(As amended Pub. L. 101-73, title VII, § 743(a), (c), Aug. 9, 1989, 103 Stat. 437; Pub. L. 101-220, § 8, Dec. 12, 1989, 103 Stat. 1881; Pub. L. 101-508, title XIII, § 13101(c), Nov. 5, 1990, 104 Stat. 1388-589; Pub. L. 102-54, § 13(a), June 13, 1991, 105 Stat. 274; Pub. L. 102-83, § 5(c)(2), Aug. 6, 1991, 105 Stat. 406; Pub. L. 102-486, title IX, § 902(d), Oct. 24, 1992, 106 Stat. 2944; Pub. L. 102-572, title VI, § 601, Oct. 29, 1992, 106 Stat. 4514.)

TERMINATION OF SECTION

For termination of section by section 14002(c)(3)(A) of Pub. L. 103-66, see Effective and Termination Dates note set out under section 900 of this title.

"Another subsec. (h) appears after subsec. (1). • So in original. Probably should be "(j)".

REFERENCES IN TEXT

Section 907 of this title, referred to in subsec. (f), was amended generally by Pub. L. 101-508, title XIII, § 13101(e)(1), Nov. 5, 1990, 104 Stat. 1388-591, and, as so amended, does not contain a par. (1).

Section 901 of this title, referred to in subsec. (f), was amended generally by Pub. L. 101-508, title XIII, § 13101(a), Nov. 5, 1990, 104 Stat. 1388-577, and, as so amended, does not contain a subsec. (a)(3)(C).

Section 906(b) of this title, referred to in subsec. (f), was redesignated section 906(h) of this title by Pub. L. 101-508, title XIII, § 13101(d)(2), Nov. 5, 1990, 104 Stat. 1388-589.

AMENDMENTS

1992-Subsec. (g)(1)(A). Pub. L. 102-572, § 601(b), inserted item relating to payment to Judiciary Trust Funds.

Pub. L. 102-486 inserted item relating to United States Enrichment Corporation.

Subsec. (g)(1)(B). Pub. L. 102-572, § 601(a), inserted items relating to Judicial Officers' Retirement Fund and Court of Federal Claims Judges' Retirement Fund.

1991-Subsec. (b). Pub. L. 102-83 substituted "section 2307 of title 38" for "section 907 of title 38" in item relating to burial benefits for veterans.

Subsec. (g)(2). Pub. L. 102-54 substituted last two items relating to Department of Veterans Affairs for items relating to Veterans Administration, Loan guaranty revolving fund, and Veterans Administration, Servicemen's group life insurance fund.

1990-Subsec. (a). Pub. L. 101-508, § 13101(c)(1), amended subsec. (a) generally. Prior to amendment, subsec. (a) read as follows: "Increases in benefits payable under the old-age, survivors, and disability insurance program established under title II of the Social Security Act, or in benefits payable under section 231b(a), 231b(f)(3), 231c(a), or 231c(f) of title 45, shall not be considered “automatic spending increases" for purposes of this title; and no reduction in any such increase or in any of the benefits involved shall be made under any order issued under this subchapter."

Subsec. (e). Pub. L. 101-508, § 13101(c)(2), amended subsec. (e) generally. Prior to amendment, subsec. (e) read as follows: "Offsetting receipts and collections shall not be reduced under any order issued under this subchapter."

Subsec. (g)(1)(B). Pub. L. 101-508, § 13101(c)(3), inserted item relating to railroad supplemental annuity pension fund.

Subsec. (h). Pub. L. 101-508, § 13101(c)(4), added subsec. (h) relating to optional exemption of military personnel.

1989-Subsec. (g)(1)(A). Pub. L. 101-220 inserted item relating to Farm Credit System Financial Assistance Corporation, interest payments, after item relating to Exchange stabilization fund.

Pub. L. 101-73, § 743(a)(1), inserted item relating to Director of the Office of Thrift Supervision after item relating to Comptroller of the Currency.

Pub. L. 101-73, § 743(a)(2), substituted items relating to Federal Deposit Insurance Corporation, Bank Insurance Fund; Federal Deposit Insurance Corporation, FSLIC Resolution Fund; and Federal Deposit Insurance Corporation, Savings Association Insurance Fund; for item relating to Federal Home Loan Bank Board.

Pub. L. 101-73, § 743(a)(3), substituted item relating to Federal Housing Finance Board for item relating to Federal Home Loan Bank Board, Federal Savings and Loan Insurance Corporation.

Pub. L. 101-73, § 743(a)(4), inserted items relating to Resolution Funding Corporation and Resolution Trust Corporation after item relating to Postal service fund. Subsec. (g)(2), Pub. L. 101-73, § 743(c), struck out item relating to Federal Savings and Loan Insurance Corporation fund (82-4037-0-3-371),

EFFECTIVE DATE OF 1992 AMENDMENT

Section 1101(a) of Pub. L. 102-572 provided that: "Except as otherwise provided in this Act, the provisions of this Act and the amendments made by this Act [see Tables for classification] shall take effect on January 1, 1993."

SOLDIERS' AND AIRMEN'S HOME

The Soldiers' and Airmen's Home, referred to in subsec. (g)(1)(A), was incorporated into the Armed Forces Retirement Home by section 411 of Title 24, Hospitals and Asylums.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 901, 904 of this title; title 16 section 839d-1.

§ 906. Exceptions, limitations, and special rules

(a) Automatic spending increases

Automatic spending increases are increases in outlays due to changes in indexes in the following programs:

(1) National Wool Act;

(2) Special milk program; and

(3) Vocational rehabilitation basic State grants.

In those programs all amounts other than the automatic spending increases shall be exempt from reduction under any order issued under this subchapter.

(b) Effect of orders on guaranteed student loan pro

gram

(1) Any reductions which are required to be achieved from the student loan programs operated pursuant to part B of title IV of the Higher Education Act of 1965 [20 U.S.C. 1071 et seq.), as a consequence of an order issued pursuant to section 904 of this title, shall be achieved only from loans described in paragraphs (2) and (3) by the application of the measures described in such paragraphs.

(2) For any loan made during the period beginning on the date that an order issued under section 904 of this title takes effect with respect to a fiscal year and ending at the close of such fiscal year, the rate used in computing the special allowance payment pursuant to section 438(b)(2)(A)(iii) of such Act [20 U.S.C. 1087-1(b)(2)(A)(iii)] for each of the first four special allowance payments for such loan shall be adjusted by reducing such rate by the lesser of

(A) 0.40 percent, or

(B) the percentage by which the rate specified in such section exceeds 3 percent.

(3) For any loan made during the period beginning on the date that an order issued under section 904 of this title takes effect with respect to a fiscal year and ending at the close of such fiscal year, the origination fee which is authorized to be collected pursuant to section 438(c)(2) of such Act [20 U.S.C. 1087-1(c)(2)] shall be increased by 0.50 percent.

(c) Treatment of foster care and adoption assistance programs

Any order issued by the President under section 904 of this title shall make the reduction which is otherwise required under the foster

care and adoption assistance programs (established by part E of title IV of the Social Security Act [42 U.S.C. 670 et seq.]) only with respect to payments and expenditures made by States in which increases in foster care maintenance payment rates or adoption assistance payment rates (or both) are to take effect during the fiscal year involved, and only to the extent that the required reduction can be accomplished by applying a uniform percentage reduction to the Federal matching payments that each such State would otherwise receive under section 474 of that Act [42 U.S.C. 674] (for such fiscal year) for that portion of the State's payments which is attributable to the increases taking effect during that year. No State's matching payments from the Federal Government for foster care maintenance payments or for adoption assistance maintenance payments may be reduced by a percentage exceeding the applicable domestic sequestration percentage. No State may, after December 12, 1985, make any change in the timetable for making payments under a State plan approved under part E of title IV of the Social Security Act which has the effect of changing the fiscal year in which expenditures under such part are made.

(d) Special rules for Medicare program

(1) Calculation of reduction in individual payment amounts

To achieve the total percentage reduction in those programs required by sections 902 and 903 of this title, and notwithstanding section 710 of the Social Security Act [42 U.S.C. 911], OMB shall determine, and the applicable Presidential order under section 904 of this title shall implement, the percentage reduction that shall apply to payments under the health insurance programs under title XVIII of the Social Security Act [42 U.S.C. 1395 et seq.] for services furnished after the order is issued, such that the reduction made in payments under that order shall achieve the required total percentage reduction in those payments for that fiscal year as determined on a 12-month basis.

(2) Timing of application of reductions

(A) In general

Except as provided in subparagraph (B), if a reduction is made under paragraph (1) in payment amounts pursuant to a sequestration order, the reduction shall be applied to payment for services furnished during the effective period of the order. For purposes of the previous sentence, in the case of inpatient services furnished for an individual, the services shall be considered to be furnished on the date of the individual's discharge from the inpatient facility. (B) Payment on the basis of cost reporting periods

In the case in which payment for services of a provider of services is made under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.] on a basis relating to the reasonable cost incurred for the services during a cost reporting period of the provider, if a reduction is made under paragraph (1) in

payment amounts pursuant to a sequestration order, the reduction shall be applied to payment for costs for such services incurred at any time during each cost reporting period of the provider any part of which occurs during the effective period of the order, but only (for each such cost reporting period) in the same proportion as the fraction of the cost reporting period that occurs during the effective period of the order.

(3) No increase in beneficiary charges in assignment-related cases

If a reduction in payment amounts is made under paragraph (1) for services for which payment under part B of title XVIII of the Social Security Act [42 U.S.C. 1395j et seq.) is made on the basis of an assignment described in section 1842(b)(3)(B)(ii) [42 U.S.C. 1395u(b)(3)(B)(ii)], in accordance with section 1842(b)(6)(B) [42 U.S.C. 1395u(b)(6)(B)], or under the procedure described in section 1870(f)(1) [42 U.S.C. 1395gg(f)(1)], of such Act, the person furnishing the services shall be considered to have accepted payment of the reasonable charge for the services, less any reduction in payment amount made pursuant to a sequestration order, as payment in full.

(4) No effect on computation of AAPCC

In computing the adjusted average per capita cost for purposes of section 1876(a)(4) of the Social Security Act [42 U.S.C. 1395mm(a)(4)], the Secretary of Health and Human Services shall not take into account any reductions in payment amounts which have been or may be effected under this subchapter.

(e) Community and migrant health centers, Indian health services and facilities, and veterans' medical care

(1) The maximum permissible reduction in budget authority for any account listed in paragraph (2) for any fiscal year, pursuant to an order issued under section 904 of this title, shall be

(A) 1 percent in the case of the fiscal year 1986, and

(B) 2 percent in the case of any subsequent fiscal year.

(2) The accounts referred to in paragraph (1) are as follows:

(A) Community health centers (75-0350-0-1550).

(B) Migrant health centers (75-0350-0-1550).

(C) Indian health facilities (75-0391-0-1551).

(D) Indian health services (75-0390-0-1-551). (E) Veterans' medical care (36-0160-0-1-703). For purposes of the preceding provisions of this paragraph, programs are identified by the designated budget account identification code numbers set forth in the Budget of the United States Government-Appendix.

(f) Treatment of child support enforcement program Notwithstanding any change in the display of budget accounts, any order issued by the President under section 904 of this title shall accomplish the full amount of any required reduction in expenditures under sections 455 and 458 of the Social Security Act [42 U.S.C. 655, 658] by reducing the Federal matching rate for State administrative costs under such program, as specified (for the fiscal year involved) in section 455(a) of such Act, to the extent necessary to reduce such expenditures by that amount. (g) Federal pay

(1) In general

For purposes of any order issued under section 904 of this title

(A) Federal pay under a statutory pay system, and

(B) elements of military pay,

shall be subject to reduction under an order in the same manner as other administrative expense components of the Federal budget; except that no such order may reduce or have the effect of reducing the rate of pay to which any individual is entitled under any such statutory pay system (as increased by any amount payable under section 5304 of title 5 or section 302 of the Federal Employees Pay Comparability Act of 1990) or the rate of any element of military pay to which any individual is entitled under title 37, or any increase in rates of pay which is scheduled to take effect under section 5303 of title 5, section 1009 of title 37, or any other provision of law.

(2) Definitions

(h) Treatment of Federal administrative expenses

(1) Notwithstanding any other provision of this title, administrative expenses incurred by the departments and agencies, including independent agencies, of the Federal Government in connection with any program, project, activity, or account shall be subject to reduction pursuant to an order issued under section 904 of this title, without regard to any exemption, exception, limitation, or special rule which is otherwise applicable with respect to such program, project, activity, or account under this subchapter.

'See References in Text note below.

(2) Notwithstanding any other provision of law, administrative expenses of any program, project, activity, or account which is self-supporting and does not receive appropriations shall be subject to reduction under a sequester order, unless specifically exempted in this joint resolution.

(3) Payments made by the Federal Government to reimburse or match administrative costs incurred by a State or political subdivision under or in connection with any program, project, activity, or account shall not be considered administrative expenses of the Federal Government for purposes of this section, and shall be subject to reduction or sequestration under this subchapter to the extent (and only to the extent) that other payments made by the Federal Government under or in connection with that program, project, activity, or account are subject to such reduction or sequestration; except that Federal payments made to a State as reimbursement of administrative costs incurred by such State under or in connection with the unemployment compensation programs specified in subsection (h)(1) 1 of this section shall be subject to reduction or sequestration under this subchapter notwithstanding the exemption otherwise granted to such programs under that subsection.

(4) Notwithstanding any other provision of law, this subsection shall not apply with respect to the following:

(A) Comptroller of the Currency.

(B) Federal Deposit Insurance Corporation. (C) Office of Thrift Supervision.2

(D) Office of Thrift Supervision.2

(E) National Credit Union Administration. (F) National Credit Union Administration, central liquidity facility.

(G) Federal Retirement Thrift Investment Board.

(H) Resolution Funding Corporation. (I) Resolution Trust Corporation.

So in original. Subpars. (C) and (D) are identical.

(2)(A) A State may reduce each weekly benefit payment made under the Federal-State Extended Unemployment Compensation Act of 1970 for any week of unemployment occurring during any period with respect to which payments are reduced under an order issued under section 904 of this title by a percentage not to exceed the percentage by which the Federal payment to the State under section 204 of such Act is to be reduced for such week as a result of such order.

(B) A reduction by a State in accordance with subparagraph (A) shall not be considered as a failure to fulfill the requirements of section 3304(a)(11) of title 26.

(j) Commodity Credit Corporation

(1) Powers and authorities of the Commodity Credit Corporation

This title shall not restrict the Commodity Credit Corporation in the discharge of its authority and responsibility as a corporation to buy and sell commodities in world trade, to use the proceeds as a revolving fund to meet other obligations and otherwise operate as a corporation, the purpose for which it was created.

(2) Reduction in payments made under contracts

(A) Payments and loan eligibility under any contract entered into with a person by the Commodity Credit Corporation prior to the time an order has been issued under section 904 of this title shall not be reduced by an order subsequently issued. Subject to subparagraph (B), after an order is issued under such section for a fiscal year, any cash payments made by the Commodity Credit Corporation

(i) under the terms of any one-year contract entered into in such fiscal year and after the issuance of the order; and

(ii) out of an entitlement account, to any person (including any producer, lender, or guarantee entity) shall be subject to reduction under the order.

(B) Each contract entered into with producers or producer cooperatives with respect to a particular crop of a commodity and subject to reduction under subparagraph (A) shall be reduced in accordance with the same terms and conditions. If some, but not all, contracts applicable to a crop of a commodity have been entered into prior to the issuance of an order under section 904 of this title, the order shall provide that the necessary reduction in payments under contracts applicable to the commodity be uniformly applied to all contracts for the next succeeding crop of the commodity, under the authority provided in paragraph (3).

(3) Delayed reduction in outlays permissible Notwithstanding any other provision of this joint resolution, if an order under section 904 of this title is issued with respect to a fiscal year, any reduction under the order applicable to contracts described in paragraph (1)

'See References in Text note below.

may provide for reductions in outlays for the account involved to occur in the fiscal year following the fiscal year to which the order applies. No other account, or other program, project, or activity, shall bear an increased reduction for the fiscal year to which the order applies as a result of the operation of the preceding sentence.

(4) Uniform percentage rate of reduction and other limitations

All reductions described in paragraph (2) which are required to be made in connection with an order issued under section 904 of this title with respect to a fiscal year

(A) shall be made so as to ensure that outlays for each program, project, activity, or account involved are reduced by a percentage rate that is uniform for all such programs, projects, activities, and accounts, and may not be made so as to achieve a percentage rate of reduction in any such item exceeding the rate specified in the order; and

(B) with respect to commodity price support and income protection programs, shall be made in such manner and under such procedures as will attempt to ensure that—

(i) uncertainty as to the scope of benefits under any such program is minimized;

(ii) any instability in market prices for agricultural commodities resulting from the reduction is minimized; and

(iii) normal production and marketing relationships among agricultural commodities (including both contract and noncontract commodities) are not distorted.

In meeting the criterion set out in clause (iii) of subparagraph (B) of the preceding sentence, the President shall take into consideration that reductions under an order may apply to programs for two or more agricultural commodities that use the same type of production or marketing resources or that are alternative commodities among which a producer could choose in making annual production decisions.

(5) No double reduction

No agricultural price support or income protection program that is subject to reduction under an order issued under section 904 of this title for a fiscal year may be subject, as well, to modification or suspension under such order as an automatic spending increase. (6) Certain authority not to be limited

Nothing in this joint resolution shall limit or reduce, in any way, any appropriation that provides the Commodity Credit Corporation with budget authority to cover the Corporation's net realized losses.

(k) Special rules for JOBS portion of AFDC

(1) Full amount of sequestration required

Any order issued by the President under section 904 of this title shall accomplish the full amount of any required sequestration of the job opportunities and basic skills training program under section 402(a)(19) [42 U.S.C.