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[Congressional Record: December 15, 2000 (House)]
[Page H12304-H12354]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
[DOCID:cr15de00-43]                         
 
[[pp. H12304-H12354]] CONFERENCE REPORT ON H.R. 4577, DEPARTMENTS OF LABOR, HEALTH AND HUMAN 
 SERVICES, AND EDUCATION, AND RELATED AGENCIES APPROPRIATIONS ACT, 2001

[[Continued from page H12303]]

[[Page H12304]]

     a library from limiting Internet access to or otherwise 
     protecting against materials other than those referred to in 
     subclauses (I), (II), and (III) of paragraph (1)(A)(i).
       ``(3) Disabling during certain use.--An administrator, 
     supervisor, or other authority may disable a technology 
     protection measure under paragraph (1) to enable access for 
     bona fide research or other lawful purposes.
       ``(4) Timing and applicability of implementation.--
       ``(A) In general.--A library covered by paragraph (1) shall 
     certify the compliance of such library with the requirements 
     of paragraph (1) as part of the application process for the 
     next program funding year under this Act following the 
     effective date of this subsection, and for each subsequent 
     program funding year thereafter.
       ``(B) Process.--
       ``(i) Libraries with internet safety policies and 
     technology protection measures in place.--A library covered 
     by paragraph (1) that has in place an Internet safety policy 
     meeting the requirements of paragraph (1) shall certify its 
     compliance with paragraph (1) during each annual program 
     application cycle under this Act.
       ``(ii) Libraries without internet safety policies and 
     technology protection measures in place.--A library covered 
     by paragraph (1) that does not have in place an Internet 
     safety policy meeting the requirements of paragraph (1)--

       ``(I) for the first program year after the effective date 
     of this subsection in which the library applies for funds 
     under this Act, shall certify that it is undertaking such 
     actions, including any necessary procurement procedures, to 
     put in place an Internet safety policy that meets such 
     requirements; and
       ``(II) for the second program year after the effective date 
     of this subsection in which the library applies for funds 
     under this Act, shall certify that such library is in 
     compliance with such requirements.

     Any library covered by paragraph (1) that is unable to 
     certify compliance with such requirements in such second 
     program year shall be ineligible for all funding under this 
     Act for such second program year and all subsequent program 
     years until such time as such library comes into 
     compliance with such requirements.
       ``(iii) Waivers.--Any library subject to a certification 
     under clause (ii)(II) that cannot make the certification 
     otherwise required by that clause may seek a waiver of that 
     clause if State or local procurement rules or regulations or 
     competitive bidding requirements prevent the making of the 
     certification otherwise required by that clause. The library 
     shall notify the Director of the Institute of Museum and 
     Library Services of the applicability of that clause to the 
     library. Such notice shall certify that the library will 
     comply with the requirements in paragraph (1) before the 
     start of the third program year after the effective date of 
     this subsection for which the library is applying for funds 
     under this Act.
       ``(5) Noncompliance.--
       ``(A) Use of general education provisions act remedies.--
     Whenever the Director of the Institute of Museum and Library 
     Services has reason to believe that any recipient of funds 
     this Act is failing to comply substantially with the 
     requirements of this subsection, the Director may--
       ``(i) withhold further payments to the recipient under this 
     Act,
       ``(ii) issue a complaint to compel compliance of the 
     recipient through a cease and desist order, or
       ``(iii) enter into a compliance agreement with a recipient 
     to bring it into compliance with such requirements.
       ``(B) Recovery of funds prohibited.--The actions authorized 
     by subparagraph (A) are the exclusive remedies available with 
     respect to the failure of a library to comply substantially 
     with a provision of this subsection, and the Director shall 
     not seek a recovery of funds from the recipient for such 
     failure.
       ``(C) Recommencement of payments.--Whenever the Director 
     determines (whether by certification or other appropriate 
     evidence) that a recipient of funds who is subject to the 
     withholding of payments under subparagraph (A)(i) has cured 
     the failure providing the basis for the withholding of 
     payments, the Director shall cease the withholding of 
     payments to the recipient under that subparagraph.
       ``(6) Separability.--If any provision of this subsection is 
     held invalid, the remainder of this subsection shall not be 
     affected thereby.
       ``(7) Definitions.--In this section:
       ``(A) Child pornography.--The term `child pornography' has 
     the meaning given such term in section 2256 of title 18, 
     United States Code.
       ``(B) Harmful to minors.--The term `harmful to minors' 
     means any picture, image, graphic image file, or other visual 
     depiction that--
       ``(i) taken as a whole and with respect to minors, appeals 
     to a prurient interest in nudity, sex, or excretion;
       ``(ii) depicts, describes, or represents, in a patently 
     offensive way with respect to what is suitable for minors, an 
     actual or simulated sexual act or sexual contact, actual or 
     simulated normal or perverted sexual acts, or a lewd 
     exhibition of the genitals; and
       ``(iii) taken as a whole, lacks serious literary, artistic, 
     political, or scientific value as to minors.
       ``(C) Minor.--The term `minor' means an individual who has 
     not attained the age of 17.
       ``(D) Obscene.--The term `obscene' has the meaning given 
     such term in section 1460 of title 18, United States Code.
       ``(E) Sexual act; sexual contact.--The terms `sexual act' 
     and `sexual contact' have the meanings given such terms in 
     section 2246 of title 18, United States Code.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect 120 days after the date of the enactment of 
     this Act.

                Subtitle B--Universal Service Discounts

     SEC. 1721. REQUIREMENT FOR SCHOOLS AND LIBRARIES TO ENFORCE 
                   INTERNET SAFETY POLICIES WITH TECHNOLOGY 
                   PROTECTION MEASURES FOR COMPUTERS WITH INTERNET 
                   ACCESS AS CONDITION OF UNIVERSAL SERVICE 
                   DISCOUNTS.

       (a) Schools.--Section 254(h) of the Communications Act of 
     1934 (47 U.S.C. 254(h)) is amended--
       (1) by redesignating paragraph (5) as paragraph (7); and
       (2) by inserting after paragraph (4) the following new 
     paragraph (5):
       ``(5) Requirements for certain schools with computers 
     having internet access.--
       ``(A) Internet safety.--
       ``(i) In general.--Except as provided in clause (ii), an 
     elementary or secondary school having computers with Internet 
     access may not receive services at discount rates under 
     paragraph (1)(B) unless the school, school board, local 
     educational agency, or other authority with responsibility 
     for administration of the school--

       ``(I) submits to the Commission the certifications 
     described in subparagraphs (B) and (C);
       ``(II) submits to the Commission a certification that an 
     Internet safety policy has been adopted and implemented for 
     the school under subsection (l); and
       ``(III) ensures the use of such computers in accordance 
     with the certifications.

       ``(ii) Applicability.--The prohibition in clause (i) shall 
     not apply with respect to a school that receives services at 
     discount rates under paragraph (1)(B) only for purposes other 
     than the provision of Internet access, Internet service, or 
     internal connections.
       ``(iii) Public notice; hearing.--An elementary or secondary 
     school described in clause (i), or the school board, local 
     educational agency, or other authority with responsibility 
     for administration of the school, shall provide reasonable 
     public notice and hold at least 1 public hearing or meeting 
     to address the proposed Internet safety policy. In the case 
     of an elementary or secondary school other than an elementary 
     or secondary school as defined in section 14101 of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     8801), the notice and hearing required by this clause may be 
     limited to those members of the public with a relationship to 
     the school.
       ``(B) Certification with respect to minors.--A 
     certification under this subparagraph is a certification that 
     the school, school board, local educational agency, or other 
     authority with responsibility for administration of the 
     school--
       ``(i) is enforcing a policy of Internet safety for minors 
     that includes monitoring the online activities of minors and 
     the operation of a technology protection measure with respect 
     to any of its computers with Internet access that protects 
     against access through such computers to visual depictions 
     that are--

       ``(I) obscene;
       ``(II) child pornography; or
       ``(III) harmful to minors; and

       ``(ii) is enforcing the operation of such technology 
     protection measure during any use of such computers by 
     minors.
       ``(C) Certification with respect to adults.--A 
     certification under this paragraph is a certification that 
     the school, school board, local educational agency, or other 
     authority with responsibility for administration of the 
     school--
       ``(i) is enforcing a policy of Internet safety that 
     includes the operation of a technology protection measure 
     with respect to any of its computers with Internet access 
     that protects against access through such computers to visual 
     depictions that are--

       ``(I) obscene; or
       ``(II) child pornography; and

       ``(ii) is enforcing the operation of such technology 
     protection measure during any use of such computers.
       ``(D) Disabling during adult use.--An administrator, 
     supervisor, or other person authorized by the certifying 
     authority under subparagraph (A)(i) may disable the 
     technology protection measure concerned, during use by an 
     adult, to enable access for bona fide research or other 
     lawful purpose.
       ``(E) Timing of implementation.--
       ``(i) In general.--Subject to clause (ii) in the case of 
     any school covered by this paragraph as of the effective date 
     of this paragraph under section 1721(h) of the Children's 
     Internet Protection Act, the certification under 
     subparagraphs (B) and (C) shall be made--

       ``(I) with respect to the first program funding year under 
     this subsection following such effective date, not later than 
     120 days after the beginning of such program funding year; 
     and
       ``(II) with respect to any subsequent program funding year, 
     as part of the application process for such program funding 
     year.

       ``(ii) Process.--

       ``(I) Schools with internet safety policy and technology 
     protection measures in place.--A school covered by clause (i) 
     that has in place an Internet safety policy and technology 
     protection measures meeting the requirements necessary for 
     certification under subparagraphs (B) and (C) shall certify 
     its compliance with subparagraphs (B) and (C) during each 
     annual program application cycle under this subsection, 
     except that with respect to the first program funding year 
     after the effective date of this paragraph under section 
     1721(h) of the Children's Internet Protection Act, the 
     certifications shall be made not later than 120 days after 
     the beginning of such first program funding year.
       ``(II) Schools without internet safety policy and 
     technology protection measures in

[[Page H12305]]

     place.--A school covered by clause (i) that does not have in 
     place an Internet safety policy and technology protection 
     measures meeting the requirements necessary for certification 
     under subparagraphs (B) and (C)--

       ``(aa) for the first program year after the effective date 
     of this subsection in which it is applying for funds under 
     this subsection, shall certify that it is undertaking such 
     actions, including any necessary procurement procedures, to 
     put in place an Internet safety policy and technology 
     protection measures meeting the requirements necessary for 
     certification under subparagraphs (B) and (C); and
       ``(bb) for the second program year after the effective date 
     of this subsection in which it is applying for funds under 
     this subsection, shall certify that it is in compliance with 
     subparagraphs (B) and (C).

     Any school that is unable to certify compliance with such 
     requirements in such second program year shall be ineligible 
     for services at discount rates or funding in lieu of services 
     at such rates under this subsection for such second year and 
     all subsequent program years under this subsection, until 
     such time as such school comes into compliance with this 
     paragraph.
       ``(III) Waivers.--Any school subject to subclause (II) that 
     cannot come into compliance with subparagraphs (B) and (C) in 
     such second year program may seek a waiver of subclause 
     (II)(bb) if State or local procurement rules or regulations 
     or competitive bidding requirements prevent the making of the 
     certification otherwise required by such subclause. A school, 
     school board, local educational agency, or other authority 
     with responsibility for administration of the school shall 
     notify the Commission of the applicability of such subclause 
     to the school. Such notice shall certify that the school in 
     question will be brought into compliance before the start of 
     the third program year after the effective date of this 
     subsection in which the school is applying for funds under 
     this subsection.

       ``(F) Noncompliance.--
       ``(i) Failure to submit certification.--Any school that 
     knowingly fails to comply with the application guidelines 
     regarding the annual submission of certification required 
     by this paragraph shall not be eligible for services at 
     discount rates or funding in lieu of services at such 
     rates under this subsection.
       ``(ii) Failure to comply with certification.--Any school 
     that knowingly fails to ensure the use of its computers in 
     accordance with a certification under subparagraphs (B) and 
     (C) shall reimburse any funds and discounts received under 
     this subsection for the period covered by such certification.
       ``(iii) Remedy of noncompliance.--

       ``(I) Failure to submit.--A school that has failed to 
     submit a certification under clause (i) may remedy the 
     failure by submitting the certification to which the failure 
     relates. Upon submittal of such certification, the school 
     shall be eligible for services at discount rates under this 
     subsection.
       ``(II) Failure to comply.--A school that has failed to 
     comply with a certification as described in clause (ii) may 
     remedy the failure by ensuring the use of its computers in 
     accordance with such certification. Upon submittal to the 
     Commission of a certification or other appropriate evidence 
     of such remedy, the school shall be eligible for services at 
     discount rates under this subsection.''.

       (b) Libraries.--Such section 254(h) is further amended by 
     inserting after paragraph (5), as amended by subsection (a) 
     of this section, the following new paragraph:
       ``(6) Requirements for certain libraries with computers 
     having internet access.--
       ``(A) Internet safety.--
       ``(i) In general.--Except as provided in clause (ii), a 
     library having one or more computers with Internet access may 
     not receive services at discount rates under paragraph (1)(B) 
     unless the library--

       ``(I) submits to the Commission the certifications 
     described in subparagraphs (B) and (C); and
       ``(II) submits to the Commission a certification that an 
     Internet safety policy has been adopted and implemented for 
     the library under subsection (l); and
       ``(III) ensures the use of such computers in accordance 
     with the certifications.

       ``(ii) Applicability.--The prohibition in clause (i) shall 
     not apply with respect to a library that receives services at 
     discount rates under paragraph (1)(B) only for purposes other 
     than the provision of Internet access, Internet service, or 
     internal connections.
       ``(iii) Public notice; hearing.--A library described in 
     clause (i) shall provide reasonable public notice and hold at 
     least 1 public hearing or meeting to address the proposed 
     Internet safety policy.
       ``(B) Certification with respect to minors.--A 
     certification under this subparagraph is a certification that 
     the library--
       ``(i) is enforcing a policy of Internet safety that 
     includes the operation of a technology protection measure 
     with respect to any of its computers with Internet access 
     that protects against access through such computers to visual 
     depictions that are--

       ``(I) obscene;
       ``(II) child pornography; or
       ``(III) harmful to minors; and

       ``(ii) is enforcing the operation of such technology 
     protection measure during any use of such computers by 
     minors.
       ``(C) Certification with respect to adults.--A 
     certification under this paragraph is a certification that 
     the library--
       ``(i) is enforcing a policy of Internet safety that 
     includes the operation of a technology protection measure 
     with respect to any of its computers with Internet access 
     that protects against access through such computers to visual 
     depictions that are--

       ``(I) obscene; or
       ``(II) child pornography; and

       ``(ii) is enforcing the operation of such technology 
     protection measure during any use of such computers.
       ``(D) Disabling during adult use.--An administrator, 
     supervisor, or other person authorized by the certifying 
     authority under subparagraph (A)(i) may disable the 
     technology protection measure concerned, during use by an 
     adult, to enable access for bona fide research or other 
     lawful purpose.
       ``(E) Timing of implementation.--
       ``(i) In general.--Subject to clause (ii) in the case of 
     any library covered by this paragraph as of the effective 
     date of this paragraph under section 1721(h) of the 
     Children's Internet Protection Act, the certification under 
     subparagraphs (B) and (C) shall be made--

       ``(I) with respect to the first program funding year under 
     this subsection following such effective date, not later than 
     120 days after the beginning of such program funding year; 
     and
       ``(II) with respect to any subsequent program funding year, 
     as part of the application process for such program funding 
     year.

       ``(ii) Process.--

       ``(I) Libraries with internet safety policy and technology 
     protection measures in place.--A library covered by clause 
     (i) that has in place an Internet safety policy and 
     technology protection measures meeting the requirements 
     necessary for certification under subparagraphs (B) and (C) 
     shall certify its compliance with subparagraphs (B) and (C) 
     during each annual program application cycle under this 
     subsection, except that with respect to the first program 
     funding year after the effective date of this paragraph under 
     section 1721(h) of the Children's Internet Protection Act, 
     the certifications shall be made not later than 120 days 
     after the beginning of such first program funding year.
       ``(II) Libraries without internet safety policy and 
     technology protection measures in place.--A library covered 
     by clause (i) that does not have in place an Internet safety 
     policy and technology protection measures meeting the 
     requirements necessary for certification under subparagraphs 
     (B) and (C)--

       ``(aa) for the first program year after the effective date 
     of this subsection in which it is applying for funds under 
     this subsection, shall certify that it is undertaking such 
     actions, including any necessary procurement procedures, to 
     put in place an Internet safety policy and technology 
     protection measures meeting the requirements necessary for 
     certification under subparagraphs (B) and (C); and
       ``(bb) for the second program year after the effective date 
     of this subsection in which it is applying for funds under 
     this subsection, shall certify that it is in compliance with 
     subparagraphs (B) and (C).

     Any library that is unable to certify compliance with such 
     requirements in such second program year shall be ineligible 
     for services at discount rates or funding in lieu of services 
     at such rates under this subsection for such second year and 
     all subsequent program years under this subsection, until 
     such time as such library comes into compliance with this 
     paragraph.
       ``(III) Waivers.--Any library subject to subclause (II) 
     that cannot come into compliance with subparagraphs (B) and 
     (C) in such second year may seek a waiver of subclause 
     (II)(bb) if State or local procurement rules or regulations 
     or competitive bidding requirements prevent the making of the 
     certification otherwise required by such subclause. A 
     library, library board, or other authority with 
     responsibility for administration of the library shall 
     notify the Commission of the applicability of such 
     subclause to the library. Such notice shall certify that 
     the library in question will be brought into compliance 
     before the start of the third program year after the 
     effective date of this subsection in which the library is 
     applying for funds under this subsection.
       ``(F) Noncompliance.--
       ``(i) Failure to submit certification.--Any library that 
     knowingly fails to comply with the application guidelines 
     regarding the annual submission of certification required by 
     this paragraph shall not be eligible for services at discount 
     rates or funding in lieu of services at such rates under this 
     subsection.
       ``(ii) Failure to comply with certification.--Any library 
     that knowingly fails to ensure the use of its computers in 
     accordance with a certification under subparagraphs (B) and 
     (C) shall reimburse all funds and discounts received under 
     this subsection for the period covered by such certification.
       ``(iii) Remedy of noncompliance.--

       ``(I) Failure to submit.--A library that has failed to 
     submit a certification under clause (i) may remedy the 
     failure by submitting the certification to which the failure 
     relates. Upon submittal of such certification, the library 
     shall be eligible for services at discount rates under this 
     subsection.
       ``(II) Failure to comply.--A library that has failed to 
     comply with a certification as described in clause (ii) may 
     remedy the failure by ensuring the use of its computers in 
     accordance with such certification. Upon submittal to the 
     Commission of a certification or other appropriate evidence 
     of such remedy, the library shall be eligible for services at 
     discount rates under this subsection.''.

       (c) Definitions.--Paragraph (7) of such section, as 
     redesignated by subsection (a)(1) of this section, is amended 
     by adding at the end the following:
       ``(D) Minor.--The term `minor' means any individual who has 
     not attained the age of 17 years.
       ``(E) Obscene.--The term `obscene' has the meaning given 
     such term in section 1460 of title 18, United States Code.
       ``(F) Child pornography.--The term `child pornography' has 
     the meaning given such term in section 2256 of title 18, 
     United States Code.

[[Page H12306]]

       ``(G) Harmful to minors.--The term `harmful to minors' 
     means any picture, image, graphic image file, or other visual 
     depiction that--
       ``(i) taken as a whole and with respect to minors, appeals 
     to a prurient interest in nudity, sex, or excretion;
       ``(ii) depicts, describes, or represents, in a patently 
     offensive way with respect to what is suitable for minors, an 
     actual or simulated sexual act or sexual contact, actual or 
     simulated normal or perverted sexual acts, or a lewd 
     exhibition of the genitals; and
       ``(iii) taken as a whole, lacks serious literary, artistic, 
     political, or scientific value as to minors.
       ``(H) Sexual act; sexual contact.--The terms `sexual act' 
     and `sexual contact' have the meanings given such terms in 
     section 2246 of title 18, United States Code.
       ``(I) Technology protection measure.--The term `technology 
     protection measure' means a specific technology that blocks 
     or filters Internet access to the material covered by a 
     certification under paragraph (5) or (6) to which such 
     certification relates.''.
       (d) Conforming Amendment.--Paragraph (4) of such section is 
     amended by striking ``paragraph (5)(A)'' and inserting 
     ``paragraph (7)(A)''.
       (e) Separability.--If any provision of paragraph (5) or (6) 
     of section 254(h) of the Communications Act of 1934, as 
     amended by this section, or the application thereof to any 
     person or circumstance is held invalid, the remainder of such 
     paragraph and the application of such paragraph to other 
     persons or circumstances shall not be affected thereby.
       (f) Regulations.--
       (1) Requirement.--The Federal Communications Commission 
     shall prescribe regulations for purposes of administering the 
     provisions of paragraphs (5) and (6) of section 254(h) of the 
     Communications Act of 1934, as amended by this section.
       (2) Deadline.--Notwithstanding any other provision of law, 
     the Commission shall prescribe regulations under paragraph 
     (1) so as to ensure that such regulations take effect 120 
     days after the date of the enactment of this Act.
       (g) Availability of Certain Funds for Acquisition of 
     Technology Protection Measures.
       (1) In general.--Notwithstanding any other provision of 
     law, funds available under section 3134 or part A of title VI 
     of the Elementary and Secondary Education Act of 1965, or 
     under section 231 of the Library Services and Technology Act, 
     may be used for the purchase or acquisition of technology 
     protection measures that are necessary to meet the 
     requirements of this title and the amendments made by this 
     title. No other sources of funds for the purchase or 
     acquisition of such measures are authorized by this title, or 
     the amendments made by this title.
       (2) Technology protection measure defined.--In this 
     section, the term ``technology protection measure'' has the 
     meaning given that term in section 1703.
       (h) Effective Date.--The amendments made by this section 
     shall take effect 120 days after the date of the enactment of 
     this Act.

        Subtitle C--Neighborhood Children's Internet Protection

     SEC. 1731. SHORT TITLE.

       This subtitle may be cited as the ``Neighborhood Children's 
     Internet Protection Act''.

     SEC. 1732. INTERNET SAFETY POLICY REQUIRED.

       Section 254 of the Communications Act of 1934 (47 U.S.C. 
     254) is amended by adding at the end the following:
       ``(l) Internet Safety Policy Requirement for Schools and 
     Libraries.--
       ``(1) In general.--In carrying out its responsibilities 
     under subsection (h), each school or library to which 
     subsection (h) applies shall--
       ``(A) adopt and implement an Internet safety policy that 
     addresses--
       ``(i) access by minors to inappropriate matter on the 
     Internet and World Wide Web;
       ``(ii) the safety and security of minors when using 
     electronic mail, chat rooms, and other forms of direct 
     electronic communications;
       ``(iii) unauthorized access, including so-called `hacking', 
     and other unlawful activities by minors online;
       ``(iv) unauthorized disclosure, use, and dissemination of 
     personal identification information regarding minors; and
       ``(v) measures designed to restrict minors' access to 
     materials harmful to minors; and
       ``(B) provide reasonable public notice and hold at least 
     one public hearing or meeting to address the proposed 
     Internet safety policy.
       ``(2) Local determination of content.--A determination 
     regarding what matter is inappropriate for minors shall be 
     made by the school board, local educational agency, library, 
     or other authority responsible for making the determination. 
     No agency or instrumentality of the United States Government 
     may--
       ``(A) establish criteria for making such determination;
       ``(B) review the determination made by the certifying 
     school, school board, local educational agency, library, or 
     other authority; or
       ``(C) consider the criteria employed by the certifying 
     school, school board, local educational agency, library, or 
     other authority in the administration of subsection 
     (h)(1)(B).
       ``(3) Availability for review.--Each Internet safety policy 
     adopted under this subsection shall be made available to the 
     Commission, upon request of the Commission, by the school, 
     school board, local educational agency, library, or other 
     authority responsible for adopting such Internet safety 
     policy for purposes of the review of such Internet safety 
     policy by the Commission.
       ``(4) Effective date.--This subsection shall apply with 
     respect to schools and libraries on or after the date that is 
     120 days after the date of the enactment of the Children's 
     Internet Protection Act.''.

     SEC. 1733. IMPLEMENTING REGULATIONS.

       Not later than 120 days after the date of enactment of this 
     Act, the Federal Communications Commission shall prescribe 
     regulations for purposes of section 254(l) of the 
     Communications Act of 1934, as added by section 1732 of this 
     Act.

                      Subtitle D--Expedited Review

     SEC. 1741. EXPEDITED REVIEW.

       (a) Three-Judge District Court Hearing.--Notwithstanding 
     any other provision of law, any civil action challenging the 
     constitutionality, on its face, of this title or any 
     amendment made by this title, or any provision thereof, shall 
     be heard by a district court of 3 judges convened pursuant to 
     the provisions of section 2284 of title 28, United States 
     Code.
       (b) Appellate Review.--Notwithstanding any other provision 
     of law, an interlocutory or final judgment, decree, or order 
     of the court of 3 judges in an action under subsection (a) 
     holding this title or an amendment made by this title, or any 
     provision thereof, unconstitutional shall be reviewable as a 
     matter of right by direct appeal to the Supreme Court. Any 
     such appeal shall be filed not more than 20 days after entry 
     of such judgment, decree, or order.
       This Act may be cited as the ``Miscellaneous Appropriations 
     Act, 2001''.

                      MISCELLANEOUS APPROPRIATIONS

       Following is explanatory language on H.R. 5666, as 
     introduced on December 15, 2000.
       The conferees on H.R. 4577 agree with the matter included 
     in H.R. 5666 and enacted in this conference report by 
     reference and the following description of it.

                               DIVISION A

                               CHAPTER 1

                    General Provisions--This Chapter

       The conference agreement includes language which: provides 
     that not more than $100,000 shall be available for guarantees 
     of private sector rural electrification and 
     telecommunications loans; clarifies that a housing 
     demonstration program is to be carried out in Mississippi and 
     Alaska; clarifies that the Initiative for Future Agriculture 
     and Food Systems shall be used to make grants only to 
     colleges, universities, or research foundations maintained by 
     a college or university; makes a technical correction to the 
     Rural Community Advancement Program to specify that funds may 
     be used in counties which have received an emergency 
     designation after January 1, 2000; provides certain transfers 
     under the livestock assistance program; clarifies eligibility 
     for quality losses; clarifies that Emergency Conservation 
     Program funds previously appropriated for the Cerro Grande 
     fire can be made available for drought benefits; clarifies a 
     provision regarding payments to producers that suffered 
     losses because of the insolvency of an agriculture 
     cooperative in the State of California; provides that Burley, 
     Flue-cured, and Cigar Binder Type 54-55 tobacco will be 
     treated identically for loan forfeiture purposes; and 
     establishes an effective date for a provision of the 
     Agricultural Risk Protection Act of 2000 regarding 
     limitations on Burley tobacco quota adjustments. The 
     effective date of these provisions is the date of enactment 
     of the Agriculture, Rural Development, Food and Drug 
     Administration, and Related Agencies Appropriations Act, 
     2001.
       The conference agreement includes a section maintaining the 
     eligibility of certain rural areas for U.S. Department of 
     Agriculture rural housing programs.
       The conference agreement includes a section that authorizes 
     a study on the feasibility of including ethanol, biodiesel, 
     and other bio-based fuels as part of the Strategic Petroleum 
     Reserve.
       The conference agreement includes a section that makes the 
     City of Wilson, NC, eligible for certain U.S. Department of 
     Agriculture rural development programs.
       The conference agreement includes a section that provides 
     $26,000,000 for the Environmental Quality Incentives Program.
       The conference agreement includes a section regarding the 
     operation of the ongoing bovine tuberculosis eradication 
     program. The intent of the conferees is that funding for this 
     program, which is financed through the Commodity Credit 
     Corporation, shall provide a total of not less than 
     $60,259,000.
       The conferees expect that, in developing any consumer 
     guidance regarding mercury exposure from seafood consumption, 
     the Department of Health and Human Services will rely upon 
     the results of more than one relevant study. The Secretary is 
     directed to submit a report to the Committees on 
     Appropriations by February 28, 2001, on any actions regarding 
     a consumer advisory on this subject.
       The conferees urge USDA's Animal and Plant Health 
     Inspection Service (APHIS) to uphold approved sanitary and 
     phytosanitary measures in relation to shipping and cargo 
     materials returning to the United States as a result of trade 
     with Cuba. The conferees urge APHIS to exercise vigilance in 
     the adoption of internal measures to insure that returning 
     containers and shipping materials do not present sanitary or 
     phytosanitary risks to American agriculture or the 
     environment, and to explore the formation of a bilateral 
     cooperative agreement with Cuba to provide for pre-departure 
     inspections of containers leaving Cuba. The conferees also 
     encourage APHIS to work in cooperation with the Departments 
     of Agriculture of the states which will serve as the ports of 
     reentry for these shipping materials and containers.
       The conference agreement includes a section that makes 
     funding provided in Section

[[Page H12307]]

     211(b) of the Agriculture Risk Protection Act of 2000 (P.L. 
     106-224) available for the Farmland Protection Program.
       The conference agreement provides an additional $500,000 to 
     hire additional attorneys for the Trade Practices Division of 
     the Office of the General Counsel to enforce the Packers and 
     Stockyards Act.
       The conference agreement provides an additional $200,000 
     for the Grain Inspection, Packers and Stockyards 
     Administration to establish a hog contract library.
       The conference agreement includes language making available 
     funds of the Emergency Watershed Program to accelerate 
     completion of the Hamakua Ditch project in Hawaii.

                               CHAPTER 2

                         DEPARTMENT OF JUSTICE

                         Federal Prison System


                         Salaries and Expenses

       The conference agreement includes $500,000 for the National 
     Institute of Corrections (NIC) for a comprehensive assessment 
     of medical care and incidents of inmate mortality in the 
     Wisconsin State Prison System.

                       Office of Justice Programs


                           Justice Assistance

       The conference agreement includes $300,000 to expand the 
     collection of data on prisoner deaths while in law 
     enforcement custody.


                  Community Oriented Policing Services

       The conference agreement includes $3,080,000 under this 
     heading, of which $1,880,000 is for a grant to the Pasadena, 
     California, Police Department for equipment; $200,000 is for 
     a grant to the City of Signal Hill, California, for equipment 
     and technology for an emergency operations center; and of 
     which $1,000,000 is for a grant to the State of Alabama 
     Department of Forensic Sciences for equipment.


                       Juvenile Justice Programs

       The conference agreement includes $1,000,000 for a grant to 
     Mobile County, Alabama, for a juvenile court network program.

                           General Provisions

       Sec. 201. The conference agreement includes a provision 
     making technical changes to Chapter 2 of title II of division 
     B of Public Law 106-246.
       Sec. 202. The conference agreement includes a provision 
     appropriating $10,000,000 to the State of Texas and 
     $2,000,000 to the State of Arizona to reimburse county and 
     municipal governments only for Federal costs associated with 
     the handling and processing of illegal immigration and drug 
     and alien smuggling cases.
       Sec. 203. The conference agreement includes $9,000,000 to 
     establishment of the Strom Thurmond Boy & Girls Club National 
     Training Center.
       Sec. 204. The conference agreement includes $500,000 for 
     the New Hampshire Department of Safety to investigate and 
     support the prosecution of violations of federal trucking 
     laws.
       Sec. 205. The conference agreement includes $4,000,000 for 
     the State of South Dakota to establish a regional radio 
     system.

                         DEPARTMENT OF COMMERCE

                   Economic and Statistical Analysis


                         salaries and expenses

       The conference agreement includes $200,000 for the 
     establishment of satellite accounts for the travel and 
     tourism industry.

            National Oceanic and Atmospheric Administration


                  operations, research, and facilities

       The conference agreement includes $750,000 for a study by 
     the National Academy of Sciences pursuant to H.R. 2090, as 
     passed by the House of Representatives on September 12, 2000.
       In addition, the conferees encourage the National Oceanic 
     and Atmospheric Administration (NOAA) and the Federal 
     Maritime Administration (FMA) to work collaboratively with 
     the Great Lakes Science Center in Cleveland, Ohio in support 
     of its Great Lakes Tour simulator and related education 
     programming.
       The conferees also direct the National Oceanic and 
     Atmospheric Administration (NOAA) to develop a plan to 
     establish a program for migrating the 8 mm NEXRAD Level II 
     data archives onto a modern retrievable media, and to report 
     back to the Committees on Appropriations by February 1, 2001.
       Sec. 206. The conference agreement includes a technical 
     change to funding provided to the National Marine Fisheries 
     Management Service regarding Stellar sea lion related 
     funding.
       Sec. 207. The conference agreement includes $7,500,000 for 
     assistance to certain Alaska fisheries.
       Sec. 208. The conference agreement includes $3,000,000 for 
     assistance to certain Hawaii fisheries.
       Sec. 209. The conference agreement includes a provision 
     regarding the Bering Sea/Aleutian Island and Gulf of Alaska 
     fisheries.
       Sec. 210. The conference agreement includes $500,000 for 
     the Irish Institute.
       Sec. 211. The conference agreement includes $5,000,000 to 
     increase coverage and hours of Radio Free Europe/Radio 
     Liberty (RFE/RL) and Voice of America (VOA) broadcasts to 
     Russia and surrounding areas affected by the recent 
     restrictions on media instituted by the Putin regime. In 
     addition, the conference agreement includes $5,000,000 for 
     Radio Free Asia and the Voice of America to increase both the 
     quantity and quality of their broadcasts to China, in 
     accordance with authorization contained in the China PNTR 
     enacting legislation, Section 701(b)(2) of H.R. 4444.
       Before using any of the transfer authority provided in this 
     section and within sixty days of enactment of this act, the 
     Broadcasting Board of Governors shall provide to the 
     Committees on Appropriations a spending plan for the total 
     amount provided. This plan should emphasize new RL and VOA 
     Russian and related broadcasts in specific areas most 
     impacted by the recent media restrictions. Also included in 
     the spending plan should be a projection concerning shortwave 
     and medium wave technology needs in this newly closed 
     environment. Amounts proposed for transfer to the 
     Broadcasting Capital Improvements account should be based 
     solely on increased broadcasting to Russia and surrounding 
     areas and to China.

                            RELATED AGENCIES

                 Commission on Online Child Protection

       The conference agreement includes $750,000 for the 
     Commission on Online Child Protection.

                     Small Business Administration


                         salaries and expenses

       The conference agreement includes $1,000,000 for a grant to 
     establish an electronic commerce technology distribution 
     center in Scranton, Pennsylvania.
       Sec. 212. The conference agreement includes $1,000,000 for 
     the National Museum of Jazz.

                    General Provision--This Chapter

       Sec. 213. The conference agreement includes a provision 
     striking sections 406, 635 and 636, and making technical 
     changes to H.R. 5548.

                               CHAPTER 3

                         DEPARTMENT OF DEFENSE


                      Indirect Airfreight Carriers

       The conferees urge the Air Mobility Command (AMC) to ensure 
     that military air freight is moved in the most time efficient 
     manner possible. In furtherance of that goal, the conferees 
     believe that the Civil Reserve Air Fleet (CRAF) program 
     should admit and encourage indirect airfreight carriers which 
     have demonstrated ability to provide efficient, cost 
     effective service.


                Distributive Training Technology Program

       Public Law 106-259 provided $29,100,000 in ``Other 
     Procurement, Army'' and $65,700,000 in ``Operation and 
     Maintenance, Army National Guard'' for the National Guard 
     Distance Learning Program. It is the conferees' intention 
     that the funds appropriated for this program shall also be 
     available for courseware development and commercial off-the-
     shelf (COTS) management system software and hardware.


                       Biological Warfare Defense

       The conferees direct that of the funds appropriated in the 
     Department of Defense Appropriations Act, 2001 (Public Law 
     106-259) for the Biological Warfare Defense program, under 
     ``Research, Development, Test and Evaluation, Defense-Wide'', 
     $2,000,000 shall be used only for sensor development in the 
     Defense Advanced Research Projects Agency's Standoff/Bioagent 
     Pathogen Detector System program.


                            Cancer Research

       The conferees direct that, using funds appropriated in the 
     Department of Defense Appropriations Act, 2001 for medical 
     research programs, the Assistant Secretary of Defense (Health 
     Affairs) conduct a study on whether environmental factors, 
     such as air pollutants and electromagnetic radiation, 
     contribute to a higher than usual rate of incidence of breast 
     cancer in large populations.


                 Ballistic Missile Defense Organization

       In the Department of Defense Appropriations Act, 2001 
     (Public Law 106-259), the Congress provided additional funds 
     for National Missile Defense risk reduction activities. The 
     Defense Department is reviewing carefully potential 
     enhancements to the NMD test program, including the addition 
     of flight tests as well as the collection of data on various 
     targets and countermeasures. To support these flight test 
     program enhancements, the conferees direct that $3,000,000 of 
     the NMD risk reduction increase be allocated to sensor 
     enhancements and flight test activities outlined in the 
     Arctic Missile Signature Measurement Program (AMSP).

                    General Provisions--This Chapter

       The conference agreement includes a general provision 
     (section 301) allowing obligation of a portion of the fiscal 
     year 2001 procurement funds for the F-22 aircraft, under 
     specified circumstances.
       The conference agreement includes a general provision 
     (section 302) which transfers primary jurisdiction over 
     Shemya Island.
       The conference agreement includes a general provision 
     (section 303) requiring the Ballistic Missile Defense 
     Organization to purchase no less than 40 PAC-3 missiles, the 
     budgeted quantity, with fiscal year 2001 appropriated funds.
       The conference agreement includes a general provision 
     (section 304) which amends section 8133 of the Department of 
     Defense Appropriations Act, 2001 (Public Law 106-259), 
     regarding the amount of transfer authority available to the 
     Secretary of the Navy for ship cost changes.
       The conference agreement includes a general provision 
     (section 305) which provides

[[Page H12308]]

     the Secretary of a military department with authority to 
     transfer funds in support of Fisher Houses and Fisher Suites.
       The conference agreement includes a general provision 
     (section 306) providing such sums as required to the Defense 
     Vessel Transfer Program Account for the costs of the lease-
     sale transfers authorized by the National Defense 
     Authorization Act, 2001.
       The conference agreement includes a general provision 
     (section 307) clarifying congressional intent concerning a 
     Gulf War illness research program.
       The conference agreement includes a general provision 
     (section 308) providing $150,000,000 in emergency 
     appropriations to the Department of Defense, for ``Operation 
     and Maintenance, Navy'', for the repair of the U.S.S. Cole, 
     which was severely damaged in a terrorist attack in the port 
     of Aden, Yemen, on October 12, 2000. These funds are in 
     addition to any amounts appropriated in the Department of 
     Defense Appropriations Act, 2001 (Public Law 106-259), and 
     are designated as an emergency requirement pursuant to 
     section 251(b)(2)(A) of the Balanced Budget and Emergency 
     Deficit Control Act of 1985, as amended. In addition to the 
     repair, the Navy may expend necessary amounts from these 
     funds for the necessary stabilization of the vessel and its 
     transportation to the United States.
       The conference agreement includes a general provision 
     (section 309) making technical corrections to Section 1092 of 
     the National Defense Authorization Act, 2001, regarding the 
     establishment of an Aerospace Commission.
       The conference agreement includes a general provision 
     (section 310) which provides $2,000,000 only for planning and 
     National Environmental Protection Act documentation for the 
     proposed airfield and heliport at the Marine Corps Air Ground 
     Task Training Command.
       The conference agreement includes a general provision 
     (section 311) which transfers $5,000,000 to carry out the 
     provisions of the Minuteman Missile National Historic Site 
     Establishment Act of 1999 (Public Law 106-115; 113 Stat. 
     1540).
       The conference agreement includes a general provision 
     (section 312) providing the Secretary of the Air Force with 
     authority to transfer certain excess property.
       The conference agreement includes a general provision 
     (section 313) providing $100,000,000 in emergency 
     appropriations for the Overseas Contingency Operations 
     Transfer Fund, to meet classified requirements requested by 
     the Administration. Further details are provided in a 
     classified annex to the Statement of Managers.
       The conference agreement includes a general provision 
     (section 314) providing for the use of up to $3,000,000 for 
     Marine Corps research into nanotechnology for consequence 
     management.
       The conference agreement includes a general provision 
     (section 315) specifying the use of funds made available in 
     the Department of Defense Appropriations Act, 2000, for 
     certain defense medical initiatives.
       The conference agreement includes a general provision 
     (section 316) providing for the acquisition of certain real 
     property by the Secretary of the Navy.
       The conference agreement includes a general provision 
     (section 317) regarding the establishment of Marine Fire 
     Training Centers.
       The conference agreement includes a general provision 
     (section 318) providing the Navy authority to use funds 
     provided in the Department of Defense Appropriations Act, 
     2001, for the repair of the ex-Turner Joy.
       The conference agreement includes a general provision 
     (section 319) providing funds to accelerate transition of the 
     information technology and information services outsourcing 
     activity within the National Imagery and Mapping Agency.
       The conference agreement includes a general provision 
     (section 320) restricting the use of funds provided in the 
     Department of Defense Appropriations Act, 2001 for Air Force 
     radar operations maintenance and support programs or 
     contracts.
       The conference agreement includes a general provision 
     (section 321) providing $1,000,000 for ``Research, 
     Development, Test and Evaluation, Air Force'', to develop 
     rapid diagnostic and fingerprinting techniques along with 
     molecular monitoring systems for the detection of nosocomial 
     infections.
       The conference agreement includes a general provision 
     (section 322), making technical adjustments associated with 
     funding provided in the Department of Defense Appropriations 
     Act, 2001 for the C3RP initiative.
       The conference agreement includes a general provision 
     (section 323) which establishes procedures under which the 
     Departments of Defense and Interior shall provide the 
     Congress with a comprehensive plan and proposed legislation 
     for expansion of the U.S. Army's National Training Center at 
     Fort Irwin, California. These procedures, including specific 
     timelines for developing and implementing a proposed 
     expansion plan and meeting the requirements of the Endangered 
     Species and National Environmental Policy Acts, are the joint 
     recommendations of the Secretaries of Defense and Interior to 
     the Congress.
       The Secretaries have informed the Congress that, given the 
     urgency of the national security considerations involved and 
     the significant amount of research and analysis which has 
     already been conducted, their Departments can expedite the 
     various substantive and procedural reviews required to 
     implement this expansion. The conferees commend the 
     Secretaries of Defense and Interior for the considerable 
     progress made in recent months amongst the various executive 
     branch agencies involved in this process, and for committing 
     their Departments to meet the specific objectives contained 
     in the general provision.

                               CHAPTER 4

                   DISTRICT OF COLUMBIA FEDERAL FUNDS

           Federal Payment of the District of Columbia Courts

       The conference agreement appropriates $400,000 in Federal 
     funds to the District of Columbia courts to cover the costs 
     of a fire that broke out on November 22, 2000, in the H. Carl 
     Moultrie I Courthouse. The appropriation includes $350,000 
     for capital repairs and $50,000 for miscellaneous operating 
     expenses in connection with the fire damage. The conference 
     agreement also includes language that allows the courts to 
     reallocate not more than $1,000,000 of funds already 
     appropriated for fiscal year 2001 in the event the $400,000 
     is not sufficient to cover the costs. The fire caused 
     extensive damage to the Superior Court's Family Division 
     Quality Control Office and less severe damage to six adjacent 
     judges' chambers, electrical damage to the court's cell block 
     area, and damage to electrical and communications wiring.

                    General Provisions--This Chapter

       Sec. 401. The conference agreement inserts a new section 
     concerning water and sewer payments by Federal agencies to 
     the District of Columbia and requires the inspector general 
     of each Federal entity to submit quarterly reports to the 
     House and Senate Committees on Appropriations on the 
     promptness of payment by the agency for water and sewer 
     services furnished by the District.
       Sec. 402. The conference agreement inserts a new section as 
     requested by District officials that repeals a Federal 
     statute enacted in 1866 to convey certain parcels of land to 
     the District to be used solely for schools. The property is 
     at 12th and E Streets, N.E., in the North Lincoln Park 
     neighborhood of Capitol Hill and is the site of the Lovejoy 
     School which ceased being used as a school in 1984, 118 years 
     after the land was conveyed. The DC public school system is 
     under contract to sell the property and although the City 
     Council has passed local legislation to repeal the 1866 law, 
     Federal legislation in necessary because the District 
     government does not have the authority to pass legislation 
     affecting a Federal land interest.
       Sec. 403. The conference agreement inserts a new section 
     that amends language in section 160 of the FY 2000 DC 
     Appropriations Act concerning the Victims of Violent Crime 
     Compensation Act of 1996 that would have required any 
     unobligated balance in excess of $250,000 to be transferred 
     to miscellaneous receipts of the U.S. Treasury. The new 
     section allows the use of $250,000 at the discretion of 
     District officials and requires that amounts in excess of 
     $250,000 be used in accordance with a plan developed by the 
     District and approved by the House and Senate Committees on 
     Appropriations, the House Committee on Government Reform, and 
     the Senate Committee on Governmental Affairs. The language 
     also requires that not less than 80 percent of the amounts in 
     excess of $250,000 be used for direct compensation payments 
     to crime victims.
       Sec. 404. The conference agreement includes a new section 
     concerning the Reserve Fund for the District of Columbia 
     established pursuant to the District of Columbia 
     Appropriations Act, 2001 (Public Law 106-522, approved 
     November 22, 2000).
       Sec. 405. The conference agreement includes a new section 
     that conforms the enrollment count of the District of 
     Columbia charter schools with existing District of Columbia 
     law.
       Sec. 406. The conference agreement amends H.R. 4942 by 
     repealing the District of Columbia Appropriations Act, 2001, 
     as contained therein. Since this appropriations Act has 
     already been enacted in H.R. 5633 (Public Law 106-428) 
     including it in H.R. 4942 is no longer necessary.

                               CHAPTER 5

                      ENERGY AND WATER DEVELOPMENT

                      DEPARTMENT OF DEFENSE--CIVIL

                         DEPARTMENT OF THE ARMY

                       Corps of Engineers--Civil


                         General Investigations

       The conference agreement includes an additional $900,000 
     for General Investigations. Of the funds provided, $100,000 
     is for a reconnaissance study of shore protection needs at 
     North Topsail Beach, North Carolina; $100,000 is for a 
     reconnaissance study for a water infrastructure project in 
     Passaic County, New Jersey; $100,000 is for a reconnaissance 
     study of flooding, drainage, and other related problems in 
     the Cayuga Creek Watershed, New York; and $600,000 is for a 
     cost-shared feasibility study of the restoration of the lower 
     St. Anthony's Falls natural rapids in Minnesota.


                         Construction, General

       The conference agreement includes an additional $2,750,000 
     for Construction, General. Of the funds provided, $75,000 
     shall be available for planning and design of a project to 
     provide for floodplain evacuation in the watershed of Pond 
     Creek, Kentucky; $100,000 shall be available for the design 
     of recreation

[[Page H12309]]

     and access features at the Louisville Waterfront Park in 
     Kentucky; $75,000 shall be available for research on the 
     eradication of Eurasian water milfoil in Houghton Lake, 
     Michigan; and $500,000 shall be available for a Limited 
     Reevaluation Report for the Central Boca Raton segment of the 
     Palm Beach County, Florida, shore protection project. The 
     conferees are concerned that the utter lack of sand on some 
     stretches of beach in Boca Raton is negatively impacting the 
     local economy that is dependent on tourism. Therefore, the 
     conferees recommend that the Corps of Engineers proceed as 
     expeditiously as possible to renourish the beach in Boca 
     Raton.
       In addition, $2,000,000 of the funds provided shall be 
     available to initiate design and construction of the Hawaii 
     Water Management Project, including Waiahole Ditch on Oahu, 
     Kau Ditch on Maui, Pioneer Mill Ditch on Hawaii, and the 
     complex system on the west side of Kauai.
       In addition, language has been included which provides that 
     the Secretary of the Army may use up to $5,000,000 of 
     previously appropriated funds to carry out the Abandoned and 
     Inactive Noncoal Mine Restoration program authorized by 
     section 560 of Public Law 106-53.


 Flood Control, Mississippi River and Tributaries, Arkansas, Illinois, 
       Kentucky, Louisiana, Mississippi, Missouri, and Tennessee

       The conference agreement includes an additional $3,500,000 
     for Flood Control, Mississippi River and Tributaries to be 
     used for the repair, restoration or maintenance of 
     Mississippi River levees and for the correction of 
     deficiencies in the mainline Mississippi River levees.

                       DEPARTMENT OF THE INTERIOR

                         Bureau of Reclamation


                      Water and Related Resources

       The conference agreement includes an additional $2,000,000 
     for Water and Related Resources for construction of the Mid-
     Dakota Rural Water System project in South Dakota.

                          DEPARTMENT OF ENERGY

                            Energy Programs


                             Energy Supply

       The conference agreement includes an additional $800,000 
     for Energy Supply for the Prime, LLC, of central South 
     Dakota, for final engineering and project development of the 
     integrated ethanol complex, including an ethanol unit, waste 
     treatment system, and enclosed cattle feed lot.


                                Science

       The conference agreement includes an additional $1,000,000 
     for Science for high temperature superconducting research and 
     development at Boston College.

                               CHATPER 6

                    General Provisions--This Chapter

       Sec. 601. The conference agreement mandates that not less 
     than $1,350,000 from funds appropriated under this heading in 
     the Foreign Operations, Export Financing, and Related 
     Programs Appropriations Act, 2001, shall be available only 
     for the Protection Project to continue its study of 
     international trafficking, prostitution, slavery, debt 
     bondage and other abuses of women and children.
       Sec. 602. Embassy Compensation Authority.--The conference 
     agreement contains language that authorizes the use of funds 
     appropriated to the account ``Economic Support Fund'' in 
     Public Law 106-429 for payment to the government of the 
     People's Republic of China for property loss and damage 
     arising out of the May 7, 1999 incident in Belgrade, Federal 
     Republic of Yugoslavia. These funds may be made available 
     notwithstanding any other provision of law.

                               CHAPTER 7

                       DEPARTMENT OF THE INTERIOR

                       Bureau of Land Management


                            Land Acquisition

       The conference agreement provides $5,000,000 for land 
     exchanges authorized by Title VI of the Steens Mountain 
     Cooperative Management and Protection Act.

                United States Fish and Wildlife Service


                          resource management

       The conference agreement provides $500,000 for a grant to 
     the Center for Reproductive Biology at Washington State 
     University for basic research on reproduction abnormalities 
     that could be causing reductions in salmon in the Columbia/
     Snake River system due to presence of high estrogen levels in 
     the water. The research may also be beneficial to human 
     health conditions affected by the same water borne chemicals.


                multinational species conservation fund

       The conference agreement provides $750,000 for recently 
     authorized Great Ape conservation activities.

                         National Park Service


                 operation of the national park system

       The conference agreement provides $100,000 for the National 
     Capital Region to complete a feasibility study and select a 
     preferred alternative site for constructing a boathouse in 
     Arlington County, Virginia.
       The Department of Justice, in cooperation with the City of 
     Alexandria and the National Park Service, is encouraged to 
     seek expeditious settlement with the remaining six landowners 
     on the Alexandria, Virginia waterfront to achieve the urban 
     land use and design objectives of the city and the National 
     Park Service in bringing this longstanding lawsuit to 
     resolution. In settling these claims, the Justice Department 
     should use, to the extent authorized by law, the permanent 
     judgment appropriation established pursuant to 31 U.S.C. 1304 
     as the source of any compensation to the landowners that may 
     be required.


                  national recreation and preservation

       The conference agreement provides $1,600,000 for National 
     Recreation and Preservation. Within the statutory aid 
     account, $500,000 is specifically for continued activities at 
     the National Constitution Center in Philadelphia, 
     Pennsylvania. The remaining $1,100,000 is for a grant to the 
     Historic New Bridge Landing Park Commission for acquisition 
     of land immediately adjacent to the Historic New Bridge 
     Landing, which is a site listed on the National Register of 
     Historic Places and is a site of historic significance in the 
     revolutionary war.


                       historic preservation fund

       The conference agreement provides $100,000 to be provided 
     to the Massillon Heritage Foundation, Inc. in Massillon, 
     Ohio. The Secretary is directed to provide this grant as soon 
     as possible for critical repair and replacement needs.


                              construction

       The conference agreement provides $3,500,000 for 
     construction. Within that amount $1,500,000 is for 
     reconstruction and renovation at the Stones River National 
     Battlefield and $2,000,000 is for the Millennium Cultural 
     Cooperative Park in Ohio.

                          Department of Energy


                          energy conservation

       The conference agreement provides $300,000 for a grant to 
     the Oak Ridge National Laboratory/Nevada Test Site 
     Development Corporation. These funds will be used to develop 
     cooling, refrigeration, and thermal energy management 
     equipment capable of using natural gas or hydrogen fuels, and 
     to improve the reliability of heat-activated cooling, 
     refrigeration, and thermal energy management equipment used 
     in combined heating, cooling, and power applications.

                             RELATED AGENCY

            Woodrow Wilson International Center for Scholars


                       payment to endowment fund

       The conference agreement provides $5,000,000 for the 
     endowment fund of the Woodrow Wilson International Center for 
     Scholars.

                    General Provision--This Chapter

       Section 701 appropriates $30 million to the Indian Health 
     Service, of which $15 million is for Alaska Native alcohol 
     control and sobriety programs and $15 million is for drug and 
     alcohol prevention and treatment for non-Alaska tribes.

                               CHAPTER 8

                    General Provisions--This Chapter

       The conference agreement provides funding to the Health 
     Resources and Services Administration in the Department of 
     Health and Human Services, for the construction of the 
     Christian Nurses Hospice in Brentwood, New York ($400,000).
       The conference agreement provides funding to the Institute 
     of Museum and Library Services, for expansion of the marine 
     biology program at the Long Island Maritime Museum 
     ($250,000).

                               CHAPTER 9

                           LEGISLATIVE BRANCH

                        CONGRESSIONAL OPERATIONS

                        House of Representatives


     payments to widows and heirs of decreased members of congress

       The conference agreement includes the traditional death 
     gratuity for the widow of Herbert H. Bateman, late a 
     Representative from the State of Virginia, the widow of Bruce 
     F. Vento, late a Representative from the State of Minnesota, 
     and the widow of Julian C. Dixon, late a Representative from 
     the State of California.

                        Archtect of the Capitol

                     Capitol Buildings and Grounds


                         salaries and expenses

       An amount of $1,033,000 is provided to construct an 
     emergency egress stair from the fourth floor of the Capitol. 
     These funds are designated as an emergency requirement.

                          Library of Congress


                         salaries and expenses

       The agreement provides $100,000,000 to the Library of 
     Congress to establish a national digital information 
     infrastructure and preservation program. Of this amount, 
     $25,000,000 is provided immediately and remains available 
     until expended. An additional amount up to $75,000,000 is 
     provided to match dollar-for-dollar any non-federal 
     contributions to this program, including in-kind 
     contributions, that are received before March 31, 2003. The 
     information and technology industry that has created this new 
     medium should be a contributing partner in addressing digital 
     access and preservation issues inherent in the new digital 
     information environment. This program is a major undertaking 
     to develop standards and a nationwide collecting strategy to 
     build a national repository of digital materials.
       The Library is directed to develop a phased implementation 
     plan for this program jointly with Federal entities with 
     expertise in

[[Page H12310]]

     telecommunications technology and electronic commerce policy 
     and with participation of other Federal and non-Federal 
     entities. After consultation with the Joint Committee on the 
     Library, membership of which is changed to include the chair 
     of the Legislative Subcommittee of the Committee on 
     Appropriations of the House of Representatives, the Library 
     shall seek approval of the program plan from the Committee on 
     House Administration, the Committee on Rules and 
     Administration of the Senate, and the Committees on 
     Appropriations of the House of Representatives and the 
     Senate. The Library of Congress is authorized to expend up to 
     $5,000,000, before approval of the plan, for the development 
     of the plan and for collecting or preserving digital 
     information that may otherwise vanish during the plan 
     development and approval cycle.
       The overall plan should set forth a strategy for the 
     Library of Congress, in collaboration with other Federal and 
     non-Federal entities, to identify a national network of 
     libraries and other organizations with responsibilities for 
     collecting digital materials that will provide access to and 
     maintain those materials. In addition to developing this 
     strategy, the plan shall set forth, in concert with the 
     Copyright Office, the policies, protocols, and strategies for 
     the long-term preservation of such materials, including the 
     technological infrastructure required at the Library of 
     Congress. In developing the plan, the Library should be 
     mindful of the conclusions drawn in a recent National Academy 
     of Sciences report concerning the Library's trend toward 
     insularity and isolation from its clients and peers in the 
     transition toward digital content.

                    General Provisions--This Chapter

       The conference agreement includes a section concerning the 
     Civil Service Retirement System and the Federal Employees 
     Retirement System. Under current law, certain service as an 
     employee of a congressional campaign committee performed 
     before December 12, 1980 is creditable under the Civil 
     Service Retirement System (CSRS), provided that the applicant 
     makes the required employee contributions to the Civil 
     Service Retirement and Disability Fund. The conference report 
     extends the date of eligible service to December 31, 1990 and 
     allows service that began after 1983 to be creditable under 
     the Federal Employees Retirement System (FERS). The provision 
     also permits an employee of a legislative service 
     organization of the House of Representatives to have such 
     service credited under CSRS or FERS (as applicable), upon 
     payment of the required employee contributions to the 
     retirement fund.
       The conference agreement amends, at the request of the 
     managers on the part of the Senate, the amount provided for 
     Senate ``miscellaneous items'' in the 2001 Legislative Branch 
     Appropriations Act by striking ``$8,655,000'' and inserting 
     ``$25,155,000''. The managers on the part of the House have 
     receded to the request of the Senate.
       The conferees have included a new provision relating to the 
     application of Senate procedure to conference reports.

                               CHAPTER 10

              DEPARTMENT OF DEFENSE--MILITARY CONSTRUCTION

       The conferees provide a total of $443,500,000 to the 
     Department of Defense for Planning and Design, Military 
     Construction, and Family Housing. These amounts are provided 
     as follows:


        Account/location/facility                                Amount
Military Construction, Army:
  Planning and Design for Efficient Basing in Europe........$25,000,000
  Presido of Monterey: Information Management Computer Center.2,000,000
Military Construction, Air Force: MacDill AFB, Florida: Runway 
  Improvements...............................................12,000,000
Military Construction, Army National Guard:
  Helena, Montana: Fixed Wing Parking Apron...................3,000,000
  Fort Lewis, Washington: Planning and Design for 66th Aviation Brigade 
    Readiness Center..........................................1,500,000
                                                       ________________
                                                       
    Total....................................................43,500,000


                             land transfers

       The conferees include two provisions, sections 1002 and 
     1003 which direct the Department of Interior to transfer, 
     without consideration, parcels of public domain land to the 
     Department of the Army and the Department of the Air Force. 
     Section 1003 transfers land surrounding the Yakima Training 
     Center in Washington to the Department of the Army, and 
     section transfers land located near Cannon AFB in New Mexico 
     to the Department of the Air Force. Both transfers will 
     facilitate military training exercises.

                               CHAPTER 11

                      DEPARTMENT OF TRANSPORTATION

                    General Provisions--This Chapter

       The conference agreement includes a provision that 
     clarifies that the Dulles corridor project shall include a 
     rail extension from the West Falls Church, Virginia metrorail 
     station to Tysons Corner, Virginia.
       The conference agreement includes a provision that amends 
     item 630 of section 1602 of Public Law 105-178 regarding a 
     highway project in Buffalo, New York.
       The conference agreement directs the Secretary of 
     Transportation to credit the State of Arkansas with the fair 
     market value of land in Fort Chaffee, Arkansas, incorporated 
     as right of way on the U.S. 71 relocation project, for the 
     state share of the relocation project.
       The conference agreement includes an appropriation of 
     $2,500,000 from the airport and airway trust fund for various 
     airport improvements at the Huntsville International Airport 
     in Alabama.
       The conference agreement includes an appropriation of 
     $1,000,000 from the mass transit account of the highway trust 
     fund for the Southeast Corridor light rail project in Dallas, 
     Texas.
       The conference agreement includes a provision that would 
     designate the Ports-to-Plains corridor within the State of 
     Texas if the Texas Transportation Commission does not 
     designate that corridor within the State of Texas by June 30, 
     2001. The Federal Highway Administration is expected to 
     submit to the House and Senate Committees on Appropriations, 
     the Senate Environment and Public Works Committee, and the 
     House Transportation and Infrastructure Committee a 
     recommendation for the remaining elements of the Ports-to-
     Plains corridor by September 30, 2001 should the states of 
     New Mexico, Colorado, Oklahoma and Texas not reach a unified 
     consensus on the designation of the Ports-to-Plains corridor 
     from Dumas, Texas to Denver, Colorado. The Federal Highway 
     Administration's recommendation shall also include the basis 
     for its recommendation.
       The conference agreement includes an appropriation of 
     $3,000,000 from the mass transit account of the highway trust 
     fund for the Newark-Elizabeth rail link project in New 
     Jersey.
       The conference agreement includes a provision that waives 
     the requirements of section 5309(m)(3)(C) of title 49, United 
     States Code, for the capital investment grants made available 
     in the Department of Transportation and Related Agencies 
     Appropriations Act, 2001 (Public Law 106-346). The provision 
     also makes eligible for highway bridge replacement and 
     rehabilitation program funds in fiscal year 2001 those 
     projects specified in House report 106-940, the conference 
     report accompanying the Department of Transportation and 
     Related Agencies Appropriations Act, 2001 (Public Law 106-
     346). The provision also amends section 378 of the Department 
     of Transportation and Related Agencies Appropriations Act, 
     2001 by inserting after ``U.S. 101'' the following: ``and 
     Interstate 5 Trade Corridor''.
       The conference agreement includes an appropriation of 
     $4,000,000 from the highway trust fund for commercial remote 
     sensing products and spatial information technologies 
     authorized in section 5113 of Public Law 105-178, as amended.
       The conference agreement includes a provision that permits 
     Amtrak to continue leasing vehicles from the General Services 
     Administration's interagency fleet management system in 
     fiscal year 2001 and for each fiscal year thereafter that 
     Amtrak continues to receive a federal operating grant.
       The conference agreement includes a provision which 
     clarifies financial and project management authority for a 
     project funded in the Department of Transportation and 
     Related Agencies Appropriations Act, 2001. The agreement 
     requires the Secretary of Transportation to transfer to the 
     City of Oshkosh, Wisconsin the $575,000 previously 
     appropriated for removal of the Fox River Bridge, and to 
     assume no management responsibility for this project.
       The conference agreement includes a provision authorizing 
     the Secretary of Transportation to issue a certificate of 
     documentation with endorsement for employment in the 
     coastwise trade for the M/V Wells Gray and the Annandale.
       The conference agreement includes a provision authorizing 
     the Administrator of the General Services Administration to 
     convey Coast Guard property in Middletown, California to Lake 
     County, California.
       The conference agreement includes a provision authorizing 
     the Administrator of the General Services Administration or 
     the Commandant of the U.S. Coast Guard to convey to the Town 
     of Nantucket, Massachusetts part of U.S. Coast Guard LORAN 
     Station Nantucket and additional land located in Nantucket.
       The conference agreement includes a provision authorizing 
     the Administrator of the General Services Administration or 
     the Commandant of the U.S. Coast Guard to convey to the City 
     of Newburyport, Massachusetts the Plum Island Boat House and 
     the Plum Island Lighthouse, located in Essex County, 
     Massachusetts.
       The conference agreement includes a provision authorizing 
     the Administrator of General Services Administration to 
     transfer to the National Oceanic and Atmospheric 
     Administration the property known as Coast Guard Station 
     Scituate in Massachusetts, contingent upon the relocation of 
     Coast Guard Station Scituate to a suitable site.
       The conference agreement includes a provision which extends 
     from 2002 to 2004 the Coast Guard's current practice relating 
     to the disposal of dry bulk cargo residue on the Great Lakes; 
     requires a study on the effectiveness of the current 
     practice; and authorizes the promulgation of regulations to 
     regulate incidental discharges of such cargo into the Great 
     Lakes, taking into account the findings of the study required 
     in this section.
       The conference agreement includes a provision that amends 
     the appointment process

[[Page H12311]]

     and qualifications for individuals serving on the Great Lakes 
     Pilotage Advisory Committee.
       The conference agreement includes a provision that requires 
     only a vessel of the United States may perform certain 
     specified escort operations and towing assistance, except for 
     a vessel in distress.
       The conference agreement includes a provision authorizing 
     the expenditure of $100,000 in fiscal year 2001 funding for 
     Coast Guard environmental compliance and restoration to 
     reimburse the owner of the former Coast Guard lighthouse 
     facility in Cape May, New Jersey for costs incurred for 
     cleanup of lead contaminated soil. The Department of 
     Transportation and Related Agencies Appropriations Act, 2001 
     included $100,000 for this purpose.
       The conference agreement includes an appropriation of 
     $2,400,000 to be derived from the Highway Trust Fund, for the 
     planning, development and construction of rural farm-to-
     market roads in Tulare County, California. The non-federal 
     share of such improvements shall be 20 percent.
       The Department of Transportation is instructed that the 
     grantee for the Nashua, New Hampshire project identified in 
     section 378 of Public Law 106-346 shall be the City of 
     Nashua, New Hampshire.
       The conference agreement includes a provision authorizing 
     the Coast Guard to transfer not to exceed $200,000 to the 
     Traverse City Area Public School District for the demolition 
     and removal of Building 402 at former Coast Guard property in 
     Traverse City, Michigan. The provision makes the transfer 
     contingent upon receipt by the Coast Guard of a detailed, 
     fixed price estimate for this work. Funding in the amount of 
     $200,000 was appropriated for this purpose in the Department 
     of Transportation and Related Agencies Appropriations Act, 
     2001.
       The conference agreement includes an appropriation of 
     $500,000 from the mass transit account of the highway trust 
     fund for buses and bus facilities at Alabama A&M University. 
     These funds are to be available until expended.
       The conference agreement includes a provision which directs 
     the Federal Transit Administration to distribute $7,047,502 
     to an urbanized area over 200,000 in population which did not 
     receive fiscal year 1999, 2000 and 2001 fixed guideway 
     modernization funds to which it was lawfully entitled, prior 
     to the formula apportionment of ``Fixed guideway 
     modernization'' funds in fiscal year 2002.
       The conference agreement includes a provision that requires 
     that airport improvement program formula changes provided 
     under Public Law 106-181 and defined in section 104 of that 
     Act shall be applied without regard to the overall funding 
     levels for the airport improvement program in fiscal year 
     2001.
       The conference agreement includes a provision that amends 
     item number 473 contained in section 1602 of the 
     Transportation Equity Act for the 21st Century relating to a 
     high priority project in Minnesota.
       The conference agreement includes a provision that delays 
     the issuance of the final train horn rule until July 1, 2001. 
     This issue will not be addressed again in subsequent 
     legislation.
       The conference agreement provides $8,700,000 for four 
     transportation projects in Texas, Minnesota, Wisconsin, 
     Indiana and Colorado.

                               CHAPTER 12

                    GENERAL SERVICES ADMINISTRATION

                        Real Property Activities


                         federal buildings fund

       The conference agreement includes a new provision providing 
     $2,070,000 for the renovation and redevelopment of portions 
     of the historic Federal building in Terre Haute, Indiana. The 
     conferees direct the General Services Administration to 
     report to the Committees on Appropriations by March 15, 2001 
     on steps it will take to ensure long-term Federal occupancy 
     of this building.

                       DEPARTMENT OF THE TREASURY

                     United States Customs Service


 operations, maintenance and procurement, air and marine interdiction 
                                programs

       The conference agreement includes $7,000,000 for necessary 
     expenses related to the procurement of two aircraft and 
     related equipment expenses at the Customs National Aviation 
     Center in Oklahoma City, Oklahoma. The conference agreement 
     provides that none of the funds shall be available for 
     obligation until an expenditure plan is submitted for 
     approval to the Committees on Appropriations.

                      UNITED STATES POSTAL SERVICE


                        tinton falls, new jersey

       The conferees are aware that the Postal Service has 
     identified Tinton Falls, New Jersey as a town to receive a 
     new postal facility, but are concerned that this need for a 
     new postal facility is not being addressed in a timely 
     manner. The conferees urge the Postal Service to give this 
     project a high priority in its capital facility plan for the 
     next fiscal year.

                               CHAPTER 13

                     DEPARTMENT OF VETERANS AFFAIRS

                      Departmental Administration


                      construction, minor projects

       The conferees have included $8,840,000 for Construction, 
     minor projects. Of this amount, $8,440,000 is recommended for 
     projects related to the integration of facilities at the 
     Boston VA Medical Center. These funds are to supplement 
     amounts previously provided for minor construction projects 
     in fiscal year 2001 in Veterans Integrated Service Network 1.
       In addition, the conferees recommend $400,000 to be used 
     towards construction costs of a cover for the Riverside 
     National Cemetery amphitheater.

              DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

                   Community Planning and Development


                empowerment zones/enterprise communities

       Provides an additional $110,000,000 for urban empowerment 
     zones, as authorized by the Taxpayer Relief Act of 1997.


                       community development fund

       Language is included which makes a technical amendment to 
     an economic development initiative grant provided in Public 
     Law 106-377.
       Language is included which transfers unobligated grant 
     funds from a specific city to a county in order to carry out 
     the purposes for which the grant was made.
       The conferees have amended Public Law 106-377 to provide an 
     additional $66,128,000 for targeted Economic Development 
     Initiative grants under the terms and conditions as provided 
     in Public Law 106-377, as follows:
       --$425,000 for Project Home, Allied-Dunn's Marsh 
     Neighborhood Center and Prairie Crossing low income housing 
     rehabilitation project in Wisconsin;
       --$1,000,000 for F.E.A.T. for the establishment of the 
     Merle Travis Park in Muhlenberg County, Kentucky;
       --$750,000 for the Washington County Commission for the 
     World Wildlife Educational Museum addition to the Dixie 
     Chapter in St. George, Utah;
       --$250,000 for the Henry Ford Museum--Greefield Village in 
     Dearborn, Michigan for expenses related to the design, 
     planning and construction of the ``Great American Road 
     Exhibit'';
       --$6,000,000 for Shepherd College in Shepherdstown, West 
     Virginia for construction, related activities, and programs 
     at the Scarborough Library;
       --$633,000 for the State of Nevada to establish a state-
     wide computer database of utilities and infrastructure needs 
     for rural communities and Indian reservations;
       --$850,000 for the University of South Carolina for the 
     operation of an historical archive at the University of South 
     Carolina, Department of Archives, South Carolina;
       --$500,000 for the Idaho City Parks and Recreation 
     Commission for the Idaho City Mien Tailings Site Restoration 
     Project and Park in Idaho City, Idaho;
       --$250,000 for the Swiss Center of North America, New 
     Glarus, Wisconsin;
       --$750,000 for the City of Madison, Wisconsin for the Troy 
     Housing and Gardens Development;
       --$750,000 for the City of New Loft, Wisconsin for 
     acquisition and restoration of a teen facility;
       --$2,000,000 for the City of Pasadena, Texas for a Police 
     Academy driver training track;
       --$1,300,000 for the City of Baytown, Texas for its 
     Emergency Operations Center;
       --$750,000 for the City of Las Vegas, Nevada for downtown 
     development initiatives;
       --$800,000 to support the Innovative Brownfields Site 
     Assessment and Remediation Technology Demonstration at the 
     Defense Fuel Support Point, in Lynn Haven, Florida;
       --$200,000 for the Tri-County Agricultural Complex in 
     Calhoun, Gulf, and Liberty Counties, Florida
       --$100,000 for the CCTV Central Coast partnership 
     (California) to promote environmentally friendly, sustainable 
     agriculture practices;
       --$600,000 for the Central California Coast Research 
     Partnership;
       --$500,000 for the Santa Barbara County, California Water 
     Agency for costs associated with emergency sediment removal 
     in the Twitchell Reservoir;
       --$500,000 for the City of Paso Robles, California for the 
     Oak Parks Housing Project for modernization and 
     rehabilitation projects;
       --$100,000 for the Cambridge, Massachusetts Redevelopment 
     Authority public spaces initiative;
       --$1,000,000 for the Sidney R. Yates and Addie Yates 
     Exhibition Center at the Field Museum in Chicago, Illinois;
       --$750,000 for the Greater Dwight Development Corporation 
     in New Haven, Connecticut for its child care center and 
     offices;
       --$500,000 for methamphetamine site clean-up activities of 
     the Fresno, California Sheriff's Department;
       --$3,000,000 to the Cross Valley Rail Corridor Joint Powers 
     Authority, California for rehabilitation of the San Joaquin 
     Railroad;
       --$1,000,000 to the City of Monterrey, California to 
     upgrade 911 emergency response services;
       --$2,035,000 for Eastern Connecticut University for upgrade 
     of its technology systems;
       --$500,000 for the City of Vernon, Connecticut for 
     brownfields remediation activities;
       --$1,000,000 for the Mystic Seaport Maritime Education and 
     Research Center in Mystic, Connecticut;
       --$2,700,000 for the Southeastern Pennsylvania Consortium 
     on Higher Education for a collaborative Math and Science 
     Institute;
       --$900,000 for the Town of Towamencin, Pennsylvania for its 
     urban park and recreation recovery project;

[[Page H12312]]

       --$1,400,000 for Temple University, Pennsylvania for its 
     Center for a Sustainable Environment;
       --$600,000 for the Township of Plainsboro, New Jersey for 
     its Nature and Education Center;
       --$300,000 for the Saint Mary's County, Maryland River 
     Project;
       --$450,000 for the Truitt Laboratory of the Chesapeake 
     Biological Laboratory for the Bayscapes Habitat 
     Reconstruction Project, Maryland;
       --$800,000 for the Edmonds Community College Foundation, 
     Washington for a Center on Families;
       --$400,000 for the Access Community Health Network in 
     Chicago, Illinois;
       --$500,000 for the City of Seymour, Connecticut Police 
     Department for upgrades of law enforcement technology;
       --$2,500,000 for the Town of Beacon Falls, Connecticut for 
     the Pinebridge Industrial Park;
       --$150,000 for the City of Sacramento, California for the 
     Emerging Technology Institute;
       --$200,000 for the Kansas City, Kansas foresics crime 
     laboratory;
       --$700,000 for the Kansas City, Kansas Humane Society for 
     expenses associated with relocation of its facilities;
       --$350,000 for the expansion of the Dunbar Community Center 
     in Springfield, Massachusetts;
       --$500,000 to the West Virginia High Technology Consortium 
     Foundation, Inc. for high priority economic development 
     initiatives including land acquisition;
       --$1,000,000 for the Medford Area School District, 
     Wisconsin for after-school programs;
       --$300,000 for the North Central Wisconsin Workforce 
     Development Board for education, training, counseling, 
     emergency assistance and related services for displaced 
     workers and their families in central Wisconsin;
       --$250,000 for the Portage County, Wisconsin Business 
     Council Foundation in Stevens Point for activities including 
     construction and training related to a business education and 
     training center and a regional training clearinghouse;
       --$200,000 for the Development Association of Superior/
     Douglas Counties, Wisconsin for a microenterprise loan and 
     technical assistance fund;
       --$500,000 for the Chippewa County Economic Corporation in 
     Wisconsin for construction of a workforce development center;
       --$365,000 for the City of Wausau, Wisconsin for 
     brownfields remediation in Marathon County;
       --$1,000,000 for the Unity School District, Balsam Lake, 
     Wisconsin for after-school activities;
       --$100,000 for the Marathon County, Wisconsin Sheriff's 
     Department for Central Wisconsin drug prevention initiatives;
       --$500,000 for the Santa Ana, California Police Department 
     crime analysis unit;
       --$1,300,000 for the City of Jackson, Mississippi for its 
     brownfields clean-up activities;
       --$500,000 for Essex County, Massachusetts for its 
     wastewater and combined sewer overflow program;
       --$500,000 for Pacific Union College, California for the 
     Napa Valley Resource in Napa County, California
       --$400,000 for the establishment of the Wolfe Center for 
     teen substance abuse in Napa County, California;
       --$500,000 for Dyer, Indiana for a water diversion project;
       --$500,000 for the Community and Family Resource Center 
     renovation project in Newberg, Oregon;
       --$2,000,000 for the George Meany Center for Labor Studies 
     in Silver Spring, Maryland;
       --$1,000,000 for the Rhode Island State Police for 
     technology upgrade initiatives;
       --$2,000,000 for the War Memorial Museum in Milwaukee, 
     Wisconsin;
       --$500,000 for the Mott Community College Workforce 
     Development Institute in Michigan;
       --$1,000,000 for Maricopa County Community College for the 
     Achieving a College Education Initiative (ACE) in Arizona;
       --$1,000,000 to Coffee County, Tennessee for the Coffee 
     County Industrial Park;
       --$1,500,000 to the Tennessee Fire Services and Codes 
     Enforcement Academy in Bedford County, Tennessee;
       --$600,000 to the 21st Century Council of Lawrence for the 
     Lawrence County Industrial Park in Tennessee;
       --$350,000 to the Fayetteville-Lincoln County Library Board 
     in Tennessee for the Lincoln County Library;
       --$150,000 to the University of Tennessee Center for 
     Business and Economic Research to study the economic impact 
     of alternative management policies of TVA-managed lakes in 
     rural East Tennessee;
       --$2,500,000 to Winston-Salem University in Winston-Salem, 
     North Carolina for the reconstruction of St. Phillips Church 
     ($2,000,000) and Atkins House ($500,000);
       --$1,575,000 to Escambia County in Florida for development 
     costs for infrastructure of Central Commerce Park;
       --$1,000,000 to Ashland University in Ashland, Ohio for 
     rehabilitation and expansion of the Kettering Science Center;
       --$640,000 to Waukegan, Illinois for renovation of the 
     historic Genesee Theater;
       --$1,155,000 to the Tampa Housing Authority in Tampa, 
     Florida for costs associated with the Tom Dyer Elderly 
     Housing Redevelopment Project.

                       DEPARTMENT OF THE TREASURY

              Community Development Financial Institutions


   community development financial institutions fund program account

       Increases the cap on administrative expenses by $1,000,000, 
     in order to accommodate increased responsibilities assigned 
     to the Fund by the New Markets Initiative. The conferees 
     direct the CDFI Fund to submit a report to the Committees on 
     Appropriations within 60 days of enactment describing plans 
     for carrying out these responsibilities, including staffing 
     and resource requirements. The conferees would consider 
     supplemental appropriations for this purpose if CDFI 
     demonstrates that additional funds are needed.

                    Environmental Protection Agency


                         science and technology

       Language is included which provides $1,000,000 in 
     additional appropriations for the continuation of the South 
     Bronx Air Pollution Study being conducted by New York 
     University.


                 environmental programs and management

       Language is included which makes a technical correction to 
     a grant provided to the San Bernardino Valley Municipal Water 
     District in Public Law 106-377.


                   state and tribal assistance grants

       Language is included which clarifies that funds 
     appropriated for infrastructure needs in the New York City 
     watershed shall be awarded under section 1443(d) of the Safe 
     Drinking Water Act, as amended.
       Language is included which makes funds appropriated in 
     Public Law 106-377 for a specific project in Indiana 
     available for an alternative project.
       The conferees have amended Public Law 106-377 to include an 
     additional $20,630,000 to communities or other entities for 
     construction of water and wastewater treatment facilities. 
     Cost share requirements and all other terms and conditions 
     provided in Public Law 106-377 for these grants shall also 
     apply to these grants, distributed as follows:
       1. $1,000,000 for combined sewer overflow infrastructure 
     improvements on the Connecticut River.
       2. $7,280,000 to Grand Rapids, Michigan for combined sewer 
     overflow infrastructure improvements.
       3. $3,000,000 for water delivery system infrastructure 
     improvements for the cities of Arcadia and Sierra Madre, 
     California.
       4. $7,850,000 for wastewater facility, drinking water, and 
     water system delivery infrastructure improvements in Milton 
     Township ($5,000,000), the Village of McDonald ($350,000), 
     and the Village of Wellsville ($2,500,000), Ohio.
       5. $1,000,000 for wastewater treatment infrastructure 
     improvements in Carmel, Indiana.

                  Federal Emergency Management Agency


              emergency management planning and assistance

       Language is included which provides $100,000,000 for new 
     fire fighting programs as authorized by the Federal Fire 
     Prevention and Control Act, as amended.

                               CHAPTER 14

                    General Provisions--This Chapter

       The conference agreement includes the adoption of H. Con. 
     Res. 234 by the Senate.
       The conference agreement includes a new provision relating 
     to the application of the Federal Reports Elimination and 
     Sunset Act of 1995 to certain reports.
       The conferees direct the Comptroller General of the United 
     States to (1) ascertain the ownership of the West Campus 
     Buildings of the Saint Elizabeth's Hospital complex in the 
     District of Columbia; (2) review and comment on existing cost 
     estimates for mothballing/stabilization, phase II 
     environmental mediation, phase II archaeological study, 
     environmental impact study, and land use study; (3) report on 
     any existing historic designations and corresponding 
     responsibilities; and (4) identify action required to 
     facilitate transfer of the property. The conferees request 
     that the report be completed and submitted to the House and 
     Senate Committees on Appropriations within 45 days of the 
     enactment of this Act.
       The conference agreement includes a new provisions 
     rescinding 0.22 percent of the discretionary budget authority 
     provided (or obligation limit imposed) for fiscal year 2001, 
     except for those programs, projects, and activities which are 
     specifically exempted. The provision exempts from rescission 
     the Military Personnel accounts of the of the Department of 
     Defense Appropriations Act, 2001, and fiscal year 2001 
     amounts for activities funded in the Departments of Labor, 
     Health and Human Services, and Education, and Related 
     Agencies Appropriations Act.

                               DIVISION B

                                TITLE I

       The conference agreement includes a section that provides 
     greater availability of food assistance in day care centers 
     by modifying eligibility criteria in the Child and Adult Care 
     Food Program.
       The conference agreement includes a section to authorize a 
     pilot program through the Summer Food Service Program to 
     examine whether reducing burdensome paperwork would increase 
     the availability of food assistance for children during the 
     summer who, during the school year, have access to meals 
     through the School Lunch Program.
       The conference agreement includes language which authorizes 
     the Secretary of the

[[Page H12313]]

     Interior to conduct a feasibility study for a Sacramento 
     River, California, diversion project.
       The conference agreement includes language which modifies 
     the authorization for the Saint Francis River Basin, Missouri 
     and Arkansas, project to expand the boundaries of the project 
     to include Ten- and Fifteen-Mile Bayous near West Memphis, 
     Arkansas.
       The conference agreement includes language which authorizes 
     the Secretary of the Army to enter into an agreement to 
     permit the City of Alton, Illinois, to construct recreational 
     facilities at the Melvin Price Lock and Dam.
       The conference agreement includes language which authorizes 
     the Secretary of the Interior, in cooperation with Washoe 
     County, Nevada, to participate in the planning, design, and 
     construction of the Truckee Watershed Reclamation Project.
       The conference agreement includes language which authorizes 
     the Secretary of the Army to widen and deepen the Alafia 
     Channel in Tampa Harbor, Florida.
       The conference agreement includes language which authorizes 
     a number of environmental infrastructure projects.
       The conference agreement includes language which authorizes 
     the Secretary of the Army to provide technical and financial 
     assistance to carry out projects to improve the water quality 
     in the Florida Keys National Marine Sanctuary.
       The conference agreement includes language to provide for 
     the restoration of the San Gabriel Basin in California.
       The conference agreement includes language which authorizes 
     the Secretary of the Army to participate in studies and the 
     planning and design of projects which offer a long-term 
     solution to the problem of groundwater pollution caused by 
     perchlorates.
       The conference agreement includes language which authorizes 
     the construction of fish passage facilities at the New 
     Savannah Bluff Lock and Dam in Georgia and South Carolina.
       The conference agreement includes language which provides 
     for the extinguishment of reversionary interests and use 
     restrictions at the Port of Umatilla, Oregon.
       The conference agreement includes language which repeals 
     section 101(b)(6) of the Water Resources Development Act of 
     2000.
       The conference agreement includes language which directs 
     the Secretary of the Army to reimburse the East Bay Municipal 
     Water District for the Federal share of costs incurred by the 
     district for the Penn Mine, Calaveras County, California, 
     aquatic ecosystem restoration project.
       The conference agreement includes language which authorizes 
     the Secretary of the Army to construct intake facilities at 
     Greer Ferry Lake, Arkansas, for the benefit of Lonoke and 
     White Counties in Arkansas.
       The conference agreement includes language which authorizes 
     the Secretary of the Army to provide the non-Federal sponsor 
     of the Chehalis River and Tributaries, Washington, project 
     credit toward the non-Federal share of the cost of the 
     project for work carried out by the non-Federal sponsor 
     before the date of enactment of a project cooperation 
     agreement.
       Section 119 includes a technical correction to permit the 
     National Park Service to issue a grant to the city of Ocean 
     Beach, New York.
       Section 120 directs the National Park Service to work with 
     Fort Sumter Tours, Inc., the concessionaire at Fort Sumter 
     National Monument in South Carolina, on an amicable solution 
     to the current legal dispute. In addition, the Director shall 
     immediately extend the current contract through March 15, 
     2001, and for 180 days if the final settlement is agreed to 
     by both parties.
       Section 121 amends title VIII of the Department of the 
     Interior and Related Agencies Appropriations Act, 2001 to 
     derive funding under that title from the Land and Water 
     Conservation Fund. This reference was inadvertently omitted 
     from the original legislation.
       Section 122 amends the Energy Policy Act of 1992 to include 
     a reference to liquid fuels domestically produced from 
     natural gas.
       Section 123 incorporates by reference the text of the bill 
     H.R. 4904, as passed by the House of Representatives on 
     September 26, 2000, expressing the policy of the United 
     States regarding the U.S. relationship with Native Hawaiians. 
     The text of H.R. 4904 is as follows:
       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled.

     SECTION 1. FINDINGS.

       Congress makes the following findings:
       (1) The Constitution vests Congress with the authority to 
     address the conditions of the indigenous, native people of 
     the United States.
       (2) Native Hawaiians, the native people of the Hawaiian 
     archipelago which is now part of the United States, are 
     indigenous, native people of the United States.
       (3) The United States has a special trust relationship to 
     promote the welfare of the native people of the United 
     States, including Native Hawaiians.
       (4) Under the treaty making power of the United States, 
     Congress exercised its constitutional authority to confirm a 
     treaty between the United States and the government that 
     represented the Hawaiian people, and from 1826 until 1893, 
     the United States recognized the independence of the Kingdom 
     of Hawaii, extended full diplomatic recognition to the 
     Hawaiian government, and entered into treaties and 
     conventions with the Hawaiian monarchs to govern commerce and 
     navigation in 1826, 1842, 1849, 1875, and 1887.
       (5) Pursuant to the provisions of the Hawaiian Homes 
     Commission Act, 1920 (42 Stat. 108, chapter 42), the United 
     States set aside 203,500 acres of land in the Federal 
     territory that later became the State of Hawaii to address 
     the conditions of Native Hawaiians.
       (6) By setting aside 203,500 acres of land for Native 
     Hawaiian homesteads and farms, the Act assists the Native 
     Hawaiian community in maintaining distinct native settlements 
     throughout the State of Hawaii.
       (7) Approximately 6,800 Native Hawaiian lessees and their 
     family members reside on Hawaiian Home Lands and 
     approximately 18,000 Native Hawaiians who are eligible to 
     reside on the Home Lands are on a waiting list to receive 
     assignments of land.
       (8) In 1959, as part of the compact admitting Hawaii into 
     the United States, Congress established the Ceded Lands Trust 
     for five purposes, one of which is the betterment of the 
     conditions of Native Hawaiians. Such trust consists of 
     approximately 1,800,000 acres of land, submerged lands, and 
     the revenues derived from such lands, the assets of which 
     have never been completely inventoried or segregated.
       (9) Throughout the years, Native Hawaiians have repeatedly 
     sought access to the Ceded Lands Trust and its resources and 
     revenues in order to establish and maintain native 
     settlements and distinct native communities throughout the 
     State.
       (10) The Hawaiian Home Lands and the Ceded Lands provide an 
     important foundation for the ability of the Native Hawaiian 
     community to maintain the practice of Native Hawaiian 
     culture, language, and traditions, and for the survival of 
     the Native Hawaiian people.
       (11) Native Hawaiians have maintained other distinctly 
     native areas in Hawaii.
       (12) On November 23, 1993, Public Law 103-150 (107 Stat. 
     1510) (commonly known as the Apology Resolution) was enacted 
     into law, extending an apology on behalf of the United States 
     to the Native people of Hawaii for the United States role in 
     the overthrow of the Kingdom of Hawaii.
       (13) The Apology Resolution acknowledges that the overthrow 
     of the Kingdom of Hawaii occurred with the active 
     participation of agents and citizens of the United States and 
     further acknowledges that the Native Hawaiian people never 
     directly relinquished their claims to their inherent 
     sovereignty as a people over their national lands to the 
     United States, either through their monarchy or through a 
     plebiscite or referendum.
       (14) The Apology Resolution expresses the commitment of 
     Congress and the President to acknowledge the ramifications 
     of the overthrow of the Kingdom of Hawaii and to support 
     reconciliation efforts between the United States and Native 
     Hawaiians; and to have Congress and the President, through 
     the President's designated officials, consult with Native 
     Hawaiians on the reconciliation process as called for under 
     the Apology Resolution.
       (15) Despite the overthrow of the Hawaiian government, 
     Native Hawaiians have continued to maintain their separate 
     identity as a distinct native community through the formation 
     of cultural, social, and political institutions, and to give 
     expression to their rights as native people to self-
     determination and self-governance as evidenced through their 
     participation in the Office of Hawaiian Affairs.
       (16) Native Hawaiians also maintain a distinct Native 
     Hawaiian community through the provision of governmental 
     services to Native Hawaiians, including the provision of 
     health care services, educational programs, employment and 
     training programs, children's services, conservation 
     programs, fish and wildlife protection, agricultural 
     programs, native language immersion programs and native 
     language immersion schools from kindergarten through high 
     school, as well as college and master's degree programs in 
     native language immersion instruction, and traditional 
     justice programs, and by continuing their efforts to 
     enhance Native Hawaiian self-determination and local 
     control.
       (17) Native Hawaiians are actively engaged in Native 
     Hawaiian cultural practices, traditional agricultural 
     methods, fishing and subsistence practices, maintenance of 
     cultural use areas and sacred sites, protection of burial 
     sites, and the exercise of their traditional rights to gather 
     medicinal plants and herbs, and food sources.
       (18) The Native Hawaiian people wish to preserve, develop, 
     and transmit to future Native Hawaiian generations their 
     ancestral lands and Native Hawaiian political and cultural 
     identity in accordance with their traditions, beliefs, 
     customs and practices, language, and social and political 
     institutions, and to achieve greater self-determination over 
     their own affairs.
       (19) This Act provides for a process within the framework 
     of Federal law for the Native Hawaiian people to exercise 
     their inherent rights as a distinct aboriginal, indigenous, 
     native community to reorganize a Native Hawaiian government 
     for the purpose of giving expression to their rights as 
     native people to self-determination and self-governance.
       (20) The United States has declared that--
       (A) the United States has a special responsibility for the 
     welfare of the native peoples of the United States, including 
     Native Hawaiians;
       (B) Congress has identified Native Hawaiians as a distinct 
     indigenous group within the scope of its Indian affairs 
     power, and has enacted dozens of statutes on their behalf 
     pursuant to its recognized trust responsibility; and
       (C) Congress has also delegated broad authority to 
     administer a portion of the Federal trust responsibility to 
     the State of Hawaii.
       (21) The United States has recognized and reaffirmed the 
     special trust relationship with the Native Hawaiian people 
     through--

[[Page H12314]]

       (A) the enactment of the Act entitled ``An Act to provide 
     for the admission of the State of Hawaii into the Union'', 
     approved March 18, 1959 (Public Law 86-3; 73 Stat. 4) by--
       (i) ceding to the State of Hawaii title to the public lands 
     formerly held by the United States, and mandating that those 
     lands be held in public trust for five purposes, one of which 
     is for the betterment of the conditions of Native Hawaiians; 
     and
       (ii) transferring the United States responsibility for the 
     administration of the Hawaiian Home Lands to the State of 
     Hawaii, but retaining the authority to enforce the trust, 
     including the exclusive right of the United States to consent 
     to any actions affecting the lands which comprise the corpus 
     of the trust and any amendments to the Hawaiian Homes 
     Commission Act, 1920 (42 Stat. 108, chapter 42) that are 
     enacted by the legislature of the State of Hawaii affecting 
     the beneficiaries under the Act.
       (22) The United States continually has recognized and 
     reaffirmed that--
       (A) Native Hawaiians have a cultural, historic, and land-
     based link to the aboriginal, native people who exercised 
     sovereignty over the Hawaiian Islands;
       (B) Native Hawaiians have never relinquished their claims 
     to sovereignty or their sovereign lands;
       (C) the United States extends services to Native Hawaiians 
     because of their unique status as the aboriginal, native 
     people of a once sovereign nation with whom the United States 
     has a political and legal relationship; and
       (D) the special trust relationship of American Indians, 
     Alaska Natives, and Native Hawaiians to the United States 
     arises out of their status as aboriginal, indigenous, native 
     people of the United States.

     SEC. 2. DEFINITIONS.

       In this Act:
       (1) Aboriginal, indigenous, native people.--The term 
     ``aboriginal, indigenous, native people'' means those people 
     whom Congress has recognized as the original inhabitants of 
     the lands and who exercised sovereignty prior to European 
     contact in the areas that later became part of the United 
     States.
       (2) Adult members.--The term ``adult members'' means those 
     Native Hawaiians who have attained the age of 18 at the time 
     the Secretary publishes the final roll, as provided in 
     section 7(a)(3) of this Act.
       (3) Apology resolution.--The term ``Apology Resolution'' 
     means Public Law 103-150 (107 Stat. 1510), a joint resolution 
     offering an apology to Native Hawaiians on behalf of the 
     United States for the participation of agents of the United 
     States in the January 17, 1893 overthrow of the Kingdom of 
     Hawaii.
       (4) Ceded lands.--The term ``ceded lands'' means those 
     lands which were ceded to the United States by the Republic 
     of Hawaii under the Joint Resolution to provide for annexing 
     the Hawaiian Islands to the United States of July 7, 1898 (30 
     Stat. 750), and which were later transferred to the State of 
     Hawaii in the Act entitled ``An Act to provide for the 
     admission of the State of Hawaii into the Union'' approved 
     March 18, 1959 (Public Law 86-3; 73 Stat. 4).
       (5) Commission.--The term ``Commission'' means the 
     commission established in section 7 of this Act to certify 
     that the adult members of the Native Hawaiian community 
     contained on the roll developed under that section meet the 
     definition of Native Hawaiian, as defined in paragraph 
     (7)(A).
       (6) Indigenous, native people.--The term ``indigenous, 
     native people'' means the lineal descendants of the 
     aboriginal, indigenous, native people of the United States.
       (7) Native hawaiian.--
       (A) Prior to the recognition by the United States of a 
     Native Hawaiian government under the authority of section 
     7(d)(2) of this Act, the term ``Native Hawaiian'' means the 
     indigenous, native people of Hawaii who are the lineal 
     descendants of the aboriginal, indigenous, native people who 
     resided in the islands that now comprise the State of Hawaii 
     on or before January 1, 1893, and who occupied and exercised 
     sovereignty in the Hawaiian archipelago, including the area 
     that now constitutes the State of Hawaii, and includes all 
     Native Hawaiians who were eligible in 1921 for the programs 
     authorized by the Hawaiian Homes Commission Act (42 Stat. 
     108, chapter 42) and their lineal descendants.
       (B) Following the recognition by the United States of the 
     Native Hawaiian government under section 7(d)(2) of this Act, 
     the term ``Native Hawaiian'' shall have the meaning given to 
     such term in the organic governing documents of the Native 
     Hawaiian government.
       (8) Native hawaiian government.--The term ``Native Hawaiian 
     government'' means the citizens of the government of the 
     Native Hawaiian people that is recognized by the United 
     States under the authority of section 7(d)(2) of this Act.
       (9) Native hawaiian interim governing council.--The term 
     ``Native Hawaiian Interim Governing Council'' means the 
     interim governing council that is organized under section 
     7(c) of this Act.
       (10) Roll.--The term ``roll'' means the roll that is 
     developed under the authority of section 7(a) of this Act.
       (11) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior.
       (12) Task force.--The term ``Task Force'' means the Native 
     Hawaiian Interagency Task Force established under the 
     authority of section 6 of this Act.

     SEC. 3. UNITED STATES POLICY AND PURPOSE.

       (a) Policy.--The United States reaffirms that--
       (1) Native Hawaiians are a unique and distinct aboriginal, 
     indigenous, native people, with whom the United States has a 
     political and legal relationship;
       (2) the United States has a special trust relationship to 
     promote the welfare of Native Hawaiians;
       (3) Congress possesses the authority under the Constitution 
     to enact legislation to address the conditions of Native 
     Hawaiians and has exercised this authority through the 
     enactment of--
       (A) the Hawaiian Homes Commission Act, 1920 (42 Stat. 108, 
     chapter 42);
       (B) the Act entitled ``An Act to provide for the admission 
     of the State of Hawaii into the Union'', approved March 18, 
     1959 (Public Law 86-3; 73 Stat. 4); and
       (C) more than 150 other Federal laws addressing the 
     conditions of Native Hawaiians;
       (4) Native Hawaiians have--
       (A) an inherent right to autonomy in their internal 
     affairs;
       (B) an inherent right of self-determination and self-
     governance;
       (C) the right to reorganize a Native Hawaiian government; 
     and
       (D) the right to become economically self-sufficient; and
       (5) the United States shall continue to engage in a process 
     of reconciliation and political relations with the Native 
     Hawaiian people.
       (b) Purpose.--It is the intent of Congress that the purpose 
     of this Act is to provide a process for the reorganization of 
     a Native Hawaiian government and for the recognition by the 
     United States of the Native Hawaiian government for purposes 
     of continuing a government-to-government relationship.

     SEC. 4. ESTABLISHMENT OF THE UNITED STATES OFFICE FOR NATIVE 
                   HAWAIIAN AFFAIRS.

       (a) In General.--There is established within the Office of 
     the Secretary the United States Office for Native Hawaiian 
     Affairs.
       (b) Duties of the Office.--The United States Office for 
     Native Hawaiian Affairs shall--
       (1) effectuate and coordinate the special trust 
     relationship between the Native Hawaiian people and the 
     United States through the Secretary, and with all other 
     Federal agencies;
       (2) upon the recognition of the Native Hawaiian government 
     by the United States as provided for in section 7(d)(2) of 
     this Act, effectuate and coordinate the special trust 
     relationship between the Native Hawaiian government and the 
     United States through the Secretary, and with all other 
     Federal agencies;
       (3) fully integrate the principle and practice of 
     meaningful, regular, and appropriate consultation with the 
     Native Hawaiian people by providing timely notice to, and 
     consulting with the Native Hawaiian people prior to taking 
     any actions that may affect traditional or current Native 
     Hawaiian practices and matters that may have the potential to 
     significantly or uniquely affect Native Hawaiian resources, 
     rights, or lands, and upon the recognition of the Native 
     Hawaiian government as provided for in section 7(d)(2) of 
     this Act, fully integrate the principle and practice of 
     meaningful, regular, and appropriate consultation with the 
     Native Hawaiian government by providing timely notice to, and 
     consulting with the Native Hawaiian people and the Native 
     Hawaiian government prior to taking any actions that may have 
     the potential to significantly affect Native Hawaiian 
     resources, rights, or lands;
       (4) consult with the Native Hawaiian Interagency Task 
     Force, other Federal agencies, and with relevant agencies of 
     the State of Hawaii on policies, practices, and proposed 
     actions affecting Native Hawaiian resources, rights, or 
     lands;
       (5) be responsible for the preparation and submittal to the 
     Committee on Indian Affairs of the Senate, the Committee on 
     Energy and Natural Resources of the Senate, and the Committee 
     on Resources of the House of Representatives of an annual 
     report detailing the activities of the Interagency Task Force 
     established under section 6 of this Act that are undertaken 
     with respect to the continuing process of reconciliation and 
     to effect meaningful consultation with the Native Hawaiian 
     people and the Native Hawaiian government and providing 
     recommendations for any necessary changes to existing Federal 
     statutes or regulations promulgated under the authority of 
     Federal law;
       (6) be responsible for continuing the process of 
     reconciliation with the Native Hawaiian people, and upon the 
     recognition of the Native Hawaiian government by the United 
     States as provided for in section 7(d)(2) of this Act, be 
     responsible for continuing the process of reconciliation with 
     the Native Hawaiian government; and
       (7) assist the Native Hawaiian people in facilitating a 
     process for self-determination, including but not limited to 
     the provision of technical assistance in the development of 
     the roll under section 7(a) of this Act, the organization of 
     the Native Hawaiian Interim Governing Council as provided for 
     in section 7(c) of this Act, and the recognition of the 
     Native Hawaiian government as provided for in section 7(d) of 
     this Act.
       (c) Authority.--The United States Office for Native 
     Hawaiian Affairs is authorized to enter into a contract with 
     or make grants for the purposes of the activities authorized 
     or addressed in section 7 of this Act for a period of 3 years 
     from the date of the enactment of this Act.

     SEC. 5. DESIGNATION OF DEPARTMENT OF JUSTICE REPRESENTATIVE.

       The Attorney General shall designate an appropriate 
     official within the Department of Justice to assist the 
     United States Office for Native Hawaiian Affairs in the 
     implementation and protection of the rights of Native 
     Hawaiians and their political, legal, and trust relationship 
     with the United States, and upon the recognition of 
     the Native Hawaiian government as provided for in section 
     7(d)(2) of this Act, in the implementation and protection 
     of the rights of the Native Hawaiian government and its 
     political, legal, and trust relationship with the United 
     States.

[[Page H12315]]

     SEC. 6. NATIVE HAWAIIAN INTERAGENCY TASK FORCE.

       (a) Establishment.--There is established an interagency 
     task force to be known as the ``Native Hawaiian Interagency 
     Task Force''.
       (b) Composition.--The Task Force shall be composed of 
     officials, to be designated by the President, from--
       (1) each Federal agency that establishes or implements 
     policies that affect Native Hawaiians or whose actions may 
     significantly or uniquely impact on Native Hawaiian 
     resources, rights, or lands;
       (2) the United States Office for Native Hawaiian Affairs 
     established under section 4 of this Act; and
       (3) the Executive Office of the President.
       (c) Lead Agencies.--The Department of the Interior and the 
     Department of Justice shall serve as the lead agencies of the 
     Task Force, and meetings of the Task Force shall be convened 
     at the request of either of the lead agencies.
       (d) Co-Chairs.--The Task Force representative of the United 
     States Office for Native Hawaiian Affairs established under 
     the authority of section 4 of this Act and the Attorney 
     General's designee under the authority of section 5 of this 
     Act shall serve as co-chairs of the Task Force.
       (e) Duties.--The responsibilities of the Task Force shall 
     be--
       (1) the coordination of Federal policies that affect Native 
     Hawaiians or actions by any agency or agencies of the Federal 
     Government which may significantly or uniquely impact on 
     Native Hawaiian resources, rights, or lands;
       (2) to assure that each Federal agency develops a policy on 
     consultation with the Native Hawaiian people, and upon 
     recognition of the Native Hawaiian government by the United 
     States as provided in section 7(d)(2) of this Act, 
     consultation with the Native Hawaiian government; and
       (3) to assure the participation of each Federal agency in 
     the development of the report to Congress authorized in 
     section 4(b)(5) of this Act.

     SEC. 7. PROCESS FOR THE DEVELOPMENT OF A ROLL FOR THE 
                   ORGANIZATION OF A NATIVE HAWAIIAN INTERIM 
                   GOVERNING COUNCIL, FOR THE ORGANIZATION OF A 
                   NATIVE HAWAIIAN INTERIM GOVERNING COUNCIL AND A 
                   NATIVE HAWAIIAN GOVERNMENT, AND FOR THE 
                   RECOGNITION OF THE NATIVE HAWAIIAN GOVERNMENT.

       (a) Roll.--
       (1) Preparation of roll.--The United States Office for 
     Native Hawaiian Affairs shall assist the adult members of the 
     Native Hawaiian community who wish to participate in the 
     reorganization of a Native Hawaiian government in preparing a 
     roll for the purpose of the organization of a Native Hawaiian 
     Interim Governing Council. The roll shall include the names 
     of the--
       (A) adult members of the Native Hawaiian community who wish 
     to become citizens of a Native Hawaiian government and who 
     are--
       (i) the lineal descendants of the aboriginal, indigenous, 
     native people who resided in the islands that now comprise 
     the State of Hawaii on or before January 1, 1893, and who 
     occupied and exercised sovereignty in the Hawaiian 
     archipelago; or
       (ii) Native Hawaiians who were eligible in 1921 for the 
     programs authorized by the Hawaiian Homes Commission Act (42 
     Stat. 108, chapter 42) or their lineal descendants; and
       (B) the children of the adult members listed on the roll 
     prepared under this subsection.
       (2) Certification and submission.--
       (A) Commission.--
       (i) In general.--There is authorized to be established a 
     Commission to be composed of nine members for the purpose of 
     certifying that the adult members of the Native Hawaiian 
     community on the roll meet the definition of Native Hawaiian, 
     as defined in section 2(7)(A) of this Act.
       (ii) Membership.--

       (I) Appointment.--The Secretary shall appoint the members 
     of the Commission in accordance with subclause (II). Any 
     vacancy on the Commission shall not affect its powers and 
     shall be filled in the same manner as the original 
     appointment.

       (II) Requirements.--The members of the Commission shall be 
     Native Hawaiian, as defined in section 2(7)(A) of this Act, 
     and shall have expertise in the certification of Native 
     Hawaiian ancestry.
       (III) Congressional submission of suggested candidates.--In 
     appointing members of the Commission, the Secretary may 
     choose such members from among--

       (aa) five suggested candidates submitted by the Majority 
     Leader of the Senate and the Minority Leader of the Senate 
     from a list of candidates provided to such leaders by the 
     Chairman and Vice Chairman of the Committee on Indian Affairs 
     of the Senate; and
       (bb) four suggested candidates submitted by the Speaker of 
     the House of Representatives and the Minority Leader of the 
     House of Representatives from a list provided to the Speaker 
     and the Minority Leader by the Chairman and Ranking member of 
     the Committee on Resources of the House of Representatives.
       (iii) Expenses.--Each member of the Commission shall be 
     allowed travel expenses, including per diem in lieu of 
     subsistence, at rates authorized for employees of agencies 
     under subchapter I of chapter 57 of title 5, United States 
     Code, while away from their homes or regular places of 
     business in the performance of services for the Commission.
       (B) Certification.--The Commission shall certify that the 
     individuals listed on the roll developed under the authority 
     of this subsection are Native Hawaiians, as defined in 
     section 2(7)(A) of this Act.
       (3) Secretary.--
       (A) Certification.--The Secretary shall review the 
     Commission's certification of the membership roll and 
     determine whether it is consistent with applicable Federal 
     law, including the special trust relationship between the 
     United States and the indigenous, native people of the United 
     States.
       (B) Publication.--Upon making the determination authorized 
     in subparagraph (A), the Secretary shall publish a final 
     roll.
       (C) Appeal.--
       (i) Establishment of mechanism.--The Secretary is 
     authorized to establish a mechanism for an appeal of the 
     Commission's determination as it concerns--

       (I) the exclusion of the name of a person who meets the 
     definition of Native Hawaiian, as defined in section 2(7)(A) 
     of this Act, from the roll; or
       (II) a challenge to the inclusion of the name of a person 
     on the roll on the grounds that the person does not meet the 
     definition of Native Hawaiian, as so defined.

       (ii) Publication; update.--The Secretary shall publish the 
     final roll while appeals are pending, and shall update the 
     final roll and the publication of the final roll upon the 
     final disposition of any appeal.
       (D) Failure to act.--If the Secretary fails to make the 
     certification authorized in subparagraph (A) within 90 days 
     of the date that the Commission submits the membership roll 
     to the Secretary, the certification shall be deemed to have 
     been made, and the Commission shall publish the final roll.
       (4) Effect of publication.--The publication of the final 
     roll shall serve as the basis for the eligibility of adult 
     members listed on the roll to participate in all referenda 
     and elections associated with the organization of a Native 
     Hawaiian Interim Governing Council and the Native Hawaiian 
     government.
       (b) Recognition of Rights.--The right of the Native 
     Hawaiian people to organize for their common welfare and to 
     adopt appropriate organic governing documents is hereby 
     recognized by the United States.
       (c) Organization of the Native Hawaiian Interim Governing 
     Council.--
       (1) Organization.--The adult members listed on the roll 
     developed under the authority of subsection (a) are 
     authorized to--
       (A) develop criteria for candidates to be elected to serve 
     on the Native Hawaiian Interim Governing Council;
       (B) determine the structure of the Native Hawaiian Interim 
     Governing Council; and
       (C) elect members to the Native Hawaiian Interim Governing 
     Council.
       (2) Election.--Upon the request of the adult members listed 
     on the roll developed under the authority of subsection (a), 
     the United States Office for Native Hawaiian Affairs may 
     assist the Native Hawaiian community in holding an election 
     by secret ballot (absentee and mail balloting permitted), to 
     elect the membership of the Native Hawaiian Interim Governing 
     Council.
       (3) Powers.--
       (A) In general.--The Native Hawaiian Interim Governing 
     Council is authorized to represent those on the roll in the 
     implementation of this Act and shall have no powers other 
     than those given to it in accordance with this Act.
       (B) Funding.--The Native Hawaiian Interim Governing Council 
     is authorized to enter into a contract or grant with any 
     Federal agency, including but not limited to, the United 
     States Office for Native Hawaiian Affairs within the 
     Department of the Interior and the Administration for Native 
     Americans within the Department of Health and Human Services, 
     to carry out the activities set forth in subparagraph (C).
       (C) Activities.--
       (i) In general.--The Native Hawaiian Interim Governing 
     Council is authorized to conduct a referendum of the adult 
     members listed on the roll developed under the authority of 
     subsection (a) for the purpose of determining (but not 
     limited to) the following:

       (I) The proposed elements of the organic governing 
     documents of a Native Hawaiian government.
       (II) The proposed powers and authorities to be exercised by 
     a Native Hawaiian government, as well as the proposed 
     privileges and immunities of a Native Hawaiian government.
       (III) The proposed civil rights and protection of such 
     rights of the citizens of a Native Hawaiian government and 
     all persons subject to the authority of a Native Hawaiian 
     government.

       (ii) Development of organic governing documents.--Based 
     upon the referendum, the Native Hawaiian Interim Governing 
     Council is authorized to develop proposed organic governing 
     documents for a Native Hawaiian government.
       (iii) Distribution.--The Native Hawaiian Interim Governing 
     Council is authorized to distribute to all adult members of 
     those listed on the roll, a copy of the proposed organic 
     governing documents, as drafted by the Native Hawaiian 
     Interim Governing Council, along with a brief impartial 
     description of the proposed organic governing documents.
       (iv) Consultation.--The Native Hawaiian Interim Governing 
     Council is authorized to freely consult with those members 
     listed on the roll concerning the text and description of the 
     proposed organic governing documents.
       (D) Elections.--
       (i) In general.--The Native Hawaiian Interim Governing 
     Council is authorized to hold elections for the purpose of 
     ratifying the proposed organic governing documents, and upon 
     ratification of the organic governing documents, to hold 
     elections for the officers of the Native Hawaiian government.
       (ii) Assistance.--Upon the request of the Native Hawaiian 
     Interim Governing Council, the United States Office of Native 
     Hawaiian Affairs may assist the Council in conducting such 
     elections.
       (4) Termination.--The Native Hawaiian Interim Governing 
     Council shall have no power or

[[Page H12316]]

     authority under this Act after the time at which the duly 
     elected officers of the Native Hawaiian government take 
     office.
       (d) Recognition of the Native Hawaiian Government.--
       (1) Process for recognition.--
       (A) Submittal of organic governing documents.--The duly 
     elected officers of the Native Hawaiian government shall 
     submit the organic governing documents of the Native Hawaiian 
     government to the Secretary.
       (B) Certifications.--Within 90 days of the date that the 
     duly elected officers of the Native Hawaiian government 
     submit the organic governing documents to the Secretary, the 
     Secretary shall certify that the organic governing 
     documents--
       (i) were adopted by a majority vote of the adult members 
     listed on the roll prepared under the authority of subsection 
     (a);
       (ii) are consistent with applicable Federal law and the 
     special trust relationship between the United States and the 
     indigenous native people of the United States;
       (iii) provide for the exercise of those governmental 
     authorities that are recognized by the United States as the 
     powers and authorities that are exercised by other 
     governments representing the indigenous, native people of the 
     United States;
       (iv) provide for the protection of the civil rights of the 
     citizens of the Native Hawaiian government and all persons 
     subject to the authority of the Native Hawaiian government, 
     and to assure that the Native Hawaiian government exercises 
     its authority consistent with the requirements of section 202 
     of the Act of April 11, 1968 (25 U.S.C. 1302);
       (v) prevent the sale, disposition, lease, or encumbrance of 
     lands, interests in lands, or other assets of the Native 
     Hawaiian government without the consent of the Native 
     Hawaiian government;
       (vi) establish the criteria for citizenship in the Native 
     Hawaiian government; and
       (vii) provide authority for the Native Hawaiian government 
     to negotiate with Federal, State, and local governments, and 
     other entities.
       (C) Failure to act.--If the Secretary fails to act within 
     90 days of the date that the duly elected officers of the 
     Native Hawaiian government submitted the organic governing 
     documents of the Native Hawaiian government to the Secretary, 
     the certifications authorized in subparagraph (B) shall be 
     deemed to have been made.
       (D) Resubmission in case of noncompliance with federal 
     law.--
       (i) Resubmission by the secretary.--If the Secretary 
     determines that the organic governing documents, or any part 
     thereof, are not consistent with applicable Federal law, the 
     Secretary shall resubmit the organic governing documents to 
     the duly elected officers of the Native Hawaiian government 
     along with a justification for each of the Secretary's 
     findings as to why the provisions are not consistent with 
     such law.
       (ii) Amendment and resubmission by the native hawaiian 
     government.--If the organic governing documents are 
     resubmitted to the duly elected officers of the Native 
     Hawaiian government by the Secretary under clause (i), the 
     duly elected officers of the Native Hawaiian government 
     shall--

       (I) amend the organic governing documents to ensure that 
     the documents comply with applicable Federal law; and
       (II) resubmit the amended organic governing documents to 
     the Secretary for certification in accordance with 
     subparagraphs (B) and (C).

       (2) Federal recognition.--
       (A) Recognition.--Notwithstanding any other provision of 
     law, upon the election of the officers of the Native Hawaiian 
     government and the certifications (or deemed certifications) 
     by the Secretary authorized in paragraph (1), Federal 
     recognition is hereby extended to the Native Hawaiian 
     government as the representative governing body of the Native 
     Hawaiian people.
       (B) No diminishment of rights or privileges.--Nothing 
     contained in this Act shall diminish, alter, or amend any 
     existing rights or privileges enjoyed by the Native Hawaiian 
     people which are not inconsistent with the provisions of this 
     Act.

     SEC. 8. AUTHORIZATION OF APPROPRIATIONS.

       There is authorized to be appropriated such sums as may be 
     necessary to carry out the activities authorized in this Act.

     SEC. 9. REAFFIRMATION OF DELEGATION OF FEDERAL AUTHORITY; 
                   NEGOTIATIONS.

       (a) Reaffirmation.--The delegation by the United States of 
     authority to the State of Hawaii to address the conditions of 
     Native Hawaiians contained in the Act entitled ``An Act to 
     provide for the admission of the State of Hawaii into the 
     Union'' approved March 18, 1959 (Public Law 86-3; 73 Stat. 5) 
     is hereby reaffirmed.
       (b) Negotiations.--Upon the Federal recognition of the 
     Native Hawaiian government pursuant to section 7(d)(2) of 
     this Act, the United States is authorized to negotiate and 
     enter into an agreement with the State of Hawaii and the 
     Native Hawaiian government regarding the transfer of lands, 
     resources, and assets dedicated to Native Hawaiian use under 
     existing law as in effect on the date of the enactment of 
     this Act to the Native Hawaiian government.

     SEC. 10. DISCLAIMER.

       Nothing in this Act is intended to serve as a settlement of 
     any claims against the United States, or to affect the rights 
     of the Native Hawaiian people under international law.

     SEC. 11. REGULATIONS.

       The Secretary is authorized to make such rules and 
     regulations and such delegations of authority as the 
     Secretary deems necessary to carry out the provisions of this 
     Act.

     SEC. 12. SEVERABILITY.

       In the event that any section or provision of this Act, or 
     any amendment made by this Act is held invalid, it is the 
     intent of Congress that the remaining sections or provisions 
     of this Act, and the amendments made by this Act, shall 
     continue in full force and effect.

       Section 124 includes a technical correction to allow the 
     use of National Park Service funds for the acquisition of 
     lands near Saddleback Mountain, Maine for inclusion in the 
     Appalachian National Scenic Trail.
       Section 125 incorporates by reference the text of the bill 
     S. 2273, the Black Rock Desert-High Rock Canyon Emigrant 
     Trails National Conservation Area Act of 2000, as passed by 
     the United States Senate on October 5, 2000. The text of S. 
     2273 is as follows:
     AN ACT To establish the Black Rock Desert-High Rock Canyon 
     Emigrant Trails National Conservation Area, and for other 
     purposes.
       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 ``Black Rock Desert-High Rock 
     Canyon Emigrant Trails National Conservation Area Act of 
     2000''.

     SEC. 2. FINDINGS.

       The Congress finds the following:
       (1) The areas of northwestern Nevada known as the Black 
     Rock Desert and High Rock Canyon contain and surround the 
     last nationally significant, untouched segments of the 
     historic California emigrant Trails, including wagon ruts, 
     historic inscriptions, and a wilderness landscape largely 
     unchanged since the days of the pioneers.
       (2) The relative absence of development in the Black Rock 
     Desert and high Rock Canyon areas from emigrant times to the 
     present day offers a unique opportunity to capture the 
     terrain, sights, and conditions of the overland trails as 
     they were experienced by the emigrants and to make available 
     to both present and future generations of Americans the 
     opportunity of experiencing emigrant conditions in an 
     unaltered setting.
       (3) The Black Rock Desert and High Rock Canyon areas are 
     unique segments of the Northern Great Basin and contain broad 
     representation of the Great Basin's land forms and plant and 
     animal species, including golden eagles and other birds of 
     prey, sage grouse, mule deer, pronghorn antelope, bighorn 
     sheep, free roaming horses and burros, threatened fish and 
     sensitive plants.
       (4) The Black Rock-High Rock region contains a number of 
     cultural and natural resources that have been declared 
     eligible for National Historic Landmark and Natural Landmark 
     status, including a portion of the 1843-44 John Charles 
     Fremont exploration route, the site of the death of Peter 
     Lassen, early military facilities, and examples of early 
     homesteading and mining.
       (5) The archeological, paleontological, and geographical 
     resources of the Black Rock-High Rock region include numerous 
     prehistoric and historic Native American sites, wooly mammoth 
     sites, some of the largest natural potholes of North America, 
     and a remnant dry Pleistocene lakebed (playa) where the 
     curvature of the Earth may be observed.
       (6) The two large wilderness mosaics that frame the 
     conservation area offer exceptional opportunities for 
     solitude and serve to protect the integrity of the viewshed 
     of the historic emigrant trails.
       (7) Public lands in the conservation area have been used 
     for domestic livestock grazing for over a century, with 
     resultant benefits to community stability and contributions 
     to the local and State economies. It has not been 
     demonstrated that continuation of this use would be 
     incompatible with appropriate protection and sound management 
     of the resource values of these lands; therefore, it is 
     expected that such grazing will continue in accordance with 
     the management plan for the conservation area and other 
     applicable laws and regulations.
       (8) The Black Rock Desert playa is a unique natural 
     resource that serves as the primary destination for the 
     majority of visitors to the conservation area, including 
     visitors associated with large-scale permitted events. It is 
     expected that such permitted events will continue to be 
     administered in accordance with the management plan for the 
     conservation area and other applicable laws and regulations.

     SEC. 3. DEFINITIONS.

       As used in this Act:
       (1) The term ``Secretary'' means the Secretary of the 
     Interior.
       (2) The term ``public lands'' has the meaning stated in 
     section 103(e) of the Federal Land Policy and Management Act 
     of 1976 (43 U.S.C. 1702(e)).
       (3) The term ``conservation area'' means the Black Rock 
     Desert-High Rock Canyon Emigrant Trails National Conservation 
     Area established pursuant to section 4 of this Act.

     SEC. 4. ESTABLISHMENT OF THE CONSERVATION AREA.

       (a) Establishment and Purposes.--In order to conserve, 
     protect, and enhance for the benefit and enjoyment of present 
     and future generations the unique and nationally important 
     historical, cultural, paleontological, scenic, scientific, 
     biological, educational, wildlife, riparian, wilderness, 
     endangered species, and recreational values and resources 
     associated with the Applegate-Lassen and Nobles Trails 
     corridors and surrounding areas, there is hereby established 
     the Black Rock Desert-High Rock Canyon Emigrant Trails 
     National Conservation Area in the State of Nevada.
       (b) Areas Included.--The conservation area shall consist of 
     approximately 797,100 acres of public lands as generally 
     depicted on the map entitled ``Black Rock Desert Emigrant 
     Trail National Conservation Area'' and dated July 19, 2000.

[[Page H12317]]

       (c) Maps and Legal Description.--As soon as practicable 
     after the date of the enactment of this Act, the Secretary 
     shall submit to Congress a map and legal description of the 
     conservation area. The map and legal description shall have 
     the same force and effect as if included in this Act, except 
     the Secretary may correct clerical and typographical errors 
     in such map and legal description. Copies of the map and 
     legal description shall be on file and available for public 
     inspection in the appropriate offices of the Bureau of Land 
     Management.

     SEC. 5. MANAGEMENT.

       (a) Management.--The Secretary, acting through the Bureau 
     of Land Management, shall manage the conservation area in a 
     manner that conserves, protects and enhances its resources 
     and values, including those resources and values specified in 
     subsection 4(a), in accordance with this Act, the Federal 
     Land Policy and Management Act of 1976 (43 U.S.C. 1701 et 
     seq.), and other applicable provisions of law.
       (b) Access.--
       (1) In general.--The Secretary shall maintain adequate 
     access for the reasonable use and enjoyment of the 
     conservation area.
       (2) Private land.--The Secretary shall provide reasonable 
     access to privately owned land or interests in land within 
     the boundaries of the conservation area.
       (3) Existing public roads.--The Secretary is authorized to 
     maintain existing public access within the boundaries of the 
     conservation area in a manner consistent with the purposes 
     for which the conservation area was established.
       (c) Uses.--
       (1) In general.--The Secretary shall only allow such uses 
     of the conservation area as the Secretary finds will further 
     the purposes for which the conservation area is established.
       (2) Off-highway vehicle use.--Except where needed for 
     administrative purposes or to respond to an emergency, use of 
     motorized vehicles in the conservation area shall be 
     permitted only on roads and trails and in other areas 
     designated for use of motorized vehicles as part of the 
     management plan prepared pursuant to subsection (e).
       (3) Permitted events.--The Secretary may continue to permit 
     large-scale events in defined, low impact areas of the Black 
     Rock Desert playa in the conservation area in accordance with 
     the management plan prepared pursuant to subsection (e).
       (d) Hunting, Trapping, and Fishing.--Nothing in this Act 
     shall be deemed to diminish the jurisdiction of the State of 
     Nevada with respect to fish and wildlife management, 
     including regulation of hunting and fishing, on public lands 
     within the conservation area.
       (e) Management Plan.--Within three years following the date 
     of enactment of this Act, the Secretary shall develop a 
     comprehensive resource management plan for the long-term 
     protection and management of the conservation area. The plan 
     shall be developed with full public participation and shall 
     describe the appropriate uses and management of the 
     conservation area consistent with the provisions of this Act. 
     The plan may incorporate appropriate decisions contained in 
     any current management or activity plan for the area and may 
     use information developed in previous studies of the lands 
     within or adjacent to the conservation area.
       (f) Grazing.--Where the Secretary of the Interior currently 
     permits livestock grazing in the conservation area, such 
     grazing shall be allowed to continue subject to all 
     applicable laws, regulations, and executive orders.
       (g) Visitor Service Facilities.--The Secretary is 
     authorized to establish, in cooperation with other public or 
     private entities as the Secretary may deem appropriate, 
     visitor service facilities for the purpose of providing 
     information about the historical, cultural, ecological, 
     recreational, and other resources of the conservation area.

     SEC. 6. WITHDRAWAL.

       (a) In General.--Subject to valid existing rights, all 
     Federal lands within the conservation area and all lands and 
     interests therein which are hereafter acquired by the United 
     States are hereby withdrawn from all forms of entry, 
     appropriation, or disposal under the public land laws, from 
     location, entry, and patent under the mining laws, from 
     operation of the mineral leasing and geothermal leasing 
     laws and from the minerals materials laws and all 
     amendments thereto.

     SEC. 7. NO BUFFER ZONES.

       The Congress does not intend for the establishment of the 
     conservation area to lead to the creation of protective 
     perimeters or buffer zones around the conservation area. The 
     fact that there may be activities or uses on lands outside 
     the conservation area that would not be permitted in the 
     conservation area shall not preclude such activities or uses 
     on such lands up to the boundary of the conservation area 
     consistent with other applicable laws.

     SEC. 8. WILDERNESS.

       (a) Designation.--In furtherance of the purposes of the 
     Wilderness Act of 1964 (16 U.S.C. 1131 et seq.), the 
     following lands in the State of Nevada are designated as 
     wilderness, and, therefore, as components of the National 
     Wilderness Preservation System:
       (1) Certain lands in the Black Rock Desert Wilderness Study 
     Area comprised of approximately 315,700 acres, as generally 
     depicted on a map entitled ``Black Rock Desert Wilderness--
     Proposed'' and dated July 19, 2000, and which shall be known 
     as the Black Rock Desert Wilderness.
       (2) Certain lands in the Pahute Peak Wilderness Study Area 
     comprised of approximately 57,400 acres, as generally 
     depicted on a map entitled ``Pahute Peak Wilderness--
     Proposed'' and dated July 19, 2000, and which shall be known 
     as the Pahute Peak Wilderness.
       (3) Certain lands in the North Black Rock Range Wilderness 
     Study Area comprised of approximately 30,800 acres, as 
     generally depicted on a map entitled ``North Black Rock Range 
     Wilderness--Proposed'' and dated July 19, 2000, and which 
     shall be known as the North Black Rock Range Wilderness.
       (4) Certain lands in the East Fork High Rock Canyon 
     Wilderness Study Area comprised of approximately 52,800 
     acres, as generally depicted on a map entitled ``East Fork 
     High Rock Canyon Wilderness--Proposed'' and dated July 19, 
     2000, and which shall be known as the East Fork High Rock 
     Canyon Wilderness.
       (5) Certain lands in the High Rock Lake Wilderness Study 
     Area comprised of approximately 59,300 acres, as generally 
     depicted on a map entitled ``High Rock Lake Wilderness--
     Proposed'' and dated July 19, 2000, and which shall be known 
     as the High Rock Lake Wilderness.
       (6) Certain lands in the Little High Rock Canyon Wilderness 
     Study Area comprised of approximately 48,700 acres, as 
     generally depicted on a map entitled ``Little High Rock 
     Canyon Wilderness--Proposed'' and dated July 19, 2000, and 
     which shall be known as the Little High Rock Canyon 
     Wilderness.
       (7) Certain lands in the High Rock Canyon Wilderness Study 
     Area and Yellow Rock Canyon Wilderness Study Area comprised 
     of approximately 46,600 acres, as generally depicted on a map 
     entitled ``High Rock Canyon Wilderness--Proposed'' and dated 
     July 19, 2000, and which shall be known as the High Rock 
     Canyon Wilderness.
       (8) Certain lands in the Calico Mountains Wilderness Study 
     Area comprised of approximately 65,400 acres, as generally 
     depicted on a map entitled ``Calico Mountains Wilderness--
     Proposed'' and dated July 19, 2000, and which shall be known 
     as the Calico Mountains Wilderness.
       (9) Certain lands in the South Jackson Mountains Wilderness 
     Study Area comprised of approximately 56,800 acres, as 
     generally depicted on a map entitled ``South Jackson 
     Mountains Wilderness--Proposed'' and dated July 19, 2000, and 
     which shall be known as the South Jackson Mountains 
     Wilderness.
       (10) Certain lands in the North Jackson Mountains 
     Wilderness Study Area comprised of approximately 24,000 
     acres, as generally depicted on a map entitled ``North 
     Jackson Mountains Wilderness--Proposed'' and dated July 19, 
     2000, and which shall be known as the North Jackson Mountains 
     Wilderness.
       (b) Administration of Wilderness Areas.--Subject to valid 
     existing rights, each wilderness area designated by this Act 
     shall be administered by the Secretary in accordance with the 
     provisions of the Wilderness Act, except that any reference 
     in such provisions to the effective date of the Wilderness 
     Act shall be deemed to be a reference to the date of 
     enactment of this Act and any reference to the Secretary of 
     Agriculture shall be deemed to be a reference to the 
     Secretary of the Interior.
       (c) Maps and Legal Description.--As soon as practicable 
     after the date of the enactment of this Act, the Secretary 
     shall submit to Congress a map and legal description of the 
     wilderness areas designated under this Act. The map and legal 
     description shall have the same force and effect as if 
     included in this Act, except the Secretary may correct 
     clerical and typographical errors in such map and legal 
     description. Copies of the map and legal description shall 
     be on file and available for public inspection in the 
     appropriate offices of the Bureau of Land Management.
       (d) Grazing.--Within the wilderness areas designated under 
     subsection (a), the grazing of livestock, where established 
     prior to the date of enactment of this Act, shall be 
     permitted to continue subject to such reasonable regulations, 
     policies, and practices as the Secretary deems necessary, as 
     long as such regulations, policies, and practices fully 
     conform with and implement the intent of Congress regarding 
     grazing in such areas as such intent is expressed in the 
     Wilderness Act and section 101(f) of Public Law 101-628.

     SEC. 9. AUTHORIZATION OF APPROPRIATIONS.

       There is hereby authorized to be appropriated such sums as 
     may be necessary to carry out the provisions of this Act.

       Section 126 increases the annual authorized funding level 
     for the Illinois and Michigan Canal National Heritage 
     Corridor Commission from $250,000 to $1,000,000.
       Section 127. The bill S. 2885, the Jamestown 400th 
     Commemoration Commission Act of 2000, as passed in the United 
     States Senate on October 5, 2000, is incorporated by 
     reference. The text of S. 2885 is as follows:

 An Act to establish the Jamestown 400th Commemoration Commission, and 
                           for other purposes

       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 ``Jamestown 400th 
     Commemoration Commission Act of 2000''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--Congress finds that--
       (1) the founding of the colony at Jamestown, Virginia in 
     1607, the first permanent English colony in the New World, 
     and the capital of Virginia for 92 years, has major 
     significance in the history of the United States;
       (2) the settlement brought people from throughout the 
     Atlantic Basin together to form a multicultural society, 
     including English, other Europeans, Native Americans, and 
     Africans;
       (3) the economic, political, religious, and social 
     institutions that developed during the first 9 decades of the 
     existence of Jamestown continue to have profound effects on 
     the United States, particularly in English common law and

[[Page H12318]]

     language, cross cultural relationships, and economic 
     structure and status;
       (4) the National Park Service, the Association for the 
     Preservation of Virginia Antiquities, and the Jamestown-
     Yorktown Foundation of the Commonwealth of Virginia 
     collectively own and operate significant resources related to 
     the early history of Jamestown; and
       (5) in 1996--
       (A) the Commonwealth of Virginia designated the Jamestown-
     Yorktown Foundation as the State agency responsible for 
     planning and implementing the Commonwealth's portion of the 
     commemoration of the 400th anniversary of the founding of the 
     Jamestown settlement;
       (B) the Foundation created the Celebration 2007 Steering 
     Committee, known as the Jamestown 2007 Steering Committee; 
     and
       (C) planning for the commemoration began.
       (b) Purpose.--The purpose of this Act is to establish the 
     Jamestown 400th Commemoration Commission to--
       (1) ensure a suitable national observance of the Jamestown 
     2007 anniversary by complementing the programs and activities 
     of the Commonwealth of Virginia;
       (2) cooperate with and assist the programs and activities 
     of the State in observance of the Jamestown 2007 anniversary;
       (3) assist in ensuring that Jamestown 2007 observances 
     provide an excellent visitor experience and beneficial 
     interaction between visitors and the natural and cultural 
     resources of the Jamestown sites;
       (4) assist in ensuring that the Jamestown 2007 observances 
     are inclusive and appropriately recognize the experiences of 
     all people present in 17th century Jamestown;
       (5) provide assistance to the development of Jamestown-
     related programs and activities;
       (6) facilitate international involvement in the Jamestown 
     2007 observances;
       (7) support and facilitate marketing efforts for a 
     commemorative coin, stamp, and related activities for the 
     Jamestown 2007 observances; and
       (8) assist in the appropriate development of heritage 
     tourism and economic benefits to the United States.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Commemoration.--The term ``commemoration'' means the 
     commemoration of the 400th anniversary of the founding of the 
     Jamestown settlement.
       (2) Commission.--The term ``Commission'' means the 
     Jamestown 400th Commemoration Commission established by 
     section 4(a).
       (3) Governor.--The term ``Governor'' means the Governor of 
     Virginia.
       (4) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior.
       (5) State.--The term ``State'' means the Commonwealth of 
     Virginia, including agencies and entities of the 
     Commonwealth.

     SEC. 4. JAMESTOWN 400TH COMMEMORATION COMMISSION.

       (a) In General.--There is established a commission to be 
     known as the ``Jamestown 400th Commemoration Commission''.
       (b) Membership.--
       (1) In general.--The Commission shall be composed of 15 
     members, of whom--
       (A) 4 members shall be appointed by the Secretary, taking 
     into consideration the recommendations of the Chairperson of 
     the Jamestown 2007 Steering Committee;
       (B) 4 members shall be appointed by the Secretary, taking 
     into consideration the recommendations of the Governor;
       (C) 2 members shall be employees of the National Park 
     Service, of which--
       (i) 1 shall be the Director of the National Park Service 
     (or a designee); and
       (ii) 1 shall be an employee of the National Park Service 
     having experience relevant to the commemoration, to be 
     appointed by the Secretary; and
       (D) 5 members shall be individuals that have an interest 
     in, support for, and expertise appropriate to, the 
     commemoration, to be appointed by the Secretary.
       (2) Term; vacancies.--
       (A) Term.--A member of the Commission shall be appointed 
     for the life of the Commission.
       (B) Vacancies.--
       (i) In general.--A vacancy on the Commission shall be 
     filled in the same manner in which the original appointment 
     was made.
       (ii) Partial term.--A member appointed to fill a vacancy on 
     the Commission shall serve for the remainder of the term for 
     which the predecessor of the member was appointed.
       (3) Meetings.--
       (A) In general.--The Commission shall meet--
       (i) at least twice each year; or
       (ii) at the call of the Chairperson or the majority of the 
     members of the Commission.
       (B) Initial meeting.--Not later than 30 days after the date 
     on which all members of the Commission have been appointed, 
     the Commission shall hold the initial meeting of the 
     Commission.
       (4) Voting.--
       (A) In general.--The Commission shall act only on an 
     affirmative vote of a majority of the members of the 
     Commission.
       (B) Quorum.--A majority of the Commission shall constitute 
     a quorum.
       (5) Chairperson.--The Secretary shall appoint a Chairperson 
     of the Commission, taking into consideration any 
     recommendations of the Governor.
       (c) Duties.--
       (1) In general.--The Commission shall--
       (A) plan, develop, and execute programs and activities 
     appropriate to commemorate the 400th anniversary of the 
     founding of Jamestown;
       (B) generally facilitate Jamestown-related activities 
     throughout the United States;
       (C) encourage civic, patriotic, historical, educational, 
     religious, economic, and other organizations throughout the 
     United States to organize and participate in anniversary 
     activities to expand the understanding and appreciation of 
     the significance of the founding and early history of 
     Jamestown;
       (D) coordinate and facilitate for the public scholarly 
     research on, publication about, and interpretation of, 
     Jamestown; and
       (E) ensure that the 400th anniversary of Jamestown provides 
     a lasting legacy and long-term public benefit by assisting in 
     the development of appropriate programs and facilities.
       (2) Plans; reports.--
       (A) Strategic plan; annual performance plans.--In 
     accordance with the Government Performance and Results Act of 
     1993 (Public Law 103-62; 107 Stat. 285), the Commission shall 
     prepare a strategic plan and annual performance plans for the 
     activities of the Commission carried out under this Act.
       (B) Final report.--Not later than September 30, 2008, the 
     Commission shall complete a final report that contains--
       (i) a summary of the activities of the Commission;
       (ii) a final accounting of funds received and expended by 
     the Commission; and
       (iii) the findings and recommendations of the Commission.
       (d) Powers of the Commission.--The Commission may--
       (1) accept donations and make dispersions of money, 
     personal services, and real and personal property related to 
     Jamestown and of the significance of Jamestown in the history 
     of the United States;
       (2) appoint such advisory committees as the Commission 
     determines to be necessary to carry out this Act;
       (3) authorize any member or employee of the Commission to 
     take any action that the Commission is authorized to take by 
     this Act;
       (4) procure supplies, services, and property, and make or 
     enter into contracts, leases or other legal agreements, to 
     carry out this Act (except that any contracts, leases or 
     other legal agreements made or entered into by the Commission 
     shall not extend beyond the date of termination of the 
     Commission);
       (5) use the United States mails in the same manner and 
     under the same conditions as other Federal agencies;
       (6) subject to approval by the Commission, make grants in 
     amounts not to exceed $10,000 to communities and nonprofit 
     organizations to develop programs to assist in the 
     commemoration;
       (7) make grants to research and scholarly organizations to 
     research, publish, or distribute information relating to the 
     early history of Jamestown; and
       (8) provide technical assistance to States, localities, and 
     nonprofit organizations to further the commemoration.
       (e) Commission Personnel Matters.--
       (1) Compensation of members of the commission.--
       (A) In general.--Except as provided in subparagraph (B), a 
     member of the Commission shall serve without compensation.
       (B) Federal employees.--A member of the Commission who is 
     an officer or employee of the Federal Government shall serve 
     without compensation in addition to the compensation received 
     for the services of the member as an officer or employee of 
     the Federal Government.
       (C) Travel expenses.--A member of the Commission shall be 
     allowed travel expenses, including per diem in lieu of 
     subsistence, at rates authorized for an employee of an agency 
     under subchapter I of chapter 57 of title 5, United States 
     Code, while away from the home or regular place of business 
     of the member in the performance of the duties of the 
     Commission.
       (2) Staff.--
       (A) In general.--The Chairperson of the Commission may, 
     without regard to the civil service laws (including 
     regulations), appoint and terminate an executive director and 
     such other additional personnel as are necessary to enable 
     the Commission to perform the duties of the Commission.
       (B) Confirmation of executive director.--The employment of 
     an executive director shall be subject to confirmation by the 
     Commission.
       (3) Compensation.--
       (A) In general.--Except as provided in subparagraph (B), 
     the Chairperson of the Commission may fix the compensation of 
     the executive director and other personnel without regard to 
     the provisions of chapter 51 and subchapter III of chapter 53 
     of title 5, United States Code, relating to classification of 
     positions and General Schedule pay rates.
       (B) Maximum rate of pay.--The rate of pay for the executive 
     director and other personnel shall not exceed the rate 
     payable for level V of the Executive Schedule under section 
     5316 of title 5, United States Code.
       (4) Detail of government employees.--
       (A) Federal employees.--
       (i) In general.--On the request of the Commission, the head 
     of any Federal agency may detail, on a reimbursable or non-
     reimbursable basis, any of the personnel of the agency to the 
     Commission to assist the Commission in carrying out the 
     duties of the Commission under this Act.
       (ii) Civil service status.--The detail of an employee under 
     clause (i) shall be without interruption or loss of civil 
     service status or privilege.
       (B) State employees.--The Commission may--
       (i) accept the services of personnel detailed from States 
     (including subdivisions of States); and
       (ii) reimburse States for services of detailed personnel.
       (5) Volunteer and uncompensated services.--Notwithstanding 
     section 1342 of title 31, United States Code, the Commission 
     may accept and use voluntary and uncompensated services as 
     the Commission determines necessary.

[[Page H12319]]

       (6) Support services.--The Director of the National Park 
     Service shall provide to the Commission, on a reimbursable 
     basis, such administrative support services as the Commission 
     may request.
       (f) Procurement of Temporary and Intermittent Services.--
     The Chairperson of the Commission may procure temporary and 
     intermittent services in accordance with section 3109(b) of 
     title 5, United States Code, at rates for individuals that do 
     not exceed the daily equivalent of the annual rate of basic 
     pay prescribed for level V of the Executive Schedule under 
     section 5316 of that title.
       (g) FACA Nonapplicability.--Section 14(b) of the Federal 
     Advisory Committee Act (5 U.S.C. App.) shall not apply to the 
     Commission.
       (h) No Effect on Authority.--Nothing in this section 
     supersedes the authority of the State, the National Park 
     Service, or the Association for the Preservation of Virginia 
     Antiquities, concerning the commemoration.
       (i) Termination.--The Commission shall terminate on 
     December 31, 2008.

     SEC. 5. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated such sums as are 
     necessary to carry out this Act.
       Section 128 provides guidance to the National Park Service 
     on restricting the use of snowmobiles in units of the 
     National Park System.
       Section 129 extends an agreement, through March 31, 2001, 
     dealing with seven campsite leases in the Biscayne Bay, 
     Miami/Dade County area of Florida, collectively known as 
     ``Stiltsville''.
       Section 130 authorizes a grant of $1.3 million for the 
     National Park Service to acquire land in Lower Phalen Creek 
     near St. Paul, Minnesota for the Mississippi National River 
     and Recreation Area. The land is for a trail that is being 
     named after the late Congressman Bruce Vento.
       Section 131 authorizes the transfer of funds to the George 
     Washington's Fredericksburg Foundation, Inc. for a 
     cooperative agreement to manage Ferry Farm, which was George 
     Washington's boyhood home.
       Section 132 prohibits the Secretary of the Interior from 
     using funds to pay the salaries or expenses related to the 
     issuance of a request for proposal related to a light rail 
     system at Grand Canyon National Park until June 1, 2001. In 
     addition, the Secretary is directed to report directly to the 
     Committee prior to any additional action regarding a request 
     for proposal on alternative transportation options for the 
     park. These options should include a phase-in period based on 
     newly updated visitation numbers. The report should also 
     address using a bus/transit option only during high peak 
     visitation months. Alternatives to be analyzed and costed in 
     the report include: (1) an alternative fueled bus alternative 
     with parking outside the park; (2) a rapid transit 
     alternative and (3) a combination bus/rapid transit 
     alternative.
       Section 133 prohibits the Secretary of the Interior from 
     removing a white cross erected in 1934 by the Veterans of 
     Foreign Wars to honor the memory of fallen World War I 
     veterans. The cross is located within the boundary of the 
     Mojave National Preserve along Cima Road, approximately 11 
     miles south of Interstate 15.
       Section 134 extends the term of the Chesapeake and Ohio 
     Canal National Historical Park Commission.
       Section 135 allows funds provided in Public Law 106-291 for 
     land acquisition by the National Park Service in fiscal year 
     2001 for Brandywine Battlefield, Ice Age National Scenic 
     Trail, Mississippi National River and Recreation Area, 
     Shenandoah National Heritage Area, and Fallen Timbers 
     Battlefield and Fort Miamis National Historic Site to be used 
     for a grant to a state, local government, or to a land 
     management entity.
       Section 137 extends the boundary of Gulf Islands National 
     Seashore in Mississippi to include Cat Island.
       Section 138. The conference agreement includes a new 
     provision regarding limitations on Federal Thrift Savings 
     Plan contributions.
       Section 139. The conference agreement includes a new 
     provision regarding the exclusion of elements of the United 
     States Secret Service from certain activities.
       Section 140. The conference agreement includes a new 
     provision providing for an average 3.7 percent salary 
     adjustment for Federal employees in January, 2001, consistent 
     with the alternative pay plan submitted by the Administration 
     on November 30, 2000.
       Section 141. The conference agreement includes a new 
     provision repealing mandatory retirement for the Alaska 
     Railroad.
       Section 142. The conference agreement includes a provision 
     amending the Juvenile Justice and Delinquency Prevention Act 
     to allow a two year exception for the State of Alaska with 
     respect to the holding of juveniles in adult facilities.
       Section 143. The conference agreement contains the ``LPTV 
     Pilot Project Digital Data Services Act''.
       Section 144. The conference agreement includes a provision 
     to amend the following: the Magnuson-Stevens Fishery 
     Conservation and Management Act; P.L. 106-246; P.L. 105-83; 
     P.L. 99-5; P.L. 106-113 regarding a fishery research vessel; 
     the implementation of a fishing capacity reduction program 
     for the Commercial King and Tanner Crab Fisheries in the 
     Bering Sea and Aleutian Islands; P.L. 89-702 to be referred 
     to as the Fur Seal Act of 1966; the National Marine 
     Sanctuaries Act (16 U.S.C. 1433, 1434); and the Sustainable 
     Fisheries Act (16 U.S.C. 1855 note).
       Section 145. The conference agreement includes language 
     amending the Department of State Special Agents Retirment Act 
     of 1998 to allow agents who retired between January 1, 1997, 
     and the enactment of the Act on November 13, 1998, to also be 
     eligible for the increased benefits provided by the Act.
       Section 146. The conference agreement includes a provision 
     expressing the sense of Congress calling upon the President 
     of the United States to take action to provide relief from 
     injury caused by steel imports.
       Section 147. The conference agreement includes a provision 
     amending the Johnson Act to prohibit gambling on peri-
     Hawaiian cruises.
       Section 148. The conference agreement includes language to 
     ban political advertising by public broadcasters.
       Section 149. The conference agreement includes language 
     extending a certain small business program, which would 
     otherwise expire.
       Section 150. The conference agreement includes $105,000,000 
     in direct spending to the Department of Health and Human 
     Services for the Ricky Ray Hemophilia Relief Fund, of which 
     $10,000,000 is for program management.
       Section 151. The conference agreement includes $60,400,000 
     in direct spending to the Department of Labor for costs 
     related to administering the Energy Employees Occupational 
     Illness Compensation Program enacted as Title XXXVI of the 
     Defense Authorization Act of 2000. This program was 
     established to compensate individuals who have suffered 
     disabling and potentially fatal illnesses as a result of 
     their work in the Department of Energy's nuclear weapons 
     complex. The Secretary of Labor is authorized to transfer 
     these funds to other federal agencies to the extent necessary 
     to implement the Energy Employees Occupational Illness 
     Compensation Act.
       Section 152. The conference agreement includes a provision 
     to make certain technical and conforming amendments to the 
     Medicare/PPS law to allow the Moffit Cancer Research and 
     Treatment Center to be treated under existing law the same as 
     the other ten Medicare/PPS exempt institutions in the United 
     States.
       The conference agreement includes language which provides 
     that the Secretary of the Army may establish a pilot program 
     to provide environmental assistance to non-Federal interests 
     in northern Wisconsin.

           TITLE II--VIETNAM EDUCATION FOUNDATION ACT OF 2000

       This title enacts a bill to establish a Vietnam Education 
     Foundation, to provide fellowships for Vietnamese to study in 
     the United States at the graduate and post-graduate level in 
     the sciences, math, and medicine. It would also support 
     American professors to teach these subjects in appropriate 
     Vietnamese institutions. The bill authorizes an appropriation 
     of $5,000,000 in fiscal year 2001. Beginning in FY2002, the 
     Secretary of the Treasury would transfer $5,000,000 annually 
     to the Foundation from debt repayments that Vietnam has 
     agreed to make to the United States in settlement of debt 
     incurred prior to 1976 by the Republic of South Vietnam. The 
     Foundation can also solicit and accept private funds.

       TITLE III--COLORADO UTE SETTLEMENT ACT AMENDMENTS OF 2000

       The conference agreement includes the text of S. 2508, the 
     Colorado Ute Settlement Act Amendments of 2000.

     TITLE IV--DESIGNATION OF AMERICAN MUSEUM OF SCIENCE AND ENERGY

       The conference agreement includes language which will 
     permit the American Museum of Science and Energy located in 
     Oak Ridge, Tennessee, to accept and use donations, fees, and 
     gifts to offset the cost of operating the facility.

             TITLE V--DELTA REGIONAL AUTHORITY ACT OF 2000

       The conference agreement includes language which authorizes 
     the Delta Regional Authority.

              TITLE VI--DAKOTA WATER RESOURCES ACT OF 2000

       The conference agreement includes the text of S. 623, the 
     Dakota Water Resources Act of 2000.

                               TITLE VII

       The conference agreement includes an Act authorizing the 
     construction of a Reconciliation Place in Fort Pierre, South 
     Dakota.

                   TITLE VIII--ERIE CANALWAY NATIONAL


                           HERITAGE CORRIDOR

       The conference agreement includes an Act to designate the 
     Erie Canalway a National Heritage Corridor.

                TITLE IX--LAW ENFORCEMENT PAY EQUITY ACT

       The conference agreement includes a new provision regarding 
     pay comparability for the United States Park Police, the 
     Uniformed Division of the United States Secret Service, and 
     the D.C. Metropolitan Police Department.

          TITLE X--DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT


                       administrative provisions

       Language is included which makes technical changes to the 
     fiscal year 2000 Appropriations Act regarding the Millennial 
     Housing Commission.
       Language is included which codifies the multiplier the 
     Federal Home Loan Mortgage Corporation can use for reaching 
     the multi-family affordable housing goal.

[[Page H12320]]

       Language is included to allow the conversion of a HUD 
     rental housing project in Toledo, Ohio to condominiums as 
     long as the housing remains affordable, either as rental or 
     homeownership housing, to low- and very-low income families 
     that currently reside in the apartments.
       Language has been included which directs the General 
     Accounting Office to study and report on financial standards 
     related to the Federal Home Loan Bank System.

                  TITLE XI--DEPARTMENT OF THE TREASURY


                        administrative provision

       Language is included which honors the Navajo Code Talkers 
     of World War II by authorizing the striking and presentation 
     of a gold medal of appropriate design to each of the original 
     29 Navajo Code Talkers or a surviving family member, striking 
     and presentation of a silver medal to each man or surviving 
     family member qualified as a Navajo Code Talker, and by 
     further authorizing the striking of duplicate medals in 
     bronze for sale to the general public.

               TITLE XII--ENVIRONMENTAL PROTECTION AGENCY


                       administrative provisions

       Language is included authorizing the aboveground storage 
     tank grant program.

       TITLE XIII--NATIONAL AERONAUTICS AND SPACE ADMINISTRATION


                        administrative provision

       Language is included which permits NASA to use certain 
     proceeds from the sale of timber on lands associated with the 
     John C. Stennis Space Center for the purchase of additional 
     property to establish education and visitor programs and 
     facilities, and for wetlands mitigation.

           TITLE XIV--CERTAIN ALASKAN CRUISE SHIP OPERATIONS

       Language is included which regulates the discharge of 
     sewage and wastewater from cruise ships in certain waters in 
     and adjacent to the State of Alaska.

                     TITLE XV--LIFE ACT AMENDMENTS

       The conference agreement includes a new title, titled the 
     LIFE Act Amendments of 2000.

     TITLE XVI--IMPROVING LITERACY THROUGH FAMILY LITERACY PROJECTS

       The conference agreement includes the Literacy Involves 
     Families Together Act of 2000.

               TITLE XVII--CHILDREN'S INTERNET PROTECTION

       The conference agreement includes the Children's Internet 
     Protection Act of 2000.

              COMMODITY FUTURES MODERNIZATION ACT OF 2000

       The conference agreement would enact the provisions of H.R. 
     5660, as introduced on December 14, 2000. The text of that 
     bill follows:
     A BILL To reauthorize and amend the Commodity Exchange Act to 
     promote legal certainty, enhance competition, and reduce 
     systemic risk in markets for futures and over-the-counter 
     derivatives, and for other purposes
       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Commodity 
     Futures Modernization Act of 2000''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Purposes.

                TITLE I--COMMODITY FUTURES MODERNIZATION

Sec. 101. Definitions.
Sec. 102. Agreements, contracts, and transactions in foreign currency, 
              government securities, and certain other commodities.
Sec. 103. Legal certainty for excluded derivative transactions.
Sec. 104. Excluded electronic trading facilities.
Sec. 105. Hybrid instruments; swap transactions.
Sec. 106. Transactions in exempt commodities.
Sec. 107. Application of commodity futures laws.
Sec. 108. Protection of the public interest.
Sec. 109. Prohibited transactions.
Sec. 110. Designation of boards of trade as contract markets.
Sec. 111. Derivatives transaction execution facilities.
Sec. 112. Derivatives clearing.
Sec. 113. Common provisions applicable to registered entities.
Sec. 114. Exempt boards of trade.
Sec. 115. Suspension or revocation of designation as contract market.
Sec. 116. Authorization of appropriations.
Sec. 117. Preemption.
Sec. 118. Predispute resolution agreements for institutional customers.
Sec. 119. Consideration of costs and benefits and antitrust laws.
Sec. 120. Contract enforcement between eligible counterparties.
Sec. 121. Special procedures to encourage and facilitate bona fide 
              hedging by agricultural producers.
Sec. 122. Rule of construction.
Sec. 123. Technical and conforming amendments.
Sec. 124. Privacy.
Sec. 125. Report to Congress.
Sec. 126. International activities of the Commodity Futures Trading 
              Commission.

     TITLE II--COORDINATED REGULATION OF SECURITY FUTURES PRODUCTS

                 Subtitle A--Securities Law Amendments

Sec. 201. Definitions under the Securities Exchange Act of 1934.
Sec. 202. Regulatory relief for markets trading security futures 
              products.
Sec. 203. Regulatory relief for intermediaries trading security futures 
              products.
Sec. 204. Special provisions for interagency cooperation.
Sec. 205. Maintenance of market integrity for security futures 
              products.
Sec. 206. Special provisions for the trading of security futures 
              products.
Sec. 207. Clearance and settlement.
Sec. 208. Amendments relating to registration and disclosure issues 
              under the Securities Act of 1933 and the Securities 
              Exchange Act of 1934.
Sec. 209. Amendments to the Investment Company Act of 1940 and the 
              Investment Advisers Act of 1940.
Sec. 210. Preemption of State laws.

          Subtitle B--Amendments To the Commodity Exchange Act

Sec. 251. Jurisdiction of Securities and Exchange Commission; other 
              provisions.
Sec. 252. Application of the Commodity Exchange Act to national 
              securities exchanges and national securities associations 
              that trade security futures.
Sec. 253. Notification of investigations and enforcement actions.

             TITLE III--LEGAL CERTAINTY FOR SWAP AGREEMENTS

Sec. 301. Swap agreement.
Sec. 302. Amendments to the Securities Act of 1933.
Sec. 303. Amendments to the Securities Exchange Act of 1934.
Sec. 304. Savings provision.

         TITLE IV--REGULATORY RESPONSIBILITY FOR BANK PRODUCTS

Sec. 401. Short title.
Sec. 402. Definitions.
Sec. 403. Exclusion of identified banking products commonly offered on 
              or before December 5, 2000.
Sec. 404. Exclusion of certain identified banking products offered by 
              banks after December 5, 2000.
Sec. 405. Exclusion of certain other identified banking products.
Sec. 406. Administration of the predominance test.
Sec. 407. Exclusion of covered swap agreements.
Sec. 408. Contract enforcement.

     SEC. 2. PURPOSES.

       The purposes of this Act are--
       (1) to reauthorize the appropriation for the Commodity 
     Futures Trading Commission;
       (2) to streamline and eliminate unnecessary regulation for 
     the commodity futures exchanges and other entities regulated 
     under the Commodity Exchange Act;
       (3) to transform the role of the Commodity Futures Trading 
     Commission to oversight of the futures markets;
       (4) to provide a statutory and regulatory framework for 
     allowing the trading of futures on securities;
       (5) to clarify the jurisdiction of the Commodity Futures 
     Trading Commission over certain retail foreign exchange 
     transactions and bucket shops that may not be otherwise 
     regulated;
       (6) to promote innovation for futures and derivatives and 
     to reduce systemic risk by enhancing legal certainty in the 
     markets for certain futures and derivatives transactions;
       (7) to reduce systemic risk and provide greater stability 
     to markets during times of market disorder by allowing the 
     clearing of transactions in over-the-counter derivatives 
     through appropriately regulated clearing organizations; and
       (8) to enhance the competitive position of United States 
     financial institutions and financial markets.

                TITLE I--COMMODITY FUTURES MODERNIZATION

     SEC. 101. DEFINITIONS.

       Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is 
     amended--
       (1) by redesignating paragraphs (1) through (7), (8) 
     through (12), (13) through (15), and (16) as paragraphs (2) 
     through (8), (16) through (20), (22) through (24), and (28), 
     respectively;
       (2) by inserting before paragraph (2) (as redesignated by 
     paragraph (1)) the following:
       ``(1) Alternative trading system.--The term `alternative 
     trading system' means an organization, association, or group 
     of persons that--
       ``(A) is registered as a broker or dealer pursuant to 
     section 15(b) of the Securities Exchange Act of 1934 (except 
     paragraph (11) thereof);
       ``(B) performs the functions commonly performed by an 
     exchange (as defined in section 3(a)(1) of the Securities 
     Exchange Act of 1934);
       ``(C) does not--
       ``(i) set rules governing the conduct of subscribers other 
     than the conduct of such subscribers' trading on the 
     alternative trading system; or
       ``(ii) discipline subscribers other than by exclusion from 
     trading; and
       ``(D) is exempt from the definition of the term `exchange' 
     under such section 3(a)(1) by rule or regulation of the 
     Securities and Exchange Commission on terms that require 
     compliance with regulations of its trading functions.'';
       (3) by striking paragraph (2) (as redesignated by paragraph 
     (1)) and inserting the following:
       ``(2) Board of trade.--The term `board of trade' means any 
     organized exchange or other trading facility.'';
       (4) by inserting after paragraph (8) (as redesignated by 
     paragraph (1)) the following:
       ``(9) Derivatives clearing organization.--
       ``(A) In general.--The term `derivatives clearing 
     organization' means a clearinghouse,

[[Page H12321]]

     clearing association, clearing corporation, or similar 
     entity, facility, system, or organization that, with respect 
     to an agreement, contract, or transaction--
       ``(i) enables each party to the agreement, contract, or 
     transaction to substitute, through novation or otherwise, the 
     credit of the derivatives clearing organization for the 
     credit of the parties;
       ``(ii) arranges or provides, on a multilateral basis, for 
     the settlement or netting of obligations resulting from such 
     agreements, contracts, or transactions executed by 
     participants in the derivatives clearing organization; or
       ``(iii) otherwise provides clearing services or 
     arrangements that mutualize or transfer among participants in 
     the derivatives clearing organization the credit risk arising 
     from such agreements, contracts, or transactions executed by 
     the participants.
       ``(B) Exclusions.--The term `derivatives clearing 
     organization' does not include an entity, facility, system, 
     or organization solely because it arranges or provides for--
       ``(i) settlement, netting, or novation of obligations 
     resulting from agreements, contracts, or transactions, on a 
     bilateral basis and without a central counterparty;
       ``(ii) settlement or netting of cash payments through an 
     interbank payment system; or
       ``(iii) settlement, netting, or novation of obligations 
     resulting from a sale of a commodity in a transaction in the 
     spot market for the commodity.
       ``(10) Electronic trading facility.--The term `electronic 
     trading facility' means a trading facility that--
       ``(A) operates by means of an electronic or 
     telecommunications network; and
       ``(B) maintains an automated audit trail of bids, offers, 
     and the matching of orders or the execution of transactions 
     on the facility.
       ``(11) Eligible commercial entity.--The term `eligible 
     commercial entity' means, with respect to an agreement, 
     contract or transaction in a commodity--
       ``(A) an eligible contract participant described in clause 
     (i), (ii), (v), (vii), (viii), or (ix) of paragraph (12)(A) 
     that, in connection with its business--
       ``(i) has a demonstrable ability, directly or through 
     separate contractual arrangements, to make or take delivery 
     of the underlying commodity;
       ``(ii) incurs risks, in addition to price risk, related to 
     the commodity; or
       ``(iii) is a dealer that regularly provides risk management 
     or hedging services to, or engages in market-making 
     activities with, the foregoing entities involving 
     transactions to purchase or sell the commodity or derivative 
     agreements, contracts, or transactions in the commodity;
       ``(B) an eligible contract participant, other than a 
     natural person or an instrumentality, department, or agency 
     of a State or local governmental entity, that--
       ``(i) regularly enters into transactions to purchase or 
     sell the commodity or derivative agreements, contracts, or 
     transactions in the commodity; and
       ``(ii) either--

       ``(I) in the case of a collective investment vehicle whose 
     participants include persons other than--

       ``(aa) qualified eligible persons, as defined in Commission 
     rule 4.7(a) (17 C.F.R. 4.7(a));
       ``(bb) accredited investors, as defined in Regulation D of 
     the Securities and Exchange Commission under the Securities 
     Act of 1933 (17 C.F.R. 230.501(a)), with total assets of 
     $2,000,000; or
       ``(cc) qualified purchasers, as defined in section 
     2(a)(51)(A) of the Investment Company Act of 1940;

     in each case as in effect on the date of the enactment of the 
     Commodity Futures Modernization Act of 2000, has, or is one 
     of a group of vehicles under common control or management 
     having in the aggregate, $1,000,000,000 in total assets; or
       ``(II) in the case of other persons, has, or is one of a 
     group of persons under common control or management having in 
     the aggregate, $100,000,000 in total assets; or

       ``(C) such other persons as the Commission shall determine 
     appropriate and shall designate by rule, regulation, or 
     order.
       ``(12) Eligible contract participant.--The term `eligible 
     contract participant' means--
       ``(A) acting for its own account--
       ``(i) a financial institution;
       ``(ii) an insurance company that is regulated by a State, 
     or that is regulated by a foreign government and is subject 
     to comparable regulation as determined by the Commission, 
     including a regulated subsidiary or affiliate of such an 
     insurance company;
       ``(iii) an investment company subject to regulation under 
     the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) 
     or a foreign person performing a similar role or function 
     subject as such to foreign regulation (regardless of whether 
     each investor in the investment company or the foreign person 
     is itself an eligible contract participant);
       ``(iv) a commodity pool that--

       ``(I) has total assets exceeding $5,000,000; and
       ``(II) is formed and operated by a person subject to 
     regulation under this Act or a foreign person performing a 
     similar role or function subject as such to foreign 
     regulation (regardless of whether each investor in the 
     commodity pool or the foreign person is itself an eligible 
     contract participant);

       ``(v) a corporation, partnership, proprietorship, 
     organization, trust, or other entity--

       ``(I) that has total assets exceeding $10,000,000;
       ``(II) the obligations of which under an agreement, 
     contract, or transaction are guaranteed or otherwise 
     supported by a letter of credit or keepwell, support, or 
     other agreement by an entity described in subclause (I), in 
     clause (i), (ii), (iii), (iv), or (vii), or in subparagraph 
     (C); or
       ``(III) that--

       ``(aa) has a net worth exceeding $1,000,000; and
       ``(bb) enters into an agreement, contract, or transaction 
     in connection with the conduct of the entity's business or to 
     manage the risk associated with an asset or liability owned 
     or incurred or reasonably likely to be owned or incurred by 
     the entity in the conduct of the entity's business;
       ``(vi) an employee benefit plan subject to the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1001 et 
     seq.), a governmental employee benefit plan, or a foreign 
     person performing a similar role or function subject as such 
     to foreign regulation--

       ``(I) that has total assets exceeding $5,000,000; or
       ``(II) the investment decisions of which are made by--

       ``(aa) an investment adviser or commodity trading advisor 
     subject to regulation under the Investment Advisers Act of 
     1940 (15 U.S.C. 80b-1 et seq.) or this Act;
       ``(bb) a foreign person performing a similar role or 
     function subject as such to foreign regulation;
       ``(cc) a financial institution; or
       ``(dd) an insurance company described in clause (ii), or a 
     regulated subsidiary or affiliate of such an insurance 
     company;
       ``(vii)(I) a governmental entity (including the United 
     States, a State, or a foreign government) or political 
     subdivision of a governmental entity;
       ``(II) a multinational or supranational government entity; 
     or
       ``(III) an instrumentality, agency, or department of an 
     entity described in subclause (I) or (II);

     except that such term does not include an entity, 
     instrumentality, agency, or department referred to in 
     subclause (I) or (III) of this clause unless (aa) the entity, 
     instrumentality, agency, or department is a person described 
     in clause (i), (ii), or (iii) of section 1a(11)(A); (bb) the 
     entity, instrumentality, agency, or department owns and 
     invests on a discretionary basis $25,000,000 or more in 
     investments; or (cc) the agreement, contract, or transaction 
     is offered by, and entered into with, an entity that is 
     listed in any of subclauses (I) through (VI) of section 
     2(c)(2)(B)(ii);
       ``(viii)(I) a broker or dealer subject to regulation under 
     the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 
     or a foreign person performing a similar role or function 
     subject as such to foreign regulation, except that, if the 
     broker or dealer or foreign person is a natural person or 
     proprietorship, the broker or dealer or foreign person shall 
     not be considered to be an eligible contract participant 
     unless the broker or dealer or foreign person also meets the 
     requirements of clause (v) or (xi);
       ``(II) an associated person of a registered broker or 
     dealer concerning the financial or securities activities of 
     which the registered person makes and keeps records under 
     section 15C(b) or 17(h) of the Securities Exchange Act of 
     1934 (15 U.S.C. 78o-5(b), 78q(h));
       ``(III) an investment bank holding company (as defined in 
     section 17(i) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78q(i));
       ``(ix) a futures commission merchant subject to regulation 
     under this Act or a foreign person performing a similar role 
     or function subject as such to foreign regulation, except 
     that, if the futures commission merchant or foreign person is 
     a natural person or proprietorship, the futures commission 
     merchant or foreign person shall not be considered to be an 
     eligible contract participant unless the futures commission 
     merchant or foreign person also meets the requirements of 
     clause (v) or (xi);
       ``(x) a floor broker or floor trader subject to regulation 
     under this Act in connection with any transaction that takes 
     place on or through the facilities of a registered entity 
     or an exempt board of trade, or any affiliate thereof, on 
     which such person regularly trades; or
       ``(xi) an individual who has total assets in an amount in 
     excess of--

       ``(I) $10,000,000; or
       ``(II) $5,000,000 and who enters into the agreement, 
     contract, or transaction in order to manage the risk 
     associated with an asset owned or liability incurred, or 
     reasonably likely to be owned or incurred, by the individual;

       ``(B)(i) a person described in clause (i), (ii), (iv), (v), 
     (viii), (ix), or (x) of subparagraph (A) or in subparagraph 
     (C), acting as broker or performing an equivalent agency 
     function on behalf of another person described in 
     subparagraph (A) or (C); or
       ``(ii) an investment adviser subject to regulation under 
     the Investment Advisers Act of 1940, a commodity trading 
     advisor subject to regulation under this Act, a foreign 
     person performing a similar role or function subject as such 
     to foreign regulation, or a person described in clause (i), 
     (ii), (iv), (v), (viii), (ix), or (x) of subparagraph (A) or 
     in subparagraph (C), in any such case acting as investment 
     manager or fiduciary (but excluding a person acting as broker 
     or performing an equivalent agency function) for another 
     person described in subparagraph (A) or (C) and who is 
     authorized by such person to commit such person to the 
     transaction; or
       ``(C) any other person that the Commission determines to be 
     eligible in light of the financial or other qualifications of 
     the person.
       ``(13) Excluded commodity.--The term `excluded commodity' 
     means--
       ``(i) an interest rate, exchange rate, currency, security, 
     security index, credit risk or measure, debt or equity 
     instrument, index or measure of inflation, or other 
     macroeconomic index or measure;
       ``(ii) any other rate, differential, index, or measure of 
     economic or commercial risk, return, or value that is--

[[Page H12322]]

       ``(I) not based in substantial part on the value of a 
     narrow group of commodities not described in clause (i); or
       ``(II) based solely on 1 or more commodities that have no 
     cash market;

       ``(iii) any economic or commercial index based on prices, 
     rates, values, or levels that are not within the control of 
     any party to the relevant contract, agreement, or 
     transaction; or
       ``(iv) an occurrence, extent of an occurrence, or 
     contingency (other than a change in the price, rate, value, 
     or level of a commodity not described in clause (i)) that 
     is--

       ``(I) beyond the control of the parties to the relevant 
     contract, agreement, or transaction; and
       ``(II) associated with a financial, commercial, or economic 
     consequence.

       ``(14) Exempt commodity.--The term `exempt commodity' means 
     a commodity that is not an excluded commodity or an 
     agricultural commodity.
       ``(15) Financial institution.--The term `financial 
     institution' means--
       ``(A) a corporation operating under the fifth undesignated 
     paragraph of section 25 of the Federal Reserve Act (12 U.S.C. 
     603), commonly known as `an agreement corporation';
       ``(B) a corporation organized under section 25A of the 
     Federal Reserve Act (12 U.S.C. 611 et seq.), commonly known 
     as an `Edge Act corporation';
       ``(C) an institution that is regulated by the Farm Credit 
     Administration;
       ``(D) a Federal credit union or State credit union (as 
     defined in section 101 of the Federal Credit Union Act (12 
     U.S.C. 1752));
       ``(E) a depository institution (as defined in section 3 of 
     the Federal Deposit Insurance Act (12 U.S.C. 1813));
       ``(F) a foreign bank or a branch or agency of a foreign 
     bank (each as defined in section 1(b) of the International 
     Banking Act of 1978 (12 U.S.C. 3101(b)));
       ``(G) any financial holding company (as defined in section 
     2 of the Bank Holding Company Act of 1956);
       ``(H) a trust company; or
       ``(I) a similarly regulated subsidiary or affiliate of an 
     entity described in any of subparagraphs (A) through (H).'';
       (5) by inserting after paragraph (20) (as redesignated by 
     paragraph (1)) the following:
       ``(21) Hybrid instrument.--The term `hybrid instrument' 
     means a security having 1 or more payments indexed to the 
     value, level, or rate of, or providing for the delivery of, 1 
     or more commodities.'';
       (6) by striking paragraph (24) (as redesignated by 
     paragraph (1)) and inserting the following:
       ``(24) Member of a contract market; member of a derivatives 
     transaction execution facility.--The term `member' means, 
     with respect to a contract market or derivatives transaction 
     execution facility, an individual, association, partnership, 
     corporation, or trust--
       ``(A) owning or holding membership in, or admitted to 
     membership representation on, the contract market or 
     derivatives transaction execution facility; or
       ``(B) having trading privileges on the contract market or 
     derivatives transaction execution facility.
       ``(25) Narrow-based security index.--
       ``(A) The term `narrow-based security index' means an 
     index--
       ``(i) that has 9 or fewer component securities;
       ``(ii) in which a component security comprises more than 30 
     percent of the index's weighting;
       ``(iii) in which the 5 highest weighted component 
     securities in the aggregate comprise more than 60 percent of 
     the index's weighting; or
       ``(iv) in which the lowest weighted component securities 
     comprising, in the aggregate, 25 percent of the index's 
     weighting have an aggregate dollar value of average daily 
     trading volume of less than $50,000,000 (or in the case of an 
     index with 15 or more component securities, $30,000,000), 
     except that if there are two or more securities with equal 
     weighting that could be included in the calculation of the 
     lowest weighted component securities comprising, in the 
     aggregate, 25 percent of the index's weighting, such 
     securities shall be ranked from lowest to highest dollar 
     value of average daily trading volume and shall be included 
     in the calculation based on their ranking starting with the 
     lowest ranked security.
       ``(B) Notwithstanding subparagraph (A), an index is not a 
     narrow-based security index if--
       ``(i)(I) it has at least 9 component securities;
       ``(II) no component security comprises more than 30 percent 
     of the index's weighting; and
       ``(III) each component security is--

       ``(aa) registered pursuant to section 12 of the Securities 
     Exchange Act of 1934;
       ``(bb) 1 of 750 securities with the largest market 
     capitalization; and
       ``(cc) 1 of 675 securities with the largest dollar value of 
     average daily trading volume;

       ``(ii) a board of trade was designated as a contract market 
     by the Commodity Futures Trading Commission with respect to a 
     contract of sale for future delivery on the index, before the 
     date of enactment of the Commodity Futures Modernization Act 
     of 2000;
       ``(iii)(I) a contract of sale for future delivery on the 
     index traded on a designated contract market or registered 
     derivatives transaction execution facility for at least 30 
     days as a contract of sale for future delivery on an index 
     that was not a narrow-based security index; and
       ``(II) it has been a narrow-based security index for no 
     more than 45 business days over 3 consecutive calendar 
     months;
       ``(iv) a contract of sale for future delivery on the index 
     is traded on or subject to the rules of a foreign board of 
     trade and meets such requirements as are jointly established 
     by rule or regulation by the Commission and the Securities 
     and Exchange Commission;
       ``(v) no more than 18 months have passed since the date of 
     enactment of the Commodity Futures Modernization Act of 2000 
     and--

       ``(I) it is traded on or subject to the rules of a foreign 
     board of trade;
       ``(II) the offer and sale in the United States of a 
     contract of sale for future delivery on the index was 
     authorized before the date of the enactment of the Commodity 
     Futures Modernization Act of 2000; and
       ``(III) the conditions of such authorization continue to be 
     met; or

       ``(vi) a contract of sale for future delivery on the index 
     is traded on or subject to the rules of a board of trade and 
     meets such requirements as are jointly established by rule, 
     regulation, or order by the Commission and the Securities and 
     Exchange Commission.
       ``(C) Within 1 year after the date of the enactment of the 
     Commodity Futures Modernization Act of 2000, the Commission 
     and the Securities and Exchange Commission jointly shall 
     adopt rules or regulations that set forth the requirements 
     under subparagraph (B)(iv).
       ``(D) An index that is a narrow-based security index solely 
     because it was a narrow-based security index for more than 45 
     business days over 3 consecutive calendar months pursuant to 
     clause (iii) of subparagraph (B) shall not be a narrow-based 
     security index for the 3 following calendar months.
       ``(E) For purposes of subparagraphs (A) and (B)--
       ``(i) the dollar value of average daily trading volume and 
     the market capitalization shall be calculated as of the 
     preceding 6 full calendar months; and
       ``(ii) the Commission and the Securities and Exchange 
     Commission shall, by rule or regulation, jointly specify the 
     method to be used to determine market capitalization and 
     dollar value of average daily trading volume.
       ``(26) Option.--The term `option' means an agreement, 
     contract, or transaction that is of the character of, or is 
     commonly known to the trade as, an `option', `privilege', 
     `indemnity', `bid', `offer', `put', `call', `advance 
     guaranty', or `decline guaranty'.
       ``(27) Organized exchange.--The term `organized exchange' 
     means a trading facility that--
       ``(A) permits trading--
       ``(i) by or on behalf of a person that is not an eligible 
     contract participant; or
       ``(ii) by persons other than on a principal-to-principal 
     basis; or
       ``(B) has adopted (directly or through another 
     nongovernmental entity) rules that--
       ``(i) govern the conduct of participants, other than rules 
     that govern the submission of orders or execution of 
     transactions on the trading facility; and
       ``(ii) include disciplinary sanctions other than the 
     exclusion of participants from trading.''; and
       (7) by adding at the end the following:
       ``(29) Registered entity.--The term `registered entity' 
     means--
       ``(A) a board of trade designated as a contract market 
     under section 5;
       ``(B) a derivatives transaction execution facility 
     registered under section 5a;
       ``(C) a derivatives clearing organization registered under 
     section 5b; and
       ``(D) a board of trade designated as a contract market 
     under section 5f.
       ``(30) Security.--The term `security' means a security as 
     defined in section 2(a)(1) of the Securities Act of 1933 (15 
     U.S.C. 77b(a)(1)) or section 3(a)(10) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78c(a)(10)).
       ``(31) Security future.--The term `security future' means a 
     contract of sale for future delivery of a single security or 
     of a narrow-based security index, including any interest 
     therein or based on the value thereof, except an exempted 
     security under section 3(a)(12) of the Securities Exchange 
     Act of 1934 as in effect on the date of enactment of the 
     Futures Trading Act of 1982 (other than any municipal 
     security as defined in section 3(a)(29) of the Securities 
     Exchange Act of 1934 as in effect on the date of enactment of 
     the Futures Trading Act of 1982). The term `security future' 
     does not include any agreement, contract, or transaction 
     excluded from this Act under section 2(c), 2(d), 2(f), or 
     2(g) of this Act (as in effect on the date of the enactment 
     of the Commodity Futures Modernization Act of 2000) or title 
     IV of the Commodity Futures Modernization Act of 2000.
       ``(32) Security futures product.--The term `security 
     futures product' means a security future or any put, call, 
     straddle, option, or privilege on any security future.
       ``(33) Trading facility.--
       ``(A) In general.--The term `trading facility' means a 
     person or group of persons that constitutes, maintains, or 
     provides a physical or electronic facility or system in which 
     multiple participants have the ability to execute or trade 
     agreements, contracts, or transactions by accepting bids and 
     offers made by other participants that are open to multiple 
     participants in the facility or system.
       ``(B) Exclusions.--The term `trading facility' does not 
     include--
       ``(i) a person or group of persons solely because the 
     person or group of persons constitutes, maintains, or 
     provides an electronic facility or system that enables 
     participants to negotiate the terms of and enter into 
     bilateral transactions as a result of communications 
     exchanged by the parties and not from interaction of multiple 
     bids and multiple offers within a predetermined, 
     nondiscretionary automated trade matching and execution 
     algorithm;
       ``(ii) a government securities dealer or government 
     securities broker, to the extent that the dealer or broker 
     executes or trades agreements, contracts, or transactions in 
     government securities, or assists persons in communicating 
     about, negotiating, entering into, executing, or trading an 
     agreement, contract, or transaction in government securities 
     (as the terms `government securities dealer', `government 
     securities broker',

[[Page H12323]]

     and `government securities' are defined in section 3(a) of 
     the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))); or
       ``(iii) facilities on which bids and offers, and 
     acceptances of bids and offers effected on the facility, are 
     not binding.
     Any person, group of persons, dealer, broker, or facility 
     described in clause (i) or (ii) is excluded from the meaning 
     of the term `trading facility' for the purposes of this Act 
     without any prior specific approval, certification, or other 
     action by the Commission.
       ``(C) Special rule.--A person or group of persons that 
     would not otherwise constitute a trading facility shall not 
     be considered to be a trading facility solely as a result of 
     the submission to a derivatives clearing organization of 
     transactions executed on or through the person or group of 
     persons.''.

     SEC. 102. AGREEMENTS, CONTRACTS, AND TRANSACTIONS IN FOREIGN 
                   CURRENCY, GOVERNMENT SECURITIES, AND CERTAIN 
                   OTHER COMMODITIES.

       Section 2 of the Commodity Exchange Act (7 U.S.C. 2, 2a, 3, 
     4, 4a) is amended by adding at the end the following:
       ``(c) Agreements, Contracts, and Transactions in Foreign 
     Currency, Government Securities, and Certain Other 
     Commodities.--
       ``(1) In general.--Except as provided in paragraph (2), 
     nothing in this Act (other than section 5a (to the extent 
     provided in section 5a(g)), 5b, 5d, or 12(e)(2)(B)) governs 
     or applies to an agreement, contract, or transaction in--
       ``(A) foreign currency;
       ``(B) government securities;
       ``(C) security warrants;
       ``(D) security rights;
       ``(E) resales of installment loan contracts;
       ``(F) repurchase transactions in an excluded commodity; or
       ``(G) mortgages or mortgage purchase commitments.
       ``(2) Commission jurisdiction.--
       ``(A) Agreements, contracts, and transactions traded on an 
     organized exchange.--This Act applies to, and the Commission 
     shall have jurisdiction over, an agreement, contract, or 
     transaction described in paragraph (1) that is--
       ``(i) a contract of sale of a commodity for future delivery 
     (or an option on such a contract), or an option on a 
     commodity (other than foreign currency or a security or a 
     group or index of securities), that is executed or traded on 
     an organized exchange; or
       ``(ii) an option on foreign currency executed or traded on 
     an organized exchange that is not a national securities 
     exchange registered pursuant to section 6(a) of the 
     Securities Exchange Act of 1934.
       ``(B) Agreements, contracts, and transactions in retail 
     foreign currency.--This Act applies to, and the Commission 
     shall have jurisdiction over, an agreement, contract, or 
     transaction in foreign currency that--
       ``(i) is a contract of sale of a commodity for future 
     delivery (or an option on such a contract) or an option 
     (other than an option executed or traded on a national 
     securities exchange registered pursuant to section 6(a) of 
     the Securities Exchange Act of 1934); and
       ``(ii) is offered to, or entered into with, a person that 
     is not an eligible contract participant, unless the 
     counterparty, or the person offering to be the counterparty, 
     of the person is--

       ``(I) a financial institution;
       ``(II) a broker or dealer registered under section 15(b) or 
     15C of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b), 
     78o-5) or a futures commission merchant registered under this 
     Act;
       ``(III) an associated person of a broker or dealer 
     registered under section 15(b) or 15C of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78o(b), 78o-5), or an 
     affiliated person of a futures commission merchant registered 
     under this Act, concerning the financial or securities 
     activities of which the registered person makes and keeps 
     records under section 15C(b) or 17(h) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78o-5(b), 78q(h)) or section 
     4f(c)(2)(B) of this Act;
       ``(IV) an insurance company described in section 
     1a(12)(A)(ii) of this Act, or a regulated subsidiary or 
     affiliate of such an insurance company;
       ``(V) a financial holding company (as defined in section 2 
     of the Bank Holding Company Act of 1956); or
       ``(VI) an investment bank holding company (as defined in 
     section 17(i) of the Securities Exchange Act of 1934).

       ``(C) Notwithstanding subclauses (II) and (III) of 
     subparagraph (B)(ii), agreements, contracts, or transactions 
     described in subparagraph (B) shall be subject to sections 
     4b, 4c(b), 6(c) and 6(d) (to the extent that sections 6(c) 
     and 6(d) prohibit manipulation of the market price of any 
     commodity, in interstate commerce, or for future delivery on 
     or subject to the rules of any market), 6c, 6d, and 8(a) if 
     they are entered into by a futures commission merchant or an 
     affiliate of a futures commission merchant that is not also 
     an entity described in subparagraph (B)(ii) of this 
     paragraph.''.

     SEC. 103. LEGAL CERTAINTY FOR EXCLUDED DERIVATIVE 
                   TRANSACTIONS.

       Section 2 of the Commodity Exchange Act (7 U.S.C. 2, 2a, 3, 
     4, 4a) is further amended by adding at the end the following:
       ``(d) Excluded Derivative Transactions.--
       ``(1) In general.--Nothing in this Act (other than section 
     5b or 12(e)(2)(B)) governs or applies to an agreement, 
     contract, or transaction in an excluded commodity if--
       ``(A) the agreement, contract, or transaction is entered 
     into only between persons that are eligible contract 
     participants at the time at which the persons enter into the 
     agreement, contract, or transaction; and
       ``(B) the agreement, contract, or transaction is not 
     executed or traded on a trading facility.
       ``(2) Electronic trading facility exclusion.--Nothing in 
     this Act (other than section 5a (to the extent provided in 
     section 5a(g)), 5b, 5d, or 12(e)(2)(B)) governs or applies to 
     an agreement, contract, or transaction in an excluded 
     commodity if--
       ``(A) the agreement, contract, or transaction is entered 
     into on a principal-to-principal basis between parties 
     trading for their own accounts or as described in section 
     1a(12)(B)(ii);
       ``(B) the agreement, contract, or transaction is entered 
     into only between persons that are eligible contract 
     participants described in subparagraph (A), (B)(ii), or (C) 
     of section 1a(12)) at the time at which the persons enter 
     into the agreement, contract, or transaction; and
       ``(C) the agreement, contract, or transaction is executed 
     or traded on an electronic trading facility.''.

     SEC. 104. EXCLUDED ELECTRONIC TRADING FACILITIES.

       Section 2 of the Commodity Exchange Act (7 U.S.C. 2, 2a, 3, 
     4, 4a) is further amended by adding at the end the following:
       ``(e) Excluded Electronic Trading Facilities.--
       ``(1) In general.--Nothing in this Act (other than section 
     12(e)(2)(B)) governs or is applicable to an electronic 
     trading facility that limits transactions authorized to be 
     conducted on its facilities to those satisfying the 
     requirements of section 2(d)(2), 2(g), or 2(h)(3).
       ``(2) Effect on authority to establish and operate.--
     Nothing in this Act shall prohibit a board of trade 
     designated by the Commission as a contract market or 
     derivatives transaction execution facility, or operating as 
     an exempt board of trade from establishing and operating an 
     electronic trading facility excluded under this Act pursuant 
     to paragraph (1).
       ``(3) Effect on transactions.--No failure by an electronic 
     trading facility to limit transactions as required by 
     paragraph (1) of this subsection or to comply with section 
     2(h)(5) shall in itself affect the legality, validity, or 
     enforceability of an agreement, contract, or transaction 
     entered into or traded on the electronic trading facility or 
     cause a participant on the system to be in violation of this 
     Act.
       ``(4) Special rule.--A person or group of persons that 
     would not otherwise constitute a trading facility shall not 
     be considered to be a trading facility solely as a result of 
     the submission to a derivatives clearing organization of 
     transactions executed on or through the person or group of 
     persons.''.

     SEC. 105. HYBRID INSTRUMENTS; SWAP TRANSACTIONS.

       (a) Hybrid Instruments.--Section 2 of the Commodity 
     Exchange Act (7 U.S.C. 2, 2a, 3, 4, 4a) is further amended by 
     adding at the end the following:
       ``(f) Exclusion for Qualifying Hybrid Instruments.--
       ``(1) In general.--Nothing in this Act (other than section 
     12(e)(2)(B)) governs or is applicable to a hybrid instrument 
     that is predominantly a security.
       ``(2) Predominance.--A hybrid instrument shall be 
     considered to be predominantly a security if--
       ``(A) the issuer of the hybrid instrument receives payment 
     in full of the purchase price of the hybrid instrument, 
     substantially contemporaneously with delivery of the hybrid 
     instrument;
       ``(B) the purchaser or holder of the hybrid instrument is 
     not required to make any payment to the issuer in addition to 
     the purchase price paid under subparagraph (A), whether as 
     margin, settlement payment, or otherwise, during the life of 
     the hybrid instrument or at maturity;
       ``(C) the issuer of the hybrid instrument is not subject by 
     the terms of the instrument to mark-to-market margining 
     requirements; and
       ``(D) the hybrid instrument is not marketed as a contract 
     of sale of a commodity for future delivery (or option on such 
     a contract) subject to this Act.
       ``(3) Mark-to-market margining requirements.--For the 
     purposes of paragraph (2)(C), mark-to-market margining 
     requirements do not include the obligation of an issuer of a 
     secured debt instrument to increase the amount of collateral 
     held in pledge for the benefit of the purchaser of the 
     secured debt instrument to secure the repayment obligations 
     of the issuer under the secured debt instrument.''.
       (b) Swap Transactions.--Section 2 of the Commodity Exchange 
     Act (7 U.S.C. 2, 2a, 3, 4, 4a) is further amended by adding 
     at the end the following:
       ``(g) Excluded Swap Transactions.--No provision of this Act 
     (other than section 5a (to the extent provided in section 
     5a(g)), 5b, 5d, or 12(e)(2)) shall apply to or govern any 
     agreement, contract, or transaction in a commodity other than 
     an agricultural commodity if the agreement, contract, or 
     transaction is--
       ``(1) entered into only between persons that are eligible 
     contract participants at the time they enter into the 
     agreement, contract, or transaction;
       ``(2) subject to individual negotiation by the parties; and
       ``(3) not executed or traded on a trading facility.''.
       (c) Study Regarding Retail Swaps.--
       (1) In general.--The Board of Governors of the Federal 
     Reserve System, the Secretary of the Treasury, the Commodity 
     Futures Trading Commission, and the Securities and Exchange 
     Commission shall conduct a study of issues involving the 
     offering of swap agreements to persons other than eligible 
     contract participants (as defined in section 1a of the 
     Commodity Exchange Act).
       (2) Matters to be addressed.--The study shall address--
       (A) the potential uses of swap agreements by persons other 
     than eligible contract participants;

[[Page H12324]]

       (B) the extent to which financial institutions are willing 
     to offer swap agreements to persons other than eligible 
     contract participants;
       (C) the appropriate regulatory structure to address 
     customer protection issues that may arise in connection with 
     the offer of swap agreements to persons other than eligible 
     contract participants; and
       (D) such other relevant matters deemed necessary or 
     appropriate to address.
       (3) Report.--Before the end of the 1-year period beginning 
     on the date of enactment of this Act, a report on the 
     findings and conclusions of the study required by paragraph 
     (1) shall be submitted to Congress, together with such 
     recommendations for legislative action as are deemed 
     necessary and appropriate.

     SEC. 106. TRANSACTIONS IN EXEMPT COMMODITIES.

       Section 2 of the Commodity Exchange Act (7 U.S.C. 2, 2a, 3, 
     4, 4a) is further amended by adding at the end the following.
       ``(h) Legal Certainty for Certain Transactions in Exempt 
     Commodities.--
       ``(1) Except as provided in paragraph (2), nothing in this 
     Act shall apply to a contract, agreement or transaction in an 
     exempt commodity which--
       ``(A) is entered into solely between persons that are 
     eligible contract participants at the time the persons enter 
     into the agreement, contract, or transaction; and
       ``(B) is not entered into on a trading facility.
       ``(2) An agreement, contract, or transaction described in 
     paragraph (1) of this subsection shall be subject to--
       ``(A) sections 5b and 12(e)(2)(B);
       ``(B) sections 4b, 4o, 6(c), 6(d), 6c, 6d, and 8a, and the 
     regulations of the Commission pursuant to section 4c(b) 
     proscribing fraud in connection with commodity option 
     transactions, to the extent the agreement, contract, or 
     transaction is not between eligible commercial entities 
     (unless 1 of the entities is an instrumentality, department, 
     or agency of a State or local governmental entity) and would 
     otherwise be subject to such sections and regulations; and
       ``(C) sections 6(c), 6(d), 6c, 6d, 8a, and 9(a)(2), to the 
     extent such sections prohibit manipulation of the market 
     price of any commodity in interstate commerce and the 
     agreement, contract, or transaction would otherwise be 
     subject to such sections.
       ``(3) Except as provided in paragraph (4), nothing in this 
     Act shall apply to an agreement, contract, or transaction in 
     an exempt commodity which is--
       ``(A) entered into on a principal-to-principal basis solely 
     between persons that are eligible commercial entities at the 
     time the persons enter into the agreement, contract, or 
     transaction; and
       ``(B) executed or traded on an electronic trading facility.
       ``(4) An agreement, contract, or transaction described in 
     paragraph (3) of this subsection shall be subject to--
       ``(A) sections 5a (to the extent provided in section 
     5a(g)), 5b, 5d, and 12(e)(2)(B);
       ``(B) sections 4b and 4o and the regulations of the 
     Commission pursuant to section 4c(b) proscribing fraud in 
     connection with commodity option transactions to the extent 
     the agreement, contract, or transaction would otherwise be 
     subject to such sections and regulations;
       ``(C) sections 6(c) and 9(a)(2), to the extent such 
     sections prohibit manipulation of the market price of any 
     commodity in interstate commerce and to the extent the 
     agreement, contract, or transaction would otherwise be 
     subject to such sections; and
       ``(D) such rules and regulations as the Commission may 
     prescribe if necessary to ensure timely dissemination by the 
     electronic trading facility of price, trading volume, and 
     other trading data to the extent appropriate, if the 
     Commission determines that the electronic trading facility 
     performs a significant price discovery function for 
     transactions in the cash market for the commodity underlying 
     any agreement, contract, or transaction executed or traded on 
     the electronic trading facility.
       ``(5) An electronic trading facility relying on the 
     exemption provided in paragraph (3) shall--
       ``(A) notify the Commission of its intention to operate an 
     electronic trading facility in reliance on the exemption set 
     forth in paragraph (3), which notice shall include--
       ``(i) the name and address of the facility and a person 
     designated to receive communications from the Commission;
       ``(ii) the commodity categories that the facility intends 
     to list or otherwise make available for trading on the 
     facility in reliance on the exemption set forth in paragraph 
     (3);
       ``(iii) certifications that--

       ``(I) no executive officer or member of the governing board 
     of, or any holder of a 10 percent or greater equity interest 
     in, the facility is a person described in any of 
     subparagraphs (A) through (H) of section 8a(2);
       ``(II) the facility will comply with the conditions for 
     exemption under this paragraph; and
       ``(III) the facility will notify the Commission of any 
     material change in the information previously provided by the 
     facility to the Commission pursuant to this paragraph; and

       ``(iv) the identity of any derivatives clearing 
     organization to which the facility transmits or intends to 
     transmit transaction data for the purpose of facilitating the 
     clearance and settlement of transactions conducted on the 
     facility in reliance on the exemption set forth in paragraph 
     (3);
       ``(B)(i)(I) provide the Commission with access to the 
     facility's trading protocols and electronic access to the 
     facility with respect to transactions conducted in reliance 
     on the exemption set forth in paragraph (3); or
       ``(II) provide such reports to the Commission regarding 
     transactions executed on the facility in reliance on the 
     exemption set forth in paragraph (3) as the Commission may 
     from time to time request to enable the Commission to satisfy 
     its obligations under this Act;
       ``(ii) maintain for 5 years, and make available for 
     inspection by the Commission upon request, records of 
     activities related to its business as an electronic trading 
     facility exempt under paragraph (3), including--
       ``(I) information relating to data entry and transaction 
     details sufficient to enable the Commission to reconstruct 
     trading activity on the facility conducted in reliance on the 
     exemption set forth in paragraph (3); and
       ``(II) the name and address of each participant on the 
     facility authorized to enter into transactions in reliance on 
     the exemption set forth in paragraph (3); and
       ``(iii) upon special call by the Commission, provide to the 
     Commission, in a form and manner and within the period 
     specified in the special call, such information related to 
     its business as an electronic trading facility exempt under 
     paragraph (3), including information relating to data entry 
     and transaction details in respect of transactions entered 
     into in reliance on the exemption set forth in paragraph (3), 
     as the Commission may determine appropriate--
       ``(I) to enforce the provisions specified in subparagraphs 
     (B) and (C) of paragraph (4);
       ``(II) to evaluate a systemic market event; or
       ``(III) to obtain information requested by a Federal 
     financial regulatory authority in order to enable the 
     regulator to fulfill its regulatory or supervisory 
     responsibilities;
       ``(C)(i) upon receipt of any subpoena issued by or on 
     behalf of the Commission to any foreign person who the 
     Commission believes is conducting or has conducted 
     transactions in reliance on the exemption set forth in 
     paragraph (3) on or through the electronic trading facility 
     relating to the transactions, promptly notify the foreign 
     person of, and transmit to the foreign person, the subpoena 
     in a manner reasonable under the circumstances, or as 
     specified by the Commission; and
       ``(ii) if the Commission has reason to believe that a 
     person has not timely complied with a subpoena issued by or 
     on behalf of the Commission pursuant to clause (i), and the 
     Commission in writing has directed that a facility relying on 
     the exemption set forth in paragraph (3) deny or limit 
     further transactions by the person, the facility shall 
     deny that person further trading access to the facility 
     or, as applicable, limit that person's access to the 
     facility for liquidation trading only;
       ``(D) comply with the requirements of this paragraph 
     applicable to the facility and require that each participant, 
     as a condition of trading on the facility in reliance on the 
     exemption set forth in paragraph (3), agree to comply with 
     all applicable law;
       ``(E) have a reasonable basis for believing that 
     participants authorized to conduct transactions on the 
     facility in reliance on the exemption set forth in paragraph 
     (3) are eligible commercial entities; and
       ``(F) not represent to any person that the facility is 
     registered with, or designated, recognized, licensed or 
     approved by the Commission.
       ``(6) A person named in a subpoena referred to in paragraph 
     (5)(C) that believes the person is or may be adversely 
     affected or aggrieved by action taken by the Commission under 
     this section, shall have the opportunity for a prompt hearing 
     after the Commission acts under procedures that the 
     Commission shall establish by rule, regulation, or order.''.

     SEC. 107. APPLICATION OF COMMODITY FUTURES LAWS.

       Section 2 of the Commodity Exchange Act (7 U.S.C. 2, 2a, 3, 
     4, 4a) is further amended by adding at the end the following:
       ``(i) Application of Commodity Futures Laws.--
       ``(1) No provision of this Act shall be construed as 
     implying or creating any presumption that--
       ``(A) any agreement, contract, or transaction that is 
     excluded from this Act under section 2(c), 2(d), 2(e), 2(f), 
     or 2(g) of this Act or title IV of the Commodity Futures 
     Modernization Act of 2000, or exempted under section 2(h) or 
     4(c) of this Act; or
       ``(B) any agreement, contract, or transaction, not 
     otherwise subject to this Act, that is not so excluded or 
     exempted,
     is or would otherwise be subject to this Act.
       ``(2) No provision of, or amendment made by, the Commodity 
     Futures Modernization Act of 2000 shall be construed as 
     conferring jurisdiction on the Commission with respect to any 
     such agreement, contract, or transaction, except as expressly 
     provided in section 5a of this Act (to the extent provided in 
     section 5a(g) of this Act), 5b of this Act, or 5d of this 
     Act.''.

     SEC. 108. PROTECTION OF THE PUBLIC INTEREST.

       The Commodity Exchange Act is amended by striking section 3 
     (7 U.S.C. 5) and inserting the following:

     ``SEC. 3. FINDINGS AND PURPOSE.

       ``(a) Findings.--The transactions subject to this Act are 
     entered into regularly in interstate and international 
     commerce and are affected with a national public interest by 
     providing a means for managing and assuming price risks, 
     discovering prices, or disseminating pricing information 
     through trading in liquid, fair and financially secure 
     trading facilities.
       ``(b) Purpose.--It is the purpose of this Act to serve the 
     public interests described in subsection (a) through a system 
     of effective self-regulation of trading facilities, clearing 
     systems, market participants and market professionals under 
     the oversight of the Commission. To foster these public 
     interests, it is further the purpose of this Act to deter and 
     prevent price manipulation or any other disruptions to market 
     integrity; to ensure the financial integrity of all 
     transactions subject to this Act and the avoidance of 
     systemic risk; to protect all market participants from 
     fraudulent or other abusive sales practices and

[[Page H12325]]

     misuses of customer assets; and to promote responsible 
     innovation and fair competition among boards of trade, other 
     markets and market participants.''.

     SEC. 109. PROHIBITED TRANSACTIONS.

       Section 4c of the Commodity Exchange Act (7 U.S.C. 6c) is 
     amended by striking ``Sec. 4c.'' and all that follows through 
     subsection (a) and inserting the following:

     ``SEC. 4C. PROHIBITED TRANSACTIONS.

       ``(a) In General.--
       ``(1) Prohibition.--It shall be unlawful for any person to 
     offer to enter into, enter into, or confirm the execution of 
     a transaction described in paragraph (2) involving the 
     purchase or sale of any commodity for future delivery (or any 
     option on such a transaction or option on a commodity) if the 
     transaction is used or may be used to--
       ``(A) hedge any transaction in interstate commerce in the 
     commodity or the product or byproduct of the commodity;
       ``(B) determine the price basis of any such transaction in 
     interstate commerce in the commodity; or
       ``(C) deliver any such commodity sold, shipped, or received 
     in interstate commerce for the execution of the transaction.
       ``(2) Transaction.--A transaction referred to in paragraph 
     (1) is a transaction that--
       ``(A)(i) is, is of the character of, or is commonly known 
     to the trade as, a `wash sale' or `accommodation trade'; or
       ``(ii) is a fictitious sale; or
       ``(B) is used to cause any price to be reported, 
     registered, or recorded that is not a true and bona fide 
     price.''.

     SEC. 110. DESIGNATION OF BOARDS OF TRADE AS CONTRACT MARKETS.

       The Commodity Exchange Act is amended--
       (1) by redesignating section 5b (7 U.S.C. 7b) as section 
     5e; and
       (2) by striking sections 5 and 5a (7 U.S.C. 7, 7a) and 
     inserting the following:

     ``SEC. 5. DESIGNATION OF BOARDS OF TRADE AS CONTRACT MARKETS.

       ``(a) Applications.--A board of trade applying to the 
     Commission for designation as a contract market shall submit 
     an application to the Commission that includes any relevant 
     materials and records the Commission may require consistent 
     with this Act.
       ``(b) Criteria for Designation.--
       ``(1) In general.--To be designated as a contract market, 
     the board of trade shall demonstrate to the Commission that 
     the board of trade meets the criteria specified in this 
     subsection.
       ``(2) Prevention of market manipulation.--The board of 
     trade shall have the capacity to prevent market manipulation 
     through market surveillance, compliance, and enforcement 
     practices and procedures, including methods for conducting 
     real-time monitoring of trading and comprehensive and 
     accurate trade reconstructions.
       ``(3) Fair and equitable trading.--The board of trade shall 
     establish and enforce trading rules to ensure fair and 
     equitable trading through the facilities of the contract 
     market, and the capacity to detect, investigate, and 
     discipline any person that violates the rules. The rules may 
     authorize--
       ``(A) transfer trades or office trades;
       ``(B) an exchange of--
       ``(i) futures in connection with a cash commodity 
     transaction;
       ``(ii) futures for cash commodities; or
       ``(iii) futures for swaps; or
       ``(C) a futures commission merchant, acting as principal or 
     agent, to enter into or confirm the execution of a contract 
     for the purchase or sale of a commodity for future delivery 
     if the contract is reported, recorded, or cleared in 
     accordance with the rules of the contract market or a 
     derivatives clearing organization.
       ``(4) Trade execution facility.--The board of trade shall--
       ``(A) establish and enforce rules defining, or 
     specifications detailing, the manner of operation of the 
     trade execution facility maintained by the board of trade, 
     including rules or specifications describing the operation of 
     any electronic matching platform; and
       ``(B) demonstrate that the trade execution facility 
     operates in accordance with the rules or specifications.
       ``(5) Financial integrity of transactions.--The board of 
     trade shall establish and enforce rules and procedures for 
     ensuring the financial integrity of transactions entered into 
     by or through the facilities of the contract market, 
     including the clearance and settlement of the transactions 
     with a derivatives clearing organization.
       ``(6) Disciplinary procedures.--The board of trade shall 
     establish and enforce disciplinary procedures that authorize 
     the board of trade to discipline, suspend, or expel members 
     or market participants that violate the rules of the board of 
     trade, or similar methods for performing the same functions, 
     including delegation of the functions to third parties.
       ``(7) Public access.--The board of trade shall provide the 
     public with access to the rules, regulations, and contract 
     specifications of the board of trade.
       ``(8) Ability to obtain information.--The board of trade 
     shall establish and enforce rules that will allow the board 
     of trade to obtain any necessary information to perform any 
     of the functions described in this subsection, including the 
     capacity to carry out such international information-sharing 
     agreements as the Commission may require.
       ``(c) Existing Contract Markets.--A board of trade that is 
     designated as a contract market on the date of the enactment 
     of the Commodity Futures Modernization Act of 2000 shall be 
     considered to be a designated contract market under this 
     section.
       ``(d) Core Principles for Contract Markets.--
       ``(1) In general.--To maintain the designation of a board 
     of trade as a contract market, the board of trade shall 
     comply with the core principles specified in this subsection. 
     The board of trade shall have reasonable discretion in 
     establishing the manner in which it complies with the core 
     principles.
       ``(2) Compliance with rules.--The board of trade shall 
     monitor and enforce compliance with the rules of the contract 
     market, including the terms and conditions of any contracts 
     to be traded and any limitations on access to the contract 
     market.
       ``(3) Contracts not readily subject to manipulation.--The 
     board of trade shall list on the contract market only 
     contracts that are not readily susceptible to manipulation.
       ``(4) Monitoring of trading.--The board of trade shall 
     monitor trading to prevent manipulation, price distortion, 
     and disruptions of the delivery or cash-settlement process.
       ``(5) Position limitations or accountability.--To reduce 
     the potential threat of market manipulation or congestion, 
     especially during trading in the delivery month, the board of 
     trade shall adopt position limitations or position 
     accountability for speculators, where necessary and 
     appropriate.
       ``(6) Emergency authority.--The board of trade shall adopt 
     rules to provide for the exercise of emergency authority, in 
     consultation or cooperation with the Commission, where 
     necessary and appropriate, including the authority to--
       ``(A) liquidate or transfer open positions in any contract;
       ``(B) suspend or curtail trading in any contract; and
       ``(C) require market participants in any contract to meet 
     special margin requirements.
       ``(7) Availability of general information.--The board of 
     trade shall make available to market authorities, market 
     participants, and the public information concerning--
       ``(A) the terms and conditions of the contracts of the 
     contract market; and
       ``(B) the mechanisms for executing transactions on or 
     through the facilities of the contract market.
       ``(8) Daily publication of trading information.--The board 
     of trade shall make public daily information on settlement 
     prices, volume, open interest, and opening and closing ranges 
     for actively traded contracts on the contract market.
       ``(9) Execution of transactions.--The board of trade shall 
     provide a competitive, open, and efficient market and 
     mechanism for executing transactions.
       ``(10) Trade information.--The board of trade shall 
     maintain rules and procedures to provide for the recording 
     and safe storage of all identifying trade information in a 
     manner that enables the contract market to use the 
     information for purposes of assisting in the prevention of 
     customer and market abuses and providing evidence of any 
     violations of the rules of the contract market.
       ``(11) Financial integrity of contracts.--The board of 
     trade shall establish and enforce rules providing for the 
     financial integrity of any contracts traded on the contract 
     market (including the clearance and settlement of the 
     transactions with a derivatives clearing organization), and 
     rules to ensure the financial integrity of any futures 
     commission merchants and introducing brokers and the 
     protection of customer funds.
       ``(12) Protection of market participants.--The board of 
     trade shall establish and enforce rules to protect market 
     participants from abusive practices committed by any party 
     acting as an agent for the participants.
       ``(13) Dispute resolution.--The board of trade shall 
     establish and enforce rules regarding and provide facilities 
     for alternative dispute resolution as appropriate for market 
     participants and any market intermediaries.
       ``(14) Governance fitness standards.--The board of trade 
     shall establish and enforce appropriate fitness standards for 
     directors, members of any disciplinary committee, members of 
     the contract market, and any other persons with direct access 
     to the facility (including any parties affiliated with any of 
     the persons described in this paragraph).
       ``(15) Conflicts of interest.--The board of trade shall 
     establish and enforce rules to minimize conflicts of interest 
     in the decisionmaking process of the contract market and 
     establish a process for resolving such conflicts of interest.
       ``(16) Composition of boards of mutually owned contract 
     markets.--In the case of a mutually owned contract market, 
     the board of trade shall ensure that the composition of the 
     governing board reflects market participants.
       ``(17) Recordkeeping.--The board of trade shall maintain 
     records of all activities related to the business of the 
     contract market in a form and manner acceptable to the 
     Commission for a period of 5 years.
       ``(18) Antitrust considerations.--Unless necessary or 
     appropriate to achieve the purposes of this Act, the board of 
     trade shall endeavor to avoid--
       ``(A) adopting any rules or taking any actions that result 
     in any unreasonable restraints of trade; or
       ``(B) imposing any material anticompetitive burden on 
     trading on the contract market.
       ``(e) Current Agricultural Commodities.--
       ``(1) Subject to paragraph (2) of this subsection, a 
     contract for purchase or sale for future delivery of an 
     agricultural commodity enumerated in section 1a(4) that is 
     available for trade on a contract market, as of the date of 
     the enactment of this subsection, may be traded only on a 
     contract market designated under this section.
       ``(2) In order to promote responsible economic or financial 
     innovation and fair competition, the Commission, on 
     application by any person,

[[Page H12326]]

     after notice and public comment and opportunity for hearing, 
     may prescribe rules and regulations to provide for the offer 
     and sale of contracts for future delivery or options on such 
     contracts to be conducted on a derivatives transaction 
     execution facility.''.

     SEC. 111. DERIVATIVES TRANSACTION EXECUTION FACILITIES.

       The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended 
     by inserting after section 5 (as amended by section 110(2)) 
     the following:

     ``SEC. 5A. DERIVATIVES TRANSACTION EXECUTION FACILITIES.

       ``(a) In General.--In lieu of compliance with the contract 
     market designation requirements of sections 4(a) and 5, a 
     board of trade may elect to operate as a registered 
     derivatives transaction execution facility if the facility 
     is--
       ``(1) designated as a contract market and meets the 
     requirements of this section; or
       ``(2) registered as a derivatives transaction execution 
     facility under subsection (c) of this section.
       ``(b) Requirements for Trading.--
       ``(1) In general.--A registered derivatives transaction 
     execution facility under subsection (a) may trade any 
     contract of sale of a commodity for future delivery (or 
     option on such a contract) on or through the facility only by 
     satisfying the requirements of this section.
       ``(2) Requirements for underlying commodities.--A 
     registered derivatives transaction execution facility may 
     trade any contract of sale of a commodity for future delivery 
     (or option on such a contract) only if--
       ``(A) the underlying commodity has a nearly inexhaustible 
     deliverable supply;
       ``(B) the underlying commodity has a deliverable supply 
     that is sufficiently large that the contract is highly 
     unlikely to be susceptible to the threat of manipulation;
       ``(C) the underlying commodity has no cash market;
       ``(D)(i) the contract is a security futures product, and 
     (ii) the registered derivatives transaction execution 
     facility is a national securities exchange registered under 
     the Securities Exchange Act of 1934;
       ``(E) the Commission determines, based on the market 
     characteristics, surveillance history, self-regulatory 
     record, and capacity of the facility that trading in the 
     contract (or option) is highly unlikely to be susceptible to 
     the threat of manipulation; or
       ``(F) except as provided in section 5(e)(2), the underlying 
     commodity is a commodity other than an agricultural commodity 
     enumerated in section 1a(4), and trading access to the 
     facility is limited to eligible commercial entities trading 
     for their own account.
       ``(3) Eligible traders.--To trade on a registered 
     derivatives transaction execution facility, a person shall--
       ``(A) be an eligible contract participant; or
       ``(B) be a person trading through a futures commission 
     merchant that--
       ``(i) is registered with the Commission;
       ``(ii) is a member of a futures self-regulatory 
     organization or, if the person trades only security futures 
     products on the facility, a national securities 
     association registered under section 15A(a) of the 
     Securities Exchange Act of 1934;
       ``(iii) is a clearing member of a derivatives clearing 
     organization; and
       ``(iv) has net capital of at least $20,000,000.
       ``(4) Trading by contract markets.--A board of trade that 
     is designated as a contract market shall, to the extent that 
     the contract market also operates a registered derivatives 
     transaction execution facility--
       ``(A) provide a physical location for the contract market 
     trading of the board of trade that is separate from trading 
     on the derivatives transaction execution facility of the 
     board of trade; or
       ``(B) if the board of trade uses the same electronic 
     trading system for trading on the contract market and 
     derivatives transaction execution facility of the board of 
     trade, identify whether the electronic trading is taking 
     place on the contract market or the derivatives transaction 
     execution facility.
       ``(c) Criteria for Registration.--
       ``(1) In general.--To be registered as a registered 
     derivatives transaction execution facility, the board of 
     trade shall be required to demonstrate to the Commission only 
     that the board of trade meets the criteria specified in 
     subsection (b) and this subsection.
       ``(2) Deterrence of abuses.--The board of trade shall 
     establish and enforce trading and participation rules that 
     will deter abuses and has the capacity to detect, 
     investigate, and enforce those rules, including means to--
       ``(A) obtain information necessary to perform the functions 
     required under this section; or
       ``(B) use technological means to--
       ``(i) provide market participants with impartial access to 
     the market; and
       ``(ii) capture information that may be used in establishing 
     whether rule violations have occurred.
       ``(3) Trading procedures.--The board of trade shall 
     establish and enforce rules or terms and conditions defining, 
     or specifications detailing, trading procedures to be used in 
     entering and executing orders traded on the facilities of the 
     board of trade. The rules may authorize--
       ``(A) transfer trades or office trades;
       ``(B) an exchange of--
       ``(i) futures in connection with a cash commodity 
     transaction;
       ``(ii) futures for cash commodities; or
       ``(iii) futures for swaps; or
       ``(C) a futures commission merchant, acting as principal or 
     agent, to enter into or confirm the execution of a contract 
     for the purchase or sale of a commodity for future delivery 
     if the contract is reported, recorded, or cleared in 
     accordance with the rules of the registered derivatives 
     transaction execution facility or a derivatives clearing 
     organization.
       ``(4) Financial integrity of transactions.--The board of 
     trade shall establish and enforce rules or terms and 
     conditions providing for the financial integrity of 
     transactions entered on or through the facilities of the 
     board of trade, and rules or terms and conditions to ensure 
     the financial integrity of any futures commission merchants 
     and introducing brokers and the protection of customer funds.
       ``(d) Core Principles for Registered Derivatives 
     Transaction Execution Facilities.--
       ``(1) In general.--To maintain the registration of a board 
     of trade as a derivatives transaction execution facility, a 
     board of trade shall comply with the core principles 
     specified in this subsection. The board of trade shall have 
     reasonable discretion in establishing the manner in which the 
     board of trade complies with the core principles.
       ``(2) Compliance with rules.--The board of trade shall 
     monitor and enforce the rules of the facility, including any 
     terms and conditions of any contracts traded on or through 
     the facility and any limitations on access to the facility.
       ``(3) Monitoring of trading.--The board of trade shall 
     monitor trading in the contracts of the facility to ensure 
     orderly trading in the contract and to maintain an orderly 
     market while providing any necessary trading information to 
     the Commission to allow the Commission to discharge the 
     responsibilities of the Commission under the Act.
       ``(4) Disclosure of general information.--The board of 
     trade shall disclose publicly and to the Commission 
     information concerning--
       ``(A) contract terms and conditions;
       ``(B) trading conventions, mechanisms, and practices;
       ``(C) financial integrity protections; and
       ``(D) other information relevant to participation in 
     trading on the facility.
       ``(5) Daily publication of trading information.--The board 
     of trade shall make public daily information on settlement 
     prices, volume, open interest, and opening and closing ranges 
     for contracts traded on the facility if the Commission 
     determines that the contracts perform a significant price 
     discovery function for transactions in the cash market for 
     the commodity underlying the contracts.
       ``(6) Fitness standards.--The board of trade shall 
     establish and enforce appropriate fitness standards for 
     directors, members of any disciplinary committee, members, 
     and any other persons with direct access to the facility, 
     including any parties affiliated with any of the persons 
     described in this paragraph.
       ``(7) Conflicts of interest.--The board of trade shall 
     establish and enforce rules to minimize conflicts of interest 
     in the decision making process of the derivatives transaction 
     execution facility and establish a process for resolving such 
     conflicts of interest.
       ``(8) Recordkeeping.--The board of trade shall maintain 
     records of all activities related to the business of the 
     derivatives transaction execution facility in a form and 
     manner acceptable to the Commission for a period of 5 years.
       ``(9) Antitrust considerations.--Unless necessary or 
     appropriate to achieve the purposes of this Act, the board of 
     trade shall endeavor to avoid--
       ``(A) adopting any rules or taking any actions that result 
     in any unreasonable restraint of trade; or
       ``(B) imposing any material anticompetitive burden on 
     trading on the derivatives transaction execution facility.
       ``(e) Use of Broker-Dealers, Depository Institutions, and 
     Farm Credit System Institutions as Intermediaries.--
       ``(1) In general.--With respect to transactions other than 
     transactions in security futures products, a registered 
     derivatives transaction execution facility may by rule allow 
     a broker-dealer, depository institution, or institution of 
     the Farm Credit System that meets the requirements of 
     paragraph (2) to--
       ``(A) act as an intermediary in transactions executed on 
     the facility on behalf of customers of the broker-dealer, 
     depository institution, or institution of the Farm Credit 
     System; and
       ``(B) receive funds of customers to serve as margin or 
     security for the transactions.
       ``(2) Requirements.--The requirements referred to in 
     paragraph (1) are that--
       ``(A) the broker-dealer be in good standing with the 
     Securities and Exchange Commission, or the depository 
     institution or institution of the Farm Credit System be in 
     good standing with Federal bank regulatory agencies 
     (including the Farm Credit Administration), as applicable; 
     and
       ``(B) if the broker-dealer, depository institution, or 
     institution of the Farm Credit System carries or holds 
     customer accounts or funds for transactions on the 
     derivatives transaction execution facility for more than 1 
     business day, the broker-dealer, depository institution, or 
     institution of the Farm Credit System is registered as a 
     futures commission merchant and is a member of a registered 
     futures association.
       ``(3) Implementation.--The Commission shall cooperate and 
     coordinate with the Securities and Exchange Commission, the 
     Secretary of the Treasury, and Federal banking regulatory 
     agencies (including the Farm Credit Administration) in 
     adopting rules and taking any other appropriate action to 
     facilitate the implementation of this subsection.
       ``(f) Segregation of Customer Funds.--Not later than 180 
     days after the date of the enactment of the Commodity Futures 
     Modernization Act of 2000, consistent with regulations 
     adopted by the Commission, a registered derivatives 
     transaction execution facility may authorize a futures 
     commission merchant to offer any customer of the futures 
     commission merchant that is an eligible contract participant 
     the right to not segregate the customer funds of the customer 
     that are carried with the futures commission merchant for 
     purposes of trading on or

[[Page H12327]]

     through the facilities of the registered derivatives 
     transaction execution facility.
       ``(g) Election To Trade Excluded and Exempt Commodities.--
       ``(1) In general.--Notwithstanding subsection (b)(2) of 
     this section, a board of trade that is or elects to become a 
     registered derivatives transaction execution facility may 
     trade on the facility any agreements, contracts, or 
     transactions involving excluded or exempt commodities 
     other than securities, except contracts of sale for future 
     delivery of exempt securities under section 3(a)(12) of 
     the Securities Exchange Act of 1934 as in effect on the 
     date of enactment of the Futures Trading Act of 1982, that 
     are otherwise excluded from this Act under section 2(c), 
     2(d), or 2(g) of this Act, or exempt under section 2(h) of 
     this Act.
       ``(2) Exclusive jurisdiction of the commission.--The 
     Commission shall have exclusive jurisdiction over agreements, 
     contracts, or transactions described in paragraph (1) to the 
     extent that the agreements, contracts, or transactions are 
     traded on a derivatives transaction execution facility.''.

     SEC. 112. DERIVATIVES CLEARING.

       (a) In General.--Subtitle A of title IV of the Federal 
     Deposit Insurance Corporation Improvement Act of 1991 is 
     amended--
       (1) by inserting before the section heading for section 
     401, the following new heading:

      ``CHAPTER 1--BILATERAL AND CLEARING ORGANIZATION NETTING'';

       (2) in section 402, by striking ``this subtitle'' and 
     inserting ``this chapter''; and
       (3) by inserting after section 407, the following new 
     chapter:

            ``CHAPTER 2--MULTILATERAL CLEARING ORGANIZATIONS

     ``SEC. 408. DEFINITIONS.

       For purposes of this chapter, the following definitions 
     shall apply:
       ``(1) Multilateral clearing organization.--The term 
     `multilateral clearing organization' means a system utilized 
     by more than 2 participants in which the bilateral credit 
     exposures of participants arising from the transactions 
     cleared are effectively eliminated and replaced by a system 
     of guarantees, insurance, or mutualized risk of loss.
       ``(2) Over-the-counter derivative instrument.--The term 
     `over-the-counter derivative instrument' includes--
       ``(A) any agreement, contract, or transaction, including 
     the terms and conditions incorporated by reference in any 
     such agreement, contract, or transaction, which is an 
     interest rate swap, option, or forward agreement, including a 
     rate floor, rate cap, rate collar, cross-currency rate swap, 
     basis swap, and forward rate agreement; a same day-tomorrow, 
     tomorrow-next, forward, or other foreign exchange or precious 
     metals agreement; a currency swap, option, or forward 
     agreement; an equity index or equity swap, option, or forward 
     agreement; a debt index or debt swap, option, or forward 
     agreement; a credit spread or credit swap, option, or forward 
     agreement; a commodity index or commodity swap, option, or 
     forward agreement; and a weather swap, weather derivative, or 
     weather option;
       ``(B) any agreement, contract or transaction similar to any 
     other agreement, contract, or transaction referred to in this 
     clause that is presently, or in the future becomes, regularly 
     entered into by parties that participate in swap transactions 
     (including terms and conditions incorporated by reference in 
     the agreement) and that is a forward, swap, or option on 1 or 
     more occurrences of any event, rates, currencies, 
     commodities, equity securities or other equity instruments, 
     debt securities or other debt instruments, economic or other 
     indices or measures of economic or other risk or value;
       ``(C) any agreement, contract, or transaction excluded from 
     the Commodity Exchange Act under section 2(c), 2(d), 2(f), or 
     2(g) of such Act, or exempted under section 2(h) or 4(c) of 
     such Act; and
       ``(D) any option to enter into any, or any combination of, 
     agreements, contracts or transactions referred to in this 
     subparagraph.
       ``(3) Other definitions.--The terms `insured State 
     nonmember bank', `State member bank', and `affiliate' have 
     the same meanings as in section 3 of the Federal Deposit 
     Insurance Act.

     ``SEC. 409. MULTILATERAL CLEARING ORGANIZATIONS.

       ``(a) In General.--Except with respect to clearing 
     organizations described in subsection (b), no person may 
     operate a multilateral clearing organization for over-the-
     counter derivative instruments, or otherwise engage in 
     activities that constitute such a multilateral clearing 
     organization unless the person is a national bank, a State 
     member bank, an insured State nonmember bank, an affiliate of 
     a national bank, a State member bank, or an insured State 
     nonmember bank, or a corporation chartered under section 25A 
     of the Federal Reserve Act.
       ``(b) Clearing Organizations.--Subsection (a) shall not 
     apply to any clearing organization that--
       ``(1) is registered as a clearing agency under the 
     Securities Exchange Act of 1934;
       ``(2) is registered as a derivatives clearing organization 
     under the Commodity Exchange Act; or
       ``(3) is supervised by a foreign financial regulator that 
     the Comptroller of the Currency, the Board of Governors of 
     the Federal Reserve System, the Federal Deposit Insurance 
     Corporation, the Securities and Exchange Commission, or the 
     Commodity Futures Trading Commission, as applicable, has 
     determined satisfies appropriate standards.''.
       (b) Resolution of Clearing Banks.--The Federal Reserve Act 
     (12 U.S.C. 221 et seq.) is amended by inserting after section 
     9A the following new section:

     ``SEC. 9B. RESOLUTION OF CLEARING BANKS.

       ``(a) Conservatorship or Receivership.--
       ``(1) Appointment.--The Board may appoint a conservator or 
     receiver to take possession and control of any uninsured 
     State member bank which operates, or operates as, a 
     multilateral clearing organization pursuant to section 409 of 
     the Federal Deposit Insurance Corporation Improvement Act of 
     1991 to the same extent and in the same manner as the 
     Comptroller of the Currency may appoint a conservator or 
     receiver for a national bank.
       ``(2) Powers.--The conservator or receiver for an uninsured 
     State member bank referred to in paragraph (1) shall exercise 
     the same powers, functions, and duties, subject to the same 
     limitations, as a conservator or receiver for a national 
     bank.
       ``(b) Board Authority.--The Board shall have the same 
     authority with respect to any conservator or receiver 
     appointed under subsection (a), and the uninsured State 
     member bank for which the conservator or receiver has been 
     appointed, as the Comptroller of the Currency has with 
     respect to a conservator or receiver for a national bank and 
     the national bank for which the conservator or receiver has 
     been appointed.
       ``(c) Bankruptcy Proceedings.--The Board (in the case of an 
     uninsured State member bank which operates, or operates as, 
     such a multilateral clearing organization) may direct a 
     conservator or receiver appointed for the bank to file a 
     petition pursuant to title 11, United States Code, in which 
     case, title 11, United States Code, shall apply to the bank 
     in lieu of otherwise applicable Federal or State insolvency 
     law.''.
       (c) Technical and Conforming Amendments to Title 11, United 
     States Code.--
       (1) Bankruptcy code debtors.--Section 109(b)(2) of title 
     11, United States Code, is amended by striking ``; or'' and 
     inserting the following: ``, except that an uninsured State 
     member bank, or a corporation organized under section 25A of 
     the Federal Reserve Act, which operates, or operates as, a 
     multilateral clearing organization pursuant to section 409 of 
     the Federal Deposit Insurance Corporation Improvement Act of 
     1991 may be a debtor if a petition is filed at the direction 
     of the Board of Governors of the Federal Reserve System; 
     or''.
       (2) Chapter 7 debtors.--Section 109(d) of title 11, United 
     States Code, is amended to read as follows:
       ``(d) Only a railroad, a person that may be a debtor under 
     chapter 7 of this title (except a stockbroker or a commodity 
     broker), and an uninsured State member bank, or a corporation 
     organized under section 25A of the Federal Reserve Act, which 
     operates, or operates as, a multilateral clearing 
     organization pursuant to section 409 of the Federal Deposit 
     Insurance Corporation Improvement Act of 1991 may be a debtor 
     under chapter 11 of this title.''.
       (3) Definition of financial institution.--Section 101(22) 
     of title 11, United States Code, is amended to read as 
     follows:
       ``(22) the term `financial institution'--
       ``(A) means--
       ``(i) a Federal reserve bank or an entity (domestic or 
     foreign) that is a commercial or savings bank, industrial 
     savings bank, savings and loan association, trust company, or 
     receiver or conservator for such entity and, when any such 
     Federal reserve bank, receiver, conservator, or entity is 
     acting as agent or custodian for a customer in connection 
     with a securities contract, as defined in section 741 of this 
     title, the customer; or
       ``(ii) in connection with a securities contract, as defined 
     in section 741 of this title, an investment company 
     registered under the Investment Company Act of 1940; and
       ``(B) includes any person described in subparagraph (A) 
     which operates, or operates as, a multilateral clearing 
     organization pursuant to section 409 of the Federal Deposit 
     Insurance Corporation Improvement Act of 1991;''.
       (4) Definition of uninsured state member bank.--Section 101 
     of title 11, United States Code, is amended by inserting 
     after paragraph (54) the following new paragraph--
       ``(54A) the term `uninsured State member bank' means a 
     State member bank (as defined in section 3 of the Federal 
     Deposit Insurance Act) the deposits of which are not insured 
     by the Federal Deposit Insurance Corporation; and''.
       (5) Subchapter v of chapter 7.--
       (A) In general.--Section 103 of title 11, United States 
     Code, is amended--
       (i) by redesignating subsections (e) through (i) as 
     subsections (f) through (j), respectively; and
       (ii) by inserting after subsection (d) the following new 
     subsection:
       ``(e) Scope of Application.--Subchapter V of chapter 7 of 
     this title shall apply only in a case under such chapter 
     concerning the liquidation of an uninsured State member bank, 
     or a corporation organized under section 25A of the Federal 
     Reserve Act, which operates, or operates as, a multilateral 
     clearing organization pursuant to section 409 of the Federal 
     Deposit Insurance Corporation Improvement Act of 1991.''.
       (B) Clearing bank liquidation.--Chapter 7 of title 11, 
     United States Code, is amended by adding at the end the 
     following new subchapter:

               ``SUBCHAPTER V--CLEARING BANK LIQUIDATION

     ``Sec. 781. Definitions

       ``For purposes of this subchapter, the following 
     definitions shall apply:
       ``(1) Board.--The term `Board' means the Board of Governors 
     of the Federal Reserve System.
       ``(2) Depository institution.--The term `depository 
     institution' has the same meaning as in section 3 of the 
     Federal Deposit Insurance Act.
       ``(3) Clearing bank.--The term `clearing bank' means an 
     uninsured State member bank, or a corporation organized under 
     section 25A of

[[Page H12328]]

     the Federal Reserve Act, which operates, or operates as, a 
     multilateral clearing organization pursuant to section 409 of 
     the Federal Deposit Insurance Corporation Improvement Act of 
     1991.

     ``Sec. 782. Selection of trustee

       ``(a) In General.--
       ``(1) Appointment.--Notwithstanding any other provision of 
     this title, the conservator or receiver who files the 
     petition shall be the trustee under this chapter, unless the 
     Board designates an alternative trustee.
       ``(2) Successor.--The Board may designate a successor 
     trustee if required.
       ``(b) Authority of Trustee.--Whenever the Board appoints or 
     designates a trustee, chapter 3 and sections 704 and 705 of 
     this title shall apply to the Board in the same way and to 
     the same extent that they apply to a United States trustee.

     ``Sec. 783. Additional powers of trustee

       ``(a) Distribution of Property Not of the Estate.--The 
     trustee under this subchapter has power to distribute 
     property not of the estate, including distributions to 
     customers that are mandated by subchapters III and IV of this 
     chapter.
       ``(b) Disposition of Institution.--The trustee under this 
     subchapter may, after notice and a hearing--
       ``(1) sell the clearing bank to a depository institution or 
     consortium of depository institutions (which consortium may 
     agree on the allocation of the clearing bank among the 
     consortium);
       ``(2) merge the clearing bank with a depository 
     institution;
       ``(3) transfer contracts to the same extent as could a 
     receiver for a depository institution under paragraphs (9) 
     and (10) of section 11(e) of the Federal Deposit Insurance 
     Act;
       ``(4) transfer assets or liabilities to a depository 
     institution;
       ``(5) transfer assets and liabilities to a bridge bank as 
     provided in paragraphs (1), (3)(A), (5), (6), of section 
     11(n) of the Federal Deposit Insurance Act, paragraphs (9) 
     through (13) of such section, and subparagraphs (A) through 
     (H) and subparagraph (K) of paragraph (4) of such section 
     11(n), except that--
       ``(A) the bridge bank to which such assets or liabilities 
     are transferred shall be treated as a clearing bank for the 
     purpose of this subsection; and
       ``(B) any references in any such provision of law to the 
     Federal Deposit Insurance Corporation shall be construed to 
     be references to the appointing agency and that references to 
     deposit insurance shall be omitted.
       ``(c) Certain Transfers Included.--Any reference in this 
     section to transfers of liabilities includes a ratable 
     transfer of liabilities within a priority class.

     ``Sec. 784. Right to be heard

       ``The Board or a Federal reserve bank (in the case of a 
     clearing bank that is a member of that bank) may raise and 
     may appear and be heard on any issue in a case under this 
     subchapter.''.
       (6) Definitions of clearing organization, contract market, 
     and related definitions.--
       (A) Section 761(2) of title 11, United States Code, is 
     amended to read as follows:
       ``(2) `clearing organization' means a derivatives clearing 
     organization registered under the Act;''.
       (B) Section 761(7) of title 11, United States Code, is 
     amended to read as follows:
       ``(7) `contract market' means a registered entity;''.
       (C) Section 761(8) of title 11, United States Code, is 
     amended to read as follows:
       ``(8) `contract of sale', `commodity', `derivatives 
     clearing organization', `future delivery', `board of trade', 
     `registered entity', and `futures commission merchant' have 
     the meanings assigned to those terms in the Act;''.
       (d) Clerical Amendment.--The table of sections for chapter 
     7 of title 11, United States Code, is amended by adding at 
     the end the following new items:

               ``SUBCHAPTER V--CLEARING BANK LIQUIDATION

``Sec.
``781. Definitions.
``782. Selection of trustee.
``783. Additional powers of trustee.
``784. Right to be heard.''.
       (e) Resolution of Edge Act Corporations.--The 16th 
     undesignated paragraph of section 25A of the Federal Reserve 
     Act (12 U.S.C. 624) is amended to read as follows:
       ``(16) Appointment of receiver or conservator.--
       ``(A) In general.--The Board may appoint a conservator or 
     receiver for a corporation organized under the provisions of 
     this section to the same extent and in the same manner as the 
     Comptroller of the Currency may appoint a conservator or 
     receiver for a national bank, and the conservator or receiver 
     for such corporation shall exercise the same powers, 
     functions, and duties, subject to the same limitations, as a 
     conservator or receiver for a national bank.
       ``(B) Equivalent authority.--The Board shall have the same 
     authority with respect to any conservator or receiver 
     appointed for a corporation organized under the provisions of 
     this section under this paragraph and any such corporation as 
     the Comptroller of the Currency has with respect to a 
     conservator or receiver of a national bank and the national 
     bank for which a conservator or receiver has been appointed.
       ``(C) Title 11 petitions.--The Board may direct the 
     conservator or receiver of a corporation organized under the 
     provisions of this section to file a petition pursuant to 
     title 11, United States Code, in which case, title 11, United 
     States Code, shall apply to the corporation in lieu of 
     otherwise applicable Federal or State insolvency law.''.
       (f) Derivatives Clearing Organizations.--The Commodity 
     Exchange Act (7 U.S.C. 1 et seq.) is amended by inserting 
     after section 5a, as added by section 111 of this Act, the 
     following:

     ``SEC. 5B. DERIVATIVES CLEARING ORGANIZATIONS.

       ``(a) Registration Requirement.--It shall be unlawful for a 
     derivatives clearing organization, unless registered with the 
     Commission, directly or indirectly to make use of the mails 
     or any means or instrumentality of interstate commerce to 
     perform the functions of a derivatives clearing organization 
     described in section 1a(9) of this Act with respect to a 
     contract of sale of a commodity for future delivery (or 
     option on such a contract) or option on a commodity, in each 
     case unless the contract or option--
       ``(1) is excluded from this Act by section 2(a)(1)(C)(i), 
     2(c), 2(d), 2(f), or 2(g) of this Act or title IV of the 
     Commodity Futures Modernization Act of 2000, or exempted 
     under section 2(h) or 4(c) of this Act; or
       ``(2) is a security futures product cleared by a clearing 
     agency registered under the Securities Exchange Act of 1934.
       ``(b) Voluntary Registration.--A derivatives clearing 
     organization that clears agreements, contracts, or 
     transactions excluded from this Act by section 2(c), 2(d), 
     2(f) or 2(g) of this Act or title IV of the Commodity Futures 
     Modernization Act of 2000, or exempted under section 2(h) or 
     4(c) of this Act, or other over-the-counter derivative 
     instruments (as defined in the Federal Deposit Insurance 
     Corporation Improvement Act of 1991) may register with the 
     Commission as a derivatives clearing organization.
       ``(c) Registration of Derivatives Clearing Organizations.--
       ``(1) Application.--A person desiring to register as a 
     derivatives clearing organization shall submit to the 
     Commission an application in such form and containing such 
     information as the Commission may require for the purpose of 
     making the determinations required for approval under 
     paragraph (2).
       ``(2) Core principles.--
       ``(A) In general.--To be registered and to maintain 
     registration as a derivatives clearing organization, an 
     applicant shall demonstrate to the Commission that the 
     applicant complies with the core principles specified in this 
     paragraph. The applicant shall have reasonable discretion in 
     establishing the manner in which it complies with the core 
     principles.
       ``(B) Financial resources.--The applicant shall demonstrate 
     that the applicant has adequate financial, operational, and 
     managerial resources to discharge the responsibilities of a 
     derivatives clearing organization.
       ``(C) Participant and product eligibility.--The applicant 
     shall establish--
       ``(i) appropriate admission and continuing eligibility 
     standards (including appropriate minimum financial 
     requirements) for members of and participants in the 
     organization; and
       ``(ii) appropriate standards for determining eligibility of 
     agreements, contracts, or transactions submitted to the 
     applicant.
       ``(D) Risk management.--The applicant shall have the 
     ability to manage the risks associated with discharging the 
     responsibilities of a derivatives clearing organization 
     through the use of appropriate tools and procedures.
       ``(E) Settlement procedures.--The applicant shall have the 
     ability to--
       ``(i) complete settlements on a timely basis under varying 
     circumstances;
       ``(ii) maintain an adequate record of the flow of funds 
     associated with each transaction that the applicant clears; 
     and
       ``(iii) comply with the terms and conditions of any 
     permitted netting or offset arrangements with other clearing 
     organizations.
       ``(F) Treatment of funds.--The applicant shall have 
     standards and procedures designed to protect and ensure the 
     safety of member and participant funds.
       ``(G) Default rules and procedures.--The applicant shall 
     have rules and procedures designed to allow for efficient, 
     fair, and safe management of events when members or 
     participants become insolvent or otherwise default on their 
     obligations to the derivatives clearing organization.
       ``(H) Rule enforcement.--The applicant shall--
       ``(i) maintain adequate arrangements and resources for the 
     effective monitoring and enforcement of compliance with rules 
     of the applicant and for resolution of disputes; and
       ``(ii) have the authority and ability to discipline, limit, 
     suspend, or terminate a member's or participant's activities 
     for violations of rules of the applicant.
       ``(I) System safeguards.--The applicant shall demonstrate 
     that the applicant--
       ``(i) has established and will maintain a program of 
     oversight and risk analysis to ensure that the automated 
     systems of the applicant function properly and have adequate 
     capacity and security; and
       ``(ii) has established and will maintain emergency 
     procedures and a plan for disaster recovery, and will 
     periodically test backup facilities sufficient to ensure 
     daily processing, clearing, and settlement of transactions.
       ``(J) Reporting.--The applicant shall provide to the 
     Commission all information necessary for the Commission to 
     conduct the oversight function of the applicant with respect 
     to the activities of the derivatives clearing organization.
       ``(K) Recordkeeping.--The applicant shall maintain records 
     of all activities related to the business of the applicant as 
     a derivatives clearing organization in a form and manner 
     acceptable to the Commission for a period of 5 years.
       ``(L) Public information.--The applicant shall make 
     information concerning the rules and operating procedures 
     governing the clearing and settlement systems (including 
     default procedures) available to market participants.
       ``(M) Information sharing.--The applicant shall--

[[Page H12329]]

       ``(i) enter into and abide by the terms of all appropriate 
     and applicable domestic and international information-sharing 
     agreements; and
       ``(ii) use relevant information obtained from the 
     agreements in carrying out the clearing organization's risk 
     management program.
       ``(N) Antitrust considerations.--Unless appropriate to 
     achieve the purposes of this Act, the derivatives clearing 
     organization shall avoid--
       ``(i) adopting any rule or taking any action that results 
     in any unreasonable restraint of trade; or
       ``(ii) imposing any material anticompetitive burden on 
     trading on the contract market.
       ``(3) Orders concerning competition.--A derivatives 
     clearing organization may request the Commission to issue an 
     order concerning whether a rule or practice of the applicant 
     is the least anticompetitive means of achieving the 
     objectives, purposes, and policies of this Act.
       ``(d) Existing Derivatives Clearing Organizations.--A 
     derivatives clearing organization shall be deemed to be 
     registered under this section to the extent that the 
     derivatives clearing organization clears agreements, 
     contracts, or transactions for a board of trade that has been 
     designated by the Commission as a contract market for such 
     agreements, contracts, or transactions before the date of 
     enactment of this section.
       ``(e) Appointment of Trustee.--
       ``(1) In general.--If a proceeding under section 5e results 
     in the suspension or revocation of the registration of a 
     derivatives clearing organization, or if a derivatives 
     clearing organization withdraws from registration, the 
     Commission, on notice to the derivatives clearing 
     organization, may apply to the appropriate United States 
     district court where the derivatives clearing organization is 
     located for the appointment of a trustee.
       ``(2) Assumption of jurisdiction.--If the Commission 
     applies for appointment of a trustee under paragraph (1)--
       ``(A) the court may take exclusive jurisdiction over the 
     derivatives clearing organization and the records and assets 
     of the derivatives clearing organization, wherever located; 
     and
       ``(B) if the court takes jurisdiction under subparagraph 
     (A), the court shall appoint the Commission, or a person 
     designated by the Commission, as trustee with power to take 
     possession and continue to operate or terminate the 
     operations of the derivatives clearing organization in an 
     orderly manner for the protection of participants, subject to 
     such terms and conditions as the court may prescribe.
       ``(f) Linking of Regulated Clearing Facilities.--
       ``(1) In general.--The Commission shall facilitate the 
     linking or coordination of derivatives clearing organizations 
     registered under this Act with other regulated clearance 
     facilities for the coordinated settlement of cleared 
     transactions.
       ``(2) Coordination.--In carrying out paragraph (1), the 
     Commission shall coordinate with the Federal banking agencies 
     and the Securities and Exchange Commission.''.

     SEC. 113. COMMON PROVISIONS APPLICABLE TO REGISTERED 
                   ENTITIES.

       The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended 
     by inserting after section 5b (as added by section 112(f)) 
     the following:

     ``SEC. 5C. COMMON PROVISIONS APPLICABLE TO REGISTERED 
                   ENTITIES.

       ``(a) Acceptable Business Practices Under Core 
     Principles.--
       ``(1) In general.--Consistent with the purposes of this 
     Act, the Commission may issue interpretations, or approve 
     interpretations submitted to the Commission, of sections 
     5(d), 5a(d), and 5b(d)(2) to describe what would constitute 
     an acceptable business practice under such sections.
       ``(2) Effect of interpretation.--An interpretation issued 
     under paragraph (1) shall not provide the exclusive means for 
     complying with such sections.
       ``(b) Delegation of Functions Under Core Principles.--
       ``(1) In general.--A contract market or derivatives 
     transaction execution facility may comply with any applicable 
     core principle through delegation of any relevant function to 
     a registered futures association or another registered 
     entity.
       ``(2) Responsibility.--A contract market or derivatives 
     transaction execution facility that delegates a function 
     under paragraph (1) shall remain responsible for carrying out 
     the function.
       ``(3) Noncompliance.--If a contract market or derivatives 
     transaction execution facility that delegates a function 
     under paragraph (1) becomes aware that a delegated function 
     is not being performed as required under this Act, the 
     contract market or derivatives transaction execution facility 
     shall promptly take steps to address the noncompliance.
       ``(c) New Contracts, New Rules, and Rule Amendments.--
       ``(1) In general.--Subject to paragraph (2), a registered 
     entity may elect to list for trading or accept for clearing 
     any new contract or other instrument, or may elect to approve 
     and implement any new rule or rule amendment, by providing to 
     the Commission (and the Secretary of the Treasury, in the 
     case of a contract of sale of a government security for 
     future delivery (or option on such a contract) or a rule or 
     rule amendment specifically related to such a contract) a 
     written certification that the new contract or instrument or 
     clearing of the new contract or instrument, new rule, or rule 
     amendment complies with this Act (including regulations under 
     this Act).
       ``(2) Prior approval.--
       ``(A) In general.--A registered entity may request that the 
     Commission grant prior approval to any new contract or other 
     instrument, new rule, or rule amendment.
       ``(B) Prior approval required.--Notwithstanding any other 
     provision of this section, a designated contract market shall 
     submit to the Commission for prior approval each rule 
     amendment that materially changes the terms and conditions, 
     as determined by the Commission, in any contract of sale for 
     future delivery of a commodity specifically enumerated in 
     section 1a(4) (or any option thereon) traded through its 
     facilities if the rule amendment applies to contracts and 
     delivery months which have already been listed for trading 
     and have open interest.
       ``(C) Deadline.--If prior approval is requested under 
     subparagraph (A), the Commission shall take final action on 
     the request not later than 90 days after submission of the 
     request, unless the person submitting the request agrees to 
     an extension of the time limitation established under this 
     subparagraph.
       ``(3) Approval.--The Commission shall approve any such new 
     contract or instrument, new rule, or rule amendment unless 
     the Commission finds that the new contract or instrument, new 
     rule, or rule amendment would violate this Act.
       ``(d) Violation of Core Principles.--
       ``(1) In general.--If the Commission determines, on the 
     basis of substantial evidence, that a registered entity is 
     violating any applicable core principle specified in section 
     5(d), 5a(d), or 5b(d)(2), the Commission shall--
       ``(A) notify the registered entity in writing of the 
     determination; and
       ``(B) afford the registered entity an opportunity to make 
     appropriate changes to bring the registered entity into 
     compliance with the core principles.
       ``(2) Failure to make changes.--If, not later than 30 days 
     after receiving a notification under paragraph (1), a 
     registered entity fails to make changes that, in the opinion 
     of the Commission, are necessary to comply with the core 
     principles, the Commission may take further action in 
     accordance with this Act.
       ``(e) Reservation of Emergency Authority.--Nothing in this 
     section shall limit or in any way affect the emergency powers 
     of the Commission provided in section 8a(9).''.

     SEC. 114. EXEMPT BOARDS OF TRADE.

       The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended 
     by inserting after section 5c (as added by section 113) the 
     following:

     ``SEC. 5D. EXEMPT BOARDS OF TRADE.

       ``(a) Election To Register With the Commission.--A board of 
     trade that meets the requirements of subsection (b) of this 
     section may operate as an exempt board of trade on receipt 
     from the board of trade of a notice, provided in such manner 
     as the Commission may by rule or regulation prescribe, that 
     the board of trade elects to operate as an exempt board of 
     trade. Except as otherwise provided in this section, no 
     provision of this Act (other than subparagraphs (C) and (D) 
     of section 2(a)(1) and section 12(e)(2)(B)) shall apply with 
     respect to a contract of sale of a commodity for future 
     delivery (or option on such a contract) traded on or through 
     the facilities of an exempt board of trade.
       ``(b) Criteria for Exemption.--To qualify for an exemption 
     under subsection (a), a board of trade shall limit trading on 
     or through the facilities of the board of trade to contracts 
     of sale of a commodity for future delivery (or options on 
     such contracts or on a commodity)--
       ``(1) for which the underlying commodity has--
       ``(A) a nearly inexhaustible deliverable supply;
       ``(B) a deliverable supply that is sufficiently large, and 
     a cash market sufficiently liquid, to render any contract 
     traded on the commodity highly unlikely to be susceptible to 
     the threat of manipulation; or
       ``(C) no cash market;
       ``(2) that are entered into only between persons that are 
     eligible contract participants at the time at which the 
     persons enter into the contract; and
       ``(3) that are not contracts of sale (or options on such a 
     contract or on a commodity) for future delivery of any 
     security, including any group or index of securities or any 
     interest in, or based on the value of, any security or any 
     group or index of securities.
       ``(c) Antimanipulation Requirements.--A party to a contract 
     of sale of a commodity for future delivery (or option on such 
     a contract or on a commodity) that is traded on an exempt 
     board of trade shall be subject to sections 4b, 4c(b), 4o, 
     6(c), and 9(a)(2), and the Commission shall enforce those 
     provisions with respect to any such trading.
       ``(d) Price Discovery.--If the Commission finds that an 
     exempt board of trade is a significant source of price 
     discovery for transactions in the cash market for the 
     commodity underlying any contract, agreement, or transaction 
     traded on or through the facilities of the board of trade, 
     the board of trade shall disseminate publicly on a daily 
     basis trading volume, opening and closing price ranges, open 
     interest, and other trading data as appropriate to the 
     market.
       ``(e) Jurisdiction.--The Commission shall have exclusive 
     jurisdiction over any account, agreement, contract, or 
     transaction involving a contract of sale of a commodity for 
     future delivery, or option on such a contract or on a 
     commodity, to the extent that the account, agreement, 
     contract, or transaction is traded on an exempt board of 
     trade.
       ``(f) Subsidiaries.--A board of trade that is designated as 
     a contract market or registered as a derivatives transaction 
     execution facility may operate an exempt board of trade by 
     establishing a separate subsidiary or other legal entity and 
     otherwise satisfying the requirements of this section.
       ``(g) An exempt board of trade that meets the requirements 
     of subsection (b) shall not represent to any person that the 
     board of trade is

[[Page H12330]]

     registered with, or designated, recognized, licensed, or 
     approved by the Commission.''.

     SEC. 115. SUSPENSION OR REVOCATION OF DESIGNATION AS CONTRACT 
                   MARKET.

       Section 5e of the Commodity Exchange Act (7 U.S.C. 7b) (as 
     redesignated by section 20(1)) is amended to read as follows:

     ``SEC. 5E. SUSPENSION OR REVOCATION OF DESIGNATION AS 
                   REGISTERED ENTITY.

       ``The failure of a registered entity to comply with any 
     provision of this Act, or any regulation or order of the 
     Commission under this Act, shall be cause for the suspension 
     of the registered entity for a period not to exceed 180 days, 
     or revocation of designation as a registered entity in 
     accordance with the procedures and subject to the judicial 
     review provided in section 6(b).''.

     SEC. 116. AUTHORIZATION OF APPROPRIATIONS.

       Section 12(d) of the Commodity Exchange Act (7 U.S.C. 
     16(d)) is amended by striking ``2000'' and inserting 
     ``2005''.

     SEC. 117. PREEMPTION.

       Section 12 of the Commodity Exchange Act (7 U.S.C. 16(e)) 
     is amended by striking subsection (e) and inserting the 
     following:
       ``(e) Relation to Other Law, Departments, or Agencies.--
       ``(1) Nothing in this Act shall supersede or preempt--
       ``(A) criminal prosecution under any Federal criminal 
     statute;
       ``(B) the application of any Federal or State statute 
     (except as provided in paragraph (2)), including any rule or 
     regulation thereunder, to any transaction in or involving any 
     commodity, product, right, service, or interest--
       ``(i) that is not conducted on or subject to the rules of a 
     registered entity or exempt board of trade;
       ``(ii) (except as otherwise specified by the Commission by 
     rule or regulation) that is not conducted on or subject to 
     the rules of any board of trade, exchange, or market located 
     outside the United States, its territories or possessions; or
       ``(iii) that is not subject to regulation by the Commission 
     under section 4c or 19; or
       ``(C) the application of any Federal or State statute, 
     including any rule or regulation thereunder, to any person 
     required to be registered or designated under this Act who 
     shall fail or refuse to obtain such registration or 
     designation.
       ``(2) This Act shall supersede and preempt the application 
     of any State or local law that prohibits or regulates gaming 
     or the operation of bucket shops (other than antifraud 
     provisions of general applicability) in the case of--
       ``(A) an electronic trading facility excluded under section 
     2(e) of this Act;
       ``(B) an agreement, contract, or transaction that is 
     excluded from this Act under section 2(c), 2(d), 2(f), or 
     2(g) of this Act or title IV of the Commodity Futures 
     Modernization Act of 2000, or exempted under section 2(h) or 
     4(c) of this Act (regardless of whether any such agreement, 
     contract, or transaction is otherwise subject to this 
     Act).''.

     SEC. 118. PREDISPUTE RESOLUTION AGREEMENTS FOR INSTITUTIONAL 
                   CUSTOMERS.

       Section 14 of the Commodity Exchange Act (7 U.S.C. 18) is 
     amended by striking subsection (g) and inserting the 
     following:
       ``(g) Predispute Resolution Agreements for Institutional 
     Customers.--Nothing in this section prohibits a registered 
     futures commission merchant from requiring a customer that is 
     an eligible contract participant, as a condition to the 
     commission merchant's conducting a transaction for the 
     customer, to enter into an agreement waiving the right to 
     file a claim under this section.''.

     SEC. 119. CONSIDERATION OF COSTS AND BENEFITS AND ANTITRUST 
                   LAWS.

       Section 15 of the Commodity Exchange Act (7 U.S.C. 19) is 
     amended by striking ``Sec. 15. The Commission'' and inserting 
     the following:

     ``SEC. 15. CONSIDERATION OF COSTS AND BENEFITS AND ANTITRUST 
                   LAWS.

       ``(a) Costs and Benefits.--
       ``(1) In general.--Before promulgating a regulation under 
     this Act or issuing an order (except as provided in paragraph 
     (3)), the Commission shall consider the costs and benefits of 
     the action of the Commission.
       ``(2) Considerations.--The costs and benefits of the 
     proposed Commission action shall be evaluated in light of--
       ``(A) considerations of protection of market participants 
     and the public;
       ``(B) considerations of the efficiency, competitiveness, 
     and financial integrity of futures markets;
       ``(C) considerations of price discovery;
       ``(D) considerations of sound risk management practices; 
     and
       ``(E) other public interest considerations.
       ``(3) Applicability.--This subsection does not apply to the 
     following actions of the Commission:
       ``(A) An order that initiates, is part of, or is the result 
     of an adjudicatory or investigative process of the 
     Commission.
       ``(B) An emergency action.
       ``(C) A finding of fact regarding compliance with a 
     requirement of the Commission.
       ``(b) Antitrust Laws.--The Commission''.

     SEC. 120. CONTRACT ENFORCEMENT BETWEEN ELIGIBLE 
                   COUNTERPARTIES.

       Section 22(a) of the Commodity Exchange Act (7 U.S.C. 
     25(a)) is amended by adding at the end the following:
       ``(4) Contract enforcement between eligible 
     counterparties.--No agreement, contract, or transaction 
     between eligible contract participants or persons reasonably 
     believed to be eligible contract participants, and no hybrid 
     instrument sold to any investor, shall be void, voidable, or 
     unenforceable, and no such party shall be entitled to 
     rescind, or recover any payment made with respect to, such an 
     agreement, contract, transaction, or instrument under this 
     section or any other provision of Federal or State law, based 
     solely on the failure of the agreement, contract, 
     transaction, or instrument to comply with the terms or 
     conditions of an exemption or exclusion from any provision of 
     this Act or regulations of the Commission.''.

     SEC. 121. SPECIAL PROCEDURES TO ENCOURAGE AND FACILITATE BONA 
                   FIDE HEDGING BY AGRICULTURAL PRODUCERS.

       The Commodity Exchange Act, as otherwise amended by this 
     Act, is amended by inserting after section 4o the following:

     ``SEC. 4P. SPECIAL PROCEDURES TO ENCOURAGE AND FACILITATE 
                   BONA FIDE HEDGING BY AGRICULTURAL PRODUCERS.

       ``(a) Authority.--The Commission shall consider issuing 
     rules or orders which--
       ``(1) prescribe procedures under which each contract market 
     is to provide for orderly delivery, including temporary 
     storage costs, of any agricultural commodity enumerated in 
     section 1a(4) which is the subject of a contract for purchase 
     or sale for future delivery;
       ``(2) increase the ease with which domestic agricultural 
     producers may participate in contract markets, including by 
     addressing cost and margin requirements, so as to better 
     enable the producers to hedge price risk associated with 
     their production;
       ``(3) provide flexibility in the minimum quantities of such 
     agricultural commodities that may be the subject of a 
     contract for purchase or sale for future delivery that is 
     traded on a contract market, to better allow domestic 
     agricultural producers to hedge such price risk; and
       ``(4) encourage contract markets to provide information and 
     otherwise facilitate the participation of domestic 
     agricultural producers in contract markets.
       ``(b) Report.--Within 1 year after the date of enactment of 
     this section, the Commission shall submit to the Committee on 
     Agriculture of the House of Representatives and the Committee 
     on Agriculture, Nutrition, and Forestry of the Senate a 
     report on the steps it has taken to implement this section 
     and on the activities of contract markets pursuant to this 
     section.''.

     SEC. 122. RULE OF CONSTRUCTION.

       Except as expressly provided in this Act or an amendment 
     made by this Act, nothing in this Act or an amendment made by 
     this Act supersedes, affects, or otherwise limits or expands 
     the scope and applicability of laws governing the Securities 
     and Exchange Commission.

     SEC. 123. TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Commodity Exchange Act.--
       (1) Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) 
     (as amended by section 101) is amended--
       (A) in paragraphs (5), (6), (16), (17), (20), and (23), by 
     inserting ``or derivatives transaction execution facility'' 
     after ``contract market'' each place it appears; and
       (B) in paragraph (24)--
       (i) in the paragraph heading, by striking ``contract 
     market'' and inserting ``registered entity'';
       (ii) by striking ``contract market'' each place it appears 
     and inserting ``registered entity''; and
       (iii) by adding at the end the following:
     ``A participant in an alternative trading system that is 
     designated as a contract market pursuant to section 5f is 
     deemed a member of the contract market for purposes of 
     transactions in security futures products through the 
     contract market.''.
       (2) Section 2 of the Commodity Exchange Act (7 U.S.C. 2, 
     2a, 4, 4a, 3) is amended--
       (A) by striking ``Sec. 2. (a)(1)(A)(i) The'' and inserting 
     the following:

     ``SEC. 2. JURISDICTION OF COMMISSION; LIABILITY OF PRINCIPAL 
                   FOR ACT OF AGENT; COMMODITY FUTURES TRADING 
                   COMMISSION; TRANSACTION IN INTERSTATE COMMERCE.

       ``(a) Jurisdiction of Commission; Commodity Futures Trading 
     Commission.--
       ``(1) Jurisdiction of commission.--
       ``(A) In general.--The''; and
       (B) in subsection (a)(1)--
       (i) in subparagraph (A) (as amended by subparagraph (A) of 
     this paragraph)--

       (II) by striking ``subparagraph (B) of this subparagraph'' 
     and inserting ``subparagraphs (C) and (D) of this paragraph 
     and subsections (c) through (i) of this section'';
       (III) by striking ``contract market designated pursuant to 
     section 5 of this Act'' and inserting ``contract market 
     designated or derivatives transaction execution facility 
     registered pursuant to section 5 or 5a'';
       (IV) by striking clause (ii); and
       (V) in clause (iii), by striking ``(iii) The'' and 
     inserting the following:

       ``(B) Liability of principal for act of agent.--The''; and
       (ii) in subparagraph (B)--

       (I) by striking ``(B)'' and inserting ``(C)'';
       (II) in clause (v)--

       (aa) by striking ``section 3 of the Securities Act of 
     1933''; and
       (bb) by inserting ``or subparagraph (D)'' after 
     ``subparagraph''; and

       (III) by moving clauses (i) through (v) 4 ems to the right;

       (C) in subsection (a)(7), by striking ``contract market'' 
     and inserting ``registered entity'';
       (D) in subsection (a)(8)(B)(ii)--
       (i) in the first sentence, by striking ``designation as a 
     contract market'' and inserting ``designation or registration 
     as a contract market or derivatives transaction execution 
     facility'';
       (ii) in the second sentence, by striking ``designate a 
     board of trade as a contract market'' and inserting 
     ``designate or register a board of trade as a contract market 
     or derivatives transaction execution facility''; and
       (iii) in the fourth sentence, by striking ``designating, or 
     refusing, suspending, or revoking the

[[Page H12331]]

     designation of, a board of trade as a contract market 
     involving transactions for future delivery referred to in 
     this clause or in considering possible emergency action under 
     section 8a(9) of this Act'' and inserting ``designating, 
     registering, or refusing, suspending, or revoking the 
     designation or registration of, a board of trade as a 
     contract market or derivatives transaction execution facility 
     involving transactions for future delivery referred to in 
     this clause or in considering any possible action under this 
     Act (including without limitation emergency action under 
     section 8a(9))'', and by striking ``designation, suspension, 
     revocation, or emergency action'' and inserting 
     ``designation, registration, suspension, revocation, or 
     action''; and
       (E) in subsection (a), by moving paragraphs (2) through (9) 
     2 ems to the right.
       (3) Section 4 of the Commodity Exchange Act (7 U.S.C. 6) is 
     amended--
       (A) in subsection (a)--
       (i) in paragraph (1), by striking ``designated by the 
     Commission as a `contract market' for'' and inserting 
     ``designated or registered by the Commission as a contract 
     market or derivatives transaction execution facility for'';
       (ii) in paragraph (2), by striking ``member of such''; and
       (iii) in paragraph (3), by inserting ``or derivatives 
     transaction execution facility'' after ``contract market''; 
     and
       (B) in subsection (c)--
       (i) in paragraph (1)--

       (I) by striking ``designated as a contract market'' and 
     inserting ``designated or registered as a contract market or 
     derivatives transaction execution facility''; and
       (II) by striking ``section 2(a)(1)(B)'' and inserting 
     ``subparagraphs (C)(ii) and (D) of section 2(a)(1), except 
     that the Commission and the Securities and Exchange 
     Commission may by rule, regulation, or order jointly exclude 
     any agreement, contract, or transaction from section 
     2(a)(1)(D)''; and

       (ii) in paragraph (2)(B)(ii), by inserting ``or derivatives 
     transaction execution facility'' after ``contract market''.
       (4) Section 4a of the Commodity Exchange Act (7 U.S.C. 6a) 
     is amended--
       (A) in subsection (a)--
       (i) in the first sentence, by inserting ``or derivatives 
     transaction execution facilities'' after ``contract 
     markets''; and
       (ii) in the second sentence, by inserting ``or derivatives 
     transaction execution facility'' after ``contract market'';
       (B) in subsection (b)--
       (i) in paragraph (1), by inserting ``, or derivatives 
     transaction execution facility or facilities,'' after 
     ``markets''; and
       (ii) in paragraph (2), by inserting ``or derivatives 
     transaction execution facility'' after ``contract market''; 
     and
       (C) in subsection (e)--
       (i) by striking ``contract market or'' each place it 
     appears and inserting ``contract market, derivatives 
     transaction execution facility, or'';
       (ii) by striking ``licensed or designated'' each place it 
     appears and inserting ``licensed, designated, or 
     registered''; and
       (iii) by striking ``contract market, or'' and inserting 
     ``contract market or derivatives transaction execution 
     facility, or''.
       (5) Section 4b(a) of the Commodity Exchange Act (7 U.S.C. 
     6b(a)) is amended by striking ``contract market'' each place 
     it appears and inserting ``registered entity''.
       (6) Sections 4c(g), 4d, 4e, and 4f of the Commodity 
     Exchange Act (7 U.S.C. 6c(g), 6d, 6e, 6f) are amended by 
     inserting ``or derivatives transaction execution facility'' 
     after ``contract market'' each place it appears.
       (7) Section 4g of the Commodity Exchange Act (7 U.S.C. 6g) 
     is amended--
       (A) in subsection (b), by striking ``clearinghouse and 
     contract market'' and inserting ``registered entity''; and
       (B) in subsection (f), by striking ``clearinghouses, 
     contract markets, and exchanges'' and inserting ``registered 
     entities''.
       (8) Section 4h of the Commodity Exchange Act (7 U.S.C. 6h) 
     is amended by striking ``contract market'' each place it 
     appears and inserting ``registered entity''.
       (9) Section 4i of the Commodity Exchange Act (7 U.S.C. 6i) 
     is amended in the first sentence by inserting ``or 
     derivatives transaction execution facility'' after ``contract 
     market''.
       (10) Section 4l of the Commodity Exchange Act (7 U.S.C. 6l) 
     is amended by inserting ``or derivatives transaction 
     execution facilities'' after ``contract markets'' each place 
     it appears.
       (11) Section 4p of the Commodity Exchange Act (7 U.S.C. 6p) 
     is amended--
       (A) in the third sentence of subsection (a), by striking 
     ``Act or contract markets'' and inserting ``Act, contract 
     markets, or derivatives transaction execution facilities''; 
     and
       (B) in subsection (b), by inserting ``derivatives 
     transaction execution facility,'' after ``contract market,''.
       (12) Section 6 of the Commodity Exchange Act (7 U.S.C. 8, 
     9, 9a, 9b, 13b, 15) is amended--
       (A) in subsection (a)--
       (i) in the first sentence--

       (I) by striking ``board of trade desiring to be designated 
     a `contract market' shall make application to the Commission 
     for such designation'' and inserting ``person desiring to be 
     designated or registered as a contract market or derivatives 
     transaction execution facility shall make application to the 
     Commission for the designation or registration'';
       (II) by striking ``above conditions'' and inserting 
     ``conditions set forth in this Act''; and
       (III) by striking ``above requirements'' and inserting 
     ``the requirements of this Act'';

       (ii) in the second sentence, by striking ``designation as a 
     contract market within one year'' and inserting ``designation 
     or registration as a contract market or derivatives 
     transaction execution facility within 180 days'';
       (iii) in the third sentence--

       (I) by striking ``board of trade'' and inserting 
     ``person''; and
       (II) by striking ``one-year period'' and inserting ``180-
     day period''; and

       (iv) in the last sentence, by striking ``designate as a 
     `contract market' any board of trade that has made 
     application therefor, such board of trade'' and inserting 
     ``designate or register as a contract market or derivatives 
     transaction execution facility any person that has made 
     application therefor, the person'';
       (B) in subsection (b)--
       (i) in the first sentence--

       (I) by striking ``designation of any board of trade as a 
     `contract market' upon'' and inserting ``designation or 
     registration of any contract market or derivatives 
     transaction execution facility on'';
       (II) by striking ``board of trade'' each place it appears 
     and inserting ``contract market or derivatives transaction 
     execution facility''; and
       (III) by striking ``designation as set forth in section 5 
     of this Act'' and inserting ``designation or registration as 
     set forth in sections 5 through 5b or section 5f'';
       (ii) in the second sentence--

       (I) by striking ``board of trade'' the first place it 
     appears and inserting ``contract market or derivatives 
     transaction execution facility''; and
       (II) by striking ``board of trade'' the second and third 
     places it appears and inserting ``person''; and

       (iii) in the last sentence, by striking ``board of trade'' 
     each place it appears and inserting ``person'';
       (C) in subsection (c)--
       (i) by striking ``contract market'' each place it appears 
     and inserting ``registered entity'';
       (ii) by striking ``contract markets'' each place it appears 
     and inserting ``registered entities''; and
       (iii) by striking ``trading privileges'' each place it 
     appears and inserting ``privileges'';
       (D) in subsection (d), by striking ``contract market'' each 
     place it appears and inserting ``registered entity''; and
       (E) in subsection (e), by striking ``trading on all 
     contract markets'' each place it appears and inserting ``the 
     privileges of all registered entities''.
       (13) Section 6a of the Commodity Exchange Act (7 U.S.C. 
     10a) is amended--
       (A) in the first sentence of subsection (a), by striking 
     ``designated as a `contract market' shall'' and inserting 
     ``designated or registered as a contract market or a 
     derivatives transaction execution facility''; and
       (B) in subsection (b), by striking ``designated as a 
     contract market'' and inserting ``designated or registered as 
     a contract market or a derivatives transaction execution 
     facility''.
       (14) Section 6b of the Commodity Exchange Act (7 U.S.C. 
     13a) is amended--
       (A) by striking ``contract market'' each place it appears 
     and inserting ``registered entity'';
       (B) in the first sentence, by striking ``designation as set 
     forth in section 5 of this Act'' and inserting ``designation 
     or registration as set forth in sections 5 through 5c''; and
       (C) in the last sentence, by striking ``the contract 
     market's ability'' and inserting ``the ability of the 
     registered entity''.
       (15) Section 6c(a) of the Commodity Exchange Act (7 U.S.C. 
     13a-1(a)) by striking ``contract market'' and inserting 
     ``registered entity''.
       (16) Section 6d(1) of the Commodity Exchange Act (7 U.S.C. 
     13a-2(1)) is amended by inserting ``derivatives transaction 
     execution facility,'' after ``contract market,''.
       (17) Section 7 of the Commodity Exchange Act (7 U.S.C. 11) 
     is amended--
       (A) in the first sentence--
       (i) by striking ``board of trade'' and inserting 
     ``person'';
       (ii) by inserting ``or registered'' after ``designated'';
       (iii) by inserting ``or registration'' after 
     ``designation'' each place it appears; and
       (iv) by striking ``contract market'' each place it appears 
     and inserting ``registered entity'';
       (B) in the second sentence--
       (i) by striking ``designation of such board of trade as a 
     contract market'' and inserting ``designation or registration 
     of the registered entity''; and
       (ii) by striking ``contract markets'' and inserting 
     ``registered entities''; and
       (C) in the last sentence--
       (i) by striking ``board of trade'' and inserting 
     ``person''; and
       (ii) by striking ``designated again a contract market'' and 
     inserting ``designated or registered again a registered 
     entity''.
       (18) Section 8(c) of the Commodity Exchange Act (7 U.S.C. 
     12(c)) is amended in the first sentence by striking ``board 
     of trade'' and inserting ``registered entity''.
       (19) Section 8a of the Commodity Exchange Act (7 U.S.C. 
     12a) is amended--
       (A) by striking ``contract market'' each place it appears 
     and inserting ``registered entity''; and
       (B) in paragraph (2)(F), by striking ``trading privileges'' 
     and inserting ``privileges''.
       (20) Sections 8b and 8c(e) of the Commodity Exchange Act (7 
     U.S.C. 12b, 12c(e)) are amended by striking ``contract 
     market'' each place it appears and inserting ``registered 
     entity''.
       (21) Section 8e of the Commodity Exchange Act (7 U.S.C. 
     12e) is repealed.
       (22) Section 9 of the Commodity Exchange Act (7 U.S.C. 13) 
     is amended by striking ``contract market'' each place it 
     appears and inserting ``registered entity''.
       (23) Section 14 of the Commodity Exchange Act (7 U.S.C. 18) 
     is amended--
       (A) in subsection (a)(1)(B), by striking ``contract 
     market'' and inserting ``registered entity''; and
       (B) in subsection (f), by striking ``contract markets'' and 
     inserting ``registered entities''.
       (24) Section 17 of the Commodity Exchange Act (7 U.S.C. 21) 
     is amended by striking ``contract market'' each place it 
     appears and inserting ``registered entity''.

[[Page H12332]]

       (25) Section 22 of the Commodity Exchange Act (7 U.S.C. 25) 
     is amended--
       (A) in subsection (a)--
       (i) in paragraph (1)--

       (I) by striking ``contract market, clearing organization of 
     a contract market, licensed board of trade,'' and inserting 
     ``registered entity''; and
       (II) in subparagraph (C)(i), by striking ``contract 
     market'' and inserting ``registered entity'';

       (ii) in paragraph (2), by striking ``sections 5a(11),'' and 
     inserting ``sections 5(d)(13), 5b(b)(1)(E),''; and
       (iii) in paragraph (3), by striking ``contract market'' and 
     inserting ``registered entity''; and
       (B) in subsection (b)--
       (i) in paragraph (1)--

       (I) by striking ``contract market or clearing organization 
     of a contract market'' and inserting ``registered entity'';
       (II) by striking ``section 5a(8) and section 5a(9) of this 
     Act'' and inserting ``sections 5 through 5c'';
       (III) by striking ``contract market, clearing organization 
     of a contract market, or licensed board of trade'' and 
     inserting ``registered entity''; and
       (IV) by striking ``contract market or licensed board of 
     trade'' and inserting ``registered entity'';

       (ii) in paragraph (3)--

       (I) by striking ``a contract market, clearing organization, 
     licensed board of trade,'' and inserting ``registered 
     entity''; and
       (II) by striking ``contract market, licensed board of 
     trade'' and inserting ``registered entity'';

       (iii) in paragraph (4), by striking ``contract market, 
     licensed board of trade, clearing organization,'' and 
     inserting ``registered entity''; and
       (iv) in paragraph (5), by striking ``contract market, 
     licensed board of trade, clearing organization,'' and 
     inserting ``registered entity''.
       (b) Federal Deposit Insurance Corporation Improvement Act 
     of 1991.--Section 402(2) of the Federal Deposit Insurance 
     Corporation Improvement Act of 1991 (12 U.S.C. 4402(2)) is 
     amended by striking subparagraph (B) and inserting the 
     following:
       ``(B) that is registered as a derivatives clearing 
     organization under section 5b of the Commodity Exchange 
     Act.''.

     SEC. 124. PRIVACY.

       The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended 
     by inserting after section 5f (as added by section 252) the 
     following:

     ``SEC. 5G. PRIVACY.

       ``(a) Treatment as Financial Institutions.--Notwithstanding 
     section 509(3)(B) of the Gramm-Leach-Bliley Act, any futures 
     commission merchant, commodity trading advisor, commodity 
     pool operator, or introducing broker that is subject to the 
     jurisdiction of the Commission under this Act with respect to 
     any financial activity shall be treated as a financial 
     institution for purposes of title V of such Act with respect 
     to such financial activity.
       ``(b) Treatment of CFTC as Federal Functional Regulator.--
     For purposes of title V of such Act, the Commission shall be 
     treated as a Federal functional regulator within the meaning 
     of section 509(2) of such Act and shall prescribe regulations 
     under such title within 6 months after the date of enactment 
     of this section.''.

     SEC. 125. REPORT TO CONGRESS.

       (a) The Commodity Futures Trading Commission (in this 
     section referred to as the ``Commission'') shall undertake 
     and complete a study of the Commodity Exchange Act (in this 
     section referred to as ``the Act'') and the Commission's 
     rules, regulations and orders governing the conduct of 
     persons required to be registered under the Act, not later 
     than 1 year after the date of the enactment of this Act. The 
     study shall identify--
       (1) the core principles and interpretations of acceptable 
     business practices that the Commission has adopted or intends 
     to adopt to replace the provisions of the Act and the 
     Commission's rules and regulations thereunder;
       (2) the rules and regulations that the Commission has 
     determined must be retained and the reasons therefor;
       (3) the extent to which the Commission believes it can 
     effect the changes identified in paragraph (1) of this 
     subsection through its exemptive authority under section 4(c) 
     of the Act; and
       (4) the regulatory functions the Commission currently 
     performs that can be delegated to a registered futures 
     association (within the meaning of the Act) and the 
     regulatory functions that the Commission has determined must 
     be retained and the reasons therefor.
       (b) In conducting the study, the Commission shall solicit 
     the views of the public as well as Commission registrants, 
     registered entities, and registered futures associations (all 
     within the meaning of the Act).
       (c) The Commission shall transmit to the Committee on 
     Agriculture of the House of Representatives and the Committee 
     on Agriculture, Nutrition, and Forestry of the Senate a 
     report of the results of its study, which shall include an 
     analysis of comments received.

     SEC. 126. INTERNATIONAL ACTIVITIES OF THE COMMODITY FUTURES 
                   TRADING COMMISSION.

       (a) Findings.--The Congress finds that--
       (1) derivatives markets serving United States industry are 
     increasingly global in scope;
       (2) developments in data processing and communications 
     technologies enable users of risk management services to 
     analyze and compare those services on a worldwide basis;
       (3) financial services regulatory policy must be flexible 
     to account for rapidly changing derivatives industry business 
     practices;
       (4) regulatory impediments to the operation of global 
     business interests can compromise the competitiveness of 
     United States businesses;
       (5) events that disrupt financial markets and economies are 
     often global in scope, require rapid regulatory response, and 
     coordinated regulatory effort across international 
     jurisdictions;
       (6) through its membership in the International 
     Organisation of Securities Commissions, the Commodity Futures 
     Trading Commission has promoted beneficial communication 
     among market regulators and international regulatory 
     cooperation; and
       (7) the Commodity Futures Trading Commission and other 
     United States financial regulators and self-regulatory 
     organizations should continue to foster productive and 
     cooperative working relationships with their counterparts in 
     foreign jurisdictions.
       (b) Sense of the Congress.--It is the sense of the Congress 
     that, consistent with its responsibilities under the 
     Commodity Exchange Act, the Commodity Futures Trading 
     Commission should, as part of its international activities, 
     continue to coordinate with foreign regulatory authorities, 
     to participate in international regulatory organizations and 
     forums, and to provide technical assistance to foreign 
     government authorities, in order to encourage--
       (1) the facilitation of cross-border transactions through 
     the removal or lessening of any unnecessary legal or 
     practical obstacles;
       (2) the development of internationally accepted regulatory 
     standards of best practice;
       (3) the enhancement of international supervisory 
     cooperation and emergency procedures;
       (4) the strengthening of international cooperation for 
     customer and market protection; and
       (5) improvements in the quality and timeliness of 
     international information sharing.

     TITLE II--COORDINATED REGULATION OF SECURITY FUTURES PRODUCTS

                 Subtitle A--Securities Law Amendments

     SEC. 201. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF 
                   1934.

       Section 3(a) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)) is amended--
       (1) in paragraph (10), by inserting ``security future,'' 
     after ``treasury stock,'';
       (2) by striking paragraph (11) and inserting the following:
       ``(11) The term `equity security' means any stock or 
     similar security; or any security future on any such 
     security; or any security convertible, with or without 
     consideration, into such a security, or carrying any warrant 
     or right to subscribe to or purchase such a security; or any 
     such warrant or right; or any other security which the 
     Commission shall deem to be of similar nature and consider 
     necessary or appropriate, by such rules and regulations as it 
     may prescribe in the public interest or for the protection of 
     investors, to treat as an equity security.'';
       (3) in paragraph (13), by adding at the end the following: 
     ``For security futures products, such term includes any 
     contract, agreement, or transaction for future delivery.'';
       (4) in paragraph (14), by adding at the end the following: 
     ``For security futures products, such term includes any 
     contract, agreement, or transaction for future delivery.''; 
     and
       (5) by adding at the end the following:
       ``(55)(A) The term `security future' means a contract of 
     sale for future delivery of a single security or of a narrow-
     based security index, including any interest therein or based 
     on the value thereof, except an exempted security under 
     section 3(a)(12) of the Securities Exchange Act of 1934 as in 
     effect on the date of enactment of the Futures Trading Act of 
     1982 (other than any municipal security as defined in section 
     3(a)(29) as in effect on the date of enactment of the Futures 
     Trading Act of 1982). The term `security future' does not 
     include any agreement, contract, or transaction excluded from 
     the Commodity Exchange Act under section 2(c), 2(d), 2(f) or 
     2(g) of the Commodity Exchange Act (as in effect on the date 
     of enactment of the Commodity Futures Modernization Act of 
     2000) or title IV of the Commodity Futures Modernization Act 
     of 2000.
       ``(B) The term `narrow-based security index' means an 
     index--
       ``(i) that has 9 or fewer component securities;
       ``(ii) in which a component security comprises more than 30 
     percent of the index's weighting;
       ``(iii) in which the 5 highest weighted component 
     securities in the aggregate comprise more than 60 percent of 
     the index's weighting; or
       ``(iv) in which the lowest weighted component securities 
     comprising, in the aggregate, 25 percent of the index's 
     weighting have an aggregate dollar value of average daily 
     trading volume of less than $50,000,000 (or in the case of an 
     index with 15 or more component securities, $30,000,000), 
     except that if there are two or more securities with equal 
     weighting that could be included in the calculation of the 
     lowest weighted component securities comprising, in the 
     aggregate, 25 percent of the index's weighting, such 
     securities shall be ranked from lowest to highest dollar 
     value of average daily trading volume and shall be included 
     in the calculation based on their ranking starting with the 
     lowest ranked security.
       ``(C) Notwithstanding subparagraph (B), an index is not a 
     narrow-based security index if--
       ``(i)(I) it has at least 9 component securities;
       ``(II) no component security comprises more than 30 percent 
     of the index's weighting; and
       ``(III) each component security is--

       ``(aa) registered pursuant to section 12 of the Securities 
     Exchange Act of 1934;
       ``(bb) 1 of 750 securities with the largest market 
     capitalization; and
       ``(cc) 1 of 675 securities with the largest dollar value of 
     average daily trading volume;

       ``(ii) a board of trade was designated as a contract market 
     by the Commodity Futures Trading Commission with respect to a 
     contract of sale for future delivery on the index, before the 
     date of enactment of the Commodity Futures Modernization Act 
     of 2000;
       ``(iii)(I) a contract of sale for future delivery on the 
     index traded on a designated contract

[[Page H12333]]

     market or registered derivatives transaction execution 
     facility for at least 30 days as a contract of sale for 
     future delivery on an index that was not a narrow-based 
     security index; and
       ``(II) it has been a narrow-based security index for no 
     more than 45 business days over 3 consecutive calendar 
     months;
       ``(iv) a contract of sale for future delivery on the index 
     is traded on or subject to the rules of a foreign board of 
     trade and meets such requirements as are jointly established 
     by rule or regulation by the Commission and the Commodity 
     Futures Trading Commission;
       ``(v) no more than 18 months have passed since the date of 
     enactment of the Commodity Futures Modernization Act of 2000 
     and--

       ``(I) it is traded on or subject to the rules of a foreign 
     board of trade;
       ``(II) the offer and sale in the United States of a 
     contract of sale for future delivery on the index was 
     authorized before the date of the enactment of the Commodity 
     Futures Modernization Act of 2000; and
       ``(III) the conditions of such authorization continue to be 
     met; or

       ``(vi) a contract of sale for future delivery on the index 
     is traded on or subject to the rules of a board of trade and 
     meets such requirements as are jointly established by rule, 
     regulation, or order by the Commission and the Commodity 
     Futures Trading Commission.
       ``(D) Within 1 year after the enactment of the Commodity 
     Futures Modernization Act of 2000, the Commission and the 
     Commodity Futures Trading Commission jointly shall adopt 
     rules or regulations that set forth the requirements under 
     clause (iv) of subparagraph (C).
       ``(E) An index that is a narrow-based security index solely 
     because it was a narrow-based security index for more than 45 
     business days over 3 consecutive calendar months pursuant to 
     clause (iii) of subparagraph (C) shall not be a narrow-based 
     security index for the 3 following calendar months.
       ``(F) For purposes of subparagraphs (B) and (C) of this 
     paragraph--
       ``(i) the dollar value of average daily trading volume and 
     the market capitalization shall be calculated as of the 
     preceding 6 full calendar months; and
       ``(ii) the Commission and the Commodity Futures Trading 
     Commission shall, by rule or regulation, jointly specify the 
     method to be used to determine market capitalization and 
     dollar value of average daily trading volume.
       ``(56) The term `security futures product' means a security 
     future or any put, call, straddle, option, or privilege on 
     any security future.
       ``(57)(A) The term `margin', when used with respect to a 
     security futures product, means the amount, type, and form of 
     collateral required to secure any extension or maintenance of 
     credit, or the amount, type, and form of collateral required 
     as a performance bond related to the purchase, sale, or 
     carrying of a security futures product.
       ``(B) The terms `margin level' and `level of margin', when 
     used with respect to a security futures product, mean the 
     amount of margin required to secure any extension or 
     maintenance of credit, or the amount of margin required as a 
     performance bond related to the purchase, sale, or carrying 
     of a security futures product.
       ``(C) The terms `higher margin level' and `higher level of 
     margin', when used with respect to a security futures 
     product, mean a margin level established by a national 
     securities exchange registered pursuant to section 6(g) that 
     is higher than the minimum amount established and in effect 
     pursuant to section 7(c)(2)(B).''.

     SEC. 202. REGULATORY RELIEF FOR MARKETS TRADING SECURITY 
                   FUTURES PRODUCTS.

       (a) Expedited Registration and Exemption.--Section 6 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78f) is amended by 
     adding at the end the following:
       ``(g) Notice Registration of Security Futures Product 
     Exchanges.--
       ``(1) Registration required.--An exchange that lists or 
     trades security futures products may register as a national 
     securities exchange solely for the purposes of trading 
     security futures products if--
       ``(A) the exchange is a board of trade, as that term is 
     defined by the Commodity Exchange Act (7 U.S.C. 1a(2)), 
     that--
       ``(i) has been designated a contract market by the 
     Commodity Futures Trading Commission and such designation is 
     not suspended by order of the Commodity Futures Trading 
     Commission; or
       ``(ii) is registered as a derivative transaction execution 
     facility under section 5a of the Commodity Exchange Act and 
     such registration is not suspended by the Commodity Futures 
     Trading Commission; and
       ``(B) such exchange does not serve as a market place for 
     transactions in securities other than--
       ``(i) security futures products; or
       ``(ii) futures on exempted securities or groups or indexes 
     of securities or options thereon that have been authorized 
     under section 2(a)(1)(C) of the Commodity Exchange Act.
       ``(2) Registration by notice filing.--
       ``(A) Form and content.--An exchange required to register 
     only because such exchange lists or trades security futures 
     products may register for purposes of this section by filing 
     with the Commission a written notice in such form as the 
     Commission, by rule, may prescribe containing the rules of 
     the exchange and such other information and documents 
     concerning such exchange, comparable to the information and 
     documents required for national securities exchanges under 
     section 6(a), as the Commission, by rule, may prescribe as 
     necessary or appropriate in the public interest or for the 
     protection of investors. If such exchange has filed documents 
     with the Commodity Futures Trading Commission, to the extent 
     that such documents contain information satisfying the 
     Commission's informational requirements, copies of such 
     documents may be filed with the Commission in lieu of the 
     required written notice.
       ``(B) Immediate effectiveness.--Such registration shall be 
     effective contemporaneously with the submission of notice, in 
     written or electronic form, to the Commission, except that 
     such registration shall not be effective if such registration 
     would be subject to suspension or revocation.
       ``(C) Termination.--Such registration shall be terminated 
     immediately if any of the conditions for registration set 
     forth in this subsection are no longer satisfied.
       ``(3) Public availability.--The Commission shall promptly 
     publish in the Federal Register an acknowledgment of receipt 
     of all notices the Commission receives under this subsection 
     and shall make all such notices available to the public.
       ``(4) Exemption of exchanges from specified provisions.--
       ``(A) Transaction exemptions.--An exchange that is 
     registered under paragraph (1) of this subsection shall be 
     exempt from, and shall not be required to enforce compliance 
     by its members with, and its members shall not, solely with 
     respect to those transactions effected on such exchange in 
     security futures products, be required to comply with, the 
     following provisions of this title and the rules thereunder:
       ``(i) Subsections (b)(2), (b)(3), (b)(4), (b)(7), (b)(9), 
     (c), (d), and (e) of this section.
       ``(ii) Section 8.
       ``(iii) Section 11.
       ``(iv) Subsections (d), (f), and (k) of section 17.
       ``(v) Subsections (a), (f), and (h) of section 19.
       ``(B) Rule change exemptions.--An exchange that registered 
     under paragraph (1) of this subsection shall also be exempt 
     from submitting proposed rule changes pursuant to section 
     19(b) of this title, except that--
       ``(i) such exchange shall file proposed rule changes 
     related to higher margin levels, fraud or manipulation, 
     recordkeeping, reporting, listing standards, or decimal 
     pricing for security futures products, sales practices for 
     security futures products for persons who effect transactions 
     in security futures products, or rules effectuating such 
     exchange's obligation to enforce the securities laws pursuant 
     to section 19(b)(7);
       ``(ii) such exchange shall file pursuant to sections 
     19(b)(1) and 19(b)(2) proposed rule changes related to 
     margin, except for changes resulting in higher margin levels; 
     and
       ``(iii) such exchange shall file pursuant to section 
     19(b)(1) proposed rule changes that have been abrogated by 
     the Commission pursuant to section 19(b)(7)(C).
       ``(5) Trading in security futures products.--
       ``(A) In general.--Subject to subparagraph (B), it shall be 
     unlawful for any person to execute or trade a security 
     futures product until the later of--
       ``(i) 1 year after the date of enactment of the Commodity 
     Futures Modernization Act of 2000; or
       ``(ii) such date that a futures association registered 
     under section 17 of the Commodity Exchange Act has met the 
     requirements set forth in section 15A(k)(2) of this title.
       ``(B) Principal-to-principal transactions.--Notwithstanding 
     subparagraph (A), a person may execute or trade a security 
     futures product transaction if--
       ``(i) the transaction is entered into--

       ``(I) on a principal-to-principal basis between parties 
     trading for their own accounts or as described in section 
     1a(12)(B)(ii) of the Commodity Exchange Act; and
       ``(II) only between eligible contract participants (as 
     defined in subparagraphs (A), (B)(ii), and (C) of such 
     section 1a(12)) at the time at which the persons enter into 
     the agreement, contract, or transaction; and

       ``(ii) the transaction is entered into on or after the 
     later of--

       ``(I) 8 months after the date of enactment of the Commodity 
     Futures Modernization Act of 2000; or
       ``(II) such date that a futures association registered 
     under section 17 of the Commodity Exchange Act has met the 
     requirements set forth in section 15A(k)(2) of this title.''.

       (b) Commission Review of Proposed Rule Changes.--
       (1) Expedited review.--Section 19(b) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended by adding 
     at the end the following:
       ``(7) Security futures product rule changes.--
       ``(A) Filing required.--A self-regulatory organization that 
     is an exchange registered with the Commission pursuant to 
     section 6(g) of this title or that is a national securities 
     association registered pursuant to section 15A(k) of this 
     title shall file with the Commission, in accordance with such 
     rules as the Commission may prescribe, copies of any proposed 
     rule change or any proposed change in, addition to, or 
     deletion from the rules of such self-regulatory organization 
     (hereinafter in this paragraph collectively referred to as a 
     `proposed rule change') that relates to higher margin levels, 
     fraud or manipulation, recordkeeping, reporting, listing 
     standards, or decimal pricing for security futures products, 
     sales practices for security futures products for persons who 
     effect transactions in security futures products, or rules 
     effectuating such self-regulatory organization's obligation 
     to enforce the securities laws. Such proposed rule change 
     shall be accompanied by a concise general statement of the 
     basis and purpose of such proposed rule change. The 
     Commission shall, upon the filing of any proposed rule 
     change, promptly publish notice thereof together with the 
     terms of substance of the proposed rule change or a 
     description of the subjects and issues involved. The 
     Commission shall give interested persons an opportunity to 
     submit data,

[[Page H12334]]

     views, and arguments concerning such proposed rule change.
       ``(B) Filing with cftc.--A proposed rule change filed with 
     the Commission pursuant to subparagraph (A) shall be filed 
     concurrently with the Commodity Futures Trading Commission. 
     Such proposed rule change may take effect upon filing of a 
     written certification with the Commodity Futures Trading 
     Commission under section 5c(c) of the Commodity Exchange Act, 
     upon a determination by the Commodity Futures Trading 
     Commission that review of the proposed rule change is not 
     necessary, or upon approval of the proposed rule change by 
     the Commodity Futures Trading Commission.
       ``(C) Abrogation of rule changes.--Any proposed rule change 
     of a self-regulatory organization that has taken effect 
     pursuant to subparagraph (B) may be enforced by such self-
     regulatory organization to the extent such rule is not 
     inconsistent with the provisions of this title, the rules and 
     regulations thereunder, and applicable Federal law. At any 
     time within 60 days of the date of the filing of a written 
     certification with the Commodity Futures Trading Commission 
     under section 5c(c) of the Commodity Exchange Act, the 
     date the Commodity Futures Trading Commission determines 
     that review of such proposed rule change is not necessary, 
     or the date the Commodity Futures Trading Commission 
     approves such proposed rule change, the Commission, after 
     consultation with the Commodity Futures Trading 
     Commission, may summarily abrogate the proposed rule 
     change and require that the proposed rule change be 
     refiled in accordance with the provisions of paragraph 
     (1), if it appears to the Commission that such proposed 
     rule change unduly burdens competition or efficiency, 
     conflicts with the securities laws, or is inconsistent 
     with the public interest and the protection of investors. 
     Commission action pursuant to the preceding sentence shall 
     not affect the validity or force of the rule change during 
     the period it was in effect and shall not be reviewable 
     under section 25 of this title nor deemed to be a final 
     agency action for purposes of section 704 of title 5, 
     United States Code.
       ``(D) Review of resubmitted abrogated rules.--
       ``(i) Proceedings.--Within 35 days of the date of 
     publication of notice of the filing of a proposed rule change 
     that is abrogated in accordance with subparagraph (C) and 
     refiled in accordance with paragraph (1), or within such 
     longer period as the Commission may designate up to 90 days 
     after such date if the Commission finds such longer period to 
     be appropriate and publishes its reasons for so finding or as 
     to which the self-regulatory organization consents, the 
     Commission shall--

       ``(I) by order approve such proposed rule change; or
       ``(II) after consultation with the Commodity Futures 
     Trading Commission, institute proceedings to determine 
     whether the proposed rule change should be disapproved. 
     Proceedings under subclause (II) shall include notice of the 
     grounds for disapproval under consideration and opportunity 
     for hearing and be concluded within 180 days after the date 
     of publication of notice of the filing of the proposed rule 
     change. At the conclusion of such proceedings, the 
     Commission, by order, shall approve or disapprove such 
     proposed rule change. The Commission may extend the time for 
     conclusion of such proceedings for up to 60 days if the 
     Commission finds good cause for such extension and publishes 
     its reasons for so finding or for such longer period as to 
     which the self-regulatory organization consents.

       ``(ii) Grounds for approval.--The Commission shall approve 
     a proposed rule change of a self-regulatory organization 
     under this subparagraph if the Commission finds that such 
     proposed rule change does not unduly burden competition or 
     efficiency, does not conflict with the securities laws, and 
     is not inconsistent with the public interest or the 
     protection of investors. The Commission shall disapprove such 
     a proposed rule change of a self-regulatory organization if 
     it does not make such finding. The Commission shall not 
     approve any proposed rule change prior to the 30th day after 
     the date of publication of notice of the filing thereof, 
     unless the Commission finds good cause for so doing and 
     publishes its reasons for so finding.''.
       (2) Decimal pricing provisions.--Section 19(b) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended 
     by inserting after paragraph (7), as added by paragraph (1), 
     the following:
       ``(8) Decimal pricing.--Not later than 9 months after the 
     date on which trading in any security futures product 
     commences under this title, all self-regulatory organizations 
     listing or trading security futures products shall file 
     proposed rule changes necessary to implement decimal pricing 
     of security futures products. The Commission may not require 
     such rules to contain equal minimum increments in such 
     decimal pricing.''.
       (3) Consultation provisions.--Section 19(b) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended 
     by inserting after paragraph (8), as added by paragraph (2), 
     the following:
       ``(9) Consultation with cftc.--
       ``(A) Consultation required.--The Commission shall consult 
     with and consider the views of the Commodity Futures 
     Trading Commission prior to approving or disapproving a 
     proposed rule change filed by a national securities 
     association registered pursuant to section 15A(a) or a 
     national securities exchange subject to the provisions of 
     subsection (a) that primarily concerns conduct related to 
     transactions in security futures products, except where 
     the Commission determines that an emergency exists 
     requiring expeditious or summary action and publishes its 
     reasons therefor.
       ``(B) Responses to cftc comments and findings.--If the 
     Commodity Futures Trading Commission comments in writing to 
     the Commission on a proposed rule that has been published for 
     comment, the Commission shall respond in writing to such 
     written comment before approving or disapproving the proposed 
     rule. If the Commodity Futures Trading Commission determines, 
     and notifies the Commission, that such rule, if implemented 
     or as applied, would--
       ``(i) adversely affect the liquidity or efficiency of the 
     market for security futures products; or
       ``(ii) impose any burden on competition not necessary or 
     appropriate in furtherance of the purposes of this section,
     the Commission shall, prior to approving or disapproving the 
     proposed rule, find that such rule is necessary and 
     appropriate in furtherance of the purposes of this section 
     notwithstanding the Commodity Futures Trading Commission's 
     determination.''.
       (c) Review of Disciplinary Proceedings.--Section 19(d) of 
     the Securities Exchange Act of 1934 (15 U.S.C. 78s(d)) is 
     amended by adding at the end the following:
       ``(3) The provisions of this subsection shall apply to an 
     exchange registered pursuant to section 6(g) of this title or 
     a national securities association registered pursuant to 
     section 15A(k) of this title only to the extent that such 
     exchange or association imposes any final disciplinary 
     sanction for--
       ``(A) a violation of the Federal securities laws or the 
     rules and regulations thereunder; or
       ``(B) a violation of a rule of such exchange or 
     association, as to which a proposed change would be required 
     to be filed under section 19 of this title, except that, to 
     the extent that the exchange or association rule violation 
     relates to any account, agreement, contract, or transaction, 
     this subsection shall apply only to the extent such violation 
     involves a security futures product.''.

     SEC. 203. REGULATORY RELIEF FOR INTERMEDIARIES TRADING 
                   SECURITY FUTURES PRODUCTS.

       (a) Expedited Registration and Exemptions.--
       (1) Amendment.--Section 15(b) of the Securities Exchange 
     Act of 1934 (15 U.S.C. 78o(b)) is amended by adding at the 
     end the following:
       ``(11) Broker/dealer registration with respect to 
     transactions in security futures products.--
       ``(A) Notice registration.--
       ``(i) Contents of notice.--Notwithstanding paragraphs (1) 
     and (2), a broker or dealer required to register only because 
     it effects transactions in security futures products on an 
     exchange registered pursuant to section 6(g) may register for 
     purposes of this section by filing with the Commission a 
     written notice in such form and containing such information 
     concerning such broker or dealer and any persons associated 
     with such broker or dealer as the Commission, by rule, may 
     prescribe as necessary or appropriate in the public interest 
     or for the protection of investors. A broker or dealer may 
     not register under this paragraph unless that broker or 
     dealer is a member of a national securities association 
     registered under section 15A(k).
       ``(ii) Immediate effectiveness.--Such registration shall be 
     effective contemporaneously with the submission of notice, in 
     written or electronic form, to the Commission, except that 
     such registration shall not be effective if the registration 
     would be subject to suspension or revocation under paragraph 
     (4).
       ``(iii) Suspension.--Such registration shall be suspended 
     immediately if a national securities association registered 
     pursuant to section 15A(k) of this title suspends the 
     membership of that broker or dealer.
       ``(iv) Termination.--Such registration shall be terminated 
     immediately if any of the above stated conditions for 
     registration set forth in this paragraph are no longer 
     satisfied.
       ``(B) Exemptions for registered brokers and dealers.--A 
     broker or dealer registered pursuant to the requirements of 
     subparagraph (A) shall be exempt from the following 
     provisions of this title and the rules thereunder with 
     respect to transactions in security futures products:
       ``(i) Section 8.
       ``(ii) Section 11.
       ``(iii) Subsections (c)(3) and (c)(5) of this section.
       ``(iv) Section 15B.
       ``(v) Section 15C.
       ``(vi) Subsections (d), (e), (f), (g), (h), and (i) of 
     section 17.''.
       (2) Conforming amendment.--Section 28(e) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78bb(e)) is amended by adding 
     at the end the following:
       ``(4) The provisions of this subsection shall not apply 
     with regard to securities that are security futures 
     products.''.
       (b) Floor Brokers and Floor Traders.--Section 15(b) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78o(b)) is amended 
     by inserting after paragraph (11), as added by subsection 
     (a), the following:
       ``(12) Exemption for security futures product exchange 
     members.--
       ``(A) Registration exemption.--A natural person shall be 
     exempt from the registration requirements of this section if 
     such person--
       ``(i) is a member of a designated contract market 
     registered with the Commission as an exchange pursuant to 
     section 6(g);
       ``(ii) effects transactions only in securities on the 
     exchange of which such person is a member; and
       ``(iii) does not directly accept or solicit orders from 
     public customers or provide advice to public customers in 
     connection with the trading of security futures products.

[[Page H12335]]

       ``(B) Other exemptions.--A natural person exempt from 
     registration pursuant to subparagraph (A) shall also be 
     exempt from the following provisions of this title and the 
     rules thereunder:
       ``(i) Section 8.
       ``(ii) Section 11.
       ``(iii) Subsections (c)(3), (c)(5), and (e) of this 
     section.
       ``(iv) Section 15B.
       ``(v) Section 15C.
       ``(vi) Subsections (d), (e), (f), (g), (h), and (i) of 
     section 17.''.
       (c) Limited Purpose National Securities Association.--
     Section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 
     78o-3) is amended by adding at the end the following:
       ``(k) Limited Purpose National Securities Association.--
       ``(1) Regulation of members with respect to security 
     futures products.--A futures association registered under 
     section 17 of the Commodity Exchange Act shall be a 
     registered national securities association for the limited 
     purpose of regulating the activities of members who are 
     registered as brokers or dealers in security futures products 
     pursuant to section 15(b)(11).
       ``(2) Requirements for registration.--Such a securities 
     association shall--
       ``(A) be so organized and have the capacity to carry out 
     the purposes of the securities laws applicable to security 
     futures products and to comply, and (subject to any rule or 
     order of the Commission pursuant to section 19(g)(2)) to 
     enforce compliance by its members and persons associated with 
     its members, with the provisions of the securities laws 
     applicable to security futures products, the rules and 
     regulations thereunder, and its rules;
       ``(B) have rules that--
       ``(i) are designed to prevent fraudulent and manipulative 
     acts and practices, to promote just and equitable principles 
     of trade, and, in general, to protect investors and the 
     public interest, including rules governing sales practices 
     and the advertising of security futures products reasonably 
     comparable to those of other national securities associations 
     registered pursuant to subsection (a) that are applicable to 
     security futures products; and
       ``(ii) are not designed to regulate by virtue of any 
     authority conferred by this title matters not related to the 
     purposes of this title or the administration of the 
     association;
       ``(C) have rules that provide that (subject to any rule or 
     order of the Commission pursuant to section 19(g)(2)) its 
     members and persons associated with its members shall be 
     appropriately disciplined for violation of any provision of 
     the securities laws applicable to security futures products, 
     the rules or regulations thereunder, or the rules of the 
     association, by expulsion, suspension, limitation of 
     activities, functions, and operations, fine, censure, being 
     suspended or barred from being associated with a member, or 
     any other fitting sanction; and
       ``(D) have rules that ensure that members and natural 
     persons associated with members meet such standards of 
     training, experience, and competence necessary to effect 
     transactions in security futures products and are tested for 
     their knowledge of securities and security futures products.
       ``(3) Exemption from rule change submission.--Such a 
     securities association shall be exempt from submitting 
     proposed rule changes pursuant to section 19(b) of this 
     title, except that--
       ``(A) the association shall file proposed rule changes 
     related to higher margin levels, fraud or manipulation, 
     recordkeeping, reporting, listing standards, or decimal 
     pricing for security futures products, sales practices for, 
     advertising of, or standards of training, experience, 
     competence, or other qualifications for security futures 
     products for persons who effect transactions in security 
     futures products, or rules effectuating the association's 
     obligation to enforce the securities laws pursuant to section 
     19(b)(7);
       ``(B) the association shall file pursuant to sections 
     19(b)(1) and 19(b)(2) proposed rule changes related to 
     margin, except for changes resulting in higher margin levels; 
     and
       ``(C) the association shall file pursuant to section 
     19(b)(1) proposed rule changes that have been abrogated by 
     the Commission pursuant to section 19(b)(7)(C).
       ``(4) Other exemptions.--Such a securities association 
     shall be exempt from and shall not be required to enforce 
     compliance by its members, and its members shall not, solely 
     with respect to their transactions effected in security 
     futures products, be required to comply, with the following 
     provisions of this title and the rules thereunder:
       ``(A) Section 8.
       ``(B) Subsections (b)(1), (b)(3), (b)(4), (b)(5), (b)(8), 
     (b)(10), (b)(11), (b)(12), (b)(13), (c), (d), (e), (f), (g), 
     (h), and (i) of this section.
       ``(C) Subsections (d), (f), and (k) of section 17.
       ``(D) Subsections (a), (f), and (h) of section 19.''.
       (d) Exemption Under the Securities Investor Protection Act 
     of 1970.--
       (1) Section 16(14) of the Securities Investor Protection 
     Act of 1970 (15 U.S.C. 78lll(14)) is amended by inserting 
     ``or any security future as that term is defined in section 
     3(a)(55)(A) of the Securities Exchange Act of 1934,'' after 
     ``certificate of deposit for a security,''.
       (2) Section 3(a)(2)(A) of the Securities Investor 
     Protection Act of 1970 (15 U.S.C. 78ccc(a)(2)(A)) is 
     amended--
       (A) in clause (i), by striking ``and'' after the semicolon;
       (B) in clause (ii), by striking the period and inserting 
     ``; and''; and
       (C) by adding at the end the following:
       ``(iii) persons who are registered as a broker or dealer 
     pursuant to section 15(b)(11)(A) of the Securities Exchange 
     Act of 1934.''.

     SEC. 204. SPECIAL PROVISIONS FOR INTERAGENCY COOPERATION.

       Section 17(b) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78q(b)) is amended--
       (1) by striking ``(b) All'' and inserting the following:
       ``(b) Records Subject to Examination.--
       ``(1) Procedures for cooperation with other agencies.--
     All'';
       (2) by striking ``prior to conducting any such examination 
     of a registered clearing'' and inserting the following: 
     ``prior to conducting any such examination of a--
       ``(A) registered clearing'';
       (3) by redesignating the last sentence as paragraph (4)(C);
       (4) by striking the period at the end of the first sentence 
     and inserting the following: ``; or
       ``(B) broker or dealer registered pursuant to section 
     15(b)(11), exchange registered pursuant to section 6(g), or 
     national securities association registered pursuant to 
     section 15A(k) gives notice to the Commodity Futures Trading 
     Commission of such proposed examination and consults with the 
     Commodity Futures Trading Commission concerning the 
     feasibility and desirability of coordinating such examination 
     with examinations conducted by the Commodity Futures Trading 
     Commission in order to avoid unnecessary regulatory 
     duplication or undue regulatory burdens for such broker or 
     dealer or exchange.'';
       (5) by adding at the end the following new paragraphs:
       ``(2) Furnishing data and reports to cftc.--The Commission 
     shall notify the Commodity Futures Trading Commission of any 
     examination conducted of any broker or dealer registered 
     pursuant to section 15(b)(11), exchange registered pursuant 
     to section 6(g), or national securities association 
     registered pursuant to section 15A(k) and, upon request, 
     furnish to the Commodity Futures Trading Commission any 
     examination report and data supplied to, or prepared by, the 
     Commission in connection with such examination.
       ``(3) Use of cftc reports.--Prior to conducting an 
     examination under paragraph (1), the Commission shall use the 
     reports of examinations, if the information available therein 
     is sufficient for the purposes of the examination, of--
       ``(A) any broker or dealer registered pursuant to section 
     15(b)(11);
       ``(B) exchange registered pursuant to section 6(g); or
       ``(C) national securities association registered pursuant 
     to section 15A(k);
     that is made by the Commodity Futures Trading Commission, a 
     national securities association registered pursuant to 
     section 15A(k), or an exchange registered pursuant to section 
     6(g).
       ``(4) Rules of construction.--
       ``(A) Notwithstanding any other provision of this 
     subsection, the records of a broker or dealer registered 
     pursuant to section 15(b)(11), an exchange registered 
     pursuant to section 6(g), or a national securities 
     association registered pursuant to section 15A(k) described 
     in this subparagraph shall not be subject to routine periodic 
     examinations by the Commission.
       ``(B) Any recordkeeping rules adopted under this subsection 
     for a broker or dealer registered pursuant to section 
     15(b)(11), an exchange registered pursuant to section 6(g), 
     or a national securities association registered pursuant to 
     section 15A(k) shall be limited to records with respect to 
     persons, accounts, agreements, contracts, and transactions 
     involving security futures products.''; and
       (6) in paragraph (4)(C) (as redesignated by paragraph (3) 
     of this section), by striking ``Nothing in the proviso to the 
     preceding sentence'' and inserting ``Nothing in the proviso 
     in paragraph (1)''.

     SEC. 205. MAINTENANCE OF MARKET INTEGRITY FOR SECURITY 
                   FUTURES PRODUCTS.

       (a) Addition of Security Futures Products to Option-
     Specific Enforcement Provisions.--
       (1) Prohibition against manipulation.--Section 9(b) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78i(b)) is 
     amended--
       (A) in paragraph (1)--
       (i) by inserting ``(A)'' after ``acquires''; and
       (ii) by striking ``; or'' and inserting ``; or (B) any 
     security futures product on the security; or'';
       (B) in paragraph (2)--
       (i) by inserting ``(A)'' after ``interest in any''; and
       (ii) by striking ``; or'' and inserting ``; or (B) such 
     security futures product; or''; and
       (C) in paragraph (3)--
       (i) by inserting ``(A)'' after ``interest in any''; and
       (ii) by inserting ``; or (B) such security futures 
     product'' after ``privilege''.
       (2) Manipulation in options and other derivative 
     products.--Section 9(g) of the Securities Exchange Act of 
     1934 (15 U.S.C. 78i(g)) is amended--
       (A) by inserting ``(1)'' after ``(g)'';
       (B) by inserting ``other than a security futures product'' 
     after ``future delivery''; and
       (C) by adding at the end following:
       ``(2) Notwithstanding the Commodity Exchange Act, the 
     Commission shall have the authority to regulate the trading 
     of any security futures product to the extent provided in the 
     securities laws.''.
       (3) Liability of controlling persons and persons who aid 
     and abet violations.--Section 20(d) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78t(d)) is amended by 
     striking ``or privilege'' and inserting ``, privilege, or 
     security futures product''.
       (4) Liability to contemporaneous traders for insider 
     trading.--Section 21A(a)(1) of the Securities Exchange Act of 
     1934 (15 U.S.C. 78u-1(a)(1)) is amended by striking 
     ``standardized options, the Commission--'' and inserting 
     ``standardized options or security futures products, the 
     Commission--''.
       (5) Enforcement consultation.--Section 21 of the Securities 
     Exchange Act of 1934 (15 U.S.C.

[[Page H12336]]

     78u) is amended by adding at the end the following:
       ``(i) Information to CFTC.--The Commission shall provide 
     the Commodity Futures Trading Commission with notice of the 
     commencement of any proceeding and a copy of any order 
     entered by the Commission against any broker or dealer 
     registered pursuant to section 15(b)(11), any exchange 
     registered pursuant to section 6(g), or any national 
     securities association registered pursuant to section 
     15A(k).''.

     SEC. 206. SPECIAL PROVISIONS FOR THE TRADING OF SECURITY 
                   FUTURES PRODUCTS.

       (a) Listing Standards and Conditions for Trading.--Section 
     6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f) is 
     amended by inserting after subsection (g), as added by 
     section 202, the following:
       ``(h) Trading in Security Futures Products.--
       ``(1) Trading on exchange or association required.--It 
     shall be unlawful for any person to effect transactions in 
     security futures products that are not listed on a national 
     securities exchange or a national securities association 
     registered pursuant to section 15A(a).
       ``(2) Listing standards required.--Except as otherwise 
     provided in paragraph (7), a national securities exchange or 
     a national securities association registered pursuant to 
     section 15A(a) may trade only security futures products that 
     (A) conform with listing standards that such exchange or 
     association files with the Commission under section 19(b) and 
     (B) meet the criteria specified in section 2(a)(1)(D)(i) of 
     the Commodity Exchange Act.
       ``(3) Requirements for listing standards and conditions for 
     trading.--Such listing standards shall--
       ``(A) except as otherwise provided in a rule, regulation, 
     or order issued pursuant to paragraph (4), require that any 
     security underlying the security future, including each 
     component security of a narrow-based security index, be 
     registered pursuant to section 12 of this title;
       ``(B) require that if the security futures product is not 
     cash settled, the market on which the security futures 
     product is traded have arrangements in place with a 
     registered clearing agency for the payment and delivery of 
     the securities underlying the security futures product;
       ``(C) be no less restrictive than comparable listing 
     standards for options traded on a national securities 
     exchange or national securities association registered 
     pursuant to section 15A(a) of this title;
       ``(D) except as otherwise provided in a rule, regulation, 
     or order issued pursuant to paragraph (4), require that the 
     security future be based upon common stock and such other 
     equity securities as the Commission and the Commodity Futures 
     Trading Commission jointly determine appropriate;
       ``(E) require that the security futures product is cleared 
     by a clearing agency that has in place provisions for linked 
     and coordinated clearing with other clearing agencies that 
     clear security futures products, which permits the security 
     futures product to be purchased on one market and offset on 
     another market that trades such product;
       ``(F) require that only a broker or dealer subject to 
     suitability rules comparable to those of a national 
     securities association registered pursuant to section 15A(a) 
     effect transactions in the security futures product;
       ``(G) require that the security futures product be subject 
     to the prohibition against dual trading in section 4j of the 
     Commodity Exchange Act (7 U.S.C. 6j) and the rules and 
     regulations thereunder or the provisions of section 11(a) 
     of this title and the rules and regulations thereunder, 
     except to the extent otherwise permitted under this title 
     and the rules and regulations thereunder;
       ``(H) require that trading in the security futures product 
     not be readily susceptible to manipulation of the price of 
     such security futures product, nor to causing or being used 
     in the manipulation of the price of any underlying security, 
     option on such security, or option on a group or index 
     including such securities;
       ``(I) require that procedures be in place for coordinated 
     surveillance among the market on which the security futures 
     product is traded, any market on which any security 
     underlying the security futures product is traded, and other 
     markets on which any related security is traded to detect 
     manipulation and insider trading;
       ``(J) require that the market on which the security futures 
     product is traded has in place audit trails necessary or 
     appropriate to facilitate the coordinated surveillance 
     required in subparagraph (I);
       ``(K) require that the market on which the security futures 
     product is traded has in place procedures to coordinate 
     trading halts between such market and any market on which any 
     security underlying the security futures product is traded 
     and other markets on which any related security is traded; 
     and
       ``(L) require that the margin requirements for a security 
     futures product comply with the regulations prescribed 
     pursuant to section 7(c)(2)(B), except that nothing in this 
     subparagraph shall be construed to prevent a national 
     securities exchange or national securities association from 
     requiring higher margin levels for a security futures product 
     when it deems such action to be necessary or appropriate.
       ``(4) Authority to modify certain listing standard 
     requirements.--
       ``(A) Authority to modify.--The Commission and the 
     Commodity Futures Trading Commission, by rule, regulation, or 
     order, may jointly modify the listing standard requirements 
     specified in subparagraph (A) or (D) of paragraph (3) to the 
     extent such modification fosters the development of fair and 
     orderly markets in security futures products, is necessary or 
     appropriate in the public interest, and is consistent with 
     the protection of investors.
       ``(B) Authority to grant exemptions.--The Commission and 
     the Commodity Futures Trading Commission, by order, may 
     jointly exempt any person from compliance with the listing 
     standard requirement specified in subparagraph (E) of 
     paragraph (3) to the extent such exemption fosters the 
     development of fair and orderly markets in security futures 
     products, is necessary or appropriate in the public interest, 
     and is consistent with the protection of investors.
       ``(5) Requirements for other persons trading security 
     future products.--It shall be unlawful for any person (other 
     than a national securities exchange or a national securities 
     association registered pursuant to section 15A(a)) to 
     constitute, maintain, or provide a marketplace or facilities 
     for bringing together purchasers and sellers of security 
     future products or to otherwise perform with respect to 
     security future products the functions commonly performed by 
     a stock exchange as that term is generally understood, unless 
     a national securities association registered pursuant to 
     section 15A(a) or a national securities exchange of which 
     such person is a member--
       ``(A) has in place procedures for coordinated surveillance 
     among such person, the market trading the securities 
     underlying the security future products, and other markets 
     trading related securities to detect manipulation and insider 
     trading;
       ``(B) has rules to require audit trails necessary or 
     appropriate to facilitate the coordinated surveillance 
     required in subparagraph (A); and
       ``(C) has rules to require such person to coordinate 
     trading halts with markets trading the securities underlying 
     the security future products and other markets trading 
     related securities.
       ``(6) Deferral of options on security futures trading.--No 
     person shall offer to enter into, enter into, or confirm the 
     execution of any put, call, straddle, option, or privilege on 
     a security future, except that, after 3 years after the date 
     of enactment of this subsection, the Commission and the 
     Commodity Futures Trading Commission may by order jointly 
     determine to permit trading of puts, calls, straddles, 
     options, or privileges on any security future authorized 
     to be traded under the provisions of this Act and the 
     Commodity Exchange Act.
       ``(7) Deferral of linked and coordinated clearing.--
       ``(A) Notwithstanding paragraph (2), until the compliance 
     date, a national securities exchange or national securities 
     association registered pursuant to section 15A(a) may trade a 
     security futures product that does not--
       ``(i) conform with any listing standard promulgated to meet 
     the requirement specified in subparagraph (E) of paragraph 
     (3); or
       ``(ii) meet the criterion specified in section 
     2(a)(1)(D)(i)(IV) of the Commodity Exchange Act.
       ``(B) The Commission and the Commodity Futures Trading 
     Commission shall jointly publish in the Federal Register a 
     notice of the compliance date no later than 165 days before 
     the compliance date.
       ``(C) For purposes of this paragraph, the term `compliance 
     date' means the later of--
       ``(i) 180 days after the end of the first full calendar 
     month period in which the average aggregate comparable share 
     volume for all security futures products based on single 
     equity securities traded on all national securities 
     exchanges, any national securities associations registered 
     pursuant to section 15A(a), and all other persons equals or 
     exceeds 10 percent of the average aggregate comparable share 
     volume of options on single equity securities traded on all 
     national securities exchanges and any national securities 
     associations registered pursuant to section 15A(a); or
       ``(ii) 2 years after the date on which trading in any 
     security futures product commences under this title.''.
       (b) Margin.--Section 7 of the Securities Exchange Act of 
     1934 (15 U.S.C. 78g) is amended--
       (1) in subsection (a), by inserting ``or a security futures 
     product'' after ``exempted security'';
       (2) in subsection (c)(1)(A), by inserting ``except as 
     provided in paragraph (2),'' after ``security),'';
       (3) by redesignating paragraph (2) of subsection (c) as 
     paragraph (3) of such subsection; and
       (4) by inserting after paragraph (1) of such subsection the 
     following:
       ``(2) Margin regulations.--
       ``(A) Compliance with margin rules required.--It shall be 
     unlawful for any broker, dealer, or member of a national 
     securities exchange to, directly or indirectly, extend or 
     maintain credit to or for, or collect margin from any 
     customer on, any security futures product unless such 
     activities comply with the regulations--
       ``(i) which the Board shall prescribe pursuant to 
     subparagraph (B); or
       ``(ii) if the Board determines to delegate the authority to 
     prescribe such regulations, which the Commission and the 
     Commodity Futures Trading Commission shall jointly prescribe 
     pursuant to subparagraph (B).
     If the Board delegates the authority to prescribe such 
     regulations under clause (ii) and the Commission and the 
     Commodity Futures Trading Commission have not jointly 
     prescribed such regulations within a reasonable period of 
     time after the date of such delegation, the Board shall 
     prescribe such regulations pursuant to subparagraph (B).
       ``(B) Criteria for issuance of rules.--The Board shall 
     prescribe, or, if the authority is delegated pursuant to 
     subparagraph (A)(ii), the Commission and the Commodity 
     Futures Trading Commission shall jointly prescribe, such 
     regulations to establish margin requirements, including the 
     establishment of levels of margin

[[Page H12337]]

     (initial and maintenance) for security futures products under 
     such terms, and at such levels, as the Board deems 
     appropriate, or as the Commission and the Commodity Futures 
     Trading Commission jointly deem appropriate--
       ``(i) to preserve the financial integrity of markets 
     trading security futures products;
       ``(ii) to prevent systemic risk;
       ``(iii) to require that--

       ``(I) the margin requirements for a security future product 
     be consistent with the margin requirements for comparable 
     option contracts traded on any exchange registered 
     pursuant to section 6(a) of this title; and

       ``(II) initial and maintenance margin levels for a security 
     future product not be lower than the lowest level of margin, 
     exclusive of premium, required for any comparable option 
     contract traded on any exchange registered pursuant to 
     section 6(a) of this title, other than an option on a 
     security future;

     except that nothing in this subparagraph shall be construed 
     to prevent a national securities exchange or national 
     securities association from requiring higher margin levels 
     for a security future product when it deems such action to be 
     necessary or appropriate; and
       ``(iv) to ensure that the margin requirements (other than 
     levels of margin), including the type, form, and use of 
     collateral for security futures products, are and remain 
     consistent with the requirements established by the Board, 
     pursuant to subparagraphs (A) and (B) of paragraph (1).''.
       (c) Incorporation of Security Futures Products Into the 
     National Market System.--Section 11A of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78k-1) is amended by adding 
     at the end the following:
       ``(e) National Markets System for Security Futures 
     Products.--
       ``(1) Consultation and cooperation required.--With respect 
     to security futures products, the Commission and the 
     Commodity Futures Trading Commission shall consult and 
     cooperate so that, to the maximum extent practicable, their 
     respective regulatory responsibilities may be fulfilled and 
     the rules and regulations applicable to security futures 
     products may foster a national market system for security 
     futures products if the Commission and the Commodity Futures 
     Trading Commission jointly determine that such a system would 
     be consistent with the congressional findings in subsection 
     (a)(1). In accordance with this objective, the Commission 
     shall, at least 15 days prior to the issuance for public 
     comment of any proposed rule or regulation under this section 
     concerning security futures products, consult and request the 
     views of the Commodity Futures Trading Commission.
       ``(2) Application of rules by order of cftc.--No rule 
     adopted pursuant to this section shall be applied to any 
     person with respect to the trading of security futures 
     products on an exchange that is registered under section 6(g) 
     unless the Commodity Futures Trading Commission has issued an 
     order directing that such rule is applicable to such 
     persons.''.
       (d) Incorporation of Security Futures Products Into the 
     National System for Clearance and Settlement.--Section 17A(b) 
     of the Securities Exchange Act of 1934 (15 U.S.C. 78q-1(b)) 
     is amended by adding at the end the following:
       ``(7)(A) A clearing agency that is regulated directly or 
     indirectly by the Commodity Futures Trading Commission 
     through its association with a designated contract market for 
     security futures products that is a national securities 
     exchange registered pursuant to section 6(g), and that would 
     be required to register pursuant to paragraph (1) of this 
     subsection only because it performs the functions of a 
     clearing agency with respect to security futures products 
     effected pursuant to the rules of the designated contract 
     market with which such agency is associated, is exempted from 
     the provisions of this section and the rules and regulations 
     thereunder, except that if such a clearing agency performs 
     the functions of a clearing agency with respect to a security 
     futures product that is not cash settled, it must have 
     arrangements in place with a registered clearing agency to 
     effect the payment and delivery of the securities underlying 
     the security futures product.
       ``(B) Any clearing agency that performs the functions of a 
     clearing agency with respect to security futures products 
     must coordinate with and develop fair and reasonable links 
     with any and all other clearing agencies that perform the 
     functions of a clearing agency with respect to security 
     futures products, in order to permit, as of the compliance 
     date (as defined in section 6(h)(6)(C)), security futures 
     products to be purchased on one market and offset on another 
     market that trades such products.''.
       (e) Market Emergency Powers and Circuit Breakers.--Section 
     12(k) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78l(k)) is amended--
       (1) in paragraph (1), by adding at the end the following: 
     ``If the actions described in subparagraph (A) or (B) involve 
     a security futures product, the Commission shall consult with 
     and consider the views of the Commodity Futures Trading 
     Commission.''; and
       (2) in paragraph (2)(B), by inserting after the first 
     sentence the following: ``If the actions described in 
     subparagraph (A) involve a security futures product, the 
     Commission shall consult with and consider the views of the 
     Commodity Futures Trading Commission.''.
       (f) Transaction Fees.--Section 31 of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78ee) is amended--
       (1) in subsection (a), by inserting ``and assessments'' 
     after ``fees'';
       (2) in subsections (b), (c), and (d)(1), by striking ``and 
     other evidences of indebtedness'' and inserting ``other 
     evidences of indebtedness, and security futures products'';
       (3) in subsection (f), by inserting ``or assessment'' after 
     ``fee'';
       (4) in subsection (g), by inserting ``and assessment'' 
     after ``fee'';
       (5) by redesignating subsections (e), (f), and (g) as 
     subsections (f), (g), and (h), respectively; and
       (6) by inserting after subsection (d) the following new 
     subsection:
       ``(e) Assessments on Security Futures Transactions.--Each 
     national securities exchange and national securities 
     association shall pay to the Commission an assessment equal 
     to $0.02 for each round turn transaction (treated as 
     including one purchase and one sale of a contract of sale for 
     future delivery) on a security future traded on such national 
     securities exchange or by or through any member of such 
     association otherwise than on a national securities exchange, 
     except that for fiscal year 2007 or any succeeding fiscal 
     year such assessment shall be equal to $0.0075 for each such 
     transaction. Assessments collected pursuant to this 
     subsection shall be deposited and collected as general 
     revenue of the Treasury.''.
       (g) Exemption From Short Sale Provisions.--Section 10(a) of 
     the Securities Exchange Act of 1934 (15 U.S.C 78j(a)) is 
     amended--
       (1) by inserting ``(1)'' after ``(a)''; and
       (2) by adding at the end the following:
       ``(2) Paragraph (1) of this subsection shall not apply to 
     security futures products.''.
       (h) Rulemaking Authority To Address Duplicative Regulation 
     of Dual Registrants.--Section 15(c)(3) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78o(c)(3))is amended--
       (1) by inserting ``(A)'' after ``(3)''; and
       (2) by adding at the end the following:
       ``(B) Consistent with this title, the Commission, in 
     consultation with the Commodity Futures Trading Commission, 
     shall issue such rules, regulations, or orders as are 
     necessary to avoid duplicative or conflicting regulations 
     applicable to any broker or dealer registered with the 
     Commission pursuant to section 15(b) (except paragraph (11) 
     thereof), that is also registered with the Commodity Futures 
     Trading Commission pursuant to section 4f(a) of the Commodity 
     Exchange Act (except paragraph (2) thereof), with respect to 
     the application of (i) the provisions of section 8, section 
     15(c)(3), and section 17 of this title and the rules and 
     regulations thereunder related to the treatment of customer 
     funds, securities, or property, maintenance of books and 
     records, financial reporting, or other financial 
     responsibility rules, involving security futures products and 
     (ii) similar provisions of the Commodity Exchange Act and 
     rules and regulations thereunder involving security futures 
     products.''.
       (i) Obligation To Address Duplicative Regulation of Dual 
     Registrants.--Section 6 of the Securities Exchange Act of 
     1934 (15 U.S.C 78f) is amended by inserting after subsection 
     (h), as added by subsection (a) of this section, the 
     following:
       ``(i) Consistent with this title, each national securities 
     exchange registered pursuant to subsection (a) of this 
     section shall issue such rules as are necessary to avoid 
     duplicative or conflicting rules applicable to any broker or 
     dealer registered with the Commission pursuant to section 
     15(b) (except paragraph (11) thereof), that is also 
     registered with the Commodity Futures Trading Commission 
     pursuant to section 4f(a) of the Commodity Exchange Act 
     (except paragraph (2) thereof), with respect to the 
     application of--
       (1) rules of such national securities exchange of the type 
     specified in section 15(c)(3)(B) involving security futures 
     products; and
       (2) similar rules of national securities exchanges 
     registered pursuant to section 6(g) and national securities 
     associations registered pursuant to section 15A(k) involving 
     security futures products.''.
       (j) Obligation To Address Duplicative Regulation of Dual 
     Registrants.--Section 15A of the Securities Exchange Act of 
     1934 (15 U.S.C 78o-3) is amended by inserting after 
     subsection (k), as added by section 203, the following:
       ``(l) Consistent with this title, each national securities 
     association registered pursuant to subsection (a) of this 
     section shall issue such rules as are necessary to avoid 
     duplicative or conflicting rules applicable to any broker or 
     dealer registered with the Commission pursuant to section 
     15(b) (except paragraph (11) thereof), that is also 
     registered with the Commodity Futures Trading 
     Commission pursuant to section 4f(a) of the Commodity 
     Exchange Act (except paragraph (2) thereof), with respect 
     to the application of--
       ``(1) rules of such national securities association of the 
     type specified in section 15(c)(3)(B) involving security 
     futures products; and
       ``(2) similar rules of national securities associations 
     registered pursuant to subsection (k) of this section and 
     national securities exchanges registered pursuant to section 
     6(g) involving security futures products.''.
       (k) Obligation To Put in Place Procedures and Adopt 
     Rules.--
       (1) National securities associations.--Section 15A of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78o-3) is amended 
     by inserting after subsection (l), as added by subsection (j) 
     of this section, the following new subsection:
       ``(m) Procedures and Rules for Security Future Products.--A 
     national securities association registered pursuant to 
     subsection (a) shall, not later than 8 months after the date 
     of enactment of the Commodity Futures Modernization Act of 
     2000, implement the procedures specified in section 
     6(h)(5)(A) of this title and adopt the rules specified in 
     subparagraphs (B) and (C) of section 6(h)(5) of this 
     title.''.
       (2) National securities exchanges.--Section 6 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78f) is amended by 
     inserting after subsection (i), as added by subsection (i) of 
     this section, the following new subsection:

[[Page H12338]]

       ``(j) Procedures and Rules for Security Future Products.--A 
     national securities exchange registered pursuant to 
     subsection (a) shall implement the procedures specified in 
     section 6(h)(5)(A) of this title and adopt the rules 
     specified in subparagraphs (B) and (C) of section 6(h)(5) of 
     this title not later than 8 months after the date of receipt 
     of a request from an alternative trading system for such 
     implementation and rules.''.
       (l) Obligation To Address Security Futures Products Traded 
     on Foreign Exchanges.--Section 6 of the Securities Exchange 
     Act of 1934 (15 U.S.C. 78f) is amended by adding after 
     subsection (j), as added by subsection (k) of this section, 
     the following--
       ``(k)(1) To the extent necessary or appropriate in the 
     public interest, to promote fair competition, and consistent 
     with the promotion of market efficiency, innovation, and 
     expansion of investment opportunities, the protection of 
     investors, and the maintenance of fair and orderly markets, 
     the Commission and the Commodity Futures Trading Commission 
     shall jointly issue such rules, regulations, or orders as are 
     necessary and appropriate to permit the offer and sale of a 
     security futures product traded on or subject to the rules of 
     a foreign board of trade to United States persons.
       ``(2) The rules, regulations, or orders adopted under 
     paragraph (1) shall take into account, as appropriate, the 
     nature and size of the markets that the securities underlying 
     the security futures product reflect.''.

     SEC. 207. CLEARANCE AND SETTLEMENT.

       Section 17A(b) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78q-1(b)) is amended--
       (1) in paragraph (3)(A), by inserting ``and derivative 
     agreements, contracts, and transactions'' after ``prompt and 
     accurate clearance and settlement of securities 
     transactions'';
       (2) in paragraph (3)(F), by inserting ``and, to the extent 
     applicable, derivative agreements, contracts, and 
     transactions'' after ``designed to promote the prompt and 
     accurate clearance and settlement of securities 
     transactions''; and
       (3) by inserting after paragraph (7), as added by section 
     206(d), the following:
       ``(8) A registered clearing agency shall be permitted to 
     provide facilities for the clearance and settlement of any 
     derivative agreements, contracts, or transactions that are 
     excluded from the Commodity Exchange Act, subject to the 
     requirements of this section and to such rules and 
     regulations as the Commission may prescribe as necessary or 
     appropriate in the public interest, for the protection of 
     investors, or otherwise in furtherance of the purposes of 
     this title.''.

     SEC. 208. AMENDMENTS RELATING TO REGISTRATION AND DISCLOSURE 
                   ISSUES UNDER THE SECURITIES ACT OF 1933 AND THE 
                   SECURITIES EXCHANGE ACT OF 1934.

       (a) Amendments to the Securities Act of 1933.--
       (1) Treatment of security futures products.--Section 2(a) 
     of the Securities Act of 1933 (15 U.S.C. 77b(a)) is amended--
       (A) in paragraph (1), by inserting ``security future,'' 
     after ``treasury stock,'';
       (B) in paragraph (3), by adding at the end the following: 
     ``Any offer or sale of a security futures product by or on 
     behalf of the issuer of the securities underlying the 
     security futures product, an affiliate of the issuer, or an 
     underwriter, shall constitute a contract for sale of, sale 
     of, offer for sale, or offer to sell the underlying 
     securities.'';
       (C) by adding at the end the following:
       ``(16) The terms `security future', `narrow-based security 
     index', and `security futures product' have the same meanings 
     as provided in section 3(a)(55) of the Securities Exchange 
     Act of 1934.''.
       (2) Exemption from registration.--Section 3(a) of the 
     Securities Act of 1933 (15 U.S.C. 77c(a)) is amended by 
     adding at the end the following:
       ``(14) Any security futures product that is--
       ``(A) cleared by a clearing agency registered under section 
     17A of the Securities Exchange Act of 1934 or exempt from 
     registration under subsection (b)(7) of such section 17A; and
       ``(B) traded on a national securities exchange or a 
     national securities association registered pursuant to 
     section 15A(a) of the Securities Exchange Act of 1934.''.
       (3) Conforming amendment.--Section 12(a)(2) of the 
     Securities Act of 1933 (15 U.S.C. 77l(a)(2)) is amended by 
     striking ``paragraph (2)'' and inserting ``paragraphs (2) and 
     (14)''.
       (b) Amendments to the Securities Exchange Act of 1934.--
       (1) Exemption from registration.--Section 12(a) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78l(a)) is amended 
     by adding at the end the following: ``The provisions of this 
     subsection shall not apply in respect of a security futures 
     product traded on a national securities exchange.''.
       (2) Exemptions from reporting requirement.--Section 
     12(g)(5) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78l(g)(5)) is amended by adding at the end the following: 
     ``For purposes of this subsection, a security futures product 
     shall not be considered a class of equity security of the 
     issuer of the securities underlying the security futures 
     product.''.
       (3) Transactions by corporate insiders.--Section 16 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78p) is amended by 
     adding at the end the following:
       ``(f) Treatment of Transactions in Security Futures 
     Products.--The provisions of this section shall apply to 
     ownership of and transactions in security futures 
     products.''.

     SEC. 209. AMENDMENTS TO THE INVESTMENT COMPANY ACT OF 1940 
                   AND THE INVESTMENT ADVISERS ACT OF 1940.

       (a) Definitions Under the Investment Company Act of 1940 
     and the Investment Advisers Act of 1940.--
       (1) Section 2(a)(36) of the Investment Company Act of 1940 
     (15 U.S.C. 80a-2(a)(36)) is amended by inserting ``security 
     future,'' after ``treasury stock,''.
       (2) Section 202(a)(18) of the Investment Advisers Act of 
     1940 (15 U.S.C. 80b-2(a)(18)) is amended by inserting 
     ``security future,'' after ``treasury stock,''.
       (3) Section 2(a) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-2(a)) is amended by adding at the end the 
     following:
       ``(52) The terms `security future' and `narrow-based 
     security index' have the same meanings as provided in section 
     3(a)(55) of the Securities Exchange Act of 1934.''.
       (4) Section 202(a) of the Investment Advisers Act of 1940 
     (15 U.S.C. 80b-2(a)) is amended by adding at the end the 
     following:
       ``(27) The terms `security future' and `narrow-based 
     security index' have the same meanings as provided in section 
     3(a)(55) of the Securities Exchange Act of 1934.''.
       (b) Other Provision.--Section 203(b) of the Investment 
     Advisers Act of 1940 (15 U.S.C. 80b-3(b)) is amended--
       (1) by striking ``or'' at the end of paragraph (4);
       (2) by striking the period at the end of paragraph (5) and 
     inserting ``; or''; and
       (3) by adding at the end the following:
       ``(6) any investment adviser that is registered with the 
     Commodity Futures Trading Commission as a commodity trading 
     advisor whose business does not consist primarily of acting 
     as an investment adviser, as defined in section 202(a)(11) of 
     this title, and that does not act as an investment adviser 
     to--
       ``(A) an investment company registered under title I of 
     this Act; or
       ``(B) a company which has elected to be a business 
     development company pursuant to section 54 of title I of this 
     Act and has not withdrawn its election.''.

     SEC. 210. PREEMPTION OF STATE LAWS.

       Section 28(a) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78bb(a)) is amended--
       (1) in the last sentence--
       (A) by inserting ``subject to this title'' after 
     ``privilege, or other security''; and
       (B) by striking ``any such instrument, if such instrument 
     is traded pursuant to rules and regulations of a self-
     regulatory organization that are filed with the Commission 
     pursuant to section 19(b) of this Act'' and inserting ``any 
     such security''; and
       (2) by adding at the end the following new sentence: ``No 
     provision of State law regarding the offer, sale, or 
     distribution of securities shall apply to any transaction in 
     a security futures product, except that this sentence shall 
     not be construed as limiting any State antifraud law of 
     general applicability.''.

          Subtitle B--Amendments to the Commodity Exchange Act

     SEC. 251. JURISDICTION OF SECURITIES AND EXCHANGE COMMISSION; 
                   OTHER PROVISIONS.

       (a) Jurisdiction of Securities and Exchange Commission.--
       (1) Section 2(a)(1)(C) of the Commodity Exchange Act (7 
     U.S.C. 2a) (as redesignated by section 34(a)(2)(C)) is 
     amended--
       (A) in clause (ii)--
       (i) by inserting ``or register a derivatives transaction 
     execution facility that trades or executes,'' after 
     ``contract market in,'';
       (ii) by inserting after ``contracts) for future delivery'' 
     the following: ``, and no derivatives transaction execution 
     facility shall trade or execute such contracts of sale (or 
     options on such contracts) for future delivery,'';
       (iii) by striking ``making such application demonstrates 
     and the Commission expressly finds that the specific contract 
     (or option on such contract) with respect to which the 
     application has been made meets'' and inserting ``or the 
     derivatives transaction execution facility, and the 
     applicable contract, meet'';
       (iv) by striking subclause (III) of clause (ii) and 
     inserting the following:
       ``(III) Such group or index of securities shall not 
     constitute a narrow-based security index.'';
       (B) by striking clause (iii);
       (C) by striking clause (iv) and inserting the following:
       ``(iii) If, in its discretion, the Commission determines 
     that a stock index futures contract, notwithstanding its 
     conformance with the requirements in clause (ii) of this 
     subparagraph, can reasonably be used as a surrogate for 
     trading a security (including a security futures product), it 
     may, by order, require such contract and any option thereon 
     be traded and regulated as security futures products as 
     defined in section 3(a)(56) of the Securities Exchange Act of 
     1934 and section 1a of this Act subject to all rules and 
     regulations applicable to security futures products under 
     this Act and the securities laws as defined in section 
     3(a)(47) of the Securities Exchange Act of 1934.''; and
       (D) by redesignating clause (v) as clause (iv).
       (2) Section 2(a)(1) of the Commodity Exchange Act (7 U.S.C. 
     2, 2a, 4) is amended by adding at the end the following:
       ``(D)(i) Notwithstanding any other provision of this Act, 
     the Securities and Exchange Commission shall have 
     jurisdiction and authority over security futures as defined 
     in section 3(a)(55) of the Securities Exchange Act of 1934, 
     section 2(a)(16) of the Securities Act of 1933, section 
     2(a)(52) of the Investment Company Act of 1940, and section 
     202(a)(27) of the Investment Advisers Act of 1940, options on 
     security futures, and persons effecting transactions in 
     security futures and options thereon, and this Act shall 
     apply to and the Commission shall have jurisdiction with 
     respect to accounts, agreements (including any transaction 
     which is of the character of, or is commonly known to the 
     trade as, an `option', `privilege', `indemnity', `bid', 
     `offer', `put', `call', `advance guaranty', or `decline 
     guaranty'), contracts, and transactions involving, and may 
     designate a board of trade as

[[Page H12339]]

     a contract market in, or register a derivatives transaction 
     execution facility that trades or executes, a security 
     futures product as defined in section 1a of this Act: 
     Provided, however, That, except as provided in clause (vi) of 
     this subparagraph, no board of trade shall be designated as a 
     contract market with respect to, or registered as a 
     derivatives transaction execution facility for, any such 
     contracts of sale for future delivery unless the board of 
     trade and the applicable contract meet the following 
     criteria:
       ``(I) Except as otherwise provided in a rule, regulation, 
     or order issued pursuant to clause (v) of this subparagraph, 
     any security underlying the security future, including each 
     component security of a narrow-based security index, is 
     registered pursuant to section 12 of the Securities Exchange 
     Act of 1934.
       ``(II) If the security futures product is not cash settled, 
     the board of trade on which the security futures product is 
     traded has arrangements in place with a clearing agency 
     registered pursuant to section 17A of the Securities Exchange 
     Act of 1934 for the payment and delivery of the securities 
     underlying the security futures product.
       ``(III) Except as otherwise provided in a rule, regulation, 
     or order issued pursuant to clause (v) of this subparagraph, 
     the security future is based upon common stock and such other 
     equity securities as the Commission and the Securities and 
     Exchange Commission jointly determine appropriate.
       ``(IV) The security futures product is cleared by a 
     clearing agency that has in place provisions for linked and 
     coordinated clearing with other clearing agencies that clear 
     security futures products, which permits the security futures 
     product to be purchased on a designated contract market, 
     registered derivatives transaction execution facility, 
     national securities exchange registered under section 6(a) of 
     the Securities Exchange Act of 1934, or national securities 
     association registered pursuant to section 15A(a) of the 
     Securities Exchange Act of 1934 and offset on another 
     designated contract market, registered derivatives 
     transaction execution facility, national securities exchange 
     registered under section 6(a) of the Securities Exchange Act 
     of 1934, or national securities association registered 
     pursuant to section 15A(a) of the Securities Exchange Act of 
     1934.
       ``(V) Only futures commission merchants, introducing 
     brokers, commodity trading advisors, commodity pool operators 
     or associated persons subject to suitability rules comparable 
     to those of a national securities association registered 
     pursuant to section 15A(a) of the Securities Exchange Act of 
     1934 solicit, accept any order for, or otherwise deal in any 
     transaction in or in connection with the security futures 
     product.
       ``(VI) The security futures product is subject to a 
     prohibition against dual trading in section 4j of this Act 
     and the rules and regulations thereunder or the provisions of 
     section 11(a) of the Securities Exchange Act of 1934 and the 
     rules and regulations thereunder, except to the extent 
     otherwise permitted under the Securities Exchange Act of 1934 
     and the rules and regulations thereunder.
       ``(VII) Trading in the security futures product is not 
     readily susceptible to manipulation of the price of such 
     security futures product, nor to causing or being used in the 
     manipulation of the price of any underlying security, option 
     on such security, or option on a group or index including 
     such securities;
       ``(VIII) The board of trade on which the security futures 
     product is traded has procedures in place for coordinated 
     surveillance among such board of trade, any market on which 
     any security underlying the security futures product is 
     traded, and other markets on which any related security is 
     traded to detect manipulation and insider trading, except 
     that, if the board of trade is an alternative trading system, 
     a national securities association registered pursuant to 
     section 15A(a) of the Securities Exchange Act of 1934 or 
     national securities exchange registered pursuant to section 
     6(a) of the Securities Exchange Act of 1934 of which such 
     alternative trading system is a member has in place such 
     procedures.
       ``(IX) The board of trade on which the security futures 
     product is traded has in place audit trails necessary or 
     appropriate to facilitate the coordinated surveillance 
     required in subclause (VIII), except that, if the board of 
     trade is an alternative trading system, a national securities 
     association registered pursuant to section 15A(a) of the 
     Securities Exchange Act of 1934 or national securities 
     exchange registered pursuant to section 6(a) of the 
     Securities Exchange Act of 1934 of which such alternative 
     trading system is a member has rules to require such audit 
     trails.
       ``(X) The board of trade on which the security futures 
     product is traded has in place procedures to coordinate 
     trading halts between such board of trade and markets on 
     which any security underlying the security futures product is 
     traded and other markets on which any related security is 
     traded, except that, if the board of trade is an alternative 
     trading system, a national securities association 
     registered pursuant to section 15A(a) of the Securities 
     Exchange Act of 1934 or national securities exchange 
     registered pursuant to section 6(a) of the Securities 
     Exchange Act of 1934 of which such alternative trading 
     system is a member has rules to require such coordinated 
     trading halts.
       ``(XI) The margin requirements for a security futures 
     product comply with the regulations prescribed pursuant to 
     section 7(c)(2)(B) of the Securities Exchange Act of 1934, 
     except that nothing in this subclause shall be construed to 
     prevent a board of trade from requiring higher margin levels 
     for a security futures product when it deems such action to 
     be necessary or appropriate.
       ``(ii) It shall be unlawful for any person to offer, to 
     enter into, to execute, to confirm the execution of, or to 
     conduct any office or business anywhere in the United States, 
     its territories or possessions, for the purpose of 
     soliciting, or accepting any order for, or otherwise dealing 
     in, any transaction in, or in connection with, a security 
     futures product unless--
       ``(I) the transaction is conducted on or subject to the 
     rules of a board of trade that--
       ``(aa) has been designated by the Commission as a contract 
     market in such security futures product; or
       ``(bb) is a registered derivatives transaction execution 
     facility for the security futures product that has provided a 
     certification with respect to the security futures product 
     pursuant to clause (vii);
       ``(II) the contract is executed or consummated by, through, 
     or with a member of the contract market or registered 
     derivatives transaction execution facility; and
       ``(III) the security futures product is evidenced by a 
     record in writing which shows the date, the parties to such 
     security futures product and their addresses, the property 
     covered, and its price, and each contract market member or 
     registered derivatives transaction execution facility member 
     shall keep the record for a period of 3 years from the date 
     of the transaction, or for a longer period if the Commission 
     so directs, which record shall at all times be open to the 
     inspection of any duly authorized representative of the 
     Commission.
       ``(iii)(I) Except as provided in subclause (II) but 
     notwithstanding any other provision of this Act, no person 
     shall offer to enter into, enter into, or confirm the 
     execution of any option on a security future.
       ``(II) After 3 years after the date of the enactment of the 
     Commodity Futures Modernization Act of 2000, the Commission 
     and the Securities and Exchange Commission may by order 
     jointly determine to permit trading of options on any 
     security future authorized to be traded under the provisions 
     of this Act and the Securities Exchange Act of 1934.
       ``(iv)(I) All relevant records of a futures commission 
     merchant or introducing broker registered pursuant to section 
     4f(a)(2), floor broker or floor trader exempt from 
     registration pursuant to section 4f(a)(3), associated person 
     exempt from registration pursuant to section 4k(6), or board 
     of trade designated as a contract market in a security 
     futures product pursuant to section 5f shall be subject to 
     such reasonable periodic or special examinations by 
     representatives of the Commission as the Commission deems 
     necessary or appropriate in the public interest, for the 
     protection of investors, or otherwise in furtherance of the 
     purposes of this Act, and the Commission, before conducting 
     any such examination, shall give notice to the Securities and 
     Exchange Commission of the proposed examination and consult 
     with the Securities and Exchange Commission concerning the 
     feasibility and desirability of coordinating the examination 
     with examinations conducted by the Securities and Exchange 
     Commission in order to avoid unnecessary regulatory 
     duplication or undue regulatory burdens for the registrant or 
     board of trade.
       ``(II) The Commission shall notify the Securities and 
     Exchange Commission of any examination conducted of any 
     futures commission merchant or introducing broker registered 
     pursuant to section 4f(a)(2), floor broker or floor trader 
     exempt from registration pursuant to section 4f(a)(3), 
     associated person exempt from registration pursuant to 
     section 4k(6), or board of trade designated as a contract 
     market in a security futures product pursuant to section 5f, 
     and, upon request, furnish to the Securities and Exchange 
     Commission any examination report and data supplied to or 
     prepared by the Commission in connection with the 
     examination.
       ``(III) Before conducting an examination under subclause 
     (I), the Commission shall use the reports of examinations, 
     unless the information sought is unavailable in the reports, 
     of any futures commission merchant or introducing broker 
     registered pursuant to section 4f(a)(2), floor broker or 
     floor trader exempt from registration pursuant to section 
     4f(a)(3), associated person exempt from registration pursuant 
     to section 4k(6), or board of trade designated as a contract 
     market in a security futures product pursuant to section 5f 
     that is made by the Securities and Exchange Commission, a 
     national securities association registered pursuant to 
     section 15A(a) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78o-3(a)), or a national securities exchange 
     registered pursuant to section 6(a) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78f(a)).
       ``(IV) Any records required under this subsection for a 
     futures commission merchant or introducing broker registered 
     pursuant to section 4f(a)(2), floor broker or floor trader 
     exempt from registration pursuant to section 4f(a)(3), 
     associated person exempt from registration pursuant to 
     section 4k(6), or board of trade designated as a contract 
     market in a security futures product pursuant to section 5f, 
     shall be limited to records with respect to accounts, 
     agreements, contracts, and transactions involving security 
     futures products.
       ``(v)(I) The Commission and the Securities and Exchange 
     Commission, by rule, regulation, or order, may jointly modify 
     the criteria specified in subclause (I) or (III) of clause 
     (i), including the trading of security futures based on 
     securities other than equity securities, to the extent such 
     modification fosters the development of fair and orderly 
     markets in security futures products, is necessary or 
     appropriate in the public interest, and is consistent with 
     the protection of investors.
       ``(II) The Commission and the Securities and Exchange 
     Commission, by order, may jointly exempt any person from 
     compliance with the criterion specified in clause (i)(IV) to 
     the extent such exemption fosters the development of fair and 
     orderly markets in security futures products, is necessary or 
     appropriate in the public

[[Page H12340]]

     interest, and is consistent with the protection of investors.
       ``(vi)(I) Notwithstanding clauses (i) and (vii), until the 
     compliance date, a board of trade shall not be required to 
     meet the criterion specified in clause (i)(IV).
       ``(II) The Commission and the Securities and Exchange 
     Commission shall jointly publish in the Federal Register a 
     notice of the compliance date no later than 165 days before 
     the compliance date.
       ``(III) For purposes of this clause, the term `compliance 
     date' means the later of--
       ``(aa) 180 days after the end of the first full calendar 
     month period in which the average aggregate comparable share 
     volume for all security futures products based on single 
     equity securities traded on all designated contract markets 
     and registered derivatives transaction execution facilities 
     equals or exceeds 10 percent of the average aggregate 
     comparable share volume of options on single equity 
     securities traded on all national securities exchanges 
     registered pursuant to section 6(a) of the Securities 
     Exchange Act of 1934 and any national securities associations 
     registered pursuant to section 15A(a) of such Act; or
       ``(bb) 2 years after the date on which trading in any 
     security futures product commences under this Act.
       ``(vii) It shall be unlawful for a board of trade to trade 
     or execute a security futures product unless the board of 
     trade has provided the Commission with a certification that 
     the specific security futures product and the board of trade, 
     as applicable, meet the criteria specified in subclauses (I) 
     through (XI) of clause (i), except as otherwise provided in 
     clause (vi).''.
       (b) Margin on Security Futures.--Section 2(a)(1)(C)(vi) of 
     the Commodity Exchange Act (7 U.S.C. 2a(vi)) (as redesignated 
     by section 34) is amended--
       (1) by redesignating subclause (V) as subclause (VI); and
       (2) by striking ``(vi)(I)'' and all that follows through 
     subclause (IV) and inserting the following:
       ``(v)(I) Notwithstanding any other provision of this Act, 
     any contract market in a stock index futures contract (or 
     option thereon) other than a security futures product, or any 
     derivatives transaction execution facility on which such 
     contract or option is traded, shall file with the Board of 
     Governors of the Federal Reserve System any rule establishing 
     or changing the levels of margin (initial and maintenance) 
     for such stock index futures contract (or option thereon) 
     other than security futures products.
       ``(II) The Board may at any time request any contract 
     market or derivatives transaction execution facility to set 
     the margin for any stock index futures contract (or option 
     thereon), other than for any security futures product, at 
     such levels as the Board in its judgment determines are 
     appropriate to preserve the financial integrity of the 
     contract market or derivatives transaction execution 
     facility, or its clearing system, or to prevent systemic 
     risk. If the contract market or derivatives transaction 
     execution facility fails to do so within the time specified 
     by the Board in its request, the Board may direct the 
     contract market or derivatives transaction execution facility 
     to alter or supplement the rules of the contract market or 
     derivatives transaction execution facility as specified in 
     the request.
       ``(III) Subject to such conditions as the Board may 
     determine, the Board may delegate any or all of its 
     authority, relating to margin for any stock index futures 
     contract (or option thereon), other than security futures 
     products, under this clause to the Commission.
       ``(IV) It shall be unlawful for any futures commission 
     merchant to, directly or indirectly, extend or maintain 
     credit to or for, or collect margin from any customer on any 
     security futures product unless such activities comply with 
     the regulations prescribed pursuant to section 7(c)(2)(B) of 
     the Securities Exchange Act of 1934.
       ``(V) Nothing in this clause shall supersede or limit the 
     authority granted to the Commission in section 8a(9) to 
     direct a contract market or registered derivatives 
     transaction execution facility, on finding an emergency to 
     exist, to raise temporary margin levels on any futures 
     contract, or option on the contract covered by this clause, 
     or on any security futures product.''.
       (c) Dual Trading.--Section 4j of the Commodity Exchange Act 
     (7 U.S.C. 6j) is amended to read as follows:

     ``SEC. 4J. RESTRICTIONS ON DUAL TRADING IN SECURITY FUTURES 
                   PRODUCTS ON DESIGNATED CONTRACT MARKETS AND 
                   REGISTERED DERIVATIVES TRANSACTION EXECUTION 
                   FACILITIES.

       ``(a) The Commission shall issue regulations to prohibit 
     the privilege of dual trading in security futures products on 
     each contract market and registered derivatives transaction 
     execution facility. The regulations issued by the Commission 
     under this section--
       ``(1) shall provide that the prohibition of dual trading 
     thereunder shall take effect upon issuance of the 
     regulations; and
       ``(2) shall provide exceptions, as the Commission 
     determines appropriate, to ensure fairness and orderly 
     trading in security futures product markets, including--
       ``(A) exceptions for spread transactions and the correction 
     of trading errors;
       ``(B) allowance for a customer to designate in writing not 
     less than once annually a named floor broker to execute 
     orders for such customer, notwithstanding the regulations to 
     prohibit the privilege of dual trading required under this 
     section; and
       ``(C) other measures reasonably designed to accommodate 
     unique or special characteristics of individual boards of 
     trade or contract markets, to address emergency or unusual 
     market conditions, or otherwise to further the public 
     interest consistent with the promotion of market efficiency, 
     innovation, and expansion of investment opportunities, the 
     protection of investors, and with the purposes of this 
     section.
       ``(b) As used in this section, the term `dual trading' 
     means the execution of customer orders by a floor broker 
     during the same trading session in which the floor broker 
     executes any trade in the same contract market or registered 
     derivatives transaction execution facility for--
       ``(1) the account of such floor broker;
       ``(2) an account for which such floor broker has trading 
     discretion; or
       ``(3) an account controlled by a person with whom such 
     floor broker has a relationship through membership in a 
     broker association.
       ``(c) As used in this section, the term `broker 
     association' shall include two or more contract market 
     members or registered derivatives transaction execution 
     facility members with floor trading privileges of whom at 
     least one is acting as a floor broker, who--
       ``(1) engage in floor brokerage activity on behalf of the 
     same employer,
       ``(2) have an employer and employee relationship which 
     relates to floor brokerage activity,
       ``(3) share profits and losses associated with their 
     brokerage or trading activity, or
       ``(4) regularly share a deck of orders.''.
       (d) Exemption From Registration for Investment Advisers.--
     Section 4m of the Commodity Exchange Act (7 U.S.C. 6m) is 
     amended by adding at the end the following:
       ``(3) Subsection (1) of this section shall not apply to any 
     commodity trading advisor that is registered with the 
     Securities and Exchange Commission as an investment adviser 
     whose business does not consist primarily of acting as a 
     commodity trading advisor, as defined in section 1a(6), and 
     that does not act as a commodity trading advisor to any 
     investment trust, syndicate, or similar form of enterprise 
     that is engaged primarily in trading in any commodity for 
     future delivery on or subject to the rules of any contract 
     market or registered derivatives transaction execution 
     facility.''.
       (e) Exemption From Investigations of Markets in Underlying 
     Securities.--Section 16 of the Commodity Exchange Act (7 
     U.S.C. 20) is amended by adding at the end the following:
       ``(e) This section shall not apply to investigations 
     involving any security underlying a security futures 
     product.''.
       (f) Rulemaking Authority To Address Duplicative Regulation 
     of Dual Registrants.--Section 4d of the Commodity Exchange 
     Act (7 U.S.C. 6d) is amended--
       (1) by inserting ``(a)'' before the first undesignated 
     paragraph;
       (2) by inserting ``(b)'' before the second undesignated 
     paragraph; and
       (3) by adding at the end the following:
       ``(c) Consistent with this Act, the Commission, in 
     consultation with the Securities and Exchange Commission, 
     shall issue such rules, regulations, or orders as are 
     necessary to avoid duplicative or conflicting regulations 
     applicable to any futures commission merchant registered with 
     the Commission pursuant to section 4f(a) (except paragraph 
     (2) thereof), that is also registered with the Securities and 
     Exchange Commission pursuant to section 15(b) of the 
     Securities Exchange Act (except paragraph (11) thereof), 
     involving the application of--
       ``(1) section 8, section 15(c)(3), and section 17 of the 
     Securities Exchange Act of 1934 and the rules and regulations 
     thereunder related to the treatment of customer funds, 
     securities, or property, maintenance of books and records, 
     financial reporting or other financial responsibility rules 
     (as defined in section 3(a)(40) of the Securities Exchange 
     Act of 1934), involving security futures products; and
       ``(2) similar provisions of this Act and the rules and 
     regulations thereunder involving security futures 
     products.''.
       (g) Obligation To Address Duplicative Regulation of Dual 
     Registrants.--Section 17 of the Commodity Exchange Act (7 
     U.S.C. 21) is amended by adding at the end the following:
       ``(r) Consistent with this Act, each futures association 
     registered under this section shall issue such rules as are 
     necessary to avoid duplicative or conflicting rules 
     applicable to any futures commission merchant registered with 
     the Commission pursuant to section 4f(a) of this Act (except 
     paragraph (2) thereof), that is also registered with the 
     Securities and Exchange Commission pursuant to section 15(b) 
     of the Securities and Exchange Act of 1934 (except paragraph 
     (11) thereof), with respect to the application of--
       ``(1) rules of such futures association of the type 
     specified in section 4d(3) of this Act involving security 
     futures products; and
       ``(2) similar rules of national securities associations 
     registered pursuant to section 15A(a) of the Securities and 
     Exchange Act of 1934 involving security futures products.''.
       (h) Obligation to Address Duplicative Regulation of Dual 
     Registrants.--Section 5c of the Commodity Exchange Act (as 
     added by section 114) is amended by adding at the end the 
     following:
       ``(f) Consistent with this Act, each designated contract 
     market and registered derivatives transaction execution 
     facility shall issue such rules as are necessary to avoid 
     duplicative or conflicting rules applicable to any futures 
     commission merchant registered with the Commission pursuant 
     to section 4f(a) of this Act (except paragraph (2) thereof), 
     that is also registered with the Securities and Exchange 
     Commission pursuant to section 15(b) of the Securities 
     Exchange Act of 1934 (except paragraph (11) thereof) with 
     respect to the application of--
       ``(1) rules of such designated contract market or 
     registered derivatives transaction execution facility of the 
     type specified in section 4d(3) of this Act involving 
     security futures products; and
       ``(2) similar rules of national securities associations 
     registered pursuant to section 15A(a) of the Securities 
     Exchange Act of 1934 and national securities exchanges 
     registered pursuant to section 6(g) of such Act involving 
     security futures products.''.

[[Page H12341]]

       (i) Obligation To Address Security Futures Products Traded 
     on Foreign Exchanges.--Section 2(a)(1) of the Commodity 
     Exchange Act (7 U.S.C. 2, 2a, and 4)) is amended by adding at 
     the end the following:
       ``(E)(i) To the extent necessary or appropriate in the 
     public interest, to promote fair competition, and consistent 
     with promotion of market efficiency, innovation, and 
     expansion of investment opportunities, the protection of 
     investors, and the maintenance of fair and orderly markets, 
     the Commission and the Securities and Exchange Commission 
     shall jointly issue such rules, regulations, or orders as are 
     necessary and appropriate to permit the offer and sale of a 
     security futures product traded on or subject to the rules of 
     a foreign board of trade to United States persons.
       ``(ii) The rules, regulations, or orders adopted under 
     clause (i) shall take into account, as appropriate, the 
     nature and size of the markets that the securities underlying 
     the security futures product reflects.''.
       (j) Security Futures Products Traded on Foreign Boards of 
     Trade.--Section 2(a)(1) of the Commodity Exchange Act (7 
     U.S.C. 2, 2a, and 4) is amended by adding at the end the 
     following:
       ``(F)(i) Nothing in this Act is intended to prohibit a 
     futures commission merchant from carrying security futures 
     products traded on or subject to the rules of a foreign board 
     of trade in the accounts of persons located outside of the 
     United States.
       ``(ii) Nothing in this Act is intended to prohibit any 
     eligible contract participant located in the United States 
     from purchasing or carrying securities futures products 
     traded on or subject to the rules of a foreign board of 
     trade, exchange, or market to the same extent such person may 
     be authorized to purchase or carry other securities traded on 
     a foreign board of trade, exchange, or market so long as any 
     underlying security for such security futures products is 
     traded principally on, by, or through any exchange or market 
     located outside the United States.''.

     SEC. 252. APPLICATION OF THE COMMODITY EXCHANGE ACT TO 
                   NATIONAL SECURITIES EXCHANGES AND NATIONAL 
                   SECURITIES ASSOCIATIONS THAT TRADE SECURITY 
                   FUTURES.

       (a) Notice Designation of National Securities Exchanges and 
     National Securities Associations.--The Commodity Exchange Act 
     is amended by inserting after section 5e (7 U.S.C. 7b), as 
     redesignated by section 21(1), the following:

     ``SEC. 5F. DESIGNATION OF SECURITIES EXCHANGES AND 
                   ASSOCIATIONS AS CONTRACT MARKETS.

       ``(a) Any board of trade that is registered with the 
     Securities and Exchange Commission as a national securities 
     exchange, is a national securities association registered 
     pursuant to section 15A(a) of the Securities Exchange Act of 
     1934, or is an alternative trading system shall be a 
     designated contract market in security futures products if--
       ``(1) such national securities exchange, national 
     securities association, or alternative trading system lists 
     or trades no other contracts of sale for future delivery, 
     except for security futures products;
       ``(2) such national securities exchange, national 
     securities association, or alternative trading system files 
     written notice with the Commission in such form as the 
     Commission, by rule, may prescribe containing such 
     information as the Commission, by rule, may prescribe as 
     necessary or appropriate in the public interest or for the 
     protection of customers; and
       ``(3) the registration of such national securities 
     exchange, national securities association, or alternative 
     trading system is not suspended pursuant to an order by the 
     Securities and Exchange Commission.
     Such designation shall be effective contemporaneously with 
     the submission of notice, in written or electronic form, to 
     the Commission.
       ``(b)(1) A national securities exchange, national 
     securities association, or alternative trading system that is 
     designated as a contract market pursuant to section 5f shall 
     be exempt from the following provisions of this Act and the 
     rules thereunder:
       ``(A) Subsections (c), (e), and (g) of section 4c.
       ``(B) Section 4j.
       ``(C) Section 5.
       ``(D) Section 5c.
       ``(E) Section 6a.
       ``(F) Section 8(d).
       ``(G) Section 9(f).
       ``(H) Section 16.
       ``(2) An alternative trading system that is a designated 
     contract market under this section shall be required to be a 
     member of a futures association registered under section 17 
     and shall be exempt from any provision of this Act that would 
     require such alternative trading system to--
       ``(A) set rules governing the conduct of subscribers other 
     than the conduct of such subscribers' trading on such 
     alternative trading system; or
       ``(B) discipline subscribers other than by exclusion from 
     trading.
       ``(3) To the extent that an alternative trading system is 
     exempt from any provision of this Act pursuant to paragraph 
     (2) of this subsection, the futures association registered 
     under section 17 of which the alternative trading system is a 
     member shall set rules governing the conduct of subscribers 
     to the alternative trading system and discipline the 
     subscribers.
       ``(4)(A) Except as provided in subparagraph (B), but 
     notwithstanding any other provision of this Act, the 
     Commission, by rule, regulation, or order, may conditionally 
     or unconditionally exempt any designated contract market in 
     security futures subject to the designation requirement of 
     this section from any provision of this Act or of any rule or 
     regulation thereunder, to the extent such exemption is 
     necessary or appropriate in the public interest and is 
     consistent with the protection of investors.
       ``(B) The Commission shall, by rule or regulation, 
     determine the procedures under which an exemptive order under 
     this section is granted and may, in its sole discretion, 
     decline to entertain any application for an order of 
     exemption under this section.
       ``(C) An alternative trading system shall not be deemed to 
     be an exchange for any purpose as a result of the designation 
     of such alternative trading system as a contract market 
     under this section.''.
       (b) Notice Registration of Certain Securities Broker-
     Dealers; Exemption From Registration for Certain Securities 
     Broker-Dealers.--Section 4f(a) of the Commodity Exchange Act 
     (7 U.S.C. 6f(a)) is amended--
       (1) by inserting ``(1)'' after ``(a)''; and
       (2) by adding at the end the following:
       ``(2) Notwithstanding paragraph (1), and except as provided 
     in paragraph (3), any broker or dealer that is registered 
     with the Securities and Exchange Commission shall be 
     registered as a futures commission merchant or introducing 
     broker, as applicable, if--
       ``(A) the broker or dealer limits its solicitation of 
     orders, acceptance of orders, or execution of orders, or 
     placing of orders on behalf of others involving any contracts 
     of sale of any commodity for future delivery, on or subject 
     to the rules of any contract market or registered derivatives 
     transaction execution facility to security futures products;
       ``(B) the broker or dealer files written notice with the 
     Commission in such form as the Commission, by rule, may 
     prescribe containing such information as the Commission, by 
     rule, may prescribe as necessary or appropriate in the public 
     interest or for the protection of investors;
       ``(C) the registration of the broker or dealer is not 
     suspended pursuant to an order of the Securities and Exchange 
     Commission; and
       ``(D) the broker or dealer is a member of a national 
     securities association registered pursuant to section 15A(a) 
     of the Securities Exchange Act of 1934.
     The registration shall be effective contemporaneously with 
     the submission of notice, in written or electronic form, to 
     the Commission.
       ``(3) A floor broker or floor trader shall be exempt from 
     the registration requirements of section 4e and paragraph (1) 
     of this subsection if--
       ``(A) the floor broker or floor trader is a broker or 
     dealer registered with the Securities and Exchange 
     Commission;
       ``(B) the floor broker or floor trader limits its 
     solicitation of orders, acceptance of orders, or execution of 
     orders, or placing of orders on behalf of others involving 
     any contracts of sale of any commodity for future delivery, 
     on or subject to the rules of any contract market to security 
     futures products; and
       ``(C) the registration of the floor broker or floor trader 
     is not suspended pursuant to an order of the Securities and 
     Exchange Commission.''.
       (c) Exemption for Securities Broker-Dealers From Certain 
     Provisions of the Commodity Exchange Act.--Section 4f(a) of 
     the Commodity Exchange Act (7 U.S.C. 6f(a)) is amended by 
     inserting after paragraph (3), as added by subsection (b) of 
     this section, the following:
       ``(4)(A) A broker or dealer that is registered as a futures 
     commission merchant or introducing broker pursuant to 
     paragraph (2), or that is a floor broker or floor trader 
     exempt from registration pursuant to paragraph (3), shall be 
     exempt from the following provisions of this Act and the 
     rules thereunder:
       ``(i) Subsections (b), (d), (e), and (g) of section 4c.
       ``(ii) Sections 4d, 4e, and 4h.
       ``(iii) Subsections (b) and (c) of this section.
       ``(iv) Section 4j.
       ``(v) Section 4k(1).
       ``(vi) Section 4p.
       ``(vii) Section 6d.
       ``(viii) Subsections (d) and (g) of section 8.
       ``(ix) Section 16.
       ``(B)(i) Except as provided in clause (ii) of this 
     subparagraph, but notwithstanding any other provision of this 
     Act, the Commission, by rule, regulation, or order, may 
     conditionally or unconditionally exempt any broker or dealer 
     subject to the registration requirement of paragraph (2), or 
     any broker or dealer exempt from registration pursuant to 
     paragraph (3), from any provision of this Act or of any rule 
     or regulation thereunder, to the extent the exemption is 
     necessary or appropriate in the public interest and is 
     consistent with the protection of investors.
       ``(ii) The Commission shall, by rule or regulation, 
     determine the procedures under which an exemptive order under 
     this section shall be granted and may, in its sole 
     discretion, decline to entertain any application for an order 
     of exemption under this section.
       ``(C)(i) A broker or dealer that is registered as a futures 
     commission merchant or introducing broker pursuant to 
     paragraph (2) or an associated person thereof, or that is a 
     floor broker or floor trader exempt from registration 
     pursuant to paragraph (3), shall not be required to become a 
     member of any futures association registered under section 
     17.
       ``(ii) No futures association registered under section 17 
     shall limit its members from carrying an account, accepting 
     an order, or transacting business with a broker or dealer 
     that is registered as a futures commission merchant or 
     introducing broker pursuant to paragraph (2) or an 
     associated person thereof, or that is a floor broker or 
     floor trader exempt from registration pursuant to 
     paragraph (3).''.
       (d) Exemptions for Associated Persons of Securities Broker-
     Dealers.--Section 4k of the Commodity Exchange Act (7 U.S.C. 
     6k), is amended by inserting after paragraph (4), as added by 
     subsection (c) of this section, the following:

[[Page H12342]]

       ``(5) Any associated person of a broker or dealer that is 
     registered with the Securities and Exchange Commission, and 
     who limits its solicitation of orders, acceptance of orders, 
     or execution of orders, or placing of orders on behalf of 
     others involving any contracts of sale of any commodity for 
     future delivery or any option on such a contract, on or 
     subject to the rules of any contract market or registered 
     derivatives transaction execution facility to security 
     futures products, shall be exempt from the following 
     provisions of this Act and the rules thereunder:
       ``(A) Subsections (b), (d), (e), and (g) of section 4c.
       ``(B) Sections 4d, 4e, and 4h.
       ``(C) Subsections (b) and (c) of section 4f.
       ``(D) Section 4j.
       ``(E) Paragraph (1) of this section.
       ``(F) Section 4p.
       ``(G) Section 6d.
       ``(H) Subsections (d) and (g) of section 8.
       ``(I) Section 16.''.

     SEC. 253. NOTIFICATION OF INVESTIGATIONS AND ENFORCEMENT 
                   ACTIONS.

       (a) Section 8(a) of the Commodity Exchange Act (7 U.S.C. 
     12(a)) is amended by adding at the end the following:
       ``(3) The Commission shall provide the Securities and 
     Exchange Commission with notice of the commencement of any 
     proceeding and a copy of any order entered by the Commission 
     against any futures commission merchant or introducing broker 
     registered pursuant to section 4f(a)(2), any floor broker or 
     floor trader exempt from registration pursuant to section 
     4f(a)(3), any associated person exempt from registration 
     pursuant to section 4k(6), or any board of trade designated 
     as a contract market pursuant to section 5f.''.
       (b) Section 6 of the Commodity Exchange Act (7 U.S.C. 8, 9, 
     9a, 9b, 13b, 15) is amended by adding at the end the 
     following:
       ``(g) The Commission shall provide the Securities and 
     Exchange Commission with notice of the commencement of any 
     proceeding and a copy of any order entered by the Commission 
     pursuant to subsections (c) and (d) of this section against 
     any futures commission merchant or introducing broker 
     registered pursuant to section 4f(a)(2), any floor broker or 
     floor trader exempt from registration pursuant to section 
     4f(a)(3), any associated person exempt from registration 
     pursuant to section 4k(6), or any board of trade designated 
     as a contract market pursuant to section 5f.''.
       (c) Section 6c of the Commodity Exchange Act (7 U.S.C. 13a-
     1) is amended by adding at the end the following:
       ``(h) The Commission shall provide the Securities and 
     Exchange Commission with notice of the commencement of any 
     proceeding and a copy of any order entered by the Commission 
     against any futures commission merchant or introducing broker 
     registered pursuant to section 4f(a)(2), any floor broker or 
     floor trader exempt from registration pursuant to section 
     4f(a)(3), any associated person exempt from registration 
     pursuant to section 4k(6), or any board of trade designated 
     as a contract market pursuant to section 5f.''.

             TITLE III--LEGAL CERTAINTY FOR SWAP AGREEMENTS

     SEC. 301. SWAP AGREEMENT.

       (a) Amendment.--Title II of the Gramm-Leach-Bliley Act 
     (Public Law 106-102) is amended by inserting after section 
     206 the following new sections:

     ``SEC. 206A. SWAP AGREEMENT.

       ``(a) In General.--Except as provided in subsection (b), as 
     used in this section, the term `swap agreement' means any 
     agreement, contract, or transaction between eligible contract 
     participants (as defined in section 1a(12) of the Commodity 
     Exchange Act as in effect on the date of enactment of this 
     section), other than a person that is an eligible contract 
     participant under section 1a(12)(C) of the Commodity Exchange 
     Act, the material terms of which (other than price and 
     quantity) are subject to individual negotiation, and that--
       ``(1) is a put, call, cap, floor, collar, or similar option 
     of any kind for the purchase or sale of, or based on the 
     value of, one or more interest or other rates, currencies, 
     commodities, indices, quantitative measures, or other 
     financial or economic interests or property of any kind;
       ``(2) provides for any purchase, sale, payment or delivery 
     (other than a dividend on an equity security) that is 
     dependent on the occurrence, non-occurrence, or the extent 
     of the occurrence of an event or contingency associated 
     with a potential financial, economic, or commercial 
     consequence;
       ``(3) provides on an executory basis for the exchange, on a 
     fixed or contingent basis, of one or more payments based on 
     the value or level of one or more interest or other rates, 
     currencies, commodities, securities, instruments of 
     indebtedness, indices, quantitative measures, or other 
     financial or economic interests or property of any kind, or 
     any interest therein or based on the value thereof, and that 
     transfers, as between the parties to the transaction, in 
     whole or in part, the financial risk associated with a future 
     change in any such value or level without also conveying a 
     current or future direct or indirect ownership interest in an 
     asset (including any enterprise or investment pool) or 
     liability that incorporates the financial risk so 
     transferred, including any such agreement, contract, or 
     transaction commonly known as an interest rate swap, 
     including a rate floor, rate cap, rate collar, cross-currency 
     rate swap, basis swap, currency swap, equity index swap, 
     equity swap, debt index swap, debt swap, credit spread, 
     credit default swap, credit swap, weather swap, or commodity 
     swap;
       ``(4) provides for the purchase or sale, on a fixed or 
     contingent basis, of any commodity, currency, instrument, 
     interest, right, service, good, article, or property of any 
     kind; or
       ``(5) is any combination or permutation of, or option on, 
     any agreement, contract, or transaction described in any of 
     paragraphs (1) through (4).
       ``(b) Exclusions.--The term `swap agreement' does not 
     include--
       ``(1) any put, call, straddle, option, or privilege on any 
     security, certificate of deposit, or group or index of 
     securities, including any interest therein or based on the 
     value thereof;
       ``(2) any put, call, straddle, option, or privilege entered 
     into on a national securities exchange registered pursuant to 
     section 6(a) of the Securities Exchange Act of 1934 relating 
     to foreign currency;
       ``(3) any agreement, contract, or transaction providing for 
     the purchase or sale of one or more securities on a fixed 
     basis;
       ``(4) any agreement, contract, or transaction providing for 
     the purchase or sale of one or more securities on a 
     contingent basis, unless such agreement, contract, or 
     transaction predicates such purchase or sale on the 
     occurrence of a bona fide contingency that might reasonably 
     be expected to affect or be affected by the creditworthiness 
     of a party other than a party to the agreement, contract, or 
     transaction;
       ``(5) any note, bond, or evidence of indebtedness that is a 
     security as defined in section 2(a)(1) of the Securities 
     Exchange Act of 1933 or section 3(a)(10) of the Securities 
     Exchange Act of 1934; or
       ``(6) any agreement, contract, or transaction that is--
       ``(A) based on a security; and
       ``(B) entered into directly or through an underwriter (as 
     defined in section 2(a) of the Securities Act of 1933) by the 
     issuer of such security for the purposes of raising capital, 
     unless such agreement, contract, or transaction is entered 
     into to manage a risk associated with capital raising.
       ``(c) Rule of Construction Regarding Master Agreements.--As 
     used in this section, the term `swap agreement' shall be 
     construed to include a master agreement that provides for an 
     agreement, contract, or transaction that is a swap agreement 
     pursuant to subsections (a) and (b), together with all 
     supplements to any such master agreement, without regard to 
     whether the master agreement contains an agreement, contract, 
     or transaction that is not a swap agreement pursuant to 
     subsections (a) and (b), except that the master agreement 
     shall be considered to be a swap agreement only with respect 
     to each agreement, contract, or transaction under the master 
     agreement that is a swap agreement pursuant to subsections 
     (a) and (b).

     ``SEC. 206B. SECURITY-BASED SWAP AGREEMENT.

       ``As used in this section, the term `security-based swap 
     agreement' means a swap agreement (as defined in section 
     206A) of which a material term is based on the price, yield, 
     value, or volatility of any security or any group or index of 
     securities, or any interest therein.

     ``SEC. 206C. NON-SECURITY-BASED SWAP AGREEMENT.

       ``As used in this section, the term `non-security-based 
     swap agreement' means any swap agreement (as defined in 
     section 206A) that is not a security-based swap agreement (as 
     defined in section 206B).''.
       (b) Security Definition.--As used in the amendment made by 
     subsection (a), the term ``security'' has the same meaning as 
     in section 2(a)(1) of the Securities Act of 1933 or section 
     3(a)(10) of the Securities Exchange Act of 1934.

     SEC. 302. AMENDMENTS TO THE SECURITIES ACT OF 1933.

       (a) Enforcement Focus.--The Securities Act of 1933 is 
     amended by inserting after section 2 (15 U.S.C.77b) the 
     following new section:

     ``SEC. 2A. SWAP AGREEMENTS.

       ``(a) Non-Security-Based Swap Agreements.--The definition 
     of `security' in section 2(a)(1) of this title does not 
     include any non-security-based swap agreement (as defined in 
     section 206C of the Gramm-Leach-Bliley Act).
       ``(b) Security-Based Swap Agreements.--
       ``(1) The definition of `security' in section 2(a)(1) of 
     this title does not include any security-based swap agreement 
     (as defined in section 206B of the Gramm-Leach-Bliley Act).
       ``(2) The Commission is prohibited from registering, or 
     requiring, recommending, or suggesting, the registration 
     under this title of any security-based swap agreement (as 
     defined in section 206B of the Gramm-Leach-Bliley Act). If 
     the Commission becomes aware that a registrant has filed a 
     registration statement with respect to such a swap agreement, 
     the Commission shall promptly so notify the registrant. Any 
     such registration statement with respect to such a swap 
     agreement shall be void and of no force or effect.
       ``(3) The Commission is prohibited from--
       ``(A) promulgating, interpreting, or enforcing rules; or
       ``(B) issuing orders of general applicability;

     under this title in a manner that imposes or specifies 
     reporting or recordkeeping requirements, procedures, or 
     standards as prophylactic measures against fraud, 
     manipulation, or insider trading with respect to any 
     security-based swap agreement (as defined in section 206B of 
     the Gramm-Leach-Bliley Act).
       ``(4) References in this title to the `purchase' or `sale' 
     of a security-based swap agreement shall be deemed to mean 
     the execution, termination (prior to its scheduled maturity 
     date), assignment, exchange, or similar transfer or 
     conveyance of, or extinguishing of rights or obligations 
     under, a security-based swap agreement (as defined in section 
     206B of the Gramm-Leach-Bliley Act), as the context may 
     require.''.
       (b) Anti-Fraud and Anti-Manipulation Enforcement 
     Authority.--Section 17(a) of the Securities Act of 1933 (15 
     U.S.C. 77q(a)) is amended to read as follows:
       ``(a) It shall be unlawful for any person in the offer or 
     sale of any securities or any security-

[[Page H12343]]

     based swap agreement (as defined in section 206B of the 
     Gramm-Leach-Bliley Act) by the use of any means or 
     instruments of transportation or communication in interstate 
     commerce or by use of the mails, directly or indirectly--
       ``(1) to employ any device, scheme, or artifice to defraud, 
     or
       ``(2) to obtain money or property by means of any untrue 
     statement of a material fact or any omission to state a 
     material fact necessary in order to make the statements made, 
     in light of the circumstances under which they were made, not 
     misleading; or
       ``(3) to engage in any transaction, practice, or course of 
     business which operates or would operate as a fraud or deceit 
     upon the purchaser.''.
       (c) Limitation.--Section 17 of the Securities Act of 1933 
     is amended by adding at the end the following new subsection:
       ``(d) The authority of the Commission under this section 
     with respect to security-based swap agreements (as defined in 
     section 206B of the Gramm-Leach-Bliley Act) shall be subject 
     to the restrictions and limitations of section 2A(b) of this 
     title.''.

     SEC. 303. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.

       (a) Enforcement Focus.--The Securities Exchange Act of 1934 
     is amended by inserting after section 3 (15 U.S.C. 78c) the 
     following new section:

     ``SEC. 3A. SWAP AGREEMENTS.

       ``(a) Non-Security-Based Swap Agreements.--The definition 
     of `security' in section 3(a)(10) of this title does not 
     include any non-security-based swap agreement (as defined in 
     section 206C of the Gramm-Leach-Bliley Act).
       ``(b) Security-Based Swap Agreements.--
       ``(1) The definition of `security' in section 3(a)(10) of 
     this title does not include any security-based swap agreement 
     (as defined in section 206B of the Gramm-Leach-Bliley Act).
       ``(2) The Commission is prohibited from registering, or 
     requiring, recommending, or suggesting, the registration 
     under this title of any security-based swap agreement (as 
     defined in section 206B of the Gramm-Leach-Bliley Act). If 
     the Commission becomes aware that a registrant has filed a 
     registration application with respect to such a swap 
     agreement, the Commission shall promptly so notify the 
     registrant. Any such registration with respect to such a swap 
     agreement shall be void and of no force or effect.
       ``(3) Except as provided in section 16(a) with respect to 
     reporting requirements, the Commission is prohibited from--
       ``(A) promulgating, interpreting, or enforcing rules; or
       ``(B) issuing orders of general applicability;

     under this title in a manner that imposes or specifies 
     reporting or recordkeeping requirements, procedures, or 
     standards as prophylactic measures against fraud, 
     manipulation, or insider trading with respect to any 
     security-based swap agreement (as defined in section 206B of 
     the Gramm-Leach-Bliley Act).
       ``(4) References in this title to the `purchase' or `sale' 
     of a security-based swap agreement (as defined in section 
     206B of the Gramm-Leach-Bliley Act) shall be deemed to mean 
     the execution, termination (prior to its scheduled maturity 
     date), assignment, exchange, or similar transfer or 
     conveyance of, or extinguishing of rights or obligations 
     under, a security-based swap agreement, as the context may 
     require.''.
       (b) Anti-Fraud, Anti-Manipulation Enforcement Authority.--
     Paragraphs (2) through (5) of section 9(a) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78i(a)(2)-(5)) are amended to 
     read as follows:
       ``(2) To effect, alone or with one or more other persons, a 
     series of transactions in any security registered on a 
     national securities exchange or in connection with any 
     security-based swap agreement (as defined in section 206B of 
     the Gramm-Leach-Bliley Act) with respect to such security 
     creating actual or apparent active trading in such security, 
     or raising or depressing the price of such security, for the 
     purpose of inducing the purchase or sale of such security by 
     others.
       ``(3) If a dealer or broker, or other person selling or 
     offering for sale or purchasing or offering to purchase the 
     security or a security-based swap agreement (as defined in 
     section 206B of the Gramm-Leach-Bliley Act) with respect to 
     such security, to induce the purchase or sale of any security 
     registered on a national securities exchange or any security-
     based swap agreement (as defined in section 206B of the 
     Gramm-Leach-Bliley Act) with respect to such security by the 
     circulation or dissemination in the ordinary course of 
     business of information to the effect that the price of any 
     such security will or is likely to rise or fall because of 
     market operations of any one or more persons conducted for 
     the purpose of raising or depressing the price of such 
     security.
       ``(4) If a dealer or broker, or the person selling or 
     offering for sale or purchasing or offering to purchase the 
     security or a security-based swap agreement (as defined in 
     section 206B of the Gramm-Leach-Bliley Act) with respect to 
     such security, to make, regarding any security registered on 
     a national securities exchange or any security-based swap 
     agreement (as defined in section 206B of the Gramm-Leach-
     Bliley Act) with respect to such security, for the purpose of 
     inducing the purchase or sale of such security or such 
     security-based swap agreement, any statement which was at the 
     time and in the light of the circumstances under which it was 
     made, false or misleading with respect to any material fact, 
     and which he knew or had reasonable ground to believe was so 
     false or misleading.
       ``(5) For a consideration, received directly or indirectly 
     from a dealer or broker, or other person selling or offering 
     for sale or purchasing or offering to purchase the security 
     or a security-based swap agreement (as defined in section 
     206B of the Gramm-Leach-Bliley Act) with respect to such 
     security, to induce the purchase of any security registered 
     on a national securities exchange or any security-based swap 
     agreement (as defined in section 206B of the Gramm-Leach-
     Bliley Act) with respect to such security by the circulation 
     or dissemination of information to the effect that the price 
     of any such security will or is likely to rise or fall 
     because of the market operations of any one or more persons 
     conducted for the purpose of raising or depressing the price 
     of such security.''.
       (c) Limitation.--Section 9 of the Securities Exchange Act 
     of 1934 is amended by adding at the end the following new 
     subsection:
       ``(i) The authority of the Commission under this section 
     with respect to security-based swap agreements shall be 
     subject to the restrictions and limitations of section 3A(b) 
     of this title.''.
       (d) Regulations on the Use of Manipulative and Deceptive 
     Devices.--Section 10 of the Securities Exchange Act of 1934 
     (15 U.S.C. 78j) is amended--
       (1) in subsection (b), by inserting ``or any securities-
     based swap agreement (as defined in section 206B of the 
     Gramm-Leach-Bliley Act),'' before ``any manipulative or 
     deceptive device''; and
       (2) by adding at the end the following:
     ``Rules promulgated under subsection (b) that prohibit fraud, 
     manipulation, or insider trading (but not rules imposing or 
     specifying reporting or recordkeeping requirements, 
     procedures, or standards as prophylactic measures against 
     fraud, manipulation, or insider trading), and judicial 
     precedents decided under subsection (b) and rules promulgated 
     thereunder that prohibit fraud, manipulation, or insider 
     trading, shall apply to security-based swap agreements (as 
     defined in section 206B of the Gramm-Leach-Bliley Act) to the 
     same extent as they apply to securities. Judicial precedents 
     decided under section 17(a) of the Securities Act of 1933 and 
     sections 9, 15, 16, 20, and 21A of this title, and judicial 
     precedents decided under applicable rules promulgated under 
     such sections, shall apply to security-based swap agreements 
     (as defined in section 206B of the Gramm-Leach-Bliley Act) to 
     the same extent as they apply to securities.''.
       (e) Broker, Dealer Anti-Fraud, Anti-Manipulation 
     Enforcement Authority.--Section 15(c)(1) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78o(c)(1)) is amended to read 
     as follows:
       ``(c)(1)(A) No broker or dealer shall make use of the mails 
     or any means or instrumentality of interstate commerce to 
     effect any transaction in, or to induce or attempt to induce 
     the purchase or sale of, any security (other than commercial 
     paper, bankers' acceptances, or commercial bills) otherwise 
     than on a national securities exchange of which it is a 
     member, or any security-based swap agreement (as defined in 
     section 206B of the Gramm-Leach-Bliley Act), by means of any 
     manipulative, deceptive, or other fraudulent device or 
     contrivance.
       ``(B) No municipal securities dealer shall make use of the 
     mails or any means or instrumentality of interstate commerce 
     to effect any transaction in, or to induce or attempt to 
     induce the purchase or sale of, any municipal security or any 
     security-based swap agreement (as defined in section 206B of 
     the Gramm-Leach-Bliley Act) involving a municipal security by 
     means of any manipulative, deceptive, or other fraudulent 
     device or contrivance.
       ``(C) No government securities broker or government 
     securities dealer shall make use of the mails or any means or 
     instrumentality of interstate commerce to effect any 
     transaction in, or to induce or to attempt to induce the 
     purchase or sale of, any government security or any security-
     based swap agreement (as defined in section 206B of the 
     Gramm-Leach-Bliley Act) involving a government security by 
     means of any manipulative, deceptive, or other fraudulent 
     device or contrivance.''.
       (f) Limitation.--Section 15 of the Securities Exchange Act 
     of 1934 (15 U.S.C. 78o) is amended by adding at the end the 
     following new subsection:
       ``(i) The authority of the Commission under this section 
     with respect to security-based swap agreements (as defined in 
     section 206B of the Gramm-Leach-Bliley Act) shall be subject 
     to the restrictions and limitations of section 3A(b) of this 
     title.''.
       (g) Anti-Insider Trading Enforcement Authority.--
     Subsections (a) and (b) of section 16 (15 U.S.C. 78p(a), (b)) 
     of the Securities Exchange of 1934 are amended to read as 
     follows:
       ``(a) Every person who is directly or indirectly the 
     beneficial owner of more than 10 per centum of any class of 
     any equity security (other than an exempted security) which 
     is registered pursuant to section 12 of this title, or who is 
     a director or an officer of the issuer of such security, 
     shall file, at the time of the registration of such security 
     on a national securities exchange or by the effective date of 
     a registration statement filed pursuant to section 12 (g) of 
     this title, or within ten days after he becomes such 
     beneficial owner, director, or officer, a statement with the 
     Commission (and, if such security is registered on a national 
     securities exchange, also with the exchange) of the amount of 
     all equity securities of such issuer of which he is the 
     beneficial owner, and within ten days after the close of each 
     calendar month thereafter, if there has been a change in such 
     ownership or if such person shall have purchased or sold a 
     security-based swap agreement (as defined in section 206B of 
     the Gramm-Leach-Bliley Act) involving such equity security 
     during such month, shall file with the Commission (and if 
     such security is registered on a national securities 
     exchange, shall also file with the exchange), a statement 
     indicating his ownership at the close of the calendar month 
     and such changes in his ownership and such purchases and 
     sales of such security-based swap agreements as have occurred 
     during such calendar month.

[[Page H12344]]

       ``(b) For the purpose of preventing the unfair use of 
     information which may have been obtained by such beneficial 
     owner, director, or officer by reason of his relationship to 
     the issuer, any profit realized by him from any purchase and 
     sale, or any sale and purchase, of any equity security of 
     such issuer (other than an exempted security) or a security-
     based swap agreement (as defined in section 206B of the 
     Gramm-Leach-Bliley Act) involving any such equity security 
     within any period of less than six months, unless such 
     security or security-based swap agreement was acquired in 
     good faith in connection with a debt previously contracted, 
     shall inure to and be recoverable by the issuer, irrespective 
     of any intention on the part of such beneficial owner, 
     director, or officer in entering into such transaction of 
     holding the security or security-based swap agreement 
     purchased or of not repurchasing the security or security-
     based swap agreement sold for a period exceeding six months. 
     Suit to recover such profit may be instituted at law or in 
     equity in any court of competent jurisdiction by the issuer, 
     or by the owner of any security of the issuer in the name and 
     in behalf of the issuer if the issuer shall fail or refuse to 
     bring such suit within sixty days after request or shall fail 
     diligently to prosecute the same thereafter; but no such suit 
     shall be brought more than two years after the date such 
     profit was realized. This subsection shall not be construed 
     to cover any transaction where such beneficial owner was not 
     such both at the time of the purchase and sale, or the sale 
     and purchase, of the security or security-based swap 
     agreement (as defined in section 206B of the Gramm-Leach-
     Bliley Act) involved, or any transaction or transactions 
     which the Commission by rules and regulations may exempt as 
     not comprehended within the purpose of this subsection.''.
       (h) Limitation.--Section 16 of the Securities Exchange Act 
     of 1934 (15 U.S.C. 78p) is amended by adding at the end the 
     following new subsection:
       ``(g) The authority of the Commission under this section 
     with respect to security-based swap agreements (as defined in 
     section 206B of the Gramm-Leach-Bliley Act) shall be subject 
     to the restrictions and limitations of section 3A(b) of this 
     title.''.
       (i) Material Nonpublic Information.--Section 20(d) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78t(d)) is amended 
     to read as follows:
       ``(d) Wherever communicating, or purchasing or selling a 
     security while in possession of, material nonpublic 
     information would violate, or result in liability to any 
     purchaser or seller of the security under any provisions of 
     this title, or any rule or regulation thereunder, such 
     conduct in connection with a purchase or sale of a put, call, 
     straddle, option, privilege or security-based swap agreement 
     (as defined in section 206B of the Gramm-Leach-Bliley Act) 
     with respect to such security or with respect to a group or 
     index of securities including such security, shall also 
     violate and result in comparable liability to any purchaser 
     or seller of that security under such provision, rule, or 
     regulation.''.
       (j) Limitation.--Section 20 of the Securities Exchange Act 
     of 1934 (15 U.S.C. 78t) is amended by adding at the end the 
     following new subsection:
       ``(f) The authority of the Commission under this section 
     with respect to security-based swap agreements (as defined in 
     section 206B of the Gramm-Leach-Bliley Act) shall be subject 
     to the restrictions and limitations of section 3A(b) of this 
     title.''.
       (k) Civil Penalties.--Section 21A(a)(1) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78u-1)a)(1)) is amended by 
     inserting after ``purchasing or selling a security'' the 
     following: ``or security-based swap agreement (as defined in 
     section 206B of the Gramm-Leach-Bliley Act)''.
       (l) Limitation.--Section 21A of the Securities Exchange Act 
     of 1934 (15 U.S.C. 78u-1) is amended by adding at the end the 
     following new subsection:
       ``(g) The authority of the Commission under this section 
     with respect to security-based swap agreements (as defined in 
     section 206B of the Gramm-Leach-Bliley Act) shall be subject 
     to the restrictions and limitations of section 3A(b) of this 
     title.''.

     SEC. 304. SAVINGS PROVISIONS.

       Nothing in this Act or the amendments made by this Act 
     shall be construed as finding or implying that any swap 
     agreement is or is not a security for any purpose under the 
     securities laws. Nothing in this Act or the amendments made 
     by this Act shall be construed as finding or implying that 
     any swap agreement is or is not a futures contract or 
     commodity option for any purpose under the Commodity Exchange 
     Act.

         TITLE IV--REGULATORY RESPONSIBILITY FOR BANK PRODUCTS

     SEC. 401. SHORT TITLE.

       This title may be cited as the ``Legal Certainty for Bank 
     Products Act of 2000''.

     SEC. 402. DEFINITIONS.

       (a) Bank.--In this title, the term ``bank'' means--
       (1) any depository institution (as defined in section 3(c) 
     of the Federal Deposit Insurance Act);
       (2) any foreign bank or branch or agency of a foreign bank 
     (each as defined in section 1(b) of the International Banking 
     Act of 1978);
       (3) any Federal or State credit union (as defined in 
     section 101 of the Federal Credit Union Act);
       (4) any corporation organized under section 25A of the 
     Federal Reserve Act;
       (5) any corporation operating under section 25 of the 
     Federal Reserve Act;
       (6) any trust company; or
       (7) any subsidiary of any entity described in paragraph (1) 
     through (6) of this subsection, if the subsidiary is 
     regulated as if the subsidiary were part of the entity and is 
     not a broker or dealer (as such terms are defined in section 
     3 of the Securities Exchange Act of 1934) or a futures 
     commission merchant (as defined in section 1a(20) of the 
     Commodity Exchange Act).
       (b) Identified Banking Product.--In this title, the term 
     ``identified banking product'' shall have the same meaning as 
     in paragraphs (1) through (5) of section 206(a) of the Gramm-
     Leach-Bliley Act, except that in applying such section for 
     purposes of this title--
       (1) the term ``bank'' shall have the meaning given in 
     subsection (a) of this section; and
       (2) the term ``qualified investor'' means eligible contract 
     participant (as defined in section 1a(12) of the Commodity 
     Exchange Act, as in effect on the date of enactment of the 
     Commodity Futures Modernization Act of 2000).
       (c) Hybrid Instrument.--In this title, the term ``hybrid 
     instrument'' means an identified banking product not excluded 
     by section 403 of this Act, offered by a bank, having 1 or 
     more payments indexed to the value, level, or rate of, or 
     providing for the delivery of, 1 or more commodities (as 
     defined in section 1a(4) of the Commodity Exchange Act).
       (d) Covered Swap Agreement.--In this title, the term 
     ``covered swap agreement'' means a swap agreement (as defined 
     in section 206(b) of the Gramm-Leach-Bliley Act), including a 
     credit or equity swap, based on a commodity other than an 
     agricultural commodity enumerated in section 1a(4) of the 
     Commodity Exchange Act if--
       (1) the swap agreement--
       (A) is entered into only between persons that are eligible 
     contract participants (as defined in section 1a(12) of the 
     Commodity Exchange Act, as in effect on the date of 
     enactment of the Commodity Futures Modernization Act of 
     2000) at the time the persons enter into the swap 
     agreement; and
       (B) is not entered into or executed on a trading facility 
     (as defined in section 1a(33) of the Commodity Exchange Act); 
     or
       (2) the swap agreement--
       (A) is entered into or executed on an electronic trading 
     facility (as defined in section 1a(10) of the Commodity 
     Exchange Act);
       (B) is entered into on a principal-to-principal basis 
     between parties trading for their own accounts or as 
     described in section 1a(12)(B)(ii) of the Commodity Exchange 
     Act;
       (C) is entered into only between persons that are eligible 
     contract participants as described in subparagraphs (A), 
     (B)(ii), or (C) of section 1a(12) of the Commodity Exchange 
     Act, as in effect on the date of enactment of the Commodity 
     Futures Modernization Act of 2000, at the time the persons 
     enter into the swap agreement; and
       (D) is an agreement, contract or transaction in an excluded 
     commodity (as defined in section 1a(13) of the Commodity 
     Exchange Act).

     SEC. 403. EXCLUSION OF IDENTIFIED BANKING PRODUCTS COMMONLY 
                   OFFERED ON OR BEFORE DECEMBER 5, 2000.

       No provision of the Commodity Exchange Act shall apply to, 
     and the Commodity Futures Trading Commission shall not 
     exercise regulatory authority with respect to, an identified 
     banking product if--
       (1) an appropriate banking agency certifies that the 
     product has been commonly offered, entered into, or provided 
     in the United States by any bank on or before December 5, 
     2000, under applicable banking law; and
       (2) the product was not prohibited by the Commodity 
     Exchange Act and not regulated by the Commodity Futures 
     Trading Commission as a contract of sale of a commodity for 
     future delivery (or an option on such a contract) or an 
     option on a commodity, on or before December 5, 2000.

     SEC. 404. EXCLUSION OF CERTAIN IDENTIFIED BANKING PRODUCTS 
                   OFFERED BY BANKS AFTER DECEMBER 5, 2000.

       No provision of the Commodity Exchange Act shall apply to, 
     and the Commodity Futures Trading Commission shall not 
     exercise regulatory authority with respect to, an identified 
     banking product which had not been commonly offered, entered 
     into, or provided in the United States by any bank on or 
     before December 5, 2000, under applicable banking law if--
       (1) the product has no payment indexed to the value, level, 
     or rate of, and does not provide for the delivery of, any 
     commodity (as defined in section 1a(4) of the Commodity 
     Exchange Act); or
       (2) the product or commodity is otherwise excluded from the 
     Commodity Exchange Act.

     SEC. 405. EXCLUSION OF CERTAIN OTHER IDENTIFIED BANKING 
                   PRODUCTS.

       (a) In General.--No provision of the Commodity Exchange Act 
     shall apply to, and the Commodity Futures Trading Commission 
     shall not exercise regulatory authority with respect to, a 
     banking product if the product is a hybrid instrument that is 
     predominantly a banking product under the predominance test 
     set forth in subsection (b).
       (b) Predominance Test.--A hybrid instrument shall be 
     considered to be predominantly a banking product for purposes 
     of this section if--
       (1) the issuer of the hybrid instrument receives payment in 
     full of the purchase price of the hybrid instrument 
     substantially contemporaneously with delivery of the hybrid 
     instrument;
       (2) the purchaser or holder of the hybrid instrument is not 
     required to make under the terms of the instrument, or any 
     arrangement referred to in the instrument, any payment to the 
     issuer in addition to the purchase price referred to in 
     paragraph (1), whether as margin, settlement payment, or 
     otherwise during the life of the hybrid instrument or at 
     maturity;
       (3) the issuer of the hybrid instrument is not subject by 
     the terms of the instrument to mark-to-market margining 
     requirements; and
       (4) the hybrid instrument is not marketed as a contract of 
     sale of a commodity for future delivery (or option on such a 
     contract) subject to the Commodity Exchange Act.
       (c) Mark-to-Market Margining Requirement.--For purposes of 
     subsection (b)(3), mark-

[[Page H12345]]

     to-market margining requirements shall not include the 
     obligation of an issuer of a secured debt instrument to 
     increase the amount of collateral held in pledge for the 
     benefit of the purchaser of the secured debt instrument to 
     secure the repayment obligations of the issuer under the 
     secured debt instrument.

     SEC. 406. ADMINISTRATION OF THE PREDOMINANCE TEST.

       (a) In General.--No provision of the Commodity Exchange Act 
     shall apply to, and the Commodity Futures Trading Commission 
     shall not regulate, a hybrid instrument, unless the 
     Commission determines, by or under a rule issued in 
     accordance with this section, that--
       (1) the action is necessary and appropriate in the public 
     interest;
       (2) the action is consistent with the Commodity Exchange 
     Act and the purposes of the Commodity Exchange Act; and
       (3) the hybrid instrument is not predominantly a banking 
     product under the predominance test set forth in section 
     405(b) of this Act.
       (b) Consultation.--Before commencing a rulemaking or making 
     a determination pursuant to a rule issued under this title, 
     the Commodity Futures Trading Commission shall consult with 
     and seek the concurrence of the Board of Governors of the 
     Federal Reserve System concerning--
       (1) the nature of the hybrid instrument; and
       (2) the history, purpose, extent, and appropriateness of 
     the regulation of the hybrid instrument under the Commodity 
     Exchange Act and under appropriate banking laws.
       (c) Objection to Commission Regulation.--
       (1) Filing of petition for review.--The Board of Governors 
     of the Federal Reserve System may obtain review of any rule 
     or determination referred to in subsection (a) in the United 
     States Court of Appeals for the District of Columbia Circuit 
     by filing in the court, not later than 60 days after the date 
     of publication of the rule or determination, a written 
     petition requesting that the rule or determination be set 
     aside. Any proceeding to challenge any such rule or 
     determination shall be expedited by the court.
       (2) Transmittal of petition and record.--A copy of a 
     petition described in paragraph (1) shall be transmitted as 
     soon as possible by the Clerk of the court to an officer or 
     employee of the Commodity Futures Trading Commission 
     designated for that purpose. Upon receipt of the petition, 
     the Commission shall file with the court the rule or 
     determination under review and any documents referred to 
     therein, and any other relevant materials prescribed by the 
     court.
       (3) Exclusive jurisdiction.--On the date of the filing of a 
     petition under paragraph (1), the court shall have 
     jurisdiction, which shall become exclusive on the filing of 
     the materials set forth in paragraph (2), to affirm and 
     enforce or to set aside the rule or determination at issue.
       (4) Standard of review.--The court shall determine to 
     affirm and enforce or set aside a rule or determination of 
     the Commodity Futures Trading Commission under this section, 
     based on the determination of the court as to whether--
       (A) the subject product is predominantly a banking product; 
     and
       (B) making the provision or provisions of the Commodity 
     Exchange Act at issue applicable to the subject instrument is 
     appropriate in light of the history, purpose, and extent of 
     regulation under such Act, this title, and under the 
     appropriate banking laws, giving deference neither to the 
     views of the Commodity Futures Trading Commission nor the 
     Board of Governors of the Federal Reserve System.
       (5) Judicial stay.--The filing of a petition by the Board 
     pursuant to paragraph (1) shall operate as a judicial stay, 
     until the date on which the determination of the court is 
     final (including any appeal of the determination).
       (6) Other authority to challenge.--Any aggrieved party may 
     seek judicial review pursuant to section 6(c) of the 
     Commodity Exchange Act of a determination or rulemaking by 
     the Commodity Futures Trading Commission under this section.

     SEC. 407. EXCLUSION OF COVERED SWAP AGREEMENTS.

       No provision of the Commodity Exchange Act (other than 
     section 5b of such Act with respect to the clearing of 
     covered swap agreements) shall apply to, and the Commodity 
     Futures Trading Commission shall not exercise regulatory 
     authority with respect to, a covered swap agreement offered, 
     entered into, or provided by a bank.

     SEC. 408. CONTRACT ENFORCEMENT.

       (a) Hybrid Instruments.--No hybrid instrument shall be 
     void, voidable, or unenforceable, and no party to a hybrid 
     instrument shall be entitled to rescind, or recover any 
     payment made with respect to, a hybrid instrument under any 
     provision of Federal or State law, based solely on the 
     failure of the hybrid instrument to satisfy the predominance 
     test set forth in section 405(b) of this Act or to comply 
     with the terms or conditions of an exemption or exclusion 
     from any provision of the Commodity Exchange Act or any 
     regulation of the Commodity Futures Trading Commission.
       (b) Covered Swap Agreements.--No covered swap agreement 
     shall be void, voidable, or unenforceable, and no party to a 
     covered swap agreement shall be entitled to rescind, or 
     recover any payment made with respect to, a covered swap 
     agreement under any provision of Federal or State law, based 
     solely on the failure of the covered swap agreement to comply 
     with the terms or conditions of an exemption or exclusion 
     from any provision of the Commodity Exchange Act or any 
     regulation of the Commodity Futures Trading Commission.
       (c) Preemption.--This title shall supersede and preempt the 
     application of any State or local law that prohibits or 
     regulates gaming or the operation of bucket shops (other than 
     antifraud provisions of general applicability) in the case 
     of--
       (1) a hybrid instrument that is predominantly a banking 
     product; or
       (2) a covered swap agreement.

 MEDICARE, MEDICAID, AND SCHIP BENEFITS IMPROVEMENT AND PROTECTION ACT 
                                OF 2000

       The conference agreement would enact the provisions of H.R. 
     5661, as introduced on December 14, 2000. The text of that 
     bill follows:
     A BILL To amend titles XVIII, XIX, and XXI of the Social 
     Security Act to provide benefits improvements and beneficiary 
     protections in the Medicare and Medicaid Programs and the 
     State child health insurance program (SCHIP), as revised by 
     the Balanced Budget Act of 1997 and the Medicare, Medicaid, 
     and SCHIP Balanced Budget Refinement Act of 1999, and for 
     other purposes.
       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT; 
                   REFERENCES TO OTHER ACTS; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Medicare, 
     Medicaid, and SCHIP Benefits Improvement and Protection Act 
     of 2000''.
       (b) Amendments to Social Security Act.--Except as otherwise 
     specifically provided, whenever in this Act 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.
       (c) References to Other Acts.--In this Act:
       (1) Balanced budget act of 1997.--The term ``BBA'' means 
     the Balanced Budget Act of 1997 (Public Law 105-33; 111 Stat. 
     251).
       (2) Medicare, medicaid, and schip balanced budget 
     refinement act of 1999.--The term ``BBRA'' means the 
     Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act 
     of 1999 (Appendix F, 113 Stat. 1501A-321), as enacted into 
     law by section 1000(a)(6) of Public Law 106-113.
       (d) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; amendments to Social Security Act; references to 
              other Acts; table of contents.

               TITLE I--MEDICARE BENEFICIARY IMPROVEMENTS

                Subtitle A--Improved Preventive Benefits

Sec. 101. Coverage of biennial screening pap smear and pelvic exams.
Sec. 102. Coverage of screening for glaucoma.
Sec. 103. Coverage of screening colonoscopy for average risk 
              individuals.
Sec. 104. Modernization of screening mammography benefit.
Sec. 105. Coverage of medical nutrition therapy services for 
              beneficiaries with diabetes or a renal disease.

               Subtitle B--Other Beneficiary Improvements

Sec. 111. Acceleration of reduction of beneficiary copayment for 
              hospital outpatient department services.
Sec. 112. Preservation of coverage of drugs and biologicals under part 
              B of the medicare program.
Sec. 113. Elimination of time limitation on medicare benefits for 
              immunosuppressive drugs.
Sec. 114. Imposition of billing limits on drugs.
Sec. 115. Waiver of 24-month waiting period for medicare coverage of 
              individuals disabled with amyotrophic lateral sclerosis 
              (ALS).

             Subtitle C--Demonstration Projects and Studies

Sec. 121. Demonstration project for disease management for severely 
              chronically ill medicare beneficiaries.
Sec. 122. Cancer prevention and treatment demonstration for ethnic and 
              racial minorities.
Sec. 123. Study on medicare coverage of routine thyroid screening.
Sec. 124. MedPAC study on consumer coalitions.
Sec. 125. Study on limitation on State payment for medicare cost-
              sharing affecting access to services for qualified 
              medicare beneficiaries.
Sec. 126. Studies on preventive interventions in primary care for older 
              Americans.
Sec. 127. MedPAC study and report on medicare coverage of cardiac and 
              pulmonary rehabilitation therapy services.
Sec. 128. Lifestyle modification program demonstration.

                TITLE II--RURAL HEALTH CARE IMPROVEMENTS

            Subtitle A--Critical Access Hospital Provisions

Sec. 201. Clarification of no beneficiary cost-sharing for clinical 
              diagnostic laboratory tests furnished by critical access 
              hospitals.
Sec. 202. Assistance with fee schedule payment for professional 
              services under all-inclusive rate.
Sec. 203. Exemption of critical access hospital swing beds from SNF 
              PPS.
Sec. 204. Payment in critical access hospitals for emergency room on-
              call physicians.
Sec. 205. Treatment of ambulance services furnished by certain critical 
              access hospitals.
Sec. 206. GAO study on certain eligibility requirements for critical 
              access hospitals.

              Subtitle B--Other Rural Hospitals Provisions

Sec. 211. Treatment of rural disproportionate share hospitals.

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Sec. 212. Option to base eligibility for medicare dependent, small 
              rural hospital program on discharges during 2 of the 3 
              most recently audited cost reporting periods.
Sec. 213. Extension of option to use rebased target amounts to all sole 
              community hospitals.
Sec. 214. MedPAC analysis of impact of volume on per unit cost of rural 
              hospitals with psychiatric units.

                   Subtitle C--Other Rural Provisions

Sec. 221. Assistance for providers of ambulance services in rural 
              areas.
Sec. 222. Payment for certain physician assistant services.
Sec. 223. Revision of medicare reimbursement for telehealth services.
Sec. 224. Expanding access to rural health clinics.
Sec. 225. MedPAC study on low-volume, isolated rural health care 
              providers.

                TITLE III--PROVISIONS RELATING TO PART A

                Subtitle A--Inpatient Hospital Services

Sec. 301. Revision of acute care hospital payment update for 2001.
Sec. 302. Additional modification in transition for indirect medical 
              education (IME) percentage adjustment.
Sec. 303. Decrease in reductions for disproportionate share hospital 
              (DSH) payments.
Sec. 304. Wage index improvements.
Sec. 305. Payment for inpatient services of rehabilitation hospitals.
Sec. 306. Payment for inpatient services of psychiatric hospitals.
Sec. 307. Payment for inpatient services of long-term care hospitals.

 Subtitle B--Adjustments to PPS Payments for Skilled Nursing Facilities

Sec. 311. Elimination of reduction in skilled nursing facility (SNF) 
              market basket update in 2001.
Sec. 312. Increase in nursing component of PPS Federal rate.
Sec. 313. Application of SNF consolidated billing requirement limited 
              to part A covered stays.
Sec. 314. Adjustment of rehabilitation RUGs to correct anomaly in 
              payment rates.
Sec. 315. Establishment of process for geographic reclassification.

                        Subtitle C--Hospice Care

Sec. 321. 5 percent increase in payment base.
Sec. 322. Clarification of physician certification.
Sec. 323. MedPAC report on access to, and use of, hospice benefit.

                      Subtitle D--Other Provisions

Sec. 331. Relief from medicare part A late enrollment penalty for group 
              buy-in for State and local retirees.

                TITLE IV--PROVISIONS RELATING TO PART B

                Subtitle A--Hospital Outpatient Services

Sec. 401. Revision of hospital outpatient PPS payment update.
Sec. 402. Clarifying process and standards for determining eligibility 
              of devices for pass-through payments under hospital 
              outpatient PPS.
Sec. 403. Application of OPD PPS transitional corridor payments to 
              certain hospitals that did not submit a 1996 cost report.
Sec. 404. Application of rules for determining provider-based status 
              for certain entities.
Sec. 405. Treatment of children's hospitals under prospective payment 
              system.
Sec. 406. Inclusion of temperature monitored cryoablation in 
              transitional pass-through for certain medical devices, 
              drugs, and biologicals under OPD PPS.

        Subtitle B--Provisions Relating to Physicians' Services

Sec. 411. GAO studies relating to physicians' services.
Sec. 412. Physician group practice demonstration.
Sec. 413. Study on enrollment procedures for groups that retain 
              independent contractor physicians.

                       Subtitle C--Other Services

Sec. 421. 1-year extension of moratorium on therapy caps; report on 
              standards for supervision of physical therapy assistants.
Sec. 422. Update in renal dialysis composite rate.
Sec. 423. Payment for ambulance services.
Sec. 424. Ambulatory surgical centers.
Sec. 425. Full update for durable medical equipment.
Sec. 426. Full update for orthotics and prosthetics.
Sec. 427. Establishment of special payment provisions and requirements 
              for prosthetics and certain custom-fabricated orthotic 
              items.
Sec. 428. Replacement of prosthetic devices and parts.
Sec. 429. Revised part B payment for drugs and biologicals and related 
              services.
Sec. 430. Contrast enhanced diagnostic procedures under hospital 
              prospective payment system.
Sec. 431. Qualifications for community mental health centers.
Sec. 432. Payment of physician and nonphysician services in certain 
              Indian providers.
Sec. 433. GAO study on coverage of surgical first assisting services of 
              certified registered nurse first assistants.
Sec. 434. MedPAC study and report on medicare reimbursement for 
              services provided by certain providers.
Sec. 435. MedPAC study and report on medicare coverage of services 
              provided by certain nonphysician providers.
Sec. 436. GAO study and report on the costs of emergency and medical 
              transportation services.
Sec. 437. GAO studies and reports on medicare payments.
Sec. 438. MedPAC study on access to outpatient pain management 
              services.

             TITLE V--PROVISIONS RELATING TO PARTS A AND B

                    Subtitle A--Home Health Services

Sec. 501. 1-year additional delay in application of 15 percent 
              reduction on payment limits for home health services.
Sec. 502. Restoration of full home health market basket update for home 
              health services for fiscal year 2001.
Sec. 503. Temporary two-month periodic interim payment.
Sec. 504. Use of telehealth in delivery of home health services.
Sec. 505. Study on costs to home health agencies of purchasing 
              nonroutine medical supplies.
Sec. 506. Treatment of branch offices; GAO study on supervision of home 
              health care provided in isolated rural areas.
Sec. 507. Clarification of the homebound definition under the medicare 
              home health benefit.
Sec. 508. Temporary increase for home health services furnished in a 
              rural area.

             Subtitle B--Direct Graduate Medical Education

Sec. 511. Increase in floor for direct graduate medical education 
              payments.
Sec. 512. Change in distribution formula for Medicare+Choice-related 
              nursing and allied health education costs.

      Subtitle C--Changes in Medicare Coverage and Appeals Process

Sec. 521. Revisions to medicare appeals process.
Sec. 522. Revisions to medicare coverage process.

            Subtitle D--Improving Access to New Technologies

Sec. 531. Reimbursement improvements for new clinical laboratory tests 
              and durable medical equipment.
Sec. 532. Retention of HCPCS level III codes.
Sec. 533. Recognition of new medical technologies under inpatient 
              hospital PPS.

                      Subtitle E--Other Provisions

Sec. 541. Increase in reimbursement for bad debt.
Sec. 542. Treatment of certain physician pathology services under 
              medicare.
Sec. 543. Extension of advisory opinion authority.
Sec. 544. Change in annual MedPAC reporting.
Sec. 545. Development of patient assessment instruments.
Sec. 546. GAO report on impact of the Emergency Medical Treatment and 
              Active Labor Act (EMTALA) on hospital emergency 
              departments.
Sec. 547. Clarification of application of temporary payment increases 
              for 2001.

 TITLE VI--PROVISIONS RELATING TO PART C (MEDICARE+CHOICE PROGRAM) AND 
                 OTHER MEDICARE MANAGED CARE PROVISIONS

              Subtitle A--Medicare+Choice Payment Reforms

Sec. 601. Increase in minimum payment amount.
Sec. 602. Increase in minimum percentage increase.
Sec. 603. Phase-in of risk adjustment.
Sec. 604. Transition to revised Medicare+Choice payment rates.
Sec. 605. Revision of payment rates for ESRD patients enrolled in 
              Medicare+Choice plans.
Sec. 606. Permitting premium reductions as additional benefits under 
              Medicare+Choice plans.
Sec. 607. Full implementation of risk adjustment for congestive heart 
              failure enrollees for 2001.
Sec. 608. Expansion of application of Medicare+Choice new entry bonus.
Sec. 609. Report on inclusion of certain costs of the Department of 
              Veterans Affairs and military facility services in 
              calculating Medicare+Choice payment rates.

               Subtitle B--Other Medicare+Choice Reforms

Sec. 611. Payment of additional amounts for new benefits covered during 
              a contract term.
Sec. 612. Restriction on implementation of significant new regulatory 
              requirements midyear.
Sec. 613. Timely approval of marketing material that follows model 
              marketing language.
Sec. 614. Avoiding duplicative regulation.
Sec. 615. Election of uniform local coverage policy for Medicare+Choice 
              plan covering multiple localities.
Sec. 616. Eliminating health disparities in Medicare+Choice program.
Sec. 617. Medicare+Choice program compatibility with employer or union 
              group health plans.
Sec. 618. Special medigap enrollment antidiscrimination provision for 
              certain beneficiaries.

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Sec. 619. Restoring effective date of elections and changes of 
              elections of Medicare+Choice plans.
Sec. 620. Permitting ESRD beneficiaries to enroll in another 
              Medicare+Choice plan if the plan in which they are 
              enrolled is terminated.
Sec. 621. Providing choice for skilled nursing facility services under 
              the Medicare+Choice program.
Sec. 622. Providing for accountability of Medicare+Choice plans.
Sec. 623. Increased civil money penalty for Medicare+Choice 
              organizations that terminate contracts mid-year.

                 Subtitle C--Other Managed Care Reforms

Sec. 631. 1-year extension of social health maintenance organization 
              (SHMO) demonstration project.
Sec. 632. Revised terms and conditions for extension of medicare 
              community nursing organization (CNO) demonstration 
              project.
Sec. 633. Extension of medicare municipal health services demonstration 
              projects.
Sec. 634. Service area expansion for medicare cost contracts during 
              transition period.

                          TITLE VII--MEDICAID

Sec. 701. DSH payments.
Sec. 702. New prospective payment system for Federally-qualified health 
              centers and rural health clinics.
Sec. 703. Streamlined approval of continued State-wide section 1115 
              medicaid waivers.
Sec. 704. Medicaid county-organized health systems.
Sec. 705. Deadline for issuance of final regulation relating to 
              medicaid upper payment limits.
Sec. 706. Alaska FMAP.
Sec. 707. 1-year extension of welfare-to-work transition.
Sec. 708. Additional entities qualified to determine medicaid 
              presumptive eligibility for low-income children.
Sec. 709. Development of uniform QMB/SLMB application form.
Sec. 710. Technical corrections.

         TITLE VIII--STATE CHILDREN'S HEALTH INSURANCE PROGRAM

Sec. 801. Special rule for redistribution and availability of unused 
              fiscal year 1998 and 1999 SCHIP allotments.
Sec. 802. Authority to pay medicaid expansion SCHIP costs from title 
              XXI appropriation.
Sec. 803. Application of medicaid child presumptive eligibility 
              provisions.

                       TITLE IX--OTHER PROVISIONS

                        Subtitle A--PACE Program

Sec. 901. Extension of transition for current waivers.
Sec. 902. Continuing of certain operating arrangements permitted.
Sec. 903. Flexibility in exercising waiver authority.

   Subtitle B--Outreach to Eligible Low-Income Medicare Beneficiaries

Sec. 911. Outreach on availability of medicare cost-sharing assistance 
              to eligible low-income medicare beneficiaries.

           Subtitle C--Maternal and Child Health Block Grant

Sec. 921. Increase in authorization of appropriations for the maternal 
              and child health services block grant.

                          Subtitle D--Diabetes

Sec. 931. Increase in appropriations for special diabetes programs for 
              type I diabetes and Indians.
Sec. 932. Appropriations for Ricky Ray Hemophilia Relief Fund.

          Subtitle E--Information on Nursing Facility Staffing

Sec. 941. Posting of information on nursing facility staffing.

    Subtitle F--Adjustment of Multiemployer Plan Benefits Guaranteed

Sec. 951. Multiemployer plan benefits guaranteed.

               TITLE I--MEDICARE BENEFICIARY IMPROVEMENTS

                Subtitle A--Improved Preventive Benefits

     SEC. 101. COVERAGE OF BIENNIAL SCREENING PAP SMEAR AND PELVIC 
                   EXAMS.

       (a) In General.--
       (1) Biennial screening pap smear.--Section 1861(nn)(1) (42 
     U.S.C. 1395x(nn)(1)) is amended by striking ``3 years'' and 
     inserting ``2 years''.
       (2) Biennial screening pelvic exam.--Section 1861(nn)(2) 
     (42 U.S.C. 1395x(nn)(2)) is amended by striking ``3 years'' 
     and inserting ``2 years''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to items and services furnished on or after July 
     1, 2001.

     SEC. 102. COVERAGE OF SCREENING FOR GLAUCOMA.

       (a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) 
     is amended--
       (1) by striking ``and'' at the end of subparagraph (S);
       (2) by inserting ``and'' at the end of subparagraph (T); 
     and
       (3) by adding at the end the following:
       ``(U) screening for glaucoma (as defined in subsection 
     (uu)) for individuals determined to be at high risk for 
     glaucoma, individuals with a family history of glaucoma and 
     individuals with diabetes;''.
       (b) Services Described.--Section 1861 (42 U.S.C. 1395x) is 
     amended by adding at the end the following new subsection:

                        ``Screening for Glaucoma

       ``(uu) The term `screening for glaucoma' means a dilated 
     eye examination with an intraocular pressure measurement, and 
     a direct ophthalmoscopy or a slit-lamp biomicroscopic 
     examination for the early detection of glaucoma which 
     is furnished by or under the direct supervision of an 
     optometrist or ophthalmologist who is legally authorized 
     to furnish such services under State law (or the State 
     regulatory mechanism provided by State law) of the State 
     in which the services are furnished, as would otherwise be 
     covered if furnished by a physician or as an incident to a 
     physician's professional service, if the individual 
     involved has not had such an examination in the preceding 
     year.''.
       (c) Conforming Amendment.--Section 1862(a)(1)(F) (42 U.S.C. 
     1395y(a)(1)(F)) is amended--
       (1) by striking ``and,''; and
       (2) by adding at the end the following: ``and, in the case 
     of screening for glaucoma, which is performed more frequently 
     than is provided under section 1861(uu),''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to services furnished on or after January 1, 
     2002.

     SEC. 103. COVERAGE OF SCREENING COLONOSCOPY FOR AVERAGE RISK 
                   INDIVIDUALS.

       (a) In General.--Section 1861(pp) (42 U.S.C. 1395x(pp)) is 
     amended--
       (1) in paragraph (1)(C), by striking ``In the case of an 
     individual at high risk for colorectal cancer, screening 
     colonoscopy'' and inserting ``Screening colonoscopy''; and
       (2) in paragraph (2), by striking ``In paragraph (1)(C), 
     an'' and inserting ``An''.
       (b) Frequency Limits for Screening Colonoscopy.--Section 
     1834(d) (42 U.S.C. 1395m(d)) is amended--
       (1) in paragraph (2)(E)(ii), by inserting before the period 
     at the end the following: ``or, in the case of an individual 
     who is not at high risk for colorectal cancer, if the 
     procedure is performed within the 119 months after a previous 
     screening colonoscopy''; and
       (2) in paragraph (3)--
       (A) in the heading by striking ``for individuals at high 
     risk for colorectal cancer'';
       (B) in subparagraph (A), by striking ``for individuals at 
     high risk for colorectal cancer (as defined in section 
     1861(pp)(2))''; and
       (C) in subparagraph (E), by inserting before the period at 
     the end the following: ``or for other individuals if the 
     procedure is performed within the 119 months after a previous 
     screening colonoscopy or within 47 months after a previous 
     screening flexible sigmoidoscopy''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to colorectal cancer screening services provided 
     on or after July 1, 2001.

     SEC. 104. MODERNIZATION OF SCREENING MAMMOGRAPHY BENEFIT.

       (a) Inclusion in Physician Fee Schedule.--Section 
     1848(j)(3) (42 U.S.C. 1395w-4(j)(3)) is amended by inserting 
     ``(13),'' after ``(4),''.
       (b) Conforming Amendment.--Section 1834(c) (42 U.S.C. 
     1395m(c)) is amended to read as follows:
       ``(c) Payment and Standards for Screening Mammography.--
       ``(1) In general.--With respect to expenses incurred for 
     screening mammography (as defined in section 1861(jj)), 
     payment may be made only--
       ``(A) for screening mammography conducted consistent with 
     the frequency permitted under paragraph (2); and
       ``(B) if the screening mammography is conducted by a 
     facility that has a certificate (or provisional certificate) 
     issued under section 354 of the Public Health Service Act.
       ``(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 one 
     screening mammography performed on a woman over 34 years of 
     age, but under 40 years of age; and
       ``(iii) in the case of a woman over 39 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.
       ``(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.''.
       (c) Effective Date.--The amendments made by subsections (a) 
     and (b) shall apply with respect to screening mammographies 
     furnished on or after January 1, 2002.
       (d) Payment for New Technologies.--
       (1) Tests furnished in 2001.--
       (A) Screening.--For a screening mammography (as defined in 
     section 1861(jj) of the Social Security Act (42 U.S.C. 
     1395x(jj))) furnished during the period beginning on April 1, 
     2001, and ending on December 31, 2001, that uses a new 
     technology, payment for such screening mammography shall be 
     made as follows:
       (i) In the case of a technology which directly takes a 
     digital image (without involving film), in an amount equal to 
     150 percent of the amount of payment under section 1848 of 
     such Act (42 U.S.C. 1395w-4) for a bilateral diagnostic 
     mammography (under HCPCS code 76091) for such year.
       (ii) In the case of a technology which allows conversion of 
     a standard film mammogram into a digital image and 
     subsequently analyzes such

[[Page H12348]]

     resulting image with software to identify possible problem 
     areas, in an amount equal to the limit that would otherwise 
     be applied under section 1834(c)(3) of such Act (42 U.S.C. 
     1395m(c)(3)) for 2001, increased by $15.
       (B) Bilateral diagnostic mammography.--For a bilateral 
     diagnostic mammography furnished during the period beginning 
     on April 1, 2001, and ending on December 31, 2001, that uses 
     a new technology described in subparagraph (A), payment for 
     such mammography shall be the amount of payment provided for 
     under such subparagraph.
       (C) Allocation of amounts.--The Secretary shall provide for 
     an appropriate allocation of the amounts under subparagraphs 
     (A) and (B) between the professional and technical 
     components.
       (D) Implementation of provision.--The Secretary of Health 
     and Human Services may implement the provisions of this 
     paragraph by program memorandum or otherwise.
       (2) Consideration of new hcpcs code for new technologies 
     after 2001.--The Secretary shall determine, for such 
     mammographies performed after 2001, whether the assignment of 
     a new HCPCS code is appropriate for mammography that uses a 
     new technology. If the Secretary determines that a new code 
     is appropriate for such mammography, the Secretary shall 
     provide for such new code for such tests furnished after 
     2001.
       (3) New technology described.--For purposes of this 
     subsection, a new technology with respect to a mammography is 
     an advance in technology with respect to the test or 
     equipment that results in the following:
       (A) A significant increase or decrease in the resources 
     used in the test or in the manufacture of the equipment.
       (B) A significant improvement in the performance of the 
     test or equipment.
       (C) A significant advance in medical technology that is 
     expected to significantly improve the treatment of medicare 
     beneficiaries.
       (4) HCPCS code defined.--The term ``HCPCS code'' means a 
     code under the Health Care Financing Administration Common 
     Procedure Coding System (HCPCS).

     SEC. 105. COVERAGE OF MEDICAL NUTRITION THERAPY SERVICES FOR 
                   BENEFICIARIES WITH DIABETES OR A RENAL DISEASE.

       (a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)), 
     as amended by section 102(a), is amended--
       (1) in subparagraph (T), by striking ``and'' at the end;
       (2) in subparagraph (U), by inserting ``and'' at the end; 
     and
       (3) by adding at the end the following new subparagraph:
       ``(V) medical nutrition therapy services (as defined in 
     subsection (vv)(1)) in the case of a beneficiary with 
     diabetes or a renal disease who--
       ``(i) has not received diabetes outpatient self-management 
     training services within a time period determined by the 
     Secretary;
       ``(ii) is not receiving maintenance dialysis for which 
     payment is made under section 1881; and
       ``(iii) meets such other criteria determined by the 
     Secretary after consideration of protocols established by 
     dietitian or nutrition professional organizations;''.
       (b) Services Described.--Section 1861 (42 U.S.C. 1395x), as 
     amended by section 102(b), is amended by adding at the end 
     the following:

``Medical Nutrition Therapy Services; Registered Dietitian or Nutrition 
                              Professional

       ``(vv)(1) The term `medical nutrition therapy services' 
     means nutritional diagnostic, therapy, and counseling 
     services for the purpose of disease management which are 
     furnished by a registered dietitian or nutrition professional 
     (as defined in paragraph (2)) pursuant to a referral by a 
     physician (as defined in subsection (r)(1)).
       ``(2) Subject to paragraph (3), the term `registered 
     dietitian or nutrition professional' means an individual 
     who--
       ``(A) holds a baccalaureate or higher degree granted by a 
     regionally accredited college or university in the United 
     States (or an equivalent foreign degree) with completion of 
     the academic requirements of a program in nutrition or 
     dietetics, as accredited by an appropriate national 
     accreditation organization recognized by the Secretary for 
     this purpose;
       ``(B) has completed at least 900 hours of supervised 
     dietetics practice under the supervision of a registered 
     dietitian or nutrition professional; and
       ``(C)(i) is licensed or certified as a dietitian or 
     nutrition professional by the State in which the services are 
     performed; or
       ``(ii) in the case of an individual in a State that does 
     not provide for such licensure or certification, meets such 
     other criteria as the Secretary establishes.
       ``(3) Subparagraphs (A) and (B) of paragraph (2) shall not 
     apply in the case of an individual who, as of the date of the 
     enactment of this subsection, is licensed or certified as a 
     dietitian or nutrition professional by the State in which 
     medical nutrition therapy services are performed.''.
       (c) Payment.--Section 1833(a)(1) (42 U.S.C. 1395l(a)(1)) is 
     amended--
       (1) by striking ``and'' before ``(S)''; and
       (2) by inserting before the semicolon at the end the 
     following: ``, and (T) with respect to medical nutrition 
     therapy services (as defined in section 1861(vv)), the amount 
     paid shall be 80 percent of the lesser of the actual charge 
     for the services or 85 percent of the amount determined under 
     the fee schedule established under section 1848(b) for the 
     same services if furnished by a physician''.
       (d) Application of Limits on Billing.--Section 
     1842(b)(18)(C) (42 U.S.C. 1395u(b)(18)(C)) is amended by 
     adding at the end the following new clause:
       ``(vi) A registered dietitian or nutrition professional.''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to services furnished on or after January 1, 
     2002.
       (f) Study.--Not later than July 1, 2003, the Secretary of 
     Health and Human Services shall submit to Congress a report 
     that contains recommendations with respect to the expansion 
     to other medicare beneficiary populations of the medical 
     nutrition therapy services benefit (furnished under the 
     amendments made by this section).

               Subtitle B--Other Beneficiary Improvements

     SEC. 111. ACCELERATION OF REDUCTION OF BENEFICIARY COPAYMENT 
                   FOR HOSPITAL OUTPATIENT DEPARTMENT SERVICES.

       (a) Reducing the Upper Limit on Beneficiary Copayment.--
       (1) In general.--Section 1833(t)(8)(C) (42 U.S.C. 
     1395l(t)(8)(C)) is amended to read as follows:
       ``(C) Limitation on copayment amount.--
       ``(i) To inpatient hospital deductible amount.--In no case 
     shall the copayment amount for a procedure performed in a 
     year exceed the amount of the inpatient hospital deductible 
     established under section 1813(b) for that year.
       ``(ii) To specified percentage.--The Secretary shall reduce 
     the national unadjusted copayment amount for a covered OPD 
     service (or group of such services) furnished in a year in a 
     manner so that the effective copayment rate (determined on a 
     national unadjusted basis) for that service in the year does 
     not exceed the following percentage:

       ``(I) For procedures performed in 2001, on or after April 
     1, 2001, 57 percent.
       ``(II) For procedures performed in 2002 or 2003, 55 
     percent.
       ``(III) For procedures performed in 2004, 50 percent.
       ``(IV) For procedures performed in 2005, 45 percent.
       ``(V) For procedures performed in 2006 and thereafter, 40 
     percent.''.

       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply with respect to services furnished on or after 
     April 1, 2001.
       (b) Construction Regarding Limiting Increases in Cost-
     Sharing.--Nothing in this Act or the Social Security Act 
     shall be construed as preventing a hospital from waiving the 
     amount of any coinsurance for outpatient hospital services 
     under the medicare program under title XVIII of the Social 
     Security Act that may have been increased as a result of the 
     implementation of the prospective payment system under 
     section 1833(t) of the Social Security Act (42 U.S.C. 
     1395l(t)).
       (c) GAO Study of Reduction in Medigap Premium Levels 
     Resulting From Reductions in Coinsurance.--The Comptroller 
     General of the United States shall work, in concert with the 
     National Association of Insurance Commissioners, to evaluate 
     the extent to which the premium levels for medicare 
     supplemental policies reflect the reductions in coinsurance 
     resulting from the amendment made by subsection (a). Not 
     later than April 1, 2004, the Comptroller General shall 
     submit to Congress a report on such evaluation and the extent 
     to which the reductions in beneficiary coinsurance effected 
     by such amendment have resulted in actual savings to medicare 
     beneficiaries.

     SEC. 112. PRESERVATION OF COVERAGE OF DRUGS AND BIOLOGICALS 
                   UNDER PART B OF THE MEDICARE PROGRAM.

       (a) In General.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) 
     is amended, in each of subparagraphs (A) and (B), by striking 
     ``(including drugs and biologicals which cannot, as 
     determined in accordance with regulations, be self-
     administered)'' and inserting ``(including drugs and 
     biologicals which are not usually self-administered by the 
     patient)''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to drugs and biologicals administered on or after 
     the date of the enactment of this Act.

     SEC. 113. ELIMINATION OF TIME LIMITATION ON MEDICARE BENEFITS 
                   FOR IMMUNOSUPPRESSIVE DRUGS.

       (a) In General.--Section 1861(s)(2)(J) (42 U.S.C. 
     1395x(s)(2)(J)) is amended by striking ``, but only'' and all 
     that follows up to the semicolon at the end.
       (b) Conforming Amendments.--
       (1) Extended coverage.--Section 1832 (42 U.S.C. 1395k) is 
     amended--
       (A) by striking subsection (b); and
       (B) by redesignating subsection (c) as subsection (b).
       (2) Pass-through; report.--Section 227 of BBRA is amended 
     by striking subsection (d).
       (c) Effective Date.--The amendment made by subsection (a) 
     shall apply to drugs furnished on or after the date of the 
     enactment of this Act.

     SEC. 114. IMPOSITION OF BILLING LIMITS ON DRUGS.

       (a) In General.--Section 1842(o) (42 U.S.C. 1395u(o)) is 
     amended by adding at the end the following new paragraph:
       ``(3)(A) Payment for a charge for any drug or biological 
     for which payment may be made under this part may be made 
     only on an assignment-related basis.
       ``(B) The provisions of subsection (b)(18)(B) shall apply 
     to charges for such drugs or biologicals in the same manner 
     as they apply to services furnished by a practitioner 
     described in subsection (b)(18)(C).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to items furnished on or after January 1, 2001.

     SEC. 115. WAIVER OF 24-MONTH WAITING PERIOD FOR MEDICARE 
                   COVERAGE OF INDIVIDUALS DISABLED WITH 
                   AMYOTROPHIC LATERAL SCLEROSIS (ALS).

       (a) In General.--Section 226 (42 U.S.C. 426) is amended--

[[Page H12349]]

       (1) by redesignating subsection (h) as subsection (j) and 
     by moving such subsection to the end of the section; and
       (2) by inserting after subsection (g) the following new 
     subsection:
       ``(h) For purposes of applying this section in the case of 
     an individual medically determined to have amyotrophic 
     lateral sclerosis (ALS), the following special rules apply:
       ``(1) Subsection (b) shall be applied as if there were no 
     requirement for any entitlement to benefits, or status, for a 
     period longer than 1 month.
       ``(2) The entitlement under such subsection shall begin 
     with the first month (rather than twenty-fifth month) of 
     entitlement or status.
       ``(3) Subsection (f) shall not be applied.''.
       (b) Conforming Amendment.--Section 1837 (42 U.S.C. 1395p) 
     is amended by adding at the end the following new subsection:
       ``(j) In applying this section in the case of an individual 
     who is entitled to benefits under part A pursuant to the 
     operation of section 226(h), the following special rules 
     apply:
       ``(1) The initial enrollment period under subsection (d) 
     shall begin on the first day of the first month in which the 
     individual satisfies the requirement of section 1836(1).
       ``(2) In applying subsection (g)(1), the initial enrollment 
     period shall begin on the first day of the first month of 
     entitlement to disability insurance benefits referred to in 
     such subsection.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to benefits for months beginning July 1, 2001.

             Subtitle C--Demonstration Projects and Studies

     SEC. 121. DEMONSTRATION PROJECT FOR DISEASE MANAGEMENT FOR 
                   SEVERELY CHRONICALLY ILL MEDICARE 
                   BENEFICIARIES.

       (a) In General.--The Secretary of Health and Human Services 
     shall conduct a demonstration project under this section (in 
     this section referred to as the ``project'') to demonstrate 
     the impact on costs and health outcomes of applying disease 
     management to medicare beneficiaries with diagnosed, 
     advanced-stage congestive heart failure, diabetes, or 
     coronary heart disease. In no case may the number of 
     participants in the project exceed 30,000 at any time.
       (b) Voluntary Participation.--
       (1) Eligibility.--Medicare beneficiaries are eligible to 
     participate in the project only if--
       (A) they meet specific medical criteria demonstrating the 
     appropriate diagnosis and the advanced nature of their 
     disease;
       (B) their physicians approve of participation in the 
     project; and
       (C) they are not enrolled in a Medicare+Choice plan.
       (2) Benefits.--A beneficiary who is enrolled in the project 
     shall be eligible--
       (A) for disease management services related to their 
     chronic health condition; and
       (B) for payment for all costs for prescription drugs 
     without regard to whether or not they relate to the chronic 
     health condition, except that the project may provide for 
     modest cost-sharing with respect to prescription drug 
     coverage.
       (c) Contracts With Disease Management Organizations.--
       (1) In general.--The Secretary of Health and Human Services 
     shall carry out the project through contracts with up to 
     three disease management organizations. The Secretary shall 
     not enter into such a contract with an organization unless 
     the organization demonstrates that it can produce improved 
     health outcomes and reduce aggregate medicare expenditures 
     consistent with paragraph (2).
       (2) Contract provisions.--Under such contracts--
       (A) such an organization shall be required to provide for 
     prescription drug coverage described in subsection (b)(2)(B);
       (B) such an organization shall be paid a fee negotiated and 
     established by the Secretary in a manner so that (taking into 
     account savings in expenditures under parts A and B of the 
     medicare program under title XVIII of the Social Security 
     Act) there will be a net reduction in expenditures under the 
     medicare program as a result of the project; and
       (C) such an organization shall guarantee, through an 
     appropriate arrangement with a reinsurance company or 
     otherwise, the net reduction in expenditures described in 
     subparagraph (B).
       (3) Payments.--Payments to such organizations shall be made 
     in appropriate proportion from the Trust Funds established 
     under title XVIII of the Social Security Act.
       (d) Application of Medigap Protections to Demonstration 
     Project Enrollees.--(1) Subject to paragraph (2), the 
     provisions of section 1882(s)(3) (other than clauses (i) 
     through (iv) of subparagraph (B)) and 1882(s)(4) of the 
     Social Security Act shall apply to enrollment (and 
     termination of enrollment) in the demonstration project under 
     this section, in the same manner as they apply to enrollment 
     (and termination of enrollment) with a Medicare+Choice 
     organization in a Medicare+Choice plan.
       (2) In applying paragraph (1)--
       (A) any reference in clause (v) or (vi) of section 
     1882(s)(3)(B) of such Act to 12 months is deemed a reference 
     to the period of the demonstration project; and
       (B) the notification required under section 1882(s)(3)(D) 
     of such Act shall be provided in a manner specified by the 
     Secretary of Health and Human Services.
       (e) Duration.--The project shall last for not longer than 3 
     years.
       (f) Waiver.--The Secretary of Health and Human Services 
     shall waive such provisions of title XVIII of the Social 
     Security Act as may be necessary to provide for payment for 
     services under the project in accordance with subsection 
     (c)(3).
       (g) Report.--The Secretary of Health and Human Services 
     shall submit to Congress an interim report on the project not 
     later than 2 years after the date it is first implemented and 
     a final report on the project not later than 6 months after 
     the date of its completion. Such reports shall include 
     information on the impact of the project on costs and health 
     outcomes and recommendations on the cost-effectiveness of 
     extending or expanding the project.

     SEC. 122. CANCER PREVENTION AND TREATMENT DEMONSTRATION FOR 
                   ETHNIC AND RACIAL MINORITIES.

       (a) Demonstration.--
       (1) In general.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary'') shall 
     conduct demonstration projects (in this section referred to 
     as ``demonstration projects'') for the purpose of developing 
     models and evaluating methods that--
       (A) improve the quality of items and services provided to 
     target individuals in order to facilitate reduced disparities 
     in early detection and treatment of cancer;
       (B) improve clinical outcomes, satisfaction, quality of 
     life, and appropriate use of medicare-covered services and 
     referral patterns among those target individuals with cancer;
       (C) eliminate disparities in the rate of preventive cancer 
     screening measures, such as pap smears and prostate cancer 
     screenings, among target individuals; and
       (D) promote collaboration with community-based 
     organizations to ensure cultural competency of health care 
     professionals and linguistic access for persons with limited 
     English proficiency.
       (2) Target individual defined.--In this section, the term 
     ``target individual'' means an individual of a racial and 
     ethnic minority group, as defined by section 1707 of the 
     Public Health Service Act, who is entitled to benefits under 
     part A, and enrolled under part B, of title XVIII of the 
     Social Security Act.
       (b) Program Design.--
       (1) Initial design.--Not later than 1 year after the date 
     of the enactment of this Act, the Secretary shall evaluate 
     best practices in the private sector, community programs, and 
     academic research of methods that reduce disparities among 
     individuals of racial and ethnic minority groups in the 
     prevention and treatment of cancer and shall design the 
     demonstration projects based on such evaluation.
       (2) Number and project areas.--Not later than 2 years after 
     the date of the enactment of this Act, the Secretary shall 
     implement at least 9 demonstration projects, including the 
     following:
       (A) 2 projects for each of the 4 following major racial and 
     ethnic minority groups:
       (i) American Indians, including Alaska Natives, Eskimos, 
     and Aleuts.
       (ii) Asian Americans and Pacific Islanders.
       (iii) Blacks.
       (iv) Hispanics.
     The 2 projects must target different ethnic subpopulations.
       (B) 1 project within the Pacific Islands.
       (C) At least 1 project each in a rural area and inner-city 
     area.
       (3) Expansion of projects; implementation of demonstration 
     project results.--If the initial report under subsection (c) 
     contains an evaluation that demonstration projects--
       (A) reduce expenditures under the medicare program under 
     title XVIII of the Social Security Act; or
       (B) do not increase expenditures under the medicare program 
     and reduce racial and ethnic health disparities in the 
     quality of health care services provided to target 
     individuals and increase satisfaction of beneficiaries and 
     health care providers;
     the Secretary shall continue the existing demonstration 
     projects and may expand the number of demonstration projects.
       (c) Report to Congress.--
       (1) In general.--Not later than 2 years after the date the 
     Secretary implements the initial demonstration projects, and 
     biannually thereafter, the Secretary shall submit to Congress 
     a report regarding the demonstration projects.
       (2) Contents of report.--Each report under paragraph (1) 
     shall include the following:
       (A) A description of the demonstration projects.
       (B) An evaluation of--
       (i) the cost-effectiveness of the demonstration projects;
       (ii) the quality of the health care services provided to 
     target individuals under the demonstration projects; and
       (iii) beneficiary and health care provider satisfaction 
     under the demonstration projects.
       (C) Any other information regarding the demonstration 
     projects that the Secretary determines to be appropriate.
       (d) Waiver Authority.--The Secretary shall waive compliance 
     with the requirements of title XVIII of the Social Security 
     Act to such extent and for such period as the Secretary 
     determines is necessary to conduct demonstration projects.
       (e) Funding.--
       (1) Demonstration projects.--
       (A) State projects.--Except as provided in subparagraph 
     (B), the Secretary shall provide for the transfer from the 
     Federal Hospital Insurance Trust Fund and the Federal 
     Supplementary Insurance Trust Fund under title XVIII of the 
     Social Security Act, in such proportions as the Secretary 
     determines to be appropriate, of such funds as are necessary 
     for the costs of carrying out the demonstration projects.
       (B) Territory projects.--In the case of a demonstration 
     project described in subsection (b)(2)(B), amounts shall be 
     available only as provided in any Federal law making 
     appropriations for the territories.
       (2) Limitation.--In conducting demonstration projects, the 
     Secretary shall ensure that the aggregate payments made by 
     the Secretary do not exceed the sum of the amount which the 
     Secretary would have paid under the program for

[[Page H12350]]

     the prevention and treatment of cancer if the demonstration 
     projects were not implemented, plus $25,000,000.

     SEC. 123. STUDY ON MEDICARE COVERAGE OF ROUTINE THYROID 
                   SCREENING.

       (a) Study.--The Secretary of Health and Human Services 
     shall request the National Academy of Sciences, and as 
     appropriate in conjunction with the United States Preventive 
     Services Task Force, to conduct a study on the addition of 
     coverage of routine thyroid screening using a thyroid 
     stimulating hormone test as a preventive benefit provided to 
     medicare beneficiaries under title XVIII of the Social 
     Security Act for some or all medicare beneficiaries. In 
     conducting the study, the Academy shall consider the short-
     term and long-term benefits, and costs to the medicare 
     program, of such addition.
       (b) Report.--Not later than 2 years after the date of the 
     enactment of this Act, the Secretary of Health and Human 
     Services shall submit a report on the findings of the study 
     conducted under subsection (a) to the Committee on Ways and 
     Means and the Committee on Commerce of the House of 
     Representatives and the Committee on Finance of the Senate.

     SEC. 124. MEDPAC STUDY ON CONSUMER COALITIONS.

       (a) Study.--The Medicare Payment Advisory Commission shall 
     conduct a study that examines the use of consumer coalitions 
     in the marketing of Medicare+Choice plans under the medicare 
     program under title XVIII of the Social Security Act. The 
     study shall examine--
       (1) the potential for increased efficiency in the medicare 
     program through greater beneficiary knowledge of their health 
     care options, decreased marketing costs of Medicare+Choice 
     organizations, and creation of a group market;
       (2) the implications of Medicare+Choice plans and medicare 
     supplemental policies (under section 1882 of the Social 
     Security Act (42 U.S.C. 1395ss)) offering medicare 
     beneficiaries in the same geographic location different 
     benefits and premiums based on their affiliation with a 
     consumer coalition;
       (3) how coalitions should be governed, how they should be 
     accountable to the Secretary of Health and Human Services, 
     and how potential conflicts of interest in the activities of 
     consumer coalitions should be avoided; and
       (4) how such coalitions should be funded.
       (b) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Commission shall submit to 
     Congress a report on the study conducted under subsection 
     (a). The report shall include a recommendation on whether and 
     how a demonstration project might be conducted for the 
     operation of consumer coalitions under the medicare program.
       (c) Consumer Coalition Defined.--For purposes of this 
     section, the term ``consumer coalition'' means a nonprofit, 
     community-based group of organizations that--
       (1) provides information to medicare beneficiaries about 
     their health care options under the medicare program; and
       (2) negotiates benefits and premiums for medicare 
     beneficiaries who are members or otherwise affiliated with 
     the group of organizations with Medicare+Choice organizations 
     offering Medicare+Choice plans, issuers of medicare 
     supplemental policies, issuers of long-term care coverage, 
     and pharmacy benefit managers.

     SEC. 125. STUDY ON LIMITATION ON STATE PAYMENT FOR MEDICARE 
                   COST-SHARING AFFECTING ACCESS TO SERVICES FOR 
                   QUALIFIED MEDICARE BENEFICIARIES.

       (a) In General.--The Secretary of Health and Human Services 
     shall conduct a study to determine if access to certain 
     services (including mental health services) for qualified 
     medicare beneficiaries has been affected by limitations on a 
     State's payment for medicare cost-sharing for such 
     beneficiaries under section 1902(n) of the Social Security 
     Act (42 U.S.C. 1396a(n)). As part of such study, the 
     Secretary shall analyze the effect of such payment limitation 
     on providers who serve a disproportionate share of such 
     beneficiaries.
       (b) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Secretary shall submit to Congress 
     a report on the study under subsection (a). The report shall 
     include recommendations regarding any changes that should be 
     made to the State payment limits under section 1902(n) for 
     qualified medicare beneficiaries to ensure appropriate access 
     to services.

     SEC. 126. STUDIES ON PREVENTIVE INTERVENTIONS IN PRIMARY CARE 
                   FOR OLDER AMERICANS.

       (a) Studies.--The Secretary of Health and Human Services, 
     acting through the United States Preventive Services Task 
     Force, shall conduct a series of studies designed to identify 
     preventive interventions that can be delivered in the primary 
     care setting and that are most valuable to older Americans.
       (b) Mission Statement.--The mission statement of the United 
     States Preventive Services Task Force is amended to include 
     the evaluation of services that are of particular relevance 
     to older Americans.
       (c) Report.--Not later than 1 year after the date of the 
     enactment of this Act, and annually thereafter, the Secretary 
     of Health and Human Services shall submit to Congress a 
     report on the conclusions of the studies conducted under 
     subsection (a), together with recommendations for such 
     legislation and administrative actions as the Secretary 
     considers appropriate.

     SEC. 127. MEDPAC STUDY AND REPORT ON MEDICARE COVERAGE OF 
                   CARDIAC AND PULMONARY REHABILITATION THERAPY 
                   SERVICES.

       (a) Study.--
       (1) In general.--The Medicare Payment Advisory Commission 
     shall conduct a study on coverage of cardiac and pulmonary 
     rehabilitation therapy services under the medicare program 
     under title XVIII of the Social Security Act.
       (2) Focus.--In conducting the study under paragraph (1), 
     the Commission shall focus on the appropriate--
       (A) qualifying diagnoses required for coverage of cardiac 
     and pulmonary rehabilitation therapy services;
       (B) level of physician direct involvement and supervision 
     in furnishing such services; and
       (C) level of reimbursement for such services.
       (b) Report.--Not later than 18 months after the date of the 
     enactment of this Act, the Commission shall submit to 
     Congress a report on the study conducted under subsection (a) 
     together with such recommendations for legislation and 
     administrative action as the Commission determines 
     appropriate.

     SEC. 128. LIFESTYLE MODIFICATION PROGRAM DEMONSTRATION.

       (a) In General.--The Secretary of Health and Human Services 
     shall carry out the demonstration project known as the 
     Lifestyle Modification Program Demonstration, as described in 
     the Health Care Financing Administration Memorandum of 
     Understanding entered into on November 13, 2000, and as 
     subsequently modified, (in this section referred to as the 
     ``project'') in accordance with the following requirements:
       (1) The project shall include no fewer than 1,800 medicare 
     beneficiaries who complete under the project the entire 
     course of treatment under the Lifestyle Modification Program.
       (2) The project shall be conducted over a course of 4 
     years.
       (b) Study on Cost-Effectiveness.--
       (1) Study.--The Secretary shall conduct a study on the 
     cost-effectiveness of the Lifestyle Modification Program as 
     conducted under the project. In determining whether such 
     Program is cost-effective, the Secretary shall determine 
     (using a control group under a matched paired experimental 
     design) whether expenditures incurred for medicare 
     beneficiaries enrolled under the project exceed expenditures 
     for the control group of medicare beneficiaries with similar 
     health conditions who are not enrolled under the project.
       (2) Reports.--
       (A) Initial report.--Not later that 1 year after the date 
     on which 900 medicare beneficiaries have completed the entire 
     course of treatment under the Lifestyle Modification Program 
     under the project, the Secretary shall submit to Congress an 
     initial report on the study conducted under paragraph (1).
       (B) Final report.--Not later that 1 year after the date on 
     which 1,800 medicare beneficiaries have completed the entire 
     course of treatment under such Program under the project, the 
     Secretary shall submit to Congress a final report on the 
     study conducted under paragraph (1).

                TITLE II--RURAL HEALTH CARE IMPROVEMENTS

            Subtitle A--Critical Access Hospital Provisions

     SEC. 201. CLARIFICATION OF NO BENEFICIARY COST-SHARING FOR 
                   CLINICAL DIAGNOSTIC LABORATORY TESTS FURNISHED 
                   BY CRITICAL ACCESS HOSPITALS.

       (a) Payment Clarification.--Section 1834(g) (42 U.S.C. 
     1395m(g)) is amended by adding at the end the following new 
     paragraph:
       ``(4) No beneficiary cost-sharing for clinical diagnostic 
     laboratory services.--No coinsurance, deductible, copayment, 
     or other cost-sharing otherwise applicable under this part 
     shall apply with respect to clinical diagnostic laboratory 
     services furnished as an outpatient critical access hospital 
     service. Nothing in this title shall be construed as 
     providing for payment for clinical diagnostic laboratory 
     services furnished as part of outpatient critical access 
     hospital services, other than on the basis described in this 
     subsection.''.
       (b) Technical and Conforming Amendments.--
       (1) Paragraphs (1)(D)(i) and (2)(D)(i) of section 1833(a) 
     (42 U.S.C. 1395l(a)) are each amended by striking ``or which 
     are furnished on an outpatient basis by a critical access 
     hospital''.
       (2) Section 403(d)(2) of BBRA (113 Stat. 1501A-371) is 
     amended by striking ``The amendment made by subsection (a) 
     shall apply'' and inserting ``Paragraphs (1) through (3) of 
     section 1834(g) of the Social Security Act (as amended by 
     paragraph (1)) apply''.
       (c) Effective Dates.--The amendment made--
       (1) by subsection (a) shall apply to services furnished on 
     or after the date of the enactment of BBRA;
       (2) by subsection (b)(1) shall apply as if included in the 
     enactment of section 403(e)(1) of BBRA (113 Stat. 1501A-371); 
     and
       (3) by subsection (b)(2) shall apply as if included in the 
     enactment of section 403(d)(2) of BBRA (113 Stat. 1501A-371).

     SEC. 202. ASSISTANCE WITH FEE SCHEDULE PAYMENT FOR 
                   PROFESSIONAL SERVICES UNDER ALL-INCLUSIVE RATE.

       (a) In General.--Section 1834(g)(2)(B) (42 U.S.C. 
     1395m(g)(2)(B)) is amended by inserting ``115 percent of'' 
     before ``such amounts''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply with respect to items and services furnished on 
     or after July 1, 2001.

     SEC. 203. EXEMPTION OF CRITICAL ACCESS HOSPITAL SWING BEDS 
                   FROM SNF PPS.

       (a) In General.--Section 1888(e)(7) (42 U.S.C. 
     1395yy(e)(7)) is amended--
       (1) in the heading, by striking ``Transition for'' and 
     inserting ``Treatment of'';
       (2) in subparagraph (A), by striking ``In general.--The'' 
     and inserting ``Transition.--Subject to subparagraph (C), 
     the'';
       (3) in subparagraph (A), by inserting ``(other than 
     critical access hospitals)'' after ``facilities described in 
     subparagraph (B)'';
       (4) in subparagraph (B), by striking ``, for which 
     payment'' and all that follows before the period; and

[[Page H12351]]

       (5) by adding at the end the following new subparagraph:
       ``(C) Exemption from pps of swing-bed services furnished in 
     critical access hospitals.--The prospective payment system 
     established under this subsection shall not apply to services 
     furnished by a critical access hospital pursuant to an 
     agreement under section 1883.''.
       (b) Payment on a Reasonable Cost Basis for Swing Bed 
     Services Furnished by Critical Access Hospitals.--Section 
     1883(a) (42 U.S.C. 1395tt(a)) is amended--
       (1) in paragraph (2)(A), by inserting ``(other than a 
     critical access hospital)'' after ``any hospital''; and
       (2) by adding at the end the following new paragraph:
       ``(3) Notwithstanding any other provision of this title, a 
     critical access hospital shall be paid for covered skilled 
     nursing facility services furnished under an agreement 
     entered into under this section on the basis of the 
     reasonable costs of such services (as determined under 
     section 1861(v)).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to cost reporting periods beginning on or after 
     the date of the enactment of this Act.

     SEC. 204. PAYMENT IN CRITICAL ACCESS HOSPITALS FOR EMERGENCY 
                   ROOM ON-CALL PHYSICIANS.

       (a) In General.--Section 1834(g) (42 U.S.C. 1395m(g)), as 
     amended by section 201(a), is further amended by adding at 
     the end the following new paragraph:
       ``(5) Coverage of costs for emergency room on-call 
     physicians.--In determining the reasonable costs of 
     outpatient critical access hospital services under paragraphs 
     (1) and (2)(A), the Secretary shall recognize as allowable 
     costs, amounts (as defined by the Secretary) for reasonable 
     compensation and related costs for emergency room physicians 
     who are on-call (as defined by the Secretary) but who are not 
     present on the premises of the critical access hospital 
     involved, and are not otherwise furnishing physicians' 
     services and are not on-call at any other provider or 
     facility.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to cost reporting periods beginning on or after 
     October 1, 2001.

     SEC. 205. TREATMENT OF AMBULANCE SERVICES FURNISHED BY 
                   CERTAIN CRITICAL ACCESS HOSPITALS.

       (a) In General.--Section 1834(l) (42 U.S.C. 1395m(l)) is 
     amended by adding at the end the following new paragraph:
       ``(8) Services furnished by critical access hospitals.--
     Notwithstanding any other provision of this subsection, the 
     Secretary shall pay the reasonable costs incurred in 
     furnishing ambulance services if such services are 
     furnished--
       ``(A) by a critical access hospital (as defined in section 
     1861(mm)(1)), or
       ``(B) by an entity that is owned and operated by a critical 
     access hospital,
     but only if the critical access hospital or entity is the 
     only provider or supplier of ambulance services that is 
     located within a 35-mile drive of such critical access 
     hospital.''.
       (b) Conforming Amendment.--Section 1833(a)(1)(R) (42 U.S.C. 
     1395l(a)(1)(R)) is amended--
       (1) by striking ``ambulance service,'' and inserting 
     ``ambulance services, (i)''; and
       (2) by inserting before the comma at the end the following: 
     ``and (ii) with respect to ambulance services described in 
     section 1834(l)(8), the amounts paid shall be the amounts 
     determined under section 1834(g) for outpatient critical 
     access hospital services''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to services furnished on or after the date of the 
     enactment of this Act.

     SEC. 206. GAO STUDY ON CERTAIN ELIGIBILITY REQUIREMENTS FOR 
                   CRITICAL ACCESS HOSPITALS.

       (a) Study.--The Comptroller General of the United States 
     shall conduct a study on the eligibility requirements for 
     critical access hospitals under section 1820(c) of the Social 
     Security Act (42 U.S.C. 1395i-4(c)) with respect to 
     limitations on average length of stay and number of beds in 
     such a hospital, including an analysis of--
       (1) the feasibility of having a distinct part unit as part 
     of a critical access hospital for purposes of the medicare 
     program under title XVIII of such Act; and
       (2) the effect of seasonal variations in patient admissions 
     on critical access hospital eligibility requirements 
     with respect to limitations on average annual length of 
     stay and number of beds.
       (b) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Comptroller General shall submit 
     to Congress a report on the study conducted under subsection 
     (a) together with recommendations regarding--
       (1) whether distinct part units should be permitted as part 
     of a critical access hospital under the medicare program;
       (2) if so permitted, the payment methodologies that should 
     apply with respect to services provided by such units;
       (3) whether, and to what extent, such units should be 
     included in or excluded from the bed limits applicable to 
     critical access hospitals under the medicare program; and
       (4) any adjustments to such eligibility requirements to 
     account for seasonal variations in patient admissions.

              Subtitle B--Other Rural Hospitals Provisions

     SEC. 211. TREATMENT OF RURAL DISPROPORTIONATE SHARE 
                   HOSPITALS.

       (a) Application of Uniform Threshold.--Section 
     1886(d)(5)(F)(v) (42 U.S.C. 1395ww(d)(5)(F)(v)) is amended--
       (1) in subclause (II), by inserting ``(or 15 percent, for 
     discharges occurring on or after April 1, 2001)'' after ``30 
     percent'';
       (2) in subclause (III), by inserting ``(or 15 percent, for 
     discharges occurring on or after April 1, 2001)'' after ``40 
     percent''; and
       (3) in subclause (IV), by inserting ``(or 15 percent, for 
     discharges occurring on or after April 1, 2001)'' after ``45 
     percent''.
       (b) Adjustment of Payment Formulas.--
       (1) Sole community hospitals.--Section 1886(d)(5)(F) (42 
     U.S.C. 1395ww(d)(5)(F)) is amended--
       (A) in clause (iv)(VI), by inserting after ``10 percent'' 
     the following: ``or, for discharges occurring on or after 
     April 1, 2001, is equal to the percent determined in 
     accordance with clause (x)''; and
       (B) by adding at the end the following new clause:
       ``(x) For purposes of clause (iv)(VI) (relating to sole 
     community hospitals), in the case of a hospital for a cost 
     reporting period with a disproportionate patient percentage 
     (as defined in clause (vi)) that--
       ``(I) is less than 19.3, the disproportionate share --
     adjustment percentage is determined in accordance with the 
     following formula: (P-15)(.65) + 2.5;
       ``(II) is equal to or exceeds 19.3, but is less than 30.0, 
     such adjustment percentage is equal to 5.25 percent; or
       ``(III) is equal to or exceeds 30, such adjustment 
     percentage is equal to 10 percent,
     where `P' is the hospital's disproportionate patient 
     percentage (as defined in clause (vi)).''.
       (2) Rural referral centers.--Such section is further 
     amended--
       (A) in clause (iv)(V), by inserting after ``clause (viii)'' 
     the following: ``or, for discharges occurring on or after 
     April 1, 2001, is equal to the percent determined in 
     accordance with clause (xi)''; and
       (B) by adding at the end the following new clause:
       ``(xi) For purposes of clause (iv)(V) (relating to rural 
     referral centers), in the case of a hospital for a cost 
     reporting period with a disproportionate patient percentage 
     (as defined in clause (vi)) that--
       ``(I) is less than 19.3, the disproportionate share 
     adjustment percentage is determined in accordance with the 
     following formula: (P-15)(.65) + 2.5;
       ``(II) is equal to or exceeds 19.3, but is less than 30.0, 
     such adjustment percentage is equal to 5.25 percent; or
       ``(III) is equal to or exceeds 30, such adjustment 
     percentage is determined in accordance with the following 
     formula: (P-30)(.6) + 5.25,
     where `P' is the hospital's disproportionate patient 
     percentage (as defined in clause (vi)).''.
       (3) Small rural hospitals generally.--Such section is 
     further amended--
       (A) in clause (iv)(III), by inserting after ``4 percent'' 
     the following: ``or, for discharges occurring on or after 
     April 1, 2001, is equal to the percent determined in 
     accordance with clause (xii)''; and
       (B) by adding at the end the following new clause:
       ``(xii) For purposes of clause (iv)(III) (relating to small 
     rural hospitals generally), in the case of a hospital for a 
     cost reporting period with a disproportionate patient 
     percentage (as defined in clause (vi)) that--
       ``(I) is less than 19.3, the disproportionate share 
     adjustment percentage is determined in accordance with the 
     following formula: (P-15)(.65) + 2.5; or
       ``(II) is equal to or exceeds 19.3, such adjustment 
     percentage is equal to 5.25 percent,
     where `P' is the hospital's disproportionate patient 
     percentage (as defined in clause (vi)).''.
       (4) Hospitals that are both sole community hospitals and 
     rural referral centers.--Such section is further amended, in 
     clause (iv)(IV), by inserting after ``clause (viii)'' the 
     following: ``or, for discharges occurring on or after April 
     1, 2001, the greater of the percentages determined under 
     clause (x) or (xi)''.
       (5) Urban hospitals with less than 100 beds.--Such section 
     is further amended--
       (A) in clause (iv)(II), by inserting after ``5 percent'' 
     the following: ``or, for discharges occurring on or after 
     April 1, 2001, is equal to the percent determined in 
     accordance with clause (xiii)''; and
       (B) by adding at the end the following new clause:
       ``(xiii) For purposes of clause (iv)(II) (relating to urban 
     hospitals with less than 100 beds), in the case of a hospital 
     for a cost reporting period with a disproportionate patient 
     percentage (as defined in clause (vi)) that--
       ``(I) is less than 19.3, the disproportionate share 
     adjustment percentage is determined in accordance with the 
     following formula: (P-15)(.65) + 2.5; or
       ``(II) is equal to or exceeds 19.3, such adjustment 
     percentage is equal to 5.25 percent,
     where `P' is the hospital's disproportionate patient 
     percentage (as defined in clause (vi)).''.

     SEC. 212. OPTION TO BASE ELIGIBILITY FOR MEDICARE DEPENDENT, 
                   SMALL RURAL HOSPITAL PROGRAM ON DISCHARGES 
                   DURING 2 OF THE 3 MOST RECENTLY AUDITED COST 
                   REPORTING PERIODS.

       (a) In General.--Section 1886(d)(5)(G)(iv)(IV) (42 U.S.C. 
     1395ww(d)(5)(G)(iv)(IV)) is amended by inserting ``, or 2 of 
     the 3 most recently audited cost reporting periods for which 
     the Secretary has a settled cost report,'' after ``1987''.
       (b) Effective Date.--The amendment made by this section 
     shall apply with respect to cost reporting periods beginning 
     on or after April 1, 2001.

     SEC. 213. EXTENSION OF OPTION TO USE REBASED TARGET AMOUNTS 
                   TO ALL SOLE COMMUNITY HOSPITALS.

       (a) In General.--Section 1886(b)(3)(I)(i) (42 U.S.C. 
     1395ww(b)(3)(I)(i)) is amended--
       (1) in the matter preceding subclause (I), by striking 
     ``that for its cost reporting period beginning during 1999'' 
     and all that follows through ``for such target amount'' and 
     inserting ``there shall be substituted for the amount 
     otherwise

[[Page H12352]]

     determined under subsection (d)(5)(D)(i), if such 
     substitution results in a greater amount of payment under 
     this section for the hospital'';
       (2) in subclause (I), by striking ``target amount otherwise 
     applicable'' and all that follows through ``target amount')'' 
     and inserting ``the amount otherwise applicable to the 
     hospital under subsection (d)(5)(D)(i) (referred to in this 
     clause as the `subsection (d)(5)(D)(i) amount')''; and
       (3) in each of subclauses (II) and (III), by striking 
     ``subparagraph (C) target amount'' and inserting ``subsection 
     (d)(5)(D)(i) amount''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect as if included in the enactment of section 
     405 of BBRA (113 Stat. 1501A-372).

     SEC. 214. MEDPAC ANALYSIS OF IMPACT OF VOLUME ON PER UNIT 
                   COST OF RURAL HOSPITALS WITH PSYCHIATRIC UNITS.

       The Medicare Payment Advisory Commission, in its study 
     conducted pursuant to subsection (a) of section 411 of BBRA 
     (113 Stat. 1501A-377), shall include--
       (1) in such study an analysis of the impact of volume on 
     the per unit cost of rural hospitals with psychiatric units; 
     and
       (2) in its report under subsection (b) of such section a 
     recommendation on whether special treatment for such 
     hospitals may be warranted.

                   Subtitle C--Other Rural Provisions

     SEC. 221. ASSISTANCE FOR PROVIDERS OF AMBULANCE SERVICES IN 
                   RURAL AREAS.

       (a) Transitional Assistance in Certain Mileage Rates.--
     Section 1834(l) (42 U.S.C. 1395m(l)) is amended by adding at 
     the end the following new paragraph:
       ``(8) Transitional assistance for rural providers.--In the 
     case of ground ambulance services furnished on or after July 
     1, 2001, and before January 1, 2004, for which the 
     transportation originates in a rural area (as defined in 
     section 1886(d)(2)(D)) or in a rural census tract of a 
     metropolitan statistical area (as determined under the most 
     recent modification of the Goldsmith Modification, originally 
     published in the Federal Register on February 27, 1992 (57 
     Fed. Reg. 6725)), the fee schedule established under this 
     subsection shall provide that, with respect to the payment 
     rate for mileage for a trip above 17 miles, and up to 50 
     miles, the rate otherwise established shall be increased by 
     not less than \1/2\ of the additional payment per mile 
     established for the first 17 miles of such a trip originating 
     in a rural area.''.
       (b) GAO Studies on the Costs of Ambulance Services 
     Furnished in Rural Areas.--
       (1) Study.--The Comptroller General of the United States 
     shall conduct a study on each of the matters described in 
     paragraph (2).
       (2) Matters described.--The matters referred to in 
     paragraph (1) are the following:
       (A) The cost of efficiently providing ambulance services 
     for trips originating in rural areas, with special emphasis 
     on collection of cost data from rural providers.
       (B) The means by which rural areas with low population 
     densities can be identified for the purpose of designating 
     areas in which the cost of providing ambulance services would 
     be expected to be higher than similar services provided in 
     more heavily populated areas because of low usage. Such study 
     shall also include an analysis of the additional costs of 
     providing ambulance services in areas designated under the 
     previous sentence.
       (3) Report.--Not later than June 30, 2002, the Comptroller 
     General shall submit to Congress a report on the results of 
     the studies conducted under paragraph (1) and shall include 
     recommendations on steps that should be taken to assure 
     access to ambulance services in rural areas.
       (c) Adjustment in Rural Rates.--In providing for 
     adjustments under subparagraph (D) of section 1834(l)(2) of 
     the Social Security Act (42 U.S.C. 1395m(l)(2)) for years 
     beginning with 2004, the Secretary of Health and Human 
     Services shall take into consideration the recommendations 
     contained in the report under subsection (b)(2) and shall 
     adjust the fee schedule payment rates under such section for 
     ambulance services provided in low density rural areas based 
     on the increased cost (if any) of providing such services in 
     such areas.
       (d) Effective Date.--The amendment made by subsection (a) 
     shall apply to services furnished on or after July 1, 2001. 
     In applying such amendment to services furnished on or after 
     such date and before January 1, 2002, the amount of the rate 
     increase provided under such amendment shall be equal to 
     $1.25 per mile.

     SEC. 222. PAYMENT FOR CERTAIN PHYSICIAN ASSISTANT SERVICES.

       (a) Payment for Certain Physician Assistant Services.--
     Section 1842(b)(6)(C) (42 U.S.C. 1395u(b)(6)(C)) is amended--
       (1) by striking ``for such services provided before January 
     1, 2003,''; and
       (2) by striking the semicolon at the end and inserting a 
     comma.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect on the date of the enactment of this Act.

     SEC. 223. REVISION OF MEDICARE REIMBURSEMENT FOR TELEHEALTH 
                   SERVICES.

       (a) Time Limit for BBA Provision.--Section 4206(a) of BBA 
     (42 U.S.C. 1395l note) is amended by striking ``Not later 
     than January 1, 1999'' and inserting ``For services furnished 
     on and after January 1, 1999, and before October 1, 2001''.
       (b) Expansion of Medicare Payment for Telehealth 
     Services.--Section 1834 (42 U.S.C. 1395m) is amended by 
     adding at the end the following new subsection:
       ``(m) Payment for Telehealth Services.--
       ``(1) In general.--The Secretary shall pay for telehealth 
     services that are furnished via a telecommunications system 
     by a physician (as defined in section 1861(r)) or a 
     practitioner (described in section 1842(b)(18)(C)) to an 
     eligible telehealth individual enrolled under this part 
     notwithstanding that the individual physician or practitioner 
     providing the telehealth service is not at the same location 
     as the beneficiary. For purposes of the preceding sentence, 
     in the case of any Federal telemedicine demonstration program 
     conducted in Alaska or Hawaii, the term `telecommunications 
     system' includes store-and-forward technologies that provide 
     for the asynchronous transmission of health care information 
     in single or multimedia formats.
       ``(2) Payment amount.--
       ``(A) Distant site.--The Secretary shall pay to a physician 
     or practitioner located at a distant site that furnishes a 
     telehealth service to an eligible telehealth individual an 
     amount equal to the amount that such physician or 
     practitioner would have been paid under this title had such 
     service been furnished without the use of a 
     telecommunications system.
       ``(B) Facility fee for originating site.--With respect to a 
     telehealth service, subject to section 1833(a)(1)(U), there 
     shall be paid to the originating site a facility fee equal 
     to--
       ``(i) for the period beginning on October 1, 2001, and 
     ending on December 31, 2001, and for 2002, $20; and
       ``(ii) for a subsequent year, the facility fee specified in 
     clause (i) or this clause for the preceding year increased by 
     the percentage increase in the MEI (as defined in section 
     1842(i)(3)) for such subsequent year.
       ``(C) Telepresenter not required.--Nothing in this 
     subsection shall be construed as requiring an eligible 
     telehealth individual to be presented by a physician or 
     practitioner at the originating site for the furnishing of a 
     service via a telecommunications system, unless it is 
     medically necessary (as determined by the physician or 
     practitioner at the distant site).
       ``(3) Limitation on beneficiary charges.--
       ``(A) Physician and practitioner.--The provisions of 
     section 1848(g) and subparagraphs (A) and (B) of section 
     1842(b)(18) shall apply to a physician or practitioner 
     receiving payment under this subsection in the same manner as 
     they apply to physicians or practitioners under such 
     sections.
       ``(B) Originating site.--The provisions of section 
     1842(b)(18) shall apply to originating sites receiving a 
     facility fee in the same manner as they apply to 
     practitioners under such section.
       ``(4) Definitions.--For purposes of this subsection:
       ``(A) Distant site.--The term `distant site' means the site 
     at which the physician or practitioner is located at the time 
     the service is provided via a telecommunications system.
       ``(B) Eligible telehealth individual.--The term `eligible 
     telehealth individual' means an individual enrolled under 
     this part who receives a telehealth service furnished at an 
     originating site.
       ``(C) Originating site.--
       ``(i) In general.--The term `originating site' means only 
     those sites described in clause (ii) at which the eligible 
     telehealth individual is located at the time the service is 
     furnished via a telecommunications system and only if such 
     site is located--

       ``(I) in an area that is designated as a rural health 
     professional shortage area under section 332(a)(1)(A) of the 
     Public Health Service Act (42 U.S.C. 254e(a)(1)(A));
       ``(II) in a county that is not included in a Metropolitan 
     Statistical Area; or
       ``(III) from an entity that participates in a Federal 
     telemedicine demonstration project that has been approved by 
     (or receives funding from) the Secretary of Health and Human 
     Services as of December 31, 2000.

       ``(ii) Sites described.--The sites referred to in clause 
     (i) are the following sites:

       ``(I) The office of a physician or practitioner.
       ``(II) A critical access hospital (as defined in section 
     1861(mm)(1)).
       ``(III) A rural health clinic (as defined in section 
     1861(aa)(s)).
       ``(IV) A Federally qualified health center (as defined in 
     section 1861(aa)(4)).
       ``(V) A hospital (as defined in section 1861(e)).

       ``(D) Physician.--The term `physician' has the meaning 
     given that term in section 1861(r).
       ``(E) Practitioner.--The term `practitioner' has the 
     meaning given that term in section 1842(b)(18)(C).
       ``(F) Telehealth service.--
       ``(i) In general.--The term `telehealth service' means 
     professional consultations, office visits, and office 
     psychiatry services (identified as of July 1, 2000, by HCPCS 
     codes 99241-99275, 99201-99215, 90804-90809, and 90862 (and 
     as subsequently modified by the Secretary)), and any 
     additional service specified by the Secretary.
       ``(ii) Yearly update.--The Secretary shall establish a 
     process that provides, on an annual basis, for the addition 
     or deletion of services (and HCPCS codes), as appropriate, to 
     those specified in clause (i) for authorized payment under 
     paragraph (1).''.
       (c) Conforming Amendment.--Section 1833(a)(1) (42 U.S.C. 
     1395l(1)), as amended by section 105(c), is further amended--
       (1) by striking ``and (T)'' and inserting ``(T)''; and
       (2) by inserting before the semicolon at the end the 
     following: ``, and (U) with respect to facility fees 
     described in section 1834(m)(2)(B), the amounts paid shall be 
     80 percent of the lesser of the actual charge or the amounts 
     specified in such section''.
       (d) Study and Report on Additional Coverage.--
       (1) Study.--The Secretary of Health and Human Services 
     shall conduct a study to identify--
       (A) settings and sites for the provision of telehealth 
     services that are in addition to those permitted under 
     section 1834(m) of the Social Security Act, as added by 
     subsection (b);

[[Page H12353]]

       (B) practitioners that may be reimbursed under such section 
     for furnishing telehealth services that are in addition to 
     the practitioners that may be reimbursed for such services 
     under such section; and
       (C) geographic areas in which telehealth services may be 
     reimbursed that are in addition to the geographic areas where 
     such services may be reimbursed under such section.
       (2) Report.--Not later than 2 years after the date of the 
     enactment of this Act, the Secretary shall submit to Congress 
     a report on the study conducted under paragraph (1) together 
     with such recommendations for legislation that the Secretary 
     determines are appropriate.
       (e) Effective Date.--The amendments made by subsections (b) 
     and (c) shall be effective for services furnished on or after 
     October 1, 2001.

     SEC. 224. EXPANDING ACCESS TO RURAL HEALTH CLINICS.

       (a) In General.--The matter in section 1833(f) (42 U.S.C. 
     1395l(f)) preceding paragraph (1) is amended by striking 
     ``rural hospitals'' and inserting ``hospitals''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to services furnished on or after July 1, 2001.

     SEC. 225. MEDPAC STUDY ON LOW-VOLUME, ISOLATED RURAL HEALTH 
                   CARE PROVIDERS.

       (a) Study.--The Medicare Payment Advisory Commission shall 
     conduct a study on the effect of low patient and procedure 
     volume on the financial status of low-volume, isolated rural 
     health care providers participating in the medicare program 
     under title XVIII of the Social Security Act.
       (b) Report.--Not later than 18 months after the date of the 
     enactment of this Act, the Commission shall submit to 
     Congress a report on the study conducted under subsection (a) 
     indicating--
       (1) whether low-volume, isolated rural health care 
     providers are having, or may have, significantly decreased 
     medicare margins or other financial difficulties resulting 
     from any of the payment methodologies described in subsection 
     (c);
       (2) whether the status as a low-volume, isolated rural 
     health care provider should be designated under the medicare 
     program and any criteria that should be used to qualify for 
     such a status; and
       (3) any changes in the payment methodologies described in 
     subsection (c) that are necessary to provide appropriate 
     reimbursement under the medicare program to low-volume, 
     isolated rural health care providers (as designated pursuant 
     to paragraph (2)).
       (c) Payment Methodologies Described.--The payment 
     methodologies described in this subsection are the following:
       (1) The prospective payment system for hospital outpatient 
     department services under section 1833(t) of the Social 
     Security Act (42 U.S.C. 1395l(t)).
       (2) The fee schedule for ambulance services under section 
     1834(l) of such Act (42 U.S.C. 1395m(l)).
       (3) The prospective payment system for inpatient hospital 
     services under section 1886 of such Act (42 U.S.C. 1395ww).
       (4) The prospective payment system for routine service 
     costs of skilled nursing facilities under section 1888(e) of 
     such Act (42 U.S.C. 1395yy(e)).
       (5) The prospective payment system for home health services 
     under section 1895 of such Act (42 U.S.C. 1395fff).

                TITLE III--PROVISIONS RELATING TO PART A

                Subtitle A--Inpatient Hospital Services

     SEC. 301. REVISION OF ACUTE CARE HOSPITAL PAYMENT UPDATE FOR 
                   2001.

       (a) In General.--Section 1886(b)(3)(B)(i) (42 U.S.C. 
     1395ww(b)(3)(B)(i)) is amended--
       (1) in subclause (XVI), by striking ``minus 1.1 percentage 
     points for hospitals (other than sole community hospitals) in 
     all areas, and the market basket percentage increase for sole 
     community hospitals,'' and inserting ``for hospitals in all 
     areas,'';
       (2) in subclause (XVII)--
       (A) by striking ``minus 1.1 percentage points'' and 
     inserting ``minus 0.55 percentage points; and
       (B) by striking ``and'' at the end;
       (3) by redesignating subclause (XVIII) as subclause (XIX);
       (4) in subclause (XIX), as so redesignated, by striking 
     ``fiscal year 2003'' and inserting ``fiscal year 2004''; and
       (5) by inserting after subclause (XVII) the following new 
     subclause:
       ``(XVIII) for fiscal year 2003, the market basket 
     percentage increase minus 0.55 percentage points for 
     hospitals in all areas, and''.
       (b) Special Rule for Payment for Fiscal Year 2001.--
     Notwithstanding the amendment made by subsection (a), for 
     purposes of making payments for fiscal year 2001 for 
     inpatient hospital services furnished by subsection (d) 
     hospitals (as defined in section 1886(d)(1)(B) of the Social 
     Security Act (42 U.S.C. 1395ww(d)(1)(B)), the ``applicable 
     percentage increase'' referred to in section 1886(b)(3)(B)(i) 
     of such Act (42 U.S.C. 1395ww(b)(3)(B)(i))--
       (1) for discharges occurring on or after October 1, 2000, 
     and before April 1, 2001, shall be determined in accordance 
     with subclause (XVI) of such section as in effect on the day 
     before the date of the enactment of this Act; and
       (2) for discharges occurring on or after April 1, 2001, and 
     before October 1, 2001, shall be equal to--
       (A) the market basket percentage increase plus 1.1 
     percentage points for hospitals (other than sole community 
     hospitals) in all areas; and
       (B) the market basket percentage increase for sole 
     community hospitals.
       (c) Consideration of Price of Blood and Blood Products in 
     Market Basket Index.--The Secretary of Health and Human 
     Services shall, when next (after the date of the enactment of 
     this Act) rebasing and revising the hospital market basket 
     index (as defined in section 1886(b)(3)(B)(iii) of the Social 
     Security Act (42 U.S.C. 1395ww(b)(3)(B)(iii))), consider the 
     prices of blood and blood products purchased by hospitals and 
     determine whether those prices are adequately reflected in 
     such index.
       (d) MedPAC Study and Report Regarding Certain Hospital 
     Costs.--
       (1) Study.--The Medicare Payment Advisory Commission shall 
     conduct a study on--
       (A) any increased costs incurred by subsection (d) 
     hospitals (as defined in paragraph (1)(B) of section 1886(d) 
     of the Social Security Act (42 U.S.C. 1395ww(d))) in 
     providing inpatient hospital services to medicare 
     beneficiaries under title XVIII of such Act during the period 
     beginning on October 1, 1983, and ending on September 30, 
     1999, that were attributable to--
       (i) complying with new blood safety measure requirements; 
     and
       (ii) providing such services using new technologies;
       (B) the extent to which the prospective payment system for 
     such services under such section provides adequate and timely 
     recognition of such increased costs;
       (C) the prospects for (and to the extent practicable, the 
     magnitude of) cost increases that hospitals will incur in 
     providing such services that are attributable to complying 
     with new blood safety measure requirements and providing such 
     services using new technologies during the 10 years after the 
     date of the enactment of this Act; and
       (D) the feasibility and advisability of establishing 
     mechanisms under such payment system to provide for more 
     timely and accurate recognition of such cost increases in the 
     future.
       (2) Consultation.--In conducting the study under this 
     subsection, the Commission shall consult with representatives 
     of the blood community, including--
       (A) hospitals;
       (B) organizations involved in the collection, processing, 
     and delivery of blood; and
       (C) organizations involved in the development of new blood 
     safety technologies.
       (3) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Commission shall submit to 
     Congress a report on the study conducted under paragraph (1) 
     together with such recommendations for legislation and 
     administrative action as the Commission determines 
     appropriate.
       (e) Adjustment for Inpatient Case Mix Changes.--
       (1) In general.--Section 1886(d)(3)(A) (42 U.S.C. 
     1395ww(d)(3)(A)) is amended by adding at the end the 
     following new clause:
       ``(vi) Insofar as the Secretary determines that the 
     adjustments under paragraph (4)(C)(i) for a previous fiscal 
     year (or estimates that such adjustments for a future fiscal 
     year) did (or are likely to) result in a change in aggregate 
     payments under this subsection during the fiscal year that 
     are a result of changes in the coding or classification of 
     discharges that do not reflect real changes in case mix, the 
     Secretary may adjust the average standardized amounts 
     computed under this paragraph for subsequent fiscal years so 
     as to eliminate the effect of such coding or classification 
     changes.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to discharges occurring on or after October 1, 
     2001.

     SEC. 302. ADDITIONAL MODIFICATION IN TRANSITION FOR INDIRECT 
                   MEDICAL EDUCATION (IME) PERCENTAGE ADJUSTMENT.

       (a) In General.--Section 1886(d)(5)(B)(ii) (42 U.S.C. 
     1395ww(d)(5)(B)(ii)) is amended--
       (1) in subclause (V) by striking ``and'' at the end;
       (2) by redesignating subclause (VI) as subclause (VII);
       (3) in subclause (VII) as so redesignated, by striking 
     ``2001'' and inserting ``2002''; and
       (4) by inserting after subclause (V) the following new 
     subclause:
       ``(VI) during fiscal year 2002, `c' is equal to 1.6; and''.
       (b) Special Rule for Payment for Fiscal Year 2001.--
     Notwithstanding paragraph (5)(B)(ii)(V) of section 1886(d) of 
     the Social Security Act (42 U.S.C. 1395ww(d)(5)(B)(ii)(V)), 
     for purposes of making payments for subsection (d) hospitals 
     (as defined in paragraph (1)(B) of such section) with 
     indirect costs of medical education, the indirect teaching 
     adjustment factor referred to in paragraph (5)(B)(ii) of such 
     section shall be determined, for discharges occurring on or 
     after April 1, 2001, and before October 1, 2001, as if ``c'' 
     in paragraph (5)(B)(ii)(V) of such section equalled 1.66 
     rather than 1.54.
       (c) Conforming Amendment Relating to Determination of 
     Standardized Amount.--Section 1886(d)(2)(C)(i) (42 U.S.C. 
     1395ww(d)(2)(C)(i)) is amended by inserting ``or of section 
     302 of the Medicare, Medicaid, and SCHIP Benefits Improvement 
     and Protection Act of 2000'' after ``Balanced Budget 
     Refinement Act of 1999''.
       (d) Clerical Amendments.--Section 1886(d)(5)(B) (42 U.S.C. 
     1395ww(d)(5)(B)), as amended by subsection (a), is further 
     amended by moving the indentation of each of the following 2 
     ems to the left:
       (1) Clauses (ii), (v), and (vi).
       (2) Subclauses (I) (II), (III), (IV), (V), and (VII) of 
     clause (ii).
       (3) Subclauses (I) and (II) of clause (vi) and the flush 
     sentence at the end of such clause.

     SEC. 303. DECREASE IN REDUCTIONS FOR DISPROPORTIONATE SHARE 
                   HOSPITAL (DSH) PAYMENTS.

       (a) In General.--Section 1886(d)(5)(F)(ix) (42 U.S.C. 
     1395ww(d)(5)(F)(ix)) is amended--
       (1) in subclause (III), by striking ``each of'' and by 
     inserting ``and 2 percent, respectively'' after ``3 
     percent''; and

[[Page H12354]]

       (2) in subclause (IV), by striking ``4 percent'' and 
     inserting ``3 percent''.
       (b) Special Rule for Payment for Fiscal Year 2001.--
     Notwithstanding the amendment made by subsection (a)(1), for 
     purposes of making disproportionate share payments for 
     subsection (d) hospitals (as defined in section 1886(d)(1)(B) 
     of the Social Security Act (42 U.S.C. 1395ww(d)(1)(B)) for 
     fiscal year 2001, the additional payment amount otherwise 
     determined under clause (ii) of section 1886(d)(5)(F) of the 
     Social Security Act (42 U.S.C. 1395ww(d)(5)(F))--
       (1) for discharges occurring on or after October 1, 2000, 
     and before April 1, 2001, shall be adjusted as provided by 
     clause (ix)(III) of such section as in effect on the day 
     before the date of the enactment of this Act; and
       (2) for discharges occurring on or after April 1, 2001, and 
     before October 1, 2001, shall, instead of being reduced by 3 
     percent as provided by clause (ix)(III) of such section as in 
     effect after the date of the enactment of this Act, be 
     reduced by 1 percent.
       (c) Conforming Amendments Relating to Determination of 
     Standardized Amount.--Section 1886(d)(2)(C)(iv) (42 U.S.C. 
     1395ww(d)(2)(C)(iv)), is amended--
       (1) by striking ``1989 or'' and inserting ``1989,''; and
       (2) by inserting ``, or the enactment of section 303 of the 
     Medicare, Medicaid, and SCHIP Benefits Improvement and 
     Protection Act of 2000'' after ``Omnibus Budget 
     Reconciliation Act of 1990''.
       (d) Technical Amendment.--
       (1) In general.--Section 1886(d)(5)(F)(i) (42 U.S.C. 
     1395ww(d)(5)(F)(i)) is amended by striking ``and before 
     October 1, 1997,''.
       (2) Effective date.--The amendment made by paragraph (1) is 
     effective as if included in the enactment of BBA.
       (e) Reference to Changes in DSH for Rural Hospitals.--For 
     additional changes in the DSH program for rural hospitals, 
     see section 211.

     SEC. 304. WAGE INDEX IMPROVEMENTS.

       (a) Duration of Wage Index Reclassification; Use of 3-Year 
     Wage Data.--Section 1886(d)(10)(D) (42 U.S.C. 
     1395ww(d)(10)(D)) is amended by adding at the end the 
     following new clauses:
       ``(v) Any decision of the Board to reclassify a subsection 
     (d) hospital for purposes of the adjustment factor described 
     in subparagraph (C)(i)(II) for fiscal year 2001 or any fiscal 
     year thereafter shall be effective for a period of 3 fiscal 
     years, except that the Secretary shall establish procedures 
     under which a subsection (d) hospital may elect to terminate 
     such reclassification before the end of such period.
       ``(vi) Such guidelines shall provide that, in making 
     decisions on applications for reclassification for the 
     purposes described in clause (v) for fiscal year 2003 and any 
     succeeding fiscal year, the Board shall base any comparison 
     of the average hourly wage for the hospital with the average 
     hourly wage for hospitals in an area on--
       ``(I) an average of the average hourly wage amount for the 
     hospital from the most recently published hospital wage 
     survey data of the Secretary (as of the date on which the 
     hospital applies for reclassification) and such amount from 
     each of the two immediately preceding surveys; and
       ``(II) an average of the average hourly wage amount for 
     hospitals in such area from the most recently published 
     hospital wage survey data of the Secretary (as of the date on 
     which the hospital applies for reclassification) and such 
     amount from each of the two immediately preceding surveys.''.
       (b) Process To Permit Statewide Wage Index Calculation and 
     Application.--
       (1) In general.--The Secretary of Health and Human Services 
     shall establish a process (based on the voluntary process 
     utilized by the Secretary of Health and Human Services under 
     section 1848 of the Social Security Act (42 U.S.C. 1395w-4) 
     for purposes of computing and applying a statewide geographic 
     adjustment factor) under which an appropriate statewide 
     entity may apply to have all the geographic areas in a State 
     treated as a single geographic area for purposes of computing 
     and applying the area wage index under section 1886(d)(3)(E) 
     of such Act (42 U.S.C. 1395ww(d)(3)(E)). Such process shall 
     be established by October 1, 2001, for reclassifications 
     beginning in fiscal year 2003.
       (2) Prohibition on individual hospital reclassification.--
     Notwithstanding any other provision of law, if the Secretary 
     applies a statewide geographic wage index under paragraph (1) 
     with respect to a State, any application submitted by a 
     hospital in that State under section 1886(d)(10) of the 
     Social Security Act (42 U.S.C. 1395ww(d)(10)) for geographic 
     reclassification shall not be considered.
       (c) Collection of Information on Occupational Mix.--
       (1) In general.--The Secretary of Health and Human Services 
     shall provide for the collection of data every 3 years on 
     occupational mix for employees of each subsection (d) 
     hospital (as defined in section 1886(d)(1)(D) of the Social 
     Security Act (42 U.S.C. 1395ww(d)(1)(D))) in the provision of 
     inpatient hospital services, in order to construct an 
     occupational mix adjustment in the hospital area wage index 
     applied under section 1886(d)(3)(E) of such Act (42 U.S.C. 
     1395ww(d)(3)(E)).
       (2) Application.--The third sentence of section 
     1886(d)(3)(E) (42 U.S.C. 1395ww(d)(3)(E)) is amended by 
     striking ``To the extent determined feasible by the 
     Secretary, such survey shall measure'' and inserting ``Not 
     less often than once every 3 years the Secretary (through 
     such survey or otherwise) shall measure''.
       (3) Effective date.--By not later than September 30, 2003, 
     for application beginning October 1, 2004, the Secretary 
     shall first complete--
       (A) the collection of data under paragraph (1); and
       (B) the measurement under the third sentence of section 
     1886(d)(3)(E), as amended by paragraph (2).

     SEC. 305. PAYMENT FOR INPATIENT SERVICES OF REHABILITATION 
                   HOSPITALS.

       (a) Assistance With Administrative Costs Associated With 
     Completion of Patient Assessment.--Section 1886(j)(3)(B) (42 
     U.S.C. 1395ww(j)(3)(B)) is amended by striking ``98 percent'' 
     and inserting ``98 percent for fiscal year 2001 and 100 
     percent for fiscal year 2002''.
       (b) Election To Apply Full Prospective Payment Rate Without 
     Phase-in.--
       (1) In general.--Paragraph (1) of section 1886(j) (42 
     U.S.C. 1395ww(j)) is amended--
       (A) in subparagraph (A), by inserting ``other than a 
     facility making an election under subparagraph (F)'' before 
     ``in a cost reporting period'';
       (B) in subparagraph (B), by inserting ``or, in the case of 
     a facility making an election under subparagraph (F), for any 
     cost reporting period described in such subparagraph,'' after 
     ``2002,''; and
       (C) by adding at the end the following new subparagraph:
       ``(F) Election to apply full prospective payment system.--A 
     rehabilitation facility may elect, not later than 30 days 
     before its first cost reporting period for which the payment 
     methodology under this subsection applies to the facility, to 
     have payment made to the facility under this subsection under 
     the provisions of subparagraph (B) (rather than subparagraph 
     (A)) for each cost reporting period to which such payment 
     methodology applies.''.
       (2) Clarification.--Paragraph (3)(B) of such section is 
     amended by inserting ``but not taking into account any 
     payment adjustment resulting from an election permitted under 
     paragraph (1)(F)'' after ``paragraphs (4) and (6)''.
       (c) Effective Date.--The amendments made by this section 
     take effect as if included in the enactment of BBA.

     SEC. 306. PAYMENT FOR INPATIENT SERVICES OF PSYCHIATRIC 
                   HOSPITALS.

       With respect to hospitals described in clause (i) of 
     section 1886(d)(1)(B) of the Social Security Act (42 U.S.C. 
     1395ww(d)(1)(B)) and psychiatric units described in the 
     matter following clause (v) of such section, in making 
     incentive payments to such hospitals under section 
     1886(b)(1)(A) of such Act (42 U.S.C. 1395ww(b)(1)(A)) for 
     cost reporting periods beginning on or after October 1, 2000, 
     and before October 1, 2001, the Secretary of Health and Human 
     Services, in clause (ii) of such section, shall substitute 
     ``3 percent'' for ``2 percent''.

     SEC. 307. PAYMENT FOR INPATIENT SERVICES OF LONG-TERM CARE 
                   HOSPITALS.

       (a) Increased Target Amounts and Caps for Long-Term Care 
     Hospitals Before Implementation of the Prospective Payment 
     System.--
       (1) In general.--Section 1886(b)(3) (42 U.S.C. 
     1395ww(b)(3)) is amended--
       (A) in subparagraph (H)(ii)(III), by inserting ``subject to 
     subparagraph (J),'' after ``2002,''; and
       (B) by adding at the end the following new subparagraph:
       ``(J) For cost reporting periods beginning during fiscal 
     year 2001, for a hospital described in subsection 
     (d)(1)(B)(iv)--
       ``(i) the limiting or cap amount otherwise determined under 
     subparagraph (H) shall be increased by 2 percent; and
       ``(ii) the target amount otherwise determined under 
     subparagraph (A) shall be increased by 25 percent (subject to 
     the limiting or cap amount determined under subparagraph (H), 
     as increased by clause (i)).''.
       (2) Application.--The amendments made by subsection (a) and 
     by section 122 of BBRA (113 Stat. 1501A-331) shall not be 
     taken into account in the development and implementation of 
     the prospective payment system under section 123 of BBRA (113 
     Stat. 1501A-331).
       (b) Implementation of Prospective Payment System for Long-
     Term Care Hospitals.--
       (1) Modification of requirement.--In developing the 
     prospective payment system for payment for inpatient hospital 
     services provided in long-term care hospitals described in 
     section 1886(d)(1)(B)(iv) of the Social Security Act (42 
     U.S.C. 1395ww(d)(1)(B)(iv)) under the medicare program under 
     title XVIII of such Act required under section 123 of BBRA, 
     the Secretary of Health and Human Services shall examine the 
     feasibility and the impact of basing payment under such a 
     system on the use of existing (or refined) hospital 
     diagnosis-related groups (DRGs) that have been modified to 
     account for different resource use of long-term care hospital 
     patients as well as the use of the most recently available 
     hospital discharge data. The Secretary shall examine and may 
     provide for appropriate adjustments to the long-term hospital 
     payment system, including adjustments to DRG weights, area 
     wage adjustments, geographic reclassification, outliers, 
     updates, and a disproportionate share adjustment consistent 
     with section 1886(d)(5)(F) of the Social Security Act (42 
     U.S.C. 1395ww(d)(5)(F)).
       (2) Default implementation of system based on existing drg 
     methodology.--If the Secretary is unable to implement the 
     prospective payment system under section 123 of the BBRA by 
     October 1, 2002, the Secretary shall implement a prospective 
     payment system for such hospitals that bases payment under 
     such a system using existing hospital diagnosis-related 
     groups (DRGs), modified where feasible to account for 
     resource use of long-term care hospital patients using the 
     most recently available hospital discharge data for such 
     services furnished on or after that date.


[[Continued on page H12355]]


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