The text of the bill below is as of Apr 7, 1986 (Passed Congress).
You are reading a bill enacted 13,693 days ago. In the intervening time subsequent legislation may have amended or repealed the provisions below.
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