Public Law 101-508

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388

Public Law 101-508
101st Congress
An Act
Nov. 5, 1990
[H.R. 5835]
Omnibus Budget
Reconciliation
Act of 1990.

To provide for reconciliation pursuant to section 4 of the concurrent resolution on the
budget for fiscal year 1991.

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.

This Act may be cited as the "Omnibus Budget Reconciliation Act
of 1990".
SEC. 2. TABLE OF TITLES.
Title
Title
Title
Title
Title
Title
Title
Title
Title
Title
Title
Title
Title
Agricultural
Reconciliation
Act of 1990.

I. Agriculture and related programs.
II. Banking, housing, and related programs.
III. Student loans and labor provisions.
IV. Medicare, medicaid, and other health-related programs.
V. Income security, human resources, and related programs.
VI. Energy and environmental programs.
VII. Civil service and postal service programs.
VIII. Veterans' programs.
IX. Transportation.
X. Miscellaneous user fees and other provisions.
XI. Revenue provisions.
XII. Pensions.
XIII. Budget enforcement.

TITLE I—AGRICULTURE AND RELATED
PROGRAMS
SEC. 1001. SHORT TITLE; TABLE OF CONTENTS.

7 use 1421 note.

(a) SHORT TITLE.—This title may be cited as the "Agricultural
Reconciliation Act of 1990".
(b) TABLE OF CONTENTS.—The table of contents of this title is as
follows:
Sec. 1001. Short title; table of contents.
Sec.
Sec.
Sec.
Sec.
Sec.

Subtitle A—Commodity Programs
1101. Triple base for deficiency payments.
1102. Calculation of deficiency payments based on 12-month average.
1103. Acreage reduction program for 1991 crop.
1104. Acreage reduction programs for 1992 through 1995 crops.
1105. Loan origination fees and other savings.

Sec.
Sec.
Sec.
Sec.

Subtitle B—Other Agricultural Programs
1201. Authorization levels for rural electric and telephone loans.
1202. Authorization levels for FmHA loans.
1203. APHIS inspection user fee on international passengers.
1204. Additional savings and other provisions.

Subtitle C—Effective Date
Sec. 1301. Effective date.
Sec. 1302. Readjustment of support levels.
ENROLLMENT ERRATA
Pursuant to the provisions of H.J. Res. 682, waiving certain enrollment requirements with respect to any reconciliation bill, appropriation bill, or continuing resolution for the remainder of the One Hundred First Congress, and providing for the
subsequent preparation and certification of printed enrollments, this printed enrollment contains corrections in indentation, typeface, and type size and includes footnotes identifying obvious errors in spelling or punctuation in the hand enrollment.
•Note: For information on the printing of this law and a related Presidential memorandum, see the editorial
note at the end.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-1

Subtitle A—Commodity Programs
SEC. 1101. TRIPLE BASE FOR DEFICIENCY PAYMENTS.
(a) WHEAT.—Section 107B(c)(l)(C)(ii) of the Agricultural Act of
1949 (as added by section 301 of the Food, Agriculture, Conservation,
and Trade Act of 1990) is amended by striking "100 percent" and
inserting "85 percent".
(b) FEED GRAINS.—Section 105B(c)(l)(C)(ii) of the Agricultural Act
of 1949 (as added by section 401 of the Food, Agriculture, Conservation, and Trade Act of 1990) is amended by striking "100 percent"
and inserting "85 percent".
(c) UPLAND COTTON.—Section 103B(c)(l)(C)(ii) of the Agricultural
Act of 1949 (as added by section 501 of the Food, Agriculture,
Conservation, and Trade Act of 1990) is amended by striking "10()
percent" and inserting "85 percent".
(d) RICE.—Section 101B(c)(l)(C)(ii) of the Agricultural Act of 1949
(as added by section 601 of the Food, Agriculture, Conservation, and
Trade Act of 1990) is amended by striking "100 percent" and inserting "85 percent".
SEC. 1102. CALCULATION OF DEFICIENCY PAYMENTS BASED ON 12MONTH AVERAGE.
(a) WHEAT.—Clause (ii) of section 107B(c)(l)(B) of the Agricultural
Act of 1949 (as added by section 301 of the Food, Agriculture,
Conservation, and Trade Act of 1990) is amended to read as follows:
"(ii)

PAYMENT RATE OF 1994

AND 1995

CROPS.—The

payment rate for each of the 1994 and 1995 crops of
wheat shall be the amount by which the established
price for the crop of wheat exceeds the higher of—
"(I) the lesser of—
"(aa) the national weighted average market
price received by producers during the marketing year for the crop, as determined by the
Secretary; or
"(bb) the national weighted average market
price received by producers during the first 5
months of the marketing year for the crop, as
determined by the Secretary, plus 10 cents per
bushel; or
"(II) the loan level determined for the crop, prior
to any adjustment made under subsection (a)(3) for
the marketing year for the crop of wheat.".
Qa) FEED GRAINS.—Clause (ii) of section 105B(c)(l)(B) of the Agricultural Act of 1949 (as added by section 401 of the Food, Agriculture,
Conservation, and Trade Act of 1990) is amended to read as follows:
"(ii)

PAYMENT RATE OF 1994

AND 1995

CROPS.—The

payment rate for each of the 1994 and 1995 crops of
corn, grain sorghums, oats, and barley shall be the
amount by which the established price for the respective crop of feed grains exceeds the higher of—
"(I) the lesser of—
"(aa) the national weighted average market
price received by producers during the marketing year for the crop, as determined by the
Secretary; or

7 use 1445b-3a.

7 use 1444f.

7 use 1444-2.
7 use 1441-2.

104 STAT. 1388-2

7 u s e 1441-2.

PUBLIC LAW 101-508—NOV. 5, 1990

"(bb) the national weighted average market
price received by producers during the first 5
months of the marketing year for the crop, as
determined by the Secretary, plus 7 cents per
bushel; or
"(11) the loan level determined for the crop, prior
to any adjustment made under subsection (a)(3) for
the marketing year for the respective crop of feed
grains.".
(c) RICE.—Clause (ii) of section 101B(c)(l)(B) of the Agricultural Act
of 1949 (as added by section 601 of the Food, Agriculture, Conservation, and Trade Act of 1990) is amended to read as follows:
"(ii)

7 u s e 1445J.

P A Y M E N T RATE O F 1994

A N D 1 9 9 5 CROPS.—The

payment rate for each of the 1994 and 1995 crops of rice
shall be the amount by which the established price for
the crop of rice exceeds the higher of—
"(I) the lesser of—
"(aa) the national average market price received by producers during the calendar year
that contains the first 5 months of the marketing year for the crop, as determined by the
Secretary; or
"(bb) the national average market price received by producers during the first 5 months
of the marketing year for the crop, as determined by the Secretary, plus an appropriate
amount that is fair and equitable in relation to
wheat and feed grains (as determined by the
Secretary); or
"(II) the loan level determined for the crop.".
(d) CONFORMING AMENDMENT.—Section 114(c) of the Agricultural
Act of 1949 (as amended by section 1121(a) of the Food, Agriculture,
Conservation, and Trade Act of 1990 and redesignated by section
1161(a)(1) of such Act) by striking "wheat, feed grains, and rice
which payments are calculated on the basis of the national weighted
average market price (or, in the case of rice, the national average
market price) for the marketing year for the crop" and inserting
"wheat and feed grains which payments are calculated as provided
in sections 107B(c)(lXB)(ii), 107B(p), or 105B(c)(lXB)(ii)".
SEC. 1103. ACREAGE REDUCTION PROGRAM FOR 1991 CROP.

7 u s e 1445b-3a
note.

7 u s e 1444f.

, (a) WHEAT.—In the case of the 1991 crop of wheat, the Secretary of
Agriculture shall provide for an acreage limitation program as
described in section 107B(e)(l)(F) of the Agricultural Act of 1949 (as
added by section 301 of the Food, Agriculture, Conservation, and
Trade Act of 1990).
(b) FEED GRAINS.—Subparagraph (F) of section 105B(e)(l) of the
Agricultural Act of 1949 (as added by section 401 of the Food,
Agriculture, Conservation, and Trade Act of 1990) is amended to
read as follows:
"(F)

A C R E A G E LIMITATION PROGRAM FOR 1 9 9 1 C R O P . — I n

the case of the 1991 crop of corn, the Secretary shall provide
for an acreage limitation program (as described in paragraph (2)) under which the acreage planted to corn for
harvest on a farm would be limited to the corn crop acreage
base for the farm for the crop reduced by not less than 7.5
percent.".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-3

SEC. 1104. ACREAGE REDUCTION PROGRAMS FOR 1992 THROUGH 1995
CROPS.

7 USC 1445-3a
no*«-

(a) I N GENERAL.—Notwithstanding any other provision of law,
except as provided in subsections 03) and (c), the Secretary of Agriculture shall announce an acreage limitation program for each of
the 1992 through 1995 crops of—
(1) wheat under which the acreage planted to wheat for
harvest on a farm would be limited to the wheat crop acreage
base for the farm for the crop reduced by—
(A) in the case of the 1992 crop of wheat, not less than 6
percent;
(B) in the case of the 1993 crop of wheat, not less than 5
percent;
(C) in the case of the 1994 crop of wheat, not less than 7
percent; and
(D) in the case of the 1995 crop of wheat, not less than 5
percent; and
(2) corn, grain sorghum, and barley under which the acreage
planted to the respective feed grain for harvest on a farm would
be limited to the respective feed grain crop acreage base for the
farm for the crop reduced by not less than 7 ¥2 percent.
(b) STOCKS-TO-USE RATIO.—Subsection (a) shall not apply to a crop
if the Secretary estimates for such crop that the stocks-to-use ratio
will be less than—
(1) in the case of wheat, 34 percent; and
(2) in the case of corn, grain sorghum, and barley, 20 percent.
(c) TERMINATION.—If the Secretary determines that the quantity
of soybeans on hand in the United States on the first day of the
marketing year for the 1991 crop of soybeans (not including any
quantity of soybeans of the 1991 crop) will be less than 325,000,000
bushels, subsection (a) shall not apply to any of the 1992 through
1995 crops of wheat and feed grains.
SEC. 1105. LOAN ORIGINATION FEES AND OTHER SAVINGS.

(a) OILSEEDS.—Section 205 of the Agricultural Act of 1949 (as 7USC1446f.
added by section 701(2) of the Food, Agriculture, Conservation, and
Trade Act of 1990) is amended—
(1) by redesignating subsection (m) as subsection (n); and
(2) by inserting after subsection (1) the following new subsection:
"(m) LOAN ORIGINATION FEE.—

"(1) LOANS.—The Secretary shall charge a producer a loan
origination fee for a crop of oilseeds, in connection with making
a loan, equal to the product obtained by multiplying—
"(A) the loan level determined for the crop under subsection (c); by
"(B) 2 percent; by
"(C) the quantity of oilseeds for which the producer obtains the loan.
"(2) LOAN DEFICIENCY PAYMENTS.—The Secretary shall deduct,
from the amount of any loan deficiency payment made under
subsection (e), an amount equal to the amount of the loan
origination fee that would otherwise be paid under paragraph
(1) if the producer obtained a loan rather a loan deficiency
payment.".
(b) PEANUTS.—

104 STAT. 1388-4
7 use I446c-a.

^

PUBLIC LAW 101-508—NOV. 5, 1990
(1) IN GENERAL.—Section 108B of the Agricultural Act of 1949
(as added by section 806 of the Food, Agriculture, Conservation,
and Trade Act of 1990) is amended—
(A) by redesignating subsection (g) as subsection (h); and
(B) by inserting after subsection (f) the following new
subsection:

"(g) MARKETING ASSESSMENT.—

"(1) IN GENERAL.—The Secretary shall provide, by regulation,
for a nonrefundable marketing assessment applicable to each of
the 1991 through 1995 crops of peanuts. The assessment shall be
made in accordance with this subsection and shall be on a per
pound basis in an amount equal to 1 percent of the national
average quota or additional peanut support rate per pound, as
applicable, for the applicable crop. No peanuts shall be assessed
more than 1 percent of the applicable support rate under this
subsection.
"(2) FIRST PURCHASERS.—

-

"(A) IN GENERAL.—Except as provided under paragraphs
(3) and (4), the first purchaser of peanuts shall—
"(i) collect from the producer a marketing assessment
equal to Vi percent of the applicable national average
support rate times the quantity of peanuts acquired;
"(ii) pay, in addition to the amount collected under
clause (i), a marketing assessment in an amount equal
to y^ percent of the applicable national average support
rate times the quantity of peanuts acquired; and
"(iii) remit the amounts required under clauses (i)
and (ii) to the Commodity Credit Corporation in a
manner specified by the Secretary.
"(B) DEFINITION.—For purposes of this subsection, the
term 'first purchaser' means a person acquiring peanuts
from a producer except that in the case of peanuts forfeited
by a producer to the Commodity Credit Corporation, such
term means the person acquiring the peanuts from the
Commodity Credit Corporation.
"(3) OTHER PRIVATE MARKETINGS.—In the case of a private
marketing by a producer directly to a consumer through a retail
or wholesale outlet or in the case of a marketing by the producer outside of the continental United States, the producer
shall be responsible for the full amount of the assessment and
shall remit the assessment by such time as is specified by the
Secretary.
"(4) LOAN PEANUTS.—In the case of peanuts that are pledged
as collateral for a price support loan made under this section, Vz
of the assessment shall be deducted from the proceeds of the
loan. The remainder of the assessment shall be paid by the first
purchaser of the peanuts. For purposes of computing net gains
on peanuts under this section, the reduction in loan proceeds
shall be treated as having been paid to the producer.
"(5) PENALTIES.—If any person fails to collect or remit the
reduction required by this subsection or fails to comply with
such requirements for recordkeeping or otherwise as are required by the Secretary to carry out this subsection, the person
shall be liable to the Secretary for a civil penalty up to an
amount determined by multiplying—
"(A) the quantity of peanuts involved in the violation; by

PUBLIC LAW 101-508--NOV. 5, 1990

104 STAT. 1388-5

"(B) the national average quota peanut price support
level for the applicable crop year.
"(6) ENFORCEMENT.—The Secretary may enforce this subsection in the courts of the United States.".
(2) CONFORMING AMENDMENT.—Section 108B(a)(2) of the Agricultural Act of 1949 (as added by section 806(3) of the Food, 7 u s e 1445C-3.
Agriculture, Conservation, and Trade Act of 1990) is amended
by inserting after "cost of land" the following: "and the cost of
any assessments required under subsection (g)".
(c) SUGAR.—Section 206 of the Agricultural Act of 1949 (as added 7 u s e 1446g.
by section 901(2) of the Food, Agriculture, Conservation, and Trade
Act of 1990) is amended—
(1) by redesignating subsection (i) as subsection (j); and
(2) by inserting after subsection (h) the following new subsection:
"(i) MARKETING ASSESSMENT.—

"(1) SUGARCANE.—Effective only for each of the 1991 through
1995 crops of sugarcane, the first processor of sugarcane shall
remit to the Commodity Credit Corporation a nonrefundable
marketing assessment in an amount equal to .18 cents per
pound of raw cane sugar processed by the processor from domestically produced sugarcane.
"(2) SUGAR BEETS.—Effective only for each of the 1991 through
1995 crops of sugar beets, the first processor of sugar beets shall
remit to the Commodity Credit Corporation a nonrefundable
marketing assessment in an amount equal to .193 cents per
pound of beet sugar processed by the processor from domestically produced sugar beets.
"(3) COLLECTION.—Marketing assessments required under this
subsection shall be collected and remitted to the Commodity
Credit Corporation in the manner prescribed by the Secretary
and shall be nonrefundable.
"(4) PENALTIES.—If any person fails to collect or remit the
reduction required by this subsection or fails to comply with
such requirements for recordkeeping or otherwise as are required by the Secretary to carry out this subsection, the person
shall be liable to the Secretary for a civil penalty up to an
amount determined by multiplying—
"(A) the quantity of cane sugar or beet sugar involved in
the violation; by
"(B) the support level for the applicable crop of sugarcane
or sugar beets.
"(5) ENFORCEMENT.—The Secretary may enforce this subsection in the courts of the United States.".
(d) HONEY.—Section 207 of the Agricultural Act of 1949 (as added 7 u s e 1446h.
by section 1001 of the Food, Agriculture, Conservation, and Trade
Act of 1990) is amended—
(1) by redesignating subsection (i) as subsection (j); and
(2) by inserting after subsection (h) the following new subsection:
"(i) MARKETING ASSESSMENT.—

"(1) I N GENERAL.—Effective only for each of the 1991 through
1995 crops of honey, producers and producer-packers of honey
(as defined in paragraphs (5) and (9), respectively, of section 3 of
the Honey Research, Promotion, and Consumer Information
Act (7 U.S.C. 4602)) shall remit to the Commodity Credit Corporation a nonrefundable marketing assessment on a per pound

104 STAT. 1388-6

PUBLIC LAW 101-508—NOV. 5, 1990

basis in an amount equal to 1 percent of the national price
support level for each such crop as otherwise provided in this
section.
"(2) COLLECTION.—The assessment shall be collected and
remitted by the first handler of honey in the manner prescribed
by the Secretary which, to the extent practicable, shall be as
provided for in the Honey Research, Promotion, and Consumer
Information Act.
"(3) EXEMPTIONS.—All persons who are exempt from the
payment of the assessment authorized by such Act, and all
imported honey, shall be exempt from the payment of the
assessment required by this subsection.
"(4) PENALTIES.—If any person fails to collect or remit the
reduction required by this subsection or fails to comply with
such requirements for recordkeeping or otherwise as are required by the Secretary to carry out this subsection, the person
shall be liable to the Secretary for a civil penalty up to an
amount determined by multiplying—
"(A) the quantity of honey involved in the violation; by
"(B) the support level for the applicable crop of honey.
"(5) ENFORCEMENT.—The Secretary may enforce this subsection in the courts of the United States.".
(e) WOOL AND MOHAIR.—Section 704 of the National Wool Act of
1954 (7 U.S.C. 1783) (as amended by section 201(b) of the Food,
Agriculture, Conservation, and Trade Act of 1990) is amended by
adding at the following new subsection:
"(c) MARKETING ASSESSMENTS.—Effective only for each of the 1991
through 1995 marketing years for wool and mohair, the Secretary
shall deduct an amount from the payment to be made available to
producers of wool and mohair under subsection (a) equal to 1 percent
of the payment.".
(f) TOBACCO.—Section 106 of the Agricultural Act of 1949 (7 U.S.C.
1445) is amended by adding at the end the following new subsection:
"(g)(1) Effective only for each of the 1991 through 1995 crops of
tobacco for which price support is made available under this Act,
producers and purchasers of such tobacco shall each remit to the
Commodity Credit Corporation a nonrefundable marketing assessment in an amount equal to .5 percent of the national price support
level for each such crop as otherwise provided for in this section.
"(2) Such producer assessments and purchaser assessments shall
be—
"(A) collected in the same manner as provided for in section
106A(d)(2) or 106B(d)(3), as applicable; and
"(B) enforced in the same manner as provided in section
106A(h) or 106B(j), as applicable.
"(3) The Secretary may enforce this subsection in the courts of the
United States.".
7 u s e 1446e.

(g) OTHER SAVINGS.—Section 204 of the Agricultural Act of 1949

(as added by section 101 of the Food, Agriculture, Conservation, and
Trade Act of 1990) is amended—
(1) in subsection (g)—
(A) in paragraph (1), by striking "1991 through 1994" and
inserting "1992 through 1995";
(B) in the matter preceding subparagraph (A) of paragraph (2)—
(i) by inserting after "purchases" the following: "in
the following calendar year"; and

PUBLIC LAW 101-508—NOV. 5,1990

104 STAT. 1388-7

(ii) by inserting after "producers" the following: "in
such following calendar year"; and
(C) in paragraph (2)(B), by striking "that calendar year"
and inserting "such following calendar year";
(2) by redesignating subsections (h) and (i) as subsections (j)
and (k), respectively; and
(3) by inserting after subsection (g) the following new subsections:
"(h) REDUCTION IN PRICE RECEIVED.—

"(1) I N GENERAL.—Beginning January 1, 1991, the Secretary
shall provide for a reduction in the price received by producers
for all milk produced in the United States and marketed by
producers for commercial use, in addition to any reduction in
price required under subsection (g).
"(2) AMOUNT.—The amount of the reduction under paragraph
(1) in the price received by producers shall be—
"(A) during calendar year 1991, 5 cents per hundredweight of milk marketed; and
"(B) during each of the calendar years 1992 through 1995,
11.25 cents per hundredweight of milk marketed, which
rate shall be adjusted on or before May 1 of each of the
calendar years 1992 through 1995 by an amount per
hundredweight that is necessary to compensate for refunds
made under paragraph (3) on the basis of marketings in the
previous calendar year.
"(3) REFUND.—The Secretary shall provide a refund of the
entire reduction under paragraph (2) in the price of milk received by a producer during a calendar year, if the producer
provides evidence that the producer did not increase marketings
in the calendar year that such reduction was in effect when
compared to the immediately preceding calendar year.
"(i) ENFORCEMENT.—

"(1) COIXECTION.—Reductions in price required under subsection (g) or (h) shall be collected and remitted to the Commodity
Credit Corporation in the manner prescribed by the Secretary.
"(2) PENALTIES.—If any person fails to collect or remit the
reduction required by subsection (g) or (h) or fails to comply
with such requirements for recordkeeping or otherwise as are
required by the Secretary to carry out such subsection, the
person shall be liable to the Secretary for a civil penalty up to
an amount determined by multiplying—
"(A) the quantity of milk involved in the violation; by
"(B) the support rate for the applicable calendar year for
milk.
"(3) ENFORCEMENT.—The Secretary may enforce subsection (g)
or (h) in the courts of the United States.".

Subtitle B—Other Agricultural Programs
SEC. 1201. AUTHORIZATION LEVELS FOR RURAL ELECTRIC AND TELEPHONE LOANS.

Title III of the Rural Electrification Act of 1936 (7 U.S.C. 931 et
seq.) is amended by adding at the end the following new section:

104 STAT. 1388-8
7 u s e 940d.

PUBLIC LAW 101-508—NOV. 5, 1990

"SEC. 314. AUTHORIZATION LEVELS FOR RURAL ELECTRIC AND TELEPHONE LOANS.

"(a) I N GENERAL.—Subject to the other provisions of this section
and notwithstanding any other provision of law, for each of fiscal
years 1991 through 1995, insured loans may be made in accordance
with this title from the Rural Electrification and Telephone Revolving Fund established under section 301 in amounts equal to the
following levels:
"(1) For fiscal year 1991, $896,000,000.
"(2) For fiscal year 1992, $932,000,000.
"(3) For fiscal year 1993, $969,000,000.
"(4) For fiscal year 1994, $1,008,000,000.
"(5) For fiscal year 1995, $1,048,000,000.
"(h) REDUCTION.—Notwithstanding any other provision of law, for
each of fiscal years 1991 through 1995, the Administrator shall—
"(1) reduce the amounts otherwise made available for insured
loans made from the Rural Electrification and Telephone
Revolving Fund by—
"(A) $224,000,000 for fiscal year 1991;
"(B) $234,000,000 for fiscal year 1992;
"(C) $244,000,000 for fiscal year 1993;
"(D) $256,000,000 for fiscal year 1994; and
"(E) $267,000,000 for fiscal year 1995; and
"(2) use the funds made available from such reductions in
each fiscal year to guarantee loans under subsection (d).
"(c) MANDATORY LEVELS.—Notwithstanding any other provision of
law, the Administrator shall make insured loans at the levels
authorized by this section for each of fiscal years 1991 through 1995
taking into account any reductions under subsection (b).
"(d) GUARANTEED LOANS—

"(1) I N GENERAL.—Except as otherwise provided in this
subsection and subsection (e) and notwithstanding any other
provision of law, in carrying out this Act, the Administrator
shall guarantee loans made by legally organized lending agencies to the extent of the reduction in insured loans as provided
in subsection (b).
"(2) AMOUNT OF GUARANTEE.—The guarantees authorized
under paragraph (1) shall be 90 percent of the principal of and
interest on the loan and shall be made only upon the request of
the borrower.
"(3) No FEDERAL INSTRUMENTALITY.—The Administrator may
not provide any such guarantee for a loan made by the Federal
Financing Bank, the Rural Telephone Bank, or any other lending agency that is an agency or instrumentality of the United
States other than banks for cooperatives.
"(4) AUTHORITY.—The Administrator is authorized to approve
such guarantees subject to full use being made during each
fiscal year of insured loan amounts made available during the
fiscal year.
"(5) CONSTRUCTION.—Nothing in this subsection shall be construed as modifying the authority provided in section 306.
"(e) IMPLEMENTATION.—

"(1) I N GENERAL.—The Administrator shall implement the
reduction in insured loans provided by subsection (b) in a
manner that will lessen its adverse effect.

PUBLIC LAW 101-508—NOV. 5, 1990
"(2)

104 STAT. 1388-9

ALLOCATION BETWEEN ELECTRIC AND TELEPHONE PRO-

GRAMS.—The reductions required by subsection (b) shall be
allocated between the electric and telephone programs for each
fiscal year in proportion to the amount of insured funds made
available for each such program during the fiscal year in
annual appropriations Acts.
"(3) ELECTRIC BORROWER'S OPTION.—If the amount of an
insured electric loan is reduced as a result of the requirements of subsection (b), the electric borrower may, at the
option of such borrower, obtain capital to replace the amount
of the reduction—
"(A) with the assistance of a loan guarantee (as provided
by subsection (d));
"(B) from internally generated funds of the electric borrower;
"(C) from private credit sources with a lien accommodation provided by the Administrator; or
"(D) from other private sources.".
SEC. 1202. AUTHORIZATION LEVELS FOR FmHA LOANS.

(a) I N GENERAL.—Subsection (b) of section 346 of the Consolidated
Farm and Rural Development Act (7 U.S.C. 1994(b)) is amended to
read as follows:
"(b)(1) For each of the fiscal years 1991 through 1995, real estate
and operating loans may be insured, made to be sold and insured, or
guaranteed in accordance with subtitles A and B, respectively, from
the Agricultural Credit Insurance Fund established under section
309 in amounts equal to the following levels:
"(A) For fiscal year 1991, $4,175,000,000, of which not less
than $827,000,000 shall be for farm ownership loans under
subtitle A.
"(B) For fiscal year 1992, $4,343,000,000, of which not less
than $861,000,000 shall be for farm ownership loans under
subtitle A.
"(C) For fiscal year 1993, $4,516,000,000, of which not less than
$895,000,000 shall be for farm ownership loans under subtitle A.
"(D) For fiscal year 1994, $4,697,000,000, of which not less
than $931,000,000 shall be for farm ownership loans under
subtitle A.
"(E) For fiscal year 1995, $4,885,000,000, of which not less
than $968,000,000 shall be for farm ownership loans under
subtitle A.
"(2) Subject to paragraph (3), such amounts set forth in paragraph
(1) shall be apportioned as follows:
"(A) For fiscal year 1991—
"(i) $1,019,000,000 for insured loans, of which not less
than $83,000,000 shall be for farm ownership loans; and
"(ii) $3,156,000,000 for guaranteed loans, of which not less
than $744,000,000 shall be for guarantees of farm ownership
loans.
"(B) For fiscal year 1992—
"(i) $1,060,000,000 for insured loans, of which not less
than $87,000,000 shall be for farm ownership loans; and
"(ii) $3,283,000,000 for guaranteed loans, of which not less
than $774,000,000 shall be for guarantees of farm ownership
loans.
"(C) For fiscal year 1993—

39-194 O - 91 - 14 : QL 3 Part 2

'

104 STAT. 1388-10

PUBLIC LAW 101-508—NOV. 5, 1990

"(i) $1,102,000,000 for insured loans, of which not less
than $90,000,000 shall be for farm ownership loans; and
"(ii) $3,414,000,000 for guaranteed loans, of which not less
than $805,000,000 shall be for guarantees of farm ownership
loans.
"(D) For fiscal year 1994—
"(i) $1,147,000,000 for insured loans, of which not less
than $94,000,000 shall be for farm ownership loans; and
"(ii) $3,550,000,000 for guaranteed loans, of which not less
than $837,000,000 shall be for guarantees of farm ownership
loans.
"(E) For fiscal year 1995—
"(i) $1,192,000,000 for insured loans, of which not less
than $97,000,000 shall be for farm ownership loans; and
"(ii) $3,693,000,000 for guaranteed loans, of which not less
than $871,000,000 shall be for guarantees of farm ownership
loans.
"(3) Notwithstanding any other provision of law:
"(A) The Secretary shall—
"(i) reduce the amounts otherwise made available for
insured loans by—
"(I) $482,000,000, for fiscal year 1991;
"(II) $614,000,000, for fiscal year 1992;
"(III) $760,000,000, for fiscal year 1993;
"(IV) $859,000,000, for fiscal year 1994; and
"(V) $907,000,000, for fiscal year 1995; and
"(ii) use the funds made available from such reductions in
each fiscal year to guarantee loans under section 351.
"(B) The total amount of insured loans shall bear the same
ratio to the amount of insured farm ownership loans as the
dollar amount specified in paragraph (2)(A)(i) for insured loans
bears to the dollar amount specified therein for insured farm
ownership loans.
"(C) If more than 70 percent of the number of loans guaranteed under section 351 in a fiscal year have been guaranteed to
persons to whom the Secretary had not previously made an
insured loan under this Act, in lieu of the dollar amounts
specified in subparagraph (A) for the immediately succeeding
fiscal year, the dollar amounts which shall apply shall each be
the product obtained by multiplying—
"(i) such dollar amount; by
"(ii) the quotient of—
"(I) the number of persons provided with guaranteed
loans under section 351 in the fiscal year to whom the
Secretary had not previously made an insured or a
guaranteed loan under this Act; divided by
"(II) the total number of persons provided with
guaranteed loans under section 351 in the fiscal year.
"(4) Notwithstanding subsection (a), the Secretary shall, as soon as
practicable after the date of enactment of this subsection, make,
insure, or guarantee loans at the levels authorized by this subsection
for each of the fiscal years 1991 through 1995.".
(b) INTEREST RATE REDUCTION PROGRAM.—

(1) IN GENERAL.—Section 351 of such Act (7 U.S.C. 1999) is
amended—
(A) in subsection (c)—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-11

(i) by striking "50 percent" and inserting "100 percent"; and
(ii) by striking "2 percent" and inserting "4 percent";
and
(B) in subsection (d), by striking ", or 3 years, whichever
is less".
(2) EXTENSION OF PROGRAM FOR 2 YEARS.—Section 1320 of the

Food Security Act of 1985 (7 U.S.C. 1999 note) is amended by
striking "1993" and inserting "1995".
(c) DEMONSTRATION PROJECT FOR PURCHASE OF SYSTEM LAND.—

Section 351(h)(1) of such Act (7 U.S.C. 1999(h)(1)) is amended by
striking "3-year" and inserting "4-year".
SEC. 1203. APHIS INSPECTION USER FEE ON INTERNATIONAL PASSENGERS.

Section 2509(a) of the Food, Agriculture, Conservation, and Trade
Act of 1990 is amended—
21USC 136a.
(1) in paragraph (1), by striking "a commercial vessel,
commercial aircraft, commercial truck, or railroad car," and
inserting "an international passenger, commercial vessel,
commercial aircraft, commercial truck, or railroad car."; and
(2) in paragraph (3)(B)—
(A) by adding at the end of clause (ii) the following: "Any
such reimbursement shall be subject to appropriations
under clause (v)."; and
(B) by adding at the end the following new clause:
"(v) AUTHORIZATION OF APPROPRIATIONS.—There are

authorized to be appropriated each fiscal year amounts
in the Fund for use for quarantine or inspection
services.".
SEC. 1204. ADDITIONAL SAVINGS AND OTHER PROVISIONS.
(a) INTEGRATED FARM MANAGEMENT PROGRAM.—Section 1451 of

the Food, Agriculture, Conservation, and Trade Act of 1990 is 7 USC 5822.
amended—
(1) in subsection (d), by striking "enroll not more than" and
inserting "enroll not less than"; and
(2) in subsection (h)(7)(A), by striking "shall not be eligible"
and inserting "shall be eligible".
(b) FOOD AID ASSISTANCE.—The Agricultural Trade, Development,

and Assistance Act of 1954 (as amended by section 1512 of the Food,
Agriculture, Conservation, and Trade Act of 1990) is amended—
(1) in section 202(eXl), by striking "private" and all that 7 USC 1722.
follows through "Administrator" and inserting "the Administrator, not less than $10,000,000, and not more than $13,500,000,
shall be made available in each fiscal year to private voluntary
organizations and cooperatives";
(2) in section 406, by adding at the end the following new 7 USC 1736.
subsection:
"(d) AVAILABILITY OF FUNDS.—Funds shall be available under this
Act only to the extent provided in advance in appropriation Acts.";
and
(3) in section 407(c)(4), by striking "providing ocean" and 7 USC 1736a.
inserting "providing ocean transportation or".
(c) TOBACCO PROGRAM ADJUSTMENT.—Section 213 of the Dairy and
Tobacco Adjustment Act of 1983 (7 U.S.C. 51 Ir) is amended—

104 STAT. 1388-12

PUBLIC LAW 101-508—NOV. 5, 1990

(1) in subsection (d), by inserting before the period the following: ", subsection (e), and subsection (f)"; and
(2) in subsection (f), by adding at the end the following new
paragraph:
"(4) Subsection (d) shall apply with respect to fees and charges
imposed to cover the costs of such end user identification, certification, and reporting activities.".
(d) EMERGENCY LOANS.—Section 2269 of the Food, Agriculture,
7 use 1421 note. Conservation, and Trade Act of 1990 is amended by—
(1) striking "(7 U.S.C. 1981(b))" and inserting "(7 U.S.C.
1961(b))"; and
(2) striking "1988" and inserting "1990".
7 use I36w
(e) FIFRA USER FEES.—Notwithstanding any provision of the
note.
Omnibus Budget Reconciliation Act of 1990, nothing in this title or
the other provisions of this Act shall be construed to require or
authorize the Administrator of the Environmental Protection
Agency to assess or collect any fees or charges for services and
activities authorized under the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. 136 et seq.).

Subtitle C—Effective Date
7 u s e 51 Ir note.

SEC. 1301. EFFECTIVE DATE.

This title and the amendments made by this title shall become
effective 1 day after the date of enactment of the Food, Agriculture,
Conservation, and Trade Act of 1990, or December 1, 1990, whichever is earlier.
7 u s e 1421 note.

SEC. 1302. READJUSTMENT OF SUPPORT LEVELS.

(a) FAILURE TO ENTER INTO AGREEMENT.—If by June 30, 1992, the
United States does not enter into (within the context of section
1102(a) of the Omnibus Trade and Competitiveness Act of 1988 (19
U.S.C. 2902)) an agricultural trade agreement in the Uruguay
Round of multilateral trade negotiations under the General Agreement on Tariffs and Trade (GATT), agricultural acreage limitation
and price support and production adjustment programs and export
promotion levels shall be reconsidered and adjusted by the Secretary
of Agriculture (hereafter in this section referred to as the "Secretary") in accordance with subsection (b), as appropriate to protect
the interests of American agricultural producers and ensure the
international competitiveness of United States agriculture.
(b) REQUIRED MEASURES.—Pursuant to subsection (a), in order to
protect the interests of American agricultural producers and ensure the competitive position of United States agriculture, the
Secretary—
(1) is authorized to waive any minimum level for any acreage
limitation program required or authorized for any of the 1993
through 1995 crops of wheat, feed grains, upland cotton, or rice
established under section 107B(e), 105B(e), 103B(e), or lOlB(e) of
the Agricultural Act of 1949 (as amended by sections 301, 401,
501, and 601 of the Food, Agriculture, Conservation, and Trade
Act of 1990), respectively;
(2) shall.increase by $1,000,000,000 for the period beginning
October 1, 1993, and ending September 30, 1995, the level of
export promotion programs authorized under the Agricultural
Trade Act of 1978 (as amended by section 1531 of the Food,

PUBLIC LAW 101-508—NOV. 5,1990

104 STAT. 1388-13

Agriculture, Conservation, and Trade Act of 1990), in addition
to any amounts otherwise required or made available under
such programs; and
(3) shall permit producers to repay price support loans for any
of the 1993 through 1995 crops of wheat and feed grains at the
levels provided under sections 107B(a)(4) and 105B(a)(4) of the
Agricultural Act of 1949, respectively.
(c) FAILURE OF AGREEMENT TO ENTER INTO FORCE.—If by June 30,
1993, an agricultural trade agreement under the Uruguay Round of
multilateral trade negotiations under the General Agreement on
Tariffs and Trade has not entered into force for the United States,
agricultural price support and other programs and export promotion
levels shall be reconsidered and adjusted by the Secretary in accordance with subsection (d), if the Secretary determines such action is
appropriate to protect the interests of American Eigricultural
producers and ensure the international competitiveness of United
States agriculture.
(d) SPECIFIC MEASURES.—
(1) MEASURES TO BE CONSIDERED.—Pursuant to subsection (c),

the Secretary shall consider—
(A) waiving all or part of the requirements of this title,
and the amendments made by this title, requiring reductions in agricultural spending;
(B) increasing the level of funds made available for the
programs authorized under the Agricultural Trade Act of
1978; and
(C) permitting producers to repay price support loans for
any of the 1993 through 1995 crops of wheat and feed grains
at the levels provided under sections 107B(aX4) and
105B(a)(4) of the Agricultural Act of 1949, respectively.
(2) AUTHORITY.—The Secretary is authorized to implement
the measures specified in subparagraphs (A), (B), and (C) of
paragraph (1). This authority shall be in addition to, and not in
place of, any other authority under any other provision of law.
(3) IMPLEMENTATION.—If the Secretary determines the action
is appropriate pursuant to subsection (c), the Secretary shall
implement measures specified in subparagraph (A) of paragraph (1) and either or both of the measures specified in
subparagraph (B) or (C) of paragraph (1).
(e) LIMITATION.—This section shall not be construed to authorize
the Secretary to reduce the level of income support provided to
agricultural producers in the United States.
(f) TERMINATION.—The provisions of subsections (a) and (b) shall
cease to be effective if the President certifies to Congress that the
failure referred to in subsection (a) to enter into an agricultural
trade agreement in the Uruguay Round of multilateral trade negotiations under the GATT is a result in whole or in part of the
provisions of section 151 of the Trade Act of 1974 (19 U.S.C. 2191), or
essentially similar provisions, not applying or in effect not applying
during the period ending May 31, 1991 (or during the period June 1,
1991, through May 31,1993, if the condition of section 1103(bXlXBXi)
is satisfied) to implementing bills submitted with respect to such an
agreement entered into during the applicable period under section
1102(b) of the Omnibus Trade and Competitiveness Act of 1988 (19
U.S.C. 2902(b)).

104 STAT. 1388-14

PUBLIC LAW 101-508—NOV. 5, 1990
TITLE II—BANKING, HOUSING, AND RELATED PROGRAMS

Subtitle A—Federal Deposit Insurance Assessments
Sec. 2001. Short title.
Sec. 2002. FDIC authorized to increase assessment rates as necessary to protect insurance funds.
Sec. 2003. FDIC authorized to make mid-year adjustments in assessment rates.
Sec. 2004. FDIC authorized to set designated reserve ratio as necessary in face of
significant risk of substantial losses to insurance fund.
Sec. 2005. FDIC authorized to borrow from Federal Financing Bank.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

2101.
2102.
2103.
2104.
2105.
2106.

Subtitle B—FHA Mortgage Insurance
Increase in mortgage limit.
Mortgagor equity.
Mortgage insurance premiums.
Mutual mortgage insurance fund distributions.
Actuarial soundness of mutual mortgage insurance fund.
Home equity conversion mortgage insurance demonstration.

Subtitle C—Auction of Federally Insured Mortgages
Sec. 2201. Auction of multifamily mortgages.
Subtitle D—Crime and Flood Insurance Programs
Sec. 2301. Crime insurance program.
Sec. 2302. Flood insurance program.
Subtitle E—Effective Date
Sec. 2401. Effective date.

TITLE II—BANKING, HOUSING, AND
RELATED PROGRAMS
^mentRate
Act of 1990.
12 u s e 1811

"*'^"

Subtltlc A—Fcdcral Dcposlt Insurancc
Assessments
SEC. 2001. SHORT TITLE.

This Act may be cited as the "FDIC Assessment Rate Act of 1990".
SEC. 2002. FDIC AUTHORIZED TO INCREASE ASSESSMENT RATES AS NECESSARY TO PROTECT INSURANCE FUNDS.

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

"(i) IN GENERAL.—The assessment rate for Bank Insurance Fund members shall be the greater of 0.15 percent or
such rate as the Board of Directors, in its sole discretion,
determines to be appropriate—
"(I) to maintain the reserve ratio at the designated
reserve ratio; or
"(II) if the reserve ratio is less than the designated
reserve ratio, to increase the reserve ratio to the designated reserve ratio within a reasonable period of
time,
"(ii) FACTORS TO BE CONSIDERED,—In making any determination under clause (i), the Board of Directors shall
consider the Bank Insurance Fund's expected operating
expenses, case resolution expenditures, and income, the
effect of the assessment rate on members' earnings and

PUBLIC LAW 101-508—NOV. 5,1990

104 STAT. 1388-15

capital, and such other factors as the Board of Directors
may deem appropriate.
"(iii) MINIMUM ASSESSMENT.—Notwithstanding clause (i),
the assessment shall not be less than $1,000 for each
member in each year.".
(b) SAVINGS ASSOCIATION INSURANCE FUND.—Section 7(bXlXD) of
the Federal Deposit Insurance Act (12 U.S.C. 1817(bXlXD)) is amended to read as follows:
"(D) ASSESSMENT RATE FOR SAVINGS ASSOCIATION INSURANCE
FUND MEMBERS.—

"(i) I N GENERAL.—The assessment rate for Savings
Association Insurance Fund members shall be the greater
of 0.15 percent or such rate as the Board of Directors, in its
sole discretion, determines to be appropriate—
"(I) to maintain the reserve ratio at the designated
reserve ratio; or
"(II) if the reserve ratio is less than the designated
reserve ratio, to increase the reserve ratio to the designated reserve ratio within a reasonable period of
time,
"(ii) FACTORS TO BE CONSIDERED.—In making any determination under clause (i), the Board of Directors shsill
consider the Savings Association Insurance Fund's expected
operating expenses, case resolution expenditures, and
income, the effect of the assessment rate on members'
earnings and capital, and such other factors as the Board of
Directors may deem appropriate.
"(iii) MINIMUM ASSESSMENT.—Notwithstanding clause (i),
the assessment shall not be less than $1,000 for each
member in each year.
"(iv) TRANSITION RULE.—Until December 31, 1997, the

assessment rate for Savings Association Insurance Fund
members shall not be less than the following:
"(I) From January 1, 1990, through December 31,
1990, 0.208 percent.
"(II) From January 1, 1991, through December 31,
1993, 0.23 percent.
"(Ill) From January 1, 1994, through December 31,
1997, 0.18 percent.".
(c) CLERICAL AMENDMENTS REFLECTING $1,000 MINIMUM ASSESSMENT PROVISIONS OF CURRENT LAW.—Section 7(bX2)(A) of the Federal Deposit Insurance Act (12 U.S.C. 1817(bX2XA)) is amended—
(1) by inserting "or subparagraph (CXiii) or (DXiii) of subsection (bXD" after "subsection (cX2)"; and
(2) in clauses (i) and (ii), by inserting "the greater of $500 or
an amount" before "equal to the product of.
SEC. 2003. FDIC AUTHORIZED TO MAKE MID-YEAR ADJUSTMENTS IN
ASSESSMENT RATES.

(a) ASSESSMENT RATES.—Section 7(bXlXA) of the Federal Deposit
Insurance Act (12 U.S.C. 1817(bXl)(A)) is amended to read as follows:
"(A) ASSESSMENT RATES PRESCRIBED.—
"(i) AUTHORITY TO SET RATES.—Subject to clause (iii), the

Corporation shall set assessment rates for insured depository institutions at such times as the Corporation, in its sole
discretion, determines to be appropriate.

104 STAT. 1388-16

PUBLIC LAW 101-508—NOV. 5, 1990
"(ii) RATE FOR EACH FUND TO BE SET INDEPENDENTLY.—The

Corporation shall fix the assessment rate of Bank Insurance Fund members independently from the assessment
rate for Savings Association Insurance Fund members.
"(iii) DEADLINE FOR ANNOUNCING RATE CHANGES.—The
Corporation shall announce any change in assessment
rates.—
"(I) for the semiannual period beginning on January
1 and ending on June 30, not later than the preceding
November 1; and
"(II) for the semiannual period beginning on July 1
and ending on December 31, not later than the preceding May 1.".
(b) ASSESSMENT PROCEDURES.—Section 7(b)(2)(A) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(b)(2)(A)), as amended by section 2(c) of this Act, is amended—
(1) by striking "annual" each time it appears;
(2) in clause (i)(I), by inserting "during that semiannual
period" after "member"; and
(3) in clause (ii)(I), by inserting "during that semiannual
period" after "member".
(c) CONFORMING AMENDMENT ON TIMING OF ASSESSMENT CRED-

ITS.—Section 7(d)(1)(A) of the Federal Deposit Insurance Act (12
U.S.C. 1817(d)(1)(A)) is amended to i-ead as follows:
"(A) The Corporation shall prescribe and publish the aggregate amount to be credited to insured depository institutions—
"(i) in the semiannual period beginning on January 1 and
ending on June 30, not later than the preceding November 1; and
"(ii) in the semiannual period beginning on July 1 and
ending on December 31, not later than the preceding
May 1.".
SEC. 2004. FDIC AUTHORIZED TO SET DESIGNATED RESERVE RATIO AS
NECESSARY IN FACE OF SIGNIFICANT RISK OF SUBSTANTIAL
LOSSES TO INSURANCE FUND.

Section 7(b)(1)(B) of the Federal Deposit Insurance Act (12 U.S.C.
1817(b)(1)(B)) is amended—
(1) by striking ", not exceeding 1.50 percent," each time it
appears;
(2) in clause (iii)—
(A) by inserting "and" at the end of subclause (I);
(B) by striking subclauses (II) and (III); and
(C) by redesignating subclause (IV) as subclause (II); and
(3) in clause (iv)—
(A) by inserting "and" at the end of subclause (I);
(B) by striking subclauses (II) and (III); and
(C) by redesignating subclause (IV) as subclause (II).
SEC. 2005. FDIC AUTHORIZED TO BORROW FROM FEDERAL FINANCING
BANK.

Section 14 of the Federal Deposit Insurance Act (12 U.S.C. 1824) is
amended—
(1) in the heading, by striking "SEC. 14." and inserting:
"SEC. 14. BORROWING AUTHORITY.
"(a) BORROWING FROM TREASURY.—";

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-17

(2) in subsection (a), as designated by paragraph (1)—
(A) by striking "this section" each time it appears and
inserting "this subsection", and
(B) by striking "The Corporation may employ such funds"
and inserting "The Corporation may employ any funds
obtained under this section"; and
(3) by adding after subsection (a), as amended by paragraph
(2), the following new subsection:
"(b) BORROWING FROM FEDERAL FINANCING BANK.—The Corporation is authorized to issue and sell the Corporation's obligations, on
behalf of the Bank Insurance Fund or Savings Association Insurance Fund, to the Federal Financing Bank established by the Federal Financing Bank Act of 1973. The Federal Financing Bank is
authorized to purchase and sell the Corporation's obligations on
terms and conditions determined by the Federal Financing Bank.
Any such borrowings shall be obligations subject to the obligation
limitation of section 15(c) of this Act. This subsection does not affect
the eligibility of any other entity to borrow from the Federal
Financing Bank.''.

Subtitle B—FHA Mortgage Insurance
SEC. 2101. INCREASE IN MORTGAGE LIMIT.

Section 203(b)(2) of the National Housing Act (12 U.S.C. 1709(b)(2))
is amended by striking "150 percent (185 percent until October 31,
1990) of the dollar amount specified" and inserting the following:
"185 percent of the dollar amount specified".
SEC. 2102. MORTGAGOR EQUITY.

Section 203(b)(2) of the National Housing Act (12 U.S.C. 1709(b)(2))
is amended by adding at the end the following new undesignated
paragraph:
"Notwithstanding any other provision of this paragraph, a mortgage may not involve a principal obligation (including such initial
service charges, appraisal, inspection, and other fees £is the Secretary shall approve) in excess of 98.75 percent of the appraised
value of the property (97.75 percent, in the case of a mortgage with
an appraised value in excess of $50,000), plus the amount of the
mortgage insurance premium paid at the time the mortgage is
insured. For purposes of the preceding sentence, the term 'appraised
value' means the amount set forth in the written statement required
under section 226, or a similar amount determined by the Secretary
if section 226 does not apply.".
SEC. 2103. MORTGAGE INSURANCE PREMIUMS.

(a) PREMIUMS.—Section 203(c) of the National Housing Act (12
U.S.C. 1709(c)) is amended—
(1) by inserting "(1)" after "(c)";
(2) by striking the last sentence; and
(3) by adding at the end the following new paragraph:
"(2) Notwithstanding any other provision of this section, each
mortgage secured by a 1- to 4-family dwelling and executed on or
after October 1, 1994, that is an obligation of the Mutual Mortgage
Insurance Fund, shall be subject to the following requirements:
"(A) The Secretary shall establish and collect, at the time of
insurance, a single premium payment in an amount equal to

104 STAT. 1388-18

12 use 1709
"ote.

PUBLIC LAW 101-508—NOV. 5, 1990

2.25 percent of the amount of the original insured principal
obligation of the mortgage. Upon payment in full of the principal obligation of a mortgage prior to the maturity date of the
mortgage, the Secretary shall refund all of the unearned premium charges paid on the mortgage pursuant to this subparagraph.
"(B) In addition to the premium under subparagraph (A), the
Secretary shall establish and collect annual premium payments
in an amount equal to 0.50 percent of the remaining insured
principal balance (excluding the portion of the remaining balance attributable to the premium collected under subparagraph
(A) and without taking into account delinquent payments or
prepayments) for the following periods:
"(i) For any mortgage involving an original principal
obligation (excluding any . premium collected under
subparagraph (A)) that is-less than 90 percent of the appraised value of the property (as of the date the mortgage is
accepted for insurance), for the first 11 years of the mortgage term.
"(ii) For any mortgage involving an original principal
obligation (excluding any premium collected under
subparagraph (A)) that is greater than or equal to 90 percent of such value, for the first 30 years of the mortgage
term; except that notwithstanding the matter preceding
clause (i), for any mortgage involving an original principal
obligation (excluding any premium collected under
subparagraph (A)) that is greater than 95 percent of such
value, the annual premium collected during the 30-year
period under this clause shall be in an amount equal to 0.55
percent of the remaining insured principal balance (excluding the portion of the remaining balance attributable to the
premium collected under subparagraph (A) and without
taking into account delinquent payments or prepayments).".
(b) TRANSITION PROVISIONS.—Notwithstanding section 203(c) of the
National Housing Act (as amended by subsection (a)), mortgage
insurance premiums on mortgages executed during fiscal years 1991
through 1994 and that are obligations of the Mutual Mortgage
Insurance Fund shall be subject to the following requirements:
(1) 1991 AND 1992.—For mortgages executed during fiscal
years 1991 and 1992 (but after the date of the effectiveness of
regulations issued under subsection (c)), the Secretary shall
establish and collect the following premiums:
(A) UP-FRONT.—At the time of insurance, a single premium payment in an amount equal to 3.80 percent of the
amount of the original insured principal obligation of the
mortgage.
(B) ANNUAL.—In addition to the premium under subparagraph (A), annual premium payments in an amount equal
to 0.50 percent of the remaining insured principal balance
(excluding the portion of the remaining balance attributable to the premium collected under subparagraph (A)
and without taking into account delinquent payments or
prepayments), for any mortgage involving an original principal obligation (excluding any premium collected under
subparagraph (A)) that is—

PUBLIC LAW 101-508—NOV. 5,1990

104 STAT. 1388-19

(i) less than 90 percent of the appraised value of the
property (as of the date the mortgage is accepted for
insurance), for the first 5 years of the mortgEige term;
(ii) greater than or equal to 90 percent of such value
but equal to or less than 95 percent of such value, for
the first 8 years of the mortgage term; and
(iii) greater than 95 percent of such value, for the
first 10 years of the mortgage term.
(2) 1993 AND 1994.—For mortgages executed during fiscal
years 1993 and 1994, the Secretary shall establish and collect
the following premiums:
(A) UP-FRONT.—At the time of insurance, a single premium payment in an amount equal to 3.00 percent of the
. amount of the original insured principal obligation of the
mortgage.
(B) ANNUAL.—In addition to the premium under subparagraph (A), annual premium payments in an amount equal
to 0.50 percent of the remaining insured principal balance
(excluding the portion of the remaining balance attributable to the premium collected under subparagraph (A)
and without taking into account delinquent payments or
prepayments), for any mortgage involving an original principal obligation (excluding any premium collected under
subparagraph (A)) that is—
(i) less than 90 percent of the appraised value of the
property (as of the date the mortgage is accepted for
insurance), for the first 7 years of the mortgage term;
(ii) greater than or equal to 90 percent of such value
but equal to or less than 95 percent of such value, for
the first 12 years of the mortgage term; and
(iii) greater than 95 percent of such value, for the
first 30 years of the mortgage term.
(3) REFUNDS.—With respect to any mortgage subject to premiums under this subsection, the Secretary shall refund all of
the unearned premium charges paid on a mortgage pursuant to
paragraph (1)(A) or (2)(A) upon payment in full of the principal
obligation of the mortgage prior to the maturity date.
(c) REGULATIONS.—The Secretary shall issue regulations to carry 12 USC 1709
out this section and the amendments made by this section not later "o*«than the expiration of the 90-day period beginning on the date of the
enactment of this Act.
SEC. 2104. MUTUAL MORTGAGE INSURANCE FUND DISTRIBUTIONS.

Section 205 of the National Housing Act (12 U.S.C. 1711) is
amended by adding at the end the following new subsection:
"(e) In determining whether there is a surplus for distribution to
mortgagors under this section, the Secretary shall take into account
the actuarial status of the entire Fund.".
SEC. 2105. ACTUARIAL SOUNDNESS OF MUTUAL MORTGAGE INSURANCE
FUND.

Section 205 of the National Housing Act (12 U.S.C. 1711), as
amended by the preceding provisions of this Act, is further amended
by adding at the end the following new subsections:
"(f)(1) The Secretary shall ensure that the Mutual Mortgage
Insurance Fund attains a capital ratio of not less than 1.25 percent

104 STAT. 1388-20

PUBLIC LAW 101-508—NOV. 5, 1990

within 24 months after the date of the enactment of this subsection
and maintains such ratio thereafter, subject to paragraph (2).
"(2) The Secretary shall endeavor to ensure that the Mutual
Mortgage Insurance Fund attains a capital ratio of not less than 2.0
percent within 10 years after the date of the enactment of this
subsection, and shall ensure that the Fund maintains at least such
capital ratio at all times thereafter.
"(3) Upon the expiration of the 24-month period beginning on the
date of the enactment of this subsection, the Secretary shall submit
to the Congress a report describing the actions the Secretary will
take to ensure that the Mutual Mortgage Insurance Fund attains
the capital ratio required under paragraph (2).
"(4) For purposes of this subsection:
"(A) The term 'capital' means the economic net worth of the
Mutual Mortgage Insurance Fund, as determined by the Secretary under the annual audit required linder section 538.
"(B) The term 'capital ratio' means the ratio of capital to
unamortized insurance-in-force.
"(C) The term 'economic net worth' means the current cash
available to the Fund, plus the net present value of all future
cash inflows and outflows expected to result from the outstanding mortgages in the Fund.
"(D) The term 'unamortized insurance-in-force' means the
remaining obligation on outstanding mortgages which are
obligations of the Mutual Mortgage Insurance Fund, as estimated by the Secretary.
"(g) The Secretary shall provide for an independent actuarial
study of the Mutual Mortgage Insurance Fund to be conducted
annually and shall report annually to the Congress regarding the
financial status of the Fund.
"(h)(1) If, pursuant to the independent annual actuarial study of
the Mutual Mortgage Insurance Fund required under subsection (g),
the Secretary determines that the Mutual Mortgage Insurance Fund
is not meeting the operational goals under paragraph (2), the Secretary may not issue distributions, and may, by regulation, propose
and implement any adjustments to the insurance premiums under
section 203(c) or section 2103(b) of the Omnibus Budget Reconciliation Act of 1990. Upon determining that a premium change is
appropriate under the preceding sentence, the Secretary shall
immediately notify Congress of the proposed change and the reasons
for the change. Any such premium change shall not take effect
before the expiration of the 90-day period beginning upon such
notification.
"(2) The operational goals referred to in paragraph (1) shall be—
"(A) maintaining an adequate capital ratio;
"(B) meeting the needs of homebuyers with low
downpayments and first-time homebuyers by providing access
to mortgage credit;
"(C) minimizing the risk to the Fund and to homeowners from
homeowner default; and
"(D) avoiding adverse selection.".
SEC. 2106. HOME EQUITY CONVERSION MORTGAGE INSURANCE DEMONSTRATION.

(a) TERMINATION DATE.—The first sentence of section 255(g) of the
National Housing Act (12 U.S.C. 1715z-20(g)) is amended by striking
"September 30,1991" and inserting "September 30,1995".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-21

(b) NUMBER OF MORTGAGES INSURED.—Section 255(g) of the National Housing Act (12 U.S.C. 1715z-20(g)) is amended by striking
the second sentence and inserting the following: "The total number
of mortgages insured under this section may not exceed 25,000.".

Subtitle C—Auction of Federally Insured
Mortgages
SEC. 2201. AUCTION OF MULTIFAMILY MORTGAGES.

Section 221(gX4) of the National Housing Act (12 U.S.C. 17151(g)(4))
is amended by adding after subparagraph (B) the following new
subparagraph:
"(C)(i) In lieu of accepting assignment of the original
credit instrument and the mortgage securing the credit
instrument under subparagraph (A) in exchange for receipt
of debentures, the Secretary shall arrange for the sale of
the beneficial interests in the mortgage loan through an
auction and sale of the (I) mortgage loans, or (II) participation certificates, or other mortgage-backed obligations in a
form acceptable to the Secretary (in this subparagraph
referred to as 'participation certificates'). The Secretary
shall arrange the auction and sale at a price, to be paid to
the mortgagee, of par plus accrued interest to the date of
sale. The sale price shall also include the right to a subsidy
payment described in clause (iii).
'(iiXD The Secretary shall conduct a public auction to
determine the lowest interest rate necessary to accomplish
a sale of the beneficial interests in the original credit
instrument and mortgage securing the credit instrument.
"(II) A mortgagee who elects to assign a mortgage shall
provide the Secretary and persons bidding at the auction a
description of the characteristics of the original credit
instrument and mortgage securing the original credit instrument, which shall include the principal mortgage balance, original stated interest rate, service fees, real estate
and tenant characteristics, the level and duration of applicable Federal subsidies, and any other information determined by the Secretary to be appropriate. The Secretary
shall also provide information regarding the status of the
property with respect to the provisions of the Emergency
Low Income Housing Preservation Act of 1987 or any subsequent Act with respect to eligibility to prepay the mortgage,
a statement of whether the owner has filed a notice of
intent to prepay or a plan of action under the Emergency
Low Income Housing Preservation Act of 1987 or any subsequent Act, and the details with respect to incentives provided under the Emergency Low Income Housing
Preservation Act of 1987 or any subsequent Act in lieu of
exercising prepayment rights.
"(Ill) The Secretary shall, upon receipt of the information
in subclause (II), promptly advertise for an auction and
publish such mortgage descriptions in advance of the auction. The Secretary may conduct the auction at any time
during the 6-month period beginning upon receipt of the
information in subclause (II) but under no circumstances

104 STAT. 1388-22

PUBLIC LAW 101-508—NOV. 5, 1990
may the Secretary conduct an auction before 2 months after
receiving the mortgagee's written notice of intent to assign
its mortgage to the Secretary.
"(IV) In any auction under this subparagraph, the Secretary shall accept the lowest interest rate bid for purchase
that the Secretary determines to be acceptable. The Secretary shall cause the accepted bid to be published in the
Federal Register. Settlement for the sale of the credit instrument and the mortgage securing the credit instrument
shall occur not later than 30 business days after the date
winning bidders are selected in the auction, unless the
Secretary determines that extraordinary circumstances require an extension (not to exceed 60 days) of the period.
"(V) If no bids are received, the bids that are received are
not acceptable to the Secretary, or settlement does not
occur within the period under subclause (IV), the mortgagee
shall retain all rights (including the right to interest, at a
rate to be determined by the Secretary, for the period
covering any actions taken under this subparagraph) under
this section to assign the mortgage loan to the Secretary.
"(iii) As part of the auction process, the Secretary shall
agree to provide a monthly interest subsidy pa3anent from
the General Insurance Fund to the purchaser under the
auction of the original credit instrument or the mortgage
securing the credit instrument (and any subsequent holders
or assigns who are approved mortgagees). The subsidy payment shall be paid on the first day of each month in an
amount equal to the difference between the stated interest
due on the mortgage loan and the lowest interest rate
necessary to accomplish a sale of the mortgage loan or
participation certificates (less the servicing fee, if appropriate) for the then unpaid principal balance plus accrued
interest at a rate determined by the Secretary. Each interest subsidy payment shall be treated by the holder of the
mortgage as interest paid on the mortgage. The interest
subsidy payment shall be provided until the earlier of—
"(I) the maturity date of the loan;
"(II) prepayment of the mortgage loan in accordance
with the Emergency Low Income Housing Preservation
Act of 1987 or any subsequent Act, where applicable; or
"(III) default and full payment of insurance benefits
on the mortgage loan by the Federal Housing Administration.
"(iv) The Secretary shall require that the mortgage loans
or participation certificates presented for assignment are
auctioned as whole loans with servicing rights released and
also are auctioned with servicing rights retained by the
current servicer.
"(v) To the extent practicable, the Secretary shall encourage State housing finance agencies, nonprofit organizations,
and organizations representing the tenants of the property
securing the mortgage, or a qualified mortgagee participating in a plan of action under the Emergency Low Income
Housing Preservation Act of 1987 or subsequent Act to
participate in the auction.
"(vi) The Secretary shall implement the requirements
imposed by this subparagraph within 30 days from the date

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-23

of enactment of this subparagraph and not be subject to the
requirement of prior issuance of regulations in the Federal
Register. The Secretary shall issue regulations implementing this section within 6 months of the enactment of this
subparagraph.
"(vii) Nothing in this subparagraph shall diminish or
impair the low income use restrictions applicable to the
project under the original regulatory agreement or the
revised agreement entered into pursuant to the Emergency
Low Income Housing Preservation Act of 1987 or subsequent Act, if any, or other agreements for the provision of
Federal assistance to the housing or its tenants.
"(viii) This subparagraph shall not apply after September 30, 1995. Not later than January 31 of each year
(beginning in 1992), the Secretary shall submit to the Congress a report including statements of the number of mortgages auctioned and sold and their value, the amount of
subsidies committed to the program under this subparagraph, the ability of the Secretary to coordinate the program with the incentives provided under the Emergency
Low Income Housing Preservation Act of 1987 or subsequent Act, and the costs and benefits derived from the
program for the Federal Government.".

Subtitle D—Crime and Flood Insurance
Programs
SEC. 2301. CRIME INSURANCE PROGRAM.

(a) EXTENSION OF GENERAL AUTHORITY.—Section 1201(b) of the
National Housing Act (12 U.S.C. 1749bbb(b)) is amended by striking
"September 30, 1991" in the matter preceding paragraph (1) and
inserting "September 30,1995".
(b) CONTINUATION OF EXISTING CONTRACTS.—Section 1201(b)(1) of
the National Housing Act (12 U.S.C. 1749bbb(b)(l)) is amended by
striking "September 30, 1992" and inserting "September 30, 1996".
(c) EXTENSION OF LIMITATION ON PREMIUMS.—Section 542(c) of the
Housing and Community Development Act of 1987 (12 U.S.C.
1749bbb-10c note) is amended by striking "September 30, 1991" and
inserting "September 30,1995".
SEC. 2302. FLOOD INSURANCE PROGRAM.
(a) EXTENSION OF GENERAL AUTHORITY.—Section 1319 of the

Na-

tional Flood Insurance Act of 1968 (42 U.S.C. 4026) is amended by
striking "September 30, 1991" and inserting "September 30, 1995".
(b) EXTENSION OF EMERGENCY PROGRAM.—Section 1336(a) of the
National Flood Insurance Act of 1968 (42 U.S.C. 4056(a)) is amended
by striking "September 30, 1991" and inserting "September 30,
1995".
(c) EXTENSION OF LIMITATION ON PREMIUMS.—Section 541(d) of the
Housing and Community Development Act of 1987 (42 U.S.C. 4015
note) is amended by striking "September 30, 1991" and inserting
"September 30,1995".
(d) EXTENSION OF EROSION PROVISIONS.—Section 1306(c)(7) of the
National Flood Insurance Act of 1968 (42 U.S.C. 4013(c)(7)) is

104 STAT. 1388-24

PUBLIC LAW 101-508—NOV. 5, 1990

amended by striking "September 30, 1991" and inserting "September 30, 1995".
(e) INCLUSION OF COSTS IN PREMIUMS.—
(1) ESTIMATES OF PREMIUM RATES.—Section 1307(a) of the

National Flood Insurance Act of 1968 (42 U.S.C. 4014(a)) is
amended—
(A) in paragraph (l)(B)(i), by striking "and" at the end;
(B) in paragraph (l)(B)(ii), by inserting "and" after the
comma at the end;
(C) in paragraph (1)(B), by inserting at the end the following new clause:
"(iii) any remaining administrative expenses incurred in carrying out the flood insurance and floodplain management programs (including the costs of
mapping activities under section 1360) not included
under clause (ii), which shall be recovered by a fee
charged to policyholders and such fee shall not be
subject to any agents' commissions, company expense
allowances, or State or local premium taxes,"; and
(D) in paragraph (2), by inserting after "title" the
following: ", and which, together with a fee charged to
policyholders that shall not be not subject to any agents'
commission, company expenses allowances, or State or local
premium taxes, shall include any administrative expenses
incurred in carrying out the flood insurance and floodplain
management programs (including the costs of mapping
activities under section 1360)".
(2) ESTABLISHMENT OF CHARGEABLE PREMIUM RATES.—Section

1308 of the National Flood Insurance Act of 1968 (42 U.S.C.
4015) is amended—
(A) in subsection (b)—
(i) by striking "and" at the end of paragraph (2);
(ii) by redesignating paragraph (3) as paragraph (4);
and
(iii) by inserting after paragraph (2), the following
new paragraph:
"(3) adequate, together with the fee under paragraph (l)(B)(iii)
or (2) of section 1307(a), to provide for any administrative
expenses of the flood insurance and floodplain management
programs (including the costs of mapping activities under section 1360), and"; and
(B) by striking subsection (d) and inserting the following
new subsection:
"(d) With respect to any chargeable premium rate prescribed
under this section, a sum equal to the portion of the rate that covers
any administrative expenses of carrying out the flood insurance and
floodplain management programs which have been estimated under
paragraphs (l)(BXii) and (l)(B)(iii) of section 1307(a) or paragraph (2)
of such section (including the fees under such paragraphs), shall be
paid to the Director. The Director shall deposit the sum in the
National Flood Insurance Fund established under section 1310.".
(3) NATIONAL FLOOD INSURANCE FUND.—Section 1310(a)(4) of
the National Flood Insurance Act of 1968 (42 U.S.C. 4017(a)(4)) is
amended to read as follows:
"(4) to the extent approved in appropriations Acts, to pay any
administrative expenses of the flood insurance and floodplain

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-25

management programs (including the costs of mapping activities under section 1360); and".
(4) ADMINISTRATIVE EXPENSES.—Section 1375 of the National

Flood Insurance Act of 1968 (42 U.S.C. 4126) is amended by
striking "program" and all that follows and inserting the following: "and floodplain management programs authorized
under this title may be paid with amounts from the National
Flood Insurance Fund (as provided under section 1310(a)(4)),
subject to approval in appropriations Acts.".

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

Subtitle E—Effective Date
SEC. 2401. EFFECTIVE DATE.

If the Cranston-Gonzalez National Affordable Housing Act is
enacted before the enactment of this Act, the provisions of subtitles
B and C (of this title) and the amendments made by such subtitles
shall not take effect. This section shall apply notwithstanding any
provision relating to effective date or applicability contained in
subtitle B or C.

TITLE III—STUDENT LOANS AND LABOR
PROVISIONS
Subtitle A—Student Loan Program Savings
SEC. 3001. SHORT TITLE.

This subtitle may be cited as the 'Student Loan Default Prevention Initiative Act of 1990".
SEC. 3002. SUPPLEMENTAL PRECLAIMS ASSISTANCE PAYMENTS.
(a) EUMINATION OF SUPPLEMENTAL PRECLAIMS ASSISTANCE REIMBURSEMENTS.—SectioU 428(c) of the Higher Education Act of 1965
(20 U.S.C. 1078(c)) is amended—
(1) in the first sentence of paragraph (1)(A), by striking ",
including the administrative costs of supplemental preclaim
assistance for default prevention as defined in paragraph
(6)(C)";
(2) in paragraph (6)(C)(i), by striking "this paragraph" and
inserting "subsection (1)";
(3) in paragraph (6)(C)(i)(I), by striking "required or permitted
u n ^ r paragraph (2)(A) of this subsection and subsection (f)" and
inserting "generally comparable in intensiveness to the level of

Student Loan
Default
Prevention
Initiative Act of
1990.
20 u s e 1001
note.

104 STAT. 1388-26

PUBLIC LAW 101-508—NOV. 5, 1990

preclaims assistance performed, prior to the 120th day of delinquency, by the guaranty agency as of October 16,1990";
(4) in paragraph (6XCXii)—
(A) by striking "reimbursement" and inserting "pa)anent
under subsection (1)"; and
(B) by striking "which the guaranty agency is required or
permitted to provide pursuant to paragraph (2XA) of this
subsection and subsection if)" and inserting "described in
division (iXD of this subparagraph"; and
(5) by striking the first sentence of paragraph (6XCXiv).
(b) FIXED PAYMENTS FOR PRECLAIMS ASSISTANCE.—Section 428 of

such Act is further amended by adding at the end thereof the
following new subsection:
"(1) PRECLAIMS ASSISTANCE AND SUPPLEMENTAL PRECLAIMS ASSISTANCE.—
"(1) ASSISTANCE REQUIRED.—Upon receipt of a proper request

from the lender, a guaranty agency having an agreement with
the Secretary under subsection (c) of this section shall engage in
preclaims assistance activities (as described in subsection
(cX6XCXiXI)) and supplemental preclaims assistance activities
(as described in subsection (cX6XC)) with respect to each loan
covered by such agreement.
"(2) PAYMENTS FOR SUPPLEMENTAL PRECLAIMS ASSISTANCE.—

The Secretary shall make pajrments in accordance with the
provisions of this paragraph to any guaranty agency that engages in supplemental preclaims assistance (as defined in
subsection (cX6XC)) on a loan guaranteed under this part. Such
payments shall be equal to $50.00 for each loan on which such
assistance is performed and for which a default claim is not
presented to the guaranty agency by the lender on or before the
150th day after the loan becomes 120 days delinquent.".
SEC. 3003. INITIAL DISBURSEMENT AND ENDORSEMENT REQUIREMENTS.

20 use 1078-7
°°**'

(a) AMENDMENT.—Section 428Gr(bXl) of the Higher Education Act
of 1965 (20 U.S.C. 1078-7a)Xl)) is amended to read as follows:
"(1) FIRST YEAR STUDENTS.—The first installment of the proceeds of any loan made, insured, or guaranteed under this part
that is made to a student borrower who is entering the first year
of a program of undergraduate education, and who has not
previously obtained a loan under this part, shall not (regardless
of the amount of such loan or the duration of the period of
enrollment) be presented by the institution to the student for
endorsement until 30 days after the borrower begins a course of
study, but may be delivered to the eligible institution prior to
the end of that 30-day period.".
(b) EFFECTIVE DATE.—The amendment made by this section shall
be effective for loans made on or after the date of enactment of this
Act to cover the cost of instruction for periods of enrollment beginning on or after January 1,1991.
SEC. 3004. INELIGIBILITY BASED ON HIGH DEFAULT RATES.

20 use 1085.

(a) IN GENERAL.—Section 435(a) of the Higher Education Act of
1965 (20 U.S.C. 1088(a)) is amended by adding at the end thereof the
following new paragraph:
"(3) INELIGIBIUTY BASED ON HIGH DEFAULT RATES.—(A) An

institution whose cohort default rate is equal to or greater than
the threshold percentage specified in subparagraph (B) for each

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-27

of the three most recent fiscal years for which data are available shall not be eligible to participate in a program under this
part for the fiscal year for which the determination is made and
for the two succeeding fiscal years, unless, within 30 days of
receiving notification from the Secretary of the loss of eligibility
under this paragraph, the institution appeals the loss of its
eligibility to the Secretary. The Secretary shall issue a decision
on any such appeal within 45 days after its submission. Such
decision may permit the institution to continue to participate in
a program under this part if—
"(i) the institution demonstrates to the satisfaction of the
Secretary that the Secretary's calculation of its cohort default rate is not accurate, and that recalculation would
reduce its cohort default rate for any of the three fiscal
years below the threshold percentage specified in subparagraph (B); or
"(ii) there are, in the judgment of the Secretary, exceptional mitigating circumstances that would make the
application of this paragraph inequitable.
During such appeal, the Secretary may permit the institution to
continue to participate in a program under this part.
"(B) For purposes of determinations under subparagraph (A),
the threshold percentage is—
"(i) 35 percent for fiscal year 1991 and 1992; and
"(ii) 30 percent for any succeeding fiscal year.
"(C) Until July 1, 1994, this paragraph shall not apply to any
institution that is—
"(i) a part B institution within the meaning of section
322(2) of this Act;
"(ii) a tribally controlled community college within the
meaning of section 2(a)(4) of the Tribally Controlled
Community College Assistance Act of 1978; or
"(iii) a Navajo Community College under the Navajo
Community College Act.".
(b)

REFUSAL

TO

PROVIDE

STATEMENT

TO

LENDER.—Section

428(a)(2)(F) of such Act (20 U.S.C 1078(a)(2)(F)) is amended by inserting before the period at the end thereof the following: ", except that,
in individual cases where the institution determines that the portion of the student's expenses to be covered by the loan can be met
more appropriately, either by the institution or directly by the
student, from other sources, the institution may refuse to provide
such statement or may reduce the determination of need contained
in such statement".
(c) EXTENSION OF DEFAULT RATE LIMITATIONS ON S L S LOANS.—

Section 2003(a)(3) of the Omnibus Budget Reconciliation Act of 1989
is amended—
(1) by inserting "paragraph (1) o f after "amendments made
by"; and
(2) by striking out "October 1, 1991" and inserting "October 1,
1996".
(d) EFFECTIVE DATE.—The amendments made by this section shall
be effective July 1, 1991, except that the amendment made by
subsection (b) shall be effective upon enactment.
SEC. 3005. ABILITY TO BENEFIT.

(a) IN GENERAL.—Section 484(d) of the Higher Education Act of
1965 (20 U.S.C. 1091(d)) is amended to read as follows:

20 USC1078-1
^°^-

20 USC 1085
"°*®-

104 STAT. 1388-28

20 use 1088
^°*®-

PUBLIC LAW 101-508—NOV. 5, 1990

"(d) ABIUTY TO BENEFIT.—In order for a student who is admitted
on the basis of ability to benefit from the education or training
offered to be eligible for any grant, loan, or work assistance under
this title, the student shall, prior to enrollment, pass an independently administered examination approved by the Secretary.".
(b) CONFORMING AMENDMENT.—Section 4810t)) of the Higher Education Act of 1965 (20 U.S.C. 1088(b)) is amended in the fourth
sentence by inserting ", except in accordance with section 484(d) of
this Act," after "shall not".
(c) EFFECTIVE DATE.—The amendments made by this section shall
apply to any grant, loan, or work assistance to cover the cost of
instruction for periods of enrollment beginning on or after January 1,1991.
SEC. 3006. MAXIMUM SLS LOAN AMOUNTS.

20 use 1078-1
°ote.

(a) EFFECTIVE DATE EXTENSION.—Section 2003(b)(2) of the Omnibus
Budget Reconciliation Act of 1989 is amended by striking "1991"
and inserting "1996".
(b) PERIOD FOR DETERMINATION OF MAXIMUM LOAN AMOUNTS.—

Section 428A(bXl) of the Higher Education Act of 1965 (20 U.S.C.
1078-l(b)) is amended by striking "9 consecutive" and inserting "7
consecutive".
SEC. 3007. AMENDMENTS TO BANKRUPTCY LAWS.

(a) AUTOMATIC STAY AND PROPERTY OF THE ESTATE.—(1) Section
362(b) of title 11, United States Code, is amended—
(A) in paragraph (12), by striking "or" at the end thereof;
(B) in paragraph (13), by striking the period at the end thereof
and inserting a semicolon; and
(C) by inserting immediately following paragraph (13) the
following new paragraphs:
"(14) under subsection (a) of this section, of any action by an
accrediting agency regarding the accreditation status of the
debtor as an educational institution;
"(15) under subsection (a) of this section, of any action by a
State licensing body regarding the licensure of the debtor as an
educational institution; or
"(16) under subsection (a) of this section, of any action by a
guaranty agency, as defined in section 435(j) of the Higher
Education Act of 1965 (20 U.S.C. 1001 et seq.) or the Secretary of
Education regarding the eligibility of the debtor to participate
in programs authorized under such Act.".
(2) Section 541(b) of title 11, United States Code, is amended—
(A) in paragraph (1), by striking "or" at the end thereof;
(B) in paragraph (2), by striking the period at the end thereof
and inserting a semicolon and "or"; and
(C) by adding at the end thereof the following new paragraph:
"(3) any eligibility of the debtor to participate in programs
authorized under the Higher Education Act of 1965 (20 U.S.C.
1001 et seq.; 42 U.S.C. 2751 et seq.), or any accreditation status
or State licensure of the debtor as an educational institution.".
11 use 362 note.
(3) The amendments made by this subsection shall be effective
upon date of enactment of this Act.
(b) TREATMENT OF CERTAIN EDUCATION LOANS IN BANKRUPTCY

J PROCEEDINGS.—(1) Section 1328(aX2) of title 11, United States Code,
is amended by striking "section 523(aX5)" and inserting "paragraph
(5) or (8) of section 523(a)".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-29

(2) The amendment made by paragraph (1) shall not apply to any
case under the provisions of title 11, United States Code, commenced
before the date of the enactment of this Act.
SEC. 3008. SUNSET PROVISION.
The amendments made by this subtitle shall cease be effective on
October 1,1996.

Subtitle B—Labor Related Penalties
SEC. 3101. OCCUPATIONAL SAFETY AND HEALTH.

Section 17 of the Occupational Safety and Health Act of 1970 (29
U.S.C. 666) is amended—
(1) in subsection (a), by striking "$10,000 for each violation"
and inserting "$70,000 for each violation, but not less than
$5,000 for each willful violation; ^ and
(2) in subsections (b), (c), (d), and (i), by striking "$1,000" and
inserting "$7,000".
SEC. 3102. MINE SAFETY AND HEALTH.

Section 110 of the Federal Mine Safety and Health Act of 1977 (30
U.S.C. 820) is amended—
(1) in subsection (a), by striking "$10,000" and inserting
"$50,000"; and
(2) in subsection (b), by striking "1,000" and inserting
"$5,000", and 2
SEC. 3103. FAIR LABOR STANDARDS.

Section 16(e) of the Fair Labor Standards Act of 1938 (29 U.S.C.
216(e)) is amended—
(1) in the first sentence—
(A) by striking "or any person who repeatedly or willfully
violates section 6 or 7"; and
(B) by striking "not to exceed $1,000 for each such violation" and inserting "not to exceed $10,000 for each employee who was the subject of such a violation";
(2) by inserting after the first sentence the following: "Any
person who repeatedly or willfully violates section 6 or 7 shall
be subject to a civil penalty of not to exceed $1,000 for each such
violation.",
(3) by striking "such penalty" each place the term appears
except after "appropriateness o f and inserting "any penalty
under this subsection", and
(4) in the last sentence, by striking "Sums" and inserting
"Except for civil penalties collected for violations of section 12,
sums"; and
(5) by inserting at the end the following new sentence: "Civil
penalties collected for violations of section 12 shall be deposited
in the general fund of the Treasury.".
^ So in original. Probably should be "violation";"* So in original. The ", and" probably should be a period.

11 USC 1328
^°*®11 USC 362 note.

104 STAT. 1388-30

PUBLIC LAW 101-508—NOV. 5, 1990

TITLE IV—MEDICARE, MEDICAID, AND
OTHER HEALTH-RELATED PROGRAMS
Subtitle A—Medicare
SEC. 4000. REFERENCES IN SUBTITLE; TABLE OF CONTENTS.

(a) AMENDMENTS TO THE SOCIAL SECURITY ACT.—Except as otherwise specifically provided, whenever in this title an amendment 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 that
section or other provision of the Social Security Act.
(b) TABLE OF CONTENTS.—The table of contents of this subtitle is as
follows:
Sec. 4000. References in subtitle; table of contents.
PART 1—PROVISIONS RELATING TO PART A

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

4001.
4002.
4003.
4004.
4005.
4006.
4007.
4008.

Payments for capital-related costs of inpatient hospital services.
Prospective payment hospitals.
Expansion of DRG payment window.
PajTnents for medical education costs.
PF^-exempt hospitals.
Hospice benefit extension.
Freeze in payments under part A through December 31.
Miscellaneous and technical provisions relating to part A.
PART 2—PROVISIONS RELATING TO PART B

Subpart A—Payment for Physicians' Services
Certain overvalued procedures.
Radiology services.
Anesthesia services.
Physician pathology services.
Update for physicians' services.
New physicians and other new health care practitioners.
Assistants at surgery.
Technical components of certain diagnostic tests.
Interpretation of electrocardiograms.
Reciprocal billing arrangements.
Study of prepayment medical review screens.
Practicing physicians advisory council.
Study of aggregation rule for claims for similar physicians' services.
Utilization screens for physician visits in rehabilitation hospitals.
Study of regional variations in impact of medicare physician payment
reform.
Sec. 4116. Limitation on beneficiary liability.
Sec. 4117. Statewide fee schedule areas for physicians' services.
Sec. 4118. Technical corrections.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

4101.
4102.
4103.
4104.
4105.
4106.
4107.
4108.
4109.
4110.
4111.
4112.
4113.
4114.
4115.

Subpart B—Other Items and Services
Payments for hospital outpatient services.
Durable medical equipment.
Provisions relating to orthotics and prosthetics.
Clinical diagnostic laboratory tests.
Coverage of nurse practitioners in rural areas.
Coverage of injectable drugs for treatment of osteoporosis.
Separate pajrment under part B for services of certain health practitioners.
Sec. 4158. Reduction in payments under part B during final 2 months of 1990.
Sec. 4159. Pajrments for medical education costs.
Sec. 4160. Certified registered nurse anesthetists.

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

4151.
4152.
4153.
4154.
4155.
4156.
4157.

PUBLIC LAW 101-508—NOV. 5, 1990
Sec.
Sec.
Sec.
Sec.

104 STAT. 1388-31

4161. Community health centers and rural health clinics.
4162. Partial hospitalization in community mental health centers.
4163. Coverage of screening mammography.
4164. Miscellaneous and technical provisions relating to part B.
PART 3—PROVISIONS RELATING TO PARTS A AND B

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

4201. Provisions relating to end stage renal disease.
4202. Staff-assisted home dialysis demonstration project.
4203. Extension of secondary payor provisions.
4204. Health maintenance organizations.
4205. Peer review organizations.
4206. Medicare provider agreements assuring the implementation of a patient's
right to participate in and direct health care decisions affecting the patient.
Sec. 4207. Miscellaneous and technical provisions relating to parts A and B.
PART 4—PROVISIONS RELATING TO PART B PREMIUM AND DEDUCTIBLE

Sec. 4301. Part B premium.
Sec. 4302. Part B deductible.
PART 5—MEDICARE SUPPLEMENTAL INSURANCE POUCIES

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

4351.
4352.
4353.
4354.
4355.
4356.

Simplification of medicare supplemental policies.
Guaranteed renewability.
Enforcement of standards.
Preventing duplication.
Loss ratios and refund of premiums.
Clarification of treatment of plans offered by health maintenance organizations.
4357. Pre-existing condition limitations and limitation on medical underwriting.
4358. Medicare select policies.
4359. Health insurance advisory services for medicare beneficiaries.
4360. Health insurance information, counseling, and assistance grants.
4361. Medicare and medigap information by telephone.

PART 1—PROVISIONS RELATING TO PART A
SEC. 4001. PAYMENTS FOR CAPITAL-RELATED COSTS OF INPATIENT
HOSPITAL SERVICES.

(a) REDUCTION IN PAYMENTS FOR FISCAL YEAR 1991.—Section
1886(g)(3)(A)(v) (42 U.S.C. 1395ww(g)(3)(A)(v)) is amended by striking
"September 30,1990" and inserting "September 30,1991".
(b) IMPLEMENTATION OF PROSPECTIVE PAYMENT FOR CAPITALRELATED COSTS.—Section 1886(g)(1)(A) (42 U.S.C. 1395ww(g)(l)) is

amended by adding at the end the following: "Aggregate payments
made under subsection (d) and this subsection during fiscal years
1992 through 1995 shall be reduced in a manner that results in a
reduction (as estimated by the Secretary) in the amount of such
payments equal to a 10 percent reduction in the amount of payments attributable to capital-related costs that would otherwise
have been made during such fiscal year had the amount of such
payments been based on reasonable costs (as defined in section
1861(v)).".
(c) EXEMPTION FOR RURAL PRIMARY CARE HOSPITALS.—Section

1886(g)(3)(B) is amended by striking "subsection (d)(5)(D)(iii))." and
inserting "subsection (d)(5)(D)(iii) or a rural primary care hospital
(as defined in section 1861(mm)(l))."
SEC. 4002. PROSPECTIVE PAYMENT HOSPITALS.
(a) CHANGES IN UPDATE FACTORS.—

(1) IN GENERAL.—Section 1886(bX-3XBXi) (42
1395ww(bK3XBXi)) is amended—
(A) by striking "and" at the end of subclause (V);

U.S.C.

104 STAT. 1388-32

42 use 1395ww
°°*®-

PUBLIC LAW 101-508—NOV. 5, 1990

(B) in subclause (VI)—
(i) by striking "1991" and inserting "1994", and
(ii) by redesignating such subclause as subclause (IX);
and
(C) by inserting after subclause (V) the following new
subclauses:
"(VI) for fiscal year 1991, the market basket percentage increase minus 2.0 percentage points for hospitals in all areas,
"(VII) for fiscal year 1992, the market basket percentage
increase minus 1.6 percentage points for hospitals in all areas,
"(VIII) for fiscal year 1993, the market basket percentage
increase minus 1.55 percentage point for hospitals in all areas,
and".
(2) EFFECTIVE DATE.—The amendments made by paragraph (1)
shall apply to payments for discharges occurring on or after
January 1,1991.
(b) CHANGES IN DISPROPORTIONATE SHARE PAYMENTS.—
(1) INCREASE FOR URBAN HOSPITALS WITH MORE THAN lOO

BEDS.—Section 1886(d)(5)(F)(vii) (42 U.S.C. 1395ww(d)(5)(F)(vii)) is
amended—
(A) in subclause (I), by striking "greater than 20.2," and
all that follows and inserting the following: "greater than
20.2—
"(a) for discharges occurring on or after April 1,1990, and
on or before December 31,1990, (P-20.2)(.65) + 5.62,
"(b) for discharges occurring on or after January 1, 1991,
and on or before September 30, 1993, (P-20.2)(.7) + 5.62,
"(c) for discharges occurring on or after October 1, 1993,
and on or before September 30,1994, (P-20.2)(.8) + 5.88, and
"(d) for discharges occurring on or after October 1, 1994,
(P-20.2)(.825) + 5.88; or"; and
(B) in subclause (II), by striking "hospital, (P-15)(.6)
+ 2.5," and inserting the following: "hospital—
"(a) for discharges occurring on or after April 1, 1990, and
on or before December 31,1990, (P-15)(.6) + 2.5,
"(b) for discharges occurring on or after January 1, 1991,
and on or before September 30, 1993, (P-15)(.6) + 2.5,
"(c) for discharges occurring on or after October 1, 1993,
(P-15)(.65) + 2.5,".
(2) INCREASE FOR HOSPITALS WITH DISPROPORTIONATE INDIGENT

CARE
REVENUES.—Section
1886(d)(5)(F)(iii)
(42
U.S.C.
1395ww(dX5)(F)(iii)) is amended by striking "30 percent" and
inserting "35 percent".
(3) REPEAL OF SUNSET.—

(A) IN GENERAL.—Section 1886(d) (42 U.S.C. 1395ww(d)) is
amended by striking "and before October 1, 1995," each
place it appears in paragraph (2)(C)(iv) and paragraph
(5)(F)(i).
(B)

CONFORMING

AMENDMENTS.—(A)

Section

1886(d)(5XBXii) (42 U.S.C. 1395ww(dX5)(B)) is amended to
read as follows:
"(ii) For purposes of clause (iXII), the indirect teaching adjustment factor for discharges occurring on or after May 1, 1986, is
equal to 1.89 X (((1 + r) to the nth power) — 1), where 'r' is the
ratio of the hospital's full-time equivalent interns and residents
to beds and 'n' equals .405.".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-33

(B) Section 1886(dX3XCXii) (42 U.S.C. 1395ww(dX3XCXii)) is
amended by striking "occurring—" and all that follows and
inserting the following: "occurring on or after October 1,
1986, of an amount equal to the estimated reduction in the
pajonent amounts under paragraph (5XB) that would have
resulted from the enactment of the amendments made by
section 9104 of the Medicare and Medicaid Budget Reconciliation Amendments of 1985 and by section 4003(aXl) of
the Omnibus Budget Reconciliation Act of 1987 if the factor
described in clause (iiXH) of paragraph (5XB) (determined
without regard to amendments made by the Omnibus
Budget Reconciliation Act of 1990) were applied for discharges occurring on or after such date instead of the factor
described in clause (ii) of that paragraph.".
(4) N o RESTANDARDIZING FOR RECENT ADJUSTMENTS.—
(A)
ADJUSTMENTS
UNDER
OBRA
1989.—Section

1886(dX2XCXiv) (42 U.S.C. 1395ww(dX2XCXiv)) is amended by
striking the period at the end and inserting the
following: ", except that the Secretary shall not exclude
additional payments under such paragraph made as a
result of the enactment of section 6003(c) of the Omnibus
Budget Reconciliation Act of 1989.".
(B)

ADJUSTMENTS

UNDER

OBRA

1990.—Section

1886(d)(2)(CXiv), as amended by subparagraph (A), is further
amended by striking "1989." and inserting "1989 or the
enactment of section 4002(b) of the Omnibus Budget Reconciliation Act of 1990.".
(5) EFFECTIVE DATE.—The amendments made by paragraphs f^^Y^ 1395ww
(1), (3), and (4XB) shall apply to discharges occurring on or after note.
January 1, 1991, the amendment made by paragraph (2) shall
apply to discharges occurring on or after October 1, 1991, and
the amendment made by paragraph (4XA) shall take effect as if
included in the enactment of the Omnibus Budget Reconciliation Act of 1989.
(c) PAYMENTS TO RURAL HOSPITALS.—
(1)
PHASE-OUT
OF SEPARATE

AVERAGE

STANDARDIZED

AMOUNTS.—Section 1886(bX3)(BXi) (42 U.S.C. 1395ww(bX3XBXi)),
as amended by subsection (a)(1), is further amended—
(A) in subclause (VI), by striking "in all areas," and
inserting "in a large urban or other urban area, and the
market basket percentage increase minus 0.7 percentage
point for hospitsds located in a rural area ,";
(B) in subclause (VII), by striking "in all areas," and
inserting "in a large urban or other urban area, and the
market basket percentage increase minus 0.6 percentage
point for hospitals located in a rural area,";
(C) in subclause (VIII), by striking "in all aregis, and" and
inserting "in a large urban or other urban area, and the
market basket percentage incresise minus 0.55 for hospitals
located in a rural area,";
(D) in subclause (IX)—
(i) by striking "1994" and inserting "1996", and
(ii) by redesignating such subclause as subclause (XI);
and
(E) by inserting after subclause (VIII) the following new
subclauses:

104 STAT. 1388-34

PUBLIC LAW 101-508—NOV. 5, 1990

"(IX) for fiscal year 1994, the market basket percentage increase for hospitals located in a large urban or other urban
area, and the market basket percentage increase plus 1.5
percentage points for hospitals located in a rural area,
"(X) for fiscal year 1995, the market basket percentage increase for hospitals located in a large urban or other urban
area, and such percentage increase for hospitals located in a
rural area as will provide for the average standardized amount
determined under subsection (dX3XA) for hospitals located in a
rural area being equal to such average standardized amount for
hospitals located in an urban area (other than a large urban
area), and".
(2) CONFORMING AMENDMENTS.—(A) Section 1886(bX3XB) (42

U.S.C. 1395ww(bX3)) is amended—
(i) in clause (ii), by striking "(A) and (E)," and inserting
"(A),(C),(D),and(E),";
(ii) in subparEigraphs (CXii) and (DXii), by striking "(BXi)"
each place it appears and inserting "(B)(ii)".
(B) Section 1886(d) (42 U.S.C. 1395ww(d)) is amended—
(i) in paragraph (l)(AXiii), by striking "rural, large urban,
or other urban area" and inserting "large urban or other
area";
(ii) in paragraph (3)(A)—
(I) in clause (ii), by striking "the Secretary" and
inserting "and ending on or before September 30, 1994,
the Secretary",
(II) by redesignating clause (iii) as clause (v), and
(III) by inserting after clause (ii) the following new
clauses:
"(iii) For discharges occurring in the fiscal year beginning on
October 1, 1994, the average standardized amount for hospitals
located in a rural area shall be equal to the average standardized amount for hospitals located in an other urban area.
"(iv) For discharges occurring in a fiscal year beginning on or
after October 1, 1995, the Secretary shall compute an average
standardized amount for hospitals located in a large urban area
and for hospitals located in other areas within the United States
and within each region equal to the respective average
standardized amount computed for the previous fiscal year
under this subparagraph increased by the applicable percentage
increase under subsection (b)(3)(B)(i) with respect to hospitals
located in the respective areas for the fiscal year involved.";
(iii) in paragraph (3)(B), by striking "for hospitals located
in an urban area" and all that follows and inserting the
following: "by a factor equal to the proportion of payments
under this subsection (as estimated by the Secretary) based
on DRG prospective pa3anent amounte which are additional
payments described in paragraph (5)(A) (relating to outlier
pajpients).";
(iv) in paragraph (3XDXi)—
(I) in the matter preceding subclause (I), by striking
"an urban area (or," and all that follows through
"area)," and inserting "a large urban area", and
(II) in subclause (I), by striking "an urban area" and
inserting "a large urban area";
(v) in paragraph (3)(D)(ii), by striking "a rural area" each
place it appears and inserting "other areas"; and

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-35

(vi) in paragraph (8)(D)—
(I) in the first sentence, by striking "for hospitals
located in an urban area", and
(II) by striking the second sentence.
(3) EFFECTIVE DATE.—The amendments made by paragraph (1) 42 u s e 1395WW
and paragraph (2)(A) shall apply to payments for discharges note.
occurring on or after January 1, 1991, and the amendments
made by paragraph (2)(B) shall take effect October 1, 1994.
(d) AREA WAGE INDEX.—
(1) DETERMINATION OF AREA WAGE INDEX.—(A) For purposes of

42 u s e 1395WW

section 1886(d)(3)(E) of the Social Security Act for discharges note.
occurring on or after January 1, 1991, and before October 1,
1993, the Secretary of Health and Human Services shall apply
an area wage index determined using the survey of the 1988
wages and wage-related costs of hospitals in the United States
conducted under such section.
(B) The Secretary shall apply the wage index described in
subparagraph (A) without regard to a previous survey of wages
and wage-related costs.
(2) STUDY OF AREA WAGE INDEX ADJUSTMENTS BASED O N PROFESSIONAL OCCUPATIONAL COMPONENT.—

(A) STUDY.—The Prospective Payment Assessment
Commission shall examine available data from States and
other sources measuring earnings and paid hours of
employment of hospital workers by occupational category,
and shall include in such examination an analysis of the
impact of variation in occupational mix on the computation
of the area wage index determined under section
1886(d)(3)(E) of the Social Security Act.
(B) REPORT TO CONGRESS.—In its March 1991 report, the
Commission shall include recommendations regarding the
feasibility and desirability of modifying such area wage
index to take into account occupational mix, including
variations in occupational mix resulting from differences in
State codes and requirements.
(e) EXTENSION OF REGIONAL FLOOR ON STANDARDIZED AMOUNTS.—

(1) IN GENERAL.—Section 1886(d)(l)(A)(iii) (42 U.S.C.
1395ww(d)(l)(A)(iii)) is amended by striking "beginning on or
after" and all that follows through "1990" and inserting "beginning on or after April 1, 1988, and ending on September 30,
1993,".
(2) STUDY.—(A) The Secretary of Health and Human Services 42 u s e 1395WW
shall collect sufficient data on the input prices associated with note.
the non-wage-related portion of the adjusted average standardized amounts established under section 1886(d)(3) of the Social
Security Act to identify the extent to which variations in such
amounts among hospitals located in different geographic areas
are attributable to differences in such prices.
(B) Not later than June 1, 1993, the Secretary shall submit a
report to Congress analyzing such data, and shall include in
such report recommendations regarding a methodology for
adjusting such average standardized amounts to reflect such
variations.
(C) The provisions of chapter 35 of title 44, United States
Code, shall not apply to data collected by the Secretary under
subparagraph (A).

104 STAT. 1388-36
42 u s e 1395WW
note.

PUBLIC LAW 101-508—NOV. 5, 1990

(4) EFFECTIVE DATE.—The a m e n d m e n t m a d e by p a r a g r a p h (1)
shall apply to discharges occurring on or after October 1, 1990.
(f) E L I M I N A T I O N O F HOSPITAL O F F - S E T FOR SERVICES O F PHYSICIAN
ASSISTANTS.—

42 u s e 1395x
note.
42 u s e 1395x
note.

(1) I N GENERAL.—Section 9338 of t h e O m n i b u s Budget Reconciliation Act of 1986 is amended by striking subsection (d).
(2) EFFECTIVE DATE.—The a m e n d m e n t m a d e by p a r a g r a p h (1)
shall t a k e effect a s if included in t h e e n a c t m e n t of t h e Omnibus
Budget Reconciliation Act of 1986.
(g) RESPONSIBILITIES A N D R E P O R T I N G R E Q U I R E M E N T S O F PROSPECTIVE P A Y M E N T ASSESSMENT C O M M I S S I O N . —
(1) E X P A N S I O N O F RESPONSIBILTIES 3.—Section 1886(eX2) (42

U.S.C. 1395ww(eX2)) is a m e n d e d —
(A) by striking "(2)" a n d inserting "(2)(A)"; a n d
(B) by adding a t t h e e n d t h e following n e w subparagraphs:
"(B) In order to promote t h e efficient a n d effective delivery of
high-quality h e a l t h care services, t h e Commission shall, in addition
to carrying o u t its functions u n d e r s u b p a r a g r a p h (A), study a n d
m a k e recommendations for each fiscal y e a r regarding changes in
each existing r e i m b u r s e m e n t policy u n d e r t h i s title u n d e r which
p a y m e n t s to a n institution a r e based upon prospectively determined
r a t e s a n d t h e development of new institutional r e i m b u r s e m e n t policies u n d e r t h i s title, including recommendations r e l a t i n g t o paym e n t s during such fiscal y e a r u n d e r t h e prospective p a y m e n t
system established u n d e r this section for d e t e r m i n i n g p a y m e n t s for
t h e operating costs of i n p a t i e n t hospital services, including changes
in t h e n u m b e r of diagnosis-related groups used t o classify i n p a t i e n t
hospital discharges u n d e r subsection (d), adjustments to such groups
to reflect severity of illness, a n d changes in t h e methods by which
hospitals a r e reimbursed for capital-related costs, together with
general recommendations on t h e effectiveness a n d quality of h e a l t h
care delivery systems in t h e United States a n d t h e effects on such
systems of institutional r e i m b u r s e m e n t s u n d e r this title.
"(C) By not later t h a n J u n e 1 of each year, t h e Commission shall
submit a report to Congress containing a n e x a m i n a t i o n of issues
affecting h e a l t h care delivery in t h e United States, including issues
relating to—
"(i) t r e n d s in h e a l t h care costs;
"(ii) t h e financial condition of hospitals and t h e effect of t h e
level of p a y m e n t s m a d e to hospitals u n d e r this title on such
condition;
"(iii) t r e n d s in t h e use of h e a l t h care services; a n d
"(iv) new methods used by employers, insurers, and others t o
constrain growth in h e a l t h care costs.".
(2) R E P O R T I N G REQUIREMENTS FOR COMMISSION AND SECRETARY;

ELIMINATION OF OTA REPORTING REQUIREMENTS.—Section 1886
(42 U.S.C. 1395ww) is amended—
(A) by striking s u b p a r a g r a p h (D) of subsection (d)(4);
(B) in t h e second sentence of subsection (eX2)(A), a s
amended by p a r a g r a p h (IXA), by striking "In addition" a n d
all t h a t follows t h r o u g h " t h e Commission" a n d inserting
" T h e Commission";
(C) in subsection (eX3XA)—
(i) by striking " t h e S e c r e t a r y " a n d inserting "Congress", a n d
' So in original. Probably should be "RESPONSIBIUTIES".

• . * g ^ ^

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-37

(ii) by striking the period at the end and inserting the
following: ", together with its general recommendations under paragraph (2)(B) regarding the effectiveness and quality of health care delivery systems in the
United States.";
(D) in subsection (e)(4)—
(i) by striking "(4)" and inserting "(4)(A)", and
(ii) by adding at the end the following new subparagraph:
"(B) In addition to the recommendation made under subparagraph
(A), the Secretary shall, taking into consideration the recommendations of the Commission under paragraph (2)(B), recommend for
each fiscal year (beginning with fiscal year 1992) other appropriate
changes in each existing reimbursement policy under this title
under which payments to an institution are based upon prospectively determined rates.";
(E) in subsection (e)(5)—
(i) by striking "recommendation" each place it appears and inserting "recommendations", and
(ii) by adding at the end the following new sentence:
"To the extent that the Secretary's recommendations
under paragraph (4) differ from the Commission's recommendations for that fiscal year, the Secretary shall
include in the publication referred to in subparagraph
(A) an explanation of the Secretary's grounds for not
following the Commission's recommendations."; and
(F) in subsection (e)(6)(G)—
(i) by striking clause (i), and
(ii) by redesignating clauses (ii) and (iii) as clauses (i)
and (ii).
(3) CONFORMING AMENDMENT.—Section 1845(c)(lXD) (42 U.S.C.

1395w-l(c)(l)(D)) is amended by striking "reports and".
(4) P R O P A C STUDY OF MEDICAID PAYMENTS TO HOSPITALS.—

(A) STUDY.—The Prospective Payment Assessment
Commission shall conduct a study of hospital payment rates
under State plans for medical assistance under title XIX of
the Social Security Act, and shall specifically examine in
such study the relationship between payments under such
plans and payments made to hospitals under title XVIII of
such Act, and the financial condition of hospitals receiving
payments under such plans, with particular attention to
hospitals in urban areas which treat large numbers of
individuals eligible for medical assistance under title XIX
of such Act and other low-income individuals.
(B) REPORT.—By not later than October 1, 1991, the
Commission shall submit a report to Congress on the study
conducted under subparagraph (A) and shall include in
such report such recommendations relating to requirements for payments to hospitals under title XIX of such Act
as the Commission deems appropriate.
(5) EFFECTIVE DATE.—The amendments made by this subsec- 42 USC 1395ww
tion shall take effect on the date of the enactment of this Act. note.
(h) PROVISIONS RELATING TO GEOGRAPHIC CLASSIFICATION OF HOSPITALS.—
(1) PAYMENTS TO RECLASSIFIED HOSPITALS.—

(A) I N GENERAL.—Section
1395ww(d)(8)(C)) is amended—

1886(dX8)(C)

(42 U.S.C.

104 STAT. 1388-38

42 use 1395WW
note.
42 u s e 1395WW
note.

PUBLIC LAW 101-508—NOV. 5, 1990

(i) in clause (i), in the matter preceding subclause (I),
by striking "area—" and inserting "area, or by treating
hospitals located in one urban area as being located in
another urban area—";
(ii) by amending clause (i)(II) to read as follows:
"(II) reduces the wage index for that urban area by more than
1 percentage point (as applied under this subsection), the Secretary shall calculate and apply such wage index under this
subsection separately to hospitals located in such urban area
(excluding all the hospitals so treated) and to the hospitals so
treated (as if such hospitals were located in such urban area).";
(iii) by striking clause (ii); and
(iv) by redesignating clauses (iii) and (iv) as clauses
(ii) and (iii).
(B) EFFECTIVE DATE.—The amendments made by subparagraph (A) shall apply to discharges occurring on or after
January 1,1991.
(2) GEOGRAPHIC CLASSIFICATION REVIEW BOARD.—
(A) DEADUNE FOR SUBMISSION OF APPUCATIONS.—For

purposes of determining whether a hospital requesting a
change in geographic classification for fiscal year 1992
under section 1886(d)(10) of the Social Security Act has met
the deadline described in subparagraph (C)(ii) of such section, an application submitted under such subparagraph
shall be considered to have been submitted by the first day
of the preceding fiscal year if it is submitted within 60 days
of the date of publication of the guidelines described in
subparagraph (D)(i) of such section.
(B) TECHNICAL CORRECTIONS.—Section 1886(d)(10) (42
U.S.C. 1395ww(d)(10)) is amended—
(i) in subparagraph (A), by striking "Geographical"
V
and inserting "Geographic";
(ii) in subparagraph (BXi)—
(I) by striking "representatives" and inserting
"representative", and
(II) by striking "1 member shall be a member of
the Prospective Pa3nnent Assessment Commission,
and at least";
(iii) in subparagraph (BXii), by striking "all" and
inserting "initial"; and
(iv) in subparagraph (10XC)(iii)(II)—
(I) by striking the first 2 sentences and inserting
the following: "Appeal of decisions of the Board
shall be subject to the provisions of section 557b of
title 5, United States Code.", and
(II) by striking "after" and inserting "after the
date on which".

SEC. 4003. EXPANSION OF DRG PAYMENT WINDOW.

(a) IN GENERAL.—The first sentence of section 1886(aX4) (42 U.S.C.
1395ww(aX4)) is amended by striking the period and inserting the
following: ", and includes the costs of all services for which payment
may be made under this title that are provided by the hospital (or by
an entity wholly owned or operated by the hospital) to the patient
during the 3 days immediately preceding the date of the patient's
admission if such services are diagnostic services (including clinical

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-39

diagnostic laboratory tests) or are other services related to the
admission (as defined by the Secretary).".
42 u s e 1395WW
(b) EFFECTIVE DATE.—The amendment made by subsection (a) note.
shall apply—
(1) in the case of any services provided during the day immediately preceding the date of a patient's admission (without
regard to whether the services are related to the admission), to
services furnished on or after the date of the enactment of this
Act and before October 1,1991;
(2) in the case of diagnostic services (including clinical diagnostic laboratory tests), to services furnished on or after January 1,1991; and
(3) in the case of any other services, to services furnished on
or after October 1,1991.
(c) ISSUANCE OF INTERIM FINAL REGULATION.—The Secretary of

42 u s e 1395WW

Health and Human Services shall issue such regulations (on an note.
interim or other basis) as may be necessary to implement this
section.
SEC. 4004. PAYMENTS FOR MEDICAL EDUCATION COSTS.
(a) HOSPITAL GRADUATE MEDICAL EDUCATION RECOUPMENT.—

(1) I N GENERAL.—The Secretary of Health and Human Services may not, before October 1, 1991, recoup payments from a
hospital because of alleged overpayments to such hospital under
part A of title XVIII of the Social Security Act due to a
determination that the amount of pa5nnents made for graduate
medical education programs exceeds the amount allowable
under section 1886(h).
(2) CAP ON ANNUAL AMOUNT OF RECOUPMENT.—With respect to

overpayments to a hospital described in paragraph (1), the
Secretary may not recoup more than 25 percent of the amount
of such overpajrments from the hospital during a fiscal year.
(3) EFFECTIVE DATE.—Paragraphs (1) and (2) shall take effect
October 1,1990.
(b) UNIVERSITY HOSPITAL NURSING EDUCATION.—

(1) I N GENERAL.—The reasonable costs incurred by a hospital
(or by an educational institution related to the hospital by
common ownership or control) during a cost reporting period for
clinical training (as defined by the Secretary) conducted on the
premises of the hospital under approved nursing and allied
health education programs that are not operated by the hospital
shall be allowable as reasonable costs under part A of title
XVIII of the Social Security Act and reimbursed under such
part on a pass-through basis.
(2) CONDITIONS FOR REIMBURSEMENT.—The reasonable costs
incurred by a hospital during a cost reporting period shall be
reimbursable pursuant to paragraph (1) only if^
(A) the hospital claimed and was reimbursed for such
costs during the most recent cost reporting period that
ended on or before October 1,1989;
;
(B) the proportion of the hospital's total allowable costs
that is attributable to the clinical training costs of the
approved program, and allowable under (b)(1) during the
cost reporting period does not exceed the proportion of total
allowable costs that were attributable to the clinical training costs during the cost reporting period described in
subparagraph (A);

42 u s e 1395WW
note.

104 STAT. 1388-40

PUBLIC LAW 101-508—NOV. 5, 1990
(C) the hospital receives a benefit for the support it
furnishes to such program through the provision of clinical
services by nursing or allied health students participating
in such program; and
(D) the costs incurred by the hospital for such program do
not exceed the costs that would be incurred by the hospital
if it operated the program itself.

(3) PROHIBITION
RETARY.—

AGAINST RECOUPMENT OF COSTS BY SEC-

(A) I N GENERAL.—The Secretary of Health and Human
Services may not recoup payments from (or otherwise
reduce or adjust payments under part A of title XVIII of
the Social Security Act to) a hospital because of alleged
overpayments to such hospital under such title due to a
determination that costs which were reported by the hospital on its medicare cost reports for cost reporting periods
beginning on or after October 1, 1983, and before October 1,
1990, relating to approved nursing and allied health education programs did not meet the requirements for allowable nursing and allied health education costs (as developed
by the Secretary pursuant to section 1861(v) of such Act).
(B) REFUND OF AMOUNTS RECOUPED.—If, prior to the date
of the enactment of this Act, the Secretary has recouped
payments from (or otherwise reduced or adjusted payments
under part A of title XVIII of the Social Security Act to) a
hospital because of overpayments described in subparagraph (A), the Secretary shall refund the amount recouped,
reduced, or adjusted from the hospital.
(4) SPECIAL AUDIT TO DETERMINE COSTS.—In determining the
amount of costs incurred by, claimed by, and reimbursed to, a
hospital for purposes of this subsection, the Secretary shall
conduct a special audit (or use such other appropriate mechanism) to ensure the accuracy of such past claims and payments.
(5) EFFECTIVE DATE.—Except as provided in paragraph (3), the
provisions of this subsection shall apply to cost reporting periods beginning on or after October 1,1990.
SEC. 4005. PPS-EXEMPT HOSPITALS.
(a) ADJUSTMENT TO PAYMENT AMOUNTS.—

42 u s e 1395ww
^o*®42 u s e 1395WW

note.

(1)
I N GENERAL.—Section
1886(b)(1)(B)
(42 U.S.C.
1395ww(b)(l)(B)) is amended by striking "(ii) in the case o f and
all that follows through the semicolon and inserting the following: "(ii) in the case of cost reporting periods beginning on or
after October 1, 1991, an additional amount equal to 50 percent
of the amount by which the operating costs exceed the target
amount (except that such additional amount may not exceed 10
percent of the target amount) after any exceptions or adjustments are made to such target amount for the cost reporting
period;".
(2) EFFECTIVE DATE.—The amendment made by paragraph (1)
shall apply to cost reporting periods beginning on or after
October 1,1991.
(b) DEVELOPMENT OF NATIONAL PROSPECTIVE PAYMENT R A T E S FOR
CURRENT N O N - P P S HOSPITALS.—
(1) DEVELOPMENT OF PROPOSAL.—The Secretary of Health and

Human Services shall develop a proposal to modify the current
system under which hospitals that are not subsection (d) hos-

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-41

pitals (as defined in section 1886(dXl)(B) of the Social Security
Act) receive payment for the operating and capital-related costs
of inpatient hospital services under part A of the medicare
program or a proposal to replace such system with a system
under which such payments would be made on the basis of
nationally-determined average standardized amounts. In developing any proposal under this paragraph to replace the current
system with a prospective payment system, the Secretary
shall—
(A) take into consideration the need to provide for appropriate limits on increases in expenditures under the medicare program;
(B) provide for adjustments to prospectively determined
rates to account for changes in a hospital's case mix, severity of illness of patients, volume of cases, and the
development of new technologies and standards of medical
practice;
(C) take into consideration the need to increase the payment otherwise made under such system in the case of
services provided to patients whose length of stay or costs of
treatment greatly exceed the length of stay or cost of
treatment provided for under the applicable prospectively
determined payment rate;
(D) take into consideration the need to adjust payments
under the system to take into account factors such as a
disproportionate share of low-income patients, costs related
to graduate medical education programs, differences in
wages and wage-r6lated costs among hospitals located in
various geographic areas, and other factors the Secretary
considers appropriate; and
(E) provide for the appropriate allocation of operating
and capital-related costs of hospitals not subject to the new
prospective payment system and distinct units of such hospitals that would be paid under such system.
(2) REPORTS.—(A) By not later than April 1, 1992, the Secretary shall submit the proposal developed under paragraph (1)
to the Committee on Finance of the Senate and the Committee
on Ways and Means of the House of Representatives.
(B) By not later than June 1, 1992, the Prospective Payment
Assessment Commission shall submit an analysis of and comments on the proposal developed under paragraph (1) to the
Committee on Finance of the Senate and the Committee on
Ways and Means of the House of Representatives.
(c) APPEALS OF TARGET AMOUNTS.—
(1) DEADUNES FOR REVIEW AND DECISION.—(A)

Section 1816(f)
(42 U.S.C. 1395h(f)) is amended—
(i) by striking "(1)" and "(2)" and inserting "(A)" and
"(B)";
(ii) by striking "(f)" and inserting "(f)(1)"; and
(iii) by striking "Such standards and criteria" and all that
follows and inserting the following:
"(2) The standards and criteria established under paragraph (1)
shall include—
"(A) with respect to claims for services furnished under this
part by any provider of services other than a hospital—
"(i) whether such agency or organization is able to process 75 percent of reconsiderations within 60 days (except in

39-194 O - 91 - 15 : QL 3 Part 2

104 STAT. 1388-42

PUBLIC LAW 101-508—NOV. 5, 1990

the case of fiscal year 1989, 66 percent of reconsiderations)
and 90 percent of reconsiderations within 90 days, and
"(ii) the extent to which such agency or organization's
determinations are reversed on appeal; and
"(B) with respect to applications for an exemption from or
exception or adjustment to the target amount applicable under
section 1886(b) to a hospital that is not a subsection (d) hospital
(as defined in section 1886(d)(1)(B))—
*'(i) if such agency or organization receives a completed
application, whether such agency or organization is able to
process such application not later than 75 days after the
application is filed, and
"(ii) if such agency or organization receives an incomplete
application, whether such agency or organization is able to
return the application with instructions on how to complete
the application not later than 60 days after the application
is filed.".
(B) Section 1886(b)(4)(A) (42 U.S.C. 1395ww(b)(4)(A)) is
amended by adding at the end the following new sentence: "The
Secretary shall announce a decision on any request for an
exemption, exception, or adjustment under this paragraph not
later than 180 days after receiving a completed application from
the intermediary for such exemption, exception, or adjustment,
and shall include in such decision a detailed explanation of the
grounds on which such request was approved or denied.".
(2) STANDARDS FOR ASSIGNMENT OF NEW BASE PERIOD.—Section

188603)(4) (42 U.S.C. 1395ww(b)(4)) is amended—
(A) by redesignating subparagraph (B) as subparagraph
(C);and
(B) by inserting after subparagraph (A) the following new
subparagraph:
"(B) In determining under subpairagraph (A) whether to assign a
new base period which is more representative of the reasonable and
necessary cost to a hospital of providing inpatient services, the
Secretary shall take into consideration—
"(i) changes in applicable technologies and medical practices,
or differences in the severity of illness among patients, that
increase the hospital's costs;
"(ii) whether increases in wages and wage-related costs for
hospitals located in the geographic area in which the hospital is
located exceed the average of the increases in such costs paid by
hospitals in the United States; and
"(iii) such other factors as the Secretary considers appropriate
in determining increases in the hospital's costs of providing
inpatient services.".
42 u s e 1395WW

(3)

note.
J

42 use 1395WW
note.

GUIDANCE

TO

INTERMEDIARIES

AND

HOSPITALS.—The

Administrator of the Health Care Financing Administration
shall provide guidance to agencies and organizations performing
functions pursuant to section 1816 of the Social Security Act
and to hospitals that are not subsection (d) hospitals (as defined
in section 1886(d)(1)(B) of such Act) to assist such agencies,
organizations, and hospitals in filing complete applications with
the Administrator for exemptions, exceptions, and adjustments
under section 1886(b)(4)(A) of such Act.
(4) EFFECTIVE DATES.—The amendments made by paragraph
(1) shall take effect on the date of the enactment of this Act, and
the amendments made by paragraph (2) shall take effect as if
* So in original. Probably should be " "(i)".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-43

included in the enactment of the Omnibus Budget Reconciliation Act of 1989.
SEC. 4006. HOSPICE BENEFIT EXTENSION.

(a) I N GENERAL.—Section 1812 (42 U.S.C. 1395d) is amended—
(1) in subsection (a)(4), by striking "90 days each" and all that
follows through "with respect to" and inserting the following:
"90 days each, a subsequent period of 30 days, and a subsequent
extension period with respect to"; and
(2) in subsection (d)—
(A) in paragraph (1), by striking "90 days each" and all
that follows through "lifetime" and inserting the following:
"90 days each, a subsequent period of 30 days, and a
subsequent extension period during the individual's lifetime", and
(B) in paragraph (2)(B), by striking "a 90- or 30-day
period," and inserting "a 90- or 30-day period or a subsequent extension period,".
(b) CONFORMING AMENDMENT.—Section 1814(a)(7)(A) (42 U.S.C.

1395f(a)(7)(A)) is amended—
(1) in clause (i), by striking "and" at the end;
(2) in clause (ii), by striking the semicolon at the end and
inserting ", and"; and
(3) by adding at the end the following new clause:
"(iii) in a subsequent extension period, the medical
director or physician described in clause (i)(II)
recertifies at the beginning of the period that the
individual is terminally ill;".
(c) EFFECTIVE DATE.—The amendments made by this section shall 42 u s e 1395d
apply with respect to care and services furnished on or after Janu- note.
ary 1,1990.
SEC. 4007. FREEZE IN PAYMENTS UNDER PART A THROUGH DECEMBER 31. 42 u s e 1395WW
note.

(a) I N GENERAL.—Notwithstanding any other provision of law, for
purposes of determining the amount of payment for items or services under part A of title XVIII of the Social Security Act (including
payments under section 1886 of such Act attributable to or allocated
under such part) during the period described in subsection (b):
(1) The market basket percentage increase (described in section 1886(b)(3)(B)(iii) of the Social Security Act) shall be deemed
to be 0 for discharges occurring during such period.
(2) The percentage increase or decrease in the medical care
expenditure category of the consumer price index applicable
under section 1814(i)(2)(B) of such Act shall be deemed to be 0.
(3) The area wage index applicable to a subsection (d) hospital
under section 1886(d)(3)(E) of such Act shall be deemed to be the
area wage index applicable to such hospital as of September 30,
1990.
(4) The percentage change in the consumer price index applicable under section 1886(h)(2)(D) of such Act shall be deemed
to be 0.
(b) DESCRIPTION OF PERIOD.—The period referred to in subsection
(a) is the period beginning on October 21, 1990, and ending on
December 31, 1990.

104 STAT. 1388-44

PUBLIC LAW 101-508—NOV. 5,1990

SEC. 4008. MISCELLANEOUS AND TECHNICAL PROVISIONS RELATING TO
PART A.
(a) WAIVER OF LIABILITY FOR SKILLED NURSING FACILITIES AND
HOSPICES.—
(1) SKILLED NURSING FACIUTIES.—The second sentence of sec-

42USC1395y
note.
42 use 1395y
note.
42USC1395y
note.

tion 9126(c) of the Consolidated Omnibus Budget Reconciliation
Act of 1985 is amended by striking "October 31, 1990" and
inserting "December 31,1995".
(2) HOSPICES.—Section 9305(f)(2) of the Omnibus Budget Reconciliation Act of 1986 is amended by striking "November 1,
1990" and inserting "December 31,1995".
(3) EFFECTIVE DATE.—The amendments made by paragraphs
(1) and (2) shall take effect on the date of the enactment of this
Act.
(b) HOSPITAL OBLIGATIONS WITH RESPECT TO TREATMENT OF EMERGENCY MEDICAL CONDITIONS.—
(1) CIVIL MONETARY PENALTIES.—Section 1867(dX2XA) (42

U.S.C. 1395dd(d)(2)(A)) is amended by striking "knowingly" and
inserting "negligently".
(2) APPLICATION OF PENALTIES TO SMALL HOSPITALS.—Section

1867(d)(2)(A) (42 U.S.C. 1395dd(d)(2)(A)) is amended by inserting
"(or not more than $25,000 in the case of a hospital with less
than 100 beds)" after "$50,000".
(3) TERMINATION OF HOSPITAL PROVIDER AGREEMENTS.—

42 use 1395CC
note.
42 u s e 1395dd

note.

(A) Section 1867 (42 U.S.C. 1395dd) is further amended—
(i) by striking paragraph (1) of subsection (d),
(ii) by redesignating paragraphs (2) and (3) of subsection (d) as paragraph (1) and (2), respectively, and
(iii) in subsection (c)(2)(C), by striking "(d)(2)(C)" and
inserting "(d)(1)(C)".
(B) Section 1866(a)(l)(I)(i) (42 U.S.C. 1395cc(a)(l)(I)(i)) is
amended by inserting "and to meet the requirements of
such section" before the comma at the end.
(4) EFFECTIVE DATE,—The amendments made by this subsection shall apply to actions occurring on or after the first day of
the sixth month beginning after the date of the enactment of
this Act.
(c) INSPECTOR GENERAL S T U D Y
EMPLOYMENT OF PHYSICIANS.—

OF PROHIBITION ON HOSPITAL

(1) STUDY.—The Secretary of Health and Human Services
(acting through the Inspector General of the Department of
Health and Human Services) shall conduct a study of the effect
of State laws prohibiting the employment of physicians by
hospitals on the availability and accessibility of trauma and
emergency care services, and shall include in such study an
analysis of the effect of such laws on the ability of hospitals to
meet the requirements of section 1867 of the Social Security Act
relating to the examination and treatment of individuals with
an emergency medical condition and women in labor.
(2) REPORT.—By not later than 1 year after the date of the
enactment of this Act, the Secretary shall submit a report to
Congress on the study conducted under paragraph (1).
(d) DESIGNATION OF RURAL PRIMARY CARE HOSPITALS.—
(1) PRIORITY DESIGNATIONS OF BORDER STATE HOSPITALS.—Sec-

tion 1820(i)(2)(C) (42 U.S.C. 1395i-4(i)(2)(C)) is amended by adding
at the end the following new sentence: "In designating facilities

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-45

as rural primary care hospitals under this subparagraph, the
Secretary shall give preference to facilities not meeting the
requirements of clause (i) of subparagraph (A) that have entered
into an agreement described in subsection (g)(2) with a rural
health network located in a State receiving a grant under
subsection (a)(1).".
(2)

ELIGIBIUTY

OF CERTAIN

CLOSED

HOSPITALS.—Section

1820(f)(1)(B) (42 U.S.C. 1395i-4(f)(l)(B)) is amended by striking
"is a hospital," and inserting the following: "is a hospital (or, in
the case of a facility that closed during the 12-month period that
ends on the date the facility applies for such designation, at the
time the facility closed),".
(3) ELIGIBILITY OF URBAN HOSPITALS.—Section 1820(f)(1)(A) (42

U.S.C. 1395i-4(f)(l)(A)) is amended by striking the semicolon and
inserting the following: ", or is located in a county whose
geographic area is substantially larger than the average geographic area for urban counties in the United States and whose
hospital service area is characteristic of service areas of hospitals located in rural areas;".
(4) EFFECTIVE DATE.—The amendments made by paragraphs 42 u s e 1395i-4
(1), (2), and (3) shall take effect on the date of the enactment of note.
this Act.
(e) SKILLED NURSING FACILITY ROUTINE COST LIMITS.—

(1) I N GENERAL.—Section 6024 of the Omnibus Budget Reconciliation Act of 1989 is amended by adding at the end the 42 u s e 1395yy
following new sentence: "The Secretary shall update such costs note.
under such section for cost reporting periods beginning on or
after October 1, 1989, by using cost reports submitted by skilled
nursing facilities for cost reporting periods ending not earlier
than January 31, 1988, and not later than December 31, 1988.".
(2) 2-YEAR UPDATES REQUIRED.—Sectiou 1888(a) (42 U.S.C.
13953ry(a)) is amended in the matter following paragraph (4) by
striking the period and inserting the following: ", and shall, for
cost reporting periods beginning on or after October 1, 1992 and
every 2 years thereafter, provide for an update to the per diem
cost limits described in this subsection".
(3) EFFECTIVE DATE.—The amendments made by paragraphs 42 u s e 1395yy
(1) and (2) shall take effect as if included in the enactment of the note.
Omnibus Budget Reconciliation Act of 1989.
(f) CLARIFICATION OF EXTENSION OF WAIVER FOR FINGER LAKES
AREA HOSPITAL CORPORATION.—

(1) IN GENERAL.—The second sentence of section 1886(c)(4) (42
U.S.C. 1395ww(c)(4)) is amended by striking "rate of increase
from" and inserting "payments under the State system as
compared to aggregate payments which would have been made
under the national system since".
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 42 u s e 1395WW
shall take effect as if included in the enactment of the Omnibus note.
Budget Reconciliation Act of 1989.
(g) ENROLLMENT IN PART A FOR HMO MEMBERS.—

(1) I N GENERAL.—Section 1818(c) (42 U.S.C. 1395i-2(c)) is
amended—
(A) by striking "and" at the end of paragraph (5),
(B) by striking the period at the end of paragraph (6) and
inserting a semicolon, and
(C) by adding at the end the following new paragraphs:

104 STAT. 1388-46

42 use 1395i-2
note.
42 u s e 1395aa

PUBLIC LAW 101-508—NOV. 5, 1990

"(7) an individual who meets the conditions of subsection (a)
may enroll under this part during a special enrollment period
that includes any month during any part of which the individual is enrolled under section 1876 with an eligible organization
and ending with the last day of the 8th consecutive month in
which the individual is at no time so enrolled;
"(8) in the case of an individual who enrolls during a special
enrollment period under paragraph (7)—
"(A) in any month of the special enrollment period in
which the individual is at any time enrolled under section
1876 with an eligible organization or in the first month
following such a month, the coverage period shall begin on
the first day of the month in which the individual so enrolls
(or, at the option of the individual, on the first day of any of
the following three months), or
"(B) in any other 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; and
"(9) in applying the provisions of section 1839(b), there shall
not be taken into account months for which the individual can
demonstrate that the individual was enrolled under section
1876 with an eligible organization.".
(2) EFFECTIVE DATE.—The amendment made by paragraph (1)
shall take effect on February 1,1991.
(h) NURSING HOME REFORM.—
(1) NURSE AIDE TRAINING AND COMPETENCY EVALUATION.—
(A) N o COMPLIANCE ACTIONS BEFORE EFFECTIVE DATE OF

note.

GUIDELINES.—The Secretary of Health and Human Services
may not refuse to enter into an agreement or cancel an
existing agreement with a State under section 1864 of the
Social Security Act on the basis that the State failed to
meet the requirement of section 1819(e)(1)(A) of such Act
before the effective date of guidelines, issued by the Secretary,
establishing
requirements
under
section
1819(f)(2)(A) of such Act, if the State demonstrates to the
satisfaction of the Secretary that it has made a good faith
effort to meet such requirement before such effective date.

42 use l395i-3.

INC.—Section 1819(b)(5)(A) (42 U.S.C. 1396r(b)(5)(A)) is
amended—
(i) by striking "A skilled nursing facility" and inserting "(i) Except as provided in clause (ii), a skilled
nursing facility";
(ii) by striking "(on a full-time, temporary, per diem,
or other basis) and inserting "on a full-time basis";
(iii) by striking "(i)" and "(ii)" and inserting "(I)" and
"(II)"; and
(iv) by adding at the end the following:
"(ii) A skilled nursing facility must not use on a
temporary, per diem, leased, or on any basis other than
as a permanent employee any individual as a nurse
aide in the facility on or after January 1, 1991, unless
the individual meets the requirements described in
clause (i).".

(B) PART-TIME NURSE AIDES NOT ALLOWED DELAY IN TRAIN-

(C) REQUIREMENT TO OBTAIN INFORMATION FROM NURSE

AIDE REGISTRY.—Section 1819(b)(5)(C) (42 U.S.C. 13951-

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-47

3(b)(5)(C)) is amended by striking "the State registry established under subsection (e)(2)(A) as to information in the
registry" and inserting "any State registry estabUshed
under subsection (e)(2)(A) that the facility believes will
include information".
(D) RETRAINING OF NURSE AIDES.—Section 1819(b)(5)(D) (42

U.S.C. 1395i-3(b)(5)(D)) is amended by striking the period at
the end and inserting ", or a new competency evaluation
program.".
(E) CLARIFICATION OF NURSE AIDES NOT SUBJECT TO

CHARGES.—Section 1819(f)(2)(A)(iv) (42 U.S.C. 139513(f)(2)(A)(iv)) is amended—
(i) in subclause (I), by striking "and" at the end;
(ii) in subclause (II), by inserting after "nurse aide"
the following: "who is employed by (or who has received an offer of employment from) a facility on the
date on which the aide begins either such program";
(iii) in subclause (II), by striking the period at the end
and inserting ", and"; and
(iv) by adding at the end the following new subclause:
"(III) in the case of a nurse aide not described in
subclause (II) who is employed by (or who has
received an offer of employment from) a facility
not later than 12 months after completing either
such program, the State shall provide for the reimbursement of costs incurred in completing such
program on a prorata basis during the period in
which the nurse aide is so employed.".
(F) MODIFICATION OF NURSING FACIUTY DEFICIENCY STANDARDS.—

(i) I N GENERAL.—Section 1819(f)(2)(B)(iii)(I) (42 U.S.C.
1395i-3(f)(2)(B)(iii)(I)) is amended to read as follows:
"(I) offered Jt)y or in a skilled nursing facility
which, within the previous 2 years—
"(a) has operated under a waiver under
subsection (b)(4)(C)(ii)(II);
"(b) has been subject to an extended (or
partial extended) survey under subsection
(g)(2)(B)(i) or section 1919(g)(2)(B)(i); or
"(c) has been assessed a civil money penalty
described in subsection (h)(2)(B)(ii) or section
1919(h)(2)(A)(ii) of not less than $5,000, or has
been subject to a remedy described in clauses
(i) or (iii) of subsection (h)(2)(B), subsection
(h)(4), section 1919(h)(l)(B)(i), or in clauses (i),
(iii), or (iv) of section 1919(h)(2)(A), or",
(ii) EFFECTIVE DATE.—The amendments made by 42 USC l395i-3
clause (i) shall take effect as if included in the enact- »^ote.
ment of the Omnibus Budget Reconciliation Act of
1987, except that a State may not approve a training
and competency evaluation program or a competency
evaluation program offered by or in a nursing facility
which, pursuant to any Federal or State law within the
2-year period beginning on October 1, 1988—
(I) had its participation terminated under title
XVIII of the Social Security Act or under the State
plan under title XIX of such Act;

104 STAT. 1388-48

PUBLIC LAW 101-508—NOV. 5, 1990
(II) w a s subject to a denial of p a y m e n t u n d e r
e i t h e r such title;
(III) w a s assessed a civil money p e n a l t y not less
t h a n $5,000 for deficiencies i n n u r s i n g facility
standards;
(IV) operated u n d e r a t e m p o r a r y m a n a g e m e n t
appointed to oversee t h e operation of t h e facility
a n d t o e n s u r e t h e h e a l t h a n d safety of t h e facility's
residents; or
(V) p u r s u a n t to S t a t e action, w a s closed or h a d
its residents transferred.
(G) CLARIFICATION O F STATE RESPONSIBILITY TO DETERMINE

COMPETENCY.—Section 1819(f)(2)(B) (42 U.S.C. 139513(f)(2)(B)) is a m e n d e d in t h e second sentence by inserting
"(through subcontract or otherwise)" after " m a y n o t delegate".
42 u s e 1395i-3
note.

(H) EFFECTIVE DATE.—Except a s

provided

in

subpara-

g r a p h (F), t h e a m e n d m e n t s m a d e by t h i s subsection shall
t a k e effect a s if t h e y were included i n t h e e n a c t m e n t of t h e
O m n i b u s Budget Reconciliation Act of 1987.
(2) O T H E R A M E N D M E N T S . —
(A) A S S U R A N C E O F APPROPRIATE PAYMENT AMOUNTS.—(i)

42 u s e 1395yy.

Section 1861(v)(l)(E) (42 U.S.C. 1395x(v)(l)(E)) is a m e n d e d in
t h e second sentence by s t r i k i n g " t h e costs of such facilities"
a n d inserting " t h e costs (including t h e costs of services
required t o a t t a i n or m a i n t a i n t h e highest practicable physical, m e n t a l , a n d psychosocial well-being of each resident
eligible for benefits u n d e r t h i s title) of such facilities".
(ii) Section 1888(d)(1) (42 U.S.C. 1395xx(d)(l)) is a m e n d e d
in t h e first sentence by s t r i k i n g "(and capital-related costs)"
a n d i n s e r t i n g "(including t h e costs of services required t o
a t t a i n or m a i n t a i n t h e highest practicable physical, m e n t a l ,
a n d psychosocial well-being of each resident eligible for
benefits u n d e r this title) a n d capital-related costs".
(B) DISCLOSURE O F INFORMATION O F QUALITY ASSESSMENT
AND ASSURANCE COMMITTEES.—Section 1819(b)(1)(B) (42

U.S.C. 1395i-3(b)(l)(B)) is a m e n d e d by adding a t t h e e n d t h e
following n e w sentence: " A S t a t e or t h e Secretary m a y n o t
r e q u i r e disclosure of t h e records of such committee except
insofar a s such disclosure is related to t h e compliance of
such committee w i t h t h e r e q u i r e m e n t s of this subparagraph.".
(C)

PERIOD

FOR

RESIDENT

ASSESSMENT.—Section

1819(b)(3)(C)(i)(I) (42 U.S.C. 1395i-3(b)(3)(C)(i)(I)) is a m e n d e d
by striking "4 d a y s " a n d inserting "not l a t e r t h a n 14 days".
(D) CLARIFICATION O F RESPONSIBILITY FOR SERVICES FOR
MENTALLY ILL AND MENTALLY RETARDED RESIDENTS.—Section

1819(b)(4)(A) (42 U.S.C. 1395i-3(b)(4)(A)) is amended—
(i) by striking " a n d " a t t h e end of clause (v),
(ii) by s t r i k i n g t h e period a t t h e e n d of clause (vi) a n d
inserting "; a n d " , a n d
(iii) by inserting after clause (vi) t h e following n e w
clause:
"(vii) t r e a t m e n t a n d services required by m e n t a l l y ill
a n d m e n t a l l y r e t a r d e d residents n o t otherwise provided
or a r r a n g e d for (or required to be provided or a r r a n g e d
for) by t h e State.".

PUBLIC LAW 101-508—NOV. 5, 1990
(E)

NOTIFICATION

OF

SECRETARIAL

104 STAT. 1388-49

WAIVER.—Section

1819(b)(4)(C)(ii) (42 U.S.C. 1395i-3(b)(4)(C)(ii)) is amended—
(i) by striking "and" at the end of subclause (II);
(ii) by striking the period at the end of subclause (III)
and inserting a comma; and
(iii) by adding at the end the following new
subclauses:
"(IV) the Secretary provides notice of the waiver
to the State long-term care ombudsman (established under section 307(a)(12) of the Older Americans Act of 1965) and the protection and advocacy
system in the State for the mentally ill and the
mentally retarded, and
"(V) the facility that is granted such a waiver
notifies residents of the facility (or, where appropriate, the guardians or legal representatives of
such residents) and members of their immediate
families of the waiver.".
(F) CLARIFICATION OF DEFINITION OF NURSE AIDE.—Section

1819(b)(5)(F)(i) (42 U.S.C. 1395i-3(b)(5)(F)(i)) is amended by
striking "(G))," and inserting "(G)) or a registered dietician,".
(G) RESIDENTS' RIGHTS TO REFUSE INTRA-FACILITY TRANSFERS FOR NON-MEDICAL REASONS.—Section 1819(c)(1)(A) (42

U.S.C. 1395i-3(c)(l)(A)) is amended—
(i) by redesignating clause (x) as clause (xi) and by
inserting after clause (ix) the following new clause:
"(x) REFUSAL OF CERTAIN TRANSFERS.—The right to
refuse a transfer to another room within the facility, if
a purpose of the transfer is to relocate the resident
from a portion of the facility that is a skilled nursing
facility (for purposes of this title) to a portion of the
facility that is not such a skilled nursing facility."; and
(B) Dy adding at the end the following: "A resident's
exercise of a right to refuse transfer under clause (x)
shall not affect the resident's eligibility or entitlement
to benefits under this title or to medical assistance
under title XIX of this Act.".
(H)

RESIDENT

ACCESS

TO CONICAL

RECORDS.—Section

1819(c)(l)(A)(iv) (42 U.S.C. 1395i-3(c)(l)(A)(iv)) is amended by
inserting before the period at the end the following: "and to
access to current clinical records of the resident upon request by the resident or the resident's legal representative,
within 24 hours (excluding hours occurring during a weekend or holiday) after making such a request".
(I) INCLUSION OF STATE NOTICE OF RIGHTS IN FACIUTY
NOTICE OF RIGHTS.—Section 1819(c)(l)(B)(ii) (42 U.S.C. 13951-

3(c)(l)(B)(ii)) is amended by inserting "including the notice
(if any) of the State developed under section 1919(e)(6)"
after "in such rights)".
(J)

SPECIFICATION

OF

REQUIRED

PROGRAMS.—Section

1819(e)(1)(A) (42 U.S.C. 1395i-3(e)(l)(A)) is amended by striking "clause (i) or (ii) of subsection (f)(2)(A)" and inserting
"subsection (f)(2)".
(K)

CLARIFICATION OF NURSE AIDE REGISTRY REQUIRE-

MENTS.—Section
amended—

1819(e)(2) (42 U.S.C.

1395i-3(e)(2))

is

104 STAT. 1388-50

PUBLIC LAW 101-508—NOV. 5, 1990
(i) in subparagraph (A), by striking the period and
inserting the following: ", or any individual described
in subsection (f)(2)(B)(ii) or in subparagraph (B), (C), or
(D) of section 6901(bX4) of the Omnibus Budget Reconciliation Act of 1989."; and
(ii) by adding at the end the following new subparagraph:
"(C) PROHIBITION AGAINST CHARGES.—A State may not
impose any charges on a nurse aide relating to the registry
established and maintained under subparagraph (A).".
(L)

CLARIFICATION ON FINDINGS OF NEGLECT.—Section

1819(g)(1)(C) (42 U.S.C. 1395i-3(g)(l)(C)) is amended by
adding at the end the following: "A State shall not make a
finding that an individual has neglected a resident if the
individual demonstrates that such neglect was caused by
factors beyond the control of the individual.".
(M) TIMING OF PUBLIC DISCLOSURE OF SURVEY RESULTS.—

Section 1819(g)(5)(A)(i) (42 U.S.C. 1395i-3(g)(5)(A)(i)) is
amended by striking "deficiencies and plans" and inserting
"deficiencies, within 14 calendar days after such information is made available to those facilities, and approved
plans".
(N)

42 use 1395i-3
*******

42 use 1395i-3
^°*®-

42 use I395b-1
note.

OMBUDSMAN PROGRAM COORDINATION WITH STATE

SURVEY AND CERTIFICATION AGENCIES.—Section 1819(gX5)(B)
(42 U.S.C. 1395i-3(g)(5)(B)) is amended by striking "with
respect" and inserting "or of any adverse action taken
against a skilled nursing facility under paragraphs (1), (2),
or (4) of subsection (h), with respect".
(O) MAINTAINING REGULATORY STANDARDS FOR CERTAIN
SERVICES.—Any regulations promulgated and applied by the
Secretary of Health and Human Services after the date of
the enactment of the Omnibus Budget Reconciliation Act of
1987 with respect to services described in clauses (ii), (iv),
and (v) of section 1819(b)(4)(A) of the Social Security Act
shall include requirements for providers of such services
that are at least as strict as the requirements applicable to
providers of such services prior to the enactment of the
Omnibus Budget Reconciliation Act of 1987.
(P) EFFECTIVE DATES.—The amendments made by this
pargigraph shall take effect as if they were included in the
enactment of the Omnibus Budget Reconciliation Act of
1987.
(i) CLARIFICATION OF SECRETARIAL WAIVER AUTHORITY.—
(1) RURAL HOSPITAL DEMONSTRATION.—The Secretary

of
Health and Human Services is authorized to waive such provisions of title XVIII of the Social Security Act as are necessary to
conduct any demonstration project for limited-service rural hospitals with respect to which the Secretary has entered into an
£igreement before the date of the enactment of the Omnibus
Budget Reconciliation Act of 1989.
(2) NURSING HOME DEMONSTRATIONS.—Section 6901(d)(3)(B) of
the Omnibus Budget Reconciliation Act of 1989 is amended—
(A) by striking "Wisconsin" and inserting "Wisconsin and
nursing home case-mix demonstration projects in other
States"; and
(B) by striking the second sentence.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-51

(3) STATE WAIVER AUTHORITY.—Section 1814(b) (42 U.S.C.

1395f(b)) is amended—
(A) in paragraph (3)(B), bv striking "October 1, 1983" and
inserting "January 1,1981';
(B) in the second sentence, by striking "seventh month"
and inserting "37th month"; and
(C) by adding at the end the following: "If, by the end of
such 36-month period, the Secretary determines, based on
evidence submitted by the Governor of the State, that
neither of the conditions described in subparagraph (A) or
(B) of paragraph (3) continues to apply, the Secretary shall
continue without interruption payment to hospitals in the
State under the State's system. If, by the end of such 36month period, the Secretary determines, based on such
evidence, that either of the conditions described in subparagraph (A) or (B) of such paragraph continues to apply, the
Secretary shall (i) collect any net excess reimbursement to
hospitals in the State during such 36-month period (basing
such net excess reimbursement on the net difference, if any,
in the rate of increase in costs per hospital inpatient admission under the State system compared to the rate of increase in such costs with respect to all hospitals in the
United States over the 36-month period, as measured by
including the cumulative savings under the State system
based on the difference in the rate of increase in costs per
hospital inpatient admission under the State system as
compared to the rate of increase in such costs with respect
to all hospitals in the United States between January 1,
1981, and the date of the Secretary's initial notice), and (ii)
provide a reasonable period, not to exceed 2 years, for
transition from the State system to the national pajonent
system.".
(4) EFFECTIVE DATE.—The amendment made by paragraphs (1)
and (2) shall be effective as if included in the enactment of the
Omnibus Budget Reconciliation Act of 1989.
(j) DETERMINATION OF REASONABLE COSTS RELATING TO SWING
BEDS.—

(1) I N GENERAL.—Section 1883(aX2)(B)(iiXII) (42 U.S.C.
1395tt(a)(2)(B)(ii)(II)) is amended by striking "the previous calendar year" and all that follows through the period and inserting "the most recent year for which cost reporting data are
available with respect to such services (increased in a
compounded manner by the applicable increase for payments
for routine service costs of skilled nursing facilities under section 1888 for subsequent cost reporting periods and up to and
including such calendar year) under this title to freestanding
skilled nursing facilities in the region (as defined in section
1886(d)(2)(D)) in which the facility is located.".
(2) HOLD HARMLESS.—If, as a result of the amendment made 42 USC 1395tt
by paragraph (1), the reasonable cost of routine services fur- note,
nished by a hospital during a calendar year (as determined
under section 1883 of the Social Security Act) is less than the
reasonable cost of such services determined under such section
for the previous calendar year, the reasonable cost of such
services furnished by the hospital during the calendar year
under such section shall be equal to the reasonable cost determined under such section for the previous calendar year.

104 STAT. 1388-52
42 use I395tt
note.

42 use 1395tt
"°^42 u s e 1395yy
"°*«-

PUBLIC LAW 101-508—NOV. 5, 1990

(3) SWING BEDS CERTIFIED PRIOR TO MAY 1, 1987.—Notwithstanding the requirement of section 1883(bXl) of the Social
Security Act that the Secretary may not enter into an sigreement under such section with a hospital that is not located in a
rural area, any agreement entered into under such section on or
before May 1, 1987, between the Secretary of Health and
Human Services and a hospital located in an urban area shall
remain in effect.
(4) EFFECTIVE DATE.—The amendment made by paragraph (1)
shall apply to services furnished on or after October 1, 1990.
(k) PROSPECTIVE PAYMENT SYSTEM FOR SKILLED NuRSING FACILITY
SERVICES.—
(1) DEVELOPMENT OF PROPOSAL.—The Secretary of Health and

Human Services shall develop a proposal to modify the current
system under which skilled nursing facilities receive payment
for extended care services under part A of the medicare program or a proposal to replace such system with a system under
which such payments would be made on the basis of prospectively determined rates. In developing any proposal under this
paragraph to replace the current system with a prospective
payment system, the Secretary shall—
(A) take into consideration the need to provide for appropriate limits on increases in expenditures under the medicare program without jeopardizing access to extended care
services for individuals unable to care for themselves;
(B) provide for adjustments to prospectively determined
rates to account for changes in a facility's case mix, volume
of cases, and the development of new technologies and
standards of medical practice;
(C) take into consideration the need to increase the payment otherwise made under such system in the case of
services provided to patients whose length of stay or costs of
treatment greatly exceed the length of stay or cost of
treatment provided for under the applicable prospectively
determined payment rate;
(D) take into consideration the need to adjust payments
under the system to take into account factors such as a
disproportionate share of low-income patients, differences
in wages and wage-related costs among facilities located in
various geographic areas, and other factors the Secretary
considers appropriate; and
(E) take into consideration the appropriateness of
classifying patients and payments upon functional disability, cognitive impairment, and other patient characteristics.
(2) REPORTS.—(A) By not later than April 1, 1991, the Secretary (acting through the Administrator of the Health Care
Financing Administration) shall submit any research studies to
be used in developing the proposal under paragraph (1) to the
Committee on Finance of the Senate and the Committee on
Ways and Means of the House of Representatives.
(B) By not later than September 1, 1991, the Secretary shall
suljmit the proposal developed under paragraph (1) to the
Committee on Finance of the Senate and the Committee on
Ways and Means of the House of Representatives.
(C) By not later than March 1, 1992, the Prospective Payment
Assessment Commission shall submit an analysis of and comments on the proposal developed under paragraph (1) to the

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-53

Committee on Finance of the Senate and the Committee on
Ways and Means of the House of Representatives.
(1) REVIEW OF HOSPITAL REGULATIONS WITH RESPECT TO RURAL 42 USC I395ww
HOSPITALS.—

"°*®-

(1) I N GENERAL.—The Secretary of Health and Human Services shall review the requirements applicable under title XVIII
of the Social Security Act to determine which requirements
could be made less administratively and economically burdensome (without diminishing the quality of care) for hospitals
defined in section 1886(d)(1)(B) of such Act that are located in a
rural area (as defined in section 1886(d)(2)(D) of such Act). Such
review shall specifically include standards related to staffing
requirements.
(2) REPORT.—The Secretary of Health and Human Services
shall report to Congress by April 1, 1992, on the results of the
review conducted under subsection (a), and include conclusions
on which regulations, if any, should be modified with respect to
hospitals described in subsection (a).
(m) MISCELLANEOUS TECHNICAL CORRECTIONS.—
(1) APPLICATION OF PREENTITLEMENT PSYCHIATRIC HOSPITAL
SERVICES TO LIMIT ON INPATIENT HOSPITAL SERVICES.—Effective as

42 use I395e
note.

if included in the enactment of the Medicare Catastrophic
Coverage Repeal Act of 1989, section 101(b)(1)(B) is amended by
inserting "(other than the limitation under section 1812(c) of
such Act)" after "limitation".
(2) PROVISIONS RELATING TO HOSPITALS.—

(A)
Section
1886(d)(5)(D)(iii)
(42
U.S.C.
1395ww(d)(5)(D)(iii)), as amended by section 6003(e)(l)(A)(iv)
of Omnibus Budget Reconciliation Act of 1989 (in this
subsection referred to as "OBRA-1989"), is amended by
striking "The term" and inserting "For purposes of this
title, the term".
(B) Section 1820 of such Act (42 U.S.C. 1395i-4), as added
by section 6003(g)(1)(A) of the Omnibus Budget Reconciliation Act of 1989, is amended—
(i) in subsection (d)(1), by striking "demonstration";
(ii) in subsection (g)(l)(A)(ii), by striking "rural referral center" and inserting "regional referral center";
and
(iii) in subsection (j), by inserting "and part C" after
"this part".
(C) Section 6003(g)(3)(C)(vii)(I) of the Omnibus Budget Reconciliation Act of 1989 is amended by striking "each place it 42 USC 1395Z.
appears".
(D) Section 1835(c) of the Social Security Act (42 U.S.C.
1395n(c)) is amended—
(i) in the first sentence, by striking "a hospital" and
inserting "a hospital or a rural primary care hospital";
^
(ii) in the second sentence, by striking "1833(a)(2)"
and inserting "1833(a)(2) (or, in the case of a rural
primary care hospital, in accordance with section
1833(a)(6))"; and
(iii) by striking the third sentence.
(3) TECHNICAL CORRECTIONS RELATING TO OTHER PROVIDERS OF
SKRVICES

(A) Section 1814(i)(l)(C)(i) (42 U.S.C. 1395f(i)(l)(C)(i)), as
amended by section 6005(a)(2) of the Omnibus Budget Rec-

104 STAT. 1388-54

42 use I395f
"°*®"

PUBLIC LAW 101-508—NOV. 5, 1990
onciliation Act of 1989, is amended by striking "during
fiscal year 1990" and inserting "on or after January 1, 1990,
and on or before September 30,1990,".
(B) Section 6005(c) of the Omnibus Budget Reconciliation
Act of 1989 is amended by striking "subsection (a)" and
inserting "subsections (a) and O^)".
(C) Section 1818A(d)(l) (42 U.S.C. 1395i-2a(d)(l)), as inserted by section 6012(a)(2) of the Omnibus Budget Reconciliation Act of 1989, is amended—
(i) in subparagraph (A), by inserting "for enrollment
under this section" after "Premiums", and
(ii) by striking subparagraph (C).
(D) Section 1818(g)(2)(B) (42 U.S.C. 1395i-2(g)(2)(B)), as
added by section 6013(a) of the Omnibus Budget Reconciliation Act of 1989, is amended by striking "subsection (c)"
and inserting "subsection (c)(6)".
(F) Section 1819(f)(2)(A)(ii) (42 U.S.C. 1395i-3(f)(2)(A)(ii)) is
amended by striking "and" at the end.
(G) Section 1866(a)(1)(F) (42 U.S.C. 1395cc(a)(l)(F) is
amended—
(i) in clause (i), by striking the comma at the end and
inserting "),", and
(ii) in clause (ii), by striking "(4)(A)" and inserting
"(3)(A)" and by striking the semicolon at the end and
inserting a comma.

PART 2—PROVISIONS RELATING TO PART B
Subpart A—Payment for Physicians* Services
SEC. 4101. CERTAIN OVERVALUED PROCEDURES.
(a) PREVIOUSLY IDENTIFIED PROCEDURES.—Section 1842(b)(14) (42

U.S.C. 1395u(b)(14)) is amended—
(1) by inserting "(i)" after "(14)(A)"; and
(2) by adding at the end of subparagraph (A) the following
new clause:
"(ii) In determining the reasonable charge for a physicians' service specified in subparagraph (C)(i) and furnished during 1991, the
prevailing charge for such service shall be the prevailing charge
otherwise recognized for such service for the period during 1990
beginning on April 1, reduced by the same amount as the amount of
the reduction effected under this paragraph (as amended by the
Omnibus Budget Reconciliation Act of 1990) for such service during
such period.".
(b) UNSURVEYED SURGICAL AND TECHNICAL PROCEDURES.—(1) Section 1842(b) (42 U.S.C. 1395u(b)) is amended by adding at the end the
following new paragraph:
"(16)(A) In determining the reasonable charge for all physicians'
services other than physicians' services specified in subparagraph
(B) furnished during 1991, the prevailing charge for a locality shall
be 6.5 percent below the prevailing charges used in the locality
under this part in 1990 after March 31.
"(B) For purposes of subparagraph (A), the physicians' services
specified in this subparagraph are as follows:
"(i) Radiology, anesthesia and physician pathology services,
the technical components of diagnostic tests specified in para-

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-55

graph (17) and physicians' services specified in paragraph
(14)(C)(i).
"(ii) Primary care services specified in subsection (i)(4), hospital inpatient medical services, consultations, other visits,
preventive medicine visits, psychiatric services, emergency care
facility services, and critical care services.
"(iii) Partial, simple and subcutaneous mastectomy; tendon
sheath injections; small joint arthrocentesis; femoral fracture
treatments; trochanteric fracture treatments; endotracheal
intubation; thoracentesis; thoracostomy; lobectomy; aneurysm
repair;
enterectomy;
colectomy;
cholecystectomy;
cystourethroscopy; transurethral fulguration; transurerethral
resection; sacral laminectomy; tympanoplasty with mastoidectomy; and ophthalmoscopy.".
(2) In applying section 1842(b)(16) of the Social Security Act: J? USC I395u
(A) The codes for the procedures specified in clause (ii) are as note.
follows: Hospital inpatient medical services (HCPCS codes 90200
through 90292), consultations (HCPCS codes 90600 through
90654), other visits (HCPCS code 90699), preventive medicine
visits (HCPCS codes 90750 through 90764), psychiatric services
(HCPCS codes 90801 through 90862), emergency care facility
services (HCPCS codes 99062 through 99065), and critical care
services (HCPCS codes 99160 through 99174).
(B) The codes for the procedures specified in clause (iii) are as
follows: Partial, simple and subcutaneous mastectomy (HCPCS
codes 19160 and 19162); tendon sheath injections and small joint
arthrocentesis (HCPCS codes 20550, 20600, 20605, and 20610);
femoral fracture and trochanteric fracture treatments (HCPCS
codes 27230, 27232, 27234, 27238, 27240, 27242, 27246, and
27248); endotracheal intubation (HCPCS code 31500); thoracentesis (HCPCS code 32000); thoracostomy (HCPCS codes
32020, 32035, and 32036); aneurysm repair (HCPCS codes 35111);
cystourethroscopy (HCPCS code 52340); transurethral fulguration and resection (HCPCS codes 52606 and 52620);
tympanoplasty with mastoidectomy (HCPCS code 69645); and
ophthalmoscopy (HCPCS codes 92250, and 92260).".5
SEC. 4102. RADIOLOGY SERVICES.

(a) REDUCTION IN FEE SCHEDULE.—Section 1834(b)(4) (42 U.S.C.
1395m(b)(4)) is amended—
(1) by redesignating subparagraphs (D) and (E) as subparagraphs (E) and (F), respectively, and
(2) by inserting after subparagraph (C) the following new
subparagraph:
"(D) 1991 FEE SCHEDULES.—For radiologist services (other
than portable X-ray services) furnished under this part
during 1991, the conversion factors used in a locality under
this subsection shall be determined as follows:
"(i)

NATIONAL

WEIGHTED

AVERAGE

CONVERSION

FACTOR.—The Secretary shall estimate the national
weighted average of the conversion factors used under
this subsection for services furnished during 1990
beginning on April 1, using the best available data.
"(ii) REDUCED NATIONAL WEIGHTED AVERAGE.—The

national weighted average estimated under clause (i)
shall be reduced by 13 percent.
" So in original. The " "." should probably be deleted.

104 STAT. 1388-56

PUBLIC LAW 101-508—NOV. 5, 1990
"(iii) COMPUTATION OF 1990 LOCALITY INDEX RELATIVE
TO NATIONAL AVERAGE.—The Secretary shall establish
an index which reflects, for each locality, the ratio of
the conversion factor used in the locality under this
subsection to the national weighted average estimated
under clause (i).
"(iv) LOCAL ADJUSTMENT.—Subject to clause (vii), the

conversion factor to be applied to the professional or
technical component of a service in a locality is the
sum of ¥2 of the locally-adjusted amount determined
under clause (v) and VT. of the GPCI-adjusted amount
determined under clauses (vi).
"(v) LOCALLY-ADJUSTED AMOUNT.—For purposes of

clause (iv), the locally adjusted amount determined
under this clause is the product of (I) the national
weighted average conversion factor computed under
clause (ii), and (II) the index value established under
clause (iii) for the locality.
"(vi) GPCI-ADJUSTED AMOUNT.—For purposes of
clause (iv), the GPCI-adjusted amount determined
under this clause is the sum of—
"(I) the product of (a) the portion of the reduced
national weighted average conversion factor computed under clause (ii) which is attributable to
physician work and (b) the geographic work index
value for the locality (specified in Addendum C to
the Model Fee Schedule for Physician Services
(published on September 4, 1990, 55 Federal Register pp. 36238-36243)); and
"(II) the product of (a) the remaining portion of
the reduced national weighted average conversion
factor computed under clause (ii), and (b) the geographic practice cost index value specified in section 1842(b)(14)(C)(iv) for the locality.
In applying this clause with respect to the professional
component of a service, 80 percent of the conversion
factor shall be considered to be attributable to physician work and with respect to the technical component
of the service, 0 percent shall be considered to be
attributable to physician work.
"(vii) LIMITS ON CONVERSION FACTOR.—The conversion
factor to be applied to a locality under this subparagraph to the professional or technical component of a
service shall not be more than 9.5 percent below the
conversion factor applied in the locality under subparagraph (C) to such component, but in no case shall the
conversion factor be less than 60 percent of the national weighted average of the conversion factors (computed under clause (i)).".
(b) SPECIAL RULE FOR TRANSITION FOR RADIOLOGY SERVICES.—

Section 1848(a)(2)(C) (42 U.S.C. 1395w-4(a)(2)(C)) is amended—
(1) by inserting "AND RADIOLOGY" after "SPECIAL RULE FOR
ANESTHESIA", and

(2) by adding at the end the following: "With respect to
radiology services, '109 percent' and '9 percent' shall be substituted for '115 percent' and '15 percent', respectively, in
subparagraph (A)(ii).

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-57

(c) REDUCTION I N P R E V A I L I N G C H A R G E L E V E L FOR O T H E R RADIOLOGY SERVICES.—

42 u s e 1395m
note.

(1) I N GENERAL.—In applying p a r t B of title XVIII of t h e
Social Security Act, t h e prevailing charge for physicians' services, furnished d u r i n g 1991, which a r e radiology services m a y
not exceed t h e fee schedule a m o u n t established u n d e r section
1834(b) of such Act w i t h respect to such services.
(2) E X C E P T I O N . — P a r a g r a p h (1) s h a l l n o t apply to radiology
services which a r e subject to section 610503) of t h e O m n i b u s
Budget Reconciliation Act of 1989.
(d) REDUCTION I N P A Y M E N T S FOR T E C H N I C A L COMPONENTS OF CER-

TAIN S C A N N I N G SERVICES.—Section 1834(b)(4) (42 U.S.C. 1395m(b)(4))

is a m e n d e d by i n s e r t i n g after s u b p a r a g r a p h (D) t h e following n e w
paragraph:
"(E) I n t h e case of t h e technical components of m a g n e t i c
resonance imaging (MRI) services a n d computer assisted
t o m o g r a p h y (CAT) services furnished after December 31,
1990, t h e a m o u n t otherwise payable shall be reduced by 10
percent.".
(e) LIMITATION O N A D J U S T M E N T S . — F o r radiologist services furnished d u r i n g 1991 for which p a y m e n t is m a d e u n d e r section 1834(b)
of t h e Social Security Act—
(1) a c a r r i e r m a y n o t m a k e a n y adjustment, u n d e r section
1842(b)(3)(B) of s u c h Act, in t h e p a y m e n t a m o u n t for t h e service
u n d e r section 1834(b) on t h e basis t h a t t h e p a y m e n t a m o u n t is
h i g h e r t h a n t h e charge applicable, for a c o m p a r a b l e service a n d
u n d e r comparable circumstances, to t h e policyholders a n d
subscribers of t h e carrier,
(2) no p a y m e n t a d j u s t m e n t m a y b e m a d e u n d e r section
1842(b)(8) of such Act, a n d
(3) section 1842(b)(9) of such Act shall n o t apply.
(f) U S E OF LOCALITIES.—Section
183403)(1)(B) (42 U.S.C.
1395m03)(l)(B)) is a m e n d e d b y i n s e r t i n g "locality," after "statewide,".
(g) T R E A T M E N T OF N U C L E A R M E D I C I N E P H Y S I C I A N S . —
(1) C O N T I N U A T I O N OF SPECIAL RULE.—Section 6105(b) of

42 u s e 1395m
note.

the

O m n i b u s Budget Reconciliation Act of 1989 is a m e n d e d by 42 u s e 1395m
striking all t h a t follows "Social Security A c t " t h e second place note.
it a p p e a r s a n d inserting t h e following: "beginning April 1, 1990,
a n d e n d i n g December 31,1991, t h e r e shall b e substituted for t h e
fee schedule otherwise applicable a fee schedule based Va on t h e
fee schedule computed u n d e r such section (without r e g a r d t o
t h i s subsection) a n d % on 101 percent of t h e 1988 prevailing
charge for such services.".
(2)

ADJUSTED

HISTORICAL

PAYMENT

BASIS.—Section

1848(a)(2)(D) (42 U.S.C. 1395w-4(a)(2)(D)) is amended—
(A) in clause (ii) by inserting ", b u t excluding n u c l e a r
medicine services t h a t a r e subject to section 6105(b) of t h e
O m n i b u s Budget Reconciliation Act of 1989" after "section
183403)(6))", a n d
(B) b y adding a t t h e e n d t h e following:
"(iii)

NUCLEAR

MEDICINE

SERVICES.—In

applying

clause (i) i n t h e case of physicians' services which a r e
n u c l e a r medicine services t h a t a r e subject to section
6105(b) of t h e O m n i b u s Budget Reconciliation Act of
1989, t h e r e shall be substituted for t h e weighted aver-

104 STAT. 1388-58

PUBLIC LAW 101-508—NOV. 5, 1990
age prevailing charge the amount provided under such
section.",

(h) EXTENSION OF S P U T BILLING RULE FOR INTERVENTIONAL RADI-

42 use 1395m
note.
42 u s e 1395m
note.

OLOGISTS.—Section 6105(c) of the Omnibus Budget Reconciliation Act
of 1989 is amended by inserting "or 1991" after "1990" each place it
appears.
(i) EFFECTIVE D A T E S . —

(1) Except as otherwise provided, the amendments made by
this section shall apply to services furnished on or after January 1,1991.
(2) The amendment made by subsection (f) shall be effective as
if included in the enactment of the Omnibus Budget Reconciliation Act of 1987.
SEC. 4103. ANESTHESIA SERVICES.

(a) REDUCTION IN FEE SCHEDULE.—Section 1842(q)(l) (42 U.S.C.
1395u(q)(l)) is amended—
(1) by inserting "(A)" after "(q)(l)", and
(2) by adding at the end the following new subparagraph:
"(B) For physician anesthesia services furnished under this part
during 1991, the prevailing charge conversion factor used in a
locality under this subsection shall be determined as follows:
"(i) The Secretary shall estimate the national weighted average of the prevailing charge conversion factors used under this
subsection for services furnished during 1990 after March 31,
using the best available data.
"(ii) The national weighted average estimated under clause (i)
shall be reduced by 7 percent.
"(iii) Subject to clause (iv), the prevailing charge conversion
factor to be applied in a locality is the sum of—
"(I) the product of (a) the portion of the reduced national
weighted average prevailing charge conversion factor computed under clause (ii) which is attributable to physician
work and (b) the geographic work index value for the
locality (specified in Addendum C to the Model Fee Schedule for Physician Services (published on September 4, 1990,
55 Federal Register pp. 36238-36243)); and
"(II) the product of (a) the remaining portion of the
reduced national weighted average prevailing charge
conversion factor computed under clause (ii) and (b) the
geographic practice cost index value specified in section
1842(b)(14)(C)(iv) for the locality.
In applying this clause, 70 percent of the prevailing charge
conversion factor shall be considered to be attributable to physician work.
"(iv) The prevailing charge conversion factor to be applied to
a locality under this subparagraph shall not be reduced by more
than 15 percent below the prevailing charge conversion factor
applied in the locality for the period during 1990 after
March 31, but in no case shall the prevailing charge conversion
factor be less than 60 percent of the national weighted average
of the prevailing charge conversion factors (computed under
clause (i)).".
(b) EXTENSION OF REDUCTION FOR SUPERVISION OF CONCURRENT

SERVICES.—Section 1842(b)(13) (42 U.S.C. 1395u(b)(13)) is amended by
striking "1991" each place it appears and inserting "1996".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-59

SEC. 4104. PHYSICIAN PATHOLOGY SERVICES.
(a) REDUCTION IN PAYMENTS FOR PHYSICIAN PATHOLOGY SERV-

ICES.—Subsection (f) of section 1834 (42 U.S.C. 1395m) is amended to
read as follows:
"(f) REDUCTION IN PAYMENTS FOR PHYSICIAN PATHOLOGY SERVICES
DURING FISCAL YEAR 1991.—

"(1) I N GENERAL.—For physician pathology services furnished
under this part during 1991, the prevailing charges used in a
locality under this part shall be 7 percent below the prevailing
charges used in the locality under this part in 1990 after
March 31.
"(2) LIMITATION.—The prevailing charge for the technical and
professional components of an physician pathology service furnished by a physician through an independent laboratory shall
not be reduced pursuant to paragraph (1) to the extent that such
reduction would reduce such prevailing charge below 115 percent of the prevailing charge for the professional component of
such service when furnished by a hospital-based physician in
the same locality. For purposes of the preceding sentence, an
independent laboratory is a laboratory that is independent of a
hospital and separate from the attending or consulting physicians' office.".
(b) CONFORMING AMENDMENTS.—

(1) Section 1833(a)(l)(J) of such Act (42 U.S.C. 13951(a)(1)) is
amended by striking "or physician pathology services" and by
striking "or section 1834(f), respectively".
(2) Section 1848(a)(1) of such Act (42 U.S.C. 1395w-4(a)(l)) is
amended by striking "or 1834(f)".
(3) Section 4050 of the Omnibus Budget Reconciliation Act of
1987 is repealed.
(c) ANCILLARY POLICY.—The Secretary of Health and Human Services, in establishing ancillary policies under section 1848(c)(3) of the
Social Security Act, shall consider an appropriate adjustment to
reflect the technical component of furnishing physician pathology
services through a laboratory that is independent of a hospital and
separate from an attending or consulting physician's office.
(d) EFFECTIVE DATE.—The amendments made by this section shall
apply to services furnished on or after January 1,1991.
SEC. 4105. UPDATE FOR PHYSICIANS'SERVICES.

(a) PERCENTAGE INCREASE IN M E I FOR 1991.—
(1) I N GENERAL.—Section
1842(b)(4)(E)
(42
U.S.C.
1395u(b)(4)(E)) is amended by adding at the end the following
new clause:
"(v) For purposes of this part for items and services furnished in
1991, the percentage increase in the MEI is—
"(I) 0 percent for services (other than primary care services),
and
"(II) 2 percent for primary care services (as defined in subsection (i)(4)).".
(2) CUSTOMARY CHARGES FOR 1991.—Section 184203)(4)(B) (42
U.S.C. 1395u(b)(4)(B)) is amended by adding at the end the
following new clause:
"(iv) In determining the reasonable charge under paragraph (3)
for physicians' services (other than primary care services, as defined
in subsection (i)(4)) furnished during 1991, the customary charges
shall be the same customary charges as were recognized under this

42 u s e 1395/
note.
42 u s e 1395W-4
note.

42 u s e 1395Z
note.

104 STAT. 1388-60

PUBLIC LAW 101-508—NOV. 5, 1990

section for the 9-month period beginning April 1, 1990. In a case in
which subparagraph (F) applies (relating to new physicians) so as to
limit the customary charges of a physician during 1990 to a percent
of prevailing charges, the previous sentence shall not prevent such
limit on customary charges under such subparagraph from increasing in 1991 to a higher percent of such prevailing charges.".
(3) CHANGE IN PAYMENT FOR YEARS AFTER 1991.—Section 1848

of such Act (42 U.S.C. 1395w-4) is amended in subsection
(d)(3)(A)(A) in clause (i), by inserting "except as provided in clause
(iii)," after "subparagraph (B),", and
(B) by adding at the end the following new clause:
"(iii)

ADJUSTMENT

IN PERCENTAGE

INCREASE.—In

applying clause (i) for services furnished in 1992 for
which the appropriate update index is the index described in clause (ii)(I), the percentage increase in the
appropriate update index shall be reduced by 0.4
percentage points.".
(b) INCREASE IN PREVAILING CHARGE FLOOR FOR PRIMARY CARE
SERVICES

(1) I N GENERAL.—Section 1842(b)(4)(A)(vi) of such Act (42
U.S.C. 1395u(b)(4)(A)(vi)) is amended by striking "50 percent"
and inserting "60 percent".
42 u s e 1395W-4

note.

42 use I395u
note.

42 u s e 1395W-4
note.

(2) BUDGET NEUTRAL IMPLEMENTATION.—In c o m p u t i n g t h e

conversion factor under section 1848(d)(1)(B) of the Social Security Act for 1992, the Secretary of Health and Human Services
shall determine the estimated aggregate amount of payments
under part B of title XVIII of such Act for physicians' services
in 1991 assuming that the amendments made by this subsection
did not apply.
(3) EFFECTIVE DATE.—The amendments made by paragraphs
(1) and (2) shall apply to services furnished on or after
January 1,1991.
(c) VOLUME PERFORMANCE STANDARD FOR FISCAL YEAR 1991.—
Section 1848(f) (42 U.S.C. 1395w-4(f)) is amended—
(1) in paragraph (1)(C), by striking "1990" the first place it
appears and inserting "1991 , and
(2) by adding at the end of paragraph (2) the following:
"(C) Notwithstanding subparagraph (A), the performance
standard rate of increase for a category of physicians'
services for fiscal year 1991 shall be the sum of—
"(i) the Secretary's estimate of the percentage by
which actual expenditures for the category of physicians' services under this part for fiscal year 1991
exceed actual expenditures for such category of services
in fiscal year 1990 (determined without regard to the
amendments made by the Omnibus Budget Reconciliation Act of 1990), and
"(ii) the Secretary's estimate of the percentage increase or decrease in expenditures for the category of
services in fiscal year 1991 (compared with fiscal year
1990) that will result from changes in law and regulations (including the Omnibus Budget Reconciliation
Act of 1990), reduced by 2 percentage points.".
(d) Not later than 45 days after the date of the enactment of this
Act, the Secretary of Health and Human Services, based on the most
recent data available, shall estimate and publish in the Federal

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-61

Register the performance standard rates of increase specified in
section 1848(f)(2)(C) of the Social Security Act for fiscal year 1991.
SEC. 4106. NEW PHYSICIANS AND OTHER NEW HEALTH CARE PRACTITIONERS.
(a) EXTENSION OF CUSTOMARY CHARGE LIMIT AND INCLUSION OF
HEALTH CARE PRACTITIONERS.—

(1) I N GENERAL.—Subparagraph (F) of section 1842(b)(4) (42
U.S.C. 1395u(b)(4)) is amended to read as follows:
"(F)(i) In the case of physicians' services and professional services
of a health care practitioner (other than primary care services and
other than services furnished in a rural area (as defined in section
1886(d)(2)(D)) that is designated, under section 332(a)(1)(A) of the
Public Health Service Act, as a health manpower shortage area)
furnished during the physician's or practitioner's first through
fourth years of practice (if payment for those services is made
separately under this part and on other than a cost-related basis),
the prevailing charge or fee schedule amount to be applied under
this part shall be 80 percent for the first year of practice, 85 percent
for the second year of practice, 90 percent for the third year of
practice, and 95 percent for the fourth year of practice, of the
prevailing charge or fee schedule amount for that service under the
other provisions of this part.
"(ii) For purposes of clause (i):
"(I) The term 'health care practitioner' means a physician
assistant, certified nurse-midwife, qualified psychologist, nurse
practitioner, clinical social worker, physical therapist, occupational therapist, respiratory therapist, certified registered nurse
anesthetist, or any other practitioner as may be specified by the
Secretary.
"(II) The term 'first year of practice' means, with respect to a
physician or practitioner, the first calendar year during the first
6 months of which the physician or practitioner furnishes
professional services for which payment is made under this
part, and includes any period before such year.
"(Ill) The terms 'second year of practice', 'third year of practice', and 'fourth year of practice' mean the second, third, and
fourth calendar years, respectively, following the first year of
practice.".
(2) CONFORMING AMENDMENTS.—Section 6108(a)(2)(A) of the

Omnibus Budget Reconciliation Act of 1989 is amended—
(A) by inserting "or 1991" after "1990", and
(B) by inserting "or 1990" after "1989".
(b) APPLICATION UNDER FEE SCHEDULE.—

(1) I N GENERAL.—Section 1848(a) (42 U.S.C. 1395w-4(a)) is
amended by adding at the end the following new paragraph:
"(4) TREATMENT OF NEW PHYSICIANS.—In the case of physicians' services furnished by a physician before the end of the
physician's first full calendar year of furnishing services for
which payment may be made under this part, and during each
of the 3 succeeding years, the fee schedule amount to be applied
shall be 80 percent, 85 percent, 90 percent, and 95 percent,
respectively, of the fee schedule amount applicable to physicians who are not subject to this paragraph. The preceding
sentence shall not apply to primary care services or services
furnished in a rural area (as defined in section 1886(d)(2)) that is

42 USC 1395u
note.

104 STAT. 1388-62
42USC1395U.

42 u s e 1395W-4

note.

42 u s e 1395u

note.

PUBLIC LAW 101-508—NOV. 5, 1990

designated under section 322(a)(1)(A) of the Public Health Service Act as a health manpower shortage area.".
(2) CONFORMING AMENDMENTS.—Section 1842(b)(4)(F), as
amended by subsection (a), is amended—
(A) in clause (i), by striking "physicians' services and",
(B) in clause (i), by striking "physician's or", and
(C) in clause (ii)(II), by striking "physician or" each place
it appears.
(c) CONFORMING ADJUSTMENT IN CONVERSION FACTOR COMPUTA-

TiON.—In computing the conversion factor under section
1848(d)(1)(B) for 1992, the Secretary of Health and Human Services
shall determine the estimated aggregate amount of payments under
part B for physicians' services in 1991 assuming that the amendments made by this section (notwithstanding subsection (d)) applied
to all services furnished during such year.
(d) EFFECTIVE D A T E S . —

(1) The amendments made by subsection (a) apply to services
furnished after 1990, except that—
(A) the provisions concerning the third and fourth years
of practice apply only to physicians'services furnished after
1990 and 1991, respectively, and
(B) the provisions concerning the second, third, and
fourth years of practice apply only to services of a health
care practitioner furnished after 1991, 1992, and 1993,
respectively.
(2) The amendments made by subsection (b) shall apply to
services furnished after 1991.
SEC. 4107. ASSISTANTS AT SURGERY.
(a) PHYSICIANS AS ASSISTANTS-AT-SURGERY.—

(1) IN GENERAL.—Section 1848(i) (42 U.S.C. 1395w-4(i)) is
amended by adding at the end the following:
"(2) ASSISTANTS-AT-SURGERY.—

42 use 1395W-4
note-

"(A) IN GENERAL.—Subject to subparagraph (B), in the
case of a surgical service furnished by a physician, if payment is made separately under this part for the services of
a physician serving as an assistant-at-surgery, the fee
schedule amount shall not exceed 16 percent of the fee
schedule amount otherwise determined under this section
for the global surgical service involved.
"(B) DENIAL OF PAYMENT IN CERTAIN CASES.—If the Secretary determines, based on the most recent data available,
that for a surgical procedure (or class of surgical procedures) the national average percentage of such procedure
performed under this part which involve the use of a
physician as an assistant at surgery is less than 5 percent,
no payment may be made under this part for services of an
assistant at surgery involved in the procedure.".
(2) AppucATiON IN 1991.—Section 1848(i)(2) of the Social Security Act, as added by the amendment made by paragraph (1),
shall apply to services furnished in 1991 in the same manner as
it applies to services furnished after 1991. In applying the
previous sentence, the prevailing charge shall be substituted for
the fee schedule amount.
(b) CONFORMING AMENDMENT.—Section 1862(a)(15) of such Act (42
U.S.C. 1395y(aX15)) is amended—
(1) by inserting "(A)" after "(15)",

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-63

(2) by striking "; or" at the end and inserting ", or", and
(3) by adding at the end the following new subparagraph:
"(B) which are for services of an assistant at surgery to which
section 1848(i)(2)(B) applies; or".
(c) EFFECTIVE DATE.—The amendment made by subsection shall 42 u s e 1395y
apply with respect to services furnished on or after January 1, 1992. note.
SEC. 4108. TECHNICAL COMPONENTS OF CERTAIN DIAGNOSTIC TESTS.

(a) I N GENERAL.—Section 1842(b) of the Social Security Act (42
U.S.C. 1395u(b)), as amended by section 4101, is further amended by
adding at the end the following new paragraph:
"(18) With respect to payment under this part for the technical (as
distinct from professional) component of diagnostic tests (other than
clinical diagnostic laboratory tests and radiology services, including
portable x-ray services) which the Secretary shall designate (based
on their high volume of expenditures under this part), the reasonable charge for such technical component (including the applicable
portion of a global service) may not exceed the national median of
such charges for all localities, as estimated by the Secretary using
the best available data.".
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 42 u s e 1395u
shall apply to tests and services furnished on or after January 1, note.
1991.
SEC. 4109. INTERPRETATION OF ELECTROCARDIOGRAMS.

(a) I N GENERAL.—Section 1848(b) of the Social Security Act (42
U.S.C. 1395w-4(b)) is amended by adding at the end the following
new paragraph:
"(3)

TREATMENT

OF

INTERPRETATION

OF ELECTROCARDIO-

GRAMS.—If payment is made under this part for a visit to a
physician or consultation with a physician and, as part of or in
conjunction with the visit or consultation there is an electrocardiogram performed or ordered to be performed, no payment
may be made under this part with respect to the interpretation
of the electrocardiogram and no physician may bill an individual enrolled under this part separately for such an interpretation. If a physician knowingly and willfully bills one or more
individuals in violation of the previous sentence, the Secretary
may apply sanctions against the physician or entity in accordance with section 1842(j)(2).".
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 42 u s e 1395W-4
shall apply to services furnished on or after January 1, 1992. In note.
applying section 1848(d)(1)(B) of the Social Security Act (in computing the initial budget-neutral conversion factor for 1991), the Secretary shall compute such factor assuming that section 1848(b)(3) of
such Act (as added by the amendment made by subsection (a)) had
applied to physicians' services furnished during 1991.
SEC. 4110. RECIPROCAL BILLING ARRANGEMENTS.

(a) IN GENERAL.—The first sentence of section 1842(b)(6) of the
Social Security Act (42 U.S.C. 1395u(b)(6)) is amended—
(1) by striking "and" before "(C)", and
(2) by inserting before the period at the end the following:
", and (D) payment may be made to a physician who arranges
for visit services (including emergency visits and related services) to be provided to an individual by a second physician on an
occasional, reciprocal basis if (i) the first physician is unavail-

104 STAT. 1388-64

42 u s e 1395u
note.

42 u s e 1395u
note.

PUBLIC LAW 101-508—NOV. 5, 1990

able to provide the visit services, (ii) the individual has arranged
or seeks to receive the visit services from the first physician, (iii)
the claim form submitted to the carrier includes the second
physician's unique identifier (provided under the system established under subsection (r)) and indicates that the claim is for
such a 'covered visit service (and related services)', and (iv) the
visit services are not provided by the second physician over a
continuous period of longer than 60 days",
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to services furnished on or after the first day of the first
month beginning more than 60 days after the date of the enactment
of this Act.
SEC. 4111. STUDY OF PREPAYMENT MEDICAL REVIEW SCREENS.

(a) IN GENERAL.—The Secretary of Health and Human Services
shall conduct a study of the effect of the release of medicare
prepayment medical review screen parameters on physician billings
for the services to which the parameters apply.
(b) LIMITATIONS.—The study shall be based upon the release of the
screen parameters at a minimum of six carriers.
(c) REPORT.—The Secretary shall report the results of the study to
the Committees on Ways and Means and Energy and Commerce of
the House of Representatives and the Committee on Finance of the
Senate not later than October 1,1992.
SEC. 4112. PRACTICING PHYSICIANS ADVISORY COUNCIL.

Title XVIII of the Social Security Act is amended by inserting
after section 1867 the following new section:
"PRACTICING PHYSICIANS ADVISORY COUNCIL

42 use 1395ee.

42 u s e 1395ff
note.

"SEC. 1868. (a) The Secretary shall appoint, based upon nominations submitted by medical organizations representing physicians, a
^ Practicing Physicians Advisory Council (in this section referred to as
the 'Council') to be composed of 15 physicians, each of whom has
submitted at least 250 claims for physicians' services under this title
in the previous year. At least 11 of the members of the Council shall
be physicians described in section 1861(r)(l) and the members of the
Council shall include both participating and nonparticipating physicians and physicians practicing in rural areas and underserved
urban areas.
"(b) The Council shall meet once during each calendar quarter to
discuss certain proposed changes in regulations and carrier manual
instructions related to physician services identified by the Secretary. To the extent feasible and consistent with statutory deadlines, such consultation shall occur before the publication of such
proposed changes.
"(c) Members of the Council shall be entitled to receive reimbursement of expenses and per diem in lieu of subsistence in the same
manner as other members of advisory councils appointed by the
Secretary are provided such reimbursement and per diem under this
title.".
SEC. 4113. STUDY OF AGGREGATION RULE FOR CLAIMS FOR SIMILAR
PHYSICIANS' SERVICES.

The Secretary of Health and Human Services shall carry out a
study of the effects of permitting the aggregation of claims that
involve common issues of law and fact furnished in the same carrier

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-65

area to two or more individuals by two or more physicians within
the same 12-month period for purposes of appeals provided for under
section 1869(b)(2). Such study shall be conducted in at least four
carrier areas. The Secretary shall report on the results of such study
and any recommendations to the Committee on Finance of the
Senate and the Committees on Energy and Commerce and Ways and
Means of the House of Representatives by December 31, 1992.

•

SEC. 4114. UTILIZATION SCREENS FOR PHYSICIAN VISITS IN REHABILITA- 42 USC 1395u
TION HOSPITALS.
note.

Not later than 180 days after the date of the enactment of this
Act, the Secretary of Health and Human Services shall issue guidelines to assure a uniform level of review of physician visits to
patients of a rehabilitation hospital or unit patients after the medical review screen parameter established under section 4085(h) of the
Omnibus Budget Reconciliation Act of 1987 has been exceeded.
SEC. 4115. STUDY OF REGIONAL VARIATIONS IN IMPACT OF MEDICARE 42 USC 1395w-4
PHYSICIAN PAYMENT REFORM.
note.

(a) STUDY.—The Secretary of Health and Human Services shall
conduct a study of—
(1) factors that may explain geographic variations in Medicare reasonable charges for physicians' services that are not
attributable to variations in physician practice costs (including
the supply of physicians in an area and area variations in the
mix of services furnished);
(2) the extent to which the geographic practice cost indices
applied under the fee schedule established under section 1848 of
the Social Security Act accurately reflect variations in practice
costs and malpractice costs (and alternative'*sources of information upon which to base such indices);
(3) the impact of the transition to a national, resource-based
fee schedule for physicians' services under Medicare on access
to physicians' services in areas that experience a disproportionately large reduction in payments for physicians' services under
the fee schedule by reason of such variations; and
(4) appropriate adjustments or modifications in the transition
to, or manner of determining payments under, the fee schedule
established under section 1848 of the Social Security Act, to
compensate for such variations and ensure continued access to
physicians' services for Medicare beneficiaries in such areas.
(b) REPORT.—By not later than July 1, 1992, the Secretary shall
submit to Congress a report on the study conducted under subsection (a).
SEC. 4116. LIMITATION ON BENEFICIARY LIABILITY.

Section 1848(g)(2)(A) (42 U.S.C. 1395w-4(g)(2)(A)) is amended by
adding at the end thereof the following:
"In the case of evaluation and management services (as specified in
section 1842(b)(16)(B)(ii)), the preceding sentence shall be applied by
substituting *40 percent' for '25 percent'.".
SEC. 4117. STATEWIDE FEE SCHEDULE AREAS FOR PHYSICIANS' SERV- 42 USC 1395w-4
ICES.
note.

(a) I N GENERAL.—Notwithstanding section 1848(j)(2) of the Social
Security Act (42 U.S.C. 1395w-4(j)(2)), in the case of the States of
Nebraska and Oklahoma, if the respective State meets the require-

104 STAT. 1388-66

PUBLIC LAW 101-508—NOV. 5, 1990

ments specified in subsection (b) on or before April 1, 1991, the
Secretary of Health and Human Services (Secretary) shall treat the
State as a single fee schedule area for purposes of determining—
(1) the adjusted historical payment basis (as defined in section
1848(a)(2)(D) of such Act (42 U.S.C. 1395w-4(a)(2)(D))), and
(2) the fee schedule amount (as referred to in section 1848(a)
(42 U.S.C. 1395w-4(a)) of such Act),
for physicians' services (as defined in section 1848(j)(3) of such Act
(42 U.S.C. 1395w-40')(3))) furnished on or after January 1, 1992.
(b) REQUIREMENTS.—The requirements specified in this subsection
are that (on or before April 1, 1991) there are written expressions of
support for treatment of the State as a single fee schedule area (on a
budget-neutral basis) from—
(1) each member of the congressional delegation from the
State, and
(2) organizations representing urban and rural physicians in
the State.
(c) BUDGET NEUTRALITY.—Notwithstanding section 1842(b)(3) of
such Act (42 U.S.C. 1395u(b)(3)), the Secretary shall provide for
treatment of a State as a single fee schedule area (as described in
subsection (a)) in a manner that ensures that total payments for
physicians' services (as so defined) furnished by physicians in the
State during 1992 are not greater or less than total payments for
such services would have been but for such treatment.
(d) CONSTRUCTION.—Nothing in this section shall be construed as
limiting the availability (to the Secretary, the appropriate agency or
organization with a contract under section 1842, or physicians in a
State) of otherwise applicable administrative procedures for modifying the fee schedule area or areas in the State after implementation
of subsection (a) with respect to the State.
SEC. 4118. TECHNICAL CORRECTIONS.
(a) OVERVALUED PROCEDURES.—

(1) Section 1842(b)(14) of the Social Security Act (42 U.S.C.
1395u(b)(14)) is amended—
(A) in subparagraph (B)(iii)(I), by striking "practice expense ratio for the service (specified in table # 1 in the
Joint Explanatory Statement referred to in subparagraph
(C)(i))" and inserting "practice expense component (percent), divided by 100, specified in appendix A (pages 187
through 194) of the Report of the Medicare and Medicaid
Health Budget Reconciliation Amendments of 1989, prepared by the Subcommittee on Health and the Environment of the Committee on Energy and Commerce, House of
Representatives, (Committee Print 101-M, 101st Congress,
1st Session) for the service";
(B) in subparagraph (B)(iii)(II), by striking "practice expense ratio" and inserting "practice expense component
(percent), divided by 100";
(C) in subparagraph (C)(i), by striking "physicians' services specified in Table # 2 in the Joint Explanatory Statement of the Committee of Conference submitted with the
Conference Report to accompany H.R. 3299 (the 'Omnibus
Budget Reconciliation Act of 1989'), 101st Congress," and
inserting "procedures specified (by code and description) in
the Overvalued Procedures List for Finance Committee,

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-67

Revised September 20, 1989, prepared by the Physician
Payment Review Commission";
(D) in subparagraph (C)(iii), by striking "The 'percent
change' specified in this clause, for a physicians' service
specified in clause (i), is the percent change specified for the
service in table # 2 in the Joint Explanatory Statement"
and inserting "The 'percentage change' specified in this
clause, for a physicians' service specified in clause (i), is the
percent difference (but expressed as a positive number)
specified for the service in the list"; and
(E) in subparagraph (C)(iv), by striking "such value specified for the locality in table # 3 in the Joint Explanatory
Statement referred to in clause (i)" and inserting "the
Geographic Overhead Costs Index specified for the locality
in table 1 of the September 1989 Supplement to the Geographic Medicare Economic Index: Alternative Approaches
(prepared by the Urban Institute and the Center for Health
Economics Research)".
(2) Section 1842(b)(4)(E)(iv)(I) of such Act (42 U.S.C.
1395u(b)(4)(E)(iv)(I)) is amended by striking "Table # 2 " and all
that Allows through "101st Congress" and inserting "the list
referred to in paragraph (14)(C)(i)' .
(3) The amendments made by paragraphs (1) and (2) apply to 42 USC 1395u
services furnished after March 1990.
"°**03) MVPS AS MULTIPLICATIVE, NOT ADDITIVE.—Section 1848(f)(2)(A)
(42 U.S.C. 1395w-4(f)(2)(A)) is amended—
(1) in the matter preceding clause (i) by striking "sum" and
inserting "product";
(2) in clauses (i) through (iy), by inserting "1 plus" before "theSecretary's" each place it appears, ^
(3) in clause (i), by inserting "(divided by 100)" after "percentage increase", '
(4) in clauses (ii) and (iv), by inserting "(divided by 100)" after
"decrease", ®
(5) in clause (iii), by inserting "(divided by 100)" after
"percentage growttf ,^ and
(6) in the matter following clause (iv), by striking "reduced"
and inserting "minus 1, multiplied by 100, and reduced".
(c) PERIODIC REVIEW OF GEOGRAPHIC ADJUSTMENT FACTORS.—Sec-

tion 1848(e)(1) of such Act is amended—
(1) in subparagraph (A), by striking "subparagraph (B)" and
inserting "subparagraphs (B) and (C)", and
(2) by adding at the end the following new subparagraph:
"(C) PERIODIC REVIEW AND ADJUSTMENTS IN GEOGRAPHIC
ADJUSTMENT FACTORS.—The Secretary, not less often than

every 3 years, shall review the indices established under
subparagraph (A) and the geographic index values applied
under this subsection for all fee schedule areas. Based on
such review, the Secretary may revise such index and
adjust such index values, except that, if more than 1 year
has elasped since the last previous adjustment, the adjustment to be applied in the first year of the next adjustment
shall be Vz of the adjustment that otherwise would be
made.".
(d) ELIMINATION OF RESTRICTION ON INCORPORATION OF TIME IN

VISIT CODES.—Section 1848(c)(4) (42 U.S.C. 1395w-4(c)(4)) is amended
by striking "only for services furnished on or after January 1, 1993".
* So in original. Probably should be ";"•
^ So in original. Probably should be ";"•
* So in original. Probably should be ";"•
* So in original. Probably should be ";".

104 STAT. 1388-68

PUBLIC LAW 101-508—NOV. 5, 1990

(e) TREATMENT OF PRICE INCREASE IN DETERMINING PERFORMANCE
STANDARD RATES OF INCREASE.—Section 1848(f)(2)(A)(iv) (42 U.S.C.

1395w-4(f)(2)(A)(iv)) is amended by inserting "including changes in
law and regulations affecting the percentage increase described in
clause (i)" after "law or regulations".
(f) MISCELLANEOUS FEE SCHEDULE CORRECTIONS.—
(1) CHANGES IN SECTION 1848.—Section 1848

of the Social
Security Act (42 U.S.C. 1395w-4) is amended—
(A) in subsection (c)(1)(B), by striking the last sentence;
(B) in subsections (c)(3)(C)(ii)(II) and (c)(3)(C)(iii)(II), by
striking "by" the first place it appears in each respective
subsection, ^°
(C) in subsection (c), by redesignating the second paragraph (3), and paragraphs (4) and (5), as paragraphs (4)
through (6), respectively;
(D) in subsection (c)(4), as redesignated by subparagraph
(C),is amended by striking "subsection" and inserting "section";
(E) in subsection (d)(1)(A), by striking "subparagraph (C)"
and inserting "paragraph (3)";
(F) in subsection (d)(1)—
(i) in subparagraph (A)—
(I) by inserting "(or factors)" after "conversion
factor" each place it appears,
(II) by inserting "or updates" after "update", and
(III) by striking "subparagraph (C)" and inserting "paragraph (3)"; and
(ii) in subparagraph (C)—
(I) in clause (i), by striking "(or factors)", and
(II) in clause (ii), by inserting "the conversion
factor (or factors) which will apply to physicians'
services for the following year and" before "the
update (or updates)", and by striking "the following" and inserting "such";
(G) in subsection (d)(2)(A), in the matter preceding clause
(i), by striking "services" the first place it appears and
inserting "services (as defined in subsection (f)(5)(A))";
(H) in subsection (d)(2)(A)(ii)—
(i) by striking "(as defined in subsection (f)(5)(A))"
and inserting "and for the services involved", and
(ii) by striking "all such physicians"' and inserting "such"; and
(I) in the last sentence of subsection (d)(2)(A), by striking
"proportion of HMO enroUees" and inserting "proportion of
individuals who are enrolled under this part who are HMO
enrollees";
(J) in subsection (d)(2)(E)(i), by inserting "the" after "as
set forth in";
(K) in subsection (d)(2)(E)(ii)(I), by inserting "payments
for" after "under this part for";
(L) in subsection (d)(3)(B)—
(i) in clause (i)—
(I) by striking "update for" and inserting
"update for a category of physicians' services for";
and
,

'° So in original. Probably should be ";"•

PUBLIC LAW 101-508—NOV. 5,1990

104 STAT. 1388-69

(II) by striking "physicians' services (as defined
in subsection (f)(5)(A))" and inserting "services in
such category";
(ii) in clause (ii)—
(I) by inserting "more than" after "decrease o f ;
and
(II) in subclause (I), by striking "more than";
(M) in paragraphs (l)(D)(i) and (2)(A)(i) of subsection (f), by
striking "calendar years" and inserting "portions of calendar years";
(N) in subsection (f)(2)(A)—
(i) by striking "each performance standard rate of
increase" and inserting "the performance standard
rate of increase, for all physicians' services and for
each category of physicians'services,",
(ii) in clause (i), by striking "physicians' services (as
defined in subsection (f)(5)(A) ^^" and inserting "all
physicians' services or for the category of physicians'
services, respectively,",
(iii) in clause (iii), by striking "physicians' services"
and inserting "all physicians' services or of the category of physicians' services, respectively,", and
(iv) in clause (iv), by striking "physicians' services (as
defined in subsection (f)(5)(A))" and inserting "all physicians' services or of the category of physicians' services,
respectively,";
(O) in subsection (f)(4)(A), by striking "paragraph (B)" and
inserting "subparagraph (B)";
(P) in subsection (f)(4)(B), by striking "Congress specifically approves the plan" and inserting "specifically approved by law";
(Q) in subparagraphs (A) and (B) of subsection (g)(2), by
inserting "other than radiologist services subject to section
1834(b)," after "during 1991," and after "during 1992,",
respectively;
(R) in subsection (i)(l)(A), by striking "historical payment
basis (as defined in subsection (a)(2)(C)(i))" and inserting
"adjusted historical payment basis (as defined in subsection
(a)(2)(D)(i))"; and
(S) in subsection (j)(l). by striking ", and such other" and
all that follows through the period and inserting "(as defined by the Secretary) and all other physicians' services.".
(2) MISCELLANEOUS.—

(A) Effective as if included in the Omnibus Budget Reconciliation Act of 1989, section 6102(e)(4) of such Act is 42 USC 1395u.
amended by inserting "determined" after "prevailing
(B) Effective January 1, 1991, section 1842(b)(3)(G) of the
Social Security Act, as amended by section 6102(e)(2) of 42USC1395u.
Omnibus Budget Reconciliation Act of 1989, is amended by
striking "subsection (j)(l)(C)" and inserting "section
1848(g)(2)".
(C) Section 1842(b)(12)(A)(ii)(II) of the Social Security Act,
as amended by section 6102(e)(4) of the Omnibus Budget
Reconciliation Act of 1989, is amended by striking ", as the
case may be".
" So in original. Probably should be "(A))".

104 STAT. 1388-70
42 u s e 1395/.

42 u s e 1395W-4
note.

PUBLIC LAW 101-508—NOV. 5, 1990
(D) Section 1833(a)(1)(H) of the Social Security Act, as
amended by section 6102(e)(5) of the Omnibus Budget Reconciliation Act of 1989, is amended by striking ", as the case
may be".
(E) Section 6102(e)(ll) of the Omnibus Budget Reconciliation Act of 1989 is amended by inserting "of Health and
Human Services" after "Secretary".
(F) Effective as if included in the enactment of the Omnibus Budget Reconciliation Act of 1989, section 922(d)(1) of
the Public Health Service Act (42 U.S.C. 299c-l(d)(l)) is
amended—
(i) by inserting "(other than of dissemination activities)" after "evaluations", and
(ii) by inserting "research, demonstration projects, or
evaluations o f after "applications with respect to".

(g) REPEAL OF REPORTS N O LONGER REQUIRED.—

42 u s e 1395/
note.
42 u s e 1395u
note.
42 u s e 1395m
note.
42 u s e 1395u
note.
42 u s e 1395W-1
note.
42 u s e 1395u
note.
42 u s e 1395m
note.

42 u s e 1395WW
note.

(1) Subsection (b) of section 4043 of the Omnibus Budget
Reconciliation Act of 1987 is repealed.
(2) Subsection (c) of section 4048 of such Act is repealed.
(3) Section 4049(bXl) of such Act is amended by striking ", and
shall report" and all that follows up to the period at the end.
(4) Section 4056(a)(1) of such Act, as redesignated by section
411(f)(14) of the Medicare Catastrophic Coverage Act of 1988, is
amended by striking the last sentence.
(5) Section 4056(b)(2) of such Act is amended by striking the
second sentence.
(h) ADJUSTMENT OF EFFECTIVE DATES.—Effective as if included in
the enactment of the Omnibus Budget Reconciliation Act of 1987—
(1) section 4048(b) of such Act is amended by striking "January 1,1989" and inserting "March 1,1989", and
(2) section 4049(b)(2) of such Act is amended by striking
"January 1,1989" and inserting "April 1,1989".
(i) TRANSFER OF PROVISION INTO TITLE XVIII.—
(1) Section 1842 of the Social Security Act (42 U.S.C. 1395u) is
amended by adding at the end the following new subsection:
"(r) The Secretary shall establish a system which provides for a
unique identifier for each physician who furnishes services for
which payment may be made under this title.".
(2) Section 9202 of the Consolidated Omnibus Budget Reconciliation Act of 1985 is amended by striking subsection (g).
a) PPRC—(1) Section 1845 of such Act (42 U.S.C. 1395w-l) is
amended—
(A) in subsection (a)(3), by striking "include physicians" and
inserting "include (but need not be limited to) physicians";
(B) by striking subsection (b)(3);
(C) in subsection (b)(2)—
(i) by striking "and" at the end of subparagraph (H),
(ii) by striking the period at the end of subparagraph (I)
and inserting a semicolon,
(iii) by striking subparagraphs (A), (B), (C), and (F),
(iv) by redesignating subparagraphs (D), (E), (G), (H), and
(I) as subparagraphs (A), (B), (C), (D), and (E), and
(v) by adding at the end the following new subparagraphs:
"(F) make recommendations regarding major issues in the
implementation of the resource-based relative value scale established under section 1848(c);

..-•»«« • - ^ • • ^ ' . • ^ - ' • ^ ' i ^ ^ f^'-jffl'S^tit-V".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-71

"(G) make recommendations regarding further development
of the volume performance standards established under section
1848(f), including the development of State-based programs;
"(H) consider policies to provide payment incentives to increase patient access to primary care and other physician services in large urban and rural areas, including policies regarding
payments to physicians pursuant to title XIX;
"(I) review and consider the number and practice specialties
of physicians in training and payments under this title for
graduate medical education costs;
"(J) make recommendations regarding issues relating to utilization review and quality of care, including the effectiveness of
peer review procedures and other quality assurance programs
applicable to physicians and providers under this title and
physician certification and licensing standards and procedures;
"(K) make recommendations regarding options to help constrain the costs of health insurance to employers, including
incentives under this title;
"(L) comment on the recommendations affecting physician
payment under the medicare program that are included in the
budget submitted by the President pursuant to section 1105 of
title 31, United States Code; and
"(M) make recommendations regarding medical malpractice
liability reform and physician certification and licensing standards and procedures. ; and
(D) by striking subsection (e) and redesignating subsection (f) 42 USC 1395W-1.
as subsection (e).
(2) In section 1842(bX2XA) is amended by striking "section 42USCl395u.
1845(fX2)" and inserting "section 1845(eX2)".
(k) PROHIBITION OF CERTAIN ADJUSTMENTS.—Section 1848(i) is

amended by adding at the end the following new paragraph:
"(3) No COMPARABILITY ADJUSTMENT.—For physicians' services
for which payment under this part is determined under this
section—
"(A) a carrier may not make any adjustment in the
payment amount under section 1842(b)(3XB) on the basis
that the payment amount is higher than the charge applicable, for a ^ 2 comparable services and under comparable
circumstances, to the policyholders and subscribers of the
carrier,
"(B) no payment adjustment may be made under section
1842(bX8), and
"(C) section 1842(b)(9) shall not apply .".

Subpart B—Provisions Relating to Other Items and
Services
SEC. 4151. PAYMENTS FOR OUTPATIENT HOSPITAL SERVICES.
(a) REDUCTION IN PAYMENTS FOR CAPITAL-RELATED COSTS.—

(1) I N GENERAL.—Section 1861(vXl)(SXii)(I) (42 U.S.C.
1395x(v)(l)(S)(ii)(I)) is amended by inserting before the period at
the end the following: ", by 15 percent for payments attributable to portions of cost reporting periods occurring during
fiscal year 1991, and by 10 percent for payments attributable to
portions of cost reporting periods occurring during fiscal year
1992, 1993, 1994, or 1995".
'* So in original, "a" probably should be omitted.

42 USC 1395w-4.

104 STAT. 1388-72

PUBLIC LAW 101-508—NOV. 5, 1990
(2) EXEMPTION FOR RURAL PRIMARY CARE HOSPITALS.—Section

1861(v)(l)(SXii)(II) (42 U.S.C. 1395x(v)(l)(S)(ii)(II)) is amended by
striking "1886(d)(5)(D)(iii))." and inserting "1886(d)(5)(D)(iii) or a
rural primary care hospital (as defined in section 1861(mm)(l))."
(b) REDUCTION IN REASONABLE COSTS OF HOSPITAL OUTPATIENT
SERVICES

(1)" IN GENERAL.—Section 1861(v)(l)(S)(ii) (42 U.S.C.
1395x(v)(l)(S)(ii)) is amended—
(A) in subclause (II)—
(i) by striking "Subclause (I)" and inserting
"Subclauses (I) and (II)", and
(ii) by striking "capital-related costs of any hospital"
and inserting "costs of hospital outpatient services provided by any hospital";
(B) in subclause (III)—
(i) by striking "subclause (I)" and inserting
"subclauses (I) and (II)", and
(ii) by striking "capital-related" and inserting "the";
(C) by redesignating subclauses (II) and (III) as subclauses
(III) and (IV); and
(D) by inserting after subclause (I) the following new
subclause:
"(II) The Secretary shall reduce the reasonable cost of outpatient
hospital services (other than the capital-related costs of such services) otherwise determined pursuant to section 1833(a)(2)(B)(i)(I) by
5.8 percent for payments attributable to portions of cost reporting
periods occurring during fiscal years 1991, 1992, 1993, 1994, or
1995.".
42 u s e 1320b-5

note.

(2) PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT
SERVICES.—

(A) DEVELOPMENT OF PROPOSAL.—The Secretary of Health

and Human Services shall develop a proposal to replace the
current system under which payment is made for hospital
outpatient services under title XVIII of the Social Security
Act with a system under which such payments would be
made on the basis of prospectively determined rates. In
developing any proposal under this paragraph, the Secretary shall consider—
(i) the need to provide for appropriate limits on
increases in expenditures under the medicare program;
(ii) the need to adjust prospectively determined rates
to account for changes in a hospital's outpatient case
mix, severity of illness of patients, volume of cases, and
the development of new technologies and standards of
medical practice;
(iii) providing hospitals with incentives to control the
costs of providing outpatient services;
(iv) the feasibility and appropriateness of including
payment for outpatient services not currently paid on a
cost-related basis under the medicare program (including clinical diagnostic laboratory tests and dialysis
services) in the system;
(v) the need to increase payments under the system
to hospitals that treat a disproportionate share of lowincome patients, teaching hospitals, and hospitals
located in geographic areas with high wages and wagerelated costs;

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-73

(vi) the feasibility and appropriateness of bundling
services into larger units, such as episodes or visits, in
establishing the basic unit for making payments under
the system; and
(vii) the feasibility and appropriateness of varying
payments under the system on the basis of whether
services are provided in a free-standing or hospitalbased facility.
(B) REPORTS.—(i) By not later than January 1, 1991, the
Administrator of the Health Care Financing Administration shall submit research findings relating to prospective
payments for hospital outpatient services to the Committee
on Finance of the Senate and the Committees on Ways and
Means and Energy and Commerce of the House of
Representatives.
(ii) By not later than September 1, 1991, the Secretary
shall submit the proposal developed under subparagraph
(A) to such Committees.
(iii) By not later than March 1, 1992, the Prospective
Payment Assessment Commission shall submit an analysis
of and comments on the proposal developed under subparagraph (A) to such Committees,
(c) PAYMENTS FOR AMBULATORY SURGICAL PROCEDURES AND RADIOLOGY SERVICES.—
(1) MODIFICATION OF COST AND ASC PROPORTIONS OF ASC BLEND
AMOUNTS.—

(A) IN GENERAL.—Section 1833(i)(3)(B)(ii) (42 U.S.C.
13951(i)(3)(B)(ii)) is amended—
(i) in subclause (I), by striking "and 50 percent for
other cost reporting periods." and inserting '50 percent
for reporting periods beginning on or after October 1,
1988, and on or before December 31, 1990, and 42
percent for portions of cost reporting periods beginning
on or after January 1,1991."; and
(ii) in subclause (II), by striking "and 50 percent for
other cost reporting periods." and inserting "50 percent
for reporting periods beginning on or after October 1,
1988, and on or before December 31, 1990, and 58
percent for portions of cost reporting periods beginning
on or after January 1, 1991.".
(B) EXTENSION OF ASC BLEND AMOUNTS FOR EYE AND EYE

AND EAR SPECIALTY HOSPITALS.—The last Sentence of section
1833(i)(3)(B)(ii) (42 U.S.C. 13951(i)(3)(B)(ii)) is amended by
striking "in fiscal year 1989 or fiscal year 1990" and inserting "on or after October 1, 1988, and before January 1,
1995".
(2) MODIFICATION OF COST AND CHARGE PROPORTIONS FOR RADI-

OLOGY SERVICES.—Section
1833(n)(l)(B)(ii)(I)
(42 U.S.C.
13951(n)(l)(B)(ii)(I)) is amended by striking the period at the end
and inserting ", and such term means 42 percent in the CEise of
outpatient radiology services for portions of cost reporting periods beginning on or after January 1,1991.".
(3) 2-YEAR FREEZE IN ALLOWANCE FOR INTRAOCULAR LENSES.—

42 USC 1395/

Notwithstanding section 1833(i)(2)(A)(iii) of the Social Security note.
Act, the amount of payment determined under such section for
the insertion of an intraocular lens during or subsequent to
cataract surgery furnished to an individual in an ambulatory

-194 O - 91 - 16 : QL 3 Part 2

104 STAT. 1388-74

PUBLIC LAW 101-508—NOV. 5, 1990

surgical center on or after the date of the enactment of this Act
and on or before December 31, 1992, shall be equal to $200,
SEC. 4152. DURABLE MEDICAL EQUIPMENT.

42 use 1395m
note.

(a) PAYMENTS FOR SEAT-LIFT AND TENS.—
(1) 15 PERCENT REDUCTION IN PAYMENTS FOR TRANSCUTANEOUS
ELECTRICAL NERVE STIMULATORS.—Section 1834(a)(1)(D) of the
Social Security Act (42 U.S.C. 1395m(a)(l)(D)) is amended by
inserting before the period at the end the following: ", and, in
the case of a transcutaneous electrical nerve stimulator furnished on or after January 1, 1991, the Secretary shall further
reduce such payment amount (as previously reduced) by 15
percent".
(2) SEAT-LIFTS.—Section 1861(n) of the Social Security Act (42
U.S.C. 1395x(n)) is amended by adding at the end the following:
"With respect to a seat-lift chair, such term includes only the
seat-lift mechanism and does not include the chair.".
(3) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to items furnished on or after January 1, 1991.
(b) DEVELOPMENT AND APPUCATION OF NATIONAL LIMITS ON
FEES.—
(1) INEXPENSIVE AND ROUTINELY PURCHASED DURABLE MEDICAL
EQUIPMENT AND ITEMS REQUIRING FREQUENT AND SUBSTANTIAL

SERVICING.—Paragraphs (2) and (3) of section 1834(a) of such Act
(42 U.S.C. 1395m(a)) are each amended—
(A) in subparagraph (B)(i), by striking "or" at the end;
(B) by striking clause (ii) of subparagraph (B) and inserting the following:
"(ii) in 1991 is the sum of (I) 67 percent of the local
payment amount for the item or device computed
under subparagraph (C)(i)(I) for 1991, and (II) 33 percent of the national limited payment amount for the
item or device computed under subparagraph (C)(ii) for
1991;
"(iii) in 1992 is the sum of (I) 33 percent of the local
payment amount for the item or device computed
under subparagraph (CXDdD for 1992, and (II) 67 percent of the national limited payment amount for the
item or device computed under subparagraph (C)(ii) for
1992; and
"(iv) in 1993 and each subsequent year is the national
limited pa3Tnent amount for the item or device computed under subparagraph (CXii) for that year."; and
(C) by adding at the end the following new subparagraph:
"(C) COMPUTATION OF LOCAL PAYMENT AMOUNT AND NATIONAL UMITED PAYMENT AMOUNT.—For purposes of

subparagraph (B)—
"(i) the local payment amount for an item or device
for a year is equal to—
"(I) for 1991, the amount specified in subparagraph (B)(i) for 1990 increased by the covered item
update for 1991, and
"(II) for 1992, the amount determined under this
clause for the preceding year increased by the
covered item update for 1992; and
"(ii) the national limited payment amount for an
item or device for a year is equal to—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-75

"(I) for 1991, the local payment amount determined under clause (i) for such item or device for
that year, except that the national limited payment amount may not exceed 100 percent of the
weighted average of all local payment amounts
determined under such clause for such item for
that year and may not be less than 85 percent of
the weighted average of all local payment amounts
determined under such clause for such item, and
"(11) for each subsequent year, the amount determined under this clause for the preceding year
increased by the covered item update for such
subsequent year.".
(2) MISCELLANEOUS ITEMS AND OTHER COVERED ITEMS.—Section

1834(a)(8) (42 U.S.C. 1395m(a)(8)) is amended—
(A) in subparagraph (A)(ii)—
(i) by striking "or" at the end of subclause (I);
(ii) in subclause (II)—
(I) by striking "1991 or", and
(II) by striking "the percentage increase" and all
that follows through the period and inserting "the
covered item update for the year.";
(iii) by redesignating subclause (II) as subclause (III);
and
(iv) by inserting after subclause (I) the following new
subclause:
"(II) in 1991, equal to the local purchase price
computed under this clause for the previous year,
increased by the covered item update for 1991, and
decreased by the percentage by which the average
of the reasonable charges for claims paid for all
items described in paragraph (7) is lower than the
average of the purchase prices submitted for such
items during the final 9 months of 1988; or";
(B) by amending subparagraph (B) to read as follows:
"(B)

COMPUTATION

OF

NATIONAL

UMITED

PURCHASE

PRICE.—With respect to the furnishing of a particular item
in a year, the Secretary shall compute a national limited
purchase price—
"(i) for 1991, equal to the local purchase price computed under subparagraph (A)(ii) for the item for the
year, except that such national limited purchase price
may not exceed 100 percent of the weighted average of
all local purchase prices for the item computed under
such subparagraph for the year, and may not be less
than 85 percent of the weighted average of all local
purchase prices for the item computed under such
subparagraph for the year; and
"(ii) for each subsequent year, equal to the amount
determined under this subparagraph for the preceding
year increeised bv the covered item update for such
subsequent year. ;
(C) in subparagraph (C)—
(i) by striking "regional purchase price" each place it
appears and inserting national limited purchase
price",
(ii) by striking "and subject to subparagraph (D)",

104 STAT. 1388-76

PUBLIC LAW 101-508—NOV. 5, 1990

(iii) in clause (ii)—
(I) by striking "75" and inserting "67"; and
(II) by striking "25" and inserting "33", and
(iv) in clause (iii)—
(I) in subclause (I), by striking "50" and inserting
"33" and by striking "(A)(ii)(II)" and inserting
"(A)(ii)(III)"; and
(II) in subclause (II), by striking "50" and inserting "67"; and
(D) by striking subparagraph (D).
(3) OXYGEN AND OXYGEN EQUIPMENT.—Section 1834(a)(9) of
such Act (42 U.S.C. 1395m(a)(9)) is amended—
(A) in subparagraph (A)(ii)(II), by striking "the percentage
increase" and all that follows through the period and
inserting "the covered item increase for the year.";
(B) by amending subparagraph (B) to read as follows:
"(B) COMPUTATION OF NATIONAL LIMITED MONTHLY PAYMENT RATE.—With respect to the furnishing of an item in a

year, the Secretary shall compute a national limited
monthly payment rate equal to—
' (i) for 1991, the local monthly payment rate computed under subparagraph (A)(ii)(II) for the item for the
year, except that such national limited monthly payment rate may not exceed 100 percent of the weighted
average of all local monthly payment rates computed
for the item under such subparagraph for the year, and
may not be less than 85 percent of the weighted average of all local monthly payment rates computed for
the item under such subparagraph for the year; and
"(ii) for each subsequent year, equal to the amount
determined under this subparagraph for the preceding
year increased bv the covered item update for such
subsequent year. ;
(C) in subparagraph (C)—
(i) by striking "regional monthly pajnnent rate" each
place it appears and inserting "national limited
monthly payment rate",
(ii) in clause (ii)—
(I) by striking "75" and inserting "67"; and
(II) by striking "25" and inserting "33", and
(iii) in clause (iii)—
(I) in subclause (I), by striking "50" and inserting
"33"; and
(II) in subclause (II), by striking "50" and inserting "67" and by striking "(B)(i)" and inserting
"(B)(ii)"; and
(D) by striking subparagraph (D).
(4) DEFINITION.—Section 1834(a) (42 U.S.C. 1395m(a)) is
amended by adding at the end the following new paragraph:
"(14) COVERED ITEM UPDATE.—In this subsection, the term
'covered item update' means, with respect to a year—
"(A) for 1991 and 1992, ^^ reduction of 1 percentage point;
and
"(B) for a subsequent year, the percentage increase in the
consumer price index for all urban consumers (U.S. city
average) for the 12-month period ending with June of the
previous year.".
" So in original. Probably should be "a reduction".

^.ItpwHIH.*-' «. »^--l^i;--, .^

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-77

(5) CONFORMING AMENDMENT.—Section 1834(a)(12) (42 U.S.C.

1395m(a)(12)) is amended by striking "defined for purposes of
paragraphs (8)(B) and (9)(B)".
(c) TREATMENT OF "RENTAL C A P " ITEMS.—
(1) LIMITATION ON MONTHLY RECOGNIZED RENTAL AMOUNTS FOR

MISCELLANEOUS ITEMS.—Section 1834(a)(7)(A)(i) (42 U.S.C.
1395m(a)(7)(A)(i)) is amended—
(A) by striking "for each such month" and inserting "for
each of the first 3 months of such period"; and
(B) by striking the semicolon at the end and inserting the
following: ", and for each of the remaining months of such
period is 7.5 percent of such purchase price;".
(2) OFFER OF OPTION TO PURCHASE FOR MISCELLANEOUS ITEMS;
ESTABLISHMENT OF REASONABLE L I F E T I M E . — S e c t i o U 1 8 3 4 ( a ) ( 7 ) o f

such Act (42 U.S.C. 1395m(a)(7)(A)) is amended—
(A) in subparagraph (A)(i), by striking "15 months" and
inserting "15 months, or, in the case of an item for which a
purchase agreement has been entered into under clause
(iii), a period of continuous use of longer than 13 months";
(B) in subparagraph (A)(ii)—
(i) by striking "(ii) during the succeeding 6-month
period of medical need," and inserting "(iv) in the case
of an item for which a purchase agreement has not
been entered into under clause (ii) or clause (iii), during
the first 6-month period of medical need that follows
the period of medical need during which payment is
made under clause (i),", and
(ii) by striking "and" at the end;
(C) in subparagraph (A)(iii)—
(i) by striking "(iii)" and inserting "(v) in the case of
an item for which a purchase agreement has not been
entered into under clause (ii) or clause (iii),", and
(ii) by striking the period at the end and inserting "; and";
(D) by inserting after clause (i) of subparagraph (A) the
following new clauses:
"(ii) in the case of a power-driven wheelchair, at the
time the supplier furnishes the item, the supplier shall
offer the individual patient the option to purchase the
item, and payment for such item shall be made on a
lump-sum basis if the patient exercises such option;
"(iii) during the 10th continuous month during which
payment is made for the rental of an item under clause
(i), the supplier of such item shall offer the individual
patient the option to enter into a purchase agreement
under which, if the patient notifies the supplier not
later than 1 month after the supplier makes such offer
that the patient agrees to accept such offer and exercise such option—
"(I) the supplier shall transfer title to the item to
the individual patient on the first day that begins
after the 13th continuous month during which payment is made for the rental of the item under
clause (i),
"(II) after the supplier transfers title to the item
under subclause (I), maintenance and servicing

104 STAT. 1388-78

PUBLIC LAW 101-508—NOV. 5, 1990
payments shall be made in accordance with clause
(V);";

(E) by inserting after clause (v) of subparagraph (A) (as
amended by subparagraph (C)) the following new clause:
"(vi) in the case of an item for which a purchase
agreement has been entered into under clause (ii) or
clause (iii), maintenance and servicing payments may
be made (for parts and labor not covered by the supplier's or manufacturer's warranty, as determined by the
Secretary to be appropriate for the particular type of
durable medical equipment), and such payments shall
be in an amount established by the Secretary on the
basis of reasonable charges in the locality for maintenance and servicing."; and
(F) by adding at the end the following new subparagraph:
"(C) REPLACEMENT OF ITEMS.— *
"(i) ESTABLISHMENT OF REASONABLE USEFUL LIFE-

TIME.—In accordance with clause (iii), the Secretary
shall determine and establish a reasonable useful lifetime for items of durable medical equipment for which
payment may be made under this paragraph or paragraph (3).
"(ii)

PAYMENT

FOR

REPLACEMENT ITEMS.—If

the

reasonable lifetime of such an item, as so established,
has been reached during a continuous period of medical
need, or the carrier determines that the item is lost or
irreparably damaged, the patient may elect to have
payment for an item serving as a replacement for such
item made—
"(I) on a monthly basis for the rental of the
replacement item in accordance with subparagraph (A); or
"(II) in the case of an item for which a purchase
agreement has been entered into under subparagraph (A)(ii) or (A)(iii), in a lump-sum amount for
the purchase of the item,
"(iii) LENGTH OF REASONABLE USEFUL LIFETIME.—The

reasonable useful lifetime of an item of durable medical equipment under this subparagraph shall be equal
to 5 years, except that, if the Secretary determines
that, on the basis of prior experience in making payments for such an item under this title, a reasonable
useful lifetime of 5 years is not appropriate with respect to a particular item, the Secretary shall establish
an alternative reasonable lifetime for such item.".
(3) APPLICATION OF REASONABLE USEFUL LIFETIME FOR ITEMS
REQUIRING F R E Q U E N T AND SUBSTANTIAL SERVICING.—Soction

1834(a)(3) (42 U.S.C. 1395m(a)(3)), as amended by subsection
(b)(1), is further amended by adding at the end the following
new subparagraph:
"(D) REPLACEMENT OF ITEMS.—If the reasonable useful
lifetime of such an item, as established under paragraph
(7)(C), has been reached during a continuous period of
medical need, or the Secretary determines on the basis of
investigation by the carrier that the item is lost or irreparably damaged, payment for an item serving as a replacement for such item shall be made on a monthly basis for the

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-79

rental of the replacement item in accordance with subparagraph (A).".
(4) T R E A T M E N T O F POWER-DRIVEN WHEELCHAIRS AS MISCELLANE-

OUS ITEMS OF DURABLE MEDICAL EQUIPMENT.—

(A) I N GENERAL.—Section 1834(a)(2)(A) (42 U.S.C.
1395m(a)(2)(A)) is amended—
(i) in clause (i), by inserting "or" at the end;
(ii) in clause (ii), by striking "or" at the end; and
(iii) by striking clause (iii).
(B) CRITERIA FOR TREATMENT OF WHEELCHAIR AS CUSTOMIZED ITEM.—(i) Section 1834(a)(4) (42 U.S.C. 1395m(a)(4))

is amended by adding at the end the following: "In the case
of a wheelchair furnished on or after January 1, 1992, the
wheelchair shall be treated as a customized item for purposes of this paragraph if the wheelchair has been measured, fitted, or adapted in consideration of the patient's
body size, disability, period of need, or intended use, and
has been assembled by a supplier or ordered from a manufacturer who makes available customized features, modifications, or components for wheelchairs that are intended
for an individual patient's use in accordance with instructions from the patient's physician.".
(ii) The amendment made by clause (i) shall apply to 42 u s e 1395m
items furnished on or after January 1, 1992, unless the note.
Secretary develops specific criteria before that date for the
treatment of wheelchairs as customized items for purposes
of section 1834(a)(4) of the Social Security Act (in which case
the amendment made by such clause shall not become
effective).
(d) FREEZE IN REASONABLE CHARGES FOR PARENTERAL AND E N TERAL NUTRIENTS, SUPPUES, AND EQUIPMENT DURING 1991.—In

determining the amount of payment under part B of title XVIII of
the Social Security Act for enteral and parenteral nutrients, supplies, and equipment furnished during 1991, the charges determined
to be reasonable with respect to such nutrients, supplies, and equipment may not exceed the charges determined to be reasonable with
respect to such items for 1990.
(e)

REQUIRING

PRIOR

APPROVAL

FOR POTENTIALLY

OVERUSED

ITEMS.—Section 1834(a) (42 U.S.C. 1395m(a)), as amended by subsection (b), is amended by adding at the end the following new paragraph:
"(15) CARRIER DETERMINATIONS OF POTENTIALLY OVERUSED
ITEMS IN ADVANCE.—
"(A) DEVELOPMENT OF UST OF ITEMS BY SECRETARY.—The

Secretary shall develop and periodically update a list of
items for which payment may be made under this subsection that the Secretary determines, on the basis of prior
payment experience, are frequently subject to unnecessary
utilization, and shall include in such list seat-lift mechanisms, transcutaneous electrical nerve stimulators, and
motorized scooters.
"(B) DETERMINATIONS OF COVERAGE IN ADVANCE.—A carrier shall determine in advance whether payment for an
item included on the list developed by the Secretary under
subparagraph (A) may not be made because of the application of section 1862(a)(1).".

42 u s e 1395u
note.

104 STAT. 1388-80

PUBLIC LAW 101-508—NOV. 5, 1990

(f) PROHIBITION AGAINST DISTRIBUTION OF MEDICAL NECESSITY
FORMS BY SUPPLIERS.

(1) I N GENERAL.—Section 1834(a) (42 U.S.C. 1395m(a)), as
amended by subsections (b) and (e), is further amended by
adding at the end the following new paragraph:
"(16) PROHIBITION AGAINST DISTRIBUTION BY SUPPLIERS OF
FORMS DOCUMENTING MEDICAL NECESSITY.—

42 use 1395m
°°*®-

"(A) I N GENERAL,—A supplier of a covered item under
this subsection may not distribute to physicians or to
individuals entitled to benefits under this part for commercial purposes any completed or partially completed forms or
other documents required by the Secretary to be submitted
to show that a covered item is reasonable and necessary for
the diagnosis or treatment of illness or injury or to improve
the functioning of a malformed body member.
"(B) PENALTY.—Any supplier of a covered item who
knowingly and willfully distributes a form or other document in violation of subparagraph (A) is subject to a civil
money penalty in an amount not to exceed $1,000 for each
such form or document so distributed. The provisions of
section 1128A (other than subsections (a) and (b)) shall
apply to civil money penalties under this subparagraph in
the same manner as they apply to a penalty or proceeding
under section 1128A(a).".
(2) EFFECTIVE DATE.—The amendment made by paragraph (1)
shall apply to forms and documents distributed on or after
January 1,1991.
(g) RECERTIFICATION FOR CERTAIN PATIENTS RECEIVING HOME
OXYGEN THERAPY SERVICES ^~

(1) IN GENERAL.—Section 1834(a)(5) (42 U.S.C. 1395m(a)(5)) is
amended—
(A) in subparagraph (A), by striking "(B) and (C)" and
inserting "(B), (C), and (E)"; and
(B) by adding at the end the following new subparagraph:
"(E)

42 use 1395m
note.

42 use 1395f
note.

RECERTIFICATION FOR PATIENTS RECEIVING HOME

OXYGEN THERAPY.—In the case of a patient receiving home
oxygen therapy services who, at the time such services are
initiated, has an initial arterial blood gas value at or above
a partial pressure of 55 or an arterial oxygen saturation at
or above 89 percent (or such other values, pressures, or
criteria as J h e Secretary may specify) no payment may be
made under this part for such services after the expiration
of the 90-day period that begins on the date the patient first
receives such services unless the patient's attending physician certifies that, on the basis of a follow-up test of the
patient's arterial blood gas value or arterial oxygen saturation conducted during the final 30 days of such 90-day
period, there is a medical need for the patient to continue to
receive such services.".
(2) EFFECTIVE DATE.—The amendments made by paragraph (1)
shall apply to patients who first receive home oxygen therapy
services on or after January 1,1991.
(h) TECHNICAL CORRECTIONS.—Effective as if included in the enactment of the Omnibus Budget Reconciliation Act of 1987, section
4062(e) of such Act is amended—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-81

(1) by inserting "(other than oxygen and oxygen equipment)"
after "covered items", and
(2) by inserting before the period at the end the following:
"and to oxygen and oxygen equipment furnished on or after
June 1,1989".
(i) EFFECTIVE DATE.—Except as otherwise provided, the amend- 42 USC 1395m
ments made by this section shall apply to items furnished on or ^ote.
after January 1,1991.
SEC. 4153. PROVISIONS RELATING TO ORTHOTICS AND PROSTHETICS.
(a) PAYMENTS FOR PROSTHETIC DEVICES AND ORTHOTICS AND
PROSTHETICS.—
(1) MAINTAINING CURRENT PAYMENT METHODOLOGY.—Section

1834 (42 U.S.C. 1395m) is amended by adding at the end the
following new subsection:
"(h) PAYMENT FOR PROSTHETIC DEVICES AND ORTHOTICS AND
PROSTHETICS.—
"(1) GENERAL RULE FOR PAYMENT.—

"(A) I N GENERAL.—Payment under this subsection for
prosthetic devices and orthotics and prosthetics shall be
made in a lump-sum amount for the purchase of the item in
an amount equal to 80 percent of the payment basis described in subparagraph (B).
"(B) PAYMENT BASIS,—Except as provided in subparagraph (C), the payment basis described in this subparagraph
is the lesser of—
"(i) the actual charge for the item; or
"(ii) the amount recognized under paragraph (2) as
the purchase price for the item.
"(C) EXCEPTION FOR CERTAIN PUBLIC HOME HEALTH AGEN-

CIES.—Subparagraph (B)(i) shall not apply to an item furnished by a public home health agency (or by another home
health agency which demonstrates to the satisfaction of the
Secretary that a significant portion of its patients are low
income) free of charge or at nominal charges to the public.
"(D) EXCLUSIVE PAYMENT RULE.—This subsection shall
constitute the exclusive provision of this title for payment
for prosthetic devices, orthotics, and prosthetics under this
part or under part A to a home health agency.
"(2) PURCHASE PRICE RECOGNIZED.—For purposes of paragraph

(1), the amount that is recognized under this paragraph as the
purchase price for prosthetic devices, orthotics, and prosthetics'
is the amount described in subparagraph (C) of this paragraph,
determined as follows:
"(A) COMPUTATION OF LOCAL PURCHASE PRICE.—Each carrier under section 1842 shall compute a base local purchase
price for the item as follows:
"(i) The carrier shall compute a base local purchase
price for each item equal to the average reasonable
charge in the locality for the purchase of the item for
the 12-month period ending with June 1987.
"(ii) The carrier shall compute a local purchase price,
with respect to the furnishing of each particular item—
"(I) in 1989 and 1990, equal to the base local
purchase price computed under clause (i) increased
by the percentage increase in the consumer price
index for all urban consumers (United States city

104 STAT. 1388-82

PUBLIC LAW 101-508—NOV. 5, 1990
average) for the 6-month period ending with
December 1987, or
"(II) in 1991, 1992 or 1993, equal to the local
purchase price computed under this clause for the
previous year increased by the applicable percentage increase for the year.
"(B) COMPUTATION OF REGIONAL PURCHASE PRICE.—With

respect to the furnishing of a particular item in each region
(as defined by the Secretary), the Secretary shall compute a
regional purchase price—
"(i) for 1992, equal to the average (weighted by relative volume of all claims among carriers) of the local
purchase prices for the carriers in the region computed
under subparagraph (A)(ii)(II) for the year, and
"(ii) for each subsequent year, equal to the regional
purchase price computed under this subparagraph for
the previous year increased by the applicable percentage increase for the year.
"(C) PURCHASE PRICE RECOGNIZED.—For purposes of paragraph (1) and subject to subparagraph (D), the amount that
is recognized under this paragraph as the purchase price
for each item furnished—
"(i) in 1989, 1990, or 1991, is 100 percent of the local
purchase price computed under subparagraph (A)(ii);
"(ii) in 1992, is the sum of (I) 75 percent of the local
purchase price computed under subparagraph (A)(iiXII)
for 1992, and (II) 25 percent of the regional purchase
price computed under subparagraph (B) for 1992;
"(iii) in 1993, is the sum of (I) 50 percent of the local
purchase price computed under subparagraph (A)(ii)(II)
for 1993, and (II) 50 percent of the regional purchase
price computed under subparagraph (B) for 1993; and
"(iv) in 1994 or a subsequent year, is the regional
purchase price computed under subparagraph (B) for
that year.
"(D) RANGE ON AMOUNT RECOGNIZED.—The amount that is
recognized under subparagraph (C) as the purchase price
for an item furnished—
"(i) in 1992, may not exceed 125 percent, and may not
be lower than 85 percent, of the average of the purchase prices recognized under such subparagraph for
all the carrier service areas in the United States in that
year; and
"(ii) in a subsequent year, may not exceed 120 percent, and may not be lower than 90 percent, of the
average of the purchase prices recognized under such
subparagraph for all the carrier service areas in the
United States in that year.
"(3) APPLICABIUTY OF CERTAIN PROVISIONS RELATING TO DURA-

BLE MEDICAL EQUIPMENT.—Paragraph (12) and subparagraphs
(A) and (B) of paragraph (10) and paragraph (11) of subsection (a)
shall apply to prosthetic devices, orthotics, and prosthetics in
the same manner as such provisions apply to covered items
under such subsection.
"(4) DEFINITIONS.—In this subsection—
"(A) the term 'applicable percentage increase' means—
"(i) for 1991, 0 percent, and

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-83

"(ii) for a subsequent year, the percentage increase in
the consumer price index for all urban consumers
(United States city average) for the 12-month period
ending with June of the previous year;
"(B) the term 'prosthetic devices' has the meaning given
such term in section 1861(s)(8), except that such term does
not include parenteral and enteral nutrition nutrients, supplies, and equipment; and
"(C) the term 'orthotics and prosthetics' has the meaning
given such term in section 1861(s)(9), but does not include
intraocular lenses or medical supplies (including catheters,
catheter supplies, ostomy bags, and supplies related to
ostomy care) furnished by a home health agency under
section 1861(m)(5).".
(2) CONFORMING AMENDMENTS.—(A) Section 1832(a)(2) (42
U.S.C. 1395k(a)(2)) is amended—
(i) in subparagraphs (A) and (B), by striking "subparagraph (G)" each place it appears and inserting "subparagraph (G) or subparagraph (I)";
(ii) by striking "and" at the end of subparagraph (G);
(iii) by striking the period at the end of subparagraph (H)
and inserting "; and"; and
(iv) by adding at the end the following new subparagraph:
"(I) prosthetic devices and orthotics and prosthetics (described in section 1834(h)(4)) furnished by a provider of
services or by others under arrangements with them made
by a provider of services.".
(B) Section 1833(a)(1) (42 U.S.C. 13951(a)(1) is amended—
(i) by striking ", and (L)" and inserting ", (L)"; and
(ii) by striking "subparagraph and (N)" and inserting the
following: "subparagraph, (M) with respect to prosthetic
devices and orthotics and prosthetics (as defined in section
1834(h)(4)), the amounts paid shall be the amounts described in section 1834(h)(1), and (N)".
(C) Section 1833(a) (42 U.S.C. 13951(a)) is amended—
(i) in paragraph (2), in the matter before subparagraph
(A), by striking "and (H)" and inserting "(H), and (I)";
(ii) by striking "and" at the end of paragraph (5);
(iii) by striking the period at the end of paragraph (6) and
inserting "; a n d ' ; and
(iv) by adding at the end the following new paragraph:
"(7) in the case of prosthetic devices and orthotics and
prosthetics (as described in section 1834(h)(4)), the amounts
described in section 1834(h).".
(D) Section 1834(a) (42 U.S.C. 1395m(a)), is amended—
(i) in the heading, by striking " , PROSTHETIC DEVICES,
ORTHOTICS, AND PROSTHETICS";

(ii) in paragraph (2)(A), by striking "(13)(A)" and inserting
"(13)"; and
(iii) in paragraph (13), by striking "means—" and all that
follows and inserting the following: "means durable medical equipment (as defined in section 1861(n)), including such
equipment described in section 1861(m)(5)).
(3) EFFECTIVE DATE.—The amendments made by paragraphs 42 USC 1395k
(1) and (2) shall apply to items furnished on or after January 1, note.
1991.
(b) PROVISIONS RELATING TO EYEGLASSES.—

104 STAT. 1388-84
42 u s e I395u
"°*®-

PUBLIC LAW 101-508—NOV. 5, 1990

(1) PROHIBITION ON REGULATIONS.—(A) N o t w i t h s t a n d i n g a n y
o t h e r provision of law (except as provided in s u b p a r a g r a p h (B))

the Secretary of Health and Human Services (referred to in this
subsection as the "Secretary") may not issue any regulation
that changes the coverage of conventional eyewear furnished to
individuals (enrolled under part B of title XVIII of the Social
Security Act) following cataract surgery with insertion of an
intraocular lens.
(B) Paragraph (1) shall not apply to any regulation issued for
the sole purpose of implementing the amendments made by
paragraph (2).
(2) CLARIFYING COVERAGE OF POST-CATARACT EYEGLASSES.—(A)

42 use 1395x
"°*®-

Section 1861(s)(8) (42 U.S.C. 1395x(s)(8)) is amended by inserting
after "such devices" the following ", and including one pair of
conventional eyeglasses or contact lenses .furnished subsequent
to each cataract surgery with insertion of an intraocular lens".
(B) Section 1862(a)(7) (42 U.S.C. 1395y(a)(7)) is amended by
inserting after "eyeglasses" the first place it appears the following: "(other than eyewear described in section 1861(s)(8))".
(C) The amendments made by subparagraphs (A) and (B) shall
apply to items furnished on or after January 1, 1991.

42 u s e 1395m
note.

(c) G A O S T U D Y OF MEDICARE PAYMENTS FOR PROSTHETIC DEVICES,
ORTHOTICS, AND PROSTHETICS.—

(1) STUDY.—The Comptroller General shall conduct a study of
the feasibility and desirability of establishing a separate fee
schedule for use in determining the amount of payments for
covered items under section 1834(a) of the Social Security Act
with respect to suppliers of prosthetic devices, orthotics, and
prosthetics who provide professional services that would take
into account the costs to such providers of providing such
services.
(2) REPORT.—Not later than 1 year after the date of the
enactment of this Act, the Comptroller General shall submit a
report on the study conducted under subparagraph (A) to the
Committees on Energy and Commerce and Ways and Means of
the House of Representatives and the Committee on Finance of
the Senate, and shall include in such report any recommendations regarding payments for prosthetic devices, orthotics, and
prosthetics under the medicare program that the Comptroller
General considers appropriate.
(d) CLARIFICATION OF COVERAGE OF OSTOMY SUPPLIES.—

(1)
IN GENERAL.—Section
1866(a)(l)(P)
(42
U.S.C.
1395cc(a)(l)(P)) is amended by striking "ostomy supplies" and
inserting "catheters, catheter supplies, ostomy bags, and supplies related to ostomy care".
(2) EFFECTIVE DATE.—The amendment made by paragraph (1)
shall take effect as if included in the enactment of the Omnibus
Budget Reconiliationi* Act of 1989.

42 use 1395CC
"°*®-

SEC. 4154. CLINICAL DIAGNOSTIC LABORATORY TESTS.
(a)

LIMIT

ON

ANNUAL

FEE

SCHEDULE

INCREASES.—Section

1833(h)(2)(A)(ii) (42 U.S.C. 13951(h)(2)(A)(ii)) is amended—

(1) by striking "any other provision of this subsection" and
inserting "clause (i)";
(2) by striking "and" at the end of subclause (I);
(3) by striking the period at the end of subclause (II) and
inserting ", and'; and
'•* So in original. Probably should be "Reconciliation".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-85

(4) by adding at the end the following new subclause:
"(III) the annual adjustment in the fee schedules determined
under clause (i) for each of the years 1991, 1992, and 1993 shall
be 2 percent.".
(b) REDUCTION IN NATIONAL CAP ON FEE SCHEDULES.—

(1) IN GENERAL.—Section 1833(h)(4)(B) (42 U.S.C. 13951(h)(4XB))
is amended—
(A) in clause (ii), by striking "and" at the end;
(B) in clause (iii)—
(i) by inserting "and before January 1, 1991," after
"1989,'^', and
(ii) by striking the period at the end and inserting
", and"; and
(C) by adding at the end the following new clause:
"(iv) after December 31, 1990, is equal to 88 percent of the
median of all the fee schedules established for that test for that
laboratory setting under paragraph (1).".
(2) EFFECTIVE DATE.—The amendments made by paragraph (1) 42 USC 1395/
shall apply to tests furnished on or after January 1, 1991. "o*®(c) CLARIFICATION OF MANDATORY ASSIGNMENT FOR CLINICAL DIAGNOSTIC LABORATORY TESTS PERFORMED BY PHYSICIANS.—

(1) I N GENERAL.—(A) Section 1833(h)(5)(C) of such Act (42
U.S.C. 13951(h)(5)(C)) is amended by striking "test performed by
a laboratory other than a rural health clinic" and inserting
"test, including a test performed in a physician's office but
excluding a test performed by a rural health clinic".
(B) Section 1833(h)(5)(D) of such Act (42 U.S.C. 13951(i)(5)(D)) is
amended by striking "test performed by a laboratory, other
than a rural health clinic" and inserting "test, including a test
performed in a physician's office but excluding a test performed
by a rural health clinic,".
(2) EFFECTIVE DATE.—The amendment made by paragraph 42 USC 1395/
(1)(A) shall take effect as if included in the enactment of the «<>*«.
Consolidated Omnibus Budget Reconciliation Act of 1985, and
the amendment made by paragraph (IXB) shall take effect as if
included in the enactment of the Omnibus Budget Reconciliation Act of 1987.
(d) AGREEMENTS WITH STATES TO DETERMINE COMPLIANCE OF CLINICAL LABORATORIES WITH PROGRAM REQUIREMENTS.—

(1) I N GENERAL.—Section 1864(a) (42 U.S.C. 1395aa(a)) is
amended in the first sentence by striking "1861(s)," and inserting "1861(s) or (in the case of a laboratory that does not participate or seek to participate in the medicare program) the
requirements of section 353 of the Public Health Service Act,".
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 42 USC 1395aa
shall take effect as if included in the enactment of the Clinical "°*®Laboratory Improvement Amendments of 1988.
(e) TECHNICAL CORRECTIONS.—

(1) Section 1833(h)(5XA)(ii) of such Act (42 U.S.C.
13951(hX5XAXii)) is amended—
(A) in subclause (II), by striking "a wholly-owned subsidiary o f and inserting "wholly owned by";
(B) in subclause (III), by striking "laboratory" and inserting "laboratory (but not including a laboratory described in
subclause (ID), ; and
(C) in subclause (III), by striking "submits bills or requests for payment in any year" and inserting "receives

104 STAT. 1388-86

42 u s e 1395W-2.

42 u s e 1395/
note.
42 u s e 1395Z
note.
42 u s e 1395/
note.

PUBLIC LAW 101-508—NOV. 5, 1990

requests for testing during the year in which the test is
performed".
(2) The heading of section 1846 of such Act is amended by
striking " O F " and inserting "OR SUPPLIERS OF".
(3) Effective as if included in the enactment of the Omnibus
Budget Reconciliation Act of 1986, section 9339(b) of the Omnibus Budget Reconciliation Act of 1986 is amended by striking
paragraph (3).
(4) Section 6111(b)(2) of the Omnibus Budget Reconciliation
Act of 1989 is amended by striking "January 1, 1990" and
inserting "May 1,1990".
(5) The amendments made by paragraphs (1)(A)^^ (1)(B), (2),
and (4) shall take effect as if included in the enactment of the
Omnibus Budget Reconciliation Act of 1989, and the amendment made by paragraph (1)(C) shall take effect January 1,
1991.
SEC. 4155. COVERAGE OF NURSE PRACTITIONERS IN RURAL AREAS.

(a) IN GENERAL.—Section 1861(s)(2)(K) (42 U.S.C. 1395x(s)(2)(K)) is
amended—
(1) in clause (ii), by striking "and" at the end;
(2) by redesignating clause (iii) as clause (iv); and
(3) by inserting after clause (ii) the following new clause:
"(iii) services which would be physicians' services if furnished
by a physician (as defined in subsection (r)(l)) and which are
performed by a nurse practitioner or clinical nurse specialist (as
defined in subsection (aa)(3)) working in collaboration (as defined in subsection (aa)(4)) with a physician (as defined in
subsection (r)(l)) in a rural area (as defined in section
1886(d)(2)(D)) which the nurse practitioner or clinical nurse
specialist is authorized to perform by the State in which the
services are performed, and such services and supplies furnished as an incident to such services as would be covered under
subparagraph (A) if furnished as an incident to a physician's
professional servipe, and".
(b) PAYMENT,—
(1) DIRECT

PAYMENT.—Section

1832(a)(2)(B)

(42

U.S.C.

1395k(a)(2)(B)) is amended—
(A) in clause (ii), by striking "and" at the end;
(B) in clause (iii), by striking the semicolon and inserting
a comma; and
(C) by adding at the end the following new clause:
"(iv) services of a nurse practitioner or clinical nurse
specialist provided in a rural area (as defined in section
1886(d)(2)(D)); and".
(2) AMOUNT.—Section 1833(a)(1) (42 U.S.C. 13951(a)(1)) as
amended by section 4153(a)(2)(B), is amended—
(A) by striking "and" at the end of subparagraph (K); and
(B) by inserting after subparagraph (L) the following new
subparagraph: "(M) with respect to services described in
section 1861(s)(2)(K)(iii) (relating to nurse practitioner or
clinical nurse specialist services provided in a rural area),
the amounts paid shall be 80 percent of the lesser of the
actual charge or the prevailing charge that would be recognized (or, for services furnished on or after January 1, 1992,
the fee schedule amount provided under section 1848) if the
" So in original. Probably should be "(IXA),".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-87

services had been performed by a physician (subject to the
limitation described in subsection (r)(2))".
(3) CAP ON PREVAILING CHARGE; BILLING ONLY ON ASSIGNMENTRELATED BASIS.—Section 1833 (42 U.S.C. 13951) is amended by

adding at the end the following new subsection:
"(r)(l) With respect to services described in section 1861(s)(2)(K)(iii)
(relating to nurse practitioner or clinical nurse specialist services
provided in a rural area), payment may be made on the basis of a
claim or request for payment presented by the nurse practitioner or
clinical nurse specialist furnishing such services, or by a hospital,
rural primary care hospital, skilled nursing facility or nursing
facility (as defined in section 1919(a)), physician, group practice,
ambulatory surgical center, with which the nurse practitioner or
clinical nurse specialist has an employment or contractual relationship that provides for payment to be made under this part for such
services to such hospital, physician, group practice, ambulatory
surgical center.
"(2)(A) For purposes of subsection (a)(l)(M), the prevailing charge
for services described in section 1861(s)(2)(K)(iii) may not exceed the
applicable percentage (as defined in subparagraph (B)) of the
prevailing charge (or, for services furnished on or after January 1,
1992, the fee schedule amount provided under section 1848) determined for such services performed by physicians who are not
specialists.
"(B) In subparagraph (A), the term 'applicable percentage'
means—
"(i) 75 percent in the case of services performed in a hospital,
and
"(ii) 85 percent in the case of other services.
"(3)(A) Payment under this part for services described in section
1861(s)(2)(K)(iii) may be made only on an Eissignment-related basis,
and any such assignment agreed to by a nurse practitioner or
clinical nurse specialist shall be binding upon any other person
presenting a claim or request for payment for such services.
"(B) Except for deductible and coinsurance amounts applicable
under this section, any person who knowingly and willfully presents, or causes to be presented, to an individual enrolled under this
part a bill or request for payment for services described in section
1861(s)(2)(K)(iii) in violation of subparagraph (A) is subject to a civil
money penalty of not to exceed $2,000 for each such bill or request.
The provisions of section 1128A (other than subsections (a) and (b))
shall apply to a civil money penalty under the previous sentence in
the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
"(4) No hospital or rural primary care hospital that presents a
claim or request for payment under this part for services described
in section 1861(s)(2)(K)(iii) may treat any uncollected coinsurance
amount imposed under this part with respect to such services as a
bad debt of such hospital for purposes of this title.".
(c) CONFORMING AMENDMENT.—Section 1842(b) (42 U.S.C. 1395u(b))

is amended by striking "section 1861(sX2)(K)" each place it appears
in paragraphs (6) and (12) and inserting "clauses (i), (ii), or (iv) of
section 1861(s)(2)(K)".
(d) DEFINITION.—Section 1861(aa)(3) (42 U.S.C. 1395x(aa)(3)) is
amended by striking "The term" and all that follows through "who
performs" and inserting the following: "The term 'physician assistant', the term 'nurse practitioner', and the term 'clinical nurse

^

104 STAT. 1388-88
42 use 1395k
note.

PUBLIC LAW 101-508—NOV. 5, 1990

specialist' mean, for purposes of this Act, a physician assistant,
nurse practitioner, or clinical nurse specialist who performs".
(©) EFFECTIVE DATE.—The amendments made by this section shall
apply to services furnished on or after January 1,1991.
SEC. 4156. COVERAGE OF INJECTABLE DRUGS FOR TREATMENT OF
OSTEOPOROSIS.
(a) I N GENERAL.—Section 1861 (42 U.S.C. 1395x) is amended—
(1) in subsection (s)(2)—
(A) by striking "and" at the end of subparagraph (M),
(B) by inserting "and" at the end of subparagraph (N),
and
(C) by inserting after subparagraph (N) the following new
subparagraph:
"(O) a covered osteoporosis drug and its administration (as
defined in subsection (jj)) furnished on or after January 1, 1991,
and on or before December 31,1995; and"; and
(2) by inserting after subsection (ii) the following new subsection:
"Covered Osteoporosis Drug
"(jj) The term 'covered osteoporosis drug' means an injectable
drug approved for the treatment of a bone fracture related to postmenopausal osteoporosis provided to an individual if, in accordance
with regulations promulgated by the Secretary—
"(1) the individual's attending physician certifies that the
patient is unable to learn the skills needed to self-administer
such drug or is otherwise physically or mentally incapable of
self-administering such drug; and
"(2) the individual is confined to the individual's home (except
when receiving items and services referred to in subsection
(m)(7)).".

42 u s e 1395x

note.

(b) S T U D Y OF EFFECTS OF COVERAGE.—

(1) IN GENERAL.—The Secretary of Health and Human Services shall conduct a study analyzing the effects of coverage of
osteoporosis drugs under part B of title XVIII of the Social
Security Act (as amended by subsection (a)) on the health of
individuals enrolled under such part and the utilization of
inpatient hospital and extended care services by such individuals.
(2) REPORT.—By not later than October 1, 1994, the Secretary
shall submit a report to Congress on the study conducted under
paragraph (1), and shall include in such report such recommendations regarding expansion of coverage under the
medicare program of items and services for individuals with
post-menopausal osteoporosis as the Secretary considers appropriate.
SEC. 4157. SEPARATE PAYMENT UNDER PART B FOR SERVICES OF CERTAIN HEALTH PRACTITIONERS.
(a) SERVICES OF CERTAIN HEALTH PRACTITIONERS NOT TO B E INCLUDED IN INPATIENT HOSPITAL SERVICES.—Section 1861(b) (42 U.S.C.

1395x(b)) is amended—
(1) in paragraph (3), by striking "(including clinical psychologist (as defined by the Secretary))", and

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-89

(2) in paragraph (4), by striking everything after "intern" and
inserting ", services described by subsection (s)(2)(K)(i), certified
nurse-midwife services, qualified psychologist services, and services of a certified registered nurse anesthetist; and".
(b) TREATMENT OF SERVICES FURNISHED IN INPATIENT SETTING.—

Section 1832(a)(2)(B)(iii) (42 U.S.C. 1395k(a)(2)(B)(iii)) is amended to
read as follows:
"(iii) services described by section 1861(s)(2)(K)(i), certified nurse-midwife services, qualified psychologist
services, and services of a certified registered nurse
anesthetist;".
(c) CONFORMING AMENDMENTS.—

(1) Section 1862(a)(14) (42 U.S.C. 1395y) is amended—
(A) by striking "or are services of a certified registered
nurse anesthetist", and
(B) by inserting after "this paragraph)" a comma and the
following: "services described by section 1861(s)(2)(K)(i),
certified nurse-midwife services, qualified psychologist services, and services of a certified registered nurse
(2) The matter in section 1866(a)(1)(H) (42 U.S.C.
1395x(a)(l)(H)) preceding clause (i) is amended by inserting after
"and other than" the following: "services described by section
1861(s)(2)(K)(i), certified nurse-midwife services, qualified
psychologist services, and".
(d) EFFECTIVE DATE.—The amendments made by the preceding
subsections apply to services furnished on or after January 1, 1991.
SEC. 4158. REDUCTION IN PAYMENTS UNDER PART B DURING FINAL 2
MONTHS OF 1990.
(a) I N GENERAL.—Notwithstanding any other provision of law
(including any other provision of this Act, other than subsection
(b)(4)), payments under part B of title XVIII of the Social Security
Act for items and services furnished during the period beginning on
November 1, 1990, and ending on December 31, 1990, shall be
reduced by 2 percent, in accordance with subsection (b).
(b) SPECIAL RULES FOR APPLICATION OF REDUCTION.—
(1) PAYMENT ON THE BASIS OF COST REPORTING PERIODS.—In the

case in which payment for services of a provider of services is
made under part B of such title on a basis relating to the
reasonable cost incurred for the services during a cost reporting
period of the provider, the reduction made under subsection (a)
shall be applied to payment for costs for such services incurred
at any time during each cost reporting period of the provider
any part of which occurs during the period described in such
subsection, but only in the same proportion as the fraction of
the cost reporting period that occurs during such period.
(2) No INCREASE IN BENEFICIARY CHARGES IN ASSIGNMENTRELATED CASES.—If a reduction in payment amounts is made
under subsection (a) for items or services for which payment
under part B of such title is made on an assignment-related
basis (as defined in section 1842(i)(l) of the Social Security Act),
the person furnishing the items or services shall be considered
to have accepted payment of the reasonable charge for the items
or services, less any reduction in payment amount made under
subsection (a), as payment in full.

42USCl395cc.

42 use 1395k
note.

42 u s e 1395/
note.

104 STAT. 1388-90

PUBLIC LAW 101-508—NOV. 5, 1990
(3)

TREATMENT

OF

PAYMENTS

TO HEALTH

MAINTENANCE

ORGANIZATIONS.—Subsection (a) shall not apply to payments
under risk-sharing contracts under section 1876 of the Social
Security Act or under similar contracts under section 402 of the
Social Security Amendments of 1967 or section 222 of the Social
Security Amendments of 1972.
42 u s e 1395WW

SEC. 4159. PAYMENTS FOR MEDICAL EDUCATION COSTS.
(a) HOSPITAL GRADUATE MEDICAL EDUCATION RECOUPMENT.—

(1) I N GENERAL.—The Secretary of Health and Human Services may not, before October 1, 1991, recoup payments from a
hospital because of alleged overpayments to such hospital under
part B of title XVIII of the Social Security Act due to a
determination that the amount of payments .made for graduate
medical education programs exceeds the amount allowable
under section 1886(h).
(2) CAP ON ANNUAL AMOUNT OF RECOUPMENT.—With respect to

overpayments to a hospital described in paragraph (1), the
Secretary may not recoup more than 25 percent of the amount
of such overpayments from the hospital during a fiscal year.
(3) EFFECTIVE DATE.—Paragraphs (1) and (2) shall take effect
October 1,1990.
(b) UNIVERSITY HOSPITAL NURSING EDUCATION.—

(1) I N GENERAL.—The reasonable costs incurred by a hospital
(or by an educational institution related to the hospital by
common ownership or control) during a cost reporting period for
clinical training (as defined by the Secretary) conducted on the
premises of the hospital under approved nursing and allied
health education programs that are not operated by the hospital
shall be allowable as reasonable costs under part B of title
XVIII of the Social Security Act and reimbursed under such
part on a pass-through basis.
(2) CONDITIONS FOR REIMBURSEMENT.—The reasonable costs
incurred by a hospital during a cost reporting period shall be
reimbursable pursuant to paragraph (1) only if—
(A) the hospital claimed and was reimbursed for such
costs during the most recent cost reporting period that
ended on or before October 1,1989;
(B) the proportion of the hospital's total allowable costs
that is attributable to the clinical training costs of the
approved program, and allowable under (b)(1) during the
cost reporting period does not exceed the proportion of total
allowable costs that were attributable to clinical training
costs during the cost reporting period described in subparagraph (A);
(C) the hospital receives a benefit for the support it
furnishes to such program through the provision of clinical
services by nursing or allied health students participating
in such program; and
(D) the costs incurred by the hospital for such program do
not exceed the costs that would be incurred by the hospital
if it operated the program itself.
(3) PROHIBITION
RETARY.—

AGAINST RECOUPMENT OF COSTS BY SEC-

(A) IN GENERAL.—The Secretary of Health and Human
Services may not recoup payments from (or otherwise
reduce or adjust payments under part B of title XVIII of the

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-91

Social Security Act to) a hospital because of alleged overpayments to such hospital under such title due to a determination that costs which were reported by the hospital on
its medicare cost reports for cost reporting periods beginning on or after October 1, 1983, and before October 1, 1990,
relating to approved nursing and allied health education
programs did not meet the requirements for allowable nursing and allied health education costs (as developed by the
Secretary pursuant to section 1861(v) of such Act).
(B) REFUND OF AMOUNTS RECOUPED.—If, prior to the date
of the enactment of this Act, the Secretary has recouped
payments from (or otherwise reduced or adjusted payments
under part B of title XVIII of the Social Security Act to) a
hospital because of overpayments described in subparagraph (A), the Secretary shall refund the amount recouped,
reduced, or adjusted from the hospital.
(4) SPECIAL AUDIT TO DETERMINE COSTS.—In determining the
amount of costs incurred by, claimed by, and reimbursed to, a
hospital for purposes of this subsection, the Secretary shall
conduct a special audit (or use such other appropriate mechanism) to ensure the accuracy of such past claims and payments.
(5) EFFECTIVE DATE.—Except as provided in paragraph (3), the
provisions of this subsection shall apply to cost reporting periods beginning on or after October 1,1990.
SEC. 4160. CERTIFIED REGISTERED NURSE ANESTHETISTS.

Section 1833(1) (42 U.S.C. 13951) is amended—
(1) in paragraph (1)—
(A) by inserting "(A)" after "(1)"; and
(B) by adding at the end the following:
"(B) In establishing the fee schedule under this paragraph the
Secretary may utilize a system of time units, a system of base and
time units, or any appropriate methodology.
"(C) The provisions of this subsection shall not apply to certain
services furnished in certain hospitals in rural areas under the
provisions of section 9320(k) of the Omnibus Budget Reconciliation
Act of 1986, £is amended by section 6132 of the Omnibus Budget
Reconciliation Act of 1989.";
(2) by striking the second sentence of paragraph (2); and
(3) by striking paragraph (4) and inserting the following:
"(4)(A) Except as provided in subparagraphs (C) and (D), in determining the amount paid under the fee schedule under this subsection for services furnished on or after January 1, 1991, by a certified
registered nurse anesthetist who is not medically directed—
"(i) the conversion factor shall be—
"(I) for services furnished in 1991, $15.50,
"(II) for services furnished in 1992, $15.75,
"(III) for services furnished in 1993, $16.00,
"(IV) for services furnished in 1994, $16.25,
"(V) for services furnished in 1995, $16.50,
"(VI) for services furnished in 1996, $16.75, and
"(VII) for services furnished in calendar years after 1996,
the previous year's conversion factor increased by the
update determined under section 1848(d)(3) for physician
anesthesia services for that year;
"(ii) the payment areas to be used shall be the fee schedule
areas used under section 1848 (or, in the case of services fur-

104 STAT. 1388-92

PUBLIC LAW 101-508—NOV. 5, 1990

nished during 1991, the localities used under section 1842(b)) for
purposes of computing payments for physicians' services that
are anesthesia services;
"(iii) the geographic adjustment factors to be applied to the
conversion factor under clause (i) for services in a fee schedule
area or locality is—
"(I) in the case of services furnished in 1991, the geographic work index value and the geographic practice cost
index value specified in section 1842(q)(l)(B) for physicians'
services that are anesthesia services furnished in the area
or locality, and
"(II) in the case of services furnished after 1991, the
geographic work index value, the geographic practice cost
index value, and the geographic malpractice index value
used for determining payments for physicians' services that
are anesthesia services under section 1848,
with 70 percent of the conversion factor treated as attributable
to work and 30 percent as attributable to overhead for services
furnished in 1991 (and the portions attributable to work, practice expenses, and malpractice expenses in 1992 and thereafter
being the same as is applied under section 1848).
"(B)(i) Except as provided in clause (ii) and subparagraph (D), in
determining the amount paid under the fee schedule under this
subsection for services furnished on or after January 1, 1991, by a
certified registered nurse anesthetist who is medically directed, the
Secretary shall apply the same methodology specified in subparagraph (A).
"(ii) The conversion factor used under clause (i) shall be—
"(I) for services furnished in 1991, $10.50,
"(II) for services furnished in 1992, $10.75,
"(III) for services furnished in 1993, $11.00,
"(IV) for services furnished in 1994, $11.25,
"(V) for services furnished in 1995, $11.50,
"(VI) for services furnished in 1996, $11.70, and
"(VII) for services furnished in calendar years after 1997, the
previous year's conversion factor increased by the update determined under section 1848(d)(3) for physician anesthesia services
for that year.
"(C) Notwithstanding subclauses (I) through (V) of subparagraph
(A)(i)"(i) in the case of a 1990 conversion factor that is greater than
$16.50, the conversion factor for a calendar year after 1990 and
before 1996 shall be the 1990 conversion factor reduced by the
product of the last digit of the calendar year and one-fifth of the
amount by which the 1990 conversion factor exceeds $16.50; and
"(ii) in the case of a 1990 conversion factor that is greater
than $15.49 but less than $16.51, the conversion factor for a
calendar year after 1990 and before 1996 shall be the greater
of—
"(I) the 1990 conversion factor, or
"(II) the conversion factor specified in subparagraph (A)(i)
for the year involved.
"(D) Notwithstanding subparagraph (C), in no case may the
conversion factor used to determine payment for services in a fee
schedule area or locality under this subsection, as adjusted by the
adjustment factors specified in subparagraphs (A)(iii), exceed the

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-93

conversion factor used to determine the amount paid for physicians'
services that are anesthesia services in the area or locality.".
SEC. 4161. COMMUNITY HEALTH CENTERS AND RURAL HEALTH CLINICS.
(a) COMMUNITY H E A L T H CENTERS.—

(1) COVERAGE.—Section 1861(s)(2)(E) of the Social Security Act
(42 U.S.C. 1395x(s)(2)(E)) is amended by inserting "and Federally
qualified health center services" after "rural health clinic
services".
(2) SERVICES DEFINED.—Section 1861(aa) of such Act is
amended—
(A) in the heading, by adding at the end the following:
"and Federally Qualified Health Center Services",
(B) in paragraph (3), by striking "paragraphs (1) and (2)"
and inserting "the previous provisions of this subsection"
and by redesignating such paragraph and paragraph (4) as
paragraph (5) and (6), respectively, and
(C) by inserting after paragraph (2) the following new
paragraphs:
"(3) The term 'Federally qualified health center services' means—
"(A) services of the type described in subparagraphs (A)
through (C) of paragraph (1), and
"(B) preventive primary health services that a center is required to provide under sections 329, 330, and 340 of the Public
Health Service Act,
when furnished to an individual as an outpatient of a Federally
qualified health center and, for this purpose, any reference to a
rural health clinic or a physician described in paragraph (2)(B) is
deemed a reference to a Federally qualified health center or a
physician at the center, respectively.
"(4) The term 'Federally qualified health center' means an entity
which—
"(A)(i) is receiving a grant under section 329, 330, or 340 of the
Public Health Service Act, or
"(iiXD is receiving funding from such a grant under a contract
with the recipient of such a grant, and (II) meets the requirements to receive a grant under section 329, 330, or 340 of such
Act;
"(B) based on the recommendation of the Health Resources
and Services Administration within the Public Health Service,
is determined by the Secretary to meet the requirements for
receiving such a grant; or
"(C) was treated by the Secretary, for purposes of part B, as a
comprehensive Federally funded health center as of January 1,
1990.".
(3) PAYMENTS.—

(A) I N GENERAL.—Section 1832(a)(2XD) of such Act (42
U.S.C. 1395k(a)(2)(D)) is amended by inserting "(i)" after
"(D)" and by inserting "and (ii) Federally qualified health
center services" after "rural health clinic services".
(B) DEDUCTIBLE DOES NOT APPLY.—The first sentence of
section 1833(b) of such Act (42 U.S.C. 139510))) is amended—
(i) by striking "and" before "(4)",
(ii) by inserting before the period at the end the
following: ", and (5) such deductible shall not apply to
Federally qualified health center services".

104 STAT. 1388-94

PUBLIC LAW 101-508—NOV. 5, 1990

(C) EXCLUSION FROM PAYMENT REMOVED.—Section 1862(a)
of such Act (42 U.S.C. 1395y(a)) is amended—
(i) in paragraph (2), by inserting ", except in the csise
of Federally qualified health center services" before the
semicolon at the end, and
(ii) in paragraph (3), by inserting ", in the case of
Federally qualified health center services, as defined in
section 1861(aa)(3)," after "1861(aa)(l),", and
(iii) by adding at the end the following new sentence:
"Paragraph (7) shall not apply to Federally qualified health center
services described in section 1861(aa)(3)(B).".
(4)

WAIVER

OF

ANTI-KICKBACK

REQUIREMENT.—Section

1128B(b)(3) of such Act (42 U.S.C. 1320a-7b(b)(3)) is amended—
(A) by striking "and" at the end of subparagraph (C),
(B) by redesignating subparagraph (D) as subparagraph
(E), and
(C) by inserting after subparagraph (C) the following new
subparagraph:
"(D) a waiver of any coinsurance under part B of title XVIII
by a Federally qualified health care center with respect to an
individual who qualifies for subsidized services under a provision of the Public Health Service Act; and".
(5) CONFORMING AMENDMENTS.—Section 1861 of such Act (42
U.S.C. 1395x) is further amended—
(A) in subsections (s)(2)(H)(i) and (s)(2)(K), by striking
"subsection (aa)(3)" and "subsection (aa)(4)" each place
either appears inserting "subsection (aa)(5)" and "subsection (aa)(6)", respectively, and
(B) in subsection (aa)(l)(B), by striking "paragraph (3)"
and inserting "paragraph (5)".
(6) PRRB REVIEW OF COST REPORTS FOR FEDERALLY QUAUFIED
HEALTH CENTERS.—Section 1878 of the Social Security Act (42

U.S.C. 1395oo) is amended by adding at the end the following
new subsection:
"(j) In this section, the term 'provider of services' includes a
Federally qualified health center.".
42 u s e 254b

note.

(7) G A O STUDY OF HOSPITAL STAFF PRIVILEGES FOR PHYSICIANS
PRACTICING IN COMMUNITY HEALTH CENTERS.—

(A) STUDY.—The Comptroller General shall conduct a
study of whether physicians practicing in community and
migrant health centers are able to obtain admitting privileges at local hospitals. The study shall review—
(i) how many physicians practicing in such centers
are without hospital admitting privileges or have been
denied admitting privileges at a local hospital, and
(i)(I) the criteria hospitals use in deciding whether to
grant admitting privileges and (II) whether such criteria act as significant barriers to health center physicians obtaining hospital privileges.
(B) REPORT.—By not later than 18 months after the date
of the enactment of this Act, the Comptroller General shall
submit a report on the study under subparagraph (A) to the
Committees on Ways and Means and Energy and Commerce of the House of Representatives and shall include in
such report such recommendations as the Comptroller General deems appropriate.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-95

(8) EFFECTIVE DATE.—(A) Subject to subparagraphs (B) and (C), 42 u s e 1395k
the amendments made by this section shall apply to services note.
furnished on or after October 1,1991.
(B) In the case of a Federally qualified health care center that
has elected, as of January 1, 1990, under part B of title XVIII of
the Social Security Act, to have the amount of payments for
services under such part determined on a reasonable-charge
basis, the amendment made by paragraph (3)(A) shall only
apply on and after such date (not earlier than October 1, 1991)
as the center may elect.
(C) The amendment made by paragraph (6) shall apply to cost
reports for periods beginning on or after October 1,1991.
(b) RURAL HEALTH CLINIC SERVICES.—
(1) EXPEDITED CERTIFICATION.—Section

1861(aa)(2) of the Social
Security Act (42 U.S.C. 1395x(aa)(2)) is amended by adding at
the end the following: "If a State agency has determined under
section 1864(a) that a facility is a rural health clinic and the
facility has applied to the Secretary for certification as such a
clinic, the Secretary shall notify the facility of the the Secretary's approval or disapproval of the certification not later
than 60 days after the date of the State agency determination or
the application (whichever is later).".
(2) TEMPORARY WAIVER OF STAFFING REQUIREMENTS.—Section

1861(aa) of such Act, as amended by subsection (a), is further
amended by adding at the end the following new paragraph:
"(7XA) The Secretary shall waive for a 1-year period the requirements of paragraph (2) that a rural health clinic employ a physician
assistant, nurse practitioner or certified nurse midwife or that such
clinic require such providers to furnish services at least 50 percent
of the time that the clinic operates for any facility that requests
such waiver if the facility demonstrates that the facility has been
unable, despite reasonable efforts, to hire a physician assistant,
nurse practitioner, or certified nurse-midwife in the previous 90-day
period.
"(B) The Secretary may not grant such a waiver under subparagraph (A) to a facility if the request for the waiver is made less than
6 months after the date of the expiration of any previous such
waiver for the facility.
"(C) A waiver which is requested under this paragraph shall be
deemed granted unless such request is denied by the Secretary
within 60 days after the date such request is received.".
(3) PRODUCTIVITY SCREENS.—In

employing

any

screening

42 u s e 1395x

guideline in determining the productivity of physicians, physi- note.
cian assistants, nurse practitioners, and certified nurse-midwives in a rural health clinic, the Secretary of Health and
Human Services shall provide that the guideline shall take into
account the combined services of such staff (and not merely the
service within each class of practitioner).
(4) PRRB REVIEW OF COST REPORTS FOR RURAL HEALTH CENTERS.—Section 18780') of the Social Security Act (42 U.S.C.
1395oo(j)), as added by subsection (a)(6), is amended by inserting
"a rural health clinic and" after "includes".
(5) EFFECTIVE DATE.—This subsection shall take effect on Octo- 42 u s e 1395x
ber 1, 1991, except that the amendment made by paragraph (4) note.
shall apply to cost reports for periods beginning on or after
October 1,1991.

104 STAT. 1388-96

PUBLIC LAW 101-508—NOV. 5, 1990

SEC. 4162. PARTIAL HOSPITALIZATION IN COMMUNITY MENTAL HEALTH
CENTERS.

42 use 1395k
"°**-

(a) IN GENERAL.—Section 1861(ff)(3) of the Social Security Act (42
U.S.C. 1395x(ff)(3)) is amended—
(1) by striking "(3)" and inserting "(3)(A)";
(2) by striking "outpatients" and inserting "outpatients or by
a community mental health center (as defined in subparagraph
(B)),"; and
(3) by adding at the end the following new subparagraph:
"(B) For purposes of subparagraph (A), the term 'community
mental health center' means an entity—
"(i) providing the services described in section 1916(c)(4) of the
Public Health Service Act; and
"(ii) meeting applicable licensing or certification requirements for community mental health centers in the State in
which it is located.".
(b) CONFORMING AMENDMENTS.—(1) Section 1832(a)(2) of such
Act (42 U.S.C. 1395k(a)(2)) as amended by section 4153(a)(2)(A), is
amended—
(A) by striking "and" at the end of subparagraph (H);
(B) by striking the period at the end of subparagraph (I)
and inserting "; and"; and
(C) by adding at the end the following new subparagraph:
"(J) partial hospitalization services provided by a community mental health center (as described in section
1861(ff)(2)(B)).".
(2) Section 1866(e) of such Act (42 U.S.C. 1395cc(e))) ^^ is
amended by striking "include a clinic" and all that follows
through the period and inserting the following: "include—
"(1) a clinic, rehabilitation agency, or public health agency if,
in the case of a clinic or rehabilitation agency, such clinic or
agency meets the requirements of section 1861(p)(4)(A) (or meets
the requirements of such section through the operation of section 1861(g)), or if, in the case of a public health agency, such
agency meets the requirements of section 1861(p)(4)(B) (or meets
the requirements of such section through the operation of section 1861(g)), but only with respect to the furnishing of outpatient physical therapy services (as therein defined) or
(through the operation of section 1861(g)) with respect to the
furnishing of outpatient occupational therapy services; and
"(2) a community mental health center (as defined in section
1861(ff)(3)(B)), but only with respect to the furnishing of partial
hospitalization services (as described in section 1861(ff)(l)).".
(c) EFFECTIVE DATE.—The amendments made by subsections (a)
and (b) shall apply with respect to partial hospitalization services
provided on or after October 1,1991.
SEC, 4163. COVERAGE OF SCREENING MAMMOGRAPHY.

(a) IN GENERAL.—Section 1861 of the Social Security Act (42 U.S.C.
1395x) is amended—
(1) in subsection (s)—
(A) in paragraph (11), by striking all that follows "(bb))"
and inserting a semicolon,
(B) in paragraph (12)(C), by striking all that follows
"area)" and inserting "; and", and
(C) by inserting after paragraph (12) the following new
paragraph:
'• So in original. Probably should be "(e))".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-97

"(13) screening mammography (as defined in subsection (jj));";
£ind

(2) by inserting after subsection (ii) the following new subsection:
"Screening Mammography
"(jj) The term 'screening mammography' mesins a radiologic
procedure provided to a woman for the purpose of early detection of
breast cancer and includes a physician's interpretation of the results
of the procedure.".
(b) PAYMENT AND COVERAGE.—Section 1834 of such Act (42 U.S.C,
1395m) is amended—
(1) in subsection (b)(1)(B), by inserting "and subject to subsection (c)(1)(A)" after "conversion factors", and
(2) by inserting after subsection (b) the following new subsection:
"(c) PAYMENTS AND STANDARDS FOR SCREENING MAMMOGRAPHY.—

"(1) I N GENERAL.—Notwithstanding any other provision of
this part, with respect to expenses incurred for screening
mammography (as defined in section 1861(ij))—
"(A) payment may be made only for screening mammography conducted consistent with the frequency permitted
under paragraph (2);
"(B) payment may be made only if the screening
mammography meets the quality standards established
under paragraph (3); and
"(C) the amount of the payment under this part shall,
subject to the deductible established under section 1833(b),
be equal to 80 percent of the least of—
"(i) the actual charge for the screening,
"(ii) the fee schedule established under subsection (b)
or the fee schedule established under section 1848,
whichever is applicable, with respect to both the professional and technical components of the screening
mammography, or
"(iii) the limit established under paragraph (4) for the
screening mammography.
"(2) FREQUENCY COVERED.—

"(A) IN GENERAL.—Subject to revision by the Secretary
under subparagraph (B)—
"(i) No payment may be made under this part for
screening mammography performed on a woman under
35 years of age.
"(ii) Payment may be made under this part for only 1
screening mammography performed on a woman over
34 years of age, but under 40 years of age.
"(iii) In the case of a woman over 39 years of age, but
under 50 years of age, who—
"(I) is at a high risk of developing breast cancer
(as determined pursuant to factors identified by
the Secretary), payment may not be made under
this part for a screening mammography performed
within the 11 months following the month in
which a previous screening mammography was
performed, or

104 STAT. 1388-98

PUBLIC LAW 101-508—NOV. 5, 1990
"(II) is not at a high risk of developing breast
cancer, payment may not be made under this part
for a screening mammography performed within
the 23 months following the month in which a
previous screening mammography was performed.
"(iv) In the case of a woman over 49 years of age, but
under 65 years of age, payment may not be made under
this part for screening mammography performed
within 11 months following the month in which a
previous screening mammography was performed.
"(v) In the case of a woman over 64 years of age,
payment may not be made for screening mammography performed within 23 months following the
month in which a previous screening mammography
was performed.
"(B) REVISION OF FREQUENCY.—

"(i) REVIEW.—The Secretary, in consultation with the
Director of the National Cancer Institute, shall review
periodically the appropriate frequency for performing
screening mammography, based on age and such other
factors as the Secretary believes to be pertinent.
"(ii) REVISION OF FREQUENCY.—The Secretary, taking
into consideration the review made under clause (i),
may revise from time to time the frequency with which
screening mammography may be paid for under this
subsection, but no such revision shall apply to screening mammography performed before January 1, 1992.
"(3) QuAUTY STANDARDS.—The Secretary shall establish
standards to assure the safety and accuracy of screening
mammography performed under this part. Such standards shall
include the requirements that—
"(A) the equipment used to perform the mammography
must be specifically designed for mammography and must
meet radiologic standards established by the Secretary for
mammography;
"(B) the mammography must be performed by an individual who—
"(i) is licensed by a State to perform radiological
procedures, or
"(ii) is certified as qualified to perform radiological
procedures by such an appropriate organization as the
Secretary specifies in regulations;
"(C) the results of the mammography must be interpreted
by a physician—
* (i) who is certified as qualified to interpret radiological procedures by such an appropriate board as the
Secretary specifies in regulations, or
"(ii) who is certified as qualified to interpret screening mammography procedures by such a program as
the Secretary recognizes in regulation as assuring the
qualifications of the individual with respect to such
interpretation; and
"(D) with respect to the first screening mammography
performed on a woman for which payment is made under
this part, there are satisfactory assurances that the results
of the mammography will be placed in permanent medical
records maintained with respect to the woman.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-99

"(4) LIMIT.—

"(A) $55, INDEXED.—Except as provided by the Secretary
under subparagraph (B), the limit established under this
paragraph—
"(i) for screening mammography performed in 1991,
is $55, and
"(ii) for screening mammography performed in a
subsequent year is the limit established under this
paragraph for the preceding year increased by the
percentage increase in the MEI for that subsequent
year.
"(B) REDUCTION OF LIMIT.—The Secretary shall review
from time to time the appropriateness of the amount of the
limit established under this paragraph. The Secretary may,
with respect to screening mammography performed in a
year after 1992, reduce the amount of such limit as it
applies nationally or in any area to the amount that the
Secretary estimates is required to assure that screening
mammography of an appropriate quality is readily and
conveniently available during the year.
"(C) APPUCATION OF LIMIT IN HOSPITAL OUTPATIENT SET-

TING.—The Secretary shall provide for an appropriate
allocation of the limit established under this paragraph
between professional and technical components in the case
of hospital outpatient screening mammography (and comparable situations) where there is a claim for professional
services separate from the claim for the radiologic procedure.
"(5)

LIMITING CHARGES OF NONPARTICIPATING PHYSICIANS.—

"(A) IN GENERAL.—In the case of mammography screening performed on or after January 1, 1991, for which payment is made under this subsection, if a nonparticipating
physician or supplier provides the screening to an individual entitled to benefits under this part, the physician or
supplier may not charge the individual more than the
limiting charge (as defined in subparagraph (B), or if less, as
defined in subsection (b)(5)(B) or as defined in section
1848(g)(2)).
"(B) LIMITING CHARGE DEFINED.—In subparagraph (A), the
term 'limiting charge' means, with respect to screening
mammography performed—
"(i) in 1991, 125 percent of the limit established
under paragraph (4),
"(ii) in 1992, 120 percent of the limit established
under paragraph (4), or
"(iii) after 1992, 115 percent of the limit established
under paragraph (4).
"(C) ENFORCEMENT.—If a physician or supplier knowing
and willfully imposes a charge in violation of subparagraph
(A), the Secretary may apply sanctions against such physician or supplier in accordance with section 1842(j)(2).".
(c) CERTIFICATION OF SCREENING MAMMOGRAPHY QUALITY STANDARDS.—

(1) Section 1863 of such Act (42 U.S.C. 1395z) is amended by
inserting "or whether screening mammography meets the
standards established under section 1834(c)(3)," after
"1832(a)(2)(F)(i),".

104 STAT. 1388-100

PUBLIC LAW 101-508—NOV. 5, 1990

(2) The first sentence of section 1864(a) of such Act (42 U.S.C.
1395aa(a)) is amended by inserting before the period the following: ", or whether screening mammography meets the standards established under section 1834(c)(3)".
(3) Section 1865(a) of such Act (42 U.S.C. 1395bb(a)) is
amended by inserting "1834(c)(3)," after "1832(a)(2)(F)(i),".
(d) CONFORMING AMENDMENTS.—

42 use 1395/
^°*®-

(1) Section 1833(a)(2)(E) of such Act (42 U.S.C. 13951(a)(2)(E)) is
amended by inserting ", but excluding screening mammography" after "imaging services".
(2) Section 1862(a) of such Act (42 U.S.C. 1395y(a)) is
amended—
(A) in paragraph (1)—
(i) in subparagraph (A), by striking "subparagraph
(B), (C), (D), or (E)" and inserting "a succeeding
subparagraph",
(ii) in subparagraph (D), by striking "and" at the end,
(iii) in subparagraph (E), by striking the semicolon at
the end and inserting ", and", and
(iv) by adding at the end the following new subparagraph:
"(F) in the case of screening mammography, which is performed more frequently than is covered under section 1834(c)(2)
or which does not meet the standards established under section
1834(c)(3), and, in the case of screening pap smear, which is
performed more frequently than is provided under section
1861(nn);"; and
(B) in paragraph (7), by inserting "or under paragraph
(1)(F)" after "(1)(B)".
(e) EFFECTIVE DATE.—The amendments made by this section shall
apply to screening mammography performed on or after January 1,
1991.
SEC. 4164. MISCELLANEOUS AND TECHNICAL PROVISIONS RELATING TO
PART B.
(a) EXTENSION OF DEMONSTRATIONS.—
(1) PREVENTION DEMONSTRATIONS.—Section

42USC1395b-l
^°^-

9314

of

the

Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended by section 9344 of the Omnibus Budget Reconciliation
Act of 1986, is amended—
(A) in subsection (a), by striking "4-year" and inserting
"5-year";
(B) in subsection (e)(2), by striking "Not later than five
years after the date of the enactment of this Act, the
Secretary shall submit a final report" and inserting "Not
later than April 1, 1993, the Secretary shall submit an
interim report";
(C) in subsection (e), by adding at the end the following
new paragraph:
"(3) Not later than April 1, 1995, the Secretary shall submit a
final report to those Committees on the demonstration program and
shall include in the report a comprehensive evaluation of the longterm effects of the program.". ^'^;
(D) in subsection (f), by striking "$5,900,000" and inserting "$7,500,000"; and
'^ So in original. Probably should be "program.";"

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-101

(E) in subsection (f), by inserting before the period at the
end the following: "and shall not exceed $3,000,000 for the
comprehensive evaluation referred to in subsection (e)(3)".
(2) ALZHEIMER'S DISEASE DEMONSTRATION PROJECTS.—Section

9342 of the Omnibus Budget Reconciliation Act of 1986 is 42USCl395b-l
amended—
"°*®(A) in subsection (c)(1), by striking "3 years" and inserting
"4 years";
(B) in subsection (d)(1), by striking "third year" and
inserting "fourth year";
(C) in subsection (f)—
(i) by striking "$40,000,000" and inserting
"$55,000,000", and
(ii) by striking "$2,000,000" and inserting
"$3,000,000".
(b) DISCLOSURE OF OWNERSHIP.—

(1) I N GENERAL.—Title XI of the Social Security Act is
amended by inserting after section 1124 the following new
section:
DISCLOSURE REQUIREMENTS FOR OTHER PROVIDERS UNDER PART B OF
MEDICARE
"SEC. 1124A. (a) DISCLOSURE REQUIRED TO RECEIVE PAYMENT.—No 42 use i320a-3.
payment may be made under part B of title XVIII for items or
services furnished by any disclosing part B provider unless
such provider has provided the Secretary with full and complete
information—
"(1) on the identity of each person with an ownership or
control interest in the provider or in any subcontractor (as
defined by the Secretary in regulations) in which the provider
directly or indirectly has a 5 percent or more ownership interest; and
"(2) with respect to any person identified under paragraph (1)
or any managing employee of the provider—
"(A) on the identity of any other entities providing items
or services for which payment may be made under title
XVIII of the Social Security Act with respect to which such
person or managing employee is a person with an ownership or control interest at the time such information is
supplied or at any time during the 3-year period ending on
the date such information is supplied, and
"(B) as to whether any penalties, assessments, or exclusions have been assessed against such person or managing
employee under section 1128,1128A, or 1128B.
"(b) UPDATES TO INFORMATION SUPPLIED.—A disclosing part B
provider shall notify the Secretary of any changes or updates to the
information supplied under subsection (a) not later than 180 days
after such changes or updates take effect.
"(c) DEFINITIONS.—For purposes of this section—
"(1) the term 'disclosing part B provider' means any entity
receiving payment on an assignment-related basis for furnishing items or services for which payment may be made under
part B of title XVIII, except that such term does not include an
entity described in section 1124(a)(2);
"(2) the term 'managing employee' means, with respect to a
provider, a person described in section 1126(b); and

104 STAT. 1388-102

PUBLIC LAW 101-508—NOV. 5, 1990

"(3) the term 'person with an ownership or control interest'
means, with respect to a provider—
"(A) a person described in section 1124(a)(3), or
"(B) a person who has one of the 5 largest direct or
indirect ownership or control interests in the provider.".
(2) CRIMINAL PENALTY FOR PROVIDING FALSE INFORMATION.—

Section 1128B(c) of such Act (42 U.S.C. 1320a-7b(c)) is amended
by striking "health care program" and inserting "health care
program, or with respect to information required to be provided
under section 1124A,".
(3) FAILURE TO PROVIDE INFORMATION AS GROUNDS FOR PERMISSIVE EXCLUSION FROM PROGRAM.—Section 1128(b)(9) of such Act
42 u s e 1320a-3a
note.

42USC1395U
note.

(42 U.S.C. 1320a-7(b)(9)) is amended by striking "1124" and
inserting "1124, section 1124A,".
(4) EFFECTIVE DATE.—The amendments made by paragraph
(1), (2), and (3) shall apply with respect to items or services
furnished on or after—
(A) January 1, 1993, in the case of items or services
furnished by a provider who, on or before the date of the
enactment of this Act, has furnished items or services for
which payment may be made under part B of title XVIII of
the Social Security Act; or
(B) January 1, 1992, in the case of items or services
furnished by any other provider.
(c) DIRECTORY OF UNIQUE PHYSICIAN IDENTIFIER NUMBERS.—Not

later than March 31, 1991, the Secretary of Health and Human
Services shall publish a directory of the unique physician identification numbers of all physicians providing services for which payment
may be made under part B of title XVIII of the Social Security Act,
and shall include in such directory the names, provider numbers,
and billing addressess of all listed physicians.

PART 3—PROVISIONS RELATING TO PARTS A
ANDB
SEC. 4201. PROVISIONS RELATING TO END STAGE RENAL DISEASE.
42 u s e 1395rr
note.

42 u s e 1395rr
note.

(a) INCREASE IN COMPOSITE RATES.—Section 9335(a)(1) of the Omnibus Budget Reconciliation Act of 1986, as amended by section
6203(a)(1) of the Omnibus Budget Reconciliation Act of 1989, is
amended—
(1) by striking "October 1, 1990," and inserting "December 31,
1990,"; and
(2) by inserting after the first sentence the following: "With
respect to services furnished on or after January 1, 1991, such
base rate shall be equal to the respective rate in effect as of
September 30, 1990 (determined without regard to any reductions imposed pursuant to section 6201 of the Omnibus Budget
Reconciliation Act of 1989), increased by $1.00.".
(b) PROP AC STUDY ON E S R D COMPOSITE RATES.—
(1) IN GENERAL.—

(A) STUDY.—The Prospective Payment Assessment
Commission (in this subsection referred to as the "Commission") shall conduct a study to determine the costs and
services and profits associated with various modalities of
dialysis treatments provided to end stage renal disease

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-103

patients provided under title XVIII of the Social Security
Act.
(B) RECOMMENDATIONS.—Based on information collected
for the study described in subparagraph (A), the Commission shall make recommendations to Congress regarding
the method or methods and the levels at which the payments made for the facility component of dialysis services
by providers of service and renal dialysis facilities under
title XVIII of the Social Security Act should be established
for dialysis services furnished during fiscal year 1993 and
the methodology to be used to update such payments for
subsequent fiscal years. In making recommendations
concerning the appropriate methodology the Commission
shall consider—
(i) hemodialysis and other modalities of treatment,
(ii) the appropriate services to be included in such
payments,
(iii) the adjustment factors to be incorporated including facility characteristics, such as hospital versus freestanding facilities, urban versus rural, size and mix of
services,
(iv) adjustments for labor and nonlabor costs,
(v) comparative profit margins for all types of renal
dialysis providers of service and renal dialysis facilities,
(vi) adjustments for patient complexity, such as age,
diagnosis, case mix, and pediatric services, and
(vii) efficient costs related to high quality of care and
positive outcomes for all treatment modalities.
(2) REPORT.—Not later than June 1, 1992, the Commission
shall submit a report to the Committee on Finance of the
Senate, and the Committees on Ways and Means and Energy
and Commerce of the House of Representatives on the study
conducted under paragraph (1)(A) and shall include in the
report the recommendations described in paragraph (1)(B),
taking into account the factors described in paragraph (1)(B).
(3) ANNUAL REPORT.— The Commission, not later than
March 1 before the beginning of each fiscal year (beginning with
fiscal year 1993) shall report its recommendations to the
Committee on Finance of the Senate and the Committees on
Ways and Means and Energy and Commerce of the House of
Representatives on an appropriate change factor which should
be used for updating payments for services rendered in that
fiscal year. The Commission in making such report to Congress
shall consider conclusions and recommendations available from
the Institute of Medicine.
(c) PAYMENT RATES FOR ERYTHROPOIETIN.—

(1) IN GENERAL.—Section 1881(b)(ll) of the Social Security Act
(42 U.S.C. 1395rr(b)) is amended—
(A) by striking "(H)" and inserting "(HXA)"; and
(B) by adding at the end the following new subparagraph:
"(B) Erythropoietin, when provided to a patient determined to
have end stage renal disease, shall not be included as a dialysis
service for purposes of payment under any prospective payment
amount or comprehensive fee established under this section, and
payment for such item shall be made separately—
"(i) in the case of erj^hropoietin provided by a physician, in
accordance with section 1833; and

104 STAT. 1388-104

42 use I395rr
°°*®'

PUBLIC LAW 101-508—NOV. 5, 1990

"(ii) in the case of er3d;hropoietin provided by a provider of
services, renal dialysis facility, or other supplier of home dialysis supplies and equipment—
"(I) for erythropoietin provided during 1991, in an
amount equal to $11 per thousand units (rounded to the
nearest 100 units), and
"(ID for erythropoietin provided during a subsequent
year, in an amount determined to be appropriate by the
Secretary, except that such amount may not exceed the
amount determined under this clause for the previous year
increased by the percentage increase (if any) in the implicit
price deflator for gross national product (as published by
the Department of Commerce) for the second quarter of the
preceding year over the implicit price deflator for the
second quarter of the second preceding year.".
(2) EFFECTIVE DATE.—The amendments made by paragraph (1)
shall apply to er5rthropoietin furnished on or after January 1,
1991.
(d) SELF-ADMINISTERED ERYTHROPOIETIN.—

42 use 1395x
^°^42 u s e 1395rr

(1) COVERAGE.—Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) as
amended by section 4156(a)(1), is amended—
(A) by striking "and" at the end of subparagraph (N);
(B) by adding and" at the end of subparagraph (O); and
(C) by adding at the end the following new subparagraph:
"(P) erjrthropoietin for home dialysis patients competent
to use such drug without medical or other supervision with
respect to the administration of such drug, subject to methods and standards established by the Secretary by regulation for the safe and effective use of such drug, and items
related to the administration of such drug;".
(2) COVERAGE FOR METHOD II PATIENTS.—Section 1881(b) (42
U.S.C. 1395rr(b)) is further amended—
(A) in paragraph (1)—
(B) by striking "and (B)" and inserting "(B), 18 and
(C) by striking "equipment." and inserting "equipment,
and (C) payments to a supplier of home dialysis supplies
and equipment that is not a provider of services, a renal
dialysis facility, or a physician for self-administered
erythropoietin as described in section 1861(s)(2)(Q) if the
Secretary finds that the patient receiving such drug from
such a supplier can safely and effectively administer the
drug (in accordance with the applicable methods and standards established by the Secretary pursuant to such section)."; and
(3) by adding at the end of paragraph (11), as amended by
subsection (c), the following new subparagraph:
"(C) The amount payable to a supplier of home dialysis supplies
and equipment that is not a provider of services, a renal dialysis
facility, or a physician for erjrthropoietin shall be determined in the
same manner as the amount payable to a renal dialysis facility for
such item.".
(3) EFFECTIVE DATE.—The amendments made by paragraphs
(1) and (2) shall apply to items and services furnished on or after
July 1,1991.
SEC. 4202. STAFF-ASSISTED HOME DIALYSIS DEMONSTRATION PROJECT.
(a) ESTABLISHMENT.—
" So in original. Probably should be " "(B)", ".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-105

(1) IN GENERAL.—Not later than 9 months after the date of the
enactment of this Act, the Secretary of Health and Human
Services shall establish and carry out a 3-year demonstration
project to determine whether the services of a home dialysis
staff assistant providing services to a patient during
hemodialysis treatment at the patient's home may be covered
under the medicare program in a cost-effective manner that
ensures patient safety.
(2) NUMBER OF PARTICIPANTS.—The total number of eligible
patients receiving services under the demonstration project
established under paragraph (1) may not exceed 800.
(b) PAYMENTS TO PARTICIPATING PROVIDERS AND FACILITIES.—
(1) SERVICES FOR WHICH PAYMENT MAY BE MADE.—

(A) IN GENERAL.—Under the demonstration project established under subsection (a), the Secretary shall make payments for 3 years under title XVIII of the Social Security
Act to providers of services (other than a skilled nursing
facility) or renal dialysis facilities for services of a home
hemodialysis staff assistant provided to an individual described in subsection (c) during hemodialysis treatment at
the individual's home in an amount determined under
paragraph (2).
(B) SERVICES DESCRIBED.—For purposes of subparagraph
(A), the term "services of a home hemodialysis staff assistant" means—
(i) technical sissistance with the operation of a
hemodialysis machine in the patient's home and with
such patient's care during in-home hemodialysis; and
(ii) administration of medications within the patient's home to maintain the patency of the extra
corporeal circuit.
(2) AMOUNT OF PAYMENT.—

(A) IN GENERAL.—Payment to a provider of services or
renal dialysis facility participating in the demonstration
project established under subsection (a) for the services
described in paragraph (1) shall be prospectively determined by the Secretary, made on a per treatment basis, and
shall be in an amount determined under subparagraph (B).
(B)

DETERMINATION

OF

PAYMENT

AMOUNT.—(i)

The

amount of payment made under subparagraph (A) shall be
the product of—
(I) the rate determined under clause (ii) with respect
to a provider of services or a renal dialysis facility; and
(II) the factor by which the labor portion of the
composite rate determined under section 1881(b)(7) of
the Social Security Act is adjusted for differences in
area wage levels.
(ii) The rate determined under this clause, with respect to
a provider of services or renal dialysis facility, shall be
equal to the difference between—
(I) two-thirds of the labor portion of the composite
rate applicable under section 1881(b)(7) of such Act to
the provider or facility (as adjusted to reflect differences in area wage levels), and
(II) the product of the national median hourly wage
for a home hemodialysis staff assistant and the national median time expended in the provision of home

-194 O - 91 - 17 : QL 3 Part 2

104 STAT. 1388-106

PUBLIC LAW 101-508—NOV. 5, 1990
hemodialysis staff assistant services (taking into account time expended in travel and predialysis patient
care),
(iii) For purposes of clause (ii)(II)—
(I) the national median hourly wage for a home
hemodialysis staff assistant and the national median
average time expended for home hemodialysis staff
assistant services shall be determined annually on the
basis of the most recent data available, and
(II) the national median hourly wage for a home
hemodialysis staff assistant shall be the sum of 65
percent of the national median hourly wage for a licensed practical nurse and 35 percent of the nationial
median hourly wage for a registered nurse.
(C) PAYMENT AS ADD-ON TO COMPOSITE RATE.—The amount
of payment determined under this paragraph shall be in
addition to the amount of payment otherwise made to the
provider of services or renal dialysis facility under section
1881(b) of such Act.

(c) INDIVIDUALS EUGIBLE TO RECEIVE SERVICES UNDER PROJECT.—

(1) I N GENERAL.—An individual may receive services from a
provider of services or renal dialysis facility participating in the
demonstration project if—
(A) the individual is not a resident of a skilled nursing
facility;
(B) the individual is an end stage renal disease patient
entitled to benefits under title XVIII of the Social Security
Act;
(C) the individual's physician certifies that the individual
is confined to a bed or wheelchair and cannot transfer
themselves from a bed to a chair;
(D) the individual has a serious medical condition (as
specified by the Secretary) which would be exacerbated by
travel to and from a dialysis facility;
(E) the individual is eligible for ambulance transportation
to receive routine maintenance dialysis treatments, and,
based on the individual's medical condition, there is reasonable expectation that such transportation will be used by
the individual for a period of at least 6 consecutive months,
such that the cost of ambulance transportation can reasonably be expected to meet or exceed the cost of home
hemodialysis staff Eissistance as provided under subsection
(b)(4); and
(F) no family member or other individual is available to
provide such assistance to the individual.
(2) COVERAGE OF INDIVIDUALS CURRENTLY RECEIVING SERV-

ICES.—Any individual who, on the date of the enactment of this
Act, is receiving staff assistance under the experimental authority provided under section 1881(fX2) of the Social Security Act
shall be deemed to be an eligible individual for purposes of this
subsection.
(3)

CONTINUATION

OF

COVERAGE

UPON

TERMINATION

OF

PROJECT.—Notwithstanding any provision of title XVIII of the
Social Security Act, any individual receiving services under the
demonstration project established under subsection (a) as of the
date of the termination of the project shall continue to be
eligible for home hemodialysis staff assistance after such date

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-107

under such title on the same terms and conditions as applied
under the demonstration project.
(d) QUALIFICATIONS FOR HOME HEMODIALYSIS STAFF ASSISTANTS.—

For purposes of subsection (b), a home dialysis aide is qualified if the
aide—
(1) meets minimum qualifications as specified by the Secretary; and
(2) meets any applicable qualifications as specified under the
law of the State in which the home hemodialysis staff assistant
is providing services.
(e) REPORTS.—
(1) INTERIM STATUS REPORT.—Not

later than December 1,1992,
the Secretary shall submit to Congress a preliminary report on
the status of the demonstration project established under
subsection (a).
(2) FINAL REPORT.—Not later than December 31, 1995, the
Secretary shall submit to Congress a final report evaluating the
project, and shall include in such report recommendations
regarding appropriate eligibility criteria and cost-control
mechanisms for medicare coverage of the services of a home
dialysis aide providing medical assistance to a patient during
hemodialysis treatment at the patient's home.
(f) AUTHORIZATION OF APPROPRIATIONS.—The Secretary shall provide for the transfer from the Federal Supplementary Medical
Insurance Trust-^und (established under section 1841 of the Social
Security Act) of not more than the following amounts to carry out
the demonstration project established under subsection (a) (without
regard to amounts appropriated in advance in appropriation Acts):
(1) For fiscal year 1991, $4,000,000.
(2) For fiscal year 1992, $4,000,000.
(3) For fiscal year 1993, $3,000,000.
(4) For fiscal year 1994, $2,000,000.
(5) For fiscal year 1995, $1,000,000.
SEC. 4203. EXTENSION OF SECONDARY PAYOR PROVISIONS.
(a) EXTENSION OF TRANSFER OF DATA.—

(1) Section 1862(b)(5)(C)(iii) (42 U.S.C. 1395y(b)(5)(C)(iii)) is
'
amended by striking "September 30, 1991" and inserting
"September 30,1995".
(2) Section 6103(1)(12)(F) of the Internal Revenue Code of 1986 26 USC 6103.
is amended—
(A) in clause (i), by striking "September 30, 1991" and
inserting "September 30,1995'^
(B) in clause (ii)(I), by striking "1990" and inserting
"1994"; and
(C) in clause (ii)(II), by striking "1991" and inserting
"1995".
Qo) EXTENSION OF APPLICATION TO DISABLED BENEFICIARIES.—Sec-

tion 186203)(l)(B)(iii) (42 U.S.C. 1395y(b)(l)(B)(iii)) is amended by
striking "January 1,1992" and inserting "October 1,1995".
(c) INDIVIDUALS WITH END STAGE RENAL DISEASE.—

(1) IN GENERAL.—Section 1862(b)(1)(C) (42 U.S.C. 1395y(b)(l)(C))
is amended—
(A) in clause (i), by striking "during the 12-month period"
and all that follows and inserting "during the 12-month
period which begins with the first month in which the
individual becomes entitled to benefits under part A under

104 STAT. 1388-108

*

42 u s e 1395y

"°*®'

26 use 6103
"

PUBLIC LAW 101-508—NOV. 5, 1990
the provisions of section 226A, or, if earlier, the first month
in which the individual would have been entitled to benefits
under such part under the provisions of section 226A if the
individual had filed an application for such benefits; and"
(B) in the matter following clause (ii), by adding at the
end the following: "Effective for items and services furnished on or after February 1, 1991, and on or before
January 1, 1996, (with respect to periods beginning on or
after February 1, 1990), clauses (i) and (ii) shall be applied
by substituting '18-month' for '12-month' each place it
appears.".
(2) G A O STUDY OF EXTENSION OF SECONDARY PAYER PERIOD.—

(A) The Comptroller General shall conduct a study of the impact
of the application of clause (iii) of section 1862(b)(1)(C) of the
Social Security Act on individuals entitled to benefits under
title XVIII of such Act by reason of section 226A of such Act,
and shall include in such report information relating to—
(i) the number (and geographic distribution) of such
individuals for whom medicare is secondary;
(ii) the amount of savings to the medicare program
achieved annually by reason of the application of such
clause;
(iii) the effect on access to employment, and employmentbased health insurance, for such individuals and their
family members (including coverage by employment-based
health insurance of cost-sharing requirements under medicare after such employment-based insurance becomes
secondary);
(iv) the effect on the amount paid for each dialysis treatment under employment-based health insurance;
(v) the effect on cost-sharing requirements under employment-based health insurance (and on out-of-pocket expenses
of such individuals) during the period for which medicare is
secondary;
(vi) the appropriateness of applying the provisions of
section 1862(b)(1)(C) to all group health plans.
(B) The Comptroller General shall submit a preliminary
report on the study conducted under subparagraph (A) to the
Committees on Ways and Means and Energy and Commerce of
the House of Representatives and the Committee on Finance of
the Senate not later than January 1, 1993, and a final report on
such study not later than January 1,1995.
((J) EFFECTIVE DATE.—The amendments made this subsection shall
take effect on the date of the enactment of this Act and the
amendment made by subsection (a)(2)(B) shall apply to requests
made on or after such date.
SEC. 4204. HEALTH MAINTENANCE ORGANIZATIONS.
(a) REGULATION OF INCENTIVE PAYMENTS TO PHYSICIANS.—

(1) IN GENERAL.—Section 1876(i) (42 U.S.C. 1395mm(i)) is
amended by adding at the end the following new paragraph:
"(8)(A) Each contract with an eligible organization under this
section shall provide that the organization may not operate any
physician incentive plan (as defined in subparagraph (B)) unless the
following requirements are met:
"(i) No specific payment is made directly or indirectly under
the plan to a physician or physician group as an inducement to

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-109

reduce or limit medically necessary services provided with respect to a specific individual enrolled with the organization,
"(ii) If the plan places a physician or physician group at
substantial financial risk (as determined by the Secretary) for
services not provided by the physician or physician group, the
organization—
"(I) provides stop-loss protection for the physician or
group that is adequate and appropriate, based on standards
developed by the Secretary that take into account the
number of physicians placed at such substantial financial
risk in the group or under the plan and the number of
individuals enrolled with the organization who receive services from the physician or the physician group, and
"(II) conducts periodic surveys of both individuals enrolled and individuals previously enrolled with the
organization to determine the degree of access of such
individuals to services provided by the organization and
satisfaction with the quality of such services.
"(iii) The organization provides the Secretary with descriptive
information regarding the plan, sufficient to permit the Secretary to determine whether the plan is in compliance with the
requirements of this subparagraph.
"(B) In this paragraph, the term 'physician incentive plan' means
any compensation arrangement between an eligible organization
and a physician or physician group that may directly or indirectly
have the effect of reducing or limiting services provided with respect
to individuals enrolled with the organization.".
(2)
PENALTIES.—Section
1876(i)(6)(A)(vi)
(42
U.S.C.
1395mm(i)(6)(A)(vi)) is amended by striking "(g)(6)(A);" and
inserting "(g)(6)(A) or paragraph (8);".
(3) REPEAL OF PROHIBITION.—Section 1128A(b)(l) (42 U.S.C.
1320a-7a(b)(l)) is amended—
(A) by striking ", an eligible organization" and all that
follows through "section 1876,",
(B) by adding "and" at the end of subparagraph (A),
(C) by striking subparagraph (B),
(D) by redesignating subparagraph (C) as subparagraph
(B), and
(E) by striking "or organization".
(4) EFFECTIVE DATE.—The amendments made by paragraphs 42 u s e 1395mm
(1) and (2) shall apply with respect to contract years beginning note.
on or after January 1, 1992, and the amendments made by
paragraph (3) shall take effect on the date of the enactment of
this Act.
(b) REQUIREMENTS WITH RESPECT TO ACTUARIAL EQUIVALENCE OF 42 u s e 1395mm

AAPCC—(1) Not later than January 1, 1992, the Secretary of note.
Health and Human Services (in this section referred to as the
"Secretary") shall submit a proposal to Congress that provides for a
modified payment method for organizations with a risk contract
under section 1876(g) of the Social Security Act that is more accurate than the current payment methodology in predicting the
actual service utilization and annual medical expenditures of the
beneficiary population enrolled in a specific organization.
(2) The proposal shall include—
(A)(i) recommendations on modifying the current adjusted
average per capita cost formula, by adding predictors of medical

104 STAT. 1388-110

PUBLIC LAW 101-508—NOV. 5, 1990

utilization such as health status adjusters or prior utilization
measures; or
(ii) recommendations for a new payment methodology as an
alternative to the adjusted average per capita cost;
(B) data to support any recommended changes in payment
methodology for organizations with risk contracts under section
1876(g) of the Social Security Act; and
(C) analysis demonstrating that any proposed or revised payment methodology under this section is effective in explaining
at least 15 percent of the variation in health care utilization and
costs (as determined in consultation with the American Academy of Actuaries) among individuals enrolled in such organizations.
(3) Not later than March 1,1992, the Secretary shall cause to have
published in the Federal Register a proposed rule providing for the
implementation of the payment methodology specified in the proposal submitted pursuant to paragraph (1).
(4) Not later than May 1, 1992, the Comptroller General shall
review the proposal and recommendations made pursuant to paragraphs (1) and (2), and shall report to Congress on appropriate
modifications in such payment methodology.
(5) Taking into account the recommendations made pursuant to
paragraph (4), on or after August 1, 1992, the Secretary shall issue a
final rule implementing a payment methodology that meets the
requirements of paragraph (1), effective for contract years beginning
on or after January 1,1993.
(c) APPLICATION OF NATIONAL COVERAGE DECISIONS.—

(1) IN GENERAL.—Section 1876(c)(2) (42 U.S.C. 1395mm(c)(2)) is
amended—
(A) by redesignating clauses (i) and (ii) and subparagraphs
(A) and (B) as subclauses (I) and (II) and clauses (i) and (ii),
respectively;
(B) by inserting "(A)" after "(2)"; and
(C) by adding at the end the following new subparagraph:
"(B) If there is a national coverage determination made in the
period beginning on the date of an announcement under subsection
(a)(1)(A) and ending on the date of the next announcement under
such subsection that the Secretary projects will result in a signifcant ^^ change in the costs to the organization of providing the
benefits that are the subject of such national coverage determination and that was not incorporated in the determination of the per
capita rate of payment included in the announcement made at the
beginning of such period—
"(i) such determination shall not apply to risk-sharing contracts under this section until the first contract year that begins
after the end of such period; and
"(ii) if such coverage determination provides for coverage of
additional benefits or under additional circumstances, subsection (a)(3) shall not apply to payment for such additional benefits or benefits provided under such additional circumstances
until the first contract year that begins after the end of such
period,
unless otherwise required by law.".
(2) CONFORMING AMENDMENT.—Section 1876(a)(6) of such Act
is amended by striking "subsection (c)(7)" and inserting
"subsections (c)(2)(B)(ii) and (c)(7)".
1* So in original. Probably should be "significant".

*St^'««*'

'*"

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-111

(3) EFFECTIVE DATE.—The amendments made by this subsec- 42 u s e 1395mm
tion shall apply with respect to national coverage determina- note.
tions that are not incorporated in the determination of the per
capita rate of payment for individuals enrolled for 1991 with an
eligible organization which has entered into a risk-sharing contract under section 1876 of the Social Security Act.
(d) PAYMENTS FOR SERVICES FURNISHED BY NON-CONTRACT PROVIDERS.—

(1) I N GENERAL.—Section 1876(j) (42 U.S.C. 1395mm(j)) is
amended—
(A) in paragraph (1)(A)—
(i) by striking "physician" each place it appears and
inserting "physician or provider of services or renal
dialysis facility",
(ii) by striking "physicians' services" and inserting
"physicians' services or renal dialysis services", and
(iii) by striking "participation agreement under section 1842(h)(1)" and inserting "applicable participation
agreement",
(B) in paragraph (2)—
(i) by striking "physicians' services" each place it
appears and inserting "physicians' services or renal
dialysis services", and
(ii) by striking "which—" and all that follows and
inserting "which are furnished to an enroUee of an
eligible organization under this setion ^o by a physician, provider of services, or renal dialysis facility who
is not under a contract with the organization.".
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 42 u s e 1395mm
shall apply with respect to items and services furnished on or note.
after January 1,1991.
(e) RETROACTIVE ENROLLMENT.—

(1) IN GENERAL.—Section
1876(a)(1)(E)
(42
U.S.C.
1395mm(a)(l)(E)) is amended—
(A) by striking "(E)" and inserting "(E)(i)"; and
(B) by adding at the end the following new clause:
"(ii)(I) Subject to subclause (II), the Secretary may make retroactive adjustments under clause (i) to take into account individuals
enrolled during the period beginning on the date on which the
individual enrolls with an eligible organization (which has a risksharing contract under this section) under a health benefit plan
operated, sponsored, or contributed to, by the individual's employer
or former employer (or the employer or former employer of the
individual's spouse) and ending on the date on which the individual
is enrolled in the plan under this section, except that for purposes of
making such retroactive adjustments under this clause, such period
may not exceed 90 days.
"(II) No adjustment may be made under subclause (I) with respect
to any individual who does not certify that the organization provided the individual with the explanation described in subsection
(c)(3)(E) at the time the individual enrolled with the organization.".
(2) EFFECTIVE DATE.—The amendments made by paragraph (1) 42 u s e 1395mm
shall apply with respect to individuals enrolling with an eligible note.
organization (which has a risk-sharing contract under section
1876 of the Social Security Act) under a health benefit plan
operated, sponsored, or contributed to, by the individual's em^^ So in original. Probably should be "section".

104 STAT. 1388-112

PUBLIC LAW 101-508—NOV. 5, 1990

ployer or former employer (or the employer or former employer
of the individual's spouse) on or after January 1, 1991.
42 u s e 1395mm

^°^-

(f) S T U D Y OF CHIROPRACTIC SERVICES.—

(1) The Secretary shall conduct a study of the extent to which
health maintenance organizations with contracts under section
1876 of the Social Security Act make available to enroUees
entitled to benefits under title XVIII of such Act chiropractic
services that are covered under such title.
(2) The study shall examine the arrangements under which
such services are made available and the types of practitioners
furnishing such services to such enrollees.
(3) The study shall be based on contracts entered into or
renewed on or after January 1, 1991, and before January 1,
1993.
(4) The Secretary shall issue a final report to the Committees
on Ways and Means and Energy and Commerce of the House of
Representatives and the Committee on Finance of the Senate on
the results of the study not later than January 1, 1993. The
report shall include recommendations with respect to any legislative and regulatory changes that the Secretary determines are
necessary to ensure access to such services.
(g) PROHIBITING CERTAIN EMPLOYER MARKETING ACTIVITIES.—

42 use 1395y
"°*®"

(1) IN GENERAL.—Section 1862(b)(3) (42 U.S.C. 1395y(b)(3)) is
amended by adding at the end the following new subparagraph:
"(C) PROHIBITION OF FINANCIAL INCENTIVES NOT TO ENROLL
IN A GROUP HEALTH PLAN.—It is unlawful for an employer or
other entity to offer any financial or other incentive for an
individual entitled to benefits under this title not to enroll
(or to terminate enrollment) under a group health plan
which would (in the case of such enrollment) be a primary
plan (as defined in paragraph (2)(A)), unless such incentive
is also offered to all individuals who are eligible for coverage under the plan. Any entity that violates the previous
sentence is subject to a civil money penalty of not to exceed
$5,000 for each such violation. The provisions of section
1128A (other than the first sentence of subsection (a) and
other than subsection (b)) shall apply to a civil money
penalty under the previous sentence in the same manner as
such provisions apply to a penalty or proceeding under
section 1128A(a).".
(2) EFFECTIVE DATE.—The amendment made by paragraph (1)
shall apply to incentives offered on or after the date of the
enactment of this Act.
SEC. 4205. PEER REVIEW ORGANIZATIONS.
(a) USE OF CORRECTIVE ACTION PLANS.—

(1) IN GENERAL.—Section 1156(b)(1) (42 U.S.C. 1320c-5(b)(l)) is
amended—
(A) by inserting "and, if appropriate, after the practitioner or person has been given a reasonable opportunity to
enter into and complete a corrective action plan (which
may include remedial education) agreed to by the organization, and has failed successfully to complete such plan,"
after "concerned,"; and
(B) by inserting after the second sentence the following:
"In determining whehter^i a practitioner or person has
demonstrated an unwillingness or lack of ability substan*• So in originid. Probably should be "whether".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-113

tially to comply with such obligations, the Secretary shall
consider the practitioner's or person's willingness or lack of
ability, during the period before the organization submits
its report and recommendations, to enter into and successfully complete a corrective action plan.".
(2) EFFECTIVE DATE.—The amendments made by paragraph (1) 42 u s e 1320C-5
shall apply to initial determinations made by organizations on note.
or after the date of the enactment of this Act.
(b) TREATMENT OF OPTOMETRISTS AND PODIATRISTS.—

(1) IN GENERAL.—Section 1154 (42 U.S.C. 1820c-3) is
amended—
(A) in subsection (a)(7)(A)(i), by inserting ", optometry,
and podiatry" after "dentistry"; and
(B) in subsection (c), by striking "or dentistry"
each place it appears and inserting "dentistry, optometry,
or podiatry".
(2) EFFECTIVE DATE.—The amendments made by paragraph (1) 42 u s e 1320C-3
shall apply to contracts entered into or renewed on or after the note.
date of the enactment of this Act.
(c) COORDINATION OF P R O S AND CARRIERS.—
(1) DEVELOPMENT AND IMPLEMENTATION OF PLAN.—The Sec-

retary of Health and Human Services shall develop and implement a plan to coordinate the physician review activities of peer
review organizations and carriers. Such plan shall include—
(A) the development of common utilization and medical
review criteria;
(B) criteria for the targetting of reviews by peer review
organizations and carriers; and
(C) improved methods for exchange of information among
peer review organizations and carriers.
(2) REPORT.—Not later than January 1, 1992, the Secretary
shall submit to Congress a report on the development of the
plan described under paragraph (1) and shall include in the
report such recommendations for changes in legislation as may
be appropriate.
(d) PEER REVIEW NOTICE.—
(1) NOTICE OF PROPOSED SANCTIONS.—

(A) REQUIREMENT.—Section 1154(a)(9) (42 U.S.C. 1320c3(a)(9)) is amended—
(i) by inserting "(A)" after "(9)"; and
(ii) by adding at the end the following:
"(B) If the organization finds, after notice and hearing, that a
physician has furnished services in violation of this subsection,
the organization shall notify the State board or boards responsible for the licensing or disciplining of the physician of its
finding and decision.".
(B) DISCLOSURE.—Section 1160(b)(1) (42 U.S.C. 1320c9(b)(1)) is amended—
(i) by striking "and" at the end of subparagraph (B),
(ii) by adding "and" at the end of subparagraph (C),
and
(iii) by adding at the end the following new subparagraph:
"(D) to provide notice to the State medical board in
accordance with section 1154(a)(9)(B) when the organization
submits a report and recommendations to the Secretary

42 u s e 1320c
note.

104 STAT. 1388-114

42 use 1320C-3
"°*®-

PUBLIC LAW 101-508—NOV. 5, 1990
under section 1156G3)(1) with respect to a physician whom
the board is responsible for licensing;".
(C) EFFECTIVE DATE.—The amendments made by this
paragraph shall apply to notices of proposed sanctions
issued more than 60 days after the date of the enactment of
this Act.

(2) NOTICE TO STATE MEDICAL BOARDS WHEN ADVERSE ACTIONS
TAKEN BY SECRETARY.—

42 use 1320C-5
"°*®-

(A) IN GENERAL.—Section 1156(b) (42 U.S.C. 1320c-5(b)) is
amended by adding at the end the following new paragraph:
"(6) When the Secretary effects an exclusion of a physician under
paragraph (2), the Secretary shall notify the State board responsible
for the licensing of the physician of the exclusion.".
(B) EFFECTIVE DATE.—The amendments made by this
paragraph shall apply to sahctions effected more than 60
days after the date of the enactment of this Act.
(e) CONFIDENTIALITY OF PEER REVIEW DELIBERATIONS.—

42 use 1320C-9
"°**-

(1) I N GENERAL.—Section 1160(d) (42 U.S.C. 1320c-9(d)) is
amended by adding at the end the following: "No document or
other information produced by such an organization in connection with its deliberations in making determinations under
section 1154(a)(1)(B) or 1156(a)(2) shall be subject to subpena or
discovery in any administrative or civil proceeding; except that
such an organization shall provide, upon request of a practitioner or other person adversely affected by such a determination, a summary of the organization's findings and conclusions
in making the determination.".
(2) EFFECTIVE DATE.—The amendments made by paragraph (1)
shall apply to all proceedings as of the date of the enactment of
this Act.
(f) CLARIFICATION OF LIMITATION ON LIABILITY.—Section 1157(b) (42

U.S.C. 1320c-6(b)) is amended—
(1) by inserting "organization having a contract with the
Secretary under this part and no" after "No",
(2) by striking "by him", and
(3) by striking "he has exercised due care" and inserting "due
care was exercised in the performance of such duty, function, or
activity".
(g) MISCELLANEOUS AND TECHNICAL AMENDMENTS RELATING TO
PEER REVIEW ORGANIZATIONS.—
(1) CLARIFICATION OF PATIENT NOTIFICATION REQUIREMENTS FOR
DENIAL OF PAYMENT BY PRO.—

(A) IN GENERAL.—Section 1154(a)(3)(E) (42 U.S.C. 1320c3(a)(3)(E)) is amended—
(i) by striking "(E)" and inserting "(E)(i)";
(ii) by inserting after "items" the following:
"provided by a physician that were";
(iii) by striking "physician and hospital." and inserting "physician."; and
(iv) by adding at the end the following new clause:
"(ii) In the case of services or items provided by an entity or
practitioner other than a physician, the Secretary may substitute the entity or practitioner which provided the services or
items for the term 'physician' in the notice described in clause
(i).".

PUBLIC LAW 101-508—NOV. 5,1990

104 STAT. 1388-115

(B) EFFECTIVE DATE.—The amendments made by subparagraph (A) shall take effect as if included in the enactment
of the Omnibus Budget Reconiliation 22 Act of 1989.

42 USC 1320c-3
°°*®-

(2) CLARIFICATION OF APPLICATION OF CRITERIA FOR DENIAL OF
PAYMENT.—

(A) I N GENERAL.—Section 1154(a)(2) (42 U.S.C. 1320c3(a)(2)) is amended by striking the third sentence and
inserting the following: "The organization shall identify
cases for which payment should not be made by reason of
paragraph (1)(B) only through the use of criteria developed
pursuant to guidelines established by the Secretary.".
(B) EFFECTIVE DATE.—The amendment made by subpara- f^ ^SC 1320c-3
graph (A) shall take effect as if included in the enactment note.
of the Consolidated Omnibus Budget Reconciliation Act of
1985.
SEC. 4206. MEDICARE PROVIDER AGREEMENTS ASSURING THE IMPLEMENTATION OF A PATIENT'S RIGHT TO PARTICIPATE IN
AND DIRECT HEALTH CARE DECISIONS AFFECTING THE
PATIENT.

(a) I N GENERAL.—Section 1866(a)(1) (42 U.S.C. 1395cc(a)(l)) is
amended—
(1) in subsection (aXl)—
(A) by striking "and" at the end of subparagraph (O),
(B) by striking the period at the end of subparagraph (P)
and inserting ", and", and
(C) by inserting after subparagraph (P) the following new
sulsparagraph:
"(Q) in the case of hospitals, skilled nursing facilities, home
health agencies, and hospice programs, to comply with the
requirement of subsection (f) (relating to maintaining written
policies and procedures respecting advance directives)."; and
(2) by inserting after subsection (e) the following new subsection:
"(f)(1) For purposes of subsection (a)(l)(Q) and sections
1819(c)(2)(E), 1833(r), 1876(cX8), and 1891(a)(6), the requirement of
this subsection is that a provider of services or prepaid or eligible
organization (as the case may be) maintain written policies and
procedures with respect to all adult individuals receiving medical
care by or through the provider or organization—
"(A) to provide written information to each such individual
concerning—
"(i) an individual's rights under State law (whether statutory or as recognized by the courts of the State) to make
decisions concerning such medical care, including the right
to accept or refuse medical or surgical treatment and the
right to formulate advance directives (as defined in paragraph (3)), and
"(ii) the written policies of the provider or organization
respecting the implementation of such rights;
"(B) to document in the individual's medical record whether
or not the individual has executed an advance directive;
"(C) not to condition the provision of care or otherwise
discriminate against an individual based on whether or not the
individual has executed an advance directive;
"(D) to ensure compliance with requirements of State law
(whether statutory or as recognized by the courts of the State)
** So in original. Probably should be "Reconciliation".

104 STAT. 1388-116

PUBLIC LAW 101-508—NOV. 5,1990

respecting advance directives at facilities of the provider or
organization; and
"(E) to provide (individually or with others) for education
for staff and the community on issues concerning advance
directives.
Subparagraph (C) shall not be construed as requiring the provision
of care which conflicts with an advance directive.
"(2) The written information described in paragraph (1)(A) shall
be provided to an adult individual—
"(A) in the case of a hospital, at the time of the individual's
admission as an inpatient,
"(B) in the case of a skilled nursing facility, at the time of the
individual's admission as a resident,
"(C) in the case of a home health agency, in advance of the
individual coming under the care of the agency,
"(D) in the case of a hospice program, at the time of initial
receipt of hospice care by the individual from the program, and
"(E) in the case of an eligible organization (as defined in
section 1876(b)) or an organization provided payments under
section 1833(a)(1)(A), at the time of enrollment of the individual
with the organization.
"(3) In this subsection, the term 'advance directive' means a
written instruction, such as a living will or durable power of attorney for health care, recognized under State law (whether statutory
or as recognized by the courts of the State) and relating to the
provision of such care when the individual is incapacitated.",
(b) APPUCATION TO PREPAID ORGANIZATIONS.—
(1) ELIGIBLE ORGANIZATIONS.—Section 1876(c) of such Act (42

42 u s e 1395CC
°°*®-

U.S.C. 1395mm(c)) is amended by adding at the end the following new paragraph:
"(8) A contract under this section shall provide that the eligible
organization shall meet the requirement of section 1866(f) (relating
to maintaining written policies and procedures respecting advance
directives).".
(2) OTHER PREPAID ORGANIZATIONS.—Section 1833 of such Act
(42 U.S.C. 13951) is amended by adding at the end the following
new subsection:
"(r) The Secretary may not provide for payment under subsection
(a)(1)(A) with respect to an organization unless the organization
provides sissurances satisfactory to the Secretary that the organization meets the requirement of section 1866(f) (relating to maintaining written policies and procedures respecting advance directives).".
(c) EFFECT ON STATE LAW.—Nothing in subsections (a) and (b) shall
be construed to prohibit t h e application of a S t a t e law which allows
for a n objection on t h e basis of conscience for a n y h e a l t h c a r e
provider or a n y a g e n t of such provider which, a s a m a t t e r of
conscience, cannot i m p l e m e n t a n advance directive.
(d) CONFORMING A M E N D M E N T S . —

(1) Section 1819(c)(1) of such Act (42 U.S.C. 1395i-3(c)(l)) is
amended by adding at the end the following new subparagraph:
"(E) INFORMATION RESPECTING ADVANCE DIRECTIVES.—A

skilled nursing facility must comply with the requirement
of section 1866(f) (relating to maintaining written policies
and procedures respecting advance directives).".
(2) Section 1891(a) of such Act (42 U.S.C. 1395bbb(a)) is
amended by adding at the end the following:

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-117

"(6) The agency complies with the requirement of section
1866(f) (relating to maintaining written policies and procedures
respecting advance directives).",
(e) EFFECTIVE DATES.—

(1) The amendments made by subsections (a) and (d) shall
apply with respect to services furnished on or after the first day
of the first month beginning more than 1 year after the date of
the enactment of this Act.
(2) The amendments made by subsection (b) shall apply to
contracts under section 1876 of the Social Security Act and
payments under section 1833(a)(1)(A) of such Act as of first day
of the first month beginning more than 1 year after the date of
the enactment of this Act.

42 u s e 1395i-3
note.

42 u s e 1395/
note.

SEC. 4027. MISCELLANEOUS AND TECHNICAL PROVISIONS RELATING TO
PARTS A AND B.
(a) HOSPITAL AND PHYSICIAN OBUGATIONS WITH RESPECT TO EMERGENCY MEDICAL CONDITIONS.—
(1) PEER REVIEW.—(A) Section 1867(d) (42 U.S.C 1395dd(d)), as

amended by section 4008(b)(3), is amended by adding at the end
the following new paragraph:
"(3) CONSULTATION WITH PEER REVIEW ORGANIZATIONS.—In

considering allegations of violations of the requirements of this
section in imposing sanctions under paragraph (1), the Secretary shall request the appropriate utilization and quality
control peer review organization (with a contract under part B
of title XI) to assess whether the individual involved had an
emergency medical condition which had not been stabilized, and
provide a report on its findings. Except in the case in which a
delay would jeopardize the health or safety of individuals, the
Secretary shall request such a review before effecting a sanction
under paragraph (1) and shall provide a period of at least 60
days for such review. ^^
(B) Section 1154(a) (42 U.S.C. 1320c-4(a)) is amended by adding
at the end the following new paragraph:
"(16) The organization shall provide for a review and report to
the Secretary when requested by the Secretary under section
1867(d)(3). The organization shall provide reasonable notice of
the review to the physician and hospital involved. Within the
time period permitted by the Secretary, the organization shall
provide a reasonable opportunity for discussion with the physician and hospital involved, and an opportunity for the physician
and hospital to submit additional information, before issuing its
report to the Secretary under such section.".
(C) The amendment made by subparagraph (A) shall take
effect on the first day of the first month beginning more than 60
days after the date of the enactment of this Act. The amendment made by subparagraph (B) shall apply to contracts under
part B of title XI of the Social Security Act as of the first day of
the first month beginning more than 60 days after the date of
the enactment of this Act.
(2) CIVIL MONETARY PENALTIES.—Section 1867(d)(2)(B) (42
U.S.C. 1395dd(d)(2)(B)) is amended by striking "knowingly" and
inserting "negligently".
(3)
EXCLUSION.—Section
1867(d)(2)(B)
(42
U.S.C.
1395dd(d)(2)(B)) is amended by striking "knowing and willful or
negligent" and inserting "is gross and flagrant or is repeated".
*' So in original. Probably should be "review.".".

42 u s e 1320C-3
note.

42 u s e 1320C-3
note.

104 STAT. 1388-118
42 u s e 1395dd
note.

42 u s e 1395WW
note.

42 u s e 1395WW
note.

42 u s e 1395pp
note.

PUBLIC LAW 101-508—NOV. 5, 1990

(4) EFFECTIVE DATE.—The amendments made by this subsection shall apply to actions occurring on or after the first day of
the sixth month beginning after the date of the enactment of
this Act.
(b) EXTENSIONS OF EXPIRING PROVISIONS.—
(1) PROHIBITION ON COST SAVINGS POLICIES BEFORE BEGINNING
OF FISCAL YEAR.—Notwithstanding any other provision of law,

the Secretary of Health and Human Services may not issue any
proposed or final regulation, instruction, or other policy which
is estimated by the Secretary to result in a net reduction in
expenditures under title XVIII of the Social Security Act in a
fiscal year (beginning with fiscal year 1991 and ending with
fiscal year 1993, or, if later, the last fiscal year for which there
is a maximum deficit amount specified under section 3(7) of the
Congressional Budget and Impoundment Control Act of 1974) of
more than $50,000,000, except as follows:
(A) The Secretary may issue such a proposed regulation,
instruction, or other policy with respect to the fiscal year
before the May 15 preceding the beginning of the fiscal
year.
(B) The Secretary may issue such a final regulation,
instruction, or other policy with respect to the fiscal year on
or after October 15 of the fiscal year.
(C) The Secretary may, at any time, issue such a proposed
or final regulation, instruction, or other policy with respect
to the fiscal year if required to implement specific provisions under statute.
(2) PROHIBITION OF PAYMENT CYCLE CHANGES.—Notwithstand-

ing any other provision of law, the Secretary of Health and
Human Services is not authorized to issue, after the date of the
enactment of this Act, any final regulation, instruction, or other
policy change which is primarily intended to have the effect of
slowing down or speeding up claims processing, or delaying
payment of claims, under title XVIII of the Social Security Act.
(3) WAIVER OF LIABILITY FOR HOME HEALTH AGENCIES.—Section

9305(g)(3) of the Omnibus Budget Reconciliation Act of 1986, as
amended by section 426(d) of the Medicare Catastrophic Coverage Act of 1988, is amended by striking "November 1, 1990"
and inserting "December 31,1995".
(4) EXTENSION AND EXPANSION OF WAIVERS FOR SOCIAL HEALTH
MAINTENANCE ORGANIZATIONS.—
(A) EXTENSION OF CURRENT WAIVERS.—Section 4018(b)

of the Omnibus Budget Reconciliation Act of 1987 is
amended—
(i) in paragraph (1), by striking "September 30, 1992"
and inserting "December 31,1995"; and
(ii) in paragraph (4)—
(I) by striking "final" and inserting "second interim", and
(II) by striking the period at the end and inserting the following: ", and shall submit a final report
on the demonstration projects conducted under section 2355 of the Deficit Reduction Act of 1984 not
later than March 31,1996.".
(B) EXPANSION OF DEMONSTRATIONS.—Section 2355 of the
Deficit Reduction Act of 1984 is amended—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-119

(i) in subsection (a), by adding at the end the following: "Not later than 12 months after the date of the
enactment of the Omnibus Budget Reconciliation Act
of 1990, the Secretary shall approve such applications
or protocols for not more than 4 additional projects
described in subsection (b).";
(ii) by amending paragraph (1) of subsection (b) to
read as follows:
"(1) to demonstrate—
"(A) the concept of a social health maintenance organization with the organizations as described in Project No. 18P-9 7604/1-04 of the University Health Policy Consortium
of Brandeis University, or
"(B) in the case of a project conducted as a result of the
amendments made by section 12907(c)(4)(A) of the Omnibus
Budget Reconciliation Act of 1990, the effectiveness and
feasibilitly ^^ of innovative approaches to refining targeting
and financing methodologies and benefit design, including
the effectiveness of feasibility of—
"(i) the benefits of expanded post-acute and community care case management through links between
chronic care case management services and acute care
providers;
"(ii) refining targeting or reimbursement methodologies;
"(iii) the establishment and operation of a rural services delivery system; or
"(iv) the effectiveness of second-generation sites in
reducing the costs of the commencement and management of health care service delivery;";
(iii) in subsection (b)—
(I) by inserting "and" at the end of paragraph (3),
(II) by striking the semicolon at the end of paragraph (4) and inserting a period, and
(III) by striking paragraphs (5), (6), and (7).25
(iv) in subsection (c)—
(I) by striking "and" at the end of paragraph (1),
(II) by striking the period at the end of paragraph (2) and inserting "; and", and
(III) by adding at the end the following new
paragraph:
"(3) in the case of a project conducted as a result of the
amendments made by section 12907(c)(4)(A) of the Omnibus
Budget Reconciliation Act of 1990, any requirements of titles
XVIII or XIX of the Social Security Act that, if imposed, would
prohibit such project from being conducted."; and
(v) by adding at the end the following new subsection:
"(e) There are authorized to be appropriated $3,500,000 for the
costs of technical assistance and evaluation related to projects conducted as a result of the amendments made by section 12907(c)(4)(A)
of the Omnibus Budget Reconciliation Act of 1990.".
(c) DEVELOPMENT OF PROSPECTIVE PAYMENT SYSTEM FOR HOME 42 use I395x
HEALTH SERVICES.—

(1) D E V E L O P M E N T O F PROPOSAL.—The S e c r e t a r y of H e a l t h a n d

Human Services shall develop a proposal to modify the current
system under which payment is made for home health services
under title XVIII of the Social Security Act or a proposal to
** So in original. Probably should be "feasibility".
*" So in original. Probably should be "(7);".

"°*®-

104 STAT. 1388-120

PUBLIC LAW 101-508—NOV. 5, 1990

replace such system with a system under which such payments
would be made on the basis of prospectively determined rates.
In developing any proposal under this paragraph to replace the
current system with a prospective payment system, the Secretary shall—
(A) take into consideration the need to provide for appropriate limits on increases in expenditures under the
medicare program;
(B) provide for adjustments to prospectively determined
rates to account for changes in a provider's case mix,
severity of illness of patients, volume of cases, and the
development of new technologies and standards of medical
practice;
(C) take into consideration the need to increase the payment otherwise made under such system in the case of
services provided to patients whose length of treatment or
costs of treatment greatly exceed the length or cost of
treatment provided for under the applicable prospectively
determined payment rate;
(D) take into consideration the need to adjust payments
under the system to take into account factors such as
differences in wages and wage-related costs among agencies
located in various geographic areas and other factors the
Secretary considers appropriate; and
(E) analyze the feasibility and appropriateness of
establishing the episode of illness as the basic unit for
making payments under the system.
(2) REPORTS.—(A) By not later than April 1, 1993, the Secretary of Health and Human Services shall submit the research
findings upon which the proposal described in paragraph (1)
shall be based to the Committee on Finance of the Senate and
the Committee on Ways and Means of the House of Representatives.
(B) By not later than September 1, 1993, the Secretary shall
submit the proposal developed under paragraph (1) to the
Committee on Finance of the Senate and the Committee on
Ways and Means of the House of Representatives.
(C) By not later than March 1, 1994, the Prospective Payment
Assessment Commission shall submit an analysis of and comments on the proposal developed under paragraph (1) to the
Committee on Finance of the Senate and the Committee on
Ways and Means of the House of Representatives.
(d) HOME HEALTH WAGE INDEX.—

(1) IN GENERAL.—Section 1861(v)(l)(L)(iii) (42 U.S.C.
1395x(v)(l)(L)(iii)) is amended to read as follows:
"(iii) Not later than July 1, 1991, and annually thereafter, the
Secretary shall establish limits under this subparagraph for cost
reporting periods beginning on or after such date by utilizing the
area wage index applicable under section 1886(d)(3)(E) as of such
date to hospitals located in the geographic area in which the home
health agency is located (determined without regard to whether
such hospitals have been reclassified to a new geographic area
pursuant to section 1886(d)(8)(B), a decision of the Medicare Geographic Classification Review Board under section 1886(d)(10), or a
decision of the Secretary).",
^^te

^° '

^^^^*

^^^ APPLICATION ON BUDGET-NEUTRAL BASIS.—In updating the

wage index for establishing limits under section 1861(v)(l)(L)(iii)

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-121

of the Social Security Act, the Secretary shall ensure that
aggregate payments to home health agencies under title XVIII
of such Act will be no greater or lesser than such payments
would have been without regard to such update.
(3)

TRANSITION

PROVISION.—Notwithstanding

section

42 u s e 1395x

1861(v)(l)(L)(iii) of the Social Security Act, the Secretary of note.
Health and Human Services shall, in determining the limits of
reasonable costs under title XVIII of such Act with respect to
services furnished by a home health agency, utilize a wage
index equal to—
(A) for cost reporting periods beginning on or after July 1,
1991, and on or before June 30, 1992, a combined area wage
index consisting of—
(i) 67 percent of the area wage index applicable under
section 1861(v)(l)(L)(iii) of such Act to such home health
agency, determined using the survey of the 1982 wages
and wage-related costs of hospitals in the United States
conducted under such section, and
(ii) 33 percent of the area wage index applicable
under section 1886(d)(3)(E) of such Act to hospitals
located in the geographic area in which the home
health agency is located, determined using the survey
of the 1988 wages and wage-related costs of hospitals in
the United States conducted under such section; and
(B) for cost reporting periods beginning on or after July 1,
1992, and on or before June 30, 1993, a combined area wage
index consisting of—
(i) 33 percent of the area wage index applicable under
section 1861(v)(l)(L)(iii) of such Act to such home health
agency, determined using the survey of the 1982 wages
and wage-related costs of hospitals in the United States
conducted under such section, and
(ii) 67 percent of the area wage index applicable
under section 1886(d)(3)(E) of such Act to hospitals
located in the geographic area in which the home
health agency is located, determined using the survey
of the 1988 wages and wage-related costs of hospitals in
the United States conducted under such section.
(3) EFFECTIVE DATE.—The amendment made by paragraph (1) 42 u s e 1395x
shall apply with respect to home health agency cost reporting note.
periods beginning on or after July 1,1991.
(e) CLARIFICATION OF DEFINITIONS AND REPORTING REQUIREMENTS
RELATING TO PHYSICIAN OWNERSHIP AND REFERRAL.—

(1) CLARIFYING DEFINITIONS.—Section 1877(h) of the Social

Security Act (42 U.S.C. 1395nn(h)) is amended—
(A) in paragraph (6)(A), by striking "in the case o f and
all that follows through "the service," and inserting "in the
case of an item or service for which payment may be made
under part B, the request by a physician for the item or
service,";
(B) in paragraph (6)(B), by striking "in the case of another
clinical laboratory service,", and
(C) by redesignating paragraph (6) as paragraph (7) and
by inserting after paragraph (5) the following new paragraph:

104 STAT. 1388-122

PUBLIC LAW 101-508—NOV. 5, 1990

"(6) INVESTOR.—The term 'investor' means, with respect to an
entity, a person with a financial relationship specified in subsection (a)(2) with the entity.".
(2) EXEMPTION FOR FINANCIAL RELATIONSHIPS WITH HOSPITAL
UNRELATED TO THE PROVISION OF CUNICAL LABORATORY SERV-

ICES.—Section 1877(b) is amended by redesignating paragraph
(4) as paragraph (5) and by inserting after paragraph (3) the
following new paragraph:
"(4) HOSPITAL FINANCIAL RELATIONSHIP UNRELATED TO THE
PROVISION OF CLINICAL LABORATORY SERVICES.—In t h e CaSO o f a

42 u s e 1395nn
note.

financial relationship with a hospital if the financial relationship does not relate to the provision of clinical laboratory
services.".
(3) REVISION OF REPORTING REQUIREMENTS.—Section 1877(f) (42
U.S.C. 1395nn(f)) is amended—
(A) by amending paragraph (2) to read as follows:
"(2) the names and unique physician identification numbers
of all physicians with an ownership or investment interest (as
described in subsection (a)(2)(A)) in the entity, or whose immediate relatives have such an ownership or investment.";
(B) in the third sentence, by striking "1 year after the
date of the enactment of this section" and inserting "October 1,1991"; and
(C) by adding at the end the following new sentences:
"The requirement of this subsection shall not apply to
covered items and services provided outside the United
States or to entities which the Secretary determines provides services for which payment may be made under this
title very infrequently. The Secretary may waive the
requirements of this subsection (and the requirements of
chapter 35 of title 44, United States Code, with respect to
information provided under this subsection) with respect to
reporting by entities in a State (except for entities providing clinical laboratory services) so long as such reporting
occurs in at least 10 States, and the Secretary may waive
such requirements with respect to the providers in a State
required to report so long as such requirements are not
waived with respect to parenteral and enteral suppliers,
end stage renal disease facilities, suppliers of ambulance
services, hospitals, entities providing physical therapy services, and entities providing diagnostic imaging services of
any type.".
(4) DATE OF ISSUANCE OF REPORTS AND REGULATIONS.—(A) Section 6204 of the Omnibus Budget Reconciliation Act of 1989 is
amended by striking subsection (f) and inserting the following:

42 u s e 1395nn
note.

later than June 30, 1992, the Secretary of Health and Human
Services shall submit to Congress a statistical profile comparing
utilization of items and sei'vices by medicare beneficiaries served by
entities in which the referring physician has a direct or indirect
financial interest and by medicare beneficiaries served by other
entities, for the States and entities specified in section 1877(f) of the
Social Security Act (other than entities providing clinical laboratory
services).".
(B) Section 6204(d) of the Omnibus Budget Reconciliation Act
of 1989 is amended by striking "October 1, 1990" and inserting
"October 1,1991".

,

"(f) STATISTICAL SUMMARY OF COMPARATIVE UTILIZATION.—Not

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-123

(5) EFFECTIVE DATE.—The amendments made by this subsec- 42 u s e 1395nn
tion shall be effective as if included in the enactment of section note.
6204 of the Omnibus Budget Reconciliation Act of 1989,
(f) CASE MANAGEMENT DEMONSTRATION PROJECT.—

42 u s e 1395b-l

(1) I N GENERAL.—Notwithstanding any other provision of law, note.
the Secretary of Health and Human Services shall resume the 3
case management demonstration projects described in paragraph (2) and approved under section 425 of the Medicare
Catastrophic Coverage Act of 1988 (in this subsection referred to
as "MCCA").
(2) PROJECT DESCRIPTIONS.—The demonstration projects referred to in paragraph (1) are—
(A) the project proposed to be conducted by Providence
Hospital for case management of the elderly at risk for
acute hospitalization as described in Project No. 18-P99379/5-01;
(B) the project proposed to be conducted by the Iowa
Foundation for Medical Care to study patients with chronic
congestive conditions to reduce repeated hospitalizations of
such patients as described in Project No. P-99399/4-01; and
(C) the project proposed to be conducted by Key Care
Health Resources, Inc., to examine the effects of case
management on 2,500 high cost medicare beneficiaries as
described in Project No. 18-P-99396/5.
(3) TERMS AND CONDITIONS.—Except as provided in paragraph

(4), the demonstration projects resumed pursuant to paragraph
(1) shall be subject to the same terms and conditions established
under section 425 of MCCA. In determining the 2-year duration
period of a project resumed pursuant to paragraph (1), the
Secretary may not take into account any period of time for
which the project was in effect under section 425 of MCCA.
(4) AUTHORIZATION OF APPROPRIATIONS.—Notwithstanding section 425(g) of MCCA, there are authorized to be appropriated for
administrative costs in carrying out the demonstration projects
resumed pursuant to paragraph (1) $2,000,000 in each of fiscal
years 1991 and 1992.
(g) PROHIBITION OF USER FEES FOR SURVEY AND CERTIFICATION.—

Section 1864 (42 U.S.C. 1395aa) is amended by adding at the end the
following new subsection:
"(e) Notwithstanding any other provision of law, the Secretary
may not impose, or require a State to impose, any fee on any facility
or entity subject to a determination under subsection (a), or any
renal dialysis facility subject to the requirements of section
1881(b)(1), for any such determination or any survey relating to
determining the compliance of such facility or entity with any
requirement of this title.".
(h) DELEGATION OF AUTHORITY TO INSPECTOR GENERAL.—Section

1128A(j) (42 U.S.C. 1320a-7a(j)) is amended—
(i) by striking "(])" and inserting "CJ)(1)"; and
(ii) by adding at the end the following new paragraph:
"(2) The Secretary may delegate authority granted under this
section and under section 1128 to the Inspector General of the
Department of Health and Human Services.".
(i) MODIFICATION OF HOME HEALTH AGENCY DEFICIENCY STANDARDS.—

(1) I N GENERAL.—Effective as if included in the enactment of
the Omnibus Budget Reconciliation Act of 1987, section

104 STAT. 1388-124

42 u s e 1395bbb
note.

42 u s e 1395hh
note.

PUBLIC LAW 101-508—NOV. 5, 1990

1891(a)(3)(D)(iii) of the Social Security Act (42 U.S.C.
1395bbb(a)(3)(D)(iii)) is amended by striking "which has been
determined" and all that follows and inserting the following:
"which, within the previous 2 years—
"(I) has been determined to be out of compliance with
subparagraph (A), (B), or (C);
"(II) has been subject to an extended (or partial extended)
survey under subsection (c)(2)(D);
"(III) has been assessed a civil money penalty described in
subsection (f)(2)(A)(i) of not less than $5,000; or
"(IV) has been subject to the remedies described in
subsection (e)(1) or in clauses (ii) or (iii) of subsection
(f)(2)(A).".
(2) EFFECTIVE DATE.—The amendments made by paragraph (1)
shall take effect as if included in the enactment of the Omnibus
Budget Reconciliation Act of 1987, except that the Secretary
may not permit approval of a training and competency evaluation program or a competency evaluation program offered by or
in a home health agency which, pursuant to any Federal or
State law within the 2-year period beginning on October 1,
1988—
(i) had its participation terminated under title XVIII
of the Social Security Act;
(ii) was assessed a civil money penalty not less than
$5,000 for deficiencies in applicable quality standards
. for home health agencies;
(iii) was subject to suspension by the Secretary of all
or part of the payments to which it would otherwise be
entitled under such title. ^^
(iv) operated under a temporary management appointed to oversee the operation of the agency and to
ensure the health and safety of the agency's patients;
or
(v) pursuant to State action, was closed or had its
residents transferred,
(j) 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 title and the
amendments made by this title,
(k) MISCELLANEOUS TECHNICAL CORRECTIONS.—

42 u s e 1395nn.

42 u s e 1395dd.

(1) The third sentence of subsections (a) and (b)(1) of section
1882 of the Social Security Act (42 U.S.C. 1395ss), as amended by
section 203(a)(1)(A) of the Medicare Catastrophic Coverage
Repeal Act, is amended by striking "(k)(4),".
(2) Section 1877(g)(5) of the Social Security Act, as added by
section 6204(a) of OBRA-1989, is amended by adding at the end
the following new sentence: "The provisions of section 1128A
(other than the first sentence of subsection (a) and other than
subsection (b)) shall apply to a civil money penalty under the
previous sentence in the same manner as such provisions apply
to a penalty or proceeding under section 1128A(a).".
(3) Subsection (i) of section 1867 of the Social Security Act, as
added by section 6211(f) of the Omnibus Budget Reconciliation
Act of 1989, is amended to read as follows:
"(i) WHISTLEBLOWER PROTECTIONS.—A participating hospital may

not penalize or take adverse action against a qualified medical
person described in subsection (c)(l)(A)(iii) or a physician because the
*"• So in original. Probably should be ";"•

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-125

person or physician refuses to authorize the transfer of an individual with an emergency medical condition that has not been
stabilized or against any hospital employee because the employee
reports a violation of a requirement of this section.".
(4) Section 6213(d) of the Omnibus Budget Reconciliation Act
of 1989 is amended by striking "take effect" and inserting
"apply to services furnished on or after".
(5) Section 6217(a) of the Omnibus Budget Reconciliation Act
of 1989 is amended in the matter preceding paragraph (1) by
inserting after "pa5mients" the following: "out of the Federal
Hospital Insurance Trust Fund and the Federal Supplementary
Medical Insurance Trust Fund (in such proportions as the Secretary determines to be appropriate in a year)".
(6) Section 1139(d) of the Social Security Act, as amended by
section 6221 of Omnibus Budget Reconciliation Act of 1989, is
amended by striking "interim report" and all that follows
through "setting forth" and inserting the following: "interim
report no later than March 31, 1990, and a final report no later
than March 31,1991, setting forth".

PART 4—PROVISIONS RELATING TO MEDICARE
PART B PREMIUM AND DEDUCTIBLE
SEC. 4301. PART B PREMIUM.

Section 1839(e)(1) (42 U.S.C. 1395r(e)(l)) is amended—
(1) by inserting "(A)" after "(e)(1)", and
(2) by adding at the end the following new subparagraph:
"(B) Notwithstanding the provisions of subsection (a), the monthly
premium for each individual enrolled under this part for each
month in—
"(i) 1991 shall be $29.90,
"(ii) 1992 shall be $31.80,
"(iii) 1993 shall be $36.60,
"(iv) 1994 shall be $41.10, and
"(v) 1995 shall be $46.10.".
SEC. 4302. PART B DEDUCTIBLE.

Section 1833(b) (42 U.S.C. 13951) is amended by inserting after
"$75" the following: "for calendar years before 1991 and $100 for
1991 and subsequent years".

PART 5—MEDICARE SUPPLEMENTAL INSURANCE
POLICIES
SEC. 4351. SIMPLIFICATION OF MEDICARE SUPPLEMENTAL POLICIES.

(a) IN GENERAL.—Section 1882 (42 U.S.C. 1395ss) is amended—
(1) in subsection (b)(1)(B), by striking "through (4)" and inserting "through (5)";
(2) in subsection (c)—
(A) by striking "and" at the end of paragraph (3),
(B) by striking the period at the end of paragraph (4) and
inserting "; and", and
(C) by inserting after paragraph (4) the following new
paragraph:
"(5) meets the applicable requirements of subsections (o)
through (t)."; and

42 u s e 1395x
note.
42 u s e 1395WW
note.

42 u s e 1320b-9.

104 STAT. 1388-126

PUBLIC LAW 101-508—NOV. 5, 1990

(3) by adding at the end the following new subsections:
"(o) The requirements of this subsection are as follows:
"(1) Each medicare supplemental policy shall provide for
coverage of a group of benefits consistent with subsection (p).
"(2) If the medicare supplemental policy provides for coverage
of a group of benefits other than the core group of basic benefits
described in subsection (p)(2)(B), the issuer of the policy must
make available to the individual a medicare supplemental
policy with only such core group of basic benefits.
"(3) The issuer of the policy has provided, before the sale of
the policy, an outline of coverage that uses uniform language
and format (including layout and print size) that facilitates
comparison among medicare supplemental policies and
comparison with medicare benefits.
"(p)(l)(A) If, within 9 months after the date of the enactment of
this subsection, the National Association of Insurance Commissioners (in this subsection referred to as the 'Association') promulgates—
"(i) limitations on the groups or packages of benefits that may
be offered under a medicare supplemental policy consistent
with paragraphs (2) and (3) of this subsection,
"(ii) uniform language and definitions to be used with respect
to such benefits,
"(iii) uniform format to be used in the policy with respect to
such benefits, and
"(iv) other standards to meet the additional requirements
imposed by the amendments made by the Omnibus Budget
Reconciliation Act of 1990,
(such limitations, language, definitions, format, and standards referred to collectively in this subsection as 'NAIC standards'), subsection (g)(2)(A) shall be applied in each State, effective for policies
issued to policyholders on and after the date specified in subparagraph (C), as if the reference to the Model Regulation adopted on
June 6,1979, included a reference to the NAIC standards.
"(B) If the Association does not promulgate NAIC standards
within the 9-month period specified in subparagraph (A), the Secretary shall promulgate, not later than 9 months after the end of
such period, limitations, language, definitions, format, and standards described in clauses (i) through (iv) of such subparagraph (in
this subsection referred to collectively as 'Federal standards') and
subsection (g)(2)(A) shall be applied in each State, effective for
policies issued to policyholders on and after the date specified in
subparagraph (C), as if the reference to the Model Regulation
adopted on June 6, 1979, included a reference to the Federal
standards.
"(C)(i) Subject to clause (ii), the date specified in this subparagraph
for a State is the date the State adopts the NAIC standards or the
Federal standards or 1 year after the date the Association or the
Secretary first adopts such standards, whichever is earlier.
"(ii) In the case of a State which the Secretary identifies, in
consultation with the Association, as—
"(I) requiring State legislation (other than legislation appropriating funds) in order for medicare supplemental policies to
meet the NAIC or Federal standards, but
"(II) having a legislature which is not scheduled to meet in
1992 in a legislative session in which such legislation may be
considered.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-127

the date specified in this subparagraph is the first day of the first
calendar quarter beginning after the close of the first legislative
session of the State legislature that begins on or after January 1,
1992. For purposes of the previous sentence, in the case of a State
that has a 2-year legislative session, each year of such session shall
be deemed to be a separate regular session of the State legislature.
"(D) In promulgating standards under this paragraph, the
Association or Secretary shall consult with a working group composed of representatives of issuers of medicare supplemental policies, consumer groups, medicare beneficiaries, and other qualified
individuals. Such representatives shall be selected in a manner so as
to assure balanced representation among the interested groups.
"(E) If benefits (including deductibles and coinsurance) under this
title are changed and the Secretary determines, in consultation with
the Association, that changes in the NAIC or Federal standards are
needed to reflect such changes, the preceding provisions of this
paragraph shall apply to the modification of standards previously
established in the same manner as they applied to the original
establishment of such standards.
"(2) The benefits under the NAIC or Federal standards shall
provide—
"(A) for such groups or packages of benefits as may be appropriate taking into account the considerations specified in
paragraph (3) and the requirements of the succeeding subparagraphs;
"(B) for identification of a core group of basic benefits
common to all policies, and
"(C) that, subject to paragraph (5)(B), the total number of
different benefit packages (counting the core group of basic
benefits described in subparagraph (B) and each other combination of benefits that may be offered as a separate benefit
package) that may be established in all the States and by all
issuers shall not exceed 10.
"(3) The benefits under paragraph (2) shall, to the extent
possible—
"(A) provide for benefits that offer consumers the ability to
purchase the benefits that are available in the market as of the
date of the enactment of this subsection; and
"(B) balance the objectives of (i) simplifying the market to
facilitate comparisons among policies, (ii) avoiding adverse
selection, (iii) providing consumer choice, (iv) providing market
stability, and (v) promoting competition.
"(4XA)(i) Except as provided in subparagraph (B), no State with a
regulatory program approved under subsection (b)(1) may provide
for or permit the grouping of benefits (or language or format with
respect to such benefits) under a medicare supplemental policy
unless such grouping meets the applicable standards.
"(ii) Except as provided in subparagraph (B), the Secretary may
not provide for or permit the grouping of benefits (or language or
format with respect to such benefits) under a medicare supplemental policy seeking approval by the Secretary unless such grouping meets the applicable standards.
"(B) With the approval of the State (in the case of a policy issued
in a State with an approved regulatory program) or the Secretary
(in the case of any other policy), the issuer of a medicare supplemental policy may offer new or innovative benefits in addition to
the benefits provided in a policy that otherwise complies with the

104 STAT. 1388-128

PUBLIC LAW 101-508—NOV. 5, 1990

applicable standards. Any such new or innovative benefits may
include benefits that are not otherwise available and are costeffective and shall be offered in a manner which is consistent with
the goal of simplification of medicare supplemental policies.
"(5)(A) Except as provided in subparagraph (B), this subsection
shall not be construed as preventing a State from restricting the
groups of benefits that may be offered in medicare supplemental
policies in the State.
"(B) A State with a regulatory program approved under subsection (b)(1) may not restrict under subparagraph (A) the offering of a
medicare supplemental policy consisting only of the core group of
benefits described in paragraph (2)(B).
"(6) The Secretary may waive the application of standards in
regard to the limitation of benefits described in paragraph (4) in
those States that on the date of enactment of this subsection had in
place an alternative simplification program.
"(7) This subsection shall not be construed as preventing an issuer
of a medicare supplemental policy who otherwise meets the requirements of this section from providing, through an arrangement with
a vendor, for discounts from that vendor to policyholder or
certificateholders for the purchase of items or services not covered
under its medicare supplemental policies.
"(8) Any person who sells or issues a medicare supplemental
policy, after the effective date of the NAIC or Federal standards
with respect to the policy, in violation of the previous requirements
of this subsection is subject to a civil money penalty of not to exceed
$25,000 (or $15,000 in the case of a seller who is not an issuer of a
policy) for each such violation. The provisions of section 1128A
(other than the first sentence of subsection (a) and other than
subsection (b)) shall apply to a civil money penalty under the
previous sentence in the same manner as such provisions apply to a
penalty or proceeding under section 1128A(a).
"(9)(A) Anyone who sells a medicare supplemental policy to an
individual shall make available for sale to the individual a medicare
supplemental policy with only the core group of basic benefits
(described in paragraph (2)(B)).
"(B) Anyone who sells a medicare supplemental policy to an
individual shall provide the individual, before the sale of the policy,
an outline of coverage which describes the benefits under the policy.
Such outline shall be on a standard form approved by the State
regulatory program or the Secretary (as the case may be) consistent
with the NAIC or Federal standards under this subsection.
"(C) Whoever sells a medicare supplemental policy in violation of
this paragraph is subject to a civil money penalty of not to exceed
$25,000 (or $15,000 in the case of a seller who is not the issuer of the
policy) for each such violation. The provisions of section 1128A
(other than the first sentence of subsection (a) and other than
subsection (b)) shall apply to a civil money penalty under the
previous sentence in the same manner as such provisions apply to a
penalty or proceeding under section 1128A(a).
"(10) No penalty may be imposed under paragraph (8) or (9) in the
case of a seller who is not the issuer of a policy until the Secretary
has published a list of the groups of benefit packages that may be
sold or issued consistent with this subsection.".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-129

SEC. 4352. GUARANTEED RENEW ABILITY.

Section 1882 is amended by adding at the end the following new 42 USC 13958s.
subsection:
"(q) The requirements of this subsection are as follows:
"(1) Each medicare supplemental policy shall be guaranteed
renewable and—
"(A) the issuer may not cancel or nonrenew the policy
solely on the ground of health status of the individual; and
"(B) the issuer shall not cancel or nonrenew the policy for
any reason other than nonpayment of premium or material
misrepresentation.
"(2) If the medicare supplemental policy is terminated by the
group policyholder and is not replaced as provided under paragraph (2), the issuer shall offer certificateholders an individual
medicare supplemental policy which (at the option of the
certificateholder)—
"(A) provides for continuation of the benefits contained in
the group policy, or
"(B) provides for such benefits as otherwise meets the
requirements of this section.
"(3) If an individual is a certificateholder in a group medicare
supplemental policy and the individual terminates membership
in the group, the issuer shall—
"(A) offer the certificateholder the conversion opportunity described in paragraph (2), or
"(B) at the option of the group policyholder, offer the
certificateholder continuation of coverage under the group
policy.
"(4) If a group medicare supplemental policy is replaced by
another group medicare supplemental policy purchased by the
same policyholder, the succeeding issuer shall offer coverage to
all persons covered under the old group policy on its date of
termination. Coverage under the new group policy shall not
result in any exclusion for preexisting conditions that would
have been covered under the group policy being replaced.".
SEC. 4353. ENFORCEMENT OF STANDARDS.
(a) REQUIRING CONFORMITY WITH STANDARDS.—Section 1882 is

amended—
(1) in the heading, by striking "VOLUNTARY"; and

(2) in subsection (a)—
(A) by inserting "(1)" after "(a)",
(B) by adding at the end the following new paragraph:
"(2) No medicare supplemental policy may be issued in a State on
or after the date specified in subsection (p)(l)(C) unless—
"(A) the State's regulatory program under subsection (b)(1)
provides for the application and enforcement of the standards
and requirements set forth in such subsection (including the
NAIC standards or the Federal standards (as the case may be))
by the date specified'in subsection (p)(l)(C); or
"(B) if the State's program does not provide for the application and enforcement of such standards and requirements, the
policy has been certified by the Secretary under paragraph (1)
as meeting the standards and requirements set forth in subsection (c) (including such applicable standards) by such date.
Any person who issues a medicare supplemental policy, after the
effective date of the NAIC or Federal standards with respect to the

104 STAT. 1388-130

PUBLIC LAW 101-508—NOV. 5, 1990

policy, in violation of this paragraph is subject to a civil money
penalty of not to exceed $25,000 for each such violation. The provisions of section 1128A (other than the first sentence of subsection (a)
and other than subsection (b)) shall apply to a civil money penalty
under the previous sentence in the same manner as such provisions
apply to a penalty or proceeding under section 1128A(a).".
(b) PERIODIC REVIEW OF STATE REGULATORY PROGRAMS.—Section

42 use 1395S8.

1882(b) is amended—
(1) in paragraph (1), by striking "Supplemental Health Insurance Panel (established under paragraph (2))" and inserting
"the Secretary",
(2) in paragraph (1), by striking "the Panel" and inserting
"the Secretary",
(3) in subparagraphs (A) and (D) of paragraph (1), by inserting
"and enforcement" after "application , and
(4) by amending paragraph (2) to read as follows:
"(2) The Secretary periodically shall review State regulatory programs to determine if they continue to meet the standards and
requirements specified in paragraph (1). If the Secretary finds that a
State regulatory program no longer meets the standards and
requirements, before making a final determination, the Secretary
shall provide the State an opportunity to adopt such a plan of
correction as would permit the State regulatory program to continue
to meet such standards and requirements. If the Secretary makes a
final determination that the State regulatory program, after such
an opportunity, fails to meet such standards and requirements, the
program shall no longer be considered to have in operation a
program meeting such standards and requirements.".
(c) ENFORCEMENT BY STATES.—Section 1882a))(l) (42 U.S.C.
1395ss(b)(l)) is amended—
(1) by striking "and" at the end of subparagraph (D);
(2) by inserting "and" at the end of subparagraph (E);
(3) by inserting after subparagraph (E) the following:
"(F) reports to the Secretary on the implementation and
enforcement of standards and requirements of this paragraph at intervals established by the Secretary,"; and
(5) by adding at the end the following new sentence: "The
report required under subsection (F) shall include information
on loss ratios of policies sold in the State, frequency and types of
instances in which policies approved by the State fail to meet
the standards of this paragraph, actions taken by the State to
bring such policies into compliance, and information regarding
State programs implementing consumer protection provisions,
and such further information as the Secretary in consultation
with the National Association of Insurance Commissioners, may
specify.".
(d) REQUIRING APPROVAL OF STATE FOR SALE IN THE STATE.—

42 use 1395SS
note.

(1) I N GENERAL.—Section
1882(d)(4)(B)
(42 U.S.C.
1395ss(d)(4XB)) is amended by striking the second sentence.
(2) EFFECTIVE DATE.—The amendment made by paragraph (1)
shall apply to policies mailed, or caused to be mailed, on and
after July 1, 1991.
SEC. 4354. PREVENTING DUPLICATION.

(a) I N GENERAL.—Subsection (d)(3) of section 1882 (42 U.S.C.
1395ss) is amended—
(1) in subparagraph (A)—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-131

(A) by striking "Whoever knowingly sells" and inserting
"It is unlawful for a person to sell or issue",
(B) by striking "substantially",
(C) by striking ", shall be fined" and inserting ". Whoever
violates the previous sentence shall be fined",
(D) in subparagraph (A), by inserting "or title XIX" after
"other than this title",
(E) in subparagraph (A), by striking "$5,000" and inserting "$25,000 (or $15,000 in the case of a person other than
the issuer of the policy)", and
(F) by adding at the end the following: "A seller (who is
not the issuer of a health insurance policy) shall not be
considered to violate the previous sentence if the policy is
sold in compliance with subparagraph (B) and the statement under such subparagraph indicates on its face that
the sale of the policy will not duplicate health benefits to
which the individual is otherwise entitled. This subsection
shall not apply to such a seller until such date as the
Secretary publishes a list of the standardized benefit packages that may be offered consistent with subsection (p).";
(2) by amending subparagraph (B) to read as follows:
"(B)(i) It is unlawful for a person to issue or sell a medicare
supplemental policy to an individual entitled to benefits under part
A or enrolled under part B, whether directly, through the mail, or
otherwise, unless—
"(I) the person obtains from the individual, as part of the
application for the issuance or purchase and on a form described in clause (ii), a written statement signed by the individual
stating, to the best of the individual's knowledge, what health
insurance policies the individual has, from what source, and
whether the individual is entitled to any medical assistance
under title XIX, whether as a qualified medicare beneficiary or
otherwise, and
"(II) the written statement is accompanied by a written
acknowledgment, signed by the seller of the policy, of the
request for and receipt of such statement,
"(ii) The statement required by clause (i) shall be made on a form
that—
"(I) states in substance that a medicare-eligible individual
does not need more than one medicare supplemental policy,
"(II) states in substance that individuals 65 years of age or
older may be eligible for benefits under the State medicaid
program under title XIX and that such individuals who are
entitled to benefits under that program usually do not need a
medicare supplemental policy and that benefits and premiums
under any such policy shall be suspended upon request of the
policyholder during the period (of not longer than 24 months) of
entitlement to benefits under such title and may be reinstituted
upon loss of such entitlement, and
"(III) states that counseling services may be available in the
State to provide advice concerning the purchase of medicare
supplemental policies and enrollment under the medicaid program and may provide the telephone number for such services.
"(iii)(I) Except as provided in subclauses (II) and (III), if the
statement required by clause (i) is not obtained or indicates that the
individual has another medicare supplemental policy or indicates
that the individual is entitled to any medical assistance under title

104 STAT. 1388-132

PUBLIC LAW 101-508—NOV. 5, 1990

XIX, the sale of such a policy shall be considered to be a violation of
subparagraph (A).
"(ID Subclause (I) shall not apply in the case of an individual who
has another policy, if the individual indicates in writing, as part of
the application for purchase, that the policy being purchased replaces such other policy and indicates an intent to terminate the
policy being replaced when the new policy becomes effective and the
issuer or seller certifies in writing that such policy will not, to the
best of the issuer or seller's knowledge, duplicate coverage (taking
into account any such replacement).
"(Ill) Subclause (I) also shall not apply if a State medicaid plan
under title XIX pays the premiums for the policy, or pays less than
an individual's (who is described in section 1905(p)(l)) full liability
for medicare cost sharing as defined in section 1905(p)(3)(A).
"(iv) Whoever issues or sells a medicare supplemental policy in
violation of this subparagraph shall be fiijed under title 18, United
States Code, or imprisoned not more than 5 years, or both, and, in
addition to or in lieu of such a criminal penalty, is subject to a civil
money penalty of not to exceed $25,000 (or $15,000 in the case of a
seller who is not the issuer of a policy) for each such violation.".
(b) SUSPENSION OF POLICY DURING MEDICAID ENTITLEMENT.—Sec-

42 use 1395s8
note.

tion 1882(q), as added by section 4352, is amended by adding at the
end the following new paragraph:
"(5)(A) Each medicare supplemental policy shall provide that
benefits and premiums under the policy shall be suspended at
the request of the policyholder for the period (not to exceed 24
months) in which the policyholder has applied for and is determined to be entitled to medical assistance under title XIX of the
Social Security Act, but only if the policyholder notifies the
issuer of such policy within 90 days after the date the individual
becomes entitled to such assistance. If such suspension occurs
and if the policyholder or certificate holder loses entitlement to
such medical assistance, such policy shall be automatically
reinstituted (effective as of the date of termination of such
entitlement) under terms described in subsection (n)(6)(A)(ii) as
of the termination of such entitlement if the policyholder provides notice of loss of such entitlement within 90 days after the
date of such loss.
"(B) Nothing in this section shall be construed as affecting the
authority of a State, under title XIX of the Social Security Act,
to purchase a medicare supplemental policy for an individual
otherwise entitled to assistance under such title.
"(C) Any person who issues a medicare supplemental policy
and fails to comply with the requirements of this paragraph is
subject to a civil money penalty of not to exceed $25,000 for each
such violation. The provisions of section 1128A (other than the
first sentence of subsection (a) and other than subsection (b))
shall apply to a civil money penalty under the previous sentence
in the same manner as such provisions apply to a penalty or
proceeding under section 1128A(a).".
(c) EFFECTIVE DATE.—The amendments made by this section shall
apply to policies issued or sold more than 1 year after the date of the
enactment of this Act.
SEC. 4355. LOSS RATIOS AND REFUND OF PREMIUMS.

(a) IN GENERAL.—Section 1882 (42 U.S.C. 1395ss) is further
amended—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-133

(1) in subsection (c), by amending paragraph (2) to read as
follows:
"(2) meets the requirements of subsection (r);";
(2) by striking the sentence following subsection (cX4); and
(3) by adding at the end the following new subsection:
"(r)(l) A medicare supplemental policy may not be issued or sold
in any State unless—
"(A) the policy can be expected (as estimated for the entire
period for which rates are computed to provide coverage, on the
basis of incurred claims experience and earned premiums for
such periods and in accordance with a uniform methodology,
including uniform reporting standards, developed by the National Association of Insurance Commissioners ^7, to return to
policyholders in the form of aggregate benefits provided under
the policy, at least 75 percent of the aggregate amount of
premiums collected in the case of group policies and at least 65
percent in the case of individual policies; and
"(B) the issuer of the policy provides for the issuance of a
proportional refund, or a credit against future premiums of a
proportional amount, based on the premium paid and in accordance with paragraph (2), of the amount of premiums received
necessary to assure that the ratio of aggregate benefits provided
to the aggregate premiums collected (net of such refunds or
credits) complies with the expectation required under subparagraph (A).
For purposes of applying subparagraph (A) only, policies issued as a
result of solicitations of individuals through the mails or by mass
media advertising (including both print and broadcast advertising)
shall be deemed to be individual policies.
"(2)(A) Paragraph (1)(B) shall be applied with respect to each type
of policy by policy number. Paragraph (1)(B) shall not apply to a
policy with respect to the first 2 years in which it is in effect. The
Comptroller General, in consultation with the National Association
of Insurance Commissioners, shall submit to Congress a report
containing recommendations on adjustments in the percentages
under paragraph (1)(A) that may be appropriate in order to apply
paragraph (1)(B) to the first 2 years in which policies are effective.
"(B) A refund or credit required under paragraph (1)(B) shall be
made to each policyholder insured under the applicable policy as of
the last day of the year involved.
"(C) Such a refund or credit shall include interest from the end of
the policy year involved until the date of the refund or credit at a
rate as specified by the Secretary for this purpose from time to time
which is not less than the average rate of interest for 13-week
Treasury notes.
"(D) For purposes of this paragraph and paragraph (1)(B), refunds
or credits against premiums due shall be made, with respect to a
policy year, not later than the third quarter of the succeeding policy
year.
"(3) The provisions of this subsection do not preempt a State from
requiring a higher percentage than that specified in paragraph
(1)(A).
"(4) The Secretary shall submit in February of each year (beginning with 1993) a report to the Committees on Energy and Commerce and Ways and Means of the House of Representatives and the
Committee on Finance of the Senate on loss-ratios under medicare
supplemental policies and the use of sanctions, such as a required
* ^ ^ in original. Probably should be "Commissioners),".

104 STAT. 1388-134

PUBLIC LAW 101-508—NOV. 5, 1990

rebate or credit or the disUowance ^^ of premium increases, for
policies that fail to meet the requirements of this subsection (relating to loss-ratios). Such report shall include a list of the policies that
failed to comply with such loss-ratio requirements or other requirements of this section.
"(5XA) The Comptroller General shall periodically, not less often
than once every 3 years, perform audits with respect to the compliance of medicare supplemental policies with the loss ratio requirements of this subsection and shall report the results of such audits
to the State involved and to the Secretary.
"(B) The Secretary may independently perform such compliance
audits.
"(6)(A) A person who issues a policy in violation of the loss ratio
requirements of this subsection is subject to a civil money penalty of
not to exceed $25,000 for each such violation. The provisions of
section 1128A (other than the first sentence of subsection (a) and
other than subsection (b)) shall apply to a civil money penalty under
the previous sentence in the same manner as such provisions apply
to a penalty or proceeding under section 1128A(a).
"(B) Each issuer of a policy subject to the requirements of paragraph (IXB) shall be liable to policyholders for credits required
under such paragraph.".
(b) ASSURING ACCESS TO Loss RATIO INFORMATION.—Section
1882(b)(lXC) (42 U.S.C. 1395ss(bXl)(C)) is amended by striking the
semicolon at the end and inserting a comma and the following:
"and that a copy of each such policy, the most recent premium
for each such policy, and a listing of the ratio of benefits
provided to premiums collected for the most recent 3-year
period for each su6h policy issued or sold in the State is maintained and made available to interested persons;".
(c) IMPLEMENTATION

42 use 1395SS
note.

OF PROCESS TO APPROVE

PREMIUM IN-

CREASES.—Section 1882(bXl) (42 U.S.C. 1395ss(bXl)) is further
amended—
(1) by striking "and" at the end of subparagraph (E);
(2) by adding "and" at the end of subparagraph (F);
(3) by adding at the end thereof the following new subparagraph:
"(G) provides for a process for approving or disapproving
proposed premium increases with respect to such policies,
and establishes a policy for the holding of public hearings
prior to approval of a premium increase,".
(d) EFFECTIVE DATE.—The amendments made by this section shall
apply to policies sold or issued more than 1 year after the date of the
enactment of this Act.
SEC. 4356. CLARIFICATION OF TREATMENT OF PLANS OFFERED BY
HEALTH MAINTENANCE ORGANIZATIONS.

42 use 1395SS
note.

(a) I N GENERAL.—The first sentence of section 1882(g)(1) is
amended by inserting before the period at the end the following:
"and does not include a policy or plan of a health maintenance
organization or other direct service organization which offers benefits under this title, including such services under a contract under
under section 1876 or an agreement under section 1833".
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect on the date of the enactment of this Act.
28 So in original. Probably should be "disallowance"

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-135

SEC. 4357. PRE-EXISTING CONDITION LIMITATIONS AND LIMITATION ON
MEDICAL UNDERWRITING.

(a) I N GENERAL.—Section 1882 is amended—
(1) in subsection (c), in the matter before paragraph (1), by
inserting "or the requirement described in subsection (s)" after
"paragraph (3)", and
(2) by adding at the end the following new subsection:
"(sXD If a medicare supplemental policy replaces another medicare supplemental policy, the issuer of the replacing policy shall
waive any time periods applicable to preexisting conditions, waiting
period, elimination periods and probationary periods in the new
medicare supplemental policy for similar benefits to the extent such
time was spent under the original policy.
"(2)(A) The issuer of a medicare supplemental policy may not deny
or condition the issuance or effectiveness of a medicare supplemental policy, or discriminate in the pricing of the policy, because of
health status, claims experience, receipt of health care, or medical
condition for which an application is submitted during the 6 month
period beginning with the first month in which the individual (who
is 65 years of age or older) first is enrolled for benefits under part B.
"(B) Subject to subparagraph (C), subparagraph (A) shall not be
construed as preventing the exclusion of benefits under a policy,
during its first 6 months, based on a pre-existing condition for which
the policyholder received treatment or was otherwise diagnosed
during the 6 months before it became effective.
"(C) If a medicare supplemental policy or certificate replaces
another such policy or certificate which has been in effect for 6
months or longer, the replacing policy may not provide any time
period applicable to pre-existing conditions, waiting periods, elimination periods, and probationary periods in the new policy or certificate for similar benefits.
"(3) Any issuer of a medicare supplemental policy that fails to
meet the requirements of paragraphs (1) and (2) is subject to a civil
money penalty of not to exceed $5,000 for each such failure. The
provisions of section 1128A (other than the first sentence of subsection (a) and other than subsection (b)) shall apply to a civil money
penalty under the previous sentence in the same manner as such
provisions apply to a penalty or proceeding under section 1128A(a).".
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 42 USC 1395s8
shall take effect 1 year after the date of the enactment of this Act. note.
SEC. 4358. MEDICARE SELECT POLICIES.

(a) I N GENERAL.—Section 1882 (42 U.S.C. 1395ss) is further
amended by adding at the end the following:
"(t)(l) If a policy meets the NAIC Model Standards and otherwise
complies with the requirements of this section except that benefits
under the policy are restricted to items and services furnished by
certain entities (or reduced benefits are provided when items or
services are furnished by other entities), the policy shall nevertheless be treated as meeting those standards if—
"(A) full benefits are provided for items and services furnished through a network of entities which have entered into
contracts with the issuer of the policy;
"(B) full benefits are provided for items and services furnished
by other entities if the services are medically necessary and
immediately required because of an unforeseen illness, injury.

104 STAT. 1388-136

PUBLIC LAW 101-508—NOV. 5, 1990

or condition and it is not reasonable given the circumstances to
obtain the services through the network;
"(C) the network offers sufficient access;
"(D) the issuer of the policy has arrangements for an ongoing
quality assurance program for items and services furnished
through the network;
"(EXi) the issuer of the policy provides to each enroUee at the
time of enrollment an explanation of (I) the restrictions on
payment under the policy for services furnished other than by
or through the network, (II) out of area coverage under the
policy, (III) the policy's coverage of emergency services and
urgently needed care, and (IV) the availability of a policy
through the entity that meets the NAIC standards without
reference to this subsection and the premium charged for such
policy, and
"(ii) each enroUee prior to enrollment acknowledges receipt of
the explanation provided under clause (i); and
"(F) the issuer of the policy makes available to individuals, in
addition to the policy described in this subsection, any policy
(otherwise offered by the issuer to individuals in the State) that
meets the NAIC standards and other requirements of this section without reference to this subsection.
"(2) If the Secretary determines that an issuer of a policy approved under paragraph (1)—
"(A) fails substantially to provide medically necessary items
and services to enroUees seeking such items and services
through the issuer's network, if the failure has adversely affected (or has substantial likelihood of adversely affecting) the
individual,
"(B) imposes premiums on enroUees in excess of the premiums approved by the State,
"(C) acts to expel an enroUee for reasons other than
nonpayment of premiums, or
"(D) does not provide the explanation required under paragraph (l)(E)(i) or does not obtain the acknowledgment required
under paragraph (l)(E)(ii),
is subject to a civil money penalty in an amount not to exceed
$25,000 for each such violation. The provisions of section 1128A
(other than the first sentence of subsection (a) and other than
subsection (b)) shall apply to a civil money penalty under the
previous sentence in the same manner as such provisions apply to a
penalty or proceeding under section 1128A(a).
"(3) The Secretary may enter into a contract with an entity whose
policy has been certified under paragraph (1) or has been approved
by a State under subsection (b)(1)(H) to determine whether items
and services (furnished to individuals entitled to benefits under this
title and under that policy) are not allowable under section
1862(a)(1). Payments to the entity shall be in such amounts as the
Secretary may determine, taking into account estimated savings
under contracts with carriers and fiscal intermediaries and other
factors that the Secretary finds appropriate. Paragraph (1), the first
sentence of paragraph (2XA), paragraph (2)(B), paragraph (3)(C),
paragraph (3)(D), and paragraph (3)(E) of section 1842(b) shall apply
to the entity.".
(b) CONFORMING AMENDMENTS.—(1) Section 1882(cXl) (42 U.S.C.
1395ss(c)(l)) is amended by inserting "(except as otherwise provided
by subsection (t))" before the semicolon.

PUBLIC LAW 101-508—NOV. 5,1990

104 STAT. 1388-137

(2) Section 1882(b)(1) (42 U.S.C. 1395ss(b)(l)), as previously
amended, is amended—
(A) in subparagraph (A), by inserting ", except as otherwise
provided by subparagraph (H)" before the semicolon;
(B) by striking "and" at the end of subparagraph (F);
(C) by inserting "and" at the end of subparagraph (G); and
(D) by adding after subparagraph (G) the following:
"(H) in the case of a policy that meets the standards
under subparagraph (A) except that benefits under the
policy are limited to items and services furnished by certain
entities (or reduced benefits are provided when items or
services are furnished by other entities), provides for the
application of requirements equal to or more stringent than
the requirements under subsection (t),".
(3) The first sentence of section 1154(a)(4)(B) (42 U.S.C. 1320c3(a)(4)(B)) is amended by inserting "(or subject to review under
section 1882(t))" after "section 1876".
(c) EFFECTIVE DATE.—The amendments made by this section shall
only apply in 15 States (as determined by the Secretary of Health
and Human Services) and only during the 3-year period beginning
with 1992.
(d) EVALUATION.—The Secretary of Health and Human Services
shall conduct an evaluation of the amendments made by this section
and shall report to Congress on such evaluation by not later than
January 1,1995.

42 u s e 1320C-3
note.

42 u s e 139588
note.

SEC. 4359. HEALTH INSURANCE ADVISORY SERVICE FOR MEDICARE 42 USC 1395b-3.
BENEFICIARIES.

(a) I N GENERAL.—The Secretary of Health and Human Services
shall establish a health insurance advisory service program (in this
section referred to as the "beneficiary assistance program") to assist
medicare-eligible individuals with the receipt of services under the
medicare and medicaid programs and other health insurance programs.
(b) OUTREACH ELEMENTS.—The beneficiary assistance program
shall provide assistance—
(1) through operation using local Federal offices that provide
information on the medicare program,
(2) using community outreach programs, and
(3) using a toll-free telephone information service.
(c) ASSISTANCE PROVIDED.—The beneficiary assistance program
shall provide for information, counseling, and assistance for medicare-eligible individuals with respect to at least the following:
(1) With respect to the medicare program—
(A) eligibility,
(B) benefits (both covered and not covered),
(C) the process of payment for services,
(D) rights and process for appeals of determinations,
(E) other medicare-related entities (such as peer review
organizations, fiscal intermediaries, and carriers), and
(F) recent legislative and administrative changes in the
medicare program.
(2) With respect to the medicaid program—
(A) eligibility, benefits, and the application process,
(B) linkages between the medicaid and medicare programs, and

9-194 O - 91 - 18 : QL 3 Part 2

104 STAT. 1388-138

PUBLIC LAW 101-508—NOV. 5, 1990

(C) referral to appropriate State and local agencies involved in the medicaid program.
(3) With respect to medicare supplemental policies—
(A) the program under section 1882 of the Social Security
Act and standards required under such program,
(B) how to make informed decisions on whether to purchase such policies and on what criteria to use in evaluating different policies,
(C) appropriate Federal, State, and private agencies that
provide information and assistance in obtaining benefits
under such policies, and
(D) other issues deemed appropriate by the Secretary.
The beneficiary assistance program also shall provide such other
services as the Secretary deems appropriate to increase beneficiary
understanding of, and confidence in, the medicare program and to
improve the relationship between beneficiaries and the program.
(d) EDUCATIONAL MATERIAL.—The Secretary, through the
Administrator of the Health Care Financing Administration, shall
develop appropriate educational materials and other appropriate
techniques to assist employees in carrying out this section.
(e) NOTICE TO BENEFICIARIES.—The Secretary shall take such steps
as are necessary to assure that medicare-eligible beneficiaries and
the general public are made aware of the beneficiary assistance
program.
(f) REPORT.—The Secretary shall include, in an annual report
transmitted to the Congress, a report on the beneficiary assistance
program and on other health insurance informational and counseling services made available to medicare-eligible individuals. The
Secretary shall include in the report recommendations for such
changes as may be desirable to improve the relationship between
the medicare program and medicare-eligible individuals.
42 u s e 1395b-4.

SEC. 4360. HEALTH INSURANCE INFORMATION,
ASSISTANCE GRANTS.

COUNSELING,

AND

(a) GRANTS.—The Secretary of Health and Human Services (in
this section referred to as the "Secretary") shall make grants to
States, with approved State regulatory programs under section 1882
of the Social Security Act, that submit applications to the Secretary
that meet the requirements of this section for the purpose of providing information, counseling, and assistance relating to the procurement of adequate and appropriate health insurance coverage to
individuals who are eligible to receive benefits under title XVIII of
the Social Security Act (in this section referred to as "eligible
individuals"). The Secretary shall prescribe regulations to establish
a minimum level of funding for a grant issued under this section.
(b) GRANT APPLICATIONS.—

(1) In submitting an application under this section, a State
may consolidate and coordinate an application that consists of
parts prepared by more than one agency or department of such
State.
(2) As part of an application for a grant under this section, a
State shall submit a plan for a State-wide health insurance
information, counseling, and assistance program. Such program
shall—
(A) establish or improve upon a health insurance
information, counseling, and assistance program that pro-

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-139

vides counseling and assistance to eligible individuals in
need of health insurance information, including—
(i) information that may assist individuals in obtaining benefits and filing claims under titles XVIII and
XIX of the Social Security Act;
(ii) policy comparison information for medicare
supplemental policies (as described in section 1882(g)(1)
of the Social Security Act ^s and information that may
assist individuals in filing claims under such medicare
supplemental policies;
(iii) information regarding long-term care insurance;
and
(iv) information regarding other types of health
insurance benefits that the Secretary determines to be
appropriate;
(B) in conjunction with the health insurance information,
counseling, and assistance program described in subparagraph (A), establish a system of referral to appropriate
Federal or State departments or agencies for assistance
with problems related to health insurance coverage (including legal problems), as determined by the Secretary;
(C) provide for a sufficient number of staff positions
(including volunteer positions) necessary to provide the
services of the health insurance information, counseling,
and assistance program;
(D) provide assurances that staff members (including volunteer staff members) of the health insurance information,
counseling, and assistance program have no conflict of
interest in providing the services described in subparagraph
(A);
(E) provide for the collection and dissemination of timely
and accurate health care information to staff members;
(F) provide for training programs for staff members
(including volunteer staff members);
(G) provide for the coordination of the exchange of health
insurance information between the staff of departments
and agencies of the State government and the staff of the
health insurance information, counseling, and sissistance
program;
(H) make recommendations concerning consumer issues
and complaints related to the provision of health care to
agencies and departments of the State government and the
Federal Government responsible for providing or regulating
health insurance;
(I) establish an outreach program to provide the health
insurance information and counseling described in subparagraph (A) and the assistance described in subparagraph (B)
to eligible individuals; and
(J) demonstrate, to the satisfaction of the Secretary, an
ability to provide the counseling and assistance required
under this section.
(c) SPECIAL GRANTS.—

(1) A State that is conducting a health insurance information,
counseling, and assistance program that is substantially similar
to a program described in subsection (bX2) shall, as a requirement for eligibility for a grant under this section, demonstrate,
to the satisfaction of the Secretary, that such State shall main' • So in original. Probably should be "Act)".

104 STAT. 1388-140

PUBLIC LAW 101-508—NOV. 5, 1990

tain the activities of such program at least at the level that such
activities were conducted immediately preceding the date of the
issuance of any grant during the period of time covered by such
grant under this section and that such activities will continue to
be maintained at such level.
(2) If the Secretary determines that the existing health insurance information, counseling, and assistance program is
substantially similar to a program described in subsection (b)(2),
the Secretary may waive some or all of the requirements described in such subsection and issue a grant to the State for the
purpose of increasing the number of services offered by the
health insurance information, counseling, and assistance program, experimenting with new methods of outreach in conducting such program, or expanding such program to geographic
areas of the State not previously served by the program.
(d) CRITERIA FOR ISSUING GRANTS.—In issuing a grant under this
section, the Secretary shall consider—
(1) the commitment of the State to carrying out the health
insurance information, counseling, and assistance program described in subsection (bX2), including the level of cooperation
demonstrated—
(A) by the office of the chief insurance regulator of the
State, or the equivalent State entity;
(B) other officials of the State responsible for overseeing
insurance plans issued by nonprofit hospital and medical
service associations; and
(C) departments and agencies of such State responsible
for—
(i) administering funds under title XIX of the Social
Security Act, and
(ii) administering funds appropriated under the
Older Americans Act;
(2) the population of eligible individuals in such State as a
percentage of the population of such State; and
(3) in order to ensure the needs of rural areas in such State,
the relative costs and special problems associated with addressing the special problems of providing health care information,
counseling, and assistance to the rural areas of such State.
(e) ANNUAL STATE REPORT.—A State that receives a grant under
subsection (c) or (d) ^° shall, not later than 180 days after receiving
such grant, and annually thereafter, issue an annual report to the
Secretary that includes information concerning—
(1) the number of individuals served by the State-wide health
insurance information, counseling and assistance program of
such State;
(2) an estimate of the amount of funds saved by the State, and
by eligible individuals in the State, in the implementation of
such program; and
(3) the problems that eligible individuals in such State
encounter in procuring adequate and appropriate health care
coverage.
(f) REPORT TO CONGRESS.—Not later than 180 days after the date of
the enactment of this section, and annually thereafter, the Secretary shall issue a report to the Committee on Finance of the
Senate, the Special Committee on Aging of the Senate, the Committee on Ways and Means of the House of Representatives, the
Committee on Energy and Commerce of the House of Representa'° So in original. Probably should be "(a) or (c)".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-141

tives, and the Select Committee on Aging of the House of Representatives that—
(1) summarizes the allocation of funds authorized for grants
under this section and the expenditure of such funds;
(2) summarizes the scope and content of training conferences
convened under this section;
(3) outlines the problems that eligible individuals encounter
in procuring adequate and appropriate health care coverage;
(4) makes recommendations that the Secretary determines to
be appropriate to address the problems described in paragraph
(3); and
(5) in the case of the report issued 2 years after the date of
enactment of this section, evaluates the effectiveness of counseling programs established under this program, and makes recommendations regarding continued authorization of funds for
these purposes.
(f) AUTHORIZATION OF APPROPRIATIONS FOR GRANTS.—There

are

authorized to be appropriated, in equal parts from the Federal
Hospital Insurance Trust Fund and from the Federal Supplementary Medical Insurance Trust Fund, $10,000,000 for each of
fiscal years 1991, 1992, and 1993, to fund the grant programs described in this section.
SEC. 4361. MEDICARE AND MEDIGAP INFORMATION BY TELEPHONE.

(a) IN GENERAL.—Title XVIII (42 U.S.C. 1395 et seq.) is amended
by inserting after section 1888 the following:
MEDICARE AND MEDIGAP INFORMATION BY TELEPHONE

"SEC. 1889. The Secretary shall provide information via a toll-free 42 u s e 1395Z2.
telephone number on the programs under this title and on medicare
supplemental policies as defined in section 1882(g)(1) (including the
relationship of State programs under title XIX to such policies).".
Oa) DEMONSTRATION PROJECTS.—The Secretary of Health and 42 u s e 1395ZZ
Human Services is authorized to conduct demonstration projects in note.
up to 5 States for the purpose of establishing statewide toll-free
telephone numbers for providing information on medicare benefits,
medicare supplemental policies available in the State, and benefits
under the State medicaid program.
Subtitle B—Medicaid
PART 1—REDUCTION IN SPENDING

Sec. 4401. Reimbursement for prescribed drugs.
Sec. 4402. Requiring medicaid payment of premiums and cost-sharing for enrollment under group health plans where cost-effective.
PART 2—PROTECTION OF LOW-INCOME MEDICARE BENEFICIARIES

Sec. 4501. Phased-in extension of medicaid payments for medicare premiums for
certain individuals with income below 120 percent of the official
poverty line.
PART 3—IMPROVEMENTS IN CHILD HEALTH

Sec. 4601 Medicaid child health provisions.
Sec. 4602 Mandatory use of outreach locations other than welfare offices.
Sec. 4603 Mandatory continuation of benefits throughout pregnancy or first year of
life.
Sec. 4604. Adjustment in payment for hospital services furnished to low-income
children under the age of 6 years.
Sec. 4605 Presumptive eligibility.
Sec. 4606 Role in paternity determinations.

104 STAT. 1388-142

PUBLIC LAW 101-508—NOV. 5, 1990

Sec. 4607. Report and transition on errors in eligibility determinations.
PART 4—MISCELXANEOUS
SUBPART A—PAYMENTS

Sec. 4701. State medicaid matching payments through voluntary contributions and
State taxes.
Sec. 4702. Disproportionate share hospitals: counting of inpatient days.
Sec. 4703. Disproportionate share hospitals: alternative State payment adjustments
and systems.
Sec. 4704. Federally-qualified health centers.
Sec. 4705. Hospice payments.
Sec. 4706. Limitation on disallowances or deferral of Federal financial participation
for certain inpatient psychiatric hospital services for individuals under
age 21.
Sec. 4707. Treatment of interest on Indiana disallowance.
Sec. 4708. Billing for services of substitute physician.
SUBPART B—EUGIBIUTY AND COVERAGE

Sec. 4711. Home and community-based care as optional service.
Sec. 4712. Community supported living arrangements services.
Sec. 4713. Providing Federal medical assistance for payments for premiums for
"COBRA" continuation coverage where cost effective.
Sec. 4714. Provisions relating to spousal impoverishment.
Sec. 4715. Disregarding German reparation payments from post-eligibility treatment of income under the medicaid program.
Sec. 4716. Amendments relating to medicaid transition provision.
Sec. 4717. Clarifying effect of hospice election.
Sec. 4718. Medically needy income levels for certain 1-member families.
Sec. 4719. Codification of coverage of rehabilitation services.
Sec. 4720. Personal care services for Minnesota.
Sec. 4721. Medicaid coverage of personal care services outside the home.
Sec. 4722. Medicaid coverage of alcoholism and drug dependency treatment services.
Sec. 4723. Medicaid spenddown option.
Sec. 4424. Optional State medicaid disability determinations independent of the
Social Security Administration.
SUBPART C—HEALTH MAINTENANCE ORGANIZATIONS

Sec. 4731. Regulation of incentive payments to physicians.
Sec. 4732. Special rules.
Sec. 4733. Extension and expansion of Minnesota prepaid medicaid demonstration
project.
Sec. 4734. Treatment of certain county-operated health insuring organizations.
SUBPART D—DEMONSTRATION PROJECTS AND HOME AND COMMUNITY-BASED WAIVERS

Sec.
Sec.
Sec.
Sec.

4741.
4742.
4744.
4745.

Home and community-based waivers.
Timely payment under waivers of freedom of choice of hospital services.
Provisions relating to frail elderly demonstration project waivers.
Demonstration projects to study the effect of allowing States to extend
medicaid coverage to certain low-income families not otherwise qualified to receive medicaid benefits.
Sec. 4746. Medicaid respite demonstration project extended.
Sec. 4747. Demonstration project to provide medicaid coverage for HIV-positive
individuals.
SUBPART E—MISCELLANEOUS

Sec. 4751. Requirements for advanced directives under State plans for medical
assistance.
Sec. 4752. Improvement in quality of physician services.
Sec. 4753. Clarification of authority of Inspector General.
Sec. 4754. Notice to State medical boards when adverse actions taken.
Sec. 4755. Miscellaneous provisions.
PART 5—PROVISIONS RELATING TO NURSING HOME REFORM

Sec. 4801. Technical corrections relating to nursing home reform.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-143

PART 1—REDUCTIONS IN SPENDING
SEC. 4401. REIMBURSEMENT FOR PRESCRIBED DRUGS.
(a) I N G E N E R A L . —
(1) DENIAL OF FEDERAL FINANCIAL PARTICIPATION UNLESS
REBATE AGREEMENTS AND DRUG USE REVIEW IN EFFECT.—Section

1903(i) (42 U.S.C. 1396b(i)) is amended—
(A) by striking the period at the end of paragraph (9) and
inserting "; or", and
(B) by inserting after paragraph (9) the following new
paragraph:
"(10) with respect to covered outpatient drugs of a manufacturer dispensed in any State unless, (A) except as provided in
section 1927(a)(3), the manufacturer complies with the rebate
requirements of section 1927(a) with respect to the drugs so
dispensed in all States, and (B) effective January 1, 1993, the
State provides for drug use review in accordance with section
1927(g).".
(2) PROHIBITING STATE PLAN DRUG ACCESS UMITATIONS FOR
DRUGS COVERED UNDER A REBATE AGREEMENT.—Section 1902(a) of

such Act (42 U.S.C. 1396a(a)) is amended—
(A) by striking "and" at the end of paragraph (52),
(B) by striking the period at the end of paragraph (53) and
inserting "; and ', and
(C) by inserting after paragraph (53) the following new
pargigraph:
"(54XA) provide that, any formulary or similar restriction
(except as provided in section 1927(d)) on the coverage of covered
outpatient drugs under the plan shall permit the coverage of
covered outpatient drugs of any manufacturer which has entered into and complies with an agreement under section
1927(a), which are prescribed for a medically accepted indication (as defined in subsection 1927(k)(6)), and
"(B) comply with the reporting requirements of section
1927(bX2XA) and the requirements of subsections (d) and (g) of
section 1927.".

,

•

(3) REBATE AGREEMENTS FOR COVERED OUTPATIENT DRUGS, DRUG

USE REVIEW, AND RELATED PROVISIONS.—Title XIX of the Social
Security Act is amended by redesignating section 1927 as section 1928 and by inserting after section 1926 the following new 42 USC 1396s.
section:
" P A Y M E N T FOR COVERED OUTPATIENT DRUGS
"SEC. 1927. (a) REQUIREMENT FOR REBATE AGREEMENT.—

"(1) IN GENERAL.—In order for payment to be available under
section 1903(a) for covered outpatient drugs of a manufacturer,
the manufacturer must have entered into and have in effect a
rebate agreement described in subsection (b) with the Secretary,
on behalf of States (except that, the Secretary may authorize a
State to enter directly into agreements with a manufacturer).
Any agreement between a State and a manufacturer prior to
April 1, 1991, shall be deemed to have been entered into on
January 1, 1991, and payment to such manufacturer shall be
retroactively calculated as if the agreement between the manufacturer and the State had been entered into on January 1,
1991. If a manufacturer has not entered into such an agreement

42 u s e i396r-8.

104 STAT. 1388-144

PUBLIC LAW 101-508—NOV. 5, 1990

before March 1, 1991, such an agreement, subsequently entered
into, shall not be effective until the first day of the calendar
quarter that begins more than 60 days after the date the
agreement is entered into.
"(2) EFFECTIVE DATE.—Paragraph (1) shall first apply to drugs
dispensed under this title on or after January 1, 1991.
"(3) AUTHORIZING PAYMENT FOR DRUGS NOT COVERED UNDER

REBATE AGREEMENTS.—Paragraph (1), and section 1903(i)(10)(A),

shall not apply to the dispensing of a single source drug or
innovator multiple source drug if (A)(i) the State has made a
determination that the availability of the drug is essential to
the health of beneficiaries under the State plan for medical
assistance; (ii) such drug has been given a rating of 1-A by the
Food and Drug Administration; and (iiiXD the physician has
obtained approval for use of the drug in advance of its dispensing in accordance with a prior authorization program described
in subsection (d), or (II) the Secretary has reviewed and approved the State's determination under subparagraph (A); or (B)
the Secretary determines that in the first calendar quarter of
1991, there were extenuating circumstances.
"(4) EFFECT ON EXISTING AGREEMENTS.—In the case of a rebate
agreement in effect between a State and a manufacturer on the
date of the enactment of this section, such agreement, for the
initial agreement period specified therein, shall be considered to
be a rebate agreement in compliance with this section with
respect to that State, if the State agrees to report to the
Secretary any rebates paid pursuant to the agreement and such
agreement provides for a minimum aggregate rebate of 10
percent of the State's total expenditures under the State plan
for coverage of the manufacturer's drugs under this title. If,
after the initial agreement period, the State establishes to the
satisfaction of the Secretary that an agreement in effect on the
date of the enactment of this section provides for rebates that
are at least as large as the rebates otherwise required under
this section, and the State agrees to report any rebates under
the agreement to the Secretary, the agreement shall be considered to be a rebate agreement in compliance with the section for
the renewal periods of such agreement.
"(b) TERMS OF REBATE AGREEMENT.—
"(1) PERIODIC REBATES.—

"(A) IN GENERAL.—A rebate agreement under this subsection shall require the manufacturer to provide, to each
State plan approved under this title, a rebate each calendar
quarter (or periodically in accordance with a schedule specified by the Secretary) in an amount specified in subsection
(c) for covered outpatient drugs of the manufacturer dispensed under the plan during the quarter (or such other
period as the Secretary may specify). Such rebate shall be
paid by the manufacturer not later than 30 days after the
date of receipt of the information described in paragraph (2)
for the period involved.
"(B) OFFSET AGAINST MEDICAL ASSISTANCE.—Amounts re-

ceived by a State under this section (or under an agreement
authorized by the Secretary under subsection (a)(1) or an
agreement described in subsection (a)(4)) in any quarter
shall be considered to be a reduction in the amount ex-

PUBLIC LAW 101-508—NOV. 5,1990

104 STAT. 1388-145

pended under the State plan in the quarter for medical
assistance for purposes of section 1903(a)(1).
"(2) STATE PROVISION OF INFORMATION.—

"(A) STATE RESPONSIBIUTY.—Each State agency under
this title shall report to each manufacturer not later than
60 days after the end of each calendar quarter and in a
form consistent with a standard reporting format established by the Secretary, information on the total number of
dosage units of each covered outpatient drug dispensed
under the plan during the quarter, and shall promptly
transmit a copy of such report to the Secretary.
"(B) AUDITS.—A manufacturer may audit the information
provided (or required to be provided) under subparsigraph
(A). Adjustments to rebates shall be made to the extent that
information indicates that utilization was greater or less
than the amount previously specified.
"(3) MANUFACTURER PROVISION OF PRICE INFORMATION.—

"(A) IN GENERAL.—Each manufacturer with an agreement in effect under this section shall report to the
Secretary—
"(i) not later than 30 days after the last day of each
quarter (beginning on or after January 1, 1991), on the
average manufacturer price (as defined in subsection
(k)(l)) and, (for single source drugs and innovator multiple source drugs), the manufacturer's best price (as
defined in subsection (c)(2)(B)) for covered outpatient
drugs for the quarter, and
"(ii) not later than 30 days after the date of entering
into an agreement under this section on the average
manufacturer price (£is defined in subsection (k)(l)) as
of October 1, 1990 ^^ for each of the manufacturer's
covered outpatient drugs.
"(B) VERIFICATION SURVEYS OF AVERAGE MANUFACTURER

PRICE.—The Secretary may survey wholesalers and manufacturers that directly distribute their covered outpatient
drugs, when necessary, to verify manufacturer prices reported under subparagraph (A). The Secretary may impose
a civil monetary penalty in an amount not to exceed
$100,000 on a wholesaler, manufacturer, or direct seller, if
the wholesaler, manufacturer, or direct seller of a covered
outpatient drug refuses a request for information about
charges or prices by the Secretary in connection with a
survey under this subparagraph or knowingly provides
false information. The provisions of section 1128A (other
than subsections (a) (with respect to amounts of penalties or
additional assessments) and (b)) shall apply to a civil money
penalty under this subparagraph in the same manner as
such provisions apply to a penalty or proceeding under
section 1128A(a).
"(C) PENALTIES.—
"(i) FAILURE TO PROVIDE TIMELY INFORMATION.—In the

case of a manufacturer with an agreement under this
section that fails to provide information required under
subparagraph (A) on a timely basis, the amount of the
penalty shall be increased by $10,000 for each day in
which such information has not been provided and
such amount shall be paid to the Treasury, and, if such
" So in original. Probably should be "1990,".

104 STAT. 1388-146

PUBLIC LAW 101-508—NOV. 5, 1990
information is not reported within 90 days of the deadline imposed, the agreement shall be suspended for
services furnished after the end of such 90-day period
and until the date such information is reported (but in
no case shall such suspension be for a period of less
than 30 days).
"(ii) FALSE INFORMATION.—Any manufacturer with
an agreement under this section that knowingly provides false information is subject to a civil money
penalty in an amount not to exceed $100,000 for each
item of false information. Such civil money penalties
are in addition to other penalties as may be prescribed
by law. The provisions of section 1128A (other than
subsections (a) and (b)) shall apply to a civil money
penalty under this subparagraph in the same manner
as such provisions apply to a penalty or proceeding
under section 1128A(a).
"(D) CoNFiDENTiAUTY OF INFORMATION.—Notwithstanding any other provision of law, information disclosed by
manufacturers or wholesalers under this paragraph is confidential and shall not be disclosed by the Secretary or a
State agency (or contractor therewith) in a form which
discloses the identity of a specific manufacturer or wholesaler, prices charged for drugs by such manufacturer or
wholesaler, except as the Secretary determines to be necessary to carry out this section and to permit the Comptroller General to review the information provided.
"(4) LENGTH OF AGREEMENT.—

"(A) I N GENERAL.—A rebate agreement shall be effective
for an initial period of not less than 1 year and shall be
automatically renewed for a period of not less than one
year unless terminated under subparagraph (B).
"(B) TERMINATION.—

"(i) BY THE SECRETARY.—The Secretary may provide
for termination of a rebate agreement for violation of
the requirements of the agreement or other good cause
shown. Such termination shall not be effective earlier
than 60 days after the date of notice of such termination. The Secretary shall provide, upon request, a
manufacturer with a hearing concerning such a termination, but such hearing shall not delay the effective
date of the termination.
"(ii) BY A MANUFACTURER.—A manufacturer

may

terminate a rebate agreement under this section for
any reason. Any such termination shall not be effective
until such period after the date of the notice as the
Secretary may provide (but not beyond the term of the
agreement).
"(iii) EFFECTIVENESS OF TERMINATION.—Any termination under this subparagraph shall not affect rebates
due under the agreement before the effective date of its
termination.
"(C) DELAY BEFORE REENTRY.—In the case of any rebate
agreement with a manufacturer under this section which is
terminated, another such agreement with the manufacturer (or a successor manufacturer) may not be entered into
until a period of 1 calendar quarter has elapsed since the

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-147

date of the termination, unless the Secretary finds good
cause for a n earlier reinstatement of such an agreement.
"(c) AMOUNT OF REBATE.—
"(1) BASIC REBATE FOR SINGLE SOURCE DRUGS AND INNOVATOR

MULTIPLE SOURCE DRUGS.—With respect to single source drugs
and innovator multiple source drugs, each manufacturer shall
remit a hasic rebate to the State medical assistance plan. Except
as otherwise provided in this subsection, the amount of the
rebate to a State for a calendar quarter (or other period specified by the Secretary) with respect to each dosage form and
strength of single source drugs and innovator multiple source
drugs shall be equal to the prcduct of^
"(A) the total number of units of each dosage form and
strength dispensed under the plan under this title in the
quarter (or other period) reported by the State under
subsection (b)(2); and
"(B)(i) for quarters (or periods) beginning after December 31, 1990, and before January 1, 1993, the greater of—
"(I) the difference between the average manufacturer
price (after deducting customary prompt pajrment discounts) and 87.5 percent of such price for the quarter
(or other period), or
"(II) the difference between the average manufacturer price for a drug and the best price (as defined in
paragraph (2XB)) for such quarter (or period) for such
drug (except that for calendar quarters beginning after
December 31, 1990, and ending before January 1, 1992,
the rebate shall not exceed 25 percent of the average
manufacturer price, and for calendar quarters beginning after December 31, 1991, and ending before January 1, 1993, the rebate shall not exceed 50 percent of
the average manufacturer price); and
"(ii) for quarters (or other periods) beginning after
December 31,1992, the greater of—
"(I) the difference between the average manufacturer
price for a drug and 85 percent of such price, or
"(II) the difference between the average manufacturer price for a drug and the best price {as defined in
paragraph (2XB)) for such quarter (or period) for such
drug.
"(C) For the purposes of this paragraph, the term 'best price'
means, with respect to a single source drug or innovator multiple source drug of a manufacturer, the lowest price available
from the manufacturer to any wholesaler, retailer, nonprofit
entity, or governmental entity within the United States (excluding depot prices and single award contract prices, as defined by
the Secretary^of any ^ e n c y of the Federal Government). The
best price shall be inclusive of cash discounts, free goods,
volume discounts, and rebates (other than rebates under this
section) and shall be determined without regard to special
packaging, labeling, or identifiers on the dosage form or product
or package, and shall not take into account prices that are
merely nominal in amount; ^^
"(D) In the case of a covered outpatient drug approved for
marketing after October 1,1990, any reference in this paragraph
to 'October 1, 1990' shall be a reference to the first day of the
first month during which the drug was marketed.
'* So in original. Probably should be "."

104 STAT. 1388-148

PUBLIC LAW 101-508—NOV. 5, 1990
"(2) ADDITIONAL REBATE FOR SINGLE SOURCE AND INNOVATOR

MULTIPLE SOURCE DRUGS.—(A) Each manufacturer shall remit an
additional rebate to the State medical assistance plan in an
amount equal to:
"(i) For calendar quarters (or other periods) beginning
after December 31, 1990 and ending before January 1,
1994—
"(I) the total number of each dosage form and
strength of a single source or innovator multiple source
drug dispensed during the calendar quarter (or other
period); multiplied by
"(II)(aa) the average manufacturer price for each
dosage form and strength, minus
"(bb) the average manufacturer price for each such
dosage form and strength in effect on October 1, 1990,
increased by the percentage increase in the Consumer
Price Index for all urban C9nsumers (U.S. average)
from October 1, 1990, to the month before the beginning of the calendar quarter (or other period) involved; 2^
"(ii) For calendar quarters (or other periods) beginning
after December 31,1993—
"(I) the total number of each dosage form and
strength of a single source or innovative multiple
source drug dispensed during the calendar quarter (or
other period); multiplied by
"(II) the amount, if any, by which the weighted average manufacturer price for single source and innovator
multiple source drugs of a manufacturer exceeds the
weighted average manufacturer price for the manufacturer as of October 1, 1990, increased by the percentage
increase in the Consumer Price Index for all urban
consumers (U.S. average) from October 1, 1990, to the
month before the beginning of the calendar quarter (or
other period) involved.
"(BXi) For the purposes of subparagraph (A)(ii), the term
'weighted average manufacturer price' means (with respect to a
calendar quarter or other period) the ratio of—
"(I) the sum of the products (for all covered drugs of the
manufacturer purchased under a State program under this
title) of—
"(aa) the average manufacturer price for each such
covered drug; and
"(bb) the number of units of the covered drug sold to
any State program under this title during such period,
to
"(II) the total number of units of all such covered drugs
sold under a State program under this title in such period,
except that the Secretary may exclude certain new drugs from
the calculation of the weighted average if the inclusion of any
such drug in such calculation has the effect of—
"(aa) reducing the rebate otherwise calculated pursuant
to subparagraph (AXii); or
"(bb) increasing the rebate otherwise calculated pursuant
to subparagraph (AXii) (in cases where such calculation
under the conditions outlined in clause (ii).^*
" So in original. Probably should be ".".
'* So in original. Probably should be "(ii))".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-149

"(iiXD The Secretary may exclude drugs approved by the Food
and Drug Administration on or after October 1, 1990, from the
calculation of weighted average manufacturer price if inclus ^^
manufacturer demonstrates through a petition, in a form and
manner prescribed by the Secretary, undue hardship on such
manufacturer as a result of the inclusion of such drug in such
calculation).^®
"(II) The Secretary may promulgate guidelines to restrict the
conditions under which the Secretary may consider such
petitions.
"(C) For each of 8 calendar quarters beginning after December 31, 1991, the Secretary shall compare the aggregate amount
of the rebates under subparagraph (A)(i) to the aggregate
amount of rebates under subparagraph (A)(ii). Based on any
such comparison, the Secretary may propose and utilize an
alternative formula for the purpose of calculating an aggregate
rebate.
"(3) REBATE FOR OTHER DRUGS.—The amount of the rebate to a

State for a calendar quarter (or other period specified by the
Secretary) with respect to covered outpatient drugs (other than
single source drugs and innovator multiple source drugs) shall
be equal to the product of^
"(A) the applicable percentage (as described in paragraph
(4) 3'^ of the average manufacturer price for each dosage
form and strength of such drugs (after deducting customary
prompt payment discounts) for the quarter (or other
period), and
"(B) the number of units of such form and dosage dispensed under the plan under this title in the quarter (or
other period) reported by the State under subsection (b)(2).
"(4) For the purposes of paragraph (3), the applicable percent- .
age is—
"(A) with respect to calendar quarters beginning after
December 31, 1990, and ending before January 1, 1994, 10
percent; and
"(B) with respect to calendar quarters beginning on or
after December 31,1993,11 percent.
'(d) LIMITATIONS ON COVERAGE OF DRUGS.—
"(1) PERMISSIBLE RESTRICTIONS.—(A) Except £is provided in

parEigraph (6), a State may subject to prior authorization any
covered outpatient drug. Aiiy such prior authorization program
shall comply with the requirements of paragraph (5).
"(B) A State may exclude or otherwise restrict coverage of a
covered outpatient drug if—
"(i) the prescribed use is not for a medically accepted
indication (as defined in (kX6));
"(ii) the drug is contained in the list referred to in
paragraph (2); or
"(iii) the drug is subject to such restrictions pursuant to
an agreement between a manufacturer and a State authorized by the Secretary under subsection (aXD or in effect
pursuant to subsection (aX4).
"(2) LIST OF DRUGS SUBJECT TO RESTRICTION.—The following

drugs or classes of drugs, or their medical uses, may be excluded
from coverage or otherwise restricted:
"(A) Agents when used for anorexia or weight gain.
"(B) Agents when used to promote fertility.
'» So in original. The "inclus" probably should be "the"
' • So in original. Probably should be "calculation.".
'^ So in original. Probably should be "(4))".

104 STAT. 1388-150

PUBLIC LAW 101-508—NOV. 5, 1990

"(C) Agents when used for cosmetic purposes or hair
growth.
"(D) Agents when used for the symptomatic relief of
cough and colds.
"(E) Agents when used to promote smoking cessation.
"(F) Prescription vitamins and mineral products, except
prenatal vitamins and fluoride preparations.
"(G) Nonprescription drugs.
"(H) Covered outpatient drugs which the manufacturer
seeks to require as a condition of sale that associated tests
or monitoring services be purchased exclusively from the
manufacturer or its designee.
"(I) Drugs described in section 107(c)(3) of the Drug
Amendments of 1962 and identical„similar, or related drugs
(within the meaning of section 310.6(b)(1) of title 21 of the
Code of Federal Regulations CDESr drugs)).
"(J) Barbiturates.
"(K) Benzodiazepines.
"(3) UPDATE OF DRUG USTINGS.—The Secretary shall (except
with respect to new drugs approved by the FDA for the first 6
months following the date of approval of such drugs shall not be
subject to being listed in paragraph (2) under the provisions of
this paragraph), by regulation, periodically update the list of
drugs described in paragraph (2) or classes of drugs, or their
medical uses, which the Secretary has determined, based on
data collected by surveillance and utilization review programs
of State medical assistance programs, to be subject to clinical
abuse or inappropriate use.
"(4) INNOVATOR MULTIPLE-SOURCE DRUGS.—Innovator multiple-

source drugs shall be treated under applicable State and Federal law and regulation,
"(5) PRIOR AUTHORIZATION PROGRAMS.—A State plan under
this title may not require, as a condition of coverage or payment
for a covered outpatient drug for which Federal financial
participation is available in accordance with this section, the
approval of the drug before its dispensing for any medically
accepted indication (as defined in subsection (k)(6)) unless the
system providing for such approval—
"(A) provides response by telephone or other telecommunication device within 24 hours of a request for prior
authorization; and
"(B) except with respect to the drugs on the list referred
to in paragraph (2), provides for the dispensing of at least a
72-hour supply of a covered outpatient prescription drug in
an emergency situation (as defined by the Secretary).
"(6) TREATMENT OF NEW DRUGS.—A State may not exclude for
coverage, subject to prior authorization, or otherwise restrict
any new biological or drug approved by the Food and Drug
Administration after the date of enactment of this section, for a
period of 6 months after such approval.
"(7) OTHER PERMISSIBLE RESTRICTIONS.—A State may impose
limitations, with respect to all such drugs in a therapeutic class,
on the minimum or maximum quantities per prescription or on
the number of refills, provided such limitations are necessary to
discourage waste. Nothing in this section shall restrict the
ability of a State to address individual instances of fraud or
abuse in any manner authorized under the Social Security Act.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-151

"(8) DELAYED EFFECTIVE DATE.—The provisions of paragraph
(5) shall become effective with respect to drugs dispensed under
this title on or after July 1,1991.
"(e) DENIAL OF FEDERAL FINANCIAL PARTICIPATION IN CERTAIN

CASES.—The Secretary shall provide that no payment shall be made
to a State under section 1903(a) for an innovator multiple-source
drug dispensed on or after July 1, 1991, if, under applicable State
law, a less expensive noninnovator multiple source drug (other than
the innovator multiple-source drug) could have been dispensed.
"(f) PHARMACY REIMBURSEMENT.—
"(1) No REDUCTIONS IN REIMBURSEMENT UMITS.—(A)

During
the period of time beginning on January 1, 1991, and ending on
December 31, 1994, the Secretary may not modify by regulation
the formula used to determine reimbursement limits described
in the regulations under 42 CFR 447.331 through 42 CFR
447.334 (as in effect on the date of the enactment of the Omnibus Budget Reconciliation Act of 1990) to reduce such limits for
covered outpatient drugs.
(B) 3* During the period of time described in subpargigraph
(A), any State that was in compliance with the regulations
described in subparagraph (A) may not reduce the limits for
covered outpatient drugs described in subparsigraph (A) or dispensing fees for such drugs.
"(2) ESTABLISHMENT OF UPPER PAYMENT LIMITS.—HCFA shall
establish a Federal upper reimbursement limit for each multiple source drug for which the FDA has rated three or more
products therapeutically and pharmaceutically equivalent,
regardless of whether all such additional formulations are rated
as such and shall use only such formulations when determining
any such upper limit.

"(g) DRUG U S E REVIEW.—
"(1) I N GENERAL.—

"(A) In order to meet the requirement of section
1903(i)(10XB), a State shall provide, by not later than January 1, 1993, for a drug use review program described in
paragraph (2) for covered outpatient drugs in order to
assure that prescriptions (i) are appropriate, (ii) are medically necessary, and (iii) are not likely to result in adverse
medical results. The program shall be designed to educate
physicians and pharmacists to identify and reduce the frequency of patterns of fraud, abuse, gross overuse, or
inappropriate or medically unnecessary care, among physicians, pharmacists, and patients, or associated with specific
drugs or groups of drugs, as well as potential and actual
severe adverse reactions to drugs including education on
therapeutic appropriateness, overutilization and underutilization, appropriate use of generic products, therapeutic
duplication, drug-disease contraindications, drug-drug
interactions, incorrect drug dosage or duration of drug
treatment, drug-allergy interactions, and clinical abuse/
misuse.
"(B) The program shall assess data on drug use against
predetermined standards, consistent with the following:
"(i) compendia which shall consist of the following:
'* So in original. Probably should be " "(B)".

104 STAT. 1388-152

PUBLIC LAW 101-508—NOV. 5, 1990

"(I) American Hospital Formulary Service Drug
Information;
"(II) United States Pharmacopeia-Drug Information; and
"(III) American Medical Association Drug
Evaluations; and
"(ii) the peer-reviewed medical literature.
"(C) The Secretary, under the procedures established in
section 1903, shall pay to each State an amount equal to 75
per centum of so much of the sums expended by the State
plan during calendar years 1991 through 1993 as the Secretary determines is attributable to the statewide adoption
of a drug use review program which conforms to the
requirements of this subsection.
"(D) States shall not be required to perform additional
drug use reviews with respect to drugs dispensed to residents of nursing facilities which are in compliance with the
drug regimen review procedures prescribed by the Secretary for such facilities in regulations implementing section 1919, currently at section 483.60 of title 42, Code of
Federal Regulations.
"(2) DESCRIPTION OF PROGRAM.—Each drug use review program shall meet the following requirements for covered outpatient drugs:
"(A) PROSPECTIVE DRUG REVIEW.—(i) The State plan shall
provide for a review of drug therapy before each prescription is filled or delivered to an individual receiving benefits
under this title, typically at the point-of-sale or point of
distribution. The review shall include screening for potential drug therapy problems due to therapeutic duplication,
drug-disease contraindications, drug-drug interactions
(including serious interactions with nonprescription or
over-the-counter drugs), incorrect drug dosage or duration
of drug treatment, drug-allergy interactions, and clinical
abuse/misuse. Each State shall use the compendia and
literature referred to in paragraph (1)(B) as its source of
standards for such review.
"(ii) As part of the State's prospective drug use review
program under this subparagraph applicable State law
shall establish standards for counseling of individuals
receiving benefits under this title by pharmacists which
includes at least the following:
"(I) The pharmacist must offer to discuss with each
individual receiving benefits under this title or
caregiver of such individual (in person, whenever practicable, or through access to a telephone service which
is toll-free for long-distance calls) who presents a
prescription, matters which in the exercise of the pharmacist's professional judgment (consistent with State
law respecting the provision of such information), the
pharmacist deems significant including the following:
"(aa) The name and description of the medication.
"(bb) The route, dosage form, dosage, route of
administration, and duration of drug therapy.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-153

"(cc) Special directions and precautions for
preparation, administration and use by the patient.
"(dd) Common severe side or adverse effects or
interactions and therapeutic contraindications
that may be encountered, including their avoidance, and the action required if they occur.
"(ee) Techniques for self-monitoring drug therapy.
"(ff) Proper storage,
"(gg) Prescription refill information,
"(hh) Action to be taken in the event of a missed
dose.
"(11) A reasonable effort must be made by the pharmacist to obtain, record, and maintain at least the
following information regarding individuals receiving
benefits under this title:
"(aa) Nsmie, address, telephone number, date of
birth (or age) and gender.
"(bb) Individual history where significant,
including disease state or states, known allergies
and drug reactions, and a comprehensive list of
medications and relevant devices.
"(cc) Pharmacist comments relevant to the
individuals drug therapy.
Nothing in this clause shall be construed as requiring a
pharmacist to provide consultation when an individual
receiving benefits under this title or caregiver of such
individual refuses such consultation.
"(B) RETROSPECTIVE DRUG USE REVIEW.—The program

shall provide, through its mechanized drug claims processing and information retrieval systems (approved by the
Secretary under section 1903(r)) or otherwise, for the ongoing periodic examination of claims data and other records
in order to identify patterns of fraud, abuse, gross overuse,
or inappropriate or medically unnecessary care, among
physicians, pharmacists and individuals receiving benefits
under this title, or associated with specific drugs or groups
of drugs.
"(C) APPUCATION OF STANDARDS.—The program shall, on

an ongoing basis, assess data on drug use against explicit
predetermined standards (using the compendia and literature referred to in subsection (1)(B) as the source of
standards for such assessment) including but not limited to
monitoring for therapeutic appropriateness, overutilization
and underutilization, appropriate use of generic products,
therapeutic duplication, drug-disease contraindications,
drug-drug interactions, incorrect drug dosage or duration of
drug treatment, and clinical abuse/misuse and, as necessary, introduce remedial strategies, in order to improve
the quality of care and to conserve program funds or personal expenditures.
"(D)

EDUCATIONAL

PROGRAM.—The

program

shall,

through its State drug use review board established under
paragraph (3), either directly or through contracts with
accredited health care educational institutions, State medical societies or State pharmacists associations/societies or
other organizations as specified by the State, and using data

104 STAT. 1388-154

PUBLIC LAW 101-508—NOV. 5, 1990
provided by the State drug use review board on common
drug therapy problems, provide for active and ongoing
educational outreach programs (including the activities described in paragraph (SXCXiii) of this subsection) to educate
practitioners on common drug therapy problems with the
aim of improving prescribing or dispensing practices.
"(3) STATE DRUG USE REVIEW BOARD.—

"(A) EsTABusHMENT.—Each State shall provide for the
establishment of a drug use review board (hereinafter referred to £is the 'DUR Board') either directly or through a
contract with a private organization.
"(B) MEMBERSHIP.—The membership of the DUR Board
shall include health care professionals who have recognized
knowledge and expertise in one or more of the following:
"(i) The clinically appropriate prescribing of covered
outpatient drugs.
"(ii) The clinically appropriate dispensing and monitoring of covered outpatient drugs,
"(iii) Drug use review, evaluation, and intervention.
"(iv) Medical quality assurance.
The membership of the DUR Board shall be made up at
least Va but no more than 51 percent licensed and actively
practicing physicians and at least Va * * * licensed and
actively practicing pharmacists.
"(C) ACTIVITIES.—The activities of the DUR Board shall
include but not be limited to the following:
"(i) Retrospective DUR as defined in section (2XB).
"(ii) Application of standards as defined in section
(2XC).
"(iii) Ongoing interventions for physicians and pharmacists, targeted toward therapy problems or individuals identified in the course of retrospective drug use
reviews performed under this subsection. Intervention
programs shall include, in appropriate instances, at
least:
"(I) information dissemination sufficient to
ensure the ready availability to physicians and
pharmacists in the State of information concerning
its duties, powers, and basis for its standards;
"(II) written, oral, or electronic reminders
containing patient-specific or drug-specific (or both)
information and suggested changes in prescribing
or dispensing practices, communicated in a
manner designed to ensure the privacy of patientrelated information;
"(III) use of face-to-face discussions between
health care professionals who are experts in
rational drug therapy and selected prescribers and
pharmacists who have been targeted for educational intervention, including discussion of optimal prescribing, dispensing, or pharmacy care
practices, and follow-up face-to-face discussions;
and
"(IV) intensified review or monitoring of selected
prescribers or dispensers.
The Board shall re-evaluate interventions after an appropriate period of time to determine if the intervention im-

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-155

proved the quality of drug therapy, to evaluate the success
of the interventions and make modifications as necessary.
"(D) ANNUAL REPORT.—Each State shall require the DUR
Board to prepare a report on an annual basis. The State
shall submit a report on an annual basis to the Secretary
which shall include a description of the activities of the
Board, including the nature and scope of the prospective
and retrospective drug use review programs, a summary of
the interventions used, an assessment of the impact of these
educational interventions on quality of care, and an estimate of the cost savings generated as a result of such
program. The Secretary shall utilize such report in evaluating the effectiveness of each State's drug use review
program.
'(h) ELECTRONIC CLAIMS MANAGEMENT.—

"(1) I N GENERAL.—In accordance with chapter 35 of title 44,
United States Code (relating to coordination of Federal information policy), the Secretary shall encourage each State agency to
establish, as its principal means of processing claims for covered
outpatient drugs under this title, a point-of-sale electronic
claims management system, for the purpose of performing online, real time eligibility verifications, claims data capture,
adjudication of claims, and assisting pharmacists (and other
authorized persons) in applying for and receiving payment.
"(2) ENCOURAGEMENT.—In order to carry out paragraph (1)—
"(A) for calendar quarters during fiscal years 1991 and
1992, expenditures under the State plan attributable to
development of a system described in paragraph (1) shall
receive Federal financial participation under section
1903(a)(3)(A)(i) (at a matching rate of 90 percent) if the State
acquires, through applicable competitive procurement process in the State, the most cost-effective telecommunications
network and automatic data processing services and equipment; and
"(B) the Secretary may permit, in the procurement described in subparagraph (A) in the application of part 433 of
title 42, Code of Federal Regulations, and parts 95, 205, and
307 of title 45, Code of Federal Regulations, the substitution
of the State's request for proposal in competitive procurement for advance planning and implementation documents
otherwise required.
*(i) ANNUAL REPORT.—

"(1) I N GENERAL.—Not later than May 1 of each year the
Secretary shall transmit to the Committee on Finance of the
Senate, the Committee on Energy and Commerce of the House
of Representatives, and the Committees on Aging of the Senate
and the House of Representatives a report on the the operation
of this section in the preceding fiscal year.
"(2) DETAILS.—Each report shall include information on—
"(A) ingredient costs paid under this title for single
source drugs, multiple source drugs, and nonprescription
covered outpatient drugs;
"(B) the total value of rebates received and number of
manufacturers providing such rebates;
"(C) how the size of such rebates compare with the size or
rebates offered to other purchasers of covered outpatient
drugs;

^

104 STAT. 1388-156

PUBLIC LAW 101-508—NOV. 5, 1990

"(D) the effect of inflation on the value of rebates required under this section;
"(E) trends in prices paid under this title for covered
outpatient drugs; and
"(F) Federal and State administrative costs associated
with compliance with the provisions of this title,
"(j) EXEMPTION OF ORGANIZED HEALTH CARE SETTINGS.—(1) Covered outpatient drugs dispensed by * * * Health Maintenance
Organizations, including those organizations that contract under
section 1903(m), are not subject to the requirements of this section.
"(2) The State plan shall provide that a hospital (providing medical assistance under such plan) that dispenses covered outpatient
drugs using drug formulary systems, and bills the plan no more
than the hospital's purchasing costs for covered outpatient drugs (as
determined under the State plan) shall not be subject to the requirements of this section.
"(3) Nothing in this subsection shall be construed as providing
that amounts for covered outpatient drugs paid by the institutions
described in this subsection should not be taken into account for
purposes of determining the best price as described in subsection (c).
"(k) DEFINITIONS.—In this section—
"(1) AVERAGE MANUFACTURER PRICE.—The term 'average
manufacturer price' means, with respect to a covered outpatient
drug of a manufacturer for a calendar quarter, the average
price paid to the manufacturer for the drug in the United States
by wholesalers for drugs distributed to the retail pharmacy
class of trade.
"(2) COVERED OUTPATIENT DRUG.—Subject to the exceptions in
paragraph (3), the term 'covered outpatient drug' means—
"(A) of those drugs which are treated as prescribed drugs
for purposes of section 1905(a)(12), a drug which may be
dispensed only upon prescription (except as provided in
paragraph (5)), and—
"(i) which is approved for safety and effectiveness as
a prescription drug under section 505 or 507 of the
Federal Food, Drug, and Cosmetic Act or which is
approved under section 505(j) of such Act;
"(iiXD which was commercially used or sold in the
United States before the date of the enactment of the
Drug Amendments of 1962 or which is identical, similar, or related (within the meaning of section 310.6(bXl)
of title 21 of the Code of Federal Regulations) to such a
drug, and (II) which has not been the subject of a final
determination by the Secretary that it is a 'new drug'
(within the meaning of section 201(p) of the Federal
Food, Drug, and Cosmetic Act) or an action brought by
the Secretary under section 301, 302(a), or 304(a) of
such Act to enforce section 502(f) or 505(a) of such Act;
or
"(iiiXD which is described in section 107(cX3) of the
Drug Amendments of 1962 and for which the Secretary
has determined there is a compelling justification for
its medical need, or is identical, similar, or related
(within the meaning of section 310.6(b)(1) of title 21 of
the Code of Federal Regulations) to such a drug, and (II)
for which the Secretary has not issued a notice of an
opportunity for a hearing under section 505(e) of the

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-157

Federal Food, Drug, and Cosmetic Act on a proposed
order of the Secretary to withdraw approval of an
application for such drug under such section because
the Secretary has determined that the drug is less than
effective for some or all conditions of use prescribed,
recommended, or suggested in its labeling; and
"(B) a biological product, other than a vaccine which—
"(i) may only be dispensed upon prescription,
"(ii) is licensed under section 351 of the Public Health
Service Act, and
"(iii) is produced at an establishment licensed under
such section to produce such product; and
"(C) insulin certified under section 506 of the Federal
Food, Drug, and Cosmetic Act.
"(3) LIMITING DEFINITION.—The term 'covered outpatient
drug' does not include any drug, biological product, or insulin
provided as part of, or as incident to and in the same setting as,
any of the following (and for which payment may be made
under this title as part of payment for the following and not as
direct reimbursement for the drug):
"(A) Inpatient hospital services.
"(B) Hospice services.
"(C) Dental services, except that drugs for which the
State plan authorizes direct reimbursement to the dispensing dentist are covered outpatient drugs.
'(D) Physicians'services.
"(E) Outpatient hospital services * * * * 39 emergency
room visits.
"(F) Nursing facility sevices.
"(G) Other laboratory and x-ray services.
"(H) Renal dialysis.
Such term also does not include any such drug or product which
is used for a medical indication which is not a medically
accepted indication.
"(4) NONPRESCRIPTION DRUGS.—If a State plan for medical
assistance under this title includes coverage of prescribed drugs
as described in section 1905(aX12) and permits coverage of drugs
which may be sold without a prescription (commonly referred to
as 'over-the-counter' drugs), if they are prescribed by a physician (or other person authorized to prescribe under State law),
such a drug shall be regarded as a covered outpatient drug.
"(5) MANUFACTURER.—The term 'manufacturer' means any
entity which is engeiged in—
"(A)
the
production,
preparation,
propagation,
compounding, conversion, or processing of prescription drug
products, either directly or indirectly by extraction from
substances of natural origin, or independently by means of
chemical synthesis, or by a combination of extraction and
chemical synthesis, or
"(B) in the packaging, repackaging, labeling, relabeling,
or distribution of prescription drug products.
Such term does not include a wholesale distributor of drugs or a
retail pharmacy licensed under State law.
"(6) MEDICALLY ACCEPTED INDICATION.—The term 'medically
accepted indication' means any use for a covered outpatient
drug which is approved under the Federal Food, Drug, and
Cosmetic Act, which appears in peer-reviewed medical lit•• So in original. Probably should be "services emergency".

104 STAT. 1388-158

PUBLIC LAW 101-508—NOV. 5, 1990

erature or which is accepted by one or more of the following
compendia: the American Hospital Formulary Service-Drug
Information, the American Medical Association Drug Evaluations, and the United States Pharmacopeia-Drug Information.
"(7) MULTIPLE SOURCE DRUG; INNOVATOR MULTIPLE SOURCE
DRUG; NONINNOVATOR MULTIPLE SOURCE DRUG; SINGLE SOURCE
DRUG.—

"(A) DEFINED.—
"(i) MULTIPLE SOURCE DRUG.—The

term 'multiple
source drug' means, with respect to a calendar quarter,
a covered outpatient drug (not including any drug described in paragraph (5)) for which there are 2 or more
drug products which—
"(I) are rated as therapeutically equivalent
(under the Food and Drug Administration's most
recent publication of 'Approved Drug Products
with Therapeutic Equivalence Evaluations'),
"(II) except as provided in subparagraph (B), are
pharmaceutically equivalent and bioequivalent, as
defined in subparagraph (C) and as determined by
the Food and Drug Administration, and
"(III) are sold or marketed in the State during
the period.
"(ii) INNOVATOR MULTIPLE SOURCE DRUG.—The term
'innovator multiple source drug' means a multiple
source drug that was originally marketed under an
original new drug application approved by the Food
and Drug Administration.
"(iii) NONINNOVATOR MULTIPLE SOURCE DRUG.—The
term 'noninnovator multiple source drug' means a multiple source drug that is not an innovator multiple
source drug.
"(iv) SINGLE SOURCE DRUG.—The term 'single source
drug' means a covered outpatient drug which is
produced or distributed under an originsd new drug
application approved by the Food and Drug Administration, including a drug product marketed by any
cross-licensed producers or distributers *° operating
under the new drug application.
"(B) EXCEPTION.—Subpar^aph (AXi)(II) shall not apply
if the Food and Drug Administration changes by regulation
the requirement that, for purposes of the publication described in subparagraph (AXiXD, in order for drug products
to be rated as therapeutically equivalent, they must be
pharmaceutically equivalent and bioequivalent, as defined
in subparagraph (C).
"(C) DEFINITIONS.—For purposes of this paragraph—
"(i) drug products are pharmaceuutically * ^ equivalent if the products contain identical amounts of the
same active drug ingredient in the same dosage form
and meet compendial or other applicable standards of
strength, quality, purity, and identity;
"(ii) drugs are bioequivalent if they do not present a
known or potential bioequivalence problem, or, if they
do present such a problem, they are shown to meet an
appropriate standard of bioequivalence; and
«o So in original. Probably should be "distributors".
*' So in original. Probably should be "pharmaceutically".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-159

"(iii) a drug product is considered to be sold or marketed in a State if it appears in a published national
listing of average wholesale prices selected by the Secretary, provided that the listed product is generally
available to the public through retail pharmacies in
that State.
"(8) STATE AGENCY.—The term 'State agency' means the
agency designated under section 1902(a)(5) to administer or
supervise the administration of the State plan for medical
assistance.".
(b) FUNDING.—
(1) DRUG USE REVIEW PROGRAMS.—Section

1903(a)(3) (42 U.S.C. 42 u s e 1396b.
1936b(a)(3)) is amended—
(A) by striking "plus" at the end of subparagraph (C) and
inserting "and", and
(B) by adding at the end the following new subparagraph:
"(D) 75 percent of so much of the sums expended by the
State plan during a quarter in 1991, 1992, or 1993, as the
Secretary determines is attributable to the statewide adoption of a drug use review program which conforms to the
requirements of section 1927(g); plus".
(2) TEMPORARY INCREASE IN FEDERAL MATCH FOR ADMINISTRA-

42 u s e 1396b

TIVE COSTS.—The per centum to be applied under section note.
1903(a)(7) of the Social Security Act for amounts expended
during calendar quarters in fiscal year 1991 which are attributable to administrative activities necessary to carry out section
1927 (other than subsection (g)) of such Act shall be 75 percent,
rather than 50 percent; after fiscal year 1991, the match shall
revert back to 50 percent.
(c) DEMONSTRATION PROJECTS.—
(1) PROSPECTIVE DRUG UTIUZATION REVIEW.—

(A) The Secretary of Health and Human Services shall
provide, through competitive procurement by not later than
January 1, 1992, for the establishment of at least 10 statewide demonstration projects to evaluate the efficiency and
cost-effectiveness of prospective drug utilization review (as
a component of on-line, real-time electronic point-of-sales
claims management) in fulfilling patient counseling and in
reducing costs for prescription drugs.
(B) Each of such projects shall establish a central electronic repository for capturing, storing, and updating
prospective drug utilization review data and for providing
access to such data by participating pharmacists (and other
authorized participants).
(C) Under each project, the pharmacist or other authorized participant shall assess the active drug regimens of
recipients in terms of duplicate drug therapy, therapeutic
overlap, allergy and cross-sensitivity reactions, drug interactions, age precautions, drug regiment compliance,
prescribing limits, and other appropriate elements.
(D) Not later than January 1, 1994, the Secretary shall
submit to Congress a report on the demonstration projects
conducted under this paragraph.
(2) DEMONSTRATION PROJECT O N COST-EFFECTIVENESS O F REIMBURSEMENT FOR PHARMACISTS' COGNITIVE SERVICES.—

(A) The Secretary of Health and Human Services shall
conduct a demonstration project to evaluate the impact on

42 u s e 1396r-8
note.

104 STAT. 1388-160

PUBLIC LAW 101-508—NOV. 5, 1990
quality of care and cost-effectiveness of paying pharmacists
under title XIX of the Social Security Act, whether or not a
drug is dispensed, for drug use review services. For this
purpose, the Secretary shall provide for no fewer than 5
demonstration sites in different States and the participation of a significant number of pharmacists.
(B) Not later than January 1, 1995, the Secretary shall
submit a report to the Congress on the results of the
demonstration project conducted under subparagraph (A).

42 u s e 1396r-8
"o**-

(d) STUDIES.—
(1) STUDY OF DRUG PURCHASING AND BILLING ACTIVITIES OF
VARIOUS HEALTH CARE SYSTEMS.—

(A) The Comptroller General shall conduct a study of the
drug purchasing and billing practices of hospitals, other
institutional facilities, and managed care plans which provide covered outpatient drugs in the medicaid program. The
study shall compare the ingredient costs of drugs for medicaid prescriptions to these facilities and plans and the
charges billed to medical assistance programs by these
facilities and plans compared to retail pharmacies.
(B) The study conducted under this subsection shall include an assessment of—
(i) the prices paid by these institutions for covered
outpatient drugs compared to prices that would be paid
under this section,
(ii) the quality of outpatient drug use review provided
by these institutions as compared to drug use review
required under this section, and
(iii) the efficiency of mechanisms used by these
institutions for billing and receiving payment for covered outpatient drugs dispensed under this title.
(C) By not later than May 1, 1991, the Comptroller General shall report to the Secretary of Health and Human
Services (hereafter in this section referred to as the "Secretary"), the Committee on Finance of the Senate, the
Committee on Energy and Commerce of the House of Representatives, and the Committees on Aging of the Senate
and the House of Representatives on the study conducted
under subparagraph (A).
(2) REPORT ON DRUG PRICING.—By not later than May 1 of each
year, the Comptroller General shall submit to the Secretary, the
Committee on Finance of the Senate, the Committee on Energy
and Commerce of the House of Representatives, and the
Committees on Aging of the Senate and House of Representatives an annual report on changes in prices charged by manufacturers for prescription drugs to the Department of Veterans
Affairs, other Federal programs, retail and hospital pharmacies,
and other purchasing groups and managed care plans.
(3) STUDY ON PRIOR APPROVAL PROCEDURES.—

(A) The Secretary, acting in consultation with the
Comptroller General, shall study prior approval procedures
utilized by State medical assistance programs conducted
under title XIX of the Social Security Act, including—
(i) the appeals provisions under such programs; and
(ii) the effects of such procedures on beneficiary and
provider access to medications covered under such
programs.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-161

(B) By not later than December 31, 1991, the Secretary
and the Comptroller General shall report to the Committee
on Finance of the Senate, the Committee on Energy and
Commerce of the House of Representatives, and the
Committees on Aging of the Senate and the House of
Representatives on the results of the study conducted under
subparagraph (A) and shall make recommendations with
respect to which procedures are appropriate or inappropriate to be utilized by State plans for medical assistance.
(4) STUDY ON REIMBURSEMENT RATES TO PHARMACISTS.—

(A) The Secretary shall conduct a study on (i) the adequacy of current reimbursement rates to pharmacists under
each State medical assistance programs conducted under
title XIX of the Social Security Act; and (ii) the extent to
which reimbursement rates under such programs have an
effect on beneficiary access to medications covered and
pharmacy services under such programs.
,
(B) By not later than December 31, 1991, the Secretary
shall report to the Committee on Finance of the Senate, the
Committee on Energy and Commerce of the House of Representatives, and the Committees on Aging of the Senate
and the House of Representatives on the results of the
study conducted under subparagraph (A).
(5) STUDY OF PAYMENTS FOR VACCINES.—The Secretary

of

Health and Human Services shall undertake a study of the
relationship between State medical assistance plans and Federal and State acquisition and reimbursement policies for vaccines and the accessibility of vaccinations and immunization to
children provided under this title. The Secretary shall report to
the Congress on the Study not later than one year after the date
of the enactment of this Act.
(6) STUDY ON APPLICATION OF DISCOUNTING OF DRUGS UNDER

MEDICARE.—The Comptroller General shall conduct a study
examining methods to encourage providers of items and services
under title XVIII of the Social Security Act to negotiate discounts with suppliers of prescription drugs to such providers.
The Comptroller General shall submit to Congress a report on
such study no later than 1 year after the date of enactment of
this subsection.
SEC. 4402. REQUIRING MEDICAID PAYMENT OF PREMIUMS AND COSTSHARING FOR ENROLLMENT UNDER GROUP HEALTH PLANS
WHERE COST-EFFECTIVE.

(a) IN GENERAL.—Title XIX (42 U.S.C. 1396 et seq.) is amended—
(1) in section 1902(a)(25) (42 U.S.C 1396a(a)(25))—
(A) by striking "and" at the end of subparagraph (E),
(B) by adding "and" at the end of subparagraph (F), and
(C) by adding at the end the following new subparagraph:
"(G) that the State plan shall meet the requirements of
section 1906 (relating to enrollment of individuals under
group health plans in certain cases);"; and
(2) by inserting after section 1905 the following new section:
"ENROLLMENT OF INDIVIDUALS UNDER GROUP HEALTH PLANS

"SEC. 1906. (a) For purposes of section 1902(a)(25)(G) and subject to
subsection (d), each State plan—

42 USC 1396e.

104 STAT. 1388-162

PUBLIC LAW 101-508—NOV. 5, 1990

"(1) shall implement guidelines established by the Secretary,
consistent with subsection (b), to identify those cases in which
enrollment of an individual otherwise entitled to medical assistance under this title in a group health plan (in which the
individual is otherwise eligible to be enrolled) is cost-effective
(as defined in subsection (eX2));
"(2) shall require, in case of an individual so identified and as
a condition of the individual being or remaining eligible for
medical assistance under this title and subject to subsection
(b)(2), notwithstanding any other provision of this title, that the
individual (or in the case of a child, the child's parent) apply for
enrollment in the group health plan; and
"(3) in the case of such enrollment (except as provided in
subsection (c)(1)(B)), shall provide for payment of all enroUee
premiums for such enrollment and all deductibles, coinsurance,
and other cost-sharing obligations for items and services otherwise covered under the State plaA under this title (exceeding
• the amount otherwise permitted under section 1916), and shall
treat coverage under the group health plan as a third party
liability (under section 1902(a)(25)).
"(bXD In establishing guidelines under subsection (aXD, the Secretary shall take into account that an individual may only be
eligible to enroll in group health plans at limited times and only if
other individuals (not entitled to medical assistance under the plan)
are also enrolled in the plan simultaneously.
"(2) If a parent of a child fails to enroll the child in a group health
plan in accordance with subsection (a)(2), such failure shall not
affect the child's eligibility for benefits under this title.
"(cXlXA) In the case of pa5niients of premiums, deductibles, coinsurance, and other cost-sharing obligations under this section
shall be considered, for purposes of section 1903(a), to be payments
for medical assistance.
"(B) If all members of a family are not eligible for medical
assistance under this title and enrollment of the members so eligible
in a group health plan is not possible without also enrolling members not so eligible—
"(i) payment of premiums for enrollment of such other members shall be treated as payments for medical assistance for
eligible individuals, if it would be cost-effective (taking into
account payment of all such premiums), but
"(ii) payment of deductibles, coinsurance, and other costsharing obligations for such other members shall not be treated
as payments for medical assistance for eligible individuals.
"(2) The fact that an individual is enrolled in a group health plan
under this section shall not change the individual's eligibility for
benefits under the State plan, except insofar as section 1902(a)(25)
provides that payment for such benefits shall first be made by such
plan.
"(d)(1) In the case of any State which is providing medical assistance to its residents under a waiver granted under section 1115, the
Secretary shall require the State to meet the requirements of this
section in the same manner as the State would be required to meet
such requirement if the State had in effect a plan approved under
this title.
"(2) This section, and section 1902(aX25)(G), shall only apply to a
State that is one of the 50 States or the District of Columbia.
"(e) In this section:

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-163

"(1) The term 'group health plan' has the meaning given such
term in section 5000(b)(1) of the Internal Revenue Code of 1986,
and includes the provision of continuation coverage by such a
plan pursuant to title XXII of the Public Health Service Act,
section 4980B of the Internal Revenue Code of 1986, or title VI
of the Employee Retirement Income Security Act of 1974.
"(2) The term 'cost-effective' means, as established by the
Secretary, that the reduction in expenditures under this title
with respect to an individual who is enrolled in a group health
plan is likely to be greater than the additional expenditures for
premiums and cost-sharing required under this section with
respect to such enrollment.".
03) TREATMENT OF ERRONEOUS EXCESS PAYMENTS FOR MEDICAL

ASSISTANCE.—Section 1903(u)(l)(C)(iv) (42 U.S.C. 1396b(u)(l)(C)(iv)) is
amended by inserting before the period at the end the following: "or
with respect to payments made in violation of section 1906".
(c) OPTIONAL MINIMUM 6-MONTH ELIGIBILITY.—Section 1902(e) (42
U.S.C. 1396a(e)) is amended by adding at the end the following new
paragraph:
"(11)(A) In the case of an individual who is enrolled with a group
health plan under section 1906 and who would (but for this paragraph) lose eligibility for benefits under this title before the end of
the minimum enrollment period (defined in subparagraph (B)), the
State plan may provide, notwithstanding any other provision of this
title, that the individual shall be deemed to continue to be eligible
for such benefits until the end of such minimum period, but only
with respect to such benefits provided to the individual as an
enrollee of such plan.
"(B) For purposes of subparagraph (A), the term 'minimum enrollment period' means, with respect to an individual's enrollment with
a group health plan, a period established by the State, of not more
than 6 months beginning on the date the individual's enrollment
under the plan becomes effective.".
(d) CONFORMING AMENDMENTS.—

(1) Section 1902(a)(10) (42 U.S.C. 1396a(a)(10)) is amended in
the matter following subparagraph (E)—
(A) by striking "and' at the end of subdivision (IX);
(B) by inserting "and" at the end of subdivision (X); and
(C) by adding at the end the following new subdivision:
"(XI) the making available of medical assistance to cover
the costs of premiums, deductibles, coinsurance, and other
cost-sharing obligations for certain individuals for private
health coverage as described in section 1906 shall not, by
reason of paragraph (10), require the making available of
any such benefits or the making available of services of the
same amount, duration, and scope of such private coverage
to any other individuals;".
(2) Section 1905(a) (42 U.S.C. 1396d(a)) is amended by adding
at the end the following: "The payment described in the first
sentence may include expenditures for medicare cost-sharing
and for premiums under part B of title XVIII for individuals
who are eligible for medical assistance under the plan and (A)
are receiving aid or assistance under any plan of the State
approved under title I, X, XIV, or XVI, or part A of title IV, or
with respect to whom supplemental security income benefits
are being paid under title XVI, or (B) with respect to whom

104 STAT. 1388-164

42 use 1396a
note.

PUBLIC LAW 101-508—NOV. 5, 1990

there is being paid a State supplementary payment and are
eligible for medical assistance equal in amount, duration, and
scope to the medical assistance made available to individuals
described in section 1902(a)(10)(A), and, except in the case of
individuals 65 years of age or older and disabled individuals
entitled to health insurance benefits under title XVIII who are
not enrolled under part B of title XVIII, other insurance premiums for medical or any other type of remedial care or the cost
thereof.".
(3) Section 1903(aXl) (42 U.S.C. 1396b(a)(l)) is amended by
striking "(including expenditures for" and all that follows
through "or the cost thereof)".
(e) EFFECTIVE DATE.—(1) The amendments made by this section
apply (except as provided under paragraph (2)) to payments under
title XIX of the Social Security Act for calendar quarters beginning
on or after January 1, 1991, without regard to whether or not final
regulations to carry out such amendments have been promulgated
by such date.
(2) In the case of a State plan for medical assistance under title
XIX of the Social Security Act which the Secretary of Health and
Human Services determines requires State legislation (other than
legislation authorizing or appropriating funds) in order for the plan
to meet the additional requirements imposed by the amendments
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. For purposes of the previous
sentence, in the case of a State that has a 2-year legislative session,
each year of such session shall be deemed to be a separate regular
session of the State legislature.

PART 2—PROTECTION OF LOW-INCOME
MEDICARE BENEFICIARIES
SEC. 4501. PHASED-IN EXTENSION OF MEDICAID PAYMENTS FOR MEDICARE PREMIUMS FOR CERTAIN INDIVIDUALS WITH INCOME
BELOW 120 PERCENT OF THE OFFICIAL POVERTY LINE.
(a) 1-YEAR ACCELERATION OF BUY-IN OF PREMIUMS AND COST SHAR-

42 use 1396a.

ING FOR QUAUFIED MEDICARE BENEFICIARIES UP TO 100 PERCENT OF
POVERTY LINE.—Section 1905(p)(2) (42 U.S.C. 1396d(p)(2)) is further
amended—
(1) in subparagraph (B)—
(A) by adding "and" at the end of clause (ii);
(B) in clause (iii), by striking "95 percent, and" and
inserting "100 percent."; and
(C) by striking clause (iv); and
(2) in subparagraph (C)—
(A) in clause (iii), by striking "90" and inserting "95";
(B) by adding "and" at the end of clause (iii);
(C) in clause (iv), bv striking "95 percent, and" and
inserting "100 percent.'; and
(D) by striking clause (v).
(b)
ENTITLEMENT.—Section
1902(a)(10)(E)
(42
U.S.C.
1395b(aX10XEXii)) is amended—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-165

(1) by striking ", and" at the end of clause (i) and inserting a
semicolon;
(2) by adding "and" at the end of clause (ii); and
(3) by adding at the end the following new clause:
"(iii) for making medical assistance available for medicare cost sharing described in section 1905(p)(3)(A)(ii) subject to section 1905(p)(4), for individuals who would be
qualified medicare beneficiaries described in section
1905(p)(l) but for the fact that their income exceeds the
income level established by the State under section
'
1905(p)(2) but is less than 110 percent in 1993 and 1994, and
120 percent in 1995 and years thereafter of the official
poverty line (referred to in such section) for a family of the
size involved;".
(c) APPLICATION IN CERTAIN STATES AND TERRITORIES.—Section

1905(pX4) (42 U.S.C. 1396d(p)(4)) is amended—
(1) in subparagraph (B), by inserting "or 1902(a)(10)(E)(iii)"
after "subparagraph (B)", and
(2) by adding at the end the following:
"In the case of any State which is providing medical assistance to its
residents under a waiver granted under section 1115, the Secretary
shall require the State to meet the requirement of section
1902(a)(10)(E) in the same manner as the State would be required to
meet such requirement if the State had in effect a plan approved
under this title."
(d)

CONFORMING

AMENDMENT.—Section

1843(h)

(42

U.S.C.

1395v(h)) is amended by adding at the end the following new paragraph:
"(3) In this subsection, the term 'qualified medicare beneficiary'
also includes an individual described in section 1902(a)(10)(E)(iii).".
(e) DELAY IN COUNTING SOCIAL SECURITY COLA INCREASES UNTIL
NEW POVERTY GUIDELINES PUBUSHED.—

(1) IN GENERAL.—Section 1905(p) is amended—
(A) in paragraph (IXB), by inserting ", except as provided
in paragraph (2XD)" after "supplementary social security
income program", and
(B) by adding at the end of paragraph (2) the following
new subparagraph:
"(D)(i) In determining under this subsection the income of an
individual who is entitled to monthly insurance benefits under title
II for a transition month (as defined in clause (ii)) in a year, such
income shall not include any amounts attributable to an increase in
the level of monthly insurance benefits payable under such title
which have occurred pursuant to section 215(i) for benefits payable
for months beginning with December of the previous year.
"(ii) For purposes of clause (i), the term 'transition month' means
each month in a year through the month following the month in
which the annual revision of the official poverty line, referred to in
subparsigraph (A), is published.".
(2) CONFORMING AMENDMENTS.—Section 1902(m) (42 U.S.C.

1396a(m)) is amended—
(A) in paragraph (IXB), by inserting ", except as provided
in paragraph (2X0" after "supplemental security income
program", and
(B) by adding at the end of paragraph (2) the following
new subparagraph:

,

104 STAT. 1388-166

PUBLIC LAW 101-508—NOV. 5, 1990

"(C) The provisions of section 1905(p)(2)(D) shall apply to determinations of income under this subsection in the same manner £is
they apply to determinations of income under section 1905(p).".
(f) EFFECTIVE DATE.—The amendments made by this section shall
apply to calendar quarters beginning on or after January 1, 1991,
without regard to whether or not regulations to implement such
amendments are promulgated by such date; except that the amendments made by subsection (e) shall apply to determinations of
income for months beginning with January 1991.

42 use 1396a
"****•

PART 3—IMPROVEMENTS IN CHILD HEALTH
SEC. 4601. MEDICAID CHILD HEALTH PROVISIONS.
(a) PHASED-IN MANDATORY COVERAGE OF CHILDREN UP TO
PERCENT OF POVERTY LEVEL.—

«

100

(1) I N GENERAL.—Section 1902 (42 U.S.C. 1396a) is amended—
(A) in subsection (a)(10)(AXi)—
(i) by striking "or" at the end of subclause (V),
(ii) by striking the semicolon at the end of subclause
(VI) and inserting ", or", and
(iii) by adding at the end the following new subclause:
(VII) who are described in subparagraph (D) of
subsection (IXD and whose family income does not
exceed the income level the State is required to
establish under subsection (1)(2)(C) for such a
family;";
(B) in subsection (aX10XA)(ii)(IX), by striking "or clause
(i)(VI)" and inserting ", clause (iXVI), or clause (iXVII)";
(C) in subsection (1)—
(i) in subparagraph (C) of paragraph (1) by inserting
"children" after "(C)";
(ii) by striking subparagraph (D) of paragraph (1) and
inserting the following:
"(D) children born after September 30, 1983, who have attained 6 years of age but have not attained 19 years of age,";
(iii) by striking subparagraph (C) of paragraph (2) and
inserting the following:
"(C) For purposes of paragraph (1) with respect to individuals
described in subparagraph (D) of that paragraph, the State shall
establish an income level which is equal to 100 percent of the income
official poverty line described in subparagraph (A) applicable to a
family of the size involved.";
(iv)
in
paragraph
(3)
by
inserting
", (aX10)(AXiXVII)," after "(aXlOXAXiXVI)";
(v) in paragraph (4XA), by inserting "or subsection
(aXlOXAXiXVII)" after "(aXlOXAXiXVI)'^; and
(vi) in paragraph (4XB), by striking
"or
(aX10XAXi)(VI)" ", and inserting "(aXlOXAXiXVI), or
(aXlOXAXiXVII)"; and
(D) in subsection (rX2XA), by inserting "(aXlOXAXiXVII),"
after "(aXlOXAXiXVI),".
(2) CONFORMING AMENDMENT TO QUAUFIED CHILDREN.—Sec-

tion 1905(nX2) (42 U.S.C. 1396d(nX2)) is amended by striking
"age of 7 (or any age designated bv the State that exceeds 7 but
does not exceed 8)" and inserting age of 19".
(3) ADDITIONAL CONFORMING AMENDMENTS.—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-167

(A) Section 1903(f)(4) of such Act (42 U.S.C. 1396b(f)(4)) is
amended—
(i) by striking "1902(a)(10)(A)(i)(IV)," and inserting
"1902(a)(10)(A)(i)(III),
1902(a)(10)(A)(i)(IV),
1902(a)(10)(A)(i)(V),", and
(ii) by inserting "1902(a)(10)(A)(i)(VII)," after
"1902(a)(10)(A)(i)(VI),".
(B) Subsections (a)(3)(C) and (b)(3)(C)(i) of section 1925 of
such Act (42 U.S.C. 1396r-6), as amended by section
6411(i)(3) of the Omnibus Budget ReconciUation Act of 1989,
are each amended by inserting "(i)(VII)," after "(i)(VI)".
(b) EFFECTIVE DATE.—(1) The amendments made by this subsection 42 USC 1396a
apply (except as otherwise provided in this subsection) to payments "o^eunder title XIX of the Social Security Act for calendar quarters
beginning on or after July 1, 1991, without regard to whether or not
final regulations to carry out such amendments have been promulgated by such date.
(2) In the case of a State plan for medical assistance under title
XIX of the Social Security Act which the Secretary of Health and
Human Services determines requires State legislation (other than
legislation authorizing or appropriating funds) in order for the plan
to meet the additional requirements imposed by the amendments
made by this subsection, the State plan shall not be 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. For purposes of the previous
sentence, in the case of a State that has a 2-year legislative session,
each year of such session shall be deemed to be a separate regular
session of the State legislature.
SEC. 4602. MANDATORY USE OF OUTREACH LOCATIONS OTHER THAN
WELFARE OFFICES.

(a) I N GENERAL.—Section 1902(a) of the Social Security Act (42
U.S.C. 1396a(a)), as amended by section 4401(a)(2) of this title, is
amended—
(1) by striking "and" at the end of paragraph (53),
(2) by striking the period at the end of paragraph (54) and
inserting "; and", and
(3) by inserting after paragraph (54) the following new paragraph:
"(55) provide for receipt and initial processing of applications
of individuals for medical assistance under subsection
(a)(10)(A)(i)(IV),
(a)(10)(A)(i)(VI),
(a)(10)(A)(i)(VII),
or
(aX10)(A)(ii)(IX)"(A) at locations which are other than those used for the
receipt and processing of applications for aid under part A
of title IV and which include facilities defined as disproportionate share hospitals under section 1923(a)(1)(A) and Federally-qualified health centers described in section
1905(1)(2)(B), and
"(B) using applications which are other than those used
for applications for aid under such part.".
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 42 USC 1396a
apply to payments under title XIX of the Social Security Act for J^o*®.
calenar *^ quartern beginning on or after July 1, 1991, without
** So in original. Probably should be "calendar".

104 STAT. 1388-168

PUBLIC LAW 101-508—NOV. 5, 1990

regard to whether or not final regulations to carry out such amendments have been promulgated by such date.
SEC. 4603. MANDATORY CONTINUATION OF BENEFITS THROUGHOUT
PREGNANCY OR FIRST YEAR OF LIFE.

(a) IN GENERAL.—Section 1902(e) (42 U.S.C. 1396a(e)) is amended—
(1) in the first sentence of paragraph (4), by inserting "(or
would remain if pregnant)" after "remains"; and
(2) in paragraph (6)—
(A) by striking "At the option of a State, in" and inserting
"In";
(B) by striking "the State plan may nonetheless treat the
woman £is being" and inserting the woman shall be
deemed to continue to be"; and
(C) by adding at the end the following new sentence: "The
preceding sentence shall not apply in the case of a woman
who has been provided ambulatory prenatal care pursuant
to section 1920 during a presumptive eligibility period and
is then, in accordance with such section, determined to be
ineligible for medical assistance under the State plan.".
42 u s e 1396a
note.

(b) EFFECTIVE D A T E . —

(1) INFANTS.—The amendment made by subsection (aXD shall
apply to individuals born on or after January 1, 1991, without
regard to whether or not final regulations to carry out such
amendment have been promulgated by such date.
(2) PREGNANT WOMEN.—The amendments made by subsection
(a)(2) shall apply with respect to determinations to terminate
the eligibility of women, based on change of income, made on or
after January 1, 1991, without regard to whether or not final
regulations to carry out such amendments have been promulgated by such date.
SEC. 4604. ADJUSTMENT IN PAYMENT FOR HOSPITAL SERVICES FURNISHED TO LOW-INCOME CHILDREN UNDER THE AGE OF 6
YEARS.

(a) I N GENERAL.—Section 1902 (42 U.S.C. 1396a) is amended by
adding at the end the following new subsection:
"(s) In order to meet the requirements of subsection (a)(55), the
State plan must provide that payments to hospitals under the plan
for inpatient hospital services furnished to infants who have not
attained the age of 1 year, and to children who have not attained the
age of 6 years and who receive such services in a disproportionate
share hospital described in section 1923(b)(1), shall—
"(1) if made on a prospective basis (whether per diem, per
case, or otherwise) provide for an outlier adjustment in payment
amounts for medically necessary inpatient hospital services
involving exceptionally high costs or exceptionally long lengths
of stay,
"(2) not be limited by the imposition of day limits with respect
to the delivery of such services to such individuals, and
"(3) not be limited by the imposition of dollar limits (other
than such limits resulting from prospective payments as
adjusted pursuant to paragraph (1)) with respect to the delivery
of such services to any such individual who has not attained
their first birthday (or in the case of such an individual who is
an inpatient on his first birthday until such individual is discharged).".

PUBLIC LAW 101-508—NOV. 5, 1990
(b)

CONFORMING

AMENDMENT.—Section

1902(a)

104 STAT. 1388-169
(42

U.S.C.

1396a(a)), as amended by section 4401(a)(2), is further amended—
(1) by striking "and" at the end of paragraph (53);
(2) by striking the period at the end of paragraph (54) and
by inserting "; and"; and
(3) by inserting after paragraph (54) and before the end
matter the following new paragraph:
"(55) provide, in accordance with subsection (s), for adjusted
payments for certain inpatient hospital services.".
(c) PROHIBITION ON WAIVER.—Section 1915(b) (42 U.S.C. 1396n(b))
is amended in the matter preceding paragraph (1) by inserting
"(other than subsection (s))" after "Section 1902".
(d) EFFECTIVE DATE.—(1) The amendments made by this subsection 42 use 1396a
shall become effective with respect to payments under title XIX of note.
the Social Security Act for calendar quarters beginning on or after
July 1, 1991, without regard to whether or not final regulations to
carry out such amendments have been promulgated by such date.
(2) In the case of a State plan for medical assistance under title
XIX of the Social Security Act which the Secretary of Health and
Human Services determines requires State legislation (other than
legislation authorizing or appropriating funds) in order for the plan
to meet the additional requirements imposed by the amendments
made by this subsection, the State plan shall not be 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. For purposes of the previous
sentence, in the case of a State that has a 2-year legislative session,
each year of such session shall be deemed to be a separate regular
session of the State legislature.
SEC. 4605. PRESUMPTIVE ELIGIBILITY.
(a) EXTENSION OF PRESUMPTIVE ELIGIBILITY PERIOD.—Section 1920

(42 U.S.C. 1396r-l) is amended—
(1) in subsection (b)(1)(B)—
(A) by adding "or" at the end of clause (i),
(B) by striking clause (ii), and
(C) by amending clause (iii) to read as follows:
"(ii) in the case of a woman who does not file an
application by the last day of the month following the
month during which the provider makes the determination referred to in subparagraph (A), such last
day; and"; and
(2) in subsections (c)(2)(B) and (c)(3), by striking "within 14
calendar days after the date on which" and inserting "by not
later than the last day of the month following the month during
which".] 4 3
(b) FLEXIBILITY IN APPLICATION.—Section 1920(c)(3) (42 U.S.C.
1396r-l(c)(3)) is amended by inserting before the period at the end
the following: ", which application may be the application used for
the receipt of medical assistance by individuals described in section
1902(1)(1)(A)".
42 use 1396r-l
(1) The amendments made by subsection (a) apply to pay- note.
ments under title XIX of the Social Security Act for calendar
quarters beginning on or after July 1, 1991, without regard to

(c) EFFECTIVE DATES.—

** So in original. Probably should be "which". ".

39-194 O - 91 - 19 : QL 3 Part 2

104 STAT. 1388-170

PUBLIC LAW 101-508—NOV. 5, 1990

whether or not final regulations to carry out such amendments
have been promulgated by such date.
(2) The amendment made by subsection (b) shall be effective
as if included in the enactment of section 9407(b) of the Omnibus Budget Reconciliation Act of 1986.
SEC. 4606. ROLE IN PATERNITY DETERMINATIONS.

42 use 1396k
note.

(a) I N GENERAL.—Section 1912(aXl)(B) (42 U.S.C. 1396k(a)(lXB)) is
amended by inserting "the individual is described in section
1902(1)(1)(A) or" after "unless (in either case)".
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect on the date of the enactment of this Act.

42 u s e 1396b
note.

SEC. 4607. REPORT AND TRANSITION ON ERRORS IN ELIGIBILITY DETERMINATIONS.

(a) REPORT.—The Secretary of Health and Human Services shall
report to Congress, by not later than July 1, 1991, on error rates by
States in determining eligibility of individuals described in subparagraph (A) or (B) of section 1902(1)(1) of the Social Security Act for
medical assistance under plans approved under title XIX of such
Act. Such report may include data for medical assistance provided
before July 1,1989.
(b) ERROR RATE TRANSITION.—There shall not be taken into account, for purposes of section 1903(u) of the Social Security Act,
payments and expenditures for medical assistance which—
(1) are attributable to medical assistance for individuals described in subparagraph (A) or (B) of section 1902(1)(1) of such
Act, and
(2) are made on or after July 1, 1989, and before the first
calendar quarter that begins more than 12 months after the
date of submission of the report under subsection (a).

PART 4—MISCELLANEOUS
Subpart A—Payments
SEC. 4701. STATE MEDICAID MATCHING PAYMENTS THROUGH VOLUNTARY CONTRIBUTIONS AND STATE TAXES.
(a) EXTENSION OF PROVISION ON VOLUNTARY CONTRIBUTIONS AND
PROVIDER-SPECIFIC TAXES.—Section 8431 of the Technical and Mis-

cellaneous Revenue Act of 1988 is amended by striking "December 31,1990" and inserting "December 31,1991".
(b) STATE TAX CONTRIBUTIONS.—(1) Section 1902 (42 U.S.C. 1396a)

as amended by section 4604, is further amended by adding at the
end the following new subsection:
"(t) Except as provided in section 1903(i), nothing in this title
(including sections 1903(a) and 1905(a)) shall be construed as authorizing the Secretary to deny or limit pa5mients to a State for
expenditures, for medical assistance for items or services, attributable to taxes (whether or not of general applicability) imposed
with respect to the provision of such items or services.".
(2) Section 1903(i) (42 U.S.C. 1396b(i)) is amended—
(A) by striking the period at the end of paragraph (9) and
inserting "; or"; and
(B) by adding at the end the following new paragraph:
"(10) with respect to any amount expended for medical assistance for care or services furnished by a hospital, nursing facil-

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-171

ity, or intermediate care facility for the mentally retarded to
reimburse the hospital or facility for the costs attributable to
taxes imposed by the State soley ^^ with respect to hospitals or
facilities.".
(c) EFFECTIVE DATES.—The amendment made by subsection (b) 42 USC 1396b
shall take effect on January 1,1991.
note.
SEC, 4702. DISPROPORTIONATE SHARE HOSPITALS: COUNTING OF INPATIENT DAYS.
(a) CLARIFICATION OF MEDICAID DISPROPORTIONATE SHARE ADJUSTMENT CALCULATION.—Section 1923(b)(2) (42 U.S.C. 1396r-4(b)(2)) is

amended by adding at the end the following new sentence: "In this
paragraph, the term 'inpatient day' includes each day in which an
individual (including a newborn) is an inpatient in the hospital,
whether or not the individual is in a specialized ward and whether
or not the individual remains in the hospital for lack of suitable
placement elsewhere.".
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 42 USC l396r-4
shall take effect on July 1,1990.
''°^SEC. 4703. DISPROPORTIONATE SHARE HOSPITALS: ALTERNATIVE STATE
PAYMENT ADJUSTMENTS AND SYSTEMS.
(a) ALTERNATIVE STATE PAYMENT ADJUSTMENTS.—Section 1923(c)

(42 U.S.C. 1396r-4(c)) is amended—
(1) by striking "or" at the end of paragraph (1);
(2) by adding "or" at the end of paragraph (2); and
(3) by inserting after paragraph (2) the following new paragraph:
"(3) provide for a minimum specified additional payment
amount (or increased percentage payment) that varies according to type of hospital under a methodology that—
"(A) applies equally to all hospitals of each type; and
"(B) results in an adjustment for each type of hospital
that is reasonably related to the costs, volume, or proportion of services provided to patients eligible for medical
assistance under a State plan approved under this title or to
low-income patients.".
(b) CLARIFICATION OF SPECIAL RULE FOR STATE USING HEALTH
INSURING ORGANIZATION.—Section 1923(e)(2) (42 U.S.C. 1396r-4(e)(2))

is amended by striking "during the 3-year period".
(c) CONFORMING AMENDMENT.—Section 1923(c)(2) (42 U.S.C. 1396r4(c)(2)) is amended by inserting after "State" "or the hospital's lowincome utilization rate (as defined in paragraph (b)(3))".
(d) EFFECTIVE DATE.—The amendments made by this section shall 42 USC l396r-4
take effect as if included in the enactment of section 412(a)(2) of the »<>*».
Omnibus Budget Reconciliation Act of 1987.
SEC. 4704. FEDERAILY 45 QUALIFIED HEALTH CENTERS.
(a) CLARIFICATION OF USE OF MEDICARE PAYMENT METHODOLOGY.—

Section 1902(a)(13)(E) (42 U.S.C. 1396a(a)(13)(E)) is amended—
(1) by striking "may prescribe" the first place it appears and
inserting "prescribes", and
(2) by striking "on such tests of reasonableness as the Secretary may prescribe in regulations under this subparagraph"
and inserting "on the same methodology used under section
1833(a)(3)".
' So in original. Probably should be "solely".
' So in original. Probably should be "FEDERALLY"

104 STAT. 1388-172
(b)

PUBLIC LAW 101-508—NOV. 5, 1990
MINIMUM

PAYMENT

RATES

BY

HEALTH

MAINTENANCE

ORGANIZATIONS.—(1) Section 1903(m)(2)(A) (42 U.S.C. 1396b(m)(2XA))
is amended—
(A) by striking "and" at the end of clause (vii),
(B) by striking the period at the end of clause (viii) and
inserting ", and", and
(C) bv adding at the end the following new clause:
(ix) such contract provides, in the case of an entity that
has entered into a contract for the provision of services of
such center with a federally qualified health center, that (I)
rates of prepayment from the State are adjusted to reflect
fully the rates of payment specified in section 1902(a)(13)(E),
and (II) at the election of such center pajrments made by the
entity to such a center for services described in 1905(a)(2XC)
are made at the rates of payment specified in section
1902(a)(13)(E).".
(2) Section 1903(m)(2)(B) (42 U.S.C. 1396b(m)(2)(A)) is amended by
striking "(A)" and inserting "(A) except with respect to clause (ix) of
subparagraph (A),".
(3) Section 1915(b) (42 U.S.C. 1396n(b)) is amended by inserting
after "section 1902" "(other than sections 1902(aX13XE) and
1902(a)(10)(A) insofar as it requires provision of the care and services
described in section 1905(aX2XC))".
(c)

42 u s e 1396a,
1396d.
42 u s e 1396a
note.
42 u s e 1396a
note.

CLARIFICATION IN

TREATMENT

OF

OUTPATIENTS.—Section

1905(1)(2) (42 U.S.C. 1396d(lX2)) is amended—
(1) in subparagraph (A), by striking "outpatient" and inserting "patient",
(2) in subparagraph (B), by striking "facility" and inserting
"entity", and
(3) by redesignating clause (ii) as clause (iii) and by inserting
after clause (i) the following new clause:
"(iiXD is receiving funding from such a grant under a
contract with the recipient of such a grant, and
"(II) meets the requirements to receive a grant under
section 329, 330, or 340 of such Act;".
(d) TREATMENT OF INDIAN TRIBES.—The first sentence of section
1905(1)(2)(B) (42 U.S.C. 1396d(lX2XB)) is amended—
(1) by striking the period at the end and inserting a comma,
and
(2) by adding, after and below clause (ii), the following:
"and includes an outpatient health program or facility operated by a
tribe or tribal organization under the Indian Self-Determination Act
(Public Law 93-638).".
(e) TECHNICAL CORRECTION.—Section 6402 of the Omnibus Budget
Reconciliation Act of 1989 is amended—
(1) by striking subsection (c), and
(2) by amending subsection (d) to read as follows:
"(c) EFFECTIVE DATE.—The amendments made by this section
(except as otherwise provided in such amendments) shall take effect
on the date of the enactment of this Act.".
(f) EFFECTIVE DATE.^The amendments made by this section shall
be effective as if included in the enactment of the Omnibus Budget
Reconciliation Act of 1989.
SEC. 4705. HOSPICE PAYMENTS.
(a)

I N GENERAL.

amended—

-Section 1905(oX3) (42 U.S.C. 1396d(oX3)) is

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-173

(1) by striking "a State which elects" and all that follows
through "with respect to" the first place it appears,
(2) by striking "skilled nursing or intermediate care facility"
in subparagraphs (A) and (C) and inserting "nursing facility or
intermediate care facility for the mentally retarded";
(3) by striking "the amounts allocated under the plan for
room and board in the facility, in accordance with the rates
established under section 1902(a)(13)," and inserting "the additional amount described in section 1902(a)(13)(D)", and
(4) by striking the last sentence.
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 42 USC I396d
shall be effective as if included in the amendments made by section note.
6408(c)(1) of the Omnibus Budget Reconciliation Act of 1989.
SEC. 4706. LIMITATION ON DISALLOWANCES OR DEFERRAL OF FEDERAL 42 USC 1396d
FINANCIAL PARTICIPATION FOR CERTAIN INPATIENT PSY- note.
CHIATRIC HOSPITAL SERVICES FOR INDIVIDUALS UNDER
AGE 21.

(a) I N GENERAL.—(1) If the Secretary of Health and Human Services makes a determination that a psychiatric facility has failed to
comply with certification of need requirements for inpatient psychiatric hospital services for individuals under age 21 pursuant to
section 1905(h) of the Social Security Act, and such determination
has not been subject to a final judicial decision, any disallowance or
deferral of Federal financial participation under such Act based on
such determination shall only apply to the period of time beginning
with the first day of noncompliance and ending with the date by
which the psychiatric facility develops documentation (using plan of
care or utilization review procedures) of the need for inpatient care
with respect to such individuals.
(2) Any disallowance of Federal financial participation under title
XIX of the Social Security Act relating to the failure of a psychiatric
facility to comply with certification of need requirements—
(A) shall not exceed 25 percent of the amount of Federal
financial participation for the period described in paragraph (1);
and
(B) shall not apply to any fiscal year before the fiscal year
that is 3 years before the fiscal year in which the determination
of noncompliance described in paragraph (1) is made.
(b) EFFECTIVE DATE.—Subsection (a) shall apply to disallowance
actions and deferrals of Federal financial participation with respect
to services provided before the date of enactment of this Act.
SEC. 4707. TREATMENT OF INTEREST ON INDIANA DISALLOWANCE.

With respect to any disallowance of Federal financial participation under section 1903(a) of the Social Security Act for intermediate
care facility services, intermediate care facility services for the
mentally retarded, or skilled nursing facility services on the ground
that the facilities in the State of Indiana were not certified in
accordance with law during the period beginning June 1, 1982, and
ending September 30, 1984, payment of such disallowance may be
deferred without interest that would otherwise accrue without
regard to this subsection, until every opportunity to appeal has been
exhausted.
SEC. 4708. BILLING FOR SERVICES OF SUBSTITUTE PHYSICIAN.

(a) UNDER MEDICAID.—Section 1902(a)(32) (42 U.S.C. 1396a(a)(32))—

104 STAT. 1388-174

42 u s e 1396a
note.

PUBLIC LAW 101-508—NOV. 5, 1990

(1) by striking "and" before "(B)",
(2) by inserting "and" at the end of subparagraph (B), and
(3) by adding at the end the following:
"(C) in the case of services furnished (during a period that
does not exceed 14 continuous days in the case of an
informal reciprocal arrangement or 90 continuous days (or
such longer period as the Secretary may provide) in the
case of an arrangement involving per diem or other fee-fortime compensation) by, or incident to the services of, one
physician to the patients of another physician who submits
the claim for such services, payment shall be made to the
physician submitting the claim (as if the services were
furnished by, or incident to, the physician's services), but
only if the claim identifies (in a manner specified by the
Secretary) the physician who furnished the services.",
(b) EFFECTIVE DATE.—The amendments made by this section shall
apply to services furnished on or after the date of the enactment of
this Act.

Subpart B—Eligibility and Coverage
SEC. 4711. HOME AND COMMUNITY-BASED CARE AS OPTIONAL SERVICE.

(a) PROVISION AS OPTIONAL SERVICE.—Section 1905(a) (42 U.S.C.
1396d(a)), as amended by section 6201, is further amended—
(1) by striking "and" at the end of paragraph (22);
(2) by redesignating paragraph (23) as paragraph (24); and
(3) by inserting after paragraph (22) the following new
paragraph:
"(23) home and community care (to the extent allowed and as
defined in section 1929) for functionally disabled elderly individuals; and".
(b) HOME AND COMMUNITY CARE FOR FUNCTIONALLY DISABLED
ELDERLY INDIVIDUALS.—Title XIX (42 U.S.C. 1396 et seq.) as

amended by section 4402 is further amended—
(1) by redesignating section 1929 as section 1930; and
(2) by inserting after section 1928 the following new section:
HOME AND C O M M U N I T Y CARE FOR FUNCTIONALLY DISABLED ELDERLY
INDIVIDUALS

42 use I396t.

"SEC. 1929. (a) HOME AND COMMUNITY CARE DEFINED.—In this
title, the term 'home and community care' means one or more of the
following services furnished to an individual who has been determined, after an assessment under subsection (c), to be a functionally
disabled elderly individual, furnished in accordance with an individual community care plan (established and periodically reviewed and
revised by a qualified community care case manager under subsection (d)):
"(1) Homemaker/home health aide services.
"(2) Chore services.
"(3) Personal care services.
"(4) Nursing care services provided by, or under the supervision of, a registered nurse.
"(5) Respite care.
"(6) Training for family members in managing the individual.
"(7) Adult day care.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-175

"(8) In the case of an individual with chronic mental illness,
day treatment or other partial hospitalization, psychosocial
rehabilitation services, and clinic services (whether or not furnished in a facility).
"(9) Such other home and community-based services (other
than room and board) as the Secretary may approve.
"(b) FUNCTIONALLY DISABLED ELDERLY INDIVIDUAL DEFINED.—

"(1) IN GENERAL.—In this title, the term 'functionally disabled
elderly individual' means an individual who—
"(A) is 65 years of age or older,
"(B) is determined to be a functionally disabled individual
under subsection (c), and
"(C) subject to section 1902(f) (as applied consistent with
section 1902(r)(2)), is receiving supplemental security
income benefits under title XVI (or under a State plan
approved under title XVI) or, at the option of the State, is
described in section 1902(a)(10)(C).
"(2) TREATMENT OF CERTAIN INDIVIDUALS PREVIOUSLY COVERED

UNDER A WAIVER.—(A) In the case of a State which—
"(i) at the time of its election to provide coverage for
home and community care under this section has a waiver
approved under section 1915(c) or 1915(d) with respect to
individuals 65 years of age or older, and
"(ii) subsequently discontinues such waiver, individuals
who were eligible for benefits under the waiver as of the
date of its discontinuance and who would, but for income or
resources, be eligible for medical assistance for home and
community care under the plan shall, notwithstanding any
other provision of this title, be deemed a functionally disabled elderly individual for so long as the individual would
have remained eligible for medical assistance under such
waiver.
"(B) In the case of a State which used a health insuring
organization before January 1, 1986, and which, as of December 31, 1990, had in effect a waiver under section 1115 that
provides under the State plan under this title for personal care
services for functionally disabled individuals, the term 'functionally disabled elderly individual' may include, at the option
of the State, an individual who—
"(i) is 65 years of age or older or is disabled (as determined under the supplemental security income program
under title XVI);
"(ii) is determined to meet the test of functional disability
applied under the waiver as of such date; and
"(iii) meets the resource requirement and income standard that apply in the State to individuals described in
section 1902(a)(10)(A)(ii)(V).
"(3) USE OF PROJECTED INCOME.—In applying section 1903(f)(1)
in determining the eligibility of an individual (described in
section 1902(a)(10)(C)) for medical assistance for home and
community care, a State may, at its option, provide for the
determination of the individual's anticipated medical expenses
(to be deducted from income) over a period of up to 6 months.
"(c) DETERMINATIONS OF FUNCTIONAL DISABILITY.—

"(1) IN GENERAL.—In this section, an individual is 'functionally disabled' if the individual—

104 STAT. 1388-176

PUBLIC LAW 101-508—NOV. 5, 1990
"(A) is unable to perform without substantial assistance
from another individual at least 2 of the following 3 activities of daily living: toileting, transferring, and eating; or
"(B) has a primary or secondary diagnosis of Alzheimer's
disease and is (i) unable to perform without substantial
human assistance (including verbal reminding or physical
cueing) or supervision at least 2 of the following 5 activities
of daily living: bathing, dressing, toileting, transferring,
and eating; or (ii) cognitively impaired so as to require
substantial supervision from another individual because he
or she engages in inappropriate behaviors that pose serious
health or safety hazards to himself or herself or others.
"(2) ASSESSMENTS OF FUNCTIONAL DISABILITY.—
"(A) REQUESTS FOR ASSESSMENTS.—If a State

has elected to
provide home and community care under this section, upon
the request of an individual who is 65 years of age or older
and who meets the requirements of subsection (b)(1)(C) (or
another person on such individual's behalf), the State shall
provide for a comprehensive functional assessment under
this subparagraph which—
"(i) is used to determine whether or not the individual is functionally disabled,
"(ii) is based on a uniform minimum data set specified by the Secretary under subparagraph (C)(i), and
"(iii) uses an instrument which has been specified by
the State under subparagraph (B).
No fee may be charged for such an assessment.
"(B)

SPECIFICATION OF ASSESSMENT INSTRUMENT.—The

State shall specify the instrument to be used in the State in
complying with the requirement of subparagraph (A)(iii)
which instrument shall be—
"(i) one of the instruments designated under subparagraph (C)(ii); or
"(ii) an instrument which the Secretary has approved
as being consistent with the minimum data set of core
elements, common definitions, and utilization guidelines specified by the Secretary in subparagraph (C)(i).
"(C)

SPECIFICATION OF ASSESSMENT DATA SET AND IN-

STRUMENTS.—The Secretary shall—
"(i) not later than July 1,1991—
"(I) specify a minimum data set of core elements
and common definitions for use in conducting the
assessments required under subparagraph (A); and
"(II) establish guidelines for use of the data set;
and
"(ii) by not later than July 1, 1991, designate one or
more instruments which are consistent with the specification made under subparagraph (A) and which a
State may specify under subparagraph (B) for use in
complying with the requirements of subparagraph (A).
"(D) PERIODIC REVIEW.—Each individual who qualifies as
a functionally disabled elderly individual shall have the
individual's assessment periodically reviewed and revised
not less often than once every 12 months.
"(E)

CONDUCT OF

ASSESSMENT BY INTERDISCIPLINARY

TEAMS.—An assessment under subparagraph (A) and a
review under subparagraph (D) must be conducted by an

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-177

interdisciplinary team designated by the State. The Secretary shall permit a State to provide for assessments and
reviews through teams under contracts—
"(i) with public organizations; or
"(ii) with nonpublic organizations which do not
provide home and community care or nursing facility services and do not have a direct or indirect
ownership or control interest in, or direct or indirect affiliation or relationship with, an entity
that provides, community care or nursing facility
services.
"(F) CONTENTS OF ASSESSMENT.—The interdisciplinary
team must—
"(i) identify in each such assessment or review each
individual's functional disabilities and need for home
and community care, including information about the
individual's health status, home and community
environment, and informal support system; and
"(ii) based on such assessment or review, determine
whether the individual is (or continues to be) functionally disabled.
The results of such an assessment or review shall be used in
establishing, reviewing, and revising the individual's ICCP
under subsection (d)(1).
"(G) APPEAL PROCEDURES,—Each State which elects to
provide home and community care under this section must
have in effect an appeals process for individuals adversely
affected by determinations under subparagraph (F).
'(d) INDIVIDUAL COMMUNITY CARE PLAN (ICCP).—
"(1) INDIVIDUAL COMMUNITY CARE PLAN DEFINED.—In this section, the terms 'individual community care plan' and 'ICCP'
mean, with respect to a functionally disabled elderly individual,
a written plan which—
"(A) is established, and is periodically reviewed and revised, by a qualified case manager after a face-to-face interview with the individual or primary caregiver and based
upon the most recent comprehensive functional assessment
of such individual conducted under subsection (c)(2);
"(B) specifies, within any amount, duration, and scope
limitations imposed on home and community care provided
under the State plan, the home and community care to be
provided to such individual under the plan, and indicates
the individual's preferences for the types and providers of
services; and
"(C) may specify other services required by such individual.
An ICCP may also designate the specific providers (qualified to
provide home and community care under the State plan) which
will provide the home and community care described in
subparagraph (B). Nothing in this section shall be construed as
authorizing an ICCP or the State to restrict the specific persons
or individuals (who are competent to provide home and community care under the State plan) who will provide the home and
community care described in subparagraph (B).
"(2) QUALIFIED COMMUNITY CARE CASE MANAGER DEFINED.—In

this section, the term 'qualified community care case manager'
means a nonprofit or public agency or organization which—

104 STAT. 1388-178

PUBLIC LAW 101-508—NOV. 5, 1990

"(A) has experience or has been trained in establishing,
and in periodically reviewing and revising, individual
community care plans and in the provision of case management services to the elderly;
"(B) is responsible for (i) assuring that home and community care covered under the State plan and specified in the
ICCP is being provided, (ii) visiting each individual's home
or community setting where care is being provided not less
often than once every 90 days, and (iii) informing the
elderly individual or primary caregiver on how to contact
the case manager if service providers fail to properly provide services or other similar problems occur;
"(C) in the case of a nonpublic agency, does not provide
home and community care or nursing facility services and
does not have a direct or indirect ownership or control
interest in, or direct or indirect affiliation or relationship
with, an entity that provides, home and community care or
nursing facility services;
"(D) has procedures for assuring the quality of case
management services that includes a peer review process;
"(E) completes the ICCP in a timely manner and reviews
and discusses new and revised ICCPs with elderly individuals or primary caregivers; and
"(F) meets such other standards, established by the Secretary, as to assure that—
"(i) such a manager is competent to perform case
management functions;
"(ii) individuals whose home and community care
they mangige are not at risk of financial exploitation
due to such a manager; and
"(iii) meets such other standards £is the State may
establish.
The Secretary may waive the requirement of subparagraph (C)
in the case of a nonprofit agency located in a rural area.
"(3) APPEALS PROCESS.—Each State which elects to provide
home and community care under this section must have in
effect an appeals process for individuals who disagree with the
ICCP established.
"(e) CEIUNG ON PAYMENT AMOUNTS AND MAINTENANCE OF
EFFORT.—
"(1) CEIUNG ON PAYMENT AMOUNTS.—Payments may not be

made under section 1903(a) to a State for home and community
care provided under this section in a quarter to the extent that
the medical assistance for such care in the quarter exceeds 50
percent of the product of—
"(A) the avergige number of individuals in the quarter
receiving such care under this section;
"(B) the average per diem rate of payment which the
Secretary has determined (before the beginning of the
quarter) will be payable under title XVIII (without regard
to coinsurance) for extended care services to be provided in
the State during such quarter; and
"(C) the number of days in such quarter.
"(2) MAINTENANCE OF EFFORT.—
"(A) ANNUAL REPORTS.—As a condition for the receipt of

payment under section 1903(a) with respect to medical
assistance provided by a State for home and community

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-179

care (other than a waiver under section 1915(c) and other
than home health care services described in section
1905(a)(7) and personal care services specified under regulations under section 1905(a)(23)), the State shall report to the
Secretary, with respect to each Federal fiscal year (beginning with fiscal year 1990) and in a format developed or
approved by the Secretary, the amount of funds obligated
by the State with respect to the provision of home and
community care to the functionally disabled elderly in that
fiscal year.
"(B)

REDUCTION IN PAYMENT IF FAILURE TO MAINTAIN

EFFORT.—If the amount reported under subparagraph (A)
by a State with respect to a fiscal year is less than the
amount reported under subparagraph (A) with respect to
fiscal year 1989, the Secretary shall provide for a reduction
in payments to the State under section 1903(a) in an
amount equal to the difference between the amounts so
reported.
'(f) MINIMUM REQUIREMENTS FOR HOME AND COMMUNITY CARE.—

"(1) REQUIREMENTS.—Home and Community care provided
under this section must meet such requirements for individuals'
rights and quality as are published or developed by the Secretary under subsection (k). Such requirements shall include—
"(A) the requirement that individuals providing care are
competent to provide such care; and
"(B) the rights specified in paragraph (2).
"(2) SPECIFIED RIGHTS.—The rights specified in this paragraph
are as follows:
"(A) The right to be fully informed in advance, orally and
in writing, of the care to be provided, to be fully informed in
advance of any changes in care to be provided, and (except
with respect to an individual determined incompetent) to
participate in planning care or changes in care.
"(B) The right to voice grievances with respect to services
that are (or fail to be) furnished without discrimination or
reprisal for voicing grievances, and to be told how to complain to State and local authorities.
"(C) The right to confidentiality of personal and clinical
records.
"(D) The right to privacy and to have one's property
treated with respect.
"(E) The right to refuse all or part of any care and to be
informed of the likely consequences of such refusal.
"(F) The right to education or training for oneself and for
members of one's family or household on the management
of care.
"(G) The right to be free from physical or mental abuse,
corporal punishment, and any physical or chemical restraints imposed for purposes of discipline or convenience
and not included in an individual's ICCP.
"(H) The right to be fully informed orally and in writing
of the individual's rights.
"(I) Guidelines for such minimum compensation for
individuals providing such care as will assure the availability and continuity of competent individuals to provide such
care for functionally disabled individuals who have functional disabilities of varying levels of severity.

104 STAT. 1388-180

PUBLIC LAW 101-508—NOV. 5, 1990
"(J) Any other rights established by the Secretary.

"(g) MINIMUM REQUIREMENTS FOR SMALL COMMUNITY CARE SETTINGS.—
"(1) SMALL COMMUNITY CARE SETTINGS DEFINED.—In this sec-

tion, the term 'small community care setting' means—
"(A) a nonresidential setting that serves more than 2 and
less than 8 individuals; or
"(B) a residential setting in which more than 2 and less
than 8 unrelated adults reside and in which personal services (other than merely board) are provided in conjunction
with residing in the setting.
"(2) MINIMUM REQUIREMENTS.—A small community care setting in which community care is provided under this section
must—
"(A) meet such requirements as are published or developed by the Secretary under subsectiofi (k);
"(B) meet the requirements of paragraphs (1)(A), (1)(C),
(1)(I)), (3), and (6) of section 1919(c), to the extent applicable
to such a setting;
"(C) inform each individual receiving community care
under this section in the setting, orally and in writing at
the time the individual first receives community care in the
setting, of the individual's legal rights with respect to such
a setting and the care provided in the setting;
"(D) meet any applicable State or local requirements
regarding certification or licensure;
"(E) meet any applicable State and local zoning, building,
and housing codes, and State and local fire and safety
regulations; and
"(F) be designed, constructed, equipped, and maintained
in a manner to protect the health and safety of residents.
"(h) MINIMUM REQUIREMENTS FOR LARGE COMMUNITY CARE SETTINGS.—
"(1) LARGE COMMUNITY CARE SETTING DEFINED.—In this sec-

tion, the term 'large community care setting' means—
"(A) a nonresidential setting in which more than 8
individuals are served; or
"(B) a residential setting in which more than 8 unrelated
adults reside and in which personal services are provided in
conjunction with residing in the setting in which home and
community care under this section is provided.
"(2) MINIMUM REQUIREMENTS.—A large community care setting in which community care is provided under this section
must—
"(A) meet such requirements as are published or developed by the Secretary under subsection (k);
"(B) meet the requirements of paragraphs (1)(A), (1)(C),
(1)(D), (3), and (6) of section 1919(c), to the extent applicable
to such a setting;
"(C) inform each individual receiving community care
under this section in the setting, orally and in writing at
the time the individual first receives home and community
care in the setting, of the individual's legal rights with
respect to such a setting and the care provided in the
setting; and
"(D) meet the requirements of paragraphs (2) and (3) of
section 1919(d) (relating to administration and other mat-

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-181

ters) in the same manner as such requirements apply to
nursing facilities under such section; except that, in applying the requirement of section 1919(d)(2) (relating to life
safety code), the Secretary shall provide for the application
of such life safety requirements (if any) that are appropriate to the setting.
"(3) DISCLOSURE OF OWNERSHIP AND CONTROL INTERESTS AND

EXCLUSION OF REPEATED VIOLATORS.—A Community care setting—
"(A) must disclose persons with an ownership or control
interest (including such persons as defined in section
1124(a)(3)) in the setting; and
"(B) may not have, as a person with an ownership or
control interest in the setting, any individual or person who
has been excluded from participation in the program under
this title or who has had such an ownership or control
interest in one or more community care settings which
have been found repeatedly to be substandard or to have
failed to meet the requirements of paragraph (2).
'(i) SURVEY AND CERTIFICATION PROCESS.—
"(1) CERTIFICATIONS.—
"(A) RESPONSIBILITIES OF THE STATE.—Under

each State
plan under this title, the State shall be responsible for
certifying the compliance of providers of home and community care and community care settings with the applicable
requirements of subsections (f), (g) and (h). The failure of
the Secretary to issue regulations to carry out this subsection shall not relieve a State of its responsibility under this
subsection.
"(B) RESPONSIBILITIES OF THE SECRETARY.—The Secretary

shall be responsible for certifying the compliance of State
providers of home and community care, and of State
community care settings in which such care is provided,
with the requirements of subsections (f), (g) and (h).
"(C)

FREQUENCY

OF CERTIFICATIONS.—Certification

of

providers and settings under this subsection shall occur no
less frequently than once every 12 months.
"(2) REVIEWS OF PROVIDERS.—

"(A) IN GENERAL.—The certification under this subsection
with respect to a provider of home or community care must
be based on a periodic review of the provider's performance
in providing the care required under ICCP's in accordance
with the requirements of subsection (f).
"(B) SPECIAL REVIEWS OF COMPLIANCE.—Where the Secretary has reason to question the compliance of a provider
of home or community care with any of the requirements of
subsection (f), the Secretary may conduct a review of the
provider and, on the basis of that review, make independent
and binding determinations concerning the extent to which
the provider meets such requirements.
"(3) SURVEYS OF COMMUNITY CARE SETTINGS.—

"(A) IN GENERAL.—The certification under this subsection
with respect to community care settings must be based on a
survey. Such survey for such a setting must be conducted
without prior notice to the setting. Any individual who
notifies (or causes to be notified) a community care setting
of the time or date on which such a survey is scheduled to

104 STAT. 1388-182

PUBLIC LAW 101-508—NOV. 5, 1990
be conducted is subject to a civil money penalty of not to
exceed $2,000. The provisions of section 1128A (other than
subsections (a) and O^)) shall apply to a civil money penalty
under the previous sentence in the same manner as such
provisions apply to a penalty or proceeding under section
1128A(a). The Secretary shall review each State's procedures for scheduling and conducting such surveys to assure
that the State has taken all reasonable steps to avoid giving
notice of such a survey through the scheduling procedures
and the conduct of the surveys themselves.
"(B) SURVEY PROTOCOL.—Surveys under this paragraph
shall be conducted based upon a protocol which the Secretary has provided for under subsection (k).
"(C) PROHIBITION OF CONFUCT OF INTEREST IN SURVEY

TEAM MEMBERSHIP.—A State and the Secretary may not use
as a member of a survey team under this paragraph an
individual who is serving (or has served within the previous
2 years) as a member of the staff of, or as a consultant to,
the community care setting being surveyed (or the person
responsible for such setting) respecting compliance with the
requirements of subsection (g) or (h) or who has a personal
or familial financial interest in the setting being surveyed.
"(D)

VALIDATION SURVEYS OF COMMUNITY CARE SET-

TINGS.—The Secretary shall conduct onsite surveys of a
representative sample of community care settings in each
State, within 2 months of the date of surveys conducted
under subparagraph (A) by the State, in a sufficient
number to allow inferences about the adequacies of each
State's surveys conducted under subparagraph (A). In
conducting such surveys, the Secretary shall use the same
survey protocols as the State is required to use under
subparagraph (B). If the State has determined that an
individual setting meets the requirements of subsection (g),
but the Secretary determines that the setting does not meet
such requirements, the Secretary's determination as to the
setting's noncompliance with such requirements is binding
and supersedes that of the State survey.
"(E) SPECIAL SURVEYS OF COMPLIANCE.—Where the Secretary has reason to question the compliance of a community care setting with any of the requirements of subsection
(g) or (h), the Secretary may conduct a survey of the setting
and, on the basis of that survey, make independent and
binding determinations concerning the extent to which the
setting meets such requirements.
"(4)

INVESTIGATION OF COMPLAINTS AND MONITORING OF

PROVIDERS AND SETTINGS.—Each State and the Secretary shall
maintain procedures and adequate staff to investigate complaints of violations of applicable requirements imposed on
providers of community care or on community care settings
under subsections (f), (g) and (h).
"(5) INVESTIGATION OF ALLEGATIONS OF INDIVIDUAL NEGLECT
AND A B U S E A N D MISAPPROPRIATION OF INDIVIDUAL PROPERTY.—

The State shall provide, through the agency responsible for
surveys and certification of providers of home or community
care and community care settings under this subsection, for a
process for the receipt, review, and investigation of allegations
of individual neglect and abuse (including injuries of unknown

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-183

source) by individuals providing such care or in such setting and
of misappropriation of individual property by such individuals.
The State shall, after notice to the individual involved and a
reasonable opportunity for hearing for the individual to rebut
allegations, make a finding as to the accuracy of the allegations.
If the State finds that an individual has neglected or abused an
individual receiving community care or misappropriated such
individual's property, the State shall notify the individual
against whom the finding is made. A State shall not make a
finding that a person has neglected an individual receiving
community care if the person demonstrates that such neglect
was caused by factors beyond the control of the person. The
State shall provide for public disclosure of findings under this
paragraph upon request and for inclusion, in any such disclosure of such findings, of any brief statement (or of a clear and
accurate summary thereof) of the individual disputing such
findings.
"(6) DISCLOSURE OF RESULTS OF INSPECTIONS AND ACTIVITIES.—
"(A) PUBLIC INFORMATION.—Each State, and the Sec-

retary, shall make available to the public—
"(i) information respecting all surveys, reviews, and
certifications made under this subsection respecting
providers of home or community care and community
care settings, including statements of deficiencies,
"(ii) copies of cost reports (if any) of such providers
and settings filed under this title,
"(iii) copies of statements of ownership under section
1124, and
"(iv) information disclosed under section 1126.
"(B) NOTICES OF SUBSTANDARD CARE.—If a State finds
that—
"(i) a provider of home or community care has provided care of substandard quality with respect to an
individual, the State shall make a reasonable effort to
notify promptly (I) an immediate family member of
each such individual and (II) individuals receiving
home or community care from that provider under this
title, or
"(ii) a community care setting is substandard, the
State shall make a reasonable effort to notify promptly
(I) individuals receiving community care in that setting, and (II) immediate family members of such
individuals.
"(C) ACCESS TO FRAUD CONTROL UNITS.—Each State shall
provide its State medicaid fraud and abuse control unit
(established under section 1903(q)) with access to all
information of the State agency responsible for surveys,
reviews, and certifications under this subsection.
'(j) ENFORCEMENT PROCESS FOR PROVIDERS OF COMMUNITY CARE.—
"(1) STATE AUTHORITY.—

"(A) IN GENERAL.—If a State finds, on the basis of a
review under subsection (i)(2) or otherwise, that a provider
of home or community care no longer meets the requirements of this section, the State may terminate the
provider's participation under the State plan and may provide in addition for a civil money penalty. Nothing in this
subparagraph shall be construed as restricting the remedies

104 STAT. 1388-184

PUBLIC LAW 101-508—NOV. 5, 1990
available to a State to remedy a provider's deficiencies. If
the State finds that a provider meets such requirements
but, as of a previous period, did not meet such requirements, the State may provide for a civil money penalty
under paragraph (2)(A) for the period during which it finds
that the provider was not in compliance with such requirements.
"(B) CIVIL MONEY PENALTY.—

"(i) IN GENERAL.—Each State shall establish by law
(whether statute or regulation) at least the following
remedy: A civil money penalty assessed and collected,
with interest, for each day in which the provider is or
was out of compliance with a requirement of this section. Funds collected by a State as a result of imposition of such a penalty (or as a result of the imposition
by the State of a civil money penalty under subsection
(i)(3)(A)) may be applied to reimbursement of individuals for personal funds lost due to a failure of home or
community care providers to meet the requirements of
this section. The State also shall specify criteria, as to
when and how this remedy is to be applied and the
amounts of any penalties. Such criteria shall be
designed so as to minimize the time between the identification of violations and final imposition of the
penalties and shall provide for the imposition of
incrementally more severe penalties for repeated or
uncorrected deficiencies.
"(ii) DEADLINE AND GUIDANCE.—Each State which
elects to provide home and community care under this
section must establish the civil money penalty remedy
described in clause (i) applicable to all providers of
community care covered under this section. The Secretary shall provide, through regulations or otherwise
by not later than July 1, 1990, guidance to States in
establishing such remedy; but the failure of the Secretary to provide such guidance shall not relieve a
State of the responsibility for establishing such remedy.
"(2) SECRETARIAL AUTHORITY.—
"(A) FOR STATE PROVIDERS.—With respect to a State pro-

vider of home or community care, the Secretary shall have
the authority and duties of a State under this subsection,
except that the civil money penalty remedy described in
subparagraph (C) shall be substituted for the civil money
remedy described in paragraph (l)(B)(i).
"(B) OTHER PROVIDERS.—With respect to any other provider of home or community care in a State, if the Secretary finds that a provider no longer meets a requirement
of this section, the Secretary may terminate the provider's
participation under the State plan and may provide, in
addition, for a civil money penalty under subparagraph (C).
If the Secretary finds that a provider meets such requirements but, as of a previous period, did not meet such
requirements, the Secretary may provide for a civil money
penalty under subparagraph (C) for the period during which
the Secretary finds that the provider was not in compliance
with such requirements.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-185

"(C) CIVIL MONEY PENALTY.—If the Secretary finds on the

basis of a review under subsection (i)(2) or otherwise that a
home or community care provider no longer meets the
requirements of this section, the Secretary shall impose a
civil money penalty in an amount not to exceed $10,000 for
each day of noncompliance. The provisions of section 1128A
(other than subsections (a) and (b)) shall apply to a civil
money penalty under the previous sentence in the same
manner as such provisions apply to a penalty or proceeding
under section 1128A(a). The Secretary shall specify criteria,
as to when and how this remedy is to be applied and the
amounts of any penalties. Such criteria shall be designed so
as to minimize the time between the identification of violations and final imposition of the penalties and shall provide
for the imposition of incrementally more severe penalties
for repeated or uncorrected deficiencies.
'(k) SECRETARIAL RESPONSIBILITIES.—
"(1) PUBLICATION OF INTERIM REQUIREMENTS.—

"(A) I N GENERAL.—The Secretary shall publish, by
December 1, 1991, a proposed regulation that sets forth
interim requirements, consistent with subparagraph (B), for
the provision of home and community care and for community care settings, including—
"(i) the requirements of subsection (c)(2) (relating to
comprehensive functional assessments, including the
use of assessment instruments), of subsection (d)(2)(E)
(relating to qualifications for qualified case managers),
of subsection (f) (relating to minimum requirements for
home and community care), of subsection (g) (relating
to minimum requirements for small community care
settings), and of subsection (h) (relating to minimum
requirements for large community care settings, "^^ and
"(ii) survey protocols (for use under subsection
(i)(3)(A)) which relate to such requirements.
"(B) MINIMUM PROTECTIONS.—Interim requirements
under subparagraph (A) and final requirements under paragraph (2) shall assure, through methods other than reliance
on State licensure processes, that individuals receiving
home and community care are protected from neglect, physical and sexual abuse, financial exploitation, inappropriate
involuntary restraint, and the provision of health care
services by unqualified personnel in community care settings.
"(2) DEVELOPMENT OF FINAL REQUIREMENTS.—The Secretary

shall develop, by not later than October 1,1992—
"(A) final requirements, consistent with paragraph (1)(B),
respecting the provision of appropriate, quality home and
community care and respecting community care settings
under this section, and including at least the requirements
referred to in paragraph (l)(A)(i), and
"(B) survey protocols and methods for evaluating and
assuring the quality of community care settings.
The Secretary may, from time to time, revise such requirements, protocols, and methods.
"(3) No DELEGATION TO STATES.—The Secretary's authority

under this subsection shall not be delegated to States.
•** So in original. Probably should be "settings),'

104 STAT. 1388-186

PUBLIC LAW 101-508—NOV. 5, 1990
"(4) N o PREVENTION OF MORE STRINGENT REQUIREMENTS BY

STATES.—Nothing in this section shall be construed as preventing States from imposing requirements that are more stringent
than the requirements published or developed by the Secretary
under this subsection.
"(1) WAIVER OF STATEWIDENESS.—States may waive the requirement of section 1902(a)(1) (related to State wideness)'*'^ for a program of home and community care under this section.
"(m) LIMITATION ON AMOUNT OF EXPENDITURES AS MEDICAL ASSISTANCE.— .
"(1) LIMITATION ON AMOUNT.—The amount of funds that may

be expended as medical assistance to carry out the purposes of
this section shall be for fiscal year 1991, $40,000,000, for fiscal
year 1992, $70,000,000, for fiscal year 1993, $130,000,000, for
fiscal year 1994, $160,000,000, and for fiscal year 1995,
$180,000,000.
"(2) ASSURANCE OF ENTITLEMENT TO SERVICE.—A State which
receives Federal medical assistance for expenditures for home
and community care under this section must provide home and
community care specified under the Individual Community
Care Plan under subsection (d) to individuals described in
subsection (b) for the duration of the election period, without
regard to the amount of funds available to the State under
paragraph (1). For purposes of this paragraph, an election
period is the period of 4 or more calendar quarters elected by
the State, and approved by the Secretary, for the provision of
home and community care under this section,
"(3) LIMITATION ON ELIGIBILITY.—The State may limit eligibility for home and community care under this section during
an election period under paragraph (2) to reasonable classifications (based on age, degree of functional disability, and need for
services).
"(4) ALLOCATION OF MEDICAL ASSISTANCE.—The Secretary shall
establish a limitation on the amount of Federal medical assistance available to any State during the State's election period
under paragraph (2). The limitation under this paragraph shall
take into account the limitation under paragraph (1) and the
number of elderly individuals age 65 or over residing in such
State in relation to the number of such elderly individuals in
the United States during 1990. For purposes of the previous
sentence, elderly individuals shall, to the maximum extent
practicable, be low-income elderly individuals.".
(c) PAYMENT FOR HOME AND COMMUNITY CARE.—
(1) REASONABLE AND ADEQUATE PAYMENT RATES.—Section 1902

(42 U.S.C. 1396a) is amended—
(A) in subsection (a)(13)—
(i) by striking "and" at the end of subparagraph (D),
(ii) by inserting "and" at the end of subparagraph (E),
and
(iii) by adding at the end the following new subparagraph:
"(F) for payment for home and community care (as defined in section 1929(a) and provided under such section)
through rates which are reasonable and adequate to meet
the costs of providing care, efficiently and economically, in
conformity with applicable State and Federal laws, regulations, and quality and safety standards;"; and
*'' So in original. Probably should be "Statewideness)".

PUBLIC LAW 101-508—NOV. 5,1990

104 STAT. 1388-187

(B) in subsection (h), by adding before the period at the
end the following: "or to limit the amount of payment that
may be made under a plan under this title for home and
community care''.
(2) DENIAL OF PAYMENT FOR CIVIL MONEY PENALTIES, ETC.—

Section 1903(i)(8) of such Act (42 U.S.C. 1396b(i)(8)) is amended
by inserting "(A)" after "medical assistance" and by inserting
before the semicolon at the end the following: "or (B) for home
and community care to reimburse (or otherwise compensate) a
provider of such care for payment of a civil money penalty
imposed under this title or title XI or for legal expenses in
defense of an exclusion or civil money penalty under this title or
title XI if there is no reasonable legal ground for the provider's
case".
(d) CONFORMING AMENDMENTS.—

(1) Section 1902(j) (42 U.S.C. 1396a(j)) is amended by striking
"(21)" and inserting "(22)".
(2) Section 1902(a)(10)(C)(iv) (42 U.S.C. 1396a(a)(10)(C)(iv)) is
amended by striking "through (20)" and inserting "through
(21)".
(e) EFFECTIVE DATES.—

42 u s e 1396a

(1) Except as provided in this subsection, the amendments note.
made by this section shall apply to home and community care
furnished on or after July 1, 1991, without regard to whether or
not final regulations to carry out such amendments have been
promulgated by such date.
(2)(A) The amendments made by subsection (c)(1) shall apply
to home and community care furnished on or after July 1, 1991,
or, if later, 30 days after the date of publication of interim
regulations under section 1929(k)(l).
(B) The amendment made by subsection (c)(2) shall apply to
civil money penalties imposed after the date of the enactment of
this Act.
(f) WAIVER OF PAPERWORK REDUCTION, ETC.—Chapter 35 of title 44 u s e 3501
44, United States Code, and Executive Order 12291 shall not apply note.
to information and regulations required for purposes of carrying out
this Act and implementing the amendments made by this Act.
SEC. 4712. COMMUNITY SUPPORTED LIVING ARRANGEMENTS SERVICES.
(a) PROVISION AS OPTIONAL SERVICE.—Section 1905(a) (42 U.S.C.

1396d(a)) as amended by section 4711 is further amended—
(1) by striking "and" at the end of paragraph (23);
(2) by redesignating paragraph (24) as paragraph (25); and
(3) by inserting after paragraph (23) the following new paragraph:
"(24) community supported living arrangements services (to
the extent allowed and as defined in section 1930).".
(b) COMMUNITY SUPPORTED LIVING ARRANGEMENTS.—Title XIX (42

U.S.C. 1396 et seq.) as amended by sections 4402 and 4711 is further
amended—
(1) by redesignating section 1930 as section 1931; and
(2) by inserting after section 1929 the following new section:
COMMUNITY SUPPORTED LIVING ARRANGEMENTS SERVICES
"SEC.

1930.

(a) COMMUNITY SUPPORTED LIVING ARRANGEMENTS

SERVICES.—In this title, the term 'community supported living

42 u s e 1396U.

104 STAT. 1388-188

PUBLIC LAW 101-508—NOV. 5, 1990

arrangements services' means one or more of the following services
meeting the requirements of subsection (h) provided in a State
eligible to provide services under this section (as defined in subsection (d)) to assist a developmentally disabled individual (as defined
in subsection (b)) in activities of daily living necessary to permit
such individual to live in the individual's own home, apartment,
family home, or rental unit furnished in a community supported
living arrangement setting:
"(1) Personal assistance.
"(2) Training and habilitation services (necessary to assist the
individual in achieving increased integration, independence and
productivity).
"(3) 24-hour emergency assistance (as defined by the Secretary).
"(4) Assistive technology.
"(5) Adaptive equipment.
"(6) Other services (as approved by the Secretary, except those
services described in subsection (g)).
"(7) Support services necessary to aid an individual to participate in community activities.
"(b) DEVELOPMENTALLY DISABLED INDIVIDUAL DEFINED.—In this
title the term, 'developmentally disabled individual' means an
individual who as defined by the Secretary is described within the
term 'mental retardation and related conditions' as defined in regulations as in effect on July 1, 1990, and who is residing with the
individual's family or legal guardian in such individual's own home
in which no more than 3 other recipients of services under this
section are residing and without regard to whether or not such
individual is at risk of institutionalization (as defined by the Secretary).
"(c) CRITERIA FOR SELECTION OF PARTICIPATING STATES.—The Secretary shall develop criteria to review the applications of States
submitted under this section to provide community supported living
arrangement services. The Secretary shall provide in such criteria
that during the first 5 years of the provision of services under this
section that no less than 2 and no more than 8 States shall be
allowed to receive Federal financial participation for providing the
services described in this section.
"(d) QUALITY ASSURANCE.—A State selected by the Secretary to
provide services under this section shall in order to continue to
receive Federal financial participation for providing services under
this section be required to establish and maintain a quality assurance program, that provides that—
"(1) the State will certify and survey providers of services
under this section (such surveys to be unannounced and average
at least 1 a year);
"(2) the State will adopt standards for survey and certification
that include—
"(A) minimum qualifications and training requirements
for provider staff;
"(B) financial operating standards; and
"(C) a consumer grievance process;
"(3) the State will provide a system that allows for monitoring
boards consisting of providers, family members, consumers, and
neighbors;
"(4) the State will establish reporting procedures to make
available information to the public;

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-189

"(5) the State will provide ongoing monitoring of the health
and well-being of each recipient;
"(6) the State will provide the services defined in subsection
(a) in accordance with an individual support plan (as defined by
the Secretary in regulations); and
"(1) the State plan amendment under this section shall be
reviewed by the State Planning Council established under section 124 of the Developmental Disabilities Assistance and Bill of
Rights Act, and the Protection and Advocacy System established under section 142 of such Act.".*®
The Secretary shall not approve a quality assurance plan under this
subsection and allow a State to continue to receive Federal financial
participation under this section unless the State provides for public
hearings on the plan prior to adoption and implementation of its
plan under this subsection.
"(e) MAINTENANCE OF EFFORT.—States selected by the Secretary to

receive Federal financial participation to provide services under this
section shall maintain current levels of spending for such services in
order to be eligible to continue to receive Federal financial participation for the provision of such services under this section.
"(f) EXCLUDED SERVICES.—No Federal financial participation shall
be allowed for the provision of the following services under this
section:
"(1) Room and board.
"(2) Cost of prevocational, vocational and supported employment.
"(g) WAIVER OF REQUIREMENTS.—The Secretary may waive such
provisions of this title as necessary to carry out the provisions of this
section including the following requirements of this title—
"(1) comparability of amount, duration, and scope of services;
and
"(2) statewideness.
"(h) MINIMUM PROTECTIONS.—
"(1) PUBLICATION OF INTERIM AND FINAL REQUIREMENTS.—

"(A) IN GENERAL.—The Secretary shall publish, by July 1,
1991, a regulation (that shall be effective on an interim
basis pending the promulgation of final regulations), and by
October 1, 1992, a final regulation, that sets forth interim
and final requirements, respectively, consistent with
subparagraph (B), to protect the health, safety, and welfare
of individuals receiving community supported living
arrangements services.
"(B) MINIMUM PROTECTIONS.—Interim and final requirements under subparagraph (A) shall assure, through
methods other than reliance on State licensure processes or
the State quality assurance programs under subsection (d),
that—
"(i) individuals receiving community supported living
arrangements services are protected from neglect,
physical and sexual abuse, and financial exploitation;
"(ii) a provider of community supported living
arrangements services may not use individuals who
have been convicted of child or client abuse, neglect, or
mistreatment or of a felony involving physical harm to
an individual and shall take all reasonable steps to
determine whether applicants for employment by the
provider have histories indicating involvement in child
** So in original. Probably should be "Act.".

104 STAT. 1388-190

PUBLIC LAW 101-508—NOV. 5, 1990

or client abuse, neglect, or mistreatment or a criminal
record involving physical harm to an individual;
"(iii) individuals or entities delivering such services
are not unjustly enriched as a result of abusive financial arrangements (such as owner lease-backs); and
"(iv) individuals or entities delivering such services
to clients, or relatives of such individuals, are prohibited from being named beneficiaries of life insurance
policies purchased by (or on behalf of) such clients,
"(2) SPECIFIED REMEDIES,—If the Secretary finds that a provider has not met an applicable requirement under subsection
(h), the Secretary shall impose a civil money penalty in an
amount not to exceed $10,000 for each day of noncompliance.
The provisions of section 1128A (other than subsections (a) and
(b)) shall apply to a civil money penalty under the previous
sentence in the same manner as such provisions apply to a
penalty or proceeding under section 1128A(a),
"(i) TREATMENT OF FUNDS.—Any funds expended under this section for medical assistance shall be in addition to funds expended for
any existing services covered under the State plan, including any
waiver services for which an individual receiving services under this
program is already eligible.
"Q) LIMITATION ON AMOUNTS OF EXPENDITURES AS MEDICAL ASSIST-

ANCE.—The amount of funds that may be expended as medical
assistance to carry out the purposes of this section shall be for fiscal
year 1991, $5,000,000, for fiscal year 1992, $10,000,000, for fiscal year
1993, $20,000,000, for fiscal year 1994, $30,000,000, for fiscal year
1995, $35,000,000, and for fiscal years thereafter such sums as
provided by Congress.".
42 u s e 1396u

note.

(c) EFFECTIVE D A T E . —

(1) IN GENERAL.—The amendments made by this section shall
apply to community supported living arrangements services
furnished on or after the later of July 1, 1991, or 30 days after
the publication of regulations setting forth interim requirements under subsection (h) without regard to whether or not
final regulations to carry out such amendments have been
promulgated by such date,
(2) APPLICATION PROCESS,—The Secretary

of Health

and

Human Services shall provide that the applications required to
be submitted by States under this section shall be received and
approved prior to the effective date specified in paragraph (1).
SEC, 4713, PROVIDING FEDERAL MEDICAL ASSISTANCE FOR PAYMENTS
FOR PREMIUMS FOR "COBRA" CONTINUATION COVERAGE
WHERE COST EFFECTIVE,

(a) OPTIONAL PAYMENT OF COBRA PREMIUMS FOR QUALIFIED
COBRA CONTINUATION BENEFICIARIES,—Section 1902 (42 U,S,C,
1396a) is amended—
(1) in subsection (a)(10)—
(A) by striking "and" at the end of subparagraph (D),
(B) by adding "and" at the end of subparagraph (E),
(C) by inserting after subparagraph (E) the following new
subparagraph:
"(F) at the option of a State, for making medical assistance available for COBRA premiums (as defined in subsection (u)(2)) for qualified COBRA continuation beneficiaries
described in section 1902(u)(l);", and

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-191

(D) in the matter following subparagraph (E), by striking
"and" before "(X)" and by inserting before the semicolon at
the end the following: , and (XI) the medical assistance
made available to an individual described in subsection
(u)(l) who is eligible for medical assistance only because of
subparagraph (F) shall be limited to medical assistance for
COBRA continuation premiums (as defined in subsection
(uX2))"; and
(2) by adding after the subsections added by section 4604 and
4701(b) the following new subsection:
"(u)(l) Individuals described in this paragraph are individuals—
"(A) who are entitled to elect COBRA continuation coverage
(as defined in paragraph (3)),
"(B) whose income (as determined under section 1612 for
purposes of the supplemental security income program) does not
exceed 100 percent of the official poverty line (as defined by the
Office of Management and Budget, and revised annually in
accordance with section 673(2) of the Omnibus Budget Reconciliation Act of 1981) applicable to a family of the size involved,
"(C) whose resources (as determined under section 1613 for
purposes of the supplemental security income program) do not
exceed twice the maximum amount of resources that an
individual may have and obtain benefits under that program,
and
"(D) with respect to whose enrollment for COBRA continuation coverage the State has determined that the savings in
expenditures under this title resulting from such enrollment is
likely to exceed the amount of payments for COBRA premiums
made.
"(2) For purposes of subsection (a)(10)(F) and this subsection, the
term 'COBRA premiums' means the applicable premium imposed
with respect to COBRA continuation coverage.
"(3) In this subsection, the term 'COBRA continuation coverage'
means coverage under a group health plan provided by an employer
with 75 or more employees provided pursuant to title XXII of the
Public Health Service Act, section 4980B of the Internal Revenue
Code of 1986, or title VI of the Employee Retirement Income Security Act of 1974.
"(4) Notwithstanding subsection (a)(17), for individuals described
in paragraph (1) who are covered under the State plan by virtue of
subsection (aX10)(AXii)(XI)—
"(A) the income standard to be applied is the income standard
described in paragraph (IXB), and
"(B) except as provided in section 1612(b)(4XBXii), costs incurred for medical care or for any other type of remedial care
shall not be taken into account in determining income.
Any different treatment provided under this paragraph for such
individuals shall not, because of subsection (a)(10)(B) or (aX17), require or permit such treatment for other individuals.".
(h) CONFORMING AMENDMENT.—Section 1905(a) (42 U.S.C. 1396d(a))

is amended—
(1) by striking "or" at the end of clause (viii),
(2) by adding "or" at the end of clause (ix), and
(3) by inserting after clause (ix) the following new clause:
"(x) individuals described in section 1902(uXl),".
(c) EFFECTIVE DATE.—The amendments made by this section shall 42 USC 1396a
apply to medical assistance furnished on or after January 1, 1991. note.

104 STAT. 1388-192

PUBLIC LAW 101-508—NOV. 5, 1990

SEC. 4714. PROVISIONS RELATING TO SPOUSAL IMPOVERISHMENT.
(a) CLARIFICATION OF NON-APPLICATION OF STATE COMMUNITY

42 use 1396r-5.

PROPERTY LAWS.—Section 1924(b)(2) (42 U.S.C. 1396r-l(b)(2)) as
amended by subsection (a), is further amended by striking ", after
the institutionahzed spouse has been determined or redetermined to
be eligible for medical assistance" and inserting "for purposes of the
post-eligibility income determination described in subsection (d)".
(b) CLARIFICATION OF TRANSFER OF RESOURCES TO COMMUNITY

SPOUSE.—Section 1924(f)(1) (42 U.S.C. 1396r-5(f)(l)) is amended by
striking "section 1917" and inserting "section 1917(c)(1)".
(c) CLARIFICATION OF PERIOD OF CONTINUOUS EUGIBILITY.—Section

42 use 1396r-5.

42 use 1396r-5
^°*®-

1924(c)(1) (42 U.S.C. 1396r-l(c)(l)) is amended by striking "the
beginning of a continuous period of institutionalization of the
institutionalized spouse" each place it appears and inserting "the
beginning of the first continuous period of institutionalization
(beginning on or after September 30, 1989) of the institutionalized
spouse".
(d) EFFECTIVE DATE.—The amendments made this section shall
take effect as if included in the enactment of section 303 of the
Medicare Catastrophic Coverage Act of 1988.
SEC. 4715. DISREGARDING GERMAN REPARATION PAYMENTS FROM POSTELIGIBILITY TREATMENT OF INCOME UNDER THE MEDICAID
PROGRAM.

42 u s e 1396a
note.

(a) I N GENERAL.—Section 1902(r)(l) (42 U.S.C. 1396a(r)(l)) is
amended by inserting "there shall be disregarded reparation payments made by the Federal Republic of Germany and" after "under
such a waiver".
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to treatment of income for months beginning more than
30 days after the date of the enactment of this Act.
SEC. 4716. AMENDMENTS RELATING TO MEDICAID TRANSITION PROVISION.

42 u s e 1396r-6.

42 use 1396r-6
note.

(a) AMENDMENTS.—Subsection (f) of section 1925 (42 U.S.C. 1396s)
is amended—
(1) in subsection (b)(2)(B)(i), by inserting at the end the following: "A State may permit such additional extended assistance
under this subsection notwithstanding a failure to report under
this clause if the family has established, to the satisfaction of
the State, good cause for the failure to report on a timely
basis.";
(2) in subsection (b)(2)(B), by adding at the end the following
new clause:
"(iii) CLARIFICATION ON FREQUENCY OF REPORTING.—A
State may not require that a family receiving extended
assistance under this subsection or subsection (a) report
more frequently than as required under clause (i) or
(ii)."; and
(3) in subsection (b)(3)(B), by adding at the end the following:
"No such termination shall be effective earlier than 10 days
after the date of mailing of such notice.".
(b) EFFECTIVE DATE.—The amendments made by subsection (a)
shall be effective as if included in the enactment of the Family
Support Act of 1988.

••••

- ' ^ % r J .

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-193

SEC. 4717. CLARIFYING EFFECT OF HOSPICE ELECTION.

Section 1905(o)(l)(A) (42 U.S.C. 1396d(o)(l)(A)) is amended by
inserting "and for which payment may otherwise be made under
title XVIII" after "described in section 1812(d)(2)(A)".
SEC. 4718. MEDICALLY NEEDY INCOME LEVELS FOR CERTAIN 1-MEMBER
FAMILIES.

42 USC 1396b
note

(a) I N GENERAL.—For purposes of section 1903(f)(1)(B), for payments made before, on, or after the date of the enactment of this
Act, a State described in subparagraph (B) may use, in determining
the "highest amount which would ordinarily be paid to a family of
the same size" (under the State's plan approved under part A of title
IV of such Act) in the case of a family consisting only of one
individual and without regard to whether or not such plan provides
for aid to families consisting only of one individual, an amount
reasonably related to the highest money payment which would
ordinarily be made under such a plan to a family of two without
income or resources.
(b) STATES COVERED.—Subsection (a) shall only apply to a State the
State plan of which (under title XIX of the Social Security Act) as of
June 1, 1989, provided for the policy described in such paragraph.
For purposes of the previous sentence, a State plan includes all the
matter included in a State plan under section 2373(c)(5) of the
Deficit Reduction Act of 1984 (as amended by section 9 of the
Medicare and Medicaid Patient and Program Protection Act of
1987).
SEC. 4719. CODIFICATION OF COVERAGE OF REHABILITATION SERVICES.

(a) I N GENERAL.—Section 1905(a)(13) (42 U.S.C. 1396d(a)(13)) is
amended by inserting before the semicolon at the end the following:
", including any medical or remedial services (provided in a facility,
a home, or other setting) recommended by a physician or other
licensed practitioner of the healing arts within the scope of their
practice under State law, for the maximum reduction of physical or
mental disability and restoration of an individual to the best possible functional level".
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect on the date of the enactment of this Act.

•

SEC. 4720. PERSONAL CARE SERVICES FOR MINNESOTA.

(a) CLARIFICATION OF COVERAGE.—In applying section 1905 of the

Social Security Act with respect to Minnesota, medical assistance
shall include payment for personal care services described in subsection (b).
(b) PERSONAL CARE SERVICES DEFINED.—For purposes of this sec- 42 use I396d
tion, the term "personal care services" means services—
^°*®(1) prescribed by a physician for an individual in accordance
with a plan of treatment,
(2) provided by a person who is qualified to provide such
services who is not a member of the individual's family,
(3) supervised by a registered nurse, and
(4) furnished in a home or other location;
but does not include such services furnished to an inpatient or
resident of a hospital or nursing facility.
(c) EFFECTIVE DATE.—This section shall take effect on the date of
the enactment of this Act and shall apply with respect to—

104 STAT. 1388-194

PUBLIC LAW 101-508—NOV. 5, 1990

(1) personal care services furnished before such date pursuant
to regulations in effect as of July 1,1989; and
(2) such services furnished before October 1,1994.
SEC. 4721. MEDICAID COVERAGE OF PERSONAL CARE SERVICES OUTSIDE
THE HOME.

f L Y ^ ^^^^
note.

(a) IN GENERAL.—Section 1905(a)(7) (42 U.S.C. 1396d(a)(7)) is
amended by striking "services" and inserting "services including
personal care services (A) prescribed by a physician for an individual
in accordance with a plan of treatment, (B) provided by an individual who is qualified to provide such services and who is not a
member of the individual's family, (C) supervised by a registered
nurse, and (D) furnished in a home or other location; but not
including such services furnished to an inpatient or resident of a
nursing facility",
(b) EFFECTIVE DATE.—The amendment made by this section shall
become effective with respect to personal care services provided on
or after October 1,1994.
SEC. 4722. MEDICAID COVERAGE OF ALCOHOLISM AND DRUG DEPENDENCY TREATMENT SERVICES.

Section 1905(a) of the Social Security Act is amended by adding at
the end the following new sentence: No service (including counseling) shall be excluded from the definition of 'medical assistance'
solely because it is provided as a treatment service for alcoholism or
drug dependency.".
SEC. 4723. MEDICAID SPENDDOWN OPTION.

(a) I N GENERAL.—Section 1903(f)(2) (42 U.S.C. 1396b(f)(2)) is
amended by—
(1) inserting "(A)" after "(2)"; and
(2) by adding before the period at the end the following: "or,
(B) notwithstanding section 1916 at State option, an amount
paid by such family, at the family's option, to the State, provided that the amount, when combined with costs incurred in
prior months, is sufficient when excluded from the family's
income to reduce such family's income below the applicable
income limitation described in paragraph (1). The amount of
State expenditures for which medical assistance is available
under subsection (a)(1) will be reduced by amounts paid to the
State pursuant to this subparagraph."
0)) CONFORMING AMENDMENT.—Section 1902(a)(17) (42 U.S.C.

1396a(a)(17)) is amended by inserting after "insurance premiums"
", payments made to the State under section 1903(f)(2)(B),".
SEC, 4724. OPTIONAL STATE MEDICAID DISABILITY DETERMINATIONS
INDEPENDENT OF THE SOCIAL SECURITY ADMINISTRATION.

(a) IN GENERAL.—Section 1902 (42 U.S.C. 1396a) as amended by
this title, is further amended by adding at the end the following new
subsection:
"(v)(l) A State plan may provide for the making of determinations
of disability or blindness for the purpose of determining eligibility
for medical assistance under the State plan by the single State
agency or its designee, and make medical assistance available to
individuals whom it finds to be blind or disabled and who are
determined otherwise eligible for such assistance during the period
of time prior to which a final determination of disability or blind-

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-195

ness is made by the Social Security Administration with respect to
such an individual. In making such determinations, the State must
apply the definitions of disability and blindness found in section
1614(a) of the Social Security Act.".

Subpart C—Health Maintenance Organizations
SEC. 4731. REGULATION OP INCENTIVE PAYMENTS TO PHYSICIANS.

(a) PHYSICIAN PAYMENT PLAN.—Section 1903(m)(2)(A) (42 U.S.C.
1396b(m)(2)(A)) as amended by this title is further amended—
(1) by striking ", and" at the end of clause (viii) and inserting
a semicolon;
(2) by striking the period at the end of clause (ix) and inserting "; and"; and
(3) by adding at the end the following new clause:
"(x) any physician incentive plan that it operates meets the
requirements described in section 1876(i)(8).".
(b) REPEAL OF PROHIBITION AGAINST PHYSICIAN INCENTIVE PAY-

MENTS.—Section 1128A(b)(l) (42 U.S.C. 1320a-7a(b)(l)) is—
(1) REPEAL OF PROHIBITION.—Section 1128A(b)(l) (42 U.S.C.
1320a-7a(b)(l)) is amended by striking "or an entity with a
contract under section 1903(m)".
(2)
PENALTIES.—Section
1903(m)(5)(A)
(42
U.S.C.
1396b(m)(5)(A)) is amended—
(A) by striking "or" at the end of clause (iii);
(B) by adding "or" at the end of clause (iv); and
(C) by adding at the end the following new clause:
"(v) fails to comply with the requirements of section
1876(1X8),".
(c) EFFECTIVE DATE.—The amendments made by subsections (a) 42 USC 1396b
and (b)(2) shall apply with respect to contract years beginning on or ^°^after January 1, 1992, and the amendments made by subsection
(b)(1) shall take effect on the date of the enactment of this Act.
SEC. 4732. SPECIAL RULES.
(a) WAIVER OF 75 PERCENT RULE FOR PUBLIC ENTITIES,—Section

1903(m)(2)(D) (42 U.S.C. 1396b(m)(2)(D)) is amended by striking "(i)
special circumstances warrant such modification or waiver, and (ii)".
(b) EXTENDING SPECIAL TREATMENT TO MEDICARE COMPETITIVE
MEDICAL PLANS.—
(1) 6-MONTH MINIMUM ENROLLMENT PERIOD OPTION.—Section

1902(e)(2)(A) (42 U.S.C. 1396a(e)(2)(A)) is amended by inserting
"or with an eligible organization with a contract under section
1876" after "1903(m)(2)(A)".
(2) ENROLLMENT LOCK-IN.—Section 1903(m)(2)(F)(i) (42 U.S.C.

1396b(m)(2)(F)(i)) is amended—
(A) by striking "(G) or" and inserting "(G),", and
(B) adding at the end the following: "or with an eligible
organization with a contract under section 1876 which
meets the requirement of subparagraph (A)(ii), or".
(c) AUTOMATIC 1-MONTH REENROLLMENT FOR SHORT PERIODS OF

INELIGIBILITY.—Section 1903(m)(2) is amended by adding at the end
the following new subparagraph:
"(H) In the case of an individual who—
"(i) in a month is eligible for benefits under this title and
enrolled with a health maintenance organization with a contract under this paragraph,

104 STAT. 1388-196

PUBLIC LAW 101-508—NOV. 5, 1990

"(ii) in the next month (or in the next 2 months) is not eligible
for such benefits, but
"(iii) in the succeeding month is again eligible for such
benefits,
the State plan, subject to subparagraph (A)(vi), may enroll the
individual for that succeeding month with the health maintenance
organization described in clause (i) if the organization continues to
have a contract under this paragraph with the State.".
(d) ELIMINATION OF PROVISIONAL QUAUFICATION FOR H M O S . —

42 use 1396b.

42 use 1396a
note.

Section 1903(m) is amended—
(1) in paragraph (2)(A)(i), by striking "(or the State as authorized by paragraph (3))", and
(2) by striking paragraph (3).
(e) EFFECTIVE DATE.—The amendments made by this section shall
take effect on the date of the enactment of this Act.
SEC. 4733. EXTENSION AND EXPANSION OF MINNESOTA PREPAID MEDICAID DEMONSTRATION PROJECT.

Section 507 of the Family Support Act of 1988 is amended—
(1) by striking "1991" and inserting "1996"; and
(2) by striking the period at the end and inserting the following: ", and shall amend such waiver to permit the State to
expand such demonstration project to other counties if the
amount of medical assistance provided under title XIX of such
Act after such expansion will not exceed the amount of medical
assistance provided under such title had the project not been
expanded to other counties.".
SEC. 4734. TREATMENT OF CERTAIN COUNTY-OPERATED HEALTH INSURING ORGANIZATIONS.

42 use 1396b
note.

Section 9517(c) of the Consolidated Omnibus Budget Reconciliation Act of 1985 is amended—
(1) in paragraph (2)(A), by inserting "and in paragraph (3)"
after "subparagraph (B)", and
(2) by adding at the end the following new paragraph:
"(3)(A) Subject to subparagraph (C), in the case of up to 3 health
insuring organizations which are described in subparagraph (B),
which first become operational on or after January 1, 1986, and
which are designated by the Governor, and approved by the Legislature, of California, the amendments made by paragraph (1) shall not
apply.
"(B) A health insuring organization described in this subparagraph is one that—
"(i) is operated directly by a public entity established by a
county government in the State of California under a State
enabling statute;
"(ii) enrolls all medicaid beneficiaries residing in the county
in which it operates;
"(iii) meets the requirements for health maintenance
organizations under the Knox-Keene Act (Cal. Health and
Safety Code, section 1340 et seq.) and the Waxman-Duffy Act
(Cal. Welfare and Institutions Code, section 14450 et seq.);
"(iv) assures a reasonable choice of providers, which includes
providers that have historically served medicaid beneficiaries
and which does not impose any restriction which substantially
impairs access to covered services of adequate quality where
medically necessary;

*A^i^i<^-3ic

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-197

"(v) provides for a payment adjustment for a disproportionate
share hospital (as defined under State law consistent with
section 1923 of the Social Security Act) in a manner consistent
with the requirements of such section; and
"(vi) provides for payment, in the case of childrens' hospital
services provided to medicaid beneficiaries who are under 21
years of age, who are children with special health care needs
under title V of the Social Security Act, and who are receiving
care coordination services under such title, at rates determined
by the California Medical Assistance Commission.
"(C) Subparagraph (A) shall not apply with respect to any period
for which the Secretary of Health and Human Services determines
that the number of medicaid beneficiaries enrolled with health
insuring organizations described in subparagraph (B) exceeds 10
percent of the number of such beneficiaries in the State of
California.
"(D) In this paragraph, the term 'medicaid beneficiary' means an
individual who is entitled to medical assistance under the State plan
under title XIX of the Social Security Act, other than a qualified
medicare beneficiary who is only entitled to such assistance because
of section 1902(a)(10)(E) of such title.".

Subpart D—Demonstration Projects and Home and
Community-Based Waivers
SEC. 4741. HOME AND COMMUNITY-BASED WAIVERS.

(a) TREATMENT OF ROOM AND BOARD.—(1) Subsections (c)(1) and
(d)(1) of section 1915 (42 U.S.C. 1396n) are each amended by adding
at the end the following: "For purposes of this subsection, the term
'room and board' shall not include an amount established under a
method determined by the State to reflect the portion of costs of
rent and food attributable to an unrelated personal caregiver who is
residing in the same household with an individual who, but for the
assistance of such caregiver, would require admission to a hospital,
nursing facility, or intermediate care facility for the mentally retarded.".
(b) ADJUSTMENT TO 1915(d) CEILING T O TAKE INTO ACCOUNT THE
ADDED COSTS OF O B R A 87.—Section 1915(d)(5)(B)(iv) (42 U.S.C.

1396n(d)(5)(B)(iv)) is amended by striking "this title" the first place it
appears and inserting "this title whose provisions become effective
on or after such date .
SEC. 4742. TIMELY PAYMENT UNDER WAIVERS OF FREEDOM OF CHOICE
OF HOSPITAL SERVICES.

(a) I N GENERAL.—Section 1915(b)(4) (42 U.S.C. 1396n(b)(4)) is
amended by inserting before the period at the end the following:
"and if providers under such restriction are paid on a timely basis in
the same manner as health care practitioners must be paid under
section 1902(a)(37)(A)".
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 42 USC 1396n
shall take effect as of the first calendar quarter beginning more "°*®than 30 days after the date of the enactment of this Act.
(c) TREATMENT OF PERSONS WITH MENTAL RETARDATION OR A RELATED CONDITION IN A DECERTIFIED FACIUTY.—

(1) IN GENERAL.—Section 1915(c)(7) (42 U.S.C. 1396n(c)(7)) is
amended by adding at the end the following new subparagraph:

104 STAT. 1388-198

42 use 1396n
note.

PUBLIC LAW 101-508—NOV. 5, 1990

"(C) In making estimates under paragraph (2)(D) in the case of a
waiver to the extent that it applies to individuals with mental
retardation or a related condition who are resident in an intermediate care facility for the mentally retarded the participation of which
under the State plan is terminated, the State may determine the
average per capita expenditures that would have been made in a
fiscal year for those individuals without regard to any such termination.".
(2) EFFECTIVE DATE.—The amendment made by paragraph (1)
shall apply as if included in the enactment of the Omnibus
Budget Reconciliation Act of 1981, but shall only apply to
facilities the participation of which under a State plan under
title XIX of the Social Security Act i§ terminated on or after the
date of the enactment of this Act.
(d) SCOPE OF RESPITE CARE.—

42 use 1396n.

42 use 1396n
note.
42 use 1396n
note.

(1) IN GENERAL.—Section 1915(c)(4) is amended by adding at
the end the following:
"Except as provided under paragraph (2)(D), the Secretary may not
restrict the number of hours or days of respite care in any period
which a State may provide under a waiver under this subsection.".
(2) EFFECTIVE DATE.—The amendment made by paragraph (1)
shall apply as if included in the enactment of the Omnibus
Budget Reconciliation Act of 1981.
(e) PERMITTING ADJUSTMENT IN ESTIMATES TO TAKE INTO ACCOUNT
PREADMISSION SCREENING REQUIREMENT.—In the case of a waiver

under section 1915(c) of the Social Security Act for individuals with
mental retardation or a related condition in a State, the Secretary of
Health and Human Services shall permit the State to adjust the
estimate of average per capita expenditures submitted under paragraph (2)(D) of such section, with respect to such expenditures made
on or after January 1, 1989, to take into account increases in
expenditures for, or utilization of, intermediate care facilities for the
mentally retarded resulting from implementation of section
1919(e)(7)(A) of such Act.
SEC. 4744. PROVISIONS RELATING TO FRAIL ELDERLY DEMONSTRATION
PROJECT WAIVERS.

(a) EXPANSION OF WAIVERS.—Section 9412(b) of the Omnibus
Budget Reconciliation Act of 1986 is amended—
(1) in paragraph (1), by striking "10" and inserting "15"; and
(2) by adding at the end the following new paragraph:
"(3) In the case of an organization receiving an initial waiver
under this subsection on or after October 1, 1990, the Secretary
(at the request of the organization) shall not require the
organization to provide services under title XVIII of the Social
Security Act on a capitated or other risk basis during the first 2
years of the waiver.".
(b) APPLICATION OF SPOUSAL IMPOVERISHMENT RULES.—(1) Section

1924(a) (42 U.S.C. 1396r-5(a)) is amended by adding at the end the
following new paragraph:
"(5) APPLICATION TO INDIVIDUALS RECEIVING SERVICES FROM
ORGANIZATIONS RECEIVING CERTAIN WAIVERS.—This section ap-

plies to individuals receiving institutional or noninstitutional
services from any organization receiving a frail elderly demonstration project waiver under section 9412(b) of the Omnibus
Budget Reconciliation Act of 1986.".

s * ( § * i ^ ''*'-. '^ tf''-

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-199

(2) Section 9412(b) of the Omnibus Budget Reconciliation Act of
1986, as amended by subsection (a), is amended by adding at the end
the following new paragraph:
"(4) Section 1924 of the Social Security Act shall apply to any
individual receiving services from an organization receiving a
waiver under this subsection.".
SEC. 4745. DEMONSTRATION PROJECTS TO STUDY THE EFFECT OF
ALLOWING STATES TO EXTEND MEDICAID COVERAGE TO
CERTAIN LOW-INCOME FAMILIES NOT OTHERWISE QUALIFIED TO RECEIVE MEDICAID BENEFITS.
(a) DEMONSTRATION PROJECTS.—

(1) IN GENERAL.—(A) The Secretary of Health and Human
Services (hereafter in this section referred to as the "Secretary") shall enter into agreements with 3 and no more than 4
States submitting applications under this section for the purpose of conducting demonstration projects to study the effect on
access to, and costs of, health care of eliminating the categorical
eligibility requirement for medicaid benefits for certain lowincome individuals.
(B) In entering into agreements with States under this section
the Secretary shall provide that at least 1 and no more than 2 of
the projects are conducted on a substate basis.
(2) REQUIREMENTS.—(A) The Secretary may not enter into an
agreement with a State to conduct a project unless the Secretary determines that—
(i) the project can reasonably be expected to improve
access to health insurance coverage for the uninsured;
(ii) with respect to projects for which the statewideness
requirement has not been waived, the State provides, under
its plan under title XIX of the Social Security Act, for
eligibility for medical assistance for all individuals described in subparagraphs (A), (B), (C), and (D) of paragraph
(1) of section 1902(1) of such Act (based on the State's
election of certain eligibility options the highest income
standards and, based on the State's waiver of the application of any resource standard);
(iii) eligibility for benefits under the project is limited to
individuals in families with income below 150 percent of the
income official poverty line and who are not individuals
receiving benefits under title XIX of the Social Security
Act;
(iv) if the Secretary determines that it is cost-effective for
the project to utilize employer coverage (as described in
section 1925(bX4)(D) of the Social Security Act), the project
must require an employer contribution and benefits under
the State plan under title XIX of such Act will continue to
be made available to the extent they are not available
under the employer coverage;
(v) the project provides for coverage of benefits consistent
with subsection (b); and
(vi) the project only imposes premiums, coinsurance, and
other cost-sharing consistent with subsection (c).
(B) The Secretary may waive the requirements of clause (ii) of
this paragraph with respect to those projects described in
subparagraph (B) of paragraph (1),

42 USC 1396a
»o*e.

104 STAT. 1388-200

PUBLIC LAW 101-508—NOV. 5, 1990

(3) PERMISSIBLE RESTRICTIONS.—A project may limit eligibility
to individuals whose assets are valued below a level specified by
the State. For this purpose, any evaluation of such assets shall
be made in a manner consistent with the standards for valuation of assets under the State plan under title XIX of the Social
Security Act for individuals entitled to assistance under part A
of title IV of such Act. Nothing in this section shall be construed
as requiring a State to provide for eligibility for individuals for
months before the month in which such eligibility is first
established.
(4) EXTENSION OF ELIGIBIUTY.—A project may provide for
extension of eligibility for medical assistance for individuals
covered under the project in a manner similar to that provided
under section 1925 of the Social Security Act to certain families
receiving aid pursuant to a plan of the State approved under
part A of title IV of such Act.
(5) WAIVER OF REQUIREMENTS.—

(A) I N GENERAL.—Subject to subparagraph (B), the Secretary may waive such requirements of title XIX of the
Social Security Act (except section 1903(m) of the Social
Security Act) as may be required to provide for additional
coverage of individuals under projects under this section.
(B) NoNWAivABLE PROVISIONS.—Exccpt with rcspcct to
those projects described in subparagraph (B) of paragraph
(1), the Secretary may not waive, under subparagraph (A),
the statewideness requirement of section 1902(a)(1) of the
Social Security Act or the Federal medical assistance
percentage specified in section 1905(b) of such Act.
(b) BENEFITS.—

(1) I N GENERAL.—Except as provided in this subsection, the
amount, duration, and scope of medical assistance made available under a project shall be the same as the amount, duration,
and scope of such assistance made available to individuals
entitled to medical assistance under the State plan under section 1902(a)(10)(A)(i) of the Social Security Act.
(2) LIMITS ON BENEFITS.—

(A) REQUIRED.—Except with respect to those projects described in subparagraph (B) of paragraph (1), no medical
assistance shall be made available under a project for
nursing facility services or community-based long-term care
services (as defined by the Secretary) or for pregnancyrelated services. No medical assistance shall be made available under a project to individuals confined to a State
correctional facility, county jail, local or county detention
center, or other State institution.
(B) PERMISSIBLE.—A State, with the approval of the Secretary, may limit or otherwise deny eligibility for medical
assistance under the project and may limit coverage of
items and services under the project, other than early and
periodic screening, diagnostic, and treatment services for
children under 18 years of age.
(3) U S E OF UTILIZATION CONTROLS.—Nothing in this subsection
shall be construed as limiting a State's authority to impose
controls over utilization of services, including preadmission
requirements, managed care provisions, use of preferred providers, and use of second opinions before surgical procedures.
(c) PREMIUMS AND COST-SHARING.—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-201

(1) NONE FOR THOSE WITH INCOME BELOW THE POVERTY U N E . —

Under a project, there shall be no premiums, coinsurance, or
other cost-sharing for individuals whose family income level
does not exceed 100 percent of the income official poverty line
(as defined in subsection (g)(1)) applicable to a family of the size
involved.
(2) LIMIT FOR THOSE WITH INCOME ABOVE THE POVERTY U N E . —

Under a project, for individuals whose family income level
exceeds 100 percent, but is less than 150 percent, of the income
official poverty line applicable to a family of the size involved,
the monthly average amount of premiums, coinsurance, and
other cost-sharing for covered items and services shall not
exceed 3 percent of the family's average gross monthly earnings.
(3) INCOME DETERMINATION.—Each project shall provide for
determinations of income in a manner consistent with the
methodology used for determinations of income under title XIX
of the Social Security Act for individuals entitled to benefits
under part A of title IV of such Act.
(d) DURATION.—Each project under this section shall commence
not later than July 1, 1991 and shall be conducted for a 3-year
period; except that the Secretary may terminate such a project if the
Secretary determines that the project is not in substantial compliance with the requirements of this section.
(e) LIMITS ON EXPENDITURES AND FUNDING.—

(1) I N GENERAL.—(A) The Secretary in conducting projects
shall limit the total amount of the Federal share of benefits
paid and expenses incurred under title XIX of the Social Security Act to no more than $12,000,000 in each of fiscal years 1991,
1992, and 1993, and to no more than $4,000,000 in fiscal year
1994.
(B) Of the amounts appropriated under subparagraph (A), the
Secretary shall provide that no more than one-third of such
amounts shall be used to carry out the projects described in
paragraph (IXB) of subsection (a) (for which the statewideness
requirement has been waived).
(2) N o FUNDING OF CURRENT BENEFICIARIES.—No f u n d i n g s h a l l

be available under a project with respect to medical assistance
provided to individuals who are otherwise eligible for medical
assistance under the plan without regard to the project.
(3) No INCREASE IN FEDERAL MEDICAL ASSISTANCE PERCENTAGE.—Pajnnents to a State under a project with respect to
expenditures made for medical assistance made available under
the project may not exceed the Federal medical assistance
percentage (as defined in section 19050)) of the Social Security
Act) of such expenditures.
(f) EVALUATION AND REPORT.—

(1) EVALUATIONS.—For each project the Secretary shall provide for an evaluation to determine the effect of the project with
respect to—
(A) access to, and costs of, health care,
(B) private health care insurance coverage, and
(C) premiums and cost-sharing.
(2) REPORTS.—The Secretary shall prepare and submit to Congress an interim report on the status of the projects not later
than January 1, 1993, and a final report containing such summary together with such further recommendations as the Sec-

-194 O - 91 - 20 : QL 3 Part 2

104 STAT. 1388-202

PUBLIC LAW 101-508—NOV. 5, 1990

retary may determine appropriate not later than January 1,
1995.
(g) DEFINITIONS.—In this section:
(1) The term "income official poverty line" means such line as
defined by the Office of Management and Budget and revised
annually in accordance with section 673(2) of the Omnibus
Budget Reconciliation Act of 1981.
(2) The term "project" refers to a demonstration project under
subsection (a).
SEC. 4746. MEDICAID RESPITE DEMONSTRATION PROJECT EXTENDED.

Section 9414 of the Omnibus Budget Reconciliation Act of 1986 is
amended—
(1) by amending subsection (e) to read as follows:
"(e) DURATION.—The project under this section may continue until
September 30,1992."; and
(2) in subsection (d), by striking the last sentence and inserting in lieu thereof the following new sentence: "For the period
beginning October 1, 1990, and ending September 30, 1992,
Federgd payments for the project shall not exceed amounts
expended under the project in the preceding fiscal year.".
42 u s e 1396a
note.

SEC. 4747. DEMONSTRATION PROJECT TO PROVIDE MEDICAID COVERAGE
FOR HIV-POSITIVE INDIVIDUALS.

(a) I N GENERAL.—Not later than 3 months after the date of the
enactment of this Act, the Secretary of Health and Human Services
(hereafter in this section referred to as the "Secretary") shall provide for 2 demonstration projects to be administered by States that
submit an application under this section, through programs
administered by the States under title XIX of the Social Security
Act. Such demonstration projects shall provide coverage for the
services described in subsection (c) to individuals whose income and
resources do not exceed the maximum allowable amount for eligibility for any individual in any category of disability under the State
plan under section 1902 of the Social Security Act, and who have
tested positive for the presence of HIV virus (without regard to the
presence of any symptoms of AIDS or opportunistic diseases related
to AIDS).
(b) SERVICES AVAILABLE UNDER A DEMONSTRATION PROJECT.—(1)

The medical assistance made available to individuals described in
section 1902(aX10)(A) of the Social Security Act shall be made
available to individuals described in subsection (a) who receive
services under a demonstration project under such paragraph.
(2) A demonstration project under subsection (a) shall provide
services in addition to the services described in paragraph (1) which
shall be limited only on the basis of medical necessity or the
appropriateness of such services. To the extent not provided as
described in paragraph (1), such additional services shall include—
(A) general and preventative ^^ medical care services (including inpatient, outpatient, residential care, physician visits,
clinic visits, and hospice care);
(B) prescription drugs, including drugs for the purposes of
preventative health care services;
(C) counseling and social services;
(D) substance abuse treatment services (including services for
multiple substances abusers);
*" So in original. Probably should be "preventive".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-203

(E) home care services (including assistance in carrying out
activities of daily living);
(F) case management;
(G) health education services;
(H) respite care for caregivers;
(I) dental services; and
(J) diagnostic and laboratory services ^°
(c) AGREEMENTS WITH STATES.—(1) Each State conducting a demonstration project under subsection (a) shall enter into an agreement with a hospital and at least one other nonprofit organization
submitting applications to the State. The State shall require that
such hospital and other entity have a demonstrated record of case
management of patients who have tested positive for the presence of
HIV virus and have access to a control group of such type of patients
who are not receiving State or Federal payments for medical services (or other payments from private insurance coverage) before
developing symptoms of AIDS. Under such agreement, the State
shall agree to pay each such entity for the services provided under
subsection (b) and not later than 12 months after the commencement of a demonstration project, institute a system of monthly
payment to each such entity based on the average per capita cost of
the services described in subsection (c) provided to individuals described in paragraphs (1) and (2) of subsection (a).
(2) A demonstration project described in subsection (a) shall be
limited to an enrollment of not more than 200 individuals.
(3) A demonstration project conducted under subsection (a) shall
commence not later than 9 months after the date of the enactment
of this Act and shall terminate on the date that is 3 years after the
date of commencement.
(4)(A) The Secretary shall provide for an evaluation of the
comparative costs of providing services to individuals who have
tested positive for the presence of HIV virus at an early stage after
detection of such virus and those that are treated at a later stage
after such detection.
(B) The Secretary shall report to Congress on the results of the
evaluation conducted under subparagraph (A) no later than 6
months after the date of termination of the demonstration projects
described in this section.
(d) FEDERAL SHARE OF COSTS.—The Federal share of the cost of
services described in paragraph (3) furnished under a demonstration
project conducted under paragraph (1) shall be determined by the
otherwise applicable Federal matching assistance percentage pursuant to section 1905(b) of the Social Security Act.
(e) WAIVER OF REQUIREMENTS OF THE SOCIAL SECURITY ACT.—The

Secretary may waive such requirements of the Social Security Act
as the Secretary determines to be necessary to carry out the purposes of this section.
(f) LIMITATION ON AMOUNT OF EXPENDITURES.—The amount of

funds that may be expended as medical assistance to carry out the
purposes of this section shall be $5,000,000 for fiscal year 1991,
$12,000,000 for fiscal year 1992, and $13,000,000 for fiscal year 1993.
'° So in original. Probably should be "services.".

104 STAT. 1388-204

PUBLIC LAW 101-508—NOV. 5, 1990
Subpart E—Miscellaneous

SEC. 4751. REQUIREMENTS FOR ADVANCED DIRECTIVES UNDER STATE
PLANS FOR MEDICAL ASSISTANCE.

(a) IN GENERAL.—Section 1902 (42 U.S.C. 1396a(a)), as amended by
sections 4401(a)(2), 4601(d), 4701(a), 4711(a), and 4722 of this title, is
amended—
(1) in subsection (a)—
(A) by striking "and" at the end of paragraph (55),
(B) by striking the period at the end of paragraph (56) and
inserting "; and", and
(C) by inserting after paragraph (56) the following new
paragraphs:
"(57) provide that each hospital, nursing facility, provider of
home health care or personal care services, hospice program, or
health maintenance organization (as defined in section
1903(m)(l)(A)) receiving funds under the plan shall comply with
the requirements of subsection (w);
"(58) provide that the State, acting through a State agency,
association, or other private nonprofit entity, develop a written
description of the law of the State (whether statutory or as
recognized by the courts of the State) concerning advance directives that would be distributed by providers or organizations
under the requirements of subsection (w)."; and
(2) by adding at the end the following new subsection:
"(w)(l) For purposes of subsection (a)(57) and sections 1903(m)(l)(A)
and 1919(c)(2)(E), the requirement of this subsection is that a provider or organization (as the case may be) maintain written policies
and procedures with respect to all adult individuals receiving medical care by or through the provider or organization—
"(A) to provide written information to each such individual
concerning—
"(i) an individual's rights under State law (whether statutory or as recognized by the courts of the State) to make
decisions concerning such medical care, including the right
to accept or refuse medical or surgical treatment and the
right to formulate advance directives (as defined in paragraph (3)), and
"(ii) the provider's or organization's written policies
respecting the implementation of such rights;
"(B) to document in the individual's medical record whether
or not the individual has executed an advance directive;
"(C) not to condition the provision of care or otherwise
discriminate against an individual based on whether or not the
individual has executed an advance directive;
"(D) to ensure compliance with requirements of State law
(whether statutory or as recognized by the courts of the State)
respecting advance directives; and
"(E) to provide (individually or with others) for education for
staff and the community on issues concerning advance directives.
Subparagraph (C) shall not be construed as requiring the provision
of care which conflicts with an advance directive.
"(2) The written information described in paragraph (IXA) shall
be provided to an adult individual—

.J'^s^l?*'^-""•, .

PUBLIC LAW 101-508—NOV. 5,1990

104 STAT. 1388-205

"(A) in the case of a hospital, at the time of the individual's
admission £is an inpatient,
"(B) in the case of a nursing facility, at the time of the
individual's admission as a resident,
"(C) in the case of a provider of home health care or personal
care services, in advance of the individual coming under the
care of the provider,
"(D) in the case of a hospice program, at the time of initial
receipt of hospice care by the individual from the program, and
"(E) in the case of a health maintenance organization, at the
time of enrollment of the individual with the organization.
"(3) Nothing in this section shall be construed to prohibit the
application of a State law which allows for an objection on the basis
of conscience for any health care provider or any agent of such
provider which as a matter of conscience cannot implement an
advance directive.". ^^
"(4) In this subsection, the term 'advance directive' means a
written instruction, such as a living will or durable power of
attorney for health care, recognized under State law (whether statutory or as recognized by the courts of the State) and relating to the
provision of such care when the individual is incapacitated. ^^
(b) CONFORMING AMENDMENTS.—

(1) Section 1903(mXl)(A) (42 U.S.C. 1396b(mXlXA)) is
amended—
(A) by inserting "meets the requirement of section
1902(w)' after "which" the first place it appears, and
(B) by inserting "meets the requirement of section 1902(a)
and" after "which" the second place it appears.
(2) Section 1919(cX2) of such Act (42 U.S.C. 1396r(cX2)) is
amended by adding at the end the following new subparagraph:
"(E) INFORMATION RESPECTING ADVANCE DIRECTIVES.—A

nursing facility must comply with the requirement of section 1902(w) (relating to maintaining written policies and
procedures respecting advance directives).".
(c) EFFECTIVE DATE.—The amendments made by this section shall
apply with respect to services furnished on or after the first day of
the first month beginning more than 1 year after the date of the
enactment of this Act.
(d) PuBuc EDUCATION CAMPAIGN.—
(1) IN GENERAL.—The Secretary, no later than 6 months after
the date of enactment of this section, shall develop and implement a national campaign to inform the public of the option to
execute advance directives and of a patient's right to participate
and direct health care decisions.
(2) DEVELOPMENT AND DISTRIBUTION OF INFORMATION.—The

Secretary shall develop or approve nationwide informational
materials that would be distributed by providers under the
requirements of this section, to inform the public and the
medical and legal profession of each person's right to make
decisions concerning medical care, including the right to accept
or refuse medical or surgical treatment, and the existence of
advance directives.
(3) PROVIDING ASSISTANCE TO STATES.—The Secretary shall
assist appropriate State agencies, associations, or other private
entities in developing the State-specific documents that would
be distributed by providers under the requirements of this
section. The Secretary shall further assist appropriate State
*' So in original. Probably should be "directive.".
** So in original. Probably should be "incapacitated.".".

42 u s e 1396a
note.

42 u s e 1396a
note.

104 STAT. 1388-206

PUBLIC LAW 101-508—NOV. 5,1990

agencies, associations, or other private entities in ensuring that
providers are provided a copy of the documents that are to be
distributed under the requirements of the section.
(4) DUTIES OF SECRETARY,—The Secretary shall mail information to Social Security recipients, add a page to the medicare
handbook with respect to the provisions of this section.
SEC. 4752. IMPROVEMENT IN QUALITY OF PHYSICIAN SERVICES.
(a) USE OF UNIQUE PHYSICIAN IDENTIFIERS.—
(1) ESTABUSHMENT OF SYSTEM.—

42 use 1396a
"°*®-

(A) I N GENERAL.—Section 1902 (42 U.S.C. 1396a) as
amended by sections 4601(d), 4701(a), 4711(a), 4722(a), and
4751(a) is further amended by adding at the end the following new subsection:
"(x) The Secretary shall establish a system, for implementation by
not later than July 1,1991, which provides for a unique identifier for
each physician who furnishes services for which payment may be
made under a State plan approved under this title.".
(B) DEADUNE AND CONSIDERATIONS.—The System established under the amendment made by subparagraph (A)
may be the same as, or different from, the system established under section 9202(g) of the Consolidated Omnibus
Budget Reconciliation Act of 1985.
(2) REQUIRING INCLUSION WITH CLAIMS.—Section 1903(i) (42
U.S.C. 1396b(i)), as amended by this title, is amended—
(A) by striking the period at the end of paragraph (11) and
inserting "; or", and
(B) by inserting after paragraph (11) the following new
paragraph:
"(12) with respect to any amount expended for physicians'
services furnished on or after the first day of the first quarter
beginning more than 60 days after the date of establishment of
the physician identifier system under section 1902(x), unless the
claim for the services includes the unique physician identifier
provided under such system.".
(b) MAINTENANCE OF ENCOUNTER DATA BY HEALTH MAINTENANCE
ORGANIZATIONS.—

42 use 1396a
"*>**•

(1) I N GENERAL.—Section
1903(mX2)(A) (42 U.S.C.
1396b(mX2)(A)), as amended by this title, is amended—
(A) by striking "and" at the end of clause (ix),
(B) by striking the period at the end of clause (x) and
inserting "; and", and
(C) by adding at the end the following new clause:
"(xi) such contract provides for maintenance of sufficient
patient encounter data to identify the physician who delivers
services to patients.".
(2) EFFECTIVE DATE.—The amendments made by paragraph (1)
shall apply to contract years beginning after the date of the
establishment of the system described in section 1902(x) of the
Social Security Act.
(c) MAINTENANCE OF LIST OF PHYSICIANS BY STATES.—

(1) I N GENERAL.—Section 1902(a) (42 U.S.C. 1396a(a)), as
amended by this title, is further amended—
(A) by striking "and" at the end of paragraph (56),
(B) by striking the period at the end of paragraph (57) and
inserting "; and", and

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-207

(C) by inserting after paragraph (57) the following new
paragraph:
"(58) maintain a list (updated not less often than monthly,
and containing each physician's unique identifier provided
under the system established under subsection (v)) of all physicians who are certified to participate under the State plan.".
(2) EFFECTIVE DATE.—The amendments made by paragraph (1) 42 u s e 1396a
shall apply to medical £issistance for calendar quarters begin- note.
ning more than 60 days after the date of establishment of the
physician identifier system under section 1902(x) of the Social
Security Act.
42 u s e 1396a
(d) FOREIGN MEDICAL GRADUATE CERTIFICATION.—
(1) PASSAGE OF FMGEMS EXAMINATION IN ORDER TO OBTAIN note.

IDENTIFIER.—The Secretary of Health and Human Service '^^
shall provide, in the identifier system established under section
1902(x) of the Social Security Act, that no foreign medical
graduate (as defined in section 1886(hX5XD) of such Act) shall be
issued an identifier under such system unless the individual—
(A) has passed the FMGEMS examination (as defined in
section 1886(hX5XE) of such Act);
(B) has previously received certification from, or has
previously passed the examination of, the Elducational
Commission for Foreign Medical Graduates; or
(C) has held a license from 1 or more States continuously
since 1958.
(2) EFFECTIVE DATE.—Paragraph (1) shall apply with respect to
issuance of an identifier applicable to services furnished on or
after January 1,1992.
(e) MINIMUM QUAUFICATIONS FOR BILLING FOR PHYSICIANS' SERVICES TO CHILDREN AND PREGNANT WOMEN.—Section 1903(i) (42 U.S.C.

1396b(i)), as amended by this title and subsection (aX2) of this
section, is further amended—
(1) by striking the period at the end of paragraph (13) and
inserting "; or"; and
(2) by inserting after paragraph (13) the following new paragraph:
"(14) with respect to any amount expended for physicians'
services furnished by a physician on or after January 1, 1992,
to—
"(A) a child under 21 years of age, unless the physician—
"(i) is certified in family practice or pediatrics by the
medical specialty board recognized by the American
Board of Medical Specialties for family practice or
pediatrics,
"(ii) is employed by, or affiliated with, a Federallyqualified health center (as defined in section
1905(1X2XB)),
"(iii) holds admitting privileges at a hospital participating in a State plan approved under this title,
"(iv) is a member of the National Health Service
Corps,
"(v) documents a current, formal, consultation and
referral arrangement with a pediatrician or family
practitioner who has the certification described in
clause (i) for purposes of specialized treatment and
admission to a hospital, or
" So in original. Probably should be "Services".

104 STAT. 1388-208

PUBLIC LAW 101-508—NOV. 5, 1990
"(vi) has been certified by the Secretary as qualified
to provide physicians' services to a child under 21 years
of age; or
"(B) to a pregnant woman (or during the 60 day period
beginning on the date of termination of the pregnancy)
unless the physician—
"(i) is certified in family practice or obstetrics by the
medical specialty board recognized by the American
Board of Medical Specialties for family practice or
obstetrics,
"(ii) is employed by, or affiliated with, a Federallyqualified health center (as defined in section
1905(1)(2)(B)),
"(iii) holds admitting privileges at a hospital participating in a State plan approved under this title,
"(iv) is a member of the National Health Service
Corps,
"(v) documents a current, formal, consultation and
referral arrangement with an obstetrician or family
practitioner who has the certification described in
clause (i) for purposes of specialized treatment and
admission to a hospital, or
"(vi) has been certified by the Secretary as qualified
to provide physicians' services to pregnant women.".

(f) REPORTING OF MISCONDUCT OR SUBSTANDARD CARE.—

42 use 1396r-2
note.

(1) I N GENERAL.—Section 1921(a) (42 U.S.C. 1396r-2(a)) is
amended—
(A) in paragraph (1), in the matter before subparagraph
(A), by inserting "(or any peer review organization or private accreditation entity reviewing the services provided by
health care practitioners)" after "health care practitioners"; and
(B) in paragraph (1), by adding at the end the following
new subparagraph:
"(D) Any negative action or finding by such authority,
organization, or entity regarding the practitioner or
entity.".
(2) EFFECTIVE DATE.—The amendments made by paragraph (1)
shall apply to State information reporting systems as of January 1, 1992, without regard to whether or not the Secretary of
Health and Human Services has promulgated any regulations
to carry out such amendments by such date.
SEC. 4753. CLARIFICATION OF AUTHORITY OF INSPECTOR GENERAL.
Section 1128A(j) (42 U.S.C. 1320a-7a0*)) is amended—
(1) by striking "0')" and inserting "(j)(l)"; and
(2) by adding at the end the following new paragraph:
"(2) The Secretary may delegate authority granted under this
section and under section 1128 to the Inspector General of the
Department of Health and Human Services.".
SEC. 4754. NOTICE TO STATE MEDICAL BOARDS WHEN ADVERSE ACTIONS
TAKEN.

(a) I N GENERAL.—Section 1902(a)(41) (42 U.S.C. 1396a(a)(41)) is
amended by inserting "and, in the case of a physician and notwithstanding paragraph (7), the State medical licensing board" after
"shall promptly notify the Secretary".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-209

(b) EFFECTIVE DATE.—The amendment made by subsection (a) 42 USC 1396a
shall apply to sanctions effected more than 60 days after the date of "»<><*•
the enactment of this Act.
SEC. 4755. MISCELLANEOUS PROVISIONS.
(a) PSYCHIATRIC HOSPITALS.—
(1) CLARIFICATION OF COVERAGE OF INPATIENT PSYCHIATRIC HOSPITAL SERVICES

(A) I N ' GENERAL.—Section 1905(h)(1)(A) (42 U.S.C.
1396d(h)(l)(A)), as amended by section 2340(b) of the Deficit
Reduction Act of 1984, is amended by inserting "or in
another inpatient setting that the Secretary has specified in
regulations" after "1861(f)".
(B) EFFECTIVE DATE.—The amendment made by subpara- 42 USC I396d
graph (A) shall be effective as if included in the enactment note.
of the Deficit Reduction Act of 1984.
(2) INTERMEDIATE SANCTIONS FOR PSYCHIATRIC HOSPITALS.—Sec-

tion 1902 (42 U.S.C. 1396a) as amended by this title is further
amended by adding at the end the following new subsection:
"(y)(l) In addition to any other authority under State law, where a
State determines that a psychiatric hospital which is certified for
participation under its plan no longer meets the requirements for a
psychiatric hospital (referred to in section 1905(h)) and further finds
that the hospital's deficiencies—
"(A) immediately jeopardize the health and safety of its patients, the State shall terminate the hospital's participation
under the State plan; or
"(B) do not immediately jeopardize the health and safety of its
patients, the State may terminate the hospital's participation
under the State plan, or provide that no payment will be made
under the State plan with respect to any individual admitted to
such hospital after the effective date of the finding, or both.
"(2) Except as provided in paragraph (3), if a psychiatric hospital
described in paragraph (1)(B) has not complied with the requirements for a psychiatric hospital under this title—
"(A) within 3 months after the date the hospital is found to be
out of compliance with such requirements, the State shall provide that no payment will be made under the State plan with
respect to any individual admitted to such hospital after the end
of such 3-month period, or
"(B) within 6 months after the date the hospital is found to be
out of compliance with such requirements, no Federal financial
participation shall be provided under section 1903(a) with respect to further services provided in the hospital until the State
finds that the hospital is in compliance with the requirements
of this title.
"(3) The Secretary may continue payments, over a period of not
longer than 6 months from the date the hospital is found to be out of
compliance with such requirements, if—
"(A) the State finds that it is more appropriate to take
alternative action to assure compliance of the hospital with the
requirements than to terminate the certification of the hospital,
"(B) the State has submitted a plan and timetable for corrective action to the Secretary for approval and the Secretary
approves the plan of corrective action, and
'(C) the State agrees to repay to the Federal Government
payments received under this paragraph if the corrective action

104 STAT. 1388-210

42 u s e 1396a
note.

PUBLIC LAW 101-508—NOV. 5, 1990

is not taken in accordance with the approved plan and timetable.".
(b) STATE UTIUZATION REVIEW SYSTEMS.—Section 9432 of the
Omnibus Budget Reconciliation Act of 1986 is amended—
(1) in subsection (a)—
(A) by inserting "(D" after " I N GENERAL.—",
(B) by striking ", during the period" and all that follows
through "Congress,", and
(C) by adding at the end the following new paragraph:
"(2) The Secretary may not, during the period beginning on the
date of the enactment of the Omnibus Budget Reconciliation Act of
1990 and ending on the date that is 180 days after the date on which
the report required by subsection (d) is submitted to the Congress,
publish final or interim final regulations requiring a State plan
approved under title XIX of the Social Security Act to include a
program for ambulatory surgery, preadmission testing, or same-day
surgery.";
(2) in subsection (b)(4), by inserting "and subsection (d)" after
"In this subsection"; and
(3) by adding at the end the following new subsection:
"(d) REPORT.—The Secretary shall report to Congress, by not later
than January 1, 1993, for each State in a representative sample of
States—
"(1) an analysis of the procedures for which programs for
ambulatory surgery, preadmission testing, and same-day surgery are appropriate for patients who are covered under the
State medicaid plan, and
"(2) the effects of such programs on access of such patients to
necessary care, quality of care, and costs of care.
In selecting such a sample of States, the Secretary shall include
some States with medicaid plans that include such programs.".
(c) ADDITIONAL MISCELLANEOUS PROVISIONS.—

42 u s e 1396a.

(1) Effective July 1,1990—
(A) section 1902(a)(10)(C)(iv) of the Social Security Act is
amended by striking "through (20)" and inserting "through
(21)", and
(B) section 1902(j) of such Act is amended by striking
"through (21)" and inserting "through (22)".
(2) Effective as if included in subtitle D of title VI of the
Omnibus Budget Reconciliation Act of 1989, section 301(j) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 331(j)) is
amended by adding at the end the following: "This paragraph
does not authorize the withholding of information from either
House of Congress or from, to the extent of matter within its
jurisdiction, any committee or subcommittee of such committee
or any joint committee of Congress or any subcommittee of such
joint committee.".
(3) Section 505(b) (42 U.S.C. 7050?)) is amended in the matter
preceding pargigraph (1) by striking "requirement" and inserting "requirements".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-211

PART 5—PROVISIONS RELATING TO NURSING
HOME REFORM
SEC. 4801. TECHNICAL CORRECTIONS RELATING TO NURSING HOME
REFORM.
(a) NURSE AIDE TRAINING AND COMPETENCY EVALUATION.—
(1) N o COMPLIANCE ACTIONS BEFORE EFFECTIVE DATE OF GUIDE- 42 USC 1396r

LINES.—The Secretary of Health and Human Services shall not notetake (and shall not continue) any action against a State under
section 1904 of the Social Security Act on the basis of the State's
failure to meet the requirement of section 1919(e)(1)(A) of such
Act before the effective date of guidelines, issued by the Secretary, establishing requirements under section 1919(f)(2)(A) of
such Act, if the State demonstrates to the satisfaction of the
Secretary that it has made a good faith effort to meet such
requirement before such effective date.
(2) PART-TIME NURSE AIDES NOT ALLOWED DELAY IN TRAINING.—

Section 1919(b)(5)(A) (42 U.S.C. 1396r(b)(5)(A)) is amended—
(i) by striking "A nursing facility" and inserting "(i)
Except as provided in clause (ii), a nursing facility";
(ii) by striking "(on a full-time, temporary, per diem,
or other basis) ^'^ and inserting "on a full-time basis";
(iii) by striking "(i)" and "(ii)" and inserting "(I)" and
"(II)"; and
(iv) by adding at the end the following:
"(ii) A nursing facility must not use on a temporary, per
diem, leased, or on any other basis other than as a permanent employee any individual as a nurse aide in the facility
on or after January 1, 1991, unless the individual meets the
requirements described in clause (i).".
(3) REQUIREMENT TO OBTAIN INFORMATION FROM NURSE AIDE

REGISTRY.—Section 1919(b)(5)(C) (42 U.S.C. 1396r(b)(5)(C)) is
amended by striking "the State registry established under
subsection (e)(2)(A) as to information in the registry" and inserting "any State registry established under subsection (e)(2)(A)
that the facility believes will include information".
(4) RETRAINING OF NURSE AIDES.—Section 1919(b)(5)(D) (42

U.S.C. 1396r(b)(5)(D)) is amended by striking the period at the
end and inserting ", or a new competency evaluation program.".
(5) CLARIFICATION OF NURSE AIDES NOT SUBJECT TO CHARGES.—

Section 1919(f)(2)(A)(iv) (42 U.S.C. 1396r(f)(2)(A)(iv)) is amended—
(A) in subclause (I), by striking "and" at the end;
(B) in subclause (II), by inserting after "nurse aide" the
following: "who is employed by (or who has received an
offer of employment from) a facility on the date on which
the aide begins either such program ';
(C) in subclause (II), by striking the period at the end and
inserting ", and"; and
(D) by adding at the end the following new subclause:
"(III) in the case of a nurse aide not described in
subclause (II) who is employed by (or who has
received an offer of employment from) a facility
not later than 12 months after completing either
such program, the State shall provide for the reimbursement of costs incurred in completing such
"* So in original. Probably should be "basis)" ".

104 STAT. 1388-212

PUBLIC LAW 101-508—NOV. 5, 1990
program on a prorata basis during the period in
which the nurse aide is so employed.".

(6) MODIFICATION OF NURSING FACILITY DEFICIENCY STANDARDS.—

42 use 1396r
^ote.

(A) I N GENERAL.—Section 1919(f)(2)(B)(iii)(I) (42 U.S.C.
1396r(f)(2)(B)(iii)(I)) is amended to read as follows:
"(I) offered by or in a nursing facility which,
within the previous 2 years—
"(a) has operated under a waiver under
subsection (b)(4)(C)(ii) that was granted on the
basis of a demonstration that the facility is
unable to provide the nursing care required
under subsection (b)(4)(C)(i) for a period in
excess of 48 hours during a week;
"(b) has been subject to an extended (or
partial extended) survey under section
1819(g)(2)(B)(i) or subsection (g)(2)(B)(i); or
"(c) has been assessed a civil money penalty
described in section 1819(h)(2)(BXii) or subsection (h)(2)(AXii) of not less than $5,000, or has
been subject to a remedy described in subsection (h)(l)(B)(i), clauses (i), (iii), or (iv) of subsection (h)(2)(A), clauses (i) or (iii) of section
1819(h)(2)(B), or section 1819(h)(4), or".
(B) EFFECTIVE DATE.—TTie amendments made by subparagraph (A) shall take effect as if included in the enactment
of the Omnibus Budget Reconciliation Act of 1987, except
that a State may not approve a training and competency
evaluation program or a competency evaluation program
offered by or in a nursing facility which, pursuant to any
Federal or State law within the 2-year period beginning on
October 1,1988—
(i) had its participation terminated under title XVIII
of the Social Security Act or under the State plan
under title XIX of such Act;
(ii) was subject to a denial of payment under either
such title;
(iii) was assessed a civil money penalty not less than
$5,000 for deficiencies in nursing facility standards;
(iv) operated under a temporary management appointed to oversee the operation of the facility and to
ensure the health and safety of the facility's residents;
or
(v) pursuant to State action, was closed or had its
residents transferred.
(7) CLARIFICATION OF STATE RESPONSIBIUTY TO DETERMINE COM-

PETENCY.—Section 1919(f)(2)(B) (42 U.S.C. 1396r(f)(2)(B)) is
amended in the second sentence by inserting "(through subcontract or otherwise)" after "may not delegate '.
(8) EXTENSION OF ENHANCED MATCH RATE UNTIL OCTOBER i,

42 use 1396b
note.

1990.—Section 1903(aX2XB) (42 U.S.C. 1396b(aX2XB)) is amended
by striking "July 1, 1990" and inserting "October 1, 1990".
(9) EFFECTIVE DATE.—Except as provided in paragraph (6), the
amendments made by this subsection shall take effect as if they
were included in the enactment of the Omnibus Budget Reconciliation Act of 1987.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-213

(b) PREADMISSION SCREENING AND ANNUAL RESIDENT REVIEW.—
(1) No COMPLIANCE ACTIONS BEFORE EFFECTIVE DATE OF GUIDE-

42 use 1396r
UNES.—The Secretary of Health and Human Services shall not note.
take (and shall not continue) any action against a State under
section 1904 or section 1919(e)(7XD) of the Social Security Act on
the basis of the State's failure to meet the requirement of
section 1919(eX7XA) of such Act before the effective date of
guidelines, issued by the Secretary, establishing minimum criteria under section 1919(f)(8XA) of such Act, if the State demonstrates to the satisfaction of the Secretary that it has made a
good faith effort to meet such requirement before such effective
date.
(2) CLARIFICATION WITH RESPECT TO ADMISSIONS AND READMIS-

sioN FROM A HOSPITAL.—Section 1919 of the Social Security Act
(42 U.S.C. 1396r) is amended—
(A) in subsection (bX3XF), by striking "A nursing facility"
and by inserting "Except as provided in clauses (ii) and (iii)
of subsection (eXTXA), a nursing facility"; and
(B) in subsection (eXTXA)—
(i) by redesignating the first 2 sentences as clause (i)
with the following heading (and appropriate indentation):
"(i) I N GENERAL.—", and

(ii) by adding a t the end the following:
"(ii)

CLARIFICATION

WITH

RESPECT

TO CERTAIN

READMissiONS.—The preadmission screening program
under clause (i) need not provide for determinations in
the case of the readmission to a nursing facility of an
individual who, after being admitted to the nursing
facility, was transferred for care in a hospital.
"(iii) EXCEPTION FOR CERTAIN HOSPITAL DISCHARGES.—
The preadmission screening program under clause (i)
shall not apply to the admission to a nursing facility of
an individual—
"(I) who is admitted to the facility directly from
a hospital after receiving acute inpatient care at
the hospital,
"(II) who requires nursing facility services for
the condition for which the individual received
care in the hospital, and
"(III) whose attending physician has certified,
before admission to the facility, that the individual
is likely to require less than 30 days of nursing
facility services.".
(3) DENIAL OF PAYMENTS FOR CERTAIN RESIDENTS NOT REQUIRING NURSING FACIUTY SERVICES.—Section 1919(eX7) (42 U.S.C.

1395r(eX'7)) is amended—
(A) in subparagraph (D)—
(i) in the heading, by striking "WHERE FAILURE TO

CONDUCT PREADMISSION SCREENING",
(ii) by designating the first sentence as clause (i) with
the following heading (and appropriate indentation):
"(i) FOR FAILURE TO CONDUCT PREADMISSION SCREEN-

ING OR ANNUAL REVIEW.—", and
(iii) by adding at the end the following new clause:
"(ii) FOR CERTAIN RESIDENTS NOT REQUIRING NURSING

FACIUTY LEVEL OF SERVICES.—No payment may be made

42 USC 1396r.

104 STAT. 1388-214

PUBLIC LAW 101-508—NOV. 5, 1990
under section 1903(a) with respect to nursing facility
services furnished to an individual (other than an
individual described in subparagraph (C)(i)) who does
not require the level of services provided by a nursing
facility."; and
(B) in subparagraph (E), by striking "the requirement of
this paragraph" and inserting "the requirements of subparagraphs (A) through (C) of this paragraph".
(4) N o DELEGATION OF AUTHORITY TO CONDUCT SCREENING AND

REVIEWS.—Section 1919 is further amended—
(A) in subsection (b)(3)(F), by adding at the end the following: "A State mental health authority and a State mental
retardation or developmental disability authority may not
delegate (by subcontract or otherwise) their responsibilities
under this subparagraph to a nursing facility (or to an
entity that has a direct or indirect affiliation or relationship with such a facility)."; and
(B) in subsection (e)(7)(B), by adding at the end the following new clause:
"(iv) PROHIBITION OF DELEGATION.—A State mental
health authority, a State mental retardation or developmental disability authority, and a State may not
delegate (by subcontract or otherwise) their responsibilities under this subparagraph to a nursing facility (or
to an entity that has a direct or indirect affiliation or
relationship with such a facility).".
(5) ANNUAL REPORTS.—

(A) STATE REPORTS.—Section

1919(eX7)(C) (42 U.S.C.

1396r(eX7)(C)) is amended by adding at the end the following new clause:
"(iv) ANNUAL REPORT.—Each State shall report to the
Secretary annually concerning the number and disposition of residents described in each of clauses (ii) and
(iii).".
(B) SECRETARIAL REPORT.—Section 4215 of the Omnibus

42 use 1396r
"****•

Budget Reconciliation Act of 1987 is amended by adding at
the end the following new sentence: "Each such report shall
also include a summary of the information reported by
States under section 1919(e)(7XC)(iv) of such Act.".
(6) REVISION OF ALTERNATIVE DISPOSITION PLANS.—Section

1919(eX7XE) (42 U.S.C. 1396r(eX7XE)) is amended by adding at
the end the following: "The State may revise such an agreement, subject to the approval of the Secretary, before October 1,
1991, but only if, under the revised agreement, all residents
subject to the agreement who do not require the level of services
of such a facility are discharged from the facility by not later
than April 1,1994.".
(7) DEFINITION OF MENTALLY ILL.—Section 1919(eX7XG)(i) (42
U.S.C. 1396r(eX7)(GXi)) is amended—
(A) by striking "primary or secondary" and all that follows through "3rd edition)" and inserting "serious mental
illness (as defined by the Secretary in consultation with the
National Institute of Mental Health)",
(B) by inserting before the period "or a diagnosis (other
than a primary diagnosis) of dementia and a primary diagnosis that is not a serious mental illness".

PUBLIC LAW 101-508—NOV. 5, 1990
(8)

104 STAT. 1388-215

SUBSTITUTION OF "SPECIALIZED SERVICES" FOR "ACTIVE

TREATMENT".—Sections 1919(b)(3)(F) and 1919(e)(7) (42 U.S.C.
1396r(b)(3)(F), 1396r(e)(7)) are each amended by striking "active
treatment" and "ACTIVE TREATMENT" each place either appears
and inserting "specialized services" and "SPECIALIZED SERVICES",

respectively.
(9) EFFECTIVE DATES.—

42 u s e 1396r

(A) IN GENERAL.—Except as provided in subparagraph (B), note.
the amendments made by this subsection shall take effect
as if they were included in the enactment of the Omnibus
Budget Reconciliation Act of 1987.
(B) EXCEPTION.—The amendments made by paragraphs
(4), (6), and (8) shall take effect on the date of the enactment
of this Act, without regard to whether or not regulations to
implement such amendments have been promulgated.
(c) ENFORCEMENT PROCESS.—The Secretary of Health and Human 42 u s e 13%r
Services shall not take (and shall not continue) any action against a note.
State under section 1904 of the Social Security Act on the basis of
the State's failure to meet the requirements of section 1919(hX2) of
such Act before the effective date of guidelines, issued by the
Secretary, regarding the establishment of remedies by the State
under such section, if the State demonstrates to the satisfaction of
the Secretary that it has made a good faith effort to meet such
requirements before such effective date.
(d) SUPERVISION OF HEALTH CARE OF RESIDENTS OF NURSING
FACIUTIES BY NURSE PRACTITIONERS, CLINICAL NURSE SPECIAUSTS,
AND PHYSICIAN ASSISTANTS ACTING IN COLLABORATION WITH PHYSICIANS.—

(1) I N GENERAL.—Section
1919(bX6XA) (42 U.S.C.
1396r(bX6XA)) is amended by inserting "(or, at the option of a
State, under the supervision of a nurse practitioner, clinical
nurse specialist, or physician assistant who is not an employee
of the facility but who is working in collaboration with a
physician)" after "physician".
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 42 u s e 1396r
applies with respect to nursing facility services furnished on or note.
after October 1, 1990, without regard to whether or not final
regulations to carry out such amendment have been promulgated by such date.
(e) OTHER AMENDMENTS.—
(1) ASSURANCE OF APPROPRIATE PAYMENT AMOUNTS.—

(A) I N GENERAL.—Section 1902(aX13XA) (42 U.S.C.
1396a(aX13XA)) is amended by inserting "(including the
costs of services required to attain or maintain the highest
practicable physical, mental, and psychosocial well-being of
each resident eligible for benefits under this title)" after
"take into account the costs".
(B) DETAILS IN PLAN AMENDMENT.—Section 4211(bX2) of

the Omnibus Budget Reconciliation Act of 1987 is amended 42 u s e 1396a
by inserting after the first sentence the following: "Each note.
such amendment shall include a detailed description of the
specific methodology to be used in determining the appropriate adiustment in pa3rment amounts for nursing facility
services.'.
(2) DISCLOSURE OF INFORMATION OF QUAUTY ASSESSMENT AND

ASSURANCE COMMITTEES.—Section 1919(bXlXB) (42 U.S.C.
1396r(bXlXB)) is amended by adding at the end the following

104 STAT. 1388-216
-

PUBLIC LAW 101-508—NOV. 5, 1990

new sentence: "A State or the Secretary may not require disclosure of the records of such committee except insofar as such
disclosure is related to the compliance of such committee with
the requirements of this subparagraph.".
(3)

PERIOD

FOR

RESIDENT

ASSESSMENT.—Section

1919(b)(3)(C)(i)(I) (42 U.S.C. 1396r(b)(3)(C)(i)(I)) is amended by
striking "4 days" and inserting "not later than 14 days".
(4) CLARIFICATION O F RESPONSIBILITY FOR SERVICES FOR MENTALLY ILL AND MENTALLY RETARDED RESIDENTS.—Section

1919(b)(4)(A) (42 U.S.C. 1396r(b)(4)(A)) is amended—
(A) by striking "and" at the end of clause (v),
(B) by striking the period at the end of clause (vi) and
inserting "; and", and
(C) by inserting after clause (vi) the following new clause:
'(vii) treatment and services required by mentally ill
and mentally retarded residents not otherwise provided
or arranged for (or required to be provided or arranged
for) by the State.".
(5) CLARIFICATION OF EXTENT OF STATE WAIVER AUTHORITY;

NOTIFICATION OF WAIVERS.—Section 1919(b)(4)(C)(ii) (42 U.S.C.
1396r(b)(4)(C)(ii)) is amended—
(A) by striking "A State" and all that follows through "a
facility i f and inserting "To the extent that a facility is
unable to meet the requirements of clause (i), a State may
waive such requirements with respect to the facility if ;
(B) by striking "and" at the end of subclause (II);
(C) by striking the period at the end of subclause (III) and
inserting a comma; and
(D) by adding at the end the following new subclauses:
"(IV) the State agency granting a waiver of such
requirements provides notice of the waiver to the
State long-term care ombudsman (established
under section 307(a)(12) of the Older Americans
Act of 1965) and the protection and advocacy
system in the State for the mentally ill and the
mentally retarded, and
^
"(V) the nursing facility that is granted such a
waiver by a State notifies residents of the facility
(or, where appropriate, the guardians or legal representatives of such residents) and members of
their immediate families of the waiver.".
(6) CLARIFICATION OF DEFINITION OF NURSE AIDE.—Section

1919(b)(5)(F)(i) (42 U.S.C. 1396r(b)(5)(F)(i)) is amended by striking
"(G))," and inserting "(G)) or a registered dietician,".
(7) CHARGES APPLICABLE IN CASES OF CERTAIN MEDICAIDELIGIBLE INDIVIDUALS.—

(A) I N GENERAL.—Section 1919(c) (42 U.S.C. 1396r(c)) is
amended—
(i) by redesignating paragraph (7) as paragraph (8);
and
(ii) by inserting after paragraph (6) the following new
paragraph:
"(7) LIMITATION ON CHARGES IN CASE OF MEDICAID-ELIGIBLE
INDIVIDUALS.—

"(A) I N GENERAL.—A nursing facility may not impose
charges, for certain medicaid-eligible individuals for nursing fecility services covered by the State under its plan

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-217

under this title, that exceed the payment amounts established by the State for such services under this title.
"(B)

CERTAIN

MEDICAID

INDIVIDUALS

DEFINED.—In

subparagraph (A), the term 'certain medicaid-eligible
individual' means an individual who is entitled to medical
assistance for nursing facility services in the facility under
this title but with respect to whom such benefits are not
being paid because, in determining the amount of the
individual's income to be applied monthly to payment for
the costs of such services, the amount of such income
exceeds the payment amounts established by the State for
such services under this title.".
(B) EFFECTIVE DATE.—The amendments made by subpara- 42 USC 1396r
graph (A) shall take effect on the date of the enactment of note,
this Act, without regard to whether or not regulations to
implement such amendments have been promulgated.
(8) RESIDENTS' RIGHTS TO REFUSE INTRA-FACILITY TRANSFERS TO
MOVE THE RESIDENT TO A MEDICARE-QUALIFIED PORTION.—Section

1919(c)(1)(A) (42 U.S.C. 1396r(c)(l)(A)) is amended—
(A) by redesignating clause (x) as clause (xi) and by
inserting after clause (ix) the following new clause:
"(x) REFUSAL OF CERTAIN TRANSFERS.—The right to
refuse a transfer to another room within the facility, if
a purpose of the transfer is to relocate the resident
from a portion of the facility that is not a skilled
nursing facility (for purposes of title XVIII) to a portion
of the facility that is such a skilled nursing facility.";
and
(B) by adding at the end the following: "A resident's
exercise of a right to refuse transfer under clause (x) shall
not affect the resident's eligibility or entitlement to medical
assistance under this title or a State's entitlement to Federal medical assistance under this title with respect to
services furnished to such a resident.".
(9) RESIDENT ACCESS TO CUNICAL RECORDS.—Section section ^^
1919(c)(l)(A)(iv) (42 U.S.C. 1396r(c)(l)(A)(iv)) is amended by
inserting before the period at the end the following: "and to
access to current clinical records of the resident upon request by
the resident or the resident's legal representative, within 24
hours (excluding hours occurring during a weekend or holiday)
after making such a request".
(10) INCLUSION OF STATE NOTICE OF RIGHTS IN FACIUTY NOTICE

OF RIGHTS.—Section 1919(c)(l)(B)(ii) (42 U.S.C. 1396r(c)(l)(B)(ii)) is
amended by inserting "including the notice (if any) of the State
developed under subsection (e)(6)" after "in such rights)".
(11) REMOVAL OF DUPLICATIVE REQUIREMENT FOR QUALIFICATIONS OF NURSING HOME ADMINISTRATORS.—Effective on the date

on which the Secretary promulgates standards regarding the
qualifications of nursing facility administrators under section
1919(f)(4) of the Social Security Act—
(A) paragraph (29) of section 1902(a) of such Act (42 U.S.C.
1396a(a)) is repealed; and
(B) section 1908 of such Act (42 U.S.C. 1396g) is repealed.
(12) CLARIFICATION OF NURSE AIDE REGISTRY REQUIREMENTS.—

Section 1919(e)(2) (42 U.S.C. 1396r(e)(2)) is amended—
(A) in subparagraph (A), by striking the period and inserting the following: ", or any individual described in subsec" So in original. Probably should be "Section 1919(cXlXAXiv)".

104 STAT. 1388-218

PUBLIC LAW 101-508—NOV. 5, 1990
tion (fX2XBXii) or in subparagraph (B), (C), or (D) of section
6901(bX4) of the Omnibus Budget Reconciliation Act of
1989."; and
(B) by adding at the end the following new subparagraph:
"(C) PROHIBITION AGAINST CHARGES.—A State may not
impose any charges on a nurse aide relating to the registry
established and maintained under subparagraph (A).".
(13)

CLARIFICATION

ON

FINDINGS

OF

NEGLECT.—Section

1919(gXlXC) (42 U.S.C. 1396r(gXl)(C)) is amended by adding at
the end the following: "A State shall not make a finding that an
individual has neglected a resident if the individual demonstrates that such neglect was caused by factors beyond the
control of the individual.".
(14) TIMING OF PUBUC DISCLOSURE OF SURVEY RESULTS.—Sec-

tion 1919(gX5XAXi) (42 U.S.C. 1396r(gX5XAXi)) is amended by
striking "deficiencies and plans" and inserting "deficiencies,
within 14 calendar days after such information is made available to those facilities, and approved plans".
(15) OMBUDSMAN PROGRAM COORDINATION WITH STATE SURVEY

AND CERTIFICATION AGENCIES.—SectioD 1919(gX5XB) (42 U.S.C.
1396r(gX5XB)) is amended by striking "with respect" and inserting "or of any adverse action taken against a nursing facility
under paragraphs (1), (2), or (3) of subsection (h), with respect'.
(16) DENIAL OF PAYMENT OF LEGAL FEES FOR FRIVOLOUS UTIGATION.—

42 use 1396b
•*<>**•
42USC1396r

"<***•

(A) I N GENERAL.—Section 1903(i) (42 U.S.C. 1396b(i)), [[as
amended by section X???(aXlXB) of this Act]], is amended—
(i) by striking "or" at the end of paragraph (9);
(ii) by striking the period at the end of paragraph (10)
and inserting "; or"; and
(iii) by inserting after paragraph (10) the following
new paragraph:
"(11) with respect to any amount expended to reimburse (or
otherwise compensate) a nursing facility for pa3maent of legal
expenses associated with any action initiated by the facility that
is dismissed on the basis that no reasonable legal ground existed
for the institution of such action."
(B) EFFECTIVE DATE.—The amendments made by subparagraph (A) shall apply with respect to actions initiated on or
after the date of the enactment of this Act.
(17) PROVISIONS RELATING TO STAFFING REQUIREMENTS.—
(A) MAINTAINING REGULATORY STANDARDS FOR CERTAIN

SERVICES.—Any regulations promulgated and applied by the
Secretary of Health and Human Services after the date of
the enactment of the Omnibus Budget Reconciliation Act of
1987 with respect to services described in clauses (ii), (iv),
and (v) of section 1919(bX4XA) of the Social Security Act
shall include requirements for providers of such services
that are at least as strict as the requirements applicable to
providers of such services prior to the enactment of the
Omnibus Budget Reconciliation Act of 1987.
(B) STUDY ON STAFFING REQUIREMENTS IN NURSING FACIU-

TiES.—The Secretary shall conduct a study and report to
Congress no later than January 1, 1992, on the appropriateness of establishing minimum caregiver to resident ratios
and minimum supervisor to caregiver ratios for skilled
nursing facilities serving as providers of services under title

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-219

XVIII of the Social Security Act and nursing facilities
receiving payments under a State plan under title XIX of
the Social Security Act, and shall include in such study
recommendations regarding appropriate minimum ratios.
(18)

STATE REQUIREMENTS RELATING TO PROGRAMS.—Amend

1919(eXlXA) to strike "under clause (i) or (ii) of subsection 42 USC I396r
(fX2XA) and insert "under subsection (fK2)".
(19) EFFECTIVE DATES.—Except as provided in paragraphs (7), 42 u s e 1396a
(11), and (16), the amendments made by this subsection shall note.
take effect as if they were included in the enactment of the
Omnibus Budget Reconciliation Act of 1987.

TITLE V—INCOME SECURITY, HUMAN
RESOURCES, AND RELATED PROGRAMS
Subtitle A—Human Resource and Family
Policy Amendments
SEC. 5001. TABLE OF CONTENTS.
Sec. 5001. Table of contents.
Sec. 5002. Amendment of Social Security Act.
CHAPTER 1—CHILD SUPPORT ENFORCEMENT

Sec. 5011. Extension of IRS intercept for non-AFDC families.
Sec. 5012. Extension of Commission on Interstate Child Support.
Sec. 5013. Child support enforcement waiver.
CHAPTER 2—UNEMPLOYMENT COMPENSATION

Sec. 5021. "Reed Act" provisions made permanent.
'

CHAPTER 3—SUPPLEMENTAL SECURITY INCOME

Sec. 5031. Exclusion from income and resources of victims' compensation payments.
Sec. 5032. Attainment of age 65 not to serve as basis for termination of eligibility
under section 1619(b).
Sec. 5033. Exclusion from income of impairment-related work expenses.
Sec. 5034. Treatment of royalties and honoraria as earned income.
Sec. 5035. Certain State relocation assistance excluded from SSI income and
resources.
Sec. 5036. Evaluation of child's disability by pediatrician or other qualified
specialist.
Sec. 5037. Reimbursement for vocational rehabilitation services furnished during
certain months of nonpayment of SSI benefits.
Sec. 5038. Extension of period of presumptive eligibility for benefits.
Sec. 5039. Continuing disability or blindness reviews not required more than once
annually.
Sec. 5040. Concurrent SSI and food stamp applications by institutionalized
individuals.
Sec. 5041. Notification of certain individuals eligible to receive retroactive benefits.
CHAPTER 4—AID TO FAMIUES wrrn DEPENDENT CHILDREN

Sec. 5051. Optional monthly reporting and retrospective budgeting.
Sec. 5052. Children receiving foster care maintenance or adoption assistance payments not treated as member of family unit for purposes of determining eligibility for, or amount of, AFDC benefit.
Sec. 5053. Elimination of term "legal guardian".
Sec. 5054. Reporting of child abuse and neglect.

104 STAT. 1388-220

PUBLIC LAW 101-508—NOV. 5, 1990

Sec. 5055. Disclosure of information about AFDC applicants and recipients authorized for purposes directly connected to State foster care and adoption
assistance programs.
Sec. 5056. Repatriation.
Sec. 5057. Technical amendment to National Commission on Children.
Sec. 5058. Extension of prohibition against implementation of proposed regulations
on emergency assistance and AFDC special needs.
Sec. 5059. Amendments to Minnesota Family Investment Plan demonstration.
Sec. 5060. Good cause exception to required cooperation for transitional child care
benefits.
Sec. 5061. Technical corrections regarding penalty for failure to participate in
JOBS program.
Sec. 5062. Technical corrections regarding AFDC-UP eligibility requirements.
Sec. 5063. Family Support Act demonstration projects.
Sec. 5064. Study of JOBS programs operated by Indian Tribes and Alaska Native
organizations.
CHAPTER 5—CHILD WELFARE AND FOSTER CARE

Sec. 5071. Accounting for administrative costs.
Sec. 5072. Section 427 triennial reviews.
Sec. 5073. Independent living initiatives.
CHAPTER 6—CHILD CARE

Sec. 5081. Grants to States for child care.
Sec. 5082. Child care and development block grant.
SEC. 502. AMENDMENT OF SOCIAL SECURITY ACT.

Except as otherwise expressly provided, wherever 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 Social
Security Act.
CHAPTER 1—CHILD SUPPORT ENFORCEMENT
SEC. 5011. EXTENSION OF IRS INTERCEPT FOR NON-AFDC FAMILIES.
(a) AUTHORITY OF STATES To REQUEST WITHHOLDING OF FEDERAL
TAX REFUNDS FROM PERSONS OWING PAST DUE CHILD SUPPORT.—

Section 464(aX2XB) (42 U.S.C. 664(a)(2XB)) is amended by striking
", and before January 1,1991".
Ot)) WITHHOLDING OF FEDERAL TAX REFUNDS AND COLLECTION OF
PAST DUE CHILD SUPPORT ON BEHALF OF DISABLED CHILD OF ANY
AGE, AND OF SPOUSAL SUPPORT INCLUDED IN ANY CHILD SUPPORT

ORDER.—Section 464(c) (42 U.S.C. 664(c)) is amended—
(1) in paragraph (2), by striking "minor child." and inserting
"qualified child (or a qualified child and the parent with whom
the child is living if the same support order includes support for
the child and the parent)."; and
(2) by adding at the end the following:
"(3) For purposes of paragraph (2), the term 'qualified child'
means a child—
"(A) who is a minor; or
"(BXi) who, while a minor, was determined to be disabled
under title II or XVI; and
"(ii) for whom an order of support is in force.".
42 use 664 note.
(c) EFFECTIVE DATE.—The amendments made by subsection (b)
shall take effect on January 1,1991.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-221

SEC. 5012. EXTENSION OF COMMISSION ON INTERSTATE CHILD SUPPORT.

(a) REAUTHORIZATION.—Section 126 of the Family Support Act of
1988 (42 U.S.C. 666 note; Public Law 100-485) is amended—
(1) in subsection (d)—
(A) in paragraph (1), by striking "1990" and inserting
"1991"; and
(B) in paragraph (2), by striking "1991" and inserting
"1992";
(2) in subsection (e), by adding at the end the following:
"(5)(A) Individuals may be appointed to serve the Commission
without regard to the provisions of title 5 that govern appointments
in the competitive service, without regard to the competitive service,
and without regard to the classification system in chapter 53 of title
5, United States Code. The chairman of the Commission may fix the
compensation of the Executive Director at a rate that shall not
exceed the maximum rate of the basic pay payable under GS-18 of
the General Schedule as contained in title 5, United States Code.
"(B) The Executive Director may appoint and fix the compensation of such additional personnel as the Executive Director considers
necessary to carry out the duties of the Commission. Such personnel
may be appointed without regard to the provisions of title 5, United
States Code, governing appointments in the competitive service, and
may be paid without regard to the provisions of chapter 51 and
subchapter III of chapter 53 of such title relating to classification
and General Schedule pay rates.
"(C) On the request of the chairman, the head of any Federal
department or agency may detail, on a reimbursable basis, any of
the personnel of such agency to the Commission to assist the
Commission in carrying out its duties under this section without
regard to section 3341 of title 5, United States Code."; and
(3) in subsection (fKD, by striking "1991" and inserting
"1992".
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 42 USC 666 note,
shall take effect on the date of the enactment of this Act.
SEC. 5013. CHILD SUPPORT ENFORCEMENT WAIVER.

(a) IN GENERAL.—The Secretary of Health and Human Services (in
this section referred to as the "Secretary") shall enter into an
agreement with the State of Texas waiving (with respect to cases
where a court has issued an order for child support) the following
requirements under the State plan for child and spousal support
that are described in subparagraphs (A) and (B) of section 454(6) of
the Social Security Act, with respect to a project, based in the
county of Bexar, of delinquency monitoring for child support
enforcement:
(1) The submission of a written application by an individual
requesting child support collection services.
(2) The payment of an application fee with respect to an
application for such services.
(b) CONTENTS OF WAIVER AGREEMENT.—In the agreement between
the Secretary and the State of Texas described in subsection (a), the
waiver granted under such agreement shall provide the following:
(1) The waiver shall apply only with respect to the provision
of child support collection services.
(2) Before the provision of any child support collection services, the organizational unit designated under section 454(3) of
the Social Security Act (in this section referred to as the "State

104 STAT. 1388-222

PUBLIC LAW 101-508—NOV. 5, 1990

agency") shall provide written notification to each custodial
parent of the right of such parent to refuse such services.
(3) The State shall ensure that, to the extent possible, each
parent of the child on behalf of whom such services are provided
(regardless of whether such parent is a custodial parent) is to
receive written notice at the time such services are provided,
explaining—
(A) the legal rights of parents with respect to the child
support collection services provided; and
(B) the responsibilities of the State agency in providing
such child support collection services (including the monitoring of delinquent child support payments).
(4) A case record shall be deemed to have been established by
the State agency upon notification of a custodial parent of the
option to receive the child support enforcement services described in this subsection.
(5) Any period of enforcement by the State agency under this
section with respect to the collection of delinquent child support
payments shall be deemed to begin on the first day of any such
delinquency.
(d) STUDY AND REPORT.—
(1) STUDY REQUIRED.—As a condition precedent to granting

the waiver described in subsection (a), the State agency shall
agree to conduct a study of the cost-effectiveness to the Federal
Government and to the State of Texas of the monitoring of
delinquent child support payments under the State plan under
section 454 of the Social Security Act.
(2) CONDUCT OF STUDY.—

(A) IN GENERAL.—The study required by paragraph (1)
shall be conducted in accordance with the criteria established by the Secretary in accordance with subparagraph
(B).
(B) CRITERIA.—Not later than February 1, 1991, the Secretary shall establish the criteria required by subparagraph
(A), in consultation with—
(i) 1 or more representatives of organizations representing child support administrators;
(ii) 1 or more representatives of the General Accounting Office;
(iii) 1 or more representatives of the State of Texas;
and
(iv) such other individuals or organizations with
experience in the evaluation of child support programs,
as the Secretary may designate.
(3) REPORT.—Not later than 3 months after the expiration of
the waiver described in subsection (a), the State agency shall
submit to the Secretary and to the Congress a report that
includes the findings of the study required by this subsection.
(e) DURATION OP WAIVER.—The waiver described in subsection (a)
shall be effective for not more than 2 years.
(f) MATCHING PAYMENTS.—
(1) GENERAL EXPENDITURES.—In lieu of any payment under

section 455 of the Social Security Act with respect to expenditures of the State of Texas to carry out child support enforcement programs with respect to which the waiver described in
subsection (a) applies, the Secretary shall pay the State an
amount equal to the lesser of—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-223

(A) 66 percent of such expenditures; or
(B) $500,000.
(2) STUDY EXPENDITURES.—In lieu of any payment under section 455 of the Social Security Act with respect to expenditures
of the State of Texas to carry out the study required by subsection (d), the Secretary shall pay the State an amount equal to 66
percent of such expenditures.
CHAPTER 2—UNEMPLOYMENT COMPENSATION
SEC. 5021. AMOUNTS TRANSFERRED TO STATE UNEMPLOYMENT COMPENSATION PROGRAM ACCOUNTS.

(a) ALLOCATION OF AMOUNTS.—Paragraph (2) of section 903(a) (42
U.S.C. 1103(a)(2)) is amended to read as follows:
"(2) Each State's share of the funds to be transferred under this
subsection as of any October 1—
"(A) shall be determined by the Secretary of Labor and
certified by such Secretary to the Secretary of the Treasury
before such date, and
"(B) shall bear the same ratio to the total amount to be so
transferred as—
"(i) the amount of wages subject to tax under section 3301
of the Internal Revenue CJode of 1986 during the preceding
calendar year which are determined by the Secretary of
Labor to be attributable to the State, bears to
"(ii) the total amount of wages subject to such tax during
such year."
(b) USE OF TRANSFERRED AMOUNTS.—Paragraph (2) of section

903(c) (42 U.S.C. 1103(c)(2)) is amended—
(1) by striking "and" at the end of subparagraph (C), and
(2) by striking so much of such paragraph as follows subparagraph (C) and inserting the following:
"(DXi) the appropriation law limits the total amount which
may be obligated under such appropriation at any time to an
amount which does not exceed, at any such time, the amount by
which—
"(I) the aggregate of the amounts transferred to the
account of such State pursuant to subsections (a) and (b),
exceeds
"(II) the aggregate of the amounts used by the State
pursuant to this subsection and charged against the
amounts transferred to the account of such State, and
"(ii) for purposes of clause (i), amounts used by a State for
administration shall be chargeable against transferred amounts
at the exact time the obligation is entered into, and
"(E) the use of the money is accounted for in accordance with
standards established by the Secretary of Labor."
(c) EFFECTIVE DATE.—The amendments made by this section shall 42 USC 1103
apply to fiscal years beginning after the date of the enactment of "°*®'
this Act.

104 STAT. 1388-224

PUBLIC LAW 101-508—NOV. 5, 1990
CHAPTER 3—SUPPLEMENTAL SECURITY INCOME

SEC. 5031. EXCLUSION FROM INCOME AND RESOURCES OF VICTIMS' COMPENSATION PAYMENTS.
(a) EXCLUSION FROM INCOME.—Section 1612(b) (42 U.S.C. 1382a(b))

is amended—
(1) by striking "and" at the end of paragraph (15);
(2) by striking the period at the end of parsigraph (16) and
inserting "; and"; and
(3) by adding at the end the following:
"(17) any amount received by such individual (or such spouse)
from a fund established by a State to aid victims of crime.".
(b) EXCLUSION FROM RESOURCES.—Section 1613(a) (42 U.S.C.
1382b(a)) is amended—
(1) by striking "and" at the end of paragraph (7);
(2) by striking the period at the end of paragraph (8) and
inserting "; and"; and
(3) by adding at the end the following:
"(9) for the 9-month period beginning after the month in
which received, any amount received by such individual (or
such spouse) from a fund established by a State to aid victims of
crime, to the extent that such individual (or such spouse) demonstrates that such amount w£is paid as compensation for expenses incurred or losses suffered as a result of a crime.".
(c) VICTIMS COMPENSATION AWARD NOT REQUIRED TO BE ACCEPTED

42 u s e 1382a
note.

AS CONDITION OF RECEIVING BENEFITS.—Section 1631(a) (42 U.S.C.
1383(a)) is amended by adding at the end the following:
"(9) Benefits under this title shall not be denied to any individual
solely by reason of the refusal of the individual to accept an amount
offered as compensation for a crime of which the individual was a
victim,".
(d) EFFECTIVE DATE.—The amendments made by this section shall
apply with respect to benefits for months beginning on or after the
first day of the 6th calendar month following the month in which
this Act is enacted.
SEC. 5032. ATTAINMENT OF AGE 65 NOT TO SERVE AS BASIS FOR TERMINATION OF ELIGIBILITY UNDER SECTION 1619(b).

42 u s e 1382h.
42 u s e 1382h
note.

(a) IN GENERAL.—Section 1619(bXl) (42 U.S.C. 1392h(b)(l)) is
amended by striking "under age 65".
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply with respect to benefits for months beginning on or after
the first day of the 6th calendar month following the month in
which this Act is enacted.
SEC. 5033. EXCLUSION FROM INCOME OF IMPAIRMENT-RELATED WORK
EXPENSES.

42 u s e 1382a
note.

(a)
IN
GENERAL.—Section
1612(b)(4)(B)(ii)
(42
U.S.C.
1382a(b)(4XBXii)) is amended by striking "(for purposes of determining the amount of his or her benefits under this title and of
determining his or her eligibility for such benefits for consecutive
months of eligibility after the initial month of such eligibility)".
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to benefits payable for calendar months beginning after
the date of the enactment of this Act.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-225

SEC. 5034. TREATMENT OF ROYALTIES AND HONORARIA AS EARNED
INCOME.

(a) IN GENERAL.—Section 1612(a) (42 U.S.C. 1382a(a)) is amended—
(1) in paragraph (1)—
(A) by striking "and" at the end of subparagraph (C); and
(B) by adding at the end the following:
"(E) any royalty earned by an individual in connection with
any publication of the work of the individual, and that portion
of any honorarium which is received for services rendered;
and"; and
(2) in paragraph (2)(F), by inserting "not described in paragraph (1)(E)" before the period.
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 42 USC 1382a
shall apply with respect to benefits for months beginning on or after "°*®the first day of the 13th calendar month following the month in
which this Act is enacted.
SEC. 5035. CERTAIN STATE RELOCATION ASSISTANCE EXCLUDED FROM
SSI INCOME AND RESOURCES.

(a) EXCLUSION FROM INCOME.—Section 1612(b) (42 U.S.C. 1382a(b)),
as amended by section 5031(a) of this Act, is a m e n d e d ^
(1) by striking "and" at the end of paragraph (16);
(2) by striking the period at the end of paragraph (17) and
inserting a semicolon; and
(3) by inserting after paragraph (17) the following:
"(18) relocation assistance provided by a State or local government to such individual (or such spouse), comparable to assistance provided under title II of the Uniform Relocation
Assistance and Real Property Acquisitions Policies Act of 1970
which is subject to the treatment required by section 216 of such
Act".
(b) EXCLUSION FROM RESOURCES.—Section 1613(a) (42 U.S.C.
1382b(a)), as amended by section 5031(b) of this Act, is amended—
(1) by striking "and" at the end of paragraph (8);
(2) by striking the period at the end of paragraph (9) and
inserting "; and"; and
(3) by inserting after paragraph (9) the following:
"(10) for the 9-month period beginning after the month in
which received, relocation assistance provided by a State or
local government to such individual (or such spouse), comparable to assistance provided under title II of the Uniform
Relocation Assistance and Real Property Acquisitions Policies
Act of 1970 which is subject to the treatment required by section
216 of such Act.".
(c) EFFECTIVE DATE.—The amendments made by this section shall 42 USC 1382a
apply with respect to benefits for calendar months beginning in the "o**3-year period that begins on the first day of the 6th calendar month
following the month in which this Act is enacted.
SEC. 5036. EVALUATION OF CHILD'S DISABILITY BY PEDIATRICIAN OR
OTHER QUALIFIED SPECIALIST.

(a) I N GENERAL.—Section 1614(a)(3) (42 U.S.C. 1382c(a)(3)) is
amended by adding at the end the following:
"(H) In making any determination under this title with respect to
the disability of a child who has not attained the age of 18 years and
to whom section 221(h) does not apply, the Secretary shall make
reasonable efforts to ensure that a qualified pediatrician or other

104 STAT. 1388-226

42 u s e 1382c
note.

PUBLIC LAW 101-508—NOV. 5, 1990

individual who specializes in a field of medicine appropriate to the
disability of the child (as determined by the Secretary) evaluates the
case of such child.".
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to determinations made 6 or more months after the date
of the enactment of this Act.
SEC. 5037. REIMBURSEMENT FOR VOCATIONAL REHABILITATION SERVICES
FURNISHED
DURING
CERTAIN
MONTHS OF
NONPAYMENT OF SSI BENEFITS.

42 u s e 1382d
note.

(a) I N GENERAL.—Section 1615 (42 U.S.C. 1382d) is amended by
adding at the end the following:
"(e) The Secretary may reimburse the State agency described in
subsection (d) for the costs described therein incurred in the provision of rehabilitation services—
"(1) for any month for which an individual received—
"(A) benefits under section 1611 or 1619(a);
"(B) assistance under section 1619(b); or
"(C) a federally administered State supplementary payment under section 1616 of this Act or section 212(b) of
Public Law 93-66; and
"(2) for any month before the 13th consecutive month for
which an individual, for a reason other than cessation of disability or blindness, was ineligible for—
"(A) benefits under section 1611 or 1619(a);
"(B) assistance imder section 1619(b); or
"(C) a federally administered State supplementary payment under section 1616 of this Act or section 212(b) of
Public Law 93-66.".
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect on the date of the enactment of this Act and shall
apply to claims for reimbursement pending on or after such date.
SEC. 5038. EXTENSION OF PERIOD OF PRESUMPTIVE ELIGIBILITY FOR
BENEFITS.

42 u s e 1383
note.

(a) I N GENERAL.—Section 1631(aX4XB) (42 U.S.C. 1383(aX4XB)) is
amended by striking " 3 " and inserting "6".
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply with respect to benefits for months beginning on or after
the first day of the 6th calendar month following the month in
which this Act is enacted.
SEC. 5039. CONTINUING DISABILITY OR BLINDNESS REVIEWS NOT REQUIRED MORE THAN ONCE ANNUALLY.

(a) I N GENERAL ««—Section 1619 (42 U.S.C. 1382h) is amended—
(1) by redesignating subsection (c) as subsection (d); and
(2) by inserting after subsection (b) the following:
"(c) Subsection (aX2) and section 1631(jX2XA) shall not be construed, singly or jointly, to require more than 1 determination
during any 12-month period with respect to the continuing disability
or blindness of an individual.".
(b) CONFORMING AMENDMENT.—Section 1631(jX2XA) (42 U.S.C.
42 u s e 1382h
note.

1383(jX2XA)) is amended by inserting "(other than subsection (c)
thereof)" after "1619" the 1st place such term appears.
(c) EFFECTIVE DATE.—The amendments made by this section shall
take effect on the date of the enactment of this Act.
' So in original. Probably should be "GKNERAL.—".

PUBLIC LAW 101-508—NOV. 5, 1990
SEC. 5040. CONCURRENT SSI AND FOOD STAMP
INSTITUTIONALIZED INDIVIDUALS.

104 STAT. 1388-227

APPLICATIONS BY

Section 1631 (42 U.S.C. 1383) is amended—
(1) in subsection (m), by striking the second sentence; and
(2) by adding at the end the following:
" C O N C U R R E N T SSI AND FOOD STAMP APPLICATIONS BY
INSTITUTIONALIZED INDIVIDUALS

"(n) The Secretary and the Secretary of Agriculture shall develop
a procedure under which an individual who applies for supplemental security income benefits under this subsection shall also be
permitted to apply at thp same time for participation in the food
stamp program authorized under the Food Stamp Act of 1977 (7
U.S.C. 2011 et seq.).".
SEC. 5041. NOTIFICATION OF CERTAIN INDIVIDUALS ELIGIBLE TO RECEIVE RETROACTIVE BENEFITS.

In notifying individuals of their eligibility to receive retroactive
supplemental security income benefits as a result of Sullivan v.
Zebley, 110 S. Ct. 2658 (1990), the Secretary shall include written
notice, in language that is easily understandable, explaining—
(1) the 6-month limitation on the exclusion from resources
under section 1613(a)(7) of the Social Security Act (42 U.S.C.
1382b(a)(7));
(2) the potential effects under title XVI of the Social Security
Act, attributable to the receipt of such payment, including—
(A) potential discontinuation of eligibility; and
(B) potential reductions in the amount of benefits;
(3) the possibility of establishing a trust account that would
not be considered as income or resources for the purposes of
such title if the trust met certain conditions; and
(4) that legal assistance in establishing such a trust may be
available through legal referral services offered by a State or
local bar association, or through the Legal Services Corporation.
CHAPTER 4—AID TO FAMILIES WITH DEPENDENT
CHILDREN
SEC. 5051. OPTIONAL MONTHLY
BUDGETING.

REPORTING

AND

RETROSPECTIVE

(a) OPTIONAL MONTHLY REPORTING.—Section 402(a)(14) (42 U.S.C.
602(aX14)) is amended-(1) by striking "with respect to" and all that follows through
"(A) provide" and insert "provide, at the option of the State and
with respect to such category or categories as the State may
select and identify in its State plan (A)";
(2) by striking "(with the prior approval of the Secretary in
recent work history and earned income cases)"; and
(3) by striking "upon a determination" and all that follows
through "paragraph .
(b) OPTIONAL RETROSPECTIVE BUDGETING.—Section 402(a)(13) (42
U.S.C. 602(a)(13)) is amended by striking all that precedes subparagraph (A) and inserting the following:
"(13) at the option of the State, but only with respect to any
one or more categories of families required to report monthly to
the State agency pursuant to paragraph (14), provide that—".

4

104 STAT. 1388-228
42 use 602 note.

PUBLIC LAW 101-508—NOV. 5, 1990

(c) EFFECTIVE DATE.—The amendments made by this section shall
take effect with respect to reports pertaining to, or aid payable for,
months beginning in or after October 1990.
SEC. 5052. CHILDREN RECEIVING FOSTER CARE MAINTENANCE OR ADOPTION ASSISTANCE PAYMENTS NOT TREATED AS MEMBER OF
FAMILY UNIT FOR PURPOSES OF DETERMINING ELIGIBILITY
FOR, OR AMOUNT OF, AFDC BENEFIT.
(a) I N GENERAL.—Part A of title IV (42 U.S.C. 601 et seq.) is
amended by inserting after section 408 the following:
" E X C L U S I O N F R O M AFDC UNIT OF CHILD FOR WHOM FEDERAL, STATE, OR
LOCAL FOSTER CARE MAINTENANCE OR ADOPTION ASSISTANCE PAYMENTS ARE MADE

42 use 609.

"SEC. 409. (a) Notwithstanding anyt other provision of this title
(other than subsection Qo))—
"(1) a child with respect to whom foster care maintenance
payments or adoption assistance payments are made under part
E or under State or local law shall not, for the period for which
such payments are made, be regarded as a member of a family
for purposes of determining the amount of benefits of the family
under this part; and
"(2) the income and resources of such child shall be excluded
from the income and resources of a family under this part.
"(b) Subsection (a) shall not apply in the case of a child with
respect to whom adoption assistance payments are made under part
E or under State or local law, if application of such subsection would
reduce the benefits under this part of the family of which the child
would otherwise be regarded as a member.".
(h) CONFORMING REPEAL.—Section 478 (42 U.S.C. 678) is hereby

42 use 609 note.

42 use 602 note.

repealed.
(c) EFFECTIVE DATE.—The amendment made by subsection (a) and
the repeal made by subsection (b) shall apply with respect to benefits
for months beginning on or after the first day of the 6th calendar
month following the month in which this Act is enacted.
SEC. 5053. ELIMINATION OF TERM "LEGAL GUARDIAN".
(a) I N GENERAL.—Section 402(aX39) (42 U.S.C. 602(a)(39)) is
amended—
(1) by striking "or legal guardian"; and
(2) by striking "or legal guardians".
(b) EFFECTIVE DATE.—The amendments made by subsection (a)
shall take effect on the date of the enactment of this Act.
SEC. 5054. REPORTING OF CHILD ABUSE AND NEGLECT. .
(a) CONCERNING AFDC APPUCANTS AND RECIPIENTS.—
(1) I N GENERAL.—Section 402(a)(16) (42 U.S.C. 602(a)(16)) is
amended to read £is follows:
"(16) provide that the State agency will—
"(A) report to an appropriate agency or official, known or
suspected instances of physical or mental injury, sexual
abuse or exploitation, or negligent treatment or maltreatment of a child receiving aid under this part under circumstances which indicate that the child's health or
welfare is threatened thereby; and

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-229

"(B) provide such information with respect to a situation
described in subparagraph (A) as the State agency may
have;".
(2) CONFORMING AMENDMENTS.—Section 402(a)(9) (42 U.S.C.

602(a)(9)) is amended—
(A) in subparagraph (C), by striking "and"; and
(B) by inserting ", and (E) reporting and providing
information pursuant to paragraph (16) to appropriate
authorities with respect to known or suspected child abuse
or neglect" before the 1st semicolon.
(b) CONCERNING
ASSISTANCE

RECIPIENTS OF FOSTER

CARE

OR ADOPTION

(1) I N GENERAL.—Section 471(a)(9) (42 U.S.C. 671(a)(9)) is
amended to read as follows:
"(9) provides that the State agency will—
"(A) report to an appropriate agency or official, known or
suspected instances of physical or mental injury, sexual
abuse or exploitation, or negligent treatment or maltreatment of a child receiving aid under part B or this part
under circumstances which indicate that the child's health
or welfare is threatened thereby; and
"(B) provide such information with respect to a situation
described in subparagraph (A) as the State agency may
have;".
(2) CONFORMING AMENDMENTS.—Section 471(a)(8) (42 U.S.C.

671(a)(8)) is amended—
(A) in subparagraph (C), by striking "and"; and
(B) by inserting ", and (E) reporting and providing
information pursuant to paragraph (9) to appropriate
authorities with respect to known or suspected child abuse
or neglect" before the 1st semicolon.
(c) EFFECTIVE DATE.—The amendments made by this section shall 42 USC 602 note,
apply with respect to benefits for months beginning on or after the
first day of the 6th calendar month following the month in which
this Act is enacted.
SEC. 5055. DISCLOSURE OF INFORMATION ABOUT AFDC APPLICANTS AND
RECIPIENTS AUTHORIZED FOR PURPOSES DIRECTLY CONNECTED TO STATE FOSTER CARE AND ADOPTION ASSISTANCE PROGRAMS.

(a) I N GENERAL.—Section 402(a)(9)(A) (42 U.S.C. 602(a)(9)(A)) is
amended by striking "or D" and inserting ", D, or E".
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 42 USC 602 note,
shall take effect on the date of the enactment of this Act.
SEC. 5056. REPATRIATION.

(a) I N GENERAL.—Section 1113 (42 U.S.C. 1313) is amended—
(1) in subsection (d), by striking "on or after October 1, 1989"
and inserting "after September 30,1991"; and
(2) by adding at the end the following:
"(e)(1) The Secretary may accept on behalf of the United States
gifts, in cash or in kind, for use in carrying out the program
established under this section. Gifts in the form of cash shall be
credited to the appropriation account from which this program is
funded, in addition to amounts otherwise appropriated, and shall
remain available until expended.

104 STAT. 1388-230

42 use 1313
note.

PUBLIC LAW 101-508—NOV. 5, 1990

"(2) Gifts accepted under paragraph (1) shall be available for
obligation or other use by the United States only to the extent and
in the amounts provided in appropriation Acts.".
(b) EFFECTIVE DATE.—The amendments made by subsection (a)
shall be effective for fiscal years beginning after September 30,1989.
SEC. 5057. TECHNICAL AMENDMENT TO NATIONAL COMMISSION ON
CHILDREN.

Section 1139(d) (42 U.S.C. 1320b-9(d)) is amended in the matter
preceding paragraph (1), by striking "an interim report no later
than March 31, 1991, and a final report no later than September 30,
1990" and inserting "an interim report no later than September 30,
1990, and a final report no later than March 31,1991".
SEC. 5058. EXTENSION OF PROHIBITION AGAINST IMPLEMENTATION OF
PROPOSED REGULATIONS ON EMERGENCY ASSISTANCE AND
AFDC SPECIAL NEEDS.

Section 8005 of the Omnibus Budget Reconciliation Act of 1989 (42
U.S.C. 606 note) is amended in each of subsections (a)(2) and (c) by
striking "1990" and inserting "1991".
SEC. 5059. AMENDMENTS TO MINNESOTA FAMILY INVESTMENT PLAN
DEMONSTRATION.

Section 8015 of the Omnibus Budget Reconciliation Act of 1989 (42
U.S.C. 602 note) is amended—
(1) in subsection (a), by striking "part A" and inserting "parts
A and F";
(2) in subsection 03)(3), by striking "(e)" and inserting "(d)";
(3) in subsection (b)(6), by inserting "or that is assigned to and
found eligible for the project" after "in the project";
(4) in subsection (b)(8)(B)(ii), by inserting "(except that the age
of the youngest child may he age 1 under the project even if the
State plan specifies age 3)" after "such compliance";
(5) in subsection (b)(8)(B)(ii)(I), by inserting "and" after the
semicolon;
(6) in subsection (b)(8)(B)(ii), by striking "; and" after "age of 1
year" and all that follows through the end of subclause (III) and
inserting "(except that, in a 2-parent family, this clause applies
only to 1 parent).";
(7) by amending subsection (b)(9) to read as follows:
"(9) AVAILABILITY OF EDUCATION, EMPLOYMENT, AND TRAINING

SERVICES.—The State will make available education, employment, and training services equivalent to those services available under the State plan approved under part F of title IV of
the Social Security Act to families required to enter into and
comply with a contract with a county agency under the 1989
Minnesota Laws, section 10 of article 5 of chapter 282.";
(8) in subsection (b)(10)(A)—
(A) by inserting ", except when a sanction is implemented
under the 1989 Minnesota Laws, subdivision 3 of section 10
of article 5 of chapter 282," after "ensure that"; and
(B) by striking "cash";
(9) in subsection (b), by adding at the end the following:
"(12) LIABILITY FOR COSTS.—For each fiscal year, the Secretary
shall not be liable for any costs related to carrying out the
project in excess of those that the Secretary would have been

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-231

liable for had the project not been implemented, except for costs
for evaluating the project.";
(10) in subsection (c)(1)(B), by striking "50" and inserting "25";
(11) in subsection (c)(2), by striking "part A" and inserting
"parts A and F";
(12) in subsection (dXl)(B)(ii)—
(A) by inserting "except when a sanction is implemented
under the 1989 Minnesota Laws, subdivision 3 of section 10
of article 5 of chapter 282," before "permit"; and
(B) by striking "cash";
(13) in subsection (d)(l)(BXiii), by striking "section 402(aX19)(C)
of such Act" and inserting "subparagraph (C), (D), or (E) of
section 402(a)(19) of such Act (except that the exemption for a
parent with a child under 1 year of age need not be specified in
the State plan)"; and
(14) by adding at the end the following:
"(i) CONSTRUCTION.—For purposes of any Federal, State, or local
law other than part A of title IV of the Social Security Act, the Food
Stamp Act of 1977, or this section—
"(1) families participating in the project shall be considered to
be recipients of aid under such part; and
"(2) cash assistance provided under the project to any such
family and not designated by the State as food assistance shall
be treated as if such assistance were aid received under such
part.".
SEC. 5060. GOOD CAUSE EXCEPTION TO REQUIRED COOPERATION FOR
TRANSITIONAL CHILD CARE BENEFITS.

(a) IN GENERAL.—Section
402(gXlXAXviXII) (42 U.S.C.
602(gXlXAXvi)(II)) is amended to read as follows:
"(II) refused to cooperate with the State in establishing and
enforcing his or her child support obligations, without good cause as
determined by the State agency in accordance with standards prescribed by the Secretary which shall take into consideration the best
interests of the child for whom child care is to be provided.".
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect on the date of the enactment of this Act.
SEC. 5061. TECHNICAL CORRECTIONS REGARDING PENALTY FOR FAILURE TO PARTICIPATE IN JOBS PROGRAM.

(a) IN GENERAL.—Section 407(bXlXB) (42 U.S.C. 607(bXl)(B))) " i s
amended—
(1) in clause (iii)—
(A) by striking "—" and all that follows through "(II)";
and
(B) by striking "and " at the end;
(2) in clause (iv), by striking the period and inserting "; and";
and
(3) by adding at the end the following:
"(v) that, if and for so long as the child's parent described
in subparagraph (AXi), unless meeting a condition of section
402(a)(19XC), is, without good cause, not participating (or
available for participation) in a program under part F, or if
exempt under such section by reason of clause (vii) thereof
or because there has not been established or provided under
part F a program in which such parent can effectively
participate, is not registered with the public employment
' So in original. Probably should be "607(bXlXB))".

42 USC 602 note,

104 STAT. 1388-232

PUBLIC LAW 101-508—NOV. 5, 1990

offices in the State, the needs of such parent shall not be
taken into account in determining the need of such parent's
family under section 402(a)(7), and the needs of such parent's spouse shall not be so taken into account unless such
spouse is participating in such a program, or if not participating solely by reason of section 402(a)(19)(C)(vii) or because there has not been established or provided under part
F a program in which such spouse can effectively participate, is registered with the public employment offices of the
State; and if neither parents' needs are so taken into account, the payment provisions of section 402(aX19)(G)(iXI)
shall apply.".
42 use 607 note.
(b) EFFECTIVE DATE.—The amendments made by subsection (a)
shall take effect at the same time and in the same manner as the
amendments made by title II of the Family Support Act of 1988 take
effect.
SEC. 5062. TECHNICAL CORRECTIONS REGARDING AFDC-UP ELIGIBILITY
REQUIREMENTS.

(a) I N GENERAL.—Section 407(dXl) (42 U.S.C. 607(dXl)) is
amended—
(1) by striking "a calendar quarter (A)" and inserting "(A) a _
calendar quarter";
(2) by striking "or" at the end of subparagraph (A); and
(3) by inserting ", and (C) a calendar quarter ending before
October 1990 in which such individual participated in a community work experience program under section 409 (as in effect for
a State immediately before the effective date for that State of
the amendments made by title II of the Family Support Act of
1988) or the work incentive program established under part C
(as in effect for a State immediately before such effective date)"
before the semicolon.
42 use 607 note.
(b) EFFECTIVE DATE,—The amendments made by subsection (a)
shall take effect on the date of the enactment of this Act.
SEC. 5063. FAMILY SUPPORT ACT DEMONSTRATION PROJECTS.

42 use 1315
note.

Section 505 of the Family Support Act of 1988 (42 U.S.C. 1315; P.L.
100-385) is amended—
(1) in subsection (a), by inserting "in each of the fiscal years
1990,1991, and 1992," before "shall"; and
(2) in subsection (e), by striking "September 30, 1989" and
inserting "September 30 of the fiscal year specified in the
agreement described in subsection (a)".
SEC. 5064. STUDY OF JOBS PROGRAMS OPERATED BY INDIAN TRIBES AND
ALASKA NATIVE ORGANIZATIONS.

(a) IN GENERAL.—Within 180 days after the date of the enactment
of this Act, the Comptroller General of the United States (in this
section referred to as the "Comptroller") shall conduct a study of the
implementation of section 482(i) of the Social Security Act (42 U.S.C.
682(i)) relating to job opportunities and basic skills training programs (in this section referred to as "JOBS programs") operated by
Indian tribes and Alaska Native organizations (as defined in paragraph (5) of such section 482(i)).
(b) REQUIREMENTS FOR STUDY.—In conducting the study described
in subsection (a), the Comptroller shall—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-233

(1) identify any problems associated with the implementation
of section 482(i) of the Social Security Act; and
(2) assess (to the extent practicable) the effectiveness of the
JOBS programs operated by Indian tribes and Alaska Native
organizations.
(c) REPORT.—Upon completion of the study described in subsection
(a), the Comptroller shall submit a report to the appropriate committees of the Congress that includes—
(1) a summary of the findings of the study; and
(2) recommendations with respect to proposed legislation or
changes in administrative policy to improve the effectiveness of
JOBS programs conducted pursuant to section 482(i) of the
Social Security Act.

CHAPTER 5—CHILD WELFARE AND FOSTER CARE
SEC. 5071. ACCOUNTING FOR ADMINISTRATIVE COSTS.

(a) RECLASSIFICATION.—Section 474(a)(3) (42 U.S.C. 674(a)(3)) is
amended by inserting "provision of child placement services and for
the" before "proper and efficient".
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect on the date of the enactment of this Act.

42 USC 674 note,

SEC. 5072. SECTION 427 TRIENNIAL REVIEWS.

(a) AMENDMENTS TO SECTION 10406 OF O B R A 1989.—Section 10406
of the Omnibus Budget Reconciliation Act of 1989 (42 U.S.C. 627
note) is amended—
(1) by striking "1991" and inserting "1992";
(2) by striking "1990" and inserting "1991"; and
(3) in the section heading, by striking "1990" and inserting
"1991".
(b) CONFORMING AMENDMENT.—The item relating to section 10406
in the table of contents appearing immediately after section 10000 of
such Act is amended by striking "1990" and inserting "1991".
SEC. 5073. INDEPENDENT LIVING INITIATIVES.

(a) IN GENERAL.—Section 477(a)(2)(C) (42 U.S.C. 677(a)(2)(C)) is
amended—
(1) by inserting "who has not attained age 21" after "may at
the option of the State also include any child"; and
(2) by striking ", but such child" and all that follows through
"care".
(b) EFFECTIVE DATE.—The amendments made by subsection (a)
shall apply to payments made under part E of title IV of the Social
Security Act for fiscal years beginning in or after fiscal year 1991.
CHAPTER 6~CHILD CARE
SEC. 5081. GRANTS TO STATES FOR CHILD CARE.
(a) RULES GOVERNING PROVISION OF CHILD CARE TO ELIGIBLE FAMI-

LIES.—Section 402 (42 U.S.C. 602) is amended by adding at the end
the following:
"(i)(l) Each State agency may, to the extent that it determines
that resources are available, provide child care in accordance with
paragraph (2) to any low income family that the State determines—
"(A) is not receiving aid under the State plan approved under
this part;

9-194 O - 91 - 21 : QL 3 Part 2

42 USC 677 note,

104 STAT. 1388-234

PUBLIC LAW 101-508—NOV. 5, 1990

"(B) needs such care in order to work; and
"(C) would be at risk of becoming eligible for aid under the
State plan approved under this part if such care were not
provided.
"(2) The State agency may provide child care pursuant to paragraph (1) by—
"(A) providing such care directly;
"(B) arranging such care through providers by use of purchase of service contracts or vouchers;
"(C) providing cash or vouchers in advance to the family;
"(D) reimbursing the family; or
"(E) adopting such other arrangements as the agency deems
appropriate.
"(3)(A) A family provided with child care under paragraph (1)
shall contribute to such care in accordance with a sliding scale
formula established by the State agency based on the family's
ability to pay.
"(B) The State agency shall make payment for the cost of child
care provided under paragraph (1) with respect to a family in an
amount that is the lesser of—
"(i) the actual cost of such care; and
"(ii) the applicable local market rate (as determined by the
State in accordance with regulations issued by the Secretary).
"(4) The value of any child care provided or arranged (or any
amount received £is payment for such care or reimbursement for
costs incurred for the care) under this subsection—
"(A) shall not be treated as income or as a deductible expense
for purposes of any other Federal or federally assisted program
that bases eligibility for or amount of benefits upon need; and
"(B) may not be claimed as an employment-related expense
for purposes of the credit under section 21 of the Internal
Revenue Code of 1986.
"(5) Amounts expended by the State agency for child care under
paragraph (1) shall be treated as amounts for which payment may
be made to a State under section 403(n) only to the extent that—
"(A) such amounts are paid in accordance with paragraph
(3)(B);
"(B) the care involved meets applicable standards of State and
local law;
"(C) the provider of the care—
"(i) in the case of a provider who is not an individual that
provides such care solely to members of the family of the
individual, is licensed, regulated, or registered by the State
or locality in which the care is provided; and
"(ii) allows parental access; and
"(D) such amounts are not used to supplant any other Federal
or State funds used for child care services.
"(6)(AXi) Each State shall prepare reports annually, beginning
with fiscal year 1993, on the activities of the State carried out with
funds made available under section 403(n).
"(ii) The State shall make available for public inspection within
the State copies of each report required by this paragraph, shall
transmit a copy of each such report to the Secretary, and shall
provide a copy of each such report, on request, to any interested
public agency.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-235

"(iii) The Secretary shall annually compile, and submit to the
Congress, the State reports transmitted to the Secretary pursuant to
clause (ii).
"(B) Each report prepared and transmitted by a State under
subparagraph (A) shall set forth with respect to child care services
provided under this subsection—
"(i) showing separately for center-based child care services,
group home child care services, family child care services, and
relative care services, the number of children who received such
services and the average cost of such services;
"(ii) the criteria applied in determining eligibility or priority
for receiving services, and sliding fee schedules;
"(iii) the child care licensing and regulatory (including registration) requirements in effect in the State with respect to
each type of service specified in clause (i); and
"(iv) the enforcement policies and practices in effect in the
State which apply to licensed and regulated child care providers
(including providers required to register).
"(C) Within 12 months after the date of the enactment of this
subsection, the Secretary shall establish uniform reporting requirements for use by the States in preparing the information required
by this paragraph, and make such other provision as may be necessary or appropriate to ensure that compliance with this subsection
will not be unduly burdensome on the States.
"(D) Not later than July 1, 1992, the Secretary shall issue a report
on the implementation of this subsection, based on such information
as as has ^^ been made available to the Secretary by the States.".
(b) PAYMENTS TO STATES.—Section 403 (42 U.S.C. 603) is amended
by adding at the end the following:
"(n)(l) In addition to any payment under subsection (a) or (1), each
State shall be entitled to payment from the Secretary of an amount
equal to the lesser of—
"(A) the Federal medical assistance percentage (as defined in
section 1905(b)) of the expenditures by the State in providing
child care services pursuant to section 402(i), and in administering the provision of such child care services, for any fiscal year;
and
"(B) the limitation determined under paragraph (2) with respect to the State for the fiscal year.
"(2)(A) The limitation determined under this paragraph with
respect to a State for any fiscal year is the amount that bears the
same ratio to the amount specified in subparagraph (B) for such
fiscal year as the number of children residing in the State in the
second preceding fiscal year bears to the number of children residing in the United States in the second preceding fiscal year.
"(B) The amount specified in this subparagraph is—
"(i) $300,000,000 for fiscal year 1991;
"(ii) $300,000,000 for fiscal year 1992;
"(iii) $300,000,000 for fiscal year 1993;
"(iv) $300,000,000 for fiscal year 1994; and
"(v) $300,000,000 for fiscal year 1995, and for each fiscal year
thereafter.
"(C) If the limitation determined under subparagraph (A) with
respect to a State for a fiscal year exceeds the amount paid to the
State under this subsection for the fiscal year, the limitation determined under this paragraph with respect to the State for the
** So in original. Probably should be "information as has".

104 STAT. 1388-236

PUBLIC LAW 101-508—NOV. 5, 1990

immediately succeeding fiscal year shall be increased by the amount
of such excess.
"(3) Amounts appropriated for a fiscal year to carry out this part
shall be made available for payments under this subsection for such
fiscal year.".
(c) AMENDMENTS TO GRANTS TO STATES TO IMPROVE CHILD CARE
LICENSING AND REGISTRATION REQUIREMENTS, AND TO MONITOR
CHILD CARE PROVIDED TO CHILDREN RECEIVING A F D C . —
(1) GRANTS INCREASED AND EXTENDED.—Section 402(gX6)(D) (42

U.S.C. 602(g)(6)(D)) is amended by inserting ", and $50,000,000
for each of fiscal years 1992, 1993, and 1994" before the period.
(2) N E W PURPOSES FOR GRANTS.—Section 402(g)(6)(A) (42 U.S.C.
602(g)(6)(A)) is amended by striking "and to monitor child care
provided to children receiving aid under the State plan approved under subsection (a)" and inserting "to enforce standards with respect to child care provided to children under this
part, and to provide for the training of child care providers".
(3) HALF OF GRANT REQUIRED TO BE EXPENDED FOR TRAINING OF

CHILD CARE PROVIDERS.—Section 402(g)(6) (42 U.S.C. 602(g)(6)) is

amended by adding at the end the following:
"(E) Each State to which the Secretary makes a grant under this
paragraph shall expend not less than 50 percent of the amount of
the grant to provide for the training of child care providers.".
(d) COORDINATION WITH OTHER PROGRAMS FOR CHILDREN.—Section

402(g)(7) (42 U.S.C 602(g)(7)) is amended by inserting "and subsection (i)" after "this subsection".
42 use 602 note.
(e) EFFECTIVE DATE.—Except as otherwise expressly provided, the
amendments made by this section shall take effect on October 1,
1990.
SEC. 5082. CHILD CARE AND DEVELOPMENT BLOCK GRANT.

Chapter 8 of subtitle A of title IV of the Omnibus Budget Reconciliation Act of 1981 (Public Law 97-35) is amended—
(1) by redesignating subchapters C, D, and E, as subchapters
D, E, and F, respectively; and
(2) by inserting after subchapter B the following new
subchapter:
"Subchapter C—Child Care and Development Block Grant

Child Care and
Development
Block Grant Act
of 1990.
42 u s e 9801
note.

"SEC. 658A. SHORT TITLE.

42 u s e 9858.

"SEC. 658B, AUTHORIZATION OF APPROPRIATIONS.

"This subchapter may be cited as the 'Child Care and Development Block Grant Act of 1990'.
"There are authorized to be appropriated to carry out this subchapter, $750,000,000 for fiscal year 1991, $825,000,000 for fiscal year
1992, $925,000,000 for fiscal year 1993, and such sums as may be
necessary for each of the fiscal years 1994 and 1995.

42 u s e 9858a.

"SEC. 658C. ESTABLISHMENT OF BLOCK GRANT PROGRAM.

"The Secretary is authorized to make grants to States in accordance with the provisions of this subchapter.
42 u s e 9858b.

"SEC. 658D. LEAD AGENCY.

"(a) DESIGNATION.—The chief executive officer of a State desiring
to receive a grant under this subchapter shall designate, in an

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-237

application submitted to the Secretary under section 658E, an appropriate State agency that complies with the requirements of subjection (b) to act as the lead agency.
"(b) DUTIES.—

"(1) IN GENERAL.—The lead agency shall—
"(A) administer, directly or through other State agencies,
the financial assistance received under this subchapter by
the State;
"(B) develop the State plan to be submitted to the Secretary under section 658E(a);
"(C) in conjunction with the development of the State
plan as required under subparagraph (B), hold at least one
hearing in the State to provide to the public an opportunity
to comment on the provision of child care services under
the State plan; and
"(D) coordinate the provision of services under this subchapter with other Federal, State and local child care and
early childhood development programs.
"(2) DEVELOPMENT OF PLAN.—In the development of the State
plan described in paragraph (1)(B), the lead agency shall consult
with appropriate representatives of units of general purpose
local government. Such consultations may include consideration
of local child care needs and resources, the effectiveness of
existing child care and early childhood development services,
and the methods by which funds made available under this
subchapter can be used to effectively address local shortages.
"SEC. 658E. APPLICATION AND PLAN.

"(a) APPLICATION.—To be eligible to receive assistance under this
subchapter, a State shall prepare and submit to the Secretary an
application at such time, in such manner, and containing such
information as the Secretary shall by rule require, including—
"(1) an assurance that the State will comply with the requirements of this subchapter; and
"(2) a State plan that meets the requirements of subsection
(0.
"(b) PERIOD COVERED BY PLAN.—The State plan contained in the
application under subsection (a) shall be designed to be implemented—
"(1) during a 3-year period for the initial State plan; and
"(2) during a 2-year period for subsequent State plans.
"(c) REQUIREMENTS OF A PLAN.—
"(1) LEAD AGENCY.—The State

plan shall identify the lead
agency designated under section 658D.
"(2) PouciES AND PROCEDURES.—The State plan shall:
"(A) PARENTAL CHOICE OF PROVIDERS.—Provide assurances
that—
"(i) the parent or parents of each eligible child within
the State who receives or is offered child care services
for which financial assistance is provided under this
subchapter, other than through assistance provided
under paragraph (3XC), are given the option either—
' (I) to enroll such child with a child care provider that has a grant or contract for the provision
of such services; or
"(II) to receive a child care certificate as defined
in section 658P(2);

42 USC 9858c.

104 STAT. 1388-238

PUBLIC LAW 101-508—NOV. 5, 1990
"(ii) in cases in which the parent selects the option
described in clause (i)(I), the child will be enrolled with
the eligible provider selected by the parent to the
maximum extent practicable; and
"(iii) child care certificates offered to parents selecting the option described in clause (i)(II) shall be of a
value commensurate with the subsidy value of child
care services provided under the option described in
clause (i)(I);
except that nothing in this subparagraph shall require a
State to have a child care certificate program in operation
prior to October 1,1992.
"(B) UNLIMITED PARENTAL ACCESS.—Provide Eissurances
that procedures are in effect within the State to ensure that
child care providers who provide services for which assistance is made available under this subchapter afford parents
unlimited access to their children and to the providers
caring for their children, during the normal hours of operation of such providers and whenever such children are in
the care of such providers.
"(C) PARENTAL COMPLAINTS.—Provide assurances that the
State maintains a record of substantiated parental complaints and makes information regarding such parental
complaints available to the public on request.
"(D) CONSUMER EDUCATION.—Provide assurances that
consumer education information will be made available to
parents and the general public within the State concerning
licensing and regulatory requirements, complaint procedures, and policies and practices relative to child care
services within the State.
"(E) COMPUANCE WITH STATE AND LOCAL REGULATORY
REQUIREMENTS.—Provide assurances that—
"(i) all providers of child care services within the
State for which assistance is provided under this subchapter comply with all licensing or regulatory requirements (including registration requirements) applicable
under State and local law; and
"(ii) providers within the State that are not required
to be licensed or regulated under State or local law are
required to be registered with the State prior to payment being made under this subchapter, in accordance
with procedures designed to facilitate appropriate payment to such providers, and to permit the State to
furnish information to such providers, including
information on the availability of health and safety
training, technical assistance, and any relevant
information pertaining to regulatory requirements in
the State, and that such providers shall be permitted to
register with the State after selection by the parents of
eligible children and before such pajrment is made.
This subparagraph shall not be construed to prohibit a
State from imposing more stringent standards and licensing or regulatory requirements on child care providers
within the State that provide services for which assistance
is provided under this subchapter than the standards or
requirements imposed on other child care providers in the
State.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-239

"(F) ESTABUSHMENT OF HEALTH AND SAFETY REQUIREMENTS.—Provide assurances that there are in effect within
the State, under State or local law, requirements designed
to protect the health and safety of children that are applicable to child care providers that provide services for
which assistance is made available under this subchapter.
Such requirements shall include—
"(i) the prevention and control of infectious diseases
(including immunization);
"(ii) building and physical premises safety; and
"(iii) minimum health and safety training appropriate to the provider setting.
Nothing in this subparagraph shall be construed to require
the establishment of additional health and safety requirements for child care providers that are subject to health
and safety requirements in the categories described in this
subparagraph on the date of enactment of this subchapter
under State or local law.
"(G) COMPUANCE WITH STATE AND LOCAL HEALTH AND
SAFETY REQUIREMENTS.—Provide assurances that procedures are in effect to ensure that child care providers
within the State that provide services for which assistance
is provided under this subchapter comply with all applicable State or local health and safety requirements as
described in subparagraph (F).
"(H) REDUCTION IN STANDARDS.—Provide assurances that
if the State reduces the level of standards applicable to
child care services provided in the State on the date of
enactment of this subchapter, the State shall inform the
Secretary of the rationale for such reduction in the annual
report of the State described in section 658K.
(I)

REVIEW

OF STATE

LICENSING

AND REGULATORY

REQUIREMENTS.—Provide assurances that not later than 18
months after the jdate of the submission of the application
under section 658E, the State will complete a full review of
the law applicable to, and the licensing and regulatory
requirements and policies of, each licensing agency that
regulates child care services and programs in the State
unless the State has reviewed such law, requirements, and
policies in the 3-year period ending on the date of the
enactment of this subchapter.
"(J) SUPPLEMENTATION.—Provide assurances that funds
received under this subchapter by the State will be used
only to supplement, not to supplant, the amount of Federal,
State, and local funds otherwise expended for the support of
child care services and related programs in the State.
*(3) USE OF BLOCK GRANT FUNDS.—
"(A) GENERAL REQUIREMENT.—The

State plan shall provide that the State will use the amounts provided to the
State for each fiscal year under this subchapter as required
under subparagraphs (B) and (C).
"(B) CHILD CARE SERVICES.—Subject to the reservation

contained in subparagraph (C), the State shall use amounts
provided to the State for each fiscal year under this subchapter for—
"(i) child care services, that meet the requirements of
this subchapter, that are provided to eligible children

104 STAT. 1388-240

/

PUBLIC LAW 101-508—NOV. 5, 1990
in the State on a sliding fee scale basis using funding
methods provided for in section 658E(c)(2)(A), with
priority being given for services provided to children of
families with very low family incomes (taking into
consideration family size) and to children with special
needs; and
"(ii) activities designed to improve the availability
and quality of child care.
"(C) ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE

AND TO INCREASE THE AVAILABILITY OF EARLY CHILDHOOD
DEVELOPMENT AND BEFORE- AND AFTER-SCHOOL CARE SERVICES.—The State shall reserve 25 percent of the amounts
provided to the State for each fiscal year under this subchapter to carry out activities designed to improve the
quality of child care (as described in section 658G) and to
provide before- and after-school aVid early childhood development services (as described in section 658H).
"(4) PAYMENT RATES.—

42 use 9858d.

"(A) I N GENERAL.—The State plan shall provide assurances that payment rates for the provision of child care
services for which assistance is provided under this subchapter are sufficient to ensure equal access for eligible
children to comparable child care services in the State or
substate area that are provided to children whose parents
are not eligible to receive assistance under this subchapter
or for child care assistance under any other Federal or
State programs. Such payment rates shall take into account
the variations in the costs of providing child care in different settings and to children of different age groups, and
the additional costs of providing child care for children with
special needs.
"(B) CONSTRUCTION.—Nothing in this paragraph shall be
construed to create a private right of action.
"(5) SLIDING FEE SCALE.—The State plan shall provide that the
State will establish and periodically revise, by rule, a sliding fee
scale that provides for cost sharing by the families that receive
child care services for which assistance is provided under this
subchapter.
"(d) APPROVAL OF APPUCATION.—The Secretary shall approve an
application that satisfies the requirements of this section.
SEC. 658F.59 LIMITATIONS ON STATE ALLOTMENTS.
"(a) No ENTITLEMENT TO CONTRACT OR GRANT.—Nothing in this
subchapter shall be construed—
"(1) to entitle any child care provider or recipient of a child
care certificate to any contract, grant or benefit; or
"(2) to limit the right of any State to impose additional
limitations or conditions on contracts or grants funded under
this subchapter.
"(b) CONSTRUCTION OF FACILITIES.—

"(1) IN GENERAL.—No funds made available under this subchapter shall be expended for the purchase or improvement of
land, or for the purchase, construction, or permanent improvement (other than minor remodeling) of any building or facility.
"(2) SECTARIAN AGENCY OR ORGANIZATION.—In the case of a
sectarian agency or organization, no funds made available
under this subchapter may be used for the purposes described in
"* So in original. Probably should be " "SEC. 658F.".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-241

paragraph (1) except to the extent that renovation or repair is
necessary to bring the facility of such agency or organization
into compliance with health and safety requirements referred to
in section 658E(c)(2)(F).
"SEC. 658G. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE.

42 USC 9858e.

"A State that receives financial assistance under this subchapter
shall use not less than 20 percent of the amounts reserved by such
State under section 658E(c)(3)(C) for each fiscal year for one or more
of the following:
"(1) RESOURCE AND REFERRAL PROGRAMS.—Operating directly

or providing financial assistance to private nonprofit organizations or public organizations (including units of general purpose
local government) for the development, establishment, expansion, operation, and coordination of resource and referral programs specifically related to child care.
"(2) GRANTS OR LOANS TO ASSIST IN MEETING STATE AND LOCAL

STANDARDS.—Making grants or providing loans to child care
providers to assist such providers in meeting applicable State
and local child care standards.
"(3) MONITORING OF COMPUANCE WITH LICENSING AND REGULATORY REQUIREMENTS.—Improving the monitoring of compli-

ance with, and enforcement of, State and local licensing and
regulatory requirements (including registration requirements).
"(4) TRAINING.—Providing training and technical assistance
in areas appropriate to the provision of child care services, such
as training in health and safety, nutrition, first aid, the recognition of communicable diseases, child abuse detection and
prevention, and the care of children with special needs.
"(5) COMPENSATION.—Improving salaries and other compensation paid to full- and part-time staff who provide child care
services for which assistance is provided under this subchapter.
"SEC. 658H. EARLY CHILDHOOD DEVELOPMENT AND BEFORE- AND
AFTER-SCHOOL SERVICES.

"(a) IN GENERAL.—A State that receives financial assistance
under this subchapter shall use not less than 75 percent of the
amounts reserved by such State under section 658E(c)(3)(C) for each
fiscal year to establish or expand and conduct, through the provision
of grants or contracts, early childhood development or before- and
after-school child care programs, or both.
"(b) PROGRAM DESCRIPTION.—Programs that receive assistance
under this section shall—
"(1) in the case of early childhood development programs,
consist of services that are not intended to serve as a substitute
for a compulsory academic programs but that are intended to
provide an environment that enhances the educational, social,
cultural, emotional, and recreational development of children;
and
"(2) in the case of before- and after-school child care programs—
"(A) be provided Monday through Friday, including
school holidays and vacation periods other than legal public
holidays, to children attending early childhood development programs, kindergarten, or elementary or secondary
school classes during such times of the day and on such

42 USC 9858f.

104 STAT. 1388-242

PUBLIC LAW 101-508—NOV. 5,1990

days that regular instructional services are not in session;
and
"(B) not be intended to extend or replace the regular
academic program.
"(c) PRIORITY FOR ASSISTANCE.—In awarding grants and contracts
under this section, the State shall give the highest priority to
geographic areas within the State that are eligible to receive grants
under section 1006 of the Elementary and Secondary EJducation Act
of 1965, and shall then give priority to—
"(1) any other areas with concentrations of poverty; and
"(2) any areas with very high or very low population densities.
42USC9858g.

"SEC. 6581. ADMINISTRATION AND ENFORCEMENT.

"(a) ADMINISTRATION.—The Secretary shall—
"(1) coordinate all activities of the Department of Health and
Human Services relating to child care, and, to the maximum
extent practicable, coordinate such activities with similar activities of other Federal entities;
"(2) collect, publish and make available to the public a listing
of State child care standards at least once every 3 years; and
"(3) provide technical assistance to assist States to carry out
this subchapter, including assistance on a reimbursable basis.
"(b) ENFORCEMENT.—
"(1) REVIEW OF COMPUANCE WITH STATE PLAN.—The Secretary

shall review and monitor State compliance with this subchapter
and the plan approved under section 658E(c) for the State, and
shall have the power to terminate pa3anents to the State in
accordance with paragraph (2).
"(2) NONCOMPUANCE.—

"(A) I N GENERAL.—If the Secretary, after reasonable
notice to a State and opportunity for a hearing, finds that—
"(i) there has been a failure by the State to comply
substantially with any provision or requirement set
forth in the plan approved under section 658E(c) for the
State; or
"(ii) in the operation of any program for which assistance is provided under this subchapter there is a failure by the State to comply substantially with any
provision of this subchapter;
the Secretary shall notify the State of the finding and that
no further pajmients may be made to such State under this
subchapter (or, in the case of noncompliance in the operation of a program or activity, that no further payments to
the State will be made with respect to such program or
activity) until the Secretary is satisfied that there is no
longer any such failure to comply or that the noncompliance will be promptly corrected.
"(B) ADDITIONAL SANCTIONS.—In the case of a finding of
noncompliance made pursuant to subparagraph (A), the
Secretary may, in addition to imposing the sanctions described in such subparagraph, impose other appropriate
sanctions, including recoupment of money improperly expended for purposes prohibited or not authorized by this
subchapter, and disqualification from the receipt of financial assistance under this subchapter.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-243

"(C) NOTICE.—The notice required under subparagraph
(A) shall include a specific identification of any additional
sanction being imposed under subparagraph (B).
"(3) ISSUANCE OF RULES.—The Secretary shall establish by
rule procedures for—
"(A) receiving, processing, and determining the validity of
complaints concerning any failure of a State to comply with
the State plan or any requirement of this subchapter; and
"(B) imposing sanctions under this section.
"SEC. 658J. PAYMENTS.

42 USC 9858h.

"(a) I N GENERAL.—Subject to the availability of appropriations, a
State that has an application approved by the Secretary under
section 658E(d) shall be entitled to a payment under this section for
each fiscal year in an amount equal to its allotment under section
6580 for such fiscal year.
"(b) METHOD OP PAYMENT.—

"(1) I N GENERAL.—Subject to paragraph (2), the Secretary may
make payments to a State in installments, and in advance or by
way of reimbursement, with necessary adjustments on account
of overpayments or underpayments, as the Secretary may determine.
"(2) LIMITATION.—The Secretary may not make such payments in a manner that prevents the State from complying with
the requirement specified in section 658E(c)(3).
"(c) SPENDING OF FUNDS BY STATE.—Payments to a State from the
allotment under section 6580 for any fiscal year may be expended
by the State in that fiscal year or in the succeeding fiscal year.
"SEC. 658K. ANNUAL REPORT AND AUDITS.

"(a) ANNUAL REPORT.—Not later than December 31, 1992, and
annually thereafter, a State that receives sissistance under this
subchapter shall prepare and submit to the Secretary a report—
"(1) specifjdng the uses for which the State expended funds
specified under paragraph (3) of section 658E(c) and the amount
of funds expended for such uses;
"(2) containing available data on the manner in which the
child care needs of families in the State are being fulfilled,
including information concerning—
"(A) the number of children being assisted with funds
provided under this subchapter, and under other Federal
child care and pre-school programs;
"(B) the type and number of child care programs, child
care providers, caregivers, and support personnel located in
the State;
"(C) salaries and other compensation paid to full- and
part-time staff who provide child care services; and
"(D) activities in the State to encourage public-private
partnerships that promote business involvement in meeting
child care needs;
"(3) describing the extent to which the affordability and
availability of child care services heis increased;
"(4) if applicable, describing, in either the first or second such
report, the findings of the review of State licensing and regulatory requirements and policies described in section 658E(c),
including a description of actions taken by the State in response
to such reviews;

42 USC 98581.

104 STAT. 1388-244

PUBLIC LAW 101-508—NOV. 5, 1990

"(5) containing an explanation of any State action, in
accordance with section 658E, to reduce the level of child care
standards in the State, if applicable; and
"(6) describing the standards and health and safety requirements applicable to child care providers in the State, including
a description of State efforts to improve the quality of child
care;
during the period for which such report is required to be submitted.
"(b) AUDITS.—

"(1) REQUIREMENT.—A State shall, after the close of each
program period covered by a ^° application approved under
section 658E(d) audit its expenditures during such program
period from amounts received under this subchapter.
"(2) INDEPENDENT AUDITOR.—Audits under this subsection
shall be conducted by an entity that is independent of emy
agency administering activities that receive assistance under
this subchapter and be in accordance with generally accepted
auditing principles.
"(3) SUBMISSION.—Not later than 30 days after the completion
of an audit under this subsection, the State shall submit a copy
of the audit to the legislature of the State and to the Secretary.
"(4) REPAYMENT OF AMOUNTS.—Each State shall repay to the
United States any amounts determined through an audit under
this subsection not to have been expended in accordance with
this subchapter, or the Secretary may offset such amounts
against any other amount to which the State is or may be
entitles under this subchapter.
42 u s e 9858J.

"SEC. 658L. REPORT BY SECRETARY.

"Not later than July 31, 1993, and annually thereafter, the Secretary shall prepare and submit to the Committee on Education and
Labor of the House of Representatives and the Committee on Labor
and Human Resources of the Senate a report that contains a
summary and analysis of the data and information provided to the
Secretary in the State reports submitted under section 658K. Such
report shall include an assessment, and where appropriate, recommendations for the Congress concerning efforts that should be^
undertaken to improve the access of the public to quality and
affordable child care in the United States.
42 u s e 9858k.

"SEC. 658M. LIMITATIONS ON USE OF FINANCIAL ASSISTANCE FOR CERTAIN PURPOSES.
"(a) SECTARIAN PURPOSES AND ACTIVITIES.—No financial assist-

ance provided under this subchapter, pursuant to the choice of a
parent under section 658E(c)(2)(A)(i)(I) or through any other grant or
contract under the State plan, shall be expended for any sectarian
purpose or activity, including sectarian worship or instruction.
"(b) TUITION.—With regard to services provided to students enrolled in grades 1 through 12, no financial assistance provided under
this subchapter shall be expended for—
"(1) any services provided to such students during the regular
school day;
"(2) any services for which such students receive academic
credit toward graduation; or
"(3) any instructional services which supplant or duplicate
the academic program of any public or private school.
"" So in original. Probably should be "an"

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-245

"SEC. 658N. NONDISCRIMINATION.
"(a) REUGIOUS NONDISCRIMINATION.—
"(1) CONSTRUCTION.—

"(A) I N GENERAL.—Except £is provided in subparagraph
(B), nothing in this section shall be construed to modify or
affect the provisions of any other Federal law or regulation
that relates to discrimination in employment on the basis of
religion.
"(B) EXCEPTION.—A sectarian organization may require
that employees adhere to the religious tenets and teachings
of such organization, and such organization may require
that employees adhere to rules forbidding the use of drugs
or alcohol.
"(2) DISCRIMINATION AGAINST CHILD.—

"(A) I N GENERAL.—A child care provider (other than a
family child care provider) that receives assistance under
this subchapter shall not discriminate against any child on
the basis of religion in providing child care services.
"(B) NON-FUNDED CHILD CARE SLOTS.—Nothing in this section shall prohibit a child care provider from selecting
children for child care slots that are not funded directly
with assistance provided under this subchapter because
such children or their family members participate on a
regular bsisis in other activities of the organization that
owns or operates such provider.
"(3) EMPLOYMENT IN GENERAL.—

I
I

"(A) PROHIBITION.—A child care provider that receives
assistance under this subchapter shall not discriminate in
employment on the basis of the religion of the prospective
employee if such employee's primary responsibility is or
will be working directly with children in the provision of
child care services.
"(B) QUALIFIED APPLICANTS.—If two or more prospective
employees are qualified for any position with a child care
provider receiving assistance under this subchapter, nothing in this section shall prohibit such child care provider
from employing a prospective employee who is already
participating on a regular basis in other activities of the
organization that owns or operates such provider.
"(C) PRESENT EMPLOYEES.—This paragraph shall not
apply to employees of child care providers receiving assistance under this subchapter if such employees are employed
with the provider on the date of enactment of this subchapter.
"(4) EMPLOYMENT AND ADMISSION PRACTICES.—Notwithstand-

ing paragraphs (IXB), (2), and (3), if assistance provided under
this subchapter, and any other Federal or State program,
amounts to 80 percent or more of the operating budget of a child
care provider that receives such assistance, the Secretary shall
not permit such provider to receive any further assistance
under this subchapter unless the grant or contract relating to
the financial assistance, or the employment and admissions
policies of the provider, specifically provides that no person with
responsibilities in the operation of the child care program,
project, or activity of the provider will discriminate against any
individual in emplo3rment, if such employee's primary respon-

42 USC 9858/.

104 STAT. 1388-246

PUBLIC LAW 101-508—NOV. 5, 1990

sibility is or will be working directly with children in the
provision of child care, or admissions because of the religion of
such individual.
"(b) EFFECT ON STATE LAW.—Nothing in this subchapter shall be
construed to supersede or modify any provision of a State constitution or State law that prohibits the expenditure of public funds in or
by sectarian institutions, except that no provision of a State constitution or State law shall be construed to prohibit the expenditure
in or by sectarian institutions of any Federal funds provided under
this subchapter.
42 u s e 9858m.

"SEC. 6580. AMOUNTS RESERVED; ALLOTMENTS.
"(a) AMOUNTS RESERVED.—
"(1) TERRITORIES AND POSSESSIONS.—The Secretary shall re-

serve not to exceed one half of 1 perctent of the amount appropriated under this subchapter in each fiscal year for payments
to Guam, American Samoa, the Virgin Islands of the United
States, the Commonwealth of the Northern Mariana Islands,
and the Trust Territory of the Pacific Islands to be allotted in
accordance with their respective needs.
"(2) INDIANS TRIBES.—The Secretary shall reserve not more
than 3 percent of the amount appropriated under section 658B
in each fiscal year for payments to Indian tribes and tribal
organizations with applications approved under subsection (c).
"(b) STATE ALLOTMENT.—
"(1) GENERAL RULE.—From the amounts appropriated under

section 658B for each fiscal year remaining after reservations
under subsection (a), the Secretary shall allot to each State an
amount equal to the sum of—
"(A) an amount that bears the same ratio to 50 percent of
such remainder as the product of the young child factor of
the State and the allotment percentage of the State bears to
the sum of the corresponding products for all States; and
"(B) an amount that bears the same ratio to 50 percent of
such remainder as the product of the school lunch factor of
the State and the allotment percentage of the State bears to
the sum of the corresponding products for all States.
"(2) YOUNG CHILD FACTOR.—The term 'young child factor'
means the ratio of the number of children in the State under 5
years of age to the number of such children in all States as
provided by the most recent annual estimates of population in
the States by the Census Bureau of the Department of Commerce.
"(3) SCHOOL LUNCH FACTOR.—The term 'school lunch factor'
means the ratio of the number of children in the State who are
receiving free or reduced price lunches under the school lunch
program established under the National School Lunch Act (42
U.S.C. 1751 et seq.) to the number of such children in all the
States as determined annually by the Department of Agriculture.
"(4) ALLOTMENT PERCENTAGE.—

"(A) I N GENERAL.—The allotment percentage for a State
is determined by dividing the per capita income of all
individuals in the United States, by the per capita income
of all individuals in the State.
"(B) LIMITATIONS.—If an allotment percentage determined under subparagraph (A)—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-247

"(i) exceeds 1.2 percent, then the allotment percentage of that State shall be considered to be 1.2 percent;
and
"(ii) is less than 0.8 percent, then the allotment
percentage of the State shall be considered to be 0.8
percent.
"(C) PER CAPITA INCOME.—For purposes of subparagraph
(A), per capita income shall be—
"(i) determined at 2-year intervals;
"(ii) applied for the 2-year period beginning on October 1 of the first fiscal year beginning on the date such
determination is made; and
"(iii) equal to the average of the annual per capita
incomes for the most recent period of 3 consecutive
years for which satisfactory data are available from the
Department of Commerce at the time such determination is made.
"(c) PAYMENTS FOR THE BENEFIT OF INDIAN CHILDREN.—
"(1) GENERAL AUTHORITY.—From amounts reserved

under
subsection (aX2), the Secretary may make grants to or enter into
contracts with Indian tribes or tribal organizations that submit
applications under this section, for the planning and carrying
out of programs or activities consistent with the purposes of this
subchapter.
"(2) APPUCATIONS AND REQUIREMENTS.—An application for a

grant or contract under this section shall provide that:
"(A) COORDINATION.—The applicant will coordinate, to
the maximum extent feasible, with the lead gigency in the
State or States in which the applicant will carry out programs or activities under this section.
"(B) SERVICES ON RESERVATIONS.—In the case of an applicant located in a State other than Alaska, California, or
Oklahoma, programs and activities under this section will
be carried out on the Indian reservation for the benefit of
Indian children.
"(C) REPORTS AND AUDITS.—The applicant will make such
reports on, and conduct such audits of, programs and activities under a grant or contract under this section as the
Secretary may require.
"(3) CONSIDERATION OF SECRETARIAL APPROVAL.—In determin-

ing whether to approve an application for a grant or contract
under this section, the Secretary shall take into consideration—
"(A) the availability of child care services provided in
accordance with this subchapter by the Slate or States in
which the applicant proposes to carry out a program to
provide child care services; and
"(B) whether the applicant has the ability (including
skills, personnel, resources, community support, and other
necessary components) to satisfactorily carry out the proposed program or activity.
"(4) THREE-YEAR UMIT.—Grants or contracts under this section shall be for periods not to exceed 3 years.
"(5) DUAL EUGIBILITY OF INDIAN CHILDREN.—The awarding of

a grant or contract under this section for programs or activities
to be conducted in a State or States shall not affect the eligibility of any Indian child to receive services provided or to

104 STAT. 1388-248

PUBLIC LAW 101-508—NOV. 5, 1990

participate in programs and activities carried our ^ ^ under a
grant to the State or States under this subchapter.
"(d) DATA AND INFORMATION.—The Secretary shall obtain from
each appropriate Federal agency, the most recent data and information necessary to determine the allotments provided for in
subsection (b).
"(e) REALLOTMENTS.—

"(1) IN GENERAL.—Any portion of the allotment under subsection (b) to a State that the Secretary determines is not required
to carry out a State plan approved under section 658E(d), in the
period for which the allotment is made available, shall be
reallotted by the Secretary to other States in proportion to the
original allotments to the other States.
"(2) LIMITATIONS.—

"(A) REDUCTION.—The amount of any reallotment to
which a State is entitled to under paragraph (1) shall be
reduced to the extent that it exceeds the amount that the
Secretary estimates will be used in the State to carry out a
State plan approved under section 658E(d).
"(B) REALLOTMENTS.—The amount of such reduction shall
be similarly reallotted among States for which no reduction
in an allotment or reallotment is required by this subsection.
"(3) AMOUNTS REALLOTTED.—For purposes of any other section
of this subchapter, any amount reallotted to a State under this
subsection shall be considered to be part of the allotment made
under subsection (b) to the State.
"(f) DEFINITION.—For the purposes of this section, the term 'State'
includes only the 50 States, the District of Columbia, and the
Commonwealth of Puerto Rico.
42 u s e 9858n.

"SEC. 658P. DEFINITIONS.

"As used in this subchapter:
"(1) CAREGIVER.—The term 'caregiver' means an individual
who provides a service directly to an eligible child on a personto-person basis.
"(2) CHILD CARE CERTIFICATE.—The term 'child care certificate'
means a certificate (that may be a check or other disbursement)
that is issued by a State or local government under this subchapter directly to a parent who may use such certificate only
as payment for child care services. Nothing in this subchapter
shall preclude the use of such certificates for sectarian child
care services if freely chosen by the parent. For purposes of this
subchapter, child care certificates shall not be considered to be
grants or contracts.
"(3) ELEMENTARY SCHOOL.—The term 'elementary school'
means a day or residential school that provides elementary
education, as determined under State law.
"(4) ELIGIBLE CHILD.—The term 'eligible child' means an
individual—
"(A) who is less than 13 years of age;
"(B) whose family income does not exceed 75 percent of
the State median income for a family of the same size; and
"(C) who—
"(i) resides with a parent or parents who are working
or attending a job training or educational program; or
** So in original. Probably should be "out"

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-249

"(ii) is receiving, or needs to receive, protective services and resides with a parent or parents not described
in clause (i).
"(5) ELIGIBLE CHILD CARE PROVIDER.—The term 'ehgible child
care provider' means—
"(A) a center-based child care provider, a group home
child care provider, a family child care provider, or other
provider of child care services for compensation that—
"(i) is licensed, regulated, or registered under State
law as described in section 658E(c)(2)(E); and
"(ii) satisfies the State and local requirements,
including those referred to in section 658E(c)(2)(F);
applicable to the child care services it provides; or
"(B) a child care provider that is 18 years of age or older
who provides child care services only to eligible children
who are, by affinity or consanguinity, or by court decree,
the grandchild, niece, or nephew of such provider, if such
provider is registered and complies with any State requirements that govern child care provided by the relative involved.
"(6) FAMILY CHILD CARE PROVIDER.—The term 'family child
care provider' means one individual who provides child care
services for fewer than 24 hours per day, as the sole caregiver,
and in a private residence.
"(1) INDIAN TRIBE.—The term 'Indian tribe' has the meaning
given it in section 4(b) of the Indian Self-Determination and
Education Assistance Act (25 U.S.C. 450b(b)).
"(8) LEAD AGENCY.—The term 'lead agency' means the agency
designated under section 658B(a).
"(9) PARENT.—The term 'parent' includes a legal guardian or
other person standing in loco parentis.
"(10) SECONDARY SCHOOL.—The term 'secondary school' means
a day or residential school which provides secondary education,
as determined under State law.
"(11) SECRETARY.—The term 'Secretary' means the Secretary
of Health and Human Services unless the context specifies
otherwise.
"(12) SLIDING FEE SCALE.—The term 'sliding fee scale' means a
system of cost sharing by a family based on income and size of
the family.
"(13) STATE.—The term 'State' means any of the several
States, the District of Columbia, the Virgin Islands of the
United States, the Commonwealth of Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and the Trust Territory of the Pacific Islands.
"(14) TRIBAL ORGANIZATION.—The term 'tribal organization'
has the meaning given it in section 4(c) of the Indian SelfDetermination and Education Assistance Act (25 U.S.C. 450b(c)).
"SEC. 658Q. PARENTAL RIGHTS AND RESPONSIBILITIES.

42 USC 9858o.

"Nothing in this subchapter shall be construed or applied in any
manner to infringe on or usurp the moral and legal rights and
responsibilities of parents or legal guardians.
"SEC. 658R. SEVERABILITY.

"If any provision of this subchapter or the application thereof to
any person or circumstance is held invalid, the invalidity shall not

42 USC 9858p.

104 STAT. 1388-250

PUBLIC LAW 101-508—NOV. 5, 1990

affect other provisions of applications of this subchapter which can
be given effect without regard to the invalid provision or application, and to this end the provisions of this subchapter shall be
severable.".
SUBTITLE B—OLD-AGE, SURVIVORS, AND DISABIUTY INSURANCE
SEC. 5100. TABLE OF CONTENTS.
Sec.
Sec.
Sec.
Sec.
Sec.

5100.
5101.
5102.
5103.
5104.

Sec.
Sec.
Sec.
Sec.

5105.
5106.
5107.
5108.

Sec.
Sec.
Sec.
Sec.

5109.
5110.
5111.
5112.

Sec. 5113.
Sec. 5114.
Sec. 5115.
Sec. 5116.
Sec. 5117.
Sec. 5118.
Sec. 5119.
Sec. 5120.
Sec. 5121.
Sec. 5122.
Sec. 5123.
Sec. 5124.
Sec. 5125.
Sec. 5126.
Sec. 5127.
Sec. 5128.
Sec. 5129.
Sec. 5130.

Table of contents.
Amendment of the Social Security Act.
Continuation of disability benefits during appeal.
Repeal of special disability standard for widows and widowers.
Dependency requirements applicable to a child adopted by a surviving
spouse.
Representative payee reforms.
Fees for representation of claimants in administrative proceedings.
Applicability of administrative res judicata; related notice requirements.
Demonstration projects relating to accountability for telephone service
center communications.
Notice requirements.
Telephone access to the Social Security Administration.
Amendments relating to social security account statements.
Trial work period during rolling five-year period for all disabled beneficiaries.
Continuation of benefits on account of participation in a non-state vocational rehabilitation program.
Limitation on new entitlement to special age-72 pajmients.
Elimination of advanced crediting to the trust funds of social security
payroll tfixes.
Elimination of eligibility for retroactive benefits for certain individuals
eligible for reduced benefits
Consolidation of old methods of computing primary insurance amounts.
Suspension of dependent's benefits when the worker is in an extended
period of eligibility.
Entitlement to benefits of deemed spouse and legal spouse.
Vocational rehabilitation demonstration projects.
Exemption for certain aliens, receiving amnesty under the Immigration
and Nationality Act, from prosecution for misreporting of earnings or
misuse of social security account numbers or social security cards.
Reduction of amount of wages needed to earn a year of coverage applicable in determining special minimum primary insurance amount.
Charging of earnings of corporate directors.
Collection of employee social security and railroad retirement taxes on
taxable group-term life insurance provided to retirees.
Tier 1 railroad retirement tax rates explicitly determined by reference to
social security taxes.
Transfer to railroad retirement account.
Waiver of 2-year waiting period for independent entitlement to divorced
spouse's benefits.
Modification of the preeffectuation review requirement applicable to disability insurance cases.
Recovery of OASDI overpayments by means of reduction in tax refunds.
Miscellaneous technical corrections.

SEC. 5101. AMENDMENT OF THE SOCIAL SECURITY ACT.

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 Social
Security Act.
SEC. 5102. CONTINUATION OF DISABILITY BENEFITS DURING APPEAL.

Subsection (g) of section 223 (42 U.S.C. 423(g)) is amended—
(1) in paragraph (1), in the matter following subparagraph (C),
by inserting "or" after "hearing,", and by striking "pending, or
(iii) June 1991." and inserting "pending."; and
(2) by striking paragraph (3).

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-251

SEC. 5103. REPEAL OF SPECIAL DISABILITY STANDARD FOR WIDOWS
AND WIDOWERS.

(a) I N GENERAL.—Section 223(d)(2) (42 U.S.C. 423(d)(2)) is
amended—
(1) in subparagraph (A), by striking "(except a widow, surviving divorced wife, widower, or surviving divorced husband for
purposes of section 202(e) or (f))";
(2) by striking subparagraph (B); and
(3) by redesignating subparagraph (C) as subparagraph (B).
(b) CONFORMING AMENDMENTS.—

(1) The third sentence of section 216(i)(l) (42 U.S.C. 416(i)(l)) is
amended by striking "(2)(C)" and inserting "(2)(B)".
(2) Section 223(f)(1)(B) (42 U.S.C. 423(f)(1)(B)) is amended to
read as follows:
"(B) the individual is now able to engage in substantial
gainful activity; or".
(3) Section 223(f)(2)(A)(ii) (42 U.S.C. 423(f)(2)(A)(ii)) is amended
to read as follows:
"(ii) the individual is now able to engage in substantial gainful activity, or".
(4) Section 223(f)(3) (42 U.S.C. 423(f)(3)) is amended by striking
"therefore—" and all that follows and inserting "therefore the
individual is able to engage in substantial gainful activity; or".
(5) Section 223(f) is further amended, in the matter following
paragraph (4), by striking "(or gainful activity in the case of a
widow, surviving divorced wife, widower, or surviving divorced
husband)" each place it appears.
(c) TRANSITIONAL RULES RELATING TO MEDICAID AND MEDICARE
ELIGIBIUTY.—
(1) DETERMINATION OF MEDICAID ELIGIBILITY.—Section 1634(d)

(42 U.S.C. 1383c(d)) is amended—
(A) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively;
(B) by striking "(d) If any person—" and inserting
"(d)(1) This subsection applies with respect to any person
who—";
(C) in subparagraph (A) (as redesignated), by striking "as
required" and all that follows through "but not entitled"
and inserting "being then not entitled ';
(D) in subparagraph (B) (as redesignated), by striking
"section 1616(a)," and inserting "section 1616(a) (or payments of the type described in section 212(a) of Public Law
93-66)."; and
(E) by striking "such person shall" and all that follows
and inserting the following new paragraph:
"(2) For purposes of title XIX, each person with respect to whom
this subsection applies—
"(A) shall be deemed to be a recipient of supplemental security income benefits under this title if such person received such
a benefit for the month before the month in which such person
began to receive a benefit described in paragraph (1)(A), and
"(B) shall be deemed to be a recipient of State supplementary
payments of the type referred to in section 1616(a) of this Act (or
payments of the type described in section 212(a) of Public Law
93-66) if such person received such a payment for the month

104 STAT. 1388-252

PUBLIC LAW 101-508—NOV. 5, 1990

before the month in which such person began to receive a
benefit described in paragraph (1)(A),
for so long as such person (i) would be eligible for such supplemental
security income benefits, or such State supplementary payments (or
payments of the type described in section 212(a) of Public Law
93-66), in the absence of benefits described in paragraph (1)(A), and
(ii) is not entitled to hospital insurance benefits under part A of title
XVIII.".
(2) I N C L U S I O N O F MONTHS O F SSI ELIGIBIUTY W I T H I N 5-MONTH
DISABILITY W A I T I N G PERIOD A N D 24-MONTH MEDICARE WAITING
PERIOD.—
(A) WIDOW'S BENEFITS BASED ON DISABIUTY.—Section

202(e)(5) (42 U.S.C. 402(e)(5)) is amended—
(i) in subparagraph (B), by striking "(i)" and "(ii)"
and inserting "(I)" and "(II)", respectively;
(ii) by redesignating subparagraphs (A) and (B) as
clauses (i) and (ii), respectively;
(iii) by inserting "(A)" after "(5)"; and
(iv) by adding at the end the following new subparagraph:
"(B) For purposes of paragraph (l)(F)(i), each month in the period
commencing with the first month for which such widow or surviving
divorced wife is first eligible for supplemental security income
benefits under title XVI, or State supplementary payments of the
type referred to in section 1616(a) (or payments of the type described
in section 212(a) of Public Law 93-66) which are paid by the Secretary under an agreement referred to in section 1616(a) (or in
section 212(b) of Public Law 93-66), shall be included as one of the
months of such waiting period for which the requirements of
subparagraph (A) have been met.".
(B) WIDOWER'S BENEFITS BASED ON DISABILITY.—Section

202(f)(6) (42 U.S.C. 402(f)(6)) is amended—
(i) in subparagraph (B), by striking "(i)" and "(ii)"
and inserting "(I)" and "(II)", respectively;
(ii) by redesignating subparagraphs (A) and (B) as
clauses (i) and (ii), respectively;
(iii) by inserting "(A)" after "(6)"; and
(iv) by adding at the end the following new subparagraph:
"(B) For purposes of paragraph (l)(F)(i), each month in the period
commencing with the first month for which such widower or surviving divorced husband is first eligible for supplemental security
income benefits under title XVI, or State supplementary payments
of the type referred to in section 1616(a) (or payments of the type
described in section 212(a) of Public Law 93-66) which are paid by
the Secretary under an agreement referred to in section 1616(a) (or
in section 212(b) of Public Law 93-66), shall be included as one of the
months of such waiting period for which the requirements of
subparagraph (A) have been met.".
(C) MEDICARE BENEFITS.—Section 226(e)(1) (42 U.S.C.
426(e)(1)) is amended—
(i) by redesignating subparagraphs (A) and (B) as
clauses (i) and (ii), respectively;
(ii) by inserting "(A)" after "(e)(1)"; and
(iii) by adding at the end the following new subparagraph:

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-253

"(B) For purposes of subsection (bX2XA)(iii), each month in the
period commencing with the first month for which an individual is
first eligible for supplemental security income benefits under title
XVI, or State supplementary payments of the type referred to in
section 1616(a) of this Act (or pa5niients of the type described in
section 212(a) of Public Law 93-66) which are paid by the Secretary
under an agreement referred to in section 1616(a) (or in section
212(b) of Public Law 93-66), shall be included as one of the 24
months for which such individual must have been entitled to
widow's or widower's insurance benefits on the bsisis of disability in
order to become entitled to hospital insurance benefits on that
basis.".
(d) DEEMED DISABIUTY FOR PURPOSES OF ENTITLEMENT TO WIDOW'S
AND WIDOWER'S INSURANCE BENEFITS FOR WIDOWS AND WIDOWERS
ON SSI ROLLS.—
(1) WIDOW'S INSURANCE BENEFITS.—Section 202(e) (42 U.S.C.

402(e)) is amended by adding at the end the following new
paragraph:
"(9) An individual shall be deemed to be under a disability for
purposes of paragraph (l)(B)(ii) if such individual is eligible for
supplemental security income benefits under title XVI, or State
supplementary payments of the type referred to in section 1616(a)
(or payments of the type described in section 212(a) of Public Law
93-66) which are paid by the Secretary under an agreement referred
to in section 1616(a) (or in section 212(b) of Public Law 93-66), for the
month for which all requirements of paragraph (1) for entitlement
to benefits under this subsection (other than being under a disability) are met.".
(2) WIDOWER'S INSURANCE BENEFITS.—Section 202(f) (42 U.S.C.
402(f)) is amended by adding at the end the following new
paragraph:
"(9) An individual shall be deemed to be under a disability for
purposes of paragraph (l)(BXii) if such individual is eligible for
supplemental security income benefits under title XVI, or State
supplementary payments of the type referred to in section 1616(a)
(or payments of the type described in section 212(a) of Public Law
93-66) which are paid by the Secretary under an agreement referred
to in such section 1616(a) (or in section 212(b) of Public Law 93-66),
for the month for which all requirements of paragraph (1) for
entitlement to benefits under this subsection (other than being
under a disability) are met.".
(e) EFFECTIVE DATE.—
42 USC 402 note.
(1) I N GENERAL.—The amendments made by this section
(other than paragraphs (1) and (2XC) of subsection (c)) shall
apply with respect to monthly insurance benefits for months
after December 1990 for which applications are filed on or after
January 1, 1991, or are pending on such date. The amendments
made by subsection (cXD shall apply with respect to medical
assistance provided aiPter December 1990. The amendments
made by subsection (c)(2)(C) shall apply with respect to items
and services furnished after December 1990.
(2) APPLICATION REQUIREMENTS FOR CERTAIN INDIVIDUALS ON
BENEFIT ROLLS.—In the case of any individual who—

(A) is entitled to disability insurance benefits under section 223 of the Social Security Act for December 1990 or is
eligible for supplemental security income benefits under
title XVI of such Act, or State supplementary payments of

104 STAT. 1388-254

PUBLIC LAW 101-508—NOV. 5, 1990

the t3rpe referred to in section 1616(a) of such Act (or
payments of the type described in section 212(a) of Public
Law 93-66) which are paid by the Secretary under an
agreement referred to in such section 1616(a) (or in section
212(b) of Public Law 93-66), for January 1991,
(B) applied for widow's or widower s insurance benefits
under subsection (e) or (f) of section 202 of the Social
Security Act during 1990, and
(C) is not entitled to such benefits under such subsection
(e) or (f) for any month on the beusis of such application by
reEison of the definition of disability under section
223(dX2)(B) of the Social Security Act (as in effect immediately before the date of the enactment of this Act), and
would have been so entitled for such month on the basis of
such application if the amendments made by this section
had been applied with respect to such application,
for purposes of determining such individual's entitlement to
such benefits under subsection (e) or (f) of section 202 of the
Social Security Act for months after December 1990, the
requirement of paragraph (l)(C)(i) of such subsection shall be
deemed to have been met.
SEC. 5104. DEPENDENCY REQUIREMENTS APPLICABLE TO A CHILD
ADOPTED BY A SURVIVING SPOUSE.

42 use 416 note.

(a) I N GENERAL.—Section 216(e) (42 U.S.C. 416(e)) is amended in
the second sentence—
(1) by striking "at the time of such individual's death living in
such individual's household" and inserting "either living with
or receiving at least one-half of his support from such individual
at the time of such individual's death ; and
(2) by striking "; except" and all that follows and inserting a
period.
(b) EFFECTIVE DATE.—The amendments made by this section shall
apply with respect to benefits payable for months after December
1990, but only on the basis of applications filed after December 31,
1990.
SEC. 5105. REPRESENTATIVE PAYEE REFORMS.
(a) IMPROVEMENTS IN THE REPRESENTATIVE PAYEE SELECTION AND
RECRUITMENT PROCESS.—
(1) AUTHORITY FOR CERTIFICATION OF PAYMENTS TO REPRESENTATIVE PAYEES —

(A) TITLE IL—Section 2050)(1) (42 U.S.C. 4050")) is
amended to read as follows:
"REPRESENTATIVE PAYEES

"(jXD If the Secretary determines that the interest of any individual under this title would be served thereby, certification of payment of such individual's benefit under this title may be made,
regardless of the legal competency or incompetency of the individual, either for direct payment to the individual, or for his or her use
and benefit, to another individual, or an organization, with respect
to whom the requirements of paragraph (2) have been met (hereinafter in this subsection referred to as the individual's 'representative payee'). If the Secretary or a court of competent jurisdiction
determines that a representative payee has misused any individual's

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-255

benefit paid to such representative payee pursuant to this subsection or section 1631(aX2), the Secretary shall promptly revoke
certification for payment of benefits to such representative payee
pursuant to this subsection and certify payment to an alternative
representative payee or to the individual.".
(B) TITLE XVL—

(i) I N GENERAL.—Section 1631(aX2XA) (42 U.S.C.
1383(aX2XA)) is amended to read as follows:
"(AXi) Pajrments of the benefit of any individual may be made to
any such individual or to the eligible spouse (if any) of such individual or partly to each.
"(ii) Upon a determination by the Secretary that the interest of
such individual would be served thereby, or in the ceise of any
individual or eligible spouse referred to in section 1611(eX3XA), such
payments shall be made, regardless of the legal competency or
incompetency of the individual or eligible spouse, to another individual, or an organization, with respect to whom the requirements of
subparagraph (B) have been met (in this paragraph referred to as
such individual's 'representative payee') for the use and benefit of
the individual or eligible spouse.
"(iii) If the Secretary or a court of competent jurisdiction determines that the representative payee of an individual or eligible
spouse has misused any benefits which have been paid to the
representative payee pursuant to clause (ii) or section 205(jXl), the
Secretary shall promptly terminate payment of benefits to the
representative payee pursuant to this subparagraph, and provide for
pajnnent of benefits to the individual or eligible spouse or to an
alternative representative payee of the individual or eligible
spouse.".
(ii) CONFORMING AMENDMENTS.—Section 1631(aX2XC)

(42 U.S.C. 1383(aX2XC)) is amended—
(I) in clause (i), by striking "a person other than
the individual or spouse entitled to such payment"
and inserting "representative payee of an individual or spouse";
(II) in clauses (ii), (iii), and (iv), by striking "other
person to whom such pa3mient is made" each place
it appears and inserting "representative payee";
and
(III) in clause (v)—
(aa) by striking "person receiving payments
on behalf of another" and inserting "representative payee"; and
(bb) by striking "person receiving such payments" and inserting "representative payee'.
(2) PROCEDURE FOR SELECJTING REPRESENTATIVE PAYEES.—
(A) I N GENERAL.—

(i) TITLE II.—Section 205(jX2) (42 U.S.C. 405(jX2)) is
amended to read as follows:
"(2XA) Any certification made under paragraph (1) for payment of
benefits to an individual's representative payee shall be made on the
basis of—
"(i) an investigation by the Secretary of the person to serve as
representative payee, which shall be conducted in advance of
such certification and shall, to the extent practicable, include a
face-to-face interview with such person, and

104 STAT. 1388-256

PUBLIC LAW 101-508—NOV. 5, 1990

"(ii) adequate evidence that such certification is in the interest of such individual (as determined by the Secretary in
regulations).
"(B)(i) As part of the investigation referred to in subparagraph
(A)(i), the Secretary shall—
"(I) require the person being investigated to submit documented proof of the identity of such person, unless information
establishing such identity has been submitted with an application for benefits under this title or title XVI,
"(II) verify such person's social security account number (or
employer identification number),
"(III) determine whether such person has been convicted of a
violation of section 208 or 1632, and
"(IV) determine whether certification of payment of benefits
to such person has been revoked pursuant to this subsection or
payment of benefits to such person has been terminated pursuant to section 1631(a)(2)(AXiii) by reason of misuse of funds paid
as benefits under this title or title XVI.
"(ii) The Secretary shall establish and maintain a centralized file,
which shall be updated periodically and which shall be in a form
which renders it readily retrievable by each servicing office of the
Social Security Administration. Such file shall consist of—
"(I) a list of the names and social security account numbers
(or employer identification numbers) of all persons with respect
to whom certification of payment of benefits has been revoked
on or after January 1, 1991, pursuant to this subsection, or with
respect to whom payment of benefits has been terminated on or
after such date pursuant to section 1631(a)(2)(A)(iii), by reason of
misuse of funds paid as benefits under this title or title XVI,
and
"(II) a list of the names and social security account numbers
(or employer identification numbers) of all persons who have
been convicted of a violation of section 208 or 1632.
"(C)(i) Benefits of an individual may not be certified for payment
to any other person pursuant to this subsection if—
"(I) such person has previously been convicted as described in
subparagraph (B)(i)(III),
"(II) except as provided in clause (ii), certification of payment
of benefits to such person under this subsection has previously
been revoked as described in subparagraph (B)(i)(IV), or payment of benefits to such person pursuant to section
1631(a)(2)(AXii) has previously been terminated as described in
section 1631(a)(2)(B)(ii)(IV), or
"(III) except as provided in clause (iii), such person is a
creditor of such individual who provides such individual with
goods or services for consideration.
"(ii) The Secretary shall prescribe regulations under which the
Secretary may grant exemptions to any person from the provisions
of clause (iXII) on a case-by-case basis if such exemption is in the best
interest of the individual whose benefits would be paid to such
person pursuant to this subsection.
"(iii) Clause (i)(III) shall not apply with respect to any person who
is a creditor referred to therein if such creditor is—
"(I) a relative of such individual if such relative resides in the
same household as such individual,
"(II) a legal guardian or legal representative of such individual.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-257

"(III) a facility that is licensed or certified as a care facility
under the law of a State or a political subdivision of a State,
"(IV) a person who is an administrator, owner, or employee of
a facility referred to in subclause (III) if such individual resides
in such facility, and the certification of payment to such facility
or such person is made only after good faith efforts have been
made by the local servicing office of the Social Security
Administration to locate an alternative representative payee to
whom such certification of payment would serve the best interests of such individual, or
"(V) an individual who is determined by the Secretary, on the
basis of written findings and under procedures which the Secretary shall prescribe by regulation, to be acceptable to serve as
a representative payee.
"(iv) The procedures referred to in clause (iii)(V) shall require the
individual who will serve as representative payee to establish, to the
satisfaction of the Secretary, that—
"(I) such individual poses no risk to the beneficiary,
"(II) the financial relationship of such individual to the beneficiary poses no substantial conflict of interest, and
"(III) no other more suitable representative payee can be
found.
"(D)(i) Subject to clause (ii), if the Secretary makes a determination described in the first sentence of paragraph (1) with respect to
any individual's benefit and determines that direct payment of the
benefit to the individual would cause substantial harm to the
individual, the Secretary may defer (in the case of initial entitlement) or suspend (in the case of existing entitlement) direct payment of such benefit to the individual, until such time as the
selection of a representative payee is made pursuant to this subsection.
"(ii)(I) Except as provided in subclause (II), any deferral or suspension of direct payment of a benefit pursuant to clause (i) shall be for
a period of not more than 1 month.
"(II) Subclause (I) shall not apply in any case in which the
individual is, as of the date of the Secretary's determination, legally
incompetent or under the age of 15.
"(iii) Payment pursuant to this subsection of any benefits which
are deferred or suspended pending the selection of a representative
payee shall be made to the individual or the representative payee as
a single sum or over such period of time as the Secretary determines
is in the best interest of the individual entitled to such benefits.
"(E)(i) Any individual who is dissatisfied with a determination by
the Secretary to certify payment of such individual's benefit to a
representative payee under paragraph (1) or with the designation of
a particular person to serve as representative payee shall be entitled
to a hearing by the Secretary to the same extent as is provided in
subsection (b), and to judicial review of the Secretary's final decision
as is provided in subsection (g).
"(ii) In advance of the certification of payment of an individual's
benefit to a representative payee under paragraph (1), the Secretary
shall provide written notice of the Secretary s initial determination
to certify such payment. Such notice shall be provided to such
individual, except that, if such individual—
"(I) is under the age of 15,
"(II) is an unemancipated minor under the age of 18, or
"(III) is legally incompetent.

104 STAT. 1388-258

PUBLIC LAW 101-508—NOV. 5, 1990

then such notice shall be provided solely to the legal guardian or
legal representative of such individual.
"(iii) Any notice described in clause (ii) shall be clearly written in
language that is easily understandable to the reader, shall identify
the person to be designated as such individual's representative
payee, and shall explain to the reader the right under clause (i) of
such individual or of such individual's legal guardian or legal
representative—
"(I) to appeal a determination that a representative payee is
necessary for such individual,
"(II) to appeal the designation of a particular person to serve
as the representative payee of such individual, and
"(III) to review the evidence upon which such designation is
based and submit additional evidence.".
(ii) TITLE XVL—Section 1631(a)(2)(B) (42 U.S.C.
1383(a)(2)(B)) is amended to read as follows:
"(B)(i) Any determination made under subparagraph (A) for payment of benefits to the representative payee of an individual or
eligible spouse shall be made on the basis of—
"(I) an investigation by the Secretary of the person to serve as
representative payee, which shall be conducted in advance of
such payment, and shall, to the extent practicable, include a
face-to-face interview with such person; and
"(II) adequate evidence that such payment is in the interest of
the individual or eligible spouse (as determined by the Secretary
in regulations),
"(ii) As part of the investigation referred to in clause (i)(I), the
Secretary shall—
"(I) require the person being investigated to submit documented proof of the identity of such person, unless information
establishing such identity was submitted with an application for
benefits under title II or this title;
"(II) verify the social security account number (or employer
identification number) of such person;
"(III) determine whether such person has been convicted of a
violation of section 208 or 1632; and
"(IV) determine whether payment of benefits to such person
has been terminated pursuant to subparagraph (A)(iii), and
whether certification of pa3rment of benefits to such person has
been revoked pursuant to section 205CJ), by reason of misuse of
funds paid as benefits under title II or this title,
"(iii) Benefits of an individual may not be paid to any other person
pursuant to subparagraph (AXii) if—
"(I) such person has previously been convicted as described in
clause (iiXIII);
"(II) except as provided in clause (iv), payment of benefits to
such person pursuant to subparagraph (A)(ii) has previously
been terminated as described in clause (ii)(IV), or certification of
payment of benefits to such person under section 205(j) has
previously
been
revoked
as
described
in
section
2050)(2)(B)(i)(IV); or
"(III) except as provided in clause (v), such person is a creditor
of such individual who provides such individual with goods or
services for consideration.
"(iv) The Secretary shall prescribe regulations under which the
Secretary may grant an exemption from clause (iii)(II) to any person
on a case-by-case basis if such exemption would be in the best

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-259

interest of the individual or eligible spouse whose benefits under
this title would be paid to such person pursuant to subparagraph
(AXii).
"(v) Clause (iiiXIII) shall not apply with respect to any person who
is a creditor referred to therein if such creditor is—
"(I) a relative of such individual if such relative resides in the
same household as such individual;
"(ID a legal guardian or legal representative of such individual;
"(III) a facility that is licensed or certified as a care facility
under the law of a State or a political subdivision of a State;
"(IV) a person who is an administrator, owner, or employee of
a facility referred to in subclause (III) if such individual resides
in such facility, and the payment of benefits under this title to
such facility or such person is made only after good faith efforts
have been made by the local servicing office of the Social
Security Administration to locate an alternative representative
payee to whom the payment of such benefits would serve the
best interests of such individual; or
"(V) an individual who is determined by the Secretary, on the
basis of written findings and under procedures which the Secretary shall prescribe by regulation, to be acceptable to serve as
a representative payee.
"(vi) The procedures referred to in clause (v)(V) shall require the
individual who will serve as representative payee to establish, to the
satisfaction of the Secretary, that—
"(I) such individual poses no risk to the beneficiary;
"(II) the financial relationship of such individual to the beneficiary poses no substantial conflict of interest; and
"(III) no other more suitable representative payee can be
found.
"(vii) Subject to clause (viii), if the Secretary makes a determination described in subparagraph (A)(ii) with respect to any individual's benefit and determines that direct payment of the benefit to
the individual would cause substantial harm to the individual, the
Secretary may defer (in the case of initial entitlement) or suspend
(in the case of existing entitlement) direct payment of such benefit
to the individual, until such time as the selection of a representative
payee is made pursuant to this subparagraph.
"(viii)(I) Except as provided in subclause (II), any deferral or
suspension of direct payment of a benefit pursuant to clause (vii)
shall be for a period of not more than 1 month.
"(II) Subclause (I) shall not apply in any case in which the
individual or eligible spouse is, as of the date of the Secretary's
determination, legally incompetent, under the age 15 years, or a
drug addict or alcoholic referred to in section 1611(e)(3)(A).
"(ix) Payment pursuant to this subparagraph of any benefits
which are deferred or suspended pending the selection of a representative payee shall be made to the individual, or to the representative payee upon such selection, as a single sum or over such
period of time as the Secretary determines is in the best interests of
the individual entitled to such benefits.
"(x) Any individual who is dissatisfied with a determination by
the Secretary to pay such individual's benefits to a representative
payee under this title, or with the designation of a particular person
to serve as representative payee, shall be entitled to a hearing by

104 STAT. 1388-260

PUBLIC LAW 101-508—NOV. 5, 1990

the Secretary, and to judicial review of the Secretary's final decision, to the same extent as is provided in subsection (c).
"(xi) In advance of the first pa3mient of an individual's benefit to a
representative payee under subparagraph (A)(ii), the Secretary shall
provide written notice of the Secretary's initial determination to
make any such pa3mient. Such notice shall be provided to such
individual, except that, if such individual—
"(I) is under the age of 15,
"(II) is an unemancipated minor under the age of 18, or
"(III) is legally incompetent,
then such notice shall be provided solely to the legal guardian or
legal representative of such individual.
"(xii) Any notice described in clause (xi) shall be clearly written in
language that is easily understandable to the reader, shall identify
the person to be designated as such individual's representative
payee, and shall explain to the reader the right under clause (x) of
such individual or of such individual's legal guardian or legal
representative—
"(I) to appeal a determination that a representative payee is
necessary for such individual,
"(II) to appeal the designation of a particular person to serve
as the representative payee of such individual, and
"(III) to review the evidence upon which such designation is
based and submit additional evidence.".
42 u s e 405 note.

(B) REPORT ON FEASIBIUTY OF OBTAINING READY ACCESS TO

CERTAIN CRIMINAL FRAUD RECORDS.—As soon as practicable
after the date of the enactment of this Act, the Secretary of
Health and Human Services, in consultation with the
Attorney General of the United States and the Secretary of
the Treasury, shall study the feasibility of establishing and
maintaining a current list, which would be readily available to local offices of the Social Security Administration
for use in investigations undertaken pursuant to section
2050X2) or 1631(aX2)(B) of the Social Security Act, of the
names and social security account numbers of individuals
who have been convicted of a violation of section 495 of title
18, United States Code. The Secretary of Health and
Human Services shall, not later than July 1, 1992, submit
the results of such study, together with any recommendations, to the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the
Senate.
(3) PROVISION FOR COMPENSATION OF QUAUFIED ORGANIZATIONS
SERVING AS R E P R E S E N T A T I V E PAYEES.—
(A) I N GENERAL.—

(i) TITLE II.—Section 205(j) (42 U.S.C. 4050')) is
amended by redesignating paragraph (4) as paragraph
(5), and by inserting after paragraph (3) the following
new paragraph:
"(4XA) A qualified organization may collect from an individual a
monthly fee for expenses (including overhead) incurred by such
organization in providing services performed as such individual's
representative payee pursuant to this subsection if such fee does not
exceed the lesser of—
"(i) 10 percent of the monthly benefit involved, or
"(ii) $25.00 per month.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-261

Any agreement providing for a fee in excess of the amount permitted under this subparagraph shall be void and shall be treated as
misuse by such organization of such individual's benefits.
"(B) For purposes of this paragraph, the term 'qualified organization' means any community-based nonprofit social service agency
which is bonded or licensed in each State in which it serves as a
representative payee and which, in accordance with any applicable
regulations of the Secretary—
"(i) regularly provides services as the representative payee,
pursuant to this subsection or section 1631(a)(2), concurrently to
5 or more individuals,
"(ii) demonstrates to the satisfaction of the Secretary that
such agency is not otherwise a creditor of any such individual,
and
"(iii) was in existence on October 1,1988.
The Secretary shall prescribe regulations under which the Secretary
may grant an exception from clause (ii) for any individual on a caseby-case basis if such exception is in the best interests of such
individual.
"(C) Any qualified organization which knowingly charges or collects, directly or indirectly, any fee in excess of the maximum fee
prescribed under subparagraph (A) or makes any agreement, directly or indirectly, to charge or collect any fee in excess of such
maximum fee, shall be fined in accordance with title 18, United
States Code, or imprisoned not more than 6 months, or both.
"(D) This paragraph shall cease to be effective on July 1, 1994.".
(ii) TITLE XVI.—Section 1631(a)(2) (42 U.S.C. 1383(a)(2))
is amended—
(I) by redesignating subparagraph (D) as
subparagraph (E);
(III) ^2 by inserting after subparagraph (C) the
following:
"(D)(i) A qualified organization may collect from an individual a
monthly fee for expenses (including overhead) incurred by such
organization in providing services performed as such individual's
representative payee pursuant to subparagraph (A)(ii) if the fee does
not exceed the lesser of—
"(I) 10 percent of the monthly benefit involved, or
"(II) $25.00 per month.
Any agreement providing for a fee in excess of the amount permitted under this clause shall be void and shall be treated as misuse
by the organization of such individual's benefits.
"(ii) For purposes of this subparagraph, the term 'qualified
organization' means any community-based nonprofit social service
agency which—
"(I) is bonded or licensed in each State in which the agency
serves as a representative payee;
"(II) in accordance with any applicable regulations of the
Secretary—
"(aa) regularly provides services as a representative
payee pursuant to subpareigraph (A)(ii) or section 205(j)(4)
concurrently to 5 or more individuals;
"(bb) demonstrates to the satisfaction of the Secretary
that such agency is not otherwise a creditor of any such
individual; and
"(cc) was in existence on October 1,1988.
*^ So in original. Probably should be "(II)".

104 STAT. 1388-262

PUBLIC LAW 101-508—NOV. 5,1990

The Secretary shall prescribe regulations under which the Secretary
may grant an exception from subclause (II)(bb) for any individual on
a case-by-case basis if such exception is in the best interests of such
individual.
"(iii) Any qualified organization which knowingly charges or collects, directly or indirectly, any fee in excess of the maximum fee
prescribed under clause (i) or makes any agreement, directly or
indirectly, to charge or collect any fee in excess of such maximum
fee, shall be fined in accordance with title 18, United States Code, or
imprisoned not more than 6 months, or both.
"(iv) This subparagraph shall cease to be effective on July 1,
1994.".
42 u s e 405 note.

42 use 405 note.

42 u s e 405 note.

(B) STUDIES AND REPORTS.—
(i) REPORT BY SECRETARY OF HEALTH AND HUMAN SERV-

ICES.—Not later than January 1, 1993, the Secretary of
Health and Human Services shall transmit a report to
the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the
Senate setting forth the number and t3rpes of qualified
organizations which have served as representative
payees and have collected fees for such service pursuant to any amendment made by subparagraph (A).
(ii) REPORT BY COMPTROLLER GENERAL.—Not later
than July 1, 1992, the Comptroller General of the
United States shall conduct a study of the advantages
and disadvantages of allowing qualified organizations
serving as representative payees to charge fees pursuant to the amendments made by subparagraph (A) and
shall transmit a report to the Committee on Ways and
Means of the House of Representatives and the
Committee on Finance of the Senate setting forth the
results of such study.
(4) STUDY RELATING TO FEASIBILITY OF SCREENING OF INDIVIDUALS WITH CRIMINAL RECORDS.—As soon as practicable after the
date of the enactment of this Act, the Secretary of Health and
Human Services shall conduct a study of the feasibility of
determining the type of representative payee applicant most
likely to have a felony or misdemeanor conviction, the suitability of individuals with prior convictions to serve as representative payees, and the circumstances under which such
applicants could be allowed to serve as representative payees.
The Secretary shall transmit the results of such study to the
Committee on Ways and Means of the House of Representatives
and the Committee on Finance of the Senate not later than
July 1,1992.
(5) EFFECTIVE DATES.—
(A) USE AND SELECTION OF REPRESENTATIVE PAYEES.—The

amendments made by paragraphs (1) and (2) shall take
effect July 1, 1991, and shall apply only with respect to—
(i) certifications of payment of benefits under title II
of the Social Security Act to representative payees
made on or after such date; and
(ii) provisions for payment of benefits under title XVI
of such Act to representative payees made on or after
such date.
(B)

COMPENSATION

OF

REPRESENTATIVE

PAYEES.—The

amendments made by paragraph (3) shall take effect July 1,

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-263

1991, and the Secretary of Health and Human Services
shall prescribe initial regulations necessary to carry out
such amendments not later than such date.
(b) IMPROVEMENTS IN RECORDKEEPING AND AUDITING REQUIREMENTS.—
(1) IMPROVED ACCESS TO CERTAIN INFORMATION.—

(A) I N GENERAL.—Section 205(jX3) (42 U.S.C. 605(j)(3)) is 42 USC 405.
amended—
(i) by striking subparagraph (B);
(ii) by redesignating subparagraphs (C), (D), and (E)
as subparsigraphs (B), (C), and (D), respectively;
(iii) in subparagraph (D) (as so redesignated), by striking "(A), (B), (C), and (D)" and inserting "(A), (B), and
(C)"; and
(iv) by adding at the end the following new subparagraphs:
"(E) The Secretary shall maintain a centralized file, which shall
be updated periodically and which shall be in a form which will be
readily retrievable by each servicing office of the Social Security
Administration, of—
"(i) the address and the social security account number (or
employer identification number) of each representative payee
who is receiving benefit payments pursuant to this subsection or
section 1631(a)(2), and
"(ii) the address and social security account number of each
individual for whom each representative payee is reported to be
providing services as representative payee pursuant to this
subsection or section 1631(a)(2).
"(F) Each servicing office of the Administration shall maintain a
list, which shall be updated periodically, of public agencies and
community-based nonprofit social service agencies which are qualified to serve as representative payees pursuant to this subsection or
section 1631(aX2) and which are located in the area served by such
servicing office.".
(B) EFFECTIVE DATE.—The amendments made by subpara- 42 USC 405 note,
graph (A) shall take effect October 1, 1992, and the Secretary of Health and Human Services shall take such
actions as are necessary to ensure that the requirements of
section 205(jX3XE) of the Social Security Act (as amended by
subparagraph (A) of this paragraph) are satisfied as of such
date.
(2) STUDY RELATING TO MORE STRINGENT OVERSIGHT OF HIGH- 42 USC 405 note.
RISK REPRESENTATIVE PAYEES.—

(A) I N GENERAL.—As soon as practicable after the date of
the enactment of this Act, the Secretary of Health and
Human Services shall conduct a study of the need for a
more stringent accounting system for high-risk representative payees than is otherwise generally provided under
section 205(jX3) or 1631(aX2XC) of the Social Security Act,
which would include such additional reporting requirements, record maintenance requirements, and other measures as the Secretary considers necessary to determine
whether services are being appropriately provided by such
payees in accordance with such sections 205(j) and
1631(aX2).

104 STAT. 1388-264

PUBLIC LAW 101-508—NOV. 5, 1990
(B) SPECIAL PROCEDURES.—In such study, the Secretary
shall determine the appropriate means of implementing
more stringent, statistically valid procedures for—
(i) reviewing reports which would be submitted to the
Secretary under any system described in subparagraph
(A), and
(ii) periodic, random audits of records which would be
kept under such a system,
in order to identify any instances in which high-risk representative payees are misusing payments made pursuant
to section 2050') or 1631(a)(2) of the Social Security Act.
(C) HIGH-RISK REPRESENTATIVE PAYEE.—For purposes of
this paragraph, the term "high-risk representative payee"
means a representative payee under section 205(j) or
1631(a)(2) of the Social Security Act (42 U.S.C. 405(j) and
1383(a)(2), respectively) (other thkn a Federal or State
institution) who—
(i) regularly provides concurrent services as a representative payee under such section 205(j), such section 1631(a)(2), or both such sections, for 5 or more
individuals who are unrelated to such representative
payee,
(ii) is neither related to an individual on whose behalf
the payee is being paid benefits nor living in the same
household with such individual,
(iii) is a creditor of such individual; or
(iv) is in such other category of payees as the Secretary may determine appropriate.
(D) REPORT.—The Secretary shall report to the Committee on Ways and Means of the House of Representatives
and the Committee on Finance of the Senate the results of
the study, together with any recommendations, not later
than July 1, 1992. Such report shall include an evaluation
of the feasibility and desirability of legislation implementing stricter accounting and review procedures for high-risk
representative payees in all servicing offices of the Social
Security Administration (together with proposed legislative
language).

42 u s e 405 note.

(3) DEMONSTRATION PROJECTS RELATING TO PROVISION OF
INFORMATION TO LOCAL AGENCIES PROVIDING CHILD AND ADULT
PROTECTIVE SERVICES.—

(A) I N GENERAL.—As soon as practicable after the date of
the enactment of this Act, the Secretary of Health and
Human Services shall implement a demonstration project
under this paragraph in all or part of not fewer than 2
States. Under each such project, the Secretary shall enter
into an agreement with the State in which the project is
located to make readily available, for the duration of the
project, to the appropriate State agency, a listing of
addresses of multiple benefit recipients.
(B) LISTING OF ADDRESSES OF MULTIPLE BENEFIT RECIPI-

ENTS.—The list referred to in subparagraph (A) shall consist
of a current list setting forth each address within the State
at which benefits under title II, benefits under title XVI, or
any combination of such benefits are being received by 5 or
more individuals. For purposes of this subparagraph, in the
case of benefits under title II, all individuals receiving

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-265

benefits on the basis of the wEiges and self-employment
income of the same individual shall be counted as 1 individual.
(C) APPROPRIATE STATE AGENCY.—The appropriate State
agency referred to in subparagraph (A) is the agency of the
State which the Secretary determines is primarily responsible for regulating care facilities operated in such State or
providing for child and adult protective services in such
State.
(D) REPORT.—The Secretary shall report to the Committee on Ways and Means of the House of Representatives
and the Committee on Finance of the Senate concerning
such demonstration projects, together with any recommendations, not later than July 1, 1992. Such report
shall include an evaluation of the feasibility and desirability of legislation implementing the programs established
pursuant to this paragraph on a permanent basis.
(E) STATE.—For purposes of this paragraph, the term
"State" means a State, including the entities included in
such term by section 210(h) of the Social Security Act (42
U.S.C. 410(h)).
(c) RESTITUTION.—

(1) TITLE IL—Section 205(j) (42 U.S.C. 405(j)) is amended by
redesignating paragraph (5) (as so redesignated by subsection
(a)(3)(A)(i) of this section) as paragraph (6) and by inserting after
paragraph (4) (as added by subsection (a)(3)(A)(i)) the following
new paragraph:
"(5) In cases where the negligent failure of the Secretary to
investigate or monitor a representative payee results in misuse of
benefits by the representative payee, the Secretary shall certify for
payment to the beneficiary or the beneficiary's alternative representative payee an amount equal to such misused benefits. The
Secretary shall make a good faith effort to obtain restitution from
the terminated representative payee.".
(2) TITLE XVI.—Section 1631(a)(2) (42 U.S.C. 1383(a)(2)) is
amended by redesignating subparagraph (E) {as so redesignated
by subsection (a)(3)(A)(ii)(I) of this section) as subparagraph (F)
and by inserting after subparagraph (D) (as added by subsection
(a)(3)(A)(i)(III)) the following new subparagraph:
"(E) RESTITUTION.—In cases where the negligent failure of the
Secretary to investigate or monitor a representative payee results in misuse of benefits by the representative payee, the
Secretary shall make payment to the beneficiary or the
beneficiary's representative payee of an amount equal to such
misused benefits. The Secretary shall make a good faith effort
to obtain restitution from the terminated representative
payee.".
(d) REPORTS TO THE CONGRESS.—
(1) I N GENERAL.—

(A) TITLE II.—Section 205(j)(5) (as so redesignated by
subsection (c)(1) of this section) is amended to read as
follows:
"(5) The Secretary shall include as a part of the annual report
required under section 704 information with respect to the implementation of the preceding provisions of this subsection, including the number of cases in which the representative payee was
changed, the number of cases discovered where there has been a

39-194 O - 91 - 22 : QL 3 Part 2

104 STAT. 1388-266

42 use 405 note.

PUBLIC LAW 101-508—NOV. 5, 1990

misuse of funds, how any such cases were dealt with by the Secretary, the final disposition of such cases, including any criminal
penalties imposed, and such other information as the Secretary
determines to be appropriate.".
(B) TITLE XVI.—Section 1631(a)(2)(E) (42 U.S.C.
1383(aX2)(E)), as so redesignated by subsection (c)(2) of this
section, is amended to read as follows:
"(E) The Secretary shall include as a part of the annual report
required under section 704 information with respect to the implementation of the preceding provisions of this paragraph,
including—
"(i) the number of cases in which the representative payee
was changed;
"(ii) the number of cases discovered where there has been a
misuse of funds;
"(iii) how any such cases were dealt with by the Secretary;
"(iv) the final disposition of such cases (including any criminal
penalties imposed); and
"(v) such other information as the Secretary determines to be
appropriate.".
(2) EFFECTIVE DATE.—The amendments made by paragraph (1)
shall apply with respect to annual reports issued for years after
1991.
(3) FEASIBILITY STUDY REGARDING INVOLVEMENT OF DEPARTMENT OF VETERANS AFFAIRS.—As soon as practicable after the

date of the enactment of this Act, the Secretary of Health and
Human Services, in cooperation with the Secretary of Veterans
Affairs, shall conduct a study of the feasibility of designating
the Department of Veterans Affairs as the lead agency for
purposes of selecting, appointing, and monitoring representative payees for those individuals who receive benefits paid
under title II or XVI of the Social Security Act and benefits paid
by the Department of Veterans Affairs. Not later than 180 days
after the date of the enactment of this Act, the Secretary of
Health and Human Services shall transmit to the Committee on
Ways and Means of the House of Representatives and the
Committee on Finance of the Senate a report setting forth the
results of such study, together with any recommendations.
SEC. 5106. FEES FOR REPRESENTATION OF CLAIMANTS IN ADMINISTRATIVE PROCEEDINGS.
(a) I N GENERAL.—

(1) TITLE IL—Subsection (a) of section 206 (42 U.S.C. 406(a)) is
amended—
(A) by inserting "(1)" after "(a)";
(B) in the fifth sentence, by striking "Whenever" and
inserting "Except as provided in paragraph (2XA), whenever"; and
(C) by striking the sixth sentence and all that follows
through "Any person who" in the seventh sentence and
inserting the following:
"(2XA) In the case of a claim of entitlement to past-due benefits
under this title, if—
"(i) an agreement between the claimant and another person
regarding any fee to be recovered by such person to compensate
such person for services with respect to the claim is presented in

PUBLIC LAW 101-508—NOV. 5,1990

104 STAT. 1388-267

writing to the Secretary prior to the time of the Secretary's
determination regarding the claim,
"(ii) the fee specified in the agreement does not exceed the
lesser of—
"(I) 25 percent of the total amount of such past-due
benefits (as determined before any applicable reduction
under section 1127(a)), or
"(II) $4,000, and
"(iii) the determination is favorable to the claimant,
then the Secretary shall approve that agreement at the time of the
favorable determination, and (subject to paragraph (3)) the fee specified in the agreement shall be the maximum fee. The Secretary may
from time to time increase the dollar amount under clause (iiXII) to
the extent that the rate of increase in such amount, as determined
over the period since January 1, 1991, does not at any time exceed
the rate of increase in primary insurance amounts under section
215(i) since such date. The Secretary shall publish any such increEised amount in the Federal Register.
"(B) For purposes of this subsection, the term 'past-due benefits'
excludes any benefits with respect to which pajnnent has been
continued pursuEint to subsection (g) or (h) of section 223.
"(C) In the case of a claim with respect to which the Secretary has
approved an agreement pursuant to subparagraph (A), the Secretary
shall provide the claimant and the person representing the claimant
a written notice of—
"(i) the dollar amount of the past-due benefits (as determined
before any applicable reduction under section 1127(a)) and the
dollar amount of the past-due benefits payable to the claimant,
"(ii) the dollar amount of the maximum fee which may be
charged or recovered as determined under this paragraph, and
"(iii) a description of the procedures for review under paragraph (3).
"(3)(A) The Secretary shall provide by regulation for review of the
amount which would otherwise be the maximum fee as determined
under pargigraph (2) if, within 15 days after receipt of the notice
provided pursuant to paragraph (2)(C)—
"(i) the claimant, or the administrative law judge or other
adjudicator who made the favorable determination, submits a
written request to the Secretary to reduce the maximum fee, or
"(ii) the person representing the claimant submits a written
request to the Secretary to increase the msiximum fee.
Any such review shall be conducted after providing the claimant,
the person representing the claimant, and the adjudicator with
reasonable notice of such request and an opportunity to submit
written information in favor of or in opposition to such request. The
adjudicator may request the Secretary to reduce the maximum fee
only on the basis of evidence of the failure of the person representing the claimant to represent adequately the claimant's interest or
on the basis of evidence that the fee is clearly excessive for services
rendered.
"(BXi) In the case of a request for review under subparagraph (A)
by the claimant or by the person representing the claimant, such
review shall be conducted by the administrative law judge who
made the favorable determination or, if the Secretary determines
that such administrative law judge is unavailable or if the determination was not made by an administrative law judge, such review

104 STAT. 1388-268

PUBLIC LAW 101-508—NOV. 5, 1990

shall be conducted by another person designated by the Secretary
for such purpose.
"(ii) In the case of a request by the adjudicator for review under
subparagraph (A), the review shall be conducted by the Secretary or
by an administrative law judge or other person (other than such
adjudicator) who is designated by the Secretary.
"(C) Upon completion of the review, the administrative law judge
or other person conducting the review shall affirm or modify the
amount which would otherwise be the maximum fee. Any such
amount so affirmed or modified shall be considered the amount of
the maximum fee which may be recovered under paragraph (2). The
decision of the administrative law judge or other person conducting
the review shall not be subject to further review.
"(4)(A) Subject to subparagraph (B), if the claimant is determined
to be entitled to past-due benefits under this title and the person
representing the claimant is an attorney, the Secretary shall, notwithstanding section 205(i), certify for payment out of such past-due
benefits (as determined before any applicable reduction under section 1127(a)) to such attorney an amount equal to so much of the
maximum fee as does not exceed 25 percent of such past-due benefits
(as determined before any applicable reduction under section
1127(a)).
"(B) The Secretary shall not in any case certify any amount for
payment to the attorney pursuant to this paragraph before the
expiration of the 15-day period referred to in paragraph (3)(A) or, in
the case of any review conducted under paragraph (3), before the
completion of such review.
"(5) Any person who".
(2) TITLE XVL—Paragraph (2)(A) of section 1631(d) (42 U.S.C.
1383(d)(2)(A)) is amended to read as follows:
"(2)(A) The provisions of section 206(a) (other than paragraph (4)
thereof) shall apply to this part to the same extent as they apply in
the case of title II, except that paragraph (2) thereof shall be
applied—
"(i) by substituting 'section 1127(a) or 1631(g)' for 'section
1127(a)'; and
"(ii) by substituting 'section 1631(a)(7XA) or the requirements
of due process of law' for 'subsection (g) or (h) of section 223'.".
(b) PROTECTION OF ATTORNEY'S FEES FROM OFFSETTING SSI BENE-

FITS.—Subsection (a) of section 1127 (42 U.S.C. 1320a-6(a)) is amended
by adding at the end the following new sentence: "A benefit under
title II shall not be reduced pursuant to the preceding sentence to
the extent that any amount of such benefit would not otherwise be
available for payment in full of the maximum fee which may be
recovered from such benefit by an attorney pursuant to section
206(aX4).".
(c) LIMITATATION OF TRAVEL EXPENSES FOR REPRESENTATION OF
CLAIMANTS AT ADMINISTRATIVE PROCEEDINGS.—Section 2010') (42

U.S.C. 4010*)), section 1631(h) (42 U.S.C. 1383(h)), and section 1817(i)
(42 U.S.C. 1395i(i)) are each amended by adding at the end the
following new sentence: "The amount available for payment under
this subsection for travel by a representative to attend an administrative proceeding before an administrative law judge or other
adjudicator shall not exceed the maximum amount allowable under
this subsection for such travel originating within the geographic
area of the office having jurisdiction over such proceeding.".

PUBLIC LAW 101-508—NOV. 5,1990

104 STAT. 1388-269

(d) EFFECTIVE DATE.—The amendments made by this section shall 42 USC 401 note,
apply with respect to determinations made on or after July 1, 1991,
and to reimbursement for travel expenses incurred on or after
April 1,1991.
SEC. 5107. APPLICABILITY OF ADMINISTRATIVE RES JUDICATA; RELATED
NOTICE REQUIREMENTS.
(a) I N GENERAL.—

(1) TITLE II.—Section 205(b) (42 U.S.C. 405(b)) is amended by
adding at the end the following new paragraph:
"(3)(A) A failure to timely request review of an initial adverse
determination with respect to an application for any benefit
under this title or an adverse determination on reconsideration
of such an initial determination shall not serve as a basis for
denial of a subsequent application for any benefit under this
title if the applicant demonstrates that the applicant, or any
other individual referred to in paragraph (1), failed to so request
such a review acting in good faith reliance upon incorrect,
incomplete, or misleading information, relating to the consequences of reapplying for benefits in lieu of seeking review of
an adverse determination, provided by any officer or employee
of the Social Security Administration or any State agency
acting under section 221.
"(B) In any notice of an adverse determination with respect to
which a review may be requested under paragraph (1), the
Secretary shall describe in clear and specific language the effect
on possible entitlement to benefits under this title of choosing to
reapply in lieu of requesting review of the determination.".
(2) TITLE XVL—Section 1631(cXl) (42 U.S.C. 1383(cXl)) is
amended—
(A) by inserting "(A)" after "(cXD"; and
(B) by adding at the end the following:
"(BXi) A failure to timely request review of an initial adverse
determination with respect to an application for any payment under
this title or an adverse determination on reconsideration of such an
initial determination shall not serve EIS a basis for denial of a
subsequent application for any payment under this title if the
applicant demonstrates that the applicant, or any other individual
referred to in paragraph (1), failed to so request such a review acting
in good faith reliance upon incorrect, incomplete, or misleading
information, relating to the consequences of reapplying for
pajonents in lieu of seeking review of an adverse determination,
provided by any officer or employee of the Social Security Administration or any State agency acting under section 221.
"(ii) In any notice of an adverse determination with respect to
which a review may be requested under paragraph (1), the Secretary
shall describe in clear and specific language the effect on possible
eligibility to receive payments under this title of choosing to reapply
in lieu of requesting review of the determination.".
(b) EFFECTIVE DATE.—The amendments made by this section shall
apply with respect to adverse determinations made on or after
July 1,1991.
SEC. 5108. DEMONSTRATION PROJECTS RELATING TO ACCOUNTABILITY
FOR TELEPHONE SERVICE CENTER COMMUNICATIONS.

(a) I N GENERAL.—The Secretary of Health and Human Services
shall develop and carry out demonstration projects designed to

42 USC 405 note,
42 USC 902 note.

104 STAT. 1388-270

PUBLIC LAW 101-508—NOV. 5, 1990

implement the accountability procedures described in subsection (b)
in each of not fewer than 3 telephone service centers operated by the
Social Security Administration. Telephone service centers shall be
selected for implementation of the accountability procedures so as to
permit a thorough evaluation of such procedures as they would
operate in conjunction with the service technology most recently
employed by the Social Security Administration. Each such demonstration project shall commence not later than 180 days after the
date of the enactment of this Act and shall remain in operation for
not less than 1 year and not more than 3 years,
(b) ACCOUNTABILITY PROCEDURES,—

(1) IN GENERAL.—During the period of each demonstration
project developed and carried out by the Secretary of Health
and Human Services with respect to a telephone service center
pursuant to subsection (a), the Secretary shall provide for the
application at such telephone service center of accountability
procedures consisting of the following:
(A) In any case in which a person communicates with the
Social Security Administration by telephone at such telephone service center and provides in such communication
his or her name, address, and such other identifying
information as the Secretary determines necessary and
appropriate for purposes of this subparagraph, the Secretary must thereafter promptly provide such person a
written receipt which sets forth—
(i) the name of any individual representing the Social
Security Administration with whom such person has
spoken in such communication,
(ii) the date of the communication;
(iii) a description of the nature of the communication,
(iv) any action that an individual representing the
Social Security Administration has indicated in the
communication will be taken in response to the
communication, and
(v) a description of the information or advice offered
in the communication by an individual representing
the Social Security Administration.
(B) Such person must be notified during the communication by an individual representing the Social Security
Administration that, if adequate identifying information is
provided to the Administration, a receipt described in
subparagraph (A) will be provided to such person.
(C) A copy of any receipt required to be provided to any
person under subparagraph (A) must be—
(i) included in the file maintained by the Social Security Administration relating to such person, or
(ii) if there is no such file, otherwise retained by the
Social Security Administration in retrievable form
until the end of the 5-year period following the termination of the project.
(2) EXCLUSION OF CERTAIN ROUTINE TELEPHONE COMMUNICA-

TIONS.—The Secretary may exclude from demonstration
projects carried out pursuant to this section routine telephone
communications which do not relate to potential or current
eligibility or entitlement to benefits.

PUBLIC LAW 101-508—NOV. 5,1990

104 STAT. 1388-271

(c) REPORT.—
(1) I N GENERAL ^^—The

Secretary of Health and Human Services shall submit to the Committee on Ways and Means of the
House of Representatives and the Committee on Finance of the
Senate a written report on the progress of the demonstration
projects conducted pursuant to this section, together with any
related data and materials which the Secretary may consider
appropriate. The report shall be submitted not later than 90
days after the termination of the project.
(2) SPECIFIC MATTERS TO BE INCLUDED.—The report required
under paragraph (1) shall—
(A) assess the costs and benefits of the accountability
procedures,
(B) identify any major difficulties encountered in implementing the demonstration project, and
(C) assess the feasibility of implementing the accountability procedures on a national basis.

SEC. 5109. NOTICE REQUIREMENTS.

(1) TITLE II.—Section 205 (42 U.S.C. 405) is amended by inserting after subsection (r) the following new subsection:
"NOTICE REQUIREMENTS

"(s) The Secretary shall take such actions as are necessary to
ensure that any notice to one or more individuals issued pursuant to
this title by the Secretary or by a State agency—
"(1) is written in simple and clear language, and
"(2) includes the address and telephone number of the local
office of the Social Security Administration which serves the
recipient.
In the case of any such notice which is not generated by a local
servicing office, the requirements of paragraph (2) shall be treated
£is satisfied if such notice includes the address of the local office of
the Social Security Administration which services the recipient of
the notice and a telephone number through which such office can be
(2) TITLE xvi.—Section 1631 (42 U.S.C. 1383) is amended by
adding at the end the following:
"NOTICE REQUIREMENTS

"(n) The Secretary shall take such actions as are necessary to
ensure that any notice to one or more individuals issued pursuant to
this title by the Secretary or by a State agency—
"(1) is written in simple and clear language, and
"(2) includes the address and telephone number of the local
office of the Social Security Administration which serves the
recipient.
In the case of any such notice which is not generated by a local
servicing office, the requirements of paragraph (2) shall be treated
as satisfied if such notice includes the address of the local office of
the Social Security Administration which services the recipient of
the notice and a telephone number through which such office can be
reached.".
(b) EFFECTIVE DATE.—The amendments made by this section shall
apply with respect to notices issued on or after July 1,1991.
*' So in original. Probably should be "GENERAL.—".

42 USC 405 note,

104 STAT. 1388-272
42 u s e 902 note.

PUBLIC LAW 101-508—NOV. 5, 1990

SEC. 5110. TELEPHONE ACCESS TO THE SOCIAL SECURITY ADMINISTRATION.
(a) REQUIRED MINIMUM LEVEL OF ACCESS TO LOCAL OFFICES.—In

addition to such other access by telephone to offices of the Social
Security Administration as the Secretary of Health and Human
Services may consider appropriate, the Secretary shall maintain
access by telephone to local offices of the Social Security Administration at the level of access generally available as of September 30,
1989.
(b) TELEPHONE LISTINGS.—The Secretary shall make such requests
of local telephone utilities in the United States as are necessary to
ensure that the listings subsequently maintained and published by
such utilities for each locality include the address and telephone
number for each local office of the Social Security Administration to
which direct telephone access is maintained under subsection (a) in
such locality. Such listing may also include information concerning
the availability of a toll-free number which may be called for
general information.
(c) REPORT BY SECRETARY.—Not later than January 1, 1993, the
Secretary shall submit to the Committee on Ways and Means of the
House of Representatives and the Committee on Finance of the
Senate a report which—
(1) assesses the impact of the requirements established by this
section on the Social Security Administration's allocation of
resources, workload levels, and service to the public, and
(2) presents a plan for using new, innovative technologies to
enhance access to the Social Security Administration, including
access to local offices.
(d) GAO REPORT.—The Comptroller General of the United States
shall review the level of telephone access by the public to the local
offices of the Social Security Administration. The Comptroller General shall file an interim report with the Committee on Ways and
Means of the House of Representatives and the Committee on
Finance of the Senate describing such level of telephone access not
later than 120 days after the date of the enactment of this Act and
shall file a final report with such Committees describing such level
of access not later than 210 days after such date.
(e) EFFECTIVE DATE.—The Secretary of Health and Human Services shall meet the requirements of subsections (a) and (b) as soon as
possible after the date of the enactment of this Act but not later 180
days after such date.
SEC. 5111. AMENDMENTS RELATING TO SOCIAL SECURITY ACCOUNT
STATEMENTS.

(a) I N GENERAL.—Section 1142 (42 U.S.C. 1320b-13), as added by
section 10308 of the Omnibus Budget Reconciliation Act of 1989 (103
Stat. 2485), is amended—
(1) by striking "SEC. 1142." and inserting "SEC. 1143."; and
(2) in subsection (cX2), by striking " a biennial" and inserting
"an annual".
(b) DISCLOSURE OF ADDRESS INFORMATION BY INTERNAL REVENUE
SERVICE TO SOCIAL SECURITY ADMINISTRATION.—

26 use 6103.

(1) I N GENERAL.—Section 6103(m) of the Internal Revenue
Code of 1986 (relating to disclosure of taxpayer identity information) is amended by adding at the end the following new paragraph:

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-273

"(7) SOCIAL SECURITY ACCOUNT STATEMENT FURNISHED BY SOCIAL

SECURITY ADMINISTRATION.—Upon written request by the Commissioner of Social Security, the Secretary may disclose the mailing
address of any taxpayer who is entitled to receive a social security
account statement pursuant to section 1143(c) of the Social Security
Act, for use only by officers, employees or agents of the Social
Security Administration for purposes of mailing such statement to
such taxpayer.".
(2) SAFEGUARDS.—Section 6103(p)(4) of such Code (relating to
safeguards) is amended, in the matter following subparagraph
(f)(iii), by striking "subsection (mX2), (4), or (6)" and inserting
"paragraph (2), (4), (6), or (7) of subsection (m)".
(3) UNAUTHORIZED DISCLOSURE PENALTIES.—Paragraph (2) of

section 7213(a) of such Code (relating to unauthorized disclosure
of returns and return information) is amended by striking
"(m)(2), (4), or (6)" and inserting "(m)(2), (4), (6), or (7)".
SEC. 5112. TRIAL WORK PERIOD DURING ROLLING FIVE-YEAR PERIOD
FOR ALL DISABLED BENEFICIARIES.

(a) I N GENERAL.—Section 222(c) (42 U.S.C. 422(c)) is amended—
(1) in paragraph (4)(A), by striking ", beginning on or after the
first day of such period," and inserting ", in any period of 60
consecutive months,"; and
(2) by striking paragraph (5).
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 42 USC 422 note,
shall take effect on January 1,1992.
SEC. 5113. CONTINUATION OF BENEFITS ON ACCOUNT OF PARTICIPATION
IN A NON-STATE VOCATIONAL REHABILITATION PROGRAM.

(a) I N GENERAL.—Section 225(b) (42 U.S.C. 425(b)) is amended—
(1) by striking paragraph (1) and inserting the following new
paragraph:
"(1) such individual is participating in a program of vocational rehabilitation services approved by the Secretary, and";
and
(2) in paragraph (2), by striking "Commissioner of Social
Security" and inserting "Secretary".
(b) PAYMENTS AND PROCEDURES.—Section 1631(a)(6) (42 U.S.C.
1383(a)(6)) is amended—
(1) by striking subparagraph (A) and inserting the following
new subparagraph:
"(A) such individual is participating in a program of vocational rehabilitation services approved by the Secretary, and";
and
(2) in subparagraph (B), by striking "Commissioner of Social
Security" and inserting "Secretary".
(c) EFFECTIVE DATE.—The amendments made by this section shall 42 USC 425 note,
be effective with respect to benefits payable for months after the
eleventh month following the month in which this Act is enacted
and shall apply only Avith respect to individuals whose blindness or
disability has or may have ceased after such eleventh month.
SEC. 5114. LIMITATION ON NEW ENTITLEMENT TO SPECIAL AGE-72 PAYMENTS.

(a) IN GENERAL.—Section 228(a)(2) (42 U.S.C. 428(aX2)) is amended
by striking "(B)" and inserting "(B)(i) attained such age after 1967
and before 1972, and (ii)".

104 STAT. 1388-274
42 use 428 note.

42 use 401 note.
*

42 use 402 note.

PUBLIC LAW 101-508—NOV. 5, 1990

(b) EFFECTIVE DATE—The amendment made by subsection (a) shall
apply with respect benefits payable on the basis of applications filed
after the date of the enactment of this Act.
SEC. 5115. ELIMINATION OF ADVANCED CREDITING TO THE TRUST FUNDS
OF SOCIAL SECURITY PAYROLL TAXES.
(a) IN GENERAL.—Section 201(a) (42 U.S.C. 401(a)) is amended—
(1) in the first sentence following clause (4)—
(A) by striking "monthly on the first day of each calendar
month" both places it appears and inserting "from time to
time";
(B) by striking "to be paid to or deposited into the Treasury during such month" and inserting "paid to or deposited
into the Treasury"; and
(2) in the last sentence, by striking "Fund;" and inserting
"Fund. Notwithstanding the preceding sentence, in any case in
which the Secretary of the Treasury determines that the assets
of either such Trust Fund would otherwise be inadequate to
meet such Fund's obligations for any month, the Secretary of
the Treasury shall transfer to such Trust Fund on the first day
of such month the amount which would have been transferred
to such Fund under this section as in effect on October 1, 1990;
and".
(c) EFFECTIVE DATE.—The amendments made by this section shall
become effective on the first day of the month following the month
in which this Act is enacted.
SEC. 5116. ELIMINATION OF ELIGIBILITY FOR RETROACTIVE BENEFITS
FOR CERTAIN INDIVIDUALS ELIGIBLE FOR REDUCED BENEFITS.
(a) IN GENERAL.—Section 2O20')(4) (42 U.S.C. 4O20')(4)) is amended—
(1) in subparagraph (A), by striking "if the effect" and all that
follows and inserting "if the amount of the monthly benefit to
which such individual would otherwise be entitled for any such
month would be subject to reduction pursuant to subsection
(q)."; and
(2) in subparagraph (B), by striking clauses (i) and (iv) and by
redesignating clauses (ii), (iii), and (v) as clauses (i), (ii), and (iii),
respectively.
(b) EFFECTIVE DATE.—The amendments made by this section shall
apply with respect to applications for benefits filed on or after
January 1,1991.
SEC. 5117. CONSOLIDATION OF OLD METHODS OF COMPUTING PRIMARY
INSURANCE AMOUNTS.
(a) CONSOUDATION OF COMPUTATION METHODS.—
(1) I N GENERAL.—Section 215(aX5) (42 U.S.C. 415(aX5)) is
amended—
(A) by striking "For purposes o f and inserting "(A)
Subject to subparagraphs (B), (C), (D) and (E), for purposes
of;
(B) by striking the last sentence; and
(C) by adding at the end the following new subparagraphs:
"(BXi) Subject to clauses (ii), (iii), and (iv), and notwithstanding
any other provision of law, the primary insureince amount of any
individual described in subparagraph (C) shall be, in lieu of the

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-275

primary insurance amount as computed pursuant to any of the
provisions referred to in subparagraph (D), the primary insurance
amount computed under subsection (a) of section 215 as in effect in
December 1978, without regard to subsection G3)(4) and (c) of such
section £is so in effect.
"(ii) The computation of a primary insurance amount under this
subparagraph shall be subject to section 104(j)(2) of the Social Security Amendments of 1972 (relating to the number of elapsed years
under section 215(b)).
"(iii) In computing a primary insurance amount under this
subparagraph, the dollar amount specified in paragraph (3) of section 215(a) (as in effect in December 1978) shall be increased to
$11.50.
"(iv) In the case of an individual to whom section 215(d) applies,
the primary insurance amount of such individual shall be the
greater of—
"(I) the primary insurance amount computed under the
preceding clauses of this subparagraph, or
"(II) the primary insurance amount computed under section
215(d).
"(C) An individual is described in this subparagraph if—
"(i) paragraph (1) does not apply to such individual by reason
of such individual's eligibility for an old-age or disability insurance benefit, or the individual's death, prior to 1979, and
"(ii) such individual's primary insurance amount computed
under this section as in effect immediately before the date of the
enactment of the Omnibus Budget Reconciliation Act of 1990
would have been computed under the provisions described in
subparagraph (D).
"(D) The provisions described in this subparagraph are—
"(i) the provisions of this subsection as in effect prior to the
enactment of the Social Security Amendments of 1965, if such
provisions would preclude the use of wages prior to 1951 in the
computation of the primary insurance amount,
"(ii) the provisions of section 209 as in effect prior to the
enactment of the Social Security Act Amendments of 1950, and
"(iii) the provisions of section 215(d) as in effect prior to the
enactment of the Social Security Amendments of 1977.
"(E) For purposes of this paragraph, the table for determining
primary insurance amounts and maximum family benefits contained in this section in December 1978 shall be revised as provided
by subsection (i) for each year after 1978.".
(2) COMPUTATION OF PRIMARY INSURANCE BENEFIT UNDER 1939
ACT.—
(A) DIVISION OF WAGES BY ELAPSED YEARS.—Section

215(d)(1) (42 U.S.C. 415(d)(1)) is amended—
(i) in subparagraph (A), by inserting "and subject to
section 104(jX2) of the Social Security Amendments of
1972" after "thereof; and
(ii) by striking "(B) For purposes" in subparagraph
(B) and all that follows through clause (ii) of such
subparagraph and inserting the following:
"(B) For purposes of subparagraphs (B) and (C) of subsection
(bX2) (as so in effect)—
"(i) the total wages prior to 1951 (as defined in subparagraph (C) of this paragraph) of an individual—

104 STAT. 1388-276

PUBLIC LAW 101-508—NOV. 5, 1990

"(I) shall, in the case of an individual who attained
age 21 prior to 1950, be divided by the number of years
(hereinafter in this subparagraph referred to as the
'divisor') elapsing after the year in which the
individual attained age 20, or 1936 if later, and prior to
the earlier of the year of death or 1951, except that
such divisor shall not include any calendar year entirely included in a period of disability, and in no case
shall the divisor be less than one, and
"(II) shall, in the case of an individual who died
before 1950 and before attaining age 21, be divided by
the number of years (hereinafter in this subparagraph
referred to as the 'divisor') elapsing after the second
year prior to the year of (ieath, or 1936 if later, and
prior to the year of death, and in no case shall the
divisor be less than one; and
"(ii) the total wages prior to 1951 (as defined in subparagraph (C) of this paragraph) of an individual who either
attained age 21 after 1949 or died after 1949 before attaining age 21, shall be divided by the number of years (hereinafter in this subparagraph referred to as the 'divisor')
elapsing after 1949 and prior to 1951.".
(B) CREDITING OF WAGES TO YEARS.—Clause (iii) of section
215(d)(1)(B) (42 U.S.C. 415(d)(l)(B)(iii)) is amended to read as
follows:
"(iii) if the quotient exceeds $3,000, only $3,000 shall be
deemed to be the individual's wages for each of the years
which were used in computing the amount of the divisor,
and the remainder of the individual's total wages prior to
1951 (I) if less than $3,000, shall be deemed credited to the
computation base year (as defined in subsection (b)(2) as in
effect in December 1977) immediately preceding the earliest
year used in computing the amount of the divisor, or (II) if
$3,000 or more, shall be deemed credited, in $3,000 increments, to the computation base year (as so defined) immediately preceding the earliest year used in computing the
amount of the divisor and to each of the computation base
years (as so defined) consecutively preceding that year, with
any remainder less than $3,000 being credited to the computation base year (as so defined) immediately preceding
the earliest year to which a full $3,000 increment was
credited; and".
(C) APPUCABILITY.—Section 215(d) is further amended—
(i) in paragraph (2)(B), by striking "except as provided in paragraph (3),";
(ii) by striking paragraph (2)(C) and inserting the
following:
"(C)(i) who becomes entitled to benefits under section 202(a) or
223 or who dies, or
"(ii) whose primary insurance amount is required to be recomputed under paragraph (2), (6), or (7) of subsection (f) or under
section 231."; and
(iii) by striking paragraphs (3) and (4).
(3) CONFORMING AMENDMENTS.—

(A) Section 215(i)(4) (42 U.S.C. 415(i)(4)) is amended in the
first sentence by inserting "and as amended by section 5117

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-277

of the Omnibus Budget Reconciliation Act of 1990" after
"as then in effect".
(B) Section 203(a)(8) (42 U.S.C. 403(a)(8)) is amended in the
first sentence by inserting "and as amended by section 5117
of the Omnibus Budget Reconciliation Act of 1990," after
"December 1978" the second place it appears.
(C) Section 215(c) (42 U.S.C. 415(c)) is amended by striking
"This" and inserting "Subject to the amendments made by
section 5117 of the Omnibus Budget Reconciliation Act of
1990 this"
(D) Section 215(f)(7) (42 U.S.C. 415(f)(7)) is amended by
striking the period at the end of the first sentence and
inserting ", including a primary insurance amount computed under any such subsection whose operation is modified as a result of the amendments made by section 5117 of
the Omnibus Budget Reconciliation Act of 1990".
(E)(i) Section 215(d) (42 U.S.C. 415(d)) is further amended
by redesignating paragraph (5) as paragraph (3).
(ii) Subsections (a)(7)(A), (a)(7XC)(ii), and (fX9)(A) of section
215 (42 U.S.C. 415) are each amended by striking "subsection (d)(5)" each place it appears and inserting "subsection
(d)(3)".
"(iii) Section 215(fK9)(B) (42 U.S.C. 415(fK9)(B)) is amended
by striking "subsection (a)(7) or (d)(5)" each place it appears
and inserting "subsection (a)(7) or (dX3)".
(4) EFFECTIVE DATE.—

(A) IN GENERAL.—Except as provided in subparagraph (B),
the amendments made by this subsection shall apply with
respect to the computation of the primary insurance
amount of any insured individual in any case in which a
person becomes entitled to benefits under section 202 or 223
on the basis of such insured individual's wages and selfemployment income for months after the 18-month period
following the month in which this Act is enacted, except
that such amendments shall not apply if any person is
entitled to benefits based on the wages and self-employment
income of such insured individual for the month preceding
the initial month of such person's entitlement to such
benefits under section 202 or 223.
(B) RECOMPUTATIONS.—The amendments made by this
subsection shall apply with respect to any primary insurance amount upon the recomputation of such primary
insurance amount if such recomputation is first effective
for monthly benefits for months after the 18-month period
following the month in which this Act is enacted.
(b) BENEFITS IN CASE OF VETERANS.—Section 217(b) (42 U.S.C.
417(b)) is amended—
(1) in the first sentence of paragraph (1), by striking "Any"
and inserting "Subject to paragraph (3), any"; and
(2) by adding at the end the following new paragraph:
"(3XA) The preceding provisions of this subsection shall apply for
purposes of determining the entitlement to benefits under section
202, based on the primary insurance amount of the deceased World
War II veteran, of any surviving individual only if such surviving
individual makes application for such benefits before the end of the
18-month period after the month in which the Omnibus Budget
Reconciliation Act of 1990 was enacted.

^2 USC 403 note.

104 STAT. 1388-278

PUBLIC LAW 101-508—NOV. 5, 1990

"(B) Subparagraph (A) shall not apply if any person is entitled to
benefits under section 202 based on the primary insurance amount
of such veteran for the month preceding the month in which such
application is made.".
(c) APPLICABIUTY OF ALTERNATIVE METHbD FOR DETERMINING
QUARTERS OF COVERAGE WITH RESPECT TO WAGES IN THE PERIOD

FROM 1937-TO 1950.—
(1) APPUCABIIJTY WITHOUT REGARD TO NUMBER OF ELAPSED

YEARS.—Section 213(c) (42 U.S.C. 413(c)) is amended—
(A) by inserting "and 215(d)" after "214(a)"; and
(B) by striking "except where—" and all that follows and
inserting the following: "except where such individual is
not a fully insured individual on the basis of the number of
quarters of coverage so derived plus the number of quarters
of coverage derived from the wages and self-employment
income credited to such individual for periods after 1950.".
(2) APPLICABILITY WITHOUT REGARD TO DATE OF DEATH.—Sec-

42 use 413 note.
42 use 413 note.

42 u s e 423.

42 use 423 note.

tion 155(bX2) of the Social Security Amendments of 1967 is
amended by striking "after such date".
(3) EFFECTIVE DATE.—The amendments made by this subsection shall apply only with respect to individuals who—
(A) make application for benefits under section 202 of the
Social Security Act after the 18-month period following the
month in which this Act is enacted, and
(B) are not entitled to benefits under section 227 or 228 of
such Act for the month in which such application is made.
SEC. 5118. SUSPENSION OF DEPENDENT'S BENEFITS WHEN THE WORKER
IS IN AN EXTENDED PERIOD OF ELIGIBILITY.
(a) I N GENERAL.—Section 223(e) (42 U.S.C. 623(e)) is amended by—
(1) by inserting "(1)" after "(e)"; and
(2) by adding at the end the following new paragraph:
"(2) No benefit shall be payable under section 202 on the basis of
the wages and self-employment income of an individual entitled to a
benefit under subsection (a)(1) of this section for any month for
which the benefit of such individual under subsection (a)(1) is not
payable under paragraph (1).".
(b) EFFECTIVE DATE.—The amendments made by subsection (a)
shall apply with respect to benefits for months after the date of the
enactment of this Act.
SEC. 5119. ENTITLEMENT TO BENEFITS OF DEEMED SPOUSE AND LEGAL
SPOUSE.
(a) CONTINUED ENTITLEMENT OF DEEMED SPOUSE DESPITE ENTITLE-

MENT OF LEGAL SPOUSE.—Section 216(h)(1) (42 U.S.C. 416(h)(1)) is

amended—
(1) in subparagraph (A)—
(A) by inserting "(i)" after "(h)(1)(A)"; and
(B) by striking "If such courts" in the second sentence
and inserting the following:
"(ii) If such courts"; and
(2) in subparagraph (B)—
(A) by inserting "(i)" after "(B)";
(B) by striking "The provisions of the preceding sentence"
in the second sentence and inserting the following:
"(ii) The provisions of clause (i)";

PUBLIC LAW 101-508—NOV. 5,1990

104 STAT. 1388-279

(C) by striking "(i) if another" in the second sentence and
all that follows through "or (ii)";
(D) by striking "The entitlement" in the third sentence
and inserting the following:
"(iii) The entitlement";
(E) by striking "subsection (b), (c), (e), (f), or (g)" the first
place it appears in the third sentence and inserting "subsection (b) or (c)",
(F) by strildng "wife, widow, husband, or widower" the
first place it appears in the third sentence £ind inserting
"wife or husband";
(G) by striking "(i) in which" in the third sentence and all
that follows through "in which such applicant entered" and
inserting "in which such person enters*;
(H) by striking "For purposes" in the fourth sentence and
inserting the following:
"(iv) For purposes";
and
(I) by striking "(i)" and "(ii)" in the fourth sentence and
inserting "(I)" and "(II)", respectively.
(b) TREATMENT OF DIVORCE IN THE C!ONTEXT OF INVAUD MAR-

RIAGE.—Section 216(hXlXBXi) (as amended by subsection (a)) is further amended—
(1) by striking "where under subsection (b), (c), (f), or (g) such
applicant is not the wife, widow, husband, or widower of such
individual" and inserting "where under subsection (b), (c), (d),
(f), or (g) such applicant is not the wife, divorced wife, widow,
surviving divorced wife, husband, divorced husband, widower,
or surviving divorced husband of such individual";
(2) by striking "and such applicant" and all that follows
through "files the application,";
(3) by striking "subsections (b), (c), (f), and (g)" and inserting
"subsections (b), (c), (d), (f), and (g)"; and
(4) by adding at the end the following new sentences: "Notwithstanding the preceding sentence, in the case of any person
who would be deemed under the preceding sentence a wife,
widow, husband, or widower of the insured individual, such
marriage shall not be deemed to be a valid marriage unless the
applicant and the insured individual were living in the same
household at the time of the death of the insured individual or
(if the insured individual is living) at the time the applicant files
the application. A marriage that is deemed to be a valid marriage by reason of the preceding sentence shall continue to be
deemed a valid marriage if the insured individual and the
person entitled to benefits as the wife or husband of the insured
individual are no longer living in the same household at the
time of the death of such insured individual.".
(c) TREATMENT OF MULTIPLE ENTITLEMENTS UNDER THE FAMILY

MAXIMUM.—Section 203(aX3) (42 U.S.C. 403(aX3)) is amended by
adding after subparagraph (C) the following new subparagraph:
"(D) In any case in which—
"(i) two or more individuals are entitled to monthly benefits
for the same month as a spouse under subsection (b) or (c) of
section 202, or as a surviving spouse under subsection (e), (f), or
(g) of section 202,
"(ii) at least one of such individuals is entitled by reason of
subparagraph (AXii) or (B) of section 216(hXl), and

104 STAT. 1388-280

PUBLIC LAW 101-508—NOV. 5, 1990

"(iii) such entitlements are based on the wages and selfemployment income of the same insured individual,
the benefit of the entitled individual whose entitlement is based on a
valid marriage (as determined without regard to subparagraphs
(A)(ii) and (B) of section 216(h)(1)) to such insured individual shall,
for such month and all months thereafter, be determined without
regard to this subsection, and the benefits of all other individuals
who are entitled, for such month or any month thereafter, to
monthly benefits under section 202 based on the wages and selfemployment income of such insured individual shall be determined
as if such entitled individual were not entitled to benefits for such
month.".
(d)

CONFORMING

AMENDMENT.—Section

203(a)(6)

(42

U.S.C.

403(a)(6)) is amended by inserting "(3)(D)," after "(3)(C),".
42 u s e 403 note.

(e) EFFECTIVE D A T E . —

(1) I N GENERAL.—The amendments made by this section shall
apply with respect to benefits for months after December 1990.
(2) APPUCATION REQUIREMENT.—
(A) GENERAL RULE.—Except as provided in subparagraph

(B), the amendments made by this section shall apply only
with respect to benefits for which application is filed with
the Secretary of Health and Human Services after December 31,1990.
(B)

EXCEPTION

FROM

APPLICATION

REQUIREMENT.—

Subparagraph (A) shall not apply with respect to the benefits of any individual if such individual is entitled to a
benefit under subsection (b), (c), (e), or (f) of section 202 of
the Social Security Act for December 1990 and the individual on whose wages and self-employment income such benefit for December 1990 is based is the same individual on the
b£isis of whose wages and self-emplo3anent income application would otherwise be required under subparagraph (A).
42 u s e 1310

SEC. 5120. VOCATIONAL REHABILITATION DEMONSTRATION PROJECTS.
(a) DEMONSTRATION PROJECT.—

(1) I N GENERAL.—Pursuant to section 505 of the Social Security Disability Amendments of 1980, the Secretary of Health
and Human Services shall develop and carry out under this
section demonstration projects in each of not fewer than three
States. Each such demonstration project shall be designed to
assess the advantages and disadvantages of permitting disabled
beneficiaries (as defined in paragraph (3)) to select, from among
both public and private qualified vocational rehabilitation
providers, providers of vocational rehabilitation services directed at enabling such beneficiaries to engage in substantial
gainful activity. Each such demonstration project shall commence as soon as practicable after the date of the enactment of
this Act and shall remain in operation until the end of fiscal
year 1993.
(2) SCOPE AND PARTICIPATION.—Each demonstration project

shall be of sufficient scope and open to sufficient participation
by disabled beneficiaries so as to permit meaningful determinations under subsection (b).
(3) DISABUID BENEFICIARY.—For purposes of this section, the
term "disabled beneficiary" means an individual who is entitled
to disability insurance benefits under section 223 of the Social

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-281

Security Act or benefits under section 202 of such Act based on
such individual's own disabiUty.
(b) MATTERS TO B E DETERMINED.—In the course of each demonstration project conducted under this section, the Secretary shall determine the following:
(1) the extent to which disabled beneficiaries participate in
the process of selecting providers of rehabilitation services, and
their reasons for participating or not participating;
(2) notable characteristics of participating disabled beneficiaries (including their impairments), classified by the type of
provider selected;
(3) the various needs for rehabilitation demonstrated by
participating disabled beneficiaries, classified by the type of
provider selected;
(4) the extent to which providers of rehabilitation services
which are not agencies or instrumentalities of States accept
referrals of disabled beneficiaries under procedures in effect
under section 222(d) of the Social Security Act as of the date of
the enactment of this Act relating to reimbursement for such
services and the most effective way of reimbursing such providers in accordance with such provisions;
(5) the extent to which providers participating in the demonstration projects enter into contracts with third parties for
T' services and the types of such services;
(6) whether, and if so the extent to which, disabled beneficiaries who select their own providers of rehabilitation services are more likely to engage in substantial gainful activity and
thereby terminate their entitlement under section 202 or 223 of
the Social Security Act than those who do not;
(7) the cost effectiveness of permitting disabled beneficiaries
to select their providers of vocational rehabilitation services,
and the comparative cost effectiveness of different types of
providers; and
(8) the feasibility of establishing a permanent national program for allowing disabled beneficiaries to choose their own
qualified vocational rehabilitation provider and any additional
safeguards which would be necessary to assure the effectiveness
of such a program.
(c) PROCEDURAL REQUIREMENTS.—
(1) SELECTION OF PARTICIPANTS.—The

Secretary shall select for
participation in each demonstration project under this section
disabled beneficiaries for whom there is a reasonable likelihood
that rehabilitation services provided to them will result in
performance by them of substantial gainful activity for a
continuous period of nine months prior to termination of the
project.
(2) SELECTION OF PROVIDERS OF REHABILITATION SERVICES.—The

Secretary shall select qualified rehabilitation agencies to serve
as providers of rehabilitation services in the geographic area
covered by each demonstration project conducted under this
section. The Secretary shall make such selection after consultation with disabled individuals and organizations representing
such individuals. With respect to each demonstration project,
the Secretary may approve on a case-by-case basis additional
qualified rehabilitation agencies from outside the geographic
area covered by the project to serve particular disabled beneficiaries.

104 STAT. 1388-282

PUBLIC LAW 101-508—NOV. 5, 1990
(3) REIMBURSEMENT OF PROVIDERS.—

(A) Except as provided in subparagraph (B), providers of
rehabilitation services under each demonstration project
under this section shall be reimbursed in accordance with
the procedures in effect under the provisions of section
222(d) of the Social Security Act EIS of the date of the
enactment of this Act relating to reimbursement for services provided under such section.
(B) The Secretary may contract with providers of rehabilitation services under each demonstration project
under this section on a fee-for-service basis in order to—
(i) conduct vocational evaluations directed at identifying those disabled beneficiaries who have reasonable
potential for engaging in substantial gainful activity
and thereby terminating their entitlement to benefits
under section 202 or 223 of the Social Security Act if
provided with vocational rehabilitation services as
participants in the project, and
(ii) develop jointly with each disabled beneficiary so
identified an individualized, written rehabilitation program.
(C) Each written rehabilitation program developed pursuant to subparagraph (BXii) for any participant shall include
among its provisions—
(i) a statement of the participant's rehabilitation
goal,
(ii) a statement of the specific rehabilitation services
to be provided and of the identity of the provider to
furnish such services,
(iii) the projected date for the initiation of such services and their anticipated duration, and
(iv) objective criteria and an evaluation procedure
and schedule for determining whether the stated rehabilitation goal is being achieved.
(d) REPORTS.—The Secretary of Health and Human Services shall
submit to the Committee on Ways and Means of the House of
Representatives and the C!ommittee on Finance of the Senate an
interim written report on the progress of the demonstration projects
conducted under this section not later than April 1, 1992, together
with any related data and materials which the Secretary considers
appropriate. The Secretary shall submit a final written report to
such Committees addressing the matters to be determined under
subsection (b) not later than April 1,1994.
(e) STATE.—For purposes of this section, the term "State" means a
State, including the entities included in such term by section 210(h)
of the Social Security Act (42 U.S.C. 410(h)).
(f) CONTINUATION OF DEMONSTRATION AUTHORITY.—Section 505(c)
of the Social Security Disability Amendments of 1980 (42 U.S.C. 1310
note) is amended to read as follows:
"(c) The Secretary shall submit to the Congress a final report with
respect to all experiments and demonstration projects carried out
under this section (other than demonstration projects conducted
under section 5120 of the Omnibus Budget Reconciliation of 1990) no
later than October 1,1993.".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-283

SEC. 5121. EXEMPTION FOR CERTAIN ALIENS, RECEIVING AMNESTY
UNDER THE IMMIGRATION AND NATIONALITY ACT, FROM
PROSECUTION FOR MISREPORTING OF EARNINGS OR MISUSE
OF SOCIAL SECURITY ACCOUNT NUMBERS OR SOCIAL SECURITY CARDS.

(a) IN GENERAL.—Section 208 (42 U.S.C. 408) is amended by adding
at the end the following:
"(d)(1) Except as provided in paragraph (2), an alien—
"(A) whose status is adjusted to that of lawful temporary
resident under section 210 or 245A of the Immigration and
Nationality Act or under section 902 of the Foreign Relations
Authorization Act, Fiscal Years 1988 and 1989,
"(B) whose status is adjusted to that of permanent resident—
"(i) under section 202 of the Immigration Reform and
Control Act of 1986, or
"(ii) pursuant to section 249 of the Immigration and
Nationality Act, or
"(C) who is granted special immigrant status under section
101(a)(27)(I) of the Immigration and Nationality Act,
shall not be subject to prosecution for any alleged conduct described
in paragraph (6) or (7) of subsection (a) if such conduct is alleged to
have occurred prior to 60 days after the date of the enactment of the
Omnibus Budget Reconciliation Act of 1990.
"(2) Paragraph (1) shall not apply with respect to conduct (described in subsection (a)(7)(C)) consisting of^
"(A) selling a card that is, or purports to be, a social security
card issued by the Secretary,
"(B) possessing a social security card with intent to sell it, or
"(C) counterfeiting a social security card with intent to sell it.
"(3) Paragraph (1) shall not apply with respect to any criminal
conduct involving both the conduct described in subsection (a)(7) to
which paragraph (1) applies and any other criminal conduct if such
other conduct would be criminal conduct if the conduct described in
subsection (a)(7) were not committed.".
(b) TECHNICAL AND CONFORMING AMENDMENTS.—So much of section 208 as precedes subsection (d) (as added by subsection (a) of this
section) is amended—
(1) in subsection (a), by redesignating paragraphs (1), (2), and
(3) £is subparagraphs (A), (B), and (C), respectively;
(2) in subsection (g), by redesignating paragraphs (1), (2), and
(3) as subparagraphs (A), (B), and (C), respectively;
(3) by redesignating subsections (a) through (h) as paragraphs
(1) through (8), respectively;
(4) by inserting "(a)" before "Whoever";
(5) by inserting "(b)" at the beginning of the next-to-last
undesignated paragraph; and
(6) by inserting "(c)' at the beginning of the last undesignated
paragraph.
SEC. 5122. REDUCTION OF AMOUNT OF WAGES NEEDED TO EARN A YEAR
^
OF COVERAGE APPLICABLE IN DETERMINING SPECIAL
MINIMUM PRIMARY INSURANCE AMOUNT.

(a) IN GENERAL.—Section 215(a)(lXC)(ii) (42 U.S.C. 415(aXl)(C)(ii)) is
amended by striking "of not less than 25 percent" the first place it
appears and all that follows through "1977) i f and inserting "of not
less than 25 percent (in the case of a year after 1950 and before 1978)
of the maximum amount which (pursuant to subsection (e)) may be

104 STAT. 1388-2^4

PUBLIC LAW 101-508—NOV. 5,1990

counted for such year, or 25 percent (in the case of a year after 1977
and before 1991) or 15 percent (in the case of a year after 1990) of the
maximum amount which (pursuant to subsection (e)) could be
counted for such year i f .
(b) RETENTION OF CURRENT AMOUNT OF WAGES NEEDED TO EARN A
YEAR OF COVERAGE FOR PURPOSES OF WINDFALL EUMINATION PROVI-

SION.—Section 215(a)(7)(D) (42 U.S.C. 415(aX7XD)) is amended—
(1) in the first sentence, by striking "(as defined in paragraph
(IXCXii))"; and
(2) by adding at the end (after the table) the following new
flush sentence:
"For purposes of this subparagraph, the term 'year of coverage'
shall have the meaning provided in paragraph (lXC)(ii), except that
the reference to '15 percent' therein shall be deemed to be a
reference to '25 percent.".
SEC. 5123. CHARGING OF EARNINGS OF CORPORATE DIRECTORS.
(a) I N GENERAL.—

(1) Title II is amended by moving the last undesignated
paragraph of section 211(a) of such title (as added by section
9022(a) of the Omnibus Budget Reconciliation Act of 1987) to the
end of section 203(f)(5) of such title.
(2) The undesignated paragraph moved to section 203(fK5) of
42 u s e 403.
the Social Security Act by paragraph (1) is amended—
(A) by striking "Any income of an individual which results from or is attributable to" and inserting "(E) For
purposes of this section, any individual's net earnings from
self-employment which result from or are attributable to",
(B) by striking "the income is actually paid" and inserting "the income, on which the computation of such net
earnings from self-employment is based, is actually paid";
and
(C) by striking "unless it was" and inserting "unless such
income was".
(3) The last undesignated paragraph of section 1402(a) of the
26 use 1402.
Internal Revenue Code of 1986 (as added by section 9022(b) of
the Omnibus Budget Reconciliation Act of 1987) is repealed.
42 use 403 note.
(b) EFFECTIVE DATE.—The amendments made by this section shall
apply with respect to income received for services performed in
taxable years beginning after December 31,1990.

42 use 411,403.

SEC. 5124. COLLECTION OF EMPLOYEE SOCIAL SECURITY AND RAILROAD
RETIREMENT TAXES ON TAXABLE GROUP-TERM LIFE INSURANCE PROVIDED TO RETIREES.

26 use 3102.

(a) SOCIAL SECURITY TAXES.—Section 3102 of the Internal Revenue
Code of 1986 (relating to deduction of tax from wages) is amended by
adding at the end thereof the following new subsection:
"(d) SPECIAL RULE FOR CERTAIN TAXABLE GROUP-TERM LIFE INSURANCE BENEFITS.—

"(1) I N GENERAL.—In the case of any payment for group-term
life insurance to which this subsection applies—
"(A) subsection (a) shall not apply,
"(B) the employer shall separately include on the statement required under section 6051—
"(i) the portion of the wages which consists of payments for group-term life insurance to which this
subsection applies, and

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-285

"(ii) the amount of the tax imposed by section 3101 on
such payments, and
"(C) the tax imposed by section 3101 on such payments
shall be paid by the employee.
"(2) BENEFITS TO WHICH SUBSECTION APPUES.—This subsection
shall apply to any payment for group-term life insurance to the
extent—
"(A) such payment constitutes wages, and
"(B) such payment is for coverage for periods during
which an employment relationship no longer exists between the employee and the employer."
(b) RAILROAD RETIREMENT TAXES.—Section 3202 of such Code
(relating to deduction of tax from compensation) is amended by
adding at the end thereof the following new subsection:
"(d) SPECIAL RULE FOR CERTAIN TAXABLE GROUP-TERM LIFE INSURANCE BENEFITS.—

"(1) I N GENERAL.—In the case of any payment for group-term
life insurance to which this subsection applies—
"(A) subsection (a) shall not apply,
"(B) the employer shall separately include on the statement required under section 6051—
"(i) the portion of the compensation which consists of
payments for group-term life insurance to which this
subsection applies, and
"(ii) the amount of the tax imposed by section 3201 on
such payments, and
"(C) the tax imposed by section 3201 on such payments
shall be paid by the employee.
"(2) BENEFITS TO WHICH SUBSECTION APPLIES.—This subsection
shall apply to any payment for group-term life insurance to the
extent—
"(A) such payment constitutes compensation, and
"(B) such payment is for coverage for periods during
which an employment relationship no longer exists between the employee and the employer."
(c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 3102
apply to coverage provided after December 31,1990.
note.
SEC. 5125. TIER 1 RAILROAD RETIREMENT TAX RATES EXPLICITLY
DETERMINED BY REFERENCE TO SOCIAL SECURITY TAXES.

(a) TAX ON EMPLOYEES.—Subsection (a) of section 3201 of the
Internal Revenue Code of 1986 (relating to rate of tax) is amended— 26 USC 3201.
(1) by striking "following" and inserting "applicable", and
(2) by striking "employee:" and all that follows and inserting
"employee. For purposes of the preceding sentence, the term
'applicable percentage' means the percentage equal to the sum
of the rates of tax in effect under subsections (a) and (b) of
section 3101 for the calendar year."
Cb) TAX ON EMPLOYEE REPRESENTATIVES.—Paragraph (1) of section
3211(a) of such Code (relating to rate of tax) is amended—
(1) by striking "following" and inserting "applicable", and
(2) by striking "representative:" and all that follows and
inserting "representative. For purposes of the preceding sentence, the term 'applicable percentage' means the percentage
equal to the sum of the rates of tax in effect under subsections
(a) and (b) of section 3101 and subsections (a) and (b) of section
3111 for the calendar year."

104 STAT. 1388-286

PUBLIC LAW 101-508—NOV. 5, 1990

(c) TAX ON EMPLOYERS.—Subsection (a) of section 3221 of such
Code (relating to rate of tax) is amended—
(1) by striking "following" and inserting "applicable", and
(2) by striking "employer:" and all that follows and inserting
"employer. For purposes of the preceding sentence, the term
'applicable percentage' means the percentage equal to the sum
of the rates of tax in effect under subsections (a) and (b) of
section 3111 for the calendar year."
SEC. 5126. TRANSFER TO RAILROAD RETIREMENT ACCOUNT.

45 use 231n
"o^-

Subsection (c)(1)(A) of section 224 of the Railroad Retirement
Solvency Act of 1983 (relating to section 72(r) revenue increase
transferred to certain railroad accounts) is amended by striking
"1990" and inserting "1992".
SEC. 5127. WAIVER OF 2-YEAR WAITING PERIOD FOR INDEPENDENT
ENTITLEMENT TO DIVORCED SPOUSE'S BENEFITS.
(a) WAIVER FOR PURPOSES OF DEDUCTIONS ON ACCOUNT OF WORK.—

Section 203(b)(2) (42 U.S.C. 403(b)(2)) is amended—
(1) by striking "(2) When" and all that follows through "2
years, the benefit" and inserting the" following:
"(2XA) Except as provided in subparagraph (B), in any case in
which—
"(i) any of the other persons referred to in paragraph (1)(B) is
entitled to monthly benefits as a divorced spouse under section
202(b) or (c) for any month, and
"(ii) such person has been divorced for not less than 2 years,
the benefit"; and
(2) by adding at the end the following new subparagraph:
"(B) Clause (ii) of subparagraph (A) shall not apply with respect to
any divorced spouse in any case in which the individual referred to
in paragraph (1) became entitled to old-age insurance benefits under
section 202(a) before the date of the divorce.".
(b) WAIVER IN CASE OF NONCOVERED WORK OUTSIDE THE UNITED

STATES.—Section 203(d)(lXB) (42 U.S.C. 403(d)(1)(B)) is amended—
(1) by striking "(B) When" and all that follows through "2
years, the benefit" and inserting the following:
"(BXi) Except as provided in clause (ii), in any case in which—
"(I) a divorced spouse is entitled to monthly benefits under
section 202(b) or (c) for any month, and
"(II) such divorced spouse has been divorced for not less than
2 years,
the benefit"; and
(2) by adding at the end the following new clause:
"(ii) Subclause (II) of clause (i) shall not apply with respect to any
divorced spouse in any case in which the individual entitled to oldage insurance benefits referred to in subparagraph (A) became
entitled to such benefits before the date of the divorce.".
42 use 403 note.
(c) EFFECTIVE DATE.—The amendments made by this section shall
apply with respect to benefits for months after December 1990.
SEC. 5128. MODIFICATION OF THE PREEFFECTUATION REVIEW REQUIREMENT APPLICABLE TO DISABILITY INSURANCE CASES.

(a) IN GENERAL.—Section 221(cX3) (42 U.S.C. 421(cX3)) is amended
to read as follows:
"(3XA) In carrying out the provisions of paragraph (2) with respect
to the review of determinations made by State agencies pursuant to

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-287

this section that individuals are under disabilities (as defined in
section 216(i) or 223(d)), the Secretary shall review—
"(i) at legist 50 percent of all such determinations made by
State agencies on applications for benefits under this title, and
"(ii) other determinations made by State agencies pursuant to
this section to the extent necessary to assure a high level of
accuracy in such other determinations.
"(B) In conducting reviews pursuant to subparagraph (A), the
Secretary shall, to the extent feasible, select for review those determinations which the Secretary identifies as being the most likely to
be incorrect.
"(C) Not later than April 1, 1992, and annually thereafter, the
Secretary shall submit to the Committee on Ways and Means of the
House of Representatives and the Committee on Finance of the
Senate a written report setting forth the number of reviews conducted under subparagraph (AXii) during the preceding fiscal year
and the findings of the Secretary based on such reviews of the
accuracy of the determinations made by State agencies pursuant to
this section.".
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 42 use 421 note,
shall apply with respect to determinations made by State agencies
in fiscal years after fiscal year 1990.
SEC. 5129. RECOVERY OF OASDI OVERPAYMENTS BY MEANS OF REDUCTION IN TAX REFUNDS.

(a) ADDITIONAL METHOD OF RECOVERY.—Section 204(a)(1)(A) (42
U.S.C. 404(a)(1)(A)) is amended by inserting after "payments to such
overpaid person," the following: "or shall obtain recovery by means
of reduction in tax refunds based on notice to the Secretary of the
Treasury as permitted under section 3720A of title 31, United States
Code,".
(b) RECOVERY BY MEANS OF REDUCTION IN TAX REFUNDS.—Section

3720A of title 31, United States Code (relating to collection of debts
owed to Federal Eigencies) is amended—
(1) in subsection (a), by striking "OASDI overpayment and";
(2) by redesignating subsection (f) as subsection (g); and
(3) by inserting the following new subsection after subsection
(e):
"(fKl) Subsection (a) shall apply with respect to an OASDI overpayment made to any individual only if such individual is not
currently entitled to monthly insurance benefits under title II of the
Social Security Act.
"(2)(A) The requirements of subsection (b) shall not be treated as
met in the case of the recovery of an OASDI overpayment from any
individual under this section unless the notification under subsection (bXD describes the conditions under which the Secretary of
Health and Human Services is required to waive recovery of an
overpayment, as provided under section 204(b) of the Social Security
Act.
"(B) In any case in which an individual files for a waiver under
section 204(b) of the Social Security Act within the 60-day period
referred to in subsection (bX2), the Secretary of Health and Human
Services shall not certify to the Secretary of the Treasury that the
debt is valid under subsection (bX4) before rendering a decision on
the waiver request under such section 204(b). In lieu of payment,
pursuant to subsection (c), to the Secretary of Health and Human
Services of the amount of any reduction under this subsection based

104 STAT. 1388-288

PUBLIC LAW 101-508—NOV. 5, 1990

on an OASDI overpayment, the Secretary of the Treasury shall
deposit such amount in the Federal Old-Age and Survivors Insurance Trust Fund or the Federal Disability Insurance Trust Fund,
whichever is certified to the Secretary of the Treasury as appropriate by the Secretary of Health and Human Services.".
(c) INTERNAL REVENUE CODE PROVISIONS.—

26 use 6402.

(1) IN GENERAL.—Subsection (d) of section 6402 of the Internal
Revenue Code of 1986 (relating to collection of debts owed to
Federal agencies) is amended—
(A) in paragraph (1), by striking "any OASDI overpayment a n d ' ; and
(B) by striking paragraph (3) and inserting the following
new paragraph:
"(3) T R E A T M E N T OF OASDI OVERPAYMENTS.—

"(A) REQUIREMENTS.—Paragraph (1) shall apply with respect to an OASDI overpayment only if the requirements of
paragraphs (1) and (2) of section 3720A(f) of title 31, United
States Code, are met with respect to such overpayment.
"(B) NOTICE; PROTECTION OF OTHER PERSONS FIUNG JOINT
RETURN.—

"(i) NOTICE.—In the case of a debt consisting of an
OASDI overpayment, if the Secretary determines upon
receipt of the notice referred to in paragraph (1) that
the refund from which the reduction described in paragraph (1)(A) would be made is based upon a joint
return, the Secretary shall—
"(I) notify each taxpayer filing such joint return
that the reduction is being made from a refund
based upon such return, and
"(II) include in such notification a description of
the procedures to be followed, in the case of a joint
return, to protect the share of the refund which
may be payable to another person.
"(ii) ADJUSTMENTS BASED ON PROTECTIONS GIVEN TO

OTHER TAXPAYERS ON JOINT RETURN.—If the other
person filing a joint return with the person owing the
OASDI overpayment takes appropriate action to secure
his or her proper share of the refund subject to reduction under this subsection, the Secretary shall pay such
share to such other person. The Secretary shall deduct
the amount of such payment from amounts which are
derived from subsequent reductions in refunds under
this subsection and are payable to a trust fund referred
to in subparagraph (C).
"(C) DEPOSIT OF AMOUNT OF REDUCTION INTO APPROPRIATE

TRUST FUND.—In lieu of payment, pursuant to paragraph
(1)(B), of the amount of any reduction under this subsection
to the Secretary of Health and Human Services, the Secretary shall deposit such amount in the Federal Old-Age
and Survivors Insurance Trust Fund or the Federal Disability Insurance Trust Fund, whichever is certified to the
Secretary as appropriate by the Secretary of Health and
Human Services.
"(D) OASDI OVERPAYMENT.—For purposes of this paragraph, the term 'OASDI overpayment' means any overpayment of benefits made to an individual under title II of the
Social Security Act.".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-289

(2) PRESERVATION OF REMEDIES.—Subsection (e) of section 6402
of such Code (relating to review of reductions) is amended in the
last sentence by inserting before the period the following: "or
any such action against the Secretary of Health and Human
Services which is otherwise available with respect to recoveries
of overpayments of benefits under section 204 of the Social
Security Act",
(d) EFFECTIVE DATE.—The amendments made by this section— 26 use 6402
(1) shall take effect January 1,1991, and
note.
(2) shall not apply to refunds to which the amendments made
by section 2653 of the Deficit Reduction Act of 1984 (98 Stat.
1153) do not apply.
SEC. 5130. MISCELLANEOUS TECHNICAL CORRECTIONS.
(a) I N GENERAL.—
(1) AMENDMENT RELATING TO SECTION

7088 OF PUBLIC LAW loo690.—Section 208 (42 U.S.C. 408) is amended, in the last undesignated paragraph, by striking "section 405(c)(2) of this title" and
inserting "section 205(c)(2)".
(2) AMENDMENTS RELATING TO SECTION 322 OF PUBUC LAW 98-

21.—Paragraphs (1) and (2) of section 322(b) of the Social Security Amendments of 1983 (Public Law 98-21, 97 Stat. 121) are 42 USC 411;
each amended by inserting "the first place it appears" before 26 USC 140i2.
"the following".
(3) AMENDMENT RELATING TO SECTION lOiiB(b) (4) OF PUBUC
LAW 100-647.—Section 211(a) (42 U.S.C. 411(a)) is amended by
redesignating the second paragraph (14) as paragraph (15).
(4) AMENDMENT RELATING TO SECTION 2003 (d) OF PUBUC LAW

100-647.—Paragraph (3) of section 3509(d) of the Internal Revenue Code of 1986 (as amended by section 2003(d) of the Tech- 26 USC 3509.
nical and Miscellaneous Revenue Act of 1988 (Public Law 100647; 102 Stat. 3598)) is further amended by striking "subsection
(dX4)" and inserting "subsection (d)(3)".
(5) AMENDMENT RELATING TO SECTION 10208 OF PUBUC LAW
101-239.—Section 209(a)(7)(B) (42 U.S.C. 409(a)(7)(B)) is amended
by striking "subparagraph (B)" in the matter following clause
(ii) and inserting "clause (ii)".
(b) EFFECTIVE DATES.—The amendments made by subsection (a) 26 USC 1402
shall be effective as if included in the enactment of the provision to note,
which it relates.

TITLE VI—ENERGY AND
ENVIRONMENTAL PROGRAMS
Subtitle A—Abandoned Mine Reclamation

Abandoned

Mine
Reclamation Act
SEC. 6001. SHORT TITLE.
of 1990.
This subtitle may be cited as the "Abandoned Mine Reclamation 30 USC 1201
note.
Act of 1990".
SEC. 6002. ABANDONED MINE RECLAMATION FUND.
(a) SOURCES OF DEPOSITS.—Section 401(b) of the Surface Mining
Control and Reclamation Act of 1977 (30 U.S.C. 1231(b)) is amended
as follows:
(1) Amend paragraph (1) to read as follows:

104 STAT. 1388-290

PUBLIC LAW 101-508—NOV. 5, 1990

"(1) the reclamation fees levied under section 402;".
(2) Strike "and" at the end of paragraph (3); strike the period
at the end of paragraph (4) and insert "; and"; and add the
following new paragraph at the end:
"(5) interest credited to the fund under subsection (e).".
(b) USE OF MONEY.—Section 401(c) of the Surface Mining Control
and Reclamation Act of 1977 (30 U.S.C. 1231(c)) is amended as
follows:
(1) In paragraph (1), strike "402(gX2)" and insert ''402(gXl)".
(2) Amend paragraph (2) to read as follows:
"(2) for transfer on an annual basis to the Secretary of
Agriculture for use under section 406;".
(3) In paragraph (6), strike "by contract" and insert "conducted in accordance with section 3501 of the Opinibus Budget
Reconciliation Act of 1986" after "projects".
(4) Strike "and" at the end of paragraph (9).
(5) Strike paragraph (10) and insert the following:
"(10) for use under section 411;
"(11) for the purpose of section 507(c), except that not more
than $10,000,000 shall annually be available for such purpose;
and
"(12) all other necessary expenses to accomplish the purposes
of this title.".
(c) INTEREST.—Section 401 of the Surface Mining Control and
Reclamation Act of 1977 (30 U.S.C. 1231) is amended by adding the
following new subsection at the end:
"(e) INTEREST.—The Secretary of the Interior shall notify the
Secretary of the Treasury as to what portion of the fund is not, in
his judgment, required to meet current withdrawals. The Secretary
of the Treasury shall invest such portion of the fund in public debt
securities with maturities suitable for the needs of such fund and
bearing interest at rates determined by the Secretary of the Treasury, taking into consideration current market yields on outstanding
marketable obligations of the United States of comparable maturities. The income on such investments shall be credited to, and
form a part of, the fund.".
SEC. 6003. RECLAMATION FEES.

(a) DUE DATE.—Section 402(b) of the Surface Mining (Dontrol and
Reclamation Act of 1977 (30 U.S.C. 1232(b)) is amended by striking
"fifteen years after the date of enactment of this Act unless extended by an Act of Congress" and inserting "September 30, 1995".
(b) STATEMENT.—Section 402(c) of the Surface Mining Control and
Reclamation Act of 1977 (30 U.S.C. 1232(c)) is amended by adding the
following at the end thereof: "Such statement shall include an
identification of the permittee of the surface coal mining operation,
any operator in addition to the permittee, the owner of the coal, the
preparation plant, tripple,^* or loading point for the coal, and the
person purchasing the coal from the operator. The report shall also
specify the number of the permit required under section 506 and the
mine safety and health identification number. Each quarterly report
shall contain a notification of any changes in the information
required by this subsection since the date of the preceding quarterly
report. The information contained in the quarterly reports under
this subsection shall be maintained by the Secretary in a computerized database.".
•* So in original. Probably should be "tipple".

- • * * # # # : •

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-291

(c) AUDITS.—Section 402(d) of the Surface Mining Control and
Reclamation Act of 1977 (30 U.S.C. 1232(d)) is amended by inserting
"(1)" after "(d)" and by adding the following at the end thereof:
"(2) The Secretary shall conduct such audits of coal production
and the payment of fees under this title as may be necessary to
ensure full compliance with the provisions of this title. For purposes
of performing such audits the Secretary (or any duly designated
officer, employee, or representative of the Secretary) shall, at all
reasonable times, upon request, have access to, and may copy, all
books, papers, and other documents of any person subject to the
provisions of this title. The Secretary may at any time conduct audits
of any surface coal mining and reclamation operation, including
without limitation, tipples and preparation plants, as may be necessary in the judgment of the Secretary to ensure full and complete
payment of the fees under this title.".
(d) NOTICE.—Section 402(f) of the Surface Mining Control and
Reclamation Act of 1977 (30 U.S.C. 1232(f)) is amended by adding the
following at the end thereof: "Whenever the Secretary believes that
any person has not paid the full amount of the fee payable under
subsection (a) the Secretary shall notify the Federal agency responsible for ensuring compliance with the provisions of section 4121 of
the Internal Revenue Code of 1986.".
SEC. 6004. ALLOCATION OF FUNDS.

Section 402(g) of the Surface Mining Control and Reclamation Act
of 1977 (30 U.S.C. 1232(g)) is amended to read as follows:
"(g) ALLOCATION OF FUNDS.—(1) Moneys deposited into the fund
shall be allocated by the Secretary to accomplish the purposes of
this title as follows:
"(A) 50 percent of the reclamation fees collected annually in
any State (other than fees collected with respect to Indian
lands) shall be allocated annually by the Secretary to the State,
subject to such State having each of the following:
"(i) An approved abandoned mine reclamation program
pursuant to section 405.
"(ii) Lands and waters which are eligible pursuant to
section 404 (in the case of a State not certified under section
411(a)) or pursuant to section 411(b) (in the case of a State
certified under section 411(a)).
"(B) 50 percent of the reclamation fees collected annually
with respect to Indian lands shall be allocated annually by the
Secretary to the Indian tribe having jurisdiction over such
lands, subject to such tribe having each of the following:
"(i) an approved abandoned mine reclamation program
pursuant to section 405.
"(ii) Lands and waters which are eligible pursuant to
section 404 (in the case of an Indian tribe not certified
under section 411(a)) or pursuant to section 411(b) (in the
case of a tribe certified under section 411(a)).
"(C) The funds allocated by the Secretary under this paragraph to States and Indian tribes shall only be used for annual
reclamation project construction and program administration
grants.
"(D) To the extent not expended within 3 years after the date
of any grant award under this paragraph, such grant shall be
available for expenditure by the Secretary in any area under
paragraph (2), (3), (4), or (5).

104 STAT. 1388-292

PUBLIC LAW 101-508—NOV. 5, 1990

"(2) 20 percent of the amounts available in the fund in any fiscal
year which are not allocated under paragraph (1) in that fiscal year
(including that interest accruing as provided in section 401(e) and
including funds available for reallocation pursuant to paragraph
(IXD)), shall be allocated to the Secretary only for the purpose of
making the annual transfer to the Secretary of Agriculture under
section 401(c)(2).
"(3) Amounts available in the fund which are not allocated to
States and Indian tribes under paragraph (1) or allocated under
paragraphs (2) and (5) are authorized to be expended by the Secretary for any of the following:
"(A) For the purpose of section 507(c), either directly or
through grants to the States, subject to the limitation contained
in section 401(cXll).
"(B) For the purpose of section 410 (relating to emergencies).
"(C) For the purpose of meeting the objectives of the fund set
forth in section 403(a) for eligible lands and waters pursuant to
section 404 in States and on Indian lands where the State or
Indian tribe does not have an approved abandoned mine reclamation program pursuant to section 405.
"(D) For the administration of this title by the Secretary.
"(4XA) Amounts available in the fund which are not allocated
under paragraphs (1), (2), and (5) or expended under paragraph (3) in
any fiscal year are authorized to be expended by the Secretary
under this paragraph for the reclamation or drainage abatement of
lands and waters within unreclaimed sites which are mined for coal
or which were affected by such mining, wastebanks, coal processing
or other coal mining processes and left in an inadequate reclamation
status.
"(B) Funds made available under this paragraph may be used for
reclamation or drainage abatement at a site referred to in subparagraph (A) if the Secretary makes either of the following findings:
"(i) A finding that the surface coal mining operation occurred
during the period beginning on August 4,1977, and ending on or
before the date on which the Secretary approved a State program pursuant to section 503 for a State in which the site is
located, and that any funds for reclamation or abatement which
are available pursuant to a bond or other form of financial
guarantee or from any other source are not sufficient to provide
for adequate reclamation or abatement at the site.
"(ii) A finding that the surface coal mining operation occurred
during the period beginning on August 4,1977, and ending on or
before the date of enactment of this paragraph, and that the
surety of such mining operator became insolvent during such
period, and as of the date of enactment of this paragraph, funds
immediately available from proceedings relating to such insolvency, or from any financial guarantee or other source are not
sufficient to provide for adequate reclamation or abatement at
the site.
"(C) In determining which sites to reclaim pursuant to this paragraph, the Secretary shall follow the priorities stated in paragraphs
(1) and (2) of section 403(a). The Secretary shall ensure that priority
is given to those sites which are in the immediate vicinity of a
residenti£d area or which have an adverse economic impact upon a
local community.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-293

"(D) Amounts collected from the assessment of civil penalties
under section 518 are authorized to be appropriated to carry out this
paragraph.
"(E) Any State may expend grants made available under paragraphs (1) and (5) for reclamation and abatement of any site referred
to in subparagraph (A) if the State, with the concurrence of the
Secretary, makes either of the findings referred to in clause (i) or (ii)
of subparagraph (B) and if the State determines that the reclamation priority of the site is the same or more urgent than the
reclamation priority for eligible lands and waters pursuant to section 404 under the priorities stated in paragraphs (1) and (2) of
section 403(a).
"(F) For the purposes of the certification referred to in section
411(a), sites referred to in subparagraph (A) of this paragraph shall
be considered as having the same priorities as those stated in section
403(a) for eligible lands and waters pursuant to section 404. All sites
referred to in subparagraph (A) of this paragraph within any State
shall be reclaimed prior to such State making the certification
referred to in section 411(a).
"(5) The Secretary shall allocate 40 percent of the amount in the
fund after making the allocation referred to in paragraph (1) for
making additional annual grants to States and Indian tribes which
are not certified under section 411(a) to supplement grants received
by such States and Indian tribes pursuant to paragraph (1)(C) until
the priorities stated in paragraphs (1) and (2) of section 403(a) have
been achieved by such State or Indian tribe. The allocation of such
funds for the purpose of making such expenditures shall be through
a formula based on the amount of coal historically produced in the
State or from the Indian lands concerned prior to August 3, 1977.
Funds allocated or expended by the Secretary under paragraphs (2),
(3), or (4) of this subsection for any State or Indian tribe shall not be
deducted against any allocation of funds to the State or Indian tribe
under paragraph (1) or under this paragraph.
"(6) Any State may receive and retain, without regard to the 3year limitation referred to in paragraph (1)(D), up to 10 percent of
the total of the grants made annually to such State under paragraphs (1) and (5) if such amounts are deposited into either—
"(A) a special trust fund established under State law pursuant
to which such amounts (together with all interest earned on
such amounts) are expended by the State solely to achieve the
priorities stated in section 403(a) after September 30, 1995, or
"(B) an acid mine drainage abatement and treatment fund
established under State law as provided in paragraph (7).
"(7)(A) Any State may establish under State law an acid mine
drainage abatement and treatment fund from which amounts (together with all interest earned on such amounts) are expended by
the State to implement, in consultation with the Soil Conservation
Service, acid mine drainage abatement and treatment plans approved by the Secretary. Such plans shall provide for the comprehensive abatement of the causes and treatment of the effects of
acid mine drainage within qualified hydrologic units affected by coal
mining practices.
"(B) The plan shall include, but shall not be limited to, each of the
following:
"(i) An identification of the qualified hydrologic unit.

104 STAT. 1388-294

PUBLIC LAW 101-508—NOV. 5, 1990

"(ii) The extent to which acid mine drainage is affecting the
water quality and biological resources within the hydrologic
unit.
"(iii) An identification of the sources of acid mine drainage
within the hydrologic unit.
. "(iv) An identification of individual projects and the measures
proposed to be undertaken to abate and treat the causes or
effects of acid mine drainage within the hydrologic unit.
"(v) The cost of undertaking the proposed abatement and
treatment measures.
"(vi) An identification of existing and proposed sources of
funding for such measures.
"(vii) An analysis of the cost-effectiveness and environmental
benefits of abatement and treatment m e ^ u r e s .
"(C) The Secretary may approve any plan under this paragraph
only after determining that such plan meets the requirements of
this paragraph. In conducting an analysis of the items referred to in
clauses (iv), (v), and (vii) the Director of the Office of Surface Mining
shall obtain the comments of the Director of the Bureau of Mines. In
approving plans under this paragraph, the Secretary shall give a
priority to those plans which will be implemented in coordination
with measures undertaken by the Secretary of Agriculture under
section 406.
"(D) For purposes of this paragraph, the term 'qualified hydrologic
unit' means a hydrologic unit—
"(i) in which the water quality has been significantly affected
by acid mine drainage from coal mining practices in a manner
which adversely impacts biological resources; and
"(ii) which contains lands and waters which are—
"(I) eligible pursuant to section 404 and include any of the
priorities stated in paragraph (1), (2), or (3) of section 403(a);
and
"(II) proposed to be the subject of the expenditures by the
State (from amounts available from the forfeiture of bonds
required under section 509 or from other State sources) to
mitigate acid mine drainage.
"(8) Of the funds available for expenditure under this subsection
in any tiscal year, the Secretary shall allocate annually not less
than $2,000,000 for expenditure in each State, and for each Indian
tribe, having an approved abandoned mine reclamation program
pursuant to section 405 and eligible lands and waters pursuant to
section 404 so long as an allocation of funds to such State or such
tribe is necessary to achieve the priorities stated in paragraphs (1)
and (2) of section 403(a).".
SEC. 6005. FUND OBJECTIVES.

Section 403 of the Surface Mining Control and Reclamation Act of
1977 (30 U.S.C. 1233) is amended as follows:
(1) Insert "(a) PRIORITIES.—" after "SEC. 403.".
(2) Insert ", except as provided for under section 411," after
"title".
(3) Add at the end the following new subsections:
"(b) UTILITIES AND OTHER FACILITIES.—(1) Any State or Indian
tribe not certified under section 411(a) may expend up to 30 percent
of the funds allocated to such State or Indian tribe in any year
through the grants made available under paragraphs (1) and (5) of
section 402(g) for the purpose of protecting, repairing, replacing,

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-295

constructing, or enhancing facilities relating to water supply,
including water distribution facilities and treatment plants, to replace water supplies adversely affected by coal mining practices.
"(2) If the adverse effect on water supplies referred to in this
subsection occurred both prior to and after August 3, 1977, section
404 shall not be construed to prohibit a State or Indian tribe
referred to in paragraph (1) from using funds referred to in such
paragraph for the purposes of this subsection if the State or Indian
tribe determines that such adverse effects occurred predominantly
prior to August 3,1977.
"(c) INVENTORY.—For the purposes of assisting in the planning
and evaluation of reclamation projects pursuant to section 405, and
assisting in making the certification referred to in section 411(a), the
Secretary shall maintain an inventory of eligible lands and waters
pursuant to section 404 which meet the priorities stated in paragraphs (1) and (2) of subsection (a). Under standardized procedures
established by the Secretary, States and Indian tribes with approved
abandoned mine reclamation programs pursuant to section 405 may
offer amendments to update the inventory as it applies to eligible
lands and waters under the jurisdiction of such States or tribes. The
Secretary shall provide such States and tribes with the financial and
technical assistance necessary for the purpose of making inventory
amendments. The Secretary shall compile and maintain an inventory for States and Indian lands in the case when a State or Indian
tribe does not have an approved abandoned mine reclamation program pursuant to section 405. On a regular basis, but not less than
annually, the projects completed under this title shall be so noted on
the inventory under standardized procedures established by the
Secretary.".
SEC. 6006. ELIGIBLE LANDS AND WATERS.

Section 404 of the Surface Mining Control and Reclamation Act of
1977 (30 U.S.C. 1234) is amended by inserting ", except as provided
for under section 411" after "processes", and by adding the following
at the end thereof: "For other provisions relating to lands and
waters eligible for such expenditures, see section 402(g)(4), section
40303)(1), and section 409.".
SEC. 6007. STATE RECLAMATION PROGRAMS.

Section 405 of the Surface Mining Control and Reclamation Act of
1977 (30 U.S.C. 1235) is amended by adding the following at the end
thereof:
"(1) No State shall be liable under any provision of Federal law for
any costs or damages as a result of action taken or omitted in the
course of carrying out a State abandoned mine reclamation plan
approved under this section. This subsection shall not preclude
liability for cost or damages as a result of gross negligence or
intentional misconduct by the State. For purposes of the preceding
sentence, reckless, willful, or wanton misconduct shall constitute
gross negligence.".
SEC. 6008. CLARIFICATION.

Section 406(d) of the Surface Mining Control and Reclamation Act
of 1977 (30 U.S.C. 1236(d)) is amended by striking "experimental".

104 STAT. 1388-296

PUBLIC LAW 101-508—NOV. 5, 1990

SEC. 6009. VOIDS AND TUNNELS.

Section 409 of the the ^^ Surface Mining Control and Reclamation
Act of 1977 (30 U.S.C 1239) is amended—
(1) in subsection (a) by striking "chairman of any tribe" and
inserting in lieu thereof "the governing body of an Indian
tribe";
(2) in subsection (b), by striking "or Indian reservations under
the provisions of subsection 402(g)" and inserting "or Indian
tribes under the provisions of paragraphs (1) and (5) of section
402(g)"; and
(3) by amending subsection (c) to read as follows:
"(cXl) The Secretary may make expenditures and carry out the
purposes of this section in such States where requests are made by
the Governor or governing body of an Indian tribe for those reclamation projects which meet the priorities stated in section 403(aXl),
except that for the purposes of this section the reference to coal in
section 403(a)(1) shall not apply.
"(2) The provisions of section 404 shall apply to this section, with
the exception that such mined lands need not have been mined for
coal.
"(3) The Secretary shall not make any expenditures for the purposes of this section in those States which have made the certification referred to in section 411(a).".
SEC. 6010. CERTIFICATION.

30 use
1241-1243.

Title IV of the Surface Mining Control and Reclamation Act of
1977 (30 U.S.C. 1231 et seq.) is amended as follows:
(1) Redesignate sections 411, 412, and 413 as sections 412, 413,
and 414, respectively.
(2) Insert after section 410 the following new section:

30 u s e 1240a.

"SEC. 411. CERTIFICATION.
"(a) CERTIFICATION OF COMPLETION OF COAL RECLAMATION.—The

Governor of a State, or the head of a governing body of an Indian
tribe, with an approved abandoned mine reclamation program
under section 405 may certify to the Secretary that all of the
priorities stated in section 403(a) for eligible lands and waters
pursuant to section 404 have been achieved. The Secretary, after
notice in the Federal Register and opportunity for public comment,
shall concur with such certification if the Secretary determines that
such certification is correct.
"(b) EuGiBLE LANDS, WATERS, AND FACIUTIES.—If the Secretary

has concurred in a State or tribal certification under subsection (a),
for purposes of determining the eligibility of lands and waters for
annual grants under section 402(g)(1), section 404 shall not apply,
and eligible lands, waters, and facilities shall be those—
"(1) which were mined or processed for minerals or which
were affected by such mining or processing, and abandoned or
left in an inadequate reclamation status prior to August 3,1977;
and
"(2) for which there is no continuing reclamation
responsibility under State or other Federal laws. In determining
the eligibility under this subsection of Federal lands, waters,
and facilities under the jurisdiction of the Forest Service or
Bureau of Land Management, in lieu of the August 3,1977, date
referred to in paragraph (1) the applicable date shall be August
28,1974, and November 26,1980, respectively.
o'' So in original. Probably should be "of the Surface".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-297

"(c) PRIORITIES.—Expenditures of moneys for lands, waters, and
facilities referred to in subsection (b) shall reflect the following
objectives and priorities in the order stated (in lieu of the priorities
set forth in section 403):
"(1) The protection of public health, safety, general welfare,
and property from extreme danger of adverse effects of mineral
mining and processing practices.
"(2) The protection of public health, safety, and general welfare from adverse effects of mineral mining and processing
practices.
"(3) The restoration of land and water resources and the
environment previously degraded by the adverse effects of mineral mining and processing practices.
"(d) SPECIFIC SITES AND AREAS NOT EUGIBLE.—Sites and areas
designated for remedial action pursuant to the Uranium Mill
Tailings Radiation Control Act of 1978 (42 U.S.C. 7901 and following)
or which have been listed for remedial action pursuant to the
Comprehensive Environmental Response Compensation and Liability Act of 1980 (42 U.S.C. 9601 and following) shall not be eligible for
expenditures from the Fund under this section.
"(e)

UTIUTIES

AND OTHER

FACILITIES.—Reclamation

projects

involving the protection, repair, replacement, construction, or
enhancement of utilities, such as those relating to water supply,
roads, and such other facilities serving the public adversely affected
by mineral mining and processing practices, and the construction of
public facilities in communities impacted by coal or other mineral
mining and processing practices, shall be deemed part of the objectives set forth, and undertaken as they relate to, the priorities stated
in subsection (c).
"(f) Notwithstanding subsection (e), where the Secretary has concurred in the certification referenced in subsection (a) and where the
Governor of a State or the head of a governing body of an Indian
tribe determines there is a need for activities or construction of
specific public facilities related to the coal or minerals industry in
States impacted by coal or minerals development and the Secretary
concurs in such need, then the State or Indian tribe, as the case may
be, may use annual grants made available under section 402(g)(1) to
carry out such activities or construction.
"(g) APPUCATION OF OTHER PROVISIONS.—The provisions of sections 407 and 408 shall apply to subsections (a) through (e) of this
section, except that for purposes of this section the references to coal
in sections 407 and 408 shall not apply.".
SEC. 6011. SMALL OPERATOR ASSISTANCE.

Section 507(c) of the Surface Mining Control and Reclamation Act
of 1977 (30 U.S.C. 1257(c)) is amended by striking "100,000" and
. inserting "300,000".
SEC. 6012. TECHNICAL AND CONFORMING AMENDMENTS.

(a) TABLE OF CONTENTS.—The table of contents in the first section
of the Surface Mining Control and Reclamation Act of 1977 (30
U.S.C. 1201) is amended as follows:
(1) Redesignate the items relating to sections 411, 412, and 413
as items 412, 413, and 414, respectively.
(2) Insert after the item relating to section 410 the following:
"Sec. 411. Certification.".

39-194 O - 91 - 23 : QL 3 Part 2

104 STAT. 1388-298

30 use 1235.

30 use 1236.
30 use 1237.

30 u s e 1231

PUBLIC LAW 101-508—NOV. 5, 1990

(b) REFERENCE.—Section 712 (b) of the Surface Mining Control and
Reclamation Act of 1977 (30 U.S.C. 1302(b)) is amended to read as
follows:
"(b) For the implementation and funding of section 507(c), see the
provisions of section 401(cXll).".
(c) REPEAL.—Section 406(i) of the Surface Mining Control and
Reclamation Act of 1977 (30 U.S.C. 1236(i)) is repealed.
(d) TECHNICAL CORRECTIONS.—The following provisions of the Surface Mining Control and Reclamation Act of 1977 (30 U.S.C. 1231
£ind following) are amended as follows:
(1) Section 405(a) is amended by striking out "perparation"
and inserting "preparation".
(2) Section 405(h) is amended by striking out "Upon approved" and inserting "Upon approval".
(3) Section 406(a) is amended by striking out "including
owners" and inserting "(including owners".
(4) Section 407(a)(4) is amended by striking out the period and
inserting a semicolon.
(5) Section 407(a) is amended by striking out "Then" and
inserting "then".
(6) Section 407(e) is amended by striking out "paragraph (1), of
this subsection" and inserting "paragraph (1) of subsection (c)".
(7) Section 407(g)(2) is amended by striking out "the use o f
and inserting "the use or".
SEC. 6013. SAVINGS CLAUSE.

Nothing in this subtitle shall be construed to affect the certifications made by the State of Wyoming, the State of Montana, and
the State of Louisiana to the Secretary of the Interior prior to the
date of enactment of this subtitle that such State has completed the
reclamation of eligible abandoned coal mine lands.
30 u s e 1231

SEC. 6014. EFFECTIVE DATE.

The amendments made by this subtitle shall take effect at the
beginning of the first fiscal year immediately following the fiscal
year in which this subtitle is enacted.

Subtitle B—NRC User Fees and Annual
Charges
42 u s e 2214.

SEC. 6101. NRC USER FEES AND ANNUAL CHARGES.
(a) ANNUAL ASSESSMENT.—

(1) I N GENERAL.—Except as provided in paragraph (3), the
Nuclear Regulatory Commission (in this section referred to as
the "Commission") shall annually assess and collect such fees
and charges as are described in subsections (b) and (c).
(2) FIRST ASSESSMENT.—The first assessment of fees under
subsection (b) and annual charges under subsection (c) shall be
made not later than September 30,1991.
(3) LAST ASSESSMENT OF ANNUAL CHARGES.—The last assessment of annual charges under subsection (c) shall be made not
later than September 30,1995.
(b) FEES FOR SERVICE OR THING OF VALUE.—Pursuant to section

9701 of title 31, United States Code, any person who receives a
service or thing of value from the Commission shall pay fees to cover

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-299

the Commission's costs in providing any such service or thing of
value.
(c) ANNUAL CHARGES.—
(1) PERSONS SUBJECT TO CHARGE.—Any licensee of the Commis-

sion may be required to pay, in addition to the fees set forth in
subsection (b), an annual charge.
(2) AGGREGATE AMOUNT OF CHARGES.—The aggregate amount
of the annual charge collected from all licensees shall equal an
amount that approximates 100 percent of the budget authority
of the Commission in the fiscal year in which such charge is
collected, less any amount appropriated to the Commission from
the Nuclear Waste Fund and the amount of fees collected under
subsection (b) in such fiscal year.
(3) AMOUNT PER UCENSEE.—The Commission shall establish,
by rule, a schedule of charges fairly and equitably allocating the
aggregate amount of charges described in paragraph (2) among
licensees. To the maximum extent practicable, the charges shall
have a reasonable relationship to the cost of providing regulatory services and may be based on the allocation of the
Commission's resources among licensees or classes of licensees.
(d) DEFINITION.—As used in this section, the term "Nuclear Waste
Fund" means the fund established pursuant to section 302(c) of the
Nuclear Waste Policy Act of 1982 (42 U.S.C. 10222(c)).
(e) CONFORMING AMENDMENT TO COBRA.—Paragraph (1)(A) of
section 7601 of the Consolidated Omnibus Budget Reconciliation Act
of 1985 (Public Law 99-272) is amended by striking "except that for 42 USC 2213.
fiscal year 1990 such maximum amount shall be estimated to be
equal to 45 percent of the costs incurred by the Commission for
fiscal year 1990" and inserting "except as otherwise provided by
law".

Subtitle C—Amendments to Coastal Zone
Management Act of 1972
**
SEC. 6201. SHORT TITLE.

coastai zone Act
AmendSi^^of
1990.
16 USC 1451

This subtitle may be cited as the "Coastal Zone Act Reauthorization Amendments of 1990".
SEC. 6202. FINDINGS AND PURPOSE OF THIS SUBTITLE.

(a) FINDINGS.—Congress finds and declares the following:
(1) Our oceans, coastal waters, and estuaries constitute a
unique resource. The condition of the water quality in and
around the coastal areas is significantly declining. Growing
human pressures on the coastal ecosystem will continue to
degrade this resource until adequate actions and policies are
implemented.
(2) Almost one-half of our total population now lives in coastal
areas. By 2010, the coastal population will have grown from
80,000,000 in 1960 to 127,000,000 people, an increase of approximately 60 percent, and population density in coastal counties
will be among the highest in the Nation.
(3) Marine resources contribute to the Nation's economic
stability. Commercial and recreational fishery activities support
an industry with an estimated value of $12,000,000,000 a year.

16 USC 1451

104 STAT. 1388-300

PUBLIC LAW 101-508—NOV. 5, 1990

(4) Wetlands play a vital role in sustaining the coastal economy and environment. Wetlands support and nourish fishery
and marine resources. They also protect the Nation's shores
from storm and wave damage. Coastal wetlands contribute an
estimated $5,000,000,000 to the production of fish and shellfish
in the United States coastal waters. Yet, 50 percent of the
Nation's coastal wetlands have been destroyed, and more are
likely to decline in the near future.
(5) Nonpoint source pollution is increasingly recognized as a
significant factor in coastal water degradation. In urban areas,
storm water and combined sewer overflow are linked to major
coastal problems, and in rural areas, run-off from agricultural
activities may add to coastal pollution.
(6) Coastal planning and development control measures are
essential to protect coastal water quality, which is subject to
continued ongoing stresses. Currently, not enough is being done
to manage and protect our coastal resources.
(7) Global warming results from the accumulation of manmade gases, released into the atmosphere from such activities
as the burning of fossil fuels, deforestation, and the production
of chlorofluorocarbons, which trap solar heat in the atmosphere
and raise temperatures worldwide. Global warming could result
in significant global sea level rise by 2050 resulting from ocean
expansion, the melting of snow and ice, and the gradual melting
,
of the polar ice cap. Sea level rise will result in the loss of
natural resources such as beaches, dunes, estuaries, and wetlands, and will contribute to the salinization of drinking water
supplies. Sea level rise will also result in damage to properties,
infrastructures, and public works. There is a growing need to
plan for sea level rise.
(8) There is a clear link between coastal water quality and
land use activities along the shore. State management programs
under the Coastal Zone Management Act of 1972 (16 U.S.C. 1451
et seq.) are among the best tools for protecting coastal resources
and must play a larger role, particularly in improving coastal
zone water quality.
(9) All coastal States should have coastal zone management
programs in place that conform to the Coastal Zone Management Act of 1972, as amended by this Act.
(b) PURPOSE.—It is the purpose of Congress in this subtitle to
enhance the effectiveness of the Coastal Zone Management Act of
1972 by increasing our understanding of the coastal environment
and expanding the ability of State coastal zone management programs to address coastal environmental problems.
SEC. 6203. FINDINGS AND POLICY OF COASTAL ZONE MANAGEMENT ACT
OF 1972.

(a) FINDINGS.—(1) Section 302(d) of the Coastal Zone Management
Act of 1972 (16 U.S.C. 1451(d)) is amended by inserting "habitat
areas of the" immediately before "coastal zone".
(2) Section 302(f) of the Coastal Zone Management Act of 1972 (16
U.S.C. 1451(f)) is amended by inserting "exclusive economic zone,"
immediately after "territorial sea,".
(3) Section 302 of the Coastal Zone Management Act of 1972 (16
U.S.C. 1451) is amended by adding at the end the following new
subsections:

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-301

"(k) Land uses in the coastal zone, and the uses of adjacent lands
which drain into the coastal zone, may significantly affect the
quality of coastal waters and habitats, and efforts to control coastal
water pollution from land use activities must be improved.
"(1) Because global warming may result in a substantial sea level
rise with serious adverse effects in the coastal zone, coastal states
must anticipate and plan for such an occurrence.
"(m) Because of their proximity to and reliance upon the ocean
and its resources, the coastal states have substantial and significant
interests in the protection, management, and development of the .
resources of the exclusive economic zone that can only be served by
the active participation of coastal states in all Federal programs
affecting such resources and, wherever appropriate, by the development of state ocean resource plans as part of their federally approved coastal zone management programs.".
(b) POLICY.—(1) Section 303(2) of the Coastal Zone Management
Act of 1972 (16 U.S.C. 1452(2)) is amended by striking "as well as the
needs for" and inserting in lieu thereof "EIS well as the needs for
compatible".
(2) Section 303(2)(B) of the Coastal Zone Management Act of 1972
(16 U.S.C. 1452(2)(B)) is amended by striking "of subsidence" and
inserting in lieu thereof the following: "likely to be affected by or
vulnerable to sea level rise, land subsidence,".
(3) Section 303(2) of the Coastal Zone Management Act of 1972 (16
U.S.C. 1452(2)), as amended by paragraph (1), is amended—
(A) by redesignating subparagraphs (C) through (I) as subparagraphs (D) through (J), respectively; and
(B) by inserting immediately after subparagraph (B) the following new subparagraph:
"(C) the management of coastal development to improve,
safeguard, and restore the quality of coastal waters, and to
protect natural resources and existing uses of those
(4) Section 303(2) of the Coastal Zone Management Act of 1972 (16
U.S.C. 1452(2)), as amended by paragraphs (1) and (3), is further
amended—
(A) by striking "and" at the end of subparagraph (I), as so
redesignated by paragraph (3);
(B) by striking the semicolon in subparagraph (J), as so redesignated by paragraph (3), and inserting in lieu thereof a
comma; and
(C) bv adding at the end the following new subparagraph:
' (K) the study and development, in any case in which the
Secretary considers it to be appropriate, of plans for
addressing the adverse effects upon the coastal zone of land
subsidence and of sea level rise; and".
(5) Section 303(3) of the Coastal Zone Management Act of 1972 (16
U.S.C. 1452(3)) is amended by inserting "including those areas likely
to be affected by land subsidence, sea level rise, or fluctuating water
levels of the Great Lakes," immediately after "hazardous areas,".
(6) Section 303 of the Coastal Zone Management Act of 1972 (16
U.S.C. 1452) is amended by striking "and" at the end of paragraph
(3); by striking the period at the end of paragraph (4) and inserting
in lieu thereof a semicolon; and by adding at the end the following
new paragraphs:
"(5) to encourage coordination and cooperation with and
among the appropriate Federal, State, and local agencies, and

104 STAT. 1388-302

PUBLIC LAW 101-508—NOV. 5, 1990

international organizations where appropriate, in collection,
analysis, synthesis, and dissemination of coastal management
information, research results, and technical assistance, to support State and Federal regulation of land use practices affecting
the coastal and ocean resources of the United States; and
"(6) to respond to changing circumstances affecting the
coastal environment and coastal resource management by
encouraging States to consider such issues as ocean uses potentially affecting the coastal zone.".
SEC. 6204. DEFINITIONS.

(a) COASTAL ZONE.—The third sentence of section 304(1) of the
Coastal Zone Management Act of 1972 (16 U.S.C. 1453(1)) is
amended—
(1) by inserting ", and to control those geographical areas
which are likely to be affected by or vulnerable to sea level rise"
immediately before the period at the end; and
(2) by striking "the United States territorial sea." and inserting in lieu thereof "the outer limit of State title and ownership
under the Submerged Lands Act (43 U.S.C. 1301 et seq.), the Act
of March 2, 1917 (48 U.S.C. 749), the Covenant to Establish a
Commonwealth of the Northern Mariana Islands in Political
Union with the United States of America, as approved by the
Act of March 24, 1976 (48 U.S.C. 1681 note), or section 1 of the
Act of November 20, 1963 (48 U.S.C. 1705, ^e as applicable.".
(b) ENFORCEABLE POUCY.—Section 304 of the Coastal Zone
Management Act of 1972 (16 U.S.C. 1453) is amended by inserting
after paragraph (6) the following' ®'
"(6a) ^® The term 'enforceable policy' means State policies
which are legally binding through constitutional provisions,
laws, regulations, land use plans, ordinances, or judicial or
administrative decisions, by which a State exerts control over
private and public land and water uses and natural resources in
the coastal zone.".
(c) WATER USE.—Section 304(18) of the Coastal Zone Management
Act of 1972 (16 U.S.C. 1453(18)) is amended by striking all after
"means" and inserting in lieu thereof "a use, activity, or project
conducted in or on waters within the coastal zone.".
SEC. 6205. MANAGEMENT PROGRAM DEVELOPMENT GRANTS.
Section 305 of the Coastal Zone Management Act of 1972 (16
U.S.C. 1454) is amended to read as follows:
"MANAGEMENT PROGRAM DEVELOPMENT GRANTS

"SEC. 305. (a) In fiscal years 1991, 1992, and 1993, the Secretary
may make a grant annually to any coastal state without an approved program if the coastal state demonstrates to the satisfaction
of the Secretary that the grant will be used to develop a management program consistent with the requirements set forth in section
306. The amount of any such grant shall not exceed $200,000 in any
fiscal year, and shall require State matching funds according to
a 4-to-l ratio of Federal-to-State contributions. After an initial grant
is made to a coastal state pursuant to this subsection, no subsequent
grant shall be made to that coastal state pursuant to this subsection
unless the Secretary finds that the coastal state is satisfactorily
** So in original. Probably should be "1705),".
'^ So in original. Probably should be "following:".
" So in original. Probably should be "(6Xa)".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-303

developing its management program. No coastal State is eligible to
receive more than two grants pursuant to this subsection.
"(b) Any coastal State which has completed the development of its
management program shall submit such program to the Secretary
for review and approval pursuant to section 306.".
SEC. 6206. ADMINISTRATIVE GRANTS.

(a) IN GENERAL.—Section 306 of the Coastal Zone Management
Act of 1972 (16 U.S.C. 1455) is amended to read as follows:
"ADMINISTRATIVE GRANTS

"SEC. 306. (a) The Secretary may 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 contributions for the applicable fiscal year:
"(1) For those States for which programs were approved prior
to enactment of the Coastal Zone Act Reauthorization Amendments of 1990,1 to 1 for any fiscal year.
"(2) For programs approved after enactment of the Coastal
Zone Act Reauthorization Amendments of 1990, 4 to 1 for the
first fiscal year, 2.3 to 1 for the second fiscal year, 1.5 to 1 for the
third fiscal year, and 1 to 1 for each fiscal year thereafter.
"(b) The Secretary may make a grant to a coastal State under
subsection (a) only if the Secretary finds that the management
program of the coastal State meets all applicable requirements of
this title and has been approved in accordance with subsection (d);
"(c) Grants under this section shall be allocated to coastal States
with approved programs based on rules and regulations promulgated by the Secretary which shall take into account the extent and
nature of the shoreline and area covered by the program, population
of the area, and other relevant factors. The Secretary shall establish, after consulting with the coastal States, maximum and minimum grants for any fiscal year to promote equity between coastal
States and effective coastal management.
"(d) Before approving a management program submitted by a
coastal State, the Secretary shall find the following:
"(1) The State has developed and adopted a management
program for its coastal zone in accordance with rules and
regulations promulgated by the Secretary, after notice, and
with the opportunity of full participation by relevant Federal
agencies, State agencies, local governments, regional organizations, port authorities, and other interested parties and individuals, public and private, which is adequate to carry out the
purposes of this title and is consistent with the policy declared
in section 303.
"(2) The management program includes each of the following
required program elements:
"(A) An identification of the boundaries of the coastal
zone subject to the management program.
"(B) A definition of what shall constitute permissible land
uses and water uses within the coastal zone which have a
direct and significant impact on the coastal waters.
"(C) An inventory and designation of areas of particular
concern within the coastal zone.
"(D) An identification of the means by which the State
proposes to exert control over the land uses and water uses

104 STAT. 1388-304

PUBLIC LAW 101-508—NOV. 5, 1990
referred to in subparagraph (B), including a list of relevant
State constitutional provisions, laws, regulations, and judicial decisions.
"(E) Broad guidelines on priorities of uses in particular
areas, including specifically those uses of lowest priority.
"(F) A description of the organizational structure proposed to implement such management program, including
the responsibilities and interrelationships of local,
areawide. State, regional, and interstate agencies in the
management process.
"(G) A definition of the term 'beach' and a planning
process for the protection of, and access to, public beaches
and other public coastal areas of environmental, recreational, historical, esthetic, ecological, or cultural value.
"(H) A planning process for energy facilities likely to be
located in, or which may significantly affect, the coastal
zone, including a process for anticipating the management
of the impacts resulting from such facilities.
"(I) A planning process for assessing the effects of, and
studying and evaluating ways to control, or lessen the
impact of, shoreline erosion, and to restore areas adversely
affected by such erosion.
"(3) The State has—
"(A) coordinated its program with local, areawide, and
' interstate plans applicable to areas within the coastal
zone—
"(i) existing on January 1 of the year in which the
State's management program is submitted to the Secretary; and
"(ii) which have been developed by a local government, an areawide agency, a regional agency, or an
interstate agency; and
"(B) established an effective mechanism for continuing
consultation and coordination between the management
agency designated pursuant to paragraph (6) and with local
governments, interstate agencies, regional agencies, and
areawide agencies within the coastal zone to assure the full
participation of those local governments and agencies in
carrying out the purposes of this title; except that the
Secretary shall not find any mechanism to be effective for
purposes of this subparagraph unless it requires that—
"(i) the management agency, before implementing
any management program decision which would conflict with any local zoning ordinance, decision, or other
action, shall send a notice of the management program
decision to any local government whose zoning authority is affected;
"(ii) within the 30-day period commencing on the
date of receipt of that notice, the local government may
submit to the management agency written comments
on the management program decision, and any recommendation for alternatives; and
"(iii) the management agency, if any comments are
submitted to it within the 30-day period by any local
government—
"(I) shall consider the comments;

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-305

"(11) may, in its discretion, hold a public hearing
on the comments; and
"(III) may not take any action within the 30-day
period to implement the management program
decision.
"(4) The State has held public hearings in the development of
the management program.
"(5) The management program and any changes thereto have
been reviewed and approved by the Governor of the State.
"(6) The Governor of the State has designated a single State
agency to receive and administer grants for implementing the
management program.
"(7) The State is organized to implement the management
program.
"(8) The management program provides for adequate consideration of the national interest involved in planning for, and
managing the coastal zone, including the siting of facilities such
as energy facilities which are of greater than local significance.
In the case of energy facilities, the Secretary shall find that the
State has given consideration to any applicable national or
interstate energy plan or program.
"(9) The management program includes procedures whereby
specific areas may be designated for the purpose of preserving
or restoring them for their conservation, recreational, ecological,
historical, or esthetic values.
"(10) The State, acting through its chosen agency or agencies
(including local governments, areawide agencies, regional agencies, or interstate agencies) has authority for the management
of the coastal zone in accordance with the management program. Such authority shall include power—
"(A) to administer land use and water use regulations to
control development to ensure compliance with the
management program, and to resolve conflicts among
competing uses; and
"(B) to acquire fee simple and less than fee simple interests in land, waters, and other property through condemnation or other means when necessary to achieve
conformance with the management program.
"(11) The management program provides for any one or a
combination of the following general techniques for control of
land uses and water uses within the coastal zone:
"(A) State establishment of criteria and standards for
local implementation, subject to administrative review and
enforcement.
"(B) Direct State land and water use planning and regulation.
"(C) State administrative review for consistency with the
management program of all development plans, projects, or
land and water use regulations, including exceptions and
variances thereto, proposed by any State or local authority
or private developer, with power to approve or disapprove
after public notice and an opportunity for hearings.
"(12) The management program contains a method of assuring that local land use and water use regulations within the
coastal zone do not unreasonably restrict or exclude land uses
and water uses of regional benefit.
"(13) The management program provides for—

104 STAT. 1388-306

42 use 1456
"o*®-

PUBLIC LAW 101-508—NOV. 5, 1990

"(A) the inventory and designation of areas that contain
one or more coastal resources of national significance; and
"(B) specific and enforceable standards to protect such
resources.
"(14) The management program provides for public participation in permitting processes, consistency determinations, and
other similar decisions.
"(15) The mansigement program provides a mechanism to
ensure that all State agencies will adhere to the program.
"(16) The management program contains enforceable policies
and mechanisms to implement the applicable requirements of
the Coastal Nonpoint Pollution Control Program of the State
required by section 6217 of the Coastal Zone Act Reauthorization Amendments of 1990.
"(e) A coastal state may amend or modify a management program
which it has submitted and which has been* approved by the Secretary under this section, subject to the following conditions:
"(1) The State shall promptly notify the Secretary of any
proposed amendment, modification, or other program change
and submit it for the Secretary's approval. The Secretary may
suspend all or part of any grant made under this section
pending State submission of the proposed amendments, modification, or other program change.
"(2) Within 30 days after the date 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 after the date the Secretary received the proposed
amendment. The Secretary may extend this period only as
necessary to meet the requirements of the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.). If the Secretary does not notify the coastal State that the Secretary
approves or disapproves the amendment within that period,
then the amendment shall be conclusively presumed as
approved.
"(3XA) Except as provided in subparagraph (B), a coastal State
may not implement any amendment, modification, or other
change as part of its approved management program unless the
amendment, modification, or other change is approved by the
Secretary under this subsection.
"(B) The Secretary, after determining on a preliminary basis,
that an amendment, modification, or other change which has
been submitted for approval under this subsection is likely to
meet the program approval standards in this section, may
permit the State to expend funds awarded under this section to
begin implementing the proposed amendment, modification, or
change. This preliminary approval shall not extend for more
than 6 months and may not be renewed. A proposed amendment, modification, or change which has been given preliminary approval and is not finally approved under this paragraph
shall not be considered an enforceable policy for purposes of
section 307.".
(b) ADDITIONAL PROGRAM REQUIREMENTS.—Each State which submits a management progrsmi for approval under section 306 of the
Coastal Zone Management Act of 1972, as amended by this subtitle

PUBLIC LAW 101-508—NOV. 5,1990

104 STAT. 1388-307

(including a State which submitted a program before the date of
enactment of this Act), shall demonstrate to the Secretary—
(1) that the program complies with section 306(dX14) and (15)
of that Act, by not later than 3 years after the date of the
enactment of this Act; and
(2) that the program complies with section 306(dX16) of that
Act, by not later than 30 months after the date of publication of
final guidance under section 6217(g) of this Act.
SEC. 6207. RESOURCE MANAGEMENT IMPROVEMENT GRANTS.

Section 306A(b)(l) of the Coastal Zone Management Act of 1972 (16
U.S.C. 1455a(b)(l)) is amended by adding before the period at the end
the following: ", or for the purpose of restoring and enhancing
shellfish production by the purchase and distribution of clutch
material on publicly owned reef tracts".
SEC. 6208. COASTAL ZONE MANAGEMENT CONSISTENCY.
(a) FEDERAL AGENCY ACTIVITIES.—Section 307(cXl) of the Coastal

Zone Management Act of 1972 (16 U.S.C. 1456(cXl)) is amended to
read as follows:
"(c)(1)(A) Each Federal agency activity within or outside the
coastal zone that affects any land or water use or natural resource of
the coastal zone shall be carried out in a manner which is consistent
to the maximum extent practicable with the enforceable policies of
approved State management programs. A Federal agency activity
shall be subject to this paragraph unless it is subject to paragraph
(2) or (3).
"(B) After any final judgment, decree, or order of any Federal
court that is appealable under section 1291 or 1292 of title 28,
United States Code, or under any other applicable provision of
Federal law, that a specific Federal agency activity is not in compliance with subparagraph (A), and certification by the Secretary that
mediation under subsection (h) is not likely to result in such compliance, the President may, upon written request from the Secretary,
exempt from compliance those elements of the Federal agency
activity that are found by the Federal court to be inconsistent with
an approved State program, if the President determines that the
activity is in the paramount interest of the United States. No such
exemption shall be granted on the basis of a lack of appropriations
unless the President has specifically requested such appropriations
as part of the budgetary process, and the C!ongress has failed to
make available the requested appropriations.
"(C) Each Federal agency carrjdng out an activity subject to
paragraph (1) shall provide a consistency determination to the
relevant State agency designated under section 306(d)(6) at the
earliest practicable time, but in no case later than 90 days before
final approval of the Federal activity unless both the Federal agency
and the State agency agree to a different schedule.".
(b) TECHNICAL AND CONFORMING CHANGES.—

(1) Section 307(cX2) of the Coastal Zone Management Act of
1972 (16 U.S.C. 1456(cX2)) is amended by inserting "the enforceable policies o f before "approved State management programs".
(2) Section 307(cX3XA) of the (Doastal Zone Management Act of
1972 (16 U.S.C. 1456(cX3XA)) is amended in the first sentence—
(A) by inserting ", in or outside of the coastal zone," after
"to conduct an activity";

104 STAT. 1388-308

PUBLIC LAW 101-508—NOV. 5, 1990

(B) by striking "land or water uses in" and inserting "any
land or water use or natural resource of; and
(C) by inserting "the enforceable policies o f after the
words the proposed activity complies with".
(3) Section 307(cX3)(B) of the Coastal Zone Management Act of
1972 (16 U.S.C. 1456(c)(3XB)) is amended in the first sentence—
(A) by striking "land use or water use in" and inserting
"land or water use or natural resource o f ; and
(B) by inserting "the enforceable policies o f after "such
plan complies".
(4) Section 307(d) of the Coastal Zone Management Act of 1972
(16 U.S.C. 1456(d)) is amended—
(A) by striking "affecting" and inserting ", in or outside
of the coastal zone, affecting any land or water use of
natural resource o f ; and
(B) by inserting "the enforceable policies o f after "that
are inconsistent with".
(c) FEDERAL FEE.—Section 307 of the Coastal Zone Management
Act of 1972 (16 U.S.C. 1456) is amended by adding at the end the
following:
"(i) With respect to appeals under subsections (c)(3) and (d) which
are submitted after the date of the enactment of the Coastal Zone
Act Reauthorization Amendments of 1990, the Secretary shall collect an application fee of not less than $200 for minor appeals and
not less than $500 for major appeals, unless the Secretary, upon
consideration of an applicant's request for a fee waiver, determines
that the applicant is unable to pay the fee. The Secretary shall
collect such other fees as are necessary to recover the full costs of
administering and processing such appeals under subsection (c).".
SEC. 6209. COASTAL ZONE MANAGEMENT FUND.

Section 308 of the Coastal Zone Management Act of 1972 (16
U.S.C. 1456) is amended to read as follows:
" C O A S T A L Z O N E MANAGEMENT FUND

16 use 1456a.

"SEC. 308. (aXD The obligations of any coastal State or unit of
general purpose local government to repay loans made pursuant to
this section as in effect before the date of the enactment of the
Coastal Zone Act Reauthorization Amendments of 1990, and any
repayment schedule established pursuant to this Act as in effect
before that date of enactment, are not altered by any provision of
this title. Such loans shall be repaid under authority of this subsection and the Secretary may issue regulations governing such repayment. If the Secretary finds that any coastal State or unit of local
government is unable to meet its obligations pursuant to this subsection because the actual increases in employment and related
population resulting from coastal energy activity and the facilities
associated with such activity do not provide adequate revenues to
enable such State or unit to meet such obligations in accordance
with the appropriate repayment schedule, the Secretary shall, after
review of the information submitted by such State or unit, take any
of the following actions:
"(A) Modify the terms and conditions of such loan.
"(B) Refinance the loan.
"(C) Recommend to the Congress that legislation be enacted
to forgive the loan.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-309

"(2) Loan repayments made pursuant to this subsection shall be
retained by the Secretary as offsetting collections, and shall be
deposited into the Coastal Zone Management Fund established
under subsection (b).
"(bXl) The Secretary shall establish and maintain a fund, to be
known as the 'Coastal Zone Management Fund' (hereinafter in this
section referred to as the 'Fund'), which shall consist of amounts
retained and deposited into the Fund under subsection (a).
"(2) Subject to amounts provided in appropriation Acts, amounts
in the Fund shall be available to the Secretary for use for the
following:
"(A) Expenses incident to the administration of this title, in
an amount not to exceed—
"(i) $5,000,000 for fiscal year 1991;
"(ii) $5,225,000 for fiscal year 1992;
"(iii) $5,460,125 for fiscal year 1993;
"(iv) $5,705,830 for fiscal year 1994; and
"(v) $5,962,593 for fiscal year 1995.
"(B) After use under subparagraph (A)—
"(i) projects to address management issues which are
regional in scope, including interstate projects;
"(ii) demonstration projects which have high potential for
improving coastal zone management, especially at the local
level;
"(iii) emergency grants to State coastal zone management
agencies to address unforeseen or disaster-related circumstances;
"(iv) appropriate awards recognizing excellence in coastal
zone management as provided in section 314;
"(v) program development grants as authorized by section
305; and
"(vi) to provide financial support to coastal States for use
for investigating and applying the public trust doctrine to
implement State maneigement programs approved under
section 306.
"(3) On December 1 of each year, the Secretary shall transmit to
the Congress an annual report on the Fund, including the balance of
the Fund and an itemization of all deposits into and disbursements
from the Fund in the preceding fiscal year.".
SEC. 6210. COASTAL ZONE ENHANCEMENT GRANTS.

Section 309 of the Coastal Zone Management Act of 1972 (16
U.S.C. 1452b) is amended to read as follows:
" C O A S T A L Z O N E ENHANCEMENT GRANTS

"SEC. 309. (a) For purposes of this section, the term 'coastal zone 16 USC 1456b.
enhancement objective' means any of the following objectives:
"(1) Protection, restoration, or enhancement of the existing
coastal wetlands base, or creation of new coeistal wetlands.
"(2) Preventing or significantly reducing threats to life and
destruction of property by eliminating development and redevelopment in high-hazard areas, managing development in
other hazard areas, and anticipating and managing the effects
of potential sea level rise and Great Lakes level rise.
"(3) Attaining increased opportunities for public access,
taking into account current and future public access needs, to

104 STAT. 1388-310

PUBLIC LAW 101-508—NOV. 5, 1990

coastal areas of recreational, historical, aesthetic, ecological, or
cultural value.
"(4) Reducing marine debris entering the Nation's coastal and
ocean environment by managing uses and activities that
contribute to the entry of such debris.
"(5) Development and adoption of procedures to assess, consider, and control cumulative and secondary impacts of coEistal
growth and development, including the collective effect on various individual uses or activities on coastal resources, such as
coastal wetlands and fishery resources.
"(6) Preparing and implementing special area management
plans for important coastal areas.
"(7) Planning for the use of ocean resources.
"(8) Adoption of procedures and enforceable policies to help
facilitate the siting of energy facilities and Government facilities and energy-related activities and Government activities
which may be of greater than local significance.
"(b) Subject to the limitations and goals established in this section,
the Secretary may make grants to coastal States to provide funding
for development and submission for Federal approval of program
changes that support attainment of one or more coastal zone
enhancement objectives.
"(c) The Secretary shall evaluate and rank State proposals for
funding under this section, and make funding awards based on those
proposals, taking into account the criteria established by the Secretary under subsection (d). The Secretary shall ensure that funding
decisions under this section take into consideration the fiscal and
technical needs of proposing States and the overall merit of each
proposal in terms of benefits to the public.
"(d) Within 12 months following the date of enactment of this
section, and consistent with the notice and participation requirements established in section 317, the Secretary shall promulgate
regulations concerning coastal zone enhancement grants that establish—
"(1) specific and detailed criteria that must be addressed by a
coastal state (including the State's priority needs for improvement as identified by the Secretary after careful consultation
with the State) as part of the State's development and implementation of coastal zone enhancement objectives;
"(2) administrative or procedural rules or requirements as
necessary to facilitate the development and implementation of
such objectives by coastal states; and
"(3) other funding award criteria as are necessary or appropriate to ensure that evaluations of proposals, and decisions to
award funding, under this section are based on objective standards applied fairly and equitably to those proposals.
"(e) A State shall not be required to contribute any portion of the
cost of any proposal for which funding is awarded under this section.
"(f) Beginning in fiscal year 1991, not less than 10 percent and not
more than 20 percent of the amounts appropriated to implement
sections 306 and 306A of this title shall be retained by the Secretary
for use in implementing this section, up to a maximum of
$10,000,000 annually.
"(g) If the Secretary finds that the State is not undertaking the
actions committed to under the terms of the grant, the Secretary
shall suspend the State's eligibility for further funding under this
section for at least one year.".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-311

SEC. 6211. TECHNICAL ASSISTANCE.

The Coastal Zone Management Act of 1972 (16 U.S.C. 1451 et seq.)
is amended by inserting immediately after section 309 the following
new section:
"TECHNICAL ASSISTANCE

"SEC. 310. (a) The Secretary shall conduct a program of technical 16 USC 1456c.
assistance and management-oriented research necessary to support
the development and implementation of State coastal management
program amendments under section 309, and appropriate to the
furtherance of international cooperative efforts and technical assistance in coastal zone management. Each department, agency, and
instrumentality of the executive branch of the Federal Government
may assist the Secretary, on a reimbursable basis or otherwise, in
carrjdng out the purposes of this section, including the furnishing of
information to the extent permitted by law, the transfer of personnel with their consent and without prejudice to their position and
rating, and the performance of any research, study, and technical
assistance which does not interfere with the performance of the
primary duties of such department, agency, or instrumentality. The
Secretary may enter into contracts or other arrangements with any
qualified person for the purposes of carrying out this subsection.
"OJXD The Secretary shall provide for the coordination of technical assistance, studies, and research activities under this section
with any other such activities that are conducted by or subject to the
authority of the Secretary.
"(2) The Secretary shall make the results of research and studies
conducted pursuant to this section available to coastal states in the
form of technical assistance publications, workshops, or other means
appropriate.
"(3) The Secretary shall consult with coastal states on a regular
basis regarding the development and implementation of the program established by this section.".
SEC. 6212. COASTAL ZONE MANAGEMENT REVIEW.

(a) PuBuc PARTICIPATION.—Subsection (b) of section 312 of the
Coastal Zone Management Act of 1972 (16 U.S.C. 1458) is amended
to read as follows:
"Ot)) In evaluating a coastal State's performance, the Secretary
shall conduct the evaluation in an open and public manner, and
provide full opportunity for public participation, including holding
public meetings in the State being evaluated and providing
opportunities for the submission of written and oral comments by
the public. The Secretary shall provide the public with at least 45
days' notice of such public meetings by placing a notice in the
Federal Register, by publication of timely notices in newspapers of
general circulation within the State being evaluated, and by communications with persons and organizations known to be interested in
the evaluation. Each evaluation shall be prepared in report form
and shall include written responses to the written comments received during the evaluation process. The final report of the evaluation shall be completed within 120 days after the last public meeting
held in the State being evaluated. Copies of the evaluation shall be
immediately provided to all persons and organizations participating
in the evaluation process.".

104 STAT. 1388-312

PUBLIC LAW 101-508—NOV. 5, 1990

Ot)) INTERIM SANCTIONS.—Subsection (c) of section 312 of the

Coastal Zone Management Act of 1972 (16 U.S.C. 1458(c)) is amended
to read as follows:
"(c)(1) The Secretary may suspend payment of any portion of
financial assistance extended to any coastal State under this title,
and may withdraw any unexpended portion of such assistance, if the
Secretary determines that the coastal state is failing to adhere to (A)
the management program or a State plan developed to manage a
national estuarine reserve established under section 315 of this title,
or a portion of the program or plan approved by the Secretary, or (B)
the terms of any grant or cooperative agreement funded under this
title.
"(2) Financial assistance may not be suspended under paragraph
(1) unless the Secretary provides the Governor of the coastal state
with—
*
"(A) written specifications and a schedule for the actions that
should be taken by the State in order that such suspension of
financial assistance may be withdrawn; and
"(B) written specifications stating how those funds from the
suspended financial assistance shall be expended by the coastal
state to take the actions referred to in subparagraph (A).
"(3) The suspension of financial assistance may not last for less
than 6 months or more than 36 months after the date of suspension.".
(c) FINAL SANCTIONS.—Section 312(d) of the Coastal Zone Management Act of 1972 (16 U.S.C. 1458(d)) is amended to read as follows:
"(d) The Secretary shall withdraw approval of the management
program of any coastal state and shall withdraw financial assistance
available to that State under this title as well as any unexpended
portion of such assistance, if the Secretary determines that the
coastal state has failed to take the actions referred to in subsection
(c)(2)(A).".
(d) REPEAL.—Subsection (f) of section 312 of the Coastal Zone
Management Act of 1972 (16 U.S.C. 1458) is repealed.
SEC. 6213. COASTAL ZONE MANAGEMENT AWARDS.

The Coastal Zone Management Act of 1972 is amended by inserting after section 313 the following:
"WALTER B. JONES EXCELLENCE IN COASTAL ZONE MANAGEMENT
AWARDS

16 use 1460.

"SEC. 313. (a) The Secretary shall, using sums in the Coastal Zone
Management Fund established under section 308, implement a program to promote excellence in coastal zone management by identifying and acknowledging outstanding accomplishments in the field.
"(b) The Secretary shall elect annually—
"(1) one individual, other than an employee or officer of the
Federal Government, whose contribution to the field of coastal
zone management has been the most significant;
"(2) 5 local governments which have made the most progress
in developing and implementing the coastal zone management
principles embodied in this title; and
"(3) up to 10 graduate students whose academic study promises to contribute materially to development of new or improved
approaches to coastal zone management.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-313

"(c) In making selections under subsection (b)(2) the Secretary
shall solicit nominations from the coastal states, and shall consult
with experts in local government planning and land use.
"(d) In making selections under subsection (b)(3) the Secretary
shall solicit nominations from coastal states and the National Sea
Grant College Program.
"(e) Using sums in the Coastal Zone Management Fund established under section 308, the Secretary shall establish and execute
appropriate awards, to be known as the 'Walter B. Jones Awards',
including—
"(1) cash awards in an amount not to exceed $5,000 each;
"(2) research grants; and
"(3) public ceremonies to acknowledge such awards.".
SEC. 6214. NATIONAL ESTUARINE RESEARCH RESERVE SYSTEM.

(a) AMENDMENT TO SECTION HEADING.—The heading for section
315 of the Coastal Zone Management Act of 1972 (16 U.S.C. 1461) is
amended by striking "RESERVE RESEARCH" and inserting in lieu
thereof "RESEARCH RESERVE".
(b) GRANTS FOR ACQUISTION OF LANDS AND WATERS.—Section

315(e)(3)(A) of the Coastal Zone Management Act of 1972 (16 U.S.C.
1461(e)(3)(A)) is amended by striking "per centum" and inserting in
lieu thereof "percent", and by striking "$4,000,000" and inserting in
lieu thereof "$5,000,000".
(c) GRANTS FOR OPERATIONS AND EDUCATION.—Section 315(e)(3)(B)
of the Coastal Zone Management Act of 1972 (16 U.S.C. 1461(e)(3)(B))
is amended—
(1) by striking "50 per centum" and inserting in lieu thereof
"70 percent"; and
(2) by inserting immediately before the period at the end the
following: "; except that the amount of the financial assistance
provided under paragraph (l)(A)(iii) may be up to 100 percent of
any costs for activities that benefit the entire System".
(d) CLERICAL AMENDMENT.—Section 315(e)(3) of the Coastal Zone
Management Act of 1972 (16 U.S.C. 1461(e)) is amended by striking
"of subsection (e)" each place it appears.
SEC. 6215. AUTHORIZATION OF APPROPRIATIONS.

Section 318(a) of the Coastal Zone Management Act of 1972 (16
U.S.C 1464) is amended by striking all after "Secretary—" and
inserting in lieu thereof the following:
"(1) such sums, not to exceed $750,000 for each of the fiscal
years occurring during the period beginning October 1, 1990,
and ending September 30, 1993, as may be necessary for grants
under section 305, to remain available until expended;
"(2) such sums, not to exceed $42,000,000 for the fiscal year
ending September 30, 1991, $48,890,000 for the fiscal year
ending September 30, 1992, $58,870,000 for the fiscal year
ending September 30, 1993, $67,930,000 for the fiscal year
ending September 30, 1994, and $90,090,000 for the fiscal year
ending September 30, 1995, as may be necessary for grants
under sections 306, 306A, and 309, to remain available until
expended;
"(3) such sums, not to exceed $6,000,000 for the fiscal year
ending September 30, 1991, $6,270,000 for the fiscal year ending
September 30, 1992, $6,552,000 for the fiscal year ending
September 30, 1993, $6,847,000 for the fiscal year ending

104 STAT. 1388-314

PUBLIC LAW 101-508—NOV. 5, 1990

September 30, 1994, and $7,155,000 for the fiscal year ending
September 30, 1995, £is may be necessary for grants under
section 315, to remain available until expended; and
"(4) such sums, not to exceed $10,000,000 for each of the fiscal
years occurring during the period beginning October 1, 1990,
and ending September 30, 1995, as may be necessary for activities under section 310 and for administrative expenses incident
to the administration of this title; except that expenditures for
such administrative expenses shall not exceed $5,000,000 in any
such fiscal year.".
SEC. 6216. CONFORMING AMENDMENTS.

(a) Section 306a(bXl) of the Coastal Zone Management Act of 1972
(16 U.S.C. 1455a(b)(l)) is amended by striking "306(cX9)" and insert>
ing in lieu thereof "306(d)(9)".
(b) Section 312(a) of the Coastal Zone Management Act of 1972 (16
U.S.C. 1458(a)) is amended by striking "through (I)" and inserting in
lieu thereof "through (K)".
16 u s e 1455b.

SEC. 6217. PROTECTING COASTAL WATERS.
(a) I N GENERAL.—
(1) PROGRAM DEVELOPMENT.—Not later than 30 months after

the date of the publication of final guidance under subsection
(g), each State for which a management program has been
approved pursuant to section 306 of the Cloastal Zone Management Act of 1972 shall prepare and submit to the Secretary and
the Administrator a Coastal Nonpoint Pollution Control Program for approval pursuant to this section. The purpose of the
program shall be to develop and implement management measures for nonpoint source pollution to restore and protect coastal
waters, working in close conjunction with other State and local
authorities.
(2) PROGRAM COORDINATION.—A State program under this
section shall be coordinated closely with State and local water
quality plans and programs developed pursuant to sections 208,
303, 319, and 320 of the Federal Water Pollution Control Act (33
U.S.C. 1288, 1313, 1329, and 1330) and with State plans developed pursuant to the Coastal Zone Management Act of 1972, as
amended by this Act. The program shall serve as an update and
expansion of the State nonpoint source mansigement program
developed under section 319 of the Federal Water Pollution
Control Act, as the program under that section relates to land
and water uses affecting coastal waters.
Ot)) PROGRAM CONTENTS.—Each State program under this section
shall provide for the implementation, a t a minimum, of management measures in conformity with the guidsince published under
subsection (g), to protect coastal waters generally, and shall also
contain the following:
(1) IDENTIFYING LAND USES.—The identification

of, and a

continuing process for identifying, land uses which, individually
or cumulatively, may cause or contribute significantly to a
degradation of—
(A) those coastal waters where there is a failure to attain
or maintain applicable water quality standards or protect
designated uses, as determined by the State pursuant to its
water quality planning processes; or

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-315

(B) those coastal waters that are threatened by reasonably foreseeable increases in pollution loadings from new or
expanding sources.
(2) IDENTIFYING CRITICAL COASTAL AREAS.—The identification
of, and a continuing process for identifying, critical coastal
areas adjacent to coastal waters referred to in paragraph (1)(A)
and (B), within which any new land uses or substantial expansion of existing land uses shall be subject to management
measures in addition to those provided for in subsection (g).
(3)

MANAGEMENT

MEASURES.—The

implementation

and

continuing revision from time to time of additional management measures applicable to the land uses and areas identified
pursuant to paragraphs (1) and (2) that are necessary to achieve
and maintain applicable water quality standards under section
303 of the Federal Water Pollution Control Act (33 U.S.C. 1313)
and protect designated uses.
(4) TECHNICAL ASSISTANCE.—The provision of technical and

other assistance to local governments and the public for implementing the measures referred to in paragraph (3), which
may include assistance in developing ordinances and regulations, technical guidance, and modeling to predict and assess
the effectiveness of such measures, training, financial incentives, demonstration projects, and other innovations to protect
coastal water quality and designated uses.
(5) PUBLIC PARTICIPATION.—Opportunities for public participation in all aspects of the program, including the use of public
notices and opportunities for comment, nomination procedures,
public hearings, technical and financial assistance, public
education, and other means.
(6) ADMINISTRATIVE COORDINATION.—The establishment of
mechanisms to improve coordination among State agencies and
between State and local officials responsible for land use programs and permitting, water quality permitting and enforcement, habitat protection, and public health and safety, through
the use of joint project review, memoranda of agreement, or
other mechanisms.
(7) STATE COASTAL ZONE BOUNDARY MODIFICATION.—A proposal

to modify the boundaries of the State coastal zone as the coastal
management agency of the State determines is necessary to
implement the recommendations made pursuant to subsection
(e). If the coastal management agency does not have the authority to modify such boundaries, the program shall include recommendations for such modifications to the appropriate State
authority.
(c) PROGRAM SUBMISSION, APPROVAL, AND IMPLEMETATION.—
(1) REVIEW AND APPROVAL.—Within 6 months after the date

of
submission by a State of a program pursuant to this section, the
Secretary and the Administrator shall jointly review the
program. The program shall be approved if—
(A) the Secretary determines that the portions of the
program under the authority of the Secretary meet the
requirements of this section and the Administrator concurs
with that determination; and
(B) the Administrator determines that the portions of the
program under the authority of the Administrator meet the
requirements of this section and the Secretary concurs with
that determination.

104 STAT. 1388-316

PUBLIC LAW 101-508—NOV. 5, 1990

(2) IMPLEMENTATION OF APPROVED PROGRAM.—If the program
of a State is approved in accordance with paragraph (1), the
State shall implement the program, including the management
measures included in the progrsim pursuant to subsection (b),
through—
(A) changes to the State plan for control of nonpoint
source pollution approved under section 319 of the Federal
Water Pollution Control Act; and
(B) changes to the State coastal zone management program developed under section 306 of the Coastal Zone
Management Act of 1972, as amended by this Act.
(3) WITHHOLDING COASTAL MANAGEMENT ASSISTANCE.—If

the

Secretary finds that a coastal State has failed to submit an
approvable program as required by this section, the Secretary
shall withhold for each fiscal year until such a program is
submitted a portion of grants otherwise available to the State
for the fiscal year under section 306 of the Coastal Zone
Management Act of 1972, as follows:
(A) 10 percent for fiscal year 1996.
(B) 15 percent for fiscal year 1997.
(C) 20 percent for fiscal year 1998.
(D) 30 percent for fiscal year 1999 and each fiscal year
thereafter.
The Secretary shall make amounts withheld under this paragraph available to coastal States having programs approved
under this section.
(4) WITHHOLDING WATER POLLUTION CONTROL ASSISTANCE.—If

the Administrator finds that a coastal State has failed to submit
an approvable program as required by this section, the Administrator shall withhold from grants available to the State under
section 319 of the Federal Water Pollution Control Act, for each
fiscal year until such a program is submitted, an amount equal
to a percentage of the grants awarded to the State for the
preceding fiscal year under that section, as follows:
(A) For fiscal year 1996, 10 percent of the amount
awarded for fiscal year 1995.
(B) For fiscal year 1997, 15 percent of the amount
awarded for fiscal year 1996.
(C) For fiscal year 1998, 20 percent of the amount
awarded for fiscal year 1997.
(D) For fiscal year 1999 and each fiscal year thereafter, 30
percent of the amount awarded for fiscal year 1998 or other
preceding fiscal year.
The Administrator shall make amounts withheld under this
paragraph available to States having programs approved pursuant to this subsection,
(d) TECHNICAL ASSISTANCE.—The Secretary and the Administrator
shall provide technical sissistance to coastal States and local governments in developing and implementing programs under this section.
Such assistance shall include—
(1) methods for assessing water quality impacts associated
with coastal land uses;
(2) methods for assessing the cumulative water quality effects
of coastal development;
(3) maintaining and from time to time revising an inventory
of model ordinances, and providing other assistance to coastal

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-317

States and local governments in identifying, developing, and
implementing pollution control measures; and
(4) methods to predict and assess the effects of coastal land
use management measures on coastal water quality and designated uses.
(e) INLAND COASTAL ZONE BOUNDARIES.—

(1) REVIEW.—The Secretary, in consultation with the
Administrator of the Environmental Protection Agency, shall,
within 18 months after the effective date of this title, review the
inland coastal zone boundary of each cosistal State program
which has been approved or is proposed for approval under
section 306 of the Coastal Zone Management Act of 1972, and
evaluate whether the State's coastal zone boundary extends
inland to the extent necessary to control the land and water
uses that have a significant impact on coastal waters of the
State.
(2) RECOMMENDATION.—If the Secretary, in consultation with
the Administrator, finds that modifications to the inland boundaries of a State's coastal zone are necessary for that State to
more effectively manage land and water uses to protect coastal
waters, the Secretary, in consultation with the Administrator,
shall recommend appropriate modifications in writing to the
affected State.
(f) FINANCIAL ASSISTANCE.—

(1) IN GENERAL.—Upon request of a State having a program
approved under section 306 of the Coastal Zone Management
Act of 1972, the Secretary, in consultation with the Administrator, may provide grants to the State for use for developing a
State program under this section.
(2) AMOUNT.—The total amount of grants to a State under
this subsection shall not exceed 50 percent of the total cost to
the State of developing a program under this section.
(3) STATE SHARE.—The State share of the cost of an activity
carried out with a grant under this subsection shall be paid
from amounts from non-Federal sources.
(4) ALLOCATION.—Amounts available for grants under this
subsection shall be allocated among States in accordance with
regulations issued pursuant to section 306(c) of the Coastal Zone
Management Act of 1972, except that the Secretary may use not
more than 25 percent of amounts available for such grants to
assist States which the Secretary, in consultation with the
Administrator, determines are making exemplary progress in
preparing a State program under this section or have extreme
needs with respect to coastal water quality.
(g) GUIDANCE FOR COASTAL NONPOINT SOURCE POLLUTION CONTROL.—

(1) IN GENERAL.—The Administrator, in consultation with the
Secretary and the Director of the United States Fish and Wildlife Service and other Federal agencies, shall publish (and
periodically revise thereafter) guidance for specifying management measures for sources of nonpoint pollution in coastal
waters.
(2) CONTENT.—Guidance under this subsection shall include,
at a minimum—
(A) a description of a range of methods, measures, or
practices, including structur^ and nonstructural controls

104 STAT. 1388-318

PUBLIC LAW 101-508—NOV. 5, 1990

and operation and maintenance procedures, that constitute
each measure;
(B) a description of the categories and subcategories of
activities and locations for which each measure may be
suitable;
(C) an identification of the individual pollutants or categories or classes of pollutants that may be controlled by
the measures and the water quality effects of the measures;
(D) quantitative estimates of the pollution reduction effects and costs of the measures;
(E) a description of the factors which should be taken into
account in adapting the measures to specific sites or locations; and
(F) any necessary monitoring techniques to accompany
the measures to assess over time the success of the measures in reducing pollution loads ^nd improving water
quality.
(3) PUBLICATION.—The Administrator, in consultation with
the Secretary, shall publish—
(A) proposed guidance pursuant to this subsection not
later than 6 months after the date of the enactment of this
Act; and
(B) final guidance pursuant to this subsection not later
than 18 months after such effective date.
(4) NOTICE AND COMMENT.—The Administrator shall provide
to coastal States and other interested persons an opportunity to
provide written comments on proposed guidance under this
subsection.
(5) MANAGEMENT MEASURES.—For purposes of this subsection,
the term "management measures" means economically achievable measures for the control of the addition of pollutants from
existing and new categories and classes of nonpoint sources of
pollution, which reflect the greatest degree of pollutant reduction achievable through the application of the best available
nonpoint pollution control practices, technologies, processes,
siting criteria, operating methods, or other alternatives.
(h) AUTHORIZATIONS OF APPROPRIATIONS.—

(1) ADMINISTRATOR.—There is authorized to be appropriated
to the Administrator for use for carrying out this section not
more than $1,000,000 for each of fiscal years 1992, 1993, and
1994.
(2) SECRETARY.—(A) Of amounts appropriated to the Secretary
for a fiscal year under section 318(a)(4) of the Coastal Zone
Management Act of 1972, as amended lay this Act, not more
than $1,000,000 shall be available for use by the Secretary for
carrying out this section for that fiscal year, other than for
providing in the form of grants under subsection (f).
(B) There is authorized to be appropriated to the Secretary for
use for providing in the form of grants under subsection (f) not
more than—
(i) $6,000,000 for fiscal year 1992;
(ii) $12,000,000 for fiscal year 1993;
(iii) $12,000,000 for fiscal year 1994; and
(iv) $12,000,000 for fiscal year 1995.
(i) DEFINITIONS.—In this section—
(1) the term "Administrator" means the Administrator of the
Environmental Protection Agency;

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-319

(2) the term "coastal State" has the meaning given the term
"coastal state" under section 304 of the CoEistal Zone Management Act of 1972 (16 U.S.C. 1453);
(3) each of the terms "coastal waters", and "coastal zone" has
the meaning that term has in the Coastal Management Act of
1972;
(4) the term "coastal management agency" means a State
agency designated pursuant to section 306(dX6) of the Coastal
Zone Management Act of 1972;
(5) the term "land use" includes a use of waters adjacent to
coEistal waters; and
(6) the term "Secretary" means the Secretary of Commerce.

Subtitle D—Extension of Superfund for 3
Years
SEC. 6301. 3-YEAR EXTENSION OF COMPREHENSIVE ENVIRONMENTAL
RESPONSE, COMPENSATION, AND LIABILITY ACT OF 1980.

Section 111 of the Comprehensive Environmented Response, Compensation, and Liability Act of 1980 (42 U.S.C. 9611) is amended—
(1) by inserting after "Reauthorization Act of 1986," in subsection (a) the following: "and not more than $5,100,000,000 for the
period commencing October 1, 1991, and ending September 30,
1994,";
(2) by striking "5-fiscal-year period" in subsection (cXH) and
inserting "8-fiscal year period";
(3) by striking and 1991" in subsection (cX12) and inserting
"1991,1992,1993, and 1994";
(4) by striking "1990 and 1991" in subsection (m) and inserting
"1990,1991,1992,1993, and 1994";
(5) by striking "and 1991" in subsection (nXD and inserting
"1991,1992,1993, and 1994";
(6) by striking subsection (nX2XE) and inserting the following
new subparagraph:
"(E) For each of the fiscal years 1991, 1992, 1993, and 1994,
$35,000,000.";
(7) by striking "and 1991" in subsection (nX3) and inserting
"1991,1992,1993, and 1994"; and
(8) by inserting after subparagraph (E) of subsection (pXD the
following new subparagraphs:
"(F) For fiscal year 1992, $212,500,000.
"(G) For fiscal year 1993, $212,500,000.
"(H) For fiscal year 1994, $212,500,000.".

Subtitle E—Shale Oil Contract ModiHcation
SEC. 6401. SHALE OIL CONTRACT MODIFICATION.

Section 7404(a) of the Consolidated Omnibus Budget Reconciliation Act of 1985 (Public Law 99-272) is amended by adding at the 42 USC 8791
end the following sentence: "The Secretary of the Treasury shall "°*®have the authority to negotiate and execute agreements modifying
an existing contract relating to the production of synthetic crude oil
from oil shale, entered into under the Defense Production Act
Amendments of 1980 £ind subsequently transferred to the Secretary

104 STAT. 1388-320

PUBLIC LAW 101-508—NOV. 5, 1990

of the Treasury for administration, provided the terms and conditions of any modification(s) are revenue neutral or result in a fiscal
savings to the United States Government, and in no event would
increase the financial exposure of the United States Government
under the contract: Provided, however. That the Secretary of the
Treasury shall have no authority to increase the total amount of
funds originally authorized for the existing contract: And provided
further, That the Secretary shall have no authority to negotiate and
execute any agreement modif3dng the existing contract if such
modification(s) would increase or accelerate the financial support
per unit for the synthetic fuel to be produced under the contract.".

Subtitle F—Environmental Protection Agency
Fees
42 u s e 4370c.

SEC. 6501. ENVIRONMENTAL PROTECTION AGENCY FEES.
(a) ASSESSMENT AND COLLECTION.—The Administrator

of the

Environmental Protection Agency shall, by regulation, assess and
collect fees and charges for services and activities carried out pursuant to laws administered by the Environmental Protection Agency.
(b) AMOUNT OF FEES AND CHARGES.—Fees and charges assessed

pursuant to this section shall be in such amounts as may be necessary to ensure that the aggregate amount of fees and charges
collected pursuant to this section, in excess of the amount of fees
and charges collected under current law—
(1) in fiscal year 1991, is not less than $28,000,000; and
(2) in each of fiscal years 1992,1993,1994, and 1995, is not less
than $38,000,000.
(c) LIMITATION ON FEES AND CHARGES.—(1) The maximum aggre-

gate amount of fees and charges in excess of the amounts being
collected under current law which may be assessed and collected
pursuant to this section in a fiscal year—
(A) for services and activities carried out pursuant ot ^^ the
Federal Water Pollution Control Act is $10,000,000; and
(B) for services and activities in programs within the jurisdiction of the House Committee on Energy and Commerce and
administered by the Environmental Protection Agency through
the Administrator, shall be limited to such sums collected as of
the date of enactment of this Act pursuant to sections 260)) and
305(e)(2) of the Toxic Substances Control Act, and such sums
specifically authorized by the Clean Air Act Amendments of
1990.
(2) Any remaining amounts required to be collected under this
section shall be collected from services and programs administered
by the Environmental Protection Agency other than those specified
in subparagraphs (A) and (B) of paragraph (1).
(d) RULE OF CONSTRUCTION.—Nothing in this section increases or
diminishes the authority of the Administrator to promulgate regulations pursuant to the Independent Office Appropriations Act (31
U.S.C.9701).
(e) USES OF FEES.—Fees and charges collected pursuant to this
section shall be deposited into a special account for environmental
services in the Treasury of the United States. Subject to appropriation Acts, such funds shall be available to the Environmental
Protection Agency to carry out the activities for which such fees and
•* bo in original. Probably should be "to".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-321

charges are collected. Such funds shall remain available until
expended.
SEC. 6601. SHORT TITLE.

This subtitle may be cited as the "Pollution Prevention Act of
1990".
SEC. 6602. FINDINGS AND POLICY.
(a) FINDINGS.—The Congress finds that:
(1) The United States of America annually produces millions
of tons of pollution and spends tens of billions of dollars per
year controlling this pollution.
(2) There are significant opportunities for industry to reduce
or prevent pollution at the source through cost-effective changes
in production, operation, and raw materials use. Such changes
offer industry substantial savings in reduced raw material,
pollution control, and liability costs as well as help protect the
environment and reduce risks to worker health and safety.
(3) The opportunities for source reduction are often not realized because existing regulations, and the industrial resources
they require for compliance, focus upon treatment and disposal,
rather than source reduction; existing regulations do not
emphasize multi-media management of pollution; and
businesses need information and technical assistance to overcome institutional barriers to the adoption of source reduction
practices.
(4) Source reduction is fundamentally different and more
desirable than waste management and pollution control. The
Environmental Protection Agency needs to address the historical lack of attention to source reduction.
(5) As a first step in preventing pollution through source
reduction, the Environmental Protection Agency must establish
a source reduction program which collects and disseminates
information, provides financial assistance to States, and implements the other activities provided for in this subtitle.
(b) POLICY.—The Congress hereby declares it to be the national
policy of the United States that pollution should be prevented or
reduced at the source whenever feasible; pollution that cannot be
prevented should be recycled in an environmentally safe manner,
whenever feasible; pollution that cannot be prevented or recycled
should be treated in an environmentally safe manner whenever
feasible; and disposal or other release into the environment should
be employed only as a last resort and should be conducted in an
environmentally safe manner.
SEC. 6603. DEFINITIONS.
For purposes of this subtitle—
(1) The term "Administrator" means the Administrator of the
Environmental Protection Agency.
(2) The term "Agency" means the Environmental Protection
Agency.
(3) The term "toxic chemical" means any substance on the list
described in section 313(c) of the Superfund Amendments and
Reauthorization Act of 1986.
(4) The term "release" has the same meaning as provided by
section 329(8) of the Superfund Amendments and Reauthorization Act of 1986.

Pollution
Prevention Act

of 1990.
42 use 13101
note.
42 USC 13101.

42 USC 13102.

104 STAT. 1388-322

PUBLIC LAW 101-508—NOV. 5, 1990

(5XA) The term "source reduction" means any practice
which—
(i) reduces the amount of any hazardous substance,
pollutant, or contaminant entering any waste stream or
otherwise released into the environment (including fugitive
emissions) prior to recycling, treatment, or disposal; and
(ii) reduces the hazards to public health and the environment associated with the release of such substances, pollutants, or contaminants.
The term includes equipment or technology modifications, process or procedure modifications, reformulation or i-edesign of
products, substitution of raw materials, and improvements in
housekeeping, maintenance, training, or inventory control,
(B) The term "source reduction" does not include any practice
which alters the physical, chemical, or biological characteristics
or the volume of a hazardous substance, pollutant, or contaminant through a process or activity which itself is not integral to
and necessary for the production of a product or the providing
of a service.
(6) The term "multi-media" means water, air, and land.
(7) The term "SIC codes" refers to the 2-digit code numbers
used for classification of economic activity in the Standard
Industrial Classification Manual.
42 u s e 13103.

SEC. 6604. EPA ACTIVITIES.

(a) AUTHORITIES.—The Administrator shall establish in the
Agency an office to carry out the functions of the Administrator
under this subtitle. The office shall be independent of the Agency's
single-medium program offices but shall have the authority to
review and advise such offices on their activities to promote a multimedia approach to source reduction. The office shall be under the
direction of such officer of the Agency as the Administrator shall
designate.
(b) FUNCTIONS.—The Administrator shall develop and implement
a strategy to promote source reduction. As part of the strategy, the
Administrator shall—
(1) establish standard methods of measurement of source
reduction;
(2) ensure that the Agency considers the effect of its existing
and proposed programs on source reduction efforts and shall
review regulations of the Agency prior and subsequent to their
proposal to determine their effect on source reduction;
(3) coordinate source reduction activities in each Agency
Office and coordinate with appropriate offices to promote source
reduction practices in other Federal agencies, and generic research and development on techniques and processes which
have broad applicability;
(4) develop improved methods of coordinating, streamlining
and assuring public access to data collected under Federal
environmental statutes;
(5) facilitate the adoption of source reduction techniques by
businesses. This strategy shall include the use of the Source
Reduction Clearinghouse and State matching grants provided in
this subtitle to foster the exchange of information regarding
source reduction techniques, the dissemination of such information to businesses, and the provision of technical assistance to

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-323

businesses. The strategy shall also consider the capabilities of
various businesses to make use of source reduction techniques;
(6) identify, where appropriate, measurable goals which reflect the policy of this subtitle, the tasks necessary to achieve
the goals, dates at which the principal tasks are to be accomplished, required resources, organizational responsibilities, and
the means by which progress in meeting the goals will be
megisured;
(8) establish an advisory panel of technical experts comprised
of representatives from industry, the States, and public interest
groups, to advise the Administrator on ways to improve collection and dissemination of data;
(9) establish a training program on source reduction
opportunities, including workshops and guidance documents,
for State and Federal permit issuance, enforcement, and inspection officials working within all agency program offices.
(10) identify and make recommendations to Congress to eliminate barriers to source reduction including the use of incentives
and disincentives;
(11) identify opportunities to use Federal procurement to
encourage source reduction;
(12) develop, test and disseminate model source reduction
auditing procedures designed to highlight source reduction
opportunities; and
(13) establish an annual award program to recognize a company or companies which operate outstanding or innovative
source reduction programs.
SEC. 6605. GRANTS TO STATES FOR STATE TECHNICAL ASSISTANCE PROGRAMS.

(a) GENERAL AUTHORITY.—The Administrator shall make matching grants to States for programs to promote the use of source
reduction techniques by businesses.
(b) CRITERIA.—When evaluating the requests for grants under this
section, the Administrator shall consider, among other things,
whether the proposed State program would accomplish the
following:
(1) Make specific technical assistance available to businesses
seeking information about source reduction opportunities,
including funding for experts to provide onsite technical advice
to business seeking assistance and to assist in the development
of source reduction plans.
(2) Target assistance to businesses for whom lack of information is an impediment to source reduction.
(3) Provide training in source reduction techniques. Such
training may be provided through local engineering schools or
any other appropriate means.
(c) MATCHING FUNDS.—Federal funds used in any State program
under this section shall provide no more than 50 per centum of the
funds made available to a State in each year of that State's participation in the program.
(d) EFFECTIVENESS.—The Administrator shall establish appropriate means for measuring the effectiveness of the State grants
made under this section in promoting the use of source reduction
techniques by businesses.

42 USC 13104.

104 STAT. 1388-324

PUBLIC LAW 101-508—NOV. 5, 1990

(e) INFORMATION.—States receiving grants under this section shall
make information generated under the grants available to the
Administrator.
42 u s e 13105.

SEC. 6606. SOURCE REDUCTION CLEARINGHOUSE.

(a) AUTHORITY.—The Administrator shall establish a Source
Reduction Clearinghouse to compile information including a computer data base which contains information on management,
technical, and operational approaches to source reduction. The
Administrator shall use the clearinghouse to—
(1) serve as a center for source reduction technology transfer;
(2) mount active outreach and education programs by the
States to further the adoption of source reduction technologies;
and
(3) collect and compile information reported by States receiving grants under section 6605 on the operation and success of
State source reduction programs.
r.
(b) PUBLIC AVAILABILITY.—The Administrator shall make available to the public such information on source reduction as is gathered pursuant to this subtitle and such other pertinent information
and analysis regarding source reduction as may be available to the
Administrator. The data base shall permit entry and retrieval of
information to any person.
42 u s e 13106.

SEC. 6607. SOURCE REDUCTION AND RECYCLING DATA COLLECTION.
(a) REPORTING REQUIREMENTS.—Each owner or operator of a facil-

ity required to file an annual toxic chemical release form under
section 313 of the Superfund Amendments and Reauthorization Act
of 1986 ("SARA") for any toxic chemical shall include with each
such annual filing a toxic chemical source reduction and recycling
report for the preceeding '^° calendar year. The toxic chemical
source reduction and recycling report shall cover each toxic chemical required to be reported in the annual toxic chemical release
form filed by the owner or operator under section 313(c) of that Act.
This section shall take effect with the annual report filed under
section 313 for the first full calendar year beginning after the
enactment of this subtitle.
(b) ITEMS INCLUDED IN REPORT.—The toxic chemical source reduction and recycling report required under subsection (a) shall set
forth each of the following on a facility-by-facility basis for each
toxic chemical:
(1) The quantity of the chemical entering any waste stream
(or otherwise released into the environment) prior to recycling,
treatment, or disposal during the calendar year for which the
report is filed and the percentage change from the previous
year. The quantity reported shall not include any amount reported under paragraph (7). When actual measurements of the
quantity of a toxic chemical entering the waste streams are not
readily available, reasonable estimates should be made based on
best engineering judgment.
(2) The amount of the chemical from the facility which is
recycled (at the facility or elsewhere) during such calendar year,
the percentage change from the previous year, and the process
of recycling used.
(3) The source reduction practices used with respect to that
chemical during such year at the facility. Such practices shall
be reported in accordance with the following categories unless
^o So in original. Probably should be "preceding".

PUBLIC LAW 101-508—NOV. 5,1990

104 STAT. 1388-325

the Administrator finds other categories to be more appropriate:
(A) Equipment, technology, process, or procedure modifications.
(B) Reformulation or redesign of products.
(C) Substitution of raw materials.
(D) Improvement in management, training, inventory
control, materials handling, or other general operational
phases of industrial facilities.
(4) The amount expected to be reported under paragraph (1)
and (2) for the two calendar years immediately following the
calendar year for which the report is filed. Such amount shall
be expressed as a percentage change from the amount reported
in paragraphs (1) and (2).
(5) A ratio of production in the reporting year to production in
the previous year. The ratio should be calculated to most closely
reflect all activities involving the toxic chemical. In specific
industrial classifications subject to this section, where a feedstock or some variable other than production is the primary
influence on waste characteristics or volumes, the report may
provide an index based on that primary variable for each toxic
chemical. The Administrator is encouraged to develop production indexes to accommodate individual industries for use on a
voluntary basis.
(6) The techniques which were used to identify source reduction opportunities. Techniques listed should include, but are not
limited to, employee recommendations, external ai^j internal
audits, participative team management, and material balance
audits. Each type of source reduction listed under paragraph (3)
should be associated with the techniques or multiples of techniques used to identify the source reduction technique.
(7) The amount of any toxic chemical released into the
environment which resulted from a catastrophic event, remedial action, or other one-time event, and is not associated
with production processess during the reporting year.
(8) The amount of the chemical from the facility which is
treated (at the facility or elsewhere) during such calendar year
and the percentage change from the previous year. For the first
year of reporting under this subsection, comparison with the
previous year is required only to the extent such information is
available.
(c) SARA PROVISIONS.—The provisions of sections 322, 325(c), and
326 of the Superfund Amendments and Reauthorization Act of 1986
shall apply to the reporting requirements of this section in the same
manner as to the reports required under section 313 of that Act. The
Administrator may modify the form required for purposes of reporting information under section 313 of that Act to the extent he deems
necessary to include the additional information required under this
section.
(d) ADDITIONAL OPTIONAL INFORMATION.—Any person filing a
report under this section for any year may include with the report
additional information regarding source reduction, recycling, and
other pollution control techniques in earlier years.
(e) AVAILABILITY

OF DATA.—Subject

to

section

322

of

the

Superfund Amendments and Reauthorization Act of 1986, the
Administrator shall make data collected under this section publicly

104 STAT. 1388-326

PUBLIC LAW 101-508—NOV. 5, 1990

available in the same manner as the data collected under section
313 of the Superfund Amendments and Reauthorization Act of 1986.
42 u s e 13107.

SEC. 6608. EPA REPORT.

(a) BIENNIAL REPORTS.—The Administrator shall provide Congress
with a report within eighteen months after enactment of this subtitle and biennially thereafter, containing a detailed description of
the actions taken to implement the strategy to promote source
reduction developed under section 4(b) and of the results of such
actions. The report shall include an assessment of the effectiveness
of the clearinghouse and grant program established under this
subtitle in promoting the goals of the strategy, and shall evaluate
data gaps and data duplication with respect to data collected under
Federal environmental statutes.
(b) SUBSEQUENT REPORTS.—Each biennial report submitted under
subsection (a) after the first report shall contain each of the
following:
(1) An analysis of the data collected under section 6607 on an
industry-by-industry basis for not less than five SIC codes or
other categories as the Administrator deems appropriate. The
analysis shall begin with those SIC codes or other categories of
facilities which generate the largest quantities of toxic chemical
waste. The analysis shall include an evaluation of trends in
source reduction by industry, firm size, production, or other
useful means. Each such subsequent report shall cover five SIC
codes or other categories which were not covered in a prior
report until all SIC codes or other categories have been covered.
(2) An analysis of the usefulness and validity of the data
collected under section 6607 for measuring trends in source
reduction and the adoption of source reduction by business.
(3) Identification of regulatory and nonregulatory barriers to
source reduction, and of opportunities for using existing regulatory programs, and incentives and disincentives to promote
and assist source reduction.
(4) Identification of industries and pollutants that require
priority assistance in multi-media source reduction "^ ^
(5) Recommendations as to incentives needed to encourage
investment and research and development in source reduction.
(6) Identification of opportunities and development of priorities for research and development in source reduction methods
and techniques.
(7) An evaluation of the cost and technical feasibility, by
industry and processes, of source reduction opportunities and
current activities and an identification of any industries for
which there are significant barriers to source reduction with an
analysis of the basis of this identification.
(8) An evaluation of methods of coordinating, streamlining,
and improving public access to data collected under Federal
environmental statutes.
(9) An evaluation of data gaps and data duplication with
respect to data collected under Federal environmental statutes.
In the report following the first biennial report provided for under
this subsection, paragraphs (3) through (9) may be included at the
discretion of the Administrator.
^* So in original. Probably should be "reduction.'

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-327

SEC. 6609. SAVINGS PROVISIONS.

42 u s e 13108.

(a) Nothing in this subtitle shall be construed to modify or interfere with the implementation of title III of the Superfund
Amendments and Reauthorization Act of 1986.
(b) Nothing contained in this subtitle shall be construed, interpreted or applied to supplant, displace, preempt or otherwise diminish the responsibilities and liabilities under other State or Federal
law, whether statutory or common.
SEC. 6610. AUTHORIZATION OF APPROPRIATIONS.

There is authorized to be appropriated to the Administrator
$8,000,000 for each of the fiscal years 1991, 1992 and 1993 for
functions carried out under this subtitle (other than State Grants),
and $8,000,000 for each of the fiscal years 1991, 1992 and 1993, for
grant programs to States issued pursuant to section 6605.

TITLE VII—CIVIL SERVICE AND POSTAL
SERVICE PROGRAMS
Subtitle A—Civil Service
SEC. 7001. ELIMINATION OF LUMP-SUM RETIREMENT BENEFIT.
(a) LUMP-SUM BENEFIT.—(1) Sections 8343a and 8420a of title 5,

United States Code, are each amended by adding at the end the
following:
"(fKD Notwithstanding any other provision of this section, and
except as provided in parsigraph (2), an alternative form of annuity
under this section may not be elected if the commencement date of
the annuity would be later than December 1,1990.
"(2) Nothing in this subsection shall prevent an election from
being made by any individual—
"(A) who is separated from Government service involuntarily
(other than for cause on charges of misconduct or delinquency),
excluding—
"(i) any Senator or Representative in, or Delegate or
Resident C!ommissioner to, the Congress;
"(ii) the Vice President;
"(iii) any individual holding a position placed in the
Executive Schedule under sections 5312 through 5317;
"(iv) any individual appointed to a position by the President (or his designee) or the Vice President under section
105(aXl), 106(aXl), or 107 (aXD or (bXD of title 3, if the
maximum rate of basic pay for such position is at or above
the rate for level V of the Executive Schedule;
"(v) any noncareer appointee in the Senior Executive
Service or noncareer member of the Senior Foreign Service;
and
"(vi) any individual holding a position which is excepted
from the competitive service because of its confidential,
policy-determining, policy-making, or policy-advocating
character; or
"(B) as to whom the application of paragraph (1) would be
against equity and good conscience, due to a life-threatening
affliction or other critical medical condition affecting such
individual.

42 u s e 13109.

104 STAT. 1388-328

5 u s e 8343a
note.

5 u s e 8343a
not^.
5 u s e 8343a
note.

5 u s e 8343a
note.

5 u s e 8343a
note.

PUBLIC LAW 101-508—NOV. 5, 1990

"(3) This subsection shall cease to be effective as of October 1,
1995.".
(2) Section 4005 of the Omnibus Budget Reconciliation Act of 1989
(Public Law 101-239; 103 Stat. 2135) is amended—
(A) in subsection (a), by striking "October 1,1990." and inserting "December 2,1990."; and
(B) by adding at the end the following:
"(f) CONTINUED APPUCABIUTY.—The preceding provisions of this
section (disregarding the provision in subsection (a) limiting this
section's applicability to annuities commencing before the date
specified in such provision) shall also apply in the case of any
employee or Member whose election of an alternative form of
annuity would not have been allowable under section 8343a(f) or
8420a(6 of title 5, United States Code (as the case may be), but for—
"(1) paragraph (2)(A) thereof; or
"(2) section 7001(a)(4) of the Omnibus Budget Reconciliation
Act of 1990.".
(C)(i) Section 6001(b)(2) of the Omnibus Budget Reconciliation Act
of 1987 (5 U.S.C. 8343a note) and section 4005(b)(2) of the Omnibus
Budget Reconciliation Act of 1989 (103 Stat. 2135) are each amended
by striking "described in paragraph (1)." and inserting "on which
the payment described in paragraph (1) is paid.".
(ii) The amendments made by clause (i) shall not apply in any case
in which the first half of the lump-sum payment involved was paid
before the beginning of the 11-month period which ends on the date
of the enactment of this Act.
(D) Section 2 of Public Law 101-227 (103 Stat. 1943) is repealed.
(3) Section 8348(a)(1)(B) of title 5, United States Code, is amended
by inserting "in administering alternative forms of annuities under
sections 8343a and 8420a (and related provisions of law)," before
"and in withholding".
(4)(A) In applying the provisions of section 8343a(f) or 8420a(f) of
title 5, United States Code (as amended by paragraph (1)) to any
individual described in subparagraph (B), the reference in such
provisions to "December 1, 1990" shall be deemed to read "December 1,1991".
(B) This paragraph applies with respect to any individual who—
(i)(I) is a member of the Armed Forces of the United States
who, before December 1, 1990, was called or ordered to active
duty (other than for training) pursuant to section 672, 673, 673b,
674, 675, or 688 of title 10, United States Code, in connection
with Operation Desert Shield; or
(II) is an employee of the Department of Defense who is
certified by the Secretary of Defense to have performed, after
November 30,1990, duties essential for the support of Operation
Desert Shield; and
(ii) would have been eligible to make an election under section
8343a or 8420a of title 5, United States Code (as amended by
paragraph (1)) as of November 30,1990.
(C) The Office of Personnel Management may prescribe such
regulations as may be necessary to carry out this paragraph.
Qa) PRIOR REFUNDS.—(1) Section 8334(d) of title 5, United States
' (A) by striking "(d)" and inserting "(d)(1)"; and
(B) by adding at the end the following:
"(2)(A) This paragraph applies with respect to any employee or
Member who—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-329

"(i) separates before October 1,1990, and receives (or elects, in
accordance with applicable provisions of this subchapter, to
receive) a refund (described in paragraph (1)) which relates to a
period of service ending before October 1,1990;
"(ii) is entitled to an annuity under this subchapter (other
than a disability annuity) which is based on service of such
employee or Member, and which commences on or after December 2,1990; and
"(iii) does not make the deposit (described in paragraph (1))
required in order to receive credit for the period of service with
respect to which the refund relates.
"(B) Notwithstanding the second sentence of paragraph (1), the
annuity to which an employee or Member under this paragraph is
entitled shall (subject to adjustment under section 8340) be equal to
an amount which, when taken together with the unpaid amount
referred to in subparagraph (A)(iii), would result in the present
value of the total being actuarially equivalent to the present value
of the annuity which would otherwise be provided the employee or
Member under this subchapter, as computed under subsections (a)(i) and (n) of section 8339 (treating, for purposes of so computing the
annuity which would otherwise be provided under this subchapter,
the deposit referred to in subparagraph (A)(iii) as if it had been
timely made).
"(C) The Office of Personnel Management shall prescribe such
regulations as may be necessary to carry out this paragraph.".
(2XA) Section 8334 of title 5, United States Code, is amended in
paragraphs (1) and (2) of subsection (e), and in subsection (h), by
striking "(d)," and inserting "(d)(1),".
(B) Section 8334(f) and section 8339(i)(l) of title 5, United States
Code, are amended by striking "(d)" and inserting "(d)(1)".
(C) Section 8339(e) of title 5, United States Code, is amended by
striking "8334(d)" and inserting "8334(d)(1)".
(D) The second sentence of section 8342(a) of title 5, United States
Code, is amended by inserting "or 8334(d)(2)" after "8343a".
(3) The amendments made by this subsection shall be effective
with respect to any annuity having a commencement date later
than December 1,1990.
SEC. 7002. REFORMS IN THE HEALTH BENEFITS PROGRAM.
(a) HospiTALizATiON-CosT-CoNTAiNMENT MEASURES.—Section 8902
of title 5, United States Code, is amended by adding at the end the
following:
"(n) A contract for a plan described by section 8903 (1), (2). or (3), or
section 8903a, shall require the carrier—
"(1) to implement hospitalization-cost-containment measures,
such as measures—
"(A) for verifying the medical necessity of any proposed
treatment or surgery;
"(B) for determining the feasibility or appropriateness of
providing services on an outpatient rather than on an
inpatient basis;
"(C) for determining the appropriate length of stay
(through concurrent review or otherwise) in cases involving
inpatient care; and
"(D) involving case management, if the circumstances so
warrant; and

39-194 O - 91 - 24 : QL 3 Part 2

5 USC 8334 note,

104 STAT. 1388-330

PUBLIC LAW 101-508—NOV. 5, 1990

"(2) to establish incentives to encourage compliance with
measures under paragraph (1).".
(b) IMPROVED CASH MANAGEMENT.—Section 8909(a) of title 5,
United States Code, is amended by adding at the end (as a flush left
sentence) the following:
"Payments from the Fund to a plan participating in a letter-ofcredit arrangement under this chapter shall, in connection with any
payment or reimbursement to be made by such plan for a health
service or supply, be made, to the maximum extent practicable, on a
checks-presented basis (as defined under regulations of the Department of the Treasury).".
(c) EXEMPTION FROM STATE PREMIUM TAXES.—Section 8909 of title
5, United States Code, is amended by adding at the end the following:
"(f)(1) No tax, fee, or other monetary payment may be imposed,
directly or indirectly, on a carrier or an Underwriting or plan
administration subcontractor of an approved health benefits plan by
any State, the District of Columbia, or the Commonwealth of Puerto
Rico, or by any political subdivision or other governmental authority thereof, with respect to any payment made from the Fund.
"(2) Paragraph (1) shall not be construed to exempt any carrier or
underwriting or plan administration subcontractor of an approved
health benefits plan from the imposition, payment, or collection of a
tax, fee, or other monetary payment on the net income or profit
accruing to or realized by such carrier or underwriting or plan
administration subcontractor from business conducted under this
chapter, if that tax, fee, or payment is applicable to a broad range of
business activity.".
(d) IMPROVED COORDINATION WITH MEDICARE.—Section 8910

of

title 5, United States Code, is amended by adding at the end the
following:
"(d) Tlie Office, in consultation with the Department of Health
and Human Services, shall develop and implement a system
through which the carrier for an approved health benefits plan
described by section 8908 or 8903a will be able to identify those
annuitants or other individuals covered by such plan who are
entitled to benefits under part A or B of title XVIII of the Social
Security Act in order to ensure that payments under coordination of
benefits with Medicare do not exceed the statutory maximums
which physicians may charge Medicare enroUees.".
(e) AMENDMENTS TO PUBLIC LAW 101-76.—Public Law 101-76 (103

5 use 8906 note. Stat. 556) is amended—
(1) in subsection (a)(1), by striking "contract year 1990 or
1991," and inserting "each of contract years 1990 through 1993
(inclusive),"; and
(2) in subsection (c), by striking "contract year 1991," and
inserting "a contract year (or any period thereafter),".
(f) APPUCATION OF CERTAIN MEDICARE LIMITS TO FEDERAL EMPLOYEE HEALTH BENEFITS ENROLLEES AGE 65 OR OLDER.—(1) Section

8904 of title 5, United States Code, is amended by inserting "(a)"
before the first sentence and by adding at the end of the section the
following new subsection:
"(b)(1) A plan, other than a prepayment plan described in section
8903(4) of this title, may not provide benefits, in the case of any
retired enrolled individual who is age 65 or older and is not covered
to receive Medicare hospital and insurance benefits under part A of
title XVIII of the Social Security Act (42 U.S.C. 1395c et seq.), to pay

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-331

a charge imposed by any health care provider, for inpatient hospital
services which are covered for purposes of benefit payments under
this chapter and part A of title XVIII of the Social Security Act, to
the extent that such charge exceeds applicable limitations on hospital charges established for Medicare purposes under section 1886
of the Social Security Act (42 U.S.C. 1895ww). Hospital providers
who have in force participation agreements with the Secretary of
Health and Human Services consistent with sections 1814(a) and
1866 of the Social Security Act (42 U.S.C. 1395f(a) and 1895cc),
whereby the participating provider accepts Medicare benefits as full
payment for covered items and services after applicable patient
copayments under section 1813 of such Act (42 U.S.C. 1395e) have
been satisfied, shall accept equivalent benefit payments and enroUee
copayments under this chapter as full payment for services described in the preceding sentence. The Office of Personnel Management shall notify the Secretary of Health and Human Services if a
hospital is found to knowingly and willfully violate this subsection
on a repeated basis and the Secretary may invoke appropriate
sanctions in accordance with section 1866(b)(2) of the Social Security
Act (42 U.S.C. 1395cc(b)(2)) and applicable regulations.
"(2) Notwithstanding any other provision of law, the Secretary of
Health and Human Services and the Director of the Office of
Personnel Management, and their Eigents, shall exchange any
information necessary to implement this subsection.
"(3)(A) Not later than December 1, 1991, and periodically thereafter, the Secretary of Health and Human Services (in consultation
with the Director of the Office of Personnel Management) shall
supply to carriers of plans described in paragraphs (1) through (3) of
section 8903 the Medicare program information necessary for them
to comply with paragraph (1).
"(B) For purposes of this paragraph, the term 'Medicare program
information' includes the limitations on hospital charges established
for Medicare purposes under section 1886 of the Social Security Act
(42 U.S.C. 1395ww) and the identity of hospitals which have in force
agreements with the Secretary of Health and Human Services
consistent with section 1814(a) and 1866 of the Social Security Act
(42 U.S.C. 1395f(a) and 1395cc).".
(2) The amendments made by this subsection shall apply with 5 USC 8904 note,
respect to contract years beginning on or after January 1, 1992.
(g) EFFECTIVE DATE.—Except as provided in subsection (f), the 5 USC 8902 note,
amendments made by this section shall apply with respect to contract years beginning on or after January 1,1991.

Subtitle B—Postal Service
SEC. 7101. FUNDING OF COLAS FOR POSTAL SERVICE ANNUITANTS AND
SURVIVOR ANNUITANTS.
(a) EXPANDED SCOPE OF COVERAGE; CHANGE IN PRORATION RULE.—

Section 8348(mXl) of title 5, United States Code, is amended by
striking "October 1, 1986," each place it appears and inserting
"July 1,1971,".
(b) REPEAL OF PROVISION RELATING TO CERTAIN EARUER C O L A S . —

Section 4002(b) of the Omnibus Budget Reconciliation Act of 1989
(Public Law 101-239; 103 Stat. 2134) is repealed.
5 USC 8348 note.
(c) PROVISION RELATING TO PRE-1991 COLAs.—(1) For the purpose 5 USC 8348 note,
of this subsection—

104 STAT. 1388-332

PUBLIC LAW 101-508—NOV. 5, 1990

(A) the term "pre-1991 COLA" means a cost-of-living adjustment which took effect in any of the fiscal years specified in
subparagraphs (A)-(N) of paragraph (3);
(B) the term "post-1990 fiscal year" means a fiscal year after
fiscal year 1990; and
(C) the term "pre-1991 fiscal year" means a fiscal year before
fiscal year 1991.
(2) Notwithstanding any other provision of law, an installment
(equal to an amount determined by reference to paragraph (3)) shall
be payable by the United States Postal Service in a post-1990 fiscal
year, with respect to a pre-1991 COLA, if such fiscal year occurs
within the 15-fiscal-year period which begins with the first fiscal
year in which that COLA took effect, subject to section 7104.
(3) Notwithstanding any provision of section 8348(m) of title 5,
United States Code, or any determination thereunder (including any
made under such provision, as in effect before October 1, 1990), the
estimated increase in the unfunded liability referred to in paragraph (1) of such section 8348(m) shall be payable, in accordance
with this subsection, based on annual installments equal to—
(A) $6,500,000 each, with respect to the cost-of-living adjustment which took effect in fiscal year 1977;
(B) $7,000,000 each, with respect to the cost-of-living adjustment which took effect in fiscal year 1978;
(C) $10,400,000 each, with respect to the cost-of-living adjustment which took effect in fiscal year 1979;
(D) $20,500,000 each, with respect to the cost-of-living adjustment which took effect in fiscal year 1980;
(E) $26,100,000 each, with respect to the cost-of-living adjustment which took effect in fiscal year 1981;
(F) $28,100,000 each, with respect to the cost-of-living adjustment which took effect in fiscal year 1982;
(G) $30,600,000 each, with respect to the cost-of-living adjustment which took effect in fiscal year 1983;
(H) $5,700,000 each, with respect to the cost-of-living adjustment which took effect in fiscal year 1984;
(I) $19,400,000 each, with respect to the cost-of-living adjustment which took effect in fiscal year 1985;
(J) $7,400,000 each, with respect to the cost-of-living adjustment which took effect in fiscal year 1986;
(K) $8,500,000 each, with respect to the cost-of-living adjustment which took effect in fiscal year 1987;
(L) $36,800,000 each, with respect to the cost-of-living adjustment which took effect in fiscal year 1988;
(M) $51,600,000 each, with respect to the cost-of-living adjustment which took effect in fiscal year 1989; and
(N) $63,500,000 each, with respect to the cost-of-living adjustment which took effect in fiscal year 1990.
(4) Any installment payable under this subsection shall be paid by
the Postal Service at the same time as when it pays any installments due in that same fiscal year under section 8348(m) of title 5,
United States Code.
(5) An installment payable under this subsection in a fiscal year,
with respect to a pre-1991 COLA, shall be in lieu of any other
installment for which the Postal Service might otherwise be liable
in such fiscal year, with respect to such COLA, under section
8348(m) of title 5, United States Code.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-333

(d) EFFECTIVE DATE.—This section and the amendments made by 5 USC 8348 note,
this section shall take effect on October 1,1990.
SEC. 7102. FUNDING OF HEALTH BENEFITS FOR POSTAL SERVICE RETIREES AND SURVIVORS OF POSTAL SERVICE EMPLOYEES OR
RETIREES.
(a) EXPANDED SCOPE OF Ck)VERAGE.—Section 8906(gX2) of title 5,
United States Code, is amended by striking "October 1, 1986," each
place it appears and inserting "July 1,1971,".
(b) CONTRIBUTIONS TO B E PRORATED.—Section 8906(gX2) of title 5,
United States Code, as amended by subsection (a), is further
amended—
(1) by striking "(2)" and inserting "(2XA)"; and
(2) by adding at the end the following:
"(B) In determining any amount for which the Postal Service is
liable under this paragraph, the amount of the liability shall be
prorated to reflect only that portion of total service which is attributable to civilian service performed (by the former postal employee
or by the deceased individual referred to in subparagraph (A), as the
case may be) after June 80, 1971, as estimated by the Office of
Personnel Management.".
(c) EFFECTIVE DATE.—The amendments made by this section shall 5 USC 8906 note,
take effect on October 1, 1990, and shall apply with respect to
amounts payable for periods beginning on or after that date.
SEC. 7103. PAYMENTS RELATING TO AMOUNTS WHICH WOULD HAVE 5 USC 8348 note.
BEEN DUE BEFORE FISCAL YEAR 1987.
(a) DEFINITION.—For the purpose of this section, the term "pre1987 fiscal year" means a fiscal year before fiscal year 1987.
(b) FOR PAST RETIREMENT COLAS.—As payment for any amounts

which would have been due in any pre-1987 fiscal year under the
provisions of section 8348(m) of title 5, United States Code (as
amended by section 7101) if such provisions had been in effect as of
July 1,1971, the United States Postal Service shall pay into the Civil
Service Retirement and Disability Fund—
(1) $216,000,000, not later than September 30,1991;
(2) $266,000,000, not later than September 30,1992;
(3) $316,000,000, not later than September 30,1993;
(4) $416,000,000, not later than September 30,1994; and
(5) $471,000,000, not later than September 30,1995.
(c) FOR PAST HEALTH BENEFITS.—As payment for any amounts

which would, for any period ending before the start of fiscal year
1987, have been payable under the provisions of section 8906^X2) of
title 5, United States Code (as amended by section 7102) if such
provisions had been in effect as of July 1, 1971, the United States
Postal Service shall pay into the Employees Health Benefits Fund—
(1) $56,000,000, not later than September 30,1991;
(2) $47,000,000, not later than September 30,1992;
(3) $62,000,000, not later than September 30,1993;
(4) $56,000,000, not later than September 30,1994; and
(5) $234,000,000, not later than September 30,1995.

104 STAT. 1388-334

PUBLIC LAW 101-508—NOV. 5, 1990

Subtitle C—Miscellaneous
Computer
Matching and
Privacy
Protection
Amendments of
1990.
5 u s e 552a note.

SEC. 7201. COMPUTER MATCHING OF FEDERAL BENEFITS INFORMATION
AND PRIVACY PROTECTION.
(a) SHORT TITLE.—This section may be cited as the "Computer

Matching and Privacy Protection Amendments of 1990".
(b) VERIFICATION REQUIREMENTS AMENDMENT.—(1) Subsection (p)
of section 552a of title 5, United States Code, is amended to read as
follows:
"(p) VERIFICATION AND OPPORTUNITY TO CONTEST FINDINGS.—(1) In

5 u s e 552a note.

order to protect any individual whose records are used in a matching program, no recipient agency, non-Federal agency, or source
agency may suspend, terminate, reduce, or make a final denial of
any financial assistance or payment under a Federal benefit program to such individual, or take other adverse action against such
individual, as a result of information produced by such matching
program, until—
"(A)(i) the agency has independently verified the information;
or
"(ii) the Data Integrity Board of the agency, or in the case of a
non-Federal agency the Data Integrity Board of the source
agency, determines in accordance with guidance issued by the
Director of the Office of Management and Budget that—
"(I) the information is limited to identification and
amount of benefits paid by the source agency under a
Federal benefit program; and
"(II) there is a high degree of confidence that the information provided to the recipient agency is accurate;
"(B) the individual receives a notice from the agency containing a statement of its findings and informing the individual of
the opportunity to contest such findings; and
"(C)(i) the expiration of any time period established for the
program by statute or regulation for the individual to respond
to that notice; or
"(ii) in the case of a program for which no such period is
established, the end of the 30-day period beginning on the date
on which notice under subparagraph (B) is mailed or otherwise
provided to the individual.
"(2) Independent verification referred to in paragraph (1) requires
investigation and confirmation of specific information relating to an
individual that is used as a basis for an adverse action against the
individual, including where applicable investigation and confirmation of—
"(A) the amount of any asset or income involved;
"(B) whether such individual actually has or had access to
such asset or income for such individual's own use; and
"(C) the period or periods when the individual actually had
such asset or income.
"(3) Notwithstanding paragraph (1), an agency may take any
appropriate action otherwise prohibited by such paragraph if the
agency determines that the public health or public safety may be
adversely affected or significantly threatened during any notice
period required by such paragraph.".
(2) Not later than 90 days after the date of the enactment of this
Act, the Director of the Office of Management and Budget shall

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-335

publish guidance under subsection (pXlXAXii) of section 552a of title
5, United States Code, as amended by this Act.
5 use 552a note.
(c) LIMITATION ON APPUCATION OF VERIFICATION REQUIREMENT.—

Section 552a(pXlXAXiiXn) of title 5, United States Code, as amended
by section 2, shall not apply to a program referred to in paragraph
(1), (2), or (4) of section 1187(b) of the Social Security Act (42 U.S.C.
1320b-7), until the earlier of—
(1) the date on which the Data Integrity Board of the Federal
agency which administers that program determines that there
is not a high degree of confidence that information provided by
that agency under Federal matching programs is accurate; or
(2) 30 days after the date of publication of guidance under
section 2(b).
SEC. 7202. PORTABILITY OF BENEFITS FOR EMPLOYEES CONVERTING TO Portability of
THE CIVIL SERVICE SYSTEM.
Benefits for
Nonappropriated
(a) SHORT TITLE.—This section may be cited as the "Portability of Fund Employees

Benefits for Nonappropriated Fund Employees Act of 1990".
Act of 1990.
(b) DEFINITIONAL AMENDMENT.—Section 2105(c) of title 5, United ^ ^ ^ ^^"^ ''°^States Code, is amended—
(1) by amending paragraph (1) to read as follows:
"(1) laws administered by the OfRce of Personnel Maneigement, except—
"(A) section 7204;
"(B) as otherwise specifically provided in this title;
"(C) the Fair Labor Standards Act of 1938; or
"(D) for the purpose of entering into an interchange
agreement to provide for the noncompetitive movement of
employees between such instrumentalities and the competitive service; or"; and
(2) in paragraph (2), by striking "chapter 84" and inserting
"chapter 84 (except to the extent specifically provided therein)'.
(c) AMENDMENT RELATING TO ORDER OF RETENTION.—Section

3502(a)(C) of title 5, United States Code, is amended to read as
follows:
"(C) is entitled to credit for—
"(i) service rendered as an employee of a county
committee established pursuant to section 8(b) of the
Soil Conservation and Allotment Act or of a committee
or association of producers described in section 10(b) of
the Agricultural Adjustment Act; and
"(ii) service rendered as an employee described in
section 2105(c) if such employee moves or has moved,
on or after Jguiuary 1, 1987, without a break in service
of more than 3 days, from a position in a
nonappropriated fund instrumentality of the Department of Defense or the Coast Guard to a position in the
Department of Defense or the Coast Guard, respectively, that is not described in section 2105(c).".
(d) AMENDMENT RELATING TO PAY ON A CHANGE OF POSITION.—

Section 5334 of title 5, United States Code, is amended by adding at
the end the following:
"(g) An employee of a nonappropriated fund instrumentality of
the Department of Defense or the Coast Guard described in section
2105(c) who moves, without a break in service of more than 3 days,
to a position in the Department of Defense or the Coast Guard,
respectively, that is subject to this subchapter, may have such

104 STAT. 1388-336

PUBLIC LAW 101-508—NOV. 5, 1990

employee's initial rate of basic pay fixed at the minimum rate of the
appropriate grade or at any step of such grade that does not exceed
the highest previous rate of basic pay received by that employee
during the employee's service described in section 2105(c). In the
case of a nonappropriated fund employee who is moved involuntarily from such nonappropriated fund instrumentality without a
break in service of more than 3 days and without substantial change
in duties to a position that is subject to this subchapter, the employee's pay shall be set at a rate (not above the maximum for the grade,
except as may be provided for under section 5365) that is not less
than the employee's rate of basic pay under the nonappropriated
fund instrumentality immediately prior to so moving.".
(e) AMENDMENT RELATING TO PERIODIC STEP INCREASES.—Section

5335 of title 5, United States Code, is amended by adding at the end
the following:
"(g) In computing periods of service under subsection (a) in the
case of an employee who moves without a break in service of more
than 3 days from a position under a nonappropriated fund
instrumentality of the Department of Defense or the Coast Guard
described in section 2105(c) to a position under the Department of
Defense or the Coast Guard, respectively, that is subject to this
subchapter, service under such instrumentality shall, under regulations prescribed by the Office, be deemed service in a position
subject to this subchapter.".
(f) AMENDMENT RELATING TO GRADE AND PAY RETENTION.—Section

5365(b) of title 5, United States Code, is amended by adding at the
end, as a flush left sentence, the following:
"Individuals with respect to whom authority under paragraph (2)
may be exercised include individuals who are moved without a
break in service of more than 3 days from employment in
nonappropriated fund instrumentalities of the Department of Defense or the Coast Guard described in section 2105(c) to employment
in the Department of Defense or the Coast Guard, respectively, that
is not described in section 2105(c).".
(g) AMENDMENT RELATING TO PAY FOR ACCUMULATED AND AC-

CRUED LEAVE.—Section 5551(a) of title 5, United States Code, is
amended by adding at the end the following new sentence: "For the
purposes of this subsection, movement to employment described in
section 2105(c) shall not be deemed separation from the service in
the case of an employee whose annual leave is transferred under
section 6308(b).".
(h) AMENDMENTS RELATING TO TRANSFERS BETWEEN POSITIONS
UNDER DIFFERENT LEAVE SYSTEMS.—Section 6308 of title 5, United

States Code, is amended—
(1) by inserting "(a)" before "The annual"; and
(2) by adding at the end the following:
"(b) 'The annual leave, sick leave, and home leave to the credit of a
nonappropriated fund employee of the Department of Defense or the
Coast Guard described in section 2105(c) who moves without a break
in service of more than 3 days to a position in the Department of
Defense or the Coast Guard, respectively, that is subject to this
subchapter shall be transferred to the employee's credit. The annual
leave, sick leave, and home leave to the credit of an employee of the
Department of Defense or the Coast Guard who is subject to this
subchapter and who moves without a break in service of more than
3 days to a position under a nonappropriated fund instrumentality
of the Department of Defense or the Coast Guard, respectively.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-337

described in section 2105(c), shall be transferred to the employee's
credit under the nonappropriated fund instrumentality. The Secretary of Defense or the Secretary of Transportation, as appropriate,
may provide for a transfer of funds in an amount equal to the value
of the transferred annual leave to compensate the gaining entity for
the cost of a transfer of annual leave under this subsection.".
(i) AMENDMENTS TO INCLUDE ADDITIONAL SERVICE FOR LEAVE ACCRUAL PURPOSES.—(1) Section 6312 is amended to read as follows:

"§ 6312. Accrual and accumulation for former ASCS county office
and nonappropriated fund employees
"(a) Credit shall be given in determining years of service for the
purpose of section 6303(a) for—
"(1) service as an employee of a county committee established
pursuant to section 8(b) of the Soil Conservation and Allotment
Act or of a committee or an association of producers described
in section 10(b) of the Agricultural Adjustment Act; and
"(2) service under a nonappropriated fund instrumentality of
the Department of Defense or the Coast Guard described in
section 2105(c) by an employee who has moved without a break
in service of more than 3 days to a position subject to this
subchapter in the Department of Defense or the Coast Guard,
respectively.
"(b) The provisions of subsections (a) and (b) of section 6308 for
transfer of leave between leave systems shall apply to the leave
systems established for such county office employees and employees
of such Department of Defense and Coast Guard nonappropriated
fund instrumentalities, respectively.".
(2) The item relating to section 6312 in the table of sections for
chapter 63 of title 5, United States Code, is amended to read as
follows:
"6312. Accrual and accumulation for former ASCS county office and nonappropriated fund employees.".
(j) AMENDMENTS RELATING TO THE CIVIL SERVICE RETIREMENT

SYSTEM.—(1) Section 8331 of title 5, United States Code, is
amended—
(A) by striking "and" at the end of paragraph (IXJ);
(B) by inserting "and" after the semicolon at the end of
paragraph (1)(K);
(C) by inserting after paragraph (IXK) the following:
"(L) an employee described in section 2105(c) who has
made an election under section 8347(p)(l) to remain
covered under this subchapter;";
(D) in paragraph (l)(ii), by striking the matter following
"Government employees" through the semicolon and inserting
"(besides any employee excluded by clause (x), but including any
employee who has made an election under section 8347(pX2) to
remain covered by a retirement system established for employees described in section 2105(c));"; and
(E) in paragraph (7), by striking "and Gallaudet College;" and
inserting "Gallaudet College, and, in the case of an employee
described in paragraph (1)(L), a nonappropriated fund
instrumentality of the Department of Defense or the Coast
Guard described in section 2105(c);".
(2) Section 8347 of title 5, United States Code, is amended by
adding at the end the following:

104 STAT. 1388-338

PUBLIC LAW 101-508—NOV. 5, 1990

"(pXD Under regulations prescribed by the Office of Personnel
Management, an employee of the Department of Defense or the
Coast Guard who—
"(A) has not previously made or had an opportunity to make
an election under this subsection;
"(B) has 5 or more years of civilian service creditable under
this subchapter; and
"(C) moves, without a break in service of more than 3 days, to
emplo5mient in a nonappropriated fund instrumentality of the
Department of Defense or the Coast Guard, respectively, described in section 2105(c),
shall be given the opportunity to elect irrevocably, within 30 days
after such move, to remain covered as an employee under this
subchapter during any employment described in section 2105(c)
after such move.
"(2) Under regulations prescribed by the Office of Personnel
Management, an employee of a nonappropriated fund instrumentality of the Department of Defense or the Coast Guard, described in
section 2105(c), who—
"(A) has not previously made or had an opportunity to make
an election under this subsection;
"(B) is a vested participant in a retirement system established
for employees described in section 2105(c), as the term 'vested
participEint' is defined by such system;
"(C) moves, without a break in service of more than 3 days, to
a position in the Department of Defense or the Coast Guard,
respectively, that is not described in section 2105(c); and
' (D) is excluded from coverage under chapter 84 by section
8402(b),
shall be given the opportunity to elect irrevocably, within 30 days
after such move, to remain covered, during any subsequent employment as an employee as defined in section 2105(a) or section 2105(c),
by the retirement system applicable to such employee's current or
most recent emplo5mient described in section 2105(c) rather than be
subject to this subchapter.".
(k) AMENDMENTS RELATING TO THE FEDERAL EMPLOYEES' RETIRE-

MENT SYSTEM.—(1) Section 8401 of title 5, United States Code, is
amended—
(A) in paragraph (11)—
(i) by striking "and" at the end of subparagraph (A);
(ii) by inserting "and" after the semicolon at the end of
subparagraph (B);
(iii) by inserting after subparagraph (B) the following:
"(C) an employee described in section 2105(c) who has
made an election under section 8461(n)(l) to remain covered
under this chapter;";
(iv) by striking "or" at the end of clause (ii);
(v) by inserting "or" after the semicolon at the end of
clause (iii); and
(vi) by inserting after clause (iii) the following:
"(iv) an employee who has made an election under
section 8461(nX2) to remain covered by a retirement
system established for employees described in section
2105(c);"; and
(B) in paragraph (15), by striking "and Gallaudet College;"
and inserting ", Gallaudet College, and, in the case of an
employee described in paragraph (IIXC), a nonappropriated

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-339

fund instrumentality of the Department of Defense or the Coast
Guard described in section 2105(c);".
(2) Section 8461 of title 5, United States Code, is amended by
adding at the end the following:
"(nXD Under regulations prescribed by the Office, an employee of
the Department of Defense or the Coast Guard who—
"(A) has not previously made or had an opportunity to make
an election under this subsection;
"(B) has 5 or more years of civilian service creditable under
this chapter; and
"(C) moves, without a break in service of more than 3 days, to
employment in a nonappropriated fund instrumentality of the
Department of Defense or the Coast Guard, respectively, described in section 2105(c),
shall be given the opportunity to elect irrevocably, within 30 days
after such move, to remain covered as an employee under this
chapter during any employment described in section 2105(c) after
such move.
"(2) Under regulations prescribed by the Office, an employee of a
nonappropriated fund instrumentality of the Department of Defense
or the Coast Guard described in section 2105(c), who—
"(A) has not previously made or had an opportunity to make
an election under this subsection;
"(B) is a vested participant in a retirement system established
for employees described in section 2105(c), as the term 'vested
participant' is defined by such system;
"(C) moves, without a break in service of more than 3 days, to
a position in the Department of Defense or the Coast Guard,
respectively, that is not described by section 2105(c); and
"(D) is not eligible to make an election under section 8347(p),
shall be given the opportunity to elect irrevocably, within 30 days
after such move, to remain covered, during any subsequent employment as an employee as defined by section 2105(a) or section 2105(c),
by the retirement system applicable to such employee's current or
most recent employment described by section 2105(c) rather than be
subject to this chapter.".
(1)

AMENDMENTS

RELATING

TO

HEALTH

BENEFITS.—Section

8901(3XA) of title 5, United States Code, is amended—
(1) by striking "or" at the end of clause (ii);
(2) by inserting "or" after the semicolon at the end of clause
(iii); and
(3) by inserting after clause (iii) the following:
"(iv) on an immediate annuity under a retirement
system established for employees described in section
2105(c), in the case of an individual who elected under
section 8347(pX2) or 8461(nX2) to remain subject to such
a system;",
(m) APPUCABIUTY.—(1) The amendments made by this section 5 USC 2105 note,
shall apply with respect to any individusil who, on or after
January 1,1987—
(A) moves without a break in service of more than 3 days from
employment in a nonappropriated fund instrumentality of the
Department of Defense or the Coast Guard that is described in
section 2105(c) of title 5, United States Code, to employment in
the Department of Defense or the Coast Guard, respectively,
that is not described in such section 2105(c); or

104 STAT. 1388-340

PUBLIC LAW 101-508—NOV. 5, 1990

(B) moves without a break in service from emplo5anent in the
Department of Defense or the Ck)ast Guard that is not described
in such section 2105(c) to employment in a nonappropriated
fund instrumentality of the Department of Defense or the Coast
Guard, respectively, that is described in such section 2105(c).
(2) The Secretary of Defense, the Secretary of Transportation, the
Director of the Office of Personnel Management, and the Executive
Director of the Federal Retirement Thrift Investment Board, as
applicable, shall take such actions as may be practicable to ensure
that each individual who has moved as described under paragraph
(1) on or after January 1, 1987, and before the date of enactment of
this Act, receives the benefit of the amendments made by this
section as if such amendments had been in effect at the time such
individual so moved. Each such individual who wishes to make an
election of retirement coverage under the amendments made by
subsection (j) or (k) of this section shall complete such election
within 180 days after the date of enactment of this Act.
5 u s e 2105 note.

(n) CLARIFYING PROVISIONS RELATING TO TREATMENT OF INDIVIDUALS E L E C T I N G TO R E M A I N S U B J E C T TO T H E I R F O R M E R R E T I R E M E N T

SYSTEM.—(1) For the purpose of this section, the term
"nonappropriated fund instrumentality" means a nonappropriated
fund instrumentality of the Department of Defense or the Coast
Guard, described in section 2105(c) of title 5, United States Code.
(2XA) If an individual makes an election under section 8347(pXl) of
title 5, United States Code, to remain covered by subchapter III of
chapter 83 of such title, any nonappropriated fund instrumentality
thereafter emplojdng such individual shall deduct from such individual's pay and contribute to the Thrift Savings Fund such sums as
are required for such individual in accordance with section 8351 of
such title.
(B) Notwithstanding subsection (a) or (b) of section 8432 of title 5,
United States Code, any individual who, as of the date of enactment
of this Act, becomes eligible to make an election under section
8347(pXl) of such title may, within 30 days after such individual
makes an election thereunder in accordance with subsection (mX2),
make any election described in section 8432(bXlXA) of such title.
(3XA) If an individual makes an election under section 8461(nXl)
of title 5, United States Code, to remain covered by chapter 84 of
such title, any nonappropriated fund instrumentality thereafter
emplo3dng such individual shall deduct from such individual's pay
and shall contribute to the Thrift Savings Fund the funds deducted,
together with such other sums as are required for such individual
under subchapter III of such chapter.
(B) Notwithstanding subsection (a) or (b) of section 8432 of title 5,
United States Code, any individual who, as of the date of enactment
of this Act, becomes eligible to make an election under section
8461(nXl) of such title may, within 30 days after such individual
makes an election thereunder in accordance with subsection (mX2),
make any election described in section 8432(bXlXA) of such title.
(4) If an individu£d makes an election under section 8347(pX2) or
8461(nX2) of title 5, United States Code, to remain covered by a
retirement system established for employees described in section
2105(c) of such title, any Government agency thereafter emplojdng
such individual shall, in lieu of any deductions or contributions for
which it would otherwise be responsible with respect to such individual under chapter 83 or 84 of such title, make such deductions from
pay and such contributions as would be required (under the retire-

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-341

ment system for nonappropriated fund employees involved) if it
were a nonappropriated fund instrumentality. Any such deductions
and contributions shall be remitted to the Department of Defense or
the Coast Guard, £is applicable, for transmission to the appropriate
retirement system.

Subtitle D—Coordination
SEC. 7301. COORDINATION.

For purposes of section 202 of the Balanced Budget and Emergency Deficit Reaffirmation Act of 1987, this title and the amendments made by this title shall be considered an exception under
subsection (b) of such section.

TITLE VIII—VETERANS' PROGRAMS
TABLE OF CONTENTS
Sec. 8001.
Sec. 8002.
Sec. 8003.
Sec. 8004.
Sec. 8005.

Subtitle A—Compensation, DIC, and Pension
Compensation benefits for certain incompetent veterans.
Elimination of presumption of total disability in determination of pension for certain veterans.
Reduction in pension for certain veterans receiving Medicaid-covered
nursing home care.
Ineligibility of remarried surviving spouses or married children for reinstatement of benefits eligibility upon becoming single.
Cost-of-living increases in compensation rates.

Subtitle B—Health-Care Benefits
Sec. 8011. Medical-care cost recovery.
Sec. 8012. Copayment for medications.
Sec. 8013. Modification of health-care categories and copayments.
Subtitle C—Education and Employment
Sec. 8021. Limitation of rehabilitation program entitlement to service-disabled vetersaiB rated at 20 percent or more.
Subtitle D—Housing and Loan Guaranty Assistance
Sec. 8031. Election of claim under guaranty of manufactured home loans.
Sec. 8032. Loan fee.
Subtitle E—Burial and Grave Marker Benefits
Sec. 8041. Headstone or marker allowance.
Sec. 8042. Plot allowance eligibility.
Subtitle F—Miscellaneous
Sec. 8051. Use of Internal Revenue Service and Social Security Administration data
for income verification.
Sec. 8052. Line of duty.
Sec. 8053. Requirement for claimants to report social security numbers; use of
death information by the Department of Veterans Affairs.

Subtitle A—Compensation, DIC, and Pension
SEC. 8001. LIMITATION ON COMPENSATION BENEFITS FOR CERTAIN
INCOMPETENT VETERANS.

(a) IN GENERAL.—(1) Chapter 55 of title 38, United States Code, is
amended by adding at the end the following new section:

5 USC 2101 note.

104 STAT. 1388-342

PUBLIC LAW 101-508—NOV. 5, 1990

"§ 3205. Limitation on compensation payments for certain incompetent veterans
"(a) In any case in which a veteran having neither spouse, child,
nor dependent parent is rated by the Secretary in accordance with
regulations as being incompetent and the value of the veteran's
estate (excluding the value of the veteran's home) exceeds $25,000,
further payment of compensation to which the veteran would otherwise be entitled may not be made until the value of such estate is
reduced to less than $10,000.
"Qi)il) Subject to paragraph (2) of this subsection, if a veteran
denied payment of compensation pursuant to subsection (a) is subsequently rated as being competent, the Secretary shall pay to the
veteran a lump sum equal to the total of the compensation which
was denied the veteran pursuant to such paragraph. The Secretary
shall make the lump-sum payment as soon as practicable after the
end of the 90-day period beginning on the date of the competency
rating.
"(2) A lump-sum payment may not be made under paragraph (1)
to a veteran who, within such 90-day period, dies or is again rated by
the Secretary as being incompetent.
"(3) The costs of administering this subsection shall be paid from
amounts available to the Department of Veterans Affairs for the
payment of compensation and pension.
"(c) This section expires on September 30,1992.".
(2) The table of sections at the beginning of such chapter is
amended by adding at the end the following new item:
"3205. Limitation on compensation payments for certain incompetent veterans."

38 use 3205
note.

38 use 502 note.

(b) EFFECTIVE DATE.—The amendment made by this section shall
apply with respect to payment of compensation for months after
October 1990.
SEC. 8002. ELIMINATION OF PRESUMPTION OF TOTAL DISABILITY IN
DETERMINATION OF PENSION FOR CERTAIN VETERANS.
(a) ELIMINATION OF PRESUMPTION.—That portion of subsection (a)
of section 502 of title 38, United States Code, preceding paragraph
(1) is amended to read as follows:
"(a) For the purposes of this chapter, a person shall be considered
to be permanently and totally disabled if such a person is unemployable as a result of disability reasonably certain to continue throughout the life of the disabled person, or is suffering from—".
(b) APPLICABILITY.—The amendment made by subsection (a) shall
apply with respect to claims filed after October 31,1990.
SEC. 8003. REDUCTION IN PENSION FOR CERTAIN VETERANS RECEIVING
MEDICAID-COVERED NURSING HOME CARE.
(a) IN GENERAL.—Section 3203 of title 38, United States Code, is
amended by adding at the end the following:
"(f)(1) For the purposes of this subsection—
"(A) the term 'Medicaid plan' means a State plan for medical
assistance referred to in section 1902(a) of the Social Security
Act (42 U.S.C. 1396a(a)); and
"(B) the term 'nursing facility' means a nursing facility described in section 1919 of such Act (42 U.S.C. 1396r).
"(2) If a veteran having neither spouse nor child is covered by a
Medicaid plan for services furnished such veteran by a nursing
facility, no pension in excess of $90 per month shall be paid to or for

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-343

the veteran for any period after the month of admission to such
nursing facility.
"(3) Notwithstanding any provision of title XIX of the Social
Security Act, the amount of the pajmient paid a nursing facility
pursuant to a Medicaid plan for services furnished a veteran may
not be reduced by any amount of pension permitted to be paid such
veteran under paragraph (2) of this subsection.
"(4) A veterEui is not liable to the United States for any pajmient
of pension in excess of the amount permitted under this subsection
that is paid to or for the veteran by reason of the inability or failure
of the Secretary to reduce the veteran's pension under this subsection unless such inability or failure is the result of a willful concealment by the veteran of information necessary to make a reduction
in pension under this subsection.
"(5) The costs of administering this subsection shall be paid for
from amounts available to the Department of Veterans Affairs for
the payment of compensation and pension.
"(6) This subsection expires on September 30,1992.".
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 38 use 3203
shall take effect on November 1, 1990, or the date of the enactment "°*®of this Act, whichever is later.
SEC. 8004. INELIGIBILITY OF REMARRIED SURVIVING SPOUSES OR MARRIED CHILDREN FOR REINSTATEMENT OF BENEFITS ELIGIBILITY UPON BECOMING SINGLE.

(a) I N GENERAL.—Section 103 of title 38, United States Code, is
amended—
(1) in subsection (d)—
(A) by striking out "(1)"; and
(B) by striking out paragraphs (2) and (3); and
(2) in subsection (e)—
(A) by striking out "(1)"; and
(B) by striking out paragraph (2).
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 38 USC103 note,
shall apply with respect to claims filed after October 31, 1990, and
shall not operate to reduce or terminate benefits to any individual
whose benefits were predicated on section 103(dX2), 103(dX3), or
103(eX2) before the effective date of those amendments.
SEC. 8005. COST-OF-LIVING INCREASES IN COMPENSATION RATES.

(a) POLICY REGARDING FISCAL YEAR 1991.—The fiscal year 1991
cost-of-living adjustments in the rates of compensation payable
under chapter 11 of title 38, United States Code, and of the dependency and indemnity compensation payable under chapter 13 of such
title will be no more than a 5.4 percent increase, with all increased
monthly rates rounded down to the next lower dollar. The effective
date for such adjustments will not be earlier than January 1, 1991.
(b) INCREASE PAYABLE AS OF JANUARY 1992.—The sunount of
compensation or dependency and indemnity compensation payable
to any individual for the month of January 1992 who is entitled to
such benefits £is of January 1, 1992, shall be increased for such
month by the amount equal to the amount of the monthly increase
provided for that individual's benefit level as of January 1, 1991,
pursuant to the adjustments described in subsection (a).

38 USC 301 note.

104 STAT. 1388-344

PUBLIC LAW 101-508—NOV. 5, 1990

Subtitle B—Health-Care BeneHts
SEC. 8011. MEDICAL-CARE COST RECOVERY.

(a) APPUCABILITY.—Section 629(a)(2) of title 38, United States
Code, is amended—
(1) by striking out "or" at the end of clause (C);
(2) by striking out the period at the end of clause (D) and
inserting in lieu thereof "; or"; and
(3) by adding at the end the following new clause:
"(E) for which care and services are furnished before
October 1,1993, under this chapter to a veteran who—
"(i) has a service-connected disability; and
"(ii) is entitled to care (or payment of the expenses of
care) under a health-plan contract.".
(b)

MAXIMUM AMOUNT RECOVERABLE.—Clause

(B)

of

section

629(c)(2) of such title is amended by striking out "in accordance with
the prevailing rates at which the third party makes payments under
comparable health-plan contracts with' and inserting in lieu thereof
"if provided by".
(c) ESTABLISHMENT OF MEDICAL-CARE COST RECOVERY FUND.—Sec-

tion 629(g) of such title is amended to read as follows:
"(g)(1) There is established in the Treasury a fund to be known as
the Department of Veterans Affairs Medical-Care Cost Recovery
Fund (hereafter referred to in this section as the 'Fund').
"(2) Amounts recovered or collected under this section shall be
deposited in the Fund.
(3) Sums in the Fund shall be available to the Secretary for the
following:
"(A) Pajnnent of necessary expenses for the identification,
billing, and collection of the cost of care and services furnished
under this chapter, and for the administration and collection of
pajonents required under section 610(f) of this title for hospital
care or nursing home care, under section 612(f) of this title for
medical services, and under section 622A of this title for medications, including—
"(i) the costs of computer hardware and software, word
processing and telecommunications equipment, other equipment, supplies, and furniture;
"(ii) personnel training and travel costs;
"(iii) personnel and administrative costs for attorneys in
the Office of General Counsel of the Department and for
support personnel of such office;
(iv) other personnel and administrative costs; and
"(v) the costs of any contract for identification, billing, or
collection services.
"(B) Payment of the Secretary for reasonable charges, as
determined by the Secretary, imposed for (i) services and utilities (including light, water, and heat) furnished by the Secretary, (ii) recovery and collection activities under this section,
and (iii) administration of the Fund.
"(4) Not later than January 1 of each year, there shall be deposited into the Treasury as miscellaneous receipts an amount equal to
the amount of the unobligated balance remaining in the Fund at the
close of business on September 30 of the preceding year minus any
part of such balance that the Secretary determines is necessary in
order to enable the Secretary to defray, during the fiscal year in

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-345

which the deposit is made, the expenses, payments, and costs described in paragraph (3).".
(d) TRANSFER TO FUND.—
38 USC 629 note.
(1) AMOUNT TO BE TRANSFERRED.—The Secretary of the Treas-

ury shall transfer $25,000,000 from the Department of Veterans
Affairs Loan Guaranty Revolving Fund to the Department of
Veterans Affairs Medical-Care Cost Recovery Fund established
by section 629(g) of title 38, United States Code (as amended by
subsection (c)). The amount so transferred shall be available
until the end of September 30, 1991, for the support of the
equivalent of 800 full-time employees and other expenses described in paragraph (3) of such section.
(2) REIMBURSEMENT OF LOAN GUARANTY REVOLVING FUND.—

Notwithstanding section 629(g) of title 38, United States Code
(as amended by subsection (c)), the first $25,000,000 recovered or
collected by the Department of Veterans Affairs during fiscal
year 1991 as a result of third-party medical recovery activities
shall be credited to the Department of Veterans Affairs Loan
Guaranty Revolving Fund.
(3) THIRD-PARTY MEDICAL RECOVERY ACTIVITIES DEFINED.—For

the purposes of this subsection, the term "third-party medical
recovery activities" means recovery and collection activities
carried out under section 629 of title 38, United States Code.
(e) EFFECTIVE DATE.—The amendments made by this section shall 38 USC 629 note,
take effect as of October 1,1990.
SEC. 8012. COPAYMENT FOR MEDICATIONS.
(a) CoPAYMENT REQUIRED.—(1) Subchapter III of chapter 17 of title
38, United States Code, is amended by inserting after section 622 the
following new section:
"§ 622A. Copayment for medications
"(aXD Subject to paragraph (2), the Secretary shall require a
veteran (other than a veteran with a service-connected disability
rated 50 percent or more) to pay the United States $2 for each 30day supply of medication furnished such veteran under this chapter
on an outpatient basis for the treatment of a non-service-connected
disability or condition. If the amount supplied is less than a 30-day
supply, the amount of the charge may not be reduced.
"(2) The Secretary may not require a veteran to pay an amount in
excess of the cost to the Secretary for medication described in
paragraph (1).
"(b) Amounts collected under this section shall be deposited in the
Department of Veterans Affairs Medical-Care Cost Recovery Fund.
"(c) The provisions of subsection (a) expire on September 30,
1991.".
(2) The table of sections at the beginning of such chapter is
amended by inserting after the item relating to section 622 the
following new item:
"622A. Copayment for medications.".
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 38 USC 622A
shall take effect with respect to medication furnished to a veteran note,
after October 31, 1990, or the date of the enactment of this Act,
whichever is later.

104 STAT. 1388-346

PUBLIC LAW 101-508—NOV. 5, 1990

SEC. 8013. MODIFICATION
COPAYMENTS.

OF

HEALTH-CARE

CATEGORIES

AND

(a) INPATIENT CARE.—(1) Subsection (a) of section 610 of title 38,
United States Code, is amended—
(A) in paragraph (1)(I), by striking out "622(aXl)" and inserting in lieu thereof "622(a)"; and
(B) by striking out paragraph (2) and inserting in lieu thereof
the following:
"(2) In the case of a veteran who is not described in paragraph (1)
of this subsection, the Secretary may, to the extent resources and
facilities are available, furnish hospital care and nursing home care
to a veteran which the Secretary determines is needed for a
nonservice-connected disability, subject to the provisions of subsection (f) of this section.".
(2) Subsection (f) of such section is amended—
(A) by striking out paragraphs (1) and (2) and inserting in lieu
thereof the following:
"(fKD The Secretary may not furnish hospital care or nursing
home care under this section to a veteran who is eligible for such
care under subsection (a)(2) of this section unless the veteran agrees
to pay to the United States the applicable amount determined under
paragraph (2) of this subsection.
"(2) A veteran who is furnished hospital care or nursing home
care under this section and who is required under paragraph (1) of
this subsection to agree to pay an amount to the United States in
order to be furnished such care shall be liable to the United States
for an amount equal to—
"(A) the lesser of—
"(i) the cost of furnishing such care, as determined by the
Secretary; or
"(ii) the amount determined under paragraph (3) of this
subsection; and
"(B) an amount equal to $10 for every day the veteran receives hospital care and $5 for every day the veteran receives
nursing home care."; and
(B) in subparagraphs (A) and (B) of paragraph (3), by striking
out "(2XB)" each place it appears and inserting in lieu thereof
"(2)(AXii)".
(b) OUTPATIENT CARE.—Subsection (f) of section 612 of such title is
amended—
(1) in paragraph (1), by striking out "610(aX2XB)" and inserting in lieu thereof "610(aX2)";
(2) by redesignating paragraphs (5) and (7) as (3) and (4),
respectively; and
(3) by striking paragraphs (3), (4), and (6).
(c) INCOME THRESHOLDS.—(1) Subsection (a) of section 622 of such
title is amended—
(A) in parsigraph (1)—
(i) by striking out "(1)" at the beginning of the subsection;
(ii) by redesignating clauses (A), (B), and (C) as paragraphs (1), (2), and (3), respectively; and
(iii) by striking out "Category A threshold" in paragraph
(3), as so redesignated, and inserting in lieu thereof
"amount set forth in subsection (b)";
(B) by striking out paragraph (2).
(2) Subsection (b) of such section is amended to read as follows:

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-347

"(b)(1) For purposes of subsection (a)(3), the income threshold for
the calendar year beginning on January 1,1990, is—
"(A) $17,240 in the case of a veteran with no dependents; and
"(B) $20,688 in the case of a veteran with one dependent, plus
$1,150 for each additional dependent.
"(2) For a calendar year beginning after December 31, 1990, the
amounts in effect for purposes of this subsection shall be the
amounts in effect for the preceding calendar year as adjusted under
subsection (c) of this section.".
(3) Subsection (c) of such section is amended by striking out
"paragraphs (1) and (2) of.
(4) Paragraph (2) of subsection (d) of such section is amended to
read as follows:
"(2) A determination described in this paragraph is a determination that for purposes of subsection (a)(3) of this section a veteran's
attributable income is not greater than the amount determined
under subsection (b) of this section.".
(5) Subsection (e) of such section is amended—
(A) in paragraph (1), by striking out "the Category A threshold or the Category B threshold, as appropriate" and inserting
in lieu thereof "the amount determined under subsection Ot)) of
this section"; and
(B) by striking out paragraph (2) and inserting in lieu thereof
the following:
"(2) A veteran is described in this paragraph for the purposes of
subsection (a) of this section if^
"(A) the veteran has an attributable income greater than the
amount determined under subsection Qo) of this section; and
"(B) the current projections of such veteran's income for the
current year are that the veteran's income for such year will be
substantially below the amount determined under subsection
Ot)).".
(d) EFFECTIVE DATE.—The amendments made by this section shall 38 USC 610 note,
apply with respect to hospital care and medical services received
after October 31, 1990, or the date of the enactment of this Act,
whichever is later.
(e) SUNSET.—The amendments made by this section expire on 38 USC 610 note.
September 30,1991.

Subtitle C—Education and Employment
SEC. 8021. LIMITATION OF REHABILITATION PROGRAM ENTITLEMENT TO
SERVICE-DISABLED VETERANS RATED AT 20 PERCENT OR
MORE.

(a) IN GENERAL.—Section 1502(1) of title 38, United States Code, is
amended by inserting "at a rate of 20 percent or more" after
"compensable" both places it appears.
(b) EFFECTIVE DATE.—The amendments made by this section shall 38 USC 1502
apply to veterans and other persons originally applying for eissist- ^°^ance under chapter 31 of title 38, United States Code, on or after
November 1,1990.

104 STAT. 1388-348

PUBLIC LAW 101-508—NOV. 5, 1990

Subtitle D—Housing and Loan Guaranty
Assistance
SEC. 8031. ELECTION OF CLAIM UNDER GUARANTY OF MANUFACTURED
HOME LOANS.

38 use 1812
note-

(a) IN GENERAL.—Paragraph (3) of section 1812(c) of title 38,
United States Code, is amended to read as follows:
"(3)(A) The Secretary's guaranty may not exceed the lesser of (i)
the lesser of $20,000 or 40 percent of the loan, or (ii) the maximum
amount of the guaranty entitlement available to the veteran as
specified in paragraph (4) of this subsection.
"(B) A claim under the Secretary's guaranty shall, at the election
of the holder of a loan, be made by t];ie filing of an accounting with
the Secretary—
"(i) within a reasonable time after the receipt by such holder
of an appraisal by the Secretary of the value of the security for
the loan; or
"(ii) after liquidation of the security for the loan.
"(C) If the holder of a loan applies for payment of a claim under
clause (i) of subparagraph (B) of this paragraph, the amount of such
claim payable by the Secretary shall be the lesser of—
"(i) the amount equal to the excess, if any, of the total
indebtedness over the amount of the appraisal referred to in
such clause; or
"(ii) the amount equal to the guaranty under this section.
"(D) If the holder of a loan files for payment of a claim under
clause (ii) of subparagraph (B) this paragraph, the amount of such
claim payable by the Secretary shall be the lesser of—
"(i) the amount equal to the excess, if any, of the total
indebtedness over the greater of the value of the property
securing the loan, as determined by the Secretary, or the
amount of the liquidation or resale proceeds; or
"(ii) the amount equal to the guaranty under this section.
"(E) In any accounting filed pursuant to subparagraph (BXii) of
this subsection, the Secretary shall permit to be included therein
accrued unpaid interest from the date of the first uncured default to
such cutoff date as the Secretary may establish, and the Secretary
shall allow the holder of the loan to charge Eigainst the liquidation
or resale proceeds accrued interest from the cutoff date established
to such further date as the Secretary may determine and such costs
and expenses as the Secretary determines to be reasonable and
proper.
"(F) The liability of the United States under the guaranty provided for by this parsigraph shall decrease or increase pro rata with
any decrease or increase of the amount of the unpaid portion of the
obligation.".
(b) EFFECTIVE DATE.—The amendment made by this section shall
apply to claims filed with the Secretary of Veterans Affairs on or
after the date of the enactment of this Act.
SEC. 8032. LOAN FEE.

Section 1829(a) of title 38, United States Code, is amended—
(1) in paragraph (2), by striking out "The amount" and inserting in lieu thereof "Except as provided in paragraph (6) of this
subsection, the amount"; and

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-349

(2) by adding at the end the following:
"(6) With respect to each loan closed during the period beginning
on November 1, 1990, and ending on September 30, 1991, each
amount specified in paragraph (2) of this subsection shall be increased by 0.625 percent of the total loan amount.".

Subtitle E—Burial and Grave Marker Benefits
SEC. 8041. HEADSTONE OR MARKER ALLOWANCE.

(a) I N GENERAL.—Section 906 of title 38, United States Code, is
amended—
(1) by striking out subsection (d); and
(2) by redesignating subsection (e) as subsection (d).
(b) EFFECTIVE DATE.—This section shall apply to deaths occurring 38 USC 906 note,
on or after November 1,1990.
SEC. 8042. PLOT ALLOWANCE ELIGIBILITY.

(a) I N GENERAL.—Section 903(b)(2) of title 38, United States Code,
is amended by inserting "(other than a veteran whose eligibility for
benefits under this subsection is based on being a veteran of any
war)" after "(2) if such veteran".
(b) EFFECTIVE DATE.—This section shall apply to deaths occurring 38 USC 903 note,
on or after November 1,1990.

Subtitle F—Miscellaneous
SEC. 8051. USE OF INTERNAL REVENUE SERVICE AND SOCIAL SECURITY
ADMINISTRATION DATA FOR INCOME VERIFICATION.

(a) DISCLOSURE OF TAX INFORMATION.—(1) Subparagraph (D) of

section 6103(1X7) of the Internal Revenue Code of 1986 (relating to 26 USC 6103.
disclosure of return information to Federal, State, and local agencies
administering certain programs) is amended—
(A) by striking out "and" at the end of clause (vi);
(B) by striking out the period at the end of clause (vii) and
inserting in lieu thereof "; and"; and
(C) by adding at the end the following:
'(viiiXD any needs-based pension provided under chapter
15 of title 38, United States Code, or under any other law
administered by the Secretary of Veterans Affairs;
"(II) parents' dependency and indemnity compensation
provided under section 415 of title 38, United States Code;
"(III) health-care services furnished under section
610(aXlXI), 610(aX2), 610(b), and 612(aX2XB) of such title;
and
"(IV) compensation psiid under chapter 11 of title 38,
United States Code, at the 100 percent rate based solely on
unemployability and without regard to the fact that the
disability or disabilities are not rated as 100 percent disabling under the rating schedule.
Only return information from returns with respect to net earnings from self-employment and wages may be disclosed under
this p a r ^ ^ a p h for use with respect to any program described in
clause (viiiXIV). Clause (viii) shall not apply after September 30,
1992."

104 STAT. 1388-350

PUBLIC LAW 101-508—NOV. 5, 1990

(2) The heading of paragraph (7) of section 6103(1) of such Code is
amended by striking out "OR THE FOOD STAMP ACT OF 1977" and

inserting in lieu thereof ", THE FOOD STAMP ACT OF 1977, OR TITLE 38,
UNITED S T A T E S C O D E " .

(b) USE OF INCOME INFORMATION FOR NEEDS-BASED PROGRAMS.—(1)

Chapter 53 of title 38, United States Code, is amended by adding at
the end the following new section:
"§3117. Use of income information from other agencies: notice
and verification
"(a) The Secretary shall notify each applicant for a benefit or
service described in subsection (c) of this section that income
information furnished by the applicant to the Secretary may be
compared with information obtained by the Secretary from the
Secretary of Health and Human Services or the Secretary of the
Treasury under section 6103(l)(7)(D)(viii) of the Internal Revenue
Code of 1986. The Secretary shall periodically transmit to recipients
of such beneHts and services additional notifications of such
matters.
"0>) The Secretary may not, by reason of information obtained
from the Secretary of Health and Human Services or the Secretary
of the Treasury under section 6103(l)(7)(D)(viii) of the Internal Revenue Code of 1986, terminate, deny, suspend, or reduce any benefit or
service described in subsection (c) of this section until the Secretary
takes appropriate steps to verify independently information relating
to the following:
"(1) The amount of the asset or income involved.
"(2) Whether such individual actually has (or had) access to
such asset or income for the individual's own use.
"(3) The period or periods when the individual actually had
such asset or income.
"(c) The benefits and services described in this subsection are the
following:
"(1) Needs-based pension benefits provided under chapter 15
of this title or under any other law administered by the Secretary.
"(2) Parents' dependency and indemnity compensation provided under section 415 of this title.
"(3) Health-care services furnished under sections 610(a)(lXI),
610(aX2), 610(b), and 612(aX2XB) of this title.
"(4) Compensation paid under chapter 11 of this title at the
100 percent rate based solely on unemployability and without
regard to the fact that the disability or disabilities are not rated
as 100 percent disabling under the rating schedule.
"(d) In the case of compensation described in subsection (c)(4) of
this section, the Secretary may independently verify or otherwise
act upon wage or self-emplojmient information referred to in subsection (b) of this section only if the Secretary finds that the amount
and duration of the earnings reported in that information clearly
indicate that the individual may no longer be qualified for a rating
of total disability.
"(e) The Secretary shall inform the individual of the findings
made by the Secretary on the basis of verified information under
subsection (b) of this section, and shall give the individual an
opportunity to contest such findings, in the same manner as applies
to other information and findings relating to eligibility for the
benefit or service involved.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-351

"(f) The Secretary shall pay the expenses of carrying out this
section from amounts available to the Department for the payment
of compensation and pension.
"(g) The authority of the Secretary to obtain information from the
Secretary of the Treasury or the Secretary of Health and Human
Services under section 6103(l)(7)(D)(viii) of the Internal Revenue
Code of 1986 expires on September 30,1992.".
(2) The table of sections at the beginning of such chapter is
amended by adding at the end the following new item:
"3117. Use of income information from other agencies: notice and verification.".
(c) NOTICE TO CURRENT BENEFICIARIES.—(1) The Secretary of Veter-

38 USC 3117
ans Affairs shall notify individuals who (as of the date of the ^°^enactment of this Act) are applicants for or recipients of the benefits
described in subsection (c) (other than paragraph (3)) of section 3117
of title 38, United States Code (as added by subsection (b)), that
income information furnished to the Secretary by such applicants
and recipients may be compared with information obtained by the
Secretary from the Secretary of Health and Human Services or the
Secretary of the Treasury under clause (viii) of section 6103(1)(7)(D)
of the Internal Revenue Code of 1986 (as added by subsection (a)).
(2) Notification under paragraph (1) shall be made not later than
90 days after the date of the enactment of this Act.
(3) The Secretary of Veterans Affairs may not obtain information
from the Secretary of Health and Human Services or the Secretary
of the Treasury under section 6103(l)(7)(DXviii) of the Internal Revenue Code of 1986 (as added by subsection (a)) until notification under
paragraph (1) is made.
(d) GAO STUDY.—The Comptroller General of the United States 38 USC 3117
shall conduct a study of the effectiveness of the amendments made ^°^by this section and shall submit a report on such study to the
Committees on Veterans' Affairs and Ways and Means of the House
of Representatives and the Committees on Veterans' Affairs and
Finance of the Senate not later than January 1,1992.
SEC. 8052. LINE OF DUTY.
(a) EUMINATION OF COMPENSATION IN CERTAIN C A S E S . — T i t l e 3 8 ,

United States Code, is amended—
(1) in section 105(a), by striking out "the result of the person's
own willful misconduct" in the first sentence and inserting in
lieu thereof "a result of the person's own willful misconduct or
abuse of alcohol or drugs";
(2) in section 310, by striking out "the result of the veteran's
own willful misconduct" and inserting in lieu thereof "a result
of the veteran's own willful misconduct or abuse of alcohol or
drugs"; and
(3) in section 331, by striking out "the result of the veteran's
own willful misconduct" and inserting in lieu thereof "a result
of the veteran's own willful misconduct or abuse of alcohol or
drugs".
03) EFFECTIVE DATE.—The amendments made by subsection (a) 38 USC 105 note,
shall take effect with respect to claims filed after October 31, 1990.

104 STAT. 1388-352

PUBLIC LAW 101-508—NOV. 5, 1990

SEC. 8053. REQUIREMENT FOR CLAIMANTS TO REPORT SOCIAL SECURITY
NUMBERS; USES OF DEATH INFORMATION BY THE DEPARTMENT OF VETERANS AFFAIRS.
(a) MANDATORY REPORTING OF SOCIAL SECURITY NUMBERS.—Sec-

tion 3001 of title 38, United States Code, is amended by adding at the
end the following new subsection:
"(c)(1) Any person who applies for or is in receipt of any compensation or pension benefit under laws administered by the Secretary
shall, if requested by the Secretary, furnish the Secretary with the
social security number of such person and the social security
number of any dependent or beneficiary on whose behalf, or based
upon whom, such person applies for or is in receipt of such benefit.
A person is not required to furnish the Secretary with a social
security number for any person to whom a social security number
has not been assigned.
"(2) The Secretary shall deny the application of or terminate the
payment of compensation or pension to a person who fails to furnish
the Secretary with a social security number required to be furnished
pursuant to paragraph (1) of this subsection. The Secretary may
thereafter reconsider the application or reinstate pajnnent of compensation or pension, £is the case may be, if such person furnishes
the Secretary with such social security number.
"(3) The costs of administering this subsection shall be paid for
from amounts available to the Department of Veterans Affairs for
the pajonent of compensation and pension.".
(b) REVIEW OF DEPARTMENT OF HEALTH AND HUMAN SERVICES
DEATH INFORMATION TO IDENTIFY DECEASED RECIPIENTS OF COMPENSATION AND PENSION BENEFITS.—(1) Chapter 53 of title 38,

United States Code, as amended by section 8051(b), is further
amended by adding at the end the following new section:
"§3118. Review of Department of Health and Human Services
death information
"(a) The Secretary shall periodically compare Department of Veterans Affairs information regarding persons to or for whom compensation or pension is being paid with information in the records of
the Department of Health and Human Services relating to persons
who have died for the purposes of—
"(1) determining whether any such persons to whom compensation and pension is being paid are deceased;
"(2) ensuring that such payments to or for any such persons
who are deceased are terminated in a timely manner; and
"(3) ensuring that collection of overpayments of such benefits
resulting from pajmaents after the death of such persons is
initiated in a timely manner.
"(b) The Department of Health and Human Services death
information referred to in subsection (a) of this section is death
information available to the Secretary from or through the Secretary of Health and Human Services, including death information
available to the Secretary of Health and Human Services from a
State, pursuant to a memorandum of understanding entered into by
such Secretaries. Any such memorandum of understanding shall
include safeguards to assure that information made available under
it is not used for unauthorized purposes or improperly disclosed.".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-353

(2) The table of sections at the beginning of such chapter, as
amended by section 8051(b), is further amended by adding at the end
the following:
"3118. Review of Department of Health suid Human Services death information.".

TITLE IX—TRANSPORTATION
Subtitle A—Surface Transportation
SEC. 9001. SENSE OF CONGRESS THAT HIGHWAY USER TAXES SHOULD BE
DEDICATED TO THE HIGHWAY TRUST FUND.

(a) FINDINGS.—Congress finds that—
(1) highway motor fuel taxes have in the past been dedicated
to the Highway Trust Fund and used for the development of the
surface transportation system;
(2) extraordinary budget pressures have led to consideration
of the need for a temporary, 5-year highway motor fuels tax for
deficit reduction;
(3) any portion of the new taxes deposited into the Highway
Trust Fund shall be available to accommodate our country's
vital transportation needs;
(4) adequate funding of transportation is a key component of a
national strategy for economic growth; and
(5) use of the highway motor fuels taxes for deficit reduction
should be temporary so that we can return as soon as possible to
the dedicated user fee principle in order to ensure fairness to
highway users and to ensure that needed transportation infrastructure improvements are made.
Ob) SENSE OF CONGRESS.—It is the sense of Congress that—

(1) any increase in motor fuel excise taxes that are deposited
in the Highway Trust Fund shall be available for surface
transportation purposes;
(2) the Budget Resolutions for fiscal years 1991 through 1995
should accommodate the Nation's transportation needs and the
section 302(a) allocations should provide budget authority and
outlays attributable to the increase in deposits into the Highway Trust Fund as a result of any increases in motor fuels taxes
through implementation of this Act;
(3) Congress reaffirms the principle that highway motor fuel
taxes should be deposited in the Highway Trust Fund; and
(4) to the extent the highway motor fuel taxes are used for
deficit reduction during the 5-year period beginning with fiscal
year 1991, the Congress should return to the dedicated user fee
principle as soon as possible but no later than the end of fiscal
year 1995.

Subtitle B—Aviation Safety and Capacity
•wj^
»
HiXpanSlOn

Aviation safety

and Capacity
Expansion Act of
1990.

SEC. 9101. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This subtitle may be cited as the "Aviation

Safety and Capacity Expansion Act of 1990".
(b) TABLE OF CONTENTS.—

49 USC app.

2201 note.

104 STAT. 1388-354
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

9101.
9102.
9103.
9104.
9105.
9106.
9107.
9108.
9109.
9110.
9111.

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

9112.
9113.
9114.
9115.
9116.
9117.
9118.
9119.
9120.
9121.
9122.
9123.
9124.
9125.
9126.
9127.
9128.
9129.
9130.
9131.

PUBLIC LAW 101-508—NOV. 5, 1990
Short title; table of contents.
Construction of firefighting training facilities.
Declaration of policy.
Airport improvement program.
Airway improvement program.
FAA operations.
Operation and maintenance of aviation system.
Weather service.
Military airport program.
Passenger facility charges.
Reduction in airport improvement program apportionments for large and
medium hub airports imposing passenger facility charges.
Use of PFC reduced apportionment funds.
Small community air service program.
State block grant pilot program.
Auxiliary flight service station program.
Airport and airway improvements for the Virgin Islands.
Engine condition monitoring systems.
Procurement authority.
*
Expanded east coast plan.
Transfer of format of geodetic navigation information.
Sensitive security information.
Reports.
Atlantic City airport.
Natural disaster regulation.
Flight takeoff or landing requirement for State taxation.
Allocation of existing capacity at certain airports.
Certificate transfers.
Severability.
Buy American.
Prohibition against fraudulent use of "made in America" labels.
Restrictions on contract awards.

SEC. 9102. CONSTRUCTION OF FIREFIGHTING TRAINING FACILITIES.

Section 503(aX2) of the Airport and Airway Improvement Act of
1982 (49 U.S.C. App. 2202(a)(2)) is amended—
(1) by striking "and" at the end of subparagraph (B);
(2) by striking the period at the end of subparagraph (C) and
inserting "; and"; and
(3) by inserting after subparagraph (C) the following new
subparagraph:
"(D) any acquisition of land for, or work involved to
construct, a burn area training structure on or off the
airport for the purpose of providing live fire drill training
for aircraft rescue and firefighting personnel required to
receive such training by a regulation of the Department of
Transportation, including basic equipment and minimum
structures to support such training in accordance with
standards of the Federal Aviation Administration.".
SEC. 9103. DECLARATION OF POLICY.

Section 502(a) of the Airport and Airway Improvement Act of 1982
(49 U.S.C. App. 2201(a)) is amended—
(1) in paragraph (5) by inserting ", including as they may be
applied between category and class of aircraft' after "discriminatory practices"; and
(2) in paragraph (13) by inserting "and should not unjustly
discriminate between categories and classes of aircraft" after
"attempted".
SEC. 9104. AIRPORT IMPROVEMENT PROGRAM.

Section 505 of the Airport and Airway Improvement Act of 1982
(49 U.S.C. App. 2204) is amended—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-355

(1) in subsection (a) by striking " 13,816,700,000" and inserting ^^ «$i3^916 700,000"; and
(2) in subsection (b) by striking "September 30, 1987" and
inserting "September 30,1992".
SEC. 9105. AIRWAY IMPROVEMENT PROGRAM.

(a) RENAMING OF AIRWAY PLAN.—Section 504(b)(1) of the Airport
and Airway Improvement Act of 1982 (49 U.S.C. App. 2203(b)(1)) is
amended by inserting after the second sentence the following new
sentence: "For fiscal year 1991 and thereafter, the revised plan shall
be known as the 'Airway Capital Investment Plan'.",
(b) AIRWAY FACILITIES AND EQUIPMENT.—The first sentence of
section 506(a)(1) of such Act (49 U.S.C. App. 2205(a)(1)) is amended by
striking "September 30, 1981," and all that follows through the
period and inserting the following: "September 30, 1990, aggregate
amounts not to exceed $2,500,000,000 for fiscal year 1991 and
$5,500,000,000 for the fiscal years ending before October 1, 1992.".
SEC. 9106. F A A OPERATIONS.

Section 106 of title 49, United States Code, is amended by adding
at the end the following new subsection:
"(k) AUTHORIZATION OF APPROPRIATIONS FOR OPERATIONS.—There

is authorized to be appropriated for operations of the Administration $4,088,000,000 for fiscal year 1991 and $4,412,600,000 for fiscal
year 1992.".
SEC. 9107. OPERATION AND MAINTENANCE OF AVIATION SYSTEM.

(a) ELIMINATION OF PENALTY.—Section 506(c)(3)(B)(i) of the Airport
and Airway Improvement Act of 1982 (49 U.S.C. App. 2205(c)(3)(B)(i))
is amended—
(1) by inserting "and" after "1989"; and
(2) by striking "$3,770,000,000" and all that follows through
"1992".
(b) FUNDING.—Section 506(c) of such Act (49 U.S.C. App. 2205(c)) is
amended by adding at the end the following new paragraph:
"(4) FISCAL YEARS 1991-1992.—The amount appropriated from
the Trust Fund for the purposes of clauses (A) and (B) of
paragraph (1) of this subsection for each of fiscal years 1991 and
1992 may not exceed—
"(A) 75 percent of the amount of funds made available
under section 505, subsections (a) and (b) of this section, and
section 106(k) of title 49, United States Code, for such fiscal
year; less
"(B) the amount of funds made available under section
505 and subsections (a) and (b) of this section for such fiscal
year.".
SEC. 9108. WEATHER SERVICE.

The second sentence of section 506(d) of the Airport and Airway
Improvement Act of 1982 (49 U.S.C. App. 2205(d)) is amended—
(1) by striking "and" the first place it appears and inserting a
comma; and
(2) by inserting before the period the following: ", $34,521,000
for fiscal year 1991, and $35,389,000 for fiscal year 1992".
•f* So in original. Probably should be " "$13,916,700,000"; and".

104 STAT. 1388-356

PUBLIC LAW 101-508—NOV. 5, 1990

SEC. 9109. MILITARY AIRPORT PROGRAM.
(a) DECLARATION OF POUCY.—Section 502(a) of the Airport and

Airway Improvement Act of 1982 (49 U.S.C. App. 2201(a)) is further
amended—
(1) by striking "and" at the end of paragraph (12);
(2) by striking the period at the end of paragraph (13) and
inserting "; and"; and
(3) by adding at the end the following:
"(14) special emphasis should be placed on the conversion of
appropriate former military air bases to civil use and on
the identification and improvement of additional joint-use
id.cilit^i6S

49 use app.
2207.

(b) SET-ASIDE.—Section 508(d) of such Act (49 U.S.C. App. 2204(d))
ia amended by striking paragraph (5) and inserting the following:
"(5) MILITARY AIRPORT SET-ASIDE.—Not less than 1.5 percent of
the funds made available under section 505 in each of fiscal
years 1991 and 1992 shall be distributed during such fiscal year
to sponsors of current or former military airports designated by
the Secretary under subsection (f) for the purpose of developing
current and former military airports to improve the capacity of
the national air transportation system.
"(6) REALLOCATION.—If the Secretary determines that he will
not be able to distribute the amount of funds required to be
distributed under paragraph (1), (2), (3), (4), or (5) of this subsection for any fiscal year because the number of qualified applications submitted in compliance with this title is insufficient to
meet such amount, the portion of such amount the Secretary
determines will not be distributed shall be available for obligation during such fiscal year for other airports and for other
purposes authorized by section 505 of this title.",

49 use app.

such Act is further amended by adding at the end the following new

2207-

subsection:
"(f) DESIGNATION O F C U R R E N T OR FORMER MILITARY AIRPORTS.—
"(1) D E S I G N A T I O N . — T h e S e c r e t a r y s h a l l d e s i g n a t e n o t m o r e

(c) DESIGNATION OF FORMER MILITARY AIRPORTS.—Section 508 of

than 8 current or former military airports for participation in
the grant program established under subsection (d)(5) and this
subsection. At least 2 such airports shall be designated within 6
months after the date of the enactment of this subsection and
the remaining airports shall be designated for participation no
later than September 30,1992.
"(2) SURVEY.—The Secretary shall conduct a survey of current
and former military airports to identify which ones have the
greatest potential to improve the capacity of the national air
transportation system. The survey shall also identify the capital
development needs of such airports in order to make them part
of the national air transportation system and shall identify
which capital development needs are eligible for grants under
section 505. The survey shall be completed by September 30,
1991.
"(3) LIMITATION.—In selecting airports for participation in the
program established under subsection (dX5) and this subsection
and in conducting the survey under paragraph (2), the Secretary
shall consider only those current or former military airports
whose conversion in whole or in part to civilian commercial or
reliever airport as part of the national air transportation

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-357

system would enhance airport and air traffic control system
capacity in major metropolitan areas and reduce current and
projected flight delays.
"(4) PERIOD OF ELIGIBIUTY.—An airport designated by the
Secretary under this subsection shall remain eligible to participate in the program under subsection (d)(5) and this subsection
for the 5 fiscal years following such designation. An airport that
does not attain a level of enplaned passengers during such 5
flscal year period which qualifies it as a small hub airport as
defined as of January 1,1990, or reliever airport may be redesignated by the Secretary for participation in the program for such
additional fiscal years as may be determined by the Secretary.
"(5) ADDITIONAL FUNDING.—Notwithstanding the provisions of
section 513(b), not to exceed $5,000,000 per airport of the sums
to be distributed at the discretion of the Secretary under section
507(c) for any fiscal year may be used by the sponsor of a
current or former military airport designated by the Secretary
under this subsection for construction, improvement, or repair
of terminal building facilities, including terminal gates used by
aircraft for enplaning and deplaning revenue passengers. Under
no circumstances shall any gates constructed, improved, or
repaired with Federal funding under this paragraph be subject
to long-term leases for periods exceeding 10 years or majority in
interest clauses.".
SEC. 9110. PASSENGER FACILITY CHARGES.

Section 1113 of the Federal Aviation Act of 1958 (49 U.S.C. App.
1513) is amended—
(1) in subsection (a) by inserting "except as provided in subsection (e) and" before "except that'^ and
(2) by adding at the end the following new subsection:
"(e)
AUTHORITY
CHARGES.—

FOR

IMPOSITION

OF

PASSENGER

FACIUTY

"(1) I N GENERAL.—Subject to the provisions of this subsection,
the Secretary may grant a public agency which controls a
commercial service airport authority to impose a fee of $1.00,
$2.00, or $3.00 for each paying passenger of an air carrier
enplaned at such airport to finance eligible airport-related
projects to be carried out in connection with such airport or any
other airport which such agency controls. For purposes of this
subsection, financing an eligible airport-related project includes
making pajonents for debt service on bonds and other indebtedness incurred to carry out such project.
"(2) U S E OF REVENUES AND RELATIONSHIP BETWEEN FEES AND

REVENUES.—The Secretary may grant a public agency which
controls a commercial service airport authority to impose a fee
under this subsection to finance specific projects only if the
Secretary finds, on the basis of an application submitted for
such authority—
"(A) that the amount and duration of the proposed fee
will result in revenues (including interest and other returns
on such revenues) which do not exceed amounts necessary
to finance the specific projects; and
"(B) that each of the specific projects is an eligible airport-related project which will—
"(i) preserve or enhance capacity, safety, or security
of the national siir transportation system,

104 STAT. 1388-358

PUBLIC LAW 101-508—NOV. 5, 1990
"(ii) reduce noise resulting from an airport which is
part of such system, or
"(iii) furnish opportunities for enhanced competition
between or among air carriers.
"(3)

LIMITATION REGARDING PASSENGERS OF AIR CARRIERS

RECEIVING ESSENTIAL AIR SERVICE COMPENSATION.—If a passenger of an air carrier is being provided air service to an
eligible point under section 419 for which compensation is being
paid under such section, a public agency which controls any
other airport may not impose a fee pursuant to this subsection
for enplanement of such passenger with respect to such air
service.
"(4) LIMITATION REGARDING OBLIGATIONS.—No fee may be

im-

posed pursuant to this subsection for a project which is not
approved by the Secretary under this subsection on or before
September 30,1992—
"(A) if, during fiscal years 1991 and 1992, the amount
available for obligation, in the aggregate, under section 505
of Airport and Airway Improvement Act of 1982 is less than
$3,700,000,000; or
"(B)(i) if, during fiscal year 1991, the amount available for
obligation, in the aggregate, under section 419 is less than
$26,600,000; or
"(ii) if, during fiscal year 1992, the amount available for
obligation, in the aggregate, under section 419 is less than
$38,600,000.
"(5) LINKAGE.—The Secretary may not grant a public agency
authority to impose a fee pursuant to this subsection unless the
Secretary has—
"(A) issued a final rule establishing a program for reviewing airport noise and access restrictions on operations of
Stage 2 and Stage 3 aircraft pursuant to section 9304(a) of
the Airport Noise and Capacity Act of 1990; and
"(B) issued a notice of proposed rulemaking to consider
more efficient allocation of existing capacity at high density
airports under section 9126 of the Aviation Safety and
Capacity Expansion Act of 1990.
"(6) TWO ENPLANEMENTS PER TRIP LIMITATION.—Enplaned passengers on whom a fee may be imposed by a public agency
pursuant to this subsection include passengers of air carriers
originating or connecting at the commercial service airport
which the agency controls. A fee may not be collected pursuant
to this subsection from a passenger with respect to any
enplanement of such passenger, on a one-way trip and on a trip
in each direction of a round trip, after the second enplanement
for which a fee has been collected pursuant to this subsection
from such passenger.
"(7) AIR CARRIER RATES, FEES, AND CHARGES.—
"(A) TREATMENT OF FEE REVENUES.—Revenues

derived
from fees collected pursuant to this subsection shall not be
treated as airport revenues for the purpose of establishing a
rate, fee, or charge pursuant to a contract between a public
agency which controls a commercial service airport and an
air carrier.
"(B) CAPITAL COSTS.—Except as provided by subparagraph
(C), a public agency which controls a commercial service
airport shall not include in its rate base by means of

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-359

depreciation, amortization, or any other method that portion of the capital costs of a project paid for using revenues
derived from fees collected pursuant to this subsection for
the purpose of establishing a rate, fee, or charge pursuant
to a contract between such agency and an air carrier.
"(C) FACILITIES FINANCED WITH FEE REVENUES.—With re-

spect to a project for terminal development, gates and
related areas, or a facility which is occupied or utilized by 1
or more air carriers on an exclusive or preferential basis,
the rates, fees, and charges payable by air carriers which
use such facilities shall be no less than the rates, fees, and
charges paid by carriers using similar facilities at the
airport which were not financed using revenues derived
from collection of a fee imposed pursuant to this subsection.
"(8) EXCLUSIVITY OF AUTHORITY.—No State or political subdivision or agency thereof which is not a public agency controlling a
commercial service airport shall prohibit, limit, or regulate the
imposition of fees by the public agency pursuant to this subsection, collection of such fees, or use of revenues derived therefrom. No contract between an air carrier and a public agency
which controls a commercial service airport entered into before,
on, or after the date of the enactment of this subsection shall
impair the authority of the public agency to impose fees pursuant to this subsection and to use the revenues derived from such
fees in accordance with this subsection.
"(9)

NONEXCLUSIVITY OF

CONTRACTUAL AGREEMENTS.—No

project carried out through the use of a fee collected pursuant to
this subsection may be subject to an exclusive long-term lease or
use agreement of an air carrier, as defined by the Secretary by
regulation. No lease or use agreement of an air carrier with
respect to a project constructed or expanded through the use of
such fee may restrict the public agency which controls the
airport from funding, developing, or assigning new capacity at
the airport with revenues derived from fees imposed pursuant
to this subsection.
"(10) COLLECTION AND HANDUNG OF FEES BY AIR CARRIERS.—

The regulations issued by the Secretary to carry out this subsection shall—
"(A) require air carriers and their agents to collect fees
imposed by public agencies pursuant to this subsection;
' (B) establish procedures regarding handling and remittance of the amounts so collected;
"(C) ensure that such amounts are promptly paid to the
public agency for which they are collected less a uniform
amount determined by the Secretary as reflecting average
necessary and reasonable expenses (net of interest accruing
to the air carrier and agent after collection and prior to
remittance) incurred in the collection and handling of such
fees; and
"(D) require that the amount of fees collected pursuant to
this subsection with respect to any air transportation be
noted on the ticket for such air transportation.
"(11) APPUCATION PROCESS.—

"(A) SUBMISSION.—A public agency which controls a
commercial service airport and is interested in imposing a
fee pursuant to this subsection shall submit to the Secretary an application for authority to impose such fee.

104 STAT. 1388-360

PUBLIC LAW 101-508—NOV. 5, 1990
"(B) CONTENT.—An application submitted under this
paragraph shall contain such information and be in such
form as the Secretary may require by regulation.
"(C) OPPORTUNITY FOR CONSULTATION.—Before submission
of an application under this paragraph, a public agency
shall provide reasonable notice to, and an opportunity for
consultation with, air carriers operating at the airport. The
Secretary shall issue regulations which define reasonable
notice and contain the following requirements at a
minimum:
"(i) A public agency must provide written notice—
"(I) of individual projects being considered for
funding through imposition of a fee pursuant to
this subsection; and
"(II) of the date and location of a meeting to
present such projects to air carriers operating at
the airport,
"(ii) Not later than 30 days after the issuance of a
written notice under clause (i), each air carrier operating at the airport must provide to the public agency
written notice of receipt of such notice. Failure of an
air carrier to provide such notice may be deemed as
certification of agreement with the project by such air
carrier under clause (iv).
"(iii) Not later than 45 days after the issuance of
written notice under clause (i), the public agency must
conduct a meeting to provide air carriers—
"(I) descriptions of projects;
"(II) justifications for projects; and
"(III) a detailed financial plan for projects,
"(iv) Not later than 30 days after the date of such
meeting, each air carrier must provide the public
agency with certification of agreement or disagreement
with projects (or total plan for such projects). The
failure of an air carrier to submit such certification
shall be deemed as certification of agreement with the
project by such air carrier. Any certification of
disagreement shall contain the reasons for such disagreement. The absence of such reasons will void the
certification of disagreement.
"(D)

NOTICE AND OPPORTUNITY FOR

COMMENT.—After

receiving an application under this paragraph, the Secretary shall provide notice and an opportunity for comment
by air carriers and other interested persons concerning
such application.
"(E) APPROVAL.—A fee may only be imposed pursuant to
this subsection if the Secretary approves an application
granting authority for the imposition of such fee. Not later
than 120 days after the date of receipt of such an application, the Secretary shall make a final decision regarding
approval of such application.
"(12) RECORDKEEPING AND AUDITS.—
"(A) WITH RESPECT TO COLLECTION OF FEES.—The

Secretary shall issue regulations requiring such recordkeeping
and auditing of accounts maintained by an air carrier and
any agency thereof which is collecting a fee imposed pursuant to this subsection and by the public agency which is

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-361

imposing such fee as may be necessary to ensure compliance with this subsection.
"(B) WITH RESPECT TO USE OF REVENUES.—The Secretary

shall periodically audit and review the use by a public
agency which controls an airport of revenues derived from
a fee imposed pursuant to this subsection. Upon such
review and after a public hearing, the Secretary may terminate the authority of such agency to impose such fee, in
whole or in part, to the extent the Secretary determines
that revenues derived therefrom are not being used in
accordance with this subsection.
"(C) SET-OFF.—If the Secretary determines that a fee
imposed pursuant to this subsection is excessive or that the
revenues derived from such fee are not being used in
accordance with this subsection, the Secretary may set off
such amounts as may be necessary to ensure compliance
with this subsection against amounts otherwise payable to
the public agency under the Airport and Airway Improvement Act of 1982.
"(13) TERMS AND CONDITIONS.—Authority granted to impose a

fee pursuant to this subsection shall be subject to such terms
and conditions as the Secretary may establish to carry out the
objectives of this subsection.
"(14) ISSUANCE OF REGULATIONS.—Not later than 180 days
after the date of the enactment of this subsection, the Secretary
shall issue such regulations as may be necessary to carry out
this subsection. Such regulations may prescribe the time and
form by which a fee imposed pursuant to this subsection shall
take effect.
"(15) DEFINITIONS.—For purposes of this subsection, the following definitions apply:
"(A) AIR CARRIER.—The term 'air carrier' includes a foreign air carrier.
"(B) AIRPORT, COMMERCIAL SERVICE AIRPORT, AND PUBUC

AGENCY.—The terms 'airport', 'commercial service airport',
and 'public agency' have the meaning such terms have
under section 503 of the Airport and Airway Improvement
Act of 1982.
"(C) EuGiBLE AIRPORT-RELATED PROJECT.—The term 'eligible airport-related project' means—
"(i) a project for airport development under the Airport and Airway Improvement Act of 1982;
"(ii) a project for airport planning under such Act;
"(iii) a project for terminal development described in
section 513(b) of such Act;
"(iv) a project for airport noise capability planning
under section 103(b) of the Aviation Safety and Noise
Abatement Act of 1979;
"(v) a project to carry out noise compatibility measures which are eligible for assistance under section 104
of the Aviation Safety and Noise Abatement Act of
1979 without regard to whether or not a program has
been approved for such measures under such section;
and
"(vi) a project for construction of gates and related
areas at which passengers are enplaned or deplaned.

-194 O - 91 - 25 : QL 3 Part 2

104 STAT. 1388-362

PUBLIC LAW 101-508—NOV. 5, 1990
"(D) SECRETARY.—The term
Secretary of Transportation.".

'Secretary'

means

the

SEC. 9111. REDUCTION IN AIRPORT IMPROVEMENT PROGRAM APPORTIONMENTS FOR LARGE AND MEDIUM HUB AIRPORTS IMPOSING PASSENGER FACILITY CHARGES.

Section 507(b) of the Airport and Airway Improvement Act of 1982
(49 U.S.C. App. 2206(b)) is amended by adding at the end the
following new paragraph:
"(7) REDUCTION IN APPORTIONMENTS TO CERTAIN LARGE AND
MEDIUM HUBS.—
"(A) GENERAL RULE.—The amount which, but for this

paragraph, would be apportioned under this section (other
than subsection (aX2)) for a fiscal year to a sponsor of an
airport that annually has 0.25 percent or more of the total
annual enplanemente in the United States and for which a
fee is imposed in such fiscal year pursuant to section 1113(e)
of the Federal Aviation Act of 1958 shall be reduced by an
amount equal to 50 percent of the projected revenues derived from such fee in such fiscal year.
"(B) LIMITATIONS.—The maximum reduction in an apportionment to a sponsor of an airport as a result of this
paragraph in a fiscal year shall be 50 percent of the amount
which, but for this paragraph, would be apportioned to such
airport under this section.".
SEC. 9112. USE OF PFC REDUCED APPORTIONMENT FUNDS.
(a) ADDITION OF FUNDS TO EXISTING DISCRETIONARY FUND.—Sec-

tion 507(cXl) of the Airport and Airway Improvement Act of 1982 (49
U.S.C. App. 2206(c)(1)) is amended by inserting after the first sentence the following new sentences: "Twenty-five percent of the
amounts which are not apportioned under this section as a result of
subsection (bX7) shall be added to such discretionary fund. Fifty
percent of amounts added to such discretionary fund pursuant to the
preceding sentence shall be used for making grants for projects at
small hub airports (as such term is defined in section 419(k) of the
Federal Aviation Act of 1958).".
(b) SMALL AIRPORT FUND.—Section 507 of such Act is amended by
redesignating subsections (d) and (e), and any references thereto, as
subsections (e) and (f), respectively, and by inserting after subsection
(c) the following new subsection:
"(d) SMALL AIRPORT FUND.—

"(1) EJSTABUSHMENT.—Seventy-five percent of the amounts
which are not apportioned under this section as a result of
subsection (bX7) shall constitute a small airport fund to be
distributed at the discretion of the Secretary.
"(2) SET-ASIDE FOR GENERAL AVIATION AIRPORTS.—One-third of

the amounts in the small airport fund established by this
subsection and distributed by the Secretary under this subsection in a fiscal year shall be used for making grants to sponsors
of public-use airports (other than commercial service airports)
for any purpose for which funds are made available under
section 505.
"(3)

SET-ASIDE FOR NONHUB AIRPORTS.—Two-thirds of

the

amounts in the small airport fund established by this subsection
and distributed by the Secretary under this subsection in a
fiscal year shall be used for making grants to sponsors of

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-363

commercial service airports each of which annually has less
than 0.05 percent of the total annual enplanements in the
United States for any purpose for which funds are made available under section 505.
"(4) TREATMENT OF AIRPORTS PARTICIPATING IN STATE BLOCK

PROGRAM.—An airport in a State which is participating in the
State block grant program under section 534 shall be eligible to
receive grants pursuant to this subsection to the same extent
that the airport would be eligible to receive such grants if the
State was not participating in such program.".
(c) PROHIBITION ON REDUCED FUNDING.—It is the sense of Congress 49 use app.
that the Secretary should not reduce funding under the discre- 2206 note,
tionary fund established under section 507(c) of the Airport and
Airway Improvement Act of 1982 for small commercial service and
general aviation airports as a result of additional funds made
available to such airports under this section, including amendments
made by this section.
SEC. 9113. SMALL COMMUNITY AIR SERVICE PROGRAM.

(a) DEFINITION OF EUGIBLE POINT.—Section 419(a) of the Federal
Aviation Act of 1958 (49 U.S.C. App. 1389(a)) is amended to read as
follows:
"(a) EUGIBLE POINT DEFINED.—
"(1) GENERAL RULE.—For purposes

of this section, the term
'eligible point' means any point in the United States—
"(A) which was defined as an eligible point under this
section as in effect before October 1,1988;
"(B) which received scheduled air transportation at any
time after January 1,1990; and
"(C) which is not listed in the Department of Transportation Orders 89-9-37 and 89-12-52 as being a point no
longer eligible for compensation under this section.
"(2) LIMITATION ON USE OF PER PASSENGER SUBSIDY.—The Secretary may not determine that a point described in paragraph
(1) is not an eligible point on the basis of the per passenger
subsidy at the point or on any other basis not specifically set
forth in this section.".

(b) FUNDING.—

(1) I N GENERAL.—Section 419 of such Act is amended by
redesignating subsection (1), and any reference thereto, as
subsection (m) and by inserting after subsection (k) the following new subsection:
"(1) FUNDING.—

"(1) C!oNTRACT AUTHORITY.—The Secretary is authorized to
enter into agreements and to incur obligations from the Airport
and Airway Trust Fund for the payment of compensation under
this section. Approval by the Secretary of such an agreement
shall be deemed a contractual obligation of the United States
for pajonent of the Federal share of such compensation.
"(2) AMOUNTS AVAILABLE.—There shall be available to the
Secretary from the Airport and Airway Trust Fund to incur
obligations under this section $38,600,000 per fiscal year for
each of fiscal years 1992, 1993, 1994, 1995, 1996, 1997, and 1998.
Such amounts shall remain available until expended.".
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 49 USC app.
shall take effect October 1,1991.
1389 note.

104 STAT. 1388-364

PUBLIC LAW 101-508—NOV. 5, 1990

(c) CONFORMING AMENDMENTS.—Section 333 of Public Law 100-

457 and section 325(a) of Public Law 101-164 are repealed.
SEC. 9114. STATE BLOCK GRANT PILOT PROGRAM.

Section 534 of the Airport and Airway Improvement Act of 1982
(49 U.S.C. App. 2227) is amended—
(1) in subsection (a) by striking "1991" and inserting "1992";
and
(2) in subsection (d) by striking "not later than 90 days before
its scheduled termination" and inserting "not later than January 31,1992".
49 u s e app.

SEC. 9115. AUXILIARY FLIGHT SERVICE STATION PROGRAM.

(a) GENERAL RULE.—The Secretary of Transportation shall develop and implement a system of manned auxiliary flight service
stations. The auxiliary flight service stations shall supplement the
services of the plgmned consolidation to 61 automated flight service
stations under the flight service station modernization program.
Auxiliary flight service stations shall be located in areas of unique
weather or operational conditions which are criticed to the safety of
flight.
(b) REPORT TO CONGRESS.—Not later than 180 days after the date
of the enactment of this Act, the Secretary of Transportation shall
report to Congress with the plan and schedule for implementation of
this section.
SEC. 9116. AIRPORT AND AIRWAY IMPROVEMENTS FOR THE VIRGIN
ISLANDS.
(a) AIR SPACE STUDY.—The Administrator of the Federal Aviation

Administration shall conduct an air space study of the Caribbean
and Miami air traffic control regions for the purpose of determining
methods of improving air safety and report to Congress the results
of such study.
(b) OPERATIONS OF AIRPORT TOWERS FOR ST. THOMAS AND ST.

CROIX.—The Administrator may not enter into contracts with private persons for operation of the airport control towers for St.
Thomas and St. Croix, Virgin Islands, before the 30th day following
the date on which a report is submitted to Congress under subsection (a).
(c) REPLACEMENT OP RADAR FACIUTIES FOR ST. THOMAS.—The

Administrator shall take such action as may be necessary to ensure
that the radar facilities for the airport on St. Thomas, Virgin
Islands, which were destroyed by Hurricane Hugo are replaced and
operational by the 120th day following the date of the enactment of
this Act.
SEC. 9117. ENGINE CONDITION MONITORING SYSTEMS.

(a) STUDY.—The Administrator of the Federsd Aviation Administration shall conduct a study of the potential use of engine condition
monitoring systems on aircraft. In conducting such study, the
Administrator shall evaluate—
(1) the availability of technology for such systems;
(2) the capabilities of such systems in terms of enhancing
safety and reducing maintenance costs associated with civil and
military aircraft;

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-365

(3) the commercial viability of developing computer software
to enable maintenance workers to efficiently use data gathered
by such systems;
(4) the costs and benefits of using such systems £is compared to
engine fault detection methods which rely on the use of data
relating to historical performance and statistical failure;
(5) the types of aircraft engine failures which may be prevented by using such systems; and
(6) the operational reliability of such systems.
(b) REPORT TO CONGRESS.—Not later than 12 months after the date
of the enactment of this Act, the Administrator shall transmit to
Congress a report containing the results of the study conducted
pursuant to this section together with such legislative and administrative recommendations as the Administrator considers
appropriate.
SEC. 9118. PROCUREMENT AUTHORITY.

(a) IN GENERAL.—Section 803 of the Federal Aviation Act of 1958
(49 U.S.C. App. 1344) is amended to read as follows:
"SEC. 303. PROCUREMENT AUTHORITY.

"(a) ACQUISITION AND DISPOSAL OF PROPERTY.—Subject to subsection (b), the Administrator, on behalf of the United States, is authorized, where appropriate—
"(1) within the limits of available appropriations made by the
Congress therefor, to acquire by purchase, condemnation, lesise
for a term not to exceed 20 years, or otherwise, personal property or services and real property or interests therein, including, in the case of air navigation facilities (including airports)
owned by the United States and operated under the direction of
the Administrator, easements through or other interests in
airspace immediately adjacent thereto and needed in connection
therewith;
"(2) for adequate compensation, by sale, lease, or otherwise, to
dispose of any real or personal property or interest therein;
except that, other than for airport and airway property and
technical equipment used for the special purposes of the Federal
Aviation Administration, such disposition shall be made in
accordance with the Federal Property and Administrative Services Act of 1949; and
"(3) to construct, improve, or renovate laboratories and other
test facilities and to purchase or otherwise acquire real property
required therefor.
"(b) SPECIAL RULES FOR CERTAIN ACQUISITIONS.—
"(1) ACQUISITIONS BY CONDEMNATION.—Any

acquisition by
condemnation under subsection (a) may be made in accordance
with the provision of the Act of August 1, 1888 (40 U.S.C. 257; 25
Stat. 357), the Act of February 26, 1931 (40 U.S.C. 258a-258e-l;
46 Stat. 1421), or any other applicable Act; except that, in the
case of condemnations of easements through or other interests
in airspace, in fixing condemnation awards, consideration may
be given to the reasonable probable future use of the underlying
land.
"(2) ACQUISITIONS OF PUBLIC BUILDINGS.—The Administrator

may, under subsection (a) construct or acquire by purchase,
condemnation, or lease a public building, or interest in a public
building (as defined in section 13 of the Public Buildings Act of

104 STAT. 1388-366

PUBLIC LAW 101-508—NOV. 5, 1990

1959 (40 U.S.C. 612)) only under a delegation of authority from
the Administrator of General Services.
"(c) PROCUREMENT PROCEDURES.—In procuring personal property

or services and real property and interests therein under subsection
(a), the Administrator may use procedures other than competitive
procedures in circumstances which are set forth in section 303(c) of
the Federal Property and Administrative Services Act of 1949 (41
U.S.C. 253(c)).
"(d) SOLE SOURCE APPROVAL BY ADMINISTRATOR.—For procure-

ments by the Federal Aviation Administration, the Administrator
shall be the senior procurement executive referred to in paragraph
(3) of section 16 of Office of Federal Procurement Policy Act (41
U.S.C. 414) for the purposes of approving the justification for the use
of noncompetitive procedures required under section 303(f)(l)(B)(iii)
of the Federal Property and Administrative Services Act of 1949 (41
U.S.C. 253(f)(l)(B)(iii)).
"(e) MuLTiYEAR SERVICE CONTRACTS.—

"(1) I N GENERAL.—Notwithstanding section 1341(a)(1)(B) of
title 31, United States Code, the Administrator may enter into
contracts for periods of not more than 5 years for the following
types of services (and items of supply related to such services)
for which funds would otherwise be available for obligation only
within the fiscal year for which appropriated—
"(A) operation, maintenance, and support of facilities and
installations;
"(B) operation, maintenance, or modification of aircraft,
vehicles, and other highly complex equipment;
"(C) specialized training necessitating high quality
instructor skills (for example, pilot and aircrew members;
foreign language training); and
"(D) base services (for example, ground maintenance, inplane refueling; bus transportation; refuse collection and
disposal).
"(2) FINDINGS.—The Administrator may enter into a contract
described in paragraph (1) only if the Administrator finds
that—
"(A) there will be a continuing requirement for the services consonant with current plans for the proposed contract
period;
"(B) the furnishing of such services will require a
substantial initial investment in plant or equipment, or the
incurrence of substantial contingent liabilities for the
assembly, training, or transportation of a specialized
workforce; and
"(C) the use of such a contract will promote the best
interests of the United States by encouraging effective
competition and promoting economies in operation.
"(3) GUIDANCE PRINCIPLES.—In entering into contracts described in paragraph (1), the Administrator shall be guided by
the following principles:
"(A) The portion of the cost of any plant or equipment
amortized as a cost of contract performance should not
exceed the ratio between the period of contract performance and the anticipated useful commercial life of such
plant or equipment. Useful commercial life, for this purpose, means the commercial utility of the facilities rather
than the physical life thereof, the due consideration given

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-367

to such factors as location of facilities, specialized nature
thereof, and obsolescence.
"(B) Consideration shall be given to the desirability of
obtaining an option to renew the contract for a resisonable
period not to exceed 8 years, at prices not to include charges
for plant, equipment, and other nonrecurring costs, already
amortized.
"(C) Consideration shall be given to the desirability of
reserving in the Federal Aviation Administration the right,
upon pa5mient of the unamortized portion of the cost of the
plant or equipment, to take title thereto under appropriate
circumstances.
"(4) TERMINATION.—In the event funds are not made available
for the continuation of a contract described in paragraph (1)
into a subsequent fiscal year, the contract shall be canceled or
terminated, and the costs of cancellation or termination may be
paid from—
"(A) appropriations originally available for the performance of the contract concerned;
"(B) appropriations currently available for procurement
of the type of services concerned, and not otherwise obligated; or
"(C) funds appropriated for those payments.
*(f) MuLTiYEAR PROPERTY ACQUISITION CONTRACTS.—

"(1) I N GENERAL.—Notwithstanding section 1341(a)(lXB) of
title 31, United States Code, to the extent that funds are
otherwise available for obligation, the Administrator may make
multiyear contracts (other than contracts described in paragraph (6)) for the purchase of property, whenever the Administrator finds—
"(A) that the use of such a contract will promote the
safety or efficiency of the National Airspace System and
will result in reduced total costs under the contract;
"(B) that the minimum need for the property to be purchased is expected to remain substantially unchanged
during the contemplated contract period in terms of production rate, procurement rate, and total quantities;
"(C) that there is a reasonable expectation that throughout the contemplated contract period the Administrator
will request funding for the contract at the level required to
avoid contract cancellation;
"(D) that there is a stable design for the property to be
acquired and that the technical risks Eissociated with such
property are not excessive; and
"(E) that the estimates of both the cost of the contract
and the anticipated cost avoidance through the use of a
multiyear contract are realistic.
"(2) REGULATIONS.—
"(A) GENERAL RULE.—The Administrator shall issue regu-

lations for acquisition of property under this subsection to
promote the use of multiyear contracting as authorized by
paragraph (1) in a manner that will allow the most efficient
use of multiyear contracting.
"(B) CANCELLATION PROVISIONS.—The regulations issued
under this paragraph may provide for cancellation provisions in multiyear contracts described in paragraph (1) to
the extent that such provisions are necessary and in the

104 STAT. 1388-368

PUBLIC LAW 101-508—NOV. 5, 1990
best interests of the United States. Such cancellation provisions may include consideration of both recurring and
nonrecurring costs of the contractor associated with the
production of the items to be delivered under the contract.
"(C) BROADENING INDUSTRIAL BASE.—In order to broaden
the aviation industrial base, the regulations issued under
this paragraph shall provide that, to the extent
practicable—
"(i) multiyear contracting under paragraph (1) shall
be used in such a manner as to seek, retain, and
promote the use under such contracts of companies
that are subcontractors, vendors, or suppliers; and
"(ii) upon accrual of any payment or other benefit
under such a multiyear contract to any subcontract,
vendor, or supplier company participating in such contractor, such payment or benefit shall be delivered to
such company in the most expeditious manner
practicable.
"(D) PROTECTION OF FEDERAL INTERESTS.—The regulations
issued under this paragraph shall also provide that, to the
extent practicable, the administration of this subsection,
and of the regulations issued under this subsection, shall
not be carried out in a manner to preclude or curtail the
existing ability of the Federal Aviation Administration to—
"(i) provide for competition in the production of items
to be delivered under such a contract; or
"(ii) provide for termination of a prime contract the
performance of which is deficient with respect to cost,
quality, or schedule.
"(3) SPECIAL RULE FOR CONTRACTS WITH HIGH CANCELLATION

CEILING.—Before any contract described in paragraph (1) that
contains a clause setting forth a cancellation ceiling in excess of
$100,000,000 may be awarded, the Administrator shall give
written notification of the proposed contract and of the proposed cancellation ceiling for that contract to the Committee on
Commerce, Science, and Transportation of the Senate and the
Committee on Public Works and Transportation of the House of
Representatives, and such contract may not then be awarded
until the end of a period of 30 days beginning on the date of
such notification.
"(4) ADVANCE PROCUREMENT.—Contracts made under this
subsection may be used for the advance procurement of components, parts, and materials necessary to the manufacture of
equipment to be used in the National Airspace System, and
contracts may be made under this subsection for such advance
procurement, if feasible and practicable, in order to achieve
economic-lot purchases and more efficient production rates.
"(5) TERMINATION.—In the event funds are not made available
for the continuation of a contract made under this subsection
into a subsequent fiscal year, the contract shall be canceled or
terminated, and the costs of cancellation or termination may be
paid from—
"(A) appropriations originally available for the performance of the contract concerned;
"(B) appropriations currently available for procurement
of the type of property concerned, and not otherwise obligated; or

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-369

"(C) funds appropriated for those payments.
"(6) LIMITATION ON APPUCABILITY.—This subsection does not
apply to contracts for the construction, alteration, or major
repair or improvements to real property or contracts for the
purchase of property to which section 111 of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 759)
applies.
"(7) MuLTiYEAR CONTRACT DEFINED.—For the purposes of this
subsection, a multiyear contract is a contract for the purchase
of property or services for more than 1, but not more than 5,
fiscal years. Such a contract may provide that performance
under the contract during the second and subsequent years of
the contract is contingent upon the appropriation of funds and
(if it does so provide) may provide for a cancellation payment to
be made to the contractor if such appropriations are not made.
"(8) PRICE OPTIONS.—The Administrator may incorporate into
a proposed multiyear contract negotiated priced options for
varying the quantities of end items to be procured over the
period of the contract.",
(b) CONFORMING AMENDMENT.—The portion of the table of contents contained in the first section of such Act relating to section 303
is amended to read as follows:
"Sec. 303. Procurement authority.
"(a) Acquisition and disposed of property.
"(b) Special rules for acquisitions.
"(c) Procurement procedures.
"(d) Sole source approval by Administrator.
"(e) Multiyear service contracts.
"(f) Multiyear property acquisition contracts.".
SEC. 9119. EXPANDED EAST COAST PLAN.

(a) ENVIRONMENTAL IMPACT STATEMENT.—Not later than 180 days
after the date of the enactment of this Act, the Administrator of the
Federal Aviation Administration shall issue an environmental
impact statement pursuant to the National Environmental Policy
Act of 1969 on the effects of changes in aircraft flight patterns over
the State of New Jersey caused by implementation of the Expanded
East Coast Plan.
(b) AIR SAFETY INVESTIGATION.—Not later than 180 days after the
date of the enactment of this Act, the Administrator shall conduct
an investigation to determine the effects on air safety of changes in
aircraft flight patterns over the State of New Jersey caused by
implementation of the Expanded East Coast Plan.
(c) REPORT TO CONGRESS.—Not later than 180 days after the date of
the enactment of this Act, the Administrator shall transmit to
Congress a report containing the results of the environmental
impact statement and investigation conducted pursuant to this
section. Such report shall also contain such recommendations for
modification of the Expanded East Coast Plan as the Administrator
considers appropriate or an explanation of why modification of such
plan is not appropriate.
(d) IMPLEMENTATION OF MODIFICATIONS.—Not later than 1 year
after the date of the enactment of this Act, the Administrator shall
implement modifications to the Expanded East Coast Plan recommended under subsection (c).

104 STAT. 1388-370

PUBLIC LAW 101-508—NOV. 5, 1990

SEC. 9120. TRANSFER OF FORMAT OF GEODETIC NAVIGATION INFORMATION.

Not later than 2 years after the date of the enactment of this Act,
the Administrator of the Federal Aviation Administration and the
Administrator of the National Oceanic and Atmospheric Administration shall complete the transfer of geodetic coordinate navigation
information from NAD-27 format to NAD-83 format.
SEC. 9121. SENSITIVE SECURITY INFORMATION.

Section 316(dX2) of the Federal Aviation Act of 1958 (49 U.S.C.
App. 1357(dX2)) is amended—
(1) by inserting "security or" before "research and development activities"; and
(2) by striking "subsection" and inserting "title".
SEC. 9122. REPORTS.

Section 107 of the Federal Aviation Act of 1958 (49 U.S.C. App.
1307) is amended in subsections (b) and (c) by striking "each April 1
thereafter" each place it appears and inserting "through April 1,
1990".
SEC. 9123. ATLANTIC CITY AIRPORT.

Section 312 of the Airport and Airway-Safety and Capacity Expansion Act of 1987 (101 Stat. 1528) is repealed.
SEC. 9124. NATURAL DISASTER REGULATION.

Title VI of the Federal Aviation Act of 1958 (49 U.S.C. App. 14211432) is amended by inserting after section 612 the following new
section:
49 u s e app.

"SEC. 613. SAFETY REGULATION.

"(a) NATIONAL DISASTER AREAS.—Before the 180th day following
the date of the enactment of this section, the Administrator, for
safety and humanitarian reasons, shall issue such regulations as
may be necessary to prohibit or otherwise restrict aircraft
overflights of any inhabited area which has been declared a national
disaster area in the State of Hawaii.
"(b) EXCEPTIONS.—Regulations issued pursuant to subsection (a)
shall not be applicable in the case of aircraft overflights involving
an emergency or a ligitimate '^ scientific purpose.
"(c) STATUS OF STUDIES.—Not later than the 90th day following the
date of the enactment of this section, the Administrator shall report
to Congress on the status of the studies and reports required by the
Act entitled 'An Act to require the Secretary of the Interior to
conduct a study to determine the appropriate minimum altitude for
aircraft flying over national airport system units', approved
August 18,1987 (101 Stat. 674-678; 16 U.S.C. l a - 1 note).".
SEC. 9125. FLIGHT TAKEOFF OR LANDING REQUIREMENT FOR STATE
TAXATION.

Section 1113 of the Federal Aviation Act of 1958 (49 U.S.C. App.
1513) is amended by adding at the end the following new subsection:
"(f) FuGHT TAKEOFF OR LANDING REQUIREMENT FOR STATE TAXATION.—No State (as such term is defined under subsection (dX2XE))
or political subdivision thereof shall levy or collect any tax on or
with respect to any flight of a commercial aircraft or any activity or
service on board such aircraft unless such aircraft takes off or lands
in such State or political subdivision as part of such flight.".
^' So in original. Probably should be "legitimate".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-371

SEC. 9126. ALLOCATION OF EXISTING CAPACITY AT CERTAIN AIRPORTS.

(a) RULEMAKING.— The Secretary of Transportation shall, by
July 1, 1991, initiate a rulemgiking proceeding to consider more
efficient methods of allocating existing capacity at high density
traffic airports in order to provide improved opportunities for operations by new entrant air carriers.
(b) DEFINITION.—In this section, the term "new entrant air carrier", as used with respect to a high density traffic airport, means an
air carrier having less than 12 operating rights at such airport.
SEC. 9127. CERTIFICATE TRANSFERS.

Section 401(h) of the Federal Aviation Act of 1958 (49 App. U.S.C.
1371(h)) is amended—
(1) by inserting "(1)" after "(h)"; and
(2) by adding at the end the following new paragraphs:
"(2) CERTIFICATION.—The Secretary of Transportation shall,
upon any transfer of a certificate, certify to the C!ommittee on
Commerce, Science, and Transportation of the Senate and the
C!ommittee on Public Works and Transportation of the House of
Representatives that the transfer is consistent with the public
interest.
"(3) ACCOMPANYING REPORT.—A certification under this
subsection shall be accompanied by a report analyzing the
effects of the transfer on—
"(A) the viability of each of the carriers involved in the
transfer;
"(B) competition in the domestic airline industry,''* and
"(C) the trade position of the United States in the international air transportation market.".
SEC. 9128. SEVERABILITY.

If any provision of this subtitle (including an amendment made by
this subtitle), or the application thereof to any person or circumstance, is held invalid, the remainder of this subtitle and the
application of such provision to other persons of circumstances shall
not be affected thereby.
SEC. 9129. BUY AMERICAN.

(a) GENERAL RULE.—^Notwithstanding any other provision of law,
the Secretary of Transportation shall not obligate, after the date of
enactment of this Act, any funds authorized to be appropriated to
carry out this subtitle, section 106(k) of title 49, United States Code,
or the Airport and Airway Improvement Act of 1982 (other than
section 506(b)) for any project unless steel and manufactured products used in such project are produced in the United States.
(b) LIMITATIONS ON APPUCABIUTY.—The provisions of subsection
(a) of this section shall not apply where the Secretary finds—
(1) that their application would be inconsistent with the
public interest;
(2) that such materials and products are not produced in the
United States in sufficient and reasonably available quantities
and of a satisfactory quality;
(3) in the case of the procurement of facilities and equipment
under the Airport and Airway Improvement Act of 1982 that
(A) the cost of components and subcomponents which are produced in the United States is more than 60 percent of the cost of
all components of the facility or equipment described in this
^* So in original. Probably shoiUd be "industry,"-

49 USC app.

"° '

49 USC app.

104 STAT. 1388-372

PUBLIC LAW 101-508—NOV. 5, 1990

paragraph, and (B) final assembly of the facility or equipment
described in this paragraph has taken place in the United
States; or
(4) that inclusion of domestic material will increase the cost of
the overall project contract by more than 25 percent.
(c) CALCULATION OF COMPONENTS COSTS.—For purposes of this
section, in calculating components' costs, labor costs involved in
final assembly shall not be included in the calculation.
49 u s e app.
2226b.

SEC. 9130. PROHIBITION AGAINST FRAUDULENT USE OF "MADE IN
AMERICA" LABELS.

If the Secretary of Transportation determines that any person
intentionally affixes a label bearing a "Made in America" inscription to any product sold in or shipped to the United States that is
not made in America, the Secretary shall,declare that person ineligible to receive a Federal contract or grant in conjunction with the
issuance of any contract made under this subtitle for a period of not
less than 3 years and not more than 5 years. The Secretary may
bring action against such person to enforce this subsection in any
United States district court.
49 u s e app.
2226c.

Federsil Aviation
Administration
Rraearch,
Engineering,
and
Development
Authorization
Act of 1990.
49 u s e app.
2201 note.

SEC. 9131. RESTRICTIONS ON CONTRACT AWARDS.

No person or enterprise domiciled or operating under the laws of
a foreign government may enter into a contract or subcontract made
pursuant to this subtitle if that government unfairly maintains, in
government procurement, a significant and persistent pattern or
practice of discrimination against United States products or services
which results in identifiable harm to United States businesses, as
identified by the President pursuant to section 305(g)(1)(A) of the
Trade Agreements Act of 1979.

Subtitle C—Federal Aviation Administration
Research, Engineering, and Development
SEC. 9201. SHORT TITLE.

This subtitle may be cited as the "Federal Aviation Administration Research, Engineering, and Development Authorization Act of
1990".
SEC. 9202. AVIATION RESEARCH AUTHORIZATION OF APPROPRIATIONS.

Paragraph (2) of section 506(b) of the Airport and Airway Improvement Act of 1982 (49 U.S.C. App. 2205(b)(2)) is amended by striking
subparagraph (A) and all that follows through the period at the end
of such paragraph and inserting the following:
"(A) for fiscal year 1991—
"(i) $135,800,000 solely for air traffic control projects
and activities;
"(ii) $19,100,000 solely for air traffic control advanced
computer projects and activities;
"(iii) $3,400,000 solely for navigation projects and
activities;
"(iv) $9,700,000 solely for aviation weather projects
and activities;
"(v) $16,500,000 solely for aviation medicine projects
and activities;

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-373

"(vi) $70,100,000 solely for aircraft safety projects and
activities; and
"(vii) $5,400,000 solely for environmental projects
and activities; and
"(B) for fiscal year 1992—
"(i) $135,800,000 solely for air traffic control projects
and activities;
"(ii) $19,100,000 solely for air traffic control advanced
computer projects and activities;
"(iii) $3,400,000 solely for navigation projects and
activities;
"(iv) $9,700,000 solely for aviation weather projects
and activities;
"(v) $16,500,000 solely for aviation medicine projects
and activities;
"(vi) $70,100,000 solely for aircraft safety projects and
activities; and
"(vii) $5,400,000 solely for environmental projects
and activities.
Not less than 3 percent of the funds made available under this
paragraph for a fiscal year shall be available to the Administrator for making grants under section 312(g) of the Federal
Aviation Act of 1958.".
SEC. 9203. ENHANCED AIRPORT CAPACITY.

Section 506(b)(4) of the Airport and Airway Improvement Act of
1982 (49 App. U.S.C. 2205(bX4)) is amended—
(1) in subparagraph (A) by striking "and 1990" and inserting
"1990,1991, and 1992"; and
(2) in subparagraph (B) by striking "and 1990" and inserting
"1990,1991, and 1992".
SEC. 9204. WEATHER SERVICES.

Section 506(d) of the Airport and Airway Improvement Act of 1982
(49 U.S.C. App. 2205(d)) is amended by striking the second sentence
and inserting the following: "Expenditures for the purposes of carrying out this subsection shall be limited to $34,521,000 for fiscal year
1991 and $35,389,000 for fiscal year 1992.".
SEC. 9205. AVIATION RESEARCH GRANT PROGRAM.

(a) I N GENERAL.—Section 312 of the Federal Aviation Act of 1958
(49 U.S.C. App. 1353) is amended by adding the following new
subsection:
"(g) RESEARCH GRANT PROGRAM.—
"(1) GENERAL AUTHORITY.—The

Administrator may make
grants to colleges, universities, and nonprofit research organizations to conduct aviation research into areas deemed by the
Administrator to be required for the long-term growth of civil
aviation.
"(2) APPLICATIONS.—A university, college, or nonprofit
organization interested in receiving a grant under this subsection may submit to the Administrator an application for such
grant. Such application shall be in such form and contain such
information as the Administrator may require.
"(3) SELECTION.—The Administrator shall establish a solicitation, review, and evaluation process that ensures (A) the funding under this subsection of proposals having adequate merit

104 STAT. 1388-374

PUBLIC LAW 101-508—NOV. 5, 1990

and relevancy to the mission of the Federal Aviation Administration, (B) an equitable geographical distribution of grant
funds under this subsection, and (C) the inclusion of historically
black colleges and universities and other minority institutions
for funding consideration under this subsection.
"(4) RECORDS.—Each person awarded a grant under this
subsection shall maintain such records as the Administrator
may require as being necessary to facilitate an effective audit
and evaluation of the use of grant funds.
"(5) REPORTS.—The Administrator shall make an annual
report to the Committee on Science, Space, and Technology of
the House of Representatives and the Committee on Commerce,
Science, and Transportation of the Senate on the research grant
program conducted under this subsection.".
(b) CONFORMING AMENDMENT.—That portion of the table of contents contained in the first section of such Act which appears under
the heading:
"Sec. 312. Development planning."

is amended by adding at the end the following:
"(g) Research grant program.".
SEC. 9206. STUDY BY THE GENERAL ACCOUNTING OFFICE OF MULTIYEAR
CONTRACTING AUTHORITY.

The Comptroller General of the United States shall conduct a
study of the advisability of granting to the Administrator of the
Federal Aviation Administration specific statutory authority—
(1) to lease real property or interests therein for terms not to
exceed 20 years, including, in the case of air navigation facilities
and airports (as such terms are defined in section 101 (8) and (9)
of the Federal Aviation Act of 1958) owned by the United States
and operated under the direction of the Administrator, easements through or other interests in airspace immediately adjacent thereto and in connection therewith;
(2) to procure personal property or services and real property
and interests therein with procedures other than competitive
procedures under section 303(c) of the Federal Property and
Administrative Services Act of 1949 (41 U.S.C. 253(c));
(3) to serve as the senior procurement executive under section
16 of the Office of Federal Procurement Policy Act (41 U.S.C.
414) for the purpose of approving the justification for the
use of noncompetitive procedures required under section
303(f)(l)(B)(iii) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253(f)(l)(B)(iii));
(4) to let multiyear contracts for services, including the operation, maintenance, and support of facilities and installations;
the operation, maintenance, and modification of aircraft, vehicles, and other highly complex equipment; specialized training necessitating high quality instructor skills; and base
services; and
(5) to let multiyear contracts for the purchase of property.
The study also shall examine the implementation of section 2306(g)
and (h) of title 10, United States Code, by the Department of
Defense, and shall £issess the usefulness of granting similar authority to the Federal Aviation Administration. The Comptroller General shall submit a report on the results of the study, along with any
comments of the Administrator of the Federal Aviation Administra-

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-375

tion, to the Committee on Science, Space, and Technology of the
House of Representatives and the Committee on Commerce, Science,
and Transportation of the Senate within 6 months after the date of
enactment of this Act.
SEC. 9207. BUY-AMERICAN REQUIREMENT.
(a) DETERMINATION BY ADMINISTRATOR.—If the

49 USC app.
Administrator,

with the concurrence of the Secretary of Commerce and the United
States Trade Representative, determines that the public interest so
requires, the Administrator is authorized to award to a domestic
firm a contract made pursuant to the issuance of any grant made
under this subtitle that, under the use of competitive procedures,
would be awarded to a foreign firm, if—
(1) the final product of the domestic firm will be completely
assembled in the United States;
(2) when completely assembled, not less than 51 percent of the
final product of the domestic firm will be domestically produced;
and
(3) the difference between the bids submitted by the foreign
and domestic firms is not more than 6 percent.
In determining under this subsection whether the public interest so
requires, the Administrator shall take into account United States
international obligations and trade relations.
(b) LIMITED APPLICATION.—This section shall not apply to the
extent to which—
(1) such applicability would not be in the public interest;
(2) compelling national security considerations require otherwise; or
(3) the United States Trade Representative determines that
such an award would be in violation of the General Agreement
on Tariffs and Trade or an international agreement to which
the United States is a party.
(c) LIMITATION.—This section shall apply only to contracts made
related to the issuance of any grant made under this subtitle for
which—
(1) amounts are authorized by this subtitle (including the
amendments made by this subtitle) to be made available; and
(2) solicitations for bids are issued after the date of the
enactment of this Act.
(d) REPORT TO CONGRESS.—The Administrator shall report to the
Congress on contracts covered under this section and entered into
with foreign entities in fiscal years 1991 and 1992 and shall report to
the Congress on the number of contracts that meet the requirements
of subsection (a) but which are determined by the United States
Trade Representative to be in violation of the General Agreement
on Tariffs and Trade or an international agreement to which the
United States is a party. The Administrator shall also report to the
Congress on the number of contracts covered under this subtitle
(including the amendments made by this subtitle) and awarded
based upon the parameters of this section.
(e) DEFINITIONS.—For purposes of this section—
(1) the term "Administrator" means the Administrator of the
Federal Aviation Administration;
(2) the term "domestic firm" means a business entity that is
incorporated in the United States and that conducts business
operations in the United States; and

104 STAT. 1388-376

PUBLIC LAW 101-508—NOV. 5, 1990

(3) the term "foreign firm" means a business entity not
described in paragraph (2).
SEC. 9208. CATASTROPHIC FAILURE PREVENTION RESEARCH PROGRAM.
(a) GENERAL AUTHORITY.—Section 312(b) of the Federal Aviation

Act of 1958 (49 U.S.C. App. 1353(b)) is amended by inserting after
"inflight aircraft fires," the following; ''^ "to develop technologies
and methods to assess the risk of and prevent defects, failures, and
malfunctions of products, parts, processes, and articles manufactured for use in aircraft, aircraft engines, propellers, and appliances
which could result in a catastrophic failure of an aircraft,".
(b) GRANT PROGRAM.—Section 312 of such Act is amended by
adding at the end the following new subsection:
"(h) CATASTROPHIC FAILURE PREVENTION RESEARCH GRANT
PROGRAM.—
"(1) GENERAL AUTHORITY.—The Administrator may make

grants to colleges, universities, and nonprofit research organizations (A) to conduct aviation research relating to development of
technologies and methods to assess the risk and prevent defects,
failures, and malfunctions of products, parts, processes, and
articles manufactured for use in aircraft, aircraft engines,
propellers, and appliances which could result in a catastrophic
failure of an aircraft, and (B) to establish centers of excellence
for continuing such research.
"(2) SELECTION AND EVALUATION PROCESSES.—The Administrator shall establish a solicitation, application, review, and
evaluation process that ensures (A) the funding under this
subsection of proposals having adequate merit and relevancy to
the research described in paragraph (1).".
(c) CONFORMING AMENDMENT.—^That portion of the table of contents contained in the first section of such Act which appears under
the heading:
"Sec. 312. Development planning."

is amended by adding at the end the following:
"(h) Catastrophic failure prevention research grant program.".
SEC. 9209. AVIATION RESEARCH AND CENTERS OF EXCELLENCE.

(a) I N GENERAL.—Section 312 of the Federal Aviation Act of 1958
(49 App. U.S.C. 1353) is amended by adding at the end the following
new subsection:
"(i) AVIATION RESEARCH AND CENTERS OF EXCELLENCE.—
"(1) GENERAL AUTHORITY.—The Administrator may make

grants to one or more colleges or universities to establish and
operate several regional centers of air transportation excellence, whose locations shall be geographically equitable.
"(2) RESPONSIBILITIES.—The responsibilities of each regional
center of air transportation excellence established under this
subsection shall include, but not be limited to, the conduct of
research concerning airspace and airport planning and design,
airport capacity enhancement techniques, human performance
in the air transportation environment, aviation safety and security, the supply of trained air transportation personnel including pilots and mechanics, and other aviation issues pertinent to
developing and maintaining a safe and efficient air transportation system, and the interpretation, publication, and dissemination of the results of such research. In conducting such
^' So in original. Probably should be "following:".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-377

research, each center may contract with nonprofit research
organizations and other appropriate persons.
"(3) APPUCATION.—Any college or university interested in
receiving a grant under this subsection shall submit to the
Administrator an application in such form and containing such
information as the Administrator may require by regulation.
"(4) SELECTION CRITERIA.—The Administrator shall select
recipients of grants under this subsection on the basis of the
following criteria:
"(A) The extent to which the needs of the State in which
the applicant is located are representative of the needs of
the region for improved air transportation services and
facilities.
"(B) The demonstrated research and extension resources
available to the applicant for carrying out this subsection.
"(C) The capability of the applicant to provide leadership
in making national and regional contributions to the solution of both long-range and immediate air transportation
problems.
"(D) The extent to which the applicant has an established
air transportation program.
"(E) The demonstrated ability of the applicant to disseminate results of air transportation research and educational
programs through a statewide or regionwide continuing
education program.
"(F) The projects which the applicant proposes to carry
out under the grant.
"(5) MAINTENANCE OF EFFORT.—No grant may be made under
this subsection in any fiscal year unless the recipient of such
grant enters into such agreements with the Administrator as
the Administrator may require to ensure that such recipient
will maintain its aggregate expenditures from all other sources
for establishing and operating a regional center of air transportation excellence and related research activities at or above the
average level of such expenditures in its 2 fiscal years preceding
the date of enactment of this subsection.
"(6) FEDERAL SHARE.—The Federal share of a grant under this
subsection shall be 50 percent of the costs of establishing and
operating the regional center of air transportation excellence
and related research activities carried out by the grant recipient.
"(7) ALLOCATION OF FUNDS.—Funds made available to carry
out this subsection shall be allocated by the Administrator in a
geographically equitable manner.",
(b) RESEARCH ADVISORY COMMITTEE.—

(1) Section 312(f)(2) of the Federal Aviation Act of 1958 (49
App. U.S.C. 1353(f)(2)) is amended by adding at the end the
following new sentence: "In addition, the committee shall
review the research and training to be carried out by the
regional centers of air transportation excellence established
under subsection (h).".
(2) Section 312(f)(3) of the Federal Aviation Act of 1958 (49
App. U.S.C. 1353(f)(3)) is amended—
(A) by striking "20" and inserting "30"; and
(B) by striking the last sentence and inserting the following: "The Administrator in appointing the members of the
committee shall ensure that the research centers of air

104 STAT. 1388-378

PUBLIC LAW 101-508—NOV. 5, 1990

transportation excellence, universities, corporations,
associations, consumers, and other Government agencies
are represented.".
(c) RESEARCH AUTHORITY OF ADMINISTRATOR.—Section 312(c) of the
Federal Aviation Act of 1958 (49 App. U.S.C. 1353(c)) is amended by
inserting after the third sentence the following: "The Administrator
shall undertake or supervise research programs concerning airspace
and airport planning and design, airport capacity enhancement
techniques, human performance in the air transportation environment, aviation safety and security, the supply of trained air
transportation personnel including pilots and mechanics, and other
aviation issues pertinent to developing and maintaining a safe and
efficient air transportation system.".
(d) CONFORMING AMENDMENT.—That portion of the table of contents contained in the first section of thei Federal Aviation Act of
1958 relating to section 312 of that Act is amended by adding at the
end the following:
"(i) Aviation research and centers of excellence.".

^dcJpadty
Act of 1990.
49 u s e app.

Subtitle D—Aviation Noise Policy
SEC. 9301. SHORT TITLE.

This subtitle may be cited as the "Airport Noise and Capacity Act
of 1990".
49 u s e app.

SEC. 9302. FINDINGS.

The Congress finds that—
(1) aviation noise management is crucial to the continued
increase in airport capacity;
(2) community noise concerns have led to uncoordinated and
inconsistent restrictions on aviation which could impede the
national air transportation system;
(3) a noise policy must be implemented at the national level;
(4) local interest in aviation noise management shall be
considered in determining the national interest;
(5) community concerns can be alleviated through the use of
new technology aircraft, combined with the use of revenues,
including those available from passenger facility charges, for
noise management;
(6) federally controlled revenues can help resolve noise problems and carry with them a responsibility to the national
airport system;
(7) revenues derived from a passenger facility charge may be
applied to noise management and increased airport capacity;
and
(8) a precondition to the establishment and collection of passenger facility charges is the issuance by the Secretary of
Transportation of a final rule establishing procedures for
reviewing airport noise and access restrictions on operations of
Stage 2 and Stage 3 aircraft.
49 u s e app.

SEC. 9303. NATIONAL AVIATION NOISE POLICY.

0 1 CO

(a) DEVELOPMENT.—Not later than July 1, 1991, the Secretary of
Transportation (hereinafter in this subtitle referred to as the "Secretary") shall issue regulations establishing a national aviation
noise policy which takes into account the findings, determinations.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-379

and provisions of this subtitle, including the phaseout and
nonaddition of Stage 2 aircraft as provided in this subtitle and
implementation dates and reporting requirements consistent with
this subtitle and existing law.
(b) BASIS.—The national aviation noise policy shall be based upon
a detailed economic analysis of the impact of the phaseout date for
Stage 2 aircraft on competition in the airline industry, including the
ability of air carriers to achieve capacity growth consistent with the
projected rate of growth for the airline industry, the impact of
competition within the airline and aircargo industries, the impact
on nonhub and small community air service, and the impact on new
entry into the airline industry.
(c) RECOMMENDATIONS.—Not later than July 1,1991, the Secretary
shall transmit to Congress recommendations on—
(1) the need for changes in the standards and procedures
which govern the rights of State and local governments (including airport authorities) to restrict aircraft operations for the
purpose of limiting aircraft noise;
(2) the need for changes in the standards and procedures
which govern law suits by persons adversely affected by aircraft
noise;
(3) the need for changes in standards and procedures for
Federal regulation of airspace (including the pattern of operations for the air traffic control system) in order to take better
account of environmental effects;
(4) the need for changes in the Federal program providing
assistance for noise abatement planning and programs, including the need for greater incentives or mandatory requirements
for local restrictions on the use of land impacted by aircraft
noise;
(5) whether any changes in policy recommended in paragraphs (1) through (4) should be accomplished through regulatory, administrative, or legislative action; and
(6) specific legislative proposals necessary for implementing
the national aviation noise policy.
SEC. 9304. NOISE AND ACCESS RESTRICTION REVIEWS.

49 USC 2153.

(a) IN GENERAL.—
(1) ESTABLISHMENT OF PROGRAM.—The

national aviation noise
policy to be established under this subtitle shall require the
establishment, by regulation, in accordance with the provisions
of this section of a national program for reviewing airport noise
and access restrictions on operations of Stage 2 and Stage 3
aircraft. Such program shall provide for adequate public notice
and comment opportunities on such restrictions.
(2) LIMITATIONS ON APPLICABILITY.—
(A) APPUCABILITY DATE FOR STAGE 2 AIRCRAFT.—With re-

spect to Stage 2 aircraft, the requirements set forth in
subsection (c) shall apply only to restrictions proposed after
October 1,1990.
(B) APPLICABILITY DATE FOR STAGE 3 AIRCRAFT.—With re-

spect to Stage 3 aircraft, the requirements set forth in
subsections (b) and (d) shall apply only to restrictions that
first become effective after October 1,1990.
(C) SPECIFIC EXEMPTIONS.—Subsections (b), (c), and

shall not apply to—

(d)

104 STAT. 1388-380

PUBLIC LAW 101-508—NOV. 5, 1990
(i) a local action to enforce a negotiated or executed
airport aircraft noise or access agreement between the
airport operator and the aircraft operator in effect on
the date of the enactment of this Act;
(ii) a local action to enforce a negotiated or executed
airport aircraft noise or access restriction the airport
operator and the aircraft operators agreed to before the
date of the enactment of this Act;
(iii) an intergovernmental agreement including airport aircraft noise or access restriction in effect on the
date of the enactment of this Act;
(iv) a subsequent amendment to an airport aircraft
noise or access agreement or restriction in effect on the
date of the enactment of this Act that does not reduce
or limit aircraft operations or affect aircraft safety;
(vXD a restriction which -was adopted by an airport
operator on or before October 1, 1990, and which was
stayed as of October 1, 1990, by a court order or as a
result of litigation, if such restriction or a part thereof
is subsequently allowed by a court to take effect; and
(II) in any case in which a restriction described in
subclause (I) is either partially or totally disallowed by
a court, any new restriction imposed by an airport
operator to replace such disallowed restriction if such
new restriction would not prohibit aircraft operations
in effect as of the date of the enactment of this Act; and
(vi) a local action which represents the adoption of
the final portion of a program of a staged airport
aircraft noise or access restriction where the initial
portion of such program was adopted during calendar
year 1988 and was in effect on the date of the enactment of this Act.
(D)

ADDITIONAL WORKING GROUP EXEMPTIONS.—Subsec-

tions (b) and (d) shall not apply where the Federal Aviation
Administration has prior to the date of the enactment of
this Act formed a working group (outside the process established by part 150 of title 14 of the Code of Federal Regulations) with a local airport operator to examine the noise
impact of air traffic control procedure changes. In any case
in which an agreement relating to noise reductions at such
airport is entered into between the airport proprietor and
an air carrier or air carrier constituting a majority of the
air carrier users of such airport, subsections (b) and (d) shall
apply only to local actions to enforce such agreement,
(b) LIMITATION ON STAGE 3 AIRCRAFT RESTRICTIONS.—No airport
noise or access restriction on the operation of a Stage 3 aircraft,
including but not limited to—
(1) a restriction as to noise levels generated on either a single
event or cumulative basis;
(2) a limit, direct or indirect, on the total number of Stage 3
aircraft operations;
(3) a noise budget or noise allocation program which would
include Stage 3 aircraft;
(4) a restriction imposing limits on hours of operations; and
(5) any other limit on Stage 3 aircraft;
shall be effective unless it has been agreed to by the airport proprietor and all aircraft operators or has been submitted to and ap-

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-381

proved by the Secretary pursuant to an airport or aircraft operator's
request for approvsil in accordance with the program established
pursuant to this section.
(c) LIMITATION ON STAGE 2 AIRCRAFT RESTRICTIONS.—No giirport

noise or access restriction shall include a restriction on operations of
Stage 2 aircraft, unless the airport operator publishes the proposed
noise or access restriction and prepares and makes available for
public comment at least 180 days before the effective date of the
restriction—
(1) an analysis of the anticipated or actual costs and benefits
of the existing or proposed noise or access restriction;
(2) a description of alternative restrictions; and
(8) a description of the alternative measures considered which
do not involve aircraft restrictions, and a comparison of the
costs and benefits of such alternative measures to the costs and
benefits of the proposed noise or access restriction.
(d) APPROVAL OF STAGE 3 AIRCRAFT RESTRICTIONS.—

(1) I N GENERAL.—Not later than the 180th day after the date
on which the Secretary receives an airport or aircraft operator's
request for approval of a noise or access restriction on the
operation of a Stage 3 aircraft, the Secretary shall approve or
disapprove such request.
(2) REQUIRED FINDINGS.—The Secretary shall not approve a
noise or access restriction applying to Stage 3 aircraft operations unless the Secretary finds the following conditions to be
supported by substantial evidence:
(A) The proposed restriction is reasonable, nonarbitrary,
and nondiscriminatory.
(B) The proposed restriction does not create an undue
burden on interstate or foreign commerce.
(C) The proposed restriction is not inconsistent with
maintaining the safe and efficient utilization of the navigable airspace.
(D) The proposed restriction does not conflict with any
existing Federal statute or regulation.
(E) There has been £in adequate opportunity for public
comment with respect to the restriction.
(F) The proposed restriction does not create an undue
burden on the national aviation system.
(e) INELIGIBIUTY FOR P F C ' S AND A I P FUNDS.—Sponsors of facilities
operating under airport aircraft noise or access restrictions on Stage
3 aircraft operations that first became effective after October 1,
1990, shall not be eligible to impose a passenger facility charge
under section 1113(e) of the Federal Aviation Act of 1958 and shall
not be eligible for grants authorized by section 505 of the Airport
and Airway Improvement Act of 1982 after the 90th day following
the date on which the Secretary issues a final rule under section
9304(a) of this Act, unless such restrictions have been agreed to by
the airport proprietor and aircraft operators or the Secretary has
approved the restrictions under this subtitle or the restrictions have
been rescinded.
(f) REEVALUATION.—The Secretary may reevaluate any noise
restrictions previously agreed to or approved under subsection (d)
upon the request of any aircraft operator able to demonstrate to the
satisfaction of the Secretary that there has been a change in the
noise environment of the affected airport and that a review and
reevaluation pursuant to the criteria established under subsection

104 STAT. 1388-382

PUBLIC LAW 101-508—NOV. 5, 1990

(d) of the previously approved or agreed to noise restriction is
therefore justified.
(g) PROCEDURES FOR REEVALUATION.—The Secretary shall establish by regulation procedures under which reevaluations under
subsection (f) are to be accomplished. A reevaluation under subsection (f) of a restriction shall not occur less than 2 years after a
determination under subsection (d) has been made with respect to
such restriction.
(h) EFFECT ON EXISTING LAW.—Except to the extent required by
the application of the provisions of this section, nothing in this
subtitle shall be deemed to eliminate, invalidate, or supersede—
(1) existing law with respect to airport noise or access restrictions by local authorities;
(2) any proposed airport noise or access regulation at a
general aviation airport where the airport proprietor has formally initiated a regulatory or legislative process on or before
October 1,1990; and
(3) the authority of the Secretary to seek and obtain such
legal remedies as the Secretary considers appropriate, including
injunctive relief.
49 u s e app.
2154.

SEC. 9305. DETERMINATION REGARDING NOISE RESTRICTIONS ON CERTAIN STAGE 2 AIRCRAFT.

The Secretary shall determine by a study the applicability of
subsections (a), (b), (c), and (d) of section 9304 to noise restrictions on
the operations of Stage 2 aircraft weighing less than 75,000 pounds.
In making such determination, the Secretary shall consider—
(1) noise levels produced by such aircraft relative to other
aircraft;
(2) the benefits to general aviation and the need for efficiency
in the national air transportation system;
(3) the differences in the nature of operations at airports and
the areas immediately surrounding such airports;
(4) international standards and accords with respect to aircraft noise; and
(5) such other factors which the Secretary deems necessary.
49 u s e app.

SEC. 9306. FEDERAL LIABILITY FOR NOISE DAMAGES.

In the event that a proposed airport aircraft noise or access
restriction is disapproved, the Federal Government shall assume
liability for noise damages only to the extent that a taking has
occurred as a direct result of such disapproval. Action for the
resolution of such a case shall be brought solely in the United States
Claims Court.
49 u s e app.

SEC. 9307. LIMITATION ON AIRPORT IMPROVEMENT PROGRAM REVENUE.

p i EC

Under no conditions shall any airport receive revenues under the
provisions of the Airport and Airway Improvement Act of 1982 or
impose or collect a passenger facility charge under section 1113(e) of
the Federal Aviation Act of 1958 unless the Secretary assures that
the airport is not imposing any noise or access restriction not in
compliance with this subtitle.
49 u s e app.
2157.

SEC. 9308. PROHIBITION ON OPERATION OF CERTAIN AIRCRAFT NOT
COMPLYING WITH STAGE 3 NOISE LEVELS.
(a) GENERAL RULE.—After December 31, 1999, no person may

operate to or from an airport in the United States any civil subsonic

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-383

turbojet aircraft with a maximum weight of more than 75,000
pounds unless such aircraft complies with the Stage 3 noise levels,
as determined by the Secretary.
(b) WAIVER.—

(1) APPUCATION.—If, by July 1,1999, at least 85 percent of the
aircraft used by an air carrier to provide air transportation
comply with the Stage 3 noise levels, such carrier may apply for
a waiver of the prohibition set forth in subsection (a) for the
remaining 15 or less percent of the aircraft used by the carrier
to provide air transportation. Such application must be filed
with the Secretary no later than January 1, 1999, and must
include a plan with firm orders for making all aircraft used by
the air carrier to provide air transportation to comply with such
noise levels not later than December 31, 2003.
(2) GRANTING OF WAIVER.—The Secretary may grant a waiver
under this subsection if the Secretary finds that granting such
waiver is in the public interest. In making such a finding, the
Secretary shall consider the effect of granting such waiver on
competition in air carrier industry and on small community adr
service.
(3) LIMITATION.—A waiver granted under this subsection may
not permit the operation of Stage 2 aircraft in the United States
after December 31, 2003.
(c) CoMPUANCE SCHEDULE.—The Secretary shall, by regulation,
establish a schedule for phased-in compliance with the prohibition
set forth in subsection (a). The period of such phase-in shall begin on
the date of the enactment of this Act and end before December 31,
1999. Such regulations shall establish interim compliance dates.
Such schedule for phased-in compliance shall be based upon a
detailed economic analysis of the impact of the phaseout date for
Stage 2 aircraft on competition in the airline industry, including the
ability of air carriers to achieve capacity growth consistent with the
projected rates of growth for the airline industry, the impact of
competition within the Eiirline and air cargo industries, the impact
on nonhub and small community air service, and the impact on new
entry into the airline industry, and on an analysis of the impact of
aircraft noise on persons residing near airports.
(d) EXEMPTION FOR NONCONTIGUOUS AIR SERVICE.—This section
and section 9309 shall not apply to aircraft which are used solely to
provide air trgmsportation outeide the 48 contiguous States. Any
civil subsonic turbojet aircraft with a maximum weight of more
than 75,000 pounds which is imported into a noncontiguous State or
a territory or possession of the United States on or after the date of
the enactment of this Act may not be used to provide air transportation in the 48 contiguous States unless such aircraft complies with
the Stage 3 noise levels.
(e) VIOLATIONS.—Violations of this section and section 9309 and
regulations issued to carry out such sections shall be subject to the
same civil penalties and procedures as are provided by title IX of the
Federal Aviation Act of 1958 for violations of title VI.
(f) JUDICIAL REVIEW.—Actions taken by the Secretary under this
section and section 9309 shsdl be subject to judicial review in accordance with section 1006 of the Federal Aviation Act of 1958.
(g) REPORTS.—Beginning with csdendar year 1992, each air carrier
shall submit to the Secretary an annual report on the progress such
carrier is making toward complying with the requirements of this
section (including the regulations issued to carry out this section).

104 STAT. 1388-384

PUBLIC LAW 101-508—NOV. 5, 1990

and the Secretary shall transmit to Congress an annual report on
the progress being made toward such compliance.
(h) DEFINITIONS.—As used in this section, the following definitions
apply:
(1) AIR CARRIER; AIR TRANSPORTATION; UNITED STATES.—The

terms "air carrier", "air transportation", and "United States"
have the meanings such terms have under section 101 of the
Federal Aviation Act of 1958.
(2) STAGE 3 NOISE LEVELS.—The term "Stage 3 noise levels"
means the Stage 3 noise levels set forth in part 36 of title 14,
Code of Federal Regulations, as in effect on the date of the
enactment of this Act.
49 u s e app.

SEC. 9309. NONADDITION RULE.

(a) GENERAL RULE.—Except as provided iii subsection (b) of this
section, no person may operate a civil subsonic turbojet aircraft with
a msiximum weight of more than 75,000 pounds which is imported
into the United States on or after the date of the enactment of this
Act unless—
(1) it complies with the Stage 3 noise levels, or
(2) it was purchased by the person who imports the aircrgift
into the United States under a written contract executed before
such date of enactment.
(b) EXEMPTION FOR COMPLYING MODIFICATIONS.—The Secretary

-

may provide an exemption from the requirements of subsection (a)
to permit a person to obtain modifications to an aircraft to meet the
Stage 3 noise levels.
(c) LIMITATION ON STATUTORY CONSTRUCTION.—For the purposes of
this section, an aircraft shall not be considered to have been imported into the United States if such aircraft—
(1) on the date of the enactment of this Act, is owned—
(A) by a corporation, trust, or partnership which is organized under the laws of the United States or any State
(including the District of Columbia);
(B) by an individual who is a citizen of the United States;
or
(C) by any entity which is owned or controlled by a
corporation, trust, partnership, or individual described in
this paragraph; and
(2) enters into the United States not later than 6 months after
the date of the expiration of a lease agreement (including any
extensions thereof) between an owner described in paragraph (1)
and a foreign air carrier.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-385

TITLE X—MISCELLANEOUS USER FEES
AND OTHER PROVISIONS
Subtitle A—Customs User Fees and Other
Trade Provisions
PART I—CUSTOMS USER F E E S
SEC. 10001. CUSTOMS USER FEES.
(a) EXTENSION OF EFFECTIVE PERIOD FOR FEES.—Paragraph (3) of

section 13031(j) of the Consolidated Omnibus Budget ReconciUation
Act of 1985 (19 U.S.C. 58c(j)(3)) is amended by striking out "1991"
and inserting "1995".
(b) ADJUSTMENT OF FEES FOR FORMALLY-ENTERED MERCHANDISE.—

Paragraph (9) of section 13031(a) of the ConsoUdated Omnibus
Budget Reconciliation Act of 1985 (19 U.S.C. 58c(a)(9)) is amended to
read as follows:
"(9)(A) For the processing of merchandise that is formally
entered or released during any fiscal year, a fee in an amount
equal to 0.17 percent ad valorem, unless adjusted under
subparagraph (B).
"(B)(i) The Secretary of the Treasury may adjust the ad
valorem rate specified in subparagraph (A) to an ad valorem
rate (but not to a rate of more than 0.19 percent nor less than
0.15 percent) that would, if charged, offset the salaries and
expenses that will likely be incurred by the Customs Service in
the processing of such entries and releases during the fiscal
year in which such costs are incurred.
"(ii) In determining the amount of any adjustment under
clause (i), the Secretary of the Treasury shall take into account
whether there is a surplus or deficit in the fund established
under section 613A of the Tariff Act of 1930 with respect to the
provision of customs services for the processing of formal entries and releases of merchandise.
"(iii) An adjustment may not be made under clause (i) with
respect to the fee charged during any fiscal year unless the
Secretary of the Treasury—
"(I) not later than 45 days after the date of the enactment
of the Act providing full-year appropriations for the Customs Service for that fiscal year, publishes in the Federal
Register a notice of intent to adjust the fee under this
paragraph and the amount of such adjustment;
"(II) provides a period of not less than 30 days following
publication of the notice described in subclause (I) for public
comment and consultation with the Committee on Finance
of the Senate and the Committee on Ways and Means of the
House of Representatives regarding the proposed adjustment and the methodology used to determine such
adjustment;
"(III) upon the expiration of the period provided under
subclause (II), notifies such committees in writing regarding
the final determination to adjust the fee, the amount of
such adjustment, and the methodology used to determine
such adjustment; and

104 STAT. 1388-386

PUBLIC LAW 101-508—NOV. 5, 1990

"(IV) upon the expiration of the 15-day period following
the written notification described in subclause (III), submits
for publication in the Federal Register notice of the final
determination regarding the adjustment of the fee.
"(iv) The 15-day period referred to in clause (iiiXIV) shall be
computed by excluding—
"(I) the days on which either House is not in session
because of an adjournment of more than 3 days to a day
certain or an adjournment of the Congress sine die; and
"(II) any Saturday and Sunday, not excluded under
subclause (I), when either House is not in session.
"(v) An adjustment made under this subparagraph shall
become effective with respect to formal entries and releases
made on or after the 15th calendar day after the date of
publication of the notice described in clause (iii)(IV) and shall
remain in effect until adjusted under this subparagraph.
"(C) If for any fiscal year, the Secretary of the Treasury
determines not to make an adjustment under subparagraph (B),
the Secretary shall, within the time prescribed under subparagraph (B)(iii)(I), submit a written report to the Committee on
Finance of the Senate and the Committee on Ways and Means
of the House of Representatives detailing the reasons for
maintaining the current fee and the methodology used for
computing such fee.
"(D) Any fee charged under this paragraph, whether or not
adjusted under subparagraph (B), is subject to the limitations in
subsection (bX8XA).".
(c) AGGREGATION OF MERCHANDISE PROCESSING FEES.—Section

19 use 58c note.

lll(fKlXB) of the Customs and Trade Act of 1990 (Public Law 101382) is amended by striking out "determined in" and inserting
"curtently in effect under".
(d) CUSTOMS SERVICE ADMINISTRATION.—Section 113 of the Cus-

19 use 2082.

toms and Trade Act of 1990 is amended—
(1) by inserting "and" after the semicolon at the end of
subsection (aXD;
(2) by striking out the semicolon at the end of subsection (aX2)
and inserting a period;
(3) by striking out paragraphs (3), (4), and (5) of subsection (a);
and
(4) by striking out "Committees referred to in subsection
(a)(5)" in subsection (b) and inserting "Committee on Ways and
Means of the House of Representatives and the Committee on
Finance of the Senate".
(e) MERCHANDISE PROCESSING FEES FOR CERTAIN SMALL AIRPORTS ~'~

(1) Section 13031(aX10XC) of the Consolidated Omnibus
Budget Reconciliation Act of 1985 (19 U.S.C. 58c(aX10XC)) is
amended by striking "applies," and inserting "applies, if more
than 25,000 informal entries were cleared through such airport
or facility during the fiscal year preceding such entry or release "
(2) 'section 13031(bX9) of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (19 U.S.C. 58c(bX9)) is amended by
inserting ", if more than 25,000 informal entries were cleared
through such airport or facility during the preceding fiscal
year" in subparagraph (BXii) before the end period.

PUBLIC LAW 101-508—NOV. 5, 1990
(f)

MANUAL

ENTRIES AND RELEASES.—Clause

(ii)

104 STAT. 1388-387
of

section

13031(b)(8)(C) of the Consolidated Omnibus Budget Reconciliation
Act of 1985 (19 U.S.C. 58c(b)(8)(C)(ii)) is amended to read as follows:
"(ii) any reference to a manual formal or informal entry or
release includes £iny entry or release filed by a broker or
importer that requires the inputting of cargo selectivity data
into the Automated Commercial System by customs personnel,
except when—
"(I) the broker or importer is certified as an ABI cargo
release filer under the Automated Commercial System at
any port within the United States, or
"(II) the entry or release is filed at ports prior to the full
implementation of the cargo selectivity data system by the
Customs Service at such ports.".
(g) EFFECTIVE DATES.—
19 use 58c note.
(1) IN GENERAL.—The amendments made by subsections (b),
(c), and (d) shall take effect on the date of the enactment of the
Act providing full-year appropriations for the Customs Service
for fiscal year 1992, and shall apply to fiscal years beginning on
and after October 1,1991.
(2) MERCHANDISE PROCESSING FEES FOR SMALL AIRPORTS.—The

amendments made by subsection (e) shall take effect as if
included in section 111 of the Customs and Trade Act of 1990.
(3) MANUAL ENTRIES AND RELEASES.—The amendment made
by subsection (f) shall take effect on the date of the enactment of
this Act.

PART II—TECHNICAL CORRECTIONS
SEC. 10011. TECHNICAL AMENDMENTS TO THE HARMONIZED TARIFF
SCHEDULE.
(a) REDESIGNATIONS.—

(1) IN GENERAL.—Each subheading of the Harmonized Tariff
Schedule of the United States )that is listed in column A is
redesignated as the subheading listed in column B opposite such
column A subheading:
Column A
5111.20.60
5111.30.60
5111.90.70
5112.19.10
5112.19.60
5112.90.60
6116.10.10
6116.10.15
6116.10.25
6116.10.35
6116.10.60
6116.92.10
6116.92.20
6116.92.30
6116.93.10
6116.93.15
6116.93.20
6116.99.30
6116.99.60
6116.99.90
6216.00.10
6216.00.15
6216.00.20

Column B
5111.20.90
5111.30.90
5111.90.90
5112.19.20
5112.19.90
5112.90.90
6116.10.08
6116.10.18
6116.10.45
6116.10.70
6116.10.90
6116.92.08
6116.92.60
6116.92.90
6116.93.08
6116.93.60
6116.93.90
6116.99.35
6116.99.50
6116.99.80
6216.00.08
6216.00.12
6216.00.18

104 STAT. 1388-388

PUBLIC LAW 101-508—NOV. 5, 1990
6216.00.27
6216.00.31
6216.00.34
6216.00.38
6216.00.44
6216.00.49
6216.00.50
6216.00.60
6702.90.40
6702.90.60
8712.00.10
8712.00.20
8712.00.30
8714.94.20
8714.94.50
9022.90.80
9603.10.20
9603.10.70
(2) STAGED RATE REDUCTION.—Any

6216.00.28
6216.00.32
6216.00.35
6216.00.39
6216.00.46
6216.00.52
6216.00.80
6216.00.90
6702.90.35
6702.90.65
8712.00.15
8712.00.25
8712.00.35
8714.94.15
8714.94.60
9022.90.90
9603.10.25
9603.10.90

staged reductions of a special rate of duty set forth in a subheading of the Harmonized
Tariff Schedule of the United States listed in column A in
paragraph (1) that were proclaimed by the President before
October 1, 1990, and are scheduled to take effect on or after
October 1, 1990, shall also apply to the corresponding specisd
rates of duty set forth in the corresponding subheading listed in
column B opposite such column A subheading.
Qji) MISCELLANEOUS AMENDMENTS,—The Harmonized Tariff Schedule of the United States is further amended as follows:
(1) Chapter 61 is amended by striking out subheading
6116.10.50.
(2) Chapter 62 is amended by striking out subheadings
6216.00.23, 6216.00.29, and 6216.00.47.
(3) Subheading 6116.10.90, as redesignated by subsection (a), is
amended—
(A) by striking out the superior heading for such subheading, and
(B) by striking out the article description and inserting
"With fourchettes", with the new article description having
the same degree of indentation as the superior heading for
subheading 6116.10.70, as redesignated by subsection (a).
(4) Subheading 6216.00.28, as redesignated by subsection (a), is
amended—
(A) by striking out the superior heading for such subheading, and
(B) by inserting the article description for such subheading at the same degree of indentation as the superior
heading for subheading 6216.00.18, as redesignated by
subsection (a).
(5) Subheading 6216.00.32, as redesignated by subsection (a), is
amended—
(A) by striking out the superior heading for such subheading, and
(B) by striking out the article description and inserting
"With fourchettes", with the new article description having
the same degree of indentation as the article description for
subheading 6216.00.35, as redesignated by subsection (a).
(6) Subheading 6216.00.52, as redesignated by subsection (a), is
amended by inserting the article description for such subheading at the same degree of indentation as subheading
6216.00.46, as redesignated by subsection (a).

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-389

(7) The article descriptions for subheadings 6116.10.08,
6116.92.08, 6116.93.08, 6116.99.35, 6216.00.08, 6216.00.35, and
6216.00.46, as redesignated by subsection (a), are each amended
to read as follows: "Other gloves, mittens, and mitts, all the
foregoing specisdly designed for use in sports, including ski and
snowmobile gloves, mittens, and mitts".
(8) The superior heading for subheadings 8712.00.25 and
8712.00.35, as redesignated by subsection (a), is amended by
striking out "65" and inserting "63.5".
(9) Heading 9902.30.07 is amended by striking out
"2929.90.10" and inserting "2929.10.40".
(10) Heading 9902.30.08 is amended by striking out
"2907.29.30" and inserting "2907.19.50".
(11) Heading 9902.30.42 is amended by striking out
"19532-03-07" and inserting "19532-03-7".
(12) The article description for heading 9902.30.56 is amended
by striking out "hydroxethyl" and inserting "hydroxyethyl".
(13) Heading 9902.30.83 (as enacted by section 388 of the
Customs and Trade Act of 1990) is redesignated as heading
9902.31.11 and, as so redesignated, is amended by striking out
"piperadinyl" and inserting "piperidinyl".
(14) Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:

9902.70.20 Fiberglass tire cord
fabric woven from
electrically
nonconductive
continuous fiberglass
filaments 9 microns in
diameter or 10
microns in diameter
and impregnated with
resorcinol
formeddehyde latex
treatment for
adhesion to polymeric
compounds (provided
for in subheading
7019.20.10, 7019.20.20,
or 7019.20.50)

Free

No change

No change

On or
before 12/
31/92

(15) Heading 9902.84.83 is amended by striking out
"(A,C,E,IL)" and inserting "(A,C,CA,E,IL)".
(16) Heading 9902.87.14 is amended by striking out "brakes,"
the first place it appears.
(17) The article description for heading 9902.94.01 is amended
by striking out "Furniture seats" and inserting "Furniture,
seats,".
(c) EFFECTIVE DATE.—

(1) Subject to paragraphs (2) and (3), the amendments made by
subsections (a) and (b) apply with respect to articles entered, or

104 STAT. 1388-390

PUBLIC LAW 101-508—NOV. 5, 1990

withdrawn from warehouse for consumption, on or after October 1,1990.
(2) Any amendment made by subsection (a) or (b) to a provision of the Harmonized Tariff Schedule of the United States
that was the subject of an amendment made by title III of the
Customs and Trade Act of 1990 shall—
(A) be treated as appl3dng to that provision as established
or amended by such title III; and
(B) if the amendment made by such title III has retroactive application under section 4850)) of such Act, be
treated as appljdng with respect to entries made after the
relevant applicable date (as defined in paragraph (2)(A) of
such section 48503)).
(3) Notwithstanding section 514 of the Tariff Act of 1930 or
any other provision of law, upon proper request filed with the
appropriate customs officer before April 1, 1991, any entry—
(A) which was made after December 31, 1988, and before
October 1,1990; and
(B) with respect to which there would have been a lesser
duty if any amendment made by subsection 0)) (1) through
(7) applied to such entry;
shall be liquidated or reliquidated as though such amendment
applied to such entry.
SEC. 10012. TECHNICAL AMENDMENTS TO CERTAIN CUSTOMS LAWS.
(a) CUSTOMS FORFEITURE FUND.—

19 u s e 1613b.

19 u s e 1613b.

19 u s e 1613b
note.

(1) Paragraph (5) of section 121 of the Customs and Trade Act
of 1990 is repealed £ind subsection (f) of section 613A of the
Tariff Act of 1930 shall be applied as if the amendment made by
such paragraph (5) had not been enacted.
(2) Paragraph (2) of such section 613A(f) of the Tariff Act of
1930 (as in effect after the application of paragraph (1)) is
amended to read as follows:
"(2)(A) Subject to subparagraph (B), there are authorized to be
appropriated from the Fund not to exceed $20,000,000 for each
fiscal year to carry out the purposes set forth in subsections
(aX3) and (b) for such fiscal year.
"(B) Of the amount authorized to be appropriated under
subparagraph (A), not to exceed the following, shall be available
to carry out the purposes set forth in subsection (a)(3):
"(i) $14,855,000 for fiscal year 1991.
"(ii) $15,598,000 for fiscal year 1992.".
(b) CERTAIN ENTRIES.—Section 484 of the Customs and Trade
Act of 1990 (Public Law 101-382) is amended by striking out "1801000027" and inserting "1801-7-000027".
(c) EFFECTIVE DATE.—The provisions of this section take effect
August 21,1990.
SEC. 10013. STAGED RATE REDUCTION FOR ETBE.

(a) IN GENERAL.—Section 484G(b) of the Customs and Trade Act of
1990 is amended to read as follows:
"(b) STAGED RATE REDUCTION.—The President may proclaim such
modifications to the rates of duty set forth in subheading 9901.00.52
with respect to goods originating in the territory of Canada as will
result in reduction of such rates in equal annual stages and will
make such products free of duty effective January 1,1998.".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-391

(b) EFFECTIVE DATE.—The amendment made by this section shall
take effect £is if included in section 484G of the Customs and Trade
Act of 1990.

Subtitle B—Patent and Trademark Office User
Fees
SEC. 10101. PATENT AND TRADEMARK OFFICE USER FEES.

(a) SURCHARGES.—There shall be a surcharge, during fiscal years 35 USC 41 note.
1991 through 1995, of 69 percent, rounded by standard arithmetic
rules, on all fees authorized by subsections (a) and (b) of section 41 of
title 35, United States Code.
G)) USE OF SURCHARGES.—Notwithstanding section 3302 of title 31, 35 USC 41 note.
United States Code, beginning in fiscal year 1991, all surcharges
collected by the Patent and Trademark Office—
(1) in fiscal year 1991—
(A) shall be credited to a separate account established in
the Treasury and ascribed to the Patent and Trademark
Office activities in the Department of Commerce as offsetting receipts, and
(B) $91,000,000 shall be available only to the Patent and
Trademark Office, to the extent provided in appropriation
Acts, and the additional surcharge receipts, totalling
$18,807,000, shall be available only to the Patent and Trademark Office without appropriation, for all authorized activities and operations of the office, including all direct and
indirect costs of services provided by the office,
(2) in fiscal years 1992 through 1995—
(A) shall be credited to a separate account established in
the Treasury £md ascribed to the Patent and Trademark
Office activities in the Department of Commerce as offsetting receipts, and
(B) shall be available only to the Patent and Trademark
Office, to the extent provided in appropriation Acts, for all
authorized activities and operations of the office, including
all direct and indirect costs of services provided by the
office, and
(3) shall remain available until expended.
(c) REVISIONS.—In fiscal years 1991 through 1995, surcharges 35 USC 41 note,
established under subsection (a) may be revised periodically by the
Commissioner of Patents and Trademarks, subject to the provisions
of section 553 of title 5, United States Code, in order to ensure that
the following amounts, but not more than the following amounts, of
patent and trademark user fees are collected:
(1) $109,807,000 in fiscal year 1991.
(2) $95,000,000 in fiscal year 1992.
(3) $99,000,000 in fiscal year 1993.
(4) $103,000,000 in fiscal year 1994.
(5) $107,000,000 in fiscal year 1995.
(d) REPEAL.—Section 105(a) of Public Law 100-703 (102 Stat. 4675)
is repealed.
<
(e) REPORT ON FEES.—The Commissioner of Patents and Trademarks shall study the structure of all fees collected by the Patent
and Trademark Office and, not later than May 1, 1991, shall submit
to the Congress a report on all fees to be collected by the office in

104 STAT. 1388-392

PUBLIC LAW 101-508—NOV. 5, 1990

fiscal years 1992 through 1995. The report shall include a proposed
schedule of fees that would distribute the surcharges provided by
subsection (a) among all fees collected by the office, and recommendations for any statutory changes that may be necessary to
implement the proposals contained in the report.
35 u s e 1 note.

SEC. 10102. FEDERAL AGENCY STATUS.

For the purposes of Federal law, the Patent and Trademark Office
shall be considered a Federal agency. In particular, the Patent and
Trademark Office shall be subject to all Federal laws pertaining to
the procurement of goods and services that would apply to a Federal
agency using appropriated funds, including the Federal Property
and Administrative Services Act of 1949 and the Office of Federal
Procurement Policy Act.
35 u s e 41 note.

SEC. 10103. EFFECT ON OTHER LAW.

Except for section 10101(d), nothing in this subtitle affects the
provisions of Public Law 100-703 (102 Stat. 4674 and following).

Subtitle C—Science and Technology User Fees
SEC. 10201. NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION
USER FEES.

(a) AMENDMENTS.—Section 409 of the Act of November 17,1988 (15
U.S.C. 1534) is amended—
(1) in subsection (a), by striking "archived" and all that
follows and inserting in lieu thereof "and information and
products derived therefrom collected and/or archived by the
National Oceanic and Atmospheric Administration.";
(2) in subsection (bXD—
(A) by inserting ", information, and products" immediately after "data" the first place it appears; and
(B) by striking "data is" and inserting in lieu thereof
"data, information, and products are";
(3) in subsection (bX2)—
(A) by inserting ", information, or products" immediately
after "data" the first place it appears; and
(B) by striking "data exchange basis" and inserting in
lieu thereof "basis of exchanging such data, information,
and products";
(4) in subsection (b), by inserting at the end the following new
paragraph:
"(3) The Secretary shall waive the assessment of fees authorized
by subsection (a) as necessary to continue to provide weather
warnings, watches, and similar products and services essential to
the mission of the National Oceanic Atmospheric Administration.";
(5) by amending paragraph (1) of subsection (d) to read as
follows:
"(1) The initial schedule of fees established by the National
Environmental Satellite, Data, and Information Service for
archived data shall remain in effect for the 3-year period beginning on the date that the fees under that schedule take effect.";
(6) in subsections (d), (e), and (f)(1), by inserting "by the
National Environmental Satellite, Data, and Information Service for archived data" immediately after "under this section"
each place it appears; and

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-393

(7) in subsection (g), by striking the period at the end and
inserting in lieu thereof the following: ", including the authority of the Secretary pursuant to section 1307 of title 44, United
States Code. Nothing in this section shall be construed to
authorize the Secretary to assess fees for nautical and aeronautical products of the National Oceanic and Atmospheric
Administration in addition to those fees authorized under section 1307 of title 44, United States Code.".
(b) EFFECT OF AMENDMENTS.—(1) The increase in revenues to the 15 u s e 1534

United States attributable to the amendments made by subsection ^°^f&i Sild.ll Tioi^ GXCGGQ^^

(A) $2,000,000 for each of the fiscal years 1991,1992, and 1993;
and
(B) $3,000,000 for each of the fiscal years 1994 and 1995.
(2) Increases in revenues to the United States described in paragraph (1) shall be achieved by the Secretary of Commerce through
fair and equitable incresises in fees for services offered by the
various programs of the National Oceanic and Atmospheric
Administration.
(3) The Secretary of Commerce shall notify the Congress of any
changes in fee schedules under section 409 of the Act of November 17, 1988 (15 U.S.C. 1534), before such changes take effect.
SEC. 10202. RADON MEASUREMENT PROFICIENCY.

Section 305(e) of the Toxic Substances Control Act is amended by 15 USC 2665.
adding at the end the following new paragraphs:
"(5) RESEARCH.—The Administrator shall, in conjunction with
other Federal agencies, conduct research to develop, test, and
evaluate radon and radon progeny measurement methods and
protocols. The purpose of such research shall be to assess the
ability of those method^ and protocols to accurately assess
exposure to radon progeny. Such research shsill include—
"(A) conducting comparisons among radon and radon
progeny measurement techniques;
"(B) developing measurement protocols for different
building types under varying operating conditions; and
"(C) comparing the exposures estimated by stationary
monitors and protocols to those measured by personal monitors, and issue guidance documents that—
"(i) provide information on the results of research
conducted under this paragraph; and
"(ii) describe model State radon measurement and
mitigation programs.
"(6) MANDATORY PROFICIENCY TESTING PROGRAM STUDY.—(A)

The Administrator shall conduct a study to determine the
feasibility of establishing a mandatory proficiency testing program that would require that—
"(i) any product offered for sale, or device used in connection with a service offered to the public, for the measurement of radon meets minimum performance criteria; and
"(ii) any operator of a device, or person employing a
technique, used in connection with a service offered to the
public for the measurement of radon meets a minimum
level of proficiency.
"(B) The study shall also address procedures for—

39-194 O - 91 - 26 : QL 3 Part 2

104 STAT. 1388-394

PUBLIC LAW 101-508—NOV. 5, 1990

"(i) ordering the recall of any product sold for the
measurement of radon which does not meet minimum
performance criteria;
"(ii) ordering the discontinusmce of any service offered to
the public for the measurement of radon which does not
meet minimum performance criteria; and
"(iii) establishing adequate quality assurance requirements for each company offering radon measurement services to the public to follow.
The study shall identify enforcement mechanisms necessary to
the success of the program. The Administrator shall report the
findings of the study with recommendations to Congress by
March 1,1991.
"(7) USER FEE.—In addition to any charge imposed pursuant
to paragraph (2), the Administrator shall collect user fees from
persons seeking certification under the radon proficiency program
in an amount equal to $1,500,000 to cover the Environmental
Protection Agency's cost of conducting research pursuant
to paragraph (5) for each of the fiscal years 1991, 1992, 1993,
1994, and 1995. Such funds shall be deposited in the account
established pursuant to paragraph (3).".
SEC. 10203. DEPARTMENT OF ENERGY USER FEE STUDY.

The Secretary of Energy shall undertake a study of the Department of Energy's user fee assessment and collection practices, and
shall make recommendations on ways to—
(1) reasonably increase revenues to the United States through
user fees, consistent with the mission of the Department; and
(2) improve user fee collection practices.
The Secretary of Energy shall submit a report containing such
findings and recommendations to the Congress within 6 months
after the date of enactment of this Act. There are authorized to be
appropriated to the Secretary of Energy for carr3dng out this section
not to exceed $500,000 for fiscal year 1991, from funds otherwise
available to the Department of Energy.
SEC. 10204. DEPARTMENT OF TRANSPORTATION COMMERCIAL SPACE
LAUNCH STUDY.

(a) The Secretary of Tremsportation shall report on actions by the
Department of Transportation for the assessment and collection of
licensing fees under the Commercial Space Launch Act (49 U.S.C.
App. 2601 et seq.).
(b) The Secretary shall submit a report containing such findings to
the Congress within 6 months after the date of enactment of this
Act.
SEC. 10205. NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY
COST RECOVERY STUDY.

(a) The Secretary of Commerce shall undertake a study of current
practices at, and any suggested improvements consistent with the
mission of, the National Institute of Standards and Technology for
recovering the costs of services and materials provided to private
and nonprofit organizations, including services provided on a proprietary basis to users of Institute facilities.
Qy) The Secretary shall submit a report containing such findings to
the Congress within 6 months after the date of enactment of this
Act.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-395

Subtitle D—Travel and Tourism Facilitation
Fee
SEC. 10301. UNITED STATES TRAVEL AND TOURISM FACILITATION FEE.
(a) UNITED STATES TRAVEL AND TOURISM ADMINISTRATION FACIU-

TATiON FEE.—The International Travel Act of 1961 (22 U.S.C. 2121 et
seq.) is amended by adding at the end the following:
"SEC. 806. (a) To the extent not inconsistent with treaties or 22USC2128.
international agreements entered into by the United States, the
Secretary, on a calendar quarterly basis beginning January 1, 1991,
shall charge and collect from each commercial airline and passenger
cruise ship line transporting passengers to the United States, a
United States Travel and Tourism Administration Facilitation Fee,
in an amount determined under subsection (b).
"(bXl) During the period from January 1, 1991, through
December 31, 1991, the Secretary shall charge each commercial
airline and passenger cruise ship line an amount equal to one dollar
multiplied by the number of aliens described in section 101(a)(15)(B)
of the Immigration and Nationality Act (8 U.S.C. 1101(aX15)(B))
arriving at any port within the United States aboard a commercial
aircraft or cruise ship of such airline or passenger cruise ship line
during that calendar quarter.
"(2) Commencing in 1991, the Secretary shall each year determine
and publish the amount of the fee described in subsection (a) for the
12-month period commencing on January 1 of the succeeding CEQendar year, as follows:
"(A) The Secretary (in consultation with the Attorney General and the Secretary of State) shall estimate the number of
aliens described in section 101(aX15XB) of the Immigration and
Nationality Act (8 U.S.C. 1101(aX15XB)) expected to enter the
United States during such succeeding calendar year, based upon
the number of such aliens who entered the United States during
the previous calendar year (as reported or estimated by the
Attorney General) and such other available information as the
Secretary deems reliable.
"(B) The Secretary shall divide the amount appropriated to
the United States Travel and Tourism Administration for the
fiscal year during which such determination is made by the
number of aliens described in subparagraph (A) expected by the
Secretary to enter the United States during the calendar year
described in such subparagraph, as estimated by the Secretary
under such subparagraph, and shall round the result up to the
nearest quarter-dollar.
"(C) The Secretary shall publish in the Federal Register the
estimate required by subparagraph (A), together with a description of the information supporting such estimate, and the
amount of the fee determined under subparagraph (B) which
shall be applicable during the 12-month period commencing on
January 1 of the succeeding calendar year.
"(D) For each calendar quarter beginning after December 31,
1991, the Secretary shall charge each commercial airline and
passenger cruise ship line an amount equal to the fee amount
determined under subparagraph (B) and applicable under
subparagraph (C) multiplied by the number of aliens described
in section 101(aX15XB) of the Immigration and Nationality Act

104 STAT. 1388-396

22 use 2129.

PUBLIC LAW 101-508—NOV. 5, 1990

(8 U.S.C. 1101(a)(15)(B)) arriving at any port within the United
States aboard a commercial aircraft or cruise ship of such
airline or passenger cruise ship line during that calendar
quarter.
"(3) Neither the estimate of the Secretary under paragraph (2XA)
nor the amount determined by the Secretary under paragraph (2)(B)
shall be subject to judicial review.
"(c) Each commercial airline and passenger cruise ship line shall
remit the fee charged by the Secretary under subsection (b), in
United States dollars, no later than 31 days after the close of the
calendar quarter of the arrival of the aliens on which the calculation of the fee is based.
"(d) The Secretary shall deposit the fees received pursuant to
subsection (c) in the general fund of the Treasury as offsetting
receipts and ascribed to the travel and tourism activities of the
Secretary.
"(e) Beginning on October 1, 1992, the aggregate amounts collected for the fee charged under this section shall at least equal the
appropriations made for the travel and tourism activities of the
Secretary under this Act, but at no time shall the aggregate of
amounts collected for any fiscal year under this section exceed 105
percent of the aggregate of appropriations made for such fiscal year
for activities to be funded by such fees.
"(f) The Secretary may prescribe such rules and regulations as
may be necessary to carry out the provisions of this section.".
(b) CIVIL PENALTIES AND ENFORCEMENT.—The International
Travel Act of 1961, as amended by subsection (a), is amended by
adding at the end the following:
"SEC. 307. (a) Any commercial airline or commercial cruise ship
line which is found by the Secretary or the Secretary's designee,
after notice and an opportunity for a hearing, to have failed to pay
to the Secretary, by the due date, the fee charged by the Secretary
under section 3()6(a), may be ordered by the Secretary or the Secretary's designee to pay any fee amount outstanding plus interest on
£iny late payment and, in addition, to pay a civil penalty not to
exceed $5,000 for each day payment to the Secretary is not made or
was made late. The amount of such civil penalty shall be assessed by
the Secretary or the Secretary's designee by written notice. In
determining the amount of such penalty, the Secretary or the
Secretary's designee shall take into account the nature, circumstances, extent, and gravity of the violation, and, with respect to
the violator, the degree of culpability, and history of prior offenses,
ability to pay, and such other matters as justice may require. Each
day a pajonent to the Secretary required by this Act is late shall
constitute a separate violation of this Act.
"(b) If any commercial airline or cruise ship line fails to pay as
ordered by the Secretary or the Secretary's designee, the Attorney
General may, upon request of the Secretary, bring a civil action in
any appropriate United States district court for the recovery of the
amount ordered to be paid.
"(c) Before requesting the Attorney General to bring a civil action,
the Secretary may compromise, modify, or remit, with or without
conditions, any civil penalty which is subject to imposition or which
has been imposed under subsection (a).
"(d) For the purpose of conducting any hearing under subsection
(a), the Secretsuy or the Secretary's designee may issue subpoeneis
for the attendance and testimony of witnesses and the production of

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-397

relevant papers, books, and documents, and may administer oaths.
Witnesses summoned shall be paid the same fees and mileage that
are paid to witnesses in the courts of the United States. In case of
contempt or refusal to obey a subpoena served upon any person
pursuant to this subsection, the United States district court for any
district in which such person is found, resides, or transacts business,
upon application by the United States and after notice to such
person, shall have jurisdiction to issue an order requiring such
person to appear and give testimony before the Secretary or the
Secretary's designee or to appear and produce papers, books, and
documents before the Secretary or the Secretary's designee, or both,
and any failure to obey such order of the court may be punished by
such court as a contempt thereof.".

Subtitle E—Coast Guard User Fees
SEC. 10401. ESTABLISHMENT AND COLLECTION OF FEES FOR COAST
GUARD SERVICES.

(a) IN GENERAL.—Section 2110 of title 46, United States Code, is
amended to read as follows:
"§2110. Fees
"(aXD Except as otherwise provided in this title, the Secretary
shall establish a fee or charge for a service or thing of value
provided by the Secretary under this subtitle, in accordance with
section 9701 of title 31.
"(2) The Secretary may not establish a fee or charge under
paragraph (1) for inspection or examination of a non-self-propelled
tank vessel under part B of this title that is more than $500
annually.
"(3) The Secretary may, by regulation, adjust a fee or charge
collected under this subsection to accommodate changes in the cost
of providing a specific service or thing of value, but the adjusted fee
or charge may not exceed the total cost of providing the service or
thing of value for which the fee or charge is collected, including the
cost of collecting the fee or charge.
"(4) The Secretary may not collect a fee or charge under this
subsection that is in conflict with the international obligations of
the United States.
"(5) The Secretary may not collect a fee or charge under this
subsection for any search or rescue service.
"(bXD The Secretary shall establish a fee or charge as provided in
paragraph (2) of this subsection, and collect it annually in fiscal
years 1991,1992,1993,1994, and 1995, from the owner or operator of
each recreational vessel that is greater than 16 feet in length.
"(2) The fee or charge established under paragraph (1) of this
subsection is as follows:
"(A) for vessels greater than 16 feet in length but less than 20
feet, not more than $25;
"(B) for vessels of at least 20 feet in length but less than 27
feet, not more than $35;
"(C) for vessels of at least 27 feet in length but less than 40
feet, not more than $50; and
"(D) for vessels of at least 40 feet in length, not more than
$100.

104 STAT. 1388-398

PUBLIC LAW 101-508—NOV. 5, 1990

"(3) The fee or charge established under this subsection applies
only to vessels operated on the navigable waters of the United
States where the Coast Guard has a presence.
"(4) The fee or charge established under this subsection does not
apply to a—
"(A) public vessel; or
"(B) vessel deemed to be a public vessel under section 827 of
title 14.
"(c) In addition to the collection of fees and charges established
under subsections (a) and (b), the Secretary may recover appropriate
collection and enforcement costs associated with delinquent payments of the fees and charges.
"(d)(1) The Secretary may employ any Federal, State, or local
agency or instrumentality, or any private enterprise or business, to
collect a fee or charge established under this section. A private
enterprise or business selected by the Secretary to collect fees or
charges—
"(A) shall be subject to reasonable terms and conditions
agreed to by the Secretary and the enterprise or business;
"(B) shall provide appropriate accounting to the Secretary;
and
"(C) may not institute litigation as part of that collection.
"(2) A Federal agency shall account for the agency's costs of
collecting the fee or charge under this subsection as a reimbursable
expense, and the costs shall be credited to the account from which
expended.
'(e) A person that violates this section by failing to pay a fee or
charge established under this section is liable to the United States
Government for a civil penalty of not more than $5,000 for each
violation.
"(f) When requested by the Secretary, the Secretary of the Treasury shall deny the clearance required by section 4197 of the Revised
Statutes of the United States (46 App. U.S.C. 91) to a vessel for
which a fee or charge established under this section has not been
paid until the fee or charge is paid or until a bond is posted for the
pavment.
'(g) The Secretary may exempt a person from pajdng a fee or
charge established under this section if the Secretary determines
that it is in the public interest to do so.
"(h) Fees and charges collected by the Secretary under this section
shall be deposited in the general fund of the Treasury as offsetting
receipts of the department in which the Coast Guard is operating
and ascribed to Coast Guard activities.
"(i) The collection of a fee or charge under this section does not
alter or expand the functions, powers, responsibilities, or liability of
the United States under any law for the performance of services or
the provision of a thing of value for which a fee or charge is collected
under this section.".
(b) CLERICAL AMENDMENT.—The analysis of chapter 21 of title 46,
United States Code, is amended by striking the item relating to
section 2110 and inserting the following:
"2110. Fees.".
SEC. 10402. TONNAGE DUTIES.
(a) VESSELS ENTERING FROM FOREIGN PORT OR PLACE.—Section 36

of the Act entitled "An Act to provide revenue, equalize duties and
encourage the industries of the United States, and for other pur-

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-399

poses", approved August 5, lOOQ,"^* (36 Stat. I l l ; 46 App. U.S.C. 121)
is amended in the second paragraph—
(1) by striking "two cents per ton, not to exceed in the
aggregate ten cents per ton in any one year," and inserting "9
cents per ton, not to exceed in the aggregate 45 cents per ton in
any one year, for fiscal years 1991, 1992, 1993, 1994, and 1995,
and 2 cents per ton, not to exceed in the aggregate 10 cents per
ton in any one year, for each fiscal year thereafter";
(2) by inserting after "Newfoundland," the following: "and on
all vessels (except vessels of the United States, recreational
vessels, and barges, as those terms are defined in section 2101 of
title 46, United States Code) that depart a United States port or
place and return to the same port or place without being
entered in the United States from another port or place,"; and
(3) by striking "six cents per ton, not to exceed thirty cents
per ton per annum," and inserting "27 cents per ton, not to
exceed $1.35 per ton per annum, for fiscal years 1991, 1992,
1993, 1994, and 1995, and 6 cents per ton, not to exceed 30 cents
per ton per annum, for each fiscal year thereafter".
(b) CONFORMING AMENDMENT.—The Act entitled "An Act concern-

ing tonnage duties on vessels entering otherwise than by sea",
approved March 8, 1910 (36 Stat. 234; 46 App. U.S.C. 132), is
amended by striking "two cents per ton, not to exceed in the
aggregate ten cents per ton in any one year" and inserting "9 cents
per ton, not to exceed in the aggregate 45 cents per ton in any one
year, for fiscal years 1991,1992,1993,1994, and 1995, and 2 cents per
ton, not to exceed in the aggregate 10 cents per ton in any one year,
for each fiscal year thereafter".
(c) OFFSETTING RECEIPTS.—Increased tonnage charges collected as 46 u s e app. 121

a result of the amendments made by subsection (a) shall be depos- °°*®ited in the general fund of the Treasury as offsetting receipts of the
department in which the Coast Guard is operating and ascribed to
Coast Guard activities.

Subtitle F—Railroad User Fees
SEC. 10501. AMENDMENTS TO FEDERAL RAILROAD SAFETY ACT OF 1970.
(a) USER FEES.—The Federal Railroad Safety Act of 1970 (45 U.S.C.

431 et seq.) is amended by adding at the end the following new
section:
"SEC. 216. USER FEES.

45 USC 447.

"(aXl) The Secretary shall establish by regulation, after notice
and comment, a schedule of fees to be assessed equitably to railroads, in reasonable relationship to an appropriate combination of
criteria such as revenue ton-miles, track miles, passenger miles, or
other relevant factors, but shall not be based on the proportion of
industry revenues attributable to a railroad or class of railroads.
"(2) The Secretary shall establish procedures for the collection of
such fees. The Secretary may use the services of 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) Fees established under this section shall be assessed to railroads subject to this Act and shall cover the costs of administering
this Act, other than activities described in section 202(aX2).
T* So in original. Probably should be "1909 (36".

104 STAT. 1388-400

PUBLIC LAW 101-508—NOV. 5, 1990

"(b) The Secretary shall assess and collect fees described in subsection (a) with respect to each fiscal year before the end of such fiscal
year.
"(c) All fees collected under subsection (b) shall be deposited into
the general fund of the United States Treasury as offsetting receipts
and shall be used, to the extent provided in advance in appropriations Acts, only to carry out activities under this Act.
"(d) Fees established under subsection (a) shall be assessed in an
amount sufficient to cover activities described in subsection (c)
beginning on March 1, 1991, but at no time shall the aggregate oif
fees received for any fiscal year under this section exceed 105
percent of the aggregate of appropriations made for such fiscal year
for activities to be funded by such fees.
"(e)(1) Within 90 days after the end of each fiscal year in which
fees are collected pursuant to this section, the Secretary shall report
to the Congress—
"(A) the amount of fees collected during that fiscal year;
"(B) the impact of such fee collections on the financial health
of the railroad industry and its competitive position relative to
each competing mode of transportation; and
"(C) the total cost of Federal safety activities for each such
other mode of transportation, including the portion of that total
cost, if any, defrayed by Federal user fees.
"(2) With respect to any fiscal year for which the Secretary's
report submitted under paragraph (1) finds—
"(A) any impact of fees collected under this section either on
the financial health of the railroad industry, or on its competitive position relative to competing modes of transportation; or
"(B) any significant difference in the burden of Federal user
fees borne by the railroad industry and those applicable to
competing modes of transportation,
the Secretary shall, within 90 days after submission of such report,
prepare and submit to the Congress specific recommendations for
legislation to correct £iny such impact or difference.
"(f) This section shall expire on September 30,1995.".
(b) AUTHORIZATION OF APPROPRIATIONS.—Section 214(a) of the Federal Railroad Safety Act of 1970 (45 U.S.C. 444(a)) is amended to read
as follows:
"(a) There are authorized to be appropriated to carry out this Act
not to exceed $46,884,000 for fiscal year 1991.".

SSSation

TITLE XI—REVENUE PROVISIONS

Act of 1990.
SEC. 11001. SHORT TITLE; ETC.

26 use 1 note.

26 use 15 note.

(a) SHORT TITLE.—This title may be cited as the "Revenue Reconciliation Act of 1990".
(b) AMENDMENT OF 1986 CODE.—Except as otherwise expressly
provided, whenever in this title an amendment or repeal is expressed in terms of an 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 1986.
(c) SECTION 15 NoT To AppLY.—Except as otherwise expressly
provided in this title, no amendment made by this title shall be
treated as a change in a rate of tax for purposes of section 15 of the
Internal Revenue Code of 1986.
(d) TABLE OF CONTENTS.—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-401

TITLE XI—REVENUE PROVISIONS
Sec. 11001. Short title; etc.
Subtitle A—Individual Income Tax Provisions
PART I—PROVISIONS AFFECTING HIGH-INCOME INDIVIDUALS

Sec. 11101. Elimination of provision reducing marginal tax rate for high-income
taxpayers.
Sec. 11102. Increase in rate of individual alternative minimum tax.
Sec. 11103. Overall limitation on itemized deductions.
Sec. 11104. Phaseout of personal exemptions.
PART II—MODIFICATIONS OF EARNED INCOME CREDIT

Sec.
Sec.
Sec.
Sec.
Sec.

mil.
11112.
11113.
11114.
11115.

Modifications of earned income tax credit.
Requirement of identifying number for certain dependents.
Study of advance pajrmente.
Program to increase public awareness.
Exclusion from income and resources of earned income tax credit under
titles rV, XVI, and XIX of the Social Security Act.
Sec. 11116. C!oordination with refund provision.
Subtitle B—Excise Taxes
Part I—Taxes Related to Health and the Environment
Sec. 11201. Increase in excise taxes on distilled spirits, wine, and beer.
Sec. 11202. Increase in excise taxes on tobacco products.
Sec. 11203. Additional chemicals subject to tfix on ozone-depleting chemicals.
Part II—User-Related Taxes
Sec. 11211. Increase and extension of highway-related taxes and trust fund.
Sec. 11212. Improvements in administration of gasoline excise tax.
Sec. 11213. Increase and extension of aviation-related taxes and trust fund; repeal
of reduction in rates.
Sec. 11214. Increase in harbor maintenance tax.
Sec. 11215. Extension of Leaking Underground Storage Tank Trust Fund taxes.
Sec. 11216. Amendments to gas guzzler tax.
Sec. 11217. Telephone excise tax modified and made permanent.
Sec. 11218. Floor stocks tax treatment of articles in foreign trade zones.
Part III—Taxes on Luxury Items
Sec. 11221. Taxes on luxury items.
Part rV—4-Year Extension of Hazardous Substance Superfund
Sec. 11231. 4-year extension of Hazardous Substance Superfund.
Subtitle C—Other Revenue Increases
Part I—Insurance Provisions
SUBPART A—PROVISIONS RELATED TO POUCY ACQuismoN COSTS

Sec. 11301. Capitalization of policy acquisition expenses.
Sec. 11302. Treatment of certain nonlife reserves of life insurance companies.
Sec. 11303. Treatment of life insurcuice reserves of insurance companies which are
not life insurance companies.
SUBPART B—TREATMENT OF SALVAGE RECOVERABLE
Sec. 11305. Treatment of salvage recoverable.
SUBPART C—WAIVER OF ESTIMATED TAX PENALTIES

Sec. 11307. Waiver of estimated tax penalties.
Part II—Compliance Provisions
Sec. 11311. Suspension of statute of limitations during proceedings to enforce certain summonses.
Sec. 11312. Accuracy-related penalty to apply to section 482 adjustments.
Sec. 11313. Treatment of persons providing services.
Sec. 11314. Application of amendments made by section 7403 of Revenue Reconciliation Act of 1989 to taxable years beginning on or before July 10,
1989.
Sec. 11315. Other reporting requirements.

'

104 STAT. 1388-402
Sec.
Sec.
Sec.
Sec.

11316.
11317.
11318.
11319.

PUBLIC LAW 101-508—NOV. 5, 1990
Study of section 482.
10-year period of limitation on collection after assessment.
Return requirement where cash received in trade or business.
5-year extension of Internal Revenue Service user fees.

Part III—Corporate Provisions
Sec. 11321. Recognition of gain by distributing corporation in certain section 355
transactions.
Sec. 11322. Modifications to regulations issued under section 305(c).
Sec. 11323. Modifications to section 1060.
Sec. 11324. Modification to corporation equity reduction limitations on net operating loss carrybacks.
Sec. 11325. Issuance of debt or stock in satisfaction of indebtedness.
Part IV—Employment Tax Provisions
Sec. 11331. Increase in dollar limitation on amount of wages subject to hospital insurance tax.
Sec. 11332. Coverage of certain State and local employees under social security.
Sec. 11333. Extension of FUTA surtax.
Sec. 11334. Deposits of payroll taxes.
Part V—Miscellaneous Provisions
Increase in rate of interest payable on large corporate underpajmients.
Denial of deduction for unnecessary cosmetic surgery.
Special rules where grantor of trust is a foreign person.
Treatment of contributions of appreciated property under minimum tax.

Sec.
Sec.
Sec.
Sec.

11341.
11342.
11343.
11344.

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

Subtitle D—1-Year Extension of Certain Expiring Tax Provisions
11401. Allocation of research and experimental expenditures.
11402. Research credit.
11403. Employer-provided educational assistance.
11404. Group legal services plans.
11405. Targeted jobs credit.
11406. Energy investment credit for solar and geothermal property.
11407. Low-income housing credit.
11408. Qualified mortgage bonds.
11409. Qualified small issue bonds.
11410. Health insurance costs of self-employed individuals.
11411. Expenses for drugs for rare conditions.
Subtitle E—Energy Incentives
PART I—MODIFICATIONS OF EXISTING CREDITS

Sec. 11501. Extension and modification of credit for producing fuel from nonconventional source.
Sec. 11502. Credit for small producers of ethanol; modification of alcohol fuels
credit.
PART II—ENHANCED OIL RECOVERY CREDFT

Sec. 11511. Tax credit for enhanced oil recovery.
PART III—MODIFICATIONS OF PERCENTAGE DEPLETION

Sec. 11521. Percentage depletion permitted after transfer of proven property.
Sec. 11522. Net income limitation on percentsige depletion increased from 50 percent to 100 percent of property net income for oil and gas properties.
Sec. 11523. Increase in percentage depletion allowance for marginal production.
PART IV—MINIMUM TAX TREATMENT

Sec. 11531. Special energy deduction for minimum ttix.
Subtitle F—Small Business Incentives
PART I—TREATMENT OF ESTATE TAX FREEZES

Sec. 11601. Repeal of section 2036(c).
Sec. 11602. Special valuation rules.
PART II—DISABLED ACCESS CREDIT

Sec. 11611. Credit for cost of providing access for disabled individuals.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-403

PART III—OTHER PROVISIONS

Sec. 11621. Review of impact of regulations on small business.
Sec. 11622. Graphic presentation of major categories of Federal outlays and income.
Subtitle G—Tax Technical Corrections
Sec. 11700. Coordination with other subtitles.
Sec. 11701. Amendments related to Revenue Reconciliation Act of 1989.
Sec. 11702. Amendments related to Technical and Miscellaneous Revenue Act of
1988.
Sec. 11703. Miscellaneous amendments.
Sec. 11704. Miscellaneous clerical changes.
Subtitle H—Repeal of Expired or Obsolete Provisions
PART I—REPEAL OF EXPIRED OR OBSOLETE PROVISIONS
SUBPART A—GENERAL PROVISIONS

Sec. 11801. Repeal of expired or obsolete provisions.
Sec. 11802. Miscellaneous provisions.
SUBPART B—MODIFICATIONS TO SPECIFIC PROVISIONS

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

11811.
11812.
11813.
11814.
11815.
11816.

Elimination
Elimination
Elimination
Elimination
Elimination
Elimination

of
of
of
of
of
of

expired provisions in section 172.
ol»olete provisions in section 167.
expired or obsolete investment tax credit provisions.
obsolete provisions in section 243(b).
expired provisions in percentage depletion.
expired provisions in section 29.
SUBPART C—EFFECTIVE DATE

Sec. 11821. Effective date.
PART II—PROVISIONS RELATING TO STUDIES

Sec.
Sec.
Sec.
Sec.

11831.
11832.
11833.
11834.

Extension of date for filing reports on certain studies.
Repeal of certain studies.
Modifications to study of Americans working abroad.
Increase in threshold for joint committee reports on refunds and credits.
SUBTITLE I—PUBUC DEBT LIMIT

Sec. 11901. Increase in public debt limit.

Subtitle A—Individual Income Tax Provisions
PART I—PROVISIONS AFFECTING HIGH-INCOME
INDIVIDUALS
SEC. 11101. ELIMINATION OF PROVISION REDUCING MARGINAL TAX RATE
FOR HIGH-INCOME TAXPAYERS.

(a) GENERAL RULE.—Section 1 (relating to tax imposed) is
amended by striking subsections (a) through (e) and inserting the
following:
"(a) MARRIED INDIVIDUALS F I U N G JOINT RETURNS AND SURVIVING

SPOUSES.—There is hereby imposed on the taxable income of—
"(1) every married individual (as defined in section 7703) who
makes a single return jointly with his spouse under section
6013, and
"(2) every surviving spouse (as defined in section 2(a)),
a tax determined in accordance with the following table:
"If taxable income is:
Not over $32,450
Over $32,450 but not over $78,400
Over $78,400

The tax is:
15% of taxable income.
$4,867.50, plus 28% of the
excess over $32,450.
$17,733.50, plus 3 1 % of the excess over
$78,400.

^

104 STAT. 1388-404

PUBLIC LAW 101-508—NOV. 5, 1990

"(b) HEADS OF HOUSEHOLDS.—There is hereby imposed on the

taxable income of every head of a household (as defined in section
2(b)) a tax determined in accordance with the following table:
"If taxable income is:
Not over $26,050
Over $26,050 but not over $67,200

The tax is:
15% of taxable income.
$3,907.50, plus 28% of the excess over
$26,500.
Over $67,200
$15,429.50, plus 3 1 % of the excess over
$67,200.
"(c) UNMARRIED INDIVIDUALS (OTHER THAN SURVIVING SPOUSES
AND HEADS OF HOUSEHOLDS).—There is hereby imposed on the

taxable income of every individual (other than a surviving spouse as
defined in section 2(a) or the head of a household as defined in
section 2(b)) who is not a married individual (as defined in section
7703) a tax determined in accordance with the following table:
"If taxable income is:
Not over $19,450
Over $19,450 but not over $47,050

The tax is:
15% of taxable income.
$2,917.50, plus 28% of the excess over
$19,450.
Over $47,050
$10,645.50, plus 3 1 % of the excess over
$47,050.
"(d) MARRIED INDIVIDUALS FILING SEPARATE RETURNS.—There is

hereby imposed on the taxable income of every married individual
(as defined in section 7703) who does not make a single return
jointly with his spouse under section 6013, a tax determined in
accordance with the following table:
"If taxable income is:
Not over $16,225
Over $16,225 but not over $39,200

The tax is:
15% of taxable income.
$2,433.75, plus 28% of the excess over
$16,225.
Over $39,200
$8,866.75, plus 31% of the excess over
$39,200.
"(e) ESTATES AND TRUSTS.—There is hereby imposed on the taxable

income of—
"(1) every estate, and
"(2) every trust,
taxable under this subsection a tax determined in accordance with
the following table:
"If taxable income is:
Not over $3,300
Over $3,300 but not over $9,900
Over $9,900

The tax is:
15% of taxable income.
$495, plus 28% of the excess over $3,300.
$2,343, plus 3 1 % of the excess over
$9,900."

(b) REPEAL OF PHASEOUT.—

(1) I N GENERAL.—Section 1 is amended by striking subsection
(g) (relating to phaseout of 15-percent rate and personal exemptions).
(2) CONFORMING AMENDMENT.—Subparagraph (A) of section

l(fX6) (relating to adjustments for inflation) is amended by
striking "subsection (gX4),".
(c) 28 PERCENT MAXIMUM CAPITAL GAINS RATE.—Subsection (j) of

section 1 (relating to maximum capital gains rate) is amended to
read as follows:
"(j) MAXIMUM CAPITAL GAINS RATE.—If a taxpayer has a net

capital gain for any taxable year, then the tax imposed by this
section shall not exceed the sum of—
"(1) a tax computed a t the rates and in the same manner as if
this subsection had not been enacted on the greater of—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-405

"(A) taxable income reduced by the amount of the net
capital gain, or
(B) the amount of taxable income taxed at a rate below
28 percent, plus
"(2) a tax of 28 percent of the amount of taxable income in
excess of the amount determined under paragraph (1)."
(d) TECHNICAL AMENDMENTS.—

(IXA) Subsection (f) of section 1 is amended—
(i) by striking "1988" in paragraph (1) and inserting
"1990", and
(ii) by striking "1987" in paragraph (3XB) and inserting
"1989".
(B) Subparagraph (B) of section 32(iXl) is amended by striking
"1987" and inserting "1989".
(C) Subparagraph (C) of section 41(eX5) is amended—
(i) by inserting ", by substituting 'calendar year 1987' for
'calendar year 1989' in subparagraph (B) thereof before
the period at the end of clause (i),
(ii) by striking "1987" in clause (ii) and inserting "1989",
and
(iii) by adding at the end of clause (ii) the following new
sentence: "Such substitution shall be in lieu of the substitution under clause (i).".
(D) Subparagraph (B) of section 63(cX4) is gimended by inserting ", by substituting 'calendar year 1987' for 'calendar year
1989' in subparagraph (B) thereof*^' before the period at the end.
(E) Clause (ii) of section 13503X2XB) is amended by striking ", determined by substituting 'calendar year 1989' for 'calendar year 1987' in subparagraph (B) thereof .
(F) Subparagraph (B) of section 151(dX3) is amended by striking "1987^' and inserting "1989".
(G) Clause (ii) of section 513(hX2XC) is amended by inserting ", by substituting 'calendar year 1987' for 'calendar year
1989' in subparE^aph (B) thereof'^' before the period at the end.
(2) Section 1 is amended by striking subsection (h) and redesignating subsections (i) and (j) as subsections (g) and (h),
respectively.
(3) Subsection (j) of section 59 is amended—
(A) by striking "section l(i)" each place it appears and
inserting "section 1(g)", and
(B) by striking "section l(iX3XB)" in paragraph (2XC) and
inserting "section l(gX3XB)".
(4) Paragraph (4) of section 691(c) is amended by striking "l(j)"
and inserting "1(h)".
(5XA) Clause (i) of section 904(bX3XD) is amended by striking
"subsection (j)" and inserting "subsection (h)".
(B) Subclause (I) of section 904(bX3XEXiii) is amended by
striking "section l(j)" and inserting "section 1(h)".
(6) Clause (iv) of section 6103(eXlXA) is amended by striking
"section l(j)" and inserting "section 1(g)".
(7XA) Subparagraph (A) of section 7518(gX6) is amended by
striking "l(j)^'and inserting "1(h)".
(B) Subparagraph (A) of section 607(hX6) of the Merchant
Marine Act, 1936 is eimended by striking "l(i)" and inserting
"1(h)".
(e) EFFECTIVE DATE.—The amendments made by this section shall
apply to taxable years beginning after December 31,1990.

46 USC app.
ll'^'^26 USC 1 note,

104 STAT. 1388-406

PUBLIC LAW 101-508--NOV. 5, 1990

SEC. 11102. INCREASE IN RATE OF INDIVIDUAL ALTERNATIVE MINIMUM
TAX.

(a) GENERAL RULE.—Subparagraph (A) of section 550t)Xl) (relating
to tentative minimum tax) is amended by striking "21 percent" and
inserting "24 percent".
26 use 55 note.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to taxable years beginning after December 31, 1990.
SEC. 11103. OVERALL LIMITATION ON ITEMIZED DEDUCTIONS.

(a) I N GENERAL.—Part I of subchapter B of chapter 1 is amended
by adding at the end thereof the following new section:
"SEC. 68. OVERALL LIMITATION ON ITEMIZED DEDUCTIONS.

"(a) GENERAL RULE.—In the case of an individual whose adjusted
gross income exceeds the applicable amount, the amount of the
itemized deductions otherwise allowable for the taxable year shall
be reduced by the lesser of—
"(1) 3 percent of the excess of adjusted gross income over the
applicable amount, or
'(2) 80 percent of the amount of the itemized deductions
otherwise allowable for such taxable year.
"Ot)) APPLICABLE AMOUNT.—

"(1) I N GENERAL.—For purposes of this section, the term
'applicable amount' means $100,000 ($50,000 in the case of a
separate return by a married individual within the meaning of
section 7703).
"(2) INFLATION ADJUSTMENTS.—In the case of any taxable year
beginning in a calendar year after 1991, each dollar amount
contained in paragraph (1) shall be increased by an amount
equal to—
"(A) such dollar amount, multiplied by
"(B) the cost-of-living adjustment determined under section l(fK3) for the calendar year in which the taxable year
begins, by substituting 'calendar year 1990' for 'calendar
year 1989' in subparagraph (B) thereof."
"(c) EXCEPTION FOR CERTAIN ITEMIZED DEDUCTIONS.—For purposes
of this section, the term 'itemized deductions' does not include—
"(1) the deduction under section 213 (relating to medical, etc.
expenses),
(2) any deduction for investment interest (as defined in
section 163(d)), and
"(3) the deduction under section 165(a) for losses described in
subsection (cX3) or (d) of section 165.
"(d) COORDINATION WITH OTHER LIMITATIONS.—This section shall
be applied after the application of any other limitation on the
allowance of any itemized deduction.
"(e) EXCEPTION FOR ESTATES AND TRUSTS.—This section shall not
apply to any estate or trust.
(f) TERMINATION.—This section shall not apply to any taxable
year beginning after December 31,1995."
(b) COORDINATION WITH MINIMUM TAX.—Paragraph (1) of section

56(b) is amended by adding at the end thereof the following new
subparagraph:
'(F) SECTION 68 NOT APPUCABLE.—Section 68 shall not
apply."
(c) CONFORMING AMENDMENT.—Subparagraph (A) of section 1(f)(6)
is amended by inserting "section 68(bX2)' after "section 63(cX4),".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-407

(d) CLERICAL AMENDMENT.—The table of sections for part I of
subchapter B of chapter 1 is amended by adding a '^'^ the end thereof
the following new item:
"Sec. 68. Overall limitation on itemized deductions."
(e) EFFECTIVE DATE.—The amendments made by this section shall

apply to taxable years beginning after December 31,1990.
SEC. 11104. PHASEOUT OF PERSONAL EXEMPTIONS.
(a) GENERAL RULE.—Subsection (d) of section 151 is amended to

read as follows:
"(d) EXEMPTION AMOUNT.—For purposes of this section—
"(1) I N GENERAL.—Except as otherwise provided in this
subsection, the term 'exemption amount' means $2,000.
"(2) EXEMPTION AMOUNT DISALLOWED IN CASE OF CERTAIN

DEPENDENTS.—In the case of an individual with respect to whom
a deduction under this section is allowable to another taxpayer
for a taxable year beginning in the calendar year in which the
individual's taxable year begins, the exemption amount applicable to such individual for such individual's taxable year
shall be zero.
"(3) PHASEOUT.—

"(A) I N GENERAL.—In the case of any taxpayer whose
adjusted gross income for the taxable year exceeds the
threshold amount, the exemption amount shall be reduced
by the applicable percentage.
"(B) APPUCABLE PERCENTAGE.—For purposes of subparagraph (A), the term 'applicable percentage' means 2
percentage points for each $2,500 (or fraction thereof) by
which the taxpayer's adjusted gross income for the taxable
year exceeds the threshold amount. In the case of a married
individual filing a separate return, the preceding sentence
shall be applied by substituting '$1,250' for '$2,500'. In no
event shall the applicable percentage exceed 100 percent.
"(C) THRESHOLD AMOUNT.—For purposes of this paragraph, the term 'threshold amount' means—
"(i) $150,000 in the case of a joint of a return or a
surviving spouse (as defined in section 2(a)),
"(ii) $125,000 in the case of a head of a household (as
defined in section 2(b) '®,
"(iii) $100,000 in the case of an individual who is not
married and who is not a surviving spouse or head of a
household, and
"(iv) $75,000 in the case of a married individual filing
a separate return.
For purposes of this paragraph, marital status shall be
determined under section 7703.
"(D) COORDINATION WITH OTHER PROVISIONS.—The provi-

sions of this paragraph shall not apply for purposes of
determining whether a deduction under this section with
respect to any individual is allowable to another taxpayer
for any taxable year.
"(E) TERMINATION.—This paragraph shall not apply to
any taxable year beginning after December 31,1995.
"(4) INFLATION ADJUSTMENTS.—
"(A) ADJUSTMENT TO BASIC AMOUNT OF EXEMPTION.—In

the case of any taxable year beginning in a calendar year
^^ So in original. Probably should be "at".
^* So in original. Probably should be "2(b))".

26 USC 1 note,

104 STAT. 1388-408

PUBLIC LAW 101-508—NOV. 5, 1990
after 1989, the dollar amount contained in paragraph (1)
shall be increased by an amount equal to—
"(i) such dollar amount, multiplied by
"(ii) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable year begins, by substituting 'calendar year 1988'
for 'calendar year 1989' in subparagraph (B) thereof.
"(B)

ADJUSTMENT TO THRESHOLD AMOUNTS FOR YEARS

AFTER 1991.—In the case of any taxable year beginning in a
calendar year after 1991, each dollar amount contained in
paragraph (3)(C) shall be increased by an amount equal to—
"(i) such dollar amount, multiplied by
"(ii) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable year begins, by substituting 'calendar year 1990'
for 'calendar year 1989' in subparagraph (B) thereof."
(b) CONFORMING AMENDMENT.—Paragraph (6) of section 1(f)

26 use 1 note.

is

amended—
(1) by striking "section 151(d)(3)" in subparagraph (A) and
inserting "section 151(d)(4)", and
(2) by striking "section 151(d)(3)" in subparagraph (B) and
inserting "section 151(d)(4)(A)".
(c) EFFECTIVE DATE.—The amendments made by this section shall
apply to taxable years beginning after December 31,1990.

PART II—MODIFICATIONS OF EARNED INCOME
CREDIT
SEC. m i l . MODIFICATIONS OF EARNED INCOME TAX CREDIT.

(a) IN GENERAL.—So much of section 32 (relating to earned income
credit) as precedes subsection (d) thereof is amended to read as
follows:
"SEC. 32. EARNED INCOME.

"(a) ALLOWANCE OF CREDIT.—In the case of an eligible individual,
there shall be allowed as a credit against the tax imposed by this
subtitle for the taxable year an amount equal to the sum of—
"(1) the basic earned income credit, and
"(2) the health insurance credit.
"(b) COMPUTATION OF CREDIT.—For purposes of this section—
"(1) BASIC EARNED INCOME CREDIT.—

"(A) I N GENERAL.—The term 'basic earned income credit'
means an amount equal to the credit percentage of so much
of the taxpayer's earned income for the taxable year as does
not exceed $5,714.
"(B) LIMITATION.—The amount of the basic earned
income credit allowable to a taxpayer for any taxable year
shall not exceed the excess (if any) of—
"(i) the credit percentage of $5,714, over
"(ii) the phaseout percentage of so much of the adjusted gross income (or, if greater the earned income) of
the taxpayer for the taxable year as exceeds $9,000.
"(C) PERCENTAGES.—For purposes of this paragraph—
"(i) IN GENERAL.—Except as provided in clause (ii),
the percentages shall be determined as follows:

PUBLIC LAW 101-508—NOV. 5, 1990
"In the case of an eligible individual with:

pe^clntS'eb:

1 qualifying child
2 or more qualifying children

104 STAT. 1388-409
S^rcent^eTs:

23
25

16.43
17.86

"(ii) TRANSITION PERCENTAGES.—

"(I) For taxable years beginning in 1991, the
percentages are:
"In the case of an eligible individual with:
1 qualifying child
2 or more qualifying children

pe^|n^e\:
16.7
17.3

S'rcenS'S
11.93
12.36

"(ID For taxable years beginning in 1992, the
percentages are:
"In the case of an eligible individual with:
1 qualifying child
2 or more qualifying children

peT^lnt^il:
17.6
18.4

S'rcenS'^s:
12.57
13.14

"(III) For taxable years beginning in 1993, the
percentages are:
••to the c » of an eligible individual with:

^TSn'S^^:

1 qualifying child
18.5
2 or more qualifying children
19.5
"(D) SUPPLEMENTAL YOUNG CHILD CREDIT.—In

^ o ^ t .
13.21
13.93

the case of
a taxpayer with a qualifying child who has not attained age
1 as of the close of the calendar year in which or with which
the taxable year of the tsixpayer ends—
"(i) the credit percentage shall be incresised by 5
percentage points, and
"(ii) the phaseout percentage shall be increased by
3.57 percentage points.
If the taxpayer elects to take a child into account under this
subparagraph, such child shall not be treated as a qualifying individual under section 21.

"(2) HEALTH INSURANCE CREDIT.—

"(A) I N GENERAL.—The term 'health insurance credit'
means an amount determined in the same manner as the
basic earned income credit except that—
"(i) the credit percentage shall be equal to 6 percent,
and
"(ii) the phaseout percentage shall be equal to 4.285
percent.
"(B) LIMITATION BASED ON HEALTH INSURANCE COSTS.—The

amount of the health insurance credit determined under
subparagraph (A) for any taxable year shall not exceed the
amounts paid by the taxpayer during the tEixable year for
insurance coverage—
"(i) which constitutes medical care (within the meaning of section 213(d)(lXC)), and
"(ii) which includes at least 1 qualifying child.
For purposes of this subparagraph, the rules of section
213(d)(6) shall apply.
"(C) SUBSIDIZED EXPENSES.—A taxpayer may not take into
account under subparagraph (B) any amount to the extent
that—

104 STAT. 1388-410

PUBLIC LAW 101-508—NOV. 5, 1990

"(i) such amount is paid, reimbursed, or subsidized by
the Federal Government, a State or local government,
or any agency or instrumentality thereof; and
"(ii) the payment, reimbursement, or subsidy of such
Eunount is not includible in the gross income of the
recipient.
"(c) DEFINITIONS AND SPECIAL RULES.—For purposes of this
section—
"(1) EUGIBLE INDIVIDUAL.—

"(A) I N GENERAL.—The term 'eligible individual' means
any individual who has a qualifying child for the taxable
year.
"(B) QuAUFYiNG CHILD INELIGIBLE.—If an individual is
the qualifying child of a taxpayer for any taxable year of
such taxpayer beginning in a calendar year, such in^vidual
shall not be treated as an eligible individual for any taxable
year of such individual beginning in such calendar year.
"(C) 2 OR MORE ELIGIBLE INDIVIDUALS.—If 2 Or morC

individuals would (but for this subparagraph and after
application of subparagraph (B)) be treated as eligible
individuals with respect to the same qualifjdng child for
taxable years beginning in the same calendar year, only the
individual with the highest adjusted gross income for such
taxable years shall be treated as an eligible individual with
respect to such qualifying child.
(D) EXCEPTION FOR INDIVIDUAL CLAIMING BENEFITS UNDER

SECTION 911.—The term 'eligible individual' does not include any individual who claims the benefits of section 911
(relating to citizens or residents living abroad) for the taxable year.
"(2) EARNED INCOME.—

"(A) The term 'earned income' means—
"(i) wages, salaries, tips, and other employee compensation, plus
"(ii) the £unount of the taxpayer's net earnings from
self-emplojmient for the taxable year (within the meaning of section 1402(a)), but such net earnings shall be
determined with regard to the deduction allowed to the
taxpayer by section 164(f).
"(B) For purposes of subparagraph (A)—
"(i) the earned income of an individual shall be computed without regard to any community property laws,
"(ii) no amount received as a pension or annuity shall
be taken into account, and
"(iii) no amount to which section 871(a) applies (relating to income of nonresident alien individuals not connected with United States business) shall be taken into
account.
"(3) QUALIFYING CHILD.—

' (A) I N GENERAL.—The term 'qualifying child' means,
with respect to any taxpayer for any taxable year, an
individual—
"(i) who bears a relationship to the taxpayer described in subparagraph (B),
"(ii) except as provided in subparagraph (BXiii), who
has the same principal place of abode as the taxpayer
for more than one-half of such taxable year,

PUBLIC LAW 101-508—NOV. 5, 1990
"(iii) who meets the age requirements of subparagraph (C), and
"(iv) with respect to whom the taxpayer meets the
identification requirements of subparagraph (D).
"(B) RELATIONSHIP TEST.—

"(i) IN GENERAL.—An individual bears a relationship
to the taxpayer described in this subparsigraph if such
individual is—
"(I) a son or daughter of the taxpayer, or a
descendant of either,
"(II) a stepson or stepdaughter of the taxpayer,
or
"(III) an eligible foster child of the taxpayer.
"(ii) MARRIED CHILDREN.—Clause (i) shall not apply to
any individual who is married as of the close of the
taxpayer's taxable year unless the taxpayer is entitled
to a deduction under section 151 for such taxable year
with respect to such individual (or would be so entitled
but for paragraph (2) or (4) of section 152(e)).
"(iii) EUGIBLE FOSTER CHILD.—For purposes of clause
(iXIII), the term 'eligible foster child' means an individual not described in clause (i) (I) or (II) who—
"(I) the taxpayer cares for as the taxpayer's own
child, and
"(II) has the same principal place of abode as the
taxpayer for the taxpayer's entire taxable year.
"(iv) ADOPTION.—For purposes of this subparagraph,
a child who is legally adopted, or who is placed with the
taxpayer by an authorized placement agency for adoption by the taxpayer, shall be treated as a child by
blood.
"(C) AGE REQUIREMENTS.—An individual meets the
requirements of this subparagraph if such individual—
"(i) has not attained the £^e of 19 as of the close of
the calendar year in which the teixable year of the
taxpayer begins,
"(ii) is a student (as defined in section 151(cX4)) who
has not attained the age of 24 as of the close of such
calendar year, or
"(iii) is permanently and totally disabled (as defined
in section 22(e)(3)) at any time during the taxable year.
"(D) IDENTIFICATION REQUIREMENTS.—

"(i) I N GENERAL.—The requirements of this subparagraph are met if^
"(I) the taxpayer includes the name £ind age of
each qualifying child (without regard to this
subparagraph) on the return of tax for the taxable
year, and
"(II) in the case of an individual who has attained the age of 1 year before the close of the
taxpayer's taxable year, the taxpayer includes the
taxpayer identification number of such individual
on such return of tax for such taxable year,
"(ii) INSURANCE POUCY NUMBER.—In the case of any
taxpayer with respect to which the health insurance
credit is sdlowed under subsection (aX2), the Secretary
may require a taxpayer to include an insurance policy

104 STAT. 1388-411

104 STAT. 1388-412

PUBLIC LAW 101-508—NOV. 5, 1990
number or other adequate evidence of insurance in
addition to any information required to be included in
clause (i).
"(iii) OTHER METHODS.—The Secretary may prescribe
other methods for providing the information described
in clause (i) or (ii).
"(E) ABODE MUST BE IN THE UNITED STATES.—The require-

ments of subparagraphs (AXii) and (BXiiiXH) shall be met
only if the principal place of abode is in the United States."
(b) COORDINATION WITH CERTAIN MEANS-TESTED PROGRAMS.—Sec-

tion 32 is amended by adding at the end thereof the following new
subsection:
"0) COORDINATION WITH CERTAIN MEANS-TESTED PROGRAMS.—For

purposes of—
"(1) the United States Housing Act of 1937,
"(2) title V of the Housing Act of 1949,
"(3) section 101 of the Housing and Urban Development Act of
1965,
"(4) sections 221(dX3), 235, and 236 of the National Housing
Act, and
"(5) the Food Stamp Act of 1977,
any refund made to an individual (or the spouse of an individual) by
reason of this section, and any pajonent made to such individual (or
such spouse) by an employer under section 3507, shall not be treated
as income (and shall not be taken into account in determining
resources for the month of its receipt and the following month)."
(c) ADVANCE PAYMENT OF CREDIT.—Subparagraphs (B) and (C) of

section 3507(cX2) are amended to read as follows:
"(B) if the employee is not married, or if no earned
income eligibility certificate is in effect with respect to the
spouse of the employee, shall treat the credit provided by
section 32 as if it were a credit—
"(i) of not more than the credit percentage under
section 32(bXl) (without regard to subparagraph (D)
thereof) for an eligible individual with 1 qualifying
child and with earned income not in excess of the
amount of earned income taken into account under
section 32(aXl), which
"(ii) phases out between the amount of earned
income at which the phaseout begins under section
32(bXlXBXii) and the amount of income at which the
credit under section 32(aXl) phases out for an eligible
individual with 1 qualif3dng child, or
"(C) if an earned income eligibility certificate is in effect
with respect to the spouse of the employee, shall treat the
credit as if it were a credit determined under subparagraph
(B) by substituting Vn of the amounts of earned income
described in such subparagraph for such amounts."
(d) COORDINATION WITH DEDUCTIONS.—
(1) MEDICAL DEDUCTION.—Section 213 is amended by adding at

the end thereof the following new subsection:
"(f) COORDINATION WITH HEALTH INSURANCE CREDIT UNDER SECTION 32.—The amount otherwise taken into account under subsec-

tion (a) as expenses paid for medical care shall be reduced by the
amount (if any) of the health insurance credit allowable to the
taxpayer for the taxable year under section 32."

PUBLIC LAW 101-508—NOV. 5, 1990
(2) SELF-EMPLOYED

104 STAT. 1388-413

INDIVIDUALS.—Paragraph (3) of section

162(1) is amended to read as follows:
"(3) COORDINATION WITH MEDICAL DEDUCTION, ETC.—
"(A) MEDICAL DEDUCTION.—Any amount paid by a teix-

payer for insurance to which paragraph (1) applies shall not
be taken into account in computing the amount allowable
to the taxpayer as a deduction under section 213(a).
"(B) HEALTH INSURANCE CREDIT.—The amount otherwise
taken into account under paragraph (1) as paid for insurance which constitutes medical care shall be reduced by the
amount (if any) of the health insurance credit allowable to
the taxpayer for the taxable year under section 32."
(e) CONFORMING AMENDMENTS.—Paragraph (2) of section 32(i) is

amended—
(1) by striking "or (ii)" in subparagraph (AXi) thereof,
(2) by striking "clause (iii)" in subparagraph (A)(ii) and inserting "clause (ii)", and
(3) by amending subparsigraph (B) to read as follows:
"(B) DOLLAR AMOUNTS.—The dollar amounts referred to
in this subparagraph are—
"(i) the $5,714 dollar amounts contained in subsection
(bXl),and
"(ii) the $9,000 amount contained in subsection
(bXlXBXii)."
(f) EFFECTIVE DATE.—The amendments made by this section shall
apply to taxable years beginning after December 31,1990.

26 use 32 note,

SEC. 11112. REQUIREMENT OF IDENTIFYING NUMBER FOR CERTAIN
DEPENDENTS.

(a) GENERAL RULE.—Paragraph (2) of section 6109(e) (relating to
furnishing number for certain dependents) is amended by s t r i ^ n g
"2 years" and inserting "1 year".
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 26USC6109
shall apply to returns for taxable years beginning after Decem- "°**ber 31,1990.
SEC. 11113. STUDY OF ADVANCE PAYMENTS.

(a) I N GENERAL.—The Comptroller General of the United States
shall, in consultation with the Secretary of the Treasury, conduct a
study of advance payments required by section 3507 of the Internal
Revenue Code of 1986 to determine—
(1) the effectiveness of the advance pa)ntnent system (including
an analysis of why so few employees take advantage of such
system), and
(2) the manner in which such system can be implemented to
alleviate administrative complexity, if any, for small business,
and
(3) if there are any other problems in the administration of
such system.
(b) REPORT.—Not later than 1 year after the date of the enactment
of this title, the Comptroller shall report the results of the study
conducted under subsection (a), together with any recommendations,
to the Committee on Finance of the United States Senate and the
Committee on Ways and Means of the House of Representatives.

26 USC 3507

104 STAT. 1388-414
26 u s e 21 note.

PUBLIC LAW 101-508—NOV. 5, 1990

SEC. 11114. PROGRAM TO INCREASE PUBLIC AWARENESS.

Not later than the first calendar year following the date of the
enactment of this subtitle, the Secretary of the Treasury, or the
Secretary's delegate, shall establish a taxpayer awareness program
to inform the taxpaying public of the availability of the credit for
dependent care sillowed under section 21 of the Internal Revenue
Code of 1986 and the earned income credit and child health insurance under section 32 of such Code. Such public awareness program
shall be designed to assure that individuals who may be eligible are
informed of the availability of such credit and filing procedures. The
Secretary shall use appropriate means of communication to carry
out the provisions of this section.
SEC. 11115. EXCLUSION FROM INCOME AND RESOURCES OF EARNED
INCOME TAX CREDIT UNDER TITLES IV, XVI, AND XIX OF
THE SOCIAL SECURITY ACT.
(a) EXCLUSIONS UNDER TITLE IV.—
(1) EXCLUSIONS FROM RESOURCES.—Section 402(aX7)(B) of the

Social Security Act (42 U.S.C. 602(a)(7)(B)) is amended—
(A) by striking "or" before "(iii)"; and
(B) by inserting ", or (iv) for the month of receipt and the
following month, any refund of Federal income taxes made
to such family by resison of section 32 of the Internal
Revenue Code of 1986 (relating to earned income credit),
and any payment made to such family by an employer
under section 3507 of such Code (relating to advance payment of earned income credit)" before the semicolon.
(2) EJXCLUSIONS FROM INCOME.—Section 402(a)(18) of the Social
Security Act (42 U.S.C. 602(aX18)) is amended by inserting "or
8(AXviii)" after "other than paragraph 8(AXv)".
(b) EXCLUSIONS UNDER TITLE XVI.—
(1) EXCLUSIONS FROM INCOME.—Section 1612(b) of the Social

Security Act (42 U.S.C. 1382aa))), as amended by sections 5031(a)
and 5035(a) of this Act, is amended—
(A) by striking "and" at the end of paragraph (17);
(B) by striking the period at the end of paragraph (18) and
inserting "; and"; and
(C) by adding at the end the following:
"(19) any refund of Federal income tsixes made to such
individual (or such spouse) by reason of section 32 of the Internal Revenue Code of 1986 (relating to earned income tax
credit), and any pa3mient made to such individual (or such
spouse) by an employer under section 3507 of such Code (relating to advance pajmient of earned income credit).".
(2) EXCLUSIONS FROM RESOURCES.—Section 1613(a) of the Social

Security Act (42 U.S.C. 1382b(a)), as amended by sections 5031(b)
and 50350)) of this Act, is amended—
(A) by striking "and" at the end of paragraph (8);
(B) by striking the period at the end of paragraph (9) and
inserting "; and"; and
(C) by adding at the end the following new paragraph:
"(10) for the month of receipt and the following month, any
refund of Federal income taxes made to such individual (or such
spouse) by reason of section 32 of the Internal Revenue Code of
1986 (relating to earned income tax credit), and any payment
made to such individual (or such spouse) by an employer under

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-415

section 3507 of such Code (relating to advance pa5rment of
earned income credit).".
(c) EXCLUSIONS UNDER TITLE XIX.—Pursuant to section 1902(a)(17)
of the Social Security Act (42 U.S.C. 1396a(a)(17)), the Secretary of
Health and Human Services shall promulgate regulations to exempt
from any determination of income and resources (for the month of
receipt and the following month) under title XIX of the Social
Security Act any refund of Federal income taxes made to an individual by reason of section 32 of the Internal Revenue Code of 1986
(relating to earned income tax credit), and any payment made to gin
individual by an employer under section 3507 of such C!ode (relating
to advance payment of earned income credit).
(d) AFDC WAIVER OF OVERPAYMENT.—For the purposes of section
402(a)(18) of the Social Security Act (42 U.S.C. 602(a)(18)), a State
agency designated under a State plan under section 402(a)(3) of such
Act may waive any overpayment of aid that resulted from the
receipt by a family of a refund of Federal income taxes by reason of
section 32 of the Internal Revenue Code of 1986 (relating to earned
income tax credit) or any pajnnent made to such family by an
employer under section 3507 of such Code (relating to advance
payment of earned income credit) during the period beginning on
January 1,1990, and ending on December 31,1990.
(e) EFFECTIVE DATE.—The amendments made by subsections (a)
though '^ (c) shall apply to determinations of income or resources
made for any period after December 31,1990.

42 USC 602 note.

SEC. 11116. COORDINATION WITH REFUND PROVISION.

31 USC1324

For purposes of section 1324(bX2) of title 31 of the United States
C!ode, section 32 of the Internal Revenue Code of 1986 (as amended
by this Act) shall be considered to be a credit provision of the
Internal Revenue Code of 1954 enacted before January 1, 1978.

Subtitle B—Excise Taxes
PART I—TAXES RELATED TO HEALTH AND THE
ENVIRONMENT
SEC. 11201. INCREASE IN EXCISE TAXES ON DISTILLED SPIRITS, WINE,
AND BEER.
(a) DISTILLED SPIRITS.—

(1) I N GENERAL.—Paragraphs (1) and (3) of section 5001(a)
(relating to rate of tax on distilled spirits) are each amended by
striking "$12.50" and inserting "$13.50".
(2) TECHNICAL AMENDMENT.—Paragraphs (1) and (2) of section
5010(a) (relating to credit for wine content and .ifor flavors
content) are each amended by striking "$12.50" and inserting
"$13.50".
(b) WINE.—
(1) TAX INCREASES.—
(A) WINES CONTAINING NOT MORE THAN 14 PERCENT ALCO-

HOL.—Paragraph (1) of section 5041(b) (relating to rates of
tax on wines) is amended by striking "17 cents and inserting "$1.07".
(B) WINES CONTAINING MORE THAN 14

(BUT NOT MORE

THAN 21) PERCENT ALCOHOL.—Paragraph (2) of section
^' So in original. Probably should be "through".

42 USC 1396a
"ote.

42 USC 602 note,

104 STAT. 1388-416

PUBLIC LAW 101-508—NOV. 5, 1990
504103) is amended by striking "67 cents" and inserting
"$1.57".
(C) WINES CONTAINING MORE THAN 21

(BUT NOT MORE

THAN 24) PERCENT ALCOHOL.—Par^aph (3) of section
5041(b) is amended by striking "$2.25" and inserting
"$3.15".
(D) ARTIFICIALLY CARBONATED WINES.—Paragraph (5) of

section 50410?) is amended by striking "$2.40" and inserting
"$3.30".
(2) CREDIT FOR SMALL DOMESTIC PRODUCERS.—Section 5041

is

amended by redesignating subsections (c), (d), and (e) as subsections (d), (e), and (f), respectively, and by inserting after subsection 0)) the following new subsection:
"(c) CREDIT FOR SMALL DOMESTIC PRODUCERS.—
"(1) ALLOWANCE OF CREDIT.—Except as provided in paragraph

(2), in the CEise of a person who produces not more than 250,000
wine gallons of wine during the calendar year, there shall be
allowed as a credit against any tax imposed by this title (other
than chapters 2, 21, and 22) of 90 cents per wine g£dlon on the
1st 100,000 wine gallons of wine (other than wine described in
subsection (bX4)) which are removed during such year for
consumption or sale and which have been produced at qualified
facilities in the United States.
"(2) REDUCTION IN CREDIT.—The credit allowable by paragraph (1) shall be reduced (but not below zero) by 1 percent for
each 1,000 wine gallons of wine produced in excess of 150,000
wine gallons of wine during the calendar year.
"(3)

TIME FOR DETERMINING AND ALLOWING CREDIT.—The

credit allowable by paragraph (1)—
"(A) shall be determined at the same time the tax is
determined under subsection (a) of this section, and
"(B) shall be allowable at the time any tax described in
paragraph (1) is payable as if the credit allowable by this
subsection constituted a reduction in the rate of such tax.
"(4) CONTROLLED GROUPS.—Rules similar to rules of section
5051(aX2XB) shedl apply for purposes of this subsection.
"(5) DENIAL OF DEDUCTION.—Any deduction under subtitle A
with respect to any tax against which a credit is allowed under
this subjection shall only be for the amount of such tax as
reduced by such credit.
"(6) REGULATIONS.—The Secretary may prescribe such regulations as may be necessary to prevent the credit provided in this
subsection from benefiting any person who produces more than
250,000 wine gallons of wine during a calendar year and to
assure proper reduction of such credit for persons producing
more than 150,000 wine gallons of wine during a calendar year.'
(3)

CONFORMING

AMENDMENT.—Paragraph

(3)

of

section

5061(b) is amended to read as follows:
"(3) section 5041(e),".
(c) BEER.—

(1) I N GENERAL.—Paragraph (1) of section 5051(a) (relating to
imposition and rate of tax on beer) is amended by striking ' $9"
and inserting "$18".
(2) REGULATIONS.—Paragraph (2) of section 5051(a) is amended
by adding at the end thereof the following new subparagraph:
"(C) REGULATIONS.—The Secretary may prescribe such
regulations as may be necessary to prevent the reduced

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-417

rates provided in this paragraph from benefiting any
person who produces more than 2,000,000 barrels of beer
during a calendar year."
(d) EFFECTIVE DATE.—The amendments made by this section shall
take effect on January 1,1991.
(e) FLOOR STOCKS TAXES.—
(1) IMPOSITION OF TAX.—
(A) IN GENERAL.—In the case of any tax-increased
article—
(i) on which tax was determined under part I of
subchapter A of chapter 51 of the Internal Revenue
Code of 1986 or section 7652 of such Code before January 1,1991, and
(ii) which is held on such date for sale by any person,
there shall be imposed a tax at the applicable rate on each
such article.
(B) APPUCABLE RATE.—For purposes of subparagraph (A),
the applicable rate is—
(i) $1 per proof gallon in the case of distilled spirits,
(ii) $0.90 per wine gallon in the case of wine described
in paragraph (1), (2), (3), or (5) of section 5041(b) of such
Code, and
(iii) $9 per barrel in the case of beer.
In the case of a fraction of a gsillon or barrel, the tax
„
imposed by subparagraph (A) shall be the same fraction as
the amount of such tax imposed on a whole gallon or barrel.
(C) TAX-INCREASED ARTICLE.—For purposes of this subsection, the term "tax-increased article" means distilled spirits, wine described in paragraph (1), (2), (3), or (5) of section
5041(b) of such Code, and beer.
(2) EXCEPTION FOR SMALL DOMESTIC PRODUCERS.—

(A) In the case of wine held by the producer thereof on
January 1, 1991, if a credit would have been allowable
under section 5041(c) of such Code (as added by this section)
on such wine had the amendments made by subsection (b)
applied to all wine removed during 1990 and had the wine
so held been removed for consumption on December 31,
1990, the tax imposed by paragraph (1) on such wine shall
be reduced by the credit which would have been so
allowable.
(B) In the case of beer held by the producer thereof on
January 1, 1991, if the rate of the tax imposed by section
5051 of such Code would have been determined under
subsection (aX2) thereof had the beer so held been removed
for consumption on December 31, 1990, the tax imposed by
paragraph (1) on such beer shall not apply.
(C) For purposes of this paragraph, an article shall not be
treated as held by the producer if title thereto had at any
time been transferred to any other person.
(3)

EXCEPTION FOR CERTAIN SMALL WHOLESALE OR RETAIL

DEALERS.—No tax shall be imposed by paragraph (1) on taxincreased articles held on January 1, 1991, by any dealer if^
(A) the aggregate liquid volume of tax-increased articles
held by such dealer on such date does not exceed 500 wine
gallons, and
(B) such dealer submits to the Secretary (at the time and
in the manner required by the Secretary) such information

26 use 5001
note,
26 use 500i
note.

104 STAT. 1388-418

PUBLIC LAW 101-508—NOV. 5, 1990

as the Secretary shall require for purposes of this
paragraph.
(4) CREDIT AGAINST TAX.—Each dealer shall be allowed as a
credit against the taxes imposed by paragra:ph (1) an amount
equal to—
(A) $240 to the extent such taxes are attributable to
distilled spirits,
(B) $270 to the extent such taxes are attributable to wine,
and
(C) $87 to the extent such taxes are attributable to beer.
Such credit shall not exceed the amount of taxes imposed by
paragraph (1) with respect to distilled spirits, wine, or beer, as
the case may be, for which the dealer is liable.
(5) LIABILITY FOR TAX AND METHOD OF PAYMENT.—
(A) LIABILITY FOR TAX.—A person holding

any tax-increased article on January 1, 1991, to which the tax imposed by paragraph (1) applies shall be liable for such tax.
(B) METHOD OF PAYMENT.—The tax imposed by paragraph

(1) shall be paid in such manner as the Secretary shall
prescribe by regulations.
(C) TIME FOR PAYMENT.—The tax imposed by paragraph

(1) shall be paid on or before June 30,1991.
(6) CONTROLLED GROUPS.—

(A) CORPORATIONS.—In the case of a controlled group—
(i) the 500 wine gallon amount specified in paragraph
(3), and
(ii) the $240, $270, and $87 amounts specified in
paragraph (4),
shall be apportioned among the dealers who are component
members of such group in such manner as the Secretary
shall by regulations prescribe. For purposes of the preceding sentence, the term "controlled group" has the meaning
given to such term by subsection (a) of section 1563 of such
Code; except that for such purposes the phrase "more than
50 percent shall be substituted for the phrase "at least 80
percent" each place it appears in such subsection.
(B) NONINCORPORATED DEALERS UNDER COMMON CON-

TROL.—Under regulations prescribed by the Secretary, principles similar to the principles of subparagraph (A) shall
apply to a group of dealers under common control where 1
or more of such dealers is not a corporation.
(7) OTHER LAWS APPUCABLE.—

(A) I N GENERAL.—All provisions of law, including penalties, applicable to the comparable excise tax with respect
to any tax-increased article shall, insofar as applicable and
not inconsistent with the provisions of this subsection,
apply to the floor stocks taxes imposed by paragraph (1) to
the same extent as if such taxes were imposed by the
comparable excise tax.
(B) COMPARABLE EXCISE TAX.—For purposes of subpara-

graph (A), the term "comparable excise tax" means—
(i) the tax imposed by section 5001 of such Code in the
case of distilled spirits,
(ii) the tax imposed by section 5041 of such Code in
the case of wine, and
(iii) the tax imposed by section 5051 of such Code in
the case of beer.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-419

(8) DEFINITIONS.—For purposes of this subsection—
(A) I N GENERAL.—Terms used in this subsection which
are also used in subchapter A of chapter 51 of such Code
shall have the respective meanings such terms have in such
part.
(B) PERSON.—The term "person" includes any State or
political subdivision thereof, or any agency or instrumentality of a State or political subdivision thereof.
(C) SECRETARY.—The term "Secretary" means the Secretary of the Treasury or his delegate.
(9) TREATMENT OF IMPORTED PERFUMES CONTAINING DISTILLED

SPIRITS.—For purposes of this subsection, any article described
in section 5001(aX3) of such Code shall be treated as distilled
spirits; except that the tax imposed by paragraph (1) shall be
imposed on a wine gallon basis in lieu of a proof gallon basis. To
the extent provided by regulations prescribed by the Secretary,
the preceding sentence shall not apply to any article held on
January 1, 1991, on the premises of a retail establishment.
SEC. 11202. INCREASE IN EXCISE TAXES ON TOBACCO PRODUCTS.

(a) CIGARS.—Subsection (a) of section 5701 is amended—
(1) by striking "75 cents per thousand" in paragraph (1) and
inserting "$1,125 cents per thousand (93.75 cents per thousand
on cigars removed during 1991 or 1992)", and
(2) by striking "equal to" and all that follows in paragraph (2)
and inserting "equal to—
"(A) 10.625 percent of the price for which sold but not
more than $25 per thousand on cigars removed during 1991
or 1992, and
"(B) 12.75 percent of the price for which sold but not more
than $30 per thousand on cigars removed after 1992."
(b) CIGARETTES.—Subsection (b) of section 5701 is amended—
(1) by striking "$8 per thousand" in paragraph (1) and inserting "$12 per thousand ($10 per thousand on cigarettes removed
during 1991 or 1992)", and
(2) by striking "$16.80 per thousand" in paragraph (2) and
inserting "$25.20 per thousand ($21 per thousand on cigarettes
removed during 1991 or 1992)".
(c) CIGARETTE PAPERS.—Subsection (c) of section 5701 is amended
by striking ''Vn, cent" and inserting "0.75 cent (0.625 cent on cigarette papers removed during 1991 or 1992)".
(d) CIGARETTE TUBES.—Subsection (d) of section 5701 is amended
by striking "1 cent" and inserting "1.5 cents (1.25 cents on cigarette
tubes removed during 1991 or 1992)".
(e) SMOKELESS TOBACCO.—Subsection (e) of section 5701 is
amended—
(1) by striking "24 cents" in paragraph (1) and inserting "36
cents (30 cents on snuff removed during 1991 or 1992)", and
(2) by striking "8 cents" in paragraph (2) and inserting "12
cents (10 cents on chewing tobacco removed during 1991 or
1992)".
(f) PIPE TOBACCO.—Subsection (f) of section 5701 is amended by
striking "45 cents" and inserting "67.5 cents (56.25 cents on pipe
tobacco removed during 1991 or 1992)".
(g) DETERMINATION OF PRICE.—Subsection (m) of section 5702 is
amended to read as follows:

104 STAT. 1388-420

26 use 5701
^°^26 u s e 5701

"°**-

PUBLIC LAW 101-508—NOV. 5, 1990

"(m) DETERMINATION OF PRICE ON CIGARS.—In determining price
for purposes of section 5701(a)(2)—
"(1) there shall be included any charge incident to placing the
article in condition ready for use,
"(2) there shall be excluded—
"(A) the amount of the tax imposed by this chapter or
section 7652, and
"(B) if stated as a separate charge, the amount of any
retail sales tax imposed by any State or political subdivision
thereof or the District of Columbia, whether the liability for
such tax is imposed on the vendor or vendee, and
"(3) rules similar to the rules of section 4216(b) shall apply."
(h) EFFECTIVE DATE.—The amendments made by this section shall
apply with respect to articles removed after December 31, 1990.
(i) FLOOR STOCKS TAXES ON CIGARETTES.-;(1) IMPOSITION OF TAX.—On cigarettes

manufactured in or
imported into the United States which are removed before any
tax-increase date and held on such date for sale by any person,
there shall be imposed the following taxes:
(A) SMALL CIGARETTES.—On cigarettes, weighing not more
than 3 pounds per thousand, $2 per thousand.
(B) LARGE CIGARETTES.—On cigarettes weighing more
than 3 pounds per thousand, $4.20 per thousand; except
that, if more than 6V2 inches in length, they shall be
taxable at the rate prescribed for cigarettes weighing not
more than 3 pounds per thousand, counting each 2%
inches, or fraction thereof, of the length of each as one
cigarette.
(2) EXCEPTION FOR CERTAIN AMOUNTS OF CIGARETTES.—

(A) I N GENERAL.—No tax shall be imposed by paragraph
(1) on cigarettes held on any tax-increase date by any
person if—
(i) the aggregate number of cigarettes held by such
person on such date does not exceed 30,000, and
(ii) such person submits to the Secretary (at the time
and in the manner required by the Secretary) such
information as the Secretary shall require for purposes
of this subparagraph.
For purposes of this subparagraph, in the case of cigarettes
measuring more than QV2 inches in length, each 2% inches
(or fraction thereof) of the length of each shall be counted
as one cigarette.
(B) AUTHORITY TO EXEMPT CIGARETTES HELD IN VENDING

MACHINES.—To the extent provided in regulations
prescribed by the Secretary, no tax shall be imposed by
paragraph (1) on cigarettes held for retail sale on any taxincrease date by any person in any vending machine. If the
Secretary provides such a benefit with respect to any
person, the Secretary may reduce the 30,000 amount in
subparsigraph (A) and the $60 amount in paragraph (3) with
respect to such person.
(3) CREDIT AGAINST TAX.—Each person shall be allowed as a
credit against the taxes imp(»sed by paragraph (1) an amount
equal to $60. Such credit shall not exceed the amount of taxes
imposed by paragraph (1) for which such person is liable.
(4) LIABILITY FOR TAX AND METHOD OF PAYMENT.—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-421

(A) LIABILITY FOR TAX.—A person holding cigarettes on
any tax-increase date to which any tax imposed by paragraph (1) applies shall be liable for such tax.
(B) METHOD OF PAYMENT.—The tax imposed by paragraph
(1) shall be paid in such manner as the Secretary shall
prescribe by regulations.
(C) TIME FOR PAYMENT.—The tax imposed by paragraph

(1) shall be paid on or before the 1st June 30 following the
tax-increase date.
(5) DEFINITIONS.—For purposes of this subsection—
(A) TAX-INCREASE DATE.—The term "tax-increase date"
means January 1,1991, and January 1,1993.
(B) OTHER DEFINITIONS.—Terms used in this subsection
which are also used in section 5702 of the Internal Revenue
Code of 1986 shall have the respective meanings such terms
have in such section.
(C) SECRETARY.—The term "Secretary" means the Secretary of the Treasury or his delegate.
(6) CONTROLLED GROUPS.—Rules similar to the rules of section
11201(eX6) shall apply for purposes of this subsection.
(7) OTHER LAWS APPUCABLE.—All provisions of law, including

penalties, applicable with respect to the taxes imposed by section 5701 of such Code shall, insofar as applicable and not
inconsistent with the provisions of this subsection, apply to the
floor stocks taxes imposed by paragraph (1), to the same extent
as if such taxes were imposed by such section 5701.
SEC. 11203. ADDITIONAL CHEMICALS SUBJECT TO TAX ON OZONEDEPLETING CHEMICALS.
(a) GENERAL RULE.—

(1) The table set forth in section 4682(aX2) (defining ozonedepleting chemical) is amended by striking the period after the
last item and by adding at the end thereof the following new
items:
"Carbon tetrachloride
Methyl chloroform
CFC-13
CFC-111
CFC-112
CFC-211
CPC-212
CFC-213
CFC-214
CFC-215
CFC-216
CFC-217

Tetrachloromethane
1,1,1-trichloroethane
CF3C1
C2FC15
C2F2C14
C3FC17
C3F2C16
C3F3C15
C3F4C14
C3F5C13
C3F6C12
C3F7CI."

(2) The table set forth in section 46820t>) is amended by
striking the period after the last item and by adding at the end
thereof the following new items:
"Carbon tetrachloride
Methyl chloroform
CFC-13
CFC-111
CFC-112
CFC-211
CFC-212
CFC-213
CFC-214
CFC-215
CFC-216
CFC-217

1.1
0.1
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0."

104 STAT. 1388-422

PUBLIC LAW 101-508—NOV. 5, 1990

(b) SEPARATE APPUCATION OF EXPORT CREDIT LIMIT FOR NEWLY
LISTED CHEMICALS.—Paragraph (3) of section 4682(d) is amended by

adding at the end thereof the following new subparagraph:
"(C) SEPARATE APPUCATION OF UMIT FOR NEWLY USTED
CHEMICALS.—

"(i) I N GENERAL,—Subparagraph (B) shall be applied
separately with respect to newly listed chemicals and
other chemicals.
"(ii) APPLICATION TO NEWLY LISTED CHEMICALS.—In

appljdng subparagraph (B) to newly listed chemicals—
"(I) subparagraph (B) shall be applied by
substituting '1989' for '1986' each place it appears,
and
"(II) clause (iXII) thereof shall be applied by
substituting for the regulations referred to therein
any regulations (whether or not prescribed by the
Secretary) which the Secretary determines are
comparable to the regulations referred to in such
clause with respect to newly listed chemicals.
"(iii) NEWLY USTED CHEMICAL.—For purposes of this
subparagraph, the term 'newly listed chemical' means
any substance which appears in the table contained in
subsection (aX2) below Halon-2402."
(c) SEPARATE BASE TAX AMOUNT FOR NEWLY LISTED CHEMICALS.—

Subparagraphs (B) and (C) of section 4681(b)(1) are amended to read
as follows:
"(B) BASE TAX AMOUNT.—
"(i) INITIALLY USTED

CHEMICALS.—The base tax
amount for purposes of subparagraph (A) with respect
to any sale or use during a calendar year before 1995
with respect to any ozone-depleting chemical other
than a newly listed chemical (as defined in section
4682(dX3XC)) is the amount determined under the fol_ lowing table for such calendar year:
"Calendar Year
Base Tax Amount
1990 or 1991
$1.37
1992
1.67
1993 or 1994
2.65.
"(ii) NEWLY USTED CHEMICALS.—The base tax amount

for purposes of subparagraph (A) with respect to any
sale or use during a calendar year before 1996 with
respect to any ozone-depleting chemical which is a
newly listed chemical (as so defined) is the amount
determined under the following table for such calendar
year:
"Calendar Year
1991 or 1992
1993
1994
1995

Base Tax Amount
$1.37
1.67
3.00
3.10.

"(C) BASE TAX AMOUNT FOR LATER YEARS.—The base tax
amount for purposes of subparagraph (A) with respect to
any sale or use of an ozone-depleting chemical during a
calendar year after the last year specified in the table
under subparagraph (B) applicable to such chemical shall
be the base tax amount for such last year increased by 45
cents for each year after such last year."
(d) OTHER AMENDMENTS.—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-423

(1) The last sentence of section 4682(c)(2) is amended by
inserting "(other than methyl chloroform)" after "ozone-depleting chemical".
(2) Paragraph (3) of section 4682(h) is amended by striking
"April 1" and inserting "June 30".
(e) EFFECTIVE DATE.—The amendments made by this section shall
take effect on January 1,1991.
(f) DEPOSITS FOR 1ST QUARTER OF 1991.—No deposit of any tax
imposed by subchapter D of chapter 38 of the Internal Revenue Ck)de
of 1986 on any substance treated as an ozone-depleting chemical by
reason of the amendment made by subsection (aXl) shall be required
to be made before April 1,1991.

PART II—USER-RELATED TAXES
SEC. 11211. INCREASE AND EXTENSION OF HIGHWAY-RELATED TAXES
AND TRUST FUND.
(a) INCREASE IN TAX ON GASOUNE.—

(1) IN GENERAL.—Subparagraph (A) of section 4081(a)(2) (relating to rate of tax) is amended—
(A) by striking "and" at the end of clause (i),
(B) by striking the period at the end of clause (ii) and
inserting ", and", and
(C) by adding at the end thereof the following new clause:
"(iii) the deficit reduction rate."
(2) RATES OF TAX.—Subparagraph (B) of section 4081(aX2) is
amended—
(A) by striking "9 cents a gallon, and" and inserting "11.5
cents a gallon,",
(B) by striking the period at the end of clause (ii) and
inserting ", and", and
(C) by adding at the end thereof the following new clause:
"(iii) the deficit reduction rate is 2.5 cents a gallon."
(3) TERMINATION OF DEFICIT REDUCTION RATE.—Subsection (d)

of section 4081 is amended by adding at the end thereof the
following new paragraph:
"(3) DEFICIT REDUCTION RATE—On and after October 1, 1995,
the deficit reduction rate under subsection (aX2) shall not
apply."
(4) 15-CENT TAX ON GASOUNE USED IN NONCOMMERCIAL AVIATION.—Paragraph (3) of section 4041(c) is amended—
(A) by striking "12 cents" and inserting "15 cents", and
(B) by striking "the Highway Trust Fund financing rate"
and inserting "the sum of the Highway Trust Fund financing rate plus the deficit reduction rate".
(5) CONFORMING AMENDMENTS.—

(A) Paragraph (1) of section 4081(c) is amended—
(i) by striking "applied by" and all that follows
through "in the case" and inserting "applied by
substituting rates which are 10/9th of the otherwise
applicable rates in the case", and
(ii) by adding at the end thereof the following: "For
purposes of this subsection, in the case of the Highway
Trust Fund financing rate, the otherwise applicable
rate is 6.1 cents a gallon."

26 USC 4681
"°*®26 use 4682
"°**-

104 STAT. 1388-424

PUBLIC LAW 101-508—NOV. 5, 1990
(B) Paragraph (2) of section 4081(c) is amended by striking
"at a rate equivalent to 3 cents" and inserting "at a Highway Trust Fund financing rate equivalent to 6.1 cents".
(C) Subsection (c) of section 4081 is amended by redesignating parsigraph (4) as paragraph (5) and by inserting
after paragraph (3) the following new paragraph:
"(4) LOWER RATE ON GASOHOL MADE OTHER THAN FROM ETHA-

NOL.—In the case of gasohol none of the alcohol in which
consists of ethanol, paragraphs (1) and (2) shall be applied by
substituting '5.5 cents' for '6.1 cents'.
(D) Subparagraph (B) of section 9503(bX4) is amended by
striking "4081" and inserting "4041, 4081,".
(E) Subparagraph (A) of section 9503(cX2) is amended by
adding at the end thereof the following new sentence:
"The amounts payable from the Highway Trust Fund
under this subparagraph or paragraph (3) shall be determined by taking into account only the Highway Trust Fund
financing rate applicable to any fuel."
(F) Subsection (b) of section 9503 is amended by adding at
the end thereof the following new paragraph:
"(5) GENERAL REVENUE DEPOSITS OF CERTAIN TAXES ON ALCOHOL

26 use 4041
"°*®-

MIXTURES.—For purposes of this section, the amounts which
would G)ut for this paragraph) be required to be appropriated
under subparagraphs (A), (E), and (F) of paragraph (1) shall be
reduced by—
"(A) 0.6 cent per gallon in the case of taxes imposed on
any mixture at lesist 10 percent of which is alcohol (as
defined in section 4081(cX3)) if any portion of such alcohol is
ethanol, and
"(B) 0.67 cent per gallon in the case of gasoline or diesel
fuel used in producing a mixture described in subparagraph
(A)."
(6) EFFECTIVE DATE.—Except as otherwise provided in this
subsection, the amendments made by this subsection shall apply
to gasoline removed (as defined in section 4082 of the Internal
Revenue Code of 1986) after November 30,1990.
(b) INCREASE IN OTHER TAXES.—
(1) DEFICIT REDUCTION RATE.—

(A) Clause (i) of section 4091(bXlXA) is amended by inserting "and the diesel fuel deficit reduction rate" after
"financing rate".
(B) Subsection (b) of section 4091 is amended by redesignating paragraphs (4) and (5) as paragraphs (5) and (6),
respectively, and by inserting after paragraph (3) the following new paragraph:
"(4) DIESEL FUEL DEFICIT REDUCTION RATE.—For purposes of
paragraph (1), except as provided in subsection (c), the diesel
fuel deficit reduction rate is 2.5 cents per gallon."
(C) Paragraph (6) of section 40910^), as redesignated by
subparagraph (A), is amended by adding at the end thereof
the following new subparagraph:
"(D) The diesel fuel deficit reduction rate shall not apply
on and after October 1,1995."
(2) INCREASE IN HIGHWAY TRUST FUND FINANCING RATE.—

Paragraph (2) of section 4091(b) is amended by striking "15
cents and inserting "17.5 cents".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-425

(3) INCREASE IN TAX ON SPECIAL MOTOR FUELS.—Paragraph (2)

of section 4041(a) is amended by striking "of 9 cents a gallon"
and by inserting at the end thereof the following new sentence:
"The rate of the tax imposed by this paragraph shall be the sum
of the Highway Trust Fund financing rate and the deficit
reduction rate in effect under section 4081 at the time of such
sale or use."
(4) DEFICIT REDUCTION TAX TO APPLY TO FUEL USED IN TRAINS.—

(A) Paragraph (2) of section 4093(c) is amended by redesignating subparagraph (B) as subparagraph (C) and by
inserting after subparagraph (A) the following new
subparagraph:
"(B) DEFICIT REDUCTION TAX ON FUEL USED IN TRAINS.—In

the case of fuel sold for use in a diesel-powered train,
paragraph (1) also shall not apply to so much of the tax
imposed by section 4091 as is attributable to the diesel fuel
deficit reduction rate imposed by such section."
(B)(i) Subsection (1) of section 6427 is amended by adding
at the end thereof the following new paragraph:
"(4) No REFUND OF DEFICIT REDUCTION TAX ON FUEL USED IN
TRAINS.—In the case of fuel used in a diesel-powered train,
paragraph (1) also shall not apply to so much of the tax imposed
by section 4091 as is attributable to the diesel fuel deficit
reduction rate imposed by such section."
(ii) Paragraph (1) of section 6427(1) is amended by striking
"paragraph (3)" and inserting "paragraphs (3) and (4)'.
(5) INCREASES IN TAXES NOT TO APPLY TO CERTAIN BUSES.—

Subparagraph (A) of section 6427(b)(2) is amended by striking
"shall not exceed 12 cents" and inserting "shall be 3.1 cents per
gallon less than the aggregate rate at which tax was imposed on
such fuel by section 4041(a) or 4091, as the case may be".
(6) CONFORMING AMENDMENTS.—

(A) Paragraph (1) of section 4091(c) is amended—
(i) by striking "9 cents" and inserting "12.1 cents"
and by striking "10 cents" and inserting "13.44 cents",
and
(ii) by striking "shsill be 1/9 cent per gallon" and
inserting "and the diesel fuel deficit reduction rate
shall be 10/9th of the otherwise applicable such rates".
(B) Paragraph (2) of section 4091(c) is amended by striking
"9 cents" and inserting "12.1 cents".
(CXi) Paragraph (1) of section 4041(a) is amended by
striking "of 15 cents a gallon" and by inserting before the
last sentence the following new sentence:
"The rate of the tax imposed by this paragraph shall be the sum
of the Highway Trust Fund financing rate and the diesel fuel
deficit reduction rate in effect under section 4091 at the time of
such sale or use."
(ii) Subsection (a) of section 4041 is amended by striking
paragraph (3).
(D) Clause (i) of section 4041(bX2)(A) is amended to read as
follows:
"(i) the Highway Trust Fund financing rate applicable under subsection (a)(2) shall be 5.4 cents per
gallon less than the otherwise applicable rate (6 cents
per gallon in the case of a mixture none of the alcohol
in which consists of ethanol), £md".

-194 O - 91 - 27 : QL 3 Part 2

104 STAT. 1388-426

PUBLIC LAW 101-508—NOV. 5, 1990

(EXi) Paragraph (1) of section 4041(k) is amended by
striking subparagraphs (A), (B), and (C) and inserting the
following new subparagraphs:
"(A) the Highway Trust Fund financing rates under paragraphs (1) and (2) of subsection (a) shall be the comparable
rates under sections 4081(c) and 4091(c), as the case may be,
"(B) no tax shall be imposed by subsection (c)(1), and
"(C) no tax shall be imposed by subsection (c)(2)."
(ii) Subsection (q) of section 6427 is amended to read as
follows:
"(q) GASOHOL USED IN NONCOMMERCIAL AVIATION.—Except £is provided in subsection (k), if—
"(1) any tax is imposed by section 4081 at a rate determined
under subsection (c) thereof on gasohol (as defined in such
subsection), and
"(2) such gasohol is used as a fuel in any aircraft in noncommercial aviation (as defined in section 4041(cX4)),
the Secretary shall pay (without interest) to the ultimate purchaser
of such gasohol an amount equal to 1.4 cents (2 cents in the case of a
mixture none of the alcohol in which consists of ethanol) multiplied
by the number of gallons of gasohol so used."
(F) Subparagraph (A) of section 4041(mXl) is amended to
read £is follows:
"(A) under subsection (aX2) the Highway Trust Fund
financing rate shall be 5.75 cents per gallon and the deficit
reduction rate shall be 1.25 cents per gallon, and".
(G) Subsection (d) of section 9502 is amended by adding at
the end thereof the following new paragraph:
"(4) TRANSFERS FOR REFUNDS AND CREDITS NOT TO EXCEED
TRUST FUND REVENUES ATTRIBUTABLE TO FUEL USED.—The

26 use 4041
"°*®-

amounts payable from the Airport and Airway Trust Fund
under paragraph (2) or (3) shall not exceed the amounts required to be appropriated to such Trust Fund with respect to
fuel so used."
(H) Subparagraph (D) of section 9503(cX4) is amended by
striking "(to the extent attributable to the Highway Trust
Fund financing rate)" and by inserting before the period ",
but only to the extent such taxes are attributable to the
Highway Trust Fund financing rates under such sections".
(7) EFFECTIVE DATE.—The amendments made by this subsection shall take effect on December 1,1990.
(c) EXTENSION OF TAXES.—The following provisions are each
amended by striking "1993" each place it appears and inserting
"1995":
(1) Section 4051(c) (relating to tax on heavy trucks and trailers
sold at retail).
(2) Section 4071(d) (relating to t£ix on tires and tread rubber).
(3) Section 4081(dXl) (relating to gasoline tax).
(4) Section 4091(bX6XA) (relating to diesel fuel tax), as redesignated by subsection (b).
(5) Sections 4481(e), 4482(cX4), and 4482(d) (relating to highway use tax).
(d) EXTENSION OF EXEMPTIONS.—The following provisions are each
amended by striking "1993" each place it appears and inserting
"1995":
(1) Section 4041(fX3) (relating to exemptions for farm use).
(2) Section 4041(g) (relating to other exemptions).

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-427

(3) Section 4221(a) (relating to certain tax-free sales).
(4) Section 4483(g) (relating to termination of exemptions for
highway use tax).
(5) Section 6420(h) (relating to gasoline used on farms).
(6) Section 6421(i) (relating to gasoline used for certain nonhighway purposes, etc.).
(7) Section 6427(gX5) (relating to advance repa5niient of increased diesel fuel tax).
(8) Section 6427(o) (relating to fuels not used for taxable
purposes).
(e) EXTENSION OF REDUCED RATES OF TAX ON FUELS (DONTAINING

ALCOHOL.—The following provisions are each amended by striking
"1993" each place it appears and inserting "2000":
(1) Section 4041(bX2XC) (relating to qualified methanol and
ethanol fuel).
(2) Section 4041(kX3) (relating to fuels containing alcohol).
(3) Section 4081(cX5) (relating to gasoline mixed with alcohol),
as redesignated by subsection (a).
(4) Subsections (cX3) and (d)(3) of section 4091 (relating to
diesel fuel and aviation fuel mixed with alcohol and aviation
fuel used to produce certain alcohol fuels).
(f) OTHER PROVISIONS.—

(1) FLOOR STOCKS REFUNDS.—Section 6412(aXl) (relating to

floor stocks refunds) is amended—
(A) by striking "1993" each place it appears and inserting
"1995", and
(B) by striking "1994" each place it appears and inserting
"1996".
(2) INSTALLMENT PAYMENTS OF HIGHWAY USE TAX.—Section

6156(eX2) (relating to installment payments of tax on use of
highway motor vehicles) is amended by striking "1993" and
inserting "1995".
(g) EXTENSION OF DEPOSITS INTO TRUST FUND.—

(1) I N GENERAL.—Subsection (b), and paragraphs (2), (3), and
(4) of subsection (c), of section 9503 (relating to the Highway
Trust Fund) are each amended—
(A) by striking "1993" each place it appears and inserting
"1995", and
(B) by striking "1994" each place it appears and inserting
"1996".
(2) CONFORMING AMENDMENTS TO LAND AND WATER CONSERVATION FUND.—Section 201(b) of the Land and Water (Donservation

Fund Act of 1965 (16 U.S.C. 4601-11) is amended—
(A) by striking "1993" and inserting "1995", and
(B) by striking "1994" each place it appears and inserting
"1996".
(h) INCREASE IN TRANSFERS TO MASS TRANSIT ACCOUNT.—

(1) I N GENERAL.—Paragraph (2) of section 9503(e) is amended
by striking "1 cent" and inserting "1.5 cents".
(2) EFFECTIVE DATE.—The amendment made by paragraph (1)
shall apply to amounts attributable to taxes imposed on or after
December 1,1990.
(i) TRANSFERS OF SMALL-ENGINE FUEL TAXES INTO SPORT FISH
RESTORATION ACCOUNT.—

(1) I N GENERAL.—Section 9503(c) (relating to expenditures
from highway trust fund) is amended by adding at the end
thereof the following new paragraph:

26 use 9503
"°**-

104 STAT. 1388-428

PUBLIC LAW 101-508—NOV. 5, 1990

"(5) TRANSFERS FROM THE TRUST FUND FOR SMALL-ENGINE FUEL
TAXES.—

"(A) I N GENERAL.—The Secretary shall pay from time to
time from the Highway Trust Fund into the Sport Fish
Restoration Account in the Aquatic Resources Trust Fund
amounts (as determined by him) equivalent to the smallengine fuel taxes received on or after December 1,1990, and
before October 1,1995.
"(B) SMALL-ENGINE FUEL TAXES.—For purposes of this
paragraph, the term 'small-engine fuel taxes' means the
taxes under section 4081 with respect to gasoline used as a
fuel in the nonbusiness use of small-engine outdoor power
equipment, but only to the extent such taxes are attributable to the Highway Trust Fund financing rate under
such section."
(2) CONFORMING AMENDMENT.—Section 9504(aX2) (relating to

accounts in aquatic resources trust fund) is amended by inserting "section 9503(cX5)," after "section 9503(cX4),".
(3) EXPENDITURES FOR COASTAL WETLANDS RESTORATION.—Sec-

26 use 9503
note.
26 u s e 4081

note.

tion 9504(bX2) (relating to expenditures from sport fish restoration account) is amended to read as follows:
"(2) EXPENDITURES FROM ACCOUNT.—Amounts in the Sport
Fish Restoration Account shall be available, as provided by
appropriation Acts, for making expenditures—
"(A) to carry out the purposes of the Act entitled 'An Act
to provide that the United States shall aid the States in fish
restoration and management projects, and for other purposes', approved August 9, 1950 (as in effect on October 1,
1988), and
"(B) to carry out the purposes of any law which is
substantially identical to S. 3252 of the 101st Congress, as
introduced.
Amounts transferred to such account under section 9503(cX5)
may be used only for making expenditures described in subparagraph (B) of this paragraph.
(4) EFFECTIVE DATE.—The amendments made by this subsection shall take effect on December 1,1990.
0*) FLOOR STOCKS TAXES.—
(1) IMPOSITION OF TAX.—In

the case of—
(A) gasoline and diesel fuel on which tax WEIS imposed
under section 4081 or 4091 of such Code before December 1,
1990, and which is held on such date by any person, or
(B) diesel fuel on which no tax was imposed under section
4091 of such Code at the Highway Trust Fund financing
rate before December 1, 1990, and which is held on such
date by any person for use as a fuel in a train,
there is hereby imposed a floor stocks tax on such gasoline and
diesel fuel.
(2) RATE OF TAX.—The rate of the tax imposed by paragraph
(1) shall be—
(A) 5 cents per gallon in the case of fuel described in
paragraph (IXA), and
(B) 2.5 cents per gallon in the case of fuel described in
paragraph (IXB).
In the case of any fuel held for use in producing a mixture
described in section 4081(cXl) or section 4091(cXlXA) of such
Code, subparagraph (A) shall be applied by substituting "6.22

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-429

cents" for "5 cents". If no alcohol in such mixture is ethanol,
the preceding sentence shall be applied by substituting "5.56
cents" for "6.22 cents".
(3) LlABIUTY FOR TAX AND METHOD OF PAYMENT.—
(A) LIABILITY FOR TAX.—A person holding

gasoline or
diesel fuel on December 1, 1990, to which the tex imposed
by paragraph (1) applies shsill be liable for such tax.
(B) METHOD OF PAYMENT.—The tax imposed by paragraph

(1) shall be paid in such manner as the Secretary shall
prescribe.
(C) TIME FOR PAYMENT.—The tax imposed by paragraph

(1) shall be paid on or before May 31,1991.
(4) DEFINITIONS.—For purposes of this subsection—
(A) HELD BY A PERSON.—Gasoline and diesel fuel shall be
considered as "held by a person" if title thereto has passed
to such person (whether or not delivery to the person has
been made).
(B) GASOLINE.—The term "gasoline" has the meaning
given such term by section 4082 of such Code.
(C) DIESEL FUEL.—The term "diesel fuel" has the meaning
given such term by section 4092 of such Code.
(D) SECRETARY.—The term "Secretary" means the Secretary of the Treasury or his delegate.
(5) EXCEPTION FOR EXEMPT USES.—The tsix imposed by paragraph (1) shall not apply to gasoline or diesel fuel held by any
person exclusively for any use to the extent a credit or refund of
the tax imposed by section 4081 or 4091 of such Code, as the case
may be, is allowable for such use.
(6) EXCEPTION FOR FUEL HELD IN VEHICLE TANK.—No tax shall
be imposed by paragraph (1) on gasoline or diesel fuel held in
the tank of a motor vehicle or motorboat.
(7) EXCEPTION FOR CERTAIN AMOUNTS OF FUEL.—

(A) I N GENERAL.—No tax shall be imposed by paragraph
(D(i) on gasoline held on December 1, 1990, by any
person if the aggregate amount of gasoline held by such
person on such date does not exceed 4,000 gallons, and
(ii) on diesel fuel held on December 1, 1990, by any
person if the aggregate amount of diesel fuel held by
such person on such date does not exceed 2,000 gallons.
The preceding sentence shall apply only if such person
submits to the Secretary (at the time and in the manner
required by the Secretary) such information as the Secretary shall require for purposes of this paragraph.
(B) EXEMPT FUEL.—For purposes of subparagraph (A),
there shall not be taken into account fuel held by any
person which is exempt from the tax imposed by paragraph
(1) by reason of paragraph (5) or (6).
(C) CONTROLLED GROUPS.—For purposes of this paragraph,
rules similar to the rules of paragraph (6) of section 11201(e)
of this Act shall apply.
(8) OTHER LAWS APPUCABLE.—All previsions of law, including

penalties, applicable with respect to the taxes imposed by section 4081 of such (Dode in the case of gasoline and section 4091 of
such Code in the case of diesel fuel shall, insofar as applicable
and not inconsistent with the provisions of this subsection,
apply with respect to the floor stock taxes imposed by para-

104 STAT. 1388-430

PUBLIC LAW 101-508—NOV. 5, 1990

graph (1) to the same extent £is if such taxes were imposed by
such section 4081 or 4091.
(9) TRANSFER OF PORTION OF FLOOR STOCKS REVENUE TO HIGH-

WAY TRUST FUND.—For purposes of determining the amount
transferred to the Highway Trust Fund, the tax imposed by
paragraph (1) on fuel described in subparagraph (A) thereof
shall be treated as imposed at a Highway Trust Fund financing
rate to the extent of 2.5 cents per gallon.
SEC. 11212. IMPROVEMENTS IN ADMINISTRATION OF GASOLINE EXCISE
TAX.

(a) IN GENERAL.—Paragraph (1) of section 4081(a) is amended to
read as follows:
"(1) T A X ON REMOVAL, ENTRY, OR S A L E . —

"(A) IN GENERAL.—There is hereby imposed a tax at the
rate specified in paragraph (2) on—
"(i) the removal of gasoline from any refinery,
"(ii) the removal of gasoline from any terminal,
"(iii) the entry into the United States of gasoline for
consumption, use, or warehousing, and
"(iv) the sale of gasoline to any person who is not
registered under section 4101 unless there was a prior
taxable removal or entry of such gasoline under clause
(i), (ii), or (iii).
"(B) EXCEPTION FOR BULK TRANSFERS TO REGISTERED TERMI-

NALS.—The tax imposed by this paragraph shall not apply
to any removal or entry of gasoline transferred in bulk to a
terminal if the person removing or entering the gasoline
and the operator of such terminal are registered under
section 4101."
(b) CHANGES IN REGISTRATION RULES.—

(1) I N GENERAL.—Section 4101 is amended to read as follows:
"SEC. 4101. REGISTRATION AND BOND.

"(a) REGISTRATION.—Every person required by the Secretary to
register under this section with respect to the tax imposed by section
4081 or 4091 shall register with the Secretary at such time, in such
form and manner, and subject to such terms and conditions, as the
Secretary may by regulations prescribe. A registration under this
section may be used only in accordance with regulations prescribed
under this section.
"(b) BONDS AND LIENS.—

"(1) IN GENERAL.—Under regulations prescribed by the Secretary, the Secretary may require, as a condition of permitting
any person to be registered under subsection (a), that such
person—
"(A) give a bond in such sum as the Secretary determines
appropriate, and
'(B) agree to the imposition of a lien—
"(i) on such property (or rights to property) of such
person used in the trade or business for which the
registration is sought, or
(ii) with the consent of such person, on any other
property (or rights to property) of such person as the
Secretary determines appropriate.
Rules similar to the rules of section 6323 shall apply to the
lien imposed pursuant to this paragraph.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-431

"(2) RELEASE OR DISCHARGE OF UEN.—If a lien is imposed
pursuant to parsigraph (1), the Secretary shall issue a certificate
of discharge or a release of such lien in connection with a
transfer of the property if there is furnished to the Secretary
(and accepted by him) a bond in such sum as the Secretary
determines appropriate or the transferor agrees to the imposition of a substitute lien under paragraph (IXB) in such sum as
the Secretary determines appropriate. The Secretary shall respond to any request to discharge or release a lien imposed
pursuant to paragraph (1) in connection with a transfer of
property not later than 90 days after the date the request for
such a discharge or release is made.
"(c) DENIAL, REVOCATION, OR SUSPENSION OF REGISTRATION.—Rules

similar to the rules of section 4222(c) shall apply to registration
under this section.
"(d) INFORMATION REPORTING.—The Secretary may require—

"(1) information reporting by any person registered under
this section, Eind
"(2) information reporting by such other persons as the Secretary deems necessary to carry out this part."
(2) CLARIFICATION OF GENERAL REGISTRATION RULES.—Subsec-

tion (c) of section 4222 is amended—
(A) by striking "revoked or suspended" in the material
preceding paragraph (1) and inserting "denied, revoked, or
suspended ,
(B) by striking "revocation or suspension" each place it
appears and inserting "denial, revocation, or suspension",
and
(C) by striking in the heading "REVOCATION OR SUSPENSION" and inserting "DENIAL, REVOCATION, OR SUSPENSION".
(3) DISCLOSURE PERMITTED OF REGISTRATION INFORMATION.—

Subsection (k) of section 6103 is amended by adding at the end
thereof the following new paragraph:
"(7) DISCLOSURE OF EXCISE TAX REGISTRATION INFORMATION.—

To the extent the Secretary determines that disclosure is necessary to permit the effective administration of subtitle D, the
Secretary may disclose—
"(A) the name, address, and registration number of each
person who is registered under any provision of subtitle D
(and, in the case of a registered terminal operator, the
address of each terminal operated by such operator), and
"(B) the registration status of any person."
(4) CONFORMING AMENDMENT.—Section 4093 is amended by
striking subsection (e) (relating to special administrative rules)
and by redesignating subsection (f) as subsection (e).
(c) CERTAIN ADDITIONAL PERSONS LIABLE FOR TAX WHERE WILLFUL
FAILURE T O PAY.—Subpart C of part III of subchapter A of chapter

32 is amended by adding at the end thereof the following new
section:
"SEC. 4103. CERTAIN ADDITIONAL PERSONS LIABLE FOR TAX WHERE
WILLFUL FAILURE TO PAY.

"In any case in which there is a willful failure to pay the tax
imposed by section 4081 or 4091, each person—
"(1) who is an officer, employee, or agent of the taxpayer who
is under a duty to assure the pa3mient of such tax and who
willfully fails to perform such duty, or

104 STAT. 1388-432

PUBLIC LAW 101-508—NOV. 5, 1990

"(2) who willfully causes the taxpayer to fail to pay such tax,
shall be jointly and severally liable with the taxpayer for the tax to
which such failure relates."
(d) REFUNDS IN CERTAIN CASES.—

(1) I N GENERAL.—Section 4081 is amended by adding at the
end thereof the following new subsection:
"(e) REFUNDS IN CERTAIN CASES.—Under regulations prescribed by
the Secretary, if any person who paid the tax imposed by this section
with respect to any gasoline establishes to the satisfaction of the
Secretary that a prior tax was paid (and not credited or refunded)
with respect to such gasoline, then an amount equal to the tax paid
by such person shall be allowed as a refund (without interest) to
such person in the same manner as if it were an overpayment of tax
imposed by this section."
(2) DENIAL OF CREDITS.—Subsection (d) of section 6416 is
amended by adding at the end thereof the following new sentence: "The preceding sentence shall not apply to the tax imposed by section 4081 in the case of refunds described in section
4081(e).'^'
(e) TECHNICAL AND CONFORMING AMENDMENTS.—

(1) Paragraph (1) of section 6724(d) is amended by striking
"or" at the end of clause (x), by striking ", or subsection (e)," in
clause (xi), by striking the period at the end of clause (xi) and
inserting ", or", and by inserting after clause (xi) the following
new clause:
"(xii) section 4101(d) (relating to information reporting with respect to fuels taxes)."
(2) Subsection (a) of section 4081 is amended by striking
paragraph (3).
(3) The table of sections for subpart C of part III of subchapter
A of chapter 32 is amended by adding at the end thereof the
following new item:
"Sec. 4103. Certain additional persons liable for tax where willful failure to
pay."
26 u s e 4081

note.

(f) E F F E C T I V E D A T E S . —

(1) I N GENERAL.—Except as provided in paragraph (2), the
amendments made by this section shall take effect on July 1,
1991.
(2) REGISTRATION, ETC.—The amendments made by subsections (b), (c), and (e) (other than paragraph (2) thereof) shall take
effect on t)ecember 1,1990.
SEC. 11213. INCREASE AND EXTENSION OF AVIATION-RELATED TAXES
AND TRUST FUND; REPEAL OF REDUCTION IN RATES.
(a) INCREASE IN RATES ON TRANSPORTATION.—

^LY^ "^^ei
note.

(1) TRANSPORTATION OF PERSONS.—Subsections (a) and (b) of
section 4261 are each amended by striking "8 percent" and
inserting "10 percent".
(2) TRANSPORTATION OF PROPERTY.—Subsection (a) of section
4271 is amended by striking "5 percent" and inserting "6.25
percent".
(3) EFFECTIVE DATE.—The amendments made by this subsection shall apply to transportation beginning after November 30,
1990, but shall not apply to amounts paid on or before such date.
(b) INCREASE IN RATES ON FUEL.—

(1) I N GENERAL.—Paragraph
amended—

(3) of

section

4091(b)

is

PUBLIC LAW 101-508—NOV. 5,1990

104 STAT. 1388-433

(A) by striking "14 cents" and inserting "17.5 cents", and
(B) by inserting "except as provided in subsection (d),"
after "paragraph (1),".
(2) CONFORMING AMENDMENTS.—

(A) Paragraph (1) of section 4041(c) is amended by striking "14 cents" and inserting "17.5 cents".
(B)(i) SubparEigraph (B) of section 4041(kXl), as amended
by section 11211, is amended to read as follows:
"(B) the rate of the tax imposed by subsection (cXD shall
be the comparable rate under section 4091(d), and".
(ii) Subparagraph (B) of section 4041(m)(l) is amended to
read £is follows:
"(B) the rate of the tax imposed by subsection (cXl) shall
be the comparable rate under section 4091(dXl)."
(CXi) Paragraphs (1) and (2) of section 4091(d) are
amended to read as follows:
"(1) I N GENERAL.—The Airport and Airway Trust Fund
financing rate shall be—
"(A) 4.1 cents per gallon in the case of the sale of any
mixture of aviation fuel if—
"(i) at least 10 percent of such mixture consists of
alcohol (as defined in section 4081(cX3)), and
"(ii) the aviation fuel in such mixture was not taxed
under subparagraph (B), and
"(B) 4.56 cents per gallon in the case of the sale of
aviation fuel for use (at the time of such sale) in producing a
mixture described in subparagraph (A).
In the case of a sale described in subparagraph (B), the Leaking
Underground Storage Tank Trust Fund financing rate shall be
Vb cent per gallon.
"(2) LATER SEPARATION.—If any person separates the aviation
fuel from a mixture of the aviation fuel and alcohol on which
tax was imposed under subsection (a) at the Airport and Airway
Trust Fund financing rate equivalent to 4.1 cents per gallon by
reason of this subsection (or with respect to which a credit or
payment was allowed or made by reason of section 6427(fKl)),
such person shall be treated as the producer of such aviation
fuel. The amount of tax imposed on any sale of such aviation
fuel by such person shall be reduced by the amount of tax
imposed (and not credited or refunded) on any prior sale of such
fuel."
(ii) The heading for subsection (d) of section 4091 is
amended by striking "EXEMPTION FROM" and inserting
"REDUCED RATE OF".

(D) Section 4091 is amended by adding at the end thereof
the following new subsection:
"(e) LOWER RATES OF TAX ON ALCOHOL MIXTURES NOT MADE FROM

ETHANOL.—In the case of a mixture described in subsection
(cXlXA)(i) or (d)(l)(A)(i) none of the alcohol in which is ethanol—
"(1) subsections (c)(1)(A) and (c)(2), and subsections (dXlXA)
and (dX2), shall each be applied by substituting rates which are
0.6 cents less than the rates contained therein, and
"(2) subsections (cXlXB) and (dXlXB) shall be applied by
substituting rates which are 10/9 of the rates determined under
paragraph (1)."
(3) Subsection (f) of section 6427 is amended to read as follows:

104 STAT. 1388-434

PUBLIC LAW 101-508—NOV. 5, 1990

"(t) GASOUNE, DIESEL FUEL, AND AVIATION FUEL USED TO PRODUCE
CERTAIN ALCOHOL FUELS.—

"(1) I N GENERAL.—Except as provided in subsection (k), if any
gasoline, diesel fuel, or aviation fuel on which tax was imposed
by section 4081 or 4091 at the regular tax rate is used by any
person in producing a mixture described in section 4081(c),
4091(cXlXA), or 4091(dXlXA) (as the case may be) which is sold
or used in such person's trade or business the Secretary shall
pay (without interest) to such person an amount equal to the
excess of the regular tax rate over the incentive tax rate with
respect to such fuel.
"(2) DEFINITIONS.—For purposes of paragraph (1)—
"(A) REGULAR TAX RATE.—The term 'regular tax rate'
means—
"(i) in the case of gasoline, the aggregate rate of tax
imposed by section 4081 determined without regard to
subsection (c) thereof,
"(ii) in the case of diesel fuel, the aggregate rate of
tax imposed by section 4091 on such fuel determined
without regard to subsection (c) thereof, and
"(iii) in the case of aviation fuel, the aggregate rate of
tax imposed by section 4091 on such fuel determined
without regard to subsection (d) thereof.
"(B) INCENTIVE TAX RATE.—The term 'incentive tax rate'
means—
"(i) in the case of gasoline, the aggregate rate of tax
imposed by section 4081 with respect to fuel described
in subsection (cXD thereof,
"(ii) in the case of diesel fuel, the aggregate rate of
tax imposed by section 4091 with respect to fuel described in subsection (cXl)(B) thereof, and
"(iii) in the case of aviation fuel, the aggregate rate of
tax imposed by section 4091 with respect to fuel described in subsection (dXl)(B) thereof.
"(3) COORDINATION WITH OTHER REPAYMENT PROVISIONS.—No

26 use 4041
"°*®26 u s e 4041

°

amount shall be payable under paragraph (1) with respect to
any gasoline, diesel fuel, or aviation fuel with respect to which
an amount is payable under subsection (d), (e), or (1) of this
section or under section 6420 or 6421.
"(4) TERMINATION.—This subsection shall not apply with respect to any mixture sold or used after September 30, 1995."
(4) EFFECTIVE DATE.—The amendments made by this subsection shall take effect on December 1,1990.
(5) FLOOR STOCKS TAXES.—
(A) IMPOSITION OF TAX.—In

the case of aviation fuel on
which tax was imposed under section 4041(cXl) or 4091 of
the Internal Revenue Code of 1986 before December 1,1990,
and which is held on such date by any person, there is
hereby imposed a floor stocks tax on such fuel.
(B) RATE OF TAX.—The rate of the tax imposed by
subparagraph (A) shall be 3.5 cents per gallon.
(C) LIABILITY FOR TAX AND METHOD OF PAYMENT.—
(i) LIABILITY FOR TAX.—A person holding

fuel on
December 1, 1990, to which the tax imposed by this
paragraph applies shall be liable for such tax.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-435

(ii) METHOD OF PAYMENT.—The tax imposed by this
paragraph shall be paid in such manner as the Secretary shall prescribe.
(iii) TIME FOR PAYMENT.—The tax imposed by this
paragraph shall be paid on or before May 31, 1991.
(D) DEFINITIONS.—For purposes of this paragraph—
(i) HELD BY A PERSON.—Fuel shall be considered as

"held by a person" if title thereto has passed to such
person (whether or not delivery to the person has been
made).
(ii) AVIATION FUEL.—The term "aviation fuel" has
the meaning given such term by section 4092(a) of such
Code.
(iii) SECRETARY.—The term "Secretary" means the
Secretary of the Treasury or his delegate.
(E) EXCEPTION FOR EXEMPT USES.—The tax imposed by this
paragraph shall not apply to fuel held by any person exclusively for any use which is a nontaxable use (as defined in
section 6427(1) of such Code).
(F) OTHER LAWS APPUCABLE.—All provisions of law,

including penalties, applicable with respect to the taxes
imposed by section 4091 of such Code shall, insofar as
applicable and not inconsistent with the provisions of this
paragraph, apply with respect to the floor stock taxes imposed by this paragraph to the same extent as if such taxes
were imposed by such section 4091.
(c) SPECIAL RULES FOR DEPOSITS OF TAX REVENUES.—

(1) Section 9502 is amended by adding at the end thereof the
following new subsection:
"(e) SPECIAL RULES FOR TRANSFERS INTO TRUST FUND.—
"(1) INCREASES IN TAX REVENUES BEFORE 1993 TO REMAIN IN
GENERAL FUND.—In the case of taxes imposed before January 1,

1993, the amounts which would (but for this paragraph) be
required to be appropriated under paragraphs (1), (2), and (3) of
subsection (b) shall be 3 cents per gallon less (3.5 cents per
gallon less in the case of taxes imposed by section 4041(cXl) and
4091) than the amounts which would (but for this sentence) be
appropriated under such paragraphs.
"(2) CERTAIN TAXES ON ALCOHOL MIXTURES TO REMAIN IN GENERAL FUND.—For purposes of this section, the amounts which

would (but for this paragraph) be required to be appropriated
under paragraphs (1), (2), and (3) of subsection (b) shall be
reduced by—
"(A) 0.6 cent per gallon in the case of taxes imposed on
any mixture at least 10 percent of which is alcohol (as
defined in section 4081(cX3)) if any portion of such alcohol is
ethanol, and
"(B) 0.67 cent per gallon in the case of fuel used in
producing a mixture described in subparagraph (A)."
(2) Paragraph (2) of section 9502(b) is amended bv inserting
"and the deficit reduction rate" after "financing rate .
(d) EXTENSION OF TAXES AND TRUST FUND.—
(1) TRANSPORTATION TAXES.—Sections 4261(g) and 4271(d) are

each amended by striking "January 1, 1991" and inserting
"January 1,1996'\
(2) FUEL TAXES.—

104 STAT. 1388-436

PUBLIC LAW 101-508—NOV. 5, 1990

(A) Subparagraph (B) of section 4091(bX6), as redesignated
by section 11211, is amended by striking "January 1, 1991"
and inserting "January 1,1996".
(B) Paragraph (5) of section 4041(c) is amended by striking
"December 31, 1990" and insertmg "December 31, 1995".
(3) DEPOSITS INTO TRUST FUND.—Subsection (b) of section 9502
(relating to transfer to Airport and Airway Trust Fund of
amounts equivalent to certain taxes) is amended by striking
"January 1,1991" each place it appears and inserting "January
1,1996".
(4) EXPENDITURE PURPOSES TO INCLUDE THE FEDERAL AVIATION
ADMINISTRATION RESEARCH, ENGINEERING, AND DEVELOPMENT
AUTHORIZATION ACT OF 1990 AND THE AVIATION SAFETY AND

CAPACITY EXPANSION ACT OF 1990.—Subparagraph (A) of section
9502(dXl) is amended by striking "(as such Acts were in effect
on the date of the enactment of the Airport and Airway Safety
and Capacity Expansion Act of 1987)" and inserting "or the
Federal Aviation Administration Research, Engineering, and
Development Authorization Act of 1990 or the Aviation Safety
and Capacity Expansion Act of 1990 (as such Acts were in effect
on the date of the enactment of the Aviation Ssifety and Capacity Expansion Act of 1990)".
(e) REPEAL OF REDUCTION IN RATES.—

(1) Section 4283 (relating to reduction in aviation related
taxes in certain cases) is hereby repealed.
(2) The table of sections for part III of subchapter C of chapter
33 is amended by striking the item relating to section 4283.
(3) Subsection (c) of section 4041 is amended by striking
paragraph (6).
(f) COORDINATION WITH OTHER PROVISIONS.—No amendment or

any other provision of this section shall take effect unless the
Airport Noise and Capacity Act of 1990, the Aviation Safety and
Capacity Expansion Act of 1990, and the Federal Aviation Administration Research, Engineering, and Development Authorization Act
of 1990 are enacted as part of this Act and are identical to the
provisions of such Acts as included in the conference report on H.R.
5835 of the 101st Congress.
SEC. 11214. INCREASE IN HARBOR MAINTENANCE TAX.

(a) I N GENERAL.—Subsection (b) of section 4461 is a m e n d e d by
s t r i k i n g "0.04 p e r c e n t " a n d i n s e r t i n g "0.125 percent".
26 u s e 4461

''°*®-

(b) EFFECTIVE D A T E . — T h e a m e n d m e n t m a d e by subsection (a)

shall t a k e effect on J a n u a r y 1,1991.
SEC. 11215. EXTENSION OF LEAKING UNDERGROUND STORAGE TANK
TRUST FUND TAXES.

(a) I N GENERAL.—Paragraph (2) of section 4081(d) is amended to
read as follows:
"(2)

26 use 4081
"o*®-

LEAKING

UNDERGROUND STORAGE TANK

TRUST

FUND

FINANCING RATE.—The Leaking Underground Storage Tank
Trust Fund financing rate under subsection (a)(2) shall not
apply after December 31,1995."
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect on December 1,1990.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-437

SEC. 11216. AMENDMENTS TO GAS GUZZLER TAX.

(a) INCREASE IN RATE OF TAX.—Subsection (a) of section 4064
(relating to gas guzzler tax) is amended to read as follows:
"(a) IMPOSITION OF TAX.—There is hereby imposed on the sale by
the manufacturer of each automobile a tax determined in accordance with the following table:
If the fuel economy of the model type
in which the automobile falls is:
The tax is:
At least 22.5
$0
At least 21.5 but less than 22.5
1,000
At least 20.5 but less than 21.5
1,300
At least 19.5 but less than 20.5
1,700
At least 18.5 but less than 19.5
2,100
At least 17.5 but less than 18.5
2,600
At least 16.5 but less than 17.5
3,000
At least 15.5 but less than 16.5
3,700
At least 14.5 but less than 15.5
4,500
At least 13.5 but less than 14.5
5,400
At least 12.5 but less than 13.5
6,400
Less than 12.5
7,700."
(b) LIMOUSINES INCLUDED WITHOUT REGARD TO WEIGHT.—Subpara-

graph (A) of section 4064(bXl) is amended by adding at the end
thereof the following new sentence:
"In the case of a limousine, the preceding sentence shall be
applied without regard to clause (ii)."
(c) REPEAL OF EXCEPTION FOR LENGTHENING EXISTING AUTO-

MOBILES.—Subparagraph (B) of section 4064(bX5) (defining manufacturer) is amended to read as follows:
"(B) LENGTHENING TREATED AS MANUFACTURE.—For purposes of this section, subchapter G of this chapter, and
section 6416(b)(3), the lengthening of an automobile by any
person shall be treated as the manufacture of an automobile by such person."
(d) REPEAL OF SPECIAL RULES FOR SMALL MANUFACTURERS.—Sec-

tion 4064 is amended by striking subsection (d).
(e) EFFECTIVE DATES.—
26 use 4064
(1) SUBSECTIONS (a) AND (b).—The amendments made by "°*®subsections (a) and (b) shall apply to sales after December 31,
1990.
(2) SUBSECTION (C).—The amendments made by subsection (c)
shall take effect on January 1,1991.
(3) SUBSECTION (d).—The simendment made by subsection (d)
shall take effect on the date of the enactment of this section.
SEC. 11217. TELEPHONE EXCISE TAX MODIFIED AND MADE PERMANENT.

(a) TAX MADE PERMANENT.—Paragraph (2) of section 4251(b) is
amended by striking "percent;" and all that follows and inserting
"percent."
0)) ACCELERATION OF DEPOSIT REQUIREMENTS.—

(1) I N GENERAL.—Subsection (e) of section 6302 (relating to
time for deposit of taxes of airline tickets) is amended—
(A) by inserting "COMMUNICATIONS SERVICES AND" before
"AIRLINE", and

(B) by inserting "section 4251 or" before "subsection (a) or
(b)".
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 26 USC 6302
shall apply to pajnnents of taxes considered collected during ^^*^'
semimonthly periods beginning after December 31,1990.

104 STAT. 1388-438

PUBLIC LAW 101-508—NOV. 5, 1990

(c) ONE-TIME FILING OF TELEPHONE EXCISE TAX EXEMPTION CERTIFICATES.—

(1) IN GENERAL.—Section 4253 is amended by adding at the
end thereof the following new subsection:
"(k) FILING OF EXEMPTION CERTIFICATES.—

"(1) I N GENERAL.—In order to claim an exemption under
subsection (c), (h), (i), or (j)> a person shall provide to the
provider of communications services a statement (in such form
and manner as the Secretary may provide) certifying that such
person is entitled to such exemption.
"(2) DURATION OF CERTIFICATE.—Any statement

provided

under paragraph (1) shall remain in effect until—
"(A) the provider of communications services has actual
knowledge that the information provided in such statement
is false, or
"(B) such provider is notified by the Secretary that the
provider of the statement is no longer entitled to an exemption described in paragraph (1).
If any information provided in such statement is no longer
accurate, the person providing such statement shall inform the
provider of communications services within 30 days of any
change of information."
26 u s e 4253

"°*®'

26 u s e 5001
note.

(2) EFFECTIVE DATE.—

(A) IN GENERAL.—The amendment made by paragraph (1)
shall apply to any claim for exemption made after the date
of the enactment of this Act.
(B) DURATION OF EXISTING CERTIFICATES.—Any annual certificate of exemption effective on the date of the enactment
of this Act shall remain effective until the end of the
annual period.
SEC. 11218. FLOOR STOCKS TAX TREATMENT OF ARTICLES IN FOREIGN
TRADE ZONES.

Notwithstanding the Act of June 18, 1934 (48 Stat. 998, 19 U.S.C.
81a) or any other provision of law, any article which is located in a
foreign trade zone on the effective date of any increase in tax under
the amendments made by this part or part I shall be subject to floor
stocks taxes imposed by such parts if—
(1) internal revenue taxes have been determined, or customs
duties liquidated, with respect to such article before such date
pursuant to a request made under the 1st proviso of section 3(a)
of such Act, or
(2) such article is held on such date under the supervision of a
customs officer pursuant to the 2d proviso of such section 3(a).

PART III—TAXES ON LUXURY ITEMS
SEC. 11221. TAXES ON LUXURY ITEMS.

(a) IN GENERAL.—Chapter 31 (relating to retail excise taxes) is
amended by redesignating subchapters A and B as subchapters B
and C, respectively, and by inserting before subchapter B (as so
redesignated) the following new subchapter:
"SUBCHAPTER A—CERTAIN LUXURY ITEMS
"Part I. Imposition of taxes.
"Part II. Rules of general applicability.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-439

"PART I. IMPOSITION OF TAXES
"Subpart A. Passenger vehicles, boats, and aircraft.
"Subpart B. Jewelry and furs.

"Subpart A—Passenger Vehicles, Boats, and Aircraft
"Sec.
"Sec.
"Sec.
"Sec.

4001.
4002.
4003.
4004.

Passenger vehicles.
Boats.
Aircraft.
Rules applicable to subpart A.

"SEC. 4001. PASSENGER VEHICLES.

"(a) IMPOSITION OF TAX.—There is hereby imposed on the 1st retail
sale of any passenger vehicle a tax equal to 10 percent of the price
for which so sold to the extent such price exceeds $30,000.
"OJ) PASSENGER VEHICLE.—

"(1) I N GENERAL.—For purposes of subsection (a), the term
'passenger vehicle' means any 4-wheeled vehicle—
"(A) which is manufactured primarily for use on public
streets, roads, and highways, sind
"(B) which is rated at 6,000 pounds unloaded gross vehicle
weight or less.
"(2) S P E C I A L RULES.—

"(A) TRUCKS AND VANS.—In the case of a truck or van,
paragraph (1)(B) shall be applied by substituting 'gross
vehicle weight' for 'unloaded gross vehicle weight'.
"(B) LIMOUSINES.—In the case of a limousine, parsigraph
(1) shall be applied without regard to subparagraph (B)
thereof.
"(c) EXCEPTIONS FOR TAXICABS, ETC.—The tax imposed by this
section shall not apply to the sale of any passenger vehicle for use by
the purchaser exclusively in the active conduct of a trade or business of transporting persons or property for compensation or hire.
"SEC. 4002. BOATS.

"(a) IMPOSITION OF TAX.—There is hereby imposed on the 1st retail
sale of any boat a tax equal to 10 percent of the price for which so
sold to the extent such price exceeds $100,000.
"(b) EXCEPTIONS.—The tax imposed by this section shall not apply
to the sale of any boat for use by the purchaser exclusively in the
active conduct of—
"(1) a trade or business of commercial fishing or transporting
persons or property for compensation or hire, or
"(2) any other trade or business unless the boat is to be used
predominantly in any activity which is of a t5T)e generally
considered to constitute entertainment, amusement, or
recreation.
"SEC. 4003. AIRCRAFT.

"(a) IMPOSITION OF TAX.—There is hereby imposed on the 1st retail
sale of any aircraft a tax equal to 10 percent of the price for which so
sold to the extent such price exceeds $250,000.
"(b) AIRCRAFT.—For purposes of this section, the term 'aircraft'
means any aircraft—
"(1) which is propelled by a motor, and
"(2) which is capable of carrying 1 or more individuals.
"(c) 8() PERCENT GENERAL BUSINESS USE.—

104 STAT. 1388-440

PUBLIC LAW 101-508—NOV. 5, 1990

"(1) IN GENERAL.—The tax imposed by this section shall not
apply to the sale of any aircraft if 80 percent of the use by the
purchaser is in any trade or business.
"(2) PROOF OF BUSINESS USE.—On the income tax return for
each of the 1st 2 taxable years ending after the date an aircraft
on which no tax was imposed by this section by resison of
paragraph (1) was placed in service, the taxpayer filing such
return shall demonstrate to the satisfaction of the Secretary
that the use of such aircraft during each such year met the
requirement of paragraph (1),
"(3) IMPOSITION OF LUXURY TAX WHERE FAILURE OF PROOF.—If

the requirement of paragraph (2) is not met for either of the
taxable years referred to therein, the taxpayer filing such returns shall pay the tax which would (but for paragraph (1)) have
been imposed on such aircraft plus interest determined under
subchapter C of chapter 67 during the period beginning on the
date such tax would otherwise have been imposed. If such
taxpayer fails to pay the tax imposed pursuant to the preceding
sentence, no deduction shall be allowed under section 168 for
any taxable year with respect to the aircraft involved.
"(d) OTHER EXCEPTIONS.—The tax imposed by this section shall not
apply to the sale of any aircraft for use by the purchaser
exclusively—
"(1) in the aerial application of fertilizers or other substances,
"(2) in the case of a helicopter, in a use described in paragraph (1) or (2) of section 4261(e),
"(3) in a trade or business of providing flight training, or
"(4) in a trade or business of transporting persons or property
for compensation or hire.
"SEC. 4004. RULES APPLICABLE TO SUBPART A.

"(a) EXEMPTION FOR LAW ENFORCEMENT USES, ETC.—No tax shall
be imposed under this subpart on the sale of any article—
"(1) to the Federal Government, or a State or local government, for use exclusively in police, firefighting, search and
rescue, or other law enforcement or public safety activities, or
in public works activities, or
' (2) to any person for use exclusively in providing emergency
medical services.
"(b) SEPARATE PURCHASE OF ARTICLE AND PARTS AND ACCESSORIES

THEREFOR.—Under regulations prescribed by the Secretary—
"(1) IN GENERAL.—Except as provided in paragraph (2), if—
"(A) the owner, lessee, or operator of any article taxable
under this subpart (determined without regard to price)
installs (or causes to be installed) any part or accessory on
such article, and
"(B) such installation is not later than the date 6 months
after the date the article was 1st placed in service,
then there is hereby imposed on such installation a tax equal
to 10 percent of the price of such part or accessory and its
installation.
"(2) LIMITATION.—The tax imposed by paragraph (1) on the
installation of any part or accessory shall not exceed 10 percent
of the excess (if any) of—
"(A) the sum of—
"(i) the price of such part or accessory and its
installation,

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-441

"(ii) the aggregate price of the parts and accessories
(and their installation) installed before such part or
accessory, plus
"(iii) the price for which the passenger vehicle, boat,
or aircraft was sold, over
"(B) $30,000 in the case of a passenger vehicle, $100,000 in
the case of a boat, and $250,000 in the case of an aircraft,
"(3) EXCEPTIONS.—Paragraph (1) shall not applj'^ if^
"(A) the part or accessory installed is a replacement part
or accessory, or
"(B) the aggregate price of the parts and accessories (and
their installation) described in paragraph (1) with respect to
the taxable article does not exceed $200 (or such other
amount or amounts as the Secretary may by regulation
prescribe).
"(4) INSTALLERS SECONDARILY LIABLE FOR TAX.—The owners of

the trade or business installing the parts or accessories shall be
secondarily liable for the tax imposed by this subsection.
"(c) IMPOSITION OF TAX ON SALES, ETC., WITHIN 2 YEARS OF ARTICLES PURCHASED TAX-FREE.—
*'(1) I N GENERAL.—If^

"(A) no tax was imposed under this subchapter on the 1st
retail sale of any article by reason of its exempt use, and
"(B) within 2 years after the date of such 1st retail sale,
such article is resold by the purchaser or such purchaser
makes a substantial non-exempt use of such article,
then such sale or use of such article by such purchaser shall be
treated as the 1st retail sale of such article for a price equal to
its fair market value at the time of such sale or use.
"(2) EXEMPT USE.—For purposes of this subsection, the term
'exempt use' means any use of an article if the 1st retail sale of
such article is not taxable under this subchapter by reason of
such use.

"Subpart B—Jewelry and Furs
"Sec. 4006. Jewelry.
"Sec. 4007. Furs.
"SEC. 4006. JEWELRY.

"(a) IMPOSITION OF TAX.—There is hereby imposed on the 1st retail
sale of any jewelry a tax equal to 10 percent of the price for which so
sold to the extent such price exceeds $10,000.
"(b) JEWELRY.—For purposes of subsection (a), the term 'jewelry'
means all articles commonly or commercially known as jewelry,
whether real or imitation, including watches.
"(c) MANUFACTURE FROM CUSTOMER'S MATERIAL.—If—

"(1) a person, in the course of a trade or business, produces
jewelry from material furnished directly or indirectly by a
customer, and
"(2) the jewelry is for the use of, and not for resale by, such
customer,
the delivery of such jewelry to such customer shall be treated as the
1st retail sale of such jewelry for a price equal to its fair market
value at the time of such delivery.

104 STAT. 1388-442

PUBLIC LAW 101-508—NOV. 5, 1990

"SEC. 4007. FURS.

"(a) IMPOSITION OF TAX.—There is hereby imposed on the 1st retail
sale of the following articles a tax equal to 10 percent of the price for
which so sold to the extent such price exceeds $10,000:
"(1) Articles made of fur on the hide or pelt.
"(2) Articles of which such fur is a major component.
"(b) MANUFACTURE FROM CUSTOMER'S MATERIAL.—If—

"(1) a person, in the course of a trade or business, produces an
article of the kind described in subsection (a) from fur on the
hide or pelt furnished, directly or indirectly, by a customer, and
"(2) the article is for the use of, and not for resale by, such
customer,
the delivery of such article to such customer shall be treated as the
1st retail sale of such article for a price equal to its fair market
value at the time of such delivery.

"PART II—RULES OF GENERAL APPLICABILITY
"Sec. 4011. Definitions and special rules.
"Sec. 4012. Termination.
"SEC. 4011. DEFINITIONS AND SPECIAL RULES.

"(a) 1ST RETAIL SALE.—For purposes of this subchapter, the term
'1st retail sale' means the 1st sale, for a purpose other than resale,
after manufacture, production, or importation.
"Ot)) USE TREATED A S SALE.—

"(1) IN GENERAL.—If any person uses an article taxable under
this subchapter (including any use after importation) before the
1st retail sale of such article, then such person shall be liable for
tax under this subchapter in the same manner as if such article
were sold at retail by him.
"(2) EXEMPTION FOR FURTHER MANUFACTURE.—Paragraph (1)

shall not apply to use of an article as material in the manufacture or production of, or as a component part of, another article
taxable under this subchapter to be manufactured or produced
by him.
"(3) EXEMPTION FOR DEMONSTRATION USE OF PASSENGER VE-

HICLES.—Paragraph (1) shall not apply to any use of a passenger
vehicle £is a demonstrator for a potential customer while the
potential customer is in the vehicle.
"(4) EXCEPTION FOR USE AFTER IMPORTATION OF CERTAIN ARTI-

CLES.—Paragraph (1) shall not apply to the use of an article
after importation if the user or importer establishes to the
satisfaction of the Secretary that the 1st use of the article
occurred before January 1, 1991, outside the United States.
"(5) COMPUTATION OF TAX.—In the case of any person made
liable for tax by paragraph (1), the tax shall be computed on the
price at which similar articles are sold at retail in the ordinary
course of trade, as determined by the Secretary.
"(c) LEASES CONSIDERED AS SALES.—For purposes of this
subchapter—
(1) I N GENERAL.—Except as otherwise provided in this
subsection, the lease of an article (including any renewal or any
extension of a lease or any subsequent lease of such article) by
any person shall be considered a sale of such article at retail.
(2) SPECIAL RULES FOR CERTAIN LEASES OF PASSENGER VEHICLES, BOATS, AND AIRCRAFT.—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-443

"(A) TAX NOT IMPOSED ON SALE FOR LEASING IN A QUALIFIED LEASE.—The sale of a passenger vehicle, boat, or air-

craft to a person engaged in a leasing or rental trade or
business of the article involved for leasing by such person in
a queilified lease shall not be treated as the 1st retail sale of
such article.
"(B) QUALIFIED LEASE.—For purposes of subparagraph (A),
the term 'qualified lease' means—
"(i) any lease in the case of a boat or an aircraft, and
"(ii) any long-term lease (as defined in section 4052)
in the case of any passenger vehicle.
"(C) SPECIAL RULES.—In the case of a qualified lease of
an article which is treated as the 1st retail sale of such
article—
"(i) DETERMINATION OF PRICE.—The tax under this
subchapter shall be computed on the lowest price for
which the article is sold by retailers in the ordinary
course of trade.
"(ii) PAYMENT OF TAX.—Rules similar to the rules of
section 4217(e)(2) shall apply.
"(iii) No TAX WHERE EXEMPT USE BY LESSEE.—No tax

shall be imposed on any lease payment under a qualified lease if the lessee's use of the article under such
lease is an exempt use (as defined in section 4004(c)) of
such article.
"(d) DETERMINATION OF PRICE.—

"(1) I N GENERAL.—In determining price for purposes of this
subchapter—
"(A) there shall be included any charge incident to placing the article in condition ready for use,
"(B) there shall be excluded—
"(i) the amount of the tax imposed by this
subchapter,
"(ii) if stated as a separate charge, the amount of any
retail sales tax imposed by any State or political subdivision thereof or the District of Columbia, whether
the liability for such tax is imposed on the vendor or
vendee, and
"(iii) the value of any component of such article if—
"(I) such component is furnished by the 1st user
of such article, and
"(II) such component has been used before such
furnishing, and
"(C) the price shall be determined without regard to any
trade-in.
Subparagraph (B)(iii) shall not apply for purposes of the taxes
imposed by sections 4006 and 4007.
"(2) OTHER RULES.—Rules similar to the rules of paragraphs
(2) and (4) of section 4052(b) shall apply for purposes of this
subchapter.
"(e) PARTS AND ACCESSORIES SOLD WITH TAXABLE ARTICLE.—Parts

and accessories sold on, in connection with, or with the sale of any
article taxable under this subchapter shall be treated as part of the
article.
"(f) PARTIAL PAYMENTS, ETC.—In the case of a contract, sale, or
arrangement described in paragraph (2), (3), or (4) of section 4216(c),

104 STAT. 1388-444

PUBLIC LAW 101-508—NOV. 5, 1990

rules similar to the rules of section 4217(eX2) shall apply for purposes of this subchapter.
"SEC. 4012. TERMINATION.

"The taxes imposed by this subchapter shall not apply to any sale
or use after December 31,1999."
(b) EXEMPTION FOR EXPORTS.—

(1) The material preceding paragraph (1) of section 4221(a) is
amended by striking "section 4051" and inserting "subchapter
A or C of chapter 31".
(2) Subsection (a) of section 4221 is amended by adding at the
end thereof the following new sentence: "In the case of taxes
imposed by subchapter A of chapter 31, paragraphs (1), (3), (4),
and (5) shall not apply."
(c) EXEMPTION FOR SALES TO THE UNITED STATES.—Section 4293 is
amended by inserting "subchapter A of chapter 31," before "section
4041".
(d) TECHNICAL AMENDMENTS.—

(1) Subsection (c) of section 4221 is amended by
"section 4053(a)(6)" and inserting "section 4001(c),
4003(c), 4004(a), or 4053(aX8)".
(2) Paragraph (1) of section 4221(d) is amended by
"the tax imposed by section 4051" and inserting "taxes
by subchapter A or C of chapter 31".
(3) Subsection (d) of section 4222 is amended by
"sections 4053(a)(6)" and inserting "sections 4001(c),
4003(c), 4004(a), 4053(a)(6)".
(e) CLERICAL AMENDMENT.—The table of subchapters for
31 is amended to read as follows:

26 u s e 4001

note.

striking
4002(b),
striking
imposed
striking
4002(b),
chapter

"Subchapter A. Certain luxury items.
"Subchapter B. Special fuels.
"Subchapter C. Heavy trucks and trailers."
(f) EFFECTIVE DATE.—

(1) IN GENERAL.—The amendments made by this section shall
take effect on January 1,1991.
(2) EXCEPTION FOR BINDING CONTRACTS.—In determining
whether any tax imposed by subchapter A of chapter 31 of the
Internal Revenue Code of 1986, as added by this section, applies
to any sale after December 31, 1990, there shall not be taken
into account the amount paid for any article (or any part or
accessory therefor) if the purchaser held on September 30, 1990,
a contract (which was binding on such date and at all times
thereafter before the purchase) for the purchase of such article
(or such part or accessory).

PART IV—4-YEAR EXTENSION OF HAZARDOUS
SUBSTANCE SUPERFUND
SEC. 11231. 4-YEAR EXTENSION OF HAZARDOUS SUBSTANCE SUPERFUND.
(a) EXTENSION OF TAXES.—

(1) The following provisions of the Internal Revenue Code of
1986 are each amended by striking "January 1, 1992" and
inserting "January 1,1996":
(A) Section 59A(e)(l) (relating to application of environmental tax).

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-445

(B) Paragraphs (1) and (3) of section 4611(e) (relating to
application of Hazardous Substance Superfund finEincing
rate).
(2) Paragraph (2) of section 4611(e) of such Code is amended—
(A) by striking "1989" and inserting "1993",
(B) by striking "1990" each place it appears and inserting
"1994", and
(C) by striking "1991" each place it appears and inserting
"1995".
(b) INCREASE IN AGGREGATE TAX WHICH MAY B E COLLECTED.—

Paragraph (3) of section 4611(e) of such Code is amended by striking
"$6,650,000,000"
each
place
it
appears
and
inserting
"$11,970,000,000" and by striking "December 31, 1991" and inserting "December 31,1995".
(c) EXTENSION OF REPAYMENT DEADLINE FOR SUPERFUND BORROW-

ING.—Subparagraph (B) of section 9507(dX3) is amended by striking
"December 31,1991" and inserting "December 31,1995".
(d) EXTENSION OF AUTHORIZATION OF APPROPRIATIONS TO TRUST

FUND.—Subsection (b) of section 517 of the Superfund Revenue Act
of 1986 (26 U.S.C. 9507 note) is amended by striking "and" at the end
of paragraph (4), by striking the period at the end of paragraph (5)
and inserting ", and", and by adding at the end thereof the following
new parsigraphs:
"(6) 1992, $250,000,000,
"(7) 1993, $250,000,000,
"(8) 1994, $250,000,000, and
"(9) 1995, $250,000,000."

Subtitle C—Other Revenue Increases
PART I —INSURANCE PROVISIONS
Subpart A—Provisions Related to Policy Acquisition
Costs
SEC. 11301. CAPITALIZATION OF POLICY ACQUISITION EXPENSES.

(a) GENERAL RULE.—Part III of subchapter L of chapter 1 (relating
to provisions of general application) is amended by adding at the end
thereof the following new section:
"SEC. 848. CAPITALIZATION OF CERTAIN POLICY ACQUISITION EXPENSES.

"(a) GENERAL RULE.—In the case of an insurance company—
"(1) specified policy acquisition expenses for any taxable year
shall be capitalized, and
"(2) such expenses shall be allowed as a deduction ratably
over the 120-month period beginning with the first month in the
second half of such taxable year.
"(b) 5-YEAR AMORTIZATION FOR FIRST $5,000,000 OF SPECIFIED
POLICY ACQUISITION EXPENSES.—

"(1) I N GENERAL.—Paragraph (2) of subsection (a) shall be
applied with respect to so much of the specified policy acquisition expenses of an insurance company for any taxable year as
does not exceed $5,000,000 by substituting '60-month' for '120month'.

104 STAT. 1388-446

PUBLIC LAW 101-508—NOV. 5, 1990

"(2) PHASE-OUT.—If the specified policy acquisition expenses of
an insurance company exceed $10,000,000 for any tsixable year,
the $5,000,000 amount under paragraph (1) shall be reduced O^ut
not below zero) by the amount of such excess.
"(3) SPECIAL RULE FOR MEMBERS OF CONTROLLED GROUP.—In

the case of any controlled group-;"(A) all insurance companies which are members of such
group shall be treated as 1 company for purposes of this
subsection, and
"(B) the amount to which paragraph (1) applies shall be
allocated £imong such companies in such manner as the
Secretary may prescribe.
For purposes of the preceding sentence, the term 'controlled
group' means any controlled group of corporations as defined in
section 1563(a); except that subsections (aX4) and (bX2)(D) of
section 1563 shall not apply, and subsection (bX2XC) of section
1563 shall not apply to the extent it excludes a foreign corporation to which section 842 applies.
"(4) EXCEPTION FOR ACQUISITION EXPENSES ATTRIBUTABLE TO

CERTAIN REINSURANCE CONTRACTS.—Paragraph (1) shall not
apply to any specified policy acquisition expenses ifor any taxable year which are attributable to premiums or other consideration under any reinsurance contract.
"(c) SPECIFIED POUCY ACQUISITION EXPENSES.—For purposes of
this section—
"(1) I N GENERAL.—The term 'specified policy acquisition expenses' means, with respect to any taxable year, so much of the
general deductions for such taxable year as does not exceed the
sum of—
"(A) 1.75 percent of the net premiums for such taxable
year on specified insurance contracts which are annuity
contracts,
"(B) 2.05 percent of the net premiums for such taxable
year on specified insurance contracts which are group life
insurance contracts, and
"(C) 7.7 percent of the net premiums for such taxable
year on specified insurance contracts not described in
subparagraph (A) or (B).
"(2) GENERAL DEDUCTIONS.—The term 'general deductions'
means the deductions provided in part VI of subchapter B (sec.
161 and following, relating to itemized deductions) and in part I
of subchapter D (sec. 401 and following, relating to pension,
profit sharing, stock bonus plans, etc.).
"(d) NET PREMIUMS.—For purposes of this section—
"(1) I N GENERAL.—The term 'net premiums' means, with respect to any category of specified insurance contracts set forth
in subsection (cXl), the excess ,(if any) of—
"(A) the gross amount of premiums and other consideration on such contracts, over
"(B) return premiums on such contracts and premiums
and other consideration incurred for reinsurance of such
contracts.
The rules of section 803(b) shall apply for purposes of the
preceding sentence.
"(2) AMOUNTS DETERMINED ON ACCRUAL BASIS.—In the case of
an insurance company subject to tax under part II of this
subchapter, all computations entering into determinations of

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-447

net premiums for any taxable year shall be made in the manner
required under section 811(a) for life insurance companies.
"(3) TREATMENT OF CERTAIN POUCYHOLDER DIVIDENDS AND SIMI-

LAR AMOUNTS.—Net premiums shall ba determined without
regard to section 808(e) and without regard to other similar
amounts treated as paid to, and returned by, the policyholder.
"(4) SPECIAL RULES FOR REINSURANCE.—

"(A) Premiums and other consideration incurred for reinsurance shall be taken into account under paragraph
(IXB) only to the extent such premiums and other consideration are includible in the gross income of an insurance
company taxable under this subchapter or are subject to
tax under this chapter by reason of subpart F of part III of
subchapter N.
"(B) The Secretary shall prescribe such regulations as
may be necessary to ensure that premiums and other
consideration with respect to reinsurance are treated
consistently by the ceding company and the reinsurer.
"(e) CLASSIFICATION OF CONTRACTS.—For purposes of this section—
"(1) SPECIFIED INSURANCE CONTRACT.—

"(A) I N GENERAL.—Except as otherwise provided in this
paragraph, the term 'specified insurance contract' means
any life insurance, Einnuity, or noncancellable accident and
health insurance contract (or any combination thereof).
"(B) EXCEPTIONS.—The term 'specified insurance contract' shall not include—
"(i) any pension plan contract (as defined in section
818(a)),
"(ii) any flight insurance or similar contract, and
"(iii) any qualified foreign contract (as defined in
section 807(eX4) without regard to paragraph (5) of this
subsection).
"(2) GROUP LIFE INSURANCE CONTRACT.—The term 'group life
insurance contract' means any life insurance contract—
"(A) which covers a group of individuals defined by reference to emplojonent relationship, membership in an
organization, or similar factor,
(B) the premiums for which are determined on a group
basis, and
"(C) the proceeds of which are payable to (or for the
benefit of) persons other than the employer of the insured,
an organization to which the insured belongs, or other
similar person.
"(3) TREATMENT OF ANNUITY CONTRACTS COMBINED WITH
NONCANCELLABLE ACCIDENT AND HEALTH INSURANCE.—Any

annuity contract combined with noncancellable accident and
health insurance shall be treated as a noncancellable accident
and health insurance contract and not as an annuity contract.
"(4) TREATMENT OF GUARANTEED RENEWABLE CONTRACTS.—The

rules of section 816(e) shall apply for purposes of this section.
"(5) TREATMENT OF REINSURANCE CONTRACT.—A contract
which reinsures another contract shall be treated in the same
manner as the reinsured contract.
"(f) SPECIAL RULE WHERE NEGATIVE NET PREMIUMS.—

"(1) IN GENERAL.—If for any taxable year there is a n ^ a t i v e
capitalization amount with respect to any category of specified
insurance contracts set forth in subsection (cXD—

104 STAT. 1388-448

PUBLIC LAW 101-508—NOV. 5, 1990
"(A) the amount otherwise required to be capitalized
under this section for such taxable year with respect to any
other category of specified insurance contracts shall be
reduced (but not below zero) by such negative capitalization
amount, and
"(B) such negative capitalization amount (to the extent
not taken into account under subparagraph (A))—
"(i) shall reduce (but not below zero) the unamortized
balance (as of the beginning of such taxable year) of the
amounts previously capitalized under subsection (a)
(beginning with the amount capitalized for the most
recent taxable year), and
"(ii) to the extent taken into account as such a
reduction, shall be allowed as a deduction for such
taxable year.
"(2)

NEGATIVE CAPITALIZATION AMOUNT.—For purposes

of

paragraph (1), the term 'negative capitalization amount' means,
with respect to any category of specified insurance contracts,
the percentage (applicable under subsection (c)(1) to such category) of the amount (if any) by which—
"(A) the amount determined under subparagraph (B) of
subsection (dXD with respect to such category, exceeds
"(B) the amount determined under subparagraph (A) of
subsection (dXD with respect to such category.
"(g) TREATMENT OF CERTAIN CEDING COMMISSIONS.—Nothing in

any provision of law (other than this section) shall require the
capitalization of any ceding commission incurred on or after
September 30, 1990, under any contract which reinsures a specified
insurance contract.
"(h)
SECRETARIAL
AMOUNTS.—

;

AUTHORITY

TO

ADJUST

CAPITAUZATION

"(1) I N GENERAL.—Except as provided in paragraph (2), the
Secretary may provide that a type of insurance contract will be
treated as a separate category for purposes of this section (and
prescribe a percentage applicable to such category) if the Secretary determines that the deferral of acquisition expenses for
such tjrpe of contract which would otherwise result under this
section is substantially greater than the deferral of acquisition
expenses which would have resulted if actual acquisition expenses (including indirect expenses) and the actual useful life
for such type of contract had been used.
"(2) ADJUSTMENT TO OTHER CONTRACTS.—If the Secretary exercises his authority with respect to £iny type of contract under
paragraph (1), the Secretary shall adjust the percentage which
would otherwise have applied under subsection (cXD to the
category which includes such type of contract so that the exercise of such authority does not result in a decrease in the
amount of revenue received under this chapter by reason of this
section for any fiscal year,

"(i) TREATMENT OF QUAUFIED FOREIGN CONTRACTS UNDER
ADJUSTED CURRENT EARNINGS PREFERENCE.—For purposes of deter-

mining adjusted current earnings under section 56(g), acquisition
expenses with respect to contract described in clause (iii) of subsection (eXlXB) shall be capitalized and amortized in accordance with
the treatment generally required under generally accepted accounting principles as if this subsection applied to such contracts for all
taxable years.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-449

"(j) TRANSITIONAL RULE.—In the case of any taxable year which
includes September 30, 1990, the amount taken into account as the
net premiums (or negative capitalization amount) with respect to
any category of specified insurance contracts shall be the amount
which bears the same ratio to the amount which (but for this
subsection) would be so taken into account as the number of days in
such taxable year on or after September 30, 1990, bears to the total
number of days in such taxable year."
Qo) REPEAL OF SPECIAL TREATMENT OF ACQUISITION EXPENSES
UNDER MINIMUM TAX.—Paragraph (4) of section 56(g) is amended by

striking subparagraph (F) and redesignating subparagraphs (G) and
(H) as subparagraphs (F) and (G), respectively.
(c) CLERICAL AMENDMENT.—The table of sections for part III of
subchapter L of chapter 1 is amended by adding at the end thereof
the following new item:
"Sec. 848. Capitalization of certain policy acquisition expenses."
(d) EFFECTIVE DATE.—

(1) I N GENERAL.—The amendments made by subsections (a) 26 USC 848 note.
and (c) shall apply to taxable years ending on or after September 30, 1990. Any capitalization required by reason of such
amendments shall not be treated as a change in method of
accounting for purposes of the Internal Revenue Code of 1986.
(2) SUBSECTION (b).—
26 use 56 note.
(A) I N GENERAL.—The amendment made by subsection (b)
shall apply to taxable years beginning on or after September 30, 1990, except that, in the case of a small insurance
company, such amendment shall apply to taxable years
beginning after December 31, 1989. For purposes of this
paragraph, the term "small insurance company" means
any insurance company which meets the requirements of
section 806(a)(3) of the Internal Revenue Code of 1986;
except that paragraph (2) of section 806(c) of such Code shall
not apply.
(B) SPECIAL RULES FOR YEAR WHICH INCLUDES SEPTEMBER

30, 1990.—In the case of any taxable year which includes
September 30, 1990, the amount of acquisition expenses
which is required to be capitalized under section 56(g)(4)(F)
of the Internal Revenue Code of 1986 (as in effect before the
amendment made by subsection (b)) by a company which is
not a small insurance company shall be the amount which
bears the same ratio to the amount which (but for this
subparagraph) would be so required to be capitalized as the
number of days in such taxable year before September 30,
1990, bears to the total number of days in such taxable
year. A similar reduction shall be made in the amount
amortized for such taxable year under such section
56(g)(4)(F).
SEC. 11302. TREATMENT OF CERTAIN NONLIFE RESERVES OF LIFE INSURANCE COMPANIES.
(a) GENERAL RULE.—Subsection (e) of section 807 (relating to

special rules for computing reserves) is amended by adding at the
end thereof the following new paragraph:
"(7) SPECIAL RULES FOR TREATMENT OF CERTAIN NONLIFE
RESERVES.—

104 STAT. 1388-450

PUBLIC LAW 101-508—NOV. 5, 1990
"(A) I N GENERAL.—The amount taken into account for
purposes of subsections (a) and (b) as—
"(i) the opening balance of the items referred to in
subparagraph (C), and
"(ii) the closing balance of such items,
shall be 80 percent of the amount which (without regard to
this subparagraph) would have been taken into account as
such opening or closing balance, as the case may be.
"(B) TRANSITIONAL RULE.—

"(i) I N GENERAL.—In the case of any taxable year
beginning on or after September 30, 1990, and before
September 30,1996, there shall be included in the gross
income of any life insurance company an amount equal
to 3 1/3 percent of such company's closing balance of
the items referred to in subparagraph (C) for its most
recent taxable year beginning before September 30,
1990.
"(ii)

26 u s e 807 note.

TERMINATION AS U F E INSURANCE COMPANY.—

Except as provided in section 381(c)(22), if, for any
taxable year beginning on or before September 30,
1996, the taxpayer ceases to be a life insurance company, the aggregate inclusions which would have been
made under clause (i) for such taxable year and subsequent taxable years but for such cessation shall be
taken into account for the taxable year preceding such
cessation year.
"(C) DESCRIPTION OF ITEMS.—For purposes of this paragraph, the items referred to in this subparagraph are the
items described in subsection (c) which consist of unearned
premiums and premiums received in advance under insurance contracts not described in section 816(bXlXB)."
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to taxable years beginning on or after September 30,
1990.
SEC. 11303. TREATMENT OF LIFE INSURANCE RESERVES OF INSURANCE
COMPANIES WHICH ARE NOT LIFE INSURANCE COMPANIES.

(a) GENERAL RULE.—Paragraph (4) of section 832(b) (defining premiums earned) is amended by striking "section 807, pertaining" and
all that follows down through the period at the end of the first
sentence which follows subparagraph (C) and inserting "section
807.".
(b) TECHNICAL AMENDMENT.—Subparagraph (A) of section 832(bX7)
is amended—
(1) by striking "amounts included in unearned premiums
under the 2nd sentence of such subparagraph" and inserting
"insurance contracts described in section 816(bXlXB)", and
(2) by striking "such amounts into account" and inserting
"such contracts into account".
26 u s e 832 note.

(c) EFFECTIVE D A T E . —

(1) I N GENERAL.—The amendments made by this section shall
apply to taxable years beginning on or after September 30,1990.
(2) AMENDMENTS TREATED AS CHANGE IN METHOD OF ACCOUNT-

ING.—In the case of any taxpayer who is required by reason of
the amendments made by this section to change his method of
computing reserves—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-451

(A) such change shall be treated as a change in a method
of accounting,
(B) such change shall be treated as initiated by the
taxpayer,
(C) such change shall be treated as having been made
with the consent of the Secretary, and
(D) the net adjustments which are required by section 481
of the Internal Revenue Code of 1986 to be taken into
account by the taxpayer shall be taken into account over a
period not to exceed 4 taxable years beginning with the
taxpayer's first taxable year beginning on or after September 30,1990.
(3) COORDINATION WITH SECTION 832(b)(4)(C).—The amendments made by this section shall not affect the application of
section 832(b)(4)(C) of the Internal Revenue Code of 1986.

Subparts—Treatment of Salvage Recoverable
SEC. 11305. TREATMENT OF SALVAGE RECOVERABLE.

(a) GENERAL RULE.—Subparagraph (A) of section 832(b)(5) (defining losses incurred) is amended to read as follows:
"(A) I N GENERAL.—The term 'losses incurred' means
losses incurred during the taxable year on insurance contracts computed as follows:
"(i) To losses paid during the taxable year, deduct
salvage and reinsurance recovered during the taxable
year.
"(ii) To the result so obtained, add all unpaid losses
on life insurance contracts plus all discounted unpaid
losses (as defined in section 846) outstanding at the end
of the taxable year and deduct all unpaid losses on life
insurance contracts plus all discounted unpaid losses
outstanding at the end of the preceding taxable year.
"(iii) To the results so obtained, add estimated salvage and reinsurance recoverable as of the end of the
preceding taxable year and deduct estimated salvage
£md reinsurance recoverable as of the end of the taxable year.
The amount of estimated salvage recoverable shall be determined on a discounted b£isis in accordance with procedures
established by the Secretary."
(b) CONFORMING AMENDMENT.—Subsection (g) of section 846 is

amended by adding "and" at the end of paragraph (1), by striking
paragraph (2), and by redesignating paragraph (3) as paragraph (2).
(c) EFFECTIVE DATE.—
26 use 832 note.
(1) I N GENERAL.—The amendments made by this section shall
apply to taxable years beginning after December 31,1989.
(2) AMENDMENTS
ACCOUNTING.—

TREATED

AS

CHANGE

IN

METHOD

OF

(A) I N GENERAL.—In the case of any taxpayer who is
required by reason of the amendments made by this section
to change his method of computing losses incurred—
(i) such change shall be treated as a change in a
method of accounting,
(ii) such change shall be treated as initiated by the
taxpayer, and

104 STAT. 1388-452

PUBLIC LAW 101-508—NOV. 5, 1990
(iii) such change shall be treated as having been
made with the consent of the Secretary.
(B) ADJUSTMENTS.—In applying section 481 of the Internal Revenue Code of 1986 with respect to the change
referred to in subparagraph (A)—
(i) only 13 percent of the net amount of adjustments
(otherwise required by such section 481 to be taken into
account by the taxpayer) shall be taken into account,
and
(ii) the portion of such net adjustments which is
required to be taken into account by the taxpayer (after
the application of clause (i)) shall be taken into account
over a period not to exceed 4 taxable years beginning
with the taxpayer's 1st taxable year beginning after
December 31,1989.

(3) TREATMENT OF COMPANIES WHICH TOOK INTO ACCOUNT SALVAGE RECOVERABLE.—In the case of any insurance company

which took into account salvage recoverable in determining
losses incurred for its last taxable year beginning before January 1, 1990, 87 percent of the discounted amount of estimated
salvage recoverable as of the close of such last taxable year
shall be allowed as a deduction ratably over its 1st 4 taxable
years beginning after December 31,1989.
(4) SPECIAL RULE FOR OVERESTIMATES.—If for any taxable year
beginning after December 31,1989—
(A) the amount of the section 481 adjustment which
would have been required without regard to paragraph (2)
and any discounting, exceeds
(B) the sum of the amount of salvage recovered taken into
account under section 832(bX5)(AXi) for the taxable year
and any preceding taxable year beginning after December
31, 1989, attributable to losses incurred with respect to any
accident year beginning before 1990 and the undiscounted
amount of estimated salvage recoverable as of the close of
the taxable year on account of such losses,
87 percent of such excess (adjusted for discounting used in
determining the amount of salvage recoverable as of the close of
the last taxable year of the taxpayer beginning before January
1, 1990) shall be included in gross income for such taxable year.
(5) EFFECT ON EARNINGS AND PROFITS.—The earnings

and

profits of any insurance company for its 1st taxable year beginning after December 31, 1989, shall be increased by the amount
of the section 481 adjustment which would have been required
but for paragraph (2). For purposes of applying sections 56, 902,
952(c)(1), and 960 of the Internal Revenue Code of 1986, earnings
and profits of a corporation shall be determined by appljdng the
principles of paragraph (2XB).

Subpart C—Waiver of Estimated Tax Penalties
26 u s e 6655

SEC. 11307. WAIVER OF ESTIMATED TAX PENALTIES.

No addition to tax shall be made under section 6655 of the
Internal Revenue Code of 1986 for any period before March 16,1991,
with respect to any underpayment to the extent such underpa3anent
was created or increased by any provision of this part.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-453

PART II—COMPLIANCE PROVISIONS
SEC. 11311. SUSPENSION OF STATUTE OF LIMITATIONS DURING PROCEEDINGS TO ENFORCE CERTAIN SUMMONSES.

(a) GENERAL RULE.—Section 6503 (relating to suspension of running of period of limitation) is amended by redesignating subsection
(k) as subsection (1) and by inserting after subsection (j) the following
new subsection:
"(k) EXTENSION IN CASE OF CERTAIN SUMMONSES.—

"(1) IN GENERAL.—If any designated summons is issued by the
Secretary with respect to any return of tax by a corporation, the
running of any period of limitations provided in section 6501 on
the assessment of such tax shall be suspended—
"(A) during any judicial enforcement period—
"(i) with respect to such summons, or
"(ii) with respect to any other summons which is
issued during the 30-day period which begins on the
date on which such designated summons is issued £md
which relates to the same return as such designated
summons, and
"(B) if the court in any proceeding referred to in paragraph (3) requires any compliance with a summons referred
to in subparagraph (A), during the 120-day period beginning
with the 1st day after the close of the suspension under
subparagraph (A).
If subparagraph (B) does not apply, such period shall in no event
expire before the 60th day after the close of the suspension
under subpareigraph (A).
"(2) DESIGNATED SUMMONS.—For purposes of this subsection—
"(A) I N GENERAL.—The term 'designated summons'
means any summons issued for purposes of determining the
amount of any tax imposed by this title if—
"(i) such summons is issued at least 60 days before
the day on which the period prescribed in section 6501
for the Eissessment of such tax expires (determined with
regard to extensions), and
"(ii) such summons clearly states that it is a designated summons for purposes of this subsection.
"(B) LIMITATION.—A summons which relates to any
return shall not be treated as a designated summons if a
prior summons which relates to such return was treated as
a designated summons for purposes of this subsection.
"(3) JUDICIAL ENFORCEMENT PERIOD.—For purposes of this
subsection, the term 'judicial enforcement period means, with
respect to any summons, the period—
"(A) which begins on the day on which a court proceeding
^
with respect to such summons is brought, and
"(B) which ends on the day on which there is a final
resolution as to the summoned person's response to such
summons."
0)) EFFECTIVE DATE.—The amendment made by subsection (a) 26USC6503
shall apply to any tgix (whether imposed before, on, or after the date ^o*®.
of the enactment of this Act) if the period prescribed by section 6501
of the Internal Revenue Code of 1986 for the assessment of such tax
(determined with regard to extensions) has not expired on such date
of the enactment.

104 STAT. 1388-454

PUBLIC LAW 101-508—NOV. 5, 1990

SEC. 11312. ACCURACY-RELATED PENALTY TO APPLY TO SECTION 482
ADJUSTMENTS.

(a) GENERAL RULE.—Subsection (e) of section 6662 (defining
substantial valuation overstatement under chapter 1) is amended to
read as follows:
"(e) SUBSTANTIAL VALUATION MISSTATEMENT UNDER CHAPTER 1.—

"(1) I N GENERAL.—For purposes of this section, there is a
substantial valuation misstatement under chapter 1 if—
"(A) the value of any property (or the adjusted basis of
any property) claimed on any return of tax imposed by
chapter 1 is 200 percent or more of the amount determined
to be the correct amount of such valuation or adjusted basis
(as the case may be), or
"(BXi) the price for any property or services (or for the
use of property) claimed on any such return in connection
with any transaction between persons described in section
482 is 200 percent or more (or 50 percent or less) of the
amount determined under section 482 to be the correct
amount of such price, or
"(ii) the net section 482 transfer price adjustment for the
taxable year exceeds $10,000,000.
"(2) LIMITATION.—No penalty shall be imposed by reason of
subsection (bX3) unless the portion of the underpajmient for the
taxable
year
attributable
to substantial
valuation
misstatements under chapter 1 exceeds $5,000 ($10,000 in the
case of a corporation other than an S corporation or a personal
holding company (as defined in section 542)).
"(3) NET SECTION 482 TRANSFER PRICE ADJUSTMENT.—For purposes of this subsection—
"(A) I N GENERAL.—The term 'net section 482 transfer
price adjustment' means, with respect to any taxable year,
the net increase in taxable income for the taxable year
(determined without regard to any amount carried to such
taxable year from another taxable year) resulting from
adjustments under section 482 in the price for any property
or services (or for the use of property).
"(B) CERTAIN ADJUSTMENTS EXCLUDED IN DETERMINING

THRESHOLD.—For purposes of determining whether the
$10,000,000 threshold requirement of paragraph (IXBXii) is
met, there shall be excluded—
"(i) any portion of the net increase in taxable income
referred to in subparagraph (A) which is attributable to
any redetermination of a price if it is shown that there
was a reasonable cause for the taxpayer's determination of such price and that the taxpayer acted in good
faith with respect to such price, and
"(ii) any portion of such net increase which is attributable to any transaction solely between foreign
corporations unless, in the case of any of such corporations, the treatment of such transaction affects the
determination of income from sources within the
United States or taxable income effectively connected
with the conduct of a trade or business within the
United States.
"(C) SPECIAL RULE.—If the regular tax (as defined in

section 55(c)) imposed by chapter 1 on the taxpayer is

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-455

determined by reference to an amount other than taxable
income, such amount shall be treated as the taxable income
of such taxpayer for purposes of this paragraph."
Ot>) CONFORMING AMENDMENTS.—

(1) Paragraph (3) of section 6662(b) is amended to read as
follows:
"(3) Any substantial valuation misstatement under chapter
1."
(2) Subparagraph (A) of section 6662(hX2) is amended to read
as follows:
"(A) any substantial valuation misstatement under chapter 1 as determined under subsection (e) by substituting—
"(i) '400 percent' for '200 percent' each place it appears,
"(ii) '25 percent' for '50 percent', and
"(iii) '$20,000,000' for '$10,000,000',".
(c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 6662
apply to taxable years ending after the date of the enactment of this ^°^Act.
SEC. 11313. TREATMENT OF PERSONS PROVIDING SERVICES.

(a) GENERAL RULE.—Subsection (n) of section 6103 (relating to
certain other persons) is amended—
(1) by striking "and the programming" and inserting "the
programming", and
(2) by inserting after "of equipment," the following "and the
providing of other services,".
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 26 USC 6103
shall take effect on the date of the enactment of this Act.
"o*®SEC. 11314. APPLICATION OF AMENDMENTS MADE BY SECTION 7403 OF 26 USC 6038A
REVENUE RECONCILIATION ACT OF 1989 TO TAXABLE note.
YEARS BEGINNING ON OR BEFORE JULY 10,1989.

(a) GENERAL RULE.—The amendments made by section 7403 of the
Revenue Reconciliation Act of 1989 shall apply to—
(1) any requirement to furnish information under section
6038A(a) of the Internal Revenue Code of 1986 (as amended by
such section 7403) if the time for furnishing such information
under such section is after the date of the enactment of this Act,
(2) any requirement under such section 6038A(a) to maintain
records which were in existence on or after March 20, 1990,
(3) any requirement to authorize a corporation to act as a
limited agent under section 6038A(eXl) of such Code (as so
amended) if the time for authorizing such action is after the
date of the enactment of this Act, and
(4) any summons issued after such date of enactment,
without r ^ a r d to when the taxable year (to which the information,
records, authorization, or summons relates) began. Such amendments shall also apply in any case to which they would apply
without regard to this section.
(b) CONTINUATION OF OLD FAILURES.—In the case of any failure
with respect to a taxable year beginning on or before July 10, 1989,
which first occurs on or before the date of the enactment of this Act
but which continues after such date of enactment, section
6038A(dX2) of the Internal Revenue Code of 1986 (as amended by
subsection (c) of such section 7403) shall apply for purposes of
determining the amount of the penalty imposed for 30-day periods

104 STAT. 1388-456

PUBLIC LAW 101-508—NOV. 5, 1990

referred to in such section 6038A(dX2) which begin after the date of
the enactment of this Act.
SEC. 11315. OTHER REPORTING REQUIREMENTS.

(a) GENERAL RULE.—Subpart A of part III of subchapter A of
chapter 61 (relating to information concerning persons subject to
special provisions) is amended by inserting after section 6038B the
following new section:
"SEC. 6038C. INFORMATION WITH RESPECT TO FOREIGN CORPORATIONS
ENGAGED IN U.S. BUSINESS.

"(a) REQUIREMENT.—If a foreign corporation (hereinafter in this
section referred to as the 'reporting corporation') is engsiged in a
trade or business within the United States at any time during a
taxable year—
"(1) such corporation shall furnish (at such time and in such
manner as the Secretary shall by regulations prescribe) the
information described in subsection (b), and
"(2) such corporation shall maintain (at the location, in the
manner, and to the extent prescribed in regulations) such
records as may be appropriate to determine the liability of such
corporation for tax under this title as the Secretary shall by
regulations prescribe (or shall cause another person to so maintain such records).
"(b) REQUIRED INFORMATION.—For purposes of subsection (a), the
information described in this subsection is—
"(1) the information described in section 6038A(b), and
"(2) such other information as the Secretary may prescribe by
regulations relating to any item not directly connected with a
transaction for which information is required under
paragraph (1).
"(c) PENALTY FOR FAILURE TO FURNISH INFORMATION OR MAINTAIN

RECORDS.—The provisions of subsection (d) of section 6038A shall
apply to—
"(1) any failure to furnish (within the time prescribed by
regulations) any information described in subsection (b), and
"(2) any failure to maintain (or cause another to maintain)
records as required by subsection (a),
in the same manner as if such failure were a failure to comply with
the provisions of section 6038A.
"(d) ENFORCEMENT OF REQUESTS FOR CERTAIN RECORDS.—
"(1) AGREEMENT TO TREAT CORPORATION AS AGENT.—The rules

of paragraph (3) shall apply to any transaction between the
reporting corporation and any related party who is a foreign
person unless such related party agrees (in such manner and at
such time as the Secretary shall prescribe) to authorize the
reporting corporation to act as such related party's limited
agent solely for purposes of applying sections 7602, 7603, and
7604 with respect to any request by the Secretary to examine
records or produce testimony related to any such transaction or
with respect to any summons by the Secretary for such records
or testimony. The appearance of persons or production of
records by reason of the reporting corporation being such an
agent shall not subject such persons or records to legal process
for any purpose other than determining the correct treatment
under this title of any transaction between the reporting corporation and such related party.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-457

"(2) RULES WHERE INFORMATION NOT FURNISHED,—If—

"(A) for purposes of determining the amount of the
reporting corporation's liability for tax under this title, the
Secretary issues a summons to such corporation to produce
(either directly or as an agent for a related party who is a
foreign person) any records or testimony,
"(B) such summons is not quashed in a proceeding begun
under paragraph (4) of section 6038A(e) (as made applicable
by paragraph (4) of this subsection) and is not determined to
be invalid in a proceeding begun under section 7604(b) to
enforce such summons, and
"(C) the reporting corporation does not substantially
comply in a timely manner with such summons and the
Secretary has sent by certified or registered mail a notice to
such reporting corporation that such reporting corporation
has not so substantially complied,
the Secretary may apply the rules of paragraph (3) with respect
to any transaction or item to which such summons relates
(whether or not the Secretary begins a proceeding to enforce
such summons). If the reporting corporation fails to maintain
(or cause another to maintain) records as required by subsection
(a), and by reason of that failure, the summons is quashed in a
proceeding described in subparagraph (B) or the reporting corporation is not able to provide the records requested in the
summons, the Secretary may apply the rules of paragraph (3)
with respect to any transaction or item to which the records
relate.
"(3) APPUCABLE RULES.—If the rules of this parsigraph apply
to £my transaction or item, the treatment of such transaction (or
the amount and treatment of any such item) shall be determined by the Secretary in the Secretary's sole discretion from
the Secretary's own knowledge or from such information as the
Secretary may obtain through testimony or otherwise.
"(4) JUDICIAL PROCEEDINGS.—The provisions of section
6038A(eX4) shall apply with respect to any summons referred to
in paragraph (2XA); except that subparagraph (D) of such section shall be applied by substituting 'transaction or item' for
'transaction'.
"(e) DEFINITIONS.—For purposes of this section, the terms 'related
party', 'foreign person', and 'records' have the respective meanings
given to such terms by section 6038A(c)."
(b) CONFORMING AMENDMENTS.—

(1) Paragraph (1) of section 6038A(a) is amended by striking
"or is a foreign corporation engaged in trade or business within
the United States".
(2) The table of sections for subpart A of part III of subchapter
A of chapter 61 is amended by inserting after the item relating
to section 6038B the following new item:
"Sec. 6038C. Information with respect to foreign corporations engaged in U.S. biisiness."
(c) EFFECTIVE DATE.—The amendments made by this section shall

26 use 6038A
apply to—
note.
(1) any requirement to furnish information under section
6038C(a) of the Internal Revenue Code of 1986 (as added by this
section) if the time for furnishing such information under such
section is after the date of the enactment of this Act,

39-194 O - 91 - 28 : QL 3 Part 2

104 STAT. 1388-458

PUBLIC LAW 101-508—NOV. 5, 1990

(2) any requirement under such section 6038C(a) to maintain
records which were in existence on or after March 20, 1990,
(3) any requirement to authorize a corporation to act as a
limited Eigent under section 6038C(dXl) of such Code (as so
added) if the time for authorizing such action is after the date of
the enactment of this Act, and
(4) any summons issued after such date of enactment,
without regard to when the taxable year (to which the information,
records, authorization, or summons relates) began,
26 u s e 482 note.

SEC. 11316. STUDY OF SECTION 482.

(a) GENERAL RULE.—The Secretary of the Treasury or his delegate
shall conduct a study of the application and administration of
section 482 of the Internal Revenue Code of 1986. Such study shall
include examination of—
(1) the effectiveness of the amendments made by this part in
increasing levels of compliance with such section 482,
(2) use of advanced determination agreements with respect to
issues under such section 482,
(3) possible legislative or administrative changes to assist the
Internal Revenue Service in increasing compliance with such
section 482, and
(4) coordination of the administration of such section 482 with
similar provisions of foreign tax laws and with domestic nontax
laws.
(b) REPORT.—Not later than March 1, 1992, the Secretary of the
Treasury or his delegate shall submit to the Committee on Ways and
Means of the House of Representatives and the Committee on
Finance of the Senate a report on the study conducted under
subsection (a), together with such recommendations as he may deem
advisable.
SEC. 11317. 10-YEAR PERIOD OF LIMITATION ON COLLECTION AFTER
ASSESSMENT.

26 u s e 6323
note.

(a) I N GENERAL.—Subsection (a) of section 6502 (relating to collection after assessment) is sunended—
(1) by striking "6 years" in paragraph (1) and inserting "10
years", and
(2) by striking "6-year period" each place it appears in paragraph (2) and inserting "10-year period .
(b) CONFORMING AMENDMENT.—Paragraph (3) of section 6323(g) is
amended by striking "6 years" each place it appears and inserting
"10 years".
(c) EFFECTIVE DATE.—The amendments made by this section shall
apply to—
(1) taxes assessed after the date of the enactment of this Act,
and
(2) taxes assessed on or before such date if the period specified
in section 6502 of the Internal Revenue Code of 1986 (determined without regard to the amendments made by subsection
(a)) for collection of such taxes has not expired as of such date.
SEC. 11318. RETURN REQUIREMENT WHERE CASH RECEIVED IN TRADE
OR BUSINESS.
(a) CERTAIN MONETARY INSTRUMENTS TREATED AS CASH.—Subsec-

tion (d) of section 60501 (relating to returns relating to cash received
in trade or business) is amended to read as follows:

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-459

"(d) CASH INCLUDES FOREIGN CURRENCY AND CERTAIN MONETARY

INSTRUMENTS.—For purposes of this section, the term 'cash'
includes—
"(1) foreign currency, and
"(2) to the extent provided in regulations prescribed by the
Secretary, any monetary instrument (whether or not in bearer
form) with a face amount of not more than $10,000.
Paragraph (2) shall not apply to any check drawn on the account of
the writer in a financisd institution referred to in subsection
(c)(lXB)."
fl)) INCREASE IN PENALTY FOR INTENTIONAL DISREGARD OF REPORT-

ING REQUIREMENT.—Paragraph (2) of section 6721(e) (relating to
penalty for intentional disregard) is amended—
(1) by inserting "60501," after "6050H," in subparagraph (A),
(2) by striking or" at the end of subparagraph (A),
(3) by striking "and" at the end of subpareigraph (B) and
inserting "or", and
(4) by inserting after subparagraph (B) the following new
subparagraph:
"(C) in the case of a return required to be filed under
section 60501(a) with respect to any transaction (or related
transactions), the greater of—
"(i) $25,000, or
"(ii) the amount of cash (within the meaning of section 60501(d)) received in such transaction (or related
transactions) to the extent the amount of such cash
does not exceed $100,000, and".
(c) CLARIFICATION OF APPUCATION OF PROVISION PROHIBITING EVA-

SION TECHNIQUES.—The heading of subsection (f) of section 60501 is
amended to read as follows:
"(f) STRUCTURING TRANSACTIONS TO EVADE REPORTING REQUIREMENTS PROHIBITED.—".

(d) STUDY.—The Secretary of the Treasury or his delegate shall
conduct a study on the operation of section 60501 of the Internal
Revenue Code of 1986. Such study shall include an examination of—
(1) the extent of compliance with the provisions of such
section,
(2) the effectiveness of the penalties in ensuring compliance
with the provisions of such section,
(3) methods to increase compliance with the provisions of such
section and ways Form 8300 could be simplified, and
(4) appropriate methods to increase the usefulness and availability of information submitted under the provisions of such
section.
Not later than March 31, 1991, the Secretary shall submit to the
Committee on Ways and Means of the House of Representatives and
the Committee on Finance of the Senate a report on the study
conducted under this subsection, together with such recommendations as he may deem advisable.
(e) EFFECTIVE DATES.—
26 usc 6050i
(1) The amendments made by subsections (a) and (b) shall note,
apply to amounts received after the date of the enactment of
this Act.
(2) The amendment made by subsection (c) shall take effect on
the date of the enactment of this Act.
(3) Not later than June 1, 1991, the Secretary of the Treasury
or his delegate shall prescribe regulations under section

104 STAT. 1388-460

PUBLIC LAW 101-508—NOV. 5, 1990

6050I(dX2) of the Internal Revenue Code of 1986 (as amended by
this section).

26 use 7801
note.

26^YSC 7801
note.

SEC. 11319. 5-YEAR EXTENSION OF INTERNAL REVENUE SERVICE USER
FEES.
(a) GENERAL RULE.—Subsection (c) of section 10511 of the Revenue
Act of 1987 (relating to fees for requests for ruling, determination,
and similar letters) is amended by adding at the end thereof the
following new sentence: "Subsection (a) shall also apply with respect
to requests made after September 30, 1990, and before October 1,
1995."
(b) EFFECTIVE DATE.—The amendment made by this section shall
take effect on September 29, 1990, except that no advance pajonent
shall be required for any fee for any requests filed after September
29, 1990, and before the 30th day after the date of the enactment of
this Act.

PART III—CORPORATE PROVISIONS
SEC. 11321. RECOGNITION OF GAIN BY DISTRIBUTING CORPORATION IN
CERTAIN SECTION 355 TRANSACTIONS.
(a) GENERAL RULE.—Section 355 (relating to distribution of stock
and securities of a controlled corporation) is amended by striking
subsection (c) and inserting the following new subsections:
"(c) TAXABILITY OF CORPORATION ON DISTRIBUTION.—

"(1) I N GENERAL.—Except as provided in paragraph (2), no
gain or loss shall be recognized to a corporation on any distribution to which this section (or so much of section 356 as relates to
this section) applies and which is not in pursuance of a plan of
reorg£mization.
"(2) DISTRIBUTION OF APPRECIATED PROPERTY.—

"(A) I N GENERAL.—If—
"(i) in a distribution referred to in paragraph (1), the
corporation distributes property other than qusdified
property, and
"(ii) the fair market value of such property exceeds
its adjusted basis (in the hands of the distributing
corporation),
then gain shall be recognized to the distributing corporation as if such property were sold to the distributee at its
fair market value.
"(B) QUALIFIED PROPERTY.—For purposes of subparagraph
(A), the term 'qualified property' means any stock or securities in the controlled corporation.
"(C) TREATMENT OF UABILITIES.—If any property distributed in the distribution referred to in pareigraph (1) is
subject to a liability or the shareholder assumes a liability
of the distributing corporation in connection with the distribution, then, for purposes of subparagraph (A), the fair
market value of such property shall be treated as not less
than the amount of such liability.
"(3) COORDINATION WITH SECTIONS 3 1 1 AND 336(a).—Sections
311 and 336(a) shall not apply to any distribution referred to in
paragraph (1).
"(d) RECOGNITION OF GAIN ON CERTAIN DISTRIBUTIONS OF STOCK OR
SECURITIES IN O^NTROLLED CORPORATION.—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-461

"(1) IN GENERAL.—In the case of a disqualified distribution,
any stock or securities in the controlled corporation shall not be
treated as qualified property for purposes of subsection (c)(2) of
this section or section 361(cX2).
"(2) DiSQUAUFiED DISTRIBUTION.—For purposes of this subsection, the term 'disqualified distribution' means any distribution
to which this section (or so much of section 356 as relates to this
section) applies if, immediately after the distribution—
"(A) any person holds disqualified stock in the distributing corporation which constitutes a 50-percent or greater
interest in such corporation, or
"(B) any person holds disqualified stock in the controlled
corporation (or, if stock of more than 1 controlled corporation is distributed, in any controlled corporation) which
constitutes a 50-percent or greater interest in such corporation.
"(3) DISQUALIFIED STOCK.—For purposes of this subsection, the
term 'disqualified stock' means—
"(A) any stock in the distributing corporation acquired by
purchase after October 9,1990, and during the 5-year period
ending on the date of the distribution, and
"(B) any stock in any controlled corporation—
"(i) acquired by purchase after October 9, 1990, and
during the 5-year period ending on the date of the
distribution, or
"(ii) received in the distribution to the extent attributable to distributions on—
"(I) stock described in subparagraph (A), or
"(II) any securities in the distributing corporation acquired by purchsise after October 9, 1990,
£ind during the 5-year period ending on the date of
the distribution.
"(4) 50-PERCENT OR GREATER INTEREST.—For purpOSeS of t h i s

subsection, the term '50-percent or greater interest' means stock
possessing at least 50 percent of the total combined voting
power of all classes of stock entitled to vote or at least 50
percent of the total value of shares of all classes of stock.
"(5) PURCHASE.—For purposes of this subsection—
"(A) I N GENERAL.—Except as otherwise provided in this
paragraph, the term 'purchase' means any acquisition but
only if—
"(i) the basis of the property acquired in the hands of
the acquirer is not determined (I) in whole or in part by
reference to the adjusted basis of such property in the
hands of the person from whom acquired, or (II) under
section 1014(a), and
"(ii) the property is not acquired in an exchange to
which section 351, 354, 355, or 356 applies.
"(B) CERTAIN SECTION 351 EXCHANGES TREATED AS PUR-

CHASES.—The term 'purchase' includes any acquisition of
property in an exchange to which section 351 applies to the
extent such property is acquired in exchange for—
"(i) any cash or cash item,
"(ii) any marketable stock or security, or
"(iii) any debt of the transferor.
"(C) CARRYOVER BASIS TRANSACTIONS.—If—

104 STAT. 1388-462

PUBLIC LAW 101-508—NOV. 5, 1990
"(i) any person acquires property from another
person who acquired such property by purchase (as
determined under this paragraph with regard to this
subparagraph), and
"(ii) the adjusted basis of such property in the hands
of such acquirer is determined in whole or in part by
reference to the adjusted basis of such property in the
hands of such other person,
such acquirer shall be treated as having acquired such
property by purchase on the date it was so acquired by such
other person.
"(6) SPECIAL RULE WHERE SUBSTANTIAL DIMINUTION OF RISK.—

"(A) IN GENERAL.—If this paragraph applies to any stock
or securities for any period, the running of any 5-year
period set forth in subparagraph (A) or (B) of paragraph (3)
(whichever applies) shall be suspended during such period.
"(B) PROPERTY TO WHICH SUSPENSION APPLIES.—This paragraph applies to any stock or securities for any period
during which the holder's risk of loss with respect to such
stock or securities, or with respect to any portion of the
activities of the corporation, is (directly or indirectly)
substantially diminished by—
"(i) an option,
"(ii) a short sale,
"(iii) any special class of stock, or
"(iv) any other device or transaction.
"(1) AGGREGATION RULES.—

"(A) IN GENERAL.—For purposes of this subsection, a
person and all persons related to such person (within the
meaning of 267(b) or 707(b)(1)) shall be treated as one
person.
"(B) PERSONS ACTING PURSUANT TO PLANS OR ARRANGE-

MENTS.—If two or more persons act pursuant to a plan or
arrangement with respect to acquisitions of stock or securities in the distributing corporation or controlled corporation, such persons shall be treated as one person for
purposes of this subsection.
"(8) ATTRIBUTION FROM ENTITIES.—

"(A) I N GENERAL.—Paragraph (2) of section 318(a) shall
apply in determining whether a person holds stock or
securities in any corporation (determined by substituting
'10 percent' for '50 percent' in subparagraph (C) of such
paragraph (2) and by treating any reference to stock as
including a reference tosecurities).
"(B) DEEMED PURCHASE RULE.—If—

"(i) any person acquires by purchase an interest in
any entity, and
"(ii) such person is treated under subparagraph (A)
as holding any stock or securities by reason of holding
such interest,
such stock or securities shall be treated as acquired by
purchgise by such person on the later of the date of the
purchase of the interest in such entity or the date such
stock or securities are acquired by purchase by such entity.
"(9) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this
subsection, including—

PUBLIC LAW 101-508—NOV. 5,1990

104 STAT. 1388-463

"(A) regulations to prevent the avoidance of the purposes
of this subsection through the use of related persons,
intermediaries, pass-thru entities, options, or other
arrangements, and
"(B) regulations modifying the definition of the term
'purchase."
(b) TECHNICAL AMENDMENT.—Subsection (c) of section 361 is
amended by adding at the end thereof the following new paragraph:
"(5) CROSS REFERENCE.—
"For provision providing for recognition of gain in certain distributions, see section 355(d)."
(c) EFFECTIVE DATE.—

(1) I N GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to
distributions after October 9,1990.
(2) BINDING CONTRACT EXCEPTION.—The amendments made by
this section shall not apply to any distribution pursuant to a
written binding contract in effect on October 9, 1990, and at all
times thereafter before such distribution.
(3) TRANSITIONAL RULES.—For purposes of subparagraphs (A)

and (B) of section 355(dX3) of the Internal Revenue Code of 1986
(as amended by subsection (a)), an acquisition shall be treated as
occurring on or before October 9,1990, if—
(A) such acquisition is pursuant to a written binding
contract in effect on October 9, 1990, and at all times
thereafter before such acquisition,
(B) such acquisition is pursuant to a transaction which
was described in documents filed with the Securities and
Exchange Commission on or before October 9, 1990, or
(C) such acquisition is pursuant to a transaction—
(i) the material terms of which were described in a
written public announcement on or before October 9,
1990,
(ii) which was the subject of a prior filing with the
Securities and Exchange Commission, and
(iii) which is the subject of a subsequent filing with
the Securities and Exchange Commission before January 1,1991.
SEC. 11322. MODIFICATIONS TO REGULATIONS ISSUED UNDER SECTION
305(c).
(a) GENERAL RULE.—Subsection (c) of section 305 (relating to

certain transactions treated as distributions) is amended by adding
at the end thereof the following new sentence: "Regulations prescribed under the preceding sentence shall provide that—
"(1) where the issuer of stock is required to redeem the stock
at a specified time or the holder of stock has the option to
require the issuer to redeem the stock, a redemption premium
resulting from such requirement or option shall be treated as
reasonable only if the amount of such premium does not exceed
the amount determined under the principles of section
1273(aX3),
"(2) a redemption premium shall not fail to be treated as a
distribution (or series of distributions) merely because the stock
is callable, £ind
"(3) in any case in which a redemption premium is treated as
a distribution (or series of distributions), such premium shall be

26 use 355 note.

104 STAT. 1388-464

PUBLIC LAW 101-508—NOV. 5. 1990

taken into account under principles similar to the principles of
section 1272(a)."
26 u s e 305 note.

(b) EFFECTIVE DATE.—

(1) I N GENERAL.—Except as provided in paragraph (2), the
amendment made by subsection (a) shall apply to stock issued
after October 9,1990.
(2) EXCEPTION.—The amendment made by subsection (a) shall
not apply to any stock issued after October 9,1990, if—
(A) such stock is issued pursuant to a written binding
contract in effect on October 9, 1990, and at all times
thereafter before such issuance,
(B) such stock is issued pursuant to a registration or
offering statement filed on or before October 9,1990, with a
Federal or State agency regulating the offering or sale of
securities and such stock is issued before the date 90 days
after the date of such filing, or
(C) such stock is issued pursuant to a plan filed on or
before October 9, 1990, in a title 11 or similar case-) CONFORMING AMENDMENT.—Subsection (a) of section 7102 of

the Revenue Reconciliation Act of 1989 is amended by striking 26 USC 120 note,
paragraph (2).
(c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 120 note,
apply to taxable years beginning after December 31,1989.
SEC. 11405. TARGETED JOBS CREDIT.

(a) I N GENERAL.—Paragraph (4) of section 51(c) is amended by
striking "September 30, 1990" and inserting "December 31, 1991".
(b) AUTHORIZATION.—Paragraph (2) of section 261(f) of the Economic Recovery Act of 1981 is amended by striking "fiscal year 26 USC 51 note.
1982" and all that follows through "necessary" and inserting "each
fiscal year such sums as may be necessary".
(c) EFFECTIVE DATES.—
26 USC 51 note.
(1) CREDIT.—The amendment made by subsection (a) shall
apply to individuals who begin work for the employer after
September 30,1990.
(2) AUTHORIZATION.—The amendment made by subsection (b)
shall apply to fiscal years beginning after 1990.

104 STAT. 1388-474

PUBLIC LAW 101-508—NOV. 5, 1990

SEC. 11406. ENERGY INVESTMENT CREDIT FOR SOLAR AND GEOTHERMAL
PROPERTY.

The table contained in section 46(bX2XA) (relating to energy
percentage) is amended by striking "Sept. 30, 1990" in clauses (viii)
and (ix) and inserting "Dec. 31,1991".
SEC. 11407. LOW-INCOME HOUSING CREDIT.
(a) EXTENSION.—

(1) I N GENERAL.—Subsection (o) of section 42 (relating to lowincome housing credit) is amended—
(A) by striking "1990" each place it appears in paragraph
(1) and inserting "1991", and
(B) by striking paragraph (2) and inserting the following
new paragraph:
"(2) EXCEPTION FOR BOND-FINANCED BUILDINGS IN PROGRESS.—

For purposes of paragraph (IXB), a building shall be treated as
placed in service before 1992 if^
"(A) the bonds with respect to such building are issued
before 1992,
"(B) the taxpayer's basis in the project (of which the
building is a part) as of December 31, 1991, is more than 10
percent of the taxpayer's reasonably expected basis in such
project as of December 31,1993, and
"(C) such building is placed in service before January 1,
1994."
(2) CONFORMING AMENDMENT.—Subsection (a) of section 7108

26 use 42 note.
26 use 42 note.

of the Revenue Reconciliation Act of 1989 is amended by
striking paragraph (2).
(3) EFFECTIVE DATE.—The amendments made by this subsection shall apply to calendar years after 1989.
(b) ADDITIONAL AMENDMENTS.—
(1) CLARIFICATION OF TENANT RIGHTS OF IST REFUSAL.—Para-

graph (7) of section 42(i), as redesignated by subtitle G of this
title, is amended by striking "the tenants of such building" and
inserting "the tenants (in cooperative form or otherwise) or
resident management corporation of such building or by a
qualified nonprofit organization (as defined in subsection
(hX5XC)) or government agency".
(2) MONITORING

NONCOMPUANCE.—Clause

(iv) of section

42(mXlXB) is amended to read as follows:
"(iv) which provides a procedure that the agency (or
an agent or other private contractor of such agency)
will follow in monitoring for noncompliance with the
provisions of this section and in notifying the Internal
Revenue Service of such noncompliance which such
agency becomes aware of."
(3) TREATMENT OF SECTION 5 1 5 RENTS.—Subparagraph (B) of

section 42(gX2) is amended by striking "and at the end of
clause (ii), by striking the period at the end of clause (iii) and
inserting ", and", and by inserting after clause (iii) the following
new clause:
"(iv) does not include any rental payment to the
owner of the unit to the extent such owner pays an
equivalent amount to the Farmers' Home Administration under section 515 of the Housing Act of 1949."
(4) QUALIFIED CENSUS TRACT DETERMINATIONS WHERE DATA NOT

AVAILABLE.—Subclause (I) of section 42(d)(5XC)(ii) is amended by

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-475

adding at the end thereof the following new sentence: "If the
Secretary of Housing and Urban Development determines that
sufficient data for any period are not available to apply this
clause on the basis of census tracts, such Secretary shall apply
this clause for such period on the basis of enumeration
districts."
(5) EXCEPTION TO CREDIT DENIAL FOR MODERATE REHABIUTATION ASSISTANCE.—

(A) I N GENERAL.—The last sentence of paragraph (2) of
section 42(c), as added by subtitle G of this title, is amended
by inserting before the period "(other than assistance under
the Stewart B. McKinney Homeless Assistance Act of 1988
(as in effect on the date of the enactment of this sentence))".
(6) AFDC RECIPIENT STUDENTS NOT TO DISQUALIFY UNIT.—
Subparagraph (D) of section 42(i)(3) is amended to read as
follows:
"(D) CERTAIN STUDENTS NOT TO DISQUAUFY UNIT.—A unit
shall not fail to be treated as a low-income unit merely
because it is occupied by an individual who is—
"(i) a student and receiving assistance under title IV
of the Social Security Act, or
"(ii) enrolled in a job training program receiving
assistance under the Job Training Partnership Act or
under other similar Federal, State, or local laws."
(7) INTERMEDIARY COSTS CONSIDERED AT EVALUATION STAGE.—

(A) I N GENERAL.—Subparagraph (B) of section 42(m)(2) is
amended by striking "and" at the end of clause (i), by
striking the period at the end of clause (ii) and inserting
", and", and by adding at the end thereof the following:
"(iii) the percenteige of the housing credit dollar
amount used for project costs other than the cost of
intermediaries.
Clause (iii) shall not be applied so as to impede the development of projects in hard-to-develop areas."
(B) CONFORMING AMENDMENT.—Subparagraph (B) of section 42(mXl) is amended by striking clause (ii) and by
redesignating clauses (iii) and (iv) as clauses (ii) and (iii),
respectively.
(8) 10-YEAR RULE NOT TO APPLY TO ACQUISITION OF CERTAIN
SINGLE-FAMILY RESIDENCES.—Clause (ii) of section 42(d)(2)(D) is
amended by striking "or" at the end of subclause (III), by
striking the period at the end of subclause (IV) and inserting
", or", and by adding at the end thereof the following:
"(V) of a single-family residence by any individual who owned and used such residence for no
other purpose than as his principal residence."
(9) APPLICATION OF NONPROFIT SET-ASIDE.—Section 42(h)(5) is
amended—
(A) by inserting "own an interest in the project (directly
or through a partnership) and" after "nonprofit organization is to" in subparagraph (B),
(B) by striking "and" at the end of clause (i) of subparagraph (C), by redesignating clause (ii) of such subparagraph
as clause (iii), and by inserting after clause (i) of such
subparagraph the following new clause:

104 STAT. 1388-476

PUBLIC LAW 101-508—NOV. 5, 1990

'

"(ii) such organization is determined by the State
housing credit agency not to be affiliated with or controlled by a for-profit organization; and", and
(C) by inserting "ownership and" before "material
participation" in subparagraph (D).
26 u s e 42 note.

(10) EFFECTIVE DATES.—

(A) I N GENERAL.—Except as otherwise provided in this
paragraph, the amendments made by this subsection shall
apply to—
(i) determinations under section 42 of the Internal
Revenue Code of 1986 with respect to housing credit
dollar amounts allocated from State housing credit
ceilings for calendar years after 1990, or
(ii) buildings placed in service after December 31,
1990, to the extent paragraph (1) of section 42(h) of such
Code does not apply to any building by reason of paragraph (4) thereof, but only with respect to bonds issued
after such date.
(B) TENANT RIGHTS, ETC.—The amendments made by
paragraphs (1), (6), (8), and (9) shall take effect on the date
of the enactment of this Act.
(C) MONITORING.—The amendment made by paragraph
(2) shall take effect on January 1, 1992, and shall apply to
buildings placed in service before, on, or after such date.
(D) STUDY.—The Inspector (Jeneral of the Department of
Housing and Urban Development and the Secretary of the
Treasury shall jointly conduct a study of the effectiveness of
the amendment made by paragraph (5) in canying out the
purposes of section 42 of the Internal Revenue Code of 1986.
The report of such study shall be submitted not later than
January 1, 1993, to the Committee on Ways and Means of
the House of Representatives and the Committee on Finance of the Senate.
26 u s e 42 note.

(c) ELECTION T o ACCELERATE CREDIT I N T O 1 9 9 0 . —

(1) I N GENERAL.—At the election of an individual, the credit
determined under section 42 of the Internal Revenue Code of
1986 for the taxpayer's first taxable year ending on or after
October 25, 1990, shall be 150 percent of the amount which
would (but for this paragraph) be so allowable with respect to
investments held by such individual on or before October 25,
1990.
(2) REDUCTION IN AGGREGATE CREDIT TO REFLECT INCREASED

1990 CREDIT.—The aggregate credit gdlowable to any person
under section 42 of such Code with respect to any investment
for taxable years after the first taxable year referred to in
paragraph (1) shall be reduced on a pro rata basis by the
amount of the increased credit allowable by reason of paragraph (1) with respect to such first taxable year. The preceding
sentence shall not be construed to affect whether any taxable
year is part of the credit, compliance, or extended use periods.
(3) ELECTION.—The election under paragraph (1) shall be
made at the time and in the manner prescribed by the Secretary of the Treasury or his delegate, and, once made, shall be
irrevocable. In the case of a partnership, such election shall be
made by the partnership.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-477

SEC. 11408. QUALIFIED MORTGAGE BONDS.

(a) I N GENERAL.—Subparagraph (B) of section 143(aXl) (defining
qualified mortgage bond) is amended by striking "September 30,
1990" each place it appears and inserting "December 31, 1991".
G)) MORTGAGE CREDIT CERTIFICATES.—Subsection (h) of section 25
(relating to interest on certain home mortgages) is amended by
striking "September 30, 1990" and inserting "December 31, 1991".
(c) MODIFICATION AND SIMPUFICATION OF RECAPTURE RULES.—
(1) MODIFICATION OF HOLDING PERIOD PERCENTAGE.—

(A) Clause (i) of section 143(mX4XC) is amended to read as
follows:
"(i) I N GENERAL.—The term 'holding period percentage' means the percentage determined in accordance
with the following table:
"If the disposition occurs
during a year after the
testing date which is:
The 1st such year
The 2d such year
The 3d such year
The 4th such year
The 5th such year
The 6th such year
The 7th such year
The 8th such year
The 9th such year

The holding period
percentage is:
20
40
60
80
100
80
60
40
20."

(B) Subparagraph (C) of section 143(mX4) is amended by
striking clause (ii) and by redesignating clause (iii) as clause
(ii).
(C) Subparagraph (B) of section 143(mX2) is amended by
striking "10 years" and inserting "9 years".
(2) MODIFICATION OF RECAPTURE AMOUNT BASED ON TAXPAYER'S
INCOME.—

(A) Subparagraph (A) of section 143(mX4) is amended by
striking "and" at the end of clause (i), by striking the period
at the end of clause (ii) and inserting ", and", and by adding
at the end thereof the following new clause:
"(iii) the income percentage."
(B) Paragraph (4) of section 143(m) is amended by adding
at the end thereof the following new subparagraph:
"(E) INCOME PERCENTAGE.—The term 'income percentage'
means the percentage (but not greater than 100 percent)
which—
"(i) the excess of—
"(I) the modified adjusted gross income of the
taxpayer for the taxable year in which the disposition occurs, over
"(II) the adjusted qualifying income for such taxable year, bears to
"(ii) $5,000.
The percentage determined under the preceding sentence
shall be rounded to the nearest whole percentage point (or,
if it includes a half of a percentage point, shall be increased
to the nearest whole percentage point)."
(CXi) Paragraph (5) of section 143(m) is amended by striking all that precedes subparagraph (C) and inserting the
following:

104 STAT. 1388-478

PUBLIC LAW 101-508—NOV. 5, 1990

"(5) ADJUSTED QUAUFYING INCOME; MODIFIED ADJUSTED GROSS
INCOME.—

"(A) ADJUSTED QUAUFyiNG INCOME.—For purposes of

paragraph (4), the term 'adjusted qualif3dng income' means
the product of—
"(i) the highest family income which (as of the date
the financing was provided) would have met the
requirements of subsection (f) with respect to the residents, and
"(ii) 1.05 to the nth power where 'n' equals the
number of full years during the period beginning on
the date the financing was provided and ending on the
date of the disposition.
For purposes of clause (i), highest family income shall be
determined without regard to subsection (fK3XA) and on the
basis of the number of members of the taxpayer's family as
of the date of the disposition."
(ii) Subparagraph (C) of section 143(m)(5) is redesignated
as subparagraph (B) and is amended by striking "this paragraph' and inserting "paragraph (4)".
(3) QniER CHANGES.—

(A) Paragraph (1) of section 143(m) is amended by striking
"increased by and all that follows £uid inserting 'Increased
by the lesser of—
"(A) the recapture amount with respect to such indebtedness, or
"(B) 50 percent of the gain (if any) on the disposition of
such interest."
(B) Paragraph (6) of section 143(m) is amended—
(i) by striking "LIMITATION" in the heading and
inserting "SPECIAL RULES RELATING TO LIMITATION ,

(ii) by striking the first sentence of subparagraph (A),
and
(iii) by striking "the preceding sentence" in subparagraph (A) and inserting "paragraph (1)".
(C) Clause (ii) of section 143(mX7XB) is amended to read as
follows:
"(ii) the adjusted qualifying income (as defined in
paragraph (5)) for each category of family size for each
year of the 9-year period beginning on the date the
financing was provided."
26 u s e 143 note.

(d) EFFECTIVE D A T E S . —

(1) BONDS.—The amendment made by subsection (a) shall
apply to bonds issued after September 30,1990.
(2) CERTIFICATES.—The amendment made by subsection (b)
shall apply to elections for periods after September 30, 1990.
(3) SIMPLIFICATION.—The amendment made by subsection (c)
shall take effect as if included in the amendments made by
section 4005 of the Technical and Miscellaneous Revenue Act of
1988.
SEC. 11409. QUALIFIED SMALL ISSUE BONDS.

26 use 144 note.

(a) I N GENERAL.—Subparagraph (B) of section 144(aX12) (relating
to termination dates) is amended by striking "September 30, 1990 '
and inserting "December 31,1991".
0)) EFFECTIVE DATE.—The amendment made by this section shall
apply to bonds issued after September 30,1990.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-479

SEC. 11410. HEALTH INSURANCE COSTS OF SELF-EMPLOYED INDIVIDUALS.

(a) I N GENERAL.—Paragraph (6) of section 162(1) (relating to special rules for health insurance costs of self-employed individuals) is
amended by striking "September 30,1990" and inserting "December
31,1991".
(b) CONFORMING AMENDMENT.—Subsection (a) of section 7107 of

the Revenue Reconciliation Act of 1989 is amended by striking 26 USC162 note.
paragraph (2).
(c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC162 note,
apply to taxable years beginning after December 31,1989.
SEC. 11411. EXPENSES FOR DRUGS FOR RARE CONDITIONS.

Subsection (e) of section 28 (relating to clinical testing expenses
for certain drugs for rare diseases or conditions) is amended by
striking "December 31, 1990" and inserting "December 31, 1991'\

Subtitle E—Energy Incentives
PART I—MODIFICATIONS OF EXISTING CREDITS
SEC. 11501. EXTENSION AND MODIFICATION OF CREDIT FOR PRODUCING
FUEL FROM NONCONVENTIONAL SOURCE.

(a) EXTENSION.—Section 29(fKl) of the Internal Revenue Code of
1986 (relating to application of section) is amended—
(1) by striking "1991" in clauses (i) and (ii) of subparagraph
(A) and inserting "1993", and
(2) by striking "2001" in subparagraph (B) and inserting
"2003".
(b) MODIFICATION WITH RESPECT TO GAS FROM TIGHT FORMATIONS.—

(1) I N GENERAL.—Subpargigraph (B) of section 29(cX2) of such
Code is amended to read as follows:
"(B) SPECIAL RULES FOR GAS FROM TIGHT FORMATIONS.—

The term 'gas produced from a tight formation' shall only
include g£is from a tight formation—
"(i) which, as of April 20, 1977, w£is committed or
dedicated to interstate commerce (as defined in section
2(18) of the Natural Gas Policy Act of 1978, as in effect
on the date of the enactment of this clause), or
"(ii) which is produced from a well drilled after such
date of enactment."
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 26 USC 29 note,
shall apply to gas produced after December 31,1990.
(c) COORDINATION WITH ENHANCED OIL RECOVERY CREDIT.—

(1) I N GENERAL.—Section 29(b) is amended by redesignating
paragraph (5) as paragraph (6) and by inserting after paragraph
(4) the following new paragraph:
"(5) CREDIT REDUCED FOR ENHANCED OIL RECOVERY CREDIT.—

The amount allowable as a credit under subsection (a) with
respect to any project for any taxable year (determined after
application of paragraphs (1), (2), (3), and (4)) shall be reduced by
the excess (if any) of—
"(A) the aggregate amount allowed under section 38 for
the taxable year and any prior taxable year by reason of

104 STAT. 1388-480

26 use 29 note.

PUBLIC LAW 101-508—NOV. 5, 1990

any enhanced oil recovery credit determined under section
43 with respect to such project, over
"(B) the aggregate amount recaptured with respect to the
amount described in subparagraph (A) under this paragraph for any prior taxable year."
(2) EFFECTIVE DATE.—The amendment made by paragraph (1)
shall apply to taxable years beginning after December 31, 1990.
SEC. 11502. CREDIT FOR SMALL PRODUCERS OF ETHANOL; MODIFICATION OF ALCOHOL FUELS CREDIT.
(a) ALLOWANCE OF CREDIT.—Section 40(a) (relating to alcohol used
as fuel) is amended—
(1) by striking the period at the end of paragraph (2) and
inserting ", plus", and
(2) by adding at the end thereof the following new paragraph:
"(3) in the case of an eligible small ethanol producer, the
small ethanol producer credit."
(b) SMALL ETHANOL PRODUCER CREDIT.—Subsection (b) of section
40 is amended—
(1) by redesignating paragraph (4) as paragraph (5),
(2) by inserting after paragraph (3) the following new
paragraph:
"(4) S M A L L ETHANOL PRODUCER C R E D I T . —

"(A) I N GENERAL.—The small ethanol producer credit of
any eligible small ethanol producer for any tsixable year is
10 cents for each gallon of qualified ethanol fuel production
of such producer.
"(B) QUAUFIED ETHANOL FUEL PRODUCTION.—For purpOSeS

of this paragraph, the term 'qualified ethemol fuel production' means any alcohol which is ethanol which is produced
by an eligible small ethanol producer, and which during the
taxable year—
"(i) is sold by such producer to another person—
"(I) for use by such other person in the production of a qualified mixture in such other person's
trade or business (other than casual off-farm
production),
"(II) for use by such other person as a fuel in a
trade or business, or
"(III) who sells such ethanol at retail to another
person and places such ethanol in the fuel tank of
such other person, or
"(ii) is used or sold by such producer for any purpose
described in clause (i).
"(C) LIMITATION.—The qualified ethanol fuel production
of any producer for any taxable year shall not exceed
15,000,000 gallons.
"(D) ADDITIONAL DISTILLATION EXCLUDED.—The qualified

ethanol fuel production of any producer for any taxable
year shall not include any alcohol which is purchased by
the producer and with respect to which such producer
increases the proof of the alcohol by additional distillation."; and
(3) by striking "AND ALCOHOL CREDIT" in the heading for such
subsection and inserting ", ALCOHOL CREDIT, AND SMALL ETHANOL PRODUCER CREDIT".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-481

(c) DEFINITIONS AND SPECIAL RULES FOR EUGIBLE SMALL ETHANOL
PRODUCER CREDIT.—Section 40 is amended by adding at the end

thereof the following new subsection:
"(g) DEFINITIONS AND SPECIAL RULES FOR EUGIBLE SMALL ETHANOL
PRODUCER CREDIT.—For purposes of this section—
"(1) ELIGIBLE SMALL ETHANOL PRODUCER.—The term 'eligible

small ethanol producer' means a person who, at all times during
the taxable year, has a productive capacity for alcohol (as
defined in subsection (d)(1)(A) without regard to clauses (i) and
(ii)) not in excess of 30,000,000 gallons.
"(2) AGGREGRATION RULE.—For purposes of the 15,000,000
gallon limitation under subsection (b)(4)(C) and the 30,000,000
gallon limitation under paragraph (1), all members of the same
controlled group of corporations (within the meaning of section
267(f)) and all persons under common control (within the meaning of section 52(b) but determined by treating an interest of
more than 50 percent as a controlling interest) shall be treated
as 1 person.
"(3) PARTNERSHIP, s CORPORATIONS, AND OTHER PASS-THRU ENTITIES.—In the case of a partnership, trust, S corporation, or other
pass-thru entity, the limitations contained in subsection (b)(4)(C)
and paragraph (1) shall be applied at the entity level and at the
partner or similar level.
"(4) ALLOCATION.—For purposes of this subsection, in the case
of a facility in which more than 1 person has an interest,
productive capacity shall be allocated among such persons in
such manner as the Secretary may prescribe.
"(5) REGULATIONS.—The Secretary may prescribe such regulations as may be necessary—
"(A) to prevent the credit provided for in subsection (a)(3)
from directly or indirectly benefiting any person with a
direct or indirect productive capacity of more than
30,000,000 gallons of alcohol during the taxable year, or
"(B) to prevent any person from directly or indirectly
benefiting with respect to more than 15,000,000 gallons
during the taxable year."
(d) ALCOHOL NOT USED AS FUEL.—

(1) IN GENERAL.—Section 40(d)(3) is amended by redesignating
subparagraph (C) £is subpargigraph (D) and by inserting after
subparagraph (B) the following new subparagraph:
"(C) PRODUCER CREDIT.—If—

"(i) any credit W£is determined under subsection
(aX3),and
"(ii) any person does not use such fuel for a purpose
described in subsection Ot>)(4)(B),
then there is hereby imposed on such person a tax equal to
10 cents a gallon for each gallon of such alcohol."
(2) CONFORMING AMENDMENT.—Section 40(d)(3)(D), as redesig-

nated by paragraph (1), is amended by striking "subparagraph
(A) or (B) and inserting "subparagraph (A), (B), or (C) .
(e) REDUCED CREDIT FOR ETHANOL BLENDERS.—

(1) IN GENERAL.—Section 40, as amended by subsection (c), is
amended by adding at the end thereof the following new subsection:
"(h) REDUCED CREDIT FOR ETHANOL BLENDERS.—In the case of any
alcohol mixture credit or alcohol credit with respect to any alcohol
which is ethanol—

104 STAT. 1388-482

PUBLIC LAW 101-508—NOV. 5, 1990

"(1) subsections (bXlXA) and (bX2XA) shall be applied by
substituting '54 cents' for '60 cents';
"(2) subsection (bX3) shall be applied by substituting '40 cents'
for '45 cents' and '54 cents' for '60 cents'; and
"(3) subparagraphs (A) and (B) of subsection (dX3) shall be
applied by substituting '54 cents' for '60 cents' and '40 cents' for
'45 cents'."
(2) CONFORMING AMENDMENT.—Section 4003) is amended by
inserting ", and except as provided in subsection (h)" in the
matter preceding paragraph (1) thereof.
(f) TERMINATION.—Subsection (e) of section 40 is amended to read
as follows:
"(e) TERMINATION.—

"(1) I N GENERAL.—This section shall not apply to any sale or
use—
"(A) for any period after December 31, 2000, or
"(B) for any period before January 1, 2001, during which
the Highway Trust Fund financing rate under section
4081(aX2) is not m effect.
"(2) N o CARRYOVERS TO CERTAIN YEARS AFTER EXPIRATION.—If

this section ceases to apply for any period by reason of paragraph (1), no amount attributable to any sale or use before the
first day of such period may be carried under section 39 by
reason of this section (treating the amount allowed by reason of
this section as the first amount allowed by this subpart) to any
taxable year beginning after the 3-taxable-year period beginning with the taxable year in which such first day occurs."
(g) CONFORMING AMENDMENTS TO TARIFF SCHEDULE.—

(1) Heading 9901.00.50 of the Harmonized Tariff Schedule of
the United States (19 U.S.C. 3007) is amended—
(A) by striking "15.85)(2) is amended by
striking , a transaction to which section 371 (relating to
insolvency reorganization) applies,".
(D) Subsection (d) of section 354 is hereby repealed.
(E) Clause (i) of section 356(dX2XB) is amended by striking
"or(d)".
(FXi) Section 357 is amended by striking "351, 361, 371, or
374" each place it appears and inserting "351 or 361".
(ii) Paragraph (2) of section 357(c) is amended by inserting
"or" at the end of subparagraph (A), by striking subparagraph (B), and by redesignating subparagraph (C) as
subparagraph (B).
(G) Section 358 is amended—
(i) in subsection (a), by striking "361, 37101)), or 374"
and inserting "or 361", and
(ii) by strifing subsection Ot>)(3).
(H) Paragraph (3) of section 1245(b) is amended by striking "371(a), 374(a),".
(I) Paragraph (3) of section 1250(d) is amended by striking
"371(a), 374(a),".
(9) AMENDMENTS RELATING TO REPEAL OF SECTIONS 422 AND
424.—

(AXi) Section 422A is redesignated as section 422 and
section 425 is redesignated as section 424.
(ii) The table of sections for part II of subchapter D of
chapter 1 is amended by redesignating the items relating to
sections 422A and 425 as items relating to sections 422 and
424, respectively.
(B) Section 421 is amended—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-525

(i) in subsection (a)—
(I) by striking "422(a), 422A(a), 423(a), or 424(a)"
and inserting "422(a) or 423(a)",
(II) by striking "except as provided in section
422(cXl)," in paragraph (1), and
(III) by striking "425(a) in paragraph (2) and
inserting "424(a)";
(ii) in subsection (b)—
(I) by striking "422(a), 422A(a), 423(a), or 424(a)"
and inserting "422(a) or 423(a)", and
(II) by striking "422(a)(1), 422A(a)(l), 423(a)(1), or
424(a)(1)," and inserting "422(a)(1) or 423(aXl).";
(iii) in subsection (c)—
(I) by striking "422(a), 422A(a), 423(a), and 424(a)"
in paragraph (IXA) and inserting "422(a) and
423(a)",
(II) by striking "sections 423(c) and 424(cXl)" in
paragraph (1)(B) and inserting "section 423(c)",
(III) by striking "422(cXl), 423(c), or 424(cXl)"
each place it appears in paragraphs (2) and (3)(A)
and inserting "423(c)",
(IV) by striking "sections 422(cXl), 423(c), and
424(cXl)" in paragraph (3XB) and inserting "section
423(c)", and
(V) by striking "such sections" in paragraph
(3)(B) and inserting "such section".
(C) Section 422 (as redesignated by subparagraph (A)) is
amended—
(i) by striking "425(a)" in subsection (a)(2) and inserting "424(a)", and
(ii) by striking paragraph (5) of subsection (c) and by
redesignating paragraphs (6), (7), and (8), of subsection
(c) as paragraphs (5), (6), and (7), respectively.
(D) Subsection (a) of section 423 is amended—
(i) by striking "(other than a restricted stock option
granted pursuant to a plan described in section
424(cX3XB))", and
(ii) by striking "425(a)" and inserting "424(a)".
(E) Subsection (b) of section 423 is amended by striking
"425(d)" in paragraph (3) and inserting "424(d)".
(F) Section 424 (as redesignated by subparagraph (A)) is
amended—
(i) by striking "425(a)" in subsection (a) and inserting
"424(a)",
(ii) by striking "422(aXl), 422A(aXl), 423(aXl), or
424(aXl)" in subsection (cX3XAXii) and inserting
"422(aXl) or 423(aXl)",
(iii) by striking "422(bX7), 422A(bX6), 423(bX3), and
424(bX3)" in subsection (d) and inserting "422(bX6) and
423(bX3)".
(iv) in subsection (g)—
(I) by striking "422(aX2), 422A(aX2), 423(aX2), and
424(aX2)" and inserting "422(aX2) and 423(aX2)",
and
(II) by striking "425(a)" and inserting "424(a)",
and
(v) in subsection (h)—

104 STAT. 1388-526

PUBLIC LAW 101-508—NOV. 5, 1990

(I) by striking paragraph (2) and inserting the
following:
"(2) SPECIAL RULE FOR SECTION 423 OPTIONS.—In the case of the
transfer of stock pursuant to the exercise of an option to which
section 423 applies and which has been so modified, extended, or
renewed, the fair market value of such stock at the time of the
granting of the option shall be considered as whichever of the
following is the highest—
"(A) the fair market value of such stock on the date of the
original granting of the option,
"(B) the fair market value of such stock on the date of the
making of such modification, extension, or renewal, or
"(C) the fair market value of such stock at the time of the
making of any intervening modification, extension, or renewal. '
(II) by striking "sections 422(b)(6), 423(b)(9), and
424(b)(2)" in paragraph (3)(B) and inserting "section 423(b)(9)", and
(III) by striking the sentence following paragraph (3)(C).
(G) Paragraph (3) of section 56(b) is amended—
(i) by striking "section 422A" and inserting "section
422", and
(ii) by striking "section 422A(c)(2)" and inserting
"section 422(c)(2)'°
(H) Clause (ii) of section 1042(cX2XB) is amended by striking "section 83, 422, 422A, 423, or 424 applies" and inserting
"section 83, 422, or 423 applied (or to which section 422 or
424 (as in effect on the day before the date of the enactment
of the Revenue Reconciliation Act of 1990) applied)".
(I)(i) Subparagraph (B) of section 402(aX3) is amended by
striking "section 425" and inserting "section 424".
(ii) Clause (i) of section 402(aX6)(B) is amended by striking
"section 425(f)" and inserting "section 424(f)".
(J) Section 6039 is amended—
(i) by striking paragraphs (1) and (2) of subsection (a)
and inserting the following:
"(1) which in any calendar year transfers a share of stock
pursuant to such person's exercise of an incentive stock option,
or
"(2) which in any calendar year records (or has by its agent
recorded) a transfer of the legal title of a share of stock acquired
by the transferor pursuant to his exercise of £in option described
in section 423(c) (relating to special rule where option price is
between 85 percent and 100 percent of value of stock),",
(ii) by striking a qualified stock option, incentive
stock option, a restricted stock option, or an" in subsection (bXD and inserting "an incentive stock option or
an", and
(iii) by amending subsection (c) to read as follows:
"(c) CROSS REFERENCES.—
"For deflnition of—
"(1) the term 'incentive stock option', see section 422(b), and
"(2) the term 'employee stock purchase plan' see section 423(b)."
(10) AMENDMENTS RELATING TO REPEAL OF SECTION 545(C).—

(A) Paragraph (15) of section 381(c) is hereby repealed.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-527

(B) Section 545 is amended by redesignating subsection (d)
£is subsection (c).
(11) AMENDMENTS RELATING TO REPEAL OF PARAGRAPHS

(2),

(3), AND (4) OF SECTION 582(c).—Subsection (c) of section 582 is
amended—
(A) by striking "paragraph (5)" in paragraph (1) and
inserting "paragraph (2)", and
(B) by redesignating paragraph (5) as paragraph (2).
(12)

AMENDMENTS

RELATING TO REPEAL

OF SECTION

585

(b) (2).—
(A) Paragraph (4) of section 57(a) is amended by striking
"585 or".
(B) Subparagraph (A) of section 291(e)(1) is hereby
repealed.
(C) Paragraph (1) of section 585(b) is amended by striking
"shall not exceed" and all that follows down through the
period at the end thereof and inserting "shall not exceed
the addition to the reserve for losses on loans determined
under the experience method as provided in paragraph (2)."
(D) Subsection (b) of section 585 is amended by redesignating paragraphs (3) and (4) as paragraphs (2) and (3),
respectively.
(E) Paragraph (3) of section 585(b) (as redesignated by
subparagraph (A)) is amended to read as follows:
"(3) REGULATIONS; DEFINITION OF LOAN.—The Secretary shall
define the term loan and prescribe such regulations as may be
necessary to carry out the purposes of this section."
(F) Paragraphs (1) (A) and (E) of section 593(b) are each
amended by striking "section 585(b)(3)" and inserting "section 585(b)(2)".
(13) AMENDMENT RELATING TO REPEAL OF SECTION 617 (i).—

Section 617 is amended by redesignating subsection (j) as subsection (i).
(14)

AMENDMENTS

RELATING TO REPEAL

OF SECTION

861

(a)(i) (c) AND (D).—Paragraph (1) of section 861(a) is amended
by inserting "and" at the end of subparagraph (A) and by
striking the comma at the end of subparagraph (B) and inserting a period.
(15) AMENDMENTS RELATING TO REPEAL OF SECTION 1039.—
(A) Paragraphs (l)(A)(i) and (2XBXii) of section 1250(a) are
each amended by inserting "(as in effect on the day before
the date of the enactment of the Revenue Reconciliation
Act of 1990" after "section 1039(b)(1)(B)".
(B) Subsection (d) of section 1250 is amended by striking
paragraph (8).
(C) Section 1250 is amended by striking subsection (g) and
by redesignating subsections (h) and (i) as subsections (g)
and (h), respectively.
(16) AMENDMENT RELATING TO REPEAL OF SECTION 1401(C).—

Section 1401 is amended by redesignating subsection (d) as
subsection (c).
(17) AMENDMENTS RELATING TO RENEGOTIATION PROVISIONS.—

(A) Section 6422 is amended by striking paragraph (6) and
redesignating the succeeding paragraphs accordingly.
(B) Subparagraph (A) of section 6511(d)(2) is amended by
striking "; except that" and all that follows down through

104 STAT. 1388-528

PUBLIC LAW 101-508—NOV. 5, 1990
the period at the end of the first sentence and inserting a
period.
(C) Section 6515 is amended by striking paragraph (2) and
redesignating the succeeding paragraphs accordingly.
(18) AMENDMENT RELATING TO REPEAL OF SECTION 1564.—Para-

graph (5) of section 535(c) is amended by striking "sections 1561
and 1564" and inserting "section 1561".
(19) AMENDMENTS RELATED
PHASE-IN PROVISIONS.—

TO REPEAL OF UNIFIED

CREDIT

(A) Section 2010 is amended by redesignating subsections
(c) and (d) as subsections (b) and (c), respectively.
(B) Section 2505 is amended by redesignating subsections
(c) and (d) as subsections (b) and (c), respectively.
(C) Subsection (a) of section 6018 is amended by redesignating paragraphs (4) and (5) as paragraphs (3) and (4),
respectively.
(20) AMENDMENTS RELATED TO REPEAL OF SECTION 6158.—
(A) Section 6503 is amended by striking subsection (h) and
redesignating subsections (i), (j), and (k) as subsections (h),
(i), and (j), respectively.
(B)Paragraph(2)of section 6601(b) is amended—
(i) by striking "or 6158(a)" in the material preceding
subparagraph (A),
(ii) by striking "or 6158(a), as the case may be" in
subparagraph (A), and
(iii) by striking the last sentence.
(21) AMENDMENTS RELATING TO REPEAL OF SUBCHAPTER E OF
CHAPTER 64.—

(A) Section 6405 is amended by striking subsection (d).
(B) Section 7463 is amended by striking subsection (f).
(22) AMENDMENTS RELATING TO REPEAL OF CHAPTER 37.—

(A) Subsection (b) of section 6302 is amended by striking
"chapter 21" and all that follows down through "chapter
37," and inserting "chapter 21, 31, 32, or 33, or by section
4481".
(B)(i) Section 6418 is hereby repealed.
(ii) The table of sections for subchapter B of chapter 65 is
amended by striking the item relating to section 6418.
(C) Subsection (e) of section 6511 is hereby repealed.
(D)(i) Section 7240 is hereby repealed.
(ii) The table of sections for part II of subchapter A of
chapter 75 is amended by striking the item relating to
section 7240.
(E)(i) Subsection (a) of section 7655 is amended by striking
the semicolon at the end of paragraph (2) and inserting a
period and by striking paragraph (3).
(ii) Subsection (b) of section 7655 is amended by striking
the semicolon at the end of paragraph (2) and inserting a
period and by striking paragraph (3).
(23) A M E N D M E N T S RELATED TO REPEAL O F SECTION 6427(e).—

(A) Paragraph (1) of section 6427(i) is amended by striking
"(e),".
(B) Subparagraph (A) of section 6427(i)(2) is amended to
read as follows:
"(A) I N GENERAL.—If $1,000 or more is payable under
subsections (a), (b), (d), (g), (h), and (q) to any person with
respect to fuel used (or a qualified diesel powered highway

PUBLIC LAW 101-508—NOV. 5,1990

104 STAT. 1388-529

vehicle purchased) during any of the first 3 quarters of his
taxable year, a claim may be filed under this section with
respect to fuel used (or a qualified diesel powered highway
vehicle purchased), during such quarter."
(C) Paragraph (2) of section 6427(i) is amended by striking
subparagraph (B) and redesignating subparagraph (C) as
subparagraph (B).
SEC. 11802. MISCELLANEOUS PROVISIONS.

(a) REPEAL OF SECTION 72(tX2XC).—Subsection (t) of section 72 is

amended—
(1) by striking subparagraph (C) of paragraph (2),
(2) by redesignating subparagraph (D) of paragraph (2) as
subparagraph (C), and
(3) by striking "(C), and (D)" in paragraph (3XA) and inserting
"and(C)".
(b) REPEAL OF OBSOLETE PROVISIONS IN SECTION 274.—
(1) Paragraph (2) of section 274(1) is amended to read as
follows:
"(2) SKYBOXES, ETC.—In the case of a skybox or other private
luxury box leased for more than 1 event, the amount edlowable
£is a deduction under this chapter with respect to such events
shall not exceed the sum of the face value of non-luxury box
seat tickets for the seats in such box covered by the lease. For
purposes of the preceding sentence, 2 or more related leases
shall be treated as 1 lease."
(2) Subsection (n) of section 274 is amended—
(A) in paragraph (2)—
(i) by striking subparagraph (D) and redesignating
subparagraphs (E) and (F) as subparagraphs (D) and (E),
respectively,
(ii) by striking "described in subparagraph (E)" and
inserting "described in subparsigraph (D)", and
(iii) by striking "of subparagraph (F)" and inserting
"of subparagraph (E)", and
(B) by striking paragraph (3).
(c) REPEAL OF SECTION 468(aX2XBXii).—Subparagraph (B) of section
468(a)(2) is amended to read as follows:
"(B) INCREASE FOR INTEREST.—A reserve shall be increased each taxable year by an amount equal to the
amount of interest which would have been earned during
such taxable year on the opening balance of such reserve
for such taxable year if such interest were computed—
"(i) at the Federal short-term rate or rates (determined under section 1274) in effect, and
"(ii) by compounding semiannually."
(d) REPEAL OF OBSOLETE PROVISIONS IN SECTION 556(bXl).—
(1) Paragraph (1) of section 556(b) is amended by striking the
last 2 sentences.
(2) The gimendment made by paragraph (1) shall not apply to 26 USC 556 note,
any corporation with respect to which an election under the
second sentence of section 556(bXl) of the Internal Revenue
Code of 1986 (as in effect before the amendment made by
paragraph (1)) is in effect unless such corporation elects to have
such amendment apply and agrees to such adjustments as the
Secretary of the Treasury or his delegate may require.

104 STAT. 1388-530

PUBLIC LAW 101-508—NOV. 5, 1990

(E) EUMINATION OF UNNECESSARY SECTION RELATING TO JURY
DUTY PAY REMITTED TO EMPLOYER.—

(1) Paragraph (13) of section 62(a) is amended to read as
follows:
"(13) JURY DUTY PAY REMITTED TO EMPLOYER.—Any deduction allowable under this chapter by reason of an individual
remitting any portion of any jury pay to such individual's
employer in exchange for pa3nnent by the employer of compensation for the period such individual was performing jury
duty. For purposes of the preceding sentence, the term 'jury
pay' means any payment received by the individual for the
discharge of jury duty."
(2) Part VII of subchapter B of chapter 1 is amended by
striking out section 220 and redesignating section 221 as section
220.
(3) The table of sections for part VII of subchapter B of
chapter 1 is amended by striking the items relating to sections
220 and 221 and inserting in lieu thereof the following:
"Sec. 220. Cross reference."
(f) OTHER PROVISIONS.—

(1) Section 541 is amended by striking "(38.5 percent in the
case of taxable years beginning in 1987)".
(2) Subsection (e) of section 665 is amended to read as follows:
"(e) PRECEDING TAXABLE YEAR.—For purposes of this subpart—
"(1) In the C£ise of a foreign trust created by a United States
person, the term 'preceding taxable year' does not include any
taxable year of the trust to which this part does not apply.
"(2) In the case of a preceding taxable year with respect to
which a trust qualified, without regard to this subpart, under
the provisions of subpart B, for purposes of the application of
this subpart to such trust for such taxable year, such trust shall,
in accordance with regulations prescribed by the Secretary, be
treated as a trust to which subpart C applies.'
(3) Subsection (c) of section 668 is amended to read as follows:
"(c) INTEREST CHARGE N O T DEDUCTIBLE.—The interest charge
determined under this section shall not be allowed as a deduction
for purposes of any tax imposed by this title."
(4) Paragraph (1) of section 1503(c) is amended by striking the
last 2 sentences thereof.
(5) Paragraph (2) of section 2032A(a) is amended to read as
follows:
"(2) LIMITATION ON AGGREGATE REDUCTION IN FAIR MARKET

VALUE.—The aggregate decrease in the value of qualified real
property taken into account for purposes of this chapter which
results from the application of paragraph (1) with respect to any
decedent shall not exceed $750,000.'^

Subpart B—Modifications to Specific Provisions
SEC. 11811. ELIMINATION OF EXPIRED PROVISIONS IN SECTION 172.
(a) GENERAL RULE.—Subsection (b) of section 172 is gmiended to

read as follows:
"(b) NET OPERATING Loss CARRYBACKS AND CARRYOVERS.—
"(1) YEARS TO WHICH LOSS MAY BE CARRIED.—
"(A) GENERAL RULE.—Except as otherwise provided in

this paragraph, a net operating loss for any taxable year—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-531

"(i) shall be a net operating loss carryback to each of
the 3 taxable years preceding the taxable year of such
loss, and
"(ii) shall be a net operating loss carryover to each of
the 15 taxable years following the taxable year of the
loss.
"(B) SPECIAL RULES FOR REIT'S.—

"(i) I N GENERAL.—A net operating loss for a REIT
year shall not be a net operating loss carryback to any
taxable year preceding the taxable year of such loss,
"(ii) SPECIAL RULE.—In the case of any net operating
loss for a taxable year which is not a REIT year, such
loss shall not be carried back to any taxable year which
is a REIT year.
"(iii) REIT YEAR.—For purposes of this subparagraph,
the term 'REIT year' means any taxable year for which
the provisions of part II of subchapter M (relating to
real estate investment trusts) apply to the taxpayer.
"(C) SPECIFIED UABIUTY LOSSES.—In the case of a taxpayer
which has a specified liability loss (as defined in subsection
(f)) for a taxable year, such specified liability loss shall be a
net operating loss carryback to each of the 10 taxable years
preceding the taxable year of such loss.
"(D) BAD DEBT LOSSES OF COMMERCIAL BANKS.—In the case
of any b£ink (as defined in section 585(aX2)), the portion of
the net operating loss for any taxable year beginning after
December 31, 1986, and before January 1, 1994, which is
attributable to the deduction allowed under section 166(a)
shall be a net operating loss carryback to each of the 10
taxable years preceding the taxable year of the loss and a
net operating loss carryover to each of the 5 taxable years
following the taxable year of such loss.
"(E) EXCESS INTEREST LOSS.—
"(i) I N GENERAL.—If—

"(I) there is a corporate equity reduction transaction, and
"(II) an applicable corporation has a corporate
equity reduction interest loss for any loss limitation year ending after August 2,1989,
then the corporate equity reduction interest loss shall
be a net operating loss carryback and carryover to the
taxable years described in subparagraph (A), except
that such loss shall not be carried back to a taxable
year preceding the taxable year in which the corporate
equity reduction transaction occurs.
"(ii) Loss UMiTATiON YEAR.—For purposes of clause (i)
and subsection (m), the term 'loss limitation year'
means, with respect to any corporate equity reduction
transaction, the taxable year in which such transaction
occurs and each of the 2 succeeding taxable years.
"(iii) APPUCABLE CORPORATION.—For purposes of
clause (i), the term 'applicable corporation' means—
"(I) a C corporation which acquires stock, or
the stock of which is acquired in a major stock
acquisition.

104 STAT. 1388-532

PUBLIC LAW 101-508—NOV. 5, 1990
"(11) a C corporation making distributions with
respect to, or redeeming, its stock in connection
with an excess distribution, or
"(III) a C corporation which is a successor of a
corporation described in subclause (I) or (II),
"(iv) OTHER DEFINITIONS.—
"For deHiiitions of terms used in this subparagraph, see subsection (h).
"(2) AMOUNT OF CARRYBACKS AND CARRYOVERS.—The entire

amount of the net operating loss for any taxable year (hereinafter in this section referred to as the 'loss year') shall be
carried to the earliest of the taxable years to which (by reason of
paragraph (1)) such loss may be carried. The portion of such loss
which shall be carried to each of the other taxable years shall
be the excess, if any, of the amount of such loss over the sum of
the taxable income for each of the prior taxable years to which
such loss may be carried. For purposes of the preceding sentence, the taxable income for any such prior taxable year shall
be computed—
"(A) with the modifications specified in subsection (d)
other than paragraphs (1), (4), and (5) thereof, and
"(B) by determining the amount of the net operating loss
deduction without regard to the net operating loss for the
loss year or for any taxable year thereafter,
and the taxable income so computed shall not be considered to
be less than zero.
"(3) ELECTION TO WAIVE CARRYBACK.—Any taxpayer entitled

to a carryback period under paragraph (1) may elect to relinquish the entire carryback period with respect to a net operating loss for any taxable year. Such election shall be made in
such manner as may be prescribed by the Secretary, and shall
be made by the due date (including extensions of time) for filing
the taxpayer's return for the taxable year of the net operating
loss for which the election is to be in effect. Such election, once
made for any taxable year, shall be irrevocable for such taxable
year."
(b) CONFORMING AMENDMENTS.—

(1) Section 172 is amended by striking subsections (g), (h), (i),
and (k), and by redesignating subsections (j), (1), (m), and (n) as
subsections (f), (g), (h), and (i), respectively.
(2)(A) Subsection (f) of section 172 (as redesignated by paragraph (1)) is amended to read as follows:
"(f) RULES RELATING TO SPECIFIED LIABILITY Loss.—For purposes of
this section—
"(1) IN GENERAL.—The term 'specified liability loss' means the
sum of the following amounts to the extent taken into account
in computing the net operating loss for the taxable year:
(A) Any amount allowable as a deduction under section
162 or 165 which is attributable to—
"(i) product liability, or
"(ii) expenses incurred in the investigation or settlement of, or opposition to, claims against the taxpayer
on account of product liability.
"(B) Any amount (not described in subparagraph (A))
allowable as a deduction under this chapter with respect to
a liability which arises under a Federal or State law or out
of any tort of the taxpayer if—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-533

"(i) in the case of a liability arising out of a Federal
or State law, the act (or failure to act) giving rise to
such liability occurs at legist 3 years before the beginning of the taxable year, or
"(ii) in the case of a liability arising out of a tort, such
liability arises out of a series of actions (or failures to
act) over an extended period of time a substantial
portion of which occurs at least 3 years before the
beginning of the taxable year.
A liability shall not be taken into account under subparagraph (B) unless the taxpayer used an accrual method of
accounting throughout the period or periods during which
the acts or failures to act giving rise to such liability
occurred.
"(2) LIMITATION.—The amount of the specified liability loss for
any taxable year shall not exceed the amount of the net operating loss for such taxable year.
"(3) SPECIAL RULE FOR NUCLEAR POWERPLANTS.—Except as

provided in regulations prescribed by the Secretary, that portion of a specified liability loss which is attributable to amounts
incurred in the decommissioning of a nuclear powerplant (or
any unit thereof) may, for purposes of subsection (bXl)(C), be
carried back to each of the taxable years during the period—
"(A) beginning with the tsixable year in which such plant
(or unit thereof) was placed in service, and
"(B) ending with the taxable year preceding the loss year.
"(4) PRODUCT LIABIUTY.—The term 'product liability' means—
"(A) liability of the taxpayer for damages on account of
physical injury or emotional harm to individuals, or
damage to or loss of the use of property, on account of any
defect in any product which is manufactured, leased, or sold
by the taxpayer, but only if
"(B) such injury, harm, or damage arises after the taxpayer has completed or terminated operations with respect
to, and has relinquished possession of, such product.
"(5) COORDINATION WITH SUBSECTION (b) (2).—For purposes of

appl5dng subsection (bX2), a specified liability loss for any taxable year shall be treated as a separate net operating loss for
such taxable year to be taken into account after the remaining
portion of the net operating loss for such taxable year.
"(6) ELECTION.—Any taxpayer entitled to a 10-year carryback
under subsection (bXlXC) from any loss year may elect to have
the carryback period with respect to such loss year determined
without regard to subsection (bXlXC). Such election shall be
made in such manner as may be prescribed by the Secretary
and shall be made by the due date (including extensions of time)
for filing the taxpayer's return for the taxable year of the net
operating loss. Such election, once made for any taxable year,
shall be irrevocable for that taxable year."
(B) The portion of any loss which is attributable to a deferred 26 USC172 note,
statutory or tort liability loss (as defined in section 172(k) of the
Internal Revenue Code of 1986 as in effect on the day before the
date of the enactment of this Act) may not be carried back to
any taxable year beginning before January 1,1984, by reason of
the amendment made by subparagraph (A).
(3) Paragraph (2) of section 172(g) (as redesignated by paragraph (1)) is amended to read as follows:

104 STAT. 1388-534

PUBLIC LAW 101-508—NOV. 5, 1990

"(2) COORDINATION WITH SUBSECTION (b) (2).—For purposes of

subsection (b)(2), the portion of a net operating loss for any
taxable year which is attributable to the deduction allowed
under section 166(a) shall be treated in a manner similar to the
manner in which a specified liability loss is treated."
(4) Subparagraph (B) of section 172(h)(4) (as redesignated by
paragraph (1)) is amended to read as follows:
"(B) COORDINATION WITH SUBSECTION (b)(2).—For purposes of subsection (b)(2)
"(i) a corporate equity reduction interest loss shall be
treated in a manner similar to the manner in which a
specified liability loss is treated, and
"(ii) in determining the net operating loss deduction
for any prior taxable year referred to in the 3rd sentence of subsection (b)(2), the portion of any net operating loss which may not be carried to such taxable year
under subsection (b)(1)(E) shall not be taken into account."
26 use 172 note.
(c) EFFECTIVE DATE.—The amendments made by this section shall
apply to net operating losses for taxable years beginning after
December 31,1990.
SEC. 11812. ELIMINATION OF OBSOLETE PROVISIONS IN SECTION 167.
(a) GENERAL RULE.—Section 167 is amended—

(1) by striking subsections (b), (c), (d), (e), (f), (j), (k), (1), (m), (p),
and (q) and by redesignating subsections (g), (h), (r),'and (s) as
subsections (c), (d), (e), and (f), respectively, and
(2) by inserting after subsection (a) the following new subsection:
"(b) CROSS REFERENCE.—
"For determination of depreciation deduction in case of property to
which section 168 applies, see section 168."
(b) CONFORMING AMENDMENTS.—

(1) Subsection (e) of section 167 (as redesignated by subsection
(a)) is amended by striking "(h)" each place it appears in
paragraphs (3)(B) and (4)(B) and inserting "(d)".
(2)(A) Subparagraph (A) of section 168(e)(2) is amended to read
as follows:
"(A) RESIDENTIAL RENTAL PROPERTY.—
"(i) RESIDENTIAL RENTAL PROPERTY.—The term 'resi-

dential rental property' means any building or structure if 80 percent or more of the gross rental income
from such building or structure for the taxable year is
rental income from dwelling units,
"(ii) DEFINITIONS.—For purposes of clause (i)—
"(I) the term 'dwelling unit' means a house or
apartment used to provide living accommodations
in a building or structure, but does not include a
unit in a hotel, motel, or other establishment more
than one-half of the units in which are used on a
transient basis, and
"(II) if any portion of the building or structure is
occupied by the taxpayer, the gross rental income
from such building or structure shall include the
rental value of the portion so occupied."

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-535

(B) Paragraph (10) of section 168(i) is amended to read as
follows:
"(10) PuBUC UTiUTY PROPERTY.—The term 'public utility property' means property used predominantly in the trade or business of the furnishing or sale of—
"(A) electrical energy, water, or sewage disposal services,
"(B) gas or steam through a local distribution system,
"(C) telephone services, or other communication services
if furnished or sold by the Communications Satellite Corporation for purposes authorized by the Communications
Satellite Act of 1962 (47 U.S.C. 701), or
"(D) transportation of gas or steam by pipeline,
if the rates for such furnishing or sale, as the case may be, have
been established or approved by a State or political subdivision
thereof, by any agency or instrumentality of the United States,
or by a public service or public utility commission or other
similar body of any State or political subdivision thereof."
(C) Paragraph (2) of section 168(f) is amended by striking
"section 167(1)(8)(A)" and inserting "subsection (iXlO)".
(D) Paragraph (1) of section 168(i) is amended by adding at the
end thereof the following new sentence: "The reference in this
paragraph to subsection (m) of section 167 shall be treated as a
reference to such subsection as in effect on the day before the
date of the enactment of the Revenue Reconciliation Act of
1990."
(E) Clause (ii) of section 168(i)(9)(A) is amended by striking
"(determined without regard to section 167(1))".
(3) Sections 42(d)(2)(D)(iXI) and 42(d)(5XB) are each amended
by striking "section 167(k)" and inserting "section 167(k) (as in
effect on the day before the date of the enactment oif the
Revenue Reconciliation Act of 1990)".
(4) Subparagraph (D) of section 56(a)(1) is
amended by
striking "section 167(1X3XA)" and inserting "section 168(iX10)'\
(5) Paragraph (2) of section 312(k) is amended to read as
follows:
"(2) EXCEPTION.—If for any taxable year a method of depreciation w£is used by the taxpayer which the Secretary has determined results in a reasonable allowance under section 167(a)
and which is the unit-of-production method or other method not
expressed in a term of years, then the adjustment to earnings
and profits for depreciation for such year shall be determined
under the method so used (in lieu of the straight line method)."
(6)(A) Paragraph (6) of section 381(c) is amended by striking
"subsections (b), (J), and (k) of section 167" and inserting "sections 167 and 168 .
(B) Subsection (c) of section 381 is amended by striking paragraph (24) and redesignating paragraphs (25) and (26) as paragraphs (24) and (25), respectively.
(7) Subparagraph (C) of section 404(aXl) is amended by striking "section 167(lX3XAXiii)" and inserting "section 168(iX10XC)".
(8) Clause (i) of section 460(e)(6XA) is amended by striking
"section 167(k)" and inserting "section 168(eX2XA)(ii)".
(9) Subsection (e) of section 642 is amended by striking
"167(h)" and inserting "167(d)".
(10) Paragraph (2) of section 1016(a) is amended by striking
"under section 167(bXl)" and inserting "under the straight line
method".

104 STAT. 1388-536

PUBLIC LAW 101-508—NOV. 5, 1990

(11) Subsection (a) of section 1250 is amended by redesignating
paragraph (4) as paragraph (5) and by inserting after paragraph
(3) the following new paragraph:
"(4) SPECIAL RULE.—For purposes of this subsection, any reference to section 167(k) or 1670')(2)(B) shall be treated as a
reference to such section as in effect on the day before the date
of the enactment of the Revenue Reconciliation Act of 1990."
(12) Paragraph (4) of section 1250(b) is amended by striking
"167(k)" each place it appears and inserting "167(k) (as in effect
on the day before the date of the enactment of the Revenue
Reconciliation Act of 1990)".
(13) Subparagraph (B) of section 7701(eX5) is amended by
inserting before the period at the end thereof the following: "(as
in effect on the day before the date of the enactment of the
Revenue Reconcilation Act of 1990)".
26 u s e 42 note.

(c) EFFECTIVE D A T E . —

(1) I N GENERAL.—Except as provided in paragraph (2), the
amendments made by this section shall apply to property placed
in service after the date of the enactment of this Act.
(2) EXCEPTION.—The amendments made by this section shall
not apply to any property to which section 168 of the Internal
Revenue Code of 1986 does not apply by reason of subsection
(f)(5) thereof.
(3) EXCEPTION FOR PREVIOUSLY GRANDFATHER EXPENDITURES.—

The amendments made by this section shall not apply to rehabilitation expenditures described in section 252(f)(5) of the
Tax Reform Act of 1986 (as added by section 1002(1)(31) of the
Technical and Miscellaneous Revenue Act of 1988).
SEC. 11813. ELIMINATION OF EXPIRED OR OBSOLETE INVESTMENT TAX
CREDIT PROVISIONS.
(a) GENERAL RULE.—Subpart E of part IV of subchapter A of

chapter 1 is amended to read as follows:

"Subpart E—Rules for Computing Investment Credit
"Sec.
"Sec.
"Sec.
"Sec.
"Sec.

46. Amount of credit.
47. Rehabilitation credit.
48. Energy credit; reforestation credit.
49. At-risk rules.
50. Other special rules.

"SEC. 46. AMOUNT OF CREDIT.

^^ For purposes of section 38, the amount of the investment credit
determined under this section for any taxable year shall be the sum
of"(1) the rehabilitation credit,
"(2) the energy credit, and
"(3) the reforestation credit.
"SEC. 47. REHABILITATION CREDIT.
"(a) GENERAL RULE.—For purposes of section 46, the rehabilitation

credit for any taxable year is the sum of—
"(1) 10 percent of the qualified rehabilitation expenditures
with respect to any qualified rehabilitated building other than a
certified historic structure, and
"(2) 20 percent of the qualified rehabilitation expenditures
with respect to any certified historic structure.
** So in original. Probably should be " "For".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-537

"(b) WHEN EXPENDITURES TAKEN INTO ACCOUNT.—

"(1) IN GENERAL.—Qualified rehabilitation expenditures with
respect to any qualified rehabilitated building shall be taken
into account for the teixable year in which such qualified rehabilitated building is placed in service.
"(2) COORDINATION WITH SUBSECTION (d).—The amount which
would (but for this paragraph) be taken into account under
paragraph (1) with respect to any qualified rehabilitated building shall be reduced (but not below zero) by any amount of
qualified rehabilitation expenditures taken into account under
subsection (d) by the taxpayer or a predecessor of the taxpayer
(or, in the case of a sale and leaseback described in section
50(a)(2)(C), by the lessee), to the extent any amount so taken into
account has not been required to be recaptured under section
50(a).
"(c) DEFINITIONS.—For purposes of this section—
"(1) OUAUFIED REHABILITATED BUILDING.—

(A) I N GENERAL.—The term 'qualified rehabilitated
building' means any building (and its structural components) if—
"(i) such building has been substantially rehabilitated,
"(ii) such building was placed in service before the
beginning of the rehabilitation,
'(iii) in the case of any building other than a certified
historic structure, in the rehabilitation process—
"(I) 50 percent or more of the existing external
walls of such building are retained in place as
external walls,
"(II) 75 percent or more of the existing external
walls of such building are retained in place as
internal or external walls, and
"(III) 75 percent or more of the existing internal
structural framework of such building is retained
in place, and
"(iv) depreciation (or amortization in lieu of depreciation) is allowable with respect to such building.
"(B) BUILDING MUST BE FIRST PLACED IN SERVICE BEFORE

1936.—In the case of a building other than a certified
historic structure, a building shall not be a qualified rehabilitated building unless the building was first placed in
service before 1936.
"(C) SUBSTANTIALLY REHABILITATED DEFINED.—

"(i) I N GENERAL.—For purposes of subparagraph
(A)(i), a building shall be treated as having been
substantially rehabilitated only if the qualified rehabilitation expenditures during the 24-month period
selected by the taxpayer (at the time and in the
manner prescribed by regulation) and ending with or
within the taxable year exceed the greater of—
"(I) the adjusted basis of such building (and its
structural components), or
"(II) $5,000.
The adjusted basis of the building (and its structural
components) shall be determined as Of the beginning of
the 1st day of such 24-month period, or of the holding
period of the building, whichever is later. For purposes

104 STAT. 1388-538

PUBLIC LAW 101-508—NOV. 5, 1990
of the preceding sentence, the determination of the
beginning of the holding period shall be made without
regard to any reconstruction by the taxpayer in connection with the rehabilitation.
"(ii) SPECIAL RULE FOR PHASED REHABILITATION.—In

the case of any rehabilitation which may reasonably be
expected to be completed in phases set forth in architectural plans and specifications completed before
the rehabilitation begins, clause (i) shall be applied bv
substituting '60-month period' for '24-month period.
"(iii) LESSEES.—The Secretary shall prescribe by
regulation rules for applying this subparagraph to
lessees.
"(D) RECONSTRUCTION.—Rehabilitation includes reconstruction.
"(2) QuAUFiED REHABILITATION EXPENDITURE DEFINED.—

'(A) IN GENERAL.—The term 'qualified rehabilitation
expenditure' means any amount properly chargeable to
capital account—
"(i) for property for which depreciation is allowable
under section 168 and which is—
"(I) nonresidential real property,
"(II) residential rental property,
"(III) real property which has a class life of more
than 12.5 years, or
"(IV) an addition or improvement to property
described in subclause (I), (II), or (III), and
"(ii) in connection with the rehabilitation of a qualified rehabilitated building.
"(B) CERTAIN EXPENDITURES NOT INCLUDED.—The term
'qualified rehabilitation expenditure' does not include—
"(i) STRAIGHT U N E DEPRECIATION MUST BE USED.—Any

expenditure with respect to which the tsixpayer does
not use the straight line method over a recovery period
determined under subsection (c) or (g) of section 168.
The preceding sentence shall not apply to any expenditure to the extent the alternative depreciation system
of section 168(g) applies to such expenditure by reason
of subparagraph (B) or (C) of section 168(gXl).
"(ii) COST OF ACQUISITION.—The cost of acquiring any
building or interest therein.
"(iii) ENLARGEMENTS.—Any expenditure attributeble
to the enlargement of an existing building.
"(iv)

CERTIFIED

HISTORIC

STRUCTURE,

ETC.—Any

expenditure attributeble to the rehabilitation of a certified historic structure or a building in a registered
historic district, unless the rehabilitation is a certified
rehabilitation (within the meaning of subparagraph
(O). The preceding sentence shall not apply to a building in a registered historic district if—
"(I) such building was not a certified historic
structure,
"(II) the Secretory of the Interior certified to the
Secretary that such building is not of historic
significance to the district, and
"(III) if the certification referred to in subclause
(II) occurs after the beginning of the rehabilitetion

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-539

of such building, the taxpayer certifies to the Secretary that, at the beginning of such rehabilitation,
he in good faith was not aware of the requirements
of subclause (II).
"(v) TAX-EXEMPT USE PROPERTY.—

"(I) IN GENERAL.—Any expenditure in connection
with the rehabilitation of a building which is
allocable to the portion of such property which is
(or may reasonably be expected to be) tax-exempt
use property (within the meaning of section 168(h)).
"(II) CLAUSE NOT TO APPLY FOR PURPOSES OF PARA-

GRAPH (i)(c).—This clause shall not apply for
purposes of determining under paragraph (1)(C)
whether a building has been substantially rehabilitated.
"(vi) EXPENDITURES OF LESSEE.—Any expenditure of a
lessee of a building if, on the date the rehabilitation is
completed, the remaining term of the lease (determined
without regard to any renewal periods) is less than the
recovery period determined under section 168(c).
"(C) CERTIFIED REHABIUTATION.—For purposes of subparagraph (B), the term 'certified rehabilitation' means any
rehabilitation of a certified historic structure which the
Secretary of the Interior has certified to the Secretary as
being consistent with the historic character of such property or the district in which such property is located.
(D) NONRESIDENTIAL REAL PROPERTY; RESIDENTIAL RENTAL
PROPERTY; CLASS LIFE.—For purposes of subparagraph (A),

the terms 'nonresidential real property,' 'residential rental
property,' and 'class life' have the respective meanings
given such terms by section 168.
"(3) CERTIFIED HISTORIC STRUCTURE DEFINED.—

"(A) IN GENERAL.—The term 'certified historic structure'
means any building (and its structural components)
which—
"(i) is listed in the National Register, or
"(ii) is located in a registered historic district and is
certified by the Secretary of the Interior to the Secretary as being of historic significance to the district.
"(B) REGISTERED HISTORIC DISTRICT.—The term 'registered
historic district' means—
"(i) any district listed in the National Register, and
"(ii) any district—
"(I) which is designated under a statute of the
appropriate State or local government, if such statute is certified by the Secretary of the Interior to
the Secretary as containing criteria which will
substantially achieve the purpose of preserving
and rehabilitating buildings of historic significance
to the district, and
"(II) which is certified by the Secretary of the
Interior to the Secretary as meeting substantially
all of the requirements for the listing of districts in
the National Register.
'(d) PROGRESS EXPENDITURES.—

"(1) I N GENERAL.—In the case of any building to which this
subsection applies, except as provided in paragraph (3)—

*

104 STAT. 1388-540

PUBLIC LAW 101-508—NOV. 5, 1990
"(A) if such building is self-rehabilitated property, any
quali^ed rehabilitation expenditure with respect to such
building shall be taken into account for the taxable year for
which such expenditure is properly chargeable to capital
account with respect to such building, and
"(B) if such building is not self-rehabilitated property,
any qualified rehabilitation expenditure with respect to
such building shall be taken into account for the taxable
year in which paid.
"(2) PROPERTY TO WHICH SUBSECTION APPUES.—

"(A) I N GENERAL.—This subsection shall apply to any
building which is being rehabilitated by or for the taxpayer
if—
"(i) the normal rehabilitation period for such building is 2 years or more, and
'(ii) it is reasonable to expect that such building will
be a qualified rehabilitated building in the hands of the
taxpayer when it is placed in service.
Clauses (i) and (ii) shall be applied on the basis of facts
known as of the close of the taxable year of the taxpayer in
which the rehabilitation begins (or, if later, at the close of
the first taxable year to which an election under this
subsection applies).
"(B)

'•

NORMAL REHABILITATION PERIOD.—For purposes of

subparagraph (A), the term 'normal rehabilitation period'
means the period reasonably expected to be required for the
rehabilitation of the building—
"(i) beginning with the date on which physical work
on the rehabilitation begins (or, if later, the first day of
the first taxable year to which an election under this
subsection applies), and
"(ii) ending on the date on which it is expected that
the property will be available for placing in service.
"(3) SPECIAL RULES FOR APPLYING PARAGRAPH (i).—For purposes of paragraph (1)—
"(A) COMPONENT PARTS, ETC.—Property which is to be a
component part of, or is otherwise to be included in, any
building to which this subsection applies shall be taken into
account—
"(i) at a time not earlier than the time at which it
becomes irrevocably devoted to use in the building, and
"(ii) as if (at the time referred to in clause (i)) the
taxpayer had expended an amount equal to that portion of the cost to the taxpayer of such component or
other property which, for purposes of this subpart, is
properly chargeable (during such taxable year) to capital account with respect to such building.
"(B) CERTAIN BORROWING DISREGARDED.—Any amount
borrowed directly or indirectly by the taxpayer from the
person rehabilitating the property for him shall not be
treated as an amount expended for such rehabilitation.
"(C) LIMITATION FOR BUILDINGS WHICH ARE NOT SELFREHABILITATED.—

"(i) I N GENERAL.—In the case of a building which is
not self-rehabilitated, the amount taken into account
under paragraph (IXB) for any taxable year shall not
exceed the amount which represents the portion of the

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-541

overall cost to the taxpayer of the rehabilitation which
is properly attributable to the portion of the rehabilitation which is completed during such taxable year,
"(ii) CARRY-OVER OF CERTAIN AMOUNTS.—In the case of
a building which is not a self-rehabilitated building, if
for the taxable year—
"(I) the amount which (but for clause (i)) would
have been taken into account under paragraph
(1)(B) exceeds the limitation of clause (i), then the
amount of such excess shall be taken into account
under parsigraph (1)(B) for the succeeding taxable
year, or
"(II) the limitation of clause (i) exceeds the
amount taken into account under paragraph (IXB),
then the amount of such excess shall increase the
limitation of clause (i) for the succeeding taxable
year.
"(D)

DETERMINATION OF PERCENTAGE OF COMPLETION.—

The determination under subparagraph (C)(i) of the portion
of the overall cost to the taxpayer of the rehabilitation
which is properly attributable to rehabilitation completed
during any taxable year shall be made, under regulations
prescribed by the Secretary, on the basis of engineering or
architectural estimates or on the basis of cost accounting
records. Unless the taxpayer establishes otherwise by clear
and convincing evidence, the rehabilitation shall be deemed
to be completed not more rapidly than ratably over the
normal rehabilitation period.
"(E) No PROGRESS EXPENDITURES FOR CERTAIN PRIOR PERI-

ODS.—No qualified rehabilitation expenditures shall be
taken into account under this subsection for any period
before the first day of the first taxable year to which an
election under this subsection applies.
"(F) No PROGRESS EXPENDITURES FOR PROPERTY FOR YEAR IT
IS PLACED IN SERVICE, ETC.—In the case of any building, no
qualified rehabilitation expenditures shall be taken into
account under this subsection for the earlier of—
"(i) the taxable year in which the building is placed
in service, or
"(ii) the first taxable year for which recapture is
required under section 50(aX2) with respect to such
property,
or for any taxable year thereafter.
"(4) SELF-REHABILITATED BUILDING.—For purposes of this
subsection, the term 'self-rehabilitated building' means any
building if it is reasonable to believe that more than half of the
qualified rehabilitation expenditures for such building will be
made directly by the taxpayer.
"(5) ELECTION.—This subsection shall apply to any taxpayer
only if such taxpayer has made an election under this paragraph. Such an election shall apply to the taxable year for
which made and all subsequent taxable years. Such £in election,
once made, may be revoked only with the consent of the
Secretary.
•SEC. 48. ENERGY CREDIT; REFORESTATION CREDIT.
"(a) ENERGY CREDIT.—

104 STAT. 1388-542

PUBLIC LAW 101-508—NOV. 5, 1990

"(1) I N GENERAL.—For purposes of section 46, the energy
credit for any taxable year is the energy percentage of the basis
of each energy property placed in service during such taxable
year.
"(2) ENERGY PERCENTAGE.—

"(A) I N GENERAL.—Except as provided in subparagraph
(B), the energy percentage is 10 percent.
"(B) TERMINATION.—Effective with respect to periods
after December 31, 1991, the energy percentage is zero. For
purposes of the preceding sentence, rules similar to the
rules of section 48(m) (as in effect on the day before the date
of the enactment of the Revenue Reconciliation Act of 1990)
shall apply.
"(C)

COORDINATION WITH REHABILITATION CREDIT.—The

energy percentage shall not apply to that portion of the
basis of any property which is attributable to qualified
rehabilitation expenditures.
"(3) ENERGY PROPERTY,—For purposes of this subpart, the
term 'energy property' means any property—
"(A) which is—
"(i) equipment which uses solar energy to generate
electricity, to heat or cool (or provide hot water for use
in) a structure, or to provide solar process heat, or
"(ii) equipment used to produce, distribute, or use
energy derived from a geothermal deposit (within the
meaning of section 613(eX2)), but only, in the case of
electricity generated by geothermal power, up to (but
not including) the electrical transmission stage,
"(BXi) the construction, reconstruction, or erection of
which is completed by the taxpayer, or
"(ii) which is acquired by the taxpayer if the original use
of such property commences with the taxpayer,
"(C) with respect to which depreciation (or amortization
in lieu of depreciation) is allowable, and
"(D) which meets the performance and quality standards
(if any) which—
"(i) have been prescribed by the Secretary by regulations (after consultation with the Secretary of Energy),
and
"(ii) are in effect at the time of the acquisition of the
property.
The term 'energy property' shall not include any property
which is public utility property (as defined in section 46(fK5) as
in effect on the day before the date of the enactment of the
Revenue Reconciliation Act of 1990).
"(4) SPECIAL RULE FOR PROPERTY FINANCED BY SUBSIDIZED
ENERGY FINANCING OR INDUSTRIAL DEVELOPMENT BONDS.—
"(A) REDUCTION OF BASIS.—For purposes of applying the

energy percentage to any property, if such property is
financed in whole or in part by—
"(i) subsidized energy financing, or
"(ii) the proceeds of a private activity bond (within
the meaning of section 141) the interest on which is
exempt from tax under section 103,
the amount taken into account as the basis of such property
shall not exceed the amount which (but for this subpara-

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-543

graph) would be so taken into account multiplied by the
fraction determined under subpar£igraph (B).
"(B)

DETERMINATION OF FRACTION.—For

purposes

of

subparagraph (A), the fraction determined under this
subparagraph is 1 reduced by a fraction—
"(i) the numerator of which is that portion of the
basis of the property which is allocable to such financing or proceeds, and
(ii) the denominator of which is the basis of the
property.
"(C) SUBSIDIZED ENERGY FINANCING.—For purposes of

subparagraph (A), the term 'subsidized energy financing'
means financing provided under a Federal, State, or local
program a principal purpose of which is to provide subsidized financing for projects designed to conserve or
produce energy.
"(5)

CERTAIN

PROGRESS

EXPENDITURE

RULES

MADE AP-

PLICABLE.—Rules similar to the rules of subsections (cX4) and (d)
of section 46 (as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of 1990) shall
apply for purposes of this subsection.
"(b) REFORESTATION CREDIT.—

"(1) I N GENERAL.—For purposes of section 46, the reforestation credit for any taxable year is 10 percent of the portion of
the amortizable basis of any qualified timber property which
was acquired during such taxable year and which is taken into
account under section 194 (after the application of section
194(bXl)).
"(2) DEFINITIONS.—For purposes of this subpart, the terms
'amortizable basis' and 'qualified timber property' have the
respective meanings given to such terms by section 194.
'SEC. 49. AT-RISK RULES.
"(a) GENERAL RULE.—
"(1) CERTAIN NONRECOURSE FINANCING EXCLUDED FROM CREDIT
BASE,—

"(A) LIMITATION.—The credit base of any property to
which this paragraph applies shall be reduced by the nonqualified nonrecourse financing with respect to such credit
base (as of the close of the taxable year in which placed in
service).
"(B) PROPERTY TO WHICH PARAGRAPH APPUES.—This paragraph applies to any property which—
"(i) is placed in service during the taxable year by a
taxpayer described in section 465(aXl), and
"(ii) is used in connection with an activity with respect to which any loss is subject to limitation under
section 465.
"(C) CREDIT BASE DEFINED.—For purposes of this paragraph, the term 'credit base' means—
"(i) the portion of the basis of any qualified rehabilitated building attributable to qualified rehabilitation
expenditures,
'(ii) the basis of any energy property, and
"(iii) the amortizable basis of any qualified timber
property.
"(D) NONQUALIFIED NONRECOURSE FINANCING.—

104 STAT. 1388-544

PUBLIC LAW 101-508—NOV. 5, 1990
"(i) IN GENERAL.—For purposes of this paragraph and
paragraph (2), the term 'nonqualified nonrecourse
financing' means any nonrecourse financing which is
not qualified commercial financing.
"(ii) QUAUFIED COMMERCIAL FINANCING.—For p u r -

poses of this paragraph, the term 'qualified commercial
financing' means any financing with respect to any
property if—
"(I) such property is acquired by the taxpayer
from a person who is not a related person,
"(II) the amount of the nonrecourse financing
with respect to such property does not exceed 80
percent of the credit base of such property, and
"(III) such financing is borrowed from a qualified
person or represents a loan from any Federal,
State, or local government or instrumentality
thereof, or is guaranteed by any Federal, State, or
local government.
Such term shall not include any convertible debt.
"(iii) NONRECOURSE FINANCING.—For purposes of this
subparagraph, the term 'nonrecourse financing* includes—
"(I) any amount with respect to which the taxpayer is protected against loss through guarantees,
stop-loss agreements, or other similar arrangements, and
"(II) except to the extent provided in regulations,
any amount borrowed from a person who has an
interest (other than as a creditor) in the activity in
which the property is used or from a related person
to a person (other than the taxpayer) having such
an interest.
In the case of amounts borrowed by a corporation from
a shareholder, subclause (II) shall not apply to an
interest as a share-holder.
"(iv) QUALIFIED PERSON.—For purposes of this paragraph, the term 'qualified person* means any person
which is actively and regularly engaged in the business
of lending money and which is not—
"(I) a related person with respect to the taxpayer,
"(II) a person from which the taxpayer acquired
the property (or a related person to such person),
or
"(III) a person who receives a fee with respect to
the taxpayer's investment in the property (or a
related person to such person).
"(v) RELATED PERSON.—For purposes of this subparagraph, the term 'related person' has the meaning given
such term by section 465(bX3XC). Except as otherwise
provided in regulations prescribed by the Secretary, the
determination of whether a person is a related person
shsdl be made as of the close of the taxable year in
which the property is placed in service.
"(E) APPUCATION TO PARTNERSHIPS AND S CORPORATIONS.—

For purposes of this paragraph and paragraph (2)—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-545

"(i) IN GENERAL.—Except as otherwise provided in
this subparagraph, in the case of any partnership or S
corporation, the determination of whether a partner's
or shareholder's allocable share of any financing is
nonqualified nonrecourse financing shall be made at
the partner or shareholder level.
"(ii) SPECIAL RULE FOR CERTAIN RECOURSE FINANCING

OF s CORPORATION.—A shareholder of an S corporation
shall be treated as liable for his allocable share of any
financing provided by a qualified person to such corporation if—
"(I) such financing is recourse financing (determined at the corporate level), and
"(II) such financing is provided with respect to
qualified business property of such corporation.
"(iii) QUALIFIED BUSINESS PROPERTY.—For purposes of
clause (ii), the term'qualified business property means
any property if—
"(I) such property is used by the corporation in
the active conduct of a trade or business,
"(II) during the entire 12-month period ending on
the last day of the taxable year, such corporation
had at least 3 full-time employees who were not
owner-employees
(as
defined
in
section
465(cX7)(E)(i)) and substantially all the services of
whom were services directly related to such trade
or business, and
"(III) during the entire 12-month period ending
on the last day of such taxable year, such corporation had at least 1 full-time employee substantially
all of the services of whom were in the active
management of the trade or business,
"(iv)

DETERMINATION OF ALLOCABLE SHARE.—The

determination of any partner's or shareholder's allocable share of any financing shall be made in the same
manner as the credit allowable by section 38 with
respect to such property.
"(F) SPECIAL RULES FOR ENERGY PROPERTY.—Rules similar

to the rules of subparagraph (F) of section 46(cX8) (as in
effect on the day before the date of the enactment of the
Revenue Reconciliation Act of 1990) shall apply for purposes of this paragraph.
"(2) SUBSEQUENT DECREASES IN NONQUAUFIED NONRECOURSE
FINANCING WITH RESPECT TO THE PROPERTY.—

"(A) I N GENERAL.—If, at the close of a taxable year
following the taxable year in which the property was placed
, in service, there is a net decrease in the amount of nonqualified nonrecourse financing with respect to such property, such net decrease shall be taken into account as an
increase in the credit base for such property in accordance
with subparagraph (C).
"(B) CERTAIN TRANSACTIONS NOT TAKEN INTO ACCOUNT.—

For purposes of this paragraph, nonqualified nonrecourse
financing shall not be treated as decreased through the
surrender or other use of property financed by nonqualified
nonrecourse financing.
"(C) MANNER IN WHICH TAKEN INTO ACCOUNT.—

104 STAT. 1388-546

PUBLIC LAW 101-508—NOV. 5, 1990
"(i) CREDIT DETERMINED BY REFERENCE TO TAXABLE
YEAR PROPERTY PLACED I N S E R V I C E . — F o r p U r p o S e S

of

determining the amount of credit allowable under section 38 and the amount of credit subject to the early
disposition or cessation rules under section 50(a), any
increase in a taxpayer's credit base for any property by
reason of this paragraph shall be taken into account as
if it were property placed in service by the taxpayer in
the taxable year in which the property referred to in
subparagraph (A) was first placed in service.
"(ii) CREDIT ALLOWED FOR YEAR OF DECREASE IN NONQUALIFIED NONRECOURSE FINANCING.—Any Credit allow-

able under this subpart for any increase in qualified
investment by reason of this paragraph shall be treated
as earned during the taxable year of the decrease in the
amount of nonqualified nonrecourse financing.
"(b) INCREASES IN NONQUAUFIED NONRECOURSE FINANCING.—

"(1) IN GENERAL,—If, as of the close of the taxable year, there
is a net increase with respect to the taxpayer in the amount of
nonqualified nonrecourse financing (within the meaning of
subsection (aXl)) with respect to any property to which subsection (a)(1) applied, then the tax under this chapter for such
taxable year shall be increased by an amount equal to the
aggregate decrease in credits allowed under section 38 for all
prior taxable years which would have resulted from reducing
the credit base (as defined in subsection (aXlXC)) taken into
account with respect to such property by the amount of such net
increase. For purposes of determining the amount of credit
subject to the early disposition or cessation rules of section 50(a),
the net increase in the amount of the nonqualified nonrecourse
financing with respect to the property shall be treated as reducing the property's credit base in the year in which the property
was first placed in service.
"(2) TRANSFERS OF DEBT MORE THAN i YEAR AFTER INITIAL

BORROWING NOT TREATED AS INCREASING NONQUALIFIED
NONRECOURSE FINANCING.—For purposes of paragraph (1), the
amount of nonqualified nonrecourse financing (within the
meaning of subsection (a)(1)(D)) with respect to the taxpayer
shall not be treated as increased by reason of a transfer of (or
agreement to transfer) any evidence of any indebtedness if such
transfer occurs (or such agreement is entered into) more than 1
year after the date such indebtedness wsis incurred.
"(3) SPECIAL RULES FOR CERTAIN ENERGY PROPERTY.—Rules

similar to the rules of section 47(d)(3) (as in effect on the day
before the date of the enactment of the Revenue Reconciliation
Act of 1990) shall apply for purposes of this subsection.
"(4) SPECIAL RULE.—Any increase in tax under paragraph (1)
shall not be treated as tax imposed by this chapter for purposes
of determining the amount of any credit allowable under subpart A, B, D, or G.
"SEC. 50. OTHER SPECIAL RULES.
"(a) RECAPTURE IN CASE OF DISPOSITIONS, ETC.—Under regulations
prescribed by the Secretary—
"(1) EARLY DISPOSITION, ETC.—
"(A) GENERAL RULE.—If, during any taxable year, invest-

ment credit property is disposed of, or otherwise ceases to

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-547

be investment credit property with respect to the taxpayer,
before the close of the recapture period, then the tax under
this chapter for such taxable year shall be increased by the
recapture percentage of the aggregate decresise in the credits allowed under section 38 for all prior taxable years
which would have resulted solely from reducing to zero any
credit determined under this subpart with respect to such
property.
"(B) RECAPTURE PERCENTAGE.—For purposes of subparagraph (A), the recapture percentage shall be determined in
accordance with the following table:
"If the property ceases to be
investment credit property within—
(i) One full year after placed in service
(ii) One full year after the close of the period described
in clause (i)
(iii) One full year after the close of the period described in clause (ii)
(iv) One full year after the close of the period described in clause (iii)
(v) One full year after the close of the period described
in clause (iv)

The recapture
percentage is:
100
80
60
40
20

"(2) PROPERTY CEASES TO QUAUFY FOR PROGRESS EXPENDITURES.—

"(A) IN GENERAL.—If during any taxable year any building to which section 47(d) applied ceases (by reason of sale
or other disposition, cancellation or abandonment of contract, or otherwise) to be, with respect to the taxpayer,
property which, when placed in service, will be a qualified
rehabilitated building, then the tax under this chapter for
such taxable year shall be increased by an amount equal to
the aggregate decrease in the credits allowed under section
38 for all prior taxable years which would have resulted
solely from reducing to zero the credit determined under
this subpart with respect to such building.
"(B) CERTAIN EXCESS CREDIT RECAPTURED.—Any amount
which would have been applied as a reduction under paragraph (2) of section 47(b) but for the fact that a reduction
under such paragraph cannot reduce the amount taken into
account under section 47(b)(1) below zero shall be treated £is
an amount required to be recaptured under subparagraph
(A) for the taxable year during which the building is placed
in service.
"(C) CERTAIN SALES AND LEASEBACKS.—Under regulations
prescribed by the Secretary, a sale by, and leaseback to, a
taxpayer who, when the property is placed in service, will
be a lessee to whom the rules referred to in subsection (c)(4)
apply shall not be treated as a cessation described in
subparsigraph (A) to the extent that the amount which will
be passed through to the lessee under such rules with
respect to such property is not less than the qualified
rehabilitation expenditures properly taken into account by
the lessee under section 47(d) with respect to such property.
"(D) COORDINATION WITH PARAGRAPH (D.—If, after property is placed in service, there is a disposition or other
cessation described in paragraph (1), then paragraph (1)
shall be applied as if any credit which was allowable by

104 STAT. 1388-548

PUBLIC LAW 101-508—NOV. 5, 1990

reason of section 47(d) and which has not been required to
be recaptured before such disposition, cessation, or change
in use were allowable for the taxable year the property was
placed in service.
"(E) SPECIAL RULES.—Rules similar to the rules of this
paragraph shall apply in cases where qualified progress
expenditures were taken into account under the rules referred to in section 48(a)(5XA).
"(3) CARRYBACKS AND CARRYOVERS ADJUSTED.—In the case of
any cessation described in paragraph (1) or (2), the carrybacks
and carryovers under section 39 shall be adjusted by reason of
such cessation.
"(4) SUBSECTION NOT TO APPLY IN CERTAIN CASES.—Paragraphs

(1) and (2) shall not apply to—
"(A) a transfer by reason of death, or
"(B) a transaction to which section 381(a) applies.
For purposes of this subsection, property shall not be treated as
ceasing to be investment credit property with respect to the
taxpayer by reason of a mere change in the form of conducting
the trade or business so long as the property is retained in such
trade or business as investment credit property and the taxpayer retains a substantial interest in such trade or business.
"(5) DEFINITIONS AND SPECIAL RULES.—
"(A) INVESTMENT CREDIT PROPERTY.—For purposes of this

subsection, the term 'investment credit property' means
any property eligible for a credit determined under this
subpart.
"(B) TRANSFER BETWEEN SPOUSES OR INCIDENT TO DI-

VORCE.—In the case of any transfer described in subsection
(a) of section 1041—
"(i) the foregoing provisions of this subsection shall
not apply, £ind
"(ii) the same tax treatment under this subsection
with respect to the transferred property shall apply to
the transferee as would have applied to the transferor.
"(C) SPECIAL RULE.—Any increase in tax under paragraph
(1) or (2) shall not be treated as tax imposed by this chapter
for purposes of determining the amount of any credit allowable under subpart A, B, D, or G.
"(b) CERTAIN PROPERTY NOT EUGIBLE.—No credit shall be determined under this subpart with respect to—
"(1) PROPERTY USED OUTSIDE UNITED STATES.—

"(A) I N GENERAL.—Except as provided in subparagraph
(B), no credit shall be determined under this subpart with
respect to any property which is used predominantly outside the United States.
"(B) EXCEPTIONS.—Subparagraph (A) shall not apply to
any property described in section 168(g)(4).
"(2) PROPERTY USED FOR LODGING.—No credit shall be determined under this subpart with respect to any property which is
used predominantly to furnish lodging or in connection with the
furnishing of lodging. The preceding sentence shall not apply
to—
"(A) nonlodging commercial facilities which are available
to persons not using the lodging facilities on the same basis
as they are available to persons using the lodging facilities.®*
** So in original. Probably should be "facilities;".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-549

"(B) property used by a hotel or motel in connection with
the trade or business of furnishing lodging where the
predominant portion of the accommodations is used by
transients;
"(C) a certified historic structure to the extent of that
portion of the basis which is attributable to qualified rehabilitation expenditures; and
"(D) any energy property.
"(3) PROPERTY USED BY CERTAIN TAX-EXEMPT ORGANIZATION.—

No credit shall be determined under this subpart with respect to
any property used by an organization (other than a cooperative
described in section 521) which is exempt from the tax imposed
by this chapter unless such property is used predominantly in
an unrelated trade or business the income of which is subject to
tax under section 511. If the property is debt-financed property
(as defined in section 514(b)), the amount taken into account for
purposes of determining the amount of the credit under this
subpart with respect to such property shall be that percentage
of the amount (which but for this paragraph would be so taken
into account) which is the same percentage as is used under
section 514(a), for the year the property is placed in service, in
computing the amount of gross income to be taken into account
during such taxable year with respect to such property. If any
qualified rehabilitated building is used by the tax-exempt
organization pursuant to a lease, this paragraph shall not apply
for purposes of determining the amount of the rehabilitation
credit.
"(4) PROPERTY USED BY GOVERNMENTAL UNITS OR FOREIGN
PERSONS OR ENTITIES.—

"(A) I N GENERAL.—No credit shall be determined under
this subpart with respect to any property used—
"(i) by the United States, any State or political subdivision thereof, any possession of the United States, or
any agency or instrumentality of any of the foregoing,
or
"(ii) by any foreign person or entity (as defined in
section 168(h)(2)(C)), but only with respect to property
to which section 168(hX2XAXiii) applies (determined
after the application of section 168(h)(2)(B)).
"(B) EXCEPTION FOR SHORT-TERM LEASES.—This paragraph

and paragraph (3) shall not apply to any property by reason
of use under a lease with a term of less than 6 months
(determined under section 168(iX3)).
"(C) EXCEPTION FOR QUAUFIED REHABILITATED BUILDINGS

LEASED TO GOVERNMENTS, ETC.—If any qualified rehabilitated building is leased to a governmental unit (or a foreign
person or entity) this paragraph shall not apply for purposes of determining the rehabilitation credit with respect
to such building.
"(D) SPECIAL RULES FOR PARTNERSHIPS, ETC.—For purposes

of this paragraph and paragraph (3), rules similar to the
rules of paragraphs (5) and (6) of section 168(h) shall apply.
"(E) CROSS REFERENCE.—
"For special rules for the application of this paragraph and paragraph
(3), see section 168(h)."
'(c) BASIS ADJUSTMENT TO INVESTMENT CREDIT PROPERTY.—

104 STAT. 1388-550

PUBLIC LAW 101-508—NOV. 5, 1990

"(1) IN GENERAL.—For purposes of this subtitle, if a credit is
determined under this subpart with respect to any property, the
basis of such property shall be reduced by the amount of the
credit so determined.
"(2) CERTAIN DISPOSITIONS.—If during any taxable year there
is a recapture amount determined with respect to any property
the basis of which was reduced under paragraph (1), the basis of
such property (immediately before the event resulting in such
recapture) shall be increased by an amount equal to such
recapture amount. For purposes of the preceding sentence, the
term 'recapture amount' means any incre£ise in tax (or adjustment in carrybacks or carryovers) determined under subsection
(a).
"(3) SPECIAL RULE.—In the case of any energy credit or reforestation credit—
"(A) only 50 percent of such credit shall be taken into
account under paragraph (1), and
"(B) only 50 percent of any recapture amount attributable to such credit shall be taken into account under
paragraph (2).
"(4) RECAPTURE OF REDUCTIONS.—

"(A) I N GENERAL.—For purposes of sections 1245 and
1250, any reduction under this subsection shall be treated
as a deduction allowed for depreciation,
"(B) SPECIAL RULE FOR SECTION 1250.—For purposes of

section 1250(b), the determination of what would have been
the depreciation adjustments under the straight line
method shall be made as if there had been no reduction
under this section.
"(5) ADJUSTMENT IN BASIS OF INTEREST IN PARTNERSHIP OR S

CORPORATION.—The adjusted basis of—
"(A) a partner's interest in a partnership, and
"(B) stock in an S corporation,
shall be appropriately adjusted to take into account adjustments
made under this subsection in the basis of property held by the
partnership or S corporation (as the case may be).
"(d) CERTAIN RULES MADE APPUCABLE.—For purposes of this subpart, rules similar to the rules of the following provisions (as in
effect on the day before the date of the enactment of the Revenue
Reconciliation Act of 1990) shall apply:
"(1) Section 46(e) (relating to limitations with respect to certain persons).
"(2) Section 46(f) (relating to limitation in case of certain
regulated companies).
"(3) Section 46(h) (relating to special rules for cooperatives).
"(4) Paragraphs (2) and (3) of section 48(b) (relating to special
rule for sale-leasebacks).
"(5) Section 48(d) (relating to certain leased property),
"(6) Section 48(f) (relating to estates and trusts).
"(7) Section 48(r) (relating to certain 501(d) organizations)."
(b) CONFORMING AMENDMENTS,—

dXA) Subclause (III) of section 29a)X3XAXi) is amended by
striking "section 48(1X11XC)" and inserting "section 48(aX4XC)'\
(B) Paragraph (4) of section 29(b) is amended by striking
"section 47" each place it appears and inserting "section 49(b) or
50(a)".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-551

(C) Paragraph (3) of section 29(c) is amended to read as
follows:
"(3) BiOMASS.—The term 'biomass' means any organic material other than—
"(A) oil and natural gas (or any product thereof), and
"(B) coal (including lignite) or any product thereof."
(2)(A) Paragraph (1) of section 38(b) is amended by striking
"section 46(a)" and inserting "section 46".
(B) Subsection (c) of section 38 is amended by striking paragraph (2) and by redesignating paragraph (3) as paragraph (2).
(C) Subparagraph (C) of section 38(c)(2) (as redesignated by
subparagraph (B)) is amended—
(i) by inserting "(as in effect on the day before the date of
the enactment of the Revenue Reconciliation Act of 1990)"
after "46(e)(1)", and
(ii) by inserting "(as so in effect)" after "46(e)(2)".
(D) Subsection (d) of section 38 is amended—
(i) by striking "sections 46(f), 47(a), 196(a), and any other
provision" and inserting "any provision",
(ii) by amending paragraph (2) to read as follows:
"(2) COMPONENTS OF INVESTMENT CREDIT.—The order in which
the credits listed in section 46 are used shall be determined on
the basis of the order in which such credits are listed in section
46 as of the close of the taxable year in which the credit is
used.", and
(iii) by amending subparagraph (B) of paragraph (3) to
read as follows:
"(B) the credit determined under section 46—
"(i) to the extent attributable to the employee plan
percentage (as defined in section 46(a)(2)(E) as in effect
on the day before the date of the enactment of the Tax
Reform Act of 1984) shall be treated as a credit listed
after paragraph (1) of section 46, and
"(ii) to the extent attributable to the regular percentage (as defined in section 46(b)(1) as in effect on the day
before the date of the enactment of the Revenue Reconciliation Act of 1990) shall be treated as the first
credit listed in section 46."
(3) Subsection (k) of section 42 is amended—
(A) in paragraph (1)—
(i) by striking "46(cX8)" and inserting "49(a)(1)",
(ii) by striking "46(c)(9)" and inserting "49(a)(2)", and
(iii) by striking "47(d)(1)" and inserting "49(b)(1)",
and
(B) by striking "46(cX8XDXiv)(II)" in paragraphs (2XAXii)
and (2)(D) and inserting "49(aXlXDXiv)(II)".
(4) Subsection (e) of section 52 is amended by striking "section
46" and inserting "section 46 (as in effect on the day before the
date of the enactment of the Revenue Reconciliation Act of
1990)".
(5) Paragraph (1) of section 55(c) is amended by striking
"section 47 ' and inserting "section 49(b) or 50(a)".
(6) Subparagraph (B) of section 108(gXl) is amended by
striking "section 46(cX8XDXiv)" and inserting "section
49(aXlXDXiv)".
(7) Paragraph (4) of section 145(d) is amended—

104 STAT. 1388-552

PUBLIC LAW 101-508—NOV. 5, 1990

(A) by striking "section 48(gXlXC)" each place it appears
and inserting "section 47(c)(1)(C)", and
(B) by striking "section 48(g)(l)(CXi)" and inserting "section 47(cXl)(CXi)^'.
(8) Subparagraph (B) of section 147(dX3) is amended by striking "section 48(gX2)(B)" and inserting "section 47(cX2)(B)'\
(9XA) Clause (vi) of section 168(eX3)(B) is amended—
(i) by striking "paragraph (3XAXviii), (3XAXix) or (4) of
section 48(1)" in subclause (I) and inserting "subparagraph
(A) of section 48(a)(3) (or would be so described if 'solar and
wind' were substituted for 'solar' in clause (i) thereof)", and
(ii) by inserting "(as in effect on the day before the date of
the enactment of the Revenue Reconciliation Act of 1990)"
after "48(1)" in subclause (II).
(BXi) Subparagraph (D)(i) of section 168(eX3) is amended by
striking "section 48(p)" and inserting "subsection (i)(13)".
(ii) Subsection (i) of section 168 is amended by adding at the
end thereof the following new paragraph:
"(13) SINGLE PURPOSE AGRICULTURAL OR HORTICULTURAL STRUCTURE.—

"(A) I N GENERAL.—The term 'single purpose agricultural
or horticultural structure' means—
"(i) a single purpose livestock structure, and
"(ii) a single purpose horticultural structure.
"(B) DEFINITIONS.—For purposes of this paragraph—
"(i) SINGLE PURPOSE UVESTOCK STRUCTURE.—The term
'single purpose livestock structure' means any enclosure or structure specifically designed, constructed, and
used—
"(I) for housing, raising, and feeding a particular
type of livestock and their produce, and
(II) for housing the equipment (including any
replacements) necessary for the housing, raising,
and feeding referred to in subclause (I).
"(ii)

SINGLE PURPOSE HORTICULTURAL STRUCTURE.—

The term 'single purpose horticultural structure'
means—
"(I) a greenhouse specifically designed, constructed, and used for the commercial production
of plants, and
(II) a structure specifically designed, constructed, and used for the commercial production
of mushrooms,
"(iii) STRUCTURES WHICH INCLUDE WORK SPACE.—An
enclosure or structure which provides work space shall
be treated as a single purpose agricultural or horticultural structure only if such work space is solely
for—
"(I) the stocking, caring for, or collecting of livestock or plants (as the case may be) or their
produce,
"(II) the maintenance of the enclosure or structure, and
"(III) the maintenance or replacement of the
equipment or stock enclosed or housed therein.
"(iv) LIVESTOCK.—The term 'livestock' includes
poultry."

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-553

(C) Paragraph (4) of section 168(g) is amended to read as
follows:
"(4) EXCEPTION FOR CERTAIN PROPERTY USED OUTSIDE UNITED

STATES.—Subparagraph (A) of paragraph (1) shall not apply to—
"(A) any aircraft which is registered by the Administrator of the Federal Aviation Agency and which is operated to and from the United States or is operated under
contract with the United States;
"(B) rolling stock which is used within and without the
United States and which is—
"(i) of a domestic railroad corporation providing
transportation subject to subchapter I of chapter 105 of
title 49, or
"(ii) of a United States person (other than a corporation described in clause (i)) but only if the rolling stock
is not leased to one or more foreign persons for periods
aggregating more than 12 months in any 24-month
period;
"(C) any vessel documented under the laws of the United
States which is operated in the foreign or domestic commerce of the United States;
"(D) any motor vehicle of a United States person (as
defined in section 7701(a)(30)) which is operated to and from
the United States;
"(E) any container of a United States person which is
used in the transportation of property to and from the
United States;
"(F) any property (other than a vessel or an aircraft) of a
United States person which is used for the purpose of
exploring for, developing, removing, or transporting resources from the outer Continental Shelf (within the meaning of section 2 of the Outer Continental Shelf Lands Act, as
amended and supplemented; (43 U.S.C. 1331));
"(G) any property which is owned by a domestic corporation (other than a corporation which has an election in
effect under section 936) or by a United States citizen (other
than a citizen entitled to the benefits of section 931 or 933)
and which is used predominantly in a possession of the
United States by such a corporation or such a citizen, or by
a corporation created or organized in, or under the law of, a
possession of the United States;
"(H) any communications satellite (as defined in section
103(3) of the Communications Satellite Act of 1962, 47
U.S.C. 702(3)), or any interest therein, of a United States
person;
"(I) any cable, or any interest therein, of a domestic
corporation engaged in furnishing telephone service to
which section 168(i)(10)(C) applies (or of a wholly owned
domestic subsidiary of such a corporation), if such cable is
part of a submarine cable system which constitutes part of
a communication link exclusively between the United
States and one or more foreign countries;
"(J) any property (other than a vessel or an aircraft) of a
United States person which is used in international or
territorial waters within the northern portion of the Western Hemisphere for the purpose of exploring for, develop-

39-194 O - 91 - 31 : QL 3 Part 2

104 STAT. 1388-554

PUBLIC LAW 101-508—NOV. 5, 1990

ing, removing, or transporting resources from ocean waters
or deposits under such waters;
"(K) any property described in section 48(aX3XA)(iii)
which is owned by a United States person and which is used
in international or territorial waters to generate energy for
use in the United States; and
"(L) any satellite (not described in subparagraph (H)) or
other spacecraft (or any interest therein) held by a United
States person if such satellite or other spacecraft was
launched from within the United States.
For purposes of subparagraph (J), the term 'northern portion of
the Western Hemisphere' means the area l5dng west of the 30th
meridian west of Greenwich, east of the international dateline,
and north of the Equator, but not including any foreign country
which is a country of South America."
(10) Subparagraph (B) of section 170(h)(4) is amended by striking "section 48(g)(3XB)" and inserting "section 47(cX3XB)".
(11)(A) Paragraph (1) of section 179(d) is amended by striking
"section 38 property" and inserting "section 1245 property (as
defined in section 1245(aX3))".
(B) Paragraph (5) of section 179(d) is amended to read as
follows:
"(5)

SECTION NOT TO APPLY TO CERTAIN NONCORPORATE LES-

SORS.—This section shall not apply to any section 179 property
which is purchased by a person who is not a corporation and
with respect to which such person is the lessor unless—
"(A) the property subject to the lease has been manufactured or produced by the lessor, or
"(B) the term of the lease (taking into account options to
renew) is less than 50 percent of the class life of the
property (as defined in section 168(iXl)), and for the period
consisting of the first 12 months after the date on which the
property is transferred to the lessee the sum of the deductions with respect to such property which are allowable to
the lessor solely by reason of section 162 (other than rents
and reimbursed amounts with respect to such property)
exceeds 15 percent of the rental income produced by such
property."
(12XA) Paragraph (1) of section 196(c) is amended—
(i) by striking "section 46(a)" and inserting "section 46",
and
(ii) by striking "section 48(q)" and inserting "section
50(c)".
(B) Paragraph (1) of section 196(d) is amended—
(i) by striking "section 46(a)" and inserting "section 46",
and
(ii) by striking "other than a credit to which section
48(qX3) applies" and inserting "other than the rehabilitation credit".
(13XA) Subsection (a) of section 280F is amended—
(i) by striking paragraphs (1) and (4) and redesignating
paragraphs (2) and (3) as paragraphs (1) and (2), respectively, and
(ii) by striking "the credit determined under section 46(a)
or" in paragraph (2XB) (as redesignated by clause (i)).

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-555

(B) Subsection (b) of section 280F is amended by striking
parEigraph (1) and redesignating the following paragraphs
accordingly.
(C) The paragraph heading for paragraph (1) of section 280F(c)
is amended by striking "credits and".
(D) Subparagraph (A) of section 280F(d)(3) is amended by
striking "the amount of any credit allowable under section 38 to
the employee or".
(E) The section heading of section 280F is amended by striking
"INVESTMENT TAX CREDIT AND".

(F) The table of sections for part IX of subchapter B of chapter
1 is amended by striking "investment credit and" in the item
relating to section 280F.
(14) Paragraph (5) of section 312(k) is amended by striking
"section 48(q)" and inserting "section 50(c)".
(15) Subparagraph (D) of section 465(bX6) is amended by striking "46(c)(8)(D)(iv)" each place it appears and inserting
"49(a)(l)(D)(iv)".
(16)(A) Paragraphs (3XB) and (6XB)(ii) of section 469(i) are each
amended by striking "rehabilitation investment credit (within
the meaning of section 48(o))" and inserting "rehabilitation
credit determined under section 47".
(B) Paragraph (1) of section 469(k) is amended by striking
"rehabilitation investment credit (within the meaning of section
48(o))" and inserting "rehabilitation credit determined under
section 47".
(17) Subparagraph (A) of section 861(eXl) is amended by striking "which is section 38 property (or would be section 38 property but for section 48(aX5)" and inserting "which is section
1245 property (as defined in section 1245(a)(3))".
(18) Subparagraph (B) of section 865(c)(3) is amended by striking "section 48(aX2XB)" and inserting "section 168(gX4)".
(19) Paragraph (21) of section 1016(a) is amended by striking
"section 48(q) and inserting "section 50(c)".
(20) Subparagraph (A) of section 1033(gX3) is amended by
striking "with respect to which the investment credit determined under section 46(a) is or has been claimed or".
(21) Subparagraph (D) of section 1245(aX3) is amended by
striking "section 48(p)" and inserting "section 168(iX13)".
(22) Subsection (b) of section 1274A is amended by inserting
", as in effect on the day before the date of the enactment of the
Revenue Reconciliation Act of 1990" after "section 48(b)".
(23) Subsection (d) of section 1371 is sunended—
(A) by striking "section 47(b)" in parsigraph (1) and inserting "section 50(aX4)", and
(B) by striking "section 47" in paragraphs (2) and (3) and .
inserting "section 49(b) or 50(a)".
(24) Section 1388 is amended by striking subsection (k).
(25) Subpargigraph (B) of section 1503(eX3) is amended by
striking "section 48(q)" and inserting "section 50(c)".
(26) The table of subparts for part IV of subchapter A of
chapter 1 is amended by striking the item relating to subpart E
and inserting the following:
"Subpart E. Rules for computing investment credit."

(c) EFFECTIVE DATE.—

26 use 29 note.

104 STAT. 1388-556

PUBLIC LAW 101-508—NOV. 5, 1990

(1) I N GENERAL.—Except as provided in paragraph (2), the
amendments made by this section shall apply to property placed
in service after December 31,1990.
(2) EXCEPTIONS.—The amendments made by this section shall
not apply to—
(A) any transition property (as defined in section 49(e) of
the Internal Revenue Code of 1986 (as in effect on the day
before the date of the enactment of this Act),
(B) any property with respect to which qualified progress
expenditures were previously taken into account under
section 46(d) of such Code (as so in effect), and
(C) any property described in section 46(bX2XC) of such
Code (as so in effect).
SEC. 11814. ELIMINATION OF OBSOLETE PROVISIONS IN SECTION 243(b).

(a) I N GENERAL.—Subsection (b) of section 243 is amended to read
as follows:
"(b) QUALIFYING DIVIDENDS.—

"(1) I N GENERAL.—For purposes of this section, the term
'qualifying dividend' means any dividend received by a corporation—
"(A) if at the close of the day on which such dividend is
received, such corporation is a member of the same affiliated group as the corporation distributing such dividend,
and
"(B) if—
"(i) such dividend is distributed out of the earnings
and profits of a taxable year of the distributing corporation which ends after December 31, 1963, for which an
election under section 1562 was not in effect, and on
each day of which the distributing corporation and the
corporation receiving the dividend were members of
such affiliated group, or
"(ii) such dividend is paid by a corporation with
respect to which an election under section 936 is in
effect for the taxable year in which such dividend is
paid.
"(2) AFFIUATED GROUP.—For purposes of this subsection, the
term 'affiliated group' has the meaning given such term by
section 1504(a), except that for such purposes sections 1504(bX2),
1504(bX4), and 1504(c) shall not apply.
"(3) SPECIAL RULE FOR GROUPS WHICH INCLUDE LIFE INSURANCE
COMPANIES.—

"(A) I N GENERAL.—In the case an affiliated group which
includes 1 or more insurance companies under section 801,
no dividend by any member of such group shall be treated
as a qualif3dng dividend unless an election under this paragraph is in effect for the taxable year in which the dividend
is received. The preceding sentence shall not apply in the
case of a dividend described in paragraph (lXB)(ii).
"(B) EFFECT OF ELECTION.—If an election under this paragraph is in effect with respect to any affiliated group—
"(i) part II of subchapter B of chapter 6 (relating to
certain controlled corporations) shall be applied with
respect to the members of such group without regard to
sections 1563(a)(4) and 1563(bX2XD), and

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-557

"(ii) for purposes of this subsection, a distribution by
any member of such group which is subject to tax
under section 801 shall not be treated as a qualifying
dividend if such distribution is out of earnings and
profits for a taxable year for which an election under
this paragraph is not effective and for which such
distributing corporation was not a component member
of a controlled group of corporations within the meaning of section 1563 solely by reason of section
1563(b)(2)(D).
"(C) ELECTION.—An election under this paragraph shall
be made by the common parent of the affiliated group and
at such time and in such manner as the Secretary shall by
regulations prescribe. Any such election shall be binding on
all members of such group and may be revoked only with
the consent of the Secretary."
(b) CONFORMING AMENDMENT.—Clause (i) of section 1504(c)(2)(B) is

amended—
(1) by striking "section 243(b)(6)" and inserting "section
243(b)(3)", and
(2) by striking "section 243(b)(5)" and inserting "243(b)(2)".
(c) EFFECTIVE DATE.—
26 use 243 note.
(1) IN GENERAL.—The amendments made by this section shall
apply to taxable years beginning after December 31,1990.
(2) TREATMENT OP OLD ELECTIONS.—For purposes of section
243(b)(3) of the Internal Revenue Code of 1986 (as amended by
subsection (a)), any reference to an election under such section
shall be treated as including a reference to an election under
section 243(b) of such Code (as in effect on the day before the
date of the enactment of this Act).
SEC. 11815. ELIMINATION OF EXPIRED PROVISIONS IN PERCENTAGE
DEPLETION.
i
(a) SECTION 613A.—
'
(1) GENERAL RULE.—Subsection (c) of section 613A is

amended—
(A) by striking "the applicable percentage (determined in
accordance with the table contained in paragraph (5))" in
paragraph (1) and inserting "15 percent",
(B) by amending subparagraph (B) of paragraph (3) to
read as follows:
"(B) TENTATIVE QUANTITY.—For purposes of subparagraph (A), the tentative quantity is 1,000 barrels.", and
(C) by striking paragraphs (5), and (7)(E).
(2) CONFORMING AMENDMENTS.—

(A) Subparagraphs (A) and (B) of section 613A(cX7) are
each amended by striking "specified in paragraph (5)" and
inserting "specified in paragraph (1)".
(B) Paragraphs (8)(B), (8)(C), and (9) are each amended by
striking "determined under the table contained in paragraph (3)(B)" each place it appears and inserting "determined under paragraph (3XB)".
(b) SECTION 613(e).—

(1) Subsection (e) of section 613 is amended by striking paragraph (2) and by redesignating paragraphs (3) and (4) as paragraphs (2) and (3), respectively.

104 STAT. 1388-558

PUBLIC LAW 101-508—NOV. 5, 1990

(2) Subparagraph (B) of section 613(eXl) is amended to read as
follows:
"(B) 15 percent shall be deemed to be the percentage
specified in subsection (b),".
(3) Sections 57(a)(2)(D)(ii), 263(c), and 465(c)(1)(E) are each
amended by striking "section 613 (e)(3)" and inserting "section
613(e)(2)".
SEC. 11816. ELIMINATION OF EXPIRED PROVISIONS IN SECTION 29.

(a) GENERAL RULE.—Paragraph (1) of section 29(c) is amended by
inserting "and" at the end of subparagraph (B), by striking the
comma at the end of subparagraph (C) and inserting a period, and by
striking subparagraphs (D) and (E). .
(b) CONFORMING AMENDMENTS.—

(1) Subsection (c) of section 29 is amended by striking paragraphs (4) and (5).
(2) Paragraph (4) of section 29(d) is amended to read as
follows:
"(4) GAS FROM GEOPRESSURED BRINE, DEVONIAN SHALE, COAL

SEAMS, OR A TIGHT FORMATION.—The amount of the credit allowable under subsection (a) shall be determined without regard to
any production attributable to a property from which gas from
Devonian shale, coal seams, geopressured brine, or a tight
formation was produced in marketable quantities before January 1,1980."
(3) Subsection (d) of section 29 is amended by striking
paragraph (5) and redesignating the following paragraphs
accordingly.
(4) Paragraph (5) of section 29(d) (as redesignated by paragraph (3)) is amended by striking "subparagraph (C), (D), or (E)"
and inserting "subparagraph (C)".
(5) Subsection (f) of section 29 is amended to read as follows:
"(f) APPUCATION OF SECTION.—This section shall apply with respect to qualified fuels—
"(1) which are—
"(A) produced from a well drilled after December 31,
1979, and before January 1,1993, or
"(B) produced in a facility placed in service after December 31,1979, and before January 1,1993, and
"(2) which are sold before January 1, 2003."

Subpart C—Effective Date
26 u s e 29 note.

SEC. 11821. EFFECTIVE DATE.

(a) GENERAL RULE.—Except as otherwise provided in this part, the
amendments made by this part shall take effect on the date of the
enactment of this Act.
(b) SAVINGS PROVISION.—If—

(1) any provision amended or repealed by this part applied
to—
(A) any transaction occurring before the date of the
enactment of this Act,
(B) any property acquired before such date of enactment,
or
(C) any item of income, loss, deduction, or credit taken
into account before such date of enactment, and

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-559

(2) the treatment of such transaction, property, or item under
such provision would (without regard to the amendments made
by this part) affect liability for tax for periods ending after such
date of enactment,
nothing in the amendments made by this part shall be construed to
affect the treatment of such transaction, property, or item for
purposes of determining liability for tax for periods ending after
such date of enactment.

PART II—PROVISIONS RELATING TO
STUDIES
SEC. 11831. EXTENSION OF DATE FOR FILING REPORTS ON CERTAIN
STUDIES.

(a) GENERAL RULE.—The date for the submission of the report on
any study listed in subsection (b) is hereby extended to the due date
for such study determined under subsection (b).
(b) LIST OF STUDIES AND DUE DATES.—
In the case of the study required under:
The due date is:
Section 1211(d) of the Tax Reform Act of 1986 (relating to
source rule on sales of personal property)
January 1, 1992
Section 407 of the Compact of Free Association Act of 1985 (relating to tax provisions on Micronesia Compact of Free Association)
January 1, 1991
Section 634 of the Tax Reform Act of 1986 (relating to reform
of subchapter C)
January 1, 1992
Section 9301(cX3) of the Omnibus Budget Reconciliation Act of
1987 (relating to full funding limitation)
April 15, 1991
Section 6056 of the Technical and Miscellaneous Revenue Act
of 1988 (relatingjo minimum participation rules)
February 15,1991
Section 6072 of the Technical and Miscellaneous Revenue Act of
1988 (relating to treatment of certain technical personnel)
February 15,1991
Section 6305(e) of the Technical and Miscellaneous Revenue
Act of 1988 (relating to treatment of certain family services
providers)
January 1, 1992
Section 6064(dX4) of the Technical and Miscellaneous Revenue
Act of 1988 (relating to deferred compensation plans of State
and local governments and tax-exempt organizations)
January 1, 1992
Section 6067(b) of the Technical and Miscellaneous Revenue
Act of 1988 (relating to spin-off of defined benefit plan assets
to bridge banks)
January 1, 1992
Section 7612(f) of the Revenue Reconciliation Act of 1989 (relating to depreciation treatment of certain vehicles)
April 15, 1991
Section 1012(cX2) of the Tax Reform Act of 1986 (relating to
fraternal beneficiary associations)
July 1, 1992
Section 1025 of the Tax Reform Act of 1986 (relating to property and casualty insurance companies)
January 1, 1992

26 USC 865 note.
48 USC 1681
note.
26 USC 301 note.

26 USC 3121
note.
26 USC 457 note,
26 USC 414 note,

26 USC 833 note,
26 USC 832 note.

SEC. 11832. REPEAL OF CERTAIN STUDIES.

The following provisions are hereby repealed:
(1) Section 5041(f) of the Technical and Miscellaneous Revenue Act of 1988 (relating to long-term contracts).
(2) Section 560 of the Deficit Reduction Act of 1984 (relating to
employee welfare benefit plans).
(3) Section 621(d) of the Tax Reform Act of 1986 (relating to
depreciation, built-in deductions, and informal bankruptcy
workouts).
(4) Section 702 of the Tax Reform Act of 1986 (relating to book
earnings and profits adjustments).
(5) Section 675(d) of the Tax Reform Act of 1986, as amended
by section 1006(w) of the Technical and Miscellaneous Revenue

26 USC 382 note.
26 USC 382 note,
26 USC 382 note,
26 USC 56 note,
26 USC 860A
^°^-

104 STAT. 1388-560

PUBLIC LAW 101-508—NOV. 5, 1990

Act of 1988 (relating to impact of REMIC provisions on thrift
industry).
SEC. 11833. MODIFICATIONS TO STUDY OF AMERICANS WORKING ABROAD.

(a) DUE DATE FOR REPORTS.—Subsection (a) of section 208 of the

26 use 911 note.

Foreign Earned Income Act of 1978 (as amended by section 114 of
the Economic Recovery Tax Act of 1981) is amended by striking so
much of such subsection as precedes "the Secretary of the Treasury"
and inserting the following:
"(a) GENERAL RULE.—As soon as practicable after December 31,
1993, and as soon as practicable after the close of each fifth calendar
year thereafter,".
(b) INFORMATION FROM FEDERAL AGENCIES.—Subsection (b) of such
section 208 (as so amended) is amended by striking "shall furnish"
and inserting "shall keep such records and furnish".
SEC. 11834. INCREASE IN THRESHOLD FOR JOINT COMMITTEE REPORTS
ON REFUNDS AND CREDITS.

26 u s e 6405
°°*®-

(a) G E N E R A L RULE.—Subsections (a) a n d (b) of section 6405 a r e
e a c h a m e n d e d by s t r i k i n g "$200,000" a n d i n s e r t i n g "$1,000,000".
(b) EFFECTIVE D A T E . — T h e a m e n d m e n t m a d e b y subsection (a)
shall take effect on the date of the enactment of this Act, except that
such amendment shall not apply with respect to any refund or
credit with respect to a report has been made before such date of
enactment under section 6405 of the Internal Revenue Code of 1986.

Subtitle I—Public Debt Limit
SEC. 11901. INCREASE IN PUBLIC DEBT LIMIT.

Subsection (b) of section 3101 of title 31, United States Code, is
amended by striking the dollar limitation contained in such subsection and inserting "$4,145,000,000,000".
31 use 3101
"°*®-

(b) RESTORATION OF TRUST FUNDS FOR 1990.—
(1) I N G E N E R A L . —
(A) OBUGATIONS ISSUED.—Except as provided in para-

graph (2), within 30 days after the expiration of any debt
issuance suspension period to which this subsection applies,
the Secretary of the Treasury shall issue to each Federal
fund obligations under chapter 31 of title 31, United States
Code, which bear such issue dates, interest rates, and maturity dates as are necessary to ensure that, after such obligations are issued, the holdings of such Federal fund will
replicate to the maximum extent practicable the obligations that would have been held by such Federal fund if
any—
(i) failure to invest amounts in such Federal fund (or
any disinvestment) resulting from the limitation of
section 3101(b) of title 31, United States Code, had not
occurred, and
(ii) issuance of such obligations had occurred immediately on the expiration of the debt issuance suspension period.
(B) INTEREST CREDITED.—On the first normal interest
pajnnent date or within 30 days after the expiration of any
debt issuance suspension period (whichever is later) to
which this subsection applies, the Secretary of the Treasury

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-561

shall credit to each Federal fund an amount determined by
the Secretary, after taking into account the actions taken
pursuant to subparagraph (A), to be equal to the income
lost by such Federal fUnd by reason of any failure to invest
amounts in such Federal fund (or any disinvestment) resulting from the limitation of such section 3101(b), including
any income lost between the expiration of the debt issuance
suspension period and the date of the credit.
(2) INTEREST ON MARKET-BASED OBUGATIONS.—With respect to
any Federal fund which invests in market-based special obligations, on the expiration of a debt issuance suspension period to
which this subsection applies, the Secretary of the Treasury
shall immediately credit to such fund an eimount equal to the
interest that would have been earned by such fund during the
debt issuance suspension period if the daily balance in such
fund that the Secretary was unable to invest by reason of the
limitation of such section 3101(b) had been invested each day
during such period, overnight, in obligations under chapter 31
of title 31, United States Code, earning interest at a rate
determined by the Secretary in accordance with the standard
practice of the Department of the Treasury.
(3) DEBT ISSUANCE SUSPENSION PERIODS TO WHICH SUBSECTION

APPUES.—This subsection shall apply to debt issuance suspension periods beginning on or after October 15, 1990, and ending
before January 1,1991.
(4) CREDITED AMOUNTS TREATED AS INTEREST.—All amounts
credited under this subsection shall be treated as interest on
obligations issued under chapter 31 of title 31, United States
Code, for all purposes of Federal law.
(5) DEFINITIONS.—For purposes of this subsection—
(A) DEBT ISSUANCE SUSPENSION PERIOD.—The term "debt
issuance suspension period" means any period for which
the Secretary of the Treasury determines that the issuance
of obligations of the United States sufficient to conduct the
orderly financial operations of the United States may not
be made without exceeding the limitation imposed by section 31010)) of title 31, United States Code.
(B) FEDERAL FUND.—The term "Federal fund" means any
Federal trust fund or Government account established
pursuant to Federal law to which the Secretary of the
Treasury has issued or is expressly authorized by law directly to issue obligations under chapter 31 of title 31,
United States Code, in respect of public money, money
otherwise required to be deposited in the Treasury, or
amounts appropriated; except that such term shall not
include the Civil Service Retirement and Disability Fund or
the Thrift Savings Fund of the Federal Employees' Retirement System.

104 STAT. 1388-562

PUBLIC LAW 101-508—NOV. 5, 1990

TITLE XII—PENSIONS
Subtitle A—Treatment of Reversions of
QualiHed Plan Assets to Employers
26 use 4980.

SEC. 12001. INCREASE IN REVERSION TAX.
Section 4980(a) (relating to tax on reversion of quEilified plan
assets to employer) is amended by striking "15 percent" and inserting "20 percent'^'.
SEC. 12002. ADDITIONAL TAX IF NO REPLACEMENT PLAN.
(a) I N GENERAL.—Section 4980 is amended by adding at the end
thereof the following new subsection:
"(d) INCREASE IN TAX FOR FAILURE TO ESTABUSH REPLACEMENT
PLAN OR INCREASE BENEFITS.—

"(1) I N GENERAL.—Subsection (a) shall be applied by substituting '50 percent' for '20 percent' with respect to any employer
reversion from a qualified plan unless—
"(A) the employer establishes or maintains a qualified
replacement plan, or
"(B) the plan provides benefit increases meeting the
requirements of paragraph (3).
"(2) QuAUFiED REPLACEMENT PLAN.—For purposes of this
subsection, the term 'qualified replacement plan' means a qualified plan established or maintained by the employer in connection with a qualified plan termination (hereinafter referred to
as the 'replacement plan') with respect to which the following
requirements are met:
"(A) PARTICIPATION REQUIREMENT.—At least 95 percent of
the active participEints in the terminated plan who remain
as employees of the employer after the termination are
active participants in the replacement plan.

—---^

-

"(B) ASSET TRANSFER REQUIREMENT.—
"(i) 25 PERCENT CUSHION.—A direct transfer from the

terminated plan to the replacement plan is made
before any employer reversion, and the transfer is in
an amount equal to the excess (if any) of—
"(I) 25 percent of the maximum amount which
the employer could receive as an employer reversion without regard to this subsection, over
"(II) the amount determined under clause (ii).
"(ii)

REDUCTION FOR INCREASE IN BENEFITS.—The

amount determined under this clause is an amount
equal to the present value of the aggregate increases in
the accrued benefits under the terminated plan of any
participants or beneficiaries pursuant to a plan amendment which—
"(I) is adopted during the 60-day period ending
on the date of termination of the qualified plan,
and
"(II) takes effect immediately on the termination
date,
"(iii) TREATMENT OF AMOUNT TRANSFERRED.—In the
case of the transfer of any amount under clause (i)—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-563

"(I) such amount shall not be includible in the
gross income of the employer,
"(11) no deduction shall be allowable with respect
to such transfer, and
"(III) such transfer shall not be treated as an
employer reversion for purposes of this section.
"(C) ALLOCATION REQUIREMENTS.—

"(i) IN GENERAL.—In the case of any defined contribution plan, the portion of the amount transferred to the
replacement plan under subparagraph (B)(i) is—
"(I) allocated under the plan to the accounts of
participants in the plan year in which the transfer
occurs, or
"(II) credited to a suspense account and allocated
from such account to accounts of participants no
less rapidly than ratably over the 7-plan-year
period beginning with the year of the transfer.
"(ii) COORDINATION WITH SECTION 415 LIMITATION.—If,

by reason of any limitation under section 415, any
amount credited to a suspense account under clause
(i)(II) may not be allocated to a participant before the
close of the 7-year period under such clause—
"(I) such amount shall be allocated to the accounts of other participants, and
"(II) if any portion of such amount may not be
allocated to other participants by reason of any
such limitation, shall be allocated to the participant as provided in section 415.
"(iii) TREATMENT OF INCOME.—Any income on any
amount credited to a suspense account under clause
(i)(II) shall be allocated to accounts of participants no
less rapidly than ratably over the remainder of the
period determined under such clause (after application
of clause (ii)).
"(iv)

UNALLOCATED AMOUNTS AT TERMINATION.—If

any amount credited to a suspense account under
clause (i)(II) is not allocated as of the termination date
of the replacement plan—
"(I) such amount shall be allocated to the accounts of participants as of such date, except that
any amount which may not be allocated by reason
of any limitation under section 415 shall be allocated to the accounts of other participants, and
"(II) if any portion of such amount may not be
allocated to other participants under subclause (I)
by reason of such limitation, such portion shall be
treated as an employer reversion to which this
section applies.
"(3) PRO RATA BENEFIT INCREASES.—

"(A) IN GENERAL.—The requirements of this paragraph
are met if a plan amendment to the terminated plan is
adopted in connection with the termination of the plan
which provides pro rata increases in the accrued benefits of
all qualified participants which—
"(i) have an aggregate present value not less than 20
percent of the msiximum amount which the employer

104 STAT. 1388-564

PUBLIC LAW 101-508—NOV. 5, 1990
could receive as an employer reversion without regard
to this subsection, and
"(ii) take effect immediately on the termination date.
"(B) PRO RATA INCREASE.—For purposes of subpareigraph

(A), a pro rata increase is an increase in the present value
of the accrued benefit of each qualified participant in an
amount which bears the same ratio to the aggregate
amount determined under subparagraph (A)(i) as—
"(i) the present value of such participant's accrued
benefit (determined without regard to this subsection),
bears to
"(ii) the aggregate present value of accrued benefits
of the terminated plan (as so determined).
Notwithstanding the preceding sentence, the aggregate increases in the present value of the accrued benefits of
qualified participants who are not active participants shall
not exceed 40 percent of the aggregate amount determined
under subparagraph (A)(i) by substituting 'equal to' for 'not
less than'.
"(4) COORDINATION WITH OTHER PROVISIONS.—

"(A) LIMITATIONS.—A benefit may not be increased under
paragraph (2)(B)(ii) or (3)(A), and an amount may not be
allocated to a participant under paragraph (2)(C), if such
increase or allocation would result in a failure to meet any
requirement under section 401(a)(4) or 415.
"(B) TREATMENT AS EMPLOYER CONTRIBUTIONS.—Any in-

crease in benefits under paragraph (2)(B)(ii) or (3)(A), or any
allocation of any amount (or income allocable thereto) to
any account under paragraph (2)(C), shall be treated as an
annual benefit or annual addition for purposes of section
415.
"(C)

10-YEAR PARTICIPATION

REQUIREMENT.—ExCept aS

provided by the Secretary, section 415(b)(5)(D) shall not
apply to any increase in benefits by reason of this subsection to the extent that the application of this subparagraph
does not discriminate in favor of highly compensated
employees (as defined in section 414(q)).
"(5) DEFINITIONS AND SPECIAL RULES.—For purposes of this
subsection—
"(A) QUAUFIED PARTICIPANT.—The term 'qualified participant' means an individual who—
"(i) is an active participant,
"(ii) is a participant or beneficiary in pay status as of
the termination date,
"(iii) is a participant not described in clause (i) or
. (ii)"(I) who has a nonforfeitable right to an accrued
benefit under the terminated plan as of the termination date, and
"(II) whose service, which was creditable under
the terminated plan, terminated during the period
beginning 3 years before the termination date and
ending with the date on which the final distribution of assets occurs, or
"(iv) is a beneficiary of a participant described in
clause (iii)(II) and has a nonforfeitable right to an

PUBLIC LAW 101-508—NOV. 5,1990

104 STAT. 1388-565

accrued benefit under the terminated plan as of the
termination date.
"(B) PRESENT VALUE.—Present value shall be determined
as of the termination date and on the same basis as liabilities of the plan are determined on termination.
"(C) REALLOCATION OF INCREASE.—Except as provided in

paragraph (2XC), if any benefit increase is reduced by
reason of the leist sentence of paragraph (3XA)(ii) or paragraph (4), the amount of such reduction shall be allocated to
the remaining participants on the same bsisis as other
increases (and shall be treated as meeting any allocation
requirement of this subsection).
"(D) PLANS TAKEN INTO ACCOUNT.—For purposes of deter-

mining whether there is a qualified replacement plan
under paragraph (2), the Secretary may provide that—
"(i) 2 or more plans may be treated as 1 plan, or
"(ii) a plan of a successor employer may be taken into
account.
"(E) SPECIAL RULE FOR PARTICIPATION REQUIREMENT.—For

purposes of paragraph (2XA), all employers treated as 1
employer under section 414 (b), (c), (m), or (o) shall be
treated as 1 employer.
"(6) SUBSECTION NOT TO APPLY TO EMPLOYER IN BANKRUPTCY.—

This subsection shall not apply to an employer who, as of the
termination date of the qualified plan, is in bankruptcy liquidation under chapter 7 of title 11 of the United States Code or in
similar proceedings under State law."
(b) AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY
ACT.—
(1) FIDUCIARY RESPONSIBIUTY.—Section 404 of the Employee

Retirement Income Security Act of 1974 (29 U.S.C. 1104) is
amended by adding at the end thereof the following new subsection:
"(d)(1) If, in connection with the termination of a pension plan
which is a single-employer plan, there is an election to establish or
maintain a qualified replacement plan, or to increase benefits, as
provided under section 4980(d) of the Internal Revenue Code of 1986,
a fiduciary shall discharge the fiduciary's duties under this title and
title IV in accordance with the following requirements:
"(A) In the C£ise of a fiduciary of the terminated plan, any
requirement—
"(i) under section 4980(dX2XB) of such Code with respect
to the transfer of sissets from the terminated plan to a
qualified replacement plan, and
"(ii) under section 4980(dX2)(B)(ii) or 4980(dX3) of such
Code with respect to any increase in benefits under the
terminated plan.
"(B) In the case of a fiduciary of a qualified replacement plan,
any requirement—
(i) under section 4980(d)(2XA) of such Code with respect
to participation in the qualified replacement plan of active
participants in the terminated plan,
"(ii) under section 4980(dX2XB) of such Code with respect
to the receipt of assets from the terminated plan, and
"(iii) under section 4980(dX2XC) of such Code with respect
to the allocation of assets to participants of the qualified
replacement plan.

104 STAT. 1388-566

PUBLIC LAW 101-508—NOV. 5, 1990

"(2) For purposes of this subsection—
"(A) any term used in this subsection which is also used in
section 4980(d) of the Internal Revenue Code of 1986 shall have
the same meaning as when used in such section, and
"(B) any reference in this subsection to the Internal Revenue
Code of 1986 shall be a reference to such Code as in effect
immediately after the enactment of the Omnibus Budget Reconciliation Act of 1990."
(2) CONFORMING AMENDMENTS.—

(A) Section 404(a)(1)(D) of such Act (29 U.S.C.
1104(a)(1)(D)) is amended by striking "or title IV" and
inserting "and title IV".
(B) Section 4044(d) of such Act (29 U.S.C. 1344(d)) is
amended by adding at the end thereof the following new
paragraph:
"(4) Nothing in this subsection shall be construed to limit the
requirements of section 4980(d) of the Internal Revenue Code of 1986
(as in effect immediately after the enactment of the Omnibus
Budget Reconciliation Act of 1990) or section 404(d) of this Act with
respect to any distribution of residual assets of a single-employer
plan to the employer."
(C) Section 3 of such Act (29 U.S.C. 1002) is amended by
adding at the end thereof the following new paragraph:
"(41) The term 'single-employer plan' means a plan which is not a
multiemployer plan."
26 u s e 4980

SEC. 12003. EFFECTIVE DATE.

(a) I N GENERAL.—Except as provided in subsection (b), the amendments made by this subtitle shall apply to reversions occurring after
September 30,1990.
(b) EXCEPTION.—The amendments made by this subtitle shall not
apply to any reversion after September 30,1990, if—
(1) in the case of plans subject to title IV of the Employee
Retirement Income Security Act of 1974, a notice of intent to
terminate under such title was provided to participants (or if no
participants, to the Pension Benefit Guaranty Corporation)
before October 1,1990,
(2) in the case of plans subject to title I (and not to title IV) of
such Act, a notice of intent to reduce future accruals under
section 204(h) of such Act was provided to participants in
connection with the termination before October 1,1990,
(3) in the case of plans not subject to title I or IV of such Act, a
request for a determination letter with respect to the termination was filed with the Secretary of the Treasury or the
Secretary's delegate before October 1,1990, or
(4) in the case of plans not subject to title I or IV of such Act
and having only 1 participant, a resolution terminating the plan
was adopted by the employer before October 1,1990.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-567

Subtitle B—Transfers to Retiree Health
Accounts
SEC. 12011. TRANSFER OP EXCESS PENSION ASSETS TO RETIREE HEALTH
ACCOUNTS.

(a) I N GENERAL.—Part I of subchapter D of chapter 1 (relating to
pension, profit-sharing, and stock bonus plans) is amended by adding
at the end thereof the following new subpart:

''Subpart E—Treatment of Transfers to Retiree Health
Accounts
"Sec. 420. Transfers of excess pension assets to retiree health accounts.
"SEC. 420. TRANSFERS OF EXCESS PENSION ASSETS TO RETIREE HEALTH 26 USC 420.
ACCOUNTS.

"(a) GENERAL RULE.—If there is a qualified transfer of any excess
pension assets of a defined benefit plan (other than a multiemployer
plan) to a health benefits account which is part of such plan—
"(1) a trust which is part of such plan shall not be treated as
failing to meet the requirements of subsection (a) or (h) of
section 401 solely by reason of such transfer (or any other action
authorized under this section),
"(2) no amount shall be includible in the gross income of the
employer maintaining the plan solely by reason of such
transfer,
"(3) such transfer shall not be treated—
"(A) as an employer reversion for purposes of section
4980, or
"(B) as a prohibited transaction for purposes of section
4975, and
"(4) the limitations of subsection (d) shall apply to such
employer.
"(b) QuAUPiED TRANSFER.—For purposes of this section—
"(1) IN GENERAL.—The term 'qualified transfer' means a
transfer—
"(A) of excess pension assets of a defined benefit plan to a
health benefits account which is part of such plan in a
taxable year beginning after December 31,1990,
"(B) which does not contravene any other provision of
law, and
"(C) with respect to which the following requirements are
met in connection with the plan—
"(i) the use requirements of subsection (cXl),
"(ii) the vesting requirements of subsection (c)(2), and
"(iii) the minimum cost requirements of subsection

(0(3).

"(2) ONLY i TRANSFER PER YEAR.—

"(A) I N GENERAL.—No more than 1 transfer with respect
to any plan during a taxable year may be treated as a
qualified transfer for purposes of this section.
"(B) EXCEPTION.—A transfer described in paragraph (4)
shall not be taken into account for purposes of subparagraph (A).

104 STAT. 1388-568

PUBLIC L A W 101-508—NOV. 5, 1990
"(3) LIMITATION ON AMOUNT TRANSFERRED.—The amount of

excess pension assets which may be transferred in a qualified
transfer shall not exceed the amount which is reasonably estimated to be the amount the employer maintaining the plan will
pay (whether directly or through reimbursement) out of such
account during the taxable year of the transfer for qualified
current retiree health liabilities.
"(4) SPECIAL RULE FOR 1990.—
"(A) I N GENERAL.—Subject to the provisions of subsection
(c), a transfer shall be treated as a qualified transfer if such
transfer—
"(i) is made after the close of the taxable year preceding the employer's first taxable year beginning after
December 31,1990, and before the earlier of—
"(I) the due date (including extensions) for the
filing of the return of teix for such preceding taxable year, or
"(II) the date such return is filed, and
"(ii) does not exceed the expenditures of the employer
for qualified current retiree health liabilities for such
preceding taxable year.
"(B) DEDUCTION REDUCED.—The amount of the deductions
otherwise allowable under this chapter to an employer for
the taxable year preceding the employer's first taxable year
beginning after December 31, 1990, shall be reduced by the
amount of any qualified transfer to which this paragraph
applies.
"(C) COORDINATION WITH REDUCTION RULE.—Subsection

(eXlXB) shall not apply to a transfer described in subparagraph (A).
"(5) EXPIRATION.—No transfer in any taxable year beginning
after December 31, 1995, shall be treated as a qualified transfer.
"(c) REQUIREMENTS OF PLANS TRANSFERRING ASSETS.—
"(1) USE OF TRANSFERRED ASSETS.—

"(A) I N GENERAL.—Any assets transferred to a health
benefits account in a qualified transfer (and any income
allocable thereto) shall be used only to pay qualified current retiree health liabilities (other than liabilities of key
employees not taken into account under subsection (e)(lXD))
for the taxable year of the transfer (whether directly or
through reimbursement).
"(B) AMOUNTS NOT USED TO PAY FOR HEALTH BENEFITS.—

"(i) I N GENERAL.—Any assets transferred to a health
benefits account in a qualified transfer (and any
income allocable thereto) which are not used as provided in subparagraph (A) shall be transferred put of
the account to the transferor plan.
"(ii) TAX TREATMENT OF AMOUNTS.—Any amount
transferred out of an account under clause (i)—
"(I) shall not be includible in the gross income of
the employer for such taxable year, but
"(II) shall be treated as an employer reversion
for purposes of section 4980 (without regard to
subsection (d) thereof).
"(C) ORDERING RULE.—For purposes of this section, any
amount paid out of a health benefits account shall be

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-569

treated £is paid first out of the assets and income described
in subparagraph (A).
"(2) REQUIREMENTS RELATING TO PENSION BENEFITS ACCRUING
BEFORE TRANSFER.—

"(A) I N GENERAL.—The requirements of this paragraph
are met if the plan provides that the accrued pension
benefits of any participant or beneficiary under the plan
become nonforfeitable in the same manner which would be
required if the plan had terminated immediately before the
qualified transfer (or in the case of a participant who
separated during the 1-year period ending on the date of the
transfer, immediately before such separation).
"(B) SPECIAL RULE FOR 1990.—In the case of a qualified
transfer described in subsection (b)(4), the requirements of
this paragraph are met with respect to any participant who
separated from service during the taxable year to which
such transfer relates by recomputing such participant's
benefits as if subparagraph (A) had applied immediately
before such separation.
"(3) MINIMUM COST REQUIREMENTS.—

"(A) IN GENERAL.—The requirements of this paragraph
are met if each group health plan or arrangement under
which applicable health benefits are provided provides that
the applicable employer cost for each taxable year during
the cost maintenance period shall not be less than the
higher of the applicable employer costs for each of the 2
taxable years immediately preceding the taxable year of
the qualified transfer.
"(B) APPUCABLE EMPLOYER COST.—For purposes of this
paragraph, the term 'applicable employer cost means, with
respect to any taxable year, the amount determined by
dividing—
(i) the qualified current retiree health liabilities of
the employer for such taxable year determined—
"(I) without regard to any reduction under
subsection (e)(1)(B), and
"(II) in the case of a taxable year in which there
was no qualified transfer, in the same manner as if
there had been such a transfer at the end of the
taxable year, by
"(ii) the number of individuals to whom coverage for
applicable health benefits was provided during such
taxable year.
"(C)

ELECTION TO COMPUTE COST SEPARATELY.—An

em-

ployer may elect to have this paragraph applied separately
with respect to individuals eligible for benefits under title
XVIII of the Social Security Act at any time during the
taxable year and with respect to individuals not so eligible.
"(D) COST MAINTENANCE PERIOD.—For purposes of this
paragraph, the term 'cost maintenance period' means the
period of 5 taxable years beginning with the taxable year in
which the qualified transfer occurs. If a taxable year is in 2
or more overlapping cost maintenance periods, this paragraph shall be applied by taking into account the highest
applicable employer cost required to be provided under
subparagraph (A) for such taxable year.
'(d) LIMITATIONS ON EMPLOYER.—For purposes of this title—

104 STAT. 1388-570

PUBLIC LAW 101-508—NOV. 5, 1990

"(1) DEDUCTION LIMITATIONS.—No deduction shall be allowed—
"(A) for the transfer of any amount to a health benefits
account in a qualified transfer (or any retransfer to the
plan under subsection (c)(1)(B)),
"(B) for qualified current retiree health liabilities paid
out of the assets (and income) described in subsection (c)(1),
or
"(C) for any amounts to which subparagraph (B) does not
apply and which are paid for qualified current retiree
health liabilities for the taxable year to the extent such
amounts are not greater than the excess (if any) of—
"(i) the amount determined under subparagraph (A)
(and income allocable thereto), over
"(ii) the amount determined under subparagraph (B).
"(2) No CONTRIBUTIONS ALLOWED.—An employer may not
contribute after December 31, 1990, any amount to a health
benefits account or welfare benefit fund (as defined in section
419(e)(1)) with respect to qualified current retiree health liabilities for which transferred assets are required to be used under
subsection (c)(1).
"(e) DEFINITION AND SPECIAL RULES.—For purposes of this section—
"(1) QUAUFIED C U R R E N T RETIREE HEALTH LIABILITIES.—For

purposes of this section—
"(A) I N GENERAL.—The term 'qualified current retiree
health liabilities' means, with respect to any taxable year,
the aggregate amounts (including administrative expenses)
which would have been allowable as a deduction to the
employer for such taxable year with respect to applicable
health benefits provided during such taxable year if—
"(i) such benefits were provided directly by the emplover, and
(ii) the employer used the cash receipts and
disbursements method of accounting.
For purposes of the preceding sentence, the rule of section
419(c)(3)(B) shall apply.
"(B) REDUCTIONS FOR AMOUNTS PREVIOUSLY SET ASIDE.—

The amount determined under subparagraph (A) shall be
reduced by any amount previously contributed to a health
benefits account or welfare benefit fund (as defined in
section 419(e)(1)) to pay for the qualified current retiree
health liabilities. The portion of any reserves remaining as
of the close of December 31,1990, shall be allocated on a pro
rata basis to qualified current retiree health liabilities.
"(C) APPUCABLE HEALTH BENEFITS.—The term 'applicable
health benefits' mean health benefits or coverage which are
provided to—
"(i) retired employees who, immediately before the
qualified transfer, are entitled to receive such benefits
upon retirement and who are entitled to pension benefits under the plan, and
"(ii) their spouses and dependents.
"(D) KEY EMPLOYEES EXCLUDED.—If an employee is a key
employee (within the meaning of section 416(i)(l)) with
respect to any plan year ending in a taxable year, such
employee shall not be taken into account in computing

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-571

qualified current retiree health liabilities for such taxable
year or in calculating applicable employer cost under
subsection (c)(3XB).
"(2) EXCESS PENSION ASSETS.—The term 'excess pension gissets'
means the excess (if any) of—
"(A) the amount determined under section 412(cX7XA)(ii),
over
"(B) the greater of—
"(i) the amount determined under section
412(cX7XAXi), or
"(ii) 125 percent of current liability (as defined in
section 412(cX7XB)).
The determination under this paragraph shall be made as of the
most recent valuation date of the plan preceding the qualified
transfer.
"(3) HEALTH BENEFITS ACCOUNT.—The term "health benefits
account" means an account established and maintained under
section 401(h).
"(4) COORDINATION WITH SECTION 412.—In the case of a qualified transfer to a health benefits account—
"(A) any assets transferred in a plan year on or before the
valuation date for such year (and any income allocable
thereto) shall, for purposes of section 412, be treated as
assets in the plan as of the valuation date for such year, and
"(B) the plan shall be treated £is having a net experience
loss under section 412(b)(2)(B)(iv) in an amount equal to the
amount of such transfer (reduced by any amounts transferred back to the pension plan under subsection (c)(lXB))
and for which amortization charges begin for the first plan
year after the plan year in which such transfer occurs,
except that such section shall be applied to such amount by
substituting '10 plan years' for '5 plan years'."
Qoi) CONFORMING AMENDMENT.—Section 401(h) is amended by 26USC401.

inserting ", and subject to the provisions of section 420" after
"Secretary".
(c) EFFECTIVE DATES.—
26 USC 420 note.
(1) IN GENERAL.—The amendments made by this section shall
apply to transfers in taxable years beginning after December 31,
1990.
(2) WAIVER OF ESTIMATED TAX PENALTIES.—No addition to tax
shall be made under section 6654 or section 6655 of the Internal
Revenue Code of 1986 for the taxable year preceding the taxpayer's 1st taxable year beginning after December 31, 1990,
with respect to any underpayment to the extent such
underpayment was created or increased by reason of section
420(b)(4)(B) of such Code (as added by subsection (a)).
SEC. 12012. APPLICATION OF ERISA TO TRANSFERS OF EXCESS PENSION
ASSETS TO RETIREE HEALTH ACCOUNTS.

(a) EXCLUSIVE BENEFIT REQUIREMENT.—Section 403(cXl) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1103(cXl)) is amended by inserting ", or under section 420 of the
Internal Revenue Code of 1986 (as in effect on January 1, 1991)"
after "insured plans)".
(b) EXEMPTIONS FROM PROHIBITED TRANSACTIONS.—Section 4080?)

of such Act (29 U.S.C. 11080?)) is amended by adding at the end
thereof the following new paragraph:

104 STAT. 1388-572

PUBLIC LAW 101-508—NOV. 5, 1990

"(13) Any transfer in a taxable year beginning before January 1, 1996, of excess pension assets from a defined benefit plan
to a retiree health account in a qualified transfer permitted
under section 420 of the Internal Revenue Code of 1986 (as in
effect on January 1,1991)."
(c) FUNDING LIMITATIONS.—Section 302 of such Act (29 U.S.C.
1082) is amended by redesignating subsection (g) as subsection (h)
and by adding at the end thereof the following new subsection:
"(g) QuAUFiED TRANSFERS TO HEALTH BENEFIT ACCOUNTS.—For
purposes of this section, in the case of a qualified transfer (as defined
in section 420 of the Internal Revenue Code of 1986)—
"(1) any assets transferred in a plan year on or before the
valuation date for such year (and any income allocable thereto)
shall, for purposes of subsection (c)(7), be treated as assets in the
plan as of the valuation date for such year, and
"(2) the plan shall be treated as having a net experience loss
under subsection (b)(2)(B)(iv) in an amount equal to the amount
of such transfer (reduced by any amounts transferred back to
the plan under section 420(c)(1)(B) of such Code) and for which
amortization charges begin for the first plan year after the plan
year in which such transfer occurs, except that such subsection
shall be applied to such amount by substituting *10 plan years'
for '5 plan years'."
(d) NOTICE REQUIREMENTS.—

(1) IN GENERAL.—Section 101 of such Act (29 U.S.C. 1021) is
amended by redesignating subsection (e) as subsection (f) and by
inserting after subsection (d) the following new subsection:
"(e) NOTICE OF TRANSFER OF EXCESS PENSION ASSETS TO HEALTH
BENEFITS ACCOUNTS.—
"(1) NOTICE TO PARTICIPANTS.—Not later than 60 days before

the date of a qualified transfer by an employee pension benefit
plan of excess pension assets to a health benefits account, the
administrator of the plan shall notify (in such manner as the
Secretary may prescribe) each participant and beneficiary
under the plan of such transfer. Such notice shall include
information with respect to the amount of excess pension assets,
the portion to be transferred, the amount of health benefits
liabilities expected to be provided with the assets transferred,
and the amount of pension benefits of the participant which will
be nonforfeitable immediately after the transfer.
"(2) NOTICE TO SECRETARIES, ADMINISTRATOR, AND EMPLOYEE
ORGANIZATIONS.—

"(A) IN GENERAL.—Not later than 60 days before the date
of any qualified transfer by an employee pension benefit
plan of excess pension assets to a health benefits account,
the employer maintaining the plan from which the transfer
is made shall provide the Secretary, the Secretary of the
Treasury, the administrator, and each employee organization representing participants in the plan a written notice
of such transfer. A copy of any such notice shall be available for inspection in the principal office of the administrator.
"(B) INFORMATION RELATING TO TRANSFER.—Such notice
shall identify the plan from which the transfer is made, the
amount of the transfer, a detailed accounting of assets
projected to be held by the plan immediately before and

PUBLIC LAW 101-508—NOV. 5. 1990

104 STAT. 1388-573

immediately after the transfer, and the current liabilities
under the plan at the time of the transfer.
"(C)

AUTHORITY FOR ADDITIONAL REPORTING REQUIRE-

MENTS.—The Secretary may prescribe such additional
reporting requirements £is may be necessary to carry out
the purposes of this section.
"(3) DEFINITIONS.—For purposes of paragraph (1), any term
used in such paragraph which is also used in section 420 of the
Internal Revenue Code of 1986 (as in effect on January 1, 1991)
shall have the same meaning as when used in such section."
(2) PENALTIES.—

(A) Section 502(cXl) of such Act (29 U.S.C. 1132(cXl)) is
amended by inserting "or section lOl(eXl)" after "section
606".
(B) Section 502(cX3) of such Act (29 U.S.C. 1132(cX3)) is
amended—
(i) by inserting "or who fails to meet the requirements of section 101(eX2) with respect to any person"
after "beneficiary" the first place it appears, and
(ii) by inserting "or to such person" after "beneficiary' the second place it appears,
(e) EFFECTIVE DATE.—The amendments made by this section shall 29 use 1021
apply to qualified transfers under section 420 of the Internal Reve- "°*®nue Code of 1986 made after the date of the enactment of this Act.

Subtitle C—Premium Rates
SEC. 12021. INCREASE IN PREMIUM RATES.
(a) INCREASE IN BASIC PREMIUM.—

(1) I N GENERAL.—Clause (i) of section 4006(aX3)(A) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1306(aX3XA)) is amended by striking ' % r plan years beginning
after December 31, 1987, an gimount equal to the sum of $16'
and inserting "for plan years beginning after December 31,
1990, an amount equal to the sum of $19".
(2) CONFORMING AMENDMENT.—Section 4006(cXlXA) of such
Act (29 U.S.C. 1306(cXlXA)) is amended by adding at the end the
following new clause:
"(iv) with respect to each plan year beginning after
December 31, 1987, and before January 1, 1991, an amount
equal to $16 for each individual who was a participant in
such plan during the plan year, and".
(b) INCREASE IN ADDITIONAL PREMIUM.—Section 4006(aX3)(E) of
such Act (29 U.S.C. 1306(aX3XE)) is amended—
(1) by striking "$6.00" in clause (ii) and inserting "$9.00", and
(2) by striking "$34" in clause (ivXD and inserting "$53".
(c) EFFECTIVE DATE.—The amendments made by this section shall 29 use 1306
apply to plan years beginning after December 31,1990.
^°^-

TITLE XIII—BUDGET ENFORCEMENT

i^Sement
Act of 1990.

SEC. 13001. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE.—This title may be cited as the "Budget Enforce- 2 USC 900 note,
ment Act of 1990".
(b) TABLE OF CONTENTS.—

104 STAT. 1388-574

PUBLIC LAW 101-508—NOV. 5, 1990
TITLE XIII—BUDGET ENFORCEMENT

Subtitle A—Amendments to the Balanced Budget and Emergency Deficit Control
Act of 1985 and Related Amendments
Sec. 13001. Short title; table of contents.
PART I—AMENDMENTS TO THE BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL
ACT OF

1985

Sec. 13101. Sequestration.
PART II—RELATED AMENDMENTS

Sec. 13111. Temporary amendments to the Congressional Budget Act of 1974.
Sec. 13112. Conforming amendments.

Sec.
Sec.
Sec.
Sec.
Sec.

Subtitle B—Permanent Amendments to the Congressional Budget and
Impoundment Control Act of 1974
13201. Credit accounting.
13202. Codification of provision regarding revenue estimates.
13203. Debt increase as measure of deficit; display of Federal Retirement Trust
Fund balances.
13204. Pay-as-you-go procedures.
13205. Amendments to section 303.
13206. Amendments to section 308.
13207. Standardization of language regarding points of order.
13208. Standardization of additional deficit control provisions.
13209. Codification of precedent with regard to conference reports and amendments between Houses.
13210. Superseded deadlines and conforming changes.
13211. Definitions.
13212. Savings transfers between fiscal years.
13213. Conforming change to title 31.
13214. The Byrd Rule on extrfuieous matter in reconciliation.

Sec.
Sec.
Sec.
Sec.

13301.
13302.
13303.
13304.

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

Subtitle C—Social Security
Off-budget status of OASDI trust funds.
Protection of OASDI trust funds in the House of Representatives.
Social Security firewall and point of order in the Senate.
Report to the Congress by the Board of Trustees of the OASDI trust funds
regarding the actuarial balance of the trust funds.
Sec. 13305. Exercise of rulemaking power.
Sec. 13306. Effective date.
Subtitle D—Treatment of Fiscal Year 1991 Sequestration
Sec. 13401. Restoration of funds sequestered.
Subtitle E—Government-Sponsored Enterprises
Sec. 13501. Financial safety and soundness of Government-sponsored enterprises.

Subtitle A—Amendments to the Balanced
Budget and Emergency Deficit Control Act
of 1985 and Related Amendments
PART I—AMENDMENTS TO THE BALANCED
BUDGET AND EMERGENCY DEFICIT CONTROL
ACT OF 1985
SEC. 13101. SEQUESTRATION.

(a) SECTIONS 250 THROUGH 254.—Sections 251 (except for subsection (aX6XI)) through 254 of part C of the Balanced Budget and
Emergency Deficit Control Act of 1985 (2 U.S.C. 901 et seq.) are
amended to read as follows:

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-575

"SEC. 250. TABLE OF CONTENTS; STATEMENT OF BUDGET ENFORCEMENT 2 USC 900.
THROUGH SEQUESTRATION; DEFINITIONS.
"(a) TABLE OF CONTENTS.—
"Sec. 250. Table of contents; budget enforcement statement; definitions.
"Sec. 251. Enforcing discretionary spending limits.
"Sec. 252. Enforcing pay-as-you-go.
"Sec. 253. Enforcing deficit targets.
"Sec. 254. Reports and orders.
"Sec. 255. Exempt programs and activities.
"Sec. 256. Special rules.
"Sec. 257. The baseline.
"Sec. 258. Suspension in the event of war or low growth.
"Sec. 258A. Modification of presidential order.
"Sec. 258B. Alternative defense sequestration.
"Sec. 258C. Special reconciliation process.
"(b) GENERAL STATEMENT OF BUDGET ENFORCEMENT THROUGH

SEQUESTRATION.—This part provides for the enforcement of the
deficit reduction assumed in House Concurrent Resolution 310
(101st Congress, second session) and the applicable deficit targets for
fiscal years 1991 through 1995. Enforcement, as necessary, is to be
implemented through sequestration—
"(1) to enforce discretionary spending levels assumed in that
resolution (with adjustments as provided hereinafter);
"(2) to enforce the requirement that any legislation increasing
direct spending or decreasing revenues be on a pay-as-you-go
basis; and
"(3) to enforce the deficit targets specifically set forth in the
Congressional Budget and Impoundment Control Act of 1974
(with adjustments as provided hereinafter);
applied in the order set forth above.
"(c) DEFINITIONS.—

"As used in this part:
"(1) The terms 'budget authority', 'new budget authority',
'outlays', and 'deficit' have the meanings given to such terms in
section 3 of the Congressional Budget and Impoundment Control Act of 1974 (but including the treatment specified in section
257(b)(3) of the Hospital Insurance Trust Fund) and the terms
'maximum deficit amount' and 'discretionary spending limit'
shall mean the amounts specified in section 601 of that Act as
adjusted under sections 251 and 253 of this Act.
'(2) The terms 'sequester' and 'sequestration' refer to or mean
the cancellation of budgetary resources provided by discretionary appropriations or direct spending law.
"(3) The term 'breach' means, for any fiscal year, the amount
(if any) by which new budget authority or outlays for that year
(within a category of discretionary appropriations) is above that
category's discretionary spending limit for new budget authority or outlays for that year, as the case may be.
"(4) The term 'category' means:
"(A) For fiscal years 1991, 1992, and 1993, any of the
following subsets of discretionary appropriations: defense,
international, or domestic. Discretionary appropriations in
each of the three categories shall be those so designated in
the joint statement of managers accompanying the conference report on the Omnibus Budget Reconciliation Act of
1990. New accounts or activities shall be categorized in
consultation with the Committees on Appropriations and
the Budget of the House of Representatives and the Senate.

104 STAT. 1388-576

PUBLIC LAW 101-508—NOV. 5, 1990

"(B) For fiscal years 1994 and 1995, all discretionary
appropriations.
Contributions to the United States to offset the cost of Operation Desert Shield shall not be counted within any category.
"(5) The term 'baseline' means the projection (described in
section 257) of current-year levels of new budget authority,
outlays, receipts, and the surplus or deficit into the budget year
and the outyears.
"(6) The term 'budgetary resources' means—
"(A) with respect to budget year 1991, new budget authority; unobligated balances; new loan guarantee commitments or limitations; new direct loan obligations,
commitments, or limitations; direct spending authority; and
obligation limitations; or
"(B) with respect to budget year 1992, 1993, 1994, or 1995,
new budget authority; unobligated balances; direct spending authority; and obligation limitations.
"(7) The term 'discretionary appropriations' means budgetary
resources (except to fund direct-spending programs) provided in
appropriation Acts.
"(8) The term 'direct spending' means—
"(A) budget authority provided by law other than appropriation Acts;
"(B) entitlement authority; and
"(C) the food stamp program.
"(9) The term 'current' means, with respect to 0MB estimates
included with a budget submission under section 1105(a) of title
31, United States Code, the estimates consistent with the economic and technical assumptions underlying that budget and
with respect to estimates made after submission of the fiscal
year 1992 budget that are not included with a budget submission, estimates consistent with the economic and technical
assumptions underlying the most recently submitted President's budget.
"(10) The term 'real economic growth', with respect to any
fiscal year, means the growth in the gross national product
during such fiscal year, adjusted for inflation, consistent with
Department of Commerce definitions.
"(11) The term 'account' means an item for which appropriations are made in any appropriation Act and, for items not
provided for in appropriation Acts, such term means an item for
which there is a designated budget account identification code
number in the President's budget.
"(12) The term 'budget year' means, with respect to a session
of Congress, the fiscal year of the Government that starts on
October 1 of the calendar year in which that session begins.
"(13) The term 'current year' means, with respect to a budget
year, the fiscal year that immediately precedes that budget
year.
"(14) The term 'outyear' means, with respect to a budget year,
any of the fiscal years that follow the budget year through fiscal
year 1995.
"(15) The term '0MB' means the Director of the Office of
Management and Budget.
"(16) The term 'CBO' means the Director of the Congressional
Budget Office.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-577

"(17) For purposes of sections 252 and 253, legislation enacted
during the second session of the One Hundred First Congress
shall be deemed to have been enacted before the enactment of
this Act.
"(18) As used in this part, all references to entitlement
authority shall include the list of mandatory appropriations
included in the joint explanatory statement of managers accompanying the conference report on the Omnibus Budget Reconciliation Act of 1990.
"(19) The term 'deposit insurance' refers to the expenses of
the Federal Deposit Insurance Corporation and the funds it
incorporates, the Resolution Trust Corporation, the National
Credit Union Administration and the funds it incorporates, the
Office of Thrift Supervision, the Comptroller of the Currency
Assessment Fund, and the RTC Office of Inspector General.
"(20) The term 'composite outlay rate' means the percent of
new budget authority that is converted to outlays in the fiscal
year for which the budget authority is provided and subsequent
fiscal years, as follows:
"(A) For the international category, 46 percent for the
first year, 20 percent for the second year, 16 percent for the
third year, and 8 percent for the fourth year.
"(B) For the domestic category, 53 percent for the first
year, 31 percent for the second year, 12 percent for the
third year, and 2 percent for the fourth year.
•SEC. 251. ENFORCING DISCRETIONARY SPENDING LIMITS.
"(a) FISCAL YEARS 1991-1995 ENFORCEMENT.—

"(1) SEQUESTRATION.—Within 15 calendar days after Congress
adjourns to end a session and on the same day as a sequestration (if any) under section 252 and section 253, there shall be a
sequestration to eliminate a budget-year breach, if any, within
any category.
"(2) EUMINATING A BREACH.—Each non-exempt account
within a category shall be reduced by a dollar amount calculated by multiplying the baseline level of sequestrable budgetary resources in that account at that time by the uniform
percentage necessary to eliminate a breach within that category; except that the health programs set forth in section
256(e) shall not be reduced by more than 2 percent and the
uniform percent applicable to all other programs under this
paragraph shall be increased (if necessary) to a level sufficient
to eliminate that breach. If, within a category, the discretionary
spending limits for both new budget authority and outlays are
breached, the uniform percentage shall be calculated by—
"(A) first, calculating the uniform percentage necessary
to eliminate the breach in new budget authority, and
"(B) second, if any breach in outlays remains, increasing
the uniform percentage to a level sufficient to eliminate
that breach.
"(3) MILITARY PERSONNEL.—If the President uses the authority
to exempt any military personnel from sequestration under
section 255(h), each account within subfunctional category 051
(other than those military personnel accounts for which the
authority provided under section 255(h) has been exercised)
shall be further reduced by a dollar amount calculated by
multiplying the enacted level of non-exempt budgetary re-

39-194 O - 91 - 32 : QL 3 Part 2

2 USC 901.

104 STAT. 1388-578

PUBLIC LAW 101-508—NOV. 5, 1990

sources in that account at that time by the uniform percentage
necessary to offset the total dollar amount by which outlays are
not reduced in military personnel accounts by reason of the use
of such authority.
"(4) PART-YEAR APPROPRIATIONS.—If, on the date specified in
paragraph (1), there is in effect an Act making or continuing
appropriations for part of a fiscal year for any budget account,
then the dollar sequestration calculated for that account under
paragraphs (2) and (3) shall be subtracted from—
"(A) the annualized amount otherwise available by law in
that account under that or a subsequent part-year appropriation; and
"(B) when a full-year appropriation for that account is
enacted, from the amount otherwise provided by the fullyear appropriation.
"(5) LOOK-BACK.—If, after June 30, an appropriation for the
fiscal year in progress is enacted that causes a breach within a
category for that year (after taking into account any sequestration of amounts within that category), the discretionary spending limits for that category for the next fiscal year shall be
reduced by the amount or amounts of that breach.
"(6) WiTHiN-SESSiON SEQUESTRATION.—If an appropriation for
a fiscal year in progress is enacted (after Congress adjourns to
end the session for that budget year and before July 1 of that
fiscal year) that causes a breach within a category for that year
(after taking into account any prior sequestration of amounts
within that category), 15 days later there shall be a sequestration to eliminate that breach within that category following the
procedures set forth in paragraphs (2) through (4).
"(7) 0MB ESTIMATES.—As soon as practicable after Congress
completes action on any discretionary appropriation, CBO, after
consultation with the Committees on the Budget of the House of
Representatives and the Senate, shall provide OMB with an
estimate of the amount of discretionary new budget authority
and outlays for the current year (if any) and the budget year
provided by that legislation. Within 5 calendar days after the
enactment of any discretionary appropriation, OMB shall transmit a report to the House of Representatives and to the Senate
containing the CBO estimate of that legislation, an OMB estimate of the amount of discretionary new budget authority and
outlays for the current year (if any) and the budget year provided by that legislation, and an explanation of any difference
between the two estimates. For purposes of this paragraph,
amounts provided by annual appropriations shall include any
new budget authority and outlays for those years in account^
for which funding is provided in that legislation that result
from previously enacted legislation. Those OMB estimates shall
be made using current economic and technical assumptions.
OMB shall use the OMB estimates transmitted to the Congress
under this paragraph for the purposes of this subsection. OMB
and CBO shall prepare estimates under this paragraph in
conformance with scorekeeping guidelines determined after
consultation among the House and Senate Committees on the
Budget, CBO, and OMB.
"(b) ADJUSTMENTS TO DISCRETIONARY SPENDING LIMITS.—(1) When
the President submits the budget under section 1105(a) of title 31,
United States Code, for budget year 1992, 1993, 1994, or 1995 (except

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-579

as otherwise indicated), OMB shall calculate (in the order set forth
below), and the budget shall include, adjustments to discretionary
spending limits (and those limits as cumulatively adjusted) for the
budget year and each outyear through 1995 to reflect the following:
"(A) CHANGES IN CONCEPTS AND DEFINITIONS.—The adjustments produced by the amendments made by title XIII of the
Omnibus Budget Reconciliation Act of 1990 or by any other
changes in concepts and definitions shall equal the baseline
levels of new budget authority and outlays using up-to-date
concepts and definitions minus those levels using the concepts
and definitions in effect before such changes. Such other
changes in concepts and definitions may only be made in consultation with the Committees on Appropriations, the Budget,
Government Operations, and Governmental Affairs of the
House of Representatives and Senate.
"(B) CHANGES IN INFLATION.—(i) For a budget submitted for
budget year 1992, 1993, 1994, or 1995, the adjustments produced
by changes in inflation shall equal the levels of discretionary
new budget authority and outlays in the baseline (calculated
using current estimates) subtracted from those levels in that
baseline recalculated with the baseline inflators for the budget
year only, multiplied by the inflation adjustment factor computed under clause (ii).
"(ii) For a budget year the inflation adjustment factor shall
equal the ratio between the level of year-over-year inflation
measured for the fiscal year most recently completed and the
applicable estimated level for that year set forth below:
"For 1990,1.041
"For 1991,1.052
"For 1992,1.041
"For 1993,1.033
Inflation shall be measured by the average of the estimated
gross national product implicit price deflator index for a fiscal
year divided by the average index for the prior fiscal year.
"(C) CREDIT REESTIMATES.—For a budget submitted for fiscal
year 1993 or 1994, the adjustments produced by reestimates to
costs of Federal credit programs shall be, for any such program,
a current estimate of new budget authority and outlays £issociated with a baseline projection of the prior year's gross loan
level for that program minus the baseline projection of the prior
year's new budget authority and associated outlays for that
program.
"(2) When OMB submits a sequestration report under section
254(g) or (h) for fiscal year 1991, 1992, 1993, 1994, or 1995 (except as
otherwise indicated), OMB shall calculate (in the order set forth
below), and the sequestration report, and subsequent budgets
submitted by the President under section 1105(a) of title 31, United
States Code, shall include, adjustments to discretionary spending
limits (and those limits as adjusted) for the fiscgd year and each
succeeding year through 1995, as follows:
"(A) IRS FUNDING.—To the extent that appropriations are
enacted that provide additional new budget authority or result
in additional outlays (as compared with the CBO baseline constructed in June 1990) for the Internal Revenue Service compliance initiative in any fiscal year, the adjustments for that year
shall be those amounts, but shall not exceed the amounts set
forth below—

104 STAT. 1388-580

PUBLIC LAW 101-508—NOV. 5, 1990

"(i) for fiscal year 1991, $191,000,000 in new budget
authority and $183,000,000 in outlays;
"(ii) for fiscal year 1992, $172,000,000 in new budget
authority and $169,000,000 in outlays;
"(iii) for fiscal year 1993, $183,000,000 in new budget
authority and $179,000,000 in outlays;
"(iv) for fiscal year 1994, $187,000,000 in new budget
authority and $183,000,000 in outlays; and
"(v) for fiscal year 1995, $188,000,000 in new budget
authority and $184,000,000 in outlays; and
the prior-year outlays resulting from these appropriations of
budget authority.
"(B) DEBT FORGIVENESS.—If, in calendar year 1990 or 1991, an
appropriation is enacted that forgives the Arab Republic of
Egypt s foreign military sales indebtedness to the United States
and any part of the Government of Poland's indebtedness to the
United States, the adjustment shall be the estimated costs (in
new budget authority and outlays, in all years) of that
forgiveness.
'XC) IMF FUNDING.—If, in fiscal year 1991,1992,1993,1994, or
1995 an appropriation is enacted to provide to the International
Monetary Fund the dollar equivalent, in terms of Special Drawing Rights, of the increase in the United States quota as part of
the International Monetary Fund Ninth General Review of
Quotas, the adjustment shall be the amount provided by that
appropriation.
(D) EMERGENCY APPROPRIATIONS.—(i) If, for fiscal year 1991,
1992, 1993, 1994, or 1995, appropriations for discretionary accounts are enacted that the President designates as emergency
requirements and that the Congress so designates in statute, the
adjustment shall be the total of such appropriations in discretionary accounts designated as emergency requirements and the
outlays flowing in all years from such appropriations.
"(ii) The costs for operation Desert Shield are to be treated as
emergency funding requirements not subject to the defense
spending limits. Funding for Desert Shield will be provided
through the normal legislative process. Desert Shield costs
should be accommodated through Allied burden-sharing, subsequent appropriation Acts, and if the President so chooses,
through offsets within other defense accounts. Emergency
Desert Shield costs mean those incremental costs associated
with the increase in operations in the Middle East and do not
include costs that would be experienced by the Department of
Defense as part of its normal operations absent Operation
Desert Shield.
"(E)

SPECIAL ALLOWANCE FOR DISCRETIONARY NEW BUDGET

AUTHORITY.—(i) For each pf fiscal years 1992 and 1993, the
adjustment for the domestic category in each year shall be an
amount equal to 0.1 percent of the sum of the adjusted discretionary spending limits on new budget authority for all categories for fiscal years 1991, 1992, and 1993 (cumulatively),
together with outlays associated therewith (calculated at the
composite outlay rate for the domestic category);
"(ii) for each of fiscal years 1992 and 1993, the adjustment
for the international category in each year shall be an amount
equal to 0.079 percent of the sum of the adjusted discretionary
spending limits on new budget authority for all categories for

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-581

fiscal years 1991, 1992, and 1993 (cumulatively), together with
outlays associated therewith (calculated at the composite outlay
rate for the international category); and
"(iii) if, for fiscal years 1992 and 1993, the amount of new
budget authority provided in appropriation Acts exceeds the
discretionary spending limit on new budget authority for any
category due to technical estimates made by the Director of the
Office of Management and Budget, the adjustment is the
amount of the excess, but not to exceed an amount (for 1992 and
1993 together) equal to 0.042 percent of the sum of the adjusted
discretionary limits on new budget authority for all categories
for fiscal years 1991,1992, and 1993 (cumulatively).
"(F) SPECIAL OUTLAY ALLOWANCE.—If in any fiscal year outlays for a category exceed the discretionary spending limit for
that category but new budget authority does not exceed its limit
for that category (after application of the first step of a sequestration described in subsection (a)(2), if necessary), the adjustment in outlays is the amount of the excess, but not to exceed
$2,500,000,000 in the defense category, $1,500,000,000 in the
international category, or $2,500,000,000 in the domestic category (as applicable) in fiscal year 1991,1992, or 1993, and not to
exceed $6,500,000,000 in fiscal year 1994 or 1995 less any of the
outlay adjustments made under subparagraph (E) for a category
for a fiscal year.
"SEC. 252. ENFORCING PAY-AS-YOU-GO.

"(a) FISCAL YEARS 1992-1995 ENFORCEMENT.—The purpose of this
section is to assure that any legislation (enacted after the date of
enactment of this section) affecting direct spending or receipts that
increases the deficit in any fiscal year covered by this Act will
trigger an offsetting sequestration.
(b) SEQUESTRATION; LOOK-BACK.—Within 15 calendar days after
Congress adjourns to end a session (other than of the One Hundred
First Congress) and on the same day as a sequestration (if any)
under section 251 and section 253, there shall be a sequestration to
offset the amount of any net deficit increase in that fiscal year and
the prior fiscal year caused by all direct spending and receipts
legislation enacted after the date of enactment of this section (after
adjusting for any prior sequestration as provided by paragraph (2)).
OMB shall calculate the amount of deficit increase, if any, in those
fiscal years by adding—
"(1) all applicable estimates of direct spending and receipts
legislation transmitted under subsection (d) applicable to those
fiscal years, other than any amounts included in such estimates
resulting from—
"(A) full funding of, and continuation of, the deposit
insurance guarantee commitment in effect on the date of
enactment of this section, and
"(B) emergency provisions as designated under subsection
(e); and
"(2) the estimated amount of savings in direct spending programs applicable to those fiscal years resulting from the prior
year's sequestration under this section or section 253, if any
(except for any amounts sequestered as a result of a net deficit
increase in the fiscal year immediately preceding the prior
fiscal year), as published in OMB's end-of-session sequestration
report for that prior year.

2 USC 902.

104 STAT. 1388-582

PUBLIC LAW 101-508—NOV. 5, 1990

"(c) ELIMINATING A DEFICIT INCREASE.—(1) The amount required to
be sequestered in a fiscal year under subsection (b) shall be obtained
from non-exempt direct spending accounts from actions taken in the
following order:
"(A) FIRST.—All reductions in automatic spending increases
specified in section 256(a) shall be made.
"(B) SECOND.—If additional reductions in direct spending accounts are required to be made, the maximum reductions
permissible under sections 256(b) (guaranteed student loans)
and 256(c) (foster care and adoption assistance) shall be made.
"(C) THIRD.—(i) If additional reductions in direct spending
accounts are required to be made, each remaining non-exempt
direct spending account shall be reduced by the uniform
percentage necessary to make the reductions in direct spending
required by paragraph (1); except that the medicare programs
specified in section 256(d) shall not be reduced by more than 4
percent and the uniform percentage applicable to all other
direct spending programs under this paragraph shall be increased (if necessary) to a level sufficient to achieve the required
reduction in direct spending.
"(ii) For purposes of determining reductions under clause (i),
outlay reductions (as a result of sequestration of Commodity
Credit Corporation commodity price support contracts in the
fiscal year of a sequestration) that would occur in the following
fiscal year shall be credited as outlay reductions in the fiscal
year of the sequestration.
"(2) For purposes of this subsection, accounts shall be assumed to
be at the level in the baseline.
"(d) 0MB ESTIMATES.—As soon as practicable after Congress completes action on any direct spending or receipts legislation enacted
after the date of enactment of this section, after consultation with
the Committees on the Budget of the House of Representatives and
the Senate, CBO shall provide 0MB with an estimate of the amount
of change in outlays or receipts, as the case may be, in each fiscal
year through fiscal year 1995 resulting from that legislation. Within
5 calendar days after the enactment of any direct spending or
receipts legislation enacted after the date of enactment of this
section, 0MB shall transmit a report to the House of Representatives and to the Senate containing such CBO estimate of that
legislation, an 0MB estimate of the amount of change in outlays or
receipts, as the case may be, in each fiscal year through fiscal year
1995 resulting from that legislation, and an explanation of any
difference between the two estimates. Those CMB estimates shall be
made using current economic and technical assumptions. 0MB and
CBO shall prepare estimates under this paragraph in conformance
with scorekeeping guidelines determined after consultation among
the House and Senate Committees on the Budget, CBO, and 0MB.
"(e) EMERGENCY LEGISLATION.—If, for fiscal year 1991, 1992, 1993,
1994, or 1995, a provision of direct spending or receipts legislation is
enacted that the President designates as an emergency requirement
and that the Congress so designates in statute, the amounts of new
budget authority, outlays, and receipts in all fiscal years through
1995 resulting from that provision shall be designated as an emergency requirement in the reports required under subsection (d).

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-583

"SEC. 253. ENFORCING DEFICIT TARGETS.

"(a) SEQUESTRATION.—Within 15 calendar days after Congress
adjourns to end a session (other than of the One Hundred First
Congress) and on the same day as a sequestration (if any) under
section 251 and section 252, but after any sequestration required by
section 251 (enforcing discretionary spending limits) or section 252
(enforcing pay-as-you-go), there shall be a sequestration to eliminate
the excess deficit (if any remains) if it exceeds the margin.
"(b) EXCESS DEFICIT; MARGIN.—The excess deficit is, if greater
than zero, the estimated deficit for the budget year, minus—
"(1) the maximum deficit amount for that year;
"(2) the amounts for that year designated as emergency direct
spending or receipts legislation under section 252(e); £uid
"(3) for any fiscal year in which there is not a full adjustment
for technical and economic reestimates, the deposit insurance
reestimate for that year, if any, calculated under subsection (h).
The 'margin' for fiscal year 1992 or 1993 is zero and for fiscal year
1994 or 1995 is $15,000,000,000.
"(c) DIVIDING THE SEQUESTRATION.—To eliminate the excess deficit
in a budget year, half of the required outlay reductions shall be
obtained from non-exempt defense accounts (accounts designated as
function 050 in the President's fiscal year 1991 budget submission)
and half from non-exempt, non-defense accounts (all other nonexempt accounts).
"(d) DEFENSE.—Each non-exempt defense account shall be reduced
by a dollar amount calculated by multipljdng the level of
sequestrable budgetary resources in that account at that time by the
uniform percentage necessary to carry out subsection (c), except
that, if any military personnel are exempt, adjustments shall be
made under the procedure set forth in section 251(a)(3).
"(e) NON-DEFENSE.—Actions to reduce non-defense accounts shall
be taken in the following order:
"(1) FIRST.—All reductions in automatic spending increases
under section 256(a) shall be made.
"(2) SECOND.—If additional reductions in non-defense accounts are required to be made, the maximum reduction
permissible under sections 256(b) (guaranteed student loans)
and 256(c) (foster care and adoption assistance) shall be made.
"(3) THIRD.—(A) If additional reductions in non-defense accounts are required to be made, each remaining non-exempt,
non-defense account shall be reduced by the uniform percentage
necessary to make the reductions in non-defense outlays required by subsection (c), except that—
"(i) the medicare program specified in section 256(d) shall
not be reduced by more than 2 percent in total including
any reduction of less than 2 percent made under section 252
or, if it has been reduced by 2 percent or more under section
252, it may not be further reduced under this section; and
"(ii) the health programs set forth in section 256(e) shall
not be reduced by more than 2 percent in total (including
any reduction made under section 251),
and the uniform percent applicable to all other programs under
this subsection shall be increased (if necessary) to a level sufficient to achieve the required reduction in non-defense outlays.
"(B) For purposes of determining reductions under subparagraph (A), outlay reduction (as a result of sequestration of

2 USC 903.

104 STAT. 1388-584

PUBLIC LAW 101-508—NOV. 5, 1990

Commodity Credit Corporation commodity price support contracts in the fiscal year of a sequestration) that would occur in
the following fiscal year shall be credited as outlay reductions in
the fiscal year of the sequestration.
"(f) BASELINE ASSUMPTIONS; PART-YEAR APPROPRIATIONS.—
"(1) BUDGET ASSUMPTIONS.—For purposes of subsections

(b),
(c), (d), and (e), accounts shall be assumed to be at the level in
the baseline minus any reductions required to be made under
sections 251 and 252.
"(2) PART-YEAR APPROPRIATIONS.—If, on the date specified in
subsection (a), there is in effect an Act making or continuing
appropriations for part of a fiscal year for any non-exempt
budget account, then the dollar sequestration calculated for
that account under subsection (d) or (e), as applicable, shall be
subtracted from—
"(A) the annualized amount otherwise available by law in
that account under that or a subsequent part-year appropriation; and
"(B) when a full-year appropriation for that account is
enacted, from the amount otherwise provided by the fullyear appropriation; except that the amount to be sequestered from that account shall be reduced (but not below
zero) by the savings achieved by that appropriation when
the enacted amount is less than the baseline for that
account.

"(g) ADJUSTMENTS TO MAXIMUM DEFICIT AMOUNTS.—
"(1) ADJUSTMENTS.—

"(A) When the President submits the budget for fiscal
year 1992, the maximum deficit amounts for fiscal years
1992, 1993, 1994, and 1995 shall be adjusted to reflect up-todate reestimates of economic and technical assumptions
and any changes in concepts or definitions. When the President submits the budget for fiscal year 1993, the maximum
deficit amounts for fiscal years 1993,1994, and 1995 shall be
further adjusted to reflect up-to-date reestimates of economic and technical assumptions and any changes in concepts or definitions.
(B) When submitting the budget for fiscal year 1994, the
President may choose to adjust the maximum deficit
amounts for fiscal years 1994 and 1995 to reflect up-to-date
reestimates of economic and technical assumptions. If the
President chooses to adjust the maximum deficit amount
when submitting the fiscal year 1994 budget, the President
may choose to invoke the same adjustment procedure when
submitting the budget for fiscal year 1995. In each case, the
President must choose between making no adjustment or
the full adjustment described in paragraph (2). If the President chooses to make that full adjustment, then those
procedures for adjusting discretionary spending limits described in sections 251(b)(lXC) and 251(b)(2XE), otherwise
applicable through fiscal year 1993 or 1994 (as the case may
be), shall be deemed to apply for fiscal year 1994 (and 1995
if applicable).
"(C) When the budget for fiscal year 1994 or 1995 is
submitted and the sequestration reports for those years
under section 254 are made (as applicable), if the President
does not choose to make the adjustments set forth in

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-585

subparagraph (B), the maximum deficit amount for that
fiscal year shall be adjusted by the amount of the adjustment to discretionary spending limits first applicable for
that year (if any) under section 251(b).
"(D) For each fiscal year the adjustments required to be
made with the submission of the President's budget for that
year shall also be made when 0MB submits the sequestration update report and the final sequestration report for
that year, but OMB shall continue to use the economic and
technical assumptions in the President's budget for that
year.
Each adjustment shall be made by increasing or decreasing the
maximum deficit amounts set forth in section 601 of the
Congressional Budget Act of 1974.
"(2) CALCULATIONS OF ADJUSTMENTS.—The required incresise

or decrease shall be calculated as follows:
"(A) The baseline deficit or surplus shall be calculated
using up-to-date economic and technical assumptions, using
up-to-date concepts and definitions, and, in lieu of the
baseline levels of discretionary appropriations, using the
discretionary spending limits set forth in section 601 of the
Congressional Budget Act of 1974 as adjusted under section
251.
"(B) The net deficit increase or decrease caused by all
direct spending and receipts legislation enacted after the
date of enactment of this section (after adjusting for £iny
sequestration of direct spending accounts) shall be calculated for each fiscal year by adding—
"(i) the estimates of direct spending and receipts
legislation transmitted under section 252(d) applicable
to each such fiscal year; and
"(ii) the estimated amount of savings in direct spending programs applicable to each such fiscal year resulting from the prior year's sequestration under this
section or section 252 of direct spending, if any, as
contained in OMB's final sequestration report for that
year.
"(C) The amount calculated under subparagraph (B) shedl
be subtracted from the amount calculated under subparagraph (A).
"(D) The maximum deficit amount set forth in section 601
of the Congressional Budget Act of 1974 shall be subtracted
from the amount calculated under subparagraph (C).
"(E) The amount calculated under subparagraph (D) shall
be the amount of the adjustment required by paragraph (1).
'(h) TREATMENT OF DEPOSIT INSURANCE.—
"(1) INITIAL ESTIMATES.—The initial estimates

of the net costs
of federal deposit insurance for fiscal year 1994 and fiscal year
1995 (assuming full funding of, and continuation of, the deposit
insurance guarantee commitment in effect on the date of the
submission of the budget for fiscal year 1993) shall be set forth
in that budget.
"(2) REESTIMATES.—For fiscal year 1994 and fiscal year 1995,
the amount of the reestimate of deposit insurance costs shall be
calculated by subtracting the amount set forth under paragraph
(1) for that year from the current estimate of deposit insurance
costs (but assuming full funding of, and continuation of, the

104 STAT. 1388-586

PUBLIC LAW 101-508—NOV. 5, 1990

deposit insurance guarantee commitment in effect on the date
of submission of the budget for fiscal year 1993).
2 u s e 904.

"SEC. 254. REPORTS AND ORDERS.

"(a) TIMETABLE.—The timetable with respect to this part for any
budget year is as follows:
"Date:
January 21

Action to be completed:
Notification regarding optional adjustment of maximum deficit amount.
5 days before the President's budget
CBO sequestration preview report,
submission.
The President's budget submission....
0MB sequestration preview report.
August 10
Notification regarding military personnel.
August 15
CBO sequestration update report.
August 20
OMB sequestration update report.
10 days after end of session
CBOfinalsequestration report.
15 days after end of session
OMB final sequestration report; Presidential order.
30 days later
GAO compliance report.
"(b) SUBMISSION AND AVAILABILITY OF REPORTS.—Each report re-

quired by this section shall be submitted, in the case of CBO, to the
House of Representatives, the Senate and OMB and, in the case of
OMB, to the House of Representatives, the Senate, and the President on the day it is issued. On the following day a notice of the
report shall be printed in the Federal Register.
(c) OPTIONAL ADJUSTMENT OF MAXIMUM DEFICIT AMOUNTS.—

With respect to budget year 1994 or 1995, on the date specified in
subsection (a) the President shall notify the House of Representatives and the Senate of his decision regarding the optional adjustment of the maximum deficit amount (as allowed under section
253(g)(1)(B)).
"(d) SEQUESTRATION PREVIEW REPORTS.—
"(1) REPORTING REQUIREMENT.—On

the dates specified in
subsection (a), OMB and CBO shall issue a preview report
regarding discretionary, pay-as-you-go, and deficit sequestration
based on laws enacted through those dates.
"(2) DISCRETIONARY SEQUESTRATION REPORT.—The preview re-

ports shall set forth estimates for the current year and each
subsequent year through 1995 of the applicable discretionary
spending limits for each category and an explanation of any
adjustments in such limits under section 251.
(3) PAY-AS-YOU-GO SEQUESTRATION REPORTS.—The preview re-

ports shall set forth, for the current year and the budget year,
estimates for each of the following:
"(A) The amount of net deficit increase or decrease, if
any, calculated under subsection 252(b).
(B) A list identifying each law enacted and sequestration
implemented after the date of enactment of this section
included in the calculation of the amount of deficit increase
or decrease and specifying the budgetary effect of each such
law.
"(C) The sequestration percentage or (if the required
sequestration percentage is greater than the maximum
allowable percentage for medicare) percentages necessary
to eliminate a deficit increase under section 252(c).
"(4) DEFICIT SEQUESTRATION REPORTS.—The preview reports

shall set forth for the budget year estimates for each of the
following:

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-587

"(A) The maximum deficit amount, the estimated deficit
calculated under section 253(b), the excess deficit, and the
margin.
"(B) The amount of reductions required under section
252, the excess deficit remaining after those reductions
have been made, and the amount of reductions required
from defense accounts and the reductions required from
non-defense accounts.
"(C) The sequestration percentage necessary to achieve
the required reduction in defense accounts under section
253(d).
"(D) The reductions required under sections 253(eXl) and
253(e)(2).
"(E) The sequestration percentage necessary to achieve
the required reduction in non-defense accounts under section 253(e)(3).
The CBO report need not set forth the items other than the
maximum deficit amount for fiscal year 1992, 1993, or any fiscal
year for which the President notifies the House of Representatives and the Senate that he will adjust the maximum deficit
amount under the option under section 253(g)(1)(B).
"(5) EXPLANATION OF DIFFERENCES.—The 0MB reports shall
explain the differences between 0MB and CBO estimates for
each item set forth in this subsection.
"(e)

NOTIFICATION REGARDING MIUTARY

PERSONNEL.—On

or

before the date specified in subsection (a), the President shall notify
the Congress of the manner in which he intends to exercise flexibility with respect to military personnel accounts under section 255(h).
"(f) SEQUESTRATION UPDATE REPORTS.—On the dates specified in
subsection (a), 0MB and CBO shall issue a sequestration update
report, reflecting laws enacted through those dates, containing all of
the information required in the sequestration preview reports.
"(g) FINAL SEQUESTRATION REPORTS.—
"(1) REPORTING REQUIREMENT.—On

the dates specified in
subsection (a), 0MB and CBO shall issue a final sequestration
report, updated to reflect laws enacted through those dates.
"(2) DISCRETIONARY SEQUESTRATION REPORTS.—The final reports shall set forth estimates for each of the following:
"(A) For the current year and each subsequent year
through 1995 the applicable discretionary spending limits
for each category and an explanation of any adjustments in
such limits under section 251.
"(B) For the current year and the budget year the estimated new budget authority and outlays for each category
and the breach, if any, in each category.
"(C) For each category for which a sequestration is required, the sequestration percentages necessary to achieve
the required reduction.
"(D) For the budget year, for each account to be sequestered, estimates of the baseline level of sequestrable budgetary resources and resulting outlays and the amount of
budgetary resources to be sequestered and resulting outlay
reductions.
"(3) PAY-AS-YOU-GO AND DEFICIT SEQUESTRATION REPORTS.—The

final reports shall contain all the information required in the
pay-as-you-go and deficit sequestration preview reports. In addition, these reports shall contain, for the budget year, for each

*

104 STAT. 1388-588

PUBLIC LAW 101-508—NOV. 5, 1990

account to be sequestered, estimates of the baseline level of
sequestrable budgetary resources and resulting outlays and the
amount of budgetary resources to be sequestered and resulting
outlay reductions. The reports shall also contain estimates of
the effects on outlays of the sequestration in each outyear
through 1995 for direct spending programs.
"(4) EXPLANATION OF DIFFERENCES.—The 0MB report shall
explain any differences between OMB and CBO estimates of the
amount of any net deficit change calculated under subsection
252(b), any excess deficit, any breach, and any required sequestration percentage. The OMB report shall also explain differences in the amount of sequesterable resources for any
budget account to be reduced if such difference is greater than
$5,000,000.
"(5) PRESIDENTIAL ORDER.—On the date specified in subsection
(a), if in its final sequestration report OMB estimates that any
sequestration is required, the President shall issue an order
fully implementing without change all sequestrations required
by the OMB calculations set forth in that report. This order
shall be effective on issuance.
"(h) WITHIN-SESSION SEQUESTRATION REPORTS AND ORDER.—If an

appropriation for a fiscal year in progress is enacted (after Congress
adjourns to end the session for that budget year and before July 1 of
that fiscal year) that causes a breach, 10 days later CBO shall issue a
report containing the information required in paragraph (gX2). Fifteen days after enactment, OMB shall issue a report containing the
information required in paragraphs (g)(2) and (gX4). On the same
day as the OMB report, the President shall issue an order fully
implementing without change all sequestrations required by the
OMB calculations set forth in that report. This order shall be
effective on issuance.
"(i) GAO COMPUANCE REPORT.—On the date specified in subsection (a), the C!omptroller General shall submit to the Congress and
the President a report on—
"(1) the extent to which each order issued by the President
under this section complies with all of the requirements contained in this part, either certifying that the order fully and
accurately complies with such requirements or indicating the
respects in which it does not; and
"(2) the extent to which each report issued by OMB or CBO
under this section complies with all of the requirements contained in this part, either certifying that the report fully and
accurately complies with such requirements or indicating the
respects in which it does not.
"(j) LOW-GROWTH REPORT.—At any time, CBO shall notify the
Congress if—
"(1) during the period consisting of the quarter during which
such notification is given, the quarter preceding such notification, and the 4 quarters following such notification, CBO or
OMB has determined that real economic growth is projected or
estimated to be less than zero with respect to each of any 2
consecutive quarters within such period; or
"(2) the most recent of the Department of Commerce's advance preliminary or final reports of actual real economic
growth indicate that the rate of real economic growth for each
of the most recently reported quarter and the immediately
preceding quarter is less than one percent.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-589

"(k) ECONOMIC AND TECHNICAL ASSUMPTIONS.—In all reports required by this section, 0MB shall use the same economic and
technical assumptions as used in the most recent budget submitted
by the President under section 1105(a) of title 31, United States
Code.".
Ob) SECTION 250: DEFINITIONS.—Paragraph (12) of section 257 of

such Act (as in effect immediately before the date of enactment of 2 USC 900,907.
this Act) is redesignated as a new paragraph (21) of section 250(c).
(c) SECTION 255: EXEMPT PROGRAMS AND ACTIVITIES.—

(1) Section 255(a) of such Act is amended to read as follows: 2 USC 905.
"(a) SOCIAL SECURITY BENEFITS AND TIER I RAILROAD RETIREMENT

BENEFITS.—Benefits payable under the old-age, survivors, and
disability insursince program established under title II of the Social
Security Act, and benefits payable under section 3(a), 3(fX3), 4(a), or
4(f) of the Railroad Retirement Act of 1974, shall be exempt from
reduction under any order issued under this part.".
(2) Section 255(e) of such Act is amended to read as follows:
"(e) NON-DEFENSE UNOBLIGATED BALANCES.—Unobligated balances of budget authority carried over from prior fiscal years, except
balances in the defense category, shall be exempt from reduction
under any order issued under this part.".
(3) Section 255(gXl)(B) of such Act is amended by inserting
after the item relating to Railroad retirement tier II the
following:
"Railroad supplemental annuity pension fund (60-8012-0-7602);".
(4) Section 255 of such Act is amended by inserting at the end
the following:
"(h) OPTIONAL EXEMPTION OF MILITARY PERSONNEL.—

"(1) The President may, with respect to any military personnel account, exempt that account from sequestration or provide
for a lower uniform percentage reduction than would otherwise
apply.
(2) The President may not use the authority provided by
paragraph (1) unless he notifies the C!ongress of the manner in
which such authority will be exercised on or before the initial
snapshot date for the budget year.".
(d) SECTION 256: EXCEPTIONS, LIMITATIONS, AND SPECIAL RULES.—

(1) Section 256(a) of such Act is amended to read as follows: 2 USC 906.
"(a) AUTOMATIC SPENDING INCREASES.—Automatic spending increases are increases in outlays due to changes in indexes in the
following programs:
"(1) National Wool Act;
"(2) Special milk program; and
"(3) Vocational rehabilitation basic State grants.
In those programs all amounts other than the automatic spending
increases shall be exempt from reduction under any order issued
under this part.".
(2) Section 256 of such Act is amended by redesignating
subsection (b) as subsection (h), subsection (c) as subsection (b),
subsection (e) as subsection (f), subsection (f) as subsection (c),
subsection (h) as subsection (i), and subsection (k) as subsection
(e), by repealing subsections (i) and (1), and by inserting at the
end the following:
"(k) SPECIAL RULES FOR THE JOBS PORTION OF A F D C . —
"(1) FULL AMOUNT OF SEQUESTRATION REQUIRED.—Any order
issued by the President under section 254 shall accomplish the

104 STAT. 1388-590

PUBLIC LAW 101-508—NOV. 5, 1990

full amount of any required sequestration of the job opportunities and basic skills training program under section 402(a)(19),
and part F of title VI, of the Social Security Act, in the manner
specified in this subsection. Such an order may not reduce any
Federal matching rate pursuant to section 403(1) of the Social
Security Act.
"(2) N E W ALXOTMENT FORMULA.—
"(A) GENERAL RULE.—Notwithstanding section 403(k) of

the Social Security Act, each State's percentage share of the
amount available after sequestration for direct spending
pursuant to section 403(1) of such Act for the fiscal year to
which the sequestration applies shall be equal to—
"(i) the lesser of—
"(I) that percentage of the total amount paid to
the States pursuant to such section 403(1) for the
prior fiscal year that is represented by the amount
paid to such State pursuant to such section 403(1)
for the prior fiscal year; or
"(II) the amount that would have been allotted to
such State pursuant to such section 403(k) had the
sequestration not been in effect.
"(B) REALLOTMENT OF AMOUNTS REMAINING UNALLOTTED

AFTER APPUCATION OF GENERAL RULE.—Any amount made
available after sequestration for direct spending pursuant
to section 403(1) of the Social Security Aot for the fiscal year
to which the sequestration applies that remains unallotted
as a result of subparagraph (A) of this paragraph shall be
allotted among the States in proportion to the absolute
difference between the amount allotted, respectively, to
each State as a result of such subparagraph and the amount
that would have been allotted to such State pursuant to
section 403(k) of such Act had the sequestration not been in
effect, except that a State may not be allotted an amount
under this subparagraph that results in a total allotment to
the State under this paragraph of more than the amount
that would have been allotted to such State pursuant to
such section 403(k) had the sequestration not been in effect.
"(1) EFFECTS OF SEQUESTRATION.—The effects of sequestration shall
be as follows:
"(1) Budgetary resources sequestered from any account other
than a trust or special fund account shall be permanently
cancelled.
"(2) Except as otherwise provided, the same percentage
sequestration shall apply to EQI programs, projects, and activities within a budget account (with programs, projects, and
activities as delineated in the appropriation Act or accompanying report for the relevant fiscal year covering that account, or
for accounts not included in appropriation Acts, as delineated in
the most recently submitted President's budget).
"(3) Administrative regulations or similar actions implementing a sequestration shall be made within 120 days of the sequestration order. To the extent that formula allocations differ at
different levels of budgetary resources within an account, program, project, or activity, the sequestration shall be interpreted
as producing a lower total appropriation, with the remaining
amount of the appropriation being obligated in a manner
consistent with program allocation formulas in substantive law.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-591

"(4) Except as otherwise provided, obligations in sequestered
accounts shall be reduced only in the fiscal year in which a
sequester occurs.
"(5) If an automatic spending increase is sequestered, the
increase (in the applicable index) that was disregarded as a
result of that sequestration shall not be taken into account in
any subsequent fiscal year.
"(6) Except as otherwise provided, sequestration in trust and
special fund accounts for which obligations are indefinite shall
be taken in a manner to ensure that obligations in the fiscal
year of a sequestration are reduced, from the level that
would actually have occurred, by the applicable sequestration
percentage.".
(3) Section 256 of such Act is amended by striking "section 2 USC 906.
252" each place it appears and by inserting "section 254".
(4) Section 256(c) (as redesignated) of such Act is amended by
inserting after the first sentence the following: "No State's
matching pajrments from the Federal Government for foster
care maintenance payments or for adoption assistance maintenance payments may be reduced by a percentage exceeding the
applicable domestic sequestration percentage.".
(5) Section 256(dXl) of such Act is amended to read as follows:
"(1)

CALCULATION OF REDUCTION IN INDIVIDUAL PAYMENT

AMOUNTS.—To achieve the total percentage reduction in those
programs required by sections 252 and 253, and notwithstanding
section 710 of the Social Security Act, 0MB shall determine,
and the applicable Presidential order under section 254 shall
implement, the percentage reduction that shall apply to payments under the health insurance programs under title XVIII
of the Social Security Act for services furnished after the order
is issued, such that the reduction made in payments under that
order shall achieve the required total percentage reduction in
those payments for that fiscal year as determined on a 12-month
bdsis
(6) Section 256(d)(2)(C) of such Act is repealed.
(e) THE BASELINE.—(1) Section 257 of such Act is amended to read 2 USC 907.
as follows:
"SEC. 257. THE BASELINE.

"(a) I N GENERAL.—For any budget year, the baseline refers to a
projection of current-year levels of new budget authority, outlays,
revenues, and the surplus or deficit into the budget year and the
outyears based on laws enacted through the applicable date.
"(b) DIRECT SPENDING AND RECEIPTS.—For the budget year and
each outyear, the baseline shall be calculated using the following
assumptions:
"(1) IN GENERAL.—Laws providing or creating direct spending
and receipts are assumed to operate in the manner specified in
those laws for each such year and funding for entitlement
authority is assumed to be adequate to make all payments
required by those laws.
"(2) EXCEPTIONS.—(A) No program with estimated currentyear outlays greater than $50 million shall be assumed to expire
in the budget year or outyears.
"(B) The increase for vetersuis' compensation for a fiscal year
is assumed to be the same as that required by law for veterans'

/
/
/
/
/
/

104 STAT. 1388-592

PUBLIC LAW 101-508—NOV. 5, 1990

pensions unless otherwise provided by law enacted in that
session.
"(C) Excise taxes dedicated to a trust fund, if expiring, are
assumed to be extended at current rates.
"(3) HOSPITAL INSURANCE TRUST FUND.—Notwithstanding any

other provision of law, the receipts and disbursements of the
Hospital Insurance Trust Fund shall be included in all calculations required by this Act.
"(c) DISCRETIONARY APPROPRIATIONS.—For the budget year and
each outyear, the baseline shall be calculated using the following
assumptions regarding all amounts other than those covered by
subsection (b):
"(1) INFLATION OF CURRENT-YEAR APPROPRIATIONS.—Budgetary

resources other than unobligated balances shall be at the level
provided for the budget year in full-year appropriation Acts. If
for any account a full-year appropriation has not yet been
enacted, budgetary resources other than unobligated balances
shall be at the level available in the current year, adjusted
sequentially and cumulatively for expiring housing contracts as
specified in paragraph (2), for social insurance administrative
expenses as specified in paragraph (3), to offset pay absorption
and for pay annualization as specified in paragraph (4), for
inflation as specified in paragraph (5), and to account for
changes required by law in the level of agency pa3anents for
personnel benefits other than pay.
"(2) EXPIRING HOUSING CONTRACTS.—New budget authority to
renew expiring multiyear subsidized housing contracts shall be
adjusted to reflect the difference in the number of such contracts that are scheduled to expire in that fiscal year and the
number expiring in the current year, with the per-contract
renewal cost equal to the aversige current-year cost of renewal
contracts.
"(3) SOCIAL INSURANCE ADMINISTRATIVE EXPENSES.—Budgetary

resources for the administrative expenses of the following trust
funds shall be adjusted by the percentage change in the beneficiary population from the current year to that fiscal year: the
Federal Hospital Insurance Trust Fund, the Supplementary
Medical Insurance Trust Fund, the Unemplojmient Trust Fund,
and the railroad retirement account.
"(4) PAY ANNUALIZATION; OFFSET TO PAY ABSORPTION.—Cur-

rent-year new budget authority for Federal employees shall be
adjusted to reflect the full 12-month costs (without absorption)
of any pay adjustment that occurred in that fiscal year.
"(5) INFLATORS.—The inflator used in paragraph (1) to adjust
budgetary resources relating to personnel shall be the percent
by which the average of the Bureau of Labor Statistics Employment Cost Index (wages and salaries, private industry workers)
for that fiscal year differs from such index for the current year.
The inflator used in paragraph (1) to adjust all other budgetary
resources shall be the percent by which the average of the
estimated gross national product fixed-weight price index for
that fiscal year differs from the average of such estimated index
for the current year.
"(6) CURRENT-YEAR APPROPRIATIONS.—If, for any account, a

continuing appropriation is in effect for less than the entire
current year, then the current-year amount shall be assumed to
equal the amount that would be available if that continuing

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-593

appropriation covered the entire fiscal year. If law permits the
transfer of budget authority among budget accounts in the
current year, the current-year level for an account shall reflect
transfers accomplished by the submission of, or assumed for the
current year in, the President's original budget for the budget
year.
"(d) UP-TODATE CONCEPTS.—In deriving the baseline for any
budget year or outyear, current-year amounts shall be calculated
using the concepts and definitions that are required for that budget
year.".
(2) Section 251(aX6)(I) of such Act (as in effect immediately before 2 USC 901,907.
the date of enactment of this Act) is redesignated as section 257(e) of
such Act. Section 257(e) is amended by striking "assuming, for
purposes of this paragraph and subparagraph (A)(i) of paragraph (3),
that the" and inserting 'The".
(f) Such Act is amended by inserting after section 257 the
following:
"SEC. 258. SUSPENSION IN THE EVENT OF WAR OR LOW GROWTH.
"(a) PROCEDURES IN THE EVENT OF A LOW GROWTH REPORT.—

"(1) TRIGGER.—Whenever CBO issues a low-growth report
under section 254(j), the Majority Leader of the House of Representatives may, and the Majority Leader of the Senate shall,
introduce a joint resolution (in the form set forth in paragraph
(2)) declaring that the conditions specified in section 254(j) are
met and suspending the relevant provisions of this title, titles
III and VI of the Congressional Budget Act of 1974, and section
1103 of title 31, United States Code.
"(2) FORM OF JOINT RESOLUTION.—

"(A) The matter after the resolving clause in any joint
resolution introduced pursuant to paragraph (1) shall be as
follows: 'That the Congress declares that the conditions
specified in section 254(j) of the Balanced Budget and
Emergency Deficit Control Act of 1985 are met, and the
implementation of the Congressional Budget and Impoundment Control Act of 1974, chapter 11 of title 31, United
States Code, and part C of the Balanced Budget and Emergency Deficit Control Act of 1985 are modified as described
in section 258(b) of the Balanced Budget and Emergency
Deficit Control Act of 1985.'.
"(B) The title of the joint resolution shall be 'Joint resolution suspending certain provisions of law pursuant to section 258(aX2) of the Balanced Budget and Emergency
Deficit Control Act of 1985.'; and the joint resolution shall
not contain any preamble.
"(3) COMMITTEE ACTION.—Each joint resolution introduced
pursuant to paragraph (1) shall be referred to the appropriate
committees of the House of Representatives or the Committee
on the Budget of the Senate, as the case may be; and such
Committee shall report the joint resolution to its House without
amendment on or before the fifth day on which such House is in
session after the date on which the joint resolution is introduced. If the Committee fails to report the joint resolution
within the five-day period referred to in the preceding sentence,
it shall be automatically discharged from further consideration
of the joint resolution, and the joint resolution shall be placed
on the appropriate calendar.

2 USC 907a.

104 STAT. 1388-594

PUBLIC LAW 101-508—NOV. 5, 1990
"(4) CONSIDERATION OF JOINT RESOLUTION.—

"(A) A vote on final passage of a joint resolution reported
to the Senate or discharged pursuant to paragraph (3) shall
be taken on or before the close of the fifth calendar day of
session after the date on which the joint resolution is
reported or after the Committee has been discharged from
further consideration of the joint resolution. If prior to the
passage by one House of a joint resolution of that House,
that House receives the same joint resolution from the
other House, then—
"(i) the procedure in that House shall be the same as
if no such joint resolution had been received from the
other House, but
"(ii) the vote on final passage shall be on the joint
resolution of the other House.
When the joint resolution is agreed to, the Clerk of the
House of Representatives (in the case of a House joint
resolution agreed to in the House of Representatives) or the
Secretary of the Senate (in the case of a Senate joint
resolution agreed to in the Senate) shall cause the joint
resolution to be engrossed, certified, and transmitted to the
other House of the Congress as soon as practicable.
"(B)(i) In the Senate, a joint resolution under this paragraph shall be privileged. It shall not be in order to move to
reconsider the vote by which the motion is agreed to or
disagreed to.
"(ii) Debate in the Senate on a joint resolution under this
paragraph, and all debatable motions and appeals in
connection therewith, shall be limited to not more than five
hours. The time shall be equally divided between, and
controlled by, the majority leader and the minority leader
or their designees.
"(iii) Debate in the Senate on any debatable motion or
appeal in connection with a joint resolution under this
paragraph shall be limited to not more than one hour, to be
equally divided between, and controlled by, the mover and
the manager of the joint resolution, except that in the event
the manager of the joint resolution is in favor of any such
motion or appeal, the time in opposition thereto shall be
controlled by the minority leader or his designee.
"(iv) A motion in the Senate to further limit debate on a
joint resolution under this paragraph is not debatable. A
motion to table or to recommit a joint resolution under this
paragraph is not in order.
"(C) No amendment to a joint resolution considered
under this paragraph shall be in order in the Senate.
"(b) SUSPENSION OF SEQUESTRATION. PROCEDURES.—Upon the enactment of a declaration of war or a joint resolution described in
subsection (a)—
"(1) the subsequent issuance of any sequestration report or
any sequestration order is precluded;
"(2) sections 302(f), 310(d), 311(a), and title VI of the Congressional Budget Act of 1974 are suspended; and
"(3) section 1103 of title 31, United States C!ode, is suspended.
"(c) RESTORATION OF SEQUESTRATION PROCEDURES.—

"(1) In the event of a suspension of sequestration procedures
due to a declaration of war, then, effective with the first fiscal

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-595

year that begins in the session after the state of war is concluded by Senate ratification of the necessary treaties, the
provisions of subsection (b) triggered by that declaration of war
are no longer effective.
"(2) In the event of a suspension of sequestration procedures
due to the enactment of a joint resolution described in subsection (a), then, effective with regard to the first fiscal year
beginning at least 12 months after the enactment of that resolution, the provisions of subsection (b) triggered by that resolution
are no longer effective.
"SEC. 258A. MODIFICATION OF PRESIDENTIAL ORDER

"(a) INTRODUCTION OF JOINT RESOLUTION.—At any time after the
Director of 0MB issues a final sequestration report under section
254 for a fiscal year, but before the close of the twentieth calendar
day of the session of C!ongress beginning after the date of issuance of
such report, the majority leader of either House of Congress may
introduce a joint resolution which contains provisions directing the
President to modify the most recent order issued under section 254
or provide an £ilternative to reduce the deficit for such fiscal year.
After the introduction of the first such joint resolution in either
House of Congress in any calendar year, then no other joint resolution introduced in such House in such calendar year shall be subject
to the procedures set forth in this section.
"(b)

PROCEDURES FOR CONSIDERATION OF JOINT RESOLUTIONS.—

"(1) REFERRAL TO COMMITTEE.—A joint resolution introduced
in the Senate under subsection (a) shall not be referred to a
committee of the Senate and shall be placed on the calendar
pending disposition of such joint resolution in accordance with
this subsection.
"(2) CONSIDERATION IN THE SENATE.—On or after the third
calendar day (excluding Saturdays, Sundays, and legal holidays)
beginning after a joint resolution is introduced under subsection
(a), notwithstanding any rule or precedent of the Senate, including Rule XXII of the Standing Rules of the Senate, it is in order
(even though a previous motion to the same effect has been
disagreed to) for any Member of the Senate to move to proceed
to the consideration of the joint resolution. The motion is not in
order after the eighth calendar day (excluding Saturdays, Sundays, and legal holidays) beginning after a joint resolution (to
which the motion applies) is introduced. The joint resolution is
privileged in the Senate. A motion to reconsider the vote by
which the motion is agreed to or disagreed to shall not be in
order. If a motion to proceed to the consideration of the joint
resolution is agreed to, the Senate shall immediately proceed to
consideration of the joint resolution without intervening
motion, order, or other business, apd the joint resolution shall
remain the unfinished business of the Senate until disposed of.
"(3) DEBATE IN THE SENATE.—

"(A) In the Senate, debate on a joint resolution introduced under subsection (a), amendments thereto, and all
debatable motions and appeals in connection therewith
shall be limited to not more than 10 hours, which shall be
divided equally between the majority leader and the minority leader (or their designees).
"(B) A motion to postpone, or a motion to proceed to the
consideration of other business is not in order. A motion to

2 USC 907b.

104 STAT. 1388-596

PUBLIC LAW 101-508—NOV. 5, 1990
reconsider the vote by which the joint resolution is agreed
to or disagreed to is not in order, and a motion to recommit
the joint resolution is not in order.
"(CXi) No amendment that is not germane to the provisions of the joint resolution or to the order issued under
section 254 shall be in order in the Senate. In the Senate, an
amendment, any amendment to an amendment, or any
debatable motion or appeal is debatable for not to exceed 30
minutes to be equally divided between, and controlled by,
the mover and the majority leader (or their designees),
except that in the event that the majority leader favors the
amendment, motion, or appeal, the minority leader (or the
minority leader's designee) shall control the time in opposition to the amendment, motion, or appeal.
"(ii) In the Senate, an amendment that is otherwise in
order shall be in order notwithstanding the fact that it
amends the joint resolution in more than one place or
amends language previously amended. It shall not be in
order in the Senate to vote on the question of agreeing to
such a joint resolution or any amendment thereto unless
the figures then contained in such joint resolution or
amendment are mathematically consistent.
"(4) VOTE ON FINAL PASSAGE.—Immediately following the

conclusion of the debate on a joint resolution introduced under
subsection (a), a single quorum call at the conclusion of the
debate if requested in accordance with the rules of the Senate,
and the disposition of any pending amendments under paragraph (3), the vote on final passage of the joint resolution shall
occur.
"(5) APPEALS.—Appeals from the decisions of the Chair shall
be decided without debate.
"(6) CONFERENCE REPORTS.—In the Senate, points of order
under titles III, IV, and VI of the Congressional Budget Act of
1974 are applicable to a conference report on the joint resolution or any amendments in disagreement thereto.
"(1) RESOLUTION FROM OTHER HOUSE.—If, before the passage by

the Senate of a joint resolution of the Senate introduced under
subsection (a), the Senate receives from the House of Representatives a joint resolution introduced under subsection (a), then
the following procedures shall apply:
"(A) The joint resolution of the House of Representatives
shall not be referred to a committee and shall be placed on
the calendar.
"(B) With respect to a joint resolution introduced under
subsection (a) in the Senate—
"(i) the procedure in the Senate shall be the same as
if no joint resolution had been received from the House;
but
"(ii)(I) the vote on final passage shall be on the joint
resolution of the House if it is identical to the joint
resolution then pending for passage in the Senate; or
"(II) if the joint resolution from the House is not
identical to the joint resolution then pending for passage in the Senate and the Senate then passes the
Senate joint resolution, the Senate shall be considered
to have passed the House joint resolution as amended
by the text of the Senate joint resolution.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-597

"(C) Upon disposition of the joint resolution received from
the House, it shall no longer be in order to consider the
resolution originated in the Senate.
"(8)

SENATE ACTION ON HOUSE RESOLUTION.—If the

Senate

receives from the House of Representatives a joint resolution
introduced under subsection (a) after the Senate has disposed of
a Senate originated resolution which is identical to the House
passed joint resolution, the action of the Senate with regard to
the disposition of the Senate originated joint resolution shall be
deemed to be the action of the Senate with regard to the House
originated joint resolution. If it is not identical to the House
passed joint resolution, then the Senate shall be considered to
have passed the joint resolution of the House as amended by the
text of the Senate joint resolution.".
(g) Such Act is amended by inserting after section 258A the
following:
"SEC. 258B. FLEXIBILITY AMONG DEFENSE PROGRAMS, PROJECTS, AND 2 USC 907c.
ACTIVITIES.

"(a) Subject to subsections (b), (c), and (d), new budget authority
and unobligated balances for any programs, projects, or activities
within major functional category 050 (other than a military personnel account) may be further reduced beyond the amount specified in
an order issued by the President under section 254 for such fiscal
year. To the extent such additional reductions are made and result
in additional outlay reductions, the President may provide for lesser
reductions in new budget authority and unobligated balances for
other programs, projects, or activities within major functional category 050 for such fiscal year, but only to the extent that the
resulting outlay increases do not exceed the additional outlay reductions, and no such program, project, or activity may be increased
above the level actually made available by law in appropriation Acts
(before taking sequestration into account). In making calculations
under this subsection, the President shall use account outlay rates
that are identical to those used in the report by the Director of OMB
under section 254.
"(b) No actions taken by the President under subsection (a) for a
fiscal year may result in a domestic base closure or realignment that
would otherwise be subject to section 2687 of title 10, United States
Code.
"(c) The President may not exercise the authority provided by this
paragraph for a fiscal year unless—
"(1) the President submits a single report to Congress specifying, for each account, the detailed changes proposed to be made
for such fiscal year pursuant to this section;
"(2) that report is submitted within 5 calendar days of the
start of the next session of Congress; and
"(3) a joint resolution affirming or modifying the changes
proposed by the President pursuant to this paragraph becomes
law.
"(d) Within 5 calendar days of session after the President submits
a report to Congress under subsection (cXD for a fiscal year, the
majority leader of each House of Congress shall (by request) introduce a joint resolution which contains provisions affirming the
changes proposed by the President pursuant to this paragraph.
"(eXD The matter after the resolving clause in any joint resolution
introduced pursuant to subsection (d) shall be as follows: 'That the

104 STAT. 1388-598

PUBLIC LAW 101-508—NOV. 5, 1990

report of the President as submitted on [Insert Date] under section
258B is hereby approved.'.
"(2) The title of the joint resolution shall be 'Joint resolution
approving the report of the President submitted under section 258B
of the Balanced Budget and Emergency Deficit Control Act of 1985.'.
"(3) Such joint resolution shall not contain any preamble.
"(f)(1) A joint resolution introduced in the Senate under subsection (d) shall be referred to the Committee on Appropriations, and if
not reported within 5 calendar days (excluding Saturdays, Sundays,
and legal holidays) from the date of introduction shall be considered
as having been discharged therefrom and shall be placed on the
appropriate calendar pending disposition of such joint resolution in
accordance with this subsection. In the Senate, no amendment
proposed in the Committee on Appropriations shall be in order other
than an amendment (in the nature of a substitute) that is germane
or relevant to the provisions of the joint resolution or to the order
issued under section 254. For purposes of this paragraph, an amendment shall be considered to be relevant if it relates to function 050
(national defense).
"(2) On or after the third calendar day (excluding Saturdays,
Sundays, and legal holidays) beginning after a joint resolution is
placed on the Senate calendar, notwithstanding any rule or precedent of the Senate, including Rule XXII of the Standing Rules of the
Senate, it is in order (even though a previous motion to the same
effect has been disagreed to) for any Member of the Senate to move
to proceed to the consideration of the joint resolution. The motion is
not in order after the eighth calendar day (excluding Saturdays,
Sundays, and legal holidays) beginning after such joint resolution is
placed on the appropriate calendar. The motion is not debatable.
The joint resolution is privileged in the Senate. A motion to reconsider the vote by which the motion is agreed to or disagreed to
shall not be in order. If a motion to proceed to the consideration of
the joint resolution is agreed to, the Senate shall immediately
proceed to consideration of the joint resolution without intervening
motion, order, or other business, and the joint resolution shall
remain the unfinished business of the Senate until disposed of.
"(gXD In the Senate, debate on a joint resolution introduced under
subsection (d), amendments thereto, and all debatable motions and
appeals in connection therewith shall be limited to not more than 10
hours, which shall be divided equally between the majority leader
and the minority leader (or their designees).
"(2) A motion to postpone, or a motion to proceed to the consideration of other business is not in order. A motion to reconsider the
vote by which the joint resolution is agreed to or disagreed to is not
in order. In the Senate, a motion to recommit the joint resolution is
not in order.
"(hXD No amendment that is not germane or relevant to the
provisions of the joint resolution or to the order issued under section
254 shall be in order in the Senate. For purposes of this paragraph,
an amendment shall be considered to be relevant if it relates to
function 050 (national defense). In the Senate, an amendment, any
amendment to an amendment, or any debatable motion or appeal is
debatable for not to exceed 30 minutes to be equally divided between, and controlled by, the mover and the majority leader (or
their designees), except that in the event that the majority leader
favors the amendment, motion, or appeal, the minority leader (or

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-599

the minority leader's designee) shall control the time in opposition
to the amendment, motion, or appeal.
"(2) In the Senate, an amendment that is otherwise in order shall
be in order notwithstanding the fact that it amends the joint
resolution in more than one place or amends language previously
amended, so long as the amendment makes or maintains mathematical consistency. It shall not be in order in the Senate to vote on
the question of agreeing to such a joint resolution or any amendment thereto unless the figures then contained in such joint
resolution or amendment are mathematically consistent.
"(3) It shall not be in order in the Senate to consider any amendment to any joint resolution introduced under subsection (d) or any
conference report thereon if such amendment or conference report
would have the effect of decreasing any specific budget outlay
reductions below the level of such outlay reductions provided in
such joint resolution unless such amendment or conference report
makes a reduction in other specific budget outlays at least equivalent to any increase in outlays provided by such amendment or
conference report.
"(4) For purposes of the application of paragraph (3), the level of
outlays and specific budget outlay reductions provided in an amendment shall be determined on the basis of estimates made by the
Committee on the Budget of the Senate.
"(i) Immediately following the conclusion of the debate on a joint
resolution introduced under subsection (d), a single quorum call at
the conclusion of the debate if requested in accordance with the
rules of the Senate, and the disposition of any pending amendments
under subsection (h), the vote on final passage of the joint resolution
shall occur.
"0) Appeals from the decisions of the Chair relating to the application of the rules of the Senate to the procedure relating to a joint
resolution described in subsection (d) shall be decided without
debate.
"(k) In the Senate, points of order under titles III and IV of the
Congressional Budget Act of 1974 (including points of order under
sections 302(c), 303(a), 306, and 401(b)(1)) are applicable to a conference report on the joint resolution or any amendments in disagreement thereto.
"(1) If, before the passage by the Senate of a joint resolution of the
Senate introduced under subsection (d), the Senate receives from the
House of Representatives a joint resolution introduced under subsection (d), then the following procedures shall apply:
"(1) The joint resolution of the House of Representatives shall
not be referred to a committee.
"(2) With respect to a joint resolution introduced under
subsection (d) in the Senate—
"(A) the procedure in the Senate shall be the same as if
no joint resolution had been received from the House; but
"(BXi) the vote on final passage shall be on the joint
resolution of the House if it is identical to the joint resolution then pending for passage in the Senate; or
"(ii) if the joint resolution from the House is not identical
to the joint resolution then pending for passage in the
Senate and the Senate then passes the Senate joint resolution, the Senate shall be considered to have passed the
House joint resolution as amended by the text of the Senate
joint resolution.

104 STAT. 1388-600

PUBLIC LAW 101-508—NOV. 5, 1990

"(3) Upon disposition of the joint resolution received from the
House, it shall no longer be in order to consider the joint resolution
originated in the Senate.
"(m) If the Senate receives from the House of Representatives a
joint resolution introduced under subsection (d) after the Senate has
disposed of a Senate originated joint resolution which is identical to
the House passed joint resolution, the action of the Senate with
regard to the disposition of the Senate originated joint resolution
shall be deemed to be the action of the Senate with regard to the
House originated joint resolution. If it is not identical to the House
passed joint resolution, then the Senate shall be considered to have
passed the joint resolution of the House as amended by the text of
the Senate joint resolution.
2 u s e 907d.

"SEC. 258C. SPECIAL RECONCILIATION PROCESS.
"(a) REPORTING OF RESOLUTIONS AND RECONCIUATION BILLS AND
RESOLUTIONS, IN THE SENATE.—
"(1) COMMITTEE ALTERNATIVES TO PRESIDENTIAL ORDER.—After

the submission of an 0MB sequestration update report under
section 254 that envisions a sequestration under section 252 or
253, each standing committee of the Senate may, not later than
October 10, submit to the Committee on the Budget of the
Senate information of the type described in section 301(d) of the
Congressional Budget Act of 1974 with respect to alternatives to
the order envisioned by such report insofar as such order affects
laws within the jurisdiction of the committee.
"(2) INITIAL BUDGET COMMITTEE ACTION.—After the submission
of such a report, the Committee on the Budget of the Senate
may, not later than October 15, report to the Senate a resolution. The resolution may affirm the impact of the order envisioned by such report, in whole or in part. To the extent that
any part is not affirmed, the resolution shall state which parts
are not affirmed and shall contain instructions to committees of
the Senate of the type referred to in section 310(a) of the
Congressional Budget Act of 1974, sufficient to achieve at least
the total level of deficit reduction contained in those sections
which are not affirmed.
"(3) RESPONSE OF COMMITTEES.—Committees instructed pursuant to paragraph (2), or affected thereby, shall submit their
responses to the Budget Committee no later than 10 days after
the resolution referred to in parsigraph (2) is agreed to, except
that if only one such Committee is so instructed such Committee shall, by the same date, report to the Senate a reconciliation
bill or reconciliation resolution containing its recommendations
in response to such instructions. A committee shall be considered to have complied with all instructions to it pursuant to a
resolution adopted under paragraph (2) if it has made recommendations with respect to matters within its jurisdiction
which would result in a reduction in the deficit at least equal to
the total reduction directed by such instructions.
"(4) BUDGET COMMITTEE ACTION.—Upon receipt of the recommendations received in response to a resolution referred to
in paragraph (2), the Budget Committee shall report to the
Senate a reconciliation bill or reconciliation resolution, or both,
carrying out all such recommendations without any substantive
revisions. In the event that a committee instructed in a resolution referred to in paragraph (2) feiils to submit any rec-

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-601

ommendation (or, when only one committee is instructed, fails
to report a reconciliation bill or resolution) in response to such
instructions, the Budget Committee shall include in the reconciliation bill or reconciliation resolution reported pursuant to
this subparagraph legislative language within the jurisdiction of
the noncomplying committee to achieve the amount of deficit
reduction directed in such instructions.
"(5) POINT OF ORDER.—It shall not be in order in the Senate to

consider any reconciliation bill or reconciliation resolution reported under paragraph (4) with respect to a fiscal year, any
amendment thereto, or any conference report thereon if—
"(A) the enactment of such bill or resolution as reported;
"(B) the adoption and enactment of such amendment; or
"(C) the enactment of such bill or resolution in the form
recommended in such conference report,
would cause the amount of the deficit for such fiscal year to
exceed the maximum deficit amount for such fiscal year, unless
the low-growth report submitted under section 254 projects
negative real economic growth for such fiscal year, or for each
of any two consecutive quarters during such fiscal year.
"(6) TREATMENT OF CERTAIN AMENDMENTS.—In the Senate, an
amendment which adds to a resolution reported under
paragraph (2) an instruction of the type referred to in such
paragraph shall be in order during the consideration of such
resolution if such amendment would be in order but for the fact
that it would be held to be non-germane on the basis that the
instruction constitutes new matter.
"(7) DEFINITION.—For purposes of paragraphs (1), (2), and (3),
the term "day" shall mean any calendar day on which the
Senate is in session.
'(b) PROCEDURES.—

"(1) IN GENERAL.—Except as provided in paragraph (2), in the
Senate the provisions of sections 305 and 310 of the Congressional Budget Act of 1974 for the consideration of concurrent
resolutions on the budget and conference reports thereon shall
also apply to the consideration of resolutions, and reconciliation
bills and reconciliation resolutions reported under this paragraph and conference reports thereon.
"(2) LIMIT ON DEBATE.—Debate in the Senate on any resolu-

tion reported pursuant to subsection (a)(2), and all amendments
thereto and debatable motions and appeals in connection therewith, shall be limited to 10 hours.
"(3) LIMITATION ON AMENDMENTS.—Section 310(d)(2) of the

Congressional Budget Act shall apply to reconciliation bills and
reconciliation resolutions reported under this subsection.
"(4) BILLS AND RESOLUTIONS RECEIVED FROM THE HOUSE.—Any

bill or resolution received in the Senate from the House, which
is a companion to a reconciliation bill or reconciliation resolution of the Senate for the purposes of this subsection, shall be
considered in the Senate pursuant to the provisions of this
subsection.
"(5) DEFINITION.—For purposes of this subsection, the term
'resolution' means a simple, joint, or concurrent resolution.".

39-194 O - 91 - 33 : QL 3 Part 2

104 STAT. 1388-602

PUBLIC LAW 101-508—NOV. 5, 1990
PART II—RELATED AMENDMENTS

SEC. 13111. TEMPORARY AMENDMENTS TO THE CONGRESSIONAL BUDGET
ACT OF 1974.

Title VI of the C!ongressional Budget Act of 1974 is amended to
read as follows:

"TITLE VI—BUDGET AGREEMENT
ENFORCEMENT PROVISIONS
2 u s e 665.

"SEC. 601. DEFINITIONS AND POINT OF ORDER.

"(a) DEFINITIONS.—As used in this title and for purposes of the
Balanced Budget and Emergency Deficit Control Act of 1985:
"(1) MAXIMUM DEFICIT AMOUNT,—The term 'msiximum deficit
amount' means—
"(A) with respect to fiscal year 1991, $327,000,000,000;
"(B) with respect to fiscal year 1992, $317,000,000,000;
"(C) with respect to fiscal year 1993, $236,000,000,000;
"(D) with respect to fiscal year 1994, $102,000,000,000; and
"(E) with respect to fiscal year 1995, $83,000,000,000;
as adjusted in strict conformance with sections 251, 252, and 253
of the Balanced Budget and Emergency Deficit Control Act of
1985.
"(2) DISCRETIONARY SPENDING UMIT.—The term 'discretionary
spending limit' means—
"(A) with respect to fiscal year 1991—
"(i) for the defense category: $288,918,000,000 in new
budget authority and $297,660,000,000 in outlays;
"(ii) for the international category: $20,100,000,000 in
new budget authority and $18,600,000,000 in outlays;
and
"(iii) for the domestic category: $182,700,000,000 in
new budget authority and $198,100,000,000 in outlays;
"(B) with respect to fiscal year 1992—
"(i) for the defense category: $291,643,000,000 in new
budget authority and $295,744,000,000 in outlays;
"(ii) for the international category: $20,500,000,000 in
new budget authority and $19,100,000,000 in outlays;
and
"(iii) for the domestic category: $191,300,000,000 in
new budget authority and $210,100,000,000 in outlays;
"(C) with respect to fiscal year 1993—
"(i) for the defense category: $291,785,000,000 in new
budget authority and $292,686,000,000 in outlays;
"(ii) for the international category: $21,400,000,000 in
new budget authority and $19,600,000,000 in outlays;
and
"(iii) for the domestic category: $198,300,000,000 in
new budget authority and $221,700,000,000 in outlays;
"(D) with respect to fiscal year 1994, for the discretionary
category: $510,800,000,000 in new budget authority and
$534,800,000,000 in outlays; and
"(E) with respect to fiscal year 1995, for the discretionary
category: $517,700,000,000 in new budget authority and
$540,800,000,000 in outlays;

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-603

as adjusted in strict conformance with section 251 of the Balanced Budget and Emergency Deficit Control Act of 1985.
"(b) POINT OF ORDER IN THE SENATE ON AGGREGATE ALLOCATIONS
FOR DEFENSE, INTERNATIONAL, AND DOMESTIC DISCRETIONARY SPENDING.—

"(1) Except as provided in paragraph (3), it shall not be in
order in the Senate to consider any concurrent resolution on the
budget for fiscal year 1992, 1993, 1994, or 1995 (or amendment,
motion, or conference report on such a resolution), or any
appropriations bill or resolution (or amendment, motion, or
conference report on such an appropriations bill or resolution)
for fiscal year 1992 or 1993 that would exceed the allocations in
this section or the suballocations made under section 602(b)
based on these allocations.
"(3) For purposes of this subsection, the levels of new budget
authority and outlays for a fiscal year shall be determined on
the basis of estimates made by the Committee on the Budget of
the Senate.
"(4) This subsection shall not apply if a declaration of war by
the Congress is in effect or if a joint resolution pursuant to
section 258 of the Balanced Budget and Emergency Deficit
Control Act of 1985 has been enacted.
"SEC. 602. COMMITTEE ALLOCATIONS AND ENFORCEMENT.
" (a) (COMMITTEE SPENDING ALLOCATIONS.—
"(1) HOUSE OF REPRESENTATIVES.—
"(A) ALLOCATION AMONG COMMITTEES.—The joint

explanatory statement accompanying a conference report on a
budget resolution shall include allocations, consistent with
the resolution recommended in the conference report, of
the appropriate levels (for each fiscal year covered by that
resolution and a total for all such years) of—
"(i) total new budget authority,
"(ii) total entitlement authority, and
"(iii) total outlays;
among each committee of the House of Representatives
that hEis jurisdiction over legislation providing or creating
such amounts.
"(B) No DOUBLE COUNTING.—Any item allocated to one
committee of the House of Representatives may not be
allocated to another such committee.
"(C) FURTHER DIVISION OF AMOUNTS.—The amounts allocated to each committee for each fiscal year, other than the
Committee on Appropriations, shall be further divided between amounts provided or required by law on the date of
filing of that conference report and amounts not so provided or required. The amounts allocated to the Committee
on Appropriations for each fiscal year shall be further
divided between discretionary and mandatory amounts or
programs, as appropriate.
"(2) SENATE ALLOCATION AMONG COMMITTEES.—The joint
explanatory statement accompanying a conference report on a
budget resolution shall include an allocation, consistent with
the resolution recommended in the conference report, of the
appropriate levels of—
"(A) total new budget authority;
"(B) total outlays; and

2 USC 665a.

104 STAT. 1388-604

PUBLIC LAW 101-508—NOV. 5, 1990

"(C) social security outlays;
among each committee of the Senate that has jurisdiction over
legislation providing or creating such amounts.
"(3) AMOUNTS NOT ALLOCATED.—(A) In the House of Representatives, if a committee receives no allocation of new budget
authority, entitlement authority, or outlays, that committee
shall be deemed to have received an allocation equal to zero for
new budget authority, entitlement authority, or outlays.
"(B) In the Senate, if a committee receives no allocation of
new budget authority, outlays, or social security outlays, that
committee shall be deemed to have received an sdlocation equal
to zero for new budget authority, outlays, or social security
outlays.
"(b) SUBALLOCATIONS BY COMMITTEES.—
"(1) SUBALLOCATIONS BY APPROPRIATIONS COMMITTEES.—As

soon as practicable after a budget resolution is agreed to, the
Committee on Appropriations of each House (after consulting
with the Committee on Appropriations of the other House) shall
suballocate each amount allocated to it for the budget year
under subsection (a)(1)(A) or (a)(2) among its subcommittees.
Each Committee on Appropriations shall promptly report to its
House suballocations made or revised under this paragraph.
"(2) SUBALLOCATIONS BY OTHER COMMITTEES OF THE SENATE.—

Each other committee of the Senate to which an allocation
under subsection (a)(2) is made in the joint explanatory statement may subdivide each amount allocated to it under subsection (a) among its subcommittees or among programs over
which it has jurisdiction and shall promptly report any such
suballocations to the Senate. Section 302(c) shall not apply in
the Senate to committees other than the Committee on Appropriations.
"(c) APPLICATION OF SECTION 302(f) TO THIS SECTION.—In fiscal
years through 1995, reference in section 302(f) to the appropriate
allocation made pursuant to section 302(b) for a fiscal year shall, for
purposes of this section, be deemed to be a reference to any allocation made under subsection (a) or any suballocation made under
subsection (b), as applicable, for the fiscal year of the resolution or
for the total of all fiscal years made by the joint explanatory
statement accompanying the applicable concurrent resolution on
the budget. In the House of Representatives, the preceding sentence
shall not apply with respect to fiscal year 1991.
"(d) APPLICATION OF SUBSECTIONS (a) AND (b) TO FISCAL YEARS 1992

TO 1995.—In the case of concurrent resolutions on the budget for
fiscal years 1992 through 1995, allocations shall be made under
subsection (a) instead of section 302(a) and shall be made under
subsection (b) instead of section 302(b). For those fiscal years, all
references in sections 302(c), (d), (e), (f), and (g) to section 302(a) shall
be deemed to be to subsection (a) (including revisions made under
section 604) and all such references to section 302(b) shall be deemed
to be to subsection (b) (including revisions made under section 604).".
"(e) PAY-AS-You-Go EXCEPTION IN THE HOUSE.—Section 302(fXl)
and, after April 15 of any calendar year section 303(a), shall not
apply to any bill, joint resolution, amendment thereto, or conference
report thereon if, for each fiscal year covered by the most recently
agreed to concurrent resolution on the budget—
"(1) the enactment of such bill or resolution as reported;
"(2) the adoption and enactment of such amendment; or

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-605

"(3) the enactment of such bill or resolution in the form
recommended in such conference report,
would not increase the deficit for any such fiscal year, and, if the
sum of any revenue increases provided in legislation already enacted during the current session (when added to revenue increases,
if any, in excess of any outlay increase provided by the legislation
proposed for consideration) is at least as great as the sum of the
amount, if any, by which the aggregate level of Federal revenues
should be increased as set forth in that concurrent resolution and
the amount, if any, by which revenues are to be increased pursuant
to pay-as-you-go procedures under section 301(b)(8) if included in
that concurrent resolution.
"(2) R E V I S E D ALLOCATIONS.—

"(A) As soon as practicable after Congress agrees to a bill
or joint resolution that would have been subject to a point
of order under section 302(f)(1) but for the exception provided in paragraph (1), the chairman of the Committee on
the Budget of the House of Representatives may file with
the House appropriately revised allocations under section
302(a) and revised functional levels and budget aggregates
to reflect that bill.
"(B) such revised allocations, functional levels, and
budget aggregates shall be considered for the purposes of
this Act as allocations, functional levels, and budget aggregates contained in the most recently agreed to concurrent
resolution on the budget.

*

"SEC. 603. CONSIDERATION OF LEGISLATION BEFORE ADOPTION OF 2 USC 665b.
BUDGET RESOLUTION FOR THAT FISCAL YEAR.
"(a) ADJUSTING SECTION ALLOCATION OF DISCRETIONARY SPEND-

ING.—If a concurrent resolution on the budget is not adopted by
April 15, the chairman of the Committee on the Budget of the House
of Representatives shall submit to the House, as soon as practicable,
a section 602(a) allocation to the Committee on Appropriations
consistent with the discretionary spending limits contained in the
most recent budget submitted by the President under section 1105(a)
of title 31, United States Code. Such allocation shall include the full
allowance specified under section 251(b)(2)(E)(i) of the Balanced
Budget and Emergency Deficit Control Act of 1985.
"(b) As soon as practicable after a section 602(a) allocation is
submitted under this section, the Committee on Appropriations
shall make suballocations and promptly report those suballocations
to the House of Representatives.
"SEC. 604. RECONCILIATION DIRECTIVES REGARDING PAY-AS-YOU-GO
REQUIREMENTS.
"(a) INSTRUCTIONS TO EFFECTUATE PAY-AS-YOU-GO IN THE HOUSE

OF REPRESENTATIVES.—If legislation providing for a net reduction in
revenues in any fiscal year (that, within the same measure, is not
fully offset in that fiscal year by reductions in direct spending) is
enacted, the Committee on the Budget of the House of Representatives may report, within 15 legislative days during a Congress, a
pay-as-you-go reconciliation directive in the form of a concurrent
resolution—
"(1) specifying the total amount by which revenues sufficient
to eliminate the net deficit increase resulting from that legislation in each fiscal year are to be changed; and

,

2 USC 665c.

104 STAT. 1388-606

PUBLIC LAW 101-508—NOV. 5, 1990

"(2) directing that the committees having jurisdiction determine and recommend changes in the revenue law, bills, and
resolutions to accomplish a change of such total amount.
"(b) CONSIDERATION OF PAY-AS-YOU-GO RECONCILIATION LEGISLATION IN THE HOUSE OF REPRESENTATIVES.—In the House of R e p

resentatives, subsections (b) through (d) of section 310 shall apply in
the same manner as if the reconciliation directive described in
subsection (a) were a concurrent resolution on the budget.
2 u s e 665d.

"SEC. 605. APPLICATION OF SECTION 311; POINT OF ORDER.

"(a) APPLICATION OF SECTION 311(a).—(1) In the House of Representatives, in the application of section 311(a)(1) to any bill, resolution, amendment, or conference report, reference in section 311 to
the appropriate level of total budget authority or total budget
outlays or appropriate level of total revenues set forth in the most
recently agreed to concurrent resolution on the budget for a fiscal
year shall be deemed to be a reference to the appropriate level for
that fiscal year and to the total of the appropriate level for that year
and the 4 succeeding years.
"(2) In the Senate, in the application of section 311(a)(2) to any bill,
resolution, motion, or conference report, reference in section 311 to
the appropriate level of total revenues set forth in the most recently
agreed to concurrent resolution on the budget for a fiscal year shall
be deemed to be a reference to the appropriate level for that fiscal
year and to the total of the appropriate levels for that year and the 4
succeeding years.
"(b) MAXIMUM DEFICIT AMOUNT POINT OF ORDER IN THE SENATE.—

After Congress has completed action on a concurrent resolution on
the budget, it shall not be in order in the Senate to consider any bill,
resolution, amendment, motion, or conference report that would
result in a deficit for the first fiscal year covered by that resolution
that exceeds the maximum deficit amount specified for such fiscal
year in section 601(a).
2 u s e 665e.

"SEC. 606. 5-YEAR BUDGET RESOLUTIONS; BUDGET RESOLUTIONS MUST
CONFORM TO BALANCED BUDGET AND EMERGENCY DEFICIT
CONTROL ACT OF 1985.

"(a) 5-YEAR BUDGET RESOLUTIONS.—In the case of any concurrent
resolution on the budget for fiscal year 1992, 1993, 1994, or 1995,
that resolution shall set forth appropriate levels for the fiscal year
beginning on October 1 of the calendar year in which it is reported
and for each of the 4 succeeding fiscal years for the matters described in section 301(a).
"(b) POINT OF ORDER IN THE HOUSE OF REPRESENTATIVES.—It shall

not be in order in the House of Representatives to consider any
concurrent resolution on the budget for a fiscal year or conference
report thereon under section 301 or 304 that exceeds the maximum
deficit amount for each fiscal year covered by the concurrent resolution or conference report as determined under section 601(a), including possible revisions under part C of the Balanced Budget and
Emergency Deficit Control Act of 1985.
"(c) POINT OF ORDER IN THE SENATE.—It shall not be in order in

the Senate to consider any concurrent resolution on the budget for a
fiscal year under section 301, or to consider any amendment to such
a concurrent resolution, or to consider a conference report on such a
concurrent resolution, if the level of total budget outlays for the first
fiscal year that is set forth in such concurrent resolution or con-

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-607

ference report exceeds the recommended level of Federal revenues
set forth for that year by an amount that is greater than the
maximum deficit amount for such fiscal year as determined under
section 601(a), or if the adoption of such amendment would result in
a level of total budget outlays for that fiscal year which exceeds the
recommended level of Federal revenues for that fiscal year, by an
amount that is greater than the maximum deficit amount for such
fiscal years as determined under section 601(a).
"(d) ADJUSTMENTS.—(1) Notwithstanding any other provision of
law, concurrent resolutions on the budget for fiscal years 1992,1993,
1994, and 1995 under section 301 or 304 may set forth levels consistent with allocations increased by—
"(A) amounts not to exceed the budget authority amounts in
section 251(b)(2)(E)(i) and (ii) of the Balanced Budget and Emergency Deficit Control Act of 1985 and the composite outlays per
category consistent with them; and
"(B) the budget authority and outlay amounts in section
251(b)(1) of that Act.
"(2) For purposes of congressional consideration of provisions
described in sections 251(b)(2)(A), 251(b)(2)(B), 251(b)(2)(C),
251(b)(2)(D), and 252(e), determinations under sections 302, 303, and
311 shall not take into account any new budget authority, new
entitlement authority, outlays, receipts, or deficit effects in any
fiscal year of those provisions.
"SEC. 607. EFFECTIVE DATE.

2 USC 665 note.

This title shall take effect upon its date of enactment and shall
apply to fiscal years 1991 to 1995.".
SEC. 13112. CONFORMING AMENDMENTS.
(a) CONFORMING AMENDMENTS TO THE CONGRESSIONAL BUDGET AND
IMPOUNDMENT CONTROL ACT OF 1974.—
(1) TABLE OF CONTENTS.—Section 1(b) of the Congressional

Budget and Impoundment Control Act of 1974 is amended to
reflect the new section numbers and headings resulting from
amendments made by this title.
(2) SECTION 3.—Section 3 of such Act is amended—
2 USC 622.
(A) by striking paragraphs (6), (7), and (8) and inserting
the following:
"(6) The term deficit' means, with respect to a fiscal year, the
amount by which outlays exceeds receipts during that year.
"(7) The term 'surplus' means, with respect to a fiscal year,
the amount by which receipts exceeds outlays during that year.
"(8) The term 'government-sponsored enterprise' means a
corporate entity created by a law of the United States that—
"(A)(i) has a Federal charter authorized by law;
"(ii) is privately owned, as evidenced by capital stock owned
by private entities or individuals;
"(iii) is under the direction of a board of directors, a majority
of which is elected by private owners;
"(iv) is a financial institution with power to—
"(I) make loans or loan guarantees for limited purposes
such as to provide credit for specific borrowers or one
sector; and
"(II) raise funds by borrowing (which does not carry the
full faith and credit of the Federal Government) or to
guarantee the debt of others in unlimited amounts; and

104 STAT. 1388-608

2 use 602.
2 use 631.
2 use 632.

2 use 633.

2 use 635.
2 use 641.
2 use 642.

2 use 621 note.

PUBLIC LAW 101-508—NOV. 5, 1990

"(B)(i) does not exercise powers that are reserved to the
Government as sovereign (such as the power to tax or to regulate interstate commerce);
"(ii) does not have the power to commit the Government
financially (but it may be a recipient of a loan guarantee
commitment made by the Government); and
"(iii) has employees whose salaries and expenses are paid by
the enterprise and are not Federal employees subject to title 5
of the United States Code.''.
(3) SECTION 202.—Section 202(a)(1) and the second sentence of
202(f)(1) of such Act are amended by striking "budget authority"
and inserting "new budget authority" .
(4) SECTION 300.—Section 300 of such Act is amended by
striking "First Monday after January 3" and by inserting "First
Monday in February".
(5) SECTION 301(d).—Section 301(d) of such Act is amended by
striking "On or before February 25 of each year" and inserting
"Within 6 weeks after the President submits a budget under
section 1105(a) of title 31, United States Code".
(6) SECTION 302(a).—Section 302(a)(2) of such Act is amended
by striking "the House of Representatives and".
(7) SECTION 302(f).—Section 302(f)(2) of such Act is amended—
(A) by inserting after "in excess o f the following: "(A)";
(B) by striking "under subsection (b)" and inserting
"under subsection (a), or (B) the appropriate allocation (if
any) of such outlays or authority reported under subsection
(b)^and
(C) by inserting at the end the following:
"Subparagraph (A) shall not apply to any bill, resolution,
amendment, motion, or conference report that is within the
jurisdiction of the Committee on Appropriations.".
(8) SECTION 304.—Section 304 of such Act is amended bv
striking subsection Ot>) and by striking "(c)" and inserting "(h)' •
(9) SECTION 310(g).—Section 310(g) of such Act is amended by
striking "resolution pursuant" and inserting "joint resolution
pursuant" and by striking "2540))" and inserting "258C".
(10) SECTION 311(a).—Section 311(a) of such Act is amended by
striking "or, in the Senate" and all that follows thereafter
through "paragraph (2) of such subsection" and inserting
"except in the case that a declaration of war by the Congress is
in effect".
(H) SECTION 904(a).—Section 904(a) of such Act is amended by
striking "and" after "III", by inserting ", V, and VI (except
section 601(a))" after "IV", and by striking "606,".
(b) CONFORMING AMENDMENT TO THE BALANCED BUDGET AND
EMERGENCY DEFICIT CONTROL ACT OF 1985.—Subsection Ot)) of section

2 use 900 note.

275 of the Balanced Budget and Emergency Deficit Control Act of
1985 is amended to read as follows:
"Ot)) EXPIRATION.—Part C of this title, section 27103) of this Act,
and sections 1105(f) and 1106(c) of title 31, United States Code, shall
expire September 30,1995.".
(c) CONFORMING AMENDMENTS TO SECTION 1105 OF TITLE 31,
UNITED STATES CODE.—
(1) SECTION 1105(a).—Section 1105(a) of title 31, United States

Code, is amended by striking "On or before the first Monday
after January 3 of each year (or on or before February 5 in
1986)" and by inserting "On or after the first Monday in

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-609

January but not later than the first Monday in February of
each year"
(2) SECTION 1105(f).—Section 1105(f) of title 31, United States
Code, is amended to read as follows:
"(f) The budget transmitted pursuant to subsection (a) for a fiscal
year shall be prepared in a manner consistent with the requirements of the Balanced Budget and Emergency Deficit Control Act of
1985 that apply to that and subsequent fiscal years.".
(d) CONFORMING AMENDMENTS TO THE RULES OF THE HOUSE OF
REPRESENTATIVES.—

(1) CROSS-REFERENCE.—Clause l(eX2) of rule X of the Rules of
the House of Representatives is amended by striking "(a)(4)".
(2) CROSS-REFERENCE.—Clause 1(e)(2) of rule X of Rules of the
House of Representatives is amended by striking "Act, and any
resolution pursuant to section 254(b) of the Balanced Budget
and Emergency Deficit Control Act of 1985" and inserting
"Act".
(3) JURISDICTION.—Clause 10') of rule X of the Rules of the
House of Representatives is amended by inserting after paragraph (6) the following new paragraph:
"(7) Measures providing exemption from reduction under any
order issued under part C of the Balanced Budget and Emergency Deficit Control Act of 1985.".
(4) ALLOCATIONS.—Clause 4(h) of rule X of the Rules of the
House of Representatives is amended by inserting "or section
602 (in the case of fiscal years 1991 through 1995)" after "section
302".
(5) MULTIYEAR REVENUE ESTIMATES.—Clause 7(a)(1) of rule XIII
of the Rules of the House of Representatives is amended by
striking ", except that, in the case of measures affecting the
revenues, such reports shall require only an estimate of the gain
or loss in revenues for a one-year period".
(e) CONFORMING AMENDMENT TO THE FULL EMPLOYMENT AND
BALANCED GROWTH ACT OF 1978.—Section 103(a) of the Full Employ-

ment and Balanced Growth Act of 1978 (15 U.S.C. 1022(a) is amended by striking "transmit to the Congress during the first twenty
days of each regular session" and inserting "annually transmit to
the Congress not later than 10 days after the submission of the
budget under section 1105(a) of title 31, United States Code".
(f) FILING REQUIREMENT.—After the convening of the One Hundred Second Congress, the chairman of the C!ommittee on the
Budget of the Senate shall file with the Senate revised and outyear
budget aggregates and allocations under section 602(a) consistent
with this Act.

Subtitle B—Permanent Amendments to the
Congressional Budget and Impoundment
Control Act of 1974
SEC. 13201. CREDIT ACCOUNTING.
(a) CREDIT ACCOUNTING.—Title V of the Congressional Budget Act

of 1974 is amended to read as follows:

104 STAT. 1388-610
Federal Credit
Reform Act of
1990.
2 u s e 621 note.

PUBLIC LAW 101-508—NOV. 5, 1990

"TITLE V—CREDIT REFORM
"SEC. 500. SHORT TITLE.

"This title may be cited as the 'Federal Credit Reform Act of
1990'.
2 u s e 661.

"SEC. 501. PURPOSES.

'The purposes of this title are to—
"(1) measure more accurately the costs of Federal credit
programs;
"(2) place the cost of credit programs on a budgetary basis
equivalent to other Federal spending;
"(3) encourage the delivery of benefits in the form most
appropriate to the needs of beneficiaries; and
"(4) improve the allocation of resources among credit programs and between credit and other spending programs.
2 u s e 661a.

"SEC. 502. DEFINITIONS.

'For purposes of this title—
"(1) The term 'direct loan' means a disbursement of funds by
the Government to a non-Federal borrower under a contract
that requires the repajmient of such funds with or without
interest. The term includes the purchase of, or participation in,
a loan made by another lender. The term does not include the
acquisition of a federally guaranteed loan in satisfaction of
default claims or the price support loans of the Commodity
Credit Corporation,
"(2) The term 'direct loan obligation' meems a binding agreement by a Federal agency to make a direct loan when specified
conditions are fulfilled by the borrower.
"(3) The term 'loan guarantee' means any guarantee, insurance, or other pledge with respect to the payment of all or a
part of the principal or interest on any debt obligation of a nonFederal borrower to a non-Federal lender, but does not include
the insurance of deposits, shares, or other withdrawable accounts in financial institutions.
"(4) The term 'loan guarantee commitment' means a binding
agreement by a Federal agency to make a loan guarantee when
specified conditions are fulfilled by the borrower, the lender, or
any other party to the guarantee agreement.
"(5XA) 'The term 'cost' means the estimated long-term cost to
the Government of a direct loan or loan guarantee, calculated
on a net present value basis, excluding administrative costs and
any incidental effects on governmental receipts or outlays.
"(B) The cost of a direct loan shall be the net present value, at
the time when the direct loan is disbursed, of the following cash
flows:
"(i) loan disbursements;
"(ii) repayments of principal; and
"(iii) payments of interest and other payments by or to
the Government over the life of the loan after adjusting for
estimated defaults, prepayments, fees, penalties and other
recoveries.
"(C) The cost of a loan guarantee shall be the net present
value when a guaranteed loan is disbursed of the cash flow
from—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-611

"(i) estimated payments by the Government to cover
defaults and delinquencies, interest subsidies, or other payments, and
"(ii) the estimated pa3mients to the Government including origination and other fees, penalties and recoveries,
"(D) Any Government action that alters the estimated net
present value of an outstanding direct loan or loan guarantee
(except modifications within the terms of existing contracts or
through other existing authorities) shall be counted as a change
in the cost of that direct loan or loan guarantee. The calculation
of such changes shall be based on the estimated present value of
the direct loan or loan guarantee at the time of modification.
"(E) In estimating net present values, the discount rate shall
be the average interest rate on marketable Treasury securities
of similar maturity to the direct loan or loan guarantee for
which the estimate is being made.
"(6) The term 'credit program account' means the budget
account into which an appropriation to cover the cost of a direct
loan or loan guarantee program is made and from which such
cost is disbursed to the financing account.
"(7) The term 'financing account' means the non-budget account or accounts associated with each credit program account
which holds balances, receives the cost pa3anent from the credit
program account, and also includes all other cash flows to and
from the Government resulting from direct loan obligations or
loan guarantee commitments made on or after October 1, 1991.
"(8) The term 'liquidating account' means the budget account
that includes all cash flows to and from the Government resulting from direct loan obligations or loan guarantee commitments
made prior to October 1,1991.
These accounts shall be shown in the budget on a cash basis.
"(9) The term 'Director' means the Director of the Office of
Management and Budget.
"SEC. 503. 0MB AND CBO ANALYSIS, COORDINATION, AND REVIEW.

"(a) IN GENERAL.—For the executive branch, the Director shall be
responsible for coordinating the estimates required by this title. The
Director shall consult with the agencies that administer direct loan
or loan guarantee programs.
"(b) DELEGATION.—The Director may delegate to agencies authority to make estimates of costs. The delegation of authority shall be
based upon written guidelines, regulations, or criteria consistent
with the definitions in this title.
"(c) (DOORDINATION WiTH THE CONGRESSIONAL BuDGET OFFICE.—In

developing estimation guidelines, regulations, or criteria to be used
by Federal agencies, the Director shall consult with the Director of
the (Congressional Budget Office.
"(d) IMPROVING COST ESTIMATES.—The Director and the Director
of the (Dongressional Budget Office shall coordinate the development
of more accurate data on historical performance of direct loan and
loan guarantee programs. They shall annually review the performance of outstanding direct loans and loan guarantees to improve
estimates of costs. The Office of Management and Budget and the
C!ongression£d Budget Office shall have access to all agency data
that may facilitate the development and improvement of estimates
of costs.

2 USC 661b.

104 STAT. 1388-612

PUBLIC LAW 101-508—NOV. 5, 1990

"(e) HISTORICAL CREDIT PROGRAM COSTS.—The Director shall
review, to the extent possible, historical data and develop the best
possible estimates of adjustments that would convert aggregate
historical budget data to credit reform accounting.
"(f) ADMINISTRATIVE COSTS.—The Director and the Director of the

Congressional Budget Office shall each analyze and report to (Dongress on differences in long-term administrative costs for credit
programs versus grant programs by January 31, 1992. Their reports
shall recommend to Congress any changes, if necessary, in the
treatment of administrative costs under credit reform accounting.
2 u s e 661c.

"SEC. 504. BUDGETARY TREATMENT.

"(a) PRESIDENT'S BUDGET.—Beginning with fiscal year 1992, the
President's budget shall reflect the costs of direct loan and loan
guarantee programs. The budget shall also include the planned level
of new direct loan obligations or loan guarantee commitments associated with each appropriations request.
"(b) APPROPRIATIONS REQUIRED.—Notwithstanding any other
provision of law, new direct loan obligations may be incurred and
new loan guarantee commitments may be made for fiscal year 1992
and thereafter only to the extent that—
"(1) appropriations of budget authority to cover their costs are
made in advance;
"(2) a limitation on the use of funds otherwise available for
the cost of a direct loan or loan guarantee program is enacted;
or
"(3) authority is otherwise provided in appropriation Acts.
"(c) EXEMPTION FOR MANDATORY PROGRAMS.—Subsection (b) shall
not apply to a direct loan or loan guarantee program that—
"(1) constitutes an entitlement (such as the guaranteed student loan program or the veterans' home loan guaranty program); or
"(2) all existing credit programs of the Commodity Credit
Corporation on the date of enactment of this title.
"(d) BUDGET ACCOUNTING.—

"(1) The authority to incur new direct loan obligations, make
new loan guarantee commitments, or directly or indirectly alter
the costs of outstanding direct loans and loan guarantees shall
constitute new budget authority in an amount equal to the cost
of the direct loan or loan guarantee in the fiscal year in which
definite authority becomes available or indefinite authority is
used. Such budget authority shall constitute an obligation of the
credit program account to pay to the financing account.
"(2) The outlays resulting from new budget authority for the
cost of direct loans or loan guarantees described in paragraph
(1) shall be paid from the credit program account into the
financing account and recorded in the fiscal year in which the
direct loan or the guaranteed loan is disbursed or its costs
altered.
"(3) All collections and payments of the financing accounts
shall be a means of financing.
"(e) MODIFICATIONS.—A direct loan obligation or loan guarantee
commitment shall not be modified in a manner that increases its
cost unless budget authority for the additional cost is appropriated,
or is available out of existing appropriations or from other budgetary resources.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-613

"(f) REESTIMATES.—When the estimated cost for a group of direct
loans or loan guarantees for a given credit program made in a single
fiscal year is reestimated in a subsequent year, the difference
between the reestimated cost and the previous cost estimate shall be
displayed as a distinct and separately identified subaccount in the
credit program account as a change in program costs and a change
in net interest. There is hereby provided permanent indefinite
authority for these reestimates.
"(g) ADMINISTRATIVE EXPENSES.—All funding

for an

agency's

administration of a direct loan or loan guarantee program shall be
displayed as distinct and separately identified subaccounts within
the same budget account as the program's cost.
"SEC. 505. AUTHORIZATIONS.
"(a) AUTHORIZATION OF APPROPRIATIONS FOR C!OSTS.—There are

authorized to be appropriated to each Federal agency authorized to
make direct loan obligations or loan guarantee commitments, such
sums as may be necessary to pay the cost associated with such direct
loan obligations or loan guarantee commitments.
"(b) AUTHORIZATION FOR FINANCING ACCOUNTS.—In order to implement the accounting required by this title, the President is
authorized to establish such non-budgetary accounts £is may be
appropriate.
"(c) TREASURY TRANSACTIONS WITH THE FINANCING ACCOUNTS.—

The Secretary of the Treasury shall borrow from, receive from, lend
to, or pay to the financing accounts such amounts as may be
appropriate. The Secretary of the Treasury may prescribe forms and
denominations, maturities, and terms and conditions for the transactions described above. The authorities described above shall not be
construed to supercede or override the authority of the head of a
Federal agency to administer and operate a direct loan or loan
guarantee program. All of the transactions provided in this subsection shall be subject to the provisions of subchapter II of chapter 15
of title 31, United States Code. Cash balances of the financing
accounts in excess of current requirements shall be maintained in a
form of uninvested funds and the Secretary of the Treasury shall
pav interest on these funds.
'(d) AUTHORIZATION FOR LIQUIDATING ACCOUNTS.—If funds in liquidating accounts are insufficient to satisfy the obligations and
commitments of said accounts, there is hereby provided permanent,
indefinite authority to make any pajmients required to be made on
such obligations and commitments.
"(e) AUTHORIZATION OF APPROPRIATIONS FOR IMPLEMENTATION EX-

PENSES.—There are authorized to be appropriated to existing accounts such sums as may be necessary for salaries and expenses to
carry out the responsibilities under this title.
"(f) REINSURANCE.—Nothing in this title shall be construed as
authorizing or requiring the purchase of insurance or reinsurance
on a direct loan or loan guarantee from private insurers. If any such
reinsurance for a direct loan or loan guarantee is authorized, the
cost of such insurance and any recoveries to the Government shall
be included in the calculation of the cost.
"(g) EUGIBILITY AND ASSISTANCE.—Nothing in this title shall be
construed to change the authority or the responsibility of a Federal
agency to determine the terms and conditions of eligibility for, or
the amount of assistance provided by a direct loan or a loan
guarantee.

2 USC 661d.

104 STAT. 1388-614
2 u s e 661e.

PUBLIC LAW 101-508—NOV. 5, 1990

"SEC. 506. TREATMENT OF DEPOSIT INSURANCE AND AGENCIES AND
OTHER INSURANCE PROGRAMS.
"(a) I N GENERAL.—

"(1) This title shall not apply to the credit or insurance
activities of the Federal Deposit Insurance Corporation, National Credit Union Administration, Resolution Trust Corporation, Pension Benefit Guaranty Corporation, National Flood
Insurance, National Insurance Development Fund, Crop Insurance, or Tennessee Valley Authority.
"(2) The Director and the Director of the Congressional
Budget Office shall each study whether the accounting for
Federal deposit insurance programs should be on a cash basis
on the same basis as loan guarantees, or on a different basis.
Each Director shall report findings and recommendations to the
President and the Congress on or before May 31,1991.
"(3) For the purposes of paragraph (2), the Office of Management and Budget and the Congressional Budget Office shall
have access to all agency data that may facilitate these studies.
2 u s e 661f.

"SEC. 507. EFFECT ON OTHER LAWS.

"(a) EFFECT ON OTHER LAWS.—This title shall supersede, modify,
or repeal any provision of law enacted prior to the date of enactment
of this title to the extent such provision is inconsistent with this
title. Nothing in this title shall be construed to establish a credit
limitation on any Federal loan or loan guarantee program.
"(b) CREDITING OF COLLECTIONS.—Collections resulting from direct
loans obligated or loan guarantees committed prior to October 1,
1991, shall be credited to the liquidating accounts of Federal agencies. Amounts so credited shall be available, to the same extent that
they were available prior to the date of enactment of this title, to
liquidate obligations arising from such direct loans obligated or loan
guarantees committed prior to October 1,1991, including repayment
of any obligations held by the Secretary of the Treasury or the
Federal Financing Bank. The unobligated balances of such accounts
that are in excess of current needs shall be transferred to the
general fund of the Treasury. Such transfers shall be made from
time to time but, at least once each year.".
(b) CONFORMING AMENDMENTS.—

2 use 622.

(1) DEFINITION.—Section 3(2) of the Congressional Budget Act
of 1974 is amended by adding at the end the following: "The
term includes the cost for direct loan and loan guarantee programs, as those terms are defined by title V".

2 use 633.

1, 1991, for fiscal year 1991 only, section 302(f)(2) of the Congressional Budget Act of 1974 is amended by inserting after "new
budget authority" the following: "or new credit authority".

(2) POINT OF ORDER FOR FISCAL YEAR 1991.—Effective January

(3) SUNSET OF POINT OF ORDER IN FISCAL YEAR 1992.—Effective

for fiscal years beginning after September 30, 1991, section 302
of the Congressional Budget Act is amended—
(A) in subsection (a)(1)—
(i) by striking "total entitlement authority, and total
credit authority" and inserting "and total entitlement
authority";
(ii) by striking "such entitlement authority, or such
credit authority" and inserting "or such entitlement
authority"; and

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-615

(iii) by striking "entitlement authority, and credit
authority" and inserting "and entitlement authority";
(B) in subsection (a)(2), by striking "total budget outlays,
total new budget authority and new credit authority" and
inserting "total budget outlays and total new budget
authority";
(C) in subsection (b)(lXA), by striking "budget outlays,
new budget authority, and new credit authority" and
inserting "budget outlays and new budget authority";
(D) in subsection (c)—
(i) in paragraph (1), by inserting "or" at the end
thereof; and
(ii) by striking "or (3) new credit authority for a fiscal
year;"; and
(E) in subsection (f)(1)—
(i) by striking "year, new entitlement authority effective during such fiscal year, or new credit authority for
such fiscal year," and inserting "year or new entitlement authority effective during such fiscal year,"; and
(ii) by striking "authority, new entitlement authority, or new credit authority" and inserting "authority
or new entitlement authority".
SEC. 13202. CODIFICATION OF PROVISION REGARDING REVENUE ESTIMATES.

(a) REDESIGNATION.—Section 201 of the Congressional Budget Act
of 1974 is amended by redesignating subsection (f) as subsection (g). 2 USC 601.
(b) TRANSFER.—The text of section 273 of the Balanced Budget and
Emergency Deficit Control Act of 1985 is transferred to section 201 2 USC 921, 60lc.
of the Congressional Budget Act of 1974 and is designated as subsection (g).
(c) CONFORMING CHANGES.—Section 201(g) of the Congressional

Budget Act of 1974 (as redesignated by subsection (b)) is amended
by—
(1) striking "this title and the Congressional Budget and
Impoundment Control Act of 1974" and inserting "this Act";
and
(2) inserting "REVENUE ESTIMATES.—" before the first sentence.
SEC. 13203. DEBT INCREASE AS MEASURE OF DEFICIT; DISPLAY OF FEDERAL RETIREMENT TRUST FUND BALANCES.

Section 301(b) of the Congressional Budget Act of 1974 is amended 2 USC 632.
by striking "and" at the end of paragraph (3), by striking the period
at the end of paragraph (4) and inserting a semicolon, and by adding
at the end the following new paragraphs:
"(5) include a heading entitled 'Debt Increase as Measure of
Deficit' in which the concurrent resolution shall set forth the
amounts by which the debt subject to limit (in section 3101 of
title 31 of the United States Code) has increased or would
increase in each of the relevant fiscal years; and
"(6) include a heading entitled 'Display of Federal Retirement
Trust Fund Balances' in which the concurrent resolution shall
set forth the balances of the Federal retirement trust funds.".

104 STAT. 1388-616

PUBLIC LAW 101-508—NOV. 5, 1990

SEC. 13204. PAY-AS-YOU-GO PROCEDURES.

2 use 632.

Section 301(b) of the Congressional Budget Act of 1974 (as amended by section 13203) is further amended by striking "and" at the end
of paragraph (5), by striking the period at the end of paragraph (6)
and inserting a semicolon, and by adding at the end the following
new paragraphs:
"(7) set forth pay-as-you-go procedures for the Senate
whereby—
(A) budget authority and outlays may be allocated to a
committee for legislation that increases funding for entitlement and mandatory spending programs within its jurisdiction if that committee or the committee of conference on
such legislation reports such legislation, if, to the extent
that the costs of such legislation are not included in the
concurrent resolution on the budget, the enactment of such
legislation will not increase the deficit (by virtue of either
deficit reduction in the bill or previously passed deficit
reduction) in the resolution for the first fiscal year covered
by the concurrent resolution on the budget, and will not
increase the total deficit for the period of fiscal years
covered by the concurrent resolution on the budget;
"(B) upon the reporting of legislation pursuant to
subparagraph (A), and again upon the submission of a
conference report on such legislation (if a conference report
is submitted), the chairman of the Committee on the Budget
of the Senate may file with the Senate appropriately revised allocations under section 302(a) and revised functional
levels and aggregates to carry out this paragraph;
"(C) such revised allocations, functional levels, and aggregates shall be considered for the purposes of this Act as
allocations, functional levels, and Eiggregates contained in
the concurrent resolution on the budget; and
"(D) the appropriate committee shall report appropriately revised allocations pursuant to section 302(b) to
carry out this paragraph; and
"(8) set forth procedures to effectuate pay-as-you-go in the
House of Representatives.".
SEC. 13205. AMENDMENTS TO SECTION 303.

2 use 634.

(a) I N GENERAL.—Section 303(a) of the Congressional Budget Act
of 1974 is amended—
(1) by repealing paragraph (5),
(2) by striking "or" at the end of paragraph (4),
(3) by inserting after paragraph (4) the following new paragraphs:
"(5) in the Senate only, new spending authority (as defined in
section 401(c)(2)) for a fiscal year; or
"(6) in the Senate only, outlays,"; and
(4) by inserting after the concurrent resolution on the budget
for such fiscal year" the following: "(or, in the Senate, a concurrent resolution on the budget covering such fiscal year)".
(b) EXCEPTIONS.—Section 3030^) of such Act is amended—
(1) by striking "Subsection (a)" and inserting "(1) In the House
of Representatives, subsection (a)" and by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively;
and
(2) by inserting at the end the following new paragraph:

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-617

"(2) In the Senate, subsection (a) does not apply to any bill or
resolution making advance appropriations for the fiscal year to
which the concurrent resolution applies and the two succeeding
fiscal years.".
SEC. 13206. AMENDMENTS TO SECTION 308.
(a)

REPORTS AND SUMMARIES OF CONGRESSIONAL BUDGET AC-

TIONS.—(1) Section 308(a)(1) of that Act is amended—
2 USC 639.
(1) in the matter preceding subparagraph (A) by inserting
after "fiscal year" the following: "(or fiscal years)";
(2) in subparagraph (A) by inserting after "fiscal year" the
following: "(or fiscal years)"; and
(3) in subparagraph (C) by inserting after "such fiscal year"
the following: "(or fiscal years)".
(b) CONFORMING AMENDMENT.—Section 308(a)(2) of that Act is
amended by inserting after "fiscal year" the following: "(or fiscal
years)".
(c) ADDITIONAL CONFORMING AMENDMENT.—Section 308(b)(1) of

that Act is amended—
(1) by striking "for a fiscal year" in the first sentence and
inserting "for each fiscal year covered by a concurrent resolution on the budget"; and
(2) by striking "such fiscal year" in the second sentence and
inserting "the first fiscal year covered by the appropriate
concurrent resolution".
SEC. 13207. STANDARDIZATION OF LANGUAGE REGARDING POINTS OF
ORDER.
(a) I N GENERAL.—The Congressional Budget Act of 1974 is
amended—
(1)(A) in section 302(c), by striking "bill or resolution, or
amendment thereto" and inserting "bill, joint resolution,
amendment, motion, or conference report";
(B) in section 302(f)(1), by inserting "joint" before "resolution"
the second and third places it appears and in section 302(f)(2), by
striking "bill or resolution (including a conference report
thereon), or any amendment to a bill or resolution" and inserting "bill, joint resolution, amendment, motion, or conference
report";
(C) in section 303(a), by striking "bill or resolution (or amendment thereto)" and inserting "bill, joint resolution, amendment,
motion, or conference report";
(D) in section 306, by striking "bill or resolution, and no
amendment to any bill or resolution" and inserting "bill, resolution, amendment, motion, or conference report";
(E) in section 311(a), by—
(i) striking "bill, resolution, or amendment" and inserting
"bill, joint resolution, amendment, motion, or conference
report"; and
(ii) striking "or any conference report on any such bill or
resolution";
(F) in section 401(a), by—
(i) striking "bill, resolution, or conference report" and
inserting "bill, joint resolution, amendment, motion, or
conference report"; and
(ii) striking "(or any amendment which provides such
new spending authority)";

2 USC 633.

2 USC 634.
2 USC 637.
2 USC 642.

2 USC 651.

104 STAT. 1388-618
2 use 651.

2 use 652.

2 use 633.

PUBLICijAW 101-508—NOV. 5, 1990

/
(G) in 8601101^40106X1), by—
(i) striking "bill or resolution" and inserting "bill, joint
resolution, amendment, motion, or conference report, as
reported to its House"; and
(ii) striking "(or any amendment which provides such
new spending authority)"; and
(H) in section 402(a), by—
(i) striking "bill, resolution, or conference report" and
inserting "bill, joint resolution, amendment, motion, or
conference report"; and
(ii) striking "or any amendment"; and
(2) in section 302(f)(2), by striking "outlays or new budget
authority" and inserting "outlays, new budget authority, or new
spending authority (as defined in section 401(c)(2))".
(b) POINTS OF ORDER IN THE SENATE.—

(1) Title III of the Congressional Budget Act of 1974 is
amended by adding at the end the following new section:
"EFFECTS OF POINTS OF ORDER
2 use 643.

"SEC. 312. POINTS OF ORDER IN THE SENATE AGAINST AMENDMENTS
BETWEEN THE HOUSES.—Each provision of this Act that establishes a

point of order against an amendment also establishes a point of
order in the Senate against an amendment between the Houses. If a
point of order under this Act is raised in the Senate against an
amendment between the Houses, and the Presiding Officer sustains
the point of order, the effect shall be the same as if the Senate had
disagreed to the amendment.
"(b) EFFECT OF A POINT OF ORDER ON A BILL IN THE SENATE.—In

the Senate, if the Chair sustains a point of order under this Act
against a bill, the Chair shall then send the bill to the committee of
appropriate jurisdiction for further consideration.".
(2) The table of contents for the Congressional Budget and
Impoundment Control Act of 1974 is amended by adding after
the item relating to section 311 the following new item:
"Sec. 312. Effect of points of order.".
(c) ADJUSTMENT IN THE SENATE OF ALLOCATIONS AND AGGREGATES
To REFLECT CHANGES PURSUANT TO SECTION 310(C).—Section 310(c)

2 use 641.

of the Congressional Budget Act of 1974 is amended by—
(1) inserting "(1)" before "Any committee";
(2) redesignating subparagraphs (A) and (B) of paragraph (1)
as clauses (i) and (ii), respectively;
(3) redesignating paragraphs (1) and (2) as subparagraphs (A)
and (B), respectively; and
(4) inserting at the end the following new paragraph:
"(2)(A) Upon the reporting to the Committee on the Budget of
the Senate of a recommendation that shall be deemed to have
complied with such directions solely by virtue of this subsection,
the chairman of that committee may file with the Senate
appropriately revised allocations under section 302(a) and
revised functional levels and aggregates to carry out this
subsection.
"(B) Upon the submission to the Senate of a conference report
recommending a reconciliation bill or resolution in which a
committee shall be deemed to have complied with such directions solely by virtue of this subsection, the chairman of the

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-619

Committee on the Budget of the Senate may file with the
Senate appropriately revised allocations under section 302(a)
and revised functional levels and aggregates to carry out this
subsection.
"(C) Allocations, functional levels, and aggregates revised
pursuant to this paragraph shall be considered to be allocations,
functional levels, and aggregates contained in the concurrent
resolution on the budget pursuant to section 301.
"(D) Upon the filing of revised allocations pursuant to this
paragraph, the reporting committee shall report revised allocations pursuant to section 302(b) to carry out this subsection.",
(d)

RECONCIUATION

INSTRUCTIONS.—Section

310(a)(4)

of

the

Congressional Budget Act of 1974 is amended by inserting after "(3)" 2 USC 641.
the following: "(including a direction to achieve deficit reduction)".
SEC. 13208. STANDARDIZATION
PROVISIONS.

OF

ADDITIONAL

DEFICIT

CONTROL

(a) Section 904 of the Congressional Budget Act of 1974 is 2 USC 621 note,
amended—
(1) by amending subsection (c) to read as follows:
"(c) WAIVER.—Sections 305(b)(2), 305(c)(4), 306, 904(c), and 904(d)
may be waived or suspended in the Senate only by the affirmative
vote of three-fifths of the Members, duly chosen and sworn. Sections
301(i), 302(c), 302(f), 310(d)(2), 310(f), 311(a), 313, 601(b), and 606(c) of
this Act and sections 258(a)(4)(C), 258A(b)(3XC)(i), 258B(f)(l),
258B(h)(l), 258B(h)(3), 258C(a)(5), and 258C(b)(l) of the Balanced
Budget and Emergency Deficit Control Act of 1985 may be waived or
suspended in the Senate only by the affirmative vote of three-fifths
of the Members, duly chosen and sworn. "; and
(2) in subsection (d) by inserting at the end the following: "An
affirmative vote of three-fifths of the Members of the Senate,
duly chosen and sworn, shall be required in the Senate to
sustain an appeal of the ruling of the Chair on a point of order
raised under sections 305(b)(2), 305(c)(4), 306, 904(c), and 904(d).
An affirmative vote of three-fifths of the Members of the
Senate, duly chosen and sworn, shall be required in the Senate
to sustain an appeal of the ruling of the Chair on a point of
order raised under sections 301(i), 302(c), 302(f), 310(d)(2), 310(f),
311(a), 313, 601(b), and 606(c) of this Act and sections 258(a)(4)(C),
258A(b)(3)(C)(i), 258B(f)(l), 258B(h)(l), 258B(h)(3), 258C(a)(5), and
258C(bXl) of the Balanced Budget and Emergency Deficit Control Act of 1985".
(b) Section 275(b)(2) of the Balanced Budget and Emergency Deficit
Control Act of 1985 is amended—
2 USC 900 note.
(1) in subparagraph (C), by striking the final word "and";
(2) in subparagraph (D), by striking the final period and
inserting "; and"; and
(3) by inserting at the end the following new subparagraph:
'(E) the second sentence of section 904(c) of the Congressional Budget and Impoundment Control Act of 1974 and
the final sentence of section 904(d) of that Act."
SEC. 13209. CODIFICATION OF PRECEDENT WITH REGARD TO CONFERENCE REPORTS AND AMENDMENTS BETWEEN HOUSES.

Section 305(c) of the (Dongressional Budget Act 1974 is amended— 2 USC 636.
(1) in paragraph (1)—
(A) by striking the first sentence; and

104 STAT. 1388-620

PUBLIC LAW 101-508—NOV. 5, 1990

(B) by inserting after "consideration of the conference
report" the following: "on any concurrent resolution on the
budget (or a reconciliation bill or resolution)"; and
(2) in paragraph (2), by inserting "(or a message between
Houses)" after "conference report" each place it appears.
SEC. 13210. SUPERSEDED DEADLINES AND CONFORMING CHANGES.

2 use 636.
2 use 641.

The Congressional Budget Act of 1974 is amended—
(1) in section 305, by striking subsection (d) and redesignating
subsection (e) as subsection (d); and
(2) in section 310(f), by striking paragraph (1) and by striking
"(2) POINT OF ORDER IN THE HOUSE OF REPRESENTATIVES.—".
SEC. 13211. DEFINITIONS.
(a) BUDGET AUTHORITY,—Section 3(2) of the Congressional Budget

2 use 622.

and Impoundment Control Act of 1974 is amended to read as follows:
"(2) BUDGET AUTHORITY AND NEW BUDGET AUTHORITY.—

"(A) IN GENERAL.—The term 'budget authority' means
the authority provided by Federal law to incur financial
obligations, as follows:
"(i) provisions of law that make funds available for
obligation and expenditure (other than borrowing
authority), including the authority to obligate and
expend the proceeds of offsetting receipts and collections;
"(ii) borrowing authority, which means authority
granted to a Federal entity to borrow and obligate and
expend the borrowed funds, including through the issuance of promissory notes or other monetary credits;
"(iii) contract authority, which means the making of
funds available for obligation but not for expenditure;
and
"(iv) offsetting receipts and collections as negative
budget authority, and the reduction thereof as positive
budget authority.
"(B) LIMITATIONS ON BUDGET AUTHORITY.—With respect to

2 use 622 note.

the Federal Hospital Insurance Trust Fund, the Supplementary Medical Insurance Trust Fund, the Unemployment Trust Fund, and the railroad retirement account, any
amount that is precluded from obligation in a fiscal year by
a provision of law (such as a limitation or a benefit formula)
shall not be budget authority in that year.
"(C) N E W BUDGET AUTHORITY.—The term 'new budget
authority' means, with respect to a fiscal year—
"(i) budget authority that first becomes available for
obligation in that year, including budget authority that
becomes available in that year s ^^ a result of a
reappropriation; or
"(ii) a change in any account in the availability of
unobligated balances of budget authority carried over
from a prior year, resulting from a provision of law
first effective in that year;
and includes a change in the estimated level of new budget
authority provided in indefinite amounts by existing law.".
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall be effective for fiscal year 1992 and subsequent fiscal years.
** So in original. Probably should be "as".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-621

SEC. 13212. SAVINGS TRANSFERS BETWEEN FISCAL YEARS.

Section 202 of Public Law 100-119 is repealed.

2USC909.

SEC. 13213. CONFORMING CHANGE TO TITLE 31.
(a)

LIMITATIONS

ON EXPENDING

AND OBUGATING.—Section

1341(aXl) of title 31, United States Code, is amended—
(1) in subparagraph (A), by striking the final word "or";
(2) in subparagraph (B), by striking the final period and
inserting a semicolon; and
(3) bv adding at the end the following new subparagraphs:
(C) make or authorize an expenditure or obligation of
funds required to be sequestered under section 252 of the
Balanced Budget and Emergency Deficit Control Act of
1985; or
"(D) involve either government in a contract or obligation
for the payment of money required to be sequestered under
section 252 of the Balanced Budget and Emergency Deficit
Control Act of 1985.".
(b) LIMITATION ON VOLUNTARY SERVICES.—Section 1342 of title 31,
United States Code, is amended by inserting at the end the following: "As used in this section, the term 'emergencies involving the
safety of human life or the protection of property' does not include
ongoing, regular functions of government the suspension of which
would not imminently threaten the safety of human life or the
protection of property.".
SEC. 13214. THE BYRD RULE ON EXTRANEOUS MATTER IN RECONCILIATION.

(a) THE BYRD RULE ON EXTRANEOUS MATTER IN RECONCILIATION.—

Section 20001 of the Consolidated Omnibus Budget Reconciliation
Act of 1985 is amended—
2 USC 644.
(1) in subsection (a)—
(A) by inserting after "(a)" the following: " I N GENERAL.—";

(B) by inserting after "1974" the following: "(whether
that bill or resolution originated in the Senate or the
House) or section 258C of the Balanced Budget and Emergency Deficit Control Act of 1985";
(2) in subsection (d) by inserting after "(d)" the following:
"EXTRANEOUS PROVISIONS.—";

(3) in subsection (d)(1)(A) by inserting before the semicolon
"(but a provision in which outlay decreases or revenue incresises
exactly offset outlay increases or revenue decreases shall not be
considered extraneous by virtue of this subparagraph)";
(4) in subsection (dXl)(D) by striking "and" after the semicolon;
(5) in subsection (d)(1)(E), by striking the period at the end and
inserting "; and";
(6) in subsection (dXl) by adding at the end the following new
subparagraph:
"(F) a provision shall be considered extraneous if it violates section 310(g).";
(7) in subsection (dX2), by inserting after "A" the first place it
appears the following: "Senate-originated"; and
(8) by adding at the end the following new subsections:
"(e) EXTRANEOUS MATERIALS.—Upon the reporting or discharge of

a reconciliation bill or resolution pursuant to section 310 in the

104 STAT. 1388-622

2 use 644.
2 u s e 644.

PUBLIC LAW 101-508—NOV. 5, 1990

Senate, and again upon the submission of a conference report on
such a reconciUation bill or resolution, the Committee on the Budget
of the Senate shall submit for the record a list of material considered to be extraneous under subsections (bXlXA), (bXlXB), and
(bXlXE) of this section to the instructions of a committee as provided
in this section. The inclusion or exclusion of a provision shall not
constitute a determination of extraneousness by the Presiding Officer of the Senate.
"(f) GENERAL POINT OF ORDER.—Notwithstanding any other law or
rule of the Senate, it shall be in order for a Senator to raise a single
point of order that several provisions of a bill, resolution, amendment, motion, or conference report violate this section. The Presiding Officer may sustain the point of order as to some or all of the
provisions against which the Senator raised the point of order. If the
Presiding Officer so sustains the point of order as to some of the
provisions (including provisions of an amendment, motion, or conference report) against which the Senator raised the point of order,
then only those provisions (including provisions of an amendment,
motion, or conference report) against which the Presiding Officer
sustains the point of order shall be deemed stricken pursuant to this
section. Before the Presiding Officer rules on such a point of order,
any Senator may move to waive such a point of order as it applies to
some or all of the provisions against which the point of order was
raised. Such a motion to waive is amendable in accordance with the
rules and precedents of the Senate. After the Presiding Officer rules
on such a point of order, any Senator may appeal the ruling of the
Presiding Officer on such a point of order as it applies to some or all
of the provisions on which the Presiding Officer ruled.
"(g) DETERMINATION OF LEVELS.—For purposes of this section, the
levels of new budget authority, budget outlays, new entitlement
authority, and revenues for a fiscal year shall be determined on the
basis of estimates made by the Committee on the Budget of the
Senate.".
(b) TRANSFER OF BYRD RULE.—(1) Section 20001 of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended by subsection (a), is transferred to the end of title III of the Congressional
Budget Act of 1974, and designated as section 313 of that Act.
(2) Section 313 of the Congressional Budget Act of 1974 is amended
by—
(A) adding at the beginning the following center heading:
"EXTRANEOUS MATTER IN RECONCILIATION LEGISLATION";

2 use 644.

(B) striking subsection (b), subsection (c), and the last sentence
of subsection (a); and
(C) redesignating subsections (d) ^^ (e), (f), and (g) as subsections (b), (c), (d) and (e), respectively.
(3) Subsection (a) of the first section of Senate Resolution 286 (99th
Congress, 1st Session), as amended by Senate Resolution 509 (99th
Congress, 2d Session) is enacted as subsection (c) of section 313 of the
Congressional Budget Act of 1974.
(4) Section 313 of the Congressional Budget Act of 1974 is
amended—
(A) in subsections (a), (bXlXA), and (c), by striking "of the
Congressional Budget Act of 1974";
(B) in subsection (a), by striking "(d)" and inserting "(b)";
(C) in subsection (bX2)(C), by adding "or" at the end thereof;
*• So in original. Probably should be "(d),".

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-623

(D) in subsection (c), by striking "when" and inserting
"When";
(E) in subsection (cXD, by striking "(dXlXA) or (dXlXD) of
section 20001 of the Consolidated Omnibus Budget ReconciUation Act of 1985" and inserting "(bXlXA), (bXlXB), (bXlXD),
(bXlXE),or(bXlXF)";and
(F) in subsection (cX2), by striking "this resolution" and
inserting "this subsection".
(5) The table of contents for the Congressional Budget and
Impoundment Control Act of 1974 is amended by adding after the
item for section 312 the following new item:
"Sec. 313. Extraneous matter in reconciliation legislation.".

Subtitle C—Social Security
SEC. 13301. OFF-BUDGET STATUS OF OASDI TRUST FUNDS.
(a) EXCLUSION OF SOCIAL SECURITY FROM ALL BUDGETS.—Notwith- 2 use 632 note,

standing any other provision of law, the receipts and disbursements
of the Federal Old-Age and Survivors Insurance Trust Fund £ind the
Federal Disability Insurance Trust Fund shall not be counted as
new budget authority, outlays, receipts, or deficit or surplus for
purposes of—
(1) the budget of the United States Government as submitted
by the President,
(2) the congressional budget, or
(3) the Balanced Budget and Emergency Deficit Control Act of
1985.
0))

EXCLUSION

OF

SOCIAL

SECURITY

FROM

CONGRESSIONAL

BUDGET.—Section 301(a) of the Congressional Budget Act of 1974 is 2 USC 632.
amended by adding at the end the following: "The concurrent
resolution shall not include the outlays and revenue totals of the old
age, survivors, and disability insurance program established under
title II of the Social Security Act or the related provisions of the
Internal Revenue Code of 1986 in the surplus or deficit totals
required by this subsection or in any other surplus or deficit totals
required by this title.".
SEC. 13302. PROTECTION OF OASDI TRUST FUNDS IN THE HOUSE OF 2 USC 632 note.
REPRESENTATIVES.

(a) I N GENERAL.—It shall not be in order in the House of Representatives to consider any bill or joint resolution, as reported, or
any Eimendment thereto or conference report thereon, if, upon
enactment—
(IXA) such legislation under consideration would provide for a
net increase in OASDI benefits of at least 0.02 percent of the
present value of future taxable payroll for the 75-year period
utilized in the most recent annual report of the Board of
Trustees provided pursuant to section 201(cX2) of the Social
Security Act, and (B) such legislation under consideration does
not provide at least a net increase, for such f 5-year period, in
OASDI taxes of the amount by which the net increase in such
benefits exceeds 0.02 percent of the present value of future
taxable pajn-oU for such 75-year period,
(2XA) such legislation under consideration would provide for a
net increase in OASDI benefits (for the 5-year estimating period
for such legislation under consideration), (B) such net increase.

104 STAT. 1388-624

PUBLIC LAW 101-508—NOV. 5, 1990

together with the net increases in OASDI benefits resulting
from previous legislation enacted during that fiscal year or any
of the previous 4 fiscal years (as estimated at the time of
enactment) which are attributable to those portions of the 5year estimating periods for such previous legislation that fall
within the 5-year estimating period for such legislation under
consideration, exceeds $250,000,000, and (C) such legislation
under consideration does not provide at least a net increase, for
the 5-year estimating period for such legislation under consideration, in OASDI taxes which, together with net increases in
OASDI taxes resulting from such previous legislation which are
attributable to those portions of the 5-year estimating periods
for such previous legislation that fall within the 5-year estimating period for such legislation under consideration, equals the
amount by which the net increase derived under subparagraph
(B) exceeds $250,000,000;
(3)(A) such legislation under consideration would provide for a
net decrease in OASDI taxes of at least 0.02 percent of the
present value of future taxable payroll for the 75-year period
utilized in the most recent annual report of the Board of
Trustees provided pursuant to section 201(c)(2) of the Social
Security Act, and (B) such legislation under consideration does
not provide at least a net decrease, for such 75-year period, in
OASDI benefits of the amount by which the net decrease in
such taxes exceeds 0.02 percent of the present value of future
taxable payroll for such 75-year period, or
(4)(A) such legislation under consideration would provide for a
net decrease in OASDI taxes (for the 5-year estimating period
for such legislation under consideration), (B) such net decrease,
together with the net decreases in OASDI taxes resulting from
previous legislation enacted during that fiscal year or any of the
previous 4 fiscal years (as estimated at the time of enactment)
which are attributable to those portions of the 5-year estimating
periods for such previous legislation that fall within the 5-year
estimating period for such legislation under consideration, exceeds $250,000,000, and (C) such legislation under consideration
does not provide at least a net decrease, for the 5-year estimating period for such legislation under consideration, in OASDI
benefits which, together with net decreases in OASDI benefits
resulting from such previous legislation which are attributable
to those portions of the 5-year estimating periods for such
previous legislation that fall within the 5-year estimating period
for such legislation under consideration, equals the amount by
which the net decrease derived under subparagraph (B) exceeds
$250,000,000.
(b) APPUCATION.—In applying paragraph (3) or (4) of subsection
(a), any provision of any bill or joint resolution, as reported, or any
amendment thereto, or conference report thereon, the effect of
which is to provide for a net decrease for any period in taxes
described in subsection (c)(2)(A) shall be disregarded if such bill, joint
resolution, amendment, or conference report also includes a provision the effect of which is to provide for a net increase of at least an
equivalent amount for such period in medicare taxes.
(c) DEFINITIONS.—For purposes of this subsection:
(1) The term "OASDI benefits" means the benefits under the
old-age, survivors, and disability insurance programs under title
II of the Social Security Act.

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-625

(2) The term "OASDI taxes" means—
(A) the taxes imposed under sections 1401(a), 3101(a), and
3111(a) of the Internal Revenue Code of 1986, and
(B) the taxes imposed under chapter 1 of such Code (to the
extent attributable to section 86 of such Code).
(3) The term "medicare taxes" means the taxes imposed
under sections 1401(b), 3101(b), and 3111(b) of the Internal Revenue Code of 1986.
(4) The term "previous legislation" shall not include legislation enacted before fiscal year 1991,
(5) The term "5-year estimating period" means, with respect
to any legislation, the fiscal year in which such legislation
becomes or would become effective and the next 4 fiscal years.
(6) No provision of any bill or resolution, or any amendment
thereto or conference report thereon, involving a change in
chapter 1 of the Internal Revenue Code of 1986 shall be treated
as affecting the amount of OASDI taxes referred to in paragraph (2)(B) unless such provision changes the income tax treatment of OASDI benefits.
SEC. 13303. SOCIAL SECURITY FIREWALL AND POINT OF ORDER IN THE
SENATE.

(a) CONCURRENT RESOLUTION ON THE BUDGET.—Section 301(a) of

the Congressional Budget Act of 1974 is amended by striking "and" 2 USC 632.
at the end of paragraph (4), by striking the period at the end of
paragraph (5) and inserting a semicolon; and by adding after paragraph (5) the following new paragraphs:
"(6) For purposes of Senate enforcement under this title,
outlays of the old-age, survivors, and disability insurance program established under title II of the Social Security Act for the
fiscal year of the resolution and for each of the 4 succeeding
fiscal years; and
"(7) For purposes of Senate enforcement under this title,
revenues of the old-age, survivors, and disability insurance
program established under title II of the Social Security Act
(and the related provisions of the Internal Revenue Code of
1986) for the fiscal year of the resolution and for each of the 4
succeeding fiscal years.".
(b) POINT OF ORDER.—Section 301(i) of the Congressional Budget
Act of 1974 is amended to read as follows:
"(i) It shall not be in order in the Senate to consider any concurrent resolution on the budget as reported to the Senate that would
decrease the excess of social security revenues over social security
outlays in any of the fiscal years covered by the concurrent resolution. No change in chapter 1 of the Internal Revenue Code of 1986
shall be treated as affecting the amount of social security revenues
unless such provision changes the income tax treatment of social
security benefits.".
(c) COMMITTEE ALLOCATIONS.—

(1) Section 302(a)(2) of the Congressional Budget Act of 1974 is 2 USC 633.
amended by inserting after "appropriate levels o f the following: "social security outlays for the fiscal year of the resolution
and for each of the 4 succeeding fiscal years,".
(2) Section 302(f)(2) of the Congressional Budget Act of 1974 is
amended by inserting before the period the following: "or provides for social security outlays in excess of the appropriate
allocation of social security outlays under subsection (a) for the

104 STAT. 1388-626

2 use 633.

2 use 642.

PUBLIC LAW 101-508—NOV. 5, 1990

fiscal year of the resolution or for the total of that year and the
4 succeeding fiscal years".
(3) Section 302(f)(2) of such Act is further amended by adding
at the end the following: "In applying this paragraph—
"(A) estimated social security outlays shall be deemed to
be reduced by the excess of estimated social security revenues (including social security revenues provided for in the
bill, resolution, amendment, or conference report with respect to which this paragraph is applied) over the appropriate level of social security revenues specified in the most
recently adopted concurrent resolution on the budget;
"(B) estimated social security outlays shall be deemed
increased by the shortfall of estimated social security revenues (including social security revenues provided for in the
bill, resolution, amendment, or conference report with respect to which this paragraph is applied) below the appropriate level of social security revenues specified in the most
recently adopted concurrent resolution on the budget; and
"(C) no provision of any bill or resolution, or any amendment thereto or conference report thereon, involving a
change in chapter 1 of the Internal Revenue Code of 1986
shall be treated as affecting the amount of social security
revenues unless such provision changes the income tax
treatment of social security benefits.
The Chairmsm of the Committee on the Budget of the Senate
may file with the Senate appropriately revised allocations
under subsection (a) and revised functional levels and aggregates to reflect the application of the preceding sentence. Such
revised allocations, functional levels, and aggregates shall be
considered as allocations, functional levels, and aggregates contained in the most recently agreed to concurrent resolution on
the budget, and the appropriate committees shall report revised
allocations pursuant to subsection (b).".
(d) POINT OF ORDER UNDER SECTION 311.—(1) Subsection (a) of
section 311(a) of the Congressional Budget Act of 1974 is redesignated as subsection (aXl) and paragraphs (1), (2), and (3) are redesignated as subparagraphs (A), (B), and (C).
(2) Section 311(a) of such Act is amended by inserting at the end
the following new paragraph:
"(2XA) After the Congress has completed action on a concurrent
resolution on the budget, it shall not be in order in the Senate to
consider any bill, resolution, amendment, motion, or conference
report that would cause the appropriate level of total new budget
authority or total budget outlays or social security outlays set forth
for the first fiscal year in the most recently agreed to concurrent
resolution on the budget covering such fiscal year to be exceeded, or
would cause revenues to be less than the appropriate level of total
revenues (or social security revenues to be less than the appropriate
level of social security revenues) set forth for the first fiscal year
covered by the resolution and for the period including the first fiscal
year plus the following 4 fiscal years in such concurrent resolution.
"(B) In appljdng this paragraph—
"(iXD estimated social security outlays shall be deemed to be
reduced by the excess of estimated social security revenues
(including those provided for in the bill, resolution, amendment,
or conference report with respect to which this subsection is
applied) over the appropriate level of Social Security revenues

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-627

specified in the most recently agreed to concurrent resolution
on the budget;
"(II) estimated social security revenues shall be deemed to be
increased to the extent that estimated social security outlays
are less (taking into account the effect of the bill, resolution,
amendment, or conference report to which this subsection is
being applied) than the appropriate level of social security
outlays in the most recently agreed to concurrent resolution on
the budget; and
"(ii)(I) estimated Social Security outlays shall be deemed to be
increased by the shortfall of estimated social security revenues
(including Social Security revenues provided for in the bill,
resolution, amendment, or conference report with respect to
which this subsection is applied) below the appropriate level of
social security revenues specified in the most recently adopted
concurrent resolution on the budget; and
"(II) estimated social security revenues shall be deemed to be
reduced by the excess of estimated social security outlays
(including social security outlays provided for in the bill, resolution, amendment, or conference report with respect to which
this subsection is applied) above the appropriate level of social
security outlays specified in the most recently adopted concurrent resolution on the budget; and
"(iii) no provision of any bill or resolution, or any amendment
thereto or conference report thereon, involving a change in
chapter 1 of the Internal Revenue Code of 1986 shall be treated
as affecting the amount of social security revenues unless such
provision changes the income tax treatment of social security
benefits.
The chairman of the Committee on the Budget of the Senate may
file with the Senate appropriately revised allocations under section
302(a) and revised functional levels and aggregates to reflect the
application of the preceding sentence. Such revised allocations,
functional levels, and aggregates shall be considered as allocations,
functional levels, and aggregates contained in the most recently
agreed to concurrent resolution on the budget, and the appropriate
committees shall report revised allocations pursuant to section
302(b)."
SEC. 13304. REPORT TO THE CONGRESS BY THE BOARD OF TRUSTEES OF
THE OASDI TRUST FUNDS REGARDING THE ACTUARIAL BALANCE OF THE TRUST FUNDS.
Section 201(c) of the Social Security Act (42 U.S.C. 401(c)) is
amended by inserting after the first sentence following clause (5) the
following new sentence: "Such statement shall include a finding by
the Board of Trustees as to whether the Federal Old-Age and
Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund, individually and collectively, are in close actuarial
balance (as defined by the Board of Trustees). .
SEC. 13305. EXERCISE OF RULEMAKING POWER.

This title and the amendments made by it are enacted by the
Congress—
(1) as an exercise of the rulemaking power of the House of
Representatives and the Senate, respectively, and sis such they
shall be considered as a part of the rules of each House,
respectively, or of that House to which they specifically apply.

2 USC 900 note.

104 STAT. 1388-628

PUBLIC LAW 101-508—NOV. 5, 1990

and such rules shall supersede other rules only to the extent
that they are inconsistent therewith; and
(2) with full recognition of the constitutional right of either
House to change such rules (so far as relating to such House) at
any time, in the same manner, and to the same extent £is in the
case of any other rule of such House.
2 u s e 632 note.

SEC. 13306. EFFECTIVE DATE.

Sections 13301, 13302, and 13303 and any amendments made by
such sections shall apply with respect to fiscal years beginning on or
after October 1, 1990. Section 13304 shall be effective for annual
reports of the Board of Trustees issued in or after calendar year
1991.

Subtitle D—Treatment of Fiscal Year 1991
Sequestration
2 u s e 902 note.

SEC. 13401. RESTORATION OF FUNDS SEQUESTERED.

(a) ORDER RESCINDED.—Upon the enactment of this Act, the orders
issued by the President on August 25, 1990, and October 15, 1990,
pursuant to section 252 of the Balanced Budget and Emergency
Deficit Control Act of 1985 are hereby rescinded.
(b) AMOUNTS RESTORED.—Any action taken to implement the
orders referred to in subsection (a) shall be reversed, and any
sequestrable resource that has been reduced or sequestered by such
orders is hereby restored, revived, or released and shall be available
to the same extent and for the same purpose as if the orders had not
been issued.
(c) FuRLOUGHED EMPLOYEES,—(1) Federal employees furloughed as
a result of the lapse in appropriations from midnight October 5,
1990, until the enactment of House Joint Resolution 666 shall be
compensated at their standard rate of compensation for the period
during which there was a lapse in appropriations.
(2) AH obligations incurred in anticipation of the appropriations
made and authority granted by House Joint Resolution 666 for the
purposes of maintaining the essential level of activity to protect life
and property and bringing about orderly termination of government
functions are hereby ratified and approved if otherwise in accord
with the provisions of that Act.

Subtitle E—Government-sponsored Enterprises
2 u s e 621 note.

SEC. 13501. FINANCIAL SAFETY AND SOUNDNESS OF GOVERNMENT-SPONSORED ENTERPRISES.

(a) DEFINITION.—For purposes of this section, the terms "Government-sponsored enterprise" and "GSE" mean the Farm Credit
System (including the Farm Credit Banks, Banks for Cooperatives,
and Federal Agricultural Mortgage Corporation), the Federal Home
Loan Bank System, the Federal Home Loan Mortgage Corporation,
the Federal National Mortgage Association, and the Student Loan
Marketing Association.
0)) TREASURY DEPARTMENT STUDY AND PROPOSED LEGISLATION.—

PUBLIC LAW 101-508—NOV. 5, 1990

104 STAT. 1388-629

(1) The Department of the Treasury shall prepare and submit
to Congress no later than April 30, 1991, a study of GSEs and
recommended legislation.
(2) The study shall include an objective assessment of the
financial soundness of GSEs, the adequacy of the existing regulatory structure for GSEs, the financial exposure of the Federal
Government posed by GSEs, and the effects of GSE activities on
Treasury borrowing.
(c) CONGRESSIONAL BUDGET OFFICE STUDY.—

(1) The Congressional Budget Office shall prepare and submit
to Congress no later than April 30, 1991, a study of GSEs.
(2) The study shall include an analysis of the financial risks
each GSE assumes, how Congress may improve its understanding of those risks, the supervision and regulation of GSEs' risk
management, the financial exposure of the Federal Government
posed by GSEs, and the effects of GSE activities on Treasury
borrowing. The study shall also include an analysis of alternative models for oversight of GSEs and of the costs and benefits of each alternative model to the Government and to the
markets and beneficiaries served by GSEs.
(d) ACCESS TO RELEVANT INFORMATION.—

(1) For the studies required by this section, each GSE shall
provide full and prompt access to the Secretary of the Treasury
and the Director of the Congressional Budget Office to its bool^
and records and other information requested by the Secretary of
the Treasury or the Director of the Congressional Budget Office.
(2) In preparing the studies required by this section, the
Secretary of the Treasury and the Director of the Congressional
Budget Office may request information from, or the assistance
of, any Federal department or agency authorized by law to
supervise the activities of a GSE.
(e) CONFIDENTIALITY OF RELEVANT INFORMATION.—

(1) The Secretary of the Tresisury and the Director of the
Congressional Budget Office shall determine and maintain the
confidentiality of any book, record, or information made available by a GSE under this section in a manner consistent with
the level of confidentiality established for the material by the
GSE involved.
(2) The Department of the Treasury shall be exempt from
section 552 of title 5, United States Code, for any book, record,
or information made available under subsection (d) and determined by the Secretary of the Treasury to be confidential under
this subsection.
(3) Any officer or employee of the Department of the Treasury
shall be subject to the penalties set forth in section 1906 of title
18, United States Code, if—
(A) by virtue of his or her employment or official position,
he or she has possession of or access to any book, record, or
information made available under and determined to be
confidential under this section; and
(B) he or she discloses the material in any manner other
than—
(i) to an officer or employee of the Department of the
Treasury; or
(ii) pursuant to the exception set forth in such section
1906.

104 STAT. 1388-630

PUBLIC LAW 101-508—NOV. 5, 1990

(4) The Congressional Budget Office shall be exempt from
section 203 of the Congressional Budget Act of 1974 with respect
to any book, record, or information made available under this
subsection and determined by the Director to be confidential
under paragraph (1).
(f) REQUIREMENT TO REPORT LEGISLATION.—(1) The committees of
jurisdiction in the House shall prepare and report to the House no
later than September 15, 1991, legislation to ensure the financial
soundness of GSEs and to minimize the possibility that a GSE might
require future assistance from the Government.
(2) It is the sense of the Senate that the committees of jurisdiction
in the Senate shall prepare and report to the Senate no later than
September 15, 1991, legislation to ensure the financial safety and
soundness of GSEs and to minimize the possibility that a GSE might
require future assistance from the Government.
(f) PRESIDENT'S BUDGET,—The President's annual budget submission shall include an analysis of the financial condition of the GSEs
and the financial exposure of the Government, if any, posed by
GSEs.
Approved November 5, 1990.
Certified February 22, 1991.
Editorial note: This printed version of the original hand enrollment is published
pursuant to section 2(c) of Public Law 101-466. The following memorandum for the
Archivist of the United States was signed by the President on January 10, 1991, and
was printed in the Federal Register on January 14, 1991:
By the authority vested in me as President by the Constitution and laws of the
United States, including Section 301 of Title 3 of the United States Code, I hereby
authorize you to ascertmn whether the printed enrollment of H.R. 5835, the Omnibus
Budget Reconciliation Act of 1990 (Public Law 101-508), approved on November 5,
1990, is a correct printing of the hand enrollment and if so to make on my behalf the
certification specified in Section 2(c) of H.J. Res. 682 (Public Law 101-466).
Attached is the printed enrollment that was received at the White House on
January 7, 1991.
This memorandum shall be published in the Federal Register.
The Archivist on February 22, 1991, certified this to be a correct printing of the hand
enrollment of Public Law 101-508.

LEGISLATIVE HISTORY—H.R. 5835 (S. 3209):
HOUSE REPORTS: No. 101-881 (Comm. on the Budget) and No. 101-964 (Comm. of
OonfGrGncG)
CONGRESSIONAL RECORD, Vol. 136 (1990):
Oct. 16, considered and passed House.
Oct. 17, S. 3209 considered in Senate.
Oct. 18, H.R. 5835 considered and passed Senate, amended, in lieu of S. 3209.
Oct. 26, House agreed to conference report.
Oct. 27, Senate agreed to conference report.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 26 (1990):
Nov. 5, Presidential stetement.