public law 109–1 109th congress an act · proposed settlement agreement provide for the...

119 STAT. 3PUBLIC LAW 109–1—JAN. 7, 2005

LEGISLATIVE HISTORY—H.R. 241:CONGRESSIONAL RECORD, Vol. 151 (2005):

Jan. 6, considered and passed House and Senate.

Æ

Public Law 109–1109th Congress

An ActTo accelerate the income tax benefits for charitable cash contributions for the

relief of victims of the Indian Ocean tsunami.

Be it enacted by the Senate and House of Representatives ofthe United States of America in Congress assembled,SECTION 1. ACCELERATION OF INCOME TAX BENEFITS FOR CHARI-

TABLE CASH CONTRIBUTIONS FOR RELIEF OF INDIANOCEAN TSUNAMI VICTIMS.

(a) IN GENERAL.—For purposes of section 170 of the InternalRevenue Code of 1986, a taxpayer may treat any contributiondescribed in subsection (b) made in January 2005 as if such con-tribution was made on December 31, 2004, and not in January2005.

(b) CONTRIBUTION DESCRIBED.—A contribution is described inthis subsection if such contribution is a cash contribution madefor the relief of victims in areas affected by the December 26,2004, Indian Ocean tsunami for which a charitable contributiondeduction is allowable under section 170 of the Internal RevenueCode of 1986.

Approved January 7, 2005.

Jan. 7, 2005[H.R. 241]

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119 STAT. 4 PUBLIC LAW 109–2—FEB. 18, 2005


An ActTo amend the procedures that apply to consideration of interstate class actions

to assure fairer outcomes for class members and defendants, and for other purposes.

Be it enacted by the Senate and House of Representatives ofthe United States of America in Congress assembled,SECTION 1. SHORT TITLE; REFERENCE; TABLE OF CONTENTS.

(a) SHORT TITLE.—This Act may be cited as the ‘‘Class ActionFairness Act of 2005’’.

(b) REFERENCE.—Whenever in this Act reference is made toan amendment to, or repeal of, a section or other provision, thereference shall be considered to be made to a section or otherprovision of title 28, United States Code.

(c) TABLE OF CONTENTS.—The table of contents for this Actis as follows:

Sec. 1. Short title; reference; table of contents.Sec. 2. Findings and purposes.Sec. 3. Consumer class action bill of rights and improved procedures for interstate

class actions.Sec. 4. Federal district court jurisdiction for interstate class actions.Sec. 5. Removal of interstate class actions to Federal district court.Sec. 6. Report on class action settlements.Sec. 7. Enactment of Judicial Conference recommendations.Sec. 8. Rulemaking authority of Supreme Court and Judicial Conference.Sec. 9. Effective date.

SEC. 2. FINDINGS AND PURPOSES.

(a) FINDINGS.—Congress finds the following:(1) Class action lawsuits are an important and valuable

part of the legal system when they permit the fair and efficientresolution of legitimate claims of numerous parties by allowingthe claims to be aggregated into a single action against adefendant that has allegedly caused harm.

(2) Over the past decade, there have been abuses of theclass action device that have—

(A) harmed class members with legitimate claims anddefendants that have acted responsibly;

(B) adversely affected interstate commerce; and(C) undermined public respect for our judicial system.

(3) Class members often receive little or no benefit fromclass actions, and are sometimes harmed, such as where—

(A) counsel are awarded large fees, while leaving classmembers with coupons or other awards of little or novalue;

(B) unjustified awards are made to certain plaintiffsat the expense of other class members; and

28 USC 1711note.

28 USC 1 note.

Class ActionFairness Act of2005.

Feb. 18, 2005[S. 5]

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119 STAT. 5PUBLIC LAW 109–2—FEB. 18, 2005

(C) confusing notices are published that prevent classmembers from being able to fully understand and effec-tively exercise their rights.(4) Abuses in class actions undermine the national judicial

system, the free flow of interstate commerce, and the conceptof diversity jurisdiction as intended by the framers of the UnitedStates Constitution, in that State and local courts are—

(A) keeping cases of national importance out of Federalcourt;

(B) sometimes acting in ways that demonstrate biasagainst out-of-State defendants; and

(C) making judgments that impose their view of thelaw on other States and bind the rights of the residentsof those States.

(b) PURPOSES.—The purposes of this Act are to—(1) assure fair and prompt recoveries for class members

with legitimate claims;(2) restore the intent of the framers of the United States

Constitution by providing for Federal court consideration ofinterstate cases of national importance under diversity jurisdic-tion; and

(3) benefit society by encouraging innovation and loweringconsumer prices.

SEC. 3. CONSUMER CLASS ACTION BILL OF RIGHTS AND IMPROVEDPROCEDURES FOR INTERSTATE CLASS ACTIONS.

(a) IN GENERAL.—Part V is amended by inserting after chapter113 the following:

‘‘CHAPTER 114—CLASS ACTIONS

‘‘Sec.‘‘1711. Definitions.‘‘1712. Coupon settlements.‘‘1713. Protection against loss by class members.‘‘1714. Protection against discrimination based on geographic location.‘‘1715. Notifications to appropriate Federal and State officials.

‘‘§ 1711. Definitions‘‘In this chapter:

‘‘(1) CLASS.—The term ‘class’ means all of the class mem-bers in a class action.

‘‘(2) CLASS ACTION.—The term ‘class action’ means anycivil action filed in a district court of the United States underrule 23 of the Federal Rules of Civil Procedure or any civilaction that is removed to a district court of the United Statesthat was originally filed under a State statute or rule of judicialprocedure authorizing an action to be brought by 1 or morerepresentatives as a class action.

‘‘(3) CLASS COUNSEL.—The term ‘class counsel’ means thepersons who serve as the attorneys for the class membersin a proposed or certified class action.

‘‘(4) CLASS MEMBERS.—The term ‘class members’ meansthe persons (named or unnamed) who fall within the definitionof the proposed or certified class in a class action.

‘‘(5) PLAINTIFF CLASS ACTION.—The term ‘plaintiff classaction’ means a class action in which class members are plain-tiffs.



‘‘(6) PROPOSED SETTLEMENT.—The term ‘proposed settle-ment’ means an agreement regarding a class action that issubject to court approval and that, if approved, would bebinding on some or all class members.

‘‘§ 1712. Coupon settlements‘‘(a) CONTINGENT FEES IN COUPON SETTLEMENTS.—If a proposed

settlement in a class action provides for a recovery of couponsto a class member, the portion of any attorney’s fee award toclass counsel that is attributable to the award of the couponsshall be based on the value to class members of the coupons thatare redeemed.

‘‘(b) OTHER ATTORNEY’S FEE AWARDS IN COUPON SETTLE-MENTS.—

‘‘(1) IN GENERAL.—If a proposed settlement in a class actionprovides for a recovery of coupons to class members, and aportion of the recovery of the coupons is not used to determinethe attorney’s fee to be paid to class counsel, any attorney’sfee award shall be based upon the amount of time class counselreasonably expended working on the action.

‘‘(2) COURT APPROVAL.—Any attorney’s fee under this sub-section shall be subject to approval by the court and shallinclude an appropriate attorney’s fee, if any, for obtaining equi-table relief, including an injunction, if applicable. Nothing inthis subsection shall be construed to prohibit application ofa lodestar with a multiplier method of determining attorney’sfees.‘‘(c) ATTORNEY’S FEE AWARDS CALCULATED ON A MIXED BASIS

IN COUPON SETTLEMENTS.—If a proposed settlement in a classaction provides for an award of coupons to class members andalso provides for equitable relief, including injunctive relief—

‘‘(1) that portion of the attorney’s fee to be paid to classcounsel that is based upon a portion of the recovery of thecoupons shall be calculated in accordance with subsection (a);and

‘‘(2) that portion of the attorney’s fee to be paid to classcounsel that is not based upon a portion of the recovery ofthe coupons shall be calculated in accordance with subsection(b).‘‘(d) SETTLEMENT VALUATION EXPERTISE.—In a class action

involving the awarding of coupons, the court may, in its discretionupon the motion of a party, receive expert testimony from a witnessqualified to provide information on the actual value to the classmembers of the coupons that are redeemed.

‘‘(e) JUDICIAL SCRUTINY OF COUPON SETTLEMENTS.—In a pro-posed settlement under which class members would be awardedcoupons, the court may approve the proposed settlement only aftera hearing to determine whether, and making a written findingthat, the settlement is fair, reasonable, and adequate for classmembers. The court, in its discretion, may also require that aproposed settlement agreement provide for the distribution of aportion of the value of unclaimed coupons to 1 or more charitableor governmental organizations, as agreed to by the parties. Thedistribution and redemption of any proceeds under this subsectionshall not be used to calculate attorneys’ fees under this section.



‘‘§ 1713. Protection against loss by class members‘‘The court may approve a proposed settlement under which

any class member is obligated to pay sums to class counsel thatwould result in a net loss to the class member only if the courtmakes a written finding that nonmonetary benefits to the classmember substantially outweigh the monetary loss.

‘‘§ 1714. Protection against discrimination based ongeographic location

‘‘The court may not approve a proposed settlement that providesfor the payment of greater sums to some class members thanto others solely on the basis that the class members to whomthe greater sums are to be paid are located in closer geographicproximity to the court.

‘‘§ 1715. Notifications to appropriate Federal and State offi-cials

‘‘(a) DEFINITIONS.—‘‘(1) APPROPRIATE FEDERAL OFFICIAL.—In this section, the

term ‘appropriate Federal official’ means—‘‘(A) the Attorney General of the United States; or‘‘(B) in any case in which the defendant is a Federal

depository institution, a State depository institution, adepository institution holding company, a foreign bank,or a nondepository institution subsidiary of the foregoing(as such terms are defined in section 3 of the FederalDeposit Insurance Act (12 U.S.C. 1813)), the person whohas the primary Federal regulatory or supervisory responsi-bility with respect to the defendant, if some or all of thematters alleged in the class action are subject to regulationor supervision by that person.‘‘(2) APPROPRIATE STATE OFFICIAL.—In this section, the term

‘appropriate State official’ means the person in the State whohas the primary regulatory or supervisory responsibility withrespect to the defendant, or who licenses or otherwise author-izes the defendant to conduct business in the State, if someor all of the matters alleged in the class action are subjectto regulation by that person. If there is no primary regulator,supervisor, or licensing authority, or the matters alleged inthe class action are not subject to regulation or supervisionby that person, then the appropriate State official shall bethe State attorney general.‘‘(b) IN GENERAL.—Not later than 10 days after a proposed

settlement of a class action is filed in court, each defendant thatis participating in the proposed settlement shall serve upon theappropriate State official of each State in which a class memberresides and the appropriate Federal official, a notice of the proposedsettlement consisting of—

‘‘(1) a copy of the complaint and any materials filed withthe complaint and any amended complaints (except such mate-rials shall not be required to be served if such materials aremade electronically available through the Internet and suchservice includes notice of how to electronically access suchmaterial);

‘‘(2) notice of any scheduled judicial hearing in the classaction;

Deadline.



‘‘(3) any proposed or final notification to class membersof—

‘‘(A)(i) the members’ rights to request exclusion fromthe class action; or

‘‘(ii) if no right to request exclusion exists, a statementthat no such right exists; and

‘‘(B) a proposed settlement of a class action;‘‘(4) any proposed or final class action settlement;‘‘(5) any settlement or other agreement contemporaneously

made between class counsel and counsel for the defendants;‘‘(6) any final judgment or notice of dismissal;‘‘(7)(A) if feasible, the names of class members who reside

in each State and the estimated proportionate share of theclaims of such members to the entire settlement to that State’sappropriate State official; or

‘‘(B) if the provision of information under subparagraph(A) is not feasible, a reasonable estimate of the number ofclass members residing in each State and the estimated propor-tionate share of the claims of such members to the entiresettlement; and

‘‘(8) any written judicial opinion relating to the materialsdescribed under subparagraphs (3) through (6).‘‘(c) DEPOSITORY INSTITUTIONS NOTIFICATION.—

‘‘(1) FEDERAL AND OTHER DEPOSITORY INSTITUTIONS.—Inany case in which the defendant is a Federal depository institu-tion, a depository institution holding company, a foreign bank,or a non-depository institution subsidiary of the foregoing, thenotice requirements of this section are satisfied by servingthe notice required under subsection (b) upon the person whohas the primary Federal regulatory or supervisory responsi-bility with respect to the defendant, if some or all of thematters alleged in the class action are subject to regulationor supervision by that person.

‘‘(2) STATE DEPOSITORY INSTITUTIONS.—In any case in whichthe defendant is a State depository institution (as that termis defined in section 3 of the Federal Deposit Insurance Act(12 U.S.C. 1813)), the notice requirements of this section aresatisfied by serving the notice required under subsection (b)upon the State bank supervisor (as that term is defined insection 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813))of the State in which the defendant is incorporated or chartered,if some or all of the matters alleged in the class action aresubject to regulation or supervision by that person, and uponthe appropriate Federal official.‘‘(d) FINAL APPROVAL.—An order giving final approval of a

proposed settlement may not be issued earlier than 90 days afterthe later of the dates on which the appropriate Federal officialand the appropriate State official are served with the notice requiredunder subsection (b).

‘‘(e) NONCOMPLIANCE IF NOTICE NOT PROVIDED.—‘‘(1) IN GENERAL.—A class member may refuse to comply

with and may choose not to be bound by a settlement agreementor consent decree in a class action if the class member dem-onstrates that the notice required under subsection (b) hasnot been provided.

‘‘(2) LIMITATION.—A class member may not refuse to complywith or to be bound by a settlement agreement or consent



decree under paragraph (1) if the notice required under sub-section (b) was directed to the appropriate Federal official andto either the State attorney general or the person that hasprimary regulatory, supervisory, or licensing authority overthe defendant.

‘‘(3) APPLICATION OF RIGHTS.—The rights created by thissubsection shall apply only to class members or any personacting on a class member’s behalf, and shall not be construedto limit any other rights affecting a class member’s participationin the settlement.‘‘(f) RULE OF CONSTRUCTION.—Nothing in this section shall

be construed to expand the authority of, or impose any obligations,duties, or responsibilities upon, Federal or State officials.’’.

(b) TECHNICAL AND CONFORMING AMENDMENT.—The table ofchapters for part V is amended by inserting after the item relatingto chapter 113 the following:

‘‘114. Class Actions .............................................................................................. 1711’’.

SEC. 4. FEDERAL DISTRICT COURT JURISDICTION FOR INTERSTATECLASS ACTIONS.

(a) APPLICATION OF FEDERAL DIVERSITY JURISDICTION.—Section1332 is amended—

(1) by redesignating subsection (d) as subsection (e); and(2) by inserting after subsection (c) the following:

‘‘(d)(1) In this subsection—‘‘(A) the term ‘class’ means all of the class members in

a class action;‘‘(B) the term ‘class action’ means any civil action filed

under rule 23 of the Federal Rules of Civil Procedure or similarState statute or rule of judicial procedure authorizing an actionto be brought by 1 or more representative persons as a classaction;

‘‘(C) the term ‘class certification order’ means an orderissued by a court approving the treatment of some or all aspectsof a civil action as a class action; and

‘‘(D) the term ‘class members’ means the persons (namedor unnamed) who fall within the definition of the proposedor certified class in a class action.‘‘(2) The district courts shall have original jurisdiction of any

civil action in which the matter in controversy exceeds the sumor value of $5,000,000, exclusive of interest and costs, and is aclass action in which—

‘‘(A) any member of a class of plaintiffs is a citizen ofa State different from any defendant;

‘‘(B) any member of a class of plaintiffs is a foreign stateor a citizen or subject of a foreign state and any defendantis a citizen of a State; or

‘‘(C) any member of a class of plaintiffs is a citizen ofa State and any defendant is a foreign state or a citizen orsubject of a foreign state.‘‘(3) A district court may, in the interests of justice and looking

at the totality of the circumstances, decline to exercise jurisdictionunder paragraph (2) over a class action in which greater thanone-third but less than two-thirds of the members of all proposedplaintiff classes in the aggregate and the primary defendants arecitizens of the State in which the action was originally filed basedon consideration of—



‘‘(A) whether the claims asserted involve matters ofnational or interstate interest;

‘‘(B) whether the claims asserted will be governed by lawsof the State in which the action was originally filed or bythe laws of other States;

‘‘(C) whether the class action has been pleaded in a mannerthat seeks to avoid Federal jurisdiction;

‘‘(D) whether the action was brought in a forum with adistinct nexus with the class members, the alleged harm, orthe defendants;

‘‘(E) whether the number of citizens of the State in whichthe action was originally filed in all proposed plaintiff classesin the aggregate is substantially larger than the number ofcitizens from any other State, and the citizenship of the othermembers of the proposed class is dispersed among a substantialnumber of States; and

‘‘(F) whether, during the 3-year period preceding the filingof that class action, 1 or more other class actions assertingthe same or similar claims on behalf of the same or otherpersons have been filed.‘‘(4) A district court shall decline to exercise jurisdiction under

paragraph (2)—‘‘(A)(i) over a class action in which—

‘‘(I) greater than two-thirds of the members of all pro-posed plaintiff classes in the aggregate are citizens of theState in which the action was originally filed;

‘‘(II) at least 1 defendant is a defendant—‘‘(aa) from whom significant relief is sought by

members of the plaintiff class;‘‘(bb) whose alleged conduct forms a significant

basis for the claims asserted by the proposed plaintiffclass; and

‘‘(cc) who is a citizen of the State in which theaction was originally filed; and‘‘(III) principal injuries resulting from the alleged con-

duct or any related conduct of each defendant were incurredin the State in which the action was originally filed; and‘‘(ii) during the 3-year period preceding the filing of that

class action, no other class action has been filed assertingthe same or similar factual allegations against any of thedefendants on behalf of the same or other persons; or

‘‘(B) two-thirds or more of the members of all proposedplaintiff classes in the aggregate, and the primary defendants,are citizens of the State in which the action was originallyfiled.‘‘(5) Paragraphs (2) through (4) shall not apply to any class

action in which—‘‘(A) the primary defendants are States, State officials,

or other governmental entities against whom the district courtmay be foreclosed from ordering relief; or

‘‘(B) the number of members of all proposed plaintiff classesin the aggregate is less than 100.‘‘(6) In any class action, the claims of the individual class

members shall be aggregated to determine whether the matterin controversy exceeds the sum or value of $5,000,000, exclusiveof interest and costs.



‘‘(7) Citizenship of the members of the proposed plaintiff classesshall be determined for purposes of paragraphs (2) through (6)as of the date of filing of the complaint or amended complaint,or, if the case stated by the initial pleading is not subject toFederal jurisdiction, as of the date of service by plaintiffs of anamended pleading, motion, or other paper, indicating the existenceof Federal jurisdiction.

‘‘(8) This subsection shall apply to any class action before orafter the entry of a class certification order by the court withrespect to that action.

‘‘(9) Paragraph (2) shall not apply to any class action thatsolely involves a claim—

‘‘(A) concerning a covered security as defined under 16(f)(3)of the Securities Act of 1933 (15 U.S.C. 78p(f)(3)) and section28(f)(5)(E) of the Securities Exchange Act of 1934 (15 U.S.C.78bb(f)(5)(E));

‘‘(B) that relates to the internal affairs or governance ofa corporation or other form of business enterprise and thatarises under or by virtue of the laws of the State in whichsuch corporation or business enterprise is incorporated or orga-nized; or

‘‘(C) that relates to the rights, duties (including fiduciaryduties), and obligations relating to or created by or pursuantto any security (as defined under section 2(a)(1) of the SecuritiesAct of 1933 (15 U.S.C. 77b(a)(1)) and the regulations issuedthereunder).‘‘(10) For purposes of this subsection and section 1453, an

unincorporated association shall be deemed to be a citizen of theState where it has its principal place of business and the Stateunder whose laws it is organized.

‘‘(11)(A) For purposes of this subsection and section 1453, amass action shall be deemed to be a class action removable underparagraphs (2) through (10) if it otherwise meets the provisionsof those paragraphs.

‘‘(B)(i) As used in subparagraph (A), the term ‘mass action’means any civil action (except a civil action within the scope ofsection 1711(2)) in which monetary relief claims of 100 or morepersons are proposed to be tried jointly on the ground that theplaintiffs’ claims involve common questions of law or fact, exceptthat jurisdiction shall exist only over those plaintiffs whose claimsin a mass action satisfy the jurisdictional amount requirementsunder subsection (a).

‘‘(ii) As used in subparagraph (A), the term ‘mass action’ shallnot include any civil action in which—

‘‘(I) all of the claims in the action arise from an eventor occurrence in the State in which the action was filed, andthat allegedly resulted in injuries in that State or in Statescontiguous to that State;

‘‘(II) the claims are joined upon motion of a defendant;‘‘(III) all of the claims in the action are asserted on behalf

of the general public (and not on behalf of individual claimantsor members of a purported class) pursuant to a State statutespecifically authorizing such action; or

‘‘(IV) the claims have been consolidated or coordinatedsolely for pretrial proceedings.‘‘(C)(i) Any action(s) removed to Federal court pursuant to this

subsection shall not thereafter be transferred to any other court



pursuant to section 1407, or the rules promulgated thereunder,unless a majority of the plaintiffs in the action request transferpursuant to section 1407.

‘‘(ii) This subparagraph will not apply—‘‘(I) to cases certified pursuant to rule 23 of the Federal

Rules of Civil Procedure; or‘‘(II) if plaintiffs propose that the action proceed as a class

action pursuant to rule 23 of the Federal Rules of Civil Proce-dure.‘‘(D) The limitations periods on any claims asserted in a mass

action that is removed to Federal court pursuant to this subsectionshall be deemed tolled during the period that the action is pendingin Federal court.’’.

(b) CONFORMING AMENDMENTS.—(1) Section 1335(a)(1) is amended by inserting ‘‘subsection

(a) or (d) of’’ before ‘‘section 1332’’.(2) Section 1603(b)(3) is amended by striking ‘‘(d)’’ and

inserting ‘‘(e)’’.

SEC. 5. REMOVAL OF INTERSTATE CLASS ACTIONS TO FEDERAL DIS-TRICT COURT.

(a) IN GENERAL.—Chapter 89 is amended by adding after sec-tion 1452 the following:

‘‘§ 1453. Removal of class actions‘‘(a) DEFINITIONS.—In this section, the terms ‘class’, ‘class

action’, ‘class certification order’, and ‘class member’ shall havethe meanings given such terms under section 1332(d)(1).

‘‘(b) IN GENERAL.—A class action may be removed to a districtcourt of the United States in accordance with section 1446 (exceptthat the 1-year limitation under section 1446(b) shall not apply),without regard to whether any defendant is a citizen of the Statein which the action is brought, except that such action may beremoved by any defendant without the consent of all defendants.

‘‘(c) REVIEW OF REMAND ORDERS.—‘‘(1) IN GENERAL.—Section 1447 shall apply to any removal

of a case under this section, except that notwithstanding section1447(d), a court of appeals may accept an appeal from anorder of a district court granting or denying a motion to remanda class action to the State court from which it was removedif application is made to the court of appeals not less than7 days after entry of the order.

‘‘(2) TIME PERIOD FOR JUDGMENT.—If the court of appealsaccepts an appeal under paragraph (1), the court shall completeall action on such appeal, including rendering judgment, notlater than 60 days after the date on which such appeal wasfiled, unless an extension is granted under paragraph (3).

‘‘(3) EXTENSION OF TIME PERIOD.—The court of appealsmay grant an extension of the 60-day period described in para-graph (2) if—

‘‘(A) all parties to the proceeding agree to such exten-sion, for any period of time; or

‘‘(B) such extension is for good cause shown and inthe interests of justice, for a period not to exceed 10 days.‘‘(4) DENIAL OF APPEAL.—If a final judgment on the appeal

under paragraph (1) is not issued before the end of the period

Applicability.



described in paragraph (2), including any extension under para-graph (3), the appeal shall be denied.‘‘(d) EXCEPTION.—This section shall not apply to any class action

that solely involves—‘‘(1) a claim concerning a covered security as defined under

section 16(f)(3) of the Securities Act of 1933 (15 U.S.C. 78p(f)(3))and section 28(f)(5)(E) of the Securities Exchange Act of 1934(15 U.S.C. 78bb(f)(5)(E));

‘‘(2) a claim that relates to the internal affairs or govern-ance of a corporation or other form of business enterpriseand arises under or by virtue of the laws of the State inwhich such corporation or business enterprise is incorporatedor organized; or

‘‘(3) a claim that relates to the rights, duties (includingfiduciary duties), and obligations relating to or created by orpursuant to any security (as defined under section 2(a)(1) ofthe Securities Act of 1933 (15 U.S.C. 77b(a)(1)) and the regula-tions issued thereunder).’’.(b) TECHNICAL AND CONFORMING AMENDMENTS.—The table of

sections for chapter 89 is amended by adding after the item relatingto section 1452 the following:

‘‘1453. Removal of class actions.’’.

SEC. 6. REPORT ON CLASS ACTION SETTLEMENTS.

(a) IN GENERAL.—Not later than 12 months after the dateof enactment of this Act, the Judicial Conference of the UnitedStates, with the assistance of the Director of the Federal JudicialCenter and the Director of the Administrative Office of the UnitedStates Courts, shall prepare and transmit to the Committees onthe Judiciary of the Senate and the House of Representatives areport on class action settlements.

(b) CONTENT.—The report under subsection (a) shall contain—(1) recommendations on the best practices that courts can

use to ensure that proposed class action settlements are fairto the class members that the settlements are supposed tobenefit;

(2) recommendations on the best practices that courts canuse to ensure that—

(A) the fees and expenses awarded to counsel in connec-tion with a class action settlement appropriately reflectthe extent to which counsel succeeded in obtaining fullredress for the injuries alleged and the time, expense,and risk that counsel devoted to the litigation; and

(B) the class members on whose behalf the settlementis proposed are the primary beneficiaries of the settlement;and(3) the actions that the Judicial Conference of the United

States has taken and intends to take toward having the Federaljudiciary implement any or all of the recommendations con-tained in the report.(c) AUTHORITY OF FEDERAL COURTS.—Nothing in this section

shall be construed to alter the authority of the Federal courtsto supervise attorneys’ fees.SEC. 7. ENACTMENT OF JUDICIAL CONFERENCE RECOMMENDATIONS.

Notwithstanding any other provision of law, the amendmentsto rule 23 of the Federal Rules of Civil Procedure, which are

28 USC 2074note.



LEGISLATIVE HISTORY—S. 5:CONGRESSIONAL RECORD, Vol. 151 (2005):

Feb. 7–10, considered and passed Senate.Feb. 17, considered and passed House.

WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 41 (2005):Feb. 18, Presidential remarks.

Æ

set forth in the order entered by the Supreme Court of the UnitedStates on March 27, 2003, shall take effect on the date of enactmentof this Act or on December 1, 2003 (as specified in that order),whichever occurs first.SEC. 8. RULEMAKING AUTHORITY OF SUPREME COURT AND JUDICIAL

CONFERENCE.

Nothing in this Act shall restrict in any way the authorityof the Judicial Conference and the Supreme Court to propose andprescribe general rules of practice and procedure under chapter131 of title 28, United States Code.SEC. 9. EFFECTIVE DATE.

The amendments made by this Act shall apply to any civilaction commenced on or after the date of enactment of this Act.

Approved February 18, 2005.

28 USC 1332note.

28 USC 2071note.


119 STAT. 15PUBLIC LAW 109–3—MAR. 21, 2005


An ActFor the relief of the parents of Theresa Marie Schiavo.

Be it enacted by the Senate and House of Representatives ofthe United States of America in Congress assembled,

SECTION 1. RELIEF OF THE PARENTS OF THERESA MARIE SCHIAVO.

The United States District Court for the Middle District ofFlorida shall have jurisdiction to hear, determine, and render judg-ment on a suit or claim by or on behalf of Theresa Marie Schiavofor the alleged violation of any right of Theresa Marie Schiavounder the Constitution or laws of the United States relating tothe withholding or withdrawal of food, fluids, or medical treatmentnecessary to sustain her life.

SEC. 2. PROCEDURE.

Any parent of Theresa Marie Schiavo shall have standing tobring a suit under this Act. The suit may be brought againstany other person who was a party to State court proceedingsrelating to the withholding or withdrawal of food, fluids, or medicaltreatment necessary to sustain the life of Theresa Marie Schiavo,or who may act pursuant to a State court order authorizing ordirecting the withholding or withdrawal of food, fluids, or medicaltreatment necessary to sustain her life. In such a suit, the DistrictCourt shall determine de novo any claim of a violation of anyright of Theresa Marie Schiavo within the scope of this Act, notwith-standing any prior State court determination and regardless ofwhether such a claim has previously been raised, considered, ordecided in State court proceedings. The District Court shall enter-tain and determine the suit without any delay or abstention infavor of State court proceedings, and regardless of whether remediesavailable in the State courts have been exhausted.

SEC. 3. RELIEF.

After a determination of the merits of a suit brought underthis Act, the District Court shall issue such declaratory and injunc-tive relief as may be necessary to protect the rights of TheresaMarie Schiavo under the Constitution and laws of the United Statesrelating to the withholding or withdrawal of food, fluids, or medicaltreatment necessary to sustain her life.

SEC. 4. TIME FOR FILING.

Notwithstanding any other time limitation, any suit or claimunder this Act shall be timely if filed within 30 days after thedate of enactment of this Act.

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119 STAT. 16 PUBLIC LAW 109–3—MAR. 21, 2005


Mar. 20, considered and passed Senate and House.

Æ

SEC. 5. NO CHANGE OF SUBSTANTIVE RIGHTS.

Nothing in this Act shall be construed to create substantiverights not otherwise secured by the Constitution and laws of theUnited States or of the several States.SEC. 6. NO EFFECT ON ASSISTING SUICIDE.

Nothing in this Act shall be construed to confer additionaljurisdiction on any court to consider any claim related—

(1) to assisting suicide, or(2) a State law regarding assisting suicide.

SEC. 7. NO PRECEDENT FOR FUTURE LEGISLATION.

Nothing in this Act shall constitute a precedent with respectto future legislation, including the provision of private relief bills.SEC. 8. NO AFFECT ON THE PATIENT SELF-DETERMINATION ACT OF

1990.

Nothing in this Act shall affect the rights of any person underthe Patient Self-Determination Act of 1990.SEC. 9. SENSE OF THE CONGRESS.

It is the Sense of Congress that the 109th Congress shouldconsider policies regarding the status and legal rights of incapaci-tated individuals who are incapable of making decisions concerningthe provision, withholding, or withdrawal of foods, fluid, or medicalcare.

Approved March 21, 2005.

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An ActTo reauthorize the Temporary Assistance for Needy Families block grant program

through June 30, 2005, and for other purposes.

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

This Act may be cited as the ‘‘Welfare Reform Extension Actof 2005’’.SEC. 2. EXTENSION OF THE TEMPORARY ASSISTANCE FOR NEEDY

FAMILIES BLOCK GRANT PROGRAM THROUGH JUNE 30,2005.

(a) IN GENERAL.—Activities authorized by part A of title IVof the Social Security Act, and by sections 510, 1108(b), and 1925of such Act, shall continue through June 30, 2005, in the mannerauthorized for fiscal year 2004, notwithstanding section1902(e)(1)(A) of such Act, and out of any money in the Treasuryof the United States not otherwise appropriated, there are herebyappropriated such sums as may be necessary for such purpose.Grants and payments may be made pursuant to this authoritythrough the third quarter of fiscal year 2005 at the level providedfor such activities through the third quarter of fiscal year 2004.

(b) CONFORMING AMENDMENT.—Section 403(a)(3)(H)(ii) of theSocial Security Act (42 U.S.C. 603(a)(3)(H)(ii)) is amended bystriking ‘‘March 31’’ and inserting ‘‘June 30’’.SEC. 3. EXTENSION OF THE NATIONAL RANDOM SAMPLE STUDY OF

CHILD WELFARE AND CHILD WELFARE WAIVERAUTHORITY THROUGH JUNE 30, 2005.

Activities authorized by sections 429A and 1130(a) of the SocialSecurity Act shall continue through June 30, 2005, in the mannerauthorized for fiscal year 2004, and out of any money in theTreasury of the United States not otherwise appropriated, thereare hereby appropriated such sums as may be necessary for suchpurpose. Grants and payments may be made pursuant to thisauthority through the third quarter of fiscal year 2005 at the

42 USC 603.

Welfare ReformExtension Actof 2005.42 USC 1305note.

Mar. 25, 2005[H.R. 1160]

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Mar. 14, considered and passed House.Mar. 15, considered and passed Senate.

Æ

level provided for such activities through the third quarter of fiscalyear 2004.





Feb. 16, considered and passed Senate.Mar. 14, considered and passed House.

Æ


An ActTo extend the existence of the Nazi War Crimes and Japanese Imperial Government

Records Interagency Working Group for 2 years.

Be it enacted by the Senate and House of Representatives ofthe United States of America in Congress assembled,SECTION 1. TWO-YEAR EXTENSION OF WORKING GROUP.

Section 802(b)(1) of the Japanese Imperial Government Disclo-sure Act of 2000 (Public Law 106–567; 114 Stat. 2865) is amendedby striking ‘‘4 years’’ and inserting ‘‘6 years’’.


5 USC 552 note.

Mar. 25, 2005[S. 384]




Mar. 16, considered and passed House.Mar. 17, considered and passed Senate.

Æ


An ActTo amend the Internal Revenue Code of 1986 to extend the Leaking Underground

Storage Tank Trust Fund financing rate.

Be it enacted by the Senate and House of Representatives ofthe United States of America in Congress assembled,SECTION 1. EXTENSION OF LEAKING UNDERGROUND STORAGE TANK

TRUST FUND FINANCING RATE.

(a) IN GENERAL.—Paragraph (3) of section 4081(d) of theInternal Revenue Code of 1986 (relating to Leaking UndergroundStorage Tank Trust Fund financing rate) is amended by striking‘‘April 1, 2005’’ and inserting ‘‘October 1, 2005’’.

(b) EFFECTIVE DATE.—The amendment made by this sectionshall take effect on the date of the enactment of this Act.


26 USC 4081note.

26 USC 4081.

Mar. 31, 2005[H.R. 1270]


119 STAT. 21PUBLIC LAW 109–7—APR. 15, 2005


An ActTo amend the Internal Revenue Code of 1986 to provide for the proper tax treatment

of certain disaster mitigation payments.

Be it enacted by the Senate and House of Representatives ofthe United States of America in Congress assembled,

SECTION 1. PROPER TAX TREATMENT OF CERTAIN DISASTER MITIGA-TION PAYMENTS.

(a) QUALIFIED DISASTER MITIGATION PAYMENTS EXCLUDEDFROM GROSS INCOME.—

(1) IN GENERAL.—Section 139 of the Internal Revenue Codeof 1986 (relating to disaster relief payments) is amended byadding at the end the following new subsections:‘‘(g) QUALIFIED DISASTER MITIGATION PAYMENTS.—

‘‘(1) IN GENERAL.—Gross income shall not include anyamount received as a qualified disaster mitigation payment.

‘‘(2) QUALIFIED DISASTER MITIGATION PAYMENT DEFINED.—For purposes of this section, the term ‘qualified disaster mitiga-tion payment’ means any amount which is paid pursuant tothe Robert T. Stafford Disaster Relief and Emergency Assist-ance Act (as in effect on the date of the enactment of thissubsection) or the National Flood Insurance Act (as in effecton such date) to or for the benefit of the owner of any propertyfor hazard mitigation with respect to such property. Such termshall not include any amount received for the sale or dispositionof any property.

‘‘(3) NO INCREASE IN BASIS.—Notwithstanding any otherprovision of this subtitle, no increase in the basis or adjustedbasis of any property shall result from any amount excludedunder this subsection with respect to such property.‘‘(h) DENIAL OF DOUBLE BENEFIT.—Notwithstanding any other

provision of this subtitle, no deduction or credit shall be allowed(to the person for whose benefit a qualified disaster relief paymentor qualified disaster mitigation payment is made) for, or by reasonof, any expenditure to the extent of the amount excluded underthis section with respect to such expenditure.’’.

(2) CONFORMING AMENDMENTS.—(A) Subsection (d) of section 139 of such Code is

amended by striking ‘‘a qualified disaster relief payment’’and inserting ‘‘qualified disaster relief payments and quali-fied disaster mitigation payments’’.

(B) Subsection (e) of section 139 of such Code isamended by striking ‘‘and (f)’’ and inserting ‘‘, (f), and(g)’’.

26 USC 139.

Apr. 15, 2005[H.R. 1134]


119 STAT. 22 PUBLIC LAW 109–7—APR. 15, 2005


Mar. 14, considered and passed House.Apr. 13, considered and passed Senate, amended.Apr. 14, House concurred in Senate amendment.

Æ

(b) CERTAIN DISPOSITIONS OF PROPERTY UNDER HAZARD MITIGA-TION PROGRAMS TREATED AS INVOLUNTARY CONVERSIONS.—Section1033 of such Code (relating to involuntary conversions) is amendedby redesignating subsection (k) as subsection (l) and by insertingafter subsection (j) the following new subsection:

‘‘(k) SALES OR EXCHANGES UNDER CERTAIN HAZARD MITIGATIONPROGRAMS.—For purposes of this subtitle, if property is sold orotherwise transferred to the Federal Government, a State or localgovernment, or an Indian tribal government to implement hazardmitigation under the Robert T. Stafford Disaster Relief and Emer-gency Assistance Act (as in effect on the date of the enactmentof this subsection) or the National Flood Insurance Act (as ineffect on such date), such sale or transfer shall be treated asan involuntary conversion to which this section applies.’’.

(c) EFFECTIVE DATE.—(1) QUALIFIED DISASTER MITIGATION PAYMENTS.—The

amendments made by subsection (a) shall apply to amountsreceived before, on, or after the date of the enactment of thisAct.

(2) DISPOSITIONS OF PROPERTY UNDER HAZARD MITIGATIONPROGRAMS.—The amendments made by subsection (b) shallapply to sales or other dispositions before, on, or after thedate of the enactment of this Act.

Approved April 15, 2005.

26 USC 1033note.

26 USC 139 note.




An ActTo amend title 11 of the United States Code, and for other purposes.

Be it enacted by the Senate and House of Representatives ofthe United States of America in Congress assembled,SECTION 1. SHORT TITLE; REFERENCES; TABLE OF CONTENTS.

(a) SHORT TITLE.—This Act may be cited as the ‘‘BankruptcyAbuse Prevention and Consumer Protection Actof 2005’’.

(b) TABLE OF CONTENTS.—The table of contents for this Actis as follows:

Sec. 1. Short title; references; table of contents.

TITLE I—NEEDS-BASED BANKRUPTCYSec. 101. Conversion.Sec. 102. Dismissal or conversion.Sec. 103. Sense of Congress and study.Sec. 104. Notice of alternatives.Sec. 105. Debtor financial management training test program.Sec. 106. Credit counseling.Sec. 107. Schedules of reasonable and necessary expenses.

TITLE II—ENHANCED CONSUMER PROTECTION

Subtitle A—Penalties for Abusive Creditor PracticesSec. 201. Promotion of alternative dispute resolution.Sec. 202. Effect of discharge.Sec. 203. Discouraging abuse of reaffirmation agreement practices.Sec. 204. Preservation of claims and defenses upon sale of predatory loans.Sec. 205. GAO study and report on reaffirmation agreement process.

Subtitle B—Priority Child SupportSec. 211. Definition of domestic support obligation.Sec. 212. Priorities for claims for domestic support obligations.Sec. 213. Requirements to obtain confirmation and discharge in cases involving do-

mestic support obligations.Sec. 214. Exceptions to automatic stay in domestic support obligation proceedings.Sec. 215. Nondischargeability of certain debts for alimony, maintenance, and sup-

port.Sec. 216. Continued liability of property.Sec. 217. Protection of domestic support claims against preferential transfer mo-

tions.Sec. 218. Disposable income defined.Sec. 219. Collection of child support.Sec. 220. Nondischargeability of certain educational benefits and loans.

Subtitle C—Other Consumer ProtectionsSec. 221. Amendments to discourage abusive bankruptcy filings.Sec. 222. Sense of Congress.Sec. 223. Additional amendments to title 11, United States Code.Sec. 224. Protection of retirement savings in bankruptcy.Sec. 225. Protection of education savings in bankruptcy.

BankruptcyAbuse Preventionand ConsumerProtection Actof 2005.11 USC 101 note.

Apr. 20, 2005[S. 256]

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Sec. 226. Definitions.Sec. 227. Restrictions on debt relief agencies.Sec. 228. Disclosures.Sec. 229. Requirements for debt relief agencies.Sec. 230. GAO study.Sec. 231. Protection of personally identifiable information.Sec. 232. Consumer privacy ombudsman.Sec. 233. Prohibition on disclosure of name of minor children.Sec. 234. Protection of personal information.

TITLE III—DISCOURAGING BANKRUPTCY ABUSESec. 301. Technical amendments.Sec. 302. Discouraging bad faith repeat filings.Sec. 303. Curbing abusive filings.Sec. 304. Debtor retention of personal property security.Sec. 305. Relief from the automatic stay when the debtor does not complete in-

tended surrender of consumer debt collateral.Sec. 306. Giving secured creditors fair treatment in chapter 13.Sec. 307. Domiciliary requirements for exemptions.Sec. 308. Reduction of homestead exemption for fraud.Sec. 309. Protecting secured creditors in chapter 13 cases.Sec. 310. Limitation on luxury goods.Sec. 311. Automatic stay.Sec. 312. Extension of period between bankruptcy discharges.Sec. 313. Definition of household goods and antiques.Sec. 314. Debt incurred to pay nondischargeable debts.Sec. 315. Giving creditors fair notice in chapters 7 and 13 cases.Sec. 316. Dismissal for failure to timely file schedules or provide required informa-

tion.Sec. 317. Adequate time to prepare for hearing on confirmation of the plan.Sec. 318. Chapter 13 plans to have a 5-year duration in certain cases.Sec. 319. Sense of Congress regarding expansion of rule 9011 of the Federal Rules

of Bankruptcy Procedure.Sec. 320. Prompt relief from stay in individual cases.Sec. 321. Chapter 11 cases filed by individuals.Sec. 322. Limitations on homestead exemption.Sec. 323. Excluding employee benefit plan participant contributions and other prop-

erty from the estate.Sec. 324. Exclusive jurisdiction in matters involving bankruptcy professionals.Sec. 325. United States trustee program filing fee increase.Sec. 326. Sharing of compensation.Sec. 327. Fair valuation of collateral.Sec. 328. Defaults based on nonmonetary obligations.Sec. 329. Clarification of postpetition wages and benefits.Sec. 330. Delay of discharge during pendency of certain proceedings.Sec. 331. Limitation on retention bonuses, severance pay, and certain other pay-

ments.Sec. 332. Fraudulent involuntary bankruptcy.

TITLE IV—GENERAL AND SMALL BUSINESS BANKRUPTCY PROVISIONS

Subtitle A—General Business Bankruptcy ProvisionsSec. 401. Adequate protection for investors.Sec. 402. Meetings of creditors and equity security holders.Sec. 403. Protection of refinance of security interest.Sec. 404. Executory contracts and unexpired leases.Sec. 405. Creditors and equity security holders committees.Sec. 406. Amendment to section 546 of title 11, United States Code.Sec. 407. Amendments to section 330(a) of title 11, United States Code.Sec. 408. Postpetition disclosure and solicitation.Sec. 409. Preferences.Sec. 410. Venue of certain proceedings.Sec. 411. Period for filing plan under chapter 11.Sec. 412. Fees arising from certain ownership interests.Sec. 413. Creditor representation at first meeting of creditors.Sec. 414. Definition of disinterested person.Sec. 415. Factors for compensation of professional persons.Sec. 416. Appointment of elected trustee.Sec. 417. Utility service.Sec. 418. Bankruptcy fees.Sec. 419. More complete information regarding assets of the estate.



Subtitle B—Small Business Bankruptcy ProvisionsSec. 431. Flexible rules for disclosure statement and plan.Sec. 432. Definitions.Sec. 433. Standard form disclosure statement and plan.Sec. 434. Uniform national reporting requirements.Sec. 435. Uniform reporting rules and forms for small business cases.Sec. 436. Duties in small business cases.Sec. 437. Plan filing and confirmation deadlines.Sec. 438. Plan confirmation deadline.Sec. 439. Duties of the United States trustee.Sec. 440. Scheduling conferences.Sec. 441. Serial filer provisions.Sec. 442. Expanded grounds for dismissal or conversion and appointment of trust-

ee.Sec. 443. Study of operation of title 11, United States Code, with respect to small

businesses.Sec. 444. Payment of interest.Sec. 445. Priority for administrative expenses.Sec. 446. Duties with respect to a debtor who is a plan administrator of an em-

ployee benefit plan.Sec. 447. Appointment of committee of retired employees.

TITLE V—MUNICIPAL BANKRUPTCY PROVISIONSSec. 501. Petition and proceedings related to petition.Sec. 502. Applicability of other sections to chapter 9.

TITLE VI—BANKRUPTCY DATASec. 601. Improved bankruptcy statistics.Sec. 602. Uniform rules for the collection of bankruptcy data.Sec. 603. Audit procedures.Sec. 604. Sense of Congress regarding availability of bankruptcy data.

TITLE VII—BANKRUPTCY TAX PROVISIONSSec. 701. Treatment of certain liens.Sec. 702. Treatment of fuel tax claims.Sec. 703. Notice of request for a determination of taxes.Sec. 704. Rate of interest on tax claims.Sec. 705. Priority of tax claims.Sec. 706. Priority property taxes incurred.Sec. 707. No discharge of fraudulent taxes in chapter 13.Sec. 708. No discharge of fraudulent taxes in chapter 11.Sec. 709. Stay of tax proceedings limited to prepetition taxes.Sec. 710. Periodic payment of taxes in chapter 11 cases.Sec. 711. Avoidance of statutory tax liens prohibited.Sec. 712. Payment of taxes in the conduct of business.Sec. 713. Tardily filed priority tax claims.Sec. 714. Income tax returns prepared by tax authorities.Sec. 715. Discharge of the estate’s liability for unpaid taxes.Sec. 716. Requirement to file tax returns to confirm chapter 13 plans.Sec. 717. Standards for tax disclosure.Sec. 718. Setoff of tax refunds.Sec. 719. Special provisions related to the treatment of State and local taxes.Sec. 720. Dismissal for failure to timely file tax returns.

TITLE VIII—ANCILLARY AND OTHER CROSS-BORDER CASESSec. 801. Amendment to add chapter 15 to title 11, United States Code.Sec. 802. Other amendments to titles 11 and 28, United States Code.

TITLE IX—FINANCIAL CONTRACT PROVISIONSSec. 901. Treatment of certain agreements by conservators or receivers of insured

depository institutions.Sec. 902. Authority of the FDIC and NCUAB with respect to failed and failing in-

stitutions.Sec. 903. Amendments relating to transfers of qualified financial contracts.Sec. 904. Amendments relating to disaffirmance or repudiation of qualified finan-

cial contracts.Sec. 905. Clarifying amendment relating to master agreements.Sec. 906. Federal Deposit Insurance Corporation Improvement Act of 1991.Sec. 907. Bankruptcy law amendments.Sec. 908. Recordkeeping requirements.



Sec. 909. Exemptions from contemporaneous execution requirement.Sec. 910. Damage measure.Sec. 911. SIPC stay.

TITLE X—PROTECTION OF FAMILY FARMERS AND FAMILY FISHERMENSec. 1001. Permanent reenactment of chapter 12.Sec. 1002. Debt limit increase.Sec. 1003. Certain claims owed to governmental units.Sec. 1004. Definition of family farmer.Sec. 1005. Elimination of requirement that family farmer and spouse receive over

50 percent of income from farming operation in year prior to bank-ruptcy.

Sec. 1006. Prohibition of retroactive assessment of disposable income.Sec. 1007. Family fishermen.

TITLE XI—HEALTH CARE AND EMPLOYEE BENEFITSSec. 1101. Definitions.Sec. 1102. Disposal of patient records.Sec. 1103. Administrative expense claim for costs of closing a health care business

and other administrative expenses.Sec. 1104. Appointment of ombudsman to act as patient advocate.Sec. 1105. Debtor in possession; duty of trustee to transfer patients.Sec. 1106. Exclusion from program participation not subject to automatic stay.

TITLE XII—TECHNICAL AMENDMENTSSec. 1201. Definitions.Sec. 1202. Adjustment of dollar amounts.Sec. 1203. Extension of time.Sec. 1204. Technical amendments.Sec. 1205. Penalty for persons who negligently or fraudulently prepare bankruptcy

petitions.Sec. 1206. Limitation on compensation of professional persons.Sec. 1207. Effect of conversion.Sec. 1208. Allowance of administrative expenses.Sec. 1209. Exceptions to discharge.Sec. 1210. Effect of discharge.Sec. 1211. Protection against discriminatory treatment.Sec. 1212. Property of the estate.Sec. 1213. Preferences.Sec. 1214. Postpetition transactions.Sec. 1215. Disposition of property of the estate.Sec. 1216. General provisions.Sec. 1217. Abandonment of railroad line.Sec. 1218. Contents of plan.Sec. 1219. Bankruptcy cases and proceedings.Sec. 1220. Knowing disregard of bankruptcy law or rule.Sec. 1221. Transfers made by nonprofit charitable corporations.Sec. 1222. Protection of valid purchase money security interests.Sec. 1223. Bankruptcy Judgeships.Sec. 1224. Compensating trustees.Sec. 1225. Amendment to section 362 of title 11, United States Code.Sec. 1226. Judicial education.Sec. 1227. Reclamation.Sec. 1228. Providing requested tax documents to the court.Sec. 1229. Encouraging creditworthiness.Sec. 1230. Property no longer subject to redemption.Sec. 1231. Trustees.Sec. 1232. Bankruptcy forms.Sec. 1233. Direct appeals of bankruptcy matters to courts of appeals.Sec. 1234. Involuntary cases.Sec. 1235. Federal election law fines and penalties as nondischargeable debt.

TITLE XIII—CONSUMER CREDIT DISCLOSURESec. 1301. Enhanced disclosures under an open end credit plan.Sec. 1302. Enhanced disclosure for credit extensions secured by a dwelling.Sec. 1303. Disclosures related to ‘‘introductory rates’’.Sec. 1304. Internet-based credit card solicitations.Sec. 1305. Disclosures related to late payment deadlines and penalties.Sec. 1306. Prohibition on certain actions for failure to incur finance charges.Sec. 1307. Dual use debit card.Sec. 1308. Study of bankruptcy impact of credit extended to dependent students.



Sec. 1309. Clarification of clear and conspicuous.

TITLE XIV—PREVENTING CORPORATE BANKRUPTCY ABUSESec. 1401. Employee wage and benefit priorities.Sec. 1402. Fraudulent transfers and obligations.Sec. 1403. Payment of insurance benefits to retired employees.Sec. 1404. Debts nondischargeable if incurred in violation of securities fraud laws.Sec. 1405. Appointment of trustee in cases of suspected fraud.Sec. 1406. Effective date; application of amendments.

TITLE XV—GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTSSec. 1501. Effective date; application of amendments.Sec. 1502. Technical corrections.

TITLE I—NEEDS-BASED BANKRUPTCYSEC. 101. CONVERSION.

Section 706(c) of title 11, United States Code, is amendedby inserting ‘‘or consents to’’ after ‘‘requests’’.SEC. 102. DISMISSAL OR CONVERSION.

(a) IN GENERAL.—Section 707 of title 11, United States Code,is amended—

(1) by striking the section heading and inserting the fol-lowing:

‘‘§ 707. Dismissal of a case or conversion to a case underchapter 11 or 13’’;

and(2) in subsection (b)—

(A) by inserting ‘‘(1)’’ after ‘‘(b)’’;(B) in paragraph (1), as so redesignated by subpara-

graph (A) of this paragraph—(i) in the first sentence—

(I) by striking ‘‘but not at the request orsuggestion of’’ and inserting ‘‘trustee (or bank-ruptcy administrator, if any), or’’;

(II) by inserting ‘‘, or, with the debtor’s con-sent, convert such a case to a case under chapter11 or 13 of this title,’’ after ‘‘consumer debts’’;and

(III) by striking ‘‘a substantial abuse’’ andinserting ‘‘an abuse’’; and(ii) by striking the next to last sentence; and

(C) by adding at the end the following:‘‘(2)(A)(i) In considering under paragraph (1) whether the

granting of relief would be an abuse of the provisions of thischapter, the court shall presume abuse exists if the debtor’s currentmonthly income reduced by the amounts determined under clauses(ii), (iii), and (iv), and multiplied by 60 is not less than the lesserof—

‘‘(I) 25 percent of the debtor’s nonpriority unsecured claimsin the case, or $6,000, whichever is greater; or

‘‘(II) $10,000.‘‘(ii)(I) The debtor’s monthly expenses shall be the debtor’s

applicable monthly expense amounts specified under the NationalStandards and Local Standards, and the debtor’s actual monthlyexpenses for the categories specified as Other Necessary Expensesissued by the Internal Revenue Service for the area in which



the debtor resides, as in effect on the date of the order for relief,for the debtor, the dependents of the debtor, and the spouse ofthe debtor in a joint case, if the spouse is not otherwise a dependent.Such expenses shall include reasonably necessary health insurance,disability insurance, and health savings account expenses for thedebtor, the spouse of the debtor, or the dependents of the debtor.Notwithstanding any other provision of this clause, the monthlyexpenses of the debtor shall not include any payments for debts.In addition, the debtor’s monthly expenses shall include the debtor’sreasonably necessary expenses incurred to maintain the safety ofthe debtor and the family of the debtor from family violence asidentified under section 309 of the Family Violence Preventionand Services Act, or other applicable Federal law. The expensesincluded in the debtor’s monthly expenses described in the precedingsentence shall be kept confidential by the court. In addition, ifit is demonstrated that it is reasonable and necessary, the debtor’smonthly expenses may also include an additional allowance forfood and clothing of up to 5 percent of the food and clothingcategories as specified by the National Standards issued by theInternal Revenue Service.

‘‘(II) In addition, the debtor’s monthly expenses may include,if applicable, the continuation of actual expenses paid by the debtorthat are reasonable and necessary for care and support of anelderly, chronically ill, or disabled household member or memberof the debtor’s immediate family (including parents, grandparents,siblings, children, and grandchildren of the debtor, the dependentsof the debtor, and the spouse of the debtor in a joint case whois not a dependent) and who is unable to pay for such reasonableand necessary expenses.

‘‘(III) In addition, for a debtor eligible for chapter 13, thedebtor’s monthly expenses may include the actual administrativeexpenses of administering a chapter 13 plan for the district inwhich the debtor resides, up to an amount of 10 percent of theprojected plan payments, as determined under schedules issuedby the Executive Office for United States Trustees.

‘‘(IV) In addition, the debtor’s monthly expenses may includethe actual expenses for each dependent child less than 18 yearsof age, not to exceed $1,500 per year per child, to attend a privateor public elementary or secondary school if the debtor providesdocumentation of such expenses and a detailed explanation of whysuch expenses are reasonable and necessary, and why such expensesare not already accounted for in the National Standards, LocalStandards, or Other Necessary Expenses referred to in subclause(I).

‘‘(V) In addition, the debtor’s monthly expenses may includean allowance for housing and utilities, in excess of the allowancespecified by the Local Standards for housing and utilities issuedby the Internal Revenue Service, based on the actual expensesfor home energy costs if the debtor provides documentation ofsuch actual expenses and demonstrates that such actual expensesare reasonable and necessary.

‘‘(iii) The debtor’s average monthly payments on account ofsecured debts shall be calculated as the sum of—

‘‘(I) the total of all amounts scheduled as contractuallydue to secured creditors in each month of the 60 months fol-lowing the date of the petition; and



‘‘(II) any additional payments to secured creditors necessaryfor the debtor, in filing a plan under chapter 13 of this title,to maintain possession of the debtor’s primary residence, motorvehicle, or other property necessary for the support of thedebtor and the debtor’s dependents, that serves as collateralfor secured debts;

divided by 60.‘‘(iv) The debtor’s expenses for payment of all priority claims

(including priority child support and alimony claims) shall be cal-culated as the total amount of debts entitled to priority, dividedby 60.

‘‘(B)(i) In any proceeding brought under this subsection, thepresumption of abuse may only be rebutted by demonstrating spe-cial circumstances, such as a serious medical condition or a callor order to active duty in the Armed Forces, to the extent suchspecial circumstances that justify additional expenses or adjust-ments of current monthly income for which there is no reasonablealternative.

‘‘(ii) In order to establish special circumstances, the debtorshall be required to itemize each additional expense or adjustmentof income and to provide—

‘‘(I) documentation for such expense or adjustment toincome; and

‘‘(II) a detailed explanation of the special circumstancesthat make such expenses or adjustment to income necessaryand reasonable.‘‘(iii) The debtor shall attest under oath to the accuracy of

any information provided to demonstrate that additional expensesor adjustments to income are required.

‘‘(iv) The presumption of abuse may only be rebutted if theadditional expenses or adjustments to income referred to in clause(i) cause the product of the debtor’s current monthly income reducedby the amounts determined under clauses (ii), (iii), and (iv) ofsubparagraph (A) when multiplied by 60 to be less than the lesserof—

‘‘(I) 25 percent of the debtor’s nonpriority unsecured claims,or $6,000, whichever is greater; or

‘‘(II) $10,000.‘‘(C) As part of the schedule of current income and expenditures

required under section 521, the debtor shall include a statementof the debtor’s current monthly income, and the calculations thatdetermine whether a presumption arises under subparagraph (A)(i),that show how each such amount is calculated.

‘‘(D) Subparagraphs (A) through (C) shall not apply, and thecourt may not dismiss or convert a case based on any form ofmeans testing, if the debtor is a disabled veteran (as defined insection 3741(1) of title 38), and the indebtedness occurred primarilyduring a period during which he or she was—

‘‘(i) on active duty (as defined in section 101(d)(1) of title10); or

‘‘(ii) performing a homeland defense activity (as definedin section 901(1) of title 32).‘‘(3) In considering under paragraph (1) whether the granting

of relief would be an abuse of the provisions of this chapter ina case in which the presumption in subparagraph (A)(i) of suchparagraph does not arise or is rebutted, the court shall consider—



‘‘(A) whether the debtor filed the petition in bad faith;or

‘‘(B) the totality of the circumstances (including whetherthe debtor seeks to reject a personal services contract andthe financial need for such rejection as sought by the debtor)of the debtor’s financial situation demonstrates abuse.‘‘(4)(A) The court, on its own initiative or on the motion of

a party in interest, in accordance with the procedures describedin rule 9011 of the Federal Rules of Bankruptcy Procedure, mayorder the attorney for the debtor to reimburse the trustee forall reasonable costs in prosecuting a motion filed under section707(b), including reasonable attorneys’ fees, if—

‘‘(i) a trustee files a motion for dismissal or conversionunder this subsection; and

‘‘(ii) the court—‘‘(I) grants such motion; and‘‘(II) finds that the action of the attorney for the debtor

in filing a case under this chapter violated rule 9011 ofthe Federal Rules of Bankruptcy Procedure.

‘‘(B) If the court finds that the attorney for the debtor violatedrule 9011 of the Federal Rules of Bankruptcy Procedure, the court,on its own initiative or on the motion of a party in interest, inaccordance with such procedures, may order—

‘‘(i) the assessment of an appropriate civil penalty againstthe attorney for the debtor; and

‘‘(ii) the payment of such civil penalty to the trustee, theUnited States trustee (or the bankruptcy administrator, if any).‘‘(C) The signature of an attorney on a petition, pleading, or

written motion shall constitute a certification that the attorneyhas—

‘‘(i) performed a reasonable investigation into the cir-cumstances that gave rise to the petition, pleading, or writtenmotion; and

‘‘(ii) determined that the petition, pleading, or writtenmotion—

‘‘(I) is well grounded in fact; and‘‘(II) is warranted by existing law or a good faith argu-

ment for the extension, modification, or reversal of existinglaw and does not constitute an abuse under paragraph(1).

‘‘(D) The signature of an attorney on the petition shall constitutea certification that the attorney has no knowledge after an inquirythat the information in the schedules filed with such petition isincorrect.

‘‘(5)(A) Except as provided in subparagraph (B) and subjectto paragraph (6), the court, on its own initiative or on the motionof a party in interest, in accordance with the procedures describedin rule 9011 of the Federal Rules of Bankruptcy Procedure, mayaward a debtor all reasonable costs (including reasonable attorneys’fees) in contesting a motion filed by a party in interest (otherthan a trustee or United States trustee (or bankruptcy adminis-trator, if any)) under this subsection if—

‘‘(i) the court does not grant the motion; and‘‘(ii) the court finds that—

‘‘(I) the position of the party that filed the motionviolated rule 9011 of the Federal Rules of BankruptcyProcedure; or



‘‘(II) the attorney (if any) who filed the motion didnot comply with the requirements of clauses (i) and (ii)of paragraph (4)(C), and the motion was made solely forthe purpose of coercing a debtor into waiving a rightguaranteed to the debtor under this title.

‘‘(B) A small business that has a claim of an aggregate amountless than $1,000 shall not be subject to subparagraph (A)(ii)(I).

‘‘(C) For purposes of this paragraph—‘‘(i) the term ‘small business’ means an unincorporated

business, partnership, corporation, association, or organizationthat—

‘‘(I) has fewer than 25 full-time employees as deter-mined on the date on which the motion is filed; and

‘‘(II) is engaged in commercial or business activity;and‘‘(ii) the number of employees of a wholly owned subsidiary

of a corporation includes the employees of—‘‘(I) a parent corporation; and‘‘(II) any other subsidiary corporation of the parent

corporation.‘‘(6) Only the judge or United States trustee (or bankruptcy

administrator, if any) may file a motion under section 707(b), ifthe current monthly income of the debtor, or in a joint case, thedebtor and the debtor’s spouse, as of the date of the order forrelief, when multiplied by 12, is equal to or less than—

‘‘(A) in the case of a debtor in a household of 1 person,the median family income of the applicable State for 1 earner;

‘‘(B) in the case of a debtor in a household of 2, 3, or4 individuals, the highest median family income of theapplicable State for a family of the same number or fewerindividuals; or

‘‘(C) in the case of a debtor in a household exceeding4 individuals, the highest median family income of theapplicable State for a family of 4 or fewer individuals, plus$525 per month for each individual in excess of 4.‘‘(7)(A) No judge, United States trustee (or bankruptcy adminis-

trator, if any), trustee, or other party in interest may file a motionunder paragraph (2) if the current monthly income of the debtor,including a veteran (as that term is defined in section 101 oftitle 38), and the debtor’s spouse combined, as of the date of theorder for relief when multiplied by 12, is equal to or less than—

‘‘(i) in the case of a debtor in a household of 1 person,the median family income of the applicable State for 1 earner;

‘‘(ii) in the case of a debtor in a household of 2, 3, or4 individuals, the highest median family income of theapplicable State for a family of the same number or fewerindividuals; or

‘‘(iii) in the case of a debtor in a household exceeding4 individuals, the highest median family income of theapplicable State for a family of 4 or fewer individuals, plus$525 per month for each individual in excess of 4.‘‘(B) In a case that is not a joint case, current monthly income

of the debtor’s spouse shall not be considered for purposes ofsubparagraph (A) if—

‘‘(i)(I) the debtor and the debtor’s spouse are separatedunder applicable nonbankruptcy law; or



‘‘(II) the debtor and the debtor’s spouse are living separateand apart, other than for the purpose of evading subparagraph(A); and

‘‘(ii) the debtor files a statement under penalty of perjury—‘‘(I) specifying that the debtor meets the requirement

of subclause (I) or (II) of clause (i); and‘‘(II) disclosing the aggregate, or best estimate of the

aggregate, amount of any cash or money payments receivedfrom the debtor’s spouse attributed to the debtor’s currentmonthly income.’’.

(b) DEFINITION.—Section 101 of title 11, United States Code,is amended by inserting after paragraph (10) the following:

‘‘(10A) ‘current monthly income’—‘‘(A) means the average monthly income from all

sources that the debtor receives (or in a joint case thedebtor and the debtor’s spouse receive) without regard towhether such income is taxable income, derived duringthe 6-month period ending on—

‘‘(i) the last day of the calendar month immediatelypreceding the date of the commencement of the caseif the debtor files the schedule of current incomerequired by section 521(a)(1)(B)(ii); or

‘‘(ii) the date on which current income is deter-mined by the court for purposes of this title if thedebtor does not file the schedule of current incomerequired by section 521(a)(1)(B)(ii); and‘‘(B) includes any amount paid by any entity other

than the debtor (or in a joint case the debtor and thedebtor’s spouse), on a regular basis for the householdexpenses of the debtor or the debtor’s dependents (andin a joint case the debtor’s spouse if not otherwise adependent), but excludes benefits received under the SocialSecurity Act, payments to victims of war crimes or crimesagainst humanity on account of their status as victimsof such crimes, and payments to victims of internationalterrorism (as defined in section 2331 of title 18) or domesticterrorism (as defined in section 2331 of title 18) on accountof their status as victims of such terrorism;’’.

(c) UNITED STATES TRUSTEE AND BANKRUPTCY ADMINISTRATORDUTIES.—Section 704 of title 11, United States Code, is amended—

(1) by inserting ‘‘(a)’’ before ‘‘The trustee shall—’’; and(2) by adding at the end the following:

‘‘(b)(1) With respect to a debtor who is an individual in acase under this chapter—

‘‘(A) the United States trustee (or the bankruptcy adminis-trator, if any) shall review all materials filed by the debtorand, not later than 10 days after the date of the first meetingof creditors, file with the court a statement as to whetherthe debtor’s case would be presumed to be an abuse undersection 707(b); and

‘‘(B) not later than 5 days after receiving a statementunder subparagraph (A), the court shall provide a copy ofthe statement to all creditors.‘‘(2) The United States trustee (or bankruptcy administrator,

if any) shall, not later than 30 days after the date of filing astatement under paragraph (1), either file a motion to dismissor convert under section 707(b) or file a statement setting forth

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the reasons the United States trustee (or the bankruptcy adminis-trator, if any) does not consider such a motion to be appropriate,if the United States trustee (or the bankruptcy administrator, ifany) determines that the debtor’s case should be presumed to bean abuse under section 707(b) and the product of the debtor’scurrent monthly income, multiplied by 12 is not less than—

‘‘(A) in the case of a debtor in a household of 1 person,the median family income of the applicable State for 1 earner;or

‘‘(B) in the case of a debtor in a household of 2 or moreindividuals, the highest median family income of the applicableState for a family of the same number or fewer individuals.’’.(d) NOTICE.—Section 342 of title 11, United States Code, is

amended by adding at the end the following:‘‘(d) In a case under chapter 7 of this title in which the debtor

is an individual and in which the presumption of abuse arisesunder section 707(b), the clerk shall give written notice to allcreditors not later than 10 days after the date of the filing ofthe petition that the presumption of abuse has arisen.’’.

(e) NONLIMITATION OF INFORMATION.—Nothing in this title shalllimit the ability of a creditor to provide information to a judge(except for information communicated ex parte, unless otherwisepermitted by applicable law), United States trustee (or bankruptcyadministrator, if any), or trustee.

(f) DISMISSAL FOR CERTAIN CRIMES.—Section 707 of title 11,United States Code, is amended by adding at the end the following:

‘‘(c)(1) In this subsection—‘‘(A) the term ‘crime of violence’ has the meaning given

such term in section 16 of title 18; and‘‘(B) the term ‘drug trafficking crime’ has the meaning

given such term in section 924(c)(2) of title 18.‘‘(2) Except as provided in paragraph (3), after notice and a

hearing, the court, on a motion by the victim of a crime of violenceor a drug trafficking crime, may when it is in the best interestof the victim dismiss a voluntary case filed under this chapterby a debtor who is an individual if such individual was convictedof such crime.

‘‘(3) The court may not dismiss a case under paragraph (2)if the debtor establishes by a preponderance of the evidence thatthe filing of a case under this chapter is necessary to satisfya claim for a domestic support obligation.’’.

(g) CONFIRMATION OF PLAN.—Section 1325(a) of title 11, UnitedStates Code, is amended—

(1) in paragraph (5), by striking ‘‘and’’ at the end;(2) in paragraph (6), by striking the period and inserting

a semicolon; and(3) by inserting after paragraph (6) the following:‘‘(7) the action of the debtor in filing the petition was

in good faith;’’.(h) APPLICABILITY OF MEANS TEST TO CHAPTER 13.—Section

1325(b) of title 11, United States Code, is amended—(1) in paragraph (1)(B), by inserting ‘‘to unsecured credi-

tors’’ after ‘‘to make payments’’; and(2) by striking paragraph (2) and inserting the following:‘‘(2) For purposes of this subsection, the term ‘disposable

income’ means current monthly income received by the debtor(other than child support payments, foster care payments, or

11 USC 101 note.

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disability payments for a dependent child made in accordancewith applicable nonbankruptcy law to the extent reasonablynecessary to be expended for such child) less amounts reason-ably necessary to be expended—

‘‘(A)(i) for the maintenance or support of the debtoror a dependent of the debtor, or for a domestic supportobligation, that first becomes payable after the date thepetition is filed; and

‘‘(ii) for charitable contributions (that meet the defini-tion of ‘charitable contribution’ under section 548(d)(3) toa qualified religious or charitable entity or organization(as defined in section 548(d)(4)) in an amount not to exceed15 percent of gross income of the debtor for the year inwhich the contributions are made; and

‘‘(B) if the debtor is engaged in business, for the pay-ment of expenditures necessary for the continuation,preservation, and operation of such business.‘‘(3) Amounts reasonably necessary to be expended under

paragraph (2) shall be determined in accordance with subpara-graphs (A) and (B) of section 707(b)(2), if the debtor has currentmonthly income, when multiplied by 12, greater than—

‘‘(A) in the case of a debtor in a household of 1 person,the median family income of the applicable State for 1earner;

‘‘(B) in the case of a debtor in a household of 2, 3,or 4 individuals, the highest median family income of theapplicable State for a family of the same number or fewerindividuals; or

‘‘(C) in the case of a debtor in a household exceeding4 individuals, the highest median family income of theapplicable State for a family of 4 or fewer individuals,plus $525 per month for each individual in excess of 4.’’.

(i) SPECIAL ALLOWANCE FOR HEALTH INSURANCE.—Section1329(a) of title 11, United States Code, is amended—

(1) in paragraph (2) by striking ‘‘or’’ at the end;(2) in paragraph (3) by striking the period at the end

and inserting ‘‘; or’’; and(3) by adding at the end the following:‘‘(4) reduce amounts to be paid under the plan by the

actual amount expended by the debtor to purchase health insur-ance for the debtor (and for any dependent of the debtor ifsuch dependent does not otherwise have health insurance cov-erage) if the debtor documents the cost of such insurance anddemonstrates that—

‘‘(A) such expenses are reasonable and necessary;‘‘(B)(i) if the debtor previously paid for health insur-

ance, the amount is not materially larger than the costthe debtor previously paid or the cost necessary to maintainthe lapsed policy; or

‘‘(ii) if the debtor did not have health insurance, theamount is not materially larger than the reasonable costthat would be incurred by a debtor who purchases healthinsurance, who has similar income, expenses, age, andhealth status, and who lives in the same geographicallocation with the same number of dependents who do nototherwise have health insurance coverage; and



‘‘(C) the amount is not otherwise allowed for purposesof determining disposable income under section 1325(b)of this title;

and upon request of any party in interest, files proof thata health insurance policy was purchased.’’.(j) ADJUSTMENT OF DOLLAR AMOUNTS.—Section 104(b) of title

11, United States Code, is amended by striking ‘‘and 523(a)(2)(C)’’each place it appears and inserting ‘‘523(a)(2)(C), 707(b), and1325(b)(3)’’.

(k) DEFINITION OF ‘MEDIAN FAMILY INCOME’.—Section 101 oftitle 11, United States Code, is amended by inserting after para-graph (39) the following:

‘‘(39A) ‘median family income’ means for any year—‘‘(A) the median family income both calculated and

reported by the Bureau of the Census in the then mostrecent year; and

‘‘(B) if not so calculated and reported in the then cur-rent year, adjusted annually after such most recent yearuntil the next year in which median family income isboth calculated and reported by the Bureau of the Census,to reflect the percentage change in the Consumer PriceIndex for All Urban Consumers during the period of yearsoccurring after such most recent year and before suchcurrent year;’’.

(k) CLERICAL AMENDMENT.—The table of sections for chapter7 of title 11, United States Code, is amended by striking theitem relating to section 707 and inserting the following:

‘‘707. Dismissal of a case or conversion to a case under chapter 11 or 13.’’.

SEC. 103. SENSE OF CONGRESS AND STUDY.

(a) SENSE OF CONGRESS.—It is the sense of Congress thatthe Secretary of the Treasury has the authority to alter the InternalRevenue Service standards established to set guidelines for repay-ment plans as needed to accommodate their use under section707(b) of title 11, United States Code.

(b) STUDY.—(1) IN GENERAL.—Not later than 2 years after the date

of enactment of this Act, the Director of the Executive Officefor United States Trustees shall submit a report to the Com-mittee on the Judiciary of the Senate and the Committee onthe Judiciary of the House of Representatives containing thefindings of the Director regarding the utilization of InternalRevenue Service standards for determining—

(A) the current monthly expenses of a debtor undersecti

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