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[110th Congress Public Law 343]
[From the U.S. Government Printing Office]

[[Page 122 STAT. 3765]]

Public Law 110-343
110th Congress

                                 An Act

 
 To provide authority for the Federal Government to purchase and insure 
certain types of troubled assets for the purposes of providing stability 
  to and preventing disruption in the economy and financial system and 
  protecting taxpayers, to amend the Internal Revenue Code of 1986 to 
  provide incentives for energy production and conservation, to extend 
 certain expiring provisions, to provide individual income tax relief, 
     and for other purposes. <<NOTE: Oct. 3, 2008 -  [H.R. 1424]>> 

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

 DIVISION A--EMERGENCY <<NOTE: Emergency Economic Stabilization Act of 
2008.>>  ECONOMIC STABILIZATION
SECTION 1. <<NOTE: 12 USC 5201 note.>>  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.

[[Page 122 STAT. 3766]]

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. <<NOTE: 12 USC 5201.>>  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. <<NOTE: 12 USC 5202.>>  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

[[Page 122 STAT. 3767]]

        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.

                 TITLE I--TROUBLED ASSETS RELIEF PROGRAM

SEC. 101. <<NOTE: 12 USC 5211.>>  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.--

[[Page 122 STAT. 3768]]

                          (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) <<NOTE: Administration.>>  The Secretary shall have 
        direct hiring authority with respect to the appointment of 
        employees to administer this Act.
            (2) <<NOTE: Contracts.>>  Entering into contracts, including 
        contracts for services authorized by section 3109 of title 5, 
        United States Code.
            (3) <<NOTE: Financial agents.>>  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) <<NOTE: Regulations.>>  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) <<NOTE: Publication. Deadline.>>  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. <<NOTE: 12 USC 5212.>>  INSURANCE OF TROUBLED ASSETS.

    (a) Authority.--

[[Page 122 STAT. 3769]]

            (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. <<NOTE: Methodology. Publication.>>  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.

[[Page 122 STAT. 3770]]

            (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. <<NOTE: 12 USC 5213.>>  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. <<NOTE: 12 USC 5214.>>  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 122 STAT. 3771]]

                    (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) <<NOTE: Reports. Fraud.>>  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. <<NOTE: 12 USC 5215.>>  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

[[Page 122 STAT. 3772]]

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) <<NOTE: Deadline.>>  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-

[[Page 122 STAT. 3773]]

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. <<NOTE: 12 USC 5216.>>  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. <<NOTE: 12 USC 5217.>>  CONTRACTING PROCEDURES.

    (a) <<NOTE: Waiver authority.>>  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. <<NOTE: Deadline.>>  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) <<NOTE: Minorities.>>  Additional Contracting Requirements.--In 
any solicitation or contract where the Secretary has, pursuant to 
subsection

[[Page 122 STAT. 3774]]

(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. <<NOTE: 12 USC 5218.>>  CONFLICTS OF INTEREST.

    (a) Standards Required.--The <<NOTE: Regulations.>>  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;
            (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. <<NOTE: 12 USC 5219.>>  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

[[Page 122 STAT. 3775]]

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. <<NOTE: Residential rental property.>>  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. <<NOTE: 12 USC 5220.>>  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;

[[Page 122 STAT. 3776]]

                    (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 <<NOTE: Deadline.>>  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. <<NOTE: 12 USC 5221.>>  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 <<NOTE: Standards.>>  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 <<NOTE: Effective 
        date.>>  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--

[[Page 122 STAT. 3777]]

                    (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 <<NOTE: Employment. Contracts. Prohibition.>>  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 <<NOTE: Guidance. Deadline. Effective date.>>  
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. <<NOTE: 12 USC 5222.>>  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. <<NOTE: 12 USC 5223.>>  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 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

[[Page 122 STAT. 3778]]

        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,

[[Page 122 STAT. 3779]]

                      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) <<NOTE: Anti-dilution provisions.>>  
                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.

[[Page 122 STAT. 3780]]

SEC. 114. <<NOTE: 12 USC 5224.>>  MARKET TRANSPARENCY.

    (a) <<NOTE: Public information. Deadline.>>  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. <<NOTE: 12 USC 5225.>>  GRADUATED AUTHORIZATION TO 
                        PURCHASE.

    (a) <<NOTE: Effective dates.>>  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) <<NOTE: Definition.>>  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;

[[Page 122 STAT. 3781]]

                    (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) <<NOTE: Notification. Deadline.>>  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 <<NOTE: Deadline.>>  
        each committee authorized to consider a joint resolution reports 
        it to the House or 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. <<NOTE: Waiver.>>  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) <<NOTE: Notification. Deadline.>>  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.--

[[Page 122 STAT. 3782]]

                    (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) <<NOTE: Duration.>>  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.

[[Page 122 STAT. 3783]]

            (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) <<NOTE: Debate. Duration.>>  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. <<NOTE: 12 USC 5226.>>  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.

[[Page 122 STAT. 3784]]

                    (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 <<NOTE: Federal buildings and 
                facilities.>>  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.

[[Page 122 STAT. 3785]]

                    (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 
                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) <<NOTE: Public information.>>  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) <<NOTE: Certification.>>  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--

[[Page 122 STAT. 3786]]

                    (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) <<NOTE: Reports. Audits.>>  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. <<NOTE: 12 USC 5227.>>  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. <<NOTE: 12 USC 5228.>>  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

[[Page 122 STAT. 3787]]

be deemed appropriated at the time of such expenditure or obligation.
SEC. 119. <<NOTE: 12 USC 5229.>>  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) <<NOTE: Deadline.>>  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) <<NOTE: Contracts.>>  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, <<NOTE: Deadline.>>  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,

[[Page 122 STAT. 3788]]

        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. <<NOTE: 12 USC 5230.>>  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. <<NOTE: 12 USC 5231.>>  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) <<NOTE: President.>>  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 ``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

[[Page 122 STAT. 3789]]

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.

[[Page 122 STAT. 3790]]

    (B) <<NOTE: Reports.>>  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) <<NOTE: Reports.>>  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. <<NOTE: 12 USC 5232.>>  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

[[Page 122 STAT. 3791]]

            (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. <<NOTE: 12 USC 5233.>>  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

[[Page 122 STAT. 3792]]

                the first exercise by the 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.

[[Page 122 STAT. 3793]]

            (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--

[[Page 122 STAT. 3794]]

                          ``(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) <<NOTE: Deadline.>>  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

[[Page 122 STAT. 3795]]

                                    ``(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 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--

[[Page 122 STAT. 3796]]

                    ``(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. <<NOTE: 12 USC 5234.>>  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. <<NOTE: 12 USC 5235.>>  DISCLOSURES ON EXERCISE OF LOAN 
                        AUTHORITY.

    (a) In General.--Not <<NOTE: Reports. Deadline.>>  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.

[[Page 122 STAT. 3797]]

    (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 <<NOTE: Effective date. Termination 
date. Reports. Deadline.>>  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 <<NOTE: Reports.>>  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) <<NOTE: Good faith 
                      estimate. Deadline.>>  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) <<NOTE: Disclosure statement. Deadline.>>  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) <<NOTE: 15 USC 1638 note.>>  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. <<NOTE: 12 USC 5236.>>  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

[[Page 122 STAT. 3798]]

for the establishment of any future guaranty programs for the United 
States money market mutual fund industry.
SEC. 132. <<NOTE: 12 USC 5237.>>  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. <<NOTE: 12 USC 5238.>>  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. <<NOTE: 12 USC 5239.>>  RECOUPMENT.

    Upon <<NOTE: Reports. Deadline.>>  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. <<NOTE: President. Legislation.>>  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.

[[Page 122 STAT. 3799]]

SEC. 135. <<NOTE: 12 USC 5240.>>  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. <<NOTE: Effective dates. Termination dates. 12 USC 
                        5241.>>  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 
        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

[[Page 122 STAT. 3800]]

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. <<NOTE: 12 USC 5251.>>  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. <<NOTE: 12 USC 5252.>>  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.

[[Page 122 STAT. 3801]]

    (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) <<NOTE: 31 USC 1105 note.>>  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) <<NOTE: 31 USC 1105 note.>>  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. <<NOTE: 12 USC 5253.>>  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

[[Page 122 STAT. 3802]]

any amounts provided in this Act shall not be counted for purposes of 
budget enforcement.

                        TITLE III--TAX PROVISIONS

SEC. 301. <<NOTE: 12 USC 5261.>>  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) <<NOTE: Definition.>>  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) <<NOTE: Definition.>>  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 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

[[Page 122 STAT. 3803]]

        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 <<NOTE: 26 USC 162.>>  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) <<NOTE: Definition.>>  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

[[Page 122 STAT. 3804]]

                      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).

[[Page 122 STAT. 3805]]

                          ``(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 <<NOTE: 26 USC 280G.>>  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

[[Page 122 STAT. 3806]]

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

    (c) <<NOTE: 26 USC 162 note.>>  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) <<NOTE: 26 USC 280G note.>>  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).

[[Page 122 STAT. 3807]]

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 <<NOTE: 26 USC 108.>>  is amended by 
striking ``January 1, 2010'' and inserting ``January 1, 2013''.

    (b) <<NOTE: 26 USC 108 note.>>  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

SEC. 1. SHORT TITLE, ETC.

    (a) Short Title.--This division may be cited as the ``Energy 
Improvement and Extension Act of 2008''.
    (b) <<NOTE: 26 USC 1 et al.>>  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.

[[Page 122 STAT. 3808]]

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) <<NOTE: 26 USC 45.>>  
        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''.

[[Page 122 STAT. 3809]]

    (c) Trash Facility Clarification.--Paragraph (7) of section 45(d) 
is <<NOTE: 26 USC 45.>>  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, <<NOTE: Certification.>>  in consultation 
                with the Federal Energy Regulatory Commission, shall 
                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.''.

[[Page 122 STAT. 3810]]

    (f) <<NOTE: Applicability. 26 USC 45 note.>>  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) <<NOTE: Electricity.>>  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

[[Page 122 STAT. 3811]]

striking ``January 1, 2012'' and inserting ``the date of the enactment 
of paragraph (11)''.
    (f) <<NOTE: 26 USC 45 note.>>  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) <<NOTE: 26 USC 48.>>  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--

[[Page 122 STAT. 3812]]

                                    ``(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) <<NOTE: Definition.>>  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--

[[Page 122 STAT. 3813]]

                          ``(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) <<NOTE: 26 USC 48 note.>>  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 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''.

[[Page 122 STAT. 3814]]

    (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) <<NOTE: 26 USC 48 note.>>  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) <<NOTE: 26 USC 48 note.>>  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

[[Page 122 STAT. 3815]]

                    (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) <<NOTE: 26 USC 25D.>>  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.''.

[[Page 122 STAT. 3816]]

            (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

[[Page 122 STAT. 3817]]

                to the credit allowable under subsection (a) for such 
                succeeding taxable year.''.
            (2) Conforming amendments.--
                    (A) Section 23(b)(4)(B) <<NOTE: 26 USC 23.>>  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) <<NOTE: 26 USC 23 note.>>  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

[[Page 122 STAT. 3818]]

                    ``(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) <<NOTE: 26 USC 54A.>>  
        is amended to read as follows:
            ``(1) <<NOTE: Definition.>>  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).''.

[[Page 122 STAT. 3819]]

            (2) Subparagraph (C) of section 54A(d)(2) <<NOTE: 26 USC 
        54A.>>  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) <<NOTE: 26 USC 54 note.>>  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) <<NOTE: Definition.>>  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

[[Page 122 STAT. 3820]]

                      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) <<NOTE: Applicability. 26 USC 45.>>  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 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

[[Page 122 STAT. 3821]]

                    ``(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 <<NOTE: 26 USC 45.>>  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) <<NOTE: 26 USC 45 note.>>  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

[[Page 122 STAT. 3822]]

                not include any property which is located outside the 
                United States.''.

    (d) <<NOTE: 26 USC 451 note.>>  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) <<NOTE: 26 USC 
48A.>>  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) <<NOTE: Certification.>>  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

[[Page 122 STAT. 3823]]

                          ``(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) <<NOTE: 26 USC 
                48A.>>  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) <<NOTE: 26 USC 48A note.>>  Effective Dates.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to

[[Page 122 STAT. 3824]]

        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) <<NOTE: 26 USC 
48B.>>  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 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) <<NOTE: 26 USC 48B note.>>  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--

[[Page 122 STAT. 3825]]

            (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) <<NOTE: 26 USC 9501 note.>>  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

[[Page 122 STAT. 3826]]

                      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. <<NOTE: 26 USC 4121 note.>>  SPECIAL RULES FOR REFUND OF 
                        THE COAL EXCISE TAX TO CERTAIN COAL 
                        PRODUCERS AND EXPORTERS.

    (a) Refund.--
            (1) Coal producers.--

[[Page 122 STAT. 3827]]

                    (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) <<NOTE: Deadlines.>>  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) <<NOTE: Deadline.>>  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) <<NOTE: Deadlines.>>  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

[[Page 122 STAT. 3828]]

                    (C) <<NOTE: Deadline.>>  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.

    (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

[[Page 122 STAT. 3829]]

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) <<NOTE: Definition.>>  In general.--The term 
        `qualified carbon dioxide' means carbon dioxide captured from an 
        industrial source which--

[[Page 122 STAT. 3830]]

                    ``(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) <<NOTE: Regulations.>>  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) <<NOTE: Regulations.>>  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.

[[Page 122 STAT. 3831]]

            ``(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) <<NOTE: 26 USC 38.>>  
(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) <<NOTE: 26 USC 38 note.>>  Effective Date.--The amendments made 
by this section shall apply to carbon dioxide captured after the date of 
the enactment of this Act.
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) <<NOTE: 26 USC 7704 note.>>  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) <<NOTE: Contracts.>>  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.

[[Page 122 STAT. 3832]]

     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) <<NOTE: 26 USC 
168.>>  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) <<NOTE: Applicability. 26 USC 168 note.>>  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

[[Page 122 STAT. 3833]]

            (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) <<NOTE: 26 USC 40A.>>  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. <<NOTE: Definition.>>  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) <<NOTE: Applicability. 26 USC 40A note.>>  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.

[[Page 122 STAT. 3834]]

        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 <<NOTE: 26 USC 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) <<NOTE: Applicability. 26 USC 40 note.>>  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.--

[[Page 122 STAT. 3835]]

            (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) <<NOTE: Certification.>>  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--
                          ``(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 <<NOTE: 26 USC 6426.>>  amended by inserting 
        ``which meets the requirements of paragraph (4) and which is'' 
        after ``any liquid fuel''.

    (d) <<NOTE: 26 USC 6426 note.>>  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

[[Page 122 STAT. 3836]]

                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.--

[[Page 122 STAT. 3837]]

            ``(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)

[[Page 122 STAT. 3838]]

        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) <<NOTE: Regulations.>>  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) <<NOTE: 26 USC 30B.>>  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.''.

    (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''.

[[Page 122 STAT. 3839]]

            (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) <<NOTE: 26 USC 1400C.>>  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) <<NOTE: Applicability. 26 USC 24 note.>>  Effective Date.--The 
amendments made by this section shall apply to taxable years beginning 
after December 31, 2008.

    (f) <<NOTE: 26 USC 24 note.>>  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) <<NOTE: Applicability. 26 USC 4053 note.>>  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.''.

[[Page 122 STAT. 3840]]

    (c) <<NOTE: Applicability. 26 USC 30C note.>>  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) <<NOTE: 26 USC 7704.>>  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) <<NOTE: 26 USC 7704 note.>>  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) <<NOTE: Applicability. 26 USC 179C note.>>  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),

[[Page 122 STAT. 3841]]

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) <<NOTE: 26 USC 
132.>>  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) <<NOTE: Applicability. 26 USC 132 note.>>  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

[[Page 122 STAT. 3842]]

            ``(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 
                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--

[[Page 122 STAT. 3843]]

                          ``(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.--

[[Page 122 STAT. 3844]]

            (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) <<NOTE: Applicability. 26 USC 54A note.>>  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''.

[[Page 122 STAT. 3845]]

    (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) <<NOTE: Public information.>>  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) <<NOTE: 26 USC 25C.>>  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) <<NOTE: Applicability. 26 USC 25C note.>>  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

[[Page 122 STAT. 3846]]

                more than 324 kilowatt hours per year and 5.8 gallons 
                per cycle, and
                    ``(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 <<NOTE: 26 USC 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''.

[[Page 122 STAT. 3847]]

    (c) Types of Energy Efficient Appliances.--Subsection (d) of section 
45M <<NOTE: 26 USC 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.

[[Page 122 STAT. 3848]]

            ``(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) <<NOTE: Applicability. 26 USC 45M note.>>  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,

[[Page 122 STAT. 3849]]

                          ``(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) <<NOTE: 26 USC 168.>>  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) <<NOTE: Applicability. 26 USC 168 note.>>  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 <<NOTE: 26 USC 142 note.>>  is 
amended by striking ``issuance,'' and inserting ``issuance of the last 
issue with respect to such project,''.
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) <<NOTE: Effective date.>>  the 
                      original use of which commences with the taxpayer 
                      after August 31, 2008, and

[[Page 122 STAT. 3850]]

                          ``(iv) which is--
                                    ``(I) <<NOTE: Effective dates.>>  
                                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) <<NOTE: Effective date.>>  
                                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 <<NOTE: Effective date.>>  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--

[[Page 122 STAT. 3851]]

                                    ``(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) <<NOTE: Applicability. 26 USC 168 note.>>  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) <<NOTE: 26 USC 199.>>  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) <<NOTE: Applicability. 26 USC 199 note.>>  Effective Date.--The 
amendments made by this section shall apply to taxable years beginning 
after December 31, 2008.

[[Page 122 STAT. 3852]]

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 <<NOTE: 26 
USC 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).

[[Page 122 STAT. 3853]]

                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) <<NOTE: Effective dates.>>  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--
                          ``(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) <<NOTE: Effective dates.>>  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--

[[Page 122 STAT. 3854]]

                                    ``(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) <<NOTE: Effective date.>>  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) <<NOTE: 26 USC 907.>>  (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) <<NOTE: Effective date.>>  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) <<NOTE: 26 USC 907 note.>>  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.--

[[Page 122 STAT. 3855]]

            ``(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

[[Page 122 STAT. 3856]]

                          ``(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: <<NOTE: Deadline.>>  ``The 
                      written statement required under the preceding 
                      sentence shall be furnished on or before

[[Page 122 STAT. 3857]]

                      February 15 of the year following the calendar 
                      year in which the payment was made.''.
                    (C) Other statements.--Subsection (b) <<NOTE: 26 USC 
                6045.>>  of section 6045 is amended by adding at the end 
                the following: <<NOTE: Deadline.>>  ``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.''.

    (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

[[Page 122 STAT. 3858]]

        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 <<NOTE: Applicability.>>  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, <<NOTE: Ante, p. 2911.>> 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

[[Page 122 STAT. 3859]]

        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 <<NOTE: Regulations.>>  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 <<NOTE: Deadline.>>  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).''.

[[Page 122 STAT. 3860]]

            (2) Assessable penalties.--
                    (A) Subparagraph (B) of section 6724(d)(1), as 
                amended by the Housing Assistance Tax Act of 
                2008, <<NOTE: 26 USC 6724.>>  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) <<NOTE: 26 USC 1012 note.>>  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 <<NOTE: Applicability.>>  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 <<NOTE: 26 USC 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) <<NOTE: 26 USC 3301 note.>>  Effective Date.--The amendments 
made by this section shall apply to wages paid after December 31, 2008.
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) <<NOTE: 26 USC 4611 note.>>  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.

[[Page 122 STAT. 3861]]

    (b) Extension.--
            (1) In general.--Section 4611(f) <<NOTE: 26 USC 4611.>>  
        (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) <<NOTE: 26 USC 4611 note.>>  Effective date.--The 
        amendments made by this subsection shall take effect on the date 
        of the enactment of this Act.

DIVISION C--TAX <<NOTE: Tax Extenders and Alternative Minimum Tax Relief 
Act of 2008.>>  EXTENDERS AND ALTERNATIVE MINIMUM TAX RELIEF
SEC. 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

    (a) <<NOTE: 26 USC 1 note.>>  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.

[[Page 122 STAT. 3862]]

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.

[[Page 122 STAT. 3863]]

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) <<NOTE: 26 USC 
26.>>  (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) <<NOTE: 26 USC 26 note.>>   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)''.

    (b) <<NOTE: 26 USC 55 note.>>  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:

[[Page 122 STAT. 3864]]

    ``(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) <<NOTE: 26 USC 53 note.>>  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) <<NOTE: 26 
USC 164.>>  is amended by striking ``January 1, 2008'' and inserting 
``January 1, 2010''.

    (b) <<NOTE: 26 USC 164 note.>>  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) <<NOTE: 26 USC 222 note.>>  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) <<NOTE: 26 USC 62 note.>>  Effective Date.--The amendment made 
by subsection (a) shall apply to taxable years beginning after December 
31, 2007.

[[Page 122 STAT. 3865]]

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, <<NOTE: 26 USC 63.>>  is amended 
by inserting ``or 2009'' after ``2008''.

    (b) <<NOTE: 26 USC 63 note.>>  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) <<NOTE: 26 USC 408 note.>>  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) <<NOTE: 26 USC 871 note.>>  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) <<NOTE: 26 USC 2105 note.>>  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) <<NOTE: 26 USC 897 note.>>  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

[[Page 122 STAT. 3866]]

        ``after December 31, 2007'' and inserting ``after December 31, 
        2009''.

    (b) Termination of Alternative Incremental Credit.--Section 
41(h) <<NOTE: 26 USC 41.>>  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 <<NOTE: Applicability.>>  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) <<NOTE: 26 USC 41 note.>>  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''.

[[Page 122 STAT. 3867]]

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

    (a) In General.--Subparagraph (C) of section <<NOTE: 26 USC 954.>>  
954(c)(6) (relating to application) is amended by striking ``January 1, 
2009'' and inserting ``January 1, 2010''.

    (b) <<NOTE: 26 USC 954 note.>>  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''.
            (2) <<NOTE: 26 USC 168 note.>>  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) <<NOTE: 26 USC 168 note.>>  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.--

[[Page 122 STAT. 3868]]

                    ``(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 <<NOTE: 26 USC 168.>>  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) <<NOTE: 26 USC 168 note.>>  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) <<NOTE: 26 USC 512 note.>>  Effective Date.--The amendment made 
by this section shall apply to payments received or accrued after 
December 31, 2007.

[[Page 122 STAT. 3869]]

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

    (a) In General.--The last sentence of section <<NOTE: 26 USC 
1367.>>  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) <<NOTE: 26 USC 7652 note.>>  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 <<NOTE: 26 USC 30A note.>>  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) <<NOTE: 26 USC 30A note.>>  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) <<NOTE: 26 USC 199 note.>>  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--

[[Page 122 STAT. 3870]]

            ``(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) <<NOTE: Certification.>>  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

[[Page 122 STAT. 3871]]

                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--
            ``(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,

[[Page 122 STAT. 3872]]

                    ``(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 <<NOTE: 26 USC 54A.>>  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) <<NOTE: 26 USC 54A note.>>  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) <<NOTE: 26 USC 45A note.>>  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) <<NOTE: 26 USC 168 note.>>  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.--

[[Page 122 STAT. 3873]]

            (1) <<NOTE: 26 USC 45G note.>>  The amendment made by 
        subsection (a) shall apply to expenditures paid or incurred 
        during taxable years beginning after December 31, 2007.
            (2) <<NOTE: 26 USC 38 note.>>  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 <<NOTE: 26 USC 168.>>  
168(i)(15) (relating to termination) is amended by striking ``December 
31, 2007'' and inserting ``December 31, 2009''.

    (b) <<NOTE: 26 USC 168 note.>>  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) <<NOTE: 26 USC 198 note.>>  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 <<NOTE: 119 Stat. 2020.>>  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) <<NOTE: 26 USC 1400N note.>>  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) <<NOTE: 26 USC 170 note.>>  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) <<NOTE: 26 USC 1400 note.>>  Effective date.--The 
        amendments made by this subsection shall apply to periods 
        beginning after December 31, 2007.

    (b) Tax-Exempt Economic Development Bonds.--

[[Page 122 STAT. 3874]]

            (1) In general.--Subsection (b) of section <<NOTE: 26 USC 
        1400A.>>  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) <<NOTE: 26 USC 1400B note.>>  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) <<NOTE: 26 USC 1400C note.>>  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) <<NOTE: 26 USC 170 note.>>  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 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.''.

[[Page 122 STAT. 3875]]

            (2) <<NOTE: 26 USC 170 note.>>  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) <<NOTE: 26 USC 
170.>>  (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) <<NOTE: 26 USC 170 note.>>  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) <<NOTE: 26 USC 7608 note.>>  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).

[[Page 122 STAT. 3876]]

    (b) Disclosure Upon Request of Information Relating to Terrorist 
Activities.--Paragraph (7) of section 6103(i) <<NOTE: 26 USC 6103.>>  is 
amended by striking subparagraph (E).

    (c) <<NOTE: 26 USC 6103 note.>>  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) <<NOTE: 26 USC 24 note.>>  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

[[Page 122 STAT. 3877]]

                      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) <<NOTE: 26 USC 
181.>>  is amended by striking ``actors'' and all that follows and 
inserting ``actors, production personnel, directors, and producers.''.

    (e) <<NOTE: 26 USC 181 note.>>  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) <<NOTE: 26 USC 4161 note.>>  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

[[Page 122 STAT. 3878]]

        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--
                          (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--

[[Page 122 STAT. 3879]]

                    (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) <<NOTE: 26 USC 168.>>  
(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:

[[Page 122 STAT. 3880]]

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

    (c) <<NOTE: 26 USC 168 note.>>  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 <<NOTE: 26 USC 
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) <<NOTE: 26 USC 6694 note.>>  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.

[[Page 122 STAT. 3881]]

Subtitle B--Paul <<NOTE: Paul Wellstone and Pete Domenici Mental Health 
Parity and Addiction Equity Act of 2008.>>  Wellstone and Pete Domenici 
Mental Health Parity and Addiction Equity Act of 2008
SEC. 511. <<NOTE: 42 USC 201 note.>>  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

[[Page 122 STAT. 3882]]

        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 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.

[[Page 122 STAT. 3883]]

                    ``(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--

[[Page 122 STAT. 3884]]

                                    ``(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) <<NOTE: Publication.>>  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).

[[Page 122 STAT. 3885]]

    (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 122 STAT. 3886]]

            ``(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. <<NOTE: Reports.>>  All such determinations 
                shall be in a written report prepared

[[Page 122 STAT. 3887]]

                by the actuary. <<NOTE: Records.>>  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.'';

[[Page 122 STAT. 3888]]

            (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 <<NOTE: 26 USC 9812.>>  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

[[Page 122 STAT. 3889]]

                      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. <<NOTE: Applicability.>>  For purposes of the 
                preceding sentence, all persons 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) <<NOTE: Applicability.>>  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

[[Page 122 STAT. 3890]]

                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. <<NOTE: Reports.>>  All such determinations 
                shall be in a written report prepared by the actuary. 
                The report, <<NOTE: Records.>>  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

[[Page 122 STAT. 3891]]

                      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) <<NOTE: Deadline. 42 USC 300gg-5 note.>>  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) <<NOTE: 42 USC 300gg-5 note.>>  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--

[[Page 122 STAT. 3892]]

                    (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) <<NOTE: 42 USC 300gg-5 note.>>  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 <<NOTE: 29 USC 1185a.>>  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 <<NOTE: 42 USC 300gg-5.>>  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 <<NOTE: 26 USC 9812.>>  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.--

[[Page 122 STAT. 3893]]

            (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) <<NOTE: 16 USC 500 notes.>>  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 amended by striking sections 1 through 403 
and inserting the following:
``SEC. 1. <<NOTE: 16 USC 7101 note.>>  SHORT TITLE.

    ``This Act may be cited as the `Secure Rural Schools and Community 
Self-Determination Act of 2000'.
``SEC. 2. <<NOTE: 16 USC 7101.>>  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;

[[Page 122 STAT. 3894]]

                          ``(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. <<NOTE: 16 USC 7102.>>  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

[[Page 122 STAT. 3895]]

                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

[[Page 122 STAT. 3896]]

                    ``(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. <<NOTE: 16 USC 7111.>>  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. <<NOTE: 16 USC 7112.>>  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--

[[Page 122 STAT. 3897]]

                    ``(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 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

[[Page 122 STAT. 3898]]

                    ``(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.--

[[Page 122 STAT. 3899]]

                          ``(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. <<NOTE: 16 USC 7113.>>  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

[[Page 122 STAT. 3900]]

                      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. <<NOTE: 16 USC 7121.>>  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--

[[Page 122 STAT. 3901]]

                    ``(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
                    ``(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. <<NOTE: 16 USC 7122.>>  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. <<NOTE: 16 USC 7123.>>  SUBMISSION OF PROJECT 
                        PROPOSALS.

    ``(a) Submission of Project Proposals to Secretary Concerned.--
            ``(1) <<NOTE: Deadlines.>>  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.

[[Page 122 STAT. 3902]]

            ``(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. <<NOTE: 16 USC 7124.>>  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,

[[Page 122 STAT. 3903]]

        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) <<NOTE: Deadline. Notification.>>  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) <<NOTE: Federal Register, publication.>>  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

[[Page 122 STAT. 3904]]

                          ``(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.--
                          ``(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.

[[Page 122 STAT. 3905]]

``SEC. 205. <<NOTE: 16 USC 7125.>>  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

[[Page 122 STAT. 3906]]

            ``(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) <<NOTE: Deadline.>>  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;

[[Page 122 STAT. 3907]]

                          ``(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. <<NOTE: 16 USC 7126.>>  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.

[[Page 122 STAT. 3908]]

                    ``(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 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. <<NOTE: 16 USC 7127.>>  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

[[Page 122 STAT. 3909]]

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. <<NOTE: 16 USC 7128.>>  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. <<NOTE: 16 USC 7141.>>  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. <<NOTE: 16 USC 7142.>>  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.

[[Page 122 STAT. 3910]]

    ``(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) <<NOTE: Publication.>>  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. <<NOTE: 16 USC 7143.>>  CERTIFICATION.

    ``(a) <<NOTE: Deadline.>>  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. <<NOTE: 16 USC 7144.>>  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. <<NOTE: 16 USC 7151.>>  REGULATIONS.

    ``The Secretary of Agriculture and the Secretary of the Interior 
shall issue regulations to carry out the purposes of this Act.
``SEC. 402. <<NOTE: 16 USC 7152.>>  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. <<NOTE: 16 USC 7153.>>  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

[[Page 122 STAT. 3911]]

        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

[[Page 122 STAT. 3912]]

inserting ``$9,000,000 on October 1, 2009, and $9,000,000 on October 1, 
2010''.

                       TITLE VII--DISASTER RELIEF

   Subtitle A--Heartland <<NOTE: Heartland Disaster Tax Relief Act of 
2008.>>  and Hurricane Ike Disaster Relief
SEC. 701. <<NOTE: 26 USC 1 note.>>  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) <<NOTE: Applicability.>>  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 <<NOTE: Applicability.>>  purposes of 
        applying this section to benefits under the following 
        provisions, paragraph (1) shall be applied without regard to 
        subparagraph (B):

[[Page 122 STAT. 3913]]

                    (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) <<NOTE: Applicability.>>  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.

[[Page 122 STAT. 3914]]

                    (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,

[[Page 122 STAT. 3915]]

                    (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'',
                    (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

[[Page 122 STAT. 3916]]

                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),

[[Page 122 STAT. 3917]]

                    (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,

[[Page 122 STAT. 3918]]

                    (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) <<NOTE: Applicability.>>  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''.

[[Page 122 STAT. 3919]]

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

    (a) In General.--Section 6033(b) <<NOTE: 26 USC 6033.>>  (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) <<NOTE: 26 USC 6033 note.>>  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) <<NOTE: Applicability.>>  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
                          (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).

[[Page 122 STAT. 3920]]

            (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) <<NOTE: Texas.>>  in the case of Texas, 
                      the counties of Brazoria, Chambers, Galveston, 
                      Jefferson, and Orange, and
                          ``(ii) <<NOTE: Louisiana.>>  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) <<NOTE: Applicability.>>  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) <<NOTE: Texas.>>  in the case of Texas, 
                      the counties of Brazoria, Chambers, Galveston, 
                      Jefferson, and Orange, and
                          ``(ii) <<NOTE: Louisiana.>>  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

[[Page 122 STAT. 3921]]

        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 <<NOTE: 26 
        USC 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)''.

[[Page 122 STAT. 3922]]

                    (C) Section 165(i)(4) <<NOTE: 26 USC 165.>>  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

[[Page 122 STAT. 3923]]

        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) <<NOTE: 26 USC 165.>>  is amended by 
striking ``$100'' and inserting ``$500 ($100 for taxable years beginning 
after December 31, 2009)''.

    (d) <<NOTE: 26 USC 56 note.>>  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 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

[[Page 122 STAT. 3924]]

            ``(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) <<NOTE: 26 USC 198A note.>>  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) <<NOTE: 26 USC 
172.>>  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

[[Page 122 STAT. 3925]]

        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 <<NOTE: 26 USC 56.>>  is amended 
by adding at the end the following new paragraph:
            ``(3) Net operating loss attributable to federally declared 
        disasters.--In the <<NOTE: Applicability.>>  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) <<NOTE: 26 USC 56 note.>>  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) <<NOTE: Applicability.>>  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

[[Page 122 STAT. 3926]]

                      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) <<NOTE: 26 USC 143 note.>>  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, <<NOTE: 26 USC 
168.>>  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,
                          ``(iii) which--

[[Page 122 STAT. 3927]]

                                    ``(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

[[Page 122 STAT. 3928]]

                      not apply to all property in such class placed in 
                      service during such taxable year.
                    ``(C) <<NOTE: Applicability.>>  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 <<NOTE: Applicability.>>  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) <<NOTE: 26 USC 168 note.>>  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 <<NOTE: 26 USC 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.

[[Page 122 STAT. 3929]]

            ``(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) <<NOTE: Applicability.>>  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) <<NOTE: 26 USC 179 note.>>  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. <<NOTE: 26 USC 56 note.>>  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

[[Page 122 STAT. 3930]]

                    ``(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) <<NOTE: Regulations.>>  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 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.

[[Page 122 STAT. 3931]]

                          ``(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) <<NOTE: Deadline.>>  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, <<NOTE: 26 USC 26.>>  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) <<NOTE: 26 USC 457A note.>>  Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to

[[Page 122 STAT. 3932]]

        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) <<NOTE: Deadline. Guidance.>>  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

[[Page 122 STAT. 3933]]

        arrangement for purposes of section 409A of the Internal Revenue 
        Code of 1986.

    Approved October 3, 2008.

LEGISLATIVE HISTORY--H.R. 1424:
---------------------------------------------------------------------------

HOUSE REPORTS: No. 110-374, Pt. 1 (Comm. on Education and Labor), Pt. 2 
(Comm. on Ways and Means), and Pt. 3 (Comm. on Energy and Commerce).
CONGRESSIONAL RECORD, Vol. 154 (2008):
            Mar. 5, considered and passed House.
            Oct. 1, considered and passed Senate, amended.
            Oct. 3, House concurred in Senate amendments.

                                  <all>
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