< Back to H.R. 3128 (99th Congress, 1985–1986)

Text of the Consolidated Omnibus Budget Reconciliation Act of 1985

This bill was enacted after being signed by the President on April 7, 1986. The text of the bill below is as of Apr 7, 1986 (Passed Congress/Enrolled Bill).

100 STAT. 82                        PUBLIC LAW 99-272—APR. 7, 1986

                 Public Law 99-272                                        • ?
                 99th Congress
                                                      An Act
  Apr. 7, 1986   To provide for reconciliation pursuant to section 2 of the first co.:Q,current
  rTT p 31281      resolution on the budget for fiscal year 1986 (S. Con. Res. 32, Ninety-ninth
                   Congress).

                  Be it enacted by the Senate and House of Representatives of the
Consolidated     United States of America in Congress assembled,
Omnibus Budget
Reconciliation
Act of 1985.                                        SHORT TITLE
                   SECTION 1. This Act may be cited as the "Consolidated Omnibus
                 Budget Reconciliation Act of 1985".
                                               TABLE OF CONTENTS
                 Title   I. Agriculture programs.
                 Title   II. Armed services and defense-related programs.
                 Title   III. Housing and community development programs.
                 Title   IV. Transportation and related programs.
                 Title   V. Corporation for Public Broadcasting and Federal Communications Commis-
                                sion.
                 Title   VI. Maritime, coastal zone, and related programs.
                 Title   VII. Energy and related programs.
                 Title   VIII. Outer Continental Shelf and related programs.
                 Title   IX. Medicare, Medicaid, and Maternal and Child Health programs.
                 Title   X. Private health insurance coverage.
                 Title   XI. Single-employer plan termination insurance system amendments.
                 Title   XII. Income security and related programs.
                 Title   XIII. Revenues, trade, and related programs.
                 Title   XIV. Revenue sharing.
                 Title   XV. Civil service, postal service, and governmental affairs generally.
                 Title   XVI. Higher education programs.
                 Title   XVII. Graduate Medical Education Council and technical amendments to the
                                    Public Health Service Act.
                 Title   XVIII. Small business programs.
                 Title   XIX. Veterans' programs.
                 Title   XX. Miscellaneous provisions.
                                                                            \^

                          TITLE I—AGRICULTURE PROGRAMS
                         Subtitle A—Agricultural Program Savings
                 SEC. 1001. AGRICULTURAL PROGRAM SAVINGS.
                   The expenditures and outlays resulting from the provisions of title
                 XI (relating to the export sales of dairy products) and title XIII
                 (relating to emergency disaster loans and loan authorizations under
                 the Agricultural Credit Insurance Fund) of the Food Security Act of
99 Stat. 1465,    1985 (H.R. 2100, 99th Congress) shall be counted for purposes of
1^18-            determining savings under the Consolidated Omnibus Budget Rec-
                 onciliation Act of 1985 as having been enacted under this Act.

PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 83 Subtitle B—Tobacco Program Improvements SEC. 1101. FINDINGS AND PURPOSES. 7 USC 1445 note. (a) FINDINGS.—Congress finds that— (1) the maintenance of a viable tobacco price support and state and local production adjustment program is in the interests of tobacco governments. producers, purchasers of tobacco, persons employed directly or indirectly by the tobacco industry, and the localities and States whose economies and tax bases are dependent on the tobacco industry; (2) the present tobacco price support program is in jeopardy and in need of reform; (3) under present law, the levels of price support for tobacco have resulted in market prices for tobacco that are not competi- tive on the world market; (4) as a consequence, extremely large quantities of domestic tobacco have been put under loan and placed in the inventories of the producer-owned cooperative marketing associations that administer the tobacco price support program; (5) the increased inventories have led to a significant increase in the assessments producers are required to pay to maintain the tobacco price support program on a "no net cost" basis; (6) such increasingly large assessments are creating a severe hardship on producers; (7) the existence of such large inventories poses a threat to the orderly marketing of future crops of tobacco; (8) inventories of producer associations must be significantly reduced or the tobacco price support program will collapse; (9) the Commodity Credit Corporation is threatened with substantial losses on disposition of these inventories should the tobacco price support program collapse; (10) it is imperative that such excess inventories of tobacco be disposed of, under the supervision of the Secretary of Agri- culture, in a manner that— (A) will not disrupt the orderly marketing of new tobacco crops; (B) will minimize any losses to the Federal Government; and (C) will be fair and equitable to all tobacco producers and purchasers; (11) the mutual cooperation of tobacco producers, tobacco purchasers, producer associations, and the Secretary of Agri- culture is necessary— (A) to restore the tobacco price support program to a stable condition; and (B) to prevent substantial losses to taxpayers that would result from the collapse of the program; (12) restoration of stability to the tobacco price support pro- Commerce and gram through a sharing of the cost of that program by pur- trade, chasers of tobacco along with producers of tobacco is necessary to prevent undue burdens on, or obstruction of, interstate and foreign commerce in tobacco; and (13) the system of grading tobacco should be thoroughly re- viewed to ensure that grades are assigned to tobacco that properly state the quality of such tobacco. (b) PURPOSES.—The purposes of this subtitle are—
100 STAT. 84 PUBLIC LAW 99-272—APR, 7, 1986 (1) to encourage cooperation among tobacco producers, to- bacco purchasers, and the Secretary of Agriculture in reducing tobacco price support levels, assessment costs, the size of inven- tories of producer associations, and the exposure of taxpayers to large budget outlays; (2) to adjust the method by which price support levels and production quotas are calculated to reflect actual market conditions; (3) to facilitate the purchase and sale of Flue-cured and Burley tobacco presently in the inventories of producer associa- tions through which producers of Flue-cured and Burley tobacco are provided price support; (4) to provide that purchasers and producers of domestic tobacco share equally in the cost of maintaining the tobacco price support program at no net cost to the taxpayers; and (5) to expedite reform of the system of grading tobacco so that grades assigned to tobacco more accurately reflect the quality of such tobacco. SEC. 1102. PRICE SUPPORT ADJUSTMENTS. (a) I N GENERAL.—Effective for the 1985 and subsequent crops of tobacco, section 106(f) of the Agricultural Act of 1949 (7 U.S.C. 99 Stat. 818. 1445(f)) is amended by striking out paragraphs (4) and (5) and inserting in lieu thereof the following new paragraphs: "(4) For the 1985 and 1986 crops of Burley tobacco, the support level shall be $1,488 per pound. "(5) For the 1986 crop of Flue-cured tobacco, the support level shall be $1,438 per pound. "(6)(A) Except as provided in subparagraph (B), for the 1986 and each subsequent crop of any kind of tobacco (other than Flue-cured and Burley tobacco) for which marketing quotas are in effect or are not disapproved by producers, the support level shall be the level in cents per pound at which the immediately preceding crop was supported, plus or minus, respectively, the amount by which— "(i) the support level for the crop for which the deter- mination is being made, as determined under subsection (b); is greater or less than "(ii) the support level for the immediately preceding crop, as determined under subsection (b), as that difference may be adjusted by the Secretary under subsection (d) if the support level under clause (i) is greater than the support level under clause (ii). "(B) Notwithstanding subparagraph (A) and subsection (d), if requested by the board of directors of an association through which price support for the respective kind of tobacco specified in subparagraph (A) is made available to producers, the Sec- retary may reduce the support level for such kind of tobacco to the extent requested by the association to more accurately reflect the market value and improve the marketability of such tobacco. "(7)(A) For the 1987 and each subsequent crop of Flue-cured and Burley tobacco for which marketing quotas are in effect or are not disapproved by producers, the support level shall be the level in cents per pound at which the immediately preceding crop was supported, plus or minus, respectively, an adjustment of not less than 65 percent nor more than 100 percent of the
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 85 total, as determined by the Secretary after taking into consider- ation the supply of the kind of tobacco involved in relation to demand, of— "(i) 66.7 percent of the amount by which— "(I) the average price received by producers for Flue- cured and Burley tobacco, respectively, on the United States auction markets, as determined by the Sec- retary, during the 5 marketing years immediately preceding the marketing year for which the determina- tion is being made, excluding the year in which the average price was the highest and the year in which the average price was the lowest in such period, is greater or less than "(II) the average price received by producers for Flue- cured and Burley tobacco, respectively, on the United States auction markets, as determined by the Sec- retary, during the 5 marketing years immediately preceding the marketing year prior to the marketing year for which the determination is being made, excluding the year in which the average price was the highest and the year in which the average price was the lowest in such period; and "(ii) 33.3 percent of the change, expressed as a cost per pound of tobacco, in the index of prices paid by tobacco producers from January 1 to December 31 of the calendar year immediately preceding the year in which the deter- mination is made. "(B) For purposes of subparagraph (A)— "(i) the average market price for Burley tobacco for the 1985 marketing year shall be reduced by $0,039 per pound; "(ii) the average market price for Burley tobacco for the 1984 and each prior applicable marketing year shall be reduced by $0.30 per pound; "(iii) the average market price for Flue-cured tobacco for the 1985 marketing year shall be reduced by $0.25 per pound; "(iv) the average market price for Flue-cured tobacco for the 1984 and each prior applicable marketing year shall be reduced by $0.30 per pound; and "(v) the index of prices paid by tobacco producers shall include items representing general, variable costs of producing tobacco, as determined by the Secretary, but shall not include the cost of land, risk, overhead, manage- ment, purchase or leasing of quotas, marketing contribu- tions or assessments, and other costs not directly related to the production of tobacco.". (b) CERTAIN GRADES OF FLUE-CURED TOBACCO.—Effective for the 1986 and subsequent crops of tobacco, section 106 of the Agricultural Act of 1949 (7 U.S.C. 1445) is further amended by striking out subsection (g). SEC. 1103. DETERMINATION OF MARKETING QUOTAS FOR FLUE-CURED AND BURLEY TOBACCO. (a) DEFINITIONS.—Section 3010?) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1301(b)) is amended— (1) by adding at the end of paragraph (14) the following new subparagraphs:
100 STAT. 86 PUBLIC LAW 99-272—APR. 7, 1986 "(C) 'Reserve stock level', in the case of Flue-cured tobacco, shall be the greater of— "(i) 100,000,000 pounds (farm sales weight); or "(ii) 15 percent of the national marketing quota for Flue-cured tobacco for the marketing year immediately preceding the marketing year for which the level is being determined. "(D) 'Reserve stock level', in the case of Burley tobacco, shall be the greater of—- "(i) 50,000,000 pounds (farm sales weight); or "(ii) 15 percent of the national marketing quota for Burley tobacco for the marketing year immediately preceding the marketing year for which the level is being determined."; and (2) by adding at the end thereof the following new paragraph: "(17) 'Domestic manufacturer of cigarettes' means a person that produces and sells more than 1 percent of the cigarettes produced and sold in the United States.". (b) FLUE-CURED TOBACCO.—Section 317(a)(1) of such Act (7 U.S.C. 1314c(a)(l)) is amended— (1) by striking out " 'National marketing quota' " in the first sentence and inserting in lieu thereof "(A) Except as provided in subparagraph (B), 'national marketing quota' "; and (2) by adding at the end thereof the following new suljparagraphs: "(B) For the 1986 and each subsequent crop of Flue-cured tobacco, 'national marketing quota' for a marketing year means the quantity of Flue-cured tobacco, as determined by the Secretary, that is not more than 103 percent nor less than 97 percent of the total of— "(i) the aggregate of the quantities of Flue-cured tobacco that domestic manufecturers of cigarettes estimate the manufactur- ers intend to purchase on the United States auction markets or from producers during the marketing year, as compiled and Post, p. 88. determined under section 320A; Exports. "(jj) ^jjg average annual quantity of Flue-cured tobacco ex- ported from the United States during the 3 marketing years immediately preceding the marketing year for which the deter- mination is being made; and Loans. "(iii) the quantity, if any, of Flue-cured tobacco that the Secretary, in the discretion of the Secretary, determines is necessary to increase or decrease the inventory of the producer- owned cooperative marketing association that has entered into a loan agreement with the Commodity Credit Corporation to make price support available to producers of Flue-cured tobacco to establish or maintain such inventory at the reserve stock level for Flue-cured tobacco. "(C) Notwithstanding any other provision of law— "(i) the national marketing quota for Flue-cured tobacco for each of the 1986 through 1989 marketing years for such tobacco shall not be less than 94 percent of the national marketing quota for such tobacco for the preceding marketing year; and "(ii) the national marketing quota for Flue-cured tobacco for each of the 1990 through 1993 marketing years for such tobacco shall not be less than 90 percent of the national marketing quota for such tobacco for the preceding marketing year.". (c) BURLEY TOBACCO.—Section 319 of such Act (7 U.S.C. 1314e) is amended— (1) in subsection (c)—
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 87 (A) by striking out "The national marketing quota" in the first sentence and inserting in lieu thereof "(1) Except as provided in paragraph (3), the national marketing quota"; (B) by striking out the second sentence; (C) by designating the third sentence as paragraph (2); and (D) by adding at the end thereof the following new paragraphs: "(3)(A) For the 1986 and each subsequent crop of Burley tobacco, the national marketing quota for any marketing year shall be the quantity of Burley tobacco, as determined by the Secretary, that is not more than 103 percent nor less than 97 percent of the total of— "(i) the aggregate of the quantities of Burley tobacco that domestic manufacturers of cigarettes estimate the manufactur- ers intend to purchase on the United States auction markets or from producers during the marketing year, as compiled and determined under section 320A; "(ii) the average annual quantity of Burley tobacco exported Exports, from the United States during the 3 marketing years imme- diately preceding the marketing year for which the determina- tion is being made; and "(iii) the quantity, if any, of Burley tobacco that the Loans. Secretary, in the discretion of the Secretary, determines is necessary to increase or decrease the inventories of the producer-owned cooperative marketing associations that have entered into loan agreements with the Commodity Credit Corpora- tion to make price support available to producers of Burley tobacco to establish or maintain such inventories, in the aggre- gate, at the reserve stock level for Burley tobacco. "(B) In determining the quantity of Burley tobacco necessary to establish or maintain the inventories of the producer associations at the reserve stock level under subparagraph (AKiii)— "(i) the Secretary shall provide for initially attaining the reserve stock level over a period of 5 years; and "(ii) any downward adjustment in such inventories of Burley tobacco may not exceed the greater of— "(I) 35,000,000 pounds; or "(II) 50 percent of the quantity by which— "(aa) the total inventories of Burley tobacco of the producer-owned cooperative marketing associations that have entered into loan agreements with the Commodity Credit Corporation to make price support available to producers of Burley tobacco; exceed "(bb) the reserve stock level for Burley tobacco. "(C) Notwithstanding any other provision of law— "(i) the national marketing quota for Burley tobacco for each of the 1986 through 1989 marketing years for such tobacco shall not be less than 94 percent of the national marketing quota for such tobacco for the preceding marketing year; and "(ii) the national marketing quota for Burley tobacco for each of the 1990 through 1993 marketing years for such tobacco shall not be less than 90 percent of the national marketing quota for such tobacco for the preceding marketing year."; and (2) by inserting ", except in the case of Burley tobacco," after "Provided, That" in the fourth sentence of subsection (e).
100 STAT. 88 PUBLIC LAW 99-272—APR. 7, 1986 (d) PURCHASE INTENTIONS.—Effective for the 1986 and each subse- quent crop of tobacco, such Act is amended by inserting after section 320 (7 U.S.C. 13140 the following new section: SUBMISSION OF PURCHASE INTENTIONS BY CIGARETTE MANUFACTURERS 7 u s e 1314g. "SEC. 320A. (a)(1) Not later than December 1 of any marketing year with respect to Flue-cured tobacco (or, in the case of the 1986 crop, 14 days after the date of enactment of the Consolidated Omnibus Budget Reconciliation Act of 1985) and January 15 of any marketing year with respect to Burley tobacco (or, in the case of the 1986 crop, 14 days after the date of enactment of such Act or January 15, 1986, whichever is later), each domestic manufacturer of cigarettes shall submit to the Secretary a statement, by kind, of the quantity of Flue-cured tobacco and Burley tobacco (for which a national marketing quota is in effect or for which the Secretary has proclaimed a national marketing quota for the next succeeding marketing year) that the manufacturer intends to purchase, directly or indirectly, on the United States auction markets or from produc- ers during the next succeeding marketing year (hereafter in this section referred to as the 'quantity of intended purchases'). "(2) The Secretary shall aggregate the quantities of intended purchases in a manner that will not allow the identification of the quantity of intended purchases of any manufacturer. "(b) If any domestic manufacturer of cigarettes fails to submit to the Secretary a statement of the quantity of intended purchases of the manufacturer, as required by this section, the Secretary shall establish the quantity of intended purchases to be attributed to such manufacturer for purposes of this Act, based on— "(1) the quantity of intended purchases submitted by such manufacturer under this section for the marketing year imme- diately preceding the marketing year for which the determina- tion is being made; or "(2) if such manufacturer did not submit a statement of the quantity of intended purchases of the manufacturer for the marketing year immediately preceding the marketing year for which the determination is being made, the most recent information available to the Secretary. Classified "(c)(1) All information relating to the quantity of intended pur- information. chases that is submitted by domestic manufacturers of cigarettes under this section shall be kept confidential by all officers and employees of the Department of Agriculture. "(2) Such information may only be disclosed by such officers or employees in a suit or administrative hearing— "(A)(i) brought at the direction, or on the request, of the Secretary; or "(ii) to which the Secretary or any officer of the United States is a party; and "(B) involving enforcement of this Act. "(3) Nothing in this section shall be considered to prohibit the publication, by direction of the Secretary, of the name of any person violating this Act, together with a statement of the particular provisions of the Act violated by such person. Law "(4) Any officer or employee of the Department of Agriculture enforcement who violates this subsection, on conviction, shall be— and crime.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 89 "(A) subject to a fine of not more than $1,000 or to imprison- ment for not more than 1 year, or to both; and "(B) removed from office. "(d) Notwithstanding any other provision of law, a statement of the quantity of intended purchases that is submitted under this section shall be exempt from disclosure under section 552 of title 5, United States Code.". SEC. 1104. MARKETING QUOTA ANNOUNCEMENT DATE; PROCLAMATION OF QUOTAS FOR FLUE-CURED AND BURLEY TOBACCO. (a) IN GENERAL.—Section 312 of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1312) is amended— (1) by striking out "and February 1 of any marketing year with respect to other kinds of tobacco" in the matter preceding clause (1) of subsection (a) and inserting in lieu thereof "Feb- ruary 1 of any marketing year with respect to Burley tobacco, and March 1 of any marketing year with respect to other kinds of tobacco"; and (2) by striking out "and not later than the first day of February with respect to other kinds of tobacco" in the first sentence of subsection (b) and inserting in lieu thereof ", not later than the first day of February with respect to Burley tobacco, and not later than the first day of March with respect to other kinds of tobacco". (b) DARK AIR-CURED AND FIRE-CURED TOBACCO.—Section 319(b) of such Act (7 U.S.C. 1313e(b)) is amended by striking out "February 1" 7 USC I3l4e. each place it appears in the fourth paragraph and inserting in lieu thereof "March 1". (c) PROCLAMATION OF QUOTA FOR FLUE-CURED TOBACCO.—Section 317(d) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314c(d)) is amended by adding at the end thereof the following new sen- tences: "Notwithstanding any other provision of law, for the 1986 marketing year, the Secretary shall proclaim the national market- ing quota for Flue-cured tobacco not later than 21 days after the date of enactment of the Consolidated Omnibus Budget Reconcili- ation Act of 1985. Any proclamation with respect to the national marketing quota for the 1986 marketing year for Flue-cured tobacco made by the Secretary prior to such date of enactment shall become void on enactment of such Act.". (d) PROCLAMATION OF QUOTA FOR BURLEY TOBACCO.—Section 319(a) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314e(a)) is amended by adding at the end thereof the following new sentences: "Notwithstanding any other provision of law, for the 1986 market- ing year, the Secretary shall proclaim the national marketing quota for Burley tobacco not later than 21 days after the date of enactment of the Consolidated Omnibus Budget Reconciliation Act of 1985 or February 1, 1986, whichever is later. Any proclamation with respect to the national marketing quota for the 1986 marketing year for Burley tobacco made by the Secretary prior to such date of enact- ment shall become void on enactment of such Act.". SEC. 1105. REDUCTION IN EXCESS TOBACCO NOT SUBJECT TO MARKETING PENALTY. (a) PENALTY ON EXCESS TOBACCO.—Effective for the 1986 and subsequent crops of tobacco, the Agricultural Adjustment Act of 1938 is amended—
100 STAT. 90 PUBLIC LAW 99-272—APR. 7, 1986 (1) by striking out "110" in section 317(g)(1) (7 U.S.C. 1314c(g)(l)) and inserting in lieu thereof "103"; and (2) by striking out "110" in section 319(i)(l) (7 U.S.C. 1314e(i)(l)) and inserting in lieu thereof "103". (b) PRICE SUPPORT ON EXCESS TOBACCO.—Effective for the 1986 and subsequent crops of tobacco, section 106(c)(1) of the Agricultural Act of 1949 (7 U.S.C. 1445(c)(1)) is amended by striking out "110" and inserting in lieu thereof "103". SEC. 1106. PURCHASE REQUIREMENTS; PENALTY. (a) IN GENERAL.—Effective for the 1986 and subsequent crops of tobacco, the Agricultural Adjustment Act of 1938 (as amended by Ante, p. section 1103(d)) is further amended by inserting after section 320A the following new section: "PURCHASE REQUIREMENTS; PENALTY 7 u s e 1314 h. "SEC. 320B. (a)(1) At the conclusion of each marketing year, on or before a date prescribed by the Secretary, each domestic manufac- turer of cigarettes shall submit to the Secretary a statement, by kind, of the quantity of Flue-cured and Burley quota tobacco pur- chased, directly or indirectly, by such manufacturer during such marketing year. Loans. "(2) The statement shall include, but not be limited to, the quan- tity of each such kind of tobacco purchased by the manufacturer on the United States auction markets, from producers, and from the inventories of tobacco from the 1985 and subsequent crops of the producer-owned cooperative marketing associations that have en- tered into loan agreements with the Commodity Credit Corporation to make price support available to producers of Flue-cured or Burley tobacco. "(b)(1) Except as otherwise provided in this subsection, any domes- tic manufacturer of cigarettes that fails, as determined by the Secretary after notice and opportunity for a hearing, to purchase during a marketing year on the United States auction markets, from producers, or from the inventories of tobacco from the 1985 and subsequent crops of the producer associations described in subsec- tion (a)(2) a quantity of Flue-cured quota tobacco and a quantity of Burley quota tobacco equal to at least 90 percent of the quantity of the intended purchases of Flue-cured tobacco and Burley tobacco, respectively, submitted by such manufacturer or established by the Secretary for such manufacturer for that marketing year under Ante, p. section 320A (as that quantity may be reduced under paragraph (2)) shall be subject to a penalty as prescribed in subsection (c). "(2)(A) If the total quantity of Flue-cured or Burley quota tobacco, respectively, marketed by producers at auction in the United States during the marketing year in question is less than the national marketing quota (including any adjustments for overmarketings or undermarketings) for that kind of tobacco for that marketing year, the quantity of intended purchases of each domestic manufacturer of cigarettes, for purposes of paragraph (1), shall be reduced by a percentage equal to the percentage by which the total quantity marketed at auction in the United States during the marketing year is less than the national marketing quota (including any adjust- ments for overmarketings or undermarketings) for that kind of tobacco for the marketing year.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 91 "(B) For purposes of this section, the term 'marketed' shall include disposition of tobacco by consigning the tobacco to a producer association described in subsection (a)(2) for a price support advance. "(c) The amount of any penalty to be imposed on a manufacturer under this section shall be determined by multiplying— "(1) twice the per pound assessment (as determined under section 106A or 106B of the Agricultural Act of 1949 (7 U.S.C. 1445-1 or 1445-2)) for the kind of tobacco involved; by Post, pp. 92, 94. "(2) the quantity by which— "(A) the purchases by such manufacturer on the United States auction markets, from producers, or from the inven- tories of tobacco from the 1985 and subsequent crops of the producer associations described in subsection (a)(2) of Flue- cured and Burley quota tobacco, respectively, for the marketing year; are less than "(B) 90 percent of the quantity of intended purchases of such kinds of tobacco, respectively, submitted by the manu- facturer or established by the Secretary for such manufac- turer for that marketing year under section 320A (as that Ante, p. 88. quantity may be reduced under subsection (b)(2)). "(d)(1) An amount equivalent to the penalty collected by the Secretary under this section shall be transmitted by the Secretary to the appropriate producer-owned cooperative marketing association that has entered into a loan agreement with the Commodity Credit Corporation to make price support available to producers of Flue- cured or Burley tobacco, as the case may be. "(2) Each association to which amounts are transmitted by the Secretary under this section shall deposit such amounts in the No Net Cost Fund or Account of such association in accordance with section 106A or 106B of the Agricultural Act of 1949. "(e) The limitations on disclosure set forth in subsections (c) and (d) of section 320A shall apply to information submitted by domestic manufacturers of cigarettes under this section with respect to the quantity of purchases of Flue-cured and Burley quota tobacco during a marketing year. Any officer or employee of the Department of Agriculture who violates such limitations on disclosure shall be subject to the penalties set forth in section 320A(c)(4). "(f) As used in this section, the term 'quota tobacco' means any kind of tobacco for which marketing quotas are in effect or for which marketing quotas are not disapproved by producers.". (b) CONFORMING AMENDMENT.—Effective for the 1986 and subse- quent crops of tobacco, the last sentence of section 372(b) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1372(b)) is amended by striking out "The" and inserting in lieu thereof "Except as provided in section 320B, the". Ante, p. 90. SEC. 1107. LEASE AND TRANSFER OF BURLEY TOBACCO QUOTAS. Effective with respect to the 1985 and subsequent crops of Burley tobacco, the fourth proviso of section 319(g) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314e(g)) is amended by inserting after "July 1 of that crop year" the following: "or, if such record of the transfer is filed with the county committee after July 1, the county committee determines with the concurrence of the State committee that all interested parties agreed to such lease and transfer before July 1 and that the failure to file such record of the transfer did not result from gross negligence on the part of any party to such lease and transfer".
100 STAT. 92 PUBLIC LAW 99-272—APR. 7, 1986 SEC. 1108. ASSESSMENTS TO NO NET COST FUNDS OR ACCOUNTS. (a) No NET COST FUND.—Effective for the 1986 and subsequent crops of tobacco, section 106A of the Agricultural Act of 1949 (7 U.S.C. 1445-1) is amended— (1) in subsection (a)— (A) by striking out "and" at the end of paragraph (5); (B) by redesignating paragraph (6) as paragraph (7); and (C) by inserting after paragraph (5) the following new paragraph: "(6) the term 'purchaser' means any person who purchases in the United States, either directly or indirectly for the account of such person or another person. Flue-cured or Burley quota tobacco; and"; (2) by inserting "or paid by or on behalf of purchasers" after "producer-members" in the second sentence of subsection (c); (3) in subsection (d)— (A) by striking out "and" at the end of clause (i) of paragraph (1)(A); (B) by inserting after clause (ii) of paragraph (1)(A) the following new clause: "(iii) each purchaser of Flue-cured and Burley quota tobacco shall pay to the appropriate association, for deposit in the Fund of the association, an assessment, in an amount determined from time to time by the association with the approval of the Secretary, with respect to purchases ojf all such kind of tobacco mar- keted by a producer from a farm (including purchases of such tobacco from the 1986 and subsequent crops from the association); and"; (C) by striking out "The" in the last sentence of para- graph (1) and inserting in lieu thereof the following: "The amount of producer contributions and purchaser assess- ments shall be determined in such a manner that producers and purchasers share equally, to the maximum extent prac- ticable, in maintaining the Fund of an association. In making such determination with respect to the assessment of a purchaser, only 1985 and subsequent crops of Flue- cured and Burley quota tobacco shall be taken into account. The"; (D) by inserting "and assessments" after "contributions" in the last sentence of paragraph (1); (E) by striking out paragraph (2) and inserting in lieu thereof the following new paragraph: "(2) require that any producer contribution or purchaser assessment due under paragraph (1) shall be collected— "(A) from the person who acquired the tobacco involved from the producer, except that if the tobacco is marketed by sale, an amount equal to the producer contribution may be deducted by the purchaser from the price paid to such producer; "(B) if the tobacco involved is marketed by a producer through a warehouseman or agent, from such warehouse- man or agent, who may— "(i) deduct an amount equal to the producer contribu- tion from the price paid to the producer; and
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 93 "(ii) add an amount equal to the purchaser assess- ment to the price paid by the purchaser; and "(C) if the tobacco involved is marketed by a producer directly to any person outside the United States, from the producer, who may add an amount equal to the purchaser assessment to the price paid by the purchaser;"; (F) by striking out "producers who contribute" in the proviso of paragraph (3) and inserting in lieu thereof "producers and purchasers who contribute or pay"; (G) by striking out "and" at the end of paragraph (5); (H) by inserting "effective for the 1982 through 1985 crops of quota tobacco," after the paragraph designation in para- graph (6); (I) by striking out the period at the end of paragraph (6) and inserting in lieu thereof "; and"; and (J) by inserting after paragraph (6) the following new paragraph: "(7) effective for the 1986 and subsequent crops of quota Loans, tobacco, provide, in loan agreements between the Corporation and an association, that if the Secretary determines that the amount in the Fund or the net gains referred to in paragraph (5) exceeds the amounts necessary for the purposes specified in this section, the association, with the approval of the Secretary, may suspend the payment and collection of contributions and assess- ments under this section on terms and conditions established by the association, with the approval of the Secretary."; and (4) by adding at the end thereof the following new subsection: "(h)(1)(A) Each person who fails to collect any contribution or assessment as required by subsection (d)(2) and remit such contribu- tion or assessment to the association, at such time and in such manner as may be prescribed by the Secretary, shall be liable, in addition to any amount due, to a marketing penalty at a rate equal to 75 percent of the average market price (calculated to the nearest whole cent) for the kind of tobacco involved for the immediately preceding year on the quantity of tobacco as to which the failure occurs. "(B) The Secretary may reduce any such marketing penalty in such amount as the Secretary determines equitable in any case in which the Secretary determines that the failure was unintentional or without knowledge on the part of the person concerned. "(C) Any penalty provided for under this paragraph shall be assessed by the Secretary after notice and opportunity for a hearing. "(2)(A) Any person against whom a penalty is assessed under this Courts, U.S. subsection may obtain review of such penalty in an appropriate district court of the United States by filing a civil action in such court not later than 30 days after such penalty is imposed. "(B) The Secretary shall promptly file in such court a certified copy of the record on which the penalty is based. "(3) The district courts of the United States shall have jurisdiction Courts, U.S. to review and enforce any penalty imposed under this subsection. "(4) An amount equivalent to any penalty collected by the Sec- retary under this subsection shall be transmitted by the Secretary to the appropriate association, for deposit in the Fund of such association. "(5) The remedies provided in this subsection shall be in addition to, and not exclusive of, other remedies that may be available.".
100 STAT. 94 PUBLIC LAW 99-272—APR. 7, 1986 (b) No NET COST ACCOUNT.—Effective for the 1986 and subsequent crops of tobacco, section 106B of the Agricultural Act of 1949 (7 U.S.C. 1445-2) is amended— (1) in subsection (a)— (A) by striking out "and" at the end of paragraph (6); (B) by striking out the period at the end of paragraph (7) and inserting in lieu thereof "; and"; and (C) by adding at the end thereof the following new paragraph: "(8) the term 'purchaser' means any person who purchases in the United States, either directly or indirectly for the account of such person or another person. Flue-cured or Burley quota tobacco."; (2) by inserting "and purchasers" after "producers" in subsec- tion (c)(1); (3) in subsection (d)— (A) by inserting at the end of paragraph (1) the following new sentence: "The Secretary shall also require (in lieu of Ante, p. 92. any requirement under section 106A(d)(l)) that each pur- chaser of Flue-cured and Burley quota tobacco shall pay to the Corporation, for deposit in the Account of such associa- tion, an assessment, as determined under paragraph (2) and collected under paragraph (3), with respect to purchases of all such kind of tobacco marketed by a producer from a farm (including purchases of such tobacco from the 1986 and subsequent crops from the association)."; (B) by striking out "area. Such amount" in paragraph (2)(A) and inserting in lieu thereof "area and the amount of the assessment to be paid by purchasers of tobacco. The amount of the assessment to be paid by producers and purchasers shall be determined in such a manner that producers and purchasers share equally, to the maximum extent practicable, in maintaining the Account of an association. In making such determination with respect to the assessment of a purchaser, only 1985 and subsequent crops of Flue-cured and Burley quota tobacco shall be taken into account. The amount of the assessment"; (C) by inserting at the end of paragraph (2)(A) the follow- Loans. ing: "Notwithstanding the foregoing provisions of this para- graph, the amount of any assessment that is determined by the Secretary for the 1986 and subsequent crops of Burley quota tobacco shall be determined without regard to any net losses that the Corporation may sustain under the loan agreements of the Corporation with such association with respect to the 1983 crop of such tobacco."; and (D) by amending paragraph (3) to read as follows: Marketing. "(3)(A) Except as provided in subparagraphs (B) and (C), any assessment to be paid by a producer or a purchaser under paragraph (1) shall be collected from the person who acquired the tobacco involved from such producer, except that if the tobacco is marketed by sale, an amount equal to the producer assessment may be deducted by the purchaser from the price paid to such producer. Marketing. "(B) If tobacco of the kind for which an Account is established is marketed by a producer through a warehouseman or agent, both the producer and the purchaser assessment shall be collected from such warehouseman or agent, who may—
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 95 "(i) deduct an amount equal to the producer assessment from the price paid to the producer; and "(ii) add an amount equal to the purchaser assessment to the price paid by the purchaser. "(C) If tobacco of the kind for which an Account is established is Marketing, marketed by a producer directly to any person outside the United States, both the producer and the purchaser assessment shall be collected from the producer, who may add an amount equal to the purchaser assessment to the price paid by the purchaser."; and (4) by adding at the end thereof the following new subsection: "(j)(l)(A) Each person who fails to collect any assessment as required by subsection (d)(3) and remit such assessment to the Corporation, at such time and in such manner as may be prescribed by the Secretary, shall be liable, in addition to any amount due, to a marketing penalty at a rate equal to 75 percent of the average market price (calculated to the nearest whole cent) for the kind of tobacco involved for the immediately preceding year on the quantity of tobacco as to which the failure occurs. "(B) The Secretary may reduce any such marketing penalty in such amount as the Secretary determines equitable in any case in which the Secretary determines that the failure was unintentional or without knowledge on the part of the person concerned. "(C) Any penalty provided for under this paragraph shall be assessed by the Secretary after notice and opportunity for a hearing. "(2)(A) Any person against whom a penalty is assessed under this Courts, U.S. subsection may obtain review of such penalty in an appropriate district court of the United States by filing a civil action in such court not later than 30 days after such penalty is imposed. "(B) The Secretary shall promptly file in such court a certified copy of the record on which the penalty is based. "(3) The district courts of the United States shall have jurisdiction Courts, U.S. to review and enforce any penalty imposed under this subsection. "(4) An amount equivalent to any penalty collected by the Sec- retary under this subsection shall be transmitted by the Secretary to the Corporation, for deposit in the Account of the appropriate association. "(5) The remedies provided in this subsection shall be in addition to, and not exclusive of, other remedies that may be available.". (c) IMPLEMENTATION.—The Secretary of Agriculture shall imple- 7 use 1301 note, ment sections 1102 through 1109, and the amendments made by such sections, without regard to the provisions requiring notice and other procedures for public participation in rulemaking contained in section 553 of title 5, United States Code, or in any directive of the Secretary. (d) CONFORMING AMENDMENT.—The section heading of section 106A of the Agricultural Act of 1949 (7 U.S.C. 1445-1) is amended to read as follows: "PRODUCER CONTRIBUTIONS AND PURCHASER ASSESSMENTS FOR NO NET COST TOBACCO F U N D " . SEC. 1109. PURCHASE OF INVENTORY STOCK. 7 u s e 1445-3. Notwithstanding any other provision of law, in order to reduce or eliminate the excessive inventories of Flue-cured and Burley tobacco held by associations from the 1976 through 1984 crops, and in order to provide for the orderly disposition of such excessive inventories of tobacco in a manner that will not disrupt the orderly marketing of
100 STAT. 96 PUBLIC LAW 99-272—APR. 7, 1986 new tobacco crops and will minimize any losses to the Federal Government: Corporations. (a) SALE OF INVENTORY STOCK.—(1) The producer-owned coopera- Loans. tive marketing association that has entered into a loan agreement with the Commodity Credit Corporation to make price support available to producers of Flue-cured tobacco shall offer to sell the stocks of Flue-cured tobacco of the association from the 1976 through 1984 crops as provided in this section. (2) Each producer-owned cooperative marketing association that has entered into a loan agreement with the Commodity Credit Corporation to make price support available to producers of Burley tobacco shall offer to sell its stocks of Burley tobacco from the 1982 and 1984 crops as provided in this section. Loans. (3)(A)(i) Not later than 30 days after the date of enactment of this subtitle, the Commodity Credit Corporation shall acquire title to the Burley tobacco from the 1983 crop that is pledged as security for loans on such tobacco by calling the loans on such tobacco. (ii) The Corporation shall, then, offer such tobacco for sale at such times, in such quantities, and subject to such conditions as the Corporation considers appropriate. (B) If the Commodity Credit Corporation has not sold all of the stocks of the 1983 crop of Burley tobacco within 2 years from the date the Corporation calls the loans on such tobacco, the Corpora- tion may offer to sell to domestic manufacturers of cigarettes the remaining stocks of such tobacco as provided in this section. (b) SALE PRICES.—(1)(A) The stocks of Flue-cured tobacco from the 1976 through 1984 crops shall be offered for sale at the base prices, including carrying charges, in effect as of the date of the offer, reduced by— (i) 90 percent for Flue-cured tobacco from the 1976 through 1981 crops; and (ii) 10 percent for Flue-cured tobacco from the 1982 through 1984 crops. (B) The purchasers of the stocks of Flue-cured tobacco from the 1976 through 1984 crops shall pay the full carrying charges that have accrued to such tobacco from the date of the offer made under this section to the date that such tobacco is removed from the inventory of the association. (2)(A) The stocks of Burley tobacco from the 1982 crop shall be offered for sale at the listed base price in effect as of July 1, 1985. (B) The stocks of Burley tobacco from the 1984 crop shall be offered for sale at the costs of the association for such tobacco as of the date of enactment of this subtitle. (C) The purchasers of the stocks of Burley tobacco from the 1982 crop shall pay the full carrying charges that have accrued to such tobacco. (D) The purchasers of the stocks of Burley tobacco from the 1984 crop shall pay the full carrying charges that have accrued to such tobacco from the date of enactment of this subtitle to the date such tobacco is removed from the inventories of the associations. (3)(A) After the 2-year period specified in subsection (a)(3)(B) has expired, if the Commodity Credit Corporation offers to sell the stocks of the Corporation of Burley tobacco from the 1983 crop to domestic manufacturers of cigarettes, such stocks shall be offered for sale at the costs of the association, including carrying charges, as of the date on which the Corporation calls the loans on such tobacco, reduced by 90 percent.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 97 (B) Neither tobacco producers nor tobacco purchasers shall be responsible for carrying charges that accrue to the 1983 crop of Burley tobacco after the date on which the Commodity Credit Corporation calls the loans on such tobacco. (c) TERMS OF AGREEMENTS.—(1)(A) Each domestic manufacturer of cigarettes may enter into agreements to purchase inventory stocks of Flue-cured and Burley tobacco, in accordance with this section. (B) To be eligible for the reductions in price specified in this section, such manufacturer shall enter into such agreements as soon as practicable, but not later than 90 days after the date of enact- ment of this subtitle, except that, with respect to the 1983 crop of Burley tobacco, if the Corporation offers to sell the stocks of such tobacco pursuant to subsection (b)(3)(A), such agreements shall be entered into as soon as practicable, but not later than 90 days after the end of the 2-year period referred to in subsection (a)(3)(B). (C)(i) Such agreements shall provide that, over a period of time, each participating domestic manufacturer of cigarettes shall pur- chase a percentage of the stocks of Flue-cured and Burley tobacco held— (I) by the producer-owned cooperative marketing associations at the close of the 1984 marketing year; or (II) in the case of the 1983 crop of Burley tobacco, by the Commodity Credit Corporation at the time the Corporation offers such tobacco for sale to domestic manufacturers of ciga- rettes under this section. (ii) The period of time referred to in clause (i) may not exceed— (I) in the case of Flue-cured tobacco, 8 years from the date of enactment of this subtitle; (II) in the case of Burley tobacco from the 1982 and 1984 crops, 5 years from the date of enactment of this subtitle; and (III) in the case of the 1983 crop of Burley tobacco, 5 years from the end of the 2-year period referred to in subsection (a)(3)(B). (2)(A)(i) The percentage to be purchased by each participating manufacturer shall be at least equal to the respective percentage of the participating manufacturer of the total quantity of net ciga- rettes manufactured for use as determined by the Secretary of Agriculture under this paragraph on the basis of the monthly reports ("Manufacturer of Tobacco Products—Monthly Reports ) submitted (on ATF Form 3068) by manufacturers of tobacco prod- ucts to the Bureau of Alcohol, Tobacco and Firearms of the Depart- ment of the Treasury. (ii) The Secretary of Agriculture shall request from the Secretary of the Treasury copies of such monthly reports necessary to make the determinations required under this section. (iii) Notwithstanding any other provision of law, the Secretary of the Treasury may release and disclose such information to the Secretary of Agriculture. (B) "Net cigarettes manufactured for use" shall be computed by subtracting— (i) the cumulative figures entered for large and small ciga- rettes in item 16f of ATF Form 3068 ("Reduction to tobacco"); from (ii) the cumulative figures entered for large and small ciga- rettes in item 7 of such form ("Manufactured'). (C)(i) The percentage to be purchased by each participating manu- facturer shall be determined— 71-19A 0 - 89 - 6 : QL 3 Parti
100 STAT. 98 PUBLIC LAW 99-272—APR. 7, 1986 (I) on the date of enactment of this subtitle; and (II) annually thereafter over the course of the respective buy- out periods specified in this subsection. (ii) Such percentage shall be determined by dividing— (I) the average net cigarettes manufactured by a manufac- turer for use for the 12-month period immediately preceding the appropriate determination date (the date of enactment of this subtitle and annually thereafter over the course of the respec- tive buy-out periods specified in this subsection); by (II) the aggregate average net cigarettes manufactured by all domestic cigarette manufecturers for use for such 12-month period. (D)(i) The quantity of tobacco to be purchased by each participat- ing manufacturer shall be determined annually, (ii) Such quantity shall be based on— (I) the percentage of net cigarettes of a manufacturer manu- factured for use, as determined under subparagraph (C); multi- plied by (II) the appropriate annual quantity to be withdrawn from the inventories of the associations or the Commodity Credit Cor- poration. (iii) The appropriate annual quantity to be withdrawn from inven- tories shall be— (I) 12y2 percent of the inventories of Flue-cured tobacco from the 1976 through 1984 crops on hand on the date of enactment of this subtitle; (II) 20 percent of the inventories of Burley tobacco from the 1982 and 1984 crops on hand on the date of enactment of this subtitle; and (III) 20 percent of the inventories of Burley tobacco from the 1983 crop held by the Commodity Credit Corporation on the date that is 2 years after the call of the loans on such tobacco by the Corporation. (E) Any purchases by a manufacturer from the inventories of the associations or from the Commodity Credit Corporation for a crop covered by this section in any year of the buy-out period that exceed the quantity of the purchases of the manufacturer required under the agreement, as determined under this section, shall be applied against future purchases required of such manufacturer. (3) In carrying out this section, manufacturers may confer with one another and, separately or collectively, with associations, the Secretary of Agriculture, and the Commodity Credit Corporation, as may be necessary or appropriate to carry out this section and the purposes of this subtitle. (d) APPROVAL OF AGREEMENTS.—(1)(A) Each agreement entered into under this section shall be submitted to the Secretary of Agriculture for review and approval. (B) In the case of an agreement to purchase tobacco from the inventory of a producer association, the agreement shall be submit- ted by the association. (C) No agreement may become effective until approved by the Secretary. (2) The Secretary of Agriculture shall not approve any agreement suljmitted under this section unless the Secretary has determined that— (A) the agreement—
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 99 (i) will not unduly impair or disrupt the orderly market- ing of current and future tobacco crops during the term of / the agreement; and (ii) is otherwise consistent with the purposes of this sub- title; and (B) the price and other terms of sale are uniform and non- discriminatory among various purchasers. (e) DISCLOSURE.—The limitations on disclosure set forth in subsec- tions (c) and (d) of section 320A of the Agricultural Adjustment Act of 1938 (as added by section 1103(d)) shall apply to information submitted by domestic manufacturers of cigarettes under this sec- tion with respect to net cigarettes manufactured for use, including information provided on ATF Form 3068. Any officer or employee of the Department of Agriculture who violates such limitations on disclosure shall be subject to the penalties set forth in section 320A(c)(4)ofsuchAct. SEC. 1110. REVIEW OF TOBACCO GRADING SYSTEM AND DISASTER CROP DESIGNATION. (a) STUDY.—(1)(A) The Secretary of Agriculture shall conduct a comprehensive study of the methods and procedures for grading tobacco marketed in the United States. (B) In carrying out such study, the Secretary shall evaluate, among other things— (i) the extent to which grades assigned to tobacco accurately reflect the quality of such tobacco; (ii) the extent to which the number of grades of tobacco affects the operation of the grading system; and (iii) the competence and independence of tobacco graders. (2) The Secretary shall also study the feasibility and desirability of— (A) providing for a grade that would be used to designate tobacco that is of such poor quality as a result of a natural disaster as to affect substantially the marketability of such tobacco; and (B) establishing a price support level, if any, for such tobacco that may be adjusted by the Secretary as necessary to facilitate the sale of such tobacco and protect the no net cost funds or accounts. (b) REPORT.—(1) Not later than 120 days after the date of enact- Congress, ment of this subtitle, the Secretary of Agriculture shall report the results of the studies required under subsection (a), together with any recommendations for necessary legislation, to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate. (2) As soon as practicable after submission of the report required under paragraph (1), but not later than the opening of the market- ing season for the 1986 crop of Flue-cured tobacco, the Secretary shall implement any recommendations made in such report that may be implemented by the Secretary under existing authority. SEC. nil. INVESTMENT OF TOBACCO INSPECTION FEES. Section 5 of the Tobacco Inspection Act (7 U.S.C. 51 Id) is amended— (1) by inserting "late payment penalties, and interest earned from the investment of such funds," after "The fees and charges," in the ninth sentence;
100 STAT. 100 PUBLIC LAW 99-272—APR. 7, 1986 (2) by inserting after the ninth sentence the following new sentences: "Any funds realized from the collection of fees or 7 use 5lle. charges authorized under this section and section 6 and credited to the current appropriation account incurring the cost of serv- ices provided under this section and section 6, late payment penalties, and interest earned from the investment of such funds may be invested by the Secretary in insured or fully collateralized, interest-bearing accounts or, at the discretion of the Secretary, by the Secretary of the Treasury in United States Government debt instruments. Any income realized from this activity may be used to pay the expenses of the Secretary of Agriculture incident to providing services under this Act or reinvested in the manner authorized in the preceding sen- tence."; and (3) by striking out "Such fees and charges" in the tenth sentence (as it existed before the amendment made by clause (2)) and inserting in lieu thereof "The fees and charges authorized in this section". 7 u s e 1445 note. SEC. 1112. EFFECTIVE DATE. Except as otherwise provided in this subtitle, this subtitle and the amendments made by this subtitle shall become effective on the date of enactment of this subtitle. TITLE II—ARMED SERVICES AND DEFENSE-RELATED PROGRAMS SEC. 2001. COLLECTION BY THE UNITED STATES OF INPATIENT HOSPITAL COSTS INCURRED ON BEHALF OF CERTAIN PERSONS. (a) IN GENERAL.—(1) Chapter 55 of title 10, United States Code, is amended by adding at the end thereof the following new section: 10 use 1095. "§ 1095. Collection from third-party payers of reasonable inpatient hospital care costs incurred on behalf of retirees and dependents Insurance. "(a)(1) In the case of a person who is covered by section 1074(b), Health and 1076(a), or 1076(b) of this title, the United States shall have the right 99 Stat 656^ ^^ Collect from a third-party payer the reasonable costs of inpatient 10 use 1076. hospital care incurred by the United States on behalf of such person through a facility of the uniformed services to the extent that the person would be eligible to receive reimbursement or indemnifica- tion from the third-party payer if the person were to incur such costs on the person's own behalf. If the insurance, medical service, or health plan of that payer includes a requirement for a deductible or copayment by the beneficiary of the plan, then the amount that the United States may collect from the third-party payer is the reasonable cost of the care provided less the appropriate deductible or copayment amount. "(2) A person covered by section 1074(b), 1076(a), or 1076(b) of this title may not be required to pay an additional amount to the United States for inpatient hospital care by reason of this section. "(b) No provision of any insurance, medical service, or health plan contract or agreement having the effect of excluding from coverage or limiting payment of charges for certain care if that care is
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 101 provided through a faciHty of the uniformed services shall operate to prevent collection by the United States under subsection (a). "(c) Under regulations prescribed under subsection (f), records of the facility of the uniformed services that provided inpatient hos- pital care to a beneficiary of an insurance, medical service, or health plan of a third-party payer shall be made available for inspection and review by representatives of the payer from which collection by the United States is sought. "(d) Notwithstanding subsections (a) and (b), collection may not be made under this section in the case of a plan administered under title XVIII or XIX of the Social Security Act (42 U.S.C. 1395 et seq.). 42 use 1396. "(e)(1) The United States may institute and prosecute legal proceedings against a third-party payer to enforce a right of the United States under this section. "(2) The administering Secretary may compromise, settle, or waive a claim of the United States under this section. "(f) The Secretary of Defense, in consultation with the other Regulations, administering Secretaries, shall prescribe regulations for the administration of this section. Such regulations shall provide for computation of the reasonable cost of inpatient hospital care. Com- putation of such reasonable cost may be based on— "(1) per diem rates; or "(2) such other method as may be appropriate. "(g) In this section, 'third-party payer' means an entity that provides an insurance, medical service, or health plan by contract or agreement.". (2) The table of sections at the beginning of such chapter is amended by adding at the end thereof the following new item: "1095. Collection from third-party payers of reasonable inpatient hospital care costs incurred on behalf of retirees and dependents.". (b) EFFECTIVE DATE.—Section 1095 of title 10, United States Code, 10 u s e 1095 as added by subsection (a), shall apply with respect to inpatient note. hospital care provided after September 30, 1986, but only with respect to an insurance, medical service, or health plan agreement entered into, amended, or renewed on or after the date of the enactment of this Act. SEC. 2002. EXTENSION OF DEADLINE FOR REPORT ON USE BY CHAMPUS SYSTEM OF MEDICARE PROSPECTIVE PAYMENT PROGRAM. Section 634(c) of the Department of Defense Authorization Act, 1985 (Public Law 98-525; 98 Stat. 2544), is amended by striking out "February 28, 1985" and inserting in lieu thereof "June 30, 1986", TITLE III—HOUSING AND COMMUNITY Housing and Community DEVELOPMENT PROGRAMS Development Reconciliation Amendments of SEC. 3001. SHORT TITLE AND TABLE OF SECTIONS. 1985. 42 u s e 5301 (a) SHORT TITLE.—This title may be cited as the "Housing and note. Community Development Reconciliation Amendments of 1985". (b) TABLE OF SECTIONS.— Sec. 3001. Short title and table of sections. Sec. 3002. Purchase of CDBG guaranteed obligations by the Federal Financing Bank. Sec. 3003. Public housing operating subsidies.
100 STAT. 102 PUBLIC LAW 99-272—APR. 7, 1986 Sec. 3004. Public and Indian housing financing reforms. Sec. 3005. Rural housing authorizations. Sec. 3006. Management of insured and guaranteed rural housing loans. Sec. 3007. Extension of Federal Housing Administration mortgage insurance pro- grams. Sec. 3008. Extension of rehabilitation loan authority. Sec. 3009. Extension of rural housing authorities. Sec. 3010. Extension of flood and crime insurance programs. Sec. 3011. Miscellaneous extensions. SEC. 3002. PURCHASE OF CDBG GUARANTEED OBLIGATIONS BY THE FED- ERAL FINANCING BANK. (a) PROHIBITION.—Section 108 of the Housing and Community 42 u s e 5308. Development Act of 1974 is amended by adding at the end thereof the following: "(1) Notes or other obligations guaranteed under this section may not be purchased by the Federal Financing Bank.". 42 u s e 5308 (b) EFFECTIVE DATE.—The amendment made by subsection (a) note. shall take effect on July 1,1986, 42 u s e 5308 (c) ADMINISTRATIVE ACTIONS.—The Secretary of Housing and note. Urban Development shall take such administrative actions as are necessary to provide by the effective date of subsection (a) private sector financing of loans guaranteed under section 108 of the Hous- ing and Community Development Act of 1974. SEC. 3003. PUBLIC HOUSING OPERATING SUBSIDIES. 42 u s e 1437g. Section 9(c) of such Act is amended by striking out "and by" after "1983," and by inserting after "1984" the following: ", and not to exceed $1,279,000,000 on or after October 1,1985". SEC. 3004. PUBLIC AND INDIAN HOUSING FINANCING REFORMS. 42 u s e 1437b. Section 4 of the United States Housing Act of 1937 is amended by adding at the end thereof the following new subsection: Loans. "(c)(1) At such times as the Secretary may determine, and in Contracts. accordance with such accounting and other procedures as the Sec- retary may prescribe, each loan made by the Secretary under subsection (a) that has any principal amount outstanding or any interest amount outstanding or accrued shall be forgiven; and the terms and conditions of any contract, or any amendment to a contract, for such loan with respect to any promise to repay such principal and interest shall be canceled. Such cancellation shall not affect any other terms and conditions of such contract, which shall remain in effect as if the cancellation had not occurred. This paragraph shall not apply to any loan the repayment of which was not to be made using annual contributions, or to any loan all or part of the proceeds of which are due a public housing agency from contractors or others. "(2)(A) On the date of the enactment of the Housing and Commu- nity Development Reconciliation Amendments of 1985, each note or other obligation issued by the Secretary to the Secretary of the Treasury pursuant to subsection (b), together with any promise to repay the principal and unpaid interest that has accrued on each note or obligation, shall be forgiven; and any other term or condition specified by each such obligation shall be canceled. "(B) On September 30,1986, and on any subsequent September 30, each such note or other obligation issued by the Secretary to the Secretary of the Treasury pursuant to subsection (b) during the fiscal year ending on such date, together with any promise to repay the principal and unpaid interest that has accrued on each note or
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 103 obligation, shall be forgiven; and any other term or condition speci- fied by each such obligation shall be canceled. "(3) Any amount of budget authority (and contract authority) that becomes available during any fiscal year as a result of the forgive- ness of any loan, note, or obligation under this subsection shall be rescinded.". SEC. 3005. RURAL HOUSING AUTHORIZATIONS. Subsection (a)(1) of section 513 of the Housing Act of 1949 is 42 use 1483. amended to read as follows: "(a)(1) The Secretary may insure and guarantee loans under this title during fiscal year 1986 in an aggregate amount not to exceed $2,146,600,000, of which— "(A) $1,209,600,000 shall be for loans under section 502; 42 USC 1472. "(B) $17,000,000 shall be for loans under section 504; 42 use 1474. "(C) $19,000,000 shall be for loans under section 514; 42 use 1484. "(D) $900,000,000 shall be for loans under section 515; and 42 use 1485. "(E) $1,000,000 shall be for loans under section 524.". 42 use I490a. SEC. 3006. MANAGEMENT OF INSURED AND GUARANTEED RURAL HOUSING LOANS. (a) SALE OF INSURED AND GUARANTEED LOANS TO PUBLIC.—Section 517(c) of the Housing Act of 1949 is amended by adding at the end 42 use 1487. thereof the following new sentence: "Any loan made and sold by the Secretary under this section after the date of the enactment of the Housing and Community Development Reconciliation Amendments of 1985 (and any loan made by other lenders under this title that is insured or guaranteed in accordance with this section, is purchased by the Secretary, and is sold by the Secretary under this section after such date) shall be sold to the public and may not be sold to the Federal Financing Bank, unless such sale to the Federal Financing Bank is required to service transactions under this title between the Secretary and the Federal Financing Bank occurring on or before such date.". (b) INTEREST SUBSIDY ON INSURED AND GUARANTEED LOANS O F - FERED FOR SALE TO PUBLIC.—Section 517(d) of the Housing Act of 1949 is amended— (1) by inserting "(1)" after the subsection designation; and (2) by adding at the end thereof the following new paragraph: "(2) Each loan made by the Secretary or other lenders under this title that is insured or guaranteed in accordance with this subsec- tion shall, when offered for sale to the public, be accompanied by an agreement by the Secretary to pay to the holder of such loan (through an agreement to purchase such loan or through such other means as the Secretary determines to be appropriate) the difference between the rate of interest paid by the borrower of such loan and the market rate of interest (as determined by the Secretary) on obligations having comparable periods to maturity on the date of such sale.". (c) PROTECTION OF BORROWERS UNDER LOANS SOLD TO PUBLIC.— Section 517(d) of the Housing Act of 1949, as amended by subsection (b) of this section, is amended by adding at the end thereof the following new paragraph: "(3) Each loan made by the Secretary or other lenders under this title that is insured or guaranteed in accordance with this subsec- tion shall, when offered for sale to the public, be accompanied by
100 STAT. 104 PUBLIC LAW 99-272—APR. 7, 1986 agreements for the benefit of the borrower under the loan that provide that— "(A) the purchaser or any assignee of the loan shall not diminish any substantive or procedural right of the borrower arising under this title; "(B) upon any substantial default of the borrower, but prior to foreclosure, the loan shall be assigned to the Secretary for the purpose of avoiding foreclosure; and "(C) following any assignment under subparagraph (B) and before commencing any action to foreclose or otherwise dis- possess the borrower, the Secretary shall afford the borrower all substantive and procedural rights arising under this title, including consideration for interest subsidy, moratorium, reamortization, refinancing, and appeal of any adverse decision to an impartial officer. "(4) From the proceeds of loan sales under paragraph (2), the Secretary shall set aside as a reserve against future losses not less than 5 percent of the outstanding face amount of the loans held by the public at any time.". (d) U S E OF RURAL HOUSING INSURANCE FUND.—Section 517(j) of 42 use 1487. the Housing Act of 1949 is amended— (1) by striking out "and" at the end of paragraph (4); (2) by striking out the period at the end of paragraph (5) and inserting in lieu thereof "; and"; and (3) by adding at the end thereof the following new paragraph: "(6) to make payments and take other actions in accordance with agreements entered into under paragraphs (2) and (3) of subsection (d).". (e) ELIGIBILITY FOR GUARANTEED LOANS.—Section 517 of the Hous- ing Act of 1949 is amended by striking out subsection (n). OD REGULATIONS.—Section 517(o) of the Housing Act of 1949 is amended— (1) by inserting "(1)" after the subsection designation; and (2) by adding at the end thereof the following new paragraph: Regulations. "(2) Not later than the expiration of the 90-day period following Marketing. the date of the enactment of the Housing and Community Develop- ment Reconciliation Amendments of 1985, the Secretary shall issue regulations to facilitate the marketability in the secondary mort- gage market of loans insured or guaranteed under this section. Such regulations shall ensure that such loans are competitive with other loans and mortgages insured or guaranteed by the Federal Government.". SEC. 3007. EXTENSION OF FEDERAL HOUSING ADMINISTRATION MORT- GAGE INSURANCE PROGRAMS. 12 use 1703. (^) TITLE I INSURANCE.—Section 2(a) of the National Housing Act is amended by striking out "prior to December 16, 1985" in the first sentence and inserting in lieu thereof "not later than March 17, 1986". (b) GENERAL INSURANCE.—Section 217 of the National Housing 12 use I7l5h. Act is amended by striking out "December 15, 1985" and inserting in lieu thereof "March 17,1986". (c) LOW AND MODERATE INCOME HOUSING INSURANCE.—Section 12 use 1715/. 221(f) of the National Housing Act is amended by striking out "December 15, 1985" in the fifth sentence and inserting in lieu thereof"Marchl7,1986". (d) SECTION 235 HOMEOWNERSHIP.—
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 105 (1) ASSISTANCE PAYMENTS AUTHORITY.—Section 235(h)(1) of the National Housing Act is amended by striking out "December 15, 12 USC 1715z. 1985" in the last sentence and inserting in lieu thereof "March 17, 1986". (2) INSURANCE AUTHORITY.—Section 235(m) of the National Housing Act is amended by striking out "December 15, 1985" and inserting in lieu thereof "March 17,1986". (3) HOUSING STIMULUS AUTHORITY.—Section 235(q)(l) of the National Housing Act is amended by striking out "December 15, 1985" in the last sentence and inserting in lieu thereof "March 17, 1986". (e) CO-INSURANCE.— (1) GENERAL AUTHORITY.—Section 244(d) of the National Hous- ing Act is amended by striking out "December 15, 1985" and 12 USC l715z-9. inserting in lieu thereof "March 17,1986". (2) RENTAL REHABILITATION AND DEVELOPMENT PROJECTS.—Sec- tion 244(h) of the National Housing Act is amended by striking out "on or after December 16, 1985" in the last sentence and inserting in lieu thereof "after March 17, 1986". (f) GRADUATED PAYMENT AND INDEXED MORTGAGE INSURANCE.— Section 245(a) of the National Housing Act is amended by striking 12 USC out "December 15, 1985" in the last sentence and inserting in lieu I7l5z-10. thereof "March 17,1986". (g) REINSURANCE CONTRACTS.—Section 249(a) of the National Housing Act is amended by striking out "December 15, 1985" in the 12 USC second sentence and inserting in lieu thereof "March 17, 1986". I7l5z-14. (h) ARMED SERVICES HOUSING INSURANCE.— (1) CIVILIAN EMPLOYEES OF ARMED FORCES.—Section 809(f) of the National Housing Act is amended by striking out "Decem- 12 USC I748h-1. ber 15, 1985" in the last sentence and inserting in lieu thereof "March 17,1986". (2) DEFENSE HOUSING FOR IMPACTED AREAS.—Section 810(k) of the National Housing Act is amended by striking out "Decem- 12 USC l748h-2. ber 15, 1985" in the last sentence and inserting in lieu thereof "March 17,1986". (i) LAND DEVELOPMENT INSURANCE.—Section 1002(a) of the Na- tional Housing Act is amended by striking out "December 15, 1985" 12 usc I749bb. in the last sentence and inserting in lieu thereof "March 17, 1986". (j) GROUP PRACTICE FACILITIES INSURANCE.—Section 1101(a) of the National Housing Act is amended by striking out "December 15, 12 USC I749aaa. 1985" in the last sentence and inserting in lieu thereof "March 17, 1986". SEC. 3008. EXTENSION OF REHABILITATION LOAN AUTHORITY. Section 312(h) of the Housing Act of 1964 is amended— 42 USC 1452b. (1) by striking out "December 15, 1985" and inserting in lieu thereof "March 17, 1986"; and (2) by striking out "prior to December 16, 1985" and inserting in lieu thereof "on or before such date". SEC. 3009. EXTENSION OF RURAL HOUSING AUTHORITIES. (a) RENTAL HOUSING LOAN AUTHORITY.—Section 515(b)(4) of the Housing Act of 1949 is amended by striking out "December 15,1985" 42 usc 1485. and inserting in lieu thereof "March 17, 1986". (b) RURAL AREA CLASSIFICATION.—Section 520 of the Housing Act of 1949 is amended by striking out "December 15, 1985" in the last 42 USC 1490. sentence and inserting in lieu thereof "March 17,1986".
100 STAT. 106 PUBLIC LAW 99-272—APR. 7, 1986 (c) MUTUAL AND SELF-HELP HOUSING GRANT AND LOAN AUTHOR- 42 u s e 1490c. ITY.—Section 523(0 of the Housing Act of 1949 is amended by striking out "December 15, 1985" and inserting in lieu thereof "March 17,1986". SEC. 3010. EXTENSION OF FLOOD AND CRIME INSURANCE PROGRAMS. (a) FLOOD INSURANCE.— (1) GENERAL AUTHORITY.—Section 1319 of the National Flood 42 u s e 4026. Insurance Act of 1968 is amended by striking out "December 15, 1985" and inserting in lieu thereof "March 17,1986". (2) EMERGENCY IMPLEMENTATION.—Section 1336(a) of the Na- 42 u s e 4056. tional Flood Insurance Act of 1968 is amended by striking out "December 15, 1985" and inserting in lieu thereof "March 17, 1986". (3) ESTABLISHMENT OF FLOOD-RISK ZONES.—Section 1360(a)(2) of 42 u s e 4101. the National Flood Insurance Act of 1968 is amended by strik- ing out "December 15, 1985" and inserting in lieu thereof "March 17,1986". (b) CRIME INSURANCE.—Section 1201(b)(1) of the National Housing 12 u s e 1749bbb. Act is amended by striking out "December 15, 1985" in the matter preceding subparagraph (A) and inserting in lieu thereof "March 17, 1986". SEC. 3011. MISCELLANEOUS EXTENSIONS. (a) COMMUNITY DEVELOPMENT BLOCK GRANT CLASSIFICATIONS.— (1) METROPOLITAN CITY.—Section 102(a)(4) of the Housing and 42 u s e 5302. Community Development Act of 1974 is amended by striking out "December 15,1985" in the second sentence and inserting in lieu thereof "March 17,1986". (2) URBAN COUNTY.—Section 102(a)(6) of the Housing and Community Development Act of 1974 is amended by striking out "December 15,1985" in the second sentence and inserting in lieu thereof "March 17,1986". Ot)) SECTION 202 INTEREST RATE LIMITATION.—Section 223(a)(2) of 12 u s e 1701q the Housing and Urban-Rural Recovery Act of 1983 is amended by note. striking out "prior to December 16, 1985" and inserting in lieu thereof "not later than March 17,1986". (c) HOME MORTGAGE DISCLOSURE ACT OF 1975.—Section 312 of the 12 u s e 2811. Home Mortgage Disclosure Act of 1975 is amended by striking out "December 16, 1985" and inserting in lieu thereof "March 17, 1986". TITLE IV—TRANSPORTATION AND RELATED PROGRAMS Amtrak Subtitle A—Railroads Reauthorization Act of 1985. 45 u s e 501 note. SEC. 4001. SHORT TITLE. This subtitle may be cited as the "Amtrak Reauthorization Act of 1985". SEC. 4002. AUTHORIZATION OF APPROPRIATIONS. (a) AUTHORIZATION.—Section 601(b)(2) of the Rail Passenger Serv- ice Act (45 U.S.C. 601(b)(2)) is amended— (1) in subparagraph (A) by striking out "and" after "403(b) of this Act;";
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 107 (2) in subparagraph (B) by striking out the period and insert- ing in lieu thereof a semicolon; and (3) by adding at the end the following new subparagraphs: "(C) not to exceed $600,000,000 for the fiscal year ending September 30,1986; "(D) not to exceed $606,100,000 for the fiscal year ending September 30,1987; and "(E) not to exceed $630,300,000 for the fiscal year ending September 30,1988.". (b) LIMITATION.—Such section 601(b) is further amended by adding 45 use 601. at the end a new paragraph as follows: "(5) Unless sufficient funds are otherwise available to operate the Corporation's rail system at substantially the same level of service, maintenance, and equipment overhauls in effect on the date of the enactment of this paragraph, funds appropriated to or for the benefit of the Corporation under this section before the date of the enactment of this paragraph which the Corporation has designated for nonoperational capital projects shall be used as necessary to maintain the operations of the system at such level.". SEC. 4003. CAPITAL ASSETS. Section 304(c) of the Rail Passenger Service Act (45 U.S.C. 544(c)) is amended by adding at the end thereof the following new paragraph: "(3) The preferred stock issued pursuant to paragraphs (1) and (2) of this subsection shall be deemed to have been issued as of the date of receipt by the Corporation of the funds for which such stock is issued.". SEC. 4004. GOVERNMENT TRAVEL. Section 306(f) of the Rail Passenger Service Act (45 U.S.C. 546(f)) is amended by inserting ", which shall include allowing the Corpora- tion to participate in the contract air program administered by the General Services Administration in markets where service provided by the Corporation is competitive as to rates and total trip times" before the period. SEC. 4005. REPORT CONSOLIDATION. Section 308(a) of the Rail Passenger Service Act (45 U.S.C. 548(a)) is amended to read as follows: "(a) The Corporation shall submit to the Congress a report not later than February 15 of each year. The report shall include, for each route on which the Corporation operated intercity rail pas- senger service during the preceding fiscal year, data on ridership, passenger miles, short-term avoidable profit or loss per passenger mile, revenue-to-cost ratio, revenues, the Federal subsidy, the non- Federal subsidy, and on-time performance. Such report shall also specify significant operational problems which have been identified by the Corporation, together with proposals by the Corporation to resolve such problems.". SEC. 4006. CHARTER TRAINS. Section 402 of the Rail Passenger Service Act (45 U.S.C. 562) is amended— (1) by repealing subsection (g); and (2) by redesignating subsection (h) as subsection (g).
100 STAT. 108 PUBLIC LAW 99-272—APR. 7, 1986 SEC. 4007. MISCELLANEOUS AMENDMENTS. (a) AUDITS.—Section 805 of the Rail Passenger Service Act (45 U.S.C. 644) is amended— (1) in subsection (2)(A) by striking out "shall conduct annually a" in the first sentence and inserting in lieu thereof "may conduct"; and (2) in subsections (2)(A) and (2)(B) by striking "audit" wher- ever it appears and inserting in lieu thereof "audits". (b) REPEAL OF STUDIES AND REPORTS.—Sections 306(k), 806, 810, and 811 of the Rail Passenger Service Act (45 U.S.C. 546(k), 645, 649, and 650) are repealed. (c) EMERGENCY ASSISTANCE.—Title VII of the Rail Passenger Serv- ice Act (45 U.S.C. 621 and 622) is repealed. (d) NORTHEAST CORRIDOR REPORTS.—Section 703(1 )(D) of the Rail- road Revitalization and Regulatory Reform Act of 1976 (45 U.S.C. 853(1 )(D)) is repealed. (e) PERFORMANCE EVALUATION CENTER.—(1) Section 305(1) of the Rail Passenger Service Act (45 U.S.C. 545(1)) is repealed. (2) Section 305(m) of the Rail Passenger Service Act (45 U.S.C. 545(m)) is amended by striking out "Center" each place it appears and inserting in lieu thereof "Corporation". SEC. 4008. REVENUE-COST RATIO. Section 404(c)(4)(A) of the Rail Passenger Service Act (45 U.S.C. 564(c)(4)(a)) is amended by adding at the end the following new sentence: "Commencing in fiscal year 1986, the Corporation shall set a goal of recovering an amount sufficient that the ratio of its revenues, including contributions from States, agencies, and other persons, to costs, excluding capital costs, shall be at least 61 percent.". SEC. 4009. LABOR-RELATED COST SAVINGS. Amtrak and the representatives of employees of Amtrak shall negotiate changes in existing agreements between such parties that will result in substantial cost savings to Amtrak, and shall report the results of such negotiations to the Congress within six months after the date of enactment of this Act. 45 u s e 564 note. SEC. 4010. ROUTE DISCONTINUANCE. Amtrak shall not, by reason of any provision of this subtitle, including section 4002, reduce the frequency of service on any line on which, as of May 1, 1985, three or fewer trains operated per week. SEC. 4011. EMPLOYMENT VACANCY FILING. (a) LIABILITY.—Section 704(c) of the Regional Rail Reorganization Act of 1973 (45 U.S.C. 797c(c)) is amended— (1) by inserting "(1)" after "VACANCY NOTICES.—"; and (2) by adding at the end a new paragraph as follows: "(2)(A) As soon as the Board becomes aware of any failure on the part of a railroad to comply with paragraph (1), the Board shall issue a warning to such railroad of its potential liability under subpara- graph (B). "(B) Any railroad failing to comply with paragraph (1) of this subsection after being warned by the Board under subparagraph (A) shall be liable for a civil penalty in the amount of $500 for each subsequent vacancy with respect to which such railroad has so failed to comply.".
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 109 (b) EXTENSION.—Section 704(f) of such Act (45 U.S.C. 797c(f)) is amended by striking out "4-year" and inserting in lieu thereof "6- year". (c) EXEMPTION.—The provisions of section 703 of the Regional Rail 45 use 797b Reorganization Act of 1973 (45 U.S.C. 797b), section 8 of the Milwau- note. kee Railroad Restructuring Act (45 U.S.C. 907), and section 105 of the Rock Island Railroad Transition and Employee Assistance Act (45 U.S.C. 1004) shall not apply to the National Railroad Passenger Corporation in the hiring of qualified train and engine employees who hold seniority rights to work in intercity rail passenger service in connection with the assumption by such Corporation of functions previously performed under contract by other carriers. (d) EFFECTIVE DATES.—The amendments made by subsections (a) 45 use 797c and (c) shall take effect on the date of enactment of this Act, and the ^°^^- amendment made by subsection (b) shall be effective as of August 1, 1985. SEC. 4012. TRANSPORTATION OF USED UNOCCUPIED VEHICLES. Section 103(3) of the Rail Passenger Service Act (45 U.S.C. 502(3)) is amended by inserting ", and, when space is available, of used unoccupied vehicles" after "and their occupants". SEC. 4013. AMTRAK CORPORATE CITIZENSHIP. Section 306(m) of the Rail Passenger Service Act (45 U.S.C. 546(m)) is amended by inserting "only" immediately after "citizen". SEC. 4014. ROUTE AND SERVICE CRITERIA. (a) ROUTE AND SERVICE CRITERIA AMENDMENTS.—The Rail Pas- senger Service Act is amended— (1) in section 403(d) (45 U.S.C. 563(d))— (A) by striking out "criteria set forth in section 404(d)(2)(B)" and inserting in lieu thereof "criterion set forth in section 404(d)(2)"; and Post, p. no. (B) by inserting after the first sentence thereof the follow- ing: "Beginning October 1, 1986, if such service is not projected to meet such criterion, the Corporation may dis- continue, modify, or adjust such service so that the ap- plicable criterion will be met."; (2) in section 404(c)(3)(B) (45 U.S.C. 564(c)(3)(B))— (A) by striking out "60" and inserting in lieu thereof "120"; (B) by striking out "either the Senate" and all that Congress, follows through "that it does" and inserting in lieu thereof "the Senate and the House of Representatives adopt a joint resolution during such period stating that they do"; and (C) by adding at the end thereof the following: "For purposes of this subparagraph, continuity of session of the Congress is broken only by an adjournment sine die and the days on which either House is not in session because of adjournment of more than 3 days to a day certain are excluded in the computation of such 120-day period."; (3) by amending section 404(c)(4)(B) (45 U.S.C. 564(c)(4)(B)) to read as follows: "(B) The Corporation shall conduct an annual review of each route in the basic system to determine if such route is projected to meet the criterion appropriate to such route set forth in subsection (d), as adjusted to reflect constant 1979 dollars. If the Corporation deter-
100 STAT. 110 PUBLIC LAW 99-272—APR. 7, 1986 mines on the basis of such review that such route will not meet such criterion, the Corporation shall discontinue, modify, or adjust the operation of rail passenger service over such route so that the criterion will be met."; (4) in the first sentence of section 404(d)(1) (45 U.S.C. 564(d)(1))- (A) by striking out "if—" and inserting in lieu thereof "if; (B) by striking out "(A)"; and (C) by striking out all after "mile" the second time it appears therein and inserting in lieu there(Jf a period; (5) in the second sentence of section 404(d)(1) (45 U.S.C. 564(d)(1)) by striking out "and passenger mile per train mile"; (6) by striking out the last sentence of section 404(d)(1) (45 U.S.C. 564(d)(1)); and (7) in section 404(d)(2) (45 U.S.C. 564(d)(2))— (A) by striking out "if—" and inserting in lieu thereof "if; (B) by striking out "(A)"; and (C) by striking out all after "mile" the second time it appears therein and inserting in lieu thereof a period. 45 use 563 note. (b) EFFECTIVE DATE.—The provisions of this section shall take effect on October 1, 1986. SEC. 4015. ICC REGULATION. Section 306(a)(3) of the Rail Passenger Service Act (45 U.S.C. 546(a)(3)) is amended by striking out ", except as otherwise provided in this Act,". SEC. 4016. MEANING OF "DISCONTINUANCE" FOR LABOR PROTECTION PURPOSES. Section 405(a) of the Rail Passenger Service Act (45 U.S.C. 565(a)) is amended by adding at the end thereof the following: "For pur- poses of subsection (c) of this section and any agreement designed to implement the provisions of such subsection, a 'discontinuance of intercity rail passenger service' shall not include any adjustment in frequency or seasonal suspension of intercity rail passenger trains the effect of which is a temporary suspension of service unless such adjustment or suspension causes a reduction of passenger train operations on a particular route to a frequency of less than three round trips per week at any time during any calendar year.". SEC. 4017. NORTHEAST CORRIDOR COST DISPUTE DECISIONS. (a) ICC DECISIONS.—(1) Section 1163(a)(2) of the Northeast Rail Service Act of 1981 (45 U.S.C. 1111(a)(2)) is amended to read as follows: "(2) The Commission, in making such a determination, shall consider all relevant factors, and shall not permit cross subsidiza- tion between intercity rail passenger service and commuter rail passenger service.". 45 use 1111 (2) Any decisions of the Interstate Commerce Commission before note. the date of enactment of this Act under section 1163(a)(2) of the Northeast Rail Service Act of 1981 (45 U.S.C. 1111(a)(2)) shall have no force and effect after the date of enactment of this Act. (b) ASSIGNMENT OF COSTS.—Section 402(a) of the Rail Passenger Service Act (45 U.S.C. 562(a)) is amended— (1) by inserting "(1)" immediately after "(a)";
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. I l l (2) by inserting "(2)" immediately before "Notwithstanding"; (3) in the second sentence of paragraph (2), as so designated by paragraph (2) of this subsection, by striking out "180" and inserting in lieu thereof "120"; (4) in the last sentence of paragraph (2), as so designated by paragraph (2) of this subsection, by striking out "shall consider all relevant factors, and shall not permit cross subsidization among intercity, commuter," and inserting in lieu thereof "shall not permit cross subsidization between intercity rail passenger service"; and (5) by adding at the end of paragraph (2), as so designated by paragraph (2) of this subsection, the following: "The Commis- sion, in making such a determination, shall assign to a freight railroad obtaining services pursuant to this paragraph the costs incurred by the Corporation solely for the benefit of that rail- road, plus a proportionate share of all other costs of providing X ; services covered by this paragraph that are incurred for the common benefit of the Corporation and such freight railroad. The proportionate share of such other costs assigned to a freight railroad shall be based on relative measures of volume of car operations, tonnage, or other factors that reasonably reflect the relative use of the rail properties covered by this paragraph. Nothing in this paragraph shall be construed to preclude par- ties from entering into an agreement under this paragraph either before or after a determination of the Commission under this paragraph.". (c) EFFECTIVENESS OF STANDARD.—The compensation standard 45 use 562 note. established by the amendment made by subsection Ot>) of this section shall be effective in any proceeding instituted under section 402(a)(2) of the Rail Passenger Service Act (45 U.S.C. 562(a)(2)) after the date of enactment of this Act. (d) CONGRESSIONAL POLICY.—Nothing in this section, or any 45 use 562 note. amendment made by this section, shall be construed to alter the Congressional policy against cross subsidization among intercity, commuter, and rail freight services expressed in the last sentence of section 402(a) of the Rail Passenger Service Act, as in effect before the date of enactment of this Act. SEC. 4018. LOCAL RAIL SERVICE ASSISTANCE. Section 5(q) of the Department of Transportation Act (49 U.S.C. App. 1654(q)) is amended— (1) by inserting after "September 30, 1984." the following: "Of the funds authorized to be appropriated under this subsection, there are authorized to be appropriated not to exceed $12,000,000 for the fiscal year ending September 30, 1986, not to exceed $10,000,000 for the fiscal year ending September 30, 1987, and not to exceed $8,000,000 for the fiscal year ending September 30, 1988."; and (2) by adding at the end thereof the following: "No funds are authorized to be appropriated under this subsection for any period after September 30, 1988.".
100 STAT. 112 PUBLIC LAW 99-272—APR. 7, 1986 Subtitle B—Highway Programs SEC. 4101. REDUCTIONS IN HIGHWAY APPORTIONMENTS. (a) PRIMARY SYSTEM.—The first sentence of section 105(a)(1) of the 96 Stat. 2099. Highway Improvement Act of 1982 is amended by striking out "$2,450,000,000" and inserting in lieu thereof "$2,375,000,000". (b) BRIDGE REPLACEMENT AND REHABILITATION.—Section 202(1) of 96 Stat. 2137. the Highway Safety Act of 1982 is amended by striking out "$2,050,000,000" and inserting in lieu thereof "$1,900,000,000". (c) INTERSTATE 4R.—The first sentence of section 105 of the Fed- 92 Stat. 2692. eral-Aid Highway Act of 1978 is amended by striking out "$3,150,000,000" and inserting in lieu thereof "$2,975,000,000". (d) APPORTIONMENT ADJUSTMENTS.— State and local (1) DETERMINATION OF ADJUSTMENT AMOUNT.—On the first day governments. following the effective date of this section, the Secretary of Transportation shall determine— (A) the amount of funds that would have been appor- tioned to each State on October 1,1985— (i) for the Federal-aid primary system program if the amendment made by subsection (a) had been in effect on such date; (ii) for the highway bridge replacement and re- habilitation program if the amendment made by subsection (b) had been in effect on such date; and (iii) for the program to resurface, restore, rehabili- tate, and reconstruct routes on the National System of Interstate and Defense Highways if the amendment made by subsection (c) had been in effect on such date; and (B) the amount by which the amount which was appor- tioned to such State on October 1, 1985, for such program exceeds the amount determined under subparagraph (A) for such program. State and local (2) ADJUSTMENTS TO CURRENT APPORTIONMENT.—To the extent governments. that any funds— (A) which were apportioned to a State on October 1, 1985, for any program referred to in paragraph (1)(A); and (B) which are unobligated on the first day following the effective date of this section; do not exceed the amount determined under paragraph (IXB) for such program, such apportioned and unobligated funds shall lapse on such first day. State and local (3) ADJUSTMENT TO FUTURE APPORTIONMENT.—If the amount governments. determined under paragraph (1)(B) with respect to the appor- tionment made on October 1, 1985, to any State for any program referred to in paragraph (IXA) is greater than the amount of funds which lapse from the apportionment to such State for such program under paragraph (2), the Secretary of Transpor- tation shall reduce the amount which, but for this paragraph, would otherwise be apportioned to such State for such program on October 1,1986, by the amount of such excess. SEC. 4102. OBLIGATION CEILING. Safety. (a) GENERAL LIMITATION.—Notwithstanding any other provision of 23 u s e 104 note. law, the total of all obligations for Federal-aid highways and high- way safety construction programs shall not exceed—
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 113 (1) $13,125,000,000 for fiscal year 1986; (2) $13,525,000,000 for fiscal year 1987; and (3) $14,100,000,000 for fiscal year 1988. (b) EXCEPTIONS.—The limitations under subsection (a) shall not 23 use 104 note, apply to obligations— (1) under section 125 of title 23, United States Code; (2) under section 157 of such title; (3) under section 320 of such title; (4) under section 147 of the Surface Transportation Assistance Act of 1978; Post, p. 116. (5) under section 9 of the Federal-Aid Highway Act of 1981; 95 Stat. 1701. (6) under sections 131(b) and 131(j) of the Surface Transpor- tation Assistance Act of 1982; and 96 Stat. 2119. (7) under section 118 of the National Visitor Center Facilities Act of 1968. 40 u s e 818. (c) DISTRIBUTION OF OBLIGATIONAL AUTHORITY.—For each of the State and local fiscal years 1986, 1987, and 1988, the Secretary of Transportation governments. 23 u s e 104 note. shall distribute the limitation imposed by subsection (a) by alloca- tion in the ratio which sums authorized to be appropriated for Federal-aid highways and highway safety construction which are apportioned or allocated to each State for such fiscal year bears to the total of the sums authorized to be appropriated for Federal-aid highways and highway safety construction which are apportioned or allocated to all the States for such fiscal year. (d) LIMITATION ON OBLIGATIONAL AUTHORITY.—During the period State and local October 1 through December 31 of each of the fiscal years 1986, governments. 1987, and 1988, no State shall obligate more than 35 percent of the 23 u s e 104 note. amount distributed to such State under subsection (c) for such fiscal year, and the total of all State obligations during such period shall not exceed 25 percent of the total amount distributed to all States under such subsection for such fiscal year. (e) REDISTRIBUTION OF UNUSED OBLIGATIONAL AUTHORITY.—Not- State and local withstanding subsections (c) and (d), the Secretary of Transportation governments. shall— 23 u s e 104 note. (1) provide all States with authority sufficient to prevent lapses of sums authorized to be appropriated for Federal-aid highways and highway safety construction which have been apportioned or allocated to a State, except in those instances in which a State indicates its intention to lapse sums apportioned under section 104(b)(5)(A) of title 23, United States Code; (2) after August 1 of each of the fiscal years 1986, 1987, and 1988, revise a distribution of the funds made available under subsection (c) for such fiscal year if a State will not obligate the amount distributed during such fiscal year and redistribute sufficient amounts to those States able to obligate amounts in addition to those previously distributed during such fiscal year giving priority to those States having large unobligated bal- ances of funds apportioned under section 104 of title 23, United States Code, and giving priority to those States which, because of statutory changes made by the Surface Transportation Assistance Act of 1982 and the Federal-Aid Highway Act of 23 use 101 note. 1981, have experienced substantial proportional reductions in 23 use lOi note, their apportionments and allocations; and (3) not distribute amounts authorized for administrative ex- penses and Federal lands highways programs. (f) CONFORMING AMENDMENT.—Section 157(b) of title 23, United States Code, is amended by striking out the period at the end of the
100 STAT. 114 PUBLIC LAW 99-272—APR. 7, 1986 last sentence and inserting in lieu thereof "and section 4102(c) of the Consolidated Omnibus Budget Reconciliation Act of 1985.". SEC. 4103. INCREASE IN THE STATE EMERGENCY REPAIR FUND LIMITA- TION. The first sentence of section 125(b) of title 23, United States Code, is amended by inserting after "$30,000,000" the following: "(and $55,000,000 for projects in connection with disasters or failures occurring in calendar year 1985)". SEC. 4104. NATIONAL MINIMUM DRINKING AGE AMENDMENTS. (a) EXTENSION OF PENALTY FOR NON-COMPLIANCE.—Section 158(a)(2) of title 23, United States Code, is amended by striking out "the fiscal year succeeding" and inserting in lieu thereof "each fiscal year after". (b) COMPLYING STATE LAWS.—Subsection (a) of section 158 of such title is amended by adding at the end thereof the following new paragraph: "(3) STATE GRANDFATHER LAW AS COMPLYING.—If, before the :.: „ later of (A) October 1, 1986, or (B) the tenth day following the last day of the first session the legislature of a State convenes after the date of the enactment of this paragraph, such State has in effect a law which makes unlawful the purchase and public possession in such State of any alcoholic beverage by a person who is less than 21 years of age (other than any person who is 18 years of age or older on the day preceding the effective date of such law and at such time could lawfully purchase or publicly possess any alcoholic beverage in such State), such State shall be deemed to be in compliance with paragraphs (1) and (2) of this subsection in each fiscal year in which such law is in effect,". (c) PERIOD OF AVAILABILITY; EFFECT OF COMPLIANCE AND NON- 23 use 158. COMPLIANCE.—Subsection (b) of section 158 of such title is amended to read as follows: "(b) PERIOD OF AVAILABILITY; EFFECT OF COMPLIANCE AND NON- COMPLIANCE.— "(1) PERIOD OF AVAILABILITY OF WITHHELD FUNDS.— "(A) FUNDS WITHHELD ON OR BEFORE SEPTEMBER 30, State and local 1988.—Any funds withheld under this section from appor- governments. tionment to any State on or before September 30, 1988, shall remain available for apportionment to such State as follows: "(i) If such funds would have been apportioned under section 104(b)(5)(A) of this title but for this section, such funds shall remain available until the end of the fiscal year for which such funds are authorized to be appro- priated. "(ii) If such funds would have been apportioned under section 104(b)(5)(B) of this title but for this sec- ' tion, such funds shall remain available until the end of ,, ;ii the second fiscal year following the fiscal year for which such funds are authorized to be appropriated, "(iii) If such funds would have been apportioned under section 104(b)(1), 104(b)(2), or 104(b)(6) of this title but for this section, such funds shall remain available until the end of the third fiscal year following the fiscal
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 115 year for which such funds are authorized to be appropriated. "(B) F U N D S WITHHELD AFTER SEPTEMBER 30, 1988.—No funds withheld under this section from apportionment to any State after September 30, 1988, shall be available for apportionment to such State. "(2) APPORTIONMENT OF WITHHELD FUNDS AFTER COMPLI- State and local ANCE.—If, before the last day of the period for which funds governments, withheld under this section from apportionment are to remain available for apportionment to a State under paragraph (1)(A), the State makes effective a law which is in compliance with subsection (a), the Secretary shall on the day following the effective date of such law apportion to such State the withheld funds remaining available for apportionment to such State. "(3) PERIOD OF AVAILABILITY OF SUBSEQUENTLY APPORTIONED FUNDS.—Any funds apportioned pursuant to paragraph (2) shall remain available for expenditure as follows: "(A) Funds apportioned under section 104(b)(5)(A) of this title shall remain available until the end of the fiscal year succeeding the fiscal year in which such funds are so apportioned. "(B) Funds apportioned under section 104(b)(1), 104(b)(2), 104(b)(5)(B), or 104(b)(6) of this title shall remain available until the end of the third fiscal year succeeding the fiscal year in which such funds are so apportioned. Sums not obligated at the end of such period shall lapse or, in the case of funds apportioned under section 104(b)(5) of this title, shall lapse and be made available by the Secretary for projects in accordance with section 118(b) of this title. "(4) EFFECT OF NONCOMPLIANCE.—If, at the end of the period State and local for which funds withheld under this section from apportion- governments, ment are available for apportionment to a State under para- graph (1), the State has not made effective a law which is in compliance with subsection (a), such funds shall lapse or, in the case of funds withheld from apportionment under section 104(b)(5) of this title, such funds shall lapse and be made available by the Secretary for projects in accordance with sec- tion 118(b) of this title.", (d) CONFORMING AMENDMENTS.—Such section 158 is further 23 u s e 158. amended— (1) in subsection (a) by inserting "WITHHOLDING OF FUNDS FOR NONCOMPLIANCE.—" before "(1) The"; (2) in subsection (a)(1) by inserting "FIRST YEAR.—" before "The Secretary"; (3) by indenting paragraphs (1) and (2) of subsection (a) and aligning them with paragraph (3) of such subsection as inserted by subsection (b) of this section; (4) in subsection (a)(1) by inserting "first" before "fiscal year" the second place it appears; (5) in subsection (a)(2) by inserting "AFTER THE FIRST YEAR.—" before "The Secretary"; and (6) in subsection (c) by inserting "ALCOHOLIC BEVERAGE DE- FINED.—" before "As".
100 STAT. 116 PUBLIC LAW 99-272—APR. 7, 1986 SEC. 4105. OHIO RIVER BRIDGE FUND REPROGRAMMING. 23 use 144 note. Section 147 of the Federal-Aid Highway Act of 1978 is amended by inserting "(a)" after "SEC. 147." and by adding at the end thereof the following new subsection: "(b)(1) Of the funds which have been set aside previously pursuant to the fourth and fifth sentences of subsection (a) of this section and which are in excess of the amounts needed to complete the projects authorized by such subsection— "(A) $65,000,000 shall be available to the Secretary of Transportation to carry out the state-of-the-art technology projects described in paragraph (2) of this subsection; and "(B) the remainder shall be apportioned under subsection (e) of section 144 of title 23, United States Code, for carrying out projects under such section. "(2) The state-of-the-art technology projects referred to in para- graph (1) of this subsection are the following: Highways. "(A) Construction of a bridge (including approaches thereto) Kentucky. across the Ohio River between Newport, Kentucky, and Cin- Ohio. cinnati, Ohio, to replace a bridge on a highway designated as a United States route. "(B) Construction of a bridge (including approaches thereto) across the Ohio River between Covington, Kentucky, and Cin- cinnati, Ohio, to replace a bridge on a Kentucky State highway. "(C) Construction of a bridge (including approaches thereto) across the Ohio River near Maysville, Kentucky, and Aberdeen, Ohio, to replace a bridge on a highway designated as a United States route. Safety. "(3) In order to demonstrate the latest high-type geometric design Science and features (including safety hardware) and new advances in highway technology. bridge construction, the projects authorized by this subsection shall utilize state-of-the-art technology, and all design elements, including the decking, shall be designed to provide the best life-cycle costs, thereby minimizing future maintenance and rehabilitation costs. "(4) The Secretary of Transportation may provide necessary tech- nical assistance in the design and construction of projects under this subsection. Reports. "(5) Not later than one year after the completion of the state-of- the-art technology projects under this subsection, the Secretary of Transportation shall submit a report to Congress, including but not limited to the results of such projects, the effects of using the best available technology on safety and other considerations, rec- ommendations for applying the results to other bridge projects, and any changes that may be necessary by law to permit further use of such features. "(6) In allocating funds made available to carry out the projects described in paragraph (2) of this subsection, the Secretary shall give priority to completing the projects described in subparagraphs (A) and (B) of such paragraph. At such time as the Secretary determines and certifies in writing that sufficient funds have been set aside, from the amount made available under paragraph (1)(A), to complete the projects described in subparagraphs (A) and (B) of paragraph (2), any remaining funds shall be used to carry out the project described in subparagraph (C) of paragraph (2). "(7) Funds made available to carry out the projects described in paragraph (2) of this subsection shall be available for obligation in the same manner and to the same extent as if such funds were
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 117 apportioned under chapter 1 of title 23, United States Code, except 23 USC lOl et that such funds shall be available until expended and shall not be *^'?- subject to any obligation limitation. The Federal share of the projects described in paragraph (2) of this subsection shall be that provided in subsection (a).". TITLE V—CORPORATION FOR PUBLIC BROADCASTING AND FEDERAL COMMU- NICATIONS COMMISSION SEC. 5001. CORPORATION FOR PUBLIC BROADCASTING. (a) PUBLIC TELECOMMUNICATIONS FACILITIES.—Section 391 of the Communications Act of 1934 (47 U.S.C. 391) is amended— (1) by striking out "and" after "1983,"; and (2) by inserting ", $24,000,000 for fiscal year 1986, $28,000,000 for fiscal year 1987, and $32,000,000 for fiscal year 1988," imme- diately after "1984,". Ot)) ALLOCATION OF APPROPRIATIONS.—Section 393 of the Commu- nications Act of 1934 (47 U.S.C. 393) is amended— (1) by striking out subsection (c); and (2) by redesignating subsection (d) as subsection (c). (c) FINANCING OF CORPORATION FOR PUBLIC BROADCASTING.—(1) Section 396(k)(l)(C) of the Communications Act of 1934 (47 U.S.C. 396(k)(l)(C)) is amended— (A) by striking out "and 1986" and inserting in lieu thereof "1986,1987,1988,1989, and 1990"; (B) by striking out "and" after "fiscal year 1985,"; and (C) by inserting ", $200,000,000 for fiscal year 1987, $214,000,000 for fiscal year 1988, $238,000,000 for fiscal year 1989, and $254,000,000 for fiscal year 1990" immediately before the period at the end thereof. (2) Section 396(k)(3)(A)(i)(II) of the Communications Act of 1934 (47 U.S.C. 396(k)(3)(A)(i)(II)) is amended by striking out "research, train- ing, technical assistance, engineering, instructional support, pay- ment of interest on indebtedness,". (3) Section 396(k) of the Communications Act of 1934 (47 U.S.C. 396(k)) is amended— (A) by striking out paragraph (8); and (B) by redesignating paragraphs (9) and (10) as paragraphs (8) and (9), respectively. SEC. 5002. FEDERAL COMMUNICATIONS COMMISSION. (a) AUTHORIZATION OF APPROPRIATIONS.—(1) Section 6 of the Communications Act of 1934 (47 U.S.C. 156) is amended to read as follows: "AUTHORIZATION OF APPROPRIATIONS "SEC. 6. There are authorized to be appropriated for the adminis- tration of this Act by the Commission $98,100,000 for fiscal year 1986 and $97,600,000 for fiscal year 1987, together with such sums as may be necessary for increases resulting from adjustments in salary, pay, retirement, other employee benefits required by law, and other nondiscretionary costs, for each of the fiscal years 1986 and 1987."
100 STAT. 118 PUBLIC LAW 99-272—APR. 7, 1986 47 use 156 note. (2) The amendment made by paragraph (1) of this subsection shall apply with respect to fiscal years beginning after September 30, 1985. (b) REIMBURSED EXPENSES.—Section 4(gX2) of the Communications Act of 1934 (47 U.S.C. 154(g)(2)) is amended— (1) in subparagraph (D), by striking out "1985" and inserting in lieu thereof "1987"; and (2) by adding at the end thereof the following new subparagraph: "(E) Funds which are received by the Commission as reimburse- ments under the provisions of this paragraph after the close of a fiscal year shall remain available for obligation.". (c) ANNUAL REPORT.—Section 5(g) of the Communications Act of 1934 (47 U.S.C. 155(g)) is amended by striking out "January 31" and inserting in lieu thereof "March 31". (d) ADDITIONAL SAVINGS.—For provisions of law which, through relocation of the Fort Lauderdale, Florida, Monitoring Station of the Federal Communications Commission, reduce spending for fiscal year 1986 in satisfaction of the reconciliation requirements imposed by section 2(e) of S. Con. Res. 32 (99th Congress), see the material under the heading "FEDERAL COMMUNICATIONS COMMISSION" in the 99 Stat. 293. Supplemental Appropriations Act, 1985 (Public Law 99-88). (e) CHARGES FOR OPERATIONS.—The Communications Act of 1934 (47 U.S.C. 151 et seq.) is amended by inserting immediately after section 7 the following new section: "CHARGES 47 use 158. "SEC. 8. (a) The Commission shall assess and collect charges at such rates as the Commission shall establish or at such modified rates as it shall establish pursuant to the provisions of subsection (b) of this section. The Schedule of Charges established under this subsection shall be implemented not later than 360 days after the date of enactment of this section. "(b)(1) The Schedule of Charges established under this section shall be reviewed by the Commission every two years after the date of enactment of this section and adjusted by the Commission to reflect changes in the Consumer Price Index. Increases or decreases in charges shall apply to all categories of charges, except that individual fees shall not be adjusted until the increase or decrease, as determined by the net change in the Consumer Price Index since the date of enactment of this section, amounts to at least $5.00 in the case of fees under $100.00, or 5 percent in the case of fees of $100.00 or more. All fees which require adjustment will be rounded upward to the next $5.00 increment. The Commission shall transmit to the Congress notification of any such adjustment not later than 90 days before the effective date of such adjustment. "(2) Increases or decreases in charges made pursuant to this subsection shall not be subject to judicial review. Regulations. "(c)(1) The Commission shall prescribe by regulation an additional charge which shall be assessed as a penalty for late payment of charges required by subsection (a) of this section. Such penalty shall be 25 percent of the amount of the charge which was not paid in a timely manner. "(2) The Commission may dismiss any application or other filing for failure to pay in a timely manner any charge or penalty under this section.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 119 "(d)(1) The charges established under this section shall not be applicable to the following radio services: Local Government, Police, Fire, Highway Maintenance, Forestry-Conservation, Public Safety, and Special Emergency Radio, or to governmental entities licensed in other services. "(2) The Commission may waive or defer payment of a charge in any specific instance for good cause shown, where such action would promote the public interest. "(e) Moneys received from charges established under this section shall be deposited in the general fund of the Treasury to reimburse the United States for amounts appropriated for use by the Commis- sion in carrying out its functions under this Act. "(f) The Commission shall prescribe appropriate rules and regula- Regulations, tions to carry out the provisions of this section.". (f) Until modified pursuant to section 8(b) of the Communications 47 USC 158 note. Act of 1934 (as added by subsection (e) of this section), the Schedule of Charges which the Federal Communications Commission shall prescribe pursuant to section 8(a) of such Act shall be as follows: Schedule of Charges Fee Service amount PRIVATE RADIO BUREAU 1. Marine Coast Stations (New, Modifications, Renewals) $60.00 2. Operational Fixed Microwave Stations (New, Modifications, Renewals) 135.00 3. Aviation (Ground Stations) (New, Modifications, Renewals) 60.00 4. Land Mobile Radio Licenses (New, Modifications, Renewals) 30.00 EQUIPMENT APPROVAL SERVICE 1. Certification a. Receivers (Except TV & FM Receivers) 250.00 b. All Other Devices 650.00 2. Type Acceptance a. Approval of Subscription TV Systems 2,000.00 b. All Others 325.00 3. Type Approval a. Ship (Radio Telegraph) Automatic Alarm Systems 6,500.00 b. Ship and Lifeboat (Radio Telegraph) Transmitters 3,250.00 c. All Others (With Testing) 1,300.00 d. All Others (Without Testing) 150.00 4. Notifications 100.00 MASS MEDIA BUREAU 1. Commercial TV Stations a. New and Major Change Construction Permits Application Fees 2,250.00 b. Minor Changes Application Fee 500.00 c. Hearing Charge 6,000.00 d. License Fee 150.00 2. Commercial Radio Stations a. New and Major Change Construction Permits (1) Application Fee AM Station 2,000.00 (2) Application Fee FM Station 1,800.00 b. Minor Changes Appl. Fee-AM & FM 500.00 c. Hearing Charge 6,000.00 d. License Fee (DAM 325.00 (2)FM 100.00 e. Directional Antenna License Fee (AM only) 375.00 3. FM/TV Translators and LPTV Stations (New & Major Change Construction Permits) a. Application Fee 375.00 b. License Fee 75.00 4. Station Assignment and Transfer Fees a. AM. FM and TV Commercial Stations (1) Application Fee (Forms 314/315) 500.00
100 STAT. 120 PUBLIC LAW 99-272—APR. 7, 1986 Schedule of Charges—Continued Fee Service amount (2) Application Fee (Form 316) 70.00 b. FM/TV Translators & LPTV Stations 75.00 5. Auxiliary Services Major Actions—Application Fee 75.00 6. Renewals—All Services 30.00 7. Cable Television Service a. Cable Television Relay Service—Construction Permits, Assignments & Transfers, Renewals & Modifications 135.00 b. Cable Special Relief Petitions—Filing Fee 700.00 8. Direct Broadcast Satellite New & Major Change CPs a. Application for Authorization to Construct a Direct Broadcast Satellite 1,800.00 b. Issuance of CP & Launch Authority 17,500.00 c. License to Operate Satellite 500.00 d. Hearing Charge 6,000.00 COMMON CARRIER BUREAU 1. Domestic Public Land Mobile Stations (Base, Dispatch, Control & Repeater Stations) a. New or Additional Facility Authorizations, Assignments & Transfers (Per transmitter/per station) 200.00 b. Renewals and Minor Modifications (Per station) 20.00 c. Air-Ground Individual License Renewals & Modifications 20.00 2. Cellular Systems a. Initial Construction Permits & Major Modification Applications (Per cellular systems), 200.00 b. Assignments & Transfers (Per station) 200.00 c. Initial covering license (Per cellular system) (1) Wireline carrier 525.00 (2) Nonwireline carrier 50.00 d. Renewals 20.00 e. Minor modifications and additional licenses 50.00 3. Rural Radio ( O n t r a l Office, Interoffice or Relay Facilities) a. Initial Construction Permit, Assignments & Transfers (Per transmitter) 90.00 b. Renewals & Modifications (Per station) 20.00 4. Offshore Radio Service a. Initial Construction Permit, Assignments & Transfers (Per transmitter) 90.00 b. Renewals & Modifications (Per station) 20.00 5. Local Television or Point To Point Microwave Radio Service a. Construction Permits, Modifications of (Construction Permits, and Renew- als of Licenses 135.00 b. Assignments & Transfers of Control (Per Station) 45.00 c. Initial License for New Frequency 135.00 6. International Fixed Public Radio (Public & Control Stations) a. Initial Construction Permits, Assignments & Transfers 450.00 b. Renewals & Modifications 325.00 7. Satellite Services a. Transmit Earth Stations (1) Initial Station Authorization 1,350.00 (2) Assignments & Transfers of Station Authorizations 450.00 (3) All Other Applications 90.00 b. Small Transmit/Receive Earth Stations (2 meters or less) (1) Lead Authorization 3,000.00 (2) Routine Authorization 30.00 (3) All Other Applications 90.00 c. Receive Only Earth Stations (1) Initial Station Authorization 200.00 (2) All Other Applications 90.00 d. Applications For Authority To Construct a Space Station 1,800.00 e. Applications For Authority To Launch & Operate a Space Station 18,000.00 f. Satellite System Application (1) Initial Station Authorization 5,000.00 (2) Assignments & Transfers of Systems 1,333.00 (3) All Other Applications 90.00 8. Multipoint Distribution Service a. Construction Permits, Renewals & Modifications of Construction Permits... 135.00 b. Assignments & Transfers of (Control (Per station) 45.00 c. Initial License (Per channel) 400.00
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 121 Schedule of Charges—Continued Fee amount 9. Section 214 Applications a. Applications for Overseas Cable Construction 8,100.00 b. Applications for Domestic Cable Construction 540.00 c. All Other 214 Applications 540.00 10. Tariff Filings a. Filing Fee 250.00 b. Special Permission Filings 200.00 11. Telephone Equipment Registration 135.00 12. Digital Electronic Message Service a. Construction Permits, Renewals & Modifications of Construction Permits.... 135.00 b. Assignments & Transfers of Control (Per station) 45.00 c. Initial License (First License or License Adding a New Frequency) 135.00 TITLE VI—MARITIME, COASTAL ZONE, AND RELATED PROGRAMS Subtitle A—Boating Safety Fund SEC. 6001. BOATING SAFETY FUND. 46 USC 13106 An amount equal to one-third of the amount transferred for fiscal year 1985 to the Boat Safety Account under section 9503(c)(4) of the Internal Revenue Code of 1954 (26 U.S.C. 9503(c)(4)) shall be depos- ited in the general fund of the Treasury as proprietary receipts of the department in which the Coast Guard is operating and ascribed to Coast Guard activities. Section 13106(a) of title 46, United States Code, shall be applied with respect to fiscal year 1985 by substitut- ing "one-third" for "two-thirds" in the first sentence. Subtitle B—NOAA Nautical and Aeronautical Products SEC. 6011. SALE AND DISTRIBUTION OF NOAA NAUTICAL AND AERONAUTI- CAL PRODUCTS. (a) Section 1307 of title 44, United States Code, is amended to read as follows: "§ 1307. National Oceanic and Atmospheric Administration: nau- tical and aeronautical products, sale and distribution "(a)(1) All nautical and aeronautical products created or published by the National Oceanic and Atmospheric Administration shall be sold at such prices as the Secretary of Commerce shall establish annually, in accordance with the provisions of this subsection. The Secretary shall publish annually the prices at which nautical and aeronautical products are sold to the public. "(2)(A) Subject to subparagraph (B) of this paragraph, the prices of nautical and aeronautical products may be increased over a period of not less than three years after the date of enactment of this section so as to recover all costs attributable to data base manage- ment, compilation, printing, and distribution of such products. The prices of such products may be maintained to recover all such costs thereafter. At the end of such period and every three years there-
100 STAT. 122 PUBLIC LAW 99-272—APR. 7, 1986 after, the Secretary, after consultation with the Secretary of Transportation, shall report to the Congress on the effect of impos- ing or maintaining such increased prices, including any impact on aviation and marine safety. "(B) The Secretary, after consultation with the Secretary of Transportation, shall adjust the prices of nautical or aeronautical products in such manner as is necessary to avoid any adverse impact on aviation and marine safety attributable to the prices specified in subparagraph (A) of this paragraph. "(3) This section shall not be construed to require the establish- ment of any price for a nautical or aeronautical product where, in the judgment of the Secretary, furnishing of that product to a recipient is a reasonable exchange for voluntary contribution of information by the recipient to a program of the National Oceanic and Atmospheric Administration. "(4) Prices established under this section may not include costs attributable to the acquisition or processing of nautical or aeronauti- cal data. "(b) Fees collected from the sale of nautical or aeronautical prod- ucts under this section and from any licensing of such products which is permitted under any other provision of law shall be depos- ited in the miscellaneous receipts fund of the United States Treasury. International "(c) The Secretary may distribute nautical and aeronautical organizations. products— "(1) without charge to each foreign government or inter- national organization with which the Secretary or a Federal department or agency has an agreement for exchange of these products without cost; and "(2) at prices which the Secretary establishes, to the depart- ments and officers of the United States requiring them for official use. "(d) The fees provided for in this section are for the purpose of reimbursing the United States Government for the costs of creating, publishing or distributing aeronautical and nautical products of the National Oceanic and Atmospheric Administration. The collection of fees authorized by this section shall not alter or expand any duty or liability of the United States under existing law for the perform- ance of functions for which fees are collected, nor shall the collec- tion of fees constitute an express or implied undertaking by the United States to perform any activity in a certain manner. "(e) For purposes of this section, the term 'nautical and aeronauti- cal products' includes all nautical and aeronautical charts, tide and tidal current tables, tidal current charts, coast pilots, water level products, and associated data bases which are created or published by the National Oceanic and Atmospheric Administration.", (b) The item relating to section 1307 in the analysis of chapter 13 44 use 1301 et of title 44, United States Code, is amended to read as follows: "1307. National Oceanic and Atmospheric Administration: nautical and aeronauti- cal products, sale and distribution.".
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 123 Subtitle C—Foreign Fishing Permit Fees SEC. 6021. FOREIGN FISHING PERMIT FEES. Paragraph (10) of section 204(b) of the Magnuson Fishery Con- servation and Management Act (16 U.S.C. 1824(b)(10)) is amended to read as follows: "(10) FEES.—(A) Fees shall be paid to the Secretary by the Maritime affairs. owner or operator of any foreign fishing vessel for which a permit is issued pursuant to this subsection. The Secretary, in consultation with the Secretary of State, shall establish a sched- ule of such fees which shall apply nondiscriminatorily to each foreign nation. "(B) Unless subparagraph (C) applies, the fees imposed under subparagraph (A) shall be at least in an amount sufficient to return to the United States an amount which bears to the total cost of carrying out the provisions of this Act during each fiscal year the same ratio as the aggregate quantity of fish harvested by foreign fishing vessels within the fishery conservation zone during the preceding year bears to the aggregate quantity of fish harvested by both foreign and domestic fishing vessels within such zone and the territorial waters of the United States during such preceding year. "(C) If the Secretary, in consultation with the Secretary of Conservation. State, finds that any foreign nation receiving an allocation under section 201(e)— "(i) is harvesting anadromous species of United States origin at a level that is unacceptable to the Secretary; or "(ii) is failing to take sufficient action to benefit the conservation and development of United States fisheries; the fees imposed under subparagraph (A) for the next fiscal year shall be at least in an amount sufficient to return to the United States an amount which bears to the total cost of carrying out the provisions of this Act during that fiscal year the same ratio as the aggregate quantity of fish harvested by foreign fishing vessels within the fishery conservation zone during the preced- ing year bears to the aggregate quantity of fish harvested by both foreign and domestic fishing vessels within such zone during such preceding year. If the Secretary, in consultation with the Secretary of State, finds, at any time during a fiscal year in which fees calculated under this subparagraph are in effect with respect to a foreign nation, that the conditions requiring that calculation no longer exist, the fees imposed under this paragraph with respect to that nation for the remainder of the fiscal year shall be calculated under subpara- graph (B). "(D) Before the end of each fiscal year, the Secretary, in consultation with the Secretary of State, shall review, based on the criteria established in subparagraph (C) (i) and (ii), the performance of every nation receiving an allocation under sec- tion 201(e) and provide written notice to the Congress of his findings and reasons therefor before the end of the fiscal year. "(E) For purposes of this paragraph, the total cost of carrying Conservation. out the provisions of this Act includes, but is not limited to, fishery conservation and management, fisheries research, administration, and enforcement, but excludes costs for observ- ers covered by surcharges under section 201(i)(4).
100 STAT. 124 PUBLIC LAW 99-272—APR. 7, 1986 "(F)(i) The amounts collected by the Secretary under this paragraph (except the amounts referred to in clause (ii)) shall be transferred to the fisheries loan fund established under section 4 of the Fish and Wildlife Act of 1956 (16 U.S.C. 742(c)) for so long as such fund exists and used for the purpose of making loans therefrom, but only to the extent and in amounts provided for in advance in appropriation Acts. "(ii) The Secretary shall deposit into the general fund of the United States Treasury the difference between the amounts collected under subparagraph (C) and the amounts that would have been collected had that subparagraph not been enacted.". Coastal Zone Management Subtitle D—Amendments to the Coastal Zone Reauthorization Act of 1985. Management Act 16 u s e 1451 SEC. 6041. SHORT TITLE. note. This subtitle may be cited as the 'Coastal Zone Management Reauthorization Act of 1985". SEC. 6042. REFERENCE. Whenever in this subtitle an amendment or repeal is expressed in terms of an amendment, or repeal, of a section, subsection, para- graph, or other provision, the reference is to be considered to be made to a section, subsection, paragraph, or other provision of the Coastal Zone Management Act of 1972 (16 U.S.C. 1451 et seq.) unless otherwise specified. SEC. 6043. REDUCTION OF ADMINISTRATIVE GRANTS. (a) Section 312(c) (16 U.S.C. 1458(c)) is amended by striking "if the Secretary determines" and all that follows thereafter and inserting in lieu thereof the following: "if the Secretary determines that the coastal state— "(1) is failing to make significant improvement in achieving the coastal management objectives specified in section 303(2) (A) 16 u s e 1452. through (I); or "(2) is failing to make satisfactory progress in providing in its management program for the matters referred to in section 306(i) (A) and (B). . (b)(1) Subsection (a) of section 306 of the Coastal Zone Manage- ment Act of 1972 (16 U.S.C. 1455) is amended by striking out "The Secretary may" and all that follows through "if the Secretary—" State and local and substituting in lieu thereof the following: "The Secretary may governments. make grants to any coastal state for the purpose of administering that state's management program, if the state matches any such grant according to the following ratios of Federal to state contribu- tions for the applicable fiscal year: 4 to 1 for fiscal year 1986; 2.3 to 1 for fiscal year 1987; 1.5 to 1 for fiscal year 1988; 1 to 1 for any fiscal year after fiscal year 1988. The Secretary may make the grant only if the Secretary—". 16 u s e 1455a. (2) Section 306A is amended by striking section (d)(1) and substituting in lieu thereof the following: State and local "(d)(1) The Secretary may make grants to any coastal state for the governments. purpose of carrying out the project or purpose for which such grants are awarded, if the state matches any such grant according to the following ratios of Federal to state contributions for the applicable
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 125 fiscal year: 4 to 1 for fiscal year 1986; 2.3 to 1 for fiscal year 1987; 1.5 to 1 for fiscal year 1988; and 1 to 1 for each fiscal year after fiscal year 1988.". (c) Section 306(g) (16 U.S.C. 1455) is amended by striking out the period at the end of the first sentence and all that follows thereafter and inserting in lieu thereof the following: ", and subject to the following conditions: "(1) The state shall promptly notify the Secretary of any State and local proposed amendment, modification or other program change governments. and submit it for Secretarial approval. The Secretary may suspend all or part of any grant made under this section pending state submission of the proposed amendment, modifica- tion or other program change. "(2) Within 30 days from the date on which the Secretary receives any proposed amendment, the Secretary shall notify the state whether the Secretary approves or disapproves the amendment, or whether the Secretary finds it is necessary to extend the review of the proposed amendment for a period not to exceed 120 days from the date the Secretary received the proposed amendment. The Secretary may extend this 120-day period only as necessary to meet the requirements of the Na- tional Environmental Policy Act (42 U.S.C. 4321 et seq.). "(3) The state may not implement any proposed amendment as part of its approved program pursuant to section 306, until after the proposed amendment has been approved by the Secretary.". SEC. 6044. NATIONAL ESTUARINE RESERVE RESEARCH SYSTEM. Section 315 (16 U.S.C. 1461) is amended to read as follows: NATIONAL ESTUARINE RESERVE RESEARCH SYSTEM "SEC. 315. (a) ESTABLISHMENT OF THE SYSTEM.—There is estab- lished the National Estuarine Reserve Research System (hereinafter referred to in this section as the 'System') that consists of— "(1) each estuarine sanctuary designated under this section as in effect before the date of the enactment of the Coastal Zone Management Reauthorization Act of 1985; and Ante, p. 124. "(2) each estuarine area designated as a national estuarine reserve under subsection (b). Each estuarine sanctuary referred to in paragraph (1) is hereby designated as a national estuarine reserve. "(b) DESIGNATION OF NATIONAL ESTUARINE RESERVES.—After the State and local date of the enactment of the Coastal Zone Management Reauthor- governments. ization Act of 1985, the Secretary may designate an estuarine area as a national estuarine reserve if— "(1) the Governor of the coastal State in which the area is located nominates the area for that designation; and "(2) the Secretary finds that— "(A) the area is a representative estuarine ecosystem that is suitable for long-term research and contributes to the biogeographical and typological balance of the System; "(B) the law of the coastal State provides long-term protection for reserve resources to ensure a stable environ- ment for research; "(C) designation of the area as a reserve will serve to enhance public awareness and understanding of estuarine
100 STAT. 126 PUBLIC LAW 99-272—APR. 7, 1986 areas, and provide suitable opportunities for public edu- cation and interpretation; and "(D) the coastal State in which the area is located has complied with the requirements of any regulations issued by the Secretary to implement this section. "(c) EsTUARiNE RESEARCH GUIDELINES.—The Secretary shall de- velop guidelines for the conduct of research within the System that shall include— "(1) a mechanism for identifying, and establishing priorities among, the coastal management issues that should be addressed through coordinated research within the System; "(2) the establishment of common research principles and objectives to guide the development of research programs within the System; "(3) the identification of uniform research methodologies which will ensure comparability of data, the broadest applica- tion of research results, and the maximum use of the System for research purposes; "(4) the establishment of performance standards upon which the effectiveness of the research efforts and the value of re- serves within the System in addressing the coastal management issues identified in subsection (1) may be measured; and "(5) the consideration of additional sources of funds for estua- rine research than the funds authorized under this Act, and strategies for encouraging the use of such funds within the System, with particular emphasis on mechanisms established under subsection (d). In developing the guidelines under this section, the Secretary shall consult with prominent members of the estuarine research community. "(d) PROMOTION AND COORDINATION OF ESTUARINE RESEARCH.— The Secretary shall take such action as is necessary to promote and coordinate the use of the System for research purposes including— "(1) requiring that the National Oceanic and Atmospheric Administration, in conducting or supporting estuarine research, give priority consideration to research that uses the System; and State and local "(2) consulting with other Federal and State agencies to government. promote use of one or more reserves within the System by such agencies when conducting estuarine research. Grants. "(e) FINANCIAL ASSISTANCE.—(1) The Secretary may, in accordance Education. with such rules and regulations as the Secretary shall promulgate, State and local make grants— governments. "(A) to a coastal State— "(i) for purposes of acquiring such lands and waters, and any property interests therein, as are necessary to ensure the appropriate long-term management of an area as a national estuarine reserve, "(ii) for purposes of operating or managing a national estuarine reserve and constructing appropriate reserve facilities, or "(iii) for purposes of conducting educational or interpre- tive activities; and "(B) to any coastal State or public or private person for purposes of supporting research and monitoring within a na- tional estuarine reserve that are consistent with the research guidelines developed under subsection (c).
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 127 "(2) Financial assistance provided under paragraph (1) shall be State and local subject to such terms and conditions as the Secretary considers governments, necessary or appropriate to protect the interests of the United States, including requiring coastal States to execute suitable title documents setting forth the property interest or interests of the United States in any lands and waters acquired in whole or part with such financial assistance. "(3)(A) The amount of the financial assistance provided under paragraph (l)(A)(i) of subsection (e) with respect to the acquisition of lands and waters, or interests therein, for any one national estua- rine reserve may not exceed an amount equal to 50 per centum of the costs of the lands, waters, and interests therein or $4,000,000, whichever amount is less. "(B) The amount of the financial assistance provided under para- graph (1)(A) (ii) and (iii) and paragraph (1)(B) of subsection (e) may not exceed 50 per centum of the costs incurred to achieve the purposes described in those paragraphs with respect to a reserve. "(f) EVALUATION OF SYSTEM PERFORMANCE.—(1) The Secretary Education, shall periodically evaluate the operation and management of each Research and national estuarine reserve, including education and interpretive development, activities, and the research being conducted within the reserve. "(2) If evaluation under paragraph (1) reveals that the operation and management of the reserve is deficient, or that the research being conducted within the reserve is not consistent with the re- search guidelines developed under subsection (c), the Secretary may suspend the eligibility of that reserve for financial assistance under subsection (e) until the deficiency or inconsistency is remedied. "(3) The Secretary may withdraw the designation of an estuarine Research and area as a national estuarine reserve if evaluation under paragraph development. (1) reveals that— "(A) the basis for any one or more of the findings made under subsection Ot))(2) regarding that area no longer exists; or "(B) a substantial portion of the research conducted within the area, over a period of years, has not been consistent with the research guidelines developed under subsection (c). "(g) REPORT.—The Secretary shall include in the report required under section 316 information regarding— 16 USC 1462. "(1) new designations of national estuarine reserves; "(2) any expansion of existing national estuarine reserves; "(3) the status of the research program being conducted within the System; and "(4) a summary of the evaluations made under subsection (f).". SEC. 6045. REPEALS. The following are repealed: (1) Section 310 (16 U.S.C. 1456c; relating to research and technical assistance programs and grants). (2) Section 314 (16 U.S.C. 1460; establishing the Coastal Zone Management Advisory Committee). (3) Subsection (c) of section 15 of the Coastal Zone Manage- ment Act Amendments of 1976, Public Law 94-370 (16 U.S.C. 1451 note; relating to certain additional personnel positions). SEC. 6046. AUTHORIZATIONS OF APPROPRIATIONS. Section 318 (16 U.S.C. 1464) is amended— (1) by amending paragraph (1) to read as follows:
100 STAT. 128 PUBLIC LAW 99-272—APR. 7, 1986 "(1) such sums, not to exceed $35,000,000 for t h e fiscal y e a r ending S e p t e m b e r 30, 1986, not to exceed $36,600,000 for t h e fiscal y e a r ending September 30, 1987, $37,900,000 for t h e fiscal y e a r ending S e p t e m b e r 30, 1988, $38,800,000 for t h e fiscal y e a r ending September 30, 1989, a n d $40,600,000 for t h e fiscal y e a r ending September 30, 1990, as m a y be necessary for g r a n t s Ante, pp. 124, Under sections 306 a n d 306A, to r e m a i n available until 125. expended;"; (2) by striking paragraph (2) and renumbering the succeeding paragraphs; and (3) by amending paragraphs (3), (4), and (5) (as renumbered by paragraph (2) of this section) to read as follows: "(3) such sums, not to exceed $1,000,000 for the fiscal year ending September 30, 1986, and not to exceed $1,500,000 for each of the fiscal years occurring during the period beginning October 1, 1986, and ending September 30, 1990, as may be 16 use 1456b. necessary for grants under section 309, to remain available until expended; "(4) such sums, not to exceed $2,500,000 for the fiscal year ending September 30, 1986, not to exceed $3,800,000 for the fiscal year ending September 30, 1987, $4,500,000 for the fiscal year ending September 30, 1988, $5,000,000 for the fiscal year ending September 30, 1989, and $5,500,000 for the fiscal year ending September 30, 1990, as may be necessary for grants Ante, p. 125. Under section 315, to remain available until expended; and "(5) such sums, not to exceed $3,300,000 for the fiscal year ending September 30, 1986, not to exceed $3,300,000 for the fiscal year ending September 30, 1987, $3,300,000 for the fiscal year ending September 30, 1988, $4,000,000 for the fiscal year ending September 30, 1989, and $4,000,000 for the fiscal year ending September 30, 1990, as may be necessary for administra- tive expenses incident to the administration of this title.". SEC. 6047. TECHNICAL AMENDMENT. Section 308(h) (16 U.S.C. 1456a(h)) is amended by deleting "subsec- tions (c)(1)" each place it appears and inserting instead "subsections (0". Subpart E—National Oceanic and Atmospheric Administration SEC. 6051. AUTHORIZATION OF APPROPRIATIONS. (a) For purposes of this section— (1) The term "Administration" means the National Oceanic and Atmospheric Administration. (2) The term "Department" means the Department of Com- merce. Ob) There are authorized to be appropriated to the Department to enable the Administration to carry out its executive direction and administration functions and duties under law, $47,667,000 for fiscal year 1986 and $49,812,000 for fiscal year 1987. Moneys appropriated pursuant to this authorization shall be used to fund those functions and duties relating to executive direction and administration au- thorized by the Act entitled "An Act to clarify the status and benefits of commissioned officers of the National Oceanic and At-
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 129 mospheric Administration, and for other purposes", approved December 31, 1970 (33 U.S.C. 857-1 et seq.), and any other law involving such functions and duties. Such functions and duties include management, administrative support, retired pay of Na- tional Oceanic and Atmospheric Administration commissioned offi- cers, and policy development. (c) There are authorized to be appropriated to the Department to enable the Administration to carry out its marine services functions and duties under law, $61,791,000 for fiscal year 1986 and $64,572,000 for fiscal year 1987. Moneys appropriated pursuant to this authorization shall be used to fund those functions and duties relating to marine services authorized by the Act entitled "An Act to define the functions and duties of the Coast and Geodetic Survey, and for other purposes", approved August 6, 1947 (33 U.S.C. 883a et seq.), and any other law involving such functions and duties. Such functions and duties include ship operations, maintenance, and support. (d) There are authorized to be appropriated to the Department to enable the Administration to carry out its aircraft services functions and duties under law, $14,779,000 for fiscal year 1986 and $15,440,000 for fiscal year 1987. Moneys appropriated pursuant to this authorization shall be used to fund those functions and duties relating to aircraft services authorized by the Act entitled "An Act to increase the efficiency and reduce the expenses of the Signal Corps of the Army, and to transfer the Weather Service to the Department of Agriculture", approved October 1,1890 (15 U.S.C. 311 et seq.), and any other law involving such functions and duties. Such functions and duties include aircraft operations, maintenance, and support. (e) For the purpose of enabling the Administration to carry out its functions and duties under the National Advisory Committee on Oceans and Atmosphere Act of 1977 (33 U.S.C. 857-13 et seq.), there are authorized to be appropriated to the Department $50(),000 for fiscal year 1986. (f)(1) There are authorized to be appropriated to the Department to enable the Administration to carry out its nonliving marine resource functions and duties under law, $1,800,000 for fiscal year 1986 and $1,881,000 for fiscal year 1987. Moneys appropriated pursu- ant to this authorization shall be used to fund those functions and duties relating to nonliving marine resources authorized by the Act entitled "An Act to define the functions and duties of the Coast and Geodetic Survey, and for other purposes", approved August 6, 1947 (33 U.S.C. 883a et seq.), and any other law involving such functions and duties. Such functions and duties include research, develop- ment, and licensing responsibilities pertaining to ocean thermal energy conversion and the deep seabed mining of manganese nod- ules, and polymetallic sulfide analyses and research. (2) The authorization provided for under paragraph (1) of this subsection shall be in addition to moneys authorized under the Deep Seabed Hard Mineral Resources Act (30 U.S.C. 1401 et seq.), and the Ocean Thermal Energy Conversion Act of 1980 (42 U.S.C. 9101 et seq.), for the purpose of carrying out such functions and duties relating to nonliving marine resources. (g)(1) There are authorized to be appropriated to the Department to enable the Administration to carry out its ocean research func- tions and duties under law, $33,884,000 for fiscal year 1986 and $35,409,000 for fiscal year 1987. Moneys appropriated pursuant to
100 STAT. 130 PUBLIC LAW 99-272—APR. 7, 1986 this authorization shall be used to fund those functions and duties relating to ocean research authorized by the Act entitled "An Act to define the functions and duties of the Coast and Geodetic Survey, and for other purposes", approved August 6, 1947 (33 U.S.C. 883a et seq.), and any other law involving such functions and duties. Such functions and duties include undersea marine resources, air-sea interaction, and ocean and Great Lakes environmental research. (2) The authorization provided for under paragraph (1) of this subsection shall be in addition to ocean research moneys authorized under the National Ocean Pollution Planning Act of 1978 (33 U.S.C. 1701 et seq.) for the purpose of carrying out such functions and duties relating to ocean research. (h)(1) There are authorized to be appropriated to the Department to enable the Administration to carry out its ocean service functions and duties under law, $17,181,000 for fiscal year 1986 and $17,954,000 for fiscal year 1987. Moneys appropriated pursuant to this authorization shall be used to fund those functions and duties relating to ocean services authorized by the Act entitled "An Act to define the functions and duties of the Coast and Geodetic Survey, and for other purposes", approved August 6, 1947 (33 U.S.C. 883a et seq.), and any other law involving such functions and duties. Such functions and duties include coordination of interagency research in ocean dumping and marine pollution, and provision of tide and current data for the safe and efficient use of the oceans and Great Lakes by government, commerce, and the private sector. (2) The authorization provided for under paragraph (1) of this subsection shall be in addition to moneys authorized under the Marine Protection, Research, and Sanctuaries Act of 1972 (33 U.S.C. 1441 et seq.), the Coastal Zone Management Act of 1972 (16 U.S.C. 1451 et seq.), and the National Ocean Pollution Planning Act of 1978 (33 U.S.C. 1701 et seq.), for the purpose of carrying out such func- tions and duties relating to ocean services. (i) There are authorized to be appropriated to the Department to enable the Administration to carry out its mapping, charting, and geodesy functions and duties under law, $47,943,000 for fiscal year 1986 and $50,100,000 for fiscal year 1987. Moneys appropriated pursuant to this authorization shall be used to fund those functions and duties relating to mapping, charting, and geodesy authorized by the Act entitled "An Act to define the functions and duties of the Coast and Geodetic Survey, and for other purposes", approved August 6, 1947 (33 U.S.C. 883a et seq.), and any other law involving such functions and duties. Such functions and duties include aero- nautical and nautical mapping and charting activities, and geodetic data collection and analysis. (j) There are authorized to be appropriated to the Department to enable the Administration to carry out its programs at current levels such sums as may be necessary to accommodate salary, pay, and other employee benefits authorized by law for fiscal years 1986 and 1987. ' . • . , • • • • ; T
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 131 Subtitle F—Marine Protection, Research, and Sanctuaries Act Amendments SEC. 6061. CONSOLIDATION OF REPORT. Section 201 of the Marine Protection, Research, and Sanctuaries Act of 1972 (33 U.S.C. 1441) is amended by striking out all that follows "connecting waters" and inserting in lieu thereof a period. SEC. 6062. MARINE RESEARCH REQUIREMENTS. Section 202 of the Marine Protection, Research, and Sanctuaries Act of 1972 (33 U.S.C. 1442) is amended— (1) by inserting "(1)" before "The Secretary" in subsection (a); (2) by striking out "in consultation" in the first sentence of subsection (a) and inserting in lieu thereof "in close consulta- tion"; (3) by adding at the end of subsection (a) the following new paragraph: "(2) The Secretary of Commerce shall ensure that the program Pollution, under this section complements, when appropriate, the activities undertaken by other Federal agencies pursuant to title I and section 33 USC 1411. 203. That program shall include but not be limited to— Infra. "(A) the development and assessment of scientific techniques to define and quantify the degradation of the marine environ- ment; "(B) the assessment of the capacity of the marine environ- ment to receive materials without degradation; "(C) continuing monitoring programs to assess the health of the marine environment, including but not limited to the mon- itoring of bottom oxygen concentrations, contaminant levels in biota, sediments, and the water column, diseases in fish and shellfish, and changes in types and abundance of indicator species; "(D) the development of methodologies, techniques, and equip- ment for disposal of waste materials to minimize degradation of the marine environment."; and (4) by striking out subsection (c) and redesignating subsections (d) and (e) as subsections (c) and (d), respectively. ^ SEC. 6063. REGIONAL MANAGEMENT PLANS. Section 203 of the Marine Protection, Research, and Sanctuaries '^' ^: • Act of 1972 (33 U.S.C. 1443) is amended by adding at the end thereof the following new subsections: "(c) The Administrator, in cooperation with the Secretary, the State and local Secretary of Commerce, and other officials of appropriate Federal, governments. State, and local agencies, shall assess the feasibility in coastal areas Waste disposal, of regional management plans for the disposal of waste materials. Such plans should integrate where appropriate Federal, State, re- gional, and local waste disposal activities into a comprehensive regional disposal strategy. These plans should address, among other things— "(1) the sources, quantities, and types of materials that re- quire and will require disposal; "(2) the environmental, economic, social, and human health factors (and the methods used to assess these factors) associated with disposal alternatives; ' ' ^^^-^
100 STAT. 132 PUBLIC LAW 99-272—APR. 7, 1986 I "(3) the improvements in production processes, methods of disposal, and recycling to reduce the adverse effects associated with such disposal alternatives; "(4) the applicable laws and regulations governing waste disposal; and "(5) improvements in permitting processes to reduce adminis- trative burdens. Reports. "(d) The Administrator, in cooperation with the Secretary of New York. Commerce, shall submit to the Congress and the President, not later than one year after the date of enactment of this provision, a report on sewage sludge disposal in the New York City metropolitan region. The report shall— "(1) consider the factors listed in subsection (c) as they relate to landfilling, incineration, ocean dumping, or any other fea- sible disposal or reuse/recycling option; "(2) include an assessment of the cost of these alternatives; and v.:: "(3) recommend such regulatory or legislative changes as may be necessary to reduce the adverse impacts associated with sewage sludge disposal.". SEC. 6064. AUTHORIZATION OF APPROPRIATIONS. 33 u s e 1445. Section 204 of the Marine Protection, Research, and Sanctuaries Act of 1972 (33 U.S.C 1444) is redesignated as section 205; and such section as so redesignated is amended by striking out "and" imme- diately following "fiscal year 1981" and by striking out "1982." and inserting in lieu thereof the following: "1982, not to exceed $10,635,000 for fiscal year 1986, and not to exceed $11,114,000 for fiscal year 1987.". SEC. 6065. CONSOLIDATION OF REPORTS. Section 205 of the Marine Protection, Research, and Sanctuaries Act of 1972 (33 U.S.C. 1445) is transferred to a point immediately following section 203 of such Act and redesignated as section 204; and such section as so transferred and redesignated is amended to read as follows: "ANNUAL REPORT 33 u s e 1444. "SEC. 204. (a) In March of each year, the Secretary of Commerce shall report to the Congress on his activities under this title during the previous fiscal year. The report shall include— Ante, p. 131. "(1) the Secretary's findings made under section 201, includ- ing an evaluation of the short-term ecological effects and the social and economic factors involved with the dumping; "(2) the results of activities undertaken pursuant to section 202; "(3) with the concurrence of the Administrator and after consulting with officials of other appropriate Federal agencies, an identification of the short- and long-term research require- 33 u s e 1411. ments associated with activities under title I, and a description 33 u s e 1441. of how Federal research under titles I and II will meet those requirements; and -« "(4) activities of the Department of Commerce under section 5 of the Act of March 10, 1934 (48 Stat. 401; 16 U.S.C. 665). "(b) In March of each year, the Administrator shall report to the Congress on his activities during the previous fiscal year under Ante, p. 131. section 203.".
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 133 Subtitle G—National Ocean Pollution Planning Act Amendments SEC. 6071. FINDINGS AND PURPOSES. Research and development. (a) Section 2(a) of the National Ocean Pollution Planning Act of Conservation. 1978 (33 U.S.C. 1701) is amended by adding at the end thereof the following new paragraphs: "(6) Numerous Federal agencies have initiated and supported research projects to study, enhance, manage, preserve, protect, or restore the resources of the Great Lakes, the Chesapeake Bay, Puget Sound, and other estuaries of national significance. "(7) Various research projects relating to the Great Lakes, the Chesapeake Bay, Puget Sound, and other estuaries of national significance, including those conducted at the college and university level and those conducted at the State and local J8I; governmental level, can be more effectively coordinated in order to obtain maximum benefits.". (b) Section 2(b) of the National Ocean Pollution Planning Act of gfnxi- 1978 (33 U.S.C. 1701) is amended by striking out "and" at the end of paragraph (2), by redesignating paragraph (3) as paragraph (4), and by inserting after paragraph (2) the following new paragraph: "(3) to provide for the effective coordination of research con- ducted to support the preservation and protection of the environmental quality of the Great Lakes, the Chesapeake Bay, Puget Sound, and other estuaries of national significance, and to encourage the use of such research in determinations that affect the environmental quality of the Great Lakes, the Chesa- peake Bay, Puget Sound, and other estuaries of national signifi- cance; and". SEC. 6072. NATIONAL OCEAN POLLUTION PROGRAM OFFICE AND NA- TIONAL OCEAN POLLUTION POLICY BOARD. The National Ocean Pollution Planning Act of 1978 (33 U.S.C. 1701 et seq.) is further amended as follows: (1) Section 3 is amended— 33 u s e 1702. (A) by redesignating paragraphs (3) through (6) as para- graphs (4) through (7), respectively; (B) by inserting after paragraph (2) the following new paragraph: "(3) The term 'Board' means the National Ocean Pollution Policy Board established under section 3A(b)."; and Infra. (C) by adding at the end thereof the following new para- graph: "(8) The term 'Office' means the National Ocean Pollution Program Office established under section 3A(a).". (2) The following new section is inserted immediately after section 3: "SEC. 3A. NATIONAL OCEAN POLLUTION PROGRAM OFFICE AND NA- 33 u s e 1702a. TIONAL OCEAN POLLUTION POLICY BOARD. "(a) PROGRAM OFFICE.—(1) The Administrator shall establish within the Administration the National Ocean Pollution Program Office. "(2) The Office shall—
100 STAT. 134 PUBLIC LAW 99-272—APR. 7, 1986 "(A) serve as the lead entity responsible for administering the 33 use 1703. program established under section 4; "(B) be headed by a director who shall— "(i) be appointed by the Administrator, ;' "(ii) serve as the Chair of the Board, and ^ • "(iii) be the spokesperson for the program; "(C) serve as the staff for the Board and its supporting committees and working groups; and "(D) review each department and agency budget request transmitted under section 4(d) and submit an analysis of the requests to the Board for its review. The analysis described in subparagraph (D) shall include an analysis of how each departmental or agency budget request relates to the priorities and goals of the Plan established under section 4. "(b) POLICY BOARD.—(1) The Administrator, with the cooperation 33 use 1706. of the Federal departments and agencies referred to in section 7, shall establish a National Ocean Pollution Policy Board consisting of representatives of those departments and agencies. Reports. "(2) The Board shall— "(A) be responsible for coordinated planning and progress review for the program established under section 4; "(B) review all department and agency budget requests transmitted to it under section 4(d) and submit a report to the Office of Management and Budget and to the Congress concern- ing those budget requests; "(C) establish and maintain such interagency groups as the Board determines to be necessary to carry out its activities; and "(D) consult with and seek the advice of users and producers of ocean pollution data, information, and services to guide the Board's efforts, keeping the Director and the Congress advised , of such consultations.". SEC. 6073. FEDERAL PLANNING TO INCLUDE GREAT LAKES. Section 4 of the National Ocean Pollution Planning Act of 1978 (33 U.S.C. 1703) is amended— (1) by inserting after "general research on marine ecosystems" in subsection (b)(2)(A) the following: ", including the Great Lakes, the Chesapeake Bay, Puget Sound, and other estuaries of national significance,"; (2) in subsection (b)(4)— : • (A) by striking out "BUDGET REVIEW.—" and inserting in .f rt lieu thereof "PLAN REVIEW.—"; and CI (B) by striking out "to coordinate the budget review process"; and (3) by adding at the end thereof the following new subsection: "(d) BUDGETING.—Each Federal agency and department included under the Plan shall prepare and submit to the Office of Manage- ment and Budget, the Office, and the Board on or before the date of ,-; submission of departmental requests for appropriations to the Office of Management and Budget, an annual request for appropriations to carry out the activities of that agency or department under the Plan during the subsequent fiscal year. The Office of Management and Budget shall review the request for appropriations as an integrated, coherent, and multiagency request, taking into account the review Ante, p. 133. by the Board of those requests under section 3A(b).". • •
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 135 SEC. 6074. DISSEMINATION OF INFORMATION ON GREAT LAKES. Section 8 of the National Ocean Pollution Planning Act of 1978 (33 U.S.C. 1707) is amended by adding "(a)" after "SEC. 8." and by adding at the end thereof the following new subsection: "(b) The Administrator shall ensure that the findings and information regarding ocean pollution research activities associated with the Great Lakes identified pursuant to section 4(b) be dissemi- 33 USC 1703. nated in a timely manner and in useful forms to relevant depart- ments of the Federal Government, State governments, and other persons with an interest in such information.". SEC. 6075. AUTHORIZATION OF APPROPRIATIONS. Section 10 of the National Ocean Pollution Planning Act of 1978, as amended (33 U.S.C. 1709), is amended by striking out "and" after "1981," and by striking out "1982." and inserting in lieu thereof "1982, and not to exceed $3,571,000 for fiscal year 1986, and not to exceed $3,732,000 for fiscal year 1987.". Subtitle H—Weather ModiHcation SEC. 6081. AUTHORIZATION OF APPROPRIATIONS. Section 6 of the Act entitled "An Act to provide for the reporting of weather modification activities to the Federal Government", approved December 18, 1971 (85 Stat. 736; 15 U.S.C. 330e), is amended— (1) by striking "and"; and (2) by inserting immediately after "1981," the following: "$100,000 for the fiscal year ending September 30, 1986, $100,000 for the fiscal year ending September 30, 1987, $100,000 for the fiscal year ending September 30,1988,". SEC. 6082. OCEAN SATELLITE DATA. 33 USC 883j. The Administrator of the National Oceanic and Atmospheric Administration (hereinafter referred to in this subtitle as the "Administration") shall take such actions, including the sponsorship of applied research, as may be necessary to assure the future availability and usefulness of ocean satellite data to the maritime community. SEC. 6083. AWARDING OF CONTRACTS. 15 USC 1530. ' The Administration may not award any contract for the perform- Congress, ance of any "commercial activity", as defined by paragraph 6.a. of the Office of Management and Budget Circular Memorandum A-76, which is performed by Administration employees until at least 30 calendar days after the Administrator of the Administration has presented, in writing, to the President of the Senate, the Speaker of the House of Representatives, the Committee on Commerce, Science, and Transportation of the Senate, and the Committee on Merchant Marine and Fisheries and the Committee on Science and Technology ,,; of the House of Representatives, a full and complete description of such proposed contract, together with supporting documentation. Such documentation shall include— ( D a comparison of the cost of such activity as performed by employees of the Administration and the cost of such activity as performed under the proposed contract;
100 STAT. 136 PUBLIC LAW 99-272—APR. 7, 1986 (2) a comparison of the services performed by employees of the Administration and the services to be performed under the proposed contract; and (3) an assessment of the benefits to the Federal Government of proceeding with the proposed contract. SEC. 6084. NATIONAL CLIMATE PROGRAM. (a) Section 4 of the National Climate Program Act (15 U.S.C. 2903) is amended— (1) by redesignating paragraphs (1) through (3) as paragraphs (2) through (4), respectively; and (2) by inserting before paragraph (2), as so redesignated, the following new paragraph: "(1) The term 'Board' means the Climate Program Policy Board.". (b) Section 5(c) of the National Climate Program Act (15 U.S.C. 2904(c)) is amended— (1) by inserting "(1)" immediately before "The Secretary"; (2) by designating the third sentence as paragraph (4); and (3) by striking the second sentence and inserting in lieu thereof the following new paragraphs: "(2) The Office shall— "(A) serve as the lead entity responsible for administering the program; "(B) be headed by a Director who shall represent the Climate Program Policy Board and shall be spokesperson for the program; "(C) serve as the staff for the Board and its supporting committees and working groups; "(D) review each agency budget request transmitted under subsection (g)(1) and submit an analysis of the requests to the Board for its review; "(E) be responsible for coordinating interagency participation in international climate-related activities; and "(F) work with the National Academy of Sciences and other private, academic, State, and local groups in preparing and implementing the 5-year plan (described in subsection (d)(9)) and the program. The analysis described in subparagraph (D) shall include an analysis of how each agency's budget request relates to the priorities and goals of the program established pursuant to this Act. Contracts. "(3) The Secretary may provide, through the Office, financial Grants. assistance, in the form of contracts or grants or cooperative agree- ments, for climate-related activities which are needed to meet the goals and priorities of the program set forth in the 5-year plan pursuant to subsection (d)(9), if such goals and priorities are not being adequately addressed by any Federal department, agency, or instrumentality.". (c) Section 5(d) of the National Climate Program Act (15 U.S.C. 2904(d)) is amended— (1) by striking the semicolon at the end of paragraph (7) and State and local inserting in lieu thereof the following: ". Such mechanisms may governments. provide, among others, for the following State and regional services and functions: (A) studies relating to and analyses of climatic effects on agricultural production, water resources, energy needs, and other critical sectors of the economy; (B) atmospheric data collection and monitoring on a statewide and
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 137 regional basis; (C) advice to regional, State, and local govern- ment agencies regarding climate-related issues; (D) information to users within the State regarding climate and climatic effects; and (E) information to the Secretary regarding the needs of persons within the States for climate-related services, informa- tion, and data. The Secretary may make annual grants to any Grants. State or group of States, which grants shall be made available to State and local public or private educational institutions, to State agencies, and governments. to other persons or institutions qualified to conduct climate- related studies or provide climate-related services;"; (2) by striking "biennially" in paragraph (9) and inserting in lieu thereof "at least once every four years"; and (3) by striking "under section 6" in paragraph (9) and insert- ing in lieu thereof "described in paragraph (7)". (d) Section 5(e) of the National Climate Program Act (15 U.S.C. 2904(e)) is amended to read as follows: "(e) CLIMATE PROGRAM POLICY BOARD.—(1) The Secretary shall establish and maintain an interagency Climate Program Policy Board, consisting of representatives of the Federal agencies specified in subsection (b)(2) and any other agency which the Secretary determines should participate in the Program. "(2) The Board shall— Reports. "(A) be responsible for coordinated planning and progress review for the Program; "(B) review all agency and department budget requests re- lated to climate transmitted under subsection (g)(1) and submit a report to the Office of Management and Budget concerning such budget requests; "(C) establish and maintain such interagency groups as the Board determines to be necessary to carry out its activities; and "(D) consult with and seek the advice of users and producers of climate data, information, and services to guide the Board's efforts, keeping the Director and the Congress advised of such contacts. "(3) The Board biennially shall select a Chair from among its members. A Board member who is a representative of an agency may not serve as Chair of the Board for a term if an individual who represented that same agency on the Board served as the Board's Chair for the previous term.". (e) Section 5(f)(2) of the National Climate Program Act (15 U.S.C. 2904(f)(2)) is amended by inserting "with the Office" immediately after "cooperate". if) The first sentence of section 5(g)(1) of the National Climate Program Act (15 U.S.C. 2904(g)(1)) is amended by inserting imme- diately before the period the following: "and shall transmit a copy of such request to the National Climate Program Office". (g) Section 6 of the National Climate Program Act (15 U.S.C. 2905) is repealed. (h) There are authorized to be appropriated to the Administration, for purposes of carrying out the provisions of the amendments made by this section, $1,897,000 for fiscal year 1986 and $1,982,000 for fiscal year 1987. Of such funds, at least 25 percent shall be made available for intergovernmental climate-related activities described in section 5(d)(7) of the National Climate Program Act (15 U.S.C. 2904(d)(7)), and at least 20 percent shall be made available during each fiscal year for experimental climate forecast centers described
100 STAT. 138 PUBLIC LAW 99-272—APR. 7, 1986 in section 5(d)(8) of the National Climate Program Act (15 U.S.C. 2904(d)(8)). SEC. 6085. COOPERATIVE AGREEMENTS FOR MAPPING AND CHARTING SURVEYS. Section 5 of the Act entitled "An Act to define the functions and duties of the Coast and Geodetic Survey, and for other purposes", approved August 6, 1947 (61 Stat. 788, 33 U.S.C. 883e) is amended— (1) by inserting "(1)" after "SEC. 5."; (2) by inserting "any Federal agency," after "or subdivision thereof,"; and (3) by adding at the end thereof the following: "(2) The Secretary of Commerce is authorized to establish the terms of any cooperative agreement entered into under this section, including the amount of funds to be received, and may contribute that portion of the costs incurred by the National Oceanic and Atmospheric Administration, including shiptime and personnel ex- penses, which the Secretary determines represents the amount of benefits derived by the Administration from the cooperative agreement.". Subtitle I—Maritime Authorizations SEC. 6091. MARITIME PROGRAMS. (a) Funds are authorized to be appropriated without fiscal year limitation as the appropriation Act may provide for the use of the Department of Transportation for fiscal year 1986 as follows: (1) for payment of obligations incurred for operating-differen- tial subsidy, not to exceed $335,084,000; (2) for expenses necessary for research and development activities, not to exceed $9,900,000; and (3) for expenses necessary for operations and training activi- ties, not to exceed $71,967,000, including not to exceed— (A) $34,847,000 for maritime education and training ex- penses, including not to exceed $19,633,000 for maritime training at the Merchant Marine Academy at Kings Point, New York, $10,915,000 for financial assistance to State maritime academies, $3,000,000 for fuel oil assistance to State maritime academy training vessels, and $1,299,000 for expenses necessary for additional training; (B) $9,277,000 for national security support capabilities, including not to exceed $7,932,000 for reserve fleet ex- penses, and $1,345,000 for emergency planning/operations; and (C) $27,843,000 for other operations and training ex- penses. (b) Funds are authorized to be appropriated for the use of the Federal Maritime Commission, in the amount of $11,940,000 for fiscal year 1986.
PUBLIC LAW 9 9 - 2 7 2 - A P R . 7, 1986 100 STAT. 139 TITLE VII—ENERGY AND RELATED PROGRAMS Subtitle A—Pipeline Programs SEC. 7001. NATURAL GAS PIPELINE SAFETY AUTHORIZATIONS. Section 17(a) of the Natural Gas Pipeline Safety Act of 1968 (49 U.S.C. App. 1684(a)) is amended— (1) by striking out "and" at the end of paragraph (2); :g (2) by striking out the period at the end of paragraph (3) and p inserting in lieu thereof "; and"; and (3) by adding at the end thereof the following new paragraph: "(4) $3,450,000 for the fiscal year ending September 30, 1986.". SEC. 7002. AUTHORIZATIONS FOR FEDERAL GRANTS-IN-AID. (a) COMBINED PROGRAM.—Section 17 of the Natural Gas Pipeline Safety Act of 1968 (49 U.S.C. App. 1684) is amended by adding at the .. . end thereof the following new subsections: "(c) For the purpose of carrying out the Federal grants-in-aid provisions of section 5(d) of this Act and section 205(d) of the Infra. Hazardous Liquid Pipeline Safety Act of 1979 (49 U.S.C. App. 2004(d)) there are authorized to be appropriated $5,000,000 for the fiscal year ending September 30,1986. "(d) Not less than 5 percent of any amounts appropriated for carrying out the Federal grants-in-aid provisions for any fiscal year beginning after September 30, 1985, shall be available only for carrying out the Federal grants-in-aid provisions of section 205(d) of the Hazardous Liquid Pipeline Safety Act of 1979 (49 U.S.C. App. 2004(d)).". (b) CONFORMING AMENDMENTS.— •'••: -• "-^ (1) Section 5(d)(2) of such Act (49 U.S.C. App. 1674(d)(2)) is ^'-^^^' amended— (A) by striking out "authorized to be appropriated by section 17(b) of this Act" and inserting in lieu thereof "appropriated for carrying out the Federal grants-in-aid provisions of this subsection"; and (B) by striking out "(1) of this section" and inserting in lieu thereof "(1) of this subsection". (2) Section 205(d)(2) of the Hazardous Liquid Pipeline Safety Act of 1979 (49 U.S.C. App. 2004(d)(2)) is amended by striking out "authorized to be appropriated by section 214 of this title" and inserting in lieu thereof "appropriated for carrying out the Federal grants-in-aid provisions of this subsection". (3) Section 214(a) of the Hazardous Liquid Pipeline Safety Act of 1979 (49 U.S.C. App. 2013(a)) is amended by inserting after "subsection (b)" the following: "or section 17(c) of the Natural Gas Pipeline Safety Act of 1968 (49 U.S.C. App. 1684(c))". (4) Section 17(a) of the Natural Gas Pipeline Safety Act of 1968 (49 U.S.C. App. 1684(a)) is amended by inserting after "subsection (b)" the following: "or (c)". SEC. 7003. REPORTS. (a) GRANTS MERGER REPORT.— (1) MERGER RECOMMENDATIONS.—The Secretary of Transpor- tation shall prepare a report which shall contain details of the
100 STAT. 140 PUBLIC LAW 99-272—APR. 7, 1986 Secretary's recommendations with respect to the potential merger and joint administration of the Federal grants-in-aid provisions of section 5(d) of the Natural Gas Pipeline Safety Act Ante, p. 139. of 1968 (49 U.S.C. App. 1674(d)) and section 205(d) of the Hazard- Ante, p. 139. ous Liquid Pipeline Safety Act of 1979 (49 U.S.C. App. 2004(d)). State and local (2) CONSULTATION.—In preparing the report required by para- governments. graph (1), the Secretary shall consult with appropriate State authorities. The Secretary shall include in such report a sum- mary of the views and recommendations of such State authori- ties. (b) GRANTS ALLOCATION REPORT.— State and local (1) CONTENTS.—The Secretary of Transportation shall prepare governments. a report which shall contain an explanation of the method by which the Secretary allocates funds to the States under section 5(d) of the Natural Gas Pipeline Safety Act of 1968 (49 U.S.C App. 1674(d)) and section 205(d) of the Hazardous Liquid Pipe- line Safety Act of 1979 (49 U.S.C. App. 2004(d)). Federal (2) PUBLICATION.—The Secretary shall publish in the Federal Register, Register, as a matter of public information, the explanation publication. contained in the report required by paragraph (1), (c) REPORT DEADLINE.—The reports required by subsections (a)(1) and (b)(1) shall be submitted to Congress no later than July 1, 1986. SEC. 7004. HAZARDOUS LIQUID PIPELINE SAFETY AUTHORIZATIONS. Section 214(a) of the Hazardous Liquid Pipeline Safety Act of 1979 (49 U.S.C. App. 2013(a)) is amended— (1) by striking out "and" at the end of paragraph (2); (2) by striking out the period at the end of paragraph (3) and inserting in lieu thereof "; and"; and (3) by adding at the end thereof the following new paragraph: "(4) $875,000 for the fiscal year ending September 30, 1986.". 49 u s e app. SEC. 7005. PIPELINE SAFETY USER FEES. (a) ESTABLISHMENT.— (1) SCHEDULE.—The Secretary of Transportation (hereafter in this section referred to as the "Secretary") shall establish a schedule of fees based on the usage, in reasonable relationship to volume-miles, miles, revenues, or an appropriate combination thereof, of natural gas and hazardous liquid pipelines. In establishing such schedule, the Secretary shall take into consid- eration the allocation of departmental resources. (2) COLLECTION.—The Secretary shall establish procedures for State and local the Collection of such fees. The Secretary may use the services of governments. any Federal, State, or local agency or instrumentality to collect such fees, and may reimburse such agency or instrumentality a reasonable amount for such services. (3) LIABILITY.—Fees established under this section shall be assessed to the persons operating— (A) all pipeline facilities subject to the Hazardous Liquid ^ Pipeline Safety Act of 1979 (49 U.S.C. App. 2001 et seq.); and (B) all pipeline transmission facilities and all liquefied • natural gas facilities subject to the jurisdiction of the Natu- ral Gas Pipeline Safety Act of 1968 (49 U.S.C. App. 1671 et seq.). (b) TIME OF ASSESSMENT.—The Secretary shall assess and collect fees described in subsection (a) with respect to each fiscal year befDre the end of such fiscal year. >. no ,j
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 141 (c) USE OF FUNDS.—Funds received under subsection (a) shall be used, to the extent provided for in advance in appropriation Acts, only- CD in the case of natural gas pipeline safety fees, for activities authorized under the Natural Gas Pipeline Safety Act of 1968 (49 U.S.C. App. 1671 et seq.); and (2) in the case of hazardous liquid pipeline safety fees, for activities authorized under the Hazardous Liquid Pipeline Safety Act of 1979 (49 U.S.C. App. 2001 et seq.). (d) FEE SCHEDULE.—Fees established by the Secretary under subsection (a) shall be assessed against all natural gas and hazard- ous liquids transported by pipelines subject to the Natural Gas Pipeline Safety Act of 1968 and the Hazardous Liquid Pipeline Safety Act of 1979 after September 30, 1985, and shall be sufficient to meet the costs of activities described in subsection (c), beginning on October 1, 1985, but at no time shall the aggregate of fees received for any fiscal year under this section exceed 105 percent of the aggregate of appropriations made for such fiscal year for activi- ties to be funded by such fees. Subtitle B—Strategic Petroleum Reserve SEC. 7101. AUTHORIZATIONS OF APPROPRIATIONS FOR FISCAL YEARS 1986,1987, A N D 1988. Funds are hereby authorized to be appropriated in accordance with section 660 of the Department of Energy Organization Act for 42 USC 7270. operating expenses for the Strategic Petroleum Reserve— (1) to carry out part B of title I of the Energy Policy and Conservation Act (including any drawdown and distribution of 42 USC 6231. the Reserve), except acquisition, transportation, and injection of petroleum products, as defined for purposes of such part B, for the Reserve— (A) for fiscal year 1986, $135,912,000; P i (B) for fiscal year 1987, $358,996,000; and (C) for fiscal year 1988, $156,692,000; and (2) to carry out part B of title I of the Energy Policy and Conservation Act for the acquisition, transportation, and injec- tion of petroleum products, as defined for purposes of such part B, for the Reserve and for any drawdown and distribution of the Reserve— (A) for fiscal year 1986, $357,548,000; (B) for fiscal year 1987, $333,695,000; and (C) for fiscal year 1988, $357,000,000. SEC. 7102. FILL-RATE OF THE RESERVE; LIMITATION ON UNITED STATES SHARE OF THE NAVAL PETROLEUM RESERVE. (a) FILL-RATE OF THE RESERVE.—Section 160(c) of the Energy Policy and Conservation Act (42 U.S.C. 6240(c)) is amended by adding the following new paragraph at the end: "(3) Notwithstanding paragraph (2), beginning in fiscal year 1986 President of U.S. and continuing through fiscal years 1987 and 1988 until the quantity of crude oil in storage within the Reserve is at least 527,000,000 , ^,, barrels, the President shall carry out petroleum acquisition, *^ transportation, and injection activities at a level sufficient to assure a minimum average annual fill-rate of at least 35,000 barrels per day in addition to any petroleum products acquired for the Reserve
100 STAT. 142 PUBLIC LAW 99-272—APR. 7, 1986 to replace petroleum products withdrawn from the Reserve as a result of a test drawdown and distribution.". (b) LIMITATION ON UNITED STATES SHARE OF THE NAVAL PETRO- LEUM RESERVE.—Section 160(d)(1) of such Act (42 U.S.C. 6240(d)(1)) is amended— (1) by striking out "500,000,000 barrels" in subparagraph (A) and inserting in lieu thereof "527,000,000 barrels"; and (2) by striking out subparagraph (C) and inserting in lieu thereof the following: "(C) acquisition, transportation, and injection activities for the Reserve are being undertaken, beginning in fiscal year 1986 and continuing through fiscal years 1987 and 1988 until the quantity of crude oil in storage within the Reserve is at least 527,000,000 barrels, at a level sufficient to assure that petro- leum products in storage in the Reserve will be increased at a minimum annual average rate of at least 35,000 barrels per day in addition to any petroleum products acquired for the Reserve to replace petroleum products withdrawn from the Reserve as a result of a test drawdown and distribution.". Subtitle C—Federal Energy Conservation Shared Savings .« SEC. 7201. SHARED ENERGY SAVINGS. (a) IN GENERAL.—The National Energy Conservation Policy Act (42 U.S.C. 8201 and following) is amended by adding at the end the following new title: "TITLE VIII—SHARED ENERGY SAVINGS 42 u s e 8287. "SEC. 801. AUTHORITY TO ENTER INTO CONTRACTS. "The head of a Federal agency may enter into contracts under this title solely for the purpose of achieving energy savings and benefits ancillary to that purpose. Each such contract may, notwith- standing any other provision of law, be for a period not to exceed 25 years. Such contract shall provide that the contractor shall incur costs of implementing energy savings measures, including at least the costs (if any) incurred in making energy audits, acquiring and installing equipment, and training personnel, in exchange for a share of any energy savings directly resulting from implementation of such measures during the term of the contract. 42 u s e 8287a. "SEC. 802. PAYMENT OF COSTS. "Any amount paid by a Federal agency pursuant to any contract entered into under this title may be paid only from funds appro- priated or otherwise made available to the agency for fiscal year 1986 or any fiscal year thereafter for the payment of energy ex- penses (and related operation and maintenance expenses). 42 u s e 8287b. "SEC. 803. REPORTS. "Each Federal agency shall periodically furnish the Secretary of Energy with full and complete information on its activities under this title, and the Secretary shall include in the report submitted to
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 143 Congress under section 550 a description of the progress made by 42 USC 8260. each Federal agency in— "(1) including the authority provided by this title in its contracting practices; and "(2) achieving energy savings under contracts entered into under this title. "SEC. 804. DEFINITIONS. 42 USC 8287c. "For purposes of this title— "(1) the term 'Federal agency' means an agency defined in section 551(1) of title 5, United States Code, and "(2) the term 'energy savings' means a reduction in the cost of energy, from a base cost established through a methodology set forth in the contract, utilized in an existing federally owned building or buildings or other federally owned facilities as a result of— "(A) the lease or purchase of operating equipment, improvements, altered operation and maintenance, or tech- nical services; or "(B) the increased efficient use of existing energy sources by cogeneration or heat recovery, excluding any cogenera- tion process for other than a federally owned building or buildings or other federally owned facilities.". (b) TABLE OF CONTENTS.—The table of contents of such Act is amended by adding the following at the end: "TITLE VIII—SHARED ENERGY SAVINGS "Sec. 801. Authority to enter into contracts. "Sec. 802. Payment of costs. "Sec. 803. Reports. "Sec. 804. Definitions.". Subtitle D—Biomass Energy and Alcohol Fuels Loan Guarantees SEC. 7301. BIOMASS ENERGY AND ALCOHOL FUELS LOAN GUARANTEES. Section 221 of the Biomass Energy and Alcohol Fuels Act of 1980 (Public Law 96-294; 42 U.S.C. 8821) is amended by— (1) striking out "September 30, 1985" and inserting in lieu thereof "June 30,1986"; and (2) adding at the end thereof the following: "Notwithstanding any other provision of this subtitle, the Secretary of Energy may modify the terms and conditions of any conditional commitment for a loan guarantee under this subtitle made cs'i before October 1,1984, including the amount of the loan guaran- tee. Nothing in this section shall be interpreted as indicating Congressional approval with respect to any pending conditional commitments under this Act.". Subtitle E—Synthetic Fuels Synthetic Fuels Corporation Act of 1985. SEC. 7401. SHORT TITLE. 42 USC note prec. 8791. This subtitle may be cited as the "Synthetic Fuels Corporation Act of 1985".
100 STAT. 144 PUBLIC LAW 99-272—APR. 7, 1986 42 u s e note SEC. 7402. CESSATION OF FINANCIAL ASSISTANCE AUTHORITY. prec. 8791. Effective on the date of enactment of this Act, the United States Synthetic Fuels Corporation (hereafter in this subtitle referred to as the "Corporation") may not make any legally binding awards or commitments for financial assistance (including any changes in an 42 u s e 8701 existing award or commitment) pursuant to the Energy Security Act note. for synthetic fuel project proposals, except that nothing in this Act shall impair or alter the powers, duties, rights, obligations, privi- leges, or liabilities of the Corporation, its Board or Chairman, or project sponsors in the performance and completion of the terms and undertakings of a legally binding award or commitment entered into prior to the date of enactment of this Act. 42 u s e note SEC. 7403. TERMINATION OF THE CORPORATION. prec. 8791. (a) Within 60 days of the date of enactment of this Act, the Directors of the Corporation shall terminate their duties under the Energy Security Act and be discharged. (b) Within 120 days of the date of enactment of this Act, the Corporation shall terminate, except as otherwise provided in this subtitle, in accordance with subtitle J of part B of title I of the 42 u s e 8791. Energy Security Act. 42 u s e note SEC. 7404. DUTIES OF SECRETARY OF THE TREASURY. prec. 8791. (a) Within 60 days of the date of enactment of this Act (or earlier, in the event of absence of a Chairman of the Board of Directors of the Corporation), the Secretary of the Treasury shall assume the duties of the Chairman of the Board of Directors of the Corporation. (b) Notwithstanding any other provision of law, the duties and responsibilities of the Secretary of the Treasury under subtitle J of part B of title I of the Energy Security Act or this Act may not be transferred to any other Federal department or agency. (c) Notwithstanding such termination of the Corporation, the Advisory Committee established under jection 123 of the Energy Security Act (42 U.S.C 8719) shall remain in effect to advise the Secretary of the Treasury regarding the administration of any contract or obligation of the Corporation pursuant to subtitle D of 42 u s e 8731. part B of title I of such Act. (d) To the extent that the Secretary of the Treasury may be required to take an action under section 131(q) of the Energy 42 u s e 8731. Security Act in connection with an award or commitment of finan- cial assistance under such Act, the Secretary shall complete such action within 30 days of the date of enactment of this Act. 42 u s e note SEC. 7405. SALARIES AND COMPENSATION RIGHTS. prec. 8791. eontracts. (a) The Director of the Office of Personnel Management shall, before February 1, 1986, determine the amount of compensation or benefits which each Director, officer, or employee of the Corporation shall be legally entitled to under any contract as of the date of enactment of this Act. (b) Effective on the date of enactment of this Act, no change in any Director, officer, or employee compensation or benefits shall be allowed or permitted, unless the Director of the Office of Personnel Management agrees that such change is reasonable. (c) Effective on the date of enactment of this Act— (1) no officer or employee of the Corporation shall receive a salary in excess of the rate of basic pay payable for level IV of
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 145 the Executive Schedule under title 5 of the United States Code; and (2) the Corporation shall not waive any requirements in its By-Laws which are necessary for a Director, officer, or employee to qualify for pension or termination benefits under the By- Laws and written personnel policies and procedures in effect on the date of enactment of this Act. SEC. 7406. REPORT TO THE CONGRESS. 42 USC note The Corporation shall, within 60 days of the date of enactment of ^^^' this Act, transmit to the Committee on Energy and Natural Re- sources of the Senate and to the Committee on Energy and Com- merce and Committee on Banking, Housing and Urban Affairs of the House of Representatives a report— (1) containing a review of implementation of its Phase I Business Plan dated February 19,1985; and (2) fulfilling the requirements of section 126(b)(3) of the Energy Security Act (42 U.S.C. 8722(b)(3)). Subtitle F—Uranium Enrichment SEC. 7501. AUTHORIZATION OF APPROPRIATIONS. In accordance with section 660 of the Department of Energy Organization Act (42 U.S.C. 7270), there is authorized to be appro- priated to the Department of Energy for each of the fiscal years 1986, 1987, and 1988 to carry out uranium enrichment service activities an amount equal to the difference between— (1) the revenues to be received during each such fiscal year by the Department of Energy in providing uranium enrichment ^ service activities, as estimated in the budget submitted by the President to the Congress for each such fiscal year; and (2) the amount determined by the Secretary of Energy under section 7502(c)(1) for each such fiscal year. SEC. 7502. REPAYMENTS TO UNITED STATES TREASURY. (a) PARTIAL REPAYMENT OF UNRECOVERED COSTS.— (1) IN GENERAL.—The Secretary of Energy shall deposit in the general fund of the Treasury of the United States, in partial repayment of unrecovered Federal Government costs for ura- nium enrichment service activities, an amount determined by the Secretary under subsection (c) for each of the fiscal years ^' 1986,1987, and 1988. (2) REVENUES IN EXCESS OF EXPENDITURES.—In addition to the * payments required under paragraph (1), the Secretary of . Energy shall deposit in the general fund of the Treasury of the ' United States, in partial repayment of amounts identified by the Secretary under subsection (cX4)(B), any revenues in excess of expenditures received for the provision of such activities during the 3-year period referred to in paragraph (1). (b) REPAYMENT SCHEDULE.—The Secretary of Energy may make the repayments required in subsection (a) for any fiscal year on a quarterly basis. (c) DETERMINATION OF SECRETARY.— (1) IN GENERAL.—The Secretary of Energy shall determine, in his or her discretion, the amount of partial repayment to be made under subsection (aXD for each of the fiscal years 1986,
100 STAT. 146 PUBLIC LAW 99-272—APR. 7, 1986 ' 1987, and 1988, consistent with the financial integrity of the uranium enrichment service activities program during a period of not less than 10 years. The amount of such repayment shall not adversely affect the reliability of the supply of uranium enrichment services at competitive prices for existing and potential customers. The determinations under this paragraph shall be made after notice and opportunity for public comment. (2) REPAYMENT GOALS.—The Secretary of Energy shall seek to achieve the following repayment amounts under subsection (a)(1): . , (A) $110,000,000 for fiscal year 1986; v (B) $150,000,000 for fiscal year 1987; and - ' (C) $150,000,000 for fiscal year 1988. I ,j. (3) SCHEDULE FOR DETERMINATION.—The Secretary of Energy shall make the determination required in paragraph (1) for any j i fiscal year before the President submits to the Congress the budget for such fiscal year, except that the Secretary may make subsequent revisions in such determination. (4) SUBMISSION TO CONGRESS.— (A) IN GENERAL.—The Secretary of Energy shall submit to the Congress any determination made under paragraph (1), together with the reasons underlying such determination. (B) INITIAL SUBMISSION.—The Secretary shall include in the initial submission under this paragraph an estimate of the amount of prior investment in the uranium enrichment service activities program that remains unrecovered. SEC. 7503. URANIUM ENRICHMENT REPORT. Congress. Not later than 60 days after the date of the enactment of this Act, the Secretary of Energy shall submit to the Committee on Energy and Natural Resources of the Senate and the Committees on Energy and Commerce and on Interior and Insular Affairs of the House of Representatives a report regarding the effects of the September 19, 1985, decision of the United States District Court for the District of Colorado holding that the utility services uranium enrichment con tracts of the Department of Energy are null and void (Western Nuclear Inc. v. F. Clark Huffman, Civil No. 84-C-2315). To the extent that it will not compromise the appeals process or the competitive position of the Department of Energy with regard to uranium enrichment, the report shall identify— (1) the effects of the decision on— (A) the operation of the uranium enrichment facilities of ,,|4 ^i ,. the Department of Energy; and (B) the revenues of the uranium enrichment program; and (2) how the response of the Department of Energy may miti- gate such effects. Subtitle G—Nuclear Regulatory Commission Annual Charges 42 u s e 2213. SEC. 7601. NUCLEAR REGULATORY COMMISSION ANNUAL CHARGES. Congress. (a) SUBMISSION OF REPORT.—Within 90 days after the date of the enactment of this Act, the Nuclear Regulatory Commission shall submit to the Committee on Energy and Commerce and the Commit-
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 147 tee on Interior and Insular Affairs of the House of Representatives and the Committee on Environment and PubHc Works of the Senate a report evaluating the feasibility and necessity of establishing a system for the assessment and collection of annual charges from persons licensed by the Commission pursuant to the Atomic Energy Act of 1954 (42 U.S.C. 2011 et seq.) to fund all or part of the activities conducted by the Commission pursuant to such Act. Such report shall include an analysis of— (1) the extent to which the Commission's existing statutory or regulatory authority to assess and collect annual charges, including the authority of the Commission to assess and collect fees pursuant to title V of the Independent Offices Appropria- tion Act of 1952, is adequate to enable the Commission to assess 31 u s e 9701. and collect fees commensurate with the value of the benefit rendered to the licensee and the cost to the Commission of rendering such benefit; (2) the amounts currently assessed and collected by the Commission pursuant to existing statutory or regulatory authority, and the purposes for which such fees are assessed and collected; and (3) any recommendations of the Commission for expanding the existing statutory authority to assess and collect fees, including the Commission's justification for such expansion. Qi) ASSESSMENT AND COLLECTION.— (1) IN GENERAL.—Upon the expiration of a period of 45 cal- endar days (excluding any day in which either House of Con- gress is not in session because of an adjournment of more than 3 calendar days to a day certain or an adjournment sine die) £ following receipt by the Congress of the report required pursu- ant to subsection (a), the Nuclear Regulatory Commission shall assess and collect annual charges from its licensees on a fiscal year basis, except that— (A) the maximum amount of the aggregate charges as- • sessed pursuant to this paragraph in any fiscal year may . not exceed an amount that, when added to other amounts '"^ collected by the Commission for such fiscal year under other provisions of law, is estimated to be equal to 33 percent of the costs incurred by the Commission with re- spect to such fiscal year; and (B) any such charge assessed pursuant to this paragraph • shall be reasonably related to the regulatory service pro- vided by the Commission and shall fairly reflect the cost to V. .>? the Commission of providing such service. (2) ESTABLISHMENT OF AMOUNT BY RULE.—The amount of the charges assessed pursuant to this paragraph shall be estab- lished by rule. TITLE VIII—OUTER CONTINENTAL SHELF Outer Continental AND RELATED PROGRAMS Shelf Lands Act Amendments of 1985. SEC. 8001. SHORT TITLE. 43 u s e 1301 note. This title may be referred to as the 'Outer Continental Shelf Lands Act Amendments of 1985".
100 STAT. 148 PUBLIC LAW 99-272—APR. 7, 1986 SEC. 8002. NATIONAL POLICY FOR THE OUTER CONTINENTAL SHELF. The Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.) is 43 u s e 1332. amended in paragraph (4) of section 3 by deleting the word "and" at the end of subparagraph (A); deleting the semicolon at the end of subparagraph (B) and inserting in lieu thereof a period; designating subparagraph (B) as subparagraph (C); and inserting after subpara- graph (A) the following new subparagraph (B): Minerals and "(B) the distribution of a portion of the receipts from the mining. leasing of mineral resources of the outer Continental Shelf State and local adjacent to State lands, as provided under section 8(g), will governments. Infra. provide affected coastal States and localities with funds which may be used for the mitigation of adverse economic and environmental effects related to the development of such re- sources; and", sf SEC. 8003. REVISION OF SECTION 8(g). Section 8(g) of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(g)) is amended to read as follows: Contracts. "(g)(1) At the time of soliciting nominations for the leasing of State and local lands containing tracts wholly or partially within three nautical governments. miles of the seaward boundary of any coastal State, and subse- Energy. quently as new information is obtained or developed by the Sec- retary, the Secretary shall, in addition to the information required 43 u s e 1352. by section 26 of this Act, provide the Governor of such State— "(A) an identification and schedule of the areas and regions proposed to be offered for leasing; "(B) at the request of the Governor of such State, all informa- tion from all sources concerning the geographical, geological, and ecological characteristics of such tracts; "(C) an estimate of the oil and gas reserves in the areas proposed for leasing; and "(D) at the request of the Governor of such State, an identi- fication of any field, geological structure, or trap located wholly or partially within three nautical miles of the seaward bound- ary of such coastal State, including all information relating to the entire field, geological structure, or trap. The provisions of the first sentence of subsection (c) and the provi- sions of subsections (e)-(h) of section 26 of this Act shall be ap- plicable to the release by the Secretary of any information to any coastal State under this paragraph. In addition, the provisions of subsections (c) and (e)-(h) of section 26 of this Act shall apply in their entirety to the release by the Secretary to any coastal State of any information relating to Federal lands beyond three nautical miles of the seaward boundary of such coastal State. Alaska. "(2) Notwithstanding any other provision of this Act, the Sec- retary shall deposit into a separate account in the Treasury of the United States all bonuses, rents, and royalties, and other revenues (derived from any bidding system authorized under subsection (a)(1)), excluding Federal income and windfall profits taxes, and derived from any lease issued after September 18, 1978 of any Federal tract which lies wholly (or, in the case of Alaska, partially until seven years from the date of settlement of any boundary dispute that is the subject of an agreement under section 7 of this 43 u s e 1336. Act entered into prior to January 1, 1986 or until April 15, 1993 with respect to any other tract) within three nautical miles of the sea- ward boundary of any coastal State, or, (except as provided above for Alaska) in the case where a Federal tract lies partially within three
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 149 nautical miles of the seaward boundary, a percentage of bonuses, rents, royalties, and other revenues (derived from any bidding system authorized under subsection (a)(1)), excluding Federal income and windfall profits taxes, and derived from any lease issued after September 18, 1978 of such tract equal to the percentage of surface acreage of the tract that lies within such three nautical miles. Except as provided in paragraph (5) of this subsection, not later than the last business day of the month following the month in which those revenues are deposited in the Treasury, the Secretary shall transmit to such coastal State 27 percent of those revenues, together with all accrued interest thereon. The remaining balance of such revenues shall be transmitted simultaneously to the miscellaneous receipts account of the Treasury of the United States. "(3) Whenever the Secretary or the Governor of a coastal State determines that a common potentially hydrocarbon-bearing area may underlie the Federal and State boundary, the Secretary or the Governor shall notify the other party in writing of his determina- tion and the Secretary shall provide to the Governor notice of the current and projected status of the tract or tracts containing the , , , . common potentially hydrocarbon-bearing area. If the Secretary has ' ' leased or intends to lease such tract or tracts, the Secretary and the Governor of the coastal State may enter into an agreement to divide the revenues from production of any common potentially hydro- carbon-bearing area, by unitization or other royalty sharing agree- ment, pursuant to existing law. If the Secretary and the Governor do not enter into an agreement, the Secretary may nevertheless proceed with the leasing of the tract or tracts. Any revenues re- ceived by the United States under such an agreement shall be subject to the requirements of paragraph (2). "(4) The deposits in the Treasury account described in this section shall be invested by the Secretary of the Treasury in securities backed by the full faith and credit of the United States having maturities suitable to the needs of the account and yielding the highest reasonably available interest rates as determined by the Secretary of the Treasury. "(5)(A) When there is a boundary dispute between the United States and a State which is subject to an agreement under section 7 of this Act, the Secretary shall credit to the account established 43 USC 1336. pursuant to such agreement all bonuses, ren's, and royalties, and other revenues (derived from any bidding sys 3m authorized under subsection (a)(1)), excluding Federal income and windfall profits taxes, and derived from any lease issued after September 18, 1978 of any Federal tract which lies wholly or partially within three nau- tical miles of the seaward boundary asserted by the State, if that money has not otherwise been deposited in such account. Proceeds of such account shall be distributed as follows: , . ,^ "Upon the settlement of any boundary dispute which is sub- ' 1- .: ject to a section 7 agreement between the United States and a State, the Secretary shall pay to such State all moneys due such State from amounts deposited in the escro account. If there is insufficient money deposited in the escrc v account, the Sec- retary shall transmit, from any revenues derived from any lease of Federal lands under this Act, the remaining balance due such State in accordance with the formula set forth in section 8004(b)(lXB) of the Outer Continental Shelf Lands Act Amend- ments of 1985. Post, p. 150.
100 STAT. 150 PUBLIC LAW 99-272—APR. 7, 1986 "(B) This paragraph applies to all Federal oil and gas lease sales, under this Act, including joint lease sales, occurring after Septem- ber 18,1978. "(6) This section shall be deemed to take effect on October 1, 1985, for purposes of determining the amounts to be deposited in the separate account and the States' shares described in paragraph (2). "(7) When the Secretary leases any tract which lies wholly or partially within three miles of the seaward boundary of two or more States, the revenues from such tract shall be distributed as other- wise provided by this section, except that the State's share of such revenues that would otherwise result under this section shall be divided equally among such States.". 43 u s e 1337 SEC. 8004. DISTRIBUTION OF SECTION 8(g) ACCOUNT. State and local (a) Prior to April 15, 1986, the Secretary shall distribute to the governments. designated coastal States the sum of— (1) the amounts due and payable to each such State under paragraph (2) of section 8(g) of the Outer Continental Shelf Ante, p. 148. Lands Act, as amended by this title, for the period between October 1,1985, and the date of such distribution, and (2) the amounts due each such State under subsection (b)(lXA) of this section for the period prior to October 1,1985. (b)(1) As a fair and equitable disposition of all revenues (including interest thereon) derived from any lease of Federal lands wholly or partially within 3 miles of the seaward boundary of a coastal State prior to October 1,1985, the Secretary shall distribute: (A) from the funds which were deposited in the separate account in the Treasury of the United States under section 8(g)(4) of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(g)(4)) which was in effect prior to the date of enactment of section 8003 of this title the following sums: ($ million) Louisiana 572 - Texas 382 California 338 ijg^«j Alabama 66 Alaska 51 Mississippi 14 ^ -^ >^ i • Florida 0.03 as well as 27 percent of the royalties, derived from any lease of Federal lands, which have been deposited through September 30, 1985, in the separate account described in this paragraph and interest thereon accrued through September 30, 1985, and shall transmit any remaining amounts to the miscellaneous receipts account of the Treasury of the United States; and (B) from revenues derived from any lease of Federal lands 43 use 1301 under the Outer Continental Shelf Lands Act, as amended, ^°^- prior to April 15 of each of the fifteen fiscal years following the fiscal year in which this title is enacted, 3 percent of the following sums in each of the five fiscal years following the date of enactment of this Act, 7 percent of such sums in each of the next five fiscal years, and 10 percent of such sums in each of the following five fiscal years: ($ million) Louisiana 84 Texas 134 t n Ay/ California 289 Alabama 7 Alaska 134 Mississippi 2.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 151 (2) The acceptance of any payment by a State under this section Claims, shall satisfy and release any and all claims of such State against the United States arising under, or related to, section 8(g) of the Outer Continental Shelf Lands Act, as it was in effect prior to the date of Ante, p. 148. enactment of this Act and shall vest in such State the right to receive payments as set forth in this section. (c) Notwithstanding any other provision of this Act, the amounts Louisiana. due and payable to the State of Louisiana prior to October 1, 1986, under subtitle A of title VIII (Outer Continental Shelf and Related Programs) of this Act shall remain in their separate accounts in the Treasury of the United States and continue to accrue interest until October 1, 1986, except that the $572,000,000 set forth in subsection 8004(b)(1)(A) of this section shall only accrue interest from April 15, 1986 to October 1, 1986, at which time the Secretary shall imme- diately distribute such sums with accrued interest to the State of Louisiana. SEC. 8005. IMMOBILIZATION OF BOUNDARIES. Section 2(b) of the Submerged Lands Act (43 U.S.C. 1301(b)) is amended by inserting before the semicolon at the end a comma and the following: "except that any boundary between a State and the State and local United States under this Act which has been or is hereafter fixed by governments, coordinates under a final decree of the United States Supreme Court shall remain immobilized at the coordinates provided under such decree and shall not be ambulatory". TITLE IX—MEDICARE, MEDICAID, AND Medicare and Medicaid Budget MATERNAL AND CHILD HEALTH PRO- Reconciliation Amendments of GRAMS 1985. 42 u s e 1305 SEC. 9000. SHORT TITLE; TABLE OF CONTENTS OF TITLE. note. This title may be cited as the "Medicare and Medicaid Budget Reconciliation Amendments of 1985". TABLE OF CONTENTS OF TITLE , . ', Subtitle A—Medicare till:, " :. «> PART 1—PROVISIONS RELATING TO PART A OF MEDICARE SUBPART A—HOSPITAL REIMBURSEMENT Sec. 9101. Rate of increase in payments for inpatient hospital services. Sec. 9102. One-year extension of PPS transition. Sec. 9103. Application of revised hospital wage index. Sec. 9104. Payments to hospitals for indirect costs of medical education. Sec. 9105. Payments for hospitals which serve a disproportionate share of low- income patients. Sec. 9106. Treatment of certain rural osteopathic hospitals as rural referral centers. Sec. 9107. Return on equity capital for inpatient hospital services and other serv- ices. Sec. 9108. Continuation of medicare reimbursement waivers for certain hospitals participating in regional hospital reimbursement demonstrations. Sec. 9109. Four-year test for State waivers for certain States. Sec. 9110. Asset valuation for donations of State property to nonprofit corporations. Sec. 9111. Payments to sole community hospitals. Sec. 9112. Indirect teaching adjustment for certain clinics. Sec. 9113. Report on impact of outlier and transfer policy on rural hospitals. Sec. 9114. Information on impact of PPS payments on hospitals.
100 STAT. 152 PUBLIC LAW 99-272—APR. 7, 1986 ,,r,. Sec. 9115. Special rules for implementation of subpart. SUBPART B—MISCELLANEOUS PKOVISIONS ~ ' ' Sec. 9121. Responsibilities of medicare hospitals in emergency cases. Sec. 9122. Requirement for medicare hospitals to participate in CHAMPUS and CHAMPVA programs. Sec. 9123. Extension and payment for hospice care. Sec. 9124. Limiting the penalty for late enrollment in part A. ' ^; Sec. 9125. Promulgation of inpatient hospital deductible. , - Sec. 9126. Access to skilled nursing facilities. Sec. 9127. Additional members of Prospective Payment Assessment Commission. Sec. 9128. Sense of the Senate with respect to inpatient hospital deductible. Sec. 9129. Medicare coverage of State and local employees. PART 2—PROVISIONS RELATING TO PARTS A AND B OF MEDICARE SUBPART A—PAYMENT-RELATED PROVISIONS Sec. 9201. Extension of working aged provision. , Sec. 9202. Payments to hospitals for direct costs of medical education. Sec. 9204. Moratorium on laboratory payment demonstration. Sec. 9205. Home health waiver of liability. * .: ; - SUBPART B—OTHER PROVISIONS Sec. 9211. Provisions relating to health maintenance organizations and competitive medical plans. 1 Sec. 9213. Removal of prohibition on comments by medicare and social security ac- tuaries relating to economic assumptions. Sec. 9214. Limitation on merger of end stage renal disease networks. Sec. 9215. Extension of certain medicare municipal health services demonstration projects. Sec. 9216. Audit and medical claims review. Sec. 9217. Liver transplants. Sec. 9218. Studies relating to physical therapists and other professionals. ''i'fj J Sec. 9219. Technical corrections. Sec. 9220. Extension of on lok waiver. Sec. 9221. Continuation of "Access: Medicare" demonstration project. PART 3—PROVISIONS RELATING TO PART B OF MEDICARE SUBPART A—PAYMENT-RELATED PROVISIONS Sec. 9301. Medicare physician payment provisions. Sec. 9303. Payment for clinical laboratory services. Sec. 9304. Determinations of inherent reasonableness of charges and customary charges for certain former hospital-compensated physicians. Sec. 9305. Physician Payment Review Commission and development of relative value scale. Sec. 9306. Limitation on medicare payment for post-cataract surgery patients. Sec. 9307. Payment for £issistants at surgery for certain cataract operations and other operations. SUBPART B—BENEFITS AND OTHER PROVISIONS Sec. 9313. Part B premium. Sec. 9314. Demonstration of preventive health services under medicare. Sec. 9315. Extension of GAO reporting date. PART 4—PEER REVIEW ORGANIZATIONS Sec. 9401. 100 percent peer review of certain surgical procedures. Sec. 9402. Peer review organization reimbursement. Sec. 9403. Denial of payment for substandard care. Sec. 9404. Health maintenance organization membership on peer review organiza- tion boards. Sec. 9405. Peer review organization review of health maintenance organizations. Sec. 9406. Substitute review pending termination of a peer review organization con- tract. Subtitle B—Medicaid and Maternal and Child Health Sec. 9501. Services for pregnant women. Sec. 9502. Modifications of waiver provisions for home and community-based serv- ices. Sec. 9503. Third-party liability. Sec. 9505. Optional hospice benefits.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 153 Sec. 9506. Treatment of potential payments from medicaid qualifying trusts. Sec. 9507. Written standards for provision of organ transplants. Sec. 9508. Optional targeted case management services. Sec. 9509. Revaluation of assets. Sec. 9510. Beginning date of optional coverage for individuals in medical institu- tions. Sec. 9511. Optional coverage of children. Sec. 9512. Overpayment recovery rules. Sec. 9514. Regulations for intermediate care facilities for the mentally retarded. Sec. 9515. Life safety code recognition. Sec. 9516. Correction and reduction plans for intermediate care facilities for the mentally retarded. Sec. 9517. Modifying application of medicaid HMO provisions for certain health centers. Sec. 9518. Extension of MMIS deadline. Sec. 9519. Report on adjustment in medicaid payments for hospitals serving dispro- portionate numbers of low income patients. Sec. 9520. Task Force on Technology-Dependent Children. Sec. 9522. Expansion of services under demonstration waivers. Sec. 9523. Extension of Texas waiver project. Sec. 9524. Wisconsin health maintenance organization waiver. Sec. 9525. New Jersey demonstration project relating to training of AFDC recipi- ents as home health aides. Sec. 9526. Reference to provisions of law providing coverage under, or directly affecting, the medicaid program. Sec. 9527. Children with special health care needs. Sec. 9528. Annual calculation of Federal medical assistance percentage. Sec. 9529. Medicaid coverage relating to adoption assistance and foster care. Subtitle C—Task Force on Long-Term Health Care Policies ,j: ^ Sec. 9601. Recommendations for long-term health care policies. '• -; Subtitle A—Medicare PART 1—PROVISIONS RELATING TO PART A OF MEDICARE Subpart A—Hospital Reimbursement SEC. 9101. RATE OF INCREASE IN PAYMENTS FOR INPATIENT HOSPITAL SERVICES. (a) EXTENSION OF CURRENT FREEZE ON PAYMENT RATES THROUGH APRIL 30, 1986.—Section 5(c) of the Emergency Extension Act of 1985 (Public Law 99-107) is amended to read as follows: 42 USC I395ww "(c) EXTENSION PERIOD DEFINED.— ^°^- "(1) HOSPITAL PAYMENTS.—For purposes of subsection (a), the term 'extension period' means the period beginning on October 1,1985, and ending on April 30,1986.". (b) APPLICABLE PERCENTAGE INCREASE.—Section 1886(b)(3)(B) of the Social Security Act (42 U.S.C. 1395ww(b)(3)(B)) is amended to read as follows: "(B)(i) For purposes of subparagraph (A) for 12-month cost report- ing periods beginning during a fiscal year and for purposes of subsection (d) for discharges occurring during a fiscal year, the 'applicable percentage increase' shall be— "(I) for fiscal year 1986, Vz percent, "(II) for fiscal years 1987 and 1988, a percentage determined by the Secretary pursuant to subsection (e)(4), but not to exceed the market basket percentage increase (as defined in clause (ii)), and
100 STAT. 154 PUBLIC LAW 99-272—APR. 7, 1986 "(III) for fiscal year 1989 and subsequent fiscal years, the percentage determined by the Secretary pursuant to subsection (e)(4). "(ii) For purposes of clause (i), the term 'market basket percentage increase' means, with respect to cost reporting periods and dis- charges occurring in a fiscal year, the percentage, estimated by the Secretary before the beginning of the period or fiscal year, by which the cost of the mix of goods and services (including personnel costs but excluding nonoperating costs) comprising routine, ancillary, and special care unit inpatient hospital services, based on an index of appropriately weighted indicators of changes in wages and prices which are representative of the mix of goods and services included in such inpatient hospital services, for the period or fiscal year will exceed the cost of such mix of goods and services for the preceding 12-month cost reporting period or fiscal year.". (c) CONFORMING AMENDMENTS.—(1) Section 1886(d)(3)(A) of such Act (42 U.S.C. 1395ww(d)(3)(A)) is amended by striking out "for fiscal year 1985" and inserting in lieu thereof "for each of fiscal years 1985 and 1986". (2) Section 1886(e)(3) of such Act is amended by striking out "(instead of the applicable percentage increase described in subsec- tion (b)(3)(B))". (3) Section 1886(e)(4) of such Act is amended by striking out "1986" and inserting in lieu thereof "1987". 42 u s e 1395WW (d) EFFECTIVE DATE OF FREEZE EXTENSION.—The amendment made note. by subsection (a) shall take effect on March 15, 1986, and the amendments made by subsection (c) shall take effect on the date of the enactment of this Act. 42 u s e 1395WW (e) EFFECTIVE DATE FOR INCREASE.— note. (1) PPS HOSPITALS, DRG PORTION OF PAYMENT.—In the case of a subsection (d) hospital (as defined in paragraph (4))— (A) the amendment made by subsection (b) shall apply to payments made under section 1886(d)(1)(A) of such Act made on the basis of discharges occurring on or after May 1, 1986; and *^ (B) for discharges occurring on or after October 1, 1986, the applicable percentage increase (described in section B.i"-U 1886(b)(3)(B)) for discharges occurring during fiscal year 1986 shall be deemed to have been V2 percent. wwdfiJCf "'>;= I Si (2) P P S HOSPITALS, HOSPITAL SPECIFIC PORTION OF PAYMENT.— In the case of a subsection (d) hospital— (A) the amendment made by subsection (b) shall apply to payments under section 1886(d)(lXA) of the Social Security Act made on the basis of discharges occurring during a cost reporting period of a hospital, for the hospital's cost report- OJ ing periods beginning on or after October 1,1985; (B) notwithstanding subparagraph (A), for the cost report- ing period beginning during fiscal year 1986, the applicable percentage incresise (as defined in section 1886(b)(3)(B) of such Act) for the— (i) first 7 months of the cost reporting period shall be 0 percent, and ' ' (ij) for the remaining 5 months of the cost reporting period shall be V2 percent; and (C) for cost reporting periods beginning on or after Octo- ber 1, 1986, the applicable percentage increase (as so
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 155 defined) with respect to t h e previous cost reporting period shall be deemed to have been V2 percent. (3) PPS-EXEMPT HOSPITALS.—In t h e case of a hospital t h a t is not a subsection (d) hospital— (A) t h e a m e n d m e n t m a d e by subsection (b) shall apply to cost reporting periods beginning on or after October 1, 1985; (B) notwithstanding subparagraph (A), for the hospital's cost reporting period beginning during fiscal year 1986, payment under title XVIII of the Social Security Act shall 42 USC 1395. be made as though the applicable percentage increase de- scribed in section 1886(b)(3)(B) were equal to %4 of 1 per- 42 USC I395ww. cent; and (C) for cost reporting periods beginning on or after Octo- ber 1, 1986, t h e applicable percentage increase (as so de- i?;^ fined) with respect to t h e cost reporting period beginning d u r i n g fiscal y e a r 1986 shall be deemed to have been V2 percent. (4) DEFINITION.—In this subsection, the term "subsection (d) hospital" has the meaning given such term in section 1886(d)(1)(B) of the Social Security Act. SEC. 9102. ONE-YEAR EXTENSION OF PPS TRANSITION. (a) ONE-YEAR DELAY O F F U L L IMPLEMENTATION OF PROSPECTIVE PAYMENT SYSTEM.—Section 1886(d)(1)(A) of t h e Social Security Act (42 U.S.C. 1395ww(d)(l)(A)) is a m e n d e d by striking out "1986" in clauses (ii) a n d (iii) a n d inserting in lieu thereof "1987". (b) N E W T A R G E T A N D D R G P E R C E N T A G E S FOR R E M A I N D E R OF FISCAL YEAR 1986.—Section 1886(d)(1)(C) of such Act is amended— (1) by striking out ", or discharges occurring", (2) by striking out "and" at the end of clause (ii), (3) by striking o u t "(iii) on or after October 1, 1985, a n d before October 1, 1986" in clause (iii) a n d inserting in lieu thereof "(iv) on or after October 1, 1986, a n d before October 1, 1987", a n d (4) by inserting after clause (ii) the following new clause: "(iii) on or after October 1, 1985, and before October 1, 1986, the 'target percentage' is 45 percent and the 'DRG percentage' is 55 percent; and". (c) NEW BLENDED NATIONAL-REGIONAL DRG RATE FOR REMAINDER OF FISCAL YEAR 1986.—Section 1886(d)(1)(D) of such Act is ' '•^;^';' amended— (1) by striking out "cost reporting periods beginning, or", and (2) by striking out "1985" and "1986" and inserting in lieu thereof "1986" and "1987", respectively, each place it appears. (d) EFFECTIVE D A T E S . — 42 u s e I395ww (1) DELAY IN FINAL TRANSITION.—The amendment made by note, subsection (a) shall take effect on the date of the enactment of this Act. (2) C H A N G E I N HOSPITAL SPECIFIC PERCENTAGE.—The a m e n d - m e n t s m a d e by subsection (b) shall apply— (A) to cost reporting periods beginning on or after Octo- '^ ^- ber 1,1985, but «- OBO (B) notwithstanding subparagraph (A), for a hospital's cost reporting period beginning during fiscal year 1986, for purposes of section 1886(d)(1)(A) of the Social Security Act— (i) during the first 7 months of the period the "target percentage" is 50 percent and the "DRG percentage' is 50 percent, and
100 STAT. 156 PUBLIC LAW 99-272—APR. 7, 1986 ^J^^',.^,, . (ii) during the remaining 5 months of the period the "target percentage" is 45 percent and the "DRG percentage" is 55 percent. (3) CHANGE IN BLENDED RATE.—The amendments made by subsection (c) shall apply to discharges occurring on or after May 1,1986. (4) EXCEPTION.— (A) Notwithstanding any other provision of this subsec- Jfti" *?! tion, the amendments made by this section shall not apply to payments with respect to the operating costs of inpatient hospital services (as defined in section 1886(a)(4) of the 42 u s e 1395WW. Social Security Act) of a subsection (d) hospital (as defined in section 1886(d)(1)(B) of such Act) located in the State of Oregon. (B) Notwithstanding any other provision of law, for a cost reporting period beginning during fiscal year 1986 of a subsection (d) hospital to which the amendments made by i this section do not apply, for purposes of section 1886(d)( 1)(A) of of Social Security Act— (i) during the first 7 months of the period the "target percentage" is 50 percent and the "DRG percentage" is 50 percent, and js , . (ii) during the remaining 5 months of the period the "target percentage" is 25 percent and the "DRG percentage" is 75 percent. (C) Notwithstanding any other provision of law, for pur- ,,. , poses of section 1886(d)(1)(D) of such Act, the applicable combined adjusted DRG prospective payment rate for a subsection (d) hospital to which the amendments made by this section do not apply is, for discharges occurring on or after October 1, 1985, and before May 1, 1986, a combined i. rate consisting of 25 percent of the national adjusted DRG prospective payment rate and 75 percent of the regional adjusted DRG prospective payment rate for such dis- charges. SEC. 9103. APPLICATION OF REVISED HOSPITAL WAGE INDEX. •• (a) APPLICATION OF REVISED INDEX PROSPECTIVELY.—(1) Section 42 u s e 1395WW 2316(b) of the Deficit Reduction Act of 1984 (98 Stat. 1081) is note. amended to read as follows: "(b) The Secretary shall adjust the payment amounts for hospitals for discharges occurring on or after May 1, 1986, to reflect the changes the Secretary has promulgated in final regulations (on September 3, 1985) relating to the hospital wage index under section 42 u s e 1395WW. 1886(d)(3)(E) of the Social Security Act. For discharges occurring after September 30, 1986, the Secretary shall provide for such periodic adjustments in the appropriate wage index used under that section as may be necessary, taking into account changes in the wage levels and relative proportions of full-time and part-time workers.". 42 u s e 1395WW (2) The amendment made by paragraph (1) shall be effective as if note. it had been included in the Deficit Reduction Act of 1984. 26 u s e 1 note. Ot)) STUDY OF METHODOLOGY FOR AREA WAGE ADJUSTMENT FOR 42 u s e 1395ww CENTRAL CITIES.—(1) The Secretary of Health and Human Services, note. in consultation with the Prospective Payment Assessment Commis- sion, shall collect information and shall develop one or more meth- odologies to permit the adjustment of the wage indices used for
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 157 purposes of sections 1886(d)(2)(C)(ii), 1886(d)(2XH), and 1886(d)(3)(E) of the Social Security Act, in order to more accurately reflect hospital 42 u s e 1395WW. labor markets, by taking into account variations in wages and wage- related costs between the central city portion of urban areas and other parts of urban areas. (2) The Secretary shall report to Congress on the information Reports. collected and the methodologies developed under paragraph (1) not later than May 1, 1987. The report shall include a recommendation as to the feasibility and desirability of implementing such methodologies. SEC. 9104. PAYMENTS TO HOSPITALS FOR INDIRECT COSTS OF MEDICAL EDUCATION. (a) PAYMENT FOR INDIRECT COSTS OF MEDICAL EDUCATION.—Section 1886(d)(5)(B) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(B)) is amended to read as follows: "(B) The Secretary shall provide for an additional payment amount for subsection (d) hospitals with indirect costs of medical education, in an amount computed in the same manner as the adjustment for such costs under regulations (in effect as of January 1,1983) under subsection (a)(2), except as follows: "(i) The amount of such additional payment shall be deter- mined by multiplying (I) the sum of the amount determined under paragraph (l)(A)(ii)(II) (or, if applicable, the amount determined under paragraph (l)(A)(iii)) and the amount paid to the hospital under subparagraph (A), by (II) the indirect teach- ing adjustment factor described in clause (ii). "(ii) For purposes of clause (i)(II), the indirect teaching adjust- ment factor for discharges occurring— "(I) on or after May 1, 1986, and before October 1, 1988, is equal to 2 X (d + r)- ""S-1), or "(II) on or after October 1, 1988, is equal to 1.5x((l + r ) " ^ ^ - l ) , where 'r' is the ratio of the hospital's full-time equivalent interns and residents to beds. "(iii) In determining such adjustment the Secretary shall not distinguish between those interns and residents who are employees of a hospital and those interns and residents who furnish services to a hospital but are not employees of such hospital. "(iv) In determining such adjustment, the Secretary shall ^ continue to count interns and residents assigned to outpatient services of the hospital as part of the calculation of the full- time-equivalent number of interns and residents.". (b) ADJUSTMENT OF PAYMENT AMOUNTS.— (1) RESTANDARDIZING DRG PAYMENT AMOUNTS TO REFLECT CHANGE IN FORMULA.—Section 1886(d)(2)(C)(i) of such Act is amended by inserting "(taking into account, for discharges occurring after September 30, 1986, the amendments made by section 9104(a) of the Medicare and Medicaid Budget Reconcili- ation Amendments of 1985)" after "medical education costs". (2) PROVIDING FOR SYSTEM SAVINGS FROM CHANGE IN FOR- MULA.—Subparagraph (C) of section 1886(d)(3) of such Act is amended— (A) by inserting "(i)" after "(C)", (B) by inserting "FOR FISCAL YEAR 1985" after "NEUTRALITY",
100 STAT. 158 PUBLIC LAW 99-272—APR. 7, 1986 (C) by striking out "The Secretary" and inserting in lieu thereof "For discharges occurring in fiscal year 1985, the , Secretary", and (D) by adding at the end the following new clause: "(ii) REDUCING FOR SAVINGS FROM AMENDMENT TO INDIRECT TEACHING ADJUSTMENT FOR DISCHARGES AFTER SEPTEMBER 30, 1986.—For discharges occurring after September 30, 1986, the Secretary shall further reduce each of the average standardized amounts (in a proportion which takes into account the differing effects of the standardization effected under paragraph (2)(C)(i)) so as to provide for a reduction in the total of the payments (attributable to this paragraph) made for discharges occurring— "(I) on or after October 1, 1986, and before October 1, 1988, of an amount equal to the estimated reduction in the payment amounts under paragraph (5)(B) that would have resulted from the enactment of the amendments made by section 9104 of the Medicare and Medicaid Budget Rec- onciliation Amendments of 1985 if the factor described in ^ clause (ii)(II) of paragraph (5)(B) were applied for discharges *"*" occurring during such period instead of the factor described in clause (ii)(I) of that paragraph, and "(II) on or after October 1, 1988, of an amount equal to the estimated reduction in the payment amounts under paragraph (5)(B) for those discharges that has resulted from , the enactment of the amendments made by section 9104 of the Medicare and Medicaid Budget Reconciliation Amend- ments of 1985.". (3) CONFORMING AMENDMENT.—Clauses (i)(I) and (ii)(I) of sec- 42 u s e 1395WW. tion 1886(d)(3)(D) of such Act are each amended by inserting "or reduced" after "(B), and adjusted", 42 u s e 1395WW (c) EFFECTIVE DATE.—(1) Except as provided in paragraph (2), the note. amendments made by this section shall apply to discharges occur- ring on or after May 1,1986. (2) The amendments made by this section shall not first be applied to discharges occurring as of a date unless, for discharges occurring on that date, the amendments made by section 9105 are also being applied. SEC. 9105. PAYMENTS FOR HOSPITALS WHICH SERVE A DISPROPORTION- ATE SHARE OF LOW-INCOME PATIENTS. (a) PAYMENT FOR HOSPITALS WHICH SERVE A DISPROPORTIONATE SHARE OF LOW-INCOME PATIENTS.—Section 1886(d)(5) of the Social Security Act (42 U.S.C. 1395ww(d)(5)) is amended by adding at the end the following new subparagraph: Urban areas. "(F)(i) For discharges occurring on or after May 1, 1986, and before State and local October 1, 1988, the Secretary shall provide, in accordance with this governments. subparagraph, for an additional payment amount for each subsec- tion (d) hospital which— "(I) serves a significantly disproportionate number of low- income patients (as defined in clause (v)), or "(II) is located in an urban area, has 100 or more beds, and can demonstrate that its net inpatient care revenues (excluding any of such revenues attributable to this title or State plans approved under title XIX), during the cost reporting period in which the discharges occur, for indigent care from State and local government sources exceed 30 percent of its total of such revenues during the period.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 159 "(ii) The amount of such payment for each discharge shall be determined by multiplying (I) the sum of the amount determined under paragraph (IXAXiiXII) (or, if applicable, the amount deter- mined under paragraph (IXAXiii)) and the amount paid to the hospital under subparagraph (A) for that discharge, by (II) the disproportionate share adjustment percentage established under clause (iii) or (iv) for the cost reporting period in which the discharge occurs. "(iii) The disproportionate share adjustment percentage for a cost reporting period for a hospital described in clause (iXII) is equal to 15 percent. "(iv) The disproportionate share adjustment percentage for a cost Rural areas. reporting period for a hospital that is not described in clause (iXII) and that— "(I) is located in an urban area and has 100 or more beds, is equal to the lesser of 15 percent, or the percent determined in accordance with the following formula: (P—15X.5) + 2.5, where 'P' is the hospital's disproportionate patient percentage (as defined in clause (vi)); "(II) is located in an urban area and has less than 100 beds, is equal to 5 percent; or "(III) is located in a rural area, is equal to 4 percent. "(v) In this subparagraph, a hospital 'serves a significantly dis- Rural areas. proportionate number of low income patients' for a cost reporting period if the hospital has a disproportionate patient percentage (as defined in clause (vi)) for that period which equals, or exceeds— "(I) 15 percent, if the hospital is located in an urban area and has 100 or more beds, "(II) 40 percent, if the hospital is located in an urban area and has less than 100 beds, or "(III) 45 percent, if the hospital is located in a rural area. "(vi) In this subparagraph, the term 'disproportionate patient percentage' means, with respect to a cost reporting period of a hospital, the sum of— "(I) the fraction (expressed as a percentage), the numerator of which is the number of such hospital's patient days for such period which were made up of patients who (for such days) were entitled to benefits under part A of this title and were entitled to supplementary security income benefits (excluding any State supplementation) under title XVI of this Act, and the denomi- nator of which is the number of such hospital's patient days for such fiscal year which were made up of patients who (for such days) were entitled to benefits under part A of this title, and (II) the fraction (expressed as a percentage), the numerator of which is the number of the hospital's patient days for such period which consist of patients who (for such days) were eli- gible for medical assistance under a State plan approved under title XIX, but who were not entitled to benefits under part A of this title, and the denominator of which is the total number of the hospital's patient days for such period.". Ot)) RESTANDARDIZING D R G PAYMENT AMOUNTS TO REFLECT DIS- 42 use I395ww. PROPORTIONATE SHARE PAYMENTS.—Section 1886(dX2XC) of such Act is amended— (1) by striking out "and" at the end of clause (ii), (2) by striking out the period at the end of clause (iii) and inserting in lieu thereof ", and", and (3) by adding at the end the following new clause:
100 STAT. 160 PUBLIC LAW 99-272—APR. 7, 1986 "(iv) for discharges occurring on or after October 1, 1986, and before October 1, 1988, excluding an estimate of the additional payments to certain hospitals to be made under paragraph (5)(F).". 42 u s e 1395WW. (c) CONFORMING AMENDMENT.—Section 1886(d)(5)(C)(i) of such Act is amended by striking out ", and of public or other hospitals that serve a significantly disproportionate number of patients who have low income or are entitled to benefits under part A of this title". (d) CBO REPORT.—The Congressional Budget Office shall study, and report to Congress not later than January 1, 1987, on the impact of the implementation of this section on hospitals, including the appropriateness of the factors used in determining which hospitals are eligible for additional payments under section 1886(d)(5)(F) of the Social Security Act and the amount of the additional payments made to those hospitals. 42 u s e 1395WW (e) EFFECTIVE DATE.—The amendments made by this section shall note. apply to discharges occurring on or after May 1, 1986. SEC. 9106. TREATMENT OF CERTAIN RURAL OSTEOPATHIC HOSPITALS AS RURAL REFERRAL CENTERS. (a) IN GENERAL.—Section 1886(d)(5)(C)(i) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(C)(i)) is amended by inserting before the period at the end of the second sentence the following: "and which shall not require a rural osteopathic hospital to have more than 3,000 discharges in a year in order to be classified as a rural referral center". 42 u s e 1395WW (b) EFFECTIVE DATE.—The amendment made by subsection (a) note. shall apply to cost reporting periods beginning on or after Janu- ary 1, 1986. SEC. 9107. RETURN ON EQUITY CAPITAL FOR INPATIENT HOSPITAL SERV- ICES AND OTHER SERVICES. (a) INPATIENT HOSPITAL SERVICES.— (1) PHASE-DOWN IN PAYMENT FOR RETURN ON EQUITY CAPITAL.— Section 1886(g)(2) of the Social Security Act (42 U.S.C. 1395ww(g)(2)) is amended— (A) by inserting "the applicable percentage (described in subparagraph (B)) o f before "the average of the rates of interest" (B) by inserting "(A)" after "(2)", and (C) by adding at the end the following new subparagraph: "(B) In this paragraph, the 'applicable percentage' is— • "(i) 75 percent, for cost reporting periods beginning during fiscal year 1987, "(ii) 50 percent, for cost reporting periods beginning during fiscal year 1988, "(iii) 25 percent, for cost reporting periods beginning ^ during fiscal year 1989, and M:- 1' ««^^^) Q percent, for cost reporting periods beginning on or after October 1, 1989.". (2) EXCLUSION FROM PROSPECTIVE PAYMENT.—The second sen- tence of section 1886(a)(4) of such Act is amended— (A) by inserting "a return on equity capital," after "anes- I . thetist,", and "" (B) by inserting "other" before "capital-related costs". Ot)) OTHER SERVICES.—
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 161 (1) LIMITATION ON RATE.—Section 1861(v)(l) of such Act (42 U.S.C. 1395x(v)(l)) is amended by adding at the end the follow- ing new subparagraph: "(P) If such regulations provide for the payment for a return on equity capital (other than with respect to costs of inpatient hospital services), the rate of return to be recognized, for determining the reasonable cost of services furnished in a cost reporting period, shall be equal to the average of the rates of interest, for each of the months any part of which is included in the period, on obligations issued for purchase by the Federal Hospital Insurance Trust Fund.". (2) CONFORMING AMENDMENTS.—Section 1861(v)(l)(B) of such Act is amended— (A) by striking out "any fiscal period" and "such fiscal period" and inserting in lieu thereof "any cost reporting .,, period" and "the period", respectively, and (B) by striking out "not exceed one and one-half times" in the second sentence and inserting in lieu thereof "be equal to". (c) EFFECTIVE DATES.—(1) The amendments made by subsection (a) 42 u s e 1395WW shall apply to hospital cost reporting periods beginning on or after note. October 1,1986. (2) The amendments made by subsection (b) shall apply to cost 42 u s e 1395x reporting periods beginning on or after October 1,1985. note. SEC. 9108. CONTINUATION OF MEDICARE REIMBURSEMENT WAIVERS FOR CERTAIN HOSPITALS PARTICIPATING IN REGIONAL HOS- PITAL REIMBURSEMENT DEMONSTRATIONS. (a) CONTINUATION OF WAIVERS.—A hospital reimbursement con- 42 u s e 1395WW trol system which, on January 1, 1985, was carrying out a dem- note. onstration under a contract which had been approved by the Secretary of Health and Human Services pursuant to section 222(a) of the Social Security Amendments of 1972, or under section 402 of 42 u s e 1395b-l the Social Security Amendments of 1967 (as amended by section note. 222(b) of the Social Security Amendments of 1972), shall be deemed to meet the requirements of section 1886(c)(1)(A) of the Social Secu- rity Act if such system applies— Infra. (1) to substantially all non-Federal acute care hospitals (as defined by the Secretary) in the geographic area served by such system on January 1,1985, and (2) to the review of at least 75 percent of— (A) all revenues or expenses in such geographic area for inpatient hospital services, and (B) revenues or expenses in such geographic area for inpatient hospital services provided under the State's plan approved under title XIX. (b) APPROVAL.—In the case of a hospital cost control system described in subsection (a), the requirements of section 1886(c) of the Social Security Act which apply to States shall instead apply to such system and, for such purposes, any reference to a State is deemed a reference to such system. (c) EFFECTIVE DATE.—This section shall become effective on the date of the enactment of this Act. SEC. 9109. FOUR-YEAR TEST FOR STATE WAIVERS FOR CERTAIN STATES. (a) IN GENERAL.—Section 1886(c) of the Social Security Act (42 U.S.C 1395ww(c)) is amended by adding at the end the following new paragraph:
100 STAT. 162 PUBLIC LAW 99-272—APR. 7, 1986 "(7) In the case of a State which made a request under paragraph (5) before December 31, 1984, for the approval of a State hospital reimbursement control system and which request was approved— "(A) in applying paragraphs (1)(C) and (6), a reference to a '36- month period' is deemed a reference to a '48-month period', and "(B) in order to allow the State the opportunity to provide the assurances described in paragraph (1)(C) for a 48-month period, the Secretary may not discontinue payments under the system, under the authority of paragraph (3)(A) because the Secretary has reason to believe that such assurances are not being (or will not be) met, before July 1, 1986.". 42 u s e 1395WW (b) EFFECTIVE DATE.—The amendment made by subsection (a) note. shall take effect on the date of the enactment of this Act. SEC. 9110. ASSET VALUATION FOR DONATIONS OF STATE PROPERTY TO NONPROFIT CORPORATIONS. (a) GENERAL RULE.—Section 1861(v)(l)(0) of the Social Security Act (42 U.S.C. 1395x(v)(l)(0)) is amended— (1) by inserting ", except as provided in clause (iv)," in clause (i) after "such regulations shall provide", and (2) by adding at the end the following new clause: "(iv) In the case of the transfer of a hospital from ownership by a State to ownership by a nonprofit corporation without monetary consideration, the basis for capital allowances to the new owner shall be the book value of the hospital to the State at the time of the transfer.". 42 u s e 1395x (b) EFFECTIVE DATE.—The amendments made by subsection (a) note. shall be applied as though they were originally included in the 26 u s e 1 note. Deficit Reduction Act of 1984. SEC. 9111. PAYMENTS TO SOLE COMMUNITY HOSPITALS. (a) ADJUSTMENT TO PAYMENT AMOUNT.—Section 1886(d)(5)(C)(ii) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(C)(ii)) is amended by inserting after the second sentence thereof the following: "In the case of a sole community hospital which experiences, in any cost reporting period after the cost reporting period which was used as the base for determining the target amount for payments to such hospital under paragraph (l)(A)(i)(I), a significant increase in operat- ing costs attributable to the addition of new inpatient facilities or services at such hospital (including the opening of a special care unit), the Secretary shall provide for such adjustment to the pay- ment amounts under this subsection for such cost reporting period and subsequent cost reporting periods as may be necessary to reasonably compensate such hospital for such increased costs.". 42 u s e 1395WW (b) EFFECTIVE DATE.—The amendment made by this section shall note. apply to payments for cost reporting periods beginning on or after October 1, 1983, and before October 1, 1989. (c) STUDY.—The Secretary of Health and Human Services shall conduct a study of the effects of the amendment made by subsection (a). The Secretary shall report the results of such study, including recommendations for a permanent mechanism to take into account needed expansions of services by sole community hospitals and the hospital-specific medicare payment rates thereof, to the Congress prior to January 1, 1987.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 163 SEC. 9112. INDIRECT TEACHING ADJUSTMENT FOR CERTAIN CLINICS. (a) IN GENERAL.—Section 602(k) of the Social Security Amend- ments of 1983 (97 Stat. 165) is amended by inserting "(1)" after "(k)" 42 u s e 1495y and by adding at the end the following new paragraphs: note. "(2) In the case of a hospital which is receiving payments pursuant to a waiver under paragraph (1), payment of the adjustment for indirect costs of approved educational activities shall be made as if the hospital were receiving under part A of title XVIII of the Social Security Act all the payments which are made under part B of such 42 u s e 1395c. title solely by reason of such waiver. 42 u s e 1395J. "(3) Any waiver granted under paragraph (1) shall provide that, with respect to those items and services billed under part B of title XVIII of the Social Security Act solely by reason of such waiver— "(A) payment under such part shall be equal to 100 percent of the reasonable charge or other applicable payment base for the items and services; and "(B) the entity furnishing the items and services must agree to accept the amount paid pursuant to subparagraph (A) as the full charge for the items and services.". (b) EFFECTIVE DATES.—(1) Section 602(k)(2) of the Social Security 42 u s e 1395y Amendments of 1983 (as added by subsection (a)) shall apply to cost note. reporting periods beginning on or after January 1, 1986. (2) Section 602(k)(3) of the Social Security Amendments of 1983 (as added by subsection (a)) shall apply to items and services furnished after the end of the 10-day period beginning on the date of the enactment of this Act. SEC. 9113. REPORT ON IMPACT OF OUTLIER AND TRANSFER POLICY ON RURAL HOSPITALS. - ^ S> (a) REVIEW.—The Secretary of Health and Human Services shall review the impact of policies respecting outliers and patient trans- fers on payments under section 1886(d) of the Social Security Act to 42 use I395ww. rural hospitals (particularly on rural hospitals with less than 100 beds). (b) REPORT.—The Secretary shall report to Congress on the find- ings of the review not later than January 1, 1987, and shall include in the report recommendations on changes in policies respecting outliers and patient transfers to the extent they adversely affect rural hospitals. SEC. 9114. INFORMATION ON IMPACT OF PPS PAYMENTS ON HOSPITALS. (a) DISCLOSURE OF INFORMATION.—The Secretary of Health and 42 u s e 1395WW Human Services shall make available to the Prospective Payment note. Assessment Commission, the Congressional Budget Office, the Comptroller General, and the Congressional Research Service the most current information on the payments being made under sec- tion 1886 of the Social Security Act to individual hospitals. Such information shall be made available in a manner that permits examination of the impact of such section on hospitals. (h) CONFIDENTIALITY.—Information disclosed under subsection (a) shall be treated as confidential and shall not be subject to further disclosure in a manner that permits the identification of individual hospitals. SEC. 9115. SPECIAL RULES FOR IMPLEMENTATION OF SUBPART. (a) WAIVER OF PAPERWORK REDUCTION.—Chapter 35 of title 44, 42 u s e I395ww United States Code, shall not apply to information required for "°*f • ^ „^„, 44 u s e 3501 et
100 STAT. 164 PUBLIC LAW 99-272—APR. 7, 1986 purposes of carrying out this subpart and implementing the amend- ments made by this subpart. (b) USE OF INTERIM FINAL REGULATIONS.—The Secretary of Health and Human Services shall issue such regulations (on an interim or other basis) as may be necessary to implement this subpart and the amendments made by this subpart. Subpart B—Miscellaneous Provisions SEC. 9121. RESPONSIBILITIES OF MEDICARE HOSPITALS IN EMERGENCY CASES. (a) REQUIREMENT OF MEDICARE HOSPITAL PROVIDER AGREE- MENTS.—Section 1866(a)(1) of the Social Security Act (42 U.S.C. 1395cc(a)(l)) is amended— (1) by striking out "and" at the end of subparagraph (G), (2) by striking out the period at the end of subparagraph (H) and inserting in lieu thereof ", and", and (3) by inserting after subparagraph (H) the following new subparagraph: "(I) in the case of a hospital, to complv with the requirements Infra. of section 1867 to the extent applicable.'. (b) REQUIREMENTS.—Title XVIII of such Act is amended by insert- ing after section 1866 the following new section: "EXAMINATION AND TREATMENT FOR EMERGENCY MEDICAL CONDITIONS AND WOMEN IN ACTIVE LABOR 42 use I395dd. "SEC. 1867. (a) MEDICAL SCREENING REQUIREMENT.—In the case of a hospital that has a hospital emergency department, if any individ- ual (whether or not eligible for benefits under this title) comes to the emergency department and a request is made on the individual's behalf for examination or treatment for a medical condition, the hospital must provide for an appropriate medical screening exam- ination within the capability of the hospital's emergency depart- ment to determine whether or not an emergency medical condition (within the meaning of subsection (e)(1)) exists or to determine if the individual is in active labor (within the meaning of subsection (e)(2)). "(b) NECESSARY STABILIZING TREATMENT FOR EMERGENCY MEDICAL CONDITIONS AND ACTIVE LABOR.— "(1) I N GENERAL.—If any individual (whether or not eligible for benefits under this title) comes to a hospital and the hospital determines that the individual has an emergency medical condi- tion or is in active labor, the hospital must provide either— "(A) within the staff and facilities available at the hos- pital, for such further medical examination and such treat- ment as may be required to stabilize the medical condition or to provide for treatment of the labor, or "(B) for transfer of the individual to another medical facility in accordance with subsection (c). "(2) REFUSAL TO CONSENT TO TREATMENT.—A hospital is deemed to meet the requirement of paragraph (1)(A) with re- spect to an individual if the hospital offers the individual the further medical examination and treatment described in that paragraph but the individual (or a legally responsible person ,^ acting on the individual's behalf) refuses to consent to the examination or treatment.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 165 "(3) REFUSAL TO CONSENT TO TRANSFER.—A hospital is deemed to meet the requirement of paragraph (1) with respect to an individual if the hospital offers to transfer the individual to another medical facility in accordance with subsection (c) but the individual (or a legally responsible person acting on the individual's behalf) refuses to consent to the transfer. '(c) RESTRICTING TRANSFERS UNTIL PATIENT STABILIZED.— "(1) RULE.—If a patient at a hospital has an emergency medical condition which has not been stabilized (within the meaning of subsection (e)(4)(B)) or is in active labor, the hospital may not transfer the patient unless— "(A)(i) the patient (or a legally responsible person acting on the patient's behalf) requests that the transfer be ef- fected, or * "(ii) a physician (within the meaning of section 1861(r)(l)), 42 USC I395x. or other qualified medical personnel when a physician is not readily available in the emergency department, has signed a certification that, based upon the reasonable risks and benefits to the patient, and based upon the information available at the time, the medical benefits reasonably ex- pected from the provision of appropriate medical treatment at another medical facility outweigh the increased risks to the individual's medical condition from effecting the trans- fer; and "(B) the transfer is an appropriate transfer (within the meaning of paragraph (2)) to that facility. "(2) APPROPRIATE TRANSFER.—An appropriate transfer to a medical facility is a transfer— "(A) in which the receiving facility— "(i) has available space and qualified personnel for the treatment of the patient, and "(ii) has agreed to accept transfer of the patient and to provide appropriate medical treatment; "(B) in which the transferring hospital provides the receiving facility with appropriate medical records (or copies thereof) of the examination and treatment effected at the transferring hospital; "(C) in which the transfer is effected through qualified personnel and transportation equipment, as required including the use of necessary and medically appropriate life support measures during the transfer; and "(D) which meets such other requirements as the Sec- retary may find necessary in the interest of the health and safety of patients transferred. '(d) ENFORCEMENT.— "(1) As REQUIREMENT OF MEDICARE PROVIDER AGREEMENT.—If a hospital knowingly and willfully, or negligently, fails to meet the requirements of this section, such hospital is subject to— "(A) termination of its provider agreement under this title in accordance with section 1866(b), or 42 USC I395cc. "(B) at the option of the Secretary, suspension of such agreement for such period of time as the Secretary deter- mines to be appropriate, upon reasonable notice to the hospital and to the public. "(2) CIVIL MONETARY PENALTIES.—In addition to the other grounds for imposition of a civil money penalty under section 1128A(a), a participating hospital that knowingly violates a 42 USC 1320a-7a.
100 STAT. 166 PUBLIC LAW 99-272—APR. 7, 1986 requirement of this section and the responsible physician in the hospital with respect to such a violation are each subject, under that section, to a civil money penalty of not more than $25,000 for each such violation. As used in the previous sentence, the term 'responsible physician' means, with respect to a hospital's violation of a requirement of this section, a physician who— "(A) is employed by, or under contract with, the partici- pating hospital, and "(B) acting as such an employee or under such a contract, has professional responsibility for the provision of examina- tions or treatments for the individual, or transfers of the individual, with respect to which the violation occurred. "(3) CIVIL ENFORCEMENT.— xv. J i "(A) PERSONAL HARM.—Any individual who suffers per- sonal harm as a direct result of a participating hospital's violation of a requirement of this section may, in a civil action against the participating hospital, obtain those dam- ages available for personal injury under the law of the State in which the hospital is located, and such equitable relief as is appropriate. State and local "(B) FINANCIAL LOSS TO OTHER MEDICAL FACILITY.—Any governments. medical facility that suffers a financial loss as a direct result of a participating hospital's violation of a require- "•r ' ment of this section may, in a civil action against the participating hospital, obtain those damages available for '•>•' financial loss, under the law of the State in which the hospital is located, and such equitable relief as is appro- priate. ^-* "(C) LIMITATIONS ON ACTIONS.—No action may be brought under this paragraph more than two years after the date of the violation with respect to which the action is brought. "(e) DEFINITIONS.—In this section: "(1) The term 'emergency medical condition' means a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of imme- diate medical attention could reasonably be expected to result in— "(A) placing the patient's health in serious jeopardy, "(B) serious impairment to bodily functions, or "(C) serious dysfunction of any bodily organ or part. "(2) The term 'active labor' means labor at a time at which— "(A) delivery is imminent, "(B) there is inadequate time to effect safe transfer to another hospital prior to delivery, or "(C) a transfer may pose a threat of the health and safety of the patient or the unborn child. "(3) The term 'participating hospital' means hospital that has 42 use 1395CC. entered into a provider agreement under section 1866 and has, under the agreement, obligated itself to comply with the requirements of this section. "(4)(A) The term 'to stabilize' means, with respect to an emergency medical condition, to provide such medical treat- ment of the condition as may be necessary to assure, within reasonable medical probability, that no material deterioration of the condition is likely to result from the transfer of the individual from a facility.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 167 "(B) The term 'stabilized' means, with respect to an emer- gency medical condition, that no material deterioration of the condition is likely, within reasonable medical probability, to result from the transfer of the individual from a facility. "(5) The term 'transfer' means the movement (including the discharge) of a patient outside a hospital's facilities at the direction of any person employed by (or affiliated or associated, directly or indirectly, with) the hospital, but does not include such a movement of a patient who (A) has been declared dead, or (B) leaves the facility without the permission of any such person. "(f) PREEMPTION.—The provisions of this section do not preempt State and local any State or local law requirement, except to the extent that the governments. requirement directly conflicts with a requirement of this section.". (c) EFFECTIVE DATE.—The amendments made by this section shall 42 u s e 1395dd take effect on the first day of the first month that begins at least 90 note. days after the date of the enactment of this Act. (d) REPORT.—The Secretary of Health and Human Services shall, not later than 6 months after the effective date described in subsec- tion (c), report to Congress on the methods to be used for monitoring and enforcing compliance with section 1867 of the Social Security Act. Ante, p. 164. SEC. 9122. REQUIREMENT FOR MEDICARE HOSPITALS TO PARTICIPATE IN CHAMPUS AND CHAMPVA PROGRAMS. (a) IN GENERAL.—Section 1866(a)(1) of the Social Security Act (42 U.S.C. 1395cc(a)(l)) is amended— Ante, p. 164. (1) by striking out "and" at the end of subparagraph (H), (2) by striking out the period at the end of subparagraph (I) and inserting in lieu thereof ", and", and (3) by inserting after subparagraph (I) the following new subparagraph: "(J) in the case of hospitals which provide inpatient hospital services for which payment may be made under this title, to be a participating provider of medical care under any health plan contracted for under section 1079 or 1086 of title 10, or under section 613 of title 38, United States Code, in accordance with admission practices, payment methodology, and amounts as prescribed under joint regulations issued by the Secretary and by the Secretaries of Defense and Transportation, in im- plementation of sections 1079 and 1086 of title 10, United States Code.". (b) EFFECTIVE DATE.—The amendments made by subsection (a) 42 u s e 1395CC shall apply to agreements entered into or renewed on or after the note. date of the enactment of this Act, but shall apply only to inpatient hospital services provided pursuant to admissions to hospitals occur- ring on or after January 1,1987. (c) REFERENCE TO STUDY REQUIRED.—For a study of the use by CHAMPUS of the medicare prospective payment system, see section 634 of the Department of Defense Authorization Act, 1985 (Public Law 98-525), the deadline for which is extended under section 2002 98 Stat. 2544 of this Act. (d) REPORT.—The Secretary of Health and Human Services shall 42 u s e 1395CC report to Congress periodically on the number of hospitals that have note. terminated or failed to renew an agreement under section 1866 of the Social Security Act as a result of the additional conditions imposed under the amendments made by subsection (a).
100 STAT. 168 PUBLIC LAW 99-272—APR. 7, 1986 SEC. 9123. EXTENSION AND PAYMENT FOR HOSPICE CAKE. (a) ELIMINATION OF SUNSET.—Section 122(h)(1) of the Tax Equity 42 u s e 1395c and Fiscal Responsibility Act of 1982 (P.L. 97-248, 96 Stat. 362), note. relating to the end of the effective date for hospice care, is amended— (1) in subparagraph (A)— (A) by striking out "(h)(1)(A) Subject to subparagraph (B), the" and inserting in lieu thereof "(h)(1) The", and (B) by striking out ", and before October 1, 1986", and (2) by striking out subparagraph (B). (b) INCREASE IN PAYMENT OF DAILY RATES FOR HOSPICE CARE.—(1) Subparagraph (B) of section 1814(i)(l) of the Social Security Act (42 U.S.C. 1395f(i)(l)) is amended to read as follows: "(B) Notwithstanding subparagraph (A), for hospice care fur- nished on or after April 1, 1986, the daily rate of payment per day for routine home care shall be $63.17 and the daily rate of payment for other services included in hospice care shall be the daily rate of payment recognized under subparagraph (A) as of July 1, 1985, increased by $10.". (2) Subparagraph (C) of such section is amended by striking out "1985" and inserting in lieu thereof "1986". SEC. 9124. LIMITING THE PENALTY FOR LATE ENROLLMENT IN PART A. (a) LIMITING PENALTY TO 10 PERCENT AND TWICE THE PERIOD DURING WHICH NOT ENROLLED.—Section 1818(c) of the Social Secu- rity Act (42 U.S.C. 1395i-2(c)) is amended— (1) by striking out "and" at the end of paragraph (5), (2) by striking out the period at the end of paragraph (6) and inserting in lieu thereof "; and", and (3) by adding at the end the following new paragraph: 42 u s e 1395r. "(7) any percent increase effected under section 1839(b) in an individual's monthly premium may not exceed 10 percent and shall only apply to premiums paid during a period equal to twice the number of months in the full 12-month periods de- scribed in that section.". 42 u s e 1395i-2 (b) EFFECTIVE DATE.—(1) The amendment made by subsection note. (a)(3) shall apply to premiums paid for months beginning with July 1986. (2) In applying that amendment, months (before, during, or after April 1986) in which an individual was required to pay a premium increased under the section that was so amended shall be taken into account in determining the month in which the premium will no longer be subject to an increase under that section as so amended. SEC. 9125. PROMULGATION OF INPATIENT HOSPITAL DEDUCTIBLE. (a) CHANGE IN DEADLINE.—Section 1813(b)(2) of the Social Security Act (42 U.S.C. 1395e(b)(2)) is amended by striking out "October 1" and inserting in lieu thereof "September 15". 42 u s e 1395e (b) EFFECTIVE DATE.—The amendment made by this section shall note. apply to calendar years after 1985. SEC. 9126. ACCESS TO SKILLED NURSING FACILITIES. (a) OPTIONAL PROSPECTIVE RATES FOR CERTAIN SKILLED NURSING FACILITIES.—Section 1888 of the Social Security Act (42 U.S.C. 1395yy) is amended by adding at the end the following new subsection: ; . . _,
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 169 "(d)(1) Any skilled nursing facility may choose to be paid under this subsection on the basis of a prospective payment for all routine service costs (and capital-related costs) of extended care services provided in a fiscal year if such facility had, in the preceding fiscal year, fewer than 1,500 patient days with respect to which payments were made under this title. Such prospective payment shall be in lieu of payments which would otherwise be made for routine service costs pursuant to section 1861(v) and subsections (a) through (c) of 42 USC I395x. this section and capital-related costs pursuant to section 1861(v). This subsection shall not apply to a facility for any fiscal year immediately following a fiscal year in which such facility had 1,500 or more patient days with respect to which payments were made under this title, without regard to whether payments were made under this subsection during such preceding fiscal year. "(2)(A) The amount of the payment under this section shall be determined on a per diem basis. "(B) Subject to the limitations of subparagraph (C), for skilled Urban areas, nursing facilities located— Rural areas, "(i) in an urban area, the amount shall be equal to 105 percent of the mean of the per diem reasonable routine service and capital-related costs of extended care services for skilled nursing facilities in urban areas within the same region, deter- mined without regard to the limitations of subsection (a) and adjusted for different area wage levels, and "(ii) in a rural area the amount shall be equal to 105 percent •tU 1 of the mean of the per diem reasonable routine service and capital-related costs of extended care services for skilled nursing facilities in rural areas within the same region, determined without regard to the limitations of subsection (a) and adjusted for different area wage levels. "(C) The per diem amounts determined under subparagraph (B) shall not exceed the limit on routine service costs determined under subsection (a) with respect to the facility, adjusted to take into account average capital-related costs with respect to the type and location of the facility. "(3) For purposes of this subsection, urban and rural areas shall be determined in the same manner as for purposes of subsection (a), and the term 'region' shall have the same meaning as under section 1886(d)(2)(D). "(4) The Secretary shall establish the prospective payment amounts for each fiscal year at least 90 days prior to the beginning of such fiscal year, on the basis of the most recent data available for a 12-month period. A skilled nursing facility must notify the Sec- retary of its intention to be paid pursuant to this subsection for a fiscal year within 60 days after the Secretary establishes the final prospective payment amounts for such fiscal year. "(5) The Secretary shall provide for a simplified cost report to be Reports, filed by facilities being paid pursuant to this subsection, which shall require only the cost information necessary for determining prospec- tive payment amounts pursuant to paragraph (2) and reasonable costs of ancillary services. "(6) In lieu of payment on a cost basis for ancillary services provided by a facility which is being paid pursuant to this subsec- tion, the Secretary may pay for such ancillary services on a reason- able charge basis if the Secretary determines that such payment basis will provide an equitable level of reimbursement and will ease the reporting burden of the facility.".
100 STAT. 170 PUBLIC LAW 99-272—APR. 7, 1986 (b) PUBLICATION OF DATA RELATING TO ADJUSTMENTS TO S N F 42 u s e 1395yy. LIMITS.—Section 1888(c) of such Act is amended by adding at the end thereof the following: "The Secretary shall publish the data and criteria to be used for purposes of this subsection on an annual basis.". 42 u s e 1395y (c) REINSTATEMENT OF WAIVER OF LIABILITY PRESUMPTION.—The note. Secretary of Health and Human Services shall, for purposes of determining whether payments to a skilled nursing facility should be denied pursuant to section 1862(a)(1)(A) of the Social Security 42 u s e 1395y. Act, apply the same presumption of compliance (5 percent) as in effect under regulations as of July 1, 1985. Such presumption shall apply for the 30-month period beginning with the first month beginning after the date of the enactment of this Act. 42 u s e 1395yy (d) EFFECTIVE DATES.—(1) The amendment made by subsection (a) note. shall apply to fiscal years beginning on or after October 1, 1986. (2) The amendment made by subsection (b) shall become effective on the date of the enactment of this Act. SEC. 9127. ADDITIONAL MEMBERS OF PROSPECTIVE PAYMENT ASSESS- MENT COMMISSION. (a) EXPANSION OF MEMBERSHIP.—Section 1886(e)(6)(A) of the Social Security Act (42 U.S.C. 1395ww(e)(6)(A)) is amended by striking out "15 individuals" and inserting in lieu thereof "17 individuals". 42 u s e 1395WW (b) APPOINTMENTS.—The Director of the Congressional Office of note. Technology Assessment shall appoint the two additional members of the Prospective Payment Assessment Commission, as required by the amendment made by subsection (a), no later than 60 days after the date of the enactment of this Act, for terms of three years. SEC. 9128. SENSE OF THE SENATE WITH RESPECT TO INPATIENT HOS- PITAL DEDUCTIBLE. In view of the $92 Medicare hospital deductible increase that went into effect January 1, 1986, it is the sense of the Senate that the Committee on Finance should report legislation which will reform calculation of the annual increase in such deductible so that it is more consistent with annual increases in Medicare payments to hospitals. SEC. 9129. MEDICARE COVERAGE OF STATE AND LOCAL EMPLOYEES. For provision providing for medicare coverage of certain State and local employees, see section 13205 of this Act. PART 2—PROVISIONS RELATING TO PARTS A AND B OF MEDICARE Subpart A—Payment-Related Provisions SEC. 9201. EXTENSION OF WORKING AGED PROVISION. (a) EXTENSION OF SECONDARY PAYOR STATUS BEYOND AGE 69.— Section 1862(b)(3)(A) of the Social Security Act (42 U.S.C. 1395y(b)(3)(A)) is amended— (1) in clause (i), by striking out "who is under 70 years of age during any part of such month" and ", if the spouse is under 70 years of age during any part of such month", and
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 171 (2) in clause (iii), by striking out "and ending with the month before the month in which such individual attains the age of 70". (b) EXTENSION OF AGE DISCRIMINATION PROVISIONS.— (1) Section 4(g)(1) of the Age Discrimination in Employment Act of 1967 (29 U.S.C. 623(gXl)) is amended by striking out "through 69" and inserting in lieu thereof "or older" each place it appears. (2) Section 12(a) of such Act (29 U.S.C. 631(a)) is amended by inserting "(except the provisions of section 4(g))" after "Act'. (3) Section 4 of such Act (29 U.S.C. 623) is amended by redesignating the second subsection (g), added by section 802 of the Older Americans Act Amendments of 1984, as subsection 98 Stat. 1792. (h). (c) CONFORMING AMENDMENTS.— (1) SPECIAL ENROLLMENT PERIOD.—Paragraph (3) of section 1837(i) of the Social Security Act (42 U.S.C. 1395p(i)(3)) is amended to read as follows: "(3) The special enrollment period referred to in paragraphs (1) and (2) is the period beginning with the first day of the first month in which the individual is no longer enrolled in a group health plan described in section 1862(b)(3)(A)(iv) by reason of current employ- 42 USC 1395y. ment and ending seven months later.". (2) EFFECTIVE DATE OF ENROLLMENT.—Subsection (e) of section 1838 of the Social Security Act (42 U.S.C. 1395q) is amended to read as follows: "(e) Notwithstanding subsection (a), in the case of an individual who enrolls during a special enrollment period pursuant to section 1837(i)(3)— 42 use 1395p. "(1) in the first month of the special enrollment period, the coverage period shall begin on the first day of that month, or "(2) in a month after the first month of the special enrollment period, the coverage period shall begin on the first day of the month following the month in which the individual so enrolls." (d) EFFECTIVE DATES.—(1) The amendments made by subsection (a) 42 USC I395y shall apply with respect to items and services furnished on or after note. May 1,1986. (2) The amendments made by subsections (b) and (c) shall become 42 USC I395p effective on May 1,1986. note. SEC. 9202. PAYMENTS TO HOSPITALS FOR DIRECT COSTS OF MEDICAL EDUCATION. (a) MEDICARE PAYMENT METHODOLOGY.—Section 1886 of the Social Security Act (42 U.S.C. 1395ww) is amended by adding at the end the following new subsection: "(h) PAYMENTS FOR DIRECT GRADUATE MEDICAL EDUCATION COSTS.— "(1) SUBSTITUTION OF SPECIAL PAYMENT RULES.—Notwithstand- ing section 1861(v), instead of any amounts that are otherwise 42 USC I395x. payable under this title with respect to the reasonable costs of hospitals for direct graduate medical education costs, the Sec- retary shall provide for payments for such costs in accordance with paragraph (3) of this subsection. In providing for such payments, the Secretary shall provide for an allocation of such payments between part A and part B (and the trust funds established under the respective parts) as reasonably reflects the proportion of direct graduate medical education costs of
100 STAT. 172 PUBLIC LAW 99-272—APR. 7, 1986 hospitals associated with the provision of services under each respective part. "(2) DETERMINATION OF HOSPITAL-SPECIFIC APPROVED FTE RESI- DENT AMOUNTS.—The Secretary shall determine, for each hos- pital with an approved medical residency training program, an approved FTE resident amount for each cost reporting period beginning on or after July 1, 1985, as follows: "(A) DETERMINING ALLOWABLE AVERAGE COST PER FTE RESI- DENT IN A HOSPITAL'S BASE PERIOD.—The Secretary shall determine, for the hospital's cost reporting period that began during fiscal year 1984, the average amount recog- nized as reasonable under this title for direct graduate medical education costs of the hospital for each full-time- equivalent resident. "(B) UPDATING TO THE FIRST COST REPORTING PERIOD.— "(i) I N GENERAL.—The Secretary shall update each average amount determined under subparagraph (A) by the percentage increase in the consumer price index during the 12-month cost reporting period described in such subparagraph. "(ii) EXCEPTION.—The Secretary shall not perform an update under clause (i) in the case of a hospital if the hospital's reporting period, described in subparagraph (A), began on or after July 1, 1984, and before Octo- ber 1, 1984. "(C) AMOUNT FOR FIRST COST REPORTING PERIOD.—For the first cost reporting period of the hospital beginning on or after July 1, 1985, the approved FTE resident amount for the hospital is equal to the amount determined under paragraph (B) increased by 1 percent. "(D) AMOUNT FOR SUBSEQUENT COST REPORTING PERIODS.— For each subsequent cost reporting period, the approved FTE resident amount for the hospital is equal to the amount determined under this paragraph for the previous cost reporting period updated, through the midpoint of the period, by projecting the estimated percentage change in the consumer price index during the 12-month period ending at that midpoint, with appropriate adjustments to ,, reflect previous under- or over-estimations under this subparagraph in the projected percentage change in the consumer price index. "(E) TREATMENT OF CERTAIN HOSPITALS.—In the case of a hospital that did not have an approved medical residency training program or was not participating in the program under this title for a cost reporting period beginning during fiscal year 1984, the Secretary shall, for the first such period for which it has such a residency training program and is participating under this title, provide for such ap- proved FTE resident amount as the Secretary determines to be appropriate, based on approved FTE resident amounts for comparable programs. "(3) HOSPITAL PAYMENT AMOUNT PER RESIDENT.— "(A) I N GENERAL.—The payment amount, for a hospital cost reporting period beginning on or after July 1, 1985, is equal to the product of— "(i) the aggregate approved amount (as defined in subparagraph (B)) for that period, and
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 173 "(ii) the hospital's medicare patient load (as defined in subparagraph (O) for that period. "(B) AGGREGATE APPROVED AMOUNT.—As used in subpara- graph (A), the term 'aggregate approved amount' means, for a hospital cost reporting period, the product of— "(i) the hospital's approved FTE resident amount (determined under paragraph (2)) for that period, and "(ii) the weighted average number of full-time- equivalent residents (as determined under paragraph (4)) in the hospital's approved medical residency train- ing programs in that period. "(C) MEDICARE PATIENT LOAD.—As used in subparagraph -5Sj* ^ (A), the term 'medicare patient load' means, with respect to a hospital's cost reporting period, the fraction of the total number of inpatient-bed-days (as established by the Sec- retary) during the period which are attributable to patients with respect to whom payment may be made under part A. '(4) DETERMINATION OF FULL-TIME-EQUIVALENT RESIDENTS.— "(A) RULES.—The Secretary shall establish rules consist- ent with this paragraph for the computation of the number of full-time-equivalent residents in an approved medical residency training program. "(B) ADJUSTMENT FOR PART-YEAR OR PART-TIME RESI- DENTS.—Such rules shall take into account individuals who serve as residents for only a portion of a period with a hospital or simultaneously with more than one hospital. "(C) WEIGHTING FACTORS FOR CERTAIN RESIDENTS.—Sub- ject to subparagraph (E), such rules shall provide, in cal- culating the number of full-time-equivalent residents in an approved residency program— "(i) before July 1, 1986, for each resident the weighting factor is 1.00, "(ii) on or after July 1, 1986, for a resident who is in the resident's initial residency period (as defined in paragraph (5)(F)), the weighting factor is 1.00, "(iii) on or after July 1, 1986, and before July 1, 1987, for a resident who is not in the resident's initial resi- dency period (as defined in paragraph (5)(F)), the weighting factor is .75, and "(iv) on or after July 1,1987, for a resident who is not in the resident's initial residency period (as defined in paragraph (5)(F)), the weighting factor is .50. "(E) FOREIGN MEDICAL GRADUATES REQUIRED TO PASS FMGEMS E X A M I N A T I O N . — "(i) I N GENERAL.—Except as provided in clause (ii), such rules shall provide that, in the case of an individ- ual who is a foreign medical graduate (as defined in paragraph (5)(D)), the individual shall not be counted as a resident on or after July 1,1986, unless— "(I) the individual has passed the FMGEMS examination (as defined in paragraph (5XE)), or "(II) the individual has previously received cer- tification from, or has previously passed the exam- ination of, the Educational Commission for Foreign Medical Graduates.
100 STAT. 174 PUBLIC LAW 99-272—APR. 7, 1986 "(ii) TRANSITION FOR CURRENT FMGS.—On or after July 1, 1986, in the case of a foreign medical graduate who— "(I) has served as a resident before July 1, 1986, and is serving as a resident after that date, but "(II) has not passed the FMGEMS examination or a previous examination of the Educational Commission for Foreign Medical Graduates before July 1,1986, , the individual shall be counted as a resident at a rate equal to one-half of the rate at which the individual would otherwise be counted. "(5) DEFINITIONS AND SPECIAL RULES.—As used in this subsec- tion: "(A) APPROVED MEDICAL RESIDENCY TRAINING PROGRAM.— The term 'approved medical residency training program' means a residency or other postgraduate medical training program participation in which may be counted toward certification in a specialty or subspecialty and includes formal postgraduate training programs in geriatric medi- cine approved by the Secretary. "(B) CONSUMER PRICE INDEX.—As used in this paragraph, the term 'consumer price index' refers to the Consumer Price Index for All Urban Consumers (United States city average), as published by the Secretary of Commerce. "(C) DIRECT GRADUATE MEDICAL EDUCATION COSTS.—The term 'direct graduate medical education costs' means direct costs of approved educational activities for approved medi- cal residency training programs. "(D) FOREIGN MEDICAL GRADUATE.—The term 'foreign medical graduate' means a resident who is not a graduate i.w T of— "(i) a school of medicine accredited by the Liaison ,i3 Committee on Medical Education of the American ,-jj Medical Association and the Association of American Medical Colleges (or approved by such Committee as meeting the standards necessary for such accredita- tion), ^jl "(ii) a school of osteopathy accredited by the Amer- ican Osteopathic Association, or approved by such Association as meeting the standards necessary for j, such accreditation, or ' '^*^ "(iii) a school of dentistry or podiatry which is accred- ited (or meets the standards for accreditation) by an '^')A'! organization recognized by the Secretary for such pur- pose. "(E) FMGEMS EXAMINATION.—The term 'FMGEMS examination' means parts I and II of the Foreign Medical Graduate Examination in the Medical Sciences recognized by the Secretary for this purpose. "(F) INITIAL RESIDENCY PERIOD.—The term 'initial resi- dency period' means the period of board eligibility plus one year, except that— "(i) except as provided in clause (ii), in no case shall the initial period of residency exceed an aggregate ^': period of formal training of more than five years for any individual, and
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 175 "(ii) a period, of not more than two years, during which an individual is in a geriatric residency or fellowship program which meets such criteria as the Secretary may establish, shall be treated as part of the initial residency period, but shall not be counted against any limitation on the initial residency period. The initial residency period shall be determined, with re- spect to a resident, as of the time the resident enters the residency training program. "(G) PERIOD OF BOARD ELIGIBILITY.— "(i) GENERAL RULE.—Subject to clauses (ii) and (iii), the term 'period of board eligibility' means, for a resi- dent, the minimum number of years of formal training necessary to satisfy the requirements for initial board eligibility in the particular specialty for which the resident is training. "(ii) APPLICATION OF 1 9 8 5 - I 9 8 6 DIRECTORY.—Except as provided in clause (iii), the period of board eligibility shall be such period specified in the 1985-1986 Direc- tory of Residency Training Programs published by the Accreditation Council on Graduate Medical Education. "(iii) CHANGES IN PERIOD OF BOARD ELIGIBILITY.—On or after July 1, 1989, if the Accreditation Council on Graduate Medical Education, in its Directory of Resi- dency Training Programs— "(I) increases the minimum number of years of formal training necessary to satisfy the require- -i.L , ments for a specialty, above the period specified in its 1985-1986 Directory, the Secretary may in- crease the period of board eligibility for that spe- cialty, but not to exceed the period of board eligibility specified in that later Directory, or "(II) decreases the minimum number of years of formal training necessary to satisfy the require- ments for a specialty, below the period specified in its 1985-1986 Directory, the Secretary may de- crease the period of board eligibility for that spe- cialty, but not below the period of board eligibility : J specified in that later Directory. "(H) RESIDENT.—The term 'resident' includes an intern or other participant in an approved medical residency training program.". (b) EFFECTIVE DATE.—The amendment made by subsection (a) 42 u s e 1395WW shall apply to hospital cost reporting periods beginning on or after note. July 1, 1985. (c) STUDIES BY SECRETARY.—(1) The Secretary of Health and 42 u s e 1395WW Human Services shall conduct a study with respect to approved note. educational activities relating to nursing and other health profes- sions for which reimbursement is made to hospitals under title XVIII of the Social Security Act. The study shall address— 42 u s e 1395. (A) the types and numbers of such programs, and number of students supported or trained under each program; (B) the fiscal and administrative relationships between the hospitals involved and the schools with which the programs and students are affiliated; and (C) the types and amounts of expenses of such programs for which reimbursement is made, and the financial and other
100 STAT. 176 PUBLIC LAW 99-272—APR. 7, 1986 contributions which accrue to the hospital as a consequence of having such programs. The Secretary shall report the results of such study to the Commit- tee on Finance of the Senate and the Committees on Ways and Means and Energy and Commerce of the House of Representatives prior to December 31,1987. (2) The Secretary shall conduct a separate study of the advisability of continuing or terminating the exception under section Ante, p. 171. 1886(h)(5)(F)(ii) of the Social Security Act for geriatric residencies and fellowships, and of expanding such exception to cover other educational activities, particularly those which are necessary to meet the projected health care needs of Medicare beneficiaries. Such study shall also examine the adequacy of the supply of faculty in the field of geriatrics. The Secretary shall report the results of such study to the committees described in paragraph (1) prior to July 1, 1990. 42 u s e 1395WW (d) GAO STUDY.—(1) The Comptroller General shall conduct a note. study of the variation in the amounts of payments made under title 42 u s e 1395. XVIII of the Social Security Act with respect to patients in different teaching hospital settings and in the amounts of such payments which are made with respect to patients who are treated in teaching and nonteaching hospital settings. Such study shall identify the components of such payments (including payments with respect to inpatient hospital services, physicians' services, and capital costs, and, in the case of teaching hospital patients, payments with respect to direct and indirect teaching costs) and shall account, to the extent feasible, for any variations in the amounts of the payment compo- nents between teaching and nonteaching settings and among dif- ferent teaching settings. (2) In carrying out such study, the Comptroller General may utilize a sample of hospital patients and any other data sources which he deems appropriate, and shall, to the extent feasible, control for differences in severity of illness levels, area wage levels, levels of physician reasonable charges for like services and proce- dures, and for other factors which could affect the comparability of patients and of payments between teaching and nonteaching set- tings and among teaching settings. The information obtained in the study shall be coordinated with the information obtained in conduct- ing the study of teaching physicians' services under section 2307(c) 42 u s e 1395u of the Deficit Reduction Act of 1984. note. (3) The Comptroller General shall report the results of the study to the committees described in subsection (c)(1) prior to Decem- ber 31, 1987. 42 u s e 1395WW (e) REPORT ON UNIFORMITY OF APPROVED FTE RESIDENT note. AMOUNTS.—The Secretary of Health and Human Services shall report to the committees described in subsection (c)(1), not later than December 31, 1987, on whether section 1886(h) of the Social Security Act should be revised to provide for greater uniformity in the approved FTE resident amounts established under paragraph (2) of that section, and, if so, how such revisions should be implemented. 42 u s e 1395WW (f) STUDY ON FOREIGN MEDICAL GRADUATES.—The Secretary of note. Health and Human Services shall study, and report to the commit- tees described in subsection (c)(1), not later than December 31, 1987, respecting the use of physicians who are foreign medical graduates (within the meaning ot section 1886(h)(5)(D) of the Social Security Act) in the provision of health care services (particularly inpatient
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 177 and outpatient hospital services) to medicare beneficiaries. Such study shall evaluate— (1) the types of services provided; (2) the cost of providing such services, relative to the cost of other physicians providing the services or other approaches to providing the services; (3) any deficiencies in the quality of the services provided, and methods of assuring the quality of such services; and (4) the impact on costs of and access to services if medicare payment for hospitals' costs of graduate medical education of foreign medical graduates were phased out. (g) ESTABLISHING PHYSICIAN IDENTIFIER SYSTEM.—The Secretary of 42 u s e 1395WW Health and Human Services shall establish a system, for im- note. plementation not later than July 1, 1987, which provides for a unique identifier for each physician who furnishes services for which payment may be made under title XVIII of the Social Secu- rity Act. 42 u s e 1395. (h) PAPERWORK REDUCTION.—Chapter 35 of title 44, United States 42 u s e 1395WW note. Code, shall not apply to information required for purposes of carry- 44USe 3501 et ing out this section and the amendments made by this section. seq. (i) PROHIBITING A LIMIT O N INCREASES O N DIRECT MEDICAL EDU- CATION COSTS.—(1) Section 1861(v)(l) of the Social Security Act (42 U.S.C. 1395x(v)(l)), as amended by section 9107(b) of this title, is further amended by adding at the end the following new subparagraph: "(Q) Except as otherwise explicitly authorized, the Secretary is not authorized to limit the rate of increase on allowable costs of ap- proved medical educational activities.". (2) The amendment made by paragraph (1) shall apply to cost 42 u s e 1395x reporting periods beginning on or after July 1,1985. note. (j) SPECIAL TREATMENT OF STATES FORMERLY UNDER WAIVER.—In 42 u s e 1395WW the case of a hospital in a State that has had a waiver approved note. under section 1886(c) of the Social Security Act, for cost reporting ^n^e, p. 161. ' periods beginning on or after January 1, 1986, if the waiver is terminated— (1) the Secretary of Health and Human Services shall permit the hospital to change the method by which it allocates adminis- trative and general costs to the direct medical education cost centers to the method specified in the medicare cost report; (2) the Secretary may make appropriate adjustments in the regional adjusted DRG prospective payment rate (for the region in which the State is located), based on the assumption that all teaching hospitals in the State use the medicare cost report; and (3) the Secretary shall adjust the hospital-specific portion of payment under section 1886(d) of such Act for any such hospital that actually chooses to use the medicare cost report. The Secretary shall implement this subsection based on the best available data. SEC. 9204. MORATORIUM ON LABORATORY PAYMENT DEMONSTRATION. (a) MORATORIUM.—Prior to January 1, 1987, the Secretary of 42 u s e 1395ww Health and Human Services shall not conduct any demonstration note. projects relating to competitive bidding as a method of purchasing laboratory services under title XVIII of the Social Security Act. The eontracts. Secretary may contract for the design of, and site selection for, such 42 u s e 1395. demonstration projects.
100 STAT. 178 PUBLIC LAW 99-272—APR. 7, 1986 (b) COOPERATION IN STUDY.—The Secretary of Health and Human Services and the Comptroller General shall assist representatives of clinical laboratories in the industry's conduct of a study to deter- mine whether methods exist which are better than competitive bidding for purposes of utilizing competitive market forces in setting payment levels for laboratory services under title XVIII of the 42 u s e 1395. Social Security Act. If such a study is conducted by the clinical laboratory industry, the Secretary and the Comptroller General shall comment on such study and submit such comments and the study to the Senate Committee on Finance and the House Commit- tees on Ways and Means and Energy and Commerce. 42 u s e 1395y SEC. 9205. HOME HEALTH WAIVER OF LIABILITY. note. The Secretary of Health and Human Services shall, for purposes of determining whether payments to a home health agency should be denied pursuant to section 1862(a)(1)(A) of the Social Security 42 u s e 1395y. Act, apply a presumption of compliance (2.5 percent) in the same manner as under the regulations in effect as of July 1, 1985. Such presumption shall apply until 12 months after the date on which ten regional intermediaries have commenced operations to service home health agencies, as required under section 1816(e)(4) of the Social 42 u s e 1395h. Security Act. Subpart B—Other Provisions SEC. 9211. PROVISIONS RELATING TO HEALTH MAINTENANCE ORGANIZA- TIONS AND COMPETITIVE MEDICAL PLANS. (a) FINANCIAL RESPONSIBILITY FOR PATIENTS HOSPITALIZED ON THE EFFECTIVE DATE OF AN ENROLLMENT OR DISENROLLMENT.—(1) Subsec- tion (c) of section 1876 of the Social Security Act (42 U.S.C. 1395mm) is amended by adding at the end the following new paragraph: Contracts. "(7) A risk-sharing contract under this section shall provide that in the case of an individual who is receiving inpatient hospital services from a subsection (d) hospital (as defined in section 42 u s e 1395WW. 1886(d)(1)(B)) as of the effective date of the individual's— "(A) enrollment with an eligible organization under this sec- tion— "(i) payment for such services until the date of the individual's discharge shall be made under this title as if the individual were not enrolled with the organization, "(ii) the organization shall not be financially responsible for payment for such services until the date after the date of the individual's discharge, and "(iii) the organization shall nonetheless be paid the full amount otherwise payable to the organization under this section; or "(B) termination of enrollment with an eligible organization under this section— "(i) the organization shall be financially responsible for payment for such services after such date and until the date of the individual's discharge, "(ii) payment for such services during the stay shall not be made under section 1886(d), and "(iii) the organization shall not receive any payment with .aft: respect to the individual under this section during the period the individual is not enrolled.".
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 179 (2) Subsection (aX3) of such section is amended by striking out "Payments" and inserting in lieu thereof "Subject to subsection (c)(7), payments". (3) Subsection (a)(6) of such section is amended by striking out " I f and inserting in lieu thereof "Subject to subsection (c)(7), if . (b) DiSENROLLMENTS.— (1) EFFECTIVE DATE.—Subsection (c)(3)(B) of such section is amended by striking out "a full calendar month after" and inserting in lieu thereof "the date on which". (2) INFORMATION.—Such subsection is further amended by adding at the end the following: "In the case of an individual's termination of enrollment, the organization shall provide the individual with a copy of the written request for termination of enrollment and a written explanation of the period (ending on the effective date of the termination) during which the individ- ual continues to be enrolled with the organization and may not receive benefits under this title other than through the organization.". . f -i (c) REVIEW OF MARKETING MATERIAL.—Subsection (c)(3)(C) of such section is amended by adding at the end the following: "No bro- chures, application forms, or other promotional or informational material may be distributed by an organization to (or for the use of) individuals eligible to enroll with the organization under this sec- tion unless (i) at least 45 days before its distribution, the organiza- tion has submitted the material to the Secretary for review and (ii) the Secretary has not disapproved the distribution of the material. The Secretary shall review all such material submitted and shall disapprove such material if the Secretary determines, in the Sec- retary's discretion, that the material is materially inaccurate or misleading or otherwise makes a material misrepresentation.". (d) PROMPT PUBLICATION OF AAPCC.—Subsection (a)(1)(A) of such section is amended by inserting after "The Secretary shall annually determine" the following: ", and shall publish not later than September 7 before the calendar year concerned". (e) EFFECTIVE DATES.— 42 use 1395mm (1) FINANCIAL RESPONSIBILITY.—The amendments made by ^°^^- subsection (a) shall apply to enrollments and disenrollments that become effective on or after the date of the enactment of this Act. (2) DISENROLLMENTS.—The amendments made by subsection (b) shall apply to requests for termination of enrollment submit- ted on or after May 1,1986. (3) MATERIAL REVIEW.—(A) The amendment made by subsec- tion (c) shall not apply to material which has been distributed before July 1,1986. (B) Such amendment also shall not apply so as to require the submission of material which is distributed before July 1, 1986. (C) Such amendment shall also not apply to material which the Secretary determines has been prepared before the date of the enactment of this Act and for which a commitment for distribution has been made, if the application of such amend- ment would constitute a hardship for the organization involved. (4) PUBLICATION.—The amendment made by subsection (d) shall apply to determinations of per capita rates of payment for 1987 and subsequent years. (5) NECESSARY MODIFICATION OF CONTRACTS.—The Secretary of Health and Human Services shall provide for such changes in
100 STAT. 180 PUBLIC LAW 99-272—APR. 7, 1986 the risk-sharing contracts which have been entered into under 42 u s e 1395 section 1876 of the Social Security Act as may be necessary to mm. conform to the requirements imposed by the amendments made by this section on a timely basis. SEC. 9213. REMOVAL OF PROHIBITION ON COMMENTS BY MEDICARE AND SOCIAL SECURITY ACTUARIES RELATING TO ECONOMIC ASSUMPTIONS. (a) FEDERAL OLD-AGE AND DISABILITY INSURANCE TRUST FUND.— Section 201(c) of the Social Security Act (42 U.S.C. 401(c)) is amended by striking out ": Provided, That the certification shall not refer to economic assumptions underlying the Trustee's report, and shall" and inserting in lieu thereof ". Such report shall". (b) MEDICARE TRUST FUNDS.—Sections 1817(b) and 1841(b) of such Act (42 U.S.C. 1395i(b), 1395t(b)) are each amended by striking out ": Provided, That the certification shall not refer to economic assumptions underlying the Trustee's report". 42 u s e 401 note. (c) EFFECTIVE DATE.—The amendments made by this section shall become effective on the date of the enactment of this Act. SEC. 9214. LIMITATION ON MERGER OF END STAGE RENAL DISEASE NET- WORKS. 42 u s e 1395rr The Secretary of Health and Human Services shall maintain note. renal disease network organizations as authorized under section 42 u s e 1395rr. 1881(c) of the Social Security Act, and may not merge the network organizations into other organizations or entities. The Secretary may consolidate such network organizations, but only if such consolidation does not result in fewer than 14 such organizations being permitted to exist. SEC. 9215. EXTENSION OF CERTAIN MEDICARE MUNICIPAL HEALTH SERV- ICES DEMONSTRATION PROJECTS. Maryland. The Secretary of Health and Human Services shall extend, for a Ohio. period of three additional years, approval of four municipal health Wisconsin. services demonstration projects (located in Baltimore, Cincinnati, California. 42 u s e 1395b-l Milwaukee, and San Jose) authorized under section 402(a) of the note. Social Security Amendments of 1967. 42 u s e 1395b-l. SEC. 9216. AUDIT AND MEDICAL CLAIMS REVIEW .„ * (a) INCREASE IN ACTIVITIES FOR FISCAL YEARS 1986, 1987, AND 1988.—Section 118 of the Tax Equity and Fiscal Responsibility Act 42 u s e 1395h of 1982 (96 Stat. 355) is amended— note. (1) by striking out "for fiscal years 1983, 1984, and 1985", (2) by striking out "such fiscal years" and inserting in lieu thereof "fiscal years 1983, 1984, and 1985, and $105,000,000 for each of fiscal years 1986, 1987, and 1988", and (3) by striking out "the purpose of carrying out provider cost audits and reviews of medical necessity" and inserting in lieu thereof "purposes of carrying out provider cost audits, of review- ing medical necessity, and of recovering third-party liability payments". 42 u s e 1395h (b) EFFECTIVE DATE.—The amendments made by subsection (a) note. shall apply to fiscal years beginning with fiscal year 1986. SEC. 9217. LIVER TRANSPLANTS. (a) The Senate finds that:
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 181 (1) There have been more than 600 liver transplants since 1963 and the one year survival rate at qualified institutions is now greater than 70 percent. (2) There are 4,000 to 4,700 potential candidates in the United States each year who require a liver transplant, but only a small percentage would be eligible for Medicare coverage. (3) There are currently individuals on waiting lists for liver transplants who will die without Medicare coverage. (4) After extensive review and consideration of all the avail- ,pj j'«, able data, an National Institutes of Health expert panel concluded liver transplantation is "a therapeutic modality for end-stage liver disease that deserves broader application" in a limited number of centers where they can be carried out under optimal conditions. (5) National Institutes of Health further recommended that liver transplants be done in individuals under 18 years of age. (6) The CHAMPUS program, after considering all relevant data, determined that there was no scientific basis for limiting liver transplants to children under 18 years of age. (7) The Department of Health and Human Services has deter- mined that liver transplantation is no longer an experimental procedure only for children under 18. (b) Based upon the above findings, it is the sense of the Senate that: (1) For the purposes of title XVIII of the Social Security Act, 42 use 1395. the Secretary immediately reconsider the Medicare liver trans- plant coverage decision and implement a policy under which a liver transplant shall not be considered to be an experimental procedure for Medicare beneficiaries solely because an individ- ual is over 18 years of age. . j >j; (2) A liver transplant shall be covered under such title when -'^o.i reasonable and medically necessary. (3) The Secretary shall place appropriate limiting criteria on coverage, including those relating to the patient's condition, the .^ -^^^ ., disease state, and the institution providing the care, so as to ' ^ > .j ensure the highest quality of medical care demonstrated to be consistent with successful outcomes. SEC. 9218. STUDIES RELATING TO PHYSICAL THERAPISTS AND OTHER PROFESSIONALS. (a) SUPERVISION OF HOME HEALTH SERVICES.—The Secretary of Health and Human Services shall conduct a study of the advisability of changing the requirements of title XVIII of the Social Security Act to allow home health services to be provided under the super- vision of a physical therapist or other health care professional, rather than requiring the supervision of a physician or registered nurse. Cb) OFFICE REQUIREMENT.—The Secretary of Health and Human Services shall conduct a study on the advisability of deleting the requirement under such title that a physical therapist must have an office equipped with specified equipment, even if such therapist provides all such services in patients' homes. (c) REPORTS.—The Secretary shall report the results of the studies to the Congress prior to October 1, 1986. SEC. 9219. TECHNICAL CORRECTIONS. (a) WORKING AGED TECHNICAL CORRECTIONS.—
100 STAT. 182 PUBLIC LAW 99-272—APR. 7, 1986 (1) PREMIUM PENALTY.—The second sentence of section 1839(b) of the Social Security Act (42 U.S.C. 1395r(b)), as amended by section 2338(a) of the Deficit Reduction Act of 1984, is amended by striking out "months in which" and all that follows through "clause (iv) of such section" and inserting in lieu thereof "months during which the individual has attained the age of 65 ' and for which the individual can demonstrate that the individ- ual was enrolled in a group health plan described in section 42 use 1395y. 1862(b)(3)(A)(iv)". (2) SPECIAL ENROLLMENT PERIODS.—Section 1837(i) of the Social Security Act (42 U.S.C. 1395p), as added by section 2338(b) of the Deficit Reduction Act of 1984, is amended— (A) in paragraph (1), by amending subparagraph (A) to read as follows: "(A) has attained the age of 65,"; and (B) in paragraph (2), by redesignating subparagraph (C) as subparagraph (D) and by amending subparagraphs (A) and (B) to read as follows: "(A) has attained the age of 65; "(B)(i) has enrolled (or has been deemed to have enrolled) in the medical insurance program established under this part during the individual's initial enrollment period, or (ii) is an individual described in paragraph (1)(B); "(C) has enrolled in such program during any subsequent special enrollment period under this subsection during which the individual was not enrolled in a group health plan described in section 1862(b)(3)(A)(iv) by reason of the individual's (or individual's spouse's) current employment; and". (3) EFFECTIVE DATES.— 42 use 1395r (A) The amendment made by paragraph (1) shall apply to note. months beginning with January 1983 for premiums for months beginning with the first month that begins more than 30 days after the date of the enactment of this Act. 42 use I395p (BXi) The amendments made by paragraph (2) shall apply note. to enrollments in months beginning with the first effective month (as defined in clause (ii)), except that in the case of any individual who would have a special enrollment period gji|v under section 1837(i) of the Social Security Act that would have begun after November 1984 and before the first effec- tive month, the period shall be deemed to begin with the first day of the first effective month. (ii) For purposes of clause (i), the term "first effective month" means the first month that begins more than 90 days after the date of the enactment of this Act. (b) MISCELLANEOUS TECHNICAL CORRECTIONS.— (1)(A) Subclause (III) of section 1842(b)(7XB)(ii) of the Social Security Act (42 U.S.C. 1395ua))(7)(B)(ii)), as added by section 2307(aX2XG) of the Deficit Reduction Act of 1984, is amended by indenting it two additional ems to the right so as to align its left margin with the left margins of subclauses (I) and (II) of that section. (B) Section 1861(n) of the Social Security Act (42 U.S.C. 1395x(n)), as inserted by section 2321(e)(3) of the Deficit Reduc- tion Act of 1984, is amended by striking out "at his home" and inserting in lieu thereof "as his home". (C) Section 1888(b) of the Social Security Act (42 U.S.C. 1395yy0>)), as added by section 2319(b) of the Deficit Reduction
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 183 Act of 1984, is amended by striking out "nothwithstanding" and inserting in lieu thereof "notwithstanding". (D) The amendments made by this paragraph shall be effec- 42 u s e 1395u tive as if they had been originally included in the Deficit note. Reduction Act of 1984. (2)(A) Clause (iii) of section 1842(b)(7)(B) of the Social Security Act (42 U.S.C. 1395u(b)(7)(B)), as added by section 3(b)(6) of Public Law 98-617, is amended by moving its alignment two additional ems to the left so as to align its left margin with the left margins of clauses (i) and (ii) of that section. (B) The amendment made by subparagraph (A) shall be effec- 42 u s e 1395U tive as if it had been originally included in Public Law 98-617. note. (3)(A) Section 1861(v)(l)(G)(i) of the Social Security Act (42 U.S.C. 1395x(b)(l)(G)(i)), as amended by section 602(d)(1) of the Social Security Amendments of 1983, is amended by inserting, in the matter after subclause (III), "on the basis o f after "(during such period)". (B) The amendment made by subparagraph (A) shall be effec- 42 u s e 1395x tive as if it had been originally included in the Social Security note. Amendments of 1983. SEC. 9220. EXTENSION OF ON LOK WAIVER. (a) CONTINUED APPROVAL.— (1) MEDICARE WAIVERS.—Notwithstanding any limitations contained in section 222 of the Social Security Amendments of 1972 and section 402(a) of the Social Security Amendments of 42 u s e 1395b-l 1967, the Secretary of Health and Human Services shall con- and note, 139511. tinue approval of the risk-sharing application (described in 42 u s e 1395b-l. 42 u s e 1395b-l section 603(c)(1) of Public Law 98-21) for waivers of certain note. requirements of title XVIII of the Social Security Act after the 42 u s e 1395. end of the period described in that section. (2) MEDICAID WAIVERS.—Notwithstanding any limitations con- tained in section 1115 of the Social Security Act, the Secretary 42 u s e 1315. shall approve any application of the Department of Health Services, State of California, for a waiver of requirements of title XIX of such Act in order to continue carrying out the 42 u s e 1396. demonstration project referred to in section 603(c)(2) of Public Law 98-21 after the end of the period described in that section. (b) TERMS, CONDITIONS, AND PERIOD OF APPROVAL.—The Sec- retary's approval of an application (or renewal of an application) under this section— (1) shall be on the same terms and conditions as applied with respect to the corresponding application under section 603(c) of Public Law 98-21 as of July 1, 1985, except that requirements relating to collection and evaluation of information for dem- onstration purposes (and not for operational purposes) shall not apply; and (2) shall remain in effect until such time as the Secretary finds that the applicant no longer complies with the terms and conditions described in paragraph (1). SEC. 9221. CONTINUATION OF "ACCESS: MEDICARE" DEMONSTRATION PROJECT. (a) APPROVAL OF APPLICATION.—The Secretary of Health and Human Services shall approve any application for a waiver of any requirement of titles XVIII and XIX of the Social Security Act 42 u s e 1395, necessary to provide for the continuation, through September 30, 1396.
100 STAT. 184 PUBLIC LAW 99-272—APR. 7, 1986 1986, of the "Access: Medicare" demonstration project carried out 42 u s e 1395b-l pursuant to section 222 of the Social Security Amendments of 1972 and note, 1395/Z. and section 402(a) of the Social Security Amendments of 1967 by 42 u s e 1395b-l. Monroe County Long Term Care Program, Inc. (b) TERMS AND CONDITIONS.—The Secretary's approval of an ap- plication (or renewal of an application) under subsection (a) shall be on the same terms and conditions as applied to the demonstration project as in effect on August 31,1985. PART 3—PROVISIONS RELATING TO PART B OF MEDICARE Subpart A—Payment-Related Provisions SEC. 9301. MEDICARE PHYSICIAN PAYMENT PROVISIONS. (a) EXTENSION OF CURRENT FREEZE ON PAYMENT RATES THROUGH APRIL 30, 1986.—Section 5(c) of the Emergency Extension Act of 42 u s e 1395WW 1985 (Public Law 99-107), as amended by section 9101(a) of this title, note. is further amended by adding at the end the following new paragraph: "(2) PHYSICIAN PAYMENTS.—For purposes of subsection (b), the term 'extension period' means the period beginning on Octo- ber 1,1985, and ending on April 30,1986." (b) EXTENSION OF CERTAIN PROVISIONS THROUGH DECEMBER 31, 1986.— (1) EXTENSION.—Section 1842(bX4) of the Social Security Act (42 U.S.C. 1395u(b)(4)) is amended— (A) in subparagraph (A)— (i) by inserting "(i)" after "(4)(A)", and (ii) by adding at the end the following new clauses: "(ii)(I) In determining the prevailing charge levels under the third and fourth sentences of paragraph (3) for physicians' services fur- nished during the 8-month period beginning May 1, 1986, by a physician who is not a participating physician (as defined in subsec- tion (h)(1)) at the time of furnishing the services, the Secretary shall not set any level higher than the same level as was set for the 12- month period beginning July 1,1983. "(II) In determining the prevailing charge levels under the fourth sentence of paragraph (3) for physicians' services furnished during the 8-month period beginning May 1, 1986, by a physician who is a participating physician (as defined in subsection (h)(1)) at the time of furnishing the services, the Secretary shall permit an additional one percentage point increase in the increase otherwise permitted under that sentence. "(iii) In determining the prevailing charge levels under the third and fourth sentences of paragraph (3) for physicians' services fur- nished during a 12-month period beginning on or after January 1, 1987, by a physician who is not a participating physician (as defined in subsection (h)(1)) at the time of furnishing the services, the Secretary shall not set any level higher than the same level as was set for services furnished during the previous calendar year (without regard to clause (ii)(II)) for physicians who were participating physi- cians during that year."; (B) in subparagraph (B)— "t (i) by inserting "(i)" after "(B)", and ^^ _.;,, (ii) by adding at the end the following new clause:
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 185 "(ii) In determining the reasonable charge under paragraph (3) for physicians' services furnished during the 8-month period beginning May 1, 1986, by a physician who is not a participating physician (as defined in subsection (h)(1)) at the time of furnishing the services— "(I) if the physician was not a participating physician at any time during the 12-month period beginning on October 1, 1984, the customary charges shall be the same customary charges as were recognized under this section for the 12-month period ,^ . ^ beginning July 1, 1983, and "-' * "(II) if the physician was a participating physician at any time during the 12-month period beginning on October 1, 1984, the physician's customary charges shall be determined based upon the physician's actual charges billed during the 12-month period ending on March 31,1985."; (C) in subparagraph (C)— (i) by inserting "(i)" after "'(C)", (ii) by striking out "(A)" and inserting in lieu thereof "(A)(i)" each place it appears, and (iii) by adding at the end the following new clause: "(ii) In determining the prevailing charge levels under the third and fourth sentences of paragraph (3) for physicians' services fur- ,-^ nished during the periods beginning after December 31, 1986, by a ~.o,- physician who was not a participating physician on that date, the Secretary shall treat the level as set under subparagraph (A)(ii) as having fully provided for the economic changes which would have been taken into account but for the limitations contained in . subparagraph (A)(ii)."; and (D) in subparagraph (D)— (i) by striking out "In determining" and all that follows through "subsection (h)(1))" and insert in lieu thereof "(i) In determining the customary charges for physicians' services furnished during the 8-month period beginning May 1, 1986, or the 12-month period beginning January 1, 1987, by a physician who was not a participating physician (as de- fined in subsection (h)(1)) on September 30, 1985", and (ii) by adding at the end the following new clauses: "(ii) In determining the customary charges for physicians' services furnished during the 12-month period beginning January 1, 1987, by a physician who is not a participating physician (as defined in subsection (h)(1)) on April 30, 1986, the Secretary shall not recognize increases in actual charges for services furnished during the 7-month period beginning on October 1, 1985, above the level of the physician's actual charges billed during the 3-month period ending on June 30,1984. "(iii) In determining the customary charges for physicians' serv- ices furnished during the 12-month period beginning January 1, 1987, or January 1, 1988, by a physician who is not a participating physician (as defined in subsection (h)(1)) on December 31, 1986, the Secretary shall not recognize increases in actual charges for services furnished during the 8-month period beginning on May 1, 1986, above the level of the physician s actual charges billed during the 3-month period ending on June 30, 1984.". (2) CONTINUED ENFORCEMENT.—The first sentence of section 1842(j)(l) of such Act (42 U.S.C. 1395u(j)(l)) is amended to read as follows: "In the case of a physician who is not a participating physician for items and services furnished during a portion of the 30-month period beginning July 1, 1984, the Secretary shall
100 STAT. 186 PUBLIC LAW 99-272—APR. 7, 1986 monitor the physician's actual charges to individuals enrolled under this part for physicians' services during that portion of that period.". 42 u s e 1395U (3) PERIOD FOR ENTERING PARTICIPATION AGREEMENTS.—The note. Secretary of Health and Human Services shall provide, during the month of April 1986, that physicians and suppliers may enter into an agreement under section 1842(h)(1) of the Social 42 u s e 1395U. Security Act for the 8-month period beginning May 1, 1986, or terminate such an agreement previously entered into for fiscal year 1986. In the case of a physician or supplier who entered into such an agreement for fiscal year 1986, the physician or supplier shall be deemed to have entered into such agreement for such 8-month period and for each succeeding year unless the physician or supplier terminates such agreement before the beginning of the respective period. At the beginning of such 8-month period, the Secretary shall publish a new directory (de- scribed in section 1842(h)(4) of that Act, as redesignated by subsection (c)(3)(D) of this section) of participating physicians and suppliers. 42 u s e 1395u (4) EFFECTIVE DATE.—The amendments made by this subsec- note. tion shall apply to services furnished on or after May 1, 1986. (c) INCENTIVES FOR PARTICIPATING PHYSICIAN PROGRAM.— (1) 15-MONTH EXTENSION OF TRANSFER OF FUNDS FOR CAR- RIERS.—Section 2306(e) of the Deficit Reduction Act of 1984 42 u s e 1395u. (Public Law 98-369; 98 Stat. 1073) is amended— (A) by striking out "and 1985" and inserting in lieu thereof ", 1985, and 1986", (B) by striking out "the amendments made by this sec- tion" and inserting in lieu thereof "subsections (b)(4), (h), and (j) of section 1842 of the Social Security Act", (C) by striking out "and" before "not less", (D) by inserting before the period at the end the follow- ing: ", and not less than $18,000,000 for fiscal year 1986", and (E) by adding at the end the following new sentences: "A significant proportion of such funds shall be used for the expansion of the participating physician and supplier pro- gram and for the development of professional relations staffs dedicated to addressing the billing and other prob- lems of physicians and suppliers participating in that pro- gram. Such funds for fiscal year 1986 are available for obligation until December 31, 1986.". (2) IMPROVEMENT OF PARTICIPATING PHYSICIAN DIRECTORIES.— Section 1842(i) of the Social Security Act (42 U.S.C. 1395u(i)) is amended— (A) in the first sentence of paragraph (2)— (i) by striking out "a directory" and inserting in lieu thereof "directories (for appropriate local geographic areas)", and (ii) by inserting "for that area" before "for that fiscal year"; (B) in the second sentence of paragraph (2), by striking out "The directory" and inserting in lieu thereof "Each directory"; ,,_.,^,.^^ .•,••,. .•. , ,. , .rru-..-••..- -•,- (C) in paragraph (3)—
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 187 (i) by striking out "directory" the first place it ap- pears and inserting in lieu thereof "the directories", and (ii) by striking out "directory" the second place it appears and inserting in lieu thereof "the appropriate area directory or directories"; and ' " (D) in paragraph (4)— (i) by striking out "directory" and inserting in lieu - -^ thereof "the directories", and ,.. (ii) by adding at the end the following: "The Sec- retary shall provide that each appropriate area direc- tory is sent to each participating physician located in that area.". (3) EUMINATION OF PHYSICIAN ASSIGNMENT RATE LIST.—Section 1842(i) of such Act is further amended— 42 use I395u. (A) by striking out "(iXD" and all that follows through the end of paragraph (1), (B) by striking out "subsection (hXD" in paragraph (2) ,,: and inserting in lieu thereof "paragraph (1)", (C) by striking out "list and" each place it appears in paragraphs (3) and (4), and (D) by redesignating paragraphs (2) through (4) as para- graphs (4) through (6) of subsection (h), respectively. (4) INFORMATION O N THE PARTICIPATING PHYSICIAN A N D SUP- PLIER PROGRAM IN EXPLANATIONS OF MEDICARE BENEFITS FOR UNASSiGNED CLAIMS.—Section 1842(h) of such Act, as previously amended by this subsection, is further amended by adding at the end the following new paragraphs: "(7) The Secretary shall provide that each explanation of benefits provided under this part for services furnished in the United States, in conjunction with the payment of claims under section 1833(aXl) 42 USC 1395Z. (made other than on an assignment-related basis, described in para- graph (8)), shall include— "(A) a reminder of the participating physician and supplier program established under this subsection (including the limita- tion on charges that may be imposed by such physicians and suppliers), and "(B) the toll-free telephone number or numbers, maintained under paragraph (2), at which an individual enrolled under this part may obtain information on participating physicians and suppliers. "(8) For purposes of this title, a claim is considered to be paid on an 'assignment-related basis' if the claim is paid on the beisis of an •H'J assignment described in subsection (bX3XBXii), in accordance with subsection (bX6XB), or under the procedure described in section 1870(fKl).". 42 USC 1395gg. (5) EFFECTIVE DATE.—Section 1842(bX7) of the Social Security Act, as added by paragraph (4) of this subsection, shall apply to 42 USC 1395U explanations of benefits provided on or after such date (not later note. than October 1, 1986) as the Secretary of Health and Human Services shall specify. (d) CHANGING CUSTOMARY AND PREVAIUNG CHARGE UPDATES FOR PHYSICIAN SERVICES AND OTHER PART B SERVICES FROM OCTOBER TO JANUARY.— (1) PAYMENT UPDATES.—Section 1842(bX3) of the Social Secu- rity Act (42 U.S.C. 1395u(bX3)) is amended—
100 STAT. 188 PUBLIC LAW 99-272—APR. 7, 1986 (A) in subparagraph (F), by striking out "(ending on September 30)"; (B) in the third sentence, by striking out "March 31" and all that follows through "of each year)" and inserting in lieu thereof "June 30 last preceding the start of the cal- endar year"; and (C) in the eighth sentence, by striking out "the twelve- month period beginning on October 1 in". (2) PARTICIPATION AGREEMENTS.—Section 1842(hXl) of such 42 use 1395u. Act is amended— (A) in the second sentence— (i) by striking out "before October 1" and inserting in lieu thereof "before the beginning", (ii) by striking out "on the basis of an assignment" and all that follows through "1870(f)(1)" and inserting in lieu thereof "on an assignment-related basis", and (iii) by striking out "the 12-month period beginning on October 1 of'; and (B) in the third sentence— (i) by striking out "after October 1" and inserting in lieu thereof "after the beginning", and (ii) by striking out "12-month period beginning on such October 1" and inserting in lieu thereof "year". (3) DIRECTORIES.—The first sentence of section 1842(iX2) of such Act (which is redesignated as section 1842(hX4) by subsec- tion (c)(3)(D)), is further amended by striking out "fiscal" each place it appears. 42 u s e 1395u (4) EFFECTIVE DATE.—The amendments made by this subsec- note. tion shall apply to items and services furnished on or after October 1,1986. 42 u s e 1395u (5) TRANSITION.—Notwithstanding any other provision of law, note. for purposes of making payment under part B of title XVIII of 42 u s e 1395J. the Social Security Act, customary and prevailing charges (and the lowest charges determined under the sixth sentence of section 1842(bX3) of such Act) for items and services furnished during the period beginning on October 1, 1986, and ending on December 31, 1986, shall be determined on the same basis as for items and services furnished on September 30,1986. SEC. 9303. PAYMENT FOR CLINICAL LABORATORY SERVICES. (a) CHANGING MONTH OF ANNUAL UPDATE FROM JULY TO JANU- ARY.— (1) I N GENERAL.—Section 1833(h) of the Social Security Act (42 42 use 1395Z. U.S.C. 13951(h)) is amended— (A) by striking out "June 30, 1987" and "July 1, 1987" and inserting in lieu thereof "December 31, 1987" and "January 1, 1988", respectively, each place either appears, and (B) in paragraph (2), by inserting "(to become effective on January 1 of each year)' after "adjusted annually". 42 use 1395/ (2) EFFECTIVE DATE.—The amendments made by paragraph (1) note. shall apply to clinical laboratory diagnostic tests performed on or after July 1,1986. 42 use 1395Z (3) TRANSITION.—The Secretary of Health and Human Serv- note. ices shall provide that the annual adjustment under section 1833(h) of the Social Security Act for 1986— (A) shall take effect on January 1,1987, i.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 189 (B) shall apply for the 12-month period beginning on that date, and (C) shall take into account the percentage increase or decrease in the Consumer Price Index for all urban consum- ers (United States city average) occurring over an 18-month period, rather than over a 12-month period. (b) PROVIDING CEILING ON RATES.— (1) CEILING ON PAYMENTS.—Paragraphs (l)(D)(i) and (2)(D)(i) of section 1833(a) of the Social Security Act (42 U.S.C 13951(a)) are each amended by inserting after "lesser of the amount deter- mined under such fee schedule" the following: ", the limitation amount for that test determined under subsection (h)(4)(B),". (2) ESTABLISHMENT OF LIMITATION AMOUNT.—Section 1833(h)(4) of such Act is amended by inserting "(A)" after "(4)" and by adding at the end the following new subparagraph: "(B) For purposes of subsections (a)(l)(D)(i) and (a)(2)(D)(i), the limitation amount for a clinical diagnostic laboratory test per- formed— "(i) on or after July 1, 1986, and before January 1, 1988, is equal to 115 percent of the median of all the fee schedules established for that test for that laboratory setting under para- graph (1), or "(ii) after December 31, 1987, and so long as a fee schedule for the test has not been established on a nationwide basis, is equal to 110 percent of the median of all the fee schedules established for that test for that laboratory setting under paragraph (1).". (3) METHOD OF PAYMENT FOR NON-INDEPENDENT LABORA- TORIES.—Section 1833(h)(5)(C) of such Act is amended by striking out "which is independent of a physician's office or" and insert- ing in lieu thereof "other than". (4) EXTENDING MEDICARE PROFICIENCY EXAMINATION AUTHOR- ITY.—Section 1123(a) of such Act (42 U.S.C. 1320a-2(a)) is amend- ed by striking out "September 30, 1983" and inserting in lieu thereof "September 30, 1987". (5) EFFECTIVE DATES.—(A) The amendments made by para- 42 USC 1395Z graphs (1) and (2) shall apply to clinical diagnostic laboratory note. tests performed on or after July 1, 1986. (B) The amendment made by paragraph (3) shall apply to 42 USC 1395/ clinical diagnostic laboratory tests performed on or after Janu- note. ary 1,1987. (C) The amendment made by paragraph (4) shall take effect 42 USC l320a-2 on the date of the enactment of this Act. note. (c) REPORT ON MINIMUM STANDARDS FOR CLINICAL LABORATORIES THAT ARE PART OF, OR ASSOCIATED WITH, PHYSICIANS' OFFICES.—The Secretary of Health and Human Services shall report to Congress, not later than 12 months after the date of the enactment of this Act, on the standards that might be established under the medicare program for clinical laboratories which are part of or associated with a physician's office to assure the health and safety of individ- uals with respect to whom the laboratories perform clinical diag- nostic laboratory tests for which payment may be made under the program. In recommending standards, the Secretary shall consider the differences in the scope, type, and complexity of tests performed by such laboratories and such other factors as may indicate a need for different standards for laboratories with different characteristics.
100 STAT. 190 PUBLIC LAW 99-272—APR. 7, 1986 SEC. 9304. DETERMINATIONS OF INHERENT REASONABLENESS OF CHARGES AND CUSTOMARY CHARGES FOR CERTAIN FORMER HOSPITALCOMPENSATED PHYSICIANS. (a) REGULATIONS RELATING TO INHERENT REASONABLENESS OF CHARGES.—Section 1842(b) of the Social Security Act (42 U.S.C. 1395u(b)) is amended by adding at the end the following new para- graph: "(8) The Secretary by regulation shall— "(A) describe the factors to be used in determining the cases (of particular items or services) in which the application of this subsection results in the determination of a reasonable charge that, by reason of its grossly excessive or grossly deficient amount, is not inherently reasonable, and "(B) provide in those cases for the factors that will be consid- ered in establishing a reasonable charge that is realistic and equitable.". 42 u s e 1395u (b) COMPUTATION OF CuSTOMARY CHARGES FOR CERTAIN FORMER note. HOSPITAL-COMPENSATED PHYSICIANS.—(1) In applying section 1842(b) of the Social Security Act to payment for physicians' services per- formed during the 8-month period beginning May 1, 1986, in the case of a physician who at anytime during the period beginning on October 31, 1982, and ending on January 31, 1985, was a hospital- compensated physician (as defined in paragraph (3)) but who, as of February 1, 1985, was no longer a hospital-compensated physician, the physician's customary charges shall— (A) be based upon the physician's actual charges billed during the 12-month period ending on March 31,1985, and (B) in the case of a physician who was not a participating physician (as defined in section 1842(hXl) of the Social Security Act) on September 30, 1985, and who is not such a physician on May 1, 1986, be deflated (to take into account the legislative freeze on actual charges for nonparticipating physicians' serv- ices) by multiplying the physician's customary charges by .85. (2) In applying section 1842(b) of the Social Security Act to pay- ment for physicians' services performed during the 8-month period beginning May 1, 1986, in the case of a physician who during the period beginning on February 1, 1985, and ending on December 31, 1986, changes from being a hospital-compensated physician to not being a hospital-compensated physician, the physician's customary charges shall be determined in the same manner as if the physician were considered to be a new physician. (3) In this subsection, the term "hospital-compensated physician" means, with respect to services furnished to patients of a hospital, a physician who is compensated by the hospital for the furnishing of physicians' services for which payment may be made under this part. SEC. 9305. PHYSICIAN PAYMENT REVIEW COMMISSION AND DEVELOP- MENT OF RELATIVE VALUE SCALE. (a) EsTABUSHMENT OF COMMISSION.—Part B of title XVIII of the Social Security Act is amended by adding at the end the following new section: PHYSICIAN PAYMENT REVIEW COMMISSION r 42USC1395W-1. "SEC. 1845. (aXD The Director of the Congressional Office of Technology Assessment (hereinafter in this section referred to as
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 191 the 'Director' £ind the 'Office', respectively) shall provide for the appointment of a Physician Payment Review Commission (herein- after in this section referred to as the 'Commission'), to be composed of individuals with expertise in the provision and financing of physicians' services appointed by the Director (without regard to the provisions of title 5, United States Code, governing appointments in the competitive service). "(2) The Commission shall consist of 11 individuals. Members of the Commission shall first be appointed no later than May 1, 1986, for a term of three years, except that the Director may provide initially for such shorter terms as will insure that (on a continuing basis) the terms of no more than four members expire in any one year. "(3) The membership of the Commission shall include physicians, other health professionals, individuals skilled in the conduct and interpretation of biomedical, health services, and health economics research, and representatives of consumers and the elderly. The Director shall seek nominations from a wide range of groups, includ- ing— "(A) national organizations representing physicians, includ- ing medical specialty organizations, "(B) organizations representing the elderly and consumers, "(C) national organizations representing medical schools, "(D) national organizations representing hospitals, including teaching hospitals, and "(E) national organizations representing health benefits pro- grams. "(b)(1) The Commission shall make recommendations to the Con- gress, not later than March 1 of each year (beginning with 1987), regarding adjustments to the reasonable charge levels for physi- cians' services recognized under section 1842(b) and changes in the methodology for determining the rates of payment, and for making payment, for physicians' services under this title and other items and services under this part. "(2) In making its recommendations, the Commission shall— "(A) consider, and make recommendations on the feasibility and desirability of reducing, the differences in payment amounts for physicians' services under this part which are based on differences in geographic location or specialty; "(B) review the input costs (including time, professional skills, and risks) associated with the provision of different physicians' services; "(C) identify those charges recognized as reasonable under section 1842(b) which are significantly out-of-line, based on the 42 USC I395u. considerations of subparagraphs (A) and (B); "(D) assess the likely impact of different adjustments in pay ment rates, particularly their impact on physician participation in the participation program established under section 1842(h) and on beneficiary access to necessary physicians' services; "(E) make recommendations on ways to increase physician participation in that participation program and the acceptance of payment under this part on an assignment-related basis; "(F) make recommendations respecting the advisability and feasibility of making changes in the payment system for physi- cians' services under this part based on (i) the Secretary's study under section 603(b)(2) of the Social Security Amendments of 1983 (relating to payments for physicians' services furnished to 42 USC I395b-l note.
100 STAT. 192 PUBLIC LAW 99-272—APR. 7, 1986 hospital inpatients on the basis of diagnosis-related groups) and (ii) the Office's report under section 2309 of the Deficit Reduc- 42 u s e 1395/ tion Act of 1984 (relating to physician reimbursement under note. this part); "(G) identify those procedures, involving the use of assistants at surgery, for which payment for those assistants should not be made under this title without prior approval; and "(H) identify those procedures for which an opinion of a second physician should be required before payment is made under this title. "(3) The Commission also shall advise and make recommendations to the Secretary respecting the development of the relative value scale under subsection (e). 42 u s e 1395WW. "(c)(1) The following provisions of section 1886(e)(6) shall apply to the Commission in the same manner as they apply to the Prospec- tive Payment Assessment Commission: "(A) Subparagraph (C) (relating to staffing and administration generally). "(B) Subparagraph (D) (relating to compensation of members). "(C) Subparagraph (F) (relating to access to information), "(D) Subparagraph (G) (relating to reports and use of funds). "(E) Subparagraph (H) (relating to periodic GAO audits). "(F) Subparagraph (J) (relating to requests for appropria- tions). "(2) In order to carry out its functions, the Commission shall collect and assess information on medical and surgical procedures and services, including information on regional variations of medi- cal practice. In collecting and assessing information, the Commis- sion shall— "(A) utilize existing information, both published and unpublished, where possible, collected and assessed either by its own staff or under other arrangements made in accordance with this section, "(B) carry out, or award grants or contracts for, original research and experimentation, where existing information is inadequate for the development of useful and valid guidelines by the Commission, and "(C) adopt procedures allowing any interested party to submit information with respect to physicians' services (including new practices, such as the use of new technologies and treatment modalities), which information the Commission shall consider in making reports and recommendations to the Secretary and Congress. "(d) There are authorized to be appropriated such sums as may be necessary to carry out the provisions of this section. Such sums shall be payable from the Federal Supplementary Medical Insurance Trust Fund.". (b) DEVELOPMENT OF RELATIVE VALUE SCALE FOR PHYSICIANS' SERVICES.—Section 1845 of the Social Security Act, as added by subsection (a), is further amended by adding at the end the following new subsection: "(e)(1) The Secretary shall develop a relative value scale that establishes a numerical relationship among the various physicians' services for which payment may be made under this part or under 42 u s e 1396. State plans approved under title XIX. "(2) In developing the scale, the Secretary shall consider among other items—
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 193 "(A) the report of the Office of Technology Assessment under section 2309 of the Deficit Reduction Act of 1984, 42 u s e 1395/ "(B) the recommendations of the Physician Payment Review note. Commission under subsection (b)(3), and "(C) factors with respect to the input costs for furnishing particular physicians' services, such as— "(i) the differences in costs of furnishing services in dif- ferent settings, "(ii) the differences in skill levels and training required to perform the services, and "(iii) the time required, and risk involved, in furnishing different services. "(3) The Secretary shall complete the development of the relative Reports. value scale under this section, and report to Congress on the devel- opment, not later than July 1, 1987. The report shall include rec- ommendations for the application of the scale to payment for physi- cians' services furnished under this part on or after January 1, 1988.". SEC. 9306. LIMITATION ON MEDICARE PAYMENT FOR POST-CATARACT SURGERY PATIENTS. (a) DETERMINATION OF SEPARATE PAYMENT AMOUNTS FOR PROS- THETIC LENSES AND PROFESSIONAL SERVICES.—Section 1842(b) of the Social Security Act (42 U.S.C. 1395u(b)) is amended by adding after paragraph (8), added by section 9304(a) of this title, the following new paragraph: "(9) In providing payment for cataract eyeglasses and cataract contact lenses, and professional services relating to them, under this part, each carrier shall— "(A) provide for separate determinations of the payment amount for the eyeglasses and lenses and of the payment amount for the professional services of a physician (as defined in section 1861(r)), and 42 u s e 1395x. "(B) not recognize as reasonable for such eyeglasses and lenses more than such amount as the Secretary establishes in guidelines relating to the inherent reasonableness of charges for such eyeglasses and lenses.". (b) EFFECTIVE DATE.—The amendments made by this section shall 42 u s e 1395u apply to items and services furnished on or after April 1, 1986. note. SEC. 9307. PAYMENT FOR ASSISTANTS AT SURGERY FOR CERTAIN CATA- RACT OPERATIONS AND OTHER OPERATIONS. (a) LIMITATION ON PAYMENT.—Section 1862(a) of the Social Secu- rity Act (42 U.S.C. 1395y(a)) is amended— (1) by striking out "or" at the end of paragraph (13), (2) by striking out the period at the end of paragraph (14) and inserting in lieu thereof "; or", and (3) by adding at the end the following new paragraph: "(15) which are for services of an assistant at surgery in a cataract operation unless, before the surgery is performed, the appropriate utilization and quality control peer review organization (under part B of title XI) or a carrier under section 42 u s e 1320c. 1842 has approved of the use of such an assistant in the surgical 42 u s e 1395u. procedure based on the existence of a complicating medical condition.". (b) ADDITIONAL PRO FUNCTIONS.—Section 1154(a)(8) of such Act (42 U.S.C. 1320c-3(a)(8)) is amended by inserting before the period at 7i_iQA n _ RQ _ q : Of. ? P a r t i
100 STAT. 194 PUBLIC LAW 99-272—APR. 7, 1986 the end the following: "or as may be required to carry out section Ante, p. 193. 1862(a)(15)". (c) PROHIBITION FOR SUBMITTING BILL FOR WHICH PAYMENT MAY NOT B E MADE.—Section 1842 of such Act (42 U.S.C. 1395u) is amended— (1) in subsection (jX2), by inserting "or subsection (k)" after "paragraph (1)", and (2) by adding at the end the following new subsection: "(k)(l) If a physician knowingly and willfully bills an individual enrolled under this part for charges for services as an assistant at surgery for which payment may not be made by reason of section 1862(aX15), the Secretary may apply sanctions against such physi- cian in accordance with subsection (j)(2). "(2) If a physician knowingly and willfully bills an individual enrolled under this part for charges that includes a charge for an assistant at surgery for which payment may not be made by reason of section 1862(a)(15), the Secretary may apply sanctions against such physician in accordance with subsection (j)(2).". 42 u s e 1395y (d) EXTENSION OF PROHIBITION TO OTHER PROCEDURES.—The Sec- note. retary of Health and Human Services, after consultation with the Physician Payment Review Commission, shall develop recommenda- tions and guidelines respecting other surgical procedures for which an assistant at surgery is generally not medically necessary and the circumstances under which the use of an assistant at surgery is generally appropriate but should be subject to prior approval of an appropriate entity. The Secretary shall report to Congress, not later than January 1, 1987, on these recommendations and guidelines. 42 u s e 1320C-3 (e) EFFECTIVE DATE.—The amendments made by this section shall note. apply to services performed on or after April 1,1986. Subpart B—Benefits and Other Provisions SEC. 9313. PART B PREMIUM. Section 1839 of the Social Security Act (42 U.S.C. 1395r) is amended— (1) in subsection (e), by striking out '1988" and inserting in lieu thereof "1989" each place it appears; (2) in subsection (f)(1), by striking out "or 1986" and inserting in lieu thereof ", 1986, or 1987"; and (3) in subsection (f)(2), by striking out "or 1987" and inserting in lieu thereof ", 1987, or 1988". SEC. 9314. DEMONSTRATION OF PREVENTIVE HEALTH SERVICES UNDER MEDICARE. 42 u s e 1395b-l (a) DEMONSTRATION PROGRAM.—The Secretary of Health and note. Human Services (hereinafter in this section referred to as the "Secretary") shall establish a 4-year demonstration program de- signed to reduce disability and dependency through the provision of preventive health services to individuals entitled to benefits under 42 u s e 1395. title XVIII of the Social Security Act (hereinafter in this section referred to as "medicare beneficiaries"). (b) PREVENTIVE HEALTH SERVICES UNDER DEMONSTRATION PRO- GRAM.—The preventive health services to be made available under the demonstration program shall include— (1) health screenings, (2) health risk appraisals, (3) immunizations, and
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 195 (4) counseling on and instruction in— (A) diet and nutrition, (B) reduction of stress, (C) exercise and exercise programs, (D) sleep regulation, (E) injury prevention, (F) prevention of alcohol and drug abuse, (G) prevention of mental health disorders, (H) self-care, including use of medication, and (I) reduction or cessation of smoking. (c) CONDUCT OF PROGRAM.—The demonstration program shall— Schools and (1) be conducted under the direction of accredited public or colleges, private nonprofit schools of public health or preventive medi- cine departments accredited by the Council on Education for Public Health; (2) be conducted in no fewer than five sites, which sites shall be chosen so as to be geographically diverse and shall be readily accessible to a significant number of medicare beneficiaries; (3) involve community outreach efforts at each site to enroll the maximum number of medicare beneficiaries in the program; and (4) be designed— (A) to test alternative methods of payment for preventive health services, including payment on a prepayment basis as well as payment on a fee-for-service basis, (B) to permit a variety of appropriate health care provid- ers to furnish preventive health services, including physi- cians, health educators, nurses, allied health personnel, dieticians, and clinical psychologists, and (C) to facilitate evaluation under subsection (d). (d) EVALUATION.—The Secretary shall evaluate the demonstration project in order to determine— (1) the short-term and long-term costs and benefits of provid- ing preventive health services for medicare beneficiaries, including any reduction in inpatient services resulting from providing the services, and (2) what practical mechanisms exist to finance preventive health services under title XVIII of the Social Security Act. 42 USC 1395. (e) REPORTS TO CONGRESS.—(1) Not later than three years after the date of the enactment of this Act, the Secretary shall submit a preliminary report to the Committees on Ways and Means and Energy and Commerce of the House of Representatives and to the Committee on Finance of the Senate on the progress made in the demonstration program, including a description of the sites at which the program is being conducted and the preventive health services being provided at the different sites. (2) Not later than five years after the date of the enactment of this Act, the Secretary shall submit a final report to those Committees on the demonstration program and shall include in the report— (A) the evaluation described in subsection (d), and (B) recommendations for appropriate legislative changes to incorporate payment for cost-effective preventive health serv- ices into the medicare program. (f) FUNDING.—Expenditures made for the demonstration program shall be made from the Federal Supplementary Medical Insurance Trust Fund (established by section 1841 of the Social Security Act). 42 use I395t. Grants and payments under contracts may be made either in ad-
100 STAT. 196 PUBLIC LAW 99-272—APR. 7, 1986 vance or by way of reimbursement, as may be determined by the Secretary, and shall be made in such installments and on such conditions as the Secretary finds necessary to carry out the purpose of this section. Funding for the demonstration program shall not exceed $4,000,000 over the duration of the program. (g) WAIVER OF MEDICARE REQUIREMENTS.—The Secretary shall waive compliance with such requirements of title XVIII of the Social 42 u s e 1395. Security Act to the extent and for the period the Secretary finds necessary for the conduct of the demonstration program. SEC. 9315. EXTENSION OF GAO REPORTING DATE. (a) EXTENSION.—Section 2326(e)(2) of the Deficit Reduction Act of 42 u s e 1395h 1984 (98 Stat. 1088) is amended by striking out "12 months after the note. date of the enactment of this Act" and inserting in lieu thereof "May 1,1986". (b) EFFECTIVE DATE.—The amendment made by this section shall apply as though it were included in the Deficit Reduction Act of 1984 as originally enacted. PART 4—PEER REVIEW ORGANIZATIONS SEC. 9401. 100 PERCENT PEER REVIEW OF CERTAIN SURGICAL PROCE- DURES. 42 u s e 1320C-3. (a) REQUIREMENT.—Section 1154(a) of the Social Security Act (42 U.S.C. 1395c-3(a)) is amended by adding at the end thereof the following new paragraph: "(12) The organization shall perform the review, referral, and Infra. other functions required under section 1164.". (b) ADDITIONAL PEER REVIEW FUNCTIONS.—Part B of title XI of the Social Security Act is amended by adding at the end the following new section: "lOO PERCENT PEER REVIEW FOR CERTAIN SURGICAL PROCEDURES 42 use "SEC. 1164. (a) 100 PERCENT REVIEW FUNCTION.— 1320C-13. "(1) IN GENERAL.—Each utilization and quality control peer review organization shall perform the review described in sec- 42 u s e 1320C-3. tion 1154(a)(1) for 100 percent of the surgical procedures speci- fied pursuant to subsection (b). "(2) TIMING OF REVIEW.— "(A) IN GENERAL.—Except as provided in subparagraph (B), the review required under paragraph (1) shall be per- formed— "(i) before the performance of the procedure, in the case of an outpatient procedure, or "(ii) before admission to the hospital for the provision of services in connection with the procedure, in the case of a procedure performed on an inpatient basis. "(B) EXCEPTION.—The review with respect to a procedure need not be performed by the time specified in subpara- graph (A) in cases of a medical emergency and under such other circumstances as the Secretary may specify. "(b) SPECIFICATION OF SURGICAL PROCEDURES AND QUALIFIED REVIEWERS.— "(1) IN CONTRACT.—The contract with each organization under this part shall specify at least 10 surgical procedures to be covered under this section.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 197 "(2) SELECTION GUIDELINES.— "(A) I N GENERAL.—The specification of procedures shall be consistent with selection guidelines established by the Secretary under paragraph (3). The procedures specified shall be included among the surgical procedures which the Secretary has identified as reasonably being able to meet such guidelines. "(B) EXCEPTION.—The Secretary may permit an organiza- tion to include among the procedures specified under para- graph (1) procedures not identified by the Secretary under paragraph (2)(A) if to do so would be cost effective and consistent with the criteria described in paragraph (3). "(3) CRITERIA.—The Secretary shall establish such guidelines and identify such surgical procedures consistent with the follow- ing criteria: "(A) The procedure is one which generally can be post- poned without undue risk to the patient. "(B) The procedure is a high volume procedure among patients who are covered under the programs established under title XVIII or is a high cost procedure. 42 USC 1395. "(C) The procedure has a comparatively high rate of nonconflrmation upon examination by another qualified physician, there is substantial geographic variation in the rates of performance of the procedure, or there are other reasons why pre-procedure review for 100 percent of the procedures would be cost effective. "(4) QUALIFICATIONS FOR PHYSICIANS PROVIDING SECOND OPINIONS.— "(A) IN GENERAL.—The Secretary shall specify, for each procedure identified under paragraphs (2) and (3), the type or types of board certified or board eligible specialists who may conduct a second opinion, required under subsection (c), based upon the nature of the procedure. "(B) FREEDOM OF CHOICE OF PATIENT TO CHOOSE PHYSI- CIAN.—Subject to paragraphs (C) and (D), the patient may choose any physician of the proper specialty under subpara- graph (A) to provide the second opinion. "(C) PHYSICIANS PROHIBITED FROM PROVIDING SECOND OPIN- IONS.—For purposes of this section, a second opinion may not be provided by a physician who is affiliated with, or has a common financial interest with, the physician who ren- dered the first opinion that the procedure was necessary. "(D) RESTRICTED LIST.—In accordance with guidelines of the Secretary, an organization may disqualify a physician from providing a second opinion under this section because of the gross unreliability of the second opinions provided. '(c) REQUIRING A SECOND OPINION IN CERTAIN CASES.— "(1) DETERMINATIONS BY ORGANIZATION.—In the case of a review performed pursuant to subsection (a), the organization shall determine, based on such review, that the surgical procedure— "(A) is reasonable and medically necessary, "(B) is not reasonable and medically necessary, or "(C) may be considered reasonable and necessary, but, because of questions as to the medical appropriateness of performing the procedure, it is appropriate to require the patient to seek a second opinion as to the necessity and
100 STAT. 198 PUBLIC LAW 99-272—APR. 7, 1986 appropriateness of performing the procedure before the performance of the procedure. The Secretary shall develop appropriate measures to ensure that second opinions are only required in situations where a second opinion is needed to resolve outstanding uncertainties as to the medical necessity of the procedure. The organization 42 use 1320C-3. shall notify, in accordance with section 1154(a)(3), the physician, patient, and hospital or other entity furnishing the service, in the event of a determination under subparagraph (B) or (C) of this paragraph. "(2) PROHIBITION OF PAYMENT IF REQUIRED SECOND OPINION NOT PROVIDED.—No payment may be made under part A or part B of 42 use 1395c, title XVIII with respect to items or services furnished in connec- 1395J. tion with a surgical procedure for which there is a determina- tion described in paragraph (1)(C), unless the individual undergoing the procedure obtains the second opinion required under that paragraph. The second opinion need not necessarily agree with the first opinion in order for payment to be made. "(3) EXCEPTIONS FOR ELECTIVE SECOND OPINIONS.—Paragraphs (1)(C) and (2) shall not apply to a surgical procedure if— "(A) a delay in providing the procedure would result in a risk to the patient; "(B) no physician is available (within such reasonable limits as the Secretary shall specify) who is (i) qualified to provide the second opinion, and (ii) a participating physi- cian or a physician who has agreed to accept assignment for the second opinion; or "(C) the procedure is to be performed on a patient who is a member of a health maintenance organization or competi- tive medical plan having a risk-sharing contract with the 42 use 1395mm. Secretary under section 1876. "(d) REFERRAL MECHANISM FOR SECOND OPINIONS.— "(1) ACTING AS REFERRAL CENTER.—Each organization shall serve as a referral center for second opinions required under this section. "(2) REFERRAL OF PATIENT.—The organization shall maintain a list of physicians qualified to provide a second opinion and shall advise the patient as to which physicians are participating 42 use I395u. physicians (within the meaning of section 1842(h)) and which physicians have agreed to accept assignment to perform second opinions. The organization shall assist patients in referral to a qualified physician of the appropriate specialty for purposes of providing the opinion. "(3) FORWARDING OF RELEVANT MEDICAL RECORDS.—Each peer review organization shall, if the patient seeking the second opinion so requests, obtain the relevant medical records from the physician who rendered the first opinion that the procedure was necessary, and provide the relevant information to the physician selected by the patient to render the second opinion. "(e) NOTICE TO PHYSICIANS, HOSPITALS, AND BENEFICIARIES.—The Secretary shall assure that notice is provided to physicians, hos- pitals, ambulatory surgical centers, and beneficiaries respecting the activities under this section, including the applicable list of surgical procedures specified under this section.", (b) WAIVER OF DEDUCTIBLE AND COPAYMENTS.— (1) DEDUCTIBLE.—Section 1833(b) of the Social Security Act (42 42 use 1395Z. U.S.C. 13951(b)) is amended by striking out "and" before "(4)",
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 199 and by inserting before the period at the end of the first sentence the following: ", and (5) such deductible shall not apply with respect to items and services furnished in connection with obtaining a second opinion required under section 1164(c)(2) (or Ante, p. 196. a third opinion, if the second opinion was in disagreement with the first opinion)". (2) CoPAYMENTS.—(A) Section 1833(a)(1) of such Act (42 U.S.C. 13951(a)(1)) is amended by striking out "and" before "(F)", and 42 USC 1395/. by adding at the end thereof the following: "and (G) with respect to items and services (other than clinical diagnostic laboratory tests) furnished in connection with obtaining a second opinion required under section 1164(c)(2) (or a third opinion, if the second opinion was in disagreement with the first opinion), the amounts paid shall be 100 percent of the reasonable charges for such items and services;". (B) Section 1833(a)(1)(D) of such Act is amended by striking out "or under the procedure described in section 1870(f)(1)" and inserting in lieu thereof ", under the procedure described in section 1870(f)(1), or for tests furnished in connection with 42 USC 1395gg. obtaining a second opinion required under section 1164(c)(2) (or a third opinion, if the second opinion was in disagreement with the first opinion)". (C) Section 1833(a)(2)(A) of such Act is amended by inserting ", to items and services (other than clinical diagnostic laboratory tests) furnished in connection with obtaining a second opinion required under section 1164(c)(2) (or a third opinion, if the second opinion was in disagreement with the first opinion)," after "(other than durable medical equipment)". (D) Section 1833(a)(2)(D) of such Act is amended by striking out "or to a provider having an agreement under section 1866" and insert- ing in lieu thereof "to a provider having an agreement under section 1866, or for tests furnished in connection with obtaining a second opinion required under section 1164(c)(2) (or a third opinion, if the second opinion was in disagreement with the first opinion)". (E) Section 1833(a)(3) of such Act is amended by inserting after "1861(s)(10)(A)" the following: "and for items and services furnished in connection with obtaining a second opinion required under sec- tion 1164(c)(2), or a third opinion, if the second opinion was in disagreement with the first opinion". (F) The last sentence of section 1866(a)(2)(A) of such Act (42 U.S.C. 1395cc(a)(2)(A)) is amended by inserting after "1861(s)(10)(A)" the following: ", with respect to items and services furnished in connec- tion with obtaining a second opinion required under section 1164(c)(2) (or a third opinion, if the second opinion was in disagree- ment with the first opinion),". (c) CONFORMING AMENDMENTS.— (1) EXCLUSIONS FROM COVERAGE.—Section 1862(a) of the Social Security Act (42 U.S.C. 1395g(a)), as amended by section 9307(a) 42 USC I395y. of this title, is amended— (A) by striking out "or" at the end of paragraph (14); (B) by striking out the period at the end of paragraph (15) and inserting in lieu thereof "; or"; and (C) by adding at the end thereof the following new paragraph: "(16) furnished in connection with a surgical procedure for which a second opinion is required under section 1164(cX2) and has not been obtained.".
100 STAT. 200 PUBLIC LAW 99-272—APR. 7, 1986 42 u s e 1320C-3 (d) EFFECTIVE DATES.—The amendments made by subsection (a) note. shall apply to items and services furnished on or after January 1, Contracts. 1987. The Secretary of Health and Human Services shall provide for such modification of contracts under part B of title XI of the Social 42 u s e 1320c. Security Act that are in effect on that date as may be necessary to effect these amendments on a timely basis. 42 u s e 1320C-13 (e) STUDY.—The Secretary of Health and Human Services shall note. conduct a study of the results of the amendments made by this section, and shall report the results of the study to the Congress within 36 months after the date of the enactment of this Act. SEC. 9402. PEER REVIEW ORGANIZATION REIMBURSEMENT. (a) REIMBURSEMENT AMOUNTS.—Section 1866(a)(1)(F) of the Social Security Act (42 U.S.C. 1395cc(a)(l)(F)) is amended— (1) by striking out clause (iii), (2) by inserting "and" at the end of clause (ii), (3) by redesignating clause (iv) as clause (iii), and (4) by striking out "1982" in clause (iii) as so redesignated and inserting in lieu thereof "1986". (b) MONTHLY PAYMENTS.—Section 1153(c)(8) of such Act (42 U.S.C. 1320c-2(c)(8)) is amended to read as follows: "(8) reimbursement shall be made to the organization on a monthly basis, with payments for any month being made not later than 15 days after the close of such month.". 42 u s e 1395CC (c) EFFECTIVE DATES.—(1) The amendments made by subsection (a) note. shall become effective on the date of the enactment of this Act. 42 u s e 1320C-2 (2) The amendment made by subsection (b) shall apply to contracts note. entered into or renewed on or after the date of the enactment of this Act. SEC. 9403. DENIAL OF PAYMENT FOR SUBSTANDARD CARE. (a) DENIAL AUTHORITY FOR PRO.—Section 1154(a)(2) of the Social Security Act (42 U.S.C. 1320c-3(a)(2)) is amended— (1) by striking out "subparagraphs (A) and (C)" and inserting in lieu thereof "subparagraphs (A), (B), and (C)"; and (2) by adding at the end thereof (after and below subpara- graph (D)) the following: "Determinations that payment should not be made by reason of subparagraph (B) of paragraph (1) shall be made only on the basis of criteria which are consistent with guidelines established bv the Secretarv.". (b) WAIVER OF LIABILITY.—Section 1866(a)(1) of such Act (42 U.S.C. 1395cc(a)(l)) is amended by striking out "and" at the end of subpara- graph (G), by striking out the period at the end of subparagraph (H) and inserting in lieu thereof ", and", and by inserting after subpara- graph (H) the following new subparagraph: "(I) not to charge any individual or any other person for items or services for which payment under this title is denied under section 1154(a)(2) by reason of a determination under section 1154(a)(1)(B).". 42 u s e 1320C-3 (c) EFFECTIVE DATE.—The amendments made by this section shall note. become effective on the date of the enactment of this Act. SEC. 9404. HEALTH MAINTENANCE ORGANIZATION MEMBERSHIP ON PEER REVIEW ORGANIZATION BOARDS. (a) REMOVAL OF ONE-MEMBER LIMITATION.—Section 1153(b)(2)(A) of the Social Security Act (42 U.S.C. 1320c-2(b)(2)(A)) is amended by
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 201 striking out "consists only of one individual member of the govern- ing board" and inserting in lieu thereof "consists only of members of the governing board". (b) EFFECTIVE DATE.—The amendment made by this section shall 42 USC l320c-2 become effective on the date of the enactment of this Act. ^°^^- SEC. 9405. PEER REVIEW ORGANIZATION REVIEW OF HEALTH MAINTE- NANCE ORGANIZATIONS. (a) COMPARABLE REVIEW FOR HEALTH MAINTENANCE ORGANIZA- TIONS AND COMPETITIVE MEDICAL PLANS.—Section 1154(a)(1) of the Social Security Act (42 U.S.C. 1320c-3(a)(l)) is amended by inserting "(including where payment is made for such services to eligible organizations pursuant to contracts under section 1876)" after "title 42 USC 1395mm XVIII". (b) EFFECTIVE DATE.—The amendment made by this section shall 42 u s e 1320C-3 apply to items and services furnished on or after January 1, 1987. note. SEC. 9406. SUBSTITUTE REVIEW PENDING TERMINATION OF A PEER REVIEW ORGANIZATION CONTRACT. (a) SUBSTITUTE REVIEW.—Section 1153(d) of the Social Security Act (42 U.S.C. 1320c-2(d)) is amended by adding at the end thereof the following new paragraph: "(4) During the period after the Secretary has given notice of intent to terminate a contract, and prior to the time that the Secretary enters into a contract with another utilization and quality control peer review organization, the Secretary may transfer review responsibilities of the organization under the contract being termi- nated to another utilization and quality control peer review organization, or to an intermediary or carrier having an agreement under section 1816 or a contract under section 1842.". 42 USC 1395h, (b) EFFECTIVE DATE.—The amendment made by this section shall 1395u. become effective on the date of the enactment of this Act. 42 USC 1320C-2 note. Subtitle B—Medicaid and Maternal and Child Health SEC. 9501. SERVICES FOR PREGNANT WOMEN. (a) EXPANDED COVERAGE.—Section 1905(n)(l) of the Social Security Act (42 U.S.C. 1396d(n)(l)) is amended— (1) by striking out "or" at the end of subparagraph (A); (2) by striking out "and" at the end of subparagraph (B) and inserting in lieu thereof "or"; and (3) by adding after subparagraph (B) the following new subparagraph: "(C) otherwise meets the income and resources requirements State and local of a State plan under part A of title IV; and". governments. (b) OPTIONAL EXPANSION OF PREGNANCY-RELATED SERVICES.—Sec- 42 USC 601. tion 1902(a)(10) of such Act (42 U.S.C. 1396a(aX10)) is amended, in the matter after subparagraph (D) thereof^ (1) by striking out "and" before "(IV)" and inserting in lieu thereof a comma; and (2) by inserting before the semicolon at the end thereof the following: ", and (V) the making available to pregnant women covered under the plan of services relating to pregnancy (includ- ing prenatal, delivery, and postpartum services) or to any other
100 STAT. 202 PUBLIC LAW 99-272—APR. 7, 1986 condition which may complicate pregnancy shall not, by reason of this paragraph (10), require the making available of such services, or the making available of such services of the same amount, duration, and scope, to any other individuals, provided such services are made available (in the same amount, duration, and scope) to all pregnant women covered under the State plan". (c) POSTPARTUM ELIGIBILITY FOR PREGNANT WOMEN.—Section 42 u s e 1396a. 1902(e) of such Act (42 U.S.C. 1396b(e)) is amended by adding at the end the following new paragraph: State and local "(5) A woman who, while pregnant, is eligible for, has applied for, governments. and has received medical assistance under the State plan, shall continue to be eligible under the plan, as though she were pregnant, for all pregnancy-related and postpartum medical assistance under the plan, until the end of the 60-day period beginning on the last day of her pregnancy.". (d) EFFECTIVE DATES.— 42 u s e 1396d (1) EXPANDED COVERAGE.—(A) The amendments made by note. subsection (a) apply (except as provided under subparagraph (B)) 42 u s e 1396. to payments under title XIX of the Social Security Act for calendar quarters beginning on or after the July 1, 1986, with- out regard to whether or not final regulations to carry out the amendments have been promulgated by that date. State and local (B) In the case of a State plan for medical assistance under governments. title XIX of the Social Security Act which the Secretary of Health and Human Services determines requires State legisla- tion (other than legislation appropriating funds) in order for the plan to meet the additional requirement imposed by the amend- ments made by subsection (a), the State plan shall not be regarded as failing to comply with the requirements of such title solely on the basis of its failure to meet this additional requirement before the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature that begins after the date of the enactment of this Act. 42 u s e 1396a (2) OPTIONAL SERVICES.—The amendments made by subsection note. (b) shall become effective on the date of the enactment of this Act. 42 u s e 1396a (3) CONTINUED COVERAGE.—The amendment made by subsec- note. tion (c) shall apply to medical assistance furnished to a woman on or after the date of the enactment of this Act. SEC. 9502. MODIFICATIONS OF WAIVER PROVISIONS FOR HOME AND COMMUNITY-BASED SERVICES. (a) EXPLICIT INCLUSION OF CERTAIN PREVOCATIONAL AND EDU- CATIONAL SERVICES.—Section 1915(c) of the Social Security Act (42 U.S.C. 1396n(c)) is amended by adding at the end thereof the follow- ing new paragraph: "(5) For purposes of paragraph (4)(B), the term 'habilitation services', with respect to individuals who receive such services after discharge from a skilled nursing facility or intermediate care facility— "(A) means services designed to assist individuals in acquir- ing, retaining, and improving the self-help, socialization, and adaptive skills necessary to reside successfully in home and community based settings; and
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 203 "(B) includes (except as provided in subparagraph (C)) prevocational, educational, and supported employment services; but "(C) does not include— "(i) special education and related services (as defined in section 602(16) and (17) of the Education of the Handicapped Act (20 U.S.C. 1401(16), (17)) which otherwise are available to the individual through a local educational agency; and "(ii) vocational rehabilitation services which otherwise are available to the individual through a program funded under section 110 of the Rehabilitation Act of 1973 (29 U.S.C. 730).". (b) PERMITTING HOSPITAL LEVEL OF CARE FOR CERTAIN PARTICI- PANTS.—(1) Section 1915(c)(1) of such Act (42 U.S.C 1396n(c)(l)) is State and local amended by inserting "or but for the provision of such services the governments. individuals would continue to receive inpatient hospital services, skilled nursing facility services, or intermediate care facility serv- ices because they are dependent on ventilator support the cost of which is reimbursed under the State plan" before the period at the end thereof. (2) Section 1915(cX2XC) of such Act (42 U.S.C. 1396n(cK2XC)) is amended— (A) by inserting "hospital or" after "provided in a"; and (B) by inserting "inpatient hospital services or" after "the provision of. (c) PROHIBITING IMPOSITION OF CERTAIN REGULATORY LIMITS.— Section 1915(c) of such Act (42 U.S.C. 1396n(c)) as amended by subsection (a), is further amended— (1) in paragraph (2XD), by inserting "100 percent o f after "does not exceed ; and (2) by adding at the end thereof the following new paragraph: "(6) The Secretary may not require, as a condition of approval of a waiver under this section under paragraph (2XD), that the actual total expenditures for home and community-based services under the waiver (and a claim for Federal financial participation in expenditures for the services) cannot exceed the approved estimates for these services. The Secretary may not deny Federal financial State and local payment with respect to services under such a waiver on the ground governments. that, in order to comply with paragraph (2XD), a State has failed to comply with such a requirement.". (d) COMPUTATION OF EXPENDITURES FOR CERTAIN DISABLED PA- TIENTS.—Section 1915(c) of such Act (42 U.S.C. 1396n(c)), as amended by subsection (c), is further amended by adding at the end thereof the following new paragraph: "(7) In making estimates under paragraph (2XD) in the case of a State and local waiver which applies only to physically disabled individuals who are governments. inpatients in skilled nursing or intermediate care facilities, the State may determine the average per capita expenditure which would have been made in a fiscal year for those individuals under the State plan separately from the expenditure for other individuals who are inpatients of those facilities.'. (e) PERMITTING FLEXIBIUTY IN ESTABUSHING MAINTENANCE INCOME STANDARDS.—Section 1915(cX3) of such Act (42 U.S.C. 1396n(cX3)) is amended by adding at the end the following new sentence: "A waiver may provide, with respect to post-eligibility treatment of income of all individuals receiving services under that waiver, that the maximum amount of the individual's income which
100 STAT. 204 PUBLIC LAW 99-272—APR. 7, 1986 may be disregarded for any month for the maintenance needs of the individual may be an amount greater than the maximum allowed for that purpose under regulations in effect on July 1, 1985.". State and local (f) WAIVER EXTENSIONS.—The Secretary of Health and Human governments. Services shall extend, upon request of the State, any waiver under 42 u s e 1396n note. section 1915(c) of the Social Security Act which expires on or after September 30, 1985, and before September 30, 1986. Such extension shall be for a period of not less than one year nor more than five years, subject to section 1915(e)(1) of such Act. (g) WAIVER RENEWALS.—Section 1915(c)(3) of the Social Security Act (42 U.S.C. 1396n(c)(3)) is amended— (1) by striking out "additional three-year periods" and insert- ing in lieu thereof "additional five-year periods"; and (2) by striking out "previous three-year period" and inserting in lieu thereof "previous waiver period". (h) COORDINATED SERVICES BETWEEN M C H PROGRAM AND HOME AND COMMUNITY-BASED SERVICE PROGRAMS.—Section 1915(c) of the Social Security Act (42 U.S.C. 1396n(c)), as amended by subsection (d) of this section, is further amended by adding at the end thereof the following new paragraph: State and local "(8) The State agency administering the plan under this title may, governments. whenever appropriate, enter into cooperative arrangements with the State agency responsible for administering the program for 42 u s e 701. children with special health care needs under title V in order to assure improved access to coordinated services to meet the needs of such children.". (i) SUBSTITUTION OF PARTICIPANTS.—(1) Section 1915(c) of the Social Security Act (42 U.S.C. 1396n(c)), as amended by subsection (h) of this section, is further amended by adding at the end thereof the following new paragraph: State and local "(9) In the case of any waiver under this subsection which con- governments. tains a limit on the number of individuals who shall receive home or community-based services, the State may substitute additional individuals to receive such services to replace any individuals who die or become ineligible for services under the State plan.". 42 u s e 1396n (j) EFFECTIVE DATES.— note. (1) HABILITATION SERVICES.— The amendment made by subsec- tion (a) shall be effective for services furnished on or after the date of the enactment of this Act. (2) HOSPITALIZED PATIENTS.—The amendments made by subsection (b) shall be effective for services furnished on or after October 1, 1985. (3) PROHIBITION OF REGULATORY LIMITS AND TREATMENT OF CERTAIN PHYSICALLY DISABLED INDIVIDUALS.—The amendments made by subsections (c) and (d) shall apply to applications for waivers (or renewals thereof) filed before, on, or after, the date of the enactment of this Act and for services furnished on or after August 13,1981. (4) INCOME STANDARDS.—The amendment made by subsection (e) shall apply to waivers (or renewals thereof) approved on or after the date of the enactment of this Act. (5) WAIVER EXTENSIONS.—Subsection (f) shall apply to waivers expiring on or after September 30, 1985, and before September 30,1986. (6) WAIVER RENEWALS.—The amendments made by subsection (g) shall become effective on September 30, 1986.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 205 (7) COORDINATED SERVICES AND SUBSTITUTION OF PARTICI- PANTS.—The amendments made by subsections (h) and (i) shall become effective on the date of the enactment of this Act. SEC. 9503. THIRD-PARTY LIABILITY. (a) AMENDMENTS TO STATE PLAN REQUIREMENTS.—(1) Section 1902{a)(25) of the Social Security Act (42 U.S.C. 1396a(aX25)) is amended to read as follows: "(25) provide— "(A) that the State or local agency administering such plan will take all reasonable measures to ascertain the legal liability of third parties (including health insurers) to pay for care and services available under the plan, including— "(i) the collection of sufficient information (as speci- Claims. fied by the Secretary in regulations) to enable the State to pursue claims against such third parties, with such information being collected at the time of any deter- mination or redetermination of eligibility for medical assistance, and "(ii) the submission to the Secretary of a plan (subject to approval by the Secretary) for pursuing claims against such third parties, which plan shall— "(I) be integrated with, and be monitored as a part of the Secretary's review of, the State's mechanized claims processing and information re- trieval system under section 1903(r), and 42 USC 1396b. "(II) be subject to the provisions of section 1903(r)(4) relating to reductions in Federal pay- ments for failure to meet conditions of approval, but shall not be subject to any other financial penalty as a result of any other monitoring, quality control, or auditing requirements; "(B) that in any case where such a legal liability is found to exist after medical assistance has been made available on behalf of the individual and where the amount of re- imbursement the State can reasonably expect to recover exceeds the costs of such recovery, the State or local agency will seek reimbursement for such assistance to the extent of such legal liability; "(C) that in the case of an individual who is entitled to medical assistance under the State plan with respect to a service for which a third party is liable for payment, the person furnishing the service may not seek to collect from the individual (or any financially responsible relative or representative of that individual) payment of an amount for that service (i) if the total of the amount of the liabilities of third parties for that service is at least equal to the amount payable for that service under the plan (disregarding sec- tion 1916), or (ii) in an amount which exceeds the lesser of 42 USC l396o. (I) the amount which may be collected under section 1916, or (II) the amount by which the amount payable for that service under the plan (disregarding section 1916) exceeds the total of the amount of the liabilities of third parties for that service; "(D) that a person who furnishes services and is partici- pating under the plan may not refuse to furnish services to
100 STAT. 206 PUBLIC LAW 99-272—APR. 7, 1986 an individual (who is entitled to have payment made under the plan for the services the person furnishes) because of a third party's potential liability for payment for the service; "(E) that in the case of prenatal or preventive pediatric care (including early and periodic screening and diagnosis 42 use I396d. services under section 1905(a)(4XB)) covered under the State plan, the State shall— "(i) make payment for such service in accordance with the usual payment schedule under such plan for such services without regard to the liability of a third party for payment for such services; and "(ii) seek reimbursement from such third party in accordance with subparagraph (B); and "(F) that in the case of any services covered under such plan which are provided to an individual on whose behalf child support enforcement is being carried out by the State 42 use 651. agency under part D of title IV of this Act, the State shall— "(i) make payment for such service in accordance with the usual payment schedule under such plan for such services without regard to any third-party liability for payment for such services, if such third-party liabil- ity is derived (through insurance or otherwise) from the parent whose obligation to pay support is being en- forced by such agency, if payment has not been made by such third party within 30 days after such services are furnished; and "(ii) seek reimbursement from such third party in accordance with subparagraph (B);". (2) Section 1902 of such Act (42 U.S.C. 1396a) is amended by inserting after subsection (f) the following new subsection: "(g) In addition to any other sanction available to a State, a State may provide for a reduction of any payment amount otherwise due with respect to a person who furnishes services under the plan in an amount equal to up to three times the amount of any payment sought to be collected by that person in violation of subsection (aX25XC).". (b) PERFORMANCE STANDARDS AND REVIEW FOR MECHANIZED CLAIMS PROCESSING AND INFORMATION RETRIEVAL SYSTEMS.—(1) Sec- tion 1903(rX6XJ) of such Act (42 U.S.C. 1396b(rX6XJ)) is amended to read as follows: "(J) develop and disseminate performance standards for assessing the State's third party collection efforts in accordance with section 1902(a)(25)(AXii).". (2) Section 1903(rX4XA) of such Act (42 U.S.C. 1396b(rX4XA)) is amended— (A) by striking out "once each fiscal year" and inserting in lieu thereof "once every three years"; and (B) by adding at the end thereof the following: "Reviews may, at the Secretary's discretion, constitute reviews of the entire system or of only those standards, systems requirements, and other conditions which have demonstrated weakness in previous reviews.". 42 use 1396a (c) REGULATIONS.—The Secretary of Health and Human Services note. shall promulgate final regulations necessary to carry out sections 1902(aX25) and 1903(rX6XJ) of the Social Security Act within 6 months after the date of the enactment of this Act.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 207 (d) ERISA AMENDMENT.—(1) Section 514(b) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1144) is amended by adding at the end thereof the following new paragraph: "(8) Subsection (a) of this section shall not apply to any State law mandating that an employee benefit plan not include any provision which has the effect of limiting or excluding coverage or payment for any health care for an individual who would otherwise be covered or entitled to benefits or services under the terms of the employee benefit plan, because that individual is provided, or is eligible for, benefits or services pursuant to a plan under title XIX of the Social Security Act, to the extent such law is necessary for the 42 USC 1396. State to be eligible to receive reimbursement under title XIX of that Act". (2)(A) Except as provided in subparagraph (B), the amendment 29 USC 1144 made by paragraph (1) shall become effective on October 1, 1986. note. (B) In the case of a plan maintained pursuant to one or more Effective dates, collective bargaining agreements between employee representatives and one or more employers ratified on or before the date of the enactment of this Act, the amendment made by paragraph (1) shall become effective on the later of— (i) October 1,1986; or (ii) the earlier of—^ (I) the date on which the last of the collective bargaining agreements under which the plan is maintained, which were in effect on the date of the enactment of this Act, terminates (determined without regard to any extension thereof agreed to after the date of the enactment of this Act); or (II) three years after the date of the enactment of this Act. (e) CONDITION OF ELIGIBILITY.—Section 1912(a)(1) of the Social Security Act (42 U.S.C. 1396k(a)(l)) is amended by striking out "and" at the end of subparagraph (A), and by adding at the end thereof the following new subparagraph: "(C) to cooperate with the State in identifying, and providing information to assist the State in pursuing, any third party who may be liable to pay for care and services available under the plan, unless such individual has good cause for refusing to cooperate as determined by the State agency in accordance with standards prescribed by the Secretary, which standards shall take into consideration the best interests of the individuals involved; and". (f) DISREGARD FROM ERRONEOUS PAYMENTS.—Section 1903(u)(l)(D) of such Act (42 U.S.C. 1396b(u)(l)(D)) is amended by adding at the end thereof the following new clause: "(iv) In determining the amount of erroneous excess payments, there shall not be included any error resulting from a failure of an individual to cooperate or give correct information with respect to third-party liability as required under section 1912(a)(1)(C) or 402(a)(26)(C).". 42 use 602. (g) EFFECTIVE DATES.—(1) Except as otherwise provided, the 42 use I396a amendments made by this section shall apply to calendar quarters ^°^^- beginning on or after the date of the enactment of this Act. (2) In the case of a State plan for medical assistance under title XIX of the Social Security Act which the Secretary of Health and Human Services determines requires-State legislation (other than legislation appropriating funds) in order for the plan to meet the
100 STAT. 208 PUBLIC LAW 99-272—APR. 7, 1986 additional requirements imposed by the amendments made by this section, the State plan shall not be regarded as failing to comply with the requirements of such title solely on the basis of its failure to meet these additional requirements before the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature that begins after the date of the enactment of this Act. (3) No penalty may be applied against any State for a violation of 42 use 1396a. section 1902(a)(25) of the Social Security Act occurring prior to the effective date of the amendments made by this section. (4) The amendment made by subsection (c) shall become effective on the date of the enactment of this Act. SEC. 9505. OPTIONAL HOSPICE BENEFITS. (a) COVERAGE OF HOSPICE CARE AS AN OPTIONAL MEDICAID BENE- FIT.—Section 1905 of the Social Security Act (42 U.S.C. 1396d) is amended— (1) in subsection (a)— (A) by striking out "and" at the end of paragraph (17); (B) by redesignating paragraph (18) as paragraph (19); and (C) by inserting after paragraph (17) the following new paragraph: "(18) hospice care (as defined in subsection (o)); and"; and (2) by adding at the end thereof the following new subsection: "(o)(l) The term 'hospice care' means the care described in section 42 use 1395x. 1861(dd)(l) furnished by a hospice program (as defined in section 1861(dd)(2)) to a terminally ill individual who has voluntarily elected (in accordance with paragraph (2)) to have payment made for hos- pice care instead of having payment made for certain benefits 42 use 1395d. described in section 1812(d)(2)(A) and intermediate care facility serv- ices under the plan. For purposes of such election, hospice care may be provided to an individual while such individual is a resident of a skilled nursing facility or intermediate care facility, but the only payment made under the State plan shall be for the hospice care. "(2) An individual's voluntary election under this subsection— "(A) shall be made in accordance with procedures that are established by the State and that are consistent with the proce- dures established under section 1812(d)(2); "(B) shall be for such a period or periods (which need not be the same periods described in section 1812(d)(1)) as the State may establish; and "(C) may be revoked at any time without a showing of cause and may be modified so as to change the hospice program with respect to which a previous election was made.". (b) ELIGIBILITY.— (1) LIMITATION TO TERMINALLY ILL INDIVIDUALS.—Section 1902(a)(10) of such Act (42 U.S.C. 1396a(a)(10)), as amended by section 9501 of this Act, is further amended, in the matter following subparagraph (D), by striking out "and" before "(V)" and by inserting before the semicolon at the end thereof the following: ", and (VI) with respect to the making available of medical assistance for hospice care to terminally ill individuals who have made a voluntary election described in section 1905(o) to receive hospice care instead of medical assistance for certain other services, such assistance may not be made available in an amount, duration, or scope less than that provided under title
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 209 XVIII, and the making available of such assistance shall not, by 42 USC 1395. reason of this paragraph (10), require the making available of medical assistance for hospice care to other individuals or the making available of medical assistance for services waived by such terminally ill individuals". (2) HIGHER INCOME STANDARD PERMITTED.—Section 1902(a)(10)(A)(ii) of such Act (42 U.S.C. 1396a(a)(10)(A)(ii)) is amended— (A) by striking out "or" at the end of subclause (V); (B) by striking out the semicolon at the end of subclause (VI) and inserting in lieu thereof ", or"; and (C) by adding at the end the following new subclause: "(VII) who would be eligible under the State plan under this title if they were in a medical institution, who are terminally ill, and who will receive hospice care pursuant to a voluntary election described in sec- tion 1905(o);". 42 USC 1396d. (c) PAYMENT FOR HOSPICE CARE.— (1) U S E OF MEDICARE RATES.—Section 1902(a)(13) of such Act (42 U.S.C. 1396a(a)(13)) is amended— (A) by striking out "and" at the end of subparagraph (B); (B) by redesignating subparagraph (C) as subparagraph (D); and (C) by inserting after subparagraph (B) the following new subparagraph: "(C) for payment for hospice care in the same amounts, and using the same methodology, as used under part A of title XVIII; except that a separate rate may be paid for 42 USC 1395c. hospice care which is furnished to an individual who is a resident of a skilled nursing facility or intermediate care facility, and who would be eligible under the plan for skilled nursing facility services or intermediate care facility services if he had not elected to receive hospice care, to take into account the room and board furnished by such facility; and". (2) LIMITATION ON COPAYMENTS.—Subsections (a)(2) and (b)(2) of section 1916 of the Social Security Act (42 U.S.C. 1396o) are each amended— (A) by striking out "or" at the end of subparagraph (C); (B) by striking out "; and" at the end of subparagraph (D) and inserting in lieu thereof ", or"; and (C) by adding at the end the following new subparagraph: "(E) services furnished to an individual who is receiving hospice care (as defined in section 1905(o)); and". (d) CONFORMING AMENDMENTS.— (1) Section 1902(j) of such Act (42 U.S.C. 1396a(j)) is amended by striking out "(18)" and inserting in lieu thereof "(19)". (2) Section 1902(a)(10)(C)(iv) of such Act (42 U.S.C. 1396a(a)(10)(C)(iv)) is amended by striking out "through (17)" and inserting in lieu thereof "through (18)". (e) EFFECTIVE DATE.—The amendments made by this section shall 42 use I396a apply to medical assistance provided for hospice care furnished on or "°te. after the date of the enactment of this Act.
100 STAT. 210 PUBLIC LAW 99-272—APR. 7, 1986 SEC. 9506. TREATMENT OF POTENTIAL PAYMENTS FROM MEDICAID QUALIFYING TRUSTS. (a) AMOUNTS TREATED AS BEING AVAILABLE FROM GRANTOR TRUSTS.—Section 1902 of the Social Security Act (42 U.S.C. 1396a) is amended by adding at the end thereof the following new subsection: "(k)(l) In the case of a medicaid qualifying trust (described in paragraph (2)), the amounts from the trust deemed available to a grantor, for purposes of subsection (a)(17), is the maximum amount of payments that may be permitted under the terms of the trust to be distributed to the grantor, assuming the full exercise of discretion by the trustee or trustees for the distribution of the maximum amount to the grantor. For purposes of the previous sentence, the term 'grantor' means the individual referred to in paragraph (2). "(2) For purposes of this subsection, a 'medicaid qualifying trust' is a trust, or similar legal device, established (other than by will) by an individual (or an individual's spouse) under which the individual may be the beneficiary of all or part of the payments from the trust and the distribution of such payments is determined by one or more trustees who are permitted to exercise any discretion with respect to the distribution to the individual. "(3) This subsection shall apply without regard to— "(A) whether or not the medicaid qualifying trust is irrev- ocable or is established for purposes other than to enable a grantor to qualify for medical assistance under this title; or "(B) whether or not the discretion described in paragraph (2) is actually exercised. State and local "(4) The State may waive the application of this subsection with governments. respect to an individual where the State determines that such application would work an undue hardship.". 42 u s e 1396a (b) EFFECTIVE DATE.—The amendment made by subsection (a) note. shall apply to medical assistance furnished on or after the first day of the second month beginning after the date of the enactment of this Act. SEC. 9507. WRITTEN STANDARDS FOR PROVISION OF ORGAN TRANS- PLANTS. (a) DENIAL OF FEDERAL PAYMENTS FOR ORGAN TRANSPLANTS UNLESS PROVIDED UNDER WRITTEN STANDARDS.—Section 1903(i) of the Social Security Act (42 U.S.C. 1396b(i)) is amended by inserting before paragraph (2) the following new paragraph: "(1) for organ transplant procedures unless the State plan provides for written standards respecting the coverage of such procedures and unless such standards provide that— "(A) similarly situated individuals are treated alike; and "(B) any restriction, on the facilities or practitioners which may provide such procedures, is consistent with the accessibility of high quality care to individuals eligible for the procedures under the State plan.". 42 u s e 1396b (b) EFFECTIVE DATE.—The amendments made by subsection (a) note. shall apply to medical assistance furnished on or after January 1, 1987. SEC. 9508. OPTIONAL TARGETED CASE MANAGEMENT SERVICES. (a) EXEMPTION FROM CERTAIN REQUIREMENTS.—(1) Section 1915 of the Social Security Act (42 U.S.C. 1396n) is amended by adding at the end thereof the following new subsection:
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 211 "(g)(1) A State may provide, as medical assistance, case manage- State and local ment services under the plan without regard to the requirements of governments. section 1902(aXl) and section 1902(a)(10)(B). The provision of case 42 use 1396a. management services under this subsection shall not restrict the choice of the individual to receive medical assistance in violation of section 1902(a)(23). "(2) For purposes of this subsection, the term 'case management services' means services which will assist individuals eligible under the plan in gaining access to needed medical, social, educational, and other services. (2) Section 1915(b) of such Act (42 U.S.C. 1396n(b)) is amended by adding at the end thereof (after and below paragraph (4)) the following: "No waiver under this subsection may restrict the choice of the individual in receiving services under section 1905(a)(4)(C).". 42 u s e 1396d. (b) EFFECTIVE DATE.—The amendments made by this section shall 42 u s e 1396n apply to services furnished on or after the date of the enactment of note. this Act. SEC. 9509. REVALUATION OF ASSETS. (a) REVALUATION OF ASSETS.—Section 1902(aX13) of the Social Security Act (42 U.S.C. 1396a(a)(13)), as amended by section 9505 of this Act, is further amended— (1) in subparagraph (B), by striking out "hospitals, skilled nursing facilities, and intermediate care facilities" and insert- ing in lieu thereof "hospitals"; (2) by striking out "and" at the end of subparagraph (C); (3) by redesignating subparagraphs (C) and (D) as subpara- graphs (D) and (E); and (4) by inserting after subparagraph (B) the following new subparagraph: "(C) that the State shall provide assurances satisfactory State and local to the Secretary that the valuation of capital assets, for governments. purposes of determining payment rates for skilled nursing facilities and intermediate care facilities, will not be in- creased (as measured from the date of acquisition by the seller to the date of the change of ownership), solely as a result of a change of ownership, by more than the lesser of— "(i) one-half of the percentage increase (as measured over the same period of time, or, if necessary, as extrapolated retrospectively by the Secretary) in the Dodge Construction Systems Costs for Nursing Homes, applied in the aggregate with respect to those facilities which have undergone a change of ownership during the fiscal year, or "(ii) one-half of the percentage increase (as measured over the same period of time) in the Consumer Price Index for All Urban Consumers (United States city average);". (b) EFFECTIVE DATES.—(1) Except as provided in paragraphs (2) and 42 use 1396a (3), the amendments made by this section shall apply to medical note. assistance furnished on or after October 1, 1985, but only with respect to changes of ownership occurring on or after such date. (2) The amendments made by this section shall not apply with respect to a change of ownership pursuant to an enforceable agree- ment entered into prior to October 1,1985.
100 STAT. 212 PUBLIC LAW 99-272—APR. 7, 1986 State and local (3) In the case of a State plan for medical assistance under title governments. XIX of the Social Security Act which the Secretary of Health and 42 u s e 1396. Human Services determines requires State legislation (other than legislation appropriating funds) in order for the plan to meet the requirements imposed by the amendments made by this section, the State plan shall not be regarded as failing to comply with the requirements of such title solely on the basis of its failure to meet the requirements imposed by the amendments made by this section before the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature that begins after the date of the enactment of this Act. 42 u s e 1396a (c) GAO STUDY.—The Comptroller General shall conduct a study note. of the effects of the amendments made by this section, and shall report the results of such study to the Congress two years after the date of the enactment of this Act. SEC. 9510. BEGINNING DATE OF OPTIONAL COVERAGE FOR INDIVIDUALS IN MEDICAL INSTITUTIONS. (a) COVERAGE.—Section 1902(a)(10)(A)(ii)(V) of the Social Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)(V)) is amended by inserting "for a period of not less than 30 consecutive days (with eligibility by reason of this subclause beginning on the first day of such period)" after "are in a medical institution". 42 u s e 1396a (b) EFFECTIVE DATE,—The amendment made by this section shall note. apply with respect to payment for services furnished on or after October 1, 1985. SEC. 95n. OPTIONAL COVERAGE OF CHILDREN. (a) STATE OPTION.—Section 1905(n)(2) of the Social Security Act (42 U.S.C. 1396d(h)(2)) is amended by inserting "(or such earlier date as the State may designate)" after "September 30, 1983". 42 u s e 1396d (b) EFFECTIVE DATE.—The amendment made by this section shall note. apply to services furnished on or after April 1,1986. SEC. 9512. OVERPAYMENT RECOVERY RULES. (a) OVERPAYMENT RECOVERY.-—-Section 1903(d)(2) of the Social Security Act (42 U.S.C. 1396b(d)(2)) is amended— (1) by inserting "(A)" after "(2)"; (2) by designating the second sentence as subparagraph (B), properly indented and aligned below subparagraph (A); and (3) by adding at the end thereof the following new subpara- graphs: State and local "(C) For purposes of this subsection, when an overpayment is governments. discovered, which was made by a State to a person or other entity, the State shall have a period of 60 days in which to recover or attempt to recover such overpayment before adjustment is made in the Federal payment to such State on account of such overpayment. Except as otherwise provided in subparagraph (D), the adjustment in the Federal payment shall be made at the end of the 60 days, whether or not recovery was made. "(D) lii any case where the State is unable to recover a debt which represents an overpayment (or any portion thereof) made to a person or other entity on account of such debt having been dis- charged in bankruptcy or otherwise being uncollectable, no adjust- ment shall be made in the Federal payment to such State on account of such overpayment (or portion thereof).".
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 213 (b) EFFECTIVE DATE.—The amendments made by this section shall 42 u s e 1396b apply to overpayments identified for quarters beginning on or after note. October 1,1985. SEC. 9514. REGULATIONS FOR INTERMEDIATE CARE FACILITIES FOR THE MENTALLY RETARDED. The Secretary of Health and Human Services shall promulgate 42 u s e 1396d proposed regulations revising standards for intermediate care facili- note. ties for the mentally retarded under title XIX of the Social Security Act within 60 days after the date of the enactment of this Act. 42 u s e 1396. SEC. 9515. LIFE SAFETY CODE RECOGNITION. For purposes of section 1905(c) of the Social Security Act, an 42 u s e 1396d intermediate care facility for the mentally retarded (as defined in and notes. section 1905(d) of such Act) which meets the requirements of the relevant sections of the 1985 edition of the Life Safety Code of the National Fire Protection Association shall be deemed to meet the fire safety requirements for intermediate care facilities for the mentally retarded until such time as the Secretary specifies a later edition of the Life Safety Code for purposes of such section, or the Secretary determines that more stringent standards are necessary to protect the safety of residents of such facilities. SEC. 9516. CORRECTION AND REDUCTION PLANS FOR INTERMEDIATE CARE FACILITIES FOR THE MENTALLY RETARDED. (a) CORRECTION AND REDUCTION PLANS.—Title XIX of the Social Security Act is amended by adding at the end thereof the following new subsection: CORRECTION AND REDUCTION PLANS FOR INTERMEDIATE CARE FACILITIES FOR THE MENTALLY RETARDED "SEC. 1919. (a) If the Secretary finds that an intermediate care State and local facility for the mentally retarded has substantial deficiencies which governments. do not pose an immediate threat to the health and safety of resi- 42 u s e 1396r. dents, the State may elect, subject to the limitations in this section, to— "(1) submit, within the number of days specified by the Sec- retary in regulations which apply to submission of compliance plans with respect to deficiencies of such type, a written plan of correction which details the extent of the facility's current compliance with the standards promulgated by the Secretary, including all deficiencies identified during a validation survey, and which provides for a timetable for completion of necessary steps to correct all staffing deficiencies within 6 months, and a timetable for rectifying all physical plant deficiencies within 6 months; or "(2) submit, within a time period consisting of the number of days specified for submissions under paragraph (1) plus 35 days, a written plan for permanently reducing the number of certified beds, within a maximum of 36 months, in order to permit any noncomplying buildings (or distinct parts thereof) to be vacated and any staffing deficiencies to be corrected (hereinafter in this section referred to as a 'reduction plan'). "(b) As conditions of approval of any reduction plan submitted pursuant to subsection (a)(2), the State must— "(1) provide for a hearing to be held at the affected facility at least 35 days prior to submission of the reduction plan, with
100 STAT. 214 PUBLIC LAW 99-272—APR. 7, 1986 reasonable notice thereof to the staff and residents of the facility, responsible members of the residents' families, and the general public; "(2) demonstrate that the State has successfully provided home and community services similar to the services proposed to be provided under the reduction plan for similar individuals eligible for medical assistance; and "(3) provide assurances that the requirements of subsection (c) shall be met with respect to the reduction plan. "(c) The reduction plan must— "(1) identify the number and service needs of existing facility residents to be provided home or community services and the timetable for providing such services, in 6 month intervals, within the 36-month period; "(2) describe the methods to be used to select such residents for home and community services and to develop the alternative home and community services to meet their needs effectively; "(3) describe the necessary safeguards that will be applied to protect the health and welfare of the former residents of the facility who are to receive home or community services, includ- ing adequate standards for consumer and provider participation and assurances that applicable State licensure and applicable State and Federal certification requirements will be met in providing such home or community services; "(4) provide that residents of the affected facility who are eligible for medical assistance while in the facility shall, at their option, be placed in another setting (or another part of the affected facility) so as to retain their eligibility for medical assistance; "(5) specify the actions which will be taken to protect the health and safety of the residents who remain in the affected facility while the reduction plan is in effect; "(6) provide that the ratio of qualified staff to residents at the affected facility (or the part thereof) which is subject to the reduction plan will be the higher of— "(A) the ratio which the Secretary determines is nec- essary in order to assure the health and safety of the residents of such facility (or part thereof); or "(B) the ratio which was in effect at the time that the finding of substantial deficiencies (referred to in subsection (a)) was made; and "(7) provide for the protection of the interests of employees affected by actions under the reduction plan, including— "(A) arrangements to preserve employee rights and benefits; "(B) training and retraining of such employees where necessary; "(C) redeployment of such employees to community set- tings under the reduction plan; and (D) making maximum efforts to guarantee the employ- ment of such employees (but this requirement shall not be construed to guarantee the employment of any employee). "(dXD The Secretary must provide for a period of not less than 30 days after the submission of a reduction plan by a State, during which comments on such reduction plan may be submitted to the Secretary, before the Secretary approves or disapproves such reduc- tion plan.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 215 "(2) If the Secretary approves more than 15 reduction plans under this section in any fiscal year, any reduction plans approved in addition to the first 15 such plans approved, must be for a facility (or part thereof) for which the costs of correcting the substantial defi- ciencies (referred to in subsection (a)) are $2,000,000 or greater (as demonstrated by the State to the satisfaction of the Secretary). "(e)(1) If the Secretary, at the conclusion of the 6-month plan of correction described in subsection (a)(1), determines that the State has substantially failed to correct the deficiencies described in subsection (a), the Secretary may terminate the facility's provider agreement in accordance with the provisions of section 1910(c). 42 u s e 13961. "(2) In the case of a reduction plan described in subsection (a)(2), if Law the Secretary determines, at the conclusion of the initial 6-month enforcement and crime. period or any 6-month interval thereafter, that the State has substantially failed to meet the requirements of subsection (c), the Secretary shall— "(A) terminate the facility's provider agreement in accord- ance with the provisions of section 1910(c); or "(B) if the State has failed to meet such requirements despite good faith efforts, disallow, for purposes of Federal financial participation, an amount equal to 5 percent of the cost of care for all eligible individuals in the facility for each month for which the State fails to meet such requirements. "(f) The provisions of this section shall apply only to plans of correction and reduction plans approved by the Secretary within 3 years after the effective date of final regulations implementing this section.". (b) EFFECTIVE DATE.—(1) The amendment made by this section 42 u s e 1396r shall become effective on the date of the enactment of this Act. note. (2) The Secretary of Health and Human Services shall issue a notice of proposed rulemaking with respect to section 1919 of the Social Security Act within 60 days after the date of the enactment of this Act, and shall allow a period of 30 days for comment thereon prior to promulgating final regulations implementing such section. (c) REPORT.—'The Secretary of Health and Human Services shall 42 u s e 1396r submit a report to the Congress on the implementation and results note. of section 1919 of the Social Security Act. Such report shall be submitted not later than 30 months after the effective date of final regulations promulgated to implement such section. SEC. 9517. MODIFYING APPLICATION OF MEDICAID HMO PROVISIONS FOR CERTAIN HEALTH CENTERS. (a) WAIVING APPLICATION OF 75 PERCENT RULE AND CERTAIN ORGANIZATIONAL REQUIREMENTS.—Section 1903(m)(2) of the Social Security Act (42 U.S.C. 1396b(mX2)) is amended— (1) in subparagraph (A), by striking out "(B) and (C)" and inserting in lieu thereof "(B), (C), and (G)"; (2) in subparagraph (F)— (A) by striking out "(FXi) In the case of a contract with a Contracts. health maintenance organization described in clause (ii)" and inserting in lieu thereof "(F) in the case of a contract with an entity described in subparagraph (G) or with a qualified health maintenance organization (as defined in section 1310(d) of the Public Health Service Act) which 42 u s e 300e-9. meets the requirement of subparagraph (A)(ii)"; (B) by striking out "such organization" and inserting in lieu thereof "such entity or organization"; and
100 STAT. 216 PUBLIC LAW 99-272—APR. 7, 1986 (C) by striking out clause (ii); and (3) by adding at the end thereof the following new subpara- graph: "(G) In the case of an entity which is receiving (and has received during the previous two years) a grant of at least $100,000 under 42 u s e 254b, section 329(d)(1)(A) or 330(d)(1) of the Public Health Service Act or is 254c. receiving (and has received during the previous two years) at least $100,000 (by grant, subgrant, or subcontract) under the Appalachian 40 u s e app. 1. Regional Development Act of 1965, clauses (i) and (ii) of subpara- graph (A) shall not apply.". (b) PERMITTING 6-MONTH CONTINUATION OF BENEFITS.—Section 1902(e)(2) of such Act (42 U.S.C. 1396a(e)(2)) is amended— (1) in subparagraph (A)— (A) by inserting "or with an entity described in section Ante, p. 215. 1903(m)(2)(G)" after "Public Health Service Act)"; and (B) by inserting "or entity" before the period; and (2) in subparagraph (B)— (A) by striking out "a health maintenance organization" and inserting in lieu thereof "an organization or entity"; and (B) by inserting "or entity" after "the organization". (c) HEALTH INSURING ORGANIZATIONS.—(1) Section 1903(m)(2XA) of the Social Security Act (42 U.S.C. 1396b(m)(2)(A)) is amended, in the matter before clause (i)— (1) by inserting "(including a health insuring organization)" after "any entity"; and (2) by inserting "(directly or through arrangements with providers of services)" after responsible for the provision' 42 u s e 1396b (2)(A) Except as provided in subparagraph (B), the amendments note. made by paragraph (1) shall apply to expenditures incurred for health insuring organizations which first become operational on or after January 1,1986. (B) In the case of a health insuring organization— (i) which first becomes operational on or after January 1, 1986, but (ii) for which the Secretary of Health and Human Services 42 u s e 1396n. has waived, under section 1915(b) of the Social Security Act and before such date, certain requirements of section 1902 of such Act, clauses (ii) and (iv) of section 1903(m)(2)(A) of such Act shall not apply during the period for which such waiver is effective. SEC. 9518. EXTENSION OF MMIS DEADLINE. (a) NEW DEADLINE.—Section 1903(r)(l)(B) of the Social Security Act (42 U.S.C. 1396b(r)(l)(B)) is amended by striking out "the earlier o f and all that follows through the end of subparagraph (B) and inserting in lieu thereof "September 30, 1985.". 42 u s e 1396b (b) EFFECTIVE DATE.—The amendment made by subsection (a) note. shall apply to payment under section 1903(a) of the Social Security Act for calendar quarters beginning on or after October 1, 1982. SEC. 9519. REPORT ON ADJUSTMENT IN MEDICAID PAYMENTS FOR HOS- PITALS SERVING DISPROPORTIONATE NUMBERS OF LOW INCOME PATIENTS. The Secretary of Health and Human Services shall transmit to Congress, not later than October 1, 1986, a report that—
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 217 (1) describes the methodology used by States under section 1902(a)(13)(A) of the Social Security Act, in their making pay- 42 USC 1396a. ments to hospitals, in taking into account the situation of hospitals that serve a disproportionate number of low income patients with special needs; (2) identifies each of those hospitals that have had the amount of their payments under that title adjusted under that section; and (3) for each of those hospitals, describes the proportion of total inpatient-days attributable to low income patients and the proportion of total inpatient-days attributable to patients en- titled to medical assistance under that title. SEC. 9520. TASK FORCE ON TECHNOLOGY-DEPENDENT CHILDREN. (a) APPOINTMENT OF TASK FORCE.—The Secretary of Health and 42 u s e 1396a Human Services, within six months after the date of the enactment note. of this Act, shall establish a task force concerning alternatives to institutional care for technology-dependent children (as defined in subsection (e)). (b) MEMBERSHIP.—The task force shall include representatives of Federal and State agencies with responsibilities relating to child health, health insurers, large employers (including those that self- insure for health care costs), providers of health care to technology- dependent children, and parents of technology-dependent children. (c) FUNCTIONS OF TASK FORCE.—The task force shall— (1) identify barriers that prevent the provision of appropriate care in a home or community setting to meet the special needs of technology-dependent children; and (2) recommend changes in the provision and financing of health care in private and public health care programs (includ- ing appropriate joint public-private initiatives) so as to provide home and community-based alternatives to the institutionaliza- tion of technology-dependent children. (d) REPORT.—The task force shall make a final report to the Secretary and to the Congress on its activities not later than two years after the date of the enactment of this Act. (e) DEFINITION.—In this section, the term "technology-dependent child" means a child who has a chronic illness which makes the child dependent upon the continuing use of medical care technology (such as a ventilator). SEC. 9522. EXPANSION OF SERVICES UNDER DEMONSTRATION WAIVERS. In the case of waivers granted to (or submitted during 1986 by) the Oregon. State of Oregon under section 1915(b) of the Social Security Act, the 42 USC 1396n. Secretary of Health and Human Services may waive the require- ments of section 1903(m)(2)(A) of such Act with respect to any entity 42 USC 1396b. providing services under any such waiver if such entity does not provide more than 5 of the services listed in section 1903(m)(2)(A) of such Act, and does not provide inpatient hospital services. SEC. 9523. EXTENSION OF TEXAS WAIVER PROJECT. (a) RENEWED APPROVAL.—Notwithstanding any limitations con- tained in section 1115 of the Social Security Act but subject to 42 USC 1315. subsection (b) of this section, the Secretary of Health and Human Services, upon application, shall renew approval of demonstration project number ll-P-97473/6-06 ("Modifications under the Texas System of Care for the Elderly: Alternatives to the Institutionalized
100 STAT. 218 PUBLIC L A W 99-272—APR. 7, 1986 Aged"), previously approved under that section, until January 1, 1989. (b) TERMS AND CONDITIONS.—The Secretary's renewed approval of the project under subsection (a)— (1) shall be on the same terms and conditions as applied to the project as of December 31, 1985; and (2) shall remain in effect until such time as the Secretary finds that the applicant no longer complies with such terms and conditions. SEC. 9524. WISCONSIN HEALTH MAINTENANCE ORGANIZATION WAIVER. The waiver granted to the State of Wisconsin pursuant to section 42 u s e 1396n. 1915(b) of the Social Security Act relating to the requirements of 42 u s e 1396b. section 1903(m) of such Act in conjunction with a waiver of the 42 u s e 1396a. requirements of section 1902(a)(23) of such Act shall, upon request by the State, be reinstated, and shall be renewable for terms of 2 years, subject to the showings required generally under section 1915(b) of such Act. SEC. 9525. NEW JERSEY DEMONSTRATION PROJECT RELATING TO TRAIN- ING OF AFDC RECIPIENTS AS HOME HEALTH AIDES. The Secretary of Health and Human Services shall continue for one additional year the demonstration project conducted by the State of New Jersey pursuant to section 966 of the Omnibus Rec- 42 u s e 632a. onciliation Act of 1980. Federal matching for such demonstration project shall be 50 percent. SEC. 9526. REFERENCE TO PROVISIONS OF LAW PROVIDING COVERAGE UNDER, OR DIRECTLY AFFECTING, THE MEDICAID PROGRAM. Title XIX of the Social Security Act is amended by adding at the end thereof the following new section: " R E F E R E N C E S T O L A W S DIRECTLY A F F E C T I N G MEDICAID PROGRAM 42 u s e 1396s. "SEC. 1920. (a) AUTHORITY OR REQUIREMENTS TO COVER ADDITIONAL INDIVIDUALS.—For provisions of law which make additional individ- uals eligible for medical assistance under this title, see the following: 42 u s e 602. "(1) AFDC—(A) Section 402(aX37) of this Act (relating to individuals who lose AFDC eligibility due to increased earnings). 42 u s e 605. "(B) Section 406(h) of this Act (relating to individuals who lose AFDC eligibility due to increased collection of child or spousal support). 42 u s e 614. (C) Section 414(g) of this Act (relating to certain individuals participating in work supplementation programs). 42 u s e 1382h. "(2) SSL—Section 1619 of this Act (relating to benefits for individuals who perform substantial gainful activity despite severe medical impairment). "(3) FOSTER CARE AND ADOPTION ASSISTANCE.—Section 473(b) of 42 u s e 673. this Act (relating to medical Eissistance for children in foster care and for adopted children). "(4) REFUGEE ASSISTANCE.—Section 412(eX5) of the Immigra- 8 u s e 1522. tion and Nationality Act (relating to medical assistance for certain refu^rees). 42 u s e 1396a "(5) MISCELLANEOUS.—(A) Section 230 of Public Law 93-66 note. (relating to deeming eligible for medical assistance certain essential persons).
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 219 "(B) Section 231 of Public Law 93-66 (relating to deeming 42 u s e 1396a eligible for medical assistance certain persons in medical note. institutions). "(C) Section 232 of Public Law 93-66 (relating to deeming 42 u s e 1396a eligible for medical assistance certain blind and disabled medi- note. cally indigent persons). "(D) Section 13(c) of Public Law 93-233 (relating to deeming 42 u s e 1396a eligible for medical assistance certain individuals receiving note. mandatory State supplementary payments). "(E) Section 503 of Public Law 94-566 (relating to deeming 42 u s e 1396a eligible for medical assistance certain individuals who would be note. eligible for supplemental security income benefits but for cost- of-living increases in social security benefits). "(F) Section 310(b)(1) of Public Law 96-272 (relating to 42 u s e 1396a continuing medicaid eligibility for certain recipients of Veter- note. ans' Administration pensions). "Ot>) ADDITIONAL STATE PLAN REQUIREMENTS.—For other provi- sions of law that establish additional requirements for State plans to be approved under this title, see the following: "(1) Section 1618 of this Act (relating to requirement for 42 u s e 1382g. operation of certain State supplementation programs). "(2) Section 212(a) of Public Law 93-66 (relating to requiring 42 u s e 1382 mandatory minimum State supplementation of SSI benefits note. program). . SEC. 9527. CHILDREN WITH SPECIAL HEALTH CARE NEEDS. (a) Section 501(aX4) of the Social Security Act (42 U.S.C. 701(aX4)) is amended by striking out "children who are crippled or who are suffering from conditions leading to crippling" and inserting in lieu thereof "children who are 'children with special health care needs' or who are suffering from conditions leading to such status". Ob) Section 501(a) of such Act is amended by striking out "crippled children" in the matter following paragraph (4) and inserting in lieu thereof "children with special health care needs". (c) Section 5010t>Xl)(A) of such Act is amended by striking out "crippled children's services" and inserting in lieu thereof "services for children with special health care needs". (d) Section 502(a)(2XB) of such Act is amended— 42 u s e 702. (1) by striking out "crippled children's programs" and insert- ing in lieu thereof "programs for children with special health care needs"; and (2) by striking out "crippled children's services" and inserting in lieu thereof "services for children with special health care needs". (e) Sections 504(bXl) and 5090t)) of such Act are each amended by 42 u s e 704, 709. striking out "crippled children" and inserting in lieu thereof "chil- dren with special health care needs". SEC. 9528. ANNUAL CALCULATION OF FEDERAL MEDICAL ASSISTANCE PERCENTAGE. (a) ANNUAL CALCULATION.—Section 1101(a)(8XP) of the Social 42usei30i. Security Act is amended— (1) by striking out "even-numbered"; and (2) by striking out "eight quarters" and inserting in lieu thereof "four quarters". Ot)) EFFECTIVE DATE.—The amendments made by this section shall 42 u s e 1301 apply to the Federal percentage (and Federal medical assistance note.
100 STAT. 220 PUBLIC LAW 99-272—APR. 7, 1986 percentage) for fiscal years 1987 and thereafter. Such amendments shall apply without regard to the requirement of section 1101(a)(8)(B) of the Social Security Act relating to the promulgation of the Federal percentage prior to November 30 of the year preced- ing the year in which the new Federal percentage becomes applicable. The Secretary of Health and Human Services shall promulgate such new percentage for fiscal year 1987 as soon as practicable after the date of the enactment of this Act. SEC. 9529. MEDICAID COVERAGE RELATING TO ADOPTION ASSISTANCE AND FOSTER CARE. (a) STATE OF RESIDENCE.—(1) Section 1902(a) of the Social Security Act (42 U.S.C. 1396a(a)) is amended by adding at the end thereof the following: "For purposes of this title, any child who meets the requirements of 42 u s e 673. paragraph (1) or (2) of section 473(b) shall be deemed to be a 42 u s e 606. dependent child as defined in section 406 and shall be deemed to be a recipient of aid to families with dependent children under part A 42 u s e 601. of title IV in the State where such child resides.". 42 u s e 1396a (2) EFFECTIVE DATE.—The amendment made by paragraph (1) note. shall apply to medical assistance furnished on or after the first calendar quarter that begins more than 90 days after the date of the enactment of this Act. (b) ELIGIBILITY OF CERTAIN ADOPTED CHILDREN.—(1) Section 1902(a)(10)(A)(ii) of the Social Security Act, as amended by section 9505 of this Act, is amended— (A) by striking out "or" at the end of subclause (VI); (B) by striking out the semicolon at the end of subclause (VII) and inserting in lieu thereof ", or"; and (C) by adding after subclause (VII) the following new subclause: 42 u s e 1396d. "(VIII) who is a child described in section 1905(a)(i)— "(aa) for whom there is in effect an adoption assist- ance agreement (other than an agreement under part E 42 u s e 670. of title IV) between the State and an adoptive parent or parents, "(bb) who the State agency responsible for adoption assistance has determined cannot be placed with adop- tive parents without medical assistance because such child has special needs for medical or rehabilitative care, and "(cc) who was eligible for medical assistance under the State plan prior to the adoption assistance agree- ment being entered into, or who would have been eligible for medical assistance at such time if the eligi- bility standards and methodologies of the State's foster care program under part E of title IV were applied rather than the eligibility standards and methodologies of the State's aid to families with dependent children program under part A of title IV;". 42 u s e 1396a (2) In the case of an adoption assistance agreement (other than an note. agreement under part E of title IV of the Social Security Act) entered into before the date of the enactment of this Act— (A) the requirements of subdivisions (aa) and (bb) of section 1902(a)(10)(A)(ii)(VIII) of the Social Security Act shall be deemed to be met if the State agency responsible for adoption assistance agreements determines that—
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 221 (i) at the time of adoptive placement the child had special needs for medical or rehabilitative care that made the child difficult to place; and (ii) there is in effect with respect to such child an adop- tion assistance agreement between the State and an adop- tive parent or parents; and (B) the requirement of subdivision (cc) of such section shall be deemed to be met if the child was found by the State to be eligible for medical assistance prior to such agreement being entered into. (3) This subsection, and the amendments made by this subsection, 42 u s e 1396a shall apply to adoption assistance agreements entered into before, note. on, or after the date of the enactment of this Act. Subtitle C—Task Force on Long-Term Health Care Policies SEC. 9601. RECOMMENDATIONS FOR LONG-TERM HEALTH CARE POLICIES. (a) ESTABLISHMENT OF TASK FORCE.—(1) The Secretary of Health 42 u s e 1395b and Human Services (hereinafter in this section referred to as the note. "Secretary") shall establish a Task Force on Long-Term Health Care Policies (hereinafter in this section referred to as the "Task Force"). The Task Force shall be established not later than 60 days after the date of the enactment of this Act and in consultation with the National Association of Insurance Commissioners. (b) COMPOSITION OF TASK FORCE.—The Task Force shall be com- posed of 18 members, which shall include— (1) two members representing the National Association of Insurance Commissioners, (2) three members representing Federal and State agencies with responsibilities relating to health or the elderly, (3) three members representing private insurers, (4) three members from organizations representing consumers or the elderly, and (5) three members from organizations representing providers of long-term health care services. The Secretary shall designate a member of the Task Force as chair. (c) DEVELOPMENT OF RECOMMENDATIONS.—The Task Force shall develop recommendations for long-term health care policies, includ- ing recommendations designed— (1) to limit marketing and agent abuse for those policies, (2) to assure the dissemination of such information to consum- ers as is necessary to permit informed choice in purchasing the policies and to reduce the purchase of unnecessary or duplica- tive coverage, (3) to assure that benefits provided under the policies are reasonable in relationship to premiums charged, and (4) to promote the development and availability of long-term health care policies which meet these recommendations. (d) REPORT.—Not later than 18 months after the date of the enactment of this Act, the Task Force shall report to the Secretary, to the Committee on Energy and Commerce of the House of Rep- resentatives and to the Committee on Labor and Human Resources of the Senate respecting—
100 STAT. 222 PUBLIC LAW 99-272—APR. 7, 1986 (1) the recommendations developed under subsection (c), including an explanation of the reasons for their selection, and (2) such recommendations for additional activities respecting long-term health care policies as the Task Force finds appropriate. The Secretary, in cooperation with the National Association of Insurance Commissioners, shall provide for the dissemination of the report to each of the States. (e) TERMINATION OF TASK FORCE.—The Task Force shall terminate 90 days after the date of submission of the report required under subsection (d). (f) REPORTS OF SECRETARY.—The Secretary shall transmit to the Committee on Energy and Commerce of the House of Representa- tives and to the Committee on Labor and Human Resources of the Senate two reports on— (1) actions taken by the States to implement the recommenda- tions developed under this section and to recommend additional action; and (2) recommendations for legislative and administrative action, if any, needed to respond to issues raised by the Task Force or to improve consumer protection with respect to long-term health care policies. The first report shall be transmitted 18 months after the date the report is made under subsection (d), and the second report shall be transmitted 18 months later. (g) LONG-TERM HEALTH CARE POUCY DEFINED.—In this section, the term "long-term health care policy" means an insurance policy, or similar health benefits plan, which is designed for or marketed as providing (or making payments for) health care services (such as nursing home care and home health care) or related services (which may include home and community-based services), or both, over an extended period of time. (h) ASSURANCE OF STATES' JURISDICTION.—Nothing in this section shall be construed as recommending Federal preemption of the States in overseeing the operation and regulation of insurance carriers in their respective jurisdictions. TITLE X—PRIVATE HEALTH INSURANCE COVERAGE SEC. 10001. EMPLOYERS REQUIRED TO PROVIDE CERTAIN EMPLOYEES AND FAMILY MEMBERS WITH CONTINUED HEALTH INSUR- ANCE COVERAGE AT GROUP RATES (INTERNAL REVENUE CODE AMENDMENTS). (a) DENIAL OF DEDUCTION FOR EMPLOYER CONTRIBUTION TO PLAN.— 26 use 162. Subsection (i) of section 162 of the Internal Revenue Code of 1954 (relating to deduction for trade or business expenses with respect to group health plans) is amended by redesignating paragraph (2) as paragraph (3) and by inserting after paragraph (1) the following new paragraph: "(2) PLANS MUST PROVIDE CONTINUATION COVERAGE TO CERTAIN INDIVIDUALS.— "(A) IN GENERAL.—No deduction shall be allowed under this section for expenses paid or incurred by an employer for any group health plan maintained by such employer
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 223 unless all such plans maintained by such employer meet the continuing coverage requirements of subsection (k). "(B) EXCEPTION FOR CERTAIN SMALL EMPLOYERS, ETC.— Subparagraph (A) shall not apply to any plan described in section 106(b)(2).". (b) DENIAL OF EXCLUSION FOR HIGHLY COMPENSATED INDIVID- 26 use 106. UALS.—Section 106 of the Internal Revenue Code of 1954 (relating to contributions by employer to accident and health plans) is amended by inserting "(a) I N GENERAL.—" before "Gross" and by inserting at the end thereof the following new subsection: "(b) EXCEPTION FOR HIGHLY COMPENSATED INDIVIDUALS WHERE PLAN FAILS TO PROVIDE CERTAIN CONTINUATION COVERAGE.— "(1) I N GENERAL.—Subsection (a) shall not apply to any amount contributed by an employer on behalf of a highly compensated individual (within the meaning of section 105(h)(5)) to a group health plan maintained by such employer unless all such plans maintained by such employer meet the continuing coverage requirements of section 162(k). "(2) EXCEPTION FOR CERTAIN PLANS.—Paragraph (1) shall not apply to any— "(A) group health plan for any calendar year if all employers maintaining such plan normally employed fewer than 20 employees on a typical business day during the preceding calendar year, "(B) governmental plan (within the meaning of section 414(d)), or "(C) church plan (within the meaning of section 414(e)). Under regulations, rules similar to the rules of subsections (a) and (b) of section 52 (relating to employers under common control) shall apply for purposes of subparagraph (A). "(3) GROUP HEALTH PLAN.—For purposes of this subsection, the term 'group health plan' has the meaning given such term by section 162(i)(3).". (c) CONTINUATION COVERAGE REQUIREMENTS.—Section 162 of the Internal Revenue Code of 1954 is amended by redesignating subsec- 26 USC 162. tion (k) as subsection (1) and by inserting after subsection (j) the following new subsection: "(k) CONTINUATION COVERAGE REQUIREMENTS OF GROUP HEALTH PLANS.— "(1) IN GENERAL.—For purposes of subsection (iX2) and section 106(b)(1), a group health plan meets the requirements of this subsection only if each qualified beneficiary who would lose coverage under the plan as a result of a qualifying event is entitled to elect, within the election period, continuation cov- erage under the plan. "(2) CONTINUATION COVERAGE.—For purposes of paragraph (1), the term 'continuation coverage' means coverage under the plan which meets the following requirements: "(A) TYPE OF BENEFIT COVERAGE.—The coverage must consist of coverage which, £is of the time the coverage is being provided, is identical to the coverage provided under the plan to similarly situated beneficiaries under the plan with respect to whom a qualifying event has not occurred. "(B) PERIOD OF COVERAGE.—The coverage must extend for at least the period beginning on the date of the qual- ifying event and ending not earlier than the earliest of the following-
100 STAT. 224 PUBLIC LAW 99-272—APR. 7, 1986 "(i) MAXIMUM PERIOD.—In the case of— "(I) a qualifying event described in paragraph (3)(B) (relating to terminations and reduced hours), the date which is 18 months after the date of the qualifying event, and "(II) any qualifying event not described in subclause (I), the date which is 36 months after the date of the qualifying event, "(ii) END OF PLAN.—The date on which the employer ceases to provide any group health plan to any em- ployee. "(iii) FAILURE TO PAY PREMIUM.—The date on which coverage ceases under the plan by reason of a failure to make timely payment of any premium required under the plan with respect to the qualified beneficiary. "(iv) REEMPLOYMENT OR MEDICARE ELIGIBILITY.—The date on which the qualified beneficiary first becomes, after the date of the election— "(I) a covered employee under any other group health plan, or "(II) entitled to benefits under title XVIII of the 42 use 1395. Social Security Act. "(v) REMARRIAGE OF SPOUSE.—In the case of an individual who is a qualified beneficiary by reason of being the spouse of a covered employee, the date on which the beneficiary remarries and becomes covered under a group health plan. "(C) PREMIUM REQUIREMENTS.—The plan may require payment of a premium for any period of continuation cov- erage, except that such premium— "(i) shall not exceed 102 percent of the applicable premium for such period, and "(ii) may, at the election of the payor, be made in monthly installments. If an election is made after the qualifying event, the plan shall permit payment for continuation coverage during the period preceding the election to be made within 45 days of the date of the election. "(D) No REQUIREMENT OF INSURABILITY.—The coverage may not be conditioned upon, or discriminate on the basis of lack of, evidence of insurability. "(E) CONVERSION OPTION.—In the case of a qualified bene- ficiary whose period of continuation coverage expires under subparagraph (B)(i), the plan must, during the 180-day period ending on such expiration date, provide to the quali- fied beneficiary the option of enrollment under a conver- sion health plan otherwise generally available under the plan. "(3) QUALIFYING EVENT.—For purposes of this subsection, the term 'qualifying event' means, with respect to any covered employee, any of the following events which, but for the continuation coverage required under this subsection, would result in the loss of coverage of a qualified beneficiary: "(A) The death of the covered employee. "(B) The termination (other than by reason of such employee's gross misconduct), or reduction of hours, of the covered employee's employment.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 225 "(C) The divorce or legal separation of the covered em- ployee from the employee's spouse. "(D) The covered employee becoming entitled to benefits under title XVIII of the Social Security Act. 42 USC 1395. "(E) A dependent child ceasing to be a dependent child under the generally applicable requirements of the plan. "(4) APPLICABLE PREMIUM.—For purposes of this subsection— "(A) IN GENERAL.—The term 'applicable premium' means, with respect to any period of continuation coverage of qualified beneficiaries, the cost to the plan for such period of the coverage for similarly situated beneficiaries with respect to whom a qualifying event has not occurred (with- out regard to whether such cost is paid by the employer or employee). "(B) SPECIAL RULE FOR SELF-INSURED PLANS.—To the extent that a plan is a self-insured plan— "(i) IN GENERAL.—Except as provided in clause (ii), the applicable premium for any period of continuation coverage of qualified beneficiaries shall be equal to a reasonable estimate of the cost of providing coverage for such period for similarly situated beneficiaries which— "(I) is determined on an actuarial basis, and "(II) takes into account such factors as the Sec- retary may prescribe in regulations. "(ii) DETERMINATION ON BASIS OF PAST COST.—If a plan administrator elects to have this clause apply, the ap- plicable premium for any period of continuation cov- erage of qualified beneficiaries shall be equal to— "(I) the cost to the plan for similarly situated beneficiaries for the same period occurring during the preceding determination period under subpara- graph (C), adjusted by "(II) the percentage increase or decrease in the implicit price deflator of the gross national product (calculated by the Department of Commerce and published in the Survey of Current Business) for the 12-month period ending on the last day of the sixth month of such preceding determination period. "(iii) CLAUSE (ii) NOT TO APPLY WHERE SIGNIFICANT CHANGE.—A plan administrator may not elect to have clause (ii) apply in any case in which there is any significant difference, between the determination period and the preceding determination period, in cov- erage under, or in employees covered by, the plan. The determination under the preceding sentence for any determination period shall be made at the same time as the determination under subparagraph (C). "(C) DETERMINATION PERIOD.—The determination of any applicable premium shall be made for a period of 12 months and shall be made before the beginning of such period. "(5) ELECTION.—For purposes of this subsection— "(A) ELECTION PERIOD.—The term 'election period' means the period which—
100 STAT. 226 PUBLIC LAW 99-272—APR. 7, 1986 "(i) begins not later than the date on which coverage terminates under the plan by reason of a qualifying event, "(ii) is of at least 60 days' duration, and "(iii) ends not earlier than 60 days after the later of— "(I) the date described in clause (i), or "(11) in the case of any qualified beneficiary who receives notice under paragraph (6)(D), the date of such notice. "(B) EFFECT OF ELECTION ON OTHER BENEFICIARIES.— Except as otherwise specified in an election, any election by a qualified beneficiary described in clause (i)(I) or (ii) of paragraph (7)(B) shall be deemed to include an election of continuation coverage on behalf of any other qualified bene- ficiary who would lose coverage under the plan by reason of the qualifying event. "(6) NOTICE REQUIREMENTS.—In accordance with regulations prescribed by the Secretary— "(A) the group health plan shall provide, at the time of commencement of coverage under the plan, written notice to each covered employee and spouse of the employee (if any) of the rights provided under this subsection, "(B) the employer of an employee under a plan must notify the plan administrator of a qualifying event de- scribed in subparagraph (A), (B), or (D) of paragraph (3) with respect to such employee within 30 days of the date of the qualifying event, "(C) each covered employee or qualified beneficiary is responsible for notifying the plan administrator of the occurrence of any qualifying event described in subpara- graph (C) or (E) of paragraph (3), and "(D) the plan administrator shall notify— "(i) in the case of a qualifying event described in subparagraph (A), (B), or (D) of paragraph (3), any qualified beneficiary with respect to such event, and "(ii) in the case of a qualifying event described in subparagraph (C) or (E) of paragraph (3) where the covered employee notifies the plan administrator under subparagraph (C), any qualified beneficiary with re- spect to such event, of such beneficiary's rights under this subsection. For purposes of subparagraph (D), any notification shall be made within 14 days of the date on which the plan adminis- trator is notified under subparagraph (B) or (C), whichever is applicable, and any such notification to an individual who is a qualified beneficiary as the spouse of the covered employee shall be treated as notification to all other qualified beneficiaries residing with such spouse at the time such notification is made. "(7) DEFINITIONS.—For purposes of this subsection— "(A) COVERED EMPLOYEE.—The term 'covered employee' means an individual who is (or was) provided coverage under a group health plan by virtue of the individual's employment or previous employment with an employer "(B) QUAUFIED BENEFICIARY.— "(i) IN GENERAL.—The term 'qualified beneficiary' means, with respect to a covered employee under a group health plan, any other individual who, on the
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 227 day before the qualifying event for that employee, is a beneficiary under the plan— "(I) as the spouse of the covered employee, or "(II) as the dependent child of the employee, "(ii) SPECIAL RULE FOR TERMINATIONS AND REDUCED EMPLOYMENT.—In the case of a qualifying event de- scribed in paragraph (3)(B), the term 'qualified bene- ficiary' includes the covered employee. "(C) PLAN ADMINISTRATOR.—The term 'plan adminis- trator' has the meaning given the term 'administrator' by section 3(16)(A) of the Employee Retirement Income Secu- rity Act of 1974.". 29 use 1002. (d) CONFORMING AMENDMENT.—Paragraph (1) of section 162(i) is 26 use 162. amended by striking out "GENERAL RULE ' in the heading thereof and inserting in lieu thereof "COVERAGE RELATING TO END STAGE RENAL DISEASE". (e) EFFECTIVE DATES.— 26 use 106 note. (1) GENERAL RULE.—The amendments made by this section shall apply to plan years beginning on or after July 1, 1986. (2) SPECIAL RULE FOR COLLECTIVE BARGAINING AGREEMENTS.— In the case of a group health plan maintained pursuant to one or more collective bargaining agreements between employee representatives and one or more employers ratified before the date of the enactment of this Act, the amendments made by this section shall not apply to plan years beginning before the later of— (A) the date on which the last of the collective bargaining agreements relating to the plan terminates (determined without regard to any extension thereof agreed to after the date of the enactment of this Act), or (B) January 1,1987. For purposes of subparagraph (A), any plan amendment made pursuant to a collective bargaining agreement relating to the plan which amends the plan solely to conform to any require- ment added by this section shall not be treated as a termination of such collective bargaining agreement. SEC. 10002. TEMPORARY EXTENSION OF COVERAGE AT GROUP RATES FOR CERTAIN EMPLOYEES AND FAMILY MEMBERS (ERISA AMENDMENTS). (a) I N GENERAL.—Subtitle B of title I of the Employee Retirement Income Security Act of 1974 is amended by adding at the end thereof the following new part: "PART 6—CONTINUATION COVERAGE UNDER GROUP HEALTH PLANS "SEC. 601. PLANS MUST PROVIDE CONTINUATION COVERAGE TO CERTAIN 29 USC 1161. INDIVIDUALS. "(a) I N GENERAL.—The plan sponsor of each group health plan shall provide, in accordance with this part, that each qualified beneficiary who would lose coverage under the plan as a result of a qualifying event is entitled, under the plan, to elect, within the election period, continuation coverage under the plan. "(b) EXCEPTION FOR CERTAIN PLANS.—Subsection (a) shall not apply to any group health plan for any calendar year if all employ- ers maintaining such plan normally employed fewer than 20 employees on a typical business day during the preceding calendar
100 STAT. 228 PUBLIC LAW 99-272—APR. 7, 1986 year. Under regulations, rules similar to the rules of subsections (a) 26 use 52. and (b) of section 52 of the Internal Revenue Code of 1954 (relating to employers under common control) shall apply for purposes of this subsection. 29 u s e 1162. "SEC. 602. CONTINUATION COVERAGE. "For purposes of section 601, the term 'continuation coverage' means coverage under the plan which meets the following requirements: "(1) TYPE OF BENEFIT COVERAGE.—The coverage must consist of coverage which, as of the time the coverage is being provided, is identical to the coverage provided under the plan to similarly situated beneficiaries under the plan with respect to whom a qualifying event has not occurred. "(2) PERIOD OF COVERAGE,—The coverage must extend for at least the period beginning on the date of the qualifying event and ending not earlier than the earliest of the following: "(A) MAXIMUM PERIOD.—In the case of— "(i) a qualifying event described in section 603(2) (relating to terminations and reduced hours), the date which is 18 months after the date of the qualifying event, and "(ii) any qualifying event not described in clause (i), the date which is 36 months after the date of the qualifying event. "(B) END OF PLAN.—The date on which the employer ceases to provide any group health plan to any employee. "(C) FAILURE TO PAY PREMIUM.—The date on which cov- erage ceases under the plan by reason of a failure to make timely payment of any premium required under the plan with respect to the qualified beneficiary. "(D) REEMPLOYMENT OR MEDICARE ELIGIBILITY.—The date on which the qualified beneficiary first becomes, after the date of the election— "(i) a covered employee under any other group health plan, or "(ii) entitled to benefits under title XVIII of the 42 use 1395. Social Security Act. "(E) REMARRIAGE OF SPOUSE.—In the case of an individual who is a qualified beneficiary by reason of being the spouse of a covered employee, the date on which the beneficiary remarries and becomes covered under a group health plan. "(3) PREMIUM REQUIREMENTS.—The plan may require pay- ment of a premium for any period of continuation coverage, except that such premium— "(A) shall not exceed 102 percent of the applicable pre- mium for such period, and "(B) may, at the election of the payor, be made in monthly installments. If an election is made after the qualifying event, the plan shall permit payment for continuation coverage during the period preceding the election to be made within 45 days of the date of the election. "(4) No REQUIREMENT OF INSURABILITY.—The coverage may not be conditioned upon, or discriminate on the basis of lack of, evidence of insurability.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 229 "(5) CONVERSION OPTION.—In the case of a qualified bene- ficiary whose period of continuation coverage expires under paragraph (2)(A), the plan must, during the 180-day period ending on such expiration date, provide to the qualified bene- ficiary the option of enrollment under a conversion health plan otherwise generally available under the plan. "SEC. 603. QUALIFYING EVENT. 29 USC 1163. "For purposes of this part, the term 'qualifying event' means, with respect to any covered employee, any of the following events which, but for the continuation coverage required under this part, would result in the loss of coverage of a qualified beneficiary: "(1) The death of the covered employee. "(2) The termination (other than by reason of such employee's gross misconduct), or reduction of hours, of the covered employ- ee's employment. "(3) 'The divorce or legal separation of the covered employee from the employee's spouse. "(4) The covered employee becoming entitled to benefits under title XVIII of the Social Security Act. 42 USC 1395. "(5) A dependent child ceasing to be a dependent child under the generally applicable requirements of the plan. "SEC. 604. APPLICABLE PREMIUM. 29 USC 1164. "For purposes of this part— "(1) IN GENERAL.—The term 'applicable premium' means, with respect to any period of continuation coverage of qualified beneficiaries, the cost to the plan for such period of the coverage for similarly situated beneficiaries with respect to whom a qualifying event has not occurred (without regard to whether such cost is paid by the employer or employee). "(2) SPECIAL RULE FOR SELF-INSURED PLANS.—To the extent that a plan is a self-insured plan— "(A) IN GENERAL.—Except as provided in subparagraph (B), the applicable premium for any period of continuation coverage of qualified beneficiaries shall be equal to a reasonable estimate of the cost of providing coverage for such period for similarly situated beneficiaries which— "(i) is determined on an actuarial basis, and "(ii) takes into account such factors as the Secretary may prescribe in regulations. "(B) DETERMINATION ON BASIS OF PAST COST.—If an administrator elects to have this subparagraph apply, the applicable premium for any period of continuation coverage of qualified beneficiaries shall be equal to— "(i) the cost to the plan for similarly situated bene- ficiaries for the same period occurring during the preceding determination period under paragraph (3), adjusted by "(ii) the percentage increase or decrease in the im- plicit price deflator of the gross national product (cal- culated by the Department of Commerce and published in the Survey of Current Business) for the 12-month period ending on the last day of the sixth month of such preceding determination period. "(C) SUBPARAGRAPH (B) NOT TO APPLY WHERE SIGNIFICANT CHANGE.—An administrator may not elect to have subpara-
100 STAT. 230 PUBLIC LAW 99-272—APR. 7, 1986 graph (B) apply in any case in which there is any significant difference, between the determination period and the preceding determination period, in coverage under, or in employees covered by, the plan. The determination under the preceding sentence for any determination period shall be made at the same time as the determination under paragraph (3). "(3) DETERMINATION PERIOD.—The determination of any ap- plicable premium shall be made for a period of 12 months and shall be made before the beginning of such period. 29 u s e 1165. "SEC. 605. ELECTION. "For purposes of this part— "(1) ELECTION PERIOD.—The term 'election period' means the period which— "(A) begins not later than the date on which coverage terminates under the plan by reason of a qualifying event, "(B) is of at least 60 days' duration, and "(C) ends not earlier than 60 days after the later of— "(i) the date described in subparagraph (A), or "(ii) in the case of any qualified beneficiary who receives notice under section 606(4), the date of such notice. "(2) EFFECT OF ELECTION ON OTHER BENEFICIARIES.—Except as otherwise specified in an election, any election by a qualified beneficiary described in subparagraph (A)(i) or (B) of section 607(3) shall be deemed to include an election of continuation coverage on behalf of any other qualified beneficiary who would lose coverage under the plan by reason of the qualifying event. 29 u s e 1166. "SEC. 606. NOTICE REQUIREMENTS. "In accordance with regulations prescribed by the Secretary— "(1) the group health plan shall provide, at the time of commencement of coverage under the plan, written notice to each covered employee and spouse of the employee (if any) of the rights provided under this subsection, "(2) the employer of an employee under a plan must notify the administrator of a qualifying event described in paragraph (1), (2), or (4) of section 603 within 30 days of the date of the qualifying event, "(3) each covered employee or qualified beneficiary is respon- sible for notifying the administrator of the occurrence of any qualifying event described in paragraph (3) or (5) of section 603, and "(4) the administrator shall notify— "(A) in the case of a qualifying event described in para- graph (1), (2), or (4) of section 603, any qualified beneficiary with respect to such event, and "(B) in the case of a qualifying event described in para- graph (3) or (5) of section 603 where the covered employee notifies the administrator under paragraph (3), any quali- fied beneficiary with respect to such event, of such beneficiary's rights under this subsection. For purposes of paragraph (4), any notification shall be made within 14 days of the date on which the administrator is notified under paragraph (2) or (3), whichever is applicable, and any such notifica- tion to an individual who is a qualified beneficiary as the spouse of
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 231 the covered employee shall be treated as notification to all other qualified beneficiaries residing with such spouse at the time such notification is made. "SEC. 607. DEFINITIONS. 29 USC 1167. "For purposes of this part— "(1) GROUP HEALTH PLAN.—The term 'group health plan' means an employee welfare benefit plan that is a group health plan (within the meaning of section 162(i)(3) of the Internal Revenue Code of 1954). 26 USC 162. "(2) COVERED EMPLOYEE.—The term 'covered employee' means an individual who is (or was) provided coverage under a group health plan by virtue of the individual's employment or pre- vious employment with an employer. "(3) QUALIFIED BENEFICIARY.— "(A) IN GENERAL.—The term 'qualified beneficiary' means, with respect to a covered employee under a group health plan, any other individual who, on the day before the qualifying event for that employee, is a beneficiary under the plan— "(i) as the spouse of the covered employee, or "(ii) as the dependent child of the employee. "(B) SPECIAL RULE FOR TERMINATIONS AND REDUCED EMPLOYMENT.—In the case of a qualifying event described in section 603(2), the term 'qualified beneficiary' includes the covered employee. "SEC. 608. REGULATIONS. 29 USC 1168. "The Secretary may prescribe regulations to carry out the provi- sions of this part.". (b) PENALTY FOR FAILURE TO PROVIDE NOTICE.—Section 502(c) of such Act (29 U.S.C. 1132(c)) is amended by inserting after "Any administrator" the following: "(1) who fails to meet the require- ments of paragraph (1) or (4) of section 606 with respect to a participant or beneficiary, or (2)". (c) CLERICAL AMENDMENTS.—The table of contents in section 1 of such Act is amended by inserting after the item relating to section 514 the following new items: "PART 6—CONTINUATION COVERAGE UNDER GROUP HEALTH PLANS "Sec. 601. Plans must provide continuation coverage to certain individuals. "Sec. 602. Continuation coverage. "Sec. 603. Qualifying event. "Sec. 604. Applicable premium. "Sec. 605. Election. "Sec. 606. Notice requirements. "Sec. 607. Definitions. "Sec. 608. Regulations.". (d) E F F E C T I V E D A T E S . — 29 u s e 1161 (1) GENERAL RULE.—The amendments made by this section ^°^^- shall apply to plan years beginning on or after July 1, 1986. (2) SPECIAL RULE FOR COLLECTIVE BARGAINING AGREEMENTS.— In the case of a group health plan maintained pursuant to one or more collective bargaining agreements between employee representatives and one or more employers ratified before the date of the enactment of this Act, the amendments made by this section shall not apply to plan years beginning before the later of—
100 STAT. 232 PUBLIC LAW 99-272—APR. 7, 1986 (A) the date on which the last of the collective bargaining agreements relating to the plan terminates (determined without regard to any extension thereof agreed to after the date of the enactment of this Act), or (B) January 1, 1987. For purposes of subparagraph (A), any plan amendment made pursuant to a collective bargaining agreement relating to the plan which amends the plan solely to conform to any require- ment added by this section shall not be treated as a termination of such collective bargaining agreement. 29 use 1166 (e) NOTIFICATION TO COVERED EMPLOYEES.—At the time that the note. amendments made by this section apply to a group health plan (within the meaning of section 607(1) of the Employee Retirement Ante, p. 231. Income Security Act of 1974), the plan shall notify each covered employee, and spouse of the employee (if any), who is covered under the plan at that time of the continuation coverage required under Ante, p. 227. part 6 of subtitle B of title I of such Act. The notice furnished under this subsection is in lieu of notice that may otherwise be required Ante, p. 230. under section 606(1) of such Act with respect to such individuals. SEC. 10003. CONTINUATION OF HEALTH INSURANCE FOR ST.4TE AND LOCAL EMPLOYEES WHO LOST EMPLOYMENT-RELATED COVERAGE (PUBLIC HEALTH SERVICE ACT AMENDMENTS). (a) IN GENERAL.—The Public Health Service Act is amended by adding at the end the following new title: "TITLE XXII—REQUIREMENTS FOR CERTAIN GROUP HEALTH PLANS FOR CERTAIN STATE AND LOCAL EMPLOYEES 42 u s e 300bb-l. "SEC. 220L STATE AND LOCAL GOVERNMENTAL GROUP HEALTH PLANS MUST PROVIDE CONTINUATION COVERAGE TO CERTAIN INDIVIDUALS. "(a) IN GENERAL.—In accordance with regulations which the Sec- retary shall prescribe, each group health plan that is maintained by any State that receives funds under this Act, by any political subdivision of such a State, or by any agency or instrumentality of such a State or political subdivision, shall provide, in accordance with this title, that each qualified beneficiary who would lose cov- erage under the plan as a result of a qualifying event is entitled, under the plan, to elect, within the election period, continuation coverage under the plan. "(b) EXCEPTION FOR CERTAIN PLANS.—Subsection (a) shall not apply to— "(1) any group health plan for any calendar year if all employ- ers maintaining such plan normally employed fewer than 20 employees on a typical business day during the preceding cal- endar year, or District of "(2) any group health plan maintained for employees by the Columbia. government of the District of Columbia or any territory or possession of the United States or any agency or instrumental- ity. Under regulations, rules similar to the rules of subsections (a) and 26 u s e 52. (b) of section 52 of the Internal Revenue Code of 1954 (relating to employers under common control) shall apply for purposes of para- graph (1).
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 233 "SEC. 2202. CONTINUATION COVERAGE. 42 USC 300bb-2. "For purposes of section 2201, the term 'continuation coverage' means coverage under the plan which meets the following require- ments: "(1) TYPE OF BENEFIT COVERAGE.—The coverage must consist of coverage which, as of the time the coverage is being provided, is identical to the coverage provided under the plan to similarly situated beneficiaries under the plan with respect to whom a qualifying event has not occurred. "(2) PERIOD OF COVERAGE.—The coverage must extend for at least the period beginning on the date of the qualifying event and ending not earlier than the earliest of the following: "(A) MAXIMUM PERIOD.—In the case of— "(i) a qualifying event described in section 2203(2) (relating to terminations and reduced hours), the date which is 18 months after the date of the qualifying event, and "(ii) any qualifying event not described in clause (i), the date which is 36 months after the date of the qualifying event. "(B) END OF PLAN.—The date on which the employer ceases to provide any group health plan to any employee. "(C) FAILURE TO PAY PREMIUM.—The date on which cov- erage ceases under the plan by reason of a failure to make timely payment of any premium required under the plan with respect to the qualified beneficiary. "(D) REEMPLOYMENT OR MEDICARE ELIGIBILITY.—The date on which the qualified beneficiary first becomes, after the date of the election— "(i) a covered employee under any other group health plan, or "(ii) entitled to benefits under title XVIII of the Social Security Act. 42 USC 1395. "(E) REMARRIAGE OF SPOUSE.—In the case of an individual who is a qualified beneficiary by reason of being the spouse of a covered employee, the date on which the beneficiary remarries and becomes covered under a group health plan. "(3) PREMIUM REQUIREMENTS.—The plan may require pay- ment of a premium for any period of continuation coverage, except that such premium— "(A) shall not exceed 102 percent of the applicable pre- mium for such period, and "(B) may, at the election of the payor, be made in monthly installments. If an election is made after the qualifying event, the plan shall permit payment for continuation coverage during the period preceding the election to be made within 45 days of the date of the election. "(4) No REQUIREMENT OF INSURABILITY.—The coverage may not be conditioned upon, or discriminate on the basis of lack of, evidence of insurability. "(5) CONVERSION OPTION.—In the case of a qualified bene- ficiary whose period of continuation coverage expires under paragraph (2)(A), the plan must, during the 180-day period ending on such expiration date, provide to the qualified bene-
100 STAT. 234 PUBLIC LAW 99-272—APR. 7, 1986 ficiary the option of enrollment under a conversion health plan otherwise generally available under the plan. 42 u s e 300bb-3. "SEC. 2203. QUALIFYING EVENT. "For purposes of this title; the term 'qualifying event' means, with respect to any covered employee, any of the following events which, but for the continuation coverage required under this title, would result in the loss of coverage of a qualified beneficiary: "(1) The death of the covered employee. "(2) The termination (other than by reason of such employee's gross misconduct), or reduction of hours, of the covered em- ployee's employment. ' (3) The divorce or legal separation of the covered employee from- the employee's spouse. "(4) The covered employee becoming entitled to benefits 42 use 1395c. under title XVIII of the Social Security Act. ehildren and "(5) A dependent child ceasing to be a dependent child under y°"*^- the generally applicable requirements of the plan. 42 u s e 300bb-4. "SEC. 2204. APPLICABLE PREMIUM. "For purposes of this title— "(1) I N GENERAL.—The term 'applicable premium' means, with respect to any period of continuation coverage of qualified beneficiaries, the cost to the plan for such period of the coverage for similarly situated beneficiaries with respect to whom a qualifying event has not occurred (without regard to whether such cost is paid by the employer or employee). "(2) SPECIAL RULE FOR SELF-INSURED PLANS.—To the extent that a plan is a self-insured plan— "(A) I N GENERAL.—Except as provided in subparagraph (B), the applicable premium for any period of continuation coverage of qualified beneficiaries shall be equal to a reasonable estimate of the cost of providing coverage for such period for similarly situated beneficiaries which— "(i) is determined on an actuarial basis, and "(ii) takes into account such factors as the Secretary may prescribe in regulations. "(B) DETERMINATION ON BASIS OF PAST COST.—If a plan administrator elects to have this subparagraph apply, the applicable premium for any period of continuation coverage of qualified beneficiaries shall be equal to— "(i) the cost to the plan for similarly situated bene- ficiaries for the same period occurring during the preceding determination period under paragraph (3), adjusted by (ii) the percentage increase or decrease in the im- plicit price deflator of the gross national product (cal- culated by the Department of Commerce and published in the Survey of Current Business) for the 12-month period ending on the last day of the sixth month of such preceding determination period. "(C) SUBPARAGRAPH ( B ) NOT TO APPLY WHERE SIGNIFICANT CHANGE.—A plan administrator may not elect to have subparagraph (B) apply in any case in which there is any significant difference, between the determination period and the preceding determination period, in coverage under, or in employees covered by, the plan. The determination
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 235 under the preceding sentence for any determination period shall be made at the same time as the determination under paragraph (3). "(3) DETERMINATION PERIOD.—The determination of any ap- plicable premium shall be made for a period of 12 months and shall be made before the beginning of such period. "SEC. 2205. ELECTION. 42 u s e 300bb-5. "For purposes of this title— "(1) ELECTION PERIOD.—The term 'election period' means the period which— "(A) begins not later than the date on which coverage terminates under the plan by reason of a qualifying event, "(B) is of at least 60 days' duration, and "(C) ends not earlier than 60 days after the later of^ "(i) the date described in subparagraph (A), or "(ii) in the case of any qualified beneficiary who receives notice under section 2206(4), the date of such notice. "(2) EFFECT OF ELECTION ON OTHER BENEFICIARIES.—Except as otherwise specified in an election, any election by a qualified beneficiary described in subparagraph (A)(i) or (B) of section 2208(3) shall be deemed to include an election of continuation coverage on behalf of any other qualified beneficiary who would lose coverage under the plan by reason of the qualifying event. "SEC. 2206. NOTICE REQUIREMENTS. 42 u s e 300bb-6. "In accordance with regulations prescribed by the Secretary— "(1) the group health plan shall provide, at the time of commencement of coverage under the plan, written notice to each covered employee and spouse of the employee (if any) of the rights provided under this subsection, "(2) the employer of an employee under a plan must notify the plan administrator of a qualifying event described in para- graph (1), (2), or (4) of section 2203 within 30 days of the date of the qualifying event, "(3) each covered employee or qualified beneficiary is respon- sible for notifying the plan administrator of the occurrence of any qualif3dng event described in paragraph (3) or (5) of section 2203, and "(4) the plan administrator shall notify— "(A) in the case of a qualifying event described in para- graph (1), (2), or (4) of section 2203, any qualified beneficiary with respect to such event, and "(B) in the case of a qualifying event described in para- graph (3) or (5) of section 2203 where the covered employee notifies the plan administrator under paragraph (3), any qualified beneficiary with respect to such event, of such beneficiary's rights under this subsection. For purposes of paragraph (4), any notification shall be made within 14 days of the date on which the plan administrator is notified under paragraph (2) or (3), whichever is applicable, and any such notification to an individual who is a qualified beneficiary as the spouse of the covered employee shall be treated as notification to all other qualified beneficiaries residing with such spouse at the time such notification is made.
100 STAT. 236 PUBLIC LAW 99-272—APR. 7, 1986 42 u s e 300bb-7. "SEC. 2207. ENFORCEMENT. "Any individual who is aggrieved by the failure of a State, politi- cal subdivision, or agency or instrumentality thereof, to comply with the requirements of this title may bring an action for appropriate equitable relief. 42 u s e 300bb-8. "SEC. 2208. DEFINITIONS. "For purposes of this title— Health and "(1) GROUP HEALTH PLAN.—The term 'group health plan' has medical care. the meaning given such term in section 162(i)(3) of the Internal Revenue Code of 1954. 26 u s e 162. "(2) COVERED EMPLOYEE.—The term 'covered employee' means an individual who is (or was) provided coverage under a group health plan by virtue of the individual's employment or pre- vious employment with an employer. "(3) QUALIFIED BENEFICIARY.— "(A) IN GENERAL.—The term 'qualified beneficiary' means, with respect to a covered employee under a group health plan, any other individual who, on the day before the qualifying event for that employee, is a beneficiary under the plan— "(i) as the spouse of the covered employee, or "(ii) as the dependent child of the employee. "(B) SPECIAL RULE FOR TERMINATIONS AND REDUCED EMPLOYMENT.—In the case of a qualifying event described in section 2203(2), the term 'qualified beneficiary' includes the covered employee. "(4) PLAN ADMINISTRATOR.—The term 'plan administrator' has the meaning given the term 'administrator' by section 3(16)(A) 29 u s e 1002. of the Employee Retirement Income Security Act of 1974." 42 u s e 300bb-l (b) EFFECTIVE DATES.— note. (1) GENERAL RULE.—The amendments made by this section shall apply to plan years beginning on or after July 1, 1986. (2) SPECIAL RULE FOR COLLECTIVE BARGAINING AGREEMENTS.— In the case of a group health plan maintained pursuant to one or more collective bargaining agreements between employee representatives and one or more employers ratified before the date of the enactment of this Act, the amendments made by this section shall not apply to plan years beginning before the later of— (A) the date on which the last of the collective bargaining agreements relating to the plan terminates (determined without regard to any extension thereof agreed to after the date of the enactment of this Act), or (B) January 1,1987. For purposes of subparagraph (A), any plan amendment made pursuant to a collective bargaining agreement relating to the plan which amends the plan solely to conform to any requirement added by this section shall not be treated as a termination of such collective bargaining agreement. 42 u s e 300bb-6 (c) NOTIFICATION TO COVERED EMPLOYEES.—At the time that the note. amendments made by this section apply to a group health plan (covered under section 2201 of the Public Health Service Act), the plan shall notify each covered employee, and spouse of the employee (if any), who is covered under the plan at that time of the continu- Ante, p. 232. ation coverage required under title XXII of such Act. The notice furnished under this subsection is in lieu of notice that may other-
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 237 wise be required under section 2206(1) of such Act with respect to such individuals. TITLE XI—SINGLE-EMPLOYER PLAN TER- smgie MINATION INSURANCE SYSTEM AMEND- p^Z%i.n MENTS icTo"f%r SEC. 11001. SHORT TITLE AND TABLE OF CONTENTS. 29 u s e 1001 note. This title may be cited as "Single-Employer Pension Plan Amend- ments Act of 1986". TABLE OF CONTENTS Sec. 11001. Short title and table of contents. Sec. 11002. Findings and declaration of policy. Sec. 11003. Amendment of the Employee Retirement Income Security Act of 1974. Sec. 11004. Definitions. Sec. 11005. Single-employer plan termination insurance premiums. Sec. 11006. Notice of significant reduction in benefit accruals. Sec. 11007. General requirements relating to termination of single-employer plans by plan administrators. Sec. 11008. Standard termination of single-employer plans. Sec. 11009. Distress termination of single-employer plans. Sec. 11010. Termination proceedings; duties of the corporation. Sec. 11011. Amendments to liability provisions; liabilities relating to benefit com- mitments in excess of benefits guaranteed by the corporation. Sec. 11012. Distribution to participants and beneficiaries of liability payments to section 4049 trust. Sec. 11013. Treatment of transactions to evade liability; effect of corporate reorgani- zation. Sec. 11014. Enforcement authority relating to terminations of single-employer plans. Sec. 11015. Provisions relating to waivers of minimum funding standard and exten- sions of amortization period. Sec. 11016. Conforming, clarifying, technical, and miscellaneous amendments. Sec. 11017. Studies. Sec. 11018. Limitation on regulations. Sec. 11019. Effective date of title; temporary procedures. SEC. 11002. FINDINGS AND DECLARATION OF POLICY. 29 u s e 1001b. (a) FINDINGS.—The Congress finds that— (1) single-employer defined benefit pension plans have a substantial impact on interstate commerce and are affected with a national interest; (2) the continued well-being and retirement income security of millions of workers, retirees, and their dependents are directly affected by such plans; (3) the existence of a sound termination insurance system is fundamental to the retirement income security of participants and beneficiaries of such plans; and (4) the current termination insurance system in some in- stances encourages employers to terminate pension plans, evade their obligations to pay benefits, and shift unfunded pension liabilities onto the termination insurance system and the other premium-payers. (b) ADDITIONAL FINDINGS.—The Congress further finds that modi- fication of the current termination insurance system and an in- crease in the insurance premium for single-employer defined benefit pension plans— (1) is desirable to increase the likelihood that full benefits will be paid to participants and beneficiaries of such plans;
100 STAT. 238 PUBLIC LAW 99-272—APR. 7, 1986 (2) is desirable to provide for the transfer of liabilities to the termination insurance system only in cases of severe hardship; (3) is necessary to maintain the premium costs of such system at a reasonable level; and (4) is necessary to finance properly current funding defi- ciencies and future obligations of the single-employer pension plan termination insurance system. Commerce and (c) DECLARATION OF POLICY.—It is hereby declared to be the policy trade. of this t i t l e - CD to foster and facilitate interstate commerce; (2) to encourage the maintenance and growth of single-em- ployer defined benefit pension plans; (3) to increase the likelihood that participants and bene- ficiaries under single-employer defined benefit pension plans will receive their full benefits; (4) to provide for the transfer of unfunded pension liabilities onto the single-employer pension plan termination insurance system only in cases of severe hardship; (5) to maintain the premium costs of such system at a reason- able level; and (6) to assure the prudent financing of current funding defi- ciencies and future obligations of the single-employer pension plan termination insurance system by increasing termination insurance premiums. SEC. 11003. AMENDMENT OF THE EMPLOYEE RETIREMENT INCOME SECU- RITY ACT OF 1974. Whenever in this title an amendment or repeal is expressed in terms of an amendment to or repeal of a section or other provision, the reference is to a section or other provision of the Employee Retirement Income Security Act of 1974, unless otherwise specified. SEC. 11004. DEFINITIONS. (a) I N GENERAL.—Section 4001(a) (29 U.S.C. 1301(a)) is amended— (1) by striking out paragraph (2) and inserting in lieu thereof the following new paragraph: "(2) 'substantial employer', for any plan year of a single- employer plan, means one or more persons— "(A) who are contributing sponsors of the plan in such plan year, "(B) who, at any time during such plan year, are mem- bers of the same controlled group, and "(C) whose required contributions to the plan for each plan year constituting one of—- "(i) the two immediately preceding plan years, or "(ii) the first two of the three immediately preceding plan years, total an amount greater than or equal to 10 percent of all contributions required to be paid to or under the plan for such plan year;"; (2) in paragraph (11), by striking out "and"; (3) in paragraph (12), by striking out "corporation." and inserting in lieu thereof "corporation;'; and (4) by adding after paragraph (12) the following new para- graphs: "(13) 'contributing sponsor', of a single-employer plan, means a person—
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 239 "(A) who is responsible, in connection with such plan, for meeting the funding requirements under section 302 of this Act or section 412 of the Internal Revenue Code of 1954, or 29 USC 1112. "(B) who is a member of the controlled group of a person 26 USC 412. described in subparagraph (A), has been responsible for meeting such funding requirements, and has employed a significant number (as may be defined in regulations of the corporation) of participants under such plan while such person was so responsible; "(14) in the case of a single-employer plan— "(A) 'controlled group' means, in connection with any person, a group consisting of such person and all other persons under common control with such person; and "(B) the determination of whether two or more persons are under 'common control' shall be made under regula- tions of the corporation which are consistent and coexten- sive with regulations prescribed for similar purposes by the Secretary of the Treasury under subsections (b) and (c) of section 414 of the Internal Revenue Code of 1954; 26 USC 414. "(15) 'single-employer plan' means any defined benefit plan (as defined in section 3(35)) which is not a multiemployer plan; 29 USC 1002. "(16) 'benefit commitments', to a participant or beneficiary as of any date under a single-employer plan, means all benefits provided by the plan with respect to the participant or bene- ficiary which— "(A) are guaranteed under section 4022, 29 USC 1322. "(B) would be guaranteed under section 4022, but for the operation of subsection 4022(b), or "(C) constitute— "(i) early retirement supplements or subsidies, or "(ii) plant closing benefits, irrespective of whether any such supplements, subsidies, or benefits are benefits guaranteed under section 4022, if the participant or beneficiary has satisfied, as of such date, all of the conditions required of him or her under the provi- sions of the plan to establish entitlement to the benefits, except for the submission of a formal application, retire- ment, completion of a required waiting period subsequent to application for benefits, or designation of a beneficiary; "(17) 'amount of unfunded guaranteed benefits', of a partici- pant or beneficiary as of any date under a single-employer plan, means an amount equal to the excess of— "(A) the actuarial present value (determined as of such date on the basis of assumptions prescribed by the corpora- tion for purposes of section 4044) of the benefits of the 29 USC 1344. participant or beneficiary under the plan which are guaran- teed under section 4022, over "(B) the current value (as of such date) of the assets of the plan which are required to be allocated to those benefits under section 4044; 29 USC 1344. "(18) 'amount of unfunded benefit commitments', of a partici- pant or beneficiary as of any date under a single-employer plan, means an amount equal to the excess of— "(A) the actuarial present value (determined as of such date on the basis of assumptions prescribed by the corpora- tion for purposes of section 4044) of the benefit commit- ments to the participant or beneficiary under the plan, over
100 STAT. 240 PUBLIC LAW 99-272—APR. 7, 1986 "(B) the current value (as of such date) of the assets of the plan which are required to be allocated to those benefit 29 use 1344. commitments under section 4044; "(19) 'outstanding amount of benefit commitments', of a participant or beneficiary under a terminated single-employer plan, means the excess of— "(A) the actuarial present value (determined as of the termination date on the basis of assumptions prescribed by the corporation for purposes of section 4044) of the benefit commitments to such participant or beneficiary under the plan, over "(B) the actuarial present value (determined as of such date on the basis of assumptions prescribed by the corpora- tion for purposes of section 4044) of the benefits of such participant or beneficiary which are guaranteed under sec- 29 use 1322. tion 4022 or to which assets of the plan are required to be allocated under section 4044; 29 u s e 1002. "(20) 'person' has the meaning set forth in section 3(9); "(21) 'affected party' means, with respect to a plan— "(A) each participant in the plan, "(B) each beneficiary under the plan who is a beneficiary of a deceased participant or who is an alternate payee 29 use 1056. (within the meaning of section 206(d)(3)(K)) under an ap- plicable qualified domestic relations order (within the meaning of section 206(d)(3)(B)(i)), "(C) each employee organization representing partici- pants in the plan, and "(D) the corporation, except that, in connection with any notice required to be pro- vided to the affected party, if an affected party has designated, in writing, a person to receive such notice on behalf of the affected party, any reference to the affected party shall be construed to refer to such person.", (b) TECHNICAL CORRECTION OF ERROR IN MULTIEMPLOYER PENSION 29 use 1301. PLAN AMENDMENTS ACT OF 1980.—Section 4001 is further amended by striking out the amendments made by section 402(a)(1)(F) of the Multiemployer Pension Plan Amendments Act of 1980 (94 Stat. 29 use 1301. 1297) (adding new paragraphs after a subsection (c)(1)), and, in lieu thereof, in subsection (b), by inserting "(1)" after "(b)" and by adding at the end of such subsection the following new paragraph: "(2) For purposes of subtitle E— "(A) except as otherwise provided in subtitle E, contributions or other payments shall be considered made under a plan for a plan year if they are made within the period prescribed under 26 use 412. section 412(c)(10) of the Internal Revenue Code of 1954 (deter- mined, in the case of a terminated plan, as if the plan had continued beyond the termination date), and -^ "(B) the term 'Secretary of the Treasury' means the Secretary of the Treasury or such Secretary's delegate.". SEC. 11005. SINGLE-EMPLOYER PLAN TERMINATION INSURANCE PRE- MIUMS. (a) PREMIUM INCREASE.— (1) GENERAL RULE.—Section 4006(a)(3)(A)(i) (29 U.S.C. 1306(a)(3)(A)(i)) is amended by striking out "for plan years begin- ning after December 31, 1977, an amount equal to $2.60" and
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 241 inserting in lieu thereof "for plan years beginning after Decem- ber 31, 1985, an amount equal to $8.50". (2) CONFORMING AMENDMENT WITH RESPECT TO PLAN YEARS AFTER 1977.—Section 4006(c)(1) (29 U.S.C, 1306(c)(1)) is amended by striking out subparagraph (A) and inserting in lieu thereof the following new subparagraph: "(A) in the case of each plan which was not a multiemployer plan in a plan year— "(i) with respect to each plan year beginning before Janu- ary 1, 1978, an amount equal to $1 for each individual who was a participant in such plan during the plan year, and "(ii) with respect to each plan year beginning after December 31, 1977, an amount equal to $2.60 for each individual who was a participant in such plan during the plan year, and", (b) INCORPORATION OF CERTAIN P'ORMER PROVISIONS IN LIEU OF CROSS REFERENCE THERETO.—Section 4006(a) (29 U.S.C. 1306(a)) is amended— (1) in paragraph (1), by striking out the last sentence; and (2) by adding at the end thereof the following new paragraph: "(6)(A) In carrying out its authority under paragraph (1) to estab- lish premium rates and bases for basic benefits guaranteed under section 4022 with respect to single-employer plans, the corporation 29 USC 1322. shall establish such rates and bases in coverage schedules in accord- ance with the provisions of this paragraph. "(B) The corporation may establish annual premiums for single- employer plans composed of the sum of— "(i) a charge based on a rate applicable to the excess, if any, of the present value of the basic benefits of the plan which are guaranteed over the value of the assets of the plan, not in excess of 0.1 percent, and "(ii) an additional charge based on a rate applicable to the present value of the basic benefits of the plan which are guaran- teed. The rate for the additional charge referred to in clause (ii) shall be set by the corporation for every year at a level which the corpora- tion estimates will yield total revenue approximately equal to the total revenue to be derived by the corporation from the charges referred to in clause (i) of this subparagraph. "(C) The corporation may establish annual premiums for single- employer plans based on— "(i) the number of participants in a plan, but such premium rates shall not exceed the rates described in paragraph (3), "(ii) unfunded basic benefits guaranteed under this title, but such premium rates shall not exceed the limitations applicable to charges referred to in subparagraph (B)(i), or "(iii) total guaranteed basic benefits, but such premium rates shall not exceed the rates for additional charges referred to in subparagraph (B)(ii). If the corporation uses two or more of the rate bases described in this subparagraph, the premium rates shall be designed to produce approximately equal amounts of aggregate premium revenue from each of the rate bases used. "(D) For purposes of this paragraph, the corporation shall by regulation define the terms 'value of assets' and 'present value of the benefits of the plan which are guaranteed' in a manner consist-
100 STAT. 242 PUBLIC LAW 99-272—APR. 7, 1986 ent with the purposes of this title and the provisions of this section.". (c) APPROVAL BY JOINT RESOLUTION OF RECOMMENDATIONS OF THE PENSION BENEFIT GUARANTY CORPORATION.—Title IV is amended as follows: (1) The last sentence of subsection (a)(2) of section 4006 (29 U.S.C. 1306(a)(2)) is amended by striking out "the Congress approves such revised schedule by a concurrent resolution" and inserting in lieu thereof "a joint resolution approving such revised schedule is enacted". (2) Subsection (a)(4) of section 4006 (29 U.S.C. 1306(a)(4)) is amended by striking out "approval by the Congress" and insert- ing in lieu thereof "the enactment of a joint resolution". (3) Subsection (b)(3) of section 4006 (29 U.S.C. 1306(b)(3)) is amended by striking out "concurrent" and inserting in lieu thereof "joint", by striking out "That the Congress favors the" and inserting in lieu thereof "The", and by inserting "is hereby approved" before the period preceding the quotation marks. (4) Subsection (f)(2)(B) of section 4022A (29 U.S.C. 1322a(f)(2)(B)) is amended by striking out "Congress by concur- rent resolution" and inserting in lieu thereof "the enactment of a joint resolution". (5) Subsection (f)(2)(C) of section 4022A (29 U.S.C. 1322a(f)(2)(C)) is amended by striking out "approved" and insert- ing in lieu thereof "so enacted". (6) Subsection (f)(3)(B) of section 4022A (29 U.S.C. 1322a(f)(3)(A)) is amended by striking out "Congress by a concur- rent resolution" and inserting in lieu thereof "enactment of a joint resolution". (7) Subsection (f)(4)(A) of section 4022A (29 U.S.C. 1322a(f)(4)(A)) is amended by striking out "concurrent" and inserting in lieu thereof "joint". (8) Subsection (f)(4)(B) of section 4022A (29 U.S.C. 1322a(f)(4XB)) is amended by striking out "concurrent" each place it appears and inserting in lieu thereof "joint", by striking out "That the Congress favors the" and inserting in lieu thereof "The", and by inserting "is hereby approved" immediately before the period preceding the quotation marks. (9) Subsection (f)(4)(C) of section 4022A (29 U.S.C. 1322a(f)(4)(C)) is amended by striking out "concurrent" and inserting in lieu thereof "joint". (10) Subsection (g)(4)(A)(ii) of section 4022A (29 U.S.C. 1322a(g)(4)(A)(ii)) is amended by striking out "concurrent" and inserting in lieu thereof "joint", and by striking out "adopted" and inserting in lieu thereof "enacted". (11) Subsection (g)(4)(B) of section 4022A (29 U.S.C. 1322a(g)(4)(B)) is amended by striking out "concurrent" each place it appears and inserting in lieu thereof "joint", by striking out "That the Congress disapproves the" and inserting in lieu thereof "The", and by inserting "is hereby disapproved" imme- diately before the period preceding the quotation marks. (12) Subsection (g)(4)(D) of section 4022A (29 U.S.C. 1322a(g)(4)(D)) is amended by striking out "concurrent" and inserting in lieu thereof "joint". 42 u s e 1306 (d) EFFECTIVE DATES.— note.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 243 (1) GENERAL RULE.—Except as provided in paragraph (2), the amendments made by this section shall be effective for plan years commencing after December 31, 1985. (2) SPECIAL RULE.—The amendments made by subsection (b) shall be effective as of the date of the enactment of the Multi- employer Pension Plan Amendments Act of 1980. 29 USC lOOl (e) TRANSITIONAL RULE.— note. (1) NOTICE OF PREMIUM INCREASE.—Not later than 30 days ^ote^^ ^ after the date of the enactment of this Act, the Pension Benefit Guaranty Corporation shall send a notice to the plan adminis- trator of each single-employer plan affected by the premium increase established by the amendment made by subsection (a)(1). Such notice shall describe such increase and the require- ments of this subsection. (2) DUE DATE FOR UNPAID PREMIUMS.—With respect to any plan year beginning during the period beginning on January 1, 1986, and ending 30 days after the date of the enactment of this Act, any unpaid amount of such premium increase shall be due and payable no later than the earlier of 60 days after the date of the enactment of this Act or 30 days after the date on which the notice required by paragraph (1) is sent, except that in no event shall the amount of the premium increase established under the amendment made by subsection (a)(1) be due and payable for a plan year earlier than the date on which premiums for the plan would have been due for such plan year had this Act not been enacted. (3) ENFORCEMENT.—For purposes of enforcement, the require- ments of paragraphs (1) and (2) shall be considered to be require- ments of sections 4006 and 4007 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1306 and 1307). SEC. 11006. NOTICE OF SIGNIFICANT REDUCTION IN BENEFIT ACCRUALS. (a) IN GENERAL.—Section 204 (29 U.S.C. 1054) is amended— (1) by redesignating subsection (h) as subsection (i); and (2) by inserting after subsection (g) the following new subsection: "(h) A single-employer plan may not be amended so as to provide for a significant reduction in the rate of future benefit accrual, unless, after adoption of the plan amendment and not less than 15 days before the effective date of the plan amendment, the plan administrator provides a written notice, setting forth the plan amendment and its effective date, to— "(1) each participant in the plan, "(2) each beneficiary who is an alternate payee (within the meaning of section 206(dX3)(K)) under an applicable qualified 29 USC 1056. domestic relations order (within the meaning of section 206(d)(3XBXi)), and "(3) each employee organization representing participants in the plan, except that such notice shall instead be provided to a person des- ignated, in writing, to receive such notice on behalf of any person referred to in paragraph (1), (2), or (3).". (b) EFFECTIVE DATE.—The amendments made by subsection (a) 29 USC 1054 shall apply with respect to plan amendments adopted on or after note. January 1, 1986, except that, in the case of plan amendments adopted on or after January 1, 1986, and on or before the date of the enactment of this Act, the requirements of section 204(h) of the
100 STAT. 244 PUBLIC LAW 99-272—APR. 7, 1986 Employee Retirement Income Security Act of 1974 (as added by this section) shall be treated as met if the written notice required under such section 204(h) is provided before 60 days after the date of the enactment of this Act. SEC. 11007. GENERAL REQUIREMENTS RELATING TO TERMINATION OF SINGLE-EMPLOYER PLANS BY PLAN ADMINISTRATORS. (a) IN GENERAL.—Section 4041 (29 U.S.C. 1341) is amended by striking out subsections (a) through (c) and inserting in lieu thereof the following: "SEC. 4041. (a) GENERAL RULES GOVERNING SINGLE-EMPLOYER PLAN TERMINATIONS.— "(1) EXCLUSIVE MEANS OF PLAN TERMINATION.—Except in the case of a termination for which proceedings are otherwise in- Post, p. 253. stituted by the corporation as provided in section 4042, a single- employer plan may be terminated only in a standard termi- nation under subsection (b) or a distress termination under subsection (c). "(2) 60-DAY NOTICE OF INTENT TO TERMINATE.—Not leSS t h a n 60 days before the proposed termination date of a standard termi- nation under subsection (b) or a distress termination under subsection (c), the plan administrator shall provide to each affected party (other than the corporation in the case of a standard termination) a written notice of intent to terminate stating that such termination is intended and the proposed termination date. The written notice shall include any related additional information required in regulations of the corporation. Corporations. "(3) ADHERENCE TO COLLECTIVE BARGAINING AGREEMENTS.— The corporation shall not proceed with a termination of a plan under this section if the termination would violate the terms and conditions of an existing collective bargaining agreement. Nothing in the preceding sentence shall be construed as limit- ing the authority of the corporation to institute proceedings to involuntarily terminate a plan under section 4042.". (b) DEFINITIONS RELATING TO SUFFICIENCY.—Section 4041(d) (29 U.S.C. 1341(d)) is amended to read as follows: "(d) SUFFICIENCY.—For purposes of this section— "(1) SUFFICIENCY FOR BENEFIT COMMITMENTS.—A single-em- ployer plan is sufficient for benefit commitments if there is no amount of unfunded benefit commitments under the plan. "(2) SUFFICIENCY FOR GUARANTEED BENEFITS.—A single-em- ployer plan is sufficient for guaranteed benefits if there is no amount of unfunded guaranteed benefits under the plan.". SEC. 11008. STANDARD TERMINATION OF SINGLE-EMPLOYER PLANS. (a) IN GENERAL.—Section 4041 (as amended by section 11007 of this Act) is further amended by inserting after subsection (a) the following new subsection: "(b) STANDARD TERMINATION OF SINGLE-EMPLOYER PLANS.— "(1) GENERAL REQUIREMENTS.—A single-employer plan may terminate under a standard termination only if— "(A) the plan administrator provides the 60-day advance notice of intent to terminate to affected parties required under subsection (a)(2), "(B) the requirements of subparagraphs (A) and (B) of paragraph (2) are met.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 245 "(C) the corporation does not issue a notice of noncompli- ance under subparagraph (C) of paragraph (2), and "(D) when the final distribution of assets occurs, the plan is sufficient for benefit commitments (determined as of the termination date). '(2) TERMINATION PROCEDURE.— "(A) NOTICE TO THE CORPORATION.—As soon as practicable after the date on which the notice of intent to terminate is provided pursuant to subsection (a)(2), the plan adminis- trator shall send a notice to the corporation setting forth— "(i) certification by an enrolled actuary— "(I) of the projected amount of the assets of the plan (as of a proposed date of final distribution of assets), "(II) of the actuarial present value (as of such date) of the benefit commitments (determined as of the proposed termination date) under the plan, and "(III) that the plan is projected to be sufficient (as of such proposed date of final distribution) for such benefit commitments, "(ii) such information as the corporation may pre- Regulations, scribe in regulations as necessary to enable the cor- poration to make determinations under subparagraph (C), and "(iii) certification by the plan administrator that the information on which the enrolled actuary based the certification under clause (i) and the information pro- vided to the corporation under clause (ii) are accurate and complete. "(B) NOTICE TO PARTICIPANTS AND BENEFICIARIES OF BENE- FIT COMMITMENTS.—No later than the date on which a notice is sent by the plan administrator under subpara- graph (A), the plan administrator shall send a notice to each person who is a participant or beneficiary under the plan— "(i) specifying the amount of such person's benefit commitments (if any) as of the proposed termination date and the benefit form on the basis of which such amount is determined, and "(ii) including the following information used in determining such benefit commitments: "(I) the length of service, "(II) the age of the participant or beneficiary, "(III) wages, "(IV) the assumptions, including the interest rate, and "(V) such other information as the corporation may require. Such notice shall be written in such manner as is likely to be understood by the participant or beneficiary and as may be prescribed in regulations of the corporation. "(C) NOTICE FROM THE CORPORATION OF NONCOMPLIANCE.— "(i) I N GENERAL.—Within 60 days after receipt of the notice under subparagraph (A), the corporation shall issue a notice of noncompliance to the plan adminis- trator if—
100 STAT. 246 PUBLIC LAW 99-272—APR. 7, 1986 "(I) it has reason to believe that any requirement of subsection (a)(2) or subparagraph (A) or (B) has not been met, or "(II) it otherwise determines, on the basis of information provided by affected parties or other- wise obtained by the corporation, that there is reason to beUeve that the plan is not sufficient for benefit commitments, "(ii) EXTENSION.—The corporation and the plan administrator may agree to extend the 60-day period referred to in clause (i) by a written agreement signed by the corporation and the plan administrator before the expiration of the 60-day period. The 60-day period shall be extended as provided in the agreement and may be further extended by subsequent written agree- ments signed by the corporation and the plan adminis- trator made before the expiration of a previously agreed upon extension of the 60-day period. Any exten- sion may be made upon such terms and conditions (including the payment of benefits) as are agreed upon by the corporation and the plan administrator. "(D) FINAL DISTRIBUTION OF ASSETS IN ABSENCE OF NOTICE OF NONCOMPLIANCE.—The plan administrator shall com- mence the final distribution of assets pursuant to the stand- ard termination of the plan as soon as practicable after the expiration of the 60-day (or extended) period referred to in subparagraph (C), but such final distribution may occur only if— "(i) the plan administrator has not received during such period a notice of noncompliance from the cor- poration under subparagraph (C), and "(ii) when such final distribution occurs, the plan is sufficient for benefit commitments (determined as of the termination date). "(3) METHODS OF FINAL DISTRIBUTION OF ASSETS.— "(A) IN GENERAL.—In connection with any final distribu- tion of assets pursuant to the standard termination of the plan under this subsection, the plan administrator shall 29 use 1344. distribute the assets in accordance with section 4044. In distributing such assets, the plan administrator shall— "(i) purchase irrevocable commitments from an in- surer to provide the benefit commitments under the plan and all other benefits (if any) under the plan to which assets are required to be allocated under section 4044, or "(ii) in accordance with the provisions of the plan and any applicable regulations of the corporation, other- wise fully provide the benefit commitments under the plan and all other benefits (if any) under the plan to which assets are required to be allocated under section 4044. "(B) CERTIFICATION TO THE CORPORATION OF FINAL DIS- TRIBUTION OF ASSETS.—Within 30 days after the final dis- tribution of assets is completed pursuant to the standard termination of the plan under this subsection, the plan administrator shall send a notice to the corporation certify- ing that the assets of the plan have been distributed in
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 247 accordance with the provisions of subparagraph (A) so as to pay the benefit commitments under the plan and all other benefits under the plan to which assets are required to be allocated under section 4044. 29 USC 1344. "(4) CONTINUING AUTHORITY.—Nothing in this section shall be construed to preclude the continued exercise by the corporation, after the termination date of a plan terminated in a standard termination under this subsection, of its authority under section 4003 with respect to matters relating to the termination. A 29 USC 1303. certification under paragraph (3)(B) shall not affect the corpora- tion's obligations under section 4022.". 29 USC 1322. (b) CONFORMING AMENDMENT.—Section 4041(f) (29 U.S.C. 1341(f)) is amended to read as follows: "(f) LIMITATION ON THE CONVERSION OF A DEFINED BENEFIT PLAN TO A DEFINED CONTRIBUTION PLAN.—The adoption of an amendment to a plan which causes the plan to become a plan described in section 4021(bXl) constitutes a termination of the plan. Such an 29 USC 1821. amendment may take effect only after the plan satisfies the require- ments for standard termination under subsection (b) or distress termination under subsection (c).". (c) AUTHORITY FOR 60-DAY EXTENSION.—In the case of a standard 29 USC 1341 termination of a plan under section 4041(b) of the Employee Retire- note. ment Income Security Act of 1974 (as amended by this section) with ^*^' P" ^'*' respect to which a notice of intent to terminate is filed before 120 days after the date of the enactment of this Act, the Pension Benefit Guaranty Corporation may, without the consent of the plan administrator, extend the 60-day period under section 4041(b)(2)(C)(i) of such Act (as so amended) for a period not to exceed 60 days. (d) SPECIAL TEMPORARY RULE.— 29 u s e 1341 (1) REQUIREMENTS TO BE MET BEFORE FINAL DISTRIBUTION OF "O^. ASSETS.—In the case of the termination of a single-employer plan described in paragraph (2) with respect to which the amount payable to the employer pursuant to section 4044(d) 29 USC 1344. exceeds $1,000,000 (determined as of the proposed date of final distribution of assets), the final distribution of assets pursuant to such termination may not occur unless the Pension Benefit Guaranty Corporation— (A) determines that the assets of the plan are sufficient for benefit commitments (within the meaning of section 4041(d)(1) of the Employee Retirement Income Security Act of 1974 (as amended by section 11007)) under the plan, and (B) issues to the plan administrator a written notice setting forth the determination described in subparagraph (A). (2) PLANS TO WHICH SUBSECTION APPLIES.—A single-employer plan is described in this paragraph if— (A) the plan administrator has filed a notice of intent to terminate with the Pension Benefit Guaranty Corporation, and— (i) the filing was made before January 1, 1986, and the Corporation has not issued a notice of sufficiency for such plan before the date of the enactment of this Act, or (ii) the filing is made on or after January 1, 1986, and before 60 days after the date of the enactment of this Act and the Corporation has not issued a notice of
100 STAT. 248 PUBLIC LAW 99-272—APR. 7, 1986 sufficiency for such plan before the date of the enact- ment of this Act, and (B) of the persons who are (as of the termination date) participants in the plan, the lesser of 10 percent or 200 have filed complaints with the Corporation regarding such termi- nation— (i) in the case of plans described in subparagraph (A)(i), before 15 days after the date of the enactment of this Act, or (ii) in any other case, before the later of 15 days after the date of the enactment of this Act or 45 days after the date of the filing of such notice. (3) CONSIDERATION OF COMPLAINTS.—The Corporation shall consider and respond to such complaints not later than 90 days after the date on which the Corporation makes the determina- tion described in paragraph (1)(A). The Corporation may hold informal hearings to expedite consideration of such complaints. Any such hearing shall be exempt from the requirements of 5 use 500 et chapter 5 of title 5, United States Code. seq- (4) DELAY ON ISSUANCE OF NOTICE.— (A) GENERAL RULE.—Except as provided in subparagraph (B), the Corporation shall not issue any notice described in paragraph (1)(B) until 90 days after the date on which the Corporation makes the determination described in para- graph (1)(A). (B) EXCEPTION IN CASES OF SUBSTANTIAL BUSINESS HARD- SHIP.—Except in the case of an acquisition, takeover, or leveraged buyout, the preceding provisions of this subsec- tion shall not apply if the contributing sponsor dem- onstrates to the satisfaction of the Corporation that the contributing sponsor is experiencing substantial business hardship. For purposes of this subparagraph, a contributing sponsor shall be considered as experiencing substantial business hardship if the contributing sponsor has been operating, and can demonstrate that the contributing spon- sor will continue to operate, at an economic loss. SEC. 11009. DISTRESS TERMINATION OF SINGLE-EMPLOYER PLANS. 29 use 1341. (a) I N GENERAL.—Section 4041 (as amended by sections 11007 and 11008 of this Act) is further amended by inserting after subsection (b) the following new subsection: "(c) DISTRESS TERMINATION OF SINGLE-EMPLOYER PLANS.— "(1) I N GENERAL.—A single-employer plan may terminate under a distress termination only if— "(A) the plan administrator provides the 60-day advance notice of intent to terminate to affected parties required under subsection (a)(2), "(B) the requirements of subparagraph (A) of paragraph (2) are met, and "(C) the corporation determines that the requirements of subparagraph (B) of paragraph (2) are met. "(2) TERMINATION REQUIREMENTS.— Regulations. "(A) INFORMATION SUBMITTED TO THE CORPORATION.—As soon as practicable after the date on which the notice of intent to terminate is provided pursuant to subsection (a)(2), the plan administrator shall provide the corporation, in
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 249 such form as may be prescribed by the corporation in regulations, the following information: "(i) such information as the corporation may pre- scribe by regulation as necessary to make determina- tions under subparagraph (B) and paragraph (3); "(ii) certification by an enrolled actuary of— "(I) the amount (as of the proposed termination date) of the current value of the assets of the plan, "(II) the actuarial present value (as of such date) of the benefit commitments under the plan, "(III) whether the plan is sufficient for benefit commitments as of such date, "(IV) the actuarial present value (as of such date) of benefits under the plan guaranteed under sec- tion 4022, and 29 USC 1322. "(V) whether the plan is sufficient for guaran- teed benefits as of such date; "(iii) in any case in which the plan is not sufficient for benefit commitments as of such date— "(I) the name and address of each participant and beneficiary under the plan as of such date, and "(II) such other information as shall be pre- scribed by the corporation by regulation as nec- essary to enable the corporation (or its designee under section 4049(b)) to be able to make payments Post, p. 258. to participants and beneficiaries as required under section 4049; and "(iv) certification by the plan administrator that the information on which the enrolled actuary based the certifications under clause (ii) and the information pro- vided to the corporation under clauses (i) and (iii) are accurate and complete. "(B) DETERMINATION BY THE CORPORATION OF NECESSARY DISTRESS CRITERIA.—Upon receipt of the notice of intent to terminate required under subsection (a)(2) and the informa- tion required under subparagraph (A), the corporation shall determine whether the requirements of this subparagraph are met as provided in clause (i), (ii), or (iii). The require- ments of this subparagraph are met if each person who is (as of the termination date) a contributing sponsor of such plan or a substantial member of such sponsor's controlled group meets the requirements of any of the following clauses: "(i) LIQUIDATION IN BANKRUPTCY OR INSOLVENCY PROCEEDINGS.—The requirements of this clause are met by a. person if— "(I) such person has filed or has had filed against such person, as of the termination date, a petition seeking liquidation in a case under title 11, United States Code, or under any similar law of a State or political subdivision of a State, and "(II) such case has not, as of the termination date, been dismissed, "(ii) REORGANIZATION IN BANKRUPTCY OR INSOLVENCY PROCEEDINGS.—The requirements of this clause are met by a person if—
100 STAT. 250 PUBLIC LAW 99-272—APR. 7, 1986 "(I) such person has filed, or has had filed against such person, as of the termination date, a petition seeking reorganization in a case under title 11, United States Code, or under any similar law of a State or political subdivision of a State (or a case described in clause (i) filed by or against such person has been converted, as of such date, to such a case in which reorganization is sought), "(II) such case has not, as of the termination date, been dismissed, and "(III) the bankruptcy court (or other appropriate court in a case under such similar law of a State or political subdivision) approves the termination, "(iii) TERMINATION REQUIRED TO ENABLE PAYMENT OF DEBTS WHILE STAYING IN BUSINESS OR TO AVOID UN- REASONABLY BURDENSOME PENSION COSTS CAUSED BY DECLINING WORKFORCE.—The requirements of this clause are met by a person if such person demonstrates to the satisfaction of the corporation that— "(I) unless a distress termination occurs, such person will be unable to pay such person's debts when due and will be unable to continue in busi- ness, or "(II) the costs of providing pension coverage have become unreasonably burdensome to such person, solely as a result of a decline of such person's workforce covered as participants under all single- employer plans of which such person is a contrib- uting sponsor. "(C) SUBSTANTIAL MEMBER.—For purposes of subpara- graph (B), the term 'substantial member' of a controlled group means a person whose assets comprise 5 percent or more of the total assets of the controlled group as a whole. "(D) NOTIFICATION OF DETERMINATIONS BY THE CORPORA- TION.—The corporation shall notify the plan administrator as soon as practicable of its determinations made pursuant to subparagraph (B). ^ "(3) TERMINATION PROCEDURE.— "(A) DETERMINATIONS BY THE CORPORATION RELATING TO PLAN SUFFICIENCY FOR GUARANTEED BENEFITS AND FOR BENE- FIT COMMITMENTS.—If the Corporation determines that the requirements for a distress termination set forth in para- graphs (1) and (2) are met, the corporation shall— "(i) determine that the plan is sufficient for guaran- teed benefits (as of the termination date) or that the corporation is unable to make such determination on the basis of information made available to the corpora- tion, "(ii) determine that the plan is sufficient for benefit commitments (as of the termination date) or that the corporation is unable to make such determination on the basis of information made available to the corpora- tion, and "(iii) notify the plan administrator of the determina- tions made pursuant to this subparagraph as soon as practicable.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 251 "(B) IMPLEMENTATION OF TERMINATION.—After the cor- poration notifies the plan administrator of its determina- tions under subparagraph (A), the termination of the plan shall be carried out as soon as practicable, as provided in clause (i), (ii), or (iii). "(i) CASES OF SUFFICIENCY FOR BENEFIT COMMIT- MENTS.—In any case in which the corporation determines that the plan is sufficient for benefit commitments, the plan administrator shall proceed to distribute the plan s assets, and make certification to the corporation with respect to such distribution, in the manner described in subsection (b)(3), and shall take such other actions as may be appropriate to carry out the termination of the plan, "(ii) CASES OF SUFFICIENCY FOR GUARANTEED BENEFITS WITHOUT A FINDING OF SUFFICIENCY FOR BENEFIT COMMITMENTS.—In any case in which the corporation determines that the plan is sufficient for guaranteed benefits, but further determines that it is unable to determine that the plan is sufficient for benefit commitments on the basis of the information made available to it— "(I) the plan administrator shall proceed to distribute the plan's assets in the manner de- scribed in subsection (b)(3), make certification to the corporation that the distribution has occurred, and take such actions as may be appropriate to carry out the termination of the plan, and "(II) the corporation shall establish a separate trust in connection with the plan for purposes of section 4049. Post, p. 258. "(iii) CASES WITHOUT ANY FINDING OF SUFFICIENCY.— In any case in which the corporation determines that it is unable to determine that the plan is sufficient for guaranteed benefits on the basis of the information made available to it— "(I) the corporation shall commence proceedings Post, p. 253. in accordance with section 4042, and "(II) the corporation shall establish a separate trust in connection with the plan for purposes of section 4049 unless the corporation determines that all benefit commitments under the plan are benefits guaranteed by the corporation under sec- tion 4022. 29 use 1322. "(C) FINDING AFTER AUTHORIZED COMMENCEMENT OF TERMINATION THAT PLAN IS UNABLE TO PAY BENEFITS.— "(i) FINDING WITH RESPECT TO BENEFIT COMMITMENTS WHICH ARE NOT GUARANTEED BENEFITS.—If, after the plan administrator has begun to terminate the plan as authorized under subparagraph (B)(i), the plan administrator finds that the plan is unable, or will be unable, to pay benefit commitments which are not benefits guaranteed by the corporation under section 4022, the plan administrator shall notify the corpora- tion of such finding as soon as practicable thereafter. If the corporation concurs in the finding of the plan administrator (or the corporation itself makes such a
100 STAT. 252 PUBLIC LAW 99-272—APR. 7, 1986 finding) the corporation shall take the actions set forth in subparagraph (B)(ii)(II) relating to the trust estab- Post, p. 258. lished for purposes of section 4049. "(ii) FINDING WITH RESPECT TO GUARANTEED BENE- FITS.—If, after the plan administrator has begun to terminate the plan as authorized by subparagraph (B) (i) or (ii), the plan administrator finds that the plan is unable, or will be unable, to pay all benefits under the plan which are guaranteed by the corporation under 29 use 1322. section 4022, the plan administrator shall notify the corporation of such finding as soon as practicable there- after. If the corporation concurs in the finding of the plan administrator (or the corporation itself makes such a finding), the corporation shall institute appro- 29 use 1342. priate proceedings under section 4042. "(D) ADMINISTRATION OF THE PLAN DURING INTERIM PERIOD.— "(i) IN GENERAL.—The plan administrator shall— "(I) meet the requirements of clause (ii) for the period commencing on the date on which the plan adminis- trator provides a notice of distress termination to the corporation under subsection (a)(2) and ending on the date on which the plan administrator receives notifica- tion from the corporation of its determinations under subparagraph (A), and "(II) meet the requirements of clause (ii) commencing on the date on which the plan administrator or the corporation makes a finding under subparagraph (C)(ii). "(ii) REQUIREMENTS.—The requirements of this clause are met by the plan administrator if the plan administrator— "(I) refrains from distributing assets or taking any other actions to carry out the proposed termination of this subsection, "(II) pays benefits attributable to employer contribu- tions, other than death benefits, only in the form of an annuity, "(III) does not use plan assets to purchase irrevocable commitments to provide benefits from an insurer, and "(IV) continues to pay all benefit commitments under the plan, but, commencing on the proposed termination date, limits the payment of benefits under the plan to those benefits which are guaranteed by the corporation under section 4022 or to which assets are required to be allocated under section 4044. In the event the plan administrator is later determined not to have met the requirements for distress termination, any benefits which are not paid solely by reason of compliance with subclause (IV) shall be due and payable immediately (together with interest, at a reasonable rate, in accordance with regulations of the corporation).". 29 u s e 1341. (b) CONFORMING AMENDMENTS.—Section 4041 (as amended by the preceding provisions of this title) is further amended— (1) by striking out subsection (e); and (2) by redesignating subsection (f) as subsection (e).
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 253 SEC. 11010. TERMINATION PROCEEDINGS; DUTIES OF THE CORPORATION. (a) MANDATORY COMMENCEMENT OF PROCEEDINGS UPON INABILITY OF SINGLE-EMPLOYER PLAN TO PAY BENEFITS THAT ARE CURRENTLY DUE.— (1) I N GENERAL.—Section 4042(a) (29 U.S.C. 1342(a)) is amended— (A) in paragraph (2), by striking out "is" and inserting in lieu thereof "will be"; and (B) by inserting at the beginning of the matter following paragraph (4) the following new sentence: "The corporation shall as soon as practicable institute proceedings under this section to terminate a single-employer plan whenever the corporation determines that the plan does not have assets available to pay benefits which are currently due under the terms of the plan". (2) CONFORMING AMENDMENTS.— (A) Section 4042(b)(1) (29 U.S.C. 1342(b)(1)) is amended, in the first sentence, by inserting "or is required under subsec- tion (a) to institute proceedings under this section," after "to a plan". (B) Section 4042(c) (29 U.S.C. 1342(c)) is amended in the first sentence by striking out "If the corporation" and all that follows down through "has determined" and inserting in lieu thereof the following: "If the corporation is required under subsection (a) of this section to commence proceed- ings under this section with respect to a plan or, after issuing a notice under this section to a plan administrator, has determined". (b) ESTABLISHMENT OF SECTION 4049 TRUST.—Section 4042 is fur- ther amended by adding at the end thereof the following new subsection: "(i) In any case in which a plan is terminated under this section in a termination proceeding initiated by the corporation pursuant to subsection (a), the corporation shall establish a separate trust in connection with the plan for purposes of section 4049, unless the Post, p. 258. corporation determines that all benefit commitments under the plan are benefits guaranteed by the corporation under section 4022 or 29 USC 1322. that there is no amount of unfunded benefit commitments under the plan.". (c) CONFORMING AMENDMENT.—The heading for section 4042 is amended to read as follows: "INSTITUTION OF TERMINATION PROCEEDINGS BY THE CORPORATION", SEC. 11011. AMENDMENTS TO LIABILITY PROVISIONS; LIABILITIES RELAT- ING TO BENEFIT COMMITMENTS IN EXCESS OF BENEFITS GUARANTEED BY THE CORPORATION. (a) LIABILITY FOR DISTRESS TERMINATIONS AND TERMINATIONS BY THE CORPORATION.—Section 4062 (29 U.S.C. 1362) is amended— (1) by redesignating subsection (e) as subsection (f); and (2) by striking out so much as precedes subsection (f) (as redesignated) and inserting in lieu thereof the following:
100 STAT. 254 PUBLIC LAW 99-272—APR. 7, 1986 "LIABILITY FOR TERMINATION OF SINGLE-EMPLOYER PLANS UNDER A DISTRESS T E R M I N A T I O N OR A TERMINATION BY THE CORPORATION "SEC. 4062. (a) I N GENERAL.—In any case in which a single- employer plan is terminated in a distress termination under section Ante, p. 248. 4041(c) or a termination otherwise instituted by the corporation Ante, p. 253. under section 4042, any person who is, on the termination date, a contributing sponsor of the plan or a member of such a contributing sponsor's controlled group shall incur liability under this section. The liability under this section of all such persons shall be joint and several. The liability under this section consists of— "(1) liability to the corporation, to the extent provided in subsection (b), "(2) liability to the trust established pursuant to section Ante, pp. 248, 4041(c)(3)(B) (ii) or (iii) or section 4042(i), to the extent provided 253. in subsection (c), and "(3) liability to the trustee appointed under subsection (b) or (c) of section 4042, to the extent provided in subsection (d). "(b) LlABIUTY TO THE CORPORATION.— "(1) AMOUNT OF LIABILITY.— "(A) I N GENERAL.—Except as provided in subparagraph (B), the liability to the corporation of a person described in subsection (a) shall consist of the sum of— "(i) the lesser of— "(I) the total amount of unfunded guaranteed benefits (as of the termination date) of all partici- pants and beneficiaries under the plan, or "(II) 30 percent of the collective net worth of all persons described in subsection (a), and "(ii) the excess (if any) of— "(I) 75 percent of the amount described in clause (i)(I), over "(II) the amount described in clause (i)(II), together with interest (at a reasonable rate) calculated from the termination date in accordance with regulations pre- scribed by the corporation. "(B) SPECIAL RULE IN CASE OF SUBSEQUENT INSUFFI- CIENCY.—For purposes of subparagraph (A), in any case described in section 4041(c)(3)(C)(ii), actuarial present values shall be determined as of the date of the notice to the corporation (or the finding by the corporation) described in such section. "(2) PAYMENT OF LIABILITY.— "(A) I N GENERAL.—Except as provided in subparagraph (B), the liability to the corporation under this subsection shall be due and payable to the corporation as of the termination date, in cash or securities acceptable to the corporation. "(B) SPECIAL RULE.—Payment of the liability under para- graph (l)(A)(ii) shall be made under commercially reason- able terms prescribed by the corporation. The parties in- volved shall make a reasonable effort to reach agreement on such commercially reasonable terms. Any such terms prescribed by the corporation shall provide for deferral of 50 percent of any amount of liability otherwise payable for any year under this subparagraph if a person subject to
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 255 such liability demonstrates to the satisfaction of the cor- poration that no person subject to such liability has any individual pre-tax profits for such person's fiscal year ending during such year. "(3) ALTERNATIVE ARRANGEMENTS.—The corporation and any person liable under this section may agree to alternative arrangements for the satisfaction of liability to the corporation under this subsection. "(c) LIABILITY TO SECTION 4049 TRUST.— "(1) AMOUNT OF LIABILITY.— "(A) I N GENERAL.—In any case in which there is an outstanding amount of benefit commitments under a plan terminated under section 4041(c) or 4042, a person described Ante, pp. 248, in subsection (a) shall be subject to liability under this ^53. subsection to the trust established under section 4041(c)(3)(B) (ii) or (iii) or section 4042(i) in connection with the terminated plan. Except as provided in subparagraph (B), the liability of such person under this subsection shall consist of the lesser of— "(i) 75 percent of the total outstanding amount of benefit commitments under the plan, or "(ii) 15 percent of the actuarial present value (deter- mined as of the termination date on the basis of assumptions prescribed by the corporation for purposes of section 4044) of all benefit commitments under the 29 USC 1344. plan. "(B) SPECIAL RULE IN CASE OF SUBSEQUENT INSUFFI- CIENCY.—For purposes of subparagraph (A)— "(i) PLANS INSUFFICIENT FOR GUARANTEED BENEFITS.— In any case described in section 4041(c)(3)(C)(ii), actuar- ial present values shall be determined as of the date of the notice to the corporation (or the finding by the corporation) described in such section. "(ii) PLANS SUFFICIENT FOR GUARANTEED BENEFITS BUT INSUFFICIENT FOR BENEFIT ENTITLEMENTS.—In a n y C a s e described in section 4041(c)(3)(C)(i) but not described in section 4041(c)(3)(C)(ii), actuarial present values shall be determined as of the date on which the final distribu- tion of assets is completed. "(2) PAYMENT OF LIABILITY.— "(A) GENERAL RULE.—Except as otherwise provided in this paragraph, payment of a person's liability under this subsection shall be made for liability payment years under commercially reasonable terms prescribed by the fiduciary designated by the corporation pursuant to section 4049(b)(1)(A). Such fiduciary and the liable persons assessed Post, p. 258. liability under this subsection shall make a reasonable effort to reach agreement on such commercially reasonable terms. "(B) SPECIAL RULE FOR PLANS WITH LOW AMOUNTS OF LIABILITY.—In any case in which the amount described in paragraph (1)(A) is less than $100,000, the requirements of subparagraph (A) may be satisfied by payment of such liability over 10 liability payment years in equal annual installments (with interest at the rate determined under section 66210t)) of the Internal Revenue Code of 1954). The 26 USC 6621. corporation may, by regulation, increase the dollar amount
100 STAT. 256 PUBLIC LAW 99-272—APR. 7, 1986 referred to in this subparagraph as it determines appro- priate, taking into account reasonable administrative costs Ante, p. 248. of trusts established under section 4041(c)(3)(B) (ii) or (iii) or Ante, p. 253. section 4042(i). "(C) DEFERRAL OF PAYMENTS.—The terms for payment provided for under subparagraph (A) or (B) shall also pro- vide for deferral of 75 percent of any amount of liability otherwise payable for any liability payment year if a person subject to such liability demonstrates to the satisfaction of the corporation that no person subject to such liability has any individual pre-tax profits for such person's fiscal year ending during such year. The amount of liability so de- ferred is payable only after payment in full of any amount of liability under subsection (b) in connection with the termination of the same plan which has been deferred pursuant to terms provided for under subsection (b)(2)(B). "(d) LIABILITY TO SECTION 4042 TRUSTEE.—A person described in subsection (a) shall be subject to liability under this subsection to the trustee appointed under subsection (b) or (c) of section 4042. The liability of such person under this subsection shall consist of^ "(1) the outstanding balance of the accumulated funding defi- 29 use 1082. ciencies (within the meaning of section 302(a)(2) of this Act and 26 use 412. section 412(a) of the Internal Revenue Code of 1954) of the plan (if any) (which, for purposes of this subparagraph, shall include the amount of any increase in such accumulated funding defi- ciencies of the plan which would result if all pending applica- tions for waivers of the minimum funding standard under 29 use 1083. section 303 of this Act or section 412(d) of such Code and for 29 use 1084. extensions of the amortization period under section 304 of this Act or section 412(e) of such Code with respect to such plan were denied and if no additional contributions (other than those already made by the termination date) were made for the plan year in which the termination date occurs or for any previous plan year), "(2) the outstanding balance of the amount of waived funding deficiencies of the plan waived before such date under section 303 of this Act or section 412(d) of such Code (if any), and "(3) the outstanding balance of the amount of decreases in the minimum funding standard allowed before such date under section 304 of this Act or section 412(e) of such Code (if any), together with interest (at a reasonable rate) calculated from the termination date in accordance with regulations prescribed by the corporation. The liability under this subsection shall be due and pay- able to such trustee as of the termination date, in cash or securities acceptable to such trustee. "(e) DEFINITIONS.— "(1) COLLECTIVE NET WORTH OF PERSONS SUBJECT TO LIA- BILITY.— "(A) I N GENERAL.—The collective net worth of persons subject to liability in connection with a plan termination consists of the sum of the individual net worths of all persons who— "(i) have individual net worths which are greater than zero, and "(ii) are (as of the termination date) contributing sponsors of the terminated plan or members of their controlled groups.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 257 "(B) DETERMINATION OF NET WORTH.—For purposes of this paragraph, the net worth of a person is— "(i) determined on whatever basis best reflects, in the determination of the corporation, the current status of the person's operations and prospects at the time chosen for determining the net worth of the person, and "(ii) increased by the amount of any transfers of assets made by the person which are determined by the corporation to be improper under the circumstances, including any such transfers which would be inappro- priate under title 11, United States Code, if the person were a debtor in a case under chapter 7 of such title, li USC 701 et "(C) TIMING OF DETERMINATION.—For purposes of this ««9- paragraph, determinations of net worth shall be made as of a day chosen by the corporation (during the 120-day period ending with the termination date) and shall be computed without regard to any liability under this section. "(2) PRE-TAX PROFITS.—The term 'pre-tax profits' means— "(A) except as provided in subparagraph (B), for any fiscal year of any person, such person's consolidated net income (excluding any extraordinary charges to income and includ- ing any extraordinary credits to income) for such fiscal year, as shown on audited financial statements prepared in accordance with generally accepted accounting principles, or "(B) for any fiscal year of an organization described in section 501(c) of the Internal Revenue Code of 1954, the 26 USC 501. excess of income over expenses (as such terms are defined for such organizations under generally accepted accounting principles), before provision for or deduction of Federal or other income tax, any contribution to any single-employer plan of which such person is a contributing sponsor at any time during the period beginning on the termination date and ending with the end of such fiscal year, and any amounts required to be paid for such fiscal year under this section. The corporation may by regula- tion require such information to be filed on such forms as may be necessary to determine the existence and amount of such pre-tax profits. "(3) LIABILITY PAYMENT YEARS.—The liability payment years in connection with a terminated plan consist of the consecutive one-year periods following the last plan year preceding the termination date, excluding the first such year in any case in which the first such year ends less than 180 days after the termination date.". (b) CLERICAL AMENDMENT.—Subsection (f) of section 4062 (as re- 42 use 1362. designated by subsection (a)(1)) is amended by inserting "TREATMENT OF SUBSTANTIAL CESSATION OF OPERATIONS.—" after "(0". (c) AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1954.— (1) TIME FOR DEDUCTION OF CERTAIN EMPLOYER LIABILITY PAY- MENTS.—Paragraph (3) of section 404(g) of the Internal Revenue Code of 1954 (relating to certain employer liability payments 26 USC 404. considered as contributions) is amended to read as follows: "(3) TIMING OF DEDUCTION OF CONTRIBUTIONS.— "(A) I N GENERAL.—Except as otherwise provided in this paragraph, any payment described in paragraph (1) shall 71-194 0 - 89 - 11 : QL 3 Parti
100 STAT. 258 PUBLIC LAW 99-272—APR. 7, 1986 (subject to the last sentence of subsection (a)(1)(A)) be deductible under this section when paid. "(B) CONTRIBUTIONS UNDER STANDARD TERMINATIONS.— Subparagraph (A) shall not apply (and subsection (a)(1)(A) shall apply) to any payments described in paragraph (1) which are paid to terminate a plan under section 4041(b) of Ante, p. 244. the Employee Retirement Income Security Act of 1974 to the extent such payments result in the assets of the plan being in excess of the total amount of benefits under such plan which are guaranteed by the Pension Benefit Guar- 29 use 1322. anty Corporation under section 4022 of such Act. "(C) CONTRIBUTIONS TO CERTAIN TRUSTS.—Subparagraph (A) shall not apply to any payment described in paragraph 29 use 1362. (1) which is made under section 4062(c) of such Act and such payment shall be deductible at such time as may be pre- scribed in regulations which are based on principles similar to the principles of subsection (a)(1)(A).". (2) REFERENCES TO ERISA.—Subsection (g) of section 404 of the 26 use 404; Internal Revenue Code of 1954 is amended by adding at the end ante, p. 257. thereof the following new paragraph: "(4) REFERENCES TO EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974.—For purposes of this subsection, any reference to a section of the Employee Retirement Income Security Act of 1974 shall be treated as a reference to such section as in effect on the date of the enactment of the Single-Employer Pension Plan Ante, p. 237. Amendments Act of 1986.". 26 use 404 note. (3) EFFECTIVE DATE.—The amendments made by this subsec- tion shall apply to payments made after January 1, 1986, in taxable years ending after such date. SEC. 11012. DISTRIBUTION TO PARTICIPANTS AND BENEFICIARIES OF LI- ABILITY PAYMENTS TO SECTION 4049 TRUST. (a) IN GENERAL.—Subtitle C of title IV is amended by adding at the end thereof the following new section: "DISTRIBUTION TO PARTICIPANTS AND BENEFICIARIES OF UABILITY PAYMENTS TO SECTION 4049 TRUST 29 use 1349. "SEC. 4049. (a) TRUST REQUIREMENTS.—The requirements of this section apply to a trust established by the corporation in connection Ante, p. 248. with a terminated plan pursuant to section 4041(c)(3XB) (ii) or (iii). The trust shall be used exclusively for— 29 use 1362. "(1) receiving liability payments under section 4062(c) from the persons who were (as of the termination date) contributing sponsors of the terminated plan and members of their con- trolled groups, "(2) making distributions as provided in this section to the persons who were (as of the termination date) participants and beneficiaries under the terminated plan, and "(3) defraying the reasonable administrative expenses in- curred in carrying out responsibilities under this section. The trust shall be maintained for such period of time as is necessary to receive all liability payments required to be made to the trust under section 4062(c) with respect to the terminated plan and to make all distributions required to be made to participants and beneficiaries under this section with respect to the terminated plan.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 259 "(b) DESIGNATION OF FIDUCIARY BY THE CORPORATION.— "(1) PURPOSES FOR DESIGNATION OF FIDUCIARY.— "(A) COLLECTION OP LIABILITY.—The corporation shall des- ignate a fiduciary (within the meaning of section 3(21)) to 29 USC 1002. serve as trustee of the trust for purposes of conducting negotiations and assessing and collecting liability pursuant to section 4062(c). 29 USC 1362. "(B) ADMINISTRATION OF TRUST.— "(i) CORPORATION'S FUNCTIONS.—Except as provided in clause (ii), the corporation shall serve as trustee of the trust for purposes of administering the trust, including making distributions from the trust to participants and beneficiaries. "(ii) DESIGNATION OF FIDUCIARY IF COST-EFFECTIVE.—If the corporation determines that it would be cost-effec- tive to do so, it may designate a fiduciary (within the meaning of section 3(21)), including the fiduciary des- ignated under subparagraph (A), to perform the func- tions described in clause (i). "(2) FIDUCIARY REQUIREMENTS.—A fiduciary designated under paragraph (1) shall be— "(A) independent of each contributing sponsor of the plan and the members of such sponsor's controlled group, and "(B) subject to the requirements of part 4 of subtitle B of title I (other than section 406(a)) as if such trust were a plan 29 USC 1101, subject to such part. 1106- "(c) DISTRIBUTIONS FROM TRUST.— "(1) IN GENERAL.—Not later than 30 days after the end of each liability payment year (described in section 4062(e)(3)) with 29 USC 1362. respect to a terminated single-employer plan, the corporation, or its designee under subsection (b), shall distribute from the trust maintained pursuant to subsection (a) to each person who was (as of the termination date) a participant or beneficiary under the plan— "(A) in any case not described in subparagraph (B), an amount equal to the outstanding amount of benefit commit- ments to such person under the plan (including interest calculated from the termination date), to the extent not previously paid under this paragraph, or "(B) in any case in which the balance in the trust at the end of such year which is in cash or may be prudently converted to cash (after taking into account liability pay- ments received under subsection (a)(1) and administrative expenses paid under subsection (a)(3)) is less than the total of all amounts described in subparagraph (A) in connection with all persons who were (as of the termination date) participants and beneficiaries under the terminated plan, the product derived by multiplying— "(i) the amount described in subparagraph (A) in connection with each such person, by "(ii) a fraction— "(I) the numerator of which is such balance in the trust, and "(II) the denominator of which is equal to the total of all amounts described in subparagraph (A) in connection with all persons who were (as of the
100 STAT. 260 PUBLIC LAW 99-272—APR. 7, 1986 termination date) participants and beneficiaries under the terminated plan. "(2) CARRY-OVER OF MINIMAL PAYMENT AMOUNTS.—The cor- poration, or its designee under subsection (b), may withhold a payment to any person under this subsection in connection with any liability payment year (other than the last liability pay- ment year with respect to which payments under paragraph (1) are payable) if such payment does not exceed $100. In any case in which such a payment is so withheld, the payment to such person in connection with the next following liability pay- ment year shall be increased by the amount of such withheld payment. "(d) REGULATIONS.—The corporation may issue such regulations as it considers necessary to carry out the purposes of this section.". (b) TAX-EXEMPT STATUS FOR TRUSTS DESCRIBED IN SECTION 4049 OF ERISA.—Subsection (c) of section 501 of the Internal Revenue Code 26 use 501. of 1954 (relating to list of tax-exempt organizations) is amended by adding at the end thereof the following new paragraph: "(24) A trust described in section 4049 of the Employee Retire- Ante, p. 258. ment Income Security Act of 1974 (as in effect on the date of the enactment of the Single-Employer Pension Plan Amendments Ante, p. 237. A c t of 1986).". (c) ROLLOVERS OF PAYMENTS FROM TRUST ALLOWED.—Paragraph 26 use 402. (6) of section 402(a) of such Code (relating to special rollover rules) is amended by adding at the end thereof the following new subpara- graph: "(G) PAYMENTS FROM CERTAIN PENSION PLAN TERMINATION TRUSTS.—If— "(i) any amount is paid or distributed to a recipient from a trust described in section 501(c)(24), "(ii) the recipient transfers any portion of the property received in such distribution to an eligible retirement plan described in subclause (I) or (II) of paragraph (5)(E)(iv), and "(iii) in the case of a distribution of property other than money, the amount so transferred consists of the property distributed, then the portion of the distribution so transferred shall be treated as a distribution described in paragraph (5)(A).". 29 use 1362 (d) SPECIAL DELAYED PAYMENT RULE.—In the case of a distress note. termination under section 4041(c) of the Employee Retirement Income Security Act of 1974 (as amended by section 11009) pursuant to a notice of intent to terminate filed before January 1, 1987, no payment of liability otherwise payable as provided in section 29 use 1362. 4062(c)(2)(B) of such Act (as amended by this section) shall be required to be made before January 1,1989. SEC. 11013. TREATMENT OF TRANSACTIONS TO EVADE LIABILITY; EFFECT OF CORPORATE REORGANIZATION, (a) IN GENERAL.—Subtitle D of title IV is amended by adding at the end thereof the following new section: " T R E A T M E N T OF TRANSACTIONS TO EVADE LIABILITY; EFFECT OF CORPORATE REORGANIZATION 29 use 1369. "SEC. 4069. (a) TREATMENT OF TRANSACTIONS TO EVADE LIABIL- ITY.—If a principal purpose of any person in entering into any transaction is to evade liability to which such person would be
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 261 subject under this subtitle and the transaction becomes effective within five years before the termination date of the termination on which such Uabihty would be based, then such person and the members of such person's controlled group (determined as of the termination date) shall be subject to liability under this subtitle in connection with such termination as if such person were a contribut- ing sponsor of the terminated plan as of the termination date. This subsection shall not cause any person to be liable under this subtitle in connection with such plan termination for any increases or improvements in the benefits provided under the plan which are adopted after the date on which the transaction referred to in the preceding sentence becomes effective. "(b) EFFECT OF CORPORATE REORGANIZATION.—For purposes of this subtitle, the following rules apply in the case of certain corporate reorganizations: "(1) CHANGE OF IDENTITY, FORM, ETC.—If a person ceases to exist by reason of a reorganization which involves a mere change in identity, form, or place of organization, however effected, a successor corporation resulting from such reorganiza- tion shall be treated as the person to whom this subtitle applies. "(2) LIQUIDATION INTO PARENT CORPORATION.—If a person ceases to exist by reason of liquidation into a parent corpora- tion, the parent corporation shall be treated as the person to whom this subtitle applies. "(3) MERGER, CONSOLIDATION, OR DIVISION.—If a person ceases to exist by reason of a merger, consolidation, or division, the successor corporation or corporations shall be treated as the person to whom this subtitle applies.", (b) EFFECTIVE DATE.—Section 4069(a) of the Employee Retirement Income Security Act of 1974 (as added by subsection (a)) shall apply 29 USC 1369 with respect to transactions becoming effective on or after Janu- ^°^- ary 1, 1986. SEC. 11014. ENFORCEMENT AUTHORITY RELATING TO TERMINATIONS OF SINGLE-EMPLOYER PLANS. (a) PRIVATE RIGHTS OF ACTION.—Subtitle D of title IV (as amended by section 11013) is further amended by adding at the end thereof the following new section: "ENFORCEMENT AUTHORITY RELATING TO TERMINATIONS OF SINGLE- EMPLOYER PLANS "SEC. 4070. (a) I N GENERAL.—Any person who is with respect to a 29 USC 1370. single-employer plan a fiduciary, contributing sponsor, member of a contributing sponsor's controlled group, participant, or beneficiary, and is adversely affected by an act or practice of any party (other than the corporation) in violation of any provision of section 4041, 4042, 4049, 4062, 4063, 4064, or 4069, or who is an employee organiza- Ante, pp. 244, tion representing such a participant or beneficiary so adversely oQ^frlf?- affected for purposes of collective bargaining with respect to such i362-i364 plan, may bring an action— Ante. p. 260. "(1) to enjoin such act or practice, or "(2) to obtain other appropriate equitable relief (A) to redress such violation or (B) to enforce such provision. "(b) STATUS OF PLAN AS PARTY TO ACTION AND WITH RESPECT TO LEGAL PROCESS.—A single-employer plan may be sued under this section as an entity. Service of summons, subpoena, or other legal
100 STAT. 262 PUBLIC LAW 99-272—APR. 7, 1986 process of a court upon a trustee or an administrator of a single- employer plan in such trustee's or administrator's capacity as such shall constitute service upon the plan. If a plan has not designated in the summary plan description of the plan an individual as agent for the service of legal process, service upon any contributing spon- sor of the plan shall constitute such service. Any money judgment under this section against a single-employer plan shall be enforce- able only against the plan as an entity and shall not be enforceable against any other person unless liability against such person is established in such person's individual capacity. Courts, U.S. "(c) JURISDICTION AND VENUE.—The district courts of the United States shall have exclusive jurisdiction of civil actions under this section. Such actions may be brought in the district where the plan is administered, where the violation took place, or where a defend- ant resides or may be found, and process may be served in any other district where a defendant resides or may be found. The district courts of the United States shall have jurisdiction, without regard to the amount in controversy or the citizenship of the parties, to grant the relief provided for in subsection (a) in any action. "(d) RIGHT OF CORPORATION TO INTERVENE.—A copy of the com- plaint or notice of appeal in any action under this section shall be served upon the corporation by certified mail. The corporation shall have the right in its discretion to intervene in any action. "(e) AWARDS OF COSTS AND EXPENSES.— "(1) GENERAL RULE.—In any action brought under this sec- tion, the court in its discretion may award all or a portion of the costs and expenses incurred in connection with such action, including reasonable attorney's fees, to any party who prevails or substantially prevails in such action. "(2) EXEMPTION FOR PLANS.—Notwithstanding the preceding provisions of this subsection, no plan shall be required in any action to pay any costs and expenses (including attorney's fees). "(f) LIMITATION ON ACTIONS.— "(1) I N GENERAL.—Except as provided in paragraph (3), an action under this section may not be brought after the later of— "(A) 6 years after the date on which the cause of action arose, or "(B) 3 years after the applicable date specified in para- graph (2). "(2) APPLICABLE DATE.— "(A) GENERAL RULE.—Except as provided in subpara- graph (B), the applicable date specified in this paragraph is the earliest date on which the plaintiff acquired or should have acquired actual knowledge of the existence of such cause of action. "(B) SPECIAL RULE FOR PLAINTIFFS WHO ARE FIDUCIARIES.— In the case of a plaintiff who is a fiduciary bringing the action in the exercise of fiduciary duties, the applicable date specified in this paragraph is the date on which the plaintiff became a fiduciary with respect to the plan if such date is later than the date described in subparagraph (A). "(3) CASES OF FRAUD OR CONCEALMENT.—In the case of fraud or concealment, the period described in paragraph (1)(B) shall be extended to 6 years after the applicable date specified in para- graph (2).". (b) CIVIL ACTIONS INVOLVING THE PENSION BENEFIT GUARANTY CORPORATION.—
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 263 (1) ACTIONS AGAINST THE CORPORATION.—Section 4003(f) (29 U.S.C. 1303(f)) is amended to read as follows: "(f)(1) Except with respect to withdrawal liability disputes under part 1 of subtitle E, any person who is a fiduciary, employer, contributing sponsor, member of a contributing sponsor's controlled group, participant, or beneficiary, and is adversely affected by any action of the corporation with respect to a plan in which such person has an interest, or who is an employee organization representing such a participant or beneficiary so adversely affected for purposes of collective bargaining with respect to such plan, may bring an action against the corporation for appropriate equitable relief in the appropriate court. "(2) For purposes of this subsection, the term 'appropriate court' means— "(A) the United States district court before which proceedings under section 4041 or 4042 are being conducted. Ante, pp. 244, "(B) if no such proceedings are being conducted, the United 253. States district court for the judicial district in which the plan has its principal office, or "(C) the United States District Court for the District of Columbia. "(3) In any action brought under this subsection, the court may award all or a portion of the costs and expenses incurred in connec- tion with such action to any party who prevails or substantially prevails in such action. "(4) This subsection shall be the exclusive means for bringing actions against the corporation under this title, including actions against the corporation in its capacity as a trustee under section 4042 or 4049. Ante, p. 258. "(5)(A) Except as provided in subparagraph (C), an action under this subsection may not be brought after the later of— "(i) 6 years after the date on which the cause of action arose, or "(ii) 3 years after the applicable date specified in subpara- graph (B). "(B)(i) Except as provided in clause (ii), the applicable date speci- fied in this subparagraph is the earliest date on which the plaintiff acquired or should have acquired actual knowledge of the existence of such cause of action. "(ii) In the case of a plaintiff who is a fiduciary bringing the action m the exercise of fiduciary duties, the applicable date specified in this subparagraph is the date on which the plaintiff became a fiduciary with respect to the plan if such date is later than the date specified in clause (i). "(C) In the case of fraud or concealment, the period described in subparagraph (A)(ii) shall be extended to 6 years after the applicable date specified in subparagraph (B). "(6) The district courts of the United States have jurisdiction of actions brought under this subsection without regard to the amount in controversy. "(7) In any suit, action, or proceeding in which the corporation is a party, or intervenes under section 4301, in any State court, the 29 USC 1451. corporation may, without bond or security, remove such suit, action, or proceeding from the State court to the United States district court for the district or division in which such suit, action, or proceeding is pending by following any procedure for removal now or hereafter in effect.'.
100 STAT. 264 PUBLIC LAW 99-272—APR. 7, 1986 (2) LIMITATION ON ACTIONS BY THE CORPORATION.—Section 4003(e) (29 U.S.C. 1303(e)) is amended by adding at the end thereof the following new paragraph: "(6)(A) Except as provided in subparagraph (C), an action under this subsection may not be brought after the later of— "(i) 6 years after the date on which the cause of action arose, or "(ii) 3 years after the applicable date specified in subpara- graph (B). "(B)(i) Except as provided in clause (ii), the applicable date speci- fied in this subparagraph is the earliest date on which the corpora- tion acquired or should have acquired actual knowledge of the existence of such cause of action. "(ii) If the corporation brings the action as a trustee, the ap- plicable date specified in this subparagraph is the date on which the corporation became a trustee with respect to the plan if such date is later than the date described in clause (i). "(C) In the case of fraud or concealment, the period described in subparagraph (A)(ii) shall be extended to 6 years after the applicable date specified in subparagraph (B).". 29 use 1303 (3) EFFECTIVE DATE.—The amendments made by this subsec- note. tion shall apply with respect to actions filed after the date of the enactment of this Act. SEC. 11015. PROVISIONS RELATING TO WAIVERS OF MINIMUM FUNDING STANDARD AND EXTENSIONS OF AMORTIZATION PERIOD. (a) SECURITY F O R W A I V E R S . — (1) ERISA AMENDMENT.— (A) IN GENERAL.—Part 3 of subtitle B of title I is amended— (i) by redesignating section 306 (29 U.S.C. 1086) as section 307; and (ii) by inserting after section 305 (29 U.S.C. 1085) the following new section: "SECURITY FOR WAIVERS OF MINIMUM FUNDING STANDARD AND EXTENSIONS OF AMORTIZATION PERIOD 29 u s e 1085a. " S E C . 306. (a) SECURITY M A Y B E REQUIRED.— "(1) IN GENERAL.—Except as provided in subsection (c), the Secretary of the Treasury may require an employer maintain- ing a defined benefit plan which is a single-employer plan 29 use 1301. (within the meaning of section 4001(a)(15)) to provide security to such plan as a condition for granting or modifying a waiver 29 use 1083, under section 303 or an extension under section 3(34. 1084. "(2) SPECIAL RULES.—Any security provided under paragraph (1) may be perfected and enforced only by the Pension Benefit Guaranty Corporation or, at the direction of the Corporation, by a contributing sponsor (within the meaning of section 4001(a)(13)) or a member of such sponsor's controlled group (within the meaning of section 4001(a)(14)). "(b) CONSULTATION WITH THE PENSION BENEFIT GUARANTY COR- PORATION.—Except as provided in subsection (c), the Secretary of the Treasury shall, before granting or modifying a waiver under section 303 or an extension under section 304 with respect to a plan described in subsection (a)(1)— "(1) provide the Pension Benefit Guaranty Corporation with—
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 265 "(A) notice of the completed application for any waiver, extension, or modification, and "(B) an opportunity to comment on such application within 30 days after receipt of such notice, and "(2) consider— "(A) any comments of the Corporation under paragraph (1)(B), and "(B) any views of any employee organization representing participants in the plan which are submitted in writing to the Secretary of the Treasury in connection with such application. Information provided to the corporation under this subsection shall be considered tax return information and subject to the safeguard- ing and reporting requirements of section 6103(p) of the Internal Revenue Code of 1954. 26 USC 6103. "(c) EXCEPTION FOR CERTAIN WAIVERS AND EXTENSIONS.— "(1) I N GENERAL.—The preceding provisions of this section shall not apply to any plan with respect to which the sum of— "(A) the outstanding balance of the accumulated funding deficiencies (within the meaning of section 302(a)(2) of this Act and section 412(a) of the Internal Revenue Code of 1954) 29 USC 1082. of the plan, 26 USC 412. "(B) the outstanding balance of the amount of waived funding deficiencies of the plan waived under section 303 of this Act or section 412(d) of such Code, and "(C) the outstanding balance of the amount of decreases in the minimum funding standard allowed under section 304 of this Act or section 412(e) of such Code, 29 USC 1084. is less than $2,000,000. "(2) ACCUMULATED FUNDING DEFICIENCIES.—For purposes of paragraph (1)(A), accumulated funding deficiencies shall include any increase in such amount which would result if all applica- tions for waivers of the minimum funding standard under section 303 of this Act or section 412(d) of the Internal Revenue 29 USC 1083. Code of 1954 and for extensions of the amortization period under section 304 of this Act or section 412(e) of such Code which are pending with respect to such plan were denied.". (B) CONFORMING AMENDMENT.—Section 211(c)(1) is 29 USC 1061. amended by striking out "306(c)" and inserting in lieu thereof "307(c)". (C) CLERICAL AMENDMENT.—The table of sections in sec- tion 1 is amended by striking out the item relating to section 306 and inserting in lieu thereof the following new items: "Sec. 306. Security for waivers of minimum funding standard and extensions of am- ortization period. "Sec. 307. Effective dates." (2) A M E N D M E N T S TO THE INTERNAL REVENUE CODE OF I 9 5 4 . — (A) I N GENERAL.—Subsection (f) of section 412 of the Internal Revenue Code of 1954 (relating to requirement 26 USC 412. that benefits may not be increased during waiver or exten- sion period) is amended by adding at the end thereof the following new paragraph: "(3) SECURITY FOR WAIVERS AND EXTENSIONS; CONSULTA- TIONS.— "(A) SECURITY MAY BE REQUIRED.—
100 STAT. 266 PUBLIC LAW 99-272—APR. 7, 1986 "(i) IN GENERAL.—Except as provided in subpara- graph (C), the Secretary may require an employer maintaining a defined benefit plan which is a single- employer plan (within the meaning of section 4001(a)(15) of the Employee Retirement Income Secu- 29 use 1301. rity Act of 1974) to provide security to such plan as a condition for granting or modifying a waiver under subsection (d) or an extension under subsection (e). "(ii) SPECIAL RULES.—Any security provided under clause (i) may be perfected and enforced only by the Pension Benefit Guaranty Corporation, or at the direc- tion of the Corporation, by a contributing sponsor Ante, p. 238. (within the meaning of section 4001(a)(13) of such Act), or a member of such sponsor's controlled group (within Ante, p. 238. the meaning of section 4001(a)(14) of such Act). "(B) CONSULTATION WITH THE PENSION BENEFIT GUARANTY CORPORATION.—Except as provided in subparagraph (C), the Secretary shall, before granting or modifying a waiver under subsection (d) or an extension under subsection (e) with respect to a plan described in subparagraph (A)(i)— "(i) provide the Pension Benefit Guaranty Corpora- tion with— "(I) notice of the completed application for any waiver, extension, or modification, and "(II) an opportunity to comment on such applica- tion within 30 days after receipt of such notice, and "(ii) consider— "(I) any comments of the Corporation under clause (i)(II), and "(II) any views of any employee organization (within the meaning of section 3(4) of the Employee 29 use 1002. Retirement Income Security Act of 1974) represent- ing participants in the plan which are submitted in writing to the Secretary in connection with such application. Information provided to the corporation under this subparagraph shall be considered tax return information and subject to the safeguarding and reporting requirements 26 use 6103. of section 6103(p). "(C) EXCEPTION FOR CERTAIN WAIVERS AND EXTENSIONS.— "(i) IN GENERAL.—The preceding provisions of this paragraph shall not apply to any plan with respect to which the sum of— "(I) the outstanding balance of the accumulated funding deficiencies (within the meaning of subsec- 29 use 1082. tion (a) and section 302(a) of such Act) of the plan, "(II) the outstanding balance of the amount of waived funding deficiencies of the plan waived 29 use 1083. under subsection (d) or section 303 of such Act, and "(III) the outstanding balance of the amount of decreases in the minimum funding standard al- lowed under subsection (e) or section 304 of such 29 u s e 1084. Act, is less than $2,000,000. "(ii) ACCUMULATED FUNDING DEFICIENCIES.—For pur- poses of clause (i)(I), accumulated funding deficiencies shall include any increase in such amount which would
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 267 result if all applications for waivers of the minimum funding standard under subsection (d) or section 303 of such Act and for extensions of the amortization period 29 USC 1083. under subsection (e) or section 304 of such Act which 29 USC 1084. are pending with respect to such plan were denied.". (B) CONFORMING AMENDMENTS.—Section 412(f) of the In- ternal Revenue Code of 1954 is amended— 26 USC 412. (i) by striking out the heading thereof and inserting in lieu thereof: "(f) REQUIREMENTS RELATING TO WAIVERS AND EXTENSIONS.—", and (ii) by striking out the heading of paragraph (1) thereof and inserting in lieu thereof: "(1) BENEFITS MAY NOT BE INCREASED DURING WAIVER OR EXTENSION PERIOD.—". (3) EFFECTIVE DATES.—The amendments made by this subsec- 29 USC 1085a tion shall apply with respect to applications for waivers, exten- note, sions, and modifications filed on or after the date of the enact- ment of this Act. (b) APPLICABLE INTEREST RATE UNDER ARRANGEMENTS PROVIDING FOR WAIVERS AND EXTENSIONS.— (1) AMENDMENTS TO ERISA.— (A) VARIANCES FROM THE MINIMUM FUNDING STANDARD.— Section 303(a) (29 U.S.C. 1083(a)) is amended by adding at the end thereof the following new sentence: "The interest rate used for purposes of computing the amortization charge described in section 302(b)(2)(C) for a variance 29 USC 1082. granted under this subsection shall be the rate determined under section 6621(b) of the Internal Revenue Code of 1954.". 26 USC 6621. (B) EXTENSIONS OF THE AMORTIZATION PERIOD.—Section 304(a) (29 U.S.C. 1084(a)) is amended by adding after and below paragraph (2) the following new sentence: "The interest rate applicable under any arrangement entered into by the Secretary in connection with an extension granted under this subsection shall be the rate determined under section 6621(b) of the Internal Revenue Code of 1954.". (2) AMENDMENTS TO INTERNAL REVENUE CODE.— (A) VARIANCES FROM THE MINIMUM FUNDING STANDARD.— Paragraph (1) of section 412(d) of the Internal Revenue Code of 1954 (relating to waivers in case of substantial business 26 USC 412. hardship) is amended by adding at the end thereof the following new sentence: "The interest rate used for pur- poses of computing the amortization charge described in section 412(b)(2)(C) for a variance granted under this subsec- tion shall be the rate determined under section 6621(b).". (B) EXTENSIONS OF THE AMORTIZATION PERIOD.—Subsection (e) of section 412 of such Code (relating to extension of amortization period) is amended by adding after and below paragraph (2) the following new sentence: "The interest rate applicable under any arrangement entered into by the Secretary in connection with an extension granted under this subsection shall be the rate determined under section 6621(b).".
100 STAT. 268 PUBLIC LAW 99-272—APR. 7, 1986 SEC. 11016. CONFORMING, CLARIFYING, TECHNICAL, AND MISCELLANE- OUS AMENDMENTS. (a) CONFORMING AMENDMENTS RELATING TO PLAN TERMI- NATIONS.— (1) ESTIMATED BENEFITS FOR CERTAIN SINGLE-EMPLOYER PLANS.—Section 4005(b)(2) (29 U.S.C. 1305(b)(2)) is amended— (A) by striking out "and" at the end of subparagraph (C); (B) by striking out the period at the end of subparagraph (D) and inserting in heu thereof ", and"; and (C) by adding at the end thereof the following: "(E) to pay to participants and beneficiaries the estimated amount of benefits which are guaranteed by the corporation under this title and the estimated amount of other benefits to 29 use 1344. which plan assets are allocated under section 4044, under single-employer plans which are unable to pay benefits when due or which are abandoned.". (2) CREDITS TO REVOLVING FUND.—Section 4005(b)(1) (29 U.S.C. 1305(b)(1)) is amended— (A) by striking out "and" at the end of subparagraph (E); (B) by redesignating subparagraph (F) as subparagraph (G); and (C) by inserting after subparagraph (E) the following new subparagraph: "(F) attorney's fees awarded to the corporation, and". (3) RESTORATION OF PLANS.—Section 4047 (29 U.S.C. 1347) is amended— (A) in the first sentence, by inserting "under section 4041 or 4042" after "terminated" each place it appears; and (B) in the second sentence, by striking out "section 4042" and inserting in lieu thereof "section 4041 or 4042". (4) TERMINATION DATE.—Section 4048(a) (29 U.S.C. 1348(a)) is amended— (A) by striking out "date of termination" and inserting in lieu thereof "termination date"; (B) by redesignating paragraphs (1) through (3) as para- graphs (2) through (4), respectively; (C) in paragraph (2) (as redesignated), by inserting "in a distress termination" after "terminated" and by striking out "section 4041" and inserting in lieu thereof "section 4041(c)"; (D) by inserting before paragraph (2) (as redesignated) the following new paragraph: "(1) in the case of a plan terminated in a standard termi- nation in accordance with the provisions of section 4041(b), the termination date proposed in the notice provided under section 4041(a)(2),"; and (E) in paragraph (4) (as redesignated), by striking out "in accordance with the provisions of either section" and insert- ing in lieu thereof "under section 4041(c) or 4042". (5) CONFORMING AMENDMENTS TO SPECIAL LIABILITY RULES RELATING TO CERTAIN SINGLE-EMPLOYER PLANS UNDER MULTIPLE CONTROLLED GROUPS.— (A) LIABILITY OF SUBSTANTIAL EMPLOYER FOR WITH- DRAWAL.— (i) Section 4063(a) (29 U.S.C. 1363(a)) is amended—
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 269 (I) by striking out "plan under which more than one employer makes contributions (other than a multiemployer plan)" and inserting in lieu thereof "single-employer plan which has two or more contributing sponsors at least two of whom are not under common control"; (II) in paragraph (1), by striking out "withdrawal of a substantial employer" and inserting in lieu thereof "withdrawal during a plan year of a substantial employer for such plan year"; (III) in paragraph (2), by striking out "of such employer" and all that follows and inserting in lieu thereof "of all persons with respect to the with- drawal of the substantial employer."; (IV) by striking out "whether such employer is liable for any amount under this subtitle with respect to the withdrawal" and inserting in lieu thereof "whether there is liability resulting from the withdrawal of the substantial employer"; and (V) by striking out "notify such employer" and inserting in lieu thereof "notify the liable per- sons". (ii) Section 4063(b) (29 U.S.C. 1363(b)) is amended— (I) by striking out "an employer" and all that follows down through "shall be liable" and insert- ing in lieu thereof "any one or more contributing sponsors who withdraw, during a plan year for which they constitute a substantial employer, from a single-employer plan which has two or more contributing sponsors at least two of whom are not under common control, shall, upon notification of such contributing sponsors by the corporation as provided by subsection (a), be liable, together with the members of their controlled groups,"; (II) by striking out "such employer's"; (III) by striking out "the employer's withdrawal" and inserting in lieu thereof "the withdrawal re- ferred to in subsection (a)(1)"; (IV) in paragraph (1), by striking out "such em- ployer" and inserting in lieu thereof "such contrib- uting sponsors"; (V) in paragraph (2), by striking out "all employ- ers" and inserting in lieu thereof "all contributing sponsors"; and (VI) by striking out "the liability of each such employer" and inserting in lieu thereof "such li- ability". (iii) Section 4063(c) (29 U.S.C. 1363(c)) is amended— (I) in paragraph (1), by striking out "In lieu of payment of his liability under this section the employer" and inserting in lieu thereof "In lieu of payment of a contributing sponsor's liability under this section, the contributing sponsor"; (II) in paragraph (2), by inserting "under section 4041(c) or 4042" after "terminated", by striking out "of such employer", and by striking out "to the
100 STAT. 270 PUBLIC LAW 99-272—APR. 7, 1986 employer (or his bond cancelled)" and inserting in lieu thereof "(or the bond cancelled)"; and (III) in paragraph (3), by inserting "under section 4041(c) or 4042" after "terminates" and by striking out "employer" in subparagraph (C) and inserting in lieu thereof "contributing sponsor". (iv) Section 4063(d) (29 U.S.C. 1363(d)) is amended— (I) by striking out "Upon a showing by the plan administrator of a plan (other than a multiem- ployer plan) that the withdrawal from the plan by any employer or employers has resulted" and inserting in lieu thereof "Upon a showing by the plan administrator of the plan that the withdrawal from the plan by one or more contributing spon- sors has resulted"; (II) by striking out "by employers"; (III) in paragraph (1), by striking out "their employer's" and inserting in lieu thereof "the"; and (IV) in paragraph (2), by striking out "termi- nation" and inserting in lieu thereof "plan termi- nated under section 4042". (v) Section 4063(e) (29 U.S.C. 1363(e)) is amended— (I) by striking out "to any employer or plan administrator"; and (II) by striking out "all other employers" and inserting in lieu thereof "contributing sponsors". (vi) The heading for section 4063 is amended by adding at the end thereof the following "FROM SINGLE- EMPLOYER PLANS UNDER MULTIPLE CONTROLLED GROUPS.". (B) A L L O C A T I O N O F LIABILITY U P O N T E R M I N A T I O N O F CER- T A I N SINGLE-EMPLOYER PLANS.— (i) Section 4064(a) (29 U.S.C. 1364(a)) is amended— (I) by striking out "all employers who maintain a plan under which more than one employer makes contributions (other than a multiemployer plan)" and inserting in lieu thereof "all contributing sponsors of a single-employer plan which has two or more contributing sponsors at least two of whom are not under common control"; and (II) by inserting "under section 4041(c) or 4042" (ii) Section 4064(b) (29 U.S.C. 1364(b)) is amended to read as follows: "(b) The corporation shall determine the liability with respect to each contributing sponsor and each member of its controlled group 29 use 1362. in a manner consistent with section 4062, except that— "(1) the amount of the liability determined under section 4062(b)(1) with respect to the entire plan— "(A) shall be determined without regard to clauses (iXII) and (ii) of section 4062(b)(1)(A), and "(B) shall be allocated to each controlled group by mul- tiplying such amount by a fraction— "(i) the numerator of which is the amount required to be contributed to the plan for the last 5 plan years
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 271 ending prior to the termination date by persons in such controlled group as contributing sponsors, and "(ii) the denominator of which is the total amount required to be contributed to the plan for such last 5 plan years by all persons as contributing sponsors, and clauses (i)(II) and (ii) of section 4062(b)(1)(A) shall be applied 29 USC 1362. separately with respect to each such controlled group, and "(2) the amount of the liability determined under section 4062(c)(1) with respect to the entire plan shall be allocated to each controlled group by multiplying such amount by the frac- tion described in paragraph (1)(B) in connection with such controlled group. The corporation may also determine the liability of each such contributing sponsor and member of its controlled group on any other equitable basis prescribed by the corporation in regulations.", (iii) The heading for section 4064 is amended to read as follows: "LIABIUTY ON TERMINATION OF SINGLE-EMPLOYER PLANS UNDER MULTIPLE CONTROLLED GROUPS". (C) ANNUAL NOTIFICATION TO SUBSTANTIAL EMPLOYERS.— Section 4066 (29 U.S.C. 1366) is amended— (i) by striking out "each plan under which contribu- tions are made by more than one employer (other than a multiemployer plan)" and inserting in lieu thereof "each single-employer plan which has at least two contributing sponsors at least two of whom are not under common control"; (ii) by striking out "any employer making contribu- tions under that plan" and inserting in lieu thereof "contributing sponsor of the plan"; and (iii) by striking out "that he is a substantial em- ployer" and inserting in lieu thereof "that such contributing sponsor (alone or together with members of such contributing sponsor's controlled group) con- stitutes a substantial employer". (6) ADDITIONAL AMENDMENTS RELATING TO RECOVERY OF AMOUNTS OF LIABILITY.— (A) Section 4067 (29 U.S.C. 1367) is amended— (i) in the heading, by striking out "EMPLOYER"; (ii) by striking out "employer or employers" and inserting in lieu thereof "contributing sponsors and members of their controlled groups"; and (iii) by inserting "of amounts of liability to the cor- poration accruing as of the termination date" after "deferred payment". (B) Section 4068 (29 U.S.C. 1368) is amended— (i) in the heading, by striking out "OF EMPLOYER"; (ii) in subsection (a), by striking out "employer or employers" the first place it appears and inserting in lieu thereof "person", by striking out "neglect or refuse" and inserting in lieu thereof "neglects or re- fuses", by inserting "to the extent of an amount equal to the unpaid amount described in section 4062(b)(l)(A)(i)" after "liability" and after "corpora- tion" the second place it appears, and by striking out
100 STAT. 272 PUBLIC LAW 99-272—APR. 7, 1986 "employer or employers" and inserting in lieu thereof "person"; (iii) in subsection (d)(1), by striking out "employer" and inserting in lieu thereof "liable person"; (iv) in subsection (d)(2), by striking out "employer" each place it appears and inserting in lieu thereof "liable person"; (v) in subsection (e), by striking out "employer or employers" and inserting in lieu thereof "liable person"; and (vi) by striking out subsection (c)(1) (29 U.S.C. 1368(c)(1)) and inserting in lieu thereof the following: "(c)(1) Except as otherwise provided under this section, the prior- ity of a lien imposed under subsection (a) shall be determined in the same manner as under section 6323 of the Internal Revenue Code of 26 use 6323. 1954 (as in effect on the date of the enactment of the Single- Ante, p. 237. Employer Pension Plan Amendments Act of 1986). Such section 6323 shall be applied for purposes of this section by disregarding subsec- tion (g)(4) and by substituting— "(A) 'lien imposed by section 4068 of the Employee Retire- 29 use 1368. ment Income Security Act of 1974' for 'lien imposed by section 6321' each place it appears in subsections (a), (b), (c)(1), (c)(4)(B), (d), (e), and (h)(5); "(B) 'the corporation' for 'the Secretary' in subsections (a) and (b)(9)(C); "(C) 'the payment of the amount on which the section 4068(a) lien is based' for 'the collection of any tax under this title' in subsection (b)(3); "(D) 'a person whose property is subject to the lien' for 'the taxpayer' in subsections (b)(8), (c)(2)(A)(i) (the first place it ap- pears), (c)(2)(A)(ii), (c)(2)(B), (c)(4)(B), and (c)(4)(C) (in the matter preceding clause (i)); "(E) 'such person' for 'the taxpayer' in subsections (c)(2)(A)(i) (the second place it appears) and (c)(4)(C)(ii); "(F) 'payment of the loan value of the amount on which the lien is based is made to the corporation' for 'satisfaction of a levy pursuant to section 6332(b)' in subsection (b)(9)(C); "(G) 'section 4068(a) lien' for 'tax lien' each place it appears in subsections (c)(1), (c)(2)(A), (c)(2)(B), (c)(3)(B)(iii), (c)(4)(B), (d), and (h)(5); and "(H) 'the date on which the lien is first filed' for 'the date of the assessment of the tax' in subsection (g)(3)(A).". (b) CLARIFICATION OF DESCRIPTION OF CERTAIN INFORMATION RE- QUIRED To BE FILED IN ANNUAL REPORT.— (1) IN GENERAL.—Section 103(d)(6) (29 U.S.C. 1023(d)(6)) is amended to read as follows: "(6) Information required in regulations of the Pension Bene- fit Guaranty Corporation with respect to: "(A) the current value of the assets of the plan, "(B) the present value of all nonforfeitable benefits for participants and beneficiaries receiving payments under the plan, "(C) the present value of all nonforfeitable benefits for all other participants and beneficiaries, "(D) the present value of all accrued benefits which are not nonforfeitable (including a separate accounting of such
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 273 benefits which a r e benefit c o m m i t m e n t s , a s defined i n sec- tion 4001(a)(16)), a n d 29 USC 1301. "(E) t h e a c t u a r i a l a s s u m p t i o n s a n d techniques used in d e t e r m i n i n g t h e values described in s u b p a r a g r a p h s (A) t h r o u g h (D).". (2) C O N F O R M I N G A M E N D M E N T . — S e c t i o n 104(a)(2)(A) (29 U.S.C. 1024(a)(2)(A)) is a m e n d e d by striking o u t t h e second sentence. (3) T R A N S I T I O N RULES.—Any regulations, modifications, or 29 USC 1023 waivers which h a v e been issued by t h e Secretary of Labor with "°*^- respect to section 103(d)(6) of t h e Employee R e t i r e m e n t Income Security Act of 1974 (as in effect immediately before t h e d a t e of 29 USC 1023. t h e e n a c t m e n t of t h i s Act) shall r e m a i n in full force a n d effect u n t i l modified by a n y regulations with respect t o such section 103(d)(6) prescribed by t h e Pension Benefit G u a r a n t y Corporation. (c) ADDITIONAL A M E N D M E N T S . — (1) D E F I N I T I O N FOR TITLE L—Section 3(37)(A) (29 U.S.C. 1002(37)(A)) is a m e n d e d by i n s e r t i n g " p e n s i o n " before " p l a n " . (2) N O T I C E O F REQUEST FOR WAIVERS O F M I N I M U M F U N D I N G STANDARDS AND RIGHT TO SUBMIT RELEVANT INFORMATION.—Sec- tion 303 (29 U.S.C. 1083) is a m e n d e d by inserting after subsec- tion (d) t h e following new subsection: "(e)(1) T h e Secretary of t h e T r e a s u r y shall, before g r a n t i n g a waiver u n d e r this section, r e q u i r e each applicant t o provide evi- dence satisfactory to such S e c r e t a r y t h a t t h e applicant h a s provided notice of t h e filing of t h e application for such waiver to each employee organization r e p r e s e n t i n g employees covered by t h e affected plan. "(2) T h e Secretary of t h e T r e a s u r y shall consider a n y r e l e v a n t information provided by a person t o w h o m notice w a s given u n d e r p a r a g r a p h (1).". (3) N O T I C E O F REQUEST FOR EXTENSIONS O F AMORTIZATION PERIOD A N D RIGHT TO SUBMIT RELEVANT INFORMATION.—Section 304 (29 U.S.C. 1084) is a m e n d e d by adding a t t h e end thereof t h e following n e w subsection: "(c)(1) T h e Secretary of t h e T r e a s u r y shall, before g r a n t i n g a n extension u n d e r t h i s section, r e q u i r e each applicant t o provide evidence satisfactory t o such Secretary t h a t t h e applicant h a s pro- vided notice of t h e filing of t h e application for such extension t o each employee organization r e p r e s e n t i n g employees covered by t h e affected plan. "(2) T h e Secretary of t h e T r e a s u r y shall consider a n y r e l e v a n t information provided by a person t o whom notice w a s given u n d e r p a r a g r a p h (1).". (4) A M E N D M E N T TO T H E INTERNAL REVENUE CODE O F 1954.— Subsection (f) of section 412 of t h e I n t e r n a l Revenue Code of 1954 (relating t o benefits m a y n o t be increased d u r i n g waiver or 26 USC 412. extension period), a s a m e n d e d by t h e preceding provisions of this title, is f u r t h e r a m e n d e d by adding a t t h e e n d thereof t h e following new p a r a g r a p h : "(4) ADDITIONAL REQUIREMENTS.— "(A) ADVANCE NOTICE.—The Secretary shall, before g r a n t - ing a waiver u n d e r subsection (d) or a n extension u n d e r subsection (e), r e q u i r e each applicant t o provide evidence satisfactory t o t h e Secretary t h a t t h e applicant h a s pro- vided notice of t h e filing of t h e application for such waiver
100 STAT. 274 PUBLIC LAW 99-272—APR. 7, 1986 or extension to each employee organization representing employees covered by the affected plan. "(B) CONSIDERATION OF RELEVANT INFORMATION.—The Secretary shall consider any relevant information p r o v e d by a person to whom notice was given under subparagraph (A).". (5) AUDIT OF PLANS TERMINATED IN STANDARD TERMINATION.— Section 4003(a) (29 U.S.C. 1303(a)) is amended by adding at the end thereof the following new sentence: "The corporation shall annually audit a statistically significant number of plans termi- Ante, p. 244. nating under section 4041(b) to determine whether participants and beneficiaries have received their benefit commitments. Each audit shall include a statistically significant number of participants and beneficiaries.". (6) REPEAL OF EXPIRED AUTHORITY.—Section 4004 (29 U.S.C. 1304) is repealed. (7) VOTING BY CORPORATION OF STOCK PAID AS LIABILITY.— Section 4005 (29 U.S.C. 1305) is amended by adding at the end thereof the following new subsection: "(g) Any stock in a person liable to the corporation under this title which is paid to the corporation by such person or a member of such person's controlled group in satisfaction of such person's liability under this title may be voted only by the custodial trustees or outside money managers of the corporation or fiduciaries with Ante, p. 258. respect to trusts to which the requirements of section 4049 apply.". (8) EFFECTIVE YEARS.—Section 4022(b)(7) (29 U.S.C. 1322(b)(7)) is amended by striking out "following" and inserting in lieu thereof "beginning with". (9) TREATMENT OF QUALIFIED PRERETIREMENT SURVIVOR ANNU- ITIES.—Section 4022 (29 U.S.C. 1322) is amended by adding at the end thereof the following new subsection: "(d) For purposes of subsection (a), a qualified preretirement 29 use 1055. survivor annuity (as defined in section 205(e)(1)) with respect to a participant under a terminated single-employer plan shall not be treated as forfeitable solely because the participant has not died as of the termination date.". (10) CLARIFICATION OF POWER TO COLLECT AMOUNTS DUE THE CORPORATION.—Section 4042(d)(l)(B)(ii) (29 U.S.C. 1342(d)(l)(B)(ii)) is amended by inserting after "amounts due the plan" the following: ", including but not limited to the power to collect from the persons obligated to meet the requirements of 29 use 1082. section 302 or the terms of the plan". (11) CONFORMING AMENDMENT.—Section 4042(d)(3) (29 U.S.C. 1342(d)(3)) is amended by striking out "same duties as a trustee appointed under section 47 of the Bankruptcy Act" and insert- ing in lieu thereof "same duties as those of a trustee under section 704 of title 11, United States Code". (12) CONFORMING AMENDMENT.—Section 4044(a) (29 U.S.C. 1344(a)) is amended by striking out "defined benefit". (13) CLERICAL CORRECTIONS.—Section 4044(a)(4) (29 U.S.C. 1344(a)(4)(A)) is amended— (A) in subparagraph (A), by striking out "section 4022(b)(5)" and inserting in lieu thereof "section 4022B(a)"; and (B) in subparagraph (B), by striking out "section 4022(b)(6)" and inserting in lieu thereof "section 4022(b)(5)".
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 275 (14) RELEASE OF LIEN.—Section 4068(e) (29 U.S.C. 1368(e)) is amended by striking out ", with the consent of the board of directors,". (d) STUDIES BY COMPTROLLER GENERAL.— 29 u s e 1143a. (1) IN GENERAL.—The Comptroller General of the United Congress. States may, pursuant to the request of any Member of Congress, study employee benefit plans, including the effects of such plans on employees, participants, and their beneficiaries. (2) ACCESS TO BOOKS, DOCUMENTS, ETC.—For the purpose of conducting studies under this subsection, the Comptroller Gen- eral, or any of his duly authorized representatives, shall have access to and the right to examine and copy any books, docu- ments, papers, records, or other recorded information— (A) within the possession or control of the administrator, sponsor, or employer of and persons providing services to any employee benefit plan, and (B) which the Comptroller General or his representative finds, in his own judgment, pertinent to such study. The Comptroller General shall not disclose the identity of any Classified individual or employer in making any information obtained information. under this subsection available to the public. (3) DEFINITIONS.—For purposes of this subsection, the terms "employee benefit plan", "participant", "administrator", "bene- ficiary' , "plan sponsor", "employee", and "employer" are de- fined in section 3 of the Employee Retirement Income Security Act of 1974. 29 u s e 1002. (4) EFFECTIVE DATE.—The preceding provisions of this subsec- 29 u s e 1143a tion shall be effective on the date of the enactment of this Act. note. (e) AMENDMENTS TO THE TABLE OF CONTENTS OF ERISA.—The table of contents in section 1 is amended— (1) by striking out the item relating to section 4004; (2) by striking out the item relating to section 4042 and inserting in lieu thereof the following new item: "Sec. 4042. Institution of termination proceedings by the corporation."; (3) by inserting after the item relating to section 4048 the following new item: "Sec. 4049. Distribution to participants and beneficiaries of liability payments to section 4049 trust."; and (4) by striking out the items relating to subtitle D of title IV and inserting in lieu thereof the following new items: "Subtitle D—Liability "Sec. 4061. Amounts payable by the corporation. "Sec. 4062. Liability for termination of single-employer plans under a distress ter- mination or a termination by the corporation. "Sec. 4063. Liability of substantial employer for withdrawal from single-employer plans under multiple controlled groups. "Sec. 4064. Liability on termination of single-employer plans under multiple con- trolled groups. "Sec. 4065. Annual report of plan administrator. "Sec. 4066. Annual notification of substantial employers. "Sec. 4067. Recovery of liability for plan termination. "Sec. 4068. Lien for liability. "Sec. 4069. Treatment of transactions to evade liability; effect of corporate reorga- nization. "Sec. 4070. Enforcement authority relating to terminations of single-employer plans.".
100 STAT. 276 PUBLIC LAW 99-272—APR. 7, 1986 29 u s e 1306 SEC. 11017. STUDIES. (a) SINGLE-EMPLOYER PENSION PLAN TERMINATION INSURANCE PREMIUM STUDY.— (1) IN GENERAL.—As soon as practicable after the date of the enactment of this Act, the Pension Benefit Guaranty Corpora- tion shall conduct a study of the premiums established under the single-employer pension plan termination insurance pro- gram under title IV of the Employee Retirement Income Secu- 29 use 1301. rity Act of 1974. (2) MATTERS TO BE STUDIED.—The Corporation shall specifi- cally consider in its study the following matters: (A) the effect of the amendments made by this title on the long-term stability of the single-employer pension plan termination insurance program under title IV of the Em- ployee Retirement Income Security Act of 1974, (B) alternatives to the current statutory mechanism with respect to proposals for changes in the premium levels under such program, (C) the methods currently used by the Corporation in projecting future program costs of the single-employer pen- sion plan termination insurance program, (D) alternative methods of projecting such future pro- gram costs and an evaluation of each such alternative method, (E) the methods currently used by the Corporation in determining premiums needed to allocate and adequately fund such future program costs, (F) alternative methods of making such premium deter- minations and an evaluation of each such alternative method, and (G) alternative premium bases upon which some or all of such projected future program costs would be allocated on an exposure-related or risk-related computation, which may take into account the different exposures or risks imposed on the Corporation by plan sponsors with different histories and under different circumstances. (3) SUBMISSION OF CORPORATION'S REPORT.—Not later than one year after the date of the enactment of this Act, the Corporation shall report the results of its study, together with any rec- ommendations for statutory changes, to an advisory council, to be appointed by the chairmen of the Committee on Education and Labor and the Committee on Ways and Means of the House of Representatives and the Committee on Labor and Human Resources and the Committee on Finance of the Senate. The advisory council shall be composed of representatives of single- employer plan sponsors, employee organizations representing single-employer plan participants, and members of the general public who are experts in the matters to be considered in the study. The members of the advisory council shall serve without compensation. (4) SUBMISSION OF COUNCIL'S REPORT TO CONGRESS.—Not later than 180 days after the date of the submission of the Corpora- tion's report to the advisory council under paragraph (3), the advisory council shall submit the results of the Corporation's study and the Corporation's recommendations, together with the recommendations of the council, to the Speaker of the
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 277 House of Representatives a n d t h e President pro tempore of t h e Senate. (5) COOPERATION BY THE PENSION BENEFIT GUARANTY CORPORA- TION AND OTHER FEDERAL AGENCIES.—The Corporation shall co- operate with t h e advisory council in reviewing t h e results of t h e Corporation's study a n d recommendations. In order to avoid unnecessary expense a n d duplication, to t h e extent not other- wise prohibited by law, t h e Corporation a n d a n y other Federal agency shall provide to t h e advisory council a n y data, analyses, or other relevant information related to t h e m a t t e r s u n d e r review. (b) OVERFUNDED PENSION P L A N S T U D Y . — (1) I N GENERAL.—As soon as practicable after t h e date of e n a c t m e n t of this Act, t h e Secretary of Labor shall conduct a study of terminations resulting in residual assets under section 4044(d) of t h e Employee R e t i r e m e n t Income Security Act of 1974. 29 u s e 1344. (2) REPORT.—No later t h a n M a y 1, 1986, t h e Secretary of Labor shall submit a report on t h e study conducted u n d e r p a r a g r a p h (1), together with a n y recommendations for s t a t u t o r y changes, to t h e chairmen of t h e Committee on Education a n d Labor a n d t h e Committee on Ways a n d Means of t h e House of Representatives a n d t h e Com.mittee on Labor a n d H u m a n Re- sources and t h e Committee on Finance of t h e Senate. SEC. 11018. LIMITATION ON REGULATIONS. 29 USC 1135 (a) REGULATORY T R E A T M E N T OF ASSETS OF R E A L ESTATE E N T I T I E S . — (1) I N GENERAL.—Except as a defense, no rule or regulation adopted p u r s u a n t to t h e Secretary's proposed regulation defin- ing "plan assets" for purposes of t h e Employee R e t i r e m e n t Income Security Act of 1974 (50 Fed. Reg. 961, J a n u a r y 8, 1985, as modified by 50 Fed. Reg. 6861, F e b r u a r y 15, 1985), or a n y reproposal thereof prior to t h e adoption of t h e regulations required to be issued in accordance with subsection (d), shall apply to a n y asset of a real estate entity in which a plan, account, or a r r a n g e m e n t subject to such Act invests if— (A) a n y interest in t h e entity is first offered to a plan, account, or a r r a n g e m e n t subject to such Act investing in t h e entity (hereinafter in this section referred to as a "plan investor") on or before t h e date which is 120 days after t h e date of publication of such rule or regulation as a final rule or regulation; (B) no plan investor acquires a n interest in t h e entity from a n issuer or u n d e r w r i t e r a t a n y time on or after t h e date which is 270 days after t h e date of publication of such r u l e or regulation a s a final rule or regulation (except p u r s u a n t to a contract or subscription binding on t h e plan investor a n d entered into, or tendered, before t h e expira- tion of such 270-day period, or p u r s u a n t to t h e exercise, on or before December 31, 1990, of a w a r r a n t which was t h e subject of a n effective registration u n d e r t h e Securities Act of 1933 (15 U.S.C. 77q et seq.) prior to t h e date of t h e i5USC77ae^ e n a c t m e n t of this section); and seq. (C) every interest in t h e entity acquired by a plan inves- tor (or contracted for or subscribed to by a plan investor) before t h e expiration of such 270-day period is a security—
100 STAT. 278 PUBLIC LAW 99-272—APR. 7, 1986 (i) which is part of an issue or class of securities which upon such acquisition or at any time during the offering period is held by 100 or more persons; (ii) the economic rights of ownership in respect of which are freely transferable; (iii) which is registered under the Securities Act of 15 use 77a et 1933; and ««9- (iv) which is part of an issue or class of securities which is registered under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) (or is so registered within three years of the effective date of the registration statement of such securities for purposes of the Securi- ties Act of 1933: Provided, That the issuer provides plan investors with such reports with respect to the offering period as are required with respect to such period by the Securities and Exchange Commission under such Acts and the rules and regulations promulgated there- under). In the case of partnerships organized prior to enactment of this section, the requirements of subparagraphs (iii) and (iv) shall not apply to initial limited partnership interests in an entity otherwise described above: Provided, That such entity was the subject of an effective registration under the Securities Act of 1933 prior to the date of the enactment of this section, such interests were issued solely for partnership organizational pur- poses in compliance with State limited partnership laws, and such interest has a value as of the date of issue of less than $20,000 and represents less than one percent of the total in- terests outstanding as of the completion of the offering period. (2) MAINTENANCE OF CURRENT REGULATORY TREATMENT.—No asset of any real estate entity described in paragraph (1) shall be treated as an asset of any plan investor for any purpose of 29 use 1001 the Employee Retirement Income Security Act of 1974 if the ^°^- assets of such entity would not have been assets of such plan investor under the provisions of— (A) Interpretive Bulletin 75-2 (29 CFR 2509 750-2); or (B) the regulations proposed by the Secretary of Labor and published— (i) on August 28,1979, at 44 Fed. Reg. 50363; (ii) on June 6, 1980, at 45 Fed. Reg. 38084; (iii) on January 8, 1985, at 50 Fed. Reg. 961; or (iv) on February 15, 1985, at 50 Fed. Reg. 6361, without regard to any limitation of any effective date pro- posed therein, (b) DEFINITIONS AND SPECIAL RULES.—For purposes of this section— (1) The term "real estate entity" means an entity which, at any time within two years after the closing of its offering period has invested or has contracted to invest at least 75 percent of the value of its net assets available for investment in direct or indirect ownership of "real estate assets" or "interests in real property". (2) The term "real estate asset" means real property (includ- ing an interest in real property) and any share of stock or beneficial interest, partnership interest, depository receipt, or any other interest in any other real estate entity.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 279 (3) The term "interest in real property" includes, directly or indirectly, the following: (A) the ownership or co-ownership of land or improve- ments thereon; (B) any mortgage (including an interest in or co-owner- ship of any mortgage, leasehold mortgage, pool of mort- gages, deed of trust, or similar instrument) on land or improvements thereon, (C) any leasehold of land or improvements thereon; and (D) any option to acquire any of the foregoing, but does not include any mineral, oil, or gas royalty interest. (4) Whether the economic rights of ownership with respect to a security are "freely transferable" shall be determined based upon all the facts and circumstances, but ordinarily none of the following, alone or in any combination, shall cause the economic rights of ownership to be considered not freely transferable— (A) any requirement that not less than a minimum number of shares or units of such security be transferred or assigned by any investor: Provided, That such requirement does not prevent transfer of all of the then remaining shares or units held by an investor; (B) any prohibition against transfer or assignment of such security or rights in respect thereof to an ineligible or unsuitable investor; (C) any restriction on or prohibition against any transfer or assignment which would either result in a termination or reclassification of the entity for Federal or State tax purposes or which would violate any State or Federal stat- ute, regulation, court order, judicial decree, or rule of law; (D) any requirement that reasonable transfer or admin- istrative fees be paid in connection with a transfer or assignment; (E) any requirement that advance notice of a transfer or assignment be given to the entity and any requirement regarding execution of documentation evidencing such transfer or assignment (including documentation setting forth representations from either or both of the transferor or transferee as to compliance with any restriction or requirement described in this section or requiring compli- ance with the entity's governing instruments); (F) any restriction on substitution of an assignee as a limited partner of a partnership, including a general part- ner consent requirement: Provided, That the economic benefits of ownership of the assignor may be transferred or assigned without regard to such restriction or consent (other than compliance with any other restriction described in this section); (G) any administrative procedure which establishes an effective date, or an event such as the completion of the offering, prior to which a transfer or assignment will not be effective; and (H) any limitation or restriction on transfer or assign- ment which is not created or imposed by the issuer or any person acting for or on behalf of such issuer, (c) No EFFECT ON SECRETARY'S AUTHORITY OTHER THAN AS PRO- Regulations. viDED.—Except as provided in subsection (a), nothing in this section shall limit the authority of the Secretary of Labor to issue regula-
100 STAT. 280 PUBLIC LAW 99-272—APR. 7, 1986 tions or otherwise interpret section 3(21) of the Employee Retire- 29 use 1002. ment Income Security Act of 1974. (d) TIME LIMIT FOR FINAL REGULATIONS.—The Secretary of Labor shall adopt final regulations defining "plan assets' by December 31, 1986. (e) EFFECTIVE DATE.—The preceding provisions of this section shall take effect on the date of the enactment of this Act. SEC. 11019. EFFECTIVE DATE OF TITLE; TEMPORARY PROCEDURES. 29 u s e 1341 (a) I N GENERAL.—Except a s otherwise provided i n this title, t h e J^ot^- amendments made by this title shall be effective as of January 1, 1986, except that such amendments shall not apply with respect to terminations for which— (1) notices of intent to terminate were filed with the Pension Benefit Guaranty Corporation under section 4041 of the Em- Ante, p. 244. ployee Retirement Income Security Act of 1974 before such date, or (2) proceedings were commenced under section 4042 of such Ante, p. 253. Act before such date. (b) TRANSITIONAL RULES.— (1) IN GENERAL.—In the case of a single-employer plan termi- nation for which a notice of intent to terminate was filed with the Pension Benefit Guaranty Corporation under section 4041 of the Employee Retirement Income Security Act of 1974 (as in effect before the amendments made by this title) on or after January 1, 1986, but before the date of the enactment of this Act, the amendments made by this title shall apply with respect to such termination, as modified by paragraphs (2) and (3). (2) DEEMED COMPLIANCE WITH NOTICE REQUIREMENTS.—The requirements of subsections (a)(2), (b)(1)(A), and (c)(1)(A) of sec- tion 4041 of the Employee Retirement Income Security Act of 1974 (as amended by this title) shall be considered to have been met with respect to a termination described in paragraph (1) if— (A) the plan administrator provided notice to the partici- pants in the plan regarding the termination in compliance with applicable regulations of the Pension Benefit Guar- anty Corporation as in effect on the date of the notice, and (B) the notice of intent to terminate provided to the Pension Benefit Guaranty Corporation in connection with the termination was filed with the Corporation not less than 10 days before the proposed date of termination speci- fied in the notice. For purposes of section 4041 of such Act (as amended by this title), the proposed date of termination specified in the notice of intent to terminate referred to in subparagraph (B) shall be considered the proposed termination date. (3) SPECIAL TERMINATION PROCEDURES.— (A) IN GENERAL.—This paragraph shall apply with re- spect to any termination described in paragraph (1) if, within 90 days after the date of enactment of this Act, the plan administrator notifies the Corporation in writing— (i) that the plan administrator wishes the termi- nation to proceed as a standard termination under section 4041(b) of the Employee Retirement Income Security Act of 1974 (as amended by this title) in accordance with subparagraph (B),
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 281 (ii) that the plan administrator wishes the termi- nation to proceed as a distress termination under sec- tion 4041(c) of such Act (as amended by this title) in Ante, p. 248. accordance with subparagraph (C), or (iii) that the plan administrator wishes to stop the termination proceedings in accordance with subpara- graph (D). (B) TERMINATIONS PROCEEDING AS STANDARD TERMI- NATION.— (i) TERMINATIONS FOR WHICH SUFFICIENCY NOTICES HAVE NOT B E E N ISSUED.— (I) IN GENERAL.—In the case of a plan termi- nation described in paragraph (1) with respect to which the Corporation has been provided the notification described in subparagraph (A)(i) and with respect to which a notice of sufficiency has not been issued by the Corporation before the date of the enactment of this Act, if, during the 90-day period commencing on the date of the notice re- quired in subclause (II), all benefit commitments under the plan have been satisfied, the termi- nation shall be treated as a standard termination under section 4041(b) of such Act (as amended by this title). (II) SPECIAL NOTICE REGARDING SUFFICIENCY FOR TERMINATIONS FOR WHICH NOTICES OF SUFFICIENCY HAVE NOT BEEN ISSUED AS OF DATE OF ENACTMENT.— In the case of a plan termination described in paragraph (1) with respect to which the Corpora- tion has been provided the notification described in subparagraph (A)(i) and with respect to which a notice of sufficiency has not been issued by the Corporation before the date of the enactment of this Act, the Corporation shall make the deter- minations described in section 4041(c)(3)(A) (i) and (ii) (as amended by this title) and notify the plan administrator of such determinations as provided in section 4041(c)(3)(A)(iii) (as amended by this title). (ii) TERMINATIONS FOR WHICH NOTICES OF SUFFICIENCY HAVE BEEN ISSUED.—In the case of a plan termination described in paragraph (1) with respect to which the Corporation has been provided the notification de- scribed in subparagraph (A)(i) and with respect to which a notice of sufficiency has been issued by the Corporation before the date of the enactment of this Act, clause (i)(I) shall apply, except that the 90-day period referred to in clause (i)(I) shall begin on the date of the enactment of this Act. (C) TERMINATIONS PROCEEDING AS DISTRESS TERMI- NATION.—In the case of a plan termination described in paragraph (1) with respect to which the Corporation has been provided the notification described in subparagraph (A)(ii), if the requirements of section 4041(c)(2)(B) of such Act (as amended by this title) are met, the termination Ante, p. 248. shall be treated as a distress termination under section 4041(c) of such Act (as amended by this title).
100 STAT. 282 PUBLIC LAW 99-272—APR. 7, 1986 (D) TERMINATION OF PROCEEDINGS BY PLAN ADMINIS- TRATOR.— (i) I N GENERAL.—Except as provided in clause (ii), in the case of a plan termination described in paragraph (1) with respect to which the Corporation has been provided the notification described in subparagraph (AXiii), the termination shall not take effect. (ii) TERMINATIONS WITH RESPECT TO WHICH FINAL DIS- TRIBUTION OF ASSETS HAS COMMENCED.—Clause (i) shall not apply with respect to a termination with respect to which the final distribution of assets has commenced before the date of the enactment of this Act unless, within 90 days after the date of the enactment of this Act, the plan has been restored in accordance with procedures issued by the Corporation pursuant to subsection (c). (E) AUTHORITY OF CORPORATION TO EXTEND 90-DAY PERIODS TO PERMIT STANDARD TERMINATION.—The Corporation may, on a case-by-case basis in accordance with subsection (c), provide for extensions of the applicable 90-day period re- ferred to in clause (i) or (ii) of subparagraph (B) if it is demonstrated to the satisfaction of the Corporation that— (i) the plan could not otherwise, pursuant to the preceding provisions of this paragraph, terminate in a termination treated as a standard termination under section 4041(b) of the Employee Retirement Income Ante, p. 244. Security Act of 1974 (as amended by this title), and (ii) the extension would result in a greater likelihood that benefit commitments under the plan would be paid in full, except that any such period may not be so extended beyond one year after the date of the enactment of this Act. (c) AUTHORITY TO PRESCRIBE TEMPORARY PROCEDURES.—The Pen- sion Benefit Guaranty Corporation may prescribe temporary proce- dures for purposes of carrying out the amendments made by this title during the 180-day period beginning on the date described in subsection (a). TITLE XII—INCOME SECURITY AND RELATED PROGRAMS Subtitle A—Old-Age, Survivors, and Disability Insurance Program SEC. 12101. DEMONSTRATION PROJECTS INVOLVING THE DISABILITY INSURANCE PROGRAM. (a) EXTENSION OF WAIVER AUTHORITY.—Section 505(a)(3) of the 42 use 1310 Social Security Disability Amendments of 1980 is amended by note. inserting "which is initiated before June 10,1990" after "demonstra- tion project under paragraph (1)". 42 use 1310 (b) INTERIM REPORTS.—Section 505(a)(4) of such Amendments is note- amended to read as follows: "(4) On or before June 9 in each of the years 1986, 1987, 1988, and 1989, the Secretary shall submit to the Congress an interim report
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 283 on the progress of the experiments and demonstration projects carried out under this subsection together with any related data and materials which the Secretary may consider appropriate.". (c) FINAL REPORT.—Section 505(c) of such Amendments is 42 USC1310 amended by striking out "under this section no later than five years note, after the date of the enactment of this Act" and inserting in lieu thereof "under subsection (a) no later than June 9, 1990". (d) INCORPORATION OF CERTAIN REPORTS INTO SECRETARY'S ANNUAL REPORT TO CONGRESS.—Section 1110(b) of the Social Security Act is 42 USC 1310. amended by adding at the end thereof the following new paragraph: "(3) All reports of the Secretary with respect to projects carried out under this subsection shall be incorporated into the Secretary's annual report to the Congress required by section 704.". 42 USC 904. SEC. 12102. DISABILITY ADVISORY COUNCIL. 42 USC 907. (a) APPOINTMENT OF COUNCIL.—Within ninety days after the date of the enactment of this Act, the Secretary of Health and Human Services shall appoint a special Disability Advisory Council. (b) MEMBERSHIP OF COUNCIL.—The Disability Advisory Council shall consist of a Chairman and not more than twelve other persons, appointed by the Secretary without regard to the provisions of title 5, United States Code, governing appointments in the competitive service. The appointed members shall, to the extent possible, rep- resent organizations of employers and employees in equal numbers, medical and vocational experts from the public or private sector (or from both such sectors), organizations representing disabled people, and the public. The Council shall meet as often as may be necessary for the performance of its duties under this section, but not less often than quarterly. (c) DUTIES OF COUNCIL.—(1) The Advisory Council shall conduct studies and make recommendations with respect to the medical and vocational aspects of disability under both title II and title XVI of the Social Security Act, including studies and recommendations 42 USC 401, relating to— l^^l- (A) the effectiveness of vocational rehabilitation programs for recipients of disability insurance benefits or supplemental secu- rity income benefits; (B) the question of using specialists for completing medical and vocational evaluations at the State agency level in the disability determination process, including the question of requiring, in cases involving impairments other than mental impairments, that the medical portion of each case review (as well as any applicable assessment of residual functional capac- ity) be completed by an appropriate medical specialist employed by the appropriate State agency before any determination can be made with respect to the impairment involved; (C) alternative approaches to work evaluation in the case of applicants for benefits based on disability and recipients of such benefits undergoing reviews of their cases, including immediate referral of any such applicant or recipient to a vocational rehabilitation agency for services at the same time he or she is referred to the appropriate State agency for a disability determination; (D) the feasibility and appropriateness of providing work evaluation stipends for applicants for and recipients of benefits based on disability in cases where extended work evaluation is
100 STAT. 284 PUBLIC LAW 99-272—APR. 7, 1986 needed prior to the final determination of their eligibility for such benefits or for further rehabilitation and related services; (E) the standards, policies, and procedures which are applied or used by the Secretary of Health and Human Services with respect to work evaluations in order to determine whether such standards, policies, and procedures will provide appropriate screening criteria for work evaluation referrals in the case of applicants for and recipients of benefits based on disability; and (F) possible criteria for assessing the probability that an applicant for or recipient of benefits based on disability will benefit from rehabilitation services, taking into consideration not only whether the individual involved will be able after rehabilitation to engage in substantial gainful activity but also whether rehabilitation services can reasonably be expected to improve the individual's functioning so that he or she will bo able to live independently or work in a sheltered environment. (2) For purposes of this subsection, "work evaluation" includes (with respect to any individual) a determination of— (A) such individual's skills, ' ' (B) the work activities or types of work activity for which such individual's skills are insufficient or inadequate, (C) the work activities or types of work activity for which such individual might potentially be trained or rehabilitated, (D) the length of time for which such individual is capable of sustaining work (including, in the case of the mentally im- paired, the ability to cope with the stress of competitive work), and (E) any modifications which may be necessary, in work activi- ties for which such individual might be trained or rehabilitated, in order to enable him or her to perform such activities. (d) PROVISION OF ASSISTANCE TO COUNCIL; COMPENSATION OF MEM- BERS.—(1) The Disability Advisory Council is authorized to engage such technical assistance, including actuarial services, as may be required to carry out its functions, and the Secretary of Health and Human Services shall, in addition, make available to the Council such secretarial, clerical, and other assistance and such actuarial and other pertinent data prepared by the Department of Health and Human Services as the Council may require to carry out such functions. (2) Appointed members of the Council, while serving on business of the Council (inclusive of traveltime), shall receive compensation at rates fixed by the Secretary, but not exceeding $100 per day, and, while so serving away from their homes or regular places of business, they may be allowed travel expenses, including per diem in lieu of subsistence, as authorized by section 5703 of title 5, United States Code, for persons in the Government employed intermittently. (e) REPORTS.—The Disability Advisory Council shall submit a report (including any interim reports the Council may have issued) of its findings and recommendations to the Secretary of Health and Human Services not later than December 31, 1986; and such report and recommendations shall thereupon be transmitted to the Con- gress and to the Board of Trustees of the Federal Disability Insur- ance Trust Fund. (f) TERMINATION.—After the date of the transmittal to the Con- gress of the report required by subsection (e), the Disability Advisory Council shall cease to exist.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 285 (g) CONFORMING AMENDMENTS.—(1) Section 706 of the Social Secu- rity Act is amended— 42 USC 907. (A) by inserting "except as provided in subsection (e)," imme- diately before "the Secretary shall appoint" in subsection (a); and (B) by adding at the end thereof the following new subsection: "(e) No Advisory Council on Social Security shall be appointed under subsection (a) in 1985 (or in any subsequent year prior to 1989).". (2) Section 12 of the Social Security Disability Benefits Reform Act of 1984 is repealed. 42 USC 907 note. SEC. 12103. TAXATION OF SOCIAL SECURITY BENEFITS RECEIVED BY CERTAIN CITIZENS OF POSSESSIONS OF THE UNITED STATES. (a) GENERAL RULE.—Section 932 of the Internal Revenue Code of 1954 (relating to citizens of possessions of the United States) is 26 USC 932. amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection: "(c) TAXATION OF SOCIAL SECURITY BENEFITS.—If, for purposes of an income tax imposed in the possession, any social security benefit (as defined in section 86(d)) received by an individual described in 26 USC 86. subsection (a) is treated in a manner equivalent to that provided by section 86, then— "(1) such benefit shall be exempt from the tax imposed by section 871, and Infra. "(2) no amount shall be deducted and withheld from such benefit under section 1441. 26 USC 1441. Any income tax imposed in a possession which treats social security benefits (as defined in section 86(d)) in a manner equivalent to section 86, and which first becomes effective within 15 months after the date of the enactment of this subsection, shall, for purposes of this section, be deemed to have been in effect as of January 1, 1984.". (b) CROSS REFERENCE.—Paragraph (3) of section 871(a) of such Code 26 USC 871. is amended by adding at the end thereof (after and below subpara- graph (B)) the following new sentence: "For treatment of certain citizens of possessions of the United States, see section 932(c)." (c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 932 apply to benefits received after December 31, 1983, in taxable years note, ending after such date. SEC. 12104. APPLICATION OF DEPENDENCY TEST TO ADOPTED GREAT- GRANDCHILDREN FOR PURPOSES OF CHILD'S INSURANCE BENEFITS. (a) TREATMENT OF GRANDCHILDREN AND GREAT-GRANDCHILDREN ALIKE.—Section 202(d)(8)(D)(ii)(III) of the Social Security Act is 42 USC 402. amended by inserting "or great-grandchild" after "grandchild" (b) EFFECTIVE DATE.—The amendment made by subsection (a) 42 USC 402 shall apply with respect to benefits for which application is filed ^°^- after the date of the enactment of this Act.
100 STAT. 286 PUBLIC LAW 99-272—APR. 7, 1986 SEC. 12105. ELIMINATION OF REQUIREMENT FOR PUBLICATION OF REVI- SIONS IN PRE-1979 BENEFIT TABLE. 42 use 415. Section 215(i)(4) of the Social Security Act is amended by striking out "the Secretary shall publish" and all that follows in the last sentence and inserting in lieu thereof the following: "the Secretary shall revise the table of benefits contained in subsection (a), as in effect in December 1978, in accordance with the requirements of paragraph (2)(D) of this subsection £is then in effect, except that the requirement in such paragraph (2)(D) that the Secretary publish such revision of the table of benefits in the Federal Register shall not apply.". SEC. 12106. FORMULA CLARIFICATION. 42 use 910. Section 709(b)(1) of the Social Security Act is amended to read as follows: "(1) the balance in such Trust Fund as of the beginning of 42 use 401. such year, including the taxes transferred under section 201(a) on the first day of such year and reduced by the outstanding amount of any loan (including interest thereon) theretofore 42 use 13951. made to such Trust Fund under section 201(1) or 1817(j), to". SEC. 12107. EXTENSION OF 15-MONTH REENTITLEMENT PERIOD TO CHILDHOOD DISABILITY BENEFICIARIES SUBSEQUENTLY ENTITLED. 42 use 402. (a) IN GENERAL.—Section 202(d)(6)(E) of the Social Security Act is amended by striking out "the third month following the month in which he ceases to be under such disability" and inserting in lieu thereof "the termination month (as defined in paragraph (l)(G)(i)), subject to section 223(e),". 42 use 423. (b) CONFORMING AMENDMENT.—Section 223(e) of such Act is amended by inserting "(d)(6)(A)(ii), (dX6)(B)," after "(d)(l)(B)(ii),". 42 use 402 note. (c) EFFECTIVE DATE.—The amendments made by this section are effective December 1, 1980, and shall apply with respect to any individual who is under a disability (as defined in section 223(d) of the Social Security Act) on or after that date. SEC. 12108. CHARGING OF WORK DEDUCTIONS AGAINST AUXILIARY BENEFITS IN DISABILITY CASES. 42 use 403. (a) IN GENERAL.—(1) Section 203(a)(4) of the Social Security Act is amended by striking out "preceding" in the first sentence. (2) Section 203(aX6) of such Act is amended— (A) by striking out "and (5)" and inserting in lieu thereof "(4), and (5)"; and (B) by striking out ", whether or not" and all that follows down through "further reduced" and inserting in lieu thereof "shall be reduced". 42 use 403 note. (b) EFFECTIVE DATE.—The amendments made by subsection (a) shall apply with respect to benefits payable for months after Decem- ber 1985. SEC. 12109. PERFECTING AMENDMENTS TO DISABILITY OFFSET PRO- VISION. 42 use 424a. (a) IN GENERAL.—(1) Section 224(a)(2) of the Social Security Act is amended to read as follows: "(2) such individual is entitled for such month to— "(A) periodic benefits on account of his or her total or partial disability (whether or not permanent) under a work-
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 287 men's compensation law or plan of the United States or a State, or "(B) periodic benefits on account of his or her total or partial disability (whether or not permanent) under any other law or plan of the United States, a State, a political subdivision (as that term is used in section 218(b)(2)), or an 42 USC 418. instrumentality of two or more States (as that term is used in section 218(k)), other than (i) benefits payable under title 38, United States Code, (ii) benefits payable under a pro- gram of assistance which is based on need, (iii) benefits based on service all or substantially all of which was in- cluded under an agreement entered into by a State and the Secretary under section 218, and (iv) benefits under a law or plan of the United States based on service all or part of which is employment as defined in section 210,". 42 USC 410. (2) Section 224(a)(2)(B) of such Act (as amended by paragraph (1) of 42 USC 424a. this subsection) is further amended by striking out "all or part of which" in clause (iv) and inserting in lieu thereof "all or substan- tially all of which". (b) EFFECTIVE DATES.—(1) The amendment made by subsection 42 USC 424a (a)(1) shall be effective as though it had been included or reflected in ^°^- the amendment made by section 2208(a)(3) of the Omnibus Budget Reconciliation Act of 1981. 42 USC 424a. (2) The amendment made by subsection (a)(2) shall apply only with respect to monthly benefits payable on the basis of the wages and self-employment income of individuals who become disabled (within the meaning of section 223(d) of the Social Security Act) after the 42 USC 423. month in which this Act is enacted. SEC. 12110. STATE COVERAGE AGREEMENTS. (a) MAXIMUM PERIOD OF RETROACTIVE COVERAGE.—Section 218(f)(1) of the Social Security Act is amended by striking out "is agreed to 42 USC 418. by the Secretary and the State" and inserting in lieu thereof "is mailed or delivered by other means to the Secretary". Ot>) POSITIONS COMPENSATED SOLELY ON FEE BASIS.—Section 218(u)(3) of such Act is amended by striking out "is agreed to by the Secretary and the State" and inserting in lieu thereof "is mailed or delivered by other means to the Secretary". (c) EFFECTIVE DATE.—The amendments made by this section shall 42 USC 418 note, apply with respect to agreements and modifications of agreements which are mailed or delivered to the Secretary of Health and Human Services (under section 218 of the Social Security Act) on or after the date of the enactment of this Act. SEC. 12111. EFFECT OF EARLY DELIVERY OF BENEFIT CHECKS. (a) FOR O A S D I PURPOSES.—Section 708 of the Social Security Act is amended by adding at the end thereof the following new 42 USC 909. subsection: "(c) For purposes of computing the 'OASDI trust fund ratio' under section 201(1), the 'OASDI fund ratio' under section 215(i), and the 42 USC 401. 'balance ratio' under section 709(b), benefit checks delivered before ^ | USC 415. the end of the month for which they are issued by reason of subsection (a) of this section shall be deemed to have been delivered on the regularly designated delivery date.". Ot)) FOR INCOME TAX PURPOSES.—Section 86(d) of the Internal Revenue Code of 1954 (relating to taxation of social security and tier 26 usc 86.
100 STAT. 288 PUBLIC LAW 99-272—APR. 7, 1986 1 railroad retirement benefits) is amended by adding at the end thereof the following new paragraph: "(5) EFFECT OF EARLY DELIVERY OF BENEFIT CHECKS.—For pur- poses of subsection (a), in any case where section 708 of the 42 use 909. Social Security Act causes social security benefit checks to be delivered before the end of the calendar month for which they are issued, the benefits involved shall be deemed to have been received in the succeeding calendar month.". 42 use 909 note. (c) EFFECTIVE DATE.—The amendments made by this section shall apply with respect to benefit checks issued for months ending after the date of the enactment of this Act. SEC. 12112. EXEMPTION FROM SOCIAL SECURITY COVERAGE FOR RE- TIRED FEDERAL JUDGES ON ACTIVE DUTY. (a) AMENDMENT TO SOCIAL SECURITY ACT.—Section 209 of the 42 use 409. Social Security Act is amended in the third to the last paragraph thereof (added by section 101(c)(1) of the Social Security Amend- ments of 1983) by striking out "shall, subject to the provisions of subsection (a) of this section, include" and inserting in lieu thereof "shall not include". (b) AMENDMENT TO INTERNAL REVENUE CODE.—Section 3121(i)(5) of 26 use 3121. the Internal Revenue Code of 1954 is amended by striking out "shall, subject to the provisions of subsection (a)(1) of this section, include" and inserting in lieu thereof "shall not include". 42 use 409 note. (c) EFFECTIVE DATE.—The amendments made by this section shall be effective with respect to service performed after December 31, 1983. SEC. 12113. RECOVERY OF OVERPAYMENTS. 42 use 404. (a) OASDI PAYMENTS.—Section 204(a) of the Social Security Act is amended— (1) by inserting "(1)" after "204(a)"; (2) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B); and (3) by adding at the end thereof the following new paragraph: "(2) Notwithstanding any other provision of this section, when any payment of more than the correct amount is made to or on behalf of an individual who has died, and such payment— "(A) is made by direct deposit to a financial institution; "(B) is credited by the financial institution to a joint account of the deceased individual and another person; and "(C) such other person was entitled to a monthly benefit on the basis of the same wages and self-employment income as the deceased individual for the month preceding the month in which the deceased individual died, the amount of such payment in excess of the correct amount shall be treated as a payment of more than the correct amount to such other person.". 42 use 1383. (b) SSI PAYMENTS.—Section 1631(b) of the Social Security Act is amended by redesignating paragraphs (2) through (4) as paragraphs (3) through (5), and by inserting after paragraph (1) the following new paragraph: "(2) Notwithstanding any other provision of this section, when any payment of more than the correct amount is made to or on behalf of an individual who has died, and such payment— "(A) is made by direct deposit to a financial institution;
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 289 "(B) is credited by the financial institution to a joint account of the deceased individual and another person; and "(C) such other person is the surviving spouse of the deceased individual, and was eligible for a payment under this title (including any State supplementation payment paid by the Secretary) as an eligible spouse (or as either member of an eligible couple) for the month in which the deceased individual died, the amount of such payment in excess of the correct amount shall be treated as a payment of more than the correct amount to such other person.". (c) EFFECTIVE DATE.—The amendments made by this section shall 42 USC 404 apply only in the case of deaths of which the Secretary is first "^te. notified on or after the date of the enactment of this Act. SEC. 12114. COVERAGE OF CONNECTICUT STATE POLICE. Notwithstanding any provision of section 218 of the Social Secu- 42 USC 418 rity Act, the Secretary of Health and Human Services shall, upon ^°^^- the request of the Governor of Connecticut, modify the agreement under such section between the Secretary and the State of Connecti- cut to provide that service performed after the date of the enact- ment of this Act by members of the Division of the State Police within the Connecticut Department of Public Safety, who are hired on or after May 8, 1984, and who are members of the tier II plan of the Connecticut State Employees Retirement System, shall be cov- ered under such agreement. SEC. 12115. GENERAL EFFECTIVE DATE OF SUBTITLE. Except as otherwise specifically provided, the preceding provisions 42 USC 415 of this subtitle, including the amendments made thereby, shall take ^°^- effect on the first day of the month following the month in which this Act is enacted. Subtitle B—Supplemental Security Income Program SEC. 12201. AMENDMENTS RELATING TO STATE SUPPLEMENTATION UNDER SSI. (a) PASSTHROUGH RELATING TO OPTIONAL STATE SUPPLEMENTA- TION.—Section 1618 of the Social Security Act is amended by 42 USC I382g. adding at the end thereof the following new subsection: "(f) The Secretary shall not find that a State has failed to meet the requirements imposed by subsection (a) with respect to the levels of its supplementary payments for the period January 1, 1984, through December 31, 1985, if in the period January 1, 1986, through Decem- ber 31, 1986, its supplementary payment levels (other than to recipi- ents oif benefits determined under section 1611(e)(1)(B)) are not less 42 USC 1382. than those in effect in December 1976, increased by a percentage equal to the percentage by which payments under section 1611(b) of this Act and section 211(a)(1)(A) of Public Law 93-66 have been 42 USC 1382 increased as a result of all adjustments under section 1617 (a) and (c) "°*®- which have occurred after December 1976 and before February ^^ ^ ° ^ ^^^^^• 1986.". 71-194 0 - 89 - 12 : QL 3 Parti
100 STAT. 290 PUBLIC LAW 99-272—APR. 7, 1986 (b) FEDERAL ADMINISTRATION OF STATE SUPPLEMENTATION.—Sec- 42 use I382e. tion 1616(b) of such Act is amended by adding at the end thereof (after and below paragraph (2)) the following new sentence: "At the option of the State (but subject to paragraph (2) of this subsection), the agreement between the Secretary and such State entered into under subsection (a) shall be modified to provide that the Secretary will make supplementary payments, on and after an effective date to be specified in the agreement as so modified, to individuals receiving benefits determined under section 42 u s e 1382. 1611(eXl)(B).". SEC. 12202. PRESERVATION OF BENEFIT STATUS FOR DISABLED WIDOWS AND WIDOWERS WHO LOST SSI BENEFITS BECAUSE OF 1983 CHANGES IN ACTUARIAL REDUCTION FORMULA. 42 use 1383c. (a) IN GENERAL.—Section 1634 of the Social Security Act is amended— (1) by inserting "(a)" after "SEC. 1634.", and (2) by adding at the end the following new subsection: Insurance. "(b)(1) An eligible disabled widow or widower (described in para- graph (2)) who is entitled to a widow's or widower's insurance 42 use 402. benefit based on a disability for any month under section 202 (e) or (f) but is not eligible for benefits under this title in that month, and who applies for the protection of this subsection under paragraph 42 use 1396. (3), shall be deemed for purposes of title XIX to be an individual with respect to whom benefits under this title are paid in that month if he or she— "(A) has been continuously entitled to such widow's or widower's insurance benefits from the first month for which the increase described in paragraph (2)(C) w£is reflected in such benefits through the month involved, and "(B) would be eligible for benefits under this title in the month involved if the amount of the increase described in paragraph (2)(C) in his or her widow's or widower's insurance benefits, and any subsequent cost-of-living adjustments in such 42 use 415. benefits under section 215(i), were disregarded. "(2) For purposes of paragraph (1), the term 'eligible disabled widow or widower' means an individual who— 42 use 401. "(A) was entitled to a monthly insurance benefit under title II for December 1983, "(B) was entitled to a widow's or widower's insurance benefit based on a disability under section 202 (e) or (D for January 1984 and with respect to whom a benefit under this title was paid in that month, and "(C) because of the increase in the amount of his or her widow's or widower's insurance benefits which resulted from the amendments made by section 134 of the Social Security 42 use 402 and Amendments of 1983 (Public Law 98-21) (eliminating the addi- note. tional reduction factor for disabled widows and widowers under age 60), was ineligible for benefits under this title in the first month in which such increase w£is paid to him or her (and in which a retroactive payment of such increase for prior months was not made). "(3) This subsection shall only apply to an individual who files a written application for protection under this subsection, in such manner and form as the Secretary may prescribe, during the 15- month period beginning with the month in which this subsection is enacted.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 291 "(4) For purposes of this subsection, the term 'benefits under this title' includes payments of the type described in section 1616(a) or of 42 u s e 1382e. the type described in section 212(a) of Public Law 93-66.". 42 u s e 1382 (b) IDENTIFICATION OF BENEFICIARIES.—(1) As soon as possible after note. 42 u s e 1383c the date of the enactment of this Act, the Secretary of Health and note. Human Services shall provide each State with the names of all individuals receiving widow's or widower's insurance benefits under subsection (e) or (f) of section 202 of the Social Security Act based on 42 u s e 402. a disability who might qualify for medical assistance under the plan of that State approved under title XIX of such Act by reason of the 42 u s e 1396. application of section 1634(b) of the Social Security Act. 42 u s e 1383c. (2) Each State shall— (A) using the information so provided and any other informa- tion it may have, promptly notify all individuals who may qualify for medical assistance under its plan by reason of such section 1634(b) of their right to make application for such assistance, (B) solicit their applications for such assistance, and (C) make the necessary determination of such individuals' eligibility for such assistance under such section and under such title XIX. (c) EFFECTIVE DATE.—The amendment made by subsection (a)(2) 42 u s e 1383c shall not have the effect of deeming an individual eligible for note. medical assistance for any month which begins less than two months after the date of the enactment of this Act. Subtitle C—AFDC, Adoption Assistance, and Foster Care Programs SEC. 12301. AFDC QUALITY CONTROL STUDIES AND PENALTY MORA- TORIUM (a) STUDIES.—(1) The Secretary of Health and Human Services 42 u s e 603 (hereafter referred to in this section as the "Secretary") shall con- note. duct a study of quality control systems for the Aid to Families with Dependent Children Program under title IV-A of the Social Secu- rity Act and for the Medicaid Program under title XIX of such Act. 42 u s e 601. The study shall examine how best to operate such systems in order 42 u s e 1396. to obtain information which will allow program managers to im- prove the quality of administration, and provide reasonable data on the basis of which Federal funding may be withheld for States with excessive levels of erroneous payments. (2) The Secretary shall also contract with the National Academy Contracts, of Sciences to conduct a concurrent independent study for the purpose described in paragraph (1). For purposes of such study, the Secretary shall provide to the National Academy of Sciences any relevant data available to the Secretary at the onset of the study and on an ongoing basis. (3) The Secretary and the National Academy of Sciences shall Reports. report the results of their respective studies to the Congress within one year after the date of the enactment of this Act. (b) MORATORIUM ON PENALTIES.—(1) During the 24-month period beginning with the first calendar quarter which begins after the date of the enactment of this Act (hereafter in this section referred to as the "moratorium period"), the Secretary shall not impose any reductions in payments to States pursuant to section 403(i) of the
100 STAT. 292 PUBLIC LAW 99-272—APR. 7, 1986 42 u s e 603. Social Security Act (or prior regulations), or pursuant to any com- 42 u s e 601. parable provision of law relating to the programs under title IV-A Puerto Rico. of such Act in Puerto Rico, Guam, the Virgin Islands, American Guam. Virgin Islands. Samoa, or the Northern Mariana Islands. American (2) During the moratorium period, the Secretary and the States Samoa. shall continue to operate the quality control systems in effect under Northern title IV-A of the Social Security Act, and to calculate the error rates Mariana Islands. Regulations. under the provisions referred to in paragraph (1). 42 u s e 1396. (c) RESTRUCTURED QUAUTY CONTROL SYSTEMS.—(1) Not later than 18 months after the date of the enactment of this Act, the Secretary shall publish regulations which shall— (A) restructure the quality control systems under titles IV-A and XIX of the Social Security Act to the extent the Secretary determines to be appropriate, taking into account the studies conducted under subsection (a); and (B) establish, taking into account the studies conducted under subsection (a), criteria for adjusting the reductions which shall be made for quarters prior to the implementation of the restruc- tured quality control systems so as to eliminate reductions for those quarters which would not be required if the restructured quality control systems had been in effect during those quarters. State and local (2) Beginning with the first calendar quarter after the moratorium governments. period, the Secretary shall implement the revised quality control systems, and shall reduce payments to States— (A) for quarters after the moratorium period in accordance with the restructured quality control systems; and (B) for quarters in and before the moratorium period, as provided under the regulations described in paragraph (1)(B). (d) EFFECTIVE DATE.—This section shall become effective on the date of the enactment of this Act. SEC. 12303. A F D C AUTOMATION REQUIREMENTS. 42 u s e 602. (a) I N GENERAL.—Section 402(eX2) of the Social Security Act is amended by adding at the end thereof the following new subpara- graph: State and local "(C) If the Secretary determines that such a system has not been governments. implemented by the State by the date specified for implementation in the State's advance automatic data processing planning docu- ment, then the Secretary shall reduce payments to such State, in 42 u s e 603. accordance with section 403(b), in an amount equal to 40 percent of the expenditures referred to in section 403(a)(3XB) with respect to which payments were made to the State under section 403(a)(3)(B). The Secretary may extend the deadline for implementation if the State demonstrates to the satisfaction of the Secretary that the State cannot implement such system by the date specified in such planning document due to circumstances beyond the State's control.". State and local Ob) EFFECTIVE DATE.—The amendment made by subsection (a) governments. shall become effective on the date of the enactment of this Act, but 42 u s e 602 note. shall apply only with respect to sums expended by the States for the purposes described in section 403(a)(3XB) of the Social Security Act on or after the date of the enactment of this Act. SEC. 12304. THIRD-PARTY LIABILITY. 42 u s e 602. (a) I N GENERAL.—Section 402(aX26) of the Social Security Act is amended—
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 293 (1) by striking out the comma at the end of subparagraph (A) and inserting in lieu thereof a semicolon; (2) by adding "and" after the semicolon at the end of subpara- graph (B); and (3) by adding after subparagraph (B) the following new subparagraph: "(C) to cooperate with the State in identifying, and State and local providing information to assist the State in pursuing, any governments. third party who may be liable to pay for care and services available under the State's plan for medical assistance under title XIX, unless such individual has good cause for 42 use 1396. refusing to cooperate as determined by the State agency in accordance with standards prescribed by the Secretary, which standards shall take into consideration the best in- terests of the individuals involved; but the State shall not be subject to any financial penalty in the administration or enforcement of this subparagraph as a result of any mon- itoring, quality control, or auditing requirements;", (b) EFFECTIVE DATE.—The amendments made by subsection (a) 42 u s e 602 shall apply to calendar quarters beginning on or after the date of note. the enactment of this Act. SEC. 12305. PROVISIONS RELATING TO MEDICAID COVERAGE UNDER THE ADOPTION ASSISTANCE AND FOSTER CARE PROGRAMS. (a) I N GENERAL.—Section 473(b) of the Social Security Act is 42 use 673. amended to read as follows: "(b) For purposes of titles XIX and XX, any child— 42 USC 1396, "(1)(A) who is a child described in subsection (a)(1), and 1397. "(B) with respect to whom an adoption assistance agreement is in effect under this section (whether or not adoption assist- ance payments are provided under the agreement or are being made under this section), including any such child who has been placed for adoption in accordance with applicable State and local law (whether or not an interlocutory or other judicial decree of adoption has been issued), or "(2) with respect to whom foster care maintenance payments are being made under section 472, 42 use 672. shall be deemed to be a dependent child as defined in section 406 42 use 606. and shall be deemed to be a recipient of aid to families with dependent children under part A of this title in the State where such child resides.". (b) CONFORMING AMENDMENTS.—(1) Section 473(c)(2) of such Act is amended— (A) by striking out "without providing adoption assistance" in clause (A) and inserting in lieu thereof "without providing adoption assistance under this section or medical assistance under title XIX"; and (B) by inserting "or medical assistance under title XIX" before the period at the end thereof. (2) Section 475(3) of such Act is amended by striking out "the 42 USC 675. adoption assistance payments and any additional services and assist- ance" in clause (A) of the first sentence and inserting in lieu thereof "any adoption assistance payments and any other services and £issistance". (3) Section 1902(a)(10)(A)(i)(I) of such Act is amended by striking 42 use I396a. out "or 406(h)" and inserting in lieu thereof ", 406(h), or 473(b)".
100 STAT. 294 PUBLIC LAW 99-272—APR. 7, 1986 42 u s e 673 note. (c) EFFECTIVE DATE.—The a m e n d m e n t s m a d e by this section shall apply to medical eissistance furnished in or after t h e first calendar q u a r t e r beginning m o r e t h a n 90 days after t h e d a t e of t h e enact- m e n t of this Act. SEC. 12306. EXTENSION OF VOLUNTARY PLACEMENT, AND CEILING AND TRIGGER PROVISIONS, RELATING TO FOSTER CARE. 42 u s e 674. (a) Section 474(b) of t h e Social Security Act is amended— (1) in p a r a g r a p h s (1), (2)(B), a n d (4)(B), by striking out "1985" and inserting in lieu thereof "1987"; (2) in p a r a g r a p h (2)(A)— (A) by inserting " a n d " a t t h e end of clause (ii), and (B) by striking out clauses (iii), (iv), and (v) a n d inserting in lieu thereof t h e following: "(iii) with respect to each of t h e fiscal years 1983 t h r o u g h 42 u s e 620. 1987, only if t h e a m o u n t appropriated u n d e r section 420 for such fiscal y e a r is equal to $266,000,000."; a n d (3) in p a r a g r a p h (5)(A)— (A) by striking out "October 1, 1985" a n d inserting in lieu thereof "October 1,1987", a n d (B) in clause (ii), by striking out "1984 a n d 1985" and inserting in lieu thereof "1984 t h r o u g h 1987". Ot)) P a r a g r a p h s (1) a n d (2) of section 474(c) of such Act a r e each amended by striking out "1985" a n d inserting in lieu thereof "1987". (c)(1) Section 102(a)(1) of t h e Adoption Assistance a n d Child Wel- 42 u s e 672 note, fare Act of 1980 (Public Law 96-272) is a m e n d e d by s t r i k i n g out "1985" a n d inserting in lieu thereof "1987". 42 u s e 672 note. (2) Section 102(c) of such Act is a m e n d e d by striking out "1985" each place it a p p e a r s a n d inserting in lieu thereof "1987". SEC. 12307. INDEPENDENT LIVING INITIATIVES. (a) INDEPENDENT L I V I N G I N I T I A T I V E S . — P a r t E of t i t l e IV of the Social Security Act is a m e n d e d by adding a t t h e end thereof t h e following new section: INDEPENDENT LIVING INITIATIVES State and local "SEC. 477. (a) Payments shall be made in accordance with this governments. section for the purpose of assisting States and localities in establish- 42 u s e 677. ing and carrying out programs designed to assist children, with respect to whom foster care maintenance payments are being made by the State under this part and who have attained age 16, in making the transition from foster care to independent living. Any State which provides for the establishment and carrying out of one or more such programs in accordance with this section for a fiscal year shall be entitled to receive payments under this section for such fiscal year, in an amount determined under subsection (e). Such payments shall be made only for the fiscal years 1987 and 1988. State and local "(b) The State agency administering or supervising the adminis- governments. tration of the State's programs under this part shall be responsible Contracts. for administering or supervising the administration of the State's programs described in subsection (a). Payment under this section shall be made to the State, and shall be used for the purpose of conducting and providing in accordance with this section (directly or under contracts with local governmental entities or private non-
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 295 profit organizations) the activities and services required to carry out the program or programs involved. "(c) In order for a State to receive payments under this section for State and local any fiscal year, the State agency must submit to the Secretary, in governments. such manner and form as the Secretary may prescribe, a description of the program together with satisfactory assurances that the pro- gram will be operated in an effective and efficient manner and will otherwise meet the requirements of this section. In the case of payments for fiscal year 1987, such description and assurances must be submitted within 90 days after the Secretary promulgates regula- tions as required under subsection (i), and in the case of payments for fiscal year 1988, such description and assurances must be submitted prior to January 1, 1988. "(d) In carrying out the purpose described in subsection (a), it shall be the objective of each program established under this section to help the individuals participating in such program to prepare to live independently upon leaving foster care. Such programs may include (subject to the availability of funds) programs to— "(1) enable participants to seek a high school diploma or its Education, equivalent or to take part in appropriate vocational training; "(2) provide training in daily living skills, budgeting, locating and maintaining housing, and career planning; "(3) provide for individual and group counseling; "(4) integrate and coordinate services otherwise available to participants; "(5) provide for the establishment of outreach programs de- signed to attract individuals who are eligible to participate in the program; "(6) provide each participant a written transitional independ- ent living plan which shall be based on an assessment of his needs, and which shall be incorporated into his case plan, as described in section 475(1); and 42 u s e 675. "(7) provide participants with other services and assistance designed to improve their transition to independent living. "(e)(1) The amount to which a State shall be entitled under section 474(a)(4) for each of the fiscal years 1987 and 1988 shall be an State and local amount which bears the same ratio to $45,000,000 as such State's governments. 42 u s e 674. average number of children receiving foster care maintenance pay- ments under this part in fiscal year 1984 bears to the total of the average number of children receiving such payments under this part for all States for fiscal year 1984. "(2) If any State does not apply for funds under this section for any fiscal year within the time provided in subsection (c), the funds to which such State would have been entitled for such fiscal year shall be reallocated to one or more other States on the basis of their relative need for additional payments under this section (as deter- mined by the Secretary). "(3) Any amounts payable to States under this section shall be in addition to amounts payable to States under subsections (a)(1), (a)(2), and (a)(3) of section 474, and shall supplement and not replace any other funds which may be available for the same general purposes in the localities involved. "(f) Payments made to a State under this section for any fiscal year— "(1) shall be used only for the specific purposes described in this section;
100 STAT. 296 PUBLIC LAW 99-272—APR. 7, 1986 "(2) may be made on an estimated basis in advance of the determination of the exact amount, with appropriate subse- quent adjustments to take account of any error in the estimates; and "(3) shall be expended by such State in such fiscal year or in the succeeding fiscal year. Reports. "(gXD Not later than March 1,1988, each State shall submit to the Secretary a report on the programs carried out with the amounts received under this section. Such report— "(A) shall be in such form and contain such information as may be necessary to provide an accurate description of such activities, to provide a complete record of the purposes for which the funds were spent, and to indicate the extent to which the expenditure of such funds succeeded in accomplishing the pur- pose described in subsection (a); and "(B) shall specifically contain such information as the Sec- retary may require in order to carry out the evaluation under paragraph (2). "(2) Not later than July 1, 1988, the Secretary, on the basis of the reports submitted by States under paragraph (1) for the fiscal year 1987, and on the basis of such additional information as the Sec- retary may obtain or develop, shall evaluate the use by States of the , payments made available under this section for such fiscal year with * respect to the purpose of this section, with the objective of apprais- ing the achievements of the programs for which such payments were made available, and developing comprehensive information and data on the basis of which decisions can be made with respect to the improvement of such programs and the necessity for providing further payments in subsequent years. The Secretary shall report such evaluation to the Congress. As a part of such evaluation, the Secretary shall include, at a minimum, a detailed overall description of the number and characteristics of the individuals served by the programs, the various kinds of activities conducted and services provided and the results achieved, and shall set forth in detail findings and comments with respect to the various State programs and a statement of plans and recommendations for the future. "(h) Notwithstanding any other provision of this title, payments made and services provided to participants in a program under this section, as a direct consequence of their participation in such pro- gram, shall not be considered as income or resources for purposes of determining eligibility (or the eligibility of any other persons) for aid 42 use 602, 671. under the State's plan approved under section 402 or 471, or for purposes of determining the level of such aid. Regulations. "(i) The Secretary shall promulgate final regulations for im- plementing this section within 60 days after the date of the enact- ment of this section.". 42 use 675. (b) CASE PLANS.—Section 475(1) of such Act is amended by adding at the end thereof the following: "Where appropriate, for a child age 16 or over, the case plan must also include a written description of the programs and services which will help such child prepare for the transition from foster care to independent living.". 42 use 674. (c) PAYMENTS TO STATES.—Section 474(a) of such Act is amended— (1) by striking out the period at the end of paragraph (3) and inserting in lieu thereof "; plus"; and (2) by adding at the end thereof the following new paragraph: "(4) an amount for transitional independent living pro- Ante, p. 294. grams as provided in section 477.".
PUBLIC LAW 99-272—APR, 7, 1986 100 STAT. 297 (d) CONFORMING AMENDMENT,—Section 470 of such Act is 42 use 670. amended by striking out "foster care and adoption assistance" and inserting in lieu thereof "foster care, adoption assistance, and transitional independent living programs". Subtitle D—Provisions Relating to Unemployment Compensation SEC. 12401. RECOVERY OF UNEMPLOYMENT BENEFIT OVERPAYMENTS. (a) IN GENERAL.—(1) Section 303(a)(5) of the Social Security Act is 42 USC 503. amended by inserting before "; and" at the end thereof the follow- ing: ": Provided further, That amounts may be deducted from un- employment benefits and used to repay overpayments as provided in subsection (g)". (2) Section 303 of such Act is amended by adding at the end thereof the following new subsection: "(g)(1) A State may deduct from unemployment benefits otherwise State and local payable to an individual an amount equal to any overpayment made governments. to such individual under an unemployment benefit program of the United States or of any other State, and not previously recovered. The amount so deducted shall be paid to the jurisdiction under whose program such overpayment was made. Any such deduction shall be made only in accordance with the same procedures relating to notice and opportunity for a hearing as apply to the recovery of overpayments of regular unemployment compensation paid by such State. "(2) Any State may enter into an agreement with the Secretary of Labor under which— "(A) the State agrees to recover from unemployment benefits otherwise payable to an individual by such State any overpay- ments made under an unemployment benefit program of the United States to such individual and not previously recovered, in accordance with paragraph (1), and to pay such amounts recovered to the United States for credit to the appropriate account, and "(B) the United States agrees to allow the State to recover from unemployment benefits otherwise payable to an individual under an unemployment benefit program of the United States any overpayments made by such State to such individual under a State unemployment benefit program and not previously recovered, in accordance with the same procedures as apply under paragraph (1). "(3) For purposes of this subsection, 'unemployment benefits' means unemployment compensation, trade adjustment allowances, and other unemployment assistance,". Oa) CONFORMING AMENDMENTS.—(1) Section 3304(a)(4) of the In- 26 USC 3304. ternal Revenue Code of 1954 is amended— (A) by striking out "and" at the end of subparagraph (B); (B) by adding "and" at the end of subparagraph (C); and (C) by adding at the end thereof the following new subpara- graph: "(D) amounts may be deducted from unemployment bene- fits and used to repay overpayments as provided in section 303(g) of the Social Security Act;". (2) Section 3306(f) of such Code is amended— 26 USC 3306.
100 STAT. 298 PUBLIC LAW 99-272—APR. 7, 1986 (A) by striking out "and" at the end of paragraph (1); (B) by striking out the period at the end of paragraph (2) and inserting in lieu thereof ", and"; and (C) by adding at the end thereof the following new paragraph: "(3) amounts may be deducted from unemployment benefits and used to repay overpayments as provided in section 303(g) of 42 u s e 503. the Social Security Act.", 42 u s e 503 note. (c) EFFECTIVE DATE.—The amendments made by this section shall apply to recoveries made on or after the date of the enactment of this Act and shall apply with respect to overpayments made before, on, or after such date. SEC. 12402. SUPPLEMENTAL UNEMPLOYMENT COMPENSATION FOR CER- TAIN INDIVIDUALS. 26 u s e 3304 (a) IN GENERAL.—If— note. (1) an individual was receiving Federal supplemental com- pensation for the week which includes March 31, 1985, or a series of consecutive weeks which began with such week, and (2) such individual did not meet the consecutive-week eligi- bility requirements of the Federal Supplemental Compensation 26 u s e 3304 Act of 1982 during any period of 1 or more subsequent weeks by note. reason of performing temporary disaster services described in subsection (e), weeks in such period shall be disregarded for purposes of the 26 u s e 3304 consecutive-week requirement of section 602(f)(2)(B) of such Act, note. and, notwithstanding the requirements of State law relating to the availability for work, the active search for work, or the refusal to accept work, such individual shall be entitled to payment of Federal supplemental compensation for each week of unemployment which is described in subsection (b) and for which a certification of unemployment is made by such individual in accordance with subsection (c). (b) WEEKS FOR WHICH PAYMENT SHALL B E MADE.—A week of unemployment for which payment shall be made under subsection (a) is a week which occurred during the period which commences with the first week beginning after the close of the period described in subsection (a)(2) and ends with the beginning of the first week in which the individual was employed after the close of such period. State and local (c) CERTIFICATION.—The certification of unemployment referred to governments. in subsection (a) shall be a certification— (1) that is made on a form provided by the State agency concerned and signed by the individual; and (2) that identifies the weeks of unemployment for which the individual is making the certification. (d) LIMITATION ON AMOUNT OF PAYMENT.—In no case may the total amount paid to an individual under subsection (a) exceed the amount remaining in the account established for such individual under section 602(e) of the Federal Supplemental Compensation Act of 1982 after payments were made from such account for weeks of unemployment beginning before the period described in subsection (a)(2). Armed Forces. (e) DEFINITION.—For purposes of subsection (a), the term "tem- porary disaster services" means services performed as a member of the National Guard after being called up by the Governor of a State to perform services related to a major disaster that was declared on June 3, 1985, by the President of the United States under the 42 u s e 5121 Disaster Relief Act of 1974. note.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 299 (f) MODIFICATION OF AGREEMENT.—(1) The Secretary of Labor State and local shall, at the earliest possible date after the date of the enactment of governments. this Act, propose to any State concerned a modification of the agreement that the Secretary hgis with such State under section 602 of the Federal Supplemental Compensation Act of 1982 in order to 26 u s e 3304 carry out this section. note. (2) Pending modification of the agreement, the State may make payment in accordance with the provisions of this section and shall be reimbursed in accordance with the provisions of section 604(a) of the Federal Supplemental Compensation Act of 1982. For purposes 26 u s e 3304 of carrying out this paragraph, the term "this subtitle" in such note. section 604(a) shall include this section. (g) EFFECTIVE DATE.—The provisions of this section shall apply to weeks beginning after March 31,1985. Subtitle E—Restoration of Civil Service Retirement and Disability Fund SEC. 12501. APPROPRIATION TO CIVIL SERVICE RETIREMENT AND DISABILITY FUND OF INTEREST LOST FROM NONINVESTMENT IN SEPTEMBER 1984. On December 31, 1985, the Secretary of the Treasury shall pay to the Civil Service Retirement and Disability Fund, from amounts in the general fund of the Treasury not otherwise appropriated, an amount determined by the Secretary to be equal to the sum of— (1) the excess of (A) the amount of interest which would have been earned by such fund, during the period beginning with September 28, 1984, and ending with December 31, 1984, on all monies transferred to such fund on September 28, 1984, if all such monies had been invested on September 28, 1984, over (B) the amount of interest actually earned by such fund on such monies during such period; (2) interest that would have been earned on the amount described in paragraph (1) during the period beginning with January 1,1985, and ending with June 30,1985; (3) the excess of (A) the amount of interest which would have been earned by such fund, during the period beginning on January 1, 1985, and ending on June 30, 1985, on all monies transferred to such fund on September 28, 1984, if all such monies had been invested on September 28, 1984, over (B) the amount of interest actually earned by such fund on such monies during such period; and (4) the interest that would have been earned on the amounts described in paragraphs (1), (2), and (3) during the period begin- ning with July 1, 1985, and ending with December 31, 1985.
100 STAT. 300 PUBLIC LAW 99-272—APR. 7, 1986 TITLE XIII—REVENUES, TRADE, AND RELATED PROGRAMS Subtitle A—Trade and Customs Provisions Trade Adjust- PART 1—TRADE ADJUSTMENT ASSISTANCE ment Assistance Reform and SEC. 13001. SHORT TITLE. Extension Act of 1986. This part may be cited as the 'Trade Adjustment Assistance 19 u s e 2101 Reform and Extension Act of 1986". note. SEC. 13002. ELIGIBILITY OF WORKERS AND FIRMS FOR TRADE ADJUST- MENT ASSISTANCE. Agriculture and (a) WORKERS.—Sections 221(a) and 222 of the Trade Act of 1974 (19 agricultural U.S.C. 2271(a); 2272) are each amended by inserting "(including commodities. workers in any agricultural firm or subdivision of an agricultural firm)" after "group of workers". (b) FIRMS.— (i) Subsections (a) and (c) of section 251 of the Trade Act of 1974 (19 U.S.C. 2341) are each amended by inserting "(including any agricultural firm)" after "a firm". (2) Paragraph (2) of section 251(c) of the Trade Act of 1974 (19 U.S.C. 2341(c)(2)) is amended to read as follows: "(2) that— "(A) sales or production, or both, of the firm have de- creased absolutely, or "(B) sales or production, or both, of an article that ac- counted for not less than 25 percent of the total production or sales of the firm during the 12-month period preceding the most recent 12-month period for which data are avail- able have decreased absolutely, and". SEC. 13003. CASH ASSISTANCE FOR WORKERS. (a) PARTICIPATION IN JOB SEARCH PROGRAM REQUIRED.— (1) Subsection (a) of section 231 of the Trade Act of 1974 (19 U.S.C. 2291(a)) is amended by adding at the end thereof the following new paragraph: "(5) Such worker, unless the Secretary has determined that no acceptable job search program is reasonably available— "(A) is enrolled in a job search program approved by the 19 u s e 2297. Secretary under section 237(c), or "(B) has, after the date on which the worker became totally separated, or partially separated, from the adversely affected employment, completed a job search program ap- proved by the Secretary under section 237(c).". (2) Section 231 of the Trade Act of 1974 (19 U.S.C. 2291) is amended by adding at the end thereof the following new subsection: "(c) If the Secretary determines that— "(1) the adversely affected worker— "(A) has failed to begin participation in the job search program the enrollment in which meets the requirement of subsection (a)(5), or "(B) has ceased to participate in such job search program before completing such job search program, and
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 301 "(2) there is no justifiable cause for such failure or cessation, no trade readjustment allowance may be paid to the adversely affected worker under this part on or after the date of such deter- mination until the adversely affected worker begins or resumes participation in a job search program approved under section 237(c).". (3) Subsection (a) of section 239 of the Trade Act of 1974 (19 U.S.C. 2311(a)) is amended— (A) by striking out "training," in clause (2) and inserting in lieu thereof "training and job search programs,"; and (B) by striking out "and (3)" and inserting in lieu thereof "(3) will make determinations and approvals regarding job search programs under sections 231(c) and 237(c), and (4)". 19 USC 2291, (b) QUALIFYING WEEKS OF EMPLOYMENT.—The last sentence of ^^^^• section 231(a)(2) of the Trade Act of 1974 (19 U.S.C. 2291(a)(2)) is amended by striking out all that follows after subparagraph (C) and inserting in lieu thereof "shall be treated as a week of employment at wages of $30 or more, but not more than 7 weeks, in case of weeks described in paragraph (A) or (C), or both, may be treated as weeks of employment under this sentence.". (c) WEEKLY AMOUNTS OF READJUSTMENT ALLOWANCES.—Section 232 of the Trade Act of 1974 (19 U.S.C. 2292) is amended— (1) by striking out "under any Federal law," in subsection (c) and inserting in lieu thereof "under any Federal law other than this Act", (2) by striking out "under section 236(c)" in subsection (c) and inserting in lieu thereof "under section 231(c) or 236(c)", and (3) by striking out "If the training allowance" in subsection (c) and inserting in lieu thereof "If such training allowance". (d) LIMITATIONS.— (1) Paragraph (2) of section 233(a) of the Trade Act of 1974 (19 U.S.C. 2293(a)(2)) is amended by striking out "52-week period" and inserting in lieu thereof "104-week period". (2) Section 233 of the Trade Act of 1974 (19 U.S.C. 2293) is amended by adding at the end thereof the following new subsection: "(e) No trade readjustment allowance shall be paid to a worker under this part for any week during which the worker is receiving on-the-job training.". SEC. 13004. JOB TRAINING FOR WORKERS. (a) IN GENERAL.—Section 236 of the Trade Act of 1974 (19 U.S.C. 2296) is amended— (1) by striking out "for a worker" in subsection (a)(lXA) and inserting in lieu thereof "for an adversely affected worker", (2) by striking out "may approve" in the first sentence of subsection (a)(1) and inserting in lieu thereof "shall (to the extent appropriated funds are available) approve", (3) by striking out "under paragraph (1)" in subsection (a)(2) and inserting in lieu thereof "under subsection (a)", (4) by striking out "this subsection" in subsection (a)(3) and inserting in lieu thereof "this section", (5) by redesignating paragraphs (2) and (3) of subsection (a) as subsections (e) and (f), respectively, (6) by inserting at the end of subsection (a) the following new paragraphs:
100 STAT. 302 PUBLIC LAW 99-272—APR. 7, 1986 Emplojmient "(2) For purposes of applying paragraph (1)(C), a reasonable and expectation of employment does not require that employment unemployment. opportunities for a worker be available, or offered, immediately upon the completion of training approved under this paragraph (1). "(3)(A) If the costs of training an adversely affected worker are paid by the Secretary under paragraph (1), no other payment for such costs may be made under any other provision of Federal law. "(B) No payment may be made under paragraph (1) of the costs of training an adversely affected worker if such costs— "(i) have already been paid under any other provision of Federal law, or "(ii) are reimbursable under any other provision of Federal law and a portion of such costs have already been paid under such other provision of Federal law. "(C) The provisions of this paragraph shall not apply to, or take into account, any funds provided under any other provision of Federal law which are used for any purpose other than the direct payment of the costs incurred in training a particular adversely affected worker, even if such use has the effect of indirectly paying or reducing any portion of the costs involved in training the ad- versely affected worker. "(4) The training programs that may be approved under para- graph (1) include, but are not limited to— "(A) on-the-job training, "(B) any training program provided by a State pursuant to 29 u s e 1653. section 303 of the Job Training Partnership Act, "(C) any training program approved by a private industry 29 u s e 1512. council established under section 102 of such Act, and "(D) any other training program approved by the Secretary.", and (7) by inserting after subsection (c) the following new subjec- tion: Contracts. (d) Notwithstanding any provision of subsection (a)(1), the Sec- retary may pay the costs of on-the-job training of an adversely affected worker under subsection (a)(1) only if— "(1) no currently employed worker is displaced by such ad- versely affected worker (including partial displacement such as a reduction in the hours of nonovertime work, wages, or employ- ment benefits), "(2) such training does not impair existing contracts for serv- ices or collective bargaining agreements, "(3) in the case of training which would be inconsistent with the terms of a collective bargaining agreement, the written concurrence of the labor organization concerned has been obtained, "(4) no other individual is on layoff from the same, or any substantially equivalent, job for which such adversely affected worker is being trained, "(5) the employer has not terminated the employment of any regular employee or otherwise reduced the workforce of the employer with the intention of filling the vacancy so created by hiring such adversely affected worker, "(6) the job for which such adversely affected worker is being trained is not being created in a promotional line that will infringe in any way upon the promotional opportunities of currently employed individuals,
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 303 "(7) such training is not for the same occupation from which the worker was separated and with respect to which such worker's group was certified pursuant to section 222, 19 USC 2272. "(8) the employer certifies to the Secretary that the employer will continue to employ such worker for at least 26 weeks after completion of such training if the worker desires to continue such employment and the employer does not have due cause to terminate such employment, "(9) the employer has not received payment under subsection (a)(1) with respect to any other on-the-job training provided by such employer which failed to meet the requirements of para- graphs (1), (2), (3), (4), (5), and (6), and "(10) the employer has not taken, at any time, any action which violated the terms of any certification described in para- graph (8) made by such employer with respect to any other on- the-job training provided by such employer for which the Sec- retary has made a payment under subsection (a)(1).". (b) ON-THE-JOB TRAINING DEFINED.—Section 247 of the Trade Act of 1974 (19 U.S.C. 2319) is amended by adding at the end thereof the following new paragraph: "(16) The term "on-the-job training" means training provided by an employer to an individual who is employed by the employer.". (c) AGREEMENTS WITH THE STATES.—Section 239 of the Trade Act of 1974 (19 U.S.C. 231.1) is amended— (1) by amending subsection (a)(2) by inserting "but in accord- ance with subsection (f)," after "where appropriate,"; and (2) by adding at the end thereof the following new subsections: "(e) Agreements entered into under this section may be made with one or more State or local agencies including— "(1) the employment service agency of such State, "(2) any State agency carrying out title III of the Job Training Partnership Act, or 29 USC 1651. "(3) any other State or local agency administering job training or related programs. "(f) Each cooperating State agency shall, in carrying out subsec- tion (a)(2)— "(1) advise each adversely affected worker to apply for train- ing under section 236(a) at the time the worker makes applica- 19 USC 2296. tion for trade readjustment allowances (but failure of the worker to do so may not be treated as cause for denial of those allowances), and "(2) within 60 days after application for training is made by the worker, interview the adversely affected worker regarding suitable training opportunities available to the worker under section 236 and review such opportunities with the worker.". SEC. 13005. JOB SEARCH ALLOWANCES. (a) IN GENERAL.—Section 237 of the Trade Act of 1974 (19 U.S.C. 2297) is amended by adding at the end thereof the following new subsection: "(c) The Secretary shall reimburse any adversely affected worker for necessary expenses incurred by such worker in participating in a job search program approved by the Secretary.". (b) DEFINITIONS.—Section 247 of the Trade Act of 1974 (19 U.S.C. 2319), as amended by section 13004(b) of this Act, is further amended by adding at the end thereof the following new paragraph:
100 STAT. 304 PUBLIC LAW 99-272—APR. 7, 1986 "(17XA) The term 'job search program' means a job search workshop or job finding club. "(B) The term 'job search workshop' means a short (1 to 3 days) seminar designed to provide participants with knowledge that will enable the participants to find jobs. Subjects are not limited to, but should include, labor market information, resume writing, interviewing techniques, and techniques for finding job openings. "(C) The term 'job finding club' means a job search workshop which includes a period (1 to 2 weeks) of structured, supervised activity in which participants attempt to obtain jobs.". SEC. 13006. ADJUSTMENT ASSISTANCE FOR FIRMS. ^0) TECHNICAIJ ASSISTANCE (1) Paragraph (1) of section 252(b) of the Trade Act of 1974 (19 U.S.C. 2342(bXl)) is amended to read as follows: "(1) Adjustment assistance under this chapter consists of technical assistance. The Secretary shall approve a firm's application for adjustment assistance only if the Secretary determines that the firm's adjustment proposal— "(A) is reasonably calculated to materially contribute to the economic adjustment of the firm, "(B) gives adequate consideration to the interests of the work- ers of such firm, and "(C) demonstrates that the firm will make all reasonable efforts to use its own resources for economic development.". (2) Section 252 of the Trade Act of 1974 (19 U.S.C. 2342) is amended by striking out subsection (c) and redesignating subsection (d) as subsection (c). (3) Paragraph (2) of section 253(b) of the Trade Act of 1974 (19 U.S.C. 2343(bX2)) is amended by striking out "such cost" and inserting in lieu thereof "such cost for assistance described in paragraph (2) or (3) of subsection (a)". (b) No NEW LOANS OR GUARANTEES.—Section 254 of the Trade Act of 1974 (19 U.S.C. 2344) is amended by adding at the end thereof the following new subsection: "(d) Notwithstanding any other provision of this chapter, no direct loans or guarantees of loans may be made under this chapter after the date of enactment of the Trade Adjustment Assistance Reform Ante, p. 300. and Extension Act of 1986.". SEC. 13007. EXTENSION AND TERMINATION OF TRADE ADJUSTMENT ASSISTANCE. (a) IN GENERAL.—Section 285 of the Trade Act of 1974 (19 U.S.C. 2271, preceding note) is amended— (1) by striking out the first sentence thereof and inserting in lieu thereof "(a)", (2) by striking out the section heading and inserting in lieu thereof "SEC. 285. TERMINATION.", and (3) by adding at the end thereof the following new subsection: "(b) No assistance, allowances, or other payments may be provided under chapter 2, and no technical assistance may be provided under chapter 3, after September 30,1991.". Ot>) CONFORMING AMENDMENT.—The table of contents of the Trade Act of 1974 is amended by striking out the item relating to section 285 and inserting in lieu thereof the following: "Sec. 285. Termination.".
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 305 SEC. 13008. AUTHORIZATION OF APPROPRIATIONS. (a) WORKERS.—Section 245 of the Trade Act of 1974 (19 U.S.C. 2317) is amended by striking out "1982 through 1985" and inserting in lieu thereof "1986,1987,1988,1989,1990, and 1991". Ot)) FIRMS.—Subsection (b) of section 256 of the Trade Act of 1974 (19 U.S.C. 2346(b)) is amended— (1) by inserting "for fiscal years 1986, 1987, 1988, 1989, 1990, and 1991" after "to the Secretary", (2) by striking out "from time to time", and (3) by striking out the last sentence thereof. SEC. 13009. EFFECTIVE DATES; APPLICATION OF GRAMM-RUDMAN. 19 USC 2291 (a) IN GENERAL.—Except as provided in subsections (b) and (c), the amendments made by this part shall take effect on the date of the enactment of this Act. Ot)) JOB SEARCH PROGRAM REQUIREMENTS.—The amendments made by section 13003(a) apply with respect to workers covered by peti- tions filed under section 221 of the Trade Act of 1974 on or after the 19 USC 2271. date of the enactment of this Act. (c) EXTENSION AND AUTHORIZATION.—Chapters 2 and 3 of title II of the Trade Act of 1974 (19 U.S.C. 2271, et seq.) shall be applied as if the amendments made by sections 13007 and 13008 had taken effect on December 18,1985. (d) APPLICATION OF GRAMM-RUDMAN.—Trade readjustment allow- Sequestration ances payable under part I of chapter 2 of title II of the Trade Act of Report. 1974 for the period from March 1, 1986, and until October 1, 1986, shall be reduced by a percentage equal to the non-defense sequester percentage applied in the Sequestration Report (submitted under the Balanced Budget and Emergency Deficit Control Act of 1985 and 2 USC 901 note. dated January 21, 1986) of the Comptroller General of the United States for fiscal year 1986. PART 2—AUTHORIZATION OF APPROPRIATIONS FOR TRADE AND CUSTOMS AGENCIES SEC. 13021. UNITED STATES INTERNATIONAL TRADE COMMISSION. The first sentence of paragraph (2) of section 330(e) of the Tariff Act of 1930 (19 U.S.C. 1330(e)(2)) is amended to read as follows: "There are authorized to be appropriated to the Commission for necessary expenses (including the rental of conference rooms in the District of Columbia and elsewhere) for fiscal year 1986 not to exceed $28,901,000; of which not to exceed $2,500 may be used, subject to approval by the Chairman of the Commission, for recep- tion and entertainment expenses.". SEC. 13022. UNITED STATES CUSTOMS SERVICE. (a) AUTHORIZATION OF APPROPRIATIONS.—Section 301 of the Cus- toms Procedural Reform and Simplification Act of 1978 (19 U.S.C. 2075) is amended as follows: (1) Subsection (b) is amended to read as follows: "Ot))(l) There are authorized to be appropriated to the Department of the Treasury not to exceed $772,141,000 for the salaries and expenses of the United States Customs Service for fiscal year 1986; of which—
100 STAT. 306 PUBLIC LAW 99-272—APR. 7, 1986 "(A) $27,900,000 is for the addition of 500 inspectors, 150 import specialists, 100 customs patrol officers, and 50 special agents; "(B) $53,500,000 is for the operation and maintenance of the air interdiction program of the Service; and "(C) not to exceed $14,000,000 is for the implementation of the 'Operation EXODUS' program and any related program de- signed to enforce or monitor export controls under the Export 50 u s e app. Administration Act of 1979. 2401 note. "(2) No part of any sum that is appropriated under the authority of paragraph (1) may be used to close any port of entry at which, during fiscal year 1985— "(A) not less than 2,500 merchandise entries (including infor- mal entries) were made; and "(B) not less than $1,500,000 in customs revenues were assessed. Aircraft and "(3)(A) No part of any sum that is appropriated under the author- air carriers. ity of paragraph (1) may be used for further research and develop- Drugs and drug abuse. ment or acquisition of F-15 avionics for the P-3 aircraft and related equipment until 60 days after the Committee on Ways and Means and the Committee on Finance have received from the Secretary of the Treasury a written comparative assessment of the suitability of the P-3, E-2, or other appropriate aircraft for use by the Customs Service in its air drug interdiction program. Such assessment, which the Secretary may not submit to the Committees until the General Accounting Office study required under paragraph (7) is completed, shall include life cycle costs. "(B) Acquisition of additional aircraft for use by the Customs Service for its air drug interdiction program after completion of the assessment required under subparagraph (A) shall be subject to competitive bidding through the use of the normal 'request for proposal' process. "(4) No part of any sum that is appropriated under the authority of paragraph (1) may be used to consolidate the drawback liquida- tion centers within the Customs Service to less than 4 such centers. If a consolidation is undertaken, the Commissioner of Customs shall select the location of the centers after taking into account the drawback volume at, and the geographic dispersion of, the respec- tive centers being considered for consolidation. "(5) In addition to any sum authorized to be appropriated under paragraph (1), there are authorized to be appropriated to the Depart- ment of the 'Treasury for fiscal year 1986 not to exceed $8,000,000 from the Customs Forfeiture Fund for the making of payments under section 613A of the Tariff Act of 1930 (19 U.S.C. 1613b), of which not to exceed $5,000,000 may be used for the modification of aircraft (whether or not aircraft described in subsection (aX5) of that section) for drug interdiction. "(6) In addition to any other amounts authorized to be appro- priated for the Customs Service for fiscal years 1987 and 1988, there are authorized to be appropriated $27,900,000 for each of such fiscal years to fund the additional personnel referred to in paragraph (IXA). "(7) As soon as possible after the date of the enactment of this paragraph, but not later than 12 months after that date, the Gen- eral Accounting Office shall complete, and submit to the Committee on Ways and Means and the Committee on Finance, a study that evaluates the air detection and interdiction capability of the Cus-
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 307 toms Service, including assets, geographic dispersal, costs of oper- ation, procurement practices, and the services and equipment pro- vided by other Federal agencies. Within 6 months after commencing the study, the General Accounting Office shall consult with the Committees on the progress of the study."; and (2) by adding at the end thereof the following new subsections: "(f) USE OF SAVINGS RESULTING FROM ADMINISTRATIVE CONSOLIDA- TIONS.—If savings in salaries and expenses result from the consolida- tion of administrative functions within the Customs Service, the Commissioner of Customs shall apply those savings, to the extent they are not needed to meet emergency requirements of the Service, to strengthening the commercial operations of the Service by increasing the number of inspector, import specialist, patrol officer, and other line operational positions. "(g) ALLOCATION OF RESOURCES.—The Commissioner of Customs shall ensure that existing levels of commercial services, including inspection and control, classification, and value, shall continue to be provided by Customs personnel assigned to the headquarters office of any Customs district designated by statute before the date of enactment of this subsection. The number of such personnel as- signed to any such district headquarters shall not be reduced through attrition or otherwise, and such personnel shall be afforded the opportunity to maintain their proficiency through training and workshops to the same extent provided to Customs personnel in any other district. Automation and other modernization equipment shall be made available, as needed on a timely basis, to such headquarters to the same extent as such equipment is made available to any other district headquarters.". (b) ELIMINATION OF SURETIES ON CUSTOMS BONDS.—(1) The Commissioner of Customs may not publish, nor take any other action to give force and effect to, any final rule that would revise any provision in 19 CFR part 113 or section 142.4 (as in effect on March 1, 1984) relating to the requirement for sureties on customs bonds— (A) unless the Commissioner submits to the Committee on Reports. Ways and Means of the House of Representatives and the Committee on Finance of the Senate, on the same day, a report containing— (i) the text of the draft final rule; (ii) an analysis of the revenue impact of the rule; (iii) a regulatory impact analysis; (iv) the estimated cost benefit of the rule to the Customs Service and to the importing community, and an expla- nation in support of those estimates; and (v) a justification for each revision to be effected by the rule; and (B) until the close of the first period of 90 calendar days of continuous session of Congress occurring after the date on which the report is submitted under subparagraph (A). SEC. 13023. UNITED STATES TRADE REPRESENTATIVE. Section 141 of the Trade Act of 1974 (19 U.S.C. 2171) is amended— (1) by inserting before the semicolon at the end of subsection (d)(1) the following: ", except that not more than 20 individuals may be employed without regard to any provision of law regu- lating the employment or compensation at rates not to exceed
100 STAT. 308 PUBLIC LAW 99-272—APR. 7, 1986 the rate of pay for level IV of the Executive Schedule in section 5314 of title 5, United States Code"; and (2) by amending subsection (f)(1) by striking out "$14,179,000 for fiscal year 1985" and inserting in lieu thereof "$13,582,000 for fiscal year 1986". SEC. 13024. NOTIFICATION OF CERTAIN ACTIONS. Section 237 of the Trade and Tariff Act of 1984 (98 Stat. 2993) is amended— (1) by striking out "1985" in subsection (b) and inserting in lieu thereof "1986"; (2) by striking out subsection (c); (3) by redesignating subsection (b) as subsection (c); and (4) by inserting after subsection (a) the following new sub- section: "(b) The notice required under subsection (a) shall include— "(1) a statement which sets forth in detail the factors taken into account in making the decision to take the action described in subsection (a) and the reasons for such action; and "(2) an analysis of the impact such action will have on the commerce and community served by each office affected by such action.". PART 3—CUSTOMS FEES SEC. 13031. FEES FOR CERTAIN CUSTOMS SERVICES. Vessels. (a) SCHEDULE OF FEES.—In addition to any other fee authorized by Railroads. law, the Secretary of the Treasury shall charge and collect the ^^rr^^^* ^^^ ^^^ following fees for the provision of customs services in connection 19 use 580. with the following: (1) For the arrival of a commercial vessel of 100 net tons or more, $397. (2) Subject to the limitation in subsection (b)(2), for the arrival of a commercial truck, $5. (3) Subject to the limitations in subsection (b)(1)(B) and (3), for the arrival of each railroad car, whether passenger or freight, $5. (4) For all arrivals made during a calendar year by a private vessel or private aircraft, $25. (5) For the arrival of each passenger aboard a commercial vessel or commercial aircraft from a place outside the United States (other than a place referred to in subsection (b)(1)(A)), $5. (6) For each item of dutiable mail for which a document is prepared by a customs officer, $5. (7) For each customs broker permit held by an individual, partnership, association, or corporate customs broker, $125 per year. Prohibition. (b) LIMITATIONS ON FEES.—(1) No fee may be charged under subsec- 19 use 58c. tion (a) for customs services provided in connection with— (A) the arrival of any passenger whose journey originated in— (i) Canada, (ii) Mexico, (iii) a territory or possession of the United States, or (iv) any adjacent island (within the meaning of section 101(b)(5) of the Immigration and Nationality Act (8 U.S.C. 1101(b)(5)); or
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 309 (B) the arrival of any railroad car that is part of a train which originates and terminates in the same country, but only if— (i) such car is part of such train when such train departs from the United States, and (ii) no passengers board or disembark from such train, and no cargo is loaded or unloaded from such train, while such train is within any country other than the country in which such train originates and terminates. (2) No fee may be charged under subsection (a)(2) for the arrival of a commercial truck during any calendar year after a total of $100 in fees has been paid to the Secretary of the Treasury for the provision of customs services for all arrivals of such commercial truck during such calendar year. (3) No fee may be charged under subsection (a)(3) for the arrival of a railroad car whether passenger or freight during any calendar year after a total of $10() in fees has been paid to the Secretary of the Treasury for the provision of customs services for all arrivals of such passenger or freight rail car during such calendar year. (c) DEFINITIONS.—For purposes of this section— 19 u s e 58c. (1) The term "vessel" does not include any ferry. (2) The term "arrival" means arrival at a port of entry in the customs territory of the United States. (3) The term ' customs territory of the United States" has the meaning given to such term by headnote 2 of the General Headnotes and Rules of Interpretation of the Tariff Schedules of the United States. 19 u s e 1202. (4) The term "customs broker permit" means a permit issued under section 641(c) of the Tariff Act of 1930 (19 U.S.C. 1641(c)). (d) COLLECTION.—(1) Each person that issues a document or ticket Transportation. to an individual for transportation by a commercial vessel or Aircraft and commercial aircraft into the customs territory of the United States air carriers. Maritime affairs. shall— 19 u s e 58c. (A) collect from that individual the fee charged under subsec- tion (a)(5) at the time the document or ticket is issued; and (B) separately identify on that document or ticket the fee charged under subsection (a)(5) as a Federal inspection fee. (2) I f - (A) a document or ticket for transportation of a passenger into the customs territory of the United States is issued in a foreign country; and (B) the fee charged under subsection (a)(5) is not collected at the time such document or ticket is issued; the person providing transportation to such passenger shall collect such fee at the time such passenger departs from the customs territory of the United States and shall provide such passenger a receipt for the payment of such fee. (3) The person who collects fees under paragraph (1) or (2) shall remit those fees to the Secretary of the Treasury at any time before the date that is 31 days after the close of the calendar quarter in which the fees are collected. (e) PROVISION OF CUSTOMS SERVICES.—(1) Notwithstanding section Aircraft and air 451 of the Tariff Act of 1930 (19 U.S.C. 1451) or any other provision carriers. of law (other than paragraph (2)), the customs services required to be 19 u s e 58c. provided to passengers upon arrival in the United States on sched- uled airline flights at customs serviced airports shall be adequately provided when needed and at no cost (other than the fees imposed under subsection (a)) to airlines and airline passengers.
100 STAT. 310 PUBLIC LAW 99-272—APR. 7, 1986 (2) This subsection shall not apply with respect to any airport to which section 236 of the Trade and Tariff Act of 1984 (19 U.S.C. 58b) applies. 19 use 58c. (f) DISPOSITION OF FEES.—(1) Notwithstanding section 524 of the Tariff Act of 1930 (19 U.S.C. 1524), all of the fees collected under subsection (a) shall be deposited in a separate account within the general fund of the Treasury of the United States. Such account shall be known as the "Customs User Fee Account". (2)(A) The Secretary of the Treasury shall refund out of the Customs User Fee Account to any appropriation the amount paid out of such appropriation for expenses incurred by the Secretary of the Treasury in providing overtime customs inspectional services for which the recipient of such services is not required to reimburse the Secretary of the Treasury. (B) The amounts which are required to be refunded under subparagraph (A) shall be refunded at least quarterly on the basis of estimates made by the Secretary of the Treasury of the expenses referred to in subparagraph (A). Proper adjustments shall be made in the amounts subsequently refunded under subparagraph (A) to the extent prior estimates were in excess of, or less than, the amounts required to be refunded under subparagraph (A). 19 use 58c. (g) REGULATIONS.—The Secretary of the Treasury may prescribe such rules and regulations as may be necessary to carry out the provisions of this section. (h) CONFORMING AMENDMENTS.—(1) Subsection (i) of section 305 of the Rail Passenger Service Act (45 U.S.C. 545(i)) is amended by striking out the last sentence thereof. (2) Subsection (e) of section 53 of the Airport and Airway Develop- 49 use app. ment Act of 1970 (49 U.S.C. 1741(e)) is repealed. i'^4i. (i) EFFECT ON OTHER AUTHORITY.—Except with respect to customs 19 use 58c. services for which fees are imposed under subsection (a), nothing in this section shall be construed as affecting the authority of the Secretary of the Treasury to charge fees under section 214(b) of the Customs Procedural Reform and Simplification Act of 1978 (19 U.S.C. 58a). 19 use 58c note. (j) EFFECTIVE DATES.—(1) Except as provided in paragraph (2), the provisions of this section, and the amendments and repeals made by this section, shall apply with respect to customs services rendered after the date that is 90 days after the date of enactment of this Act. (2) Fees may be charged under subsection (a)(5) only with respect to customs services rendered in regard to arriving passengers using transportation for which documents or tickets were issued after the date that is 90 days after such date of enactment. SEC. 13032. USER FEES FOR CUSTOMS SERVICES AT CERTAIN SMALL AIR- PORTS. Section 236 of the Trade and Tariff Act of 1984 (19 U.S.C. 58b) is amended— (1) by striking out "4 airports" in subsection (c) and inserting in lieu thereof "20 airports '; and (2) by striking out the last sentence in subsection (e) and inserting in lieu thereof the following new sentences: "The Secretary of the Treasury is authorized and directed to pay out of any funds available in such account any expenses incurred by the Federal Government in providing customs services at such airport (including expenses incurred for the salaries and ex- penses of individuals employed to provide such services). None
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 311 of the funds deposited into such account shall be available for any purpose other than making payments authorized under the preceding sentence.". SEC. 13033. ADVISORY COMMITTEE. 19 USC 2071 In accordance with the provisions of the Federal Advisory Committee Act, the Secretary of the Treasury shall establish an 5 USC app. advisory committee, whose membership shall consist of representa- tives from the airline, shipping, and other transportation industries, the general public, and others who may be subject to any fee or charge (1) authorized by law, or (2) proposed by the United States Customs Service for the purpose of covering expenses incurred by the Customs Service. The advisory committee shall meet on a periodic basis and shall advise the Secretary on issues related to the performance of the customs services. This advice shall include, but not be limited to, such issues as the time periods during which such services should be performed, the proper number and deployment of inspection officers, the level of fees, and the appropriateness of any proposed fee. The Secretary shall give substantial consideration to the views of the advisory committee in the exercise of his duties. Subtitle B—General Revenue Provisions SEC. 13200. AMENDMENT OF 1954 CODE. Except as otherwise expressly provided, whenever in this subtitle an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1954. 26 USC l et seq. SEC. 13201. INCREASE IN TAX ON CIGARETTES MADE PERMANENT. (a) Subsection (c) of section 283 of the Tax Equity and Fiscal Responsibility Act of 1982 (relating to increase in tax on cigarettes) 26 USC 5701 is amended by striking out all that follows "December 31, 1982" and ^°^- inserting in lieu thereof a period. (b) For purposes of all Federal and State laws, the amendment state and local made by subsection (a) shall be treated as having taken effect on 1°^®^'!?"^®"*^^- M a r c h 14,1986. ^6 USC 5701 SEC. 13202. TAX ON SMOKELESS TOBACCO. (a) In GENERAL.—Section 5701 (relating to rate of tax) is amended 26 USC 5701. by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: "(e) SMOKELESS TOBACCO.—On smokeless tobacco, manufacturered in or imported into the United States, there shall be imposed the following taxes: "(1) SNUFF.—On snuff, 24 cents per pound and a propor- tionate tax at the like rate on all fractional parts of a pound. "(2) CHEWING TOBACCO.—On chewing tobacco, 8 cents per pound and a proportionate tax at the like rate on all fractional parts of a pound.". (b) CONFORMING AMENDMENTS.— (1) The heading of chapter 52 is amended by inserting "SMOKELESS TOBACCO," after "CIGARETTES,".
100 STAT. 312 PUBLIC LAW 99-272—APR. 7, 1986 26 use 5702. (2) Section 5702(c) (defining tobacco products) is amended by striking out "and cigarettes" and inserting in lieu thereof ", cigarettes, and smokeless tobacco". (3) Section 5702(d) (defining manufacturers of tobacco prod- ucts) is amended by striking out "cigars or cigarettes" each place it appears and inserting in lieu thereof "cigars, cigarettes, or smokeless tobacco". (4) Section 5702 is amended by adding at the end thereof the following new subsection: "(n) DEFINITIONS RELATING TO SMOKELESS TOBACCO.— "(1) SMOKELESS TOBACCO.—The term 'smokeless tobacco' means any snuff or chewing tobacco. "(2) SNUFF.—The term 'snuff means any finely cut, ground, or powdered tobacco that is not intended to be smoked. "(3) CHEWING TOBACCO.—The term 'chewing tobacco' means any leaf tobacco that is not intended to be smoked,". 26 use 5701 (c) EFFECTIVE DATE.— note. (1) IN GENERAL.—The amendments made by this section shall apply to smokeless tobacco removed after June 30,1986. (2) TRANSITIONAL RULE.—Any person who— (A) on the date of the enactment of this Act, is engaged in business as a manufacturer of smokeless tobacco, and (B) before July 1, 1986, submits an application under sulbchapter B of chapter 52 of the Internal Revenue Code of 26 use 5711. 1954 to engage in such business, may, notwithstanding such subchapter B, continue to engage in such business pending final action on such application. Pending 26 use 5701 et such final action, all provisions of chapter 52 of such Code shall s«9- apply to such applicant in the same manner and to the same extent as if such applicant were a holder of a permit to manu- facture smokless tobacco under such chapter 52. SEC. 13203. INCREASE IN EXCISE TAX ON COAL. 26 use 4121. (a) INCREASE IN TAX.—Subsections (a) and (b) of section 4121 (relating to imposition of tax on coal) are amended to read as follows: "(a) TAX IMPOSED.— "(1) IN GENERAL.—There is hereby imposed on coal from mines located in the United States sold by the producer, a tax equal to the rate per ton determined under subsection (b). "(2) LIMITATION ON TAX.—The amount of the tax imposed by paragraph (1) with respect to a ton of coal shall not exceed the applicable percentage (determined under subsection (b)) of the price at which such ton of coal is sold by the producer. "(b) DETERMINATION OF RATES AND LIMITATION ON TAX.—For pur- poses of subsection (a), in the case of sales during any calendar year beginning after December 31, 1985— "(1) the rate of tax on coal from underground mines shall be $1.10, "(2) the rate of tax on coal from surface mines shall be $.55, and "(3) the applicable percentage shall be 4.4 percent.". 26 use 9501 (b) 5-YEAR MORATORIUM ON INTEREST ACCRUALS WITH RESPECT TO note. THE INDEBTEDNESS OF THE BLACK LUNG DISABILITY TRUST FUND.—No interest shall accrue for the period beginning on October 1, 1985, and ending on September 30, 1990, with respect to any repayable advance to the Black Lung Disability Trust Fund.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 313 (c) EXISTING REDUCTION IN RATES FOR PERIOD AFTER TEMPORARY INCREASE RETAINED.—So much of subsection (e) of section 4121 26 use 4i2i. (relating to temporary increase in amount of tax) as precedes para- graph (2) is amended to read as follows: "(e) REDUCTION IN AMOUNT OF TAX.— "(1) I N GENERAL.—Effective with respect to sales after the temporary increase termination date, subsection (b) shall be applied— "(A) by substituting '$.50' for '$1.10', "(B) by substituting '$.25' for '$.55', and "(C) by substituting '2 percent' for '4.4 percent'.". (d) EFFECTIVE DATE.—The amendments made by this section shall 26 use 4121 apply to sales after March 31,1986. note. SEC. 13204. ONLY RAILROAD RETIREMENT BENEFITS EQUIVALENT TO SOCIAL SECURITY BENEFITS TREATED AS TIER 1 BENEFITS. (a) I N GENERAL.—Paragraph (4) of section 86(d) (defining Social 26 use 86. Security benefits) is amended to read as follows: ' (4) TIER i RAILROAD RETIREMENT BENEFIT.—For purposes of paragraph (1), the term 'tier 1 railroad retirement benefit' means— "(A) the amount of the annuity under the Railroad Retirement Act of 1974 equal to the amount of the benefit 45 use 231. to which the taxpayer would have been entitled under the Social Security Act if all of the service after December 31, 42 use 1305 et 1936, of the employee (on whose employment record the *^9 annuity is being paid) had been included in the term 'employment' as defined in the Social Security Act, and "(B) a monthly annuity amount under section 3(f)(3) of the Railroad Retirement Act of 1974.". 45 use 231b. Qa) EFFECTIVE DATE.—The amendment made by subsection (a) 26 use 86 note. shall apply to any monthly benefit for which the generally ap- plicable payment date is after December 31,1985. SEC. 13205. MEDICARE COVERAGE OF, AND APPLICATION OF HOSPITAL INSURANCE TAX TO, NEWLY HIRED STATE AND LOCAL GOVERNMENT EMPLOYEES. (a) APPLICATION OF HOSPITAL INSURANCE TAX TO NEWLY HIRED EMPLOYEES OF STATE AND LOCAL GOVERNMENTS.— (1) I N GENERAL.—Subsection (u) of section 3121 (relating to 26 use 3121. application of hospital insurance tax to Federal employment) is amended to read as follows: "(u) APPLICATION OF HOSPITAL INSURANCE TAX TO FEDERAL, STATE, AND LOCAL EMPLOYMENT.— "(1) FEDERAL EMPLOYMENT.—For purposes of the taxes im- posed by sections 31010?) and 3111(b), subsection (b) shall be 26USe3ioi, applied without regard to paragraph (5) thereof. 3lii. "(2) STATE AND LOCAL EMPLOYMENT.—For purposes of the taxes imposed by sections 3101(b) and 31110t))— "(A) I N GENERAL.—Except as provided in subparagraphs (B) and (C), subsection (b) shall be applied without regard to paragraph (7) thereof. "(B) EXCEPTION FOR CERTAIN SERVICES.—Service shall not be treated as employment by reason of subparagraph (A) if— "(i) the service is included under an agreement under section 218 of the Social Security Act, or 42 use 418.
100 STAT. 314 PUBLIC LAW 99-272—APR. 7, 1986 "(ii) the service is performed— "(I) by an individual who is employed by a State or political subdivision thereof to relieve him from unemployment, District of "(H) in a hospital, home, or other institution by a Columbia. patient or inmate thereof as an employee of a State or political subdivision thereof or of the District of Columbia, "(III) by an individual, as an employee of a State or political subdivision thereof or of the District of Columbia, serving on a temporary basis in case of fire, storm, snow, earthquake, flood or other simi- lar emergency, or "(IV) by any individual as an employee included under section 5351(2) of title 5, United States Code (relating to certain interns, student nurses, and other student employees of hospitals of the District of Columbia Government), other than as a medical or dental intern or a medical or dental resident in training. As used in this subparagraph, the terms 'State' and 'politi- cal subdivision' have the meanings given those terms in 42 use 418. section 218(b) of the Social Security Act. "(C) EXCEPTION FOR CURRENT EMPLOYMENT WHICH CON- TINUES.—Service performed for an employer shall not be treated as employment by reason of subparagraph (A) if— "(i) such service would be excluded from the term 'employment' for purposes of this chapter if subpara- graph (A) did not apply; "(ii) such service is performed by an individual— "(I) who was performing substantial and regular service for remuneration for that employer before April 1,1986, "(II) who is a bona fide employee of that em- ployer on March 31,1986, and "(III) whose employment relationship with that employer was not entered into for purposes of meeting the requirements of this subparagraph; and "(iii) the employment relationship with that em- ployer has not been terminated after March 31, 1986. "(D) TREATMENT OF AGENCIES AND INSTRUMENTAUTIES.— District of For purposes of subparagraph (C), under regulations— Columbia. "(j) All agencies and instrumentalities of a State (£is 42 use 418. defined in section 218(b) of the Social Security Act) or of the District of Columbia shall be treated as a single employer. "(ii) All agencies and instrumentalities of a political subdivision of a State (as so defined) shall be treated as a single employer and shall not be treated as described in clause (i). "(3) MEDICARE QUALIFIED GOVERNMENT EMPLOYMENT.—For purposes of this chapter, the term 'medicare qualified govern- ment employment' means service which— "(A) is employment (as defined in subsection (b)) with the application of paragraphs (1) and (2), but
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 315 "(B) would not be employment (as so defined) without the application of such paragraphs." (2) CONFORMING AMENDMENTS.— (A)(i) Section 3125 (relating to returns in the case of 26 u s e 3125. governmental employees in Guam, American Samoa, and Guam, the District of Columbia) is amended by redesignated American Samoa. subsections (a), (b), and (c) as subsections (b), (c), and (d), District of respectively, and by inserting before subsection (b) (as so Columbia. redesignated) the following new subsection: "(a) STATES.—Except as otherwise provided in this section, in the case of the taxes imposed by sections 3101(b) and 3111(b) with 26 u s e 3101, respect to service performed in the employ of a State or any political 3111. subdivision thereof (or any instrumentality of any one or more of the foregoing which is wholly owned thereby), the return and pay- ment of such taxes may be made by the head of the agency or instrumentality having the control of such service, or by such agents as such head may designate. The person making such return may, for convenience of administration, make payments of the tax im- posed under section 3111 with respect to the service of such individ- uals without regard to the contribution and benefit base limitation in section 3121(a)(1)." (ii) The section heading for such section 3125 is amended by inserting "STATES," before "GUAM". (iii) The item relating to section 3125 in the table of sections for subchapter C of chaper 21 is amended by inserting "States," before "Guam". (B) Subsection (b) of section 1402 is amended by striking 26 u s e 1402. out "medicare qualified Federal employment (as defined in section 3121(uX2))" and inserting in lieu thereof "medicare 26 u s e 3121. qualified government employment (as defined in section 3121(u)(3))". (C) Section 3122 (relating to Federal service) is amended 26 u s e 3122. by striking out "including service which is medicare quali- fied Federal employment (as defined in section 3121(u)(2))" and inserting in lieu thereof "including such service which is medicare qualified government employment (as defined in section 3121(u)(3))". (D) Subsection (a) of section 6205 (relating to special rules 26 u s e 6205. applicable to certain employment tsixes) is amended by adding at the end thereof the following new paragraph: "(5) STATES AND POLITICAL SUBDIVISIONS AS EMPLOYER.—For purposes of this subsection, in the case of remuneration received from a State or any political subdivision thereof (or any instrumentality of any one or more of the foregoing which is wholly owned thereby) during any calendar year, each head of an agency or instrumentality, and each agent designated by either, who makes a return pursuant to section 3125 shall be 26 u s e 3125. deemed a separate employer.' (E)(i) Section 6413(a) (relating to adjustment of certain 26 u s e 6413. employment taxes) is amended by adding at the end thereof the following new paragraph: "(5) STATES AND POLITICAL SUBDIVISIONS AS EMPLOYER.—For purposes of this subsection, in the case of remuneration received from a State or any political subdivision thereof (or any instrumentality of any one or more of the foregoing which is wholly owned thereby) during any calendar year, each head of an agency or instrumentality, and each agent designated by
100 STAT. 316 PUBLIC LAW 99-272—APR. 7, 1986 26 use 3125. either, who makes a return pursuant to section 3125 shall be deemed a separate employer." 26 use 6413. (ii) Section 6413(c)(2) (relating to special refunds of certain employment taxes) is amended— (I) by striking out "3125(a)", "3125(b)", and "3125(c)" in subparagraphs (D), (E), and (F), respectively, and inserting in lieu thereof "3125(b)", "3125(c)", and "3125(d)^', respectively, and (II) by adding at the end thereof the following new subparagraph: "(G) EMPLOYEES OF STATES AND POLITICAL SUBDIVISIONS.— In the case of remuneration received from a State or any political subdivision thereof (or any instrumentality of any one or more of the foregoing which is wholly owned thereby) during any calendar year, each head of an agency or instrumentality, and each agent designated by either, who makes a return pursuant to section 3125(a) shall, for purposes of this subsection, be deemed a separate employer." (b) ENTITLEMENT TO HOSPITAL INSURANCE BENEFITS.— (1) REVISION OF DEFINITION OF MEDICARE QUALIFIED GOVERN- MENT EMPLOYMENT.—Section 210(p)) of the Social Security Act (42 U.S.C. 410(p)) is amended to read as follows: "MEDICARE QUALIFIED GOVERNMENT EMPLOYMENT State and local "(p)(l) For purposes of sections 226 and 226A, the term 'medicare governments. qualified government employment' means any service which would 426^1 ^^^' constitute 'employment' as defined in subsection (a) of this section but for the application of the provisions of— "(A) subsection (a)(5), or "(B) subsection (a)(7), except as provided in paragraphs (2) and (3). "(2) Service shall not be treated as employment by reason of paragraph (1)(B) if the service is performed— "(A) by an individual who is employed by a State or political subdivision thereof to relieve him from unemployment, "(B) in a hospital, home, or other institution by a patient or inmate thereof as an employee of a State or political subdivision thereof or of the District of Columbia, "(C) by an individual, as an employee of a State or political subdivision thereof or of the District of Columbia, serving on a temporary basis in case of fire, storm, snow, earthquake, flood or other similar emergency, or "(D) by any individual as an employee included under section 5351(2) of title 5, United States Code (relating to certain interns, student nurses, and other student employees of hospitals of the District of Columbia Government), other than as a medical or dental intern or a medical or dental resident in training. As used in this paragraph, the terms 'State' and 'political subdivi- 42 use 418. sion' have the meanings given those terms in section 218(b). "(3) Service performed for an employer shall not be treated as employment by reason of paragraph (1)(B) if— "(A) such service would be excluded from the term 'employ- ment' for purposes of this section if paragraph (1)(B) did not apply; "(B) such service is performed by an individual—
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 317 "(i) who was performing substantial and regular service for remuneration for that employer before April 1, 1986, "(ii) who is a bona fide employee of that employer on March 31, 1986, and "(iii) whose employment relationship with that employer was not entered into for purposes of meeting the require- ments of this subparagraph; and "(C) the employment relationship with that employer has not been terminated after March 31, 1986. "(4) For purposes of paragraph (3), under regulations (consistent with regulations established under section 3121(u)(2XD) of the In- ternal Revenue Code of 1954)— 26 use 3121. "(A) all agencies and instrumentalities of a State (as defined in section 218(b)) or of the District of Columbia shall be treated 42 USC 418. as a single employer, and "(B) all agencies and instrumentalities of a political subdivi- sion of a State (as so defined) shall be treated as a single employer and shall not be treated as described in subparagraph "(A)." (2) ENTITLEMENT TO HOSPITAL INSURANCE BENEFITS.— (A) FOR INDIVIDUALS AGE 65 OR OLDER AND FOR DISABLED INDIVIDUALS.—Section 226 of such Act (42 U.S.C. 426) is amended by striking out "medicare qualified Federal employment" in subsections (a)(2)(C)(i) and (b)(2)(C)(ii)(I) and inserting in lieu thereof "medicare qualified government - employment". (B) FOR INDIVIDUALS WITH END-STAGE RENAL DISEASE.— Section 226A(a) of such Act (42 U.S.C. 426-l(a)) is amended by striking out "medicare qualified Federal employment" in paragraphs (l)(A)(ii) and (l)(B)(iii) and inserting in lieu thereof "medicare qualified government employment". (C) CONFORMING AMENDMENTS.— (i) Section 1811 of such Act (42 U.S.C. 1395c) is amended by striking out "Federal employment" in clauses (1) and (2) and inserting in lieu thereof "govern- ment employment". (ii) Section 226(g) of such Act (42 U.S.C. 426(g)) is amended by striking out "medicare qualified Federal employment" and inserting in lieu thereof "medicare qualified government employment by virtue of service described in section 210(a)(5)". 42 use 410. (c) OPTIONAL MEDICARE COVERAGE OF CURRENT EMPLOYEES.—Sec- tion 218 of the Social Security Act (42 U.S.C. 418) is amended by adding at the end the following new subsection: "(v)(l) The Secretary shall, at the request of any State, enter into State and local or modify an agreement with such State under this section for the governments. purpose of extending the provisions of title XVIII, and sections 226 425^ ^^^^' and 226A, to services performed by employees of such State or any 42 use 426-1. political subdivision thereof who are described in paragraph (2). "(2) This subsection shall apply only with respect to employees— "(A) whose services are not treated as employment as that term applies under section 210(p) by reason of paragraph (3) of Ante, p. 316. such section; and "(B) who are not otherwise covered under the State's agree- ment under this section. "(3) Payments by the State required under subsection (e) with respect to employees covered under this subsection shall be limited
100 STAT. 318 PUBLIC LAW 99-272—APR. 7, 1986 to amounts equivalent to the sum of the taxes which would be imposed by sections 3101(b) and 3111(b) of the Internal Revenue 26 use 3101, Code of 1954 if such services for which wages were paid to such 3111- employees constituted 'employment' as defined in section 3121 of 26 use 3121. such Code. 42 use 426, "(4) For purposes of sections 226 and 226A of this Act, services 426-1. covered under an agreement pursuant to this subsection shall be treated as 'medicare qualified government employment'. "(5) Except as otherwise provided in this subsection, the provisions of this section shall apply with respect to services covered under the agreement pursuant to this subsection. "(w) Notwithstanding sections 3125(a), 6205(a)(5), 6413(a)(5), and 26 use 3125, 6413(c)(2)(G) of the Internal Revenue Code of 1954, any State shall 6205,6413. make payments of the taxes imposed with respect to services of employees of such State and of a political subdivision thereof under sections 3101(b) and 3111(b) of such Code, and reports of such services, under the same procedures as apply to payments and reports under subsection (e) of this section, but only if any employ- ees of such State or of such political subdivision thereof respectively are covered under an agreement pursuant to this section.". 26 use 3121 (d) EFFECTIVE DATES.— note. (1) HOSPITAL INSURANCE TAXES.—The amendments made by sulDsection (a) shall apply to services performed after March 31, 1986. 42 u s e 410 n^te. (2) MEDICARE COVERAGE.— (A) I N GENERAL.—The amendments made by subsection Ot)) shall be effective after March 31, 1986, and the amend- ments made by paragraph (3) of that subsection shall apply to services performed (for medicare qualified government employment) after that date. (B) 'TREATMENT OF CERTAIN DISABILITIES.—For purposes of establishing entitlement to hospital insurance benefits 42 use 1395c. under part A of title XVIII of the Social Security Act pursuant to the amendments made by subsection (b), no individual may be considered to be under a disability for any period beginning before April 1,1986. 42 use 418 note. (3) OPTIONAL COVERAGE OF CURRENT EMPLOYEES.—The amend- ment made by subsection (c) shall apply to services performed after March 31,1986. SEC. 13206. FULL-TIME STUDENTS NOT ELIGIBLE FOR INCOME AVER- AGING. 26 use 1303. (a) IN GENERAL.—Subsection (d) of section 1303 (defining eligible individuals for income averaging) is amended to read as follows: "(d) ELIGIBLE INDIVIDUALS NOT T O INCLUDE FULL-TIME STU- DENTS.— "(1) IN GENERAL.—For purposes of this part, an individual shall not be an eligible individual for the computation year if, at any time during any base period year, such individual was a student. "(2) EXCEPTION FOR MARRIED STUDENTS PROVIDING 25 PERCENT OR LESS OF JOINT INCOME.—Paragraph (1) shall not apply to any individual for any computation year if— "(A) the individual makes a joint return for the computa- tion year, and "(B) not more than 25 percent of the aggregate adjusted gross income of such individual and the spouse of such
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 319 individual for such computation year is attributable to such individual. In applying subparagraph (B), amounts which constitute earned income (within the meaning of section 911(d)(2)) and are community income under commuity prop- 26 USC 911. erty laws applicable to such income shall be taken into account as if such amounts did not constitute community income. "(3) STUDENT DEFINED.—For purposes of this subsection, the term 'student' means, with respect to a taxable year, an individ- ual who during each of 5 calendar months during such taxable year— "(A) was a full-time student at an educational organiza- tion described in section 170(b)(l)(A)(ii); or 26 USC 170. "(B) was pursuing a full-time course of institutional on- farm training under the supervision of an accredited agent of an educational organization described in section 170(b)(l)(A)(ii) or of a State or political subdivision of a State.". (b) REPEAL OF NON-FULL-TIME STUDENT SUPPORT EXCEPTION.— Paragraph (2) of section 1303(c) (relating to individuals receiving 26 USC 1303. support from others) is amended— (1) by striking out subparagraph (A), (2) by redesignating subparagraphs (B) and (C) as subpara- graphs (A) and (B), and (3) by striking out "subparagraph (C)" in the second sentence and inserting in lieu thereof "subparagraph (B)". (c) EFFECTIVE DATE.—The amendments made by this section shall 26 use 1303 apply with respect to taxable years beginning after December 31, ^°^- 1985. SEC. 13207. APPLICATION OF FRINGE BENEFIT RULES TO AIRLINES AND THEIR AFFILIATES. (a) PARENTS OF A I R U N E EMPLOYEES TREATED AS EMPLOYEES IN APPLYING FRINGE BENEFIT RULES.— (1) IN GENERAL.—Section 132(f) (relating to certain individuals 26 USC 132. treated as employees with respect to certain fringe benefits) is amended by adding at the end thereof the following new paragraph: "(3) SPECIAL RULE FOR PARENTS IN THE CASE OF AIR TRANSPOR- TATION.—Any use of air transportation by a parent of an em- ployee (determined without regard to paragraph (1)(B)) shall be treated as use by the employee.". (2) EFFECTIVE DATE.—The amendment made by this subsection 26 USC 132 note, shall take effect on January 1,1985. (b) LINE OF BUSINESS TEST FOR AFFIUATES PROVIDING AIRLINE- RELATED SERVICES.— (1) IN GENERAL.—Section 132(h) (relating to special rules) is amended by adding at the end thereof the following new paragraph: "(6) SPECIAL RULE FOR AFFIUATES OF AIRLINES.— "(A) IN GENERAL.—If— "(i) a qualified affiliate is a member of an affiliated group another member of which operates an airline, and "(ii) employees of the qualified affiliate who are di- rectly engaged in providing airline-related services are
100 STAT. 320 PUBLIC LAW 99-272—APR. 7, 1986 entitled to no-additional-cost service with respect to air transportation provided by such other member, then, for purposes of applying paragraph (1) of subsection (a) to such no-additional-cost service provided to such employees, such qualified affiliate shall be treated as en- gaged in the same line of business as such other member. "(B) QUALIFIED AFFILIATE.—For purposes of this para- graph, the term 'qualified affiliate' means any corporation which is predominantly engaged in airline-related services. "(C) AIRLINE-RELATED SERVICES.—For purposes of this paragraph, the term 'airline-related services' means any of the following services provided in connection with air transportation: "(i) Catering. "(ii) Baggage handling, "(iii) Ticketing and reservations. "(iv) Flight planning and weather analysis. "(v) Restaurants and gift shops located at an airport. "(vi) Such other similar services provided to the air- line as the Secretary may prescribe. "(D) AFFILIATED GROUP.—For purposes of this paragraph, the term 'affiliated group' has the meaning given such term 26 use 1504. by section 1504(a).". 26 use 132 note. (2) EFFECTIVE DATE.—The amendment made by this subsection shall take effect on January 1, 1985. 26 u s e 132 note. (c) TRANSITIONAL R u L E FOR DETERMINATION OF LiNE OF BUSINESS IN CASE OF AFFILIATED GROUP OPERATING AIRUNE.—If, as of Septem- ber 12, 1984— (1) an individual— (A) was an employee (within the meaning of section 132 of 26 use 132. the Internal Revenue Code of 1954, including subsection (f) thereof) of one member of an affiliated group (as defined in 26 use 1504. section 1504 of such Code), hereinafter referred to as the "first corporation", and (B) was eligible for no-additional-cost service in the form of air transportation provided by another member of such affiliated group, hereinafter referred to as the "second corporation", (2) at least 50 percent of the individuals performing service for the first corporation were or had been employees of, or had previously performed services for, the second corporation, and (3) the primary business of the affiliated group was air transportation of passengers, then, for purposes of applying paragraphs (1) and (2) of section 132(a) 26 use 132. of the Internal Revenue Code of 1954, with respect to no-additional- cost services and qualified employee discounts provided after Decem- ber 31, 1984, for such individual by the second corporation, the first corporation shall be treated as engaged in the same air transpor- tation line of business as the second corporation. For purposes of the preceding sentence, an employee of the second corporation who is performing services for the first corporation shall also be treated as an employee of the first corporation. 26 u s e 132 note. (d) SPECIAL RULE FOR SERVICES RELATED TO PROVIDING AlR TRANSPORTATION.—Section 531 of the Tax Reform Act of 1984 is amended by redesignating subsections (g) and (h) as subsections (h) and (i), respectively, and by inserting after subsection (f) the follow- ing new subsection:
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 321 "(g) SPECIAL RULE FOR CERTAIN SERVICES RELATED TO A I R 26 use 132 note. TRANSPORTATION.— "(1) IN GENERAL.—If^ "(A) an individual performs services for a qualified air transportation organization, and "(B) such services are performed primarily for persons engaged in providing air transportation and are of the kind which (if performed on September 12, 1984) would qualify such individual for no-additional-cost services in the form of air transportation, then, with respect to such individual, such qualified air transportation organization shall be treated as engaged in the line of business of providing air transportation. "(2) QUALIFIED AIR TRANSPORTATION ORGANIZATION.—For pur- poses of paragraph (1), the term 'qualified air transportation organization' means any organization— "(A) if such organization (or a predecessor) was in exist- ence on September 12, 1984, "(B) if— "(i) such organization is described in section 501(c)(6) of the Internal Revenue Code of 1954 and the member- 26 USC 501. ship of such organization is limited to entities engaged in the transportation by air of individuals or property for compensation or hire, or "(ii) such organization is a corporation all the stock of which is owned entirely by entities referred to in clause (i), and "(C) if such organization is operated in furtherance of the activities of its members or owners.". SEC. 13208. CERTAIN INSOLVENT TAXPAYERS ALLOWED TO REDUCE CAP- ITAL GAINS PREFERENCE ITEM FOR PURPOSES OF THE INDIVIDUAL MINIMUM TAX. (a) IN GENERAL.—Paragraph (9) of section 57(a) (relating to capital 26 USC 57. gains as items of tax preference) is amended by adding at the end thereof the following new subparagraph: "(E) SPECIAL RULE FOR CERTAIN INSOLVENT TAXPAYERS.— "(i) IN GENERAL.—The amount of the tax preference under subparagraph (A) shall be reduced (but not below zero) by the excess (if any) of— "(I) the applicable percentage of gain from any farm insolvency transaction, over "(II) the applicable percentage of any loss from any farm insolvency transaction which offsets such gain. "(ii) REDUCTION LIMITED TO AMOUNT OF INSOLVENCY.— The amount of the reduction determined under clause (i) shall not exceed the amount by which the taxpayer is insolvent immediately before the transaction (re- duced by any portion of such amount previously taken into account under this clause). "(iii) FARM INSOLVENCY TRANSACTION.—For purposes of this subparagraph, the term 'farm insolvency trans- action' means— "(I) the transfer by a farmer of farmland to a creditor in cancellation of indebtedness or 71-194 0 - 89 - 13 : QL 3 Parti
100 STAT. 322 PUBLIC LAW 99-272—APR. 7, 1986 "(ID the sale or exchange by the farmer of prop- erty described in subclause (I) under the threat of foreclosure, but only if the farmer is insolvent immediately before such transaction. "(iv) INSOLVENT.—For purposes of this subparagraph, the term 'insolvent' means the excess of liabilities over the fair market value of assets. "(v) APPLICABLE PERCENTAGE.—For purposes of this subparagraph, the term 'applicable percentage' means that percentage of net capital gain with respect to 26 use 1202. which a deduction is allowed under section 1202(a). "(vi) FARMLAND.—For purposes of this subparagraph, the term 'farmland' means any land used or held for use in the trade or business of farming (within the 26 use 2032A. meaning of section 2032A(e)(5)). "(vii) FARMER.—For purposes of this subparagraph, the term 'farmer' means any taxpayer if 50 percent or more of the average annual gross income of the tax- payer for the 3 preceding taxable years is attributable to the trade or business of farming (within the meaning of section 2032A(e)(5))." 26 use 57 note. (b) EFFECTIVE DATE.—The amendment made by this section shall apply to transfers or sales or exchanges made after December 31, 1981, in taxable years ending after such date. SEC. 13209. TREATMENT OF CERTAIN POLLUTION CONTROL BONDS. (a) GENERAL RULE.—For purposes of subparagraph (F) of section 26 use 103. 103(b)(4) of the Internal Revenue Code of 1954 (relating to pollution control facilities), any obligation issued after December 31, 1985, shall be treated as described in such subparagraph if it is part of an issue substantially all of the proceeds of which are used by a qualified regional pollution control authority to acquire existing air or water pollution control facilities which the authority itself will operate in order to maintain or improve control of pollutants. The provisions of section 103(b)(17) of such Code (relating to prohibition on acquisition of existing property not permitted) shall not apply to any obligation described in the preceding sentence. (b) $200,000,000 LIMITATION.—The aggregate amount of obliga- tions to which subsection (a) applies shall not exceed $200,000,000, except that the amount of such obligations issued during calendar year 1986 to which subsection (a) applies shall not exceed $100,000,000. (c) RESTRICTIONS.—Subsection (a) shall apply only if— (1) the amount paid (directly or indirectly) for the facilities does not exceed their fair market value, (2) the fees or charges imposed (directly or indirectly) on any seller for the use of any facilities after the sale are not less than the amounts charged for the use of such facilities to persons other than the seller, (3) the original use of the facilities acquired with the proceeds of such obligations commenced before September 3, 1982, and (4) no person other than the qualified regional pollution control authority is considered after the sale as the owner of the facilities for purposes of Federal income taxes.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 323 (d) QUALIFIED REGIONAL POLLUTION CONTROL AUTHORITY DE- FINED.—For purposes of this section, the term "qualified regional pollution control authority" means an authority which— (1) is a political subdivision created by State law to control air or water pollution, (2) has within its jurisdictional boundaries all or part of at least 2 counties (or equivalent political subdivision), (3) operates air or water pollution control facilities, and (4) was created on September 1,1969. (e) REPEAL OF SECTION 103(b)(ll).—Paragraph (11) of section 103(b) 26 use 103. is hereby repealed. SEC. 13210. TREATMENT OF THE NETTING OF GAINS AND LOSSES BY COOPERATIVES. (a) IN GENERAL.—Section 1388 (relating to definitions and special 26 USC 1388. rules applicable to cooperatives) is amended by redesignating subsection (j) as subsection (k) and by inserting after subsection (i) the following new subsection: "(j) SPECIAL RULES FOR THE NETTING OF GAINS AND LOSSES BY COOPERATIVES.—For purposes of this subchapter, in the case of any organization to which part I of this subchapter applies— 26 USC 1381. "(1) OPTIONAL NETTING OF PATRONAGE GAINS AND LOSSES PER- MITTED.—The net earnings of such organization may, at its option, be determined by offsetting patronage losses (including any patronage loss carried to such year) which are attributable to 1 or more allocation units (whether such units are functional, divisional, departmental, geographic, or otherwise) against patronage earnings of 1 or more other such allocation units. "(2) CERTAIN NETTING PERMITTED AFTER SECTION 381 TRANS- ACTIONS.—If such an organization acquires the assets of another such organization in a transaction described in section 381(a), 26 USC 381. the acquiring organization may, in computing its net earnings for taxable years ending after the date of acquisition, offset losses of 1 or more allocation units of the acquiring or acquired organization against earnings of the acquired or acquiring organization, respectively, but only to the extent— "(A) such earnings are properly allocable to periods after the date of acquisition, and "(B) such earnings could have been offset by such losses if such earnings and losses had been derived from allocation units of the same organization. "(3) NOTICE REQUIREMENTS.— "(A) IN GENERAL.—In the case of any organization which exercises its option under paragraph (1) for any taxable year, such organization shall, on or before the 15th day of the 9th month following the close of such taxable year, provide to its patrons a written notice which— "(i) states that the organization has offset earnings and losses from 1 or more of its allocation units and that such offset may have affected the amount which is being distributed to its patrons, "(ii) states generally the identity of the offsetting allocation units, and "(iii) states briefly what rights, if any, its patrons may have to additional financial information of such organization under terms of its charter, articles of incorporation, or bylaws, or under any provision of law.
100 STAT. 324 PUBLIC LAW 99-272—APR. 7, 1986 "(B) CERTAIN INFORMATION NEED NOT BE PROVIDED.—An organization may exclude from the information required to be provided under clause (ii) of subparagraph (A) any de- tailed or specific data regarding earnings or losses of such units which such organization determines would disclose commercially sensitive information which— "(i) could result in di.~competitive disadvantage to such organization, or "(ii) could create a competitive advantage to the benefit of a competitor of such organization. "(C) FAILURE TO PROVIDE SUFFICIENT NOTICE.—If the Sec- retary determines that an organization failed to provide sufficient notice under this paragraph— "(i) the Secretary shall notify such organization, and "(ii) such organization shall, upon receipt of such notification, provide to its patrons a revised notice meeting the requirements of this paragraph. Any such failure shall not affect the treatment of the organization under any provision of this subchapter or 26 use 521. section 521. "(4) PATRONAGE EARNINGS OR LOSSES DEFINED.—For purposes of this subsection, the terms 'patronage earnings' and 'patron- age losses' means earnings and losses, respectively, which are derived from business done with or for patrons of the organiza- tion." 26 u s e 521. (b) TAX-EXEMPT STATUS NOT AFFECTED BY NETTING.—Section 521(b) (relating to applicable rules) is amended by adding at the end thereof the following new paragraph: "(6) NETTING OF LOSSES.—Exemption shall not be denied any such association because such association computes its net earn- ings for purposes of determining any amount available for distribution to patrons in the manner described in paragraph (1) Ante, p. 323. of section 1388(j)." 26 use 1388 (c) EFFECTIVE DATE.— ^°^' (1) I N GENERAL.—Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 1962. (2) NOTIFICATION REQUIREMENT.—The provisions of section 1388(j)(3) of the Internal Revenue Code of 1954 (as added by subsection (a)) shall apply to taxable years beginning on or after the date of the enactment of this Act. (3) No INFERENCE.—Nothing in the amendments made by this section shall be construed to infer that a change in law is intended as to whether any patronage earnings may or not be offset by nonpatronage losses, and any determination of such issue shall be made as if such amendments had not been enacted. SEC. 13211. ALLOCATION UNDER SECTION 861 OF RESEARCH AND EXPERI- MENTAL EXPENDITURES. 26 use 861 note. Subsection (c) of section 126 of the Deficit Reduction Act of 1984 is amended— (1) by striking out "1985" and inserting in lieu thereof "1986"; and (2) by striking out "3rd" each place it appears and inserting in lieu thereof "4th".
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 325 SEC. 13212. LIMITATION ON ISSUANCE OF UNITED STATES BONDS. Subsection (a) of section 3102 of title 31, U n i t e d S t a t e s Code, is a m e n d e d by s t r i k i n g o u t "$200,000,000,000" a n d i n s e r t i n g in lieu thereof "$250,000,000,000". SEC. 13213. AUTHORIZATION OF ADDITIONAL FUNDS TO INTERNAL REVE- NUE SERVICE FOR REVENUE ENFORCEMENT AND RELATED PURPOSES, ETC. (a) AUTHORIZATION.—There is authorized to be a p p r o p r i a t e d $46,500,000 for each of t h e fiscal y e a r s 1986, 1987, a n d 1988 for t h e use of t h e I n t e r n a l R e v e n u e Service to employ 1,550 additional a g e n t s a n d e x a m i n a t i o n employees. Ot)) RESTORATION O F PROPOSED C U T S . — I t is t h e sense of t h e Con- gress t h a t — (1) t h e r e s t o r a t i o n of t h e cuts in t h e budget for t h e I n t e r n a l Revenue Service for fiscal y e a r 1986, a n d (2) t h e f u r t h e r increase in such budget total, recommended by t h e C o m m i t t e e on A p p r o p r i a t i o n s of t h e House of Representatives a r e necessary for t h e efficient operation of t h e G o v e r n m e n t a n d to c a r r y o u t t h e purposes of t h i s Act. Subtitle C—Provisions Relating to Unemployment Taxes SEC. 13301. RAILROAD UNEMPLOYMENT REPAYMENT TAX. (a) R A T E O F TAX.—Subsection (c) of section 3321 of t h e I n t e r n a l R e v e n u e Code of 1954 (relating to r a t e of railroad u n e m p l o y m e n t 26 USC 3321. r e p a y m e n t tax) is a m e n d e d to r e a d a s follows: "(c) R A T E OF T A X . — F o r purposes of this section— "(1) I N GENERAL.—The applicable p e r c e n t a g e for a n y t a x a b l e period shall be t h e s u m of— "(A) t h e basic r a t e for such period, a n d "(B) t h e s u r t a x r a t e (if any) for such period. "(2) BASIC RATE.—For purposes of p a r a g r a p h (1)— "(A) F O R PERIODS BEFORE 1989.—The basic r a t e shall be— "(i) 4.3 percent for t h e t a x a b l e period beginning on J u l y 1,1986, a n d ending on December 31, 1986, "(ii) 4.7 percent for t h e 1987 t a x a b l e period, a n d "(iii) 6 p e r c e n t for t h e 1988 t a x a b l e period. "(B) F O R PERIODS AFTER 1 9 8 8 . — F o r a n y t a x a b l e period beginning after December 31, 1988, t h e basic r a t e shall be t h e s u m of— "(i) 2.9 percent, plus "(ii) 0.3 percent for each preceding taxable period after 1988. In no event shall t h e basic r a t e u n d e r this s u b p a r a g r a p h exceed 5 percent. "(3) SURTAX RATE.—For purposes of p a r a g r a p h (1), t h e s u r t a x r a t e shall be— "(A) 3.5 percent for a n y t a x a b l e period if, a s of S e p t e m b e r 30 of t h e preceding c a l e n d a r year, t h e r e w a s a b a l a n c e of transfers (or u n p a i d i n t e r e s t thereon) m a d e after Septem- ber 30, 1985, to t h e railroad u n e m p l o y m e n t i n s u r a n c e ac- count u n d e r section 10(d) of t h e Railroad U n e m p l o y m e n t I n s u r a n c e Act, a n d 45 USC 360.
100 STAT. 326 PUBLIC LAW 99-272—APR. 7, 1986 "(B) zero for any other taxable period. "(4) BASIC RATE NOT TO APPLY TO RAIL WAGES PAID AFTER SEPTEMBER 30, 1990.—The basic rate under paragraph (1>(A, shall not apply to rail wages paid after September 30, 1990 " OJ) BASE OF TAX T O B E COMPENSATION USED FOR RAILROAD RETIRE- 26 use 3323. MENT TAX PURPOSES.—Subsection (b) of section 3323 of such Code (defining rail wages) is amended to read as follows: "(b) RAIL WAGES.— "(1) IN GENERAL.—For purposes of this chapter, the term 'rail 26 use 3231. wages' means compensation (as defined in section 3231(e) for 26 use 3201. purposes of the tax imposed by section 3201(a)) with the modi- fications specified in paragraph (2). "(2) MODIFICATIONS.—In applying subsection (e) of section 3231 for purposes of paragraph (1)— "(A) ONLY EMPLOYMENT COVERED BY RAILROAD UNEMPLOY- MENT INSURANCE ACT TAKEN INTO ACCOUNT.—Such subsec- tion (e) shall be applied— "(i) by substituting 'rail employment' for 'services' each place it appears, "(ii) by substituting 'rail employer' for 'employer' each place it appears, and "(iii) by substituting 'rail employee' for 'employee' each place it appears. "(B) $7,000 WAGE BASE.—Such subsection (e) shall be ap- plied by substituting for 'the applicable base' in paragraph (2)(A)(i) thereof— "(i) except as provided in clauses (ii) and (iii),'$7,000', "(ii) '$3,500' for the taxable period beginning on July 1,1986, and ending on December 31, 1986, and "(iii) for purposes of applying the basic rate under 26 use 3321. section 3321(c)(1)(A), '$5,250' for the taxable period beginning on January 1,1990. "(C) SUCCESSOR EMPLOYERS.—For purposes of this subsec- tion, rules similar to the rules applicable under section 3231(e)(2)(C) shall apply." (c) USE OF TAXES.— (1) I N GENERAL.—Paragraph (2) of section 232(a) of the Rail- 45 use 231n road Retirement Revenue Act of 1983 (relating to tax used to ^°^- repay loans made to railroad unemployment insurance account) is amended to read as follows: "(2) TAXES CREDITED AGAINST LOANS TO RAILROAD UNEMPLOY- MENT INSURANCE ACCOUNT.— "(A) TAXES ATTRIBUTABLE TO BASIC RATE TO REDUCE RAIL- ROAD UNEMPLOYMENT LOANS MADE BEFORE OCTOBER 1, 1985.—So much of the amount transferred under paragraph (1) as is attributable to the basic rate under section 3321(c)(1)(A) of the Internal Revenue Code of 1954 shall be credited against, and operate to reduce, the outstanding balance of railroad unemployment loans made before Octo- ber 1, 1985. "(B) T A X E S ATTRIBUTABLE TO SURTAX RATE TO REDUCE RAIL- ROAD UNEMPLOYMENT LOANS MADE AFTER SEPTEMBER 30, 1985.—So much of the amount transferred under paragraph (1) as is attributable to the surtax rate under section 3321(c)(lXB) of such Code shall be credited against, and operate to reduce, the outstanding balance of railroad un- employment loans made after September 30,1985."
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 327 (2) TRANSFERS TO RAILROAD UNEMPLOYMENT FUND AFTER LOAN REPAID.—Subsection (c) of section 232 of such Act is amended— 45 USC 23ln (A) by striking out "the amount" in paragraph (1) and note, inserting in lieu thereof "the amount described in subpara- graph (A) or (B) of subsection (a)(2)", and (B) by inserting before the comma at the end of para- graph (2) "against which the amount described in such subparagraph may be credited under such subparagraph". (d) TECHNICAL AMENDMENTS.— (1) Subsection (a) of section 3322 of such Code (relating to 26 USC 3322. taxable period) is amended— (A) by adding "and" at the end of paragraph (1), and (B) by striking out paragraphs (2) and (3) and inserting in lieu thereof the following: "(2) each calendar year after 1986." (2) Subsection (b) of section 3322 of such Code (relating to earlier termination if loans to rail unemployment fund repaid) is amended— (A) by striking out "The tax imposed by this chapter shall not apply" and inserting in lieu thereof "The basic rate under section 3321(c)(1)(A) of the tax imposed by section 3321 shall not apply", and (B) by inserting 'made before October 1, 1985," after "no balance of transfers" in paragraph (1) thereof SEC. 13302. EXTENSION OF BORROWING AUTHORITY UNDER THE RAIL- ROAD UNEMPLOYMENT INSURANCE ACT. Section 10(d) of the Railroad Unemployment Insurance Act is 45 USC 360. amended by striking out the last sentence thereof SEC. 13303. CERTAIN EXEMPTIONS FROM THE FEDERAL UNEMPLOYMENT TAX ACT. (a) CERTAIN AGRICULTURAL LABOR.—Paragraph (1)(B) of section 26 USC 3306. 3306(c) of the Internal Revenue Code of 1954 (defining employment) is amended by striking out "January 1, 1986," and inserting in lieu thereof "January 1, 1988". (b) FULL-TIME STUDENTS EMPLOYED BY SUMMER CAMPS.—Notwith- standing paragraph (3) of section 276(b) of the Tax Equity and Fiscal Responsibility Act of 1982, the amendments made by paragraphs (1) 26 USC 3306 and (2) of such section 276(b) shall also apply to remuneration paid note. after September 19, 1985. (c) SERVICES PERFORMED ON CERTAIN FISHING BOATS.— 26 use 3306 (1) IN GENERAL.—Section 822(b) of the Economic Recovery Tax note. Act of 1981 is amended to read as follows: "(b) EFFECTIVE DATE.—The amendments made by subsection (a) shall apply to remuneration paid after December 31, 1980.". (2) TECHNICAL AMENDMENT.—Paragraph (20) of section 312(b) of such Code (defining employment for purposes of Federal 26 USC 3121. Insurance Contributions Act) is amended by inserting "(other 26 USC 3101. than service described in paragraph (3)(A))" after "service". TITLE XIV—REVENUE SHARING SEC. 14001. TERMINATION OF GENERAL REVENUE SHARING. (a) IN GENERAL.—(1) Except as otherwise provided in this section, chapter 67 of title 31, United States Code, is hereby repealed. 3i USC 6701 e^ seq.
100 STAT. 328 PUBLIC LAW 99-272—APR. 7, 1986 31 u s e 6701 (2) The Secretary of the Treasury shall continue to be the trustee note. of the Trust Fund, which shall remain in existence until all entitle- ment payments which are required to be made under the Revenue Post, p. 329. Sharing Act are made in accordance with the terms of such Act. Ante, p. 327. Any funds remaining in the Trust Fund after all of such entitlement payments are completely made shall revert to the General Fund of the Treasury of the United States. 31 u s e 6701 (3) The Secretary is authorized to take such necessary or appro- note. priate actions, to carry out the requirements of this Act with respect to funds appropriated to the Trust Fund, as were authorized under the terms of the Revenue Sharing Act, including but not limited to enforcement of the regulatory provisions concerning nondiscrimina- tion, audits, accounting procedures, public hearings, expenditures in accordance with State and local law, and cooperation with reason- able requests for information. State and local (4) The Secretary may increase or decrease a payment to a unit of governments. general local government under the Revenue Sharing Act for the 31 u s e 6701 entitlement period ending September 30, 1986, to account for a prior note. underpayment or overpayment only if the increase or decrease is demanded by the Secretary or such unit of general local government before June 2, 1986. State and local (5) Amounts paid to units of general local government from the governments. Trust Fund shall be used, obligated, or appropriated by the units of 31 u s e 6701 general local government before October 1, 1987, and shall continue note. to be subject to the terms of the Revenue Sharing Act. 31 u s e 6701 (6) Subsection (a)(1) of this section shall not have the effect of note. releasing or extinguishing any fiscal sanction, finding, determina- tion, compliance agreement, or other duly authorized action for the purpose of sustaining any proper action or prosecution for enforce- ment authorized under the terms of the Revenue Sharing Act. state and local (7) The Attorney General, and persons adversely affected by a governments, practice of a local government, may bring a civil action in an eourts, U.S. appropriate district court of the United States against the applicable 31 u s e 6701 note. unit of general local government as authorized under the Revenue Sharing Act. The court is authorized to grant such relief as was authorized under the terms of the Revenue Sharing Act. 31 u s e 6701 (8) The Secretary shall report to Congress on the operation and note. status of the Trust Fund and the implementation of this section not Reports. later than December 1 of each year the Trust Fund remains on the books of the Department of the Treasury. (b) CONFORMING AMENDMENTS.—(1) The table of chapters for sub- title V of title 31, United States Code, is amended by striking out the item relating to chapter 67. (2) Paragraph (2) of section 1115(b) of the Social Security Act (42 U.S.C. 1315(b)(2)) is amended— (A) by adding "and" at the end of subparagraph (A), (B) by striking out "; and" at the end of subparagraph (B) and inserting in lieu thereof a period, and (C) by striking out subparagraph (C). (3) Section 501(b)(6) of the Housing Act of 1949 (42 U.S.C. 1471(b)(6)) and section 102(a)(17) of the Housing and Community Development Act of 1974 (42 U.S.C. 5302(a)(17)) are each amended by striking out "or under chapter 67 of title 31, United States Code" and inserting in lieu thereof "or was considered an eligible recipient under chapter 67 of title 31, United States Code, prior to the repeal 31 u s e 6701 of such chapter". et seq.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 329 (4) Section 302 of the Age Discrimination Act of 1975 (42 U.S.C. 6101) is amended by striking out ", including programs or activities receiving funds under the State and Local Fiscal Assistance Act of 1972 (31 U.S.C. 1221 et seq.)". (5) Paragraph (3) of section 3 of the Coastal Barrier Resources Act (16 U.S.C. 3502(3)) is amended by striking out subparagraph (A) and redesignating subparagraphs (B), (C), (D), and (E) as subparagraphs (A), (B), (C), and (D), respectively. (6) Subparagraph (B) of section 119(n)(2) of the Housing and Community Development Act of 1974 (42 U.S.C. 5318(n)(2)(B)) is amended by striking out "is an eligible recipient under chapter 67 of title 31, United States Code" and inserting in lieu thereof "was an eligible recipient under chapter 67 of title 31, United States Code, 31 USC 6701 prior to the repeal of such chapter". ^^ «^9- (7) Paragraph (1) of section 248(h) of the National Housing Act (12 U.S.C. 1715z-13(h)(l)) is amended by striking out "is an eligible recipient under chapter 67 of title 31, United States Code" and inserting in lieu thereof "was an eligible recipient under chapter 67 of title 31, United States Code, prior to the repeal of such chapter". (c) DEFINITIONS.—For purposes of this section— 3i USC 6701 (1) The term "Trust Fund" means the State and Local note. Government Fiscal Assistance Trust Fund established under the Revenue Sharing Act. Infra. (2) The term "Revenue Sharing Act" means the provisions of ^"^e, p. 327. chapter 67 of title 31, United States Code, as in effect on the day before the date of enactment of this Act and subject to the terms of any appropriation Act of fiscal year 1986. (3) The term "Secretary" means the Secretary of the Treasury. (d) AUTHORIZATION OF APPROPRIATIONS.—There are hereby au- 31 use 6701 thorized to be appropriated for fiscal year 1987 such sums as may be "o*^^ necessary to administer the provisions of this section. (e) EFFECTIVE DATES.—(1) Except as otherwise provided in this 31 USC 6701 subsection, the repeal and amendments made by this section, and note. the provisions of this section, shall take effect on the earlier of— (A) the date of the adjournment sine die of the 99th Congress, or (B) December 31,1986, unless the provisions of chapter 67 of title 31, United States Code, are amended before the earlier of such dates to apply to any entitlement period beginning after September 30,1986. (2) The provisions of subsections (a)(4), (c), and (d) shall take effect on the date of enactment of this Act. (3) Nothing in this section shall be construed to prevent the payment of any allocation for the entitlement period ending Septem- ber 30,1986.
100 STAT. 330 PUBLIC LAW 99-272—APR. 7, 1986 TITLE XV—CIVIL SERVICE, POSTAL SERVICE, AND GOVERNMENTAL AF- FAIRS GENERALLY Subtitle A—Postal Service Programs SEC. 15101. REVENUE FORGONE. Notwithstanding subsection (c) of section 2401 of title 39, United 39 use 2401 States Code, the amount authorized to be appropriated pursuant to note. such subsection for fiscal year 1986 shall be $749,000,000. SEC. 15102. DELAY OF STEP 16 RATES: ELIMINATION OF PHASING SCHED- ULE; TERMINATION OF REDUCTION IN RATES OF POSTAGE FOR CERTAIN MAILERS. (a) DELAY OF STEP 16 RATES.—The increase in rates of postage for non-profit and certain other mailers announced by the Board of Governors of the United States Postal Service in Resolution No. 85-7 (adopted September 6, 1985) shall not take effect before January 1, 1986. (b) ELIMINATION OF PHASING SCHEDULE.—(1) Section 3626(a) of title 39, United States Code, is amended to read as follows: "(a)(1) Except as provided in paragraph (2) of this subsection, rates of postage for a class of mail or kind of mailer under former section 39 use 4358, 4358, 4452(b), 4452(c), 4554(b), or 4554(c) of this title shall be estab- 4452,4554. lished in accordance with applicable provisions of this chapter. "(2) Rates of postage for a class of mail or kind of mailer referred to in paragraph (1) of this subsection shall be established in accord- ance with the requirement that the direct and indirect postal costs attributable to such class of mail or kind of mailer (excluding any other costs of the Postal Service) shall be borne by such class of mail or kind of mailer, as the case may be.". Effective date. (2) The amendment made by this subsection shall apply with 39 use 3626 respect to rates of postage taking effect after December 31, 1985. " (c) TERMINATION OF REDUCTION IN RATES OF POSTAGE FOR CERTAIN MAILERS.—Section 3626 of title 39, United States Code, is amended by adding at the end thereof the following: "(f) In the administration of this chapter, the rates for mail under former section 4358(g) of this title shall be established without regard to either the provisions of such former section 4358(g) or the provisions of this section.". SEC. 15103. STUDY AND REPORT. (a) PERIOD OF STUDY.—The Postal Rate Commission shall study and, within 6 months after the date of the enactment of this Act, transmit to the Committee on Post Office and Civil Service of the House of Representatives and the Committee on Governmental Affairs of the Senate a written report on the matters described in subsection (b). (b) PURPOSE OF STUDY.—The purpose of the study under this section is— (1) to develop recommendations for legislation which would reduce the amount of revenue forgone with respect to former sections 4355(a), 4355(b), 4358(d), 44520t)), 4452(c), 4554(b) and 4554(c) of title 39, United States Code, by changing the eligi-
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 331 bility requirements under which the reduced rates of postage under those sections would apply to mail which advertises or promotes the sale of, recommends the purchase of, or announces the availability of any article, product, service, insurance, or travel arrangements; (2)(A) to identify the kinds of mailers which are the most frequent users of, or which otherwise significantly benefit from, rates for mail under subsections (a), (b), and (c) of former section 4358 of title 39, United States Code; and (B) to examine the arguments for and against making the eligibility requirements for the rates referred to in subpara- graph (A) more stringent, taking into consideration— (i) the findings under subparagraph (A); (ii) costs and benefits to the public; and (iii) any other factor which may be appropriate; and (3) to develop one or more alternatives for the method cur- rently used by the United States Postal Service in computing revenue forgone (as determined with respect to the provisions of law referred to in section 2401(c) of title 39, United States Code) and to determine the advantages and disadvantages of each such alternative. (c) In preparing its report under this section, the Postal Rate Commission shall invite and consider the views of interested parties. (d) The United States Postal Service shall, upon request of the Postal Rate Commission, cooperate in the conduct of the study and the preparation of the report under this section. SEC. 15104. RESTRICTION RELATING TO ELIGIBILITY FOR IN-COUNTY SECOND-CLASS RATES OF POSTAGE. Section 3626 of title 39, United States Code, as amended by section 15102(c) of this Act, is further amended by adding at the end thereof the following: "(g)(1) In the administration of this section, the rates for mail under subsections (a), (b), and (c) of former section 4358 of this title 39 use 4358. shall not apply to an issue of a publication if the number of copies of such issue distributed within the county of publication is less than the number equal to the sum of 50 percent of the total paid circulation of such issue plus one. "(2) Paragraph (1) of this subsection shall not apply to an issue of a publication if the total paid circulation of such issue is less than 10,000 copies.". SEC. 15105. CURBING OF SUBSIDIES FOR ADVERTISING-ORIENTED "PLUS ISSUES" MAILED TO SUBSCRIBERS AT IN-COUNTY RATES. Section 3626 of title 39, United States Code, as amended by sections 15102(c) and 15104 of this Act, is further amended by adding at the end thereof the following: "(h) In the administration of this section, the number of copies of a subscription publication mailed to nonsubscribers during a cal- endar year at rates under subsections (a), (b), and (c) of former section 4358 of this title may not exceed 10 percent of the number of copies of such publication mailed at such rates to subscribers.".
100 STAT. 332 PUBLIC LAW 99-272—APR. 7, 1986 Subtitle B—Civil Service Programs 5 u s e 5305 note. SEC. 15201. PAY ADJUSTMENTS. (a) LIMITATION ON PAY ADJUSTMENTS FOR STATUTORY PAY SYS- TEMS.—(1) The rates of pay under the General Schedule and the rates of pay under the other statutory pay systems referred to in section 5301(c) of title 5, United States Code, shall not be adjusted under section 5305 of such title during fiscal year 1986. President of U.S. (2)(A)(i) For fiscal years 1987 and 1988, the President shall provide for the adjustment of rates of pay under section 5305 of title 5, United States Code, as appropriate to reduce outlays, relating to pay of officers and employees of the Federal Government, by at least $746,000,000 in fiscal year 1987 and $1,264,000,000 in fiscal year 1988 (without regard to reductions in outlays which result by reason of subparagraph (B)(ii) of this paragraph, paragraph (1) of this subsec- tion, subsection (b) of this section, and the application of section 1009 of title 37, United States Code), computed using the baseline used for the First Concurrent Resolution on the Budget for Fiscal Year 1986 (S. Con. Res. 32, 99th Congress), agreed to on August 1, 1985. (ii) Clause (i) of this subparagraph shall not be construed to suspend the requirements of section 5305 of title 5, United States Code, with respect to fiscal years 1987 and 1988. (B) Each adjustment in a pay rate or schedule which takes effect pursuant to subparagraph (A) of this paragraph— (i) shall, to the maximum extent practicable, be of the same percentage; and (ii) shall be effective with respect to pay periods beginning on or after January 1 of the fiscal year involved. 5 u s e 5343 note. (b) LIMITATION ON P A Y ADJUSTMENTS FOR PREVAILING RATE EMPLOYEES.—(1) Notwithstanding any other provision of law, and except as otherwise provided in this subsection, in the case of a prevailing rate employee described in section 5342(a)(2) of title 5, United States Code, or an employee covered by section 5348 of such title, the total adjustment to any wage schedule or rate applicable to such employee which is to become effective (determined without regard to paragraph (2)) during— (A) fiscal year 1986, shall (except to the extent permitted by section 616(a)(2) of H.R. 5798, incorporated by reference in section 101(j) of Public Law 98-473 (98 Stat. 1963)) be equal to zero; (B) fiscal year 1987, shall not exceed an increase equal to the overall percentage of the adjustment (under section 5305 of title 5, United States Code) in the rates of pay under the General 5 use 5332. Schedule for such fiscal year; and (C) fiscal year 1988, shall not exceed an increase equal to the overall percentage of the adjustment (under section 5305 of title 5, United States Code) in the rates of pay under the General Schedule for such fiscal year. Effective date. (2) Notwithstanding any other provision of law, any increase permitted by paragraph (1) which is scheduled to take effect during fiscal year 1987 or 1988 (determined without regard to this para- graph) shall take effect as of the beginning of the first applicable pay period beginning at least 90 days after the date on which such increase is so scheduled to take effect. (3) Notwithstanding the provisions of section 9(b) of Public Law 5 use 5343 note. 92-392 or section 704(b) of Public Law 95-454, the provisions of
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 333 paragraphs (1) and (2) shall apply (in such manner as the Office of Personnel Management shall prescribe) to prevailing rate employ- ees to whom such section 9(b) applies, except that the provisions of 5 USC 5343 note, paragraph (1) shall not apply to any increase in a wage schedule or rate which is required by the terms of a contract entered into before October 1, 1985. (4) Nothing in this subsection or any provision of law governing the use of appropriated funds for the payment of employees covered by this subsection during the period covered by paragraph (1) (or any part of such period) shall be construed to permit or require the payment to any such employee at a rate in excess of the rate that would be payable were this subsection, or such provision of law governing the use of appropriated funds, not in effect. (5) The Office may make exceptions from the limitations imposed by paragraph (1) if the Office determines that such exceptions are necessary to ensure the recruitment or retention of well-qualified employees. SEC. 15202. PROVISIONS RELATING TO FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM. (a) AMOUNTS TO B E REFUNDED FROM CARRIERS' SPECIAL RE- 5 USC 8909 note. SERVES.—(1) The Office of Personnel Management— (A) shall determine the minimum level of financial reserves necessary to be held by a carrier for each health benefits plan under chapter 89 of such title for the purpose of ensuring the stable and efficient operation of such plan; and (B) shall require the carrier to refund to the Employees Health Benefits Fund (described in section 8909(a) of title 5, United States Code) any such reserves in excess of such mini- mum level in such amounts and at such times during fiscal years 1986 and 1987 as the Office determines appropriate. (2) In carrying out its responsibilities under this subsection, the Office shall ensure that the aggregate amount to be refunded to the Employees Health Benefits Fund under this subsection— (A) during fiscal year 1986 shall be not less than $800,000,000; and (B) during fiscal year 1987 shall be not less than $300,000,000. (3) No amount in the Employees Health Benefits Fund may be transferred to the general fund of the Treasury of the United States as a result of a refund made under this subsection. (4)(A) Subject to subparagraphs (B) and (C), any amounts refunded to the Employees Health Benefits Fund under this subsection may be used solely for the purpose of paying the Government contribu- tion under chapter 89 of title 5, United States Code, for health 5 USC 8901 et benefits for annuitants, as defined by section 8901(3) of title 5, seq. United States Code, (including the Government contribution for former employees of the United States Postal Service) enrolled in health benefits plans under such chapter. (B) This paragraph applies to a refund to the extent that such refund represents amounts attributable to Government contribu- tions which were made under section 8906(b) of title 5, United States Code, (including contributions made by the United States Postal Service) as determined under regulations which the Office of Personnel Management shall prescribe. (C) Any part of the amount in the Employees Health Benefits District of Fund as a result of a refund made under this subsection may be Columbia, transferred—
100 STAT. 334 PUBLIC LAW 99-272—APR. 7, 1986 (i) to the government of the District of Columbia, except that the amount of any such part so transferred shall not exceed the amount attributable to the contributions made by the govern- ment of the District of Columbia to subscription charges under this chapter (as determined by the Office of Personnel Manage- ment); and (ii) to the United States Postal Service, except that the amount of any such part so transferred shall not exceed the amount attributable to the contributions made by the United States Postal Service to subscription charges under this chapter (as determined by the Office). (5) The provisions of this subsection shall apply notwithstanding any provision of the Federal Employees Benefits Improvement Act of 1985. (b) GOVERNMENT CONTRIBUTIONS FOR RETIRED FORMER EMPLOYEES OF THE UNITED STATES POSTAL SERVICE.—Section 8906(g) of title 5, United States Code, is amended— (1) by striking out "(g) The" and inserting in lieu thereof "(g)(1) Except as provided in paragraph (2), the"; and (2) isy adding at the end thereof the following: "(2) The Government contributions authorized by this section for health benefits for an individual who first becomes an annuitant by reason of retirement from employment with the United States Postal Service on or after October 1, 1986, shall be paid by the United States Postal Service.". SEC. 15203. COMPUTATION OF HOURLY RATES OF PAY. (a) METHOD OF COMPUTATION.—Section 5504(b) of title 5, United States Code, is amended— (1) by striking out the first sentence; (2) in the second sentence, by striking out "When" and insert- ing in lieu thereof "When, in the case of an employee,"; (3) in paragraph (1), by striking out "2,080" and inserting in lieu thereof "2,087"; and (4) in the last sentence, by striking out "title." and inserting in lieu thereof "title other than an employee or individual 5 use 5541. excluded by section 5541(2)(xvi) of this title. . 5 use 5504 note. (b) EFFECTIVE DATE.—The amendments made by subsection (a) shall be effective with respect to pay periods commencing on or after March 1,1986. SEC. 15204. COMPUTATION OF RETIREMENT ANNUITY FOR PART-TIME EMPLOYMENT. (a) IN GENERAL.—(1) Section 8339 of title 5, United States Code, is amended by adding at the end thereof the following new subsection: "(oXD In computing an annuity under this subchapter for an employee whose service includes service that was performed on a part-time basis— "(A) the average pay of the employee, to the extent that it includes pay for service performed in any position on a part- time basis, shall be determined by using the annual rate of basic pay that would be payable for full-time service in the position; and "(B) the benefit so computed shall then be multiplied by a fraction equal to the ratio which the employee's actual service, as determined by prorating an employee's total service to reflect the service that was performed on a part-time basis, bears to the
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 335 total service that would be creditable for the employee if all of the service had been performed on a full-time basis. "(2) For the purpose of this subsection, employment on a part-time basis shall not be considered to include employment on a temporary or intermittent basis.". (2) Section 8341 of such title is amended— 5 USC 8341. (A) by striking out "and (n)" in subsection (b)(1) and inserting in lieu thereof ", (n), and (o)"; and (B) by striking out "and (n)" in subsection (d) and insert- ing in lieu thereof "(n), and (o)". (b) Section 4109(b) of title 38, United States Code, is repealed. (c) The amendments made by this section shall be effective with 5 USC 8339 note. respect to service performed on or after the date of the enactment of this Act. SEC. 15205. EFFECT OF WAGE AREA SURVEY REGARDING CERTAIN FED- ERAL EMPLOYEES IN TUCSON, ARIZONA. (a) I N GENERAL.—Notwithstanding any other provision of law limiting the amounts payable to prevailing wage rate employees during the fiscal year 1986, wage schedules or rates applicable to the Tucson, Arizona, wage area shall not be reduced as a result of a wage survey conducted during fiscal year 1985. (b) EFFECTIVE DATE.—This section shall be effective as of October 1,1985. Subtitle C—Federal Motor Vehicle Expenditure Control SEC. 15301. MONITORING SYSTEM. 40 USC 901. The head of each executive agency, including the Department of Defense, shall designate one office, officer, or employee of the agency to establish and operate a central monitoring system for, and provide oversight of, the motor vehicle operations of the agency, related activities, and related reporting requirements. SEC. 15302. DATA COLLECTION. 40 USC 902. (a) COST IDENTIFICATION AND ANALYSIS.—The head of each execu- tive agency, including the Department of Defense, shall develop a system to identify, collect, and analyze data with respect to all costs, including obligations and outlays, incurred by the agency in the operation, maintenance, acquisition, and disposition of motor ve- hicles, including Government-owned vehicles, leased vehicles, and privately owned vehicles used for official purposes. (b) REQUIREMENTS FOR DATA SYSTEMS.—The Administrator, in cooperation with the Comptroller General and the Director, shall promulgate requirements governing the establishment and oper- ation by executive agencies of the systems required by subsection (a), including requirements with respect to data concerning the costs and uses of motor vehicles and with respect to the uniform collection and submission of such data. Requirements promulgated under this section shall be in conformance with accounting principles and standards issued by the Comptroller General. Each executive agency, including the Department of Defense, shall comply with such requirements.
100 STAT. 336 PUBLIC LAW 99-272—APR. 7, 1986 40 u s e 903. SEC. 15303. AGENCY STATEMENTS WITH RESPECT TO MOTOR VEHICLE USE. (a) CONTENTS OF STATEMENT.—The head of each executive agency, including the Department of Defense, shall include with the appro- priation request of such agency submitted under section 1108 of title 31, United States Code, for fiscal year 1988 and each succeeding fiscal year, a statement— (1) specifying— (A) the total motor vehicle acquisition, maintenance, leas- ing, operation, and disposal costs, including obligations and outlays, incurred by such agency in the most recently completed fiscal year; and (B) an estimate of such costs for the fiscal year in which such request is submitted and for the succeeding fiscal year; and (2) justifying why the existing and any new motor vehicle acquisition, maintenance, leasing, operation, and disposal requirements of the agency cannot be met through the Inter- agency Fleet Management System operated by the Adminis- trator, a qualified private fleet management firm, or any other method which is less costly to the Government. (b) COMPLIANCE WITH REQUIREMENTS.—The head of each executive agency shall comply with the requirements promulgated under section 15302(b) in preparing each statement required under subsec- tion (a). SEC. 15304. PRESIDENTIAL REPORT. President of U.S. (a) SUMMARY AND ANALYSIS OF A G E N C Y STATEMENTS.—The P r e s i - 40 use 904. dent shall include with the budget transmitted pursuant to section 1105 of title 31, United States Code, for fiscal year 1988 and each succeeding fiscal year, or in a separate written report to the Con- gress for each such fiscal year, a summary and analysis of the statements most recently submitted by the heads of executive agen- cies pursuant to section 15303(a). Each such summary and analysis shall include a review, for the fiscal year preceding the fiscal year in which the budget is submitted, the current fiscal year, and the fiscal year for which the budget is submitted, of the cost savings that have been achieved, that are estimated will be achieved, and that could be achieved, in the acquisition, maintenance, leasing, operation, and disposal of motor vehicles by executive agencies through— (1) the use of a qualified private fleet management firm or another private contractor; (2) increased reliance by executive agencies on the Inter- agency Fleet Management System operated by the Adminis- trator; or (3) other existing motor vehicle management systems. (b) APPLICABILITY TO FISCAL YEAR 1986.—The summary and analy- sis submitted under subsection (a) during fiscal year 1987 is not required to include a review, under the second sentence of such subsection, of the cost savings achieved for fiscal year 1986. 40 u s e 905. SEC. 15305. STUDY REQUIRED. (a) STUDY OF COSTS, BENEFITS, AND FEASIBILITY.—(1) The head of each executive agency, including the Department of Defense, shall conduct a comprehensive and detailed study of the costs, benefits, and feasibility of—
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 337 (A) relying on the Interagency Management Fleet System operated by the Administrator; (B) entering into a contract with a qualified fleet management firm or another private contractor; or (C) using any other means less costly to the Government, to meet its motor vehicle operation, maintenance, leasing, acquisi- tion, and disposal requirements. (2) Each study conducted under paragraph (1) shall compare the costs, benefits, and feasibility of the alternatives described in sub- paragraphs (A), (B), and (C) of such paragraph to the costs and benefits of the agency's current motor vehicle operations and, in the case of the alternatives described in subparagraphs (B) and (C) of such paragraph, to the costs, benefits, and feasibility of the use of the Interagency Fleet Management System operated by the Administrator. (b) SUBMISSION TO DIRECTOR AND COMPTROLLER GENERAL.—Within Reports. 6 months after the date of enactment of this Act, the head of each executive agency shall submit a report concerning the study re- quired under subsection (a) to the Administrator. SEC. 15306. INTERAGENCY CONSOLIDATION. 40 USC 906. (a) IDENTIFICATION OF OPPORTUNITIES FOR CONSOLIDATION.—The Motor vehicles. Administrator shall review and identify interagency opportunities for the consolidation of motor vehicles, related equipment, and facilities, and of functions relating to the administration and management of such vehicles, equipment, and facilities, in order to reduce the size and cost of the Federal Government's motor vehicle fleet. (b) REPORT AND ACTION ON FINDINGS.—Within one year after the date of enactment of this Act, the Administrator shall— (1) submit a report to the Congress specifying the findings and recommendations of the Administrator from the review con- ducted under subsection (a); and (2) take such action as the Administrator considers appro- priate based on such findings and recommendations and in accordance with section 211 of the Federal Property and Administrative Services Act. 40 USC 491. SEC. 15307. REDUCTION OF STORAGE AND DISPOSAL COSTS. 40 USC 907. The Administrator shall take such actions as may be necessary to reduce motor vehicle storage and disposal costs and to improve the rate of return on motor vehicle sales through a program of vehicle reconditioning prior to sale. SEC. 15308. SAVINGS. 40 USC 908. (a) ACTIONS BY PRESIDENT REQUIRED.—The President shall estab- lish, for each executive agency, including the Department of De- fense, goals to reduce outlays for the operation, maintenance, leas- ing, acquisition, and disposal of motor vehicles in order to reduce, by fiscal year 1988, the total amount of outlays by all executive agen- cies for such operation, maintenance, leasing, acquisition, and dis- posal to an amount which is $150,000,000 less than the amount for such operation, maintenance, leasing, acquisition, and disposal re- quested by the President in the budget submitted under section 1105 of title 31, United States Code, for fiscal year 1986. (b) MONITORING OF COMPLIANCE AND COMPLIANCE REPORT.—The Director shall monitor compliance by executive agencies with the
100 STAT. 338 PUBLIC LAW 99-272—APR. 7, 1986 goals established by the President under subsection (a) and shall include, in each summary and analysis required under section 15304, a statement specifying the reductions in expenditures by executive agencies, including the Department of Defense, achieved under such goals. Motor vehicles. SEC. 15309. COMPLIANCE. 40 u s e 909. (a) ADMINISTRATOR OF GENERAL SERVICES.—The Administrator shall comply with and be subject to the provisions of this part with regard to all motor vehicles that are used within the General Services Administration for official purposes. (b) MANAGERS OF OTHER MOTOR POOLS.—The provisions of this part with respect to motor vehicles from the Interagency Fleet Management System shall be complied with by the executive agen- cies to which such motor vehicles are assigned. 40 u s e 910. SEC. 15310. A P P L I C A B I L I T Y . (a) PRIORITY IN REDUCING HEADQUARTERS USE.—The heads of executive agencies shall give first priority to meeting the goals established by the President under section 15308(a) by reducing the costs of administrative motor vehicles used at the headquarters and regional headquarters of executive agencies, rather than by reduc- ing the costs of motor vehicles used by line agency personnel working in agency field operations or activities. President of U.S. (b) REGULATIONS, STANDARDS, AND DEFINITIONS.—The P r e s i d e n t shall require the Administrator, in cooperation with the Director, to promulgate appropriate regulations, standards, and definitions to assure that executive agencies meet the goals established under section 15308(a) in the manner prescribed by subsection (a). 40 u s e 911. SEC. 15311. COOPERATION. The Director and the Administrator shall closely cooperate in the implementation of the provisions of this part. 40 u s e 912. SEC. 15312. REPORTS. The Comptroller General shall evaluate the extent to which the Director, the Administrator, and executive agencies have complied with this part. By January 31, 1988, the Comptroller General shall submit a report to the Congress describing the results of such evaluation. 40 u s e 913. SEC. 15313. DEFINITIONS. For purposes of this title— (1) the term "executive agency" means an Executive agency (as such term is defined in section 105 of title 5, United States Code), which operates at least three hundred motor vehicles, except that such term does not include the Tennessee Valley Authority; (2) the term "Director" means the Director of the Office of Management and Budget; (3) the term "Administrator" means the Administrator of General Services; (4) the term "Comptroller General" means the Comptroller General of the United States; and (5) the term "motor vehicle" means any vehicle self-propelled or drawn by mechanical power, except that such term does not include any vehicle designed or used for military field training, combat, or tactical purposes, or any other special purpose ve-
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 339 hide exempted from the requirements of this part by the Administrator. TITLE XVI—HIGHER EDUCATION Student Financial PROGRAMS Assistance Amendments of 1985. SEC. 16001. SHORT TITLE; REFERENCE. 20 u s e 1001 (a) SHORT TITLE.—This title may be cited as the "Student Finan- note. cial Assistance Amendments of 1985". (b) REFERENCE.—References in this title to "the Act" are to the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.). Subtitle A—Savings in Student Loan Program Operations SEC. 16011. RECOVERY OF OUTSTANDING ADVANCES TO GUARANTY AGENCIES. Section 422 of the Act is amended by adding at the end thereof the 20 USC 1072. following new subsection: "(d)(1) Notwithstanding any other provision of this section, ad- State and local vances made by the Secretary under this section shall be repaid in governments. accordance with this paragraph and shall be deposited in the fund established by section 431. The Secretary shall, in accordance with 20 USC 1081. the requirements of paragraph (2), recover (and so deposit) an amount equal to $75,000,000 during fiscal year 1988. "(2) In determining the amount of advances which shall be repaid by a State or nonprofit private institution or organization under paragraph (1), the Secretary— "(A) shall consider the solvency and maturity, as determined by the Comptroller General, of the reserve and insurance funds of the State or nonprofit private institution or organization assisted by such advances; "(B) shall not seek repayment of such advances from any State described in subsection (cX5)(B) during any year of its eligibility under such subsection; and "(C) shall not seek repayment of such advances from any State if such repayment encumbers the reserve fund require- ment mandated by the statutes of such State.". SEC. 16012. DISBURSEMENT OF STUDENT LOANS TO INSTITUTIONS RE- QUIRED. (a) FISL LOANS REQUIREMENT.—Section 427(aX2) of the Act is 20 use 1077. amended— (1) by striking out clause (ii) of subparagraph (B) and by redesignating clauses (iii) and (iv) of subparagraph (B) as clauses (ii) and (iii), respectively; (2) by striking out "or the fifteen-year period" in the matter following clause (viii) of subparagraph (C); and (3) by amending subparagraph (I) to read as follows: "(I) the funds borrowed by a student are disbursed to the institution by check or other means that is payable to and requires the endorsement or other certification by such student, except nothing in this subparagraph shall be inter- preted to allow the Secretary to require checks to be made
100 STAT. 340 PUBLIC LAW 99-272—APR. 7, 1986 co-payable to the institution and the borrower or to prohibit the disbursement of loan proceeds by means other than by 20 use 1078. (b) GSL LOANS REQUIREMENT.—Section 428(b)(l)(0) of the Act is amended to read as follows: "(O) provides that funds borrowed by a student are dis- bursed to the institution by check or other means that is payable to and requires the endorsement or other certifi- cation by such student, except nothing in this subparagraph shall be interpreted to allow the Secretary to require checks to be made co-payable to the institution and the borrower or to prohibit the disbursement of loan proceeds by means other than by check;". 20 use 1083a. (c) CONFORMING AMENDMENT.—Section 433A(a) of the Act is amended by striking out "to a borrower" in the first sentence. SEC. 16013. MULTIPLE DISBURSEMENTS OF STUDENT LOANS REQUIRED. (a) REPEAL OF INCENTIVES TO LENDERS TO MAKE MULTIPLE 20 use 1078. DISBURSEMENTS.—Section 428(a) of the Act is amended by striking out paragraph (8). (b) MULTIPLE DISBURSEMENT REQUIRED IN F I S L PROGRAM.—Sec- 20 use 1077. tion 427(a) of the Act is amended— (1) by striking out "and" at the end of paragraph (1); (2) by striking out the period at the end of paragraph (2) and inserting in lieu thereof "; and"; and (3) by adding at the end thereof the following: "(3) in the case of a loan made for any period of enrollment of more than six months, one semester, two quarters, or 600 clock hours and for an amount of $1,000 or more, the proceeds of the loan will be disbursed directly by the lender in two or more installments, none of which exceeds one-half of the loan, with the interval between the first and second installment being not less than one-third of such period. For purposes of paragraph (3), all loans issued for the same period of enrollment shall be considered as a single loan.". (c) MULTIPLE DISBURSEMENTS REQUIRED IN GSL PROGRAM.—Sec- tion 42803)(1) of such Act is amended— (1) by redesignating subparagraph (P) as subparagraph (Q); and (2) by inserting after subparagraph (O) the following new sulDparagraph: "(P) provides that the proceeds of any loan made for any period of enrollment of more than six months, one semester, two quarters, or 600 clock hours and for an amount of $1,000 or more— "(i) will be disbursed directly by the lender in two or more installments, none of which exceeds one-half of the loan, with the interval between the first and second installment being not less than one-third of such period, or "(ii) will be disbursed in such installments pursuant to the escrow provisions of subsection (i) of this section, but all loans issued for the same period of enrollment shall be considered as a single loan for purposes of this subparagraph; and". (d) ORIGINATION FEE T O B E DEDUCTED PROPORTIONATELY FROM 20 use 1087-1. EACH INSTALLMENT.—Section 438(c)(2) of the Act is amended by striking out "which may be deducted from the proceeds of the loan
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 341 prior to payment to the borrower" and inserting in lieu thereof "which shall be deducted proportionately from each installment payment of the proceeds of the loan to the borrower". (e) CONFORMING AMENDMENTS.—(1) Section 425(a)(1) of the Act is 20 use 1075. amended— (A) by inserting "and" at the end of subparagraph (A), by striking out subparagraph (B), and by redesignating subpara- graph (C) as subparagraph (B); and (B) by striking out the last sentence. (2) Section 428(aX3XA) of the Act is amended— 20 use 1078. (A) by striking out "Except as provided in paragraph (8) and subject" and inserting in lieu thereof "Subject"; and (B) by striking out "but, except as provided in paragraph (8) of this subsection, such portion" and inserting in lieu thereof "but such portion". (3) Section 428(bXl)(A) of such Act is amended— (A) by inserting "and" at the end of division (i); (B) by striking out division (ii) and by redesignating division (iii) as division (ii); and (C) in the matter following such division, by striking out "annual limit," and all that follows and inserting in lieu thereof "annual limit;". SEC. 16014. PRECLAIM COLLECTION ACTIVITIES. (a) DELAY REQUIRED BEFORE SUBMISSION OF CLAIMS BY GUARANTY AGENCIES.—(1) Section 428(cXlXA) of the Act is amended by adding 20 use 1078. at the end thereof the following new sentence: "In no case shall a State or nonprofit private institution or organization with which the Secretary has an agreement pursuant to subsection (b) file a claim for such reimbursement with respect to such losses prior to 270 days after the loan becomes delinquent with respect to any loan installment.". (2) Section 430(eX2) of the Act is amended— 20 use 1080. (A) by striking out "one hundred and twenty days" and inserting in lieu thereof "180 days"; and (B) by striking out "one hundred and eighty days" and insert- ing in lieu thereof "240 days". QD) SUPPLEMENTAL PRECLAIMS ASSISTANCE.—(1) Section 428(cX6XA) of the Act is amended— (A) by inserting after "assistance for default prevention," the following: "the administrative costs of supplemental preclaim assistance for default prevention,"; and (B) by striking out "as such terms are defined in subparagraph (B)" and inserting in lieu thereof "as such terms are defined in subparagraph (B) or (C)". (2) Section 428(cX6) of the Act is amended by adding at the end thereof the following new subparagraph: "(C)(i) For purposes of this paragraph, 'administrative costs of supplemental preclaim assistance for default prevention' means (subject to divisions (ii) through (iv)) any administrative costs— "(I) incurred by a guaranty agency in connection with a loan on which the guarantor has exercised preclaims assistance required or permitted under sections 428(cX2XA) and 428(0(2), and which has been in delinquent status for at least 120 days; and
100 STAT. 342 PUBLIC LAW 99-272—APR. 7, 1986 "(II) which are directly related to providing collection assist- ance to the lender on a delinquent loan, prior to a claim being filed by the guaranty agency, including the attributable compensation of appropriate personnel (and in the case of personnel who perform several functions, only the portion of compensation attributable to the collection assist- ance), fees paid to locate a missing borrower, postage, equipment, supplies, telephone, and similar charges, but does not include over- head costs. "(ii) The administrative costs for which reimbursement is au- thorized under this subparagraph must be clearly supplemental to the preclaim assistance for default prevention which the guaranty 20 use 1078. agency is required to provide pursuant to section 428(c)(2)(A) and section 428(f)(2) of this Act. "(iii) The services associated with carrying out this subparagraph may be provided by the guaranty agency directly or under contract, except that such services may not be carried out by an organization or entity (other than the guaranty agency)— "(I) that is the holder or servicer of the loan or an organiza- tion or entity that owns or controls the holder or servicer of the loan; or "(II) that is owned or controlled by the same corporation, partnership, association, or individual that owns or controls the holder or servicer of the loan. "(iv) The costs associated with carrying out this subparagraph may not exceed 2 percent of the outstanding principal balance of each delinquent loan subject to the supplemental preclaim assist- ance authorized by this subparagraph or $100, whichever is less.". 20 use 1078 (3) The amendments made by this subsection shall be effective in accordance with section 16041(a) of this title without regard to whether such amendments are reflected in the regulations pre- scribed by the Secretary of Education. SEC. 16015. PROMPT PAYMENT OF SUPPLEMENTAL GUARANTY ADMINIS- TRATIVE COST AGREEMENT. Loans. (a) PURPOSE.—It is the purpose of the amendments made by this 20 use 1078 section to assure the prompt payment of the amount due under the ^° ®' supplemental guaranty administrative cost agreement made under section 428(f)(2) in order to encourage improved collection of student loans and preclaims assistance to prevent default on student loans. 20 use 1078. (b) PROMPT PAYMENT REQUIRED.—(1) Section 428(f)(1) of the Act is amended— (A) by striking out "is authorized to" and inserting in lieu thereof "shall"; (B) by striking out "shall not exceed" and inserting in lieu thereof "shall be equal to"; and (C) by striking out the third and fourth sentences of such section. (2) Section 428(f)(2) of the Act is amended— (A) by striking out "is authorized to" and inserting in lieu thereof "shall"; (B) by striking out "shall not exceed" and inserting in lieu thereof "shall be equal to"; and (C) by striking out the third and fourth sentences of such section.
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 343 SEC. 16016. GUARANTY AGENCY; LENDER OF LAST RESORT. Section 428 of the Act is amended by adding at the end thereof the 20 USC 1078. following new subsection: "(j) In each State, the guaranty agency or an eligible lender in the State and local State described in section 435(d)(1)(D) of this Act shall make loans foYjcpTo^ol- directly, or through an agreement with an eligible lender or lenders, ^• to students who are eligible to have interest benefits paid on their behalf (under subsection (a) of this section) but who are otherwise unable to obtain loans under this part. Loans made under this subsection shall neither exceed the amount of the need of the borrower, as determined under subsection (a)(2)(B), nor be less than $200.". SEC. 16017. STUDENT LOAN CONSOLIDATION. (a) LOAN CONSOLIDATION AUTHORIZED.—Part B of title IV of the Act is amended by inserting after section 428B the following new section: "CONSOLIDATION LOANS "SEC. 428C. (a)(1) For the purpose of providing loans to eligible 20 USC 1078-3. borrowers for consolidation of their obligations with respect to student loans made, insured, or guaranteed under this part or made under part E of this title, the Secretary or a guaranty agency shall 20 USC 1088. enter into agreements in accordance with subsection (b) with the following eligible lenders: "(A) the Student Loan Marketing Association; "(B) agencies described in subparagraphs (D) and (F) of section 435(g)(1); and 20 USC 1085. "(C) eligible lenders described in subparagraphs (A), (B), (C), and (E) of such section. "(2) Except as provided in section 429(e), no contract of insurance 20 USC 1079. under this part shall apply to a consolidation loan unless such loan is made under an agreement pursuant to this section and is covered by a certificate issued in accordance with subsection (bX2). Loans covered by such a certificate that is issued by a guaranty agency shall be considered to be insured loans for the purposes of re- imbursements under section 428(c), but no payment shall be made 20 USC 1078. with respect to such loans under section 428(f) to any such guaranty agency. "(3) For the purpose of this section, the term 'eligible borrower' means a borrower who— "(A) has an outstanding indebtedness, at the time of applica- tion for a consolidation loan, to one or more lenders or programs under this title of not less than $5,000; "(B) has not during the previous 4 months carried at an eligible institution at least one-half the normal full-time aca- demic workload; "(C) if in repayment status, is not delinquent with respect to any required payment on such indebtedness by more than 90 days; and '(D) is not a parent borrower under section 428B(a)(l). 20 USC 1078-2. "(4) An individual's status as an eligible borrower under this section terminates upon receipt of a consolidation loan under this section except with respect to loans received under this title after the date of receipt of the consolidation loan. For the purpose of computing the outstanding indebtedness of such an individual, only loans received after such date shall be taken into account.
100 STAT. 344 PUBLIC LAW 99-272—APR. 7, 1986 "(b)(1) Any lender described in clause (A), (B), or (C) of subsection (a)(1) who wishes to make consolidation loans under this section shall enter into an agreement with the Secretary or a guaranty agency which provides— "(A)(i) that, in the case of lenders described in subsection (a)(1)(C), the lender will make a consolidation loan to any eli- gible borrower on request of that borrower, if the lender holds an outstanding loan of that borrower which is selected by the borrower for consolidation under this section, and will make such loans to other eligible borrowers only to the extent per- mitted by the Secretary in an agreement under subsection (d); "(ii) that, in the case of lenders described in subsection (a)(1)(B), the lender will make, subject to the availability of funds allocated for such purpose, a consolidation loan to any eligible borrower— "(I) who is, or was at the time of receiving a loan which is selected for consolidation, a resident of the State of such lender; or "(II) who received loans under this title while attending an institution of higher education in the State of such lender, except that the lender may elect to limit further the availability of its loans under this section to those borrowers for whom the lender is the holder of a loan selected for consolidation; or "(iii) that, in the case of the Student Loan Marketing Associa- tion, the lender will make a consolidation loan to any eligible borrower on request of that borrower; "(B) that each consolidation loan made by the lender will bear interest, and be subject to repayment, in accordance with subsection (c); "(C) that each consolidation loan will be made, notwithstand- ing any other provision of this part limiting the maximum principal amount for all insured loans made to a borrower, in an amount (i) which is not less than the minimum amount required for eligibility of the borrower under subsection (a)(3)(A)(i), and (ii) which is equal to the sum of the unpaid principal, accrued unpaid interest and late charges of all loans received by the eligible borrower under this title which are selected by the borrower for consolidation; "(D) that the proceeds of each consolidation loan will be paid by the lender to the holder or holders of the loans so selected to discharge the liability on such loans; "(E) that, in the case of any lender, such lender will not make consolidation loans under this part from the proceeds of bonds or other obligations, the income from which is exempt from 26 use 1 et seq. taxation under the Internal Revenue Code of 1954, issued subse- quent to the enactment date of the Student Financial Assist- Ante, p. 339. ance Amendments of 1985; and "(F) such other terms and conditions as the Secretary or guaranty agency (whichever is party to the agreement) may specifically require of the lender to carry out this section. "(2) The Secretary shall issue a certificate of comprehensive insur- 20 use 1079. ance coverage under section 429(b) to a lender which has entered into an agreement with the Secretary under paragraph (1) of this subsection. A guaranty agency may issue a certificate of comprehen- sive insurance coverage to a lender if the lender has entered into an agreement under paragraph (1) of this subsection. The Secretary
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 345 shall not issue such a certificate under this paragraph to a lender described in clause (B) or (C) of subsection (a)(1) if the Secretary determines that such lender has reasonable access in its State, for the purpose of obtaining such a certificate, to a guaranty agency. In either case, such certificate shall, at a minimum, provide— "(A) that all consolidation loans made by such lender in conformity with the requirements of this section will be insured against loss of principal and interest by the issuer of such certificate; "(B) that a consolidation loan will not be insured unless the lender has determined to its satisfaction, in accordance with reasonable and prudent business practices, for each loan being consolidated (i) that the loan is a legal, valid, and binding obligation of the borrower; (ii) that each such loan was made and serviced in compliance with applicable laws and regula- tions; and (iii) in the case of loans under this part, that the insurance on such loan is in full force and effect; "(C) the effective date and expiration date of the certificate; "(D) the aggregate amount to which the certificate applies; "(E) that, if the lender prior to the expiration of the certificate no longer proposes to make consolidation loans, the lender will so notify the issuer of such certificate in order that the certifi- cate may be terminated (without affecting the insurance on any consolidation loan made prior to such termination); and "(F) the terms upon which the issuer of the certificate may limit, suspend, or terminate the lender's authority to make consolidation loans under the certificate (without affecting the insurance on any consolidation loan made prior to such limita- tion, suspension, or termination). "(3) A consolidation loan made pursuant to this section shall be insurable under a certificate issued pursuant to paragraph (2) only if the loan is made to an eligible borrower who has agreed to notify the holder of the loan promptly concerning any change of address and the loan is evidenced by a note or other written agreement which— "(A) is made without security and without endorsement, except that if the borrower is a minor and such note or other written agreement executed by him would not, under applicable law, create a binding obligation, endorsement may be required; "(B) provides for the payment of interest and the repayment of principal in accordance with subsection (c) of this section and contains notice of the possibility of a revised repayment sched- ule under paragraph (2) of such subsection; "(C) provides that periodic installments of principal need not be paid, but interest shall accrue and be paid, during any period— "(i) during which the borrower is pursuing a full-time Fellowships and course of study at an eligible institution, is pursuing a scholarships. course of study pursuant to a graduate fellowship program Handicapped persons. approved by the Secretary, or pursuant to a rehabilitation training program for disabled individuals approved by the Secretary; "(ii) not in excess of 2 years during which the borrower is serving an internship, the successful completion of which is required in order to receive professional recognition; "(iii) not in excess of 3 years during which the borrower is temporarily totally disabled, as established by sworn affida- vit of a qualified physician, or during which the borrower is
100 STAT. 346 PUBLIC LAW 99-272—APR. 7, 1986 unable to secure employment by reason of the care required by a spouse who is so disabled; or "(iv) which is a single period, not in excess of 12 months, at the request of the borrower, during which the borrower is seeking and unable to find full-time employment; and that any such period shall not be included in determining the repayment period provided pursuant to subsection (c)(2) of this section; "(D) entitles the borrower to accelerate without penalty repayment of the whole or any part of the loan; and "(E)(i) contains a notice of the system of disclosure concerning 20 use 1080. such loan to credit bureau organizations under section 430(bX2), and (ii) provides that the lender on request of the borrower will provide information on the repayment status of the note to such organizations. "(c)(1) Consolidation loans made under this section shall bear interest at the rate of 10 per centum per annum on the unpaid principal balance of the loan, except that, if the consolidation loan is used for the purpose of discharging liability on a loan made pursu- 20 u s e 1078-2. ant to section 428B, the consolidation loan shall bear interest at a rate per annum on such unpaid balance which is equal to the 20 u s e 1077a. highest applicable interest rate under section 427A on any loan which is selected for consolidation by the borrower. For the purposes 20 u s e 1087-1. of payment of special allowances under section 438(b)(2), the interest rate required by this subsection is the applicable interest rate with respect to a consolidation loan. "(2) Notwithstanding any other provision of this part, to the extent authorized by its certificate of insurance under subsection (b)(2)(F) and approved by the issuer of such certificate, the lender of a consolidation loan, with the agreement of the borrower, may establish such repayment terms as will promote the objectives of this section, including the establishment of graduated and income sensitive repayment schedules. In each case a consolidation loan shall be repaid as follows: "(A) in the case of a consolidation loan the original amount of which is less than $7,500, such loan shall be repaid in not more than 10 years; "(B) in the case of a consolidation loan the original amount of which equals or exceeds $7,500 but is less than $11,000, such loan shall be repaid in not more than 13 years; or "(C) in the case of a consolidation loan the original amount of which equals or exceeds $11,000, such loan shall be repaid in not more than 15 years. "(3) Repayment of a consolidation loan shall commence within 60 days after all holders have, pursuant to subsection (b)(lXD), dis- charged the liability of the borrower on the loans selected for consolidation. "(4) No origination fee or insurance premium shall be charged to the borrower on any consolidation loan, and no insurance premium shall be payable by the lender to the issuer of the certificate of insurance with respect to any such loan. State and local "(d)(1) If, within 18 months after the effective date of this section, governments. an eligible lender described in subsection (a)(1)(B) for a State has not entered into an agreement with the Secretary or a guaranty agency for purposes of making consolidation loans under this section, the Secretary may, after a hearing and upon a determination of need therefor, enter into an agreement for the purposes of making
PUBLIC LAW 99-272—APR. 7, 1986 100 STAT. 347 consolidation loans to eligible borrowers in such State with an eligible lender described in clause (B) or (C) of subsection (aXD from another State. "(2) Notice of the hearing required by paragraph (1) of this State and local subsection shall be sent to the Governor of the affected State and governments, the eligible lenders described in subsection (a)(1)(B) for that State. At any such hearing representatives of such Governor and lenders may present evidence and testimony and examine witnesses, and full consideration shall be given to the views of such Governor and lenders with respect to the interests of the eligible borrowers in that State and with respect to the impact on programs of such lenders of allowing a lender described in clause (B) or (C) of subsection (a)(1) from another State to make consolidation loans pursuant to an agreement under this subsection in such State. "(3) An agreement under this subsection may contain such terms and conditions as the Secretary may specifically require of the lender to carry out this section. "(4) The requirements of paragraphs (1) and (2) of this subsection State and local shall not apply if, in any State, an eligible lender described in governments. subsection (a)(1)(B) from another State is functioning as a secondary market described in subparagraph (D) or (F) of section 435(g)(1) prior 20 USC 1085. to the date of enactment of the Student Financial Assistance Amendments of 1985 and such lender agrees to make consolidation Ante, p. 339. loans to eligible borrowers in such State. "(e) The authority to make loans under this section expires at the Termination close of September 30, 1991. Nothing in this section shall be con- date. strued to authorize the Secretary to promulgate rules or regulations governing the terms or conditions of the agreements and certificates under subsection (b). Loans made under this section shall not be considered to be new loans made to students for purposes of section 424(a).". 20 USC 1074. (b) CONFORMING AMENDMENTS.—(1) Section 427(a) of the Act is 20 USC 1077. amended by striking out "A loan" and inserting in lieu thereof "Except as provided in section 428C, a loan". Ante, p. 343. (2) Section 435(g)(1) of the Act is amended— (A) by striking out "section 439 (o) and (q)" in subparagraph (G) and inserting in lieu thereof "sections 428C and 439(q)"; and (B) by striking out "section 428(j)" in subparagraph (H) and inserting in lieu thereof "sections 428(h) and 428C". (3) Section 438 of the Act is amended— 20 USC 1087-1. (A) in subsection (b)(5)(A)(ii), by inserting ", 428C," after "428B"; and (B) in subsection (c)(2), by striking out "section 428B and section 439(o)" and inserting in lieu thereof "sections 428B and 20 USC 1078-2. 428C". (4) Section 439(d)(1)(C) of the Act is amended by striking out 20 USC 1087-2. "428(A), and except with respect to loans under section 439(o),' and inserting in lieu thereof "428A, and except with respect to loans under section 428C,". (c) SPECIAL ALLOWANCE.—(1) Section 438(b)(2)(A) of the Act is amended by striking out "subparagraph (B)" and inserting in lieu thereof "subparagraphs (B) and (C)". (2) The first sentence of section 438(b)(2)(B)(i) of the Act is amended— (A) by inserting "appropriate" before "quarterly rate" the second time it appears; and (B) by inserting "or subparagraph (C)" before the period.
100 STAT. 348 PUBLIC LAW 99-272—APR. 7, 1986 20 use 1087-1. (3) Section 438(b)(2) of the Act is amended by adding at the end thereof the following new subparagraph: Ante, p. 343. "(C) In the case of loans made in accordance with section 428C, the