2 USC 906 - General and special sequestration rules

U.S Code last checked for updates: Apr 27, 2024

§ 906.

General and special sequestration rules

(a)

Repealed. Pub. L. 111–139, title I, § 10(a), Feb. 12, 2010, 124 Stat. 21

(b)

Student loans

(c)

Repealed. Pub. L. 111–139, title I, § 10(c), Feb. 12, 2010, 124 Stat. 22

(d)

Special rules for Medicare program

(1)

Calculation of reduction in payment amounts

To achieve the total percentage reduction in those programs required by section 902 or 903 of this title, subject to paragraph (2), 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, with respect to the health insurance programs under title XVIII of the Social Security Act [42 U.S.C. 1395 et seq.]—

(A)

in the case of parts A and B of such title [42 U.S.C. 1395c et seq., 1395j et seq.], to individual payments for services furnished during the one-year period beginning on the first day of the first month beginning after the date the order is issued (or, if later, the date specified in paragraph (4)); and

(B)

in the case of parts C and D [42 U.S.C. 1395w–21 et seq., 1395w–101 et seq.], to monthly payments under contracts under such parts for the same one-year period;

such that the reduction made in payments under that order shall achieve the required total percentage reduction in those payments for that period.

(2)

Uniform reduction rate; maximum permissible reduction

(3)

Timing of application of reductions

(A)

In general

(B)

Payment on the basis of cost reporting periods

(4)

Timing of subsequent sequestration order

(5)

No increase in beneficiary charges in assignment-related cases

(6)

Sequestration disregarded in computing payment amounts

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, for purposes of computing any adjustments to payment rates under such title XVIII [42 U.S.C. 1395 et seq.], specifically including—

(A)

the part C growth percentage under section 1853(c)(6) [42 U.S.C. 1395w–23(c)(6)];

(B)

the part D annual growth rate under section 1860D–2(b)(6) [42 U.S.C. 1395w–102(b)(6)]; and

(C)

application of risk corridors to part D payment rates under section 1860D–15(e) [42 U.S.C. 1395w–115(e)].

(7)

Exemptions from sequestration

In addition to the programs and activities specified in section 905 of this title, the following shall be exempt from sequestration under this subchapter:

(A)

Part D low-income subsidies

(B)

Part D catastrophic subsidy

(C)

Qualified individual (QI) premiums

(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 2 percent.

(2)

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

(A)

Community health centers (75-0350-0-1-550).

(B)

Migrant health centers (75-0350-0-1-550).

(C)

Indian health facilities (75-0391-0-1-551).

(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

(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

For purposes of this subsection:

(A)

The term “statutory pay system” shall have the meaning given that term in section 5302(1) of title 5.

(B)

The term “elements of military pay” means—

(i)

the elements of compensation of members of the uniformed services specified in section 1009 of title 37,

(ii)

allowances provided members of the uniformed services under sections 403b and 405 of such title, and

(iii)

cadet pay and midshipman pay under section 203(c) of such title.

(C)

The term “uniformed services” shall have the meaning given that term in section 101(3) of title 37.

(h)

Treatment of Federal administrative expenses

(1)

Notwithstanding any other provision of this title,1

 See References in Text note below.

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.

(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 subchapter.

(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 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)

National Credit Union Administration.

(D)

National Credit Union Administration, central liquidity facility.

(E)

Federal Retirement Thrift Investment Board.

(F)

Farm Credit Administration.

(G)

Cost of War Toxic Exposures Fund.

(i)

Treatment of payments and advances made with respect to unemployment compensation programs

(1)

For purposes of section 904 of this title—

(A)

any amount paid as regular unemployment compensation by a State from its account in the Unemployment Trust Fund (established by section 904(a) of the Social Security Act [42 U.S.C. 1104(a)]),

(B)

any advance made to a State from the Federal unemployment account (established by section 904(g) of such Act [42 U.S.C. 1104(g)]) under title XII of such Act [42 U.S.C. 1321 et seq.] and any advance appropriated to the Federal unemployment account pursuant to section 1203 of such Act [42 U.S.C. 1323], and

(C)

any payment made from the Federal Employees Compensation Account (as established under section 909 of such Act [42 U.S.C. 1109

]) for the purpose of carrying out chapter 85 of title 5 and funds appropriated or transferred to or otherwise deposited in such Account,

shall not be subject to reduction.

(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

(2)

Reduction in payments made under contracts

(A)

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 for loans or loan deficiencies made by the Commodity Credit Corporation shall be subject to reduction under the order.

(B)

Each loan 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

(4)

Uniform percentage rate of reduction and other limitations

(5)

Dairy program

(6)

Certain authority not to be limited

(k)

Effects of sequestration

The effects of sequestration shall be as follows:

(1)

Budgetary resources sequestered from any account shall be permanently cancelled, except as provided in paragraph (6).

(2)

Except as otherwise provided, the same percentage sequestration shall apply to all programs, projects, and activities within a budget account (with programs, projects, and activities as delineated in the appropriation Act or accompanying report for the relevant fiscal year covering that account, or for accounts not included in appropriation Acts, as delineated in the most recently submitted President’s budget).

(3)

Administrative regulations or similar actions implementing a sequestration shall be made within 120 days of the sequestration order. To the extent that formula allocations differ at different levels of budgetary resources within an account, program, project, or activity, the sequestration shall be interpreted as producing a lower total appropriation, with the remaining amount of the appropriation being obligated in a manner consistent with program allocation formulas in substantive law.

(4)

Except as otherwise provided, obligations in sequestered accounts shall be reduced only in the fiscal year in which a sequester occurs.

(5)

If an automatic spending increase is sequestered, the increase (in the applicable index) that was disregarded as a result of that sequestration shall not be taken into account in any subsequent fiscal year.

(6)

Budgetary resources sequestered in revolving, trust, and special fund accounts and offsetting collections sequestered in appropriation accounts shall not be available for obligation during the fiscal year in which the sequestration occurs, but shall be available in subsequent years to the extent otherwise provided in law.

(Pub. L. 99–177, title II, § 256, Dec. 12, 1985, 99 Stat. 1086; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095; Pub. L. 100–86, title V, § 506(b), Aug. 10, 1987, 101 Stat. 634; Pub. L. 100–119, title I, §§ 102(b)(2), (3), (11), 104(a)(3), (4), Sept. 29, 1987, 101 Stat. 773, 775, 776; Pub. L. 101–73, title VII, § 743(b), Aug. 9, 1989, 103 Stat. 437; Pub. L. 101–508, title XIII, § 13101(d), Nov. 5, 1990, 104 Stat. 1388–589; Pub. L. 101–509, title V, § 529 [title I, § 101(b)(2)(A), (4)(H)], Nov. 5, 1990, 104 Stat. 1427, 1439, 1440; Pub. L. 104–193, title I, § 110(r)(2), Aug. 22, 1996, 110 Stat. 2175; Pub. L. 105–33, title X, § 10208(a)(1), (b)–(g), Aug. 5, 1997, 111 Stat. 708–710; Pub. L. 111–139, title I, §§ 9(b), 10, Feb. 12, 2010, 124 Stat. 21; Pub. L. 111–203, title III, § 352, July 21, 2010, 124 Stat. 1546; Pub. L. 112–81, div. A, title VI, § 631(f)(4)(B), Dec. 31, 2011, 125 Stat. 1465; Pub. L. 112–239, div. A, title X, § 1076(a)(9), Jan. 2, 2013, 126 Stat. 1948; Pub. L. 116–260, div. N, title II, § 235(a), (c), Dec. 27, 2020, 134 Stat. 1959; Pub. L. 117–168, title VIII, § 805(b), Aug. 10, 2022, 136 Stat. 1805; Pub. L. 117–263, div. A, title VI, § 626(a), Dec. 23, 2022, 136 Stat. 2628.)

cite as: 2 USC 906