In the nature of a substitute.

SA 5685. Mr. DODD proposed an amendment to the bill H.R. 1424, of
1974, section 2705 of the Public Health Service Act, section 9812 of
the Internal Revenue Code of 1986 to require equity in the provision of
mental health and substance-related disorder benefits under group
health plans, to prohibit discrimination on the basis of genetic
information with respect to health insurance and employment, and for
other purposes; as follows:

Strike all after the enacting clause and insert the
following:

DIVISION A--EMERGENCY ECONOMIC STABILIZATION

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

(a) Short Title.--This division may be cited as the
``Emergency Economic Stabilization Act of 2008''.
(b) Table of Contents.--The table of contents for this
division is as follows:

Sec. 1. Short title and table of contents.
Sec. 2. Purposes.
Sec. 3. Definitions.

TITLE I--TROUBLED ASSETS RELIEF PROGRAM

Sec. 101. Purchases of troubled assets.
Sec. 102. Insurance of troubled assets.
Sec. 103. Considerations.
Sec. 104. Financial Stability Oversight Board.
Sec. 105. Reports.
Sec. 106. Rights; management; sale of troubled assets; revenues and
sale proceeds.
Sec. 107. Contracting procedures.
Sec. 108. Conflicts of interest.
Sec. 109. Foreclosure mitigation efforts.
Sec. 110. Assistance to homeowners.
Sec. 111. Executive compensation and corporate governance.
Sec. 112. Coordination with foreign authorities and central banks.
Sec. 113. Minimization of long-term costs and maximization of benefits
for taxpayers.
Sec. 114. Market transparency.
Sec. 115. Graduated authorization to purchase.
Sec. 116. Oversight and audits.
Sec. 117. Study and report on margin authority.
Sec. 118. Funding.
Sec. 119. Judicial review and related matters.
Sec. 120. Termination of authority.
Sec. 121. Special Inspector General for the Troubled Asset Relief
Program.
Sec. 122. Increase in statutory limit on the public debt.
Sec. 123. Credit reform.
Sec. 124. HOPE for Homeowners amendments.
Sec. 125. Congressional Oversight Panel.
Sec. 126. FDIC authority.
Sec. 127. Cooperation with the FBI.
Sec. 128. Acceleration of effective date.
Sec. 129. Disclosures on exercise of loan authority.
Sec. 130. Technical corrections.
Sec. 131. Exchange Stabilization Fund reimbursement.
Sec. 132. Authority to suspend mark-to-market accounting.
Sec. 133. Study on mark-to-market accounting.
Sec. 134. Recoupment.
Sec. 135. Preservation of authority.
Sec. 136. Temporary increase in deposit and share insurance coverage.

TITLE II--BUDGET-RELATED PROVISIONS

Sec. 201. Information for congressional support agencies.
Sec. 202. Reports by the Office of Management and Budget and the
Congressional Budget Office.
Sec. 203. Analysis in President's Budget.
Sec. 204. Emergency treatment.

TITLE III--TAX PROVISIONS

Sec. 301. Gain or loss from sale or exchange of certain preferred
stock.
Sec. 302. Special rules for tax treatment of executive compensation of
employers participating in the troubled assets relief
program.
Sec. 303. Extension of exclusion of income from discharge of qualified
principal residence indebtedness.

SEC. 2. PURPOSES.

The purposes of this Act are--
(1) to immediately provide authority and facilities that
the Secretary of the Treasury can use to restore liquidity
and stability to the financial system of the United States;
and
(2) to ensure that such authority and such facilities are
used in a manner that--
(A) protects home values, college funds, retirement
accounts, and life savings;
(B) preserves homeownership and promotes jobs and economic
growth;
(C) maximizes overall returns to the taxpayers of the
United States; and
(D) provides public accountability for the exercise of such
authority.

SEC. 3. DEFINITIONS.

For purposes of this Act, the following definitions shall
apply:
(1) Appropriate committees of congress.--The term
``appropriate committees of Congress'' means--
(A) the Committee on Banking, Housing, and Urban Affairs,
the Committee on Finance, the Committee on the Budget, and
the Committee on Appropriations of the Senate; and
(B) the Committee on Financial Services, the Committee on
Ways and Means, the Committee on the Budget, and the
Committee on Appropriations of the House of Representatives.
(2) Board.--The term ``Board'' means the Board of Governors
of the Federal Reserve System.
(3) Congressional support agencies.--The term
``congressional support agencies'' means the Congressional
Budget Office and the Joint Committee on Taxation.
(4) Corporation.--The term ``Corporation'' means the
Federal Deposit Insurance Corporation.
(5) Financial institution.--The term ``financial
institution'' means any institution, including, but not
limited to, any bank, savings association, credit union,
security broker or dealer, or insurance company, established
and regulated under the laws of the United States or any
State, territory, or possession of the United States, the
District of Columbia, Commonwealth of Puerto Rico,
Commonwealth of Northern Mariana Islands, Guam, American
Samoa, or the United States Virgin Islands, and having
significant operations in the United States, but excluding
any central bank of, or institution owned by, a foreign
government.
(6) Fund.--The term ``Fund'' means the Troubled Assets
Insurance Financing Fund established under section 102.
(7) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(8) TARP.--The term ``TARP'' means the Troubled Asset
Relief Program established under section 101.
(9) Troubled assets.--The term ``troubled assets'' means--
(A) residential or commercial mortgages and any securities,
obligations, or other instruments that are based on or
related to such mortgages, that in each case was originated
or issued on or before March 14, 2008, the purchase of which
the Secretary determines promotes financial market stability;
and
(B) any other financial instrument that the Secretary,
after consultation with the Chairman of the Board of
Governors of the Federal Reserve System, determines the
purchase of which is necessary to promote financial market
stability, but only upon transmittal of such determination,
in writing, to the appropriate committees of Congress.

[[Page S10341]]

TITLE I--TROUBLED ASSETS RELIEF PROGRAM

SEC. 101. PURCHASES OF TROUBLED ASSETS.

(a) Offices; Authority.--
(1) Authority.--The Secretary is authorized to establish
the Troubled Asset Relief Program (or ``TARP'') to purchase,
and to make and fund commitments to purchase, troubled assets
from any financial institution, on such terms and conditions
as are determined by the Secretary, and in accordance with
this Act and the policies and procedures developed and
published by the Secretary.
(2) Commencement of program.--Establishment of the policies
and procedures and other similar administrative requirements
imposed on the Secretary by this Act are not intended to
delay the commencement of the TARP.
(3) Establishment of treasury office.--
(A) In general.--The Secretary shall implement any program
under paragraph (1) through an Office of Financial Stability,
established for such purpose within the Office of Domestic
Finance of the Department of the Treasury, which office shall
be headed by an Assistant Secretary of the Treasury,
appointed by the President, by and with the advice and
consent of the Senate, except that an interim Assistant
Secretary may be appointed by the Secretary.
(B) Clerical amendments.--
(i) Title 5.--Section 5315 of title 5, United States Code,
is amended in the item relating to Assistant Secretaries of
the Treasury, by striking ``(9)'' and inserting ``(10)''.
(ii) Title 31.--Section 301(e) of title 31, United States
Code, is amended by striking ``9'' and inserting ``10''.
(b) Consultation.--In exercising the authority under this
section, the Secretary shall consult with the Board, the
Corporation, the Comptroller of the Currency, the Director of
the Office of Thrift Supervision, the Chairman of the
National Credit Union Administration Board, and the Secretary
of Housing and Urban Development.
(c) Necessary Actions.--The Secretary is authorized to take
such actions as the Secretary deems necessary to carry out
the authorities in this Act, including, without limitation,
the following:
(1) The Secretary shall have direct hiring authority with
respect to the appointment of employees to administer this
Act.
(2) Entering into contracts, including contracts for
services authorized by section 3109 of title 5, United States
Code.
(3) Designating financial institutions as financial agents
of the Federal Government, and such institutions shall
perform all such reasonable duties related to this Act as
financial agents of the Federal Government as may be
required.
(4) In order to provide the Secretary with the flexibility
to manage troubled assets in a manner designed to minimize
cost to the taxpayers, establishing vehicles that are
authorized, subject to supervision by the Secretary, to
purchase, hold, and sell troubled assets and issue
obligations.
(5) Issuing such regulations and other guidance as may be
necessary or appropriate to define terms or carry out the
authorities or purposes of this Act.
(d) Program Guidelines.--Before the earlier of the end of
the 2-business-day period beginning on the date of the first
purchase of troubled assets pursuant to the authority under
this section or the end of the 45-day period beginning on the
date of enactment of this Act, the Secretary shall publish
program guidelines, including the following:
(1) Mechanisms for purchasing troubled assets.
(2) Methods for pricing and valuing troubled assets.
(3) Procedures for selecting asset managers.
(4) Criteria for identifying troubled assets for purchase.
(e) Preventing Unjust Enrichment.--In making purchases
under the authority of this Act, the Secretary shall take
such steps as may be necessary to prevent unjust enrichment
of financial institutions participating in a program
established under this section, including by preventing the
sale of a troubled asset to the Secretary at a higher price
than what the seller paid to purchase the asset. This
subsection does not apply to troubled assets acquired in a
merger or acquisition, or a purchase of assets from a
financial institution in conservatorship or receivership, or
that has initiated bankruptcy proceedings under title 11,
United States Code.

SEC. 102. INSURANCE OF TROUBLED ASSETS.

(a) Authority.--
(1) In general.--If the Secretary establishes the program
authorized under section 101, then the Secretary shall
establish a program to guarantee troubled assets originated
or issued prior to March 14, 2008, including mortgage-backed
securities.
(2) Guarantees.--In establishing any program under this
subsection, the Secretary may develop guarantees of troubled
assets and the associated premiums for such guarantees. Such
guarantees and premiums may be determined by category or
class of the troubled assets to be guaranteed.
(3) Extent of guarantee.--Upon request of a financial
institution, the Secretary may guarantee the timely payment
of principal of, and interest on, troubled assets in amounts
not to exceed 100 percent of such payments. Such guarantee
may be on such terms and conditions as are determined by the
Secretary, provided that such terms and conditions are
consistent with the purposes of this Act.
(b) Reports.--Not later than 90 days after the date of
enactment of this Act, the Secretary shall report to the
appropriate committees of Congress on the program established
under subsection (a).
(c) Premiums.--
(1) In general.--The Secretary shall collect premiums from
any financial institution participating in the program
established under subsection (a). Such premiums shall be in
an amount that the Secretary determines necessary to meet the
purposes of this Act and to provide sufficient reserves
pursuant to paragraph (3).
(2) Authority to base premiums on product risk.--In
establishing any premium under paragraph (1), the Secretary
may provide for variations in such rates according to the
credit risk associated with the particular troubled asset
that is being guaranteed. The Secretary shall publish the
methodology for setting the premium for a class of troubled
assets together with an explanation of the appropriateness of
the class of assets for participation in the program
established under this section. The methodology shall ensure
that the premium is consistent with paragraph (3).
(3) Minimum level.--The premiums referred to in paragraph
(1) shall be set by the Secretary at a level necessary to
create reserves sufficient to meet anticipated claims, based
on an actuarial analysis, and to ensure that taxpayers are
fully protected.
(4) Adjustment to purchase authority.--The purchase
authority limit in section 115 shall be reduced by an amount
equal to the difference between the total of the outstanding
guaranteed obligations and the balance in the Troubled Assets
Insurance Financing Fund.
(d) Troubled Assets Insurance Financing Fund.--
(1) Deposits.--The Secretary shall deposit fees collected
under this section into the Fund established under paragraph
(2).
(2) Establishment.--There is established a Troubled Assets
Insurance Financing Fund that shall consist of the amounts
collected pursuant to paragraph (1), and any balance in such
fund shall be invested by the Secretary in United States
Treasury securities, or kept in cash on hand or on deposit,
as necessary.
(3) Payments from fund.--The Secretary shall make payments
from amounts deposited in the Fund to fulfill obligations of
the guarantees provided to financial institutions under
subsection (a).

SEC. 103. CONSIDERATIONS.

In exercising the authorities granted in this Act, the
Secretary shall take into consideration--
(1) protecting the interests of taxpayers by maximizing
overall returns and minimizing the impact on the national
debt;
(2) providing stability and preventing disruption to
financial markets in order to limit the impact on the economy
and protect American jobs, savings, and retirement security;
(3) the need to help families keep their homes and to
stabilize communities;
(4) in determining whether to engage in a direct purchase
from an individual financial institution, the long-term
viability of the financial institution in determining whether
the purchase represents the most efficient use of funds under
this Act;
(5) ensuring that all financial institutions are eligible
to participate in the program, without discrimination based
on size, geography, form of organization, or the size, type,
and number of assets eligible for purchase under this Act;
(6) providing financial assistance to financial
institutions, including those serving low- and moderate-
income populations and other underserved communities, and
that have assets less than $1,000,000,000, that were well or
adequately capitalized as of June 30, 2008, and that as a
result of the devaluation of the preferred government-
sponsored enterprises stock will drop one or more capital
levels, in a manner sufficient to restore the financial
institutions to at least an adequately capitalized level;
(7) the need to ensure stability for United States public
instrumentalities, such as counties and cities, that may have
suffered significant increased costs or losses in the current
market turmoil;
(8) protecting the retirement security of Americans by
purchasing troubled assets held by or on behalf of an
eligible retirement plan described in clause (iii), (iv),
(v), or (vi) of section 402(c)(8)(B) of the Internal Revenue
Code of 1986, except that such authority shall not extend to
any compensation arrangements subject to section 409A of such
Code; and
(9) the utility of purchasing other real estate owned and
instruments backed by mortgages on multifamily properties.

SEC. 104. FINANCIAL STABILITY OVERSIGHT BOARD.

(a) Establishment.--There is established the Financial
Stability Oversight Board, which shall be responsible for--
(1) reviewing the exercise of authority under a program
developed in accordance with this Act, including--
(A) policies implemented by the Secretary and the Office of
Financial Stability created under sections 101 and 102,
including the appointment of financial agents, the
designation of asset classes to be purchased, and plans for
the structure of vehicles used to purchase troubled assets;
and

[[Page S10342]]

(B) the effect of such actions in assisting American
families in preserving home ownership, stabilizing financial
markets, and protecting taxpayers;
(2) making recommendations, as appropriate, to the
Secretary regarding use of the authority under this Act; and
(3) reporting any suspected fraud, misrepresentation, or
malfeasance to the Special Inspector General for the Troubled
Assets Relief Program or the Attorney General of the United
States, consistent with section 535(b) of title 28, United
States Code.
(b) Membership.--The Financial Stability Oversight Board
shall be comprised of--
(1) the Chairman of the Board of Governors of the Federal
Reserve System;
(2) the Secretary;
(3) the Director of the Federal Housing Finance Agency;
(4) the Chairman of the Securities Exchange Commission; and
(5) the Secretary of Housing and Urban Development.
(c) Chairperson.--The chairperson of the Financial
Stability Oversight Board shall be elected by the members of
the Board from among the members other than the Secretary.
(d) Meetings.--The Financial Stability Oversight Board
shall meet 2 weeks after the first exercise of the purchase
authority of the Secretary under this Act, and monthly
thereafter.
(e) Additional Authorities.--In addition to the
responsibilities described in subsection (a), the Financial
Stability Oversight Board shall have the authority to ensure
that the policies implemented by the Secretary are--
(1) in accordance with the purposes of this Act;
(2) in the economic interests of the United States; and
(3) consistent with protecting taxpayers, in accordance
with section 113(a).
(f) Credit Review Committee.--The Financial Stability
Oversight Board may appoint a credit review committee for the
purpose of evaluating the exercise of the purchase authority
provided under this Act and the assets acquired through the
exercise of such authority, as the Financial Stability
Oversight Board determines appropriate.
(g) Reports.--The Financial Stability Oversight Board shall
report to the appropriate committees of Congress and the
Congressional Oversight Panel established under section 125,
not less frequently than quarterly, on the matters described
under subsection (a)(1).
(h) Termination.--The Financial Stability Oversight Board,
and its authority under this section, shall terminate on the
expiration of the 15-day period beginning upon the later of--
(1) the date that the last troubled asset acquired by the
Secretary under section 101 has been sold or transferred out
of the ownership or control of the Federal Government; or
(2) the date of expiration of the last insurance contract
issued under section 102.

SEC. 105. REPORTS.

(a) In General.--Before the expiration of the 60-day period
beginning on the date of the first exercise of the authority
granted in section 101(a), or of the first exercise of the
authority granted in section 102, whichever occurs first, and
every 30-day period thereafter, the Secretary shall report to
the appropriate committees of Congress, with respect to each
such period--
(1) an overview of actions taken by the Secretary,
including the considerations required by section 103 and the
efforts under section 109;
(2) the actual obligation and expenditure of the funds
provided for administrative expenses by section 118 during
such period and the expected expenditure of such funds in the
subsequent period; and
(3) a detailed financial statement with respect to the
exercise of authority under this Act, including--
(A) all agreements made or renewed;
(B) all insurance contracts entered into pursuant to
section 102;
(C) all transactions occurring during such period,
including the types of parties involved;
(D) the nature of the assets purchased;
(E) all projected costs and liabilities;
(F) operating expenses, including compensation for
financial agents;
(G) the valuation or pricing method used for each
transaction; and
(H) a description of the vehicles established to exercise
such authority.
(b) Tranche Reports to Congress.--
(1) Reports.--The Secretary shall provide to the
appropriate committees of Congress, at the times specified in
paragraph (2), a written report, including--
(A) a description of all of the transactions made during
the reporting period;
(B) a description of the pricing mechanism for the
transactions;
(C) a justification of the price paid for and other
financial terms associated with the transactions;
(D) a description of the impact of the exercise of such
authority on the financial system, supported, to the extent
possible, by specific data;
(E) a description of challenges that remain in the
financial system, including any benchmarks yet to be
achieved; and
(F) an estimate of additional actions under the authority
provided under this Act that may be necessary to address such
challenges.
(2) Timing.--The report required by this subsection shall
be submitted not later than 7 days after the date on which
commitments to purchase troubled assets under the authorities
provided in this Act first reach an aggregate of
$50,000,000,000 and not later than 7 days after each
$50,000,000,000 interval of such commitments is reached
thereafter.
(c) Regulatory Modernization Report.--The Secretary shall
review the current state of the financial markets and the
regulatory system and submit a written report to the
appropriate committees of Congress not later than April 30,
2009, analyzing the current state of the regulatory system
and its effectiveness at overseeing the participants in the
financial markets, including the over-the-counter swaps
market and government-sponsored enterprises, and providing
recommendations for improvement, including--
(1) recommendations regarding--
(A) whether any participants in the financial markets that
are currently outside the regulatory system should become
subject to the regulatory system; and
(B) enhancement of the clearing and settlement of over-the-
counter swaps; and
(2) the rationale underlying such recommendations.
(d) Sharing of Information.--Any report required under this
section shall also be submitted to the Congressional
Oversight Panel established under section 125.
(e) Sunset.--The reporting requirements under this section
shall terminate on the later of--
(1) the date that the last troubled asset acquired by the
Secretary under section 101 has been sold or transferred out
of the ownership or control of the Federal Government; or
(2) the date of expiration of the last insurance contract
issued under section 102.

SEC. 106. RIGHTS; MANAGEMENT; SALE OF TROUBLED ASSETS;
REVENUES AND SALE PROCEEDS.

(a) Exercise of Rights.--The Secretary may, at any time,
exercise any rights received in connection with troubled
assets purchased under this Act.
(b) Management of Troubled Assets.--The Secretary shall
have authority to manage troubled assets purchased under this
Act, including revenues and portfolio risks therefrom.
(c) Sale of Troubled Assets.--The Secretary may, at any
time, upon terms and conditions and at a price determined by
the Secretary, sell, or enter into securities loans,
repurchase transactions, or other financial transactions in
regard to, any troubled asset purchased under this Act.
(d) Transfer to Treasury.--Revenues of, and proceeds from
the sale of troubled assets purchased under this Act, or from
the sale, exercise, or surrender of warrants or senior debt
instruments acquired under section 113 shall be paid into the
general fund of the Treasury for reduction of the public
debt.
(e) Application of Sunset to Troubled Assets.--The
authority of the Secretary to hold any troubled asset
purchased under this Act before the termination date in
section 120, or to purchase or fund the purchase of a
troubled asset under a commitment entered into before the
termination date in section 120, is not subject to the
provisions of section 120.

SEC. 107. CONTRACTING PROCEDURES.

(a) Streamlined Process.--For purposes of this Act, the
Secretary may waive specific provisions of the Federal
Acquisition Regulation upon a determination that urgent and
compelling circumstances make compliance with such provisions
contrary to the public interest. Any such determination, and
the justification for such determination, shall be submitted
to the Committees on Oversight and Government Reform and
Financial Services of the House of Representatives and the
Committees on Homeland Security and Governmental Affairs and
Banking, Housing, and Urban Affairs of the Senate within 7
days.
(b) Additional Contracting Requirements.--In any
solicitation or contract where the Secretary has, pursuant to
subsection (a), waived any provision of the Federal
Acquisition Regulation pertaining to minority contracting,
the Secretary shall develop and implement standards and
procedures to ensure, to the maximum extent practicable, the
inclusion and utilization of minorities (as such term is
defined in section 1204(c) of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1811
note)) and women, and minority- and women-owned businesses
(as such terms are defined in section 21A(r)(4) of the
Federal Home Loan Bank Act (12 U.S.C. 1441a(r)(4)), in that
solicitation or contract, including contracts to asset
managers, servicers, property managers, and other service
providers or expert consultants.
(c) Eligibility of FDIC.--Notwithstanding subsections (a)
and (b), the Corporation--
(1) shall be eligible for, and shall be considered in, the
selection of asset managers for residential mortgage loans
and residential mortgage-backed securities; and
(2) shall be reimbursed by the Secretary for any services
provided.

SEC. 108. CONFLICTS OF INTEREST.

(a) Standards Required.--The Secretary shall issue
regulations or guidelines necessary to address and manage or
to prohibit conflicts of interest that may arise in
connection with the administration and execution of the
authorities provided under this Act, including--
(1) conflicts arising in the selection or hiring of
contractors or advisors, including asset managers;
(2) the purchase of troubled assets;
(3) the management of the troubled assets held;

[[Page S10343]]

(4) post-employment restrictions on employees; and
(5) any other potential conflict of interest, as the
Secretary deems necessary or appropriate in the public
interest.
(b) Timing.--Regulations or guidelines required by this
section shall be issued as soon as practicable after the date
of enactment of this Act.

SEC. 109. FORECLOSURE MITIGATION EFFORTS.

(a) Residential Mortgage Loan Servicing Standards.--To the
extent that the Secretary acquires mortgages, mortgage backed
securities, and other assets secured by residential real
estate, including multifamily housing, the Secretary shall
implement a plan that seeks to maximize assistance for
homeowners and use the authority of the Secretary to
encourage the servicers of the underlying mortgages,
considering net present value to the taxpayer, to take
advantage of the HOPE for Homeowners Program under section
257 of the National Housing Act or other available programs
to minimize foreclosures. In addition, the Secretary may use
loan guarantees and credit enhancements to facilitate loan
modifications to prevent avoidable foreclosures.
(b) Coordination.--The Secretary shall coordinate with the
Corporation, the Board (with respect to any mortgage or
mortgage-backed securities or pool of securities held, owned,
or controlled by or on behalf of a Federal reserve bank, as
provided in section 110(a)(1)(C)), the Federal Housing
Finance Agency, the Secretary of Housing and Urban
Development, and other Federal Government entities that hold
troubled assets to attempt to identify opportunities for the
acquisition of classes of troubled assets that will improve
the ability of the Secretary to improve the loan modification
and restructuring process and, where permissible, to permit
bona fide tenants who are current on their rent to remain in
their homes under the terms of the lease. In the case of a
mortgage on a residential rental property, the plan required
under this section shall include protecting Federal, State,
and local rental subsidies and protections, and ensuring any
modification takes into account the need for operating funds
to maintain decent and safe conditions at the property.
(c) Consent to Reasonable Loan Modification Requests.--Upon
any request arising under existing investment contracts, the
Secretary shall consent, where appropriate, and considering
net present value to the taxpayer, to reasonable requests for
loss mitigation measures, including term extensions, rate
reductions, principal write downs, increases in the
proportion of loans within a trust or other structure allowed
to be modified, or removal of other limitation on
modifications.

SEC. 110. ASSISTANCE TO HOMEOWNERS.

(a) Definitions.--As used in this section--
(1) the term ``Federal property manager'' means--
(A) the Federal Housing Finance Agency, in its capacity as
conservator of the Federal National Mortgage Association and
the Federal Home Loan Mortgage Corporation;
(B) the Corporation, with respect to residential mortgage
loans and mortgage-backed securities held by any bridge
depository institution pursuant to section 11(n) of the
Federal Deposit Insurance Act; and
(C) the Board, with respect to any mortgage or mortgage-
backed securities or pool of securities held, owned, or
controlled by or on behalf of a Federal reserve bank, other
than mortgages or securities held, owned, or controlled in
connection with open market operations under section 14 of
the Federal Reserve Act (12 U.S.C. 353), or as collateral for
an advance or discount that is not in default;
(2) the term ``consumer'' has the same meaning as in
section 103 of the Truth in Lending Act (15 U.S.C. 1602);
(3) the term ``insured depository institution'' has the
same meaning as in section 3 of the Federal Deposit Insurance
Act (12 U.S.C. 1813); and
(4) the term ``servicer'' has the same meaning as in
section 6(i)(2) of the Real Estate Settlement Procedures Act
of 1974 (12 U.S.C. 2605(i)(2)).
(b) Homeowner Assistance by Agencies.--
(1) In general.--To the extent that the Federal property
manager holds, owns, or controls mortgages, mortgage backed
securities, and other assets secured by residential real
estate, including multifamily housing, the Federal property
manager shall implement a plan that seeks to maximize
assistance for homeowners and use its authority to encourage
the servicers of the underlying mortgages, and considering
net present value to the taxpayer, to take advantage of the
HOPE for Homeowners Program under section 257 of the National
Housing Act or other available programs to minimize
foreclosures.
(2) Modifications.--In the case of a residential mortgage
loan, modifications made under paragraph (1) may include--
(A) reduction in interest rates;
(B) reduction of loan principal; and
(C) other similar modifications.
(3) Tenant protections.--In the case of mortgages on
residential rental properties, modifications made under
paragraph (1) shall ensure--
(A) the continuation of any existing Federal, State, and
local rental subsidies and protections; and
(B) that modifications take into account the need for
operating funds to maintain decent and safe conditions at the
property.
(4) Timing.--Each Federal property manager shall develop
and begin implementation of the plan required by this
subsection not later than 60 days after the date of enactment
of this Act.
(5) Reports to congress.--Each Federal property manager
shall, 60 days after the date of enactment of this Act and
every 30 days thereafter, report to Congress specific
information on the number and types of loan modifications
made and the number of actual foreclosures occurring during
the reporting period in accordance with this section.
(6) Consultation.--In developing the plan required by this
subsection, the Federal property managers shall consult with
one another and, to the extent possible, utilize consistent
approaches to implement the requirements of this subsection.
(c) Actions With Respect to Servicers.--In any case in
which a Federal property manager is not the owner of a
residential mortgage loan, but holds an interest in
obligations or pools of obligations secured by residential
mortgage loans, the Federal property manager shall--
(1) encourage implementation by the loan servicers of loan
modifications developed under subsection (b); and
(2) assist in facilitating any such modifications, to the
extent possible.
(d) Limitation.--The requirements of this section shall not
supersede any other duty or requirement imposed on the
Federal property managers under otherwise applicable law.

SEC. 111. EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE.

(a) Applicability.--Any financial institution that sells
troubled assets to the Secretary under this Act shall be
subject to the executive compensation requirements of
subsections (b) and (c) and the provisions under the Internal
Revenue Code of 1986, as provided under the amendment by
section 302, as applicable.
(b) Direct Purchases.--
(1) In general.--Where the Secretary determines that the
purposes of this Act are best met through direct purchases of
troubled assets from an individual financial institution
where no bidding process or market prices are available, and
the Secretary receives a meaningful equity or debt position
in the financial institution as a result of the transaction,
the Secretary shall require that the financial institution
meet appropriate standards for executive compensation and
corporate governance. The standards required under this
subsection shall be effective for the duration of the period
that the Secretary holds an equity or debt position in the
financial institution.
(2) Criteria.--The standards required under this subsection
shall include--
(A) limits on compensation that exclude incentives for
senior executive officers of a financial institution to take
unnecessary and excessive risks that threaten the value of
the financial institution during the period that the
Secretary holds an equity or debt position in the financial
institution;
(B) a provision for the recovery by the financial
institution of any bonus or incentive compensation paid to a
senior executive officer based on statements of earnings,
gains, or other criteria that are later proven to be
materially inaccurate; and
(C) a prohibition on the financial institution making any
golden parachute payment to its senior executive officer
during the period that the Secretary holds an equity or debt
position in the financial institution.
(3) Definition.--For purposes of this section, the term
``senior executive officer'' means an individual who is one
of the top 5 highly paid executives of a public company,
whose compensation is required to be disclosed pursuant to
the Securities Exchange Act of 1934, and any regulations
issued thereunder, and non-public company counterparts.
(c) Auction Purchases.--Where the Secretary determines that
the purposes of this Act are best met through auction
purchases of troubled assets, and only where such purchases
per financial institution in the aggregate exceed
$300,000,000 (including direct purchases), the Secretary
shall prohibit, for such financial institution, any new
employment contract with a senior executive officer that
provides a golden parachute in the event of an involuntary
termination, bankruptcy filing, insolvency, or receivership.
The Secretary shall issue guidance to carry out this
paragraph not later than 2 months after the date of enactment
of this Act, and such guidance shall be effective upon
issuance.
(d) Sunset.--The provisions of subsection (c) shall apply
only to arrangements entered into during the period during
which the authorities under section 101(a) are in effect, as
determined under section 120.

SEC. 112. COORDINATION WITH FOREIGN AUTHORITIES AND CENTRAL
BANKS.

The Secretary shall coordinate, as appropriate, with
foreign financial authorities and central banks to work
toward the establishment of similar programs by such
authorities and central banks. To the extent that such
foreign financial authorities or banks hold troubled assets
as a result of extending financing to financial institutions
that have failed or defaulted on such financing, such
troubled assets qualify for purchase under section 101.

SEC. 113. MINIMIZATION OF LONG-TERM COSTS AND MAXIMIZATION OF
BENEFITS FOR TAXPAYERS.

(a) Long-Term Costs and Benefits.--
(1) Minimizing negative impact.--The Secretary shall use
the authority under this Act

[[Page S10344]]

in a manner that will minimize any potential long-term
negative impact on the taxpayer, taking into account the
direct outlays, potential long-term returns on assets
purchased, and the overall economic benefits of the program,
including economic benefits due to improvements in economic
activity and the availability of credit, the impact on the
savings and pensions of individuals, and reductions in losses
to the Federal Government.
(2) Authority.--In carrying out paragraph (1), the
Secretary shall--
(A) hold the assets to maturity or for resale for and until
such time as the Secretary determines that the market is
optimal for selling such assets, in order to maximize the
value for taxpayers; and
(B) sell such assets at a price that the Secretary
determines, based on available financial analysis, will
maximize return on investment for the Federal Government.
(3) Private sector participation.--The Secretary shall
encourage the private sector to participate in purchases of
troubled assets, and to invest in financial institutions,
consistent with the provisions of this section.
(b) Use of Market Mechanisms.--In making purchases under
this Act, the Secretary shall--
(1) make such purchases at the lowest price that the
Secretary determines to be consistent with the purposes of
this Act; and
(2) maximize the efficiency of the use of taxpayer
resources by using market mechanisms, including auctions or
reverse auctions, where appropriate.
(c) Direct Purchases.--If the Secretary determines that use
of a market mechanism under subsection (b) is not feasible or
appropriate, and the purposes of the Act are best met through
direct purchases from an individual financial institution,
the Secretary shall pursue additional measures to ensure that
prices paid for assets are reasonable and reflect the
underlying value of the asset.
(d) Conditions on Purchase Authority for Warrants and Debt
Instruments.--
(1) In general.--The Secretary may not purchase, or make
any commitment to purchase, any troubled asset under the
authority of this Act, unless the Secretary receives from the
financial institution from which such assets are to be
purchased--
(A) in the case of a financial institution, the securities
of which are traded on a national securities exchange, a
warrant giving the right to the Secretary to receive
nonvoting common stock or preferred stock in such financial
institution, or voting stock with respect to which, the
Secretary agrees not to exercise voting power, as the
Secretary determines appropriate; or
(B) in the case of any financial institution other than one
described in subparagraph (A), a warrant for common or
preferred stock, or a senior debt instrument from such
financial institution, as described in paragraph (2)(C).
(2) Terms and conditions.--The terms and conditions of any
warrant or senior debt instrument required under paragraph
(1) shall meet the following requirements:
(A) Purposes.--Such terms and conditions shall, at a
minimum, be designed--
(i) to provide for reasonable participation by the
Secretary, for the benefit of taxpayers, in equity
appreciation in the case of a warrant or other equity
security, or a reasonable interest rate premium, in the case
of a debt instrument; and
(ii) to provide additional protection for the taxpayer
against losses from sale of assets by the Secretary under
this Act and the administrative expenses of the TARP.
(B) Authority to sell, exercise, or surrender.--The
Secretary may sell, exercise, or surrender a warrant or any
senior debt instrument received under this subsection, based
on the conditions established under subparagraph (A).
(C) Conversion.--The warrant shall provide that if, after
the warrant is received by the Secretary under this
subsection, the financial institution that issued the warrant
is no longer listed or traded on a national securities
exchange or securities association, as described in paragraph
(1)(A), such warrants shall convert to senior debt, or
contain appropriate protections for the Secretary to ensure
that the Treasury is appropriately compensated for the value
of the warrant, in an amount determined by the Secretary.
(D) Protections.--Any warrant representing securities to be
received by the Secretary under this subsection shall contain
anti-dilution provisions of the type employed in capital
market transactions, as determined by the Secretary. Such
provisions shall protect the value of the securities from
market transactions such as stock splits, stock
distributions, dividends, and other distributions, mergers,
and other forms of reorganization or recapitalization.
(E) Exercise price.--The exercise price for any warrant
issued pursuant to this subsection shall be set by the
Secretary, in the interest of the taxpayers.
(F) Sufficiency.--The financial institution shall guarantee
to the Secretary that it has authorized shares of nonvoting
stock available to fulfill its obligations under this
subsection. Should the financial institution not have
sufficient authorized shares, including preferred shares that
may carry dividend rights equal to a multiple number of
common shares, the Secretary may, to the extent necessary,
accept a senior debt note in an amount, and on such terms as
will compensate the Secretary with equivalent value, in the
event that a sufficient shareholder vote to authorize the
necessary additional shares cannot be obtained.
(3) Exceptions.--
(A) De minimis.--The Secretary shall establish de minimis
exceptions to the requirements of this subsection, based on
the size of the cumulative transactions of troubled assets
purchased from any one financial institution for the duration
of the program, at not more than $100,000,000.
(B) Other exceptions.--The Secretary shall establish an
exception to the requirements of this subsection and
appropriate alternative requirements for any participating
financial institution that is legally prohibited from issuing
securities and debt instruments, so as not to allow
circumvention of the requirements of this section.

SEC. 114. MARKET TRANSPARENCY.

(a) Pricing.--To facilitate market transparency, the
Secretary shall make available to the public, in electronic
form, a description, amounts, and pricing of assets acquired
under this Act, within 2 business days of purchase, trade, or
other disposition.
(b) Disclosure.--For each type of financial institutions
that sells troubled assets to the Secretary under this Act,
the Secretary shall determine whether the public disclosure
required for such financial institutions with respect to off-
balance sheet transactions, derivatives instruments,
contingent liabilities, and similar sources of potential
exposure is adequate to provide to the public sufficient
information as to the true financial position of the
institutions. If such disclosure is not adequate for that
purpose, the Secretary shall make recommendations for
additional disclosure requirements to the relevant
regulators.

SEC. 115. GRADUATED AUTHORIZATION TO PURCHASE.

(a) Authority.--The authority of the Secretary to purchase
troubled assets under this Act shall be limited as follows:
(1) Effective upon the date of enactment of this Act, such
authority shall be limited to $250,000,000,000 outstanding at
any one time.
(2) If at any time, the President submits to the Congress a
written certification that the Secretary needs to exercise
the authority under this paragraph, effective upon such
submission, such authority shall be limited to
$350,000,000,000 outstanding at any one time.
(3) If, at any time after the certification in paragraph
(2) has been made, the President transmits to the Congress a
written report detailing the plan of the Secretary to
exercise the authority under this paragraph, unless there is
enacted, within 15 calendar days of such transmission, a
joint resolution described in subsection (c), effective upon
the expiration of such 15-day period, such authority shall be
limited to $700,000,000,000 outstanding at any one time.
(b) Aggregation of Purchase Prices.--The amount of troubled
assets purchased by the Secretary outstanding at any one time
shall be determined for purposes of the dollar amount
limitations under subsection (a) by aggregating the purchase
prices of all troubled assets held.
(c) Joint Resolution of Disapproval.--
(1) In general.--Notwithstanding any other provision of
this section, the Secretary may not exercise any authority to
make purchases under this Act with regard to any amount in
excess of $350,000,000,000 previously obligated, as described
in this section if, within 15 calendar days after the date on
which Congress receives a report of the plan of the Secretary
described in subsection (a)(3), there is enacted into law a
joint resolution disapproving the plan of the Secretary with
respect to such additional amount.
(2) Contents of joint resolution.--For the purpose of this
section, the term ``joint resolution'' means only a joint
resolution--
(A) that is introduced not later than 3 calendar days after
the date on which the report of the plan of the Secretary
referred to in subsection (a)(3) is received by Congress;
(B) which does not have a preamble;
(C) the title of which is as follows: ``Joint resolution
relating to the disapproval of obligations under the
Emergency Economic Stabilization Act of 2008''; and
(D) the matter after the resolving clause of which is as
follows: ``That Congress disapproves the obligation of any
amount exceeding the amounts obligated as described in
paragraphs (1) and (2) of section 115(a) of the Emergency
Economic Stabilization Act of 2008.''.
(d) Fast Track Consideration in House of Representatives.--
(1) Reconvening.--Upon receipt of a report under subsection
(a)(3), the Speaker, if the House would otherwise be
adjourned, shall notify the Members of the House that,
pursuant to this section, the House shall convene not later
than the second calendar day after receipt of such report;
(2) Reporting and discharge.--Any committee of the House of
Representatives to which a joint resolution is referred shall
report it to the House not later than 5 calendar days after
the date of receipt of the report described in subsection
(a)(3). If a committee fails to report the joint resolution
within that period, the committee shall be discharged from
further consideration of the joint resolution and the joint
resolution shall be referred to the appropriate calendar.
(3) Proceeding to consideration.--After each committee
authorized to consider a joint resolution reports it to the
House or

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has been discharged from its consideration, it shall be in
order, not later than the sixth day after Congress receives
the report described in subsection (a)(3), to move to proceed
to consider the joint resolution in the House. All points of
order against the motion are waived. Such a motion shall not
be in order after the House has disposed of a motion to
proceed on the joint resolution. The previous question shall
be considered as ordered on the motion to its adoption
without intervening motion. The motion shall not be
debatable. A motion to reconsider the vote by which the
motion is disposed of shall not be in order.
(4) Consideration.--The joint resolution shall be
considered as read. All points of order against the joint
resolution and against its consideration are waived. The
previous question shall be considered as ordered on the joint
resolution to its passage without intervening motion except
two hours of debate equally divided and controlled by the
proponent and an opponent. A motion to reconsider the vote on
passage of the joint resolution shall not be in order.
(e) Fast Track Consideration in Senate.--
(1) Reconvening.--Upon receipt of a report under subsection
(a)(3), if the Senate has adjourned or recessed for more than
2 days, the majority leader of the Senate, after consultation
with the minority leader of the Senate, shall notify the
Members of the Senate that, pursuant to this section, the
Senate shall convene not later than the second calendar day
after receipt of such message.
(2) Placement on calendar.--Upon introduction in the
Senate, the joint resolution shall be placed immediately on
the calendar.
(3) Floor consideration.--
(A) In general.--Notwithstanding Rule XXII of the Standing
Rules of the Senate, it is in order at any time during the
period beginning on the 4th day after the date on which
Congress receives a report of the plan of the Secretary
described in subsection (a)(3) and ending on the 6th day
after the date on which Congress receives a report of the
plan of the Secretary described in subsection (a)(3) (even
though a previous motion to the same effect has been
disagreed to) to move to proceed to the consideration of the
joint resolution, and all points of order against the joint
resolution (and against consideration of the joint
resolution) are waived. The motion to proceed is not
debatable. The motion is not subject to a motion to postpone.
A motion to reconsider the vote by which the motion is agreed
to or disagreed to shall not be in order. If a motion to
proceed to the consideration of the resolution is agreed to,
the joint resolution shall remain the unfinished business
until disposed of.
(B) Debate.--Debate on the joint resolution, and on all
debatable motions and appeals in connection therewith, shall
be limited to not more than 10 hours, which shall be divided
equally between the majority and minority leaders or their
designees. A motion further to limit debate is in order and
not debatable. An amendment to, or a motion to postpone, or a
motion to proceed to the consideration of other business, or
a motion to recommit the joint resolution is not in order.
(C) Vote on passage.--The vote on passage shall occur
immediately following the conclusion of the debate on a joint
resolution, and a single quorum call at the conclusion of the
debate if requested in accordance with the rules of the
Senate.
(D) Rulings of the chair on procedure.--Appeals from the
decisions of the Chair relating to the application of the
rules of the Senate, as the case may be, to the procedure
relating to a joint resolution shall be decided without
debate.
(f) Rules Relating to Senate and House of
Representatives.--
(1) Coordination with action by other house.--If, before
the passage by one House of a joint resolution of that House,
that House receives from the other House a joint resolution,
then the following procedures shall apply:
(A) The joint resolution of the other House shall not be
referred to a committee.
(B) With respect to a joint resolution of the House
receiving the resolution--
(i) the procedure in that House shall be the same as if no
joint resolution had been received from the other House; but
(ii) the vote on passage shall be on the joint resolution
of the other House.
(2) Treatment of joint resolution of other house.--If one
House fails to introduce or consider a joint resolution under
this section, the joint resolution of the other House shall
be entitled to expedited floor procedures under this section.
(3) Treatment of companion measures.--If, following passage
of the joint resolution in the Senate, the Senate then
receives the companion measure from the House of
Representatives, the companion measure shall not be
debatable.
(4) Consideration after passage.--
(A) In general.--If Congress passes a joint resolution, the
period beginning on the date the President is presented with
the joint resolution and ending on the date the President
takes action with respect to the joint resolution shall be
disregarded in computing the 15-calendar day period described
in subsection (a)(3).
(B) Vetoes.--If the President vetoes the joint resolution--
(i) the period beginning on the date the President vetoes
the joint resolution and ending on the date the Congress
receives the veto message with respect to the joint
resolution shall be disregarded in computing the 15-calendar
day period described in subsection (a)(3), and
(ii) debate on a veto message in the Senate under this
section shall be 1 hour equally divided between the majority
and minority leaders or their designees.
(5) Rules of house of representatives and senate.--This
subsection and subsections (c), (d), and (e) are enacted by
Congress--
(A) as an exercise of the rulemaking power of the Senate
and House of Representatives, respectively, and as such it is
deemed a part of the rules of each House, respectively, but
applicable only with respect to the procedure to be followed
in that House in the case of a joint resolution, and it
supersedes other rules only to the extent that it is
inconsistent with such rules; and
(B) with full recognition of the constitutional right of
either House to change the rules (so far as relating to the
procedure of that House) at any time, in the same manner, and
to the same extent as in the case of any other rule of that
House.

SEC. 116. OVERSIGHT AND AUDITS.

(a) Comptroller General Oversight.--
(1) Scope of oversight.--The Comptroller General of the
United States shall, upon establishment of the troubled
assets relief program under this Act (in this section
referred to as the ``TARP''), commence ongoing oversight of
the activities and performance of the TARP and of any agents
and representatives of the TARP (as related to the agent or
representative's activities on behalf of or under the
authority of the TARP), including vehicles established by the
Secretary under this Act. The subjects of such oversight
shall include the following:
(A) The performance of the TARP in meeting the purposes of
this Act, particularly those involving--
(i) foreclosure mitigation;
(ii) cost reduction;
(iii) whether it has provided stability or prevented
disruption to the financial markets or the banking system;
and
(iv) whether it has protected taxpayers.
(B) The financial condition and internal controls of the
TARP, its representatives and agents.
(C) Characteristics of transactions and commitments entered
into, including transaction type, frequency, size, prices
paid, and all other relevant terms and conditions, and the
timing, duration and terms of any future commitments to
purchase assets.
(D) Characteristics and disposition of acquired assets,
including type, acquisition price, current market value, sale
prices and terms, and use of proceeds from sales.
(E) Efficiency of the operations of the TARP in the use of
appropriated funds.
(F) Compliance with all applicable laws and regulations by
the TARP, its agents and representatives.
(G) The efforts of the TARP to prevent, identify, and
minimize conflicts of interest involving any agent or
representative performing activities on behalf of or under
the authority of the TARP.
(H) The efficacy of contracting procedures pursuant to
section 107(b), including, as applicable, the efforts of the
TARP in evaluating proposals for inclusion and contracting to
the maximum extent possible of minorities (as such term is
defined in 1204(c) of the Financial Institutions Reform,
Recovery, and Enhancement Act of 1989 (12 U.S.C. 1811 note),
women, and minority- and women-owned businesses, including
ascertaining and reporting the total amount of fees paid and
other value delivered by the TARP to all of its agents and
representatives, and such amounts paid or delivered to such
firms that are minority- and women-owned businesses (as such
terms are defined in section 21A of the Federal Home Loan
Bank Act (12 U.S.C. 1441a)).
(2) Conduct and administration of oversight.--
(A) GAO presence.--The Secretary shall provide the
Comptroller General with appropriate space and facilities in
the Department of the Treasury as necessary to facilitate
oversight of the TARP until the termination date established
in section 120.
(B) Access to records.--To the extent otherwise consistent
with law, the Comptroller General shall have access, upon
request, to any information, data, schedules, books,
accounts, financial records, reports, files, electronic
communications, or other papers, things, or property
belonging to or in use by the TARP, or any vehicles
established by the Secretary under this Act, and to the
officers, directors, employees, independent public
accountants, financial advisors, and other agents and
representatives of the TARP (as related to the agent or
representative's activities on behalf of or under the
authority of the TARP) or any such vehicle at such reasonable
time as the Comptroller General may request. The Comptroller
General shall be afforded full facilities for verifying
transactions with the balances or securities held by
depositaries, fiscal agents, and custodians. The Comptroller
General may make and retain copies of such books, accounts,
and other records as the Comptroller General deems
appropriate.
(C) Reimbursement of costs.--The Treasury shall reimburse
the Government Accountability Office for the full cost of any
such oversight activities as billed therefor by the
Comptroller General of the United

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States. Such reimbursements shall be credited to the
appropriation account ``Salaries and Expenses, Government
Accountability Office'' current when the payment is received
and remain available until expended.
(3) Reporting.--The Comptroller General shall submit
reports of findings under this section, regularly and no less
frequently than once every 60 days, to the appropriate
committees of Congress, and the Special Inspector General for
the Troubled Asset Relief Program established under this Act
on the activities and performance of the TARP. The
Comptroller may also submit special reports under this
subsection as warranted by the findings of its oversight
activities.
(b) Comptroller General Audits.--
(1) Annual audit.--The TARP shall annually prepare and
issue to the appropriate committees of Congress and the
public audited financial statements prepared in accordance
with generally accepted accounting principles, and the
Comptroller General shall annually audit such statements in
accordance with generally accepted auditing standards. The
Treasury shall reimburse the Government Accountability Office
for the full cost of any such audit as billed therefor by the
Comptroller General. Such reimbursements shall be credited to
the appropriation account ``Salaries and Expenses, Government
Accountability Office'' current when the payment is received
and remain available until expended. The financial statements
prepared under this paragraph shall be on the fiscal year
basis prescribed under section 1102 of title 31, United
States Code.
(2) Authority.--The Comptroller General may audit the
programs, activities, receipts, expenditures, and financial
transactions of the TARP and any agents and representatives
of the TARP (as related to the agent or representative's
activities on behalf of or under the authority of the TARP),
including vehicles established by the Secretary under this
Act.
(3) Corrective responses to audit problems.--The TARP
shall--
(A) take action to address deficiencies identified by the
Comptroller General or other auditor engaged by the TARP; or
(B) certify to appropriate committees of Congress that no
action is necessary or appropriate.
(c) Internal Control.--
(1) Establishment.--The TARP shall establish and maintain
an effective system of internal control, consistent with the
standards prescribed under section 3512(c) of title 31,
United States Code, that provides reasonable assurance of--
(A) the effectiveness and efficiency of operations,
including the use of the resources of the TARP;
(B) the reliability of financial reporting, including
financial statements and other reports for internal and
external use; and
(C) compliance with applicable laws and regulations.
(2) Reporting.--In conjunction with each annual financial
statement issued under this section, the TARP shall--
(A) state the responsibility of management for establishing
and maintaining adequate internal control over financial
reporting; and
(B) state its assessment, as of the end of the most recent
year covered by such financial statement of the TARP, of the
effectiveness of the internal control over financial
reporting.
(d) Sharing of Information.--Any report or audit required
under this section shall also be submitted to the
Congressional Oversight Panel established under section 125.
(e) Termination.--Any oversight, reporting, or audit
requirement under this section shall terminate on the later
of--
(1) the date that the last troubled asset acquired by the
Secretary under section 101 has been sold or transferred out
of the ownership or control of the Federal Government; or
(2) the date of expiration of the last insurance contract
issued under section 102.

SEC. 117. STUDY AND REPORT ON MARGIN AUTHORITY.

(a) Study.--The Comptroller General shall undertake a study
to determine the extent to which leverage and sudden
deleveraging of financial institutions was a factor behind
the current financial crisis.
(b) Content.--The study required by this section shall
include--
(1) an analysis of the roles and responsibilities of the
Board, the Securities and Exchange Commission, the Secretary,
and other Federal banking agencies with respect to monitoring
leverage and acting to curtail excessive leveraging;
(2) an analysis of the authority of the Board to regulate
leverage, including by setting margin requirements, and what
process the Board used to decide whether or not to use its
authority;
(3) an analysis of any usage of the margin authority by the
Board; and
(4) recommendations for the Board and appropriate
committees of Congress with respect to the existing authority
of the Board.
(c) Report.--Not later than June 1, 2009, the Comptroller
General shall complete and submit a report on the study
required by this section to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives.
(d) Sharing of Information.--Any reports required under
this section shall also be submitted to the Congressional
Oversight Panel established under section 125.

SEC. 118. FUNDING.

For the purpose of the authorities granted in this Act, and
for the costs of administering those authorities, the
Secretary may use the proceeds of the sale of any securities
issued under chapter 31 of title 31, United States Code, and
the purposes for which securities may be issued under chapter
31 of title 31, United States Code, are extended to include
actions authorized by this Act, including the payment of
administrative expenses. Any funds expended or obligated by
the Secretary for actions authorized by this Act, including
the payment of administrative expenses, shall be deemed
appropriated at the time of such expenditure or obligation.

SEC. 119. JUDICIAL REVIEW AND RELATED MATTERS.

(a) Judicial Review.--
(1) Standard.--Actions by the Secretary pursuant to the
authority of this Act shall be subject to chapter 7 of title
5, United States Code, including that such final actions
shall be held unlawful and set aside if found to be
arbitrary, capricious, an abuse of discretion, or not in
accordance with law.
(2) Limitations on equitable relief.--
(A) Injunction.--No injunction or other form of equitable
relief shall be issued against the Secretary for actions
pursuant to section 101, 102, 106, and 109, other than to
remedy a violation of the Constitution.
(B) Temporary restraining order.--Any request for a
temporary restraining order against the Secretary for actions
pursuant to this Act shall be considered and granted or
denied by the court within 3 days of the date of the request.
(C) Preliminary injunction.--Any request for a preliminary
injunction against the Secretary for actions pursuant to this
Act shall be considered and granted or denied by the court on
an expedited basis consistent with the provisions of rule
65(b)(3) of the Federal Rules of Civil Procedure, or any
successor thereto.
(D) Permanent injunction.--Any request for a permanent
injunction against the Secretary for actions pursuant to this
Act shall be considered and granted or denied by the court on
an expedited basis. Whenever possible, the court shall
consolidate trial on the merits with any hearing on a request
for a preliminary injunction, consistent with the provisions
of rule 65(a)(2) of the Federal Rules of Civil Procedure, or
any successor thereto.
(3) Limitation on actions by participating companies.--No
action or claims may be brought against the Secretary by any
person that divests its assets with respect to its
participation in a program under this Act, except as provided
in paragraph (1), other than as expressly provided in a
written contract with the Secretary.
(4) Stays.--Any injunction or other form of equitable
relief issued against the Secretary for actions pursuant to
section 101, 102, 106, and 109, shall be automatically
stayed. The stay shall be lifted unless the Secretary seeks a
stay from a higher court within 3 calendar days after the
date on which the relief is issued.
(b) Related Matters.--
(1) Treatment of homeowners' rights.--The terms of any
residential mortgage loan that is part of any purchase by the
Secretary under this Act shall remain subject to all claims
and defenses that would otherwise apply, notwithstanding the
exercise of authority by the Secretary under this Act.
(2) Savings clause.--Any exercise of the authority of the
Secretary pursuant to this Act shall not impair the claims or
defenses that would otherwise apply with respect to persons
other than the Secretary. Except as established in any
contract, a servicer of pooled residential mortgages owes any
duty to determine whether the net present value of the
payments on the loan, as modified, is likely to be greater
than the anticipated net recovery that would result from
foreclosure to all investors and holders of beneficial
interests in such investment, but not to any individual or
groups of investors or beneficial interest holders, and shall
be deemed to act in the best interests of all such investors
or holders of beneficial interests if the servicer agrees to
or implements a modification or workout plan when the
servicer takes reasonable loss mitigation actions, including
partial payments.

SEC. 120. TERMINATION OF AUTHORITY.

(a) Termination.--The authorities provided under sections
101(a), excluding section 101(a)(3), and 102 shall terminate
on December 31, 2009.
(b) Extension Upon Certification.--The Secretary, upon
submission of a written certification to Congress, may extend
the authority provided under this Act to expire not later
than 2 years from the date of enactment of this Act. Such
certification shall include a justification of why the
extension is necessary to assist American families and
stabilize financial markets, as well as the expected cost to
the taxpayers for such an extension.

SEC. 121. SPECIAL INSPECTOR GENERAL FOR THE TROUBLED ASSET
RELIEF PROGRAM.

(a) Office of Inspector General.--There is hereby
established the Office of the Special Inspector General for
the Troubled Asset Relief Program.
(b) Appointment of Inspector General; Removal.--(1) The
head of the Office of the Special Inspector General for the
Troubled Asset Relief Program is the Special Inspector
General for the Troubled Asset Relief Program (in this
section referred to as the

[[Page S10347]]

``Special Inspector General''), who shall be appointed by the
President, by and with the advice and consent of the Senate.
(2) The appointment of the Special Inspector General shall
be made on the basis of integrity and demonstrated ability in
accounting, auditing, financial analysis, law, management
analysis, public administration, or investigations.
(3) The nomination of an individual as Special Inspector
General shall be made as soon as practicable after the
establishment of any program under sections 101 and 102.
(4) The Special Inspector General shall be removable from
office in accordance with the provisions of section 3(b) of
the Inspector General Act of 1978 (5 U.S.C. App.).
(5) For purposes of section 7324 of title 5, United States
Code, the Special Inspector General shall not be considered
an employee who determines policies to be pursued by the
United States in the nationwide administration of Federal
law.
(6) The annual rate of basic pay of the Special Inspector
General shall be the annual rate of basic pay for an
Inspector General under section 3(e) of the Inspector General
Act of 1978 (5 U.S.C. App.).
(c) Duties.--(1) It shall be the duty of the Special
Inspector General to conduct, supervise, and coordinate
audits and investigations of the purchase, management, and
sale of assets by the Secretary of the Treasury under any
program established by the Secretary under section 101, and
the management by the Secretary of any program established
under section 102, including by collecting and summarizing
the following information:
(A) A description of the categories of troubled assets
purchased or otherwise procured by the Secretary.
(B) A listing of the troubled assets purchased in each such
category described under subparagraph (A).
(C) An explanation of the reasons the Secretary deemed it
necessary to purchase each such troubled asset.
(D) A listing of each financial institution that such
troubled assets were purchased from.
(E) A listing of and detailed biographical information on
each person or entity hired to manage such troubled assets.
(F) A current estimate of the total amount of troubled
assets purchased pursuant to any program established under
section 101, the amount of troubled assets on the books of
the Treasury, the amount of troubled assets sold, and the
profit and loss incurred on each sale or disposition of each
such troubled asset.
(G) A listing of the insurance contracts issued under
section 102.
(2) The Special Inspector General shall establish,
maintain, and oversee such systems, procedures, and controls
as the Special Inspector General considers appropriate to
discharge the duty under paragraph (1).
(3) In addition to the duties specified in paragraphs (1)
and (2), the Inspector General shall also have the duties and
responsibilities of inspectors general under the Inspector
General Act of 1978.
(d) Powers and Authorities.--(1) In carrying out the duties
specified in subsection (c), the Special Inspector General
shall have the authorities provided in section 6 of the
Inspector General Act of 1978.
(2) The Special Inspector General shall carry out the
duties specified in subsection (c)(1) in accordance with
section 4(b)(1) of the Inspector General Act of 1978.
(e) Personnel, Facilities, and Other Resources.--(1) The
Special Inspector General may select, appoint, and employ
such officers and employees as may be necessary for carrying
out the duties of the Special Inspector General, subject to
the provisions of title 5, United States Code, governing
appointments in the competitive service, and the provisions
of chapter 51 and subchapter III of chapter 53 of such title,
relating to classification and General Schedule pay rates.
(2) The Special Inspector General may obtain services as
authorized by section 3109 of title 5, United States Code, at
daily rates not to exceed the equivalent rate prescribed for
grade GS-15 of the General Schedule by section 5332 of such
title.
(3) The Special Inspector General may enter into contracts
and other arrangements for audits, studies, analyses, and
other services with public agencies and with private persons,
and make such payments as may be necessary to carry out the
duties of the Inspector General.
(4)(A) Upon request of the Special Inspector General for
information or assistance from any department, agency, or
other entity of the Federal Government, the head of such
entity shall, insofar as is practicable and not in
contravention of any existing law, furnish such information
or assistance to the Special Inspector General, or an
authorized designee.
(B) Whenever information or assistance requested by the
Special Inspector General is, in the judgment of the Special
Inspector General, unreasonably refused or not provided, the
Special Inspector General shall report the circumstances to
the appropriate committees of Congress without delay.
(f) Reports.--(1) Not later than 60 days after the
confirmation of the Special Inspector General, and every
calendar quarter thereafter, the Special Inspector General
shall submit to the appropriate committees of Congress a
report summarizing the activities of the Special Inspector
General during the 120-day period ending on the date of such
report. Each report shall include, for the period covered by
such report, a detailed statement of all purchases,
obligations, expenditures, and revenues associated with any
program established by the Secretary of the Treasury under
sections 101 and 102, as well as the information collected
under subsection (c)(1).
(2) Nothing in this subsection shall be construed to
authorize the public disclosure of information that is--
(A) specifically prohibited from disclosure by any other
provision of law;
(B) specifically required by Executive order to be
protected from disclosure in the interest of national defense
or national security or in the conduct of foreign affairs; or
(C) a part of an ongoing criminal investigation.
(3) Any reports required under this section shall also be
submitted to the Congressional Oversight Panel established
under section 125.
(g) Funding.--(1) Of the amounts made available to the
Secretary of the Treasury under section 118, $50,000,000
shall be available to the Special Inspector General to carry
out this section.
(2) The amount available under paragraph (1) shall remain
available until expended.
(h) Termination.--The Office of the Special Inspector
General shall terminate on the later of--
(1) the date that the last troubled asset acquired by the
Secretary under section 101 has been sold or transferred out
of the ownership or control of the Federal Government; or
(2) the date of expiration of the last insurance contract
issued under section 102.

SEC. 122. INCREASE IN STATUTORY LIMIT ON THE PUBLIC DEBT.

Subsection (b) of section 3101 of title 31, United States
Code, is amended by striking out the dollar limitation
contained in such subsection and inserting
``$11,315,000,000,000''.

SEC. 123. CREDIT REFORM.

(a) In General.--Subject to subsection (b), the costs of
purchases of troubled assets made under section 101(a) and
guarantees of troubled assets under section 102, and any cash
flows associated with the activities authorized in section
102 and subsections (a), (b), and (c) of section 106 shall be
determined as provided under the Federal Credit Reform Act of
1990 (2 U.S.C. 661 et. seq.).
(b) Costs.--For the purposes of section 502(5) of the
Federal Credit Reform Act of 1990 (2 U.S.C. 661a(5))--
(1) the cost of troubled assets and guarantees of troubled
assets shall be calculated by adjusting the discount rate in
section 502(5)(E) (2 U.S.C. 661a(5)(E)) for market risks; and
(2) the cost of a modification of a troubled asset or
guarantee of a troubled asset shall be the difference between
the current estimate consistent with paragraph (1) under the
terms of the troubled asset or guarantee of the troubled
asset and the current estimate consistent with paragraph (1)
under the terms of the troubled asset or guarantee of the
troubled asset, as modified.

SEC. 124. HOPE FOR HOMEOWNERS AMENDMENTS.

Section 257 of the National Housing Act (12 U.S.C. 1715z-
23) is amended--
(1) in subsection (e)--
(A) in paragraph (1)(B), by inserting before ``a ratio''
the following: ``, or thereafter is likely to have, due to
the terms of the mortgage being reset,'';
(B) in paragraph (2)(B), by inserting before the period at
the end ``(or such higher percentage as the Board determines,
in the discretion of the Board)'';
(C) in paragraph (4)(A)--
(i) in the first sentence, by inserting after ``insured
loan'' the following: ``and any payments made under this
paragraph,''; and
(ii) by adding at the end the following: ``Such actions may
include making payments, which shall be accepted as payment
in full of all indebtedness under the eligible mortgage, to
any holder of an existing subordinate mortgage, in lieu of
any future appreciation payments authorized under
subparagraph (B).''; and
(2) in subsection (w), by inserting after ``administrative
costs'' the following: ``and payments pursuant to subsection
(e)(4)(A)''.

SEC. 125. CONGRESSIONAL OVERSIGHT PANEL.

(a) Establishment.--There is hereby established the
Congressional Oversight Panel (hereafter in this section
referred to as the ``Oversight Panel'') as an establishment
in the legislative branch.
(b) Duties.--The Oversight Panel shall review the current
state of the financial markets and the regulatory system and
submit the following reports to Congress:
(1) Regular reports.--
(A) In general.--Regular reports of the Oversight Panel
shall include the following:
(i) The use by the Secretary of authority under this Act,
including with respect to the use of contracting authority
and administration of the program.
(ii) The impact of purchases made under the Act on the
financial markets and financial institutions.
(iii) The extent to which the information made available on
transactions under the program has contributed to market
transparency.
(iv) The effectiveness of foreclosure mitigation efforts,
and the effectiveness of the program from the standpoint of
minimizing long-term costs to the taxpayers and maximizing
the benefits for taxpayers.
(B) Timing.--The reports required under this paragraph
shall be submitted not later than 30 days after the first
exercise by the

[[Page S10348]]

Secretary of the authority under section 101(a) or 102, and
every 30 days thereafter.
(2) Special report on regulatory reform.--The Oversight
Panel shall submit a special report on regulatory reform not
later than January 20, 2009, analyzing the current state of
the regulatory system and its effectiveness at overseeing the
participants in the financial system and protecting
consumers, and providing recommendations for improvement,
including recommendations regarding whether any participants
in the financial markets that are currently outside the
regulatory system should become subject to the regulatory
system, the rationale underlying such recommendation, and
whether there are any gaps in existing consumer protections.
(c) Membership.--
(1) In general.--The Oversight Panel shall consist of 5
members, as follows:
(A) 1 member appointed by the Speaker of the House of
Representatives.
(B) 1 member appointed by the minority leader of the House
of Representatives.
(C) 1 member appointed by the majority leader of the
Senate.
(D) 1 member appointed by the minority leader of the
Senate.
(E) 1 member appointed by the Speaker of the House of
Representatives and the majority leader of the Senate, after
consultation with the minority leader of the Senate and the
minority leader of the House of Representatives.
(2) Pay.--Each member of the Oversight Panel shall each be
paid at a rate equal to the daily equivalent of the annual
rate of basic pay for level I of the Executive Schedule for
each day (including travel time) during which such member is
engaged in the actual performance of duties vested in the
Commission.
(3) Prohibition of compensation of federal employees.--
Members of the Oversight Panel who are full-time officers or
employees of the United States or Members of Congress may not
receive additional pay, allowances, or benefits by reason of
their service on the Oversight Panel.
(4) Travel expenses.--Each member shall receive travel
expenses, including per diem in lieu of subsistence, in
accordance with applicable provisions under subchapter I of
chapter 57 of title 5, United States Code.
(5) Quorum.--Four members of the Oversight Panel shall
constitute a quorum but a lesser number may hold hearings.
(6) Vacancies.--A vacancy on the Oversight Panel shall be
filled in the manner in which the original appointment was
made.
(7) Meetings.--The Oversight Panel shall meet at the call
of the Chairperson or a majority of its members.
(d) Staff.--
(1) In general.--The Oversight Panel may appoint and fix
the pay of any personnel as the Commission considers
appropriate.
(2) Experts and consultants.--The Oversight Panel may
procure temporary and intermittent services under section
3109(b) of title 5, United States Code.
(3) Staff of agencies.--Upon request of the Oversight
Panel, the head of any Federal department or agency may
detail, on a reimbursable basis, any of the personnel of that
department or agency to the Oversight Panel to assist it in
carrying out its duties under this Act.
(e) Powers.--
(1) Hearings and sessions.--The Oversight Panel may, for
the purpose of carrying out this section, hold hearings, sit
and act at times and places, take testimony, and receive
evidence as the Panel considers appropriate and may
administer oaths or affirmations to witnesses appearing
before it.
(2) Powers of members and agents.--Any member or agent of
the Oversight Panel may, if authorized by the Oversight
Panel, take any action which the Oversight Panel is
authorized to take by this section.
(3) Obtaining official data.--The Oversight Panel may
secure directly from any department or agency of the United
States information necessary to enable it to carry out this
section. Upon request of the Chairperson of the Oversight
Panel, the head of that department or agency shall furnish
that information to the Oversight Panel.
(4) Reports.--The Oversight Panel shall receive and
consider all reports required to be submitted to the
Oversight Panel under this Act.
(f) Termination.--The Oversight Panel shall terminate 6
months after the termination date specified in section 120.
(g) Funding for Expenses.--
(1) Authorization of appropriations.--There is authorized
to be appropriated to the Oversight Panel such sums as may be
necessary for any fiscal year, half of which shall be derived
from the applicable account of the House of Representatives,
and half of which shall be derived from the contingent fund
of the Senate.
(2) Reimbursement of amounts.--An amount equal to the
expenses of the Oversight Panel shall be promptly transferred
by the Secretary, from time to time upon the presentment of a
statement of such expenses by the Chairperson of the
Oversight Panel, from funds made available to the Secretary
under this Act to the applicable fund of the House of
Representatives and the contingent fund of the Senate, as
appropriate, as reimbursement for amounts expended from such
account and fund under paragraph (1).

SEC. 126. FDIC AUTHORITY.

(a) In General.--Section 18(a) of the Federal Deposit
Insurance Act (12 U.S.C. 1828(a)) is amended by adding at the
end the following new paragraph:
``(4) False advertising, misuse of fdic names, and
misrepresentation to indicate insured status.--
``(A) Prohibition on false advertising and misuse of fdic
names.--No person may represent or imply that any deposit
liability, obligation, certificate, or share is insured or
guaranteed by the Corporation, if such deposit liability,
obligation, certificate, or share is not insured or
guaranteed by the Corporation--
``(i) by using the terms `Federal Deposit', `Federal
Deposit Insurance', `Federal Deposit Insurance Corporation',
any combination of such terms, or the abbreviation `FDIC' as
part of the business name or firm name of any person,
including any corporation, partnership, business trust,
association, or other business entity; or
``(ii) by using such terms or any other terms, sign, or
symbol as part of an advertisement, solicitation, or other
document.
``(B) Prohibition on misrepresentations of insured
status.--No person may knowingly misrepresent--
``(i) that any deposit liability, obligation, certificate,
or share is insured, under this Act, if such deposit
liability, obligation, certificate, or share is not so
insured; or
``(ii) the extent to which or the manner in which any
deposit liability, obligation, certificate, or share is
insured under this Act, if such deposit liability,
obligation, certificate, or share is not so insured, to the
extent or in the manner represented.
``(C) Authority of the appropriate federal banking
agency.--The appropriate Federal banking agency shall have
enforcement authority in the case of a violation of this
paragraph by any person for which the agency is the
appropriate Federal banking agency, or any institution-
affiliated party thereof.
``(D) Corporation authority if the appropriate federal
banking agency fails to follow recommendation.--
``(i) Recommendation.--The Corporation may recommend in
writing to the appropriate Federal banking agency that the
agency take any enforcement action authorized under section 8
for purposes of enforcement of this paragraph with respect to
any person for which the agency is the appropriate Federal
banking agency or any institution-affiliated party thereof.
``(ii) Agency response.--If the appropriate Federal banking
agency does not, within 30 days of the date of receipt of a
recommendation under clause (i), take the enforcement action
with respect to this paragraph recommended by the Corporation
or provide a plan acceptable to the Corporation for
responding to the situation presented, the Corporation may
take the recommended enforcement action against such person
or institution-affiliated party.
``(E) Additional authority.--In addition to its authority
under subparagraphs (C) and (D), for purposes of this
paragraph, the Corporation shall have, in the same manner and
to the same extent as with respect to a State nonmember
insured bank--
``(i) jurisdiction over--

``(I) any person other than a person for which another
agency is the appropriate Federal banking agency or any
institution-affiliated party thereof; and
``(II) any person that aids or abets a violation of this
paragraph by a person described in subclause (I); and

``(ii) for purposes of enforcing the requirements of this
paragraph, the authority of the Corporation under--

``(I) section 10(c) to conduct investigations; and
``(II) subsections (b), (c), (d) and (i) of section 8 to
conduct enforcement actions.

``(F) Other actions preserved.--No provision of this
paragraph shall be construed as barring any action otherwise
available, under the laws of the United States or any State,
to any Federal or State agency or individual.''.
(b) Enforcement Orders.--Section 8(c) of the Federal
Deposit Insurance Act (12 U.S.C. 1818(c)) is amended by
adding at the end the following new paragraph:
``(4) False advertising or misuse of names to indicate
insured status.--
``(A) Temporary order.--
``(i) In general.--If a notice of charges served under
subsection (b)(1) specifies on the basis of particular facts
that any person engaged or is engaging in conduct described
in section 18(a)(4), the Corporation or other appropriate
Federal banking agency may issue a temporary order
requiring--

``(I) the immediate cessation of any activity or practice
described, which gave rise to the notice of charges; and
``(II) affirmative action to prevent any further, or to
remedy any existing, violation.

``(ii) Effect of order.--Any temporary order issued under
this subparagraph shall take effect upon service.
``(B) Effective period of temporary order.--A temporary
order issued under subparagraph (A) shall remain effective
and enforceable, pending the completion of an administrative
proceeding pursuant to subsection (b)(1) in connection with
the notice of charges--
``(i) until such time as the Corporation or other
appropriate Federal banking agency dismisses the charges
specified in such notice; or
``(ii) if a cease-and-desist order is issued against such
person, until the effective date of such order.
``(C) Civil money penalties.--Any violation of section
18(a)(4) shall be subject to

[[Page S10349]]

civil money penalties, as set forth in subsection (i), except
that for any person other than an insured depository
institution or an institution-affiliated party that is found
to have violated this paragraph, the Corporation or other
appropriate Federal banking agency shall not be required to
demonstrate any loss to an insured depository institution.''.
(c) Unenforceability of Certain Agreements.--Section 13(c)
of the Federal Deposit Insurance Act (12 U.S.C. 1823(c)) is
amended by adding at the end the following new paragraph:
``(11) Unenforceability of certain agreements.--No
provision contained in any existing or future standstill,
confidentiality, or other agreement that, directly or
indirectly--
``(A) affects, restricts, or limits the ability of any
person to offer to acquire or acquire,
``(B) prohibits any person from offering to acquire or
acquiring, or
``(C) prohibits any person from using any previously
disclosed information in connection with any such offer to
acquire or acquisition of,
all or part of any insured depository institution, including
any liabilities, assets, or interest therein, in connection
with any transaction in which the Corporation exercises its
authority under section 11 or 13, shall be enforceable
against or impose any liability on such person, as such
enforcement or liability shall be contrary to public
policy.''.
(d) Technical and Conforming Amendments.--Section 18 of the
Federal Deposit Insurance Act (12 U.S.C. 1828) is amended--
(1) in subsection (a)(3)--
(A) by striking ``this subsection'' the first place that
term appears and inserting ``paragraph (1)''; and
(B) by striking ``this subsection'' the second place that
term appears and inserting ``paragraph (2)''; and
(2) in the heading for subsection (a), by striking
``Insurance Logo.--'' and inserting ``Representations of
Deposit Insurance.--''.

SEC. 127. COOPERATION WITH THE FBI.

Any Federal financial regulatory agency shall cooperate
with the Federal Bureau of Investigation and other law
enforcement agencies investigating fraud, misrepresentation,
and malfeasance with respect to development, advertising, and
sale of financial products.

SEC. 128. ACCELERATION OF EFFECTIVE DATE.

Section 203 of the Financial Services Regulatory Relief Act
of 2006 (12 U.S.C. 461 note) is amended by striking ``October
1, 2011'' and inserting ``October 1, 2008''.

SEC. 129. DISCLOSURES ON EXERCISE OF LOAN AUTHORITY.

(a) In General.--Not later than 7 days after the date on
which the Board exercises its authority under the third
paragraph of section 13 of the Federal Reserve Act (12 U.S.C.
343; relating to discounts for individuals, partnerships, and
corporations) the Board shall provide to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives a report which includes--
(1) the justification for exercising the authority; and
(2) the specific terms of the actions of the Board,
including the size and duration of the lending, available
information concerning the value of any collateral held with
respect to such a loan, the recipient of warrants or any
other potential equity in exchange for the loan, and any
expected cost to the taxpayers for such exercise.
(b) Periodic Updates.--The Board shall provide updates to
the Committees specified in subsection (a) not less
frequently than once every 60 days while the subject loan is
outstanding, including--
(1) the status of the loan;
(2) the value of the collateral held by the Federal reserve
bank which initiated the loan; and
(3) the projected cost to the taxpayers of the loan.
(c) Confidentiality.--The information submitted to the
Congress under this section shall be kept confidential, upon
the written request of the Chairman of the Board, in which
case it shall be made available only to the Chairpersons and
Ranking Members of the Committees described in subsection
(a).
(d) Applicability.--The provisions of this section shall be
in force for all uses of the authority provided under section
13 of the Federal Reserve Act occurring during the period
beginning on March 1, 2008 and ending on the after the date
of enactment of this Act, and reports described in subsection
(a) shall be required beginning not later than 30 days after
that date of enactment, with respect to any such exercise of
authority.
(e) Sharing of Information.--Any reports required under
this section shall also be submitted to the Congressional
Oversight Panel established under section 125.

SEC. 130. TECHNICAL CORRECTIONS.

(a) In General.--Section 128(b)(2) of the Truth in Lending
Act (15 U.S.C. 1638(b)(2)), as amended by section 2502 of the
Mortgage Disclosure Improvement Act of 2008 (Public Law 110-
289), is amended--
(1) in subparagraph (A), by striking ``In the case'' and
inserting ``Except as provided in subparagraph (G), in the
case''; and
(2) by amending subparagraph (G) to read as follows:
``(G)(i) In the case of an extension of credit relating to
a plan described in section 101(53D) of title 11, United
States Code--
``(I) the requirements of subparagraphs (A) through (E)
shall not apply; and
``(II) a good faith estimate of the disclosures required
under subsection (a) shall be made in accordance with
regulations of the Board under section 121(c) before such
credit is extended, or shall be delivered or placed in the
mail not later than 3 business days after the date on which
the creditor receives the written application of the consumer
for such credit, whichever is earlier.
``(ii) If a disclosure statement furnished within 3
business days of the written application (as provided under
clause (i)(II)) contains an annual percentage rate which is
subsequently rendered inaccurate, within the meaning of
section 107(c), the creditor shall furnish another disclosure
statement at the time of settlement or consummation of the
transaction.''.
(b) Effective Date.--The amendments made by subsection (a)
shall take effect as if included in the amendments made by
section 2502 of the Mortgage Disclosure Improvement Act of
2008 (Public Law 110-289).

SEC. 131. EXCHANGE STABILIZATION FUND REIMBURSEMENT.

(a) Reimbursement.--The Secretary shall reimburse the
Exchange Stabilization Fund established under section 5302 of
title 31, United States Code, for any funds that are used for
the Treasury Money Market Funds Guaranty Program for the
United States money market mutual fund industry, from funds
under this Act.
(b) Limits on Use of Exchange Stabilization Fund.--The
Secretary is prohibited from using the Exchange Stabilization
Fund for the establishment of any future guaranty programs
for the United States money market mutual fund industry.

SEC. 132. AUTHORITY TO SUSPEND MARK-TO-MARKET ACCOUNTING.

(a) Authority.--The Securities and Exchange Commission
shall have the authority under the securities laws (as such
term is defined in section 3(a)(47) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(47)) to suspend, by
rule, regulation, or order, the application of Statement
Number 157 of the Financial Accounting Standards Board for
any issuer (as such term is defined in section 3(a)(8) of
such Act) or with respect to any class or category of
transaction if the Commission determines that is necessary or
appropriate in the public interest and is consistent with the
protection of investors.
(b) Savings Provision.--Nothing in subsection (a) shall be
construed to restrict or limit any authority of the
Securities and Exchange Commission under securities laws as
in effect on the date of enactment of this Act.

SEC. 133. STUDY ON MARK-TO-MARKET ACCOUNTING.

(a) Study.--The Securities and Exchange Commission, in
consultation with the Board and the Secretary, shall conduct
a study on mark-to-market accounting standards as provided in
Statement Number 157 of the Financial Accounting Standards
Board, as such standards are applicable to financial
institutions, including depository institutions. Such a study
shall consider at a minimum--
(1) the effects of such accounting standards on a financial
institution's balance sheet;
(2) the impacts of such accounting on bank failures in
2008;
(3) the impact of such standards on the quality of
financial information available to investors;
(4) the process used by the Financial Accounting Standards
Board in developing accounting standards;
(5) the advisability and feasibility of modifications to
such standards; and
(6) alternative accounting standards to those provided in
such Statement Number 157.
(b) Report.--The Securities and Exchange Commission shall
submit to Congress a report of such study before the end of
the 90-day period beginning on the date of the enactment of
this Act containing the findings and determinations of the
Commission, including such administrative and legislative
recommendations as the Commission determines appropriate.

SEC. 134. RECOUPMENT.

Upon the expiration of the 5-year period beginning upon the
date of the enactment of this Act, the Director of the Office
of Management and Budget, in consultation with the Director
of the Congressional Budget Office, shall submit a report to
the Congress on the net amount within the Troubled Asset
Relief Program under this Act. In any case where there is a
shortfall, the President shall submit a legislative proposal
that recoups from the financial industry an amount equal to
the shortfall in order to ensure that the Troubled Asset
Relief Program does not add to the deficit or national debt.

SEC. 135. PRESERVATION OF AUTHORITY.

With the exception of section 131, nothing in this Act may
be construed to limit the authority of the Secretary or the
Board under any other provision of law.

SEC. 136. TEMPORARY INCREASE IN DEPOSIT AND SHARE INSURANCE
COVERAGE.

(a) Federal Deposit Insurance Act; Temporary Increase in
Deposit Insurance.--
(1) Increased amount.--Effective only during the period
beginning on the date of enactment of this Act and ending on
December 31, 2009, section 11(a)(1)(E) of the Federal Deposit
Insurance Act (12 U.S.C. 1821(a)(1)(E)) shall apply with
``$250,000'' substituted for ``$100,000''.
(2) Temporary increase not to be considered for setting
assessments.--The temporary increase in the standard maximum

[[Page S10350]]

deposit insurance amount made under paragraph (1) shall not
be taken into account by the Board of Directors of the
Corporation for purposes of setting assessments under section
7(b)(2) of the Federal Deposit Insurance Act (12 U.S.C.
1817(b)(2)).
(3) Borrowing limits temporarily lifted.--During the period
beginning on the date of enactment of this Act and ending on
December 31, 2009, the Board of Directors of the Corporation
may request from the Secretary, and the Secretary shall
approve, a loan or loans in an amount or amounts necessary to
carry out this subsection, without regard to the limitations
on such borrowing under section 14(a) and 15(c) of the
Federal Deposit Insurance Act (12 U.S.C. 1824(a), 1825(c)).
(b) Federal Credit Union Act; Temporary Increase in Share
Insurance.--
(1) Increased amount.--Effective only during the period
beginning on the date of enactment of this Act and ending on
December 31, 2009, section 207(k)(5) of the Federal Credit
Union Act (12 U.S.C. 1787(k)(5)) shall apply with
``$250,000'' substituted for ``$100,000''.
(2) Temporary increase not to be considered for setting
insurance premium charges and insurance deposit
adjustments.--The temporary increase in the standard maximum
share insurance amount made under paragraph (1) shall not be
taken into account by the National Credit Union
Administration Board for purposes of setting insurance
premium charges and share insurance deposit adjustments under
section 202(c)(2) of the Federal Credit Union Act (12 U.S.C.
1782(c)(2)).
(3) Borrowing limits temporarily lifted.--During the period
beginning on the date of enactment of this Act and ending on
December 31, 2009, the National Credit Union Administration
Board may request from the Secretary, and the Secretary shall
approve, a loan or loans in an amount or amounts necessary to
carry out this subsection, without regard to the limitations
on such borrowing under section 203(d)(1) of the Federal
Credit Union Act (12 U.S.C. 1783(d)(1)).
(c) Not for Use in Inflation Adjustments.--The temporary
increase in the standard maximum deposit insurance amount
made under this section shall not be used to make any
inflation adjustment under section 11(a)(1)(F) of the Federal
Deposit Insurance Act (12 U.S.C. 1821(a)(1)(F)) for purposes
of that Act or the Federal Credit Union Act.

TITLE II--BUDGET-RELATED PROVISIONS

SEC. 201. INFORMATION FOR CONGRESSIONAL SUPPORT AGENCIES.

Upon request, and to the extent otherwise consistent with
law, all information used by the Secretary in connection with
activities authorized under this Act (including the records
to which the Comptroller General is entitled under this Act)
shall be made available to congressional support agencies (in
accordance with their obligations to support the Congress as
set out in their authorizing statutes) for the purposes of
assisting the committees of Congress with conducting
oversight, monitoring, and analysis of the activities
authorized under this Act.

SEC. 202. REPORTS BY THE OFFICE OF MANAGEMENT AND BUDGET AND
THE CONGRESSIONAL BUDGET OFFICE.

(a) Reports by the Office of Management and Budget.--Within
60 days of the first exercise of the authority granted in
section 101(a), but in no case later than December 31, 2008,
and semiannually thereafter, the Office of Management and
Budget shall report to the President and the Congress--
(1) the estimate, notwithstanding section 502(5)(F) of the
Federal Credit Reform Act of 1990 (2 U.S.C. 661a(5)(F)), as
of the first business day that is at least 30 days prior to
the issuance of the report, of the cost of the troubled
assets, and guarantees of the troubled assets, determined in
accordance with section 123;
(2) the information used to derive the estimate, including
assets purchased or guaranteed, prices paid, revenues
received, the impact on the deficit and debt, and a
description of any outstanding commitments to purchase
troubled assets; and
(3) a detailed analysis of how the estimate has changed
from the previous report.
Beginning with the second report under subsection (a), the
Office of Management and Budget shall explain the differences
between the Congressional Budget Office estimates delivered
in accordance with subsection (b) and prior Office of
Management and Budget estimates.
(b) Reports by the Congressional Budget Office.--Within 45
days of receipt by the Congress of each report from the
Office of Management and Budget under subsection (a), the
Congressional Budget Office shall report to the Congress the
Congressional Budget Office's assessment of the report
submitted by the Office of Management and Budget, including--
(1) the cost of the troubled assets and guarantees of the
troubled assets,
(2) the information and valuation methods used to calculate
such cost, and
(3) the impact on the deficit and the debt.
(c) Financial Expertise.--In carrying out the duties in
this subsection or performing analyses of activities under
this Act, the Director of the Congressional Budget Office may
employ personnel and procure the services of experts and
consultants.
(d) Authorization of Appropriations.--There are authorized
to be appropriated such sums as may be necessary to produce
reports required by this section.

SEC. 203. ANALYSIS IN PRESIDENT'S BUDGET.

(a) In General.--Section 1105(a) of title 31, United States
Code, is amended by adding at the end the following new
paragraph:
``(35) as supplementary materials, a separate analysis of
the budgetary effects for all prior fiscal years, the current
fiscal year, the fiscal year for which the budget is
submitted, and ensuing fiscal years of the actions the
Secretary of the Treasury has taken or plans to take using
any authority provided in the Emergency Economic
Stabilization Act of 2008, including--
``(A) an estimate of the current value of all assets
purchased, sold, and guaranteed under the authority provided
in the Emergency Economic Stabilization Act of 2008 using
methodology required by the Federal Credit Reform Act of 1990
(2 U.S.C. 661 et seq.) and section 123 of the Emergency
Economic Stabilization Act of 2008;
``(B) an estimate of the deficit, the debt held by the
public, and the gross Federal debt using methodology required
by the Federal Credit Reform Act of 1990 and section 123 of
the Emergency Economic Stabilization Act of 2008;
``(C) an estimate of the current value of all assets
purchased, sold, and guaranteed under the authority provided
in the Emergency Economic Stabilization Act of 2008
calculated on a cash basis;
``(D) a revised estimate of the deficit, the debt held by
the public, and the gross Federal debt, substituting the
cash-based estimates in subparagraph (C) for the estimates
calculated under subparagraph (A) pursuant to the Federal
Credit Reform Act of 1990 and section 123 of the Emergency
Economic Stabilization Act of 2008; and
``(E) the portion of the deficit which can be attributed to
any action taken by the Secretary using authority provided by
the Emergency Economic Stabilization Act of 2008 and the
extent to which the change in the deficit since the most
recent estimate is due to a reestimate using the methodology
required by the Federal Credit Reform Act of 1990 and section
123 of the Emergency Economic Stabilization Act of 2008.''
(b) Consultation.--In implementing this section, the
Director of Office of Management and Budget shall consult
periodically, but at least annually, with the Committee on
the Budget of the House of Representatives, the Committee on
the Budget of the Senate, and the Director of the
Congressional Budget Office.
(c) Effective Date.--This section and the amendment made by
this section shall apply beginning with respect to the fiscal
year 2010 budget submission of the President.

SEC. 204. EMERGENCY TREATMENT.

All provisions of this Act are designated as an emergency
requirement and necessary to meet emergency needs pursuant to
section 204(a) of S. Con. Res 21 (110th Congress), the
concurrent resolution on the budget for fiscal year 2008 and
rescissions of any amounts provided in this Act shall not be
counted for purposes of budget enforcement.

TITLE III--TAX PROVISIONS

SEC. 301. GAIN OR LOSS FROM SALE OR EXCHANGE OF CERTAIN
PREFERRED STOCK.

(a) In General.--For purposes of the Internal Revenue Code
of 1986, gain or loss from the sale or exchange of any
applicable preferred stock by any applicable financial
institution shall be treated as ordinary income or loss.
(b) Applicable Preferred Stock.--For purposes of this
section, the term ``applicable preferred stock'' means any
stock--
(1) which is preferred stock in--
(A) the Federal National Mortgage Association, established
pursuant to the Federal National Mortgage Association Charter
Act (12 U.S.C. 1716 et seq.), or
(B) the Federal Home Loan Mortgage Corporation, established
pursuant to the Federal Home Loan Mortgage Corporation Act
(12 U.S.C. 1451 et seq.), and
(2) which--
(A) was held by the applicable financial institution on
September 6, 2008, or
(B) was sold or exchanged by the applicable financial
institution on or after January 1, 2008, and before September
7, 2008.
(c) Applicable Financial Institution.--For purposes of this
section:
(1) In general.--Except as provided in paragraph (2), the
term ``applicable financial institution'' means--
(A) a financial institution referred to in section
582(c)(2) of the Internal Revenue Code of 1986, or
(B) a depository institution holding company (as defined in
section 3(w)(1) of the Federal Deposit Insurance Act (12
U.S.C. 1813(w)(1))).
(2) Special rules for certain sales.--In the case of--
(A) a sale or exchange described in subsection (b)(2)(B),
an entity shall be treated as an applicable financial
institution only if it was an entity described in
subparagraph (A) or (B) of paragraph (1) at the time of the
sale or exchange, and
(B) a sale or exchange after September 6, 2008, of
preferred stock described in subsection (b)(2)(A), an entity
shall be treated as an applicable financial institution only
if it was an entity described in subparagraph (A) or (B) of
paragraph (1) at all times during the period beginning on
September 6, 2008, and ending on the date of the sale or
exchange of the preferred stock.
(d) Special Rule for Certain Property Not Held on September
6, 2008.--The Secretary of the Treasury or the Secretary's

[[Page S10351]]

delegate may extend the application of this section to all or
a portion of the gain or loss from a sale or exchange in any
case where--
(1) an applicable financial institution sells or exchanges
applicable preferred stock after September 6, 2008, which the
applicable financial institution did not hold on such date,
but the basis of which in the hands of the applicable
financial institution at the time of the sale or exchange is
the same as the basis in the hands of the person which held
such stock on such date, or
(2) the applicable financial institution is a partner in a
partnership which--
(A) held such stock on September 6, 2008, and later sold or
exchanged such stock, or
(B) sold or exchanged such stock during the period
described in subsection (b)(2)(B).
(e) Regulatory Authority.--The Secretary of the Treasury or
the Secretary's delegate may prescribe such guidance, rules,
or regulations as are necessary to carry out the purposes of
this section.
(f) Effective Date.--This section shall apply to sales or
exchanges occurring after December 31, 2007, in taxable years
ending after such date.

SEC. 302. SPECIAL RULES FOR TAX TREATMENT OF EXECUTIVE
COMPENSATION OF EMPLOYERS PARTICIPATING IN THE
TROUBLED ASSETS RELIEF PROGRAM.

(a) Denial of Deduction.--Subsection (m) of section 162 of
the Internal Revenue Code of 1986 is amended by adding at the
end the following new paragraph:
``(5) Special rule for application to employers
participating in the troubled assets relief program.--
``(A) In general.--In the case of an applicable employer,
no deduction shall be allowed under this chapter--
``(i) in the case of executive remuneration for any
applicable taxable year which is attributable to services
performed by a covered executive during such applicable
taxable year, to the extent that the amount of such
remuneration exceeds $500,000, or
``(ii) in the case of deferred deduction executive
remuneration for any taxable year for services performed
during any applicable taxable year by a covered executive, to
the extent that the amount of such remuneration exceeds
$500,000 reduced (but not below zero) by the sum of--

``(I) the executive remuneration for such applicable
taxable year, plus
``(II) the portion of the deferred deduction executive
remuneration for such services which was taken into account
under this clause in a preceding taxable year.

``(B) Applicable employer.--For purposes of this
paragraph--
``(i) In general.--Except as provided in clause (ii), the
term `applicable employer' means any employer from whom 1 or
more troubled assets are acquired under a program established
by the Secretary under section 101(a) of the Emergency
Economic Stabilization Act of 2008 if the aggregate amount of
the assets so acquired for all taxable years exceeds
$300,000,000.
``(ii) Disregard of certain assets sold through direct
purchase.--If the only sales of troubled assets by an
employer under the program described in clause (i) are
through 1 or more direct purchases (within the meaning of
section 113(c) of the Emergency Economic Stabilization Act of
2008), such assets shall not be taken into account under
clause (i) in determining whether the employer is an
applicable employer for purposes of this paragraph.
``(iii) Aggregation rules.--Two or more persons who are
treated as a single employer under subsection (b) or (c) of
section 414 shall be treated as a single employer, except
that in applying section 1563(a) for purposes of either such
subsection, paragraphs (2) and (3) thereof shall be
disregarded.
``(C) Applicable taxable year.--For purposes of this
paragraph, the term `applicable taxable year' means, with
respect to any employer--
``(i) the first taxable year of the employer--

``(I) which includes any portion of the period during which
the authorities under section 101(a) of the Emergency
Economic Stabilization Act of 2008 are in effect (determined
under section 120 thereof), and
``(II) in which the aggregate amount of troubled assets
acquired from the employer during the taxable year pursuant
to such authorities (other than assets to which subparagraph
(B)(ii) applies), when added to the aggregate amount so
acquired for all preceding taxable years, exceeds
$300,000,000, and

``(ii) any subsequent taxable year which includes any
portion of such period.
``(D) Covered executive.--For purposes of this paragraph--
``(i) In general.--The term `covered executive' means, with
respect to any applicable taxable year, any employee--

``(I) who, at any time during the portion of the taxable
year during which the authorities under section 101(a) of the
Emergency Economic Stabilization Act of 2008 are in effect
(determined under section 120 thereof), is the chief
executive officer of the applicable employer or the chief
financial officer of the applicable employer, or an
individual acting in either such capacity, or
``(II) who is described in clause (ii).

``(ii) Highest compensated employees.--An employee is
described in this clause if the employee is 1 of the 3
highest compensated officers of the applicable employer for
the taxable year (other than an individual described in
clause (i)(I)), determined--

``(I) on the basis of the shareholder disclosure rules for
compensation under the Securities Exchange Act of 1934
(without regard to whether those rules apply to the
employer), and
``(II) by only taking into account employees employed
during the portion of the taxable year described in clause
(i)(I).

``(iii) Employee remains covered executive.--If an employee
is a covered executive with respect to an applicable employer
for any applicable taxable year, such employee shall be
treated as a covered executive with respect to such employer
for all subsequent applicable taxable years and for all
subsequent taxable years in which deferred deduction
executive remuneration with respect to services performed in
all such applicable taxable years would (but for this
paragraph) be deductible.
``(E) Executive remuneration.--For purposes of this
paragraph, the term `executive remuneration' means the
applicable employee remuneration of the covered executive, as
determined under paragraph (4) without regard to
subparagraphs (B), (C), and (D) thereof. Such term shall not
include any deferred deduction executive remuneration with
respect to services performed in a prior applicable taxable
year.
``(F) Deferred deduction executive remuneration.--For
purposes of this paragraph, the term `deferred deduction
executive remuneration' means remuneration which would be
executive remuneration for services performed in an
applicable taxable year but for the fact that the deduction
under this chapter (determined without regard to this
paragraph) for such remuneration is allowable in a subsequent
taxable year.
``(G) Coordination.--Rules similar to the rules of
subparagraphs (F) and (G) of paragraph (4) shall apply for
purposes of this paragraph.
``(H) Regulatory authority.--The Secretary may prescribe
such guidance, rules, or regulations as are necessary to
carry out the purposes of this paragraph and the Emergency
Economic Stabilization Act of 2008, including the extent to
which this paragraph applies in the case of any acquisition,
merger, or reorganization of an applicable employer.''.
(b) Golden Parachute Rule.--Section 280G of the Internal
Revenue Code of 1986 is amended--
(1) by redesignating subsection (e) as subsection (f), and
(2) by inserting after subsection (d) the following new
subsection:
``(e) Special Rule for Application to Employers
Participating in the Troubled Assets Relief Program.--
``(1) In general.--In the case of the severance from
employment of a covered executive of an applicable employer
during the period during which the authorities under section
101(a) of the Emergency Economic Stabilization Act of 2008
are in effect (determined under section 120 of such Act),
this section shall be applied to payments to such executive
with the following modifications:
``(A) Any reference to a disqualified individual (other
than in subsection (c)) shall be treated as a reference to a
covered executive.
``(B) Any reference to a change described in subsection
(b)(2)(A)(i) shall be treated as a reference to an applicable
severance from employment of a covered executive, and any
reference to a payment contingent on such a change shall be
treated as a reference to any payment made during an
applicable taxable year of the employer on account of such
applicable severance from employment.
``(C) Any reference to a corporation shall be treated as a
reference to an applicable employer.
``(D) The provisions of subsections (b)(2)(C), (b)(4),
(b)(5), and (d)(5) shall not apply.
``(2) Definitions and special rules.--For purposes of this
subsection:
``(A) Definitions.--Any term used in this subsection which
is also used in section 162(m)(5) shall have the meaning
given such term by such section.
``(B) Applicable severance from employment.--The term
`applicable severance from employment' means any severance
from employment of a covered executive--
``(i) by reason of an involuntary termination of the
executive by the employer, or
``(ii) in connection with any bankruptcy, liquidation, or
receivership of the employer.
``(C) Coordination and other rules.--
``(i) In general.--If a payment which is treated as a
parachute payment by reason of this subsection is also a
parachute payment determined without regard to this
subsection, this subsection shall not apply to such payment.
``(ii) Regulatory authority.--The Secretary may prescribe
such guidance, rules, or regulations as are necessary--

``(I) to carry out the purposes of this subsection and the
Emergency Economic Stabilization Act of 2008, including the
extent to which this subsection applies in the case of any
acquisition, merger, or reorganization of an applicable
employer,
``(II) to apply this section and section 4999 in cases
where one or more payments with respect to any individual are
treated as parachute payments by reason of this subsection,
and other payments with respect to such individual are
treated as parachute payments under this section without
regard to this subsection, and
``(III) to prevent the avoidance of the application of this
section through the

[[Page S10352]]

mischaracterization of a severance from employment as other
than an applicable severance from employment.''.

(c) Effective Dates.--
(1) In general.--The amendment made by subsection (a) shall
apply to taxable years ending on or after the date of the
enactment of this Act.
(2) Golden parachute rule.--The amendments made by
subsection (b) shall apply to payments with respect to
severances occurring during the period during which the
authorities under section 101(a) of this Act are in effect
(determined under section 120 of this Act).

SEC. 303. EXTENSION OF EXCLUSION OF INCOME FROM DISCHARGE OF
QUALIFIED PRINCIPAL RESIDENCE INDEBTEDNESS.

(a) Extension.--Subparagraph (E) of section 108(a)(1) of
the Internal Revenue Code of 1986 is amended by striking
``January 1, 2010'' and inserting ``January 1, 2013''.
(b) Effective Date.--The amendment made by this section
shall apply to discharges of indebtedness occurring on or
after January 1, 2010.

DIVISION B--ENERGY IMPROVEMENT AND EXTENSION ACT OF 2008

SECTION 1. SHORT TITLE, ETC.

(a) Short Title.--This division may be cited as the
``Energy Improvement and Extension Act of 2008''.
(b) Reference.--Except as otherwise expressly provided,
whenever in this division 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.
(c) Table of Contents.--The table of contents for this
division is as follows:

Sec. 1. Short title, etc.

TITLE I--ENERGY PRODUCTION INCENTIVES

Subtitle A--Renewable Energy Incentives

Sec. 101. Renewable energy credit.
Sec. 102. Production credit for electricity produced from marine
renewables.
Sec. 103. Energy credit.
Sec. 104. Energy credit for small wind property.
Sec. 105. Energy credit for geothermal heat pump systems.
Sec. 106. Credit for residential energy efficient property.
Sec. 107. New clean renewable energy bonds.
Sec. 108. Credit for steel industry fuel.
Sec. 109. Special rule to implement FERC and State electric
restructuring policy.

Subtitle B--Carbon Mitigation and Coal Provisions

Sec. 111. Expansion and modification of advanced coal project
investment credit.
Sec. 112. Expansion and modification of coal gasification investment
credit.
Sec. 113. Temporary increase in coal excise tax; funding of Black Lung
Disability Trust Fund.
Sec. 114. Special rules for refund of the coal excise tax to certain
coal producers and exporters.
Sec. 115. Tax credit for carbon dioxide sequestration.
Sec. 116. Certain income and gains relating to industrial source carbon
dioxide treated as qualifying income for publicly traded
partnerships.
Sec. 117. Carbon audit of the tax code.

TITLE II--TRANSPORTATION AND DOMESTIC FUEL SECURITY PROVISIONS

Sec. 201. Inclusion of cellulosic biofuel in bonus depreciation for
biomass ethanol plant property.
Sec. 202. Credits for biodiesel and renewable diesel.
Sec. 203. Clarification that credits for fuel are designed to provide
an incentive for United States production.
Sec. 204. Extension and modification of alternative fuel credit.
Sec. 205. Credit for new qualified plug-in electric drive motor
vehicles.
Sec. 206. Exclusion from heavy truck tax for idling reduction units and
advanced insulation.
Sec. 207. Alternative fuel vehicle refueling property credit.
Sec. 208. Certain income and gains relating to alcohol fuels and
mixtures, biodiesel fuels and mixtures, and alternative
fuels and mixtures treated as qualifying income for
publicly traded partnerships.
Sec. 209. Extension and modification of election to expense certain
refineries.
Sec. 210. Extension of suspension of taxable income limit on percentage
depletion for oil and natural gas produced from marginal
properties.
Sec. 211. Transportation fringe benefit to bicycle commuters.

TITLE III--ENERGY CONSERVATION AND EFFICIENCY PROVISIONS

Sec. 301. Qualified energy conservation bonds.
Sec. 302. Credit for nonbusiness energy property.
Sec. 303. Energy efficient commercial buildings deduction.
Sec. 304. New energy efficient home credit.
Sec. 305. Modifications of energy efficient appliance credit for
appliances produced after 2007.
Sec. 306. Accelerated recovery period for depreciation of smart meters
and smart grid systems.
Sec. 307. Qualified green building and sustainable design projects.
Sec. 308. Special depreciation allowance for certain reuse and
recycling property.

TITLE IV--REVENUE PROVISIONS

Sec. 401. Limitation of deduction for income attributable to domestic
production of oil, gas, or primary products thereof.
Sec. 402. Elimination of the different treatment of foreign oil and gas
extraction income and foreign oil related income for
purposes of the foreign tax credit.
Sec. 403. Broker reporting of customer's basis in securities
transactions.
Sec. 404. 0.2 percent FUTA surtax.
Sec. 405. Increase and extension of Oil Spill Liability Trust Fund tax.

TITLE I--ENERGY PRODUCTION INCENTIVES

Subtitle A--Renewable Energy Incentives

SEC. 101. RENEWABLE ENERGY CREDIT.

(a) Extension of Credit.--
(1) 1-year extension for wind and refined coal
facilities.--Paragraphs (1) and (8) of section 45(d) are each
amended by striking ``January 1, 2009'' and inserting
``January 1, 2010''.
(2) 2-year extension for certain other facilities.--Each of
the following provisions of section 45(d) is amended by
striking ``January 1, 2009'' and inserting ``January 1,
2011'':
(A) Clauses (i) and (ii) of paragraph (2)(A).
(B) Clauses (i)(I) and (ii) of paragraph (3)(A).
(C) Paragraph (4).
(D) Paragraph (5).
(E) Paragraph (6).
(F) Paragraph (7).
(G) Subparagraphs (A) and (B) of paragraph (9).
(b) Modification of Refined Coal as a Qualified Energy
Resource.--
(1) Elimination of increased market value test.--Section
45(c)(7)(A)(i) (defining refined coal), as amended by section
108, is amended--
(A) by striking subclause (IV),
(B) by adding ``and'' at the end of subclause (II), and
(C) by striking ``, and'' at the end of subclause (III) and
inserting a period.
(2) Increase in required emission reduction.--Section
45(c)(7)(B) (defining qualified emission reduction) is
amended by inserting ``at least 40 percent of the emissions
of'' after ``nitrogen oxide and''.
(c) Trash Facility Clarification.--Paragraph (7) of section
45(d) is amended--
(1) by striking ``facility which burns'' and inserting
``facility (other than a facility described in paragraph (6))
which uses'', and
(2) by striking ``combustion''.
(d) Expansion of Biomass Facilities.--
(1) Open-loop biomass facilities.--Paragraph (3) of section
45(d) is amended by redesignating subparagraph (B) as
subparagraph (C) and by inserting after subparagraph (A) the
following new subparagraph:
``(B) Expansion of facility.--Such term shall include a new
unit placed in service after the date of the enactment of
this subparagraph in connection with a facility described in
subparagraph (A), but only to the extent of the increased
amount of electricity produced at the facility by reason of
such new unit.''.
(2) Closed-loop biomass facilities.--Paragraph (2) of
section 45(d) is amended by redesignating subparagraph (B) as
subparagraph (C) and inserting after subparagraph (A) the
following new subparagraph:
``(B) Expansion of facility.--Such term shall include a new
unit placed in service after the date of the enactment of
this subparagraph in connection with a facility described in
subparagraph (A)(i), but only to the extent of the increased
amount of electricity produced at the facility by reason of
such new unit.''.
(e) Modification of Rules for Hydropower Production.--
Subparagraph (C) of section 45(c)(8) is amended to read as
follows:
``(C) Nonhydroelectric dam.--For purposes of subparagraph
(A), a facility is described in this subparagraph if--
``(i) the hydroelectric project installed on the
nonhydroelectric dam is licensed by the Federal Energy
Regulatory Commission and meets all other applicable
environmental, licensing, and regulatory requirements,
``(ii) the nonhydroelectric dam was placed in service
before the date of the enactment of this paragraph and
operated for flood control, navigation, or water supply
purposes and did not produce hydroelectric power on the date
of the enactment of this paragraph, and
``(iii) the hydroelectric project is operated so that the
water surface elevation at any given location and time that
would have occurred in the absence of the hydroelectric
project is maintained, subject to any license requirements
imposed under applicable law that change the water surface
elevation for the purpose of improving environmental quality
of the affected waterway.

The Secretary, in consultation with the Federal Energy
Regulatory Commission, shall

[[Page S10353]]

certify if a hydroelectric project licensed at a
nonhydroelectric dam meets the criteria in clause (iii).
Nothing in this section shall affect the standards under
which the Federal Energy Regulatory Commission issues
licenses for and regulates hydropower projects under part I
of the Federal Power Act.''.
(f) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply
to property originally placed in service after December 31,
2008.
(2) Refined coal.--The amendments made by subsection (b)
shall apply to coal produced and sold from facilities placed
in service after December 31, 2008.
(3) Trash facility clarification.--The amendments made by
subsection (c) shall apply to electricity produced and sold
after the date of the enactment of this Act.
(4) Expansion of biomass facilities.--The amendments made
by subsection (d) shall apply to property placed in service
after the date of the enactment of this Act.

SEC. 102. PRODUCTION CREDIT FOR ELECTRICITY PRODUCED FROM
MARINE RENEWABLES.

(a) In General.--Paragraph (1) of section 45(c) is amended
by striking ``and'' at the end of subparagraph (G), by
striking the period at the end of subparagraph (H) and
inserting ``, and'', and by adding at the end the following
new subparagraph:
``(I) marine and hydrokinetic renewable energy.''.
(b) Marine Renewables.--Subsection (c) of section 45 is
amended by adding at the end the following new paragraph:
``(10) Marine and hydrokinetic renewable energy.--
``(A) In general.--The term `marine and hydrokinetic
renewable energy' means energy derived from--
``(i) waves, tides, and currents in oceans, estuaries, and
tidal areas,
``(ii) free flowing water in rivers, lakes, and streams,
``(iii) free flowing water in an irrigation system, canal,
or other man-made channel, including projects that utilize
nonmechanical structures to accelerate the flow of water for
electric power production purposes, or
``(iv) differentials in ocean temperature (ocean thermal
energy conversion).
``(B) Exceptions.--Such term shall not include any energy
which is derived from any source which utilizes a dam,
diversionary structure (except as provided in subparagraph
(A)(iii)), or impoundment for electric power production
purposes.''.
(c) Definition of Facility.--Subsection (d) of section 45
is amended by adding at the end the following new paragraph:
``(11) Marine and hydrokinetic renewable energy
facilities.--In the case of a facility producing electricity
from marine and hydrokinetic renewable energy, the term
`qualified facility' means any facility owned by the
taxpayer--
``(A) which has a nameplate capacity rating of at least 150
kilowatts, and
``(B) which is originally placed in service on or after the
date of the enactment of this paragraph and before January 1,
2012.''.
(d) Credit Rate.--Subparagraph (A) of section 45(b)(4) is
amended by striking ``or (9)'' and inserting ``(9), or
(11)''.
(e) Coordination With Small Irrigation Power.--Paragraph
(5) of section 45(d), as amended by section 101, is amended
by striking ``January 1, 2012'' and inserting ``the date of
the enactment of paragraph (11)''.
(f) Effective Date.--The amendments made by this section
shall apply to electricity produced and sold after the date
of the enactment of this Act, in taxable years ending after
such date.

SEC. 103. ENERGY CREDIT.

(a) Extension of Credit.--
(1) Solar energy property.--Paragraphs (2)(A)(i)(II) and
(3)(A)(ii) of section 48(a) are each amended by striking
``January 1, 2009'' and inserting ``January 1, 2017''.
(2) Fuel cell property.--Subparagraph (E) of section
48(c)(1) is amended by striking ``December 31, 2008'' and
inserting ``December 31, 2016''.
(3) Microturbine property.--Subparagraph (E) of section
48(c)(2) is amended by striking ``December 31, 2008'' and
inserting ``December 31, 2016''.
(b) Allowance of Energy Credit Against Alternative Minimum
Tax.--
(1) In general.--Subparagraph (B) of section 38(c)(4), as
amended by the Housing Assistance Tax Act of 2008, is amended
by redesignating clause (vi) as clause (vi) and (vii),
respectively, and by inserting after clause (iv) the
following new clause:
``(v) the credit determined under section 46 to the extent
that such credit is attributable to the energy credit
determined under section 48,''.
(2) Technical amendment.--Clause (vi) of section
38(c)(4)(B), as redesignated by paragraph (1), is amended by
striking ``section 47 to the extent attributable to'' and
inserting ``section 46 to the extent that such credit is
attributable to the rehabilitation credit under section 47,
but only with respect to''.
(c) Energy Credit for Combined Heat and Power System
Property.--
(1) In general.--Section 48(a)(3)(A) is amended by striking
``or'' at the end of clause (iii), by inserting ``or'' at the
end of clause (iv), and by adding at the end the following
new clause:
``(v) combined heat and power system property,''.
(2) Combined heat and power system property.--Subsection
(c) of section 48 is amended--
(A) by striking ``Qualified Fuel Cell Property; Qualified
Microturbine Property'' in the heading and inserting
``Definitions'', and
(B) by adding at the end the following new paragraph:
``(3) Combined heat and power system property.--
``(A) Combined heat and power system property.--The term
`combined heat and power system property' means property
comprising a system--
``(i) which uses the same energy source for the
simultaneous or sequential generation of electrical power,
mechanical shaft power, or both, in combination with the
generation of steam or other forms of useful thermal energy
(including heating and cooling applications),
``(ii) which produces--

``(I) at least 20 percent of its total useful energy in the
form of thermal energy which is not used to produce
electrical or mechanical power (or combination thereof), and
``(II) at least 20 percent of its total useful energy in
the form of electrical or mechanical power (or combination
thereof),

``(iii) the energy efficiency percentage of which exceeds
60 percent, and
``(iv) which is placed in service before January 1, 2017.
``(B) Limitation.--
``(i) In general.--In the case of combined heat and power
system property with an electrical capacity in excess of the
applicable capacity placed in service during the taxable
year, the credit under subsection (a)(1) (determined without
regard to this paragraph) for such year shall be equal to the
amount which bears the same ratio to such credit as the
applicable capacity bears to the capacity of such property.
``(ii) Applicable capacity.--For purposes of clause (i),
the term `applicable capacity' means 15 megawatts or a
mechanical energy capacity of more than 20,000 horsepower or
an equivalent combination of electrical and mechanical energy
capacities.
``(iii) Maximum capacity.--The term `combined heat and
power system property' shall not include any property
comprising a system if such system has a capacity in excess
of 50 megawatts or a mechanical energy capacity in excess of
67,000 horsepower or an equivalent combination of electrical
and mechanical energy capacities.
``(C) Special rules.--
``(i) Energy efficiency percentage.--For purposes of this
paragraph, the energy efficiency percentage of a system is
the fraction--

``(I) the numerator of which is the total useful
electrical, thermal, and mechanical power produced by the
system at normal operating rates, and expected to be consumed
in its normal application, and
``(II) the denominator of which is the lower heating value
of the fuel sources for the system.

``(ii) Determinations made on btu basis.--The energy
efficiency percentage and the percentages under subparagraph
(A)(ii) shall be determined on a Btu basis.
``(iii) Input and output property not included.--The term
`combined heat and power system property' does not include
property used to transport the energy source to the facility
or to distribute energy produced by the facility.
``(D) Systems using biomass.--If a system is designed to
use biomass (within the meaning of paragraphs (2) and (3) of
section 45(c) without regard to the last sentence of
paragraph (3)(A)) for at least 90 percent of the energy
source--
``(i) subparagraph (A)(iii) shall not apply, but
``(ii) the amount of credit determined under subsection (a)
with respect to such system shall not exceed the amount which
bears the same ratio to such amount of credit (determined
without regard to this subparagraph) as the energy efficiency
percentage of such system bears to 60 percent.''.
(3) Conforming amendment.--Section 48(a)(1) is amended by
striking ``paragraphs (1)(B) and (2)(B)'' and inserting
``paragraphs (1)(B), (2)(B), and (3)(B)''.
(d) Increase of Credit Limitation for Fuel Cell Property.--
Subparagraph (B) of section 48(c)(1) is amended by striking
``$500'' and inserting ``$1,500''.
(e) Public Utility Property Taken Into Account.--
(1) In general.--Paragraph (3) of section 48(a) is amended
by striking the second sentence thereof.
(2) Conforming amendments.--
(A) Paragraph (1) of section 48(c) is amended by striking
subparagraph (D) and redesignating subparagraph (E) as
subparagraph (D).
(B) Paragraph (2) of section 48(c) is amended by striking
subparagraph (D) and redesignating subparagraph (E) as
subparagraph (D).
(f) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall take
effect on the date of the enactment of this Act.
(2) Allowance against alternative minimum tax.--The
amendments made by subsection (b) shall apply to credits
determined under section 46 of the Internal Revenue Code of
1986 in taxable years beginning after the date of the
enactment of this Act and to carrybacks of such credits.
(3) Combined heat and power and fuel cell property.--The
amendments made by

[[Page S10354]]

subsections (c) and (d) shall apply to periods after the date
of the enactment of this Act, in taxable years ending after
such date, under rules similar to the rules of section 48(m)
of the Internal Revenue Code of 1986 (as in effect on the day
before the date of the enactment of the Revenue
Reconciliation Act of 1990).
(4)  Public utility property.--The amendments made by
subsection (e) shall apply to periods after February 13,
2008, in taxable years ending after such date, under rules
similar to the rules of section 48(m) of the Internal Revenue
Code of 1986 (as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of 1990).

SEC. 104. ENERGY CREDIT FOR SMALL WIND PROPERTY.

(a) In General.--Section 48(a)(3)(A), as amended by section
103, is amended by striking ``or'' at the end of clause (iv),
by adding ``or'' at the end of clause (v), and by inserting
after clause (v) the following new clause:
``(vi) qualified small wind energy property,''.
(b) 30 Percent Credit.--Section 48(a)(2)(A)(i) is amended
by striking ``and'' at the end of subclause (II) and by
inserting after subclause (III) the following new subclause:

``(IV) qualified small wind energy property, and''.

(c) Qualified Small Wind Energy Property.--Section 48(c),
as amended by section 103, is amended by adding at the end
the following new paragraph:
``(4) Qualified small wind energy property.--
``(A) In general.--The term `qualified small wind energy
property' means property which uses a qualifying small wind
turbine to generate electricity.
``(B) Limitation.--In the case of qualified small wind
energy property placed in service during the taxable year,
the credit otherwise determined under subsection (a)(1) for
such year with respect to all such property of the taxpayer
shall not exceed $4,000.
``(C) Qualifying small wind turbine.--The term `qualifying
small wind turbine' means a wind turbine which has a
nameplate capacity of not more than 100 kilowatts.
``(D) Termination.--The term `qualified small wind energy
property' shall not include any property for any period after
December 31, 2016.''.
(d) Conforming Amendment.--Section 48(a)(1), as amended by
section 103, is amended by striking ``paragraphs (1)(B),
(2)(B), and (3)(B)'' and inserting ``paragraphs (1)(B),
(2)(B), (3)(B), and (4)(B)''.
(e) Effective Date.--The amendments made by this section
shall apply to periods after the date of the enactment of
this Act, in taxable years ending after such date, under
rules similar to the rules of section 48(m) of the Internal
Revenue Code of 1986 (as in effect on the day before the date
of the enactment of the Revenue Reconciliation Act of 1990).

SEC. 105. ENERGY CREDIT FOR GEOTHERMAL HEAT PUMP SYSTEMS.

(a) In General.--Subparagraph (A) of section 48(a)(3), as
amended by this Act, is amended by striking ``or'' at the end
of clause (v), by inserting ``or'' at the end of clause (vi),
and by adding at the end the following new clause:
``(vii) equipment which uses the ground or ground water as
a thermal energy source to heat a structure or as a thermal
energy sink to cool a structure, but only with respect to
periods ending before January 1, 2017,''.
(b) Effective Date.--The amendments made by this section
shall apply to periods after the date of the enactment of
this Act, in taxable years ending after such date, under
rules similar to the rules of section 48(m) of the Internal
Revenue Code of 1986 (as in effect on the day before the date
of the enactment of the Revenue Reconciliation Act of 1990).

SEC. 106. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT PROPERTY.

(a) Extension.--Section 25D(g) is amended by striking
``December 31, 2008'' and inserting ``December 31, 2016''.
(b) Removal of Limitation for Solar Electric Property.--
(1) In general.--Section 25D(b)(1), as amended by
subsections (c) and (d), is amended--
(A) by striking subparagraph (A), and
(B) by redesignating subparagraphs (B) through (E) as
subparagraphs (A) through and (D), respectively.
(2) Conforming amendment.--Section 25D(e)(4)(A), as amended
by subsections (c) and (d), is amended--
(A) by striking clause (i), and
(B) by redesignating clauses (ii) through (v) as clauses
(i) and (iv), respectively.
(c) Credit for Residential Wind Property.--
(1) In general.--Section 25D(a) is amended by striking
``and'' at the end of paragraph (2), by striking the period
at the end of paragraph (3) and inserting ``, and'', and by
adding at the end the following new paragraph:
``(4) 30 percent of the qualified small wind energy
property expenditures made by the taxpayer during such
year.''.
(2) Limitation.--Section 25D(b)(1) is amended by striking
``and'' at the end of subparagraph (B), by striking the
period at the end of subparagraph (C) and inserting ``,
and'', and by adding at the end the following new
subparagraph:
``(D) $500 with respect to each half kilowatt of capacity
(not to exceed $4,000) of wind turbines for which qualified
small wind energy property expenditures are made.''.
(3) Qualified small wind energy property expenditures.--
(A) In general.--Section 25D(d) is amended by adding at the
end the following new paragraph:
``(4) Qualified small wind energy property expenditure.--
The term `qualified small wind energy property expenditure'
means an expenditure for property which uses a wind turbine
to generate electricity for use in connection with a dwelling
unit located in the United States and used as a residence by
the taxpayer.''.
(B) No double benefit.--Section 45(d)(1) is amended by
adding at the end the following new sentence: ``Such term
shall not include any facility with respect to which any
qualified small wind energy property expenditure (as defined
in subsection (d)(4) of section 25D) is taken into account in
determining the credit under such section.''.
(4) Maximum expenditures in case of joint occupancy.--
Section 25D(e)(4)(A) 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) $1,667 in the case of each half kilowatt of capacity
(not to exceed $13,333) of wind turbines for which qualified
small wind energy property expenditures are made.''.
(d) Credit for Geothermal Heat pump Systems.--
(1) In general.--Section 25D(a), as amended by subsection
(c), is amended by striking ``and'' at the end of paragraph
(3), by striking the period at the end of paragraph (4) and
inserting ``, and'', and by adding at the end the following
new paragraph:
``(5) 30 percent of the qualified geothermal heat pump
property expenditures made by the taxpayer during such
year.''.
(2) Limitation.--Section 25D(b)(1), as amended by
subsection (c), is amended by striking ``and'' at the end of
subparagraph (C), by striking the period at the end of
subparagraph (D) and inserting ``, and'', and by adding at
the end the following new subparagraph:
``(E) $2,000 with respect to any qualified geothermal heat
pump property expenditures.''.
(3) Qualified geothermal heat pump property expenditure.--
Section 25D(d), as amended by subsection (c), is amended by
adding at the end the following new paragraph:
``(5) Qualified geothermal heat pump property
expenditure.--
``(A) In general.--The term `qualified geothermal heat pump
property expenditure' means an expenditure for qualified
geothermal heat pump property installed on or in connection
with a dwelling unit located in the United States and used as
a residence by the taxpayer.
``(B) Qualified geothermal heat pump property.--The term
`qualified geothermal heat pump property' means any equipment
which--
``(i) uses the ground or ground water as a thermal energy
source to heat the dwelling unit referred to in subparagraph
(A) or as a thermal energy sink to cool such dwelling unit,
and
``(ii) meets the requirements of the Energy Star program
which are in effect at the time that the expenditure for such
equipment is made.''.
(4) Maximum expenditures in case of joint occupancy.--
Section 25D(e)(4)(A), as amended by subsection (c), is
amended by striking ``and'' at the end of clause (iii), by
striking the period at the end of clause (iv) and inserting
``, and'', and by adding at the end the following new clause:
``(v) $6,667 in the case of any qualified geothermal heat
pump property expenditures.''.
(e) Credit Allowed Against Alternative Minimum Tax.--
(1) In general.--Subsection (c) of section 25D is amended
to read as follows:
``(c) Limitation Based on Amount of Tax; Carryforward of
Unused Credit.--
``(1) Limitation based on amount of tax.--In the case of a
taxable year to which section 26(a)(2) does not apply, the
credit allowed under subsection (a) for the taxable year
shall not exceed the excess of--
``(A) the sum of the regular tax liability (as defined in
section 26(b)) plus the tax imposed by section 55, over
``(B) the sum of the credits allowable under this subpart
(other than this section) and section 27 for the taxable
year.
``(2) Carryforward of unused credit.--
``(A) Rule for years in which all personal credits allowed
against regular and alternative minimum tax.--In the case of
a taxable year to which section 26(a)(2) applies, if the
credit allowable under subsection (a) exceeds the limitation
imposed by section 26(a)(2) for such taxable year reduced by
the sum of the credits allowable under this subpart (other
than this section), such excess shall be carried to the
succeeding taxable year and added to the credit allowable
under subsection (a) for such succeeding taxable year.
``(B) Rule for other years.--In the case of a taxable year
to which section 26(a)(2) does not apply, if the credit
allowable under subsection (a) exceeds the limitation imposed
by paragraph (1) for such taxable year, such excess shall be
carried to the succeeding taxable year and added to the
credit allowable under subsection (a) for such succeeding
taxable year.''.
(2) Conforming amendments.--

[[Page S10355]]

(A) Section 23(b)(4)(B) is amended by inserting ``and
section 25D'' after ``this section''.
(B) Section 24(b)(3)(B) is amended by striking ``and 25B''
and inserting ``, 25B, and 25D''.
(C) Section 25B(g)(2) is amended by striking ``section 23''
and inserting ``sections 23 and 25D''.
(D) Section 26(a)(1) is amended by striking ``and 25B'' and
inserting ``25B, and 25D''.
(f) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2007.
(2) Solar electric property limitation.--The amendments
made by subsection (b) shall apply to taxable years beginning
after December 31, 2008.
(3) Application of egtrra sunset.--The amendments made by
subparagraphs (A) and (B) of subsection (e)(2) shall be
subject to title IX of the Economic Growth and Tax Relief
Reconciliation Act of 2001 in the same manner as the
provisions of such Act to which such amendments relate.

SEC. 107. NEW CLEAN RENEWABLE ENERGY BONDS.

(a) In General.--Subpart I of part IV of subchapter A of
chapter 1 is amended by adding at the end the following new
section:

``SEC. 54C. NEW CLEAN RENEWABLE ENERGY BONDS.

``(a) New Clean Renewable Energy Bond.--For purposes of
this subpart, the term `new clean renewable energy bond'
means any bond issued as part of an issue if--
``(1) 100 percent of the available project proceeds of such
issue are to be used for capital expenditures incurred by
governmental bodies, public power providers, or cooperative
electric companies for one or more qualified renewable energy
facilities,
``(2) the bond is issued by a qualified issuer, and
``(3) the issuer designates such bond for purposes of this
section.
``(b) Reduced Credit Amount.--The annual credit determined
under section 54A(b) with respect to any new clean renewable
energy bond shall be 70 percent of the amount so determined
without regard to this subsection.
``(c) Limitation on Amount of Bonds Designated.--
``(1) In general.--The maximum aggregate face amount of
bonds which may be designated under subsection (a) by any
issuer shall not exceed the limitation amount allocated under
this subsection to such issuer.
``(2) National limitation on amount of bonds designated.--
There is a national new clean renewable energy bond
limitation of $800,000,000 which shall be allocated by the
Secretary as provided in paragraph (3), except that--
``(A) not more than 33\1/3\ percent thereof may be
allocated to qualified projects of public power providers,
``(B) not more than 33\1/3\ percent thereof may be
allocated to qualified projects of governmental bodies, and
``(C) not more than 33\1/3\ percent thereof may be
allocated to qualified projects of cooperative electric
companies.
``(3) Method of allocation.--
``(A) Allocation among public power providers.--After the
Secretary determines the qualified projects of public power
providers which are appropriate for receiving an allocation
of the national new clean renewable energy bond limitation,
the Secretary shall, to the maximum extent practicable, make
allocations among such projects in such manner that the
amount allocated to each such project bears the same ratio to
the cost of such project as the limitation under paragraph
(2)(A) bears to the cost of all such projects.
``(B) Allocation among governmental bodies and cooperative
electric companies.--The Secretary shall make allocations of
the amount of the national new clean renewable energy bond
limitation described in paragraphs (2)(B) and (2)(C) among
qualified projects of governmental bodies and cooperative
electric companies, respectively, in such manner as the
Secretary determines appropriate.
``(d) Definitions.--For purposes of this section--
``(1) Qualified renewable energy facility.--The term
`qualified renewable energy facility' means a qualified
facility (as determined under section 45(d) without regard to
paragraphs (8) and (10) thereof and to any placed in service
date) owned by a public power provider, a governmental body,
or a cooperative electric company.
``(2) Public power provider.--The term `public power
provider' means a State utility with a service obligation, as
such terms are defined in section 217 of the Federal Power
Act (as in effect on the date of the enactment of this
paragraph).
``(3) Governmental body.--The term `governmental body'
means any State or Indian tribal government, or any political
subdivision thereof.
``(4) Cooperative electric company.--The term `cooperative
electric company' means a mutual or cooperative electric
company described in section 501(c)(12) or section
1381(a)(2)(C).
``(5) Clean renewable energy bond lender.--The term `clean
renewable energy bond lender' means a lender which is a
cooperative which is owned by, or has outstanding loans to,
100 or more cooperative electric companies and is in
existence on February 1, 2002, and shall include any
affiliated entity which is controlled by such lender.
``(6) Qualified issuer.--The term `qualified issuer' means
a public power provider, a cooperative electric company, a
governmental body, a clean renewable energy bond lender, or a
not-for-profit electric utility which has received a loan or
loan guarantee under the Rural Electrification Act.''.
(b) Conforming Amendments.--
(1) Paragraph (1) of section 54A(d) is amended to read as
follows:
``(1) Qualified tax credit bond.--The term `qualified tax
credit bond' means--
``(A) a qualified forestry conservation bond, or
``(B) a new clean renewable energy bond,
which is part of an issue that meets requirements of
paragraphs (2), (3), (4), (5), and (6).''.
(2) Subparagraph (C) of section 54A(d)(2) is amended to
read as follows:
``(C) Qualified purpose.--For purposes of this paragraph,
the term `qualified purpose' means--
``(i) in the case of a qualified forestry conservation
bond, a purpose specified in section 54B(e), and
``(ii) in the case of a new clean renewable energy bond, a
purpose specified in section 54C(a)(1).''.
(3) The table of sections for subpart I of part IV of
subchapter A of chapter 1 is amended by adding at the end the
following new item:

``Sec. 54C. Qualified clean renewable energy bonds.''.

(c) Extension for Clean Renewable Energy Bonds.--Subsection
(m) of section 54 is amended by striking ``December 31,
2008'' and inserting ``December 31, 2009''.
(d) Effective Date.--The amendments made by this section
shall apply to obligations issued after the date of the
enactment of this Act.

SEC. 108. CREDIT FOR STEEL INDUSTRY FUEL.

(a) Treatment as Refined Coal.--
(1) In general.--Subparagraph (A) of section 45(c)(7) of
the Internal Revenue Code of 1986 (relating to refined coal),
as amended by this Act, is amended to read as follows:
``(A) In general.--The term `refined coal' means a fuel--
``(i) which--

``(I) is a liquid, gaseous, or solid fuel produced from
coal (including lignite) or high carbon fly ash, including
such fuel used as a feedstock,
``(II) is sold by the taxpayer with the reasonable
expectation that it will be used for purpose of producing
steam,
``(III) is certified by the taxpayer as resulting (when
used in the production of steam) in a qualified emission
reduction, and
``(IV) is produced in such a manner as to result in an
increase of at least 50 percent in the market value of the
refined coal (excluding any increase caused by materials
combined or added during the production process), as compared
to the value of the feedstock coal, or

``(ii) which is steel industry fuel.''.
(2) Steel industry fuel defined.--Paragraph (7) of section
45(c) of such Code is amended by adding at the end the
following new subparagraph:
``(C) Steel industry fuel.--
``(i) In general.--The term `steel industry fuel' means a
fuel which--

``(I) is produced through a process of liquifying coal
waste sludge and distributing it on coal, and
``(II) is used as a feedstock for the manufacture of coke.

``(ii) Coal waste sludge.--The term `coal waste sludge'
means the tar decanter sludge and related byproducts of the
coking process, including such materials that have been
stored in ground, in tanks and in lagoons, that have been
treated as hazardous wastes under applicable Federal
environmental rules absent liquefaction and processing with
coal into a feedstock for the manufacture of coke.''.
(b) Credit Amount.--
(1) In general.--Paragraph (8) of section 45(e) of the
Internal Revenue Code of 1986 (relating to refined coal
production facilities) is amended by adding at the end the
following new subparagraph
``(D) Special rule for steel industry fuel.--
``(i) In general.--In the case of a taxpayer who produces
steel industry fuel--

``(I) this paragraph shall be applied separately with
respect to steel industry fuel and other refined coal, and
``(II) in applying this paragraph to steel industry fuel,
the modifications in clause (ii) shall apply.

``(ii) Modifications.--

``(I) Credit amount.--Subparagraph (A) shall be applied by
substituting `$2 per barrel-of-oil equivalent' for `$4.375
per ton'.
``(II) Credit period.--In lieu of the 10-year period
referred to in clauses (i) and (ii)(II) of subparagraph (A),
the credit period shall be the period beginning on the later
of the date such facility was originally placed in service,
the date the modifications described in clause (iii) were
placed in service, or October 1, 2008, and ending on the
later of December 31, 2009, or the date which is 1 year after
the date such facility or the modifications described in
clause (iii) were placed in service.
``(III) No phaseout.--Subparagraph (B) shall not apply.

``(iii) Modifications.--The modifications described in this
clause are modifications to an existing facility which allow
such facility to produce steel industry fuel.
``(iv) Barrel-of-oil equivalent.--For purposes of this
subparagraph, a barrel-of-oil

[[Page S10356]]

equivalent is the amount of steel industry fuel that has a
Btu content of 5,800,000 Btus.''.
(2) Inflation adjustment.--Paragraph (2) of section 45(b)
of such Code is amended by inserting ``the $3 amount in
subsection (e)(8)(D)(ii)(I),'' after ``subsection
(e)(8)(A),''.
(c) Termination.--Paragraph (8) of section 45(d) of the
Internal Revenue Code of 1986 (relating to refined coal
production facility), as amended by this Act, is amended to
read as follows:
``(8) Refined coal production facility.--In the case of a
facility that produces refined coal, the term `refined coal
production facility' means--
``(A) with respect to a facility producing steel industry
fuel, any facility (or any modification to a facility) which
is placed in service before January 1, 2010, and
``(B) with respect to any other facility producing refined
coal, any facility placed in service after the date of the
enactment of the American Jobs Creation Act of 2004 and
before January 1, 2010.''.
(d) Coordination With Credit for Producing Fuel From a
Nonconventional Source.--
(1) In general.--Subparagraph (B) of section 45(e)(9) of
the Internal Revenue Code of 1986 is amended--
(A) by striking ``The term'' and inserting the following:
``(i) In general.--The term'', and
(B) by adding at the end the following new clause:
``(ii) Exception for steel industry coal.--In the case of a
facility producing steel industry fuel, clause (i) shall not
apply to so much of the refined coal produced at such
facility as is steel industry fuel.''.
(2) No double benefit.--Section 45K(g)(2) of such Code is
amended by adding at the end the following new subparagraph:
``(E) Coordination with section 45.--No credit shall be
allowed with respect to any qualified fuel which is steel
industry fuel (as defined in section 45(c)(7)) if a credit is
allowed to the taxpayer for such fuel under section 45.''.
(e) Effective Date.--The amendments made by this section
shall apply to fuel produced and sold after September 30,
2008.

SEC. 109. SPECIAL RULE TO IMPLEMENT FERC AND STATE ELECTRIC
RESTRUCTURING POLICY.

(a) Extension for Qualified Electric Utilities.--
(1) In general.--Paragraph (3) of section 451(i) is amended
by inserting ``(before January 1, 2010, in the case of a
qualified electric utility)'' after ``January 1, 2008''.
(2) Qualified electric utility.--Subsection (i) of section
451 is amended by redesignating paragraphs (6) through (10)
as paragraphs (7) through (11), respectively, and by
inserting after paragraph (5) the following new paragraph:
``(6) Qualified electric utility.--For purposes of this
subsection, the term `qualified electric utility' means a
person that, as of the date of the qualifying electric
transmission transaction, is vertically integrated, in that
it is both--
``(A) a transmitting utility (as defined in section 3(23)
of the Federal Power Act (16 U.S.C. 796(23))) with respect to
the transmission facilities to which the election under this
subsection applies, and
``(B) an electric utility (as defined in section 3(22) of
the Federal Power Act (16 U.S.C. 796(22))).''.
(b) Extension of Period for Transfer of Operational Control
Authorized by FERC.--Clause (ii) of section 451(i)(4)(B) is
amended by striking ``December 31, 2007'' and inserting ``the
date which is 4 years after the close of the taxable year in
which the transaction occurs''.
(c) Property Located Outside the United States Not Treated
as Exempt Utility Property.--Paragraph (5) of section 451(i)
is amended by adding at the end the following new
subparagraph:
``(C) Exception for property located outside the united
states.--The term `exempt utility property' shall not include
any property which is located outside the United States.''.
(d) Effective Dates.--
(1) Extension.--The amendments made by subsection (a) shall
apply to transactions after December 31, 2007.
(2) Transfers of operational control.--The amendment made
by subsection (b) shall take effect as if included in section
909 of the American Jobs Creation Act of 2004.
(3) Exception for property located outside the united
states.--The amendment made by subsection (c) shall apply to
transactions after the date of the enactment of this Act.

Subtitle B--Carbon Mitigation and Coal Provisions

SEC. 111. EXPANSION AND MODIFICATION OF ADVANCED COAL PROJECT
INVESTMENT CREDIT.

(a) Modification of Credit Amount.--Section 48A(a) is
amended by striking ``and'' at the end of paragraph (1), by
striking the period at the end of paragraph (2) and inserting
``, and'', and by adding at the end the following new
paragraph:
``(3) 30 percent of the qualified investment for such
taxable year in the case of projects described in clause
(iii) of subsection (d)(3)(B).''.
(b) Expansion of Aggregate Credits.--Section 48A(d)(3)(A)
is amended by striking ``$1,300,000,000'' and inserting
``$2,550,000,000''.
(c) Authorization of Additional Projects.--
(1) In general.--Subparagraph (B) of section 48A(d)(3) is
amended to read as follows:
``(B) Particular projects.--Of the dollar amount in
subparagraph (A), the Secretary is authorized to certify--
``(i) $800,000,000 for integrated gasification combined
cycle projects the application for which is submitted during
the period described in paragraph (2)(A)(i),
``(ii) $500,000,000 for projects which use other advanced
coal-based generation technologies the application for which
is submitted during the period described in paragraph
(2)(A)(i), and
``(iii) $1,250,000,000 for advanced coal-based generation
technology projects the application for which is submitted
during the period described in paragraph (2)(A)(ii).''.
(2) Application period for additional projects.--
Subparagraph (A) of section 48A(d)(2) is amended to read as
follows:
``(A) Application period.--Each applicant for certification
under this paragraph shall submit an application meeting the
requirements of subparagraph (B). An applicant may only
submit an application--
``(i) for an allocation from the dollar amount specified in
clause (i) or (ii) of paragraph (3)(B) during the 3-year
period beginning on the date the Secretary establishes the
program under paragraph (1), and
``(ii) for an allocation from the dollar amount specified
in paragraph (3)(B)(iii) during the 3-year period beginning
at the earlier of the termination of the period described in
clause (i) or the date prescribed by the Secretary.''.
(3) Capture and sequestration of carbon dioxide emissions
requirement.--
(A) In general.--Section 48A(e)(1) is amended by striking
``and'' at the end of subparagraph (E), by striking the
period at the end of subparagraph (F) and inserting ``;
and'', and by adding at the end the following new
subparagraph:
``(G) in the case of any project the application for which
is submitted during the period described in subsection
(d)(2)(A)(ii), the project includes equipment which separates
and sequesters at least 65 percent (70 percent in the case of
an application for reallocated credits under subsection
(d)(4)) of such project's total carbon dioxide emissions.''.
(B) Highest priority for projects which sequester carbon
dioxide emissions.--Section 48A(e)(3) is amended by striking
``and'' at the end of subparagraph (A)(iii), by striking the
period at the end of subparagraph (B)(iii) and inserting ``,
and'', and by adding at the end the following new
subparagraph:
``(C) give highest priority to projects with the greatest
separation and sequestration percentage of total carbon
dioxide emissions.''.
(C) Recapture of credit for failure to sequester.--Section
48A is amended by adding at the end the following new
subsection:
``(i) Recapture of Credit for Failure To Sequester.--The
Secretary shall provide for recapturing the benefit of any
credit allowable under subsection (a) with respect to any
project which fails to attain or maintain the separation and
sequestration requirements of subsection (e)(1)(G).''.
(4) Additional priority for research partnerships.--Section
48A(e)(3)(B), as amended by paragraph (3)(B), is amended--
(A) by striking ``and'' at the end of clause (ii),
(B) by redesignating clause (iii) as clause (iv), and
(C) by inserting after clause (ii) the following new
clause:
``(iii) applicant participants who have a research
partnership with an eligible educational institution (as
defined in section 529(e)(5)), and''.
(5) Clerical amendment.--Section 48A(e)(3) is amended by
striking ``integrated gasification combined cycle'' in the
heading and inserting ``certain''.
(d) Disclosure of Allocations.--Section 48A(d) is amended
by adding at the end the following new paragraph:
``(5) Disclosure of allocations.--The Secretary shall, upon
making a certification under this subsection or section
48B(d), publicly disclose the identity of the applicant and
the amount of the credit certified with respect to such
applicant.''.
(e) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply
to credits the application for which is submitted during the
period described in section 48A(d)(2)(A)(ii) of the Internal
Revenue Code of 1986 and which are allocated or reallocated
after the date of the enactment of this Act.
(2) Disclosure of allocations.--The amendment made by
subsection (d) shall apply to certifications made after the
date of the enactment of this Act.
(3) Clerical amendment.--The amendment made by subsection
(c)(5) shall take effect as if included in the amendment made
by section 1307(b) of the Energy Tax Incentives Act of 2005.

SEC. 112. EXPANSION AND MODIFICATION OF COAL GASIFICATION
INVESTMENT CREDIT.

(a) Modification of Credit Amount.--Section 48B(a) is
amended by inserting ``(30 percent in the case of credits
allocated under subsection (d)(1)(B))'' after ``20 percent''.
(b) Expansion of Aggregate Credits.--Section 48B(d)(1) is
amended by striking ``shall not exceed $350,000,000'' and all
that follows and inserting ``shall not exceed--
``(A) $350,000,000, plus
``(B) $250,000,000 for qualifying gasification projects
that include equipment which separates and sequesters at
least 75 percent of

[[Page S10357]]

such project's total carbon dioxide emissions.''.
(c) Recapture of Credit for Failure to Sequester.--Section
48B is amended by adding at the end the following new
subsection:
``(f) Recapture of Credit for Failure to Sequester.--The
Secretary shall provide for recapturing the benefit of any
credit allowable under subsection (a) with respect to any
project which fails to attain or maintain the separation and
sequestration requirements for such project under subsection
(d)(1).''.
(d) Selection Priorities.--Section 48B(d) is amended by
adding at the end the following new paragraph:
``(4) Selection priorities.--In determining which
qualifying gasification projects to certify under this
section, the Secretary shall--
``(A) give highest priority to projects with the greatest
separation and sequestration percentage of total carbon
dioxide emissions, and
``(B) give high priority to applicant participants who have
a research partnership with an eligible educational
institution (as defined in section 529(e)(5)).''.
(e) Eligible Projects Include Transportation Grade Liquid
Fuels.--Section 48B(c)(7) (defining eligible entity) is
amended by striking ``and'' at the end of subparagraph (F),
by striking the period at the end of subparagraph (G) and
inserting ``, and'', and by adding at the end the following
new subparagraph:
``(H) transportation grade liquid fuels.''.
(f) Effective Date.--The amendments made by this section
shall apply to credits described in section 48B(d)(1)(B) of
the Internal Revenue Code of 1986 which are allocated or
reallocated after the date of the enactment of this Act.

SEC. 113. TEMPORARY INCREASE IN COAL EXCISE TAX; FUNDING OF
BLACK LUNG DISABILITY TRUST FUND.

(a) Extension of Temporary Increase.--Paragraph (2) of
section 4121(e) is amended--
(1) by striking ``January 1, 2014'' in subparagraph (A) and
inserting ``December 31, 2018'', and
(2) by striking ``January 1 after 1981'' in subparagraph
(B) and inserting ``December 31 after 2007''.
(b) Restructuring of Trust Fund Debt.--
(1) Definitions.--For purposes of this subsection--
(A) Market value of the outstanding repayable advances,
plus accrued interest.--The term ``market value of the
outstanding repayable advances, plus accrued interest'' means
the present value (determined by the Secretary of the
Treasury as of the refinancing date and using the Treasury
rate as the discount rate) of the stream of principal and
interest payments derived assuming that each repayable
advance that is outstanding on the refinancing date is due on
the 30th anniversary of the end of the fiscal year in which
the advance was made to the Trust Fund, and that all such
principal and interest payments are made on September 30 of
the applicable fiscal year.
(B) Refinancing date.--The term ``refinancing date'' means
the date occurring 2 days after the enactment of this Act.
(C) Repayable advance.--The term ``repayable advance''
means an amount that has been appropriated to the Trust Fund
in order to make benefit payments and other expenditures that
are authorized under section 9501 of the Internal Revenue
Code of 1986 and are required to be repaid when the Secretary
of the Treasury determines that monies are available in the
Trust Fund for such purpose.
(D) Treasury rate.--The term ``Treasury rate'' means a rate
determined by the Secretary of the Treasury, taking into
consideration current market yields on outstanding marketable
obligations of the United States of comparable maturities.
(E) Treasury 1-year rate.--The term ``Treasury 1-year
rate'' means a rate determined by the Secretary of the
Treasury, taking into consideration current market yields on
outstanding marketable obligations of the United States with
remaining periods to maturity of approximately 1 year, to
have been in effect as of the close of business 1 business
day prior to the date on which the Trust Fund issues
obligations to the Secretary of the Treasury under paragraph
(2)(B).
(2) Refinancing of outstanding principal of repayable
advances and unpaid interest on such advances.--
(A) Transfer to general fund.--On the refinancing date, the
Trust Fund shall repay the market value of the outstanding
repayable advances, plus accrued interest, by transferring
into the general fund of the Treasury the following sums:
(i) The proceeds from obligations that the Trust Fund shall
issue to the Secretary of the Treasury in such amounts as the
Secretaries of Labor and the Treasury shall determine and
bearing interest at the Treasury rate, and that shall be in
such forms and denominations and be subject to such other
terms and conditions, including maturity, as the Secretary of
the Treasury shall prescribe.
(ii) All, or that portion, of the appropriation made to the
Trust Fund pursuant to paragraph (3) that is needed to cover
the difference defined in that paragraph.
(B) Repayment of obligations.--In the event that the Trust
Fund is unable to repay the obligations that it has issued to
the Secretary of the Treasury under subparagraph (A)(i) and
this subparagraph, or is unable to make benefit payments and
other authorized expenditures, the Trust Fund shall issue
obligations to the Secretary of the Treasury in such amounts
as may be necessary to make such repayments, payments, and
expenditures, with a maturity of 1 year, and bearing interest
at the Treasury 1-year rate. These obligations shall be in
such forms and denominations and be subject to such other
terms and conditions as the Secretary of the Treasury shall
prescribe.
(C) Authority to issue obligations.--The Trust Fund is
authorized to issue obligations to the Secretary of the
Treasury under subparagraphs (A)(i) and (B). The Secretary of
the Treasury is authorized to purchase such obligations of
the Trust Fund. For the purposes of making such purchases,
the Secretary of the Treasury may use as a public debt
transaction the proceeds from the sale of any securities
issued under chapter 31 of title 31, United States Code, and
the purposes for which securities may be issued under such
chapter are extended to include any purchase of such Trust
Fund obligations under this subparagraph.
(3) One-time appropriation.--There is hereby appropriated
to the Trust Fund an amount sufficient to pay to the general
fund of the Treasury the difference between--
(A) the market value of the outstanding repayable advances,
plus accrued interest; and
(B) the proceeds from the obligations issued by the Trust
Fund to the Secretary of the Treasury under paragraph
(2)(A)(i).
(4) Prepayment of trust fund obligations.--The Trust Fund
is authorized to repay any obligation issued to the Secretary
of the Treasury under subparagraphs (A)(i) and (B) of
paragraph (2) prior to its maturity date by paying a
prepayment price that would, if the obligation being prepaid
(including all unpaid interest accrued thereon through the
date of prepayment) were purchased by a third party and held
to the maturity date of such obligation, produce a yield to
the third-party purchaser for the period from the date of
purchase to the maturity date of such obligation
substantially equal to the Treasury yield on outstanding
marketable obligations of the United States having a
comparable maturity to this period.

SEC. 114. SPECIAL RULES FOR REFUND OF THE COAL EXCISE TAX TO
CERTAIN COAL PRODUCERS AND EXPORTERS.

(a) Refund.--
(1) Coal producers.--
(A) In general.--Notwithstanding subsections (a)(1) and (c)
of section 6416 and section 6511 of the Internal Revenue Code
of 1986, if--
(i) a coal producer establishes that such coal producer, or
a party related to such coal producer, exported coal produced
by such coal producer to a foreign country or shipped coal
produced by such coal producer to a possession of the United
States, or caused such coal to be exported or shipped, the
export or shipment of which was other than through an
exporter who meets the requirements of paragraph (2),
(ii) such coal producer filed an excise tax return on or
after October 1, 1990, and on or before the date of the
enactment of this Act, and
(iii) such coal producer files a claim for refund with the
Secretary not later than the close of the 30-day period
beginning on the date of the enactment of this Act,

then the Secretary shall pay to such coal producer an amount
equal to the tax paid under section 4121 of such Code on such
coal exported or shipped by the coal producer or a party
related to such coal producer, or caused by the coal producer
or a party related to such coal producer to be exported or
shipped.
(B) Special rules for certain taxpayers.--For purposes of
this section--
(i) In general.--If a coal producer or a party related to a
coal producer has received a judgment described in clause
(iii), such coal producer shall be deemed to have established
the export of coal to a foreign country or shipment of coal
to a possession of the United States under subparagraph
(A)(i).
(ii) Amount of payment.--If a taxpayer described in clause
(i) is entitled to a payment under subparagraph (A), the
amount of such payment shall be reduced by any amount paid
pursuant to the judgment described in clause (iii).
(iii) Judgment described.--A judgment is described in this
subparagraph if such judgment--

(I) is made by a court of competent jurisdiction within the
United States,
(II) relates to the constitutionality of any tax paid on
exported coal under section 4121 of the Internal Revenue Code
of 1986, and
(III) is in favor of the coal producer or the party related
to the coal producer.

(2) Exporters.--Notwithstanding subsections (a)(1) and (c)
of section 6416 and section 6511 of the Internal Revenue Code
of 1986, and a judgment described in paragraph (1)(B)(iii) of
this subsection, if--
(A) an exporter establishes that such exporter exported
coal to a foreign country or shipped coal to a possession of
the United States, or caused such coal to be so exported or
shipped,
(B) such exporter filed a tax return on or after October 1,
1990, and on or before the date of the enactment of this Act,
and
(C) such exporter files a claim for refund with the
Secretary not later than the close of the 30-day period
beginning on the date of the enactment of this Act,

then the Secretary shall pay to such exporter an amount equal
to $0.825 per ton of such coal exported by the exporter or
caused to be exported or shipped, or caused to be exported or
shipped, by the exporter.

[[Page S10358]]

(b) Limitations.--Subsection (a) shall not apply with
respect to exported coal if a settlement with the Federal
Government has been made with and accepted by, the coal
producer, a party related to such coal producer, or the
exporter, of such coal, as of the date that the claim is
filed under this section with respect to such exported coal.
For purposes of this subsection, the term ``settlement with
the Federal Government'' shall not include any settlement or
stipulation entered into as of the date of the enactment of
this Act, the terms of which contemplate a judgment
concerning which any party has reserved the right to file an
appeal, or has filed an appeal.
(c) Subsequent Refund Prohibited.--No refund shall be made
under this section to the extent that a credit or refund of
such tax on such exported or shipped coal has been paid to
any person.
(d) Definitions.--For purposes of this section--
(1) Coal producer.--The term ``coal producer'' means the
person in whom is vested ownership of the coal immediately
after the coal is severed from the ground, without regard to
the existence of any contractual arrangement for the sale or
other disposition of the coal or the payment of any royalties
between the producer and third parties. The term includes any
person who extracts coal from coal waste refuse piles or from
the silt waste product which results from the wet washing (or
similar processing) of coal.
(2) Exporter.--The term ``exporter'' means a person, other
than a coal producer, who does not have a contract, fee
arrangement, or any other agreement with a producer or seller
of such coal to export or ship such coal to a third party on
behalf of the producer or seller of such coal and--
(A) is indicated in the shipper's export declaration or
other documentation as the exporter of record, or
(B) actually exported such coal to a foreign country or
shipped such coal to a possession of the United States, or
caused such coal to be so exported or shipped.
(3) Related party.--The term ``a party related to such coal
producer'' means a person who--
(A) is related to such coal producer through any degree of
common management, stock ownership, or voting control,
(B) is related (within the meaning of section 144(a)(3) of
the Internal Revenue Code of 1986) to such coal producer, or
(C) has a contract, fee arrangement, or any other agreement
with such coal producer to sell such coal to a third party on
behalf of such coal producer.
(4) Secretary.--The term ``Secretary'' means the Secretary
of Treasury or the Secretary's designee.
(e) Timing of Refund.--With respect to any claim for refund
filed pursuant to this section, the Secretary shall determine
whether the requirements of this section are met not later
than 180 days after such claim is filed. If the Secretary
determines that the requirements of this section are met, the
claim for refund shall be paid not later than 180 days after
the Secretary makes such determination.
(f) Interest.--Any refund paid pursuant to this section
shall be paid by the Secretary with interest from the date of
overpayment determined by using the overpayment rate and
method under section 6621 of the Internal Revenue Code of
1986.
(g) Denial of Double Benefit.--The payment under subsection
(a) with respect to any coal shall not exceed--
(1) in the case of a payment to a coal producer, the amount
of tax paid under section 4121 of the Internal Revenue Code
of 1986 with respect to such coal by such coal producer or a
party related to such coal producer, and
(2) in the case of a payment to an exporter, an amount
equal to $0.825 per ton with respect to such coal exported by
the exporter or caused to be exported by the exporter.
(h) Application of Section.--This section applies only to
claims on coal exported or shipped on or after October 1,
1990, through the date of the enactment of this Act.
(i) Standing Not Conferred.--
(1) Exporters.--With respect to exporters, this section
shall not confer standing upon an exporter to commence, or
intervene in, any judicial or administrative proceeding
concerning a claim for refund by a coal producer of any
Federal or State tax, fee, or royalty paid by the coal
producer.
(2) Coal producers.--With respect to coal producers, this
section shall not confer standing upon a coal producer to
commence, or intervene in, any judicial or administrative
proceeding concerning a claim for refund by an exporter of
any Federal or State tax, fee, or royalty paid by the
producer and alleged to have been passed on to an exporter.

SEC. 115. TAX CREDIT FOR CARBON DIOXIDE SEQUESTRATION.

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

``SEC. 45Q. CREDIT FOR CARBON DIOXIDE SEQUESTRATION.

``(a) General Rule.--For purposes of section 38, the carbon
dioxide sequestration credit for any taxable year is an
amount equal to the sum of--
``(1) $20 per metric ton of qualified carbon dioxide which
is--
``(A) captured by the taxpayer at a qualified facility, and
``(B) disposed of by the taxpayer in secure geological
storage, and
``(2) $10 per metric ton of qualified carbon dioxide which
is--
``(A) captured by the taxpayer at a qualified facility, and
``(B) used by the taxpayer as a tertiary injectant in a
qualified enhanced oil or natural gas recovery project.
``(b) Qualified Carbon Dioxide.--For purposes of this
section--
``(1) In general.--The term `qualified carbon dioxide'
means carbon dioxide captured from an industrial source
which--
``(A) would otherwise be released into the atmosphere as
industrial emission of greenhouse gas, and
``(B) is measured at the source of capture and verified at
the point of disposal or injection.
``(2) Recycled carbon dioxide.--The term `qualified carbon
dioxide' includes the initial deposit of captured carbon
dioxide used as a tertiary injectant. Such term does not
include carbon dioxide that is re-captured, recycled, and re-
injected as part of the enhanced oil and natural gas recovery
process.
``(c) Qualified Facility.--For purposes of this section,
the term `qualified facility' means any industrial facility--
``(1) which is owned by the taxpayer,
``(2) at which carbon capture equipment is placed in
service, and
``(3) which captures not less than 500,000 metric tons of
carbon dioxide during the taxable year.
``(d) Special Rules and Other Definitions.--For purposes of
this section--
``(1) Only carbon dioxide captured and disposed of or used
within the united states taken into account.--The credit
under this section shall apply only with respect to qualified
carbon dioxide the capture and disposal or use of which is
within--
``(A) the United States (within the meaning of section
638(1)), or
``(B) a possession of the United States (within the meaning
of section 638(2)).
``(2) Secure geological storage.--The Secretary, in
consultation with the Administrator of the Environmental
Protection Agency, shall establish regulations for
determining adequate security measures for the geological
storage of carbon dioxide under subsection (a)(1)(B) such
that the carbon dioxide does not escape into the atmosphere.
Such term shall include storage at deep saline formations and
unminable coal seems under such conditions as the Secretary
may determine under such regulations.
``(3) Tertiary injectant.--The term `tertiary injectant'
has the same meaning as when used within section 193(b)(1).
``(4) Qualified enhanced oil or natural gas recovery
project.--The term `qualified enhanced oil or natural gas
recovery project' has the meaning given the term `qualified
enhanced oil recovery project' by section 43(c)(2), by
substituting `crude oil or natural gas' for `crude oil' in
subparagraph (A)(i) thereof.
``(5) Credit attributable to taxpayer.--Any credit under
this section shall be attributable to the person that
captures and physically or contractually ensures the disposal
of or the use as a tertiary injectant of the qualified carbon
dioxide, except to the extent provided in regulations
prescribed by the Secretary.
``(6) Recapture.--The Secretary shall, by regulations,
provide for recapturing the benefit of any credit allowable
under subsection (a) with respect to any qualified carbon
dioxide which ceases to be captured, disposed of, or used as
a tertiary injectant in a manner consistent with the
requirements of this section.
``(7) Inflation adjustment.--In the case of any taxable
year beginning in a calendar year after 2009, there shall be
substituted for each dollar amount contained in subsection
(a) an amount equal to the product of--
``(A) such dollar amount, multiplied by
``(B) the inflation adjustment factor for such calendar
year determined under section 43(b)(3)(B) for such calendar
year, determined by substituting `2008' for `1990'.
``(e) Application of Section.--The credit under this
section shall apply with respect to qualified carbon dioxide
before the end of the calendar year in which the Secretary,
in consultation with the Administrator of the Environmental
Protection Agency, certifies that 75,000,000 metric tons of
qualified carbon dioxide have been captured and disposed of
or used as a tertiary injectant.''.
(b) Conforming Amendment.--Section 38(b) (relating to
general business credit) is amended by striking ``plus'' at
the end of paragraph (32), by striking the period at the end
of paragraph (33) and inserting ``, plus'', and by adding at
the end of following new paragraph:
``(34) the carbon dioxide sequestration credit determined
under section 45Q(a).''.
(c) Clerical Amendment.--The table of sections for subpart
B of part IV of subchapter A of chapter 1 (relating to other
credits) is amended by adding at the end the following new
section:

``Sec. 45Q. Credit for carbon dioxide sequestration.''.

(d) Effective Date.--The amendments made by this section
shall apply to carbon dioxide captured after the date of the
enactment of this Act.

[[Page S10359]]

SEC. 116. CERTAIN INCOME AND GAINS RELATING TO INDUSTRIAL
SOURCE CARBON DIOXIDE TREATED AS QUALIFYING
INCOME FOR PUBLICLY TRADED PARTNERSHIPS.

(a) In General.--Subparagraph (E) of section 7704(d)(1)
(defining qualifying income) is amended by inserting ``or
industrial source carbon dioxide'' after ``timber)''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act,
in taxable years ending after such date.

SEC. 117. CARBON AUDIT OF THE TAX CODE.

(a) Study.--The Secretary of the Treasury shall enter into
an agreement with the National Academy of Sciences to
undertake a comprehensive review of the Internal Revenue Code
of 1986 to identify the types of and specific tax provisions
that have the largest effects on carbon and other greenhouse
gas emissions and to estimate the magnitude of those effects.
(b) Report.--Not later than 2 years after the date of
enactment of this Act, the National Academy of Sciences shall
submit to Congress a report containing the results of study
authorized under this section.
(c) Authorization of Appropriations.--There is authorized
to be appropriated to carry out this section $1,500,000 for
the period of fiscal years 2009 and 2010.

TITLE II--TRANSPORTATION AND DOMESTIC FUEL SECURITY PROVISIONS

SEC. 201. INCLUSION OF CELLULOSIC BIOFUEL IN BONUS
DEPRECIATION FOR BIOMASS ETHANOL PLANT
PROPERTY.

(a) In General.--Paragraph (3) of section 168(l) is amended
to read as follows:
``(3) Cellulosic biofuel.--The term `cellulosic biofuel'
means any liquid fuel which is produced from any
lignocellulosic or hemicellulosic matter that is available on
a renewable or recurring basis.''.
(b) Conforming Amendments.--Subsection (l) of section 168
is amended--
(1) by striking ``cellulosic biomass ethanol'' each place
it appears and inserting ``cellulosic biofuel'',
(2) by striking ``Cellulosic Biomass Ethanol'' in the
heading of such subsection and inserting ``Cellulosic
Biofuel'', and
(3) by striking ``cellulosic biomass ethanol'' in the
heading of paragraph (2) thereof and inserting ``cellulosic
biofuel''.
(c) Effective Date.--The amendments made by this section
shall apply to property placed in service after the date of
the enactment of this Act, in taxable years ending after such
date.

SEC. 202. CREDITS FOR BIODIESEL AND RENEWABLE DIESEL.

(a) In General.--Sections 40A(g), 6426(c)(6), and
6427(e)(5)(B) are each amended by striking ``December 31,
2008'' and inserting ``December 31, 2009''.
(b) Increase in Rate of Credit.--
(1) Income tax credit.--Paragraphs (1)(A) and (2)(A) of
section 40A(b) are each amended by striking ``50 cents'' and
inserting ``$1.00''.
(2) Excise tax credit.--Paragraph (2) of section 6426(c) is
amended to read as follows:
``(2) Applicable amount.--For purposes of this subsection,
the applicable amount is $1.00.''.
(3) Conforming amendments.--
(A) Subsection (b) of section 40A is amended by striking
paragraph (3) and by redesignating paragraphs (4) and (5) as
paragraphs (3) and (4), respectively.
(B) Paragraph (2) of section 40A(f) is amended to read as
follows:
``(2) Exception.--Subsection (b)(4) shall not apply with
respect to renewable diesel.''.
(C) Paragraphs (2) and (3) of section 40A(e) are each
amended by striking ``subsection (b)(5)(C)'' and inserting
``subsection (b)(4)(C)''.
(D) Clause (ii) of section 40A(d)(3)(C) is amended by
striking ``subsection (b)(5)(B)'' and inserting ``subsection
(b)(4)(B)''.
(c) Uniform Treatment of Diesel Produced From Biomass.--
Paragraph (3) of section 40A(f) is amended--
(1) by striking ``diesel fuel'' and inserting ``liquid
fuel'',
(2) by striking ``using a thermal depolymerization
process'', and
(3) by inserting ``, or other equivalent standard approved
by the Secretary'' after ``D396''.
(d) Coproduction of Renewable Diesel With Petroleum
Feedstock.--
(1) In general.--Paragraph (3) of section 40A(f) is amended
by adding at the end the following new sentences: ``Such term
does not include any fuel derived from coprocessing biomass
with a feedstock which is not biomass. For purposes of this
paragraph, the term `biomass' has the meaning given such term
by section 45K(c)(3).''.
(2) Conforming amendment.--Paragraph (3) of section 40A(f)
is amended by striking ``(as defined in section 45K(c)(3))''.
(e) Eligibility of Certain Aviation Fuel.--Subsection (f)
of section 40A (relating to renewable diesel) is amended by
adding at the end the following new paragraph:
``(4) Certain aviation fuel.--
``(A) In general.--Except as provided in the last 3
sentences of paragraph (3), the term `renewable diesel' shall
include fuel derived from biomass which meets the
requirements of a Department of Defense specification for
military jet fuel or an American Society of Testing and
Materials specification for aviation turbine fuel.
``(B) Application of mixture credits.--In the case of fuel
which is treated as renewable diesel solely by reason of
subparagraph (A), subsection (b)(1) and section 6426(c) shall
be applied with respect to such fuel by treating kerosene as
though it were diesel fuel.''.
(f) Modification Relating to Definition of Agri-
Biodiesel.--Paragraph (2) of section 40A(d) (relating to
agri-biodiesel) is amended by striking ``and mustard seeds''
and inserting ``mustard seeds, and camelina''.
(g) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply
to fuel produced, and sold or used, after December 31, 2008.
(2) Coproduction of renewable diesel with petroleum
feedstock.--The amendment made by subsection (d) shall apply
to fuel produced, and sold or used, after the date of the
enactment of this Act.

SEC. 203. CLARIFICATION THAT CREDITS FOR FUEL ARE DESIGNED TO
PROVIDE AN INCENTIVE FOR UNITED STATES
PRODUCTION.

(a) Alcohol Fuels Credit.--Subsection (d) of section 40 is
amended by adding at the end the following new paragraph:
``(7) Limitation to alcohol with connection to the united
states.--No credit shall be determined under this section
with respect to any alcohol which is produced outside the
United States for use as a fuel outside the United States.
For purposes of this paragraph, the term `United States'
includes any possession of the United States.''.
(b) Biodiesel Fuels Credit.--Subsection (d) of section 40A
is amended by adding at the end the following new paragraph:
``(5) Limitation to biodiesel with connection to the united
states.--No credit shall be determined under this section
with respect to any biodiesel which is produced outside the
United States for use as a fuel outside the United States.
For purposes of this paragraph, the term `United States'
includes any possession of the United States.''.
(c) Excise Tax Credit.--
(1) In general.--Section 6426 is amended by adding at the
end the following new subsection:
``(i) Limitation to Fuels With Connection to the United
States.--
``(1) Alcohol.--No credit shall be determined under this
section with respect to any alcohol which is produced outside
the United States for use as a fuel outside the United
States.
``(2) Biodiesel and alternative fuels.--No credit shall be
determined under this section with respect to any biodiesel
or alternative fuel which is produced outside the United
States for use as a fuel outside the United States.

For purposes of this subsection, the term `United States'
includes any possession of the United States.''.
(2) Conforming amendment.--Subsection (e) of section 6427
is amended by redesignating paragraph (5) as paragraph (6)
and by inserting after paragraph (4) the following new
paragraph:
``(5) Limitation to fuels with connection to the united
states.--No amount shall be payable under paragraph (1) or
(2) with respect to any mixture or alternative fuel if credit
is not allowed with respect to such mixture or alternative
fuel by reason of section 6426(i).''.
(d) Effective Date.--The amendments made by this section
shall apply to claims for credit or payment made on or after
May 15, 2008.

SEC. 204. EXTENSION AND MODIFICATION OF ALTERNATIVE FUEL
CREDIT.

(a) Extension.--
(1) Alternative fuel credit.--Paragraph (4) of section
6426(d) (relating to alternative fuel credit) is amended by
striking ``September 30, 2009'' and inserting ``December 31,
2009''.
(2) Alternative fuel mixture credit.--Paragraph (3) of
section 6426(e) (relating to alternative fuel mixture credit)
is amended by striking ``September 30, 2009'' and inserting
``December 31, 2009''.
(3) Payments.--Subparagraph (C) of section 6427(e)(5)
(relating to termination) is amended by striking ``September
30, 2009'' and inserting ``December 31, 2009''.
(b) Modifications.--
(1) Alternative fuel to include compressed or liquified
biomass gas.--Paragraph (2) of section 6426(d) (relating to
alternative fuel credit) is amended by striking ``and'' at
the end of subparagraph (E), by redesignating subparagraph
(F) as subparagraph (G), and by inserting after subparagraph
(E) the following new subparagraph:
``(F) compressed or liquefied gas derived from biomass (as
defined in section 45K(c)(3)), and''.
(2) Credit allowed for aviation use of fuel.--Paragraph (1)
of section 6426(d) is amended by inserting ``sold by the
taxpayer for use as a fuel in aviation,'' after
``motorboat,''.
(c) Carbon Capture Requirement for Certain Fuels.--
(1) In general.--Subsection (d) of section 6426, as amended
by subsection (a), is amended by redesignating paragraph (4)
as paragraph (5) and by inserting after paragraph (3) the
following new paragraph:
``(4) Carbon capture requirement.--
``(A) In general.--The requirements of this paragraph are
met if the fuel is certified, under such procedures as
required by the Secretary, as having been derived from coal
produced at a gasification facility which separates and
sequesters not less than the applicable percentage of such
facility's total carbon dioxide emissions.
``(B) Applicable percentage.--For purposes of subparagraph
(A), the applicable percentage is--

[[Page S10360]]

``(i) 50 percent in the case of fuel produced after
September 30, 2009, and on or before December 30, 2009, and
``(ii) 75 percent in the case of fuel produced after
December 30, 2009.''.
(2) Conforming amendment.--Subparagraph (E) of section
6426(d)(2) is amended by inserting ``which meets the
requirements of paragraph (4) and which is'' after ``any
liquid fuel''.
(d) Effective Date.--The amendments made by this section
shall apply to fuel sold or used after the date of the
enactment of this Act.

SEC. 205. CREDIT FOR NEW QUALIFIED PLUG-IN ELECTRIC DRIVE
MOTOR VEHICLES.

(a) Plug-in Electric Drive Motor Vehicle Credit.--Subpart B
of part IV of subchapter A of chapter 1 (relating to other
credits) is amended by adding at the end the following new
section:

``SEC. 30D. NEW QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR
VEHICLES.

``(a) Allowance of Credit.--
``(1) In general.--There shall be allowed as a credit
against the tax imposed by this chapter for the taxable year
an amount equal to the applicable amount with respect to each
new qualified plug-in electric drive motor vehicle placed in
service by the taxpayer during the taxable year.
``(2) Applicable amount.--For purposes of paragraph (1),
the applicable amount is sum of--
``(A) $2,500, plus
``(B) $417 for each kilowatt hour of traction battery
capacity in excess of 4 kilowatt hours.
``(b) Limitations.--
``(1) Limitation based on weight.--The amount of the credit
allowed under subsection (a) by reason of subsection (a)(2)
shall not exceed--
``(A) $7,500, in the case of any new qualified plug-in
electric drive motor vehicle with a gross vehicle weight
rating of not more than 10,000 pounds,
``(B) $10,000, in the case of any new qualified plug-in
electric drive motor vehicle with a gross vehicle weight
rating of more than 10,000 pounds but not more than 14,000
pounds,
``(C) $12,500, in the case of any new qualified plug-in
electric drive motor vehicle with a gross vehicle weight
rating of more than 14,000 pounds but not more than 26,000
pounds, and
``(D) $15,000, in the case of any new qualified plug-in
electric drive motor vehicle with a gross vehicle weight
rating of more than 26,000 pounds.
``(2) Limitation on number of passenger vehicles and light
trucks eligible for credit.--
``(A) In general.--In the case of a new qualified plug-in
electric drive motor vehicle sold during the phaseout period,
only the applicable percentage of the credit otherwise
allowable under subsection (a) shall be allowed.
``(B) Phaseout period.--For purposes of this subsection,
the phaseout period is the period beginning with the second
calendar quarter following the calendar quarter which
includes the first date on which the total number of such new
qualified plug-in electric drive motor vehicles sold for use
in the United States after December 31, 2008, is at least
250,000.
``(C) Applicable percentage.--For purposes of subparagraph
(A), the applicable percentage is--
``(i) 50 percent for the first 2 calendar quarters of the
phaseout period,
``(ii) 25 percent for the 3d and 4th calendar quarters of
the phaseout period, and
``(iii) 0 percent for each calendar quarter thereafter.
``(D) Controlled groups.--Rules similar to the rules of
section 30B(f)(4) shall apply for purposes of this
subsection.
``(c) New Qualified Plug-in Electric Drive Motor Vehicle.--
For purposes of this section, the term `new qualified plug-in
electric drive motor vehicle' means a motor vehicle--
``(1) which draws propulsion using a traction battery with
at least 4 kilowatt hours of capacity,
``(2) which uses an offboard source of energy to recharge
such battery,
``(3) which, in the case of a passenger vehicle or light
truck which has a gross vehicle weight rating of not more
than 8,500 pounds, has received a certificate of conformity
under the Clean Air Act and meets or exceeds the equivalent
qualifying California low emission vehicle standard under
section 243(e)(2) of the Clean Air Act for that make and
model year, and
``(A) in the case of a vehicle having a gross vehicle
weight rating of 6,000 pounds or less, the Bin 5 Tier II
emission standard established in regulations prescribed by
the Administrator of the Environmental Protection Agency
under section 202(i) of the Clean Air Act for that make and
model year vehicle, and
``(B) in the case of a vehicle having a gross vehicle
weight rating of more than 6,000 pounds but not more than
8,500 pounds, the Bin 8 Tier II emission standard which is so
established,
``(4) the original use of which commences with the
taxpayer,
``(5) which is acquired for use or lease by the taxpayer
and not for resale, and
``(6) which is made by a manufacturer.
``(d) Application With Other Credits.--
``(1) Business credit treated as part of general business
credit.--So much of the credit which would be allowed under
subsection (a) for any taxable year (determined without
regard to this subsection) that is attributable to property
of a character subject to an allowance for depreciation shall
be treated as a credit listed in section 38(b) for such
taxable year (and not allowed under subsection (a)).
``(2) Personal credit.--
``(A) In general.--For purposes of this title, the credit
allowed under subsection (a) for any taxable year (determined
after application of paragraph (1)) shall be treated as a
credit allowable under subpart A for such taxable year.
``(B) Limitation based on amount of tax.--In the case of a
taxable year to which section 26(a)(2) does not apply, the
credit allowed under subsection (a) for any taxable year
(determined after application of paragraph (1)) shall not
exceed the excess of--
``(i) the sum of the regular tax liability (as defined in
section 26(b)) plus the tax imposed by section 55, over
``(ii) the sum of the credits allowable under subpart A
(other than this section and sections 23 and 25D) and section
27 for the taxable year.
``(e) Other Definitions and Special Rules.--For purposes of
this section--
``(1) Motor vehicle.--The term `motor vehicle' has the
meaning given such term by section 30(c)(2).
``(2) Other terms.--The terms `passenger automobile',
`light truck', and `manufacturer' have the meanings given
such terms in regulations prescribed by the Administrator of
the Environmental Protection Agency for purposes of the
administration of title II of the Clean Air Act (42 U.S.C.
7521 et seq.).
``(3) Traction battery capacity.--Traction battery capacity
shall be measured in kilowatt hours from a 100 percent state
of charge to a zero percent state of charge.
``(4) Reduction in basis.--For purposes of this subtitle,
the basis of any property for which a credit is allowable
under subsection (a) shall be reduced by the amount of such
credit so allowed.
``(5) No double benefit.--The amount of any deduction or
other credit allowable under this chapter for a new qualified
plug-in electric drive motor vehicle shall be reduced by the
amount of credit allowed under subsection (a) for such
vehicle for the taxable year.
``(6) Property used by tax-exempt entity.--In the case of a
vehicle the use of which is described in paragraph (3) or (4)
of section 50(b) and which is not subject to a lease, the
person who sold such vehicle to the person or entity using
such vehicle shall be treated as the taxpayer that placed
such vehicle in service, but only if such person clearly
discloses to such person or entity in a document the amount
of any credit allowable under subsection (a) with respect to
such vehicle (determined without regard to subsection
(b)(2)).
``(7) Property used outside united states, etc., not
qualified.--No credit shall be allowable under subsection (a)
with respect to any property referred to in section 50(b)(1)
or with respect to the portion of the cost of any property
taken into account under section 179.
``(8) Recapture.--The Secretary shall, by regulations,
provide for recapturing the benefit of any credit allowable
under subsection (a) with respect to any property which
ceases to be property eligible for such credit (including
recapture in the case of a lease period of less than the
economic life of a vehicle).
``(9) Election to not take credit.--No credit shall be
allowed under subsection (a) for any vehicle if the taxpayer
elects not to have this section apply to such vehicle.
``(10) Interaction with air quality and motor vehicle
safety standards.--Unless otherwise provided in this section,
a motor vehicle shall not be considered eligible for a credit
under this section unless such vehicle is in compliance
with--
``(A) the applicable provisions of the Clean Air Act for
the applicable make and model year of the vehicle (or
applicable air quality provisions of State law in the case of
a State which has adopted such provision under a waiver under
section 209(b) of the Clean Air Act), and
``(B) the motor vehicle safety provisions of sections 30101
through 30169 of title 49, United States Code.
``(f) Regulations.--
``(1) In general.--Except as provided in paragraph (2), the
Secretary shall promulgate such regulations as necessary to
carry out the provisions of this section.
``(2) Coordination in prescription of certain
regulations.--The Secretary of the Treasury, in coordination
with the Secretary of Transportation and the Administrator of
the Environmental Protection Agency, shall prescribe such
regulations as necessary to determine whether a motor vehicle
meets the requirements to be eligible for a credit under this
section.
``(g) Termination.--This section shall not apply to
property purchased after December 31, 2014.''.
(b) Coordination With Alternative Motor Vehicle Credit.--
Section 30B(d)(3) is amended by adding at the end the
following new subparagraph:
``(D) Exclusion of plug-in vehicles.--Any vehicle with
respect to which a credit is allowable under section 30D
(determined without regard to subsection (d) thereof) shall
not be taken into account under this section.''.

[[Page S10361]]

(c) Credit Made Part of General Business Credit.--Section
38(b), as amended by this Act, is amended by striking
``plus'' at the end of paragraph (33), by striking the period
at the end of paragraph (34) and inserting ``plus'', and by
adding at the end the following new paragraph:
``(35) the portion of the new qualified plug-in electric
drive motor vehicle credit to which section 30D(d)(1)
applies.''.
(d) Conforming Amendments.--
(1)(A) Section 24(b)(3)(B), as amended by section 106, is
amended by striking ``and 25D'' and inserting ``25D, and
30D''.
(B) Section 25(e)(1)(C)(ii) is amended by inserting
``30D,'' after ``25D,''.
(C) Section 25B(g)(2), as amended by section 106, is
amended by striking ``and 25D'' and inserting ``, 25D, and
30D''.
(D) Section 26(a)(1), as amended by section 106, is amended
by striking ``and 25D'' and inserting ``25D, and 30D''.
(E) Section 1400C(d)(2) is amended by striking ``and 25D''
and inserting ``25D, and 30D''.
(2) Section 1016(a) is amended by striking ``and'' at the
end of paragraph (35), by striking the period at the end of
paragraph (36) and inserting ``, and'', and by adding at the
end the following new paragraph:
``(37) to the extent provided in section 30D(e)(4).''.
(3) Section 6501(m) is amended by inserting ``30D(e)(9),''
after ``30C(e)(5),''.
(4) The table of sections for subpart B of part IV of
subchapter A of chapter 1 is amended by adding at the end the
following new item:

``Sec. 30D. New qualified plug-in electric drive motor vehicles.''.
(e) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2008.
(f) Application of EGTRRA Sunset.--The amendment made by
subsection (d)(1)(A) shall be subject to title IX of the
Economic Growth and Tax Relief Reconciliation Act of 2001 in
the same manner as the provision of such Act to which such
amendment relates.

SEC. 206. EXCLUSION FROM HEAVY TRUCK TAX FOR IDLING REDUCTION
UNITS AND ADVANCED INSULATION.

(a) In General.--Section 4053 is amended by adding at the
end the following new paragraphs:
``(9) Idling reduction device.--Any device or system of
devices which--
``(A) is designed to provide to a vehicle those services
(such as heat, air conditioning, or electricity) that would
otherwise require the operation of the main drive engine
while the vehicle is temporarily parked or remains stationary
using one or more devices affixed to a tractor, and
``(B) is determined by the Administrator of the
Environmental Protection Agency, in consultation with the
Secretary of Energy and the Secretary of Transportation, to
reduce idling of such vehicle at a motor vehicle rest stop or
other location where such vehicles are temporarily parked or
remain stationary.
``(10) Advanced insulation.--Any insulation that has an R
value of not less than R35 per inch.''.
(b) Effective Date.--The amendment made by this section
shall apply to sales or installations after the date of the
enactment of this Act.

SEC. 207. ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY CREDIT.

(a) Extension of Credit.--Paragraph (2) of section 30C(g)
is amended by striking ``December 31, 2009'' and inserting
``December 31, 2010''.
(b) Inclusion of Electricity as a Clean-Burning Fuel.--
Section 30C(c)(2) is amended by adding at the end the
following new subparagraph:
``(C) Electricity.''.
(c) Effective Date.--The amendments made by this section
shall apply to property placed in service after the date of
the enactment of this Act, in taxable years ending after such
date.

SEC. 208. CERTAIN INCOME AND GAINS RELATING TO ALCOHOL FUELS
AND MIXTURES, BIODIESEL FUELS AND MIXTURES, AND
ALTERNATIVE FUELS AND MIXTURES TREATED AS
QUALIFYING INCOME FOR PUBLICLY TRADED
PARTNERSHIPS.

(a) In General.--Subparagraph (E) of section 7704(d)(1), as
amended by this Act, is amended by striking ``or industrial
source carbon dioxide'' and inserting ``, industrial source
carbon dioxide, or the transportation or storage of any fuel
described in subsection (b), (c), (d), or (e) of section
6426, or any alcohol fuel defined in section 6426(b)(4)(A) or
any biodiesel fuel as defined in section 40A(d)(1)'' after
``timber)''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act,
in taxable years ending after such date.

SEC. 209. EXTENSION AND MODIFICATION OF ELECTION TO EXPENSE
CERTAIN REFINERIES.

(a) Extension.--Paragraph (1) of section 179C(c) (relating
to qualified refinery property) is amended--
(1) by striking ``January 1, 2012'' in subparagraph (B) and
inserting ``January 1, 2014'', and
(2) by striking ``January 1, 2008'' each place it appears
in subparagraph (F) and inserting ``January 1, 2010''.
(b) Inclusion of Fuel Derived From Shale and Tar Sands.--
(1) In general.--Subsection (d) of section 179C is amended
by inserting ``, or directly from shale or tar sands'' after
``(as defined in section 45K(c))''.
(2) Conforming amendment.--Paragraph (2) of section 179C(e)
is amended by inserting ``shale, tar sands, or'' before
``qualified fuels''.
(c) Effective Date.--The amendments made by this section
shall apply to property placed in service after the date of
the enactment of this Act.

SEC. 210. EXTENSION OF SUSPENSION OF TAXABLE INCOME LIMIT ON
PERCENTAGE DEPLETION FOR OIL AND NATURAL GAS
PRODUCED FROM MARGINAL PROPERTIES.

Subparagraph (H) of section 613A(c)(6) (relating to oil and
gas produced from marginal properties) is amended by striking
``for any taxable year'' and all that follows and inserting
``for any taxable year--
``(i) beginning after December 31, 1997, and before January
1, 2008, or
``(ii) beginning after December 31, 2008, and before
January 1, 2010.''.

SEC. 211. TRANSPORTATION FRINGE BENEFIT TO BICYCLE COMMUTERS.

(a) In General.--Paragraph (1) of section 132(f) is amended
by adding at the end the following:
``(D) Any qualified bicycle commuting reimbursement.''.
(b) Limitation on Exclusion.--Paragraph (2) of section
132(f) 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 new subparagraph:
``(C) the applicable annual limitation in the case of any
qualified bicycle commuting reimbursement.''.
(c) Definitions.--Paragraph (5) of section 132(f) is
amended by adding at the end the following:
``(F) Definitions related to bicycle commuting
reimbursement.--
``(i) Qualified bicycle commuting reimbursement.--The term
`qualified bicycle commuting reimbursement' means, with
respect to any calendar year, any employer reimbursement
during the 15-month period beginning with the first day of
such calendar year for reasonable expenses incurred by the
employee during such calendar year for the purchase of a
bicycle and bicycle improvements, repair, and storage, if
such bicycle is regularly used for travel between the
employee's residence and place of employment.
``(ii) Applicable annual limitation.--The term `applicable
annual limitation' means, with respect to any employee for
any calendar year, the product of $20 multiplied by the
number of qualified bicycle commuting months during such
year.
``(iii) Qualified bicycle commuting month.--The term
`qualified bicycle commuting month' means, with respect to
any employee, any month during which such employee--

``(I) regularly uses the bicycle for a substantial portion
of the travel between the employee's residence and place of
employment, and
``(II) does not receive any benefit described in
subparagraph (A), (B), or (C) of paragraph (1).''.

(d) Constructive Receipt of Benefit.--Paragraph (4) of
section 132(f) is amended by inserting ``(other than a
qualified bicycle commuting reimbursement)'' after
``qualified transportation fringe''.
(e) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2008.

TITLE III--ENERGY CONSERVATION AND EFFICIENCY PROVISIONS

SEC. 301. QUALIFIED ENERGY CONSERVATION BONDS.

(a) In General.--Subpart I of part IV of subchapter A of
chapter 1, as amended by section 107, is amended by adding at
the end the following new section:

``SEC. 54D. QUALIFIED ENERGY CONSERVATION BONDS.

``(a) Qualified Energy Conservation Bond.--For purposes of
this subchapter, the term `qualified energy conservation
bond' means any bond issued as part of an issue if--
``(1) 100 percent of the available project proceeds of such
issue are to be used for one or more qualified conservation
purposes,
``(2) the bond is issued by a State or local government,
and
``(3) the issuer designates such bond for purposes of this
section.
``(b) Reduced Credit Amount.--The annual credit determined
under section 54A(b) with respect to any qualified energy
conservation bond shall be 70 percent of the amount so
determined without regard to this subsection.
``(c) Limitation on Amount of Bonds Designated.--The
maximum aggregate face amount of bonds which may be
designated under subsection (a) by any issuer shall not
exceed the limitation amount allocated to such issuer under
subsection (e).
``(d) National Limitation on Amount of Bonds Designated.--
There is a national qualified energy conservation bond
limitation of $800,000,000.
``(e) Allocations.--
``(1) In general.--The limitation applicable under
subsection (d) shall be allocated by the Secretary among the
States in proportion to the population of the States.
``(2) Allocations to largest local governments.--
``(A) In general.--In the case of any State in which there
is a large local government, each such local government shall
be allocated a portion of such State's allocation which bears
the same ratio to the State's allocation (determined without
regard to this

[[Page S10362]]

subparagraph) as the population of such large local
government bears to the population of such State.
``(B) Allocation of unused limitation to state.--The amount
allocated under this subsection to a large local government
may be reallocated by such local government to the State in
which such local government is located.
``(C) Large local government.--For purposes of this
section, the term `large local government' means any
municipality or county if such municipality or county has a
population of 100,000 or more.
``(3) Allocation to issuers; restriction on private
activity bonds.--Any allocation under this subsection to a
State or large local government shall be allocated by such
State or large local government to issuers within the State
in a manner that results in not less than 70 percent of the
allocation to such State or large local government being used
to designate bonds which are not private activity bonds.
``(f) Qualified Conservation Purpose.--For purposes of this
section--
``(1) In general.--The term `qualified conservation
purpose' means any of the following:
``(A) Capital expenditures incurred for purposes of--
``(i) reducing energy consumption in publicly-owned
buildings by at least 20 percent,
``(ii) implementing green community programs,
``(iii) rural development involving the production of
electricity from renewable energy resources, or
``(iv) any qualified facility (as determined under section
45(d) without regard to paragraphs (8) and (10) thereof and
without regard to any placed in service date).
``(B) Expenditures with respect to research facilities, and
research grants, to support research in--
``(i) development of cellulosic ethanol or other nonfossil
fuels,
``(ii) technologies for the capture and sequestration of
carbon dioxide produced through the use of fossil fuels,
``(iii) increasing the efficiency of existing technologies
for producing nonfossil fuels,
``(iv) automobile battery technologies and other
technologies to reduce fossil fuel consumption in
transportation, or
``(v) technologies to reduce energy use in buildings.
``(C) Mass commuting facilities and related facilities that
reduce the consumption of energy, including expenditures to
reduce pollution from vehicles used for mass commuting.
``(D) Demonstration projects designed to promote the
commercialization of--
``(i) green building technology,
``(ii) conversion of agricultural waste for use in the
production of fuel or otherwise,
``(iii) advanced battery manufacturing technologies,
``(iv) technologies to reduce peak use of electricity, or
``(v) technologies for the capture and sequestration of
carbon dioxide emitted from combusting fossil fuels in order
to produce electricity.
``(E) Public education campaigns to promote energy
efficiency.
``(2) Special rules for private activity bonds.--For
purposes of this section, in the case of any private activity
bond, the term `qualified conservation purposes' shall not
include any expenditure which is not a capital expenditure.
``(g) Population.--
``(1) In general.--The population of any State or local
government shall be determined for purposes of this section
as provided in section 146(j) for the calendar year which
includes the date of the enactment of this section.
``(2) Special rule for counties.--In determining the
population of any county for purposes of this section, any
population of such county which is taken into account in
determining the population of any municipality which is a
large local government shall not be taken into account in
determining the population of such county.
``(h) Application to Indian Tribal Governments.--An Indian
tribal government shall be treated for purposes of this
section in the same manner as a large local government,
except that--
``(1) an Indian tribal government shall be treated for
purposes of subsection (e) as located within a State to the
extent of so much of the population of such government as
resides within such State, and
``(2) any bond issued by an Indian tribal government shall
be treated as a qualified energy conservation bond only if
issued as part of an issue the available project proceeds of
which are used for purposes for which such Indian tribal
government could issue bonds to which section 103(a)
applies.''.
(b) Conforming Amendments.--
(1) Paragraph (1) of section 54A(d), as amended by this
Act, is amended to read as follows:
``(1) Qualified tax credit bond.--The term `qualified tax
credit bond' means--
``(A) a qualified forestry conservation bond,
``(B) a new clean renewable energy bond, or
``(C) a qualified energy conservation bond,
which is part of an issue that meets requirements of
paragraphs (2), (3), (4), (5), and (6).''.
(2) Subparagraph (C) of section 54A(d)(2), as amended by
this Act, is amended to read as follows:
``(C) Qualified purpose.--For purposes of this paragraph,
the term `qualified purpose' means--
``(i) in the case of a qualified forestry conservation
bond, a purpose specified in section 54B(e),
``(ii) in the case of a new clean renewable energy bond, a
purpose specified in section 54C(a)(1), and
``(iii) in the case of a qualified energy conservation
bond, a purpose specified in section 54D(a)(1).''.
(3) The table of sections for subpart I of part IV of
subchapter A of chapter 1, as amended by this Act, is amended
by adding at the end the following new item:

``Sec. 54D. Qualified energy conservation bonds.''.
(c) Effective Date.--The amendments made by this section
shall apply to obligations issued after the date of the
enactment of this Act.

SEC. 302. CREDIT FOR NONBUSINESS ENERGY PROPERTY.

(a) Extension of Credit.--Section 25C(g) is amended by
striking ``placed in service after December 31, 2007'' and
inserting ``placed in service--
``(1) after December 31, 2007, and before January 1, 2009,
or
``(2) after December 31, 2009.''.
(b) Qualified Biomass Fuel Property.--
(1) In general.--Section 25C(d)(3) is amended--
(A) by striking ``and'' at the end of subparagraph (D),
(B) by striking the period at the end of subparagraph (E)
and inserting ``, and'', and
(C) by adding at the end the following new subparagraph:
``(F) a stove which uses the burning of biomass fuel to
heat a dwelling unit located in the United States and used as
a residence by the taxpayer, or to heat water for use in such
a dwelling unit, and which has a thermal efficiency rating of
at least 75 percent.''.
(2) Biomass fuel.--Section 25C(d) is amended by adding at
the end the following new paragraph:
``(6) Biomass fuel.--The term `biomass fuel' means any
plant-derived fuel available on a renewable or recurring
basis, including agricultural crops and trees, wood and wood
waste and residues (including wood pellets), plants
(including aquatic plants), grasses, residues, and fibers.''.
(c) Modification of Water Heater Requirements.--Section
25C(d)(3)(E) is amended by inserting ``or a thermal
efficiency of at least 90 percent'' after ``0.80''.
(d) Coordination With Credit for Qualified Geothermal Heat
pump Property Expenditures.--
(1) In general.--Paragraph (3) of section 25C(d), as
amended by subsections (b) and (c), is amended by striking
subparagraph (C) and by redesignating subparagraphs (D), (E),
and (F) as subparagraphs (C), (D), and (E), respectively.
(2) Conforming amendment.--Subparagraph (C) of section
25C(d)(2) is amended to read as follows:
``(C) Requirements and standards for air conditioners and
heat pumps.--The standards and requirements prescribed by the
Secretary under subparagraph (B) with respect to the energy
efficiency ratio (EER) for central air conditioners and
electric heat pumps--
``(i) shall require measurements to be based on published
data which is tested by manufacturers at 95 degrees
Fahrenheit, and
``(ii) may be based on the certified data of the Air
Conditioning and Refrigeration Institute that are prepared in
partnership with the Consortium for Energy Efficiency.''.
(e) Modification of Qualified Energy Efficiency
Improvements.--
(1) In general.--Paragraph (1) of section 25C(c) is amended
by inserting ``, or an asphalt roof with appropriate cooling
granules,'' before ``which meet the Energy Star program
requirements''.
(2) Building envelope component.--Subparagraph (D) of
section 25C(c)(2) is amended--
(A) by inserting ``or asphalt roof'' after ``metal roof'',
and
(B) by inserting ``or cooling granules'' after ``pigmented
coatings''.
(f) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made this section shall apply to expenditures made
after December 31, 2008.
(2) Modification of qualified energy efficiency
improvements.--The amendments made by subsection (e) shall
apply to property placed in service after the date of the
enactment of this Act.

SEC. 303. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

Subsection (h) of section 179D is amended by striking
``December 31, 2008'' and inserting ``December 31, 2013''.

SEC. 304. NEW ENERGY EFFICIENT HOME CREDIT.

Subsection (g) of section 45L (relating to termination) is
amended by striking ``December 31, 2008'' and inserting
``December 31, 2009''.

SEC. 305. MODIFICATIONS OF ENERGY EFFICIENT APPLIANCE CREDIT
FOR APPLIANCES PRODUCED AFTER 2007.

(a) In General.--Subsection (b) of section 45M is amended
to read as follows:
``(b) Applicable Amount.--For purposes of subsection (a)--
``(1) Dishwashers.--The applicable amount is--
``(A) $45 in the case of a dishwasher which is manufactured
in calendar year 2008 or 2009 and which uses no more than 324
kilowatt hours per year and 5.8 gallons per cycle, and

[[Page S10363]]

``(B) $75 in the case of a dishwasher which is manufactured
in calendar year 2008, 2009, or 2010 and which uses no more
than 307 kilowatt hours per year and 5.0 gallons per cycle
(5.5 gallons per cycle for dishwashers designed for greater
than 12 place settings).
``(2) Clothes washers.--The applicable amount is--
``(A) $75 in the case of a residential top-loading clothes
washer manufactured in calendar year 2008 which meets or
exceeds a 1.72 modified energy factor and does not exceed a
8.0 water consumption factor,
``(B) $125 in the case of a residential top-loading clothes
washer manufactured in calendar year 2008 or 2009 which meets
or exceeds a 1.8 modified energy factor and does not exceed a
7.5 water consumption factor,
``(C) $150 in the case of a residential or commercial
clothes washer manufactured in calendar year 2008, 2009, or
2010 which meets or exceeds 2.0 modified energy factor and
does not exceed a 6.0 water consumption factor, and
``(D) $250 in the case of a residential or commercial
clothes washer manufactured in calendar year 2008, 2009, or
2010 which meets or exceeds 2.2 modified energy factor and
does not exceed a 4.5 water consumption factor.
``(3) Refrigerators.--The applicable amount is--
``(A) $50 in the case of a refrigerator which is
manufactured in calendar year 2008, and consumes at least 20
percent but not more than 22.9 percent less kilowatt hours
per year than the 2001 energy conservation standards,
``(B) $75 in the case of a refrigerator which is
manufactured in calendar year 2008 or 2009, and consumes at
least 23 percent but no more than 24.9 percent less kilowatt
hours per year than the 2001 energy conservation standards,
``(C) $100 in the case of a refrigerator which is
manufactured in calendar year 2008, 2009, or 2010, and
consumes at least 25 percent but not more than 29.9 percent
less kilowatt hours per year than the 2001 energy
conservation standards, and
``(D) $200 in the case of a refrigerator manufactured in
calendar year 2008, 2009, or 2010 and which consumes at least
30 percent less energy than the 2001 energy conservation
standards.''.
(b) Eligible Production.--
(1) Similar treatment for all appliances.--Subsection (c)
of section 45M is amended--
(A) by striking paragraph (2),
(B) by striking ``(1) In general'' and all that follows
through ``the eligible'' and inserting ``The eligible'',
(C) by moving the text of such subsection in line with the
subsection heading, and
(D) by redesignating subparagraphs (A) and (B) as
paragraphs (1) and (2), respectively, and by moving such
paragraphs 2 ems to the left.
(2) Modification of base period.--Paragraph (2) of section
45M(c), as amended by paragraph (1), is amended by striking
``3-calendar year'' and inserting ``2-calendar year''.
(c) Types of Energy Efficient Appliances.--Subsection (d)
of section 45M is amended to read as follows:
``(d) Types of Energy Efficient Appliance.--For purposes of
this section, the types of energy efficient appliances are--
``(1) dishwashers described in subsection (b)(1),
``(2) clothes washers described in subsection (b)(2), and
``(3) refrigerators described in subsection (b)(3).''.
(d) Aggregate Credit Amount Allowed.--
(1) Increase in limit.--Paragraph (1) of section 45M(e) is
amended to read as follows:
``(1) Aggregate credit amount allowed.--The aggregate
amount of credit allowed under subsection (a) with respect to
a taxpayer for any taxable year shall not exceed $75,000,000
reduced by the amount of the credit allowed under subsection
(a) to the taxpayer (or any predecessor) for all prior
taxable years beginning after December 31, 2007.''.
(2) Exception for certain refrigerator and clothes
washers.--Paragraph (2) of section 45M(e) is amended to read
as follows:
``(2) Amount allowed for certain refrigerators and clothes
washers.--Refrigerators described in subsection (b)(3)(D) and
clothes washers described in subsection (b)(2)(D) shall not
be taken into account under paragraph (1).''.
(e) Qualified Energy Efficient Appliances.--
(1) In general.--Paragraph (1) of section 45M(f) is amended
to read as follows:
``(1) Qualified energy efficient appliance.--The term
`qualified energy efficient appliance' means--
``(A) any dishwasher described in subsection (b)(1),
``(B) any clothes washer described in subsection (b)(2),
and
``(C) any refrigerator described in subsection (b)(3).''.
(2) Clothes washer.--Section 45M(f)(3) is amended by
inserting ``commercial'' before ``residential'' the second
place it appears.
(3) Top-loading clothes washer.--Subsection (f) of section
45M is amended by redesignating paragraphs (4), (5), (6), and
(7) as paragraphs (5), (6), (7), and (8), respectively, and
by inserting after paragraph (3) the following new paragraph:
``(4) Top-loading clothes washer.--The term `top-loading
clothes washer' means a clothes washer which has the clothes
container compartment access located on the top of the
machine and which operates on a vertical axis.''.
(4) Replacement of energy factor.--Section 45M(f)(6), as
redesignated by paragraph (3), is amended to read as follows:
``(6) Modified energy factor.--The term `modified energy
factor' means the modified energy factor established by the
Department of Energy for compliance with the Federal energy
conservation standard.''.
(5) Gallons per cycle; water consumption factor.--Section
45M(f), as amended by paragraph (3), is amended by adding at
the end the following:
``(9) Gallons per cycle.--The term `gallons per cycle'
means, with respect to a dishwasher, the amount of water,
expressed in gallons, required to complete a normal cycle of
a dishwasher.
``(10) Water consumption factor.--The term `water
consumption factor' means, with respect to a clothes washer,
the quotient of the total weighted per-cycle water
consumption divided by the cubic foot (or liter) capacity of
the clothes washer.''.
(f) Effective Date.--The amendments made by this section
shall apply to appliances produced after December 31, 2007.

SEC. 306. ACCELERATED RECOVERY PERIOD FOR DEPRECIATION OF
SMART METERS AND SMART GRID SYSTEMS.

(a) In General.--Section 168(e)(3)(D) is amended by
striking ``and'' at the end of clause (i), by striking the
period at the end of clause (ii) and inserting a comma, and
by inserting after clause (ii) the following new clauses:
``(iii) any qualified smart electric meter, and
``(iv) any qualified smart electric grid system.''.
(b) Definitions.--Section 168(i) is amended by inserting at
the end the following new paragraph:
``(18) Qualified smart electric meters.--
``(A) In general.--The term `qualified smart electric
meter' means any smart electric meter which--
``(i) is placed in service by a taxpayer who is a supplier
of electric energy or a provider of electric energy services,
and
``(ii) does not have a class life (determined without
regard to subsection (e)) of less than 10 years.
``(B) Smart electric meter.--For purposes of subparagraph
(A), the term `smart electric meter' means any time-based
meter and related communication equipment which is capable of
being used by the taxpayer as part of a system that--
``(i) measures and records electricity usage data on a
time-differentiated basis in at least 24 separate time
segments per day,
``(ii) provides for the exchange of information between
supplier or provider and the customer's electric meter in
support of time-based rates or other forms of demand
response,
``(iii) provides data to such supplier or provider so that
the supplier or provider can provide energy usage information
to customers electronically, and
``(iv) provides net metering.
``(19) Qualified smart electric grid systems.--
``(A) In general.--The term `qualified smart electric grid
system' means any smart grid property which--
``(i) is used as part of a system for electric distribution
grid communications, monitoring, and management placed in
service by a taxpayer who is a supplier of electric energy or
a provider of electric energy services, and
``(ii) does not have a class life (determined without
regard to subsection (e)) of less than 10 years.
``(B) Smart grid property.--For the purposes of
subparagraph (A), the term `smart grid property' means
electronics and related equipment that is capable of--
``(i) sensing, collecting, and monitoring data of or from
all portions of a utility's electric distribution grid,
``(ii) providing real-time, two-way communications to
monitor or manage such grid, and
``(iii) providing real time analysis of and event
prediction based upon collected data that can be used to
improve electric distribution system reliability, quality,
and performance.''.
(c) Continued Application of 150 Percent Declining Balance
Method.--Paragraph (2) of section 168(b) is amended by
striking ``or'' at the end of subparagraph (B), by
redesignating subparagraph (C) as subparagraph (D), and by
inserting after subparagraph (B) the following new
subparagraph:
``(C) any property (other than property described in
paragraph (3)) which is a qualified smart electric meter or
qualified smart electric grid system, or''.
(d) Effective Date.--The amendments made by this section
shall apply to property placed in service after the date of
the enactment of this Act.

SEC. 307. QUALIFIED GREEN BUILDING AND SUSTAINABLE DESIGN
PROJECTS.

(a) In General.--Paragraph (8) of section 142(l) is amended
by striking ``September 30, 2009'' and inserting ``September
30, 2012''.
(b) Treatment of Current Refunding Bonds.--Paragraph (9) of
section 142(l) is amended by striking ``October 1, 2009'' and
inserting ``October 1, 2012''.
(c) Accountability.--The second sentence of section 701(d)
of the American Jobs Creation Act of 2004 is amended by
striking ``issuance,'' and inserting ``issuance of the last
issue with respect to such project,''.

[[Page S10364]]

SEC. 308. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN REUSE
AND RECYCLING PROPERTY.

(a) In General.--Section 168 is amended by adding at the
end the following new subsection:
``(m) Special Allowance for Certain Reuse and Recycling
Property.--
``(1) In general.--In the case of any qualified reuse and
recycling property--
``(A) the depreciation deduction provided by section 167(a)
for the taxable year in which such property is placed in
service shall include an allowance equal to 50 percent of the
adjusted basis of the qualified reuse and recycling property,
and
``(B) the adjusted basis of the qualified reuse and
recycling property shall be reduced by the amount of such
deduction before computing the amount otherwise allowable as
a depreciation deduction under this chapter for such taxable
year and any subsequent taxable year.
``(2) Qualified reuse and recycling property.--For purposes
of this subsection--
``(A) In general.--The term `qualified reuse and recycling
property' means any reuse and recycling property--
``(i) to which this section applies,
``(ii) which has a useful life of at least 5 years,
``(iii) the original use of which commences with the
taxpayer after August 31, 2008, and
``(iv) which is--

``(I) acquired by purchase (as defined in section
179(d)(2)) by the taxpayer after August 31, 2008, but only if
no written binding contract for the acquisition was in effect
before September 1, 2008, or
``(II) acquired by the taxpayer pursuant to a written
binding contract which was entered into after August 31,
2008.

``(B) Exceptions.--
``(i) Bonus depreciation property under subsection (k).--
The term `qualified reuse and recycling property' shall not
include any property to which section 168(k) applies.
``(ii) Alternative depreciation property.--The term
`qualified reuse and recycling property' shall not include
any property to which the alternative depreciation system
under subsection (g) applies, determined without regard to
paragraph (7) of subsection (g) (relating to election to have
system apply).
``(iii) Election out.--If a taxpayer makes an election
under this clause with respect to any class of property for
any taxable year, this subsection shall not apply to all
property in such class placed in service during such taxable
year.
``(C) Special rule for self-constructed property.--In the
case of a taxpayer manufacturing, constructing, or producing
property for the taxpayer's own use, the requirements of
clause (iv) of subparagraph (A) shall be treated as met if
the taxpayer begins manufacturing, constructing, or producing
the property after August 31, 2008.
``(D) Deduction allowed in computing minimum tax.--For
purposes of determining alternative minimum taxable income
under section 55, the deduction under subsection (a) for
qualified reuse and recycling property shall be determined
under this section without regard to any adjustment under
section 56.
``(3) Definitions.--For purposes of this subsection--
``(A) Reuse and recycling property.--
``(i) In general.--The term `reuse and recycling property'
means any machinery and equipment (not including buildings or
real estate), along with all appurtenances thereto, including
software necessary to operate such equipment, which is used
exclusively to collect, distribute, or recycle qualified
reuse and recyclable materials.
``(ii) Exclusion.--Such term does not include rolling stock
or other equipment used to transport reuse and recyclable
materials.
``(B) Qualified reuse and recyclable materials.--
``(i) In general.--The term `qualified reuse and recyclable
materials' means scrap plastic, scrap glass, scrap textiles,
scrap rubber, scrap packaging, recovered fiber, scrap ferrous
and nonferrous metals, or electronic scrap generated by an
individual or business.
``(ii) Electronic scrap.--For purposes of clause (i), the
term `electronic scrap' means--

``(I) any cathode ray tube, flat panel screen, or similar
video display device with a screen size greater than 4 inches
measured diagonally, or
``(II) any central processing unit.

``(C) Recycling or recycle.--The term `recycling' or
`recycle' means that process (including sorting) by which
worn or superfluous materials are manufactured or processed
into specification grade commodities that are suitable for
use as a replacement or substitute for virgin materials in
manufacturing tangible consumer and commercial products,
including packaging.''.
(b) Effective Date.--The amendment made by this section
shall apply to property placed in service after August 31,
2008.

TITLE IV--REVENUE PROVISIONS

SEC. 401. LIMITATION OF DEDUCTION FOR INCOME ATTRIBUTABLE TO
DOMESTIC PRODUCTION OF OIL, GAS, OR PRIMARY
PRODUCTS THEREOF.

(a) In General.--Section 199(d) is amended by redesignating
paragraph (9) as paragraph (10) and by inserting after
paragraph (8) the following new paragraph:
``(9) Special rule for taxpayers with oil related qualified
production activities income.--
``(A) In general.--If a taxpayer has oil related qualified
production activities income for any taxable year beginning
after 2009, the amount otherwise allowable as a deduction
under subsection (a) shall be reduced by 3 percent of the
least of--
``(i) the oil related qualified production activities
income of the taxpayer for the taxable year,
``(ii) the qualified production activities income of the
taxpayer for the taxable year, or
``(iii) taxable income (determined without regard to this
section).
``(B) Oil related qualified production activities income.--
For purposes of this paragraph, the term `oil related
qualified production activities income' means for any taxable
year the qualified production activities income which is
attributable to the production, refining, processing,
transportation, or distribution of oil, gas, or any primary
product thereof during such taxable year.
``(C) Primary product.--For purposes of this paragraph, the
term `primary product' has the same meaning as when used in
section 927(a)(2)(C), as in effect before its repeal.''.
(b) Conforming Amendment.--Section 199(d)(2) (relating to
application to individuals) is amended by striking
``subsection (a)(1)(B)'' and inserting ``subsections
(a)(1)(B) and (d)(9)(A)(iii)''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2008.

SEC. 402. ELIMINATION OF THE DIFFERENT TREATMENT OF FOREIGN
OIL AND GAS EXTRACTION INCOME AND FOREIGN OIL
RELATED INCOME FOR PURPOSES OF THE FOREIGN TAX
CREDIT.

(a) In General.--Subsections (a) and (b) of section 907
(relating to special rules in case of foreign oil and gas
income) are amended to read as follows:
``(a) Reduction in Amount Allowed as Foreign Tax Under
Section 901.--In applying section 901, the amount of any
foreign oil and gas taxes paid or accrued (or deemed to have
been paid) during the taxable year which would (but for this
subsection) be taken into account for purposes of section 901
shall be reduced by the amount (if any) by which the amount
of such taxes exceeds the product of--
``(1) the amount of the combined foreign oil and gas income
for the taxable year,
``(2) multiplied by--
``(A) in the case of a corporation, the percentage which is
equal to the highest rate of tax specified under section
11(b), or
``(B) in the case of an individual, a fraction the
numerator of which is the tax against which the credit under
section 901(a) is taken and the denominator of which is the
taxpayer's entire taxable income.
``(b) Combined Foreign Oil and Gas Income; Foreign Oil and
Gas Taxes.--For purposes of this section--
``(1) Combined foreign oil and gas income.--The term
`combined foreign oil and gas income' means, with respect to
any taxable year, the sum of--
``(A) foreign oil and gas extraction income, and
``(B) foreign oil related income.
``(2) Foreign oil and gas taxes.--The term `foreign oil and
gas taxes' means, with respect to any taxable year, the sum
of--
``(A) oil and gas extraction taxes, and
``(B) any income, war profits, and excess profits taxes
paid or accrued (or deemed to have been paid or accrued under
section 902 or 960) during the taxable year with respect to
foreign oil related income (determined without regard to
subsection (c)(4)) or loss which would be taken into account
for purposes of section 901 without regard to this
section.''.
(b) Recapture of Foreign Oil and Gas Losses.--Paragraph (4)
of section 907(c) (relating to recapture of foreign oil and
gas extraction losses by recharacterizing later extraction
income) is amended to read as follows:
``(4) Recapture of foreign oil and gas losses by
recharacterizing later combined foreign oil and gas income.--
``(A) In general.--The combined foreign oil and gas income
of a taxpayer for a taxable year (determined without regard
to this paragraph) shall be reduced--
``(i) first by the amount determined under subparagraph
(B), and
``(ii) then by the amount determined under subparagraph
(C).
The aggregate amount of such reductions shall be treated as
income (from sources without the United States) which is not
combined foreign oil and gas income.
``(B) Reduction for pre-2009 foreign oil extraction
losses.--The reduction under this paragraph shall be equal to
the lesser of--
``(i) the foreign oil and gas extraction income of the
taxpayer for the taxable year (determined without regard to
this paragraph), or
``(ii) the excess of--

``(I) the aggregate amount of foreign oil extraction losses
for preceding taxable years beginning after December 31,
1982, and before January 1, 2009, over
``(II) so much of such aggregate amount as was
recharacterized under this paragraph (as in effect before and
after the date of the enactment of the Energy Improvement and
Extension Act of 2008) for preceding taxable years beginning
after December 31, 1982.

``(C) Reduction for post-2008 foreign oil and gas losses.--
The reduction under this paragraph shall be equal to the
lesser of--

[[Page S10365]]

``(i) the combined foreign oil and gas income of the
taxpayer for the taxable year (determined without regard to
this paragraph), reduced by an amount equal to the reduction
under subparagraph (A) for the taxable year, or
``(ii) the excess of--

``(I) the aggregate amount of foreign oil and gas losses
for preceding taxable years beginning after December 31,
2008, over
``(II) so much of such aggregate amount as was
recharacterized under this paragraph for preceding taxable
years beginning after December 31, 2008.

``(D) Foreign oil and gas loss defined.--
``(i) In general.--For purposes of this paragraph, the term
`foreign oil and gas loss' means the amount by which--

``(I) the gross income for the taxable year from sources
without the United States and its possessions (whether or not
the taxpayer chooses the benefits of this subpart for such
taxable year) taken into account in determining the combined
foreign oil and gas income for such year, is exceeded by
``(II) the sum of the deductions properly apportioned or
allocated thereto.

``(ii) Net operating loss deduction not taken into
account.--For purposes of clause (i), the net operating loss
deduction allowable for the taxable year under section 172(a)
shall not be taken into account.
``(iii) Expropriation and casualty losses not taken into
account.--For purposes of clause (i), there shall not be
taken into account--

``(I) any foreign expropriation loss (as defined in section
172(h) (as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of 1990)) for the
taxable year, or
``(II) any loss for the taxable year which arises from
fire, storm, shipwreck, or other casualty, or from theft,

to the extent such loss is not compensated for by insurance
or otherwise.
``(iv) Foreign oil extraction loss.--For purposes of
subparagraph (B)(ii)(I), foreign oil extraction losses shall
be determined under this paragraph as in effect on the day
before the date of the enactment of the Energy Improvement
and Extension Act of 2008.''.
(c) Carryback and Carryover of Disallowed Credits.--Section
907(f) (relating to carryback and carryover of disallowed
credits) is amended--
(1) by striking ``oil and gas extraction taxes'' each place
it appears and inserting ``foreign oil and gas taxes'', and
(2) by adding at the end the following new paragraph:
``(4) Transition rules for pre-2009 and 2009 disallowed
credits.--
``(A) Pre-2009 credits.--In the case of any unused credit
year beginning before January 1, 2009, this subsection shall
be applied to any unused oil and gas extraction taxes carried
from such unused credit year to a year beginning after
December 31, 2008--
``(i) by substituting `oil and gas extraction taxes' for
`foreign oil and gas taxes' each place it appears in
paragraphs (1), (2), and (3), and
``(ii) by computing, for purposes of paragraph (2)(A), the
limitation under subparagraph (A) for the year to which such
taxes are carried by substituting `foreign oil and gas
extraction income' for `foreign oil and gas income' in
subsection (a).
``(B) 2009 credits.--In the case of any unused credit year
beginning in 2009, the amendments made to this subsection by
the Energy Improvement and Extension Act of 2008 shall be
treated as being in effect for any preceding year beginning
before January 1, 2009, solely for purposes of determining
how much of the unused foreign oil and gas taxes for such
unused credit year may be deemed paid or accrued in such
preceding year.''.
(d) Conforming Amendment.--Section 6501(i) is amended by
striking ``oil and gas extraction taxes'' and inserting
``foreign oil and gas taxes''.
(e) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2008.

SEC. 403. BROKER REPORTING OF CUSTOMER'S BASIS IN SECURITIES
TRANSACTIONS.

(a) In General.--
(1) Broker reporting for securities transactions.--Section
6045 is amended by adding at the end the following new
subsection:
``(g) Additional Information Required in the Case of
Securities Transactions, etc.--
``(1) In general.--If a broker is otherwise required to
make a return under subsection (a) with respect to the gross
proceeds of the sale of a covered security, the broker shall
include in such return the information described in paragraph
(2).
``(2) Additional information required.--
``(A) In general.--The information required under paragraph
(1) to be shown on a return with respect to a covered
security of a customer shall include the customer's adjusted
basis in such security and whether any gain or loss with
respect to such security is long-term or short-term (within
the meaning of section 1222).
``(B) Determination of adjusted basis.--For purposes of
subparagraph (A)--
``(i) In general.--The customer's adjusted basis shall be
determined--

``(I) in the case of any security (other than any stock for
which an average basis method is permissible under section
1012), in accordance with the first-in first-out method
unless the customer notifies the broker by means of making an
adequate identification of the stock sold or transferred, and
``(II) in the case of any stock for which an average basis
method is permissible under section 1012, in accordance with
the broker's default method unless the customer notifies the
broker that he elects another acceptable method under section
1012 with respect to the account in which such stock is held.

``(ii) Exception for wash sales.--Except as otherwise
provided by the Secretary, the customer's adjusted basis
shall be determined without regard to section 1091 (relating
to loss from wash sales of stock or securities) unless the
transactions occur in the same account with respect to
identical securities.
``(3) Covered security.--For purposes of this subsection--
``(A) In general.--The term `covered security' means any
specified security acquired on or after the applicable date
if such security--
``(i) was acquired through a transaction in the account in
which such security is held, or
``(ii) was transferred to such account from an account in
which such security was a covered security, but only if the
broker received a statement under section 6045A with respect
to the transfer.
``(B) Specified security.--The term `specified security'
means--
``(i) any share of stock in a corporation,
``(ii) any note, bond, debenture, or other evidence of
indebtedness,
``(iii) any commodity, or contract or derivative with
respect to such commodity, if the Secretary determines that
adjusted basis reporting is appropriate for purposes of this
subsection, and
``(iv) any other financial instrument with respect to which
the Secretary determines that adjusted basis reporting is
appropriate for purposes of this subsection.
``(C) Applicable date.--The term `applicable date' means--
``(i) January 1, 2011, in the case of any specified
security which is stock in a corporation (other than any
stock described in clause (ii)),
``(ii) January 1, 2012, in the case of any stock for which
an average basis method is permissible under section 1012,
and
``(iii) January 1, 2013, or such later date determined by
the Secretary in the case of any other specified security.
``(4) Treatment of s corporations.--In the case of the sale
of a covered security acquired by an S corporation (other
than a financial institution) after December 31, 2011, such S
corporation shall be treated in the same manner as a
partnership for purposes of this section.
``(5) Special rules for short sales.--In the case of a
short sale, reporting under this section shall be made for
the year in which such sale is closed.''.
(2) Broker information required with respect to options.--
Section 6045, as amended by subsection (a), is amended by
adding at the end the following new subsection:
``(h) Application to Options on Securities.--
``(1) Exercise of option.--For purposes of this section, if
a covered security is acquired or disposed of pursuant to the
exercise of an option that was granted or acquired in the
same account as the covered security, the amount received
with respect to the grant or paid with respect to the
acquisition of such option shall be treated as an adjustment
to gross proceeds or as an adjustment to basis, as the case
may be.
``(2) Lapse or closing transaction.--In the case of the
lapse (or closing transaction (as defined in section
1234(b)(2)(A))) of an option on a specified security or the
exercise of a cash-settled option on a specified security,
reporting under subsections (a) and (g) with respect to such
option shall be made for the calendar year which includes the
date of such lapse, closing transaction, or exercise.
``(3) Prospective application.--Paragraphs (1) and (2)
shall not apply to any option which is granted or acquired
before January 1, 2013.
``(4) Definitions.--For purposes of this subsection, the
terms `covered security' and `specified security' shall have
the meanings given such terms in subsection (g)(3).''.
(3) Extension of period for statements sent to customers.--
(A) In general.--Subsection (b) of section 6045 is amended
by striking ``January 31'' and inserting ``February 15''.
(B) Statements related to substitute payments.--Subsection
(d) of section 6045 is amended--
(i) by striking ``at such time and'', and
(ii) by inserting after ``other item.'' the following new
sentence: ``The written statement required under the
preceding sentence shall be furnished on or before February
15 of the year following the calendar year in which the
payment was made.''.
(C) Other statements.--Subsection (b) of section 6045 is
amended by adding at the end the following: ``In the case of
a consolidated reporting statement (as defined in
regulations) with respect to any customer, any statement
which would otherwise be required to be furnished on or
before January 31 of a calendar year with respect to any item
reportable to the taxpayer shall instead be required to be
furnished on or before February 15 of such calendar year if
furnished with such consolidated reporting statement.''.

[[Page S10366]]

(b) Determination of Basis of Certain Securities on Account
by Account or Average Basis Method.--Section 1012 is
amended--
(1) by striking ``The basis of property'' and inserting the
following:
``(a) In General.--The basis of property'',
(2) by striking ``The cost of real property'' and inserting
the following:
``(b) Special Rule for Apportioned Real Estate Taxes.--The
cost of real property'', and
(3) by adding at the end the following new subsections:
``(c) Determinations by Account.--
``(1) In general.--In the case of the sale, exchange, or
other disposition of a specified security on or after the
applicable date, the conventions prescribed by regulations
under this section shall be applied on an account by account
basis.
``(2) Application to certain funds.--
``(A) In general.--Except as provided in subparagraph (B),
any stock for which an average basis method is permissible
under section 1012 which is acquired before January 1, 2012,
shall be treated as a separate account from any such stock
acquired on or after such date.
``(B) Election fund for treatment as single account.--If a
fund described in subparagraph (A) elects to have this
subparagraph apply with respect to one or more of its
stockholders--
``(i) subparagraph (A) shall not apply with respect to any
stock in such fund held by such stockholders, and
``(ii) all stock in such fund which is held by such
stockholders shall be treated as covered securities described
in section 6045(g)(3) without regard to the date of the
acquisition of such stock.

A rule similar to the rule of the preceding sentence shall
apply with respect to a broker holding such stock as a
nominee.
``(3) Definitions.--For purposes of this section, the terms
`specified security' and `applicable date' shall have the
meaning given such terms in section 6045(g).
``(d) Average Basis for Stock Acquired Pursuant to a
Dividend Reinvestment Plan.--
``(1) In general.--In the case of any stock acquired after
December 31, 2010, in connection with a dividend reinvestment
plan, the basis of such stock while held as part of such plan
shall be determined using one of the methods which may be
used for determining the basis of stock in an open-end fund.
``(2) Treatment after transfer.--In the case of the
transfer to another account of stock to which paragraph (1)
applies, such stock shall have a cost basis in such other
account equal to its basis in the dividend reinvestment plan
immediately before such transfer (properly adjusted for any
fees or other charges taken into account in connection with
such transfer).
``(3) Separate accounts; election for treatment as single
account.--Rules similar to the rules of subsection (c)(2)
shall apply for purposes of this subsection.
``(4) Dividend reinvestment plan.--For purposes of this
subsection--
``(A) In general.--The term `dividend reinvestment plan'
means any arrangement under which dividends on any stock are
reinvested in stock identical to the stock with respect to
which the dividends are paid.
``(B) Initial stock acquisition treated as acquired in
connection with plan.--Stock shall be treated as acquired in
connection with a dividend reinvestment plan if such stock is
acquired pursuant to such plan or if the dividends paid on
such stock are subject to such plan.''.
(c) Information by Transferors To Aid Brokers.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61 is amended by inserting after section 6045 the
following new section:

``SEC. 6045A. INFORMATION REQUIRED IN CONNECTION WITH
TRANSFERS OF COVERED SECURITIES TO BROKERS.

``(a) Furnishing of Information.--Every applicable person
which transfers to a broker (as defined in section
6045(c)(1)) a security which is a covered security (as
defined in section 6045(g)(3)) in the hands of such
applicable person shall furnish to such broker a written
statement in such manner and setting forth such information
as the Secretary may by regulations prescribe for purposes of
enabling such broker to meet the requirements of section
6045(g).
``(b) Applicable Person.--For purposes of subsection (a),
the term `applicable person' means--
``(1) any broker (as defined in section 6045(c)(1)), and
``(2) any other person as provided by the Secretary in
regulations.
``(c) Time for Furnishing Statement.--Except as otherwise
provided by the Secretary, any statement required by
subsection (a) shall be furnished not later than 15 days
after the date of the transfer described in such
subsection.''.
(2) Assessable penalties.--Paragraph (2) of section
6724(d), as amended by the Housing Assistance Tax Act of
2008, is amended by redesignating subparagraphs (I) through
(DD) as subparagraphs (J) through (EE), respectively, and by
inserting after subparagraph (H) the following new
subparagraph:
``(I) section 6045A (relating to information required in
connection with transfers of covered securities to
brokers),''.
(3) Clerical 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 6045 the
following new item:

``Sec. 6045A. Information required in connection with transfers of
covered securities to brokers.''.

(d) Additional Issuer Information To Aid Brokers.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61, as amended by subsection (b), is amended by
inserting after section 6045A the following new section:

``SEC. 6045B. RETURNS RELATING TO ACTIONS AFFECTING BASIS OF
SPECIFIED SECURITIES.

``(a) In General.--According to the forms or regulations
prescribed by the Secretary, any issuer of a specified
security shall make a return setting forth--
``(1) a description of any organizational action which
affects the basis of such specified security of such issuer,
``(2) the quantitative effect on the basis of such
specified security resulting from such action, and
``(3) such other information as the Secretary may
prescribe.
``(b) Time for Filing Return.--Any return required by
subsection (a) shall be filed not later than the earlier of--
``(1) 45 days after the date of the action described in
subsection (a), or
``(2) January 15 of the year following the calendar year
during which such action occurred.
``(c) Statements To Be Furnished to Holders of Specified
Securities or Their Nominees.--According to the forms or
regulations prescribed by the Secretary, every person
required to make a return under subsection (a) with respect
to a specified security shall furnish to the nominee with
respect to the specified security (or certificate holder if
there is no nominee) a written statement showing--
``(1) the name, address, and phone number of the
information contact of the person required to make such
return,
``(2) the information required to be shown on such return
with respect to such security, and
``(3) such other information as the Secretary may
prescribe.

The written statement required under the preceding sentence
shall be furnished to the holder on or before January 15 of
the year following the calendar year during which the action
described in subsection (a) occurred.
``(d) Specified Security.--For purposes of this section,
the term `specified security' has the meaning given such term
by section 6045(g)(3)(B). No return shall be required under
this section with respect to actions described in subsection
(a) with respect to a specified security which occur before
the applicable date (as defined in section 6045(g)(3)(C))
with respect to such security.
``(e) Public Reporting in Lieu of Return.--The Secretary
may waive the requirements under subsections (a) and (c) with
respect to a specified security, if the person required to
make the return under subsection (a) makes publicly
available, in such form and manner as the Secretary
determines necessary to carry out the purposes of this
section--
``(1) the name, address, phone number, and email address of
the information contact of such person, and
``(2) the information described in paragraphs (1), (2), and
(3) of subsection (a).''.
(2) Assessable penalties.--
(A) Subparagraph (B) of section 6724(d)(1), as amended by
the Housing Assistance Tax Act of 2008, is amended by
redesignating clause (iv) and each of the clauses which
follow as clauses (v) through (xxiii), respectively, and by
inserting after clause (iii) the following new clause:
``(iv) section 6045B(a) (relating to returns relating to
actions affecting basis of specified securities),''.
(B) Paragraph (2) of section 6724(d), as amended by the
Housing Assistance Tax Act of 2008 and by subsection (c)(2),
is amended by redesignating subparagraphs (J) through (EE) as
subparagraphs (K) through (FF), respectively, and by
inserting after subparagraph (I) the following new
subparagraph:
``(J) subsections (c) and (e) of section 6045B (relating to
returns relating to actions affecting basis of specified
securities),''.
(3) Clerical amendment.--The table of sections for subpart
B of part III of subchapter A of chapter 61, as amended by
subsection (b)(3), is amended by inserting after the item
relating to section 6045A the following new item:

``Sec. 6045B. Returns relating to actions affecting basis of specified
securities.''.

(e) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall take
effect on January 1, 2011.
(2) Extension of period for statements sent to customers.--
The amendments made by subsection (a)(3) shall apply to
statements required to be furnished after December 31, 2008.

SEC. 404. 0.2 PERCENT FUTA SURTAX.

(a) In General.--Section 3301 (relating to rate of tax) is
amended--
(1) by striking ``through 2008'' in paragraph (1) and
inserting ``through 2009'', and
(2) by striking ``calendar year 2009'' in paragraph (2) and
inserting ``calendar year 2010''.
(b) Effective Date.--The amendments made by this section
shall apply to wages paid after December 31, 2008.

[[Page S10367]]

SEC. 405. 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 ``is 5 cents a barrel.'' and inserting
``is--
``(i) in the case of crude oil received or petroleum
products entered before January 1, 2017, 8 cents a barrel,
and
``(ii) in the case of crude oil received or petroleum
products entered after December 31, 2016, 9 cents a
barrel.''.
(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 December 31, 2017.''.
(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.

DIVISION C--TAX EXTENDERS AND ALTERNATIVE MINIMUM TAX RELIEF

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF
CONTENTS.

(a) Short Title.--This division may be cited as the ``Tax
Extenders and Alternative Minimum Tax Relief Act of 2008''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this division 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.
(c) Table of Contents.--The table of contents of this
division is as follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.

TITLE I--ALTERNATIVE MINIMUM TAX RELIEF

Sec. 101. Extension of alternative minimum tax relief for nonrefundable
personal credits.
Sec. 102. Extension of increased alternative minimum tax exemption
amount.
Sec. 103. Increase of AMT refundable credit amount for individuals with
long-term unused credits for prior year minimum tax
liability, etc.

TITLE II--EXTENSION OF INDIVIDUAL TAX PROVISIONS

Sec. 201. Deduction for State and local sales taxes.
Sec. 202. Deduction of qualified tuition and related expenses.
Sec. 203. Deduction for certain expenses of elementary and secondary
school teachers.
Sec. 204. Additional standard deduction for real property taxes for
nonitemizers.
Sec. 205. Tax-free distributions from individual retirement plans for
charitable purposes.
Sec. 206. Treatment of certain dividends of regulated investment
companies.
Sec. 207. Stock in RIC for purposes of determining estates of
nonresidents not citizens.
Sec. 208. Qualified investment entities.

TITLE III--EXTENSION OF BUSINESS TAX PROVISIONS

Sec. 301. Extension and modification of research credit.
Sec. 302. New markets tax credit.
Sec. 303. Subpart F exception for active financing income.
Sec. 304. Extension of look-thru rule for related controlled foreign
corporations.
Sec. 305. Extension of 15-year straight-line cost recovery for
qualified leasehold improvements and qualified restaurant
improvements; 15-year straight-line cost recovery for
certain improvements to retail space.
Sec. 306. Modification of tax treatment of certain payments to
controlling exempt organizations.
Sec. 307. Basis adjustment to stock of S corporations making charitable
contributions of property.
Sec. 308. Increase in limit on cover over of rum excise tax to Puerto
Rico and the Virgin Islands.
Sec. 309. Extension of economic development credit for American Samoa.
Sec. 310. Extension of mine rescue team training credit.
Sec. 311. Extension of election to expense advanced mine safety
equipment.
Sec. 312. Deduction allowable with respect to income attributable to
domestic production activities in Puerto Rico.
Sec. 313. Qualified zone academy bonds.
Sec. 314. Indian employment credit.
Sec. 315. Accelerated depreciation for business property on Indian
reservations.
Sec. 316. Railroad track maintenance.
Sec. 317. Seven-year cost recovery period for motorsports racing track
facility.
Sec. 318. Expensing of environmental remediation costs.
Sec. 319. Extension of work opportunity tax credit for Hurricane
Katrina employees.
Sec. 320. Extension of increased rehabilitation credit for structures
in the Gulf Opportunity Zone.
Sec. 321. Enhanced deduction for qualified computer contributions.
Sec. 322. Tax incentives for investment in the District of Columbia.
Sec. 323. Enhanced charitable deductions for contributions of food
inventory.
Sec. 324. Extension of enhanced charitable deduction for contributions
of book inventory.
Sec. 325. Extension and modification of duty suspension on wool
products; wool research fund; wool duty refunds.

TITLE IV--EXTENSION OF TAX ADMINISTRATION PROVISIONS

Sec. 401. Permanent authority for undercover operations.
Sec. 402. Permanent authority for disclosure of information relating to
terrorist activities.

TITLE V--ADDITIONAL TAX RELIEF AND OTHER TAX PROVISIONS

Subtitle A--General Provisions

Sec. 501. $8,500 income threshold used to calculate refundable portion
of child tax credit.
Sec. 502. Provisions related to film and television productions.
Sec. 503. Exemption from excise tax for certain wooden arrows designed
for use by children.
Sec. 504. Income averaging for amounts received in connection with the
Exxon Valdez litigation.
Sec. 505. Certain farming business machinery and equipment treated as
5-year property.
Sec. 506. Modification of penalty on understatement of taxpayer's
liability by tax return preparer.

Subtitle B--Paul Wellstone and Pete Domenici Mental Health Parity and
Addiction Equity Act of 2008

Sec. 511. Short title.
Sec. 512. Mental health parity.

TITLE VI--OTHER PROVISIONS

Sec. 601. Secure rural schools and community self-determination
program.
Sec. 602. Transfer to abandoned mine reclamation fund.

TITLE VII--DISASTER RELIEF

Subtitle A--Heartland and Hurricane Ike Disaster Relief

Sec. 701. Short title.
Sec. 702. Temporary tax relief for areas damaged by 2008 Midwestern
severe storms, tornados, and flooding.
Sec. 703. Reporting requirements relating to disaster relief
contributions.
Sec. 704. Temporary tax-exempt bond financing and low-income housing
tax relief for areas damaged by Hurricane Ike.

Subtitle B--National Disaster Relief

Sec. 706. Losses attributable to federally declared disasters.
Sec. 707. Expensing of Qualified Disaster Expenses.
Sec. 708. Net operating losses attributable to federally declared
disasters.
Sec. 709. Waiver of certain mortgage revenue bond requirements
following federally declared disasters.
Sec. 710. Special depreciation allowance for qualified disaster
property.
Sec. 711. Increased expensing for qualified disaster assistance
property.
Sec. 712. Coordination with Heartland disaster relief.

TITLE VIII--SPENDING REDUCTIONS AND APPROPRIATE REVENUE RAISERS FOR NEW
TAX RELIEF POLICY

Sec. 801. Nonqualified deferred compensation from certain tax
indifferent parties.

TITLE I--ALTERNATIVE MINIMUM TAX RELIEF

SEC. 101. EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF FOR
NONREFUNDABLE PERSONAL CREDITS.

(a) In General.--Paragraph (2) of section 26(a) (relating
to special rule for taxable years 2000 through 2007) is
amended--
(1) by striking ``or 2007'' and inserting ``2007, or
2008'', and
(2) by striking ``2007'' in the heading thereof and
inserting ``2008''.
(b)  Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2007.

SEC. 102. EXTENSION OF INCREASED ALTERNATIVE MINIMUM TAX
EXEMPTION AMOUNT.

(a) In General.--Paragraph (1) of section 55(d) (relating
to exemption amount) is amended--
(1) by striking ``($66,250 in the case of taxable years
beginning in 2007)'' in subparagraph (A) and inserting
``($69,950 in the case of taxable years beginning in 2008)'',
and
(2) by striking ``($44,350 in the case of taxable years
beginning in 2007)'' in subparagraph (B) and inserting
``($46,200 in the case of taxable years beginning in 2008)''.

[[Page S10368]]

(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2007.

SEC. 103. INCREASE OF AMT REFUNDABLE CREDIT AMOUNT FOR
INDIVIDUALS WITH LONG-TERM UNUSED CREDITS FOR
PRIOR YEAR MINIMUM TAX LIABILITY, ETC.

(a) In General.--Paragraph (2) of section 53(e) is amended
to read as follows:
``(2) AMT refundable credit amount.--For purposes of
paragraph (1), the term `AMT refundable credit amount' means,
with respect to any taxable year, the amount (not in excess
of the long-term unused minimum tax credit for such taxable
year) equal to the greater of--
``(A) 50 percent of the long-term unused minimum tax credit
for such taxable year, or
``(B) the amount (if any) of the AMT refundable credit
amount determined under this paragraph for the taxpayer's
preceding taxable year (determined without regard to
subsection (f)(2)).''.
(b) Treatment of Certain Underpayments, Interest, and
Penalties Attributable to the Treatment of Incentive Stock
Options.--Section 53 is amended by adding at the end the
following new subsection:
``(f) Treatment of Certain Underpayments, Interest, and
Penalties Attributable to the Treatment of Incentive Stock
Options.--
``(1) Abatement.--Any underpayment of tax outstanding on
the date of the enactment of this subsection which is
attributable to the application of section 56(b)(3) for any
taxable year ending before January 1, 2008, and any interest
or penalty with respect to such underpayment which is
outstanding on such date of enactment, is hereby abated. The
amount determined under subsection (b)(1) shall not include
any tax abated under the preceding sentence.
``(2) Increase in credit for certain interest and penalties
already paid.--The AMT refundable credit amount, and the
minimum tax credit determined under subsection (b), for the
taxpayer's first 2 taxable years beginning after December 31,
2007, shall each be increased by 50 percent of the aggregate
amount of the interest and penalties which were paid by the
taxpayer before the date of the enactment of this subsection
and which would (but for such payment) have been abated under
paragraph (1).''.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2007.
(2) Abatement.--Section 53(f)(1), as added by subsection
(b), shall take effect on the date of the enactment of this
Act.

TITLE II--EXTENSION OF INDIVIDUAL TAX PROVISIONS

SEC. 201. DEDUCTION FOR STATE AND LOCAL SALES TAXES.

(a) In General.--Subparagraph (I) of section 164(b)(5) is
amended by striking ``January 1, 2008'' and inserting
``January 1, 2010''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2007.

SEC. 202. DEDUCTION OF QUALIFIED TUITION AND RELATED
EXPENSES.

(a) In General.--Subsection (e) of section 222 (relating to
termination) is amended by striking ``December 31, 2007'' and
inserting ``December 31, 2009''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2007.

SEC. 203. DEDUCTION FOR CERTAIN EXPENSES OF ELEMENTARY AND
SECONDARY SCHOOL TEACHERS.

(a) In General.--Subparagraph (D) of section 62(a)(2)
(relating to certain expenses of elementary and secondary
school teachers) is amended by striking ``or 2007'' and
inserting ``2007, 2008, or 2009''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years beginning after December 31,
2007.

SEC. 204. ADDITIONAL STANDARD DEDUCTION FOR REAL PROPERTY
TAXES FOR NONITEMIZERS.

(a) In General.--Subparagraph (C) of section 63(c)(1), as
added by the Housing Assistance Tax Act of 2008, is amended
by inserting ``or 2009'' after ``2008''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2008.

SEC. 205. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT
PLANS FOR CHARITABLE PURPOSES.

(a) In General.--Subparagraph (F) of section 408(d)(8)
(relating to termination) is amended by striking ``December
31, 2007'' and inserting ``December 31, 2009''.
(b) Effective Date.--The amendment made by this section
shall apply to distributions made in taxable years beginning
after December 31, 2007.

SEC. 206. TREATMENT OF CERTAIN DIVIDENDS OF REGULATED
INVESTMENT COMPANIES.

(a) Interest-Related Dividends.--Subparagraph (C) of
section 871(k)(1) (defining interest-related dividend) is
amended by striking ``December 31, 2007'' and inserting
``December 31, 2009''.
(b) Short-Term Capital Gain Dividends.--Subparagraph (C) of
section 871(k)(2) (defining short-term capital gain dividend)
is amended by striking ``December 31, 2007'' and inserting
``December 31, 2009''.
(c) Effective Date.--The amendments made by this section
shall apply to dividends with respect to taxable years of
regulated investment companies beginning after December 31,
2007.

SEC. 207. STOCK IN RIC FOR PURPOSES OF DETERMINING ESTATES OF
NONRESIDENTS NOT CITIZENS.

(a) In General.--Paragraph (3) of section 2105(d) (relating
to stock in a RIC) is amended by striking ``December 31,
2007'' and inserting ``December 31, 2009''.
(b) Effective Date.--The amendment made by this section
shall apply to decedents dying after December 31, 2007.

SEC. 208. QUALIFIED INVESTMENT ENTITIES.

(a) In General.--Clause (ii) of section 897(h)(4)(A)
(relating to termination) is amended by striking ``December
31, 2007'' and inserting ``December 31, 2009''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on January 1, 2008.

TITLE III--EXTENSION OF BUSINESS TAX PROVISIONS

SEC. 301. EXTENSION AND MODIFICATION OF RESEARCH CREDIT.

(a) Extension.--
(1) In general.--Section 41(h) (relating to termination) is
amended by striking ``December 31, 2007'' and inserting
``December 31, 2009'' in paragraph (1)(B).
(2) Conforming amendment.--Subparagraph (D) of section
45C(b)(1) (relating to special rule) is amended by striking
``after December 31, 2007'' and inserting ``after December
31, 2009''.
(b) Termination of Alternative Incremental Credit.--Section
41(h) is amended by redesignating paragraph (2) as paragraph
(3), and by inserting after paragraph (1) the following new
paragraph:
``(2) Termination of alternative incremental credit.--No
election under subsection (c)(4) shall apply to taxable years
beginning after December 31, 2008.''.
(c) Modification of Alternative Simplified Credit.--
Paragraph (5)(A) of section 41(c) (relating to election of
alternative simplified credit) is amended by striking ``12
percent'' and inserting ``14 percent (12 percent in the case
of taxable years ending before January 1, 2009)''.
(d) Technical Correction.--Paragraph (3) of section 41(h)
is amended to read as follows:
``(2) Computation for taxable year in which credit
terminates.--In the case of any taxable year with respect to
which this section applies to a number of days which is less
than the total number of days in such taxable year--
``(A) the amount determined under subsection (c)(1)(B) with
respect to such taxable year shall be the amount which bears
the same ratio to such amount (determined without regard to
this paragraph) as the number of days in such taxable year to
which this section applies bears to the total number of days
in such taxable year, and
``(B) for purposes of subsection (c)(5), the average
qualified research expenses for the preceding 3 taxable years
shall be the amount which bears the same ratio to such
average qualified research expenses (determined without
regard to this paragraph) as the number of days in such
taxable year to which this section applies bears to the total
number of days in such taxable year.''.
(e) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2007.
(2) Extension.--The amendments made by subsection (a) shall
apply to amounts paid or incurred after December 31, 2007.

SEC. 302. NEW MARKETS TAX CREDIT.

Subparagraph (D) of section 45D(f)(1) (relating to national
limitation on amount of investments designated) is amended by
striking ``and 2008'' and inserting ``2008, and 2009''.

SEC. 303. SUBPART F EXCEPTION FOR ACTIVE FINANCING INCOME.

(a) Exempt Insurance Income.--Paragraph (10) of section
953(e) (relating to application) is amended--
(1) by striking ``January 1, 2009'' and inserting ``January
1, 2010'', and
(2) by striking ``December 31, 2008'' and inserting
``December 31, 2009''.
(b) Exception to Treatment as Foreign Personal Holding
Company Income.--Paragraph (9) of section 954(h) (relating to
application) is amended by striking ``January 1, 2009'' and
inserting ``January 1, 2010''.

SEC. 304. EXTENSION OF LOOK-THRU RULE FOR RELATED CONTROLLED
FOREIGN CORPORATIONS.

(a) In General.--Subparagraph (C) of section 954(c)(6)
(relating to application) is amended by striking ``January 1,
2009'' and inserting ``January 1, 2010''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years of foreign corporations
beginning after December 31, 2007, and to taxable years of
United States shareholders with or within which such taxable
years of foreign corporations end.

SEC. 305. EXTENSION OF 15-YEAR STRAIGHT-LINE COST RECOVERY
FOR QUALIFIED LEASEHOLD IMPROVEMENTS AND
QUALIFIED RESTAURANT IMPROVEMENTS; 15-YEAR
STRAIGHT-LINE COST RECOVERY FOR CERTAIN
IMPROVEMENTS TO RETAIL SPACE.

(a) Extension of Leasehold and Restaurant Improvements.--
(1) In general.--Clauses (iv) and (v) of section
168(e)(3)(E) (relating to 15-year property) are each amended
by striking ``January 1, 2008'' and inserting ``January 1,
2010''.

[[Page S10369]]

(2) Effective date.--The amendments made by this subsection
shall apply to property placed in service after December 31,
2007.
(b) Treatment to Include New Construction.--
(1) In general.--Paragraph (7) of section 168(e) (relating
to classification of property) is amended to read as follows:
``(7) Qualified restaurant property.--
``(A) In general.--The term `qualified restaurant property'
means any section 1250 property which is--
``(i) a building, if such building is placed in service
after December 31, 2008, and before January 1, 2010, or
``(ii) an improvement to a building,
if more than 50 percent of the building's square footage is
devoted to preparation of, and seating for on-premises
consumption of, prepared meals.
``(B) Exclusion from bonus depreciation.--Property
described in this paragraph shall not be considered qualified
property for purposes of subsection (k).''.
(2) Effective date.--The amendment made by this subsection
shall apply to property placed in service after December 31,
2008.
(c) Recovery Period for Depreciation of Certain
Improvements to Retail Space.--
(1) 15-year recovery period.--Section 168(e)(3)(E)
(relating to 15-year property) is amended by striking ``and''
at the end of clause (vii), by striking the period at the end
of clause (viii) and inserting ``, and'', and by adding at
the end the following new clause:
``(ix) any qualified retail improvement property placed in
service after December 31, 2008, and before January 1,
2010.''.
(2) Qualified retail improvement property.--Section 168(e)
is amended by adding at the end the following new paragraph:
``(8) Qualified retail improvement property.--
``(A) In general.--The term `qualified retail improvement
property' means any improvement to an interior portion of a
building which is nonresidential real property if--
``(i) such portion is open to the general public and is
used in the retail trade or business of selling tangible
personal property to the general public, and
``(ii) such improvement is placed in service more than 3
years after the date the building was first placed in
service.
``(B) Improvements made by owner.--In the case of an
improvement made by the owner of such improvement, such
improvement shall be qualified retail improvement property
(if at all) only so long as such improvement is held by such
owner. Rules similar to the rules under paragraph (6)(B)
shall apply for purposes of the preceding sentence.
``(C) Certain improvements not included.--Such term shall
not include any improvement for which the expenditure is
attributable to--
``(i) the enlargement of the building,
``(ii) any elevator or escalator,
``(iii) any structural component benefitting a common area,
or
``(iv) the internal structural framework of the building.
``(D) Exclusion from bonus depreciation.--Property
described in this paragraph shall not be considered qualified
property for purposes of subsection (k).
``(E) Termination.--Such term shall not include any
improvement placed in service after December 31, 2009.''.
(3) Requirement to use straight line method.--Section
168(b)(3) is amended by adding at the end the following new
subparagraph:
``(I) Qualified retail improvement property described in
subsection (e)(8).''.
(4) Alternative system.--The table contained in section
168(g)(3)(B) is amended by inserting after the item relating
to subparagraph (E)(viii) the following new item:

``(E)(ix).....................................................39''.
(5) Effective date.--The amendments made by this subsection
shall apply to property placed in service after December 31,
2008.

SEC. 306. MODIFICATION OF TAX TREATMENT OF CERTAIN PAYMENTS
TO CONTROLLING EXEMPT ORGANIZATIONS.

(a) In General.--Clause (iv) of section 512(b)(13)(E)
(relating to termination) is amended by striking ``December
31, 2007'' and inserting ``December 31, 2009''.
(b) Effective Date.--The amendment made by this section
shall apply to payments received or accrued after December
31, 2007.

SEC. 307. BASIS ADJUSTMENT TO STOCK OF S CORPORATIONS MAKING
CHARITABLE CONTRIBUTIONS OF PROPERTY.

(a) In General.--The last sentence of section 1367(a)(2)
(relating to decreases in basis) is amended by striking
``December 31, 2007'' and inserting ``December 31, 2009''.
(b) Effective Date.--The amendment made by this section
shall apply to contributions made in taxable years beginning
after December 31, 2007.

SEC. 308. INCREASE IN LIMIT ON COVER OVER OF RUM EXCISE TAX
TO PUERTO RICO AND THE VIRGIN ISLANDS.

(a) In General.--Paragraph (1) of section 7652(f) is
amended by striking ``January 1, 2008'' and inserting
``January 1, 2010''.
(b) Effective Date.--The amendment made by this section
shall apply to distilled spirits brought into the United
States after December 31, 2007.

SEC. 309. EXTENSION OF ECONOMIC DEVELOPMENT CREDIT FOR
AMERICAN SAMOA.

(a) In General.--Subsection (d) of section 119 of division
A of the Tax Relief and Health Care Act of 2006 is amended--
(1) by striking ``first two taxable years'' and inserting
``first 4 taxable years'', and
(2) by striking ``January 1, 2008'' and inserting ``January
1, 2010''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2007.

SEC. 310. EXTENSION OF MINE RESCUE TEAM TRAINING CREDIT.

Section 45N(e) (relating to termination) is amended by
striking ``December 31, 2008'' and inserting ``December 31,
2009''.

SEC. 311. EXTENSION OF ELECTION TO EXPENSE ADVANCED MINE
SAFETY EQUIPMENT.

Section 179E(g) (relating to termination) is amended by
striking ``December 31, 2008'' and inserting ``December 31,
2009''.

SEC. 312. DEDUCTION ALLOWABLE WITH RESPECT TO INCOME
ATTRIBUTABLE TO DOMESTIC PRODUCTION ACTIVITIES
IN PUERTO RICO.

(a) In General.--Subparagraph (C) of section 199(d)(8)
(relating to termination) is amended--
(1) by striking ``first 2 taxable years'' and inserting
``first 4 taxable years'', and
(2) by striking ``January 1, 2008'' and inserting ``January
1, 2010''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2007.

SEC. 313. QUALIFIED ZONE ACADEMY BONDS.

(a) In General.--Subpart I of part IV of subchapter A of
chapter 1 is amended by adding at the end the following new
section:

``SEC. 54E. QUALIFIED ZONE ACADEMY BONDS.

``(a) Qualified Zone Academy Bonds.--For purposes of this
subchapter, the term `qualified zone academy bond' means any
bond issued as part of an issue if--
``(1) 100 percent of the available project proceeds of such
issue are to be used for a qualified purpose with respect to
a qualified zone academy established by an eligible local
education agency,
``(2) the bond is issued by a State or local government
within the jurisdiction of which such academy is located, and
``(3) the issuer--
``(A) designates such bond for purposes of this section,
``(B) certifies that it has written assurances that the
private business contribution requirement of subsection (b)
will be met with respect to such academy, and
``(C) certifies that it has the written approval of the
eligible local education agency for such bond issuance.
``(b)  Private Business Contribution Requirement.--For
purposes of subsection (a), the private business contribution
requirement of this subsection is met with respect to any
issue if the eligible local education agency that established
the qualified zone academy has written commitments from
private entities to make qualified contributions having a
present value (as of the date of issuance of the issue) of
not less than 10 percent of the proceeds of the issue.
``(c) Limitation on Amount of Bonds Designated.--
``(1) National limitation.--There is a national zone
academy bond limitation for each calendar year. Such
limitation is $400,000,000 for 2008 and 2009, and, except as
provided in paragraph (4), zero thereafter.
``(2) Allocation of limitation.--The national zone academy
bond limitation for a calendar year shall be allocated by the
Secretary among the States on the basis of their respective
populations of individuals below the poverty line (as defined
by the Office of Management and Budget). The limitation
amount allocated to a State under the preceding sentence
shall be allocated by the State education agency to qualified
zone academies within such State.
``(3) Designation subject to limitation amount.--The
maximum aggregate face amount of bonds issued during any
calendar year which may be designated under subsection (a)
with respect to any qualified zone academy shall not exceed
the limitation amount allocated to such academy under
paragraph (2) for such calendar year.
``(4) Carryover of unused limitation.--
``(A) In general.--If for any calendar year--
``(i) the limitation amount for any State, exceeds
``(ii) the amount of bonds issued during such year which
are designated under subsection (a) with respect to qualified
zone academies within such State,
the limitation amount for such State for the following
calendar year shall be increased by the amount of such
excess.
``(B) Limitation on carryover.--Any carryforward of a
limitation amount may be carried only to the first 2 years
following the unused limitation year. For purposes of the
preceding sentence, a limitation amount shall be treated as
used on a first-in first-out basis.
``(C) Coordination with section 1397e.--Any carryover
determined under section 1397E(e)(4) (relating to carryover
of unused limitation) with respect to any State to calendar
year 2008 or 2009 shall be treated for purposes of this
section as a carryover with respect to such State for such
calendar year under subparagraph (A), and the limitation of
subparagraph (B) shall apply to such carryover taking into
account the calendar years to which such carryover relates.
``(d) Definitions.--For purposes of this section--

[[Page S10370]]

``(1) Qualified zone academy.--The term `qualified zone
academy' means any public school (or academic program within
a public school) which is established by and operated under
the supervision of an eligible local education agency to
provide education or training below the postsecondary level
if--
``(A) such public school or program (as the case may be) is
designed in cooperation with business to enhance the academic
curriculum, increase graduation and employment rates, and
better prepare students for the rigors of college and the
increasingly complex workforce,
``(B) students in such public school or program (as the
case may be) will be subject to the same academic standards
and assessments as other students educated by the eligible
local education agency,
``(C) the comprehensive education plan of such public
school or program is approved by the eligible local education
agency, and
``(D)(i) such public school is located in an empowerment
zone or enterprise community (including any such zone or
community designated after the date of the enactment of this
section), or
``(ii) there is a reasonable expectation (as of the date of
issuance of the bonds) that at least 35 percent of the
students attending such school or participating in such
program (as the case may be) will be eligible for free or
reduced-cost lunches under the school lunch program
established under the National School Lunch Act.
``(2) Eligible local education agency.--For purposes of
this section, the term `eligible local education agency'
means any local educational agency as defined in section 9101
of the Elementary and Secondary Education Act of 1965.
``(3) Qualified purpose.--The term `qualified purpose'
means, with respect to any qualified zone academy--
``(A) rehabilitating or repairing the public school
facility in which the academy is established,
``(B) providing equipment for use at such academy,
``(C) developing course materials for education to be
provided at such academy, and
``(D) training teachers and other school personnel in such
academy.
``(4) Qualified contributions.--The term `qualified
contribution' means any contribution (of a type and quality
acceptable to the eligible local education agency) of--
``(A) equipment for use in the qualified zone academy
(including state-of-the-art technology and vocational
equipment),
``(B) technical assistance in developing curriculum or in
training teachers in order to promote appropriate market
driven technology in the classroom,
``(C) services of employees as volunteer mentors,
``(D) internships, field trips, or other educational
opportunities outside the academy for students, or
``(E) any other property or service specified by the
eligible local education agency.''.
(b) Conforming Amendments.--
(1) Paragraph (1) of section 54A(d), as amended by this
Act, is amended by striking ``or'' at the end of subparagraph
(B), by inserting ``or'' at the end of subparagraph (C), and
by inserting after subparagraph (C) the following new
subparagraph:
``(D) a qualified zone academy bond,''.
(2) Subparagraph (C) of section 54A(d)(2), as amended by
this Act, 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 a qualified zone academy bond, a
purpose specified in section 54E(a)(1).''.
(3) Section 1397E is amended by adding at the end the
following new subsection:
``(m) Termination.--This section shall not apply to any
obligation issued after the date of the enactment of the Tax
Extenders and Alternative Minimum Tax Relief Act of 2008.''.
(4) The table of sections for subpart I of part IV of
subchapter A of chapter 1 is amended by adding at the end the
following new item:

``Sec. 54E. Qualified zone academy bonds.''.
(c) Effective Date.--The amendments made by this section
shall apply to obligations issued after the date of the
enactment of this Act.

SEC. 314. INDIAN EMPLOYMENT CREDIT.

(a) In General.--Subsection (f) of section 45A (relating to
termination) is amended by striking ``December 31, 2007'' and
inserting ``December 31, 2009''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2007.

SEC. 315. ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY ON
INDIAN RESERVATIONS.

(a) In General.--Paragraph (8) of section 168(j) (relating
to termination) is amended by striking ``December 31, 2007''
and inserting ``December 31, 2009''.
(b) Effective Date.--The amendment made by this section
shall apply to property placed in service after December 31,
2007.

SEC. 316. RAILROAD TRACK MAINTENANCE.

(a) In General.--Subsection (f) of section 45G (relating to
application of section) is amended by striking ``January 1,
2008'' and inserting ``January 1, 2010''.
(b) Credit Allowed Against Alternative Minimum Tax.--
Subparagraph (B) of section 38(c)(4), as amended by this Act,
is amended--
(1) by redesignating clauses (v), (vi), and (vii) as
clauses (vi), (vii), and (viii), respectively, and
(2) by inserting after clause (iv) the following new
clause:
``(v) the credit determined under section 45G,''.
(c) Effective Dates.--
(1) The amendment made by subsection (a) shall apply to
expenditures paid or incurred during taxable years beginning
after December 31, 2007.
(2) The amendments made by subsection (b) shall apply to
credits determined under section 45G of the Internal Revenue
Code of 1986 in taxable years beginning after December 31,
2007, and to carrybacks of such credits.

SEC. 317. SEVEN-YEAR COST RECOVERY PERIOD FOR MOTORSPORTS
RACING TRACK FACILITY.

(a) In General.--Subparagraph (D) of section 168(i)(15)
(relating to termination) is amended by striking ``December
31, 2007'' and inserting ``December 31, 2009''.
(b) Effective Date.--The amendment made by this section
shall apply to property placed in service after December 31,
2007.

SEC. 318. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS.

(a) In General.--Subsection (h) of section 198 (relating to
termination) is amended by striking ``December 31, 2007'' and
inserting ``December 31, 2009''.
(b) Effective Date.--The amendment made by this section
shall apply to expenditures paid or incurred after December
31, 2007.

SEC. 319. EXTENSION OF WORK OPPORTUNITY TAX CREDIT FOR
HURRICANE KATRINA EMPLOYEES.

(a) In General.--Paragraph (1) of section 201(b) of the
Katrina Emergency Tax Relief Act of 2005 is amended by
striking ``2-year'' and inserting ``4-year''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to individuals hired after August 27, 2007.

SEC. 320. EXTENSION OF INCREASED REHABILITATION CREDIT FOR
STRUCTURES IN THE GULF OPPORTUNITY ZONE.

(a) In General.--Subsection (h) of section 1400N is amended
by striking ``December 31, 2008'' and inserting ``December
31, 2009''.
(b) Effective Date.--The amendment made by this section
shall apply to expenditures paid or incurred after the date
of the enactment of this Act.

SEC. 321. ENHANCED DEDUCTION FOR QUALIFIED COMPUTER
CONTRIBUTIONS.

(a) In General.--Subparagraph (G) of section 170(e)(6) is
amended by striking ``December 31, 2007'' and inserting
``December 31, 2009''.
(b) Effective Date.--The amendment made by this section
shall apply to contributions made during taxable years
beginning after December 31, 2007.

SEC. 322. TAX INCENTIVES FOR INVESTMENT IN THE DISTRICT OF
COLUMBIA.

(a) Designation of Zone.--
(1) In general.--Subsection (f) of section 1400 is amended
by striking ``2007'' both places it appears and inserting
``2009''.
(2) Effective date.--The amendments made by this subsection
shall apply to periods beginning after December 31, 2007.
(b) Tax-Exempt Economic Development Bonds.--
(1) In general.--Subsection (b) of section 1400A is amended
by striking ``2007'' and inserting ``2009''.
(2) Effective date.--The amendment made by this subsection
shall apply to bonds issued after December 31, 2007.
(c) Zero Percent Capital Gains Rate.--
(1) In general.--Subsection (b) of section 1400B is amended
by striking ``2008'' each place it appears and inserting
``2010''.
(2) Conforming amendments.--
(A) Section 1400B(e)(2) is amended--
(i) by striking ``2012'' and inserting ``2014'', and
(ii) by striking ``2012'' in the heading thereof and
inserting ``2014''.
(B) Section 1400B(g)(2) is amended by striking ``2012'' and
inserting ``2014''.
(C) Section 1400F(d) is amended by striking ``2012'' and
inserting ``2014''.
(3) Effective dates.--
(A) Extension.--The amendments made by paragraph (1) shall
apply to acquisitions after December 31, 2007.
(B) Conforming amendments.--The amendments made by
paragraph (2) shall take effect on the date of the enactment
of this Act.
(d) First-Time Homebuyer Credit.--
(1) In general.--Subsection (i) of section 1400C is amended
by striking ``2008'' and inserting ``2010''.
(2) Effective date.--The amendment made by this subsection
shall apply to property purchased after December 31, 2007.

SEC. 323. ENHANCED CHARITABLE DEDUCTIONS FOR CONTRIBUTIONS OF
FOOD INVENTORY.

(a) Increased Amount of Deduction.--
(1) In general.--Clause (iv) of section 170(e)(3)(C)
(relating to termination) is amended by striking ``December
31, 2007'' and inserting ``December 31, 2009''.
(2) Effective date.--The amendment made by this subsection
shall apply to contributions made after December 31, 2007.
(b) Temporary Suspension of Limitations on Charitable
Contributions.--
(1) In general.--Section 170(b) is amended by adding at the
end the following new paragraph:
``(3) Temporary suspension of limitations on charitable
contributions.--In the case of a qualified farmer or rancher
(as defined

[[Page S10371]]

in paragraph (1)(E)(v)), any charitable contribution of
food--
``(A) to which subsection (e)(3)(C) applies (without regard
to clause (ii) thereof), and
``(B) which is made during the period beginning on the date
of the enactment of this paragraph and before January 1,
2009,
shall be treated for purposes of paragraph (1)(E) or (2)(B),
whichever is applicable, as if it were a qualified
conservation contribution which is made by a qualified farmer
or rancher and which otherwise meets the requirements of such
paragraph.''.
(2) Effective date.--The amendment made by this subsection
shall apply to taxable years ending after the date of the
enactment of this Act.

SEC. 324. EXTENSION OF ENHANCED CHARITABLE DEDUCTION FOR
CONTRIBUTIONS OF BOOK INVENTORY.

(a) Extension.--Clause (iv) of section 170(e)(3)(D)
(relating to termination) is amended by striking ``December
31, 2007'' and inserting ``December 31, 2009''.
(b) Clerical Amendment.--Clause (iii) of section
170(e)(3)(D) (relating to certification by donee) is amended
by inserting ``of books'' after ``to any contribution''.
(c) Effective Date.--The amendments made by this section
shall apply to contributions made after December 31, 2007.

SEC. 325. EXTENSION AND MODIFICATION OF DUTY SUSPENSION ON
WOOL PRODUCTS; WOOL RESEARCH FUND; WOOL DUTY
REFUNDS.

(a) Extension of Temporary Duty Reductions.--Each of the
following headings of the Harmonized Tariff Schedule of the
United States is amended by striking the date in the
effective period column and inserting ``12/31/2014'':
(1) Heading 9902.51.11 (relating to fabrics of worsted
wool).
(2) Heading 9902.51.13 (relating to yarn of combed wool).
(3) Heading 9902.51.14 (relating to wool fiber, waste,
garnetted stock, combed wool, or wool top).
(4) Heading 9902.51.15 (relating to fabrics of combed
wool).
(5) Heading 9902.51.16 (relating to fabrics of combed
wool).
(b) Extension of Duty Refunds and Wool Research Trust
Fund.--
(1) In general.--Section 4002(c) of the Wool Suit and
Textile Trade Extension Act of 2004 (Public Law 108-429; 118
Stat. 2603) is amended--
(A) in paragraph (3)(C), by striking ``2010'' and inserting
``2015''; and
(B) in paragraph (6)(A), by striking ``through 2009'' and
inserting ``through 2014''.
(2) Sunset.--Section 506(f) of the Trade and Development
Act of 2000 (Public 106-200; 114 Stat. 303 (7 U.S.C. 7101
note)) is amended by striking ``2010'' and inserting
``2015''.

TITLE IV--EXTENSION OF TAX ADMINISTRATION PROVISIONS

SEC. 401. PERMANENT AUTHORITY FOR UNDERCOVER OPERATIONS.

(a) In General.--Section 7608(c) (relating to rules
relating to undercover operations) is amended by striking
paragraph (6).
(b) Effective Date.--The amendment made by this section
shall apply to operations conducted after the date of the
enactment of this Act.

SEC. 402. PERMANENT AUTHORITY FOR DISCLOSURE OF INFORMATION
RELATING TO TERRORIST ACTIVITIES.

(a) Disclosure of Return Information to Apprise Appropriate
Officials of Terrorist Activities.--Subparagraph (C) of
section 6103(i)(3) is amended by striking clause (iv).
(b) Disclosure Upon Request of Information Relating to
Terrorist Activities.--Paragraph (7) of section 6103(i) is
amended by striking subparagraph (E).
(c) Effective Date.--The amendments made by this section
shall apply to disclosures after the date of the enactment of
this Act.

TITLE V--ADDITIONAL TAX RELIEF AND OTHER TAX PROVISIONS

Subtitle A--General Provisions

SEC. 501. $8,500 INCOME THRESHOLD USED TO CALCULATE
REFUNDABLE PORTION OF CHILD TAX CREDIT.

(a) In General.--Section 24(d) is amended by adding at the
end the following new paragraph:
``(4) Special rule for 2008.--Notwithstanding paragraph
(3), in the case of any taxable year beginning in 2008, the
dollar amount in effect for such taxable year under paragraph
(1)(B)(i) shall be $8,500.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2007.

SEC. 502. PROVISIONS RELATED TO FILM AND TELEVISION
PRODUCTIONS.

(a) Extension of Expensing Rules for Qualified Film and
Television Productions.--Section 181(f) (relating to
termination) is amended by striking ``December 31, 2008'' and
inserting ``December 31, 2009''.
(b) Modification of Limitation on Expensing.--Subparagraph
(A) of section 181(a)(2) is amended to read as follows:
``(A) In general.--Paragraph (1) shall not apply to so much
of the aggregate cost of any qualified film or television
production as exceeds $15,000,000.''.
(c) Modifications to Deduction for Domestic Activities.--
(1) Determination of w-2 wages.--Paragraph (2) of section
199(b) is amended by adding at the end the following new
subparagraph:
``(D) Special rule for qualified film.--In the case of a
qualified film, such term shall include compensation for
services performed in the United States by actors, production
personnel, directors, and producers.''.
(2) Definition of qualified film.--Paragraph (6) of section
199(c) is amended by adding at the end the following: ``A
qualified film shall include any copyrights, trademarks, or
other intangibles with respect to such film. The methods and
means of distributing a qualified film shall not affect the
availability of the deduction under this section.''.
(3) Partnerships.--Subparagraph (A) of section 199(d)(1) 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 each partner of a partnership, or
shareholder of an S corporation, who owns (directly or
indirectly) at least 20 percent of the capital interests in
such partnership or of the stock of such S corporation--

``(I) such partner or shareholder shall be treated as
having engaged directly in any film produced by such
partnership or S corporation, and
``(II) such partnership or S corporation shall be treated
as having engaged directly in any film produced by such
partner or shareholder.''.

(d) Conforming Amendment.--Section 181(d)(3)(A) is amended
by striking ``actors'' and all that follows and inserting
``actors, production personnel, directors, and producers.''.
(e) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply
to qualified film and television productions commencing after
December 31, 2007.
(2) Deduction.--The amendments made by subsection (c) shall
apply to taxable years beginning after December 31, 2007.

SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS
DESIGNED FOR USE BY CHILDREN.

(a) In General.--Paragraph (2) of section 4161(b) is
amended by redesignating subparagraph (B) as subparagraph (C)
and by inserting after subparagraph (A) the following new
subparagraph:
``(B) Exemption for certain wooden arrow shafts.--
Subparagraph (A) shall not apply to any shaft consisting of
all natural wood with no laminations or artificial means of
enhancing the spine of such shaft (whether sold separately or
incorporated as part of a finished or unfinished product) of
a type used in the manufacture of any arrow which after its
assembly--
``(i) measures \5/16\ of an inch or less in diameter, and
``(ii) is not suitable for use with a bow described in
paragraph (1)(A).''.
(b) Effective Date.--The amendments made by this section
shall apply to shafts first sold after the date of enactment
of this Act.

SEC. 504. INCOME AVERAGING FOR AMOUNTS RECEIVED IN CONNECTION
WITH THE EXXON VALDEZ LITIGATION.

(a) Income Averaging of Amounts Received From the Exxon
Valdez Litigation.--For purposes of section 1301 of the
Internal Revenue Code of 1986--
(1) any qualified taxpayer who receives any qualified
settlement income in any taxable year shall be treated as
engaged in a fishing business (determined without regard to
the commercial nature of the business), and
(2) such qualified settlement income shall be treated as
income attributable to such a fishing business for such
taxable year.
(b) Contributions of Amounts Received to Retirement
Accounts.--
(1) In general.--Any qualified taxpayer who receives
qualified settlement income during the taxable year may, at
any time before the end of the taxable year in which such
income was received, make one or more contributions to an
eligible retirement plan of which such qualified taxpayer is
a beneficiary in an aggregate amount not to exceed the lesser
of--
(A) $100,000 (reduced by the amount of qualified settlement
income contributed to an eligible retirement plan in prior
taxable years pursuant to this subsection), or
(B) the amount of qualified settlement income received by
the individual during the taxable year.
(2) Time when contributions deemed made.--For purposes of
paragraph (1), a qualified taxpayer shall be deemed to have
made a contribution to an eligible retirement plan on the
last day of the taxable year in which such income is received
if the contribution is made on account of such taxable year
and is made not later than the time prescribed by law for
filing the return for such taxable year (not including
extensions thereof).
(3) Treatment of contributions to eligible retirement
plans.--For purposes of the Internal Revenue Code of 1986, if
a contribution is made pursuant to paragraph (1) with respect
to qualified settlement income, then--
(A) except as provided in paragraph (4)--
(i) to the extent of such contribution, the qualified
settlement income shall not be included in taxable income,
and
(ii) for purposes of section 72 of such Code, such
contribution shall not be considered to be investment in the
contract,
(B) the qualified taxpayer shall, to the extent of the
amount of the contribution, be treated--

[[Page S10372]]

(i) as having received the qualified settlement income--

(I) in the case of a contribution to an individual
retirement plan (as defined under section 7701(a)(37) of such
Code), in a distribution described in section 408(d)(3) of
such Code, and
(II) in the case of any other eligible retirement plan, in
an eligible rollover distribution (as defined under section
402(f)(2) of such Code), and

(ii) as having transferred the amount to the eligible
retirement plan in a direct trustee to trustee transfer
within 60 days of the distribution,
(C) section 408(d)(3)(B) of the Internal Revenue Code of
1986 shall not apply with respect to amounts treated as a
rollover under this paragraph, and
(D) section 408A(c)(3)(B) of the Internal Revenue Code of
1986 shall not apply with respect to amounts contributed to a
Roth IRA (as defined under section 408A(b) of such Code) or a
designated Roth contribution to an applicable retirement plan
(within the meaning of section 402A of such Code) under this
paragraph.
(4) Special rule for roth iras and roth 401(k)s.--For
purposes of the Internal Revenue Code of 1986, if a
contribution is made pursuant to paragraph (1) with respect
to qualified settlement income to a Roth IRA (as defined
under section 408A(b) of such Code) or as a designated Roth
contribution to an applicable retirement plan (within the
meaning of section 402A of such Code), then--
(A) the qualified settlement income shall be includible in
taxable income, and
(B) for purposes of section 72 of such Code, such
contribution shall be considered to be investment in the
contract.
(5) Eligible retirement plan.--For purpose of this
subsection, the term ``eligible retirement plan'' has the
meaning given such term under section 402(c)(8)(B) of the
Internal Revenue Code of 1986.
(c) Treatment of Qualified Settlement Income Under
Employment Taxes.--
(1) SECA.--For purposes of chapter 2 of the Internal
Revenue Code of 1986 and section 211 of the Social Security
Act, no portion of qualified settlement income received by a
qualified taxpayer shall be treated as self-employment
income.
(2) FICA.--For purposes of chapter 21 of the Internal
Revenue Code of 1986 and section 209 of the Social Security
Act, no portion of qualified settlement income received by a
qualified taxpayer shall be treated as wages.
(d) Qualified Taxpayer.--For purposes of this section, the
term ``qualified taxpayer'' means--
(1) any individual who is a plaintiff in the civil action
In re Exxon Valdez, No. 89-095-CV (HRH) (Consolidated) (D.
Alaska); or
(2) any individual who is a beneficiary of the estate of
such a plaintiff who--
(A) acquired the right to receive qualified settlement
income from that plaintiff; and
(B) was the spouse or an immediate relative of that
plaintiff.
(e) Qualified Settlement Income.--For purposes of this
section, the term ``qualified settlement income'' means any
interest and punitive damage awards which are--
(1) otherwise includible in taxable income, and
(2) received (whether as lump sums or periodic payments) in
connection with the civil action In re Exxon Valdez, No. 89-
095-CV (HRH) (Consolidated) (D. Alaska) (whether pre- or
post-judgment and whether related to a settlement or
judgment).

SEC. 505. CERTAIN FARMING BUSINESS MACHINERY AND EQUIPMENT
TREATED AS 5-YEAR PROPERTY.

(a) In General.--Section 168(e)(3)(B) (defining 5-year
property) is amended by striking ``and'' at the end of clause
(v), by striking the period at the end of clause (vi)(III)
and inserting ``, and'', and by inserting after clause (vi)
the following new clause:
``(vii) any machinery or equipment (other than any grain
bin, cotton ginning asset, fence, or other land improvement)
which is used in a farming business (as defined in section
263A(e)(4)), the original use of which commences with the
taxpayer after December 31, 2008, and which is placed in
service before January 1, 2010.''.
(b) Alternative System.--The table contained in section
168(g)(3)(B) (relating to special rule for certain property
assigned to classes) is amended by inserting after the item
relating to subparagraph (B)(iii) the following:

(B)(vii)......................................................10''.

(c) Effective Date.--The amendments made by this section
shall apply to property placed in service after December 31,
2008.

SEC. 506. MODIFICATION OF PENALTY ON UNDERSTATEMENT OF
TAXPAYER'S LIABILITY BY TAX RETURN PREPARER.

(a) In General.--Subsection (a) of section 6694 is amended
to read as follows:
``(a) Understatement Due to Unreasonable Positions.--
``(1) In general.--If a tax return preparer--
``(A) prepares any return or claim of refund with respect
to which any part of an understatement of liability is due to
a position described in paragraph (2), and
``(B) knew (or reasonably should have known) of the
position,
such tax return preparer shall pay a penalty with respect to
each such return or claim in an amount equal to the greater
of $1,000 or 50 percent of the income derived (or to be
derived) by the tax return preparer with respect to the
return or claim.
``(2) Unreasonable position.--
``(A) In general.--Except as otherwise provided in this
paragraph, a position is described in this paragraph unless
there is or was substantial authority for the position.
``(B) Disclosed positions.--If the position was disclosed
as provided in section 6662(d)(2)(B)(ii)(I) and is not a
position to which subparagraph (C) applies, the position is
described in this paragraph unless there is a reasonable
basis for the position.
``(C) Tax shelters and reportable transactions.--If the
position is with respect to a tax shelter (as defined in
section 6662(d)(2)(C)(ii)) or a reportable transaction to
which section 6662A applies, the position is described in
this paragraph unless it is reasonable to believe that the
position would more likely than not be sustained on its
merits.
``(3) Reasonable cause exception.--No penalty shall be
imposed under this subsection if it is shown that there is
reasonable cause for the understatement and the tax return
preparer acted in good faith.''.
(b) Effective Date.--The amendment made by this section
shall apply--
(1) in the case of a position other than a position
described in subparagraph (C) of section 6694(a)(2) of the
Internal Revenue Code of 1986 (as amended by this section),
to returns prepared after May 25, 2007, and
(2) in the case of a position described in such
subparagraph (C), to returns prepared for taxable years
ending after the date of the enactment of this Act.

Subtitle B--Paul Wellstone and Pete Domenici Mental Health Parity and
Addiction Equity Act of 2008

SEC. 511. SHORT TITLE.

This subtitle may be cited as the ``Paul Wellstone and Pete
Domenici Mental Health Parity and Addiction Equity Act of
2008''.

SEC. 512. MENTAL HEALTH PARITY.

(a) Amendments to ERISA.--Section 712 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1185a) is
amended--
(1) in subsection (a), by adding at the end the following:
``(3) Financial requirements and treatment limitations.--
``(A) In general.--In the case of a group health plan (or
health insurance coverage offered in connection with such a
plan) that provides both medical and surgical benefits and
mental health or substance use disorder benefits, such plan
or coverage shall ensure that--
``(i) the financial requirements applicable to such mental
health or substance use disorder benefits are no more
restrictive than the predominant financial requirements
applied to substantially all medical and surgical benefits
covered by the plan (or coverage), and there are no separate
cost sharing requirements that are applicable only with
respect to mental health or substance use disorder benefits;
and
``(ii) the treatment limitations applicable to such mental
health or substance use disorder benefits are no more
restrictive than the predominant treatment limitations
applied to substantially all medical and surgical benefits
covered by the plan (or coverage) and there are no separate
treatment limitations that are applicable only with respect
to mental health or substance use disorder benefits.
``(B) Definitions.--In this paragraph:
``(i) Financial requirement.--The term `financial
requirement' includes deductibles, copayments, coinsurance,
and out-of-pocket expenses, but excludes an aggregate
lifetime limit and an annual limit subject to paragraphs (1)
and (2),
``(ii) Predominant.--A financial requirement or treatment
limit is considered to be predominant if it is the most
common or frequent of such type of limit or requirement.
``(iii) Treatment limitation.--The term `treatment
limitation' includes limits on the frequency of treatment,
number of visits, days of coverage, or other similar limits
on the scope or duration of treatment.
``(4) Availability of plan information.--The criteria for
medical necessity determinations made under the plan with
respect to mental health or substance use disorder benefits
(or the health insurance coverage offered in connection with
the plan with respect to such benefits) shall be made
available by the plan administrator (or the health insurance
issuer offering such coverage) in accordance with regulations
to any current or potential participant, beneficiary, or
contracting provider upon request. The reason for any denial
under the plan (or coverage) of reimbursement or payment for
services with respect to mental health or substance use
disorder benefits in the case of any participant or
beneficiary shall, on request or as otherwise required, be
made available by the plan administrator (or the health
insurance issuer offering such coverage) to the participant
or beneficiary in accordance with regulations.
``(5) Out-of-network providers.--In the case of a plan or
coverage that provides both medical and surgical benefits and
mental health or substance use disorder benefits, if the plan
or coverage provides coverage for medical or surgical
benefits provided by out-of-network providers, the plan or
coverage

[[Page S10373]]

shall provide coverage for mental health or substance use
disorder benefits provided by out-of-network providers in a
manner that is consistent with the requirements of this
section.'';
(2) in subsection (b), by amending paragraph (2) to read as
follows:
``(2) in the case of a group health plan (or health
insurance coverage offered in connection with such a plan)
that provides mental health or substance use disorder
benefits, as affecting the terms and conditions of the plan
or coverage relating to such benefits under the plan or
coverage, except as provided in subsection (a).'';
(3) in subsection (c)--
(A) in paragraph (1)(B)--
(i) by inserting ``(or 1 in the case of an employer
residing in a State that permits small groups to include a
single individual)'' after ``at least 2'' the first place
that such appears; and
(ii) by striking ``and who employs at least 2 employees on
the first day of the plan year''; and
(B) by striking paragraph (2) and inserting the following:
``(2) Cost exemption.--
``(A) In general.--With respect to a group health plan (or
health insurance coverage offered in connection with such a
plan), if the application of this section to such plan (or
coverage) results in an increase for the plan year involved
of the actual total costs of coverage with respect to medical
and surgical benefits and mental health and substance use
disorder benefits under the plan (as determined and certified
under subparagraph (C)) by an amount that exceeds the
applicable percentage described in subparagraph (B) of the
actual total plan costs, the provisions of this section shall
not apply to such plan (or coverage) during the following
plan year, and such exemption shall apply to the plan (or
coverage) for 1 plan year. An employer may elect to continue
to apply mental health and substance use disorder parity
pursuant to this section with respect to the group health
plan (or coverage) involved regardless of any increase in
total costs.
``(B) Applicable percentage.--With respect to a plan (or
coverage), the applicable percentage described in this
subparagraph shall be--
``(i) 2 percent in the case of the first plan year in which
this section is applied; and
``(ii) 1 percent in the case of each subsequent plan year.
``(C) Determinations by actuaries.--Determinations as to
increases in actual costs under a plan (or coverage) for
purposes of this section shall be made and certified by a
qualified and licensed actuary who is a member in good
standing of the American Academy of Actuaries. All such
determinations shall be in a written report prepared by the
actuary. The report, and all underlying documentation relied
upon by the actuary, shall be maintained by the group health
plan or health insurance issuer for a period of 6 years
following the notification made under subparagraph (E).
``(D) 6-month determinations.--If a group health plan (or a
health insurance issuer offering coverage in connection with
a group health plan) seeks an exemption under this paragraph,
determinations under subparagraph (A) shall be made after
such plan (or coverage) has complied with this section for
the first 6 months of the plan year involved.
``(E) Notification.--
``(i) In general.--A group health plan (or a health
insurance issuer offering coverage in connection with a group
health plan) that, based upon a certification described under
subparagraph (C), qualifies for an exemption under this
paragraph, and elects to implement the exemption, shall
promptly notify the Secretary, the appropriate State
agencies, and participants and beneficiaries in the plan of
such election.
``(ii) Requirement.--A notification to the Secretary under
clause (i) shall include--

``(I) a description of the number of covered lives under
the plan (or coverage) involved at the time of the
notification, and as applicable, at the time of any prior
election of the cost-exemption under this paragraph by such
plan (or coverage);
``(II) for both the plan year upon which a cost exemption
is sought and the year prior, a description of the actual
total costs of coverage with respect to medical and surgical
benefits and mental health and substance use disorder
benefits under the plan; and
``(III) for both the plan year upon which a cost exemption
is sought and the year prior, the actual total costs of
coverage with respect to mental health and substance use
disorder benefits under the plan.

``(iii) Confidentiality.--A notification to the Secretary
under clause (i) shall be confidential. The Secretary shall
make available, upon request and on not more than an annual
basis, an anonymous itemization of such notifications, that
includes--

``(I) a breakdown of States by the size and type of
employers submitting such notification; and
``(II) a summary of the data received under clause (ii).

``(F) Audits by appropriate agencies.--To determine
compliance with this paragraph, the Secretary may audit the
books and records of a group health plan or health insurance
issuer relating to an exemption, including any actuarial
reports prepared pursuant to subparagraph (C), during the 6
year period following the notification of such exemption
under subparagraph (E). A State agency receiving a
notification under subparagraph (E) may also conduct such an
audit with respect to an exemption covered by such
notification.'';
(4) in subsection (e), by striking paragraph (4) and
inserting the following:
``(4) Mental health benefits.--The term `mental health
benefits' means benefits with respect to services for mental
health conditions, as defined under the terms of the plan and
in accordance with applicable Federal and State law.
``(5) Substance use disorder benefits.--The term `substance
use disorder benefits' means benefits with respect to
services for substance use disorders, as defined under the
terms of the plan and in accordance with applicable Federal
and State law.'';
(5) by striking subsection (f);
(6) by inserting after subsection (e) the following:
``(f) Secretary Report.--The Secretary shall, by January 1,
2012, and every two years thereafter, submit to the
appropriate committees of Congress a report on compliance of
group health plans (and health insurance coverage offered in
connection with such plans) with the requirements of this
section. Such report shall include the results of any surveys
or audits on compliance of group health plans (and health
insurance coverage offered in connection with such plans)
with such requirements and an analysis of the reasons for any
failures to comply.
``(g) Notice and Assistance.--The Secretary, in cooperation
with the Secretaries of Health and Human Services and
Treasury, as appropriate, shall publish and widely
disseminate guidance and information for group health plans,
participants and beneficiaries, applicable State and local
regulatory bodies, and the National Association of Insurance
Commissioners concerning the requirements of this section and
shall provide assistance concerning such requirements and the
continued operation of applicable State law. Such guidance
and information shall inform participants and beneficiaries
of how they may obtain assistance under this section,
including, where appropriate, assistance from State consumer
and insurance agencies.'';
(7) by striking ``mental health benefits'' and inserting
``mental health and substance use disorder benefits'' each
place it appears in subsections (a)(1)(B)(i), (a)(1)(C),
(a)(2)(B)(i), and (a)(2)(C); and
(8) by striking ``mental health benefits'' and inserting
``mental health or substance use disorder benefits'' each
place it appears (other than in any provision amended by the
previous paragraph).
(b) Amendments to Public Health Service Act.--Section 2705
of the Public Health Service Act (42 U.S.C. 300gg-5) is
amended--
(1) in subsection (a), by adding at the end the following:
``(3) Financial requirements and treatment limitations.--
``(A) In general.--In the case of a group health plan (or
health insurance coverage offered in connection with such a
plan) that provides both medical and surgical benefits and
mental health or substance use disorder benefits, such plan
or coverage shall ensure that--
``(i) the financial requirements applicable to such mental
health or substance use disorder benefits are no more
restrictive than the predominant financial requirements
applied to substantially all medical and surgical benefits
covered by the plan (or coverage), and there are no separate
cost sharing requirements that are applicable only with
respect to mental health or substance use disorder benefits;
and
``(ii) the treatment limitations applicable to such mental
health or substance use disorder benefits are no more
restrictive than the predominant treatment limitations
applied to substantially all medical and surgical benefits
covered by the plan (or coverage) and there are no separate
treatment limitations that are applicable only with respect
to mental health or substance use disorder benefits.
``(B) Definitions.--In this paragraph:
``(i) Financial requirement.--The term `financial
requirement' includes deductibles, copayments, coinsurance,
and out-of-pocket expenses, but excludes an aggregate
lifetime limit and an annual limit subject to paragraphs (1)
and (2).
``(ii) Predominant.--A financial requirement or treatment
limit is considered to be predominant if it is the most
common or frequent of such type of limit or requirement.
``(iii) Treatment limitation.--The term `treatment
limitation' includes limits on the frequency of treatment,
number of visits, days of coverage, or other similar limits
on the scope or duration of treatment.
``(4) Availability of plan information.--The criteria for
medical necessity determinations made under the plan with
respect to mental health or substance use disorder benefits
(or the health insurance coverage offered in connection with
the plan with respect to such benefits) shall be made
available by the plan administrator (or the health insurance
issuer offering such coverage) in accordance with regulations
to any current or potential participant, beneficiary, or
contracting provider upon request. The reason for any denial
under the plan (or coverage) of reimbursement or payment for
services with respect to mental health or substance use
disorder benefits in the case of any participant or
beneficiary shall, on request or as otherwise required, be
made available by the plan administrator (or the health
insurance issuer offering such coverage) to the participant
or beneficiary in accordance with regulations.

[[Page S10374]]

``(5) Out-of-network providers.--In the case of a plan or
coverage that provides both medical and surgical benefits and
mental health or substance use disorder benefits, if the plan
or coverage provides coverage for medical or surgical
benefits provided by out-of-network providers, the plan or
coverage shall provide coverage for mental health or
substance use disorder benefits provided by out-of-network
providers in a manner that is consistent with the
requirements of this section.'';
(2) in subsection (b), by amending paragraph (2) to read as
follows:
``(2) in the case of a group health plan (or health
insurance coverage offered in connection with such a plan)
that provides mental health or substance use disorder
benefits, as affecting the terms and conditions of the plan
or coverage relating to such benefits under the plan or
coverage, except as provided in subsection (a).'';
(3) in subsection (c)--
(A) in paragraph (1), by inserting before the period the
following: ``(as defined in section 2791(e)(4), except that
for purposes of this paragraph such term shall include
employers with 1 employee in the case of an employer residing
in a State that permits small groups to include a single
individual)''; and
(B) by striking paragraph (2) and inserting the following:
``(2) Cost exemption.--
``(A) In general.--With respect to a group health plan (or
health insurance coverage offered in connection with such a
plan), if the application of this section to such plan (or
coverage) results in an increase for the plan year involved
of the actual total costs of coverage with respect to medical
and surgical benefits and mental health and substance use
disorder benefits under the plan (as determined and certified
under subparagraph (C)) by an amount that exceeds the
applicable percentage described in subparagraph (B) of the
actual total plan costs, the provisions of this section shall
not apply to such plan (or coverage) during the following
plan year, and such exemption shall apply to the plan (or
coverage) for 1 plan year. An employer may elect to continue
to apply mental health and substance use disorder parity
pursuant to this section with respect to the group health
plan (or coverage) involved regardless of any increase in
total costs.
``(B) Applicable percentage.--With respect to a plan (or
coverage), the applicable percentage described in this
subparagraph shall be--
``(i) 2 percent in the case of the first plan year in which
this section is applied; and
``(ii) 1 percent in the case of each subsequent plan year.
``(C) Determinations by actuaries.--Determinations as to
increases in actual costs under a plan (or coverage) for
purposes of this section shall be made and certified by a
qualified and licensed actuary who is a member in good
standing of the American Academy of Actuaries. All such
determinations shall be in a written report prepared by the
actuary. The report, and all underlying documentation relied
upon by the actuary, shall be maintained by the group health
plan or health insurance issuer for a period of 6 years
following the notification made under subparagraph (E).
``(D) 6-month determinations.--If a group health plan (or a
health insurance issuer offering coverage in connection with
a group health plan) seeks an exemption under this paragraph,
determinations under subparagraph (A) shall be made after
such plan (or coverage) has complied with this section for
the first 6 months of the plan year involved.
``(E) Notification.--
``(i) In general.--A group health plan (or a health
insurance issuer offering coverage in connection with a group
health plan) that, based upon a certification described under
subparagraph (C), qualifies for an exemption under this
paragraph, and elects to implement the exemption, shall
promptly notify the Secretary, the appropriate State
agencies, and participants and beneficiaries in the plan of
such election.
``(ii) Requirement.--A notification to the Secretary under
clause (i) shall include--

``(I) a description of the number of covered lives under
the plan (or coverage) involved at the time of the
notification, and as applicable, at the time of any prior
election of the cost-exemption under this paragraph by such
plan (or coverage);
``(II) for both the plan year upon which a cost exemption
is sought and the year prior, a description of the actual
total costs of coverage with respect to medical and surgical
benefits and mental health and substance use disorder
benefits under the plan; and
``(III) for both the plan year upon which a cost exemption
is sought and the year prior, the actual total costs of
coverage with respect to mental health and substance use
disorder benefits under the plan.

``(iii) Confidentiality.--A notification to the Secretary
under clause (i) shall be confidential. The Secretary shall
make available, upon request and on not more than an annual
basis, an anonymous itemization of such notifications, that
includes--

``(I) a breakdown of States by the size and type of
employers submitting such notification; and
``(II) a summary of the data received under clause (ii).

``(F) Audits by appropriate agencies.--To determine
compliance with this paragraph, the Secretary may audit the
books and records of a group health plan or health insurance
issuer relating to an exemption, including any actuarial
reports prepared pursuant to subparagraph (C), during the 6
year period following the notification of such exemption
under subparagraph (E). A State agency receiving a
notification under subparagraph (E) may also conduct such an
audit with respect to an exemption covered by such
notification.'';
(4) in subsection (e), by striking paragraph (4) and
inserting the following:
``(4) Mental health benefits.--The term `mental health
benefits' means benefits with respect to services for mental
health conditions, as defined under the terms of the plan and
in accordance with applicable Federal and State law.
``(5) Substance use disorder benefits.--The term `substance
use disorder benefits' means benefits with respect to
services for substance use disorders, as defined under the
terms of the plan and in accordance with applicable Federal
and State law.'';
(5) by striking subsection (f);
(6) by striking ``mental health benefits'' and inserting
``mental health and substance use disorder benefits'' each
place it appears in subsections (a)(1)(B)(i), (a)(1)(C),
(a)(2)(B)(i), and (a)(2)(C); and
(7) by striking ``mental health benefits'' and inserting
``mental health or substance use disorder benefits'' each
place it appears (other than in any provision amended by the
previous paragraph).
(c) Amendments to Internal Revenue Code.--Section 9812 of
the Internal Revenue Code of 1986 is amended--
(1) in subsection (a), by adding at the end the following:
``(3) Financial requirements and treatment limitations.--
``(A) In general.--In the case of a group health plan that
provides both medical and surgical benefits and mental health
or substance use disorder benefits, such plan shall ensure
that--
``(i) the financial requirements applicable to such mental
health or substance use disorder benefits are no more
restrictive than the predominant financial requirements
applied to substantially all medical and surgical benefits
covered by the plan, and there are no separate cost sharing
requirements that are applicable only with respect to mental
health or substance use disorder benefits; and
``(ii) the treatment limitations applicable to such mental
health or substance use disorder benefits are no more
restrictive than the predominant treatment limitations
applied to substantially all medical and surgical benefits
covered by the plan and there are no separate treatment
limitations that are applicable only with respect to mental
health or substance use disorder benefits.
``(B) Definitions.--In this paragraph:
``(i) Financial requirement.--The term `financial
requirement' includes deductibles, copayments, coinsurance,
and out-of-pocket expenses, but excludes an aggregate
lifetime limit and an annual limit subject to paragraphs (1)
and (2),
``(ii) Predominant.--A financial requirement or treatment
limit is considered to be predominant if it is the most
common or frequent of such type of limit or requirement.
``(iii) Treatment limitation.--The term `treatment
limitation' includes limits on the frequency of treatment,
number of visits, days of coverage, or other similar limits
on the scope or duration of treatment.
``(4) Availability of plan information.--The criteria for
medical necessity determinations made under the plan with
respect to mental health or substance use disorder benefits
shall be made available by the plan administrator in
accordance with regulations to any current or potential
participant, beneficiary, or contracting provider upon
request. The reason for any denial under the plan of
reimbursement or payment for services with respect to mental
health or substance use disorder benefits in the case of any
participant or beneficiary shall, on request or as otherwise
required, be made available by the plan administrator to the
participant or beneficiary in accordance with regulations.
``(5) Out-of-network providers.--In the case of a plan that
provides both medical and surgical benefits and mental health
or substance use disorder benefits, if the plan provides
coverage for medical or surgical benefits provided by out-of-
network providers, the plan shall provide coverage for mental
health or substance use disorder benefits provided by out-of-
network providers in a manner that is consistent with the
requirements of this section.'';
(2) in subsection (b), by amending paragraph (2) to read as
follows:
``(2) in the case of a group health plan that provides
mental health or substance use disorder benefits, as
affecting the terms and conditions of the plan relating to
such benefits under the plan, except as provided in
subsection (a).'';
(3) in subsection (c)--
(A) by amending paragraph (1) to read as follows:
``(1) Small employer exemption.--
``(A) In general.--This section shall not apply to any
group health plan for any plan year of a small employer.
``(B) Small employer.--For purposes of subparagraph (A),
the term `small employer' means, with respect to a calendar
year and a plan year, an employer who employed an average of
at least 2 (or 1 in the case of an employer residing in a
State that permits small groups to include a single
individual) but not more than 50 employees on business days
during the preceding calendar year. For purposes of the
preceding sentence, all persons

[[Page S10375]]

treated as a single employer under subsection (b), (c), (m),
or (o) of section 414 shall be treated as 1 employer and
rules similar to rules of subparagraphs (B) and (C) of
section 4980D(d)(2) shall apply.''; and
(B) by striking paragraph (2) and inserting the following:
``(2) Cost exemption.--
``(A) In general.--With respect to a group health plan, if
the application of this section to such plan results in an
increase for the plan year involved of the actual total costs
of coverage with respect to medical and surgical benefits and
mental health and substance use disorder benefits under the
plan (as determined and certified under subparagraph (C)) by
an amount that exceeds the applicable percentage described in
subparagraph (B) of the actual total plan costs, the
provisions of this section shall not apply to such plan
during the following plan year, and such exemption shall
apply to the plan for 1 plan year. An employer may elect to
continue to apply mental health and substance use disorder
parity pursuant to this section with respect to the group
health plan involved regardless of any increase in total
costs.
``(B) Applicable percentage.--With respect to a plan, the
applicable percentage described in this subparagraph shall
be--
``(i) 2 percent in the case of the first plan year in which
this section is applied; and
``(ii) 1 percent in the case of each subsequent plan year.
``(C) Determinations by actuaries.--Determinations as to
increases in actual costs under a plan for purposes of this
section shall be made and certified by a qualified and
licensed actuary who is a member in good standing of the
American Academy of Actuaries. All such determinations shall
be in a written report prepared by the actuary. The report,
and all underlying documentation relied upon by the actuary,
shall be maintained by the group health plan for a period of
6 years following the notification made under subparagraph
(E).
``(D) 6-month determinations.--If a group health plan seeks
an exemption under this paragraph, determinations under
subparagraph (A) shall be made after such plan has complied
with this section for the first 6 months of the plan year
involved.
``(E) Notification.--
``(i) In general.--A group health plan that, based upon a
certification described under subparagraph (C), qualifies for
an exemption under this paragraph, and elects to implement
the exemption, shall promptly notify the Secretary, the
appropriate State agencies, and participants and
beneficiaries in the plan of such election.
``(ii) Requirement.--A notification to the Secretary under
clause (i) shall include--

``(I) a description of the number of covered lives under
the plan involved at the time of the notification, and as
applicable, at the time of any prior election of the cost-
exemption under this paragraph by such plan;
``(II) for both the plan year upon which a cost exemption
is sought and the year prior, a description of the actual
total costs of coverage with respect to medical and surgical
benefits and mental health and substance use disorder
benefits under the plan; and
``(III) for both the plan year upon which a cost exemption
is sought and the year prior, the actual total costs of
coverage with respect to mental health and substance use
disorder benefits under the plan.

``(iii) Confidentiality.--A notification to the Secretary
under clause (i) shall be confidential. The Secretary shall
make available, upon request and on not more than an annual
basis, an anonymous itemization of such notifications, that
includes--

``(I) a breakdown of States by the size and type of
employers submitting such notification; and
``(II) a summary of the data received under clause (ii).

``(F) Audits by appropriate agencies.--To determine
compliance with this paragraph, the Secretary may audit the
books and records of a group health plan relating to an
exemption, including any actuarial reports prepared pursuant
to subparagraph (C), during the 6 year period following the
notification of such exemption under subparagraph (E). A
State agency receiving a notification under subparagraph (E)
may also conduct such an audit with respect to an exemption
covered by such notification.'';
(4) in subsection (e), by striking paragraph (4) and
inserting the following:
``(4) Mental health benefits.--The term `mental health
benefits' means benefits with respect to services for mental
health conditions, as defined under the terms of the plan and
in accordance with applicable Federal and State law.
``(5) Substance use disorder benefits.--The term `substance
use disorder benefits' means benefits with respect to
services for substance use disorders, as defined under the
terms of the plan and in accordance with applicable Federal
and State law.'';
(5) by striking subsection (f);
(6) by striking ``mental health benefits'' and inserting
``mental health and substance use disorder benefits'' each
place it appears in subsections (a)(1)(B)(i), (a)(1)(C),
(a)(2)(B)(i), and (a)(2)(C); and
(7) by striking ``mental health benefits'' and inserting
``mental health or substance use disorder benefits'' each
place it appears (other than in any provision amended by the
previous paragraph).
(d) Regulations.--Not later than 1 year after the date of
enactment of this Act, the Secretaries of Labor, Health and
Human Services, and the Treasury shall issue regulations to
carry out the amendments made by subsections (a), (b), and
(c), respectively.
(e) Effective Date.--
(1) In general.--The amendments made by this section shall
apply with respect to group health plans for plan years
beginning after the date that is 1 year after the date of
enactment of this Act, regardless of whether regulations have
been issued to carry out such amendments by such effective
date, except that the amendments made by subsections (a)(5),
(b)(5), and (c)(5), relating to striking of certain sunset
provisions, shall take effect on January 1, 2009.
(2) Special rule for collective bargaining agreements.--In
the case of a group health plan maintained pursuant to one or
more collective bargaining agreements between employee
representatives and one or more employers ratified before the
date of the enactment of this Act, the amendments made by
this section shall not apply to plan years beginning before
the later of--
(A) the date on which the last of the collective bargaining
agreements relating to the plan terminates (determined
without regard to any extension thereof agreed to after the
date of the enactment of this Act), or
(B) January 1, 2009.
For purposes of subparagraph (A), any plan amendment made
pursuant to a collective bargaining agreement relating to the
plan which amends the plan solely to conform to any
requirement added by this section shall not be treated as a
termination of such collective bargaining agreement.
(f) Assuring Coordination.--The Secretary of Health and
Human Services, the Secretary of Labor, and the Secretary of
the Treasury may ensure, through the execution or revision of
an interagency memorandum of understanding among such
Secretaries, that--
(1) regulations, rulings, and interpretations issued by
such Secretaries relating to the same matter over which two
or more such Secretaries have responsibility under this
section (and the amendments made by this section) are
administered so as to have the same effect at all times; and
(2) coordination of policies relating to enforcing the same
requirements through such Secretaries in order to have a
coordinated enforcement strategy that avoids duplication of
enforcement efforts and assigns priorities in enforcement.
(g) Conforming Clerical Amendments.--
(1) ERISA heading.--
(A) In general.--The heading of section 712 of the Employee
Retirement Income Security Act of 1974 is amended to read as
follows:

``SEC. 712. PARITY IN MENTAL HEALTH AND SUBSTANCE USE
DISORDER BENEFITS.''.

(B) Clerical amendment.--The table of contents in section 1
of such Act is amended by striking the item relating to
section 712 and inserting the following new item:

``Sec. 712. Parity in mental health and substance use disorder
benefits.''.
(2) PHSA heading.--The heading of section 2705 of the
Public Health Service Act is amended to read as follows:

``SEC. 2705. PARITY IN MENTAL HEALTH AND SUBSTANCE USE
DISORDER BENEFITS.''.

(3) IRC heading.--
(A) In general.--The heading of section 9812 of the
Internal Revenue Code of 1986 is amended to read as follows:

``SEC. 9812. PARITY IN MENTAL HEALTH AND SUBSTANCE USE
DISORDER BENEFITS.''.

(B) Clerical amendment.--The table of sections for
subchapter B of chapter 100 of such Code is amended by
striking the item relating to section 9812 and inserting the
following new item:

``Sec. 9812. Parity in mental health and substance use disorder
benefits.''.

(h) GAO Study on Coverage and Exclusion of Mental Health
and Substance Use Disorder Diagnoses.--
(1) In general.--The Comptroller General of the United
States shall conduct a study that analyzes the specific
rates, patterns, and trends in coverage and exclusion of
specific mental health and substance use disorder diagnoses
by health plans and health insurance. The study shall include
an analysis of--
(A) specific coverage rates for all mental health
conditions and substance use disorders;
(B) which diagnoses are most commonly covered or excluded;
(C) whether implementation of this Act has affected trends
in coverage or exclusion of such diagnoses; and
(D) the impact of covering or excluding specific diagnoses
on participants' and enrollees' health, their health care
coverage, and the costs of delivering health care.
(2) Reports.--Not later than 3 years after the date of the
enactment of this Act, and 2 years after the date of
submission the first report under this paragraph, the
Comptroller General shall submit to Congress a report on the
results of the study conducted under paragraph (1).

TITLE VI--OTHER PROVISIONS

SEC. 601. SECURE RURAL SCHOOLS AND COMMUNITY SELF-
DETERMINATION PROGRAM.

(a) Reauthorization of the Secure Rural Schools and
Community Self-Determination Act of 2000.--The Secure Rural
Schools and Community Self-Determination Act of 2000 (16
U.S.C. 500 note; Public Law 106-393) is

[[Page S10376]]

amended by striking sections 1 through 403 and inserting the
following:

``SECTION 1. SHORT TITLE.

``This Act may be cited as the `Secure Rural Schools and
Community Self-Determination Act of 2000'.

``SEC. 2. PURPOSES.

``The purposes of this Act are--
``(1) to stabilize and transition payments to counties to
provide funding for schools and roads that supplements other
available funds;
``(2) to make additional investments in, and create
additional employment opportunities through, projects that--
``(A)(i) improve the maintenance of existing
infrastructure;
``(ii) implement stewardship objectives that enhance forest
ecosystems; and
``(iii) restore and improve land health and water quality;
``(B) enjoy broad-based support; and
``(C) have objectives that may include--
``(i) road, trail, and infrastructure maintenance or
obliteration;
``(ii) soil productivity improvement;
``(iii) improvements in forest ecosystem health;
``(iv) watershed restoration and maintenance;
``(v) the restoration, maintenance, and improvement of
wildlife and fish habitat;
``(vi) the control of noxious and exotic weeds; and
``(vii) the reestablishment of native species; and
``(3) to improve cooperative relationships among--
``(A) the people that use and care for Federal land; and
``(B) the agencies that manage the Federal land.

``SEC. 3. DEFINITIONS.

``In this Act:
``(1) Adjusted share.--The term `adjusted share' means the
number equal to the quotient obtained by dividing--
``(A) the number equal to the quotient obtained by
dividing--
``(i) the base share for the eligible county; by
``(ii) the income adjustment for the eligible county; by
``(B) the number equal to the sum of the quotients obtained
under subparagraph (A) and paragraph (8)(A) for all eligible
counties.
``(2) Base share.--The term `base share' means the number
equal to the average of--
``(A) the quotient obtained by dividing--
``(i) the number of acres of Federal land described in
paragraph (7)(A) in each eligible county; by
``(ii) the total number acres of Federal land in all
eligible counties in all eligible States; and
``(B) the quotient obtained by dividing--
``(i) the amount equal to the average of the 3 highest 25-
percent payments and safety net payments made to each
eligible State for each eligible county during the
eligibility period; by
``(ii) the amount equal to the sum of the amounts
calculated under clause (i) and paragraph (9)(B)(i) for all
eligible counties in all eligible States during the
eligibility period.
``(3) County payment.--The term `county payment' means the
payment for an eligible county calculated under section
101(b).
``(4) Eligible county.--The term `eligible county' means
any county that--
``(A) contains Federal land (as defined in paragraph (7));
and
``(B) elects to receive a share of the State payment or the
county payment under section 102(b).
``(5) Eligibility period.--The term `eligibility period'
means fiscal year 1986 through fiscal year 1999.
``(6) Eligible state.--The term `eligible State' means a
State or territory of the United States that received a 25-
percent payment for 1 or more fiscal years of the eligibility
period.
``(7) Federal land.--The term `Federal land' means--
``(A) land within the National Forest System, as defined in
section 11(a) of the Forest and Rangeland Renewable Resources
Planning Act of 1974 (16 U.S.C. 1609(a)) exclusive of the
National Grasslands and land utilization projects designated
as National Grasslands administered pursuant to the Act of
July 22, 1937 (7 U.S.C. 1010-1012); and
``(B) such portions of the revested Oregon and California
Railroad and reconveyed Coos Bay Wagon Road grant land as are
or may hereafter come under the jurisdiction of the
Department of the Interior, which have heretofore or may
hereafter be classified as timberlands, and power-site land
valuable for timber, that shall be managed, except as
provided in the former section 3 of the Act of August 28,
1937 (50 Stat. 875; 43 U.S.C. 1181c), for permanent forest
production.
``(8) 50-Percent adjusted share.--The term `50-percent
adjusted share' means the number equal to the quotient
obtained by dividing--
``(A) the number equal to the quotient obtained by
dividing--
``(i) the 50-percent base share for the eligible county; by
``(ii) the income adjustment for the eligible county; by
``(B) the number equal to the sum of the quotients obtained
under subparagraph (A) and paragraph (1)(A) for all eligible
counties.
``(9) 50-Percent base share.--The term `50-percent base
share' means the number equal to the average of--
``(A) the quotient obtained by dividing--
``(i) the number of acres of Federal land described in
paragraph (7)(B) in each eligible county; by
``(ii) the total number acres of Federal land in all
eligible counties in all eligible States; and
``(B) the quotient obtained by dividing--
``(i) the amount equal to the average of the 3 highest 50-
percent payments made to each eligible county during the
eligibility period; by
``(ii) the amount equal to the sum of the amounts
calculated under clause (i) and paragraph (2)(B)(i) for all
eligible counties in all eligible States during the
eligibility period.
``(10) 50-percent payment.--The term `50-percent payment'
means the payment that is the sum of the 50-percent share
otherwise paid to a county pursuant to title II of the Act of
August 28, 1937 (chapter 876; 50 Stat. 875; 43 U.S.C. 1181f),
and the payment made to a county pursuant to the Act of May
24, 1939 (chapter 144; 53 Stat. 753; 43 U.S.C. 1181f-1 et
seq.).
``(11) Full funding amount.--The term `full funding amount'
means--
``(A) $500,000,000 for fiscal year 2008; and
``(B) for fiscal year 2009 and each fiscal year thereafter,
the amount that is equal to 90 percent of the full funding
amount for the preceding fiscal year.
``(12) Income adjustment.--The term `income adjustment'
means the square of the quotient obtained by dividing--
``(A) the per capita personal income for each eligible
county; by
``(B) the median per capita personal income of all eligible
counties.
``(13) Per capita personal income.--The term `per capita
personal income' means the most recent per capita personal
income data, as determined by the Bureau of Economic
Analysis.
``(14) Safety net payments.--The term `safety net payments'
means the special payment amounts paid to States and counties
required by section 13982 or 13983 of the Omnibus Budget
Reconciliation Act of 1993 (Public Law 103-66; 16 U.S.C. 500
note; 43 U.S.C. 1181f note).
``(15) Secretary concerned.--The term `Secretary concerned'
means--
``(A) the Secretary of Agriculture or the designee of the
Secretary of Agriculture with respect to the Federal land
described in paragraph (7)(A); and
``(B) the Secretary of the Interior or the designee of the
Secretary of the Interior with respect to the Federal land
described in paragraph (7)(B).
``(16) State payment.--The term `State payment' means the
payment for an eligible State calculated under section
101(a).
``(17) 25-Percent payment.--The term `25-percent payment'
means the payment to States required by the sixth paragraph
under the heading of `FOREST SERVICE' in the Act of May 23,
1908 (35 Stat. 260; 16 U.S.C. 500), and section 13 of the Act
of March 1, 1911 (36 Stat. 963; 16 U.S.C. 500).

``TITLE I--SECURE PAYMENTS FOR STATES AND COUNTIES CONTAINING FEDERAL
LAND

``SEC. 101. SECURE PAYMENTS FOR STATES CONTAINING FEDERAL
LAND.

``(a) State Payment.--For each of fiscal years 2008 through
2011, the Secretary of Agriculture shall calculate for each
eligible State an amount equal to the sum of the products
obtained by multiplying--
``(1) the adjusted share for each eligible county within
the eligible State; by
``(2) the full funding amount for the fiscal year.
``(b) County Payment.--For each of fiscal years 2008
through 2011, the Secretary of the Interior shall calculate
for each eligible county that received a 50-percent payment
during the eligibility period an amount equal to the product
obtained by multiplying--
``(1) the 50-percent adjusted share for the eligible
county; by
``(2) the full funding amount for the fiscal year.

``SEC. 102. PAYMENTS TO STATES AND COUNTIES.

``(a) Payment Amounts.--Except as provided in section 103,
the Secretary of the Treasury shall pay to--
``(1) a State or territory of the United States an amount
equal to the sum of the amounts elected under subsection (b)
by each county within the State or territory for--
``(A) if the county is eligible for the 25-percent payment,
the share of the 25-percent payment; or
``(B) the share of the State payment of the eligible
county; and
``(2) a county an amount equal to the amount elected under
subsection (b) by each county for--
``(A) if the county is eligible for the 50-percent payment,
the 50-percent payment; or
``(B) the county payment for the eligible county.
``(b) Election To Receive Payment Amount.--
``(1) Election; submission of results.--
``(A) In general.--The election to receive a share of the
State payment, the county payment, a share of the State
payment and the county payment, a share of the 25-percent
payment, the 50-percent payment, or a share of the 25-percent
payment and the 50-percent payment, as applicable, shall be
made at the discretion of each affected county by August 1,
2008 (or as soon thereafter as the Secretary concerned
determines is practicable), and August 1 of each second
fiscal

[[Page S10377]]

year thereafter, in accordance with paragraph (2), and
transmitted to the Secretary concerned by the Governor of
each eligible State.
``(B) Failure to transmit.--If an election for an affected
county is not transmitted to the Secretary concerned by the
date specified under subparagraph (A), the affected county
shall be considered to have elected to receive a share of the
State payment, the county payment, or a share of the State
payment and the county payment, as applicable.
``(2) Duration of election.--
``(A) In general.--A county election to receive a share of
the 25-percent payment or 50-percent payment, as applicable,
shall be effective for 2 fiscal years.
``(B) Full funding amount.--If a county elects to receive a
share of the State payment or the county payment, the
election shall be effective for all subsequent fiscal years
through fiscal year 2011.
``(3) Source of payment amounts.--The payment to an
eligible State or eligible county under this section for a
fiscal year shall be derived from--
``(A) any amounts that are appropriated to carry out this
Act;
``(B) any revenues, fees, penalties, or miscellaneous
receipts, exclusive of deposits to any relevant trust fund,
special account, or permanent operating funds, received by
the Federal Government from activities by the Bureau of Land
Management or the Forest Service on the applicable Federal
land; and
``(C) to the extent of any shortfall, out of any amounts in
the Treasury of the United States not otherwise appropriated.
``(c) Distribution and Expenditure of Payments.--
``(1) Distribution method.--A State that receives a payment
under subsection (a) for Federal land described in section
3(7)(A) shall distribute the appropriate payment amount among
the appropriate counties in the State in accordance with--
``(A) the Act of May 23, 1908 (16 U.S.C. 500); and
``(B) section 13 of the Act of March 1, 1911 (36 Stat. 963;
16 U.S.C. 500).
``(2) Expenditure purposes.--Subject to subsection (d),
payments received by a State under subsection (a) and
distributed to counties in accordance with paragraph (1)
shall be expended as required by the laws referred to in
paragraph (1).
``(d) Expenditure Rules for Eligible Counties.--
``(1) Allocations.--
``(A) Use of portion in same manner as 25-percent payment
or 50-percent payment, as applicable.--Except as provided in
paragraph (3)(B), if an eligible county elects to receive its
share of the State payment or the county payment, not less
than 80 percent, but not more than 85 percent, of the funds
shall be expended in the same manner in which the 25-percent
payments or 50-percent payment, as applicable, are required
to be expended.
``(B) Election as to use of balance.--Except as provided in
subparagraph (C), an eligible county shall elect to do 1 or
more of the following with the balance of any funds not
expended pursuant to subparagraph (A):
``(i) Reserve any portion of the balance for projects in
accordance with title II.
``(ii) Reserve not more than 7 percent of the total share
for the eligible county of the State payment or the county
payment for projects in accordance with title III.
``(iii) Return the portion of the balance not reserved
under clauses (i) and (ii) to the Treasury of the United
States.
``(C) Counties with modest distributions.--In the case of
each eligible county to which more than $100,000, but less
than $350,000, is distributed for any fiscal year pursuant to
either or both of paragraphs (1)(B) and (2)(B) of subsection
(a), the eligible county, with respect to the balance of any
funds not expended pursuant to subparagraph (A) for that
fiscal year, shall--
``(i) reserve any portion of the balance for--

``(I) carrying out projects under title II;
``(II) carrying out projects under title III; or
``(III) a combination of the purposes described in
subclauses (I) and (II); or

``(ii) return the portion of the balance not reserved under
clause (i) to the Treasury of the United States.
``(2) Distribution of funds.--
``(A) In general.--Funds reserved by an eligible county
under subparagraph (B)(i) or (C)(i) of paragraph (1) for
carrying out projects under title II shall be deposited in a
special account in the Treasury of the United States.
``(B) Availability.--Amounts deposited under subparagraph
(A) shall--
``(i) be available for expenditure by the Secretary
concerned, without further appropriation; and
``(ii) remain available until expended in accordance with
title II.
``(3) Election.--
``(A) Notification.--
``(i) In general.--An eligible county shall notify the
Secretary concerned of an election by the eligible county
under this subsection not later than September 30, 2008 (or
as soon thereafter as the Secretary concerned determines is
practicable), and each September 30 thereafter for each
succeeding fiscal year.
``(ii) Failure to elect.--Except as provided in
subparagraph (B), if the eligible county fails to make an
election by the date specified in clause (i), the eligible
county shall--

``(I) be considered to have elected to expend 85 percent of
the funds in accordance with paragraph (1)(A); and
``(II) return the balance to the Treasury of the United
States.

``(B) Counties with minor distributions.--In the case of
each eligible county to which less than $100,000 is
distributed for any fiscal year pursuant to either or both of
paragraphs (1)(B) and (2)(B) of subsection (a), the eligible
county may elect to expend all the funds in the same manner
in which the 25-percent payments or 50-percent payments, as
applicable, are required to be expended.
``(e) Time for Payment.--The payments required under this
section for a fiscal year shall be made as soon as
practicable after the end of that fiscal year.

``SEC. 103. TRANSITION PAYMENTS TO STATES.

``(a) Definitions.--In this section:
``(1) Adjusted amount.--The term `adjusted amount' means,
with respect to a covered State--
``(A) for fiscal year 2008, 90 percent of--
``(i) the sum of the amounts paid for fiscal year 2006
under section 102(a)(2) (as in effect on September 29, 2006)
for the eligible counties in the covered State that have
elected under section 102(b) to receive a share of the State
payment for fiscal year 2008; and
``(ii) the sum of the amounts paid for fiscal year 2006
under section 103(a)(2) (as in effect on September 29, 2006)
for the eligible counties in the State of Oregon that have
elected under section 102(b) to receive the county payment
for fiscal year 2008;
``(B) for fiscal year 2009, 81 percent of--
``(i) the sum of the amounts paid for fiscal year 2006
under section 102(a)(2) (as in effect on September 29, 2006)
for the eligible counties in the covered State that have
elected under section 102(b) to receive a share of the State
payment for fiscal year 2009; and
``(ii) the sum of the amounts paid for fiscal year 2006
under section 103(a)(2) (as in effect on September 29, 2006)
for the eligible counties in the State of Oregon that have
elected under section 102(b) to receive the county payment
for fiscal year 2009; and
``(C) for fiscal year 2010, 73 percent of--
``(i) the sum of the amounts paid for fiscal year 2006
under section 102(a)(2) (as in effect on September 29, 2006)
for the eligible counties in the covered State that have
elected under section 102(b) to receive a share of the State
payment for fiscal year 2010; and
``(ii) the sum of the amounts paid for fiscal year 2006
under section 103(a)(2) (as in effect on September 29, 2006)
for the eligible counties in the State of Oregon that have
elected under section 102(b) to receive the county payment
for fiscal year 2010.
``(2) Covered state.--The term `covered State' means each
of the States of California, Louisiana, Oregon, Pennsylvania,
South Carolina, South Dakota, Texas, and Washington.
``(b) Transition Payments.--For each of fiscal years 2008
through 2010, in lieu of the payment amounts that otherwise
would have been made under paragraphs (1)(B) and (2)(B) of
section 102(a), the Secretary of the Treasury shall pay the
adjusted amount to each covered State and the eligible
counties within the covered State, as applicable.
``(c) Distribution of Adjusted Amount.--Except as provided
in subsection (d), it is the intent of Congress that the
method of distributing the payments under subsection (b)
among the counties in the covered States for each of fiscal
years 2008 through 2010 be in the same proportion that the
payments were distributed to the eligible counties in fiscal
year 2006.
``(d) Distribution of Payments in California.--The
following payments shall be distributed among the eligible
counties in the State of California in the same proportion
that payments under section 102(a)(2) (as in effect on
September 29, 2006) were distributed to the eligible counties
for fiscal year 2006:
``(1) Payments to the State of California under subsection
(b).
``(2) The shares of the eligible counties of the State
payment for California under section 102 for fiscal year
2011.
``(e) Treatment of Payments.--For purposes of this Act, any
payment made under subsection (b) shall be considered to be a
payment made under section 102(a).

``TITLE II--SPECIAL PROJECTS ON FEDERAL LAND

``SEC. 201. DEFINITIONS.

``In this title:
``(1) Participating county.--The term `participating
county' means an eligible county that elects under section
102(d) to expend a portion of the Federal funds received
under section 102 in accordance with this title.
``(2) Project funds.--The term `project funds' means all
funds an eligible county elects under section 102(d) to
reserve for expenditure in accordance with this title.
``(3) Resource advisory committee.--The term `resource
advisory committee' means--
``(A) an advisory committee established by the Secretary
concerned under section 205; or
``(B) an advisory committee determined by the Secretary
concerned to meet the requirements of section 205.
``(4) Resource management plan.--The term `resource
management plan' means--
``(A) a land use plan prepared by the Bureau of Land
Management for units of the Federal land described in section
3(7)(B) pursuant to section 202 of the Federal Land Policy
and Management Act of 1976 (43 U.S.C. 1712); or

[[Page S10378]]

``(B) a land and resource management plan prepared by the
Forest Service for units of the National Forest System
pursuant to section 6 of the Forest and Rangeland Renewable
Resources Planning Act of 1974 (16 U.S.C. 1604).

``SEC. 202. GENERAL LIMITATION ON USE OF PROJECT FUNDS.

``(a) Limitation.--Project funds shall be expended solely
on projects that meet the requirements of this title.
``(b) Authorized Uses.--Project funds may be used by the
Secretary concerned for the purpose of entering into and
implementing cooperative agreements with willing Federal
agencies, State and local governments, private and nonprofit
entities, and landowners for protection, restoration, and
enhancement of fish and wildlife habitat, and other resource
objectives consistent with the purposes of this Act on
Federal land and on non-Federal land where projects would
benefit the resources on Federal land.

``SEC. 203. SUBMISSION OF PROJECT PROPOSALS.

``(a) Submission of Project Proposals to Secretary
Concerned.--
``(1) Projects funded using project funds.--Not later than
September 30 for fiscal year 2008 (or as soon thereafter as
the Secretary concerned determines is practicable), and each
September 30 thereafter for each succeeding fiscal year
through fiscal year 2011, each resource advisory committee
shall submit to the Secretary concerned a description of any
projects that the resource advisory committee proposes the
Secretary undertake using any project funds reserved by
eligible counties in the area in which the resource advisory
committee has geographic jurisdiction.
``(2) Projects funded using other funds.--A resource
advisory committee may submit to the Secretary concerned a
description of any projects that the committee proposes the
Secretary undertake using funds from State or local
governments, or from the private sector, other than project
funds and funds appropriated and otherwise available to do
similar work.
``(3) Joint projects.--Participating counties or other
persons may propose to pool project funds or other funds,
described in paragraph (2), and jointly propose a project or
group of projects to a resource advisory committee
established under section 205.
``(b) Required Description of Projects.--In submitting
proposed projects to the Secretary concerned under subsection
(a), a resource advisory committee shall include in the
description of each proposed project the following
information:
``(1) The purpose of the project and a description of how
the project will meet the purposes of this title.
``(2) The anticipated duration of the project.
``(3) The anticipated cost of the project.
``(4) The proposed source of funding for the project,
whether project funds or other funds.
``(5)(A) Expected outcomes, including how the project will
meet or exceed desired ecological conditions, maintenance
objectives, or stewardship objectives.
``(B) An estimate of the amount of any timber, forage, and
other commodities and other economic activity, including jobs
generated, if any, anticipated as part of the project.
``(6) A detailed monitoring plan, including funding needs
and sources, that--
``(A) tracks and identifies the positive or negative
impacts of the project, implementation, and provides for
validation monitoring; and
``(B) includes an assessment of the following:
``(i) Whether or not the project met or exceeded desired
ecological conditions; created local employment or training
opportunities, including summer youth jobs programs such as
the Youth Conservation Corps where appropriate.
``(ii) Whether the project improved the use of, or added
value to, any products removed from land consistent with the
purposes of this title.
``(7) An assessment that the project is to be in the public
interest.
``(c) Authorized Projects.--Projects proposed under
subsection (a) shall be consistent with section 2.

``SEC. 204. EVALUATION AND APPROVAL OF PROJECTS BY SECRETARY
CONCERNED.

``(a) Conditions for Approval of Proposed Project.--The
Secretary concerned may make a decision to approve a project
submitted by a resource advisory committee under section 203
only if the proposed project satisfies each of the following
conditions:
``(1) The project complies with all applicable Federal laws
(including regulations).
``(2) The project is consistent with the applicable
resource management plan and with any watershed or subsequent
plan developed pursuant to the resource management plan and
approved by the Secretary concerned.
``(3) The project has been approved by the resource
advisory committee in accordance with section 205, including
the procedures issued under subsection (e) of that section.
``(4) A project description has been submitted by the
resource advisory committee to the Secretary concerned in
accordance with section 203.
``(5) The project will improve the maintenance of existing
infrastructure, implement stewardship objectives that enhance
forest ecosystems, and restore and improve land health and
water quality.
``(b) Environmental Reviews.--
``(1) Request for payment by county.--The Secretary
concerned may request the resource advisory committee
submitting a proposed project to agree to the use of project
funds to pay for any environmental review, consultation, or
compliance with applicable environmental laws required in
connection with the project.
``(2) Conduct of environmental review.--If a payment is
requested under paragraph (1) and the resource advisory
committee agrees to the expenditure of funds for this
purpose, the Secretary concerned shall conduct environmental
review, consultation, or other compliance responsibilities in
accordance with Federal laws (including regulations).
``(3) Effect of refusal to pay.--
``(A) In general.--If a resource advisory committee does
not agree to the expenditure of funds under paragraph (1),
the project shall be deemed withdrawn from further
consideration by the Secretary concerned pursuant to this
title.
``(B) Effect of withdrawal.--A withdrawal under
subparagraph (A) shall be deemed to be a rejection of the
project for purposes of section 207(c).
``(c) Decisions of Secretary Concerned.--
``(1) Rejection of projects.--
``(A) In general.--A decision by the Secretary concerned to
reject a proposed project shall be at the sole discretion of
the Secretary concerned.
``(B) No administrative appeal or judicial review.--
Notwithstanding any other provision of law, a decision by the
Secretary concerned to reject a proposed project shall not be
subject to administrative appeal or judicial review.
``(C) Notice of rejection.--Not later than 30 days after
the date on which the Secretary concerned makes the rejection
decision, the Secretary concerned shall notify in writing the
resource advisory committee that submitted the proposed
project of the rejection and the reasons for rejection.
``(2) Notice of project approval.--The Secretary concerned
shall publish in the Federal Register notice of each project
approved under subsection (a) if the notice would be required
had the project originated with the Secretary.
``(d) Source and Conduct of Project.--Once the Secretary
concerned accepts a project for review under section 203, the
acceptance shall be deemed a Federal action for all purposes.
``(e) Implementation of Approved Projects.--
``(1) Cooperation.--Notwithstanding chapter 63 of title 31,
United States Code, using project funds the Secretary
concerned may enter into contracts, grants, and cooperative
agreements with States and local governments, private and
nonprofit entities, and landowners and other persons to
assist the Secretary in carrying out an approved project.
``(2) Best value contracting.--
``(A) In general.--For any project involving a contract
authorized by paragraph (1) the Secretary concerned may elect
a source for performance of the contract on a best value
basis.
``(B) Factors.--The Secretary concerned shall determine
best value based on such factors as--
``(i) the technical demands and complexity of the work to
be done;
``(ii)(I) the ecological objectives of the project; and
``(II) the sensitivity of the resources being treated;
``(iii) the past experience by the contractor with the type
of work being done, using the type of equipment proposed for
the project, and meeting or exceeding desired ecological
conditions; and
``(iv) the commitment of the contractor to hiring highly
qualified workers and local residents.
``(3) Merchantable timber contracting pilot program.--
``(A) Establishment.--The Secretary concerned shall
establish a pilot program to implement a certain percentage
of approved projects involving the sale of merchantable
timber using separate contracts for--
``(i) the harvesting or collection of merchantable timber;
and
``(ii) the sale of the timber.
``(B) Annual percentages.--Under the pilot program, the
Secretary concerned shall ensure that, on a nationwide basis,
not less than the following percentage of all approved
projects involving the sale of merchantable timber are
implemented using separate contracts:
``(i) For fiscal year 2008, 35 percent.
``(ii) For fiscal year 2009, 45 percent.
``(iii) For each of fiscal years 2010 and 2011, 50 percent.
``(C) Inclusion in pilot program.--The decision whether to
use separate contracts to implement a project involving the
sale of merchantable timber shall be made by the Secretary
concerned after the approval of the project under this title.
``(D) Assistance.--
``(i) In general.--The Secretary concerned may use funds
from any appropriated account available to the Secretary for
the Federal land to assist in the administration of projects
conducted under the pilot program.
``(ii) Maximum amount of assistance.--The total amount
obligated under this subparagraph may not exceed $1,000,000
for any fiscal year during which the pilot program is in
effect.
``(E) Review and report.--

[[Page S10379]]

``(i) Initial report.--Not later than September 30, 2010,
the Comptroller General shall submit to the Committees on
Agriculture, Nutrition, and Forestry and Energy and Natural
Resources of the Senate and the Committees on Agriculture and
Natural Resources of the House of Representatives a report
assessing the pilot program.
``(ii) Annual report.--The Secretary concerned shall submit
to the Committees on Agriculture, Nutrition, and Forestry and
Energy and Natural Resources of the Senate and the Committees
on Agriculture and Natural Resources of the House of
Representatives an annual report describing the results of
the pilot program.
``(f) Requirements for Project Funds.--The Secretary shall
ensure that at least 50 percent of all project funds be used
for projects that are primarily dedicated--
``(1) to road maintenance, decommissioning, or
obliteration; or
``(2) to restoration of streams and watersheds.

``SEC. 205. RESOURCE ADVISORY COMMITTEES.

``(a) Establishment and Purpose of Resource Advisory
Committees.--
``(1) Establishment.--The Secretary concerned shall
establish and maintain resource advisory committees to
perform the duties in subsection (b), except as provided in
paragraph (4).
``(2) Purpose.--The purpose of a resource advisory
committee shall be--
``(A) to improve collaborative relationships; and
``(B) to provide advice and recommendations to the land
management agencies consistent with the purposes of this
title.
``(3) Access to resource advisory committees.--To ensure
that each unit of Federal land has access to a resource
advisory committee, and that there is sufficient interest in
participation on a committee to ensure that membership can be
balanced in terms of the points of view represented and the
functions to be performed, the Secretary concerned may,
establish resource advisory committees for part of, or 1 or
more, units of Federal land.
``(4) Existing advisory committees.--
``(A) In general.--An advisory committee that meets the
requirements of this section, a resource advisory committee
established before September 29, 2006, or an advisory
committee determined by the Secretary concerned before
September 29, 2006, to meet the requirements of this section
may be deemed by the Secretary concerned to be a resource
advisory committee for the purposes of this title.
``(B) Charter.--A charter for a committee described in
subparagraph (A) that was filed on or before September 29,
2006, shall be considered to be filed for purposes of this
Act.
``(C) Bureau of land management advisory committees.--The
Secretary of the Interior may deem a resource advisory
committee meeting the requirements of subpart 1784 of part
1780 of title 43, Code of Federal Regulations, as a resource
advisory committee for the purposes of this title.
``(b) Duties.--A resource advisory committee shall--
``(1) review projects proposed under this title by
participating counties and other persons;
``(2) propose projects and funding to the Secretary
concerned under section 203;
``(3) provide early and continuous coordination with
appropriate land management agency officials in recommending
projects consistent with purposes of this Act under this
title;
``(4) provide frequent opportunities for citizens,
organizations, tribes, land management agencies, and other
interested parties to participate openly and meaningfully,
beginning at the early stages of the project development
process under this title;
``(5)(A) monitor projects that have been approved under
section 204; and
``(B) advise the designated Federal official on the
progress of the monitoring efforts under subparagraph (A);
and
``(6) make recommendations to the Secretary concerned for
any appropriate changes or adjustments to the projects being
monitored by the resource advisory committee.
``(c) Appointment by the Secretary.--
``(1) Appointment and term.--
``(A) In general.--The Secretary concerned, shall appoint
the members of resource advisory committees for a term of 4
years beginning on the date of appointment.
``(B) Reappointment.--The Secretary concerned may reappoint
members to subsequent 4-year terms.
``(2) Basic requirements.--The Secretary concerned shall
ensure that each resource advisory committee established
meets the requirements of subsection (d).
``(3) Initial appointment.--Not later than 180 days after
the date of the enactment of this Act, the Secretary
concerned shall make initial appointments to the resource
advisory committees.
``(4) Vacancies.--The Secretary concerned shall make
appointments to fill vacancies on any resource advisory
committee as soon as practicable after the vacancy has
occurred.
``(5) Compensation.--Members of the resource advisory
committees shall not receive any compensation.
``(d) Composition of Advisory Committee.--
``(1) Number.--Each resource advisory committee shall be
comprised of 15 members.
``(2) Community interests represented.--Committee members
shall be representative of the interests of the following 3
categories:
``(A) 5 persons that--
``(i) represent organized labor or non-timber forest
product harvester groups;
``(ii) represent developed outdoor recreation, off highway
vehicle users, or commercial recreation activities;
``(iii) represent--

``(I) energy and mineral development interests; or
``(II) commercial or recreational fishing interests;

``(iv) represent the commercial timber industry; or
``(v) hold Federal grazing or other land use permits, or
represent nonindustrial private forest land owners, within
the area for which the committee is organized.
``(B) 5 persons that represent--
``(i) nationally recognized environmental organizations;
``(ii) regionally or locally recognized environmental
organizations;
``(iii) dispersed recreational activities;
``(iv) archaeological and historical interests; or
``(v) nationally or regionally recognized wild horse and
burro interest groups, wildlife or hunting organizations, or
watershed associations.
``(C) 5 persons that--
``(i) hold State elected office (or a designee);
``(ii) hold county or local elected office;
``(iii) represent American Indian tribes within or adjacent
to the area for which the committee is organized;
``(iv) are school officials or teachers; or
``(v) represent the affected public at large.
``(3) Balanced representation.--In appointing committee
members from the 3 categories in paragraph (2), the Secretary
concerned shall provide for balanced and broad representation
from within each category.
``(4) Geographic distribution.--The members of a resource
advisory committee shall reside within the State in which the
committee has jurisdiction and, to extent practicable, the
Secretary concerned shall ensure local representation in each
category in paragraph (2).
``(5) Chairperson.--A majority on each resource advisory
committee shall select the chairperson of the committee.
``(e) Approval Procedures.--
``(1) In general.--Subject to paragraph (3), each resource
advisory committee shall establish procedures for proposing
projects to the Secretary concerned under this title.
``(2) Quorum.--A quorum must be present to constitute an
official meeting of the committee.
``(3) Approval by majority of members.--A project may be
proposed by a resource advisory committee to the Secretary
concerned under section 203(a), if the project has been
approved by a majority of members of the committee from each
of the 3 categories in subsection (d)(2).
``(f) Other Committee Authorities and Requirements.--
``(1) Staff assistance.--A resource advisory committee may
submit to the Secretary concerned a request for periodic
staff assistance from Federal employees under the
jurisdiction of the Secretary.
``(2) Meetings.--All meetings of a resource advisory
committee shall be announced at least 1 week in advance in a
local newspaper of record and shall be open to the public.
``(3) Records.--A resource advisory committee shall
maintain records of the meetings of the committee and make
the records available for public inspection.

``SEC. 206. USE OF PROJECT FUNDS.

``(a) Agreement Regarding Schedule and Cost of Project.--
``(1) Agreement between parties.--The Secretary concerned
may carry out a project submitted by a resource advisory
committee under section 203(a) using project funds or other
funds described in section 203(a)(2), if, as soon as
practicable after the issuance of a decision document for the
project and the exhaustion of all administrative appeals and
judicial review of the project decision, the Secretary
concerned and the resource advisory committee enter into an
agreement addressing, at a minimum, the following:
``(A) The schedule for completing the project.
``(B) The total cost of the project, including the level of
agency overhead to be assessed against the project.
``(C) For a multiyear project, the estimated cost of the
project for each of the fiscal years in which it will be
carried out.
``(D) The remedies for failure of the Secretary concerned
to comply with the terms of the agreement consistent with
current Federal law.
``(2) Limited use of federal funds.--The Secretary
concerned may decide, at the sole discretion of the Secretary
concerned, to cover the costs of a portion of an approved
project using Federal funds appropriated or otherwise
available to the Secretary for the same purposes as the
project.
``(b) Transfer of Project Funds.--
``(1) Initial transfer required.--As soon as practicable
after the agreement is reached under subsection (a) with
regard to a project to be funded in whole or in part using
project funds, or other funds described in section 203(a)(2),
the Secretary concerned shall transfer to the applicable unit
of National Forest System land or Bureau of Land Management
District an amount of project funds equal to--
``(A) in the case of a project to be completed in a single
fiscal year, the total

[[Page S10380]]

amount specified in the agreement to be paid using project
funds, or other funds described in section 203(a)(2); or
``(B) in the case of a multiyear project, the amount
specified in the agreement to be paid using project funds, or
other funds described in section 203(a)(2) for the first
fiscal year.
``(2) Condition on project commencement.--The unit of
National Forest System land or Bureau of Land Management
District concerned, shall not commence a project until the
project funds, or other funds described in section 203(a)(2)
required to be transferred under paragraph (1) for the
project, have been made available by the Secretary concerned.
``(3) Subsequent transfers for multiyear projects.--
``(A) In general.--For the second and subsequent fiscal
years of a multiyear project to be funded in whole or in part
using project funds, the unit of National Forest System land
or Bureau of Land Management District concerned shall use the
amount of project funds required to continue the project in
that fiscal year according to the agreement entered into
under subsection (a).
``(B) Suspension of work.--The Secretary concerned shall
suspend work on the project if the project funds required by
the agreement in the second and subsequent fiscal years are
not available.

``SEC. 207. AVAILABILITY OF PROJECT FUNDS.

``(a) Submission of Proposed Projects To Obligate Funds.--
By September 30, 2008 (or as soon thereafter as the Secretary
concerned determines is practicable), and each September 30
thereafter for each succeeding fiscal year through fiscal
year 2011, a resource advisory committee shall submit to the
Secretary concerned pursuant to section 203(a)(1) a
sufficient number of project proposals that, if approved,
would result in the obligation of at least the full amount of
the project funds reserved by the participating county in the
preceding fiscal year.
``(b) Use or Transfer of Unobligated Funds.--Subject to
section 208, if a resource advisory committee fails to comply
with subsection (a) for a fiscal year, any project funds
reserved by the participating county in the preceding fiscal
year and remaining unobligated shall be available for use as
part of the project submissions in the next fiscal year.
``(c) Effect of Rejection of Projects.--Subject to section
208, any project funds reserved by a participating county in
the preceding fiscal year that are unobligated at the end of
a fiscal year because the Secretary concerned has rejected
one or more proposed projects shall be available for use as
part of the project submissions in the next fiscal year.
``(d) Effect of Court Orders.--
``(1) In general.--If an approved project under this Act is
enjoined or prohibited by a Federal court, the Secretary
concerned shall return the unobligated project funds related
to the project to the participating county or counties that
reserved the funds.
``(2) Expenditure of funds.--The returned funds shall be
available for the county to expend in the same manner as the
funds reserved by the county under subparagraph (B) or (C)(i)
of section 102(d)(1).

``SEC. 208. TERMINATION OF AUTHORITY.

``(a) In General.--The authority to initiate projects under
this title shall terminate on September 30, 2011.
``(b) Deposits in Treasury.--Any project funds not
obligated by September 30, 2012, shall be deposited in the
Treasury of the United States.

``TITLE III--COUNTY FUNDS

``SEC. 301. DEFINITIONS.

``In this title:
``(1) County funds.--The term `county funds' means all
funds an eligible county elects under section 102(d) to
reserve for expenditure in accordance with this title.
``(2) Participating county.--The term `participating
county' means an eligible county that elects under section
102(d) to expend a portion of the Federal funds received
under section 102 in accordance with this title.

``SEC. 302. USE.

``(a) Authorized Uses.--A participating county, including
any applicable agencies of the participating county, shall
use county funds, in accordance with this title, only--
``(1) to carry out activities under the Firewise
Communities program to provide to homeowners in fire-
sensitive ecosystems education on, and assistance with
implementing, techniques in home siting, home construction,
and home landscaping that can increase the protection of
people and property from wildfires;
``(2) to reimburse the participating county for search and
rescue and other emergency services, including firefighting,
that are--
``(A) performed on Federal land after the date on which the
use was approved under subsection (b);
``(B) paid for by the participating county; and
``(3) to develop community wildfire protection plans in
coordination with the appropriate Secretary concerned.
``(b) Proposals.--A participating county shall use county
funds for a use described in subsection (a) only after a 45-
day public comment period, at the beginning of which the
participating county shall--
``(1) publish in any publications of local record a
proposal that describes the proposed use of the county funds;
and
``(2) submit the proposal to any resource advisory
committee established under section 205 for the participating
county.

``SEC. 303. CERTIFICATION.

``(a) In General.--Not later than February 1 of the year
after the year in which any county funds were expended by a
participating county, the appropriate official of the
participating county shall submit to the Secretary concerned
a certification that the county funds expended in the
applicable year have been used for the uses authorized under
section 302(a), including a description of the amounts
expended and the uses for which the amounts were expended.
``(b) Review.--The Secretary concerned shall review the
certifications submitted under subsection (a) as the
Secretary concerned determines to be appropriate.

``SEC. 304. TERMINATION OF AUTHORITY.

``(a) In General.--The authority to initiate projects under
this title terminates on September 30, 2011.
``(b) Availability.--Any county funds not obligated by
September 30, 2012, shall be returned to the Treasury of the
United States.

``TITLE IV--MISCELLANEOUS PROVISIONS

``SEC. 401. REGULATIONS.

``The Secretary of Agriculture and the Secretary of the
Interior shall issue regulations to carry out the purposes of
this Act.

``SEC. 402. AUTHORIZATION OF APPROPRIATIONS.

``There are authorized to be appropriated such sums as are
necessary to carry out this Act for each of fiscal years 2008
through 2011.

``SEC. 403. TREATMENT OF FUNDS AND REVENUES.

``(a) Relation to Other Appropriations.--Funds made
available under section 402 and funds made available to a
Secretary concerned under section 206 shall be in addition to
any other annual appropriations for the Forest Service and
the Bureau of Land Management.
``(b) Deposit of Revenues and Other Funds.--All revenues
generated from projects pursuant to title II, including any
interest accrued from the revenues, shall be deposited in the
Treasury of the United States.''.
(b) Forest Receipt Payments to Eligible States and
Counties.--
(1) Act of may 23, 1908.--The sixth paragraph under the
heading ``FOREST SERVICE'' in the Act of May 23, 1908 (16
U.S.C. 500) is amended in the first sentence by striking
``twenty-five percentum'' and all that follows through
``shall be paid'' and inserting the following: ``an amount
equal to the annual average of 25 percent of all amounts
received for the applicable fiscal year and each of the
preceding 6 fiscal years from each national forest shall be
paid''.
(2) Weeks law.--Section 13 of the Act of March 1, 1911
(commonly known as the ``Weeks Law'') (16 U.S.C. 500) is
amended in the first sentence by striking ``twenty-five
percentum'' and all that follows through ``shall be paid''
and inserting the following: ``an amount equal to the annual
average of 25 percent of all amounts received for the
applicable fiscal year and each of the preceding 6 fiscal
years from each national forest shall be paid''.
(c) Payments in Lieu of Taxes.--
(1) In general.--Section 6906 of title 31, United States
Code, is amended to read as follows:

``Sec. 6906. Funding

``For each of fiscal years 2008 through 2012--
``(1) each county or other eligible unit of local
government shall be entitled to payment under this chapter;
and
``(2) sums shall be made available to the Secretary of the
Interior for obligation or expenditure in accordance with
this chapter.''.
(2) Conforming amendment.--The table of sections for
chapter 69 of title 31, United States Code, is amended by
striking the item relating to section 6906 and inserting the
following:

``6906. Funding.''.

(3) Budget scorekeeping.--
(A) In general.--Notwithstanding the Budget Scorekeeping
Guidelines and the accompanying list of programs and accounts
set forth in the joint explanatory statement of the committee
of conference accompanying Conference Report 105-217, the
section in this title regarding Payments in Lieu of Taxes
shall be treated in the baseline for purposes of section 257
of the Balanced Budget and Emergency Deficit Control Act of
1985 (as in effect prior to September 30, 2002), and by the
Chairmen of the House and Senate Budget Committees, as
appropriate, for purposes of budget enforcement in the House
and Senate, and under the Congressional Budget Act of 1974 as
if Payment in Lieu of Taxes (14-1114-0-1-806) were an account
designated as Appropriated Entitlements and Mandatories for
Fiscal Year 1997 in the joint explanatory statement of the
committee of conference accompanying Conference Report 105-
217.
(B) Effective date.--This paragraph shall remain in effect
for the fiscal years to which the entitlement in section 6906
of title 31, United States Code (as amended by paragraph
(1)), applies.

SEC. 602. TRANSFER TO ABANDONED MINE RECLAMATION FUND.

Subparagraph (C) of section 402(i)(1) of the Surface Mining
Control and Reclamation Act of 1977 (30 U.S.C. 1232(i)(1)) is
amended by striking ``and $9,000,000 on October 1, 2009'' and
inserting ``$9,000,000 on October 1, 2009, and $9,000,000 on
October 1, 2010''.

[[Page S10381]]

TITLE VII--DISASTER RELIEF

Subtitle A--Heartland and Hurricane Ike Disaster Relief

SEC. 701. SHORT TITLE.

This subtitle may be cited as the ``Heartland Disaster Tax
Relief Act of 2008''.

SEC. 702. TEMPORARY TAX RELIEF FOR AREAS DAMAGED BY 2008
MIDWESTERN SEVERE STORMS, TORNADOS, AND
FLOODING.

(a) In General.--Subject to the modifications described in
this section, the following provisions of or relating to the
Internal Revenue Code of 1986 shall apply to any Midwestern
disaster area in addition to the areas to which such
provisions otherwise apply:
(1) Go zone benefits.--
(A) Section 1400N (relating to tax benefits) other than
subsections (b), (d), (e), (i), (j), (m), and (o) thereof.
(B) Section 1400O (relating to education tax benefits).
(C) Section 1400P (relating to housing tax benefits).
(D) Section 1400Q (relating to special rules for use of
retirement funds).
(E) Section 1400R(a) (relating to employee retention credit
for employers).
(F) Section 1400S (relating to additional tax relief) other
than subsection (d) thereof.
(G) Section 1400T (relating to special rules for mortgage
revenue bonds).
(2) Other benefits included in katrina emergency tax relief
act of 2005.--Sections 302, 303, 304, 401, and 405 of the
Katrina Emergency Tax Relief Act of 2005.
(b) Midwestern Disaster Area.--
(1) In general.--For purposes of this section and for
applying the substitutions described in subsections (d) and
(e), the term ``Midwestern disaster area'' means an area--
(A) with respect to which a major disaster has been
declared by the President on or after May 20, 2008, and
before August 1, 2008, under section 401 of the Robert T.
Stafford Disaster Relief and Emergency Assistance Act by
reason of severe storms, tornados, or flooding occurring in
any of the States of Arkansas, Illinois, Indiana, Iowa,
Kansas, Michigan, Minnesota, Missouri, Nebraska, and
Wisconsin, and
(B) determined by the President to warrant individual or
individual and public assistance from the Federal Government
under such Act with respect to damages attributable to such
severe storms, tornados, or flooding.
(2) Certain benefits available to areas eligible only for
public assistance.--For purposes of applying this section to
benefits under the following provisions, paragraph (1) shall
be applied without regard to subparagraph (B):
(A) Sections 1400Q, 1400S(b), and 1400S(d) of the Internal
Revenue Code of 1986.
(B) Sections 302, 401, and 405 of the Katrina Emergency Tax
Relief Act of 2005.
(c) References.--
(1) Area.--Any reference in such provisions to the
Hurricane Katrina disaster area or the Gulf Opportunity Zone
shall be treated as a reference to any Midwestern disaster
area and any reference to the Hurricane Katrina disaster area
or the Gulf Opportunity Zone within a State shall be treated
as a reference to all Midwestern disaster areas within the
State.
(2) Items attributable to disaster.--Any reference in such
provisions to any loss, damage, or other item attributable to
Hurricane Katrina shall be treated as a reference to any
loss, damage, or other item attributable to the severe
storms, tornados, or flooding giving rise to any Presidential
declaration described in subsection (b)(1)(A).
(3) Applicable disaster date.--For purposes of applying the
substitutions described in subsections (d) and (e), the term
``applicable disaster date'' means, with respect to any
Midwestern disaster area, the date on which the severe
storms, tornados, or flooding giving rise to the Presidential
declaration described in subsection (b)(1)(A) occurred.
(d) Modifications to 1986 Code.--The following provisions
of the Internal Revenue Code of 1986 shall be applied with
the following modifications:
(1) Tax-exempt bond financing.--Section 1400N(a)--
(A) by substituting ``qualified Midwestern disaster area
bond'' for ``qualified Gulf Opportunity Zone Bond'' each
place it appears, except that in determining whether a bond
is a qualified Midwestern disaster area bond--
(i) paragraph (2)(A)(i) shall be applied by only treating
costs as qualified project costs if--

(I) in the case of a project involving a private business
use (as defined in section 141(b)(6)), either the person
using the property suffered a loss in a trade or business
attributable to the severe storms, tornados, or flooding
giving rise to any Presidential declaration described in
subsection (b)(1)(A) or is a person designated for purposes
of this section by the Governor of the State in which the
project is located as a person carrying on a trade or
business replacing a trade or business with respect to which
another person suffered such a loss, and
(II) in the case of a project relating to public utility
property, the project involves repair or reconstruction of
public utility property damaged by such severe storms,
tornados, or flooding, and

(ii) paragraph (2)(A)(ii) shall be applied by treating an
issue as a qualified mortgage issue only if 95 percent or
more of the net proceeds (as defined in section 150(a)(3)) of
the issue are to be used to provide financing for mortgagors
who suffered damages to their principal residences
attributable to such severe storms, tornados, or flooding,
(B) by substituting ``any State in which a Midwestern
disaster area is located'' for ``the State of Alabama,
Louisiana, or Mississippi'' in paragraph (2)(B),
(C) by substituting ``designated for purposes of this
section (on the basis of providing assistance to areas in the
order in which such assistance is most needed)'' for
``designated for purposes of this section'' in paragraph
(2)(C),
(D) by substituting ``January 1, 2013'' for ``January 1,
2011'' in paragraph (2)(D),
(E) in paragraph (3)(A)--
(i) by substituting ``$1,000'' for ``$2,500'', and
(ii) by substituting ``before the earliest applicable
disaster date for Midwestern disaster areas within the
State'' for ``before August 28, 2005'',
(F) by substituting ``qualified Midwestern disaster area
repair or construction'' for ``qualified GO Zone repair or
construction'' each place it appears,
(G) by substituting ``after the date of the enactment of
the Heartland Disaster Tax Relief Act of 2008 and before
January 1, 2013'' for ``after the date of the enactment of
this paragraph and before January 1, 2011'' in paragraph
(7)(C), and
(H) by disregarding paragraph (8) thereof.
(2) Low-income housing credit.--Section 1400N(c)--
(A) only with respect to calendar years 2008, 2009, and
2010,
(B) by substituting ``Disaster Recovery Assistance housing
amount'' for ``Gulf Opportunity housing amount'' each place
it appears,
(C) in paragraph (1)(B)--
(i) by substituting ``$8.00'' for ``$18.00'', and
(ii) by substituting ``before the earliest applicable
disaster date for Midwestern disaster areas within the
State'' for ``before August 28, 2005'' , and
(D) determined without regard to paragraphs (2), (3), (4),
(5), and (6) thereof.
(3) Expensing for certain demolition and clean-up costs.--
Section 1400N(f)--
(A) by substituting ``qualified Disaster Recovery
Assistance clean-up cost'' for ``qualified Gulf Opportunity
Zone clean-up cost'' each place it appears,
(B) by substituting ``beginning on the applicable disaster
date and ending on December 31, 2010'' for ``beginning on
August 28, 2005, and ending on December 31, 2007'' in
paragraph (2), and
(C) by treating costs as qualified Disaster Recovery
Assistance clean-up costs only if the removal of debris or
demolition of any structure was necessary due to damage
attributable to the severe storms, tornados, or flooding
giving rise to any Presidential declaration described in
subsection (b)(1)(A).
(4) Extension of expensing for environmental remediation
costs.--Section 1400N(g)--
(A) by substituting ``the applicable disaster date'' for
``August 28, 2005'' each place it appears,
(B) by substituting ``January 1, 2011'' for ``January 1,
2008'' in paragraph (1),
(C) by substituting ``December 31, 2010'' for ``December
31, 2007'' in paragraph (1), and
(D) by treating a site as a qualified contaminated site
only if the release (or threat of release) or disposal of a
hazardous substance at the site was attributable to the
severe storms, tornados, or flooding giving rise to any
Presidential declaration described in subsection (b)(1)(A).
(5) Increase in rehabilitation credit.--Section 1400N(h),
as amended by this Act--
(A) by substituting ``the applicable disaster date'' for
``August 28, 2005'',
(B) by substituting ``December 31, 2011'' for ``December
31, 2009'' in paragraph (1), and
(C) by only applying such subsection to qualified
rehabilitation expenditures with respect to any building or
structure which was damaged or destroyed as a result of the
severe storms, tornados, or flooding giving rise to any
Presidential declaration described in subsection (b)(1)(A).
(6) Treatment of net operating losses attributable to
disaster losses.--Section 1400N(k)--
(A) by substituting ``qualified Disaster Recovery
Assistance loss'' for ``qualified Gulf Opportunity Zone
loss'' each place it appears,
(B) by substituting ``after the day before the applicable
disaster date, and before January 1, 2011'' for ``after
August 27, 2005, and before January 1, 2008'' each place it
appears,
(C) by substituting ``the applicable disaster date'' for
``August 28, 2005'' in paragraph (2)(B)(ii)(I),
(D) by substituting ``qualified Disaster Recovery
Assistance property'' for ``qualified Gulf Opportunity Zone
property'' in paragraph (2)(B)(iv), and
(E) by substituting ``qualified Disaster Recovery
Assistance casualty loss'' for ``qualified Gulf Opportunity
Zone casualty loss'' each place it appears.
(7) Credit to holders of tax credit bonds.--Section
1400N(l)--
(A) by substituting ``Midwestern tax credit bond'' for
``Gulf tax credit bond'' each place it appears,
(B) by substituting ``any State in which a Midwestern
disaster area is located or any instrumentality of the
State'' for ``the State of Alabama, Louisiana, or
Mississippi'' in paragraph (4)(A)(i),
(C) by substituting ``after December 31, 2008 and before
January 1, 2010'' for ``after December 31, 2005, and before
January 1, 2007'',

[[Page S10382]]

(D) by substituting ``shall not exceed $100,000,000 for any
State with an aggregate population located in all Midwestern
disaster areas within the State of at least 2,000,000,
$50,000,000 for any State with an aggregate population
located in all Midwestern disaster areas within the State of
at least 1,000,000 but less than 2,000,000, and zero for any
other State. The population of a State within any area shall
be determined on the basis of the most recent census estimate
of resident population released by the Bureau of Census
before the earliest applicable disaster date for Midwestern
disaster areas within the State.'' for ``shall not exceed''
and all that follows in paragraph (4)(C), and
(E) by substituting ``the earliest applicable disaster date
for Midwestern disaster areas within the State'' for ``August
28, 2005'' in paragraph (5)(A).
(8) Education tax benefits.--Section 1400O, by substituting
``2008 or 2009'' for ``2005 or 2006''.
(9) Housing tax benefits.--Section 1400P, by substituting
``the applicable disaster date'' for ``August 28, 2005'' in
subsection (c)(1).
(10) Special rules for use of retirement funds.--Section
1400Q--
(A) by substituting ``qualified Disaster Recovery
Assistance distribution'' for ``qualified hurricane
distribution'' each place it appears,
(B) by substituting ``on or after the applicable disaster
date and before January 1, 2010'' for ``on or after August
25, 2005, and before January 1, 2007'' in subsection
(a)(4)(A)(i),
(C) by substituting ``the applicable disaster date'' for
``August 28, 2005'' in subsections (a)(4)(A)(i) and
(c)(3)(B),
(D) by disregarding clauses (ii) and (iii) of subsection
(a)(4)(A) thereof,
(E) by substituting ``qualified storm damage distribution''
for ``qualified Katrina distribution'' each place it appears,
(F) by substituting ``after the date which is 6 months
before the applicable disaster date and before the date which
is the day after the applicable disaster date'' for ``after
February 28, 2005, and before August 29, 2005'' in subsection
(b)(2)(B)(ii),
(G) by substituting ``the Midwestern disaster area, but not
so purchased or constructed on account of severe storms,
tornados, or flooding giving rise to the designation of the
area as a disaster area'' for ``the Hurricane Katrina
disaster area, but not so purchased or constructed on account
of Hurricane Katrina'' in subsection (b)(2)(B)(iii),
(H) by substituting ``beginning on the applicable disaster
date and ending on the date which is 5 months after the date
of the enactment of the Heartland Disaster Tax Relief Act of
2008'' for ``beginning on August 25, 2005, and ending on
February 28, 2006'' in subsection (b)(3)(A),
(I) by substituting ``qualified storm damage individual''
for ``qualified Hurricane Katrina individual'' each place it
appears,
(J) by substituting ``December 31, 2009'' for ``December
31, 2006'' in subsection (c)(2)(A),
(K) by disregarding subparagraphs (C) and (D) of subsection
(c)(3) thereof,
(L) by substituting ``beginning on the date of the
enactment of the Heartland Disaster Tax Relief Act of 2008
and ending on December 31, 2009'' for ``beginning on
September 24, 2005, and ending on December 31, 2006'' in
subsection (c)(4)(A)(i),
(M) by substituting ``the applicable disaster date'' for
``August 25, 2005'' in subsection (c)(4)(A)(ii), and
(N) by substituting ``January 1, 2010'' for ``January 1,
2007'' in subsection (d)(2)(A)(ii).
(11) Employee retention credit for employers affected by
severe storms, tornados, and flooding.--Section 1400R(a)--
(A) by substituting ``the applicable disaster date'' for
``August 28, 2005'' each place it appears,
(B) by substituting ``January 1, 2009'' for ``January 1,
2006'' both places it appears, and
(C) only with respect to eligible employers who employed an
average of not more than 200 employees on business days
during the taxable year before the applicable disaster date.
(12) Temporary suspension of limitations on charitable
contributions.--Section 1400S(a), by substituting the
following paragraph for paragraph (4) thereof:
``(4) Qualified contributions.--
``(A) In general.--For purposes of this subsection, the
term `qualified contribution' means any charitable
contribution (as defined in section 170(c)) if--
``(i) such contribution--

``(I) is paid during the period beginning on the earliest
applicable disaster date for all States and ending on
December 31, 2008, in cash to an organization described in
section 170(b)(1)(A), and
``(II) is made for relief efforts in 1 or more Midwestern
disaster areas,

``(ii) the taxpayer obtains from such organization
contemporaneous written acknowledgment (within the meaning of
section 170(f)(8)) that such contribution was used (or is to
be used) for relief efforts in 1 or more Midwestern disaster
areas, and
``(iii) the taxpayer has elected the application of this
subsection with respect to such contribution.
``(B) Exception.--Such term shall not include a
contribution by a donor if the contribution is--
``(i) to an organization described in section 509(a)(3), or
``(ii) for establishment of a new, or maintenance of an
existing, donor advised fund (as defined in section
4966(d)(2)).
``(C) Application of election to partnerships and s
corporations.--In the case of a partnership or S corporation,
the election under subparagraph (A)(iii) shall be made
separately by each partner or shareholder.''.
(13) Suspension of certain limitations on personal casualty
losses.--Section 1400S(b)(1), by substituting ``the
applicable disaster date'' for ``August 25, 2005''.
(14) Special rule for determining earned income.--Section
1400S(d)--
(A) by treating an individual as a qualified individual if
such individual's principal place of abode on the applicable
disaster date was located in a Midwestern disaster area,
(B) by treating the applicable disaster date with respect
to any such individual as the applicable date for purposes of
such subsection, and
(C) by treating an area as described in paragraph
(2)(B)(ii) thereof if the area is a Midwestern disaster area
only by reason of subsection (b)(2) of this section (relating
to areas eligible only for public assistance).
(15) Adjustments regarding taxpayer and dependency
status.--Section 1400S(e), by substituting ``2008 or 2009''
for ``2005 or 2006''.
(e) Modifications to Katrina Emergency Tax Relief Act of
2005.--The following provisions of the Katrina Emergency Tax
Relief Act of 2005 shall be applied with the following
modifications:
(1) Additional exemption for housing displaced
individual.--Section 302--
(A) by substituting ``2008 or 2009'' for ``2005 or 2006''
in subsection (a) thereof,
(B) by substituting ``Midwestern displaced individual'' for
``Hurricane Katrina displaced individual'' each place it
appears, and
(C) by treating an area as a core disaster area for
purposes of applying subsection (c) thereof if the area is a
Midwestern disaster area without regard to subsection (b)(2)
of this section (relating to areas eligible only for public
assistance).
(2) Increase in standard mileage rate.--Section 303, by
substituting ``beginning on the applicable disaster date and
ending on December 31, 2008'' for ``beginning on August 25,
2005, and ending on December 31, 2006''.
(3) Mileage reimbursements for charitable volunteers.--
Section 304--
(A) by substituting ``beginning on the applicable disaster
date and ending on December 31, 2008'' for ``beginning on
August 25, 2005, and ending on December 31, 2006'' in
subsection (a), and
(B) by substituting ``the applicable disaster date'' for
``August 25, 2005'' in subsection (a).
(4) Exclusion of certain cancellation of indebtedness
income.--Section 401--
(A) by treating an individual whose principal place of
abode on the applicable disaster date was in a Midwestern
disaster area (determined without regard to subsection (b)(2)
of this section) as an individual described in subsection
(b)(1) thereof, and by treating an individual whose principal
place of abode on the applicable disaster date was in a
Midwestern disaster area solely by reason of subsection
(b)(2) of this section as an individual described in
subsection (b)(2) thereof,
(B) by substituting ``the applicable disaster date'' for
``August 28, 2005'' both places it appears, and
(C) by substituting ``January 1, 2010'' for ``January 1,
2007'' in subsection (e).
(5) Extension of replacement period for nonrecognition of
gain.--Section 405, by substituting ``on or after the
applicable disaster date'' for ``on or after August 25,
2005''.

SEC. 703. REPORTING REQUIREMENTS RELATING TO DISASTER RELIEF
CONTRIBUTIONS.

(a) In General.--Section 6033(b) (relating to returns of
certain organizations described in section 501(c)(3)) is
amended by striking ``and'' at the end of paragraph (13), by
redesignating paragraph (14) as paragraph (15), and by adding
after paragraph (13) the following new paragraph:
``(14) such information as the Secretary may require with
respect to disaster relief activities, including the amount
and use of qualified contributions to which section 1400S(a)
applies, and''.
(b) Effective Date.--The amendments made by this section
shall apply to returns the due date for which (determined
without regard to any extension) occurs after December 31,
2008.

SEC. 704. TEMPORARY TAX-EXEMPT BOND FINANCING AND LOW-INCOME
HOUSING TAX RELIEF FOR AREAS DAMAGED BY
HURRICANE IKE.

(a) Tax-Exempt Bond Financing.--Section 1400N(a) of the
Internal Revenue Code of 1986 shall apply to any Hurricane
Ike disaster area in addition to any other area referenced in
such section, but with the following modifications:
(1) By substituting ``qualified Hurricane Ike disaster area
bond'' for ``qualified Gulf Opportunity Zone Bond'' each
place it appears, except that in determining whether a bond
is a qualified Hurricane Ike disaster area bond--
(A) paragraph (2)(A)(i) shall be applied by only treating
costs as qualified project costs if--
(i) in the case of a project involving a private business
use (as defined in section 141(b)(6)), either the person
using the property suffered a loss in a trade or business
attributable to Hurricane Ike or is a person designated for
purposes of this section by the Governor of the State in
which the project is located as a person carrying on a trade
or business replacing a trade or business with respect to
which another person suffered such a loss, and

[[Page S10383]]

(ii) in the case of a project relating to public utility
property, the project involves repair or reconstruction of
public utility property damaged by Hurricane Ike, and
(B) paragraph (2)(A)(ii) shall be applied by treating an
issue as a qualified mortgage issue only if 95 percent or
more of the net proceeds (as defined in section 150(a)(3)) of
the issue are to be used to provide financing for mortgagors
who suffered damages to their principal residences
attributable to Hurricane Ike.
(2) By substituting ``any State in which any Hurricane Ike
disaster area is located'' for ``the State of Alabama,
Louisiana, or Mississippi'' in paragraph (2)(B).
(3) By substituting ``designated for purposes of this
section (on the basis of providing assistance to areas in the
order in which such assistance is most needed)'' for
``designated for purposes of this section'' in paragraph
(2)(C).
(4) By substituting ``January 1, 2013'' for ``January 1,
2011'' in paragraph (2)(D).
(5) By substituting the following for subparagraph (A) of
paragraph (3):
``(A) Aggregate amount designated.--The maximum aggregate
face amount of bonds which may be designated under this
subsection with respect to any State shall not exceed the
product of $2,000 multiplied by the portion of the State
population which is in--
``(i) in the case of Texas, the counties of Brazoria,
Chambers, Galveston, Jefferson, and Orange, and
``(ii) in the case of Louisiana, the parishes of Calcasieu
and Cameron,

(as determined on the basis of the most recent census
estimate of resident population released by the Bureau of
Census before September 13, 2008).''.
(6) By substituting ``qualified Hurricane Ike disaster area
repair or construction'' for ``qualified GO Zone repair or
construction'' each place it appears.
(7) By substituting ``after the date of the enactment of
the Heartland Disaster Tax Relief Act of 2008 and before
January 1, 2013'' for ``after the date of the enactment of
this paragraph and before January 1, 2011'' in paragraph
(7)(C).
(8) By disregarding paragraph (8) thereof.
(9) By substituting ``any Hurricane Ike disaster area'' for
``the Gulf Opportunity Zone'' each place it appears.
(b) Low-Income Housing Credit.--Section 1400N(c) of the
Internal Revenue Code of 1986 shall apply to any Hurricane
Ike disaster area in addition to any other area referenced in
such section, but with the following modifications:
(1) Only with respect to calendar years 2008, 2009, and
2010.
(2) By substituting ``any Hurricane Ike disaster area'' for
``the Gulf Opportunity Zone'' each place it appears.
(3) By substituting ``Hurricane Ike Recovery Assistance
housing amount'' for ``Gulf Opportunity housing amount'' each
place it appears.
(4) By substituting the following for subparagraph (B) of
paragraph (1):
``(B) Hurricane ike housing amount.--For purposes of
subparagraph (A), the term `Hurricane Ike housing amount'
means, for any calendar year, the amount equal to the product
of $16.00 multiplied by the portion of the State population
which is in--
``(i) in the case of Texas, the counties of Brazoria,
Chambers, Galveston, Jefferson, and Orange, and
``(ii) in the case of Louisiana, the parishes of Calcasieu
and Cameron,

(as determined on the basis of the most recent census
estimate of resident population released by the Bureau of
Census before September 13, 2008).''.
(5) Determined without regard to paragraphs (2), (3), (4),
(5), and (6) thereof.
(c) Hurricane Ike Disaster Area.--For purposes of this
section and for applying the substitutions described in
subsections (a) and (b), the term ``Hurricane Ike disaster
area'' means an area in the State of Texas or Louisiana--
(1) with respect to which a major disaster has been
declared by the President on September 13, 2008, under
section 401 of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act by reason of Hurricane Ike, and
(2) determined by the President to warrant individual or
individual and public assistance from the Federal Government
under such Act with respect to damages attributable to
Hurricane Ike.

Subtitle B--National Disaster Relief

SEC. 706. LOSSES ATTRIBUTABLE TO FEDERALLY DECLARED
DISASTERS.

(a) Waiver of Adjusted Gross Income Limitation.--
(1) In general.--Subsection (h) of section 165 is amended
by redesignating paragraphs (3) and (4) as paragraphs (4) and
(5), respectively, and by inserting after paragraph (2) the
following new paragraph:
``(3) Special rule for losses in federally declared
disasters.--
``(A) In general.--If an individual has a net disaster loss
for any taxable year, the amount determined under paragraph
(2)(A)(ii) shall be the sum of--
``(i) such net disaster loss, and
``(ii) so much of the excess referred to in the matter
preceding clause (i) of paragraph (2)(A) (reduced by the
amount in clause (i) of this subparagraph) as exceeds 10
percent of the adjusted gross income of the individual.
``(B) Net disaster loss.--For purposes of subparagraph (A),
the term `net disaster loss' means the excess of--
``(i) the personal casualty losses--

``(I) attributable to a federally declared disaster
occurring before January 1, 2010, and
``(II) occurring in a disaster area, over

``(ii) personal casualty gains.
``(C) Federally declared disaster.--For purposes of this
paragraph--
``(i) Federally declared disaster.--The term `federally
declared disaster' means any disaster subsequently determined
by the President of the United States to warrant assistance
by the Federal Government under the Robert T. Stafford
Disaster Relief and Emergency Assistance Act.
``(ii) Disaster area.--The term `disaster area' means the
area so determined to warrant such assistance.''.
(2) Conforming amendments.--
(A) Section 165(h)(4)(B) (as so redesignated) is amended by
striking ``paragraph (2)'' and inserting ``paragraphs (2) and
(3)''.
(B) Section 165(i)(1) is amended by striking ``loss'' and
all that follows through ``Act'' and inserting ``loss
occurring in a disaster area (as defined by clause (ii) of
subsection (h)(3)(C)) and attributable to a federally
declared disaster (as defined by clause (i) of such
subsection)''.
(C) Section 165(i)(4) is amended by striking
``Presidentially declared disaster (as defined by section
1033(h)(3))'' and inserting ``federally declared disaster (as
defined by subsection (h)(3)(C)(i)''.
(D)(i) So much of subsection (h) of section 1033 as
precedes subparagraph (A) of paragraph (1) thereof is amended
to read as follows:
``(h) Special Rules for Property Damaged by Federally
Declared Disasters.--
``(1) Principal residences.--If the taxpayer's principal
residence or any of its contents is located in a disaster
area and is compulsorily or involuntarily converted as a
result of a federally declared disaster--''.
(ii) Paragraph (2) of section 1033(h) is amended by
striking ``investment'' and all that follows through
``disaster'' and inserting ``investment located in a disaster
area and compulsorily or involuntarily converted as a result
of a federally declared disaster''.
(iii) Paragraph (3) of section 1033(h) is amended to read
as follows:
``(3) Federally declared disaster; disaster area.--The
terms ``federally declared disaster'' and ``disaster area''
shall have the respective meaning given such terms by section
165(h)(3)(C).''.
(iv) Section 139(c)(2) is amended to read as follows:
``(2) federally declared disaster (as defined by section
165(h)(3)(C)(i)),''.
(v) Subclause (II) of section 172(b)(1)(F)(ii) is amended
by striking ``Presidentially declared disasters (as defined
in section 1033(h)(3))'' and inserting ``federally declared
disasters (as defined by subsection (h)(3)(C)(i))''.
(vi) Subclause (III) of section 172(b)(1)(F)(ii) is amended
by striking ``Presidentially declared disasters'' and
inserting ``federally declared disasters''.
(vii) Subsection (a) of section 7508A is amended by
striking ``Presidentially declared disaster (as defined in
section 1033(h)(3))'' and inserting ``federally declared
disaster (as defined by section 165(h)(3)(C)(i))''.
(b) Increase in Standard Deduction by Disaster Casualty
Loss.--
(1) In general.--Paragraph (1) of section 63(c), as amended
by the Housing Assistance Tax Act of 2008, is amended by
striking ``and'' at the end of subparagraph (B), by striking
the period at the end of subparagraph (C) and inserting ``,
and'', and by adding at the end the following new
subparagraph:
``(D) the disaster loss deduction.''.
(2) Disaster loss deduction.--Subsection (c) of section 63,
as amended by the Housing Assistance Tax Act of 2008, is
amended by adding at the end the following new paragraph:
``(8) Disaster loss deduction.--For the purposes of
paragraph (1), the term `disaster loss deduction' means the
net disaster loss (as defined in section 165(h)(3)(B)).''.
(3) Allowance in computing alternative minimum taxable
income.--Subparagraph (E) of section 56(b)(1) is amended by
adding at the end the following new sentence: ``The preceding
sentence shall not apply to so much of the standard deduction
as is determined under section 63(c)(1)(D).''.
(c) Increase in Limitation on Individual Loss Per
Casualty.--Paragraph (1) of section 165(h) is amended by
striking ``$100'' and inserting ``$500 ($100 for taxable
years beginning after December 31, 2009)''.
(d) Effective Dates.--
(1) In general.--Except as provided by paragraph (2), the
amendments made by this section shall apply to disasters
declared in taxable years beginning after December 31, 2007.
(2) Increase in limitation on individual loss per
casualty.--The amendment made by subsection (c) shall apply
to taxable years beginning after December 31, 2008.

SEC. 707. EXPENSING OF QUALIFIED DISASTER EXPENSES.

(a) In General.--Part VI of subchapter B of chapter 1 is
amended by inserting after section 198 the following new
section:

``SEC. 198A. EXPENSING OF QUALIFIED DISASTER EXPENSES.

``(a) In General.--A taxpayer may elect to treat any
qualified disaster expenses which are paid or incurred by the
taxpayer as an expense which is not chargeable to capital
account. Any expense which is so treated

[[Page S10384]]

shall be allowed as a deduction for the taxable year in which
it is paid or incurred.
``(b) Qualified Disaster Expense.--For purposes of this
section, the term `qualified disaster expense' means any
expenditure--
``(1) which is paid or incurred in connection with a trade
or business or with business-related property,
``(2) which is--
``(A) for the abatement or control of hazardous substances
that were released on account of a federally declared
disaster occurring before January 1, 2010,
``(B) for the removal of debris from, or the demolition of
structures on, real property which is business-related
property damaged or destroyed as a result of a federally
declared disaster occurring before such date, or
``(C) for the repair of business-related property damaged
as a result of a federally declared disaster occurring before
such date, and
``(3) which is otherwise chargeable to capital account.
``(c) Other Definitions.--For purposes of this section--
``(1) Business-related property.--The term `business-
related property' means property--
``(A) held by the taxpayer for use in a trade or business
or for the production of income, or
``(B) described in section 1221(a)(1) in the hands of the
taxpayer.
``(2) Federally declared disaster.--The term `federally
declared disaster' has the meaning given such term by section
165(h)(3)(C)(i).
``(d) Deduction Recaptured as Ordinary Income on Sale,
etc.--Solely for purposes of section 1245, in the case of
property to which a qualified disaster expense would have
been capitalized but for this section--
``(1) the deduction allowed by this section for such
expense shall be treated as a deduction for depreciation, and
``(2) such property (if not otherwise section 1245
property) shall be treated as section 1245 property solely
for purposes of applying section 1245 to such deduction.
``(e) Coordination With Other Provisions.--Sections 198,
280B, and 468 shall not apply to amounts which are treated as
expenses under this section.
``(f) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.''.
(b) Clerical Amendment.--The table of sections for part VI
of subchapter B of chapter 1 is amended by inserting after
the item relating to section 198 the following new item:

``Sec. 198A. Expensing of Qualified Disaster Expenses.''.

(c) Effective Date.--The amendments made by this section
shall apply to amounts paid or incurred after December 31,
2007 in connection with disaster declared after such date.

SEC. 708. NET OPERATING LOSSES ATTRIBUTABLE TO FEDERALLY
DECLARED DISASTERS.

(a) In General.--Paragraph (1) of section 172(b) is amended
by adding at the end the following new subparagraph:
``(J) Certain losses attributable federally declared
disasters.--In the case of a taxpayer who has a qualified
disaster loss (as defined in subsection (j)), such loss shall
be a net operating loss carryback to each of the 5 taxable
years preceding the taxable year of such loss.''.
(b) Qualified Disaster Loss.--Section 172 is amended by
redesignating subsections (j) and (k) as subsections (k) and
(l), respectively, and by inserting after subsection (i) the
following new subsection:
``(j) Rules Relating to Qualified Disaster Losses.--For
purposes of this section--
``(1) In general.--The term `qualified disaster loss' means
the lesser of--
``(A) the sum of--
``(i) the losses allowable under section 165 for the
taxable year--

``(I) attributable to a federally declared disaster (as
defined in section 165(h)(3)(C)(i)) occurring before January
1, 2010, and
``(II) occurring in a disaster area (as defined in section
165(h)(3)(C)(ii)), and

``(ii) the deduction for the taxable year for qualified
disaster expenses which is allowable under section 198A(a) or
which would be so allowable if not otherwise treated as an
expense, or
``(B) the net operating loss for such taxable year.
``(2) Coordination with subsection (b)(2).--For purposes of
applying subsection (b)(2), a qualified disaster loss for any
taxable year shall be treated in a manner similar to the
manner in which a specified liability loss is treated.
``(3) Election.--Any taxpayer entitled to a 5-year
carryback under subsection (b)(1)(J) from any loss year may
elect to have the carryback period with respect to such loss
year determined without regard to subsection (b)(1)(J). Such
election shall be made in such manner as may be prescribed by
the Secretary and shall be made by the due date (including
extensions of time) for filing the taxpayer's return for the
taxable year of the net operating loss. Such election, once
made for any taxable year, shall be irrevocable for such
taxable year.
``(4) Exclusion.--The term `qualified disaster loss' shall
not include any loss with respect to any property described
in section 1400N(p)(3).''.
(c) Loss Deduction Allowed in Computing Alternative Minimum
Taxable Income.--Subsection (d) of section 56 is amended by
adding at the end the following new paragraph:
``(3) Net operating loss attributable to federally declared
disasters.--In the case of a taxpayer which has a qualified
disaster loss (as defined by section 172(b)(1)(J)) for the
taxable year, paragraph (1) shall be applied by increasing
the amount determined under subparagraph (A)(ii)(I) thereof
by the sum of the carrybacks and carryovers of such loss.''.
(d) Conforming Amendments.--
(1) Clause (ii) of section 172(b)(1)(F) is amended by
inserting ``or qualified disaster loss (as defined in
subsection (j))'' before the period at the end of the last
sentence.
(2) Paragraph (1) of section 172(i) is amended by adding at
the end the following new flush sentence:

``Such term shall not include any qualified disaster loss (as
defined in subsection (j)).''.
(e) Effective Date.--The amendments made by this section
shall apply to losses arising in taxable years beginning
after December 31, 2007, in connection with disasters
declared after such date.

SEC. 709. WAIVER OF CERTAIN MORTGAGE REVENUE BOND
REQUIREMENTS FOLLOWING FEDERALLY DECLARED
DISASTERS.

(a) In General.--Subsection (k) of section 143 is amended
by adding at the end the following new paragraph:
``(12) Special rules for residences destroyed in federally
declared disasters.--
``(A) Principal residence destroyed.--At the election of
the taxpayer, if the principal residence (within the meaning
of section 121) of such taxpayer is--
``(i) rendered unsafe for use as a residence by reason of a
federally declared disaster occurring before January 1, 2010,
or
``(ii) demolished or relocated by reason of an order of the
government of a State or political subdivision thereof on
account of a federally declared disaster occurring before
such date,

then, for the 2-year period beginning on the date of the
disaster declaration, subsection (d)(1) shall not apply with
respect to such taxpayer and subsection (e) shall be applied
by substituting `110' for `90' in paragraph (1) thereof.
``(B) Principal residence damaged.--
``(i) In general.--At the election of the taxpayer, if the
principal residence (within the meaning of section 121) of
such taxpayer was damaged as the result of a federally
declared disaster occurring before January 1, 2010, any
owner-financing provided in connection with the repair or
reconstruction of such residence shall be treated as a
qualified rehabilitation loan.
``(ii) Limitation.--The aggregate owner-financing to which
clause (i) applies shall not exceed the lesser of--

``(I) the cost of such repair or reconstruction, or
``(II) $150,000.

``(C) Federally declared disaster.--For purposes of this
paragraph, the term `federally declared disaster' has the
meaning given such term by section 165(h)(3)(C)(i).
``(D) Election; denial of double benefit.--
``(i) Election.--An election under this paragraph may not
be revoked except with the consent of the Secretary.
``(ii) Denial of double benefit.--If a taxpayer elects the
application of this paragraph, paragraph (11) shall not apply
with respect to the purchase or financing of any residence by
such taxpayer.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to disasters occurring after December 31, 2007.

SEC. 710. SPECIAL DEPRECIATION ALLOWANCE FOR QUALIFIED
DISASTER PROPERTY.

(a) In General.--Section 168, as amended by this Act, is
amended by adding at the end the following new subsection:
``(n) Special Allowance for Qualified Disaster Assistance
Property.--
``(1) In general.--In the case of any qualified disaster
assistance property--
``(A) the depreciation deduction provided by section 167(a)
for the taxable year in which such property is placed in
service shall include an allowance equal to 50 percent of the
adjusted basis of the qualified disaster assistance property,
and
``(B) the adjusted basis of the qualified disaster
assistance property shall be reduced by the amount of such
deduction before computing the amount otherwise allowable as
a depreciation deduction under this chapter for such taxable
year and any subsequent taxable year.
``(2) Qualified disaster assistance property.--For purposes
of this subsection--
``(A) In general.--The term `qualified disaster assistance
property' means any property--
``(i)(I) which is described in subsection (k)(2)(A)(i), or
``(II) which is nonresidential real property or residential
rental property,
``(ii) substantially all of the use of which is--

``(I) in a disaster area with respect to a federally
declared disaster occurring before January 1, 2010, and
``(II) in the active conduct of a trade or business by the
taxpayer in such disaster area,

[[Page S10385]]

``(iii) which--

``(I) rehabilitates property damaged, or replaces property
destroyed or condemned, as a result of such federally
declared disaster, except that, for purposes of this clause,
property shall be treated as replacing property destroyed or
condemned if, as part of an integrated plan, such property
replaces property which is included in a continuous area
which includes real property destroyed or condemned, and
``(II) is similar in nature to, and located in the same
county as, the property being rehabilitated or replaced,

``(iv) the original use of which in such disaster area
commences with an eligible taxpayer on or after the
applicable disaster date,
``(v) which is acquired by such eligible taxpayer by
purchase (as defined in section 179(d)) on or after the
applicable disaster date, but only if no written binding
contract for the acquisition was in effect before such date,
and
``(vi) which is placed in service by such eligible taxpayer
on or before the date which is the last day of the third
calendar year following the applicable disaster date (the
fourth calendar year in the case of nonresidential real
property and residential rental property).
``(B) Exceptions.--
``(i) Other bonus depreciation property.--The term
`qualified disaster assistance property' shall not include--

``(I) any property to which subsection (k) (determined
without regard to paragraph (4)), (l), or (m) applies,
``(II) any property to which section 1400N(d) applies, and
``(III) any property described in section 1400N(p)(3).

``(ii) Alternative depreciation property.--The term
`qualified disaster assistance property' shall not include
any property to which the alternative depreciation system
under subsection (g) applies, determined without regard to
paragraph (7) of subsection (g) (relating to election to have
system apply).
``(iii) Tax-exempt bond financed property.--Such term shall
not include any property any portion of which is financed
with the proceeds of any obligation the interest on which is
exempt from tax under section 103.
``(iv) Qualified revitalization buildings.--Such term shall
not include any qualified revitalization building with
respect to which the taxpayer has elected the application of
paragraph (1) or (2) of section 1400I(a).
``(v) Election out.--If a taxpayer makes an election under
this clause with respect to any class of property for any
taxable year, this subsection shall not apply to all property
in such class placed in service during such taxable year.
``(C) Special rules.--For purposes of this subsection,
rules similar to the rules of subparagraph (E) of subsection
(k)(2) shall apply, except that such subparagraph shall be
applied--
``(i) by substituting `the applicable disaster date' for
`December 31, 2007' each place it appears therein,
``(ii) without regard to `and before January 1, 2009' in
clause (i) thereof, and
``(iii) by substituting `qualified disaster assistance
property' for `qualified property' in clause (iv) thereof.
``(D) Allowance against alternative minimum tax.--For
purposes of this subsection, rules similar to the rules of
subsection (k)(2)(G) shall apply.
``(3) Other definitions.--For purposes of this subsection--
``(A) Applicable disaster date.--The term `applicable
disaster date' means, with respect to any federally declared
disaster, the date on which such federally declared disaster
occurs.
``(B) Federally declared disaster.--The term `federally
declared disaster' has the meaning given such term under
section 165(h)(3)(C)(i).
``(C) Disaster area.--The term `disaster area' has the
meaning given such term under section 165(h)(3)(C)(ii).
``(D) Eligible taxpayer.--The term `eligible taxpayer'
means a taxpayer who has suffered an economic loss
attributable to a federally declared disaster.
``(4) Recapture.--For purposes of this subsection, rules
similar to the rules under section 179(d)(10) shall apply
with respect to any qualified disaster assistance property
which ceases to be qualified disaster assistance property.''.
(b) Effective Date.--The amendment made by this section
shall apply to property placed in service after December 31,
2007, with respect disasters declared after such date.

SEC. 711. INCREASED EXPENSING FOR QUALIFIED DISASTER
ASSISTANCE PROPERTY.

(a) In General.--Section 179 is amended by adding at the
end the following new subsection:
``(e) Special Rules for Qualified Disaster Assistance
Property.--
``(1) In general.--For purposes of this section--
``(A) the dollar amount in effect under subsection (b)(1)
for the taxable year shall be increased by the lesser of--
``(i) $100,000, or
``(ii) the cost of qualified section 179 disaster
assistance property placed in service during the taxable
year, and
``(B) the dollar amount in effect under subsection (b)(2)
for the taxable year shall be increased by the lesser of--
``(i) $600,000, or
``(ii) the cost of qualified section 179 disaster
assistance property placed in service during the taxable
year.
``(2) Qualified section 179 disaster assistance property.--
For purposes of this subsection, the term `qualified section
179 disaster assistance property' means section 179 property
(as defined in subsection (d)) which is qualified disaster
assistance property (as defined in section 168(n)(2)).
``(3) Coordination with empowerment zones and renewal
communities.--For purposes of sections 1397A and 1400J,
qualified section 179 disaster assistance property shall not
be treated as qualified zone property or qualified renewal
property, unless the taxpayer elects not to take such
qualified section 179 disaster assistance property into
account for purposes of this subsection.
``(4) Recapture.--For purposes of this subsection, rules
similar to the rules under subsection (d)(10) shall apply
with respect to any qualified section 179 disaster assistance
property which ceases to be qualified section 179 disaster
assistance property.''.
(b) Effective Date.--The amendment made by this section
shall apply to property placed in service after December 31,
2007, with respect disasters declared after such date.

SEC. 712. COORDINATION WITH HEARTLAND DISASTER RELIEF.

The amendments made by this subtitle, other than the
amendments made by sections 706(a)(2), 710, and 711, shall
not apply to any disaster described in section 702(c)(1)(A),
or to any expenditure or loss resulting from such disaster.

TITLE VIII--SPENDING REDUCTIONS AND APPROPRIATE REVENUE RAISERS FOR NEW
TAX RELIEF POLICY

SEC. 801. NONQUALIFIED DEFERRED COMPENSATION FROM CERTAIN TAX
INDIFFERENT PARTIES.

(a) In General.--Subpart B of part II of subchapter E of
chapter 1 is amended by inserting after section 457 the
following new section:

``SEC. 457A. NONQUALIFIED DEFERRED COMPENSATION FROM CERTAIN
TAX INDIFFERENT PARTIES.

``(a) In General.--Any compensation which is deferred under
a nonqualified deferred compensation plan of a nonqualified
entity shall be includible in gross income when there is no
substantial risk of forfeiture of the rights to such
compensation.
``(b) Nonqualified Entity.--For purposes of this section,
the term `nonqualified entity' means--
``(1) any foreign corporation unless substantially all of
its income is--
``(A) effectively connected with the conduct of a trade or
business in the United States, or
``(B) subject to a comprehensive foreign income tax, and
``(2) any partnership unless substantially all of its
income is allocated to persons other than--
``(A) foreign persons with respect to whom such income is
not subject to a comprehensive foreign income tax, and
``(B) organizations which are exempt from tax under this
title.
``(c) Determinability of Amounts of Compensation.--
``(1) In general.--If the amount of any compensation is not
determinable at the time that such compensation is otherwise
includible in gross income under subsection (a)--
``(A) such amount shall be so includible in gross income
when determinable, and
``(B) the tax imposed under this chapter for the taxable
year in which such compensation is includible in gross income
shall be increased by the sum of--
``(i) the amount of interest determined under paragraph
(2), and
``(ii) an amount equal to 20 percent of the amount of such
compensation.
``(2) Interest.--For purposes of paragraph (1)(B)(i), the
interest determined under this paragraph for any taxable year
is the amount of interest at the underpayment rate under
section 6621 plus 1 percentage point on the underpayments
that would have occurred had the deferred compensation been
includible in gross income for the taxable year in which
first deferred or, if later, the first taxable year in which
such deferred compensation is not subject to a substantial
risk of forfeiture.
``(d) Other Definitions and Special Rules.--For purposes of
this section--
``(1) Substantial risk of forfeiture.--
``(A) In general.--The rights of a person to compensation
shall be treated as subject to a substantial risk of
forfeiture only if such person's rights to such compensation
are conditioned upon the future performance of substantial
services by any individual.
``(B) Exception for compensation based on gain recognized
on an investment asset.--
``(i) In general.--To the extent provided in regulations
prescribed by the Secretary, if compensation is determined
solely by reference to the amount of gain recognized on the
disposition of an investment asset, such compensation shall
be treated as subject to a substantial risk of forfeiture
until the date of such disposition.
``(ii) Investment asset.--For purposes of clause (i), the
term `investment asset' means

[[Page S10386]]

any single asset (other than an investment fund or similar
entity)--

``(I) acquired directly by an investment fund or similar
entity,
``(II) with respect to which such entity does not (nor does
any person related to such entity) participate in the active
management of such asset (or if such asset is an interest in
an entity, in the active management of the activities of such
entity), and
``(III) substantially all of any gain on the disposition of
which (other than such deferred compensation) is allocated to
investors in such entity.

``(iii) Coordination with special rule.--Paragraph (3)(B)
shall not apply to any compensation to which clause (i)
applies.
``(2) Comprehensive foreign income tax.--The term
`comprehensive foreign income tax' means, with respect to any
foreign person, the income tax of a foreign country if--
``(A) such person is eligible for the benefits of a
comprehensive income tax treaty between such foreign country
and the United States, or
``(B) such person demonstrates to the satisfaction of the
Secretary that such foreign country has a comprehensive
income tax.
``(3) Nonqualified deferred compensation plan.--
``(A) In general.--The term `nonqualified deferred
compensation plan' has the meaning given such term under
section 409A(d), except that such term shall include any plan
that provides a right to compensation based on the
appreciation in value of a specified number of equity units
of the service recipient.
``(B) Exception.--Compensation shall not be treated as
deferred for purposes of this section if the service provider
receives payment of such compensation not later than 12
months after the end of the taxable year of the service
recipient during which the right to the payment of such
compensation is no longer subject to a substantial risk of
forfeiture.
``(4) Exception for certain compensation with respect to
effectively connected income.--In the case a foreign
corporation with income which is taxable under section 882,
this section shall not apply to compensation which, had such
compensation had been paid in cash on the date that such
compensation ceased to be subject to a substantial risk of
forfeiture, would have been deductible by such foreign
corporation against such income.
``(5) Application of rules.--Rules similar to the rules of
paragraphs (5) and (6) of section 409A(d) shall apply.
``(e) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section, including regulations
disregarding a substantial risk of forfeiture in cases where
necessary to carry out the purposes of this section.''.
(b) Conforming Amendment.--Section 26(b)(2), as amended by
the Housing Assistance Tax Act of 2008, is amended by
striking ``and'' at the end of subparagraph (V), by striking
the period at the end of subparagraph (W) and inserting ``,
and'', and by adding at the end the following new
subparagraph:
``(X) section 457A(c)(1)(B) (relating to determinability of
amounts of compensation).''.
(c) Clerical Amendment.--The table of sections of subpart B
of part II of subchapter E of chapter 1 is amended by
inserting after the item relating to section 457 the
following new item:

``Sec. 457A. Nonqualified deferred compensation from certain tax
indifferent parties.''.

(d) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply
to amounts deferred which are attributable to services
performed after December 31, 2008.
(2) Application to existing deferrals.--In the case of any
amount deferred to which the amendments made by this section
do not apply solely by reason of the fact that the amount is
attributable to services performed before January 1, 2009, to
the extent such amount is not includible in gross income in a
taxable year beginning before 2018, such amounts shall be
includible in gross income in the later of--
(A) the last taxable year beginning before 2018, or
(B) the taxable year in which there is no substantial risk
of forfeiture of the rights to such compensation (determined
in the same manner as determined for purposes of section 457A
of the Internal Revenue Code of 1986, as added by this
section).
(3) Accelerated payments.--No later than 120 days after the
date of the enactment of this Act, the Secretary shall issue
guidance providing a limited period of time during which a
nonqualified deferred compensation arrangement attributable
to services performed on or before December 31, 2008, may,
without violating the requirements of section 409A(a) of the
Internal Revenue Code of 1986, be amended to conform the date
of distribution to the date the amounts are required to be
included in income.
(4) Certain back-to-back arrangements.--If the taxpayer is
also a service recipient and maintains one or more
nonqualified deferred compensation arrangements for its
service providers under which any amount is attributable to
services performed on or before December 31, 2008, the
guidance issued under paragraph (4) shall permit such
arrangements to be amended to conform the dates of
distribution under such arrangement to the date amounts are
required to be included in the income of such taxpayer under
this subsection.
(5) Accelerated payment not treated as material
modification.--Any amendment to a nonqualified deferred
compensation arrangement made pursuant to paragraph (4) or
(5) shall not be treated as a material modification of the
arrangement for purposes of section 409A of the Internal
Revenue Code of 1986.
______