In the nature of a substitute.

SA 4627. Mr. ROCKEFELLER proposed an amendment to the bill H.R. 2881,
to amend title 49, United States Code, to authorize appropriations for
the Federal Aviation Administration for fiscal years 2008 through 2011,
to improve aviation safety and capacity, to provide stable funding for
the national aviation system, and for other purposes; as follows:

Strike out all after the enacting clause and insert the
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Aviation
Investment and Modernization Act of 2008''.
(b) Table of Contents.--The table of contents for this Act
is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Amendments to title 49, United States Code.
Sec. 3. Effective date.

TITLE I--AUTHORIZATIONS AND FINANCING

Sec. 101. Operations.
Sec. 102. Air navigation facilities and equipment.
Sec. 103. Research and development.
Sec. 104. Airport planning and development and noise compatibility
planning and programs.
Sec. 105. Other aviation programs.
Sec. 106. Delineation of next generation air transportation system
projects.
Sec. 107. Funding for administrative expenses for airport programs.

TITLE II--AIRPORT IMPROVEMENTS

Sec. 201. Reform of passenger facility charge authority.
Sec. 202. Passenger facility charge pilot program.
Sec. 203. Amendments to grant assurances.
Sec. 204. Government share of project costs.
Sec. 205. Amendments to allowable costs.
Sec. 206. Sale of private airport to public sponsor.
Sec. 207. Pilot program for airport takeover of air navigation
facilities.
Sec. 208. Government share of certain air project costs.
Sec. 209. Miscellaneous amendments.
Sec. 210. State block grant program.
Sec. 211. Airport funding of special studies or reviews.
Sec. 212. Grant eligibility for assessment of flight procedures.
Sec. 213. Safety-critical airports.
Sec. 214. Expanded passenger facility charge eligibility for noise
compatibility projects.
Sec. 215. Environmental mitigation demonstration pilot program.
Sec. 216. Allowable project costs for airport development program.
Sec. 217. Glycol recovery vehicles.
Sec. 218. Research improvement for aircraft.

TITLE III--FAA ORGANIZATION AND REFORM

Sec. 301. Air Traffic Control Modernization Oversight Board.
Sec. 302. ADS-B support pilot program.
Sec. 303. Facilitation of next generation air traffic services.
Sec. 304. Clarification of authority to enter into reimbursable
agreements.
Sec. 305. Clarification to acquisition reform authority.
Sec. 306. Assistance to other aviation authorities.
Sec. 307. Presidential rank award program.
Sec. 308. Next generation facilities needs assessment.
Sec. 309. Next generation air transportation system planning office.
Sec. 310. Definition of air navigation facility.
Sec. 311. Improved management of property inventory.
Sec. 312. Educational requirements.
Sec. 313. FAA personnel management system.
Sec. 314. Rulemaking and report on ADS-B implementation.
Sec. 315. FAA task force on air traffic control facility conditions.
Sec. 316. State ADS-B equipage bank pilot program.

TITLE IV--AIRLINE SERVICE AND SMALL COMMUNITY AIR SERVICE IMPROVEMENTS

Sec. 401. Airline contingency service requirements.
Sec. 402. Publication of customer service data and flight delay
history.
Sec. 403. EAS connectivity program.
Sec. 404. Extension of final order establishing mileage adjustment
eligibility.

[[Page S3611]]

Sec. 405. EAS contract guidelines.
Sec. 406. Conversion of former EAS airports.
Sec. 407. EAS reform.
Sec. 408. Clarification of air carrier fee disputes.
Sec. 409. Small community air service.
Sec. 410. Contract tower program.
Sec. 411. Airfares for members of the armed forces.
Sec. 412. Expansion of DOT airline consumer complaint investigations.
Sec. 413. EAS marketing.
Sec. 414. Extraperimetal and intraperimetal slots at Ronald Reagan
Washington National Airport.
Sec. 415. Establishment of advisory committee for aviation consumer
protection.
Sec. 416. Rural aviation improvement.

TITLE V--AVIATION SAFETY

Sec. 501. Runway safety equipment plan.
Sec. 502. Aircraft fuel tank safety improvement.
Sec. 503. Judicial review of denial of airman certificates.
Sec. 504. Release of data relating to abandoned type certificates and
supplemental type certificates.
Sec. 505. Design organization certificates.
Sec. 506. FAA access to criminal history records or database systems.
Sec. 507. Flight crew fatigue.
Sec. 508. Increasing safety for helicopter emergency medical service
operators.
Sec. 509. Cabin crew communication.
Sec. 510. Clarification of memorandum of understanding with osha.
Sec. 511. Acceleration of development and implementation of required
navigation performance approach procedures.
Sec. 512. Enhanced safety for airport operations.
Sec. 513. Improved safety information.
Sec. 514. Voluntary disclosure reporting process improvements.
Sec. 515. Procedural improvements for inspections.
Sec. 516. Independent review of safety issues.
Sec. 517. National review team.
Sec. 518. FAA Academy improvements.
Sec. 519. Reduction of runway incursions and operational errors.

TITLE VI--AVIATION RESEARCH

Sec. 601. Airport cooperative research program.
Sec. 602. Reduction of noise, emissions, and energy consumption from
civilian aircraft.
Sec. 603. Production of clean coal fuel technology for civilian
aircraft.
Sec. 604. Advisory committee on future of aeronautics.
Sec. 605. Research program to improve airfield pavements.
Sec. 606. Wake turbulence, volcanic ash, and weather research.
Sec. 607. Incorporation of unmanned aerial systems into FAA plans and
policies.
Sec. 608. Reauthorization of center of excellence in applied research
and training in the use of advanced materials in
transport aircraft.
Sec. 609. Pilot program for zero emission airport vehicles.
Sec. 610. Reduction of emissions from airport power sources.

TITLE VII--MISCELLANEOUS

Sec. 701. General authority.
Sec. 702. Human intervention management study.
Sec. 703. Airport program modifications.
Sec. 704. Miscellaneous program extensions.
Sec. 705. Extension of competitive access reports.
Sec. 706. Update on overflights.
Sec. 707. Technical corrections.
Sec. 708. FAA technical training and staffing.
Sec. 709. Commercial air tour operators in national parks.
Sec. 710. Phaseout of stage 1 and 2 aircraft.
Sec. 711. Weight restrictions at teterboro airport.
Sec. 712. Pilot program for redevelopment of airport properties.
Sec. 713. Air carriage of international mail.
Sec. 714. Transporting musical instruments.
Sec. 715. Recycling plans for airports.
Sec. 716. Consumer information pamphlet.

TITLE VIII--AMERICAN INFRASTRUCTURE INVESTMENT AND IMPROVEMENT

Sec. 800. Short title, etc.

Subtitle A--Airport and Airway Trust Fund Provisions and Related Taxes

Sec. 801. Extension of taxes funding Airport and Airway Trust Fund.
Sec. 802. Extension of Airport and Airway Trust Fund expenditure
authority.
Sec. 803. Modification of excise tax on kerosene used in aviation .
Sec. 804. Air Traffic Control System Modernization Account.
Sec. 805. Treatment of fractional aircraft ownership programs.
Sec. 806. Termination of exemption for small aircraft on nonestablished
lines.
Sec. 807. Transparency in passenger tax disclosures.ier pension plans.

Subtitle B--Increased Funding for Highway Trust Fund

Sec. 811. Replenish emergency spending from Highway Trust Fund.
Sec. 812. Suspension of transfers from highway trust fund for certain
repayments and credit.
Sec. 813. Taxation of taxable fuels in foreign trade zones.
Sec. 814. Clarification of penalty for sale of fuel failing to meet EPA
regulations.
Sec. 815. Treatment of qualified alcohol fuel mixtures and qualified
biodiesel fuel mixtures as taxable fuels.
Sec. 816. Calculation of volume of alcohol for fuel credits.
Sec. 817. Bulk transfer exception not to apply to finished gasoline.
Sec. 818. Increase and extension of Oil Spill Liability Trust Fund tax.
Sec. 819. Application of rules treating inverted corporations as
domestic corporations to certain transactions occurring
after March 20, 2002.
Sec. 820. Denial of deduction for punitive damages.
Sec. 821. Motor fuel tax enforcement advisory commission.
Sec. 822. Highway Trust Fund conforming expenditure amendment.

Subtitle C--Additional Infrastructure Modifications and Revenue
Provisions

Sec. 831. Restructuring of New York Liberty Zone tax credits.
Sec. 832. Participants in government section 457 plans allowed to treat
elective deferrals as Roth contributions.
Sec. 833. Increased information return penalties.
Sec. 834. Exemption of certain commercial cargo from harbor maintenance
tax.
Sec. 835. Credit to holders of qualified rail infrastructure bonds.
Sec. 836. Repeal of suspension of certain penalties and interest.
Sec. 837. Denial of deduction for certain fines, penalties, and other
amounts.
Sec. 838. Revision of tax rules on expatriation.

SEC. 2. AMENDMENTS TO TITLE 49, UNITED STATES CODE.

Except as otherwise expressly provided, whenever in this
Act an amendment or repeal is expressed in terms of an
amendment to, or a repeal of, a section or other provision,
the reference shall be considered to be made to a section or
other provision of title 49, United States Code.

SEC. 3. EFFECTIVE DATE.

Except as otherwise expressly provided, this Act and the
amendments made by this Act shall take effect on the date of
enactment.

TITLE I--AUTHORIZATIONS AND FINANCING

SEC. 101. OPERATIONS.

(a) In General.--Section 106(k)(1) is amended by striking
subparagraphs (A) through (D) and inserting the following:
``(A) $8,726,000,000 for fiscal year 2008;
``(B) $8,990,000,000 for fiscal year 2009;
``(C) $9,330,000,000 for fiscal year 2010; and
``(D) $9,620,000,000 for fiscal year 2011.''.
(b) Safety Project.--Section 106(k)(2)(F) is amended by
striking ``2007'' and inserting ``2011''.

SEC. 102. AIR NAVIGATION FACILITIES AND EQUIPMENT.

Section 48101(a) is amended by striking paragraphs (1)
through (4) and inserting the following:
``(1) $2,572,000,000 for fiscal year 2008;
``(2) $2,923,000,000 for fiscal year 2009, of which
$400,000,000 is derived from the Air Traffic Control System
Modernization Account of the Airport and Airways Trust Fund;
``(3) $3,079,000,000 for fiscal year 2010, of which
$400,000,000 is derived from the Air Traffic Control System
Modernization Account of the Airport and Airways Trust Fund;
and
``(4) $3,317,000,000 for fiscal year 2011, of which
$400,000,000 is derived from the Air Traffic Control System
Modernization Account of the Airport and Airways Trust
Fund.''.

SEC. 103. RESEARCH AND DEVELOPMENT.

Section 48102 is amended--
(1) by striking subsection (a) and inserting the following:
``(a) In General.--Not more than the following amounts may
be appropriated to the Secretary of Transportation out of the
Airport and Airway Trust Fund established under section 9502
of the Internal Revenue Code of 1986 (26 U.S.C. 9502) for
conducting civil aviation research and development under
sections 44504, 44505, 44507, 44509, and 44511 through 44513
of this title:
``(1) $140,000,000 for fiscal year 2008.
``(2) $191,000,000 for fiscal year 2009.
``(3) $191,000,000 for fiscal year 2010.
``(4) $194,000,000 for fiscal year 2011.'';
(2) by striking subsections (c) through (h); and
(3) by adding at the end the following:
``(c) Research Grants Program Involving Undergraduate
Students.--The Administrator of the Federal Aviation
Administration shall establish a program to utilize
undergraduate and technical colleges, including Historically
Black Colleges and Universities, Hispanic Serving
Institutions, tribally controlled colleges and universities,
and Alaska Native and Native Hawaiian serving institutions in
research on subjects of relevance to the Federal Aviation
Administration. Grants may be awarded under this subsection
for--

[[Page S3612]]

``(1) research projects to be carried out at primarily
undergraduate institutions and technical colleges;
``(2) research projects that combine research at primarily
undergraduate institutions and technical colleges with other
research supported by the Federal Aviation Administration;
``(3) research on future training requirements on projected
changes in regulatory requirements for aircraft maintenance
and power plant licensees; or
``(4) research on the impact of new technologies and
procedures, particularly those related to aircraft flight
deck and air traffic management functions, and on training
requirements for pilots and air traffic controllers.''.

SEC. 104. AIRPORT PLANNING AND DEVELOPMENT AND NOISE
COMPATIBILITY PLANNING AND PROGRAMS.

Section 48103 is amended by striking paragraphs (1) through
(4) and inserting the following:
``(1) $3,800,000,000 for fiscal year 2008;
``(2) $3,900,000,000 for fiscal year 2009;
``(3) $4,000,000,000 for fiscal year 2010; and
``(4) $4,100,000,000 for fiscal year 2011.''.

SEC. 105. OTHER AVIATION PROGRAMS.

Section 48114 is amended--
(1) by striking ``2007'' in subsection (a)(1)(A) and
inserting ``2011'';
(2) by striking ``2007,'' in subsection (a)(2) and
inserting ``2011,''; and
(3) by striking ``2007'' in subsection (c)(2) and inserting
``2011''.

SEC. 106. DELINEATION OF NEXT GENERATION AIR TRANSPORTATION
SYSTEM PROJECTS.

Section 44501(b) is amended--
(1) by striking ``and'' after the semicolon in paragraph
(3);
(2) by striking ``defense.'' in paragraph (4) and inserting
``defense; and''; and
(3) by adding at the end thereof the following:
``(5) a list of projects that are part of the Next
Generation Air Transportation System and do not have as a
primary purpose to operate or maintain the current air
traffic control system.''.

SEC. 107. FUNDING FOR ADMINISTRATIVE EXPENSES FOR AIRPORT
PROGRAMS.

(a) In General.--Section 48105 is amended to read as
follows:

``Sec. 48105. Airport programs administrative expenses

``Of the amount made available under section 48103 of this
title, the following may be available for administrative
expenses relating to the Airport Improvement Program,
passenger facility charge approval and oversight, national
airport system planning, airport standards development and
enforcement, airport certification, airport-related
environmental activities (including legal services), and
other airport-related activities (including airport
technology research), to remain available until expended--
``(1) for fiscal year 2008, $80,676,000;
``(2) for fiscal year 2009, $85,000,000;
``(3) for fiscal year 2010, $89,000,000; and
``(4) for fiscal year 2011, $93,000,000.''.
(b) Conforming Amendment.--The chapter analysis for chapter
481 is amended by striking the item relating to section 48105
and inserting the following:

``48105. Airport programs administrative expenses.''.

TITLE II--AIRPORT IMPROVEMENTS

SEC. 201. REFORM OF PASSENGER FACILITY CHARGE AUTHORITY.

(a) Passenger Facility Charge Streamlining.--Section
40117(c) is amended to read as follows:
``(c) Procedural Requirements for Imposition of Passenger
Facility Charge.--
``(1) In general.--An eligible agency must submit to those
air carriers and foreign air carriers operating at the
airport with a significant business interest, as defined in
paragraph (3), and to the Secretary and make available to the
public annually a report, in the form required by the
Secretary, on the status of the eligible agency's passenger
facility charge program, including--
``(A) the total amount of program revenue held by the
agency at the beginning of the 12 months covered by the
report;
``(B) the total amount of program revenue collected by the
agency during the period covered by the report;
``(C) the amount of expenditures with program revenue made
by the agency on each eligible airport-related project during
the period covered by the report;
``(D) each airport-related project for which the agency
plans to collect and use program revenue during the next 12-
month period covered by the report, including the amount of
revenue projected to be used for such project;
``(E) the level of program revenue the agency plans to
collect during the next 12-month period covered by the
report;
``(F) a description of the notice and consultation process
with air carriers and foreign air carriers under paragraph
(3), and with the public under paragraph (4), including a
copy of any adverse comments received and how the agency
responded; and
``(G) any other information on the program that the
Secretary may require.
``(2) Implementation.--Subject to the requirements of
paragraphs (3), (4), (5), and (6), the eligible agency may
implement the planned collection and use of passenger
facility charges in accordance with its report upon filing
the report as required in paragraph (1).
``(3) Consultation with carriers for new projects.--
``(A) An eligible agency proposing to collect or use
passenger facility charge revenue for a project not
previously approved by the Secretary or not included in a
report required by paragraph (1) that was submitted in a
prior year shall provide to air carriers and foreign air
carriers operating at the airport reasonable notice, and an
opportunity to comment on the planned collection and use of
program revenue before providing the report required under
paragraph (1). The Secretary shall prescribe by regulation
what constitutes reasonable notice under this paragraph,
which shall at a minimum include--
``(i) that the eligible agency provide to air carriers and
foreign air carriers operating at the airport written notice
of the planned collection and use of passenger facility
charge revenue;
``(ii) that the notice include a full description and
justification for a proposed project;
``(iii) that the notice include a detailed financial plan
for the proposed project; and
``(iv) that the notice include the proposed level for the
passenger facility charge.
``(B) An eligible agency providing notice and an
opportunity for comment shall be deemed to have satisfied the
requirements of this paragraph if the eligible agency
provides such notice to air carriers and foreign air carriers
that have a significant business interest at the airport. For
purposes of this subparagraph, the term `significant business
interest' means an air carrier or foreign air carrier that--
``(i) had not less than 1.0 percent of passenger boardings
at the airport in the prior calendar year;
``(ii) had at least 25,000 passenger boardings at the
airport in the prior calendar year; or
``(iii) provides scheduled service at the airport.
``(C) Not later than 45 days after written notice is
provided under subparagraph (A), each air carrier and foreign
air carrier may provide written comments to the eligible
agency indicating its agreement or disagreement with the
project or, if applicable, the proposed level for a passenger
facility charge.
``(D) The eligible agency may include, as part of the
notice and comment process, a consultation meeting to discuss
the proposed project or, if applicable, the proposed level
for a passenger facility charge. If the agency provides a
consultation meeting, the written comments specified in
subparagraph (C) shall be due not later than 30 days after
the meeting.
``(4) Public notice and comment.--
``(A) An eligible agency proposing to collect or use
passenger facility charge revenue for a project not
previously approved by the Secretary or not included in a
report required by paragraph (1) that was filed in a prior
year shall provide reasonable notice and an opportunity for
public comment on the planned collection and use of program
revenue before providing the report required in paragraph
(1).
``(B) The Secretary shall prescribe by regulation what
constitutes reasonable notice under this paragraph, which
shall at a minimum require--
``(i) that the eligible agency provide public notice of
intent to collect a passenger facility charge so as to inform
those interested persons and agencies that may be affected;
``(ii) appropriate methods of publication, which may
include notice in local newspapers of general circulation or
other local media, or posting of the notice on the agency's
Internet website; and
``(iii) submission of public comments no later than 45 days
after the date of the publication of the notice.
``(5) Objections.--
``(A) Any interested person may file with the Secretary a
written objection to a proposed project included in a notice
under this paragraph provided that the filing is made within
30 days after submission of the report specified in paragraph
(1).
``(B) The Secretary shall provide not less than 30 days for
the eligible agency to respond to any filed objection.
``(C) Not later than 90 days after receiving the eligible
agency's response to a filed objection, the Secretary shall
make a determination whether or not to terminate authority to
collect the passenger facility charge for the project, based
on the filed objection. The Secretary shall state the reasons
for any determination. The Secretary may only terminate
authority if--
``(i) the project is not an eligible airport related
project;
``(ii) the eligible agency has not complied with the
requirements of this section or the Secretary's implementing
regulations in proposing the project;
``(iii) the eligible agency has been found to be in
violation of section 47107(b) of this title and has failed to
take corrective action, prior to the filing of the objection;
or
``(iv) in the case of a proposed increase in the passenger
facility charge level, the level is not authorized by this
section.
``(D) Upon issuance of a decision terminating authority,
the public agency shall prepare an accounting of passenger
facility revenue collected under the terminated authority and
restore the funds for use on other authorized projects.
``(E) Except as provided in subparagraph (C), the eligible
agency may implement the planned collection and use of a
passenger facility charge in accordance with its report upon
filing the report as specified in paragraph (1)(A).

[[Page S3613]]

``(6) Approval requirement for increased passenger facility
charge or intermodal ground access project.--
``(A) An eligible agency may not collect or use a passenger
facility charge to finance an intermodal ground access
project, or increase a passenger facility charge, unless the
project is first approved by the Secretary in accordance with
this paragraph.
``(B) The eligible agency may submit to the Secretary an
application for authority to impose a passenger facility
charge for an intermodal ground access project or to increase
a passenger facility charge. The application shall contain
information and be in the form that the Secretary may require
by regulation but, at a minimum, must include copies of any
comments received by the agency during the comment period
described by subparagraph (C).
``(C) Before submitting an application under this
paragraph, an eligible agency must provide air carriers and
foreign air carriers operating at the airport, and the
public, reasonable notice of and an opportunity to comment on
a proposed intermodal ground access project or the increased
passenger facility charge. Such notice and opportunity to
comment shall conform to the requirements of paragraphs (3)
and (4).
``(D) After receiving an application, the Secretary may
provide air carriers, foreign air carriers and other
interested persons notice and an opportunity to comment on
the application. The Secretary shall make a final decision on
the application not later than 120 days after receiving
it.''.
(b) Conforming Amendments.--
(1) References.--
(A) Section 40117(a) is amended--
(i) by striking ``fee'' in the heading for paragraph (5)
and inserting ``charge''; and
(ii) by striking ``fee'' each place it appears in
paragraphs (5) and (6) and inserting ``charge''.
(B) Subsections (b), and subsections (d) through (m), of
section 40117 are amended--
(i) by striking ``fee'' or ``fees'' each place either
appears and inserting ``charge'' or ``charges'',
respectively; and
(ii) by striking ``Fee'' in the subsection caption for
subsection (l), and ``Fees'' in the subsection captions for
subsections (e) and (m), and inserting ``Charge'' and
``Charges'', respectively.
(C) The caption for section 40117 is amended to read as
follows:

``Sec. 40117. Passenger facility charges''.

(D) The chapter analysis for chapter 401 is amended by
striking the item relating to section 40117 and inserting the
following:

``40117. Passenger facility charges.''.

(2) Limitations on approving applications.--Section
40117(d) is amended--
(A) by striking ``subsection (c) of this section to finance
a specific'' and inserting ``subsection (c)(6) of this
section to finance an intermodal ground access'';
(B) by striking ``specific'' in paragraph (1);
(C) by striking paragraph (2) and inserting the following:
``(2) the project is an eligible airport-related project;
and'';
(D) by striking ``each of the specific projects; and'' in
paragraph (3) and inserting ``the project.''; and
(E) by striking paragraph (4).
(3) Limitations on imposing charges.--Section 40117(e)(1)
is amended to read as follows: ``(1) An eligible agency may
impose a passenger facility charge only subject to terms the
Secretary may prescribe to carry out the objectives of this
section.''.
(4) Limitations on contracts, leases, and use agreements.--
Section 40117(f)(2) is amended by striking ``long-term''.
(5) Compliance.--Section 40117(h) is amended--
(A) by redesignating paragraph (3) as paragraph (4); and
(B) by inserting after paragraph (2) the following:
``(3) The Secretary may, on complaint of an interested
person or on the Secretary's own initiative, conduct an
investigation into an eligible agency's collection and use of
passenger facility charge revenue to determine whether a
passenger facility charge is excessive or that passenger
facility revenue is not being used as provided in this
section. The Secretary shall prescribe regulations
establishing procedures for complaints and investigations.
The regulations may provide for the issuance of a final
agency decision without resort to an oral evidentiary
hearing. The Secretary shall not accept complaints filed
under this paragraph until after the issuance of regulations
establishing complaint procedures.''.
(6) Pilot program for pfc at nonhub airports.--Section
40117(l) is amended--
(A) by striking ``(c)(2)'' in paragraph (2) and inserting
``(c)(3)''; and
(B) by striking ``date that is 3 years after the date of
issuance of regulations to carry out this subsection.'' in
paragraph (7) and inserting ``date of issuance of regulations
to carry out subsection (c) of this section, as amended by
the Aviation Investment and Modernization Act of 2008.''.
(7) Prohibition on approving pfc applications for airport
revenue diversion.--Section 47111(e) is amended by striking
``sponsor'' the second place it appears in the first sentence
and all that follows and inserting ``sponsor. A sponsor shall
not propose collection or use of passenger facility charges
for any new projects under paragraphs (3) through (6) of
section 40117(c) unless the Secretary determines that the
sponsor has taken corrective action to address the violation
and the violation no longer exists.''.

SEC. 202. PASSENGER FACILITY CHARGE PILOT PROGRAM.

Section 40117 is amended by adding at the end thereof the
following:
``(n) Alternative Passenger Facility Charge Collection
Pilot Program.--
``(1) In general.--The Secretary shall establish and
conduct a pilot program at not more than 6 airports under
which an eligible agency may impose a passenger facility
charge under this section without regard to the dollar amount
limitations set forth in paragraph (1) or (4) of subsection
(b) if the participating eligible agency meets the
requirements of paragraph (2).
``(2) Collection requirements.--
``(A) Direct collection.--An eligible agency participating
in the pilot program--
``(i) may collect the charge from the passenger at the
facility, via the Internet, or in any other reasonable
manner; but
``(ii) may not require or permit the charge to be collected
by an air carrier or foreign air carrier for the flight
segment.
``(B) PFC collection requirement not to apply.--Subpart C
of part 158 of title 14, Code of Federal Regulations, does
not apply to the collection of the passenger facility charge
imposed by an eligible agency participating in the pilot
program.''.

SEC. 203. AMENDMENTS TO GRANT ASSURANCES.

Section 47107 is amended--
(1) by striking ``made;'' in subsection (a)(16)(D)(ii) and
inserting ``made, except that, if there is a change in
airport design standards that the Secretary determines is
beyond the owner or operator's control that requires the
relocation or replacement of an existing airport facility,
the Secretary, upon the request of the owner or operator, may
grant funds available under section 47114 to pay the cost of
relocating or replacing such facility;'';
(2) by striking ``purpose;'' in subsection (c)(2)(A)(i) and
inserting ``purpose, which includes serving as noise buffer
land;'';
(3) by striking ``paid to the Secretary for deposit in the
Fund if another eligible project does not exist.'' in
subsection (c)(2)(B)(iii) and inserting ``reinvested in
another project at the airport or transferred to another
airport as the Secretary prescribes.''; and
(4) by redesignating paragraph (3) of subsection (c) as
paragraph (4) and inserting after paragraph (2) the
following:
``(3) In approving the reinvestment or transfer of proceeds
under paragraph (2)(C)(iii), the Secretary shall give
preference, in descending order, to--
``(i) reinvestment in an approved noise compatibility
project;
``(ii) reinvestment in an approved project that is eligible
for funding under section 47117(e);
``(iii) reinvestment in an airport development project that
is eligible for funding under section 47114, 47115, or 47117
and meets the requirements of this chapter;
``(iv) transfer to the sponsor of another public airport to
be reinvested in an approved noise compatibility project at
such airport; and
``(v) payment to the Secretary for deposit in the Airport
and Airway Trust Fund established under section 9502 of the
Internal Revenue Code of 1986 (26 U.S.C. 9502).''.

SEC. 204. GOVERNMENT SHARE OF PROJECT COSTS.

(a) Federal Share.--Section 47109 is amended--
(1) by striking ``subsection (b) or subsection (c)'' in
subsection (a) and inserting ``subsection (b), (c), or (e)'';
and
(2) by adding at the end the following:
``(e) Special Rule for Transition From Small Hub to Medium
Hub Status.--If the status of a small hub primary airport
changes to a medium hub primary airport, the United States
Government's share of allowable project costs for the airport
may not exceed 95 percent for 2 fiscal years following such
change in hub status.''.
(b) Transitioning Airports.--Section 47114(f)(3)(B) is
amended by striking ``year 2004.'' and inserting ``years
2008, 2009, 2010, and 2011.''.

SEC. 205. AMENDMENTS TO ALLOWABLE COSTS.

Section 47110 is amended--
(1) by striking subsection (d) and inserting the following:
``(d) Relocation of Airport-Owned Facilities.--The
Secretary may determine that the costs of relocating or
replacing an airport-owned facility are allowable for an
airport development project at an airport only if--
``(1) the Government's share of such costs is paid with
funds apportioned to the airport sponsor under sections
47114(c)(1) or 47114(d)(2);
``(2) the Secretary determines that the relocation or
replacement is required due to a change in the Secretary's
design standards; and
``(3) the Secretary determines that the change is beyond
the control of the airport sponsor.''; and
(2) by striking ``facilities, including fuel farms and
hangars,'' in subsection (h) and inserting ``facilities, as
defined by section 47102,''.

SEC. 206. SALE OF PRIVATE AIRPORT TO PUBLIC SPONSOR.

Section 47133(b) is amended--
(1) by resetting the text of the subsection as an indented
paragraph 2 ems from the left margin;

[[Page S3614]]

(2) by inserting ``(1)'' before ``Subsection''; and
(3) by adding at the end thereof the following:
``(2) In the case of a privately owned airport, subsection
(a) shall not apply to the proceeds from the sale of the
airport to a public sponsor if--
``(A) the sale is approved by the Secretary;
``(B) funding is provided under this title for the public
sponsor's acquisition; and
``(C) an amount equal to the remaining unamortized portion
of the original grant, amortized over a 20-year period, is
repaid to the Secretary by the private owner for deposit in
the Trust Fund for airport acquisitions.
``(3) This subsection shall apply to grants issued on or
after October 1, 1996.''.

SEC. 207. PILOT PROGRAM FOR AIRPORT TAKEOVER OF AIR
NAVIGATION FACILITIES.

(a) In General.--Chapter 445 is amended by adding at the
end the following new section:

``Sec. 44518. Pilot program for airport takeover of terminal
area air navigation equipment

``(a) In General.--Subject to the requirements of this
section, the Administrator of the Federal Aviation
Administrator may carry out a pilot program under which the
Administrator may transfer ownership, operating, and
maintenance responsibilities for airport terminal area air
navigation equipment to sponsors of not more than 10
airports.
``(b) Terms and Conditions of Transfer for Airport
Sponsors.--As a condition of participating in this pilot
program the sponsor shall agree that the sponsor will--
``(1) operate and maintain all of the air navigation
equipment that is subject to this section at the airport in
accordance with standards established by the Administrator;
``(2) permit the Administrator or a person designated by
the Administrator to conduct inspections of the air
navigation equipment under a schedule established by the
Administrator; and
``(3) acquire and maintain new air navigation equipment as
needed to replace facilities that have to be replaced at the
end of their useful life or to meet new standards established
by the Administrator.
``(c) Terms and Conditions of Transfer for the
Administrator.--When the Administrator approves a sponsor's
participation in this pilot program, the Administrator
shall--
``(1) transfer, at no cost to the sponsor, the title and
ownership of the air navigation equipment facilities approved
for transfer under this program; and
``(2) transfer, at no cost to the sponsor, the government's
property interest in the land on which the air navigation
facilities transferred under paragraph (1) are located.
``(d) Treatment of Airport Costs Under Pilot Program.--Upon
transfer by the Administrator, any costs incurred by the
airport for ownership and maintenance of the equipment
transferred under this section shall be considered a cost of
providing airfield facilities and services under standards
and guidelines issued by the Secretary under section
47129(b)(2) and may be recovered in rates and charges
assessed for use of the airfield.
``(e) Definitions.--In this section:
``(1) Sponsor.--The term `sponsor' has the meaning given
that term in section 40102.
``(2) Terminal area air navigation equipment.--The term
`terminal area air navigation equipment' means an air
navigation facility under section 40102, other than buildings
used for air traffic control functions, that exists to
provide approach and landing guidance to aircraft.
``(f) Guidelines.--The Administrator shall issue advisory
guidelines on the implementation of the program. The
guidelines shall not be subject to administrative rulemaking
requirements under subchapter II of chapter 5 of title 5.''.
(b) Conforming Amendment.--The chapter analysis for chapter
445 is amended by inserting after the item relating to
section 44517 the following:

``44518. Pilot program for airport takeover of terminal area air
navigation equipment.''.

SEC. 208. GOVERNMENT SHARE OF CERTAIN AIR PROJECT COSTS.

Notwithstanding section 47109(a) of title 49, United States
Code, the Federal government's share of allowable project
costs for a grant made in fiscal year 2008, 2009, 2010, or
2011 under chapter 471 of that title for a project described
in paragraph (2) or (3) of that section shall be 95 percent.

SEC. 209. MISCELLANEOUS AMENDMENTS.

(a) Technical Changes to National Plan of Integrated
Airport Systems.--Section 47103 is amended--
(1) by striking ``each airport to--'' in subsection (a) and
inserting ``the airport system to--'';
(2) by striking ``system in the particular area;'' in
subsection (a)(1) and inserting ``system, including
connection to the surface transportation network; and'';
(3) by striking ``aeronautics; and'' in subsection (a)(2)
and inserting ``aeronautics.'';
(4) by striking subsection (a)(3);
(5) by striking paragraph (2) of subsection (b) and
redesignating paragraph (3) as paragraph (2);
(6) by striking ``operations, Short Takeoff and Landing/
Very Short Takeoff and Landing aircraft operations,'' in
subsection (b)(2), as redesignated, and inserting
``operations''; and
(7) by striking ``status of the'' in subsection (d).
(b) Update Veterans Preference Definition.--Section
47112(c) is amended--
(1) by striking ``separated from'' in paragraph (1)(B) and
inserting ``discharged or released from active duty in'';
(2) by adding at the end of paragraph (1) the following:
``(C) `Afghanistan-Iraq war veteran' means an individual
who served on active duty, as defined by section 101(21) of
title 38, at any time in the armed forces for a period of
more than 180 consecutive days, any part of which occurred
during the period beginning on September 11, 2001, and ending
on the date prescribed by Presidential proclamation or by law
as the last date of Operation Iraqi Freedom.''; and
(3) by striking ``veterans and'' in paragraph (2) and
inserting ``veterans, Afghanistan-Iraq war veterans, and''.
(c) Annual Report.--Section 47131(a) is amended--
(1) by striking ``April 1'' and inserting ``June 1''; and
(2) by striking paragraphs (1) through (4) and inserting
the following:
``(1) a summary of airport development and planning
completed;
``(2) a summary of individual grants issued;
``(3) an accounting of discretionary and apportioned funds
allocated;
``(4) the allocation of appropriations; and''.
(d) Sunset of Program.--Section 47137 is repealed effective
September 30, 2008.
(e) Correction to Emission Credits Provision.--Section
47139 is amended--
(1) by striking ``47102(3)(F),'' in subsection (a);
(2) by striking ``47102(3)(F),'' in subsection (b);
(3) by striking ``47102(3)(L), or 47140'' in subsection (b)
and inserting ``or 47102(3)(L),'';
(4) by striking ``47103(3)(F), in subsection (b);
(5) by striking ``47102(3)(L), or 47140,'' in subsection
(b) and inserting ``or 47102(3)(L),''.
(f) Correction to Surplus Property Authority.--Section
47151(e) is amended by striking ``(other than real property
that is subject to section 2687 of title 10, section 201 of
the Defense Authorization Amendments and Base Closure and
Realignment Act (10 U.S.C. 2687 note), or section 2905 of the
Defense Base Closure and Realignment Act of 1990 (10 U.S.C.
2687 note),''.
(g) Airport Capacity Benchmark Reports; Definition of Joint
Use Airport.--Section 47175 is amended--
(1) by striking ``Airport Capacity Benchmark Report 2001.''
in paragraph (2) and inserting ``2001 and 2004 Airport
Capacity Benchmark Reports or of the most recent Benchmark
report.''; and
(2) by adding at the end thereof the following:
``(7) Joint use airport.--The term `joint use airport'
means an airport owned by the United States Department of
Defense, at which both military and civilian aircraft make
shared use of the airfield.''.
(h) Cargo Airports.--Section 47114(c)(2)(A) is amended by
striking ``3.5 percent'' and inserting ``4.0 percent''.
(i) Use of Apportioned Amounts.--Section 47117(e)(1)(A) is
amended--
(1) by striking ``35 percent'' in the first sentence and
inserting ``$300,000,000'';
(2) by striking ``and'' after ``47141,'';
(3) by striking ``et seq.).'' and inserting ``et seq.), and
for water quality mitigation projects to comply with the Act
of June 30, 1948 (33 U.S.C. 1251 et seq.) approved in an
environmental record of decision for an airport development
project under this title.''; and
(4) by striking ``such 35 percent requirement is'' in the
second sentence and inserting ``the requirements of the
preceding sentence are''.
(j) Use of Apportioned Amounts.--An amount apportioned
under section 47114 of title 49, United States Code, or made
available under section 47115 of that title, to the sponsor
of a reliever airport the crosswind runway of which was
closed as a result of a Record of Decision dated September 3,
2004, shall be available for project costs associated with
the establishment of a new crosswind runway.
(k) Use of Previous Fiscal Year's Apportionment.--Section
47114(c)(1) is amended--
(1) by striking ``airport due to an employment action,
natural disaster, or other event unrelated to the demand for
air transportation at the affected airport.'' in subparagraph
(E)(iii) and inserting ``airport--
``(I) if it is included in the essential air service
program in the calendar year in which the passenger boardings
fall below 9,700;
``(II) if at the airport the total passenger boardings from
large certificated air carriers (as defined in part 241 of
title 14, Code of Federal Regulations) conducting scheduled
plus nonscheduled service totals 10,000 or more in the
calendar year in which the airport does not meet the criteria
for a primary airport under section 47102 of this title; or
``(III) if the documented interruption to scheduled service
at the airport was equal to 4 percent of the scheduled
flights in calendar year 2006, exclusive of cancellations due
to severe weather conditions, and the airport is served by a
single air carrier.'';
(2) by redesignating subparagraphs (F) and (G) as (G) and
(H), respectively, and inserting after subparagraph (E) the
following:
``(F) For fiscal years 2009 through 2012, with regard to an
airport that meets the criteria described in paragraph
(E)(iii), if the calendar year passenger boardings for the

[[Page S3615]]

calculation of apportionments under this section fall below
10,000 passenger boardings, the Secretary may use the
passenger boardings for the last fiscal year in which
passenger boardings exceeded 10,000 for calculating
apportionments.''.
(l) Section 47102(3) is amended by adding at the end the
following:
``(M) construction of mobile refueler parking within a fuel
farm at a nonprimary airport meeting the requirements of
section 112.8 of title 40, Code of Federal Regulations.''.
(m) Section 47115(g)(1) is amended by striking ``of--'' and
all that follows and inserting ``of $520,000,000. The amount
credited is exclusive of amounts that have been apportioned
in a prior fiscal year under section 47114 of this title and
that remain available for obligation.''.
(n) Section 47114(c) is amended by adding at the end
thereof the following:
``(3) Airports served by large certificated carriers.--
``(A) Apportionment.--The Secretary shall apportion to the
sponsor of an airport that received scheduled air service
from a large certificated air carrier (as defined in part 241
of title 14, Code of Federal Regulations) an amount equal to
the minimum apportionment specified in paragraph (1) of this
subsection.
``(B) Limitation.--The apportionment under subparagraph (A)
shall be made available to an airport sponsor only if--
``(i) the large certificated air carrier began scheduled
air service at the airport in May 2006 and ceased scheduled
air service at the airport in October 2006; and
``(ii) the Secretary determines that the airport had more
than 10,000 passenger boardings in the preceding calendar
year, based on data submitted to the Secretary under part 241
of title 14, Code of Federal Regulations.''.
(o) Subparagraph (H) of section 47114(c)(1), as
redesignated by subsection (k)(2) of this section, is
amended--
(1) by striking ``fiscal year 2006'' in the subparagraph
heading and inserting ``fiscal years 2008 through 2011.--'';
(2) by striking ``fiscal year 2006'' and inserting ``each
of fiscal years 2008 through 2011''; and
(3) by striking clause (i) and inserting the following:
``(i) the average annual passenger boardings at the airport
for calendar years 2004 through 2006 were below 10,000 per
year;''; and
(4) by striking ``2000 or 2001;'' in clause (ii) and
inserting ``2003''.
(p) Section 47114 is amended by adding at the end thereof
the following:
``(g) Approach Lighting System.--Any amount apportioned for
airport 03-02-0133 under the National Plan of Integrated
Airport Systems may be utilized in any fiscal year for
approach lighting systems including a medium intensity
approach lighting system with runway alignment lights.''.

SEC. 210. STATE BLOCK GRANT PROGRAM.

Section 47128 is amended--
(1) by striking ``regulations'' each place it appears in
subsection (a) and inserting ``guidance'';
(2) by striking ``grant;'' in subsection (b)(4) and
inserting ``grant, including Federal environmental
requirements or an agreed upon equivalent;'';
(3) by redesignating subsection (c) as subsection (d) and
inserting after subsection (b) the following:
``(c) Project Analysis and Coordination Requirements.--Any
Federal agency that must approve, license, or permit a
proposed action by a participating State shall coordinate and
consult with the State. The agency shall utilize the
environmental analysis prepared by the State, provided it is
adequate, or supplement that analysis as necessary to meet
applicable Federal requirements.''; and
(4) by adding at the end the following:
``(e) Pilot Program.--The Secretary shall establish a pilot
program for up to 3 States that do not participate in the
program established under subsection (a) that is consistent
with the program under subsection (a).''.

SEC. 211. AIRPORT FUNDING OF SPECIAL STUDIES OR REVIEWS.

Section 47173(a) is amended by striking ``project.'' and
inserting ``project, or to conduct special environmental
studies related to a federally funded airport project or for
special studies or reviews to support approved noise
compatibility measures in a Part 150 program or environmental
mitigation in a Federal Aviation Administration Record of
Decision or Finding of No Significant Impact.''.

SEC. 212. GRANT ELIGIBILITY FOR ASSESSMENT OF FLIGHT
PROCEDURES.

Section 47504 is amended by adding at the end the
following:
``(e) Grants for Assessment of Flight Procedures.--
``(1) The Secretary is authorized in accordance with
subsection (c)(1) to make a grant to an airport operator to
assist in completing environmental review and assessment
activities for proposals to implement flight procedures that
have been approved for airport noise compatibility planning
purposes under subsection (b).
``(2) The Administrator of the Federal Aviation
Administration may accept funds from an airport sponsor,
including funds provided to the sponsor under paragraph (1),
to hire additional staff or obtain the services of
consultants in order to facilitate the timely processing,
review and completion of environmental activities associated
with proposals to implement flight procedures submitted and
approved for airport noise compatibility planning purposes in
accordance with this section. Funds received under this
authority shall not be subject to the procedures applicable
to the receipt of gifts by the Administrator.''.

SEC. 213. SAFETY-CRITICAL AIRPORTS.

Section 47118(c) is amended--
(1) by striking ``or'' after the semicolon in paragraph
(1);
(2) by striking ``delays.'' in paragraph (2) and inserting
``delays; or''; and
(3) by adding at the end the following:
``(3) be critical to the safety of commercial, military, or
general aviation in trans-oceanic flights.''.

SEC. 214. EXPANDED PASSENGER FACILITY CHARGE ELIGIBILITY FOR
NOISE COMPATIBILITY PROJECTS.

Section 40117(b) is amended by adding at the end the
following:
``(7) Noise mitigation for certain schools.--
``(A) In general.--In addition to the uses specified in
paragraphs (1), (4), and (6), the Secretary may authorize a
passenger facility charge imposed under paragraph (1) or (4)
at a large hub airport that is the subject of an amended
judgment and final order in condemnation filed on January 7,
1980, by the Superior Court of the State of California for
the county of Los Angeles, to be used for a project to carry
out noise mitigation for a building, or for the replacement
of a relocatable building with a permanent building, in the
noise impacted area surrounding the airport at which such
building is used primarily for educational purposes,
notwithstanding the air easement granted or any terms to the
contrary in such judgment and final order, if--
``(i) the Secretary determines that the building is
adversely affected by airport noise;
``(ii) the building is owned or chartered by the school
district that was the plaintiff in case number 986,442 or
986,446, which was resolved by such judgment and final order;
``(iii) the project is for a school identified in 1 of the
settlement agreements effective February 16, 2005, between
the airport and each of the school districts;
``(iv) in the case of a project to replace a relocatable
building with a permanent building, the eligible project
costs are limited to the actual structural construction costs
necessary to mitigate aircraft noise in instructional
classrooms to an interior noise level meeting current
standards of the Federal Aviation Administration; and
``(v) the project otherwise meets the requirements of this
section for authorization of a passenger facility charge.
``(B) Eligible project costs.--In subparagraph (A)(iv), the
term `eligible project costs' means the difference between
the cost of standard school construction and the cost of
construction necessary to mitigate classroom noise to the
standards of the Federal Aviation Administration.''.

SEC. 215. ENVIRONMENTAL MITIGATION DEMONSTRATION PILOT
PROGRAM.

(a) Pilot Program.--Subchapter I of chapter 471 is amended
by adding at the end thereof the following:

``Sec. 47143. Environmental mitigation demonstration pilot
program

``(a) In General.--The Secretary of Transportation shall
carry out a pilot program involving not more than 6 projects
at public-use airports under which the Secretary may make
grants to sponsors of such airports from funds apportioned
under paragraph 47117(e)(1)(A) for use at such airports for
environmental mitigation demonstration projects that will
measurably reduce or mitigate aviation impacts on noise, air
quality or water quality in the vicinity of the airport.
Notwithstanding any other provision of this subchapter, an
environmental mitigation demonstration project approved under
this section shall be treated as eligible for assistance
under this subchapter.
``(b) Participation in Pilot Program.--A public-use airport
shall be eligible for participation in the pilot.
``(c) Selection Criteria.--In selecting from among
applicants for participation in the pilot program, the
Secretary may give priority consideration to environmental
mitigation demonstration projects that--
``(1) will achieve the greatest reductions in aircraft
noise, airport emissions, or airport water quality impacts
either on an absolute basis, or on a per-dollar-of-funds
expended basis; and
``(2) will be implemented by an eligible consortium.
``(d) Federal Share.--Notwithstanding any other provision
of this subchapter, the United States Government's share of
the costs of a project carried out under this section shall
be 50 percent.
``(e) Maximum Amount.--Not more than $2,500,000 may be made
available by the Secretary in grants under this section for
any single project.
``(f) Identifying Best Practices.--The Administrator may
develop and publish information identifying best practices
for reducing or mitigating aviation impacts on noise, air
quality, or water quality in the vicinity of airports, based
on the projects carried out under the pilot program.
``(g) Definitions.--In this section:
``(1) Eligible consortium.--The term `eligible consortium'
means a consortium that comprises 2 or more of the following
entities:

[[Page S3616]]

``(A) Businesses incorporated in the United States.
``(B) Public or private educational or research
organizations located in the United States.
``(C) Entities of State or local governments in the United
States.
``(D) Federal laboratories.
``(2) Environmental mitigation demonstration project.--The
term `environmental mitigation demonstration project' means a
project that--
``(A) introduces new conceptual environmental mitigation
techniques or technology with associated benefits, which have
already been proven in laboratory demonstrations;
``(B) proposes methods for efficient adaptation or
integration of new concepts to airport operations; and
``(C) will demonstrate whether new techniques or technology
for environmental mitigation identified in research are--
``(i) practical to implement at or near multiple public use
airports; and
``(ii) capable of reducing noise, airport emissions, or
water quality impacts in measurably significant amounts.''.
(b) Conforming Amendment.--The chapter analysis for chapter
471 is amended by inserting after the item relating to
section 47142 the following:

``47143. Environmental mitigation demonstration pilot program''.

SEC. 216. ALLOWABLE PROJECT COSTS FOR AIRPORT DEVELOPMENT
PROGRAM.

Section 47110(c) of title 49, United States Code, is
amended--
(1) by striking ``; or'' in paragraph (1) and inserting a
semicolon;
(2) by striking ``project.'' in paragraph (2) and inserting
``project; or''; and
(3) by adding at the end the following:
``(3) necessarily incurred in anticipation of severe
weather.''.

SEC. 217. GLYCOL RECOVERY VEHICLES.

Section 47102(3)(G) is amended by inserting ``including
acquiring glycol recovery vehicles,'' after ``aircraft,''.

SEC. 218. RESEARCH IMPROVEMENT FOR AIRCRAFT.

Section 44504(b) is amended--
(1) by striking ``and'' after the semicolon in paragraph
(6);
(2) by striking ``aircraft.'' in paragraph (7) and
inserting ``aircraft; and''; and
(3) by adding at the end thereof the following:
``(8) to conduct research to support programs designed to
reduce gases and particulates emitted.''.

TITLE III--FAA ORGANIZATION AND REFORM

SEC. 301. AIR TRAFFIC CONTROL MODERNIZATION OVERSIGHT BOARD.

Section 106(p) is amended to read as follows:
``(p) Air Traffic Control Modernization Oversight Board.--
``(1) Establishment.--Within 90 days after the date of
enactment of the Aviation Investment and Modernization Act of
2008, the Secretary shall establish and appoint the members
of an advisory Board which shall be known as the Air Traffic
Control Modernization Oversight Board.
``(2) Membership.--The Board shall be comprised of 7
members, who shall consist of--
``(A) the Administrator of the Federal Aviation
Administration and a representative from the Department of
Defense;
``(B) 1 member who shall have a fiduciary responsibility to
represent the public interest; and
``(C) 4 members representing aviation interests, as
follows:
``(i) 1 representative that is the chief executive officer
of an airport.
``(ii) 1 representative that is the chief executive officer
of a passenger or cargo air carrier.
``(iii) 1 representative of a labor organization
representing employees at the Federal Aviation Administration
that are involved with the operation, maintenance or
procurement of the air traffic control system.
``(iv) 1 representative with extensive operational
experience in the general aviation community.
``(3) Appointment and qualifications.--
``(A) Members of the Board appointed under paragraphs
(2)(B) and (2)(C) shall be appointed by the President, by and
with the advice and consent of the Senate.
``(B) Members of the Board appointed under paragraph (2)(B)
shall be citizens of the United States and shall be appointed
without regard to political affiliation and solely on the
basis of their professional experience and expertise in one
or more of the following areas and, in the aggregate, should
collectively bring to bear expertise in--
``(i) management of large service organizations;
``(ii) customer service;
``(iii) management of large procurements;
``(iv) information and communications technology;
``(v) organizational development; and
``(vi) labor relations.
``(4) Functions.--
``(A) In general.--The Board shall--
``(i) review and provide advice on the Administration's
modernization programs, budget, and cost accounting system;
``(ii) review the Administration's strategic plan and make
recommendations on the non-safety program portions of the
plan, and provide advice on the safety programs of the plan;
``(iii) review the operational efficiency of the air
traffic control system and make recommendations on the
operational and performance metrics for that system;
``(iv) approve procurements of air traffic control
equipment in excess of $100,000,000;
``(v) approve by July 31 of each year the Administrator's
budget request for facilities and equipment prior to its
submission to the Office of Management and budget, including
which programs are proposed to be funded from the Air Traffic
control system Modernization Account of the Airport and
Airway Trust Fund;
``(vi) approve the Federal Aviation Administration's
Capital Investment Plan prior to its submission to the
Congress;
``(vii) annually approve the Operational Evolution Plan;
``(viii) approve the Administrator's selection of a Chief
Operating Officer for the Air Traffic Organization and on the
appointment and compensation of its managers; and
``(ix) approve the selection of the head of the Joint
Planning Development Office.
``(B) Meetings.--The Board shall meet on a regular and
periodic basis or at the call of the Chairman or of the
Administrator.
``(C) Access to documents and staff.--The Administration
may give the Board appropriate access to relevant documents
and personnel of the Administration, and the Administrator
shall make available, consistent with the authority to
withhold commercial and other proprietary information under
section 552 of title 5, cost data associated with the
acquisition and operation of air traffic control systems. Any
member of the Board who receives commercial or other
proprietary data from the Administrator shall be subject to
the provisions of section 1905 of title 18, pertaining to
unauthorized disclosure of such information.
``(5) Federal advisory committee act not to apply.--The
Federal Advisory Committee Act (5 U.S.C. App.) shall not
apply to the Board or such rulemaking committees as the
Administrator shall designate.
``(6) Administrative matters.--
``(A) Terms of members.--Members of the Board appointed
under paragraph (2)(B) and (2)(C) shall be appointed for a
term of 4 years.
``(B) Reappointment.--No individual may be appointed to the
Board for more than 8 years total.
``(C) Vacancy.--Any vacancy on the Board shall be filled in
the same manner as the original position. Any member
appointed to fill a vacancy occurring before the expiration
of the term for which the member's predecessor was appointed
shall be appointed for a term of 4 years.
``(D) Continuation in office.--A member of the Board whose
term expires shall continue to serve until the date on which
the member's successor takes office.
``(E) Removal.--Any member of the Board appointed under
paragraph (2)(B) or (2)(C) may be removed by the President
for cause.
``(F) Claims against members of the board.--
``(i) In general.--A member appointed to the Board shall
have no personal liability under State or Federal law with
respect to any claim arising out of or resulting from an act
or omission by such member within the scope of service as a
member of the Board.
``(ii) Effect on other law.--This subparagraph shall not be
construed--

``(I) to affect any other immunity or protection that may
be available to a member of the Board under applicable law
with respect to such transactions;
``(II) to affect any other right or remedy against the
United States under applicable law; or
``(III) to limit or alter in any way the immunities that
are available under applicable law for Federal officers and
employees.

``(G) Ethical considerations.--Each member of the Board
appointed under paragraph (2)(B) must certify that he or
she--
``(i) does not have a pecuniary interest in, or own stock
in or bonds of, an aviation or aeronautical enterprise,
except an interest in a diversified mutual fund or an
interest that is exempt from the application of section 208
of title 18;
``(ii) does not engage in another business related to
aviation or aeronautics; and
``(iii) is not a member of any organization that engages,
as a substantial part of its activities, in activities to
influence aviation-related legislation.
``(H) Chairman; vice chairman.--The Board shall elect a
chair and a vice chair from among its members, each of whom
shall serve for a term of 2 years. The vice chair shall
perform the duties of the chairman in the absence of the
chairman.
``(I) Compensaton.--No member shall receive any
compensation or other benefits from the Federal Government
for serving on the Board, except for compensation benefits
for injuries under subchapter I of chapter 81 of title 5 and
except as provided under subparagraph (J).
``(J) Expenses.--Each member of the Board shall be paid
actual travel expenses and per diem in lieu of subsistence
expenses when away from his or her usual place of residence,
in accordance with section 5703 of title 5.
``(K) Board resources.--From resources otherwise available
to the Administrator, the Chairman shall appoint such staff
to assist the board and provide impartial analysis, and the
Administrator shall make available to the Board such
information and administrative services and assistance, as
may reasonably be required to enable the Board to carry out
its responsibilities under this subsection.

[[Page S3617]]

``(L) Quorum and voting.--A simple majority of members of
the Board duly appointed shall constitute a quorum. A
majority vote of members present and voting shall be required
for the Committee to take action.
``(7) Air traffic control system defined.--In this
subsection, the term `air traffic control system' has the
meaning given that term in section 40102(a).''.

SEC. 302. ADS-B SUPPORT PILOT PROGRAM.

(a) In General.--Chapter 445, as amended by section 207, is
amended by adding at the end the following:

``Sec. 44519. ADS-B support pilot program

``(a) In General.--The Secretary may carry out a pilot
program to support non-Federal acquisition of National
Airspace System compliant Automatic Dependent Surveillance-
Broadcast (ADS-B) ground stations if--
``(1) the Secretary determines that acquisition of the
ground stations benefits the improvement of safety or
capacity in the National Airspace System;
``(2) the ground stations provide the required transmit and
receive data formats consistent with the National Airspace
System architecture at the appropriate service delivery
point; and
``(3) the ground stations acquired under this program are
supplemental to ground stations established under programs
administered by the Administrator of the Federal Aviation
Administration.
``(b) Project Grants.--
``(1) For purposes of carrying out the pilot program and
notwithstanding the requirements of section 47114(d), the
Secretary may make a project grant out of funds apportioned
under section 47114(d)(2) to not more than 10 eligible
sponsors to acquire and install ADS-B ground stations in
order to serve any public-use airport.
``(2) The Secretary shall establish procurement procedures
applicable to grants issued under this section. The
procedures shall permit the sponsor to carry out the project
using Federal Aviation Administration contracts. The
procedures established by the Secretary may provide for the
direct reimbursement (including administrative costs) of the
Administrator by the sponsor using grant funds under this
section, for the ordering of such equipment and its
installation, or for the direct ordering of such equipment
and its installation by the sponsor, using such grant funds,
from the suppliers with which the Administrator has
contracted.
``(c) Matching Requirement.--The amount of a grant to an
eligible sponsor under subsection (b) may not exceed 90
percent of the costs of the acquisition and installation of
the ground support equipment.
``(d) Definitions.--In this section:
``(1) ADS-B ground station.--The term `ADS-B ground
station' means electronic equipment that provides for ADS-B
reception and broadcast services.
``(2) Eligible sponsor.--The term `eligible sponsor' means
a State or any consortium of 2 or more State or local
governments meeting the definition of a sponsor under section
47102 of this title.''.
(b) Conforming Amendment.--The chapter analysis for chapter
445 is amended by inserting after the item relating to
section 44518 the following:

``44519. ADS-B support pilot program.''.

SEC. 303. FACILITATION OF NEXT GENERATION AIR TRAFFIC
SERVICES.

Section 106(l) is amended by adding at the end the
following:
``(7) Air Traffic Services.--In determining what actions to
take, by rule or through an agreement or transaction under
paragraph (6) or under section 44502, to permit non-
government providers of communications, navigation,
surveillance or other services to provide such services in
the National Airspace System, or to require the usage of such
services, the Administrator shall consider whether such
actions would--
``(A) promote the safety of life and property;
``(B) improve the efficiency of the National Airspace
System and reduce the regulatory burden upon National
Airspace System users, based upon sound engineering
principles, user operational requirements, and marketplace
demands;
``(C) encourage competition and provide services to the
largest feasible number of users; and
``(D) take into account the unique role served by general
aviation.''.

SEC. 304. CLARIFICATION OF AUTHORITY TO ENTER INTO
REIMBURSABLE AGREEMENTS.

Section 106(m) is amended by striking ``without'' in the
last sentence and inserting ``with or without''.

SEC. 305. CLARIFICATION TO ACQUISITION REFORM AUTHORITY.

Section 40110(c) is amended--
(1) by inserting ``and'' after the semicolon in paragraph
(3);
(2) by striking paragraph (4); and
(3) by redesignating paragraph (5) as paragraph (4).

SEC. 306. ASSISTANCE TO OTHER AVIATION AUTHORITIES.

Section 40113(e) is amended--
(1) by inserting ``(whether public or private)'' in
paragraph (1) after ``authorities'';
(2) by striking ``safety.'' in paragraph (1) and inserting
``safety or efficiency. The Administrator is authorized to
participate in, and submit offers in response to,
competitions to provide these services, and to contract with
foreign aviation authorities to provide these services
consistent with the provisions under section 106(l)(6) of
this title. The Administrator is also authorized,
notwithstanding any other provision of law or policy, to
accept payments in arrears.''; and
(3) by striking ``appropriation from which expenses were
incurred in providing such services.'' in paragraph (3) and
inserting ``appropriation current when the expenditures are
or were paid, or the appropriation current when the amount is
received.''.

SEC. 307. PRESIDENTIAL RANK AWARD PROGRAM.

Section 40122(g)(2) is amended--
(1) by striking ``and'' after the semicolon in subparagraph
(G);
(2) by striking ``Board.'' in subparagraph (H) and
inserting ``Board;''; and
(3) by inserting at the end the following new subparagraph:
``(I) subsections (b), (c), and (d) of section 4507
(relating to Meritorious Executive or Distinguished Executive
rank awards), and section subsections (b) and (c) of section
4507a (relating to Meritorious Senior Professional or
Distinguished Senior Professional rank-awards), except that--
``(i) for purposes of applying such provisions to the
personnel management system--

``(I) the term `agency' means the Department of
Transportation;
``(II) the term `senior executive' means an Federal
Aviation Administration executive;
``(III) the term `career appointee' means an Federal
Aviation Administration career executive; and
``(IV) the term `senior career employee' means an Federal
Aviation Administration career senior professional;

``(ii) receipt by a career appointee of the rank of
Meritorious Executive or Meritorious Senior Professional
entitles such individual to a lump-sum payment of an amount
equal to 20 percent of annual basic pay, which shall be in
addition to the basic pay paid under the Federal Aviation
Administration Executive Compensation Plan; and
``(iii) receipt by a career appointee of the rank of
Distinguished Executive or Distinguished Senior Professional
entitles the individual to a lump-sum payment of an amount
equal to 35 percent of annual basic pay, which shall be in
addition to the basic pay paid under the Federal Aviation
Administration Executive Compensation Plan.''.

SEC. 308. NEXT GENERATION FACILITIES NEEDS ASSESSMENT.

(a) FAA Criteria for Facilities Realignment.--Within 9
months after the date of enactment of this Act, the
Administrator of the Federal Aviation Administration, after
providing an opportunity for public comment, shall publish
final criteria to be used in making the Administrator's
recommendations for the realignment of services and
facilities to assist in the transition to next generation
facilities and help reduce capital, operating, maintenance,
and administrative costs with no adverse effect on safety.
(b) Realignment Recommendations.--Within 9 months after
publication of the criteria, the Administrator shall publish
a list of the services and facilities that the Administrator
recommends for realignment, including a justification for
each recommendation, and a description of the costs and
savings of such transition.
(c) Realignment Defined.--As used in this section, the term
``realignment'' includes any action which relocates or
reorganizes functions, services, and personnel positions but
does not include a reduction in personnel resulting from
workload adjustments.
(d) Study by Board.--The Air Traffic Control Modernization
Oversight Board established by section 106(p) of title 49,
United States Code, shall study the Administrator's
recommendations for realignment and the opportunities, risks,
and benefits of realigning services and facilities of the
Federal Aviation Administration to help reduce capital,
operating, maintenance, and administrative costs with no
adverse effect on safety.
(e) Review and Recommendations.--
(1) After receiving the recommendations from the
Administrator pursuant to subsection (b), the Board shall
provide opportunity for public comment on such
recommendations.
(2) Based on its review and analysis of the Administrator's
recommendations and any public comment it may receive, the
Board shall make its independent recommendations for
realignment of aviation services or facilities and submit its
recommendations in a report to the President, the Senate
Committee on Commerce, Science, and Transportation, and the
House of Representatives Committee on Transportation and
Infrastructure.
(3) The Board shall explain and justify in its report any
recommendation made by the Board that is different from the
recommendations made by the Administrator pursuant to
subsection (b).
(4) The Administrator may not consolidate any additional
approach control facilities into the Southern California
TRACON, or the Memphis TRACON until the Board's
recommendations are completed.

SEC. 309. NEXT GENERATION AIR TRANSPORTATION SYSTEM PLANNING
OFFICE.

(a) Improved Cooperation and Coordination among
Participating Agencies.--Section 709 of the Vision 100--
Century of Aviation Reauthorization Act (49 U.S.C. 40101
note) is amended--
(1) by inserting ``(A)'' after ``(3)'' in subsection
(a)(3);
(2) by inserting after subsection (a)(3) the following:

[[Page S3618]]

``(B) The Administrator of the Federal Aviation
Administration, the Secretary of Defense, the Administrator
of the National Aeronautics and Space Administration, the
Secretary of Commerce, the Secretary of Homeland Security,
and the head of any other Department or Federal agency from
which the Secretary of Transportation requests assistance
under subparagraph (A) shall designate an implementation
office to be responsible for--
``(i) carrying out the Department or agency's Next
Generation Air Transportation System implementation
activities with the Office; and
``(ii) liaison and coordination with other Departments and
agencies involved in Next Generation Air Transportation
System activities; and
``(iii) managing all Next Generation Air Transportation
System programs for the Department or agency, including
necessary budgetary and staff resources, including, for the
Federal Aviation Administration, those projects described in
section 44501(b)(5) of title 49, United States Code).
``(C) The head of any such Department or agency shall
ensure that--
``(i) the Department's or agency's Next Generation Air
Transportation System responsibilities are clearly
communicated to the designated office; and
``(ii) the performance of supervisory personnel in that
office in carrying out the Department's or agency's Next
Generation Air Transportation System responsibilities is
reflected in their annual performance evaluations and
compensation decisions.
``(D)(i) Within 6 months after the date of enactment of the
Aviation Investment and Modernization Act of 2008, the head
of each such Department or agency shall execute a memorandum
of understanding with the Office and with the other
Departments and agencies participating in the Next Generation
Air Transportation System project that--
``(I) describes the respective responsibilities of each
such Department and agency, including budgetary commitments;
and
``(II) the budgetary and staff resources committed to the
project.
``(ii) The memorandum shall be revised as necessary to
reflect any changes in such responsibilities or commitments
and be reflected in each Department or agency's budget
request.'';
(3) by adding at the end of subsection (a) the following:
``(5) The Director of the Office shall be a voting member
of the Federal Aviation Administration's Joint Resources
Council and the Air Traffic Organization's Executive
Council.'';
(4) by striking ``beyond those currently included in the
Federal Aviation Administration's Operational Evolution
Plan'' in subsection (b);
(5) by striking ``research and development roadmap'' in
subsection (b)(3) and inserting ``implementation plan'';
(6) by striking ``and'' after the semicolon in subsection
(b)(3)(B);
(7) by inserting after subsection (b)(3)(C) the following:
``(D) a schedule of rulemakings required to issue
regulations and guidelines for implementation of the Next
Generation Air Transportation System within a timeframe
consistent with the integrated plan; and'';
(8) by inserting ``and key technologies'' after
``concepts'' in subsection (b)(4);
(9) by striking ``users'' in subsection (b)(4) and
inserting ``users, an implementation plan,'';
(10) by adding at the end of subsection (b) the following:
``Within 6 months after the date of enactment of the Aviation
Investment and Modernization Act of 2008, the Administrator
shall develop the implementation plan described in paragraph
(3) of this subsection and shall update it annually
thereafter.''; and
(11) by striking ``2010.'' in subsection (e) and inserting
``2011.''.
(b) Senior Policy Committee Meetings.--Section 710(a) of
such Act (49 U.S.C. 40101 note) is amended by striking
``Secretary.'' and inserting ``Secretary and shall meet at
least once each quarter.''.

SEC. 310. DEFINITION OF AIR NAVIGATION FACILITY.

Section 40102(a)(4) is amended--
(1) by striking subparagraph (B) and inserting the
following:
``(B) runway lighting and airport surface visual and other
navigation aids;'';
(2) by striking ``weather information, signaling, radio-
directional finding, or radio or other electromagnetic
communication; and'' in subparagraph (C) and inserting
``aeronautical and meteorological information to air traffic
control facilities or aircraft, supplying communication,
navigation or surveillance equipment for air-to-ground or
air-to-air applications;'';
(3) by striking ``another structure'' in subparagraph (D)
and inserting ``any structure or equipment'';
(4) by striking ``aircraft.'' in subparagraph (D) and
inserting ``aircraft; and''; and
(5) by adding at the end the following:
``(E) buildings, equipment and systems dedicated to the
National Airspace System.''.

SEC. 311. IMPROVED MANAGEMENT OF PROPERTY INVENTORY.

Section 40110(a)(2) is amended by striking ``compensation;
and'' and inserting ``compensation, and the amount received
may be credited to the appropriation current when the amount
is received; and''.

SEC. 312. EDUCATIONAL REQUIREMENTS.

The Administrator of the Federal Aviation Administration
shall make payments to the Department of Defense for the
education of dependent children of those Federal Aviation
Administration employees in Puerto Rico and Guam as they are
subject to transfer by policy and practice and meet the
eligibility requirements of section 2164(c) of title 10,
United States Code.

SEC. 313. FAA PERSONNEL MANAGEMENT SYSTEM.

Section 40122(a)(2) is amended to read as follows:
``(2) Dispute resolution.--
``(A) Mediation.--If the Administrator does not reach an
agreement under paragraph (1) or subsection (g)(2)(C) with
the exclusive bargaining representatives, the services of the
Federal Mediation and Conciliation Service shall be used to
attempt to reach such agreement in accordance with part 1425
of title 29, Code of Federal Regulations. The Administrator
and bargaining representatives may by mutual agreement adopt
procedures for the resolution of disputes or impasses arising
in the negotiation of a collective-bargaining agreement.
``(B) Binding arbitration.--If the services of the Federal
Mediation and Conciliation Service under subparagraph (A)
does not lead to an agreement, the Administrator and the
bargaining representatives shall submit their issues in
controversy to the Federal Service Impasses Panel in
accordance with section 7119 of title 5. The Panel shall
assist the parties in resolving the impasse by asserting
jurisdiction and ordering binding arbitration by a private
arbitration board consisting of 3 members in accordance with
section 2471.6(a)(2)(ii) of title 5, Code of Federal
Regulations. The executive director of the Panel shall
request a list of not less than 15 names of arbitrators with
Federal sector experience from the director of the Federal
Mediation and Conciliation Service to be provided to the
Administrator and the bargaining representatives. Within 10
days after receiving the list, the parties shall each select
1 person. The 2 arbitrators shall then select a third person
from the list within 7 days. If the 2 arbitrators are unable
to agree on the third person, the parties shall select the
third person by alternately striking names from the list
until only 1 name remains. If the parties do not agree on the
framing of the issues to be submitted, the arbitration board
shall frame the issues. The arbitration board shall give the
parties a full and fair hearing, including an opportunity to
present evidence in support of their claims, and an
opportunity to present their case in person, by counsel, or
by other representative as they may elect. Decisions of the
arbitration board shall be conclusive and binding upon the
parties. The arbitration board shall render its decision
within 90 days after its appointment. The Administrator and
the bargaining representative shall share costs of the
arbitration equally. The arbitration board shall take into
consideration the effect of its arbitration decisions on the
Federal Aviation Administration's ability to attract and
retain a qualified workforce and the Federal Aviation
Administration's budget.
``(C) Effect.--Upon reaching a voluntary agreement or at
the conclusion of the binding arbitration under subparagraph
(B) above, the final agreement, except for those matters
decided by the arbitration board, shall be subject to
ratification by the exclusive representative, if so requested
by the exclusive representative, and approval by the head of
the agency in accordance with subsection (g)(2)(C).
``(D) Enforcement.--Enforcement of the provisions of this
paragraph, and any agreement hereunder, shall be in the
United States District Court for the District of Columbia.''.

SEC. 314. RULEMAKING AND REPORT ON ADS-B IMPLEMENTATION.

(a) Report.--Within 90 days after the date of enactment of
this Act, the Administrator of the Federal Aviation
Administration shall submit a report to the Senate Committee
on Commerce, Science, and Transportation and the House of
Representatives Committee on Transportation and
Infrastructure detailing the Administration program and
schedule for integrating ADS-B technology into the National
Airspace System. The report shall include--
(1) Phase 1 and Phase 2 activity to purchase and install
necessary ADS-B ground stations; and
(2) detailed plans and schedules for implementation of
advanced operational procedures and ADS-B air-to-air
applications.
(b) Rulemaking.--Not later than 12 months after the date of
enactment of this Act the Administrator shall issue
guidelines and regulations required for the implementation of
ADS-B, including--
(1) the type of avionics (e.g., ADS-B avionics) required of
aircraft for all classes of airspace;
(2) a schedule outlining when aircraft will be required to
be equipped with such avionics;
(3) the expected costs associated with the avionics; and
(4) the expected uses and benefits of the avionics.

SEC. 315. FAA TASK FORCE ON AIR TRAFFIC CONTROL FACILITY
CONDITIONS.

(a) Establishment.--The Administrator of the Federal
Aviation Administration shall

[[Page S3619]]

establish a special task force to be known as the ``FAA Task
Force on Air Traffic Control Facility Conditions''.
(b) Membership.--
(1) Composition.--The Task Force shall be composed of 11
members of whom--
(A) 7 members shall be appointed by the Administrator; and
(B) 4 members shall be appointed by labor unions
representing employees who work at field facilities of the
Administration.
(2) Qualifications.--Of the members appointed by the
Administrator under paragraph (1)(A)--
(A) 4 members shall be specialists on toxic mold abatement,
``sick building syndrome,'' and other hazardous building
conditions that can lead to employee health concerns and
shall be appointed by the Administrator in consultation with
the Director of the National Institute for Occupational
Safety and Health; and
(B) 2 members shall be specialists on the rehabilitation of
aging buildings.
(3) Terms.--Members shall be appointed for the life of the
Task Force.
(4) Vacancies.--A vacancy in the Task Force shall be filled
in the manner in which the original appointment was made.
(5) Travel expenses.--Members shall serve without pay but
shall receive travel expenses, including per diem in lieu of
subsistence, in accordance with subchapter I of chapter 57 of
title 5, United States Code.
(c) Chairperson.--The Administrator shall designate, from
among the individuals appointed under subsection (b)(1), an
individual to serve as chairperson of the Task Force.
(d) Task Force Personnel Matters.--
(1) Staff.--The Task Force may appoint and fix the pay of
such personnel as it considers appropriate.
(2) Staff of federal agencies.--Upon request of the
Chairperson of the Task Force, the head of any department or
agency of the United States may detail, on a reimbursable
basis, any of the personnel of that department or agency to
the Task Force to assist it in carrying out its duties under
this section.
(3) Other staff and support.--Upon request of the Task
Force or a panel of the Task Force, the Administrator shall
provide the Task Force or panel with professional and
administrative staff and other support, on a reimbursable
basis, to the Task Force to assist it in carrying out its
duties under this section.
(e) Obtaining Official Data.--The Task Force may secure
directly from any department or agency of the United States
information (other than information required by any statute
of the United States to be kept confidential by such
department or agency) necessary for the Task Force to carry
out its duties under this section. Upon request of the
chairperson of the Task Force, the head of that department or
agency shall furnish such information to the Task Force.
(f) Duties.--
(1) Study.--The Task Force shall undertake a study of--
(A) the conditions of all air traffic control facilities
across the Nation, including towers, centers, and terminal
radar air control;
(B) reports from employees of the Administration relating
to respiratory ailments and other health conditions resulting
from exposure to mold, asbestos, poor air quality, radiation
and facility-related hazards in facilities of the
Administration;
(C) conditions of such facilities that could interfere with
such employees' ability to effectively and safely perform
their duties;
(D) the ability of managers and supervisors of such
employees to promptly document and seek remediation for
unsafe facility conditions;
(E) whether employees of the Administration who report
facility-related illnesses are treated fairly;
(F) utilization of scientifically-approved remediation
techniques in a timely fashion once hazardous conditions are
identified in a facility of the Administration; and
(G) resources allocated to facility maintenance and
renovation by the Administration.
(2) Facility condition indices.--The Task Force shall
review the facility condition indices of the Administration
for inclusion in the recommendations under subsection (g).
(g) Recommendations.--Based on the results of the study and
review of the facility condition indices under subsection
(f), the Task Force shall make recommendations as it
considers necessary to--
(1) prioritize those facilities needing the most immediate
attention in order of the greatest risk to employee health
and safety;
(2) ensure that the Administration is using scientifically
approved remediation techniques in all facilities; and
(3) assist the Administration in making programmatic
changes so that aging air traffic control facilities do not
deteriorate to unsafe levels.
(h) Report.--Not later than 6 months after the date on
which initial appointments of members to the Task Force are
completed, the Task Force shall submit to the Administrator,
the Committee on Transportation and Infrastructure of the
House of Representatives, and the Committee on Commerce,
Science, and Transportation of the Senate a report on the
activities of the Task Force, including the recommendations
of the Task Force under subsection (g).
(i) Implementation.--Within 30 days after receipt of the
Task Force report under subsection (h), the Administrator
shall submit to the House of Representatives Committee on
Transportation and Infrastructure and the Senate Committee on
Commerce, Science, and Transportation a report that includes
a plan and timeline to implement the recommendations of the
Task Force and to align future budgets and priorities of the
Administration accordingly.
(j) Termination.--The Task Force shall terminate on the
last day of the 30-day period beginning on the date on which
the report under subsection (h) is submitted.
(k) Applicability of the Federal Advisory Committee Act.--
The Federal Advisory Committee Act (5 U.S.C. App.) shall not
apply to the Task Force.

SEC. 316. STATE ADS-B EQUIPAGE BANK PILOT PROGRAM.

(a) In General.--
(1) Cooperative agreements.--Subject to the provisions of
this section, the Secretary of Transportation may enter into
cooperative agreements with not to exceed 5 States for the
establishment of State ADS-B equipage banks for making loans
and providing other assistance to public entities for
projects eligible for assistance under this section.
(b) Funding.--
(1) Separate account.--An ADS-B equipage bank established
under this section shall maintain a separate aviation trust
fund account for Federal funds contributed to the bank under
paragraph (2). No Federal funds contributed or credited to an
account of an ADS-B equipage bank established under this
section may be commingled with Federal funds contributed or
credited to any other account of such bank.
(2) Authorization.--There are authorized to be appropriated
to the Secretary $25,000,000 for each of fiscal years 2009
through 2013.
(c) Forms of Assistance From ADS-B Equipage Banks.--An ADS-
B equipage bank established under this section may make loans
or provide other assistance to a public entity in an amount
equal to all or part of the cost of carrying out a project
eligible for assistance under this section. The amount of any
loan or other assistance provided for such project may be
subordinated to any other debt financing for the project.
(d) Qualifying Projects.--Federal funds in the ADS-B
equipage account of an ADS-B equipage bank established under
this section may be used only to provide assistance with
respect to aircraft ADS-B avionics equipage.
(e) Requirements.--In order to establish an ADS-B equipage
bank under this section, each State establishing such a bank
shall--
(1) contribute, at a minimum, in each account of the bank
from non-Federal sources an amount equal to 50 percent of the
amount of each capitalization grant made to the State and
contributed to the bank;
(2) ensure that the bank maintains on a continuing basis an
investment grade rating on its debt issuances or has a
sufficient level of bond or debt financing instrument
insurance to maintain the viability of the bank;
(3) ensure that investment income generated by funds
contributed to an account of the bank will be--
(A) credited to the account;
(B) available for use in providing loans and other
assistance to projects eligible for assistance from the
account; and
(C) invested in United States Treasury securities, bank
deposits, or such other financing instruments as the
Secretary may approve to earn interest to enhance the
leveraging of projects assisted by the bank;
(5) ensure that any loan from the bank will bear interest
at or below market interest rates, as determined by the
State, to make the project that is the subject of the loan
feasible;
(6) ensure that the term for repaying any loan will not
exceed 10 years after the date of the first payment on the
loan; and
(7) require the bank to make an annual report to the
Secretary on its status no later than September 30 of each
year for which funds are made available under this section,
and to make such other reports as the Secretary may require
by guidelines.

TITLE IV--AIRLINE SERVICE AND SMALL COMMUNITY AIR SERVICE IMPROVEMENTS

SEC. 401. AIRLINE CONTINGENCY SERVICE REQUIREMENTS.

(a) In General.--Chapter 417 is amended by adding at the
end the following:

``SUBCHAPTER IV--AIRLINE CUSTOMER SERVICE

``Sec.  41781. AIRLINE CONTINGENCY SERVICE REQUIREMENTS.

``(a) In General.--Not later than 60 days after the date of
enactment of the Aviation Investment and Modernization Act of
2008, each air carrier shall submit a contingency service
plan to the Secretary of Transportation for review and
approval. The plan shall require the air carrier to
implement, at a minimum, the following practices:
``(1) Provision of food and water.--If the departure of a
flight of an air carrier is substantially delayed, or
disembarkation of passengers on an arriving flight that has
landed is substantially delayed, the air carrier shall
provide--
``(A) adequate food and potable water to passengers on such
flight during such delay; and
``(B) adequate restroom facilities to passengers on such
flight during such delay.
``(2) Right to deplane.--
``(A) In general.--An air carrier shall develop a plan,
that incorporates medical considerations, to ensure that
passengers are provided a clear timeframe under which they

[[Page S3620]]

will be permitted to deplane a delayed aircraft. The air
carrier shall provide a copy of the plan to the Secretary of
Transportation, who shall make the plan available to the
public. In the absence of such a plan, except as provided in
subparagraph (B), if more than 3 hours after passengers have
boarded a flight, the aircraft doors are closed and the
aircraft has not departed, the air carrier shall provide
passengers with the option to deplane safely before the
departure of such aircraft. Such option shall be provided to
passengers not less often than once during each 3-hour period
that the plane remains on the ground.
``(B) Exceptions.--Subparagraph (A) shall not apply--
``(i) if the pilot of such flight reasonably determines
that such flight will depart not later than 30 minutes after
the 3 hour delay; or
``(ii) if the pilot of such flight reasonably determines
that permitting a passenger to deplane would jeopardize
passenger safety or security.
``(C) Application to diverted flights.--This section
applies to aircraft without regard to whether they have been
diverted to an airport other than the original destination.
``(b) Posting Consumer Rights on Website.--An air carrier
holding a certificate issued under section 41102 that
conducts scheduled passenger air transportation shall publish
conspicuously and update monthly on the Internet website of
the air carrier a statement of the air carrier's customer
service policy and of air carrier customers' consumer rights
under Federal and State law.
``(c) Review and Approval; Minimum Standards.--The
Secretary of Transportation shall review the contingency
service plan submitted by an air carrier under subsection (a)
and may approve it or disapprove it and return it to the
carrier for modification and resubmittal. The Secretary may
establish minimum standards for such plans and require air
carriers to meet those standards.
``(d) Air Carrier.--In this section the term `air carrier'
means an air carrier holding a certificate issued under
section 41102 that conducts scheduled passenger air
transportation.''.
(b) Regulations.--Not later than 60 days after the date of
enactment of this Act, the Secretary of Transportation shall
promulgate such regulations as the Secretary determines
necessary to carry out the amendment made by subsection (a).
(c) Conforming Amendment.--The chapter analysis for chapter
417 is amended by adding at the end the following:

subchapter iv. airline customer service

``41781. Airline contingency service requirements.''.

SEC. 402. PUBLICATION OF CUSTOMER SERVICE DATA AND FLIGHT
DELAY HISTORY.

Section 41722 is amended by adding at the end the
following:
``(f) Chronically Delayed Flights.--
``(1) Publication of list of flights.--An air carrier
holding a certificate issued under section 41102 that
conducts scheduled passenger air transportation shall publish
and update monthly on the Internet website of the air
carrier, or provide on request, a list of chronically delayed
flights operated by the air carrier.
``(2) Disclosure to customers when purchasing tickets.--An
air carrier shall disclose the following information
prominently to an individual before that individual books
transportation on the air carrier's Internet website for any
flight for which data is reported to the Department of
Transportation under part 234 of title 14, Code of Federal
Regulations, and for which the air carrier has primary
responsibility for inventory control:
``(A) The on-time performance for the flight if it is a
chronically delayed flight.
``(B) The cancellation rate for the flight if it is a
chronically canceled flight.
``(3) Chronically delayed; chronically canceled.--The
Secretary of Transportation shall define the terms
`chronically delayed flight' and `chronically canceled
flight' for purposes of this subsection.''.

SEC. 403. EAS CONNECTIVITY PROGRAM.

Section 406(a) of the Vision 100--Century of Aviation
Reauthorization Act (49 U.S.C. 40101 note) is amended by
striking ``may'' and inserting ``shall''.

SEC. 404. EXTENSION OF FINAL ORDER ESTABLISHING MILEAGE
ADJUSTMENT ELIGIBILITY.

Section 409(d) of the Vision 100--Century of Aviation
Reauthorization Act (49 U.S.C. 40101 note) is amended by
striking ``September 30, 2007.'' and inserting ``September
30, 2011.''.

SEC. 405. EAS CONTRACT GUIDELINES.

Section 41737(a)(1) is amended--
(1) by striking ``and'' after the semicolon in subparagraph
(B);
(2) by striking ``provided.'' in subparagraph (C) and
inserting ``provided;''; and
(3) by adding at the end the following:
``(D) include provisions under which the Secretary may
encourage carriers to improve air service to small and rural
communities by incorporating financial incentives in
essential air service contracts based on specified
performance goals; and
``(E) include provisions under which the Secretary may
execute long-term essential air service contracts to
encourage carriers to provide air service to small and rural
communities where it would be in the public interest to do
so.''.

SEC. 406. CONVERSION OF FORMER EAS AIRPORTS.

(a) In General.--Section 41745 is amended--
(1) by redesignating subsections (c) through (g) as
subsections (d) through (h), respectively; and
(2) by inserting after subsection (b) the following:
``(c) Conversion of Lost Eligibility Airports.--
``(1) In general.--The Secretary shall establish a program
to provide general aviation conversion funding for airports
serving eligible places that the Secretary has determined no
longer qualify for a subsidy.
``(2) Grants.--A grant under this subsection--
``(A) may not exceed twice the compensation paid to provide
essential air service to the airport in the fiscal year
preceding the fiscal year in which the Secretary determines
that the place served by the airport is no longer an eligible
place; and
``(B) may be used--
``(i) for airport development (as defined in section
47102(3)) that will enhance general aviation capacity at the
airport;
``(ii) to defray operating expenses, if such use is
approved by the Secretary; or
``(iii) to develop innovative air service options, such as
on-demand or air taxi operations, if such use is approved by
the Secretary.
``(3) AIP requirements.--An airport sponsor that uses funds
provided under this subsection for an airport development
project shall comply with the requirements of subchapter I of
chapter 471 applicable to airport development projects funded
under that subchapter with respect to the project funded
under this subsection.
``(4) Limitation.--The sponsor of an airport receiving
funding under this subsection is not eligible for funding
under section 41736.''.
(b) Conforming Amendment.--Section 41745(f), as
redesignated, is amended--
(1) by striking ``An eligible place'' and inserting
``Neither an eligible place, nor a place to which subsection
(c) applies,''; and
(2) by striking ``not''.

SEC. 407. EAS REFORM.

Section 41742(a) is amended--
(1) by adding at the end of paragraph (1) ``Any amount in
excess of $50,000,000 credited for any fiscal year to the
account established under section 45303(c) shall be obligated
for programs under section 406 of the Vision 100--Century of
Aviation Reauthorization Act (49 U.S.C. 40101 note) and
section 41745 of this title. Amounts appropriated pursuant to
this section shall remain available until expended.''; and
(2) by striking ``$77,000,000'' in paragraph (2) and
inserting ``$125,000,000''.

SEC. 408. CLARIFICATION OF AIR CARRIER FEE DISPUTES.

(a) In General.--Section 47129 is amended--
(1) by striking the section heading and inserting the
following:

``Sec. 47129. Resolution of airport-air carrier and foreign
air carrier disputes concerning airport fees'' ;
(2) by inserting ``and Foreign Air Carrier'' after
``Carrier''  in the subsection caption for subsection (d);
(3) by inserting ``and foreign air carrier'' after
``Carrier'' in the paragraph caption for subsection (d)(2);
(4) by striking ``air carrier'' each place it appears and
inserting ``air carrier or foreign air carrier'';
(5) by striking ``air carrier's'' each place it appears and
inserting ``air carrier's or foreign air carrier's'';
(6) by striking ``air carriers'' and inserting ``air
carriers or foreign air carriers''; and
(7) by striking ``(as defined in section 40102 of this
title)'' in subsection (a) and inserting ``(as those terms
are defined in section 40102 of this title)''.
(b) Conforming Amendment.--The chapter analysis for chapter
471 is amended by striking the item relating to section 47129
and inserting the following:

``47129. Resolution of airport-air carrier and foreign air carrier
disputes concerning airport fees.''.

SEC. 409. SMALL COMMUNITY AIR SERVICE.

(a) Priorities.--Section 41743(c)(5) is amended--
(1) by striking ``and'' after the semicolon in subparagraph
(D);
(2) by striking ``fashion.'' in subparagraph (E) and
inserting ``fashion; and''; and
(3) by adding at the end the following:
``(F) multiple communities cooperate to submit a region or
multistate application to improve air service.''.
(b) Extension of Authorization.--Section 41743(e)(2) is
amended by striking ``2008'' and inserting ``2011''.

SEC. 410. CONTRACT TOWER PROGRAM.

(a) Cost-Benefit Requirement.--Section 47124(b)(1) is
amended--
(1) by inserting ``(A)'' after ``(1)''; and
(2) by adding at the end the following:
``(B) If the Secretary determines that a tower already
operating under this program has a benefit to cost ratio of
less than 1.0, the airport sponsor or State or local
government having jurisdiction over the airport shall not be
required to pay the portion of the costs that exceeds the
benefit for a period of 18 months after such determination is
made.
``(C) If the Secretary finds that all or part of an amount
made available to carry out the program continued under this
paragraph is not required during a fiscal year, the Secretary
may use during such fiscal year the

[[Page S3621]]

amount not so required to carry out the program established
under paragraph (3) of this section.''.
(b) Funding.--Subparagraph (E) of section 47124(b)(3) is
amended--
(1) by striking ``and'' after ``2006,''; and
(2) by inserting ``$8,500,000 for fiscal year 2008,
$9,000,000 for fiscal year 2009, $9,500,000 for fiscal year
2010, and $10,000,000 for fiscal year 2011'' after ``2007,'';
and
(3) by inserting after ``paragraph.'' the following: ``If
the Secretary finds that all or part of an amount made
available under this subparagraph is not required during a
fiscal year to carry out this paragraph, the Secretary may
use during such fiscal year the amount not so required to
carry out the program continued under paragraph (b)(1) of
this section.''.
(c) Federal Share.--Subparagraph (C) of section 47124(b)(4)
is amended by striking ``$1,500,000.'' and inserting
``$2,000,000.''.
(d) Safety Audits.--Section 41724 is amended by adding at
the end the following:
``(c)  Safety Audits.--The Secretary shall establish
uniform standards and requirements for safety assessments of
air traffic control towers that receive funding under this
section in accordance with the Administration's safety
management system.''.

SEC. 411. AIRFARES FOR MEMBERS OF THE ARMED FORCES.

(a) Findings.--The Congress finds that--
(1) the Armed Forces is comprised of approximately
1,400,000 members who are stationed on active duty at more
than 6,000 military bases in 146 different countries;
(2) the United States is indebted to the members of the
Armed Forces, many of whom are in grave danger due to their
engagement in, or exposure to, combat;
(3) military service, especially in the current war against
terrorism, often requires members of the Armed Forces to be
separated from their families on short notice, for long
periods of time, and under very stressful conditions;
(4) the unique demands of military service often preclude
members of the Armed Forces from purchasing discounted
advance airline tickets in order to visit their loved ones at
home; and
(5) it is the patriotic duty of the people of the United
States to support the members of the Armed Forces who are
defending the Nation's interests around the world at great
personal sacrifice.
(b) Sense of Congress.--It is the sense of Congress that
each United States air carrier should--
(1) establish for all members of the Armed Forces on active
duty reduced air fares that are comparable to the lowest
airfare for ticketed flights; and
(2) offer flexible terms that allow members of the Armed
Forces on active duty to purchase, modify, or cancel tickets
without time restrictions, fees, and penalties.

SEC. 412. EXPANSION OF DOT AIRLINE CONSUMER COMPLAINT
INVESTIGATIONS.

(a) In General.--The Secretary of Transportation shall
investigate consumer complaints regarding--
(1) flight cancellations;
(2) compliance with Federal regulations concerning
overbooking seats flights;
(3) lost, damaged, or delayed baggage, and difficulties
with related airline claims procedures;
(4) problems in obtaining refunds for unused or lost
tickets or fare adjustments;
(5) incorrect or incomplete information about fares,
discount fare conditions and availability, overcharges, and
fare increases;
(6) the rights of passengers who hold frequent flier miles,
or equivalent redeemable awards earned through customer-
loyalty programs; and
(7) deceptive or misleading advertising.
(b) Budget Needs Report.--The Secretary shall provide, as
an annex to its annual budget request, an estimate of
resources which would have been sufficient to investigate all
such claims the Department of Transportation received in the
previous fiscal year. The annex shall be transmitted to the
Congress when the President submits the budget of the United
States to the Congress under section 1105 of title 31, United
States Code.

SEC. 413. EAS MARKETING.

The Secretary of Transportation shall require all
applications to provide service under subchapter II of
chapter 417 of title 49, United States Code, include a
marketing plan.

SEC. 414. EXTRAPERIMETAL AND INTRAPERIMETAL SLOTS AT RONALD
REAGAN WASHINGTON NATIONAL AIRPORT.

(a) Beyond Perimeter Exemptions.--Section 41718 (a) is
amended by striking ``24'' and inserting ``36''.
(b) Within Perimeter Exemptions.--Section 41718 (b) is
amended by striking ``20'' and inserting ``28''.
(c) Limitations.--Section 41718(c) is amended--
(1) by striking ``3 operations.'' in paragraph (2) and
inserting ``5 operations. Operations conducted by new entrant
and limited incumbent air carriers shall be afforded a
scheduling priority over operations conducted by other air
carriers granted exemptions pursuant to section 41718 with
the highest scheduling priority afforded to beyond-perimeter
operations conducted by new entrant and limited incumbent air
carriers.'';
(2) by striking ``six'' in paragraph (3)(A) and inserting
``8'';
(3) by striking ``ten'' in paragraph (3)(B) and inserting
``12''; and
(4) by striking ``four'' in paragraph (3)(C) and inserting
``8''.

SEC. 415. ESTABLISHMENT OF ADVISORY COMMITTEE FOR AVIATION
CONSUMER PROTECTION.

(a) In General.--The Secretary of Transportation shall
establish an advisory committee for aviation consumer
protection to advise the Secretary in carrying out air
passenger service improvements, including those required by
chapter 423 of title 49, United States Code.
(b) Membership.--The Secretary shall appoint members of the
advisory committee comprised of one representative each of--
(1) air carriers;
(2) airport operators;
(3) State or local governments who has expertise in
consumer protection matters; and
(4) a nonprofit public interest group who has expertise in
consumer protection matters.
(c) Vacancies.--A vacancy in the advisory committee shall
be filled in the manner in which the original appointment was
made.
(d) Travel Expenses.--Members of the advisory committee
shall serve without pay but shall receive travel expenses,
including per diem in lieu of subsistence, in accordance with
subchapter I of chapter 57 of title 5, United States Code.
(e) Chairperson.--The Secretary shall designate, from among
the individuals appointed under subsection (b), an individual
to serve as chairperson of the advisory committee.
(f) Duties.--The duties of the advisory committee shall
include--
(1) evaluating existing aviation consumer protection
programs and providing recommendations for the improvement of
such programs, if needed; and
(2) providing recommendations to establish additional
aviation consumer protection programs, if needed.
(g) Report.--Not later than February 1 of each of the first
2 calendar years beginning after the date of enactment of
this Act, the Secretary shall transmit to Congress a report
containing--
(1) the recommendations made by the advisory committee
during the preceding calendar year; and
(2) an explanation of how the Secretary has implemented
each recommendation and, for each recommendation not
implemented, the Secretary's reason for not implementing the
recommendation.

SEC. 416. RURAL AVIATION IMPROVEMENT.

(a) Communities Above Per Passenger Subsidy Cap.--
(1) In general.--Subchapter II of chapter 417 is amended by
adding at the end the following:

`` 41749. Essential air service for eligible places above
per passenger subsidy cap

``(a) Proposals.--A State or local government may submit a
proposal to the Secretary of Transportation for compensation
for an air carrier to provide air transportation to a place
described in subsection (b).
``(b) Place Described.--A place described in this
subsection is a place--
``(1) that is otherwise an eligible place; and
``(2) for which the per passenger subsidy exceeds the
dollar amount allowable under this subchapter.
``(c) Decisions.--Not later than 90 days after receiving a
proposal under subsection (a) for compensation for an air
carrier to provide air transportation to a place described in
subsection (b), the Secretary shall--
``(1) decide whether to provide compensation for the air
carrier to provide air transportation to the place; and
``(2) approve the proposal if the State or local government
or a person is willing and able to pay the difference
between--
``(A) the per passenger subsidy; and
``(B) the dollar amount allowable for such subsidy under
this subchapter.
``(d) Compensation Payments.--
``(1) In general--The Secretary shall pay compensation
under this section at such time and in such manner as the
Secretary determines is appropriate.
``(2) Duration of payments--The Secretary shall continue to
pay compensation under this section only as long as--
``(A) the State or local government or person agreeing to
pay compensation under subsection (c)(2) continues to pay
such compensation; and
``(B) the Secretary decides the compensation is necessary
to maintain air transportation to the place.
``(e) Review--
``(1) In general--The Secretary shall periodically review
the type and level of air service provided under this
section.
``(2) Consultation--The Secretary may make appropriate
adjustments in the type and level of air service to a place
under this section based on the review under paragraph (1)
and consultation with the affected community and the State or
local government or person agreeing to pay compensation under
subsection (c)(2).
``(f) Ending, Suspending, and Reducing Air Transportation--
An air carrier providing air transportation to a place under
this section may end, suspend, or reduce such air
transportation if, not later than 30 days before ending,
suspending, or reducing such air transportation, the air
carrier provides notice of the intent of the air carrier to
end, suspend, or reduce such air transportation to--
``(1) the Secretary;
``(2) the affected community; and

[[Page S3622]]

``(3) the State or local government or person agreeing to
pay compensation under subsection (c)(2).''.
(2) Clerical Amendment--The chapter analysis for chapter
417 is amended by adding after the item relating to section
41748 the following new item:

``41749. Essential air service for eligible places above per passenger
subsidy cap.''.
(b) Preferred Essential Air Service.--
(1) In General.--Subchapter II of chapter 417, as amended
by subsection (a), is further amended by adding after section
41749 the following:

`` 41750. Preferred essential air service

``(a) Proposals.--A State or local government may submit a
proposal to the Secretary of Transportation for compensation
for a preferred air carrier described in subsection (b) to
provide air transportation to an eligible place.
``(b) Preferred Air Carrier Described--A preferred air
carrier described in this subsection is an air carrier that--
``(1) submits an application under section 41733(c) to
provide air transportation to an eligible place;
``(2) is not the air carrier that submits the lowest cost
bid to provide air transportation to the eligible place; and
``(3) is an air carrier that the affected community prefers
to provide air transportation to the eligible place instead
of the air carrier that submits the lowest cost bid.
``(c) Decisions--Not later than 90 days after receiving a
proposal under subsection (a) for compensation for a
preferred air carrier described in subsection (b) to provide
air transportation to an eligible place, the Secretary
shall--
``(1) decide whether to provide compensation for the
preferred air carrier to provide air transportation to the
eligible place; and
``(2) approve the proposal if the State or local government
or a person is willing and able to pay the difference
between--
``(A) the rate of compensation the Secretary would provide
to the air carrier that submits the lowest cost bid to
provide air transportation to the eligible place; and
``(B) the rate of compensation the preferred air carrier
estimates to be necessary to provide air transportation to
the eligible place.
``(d) Compensation Payments--
``(1) In general--The Secretary shall pay compensation
under this section at such time and in such manner as the
Secretary determines is appropriate.
``(2) Duration of payments--The Secretary shall continue to
pay compensation under this section only as long as--
``(A) the State or local government or person agreeing to
pay compensation under subsection (c)(2) continues to pay
such compensation; and
``(B) the Secretary decides the compensation is necessary
to maintain air transportation to the eligible place.
``(e) Review--
``(1) In general--The Secretary shall periodically review
the type and level of air service provided under this
section.
``(2) Consultation--The Secretary may make appropriate
adjustments in the type and level of air service to an
eligible place under this section based on the review under
paragraph (1) and consultation with the affected community
and the State or local government or person agreeing to pay
compensation under subsection (c)(2).
``(f) Ending, Suspending, and Reducing Air Transportation--
A preferred air carrier providing air transportation to an
eligible place under this section may end, suspend, or reduce
such air transportation if, not later than 30 days before
ending, suspending, or reducing such air transportation, the
preferred air carrier provides notice of the intent of the
preferred air carrier to end, suspend, or reduce such air
transportation to--
``(1) the Secretary;
``(2) the affected community; and
``(3) the State or local government or person agreeing to
pay compensation under subsection (c)(2).''.
(2) Clerical amendment--The chapter analysis for chapter
417, as amended by subsection (a), is further amended by
adding after the item relating to section 41749 the following
new item:

``41750. Preferred essential air service.'.
(c) Restoration of Eligibility to a Place Determined by the
Secretary To Be Ineligible for Subsidized Essential Air
Service.----Section 41733 is amended by adding at the end the
following new subsection:
``(f) Restoration of Eligibility for Subsidized Essential
Air Service--
``(1) In general--If the Secretary of Transportation
terminates the eligibility of an otherwise eligible place to
receive basic essential air service by an air carrier for
compensation under subsection (c), a State or local
government may submit to the Secretary a proposal for
restoring such eligibility.
``(2) Determination by secretary--If the per passenger
subsidy required by the proposal submitted by a State or
local government under paragraph (1) does not exceed the per
passenger subsidy cap provided under this subchapter, the
Secretary shall issue an order restoring the eligibility of
the otherwise eligible place to receive basic essential air
service by an air carrier for compensation under subsection
(c).'.
(d) Office of Rural Aviation.--
(1) Establishment--There is established within the Office
of the Secretary of Transportation the Office of Rural
Aviation.
(b) Functions--The functions of the Office are--
(1) to develop a uniform 4-year contract for air carriers
providing essential air service to communities under
subchapter II of chapter 417 of title 49, United States Code;
(2) to develop a mechanism for comparing applications
submitted by air carriers under section 41733(c) to provide
essential air service to communities, including comparing--
(A) estimates from air carriers on--
(i) the cost of providing essential air service; and
(ii) the revenues air carriers expect to receive when
providing essential air service; and
(B) estimated schedules for air transportation; and
(3) to select an air carrier from among air carriers
applying to provide essential air service, based on the
criteria described in paragraph (2).
(e) Extension of Authority To Make Agreements under the
Essential Air Service Program.--Section 41743(e)(2) is
amended by striking ``2008'' and inserting ``2011''.
(f) Adjustments to Compensation for Significantly Increased
Costs--Section 41737 is amended--
(1) by striking ``and'' after the semicolon in subsection
(a)(1)(B);
(2) by striking ``provided.'' in subsection (a)(1)(C) and
inserting ``provided; and'';
(3) by adding at the end of subsection (a)(1) the
following:
``(D) provide for an adjustment in compensation, for
service or transportation to a place that was an eligible
place as of November 1, 2007, to account for significant
increases in fuel costs, in accordance with subsection
(e).''; and
(4) by adding at the end thereof the following:
``(f) Fuel Cost Subsidy Disregard.--Any amount provided as
an adjustment in compensation pursuant to subsection
(a)(1)(D) shall be disregarded for the purpose of determining
whether the amount of compensation provided under this
subchapter with respect to an eligible place exceeds the per
passenger subsidy exceeds the dollar amount allowable under
this subchapter.''.
(f) Continued Eligibility.--Notwithstanding any provision
of subchapter II of chapter 417 of title 49, United States
Code, to the contrary, a community that was receiving service
or transportation under that subchapter as an eligible place
(as defined in section 41731(a)(1) of such title) as of
November 1, 2007, shall continue to be eligible to receive
service or transportation under that subchapter without
regard to whether the per passenger subsidy required exceeds
the per passenger subsidy cap provided under that subchapter.

TITLE V--AVIATION SAFETY

SEC. 501. RUNWAY SAFETY EQUIPMENT PLAN.

Not later than December 31, 2008, the Administrator of the
Federal Aviation Administration shall issue a plan to develop
an installation and deployment schedule for systems the
Administration is installing to alert controllers and flight
crews to potential runway incursions. The plan shall be
integrated into the annual Federal Aviation Administration
operational evolution plan.

SEC. 502. AIRCRAFT FUEL TANK SAFETY IMPROVEMENT.

Not later than December 31, 2008, the Federal Aviation
Administration shall issue a final rule regarding the
reduction of fuel tank flammability in transport category
aircraft.

SEC. 503. JUDICIAL REVIEW OF DENIAL OF AIRMAN CERTIFICATES.

(a) Judicial Review of NTSB Decisions.--Section 44703(d) is
amended by adding at the end the following:
``(3) Judicial review.--A person substantially affected by
an order of the Board under this subsection, or the
Administrator when the Administrator decides that an order of
the Board will have a significant adverse impact on carrying
out this part, may obtain judicial review of the order under
section 46110 of this title. The Administrator shall be made
a party to the judicial review proceedings. The findings of
fact of the Board in any such case are conclusive if
supported by substantial evidence.''.
(b) Conforming Amendment.--Section 1153(c) is amended by
striking ``section 44709 or'' and inserting ``section
44703(d), 44709, or''.

SEC. 504. RELEASE OF DATA RELATING TO ABANDONED TYPE
CERTIFICATES AND SUPPLEMENTAL TYPE
CERTIFICATES.

Section 44704(a) is amended by adding at the end the
following:
``(5) Release of data.--
``(A) Notwithstanding any other provision of law, the
Administrator may designate, without the consent of the owner
of record, engineering data in the agency's possession
related to a type certificate or a supplemental type
certificate for an aircraft, engine, propeller or appliance
as public data, and therefore releasable, upon request, to a
person seeking to maintain the airworthiness of such product,
if the Administrator determines that--
``(i) the certificate containing the requested data has
been inactive for 3 years;
``(ii) the owner of record, or the owner of record's heir,
of the type certificate or supplemental certificate has not
been located despite a search of due diligence by the agency;
and
``(iii) the designation of such data as public data will
enhance aviation safety.

[[Page S3623]]

``(B) In this section, the term `engineering data' means
type design drawings and specifications for the entire
product or change to the product, including the original
design data, and any associated supplier data for individual
parts or components approved as part of the particular
aeronautical product certificate.''.

SEC. 505. DESIGN ORGANIZATION CERTIFICATES.

Section 44704(e) is amended--
(1) by striking ``Beginning 7 years after the date of
enactment of this subsection,'' in paragraph (1) and
inserting ``Effective January 1, 2013,'';
(2) by striking ``testing'' in paragraph (2) and inserting
``production''; and
(3) by striking paragraph (3) and inserting the following:
``(3) Issuance of certificate based on design organization
certification.--The Administrator may rely on the Design
Organization for certification of compliance under this
section.''.

SEC. 506. FAA ACCESS TO CRIMINAL HISTORY RECORDS OR DATABASE
SYSTEMS.

(a) In General.--Chapter 401 is amended by adding at the
end thereof the following:

``Sec. 40130. FAA access to criminal history records or
databases systems

``(a) Access to Records or Databases Systems.--
``(1) Notwithstanding section 534 of title 28 and the
implementing regulations for such section (28 C.F.R. part
20), the Administrator of the Federal Aviation Administration
is authorized to access a system of documented criminal
justice information maintained by the Department of Justice
or by a State but may do so only for the purpose of carrying
out its civil and administrative responsibilities to protect
the safety and security of the National Airspace System or to
support the missions of the Department of Justice, the
Department of Homeland Security, and other law enforcement
agencies. The Administrator shall be subject to the same
conditions or procedures established by the Department of
Justice or State for access to such an information system by
other governmental agencies with access to the system.
``(2) The Administrator may not use the access authorized
under paragraph (1) to conduct criminal investigations.
``(b) Designated Employees.--The Administrator shall, by
order, designate those employees of the Administration who
shall carry out the authority described in subsection (a).
Such designated employees may--
``(1) have access to and receive criminal history, driver,
vehicle, and other law enforcement information contained in
the law enforcement databases of the Department of Justice,
or of any jurisdiction in a State in the same manner as a
police officer employed by a State or local authority of that
State who is certified or commissioned under the laws of that
State;
``(2) use any radio, data link, or warning system of the
Federal Government and of any jurisdiction in a State that
provides information about wanted persons, be-on-the-lookout
notices, or warrant status or other officer safety
information to which a police officer employed by a State or
local authority in that State who is certified or commission
under the laws of that State has access and in the same
manner as such police officer; or
``(3) receive Federal, State, or local government
communications with a police officer employed by a State or
local authority in that State in the same manner as a police
officer employed by a State or local authority in that State
who is commissioned under the laws of that State.
``(c) System of Documented Criminal Justice Information
Defined.--In this section the term `system of documented
criminal justice information' means any law enforcement
databases, systems, or communications containing information
concerning identification, criminal history, arrests,
convictions, arrest warrants, or wanted or missing persons,
including the National Crime Information Center and its
incorporated criminal history databases and the National Law
Enforcement Telecommunications System.''.
(b) Conforming Amendment.--The chapter analysis for chapter
401 is amended by inserting after the item relating to
section 40129 the following:

``40130. FAA access to criminal history records or databases
systems.''.

SEC. 507. FLIGHT CREW FATIGUE.

(a) In General.--Within 3 months after the date of
enactment of this Act the Administrator of the Federal
Aviation Administration shall conclude arrangements with the
National Academy of Sciences for a study of pilot fatigue.
(b) Study.--The study shall include consideration of--
(1) research on fatigue, sleep, and circadian rhythms;
(2) sleep and rest requirements recommended by the National
Transportation Safety Board; and
(3) international standards.
(c) Report.--Within 18 months after initiating the study,
the National Academy shall submit a report to the
Administrator containing its findings and recommendations,
including recommendations with respect to Federal Aviation
Regulations governing flight limitation and rest
requirements.
(d) Rulemaking.--After the Administrator receives the
National Academy's report, the Federal Aviation
Administration shall consider the findings of the National
Academy in its rulemaking proceeding on flight time
limitations and rest requirements.
(e) Implementation of Flight Attendant Fatigue Study
Recommendations.--Within 60 days after the date of enactment
of this Act, the Administrator of the Federal Aviation
Administration shall initiate a process to carry out the
recommendations of the CAMI study on flight attendant
fatigue.

SEC. 508. INCREASING SAFETY FOR HELICOPTER EMERGENCY MEDICAL
SERVICE OPERATORS.

(a) Compliance With 14 CFR Part 135 Regulations.--No later
than 18 months after the date of enactment of this Act, all
helicopter emergency medical service operators shall comply
with the regulations in part 135 of title 14, Code of Federal
Regulations whenever there is a medical crew on board,
without regard to whether there are patients on board the
helicopter.
(b) Implementation of Flight Risk Evaluation Program.--
Within 60 days after the date of enactment of this Act, the
Federal Aviation Administration shall initiate, and complete
within 18 months, a rulemaking--
(1) to create a standardized checklist of risk evaluation
factors based on its Notice 8000.301, issued in August, 2005;
and
(2) to require helicopter emergency medical service
operators to use the checklist to determine whether a mission
should be accepted.
(c) Comprehensive Consistent Flight Dispatch Procedures.--
Within 60 days after the date of enactment of this Act, the
Federal Aviation Administration shall initiate, and complete
within 18 months, a rulemaking--
(1) to create standardized flight dispatch procedures for
helicopter emergency medical service operators based on the
regulations in part 121 of title 14, Code of Federal
Regulations; and
(2) to require such operators to use those procedures for
flights.
(d) Improving Situational Awareness.--Any helicopter used
for helicopter emergency medical service operations that is
ordered, purchased, or otherwise obtained after the date of
enactment of this Act shall have on board an operational
terrain awareness and warning system that meets the technical
specifications of section 135.154 of the Federal Aviation
Regulations (14 C.F.R. 135.154).
(e) Improving the Data Available to NTSB Investigators at
Crash Sites.--
(1) Study.--Within 1 year after the date of enactment of
this Act, the Federal Aviation Administration shall complete
a feasibility study of requiring flight data and cockpit
voice recorders on new and existing helicopters used for
emergency medical service operations. The study shall
address, at a minimum, issues related to survivability,
weight, and financial considerations of such a requirement.
(2) Rulemaking.--Within 2 years after the date of enactment
of this Act, the Federal Aviation Administration shall
complete a rulemaking to require flight data and cockpit
voice recorders on board such helicopters.

SEC. 509. CABIN CREW COMMUNICATION.

(a) In General.--Section 44728 is amended--
(1) by redesignating subsection (f) as subsection (g); and
(2) by inserting after subsection (e) the following:
``(f) Minimum Language Skills.--
``(1) In general.--No certificate holder may use any person
to serve, nor may any person serve, as a flight attendant
under this part, unless that person has the ability to read,
speak, and write English well enough to--
``(A) read material written in English and comprehend the
information;
``(B) speak and understand English sufficiently to provide
direction to, and understand and answer questions from,
English-speaking individuals;
``(C) write incident reports and statements and log entries
and statements; and
``(D) carry out written and oral instructions regarding the
proper performance of their duties.
``(2) Foreign flights.--The requirements of paragraph (1)
do not apply to service as a flight attendant on a flight
operated by a certificate holder solely between points
outside the United States.''.
(b) Administration.--The Administrator of the Federal
Aviation Administration shall work with certificate holders
to which section 44728(f) of title 49, United States Code,
applies to facilitate compliance with the requirements of
section 44728(f)(1) of that title.

SEC. 510. CLARIFICATION OF MEMORANDUM OF UNDERSTANDING WITH
OSHA.

(a) In General.--Within 6 months after the date of
enactment of this Act, the Administrator of the Federal
Aviation Administration shall--
(1) establish milestones, in consultation with the
Occupational Safety and Health Administration, through a
report to Congress for the completion of work begun under the
August 2000 memorandum of understanding between the 2
Administrations and to address issues needing further action
in the Administrations' joint report in December 2000; and
(2) initiate development of a policy statement to set forth
the circumstances in which Occupational Safety and Health
Administration requirements may be applied to crewmembers
while working in the aircraft cabin.
(b) Policy Statement.--The policy statement to be developed
under subsection (a)(2) shall satisfy the following
principles:
(1) The establishment of a coordinating body similar to the
Aviation Safety and

[[Page S3624]]

Health Joint Team established by the August 2000 memorandum
of understanding that includes representatives designated by
both Administrations--
(A) to examine the applicability of current and future
Occupational Safety and Health Administration regulations;
(B) to recommend policies for facilitating the training of
Federal Aviation Administration inspectors; and
(C) to make recommendations that will govern the inspection
and enforcement of safety and health standards on board
aircraft in operation and all work-related environments.
(2) Any standards adopted by the Federal Aviation
Administration shall set forth clearly--
(A) the circumstances under which an employer is required
to take action to address occupational safety and health
hazards;
(B) the measures required of an employer under the
standard; and
(C) the compliance obligations of an employer under the
standard.

SEC. 511. ACCELERATION OF DEVELOPMENT AND IMPLEMENTATION OF
REQUIRED NAVIGATION PERFORMANCE APPROACH
PROCEDURES.

(a) In General.--The Administrator of the Federal Aviation
Administration shall set a target of achieving a minimum of
200 Required Navigation Performance procedures each fiscal
year through fiscal year 2012, with 25 percent of that target
number meeting the low visibility approach criteria.
(b) Use of Third Parties.--The Administrator is authorized
to provide third parties the ability to design, flight check,
and implement Required Navigation Performance approach
procedures.

SEC. 512. ENHANCED SAFETY FOR AIRPORT OPERATIONS.

From amounts appropriated for fiscal years 2009 through
2011 pursuant to section 48101(a) of title 49, United States
Code, the Secretary shall make available such sums as may be
necessary for use in relocating the radar facility at
National Plan of Integrated Airport Systems airport number
54-0026 to improve the safety, efficiency, and security of
air traffic control, navigation, low altitude communications
and surveillance, and weather. The Administrator of the
Federal Aviation Administration shall ensure that the radar
is relocated before September 30, 2011.

SEC. 513. IMPROVED SAFETY INFORMATION.

Not later than December 31, 2008, the Administrator of the
Federal Aviation Administration shall issue a final rule in
docket No. FAA-2008-0188, Re-registration and Renewal of
Aircraft Registration. The final rule shall include--
(1) provision for the expiration of a certificate for an
aircraft registered as of the date of enactment of this Act,
with re-registration requirements for those aircraft that
remain eligible for registration;
(2) provision for the periodic expiration of all
certificates issued after the effective date of the rule with
a registration renewal process; and
(3) other measures to promote the accuracy and efficient
operation and value of the Administration's aircraft
registry.

SEC. 514. VOLUNTARY DISCLOSURE REPORTING PROCESS
IMPROVEMENTS.

Within 180 days after the date of enactment of this Act,
the Administrator of the Federal Aviation Administration
shall--
(1) take such action as may be necessary to ensure that the
Voluntary Disclosure Reporting Process requires inspectors--
(A) to evaluate corrective action proposed by an air
carrier with respect to a matter disclosed by that air
carrier is sufficiently comprehensive in scope and
application and applies to all affected aircraft operated by
that air carrier before accepting the proposed voluntary
disclosure; and
(B) to verify that corrective action so identified by an
air carrier is completed within the timeframe proposed; and
(C) to verify by inspection that the carrier's corrective
action adequately corrects the problem that was disclosed;
and
(2) establish a second level supervisory review of
disclosures under the Voluntary Disclosure Reporting Process
before any proposed disclosure is accepted and closed that
will ensure that a matter disclosed by an air carrier--
(A) has not been previously identified by a Federal
Aviation Administration inspector; and
(B) has not been previously disclosed by the carrier in the
preceding 5 years.

SEC. 515. PROCEDURAL IMPROVEMENTS FOR INSPECTIONS.

(a) Employment by Inspected Air Carriers.--Within 90 days
after the date of enactment of this Act, the Administrator of
the Federal Aviation Administration shall initiate a
rulemaking proceeding to revise its post-employment guidance
to prohibit an inspector employed by an air carrier the
inspector was responsible for inspecting from representing
that air carrier before the Federal Aviation Administration
or participating in negotiations or other contacts with the
Federal Aviation Administration on behalf of that air carrier
for a period of 2 years after terminating employment by the
Federal Aviation Administration.
(b) Inspection Tracking.--Within 90 days after the date of
enactment of this Act, the Administrator of the Federal
Aviation Administration shall implement a process for
tracking field office review of air carrier compliance with
Federal Aviation Administration air worthiness directives. In
tracking air worthiness directive compliance, the
Administrator shall ensure that--
(1) each air carriers under the Administration's air
transportation oversight system is reviewed for 100 percent
compliance on a 5-year cycle;
(2) Compliance reviews include physical inspections at each
applicable carrier of a sample of the aircraft to which the
air worthiness certificate applies; and
(3) the appropriate local and regional offices, and the
Administrator, are alerted whenever a carrier is no longer in
compliance with an air worthiness directive.

SEC. 516. INDEPENDENT REVIEW OF SAFETY ISSUES.

Within 30 days after the date of enactment of this Act, the
Comptroller General shall initate a review and investigation
of air safety issues identified by Federal Aviation
Administration employees and reported to the Administrator.
The Comptroller General shall report the Government
Accountability Office's findings and recommendations to the
Administrator, the Senate Committee on Commerce, Science, and
Transportation, and the House of Representatives Committee on
Transportation and Infrastructure on an annual basis.

SEC. 517. NATIONAL REVIEW TEAM.

(a) In General.--Within 180 days after the date of
enactment of this Act, the Administrator of the Federal
Aviation Administration shall establish a national review
team within the Administration to conduct periodic, random
reviews of the Administration's oversight of air carriers and
report annually its findings and recommendations to the
Administrator, the Senate Commerce, Science, and
Transportation Committee, and the House of Representatives
Committee on Transportation and Infrastructure.
(b) Inspector General Reports.--The Inspector General of
the Department of Transportation shall provide progress
reports to the Senate Committee on Commerce, Science, and
Transportation and the House of Representatives Committee on
Transportation and Infrastructure on the review teams and
their effectiveness.
(c) Additional Safety Inspectors.--From amounts
appropriated pursuant to section 106(k)(1) of title 49,
United States Code, the Administrator of the Federal Aviation
Administration may hire a net increase of 200 additional
safety inspectors.

SEC. 518. FAA ACADEMY IMPROVEMENTS.

(a) Review.--Within 1 year after the date of enactment of
this Act, the Administrator of the Federal Aviation
Administration shall conduct a comprehensive review and
evaluation of its Academy and facility training efforts.
(b) Facility Training Program.--The Administrator shall--
(1) clarify responsibility for oversight and direction of
the Academy's facility training program at the national
level;
(2) communicate information concerning that responsibility
to facility managers; and
(3) establish standards to identify the number of
developmental controllers that can be accommodated at each
facility, based on--
(A) the number of available on-the-job-training
instructors;
(B) available classroom space;
(C) the number of available simulators;
(D) training requirements; and
(E) the number of recently placed new personnel already in
training.

SEC. 519. REDUCTION OF RUNWAY INCURSIONS AND OPERATIONAL
ERRORS.

(a) Plan.--The Administrator of the Federal Aviation
Administration shall develop a plan for the reduction of
runway incursions by reviewing every commercial service
airport (as defined in section 47102 of title 49, United
States Code) in the United States and initiating action to
improve airport lighting, provide better signage, and improve
runway and taxiway markings.
(b) Process.--Within 1 year after the date of enactment of
this Act, the Administrator of the Federal Aviation
Administration shall develop a process for tracking and
investigating operational errors and runway incursions that
includes--
(1) identifying the office responsible for establishing
regulations regarding operational errors and runway
incursions;
(2) identifying who is responsible for tracking and
investigating operational errors and runway incursions and
taking remedial actions;
(3) identifying who is responsible for tracking operational
errors and runway incursions, including a process for lower
level employees to report to higher supervisory levels; and
(4) periodic random audits of the oversight process.

TITLE VI--AVIATION RESEARCH

SEC. 601. AIRPORT COOPERATIVE RESEARCH PROGRAM.

(a) In General.--Section 44511(f) is amended--
(1) by striking ``establish a 4-year pilot'' in paragraph
(1) and inserting ``maintain an''; and
(2) by inserting ``pilot'' in paragraph (4) before
``program'' the first time it appears; and
(3) by striking ``program, including recommendations as to
the need for establishing a permanent airport cooperative
research program.'' in paragraph (4) and inserting
``program.''.
(b) Airport Cooperative Research Program.--Not more than
$15,000,000 per year for fiscal years 2008, 2009, 2010, and
2011 may be

[[Page S3625]]

appropriated to the Secretary of Transportation from the
amounts made available each year under subsection (a) for the
Airport Cooperative Research Program under section 44511 of
this title, of which not less than $5,000,000 per year shall
be for research activities related to the airport
environment, including reduction of community exposure to
civil aircraft noise, reduction of civil aviation emissions,
or addressing water quality issues.

SEC. 602. REDUCTION OF NOISE, EMISSIONS, AND ENERGY
CONSUMPTION FROM CIVILIAN AIRCRAFT.

(a) Establishment of Research Program.--From amounts made
available under section 48102(a) of title 49, United States
Code, the Administrator of the Federal Aviation
Administration shall establish a research program related to
reducing civilian aircraft source noise and emissions through
grants or other measures authorized under section 106(l)(6)
of such title, including reimbursable agreements with other
Federal agencies. The program shall include participation of
educational and research institutions or private sector
entities that have existing facilities and experience for
developing and testing noise, emissions and energy reduction
engine and aircraft technology, and developing alternative
fuels.
(b) Establishing a Consortium.--Within 6 months after the
date of enactment of this Act, the Administrator shall
designate, using a competitive process, an institution,
entity, or consortium described in subsection (a) as a
Consortium for Aviation Noise, Emissions, and Energy
Technology Research to perform research in accordance with
this section. The Consortium shall conduct the research
program in coordination with the National Aeronautics and
Space Administration and other relevant agencies.
(c) Performance Objectives.--By January 1, 2015, the
research program shall accomplish the following objectives:
(1) Certifiable aircraft technology that increases aircraft
fuel efficiency by 25 percent relative to 1997 subsonic
aircraft technology.
(2) Certifiable engine technology that reduces landing and
takeoff cycle nitrogen oxide emissions by 50 percent, without
increasing other gaseous or particle emissions, over the
International Civil Aviation Organization standard adopted in
2004.
(3) Certifiable aircraft technology that reduces noise
levels by 10 dB (30 dB cumulative) relative to 1997 subsonic
jet aircraft technology.
(4) Determination of the feasibility of use of alternative
fuels in aircraft systems, including successful demonstration
and quantification of benefits.
(5) Determination of the extent to which new engine and
aircraft technologies may be used to retrofit or re-engine
aircraft so as to increase the level of penetration into the
commercial fleet.

SEC. 603. PRODUCTION OF CLEAN COAL FUEL TECHNOLOGY FOR
CIVILIAN AIRCRAFT.

(a) Establishment of Research Program.--From amounts made
available under section 48102(a) of title 49, United States
Code, the Secretary of Transportation shall establish a
research program related to developing jet fuel from clean
coal through grants or other measures authorized under
section 106(l)(6) of such title, including reimbursable
agreements with other Federal agencies. The program shall
include participation by educational and research
institutions that have existing facilities and experience in
the development and deployment of technology that processes
coal to aviation fuel.
(b) Designation of Institution as a Center of Excellence.--
Within 6 months after the date of enactment of this Act, the
Administrator of the Federal Aviation Administration shall
designate an institution described in subsection (a) as a
Center of Excellence for Coal-to-Jet-Fuel Research.

SEC. 604. ADVISORY COMMITTEE ON FUTURE OF AERONAUTICS.

(a) Establishment.--There is established an advisory
committee to be know as the ``Advisory Committee on the
Future of Aeronautics''.
(b) Membership.--The Advisory Committee shall consist of 7
members appointed by the President from a list of 15
candidates proposed by the Director of the National Academy
of Sciences.
(c) Chairperson.--The Advisory Committee members shall
elect 1 member to serve as chairperson of the Advisory
Committee.
(d) Functions.--The Advisory Committee shall examine the
best governmental and organizational structures for the
conduct of civil aeronautics research and development,
including options and recommendations for consolidating such
research to ensure continued United States leadership in
civil aeronautics. The Committee shall consider transferring
responsibility for civil aeronautics research and development
from the National Aeronautics and Space Administration to
other existing departments or agencies of the Federal
government or to a non-governmental organization such as
academic consortia or not-for-profit organizations. In
developing its recommendations, the Advisory Committee shall
consider, as appropriate, the aeronautics research policies
developed pursuant to section 101(d) of Public Law 109-155
and the requirements and priorities for aeronautics research
established by title IV of Public Law 109-155.
(e) Report.--Not later than 12 months after the date on
which the full membership of the Advisory Committee is
appointed, the Advisory Committee shall submit a report to
the Senate Committee on Commerce, Science, and Transportation
and the House Committees on Science and Technology and on
Transportation and Infrastructure on its findings and
recommendations. The report may recommend a rank ordered list
of acceptable solutions.
(f) Termination.--The Advisory Committee shall terminate 60
days after the date on which it submits the report to the
Congress.

SEC. 605. RESEARCH PROGRAM TO IMPROVE AIRFIELD PAVEMENTS.

(a) Continuation of Program.--The Administrator of the
Federal Aviation Administration shall continue the program to
consider awards to nonprofit concrete and asphalt pavement
research foundations to improve the design, construction,
rehabilitation, and repair of airfield pavements to aid in
the development of safer, more cost effective, and more
durable airfield pavements.
(b) Use of Grants or Cooperative Agreements.--The
Administrator may use grants or cooperative agreements in
carrying out this section.

SEC. 606. WAKE TURBULENCE, VOLCANIC ASH, AND WEATHER
RESEARCH.

Within 60 days after the date of enactment of this Act, the
Administrator of the Federal Aviation Administration shall--
(1) initiate evaluation of proposals that would increase
capacity throughout the air transportation system by reducing
existing spacing requirements between aircraft of all sizes,
including research on the nature of wake vortices;
(2) begin implementation of a system to improve volcanic
ash avoidance options for aircraft, including the development
of a volcanic ash warning and notification system for
aviation; and
(3) establish research projects on--
(A) ground de-icing/anti-icing, ice pellets, and freezing
drizzle;
(B) oceanic weather, including convective weather;
(C) en route turbulence prediction and detection; and
(D) all hazards during oceanic operations, where commercial
traffic is high and only rudimentary satellite sensing is
available, to reduce the hazards presented to commercial
aviation.

SEC. 607. INCORPORATION OF UNMANNED AERIAL SYSTEMS INTO FAA
PLANS AND POLICIES.

(a) Research.--
(1) Equipment.--Section 44504 is amended--
(A) by inserting ``unmanned and manned'' in subsection (a)
after ``improve'';
(B) by striking ``and'' after the semicolon in subsection
(b)(6);
(C) by striking ``aircraft.'' in subsection (b)(7) and
inserting ``aircraft; and''; and
(D) by adding at the end of subsection (b) the following:
``(8) in conjunction with other Federal agencies as
appropriate, to develop technologies and methods to assess
the risk of and prevent defects, failures, and malfunctions
of products, parts, and processes, for use in all classes of
unmanned aerial systems that could result in a catastrophic
failure.''.
(2) Human Factors; Simulations.--Section 44505(b) is
amended--
(A) by striking ``and'' after the semicolon in paragraph
(4);
(B) by striking ``programs.'' in paragraph (5)(C) and
inserting ``programs; and''; and
(C) by adding at the end thereof the following:
``(6) to develop a better understanding of the relationship
between human factors and unmanned aerial systems air safety;
and
``(7) to develop dynamic simulation models of integrating
all classes of unmanned aerial systems into the National Air
Space.''.
(b) National Academy of Sciences Assessment.--
(1) In general.--Within 3 months after the date of
enactment of this Act, the Administrator of the Federal
Aviation Administration shall enter into an arrangement with
the National Academy of Science for an assessment of unmanned
aerial systems that shall include consideration of--
(A) human factors regarding unmanned aerial systems
operation;
(B) ``detect, sense and avoid technologies'' with respect
to both cooperative and non-cooperative aircraft;
(C) spectrum issues and bandwidth requirements;
(D) operation in suboptimal winds and adverse weather
conditions;
(E) mechanisms for letter others know where the unmanned
aerial system is flying;
(F) airworthiness and system redundancy;
(G) flight termination systems for safety and security;
(H) privacy issues;
(I) technologies for unmanned aerial systems flight
control;
(J) technologies for unmanned aerial systems propulsion;
(K) unmanned aerial systems operator qualifications,
medical standards, and training requirements;
(L) unmanned aerial systems maintenance requirements and
training requirements; and
(M) any other unmanned aerial systems-related issue the
Administrator believes should be addressed.
(2) Report.--Within 12 months after initiating the study,
the National Academy shall submit its report to the
Administrator, the Senate Committee on Commerce, Science, and
Transportation, and the House of Representatives Committee on
Transportation

[[Page S3626]]

and Infrastructure containing its findings and
recommendations.
(c) Pilot Projects.--
(1) In general.--The Administrator of the Federal Aviation
Administration shall establish 3 2-year cost-shared pilot
projects in sparsely populated, low-density Class G air
traffic airspace to conduct experiments and collect data in
order to accelerate the safe integration of unmanned aerial
systems into the National Airspace System as follows:
(A) 1 project shall address operational issues required for
integration of Category 1 unmanned aerial systems.
(B) 1 project shall address operational issues required for
integration of Category 2 unmanned aerial systems.
(C) 1 project shall address operational issues required for
integration of Category 3 unmanned aerial systems.
(2) Use of consortia.--In conducting the pilot projects,
the Administrator shall encourage the formation of consortia
from the public and private sectors, educational
institutions, and non-profit organization.
(3) Report.--Within 60 days after completing the pilot
projects, the Administrator shall transmit a report to the
Senate Committee on Commerce, Science, and Transportation and
the House of Representatives Committee on Transportation and
Infrastructure setting forth the Administrator's findings and
conclusions concerning the projects.
(4) Authorization of appropriations.--There are authorized
to be appropriated to the Administrator for fiscal years 2008
and 2009 such sums as may be necessary to conduct the pilot
projects.
(d) FAA Task List.--
(1) Streamline unmanned aerial systems certification
process.--Within 30 days after the date of enactment of this
Act, the Administrator of the Federal Aviation Administration
shall develop and transmit an unmanned aerial systems
``roadmap'' to the Senate Committee on Commerce, Science, and
Transportation and the House of Representatives Committee on
Transportation and Infrastructure.
(2) Update policy statement.--Within 45 days after the date
of enactment of this Act, the Administrator shall issue an
updated policy statement on unmanned aerial systems under
Docket No. FAA-2006-25714; Notice No. 07-01.
(3) Issue nprm for certificates.--Within 90 days after the
date of enactment of this Act, the Administrator shall
publish a notice of proposed rulemaking on issuing
airworthiness certificates and experimental certificates to
unmanned aerial systems operators for compensation or hire.
The Administrator shall promulgate a final rule 90 days after
the date on which the notice is published.
(4) Notice to Congress on basing unmanned aerial systems
regulations on ultralight regulations.--Within 90 days after
the date of enactment of this Act, the Administrator shall
transmit a report to the Senate Committee on Commerce,
Science, and Transportation and the House of Representatives
Committee on Transportation and Infrastructure on the
potential of using part 103 of title 14, Code of Federal
Regulations (relating to Ultralight Aircraft), as the
regulatory basis for regulations on lightweight unmanned
aerial systems.
(e) Consolidated Rulemaking Deadline.--No later than April
30, 2010, the Federal Aviation Administration and other
affected Federal agencies shall have initiated all of the
rule makings regarding vehicle design requirements,
operational requirements, airworthiness requirements, and
flight crew certifications requirements necessary for
integrating all categories of unmanned aerial systems into
the national air space, taking into consideration the
recommendations the Administrator receives from the National
Academy of Sciences report under subsection (b), the unmanned
aerial systems ``roadmap'' developed by the Administrator
under subsection (d)(1), the recommendations of the Radio
Technical Committee Aeronautics Special Committee 203 (RTCA-
SC 203), and the data generated from the 3 pilot projects
conducted under subsection (c).

SEC. 608. REAUTHORIZATION OF CENTER OF EXCELLENCE IN APPLIED
RESEARCH AND TRAINING IN THE USE OF ADVANCED
MATERIALS IN TRANSPORT AIRCRAFT.

Section 708(b) of the Vision 100--Century of Aviation
Reauthorization Act (49 U.S.C. 44504 note) is amended by
striking ``$500,000 for fiscal year 2004'' and inserting
``$1,000,000 for each of fiscal years 2008 through 2012''.

SEC. 609. PILOT PROGRAM FOR ZERO EMISSION AIRPORT VEHICLES.

(a) In General.--Subchapter I of chapter 471 is amended by
inserting after section 47136 the following:

``Sec. 47136A. Zero emission airport vehicles and
infrastructure

``(a) In General.--The Secretary of Transportation shall
establish a pilot program under which the sponsor of a
public-use airport may use funds made available under section
47117 or section 48103 for use at such airports or passenger
facility revenue (as defined in section 40117(a)(6)) to carry
out activities associated with the acquisition and operation
of zero emission vehicles (as defined in section 88.120-94 of
title 40, Code of Federal Regulations), including the
construction or modification of infrastructure to facilitate
the delivery of fuel and services necessary for the use of
such vehicles. Any use of funds authorized by the preceding
sentence shall be considered to be an authorized use of funds
under section 47117 or section 48103, or an authorized use of
passenger facility revenue (as defined in section
40117(a)(6)), as the case may be.
``(b) Location in Air Quality Nonattainment Areas.--
``(1) In general.--A public-use airport shall be eligible
for participation in the pilot program only if the airport is
located in an air quality nonattainment area (as defined in
section 171(2) of the Clean Air Act (42 U.S.C. 7501(2))).
``(2) Shortage of candidates.--If the Secretary receives an
insufficient number of applications from public-use airports
located in such areas, then the Secretary may consider
applications from public-use airports that are not located in
such areas.
``(c) Selection Criteria.--In selecting from among
applicants for participation in the program, the Secretary
shall give priority consideration to applicants that will
achieve the greatest air quality benefits measured by the
amount of emissions reduced per dollar of funds expended
under the program.
``(d) Federal Share.--Notwithstanding any other provision
of this subchapter, the Federal share of the costs of a
project carried out under the program shall be 50 percent.
``(e) Technical Assistance.--
``(1) In general.--The sponsor of a public-use airport
carrying out activities funded under the program may not use
more than 10 percent of the amounts made available under the
program in any fiscal year for technical assistance in
carrying out such activities.
``(2) Eligible consortium.--To the maximum extent
practicable, participants in the program shall use an
eligible consortium (as defined in section 5506 of this
title) in the region of the airport to receive technical
assistance described in paragraph (1).
``(f) Materials Identifying Best Practices.--The Secretary
may develop and make available materials identifying best
practices for carrying out activities funded under the
program based on projects carried out under section 47136 and
other sources.''.
(b) Report on Effectiveness of Program.--Not later than 18
months after the date of enactment of this section, the
Secretary of Transportation shall transmit a report to the
Senate Committee on Commerce, Science, and Transportation the
House of Representatives Committee on Transportation and
Infrastructure containing--
(1) an evaluation of the effectiveness of the pilot
program;
(2) an identification of all public-use airports that
expressed an interest in participating in the program; and
(3) a description of the mechanisms used by the Secretary
to ensure that the information and know-how gained by
participants in the program is transferred among the
participants and to other interested parties, including other
public-use airports.
(c) Conforming Amendment.--The chapter analysis for chapter
471 is amended by inserting after the item relating to
section 47136 the following:

``47136A. Zero emission airport vehicles and infrastructure''.

SEC. 610. REDUCTION OF EMISSIONS FROM AIRPORT POWER SOURCES.

(a) In General.--Subchapter I of chapter 471 is amended by
inserting after section 47140 the following:

``Sec. 47140A. Reduction of emissions from airport power
sources

``(a) In General.--The Secretary of Transportation shall
establish a program under which the sponsor of each airport
eligible to receive grants under section 48103 is encouraged
to assess the airport's energy requirements, including
heating and cooling, base load, back-up power, and power for
on-road airport vehicles and ground support equipment, in
order to identify opportunities to reduce harmful emissions
and increase energy efficiency at the airport.
``(b) Grants.--The Secretary may make grants under section
48103 to assist airport sponsors that have completed the
assessment described in subsection (a) to acquire or
construct equipment, including hydrogen equipment and related
infrastructure, that will reduce harmful emissions and
increase energy efficiency at the airport. To be eligible for
such a grant, the sponsor of such an airport shall submit an
application to the Secretary, at such time, in such manner,
and containing such information as the Secretary may
require.''.
(b) Conforming Amendment.--The chapter analysis for chapter
471 is amended by inserting after the item relating to
section 47140 the following:

``47140A. Reduction of emissions from airport power sources''.

TITLE VII--MISCELLANEOUS

SEC. 701. GENERAL AUTHORITY.

(a) Third Party Liability.--Section 44303(b) is amended by
striking ``December 31, 2006,'' and inserting ``December 31,
2012,''.
(b) Extension of Program Authority.--Section 44310 is
amended by striking ``March 30, 2008.'' and inserting
``October 1, 2017.''.

SEC. 702. HUMAN INTERVENTION MANAGEMENT STUDY.

Within 6 months after the date of enactment of this Act,
the Administrator of the Federal Aviation Administration
shall develop a Human Intervention Management Study program
for cabin crews employed by commercial air carriers in the
United States.

SEC. 703. AIRPORT PROGRAM MODIFICATIONS.

The Administrator of the Federal Aviation Administration--

[[Page S3627]]

(1) shall establish a formal, structured certification
training program for the airport concessions disadvantaged
business enterprise program; and
(2) may appoint 3 additional staff to implement the
programs of the airport concessions disadvantaged business
enterprise initiative.

SEC. 704. MISCELLANEOUS PROGRAM EXTENSIONS.

(a) Extension of Metropolitan Washington Airports
Authority.--Section 49108 is amended by striking ``2008,''
and inserting ``2011,''.
(b) Marshall Islands, Federated States of Micronesia, and
Palau.--Section 47115(j) is amended by striking ``2007,'' and
inserting ``2011,''.
(c) Midway Island Airport.--Section 186(d) of the Vision
100--Century of Aviation Reauthorization Act (17 Stat. 2518)
is amended by striking ``October 1, 2007,'' and inserting
``October 1, 2011,''.

SEC. 705. EXTENSION OF COMPETITIVE ACCESS REPORTS.

Section 47107(s) is amended by striking paragraph (3).

SEC. 706. UPDATE ON OVERFLIGHTS.

(a) In General.--Section 45301(b) is amended to read as
follows:
``(b) Limitations.--
``(1) In general.--In establishing fees under subsection
(a), the Administrator shall ensure that the fees required by
subsection (a) are reasonably related to the Administration's
costs, as determined by the Administrator, of providing the
services rendered. Services for which costs may be recovered
include the costs of air traffic control, navigation, weather
services, training, and emergency services which are
available to facilitate safe transportation over the United
States, and other services provided by the Administrator or
by programs financed by the Administrator to flights that
neither take off nor land in the United States. The
determination of such costs by the Administrator is not
subject to judicial review.
``(2) Adjustment of fees.--The Administrator shall adjust
the overflight fees established by subsection (a)(1) by
expedited rulemaking and begin collections under the adjusted
fees by October 1, 2009. In developing the adjusted
overflight fees, the Administrator shall seek and consider
the recommendations, if any, offered by the Aviation
Rulemaking Committee for Overflight Fees that are intended to
ensure that overflight fees are reasonably related to the
Administrator's costs of providing air traffic control and
related services to overflights. In addition, the
Administrator may periodically modify the fees established
under this section either on the Administrator's own
initiative or on a recommendation from the Air Traffic
Control Modernization Board.
``(3) Cost data.--The adjustment of overflight fees under
paragraph (2) shall be based on the costs to the
Administration of providing the air traffic control and
related activities, services, facilities, and equipment using
the available data derived from the Administration's cost
accounting system and cost allocation system to users, as
well as budget and operational data.
``(4) Aircraft altitude.--Nothing in this section shall
require the Administrator to take into account aircraft
altitude in establishing any fee for aircraft operations in
en route or oceanic airspace.
``(5) Costs defined.--In this subsection, the term `costs'
means those costs associated with the operation, maintenance,
debt service, and overhead expenses of the services provided
and the facilities and equipment used in such services,
including the projected costs for the period during which the
services will be provided.
``(6) Publication; comment.--The Administrator shall
publish in the Federal Register any fee schedule under this
section, including any adjusted overflight fee schedule, and
the associated collection process as a proposed rule,
pursuant to which public comment will be sought and a final
rule issued.''.
(b) Administrative Provision.--Section 45303(c)(2) is
amended to read as follows:
``(2) shall be available to the Administrator for
expenditure for purposes authorized by Congress for the
Federal Aviation Administration, however, fees established by
section 45301(a)(1) of title 49 of the United States Code
shall be available only to pay the cost of activities and
services for which the fee is imposed, including the costs to
determine, assess, review, and collect the fee; and''.

SEC. 707. TECHNICAL CORRECTIONS.

Section 40122(g), as amended by section 307 of this Act, is
further amended--
(1) by striking ``2302(b), relating to whistleblower
protection,'' in paragraph (2)(A) and inserting ``2302,'';
(2) by striking ``and'' after the semicolon in paragraph
(2)(H).
(3) by striking ``Plan.'' in paragraph (2)(I)(iii) and
inserting ``Plan; and'';
(4) by adding at the end of paragraph (2) the following:
``(J) sections 6381 through 6387, relating to Family and
Medical Leave.''; and
(5) by adding at the end of paragraph (3) ``Notwithstanding
any other provision of law, retroactive to April 1, 1996, the
Board shall have the same remedial authority over such
employee appeals that it had as of March 31, 1996.''.

SEC. 708. FAA TECHNICAL TRAINING AND STAFFING.

(a) Study.--
(1) In general.--The Comptroller General shall conduct a
study of the training of airway transportation systems
specialists of the Federal Aviation Administration that
includes--
(A) an analysis of the type of training provided to such
specialists;
(B) an analysis of the type of training that such
specialists need to be proficient in the maintenance of the
latest technologies;
(C) actions that the Administration has undertaken to
ensure that such specialists receive up-to-date training on
such technologies;
(D) the amount and cost of training provided by vendors for
such specialists;
(E) the amount and cost of training provided by the
Administration after developing in-house training courses for
such specialists;
(F) the amount and cost of travel required of such
specialists in receiving training; and
(G) a recommendation regarding the most cost-effective
approach to providing such training.
(2) Report.--Within 1 year after the date of enactment of
this Act, the Comptroller General shall transmit a report on
the study containing the Comptroller General's findings and
recommendations to the Senate Committee on Commerce, Science,
and Transportation and the House of Representatives Committee
on Transportation and Infrastructure.
(b) Study by National Academy of Sciences.--
(1) In general.--Not later than 90 days after the date of
enactment of this Act, the Administrator of the Federal
Aviation Administration shall contract with the National
Academy of Sciences to conduct a study of the assumptions and
methods used by the Federal Aviation Administration to
estimate staffing needs for Federal Aviation Administration
air traffic controllers, system specialists, and engineers to
ensure proper maintenance, certification, and operation of
the National Airspace System. The National Academy of
Sciences shall consult with the Exclusive Bargaining
Representative certified under section 7111 of title 5,
United States Code, and the Administration (including the
Civil Aeronautical Medical Institute) and examine data
entailing human factors, traffic activity, and the technology
at each facility.
(2) Contents.--The study shall include--
(A) recommendations for objective staffing standards that
maintain the safety of the National Airspace System; and
(B) the approximate length of time for developing such
standards.
(3) Report.--Not later than 24 months after executing a
contract under subsection (a), the National Academy of
Sciences shall transmit a report containing its findings and
recommendations to the Congress.
(c) Safety Staffing Model.--Within 18 months after the date
of enactment of this Act, the Administrator of the Federal
Aviation Administration shall develop a staffing model for
aviation safety inspectors. In developing the model, the
Administrator shall consult with representatives of the
aviation safety inspectors and other interested parties.

SEC. 709. COMMERCIAL AIR TOUR OPERATORS IN NATIONAL PARKS.

(a) Secretary of the Interior and Overflights of National
Parks.--
(1) Section 40128 is amended--
(A) by striking paragraph (8) of subsection (f);
(B) by striking ``Director'' each place it appears and
inserting ``Secretary of the Interior'';
(C) by striking ``National Park Service'' in subsection
(a)(2)(B)(vi) and inserting ``Department of the Interior'';
and
(D) by striking ``National Park Service'' in subsection
(b)(4)(C) and inserting ``Department of the Interior''.
(2) The National Parks Air Tour Management Act of 2000 (49
U.S.C. 40128 note) is amended--
(A) by striking ``Director'' in section 804(b) and
inserting ``Secretary of the Interior'';
(B) in section 805--
(i) by striking ``Director of the National Park Service''
in subsection (a) and inserting ``Secretary of the
Interior'';
(ii) by striking ``Director'' each place it appears and
inserting ``Secretary of the Interior'';
(iii) by striking ``National Park Service'' each place it
appears in subsection (b) and inserting ``Department of the
Interior'';
(iv) by striking ``National Park Service'' in subsection
(d)(2) and inserting ``Department of the Interior''; and
(C) in section 807--
(i) by striking ``National Park Service'' in subsection
(a)(1) and inserting ``Department of the Interior''; and
(ii) by striking ``Director of the National Park Service''
in subsection (b) and inserting ``Secretary of the
Interior''.
(b) Allowing Overflights in Case of Agreement.--Paragraph
(1) of subsection (a) of section 40128 is amended--
(1) by striking ``and'' in subparagraph (B);
(2) by striking ``lands.'' in subparagraph (C) and
inserting ``lands; and''; and
(3) by adding at the end the following:
``(D) in accordance with a voluntary agreement between the
commercial air tour operator and appropriate representatives
of the national park or tribal lands, as the case may be.''.
(c) Additional Exemptions to Air Tour Management Plans.--
Subsection (a) of section 40128 is further amended by adding
at the end the following:

[[Page S3628]]

``(5) Waiver for national parks with 100 or fewer
commercial air tour operations per year.--
``(A) In general.--Subject to subparagraph (B), and without
further administrative or environmental process, the
Secretary may waive the requirements of this section with
respect to a national park over which 100 or fewer commercial
air tour operations are conducted in a year.
``(B) Exception to waiver if necessary to protect park
resources.--
``(i) In general.--The Secretary may not waive the
requirements of this section if the Secretary determines that
an air tour management plan is necessary to protect park
resources and values.
``(ii) Notice and publication.--The Secretary shall inform
the Administrator in writing of the determinations under
clause (i), and the Secretary and the Administrator shall
publish in the Federal Register a list of the national parks
that fall under this subparagraph.
``(6) Waiver with respect to voluntary agreements.--
``(A) In general.--The Secretary may waive the requirements
of this section if a commercial air tour operator enters into
a voluntary agreement with a national park to manage
commercial air tour operations over the national park.
``(B) Purpose of voluntary agreements.--A voluntary
agreement described in subparagraph (A) shall seek to protect
park resources and visitor experiences without compromising
aviation safety, and may--
``(i) include provisions described in subparagraph (B)
through (E) of subsection (b)(3);
``(ii) include provisions to ensure the stability of, and
compliance with, the provisions of the voluntary agreement;
and
``(iii) set forth a fee schedule for operating over the
national park.
``(C) Consultation.--Before entering into a voluntary
agreement described in subparagraph (A), a national park
shall consult with any Indian tribe over whose tribal lands a
commercial air tour operator may conduct commercial air tour
operations pursuant to the voluntary agreement.
``(D) Review and approval by the secretary and the
administrator.--
``(i) Review.--Before executing a voluntary agreement
described in subparagraph (A), a national park shall submit
the voluntary agreement to the Secretary and the
Administrator for review and approval.
``(ii) Approval.--Not later than 60 days after receiving
the agreement from the national park, the Secretary and the
Administrator shall inform the national park of the
determination of the Secretary and the Administrator
regarding the approval of the agreement.
``(E) Rescission of voluntary agreement.--
``(i) By the secretary.--The Secretary may rescind a
voluntary agreement described in subparagraph (A) if the
Secretary determines that the agreement does not adequately
protect park resources or visitor experiences.
``(ii) By the administrator.--The Administrator may rescind
a voluntary agreement described in subparagraph (A) if the
Administrator determines that the agreement adversely affects
aviation safety or the management of the national airspace
system.
``(iii) Effect of rescission.--If the Secretary or the
Administrator rescinds a voluntary agreement described in
subparagraph (A), the commercial air tour operator that was a
party to the agreement shall operate under the requirements
for interim operating authority of subsection (c) until an
air tour management plan for the national park becomes
effective.''.
(d) Modification of Interim Operating Authority.--
Subsection (c)(2)(I) of section 40128 is amended to read as
follows:
``(I) may allow for modifications of the interim operating
authority without further environmental process, if--
``(i) adequate information on the existing and proposed
operations of the commercial air tour operator is provided to
the Administrator and the Secretary by the operator seeking
operating authority;
``(ii) the Administrator determines that the modifications
would not adversely affect aviation safety or the management
of the national airspace system; and
``(iii) the Secretary agrees that the modifications would
not adversely affect park resources and visitor
experiences.''.
(e) Reporting Requirements for Commercial Air Tour
Operators.--
(1) In general.--Not later than 90 days after the date of
the enactment of this Act, and annually thereafter, each
commercial air tour conducting commercial air tour operations
over a national park shall report to the Administrator of the
Federal Aviation Administration and the Secretary of the
Interior on--
(A) the number of commercial air tour operations conducted
by such operator over the national park each day;
(B) any relevant characteristics of commercial air tour
operations, including the routes, altitudes, duration, and
time of day of flights; and
(C) such other information as the Administrator and the
Secretary may determine necessary to administer the
provisions of the National Parks Air Tour Management Act of
2000 (49 U.S.C. 40128 note).
(2) Format.--The report required by paragraph (1) shall be
submitted in such form as the Administrator and the Secretary
determine to be appropriate.
(3) Effect of failure to report.--The Administrator shall
rescind the operating authority of a commercial air tour
operator that fails to file a report not later than 180 days
after the date for the submittal of the report described in
paragraph (1).
(4) Audit of reports.--Not later than 2 years after the
date of the enactment of this Act, and at such times
thereafter as the Inspector General of the Department of
Transportation determines necessary, the Inspector General
shall audit the reports required by paragraph (1).
(f) Collection of Fees From Air Tour Operations.--
(1) In general.--The Secretary of the Interior may assess a
fee in an amount determined by the Secretary under paragraph
(2) on a commercial air tour operator conducting commercial
air tour operations over a national park.
(2) Amount of fee.--In determining the amount of the fee
assessed under paragraph (1), the Secretary shall consider
the cost of developing air tour management plans for each
national park.
(3) Effect of failure to pay fee.--The Administrator of the
Federal Aviation Administration shall revoke the operating
authority of a commercial air tour operator conducting
commercial air tour operations over any national park,
including the Grand Canyon National Park, that has not paid
the fee assessed by the Secretary under paragraph (1) by the
date that is 180 days after the date on which the Secretary
determines the fee shall be paid.
(g) Authorization of Appropriations for Air Tour Management
Plans.--
(1) In general.--There are authorized to be appropriated
$10,000,000 to the Secretary of the Interior for the
development of air tour management plans under section
40128(b) of title 49, United States Code.
(2) Use of funds.--The funds authorized to be appropriated
by paragraph (1) shall be used to develop air tour management
plans for the national parks the Secretary determines would
most benefit from such a plan.
(h) Guidance to District Offices on Commercial Air Tour
Operators.--The Administrator of the Federal Aviation
Administration shall provide to the Administration's district
offices clear guidance on the ability of commercial air tour
operators to obtain--
(1) increased safety certifications;
(2) exemptions from regulations requiring safety
certifications; and
(3) other information regarding compliance with the
requirements of this Act and other Federal and State laws and
regulations.
(i) Operating Authority of Commercial Air Tour Operators.--
(1) Transfer of operating authority.--
(A) In general.--Subject to subparagraph (B), a commercial
air tour operator that obtains operating authority from the
Administrator under section 40128 of title 49, United States
Code, to conduct commercial air tour operations may transfer
such authority to another commercial air tour operator at any
time.
(B) Notice.--Not later than 30 days before the date on
which a commercial air tour operator transfers operating
authority under subparagraph (A), the operator shall notify
the Administrator and the Secretary of the intent of the
operator to transfer such authority.
(C) Regulations.--Not later than 180 days after the date of
the enactment of this Act, the Administrator shall prescribe
regulations to allow transfers of operating authority
described in subparagraph (A).
(2) Time for determination regarding operating authority.--
Notwithstanding any other provision of law, the Administrator
shall determine whether to grant a commercial air tour
operator operating authority under section 40128 of title 49,
United States Code, not later than 180 days after the earlier
of the date on which--
(A) the operator submits an application; or
(B) an air tour management plan is completed for the
national park over which the operator seeks to conduct
commercial air tour operations.
(3) Increase in interim operating authority.--The
Administrator and the Secretary may increase the interim
operating authority while an air tour management plan is
being developed for a park if--
(A) the Secretary determines that such an increase does not
adversely impact park resources or visitor experiences; and
(B) the Administrator determines that granting interim
operating authority does not adversely affect aviation safety
or the management of the national airspace system.
(4) Enforcement of operating authority.--The Administrator
is authorized and directed to enforce the requirements of
this Act and any agency rules or regulations related to
operating authority.

SEC. 710. PHASEOUT OF STAGE 1 AND 2 AIRCRAFT.

(a) In General.--Subchapter II of chapter 475 is amended by
adding at the end the following:

``Sec. 47534. Prohibition on operating certain aircraft
weighing 75,000 pounds or less not complying with Stage 3
noise levels

``(a) Prohibition.--Except as provided in subsection (b),
(c), or (d), a person may not operate a civil subsonic
turbojet with a maximum weight of 75,000 pounds or less to or
from an airport in the United States unless the Secretary of
Transportation finds that

[[Page S3629]]

the aircraft complies with stage 3 noise levels.
``(b) Exception.--Subsection (a) shall not apply to
aircraft operated only outside the 48 contiguous States.
``(c) Opt-Out.--Subsection (a) shall not apply at an
airport where the airport operator has notified the Secretary
that it wants to continue to permit the operation of civil
subsonic turbojets with a maximum weight of 75,000 pounds or
less that do not comply with stage 3 noise levels. The
Secretary shall post the notices received under this
subsection on its website or in another place easily
accessible to the public.
``(d) Limitation.--The Secretary shall permit a person to
operate Stage 1 and Stage 2 aircraft with a maximum weight of
75,000 pounds or less to or from an airport in the contiguous
48 States in order--
``(1) to sell, lease, or use the aircraft outside the 48
contiguous States;
``(2) to scrap the aircraft;
``(3) to obtain modifications to the aircraft to meet stage
3 noise levels;
``(4) to perform scheduled heavy maintenance or significant
modifications on the aircraft at a maintenance facility
located in the contiguous 48 states;
``(5) to deliver the aircraft to an operator leasing the
aircraft from the owner or return the aircraft to the lessor;
``(6) to prepare or park or store the aircraft in
anticipation of any of the activities described in paragraphs
(1) through (5); or
``(7) to divert the aircraft to an alternative airport in
the 48 contiguous States on account of weather, mechanical,
fuel air traffic control or other safety reasons while
conducting a flight in order to perform any of the activities
described in paragraphs (1) through (6).
``(e) Statutory Construction.--Nothing in the section may
be construed as interfering with, nullifying, or otherwise
affecting determinations made by the Federal Aviation
Administration, or to be made by the Administration, with
respect to applications under part 161 of title 14, Code of
Federal Regulations, that were pending on the date of
enactment of the Aircraft Noise Reduction Act of 2006.''.
(b) Conforming Amendments.--
(1) Section 47531 is amended by striking ``47529, or
47530'' and inserting ``47529, 47530, or 47534''.
(2) Section 47532 is amended by striking ``47528-47531''
and inserting ``47528 through 47531 or 47534''.
(3) The chapter analysis for chapter 475 is amended by
inserting after the item relating to section 47533 the
following:

``47534. Prohibition on operating certain aircraft weighing 75,000
pounds or less not complying with stage 3 noise levels''.
(c) Effective Date.--The amendments made by this section
shall take effect 5 years after the date of enactment of this
Act.

SEC. 711. WEIGHT RESTRICTIONS AT TETERBORO AIRPORT.

On and after the date of the enactment of this Act, the
Administrator of the Federal Aviation Administration is
prohibited from taking actions designed to challenge or
influence weight restrictions or prior permission rules at
Teterboro Airport in Teterboro, New Jersey.

SEC. 712. PILOT PROGRAM FOR REDEVELOPMENT OF AIRPORT
PROPERTIES.

(a) In General.--Within 1 year after the date of enactment
of this Act, the Administrator of the Federal Aviation
Administration shall establish a pilot program at up to 4
public-use airports for airport sponsors that have submitted
a noise compatibility program to the Federal Aviation
Administration, from funds apportioned under section 47504 or
section 40117 of title 49, United States Code, in partnership
with affected neighboring local jurisdictions, to support
joint planning, engineering design, and environmental
permitting for the assembly and redevelopment of property
purchased with noise mitigation funds or passenger facility
charge funds, to encourage airport-compatible land uses and
generate economic benefits to the local airport authority and
adjacent community.
(b) Noise Compatability Measures.--Section 47504(a)(2) is
amended--
(1) by striking ``and'' after the semicolon in subparagraph
(D);
(2) by striking ``operations.'' in subparagraph (E) and
inserting ``operations;''; and
(3) by adding at the end the following:
``(F) joint comprehensive land use planning including
master plans, traffic studies, environmental evaluation and
economic and feasibility studies, with neighboring local
jurisdictions undertaking community redevelopment in the area
where the land or other property interests acquired by the
airport operator pursuant to this subsection is located, to
encourage and enhance redevelopment opportunities that
reflect zoning and uses that will prevent the introduction of
additional incompatible uses and enhance redevelopment
potential; and
``(G) utility upgrades and other site preparation
efforts.''.
(c) Grant Requirements.--The Administrator may not make a
grant under subsection (a) unless the grant is made--
(1) to enable the airport operator and local jurisdictions
undertaking the community redevelopment effort to expedite
redevelopment efforts;
(2) subject to a requirement that the local jurisdiction
governing the property interests in question has adopted
zoning regulations that permit airport compatible
redevelopment; and
(3) subject to a requirement that, in determining the part
of the proceeds from disposing of the land that is subject to
repayment or reinvestment under section 47107(c)(2)(A) of
title 49, United States Code, the total amount of the grant
issued under this section shall be added to the amount of any
grants issued for acquisition of land.
(d) Demonstration Grants.--
(1) In general.--The Administrator shall provide grants
under subsection (a) for demonstration projects distributed
geographically and targeted to airports that demonstrate--
(A) a readiness to implement cooperative land use
management and redevelopment plans with the adjacent
community; and
(B) the probability of clear economic benefit to the local
community and financial return to the airport through the
implementation of the redevelopment plan.
(2) Federal share.--
(A) Notwithstanding any other provision of law, the Federal
share of the allowable costs of a project carried out under
the pilot program shall be 80 percent.
(B) In determining the allowable costs, the Administrator
shall deduct from the total costs of the activities described
in subsection (a) that portion of the costs which is equal to
that portion of the total property to be redeveloped under
this section that is not owned or to be acquired by the
airport operator pursuant to the noise compatibility program
or that is not owned by the affected neighboring local
jurisdictions or other public entities.
(3) Maximum amount.--Not more than $5,000,000 in funds made
available under section 47117(e) of title 49, United States
Code, may be expended under the pilot program at any single
public-use airport.
(4) Exception.--Amounts paid to the Administrator under
subsection (c)(3)--
(A) shall be in addition to amounts authorized under
section 48203 of title 49, United States Code;
(B) shall not be subject to any limitation on grant
obligations for any fiscal year; and
(C) shall remain available until expended.
(e) Use of Passenger Revenue.--An airport sponsor that owns
or operates an airport participating in the pilot program may
use passenger facility revenue collected under section 40117
of title 49, United States Code, to pay any project cost
described in subsection (a) that is not financed by a grant
under the program.
(f) Sunset.--This section, other than the amendments made
by subsections (b), shall not be in effect after September
30, 2011.
(g) Report to Congress.--The Administrator shall report to
Congress within 18 months after making the first grant under
this section on the effectiveness of this program on
returning Part 150 lands to productive use.

SEC. 713. AIR CARRIAGE OF INTERNATIONAL MAIL.

(a) Contracting Authority.--Section 5402 of title 39,
United States Code, is amended by striking subsections (b)
and (c) and inserting the following:
``(b) International Mail.--
``(1) In general.--
``(A) Except as otherwise provided in this subsection, the
Postal Service may contract for the transportation of mail by
aircraft between any of the points in foreign air
transportation only with certificated air carriers. A
contract may be awarded to a certificated air carrier to
transport mail by air between any of the points in foreign
air transportation that the Secretary of Transportation has
authorized the carrier to serve either directly or through a
code-share relationship with one or more foreign air
carriers.
``(B) If the Postal Service has sought offers or proposals
from certificated air carriers to transport mail in foreign
air transportation between points, or pairs of points within
a geographic region or regions, and has not received offers
or proposals that meet Postal Service requirements at a fair
and reasonable price from at least 2 such carriers, the
Postal Service may seek offers or proposals from foreign air
carriers. Where service in foreign air transportation meeting
the Postal Service's requirements is unavailable at a fair
and reasonable price from at least 2 certificated air
carriers, either directly or through a code-share
relationship with one or more foreign air carriers, the
Postal Service may contract with foreign air carriers to
provide the service sought if, when the Postal Service seeks
offers or proposals from foreign air carriers, it also seeks
an offer or proposal to provide that service from any
certificated air carrier providing service between those
points, or pairs of points within a geographic region or
regions, on the same terms and conditions that are being
sought from foreign air carriers.
``(C) For purposes of this subsection, the Postal Service
shall use a methodology for determining fair and reasonable
prices for the Postal Service designated region or regions
developed in consultation with, and with the concurrence of,
certificated air carriers representing at least 51 percent of
available ton miles in the markets of interest.
``(D) For purposes of this subsection, ceiling prices
determined pursuant to the methodology used under
subparagraph (C) shall be presumed to be fair and reasonable
if they do not exceed the ceiling prices derived from--
``(i) a weighted average based on market rate data
furnished by the International Air

[[Page S3630]]

Transport Association or a subsidiary unit thereof; or
``(ii) if such data are not available from those sources,
such other neutral, regularly updated set of weighted average
market rates as the Postal Service, with the concurrence of
certificated air carriers representing at least 51 percent of
available ton miles in the markets of interest, may
designate.
``(E) If, for purposes of subparagraph (D)(ii), concurrence
cannot be attained, then the most recently available market
rate data described in this subparagraph shall continue to
apply for the relevant market or markets.
``(2) Contract process.--The Postal Service shall contract
for foreign air transportation as set forth in paragraph (1)
through an open procurement process that will provide--
``(A) potential offerors with timely notice of business
opportunities in sufficient detail to allow them to make a
proposal;
``(B) requirements, proposed terms and conditions, and
evaluation criteria to potential offerors; and
``(C) an opportunity for unsuccessful offerors to receive
prompt feedback upon request.
``(3) Emergency or unanticipated conditions; inadequate
lift space.--The Postal Service may enter into contracts to
transport mail by air in foreign air transportation with a
certificated air carrier or a foreign air carrier without
complying with the requirements of paragraphs (b)(1) and (2)
if--
``(A) emergency or unanticipated conditions exist that make
it impractical for the Postal Service to comply with such
requirements; or
``(B) its demand for lift exceeds the space available to it
under existing contracts and--
``(i) there is insufficient time available to seek
additional lift using procedures that comply with those
requirements without compromising the Postal Service's
service commitments to its own customers; and
``(ii) the Postal Service first offers any certificated air
carrier holding a contract to carry mail between the relevant
points the opportunity to carry such excess volumes under the
terms of its existing contract.
``(c) Good Faith Effort Required.--The Postal Service and
potential offerors shall put a good-faith effort into
resolving disputes concerning the award of contracts made
under subsection (b).''.
(b) Conforming Amendments to Title 49.--
(1) Section 41901(a) is amended by striking ``39.'' and
inserting ``39, and in foreign air transportation under
section 5402(b) and (c) of title 39.''.
(2) Section 41901(b)(1) is amended by striking ``in foreign
air transportation or''.
(3) Section 41902 is amended--
(A) by striking ``in foreign air transportation or'' in
subsection (a);
(B) by striking subsection (b) and inserting the following:
``(b) Statements on Places and Schedules.--Every air
carrier shall file with the United States Postal Service a
statement showing--
``(1) the places between which the carrier is authorized to
transport mail in Alaska;
``(2) every schedule of aircraft regularly operated by the
carrier between places described in paragraph (1) and every
change in each schedule; and
``(3) for each schedule, the places served by the carrier
and the time of arrival at, and departure from, each such
place.'';
(C) by striking ``subsection (b)(3)'' each place it appears
in subsections (c)(1) and (d) and inserting ``subsection
(b)(2)''; and
(D) by striking subsections (e) and (f).
(4) Section 41903 is amended by striking ``in foreign air
transportation or'' each place it appears.
(5) Section 41904 is amended--
(A) by striking ``to or in foreign countries'' in the
section heading;
(B) by striking ``to or in a foreign country'' and
inserting ``between two points outside the United States'';
and
(C) by inserrting after ``transportation.'' the following:
``Nothing in this section shall affect the authority of the
Postal Service to make arrangements with noncitizens for the
carriage of mail in foreign air transportation under
subsections 5402(b) and (c) of title 39.''.
(6) Section 41910 is amended by striking the first sentence
and inserting ``The United States Postal Service may weigh
mail transported by aircraft between places in Alaska and
make statistical and -administrative computations necessary
in the interest of mail service.''.
(7) Chapter 419 is amended--
(A) by striking sections 41905, 41907, 41908, and 41911;
and
(B) redesignating sections 41906, 41909, 41910, and 49112
as sections 41905, 41906, 41907, and 41908, respectively.
(8) The chapter analysis for chapter 419 is amended by
redesignating the items relating to sections 41906, 41909,
41910, and 49112 as relating to sections 41905, 41906, 41907,
and 41908, respectively.
(9) Section 101(f) of title 39, United States Code, is
amended by striking ``mail and shall make a fair and
equitable distribution of mail business to carriers providing
similar modes of transportation services to the Postal
Service.'' and inserting ``mail.''.
(9) Subsections (b) and (c) of section 3401 of title 39,
United States Code, are amended--
(A) by striking ``at rates fixed and determined by the
Secretary of Transportation in accordance with section 41901
of title 49'' and inserting ``or, for carriage of mail in
foreign air transportation, other air carriers, air taxi
operators or foreign air carriers as permitted by section
5402 of this title'';
(B) by striking ``at rates not to exceed those so fixed and
determined for scheduled United States air carriers'';
(C) by striking ``scheduled'' each place it appears and
inserting ``certificated''; and
(D) by striking the last sentence in each such subsection.
(10) Section 5402(a) of title 39, United States Code, is
amended--
(A) by inserting ``  `foreign air carrier'.  '' after ``
`interstate air transportation',  '' in paragraph (2);
(B) by redesignating paragraphs (7) through (23) as
paragraphs (8) through (24) and inserting after paragraph (6)
the following:
``(7) the term `certificated air carrier' means an air
carrier that holds a ---certificate of public convenience and
necessity issued under section 41102(a) of ---title 49;'';
and
(C) by redesignating paragraphs (9) through (24), as
redesignated, as paragraphs (10) through (25), respectively,
and inserting after paragraph (8) the following:
``(9) the term `code-share relationship' means a
relationship pursuant to which any certificated air carrier
or foreign air carrier's designation code is used to identify
a flight operated by another air carrier or foreign air
carrier;''.
(c) Effective Date.--The amendments made by this section
shall take effect on October 1, 2008.

SEC. 714. TRANSPORTING MUSICAL INSTRUMENTS.

(a) In General.--Subchapter I of chapter 417 is amended by
adding at the end thereof the following:

``Sec. 41724. Musical instruments

``(a) In General.--
``(1) Small instruments as carry-on baggage.--An air
carrier providing air transportation shall permit a passenger
to carry a violin, guitar, or other musical instrument in the
aircraft cabin without charge if--
``(A) the instrument can be stowed safely in a suitable
baggage compartment in the aircraft cabin or under a
passenger seat; and
``(B) there is space for such stowage at the time the
passenger boards the aircraft.
``(2) Larger instruments as carry-on baggage.--An air
carrier providing air transportation shall permit a passenger
to carry a musical instrument that is too large to meet the
requirements of paragraph (1) in the aircraft cabin without
charge if--
``(A) the instrument is contained in a case or covered so
as to avoid injury to other passengers;
``(B) the weight of the instrument, including the case or
covering, does not exceed 165 pounds;
``(C) the instrument can be secured by a seat belt to avoid
shifting during flight;
``(D) the instrument does not restrict access to, or use
of, any required emergency exit, regular exit, or aisle;
``(E) the instrument does not obscure any passenger's view
of any illuminated exit, warning, or other informational
sign;
``(F) neither the instrument nor the case contains any
object not otherwise permitted to be carried in an aircraft
cabin because of a law or regulation of the United States;
and
``(G) the passenger wishing to carry the instrument in the
aircraft cabin has purchased an additional seat to
accommodate the instrument.
``(3) Large instruments as checked baggage.--An air carrier
shall transport as baggage, without charge, a musical
instrument that is the property of a passenger traveling in
air transportation that may not be carried in the aircraft
cabin if--
``(A) the sum of the length, width, and height measured in
inches of the outside linear dimensions of the instrument
(including the case) does not exceed 120 inches; and
``(B) the weight of the instrument does not exceed 100
pounds.
``(b) Regulations.--The Secretary may prescribe such
regulations as may be necessary or appropriate to implement
subsection (a).''.
(b) Conforming Amendment.--The chapter analysis for chapter
417 is amended by inserting after the item relating to
section 41723 the following:

``41724. Musical instruments''.
(c) Effective Date.--The amendments made by this section
shall take effect 30 days after the date of enactment of this
Act.

SEC. 715. RECYCLING PLANS FOR AIRPORTS.

(a) Airport Planning.--section 47102(5) is amended by
striking ``planning.'' and inserting ``planning and a plan
for recycling and minimizing the generation of airport solid
waste, consistent with applicable State and local recycling
laws, including the cost of a waste audit.''.
(b) Master Plan.--Section 47106(a) is amended--
(1) by striking ``and'' at the end of paragraph (4);
(2) by striking ``proposed.'' in paragraph (5) and
inserting ``proposed; and''; and
(3) by adding at the end the following:
``(6) if the project is for an airport that has an airport
master plan, the master plan addresses--
``(A) the feasibility of solid waste recycling at the
airport;
``(B) minimizing the generation of solid waste at the
airport;
``(C) operation and maintenance requirements;
``(D) the review of waste management contracts;

[[Page S3631]]

``(E) the potential for cost savings or the generation of
revenue; and
``(F) training and education requirements.''.

SEC. 716. CONSUMER INFORMATION PAMPHLET.

Within 6 months after the date of enactment of this Act,
the Secretary of Transportation shall develop and make
available to the public in written and electronic form a
consumer and parental information pamphlet that includes--
(1) a summary of the unaccompanied minor policies of major
air carriers serving United States airports;
(2) a summary of such carriers' policies pertaining to
passenger air travel by children aged 17 and under;
(3) recommendations to parents about who the appropriate
authorities are to notify if a minor is traveling
unsupervised and without parental consent on a major air
carrier; and
(4) any additional recommendations the Secretary deems
appropriate or necessary.

TITLE VIII--AMERICAN INFRASTRUCTURE INVESTMENT AND IMPROVEMENT

SECTION 800. SHORT TITLE, ETC.

(a) Short Title; Amendment of 1986 Code.--This title may be
cited as the ``American Infrastructure Investment and
Improvement Act of 2008''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this title an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a
section or other provision, the reference shall be considered
to be made to a section or other provision of the Internal
Revenue Code of 1986.

Subtitle A--Airport and Airway Trust Fund Provisions and Related Taxes

SEC. 801. EXTENSION OF TAXES FUNDING AIRPORT AND AIRWAY TRUST
FUND.

(a) Fuel Taxes.--Subparagraph (B) of section 4081(d)(2) is
amended by striking ``June 30, 2008'' and inserting
``September 30, 2011''.
(b) Ticket Taxes.--
(1) Persons.--Clause (ii) of section 4261(j)(1)(A) is
amended by striking ``June 30, 2008'' and inserting
``September 30, 2011''.
(2) Property.--Clause (ii) of section 4271(d)(1)(A) is
amended by striking ``June 30, 2008'' and inserting
``September 30, 2011''.
(c) Effective Date.--The amendments made by this section
shall take effect on July 1, 2008.

SEC. 802. EXTENSION OF AIRPORT AND AIRWAY TRUST FUND
EXPENDITURE AUTHORITY.

(a) In General.--Paragraph (1) of section 9502(d) is
amended--
(1) by striking ``July 1, 2008'' in the matter preceding
subparagraph (A) and inserting ``October 1, 2011'', and
(2) by striking the semicolon at the end of subparagraph
(A) and inserting ``or the Aviation Investment and
Modernization Act of 2008;''.
(b) Conforming Amendment.--Paragraph (2) of section 9502(e)
is amended by striking ``July 1, 2008'' and inserting
``October 1, 2011''.
(c) Effective Date.--The amendments made by this section
shall take effect on July 1, 2008.

SEC. 803. MODIFICATION OF EXCISE TAX ON KEROSENE USED IN
AVIATION.

(a) Rate of Tax on Aviation-Grade Kerosene.--
(1) In general.--Subparagraph (A) of section 4081(a)(2)
(relating to rates of tax) is amended by striking ``and'' at
the end of clause (ii), by striking the period at the end of
clause (iii) and inserting ``, and'', and by adding at the
end the following new clause:
``(iv) in the case of aviation-grade kerosene, 35.9 cents
per gallon.''.
(2) Fuel removed directly into fuel tank of airplane used
in noncommercial aviation.--Subparagraph (C) of section
4081(a)(2) is amended to read as follows:
``(C) Taxes imposed on fuel used in commercial aviation.--
In the case of aviation-grade kerosene which is removed from
any refinery or terminal directly into the fuel tank of an
aircraft for use in commercial aviation by a person
registered for such use under section 4101, the rate of tax
under subparagraph (A)(iv) shall be 4.3 cents per gallon.''.
(3) Exemption for aviation-grade kerosene removed into an
aircraft.--Subsection (e) of section 4082 is amended--
(A) by striking ``kerosene'' and inserting ``aviation-grade
kerosene'',
(B) by striking ``section 4081(a)(2)(A)(iii)'' and
inserting ``section 4081(a)(2)(A)(iv)'', and
(C) by striking ``Kerosene'' in the heading and inserting
``Aviation-Grade Kerosene''.
(4) Conforming amendments.--
(A) Clause (iii) of section 4081(a)(2)(A) is amended by
inserting ``other than aviation-grade kerosene'' after
``kerosene''.
(B) The following provisions are each amended by striking
``kerosene'' and inserting ``aviation-grade kerosene'':
(i) Section 4081(a)(3)(A)(ii).
(ii) Section 4081(a)(3)(A)(iv).
(iii) Section 4081(a)(3)(D).
(C) Section 4081(a)(3)(D) is amended--
(i) by striking ``paragraph (2)(C)(i)'' in clause (i) and
inserting ``paragraph (2)(C)'', and
(ii) by striking ``paragraph (2)(C)(ii)'' in clause (ii)
and inserting ``paragraph (2)(A)(iv)''.
(D) Section 4081(a)(4) is amended--
(i) in the heading by striking ``kerosene'' and inserting
``aviation-grade kerosene'', and
(ii) by striking ``paragraph (2)(C)(i)'' and inserting
``paragraph (2)(C)''.
(E) Section 4081(d)(2) is amended by striking
``(a)(2)(C)(ii)'' and inserting ``(a)(2)(A)(iv)''.
(b) Retail Tax on Aviation Fuel.--
(1) Exemption for previously taxed fuel.--Paragraph (2) of
section 4041(c) is amended by inserting ``at the rate
specified in subsection (a)(2)(A)(iv) thereof'' after
``section 4081''.
(2) Rate of tax.--Paragraph (3) of section 4041(c) is
amended to read as follows:
``(3) Rate of tax.--The rate of tax imposed by this
subsection shall be the rate of tax in effect under section
4081(a)(2)(A)(iv) (4.3 cents per gallon with respect to any
sale or use for commercial aviation).''.
(c) Refunds Relating to Aviation-Grade Kerosene.--
(1) Kerosene used in commercial aviation.--Clause (ii) of
section 6427(l)(4)(A) is amended by striking ``specified in
section 4041(c) or 4081(a)(2)(A)(iii), as the case may be,''
and inserting ``so imposed''.
(2) Kerosene used in aviation.--Paragraph (4) of section
6427(l) is amended--
(A) by striking subparagraph (B) and redesignating
subparagraph (C) as subparagraph (B), and
(B) by amending subparagraph (B), as redesignated by
subparagraph (A), to read as follows:
``(B) Payments to ultimate, registered vendor.--With
respect to any kerosene used in aviation (other than kerosene
to which paragraph (6) applies), if the ultimate purchaser of
such kerosene waives (at such time and in such form and
manner as the Secretary shall prescribe) the right to payment
under paragraph (1) and assigns such right to the ultimate
vendor, then the Secretary shall pay (without interest) the
amount which would be paid under paragraph (1) to such
ultimate vendor, but only if such ultimate vendor--
``(i) is registered under section 4101, and
``(ii) meets the requirements of subparagraph (A), (B), or
(D) of section 6416(a)(1).''.
(3) Aviation-grade kerosene not used in aviation.--
Subsection (l) of section 6427 is amended by redesignating
paragraph (5) as paragraph (6) and by inserting after
paragraph (4) the following new paragraph:
``(5) Refunds for aviation-grade kerosene not used in
aviation.--If tax has been imposed under section 4081 at the
rate specified in section 4081(a)(2)(A)(iv) and the fuel is
used other than in an aircraft, the Secretary shall pay
(without interest) to the ultimate purchaser of such fuel an
amount equal to the amount of tax imposed on such fuel
reduced by the amount of tax that would be imposed under
section 4041 if no tax under section 4081 had been
imposed.''.
(4) Conforming amendments.--
(A) Section 4082(d)(2)(B) is amended by striking
``6427(l)(5)(B)'' and inserting ``6427(l)(6)(B)''.
(B) Section 6427(i)(4) is amended--
(i) by striking ``(4)(C)'' the first two places it occurs
and inserting ``(4)(B)'', and
(ii) by striking ``, (l)(4)(C)(ii), and'' and inserting
``and''.
(C) The heading of section 6427(l) is amended by striking
``Diesel Fuel and Kerosene'' and inserting ``Diesel Fuel,
Kerosene, and Aviation Fuel''.
(D) Section 6427(l)(1) is amended by striking ``paragraph
(4)(C)(i)'' and inserting ``paragraph (4)(B)''.
(E) Section 6427(l)(4) is amended--
(i) by striking ``kerosene used in aviation'' in the
heading and inserting ``aviation-grade kerosene used in
commercial aviation'', and
(ii) in subparagraph (A)--

(I) by striking ``kerosene'' and inserting ``aviation-grade
kerosene'',
(II) by striking ``Kerosene used in commercial aviation''
in the heading and inserting ``In general''.

(d) Transfers to the Airport and Airway Trust Fund.--
(1) In general.--Subparagraph (C) of section 9502(b)(1) is
amended to read as follows:
``(C) section 4081 with respect to aviation gasoline and
aviation-grade kerosene, and''.
(2) Transfers on account of certain refunds.--
(A) In general.--Subsection (d) of section 9502 is
amended--
(i) in paragraph (2) by striking ``(other than subsection
(l)(4) thereof)'', and
(ii) in paragraph (3) by striking ``(other than payments
made by reason of paragraph (4) of section 6427(l))''.
(B) Conforming amendments.--
(i) Section 9503(b)(4) is amended by striking ``or'' at the
end of subparagraph (C), by striking the period at the end of
subparagraph (D) and inserting a comma, and by inserting
after subparagraph (D) the following:
``(E) section 4081 to the extent attributable to the rate
specified in clause (ii) or (iv) of section 4081(a)(2)(A), or
``(F) section 4041(c).''.
(ii) Section 9503(c) is amended by striking the last
paragraph (relating to transfers from the Trust Fund for
certain aviation fuel taxes).
(iii) Section 9502(a) is amended--

(I) by striking ``appropriated, credited, or paid into''
and inserting ``appropriated or credited to'', and
(II) by striking ``, section 9503(c)(7),''.

(e) Effective Date.--The amendments made by this section
shall apply to fuels removed, entered, or sold after December
31, 2008.
(f) Floor Stocks Tax.--

[[Page S3632]]

(1) Imposition of tax.--In the case of aviation fuel which
is held on January 1, 2009, by any person, there is hereby
imposed a floor stocks tax on aviation fuel equal to--
(A) the tax which would have been imposed before such date
on such fuel had the amendments made by this section been in
effect at all times before such date, reduced by
(B) the sum of--
(i) the tax imposed before such date on such fuel under
section 4081 of the Internal Revenue Code of 1986, as in
effect on such date, and
(ii) in the case of kerosene held exclusively for such
person's own use, the amount which such person would (but for
this clause) reasonably expect (as of such date) to be paid
as a refund under section 6427(l) of such Code with respect
to such kerosene.
(2) Liability for tax and method of payment.--
(A) Liability for tax.--A person holding aviation fuel on
January 1, 2009, shall be liable for such tax.
(B) Time and method of payment.--The tax imposed by
paragraph (1) shall be paid at such time and in such manner
as the Secretary of the Treasury shall prescribe.
(3) Transfer of floor stock tax revenues to trust funds.--
For purposes of determining the amount transferred to the
Airport and Airway Trust Fund, the tax imposed by this
subsection shall be treated as imposed by section
4081(a)(2)(A)(iv) of the Internal Revenue Code of 1986.
(4) Definitions.--For purposes of this subsection--
(A) Aviation fuel.--The term ``aviation fuel'' means
aviation-grade kerosene and aviation gasoline, as such terms
are used within the meaning of section 4081 of the Internal
Revenue Code of 1986.
(B) Held by a person.--Aviation fuel shall be considered as
held by a person if title thereto has passed to such person
(whether or not delivery to the person has been made).
(C) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury or the Secretary's delegate.
(5) Exception for exempt uses.--The tax imposed by
paragraph (1) shall not apply to any aviation fuel held by
any person exclusively for any use to the extent a credit or
refund of the tax is allowable under the Internal Revenue
Code of 1986 for such use.
(6) Exception for certain amounts of fuel.--
(A) In general.--No tax shall be imposed by paragraph (1)
on any aviation fuel held on January 1, 2009, by any person
if the aggregate amount of such aviation fuel held by such
person on such date does not exceed 2,000 gallons. The
preceding sentence shall apply only if such person submits to
the Secretary (at the time and in the manner required by the
Secretary) such information as the Secretary shall require
for purposes of this subparagraph.
(B) Exempt fuel.--For purposes of subparagraph (A), there
shall not be taken into account any aviation fuel held by any
person which is exempt from the tax imposed by paragraph (1)
by reason of paragraph (6).
(C) Controlled groups.--For purposes of this subsection--
(i) Corporations.--

(I) In general.--All persons treated as a controlled group
shall be treated as 1 person.
(II) Controlled group.--The term ``controlled group'' has
the meaning given to such term by subsection (a) of section
1563 of the Internal Revenue Code of 1986; except that for
such purposes the phrase ``more than 50 percent'' shall be
substituted for the phrase ``at least 80 percent'' each place
it appears in such subsection.

(ii) Nonincorporated persons under common control.--Under
regulations prescribed by the Secretary, principles similar
to the principles of subparagraph (A) shall apply to a group
of persons under common control if 1 or more of such persons
is not a corporation.
(7) Other laws applicable.--All provisions of law,
including penalties, applicable with respect to the taxes
imposed by section 4081 of the Internal Revenue Code of 1986
on the aviation fuel involved shall, insofar as applicable
and not inconsistent with the provisions of this subsection,
apply with respect to the floor stock taxes imposed by
paragraph (1) to the same extent as if such taxes were
imposed by such section.

SEC. 804. AIR TRAFFIC CONTROL SYSTEM MODERNIZATION ACCOUNT.

(a) In General.--Section 9502 (relating to the Airport and
Airway Trust Fund) is amended by adding at the end the
following new subsection:
``(g) Establishment of Air Traffic Control System
Modernization Account.--
``(1) Creation of account.--There is established in the
Airport and Airway Trust Fund a separate account to be known
as the `Air Traffic Control System Modernization Account'
consisting of such amounts as may be transferred or credited
to the Air Traffic Control System Modernization Account as
provided in this subsection or section 9602(b).
``(2) Transfers to air traffic control system modernization
account.--On October 1, 2008, and annually thereafter, the
Secretary shall transfer to the Air Traffic Control System
Modernization Account from amounts appropriated to the
Airport and Airway Trust Fund under subsection (b) which are
attributable to taxes on aviation-grade kerosene an amount
equal to $400,000,000.
``(3) Expenditures from account.--Amounts in the Air
Traffic Control System Modernization Account shall be
available subject to appropriation for expenditures relating
to the modernization of the air traffic control system
(including facility and equipment account expenditures).''.
(b) Conforming Amendment.--Section 9502(d)(1) is amended by
striking ``Amounts'' and inserting ``Except as provided in
subsection (g), amounts''.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.

SEC. 805. TREATMENT OF FRACTIONAL AIRCRAFT OWNERSHIP
PROGRAMS.

(a) Fuel Surtax.--
(1) In general.--Subchapter B of chapter 31 is amended by
adding at the end the following new section:

``SEC. 4043. SURTAX ON FUEL USED IN AIRCRAFT PART OF A
FRACTIONAL OWNERSHIP PROGRAM.

``(a) In General.--There is hereby imposed a tax on any
liquid used during any calendar quarter by any person as a
fuel in an aircraft which is--
``(1) registered in the United States, and
``(2) part of a fractional ownership aircraft program.
``(b) Amount of Tax.--The rate of tax imposed by subsection
(a) is 14.1 cents per gallon.
``(c) Fractional Ownership Aircraft Program.--For purposes
of this section--
``(1) In general.--The term `fractional ownership aircraft
program' means a program under which--
``(A) a single fractional ownership program manager
provides fractional ownership program management services on
behalf of the fractional owners,
``(B) 2 or more airworthy aircraft are part of the program,
``(C) there are 1 or more fractional owners per program
aircraft, with at least 1 program aircraft having more than 1
owner,
``(D) each fractional owner possesses at least a minimum
fractional ownership interest in 1 or more program aircraft,
``(E) there exists a dry-lease exchange arrangement among
all of the fractional owners, and
``(F) there are multi-year program agreements covering the
fractional ownership, fractional ownership program management
services, and dry-lease aircraft exchange aspects of the
program.
``(2) Minimum fractional ownership interest.--The term
`minimum fractional ownership interest' means, with respect
to each type of aircraft--
``(A) a fractional ownership interest equal to or greater
than \1/16\ of at least 1 subsonic, fixed wing or powered
lift program aircraft, or
``(B) a fractional ownership interest equal to or greater
than \1/32\ of a least 1 rotorcraft program aircraft.
``(3) Dry-lease exchange arrangement.--A `dry-lease
aircraft exchange' means an agreement, documented by the
written program agreements, under which the program aircraft
are available, on an as needed basis without crew, to each
fractional owner.
``(d) Termination.--This section shall not apply to liquids
used as a fuel in an aircraft after September 30, 2011.''.
(2) Conforming amendment.--Section 4082(e) is amended by
inserting ``(other than an aircraft described in section
4043(a))'' after ``an aircraft''.
(3) Transfer of revenues to airport and airway trust
fund.--Section 9502(b)(1) is amended by redesignating
subparagraphs (B) and (C) as subparagraphs (C) and (D),
respectively, and by inserting after subparagraph (A) the
following new subparagraph:
``(B) section 4043 (relating to surtax on fuel used in
aircraft part of a fractional ownership program),''.
(4) Clerical amendment.--The table of sections for
subchapter B of chapter 31 is amended by adding at the end
the following new item:

``Sec. 4043. Surtax on fuel used in aircraft part of a fractional
ownership program.''.

(b) Fractional Ownership Programs Treated as Non-Commercial
Aviation.--Subsection (b) of section 4083 is amended by
adding at the end the following new sentence: ``Such term
shall not include the use of any aircraft which is part of a
fractional ownership aircraft program (as defined by section
4043(c)).''.
(c) Exemption From Tax on Transportation of Persons.--
Section 4261, as amended by this Act, is amended by
redesignating subsection (j) as subsection (k) and by
inserting after subsection (i) the following new subsection:
``(j) Exemption for Aircraft in Fractional Ownership
Aircraft Programs.--No tax shall be imposed by this section
or section 4271 on any air transportation by an aircraft
which is part of a fractional ownership aircraft program (as
defined by section 4043(c)).''.
(d) Effective Dates.--
(1) Subsection (a).--The amendments made by subsections (a)
shall apply to fuel used after December 31, 2008.
(2) Subsection (b).--The amendment made by subsection (b)
shall apply to uses of aircraft after December 31, 2008.
(3) Subsection (c).--The amendments made by subsection (c)
shall apply to taxable transportation provided after December
31, 2008.

SEC. 806. TERMINATION OF EXEMPTION FOR SMALL AIRCRAFT ON
NONESTABLISHED LINES.

(a) In General.--Section 4281 is amended to read as
follows:

[[Page S3633]]

``SEC. 4281. SMALL AIRCRAFT OPERATED SOLELY FOR SIGHTSEEING.

``The taxes imposed by sections 4261 and 4271 shall not
apply to transportation by an aircraft having a maximum
certificated takeoff weight of 6,000 pounds or less at any
time during which such aircraft is being operated on a flight
the sole purpose of which is sightseeing. For purposes of the
preceding sentence, the term `maximum certificated takeoff
weight' means the maximum such weight contained in the type
certificate or airworthiness certificate.''.
(b) Conforming Amendment.--The item relating to section
4281 in the table of sections for part III of subchapter C of
chapter 33 is amended by striking ``on nonestablished lines''
and inserting ``operated solely for sightseeing''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable transportation provided after December
31, 2008.

SEC. 807. TRANSPARENCY IN PASSENGER TAX DISCLOSURES.

(a) In General.--Section 7275 (relating to penalty for
offenses relating to certain airline tickets and advertising)
is amended--
(1) by redesignating subsection (c) as subsection (d),
(2) by striking ``subsection (a) or (b)'' in subsection
(d), as so redesignated, and inserting ``subsection (a), (b),
or (c)'', and
(3) by inserting after subsection (b) the following new
subsection:
``(c) Non-Tax Charges.--
``(1) In general.--In the case of transportation by air for
which disclosure on the ticket or advertising for such
transportation of the amounts paid for passenger taxes is
required by subsection (a)(2) or (b)(1)(B), it shall be
unlawful for the disclosure of the amount of such taxes on
such ticket or advertising to include any amounts not
attributable to the taxes imposed by subsection (a), (b), or
(c) of section 4261.
``(2) Inclusion in transportation cost.--Nothing in this
subsection shall prohibit the inclusion of amounts not
attributable to the taxes imposed by subsection (a), (b), or
(c) of section 4261 in the disclosure of the amount paid for
transportation as required by subsection (a)(1) or (b)(1)(A),
or in a separate disclosure of amounts not attributable to
such taxes.''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable transportation provided after December
31, 2008.

Subtitle B--Increased Funding for Highway Trust Fund

SEC. 811. REPLENISH EMERGENCY SPENDING FROM HIGHWAY TRUST
FUND.

(a) In General.--Section 9503(b) is amended--
(1) by adding at the end the following new paragraph:
``(7) Emergency spending replenishment.--There is hereby
appropriated to the Highway Trust Fund $3,400,000,000.'', and
(2) by striking ``Amounts Equivalent to Certain Taxes and
Penalties'' in the heading and inserting ``Certain Amounts''.
(b) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.

SEC. 812. SUSPENSION OF TRANSFERS FROM HIGHWAY TRUST FUND FOR
CERTAIN REPAYMENTS AND CREDIT.

Section 9503(c)(2) is amended by adding at the end the
following new subparagraph:
``(D) Temporary suspension.--This paragraph shall not apply
to 85 percent of the amounts estimated by the Secretary to be
attributable to the 6-month period beginning on the date of
the enactment of the American Infrastructure Investment and
Improvement Act of 2008.''.

SEC. 813. TAXATION OF TAXABLE FUELS IN FOREIGN TRADE ZONES.

(a) Tax Imposed on Removals and Entries in Foreign Trade
Zones.--
(1) In general.--Subsection (a) of section 4083 (relating
to definitions) is amended by adding at the end the following
new paragraph:
``(4) United states.--The term `United States' includes any
foreign trade zone or bonded warehouse located in the United
States.''.
(2) Conforming amendment.--Section 4081(a)(1)(A) (relating
to imposition of tax) is amended--
(A) in clause (i), by inserting ``in the United States''
after ``refinery''; and
(B) in clause (ii), by inserting ``in the United States''
after ``terminal''.
(b) Treatment of Taxable Fuel in Foreign Trade Zones.--
Paragraph (2) of section 81c(a) of title 19, United States
Code, is amended by inserting ``(other than the provisions
relating to taxable fuel (as defined under section 4083(a) of
the Internal Revenue Code of 1986))'' after ``thereunder''.
(c) Effective Dates.--
(1) Subsection (a).--The amendments made by subsection (a)
shall apply to removals and entries after December 31, 2008.
(2) Subsection (b).--The amendment made by subsection (b)
shall take effect on January 1, 2009.

SEC. 814. CLARIFICATION OF PENALTY FOR SALE OF FUEL FAILING
TO MEET EPA REGULATIONS.

(a) In General.--Subsection (a) of section 6720A (relating
to penalty with respect to certain adulterated fuels) is
amended by striking ``applicable EPA regulations (as defined
in section 45H(c)(3))'' and inserting ``the requirements for
diesel fuel under section 211 of the Clean Air Act, as
determined by the Secretary,''.
(b) Effective Date.--The amendments made by this section
shall apply to any transfer, sale, or holding out for sale or
resale occurring after the date of the enactment of this Act.

SEC. 815. TREATMENT OF QUALIFIED ALCOHOL FUEL MIXTURES AND
QUALIFIED BIODIESEL FUEL MIXTURES AS TAXABLE
FUELS.

(a) In General.--
(1) Qualified alcohol fuel mixtures.--Paragraph (2) of
section 4083(a) (relating to gasoline) is amended--
(A) by striking ``and'' at the end of subparagraph (A),
(B) by redesignating subparagraph (B) as subparagraph (C),
and
(C) by inserting after subparagraph (A) the following new
subparagraph:
``(B) includes any qualified mixture (as defined in section
40(b)(1)(B)) which is a mixture of alcohol and special fuel,
and''.
(2) Qualified biodiesel fuel mixtures.--Subparagraph (A) of
section 4083(a)(3) (relating to diesel fuel) is amended by
striking ``and'' at the end of clause (ii), by redesignating
clause (iii) as clause (iv), and inserting after clause (ii)
the following new clause:
``(iii) any qualified biodiesel mixture (as defined in
section 40A(b)(1)(B)), and''.
(b) Effective Date.--The amendments made by this section
shall apply to fuels removed, entered, or sold after December
31, 2008.

SEC. 816. CALCULATION OF VOLUME OF ALCOHOL FOR FUEL CREDITS.

(a) In General.--Paragraph (4) of section 40(d) (relating
to volume of alcohol) is amended by striking ``5 percent''
and inserting ``2 percent''.
(b) Conforming Amendment for Excise Tax Credit.--Section
6426(b) (relating to alcohol fuel mixture credit) is amended
by redesignating paragraph (5) as paragraph (6) and by
inserting after paragraph (4) the following new paragraph:
``(5) Volume of alcohol.--For purposes of determining under
subsection (a) the number of gallons of alcohol with respect
to which a credit is allowable under subsection (a), the
volume of alcohol shall include the volume of any denaturant
(including gasoline) which is added under any formulas
approved by the Secretary to the extent that such denaturants
do not exceed 2 percent of the volume of such alcohol
(including denaturants).''.
(c) Effective Date.--The amendments made by this section
shall apply to fuel sold or used after December 31, 2008.

SEC. 817. BULK TRANSFER EXCEPTION NOT TO APPLY TO FINISHED
GASOLINE.

(a) In General.--Subparagraph (B) of section 4081(a)(1)
(relating to tax on removal, entry, or sale) is amended by
adding at the end the following new clause:
``(iii) Exception for finished gasoline.--Clause (i) shall
not apply to any finished gasoline.''.
(b) Exception to Tax on Finished Gasoline for Prior Taxable
Removals.--Paragraph (1) of section 4081(a) is amended by
adding at the end the following new subparagraph:
``(C) Exemption for previously taxed finished gasoline.--
The tax imposed by this paragraph shall not apply to the
removal of gasoline described in subparagraph (B)(iii) from
any terminal if there was a prior taxable removal or entry of
such fuel under clause (i), (ii), or (iii) of subparagraph
(A). The preceding sentence shall not apply to the volume of
any product added to such gasoline at the terminal unless
there was a prior taxable removal or entry of such product
under clause (i), (ii), or (iii) of subparagraph (A).''.
(c) Effective Date.--The amendment made by this section
shall apply to fuel removed, entered, or sold after December
31, 2008.

SEC. 818. INCREASE AND EXTENSION OF OIL SPILL LIABILITY TRUST
FUND TAX.

(a) Increase in Rate.--
(1) In general.--Section 4611(c)(2)(B) (relating to rates)
is amended by striking ``5 cents'' and inserting ``10
cents''.
(2) Effective date.--The amendment made by this subsection
shall apply on and after the first day of the first calendar
quarter beginning more than 60 days after the date of the
enactment of this Act.
(b) Extension.--
(1) In general.--Section 4611(f) (relating to application
of Oil Spill Liability Trust Fund financing rate) is amended
by striking paragraphs (2) and (3) and inserting the
following new paragraph:
``(2) Termination.--The Oil Spill Liability Trust Fund
financing rate shall not apply after September 30, 2018.''.
(2) Conforming amendment.--Section 4611(f)(1) is amended by
striking ``paragraphs (2) and (3)'' and inserting ``paragraph
(2)''.
(3) Effective date.--The amendments made by this subsection
shall take effect on the date of the enactment of this Act.

SEC. 819. APPLICATION OF RULES TREATING INVERTED CORPORATIONS
AS DOMESTIC CORPORATIONS TO CERTAIN
TRANSACTIONS OCCURRING AFTER MARCH 20, 2002.

(a) In General.--Section 7874(b) (relating to inverted
corporations treated as domestic corporations) is amended to
read as follows:
``(b) Inverted Corporations Treated as Domestic
Corporations.--
``(1) In general.--Notwithstanding section 7701(a)(4), a
foreign corporation shall be treated for purposes of this
title as a domestic corporation if such corporation would be
a surrogate foreign corporation if subsection

[[Page S3634]]

(a)(2) were applied by substituting `80 percent' for `60
percent'.
``(2) Special rule for certain transactions occurring after
march 20, 2002.--
``(A) In general.--If--
``(i) paragraph (1) does not apply to a foreign
corporation, but
``(ii) paragraph (1) would apply to such corporation if, in
addition to the substitution under paragraph (1), subsection
(a)(2) were applied by substituting `March 20, 2002' for
`March 4, 2003' each place it appears,

then paragraph (1) shall apply to such corporation but only
with respect to taxable years of such corporation beginning
after the date of the enactment of the American
Infrastructure Investment and Improvement Act of 2008.
``(B) Special rules.--Subject to such rules as the
Secretary may prescribe, in the case of a corporation to
which paragraph (1) applies by reason of this paragraph--
``(i) the corporation shall be treated, as of the close of
its first taxable year ending after the date of the enactment
of the American Infrastructure Investment and Improvement Act
of 2008, as having transferred all of its assets,
liabilities, and earnings and profits to a domestic
corporation in a transaction with respect to which no tax is
imposed under this title,
``(ii) the bases of the assets transferred in the
transaction to the domestic corporation shall be the same as
the bases of the assets in the hands of the foreign
corporation, subject to any adjustments under this title for
built-in losses,
``(iii) the basis of the stock of any shareholder in the
domestic corporation shall be the same as the basis of the
stock of the shareholder in the foreign corporation for which
it is treated as exchanged, and
``(iv) the transfer of any earnings and profits by reason
of clause (i) shall be disregarded in determining any deemed
dividend or foreign tax creditable to the domestic
corporation with respect to such transfer.
``(C) Regulations.--The Secretary may prescribe such
regulations as may be necessary or appropriate to carry out
this paragraph, including regulations to prevent the
avoidance of the purposes of this paragraph.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.

SEC. 820. DENIAL OF DEDUCTION FOR PUNITIVE DAMAGES.

(a) Disallowance of Deduction.--
(1) In general.--Section 162(g) (relating to treble damage
payments under the antitrust laws) is amended--
(A) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively,
(B) by striking ``If'' and inserting:
``(1) Treble damages.--If'', and
(C) by adding at the end the following new paragraph:
``(2) Punitive damages.--No deduction shall be allowed
under this chapter for any amount paid or incurred for
punitive damages in connection with any judgment in, or
settlement of, any action. This paragraph shall not apply to
punitive damages described in section 104(c).''.
(2) Conforming amendment.--The heading for section 162(g)
is amended by inserting ``Or Punitive Damages'' after
``Laws''.
(b) Inclusion in Income of Punitive Damages Paid by Insurer
or Otherwise.--
(1) In general.--Part II of subchapter B of chapter 1
(relating to items specifically included in gross income) is
amended by adding at the end the following new section:

``SEC. 91. PUNITIVE DAMAGES COMPENSATED BY INSURANCE OR
OTHERWISE.

``Gross income shall include any amount paid to or on
behalf of a taxpayer as insurance or otherwise by reason of
the taxpayer's liability (or agreement) to pay punitive
damages.''.
(2) Reporting requirements.--Section 6041 (relating to
information at source) is amended by adding at the end the
following new subsection:
``(h) Section To Apply to Punitive Damages Compensation.--
This section shall apply to payments by a person to or on
behalf of another person as insurance or otherwise by reason
of the other person's liability (or agreement) to pay
punitive damages.''.
(3) Conforming amendment.--The table of sections for part
II of subchapter B of chapter 1 is amended by adding at the
end the following new item:

``Sec. 91. Punitive damages compensated by insurance or otherwise.''.

(c) Effective Date.--The amendments made by this section
shall apply to damages paid or incurred on or after the date
of the enactment of this Act.

SEC. 821. MOTOR FUEL TAX ENFORCEMENT ADVISORY COMMISSION.

(a) In General.--Section 11141 of the Safe, Accountable,
Flexible, Efficient Transportation Equity Act: A Legacy for
Users is amended to read as follows:

``SEC. 11141. MOTOR FUEL TAX ENFORCEMENT ADVISORY COMMISSION.

``(a) Establishment.--There is established a Motor Fuel Tax
Enforcement Advisory Commission (in this section referred to
as the `Commission').
``(b) Membership.--
``(1) Appointment.--The Commission shall be composed of 14
members, of which--
``(A) 1 shall be appointed by the Administrator of the
Federal Highway Administration as a representative of the
Federal Highway Administration,
``(B) 1 shall be appointed by the Inspector General for the
Department of Transportation as a representative the Office
of Inspector General for the Department of Transportation,
``(C) 1 shall be appointed by the Secretary of
Transportation as a representative of the Department of
Transportation,
``(D) 1 shall be appointed by the Secretary of Homeland
Security to be a representative of the Department of Homeland
Security,
``(E) 1 shall be appointed by the Secretary of Defense to
be a representative of the Department of Defense,
``(F) 1 shall be appointed by the Attorney General to be a
representative of the Department of Justice,
``(G) 2 shall be appointed by the Chairman of the Committee
on Finance of the Senate,
``(H) 2 shall be appointed by the Ranking Member of the
Committee on Finance of the Senate,
``(I) 2 shall be appointed by Chairman of the Committee on
Ways and Means of the House of Representatives, and
``(J) 2 shall be appointed by Ranking Member of the
Committee on Ways and Means of the House of Representatives.
``(2) Qualification for certain members.--Of the members
appointed under subparagraphs (G), (H), (I) and (J)--
``(A) at least 1 shall be representative from the
Federation of State Tax Administrators,
``(B) at least 1 shall be a representative from any State
department of transportation,
``(C) at least 1 shall be a representative from the retail
fuel industry, and
``(D) at least 1 shall be a representative from industries
relating to fuel distribution (such a refiners, distributors,
pipeline operators, and terminal operators).
``(3) Terms.--Members shall be appointed for the life of
the Commission.
``(4) Vacancies.--A vacancy in the Commission shall be
filled in the manner in which the original appointment was
made.
``(5) Travel expenses.--Members of the Commission shall
serve without pay but shall receive travel expenses,
including per diem in lieu of subsistence, in accordance with
sections 5702 and 5703 of title 5, United States Code.
``(6) Chairman.--The Chairman of the Commission shall be
elected by the members.
``(c) Duties.--
``(1) In general.--The Commission shall--
``(A) review motor fuel revenue collections, historical and
current;
``(B) review the progress of investigations;
``(C) develop and review legislative proposals with respect
to motor fuel taxes;
``(D) monitor the progress of administrative regulation
projects relating to motor fuel taxes;
``(E) evaluate and make recommendations to the President
and Congress regarding--
``(i) the effectiveness of existing Federal enforcement
programs regarding motor fuel taxes,
``(ii) enforcement personnel allocation, and
``(iii) proposals for regulatory projects, legislation, and
funding.
``(2) Report.--Not later than September 30, 2009, the
Commission shall submit to Congress a final report that
contains a detailed statement on the findings and conclusions
of the Commission, together with recommendations for such
legislation and administrative action as the Commission
considers appropriate or necessary.
``(d) Powers.--
``(1) Hearings.--The Commission may hold such hearings for
the purpose of carrying out this Act, sit and act at such
times and places, take such testimony, and receive such
evidence as the Commission considers advisable to carry out
this Act. The Commission may administer oaths and
affirmations to witnesses appearing before the Commission.
``(2) Obtaining data.--The Commission may secure directly
from any department or agency of the United States,
information (other than information required by any law to be
kept confidential by such department or agency) necessary for
the Commission to carry out its duties under this section.
Upon request of the Commission, the head of that department
or agency shall furnish such nonconfidential information to
the Commission. The Commission shall also gather evidence
through such means as it may determine appropriate, including
through holding hearings and soliciting comments by means of
Federal Register notices.
``(3) Postal services.--The Commission may use the United
States mails in the same manner and under the same conditions
as other departments and agencies of the Federal Government.
``(4) Gifts.--The Commission may accept, hold, administer,
and utilize gifts, donations, and requests of property, both
real and personal, for the purposes of aiding or facilitating
the work of the Commission. Gifts and bequests of money, and
the proceeds from the sale of any other property received as
gifts or bequests, shall be deposited in the Treasury in a
separate fund and shall be disbursed upon order of the
Commission. For purposes of Federal income, estate, and gift
taxation, property accepted under this section shall be
considered as a gift or bequest to or for the use of the
United States.
``(e) Support Services.--
``(1) Administrative support services.--Upon the request of
the Commission, the Secretary of Transportation shall provide
to

[[Page S3635]]

the Commission administrative support services necessary to
enable the Commission to carry out its duties under this Act.
``(2) Detail of government employees.--Any Federal
Government employee may be detailed to the Commission without
reimbursement, and such detail shall be without interruption
or loss of civil service status or privilege.
``(3) Voluntary services.--
``(A) In general.--Notwithstanding the provisions of
section 1342 of title 31, United States Code, the Commission
is authorized to accept and utilize the services of
volunteers serving without compensation. The Commission may
reimburse such volunteers for local travel and office
supplies, and for other travel expenses, including per diem
in lieu of subsistence as authorized by section 5703, United
States Code.
``(B) Treatment of volunteers.--A person providing
volunteer services to the Commission shall be considered an
employee of the Federal Government in the performance of
those services for the purposes of the following provisions
of law:
``(i) chapter 81 of title 5, United States Code, relating
to compensation for work-related injuries;
``(ii) chapter 171 of title 28, United States Code,
relating to tort claims; and
``(iii) chapter 11 of title 18, United States Code,
relating to conflicts of interest.
``(4) Consultation.--Upon request of the Commission,
representatives of the Department of the Treasury and the
Internal Revenue Service shall be available for consultation
to assist the Commission in carrying out its duties under
this section.
``(5) Cooperation.--The staff of the Department of
Transportation, the Department of Homeland Security, the
Department of Justice, and the Department of Defense shall
cooperate with the Commission as necessary.
``(f) Inapplicability of Federal Advisory Committee Act.--
The Federal Advisory Committee Act (5 U.S.C. App.) shall not
apply to the Commission.
``(g) Termination.--
``(1) In general.--The Commission shall terminate on the
date that is 90 days after the date on which the Commission
submits the report required under subsection (c)(2).
``(2) Records.--Not later than the date on which the
Commission terminates, the Commission shall transmit all
records of the Commission to the National Archives.''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.

SEC. 822. HIGHWAY TRUST FUND CONFORMING EXPENDITURE
AMENDMENT.

(a) In General.--Subsections (c)(1) and (e)(3) of section
9503 are each amended by inserting ``, as amended by An Act
to authorize additional funds for emergency repairs and
reconstruction of the Interstate I-35 bridge located in
Minneapolis, Minnesota, that collapsed on August 1, 2007, to
waive the $100,000,000 limitation on emergency relief funds
for those emergency repairs and reconstruction, and for other
purposes,'' after ``Users''.
(b) Effective Date.--The amendments made by this section
shall take effect as if included in the enactment of An Act
to authorize additional funds for emergency repairs and
reconstruction of the Interstate I-35 bridge located in
Minneapolis, Minnesota, that collapsed on August 1, 2007, to
waive the $100,000,000 limitation on emergency relief funds
for those emergency repairs and reconstruction, and for other
purposes.

Subtitle C--Additional Infrastructure Modifications and Revenue
Provisions

SEC. 831. RESTRUCTURING OF NEW YORK LIBERTY ZONE TAX CREDITS.

(a) In General.--Part I of subchapter Y of chapter 1 is
amended by redesignating section 1400L as 1400K and by adding
at the end the following new section:

``SEC. 1400L. NEW YORK LIBERTY ZONE TAX CREDITS.

``(a) In General.--In the case of a New York Liberty Zone
governmental unit, there shall be allowed as a credit against
any taxes imposed for any payroll period by section 3402 for
which such governmental unit is liable under section 3403 an
amount equal to so much of the portion of the qualifying
project expenditure amount allocated under subsection (b)(3)
to such governmental unit for the calendar year as is
allocated by such governmental unit to such period under
subsection (b)(4).
``(b) Qualifying Project Expenditure Amount.--For purposes
of this section--
``(1) In general.--The term `qualifying project expenditure
amount' means, with respect to any calendar year, the sum
of--
``(A) the total expenditures paid or incurred during such
calendar year by all New York Liberty Zone governmental units
and the Port Authority of New York and New Jersey for any
portion of qualifying projects located wholly within the City
of New York, New York, and
``(B) any such expenditures--
``(i) paid or incurred in any preceding calendar year which
begins after the date of enactment of this section, and
``(ii) not previously allocated under paragraph (3).
``(2) Qualifying project.--The term `qualifying project'
means any transportation infrastructure project, including
highways, mass transit systems, railroads, airports, ports,
and waterways, in or connecting with the New York Liberty
Zone (as defined in section 1400K(h)), which is designated as
a qualifying project under this section jointly by the
Governor of the State of New York and the Mayor of the City
of New York, New York.
``(3) General allocation.--
``(A) In general.--The Governor of the State of New York
and the Mayor of the City of New York, New York, shall
jointly allocate to each New York Liberty Zone governmental
unit the portion of the qualifying project expenditure amount
which may be taken into account by such governmental unit
under subsection (a) for any calendar year in the credit
period.
``(B) Aggregate limit.--The aggregate amount which may be
allocated under subparagraph (A) for all calendar years in
the credit period shall not exceed $2,000,000,000.
``(C) Annual limit.--
``(i) In general.--The aggregate amount which may be
allocated under subparagraph (A) for any calendar year in the
credit period shall not exceed the sum of--

``(I) the applicable limit, plus
``(II) the aggregate amount authorized to be allocated
under this paragraph for all preceding calendar years in the
credit period which was not so allocated.

``(ii) Applicable limit.--For purposes of clause (i), the
applicable limit for any calendar year in the credit period
is $169,000,000 and in the case of any calendar year after
2020, zero.
``(D) Unallocated amounts at end of credit period.--If, as
of the close of the credit period, the amount under
subparagraph (B) exceeds the aggregate amount allocated under
subparagraph (A) for all calendar years in the credit period,
the Governor of the State of New York and the Mayor of the
City of New York, New York, may jointly allocate to New York
Liberty Zone governmental units for any calendar year in the
5-year period following the credit period an amount equal
to--
``(i) the lesser of--

``(I) such excess, or
``(II) the qualifying project expenditure amount for such
calendar year, reduced by

``(ii) the aggregate amount allocated under this
subparagraph for all preceding calendar years.
``(4) Allocation to payroll periods.--Each New York Liberty
Zone governmental unit which has been allocated a portion of
the qualifying project expenditure amount under paragraph (3)
for a calendar year may allocate such portion to payroll
periods beginning in such calendar year as such governmental
unit determines appropriate.
``(c) Carryover of Unused Allocations.--
``(1) In general.--Except as provided in paragraph (2), if
the amount allocated under subsection (b)(3) to a New York
Liberty Zone governmental unit for any calendar year exceeds
the aggregate taxes imposed by section 3402 for which such
governmental unit is liable under section 3403 for periods
beginning in such year, such excess shall be carried to the
succeeding calendar year and added to the allocation of such
governmental unit for such succeeding calendar year. No
amount may be carried under the preceding sentence to a
calendar year after 2025.
``(2) Reallocation.--If a New York Liberty Zone
governmental unit does not use an amount allocated to it
under subsection (b)(3) within the time prescribed by the
Governor of the State of New York and the Mayor of the City
of New York, New York, then such amount shall after such time
be treated for purposes of subsection (b)(3) in the same
manner as if it had never been allocated.
``(d) Definitions and Special Rules.--For purposes of this
section--
``(1) Credit period.--The term `credit period' means the
12-year period beginning on January 1, 2009.
``(2) New york liberty zone governmental unit.--The term
`New York Liberty Zone governmental unit' means--
``(A) the State of New York,
``(B) the City of New York, New York, and
``(C) any agency or instrumentality of such State or City.
``(3) Treatment of funds.--Any expenditure for a qualifying
project taken into account for purposes of the credit under
this section shall be considered State and local funds for
the purpose of any Federal program.
``(4) Treatment of credit amounts for purposes of
withholding taxes.--For purposes of this title, a New York
Liberty Zone governmental unit shall be treated as having
paid to the Secretary, on the day on which wages are paid to
employees, an amount equal to the amount of the credit
allowed to such entity under subsection (a) with respect to
such wages, but only if such governmental unit deducts and
withholds wages for such payroll period under section 3401
(relating to wage withholding).
``(e) Reporting.--The Governor of the State of New York and
the Mayor of the City of New York, New York, shall jointly
submit to the Secretary an annual report--
``(1) which certifies--
``(A) the qualifying project expenditure amount for the
calendar year, and
``(B) the amount allocated to each New York Liberty Zone
governmental unit under subsection (b)(3) for the calendar
year, and
``(2) includes such other information as the Secretary may
require to carry out this section.

[[Page S3636]]

``(f) Guidance.--The Secretary may prescribe such guidance
as may be necessary or appropriate to ensure compliance with
the purposes of this section.
``(g) Termination.--No credit shall be allowed under
subsection (a) for any calender year after 2025.''.
(b) Termination of Special Allowance and Expensing.--
Section 1400K(b)(2)(A)(v), as redesignated by subsection (a),
is amended by striking ``the termination date'' and inserting
``the date of the enactment of the American Infrastructure
Investment and Improvement Act of 2008 or the termination
date if pursuant to a binding contract in effect on such
enactment date''.
(c) Conforming Amendments.--
(1) Section 38(c)(3)(B) is amended by striking ``section
1400L(a)'' and inserting ``section 1400K(a)''.
(2) Section 168(k)(2)(D)(ii) is amended by striking
``section 1400L(c)(2)'' and inserting ``1400K(c)(2)''.
(3) The table of sections for part I of subchapter Y of
chapter 1 is amended by striking ``1400L'' and inserting
``1400K''.
(d) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to periods
beginning after December 31, 2008.
(2) Termination of special allowance and expensing.--The
amendment made by subsection (b) shall take effect on the
date of the enactment of this Act.

SEC. 832. PARTICIPANTS IN GOVERNMENT SECTION 457 PLANS
ALLOWED TO TREAT ELECTIVE DEFERRALS AS ROTH
CONTRIBUTIONS.

(a) In General.--Section 402A(e)(1) (defining applicable
retirement plan) is amended by striking ``and'' at the end of
subparagraph (A), by striking the period at the end of
subparagraph (B) and inserting ``, and'', and by adding at
the end the following:
``(C) an eligible deferred compensation plan (as defined in
section 457(b)) of an eligible employer described in section
457(e)(1)(A).''.
(b) Elective Deferrals.--Section 402A(e)(2) (defining
elective deferral) is amended to read as follows:
``(2) Elective deferral.--The term `elective deferral'
means--
``(A) any elective deferral described in subparagraph (A)
or (C) of section 402(g)(3), and
``(B) any elective deferral of compensation by an
individual under an eligible deferred compensation plan (as
defined in section 457(b)) of an eligible employer described
in section 457(e)(1)(A).''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2008.

SEC. 833. INCREASED INFORMATION RETURN PENALTIES.

(a) Failure to File Correct Information Returns.--
(1) In general.--Section 6721(a)(1) (relating to imposition
of penalty) is amended--
(A) by striking ``$50'' and inserting ``$250'', and
(B) by striking ``$250,000'' and inserting ``$3,000,000''.
(2) Reduction where correction in specified period.--
(A) Correction within 30 days.--Section 6721(b)(1) is
amended--
(i) by striking ``$15'' and inserting ``$50'',
(ii) by striking ``in lieu of $50'' and inserting ``in lieu
of $250'', and
(iii) by striking ``$75,000'' and inserting ``$500,000''.
(B) Failures corrected on or before august 1.--Section
6721(b)(2) is amended--
(i) by striking ``$30'' and inserting ``$100'',
(ii) by striking ``$50'' and inserting ``$250'', and
(iii) by striking ``$150,000'' and inserting
``$1,500,000''.
(3) Lower limitation for persons with gross receipts of not
more than $5,000,000.--Section 6721(d)(1) is amended--
(A) in subparagraph (A)--
(i) by striking ``$100,000'' and inserting ``$1,000,000'',
and
(ii) by striking ``$250,000'' and inserting ``$3,000,000'',
(B) in subparagraph (B)--
(i) by striking ``$25,000'' and inserting ``$175,000'', and
(ii) by striking ``$75,000'' and inserting ``$500,000'',
and
(C) in subparagraph (C)--
(i) by striking ``$50,000'' and inserting ``$500,000'', and
(ii) by striking ``$150,000'' and inserting ``$1,500,000''.
(4) Penalty in case of intentional disregard.--Section
6721(e) is amended--
(A) by striking ``$100'' in paragraph (2) and inserting
``$500'',
(B) by striking ``$250,000'' in paragraph (3)(A) and
inserting ``$3,000,000''.
(b) Failure to Furnish Correct Payee Statements.--
(1) In general.--Section 6722(a) is amended--
(A) by striking ``$50'' and inserting ``$250'', and
(B) by striking ``$100,000'' and inserting ``$1,000,000''.
(2) Penalty in case of intentional disregard.--Section
6722(c) is amended--
(A) by striking ``$100'' in paragraph (1) and inserting
``$500'', and
(B) by striking ``$100,000'' in paragraph (2)(A) and
inserting ``$1,000,000''.
(c) Failure to Comply With Other Information Reporting
Requirements.--Section 6723 is amended--
(1) by striking ``$50'' and inserting ``$250'', and
(2) by striking ``$100,000'' and inserting ``$1,000,000''.
(d) Effective Date.--The amendments made by this section
shall apply with respect to information returns required to
be filed on or after January 1, 2009.

SEC. 834. EXEMPTION OF CERTAIN COMMERCIAL CARGO FROM HARBOR
MAINTENANCE TAX.

(a) In General.--Section 4462 is amended--
(1) by redesignating subsection (i) as subsection (j), and
(2) by inserting after subsection (h) the following new
subsection:
``(i) Exemption for Certain Cargo Transported on the Great
Lakes Saint Lawrence Seaway System.--
``(1) In general.--No tax shall be imposed under section
4461(a) with respect to--
``(A) commercial cargo (other than bulk cargo) loaded at a
port in the United States located in the Great Lakes Saint
Lawrence Seaway System and unloaded at another port in the
United States located in such system, and
``(B) commercial cargo (other than bulk cargo) unloaded at
a port in the United States located in the Great Lakes Saint
Lawrence Seaway System which was loaded at a port in Canada
located in such system.
``(2) Bulk cargo.--For purposes of this subsection, the
term `bulk cargo' shall have the meaning given such term by
section 53101(1) of title 46, United States Code (as in
effect on the date of the enactment of this section).
``(3) Great lakes saint lawrence seaway system.--For
purposes of this subsection, the term `Great Lakes Saint
Lawrence Seaway System' means the waterway between Duluth,
Minnesota and Sept. Iles, Quebec, encompassing the five Great
Lakes, their connecting channels, and the Saint Lawrence
River.''.
(b) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.

SEC. 835. CREDIT TO HOLDERS OF QUALIFIED RAIL INFRASTRUCTURE
BONDS.

(a) In General.--Subpart H of part IV of subchapter A of
chapter 1 (relating to credits against tax) is amended by
adding at the end the following new section:

``SEC. 54A. CREDIT TO HOLDERS OF QUALIFIED RAIL
INFRASTRUCTURE BONDS.

``(a) Allowance of Credit.--If a taxpayer holds a qualified
rail infrastructure bond on 1 or more credit allowance dates
of the bond occurring during any taxable year, there shall be
allowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to the sum of the
credits determined under subsection (b) with respect to such
dates.
``(b) Amount of Credit.--
``(1) In general.--The amount of the credit determined
under this subsection with respect to any credit allowance
date for a qualified rail infrastructure bond is 25 percent
of the annual credit determined with respect to such bond.
``(2) Annual credit.--The annual credit determined with
respect to any qualified rail infrastructure bond is the
product of--
``(A) the credit rate determined by the Secretary under
paragraph (3) for the day on which such bond was sold,
multiplied by
``(B) the outstanding face amount of the bond.
``(3) Determination.--For purposes of paragraph (2), with
respect to any qualified rail infrastructure bond, the
Secretary shall determine daily or cause to be determined
daily a credit rate which shall apply to the first day on
which there is a binding, written contract for the sale or
exchange of the bond. The credit rate for any day is the
credit rate which the Secretary or the Secretary's designee
estimates will permit the issuance of qualified rail
infrastructure bonds with a specified maturity or redemption
date, without discount and without interest cost to the
qualified issuer.
``(4) Credit allowance date.--For purposes of this section,
the term `credit allowance date' means--
``(A) March 15,
``(B) June 15,
``(C) September 15, and
``(D) December 15.
Such term also includes the last day on which the bond is
outstanding.
``(5) Special rule for issuance and redemption.--In the
case of a bond which is issued during the 3-month period
ending on a credit allowance date, the amount of the credit
determined under this subsection with respect to such credit
allowance date shall be a ratable portion of the credit
otherwise determined based on the portion of the 3-month
period during which the bond is outstanding. A similar rule
shall apply when the bond is redeemed or matures.
``(c) Limitation Based on Amount of Tax.--The credit
allowed under subsection (a) for any taxable year shall not
exceed the excess of--
``(1) the sum of the regular tax liability (as defined in
section 26(b)) plus the tax imposed by section 55, over
``(2) the sum of the credits allowable under this part
(other than this subpart, subpart C, and section 1400N(l)).
``(d) Qualified Rail Infrastructure Bond.--For purposes of
this section--
``(1) In general.--The term `qualified rail infrastructure
bond' means any bond issued as part of an issue if--
``(A) the bond is issued by a qualified issuer pursuant to
an allocation by the Secretary to such issuer of a portion of
the national qualified rail infrastructure bond annual
limitation under subsection (f)(2) by not later than the end
of the calendar year following the year of such allocation,

[[Page S3637]]

``(B) 95 percent or more of the proceeds of such issue are
to be used for capital expenditures incurred for 1 or more
qualified projects,
``(C) the qualified issuer designates such bond for
purposes of this section and the bond is in registered form,
and
``(D) the issue meets the requirements of subsection (h).
``(2) Qualified project; special use rules.--
``(A) In general.--The term `qualified project' means a
project eligible under section 26101(b) of title 49, United
States Code (determined without regard to paragraph (2)
thereof), which the Secretary determines was selected using
the criteria of subsection (c) of such section 26101 by the
Secretary of Transportation, that makes a substantial
contribution to improving a rail transportation corridor for
intercity passenger rail use.
``(B) Certification required regarding certain projects.--
The Secretary shall not consider a project to be a qualified
project unless an applicant certifies to the Secretary that--
``(i) if a project involves a rail transportation corridor
which includes the use of rights-of-way owned by a freight
railroad, the applicant has entered into a written agreement
with such freight railroad regarding the use of the rights-
of-way and has received assurances that collective bargaining
agreements between such freight railroad and its employees
(including terms regarding the contracting of work performed
on such corridor) shall remain in full force and effect
during the term of such written agreement,
``(ii) any person which provides railroad transportation
over infrastructure improved or acquired pursuant to this
section, is a rail carrier as defined by section 10102 of
title 49, United States Code, and
``(iii) the applicant shall, with respect to improvements
to rail infrastructure made pursuant to this section, comply
with the standards applicable to construction work in such
title 49, in the same manner in which the National Railroad
Passenger Corporation is required to comply with such
standards.
``(C) Refinancing rules.--For purposes of paragraph (1)(B),
a qualified project may be refinanced with proceeds of a
qualified rail infrastructure bond only if the indebtedness
being refinanced (including any obligation directly or
indirectly refinanced by such indebtedness) was originally
incurred after the date of the enactment of this section.
``(D) Reimbursement.--For purposes of paragraph (1)(B), a
qualified rail infrastructure bond may be issued to reimburse
for amounts paid after the date of the enactment of this
section with respect to a qualified project, but only if--
``(i) prior to the payment of the original expenditure, the
issuer declared its intent to reimburse such expenditure with
the proceeds of a qualified rail infrastructure bond,
``(ii) not later than 60 days after payment of the original
expenditure, the qualified issuer adopts an official intent
to reimburse the original expenditure with such proceeds, and
``(iii) the reimbursement is made not later than 18 months
after the date the original expenditure is paid.
``(E) Treatment of changes in use.--For purposes of
paragraph (1)(B), the proceeds of an issue shall not be
treated as used for a qualified project to the extent that a
qualified issuer takes any action within its control which
causes such proceeds not to be used for a qualified project.
The Secretary shall prescribe regulations specifying remedial
actions that may be taken (including conditions to taking
such remedial actions) to prevent an action described in the
preceding sentence from causing a bond to fail to be a
qualified rail infrastructure bond.
``(e) Maturity Limitations.--
``(1) Duration of term.--A bond shall not be treated as a
qualified rail infrastructure bond if the maturity of such
bond exceeds the maximum term determined by the Secretary
under paragraph (2) with respect to such bond.
``(2) Maximum term.--During each calendar month, the
Secretary shall determine the maximum term permitted under
this paragraph for bonds issued during the following calendar
month. Such maximum term shall be the term which the
Secretary estimates will result in the present value of the
obligation to repay the principal on the bond being equal to
50 percent of the face amount of such bond. Such present
value shall be determined without regard to the requirements
of paragraph (3) and using as a discount rate the average
annual interest rate of tax-exempt obligations having a term
of 10 years or more which are issued during the month. If the
term as so determined is not a multiple of a whole year, such
term shall be rounded to the next highest whole year.
``(3) Ratable principal amortization required.--A bond
shall not be treated as a qualified rail infrastructure bond
unless it is part of an issue which provides for an equal
amount of principal to be paid by the qualified issuer during
each 12-month period that the issue is outstanding (other
than the first 12-month period).
``(f) Annual Limitation on Amount of Bonds Designated.--
``(1) National annual limitation.--There is a national
qualified rail infrastructure bond annual limitation for each
calendar year. Such limitation is $900,000,000 for 2009,
2010, and 2011, and, except as provided in paragraph (3),
zero thereafter.
``(2) Allocation by secretary.--The national qualified rail
infrastructure bond annual limitation for a calendar year
shall be allocated by the Secretary among qualified projects
in such manner as the Secretary determines appropriate.
``(3) Carryover of unused limitation.--If for any calendar
year, the national qualified rail infrastructure bond annual
limitation for such year exceeds the amount of bonds
allocated during such year, such limitation for the following
calendar year shall be increased by the amount of such
excess. Any carryforward of a limitation may be carried only
to the first 2 years following the unused limitation year.
For purposes of the preceding sentence, a limitation shall be
treated as used on a first-in first-out basis.
``(g) Credit Treated as Interest.--For purposes of this
title, the credit determined under subsection (a) shall be
treated as interest which is includible in gross income.
``(h) Special Rules Relating to Expenditures.--
``(1) In general.--An issue shall be treated as meeting the
requirements of this subsection if, as of the date of
issuance, the qualified issuer reasonably expects--
``(A) at least 95 percent of the proceeds of the issue are
to be spent for 1 or more qualified projects within the 5-
year period beginning on the date of issuance of the
qualified rail infrastructure bond,
``(B) a binding commitment with a third party to spend at
least 10 percent of the proceeds of the issue will be
incurred within the 6-month period beginning on the date of
issuance of the qualified rail infrastructure bond, and
``(C) such projects will be completed with due diligence
and the proceeds from the sale of the issue will be spent
with due diligence.
``(2) Extension of period.--Upon submission of a request
prior to the expiration of the period described in paragraph
(1)(A), the Secretary may extend such period if the qualified
issuer establishes that the failure to satisfy the 5-year
requirement is due to reasonable cause and the related
projects will continue to proceed with due diligence.
``(3) Failure to spend required amount of bond proceeds
within 5 years.--To the extent that less than 95 percent of
the proceeds of such issue are expended by the close of the
5-year period beginning on the date of issuance (or if an
extension has been obtained under paragraph (2), by the close
of the extended period), the qualified issuer shall redeem
all of the nonqualified bonds within 90 days after the end of
such period. For purposes of this paragraph, the amount of
the nonqualified bonds required to be redeemed shall be
determined in the same manner as under section 142.
``(i) Special Rules Relating to Arbitrage.--A bond which is
part of an issue shall not be treated as a qualified rail
infrastructure bond unless, with respect to the issue of
which the bond is a part, the qualified issuer satisfies the
arbitrage requirements of section 148 with respect to
proceeds of the issue.
``(j) Special Rules Relating to Pool Bonds.--No portion of
a pooled financing bond may be allocable to loan unless the
borrower has entered into a written loan commitment for such
portion prior to the issue date of such issue.
``(k) Other Definitions and Special Rules.--For purposes of
this section--
``(1) Bond.--The term `bond' includes any obligation.
``(2) Pooled financing bond.--The term `pooled financing
bond' shall have the meaning given such term by section
149(f)(4)(A).
``(3) Qualified issuer.--The term `qualified issuer' means
1 or more States or an interstate compact of States.
``(4) State.--The term `State' includes the District of
Columbia and any possession of the United States.
``(5) S corporations and partnerships.--In the case of a
qualified rail infrastructure bond held by an S corporation
or partnership, the allocation of the credit allowed by this
section to the shareholders of the corporation or partners of
such partnership shall be treated as a distribution.
``(6) Bonds held by regulated investment companies.--If any
qualified rail infrastructure bond is held by a regulated
investment company, the credit determined under subsection
(a) shall be allowed to shareholders of such company under
procedures prescribed by the Secretary.
``(7) Reporting.--Issuers of qualified rail infrastructure
bonds shall submit reports similar to the reports required
under section 149(e).
``(8) Termination.--This section shall not apply with
respect to any bond issued after December 31, 2013.''.
(b) Reporting.--Subsection (d) of section 6049 (relating to
returns regarding payments of interest) is amended by adding
at the end the following new paragraph:
``(9) Reporting of credit on qualified rail infrastructure
bonds.--
``(A) In general.--For purposes of subsection (a), the term
`interest' includes amounts includible in gross income under
section 54A(g) and such amounts shall be treated as paid on
the credit allowance date (as defined in section 54A(b)(4)).
``(B) Reporting to corporations, etc.--Except as otherwise
provided in regulations, in the case of any interest
described in subparagraph (A), subsection (b)(4) shall be
applied without regard to subparagraphs (A), (H), (I), (J),
(K), and (L)(i) of such subsection.
``(C) Regulatory authority.--The Secretary may prescribe
such regulations as are necessary or appropriate to carry out
the

[[Page S3638]]

purposes of this paragraph, including regulations which
require more frequent or more detailed reporting.''.
(c) Conforming Amendments.--
(1) The table of sections for subpart H of part IV of
subchapter A of chapter 1 is amended by adding at the end the
following new item:

``Sec. 54A. Credit to holders of qualified rail infrastructure
bonds.''.
(2) Section 54(c)(2) is amended by inserting ``, section
54A,'' after ``subpart C''.
(d) Issuance of Regulations.--The Secretary of Treasury
shall issue regulations required under section 54A of the
Internal Revenue Code of 1986 (as added by this section) not
later than 120 days after the date of the enactment of this
Act.
(e) Effective Date.--The amendments made by this section
shall apply to bonds issued after the date of the enactment
of this Act.

SEC. 836. REPEAL OF SUSPENSION OF CERTAIN PENALTIES AND
INTEREST.

(a) In General.--Section 6404 is amended by striking
subsection (g).
(b) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to notices
provided by the Secretary of the Treasury, or his delegate
after the date which is 6 months after the date of the
enactment of the Small Business and Work Opportunity Tax Act
of 2007.
(2) Exception for certain taxpayers.--The amendments made
by this section shall not apply to any taxpayer with respect
to whom a suspension of any interest, penalty, addition to
tax, or other amount is in effect on the date which is 6
months after the date of the enactment of the Small Business
and Work Opportunity Tax Act of 2007.

SEC. 837. DENIAL OF DEDUCTION FOR CERTAIN FINES, PENALTIES,
AND OTHER AMOUNTS.

(a) In General.--Subsection (f) of section 162 (relating to
trade or business expenses) is amended to read as follows:
``(f) Fines, Penalties, and Other Amounts.--
``(1) In general.--Except as provided in paragraph (2), no
deduction otherwise allowable shall be allowed under this
chapter for any amount paid or incurred (whether by suit,
agreement, or otherwise) to, or at the direction of, a
government or entity described in paragraph (4) in relation
to--
``(A) the violation of any law, or
``(B) an investigation or inquiry into the potential
violation of any law which is initiated by such government or
entity.
``(2) Exception for amounts constituting restitution or
paid to come into compliance with law.--Paragraph (1) shall
not apply to any amount which--
``(A) the taxpayer establishes--
``(i) constitutes restitution (or remediation of property)
for damage or harm caused by, or which may be caused by, the
violation of any law or the potential violation of any law,
or
``(ii) is paid to come into compliance with any law which
was violated or involved in the investigation or inquiry, and
``(B) is identified as an amount described in clause (i) or
(ii) of subparagraph (A), as the case may be, in the court
order or settlement agreement, except that the requirement of
this subparagraph shall not apply in the case of any
settlement agreement which requires the taxpayer to pay or
incur an amount not greater than $1,000,000.
A taxpayer shall not meet the requirements of subparagraph
(A) solely by reason an identification under subparagraph
(B). This paragraph shall not apply to any amount paid or
incurred as reimbursement to the government or entity for the
costs of any investigation or litigation unless such amount
is paid or incurred for a cost or fee regularly charged for
any routine audit or other customary review performed by the
government or entity.
``(3) Exception for amounts paid or incurred as the result
of certain court orders.--Paragraph (1) shall not apply to
any amount paid or incurred by order of a court in a suit in
which no government or entity described in paragraph (4) is a
party.
``(4) Certain nongovernmental regulatory entities.--An
entity is described in this paragraph if it is--
``(A) a nongovernmental entity which exercises self-
regulatory powers (including imposing sanctions) in
connection with a qualified board or exchange (as defined in
section 1256(g)(7)), or
``(B) to the extent provided in regulations, a
nongovernmental entity which exercises self-regulatory powers
(including imposing sanctions) as part of performing an
essential governmental function.
``(5) Exception for taxes due.--Paragraph (1) shall not
apply to any amount paid or incurred as taxes due.''.
(b) Reporting of Deductible Amounts.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61 is amended by inserting after section 6050V the
following new section:

``SEC. 6050W. INFORMATION WITH RESPECT TO CERTAIN FINES,
PENALTIES, AND OTHER AMOUNTS.

``(a) Requirement of Reporting.--
``(1) In general.--The appropriate official of any
government or entity which is described in section 162(f)(4)
which is involved in a suit or agreement described in
paragraph (2) shall make a return in such form as determined
by the Secretary setting forth--
``(A) the amount required to be paid as a result of the
suit or agreement to which paragraph (1) of section 162(f)
applies,
``(B) any amount required to be paid as a result of the
suit or agreement which constitutes restitution or
remediation of property, and
``(C) any amount required to be paid as a result of the
suit or agreement for the purpose of coming into compliance
with any law which was violated or involved in the
investigation or inquiry.
``(2) Suit or agreement described.--
``(A) In general.--A suit or agreement is described in this
paragraph if--
``(i) it is--

``(I) a suit with respect to a violation of any law over
which the government or entity has authority and with respect
to which there has been a court order, or
``(II) an agreement which is entered into with respect to a
violation of any law over which the government or entity has
authority, or with respect to an investigation or inquiry by
the government or entity into the potential violation of any
law over which such government or entity has authority, and

``(ii) the aggregate amount involved in all court orders
and agreements with respect to the violation, investigation,
or inquiry is $600 or more.
``(B) Adjustment of reporting threshold.--The Secretary may
adjust the $600 amount in subparagraph (A)(ii) as necessary
in order to ensure the efficient administration of the
internal revenue laws.
``(3) Time of filing.--The return required under this
subsection shall be filed not later than--
``(A) 30 days after the date on which a court order is
issued with respect to the suit or the date the agreement is
entered into, as the case may be, or
``(B) the date specified by the Secretary.
``(b) Statements To Be Furnished to Individuals Involved in
the Settlement.--Every person required to make a return under
subsection (a) shall furnish to each person who is a party to
the suit or agreement a written statement showing--
``(1) the name of the government or entity, and
``(2) the information supplied to the Secretary under
subsection (a)(1).
The written statement required under the preceding sentence
shall be furnished to the person at the same time the
government or entity provides the Secretary with the
information required under subsection (a).
``(c) Appropriate Official Defined.--For purposes of this
section, the term `appropriate official' means the officer or
employee having control of the suit, investigation, or
inquiry or the person appropriately designated for purposes
of this section.''.
(2) Conforming amendment.--The table of sections for
subpart B of part III of subchapter A of chapter 61 is
amended by inserting after the item relating to section 6050V
the following new item:

``Sec. 6050W. Information with respect to certain fines, penalties, and
other amounts.''.
(c) Effective Date.--The amendments made by this section
shall apply to amounts paid or incurred on or after the date
of the enactment of this Act, except that such amendments
shall not apply to amounts paid or incurred under any binding
order or agreement entered into before such date. Such
exception shall not apply to an order or agreement requiring
court approval unless the approval was obtained before such
date.

SEC. 838. REVISION OF TAX RULES ON EXPATRIATION.

(a) In General.--Subpart A of part II of subchapter N of
chapter 1 is amended by inserting after section 877 the
following new section:

``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

``(a) General Rules.--For purposes of this subtitle--
``(1) Mark to market.--All property of a covered expatriate
shall be treated as sold on the day before the expatriation
date for its fair market value.
``(2) Recognition of gain or loss.--In the case of any sale
under paragraph (1)--
``(A) notwithstanding any other provision of this title,
any gain arising from such sale shall be taken into account
for the taxable year of the sale, and
``(B) any loss arising from such sale shall be taken into
account for the taxable year of the sale to the extent
otherwise provided by this title, except that section 1091
shall not apply to any such loss.
Proper adjustment shall be made in the amount of any gain or
loss subsequently realized for gain or loss taken into
account under the preceding sentence, determined without
regard to paragraph (3).
``(3) Exclusion for certain gain.--
``(A) In general.--The amount which would (but for this
paragraph) be includible in the gross income of any
individual by reason of paragraph (1) shall be reduced (but
not below zero) by $600,000.
``(B) Adjustment for inflation.--
``(i) In general.--In the case of any taxable year
beginning in a calendar year after 2008, the dollar amount in
subparagraph (A) shall be increased by an amount equal to--

``(I) such dollar amount, multiplied by
``(II) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, by substituting `calendar year 2007' for
`calendar year 1992' in subparagraph (B) thereof.

``(ii) Rounding.--If any amount as adjusted under clause
(i) is not a multiple of $1,000,

[[Page S3639]]

such amount shall be rounded to the nearest multiple of
$1,000.
``(b) Election To Defer Tax.--
``(1) In general.--If the taxpayer elects the application
of this subsection with respect to any property treated as
sold by reason of subsection (a), the time for payment of the
additional tax attributable to such property shall be
extended until the due date of the return for the taxable
year in which such property is disposed of (or, in the case
of property disposed of in a transaction in which gain is not
recognized in whole or in part, until such other date as the
Secretary may prescribe).
``(2) Determination of tax with respect to property.--For
purposes of paragraph (1), the additional tax attributable to
any property is an amount which bears the same ratio to the
additional tax imposed by this chapter for the taxable year
solely by reason of subsection (a) as the gain taken into
account under subsection (a) with respect to such property
bears to the total gain taken into account under subsection
(a) with respect to all property to which subsection (a)
applies.
``(3) Termination of extension.--The due date for payment
of tax may not be extended under this subsection later than
the due date for the return of tax imposed by this chapter
for the taxable year which includes the date of death of the
expatriate (or, if earlier, the time that the security
provided with respect to the property fails to meet the
requirements of paragraph (4), unless the taxpayer corrects
such failure within the time specified by the Secretary).
``(4) Security.--
``(A) In general.--No election may be made under paragraph
(1) with respect to any property unless adequate security is
provided with respect to such property.
``(B) Adequate security.--For purposes of subparagraph (A),
security with respect to any property shall be treated as
adequate security if--
``(i) it is a bond which is furnished to, and accepted by,
the Secretary, which is conditioned on the payment of tax
(and interest thereon), and which meets the requirements of
section 6325, or
``(ii) it is another form of security for such payment
(including letters of credit) that meets such requirements as
the Secretary may prescribe.
``(5) Waiver of certain rights.--No election may be made
under paragraph (1) unless the taxpayer makes an irrevocable
waiver of any right under any treaty of the United States
which would preclude assessment or collection of any tax
imposed by reason of this section.
``(6) Elections.--An election under paragraph (1) shall
only apply to property described in the election and, once
made, is irrevocable.
``(7) Interest.--For purposes of section 6601, the last
date for the payment of tax shall be determined without
regard to the election under this subsection.
``(c) Exception for Certain Property.--Subsection (a) shall
not apply to--
``(1) any deferred compensation item (as defined in
subsection (d)(4)),
``(2) any specified tax deferred account (as defined in
subsection (e)(2)), and
``(3) any interest in a nongrantor trust (as defined in
subsection (f)(3)).
``(d) Treatment of Deferred Compensation Items.--
``(1) Withholding on eligible deferred compensation
items.--
``(A) In general.--In the case of any eligible deferred
compensation item, the payor shall deduct and withhold from
any taxable payment to a covered expatriate with respect to
such item a tax equal to 30 percent thereof.
``(B) Taxable payment.--For purposes of subparagraph (A),
the term `taxable payment' means with respect to a covered
expatriate any payment to the extent it would be includible
in the gross income of the covered expatriate if such
expatriate continued to be subject to tax as a citizen or
resident of the United States. A deferred compensation item
shall be taken into account as a payment under the preceding
sentence when such item would be so includible.
``(2) Other deferred compensation items.--In the case of
any deferred compensation item which is not an eligible
deferred compensation item--
``(A)(i) with respect to any deferred compensation item to
which clause (ii) does not apply, an amount equal to the
present value of the covered expatriate's accrued benefit
shall be treated as having been received by such individual
on the day before the expatriation date as a distribution
under the plan, and
``(ii) with respect to any deferred compensation item
referred to in paragraph (4)(D), the rights of the covered
expatriate to such item shall be treated as becoming
transferable and not subject to a substantial risk of
forfeiture on the day before the expatriation date,
``(B) no early distribution tax shall apply by reason of
such treatment, and
``(C) appropriate adjustments shall be made to subsequent
distributions from the plan to reflect such treatment.
``(3) Eligible deferred compensation items.--For purposes
of this subsection, the term `eligible deferred compensation
item' means any deferred compensation item with respect to
which--
``(A) the payor of such item is--
``(i) a United States person, or
``(ii) a person who is not a United States person but who
elects to be treated as a United States person for purposes
of paragraph (1) and meets such requirements as the Secretary
may provide to ensure that the payor will meet the
requirements of paragraph (1), and
``(B) the covered expatriate--
``(i) notifies the payor of his status as a covered
expatriate, and
``(ii) makes an irrevocable waiver of any right to claim
any reduction under any treaty with the United States in
withholding on such item.
``(4) Deferred compensation item.--For purposes of this
subsection, the term `deferred compensation item' means--
``(A) any interest in a plan or arrangement described in
section 219(g)(5),
``(B) any interest in a foreign pension plan or similar
retirement arrangement or program,
``(C) any item of deferred compensation, and
``(D) any property, or right to property, which the
individual is entitled to receive in connection with the
performance of services to the extent not previously taken
into account under section 83 or in accordance with section
83.
``(5) Exception.--Paragraphs (1) and (2) shall not apply to
any deferred compensation item which is attributable to
services performed outside the United States while the
covered expatriate was not a citizen or resident of the
United States.
``(6) Special rules.--
``(A) Application of withholding rules.--Rules similar to
the rules of subchapter B of chapter 3 shall apply for
purposes of this subsection.
``(B) Application of tax.--Any item subject to the
withholding tax imposed under paragraph (1) shall be subject
to tax under section 871.
``(C) Coordination with other withholding requirements.--
Any item subject to withholding under paragraph (1) shall not
be subject to withholding under section 1441 or chapter 24.
``(e) Treatment of Specified Tax Deferred Accounts.--
``(1) Account treated as distributed.--In the case of any
interest in a specified tax deferred account held by a
covered expatriate on the day before the expatriation date--
``(A) the covered expatriate shall be treated as receiving
a distribution of his entire interest in such account on the
day before the expatriation date,
``(B) no early distribution tax shall apply by reason of
such treatment, and
``(C) appropriate adjustments shall be made to subsequent
distributions from the account to reflect such treatment.
``(2) Specified tax deferred account.--For purposes of
paragraph (1), the term `specified tax deferred account'
means an individual retirement plan (as defined in section
7701(a)(37)) other than any arrangement described in
subsection (k) or (p) of section 408, a qualified tuition
program (as defined in section 529), a Coverdell education
savings account (as defined in section 530), a health savings
account (as defined in section 223), and an Archer MSA (as
defined in section 220).
``(f) Special Rules for Nongrantor Trusts.--
``(1) In general.--In the case of a distribution (directly
or indirectly) of any property from a nongrantor trust to a
covered expatriate--
``(A) the trustee shall deduct and withhold from such
distribution an amount equal to 30 percent of the taxable
portion of the distribution, and
``(B) if the fair market value of such property exceeds its
adjusted basis in the hands of the trust, gain shall be
recognized to the trust as if such property were sold to the
expatriate at its fair market value.
``(2) Taxable portion.--For purposes of this subsection,
the term `taxable portion' means, with respect to any
distribution, that portion of the distribution which would be
includible in the gross income of the covered expatriate if
such expatriate continued to be subject to tax as a citizen
or resident of the United States.
``(3) Nongrantor trust.--For purposes of this subsection,
the term `nongrantor trust' means the portion of any trust
that the individual is not considered the owner of under
subpart E of part I of subchapter J. The determination under
the preceding sentence shall be made immediately before the
expatriation date.
``(4) Special rules relating to withholding.--For purposes
of this subsection--
``(A) rules similar to the rules of subsection (d)(6) shall
apply, and
``(B) the covered expatriate shall be treated as having
waived any right to claim any reduction under any treaty with
the United States in withholding on any distribution to which
paragraph (1)(A) applies.
``(g) Definitions and Special Rules Relating to
Expatriation.--For purposes of this section--
``(1) Covered expatriate.--
``(A) In general.--The term `covered expatriate' means an
expatriate who meets the requirements of subparagraph (A),
(B), or (C) of section 877(a)(2).
``(B) Exceptions.--An individual shall not be treated as
meeting the requirements of subparagraph (A) or (B) of
section 877(a)(2) if--
``(i) the individual--

[[Page S3640]]

``(I) became at birth a citizen of the United States and a
citizen of another country and, as of the expatriation date,
continues to be a citizen of, and is taxed as a resident of,
such other country, and
``(II) has been a resident of the United States (as defined
in section 7701(b)(1)(A)(ii)) for not more than 10 taxable
years during the 15-taxable year period ending with the
taxable year during which the expatriation date occurs, or

``(ii)(I) the individual's relinquishment of United States
citizenship occurs before such individual attains age 18\1/
2\, and
``(II) the individual has been a resident of the United
States (as so defined) for not more than 10 taxable years
before the date of relinquishment.
``(C) Covered expatriates also subject to tax as citizens
or residents.--In the case of any covered expatriate who is
subject to tax as a citizen or resident of the United States
for any period beginning after the expatriation date, such
individual shall not be treated as a covered expatriate
during such period for purposes of subsections (d)(1) and (f)
and section 2801.
``(2) Expatriate.--The term `expatriate' means--
``(A) any United States citizen who relinquishes his
citizenship, and
``(B) any long-term resident of the United States who
ceases to be a lawful permanent resident of the United States
(within the meaning of section 7701(b)(6)).
``(3) Expatriation date.--The term `expatriation date'
means--
``(A) the date an individual relinquishes United States
citizenship, or
``(B) in the case of a long-term resident of the United
States, the date on which the individual ceases to be a
lawful permanent resident of the United States (within the
meaning of section 7701(b)(6)).
``(4) Relinquishment of citizenship.--A citizen shall be
treated as relinquishing his United States citizenship on the
earliest of--
``(A) the date the individual renounces his United States
nationality before a diplomatic or consular officer of the
United States pursuant to paragraph (5) of section 349(a) of
the Immigration and Nationality Act (8 U.S.C. 1481(a)(5)),
``(B) the date the individual furnishes to the United
States Department of State a signed statement of voluntary
relinquishment of United States nationality confirming the
performance of an act of expatriation specified in paragraph
(1), (2), (3), or (4) of section 349(a) of the Immigration
and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
``(C) the date the United States Department of State issues
to the individual a certificate of loss of nationality, or
``(D) the date a court of the United States cancels a
naturalized citizen's certificate of naturalization.
Subparagraph (A) or (B) shall not apply to any individual
unless the renunciation or voluntary relinquishment is
subsequently approved by the issuance to the individual of a
certificate of loss of nationality by the United States
Department of State.
``(5) Long-term resident.--The term `long-term resident'
has the meaning given to such term by section 877(e)(2).
``(6) Early distribution tax.--The term `early distribution
tax' means any increase in tax imposed under section 72(t),
220(e)(4), 223(f)(4), 409A(a)(1)(B), 529(c)(6), or 530(d)(4).
``(h) Other Rules.--
``(1) Termination of deferrals, etc.--In the case of any
covered expatriate, notwithstanding any other provision of
this title--
``(A) any time period for acquiring property which would
result in the reduction in the amount of gain recognized with
respect to property disposed of by the taxpayer shall
terminate on the day before the expatriation date, and
``(B) any extension of time for payment of tax shall cease
to apply on the day before the expatriation date and the
unpaid portion of such tax shall be due and payable at the
time and in the manner prescribed by the Secretary.
``(2) Step-up in basis.--Solely for purposes of determining
any tax imposed by reason of subsection (a), property which
was held by an individual on the date the individual first
became a resident of the United States (within the meaning of
section 7701(b)) shall be treated as having a basis on such
date of not less than the fair market value of such property
on such date. The preceding sentence shall not apply if the
individual elects not to have such sentence apply. Such an
election, once made, shall be irrevocable.
``(3) Coordination with section 684.--If the expatriation
of any individual would result in the recognition of gain
under section 684, this section shall be applied after the
application of section 684.
``(i) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.''.
(b) Tax on Gifts and Bequests Received by United States
Citizens and Residents From Expatriates.--
(1) In general.--Subtitle B (relating to estate and gift
taxes) is amended by inserting after chapter 14 the following
new chapter:

``CHAPTER 15--GIFTS AND BEQUESTS FROM EXPATRIATES

``Sec. 2801. Imposition of tax.

``SEC. 2801. IMPOSITION OF TAX.

``(a) In General.--If, during any calendar year, any United
States citizen or resident receives any covered gift or
bequest, there is hereby imposed a tax equal to the product
of--
``(1) the highest rate of tax specified in the table
contained in section 2001(c) as in effect on the date of such
receipt (or, if greater, the highest rate of tax specified in
the table applicable under section 2502(a) as in effect on
the date), and
``(2) the value of such covered gift or bequest.
``(b) Tax To Be Paid by Recipient.--The tax imposed by
subsection (a) on any covered gift or bequest shall be paid
by the person receiving such gift or bequest.
``(c) Exception for Certain Gifts.--Subsection (a) shall
apply only to the extent that the value of covered gifts and
bequests received by any person during the calendar year
exceeds $10,000.
``(d) Tax Reduced by Foreign Gift or Estate Tax.--The tax
imposed by subsection (a) on any covered gift or bequest
shall be reduced by the amount of any gift or estate tax paid
to a foreign country with respect to such covered gift or
bequest.
``(e) Covered Gift or Bequest.--
``(1) In general.--For purposes of this chapter, the term
`covered gift or bequest' means--
``(A) any property acquired by gift directly or indirectly
from an individual who, at the time of such acquisition, is a
covered expatriate, and
``(B) any property acquired directly or indirectly by
reason of the death of an individual who, immediately before
such death, was a covered expatriate.
``(2) Exceptions for transfers otherwise subject to estate
or gift tax.--Such term shall not include--
``(A) any property shown on a timely filed return of tax
imposed by chapter 12 which is a taxable gift by the covered
expatriate, and
``(B) any property included in the gross estate of the
covered expatriate for purposes of chapter 11 and shown on a
timely filed return of tax imposed by chapter 11 of the
estate of the covered expatriate.
``(3) Transfers in trust.--
``(A) Domestic trusts.--In the case of a covered gift or
bequest made to a domestic trust--
``(i) subsection (a) shall apply in the same manner as if
such trust were a United States citizen, and
``(ii) the tax imposed by subsection (a) on such gift or
bequest shall be paid by such trust.
``(B) Foreign trusts.--
``(i) In general.--In the case of a covered gift or bequest
made to a foreign trust, subsection (a) shall apply to any
distribution attributable to such gift or bequest from such
trust (whether from income or corpus) to a United States
citizen or resident in the same manner as if such
distribution were a covered gift or bequest.
``(ii) Deduction for tax paid by recipient.--There shall be
allowed as a deduction under section 164 the amount of tax
imposed by this section which is paid or accrued by a United
States citizen or resident by reason of a distribution from a
foreign trust, but only to the extent such tax is imposed on
the portion of such distribution which is included in the
gross income of such citizen or resident.
``(iii) Election to be treated as domestic trust.--Solely
for purposes of this section, a foreign trust may elect to be
treated as a domestic trust. Such an election may be revoked
with the consent of the Secretary.
``(f) Covered Expatriate.--For purposes of this section,
the term `covered expatriate' has the meaning given to such
term by section 877A(g)(1).''.
(2) Clerical amendment.--The table of chapters for subtitle
B is amended by inserting after the item relating to chapter
14 the following new item:

``Chapter 15. Gifts and Bequests From Expatriates.''.

(c) Definition of Termination of United States
Citizenship.--
(1) In general.--Section 7701(a) is amended by adding at
the end the following new paragraph:
``(50) Termination of united states citizenship.--
``(A) In general.--An individual shall not cease to be
treated as a United States citizen before the date on which
the individual's citizenship is treated as relinquished under
section 877A(g)(4).
``(B) Dual citizens.--Under regulations prescribed by the
Secretary, subparagraph (A) shall not apply to an individual
who became at birth a citizen of the United States and a
citizen of another country.''.
(2) Conforming amendments.--
(A) Paragraph (1) of section 877(e) is amended to read as
follows:
``(1) In general.--Any long-term resident of the United
States who ceases to be a lawful permanent resident of the
United States (within the meaning of section 7701(b)(6))
shall be treated for purposes of this section and sections
2107, 2501, and 6039G in the same manner as if such resident
were a citizen of the United States who lost United States
citizenship on the date of such cessation or commencement.''.
(B) Paragraph (6) of section 7701(b) is amended by adding
at the end the following flush sentence:
``An individual shall cease to be treated as a lawful
permanent resident of the United States if such individual
commences to be treated as a resident of a foreign country
under the provisions of a tax treaty between the United
States and the foreign country, does not waive the benefits
of such treaty

[[Page S3641]]

applicable to residents of the foreign country, and notifies
the Secretary of the commencement of such treatment.''.
(C) Section 7701 is amended by striking subsection (n) and
by redesignating subsections (o) and (p) as subsections (n)
and (o), respectively.
(d) Information Returns.--Section 6039G is amended--
(1) by inserting ``or 877A'' after ``section 877(b)'' in
subsection (a), and
(2) by inserting ``or 877A'' after ``section 877(a)'' in
subsection (d).
(e) Clerical Amendment.--The table of sections for subpart
A of part II of subchapter N of chapter 1 is amended by
inserting after the item relating to section 877 the
following new item:

``Sec. 877A. Tax responsibilities of expatriation.''.
(f) Effective Date.--
(1) In general.--Except as provided in this subsection, the
amendments made by this section shall apply to expatriates
(as defined in section 877A(g) of the Internal Revenue Code
of 1986, as added by this section) whose expatriation date
(as so defined) is on or after the date of the enactment of
this Act.
(2) Gifts and bequests.--Chapter 15 of the Internal Revenue
Code of 1986 (as added by subsection (b)) shall apply to
covered gifts and bequests (as defined in section 2801 of
such Code, as so added) received on or after the date of the
enactment of this Act, regardless of when the transferor
expatriated.
______