II 

Calendar No. 898 

110TH CONGRESS 

2D SESSION S. 3335 

To amend the Internal Revenue Code of 1986 to extend certain expiring 

provisions, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 24 (legislative day, JULY 23), 2008 

Mr. BAUCUS (for himself and Mr. REID) introduced the following bill; which 

was read the first time 

JULY 25, 2008 

Read the second time and placed on the calendar 

A BILL 

To amend the Internal Revenue Code of 1986 to extend 

certain expiring provisions, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE, ETC. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Jobs, Energy, Families, and Disaster Relief Act of 

6 2008’’. 


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1 (b) REFERENCE.—Except as otherwise expressly pro2 vided, whenever in this Act an amendment or repeal is 

3 expressed in terms of an amendment to, or repeal of, a 

4 section or other provision, the reference shall be consid5 ered to be made to a section or other provision of the In6 ternal Revenue Code of 1986. 

7 (c) TABLE OF CONTENTS.—The table of contents for 

8 this Act is as follows: 

Sec. 1. Short title, etc. 

TITLE I—ENERGY TAX INCENTIVES 

Subtitle A—Energy Production Incentives 

PART I—RENEWABLE ENERGY INCENTIVES

Sec. 101. Renewable energy credit. 

Sec. 102. Production credit for electricity produced from marine renewables. 

Sec. 103. Energy credit. 

Sec. 104. Credit for residential energy efficient property. 

Sec. 105. Special rule to implement FERC and State electric restructuring policy. 

Sec. 106. New clean renewable energy bonds. 

PART II—CARBON MITIGATION 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. 

Sec. 114. Special rules for refund of the coal excise tax to certain coal producers and exporters. 

Sec. 115. Carbon audit of the tax code. 

Subtitle B—Transportation and Domestic Fuel Security Provisions 

Sec. 121. Inclusion of cellulosic biofuel in bonus depreciation for biomass ethanol plant property. 

Sec. 122. Credits for biodiesel and renewable diesel. 

Sec. 123. Clarification that credits for fuel are designed to provide an incentive 

for United States production. 

Sec. 124. Credit for new qualified plug-in electric drive motor vehicles. 

Sec. 125. Exclusion from heavy truck tax for idling reduction units and advanced insulation. 

Sec. 126. Transportation fringe benefit to bicycle commuters. 

Sec. 127. Alternative fuel vehicle refueling property credit. 


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Sec. 128. 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. 

Subtitle C—Energy Conservation and Efficiency Provisions 

Sec. 141. Qualified energy conservation bonds. 

Sec. 142. Credit for nonbusiness energy property. 

Sec. 143. Energy efficient commercial buildings deduction. 

Sec. 144. Modifications of energy efficient appliance credit for appliances produced after 2007. 

Sec. 145. Accelerated recovery period for depreciation of smart meters and 

smart grid systems. 

Sec. 146. Qualified green building and sustainable design projects. 

Sec. 147. Special depreciation allowance for certain reuse and recycling property. 

TITLE II—ONE-YEAR EXTENSION OF TEMPORARY PROVISIONS 

Subtitle A—Alternative Minimum Tax 

Sec. 201. Extension of alternative minimum tax relief for nonrefundable personal credits. 

Sec. 202. Extension of increased alternative minimum tax exemption amount. 

Sec. 203. Increase of AMT refundable credit amount for individuals with longterm unused credits for prior year minimum tax liability, etc. 

Subtitle B—Extensions Primarily Affecting Individuals 

Sec. 211. Deduction for State and local sales taxes. 

Sec. 212. Deduction of qualified tuition and related expenses. 

Sec. 213. Treatment of certain dividends of regulated investment companies. 

Sec. 214. Tax-free distributions from individual retirement plans for charitable 

purposes. 

Sec. 215. Deduction for certain expenses of elementary and secondary school 

teachers. 

Sec. 216. Stock in RIC for purposes of determining estates of nonresidents not 

citizens. 

Sec. 217. Qualified investment entities. 

Sec. 218. Exclusion of amounts received under qualified group legal services 

plans. 

Subtitle C—Extensions Primarily Affecting Businesses 

Sec. 221. Extension and modification of research credit. 

Sec. 222. Indian employment credit. 

Sec. 223. Extension and modification of new markets tax credit. 

Sec. 224. Railroad track maintenance. 

Sec. 225. Extension of mine rescue team training credit. 

Sec. 226. 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. 227. Seven-year cost recovery period for motorsports racing track facility. 

Sec. 228. Accelerated depreciation for business property on Indian reservation. 

Sec. 229. Extension of election to expense advanced mine safety equipment. 

Sec. 230. Expensing of environmental remediation costs. 


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Sec. 231. Deduction allowable with respect to income attributable to domestic 

production activities in Puerto Rico. 

Sec. 232. Modification of tax treatment of certain payments to controlling exempt organizations. 

Sec. 233. Qualified zone academy bonds. 

Sec. 234. Tax incentives for investment in the District of Columbia. 

Sec. 235. Economic development credit for American Samoa. 

Sec. 236. Extension and expansion of charitable deduction for contributions of 

food inventory. 

Sec. 237. Enhanced charitable deduction for contributions of book inventory to 

public schools. 

Sec. 238. Enhanced deduction for qualified computer contributions. 

Sec. 239. Basis adjustment to stock of S corporations making charitable contributions of property. 

Sec. 240. Work opportunity tax credit for Hurricane Katrina employees. 

Sec. 241. Subpart F exception for active financing income. 

Sec. 242. Look-thru rule for related controlled foreign corporations. 

Sec. 243. Expensing for certain qualified film and television productions. 

Sec. 244. Extension and modification of duty suspension on wool products; wool 

research fund; wool duty refunds. 

Subtitle D—Other Extensions 

Sec. 251. Authority to disclose information related to terrorist activities made 

permanent. 

Sec. 252. Authority for undercover operations made permanent. 

Sec. 253. Increase in limit on cover over of rum excise tax to Puerto Rico and 

the Virgin Islands. 

TITLE III—ADDITIONAL RELIEF 

Subtitle A—Individual Tax Relief 

Sec. 301. $8,500 income threshold used to calculate refundable portion of child 

tax credit. 

Sec. 302. Income averaging for amounts received in connection with the Exxon 

Valdez litigation. 

Subtitle B—Business Related Provisions 

Sec. 311. Provisions related to film and television productions. 

Sec. 312. Modification of rate of excise tax on certain wooden arrows designed 

for use by children. 

Sec. 313. Mental health parity. 

Subtitle C—Modification of Penalty on Understatement of Taxpayer’s 

Liability by Tax Return Preparer 

Sec. 321. Modification of penalty on understatement of taxpayer’s liability by 

tax return preparer. 

Subtitle D—Other Provisions 

Sec. 331. Secure rural schools and community self-determination program. 

Sec. 332. Clarification of uniform definition of child. 

TITLE IV—TRANSPORTATION AND INFRASTRUCTURE 


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Sec. 401. Restoration of Highway Trust Fund balance. 

TITLE V—DISASTER RELIEF 

Subtitle A—Relief for Federally Declared Disasters 

Sec. 501. Losses attributable to federally declared disasters. 

Sec. 502. Expensing of Qualified Disaster Expenses. 

Sec. 503. Net operating losses attributable to federally declared disasters. 

Sec. 504. Waiver of certain mortgage revenue bond requirements following federally declared disasters. 

Sec. 505. Other relief for federally declared disasters. 

Sec. 506. Sunset. 

Subtitle B—Other Disaster Relief Provisions 

Sec. 511. Restructuring of New York Liberty Zone tax credits. 

Sec. 512. Reporting requirements relating to disaster relief contributions. 

TITLE VI—REVENUE PROVISIONS 

Sec. 601. Nonqualified deferred compensation from certain tax indifferent parties. 

Sec. 602. Delay in application of worldwide allocation of interest. 

Sec. 603. Broker reporting of customer’s basis in securities transactions. 

Sec. 604. Time for payment of corporate estimated taxes. 

1 TITLE I—ENERGY TAX 

2 INCENTIVES 

3 Subtitle A—Energy Production 

4 Incentives 

5 PART I—RENEWABLE ENERGY INCENTIVES 

6 SEC. 101. RENEWABLE ENERGY CREDIT. 

7 (a) EXTENSION OF CREDIT.— 

8 (1) 1-YEAR EXTENSION FOR WIND FACILI9 TIES.—Paragraph (1) of section 45(d) is amended 

10 by striking ‘‘January 1, 2009’’ and inserting ‘‘Janu11 ary 1, 2010’’. 

12 (2) 3-YEAR EXTENSION FOR CERTAIN OTHER

13 FACILITIES.—Each of the following provisions of 


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1 section 45(d) is amended by striking ‘‘January 1, 

2 2009’’ and inserting ‘‘January 1, 2012’’: 

3 (A) Clauses (i) and (ii) of paragraph 

4 (2)(A). 

5 (B) Clauses (i)(I) and (ii) of paragraph 

6 (3)(A). 

7 (C) Paragraph (4). 

8 (D) Paragraph (5). 

9 (E) Paragraph (6). 

10 (F) Paragraph (7). 

11 (G) Subparagraphs (A) and (B) of para12 graph (9). 

13 (b) MODIFICATION OF CREDIT PHASEOUT.— 

14 (1) REPEAL OF PHASEOUT.—Subsection (b) of 

15 section 45 is amended— 

16 (A) by striking paragraph (1), and 

17 (B) by striking ‘‘the 8 cent amount in 

18 paragraph (1),’’ in paragraph (2) thereof. 

19 (2) LIMITATION BASED ON INVESTMENT IN FA20 CILITY.—Subsection (b) of section 45 is amended by 

21 inserting before paragraph (2) the following new 

22 paragraph: 

23 ‘‘(1) LIMITATION BASED ON INVESTMENT IN

24 FACILITY.— 


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1 ‘‘(A) IN GENERAL.—In the case of any 

2 qualified facility originally placed in service 

3 after December 31, 2009, the amount of the 

4 credit determined under subsection (a) for any 

5 taxable year with respect to electricity produced 

6 at such facility shall not exceed the product 

7 of— 

8 ‘‘(i) the applicable percentage with re9 spect to such facility, multiplied by 

10 ‘‘(ii) the eligible basis of such facility. 

11 ‘‘(B) CARRYFORWARD OF UNUSED LIMITA12 TION AND EXCESS CREDIT.— 

13 ‘‘(i) UNUSED LIMITATION.—If the 

14 limitation imposed under subparagraph (A) 

15 with respect to any facility for any taxable 

16 year exceeds the prelimitation credit for 

17 such facility for such taxable year, the lim18 itation imposed under subparagraph (A) 

19 with respect to such facility for the suc20 ceeding taxable year shall be increased by 

21 the amount of such excess. 

22 ‘‘(ii) EXCESS CREDIT.—If the 

23 prelimitation credit with respect to any fa24 cility for any taxable year exceeds the limi25 tation imposed under subparagraph (A) 


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1 with respect to such facility for such tax2 able year, the credit determined under sub3 section (a) with respect to such facility for 

4 the succeeding taxable year (determined 

5 before the application of subparagraph (A) 

6 for such succeeding taxable year) shall be 

7 increased by the amount of such excess. 

8 With respect to any facility, no amount 

9 may be carried forward under this clause 

10 to any taxable year beginning after the 10- 

11 year period described in subsection 

12 (a)(2)(A)(ii) with respect to such facility. 

13 ‘‘(iii) PRELIMITATION CREDIT.—The 

14 term ‘prelimitation credit’ with respect to 

15 any facility for a taxable year means the 

16 credit determined under subsection (a) 

17 with respect to such facility for such tax18 able year, determined without regard to 

19 subparagraph (A) and after taking into ac20 count any increase for such taxable year 

21 under clause (ii). 

22 ‘‘(C) APPLICABLE PERCENTAGE.—For 

23 purposes of this paragraph— 

24 ‘‘(i) IN GENERAL.—The term ‘applica25 ble percentage’ means, with respect to any 


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1 facility, the appropriate percentage pre2 scribed by the Secretary for the month in 

3 which such facility is originally placed in 

4 service. 

5 ‘‘(ii) METHOD OF PRESCRIBING AP6 PLICABLE PERCENTAGES.—The applicable 

7 percentages prescribed by the Secretary for 

8 any month under clause (i) shall be per9 centages which yield over a 10-year period 

10 amounts of limitation under subparagraph 

11 (A) which have a present value equal to 35 

12 percent of the eligible basis of the facility. 

13 ‘‘(iii) METHOD OF DISCOUNTING.— 

14 The present value under clause (ii) shall be 

15 determined— 

16 ‘‘(I) as of the last day of the 1st 

17 year of the 10-year period referred to 

18 in clause (ii), 

19 ‘‘(II) by using a discount rate 

20 equal to the greater of 110 percent of 

21 the Federal long-term rate as in effect 

22 under section 1274(d) for the month 

23 preceding the month for which the ap24 plicable percentage is being pre25 scribed, or 4.5 percent, and 


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1 ‘‘(III) by taking into account the 

2 limitation under subparagraph (A) for 

3 any year on the last day of such year. 

4 ‘‘(D) ELIGIBLE BASIS.—For purposes of 

5 this paragraph— 

6 ‘‘(i) IN GENERAL.—The term ‘eligible 

7 basis’ means, with respect to any facility, 

8 the sum of— 

9 ‘‘(I) the basis of such facility de10 termined as of the time that such fa11 cility is originally placed in service, 

12 and 

13 ‘‘(II) the portion of the basis of 

14 any shared qualified property which is 

15 properly allocable to such facility 

16 under clause (ii). 

17 ‘‘(ii) RULES FOR ALLOCATION.—For 

18 purposes of subclause (II) of clause (i), the 

19 basis of shared qualified property shall be 

20 allocated among all qualified facilities 

21 which are projected to be placed in service 

22 and which require utilization of such prop23 erty in proportion to projected generation 

24 from such facilities. 


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1 ‘‘(iii) SHARED QUALIFIED PROP2 ERTY.—For purposes of this paragraph, 

3 the term ‘shared qualified property’ means, 

4 with respect to any facility, any property 

5 described in section 168(e)(3)(B)(vi)— 

6 ‘‘(I) which a qualified facility will 

7 require for utilization of such facility, 

8 and 

9 ‘‘(II) which is not a qualified fa10 cility. 

11 ‘‘(iv) SPECIAL RULE RELATING TO

12 GEOTHERMAL FACILITIES.—In the case of 

13 any qualified facility using geothermal en14 ergy to produce electricity, the basis of 

15 such facility for purposes of this paragraph 

16 shall be determined as though intangible 

17 drilling and development costs described in 

18 section 263(c) were capitalized rather than 

19 expensed. 

20 ‘‘(E) SPECIAL RULE FOR FIRST AND LAST

21 YEAR OF CREDIT PERIOD.—In the case of any 

22 taxable year any portion of which is not within 

23 the 10-year period described in subsection 

24 (a)(2)(A)(ii) with respect to any facility, the 

25 amount of the limitation under subparagraph 


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1 (A) with respect to such facility shall be re2 duced by an amount which bears the same ratio 

3 to the amount of such limitation (determined 

4 without regard to this subparagraph) as such 

5 portion of the taxable year which is not within 

6 such period bears to the entire taxable year. 

7 ‘‘(F) ELECTION TO TREAT ALL FACILITIES

8 PLACED IN SERVICE IN A YEAR AS 1 FACIL9 ITY.—At the election of the taxpayer, all quali10 fied facilities which are part of the same project 

11 and which are placed in service during the same 

12 calendar year shall be treated for purposes of 

13 this section as 1 facility which is placed in serv14 ice at the mid-point of such year or the first 

15 day of the following calendar year.’’. 

16 (c) TRASH FACILITY CLARIFICATION.—Paragraph 

17 (7) of section 45(d) is amended— 

18 (1) by striking ‘‘facility which burns’’ and in19 serting ‘‘facility (other than a facility described in 

20 paragraph (6)) which uses’’, and 

21 (2) by striking ‘‘COMBUSTION’’. 

22 (d) EXPANSION OF BIOMASS FACILITIES.— 

23 (1) OPEN-LOOP BIOMASS FACILITIES.—Para24 graph (3) of section 45(d) is amended by redesig25 nating subparagraph (B) as subparagraph (C) and 


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1 by inserting after subparagraph (A) the following 

2 new subparagraph: 

3 ‘‘(B) EXPANSION OF FACILITY.—Such 

4 term shall include a new unit placed in service 

5 after the date of the enactment of this subpara6 graph in connection with a facility described in 

7 subparagraph (A), but only to the extent of the 

8 increased amount of electricity produced at the 

9 facility by reason of such new unit.’’. 

10 (2) CLOSED-LOOP BIOMASS FACILITIES.—Para11 graph (2) of section 45(d) is amended by redesig12 nating subparagraph (B) as subparagraph (C) and 

13 inserting after subparagraph (A) the following new 

14 subparagraph: 

15 ‘‘(B) EXPANSION OF FACILITY.—Such 

16 term shall include a new unit placed in service 

17 after the date of the enactment of this subpara18 graph in connection with a facility described in 

19 subparagraph (A)(i), but only to the extent of 

20 the increased amount of electricity produced at 

21 the facility by reason of such new unit.’’. 

22 (e) SALES OF NET ELECTRICITY TO REGULATED

23 PUBLIC UTILITIES TREATED AS SALES TO UNRELATED

24 PERSONS.—Paragraph (4) of section 45(e) is amended by 

25 adding at the end the following new sentence: ‘‘The net 


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1 amount of electricity sold by any taxpayer to a regulated 

2 public utility (as defined in section 7701(a)(33)) shall be 

3 treated as sold to an unrelated person.’’. 

4 (f) MODIFICATION OF RULES FOR HYDROPOWER

5 PRODUCTION.—Subparagraph (C) of section 45(c)(8) is 

6 amended to read as follows: 

7 ‘‘(C) NONHYDROELECTRIC DAM.—For pur8 poses of subparagraph (A), a facility is de9 scribed in this subparagraph if— 

10 ‘‘(i) the hydroelectric project installed 

11 on the nonhydroelectric dam is licensed by 

12 the Federal Energy Regulatory Commis13 sion and meets all other applicable environ14 mental, licensing, and regulatory require15 ments, 

16 ‘‘(ii) the nonhydroelectric dam was 

17 placed in service before the date of the en18 actment of this paragraph and operated 

19 for flood control, navigation, or water sup20 ply purposes and did not produce hydro21 electric power on the date of the enactment 

22 of this paragraph, and 

23 ‘‘(iii) the hydroelectric project is oper24 ated so that the water surface elevation at 

25 any given location and time that would 


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1 have occurred in the absence of the hydro2 electric project is maintained, subject to 

3 any license requirements imposed under 

4 applicable law that change the water sur5 face elevation for the purpose of improving 

6 environmental quality of the affected wa7 terway. 

8 The Secretary, in consultation with the Federal 

9 Energy Regulatory Commission, shall certify if 

10 a hydroelectric project licensed at a nonhydro11 electric dam meets the criteria in clause (iii). 

12 Nothing in this section shall affect the stand13 ards under which the Federal Energy Regu14 latory Commission issues licenses for and regu15 lates hydropower projects under part I of the 

16 Federal Power Act.’’. 

17 (g) EFFECTIVE DATE.— 

18 (1) IN GENERAL.—Except as otherwise pro19 vided in this subsection, the amendments made by 

20 this section shall apply to property originally placed 

21 in service after December 31, 2008. 

22 (2) REPEAL OF CREDIT PHASEOUT.—The 

23 amendments made by subsection (b)(1) shall apply 

24 to taxable years ending after December 31, 2008. 


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1 (3) LIMITATION BASED ON INVESTMENT IN FA2 CILITY.—The amendment made by subsection (b)(2) 

3 shall apply to property originally placed in service 

4 after December 31, 2009. 

5 (4) TRASH FACILITY CLARIFICATION; SALES TO

6 RELATED REGULATED PUBLIC UTILITIES.—The 

7 amendments made by subsections (c) and (e) shall 

8 apply to electricity produced and sold after the date 

9 of the enactment of this Act. 

10 (5) EXPANSION OF BIOMASS FACILITIES.—The 

11 amendments made by subsection (d) shall apply to 

12 property placed in service after the date of the en13 actment of this Act. 

14 SEC. 102. PRODUCTION CREDIT FOR ELECTRICITY PRO15 DUCED FROM MARINE RENEWABLES. 

16 (a) IN GENERAL.—Paragraph (1) of section 45(c) is 

17 amended by striking ‘‘and’’ at the end of subparagraph 

18 (G), by striking the period at the end of subparagraph 

19 (H) and inserting ‘‘, and’’, and by adding at the end the 

20 following new subparagraph: 

21 ‘‘(I) marine and hydrokinetic renewable en22 ergy.’’. 

23 (b) MARINE RENEWABLES.—Subsection (c) of sec24 tion 45 is amended by adding at the end the following 

25 new paragraph: 


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1 ‘‘(10) MARINE AND HYDROKINETIC RENEW2 ABLE ENERGY.— 

3 ‘‘(A) IN GENERAL.—The term ‘marine and 

4 hydrokinetic renewable energy’ means energy 

5 derived from— 

6 ‘‘(i) waves, tides, and currents in 

7 oceans, estuaries, and tidal areas, 

8 ‘‘(ii) free flowing water in rivers, 

9 lakes, and streams, 

10 ‘‘(iii) free flowing water in an irriga11 tion system, canal, or other man-made 

12 channel, including projects that utilize non13 mechanical structures to accelerate the 

14 flow of water for electric power production 

15 purposes, or 

16 ‘‘(iv) differentials in ocean tempera17 ture (ocean thermal energy conversion). 

18 ‘‘(B) EXCEPTIONS.—Such term shall not 

19 include any energy which is derived from any 

20 source which utilizes a dam, diversionary struc21 ture (except as provided in subparagraph 

22 (A)(iii)), or impoundment for electric power 

23 production purposes.’’. 


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1 (c) DEFINITION OF FACILITY.—Subsection (d) of 

2 section 45 is amended by adding at the end the following 

3 new paragraph: 

4 ‘‘(11) MARINE AND HYDROKINETIC RENEW5 ABLE ENERGY FACILITIES.—In the case of a facility 

6 producing electricity from marine and hydrokinetic 

7 renewable energy, the term ‘qualified facility’ means 

8 any facility owned by the taxpayer— 

9 ‘‘(A) which has a nameplate capacity rat10 ing of at least 150 kilowatts, and 

11 ‘‘(B) which is originally placed in service 

12 on or after the date of the enactment of this 

13 paragraph and before January 1, 2012.’’. 

14 (d) CREDIT RATE.—Subparagraph (A) of section 

15 45(b)(4) is amended by striking ‘‘or (9)’’ and inserting 

16 ‘‘(9), or (11)’’. 

17 (e) COORDINATION WITH SMALL IRRIGATION

18 POWER.—Paragraph (5) of section 45(d), as amended by 

19 section 101, is amended by striking ‘‘January 1, 2012’’ 

20 and inserting ‘‘the date of the enactment of paragraph 

21 (11)’’. 

22 (f) EFFECTIVE DATE.—The amendments made by 

23 this section shall apply to electricity produced and sold 

24 after the date of the enactment of this Act, in taxable 

25 years ending after such date. 


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1 SEC. 103. ENERGY CREDIT. 

2 (a) EXTENSION OF CREDIT.— 

3 (1) SOLAR ENERGY PROPERTY.—Paragraphs 

4 (2)(A)(i)(II) and (3)(A)(ii) of section 48(a) are each 

5 amended by striking ‘‘January 1, 2009’’ and insert6 ing ‘‘January 1, 2017’’. 

7 (2) FUEL CELL PROPERTY.—Subparagraph (E) 

8 of section 48(c)(1) is amended by striking ‘‘Decem9 ber 31, 2008’’ and inserting ‘‘December 31, 2017’’. 

10 (3) MICROTURBINE PROPERTY.—Subparagraph 

11 (E) of section 48(c)(2) is amended by striking ‘‘De12 cember 31, 2008’’ and inserting ‘‘December 31, 

13 2017’’. 

14 (b) ALLOWANCE OF ENERGY CREDIT AGAINST AL15 TERNATIVE MINIMUM TAX.—Subparagraph (B) of section 

16 38(c)(4), as amended by the Housing Assistance Tax Act 

17 of 2008, is amended by redesignating clauses (v) and (vi) 

18 as clauses (vi) and (vii), respectively, and by inserting 

19 after clause (iv) the following new clause: 

20 ‘‘(v) the credit determined under sec21 tion 46 to the extent that such credit is at22 tributable to the energy credit determined 

23 under section 48, and’’. 

24 (c) ENERGY CREDIT FOR COMBINED HEAT AND

25 POWER SYSTEM PROPERTY.— 


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1 (1) IN GENERAL.—Section 48(a)(3)(A) is 

2 amended by striking ‘‘or’’ at the end of clause (iii), 

3 by inserting ‘‘or’’ at the end of clause (iv), and by 

4 adding at the end the following new clause: 

5 ‘‘(v) combined heat and power system 

6 property,’’. 

7 (2) COMBINED HEAT AND POWER SYSTEM

8 PROPERTY.—Section 48 is amended by adding at 

9 the end the following new subsection: 

10 ‘‘(d) COMBINED HEAT AND POWER SYSTEM PROP11 ERTY.—For purposes of subsection (a)(3)(A)(v)— 

12 ‘‘(1) COMBINED HEAT AND POWER SYSTEM

13 PROPERTY.—The term ‘combined heat and power 

14 system property’ means property comprising a sys15 tem— 

16 ‘‘(A) which uses the same energy source 

17 for the simultaneous or sequential generation of 

18 electrical power, mechanical shaft power, or 

19 both, in combination with the generation of 

20 steam or other forms of useful thermal energy 

21 (including heating and cooling applications), 

22 ‘‘(B) which produces— 

23 ‘‘(i) at least 20 percent of its total 

24 useful energy in the form of thermal en25 ergy which is not used to produce electrical 


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1 or mechanical power (or combination 

2 thereof), and 

3 ‘‘(ii) at least 20 percent of its total 

4 useful energy in the form of electrical or 

5 mechanical power (or combination thereof), 

6 ‘‘(C) the energy efficiency percentage of 

7 which exceeds 60 percent, and 

8 ‘‘(D) which is placed in service before Jan9 uary 1, 2018. 

10 ‘‘(2) LIMITATION.— 

11 ‘‘(A) IN GENERAL.—In the case of com12 bined heat and power system property with an 

13 electrical capacity in excess of the applicable ca14 pacity placed in service during the taxable year, 

15 the credit under subsection (a)(1) (determined 

16 without regard to this paragraph) for such year 

17 shall be equal to the amount which bears the 

18 same ratio to such credit as the applicable ca19 pacity bears to the capacity of such property. 

20 ‘‘(B) APPLICABLE CAPACITY.—For pur21 poses of subparagraph (A), the term ‘applicable 

22 capacity’ means 15 megawatts or a mechanical 

23 energy capacity of more than 20,000 horse24 power or an equivalent combination of electrical 

25 and mechanical energy capacities. 


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1 ‘‘(C) MAXIMUM CAPACITY.—The term 

2 ‘combined heat and power system property’ 

3 shall not include any property comprising a sys4 tem if such system has a capacity in excess of 

5 50 megawatts or a mechanical energy capacity 

6 in excess of 67,000 horsepower or an equivalent 

7 combination of electrical and mechanical energy 

8 capacities. 

9 ‘‘(3) SPECIAL RULES.— 

10 ‘‘(A) ENERGY EFFICIENCY PERCENT11 AGE.—For purposes of this subsection, the en12 ergy efficiency percentage of a system is the 

13 fraction— 

14 ‘‘(i) the numerator of which is the 

15 total useful electrical, thermal, and me16 chanical power produced by the system at 

17 normal operating rates, and expected to be 

18 consumed in its normal application, and 

19 ‘‘(ii) the denominator of which is the 

20 lower heating value of the fuel sources for 

21 the system. 

22 ‘‘(B) DETERMINATIONS MADE ON BTU

23 BASIS.—The energy efficiency percentage and 

24 the percentages under paragraph (1)(B) shall 

25 be determined on a Btu basis. 


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1 ‘‘(C) INPUT AND OUTPUT PROPERTY NOT

2 INCLUDED.—The term ‘combined heat and 

3 power system property’ does not include prop4 erty used to transport the energy source to the 

5 facility or to distribute energy produced by the 

6 facility. 

7 ‘‘(4) SYSTEMS USING BIOMASS.—If a system is 

8 designed to use biomass (within the meaning of 

9 paragraphs (2) and (3) of section 45(c) without re10 gard to the last sentence of paragraph (3)(A)) for at 

11 least 90 percent of the energy source— 

12 ‘‘(A) paragraph (1)(C) shall not apply, but 

13 ‘‘(B) the amount of credit determined 

14 under subsection (a) with respect to such sys15 tem shall not exceed the amount which bears 

16 the same ratio to such amount of credit (deter17 mined without regard to this paragraph) as the 

18 energy efficiency percentage of such system 

19 bears to 60 percent.’’. 

20 (d) INCREASE OF CREDIT LIMITATION FOR FUEL

21 CELL PROPERTY.—Subparagraph (B) of section 48(c)(1) 

22 is amended by striking ‘‘$500’’ and inserting ‘‘$1,500’’. 

23 (e) PUBLIC UTILITY PROPERTY TAKEN INTO AC24 COUNT.— 


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1 (1) IN GENERAL.—Paragraph (3) of section 

2 48(a) is amended by striking the second sentence 

3 thereof. 

4 (2) CONFORMING AMENDMENTS.— 

5 (A) Paragraph (1) of section 48(c) is 

6 amended by striking subparagraph (D) and re7 designating subparagraph (E) as subparagraph 

8 (D). 

9 (B) Paragraph (2) of section 48(c) is 

10 amended by striking subparagraph (D) and re11 designating subparagraph (E) as subparagraph 

12 (D). 

13 (f) EFFECTIVE DATE.— 

14 (1) IN GENERAL.—Except as otherwise pro15 vided in this subsection, the amendments made by 

16 this section shall take effect on the date of the en17 actment of this Act. 

18 (2) ALLOWANCE AGAINST ALTERNATIVE MIN19 IMUM TAX.—The amendments made by subsection 

20 (b) shall apply to credits determined under section 

21 46 of the Internal Revenue Code of 1986 in taxable 

22 years beginning after the date of the enactment of 

23 this Act and to carrybacks of such credits. 

24 (3) COMBINED HEAT AND POWER AND FUEL

25 CELL PROPERTY.—The amendments made by subVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00024 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 sections (c) and (d) shall apply to periods after the 

2 date of the enactment of this Act, in taxable years 

3 ending after such date, under rules similar to the 

4 rules of section 48(m) of the Internal Revenue Code 

5 of 1986 (as in effect on the day before the date of 

6 the enactment of the Revenue Reconciliation Act of 

7 1990). 

8 (4) PUBLIC UTILITY PROPERTY.—The amend9 ments made by subsection (e) shall apply to periods 

10 after February 13, 2008, in taxable years ending 

11 after such date, under rules similar to the rules of 

12 section 48(m) of the Internal Revenue Code of 1986 

13 (as in effect on the day before the date of the enact14 ment of the Revenue Reconciliation Act of 1990). 

15 SEC. 104. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT 

16 PROPERTY. 

17 (a) EXTENSION.—Section 25D(g) is amended by 

18 striking ‘‘December 31, 2008’’ and inserting ‘‘December 

19 31, 2016’’. 

20 (b) MAXIMUM CREDIT FOR SOLAR ELECTRIC PROP21 ERTY.— 

22 (1) IN GENERAL.—Section 25D(b)(1)(A) is 

23 amended by striking ‘‘$2,000’’ and inserting 

24 ‘‘$4,000’’. 


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1 (2) CONFORMING AMENDMENT.—Section 

2 25D(e)(4)(A)(i) is amended by striking ‘‘$6,667’’ 

3 and inserting ‘‘$13,333’’. 

4 (c) CREDIT FOR RESIDENTIAL WIND PROPERTY.— 

5 (1) IN GENERAL.—Section 25D(a) is amended 

6 by striking ‘‘and’’ at the end of paragraph (2), by 

7 striking the period at the end of paragraph (3) and 

8 inserting ‘‘, and’’, and by adding at the end the fol9 lowing new paragraph: 

10 ‘‘(4) 30 percent of the qualified small wind en11 ergy property expenditures made by the taxpayer 

12 during such year.’’. 

13 (2) LIMITATION.—Section 25D(b)(1) is amend14 ed by striking ‘‘and’’ at the end of subparagraph 

15 (B), by striking the period at the end of subpara16 graph (C) and inserting ‘‘, and’’, and by adding at 

17 the end the following new subparagraph: 

18 ‘‘(D) $500 with respect to each half kilo19 watt of capacity (not to exceed $4,000) of wind 

20 turbines for which qualified small wind energy 

21 property expenditures are made.’’. 

22 (3) QUALIFIED SMALL WIND ENERGY PROP23 ERTY EXPENDITURES.— 


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1 (A) IN GENERAL.—Section 25D(d) is 

2 amended by adding at the end the following 

3 new paragraph: 

4 ‘‘(4) QUALIFIED SMALL WIND ENERGY PROP5 ERTY EXPENDITURE.—The term ‘qualified small 

6 wind energy property expenditure’ means an expend7 iture for property which uses a wind turbine to gen8 erate electricity for use in connection with a dwelling 

9 unit located in the United States and used as a resi10 dence by the taxpayer.’’. 

11 (B) NO DOUBLE BENEFIT.—Section 

12 45(d)(1) is amended by adding at the end the 

13 following new sentence: ‘‘Such term shall not 

14 include any facility with respect to which any 

15 qualified small wind energy property expendi16 ture (as defined in subsection (d)(4) of section 

17 25D) is taken into account in determining the 

18 credit under such section.’’. 

19 (4) MAXIMUM EXPENDITURES IN CASE OF

20 JOINT OCCUPANCY.—Section 25D(e)(4)(A) is 

21 amended by striking ‘‘and’’ at the end of clause (ii), 

22 by striking the period at the end of clause (iii) and 

23 inserting ‘‘, and’’, and by adding at the end the fol24 lowing new clause: 


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1 ‘‘(iv) $1,667 in the case of each half 

2 kilowatt of capacity (not to exceed 

3 $13,333) of wind turbines for which quali4 fied small wind energy property expendi5 tures are made.’’. 

6 (d) CREDIT FOR GEOTHERMAL HEAT PUMP SYS7 TEMS.— 

8 (1) IN GENERAL.—Section 25D(a), as amended 

9 by subsection (c), is amended by striking ‘‘and’’ at 

10 the end of paragraph (3), by striking the period at 

11 the end of paragraph (4) and inserting ‘‘, and’’, and 

12 by adding at the end the following new paragraph: 

13 ‘‘(5) 30 percent of the qualified geothermal 

14 heat pump property expenditures made by the tax15 payer during such year.’’. 

16 (2) LIMITATION.—Section 25D(b)(1), as 

17 amended by subsection (c), is amended by striking 

18 ‘‘and’’ at the end of subparagraph (C), by striking 

19 the period at the end of subparagraph (D) and in20 serting ‘‘, and’’, and by adding at the end the fol21 lowing new subparagraph: 

22 ‘‘(E) $2,000 with respect to any qualified 

23 geothermal heat pump property expenditures.’’. 

24 (3) QUALIFIED GEOTHERMAL HEAT PUMP

25 PROPERTY EXPENDITURE.—Section 25D(d), as 


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1 amended by subsection (c), is amended by adding at 

2 the end the following new paragraph: 

3 ‘‘(5) QUALIFIED GEOTHERMAL HEAT PUMP

4 PROPERTY EXPENDITURE.— 

5 ‘‘(A) IN GENERAL.—The term ‘qualified 

6 geothermal heat pump property expenditure’ 

7 means an expenditure for qualified geothermal 

8 heat pump property installed on or in connec9 tion with a dwelling unit located in the United 

10 States and used as a residence by the taxpayer. 

11 ‘‘(B) QUALIFIED GEOTHERMAL HEAT

12 PUMP PROPERTY.—The term ‘qualified geo13 thermal heat pump property’ means any equip14 ment which— 

15 ‘‘(i) uses the ground or ground water 

16 as a thermal energy source to heat the 

17 dwelling unit referred to in subparagraph 

18 (A) or as a thermal energy sink to cool 

19 such dwelling unit, and 

20 ‘‘(ii) meets the requirements of the 

21 Energy Star program which are in effect 

22 at the time that the expenditure for such 

23 equipment is made.’’. 

24 (4) MAXIMUM EXPENDITURES IN CASE OF

25 JOINT OCCUPANCY.—Section 25D(e)(4)(A), as 


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1 amended by subsection (c), is amended by striking 

2 ‘‘and’’ at the end of clause (iii), by striking the pe3 riod at the end of clause (iv) and inserting ‘‘, and’’, 

4 and by adding at the end the following new clause: 

5 ‘‘(v) $6,667 in the case of any quali6 fied geothermal heat pump property ex7 penditures.’’. 

8 (e) CREDIT ALLOWED AGAINST ALTERNATIVE MIN9 IMUM TAX.— 

10 (1) IN GENERAL.—Subsection (c) of section 

11 25D is amended to read as follows: 

12 ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX; 

13 CARRYFORWARD OF UNUSED CREDIT.— 

14 ‘‘(1) LIMITATION BASED ON AMOUNT OF

15 TAX.—In the case of a taxable year to which section 

16 26(a)(2) does not apply, the credit allowed under 

17 subsection (a) for the taxable year shall not exceed 

18 the excess of— 

19 ‘‘(A) the sum of the regular tax liability 

20 (as defined in section 26(b)) plus the tax im21 posed by section 55, over 

22 ‘‘(B) the sum of the credits allowable 

23 under this subpart (other than this section) and 

24 section 27 for the taxable year. 

25 ‘‘(2) CARRYFORWARD OF UNUSED CREDIT.— 


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1 ‘‘(A) RULE FOR YEARS IN WHICH ALL

2 PERSONAL CREDITS ALLOWED AGAINST REG3 ULAR AND ALTERNATIVE MINIMUM TAX.—In 

4 the case of a taxable year to which section 

5 26(a)(2) applies, if the credit allowable under 

6 subsection (a) exceeds the limitation imposed by 

7 section 26(a)(2) for such taxable year reduced 

8 by the sum of the credits allowable under this 

9 subpart (other than this section), such excess 

10 shall be carried to the succeeding taxable year 

11 and added to the credit allowable under sub12 section (a) for such succeeding taxable year. 

13 ‘‘(B) RULE FOR OTHER YEARS.—In the 

14 case of a taxable year to which section 26(a)(2) 

15 does not apply, if the credit allowable under 

16 subsection (a) exceeds the limitation imposed by 

17 paragraph (1) for such taxable year, such ex18 cess shall be carried to the succeeding taxable 

19 year and added to the credit allowable under 

20 subsection (a) for such succeeding taxable 

21 year.’’. 

22 (2) CONFORMING AMENDMENTS.— 

23 (A) Section 23(b)(4)(B) is amended by in24 serting ‘‘and section 25D’’ after ‘‘this section’’. 


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1 (B) Section 24(b)(3)(B) is amended by 

2 striking ‘‘and 25B’’ and inserting ‘‘, 25B, and 

3 25D’’. 

4 (C) Section 25B(g)(2) is amended by strik5 ing ‘‘section 23’’ and inserting ‘‘sections 23 and 

6 25D’’. 

7 (D) Section 26(a)(1) is amended by strik8 ing ‘‘and 25B’’ and inserting ‘‘25B, and 25D’’. 

9 (f) EFFECTIVE DATE.— 

10 (1) IN GENERAL.—The amendments made by 

11 this section shall apply to taxable years beginning 

12 after December 31, 2007. 

13 (2) APPLICATION OF EGTRRA SUNSET.—The 

14 amendments made by subparagraphs (A) and (B) of 

15 subsection (e)(2) shall be subject to title IX of the 

16 Economic Growth and Tax Relief Reconciliation Act 

17 of 2001 in the same manner as the provisions of 

18 such Act to which such amendments relate. 

19 SEC. 105. SPECIAL RULE TO IMPLEMENT FERC AND STATE 

20 ELECTRIC RESTRUCTURING POLICY. 

21 (a) EXTENSION FOR QUALIFIED ELECTRIC UTILI22 TIES.— 

23 (1) IN GENERAL.—Paragraph (3) of section 

24 451(i) is amended by inserting ‘‘(before January 1, 


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1 2010, in the case of a qualified electric utility)’’ 

2 after ‘‘January 1, 2008’’. 

3 (2) QUALIFIED ELECTRIC UTILITY.—Subsection 

4 (i) of section 451 is amended by redesignating para5 graphs (6) through (10) as paragraphs (7) through 

6 (11), respectively, and by inserting after paragraph 

7 (5) the following new paragraph: 

8 ‘‘(6) QUALIFIED ELECTRIC UTILITY.—For pur9 poses of this subsection, the term ‘qualified electric 

10 utility’ means a person that, as of the date of the 

11 qualifying electric transmission transaction, is 

12 vertically integrated, in that it is both— 

13 ‘‘(A) a transmitting utility (as defined in 

14 section 3(23) of the Federal Power Act (16 

15 U.S.C. 796(23))) with respect to the trans16 mission facilities to which the election under 

17 this subsection applies, and 

18 ‘‘(B) an electric utility (as defined in sec19 tion 3(22) of the Federal Power Act (16 U.S.C. 

20 796(22))).’’. 

21 (b) EXTENSION OF PERIOD FOR TRANSFER OF

22 OPERATIONAL CONTROL AUTHORIZED BY FERC.— 

23 Clause (ii) of section 451(i)(4)(B) is amended by striking 

24 ‘‘December 31, 2007’’ and inserting ‘‘the date which is 


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1 4 years after the close of the taxable year in which the 

2 transaction occurs’’. 

3 (c) PROPERTY LOCATED OUTSIDE THE UNITED

4 STATES NOT TREATED AS EXEMPT UTILITY PROP5 ERTY.—Paragraph (5) of section 451(i) is amended by 

6 adding at the end the following new subparagraph: 

7 ‘‘(C) EXCEPTION FOR PROPERTY LOCATED

8 OUTSIDE THE UNITED STATES.—The term ‘ex9 empt utility property’ shall not include any 

10 property which is located outside the United 

11 States.’’. 

12 (d) EFFECTIVE DATES.— 

13 (1) EXTENSION.—The amendments made by 

14 subsection (a) shall apply to transactions after De15 cember 31, 2007. 

16 (2) TRANSFERS OF OPERATIONAL CONTROL.— 

17 The amendment made by subsection (b) shall take 

18 effect as if included in section 909 of the American 

19 Jobs Creation Act of 2004. 

20 (3) EXCEPTION FOR PROPERTY LOCATED OUT21 SIDE THE UNITED STATES.—The amendment made 

22 by subsection (c) shall apply to transactions after 

23 the date of the enactment of this Act. 


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1 SEC. 106. NEW CLEAN RENEWABLE ENERGY BONDS. 

2 (a) IN GENERAL.—Subpart I of part IV of sub3 chapter A of chapter 1 is amended by adding at the end 

4 the following new section: 

5 ‘‘SEC. 54C. NEW CLEAN RENEWABLE ENERGY BONDS. 

6 ‘‘(a) NEW CLEAN RENEWABLE ENERGY BOND.—For 

7 purposes of this subpart, the term ‘new clean renewable 

8 energy bond’ means any bond issued as part of an issue 

9 if— 

10 ‘‘(1) 100 percent of the available project pro11 ceeds of such issue are to be used for capital expend12 itures incurred by governmental bodies, public power 

13 providers, or cooperative electric companies for one 

14 or more qualified renewable energy facilities, 

15 ‘‘(2) the bond is issued by a qualified issuer, 

16 and 

17 ‘‘(3) the issuer designates such bond for pur18 poses of this section. 

19 ‘‘(b) REDUCED CREDIT AMOUNT.—The annual credit 

20 determined under section 54A(b) with respect to any new 

21 clean renewable energy bond shall be 70 percent of the 

22 amount so determined without regard to this subsection. 

23 ‘‘(c) LIMITATION ON AMOUNT OF BONDS DES24 IGNATED.— 

25 ‘‘(1) IN GENERAL.—The maximum aggregate 

26 face amount of bonds which may be designated 


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1 under subsection (a) by any issuer shall not exceed 

2 the limitation amount allocated under this sub3 section to such issuer. 

4 ‘‘(2) NATIONAL LIMITATION ON AMOUNT OF

5 BONDS DESIGNATED.—There is a national new clean 

6 renewable energy bond limitation of $2,000,000,000 

7 which shall be allocated by the Secretary as provided 

8 in paragraph (3), except that— 

‘‘(A) not more than 331 9 ⁄3 percent thereof 

10 may be allocated to qualified projects of public 

11 power providers, 

‘‘(B) not more than 331 12 ⁄3 percent thereof 

13 may be allocated to qualified projects of govern14 mental bodies, and 

‘‘(C) not more than 331 15 ⁄3 percent thereof 

16 may be allocated to qualified projects of cooper17 ative electric companies. 

18 ‘‘(3) METHOD OF ALLOCATION.— 

19 ‘‘(A) ALLOCATION AMONG PUBLIC POWER

20 PROVIDERS.—After the Secretary determines 

21 the qualified projects of public power providers 

22 which are appropriate for receiving an alloca23 tion of the national new clean renewable energy 

24 bond limitation, the Secretary shall, to the max25 imum extent practicable, make allocations 


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1 among such projects in such manner that the 

2 amount allocated to each such project bears the 

3 same ratio to the cost of such project as the 

4 limitation under paragraph (2)(A) bears to the 

5 cost of all such projects. 

6 ‘‘(B) ALLOCATION AMONG GOVERNMENTAL

7 BODIES AND COOPERATIVE ELECTRIC COMPA8 NIES.—The Secretary shall make allocations of 

9 the amount of the national new clean renewable 

10 energy bond limitation described in paragraphs 

11 (2)(B) and (2)(C) among qualified projects of 

12 governmental bodies and cooperative electric 

13 companies, respectively, in such manner as the 

14 Secretary determines appropriate. 

15 ‘‘(d) DEFINITIONS.—For purposes of this section— 

16 ‘‘(1) QUALIFIED RENEWABLE ENERGY FACIL17 ITY.—The term ‘qualified renewable energy facility’ 

18 means a qualified facility (as determined under sec19 tion 45(d) without regard to paragraphs (8) and 

20 (10) thereof and to any placed in service date) 

21 owned by a public power provider, a governmental 

22 body, or a cooperative electric company. 

23 ‘‘(2) PUBLIC POWER PROVIDER.—The term 

24 ‘public power provider’ means a State utility with a 

25 service obligation, as such terms are defined in secVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00037 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 tion 217 of the Federal Power Act (as in effect on 

2 the date of the enactment of this paragraph). 

3 ‘‘(3) GOVERNMENTAL BODY.—The term ‘gov4 ernmental body’ means any State or Indian tribal 

5 government, or any political subdivision thereof. 

6 ‘‘(4) COOPERATIVE ELECTRIC COMPANY.—The 

7 term ‘cooperative electric company’ means a mutual 

8 or cooperative electric company described in section 

9 501(c)(12) or section 1381(a)(2)(C). 

10 ‘‘(5) CLEAN RENEWABLE ENERGY BOND LEND11 ER.—The term ‘clean renewable energy bond lender’ 

12 means a lender which is a cooperative which is 

13 owned by, or has outstanding loans to, 100 or more 

14 cooperative electric companies and is in existence on 

15 February 1, 2002, and shall include any affiliated 

16 entity which is controlled by such lender. 

17 ‘‘(6) QUALIFIED ISSUER.—The term ‘qualified 

18 issuer’ means a public power provider, a cooperative 

19 electric company, a governmental body, a clean re20 newable energy bond lender, or a not-for-profit elec21 tric utility which has received a loan or loan guar22 antee under the Rural Electrification Act.’’. 

23 (b) CONFORMING AMENDMENTS.— 

24 (1) Paragraph (1) of section 54A(d) is amended 

25 to read as follows: 


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1 ‘‘(1) QUALIFIED TAX CREDIT BOND.—The term 

2 ‘qualified tax credit bond’ means— 

3 ‘‘(A) a qualified forestry conservation 

4 bond, or 

5 ‘‘(B) a new clean renewable energy bond, 

6 which is part of an issue that meets requirements of 

7 paragraphs (2), (3), (4), (5), and (6).’’. 

8 (2) Subparagraph (C) of section 54A(d)(2) is 

9 amended to read as follows: 

10 ‘‘(C) QUALIFIED PURPOSE.—For purposes 

11 of this paragraph, the term ‘qualified purpose’ 

12 means— 

13 ‘‘(i) in the case of a qualified forestry 

14 conservation bond, a purpose specified in 

15 section 54B(e), and 

16 ‘‘(ii) in the case of a new clean renew17 able energy bond, a purpose specified in 

18 section 54C(a)(1).’’. 

19 (3) The table of sections for subpart I of part 

20 IV of subchapter A of chapter 1 is amended by add21 ing at the end the following new item: 

‘‘Sec. 54C. Qualified clean renewable energy bonds.’’. 

22 (c) EFFECTIVE DATE.—The amendments made by 

23 this section shall apply to obligations issued after the date 

24 of the enactment of this Act. 


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1 PART II—CARBON MITIGATION PROVISIONS 

2 SEC. 111. EXPANSION AND MODIFICATION OF ADVANCED 

3 COAL PROJECT INVESTMENT CREDIT. 

4 (a) MODIFICATION OF CREDIT AMOUNT.—Section 

5 48A(a) is amended by striking ‘‘and’’ at the end of para6 graph (1), by striking the period at the end of paragraph 

7 (2) and inserting ‘‘, and’’, and by adding at the end the 

8 following new paragraph: 

9 ‘‘(3) 30 percent of the qualified investment for 

10 such taxable year in the case of projects described 

11 in clause (iii) of subsection (d)(3)(B).’’. 

12 (b) EXPANSION OF AGGREGATE CREDITS.—Section 

13 48A(d)(3)(A) is amended by striking ‘‘$1,300,000,000’’ 

14 and inserting ‘‘$2,550,000,000’’. 

15 (c) AUTHORIZATION OF ADDITIONAL PROJECTS.— 

16 (1) IN GENERAL.—Subparagraph (B) of section 

17 48A(d)(3) is amended to read as follows: 

18 ‘‘(B) PARTICULAR PROJECTS.—Of the dol19 lar amount in subparagraph (A), the Secretary 

20 is authorized to certify— 

21 ‘‘(i) $800,000,000 for integrated gas22 ification combined cycle projects the appli23 cation for which is submitted during the 

24 period described in paragraph (2)(A)(i), 

25 ‘‘(ii) $500,000,000 for projects which 

26 use other advanced coal-based generation 


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1 technologies the application for which is 

2 submitted during the period described in 

3 paragraph (2)(A)(i), and 

4 ‘‘(iii) $1,250,000,000 for advanced 

5 coal-based generation technology projects 

6 the application for which is submitted dur7 ing the period described in paragraph 

8 (2)(A)(ii).’’. 

9 (2) APPLICATION PERIOD FOR ADDITIONAL

10 PROJECTS.—Subparagraph (A) of section 48A(d)(2) 

11 is amended to read as follows: 

12 ‘‘(A) APPLICATION PERIOD.—Each appli13 cant for certification under this paragraph shall 

14 submit an application meeting the requirements 

15 of subparagraph (B). An applicant may only 

16 submit an application— 

17 ‘‘(i) for an allocation from the dollar 

18 amount specified in clause (i) or (ii) of 

19 paragraph (3)(B) during the 3-year period 

20 beginning on the date the Secretary estab21 lishes the program under paragraph (1), 

22 and 

23 ‘‘(ii) for an allocation from the dollar 

24 amount specified in paragraph (3)(B)(iii) 

25 during the 3-year period beginning at the 


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1 earlier of the termination of the period de2 scribed in clause (i) or the date prescribed 

3 by the Secretary.’’. 

4 (3) CAPTURE AND SEQUESTRATION OF CARBON

5 DIOXIDE EMISSIONS REQUIREMENT.— 

6 (A) IN GENERAL.—Section 48A(e)(1) is 

7 amended by striking ‘‘and’’ at the end of sub8 paragraph (E), by striking the period at the 

9 end of subparagraph (F) and inserting ‘‘; and’’, 

10 and by adding at the end the following new sub11 paragraph: 

12 ‘‘(G) in the case of any project the applica13 tion for which is submitted during the period 

14 described in subsection (d)(2)(A)(ii), the project 

15 includes equipment which separates and seques16 ters at least 65 percent (70 percent in the case 

17 of an application for reallocated credits under 

18 subsection (d)(4)) of such project’s total carbon 

19 dioxide emissions.’’. 

20 (B) HIGHEST PRIORITY FOR PROJECTS

21 WHICH SEQUESTER CARBON DIOXIDE EMIS22 SIONS.—Section 48A(e)(3) is amended by strik23 ing ‘‘and’’ at the end of subparagraph (A)(iii), 

24 by striking the period at the end of subpara25 graph (B)(iii) and inserting ‘‘, and’’, and by 


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1 adding at the end the following new subpara2 graph: 

3 ‘‘(C) give highest priority to projects with 

4 the greatest separation and sequestration per5 centage of total carbon dioxide emissions.’’. 

6 (C) RECAPTURE OF CREDIT FOR FAILURE

7 TO SEQUESTER.—Section 48A is amended by 

8 adding at the end the following new subsection: 

9 ‘‘(i) RECAPTURE OF CREDIT FOR FAILURE TO SE10 QUESTER.—The Secretary shall provide for recapturing 

11 the benefit of any credit allowable under subsection (a) 

12 with respect to any project which fails to attain or main13 tain the separation and sequestration requirements of sub14 section (e)(1)(G).’’. 

15 (4) ADDITIONAL PRIORITY FOR RESEARCH

16 PARTNERSHIPS.—Section 48A(e)(3)(B), as amended 

17 by paragraph (3)(B), is amended— 

18 (A) by striking ‘‘and’’ at the end of clause 

19 (ii), 

20 (B) by redesignating clause (iii) as clause 

21 (iv), and 

22 (C) by inserting after clause (ii) the fol23 lowing new clause: 

24 ‘‘(iii) applicant participants who have 

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1 cational institution (as defined in section 

2 529(e)(5)), and’’. 

3 (5) CLERICAL AMENDMENT.—Section 48A(e)(3) 

4 is amended by striking ‘‘INTEGRATED GASIFICATION

5 COMBINED CYCLE’’ in the heading and inserting 

6 ‘‘CERTAIN’’. 

7 (d) DISCLOSURE OF ALLOCATIONS.—Section 48A(d) 

8 is amended by adding at the end the following new para9 graph: 

10 ‘‘(5) DISCLOSURE OF ALLOCATIONS.—The Sec11 retary shall, upon making a certification under this 

12 subsection or section 48B(d), publicly disclose the 

13 identity of the applicant and the amount of the cred14 it certified with respect to such applicant.’’. 

15 (e) EFFECTIVE DATES.— 

16 (1) IN GENERAL.—Except as otherwise pro17 vided in this subsection, the amendments made by 

18 this section shall apply to credits the application for 

19 which is submitted during the period described in 

20 section 48A(d)(2)(A)(ii) of the Internal Revenue 

21 Code of 1986 and which are allocated or reallocated 

22 after the date of the enactment of this Act. 

23 (2) DISCLOSURE OF ALLOCATIONS.—The 

24 amendment made by subsection (d) shall apply to 


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1 certifications made after the date of the enactment 

2 of this Act. 

3 (3) CLERICAL AMENDMENT.—The amendment 

4 made by subsection (c)(5) shall take effect as if in5 cluded in the amendment made by section 1307(b) 

6 of the Energy Tax Incentives Act of 2005. 

7 SEC. 112. EXPANSION AND MODIFICATION OF COAL GASIFI8 CATION INVESTMENT CREDIT. 

9 (a) MODIFICATION OF CREDIT AMOUNT.—Section 

10 48B(a) is amended by inserting ‘‘(30 percent in the case 

11 of credits allocated under subsection (d)(1)(B))’’ after ‘‘20 

12 percent’’. 

13 (b) EXPANSION OF AGGREGATE CREDITS.—Section 

14 48B(d)(1) is amended by striking ‘‘shall not exceed 

15 $350,000,000’’ and all that follows and inserting ‘‘shall 

16 not exceed— 

17 ‘‘(A) $350,000,000, plus 

18 ‘‘(B) $250,000,000 for qualifying gasifi19 cation projects that include equipment which 

20 separates and sequesters at least 75 percent of 

21 such project’s total carbon dioxide emissions.’’. 

22 (c) RECAPTURE OF CREDIT FOR FAILURE TO SE23 QUESTER.—Section 48B is amended by adding at the end 

24 the following new subsection: 


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1 ‘‘(f) RECAPTURE OF CREDIT FOR FAILURE TO SE2 QUESTER.—The Secretary shall provide for recapturing 

3 the benefit of any credit allowable under subsection (a) 

4 with respect to any project which fails to attain or main5 tain the separation and sequestration requirements for 

6 such project under subsection (d)(1).’’. 

7 (d) SELECTION PRIORITIES.—Section 48B(d) is 

8 amended by adding at the end the following new para9 graph: 

10 ‘‘(4) SELECTION PRIORITIES.—In determining 

11 which qualifying gasification projects to certify 

12 under this section, the Secretary shall— 

13 ‘‘(A) give highest priority to projects with 

14 the greatest separation and sequestration per15 centage of total carbon dioxide emissions, and 

16 ‘‘(B) give high priority to applicant partici17 pants who have a research partnership with an 

18 eligible educational institution (as defined in 

19 section 529(e)(5)).’’. 

20 (e) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to credits described in section 

22 48B(d)(1)(B) of the Internal Revenue Code of 1986 which 

23 are allocated or reallocated after the date of the enactment 

24 of this Act. 


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1 SEC. 113. TEMPORARY INCREASE IN COAL EXCISE TAX. 

2 Paragraph (2) of section 4121(e) is amended— 

3 (1) by striking ‘‘January 1, 2014’’ in subpara4 graph (A) and inserting ‘‘December 31, 2018’’, and 

5 (2) by striking ‘‘January 1 after 1981’’ in sub6 paragraph (B) and inserting ‘‘December 31 after 

7 2007’’. 

8 SEC. 114. SPECIAL RULES FOR REFUND OF THE COAL EX9 CISE TAX TO CERTAIN COAL PRODUCERS 

10 AND EXPORTERS. 

11 (a) REFUND.— 

12 (1) COAL PRODUCERS.— 

13 (A) IN GENERAL.—Notwithstanding sub14 sections (a)(1) and (c) of section 6416 and sec15 tion 6511 of the Internal Revenue Code of 

16 1986, if— 

17 (i) a coal producer establishes that 

18 such coal producer, or a party related to 

19 such coal producer, exported coal produced 

20 by such coal producer to a foreign country 

21 or shipped coal produced by such coal pro22 ducer to a possession of the United States, 

23 or caused such coal to be exported or 

24 shipped, the export or shipment of which 

25 was other than through an exporter who 

26 meets the requirements of paragraph (2), 


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1 (ii) such coal producer filed an excise 

2 tax return on or after October 1, 1990, 

3 and on or before the date of the enactment 

4 of this Act, and 

5 (iii) such coal producer files a claim 

6 for refund with the Secretary not later 

7 than the close of the 30-day period begin8 ning on the date of the enactment of this 

9 Act, 

10 then the Secretary shall pay to such coal pro11 ducer an amount equal to the tax paid under 

12 section 4121 of such Code on such coal ex13 ported or shipped by the coal producer or a 

14 party related to such coal producer, or caused 

15 by the coal producer or a party related to such 

16 coal producer to be exported or shipped. 

17 (B) SPECIAL RULES FOR CERTAIN TAX18 PAYERS.—For purposes of this section— 

19 (i) IN GENERAL.—If a coal producer 

20 or a party related to a coal producer has 

21 received a judgment described in clause 

22 (iii), such coal producer shall be deemed to 

23 have established the export of coal to a for24 eign country or shipment of coal to a posVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00048 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 session of the United States under sub2 paragraph (A)(i). 

3 (ii) AMOUNT OF PAYMENT.—If a tax4 payer described in clause (i) is entitled to 

5 a payment under subparagraph (A), the 

6 amount of such payment shall be reduced 

7 by any amount paid pursuant to the judg8 ment described in clause (iii). 

9 (iii) JUDGMENT DESCRIBED.—A judg10 ment is described in this subparagraph if 

11 such judgment— 

12 (I) is made by a court of com13 petent jurisdiction within the United 

14 States, 

15 (II) relates to the constitu16 tionality of any tax paid on exported 

17 coal under section 4121 of the Inter18 nal Revenue Code of 1986, and 

19 (III) is in favor of the coal pro20 ducer or the party related to the coal 

21 producer. 

22 (2) EXPORTERS.—Notwithstanding subsections 

23 (a)(1) and (c) of section 6416 and section 6511 of 

24 the Internal Revenue Code of 1986, and a judgment 


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1 described in paragraph (1)(B)(iii) of this subsection, 

2 if— 

3 (A) an exporter establishes that such ex4 porter exported coal to a foreign country or 

5 shipped coal to a possession of the United 

6 States, or caused such coal to be so exported or 

7 shipped, 

8 (B) such exporter filed a tax return on or 

9 after October 1, 1990, and on or before the 

10 date of the enactment of this Act, and 

11 (C) such exporter files a claim for refund 

12 with the Secretary not later than the close of 

13 the 30-day period beginning on the date of the 

14 enactment of this Act, 

15 then the Secretary shall pay to such exporter an 

16 amount equal to $0.825 per ton of such coal ex17 ported by the exporter or caused to be exported or 

18 shipped, or caused to be exported or shipped, by the 

19 exporter. 

20 (b) LIMITATIONS.—Subsection (a) shall not apply 

21 with respect to exported coal if a settlement with the Fed22 eral Government has been made with and accepted by, the 

23 coal producer, a party related to such coal producer, or 

24 the exporter, of such coal, as of the date that the claim 

25 is filed under this section with respect to such exported 


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1 coal. For purposes of this subsection, the term ‘‘settlement 

2 with the Federal Government’’ shall not include any settle3 ment or stipulation entered into as of the date of the en4 actment of this Act, the terms of which contemplate a 

5 judgment concerning which any party has reserved the 

6 right to file an appeal, or has filed an appeal. 

7 (c) SUBSEQUENT REFUND PROHIBITED.—No refund 

8 shall be made under this section to the extent that a credit 

9 or refund of such tax on such exported or shipped coal 

10 has been paid to any person. 

11 (d) DEFINITIONS.—For purposes of this section— 

12 (1) COAL PRODUCER.—The term ‘‘coal pro13 ducer’’ means the person in whom is vested owner14 ship of the coal immediately after the coal is severed 

15 from the ground, without regard to the existence of 

16 any contractual arrangement for the sale or other 

17 disposition of the coal or the payment of any royal18 ties between the producer and third parties. The 

19 term includes any person who extracts coal from 

20 coal waste refuse piles or from the silt waste product 

21 which results from the wet washing (or similar proc22 essing) of coal. 

23 (2) EXPORTER.—The term ‘‘exporter’’ means a 

24 person, other than a coal producer, who does not 

25 have a contract, fee arrangement, or any other 


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1 agreement with a producer or seller of such coal to 

2 export or ship such coal to a third party on behalf 

3 of the producer or seller of such coal and— 

4 (A) is indicated in the shipper’s export 

5 declaration or other documentation as the ex6 porter of record, or 

7 (B) actually exported such coal to a for8 eign country or shipped such coal to a posses9 sion of the United States, or caused such coal 

10 to be so exported or shipped. 

11 (3) RELATED PARTY.—The term ‘‘a party re12 lated to such coal producer’’ means a person who— 

13 (A) is related to such coal producer 

14 through any degree of common management, 

15 stock ownership, or voting control, 

16 (B) is related (within the meaning of sec17 tion 144(a)(3) of the Internal Revenue Code of 

18 1986) to such coal producer, or 

19 (C) has a contract, fee arrangement, or 

20 any other agreement with such coal producer to 

21 sell such coal to a third party on behalf of such 

22 coal producer. 

23 (4) SECRETARY.—The term ‘‘Secretary’’ means 

24 the Secretary of Treasury or the Secretary’s des25 ignee. 


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1 (e) TIMING OF REFUND.—With respect to any claim 

2 for refund filed pursuant to this section, the Secretary 

3 shall determine whether the requirements of this section 

4 are met not later than 180 days after such claim is filed. 

5 If the Secretary determines that the requirements of this 

6 section are met, the claim for refund shall be paid not 

7 later than 180 days after the Secretary makes such deter8 mination. 

9 (f) INTEREST.—Any refund paid pursuant to this 

10 section shall be paid by the Secretary with interest from 

11 the date of overpayment determined by using the overpay12 ment rate and method under section 6621 of the Internal 

13 Revenue Code of 1986. 

14 (g) DENIAL OF DOUBLE BENEFIT.—The payment 

15 under subsection (a) with respect to any coal shall not ex16 ceed— 

17 (1) in the case of a payment to a coal producer, 

18 the amount of tax paid under section 4121 of the 

19 Internal Revenue Code of 1986 with respect to such 

20 coal by such coal producer or a party related to such 

21 coal producer, and 

22 (2) in the case of a payment to an exporter, an 

23 amount equal to $0.825 per ton with respect to such 

24 coal exported by the exporter or caused to be ex25 ported by the exporter. 


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1 (h) APPLICATION OF SECTION.—This section applies 

2 only to claims on coal exported or shipped on or after Oc3 tober 1, 1990, through the date of the enactment of this 

4 Act. 

5 (i) STANDING NOT CONFERRED.— 

6 (1) EXPORTERS.—With respect to exporters, 

7 this section shall not confer standing upon an ex8 porter to commence, or intervene in, any judicial or 

9 administrative proceeding concerning a claim for re10 fund by a coal producer of any Federal or State tax, 

11 fee, or royalty paid by the coal producer. 

12 (2) COAL PRODUCERS.—With respect to coal 

13 producers, this section shall not confer standing 

14 upon a coal producer to commence, or intervene in, 

15 any judicial or administrative proceeding concerning 

16 a claim for refund by an exporter of any Federal or 

17 State tax, fee, or royalty paid by the producer and 

18 alleged to have been passed on to an exporter. 

19 SEC. 115. CARBON AUDIT OF THE TAX CODE. 

20 (a) STUDY.—The Secretary of the Treasury shall 

21 enter into an agreement with the National Academy of 

22 Sciences to undertake a comprehensive review of the Inter23 nal Revenue Code of 1986 to identify the types of and 

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1 bon and other greenhouse gas emissions and to estimate 

2 the magnitude of those effects. 

3 (b) REPORT.—Not later than 2 years after the date 

4 of enactment of this Act, the National Academy of 

5 Sciences shall submit to Congress a report containing the 

6 results of study authorized under this section. 

7 (c) AUTHORIZATION OF APPROPRIATIONS.—There is 

8 authorized to be appropriated to carry out this section 

9 $1,500,000 for the period of fiscal years 2008 and 2009. 

10 Subtitle B—Transportation and 

11 Domestic Fuel Security Provisions 

12 SEC. 121. INCLUSION OF CELLULOSIC BIOFUEL IN BONUS 

13 DEPRECIATION FOR BIOMASS ETHANOL 

14 PLANT PROPERTY. 

15 (a) IN GENERAL.—Paragraph (3) of section 168(l) 

16 is amended to read as follows: 

17 ‘‘(3) CELLULOSIC BIOFUEL.—The term ‘cel18 lulosic biofuel’ means any liquid fuel which is pro19 duced from any lignocellulosic or hemicellulosic mat20 ter that is available on a renewable or recurring 

21 basis.’’. 

22 (b) CONFORMING AMENDMENTS.—Subsection (l) of 

23 section 168 is amended— 


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1 (1) by striking ‘‘cellulosic biomass ethanol’’ 

2 each place it appears and inserting ‘‘cellulosic 

3 biofuel’’, 

4 (2) by striking ‘‘CELLULOSIC BIOMASS ETH5 ANOL’’ in the heading of such subsection and insert6 ing ‘‘CELLULOSIC BIOFUEL’’, and 

7 (3) by striking ‘‘CELLULOSIC BIOMASS ETH8 ANOL’’ in the heading of paragraph (2) thereof and 

9 inserting ‘‘CELLULOSIC BIOFUEL’’. 

10 (c) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to property placed in service after 

12 the date of the enactment of this Act, in taxable years 

13 ending after such date. 

14 SEC. 122. CREDITS FOR BIODIESEL AND RENEWABLE DIE15 SEL. 

16 (a) IN GENERAL.—Sections 40A(g), 6426(c)(6), and 

17 6427(e)(5)(B) are each amended by striking ‘‘December 

18 31, 2008’’ and inserting ‘‘December 31, 2009’’. 

19 (b) INCREASE IN RATE OF CREDIT.— 

20 (1) INCOME TAX CREDIT.—Paragraphs (1)(A) 

21 and (2)(A) of section 40A(b) are each amended by 

22 striking ‘‘50 cents’’ and inserting ‘‘$1.00’’. 

23 (2) EXCISE TAX CREDIT.—Paragraph (2) of 

24 section 6426(c) is amended to read as follows: 


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1 ‘‘(2) APPLICABLE AMOUNT.—For purposes of 

2 this subsection, the applicable amount is $1.00.’’. 

3 (3) CONFORMING AMENDMENTS.— 

4 (A) Subsection (b) of section 40A is 

5 amended by striking paragraph (3) and by re6 designating paragraphs (4) and (5) as para7 graphs (3) and (4), respectively. 

8 (B) Paragraph (2) of section 40A(f) is 

9 amended to read as follows: 

10 ‘‘(2) EXCEPTION.—Subsection (b)(4) shall not 

11 apply with respect to renewable diesel.’’. 

12 (C) Paragraphs (2) and (3) of section 

13 40A(e) are each amended by striking ‘‘sub14 section (b)(5)(C)’’ and inserting ‘‘subsection 

15 (b)(4)(C)’’. 

16 (D) Clause (ii) of section 40A(d)(3)(C) is 

17 amended by striking ‘‘subsection (b)(5)(B)’’ 

18 and inserting ‘‘subsection (b)(4)(B)’’. 

19 (c) UNIFORM TREATMENT OF DIESEL PRODUCED

20 FROM BIOMASS.—Paragraph (3) of section 40A(f) is 

21 amended— 

22 (1) by striking ‘‘diesel fuel’’ and inserting ‘‘liq23 uid fuel’’, 

24 (2) by striking ‘‘using a thermal 

25 depolymerization process’’, and 


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1 (3) by striking ‘‘or D396’’ in subparagraph (B) 

2 and inserting ‘‘, D396, or other equivalent standard 

3 approved by the Secretary’’. 

4 (d) COPRODUCTION OF RENEWABLE DIESEL WITH

5 PETROLEUM FEEDSTOCK.— 

6 (1) IN GENERAL.—Paragraph (3) of section 

7 40A(f) is amended by adding at the end the fol8 lowing new sentence: ‘‘Such term does not include 

9 any fuel derived from coprocessing biomass with a 

10 feedstock which is not biomass. For purposes of this 

11 paragraph, the term ‘biomass’ has the meaning 

12 given such term by section 45K(c)(3).’’. 

13 (2) CONFORMING AMENDMENT.—Paragraph (3) 

14 of section 40A(f) is amended by striking ‘‘(as de15 fined in section 45K(c)(3))’’. 

16 (e) ELIGIBILITY OF CERTAIN AVIATION FUEL.— 

17 Paragraph (3) of section 40A(f) is amended by adding at 

18 the end the following: ‘‘The term ‘renewable diesel’ also 

19 means fuel derived from biomass which meets the require20 ments of a Department of Defense specification for mili21 tary jet fuel or an American Society of Testing and Mate22 rials specification for aviation turbine fuel.’’. 

23 (f) EFFECTIVE DATE.— 

24 (1) IN GENERAL.—Except as otherwise pro25 vided in this subsection, the amendments made by 


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1 this section shall apply to fuel produced, and sold or 

2 used, after December 31, 2008. 

3 (2) COPRODUCTION OF RENEWABLE DIESEL

4 WITH PETROLEUM FEEDSTOCK.—The amendments 

5 made by subsection (d) shall apply to fuel produced, 

6 and sold or used, after the date of the enactment of 

7 this Act. 

8 SEC. 123. CLARIFICATION THAT CREDITS FOR FUEL ARE 

9 DESIGNED TO PROVIDE AN INCENTIVE FOR 

10 UNITED STATES PRODUCTION. 

11 (a) ALCOHOL FUELS CREDIT.—Paragraph (6) of sec12 tion 40(d) is amended to read as follows: 

13 ‘‘(6) LIMITATION TO ALCOHOL WITH CONNEC14 TION TO THE UNITED STATES.—No credit shall be 

15 determined under this section with respect to any al16 cohol which is produced outside the United States 

17 for use as a fuel outside the United States. For pur18 poses of this paragraph, the term ‘United States’ in19 cludes any possession of the United States.’’. 

20 (b) BIODIESEL FUELS CREDIT.—Subsection (d) of 

21 section 40A is amended by adding at the end the following 

22 new paragraph: 

23 ‘‘(5) LIMITATION TO BIODIESEL WITH CONNEC24 TION TO THE UNITED STATES.—No credit shall be 

25 determined under this section with respect to any 


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1 biodiesel which is produced outside the United 

2 States for use as a fuel outside the United States. 

3 For purposes of this paragraph, the term ‘United 

4 States’ includes any possession of the United 

5 States.’’. 

6 (c) EXCISE TAX CREDIT.— 

7 (1) IN GENERAL.—Section 6426 is amended by 

8 adding at the end the following new subsection: 

9 ‘‘(i) LIMITATION TO FUELS WITH CONNECTION TO

10 THE UNITED STATES.— 

11 ‘‘(1) ALCOHOL.—No credit shall be determined 

12 under this section with respect to any alcohol which 

13 is produced outside the United States for use as a 

14 fuel outside the United States. 

15 ‘‘(2) BIODIESEL AND ALTERNATIVE FUELS.— 

16 No credit shall be determined under this section 

17 with respect to any biodiesel or alternative fuel 

18 which is produced outside the United States for use 

19 as a fuel outside the United States. 

20 For purposes of this subsection, the term ‘United States’ 

21 includes any possession of the United States.’’. 

22 (2) CONFORMING AMENDMENT.—Subsection (e) 

23 of section 6427 is amended by redesignating para24 graph (5) as paragraph (6) and by inserting after 

25 paragraph (4) the following new paragraph: 


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1 ‘‘(5) LIMITATION TO FUELS WITH CONNECTION

2 TO THE UNITED STATES.—No amount shall be pay3 able under paragraph (1) or (2) with respect to any 

4 mixture or alternative fuel if credit is not allowed 

5 with respect to such mixture or alternative fuel by 

6 reason of section 6426(i).’’. 

7 (d) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to claims for credit or payment 

9 made on or after May 15, 2008. 

10 SEC. 124. CREDIT FOR NEW QUALIFIED PLUG-IN ELECTRIC 

11 DRIVE MOTOR VEHICLES. 

12 (a) IN GENERAL.—Subpart B of part IV of sub13 chapter A of chapter 1 is amended by adding at the end 

14 the following new section: 

15 ‘‘SEC. 30D. NEW QUALIFIED PLUG-IN ELECTRIC DRIVE 

16 MOTOR VEHICLES. 

17 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al18 lowed as a credit against the tax imposed by this chapter 

19 for the taxable year an amount equal to the sum of the 

20 credit amounts determined under subsection (b) with re21 spect to each new qualified plug-in electric drive motor ve22 hicle placed in service by the taxpayer during the taxable 

23 year. 

24 ‘‘(b) PER VEHICLE DOLLAR LIMITATION.— 


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1 ‘‘(1) IN GENERAL.—The amount determined 

2 under this subsection with respect to any new quali3 fied plug-in electric drive motor vehicle is the sum 

4 of the amounts determined under paragraphs (2) 

5 and (3) with respect to such vehicle. 

6 ‘‘(2) BASE AMOUNT.—The amount determined 

7 under this paragraph is $3,000. 

8 ‘‘(3) BATTERY CAPACITY.—In the case of a ve9 hicle which draws propulsion energy from a battery 

10 with not less than 5 kilowatt hours of capacity, the 

11 amount determined under this paragraph is $200, 

12 plus $200 for each kilowatt hour of capacity in ex13 cess of 5 kilowatt hours. The amount determined 

14 under this paragraph shall not exceed $2,000. 

15 ‘‘(c) APPLICATION WITH OTHER CREDITS.— 

16 ‘‘(1) BUSINESS CREDIT TREATED AS PART OF

17 GENERAL BUSINESS CREDIT.—So much of the credit 

18 which would be allowed under subsection (a) for any 

19 taxable year (determined without regard to this sub20 section) that is attributable to property of a char21 acter subject to an allowance for depreciation shall 

22 be treated as a credit listed in section 38(b) for such 

23 taxable year (and not allowed under subsection (a)). 

24 ‘‘(2) PERSONAL CREDIT.— 


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1 ‘‘(A) IN GENERAL.—For purposes of this 

2 title, the credit allowed under subsection (a) for 

3 any taxable year (determined after application 

4 of paragraph (1)) shall be treated as a credit 

5 allowable under subpart A for such taxable 

6 year. 

7 ‘‘(B) LIMITATION BASED ON AMOUNT OF

8 TAX.—In the case of a taxable year to which 

9 section 26(a)(2) does not apply, the credit al10 lowed under subsection (a) for any taxable year 

11 (determined after application of paragraph (1)) 

12 shall not exceed the excess of— 

13 ‘‘(i) the sum of the regular tax liabil14 ity (as defined in section 26(b)) plus the 

15 tax imposed by section 55, over 

16 ‘‘(ii) the sum of the credits allowable 

17 under subpart A (other than this section 

18 and sections 23 and 25D) and section 27 

19 for the taxable year. 

20 ‘‘(d) NEW QUALIFIED PLUG-IN ELECTRIC DRIVE

21 MOTOR VEHICLE.—For purposes of this section— 

22 ‘‘(1) IN GENERAL.—The term ‘new qualified 

23 plug-in electric drive motor vehicle’ means a motor 

24 vehicle (as defined in section 30(c)(2))— 


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1 ‘‘(A) the original use of which commences 

2 with the taxpayer, 

3 ‘‘(B) which is acquired for use or lease by 

4 the taxpayer and not for resale, 

5 ‘‘(C) which is made by a manufacturer, 

6 ‘‘(D) which has a gross vehicle weight rat7 ing of less than 14,000 pounds, 

8 ‘‘(E) which has received a certificate of 

9 conformity under the Clean Air Act and meets 

10 or exceeds the Bin 5 Tier II emission standard 

11 established in regulations prescribed by the Ad12 ministrator of the Environmental Protection 

13 Agency under section 202(i) of the Clean Air 

14 Act for that make and model year vehicle, and 

15 ‘‘(F) which is propelled to a significant ex16 tent by an electric motor which draws electricity 

17 from a battery which— 

18 ‘‘(i) has a capacity of not less than 4 

19 kilowatt hours, and 

20 ‘‘(ii) is capable of being recharged 

21 from an external source of electricity. 

22 ‘‘(2) EXCEPTION.—The term ‘new qualified 

23 plug-in electric drive motor vehicle’ shall not include 

24 any vehicle which is not a passenger automobile or 


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1 light truck if such vehicle has a gross vehicle weight 

2 rating of less than 8,500 pounds. 

3 ‘‘(3) OTHER TERMS.—The terms ‘passenger 

4 automobile’, ‘light truck’, and ‘manufacturer’ have 

5 the meanings given such terms in regulations pre6 scribed by the Administrator of the Environmental 

7 Protection Agency for purposes of the administra8 tion of title II of the Clean Air Act (42 U.S.C. 7521 

9 et seq.). 

10 ‘‘(4) BATTERY CAPACITY.—The term ‘capacity’ 

11 means, with respect to any battery, the quantity of 

12 electricity which the battery is capable of storing, ex13 pressed in kilowatt hours, as measured from a 100 

14 percent state of charge to a 0 percent state of 

15 charge. 

16 ‘‘(e) LIMITATION ON NUMBER OF NEW QUALIFIED

17 PLUG-IN ELECTRIC DRIVE MOTOR VEHICLES ELIGIBLE

18 FOR CREDIT.— 

19 ‘‘(1) IN GENERAL.—In the case of a new quali20 fied plug-in electric drive motor vehicle sold during 

21 the phaseout period, only the applicable percentage 

22 of the credit otherwise allowable under subsection 

23 (a) shall be allowed. 

24 ‘‘(2) PHASEOUT PERIOD.—For purposes of this 

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1 ning with the second calendar quarter following the 

2 calendar quarter which includes the first date on 

3 which the number of new qualified plug-in electric 

4 drive motor vehicles manufactured by the manufac5 turer of the vehicle referred to in paragraph (1) sold 

6 for use in the United States after the date of the en7 actment of this section, is at least 60,000. 

8 ‘‘(3) APPLICABLE PERCENTAGE.—For purposes 

9 of paragraph (1), the applicable percentage is— 

10 ‘‘(A) 50 percent for the first 2 calendar 

11 quarters of the phaseout period, 

12 ‘‘(B) 25 percent for the 3d and 4th cal13 endar quarters of the phaseout period, and 

14 ‘‘(C) 0 percent for each calendar quarter 

15 thereafter. 

16 ‘‘(4) CONTROLLED GROUPS.—Rules similar to 

17 the rules of section 30B(f)(4) shall apply for pur18 poses of this subsection. 

19 ‘‘(f) SPECIAL RULES.— 

20 ‘‘(1) BASIS REDUCTION.—The basis of any 

21 property for which a credit is allowable under sub22 section (a) shall be reduced by the amount of such 

23 credit (determined without regard to subsection (c)). 

24 ‘‘(2) RECAPTURE.—The Secretary shall, by reg25 ulations, provide for recapturing the benefit of any 


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1 credit allowable under subsection (a) with respect to 

2 any property which ceases to be property eligible for 

3 such credit. 

4 ‘‘(3) PROPERTY USED OUTSIDE UNITED

5 STATES, ETC., NOT QUALIFIED.—No credit shall be 

6 allowed under subsection (a) with respect to any 

7 property referred to in section 50(b)(1) or with re8 spect to the portion of the cost of any property 

9 taken into account under section 179. 

10 ‘‘(4) ELECTION NOT TO TAKE CREDIT.—No 

11 credit shall be allowed under subsection (a) for any 

12 vehicle if the taxpayer elects to not have this section 

13 apply to such vehicle. 

14 ‘‘(5) PROPERTY USED BY TAX-EXEMPT ENTITY; 

15 INTERACTION WITH AIR QUALITY AND MOTOR VEHI16 CLE SAFETY STANDARDS.—Rules similar to the rules 

17 of paragraphs (6) and (10) of section 30B(h) shall 

18 apply for purposes of this section.’’. 

19 (b) COORDINATION WITH ALTERNATIVE MOTOR VE20 HICLE CREDIT.—Section 30B(d)(3) is amended by adding 

21 at the end the following new subparagraph: 

22 ‘‘(D) EXCLUSION OF PLUG-IN VEHICLES.— 

23 Any vehicle with respect to which a credit is al24 lowable under section 30D (determined without 


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1 regard to subsection (c) thereof) shall not be 

2 taken into account under this section.’’. 

3 (c) CREDIT MADE PART OF GENERAL BUSINESS

4 CREDIT.—Section 38(b) is amended— 

5 (1) by striking ‘‘plus’’ at the end of paragraph 

6 (32), 

7 (2) by striking the period at the end of para8 graph (33) and inserting ‘‘, plus’’, and 

9 (3) by adding at the end the following new 

10 paragraph: 

11 ‘‘(34) the portion of the new qualified plug-in 

12 electric drive motor vehicle credit to which section 

13 30D(c)(1) applies.’’. 

14 (d) CONFORMING AMENDMENTS.— 

15 (1)(A) Section 24(b)(3)(B), as amended by sec16 tion 104, is amended by striking ‘‘and 25D’’ and in17 serting ‘‘25D, and 30D’’. 

18 (B) Section 25(e)(1)(C)(ii) is amended by in19 serting ‘‘30D,’’ after ‘‘25D,’’. 

20 (C) Section 25B(g)(2), as amended by section 

21 104, is amended by striking ‘‘and 25D’’ and insert22 ing ‘‘, 25D, and 30D’’. 

23 (D) Section 26(a)(1), as amended by section 

24 104, is amended by striking ‘‘and 25D’’ and insert25 ing ‘‘25D, and 30D’’. 


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1 (E) Section 1400C(d)(2) is amended by striking 

2 ‘‘and 25D’’ and inserting ‘‘25D, and 30D’’. 

3 (2) Section 1016(a) is amended by striking 

4 ‘‘and’’ at the end of paragraph (35), by striking the 

5 period at the end of paragraph (36) and inserting ‘‘, 

6 and’’, and by adding at the end the following new 

7 paragraph: 

8 ‘‘(37) to the extent provided in section 

9 30D(f)(1).’’. 

10 (3) Section 6501(m) is amended by inserting 

11 ‘‘30D(f)(4),’’ after ‘‘30C(e)(5),’’. 

12 (4) The table of sections for subpart B of part 

13 IV of subchapter A of chapter 1 is amended by add14 ing at the end the following new item: 

‘‘Sec. 30D. New qualified plug-in electric drive motor vehicles.’’. 

15 (e) TREATMENT OF ALTERNATIVE MOTOR VEHICLE

16 CREDIT AS A PERSONAL CREDIT.— 

17 (1) IN GENERAL.—Paragraph (2) of section 

18 30B(g) is amended to read as follows: 

19 ‘‘(2) PERSONAL CREDIT.—The credit allowed 

20 under subsection (a) for any taxable year (after ap21 plication of paragraph (1)) shall be treated as a 

22 credit allowable under subpart A for such taxable 

23 year.’’. 

24 (2) CONFORMING AMENDMENTS.— 


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1 (A) Subparagraph (A) of section 30C(d)(2) 

2 is amended by striking ‘‘sections 27, 30, and 

3 30B’’ and inserting ‘‘sections 27 and 30’’. 

4 (B) Paragraph (3) of section 55(c) is 

5 amended by striking ‘‘30B(g)(2),’’. 

6 (f) EFFECTIVE DATE.— 

7 (1) IN GENERAL.—Except as otherwise pro8 vided in this subsection, the amendments made by 

9 this section shall apply to taxable years beginning 

10 after December 31, 2008. 

11 (2) TREATMENT OF ALTERNATIVE MOTOR VE12 HICLE CREDIT AS PERSONAL CREDIT.—The amend13 ments made by subsection (e) shall apply to taxable 

14 years beginning after December 31, 2007. 

15 (g) APPLICATION OF EGTRRA SUNSET.—The 

16 amendment made by subsection (d)(1)(A) shall be subject 

17 to title IX of the Economic Growth and Tax Relief Rec18 onciliation Act of 2001 in the same manner as the provi19 sion of such Act to which such amendment relates. 

20 SEC. 125. EXCLUSION FROM HEAVY TRUCK TAX FOR IDLING 

21 REDUCTION UNITS AND ADVANCED INSULA22 TION. 

23 (a) IN GENERAL.—Section 4053 is amended by add24 ing at the end the following new paragraphs: 


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1 ‘‘(9) IDLING REDUCTION DEVICE.—Any device 

2 or system of devices which— 

3 ‘‘(A) is designed to provide to a vehicle 

4 those services (such as heat, air conditioning, or 

5 electricity) that would otherwise require the op6 eration of the main drive engine while the vehi7 cle is temporarily parked or remains stationary 

8 using one or more devices affixed to a tractor, 

9 and 

10 ‘‘(B) is determined by the Administrator of 

11 the Environmental Protection Agency, in con12 sultation with the Secretary of Energy and the 

13 Secretary of Transportation, to reduce idling of 

14 such vehicle at a motor vehicle rest stop or 

15 other location where such vehicles are tempo16 rarily parked or remain stationary. 

17 ‘‘(10) ADVANCED INSULATION.—Any insulation 

18 that has an R value of not less than R35 per inch.’’. 

19 (b) EFFECTIVE DATE.—The amendment made by 

20 this section shall apply to sales or installations after the 

21 date of the enactment of this Act. 

22 SEC. 126. TRANSPORTATION FRINGE BENEFIT TO BICYCLE 

23 COMMUTERS. 

24 (a) IN GENERAL.—Paragraph (1) of section 132(f) 

25 is amended by adding at the end the following: 


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1 ‘‘(D) Any qualified bicycle commuting re2 imbursement.’’. 

3 (b) LIMITATION ON EXCLUSION.—Paragraph (2) of 

4 section 132(f) is amended by striking ‘‘and’’ at the end 

5 of subparagraph (A), by striking the period at the end 

6 of subparagraph (B) and inserting ‘‘, and’’, and by adding 

7 at the end the following new subparagraph: 

8 ‘‘(C) the applicable annual limitation in 

9 the case of any qualified bicycle commuting re10 imbursement.’’. 

11 (c) DEFINITIONS.—Paragraph (5) of section 132(f) 

12 is amended by adding at the end the following: 

13 ‘‘(F) DEFINITIONS RELATED TO BICYCLE

14 COMMUTING REIMBURSEMENT.— 

15 ‘‘(i) QUALIFIED BICYCLE COMMUTING

16 REIMBURSEMENT.—The term ‘qualified bi17 cycle commuting reimbursement’ means, 

18 with respect to any calendar year, any em19 ployer reimbursement during the 15-month 

20 period beginning with the first day of such 

21 calendar year for reasonable expenses in22 curred by the employee during such cal23 endar year for the purchase of a bicycle 

24 and bicycle improvements, repair, and stor25 age, if such bicycle is regularly used for 


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1 travel between the employee’s residence 

2 and place of employment. 

3 ‘‘(ii) APPLICABLE ANNUAL LIMITA4 TION.—The term ‘applicable annual limita5 tion’ means, with respect to any employee 

6 for any calendar year, the product of $20 

7 multiplied by the number of qualified bicy8 cle commuting months during such year. 

9 ‘‘(iii) QUALIFIED BICYCLE COM10 MUTING MONTH.—The term ‘qualified bi11 cycle commuting month’ means, with re12 spect to any employee, any month during 

13 which such employee— 

14 ‘‘(I) regularly uses the bicycle for 

15 a substantial portion of the travel be16 tween the employee’s residence and 

17 place of employment, and 

18 ‘‘(II) does not receive any benefit 

19 described in subparagraph (A), (B), 

20 or (C) of paragraph (1).’’. 

21 (d) CONSTRUCTIVE RECEIPT OF BENEFIT.—Para22 graph (4) of section 132(f) is amended by inserting 

23 ‘‘(other than a qualified bicycle commuting reimburse24 ment)’’ after ‘‘qualified transportation fringe’’. 


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1 (e) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2008. 

4 SEC. 127. ALTERNATIVE FUEL VEHICLE REFUELING PROP5 ERTY CREDIT. 

6 (a) INCREASE IN CREDIT AMOUNT.—Section 30C is 

7 amended— 

8 (1) by striking ‘‘30 percent’’ in subsection (a) 

9 and inserting ‘‘50 percent’’, and 

10 (2) by striking ‘‘$30,000’’ in subsection (b)(1) 

11 and inserting ‘‘$50,000’’. 

12 (b) EXTENSION OF CREDIT.—Paragraph (2) of sec13 tion 30C(g) is amended by striking ‘‘December 31, 2009’’ 

14 and inserting ‘‘December 31, 2010’’. 

15 (c) EFFECTIVE DATE.—The amendments made by 

16 this section shall apply to property placed in service after 

17 the date of the enactment of this Act, in taxable years 

18 ending after such date. 


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1 SEC. 128. CERTAIN INCOME AND GAINS RELATING TO AL2 COHOL FUELS AND MIXTURES, BIODIESEL 

3 FUELS AND MIXTURES, AND ALTERNATIVE 

4 FUELS AND MIXTURES TREATED AS QUALI5 FYING INCOME FOR PUBLICLY TRADED 

6 PARTNERSHIPS. 

7 (a) IN GENERAL.—Subparagraph (E) of section 

8 7704(d)(1) is amended by inserting ‘‘, or the transpor9 tation, storage, or marketing of any fuel described in sub10 section (b), (c), (d), or (e) of section 6426, or any alcohol 

11 fuel defined in section 6426(b)(4)(A) or any biodiesel fuel 

12 as defined in section 40A(d)(1)’’ after ‘‘timber)’’. 

13 (b) EFFECTIVE DATE.—The amendment made by 

14 this section shall apply to taxable years beginning after 

15 December 31, 2011. 

16 Subtitle C—Energy Conservation 

17 and Efficiency Provisions 

18 SEC. 141. QUALIFIED ENERGY CONSERVATION BONDS. 

19 (a) IN GENERAL.—Subpart I of part IV of sub20 chapter A of chapter 1, as amended by section 106, is 

21 amended by adding at the end the following new section: 

22 ‘‘SEC. 54D. QUALIFIED ENERGY CONSERVATION BONDS. 

23 ‘‘(a) QUALIFIED ENERGY CONSERVATION BOND.— 

24 For purposes of this subchapter, the term ‘qualified en25 ergy conservation bond’ means any bond issued as part 

26 of an issue if— 


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1 ‘‘(1) 100 percent of the available project pro2 ceeds of such issue are to be used for one or more 

3 qualified conservation purposes, 

4 ‘‘(2) the bond is issued by a State or local gov5 ernment, and 

6 ‘‘(3) the issuer designates such bond for pur7 poses of this section. 

8 ‘‘(b) REDUCED CREDIT AMOUNT.—The annual credit 

9 determined under section 54A(b) with respect to any 

10 qualified energy conservation bond shall be 70 percent of 

11 the amount so determined without regard to this sub12 section. 

13 ‘‘(c) LIMITATION ON AMOUNT OF BONDS DES14 IGNATED.—The maximum aggregate face amount of 

15 bonds which may be designated under subsection (a) by 

16 any issuer shall not exceed the limitation amount allocated 

17 to such issuer under subsection (e). 

18 ‘‘(d) NATIONAL LIMITATION ON AMOUNT OF BONDS

19 DESIGNATED.—There is a national qualified energy con20 servation bond limitation of $3,000,000,000. 

21 ‘‘(e) ALLOCATIONS.— 

22 ‘‘(1) IN GENERAL.—The limitation applicable 

23 under subsection (d) shall be allocated by the Sec24 retary among the States in proportion to the popu25 lation of the States. 


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1 ‘‘(2) ALLOCATIONS TO LARGEST LOCAL GOV2 ERNMENTS.— 

3 ‘‘(A) IN GENERAL.—In the case of any 

4 State in which there is a large local govern5 ment, each such local government shall be allo6 cated a portion of such State’s allocation which 

7 bears the same ratio to the State’s allocation 

8 (determined without regard to this subpara9 graph) as the population of such large local 

10 government bears to the population of such 

11 State. 

12 ‘‘(B) ALLOCATION OF UNUSED LIMITATION

13 TO STATE.—The amount allocated under this 

14 subsection to a large local government may be 

15 reallocated by such local government to the 

16 State in which such local government is located. 

17 ‘‘(C) LARGE LOCAL GOVERNMENT.—For 

18 purposes of this section, the term ‘large local 

19 government’ means any municipality or county 

20 if such municipality or county has a population 

21 of 100,000 or more. 

22 ‘‘(3) ALLOCATION TO ISSUERS; RESTRICTION

23 ON PRIVATE ACTIVITY BONDS.—Any allocation 

24 under this subsection to a State or large local gov25 ernment shall be allocated by such State or large 


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1 local government to issuers within the State in a 

2 manner that results in not less than 70 percent of 

3 the allocation to such State or large local govern4 ment being used to designate bonds which are not 

5 private activity bonds. 

6 ‘‘(f) QUALIFIED CONSERVATION PURPOSE.—For 

7 purposes of this section— 

8 ‘‘(1) IN GENERAL.—The term ‘qualified con9 servation purpose’ means any of the following: 

10 ‘‘(A) Capital expenditures incurred for 

11 purposes of— 

12 ‘‘(i) reducing energy consumption in 

13 publicly-owned buildings by at least 20 

14 percent, 

15 ‘‘(ii) implementing green community 

16 programs, 

17 ‘‘(iii) rural development involving the 

18 production of electricity from renewable 

19 energy resources, or 

20 ‘‘(iv) any qualified facility (as deter21 mined under section 45(d) without regard 

22 to paragraphs (8) and (10) thereof and 

23 without regard to any placed in service 

24 date). 


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1 ‘‘(B) Expenditures with respect to research 

2 facilities, and research grants, to support re3 search in— 

4 ‘‘(i) development of cellulosic ethanol 

5 or other nonfossil fuels, 

6 ‘‘(ii) technologies for the capture and 

7 sequestration of carbon dioxide produced 

8 through the use of fossil fuels, 

9 ‘‘(iii) increasing the efficiency of exist10 ing technologies for producing nonfossil 

11 fuels, 

12 ‘‘(iv) automobile battery technologies 

13 and other technologies to reduce fossil fuel 

14 consumption in transportation, or 

15 ‘‘(v) technologies to reduce energy use 

16 in buildings. 

17 ‘‘(C) Mass commuting facilities and related 

18 facilities that reduce the consumption of energy, 

19 including expenditures to reduce pollution from 

20 vehicles used for mass commuting. 

21 ‘‘(D) Demonstration projects designed to 

22 promote the commercialization of— 

23 ‘‘(i) green building technology, 


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1 ‘‘(ii) conversion of agricultural waste 

2 for use in the production of fuel or other3 wise, 

4 ‘‘(iii) advanced battery manufacturing 

5 technologies, 

6 ‘‘(iv) technologies to reduce peak use 

7 of electricity, or 

8 ‘‘(v) technologies for the capture and 

9 sequestration of carbon dioxide emitted 

10 from combusting fossil fuels in order to 

11 produce electricity. 

12 ‘‘(E) Public education campaigns to pro13 mote energy efficiency. 

14 ‘‘(2) SPECIAL RULES FOR PRIVATE ACTIVITY

15 BONDS.—For purposes of this section, in the case of 

16 any private activity bond, the term ‘qualified con17 servation purposes’ shall not include any expenditure 

18 which is not a capital expenditure. 

19 ‘‘(g) POPULATION.— 

20 ‘‘(1) IN GENERAL.—The population of any 

21 State or local government shall be determined for 

22 purposes of this section as provided in section 146(j) 

23 for the calendar year which includes the date of the 

24 enactment of this section. 


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1 ‘‘(2) SPECIAL RULE FOR COUNTIES.—In deter2 mining the population of any county for purposes of 

3 this section, any population of such county which is 

4 taken into account in determining the population of 

5 any municipality which is a large local government 

6 shall not be taken into account in determining the 

7 population of such county. 

8 ‘‘(h) APPLICATION TO INDIAN TRIBAL GOVERN9 MENTS.—An Indian tribal government shall be treated for 

10 purposes of this section in the same manner as a large 

11 local government, except that— 

12 ‘‘(1) an Indian tribal government shall be treat13 ed for purposes of subsection (e) as located within 

14 a State to the extent of so much of the population 

15 of such government as resides within such State, 

16 and 

17 ‘‘(2) any bond issued by an Indian tribal gov18 ernment shall be treated as a qualified energy con19 servation bond only if issued as part of an issue the 

20 available project proceeds of which are used for pur21 poses for which such Indian tribal government could 

22 issue bonds to which section 103(a) applies.’’. 

23 (b) CONFORMING AMENDMENTS.— 

24 (1) Paragraph (1) of section 54A(d), as amend25 ed by section 106, is amended to read as follows: 


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1 ‘‘(1) QUALIFIED TAX CREDIT BOND.—The term 

2 ‘qualified tax credit bond’ means— 

3 ‘‘(A) a qualified forestry conservation 

4 bond, 

5 ‘‘(B) a new clean renewable energy bond, 

6 or 

7 ‘‘(C) a qualified energy conservation bond, 

8 which is part of an issue that meets requirements of 

9 paragraphs (2), (3), (4), (5), and (6).’’. 

10 (2) Subparagraph (C) of section 54A(d)(2), as 

11 amended by section 106, is amended to read as fol12 lows: 

13 ‘‘(C) QUALIFIED PURPOSE.—For purposes 

14 of this paragraph, the term ‘qualified purpose’ 

15 means— 

16 ‘‘(i) in the case of a qualified forestry 

17 conservation bond, a purpose specified in 

18 section 54B(e), 

19 ‘‘(ii) in the case of a new clean renew20 able energy bond, a purpose specified in 

21 section 54C(a)(1), and 

22 ‘‘(iii) in the case of a qualified energy 

23 conservation bond, a purpose specified in 

24 section 54D(a)(1).’’. 


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1 (3) The table of sections for subpart I of part 

2 IV of subchapter A of chapter 1 is amended by add3 ing at the end the following new item: 

‘‘Sec. 54D. Qualified energy conservation bonds.’’. 

4 (c) EFFECTIVE DATE.—The amendments made by 

5 this section shall apply to obligations issued after the date 

6 of the enactment of this Act. 

7 SEC. 142. CREDIT FOR NONBUSINESS ENERGY PROPERTY. 

8 (a) EXTENSION OF CREDIT.—Section 25C(g) is 

9 amended by striking ‘‘December 31, 2007’’ and inserting 

10 ‘‘December 31, 2008’’. 

11 (b) QUALIFIED BIOMASS FUEL PROPERTY.— 

12 (1) IN GENERAL.—Section 25C(d)(3) is amend13 ed— 

14 (A) by striking ‘‘and’’ at the end of sub15 paragraph (D), 

16 (B) by striking the period at the end of 

17 subparagraph (E) and inserting ‘‘, and’’, and 

18 (C) by adding at the end the following new 

19 subparagraph: 

20 ‘‘(F) a stove which uses the burning of bio21 mass fuel to heat a dwelling unit located in the 

22 United States and used as a residence by the 

23 taxpayer, or to heat water for use in such a 

24 dwelling unit, and which has a thermal effi25 ciency rating of at least 75 percent.’’. 


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1 (2) BIOMASS FUEL.—Section 25C(d) is amend2 ed by adding at the end the following new para3 graph: 

4 ‘‘(6) BIOMASS FUEL.—The term ‘biomass fuel’ 

5 means any plant-derived fuel available on a renew6 able or recurring basis, including agricultural crops 

7 and trees, wood and wood waste and residues (in8 cluding wood pellets), plants (including aquatic 

9 plants), grasses, residues, and fibers.’’. 

10 (c) MODIFICATION OF WATER HEATER REQUIRE11 MENTS.—Section 25C(d)(3)(E) is amended by inserting 

12 ‘‘or a thermal efficiency of at least 90 percent’’ after 

13 ‘‘0.80’’. 

14 (d) COORDINATION WITH CREDIT FOR QUALIFIED

15 GEOTHERMAL HEAT PUMP PROPERTY EXPENDITURES.— 

16 (1) IN GENERAL.—Paragraph (3) of section 

17 25C(d), as amended by subsections (b) and (c), is 

18 amended by striking subparagraph (C) and by redes19 ignating subparagraphs (D), (E), and (F) as sub20 paragraphs (C), (D), and (E), respectively. 

21 (2) CONFORMING AMENDMENT.—Subparagraph 

22 (C) of section 25C(d)(2) is amended to read as fol23 lows: 

24 ‘‘(C) REQUIREMENTS AND STANDARDS

25 FOR AIR CONDITIONERS AND HEAT PUMPS.— 


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1 The standards and requirements prescribed by 

2 the Secretary under subparagraph (B) with re3 spect to the energy efficiency ratio (EER) for 

4 central air conditioners and electric heat 

5 pumps— 

6 ‘‘(i) shall require measurements to be 

7 based on published data which is tested by 

8 manufacturers at 95 degrees Fahrenheit, 

9 and 

10 ‘‘(ii) may be based on the certified 

11 data of the Air Conditioning and Refrig12 eration Institute that are prepared in part13 nership with the Consortium for Energy 

14 Efficiency.’’. 

15 (e) MODIFICATION OF QUALIFIED ENERGY EFFI16 CIENCY IMPROVEMENTS.— 

17 (1) IN GENERAL.—Paragraph (1) of section 

18 25C(c) is amended by inserting ‘‘, or an asphalt roof 

19 with appropriate cooling granules,’’ before ‘‘which 

20 meet the Energy Star program requirements’’. 

21 (2) BUILDING ENVELOPE COMPONENT.—Sub22 paragraph (D) of section 25C(c)(2) is amended— 

23 (A) by inserting ‘‘or asphalt roof’’ after 

24 ‘‘metal roof’’, and 


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1 (B) by inserting ‘‘or cooling granules’’ 

2 after ‘‘pigmented coatings’’. 

3 (f) EFFECTIVE DATES.— 

4 (1) IN GENERAL.—Except as provided in para5 graph (2), the amendments made this section shall 

6 apply to expenditures made after December 31, 

7 2007. 

8 (2) MODIFICATION OF QUALIFIED ENERGY EF9 FICIENCY IMPROVEMENTS.—The amendments made 

10 by subsection (e) shall apply to property placed in 

11 service after the date of the enactment of this Act. 

12 SEC. 143. ENERGY EFFICIENT COMMERCIAL BUILDINGS DE13 DUCTION. 

14 Subsection (h) of section 179D is amended by strik15 ing ‘‘December 31, 2008’’ and inserting ‘‘December 31, 

16 2013’’. 

17 SEC. 144. MODIFICATIONS OF ENERGY EFFICIENT APPLI18 ANCE CREDIT FOR APPLIANCES PRODUCED 

19 AFTER 2007. 

20 (a) IN GENERAL.—Subsection (b) of section 45M is 

21 amended to read as follows: 

22 ‘‘(b) APPLICABLE AMOUNT.—For purposes of sub23 section (a)— 

24 ‘‘(1) DISHWASHERS.—The applicable amount 

25 is— 


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1 ‘‘(A) $45 in the case of a dishwasher which 

2 is manufactured in calendar year 2008 or 2009 

3 and which uses no more than 324 kilowatt 

4 hours per year and 5.8 gallons per cycle, and 

5 ‘‘(B) $75 in the case of a dishwasher 

6 which is manufactured in calendar year 2008, 

7 2009, or 2010 and which uses no more than 

8 307 kilowatt hours per year and 5.0 gallons per 

9 cycle (5.5 gallons per cycle for dishwashers de10 signed for greater than 12 place settings). 

11 ‘‘(2) CLOTHES WASHERS.—The applicable 

12 amount is— 

13 ‘‘(A) $75 in the case of a residential top14 loading clothes washer manufactured in cal15 endar year 2008 which meets or exceeds a 1.72 

16 modified energy factor and does not exceed a 

17 8.0 water consumption factor, 

18 ‘‘(B) $125 in the case of a residential top19 loading clothes washer manufactured in cal20 endar year 2008 or 2009 which meets or ex21 ceeds a 1.8 modified energy factor and does not 

22 exceed a 7.5 water consumption factor, 

23 ‘‘(C) $150 in the case of a residential or 

24 commercial clothes washer manufactured in cal25 endar year 2008, 2009, or 2010 which meets or 


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1 exceeds 2.0 modified energy factor and does not 

2 exceed a 6.0 water consumption factor, and 

3 ‘‘(D) $250 in the case of a residential or 

4 commercial clothes washer manufactured in cal5 endar year 2008, 2009, or 2010 which meets or 

6 exceeds 2.2 modified energy factor and does not 

7 exceed a 4.5 water consumption factor. 

8 ‘‘(3) REFRIGERATORS.—The applicable amount 

9 is— 

10 ‘‘(A) $50 in the case of a refrigerator 

11 which is manufactured in calendar year 2008, 

12 and consumes at least 20 percent but not more 

13 than 22.9 percent less kilowatt hours per year 

14 than the 2001 energy conservation standards, 

15 ‘‘(B) $75 in the case of a refrigerator 

16 which is manufactured in calendar year 2008 or 

17 2009, and consumes at least 23 percent but no 

18 more than 24.9 percent less kilowatt hours per 

19 year than the 2001 energy conservation stand20 ards, 

21 ‘‘(C) $100 in the case of a refrigerator 

22 which is manufactured in calendar year 2008, 

23 2009, or 2010, and consumes at least 25 per24 cent but not more than 29.9 percent less kiloVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00088 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 watt hours per year than the 2001 energy con2 servation standards, and 

3 ‘‘(D) $200 in the case of a refrigerator 

4 manufactured in calendar year 2008, 2009, or 

5 2010 and which consumes at least 30 percent 

6 less energy than the 2001 energy conservation 

7 standards.’’. 

8 (b) ELIGIBLE PRODUCTION.— 

9 (1) SIMILAR TREATMENT FOR ALL APPLI10 ANCES.—Subsection (c) of section 45M is amend11 ed— 

12 (A) by striking paragraph (2), 

13 (B) by striking ‘‘(1) IN GENERAL’’ and all 

14 that follows through ‘‘the eligible’’ and inserting 

15 ‘‘The eligible’’, 

16 (C) by moving the text of such subsection 

17 in line with the subsection heading, and 

18 (D) by redesignating subparagraphs (A) 

19 and (B) as paragraphs (1) and (2), respectively, 

20 and by moving such paragraphs 2 ems to the 

21 left. 

22 (2) MODIFICATION OF BASE PERIOD.—Para23 graph (2) of section 45M(c), as amended by para24 graph (1), is amended by striking ‘‘3-calendar year’’ 

25 and inserting ‘‘2-calendar year’’. 


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1 (c) TYPES OF ENERGY EFFICIENT APPLIANCES.— 

2 Subsection (d) of section 45M is amended to read as fol3 lows: 

4 ‘‘(d) TYPES OF ENERGY EFFICIENT APPLIANCE.— 

5 For purposes of this section, the types of energy efficient 

6 appliances are— 

7 ‘‘(1) dishwashers described in subsection (b)(1), 

8 ‘‘(2) clothes washers described in subsection 

9 (b)(2), and 

10 ‘‘(3) refrigerators described in subsection 

11 (b)(3).’’. 

12 (d) AGGREGATE CREDIT AMOUNT ALLOWED.— 

13 (1) INCREASE IN LIMIT.—Paragraph (1) of sec14 tion 45M(e) is amended to read as follows: 

15 ‘‘(1) AGGREGATE CREDIT AMOUNT ALLOWED.— 

16 The aggregate amount of credit allowed under sub17 section (a) with respect to a taxpayer for any tax18 able year shall not exceed $75,000,000 reduced by 

19 the amount of the credit allowed under subsection 

20 (a) to the taxpayer (or any predecessor) for all prior 

21 taxable years beginning after December 31, 2007.’’. 

22 (2) EXCEPTION FOR CERTAIN REFRIGERATOR

23 AND CLOTHES WASHERS.—Paragraph (2) of section 

24 45M(e) is amended to read as follows: 


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1 ‘‘(2) AMOUNT ALLOWED FOR CERTAIN REFRIG2 ERATORS AND CLOTHES WASHERS.—Refrigerators 

3 described in subsection (b)(3)(D) and clothes wash4 ers described in subsection (b)(2)(D) shall not be 

5 taken into account under paragraph (1).’’. 

6 (e) QUALIFIED ENERGY EFFICIENT APPLIANCES.— 

7 (1) IN GENERAL.—Paragraph (1) of section 

8 45M(f) is amended to read as follows: 

9 ‘‘(1) QUALIFIED ENERGY EFFICIENT APPLI10 ANCE.—The term ‘qualified energy efficient appli11 ance’ means— 

12 ‘‘(A) any dishwasher described in sub13 section (b)(1), 

14 ‘‘(B) any clothes washer described in sub15 section (b)(2), and 

16 ‘‘(C) any refrigerator described in sub17 section (b)(3).’’. 

18 (2) CLOTHES WASHER.—Section 45M(f)(3) is 

19 amended by inserting ‘‘commercial’’ before ‘‘residen20 tial’’ the second place it appears. 

21 (3) TOP-LOADING CLOTHES WASHER.—Sub22 section (f) of section 45M is amended by redesig23 nating paragraphs (4), (5), (6), and (7) as para24 graphs (5), (6), (7), and (8), respectively, and by inVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00091 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 serting after paragraph (3) the following new para2 graph: 

3 ‘‘(4) TOP-LOADING CLOTHES WASHER.—The 

4 term ‘top-loading clothes washer’ means a clothes 

5 washer which has the clothes container compartment 

6 access located on the top of the machine and which 

7 operates on a vertical axis.’’. 

8 (4) REPLACEMENT OF ENERGY FACTOR.—Sec9 tion 45M(f)(6), as redesignated by paragraph (3), is 

10 amended to read as follows: 

11 ‘‘(6) MODIFIED ENERGY FACTOR.—The term 

12 ‘modified energy factor’ means the modified energy 

13 factor established by the Department of Energy for 

14 compliance with the Federal energy conservation 

15 standard.’’. 

16 (5) GALLONS PER CYCLE; WATER CONSUMP17 TION FACTOR.—Section 45M(f), as amended by 

18 paragraph (3), is amended by adding at the end the 

19 following: 

20 ‘‘(9) GALLONS PER CYCLE.—The term ‘gallons 

21 per cycle’ means, with respect to a dishwasher, the 

22 amount of water, expressed in gallons, required to 

23 complete a normal cycle of a dishwasher. 

24 ‘‘(10) WATER CONSUMPTION FACTOR.—The 

25 term ‘water consumption factor’ means, with respect 


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1 to a clothes washer, the quotient of the total weight2 ed per-cycle water consumption divided by the cubic 

3 foot (or liter) capacity of the clothes washer.’’. 

4 (f) EFFECTIVE DATE.—The amendments made by 

5 this section shall apply to appliances produced after De6 cember 31, 2007. 

7 SEC. 145. ACCELERATED RECOVERY PERIOD FOR DEPRE8 CIATION OF SMART METERS AND SMART 

9 GRID SYSTEMS. 

10 (a) IN GENERAL.—Section 168(e)(3)(D) is amended 

11 by striking ‘‘and’’ at the end of clause (i), by striking the 

12 period at the end of clause (ii) and inserting a comma, 

13 and by inserting after clause (ii) the following new clauses: 

14 ‘‘(iii) any qualified smart electric 

15 meter, and 

16 ‘‘(iv) any qualified smart electric grid 

17 system.’’. 

18 (b) DEFINITIONS.—Section 168(i) is amended by in19 serting at the end the following new paragraph: 

20 ‘‘(18) QUALIFIED SMART ELECTRIC METERS.— 

21 ‘‘(A) IN GENERAL.—The term ‘qualified 

22 smart electric meter’ means any smart electric 

23 meter which is placed in service by a taxpayer 

24 who is a supplier of electric energy or a pro25 vider of electric energy services. 


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1 ‘‘(B) SMART ELECTRIC METER.—For pur2 poses of subparagraph (A), the term ‘smart 

3 electric meter’ means any time-based meter and 

4 related communication equipment which is ca5 pable of being used by the taxpayer as part of 

6 a system that— 

7 ‘‘(i) measures and records electricity 

8 usage data on a time-differentiated basis 

9 in at least 24 separate time segments per 

10 day, 

11 ‘‘(ii) provides for the exchange of in12 formation between supplier or provider and 

13 the customer’s electric meter in support of 

14 time-based rates or other forms of demand 

15 response, 

16 ‘‘(iii) provides data to such supplier or 

17 provider so that the supplier or provider 

18 can provide energy usage information to 

19 customers electronically, and 

20 ‘‘(iv) provides net metering. 

21 ‘‘(19) QUALIFIED SMART ELECTRIC GRID SYS22 TEMS.— 

23 ‘‘(A) IN GENERAL.—The term ‘qualified 

24 smart electric grid system’ means any smart 

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1 tric distribution grid communications, moni2 toring, and management placed in service by a 

3 taxpayer who is a supplier of electric energy or 

4 a provider of electric energy services. 

5 ‘‘(B) SMART GRID PROPERTY.—For the 

6 purposes of subparagraph (A), the term ‘smart 

7 grid property’ means electronics and related 

8 equipment that is capable of— 

9 ‘‘(i) sensing, collecting, and moni10 toring data of or from all portions of a 

11 utility’s electric distribution grid, 

12 ‘‘(ii) providing real-time, two-way 

13 communications to monitor or manage 

14 such grid, and 

15 ‘‘(iii) providing real time analysis of 

16 and event prediction based upon collected 

17 data that can be used to improve electric 

18 distribution system reliability, quality, and 

19 performance.’’. 

20 (c) CONTINUED APPLICATION OF 150 PERCENT DE21 CLINING BALANCE METHOD.—Paragraph (2) of section 

22 168(b) is amended by striking ‘‘or’’ at the end of subpara23 graph (B), by redesignating subparagraph (C) as subpara24 graph (D), and by inserting after subparagraph (B) the 

25 following new subparagraph: 


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1 ‘‘(C) any property (other than property de2 scribed in paragraph (3)) which is a qualified 

3 smart electric meter or qualified smart electric 

4 grid system, or’’. 

5 (d) EFFECTIVE DATE.—The amendments made by 

6 this section shall apply to property placed in service after 

7 the date of the enactment of this Act. 

8 SEC. 146. QUALIFIED GREEN BUILDING AND SUSTAINABLE 

9 DESIGN PROJECTS. 

10 (a) IN GENERAL.—Paragraph (8) of section 142(l) 

11 is amended by striking ‘‘September 30, 2009’’ and insert12 ing ‘‘September 30, 2012’’. 

13 (b) TREATMENT OF CURRENT REFUNDING

14 BONDS.—Paragraph (9) of section 142(l) is amended by 

15 striking ‘‘October 1, 2009’’ and inserting ‘‘October 1, 

16 2012’’. 

17 (c) ACCOUNTABILITY.—The second sentence of sec18 tion 701(d) of the American Jobs Creation Act of 2004 

19 is amended by striking ‘‘issuance,’’ and inserting 

20 ‘‘issuance of the last issue with respect to such project,’’. 

21 SEC. 147. SPECIAL DEPRECIATION ALLOWANCE FOR CER22 TAIN REUSE AND RECYCLING PROPERTY. 

23 (a) IN GENERAL.—Section 168 is amended by adding 

24 at the end the following new subsection: 


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1 ‘‘(m) SPECIAL ALLOWANCE FOR CERTAIN REUSE

2 AND RECYCLING PROPERTY.— 

3 ‘‘(1) IN GENERAL.—In the case of any qualified 

4 reuse and recycling property— 

5 ‘‘(A) the depreciation deduction provided 

6 by section 167(a) for the taxable year in which 

7 such property is placed in service shall include 

8 an allowance equal to 50 percent of the ad9 justed basis of the qualified reuse and recycling 

10 property, and 

11 ‘‘(B) the adjusted basis of the qualified 

12 reuse and recycling property shall be reduced by 

13 the amount of such deduction before computing 

14 the amount otherwise allowable as a deprecia15 tion deduction under this chapter for such tax16 able year and any subsequent taxable year. 

17 ‘‘(2) QUALIFIED REUSE AND RECYCLING PROP18 ERTY.—For purposes of this subsection— 

19 ‘‘(A) IN GENERAL.—The term ‘qualified 

20 reuse and recycling property’ means any reuse 

21 and recycling property— 

22 ‘‘(i) to which this section applies, 

23 ‘‘(ii) which has a useful life of at least 

24 5 years, 


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1 ‘‘(iii) the original use of which com2 mences with the taxpayer after December 

3 31, 2007, and 

4 ‘‘(iv) which is— 

5 ‘‘(I) acquired by purchase (as de6 fined in section 179(d)(2)) by the tax7 payer after December 31, 2007, but 

8 only if no written binding contract for 

9 the acquisition was in effect before 

10 January 1, 2008, or 

11 ‘‘(II) acquired by the taxpayer 

12 pursuant to a written binding contract 

13 which was entered into after Decem14 ber 31, 2007. 

15 ‘‘(B) EXCEPTIONS.— 

16 ‘‘(i) BONUS DEPRECIATION PROPERTY

17 UNDER SUBSECTION (k).—The term ‘quali18 fied reuse and recycling property’ shall not 

19 include any property to which section 

20 168(k) applies. 

21 ‘‘(ii) ALTERNATIVE DEPRECIATION

22 PROPERTY.—The term ‘qualified reuse and 

23 recycling property’ shall not include any 

24 property to which the alternative deprecia25 tion system under subsection (g) applies, 


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1 determined without regard to paragraph 

2 (7) of subsection (g) (relating to election to 

3 have system apply). 

4 ‘‘(iii) ELECTION OUT.—If a taxpayer 

5 makes an election under this clause with 

6 respect to any class of property for any 

7 taxable year, this subsection shall not 

8 apply to all property in such class placed 

9 in service during such taxable year. 

10 ‘‘(C) SPECIAL RULE FOR SELF-CON11 STRUCTED PROPERTY.—In the case of a tax12 payer manufacturing, constructing, or pro13 ducing property for the taxpayer’s own use, the 

14 requirements of clause (iv) of subparagraph (A) 

15 shall be treated as met if the taxpayer begins 

16 manufacturing, constructing, or producing the 

17 property after December 31, 2007. 

18 ‘‘(D) DEDUCTION ALLOWED IN COM19 PUTING MINIMUM TAX.—For purposes of deter20 mining alternative minimum taxable income 

21 under section 55, the deduction under sub22 section (a) for qualified reuse and recycling 

23 property shall be determined under this section 

24 without regard to any adjustment under section 

25 56. 


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1 ‘‘(3) DEFINITIONS.—For purposes of this sub2 section— 

3 ‘‘(A) REUSE AND RECYCLING PROPERTY.— 

4 ‘‘(i) IN GENERAL.—The term ‘reuse 

5 and recycling property’ means any machin6 ery and equipment (not including buildings 

7 or real estate), along with all appur8 tenances thereto, including software nec9 essary to operate such equipment, which is 

10 used exclusively to collect, distribute, or re11 cycle qualified reuse and recyclable mate12 rials. 

13 ‘‘(ii) EXCLUSION.—Such term does 

14 not include rolling stock or other equip15 ment used to transport reuse and recycla16 ble materials. 

17 ‘‘(B) QUALIFIED REUSE AND RECYCLABLE

18 MATERIALS.— 

19 ‘‘(i) IN GENERAL.—The term ‘quali20 fied reuse and recyclable materials’ means 

21 scrap plastic, scrap glass, scrap textiles, 

22 scrap rubber, scrap packaging, recovered 

23 fiber, scrap ferrous and nonferrous metals, 

24 or electronic scrap generated by an indi25 vidual or business. 


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1 ‘‘(ii) ELECTRONIC SCRAP.—For pur2 poses of clause (i), the term ‘electronic 

3 scrap’ means— 

4 ‘‘(I) any cathode ray tube, flat 

5 panel screen, or similar video display 

6 device with a screen size greater than 

7 4 inches measured diagonally, or 

8 ‘‘(II) any central processing unit. 

9 ‘‘(C) RECYCLING OR RECYCLE.—The term 

10 ‘recycling’ or ‘recycle’ means that process (in11 cluding sorting) by which worn or superfluous 

12 materials are manufactured or processed into 

13 specification grade commodities that are suit14 able for use as a replacement or substitute for 

15 virgin materials in manufacturing tangible con16 sumer and commercial products, including 

17 packaging.’’. 

18 (b) EFFECTIVE DATE.—The amendment made by 

19 this section shall apply to property placed in service after 

20 December 31, 2007. 


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1 TITLE II—ONE-YEAR EXTENSION 

2 OF TEMPORARY PROVISIONS 

3 Subtitle A—Alternative Minimum 

4 Tax 

5 SEC. 201. EXTENSION OF ALTERNATIVE MINIMUM TAX RE6 LIEF FOR NONREFUNDABLE PERSONAL 

7 CREDITS. 

8 (a) IN GENERAL.—Paragraph (2) of section 26(a) is 

9 amended— 

10 (1) by striking ‘‘or 2007’’ and inserting ‘‘2007, 

11 or 2008’’, and 

12 (2) by striking ‘‘2007’’ in the heading thereof 

13 and inserting ‘‘2008’’. 

14 (b) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to taxable years beginning after 

16 December 31, 2007. 

17 SEC. 202. EXTENSION OF INCREASED ALTERNATIVE MIN18 IMUM TAX EXEMPTION AMOUNT. 

19 (a) IN GENERAL.—Paragraph (1) of section 55(d) is 

20 amended— 

21 (1) by striking ‘‘($66,250 in the case of taxable 

22 years beginning in 2007)’’ in subparagraph (A) and 

23 inserting ‘‘($69,950 in the case of taxable years be24 ginning in 2008)’’, and 


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1 (2) by striking ‘‘($44,350 in the case of taxable 

2 years beginning in 2007)’’ in subparagraph (B) and 

3 inserting ‘‘($46,200 in the case of taxable years be4 ginning in 2008)’’. 

5 (b) EFFECTIVE DATE.—The amendments made by 

6 this section shall apply to taxable years beginning after 

7 December 31, 2007. 

8 SEC. 203. INCREASE OF AMT REFUNDABLE CREDIT 

9 AMOUNT FOR INDIVIDUALS WITH LONG10 TERM UNUSED CREDITS FOR PRIOR YEAR 

11 MINIMUM TAX LIABILITY, ETC. 

12 (a) IN GENERAL.—Paragraph (2) of section 53(e) is 

13 amended to read as follows: 

14 ‘‘(2) AMT REFUNDABLE CREDIT AMOUNT.— 

15 For purposes of paragraph (1), the term ‘AMT re16 fundable credit amount’ means, with respect to any 

17 taxable year, the amount (not in excess of the long18 term unused minimum tax credit for such taxable 

19 year) equal to the greater of— 

20 ‘‘(A) 50 percent of the long-term unused 

21 minimum tax credit for such taxable year, or 

22 ‘‘(B) the amount (if any) of the AMT re23 fundable credit amount for the taxpayer’s pre24 ceding taxable year (determined without regard 

25 to subsection (f)(2)).’’. 


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1 (b) TREATMENT OF CERTAIN UNDERPAYMENTS, IN2 TEREST, AND PENALTIES ATTRIBUTABLE TO THE TREAT3 MENT OF INCENTIVE STOCK OPTIONS.—Section 53 is 

4 amended by adding at the end the following new sub5 section: 

6 ‘‘(f) TREATMENT OF CERTAIN UNDERPAYMENTS, IN7 TEREST, AND PENALTIES ATTRIBUTABLE TO THE TREAT8 MENT OF INCENTIVE STOCK OPTIONS.— 

9 ‘‘(1) ABATEMENT.—Any underpayment of tax 

10 outstanding on the date of the enactment of this 

11 subsection which is attributable to the application of 

12 section 56(b)(3) for any taxable year ending before 

13 January 1, 2008 (and any interest or penalty with 

14 respect to such underpayment which is outstanding 

15 on such date of enactment), is hereby abated. The 

16 amount determined under subsection (b)(1) shall not 

17 include any tax abated under the preceding sentence. 

18 ‘‘(2) INCREASE IN CREDIT FOR CERTAIN INTER19 EST AND PENALTIES ALREADY PAID.—The AMT re20 fundable credit amount, and the minimum tax credit 

21 determined under subsection (b), for the taxpayer’s 

22 first 2 taxable years beginning after December 31, 

23 2007, shall each be increased by 50 percent of the 

24 aggregate amount of the interest and penalties 

25 which were paid by the taxpayer before the date of 


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1 the enactment of this subsection and which would 

2 (but for such payment) have been abated under 

3 paragraph (1).’’. 

4 (c) EFFECTIVE DATE.— 

5 (1) IN GENERAL.—Except as provided in para6 graph (2), the amendment made by this section shall 

7 apply to taxable years beginning after December 31, 

8 2007. 

9 (2) ABATEMENT.—Section 53(f)(1), as added 

10 by subsection (b), shall take effect on the date of the 

11 enactment of this Act. 

12 Subtitle B—Extensions Primarily 

13 Affecting Individuals 

14 SEC. 211. DEDUCTION FOR STATE AND LOCAL SALES 

15 TAXES. 

16 (a) IN GENERAL.—Subparagraph (I) of section 

17 164(b)(5) is amended by striking ‘‘January 1, 2008’’ and 

18 inserting ‘‘January 1, 2009’’. 

19 (b) EFFECTIVE DATE.—The amendment made by 

20 this section shall apply to taxable years beginning after 

21 December 31, 2007. 


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1 SEC. 212. DEDUCTION OF QUALIFIED TUITION AND RE2 LATED EXPENSES. 

3 (a) IN GENERAL.—Subsection (e) of section 222 is 

4 amended by striking ‘‘December 31, 2007’’ and inserting 

5 ‘‘December 31, 2008’’. 

6 (b) EFFECTIVE DATE.—The amendment made by 

7 this section shall apply to taxable years beginning after 

8 December 31, 2007. 

9 SEC. 213. TREATMENT OF CERTAIN DIVIDENDS OF REGU10 LATED INVESTMENT COMPANIES. 

11 (a) INTEREST-RELATED DIVIDENDS.—Subpara12 graph (C) of section 871(k)(1) is amended by striking 

13 ‘‘December 31, 2007’’ and inserting ‘‘December 31, 

14 2008’’. 

15 (b) SHORT-TERM CAPITAL GAIN DIVIDENDS.—Sub16 paragraph (C) of section 871(k)(2) is amended by striking 

17 ‘‘December 31, 2007’’ and inserting ‘‘December 31, 

18 2008’’. 

19 (c) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to dividends with respect to taxable 

21 years of regulated investment companies beginning after 

22 December 31, 2007. 


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1 SEC. 214. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RE2 TIREMENT PLANS FOR CHARITABLE PUR3 POSES. 

4 (a) IN GENERAL.—Subparagraph (F) of section 

5 408(d)(8) is amended by striking ‘‘December 31, 2007’’ 

6 and inserting ‘‘December 31, 2008’’. 

7 (b) EFFECTIVE DATE.—The amendment made by 

8 this section shall apply to distributions made in taxable 

9 years beginning after December 31, 2007. 

10 SEC. 215. DEDUCTION FOR CERTAIN EXPENSES OF ELE11 MENTARY AND SECONDARY SCHOOL TEACH12 ERS. 

13 (a) IN GENERAL.—Subparagraph (D) of section 

14 62(a)(2) is amended by striking ‘‘or 2007’’ and inserting 

15 ‘‘2007, or 2008’’. 

16 (b) EFFECTIVE DATE.—The amendment made by 

17 subsection (a) shall apply to taxable years beginning after 

18 December 31, 2007. 

19 SEC. 216. STOCK IN RIC FOR PURPOSES OF DETERMINING 

20 ESTATES OF NONRESIDENTS NOT CITIZENS. 

21 (a) IN GENERAL.—Paragraph (3) of section 2105(d) 

22 is amended by striking ‘‘December 31, 2007’’ and insert23 ing ‘‘December 31, 2008’’. 

24 (b) EFFECTIVE DATE.—The amendment made by 

25 this section shall apply to decedents dying after December 

26 31, 2007. 


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1 SEC. 217. QUALIFIED INVESTMENT ENTITIES. 

2 (a) IN GENERAL.—Clause (ii) of section 

3 897(h)(4)(A) is amended by striking ‘‘December 31, 

4 2007’’ and inserting ‘‘December 31, 2008’’. 

5 (b) EFFECTIVE DATE.—The amendment made by 

6 subsection (a) shall take effect on January 1, 2008, except 

7 that such amendment shall not apply to the application 

8 of withholding requirements with respect to any payment 

9 made on or before the date of the enactment of this Act. 

10 SEC. 218. EXCLUSION OF AMOUNTS RECEIVED UNDER 

11 QUALIFIED GROUP LEGAL SERVICES PLANS. 

12 (a) IN GENERAL.—Subsection (e) of section 120 is 

13 amended by striking ‘‘shall not apply to taxable years be14 ginning after June 30, 1992’’ and inserting ‘‘shall apply 

15 to taxable years beginning after December 31, 2007, and 

16 before January 1, 2009’’. 

17 (b) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply to taxable years beginning after 

19 December 31, 2007. 

20 Subtitle C—Extensions Primarily 

21 Affecting Businesses 

22 SEC. 221. EXTENSION AND MODIFICATION OF RESEARCH 

23 CREDIT. 

24 (a) EXTENSION.—Section 41(h)(1)(B) is amended by 

25 striking ‘‘December 31, 2007’’ and inserting ‘‘December 

26 31, 2008’’. 


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1 (b) TERMINATION OF ALTERNATIVE INCREMENTAL

2 CREDIT.—Paragraph (4) of section 41(c) is repealed. 

3 (c) MODIFICATION OF ALTERNATIVE SIMPLIFIED

4 CREDIT.—Section 41(c)(5)(A) is amended by striking ‘‘12 

5 percent’’ and inserting ‘‘14 percent’’. 

6 (d) CONFORMING AMENDMENT.—Subparagraph (D) 

7 of section 45C(b)(1) is amended by striking ‘‘December 

8 31, 2007’’ and inserting ‘‘December 31, 2008’’. 

9 (e) TECHNICAL CORRECTION.—Paragraph (3) of sec10 tion 41(h) is amended to read as follows: 

11 ‘‘(2) COMPUTATION FOR TAXABLE YEAR IN

12 WHICH CREDIT TERMINATES.—In the case of any 

13 taxable year with respect to which this section ap14 plies to a number of days which is less than the total 

15 number of days in such taxable year— 

16 ‘‘(A) the amount determined under sub17 section (c)(1)(B) with respect to such taxable 

18 year shall be the amount which bears the same 

19 ratio to such amount (determined without re20 gard to this paragraph) as the number of days 

21 in such taxable year to which this section ap22 plies bears to the total number of days in such 

23 taxable year, and 

24 ‘‘(B) for purposes of subsection (c)(5), the 

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1 ceding 3 taxable years shall be the amount 

2 which bears the same ratio to such average 

3 qualified research expenses (determined without 

4 regard to this paragraph) as the number of 

5 days in such taxable year to which this section 

6 applies bears to the total number of days in 

7 such taxable year.’’. 

8 (f) EFFECTIVE DATES.— 

9 (1) IN GENERAL.—Except as provided in para10 graph (2), the amendments made by this section 

11 shall apply to amounts paid or incurred after De12 cember 31, 2007. 

13 (2) ALTERNATIVE INCREMENTAL AND SIM14 PLIFIED CREDITS AND TECHNICAL AMENDMENT.— 

15 The repeal made by subsection (b) and the amend16 ments made by subsections (c) and (e) shall apply 

17 to taxable years beginning after December 31, 2007. 

18 SEC. 222. INDIAN EMPLOYMENT CREDIT. 

19 (a) IN GENERAL.—Subsection (f) of section 45A is 

20 amended by striking ‘‘December 31, 2007’’ and inserting 

21 ‘‘December 31, 2008’’. 

22 (b) EFFECTIVE DATE.—The amendment made by 

23 this section shall apply to taxable years beginning after 

24 December 31, 2007. 


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1 SEC. 223. EXTENSION AND MODIFICATION OF NEW MAR2 KETS TAX CREDIT. 

3 (a) EXTENSION.—Subparagraph (D) of section 

4 45D(f)(1) is amended by striking ‘‘and 2008’’ and insert5 ing ‘‘2008, and 2009’’. 

6 (b) EXPANSION OF DEFINITION OF LOW-INCOME

7 COMMUNITY FOR NEW MARKETS TAX CREDIT.— 

8 (1) IN GENERAL.—Section 45D(e) is amended 

9 by adding at the end the following new paragraph: 

10 ‘‘(6) CERTAIN COUNTIES TREATED AS LOW-IN11 COME COMMUNITIES.— 

12 ‘‘(A) IN GENERAL.—The term ‘low-income 

13 community’ shall include any county if such 

14 county— 

15 ‘‘(i) has a decennial average annual 

16 wage which is at or below 75 percent of 

17 the national decennial average annual 

18 wage, and 

19 ‘‘(ii) is located in a State the decen20 nial average annual wage of which is at or 

21 below 75 percent of the national decennial 

22 average annual wage. 

23 ‘‘(B) DECENNIAL AVERAGE ANNUAL

24 WAGE.—For purposes of subparagraph (A), the 

25 term ‘decennial average annual wage’ means 

26 the average wage, as determined based on data 


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1 from the Bureau of Labor Statistics, for the 

2 year in which the most recent decennial census 

3 was taken.’’. 

4 (2) EFFECTIVE DATE.—The amendment made 

5 by this subsection shall apply to investments made 

6 after the date of the enactment of this Act. 

7 SEC. 224. RAILROAD TRACK MAINTENANCE. 

8 (a) IN GENERAL.—Subsection (f) of section 45G is 

9 amended by striking ‘‘January 1, 2008’’ and inserting 

10 ‘‘January 1, 2009’’. 

11 (b) CREDIT ALLOWED AGAINST ALTERNATIVE MIN12 IMUM TAX.—Subparagraph (B) of section 38(c)(4), as 

13 amended by the Housing Assistance Tax Act of 2008 and 

14 by section 103, is amended— 

15 (1) by redesignating clauses (v), (vi), and (vii) 

16 as clauses (vi), (vii), and (viii), respectively, and 

17 (2) by inserting after clause (iv) the following 

18 new clause: 

19 ‘‘(v) the credit determined under sec20 tion 45G,’’. 

21 (c) EFFECTIVE DATES.— 

22 (1) The amendment made by subsection (a) 

23 shall apply to expenditures paid or incurred during 

24 taxable years beginning after December 31, 2007. 


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1 (2) The amendments made by subsection (b) 

2 shall apply to credits determined under section 45G 

3 of the Internal Revenue Code of 1986 in taxable 

4 years beginning after December 31, 2007, and to 

5 carrybacks of such credits. 

6 SEC. 225. EXTENSION OF MINE RESCUE TEAM TRAINING 

7 CREDIT. 

8 Section 45N(e) is amended by striking ‘‘December 

9 31, 2008’’ and inserting ‘‘December 31, 2009’’. 

10 SEC. 226. EXTENSION OF 15-YEAR STRAIGHT-LINE COST RE11 COVERY FOR QUALIFIED LEASEHOLD IM12 PROVEMENTS AND QUALIFIED RESTAURANT 

13 IMPROVEMENTS; 15-YEAR STRAIGHT-LINE 

14 COST RECOVERY FOR CERTAIN IMPROVE15 MENTS TO RETAIL SPACE. 

16 (a) EXTENSION OF LEASEHOLD AND RESTAURANT

17 IMPROVEMENTS.— 

18 (1) IN GENERAL.—Clauses (iv) and (v) of sec19 tion 168(e)(3)(E) are each amended by striking 

20 ‘‘January 1, 2008’’ and inserting ‘‘January 1, 

21 2009’’. 

22 (2) EFFECTIVE DATE.—The amendments made 

23 by this subsection shall apply to property placed in 

24 service after December 31, 2007. 


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1 (b) TREATMENT TO INCLUDE NEW CONSTRUC2 TION.— 

3 (1) IN GENERAL.—Paragraph (7) of section 

4 168(e) is amended to read as follows: 

5 ‘‘(7) QUALIFIED RESTAURANT PROPERTY.—The 

6 term ‘qualified restaurant property’ means any sec7 tion 1250 property which is a building or an im8 provement to a building if more than 50 percent of 

9 the building’s square footage is devoted to prepara10 tion of, and seating for on-premises consumption of, 

11 prepared meals.’’. 

12 (2) EFFECTIVE DATE.—The amendments made 

13 by this subsection shall apply to property placed in 

14 service after the date of the enactment of this Act. 

15 (c) RECOVERY PERIOD FOR DEPRECIATION OF CER16 TAIN IMPROVEMENTS TO RETAIL SPACE.— 

17 (1) 15-YEAR RECOVERY PERIOD.—Section 

18 168(e)(3)(E) is amended by striking ‘‘and’’ at the 

19 end of clause (vii), by striking the period at the end 

20 of clause (viii) and inserting ‘‘, and’’, and by adding 

21 at the end the following new clause: 

22 ‘‘(ix) any qualified retail improvement 

23 property placed in service before January 

24 1, 2009.’’. 


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1 (2) QUALIFIED RETAIL IMPROVEMENT PROP2 ERTY.—Section 168(e) is amended by adding at the 

3 end the following new paragraph: 

4 ‘‘(8) QUALIFIED RETAIL IMPROVEMENT PROP5 ERTY.— 

6 ‘‘(A) IN GENERAL.—The term ‘qualified 

7 retail improvement property’ means any im8 provement to an interior portion of a building 

9 which is nonresidential real property if— 

10 ‘‘(i) such portion is open to the gen11 eral public and is used in the retail trade 

12 or business of selling tangible personal 

13 property to the general public, and 

14 ‘‘(ii) such improvement is placed in 

15 service more than 3 years after the date 

16 the building was first placed in service. 

17 ‘‘(B) IMPROVEMENTS MADE BY OWNER.— 

18 In the case of an improvement made by the 

19 owner of such improvement, such improvement 

20 shall be qualified retail improvement property 

21 (if at all) only so long as such improvement is 

22 held by such owner. Rules similar to the rules 

23 under paragraph (6)(B) shall apply for pur24 poses of the preceding sentence. 


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1 ‘‘(C) CERTAIN IMPROVEMENTS NOT IN2 CLUDED.—Such term shall not include any im3 provement for which the expenditure is attrib4 utable to— 

5 ‘‘(i) the enlargement of the building, 

6 ‘‘(ii) any elevator or escalator, 

7 ‘‘(iii) any structural component bene8 fitting a common area, or 

9 ‘‘(iv) the internal structural frame10 work of the building.’’. 

11 (3) REQUIREMENT TO USE STRAIGHT LINE

12 METHOD.—Section 168(b)(3) is amended by adding 

13 at the end the following new subparagraph: 

14 ‘‘(I) Qualified retail improvement property 

15 described in subsection (e)(8).’’. 

16 (4) ALTERNATIVE SYSTEM.—The table con17 tained in section 168(g)(3)(B) is amended by insert18 ing after the item relating to subparagraph (E)(viii) 

19 the following new item: 

‘‘(E)(ix) ........................................................................................... 39’’. 

20 (5) EFFECTIVE DATE.—The amendments made 

21 by this subsection shall apply to property placed in 

22 service after the date of the enactment of this Act. 


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1 SEC. 227. SEVEN-YEAR COST RECOVERY PERIOD FOR MO2 TORSPORTS RACING TRACK FACILITY. 

3 (a) IN GENERAL.—Subparagraph (D) of section 

4 168(i)(15) is amended by striking ‘‘December 31, 2007’’ 

5 and inserting ‘‘December 31, 2008’’. 

6 (b) EFFECTIVE DATE.—The amendment made by 

7 this section shall apply to property placed in service after 

8 December 31, 2007. 

9 SEC. 228. ACCELERATED DEPRECIATION FOR BUSINESS 

10 PROPERTY ON INDIAN RESERVATION. 

11 (a) IN GENERAL.—Paragraph (8) of section 168(j) 

12 is amended by striking ‘‘December 31, 2007’’ and insert13 ing ‘‘December 31, 2008’’. 

14 (b) EFFECTIVE DATE.—The amendment made by 

15 this section shall apply to property placed in service after 

16 December 31, 2007. 

17 SEC. 229. EXTENSION OF ELECTION TO EXPENSE AD18 VANCED MINE SAFETY EQUIPMENT. 

19 Section 179E(g) is amended by striking ‘‘December 

20 31, 2008’’ and inserting ‘‘December 31, 2009’’. 

21 SEC. 230. EXPENSING OF ENVIRONMENTAL REMEDIATION 

22 COSTS. 

23 (a) IN GENERAL.—Subsection (h) of section 198 is 

24 amended by striking ‘‘December 31, 2007’’ and inserting 

25 ‘‘December 31, 2008’’. 


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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to expenditures paid or incurred 

3 after December 31, 2007. 

4 SEC. 231. DEDUCTION ALLOWABLE WITH RESPECT TO IN5 COME ATTRIBUTABLE TO DOMESTIC PRO6 DUCTION ACTIVITIES IN PUERTO RICO. 

7 (a) IN GENERAL.—Subparagraph (C) of section 

8 199(d)(8) is amended— 

9 (1) by striking ‘‘first 2 taxable years’’ and in10 serting ‘‘first 3 taxable years’’, and 

11 (2) by striking ‘‘January 1, 2008’’ and insert12 ing ‘‘January 1, 2009’’. 

13 (b) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to taxable years beginning after 

15 December 31, 2007. 

16 SEC. 232. MODIFICATION OF TAX TREATMENT OF CERTAIN 

17 PAYMENTS TO CONTROLLING EXEMPT ORGA18 NIZATIONS. 

19 (a) IN GENERAL.—Clause (iv) of section 

20 512(b)(13)(E) is amended by striking ‘‘December 31, 

21 2007’’ and inserting ‘‘December 31, 2008’’. 

22 (b) EFFECTIVE DATE.—The amendment made by 

23 this section shall apply to payments received or accrued 

24 after December 31, 2007. 


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1 SEC. 233. QUALIFIED ZONE ACADEMY BONDS. 

2 (a) IN GENERAL.—Subpart I of part IV of sub3 chapter A of chapter 1, as amended by sections 106 and 

4 141, is amended by adding at the end the following new 

5 section: 

6 ‘‘SEC. 54E. QUALIFIED ZONE ACADEMY BONDS. 

7 ‘‘(a) QUALIFIED ZONE ACADEMY BONDS.—For pur8 poses of this subchapter, the term ‘qualified zone academy 

9 bond’ means any bond issued as part of an issue if— 

10 ‘‘(1) 100 percent of the available project pro11 ceeds of such issue are to be used for a qualified 

12 purpose with respect to a qualified zone academy es13 tablished by an eligible local education agency, 

14 ‘‘(2) the bond is issued by a State or local gov15 ernment within the jurisdiction of which such acad16 emy is located, and 

17 ‘‘(3) the issuer— 

18 ‘‘(A) designates such bond for purposes of 

19 this section, 

20 ‘‘(B) certifies that it has written assur21 ances that the private business contribution re22 quirement of subsection (b) will be met with re23 spect to such academy, and 

24 ‘‘(C) certifies that it has the written ap25 proval of the eligible local education agency for 

26 such bond issuance. 


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1 ‘‘(b) PRIVATE BUSINESS CONTRIBUTION REQUIRE2 MENT.—For purposes of subsection (a), the private busi3 ness contribution requirement of this subsection is met 

4 with respect to any issue if the eligible local education 

5 agency that established the qualified zone academy has 

6 written commitments from private entities to make quali7 fied contributions having a present value (as of the date 

8 of issuance of the issue) of not less than 10 percent of 

9 the proceeds of the issue. 

10 ‘‘(c) LIMITATION ON AMOUNT OF BONDS DES11 IGNATED.— 

12 ‘‘(1) NATIONAL LIMITATION.—There is a na13 tional zone academy bond limitation for each cal14 endar year. Such limitation is $400,000,000 for 

15 2008, and, except as provided in paragraph (4), zero 

16 thereafter. 

17 ‘‘(2) ALLOCATION OF LIMITATION.—The na18 tional zone academy bond limitation for a calendar 

19 year shall be allocated by the Secretary among the 

20 States on the basis of their respective populations of 

21 individuals below the poverty line (as defined by the 

22 Office of Management and Budget). The limitation 

23 amount allocated to a State under the preceding 

24 sentence shall be allocated by the State education 


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1 agency to qualified zone academies within such 

2 State. 

3 ‘‘(3) DESIGNATION SUBJECT TO LIMITATION

4 AMOUNT.—The maximum aggregate face amount of 

5 bonds issued during any calendar year which may be 

6 designated under subsection (a) with respect to any 

7 qualified zone academy shall not exceed the limita8 tion amount allocated to such academy under para9 graph (2) for such calendar year. 

10 ‘‘(4) CARRYOVER OF UNUSED LIMITATION.— 

11 ‘‘(A) IN GENERAL.—If for any calendar 

12 year— 

13 ‘‘(i) the limitation amount for any 

14 State, exceeds 

15 ‘‘(ii) the amount of bonds issued dur16 ing such year which are designated under 

17 subsection (a) with respect to qualified 

18 zone academies within such State, 

19 the limitation amount for such State for the fol20 lowing calendar year shall be increased by the 

21 amount of such excess. 

22 ‘‘(B) LIMITATION ON CARRYOVER.—Any 

23 carryforward of a limitation amount may be 

24 carried only to the first 2 years following the 

25 unused limitation year. For purposes of the preVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00121 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 ceding sentence, a limitation amount shall be 

2 treated as used on a first-in first-out basis. 

3 ‘‘(C) COORDINATION WITH SECTION

4 1397E.—Any carryover determined under sec5 tion 1397E(e)(4) (relating to carryover of un6 used limitation) with respect to any State to 

7 calendar year 2008 shall be treated for pur8 poses of this section as a carryover with respect 

9 to such State for such calendar year under sub10 paragraph (A), and the limitation of subpara11 graph (B) shall apply to such carryover taking 

12 into account the calendar years to which such 

13 carryover relates. 

14 ‘‘(d) DEFINITIONS.—For purposes of this section— 

15 ‘‘(1) QUALIFIED ZONE ACADEMY.—The term 

16 ‘qualified zone academy’ means any public school (or 

17 academic program within a public school) which is 

18 established by and operated under the supervision of 

19 an eligible local education agency to provide edu20 cation or training below the postsecondary level if— 

21 ‘‘(A) such public school or program (as the 

22 case may be) is designed in cooperation with 

23 business to enhance the academic curriculum, 

24 increase graduation and employment rates, and 


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1 better prepare students for the rigors of college 

2 and the increasingly complex workforce, 

3 ‘‘(B) students in such public school or pro4 gram (as the case may be) will be subject to the 

5 same academic standards and assessments as 

6 other students educated by the eligible local 

7 education agency, 

8 ‘‘(C) the comprehensive education plan of 

9 such public school or program is approved by 

10 the eligible local education agency, and 

11 ‘‘(D)(i) such public school is located in an 

12 empowerment zone or enterprise community 

13 (including any such zone or community des14 ignated after the date of the enactment of this 

15 section), or 

16 ‘‘(ii) there is a reasonable expectation (as 

17 of the date of issuance of the bonds) that at 

18 least 35 percent of the students attending such 

19 school or participating in such program (as the 

20 case may be) will be eligible for free or reduced21 cost lunches under the school lunch program es22 tablished under the National School Lunch Act. 

23 ‘‘(2) ELIGIBLE LOCAL EDUCATION AGENCY.— 

24 For purposes of this section, the term ‘eligible local 

25 education agency’ means any local educational agenVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00123 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 cy as defined in section 9101 of the Elementary and 

2 Secondary Education Act of 1965. 

3 ‘‘(3) QUALIFIED PURPOSE.—The term ‘quali4 fied purpose’ means, with respect to any qualified 

5 zone academy— 

6 ‘‘(A) rehabilitating or repairing the public 

7 school facility in which the academy is estab8 lished, 

9 ‘‘(B) providing equipment for use at such 

10 academy, 

11 ‘‘(C) developing course materials for edu12 cation to be provided at such academy, and 

13 ‘‘(D) training teachers and other school 

14 personnel in such academy. 

15 ‘‘(4) QUALIFIED CONTRIBUTIONS.—The term 

16 ‘qualified contribution’ means any contribution (of a 

17 type and quality acceptable to the eligible local edu18 cation agency) of— 

19 ‘‘(A) equipment for use in the qualified 

20 zone academy (including state-of-the-art tech21 nology and vocational equipment), 

22 ‘‘(B) technical assistance in developing 

23 curriculum or in training teachers in order to 

24 promote appropriate market driven technology 

25 in the classroom, 


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1 ‘‘(C) services of employees as volunteer 

2 mentors, 

3 ‘‘(D) internships, field trips, or other edu4 cational opportunities outside the academy for 

5 students, or 

6 ‘‘(E) any other property or service speci7 fied by the eligible local education agency.’’. 

8 (b) CONFORMING AMENDMENTS.— 

9 (1) Paragraph (1) of section 54A(d), as amend10 ed by sections 106 and 141, is amended by striking 

11 ‘‘or’’ at the end of subparagraph (B), by inserting 

12 ‘‘or’’ at the end of subparagraph (C), and by insert13 ing after subparagraph (C) the following new sub14 paragraph: 

15 ‘‘(D) a qualified zone academy bond,’’. 

16 (2) Subparagraph (C) of section 54A(d)(2), as 

17 amended by sections 106 and 141, is amended by 

18 striking ‘‘and’’ at the end of clause (ii), by striking 

19 the period at the end of clause (iii) and inserting ‘‘, 

20 and’’, and by adding at the end the following new 

21 clause: 

22 ‘‘(iv) in the case of a qualified zone 

23 academy bond, a purpose specified in sec24 tion 54E(a)(1).’’. 


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1 (3) Section 1397E is amended by adding at the 

2 end the following new subsection: 

3 ‘‘(m) TERMINATION.—This section shall not apply to 

4 any obligation issued after the date of the enactment of 

5 this Act.’’. 

6 (4) The table of sections for subpart I of part 

7 IV of subchapter A of chapter 1 is amended by add8 ing at the end the following new item: 

‘‘Sec. 54E. Qualified zone academy bonds.’’. 

9 (c) EFFECTIVE DATE.—The amendments made by 

10 this section shall apply to obligations issued after the date 

11 of the enactment of this Act. 

12 SEC. 234. TAX INCENTIVES FOR INVESTMENT IN THE DIS13 TRICT OF COLUMBIA. 

14 (a) DESIGNATION OF ZONE.— 

15 (1) IN GENERAL.—Subsection (f) of section 

16 1400 is amended by striking ‘‘2007’’ both places it 

17 appears and inserting ‘‘2008’’. 

18 (2) EFFECTIVE DATE.—The amendments made 

19 by this subsection shall apply to periods beginning 

20 after December 31, 2007. 

21 (b) TAX-EXEMPT ECONOMIC DEVELOPMENT

22 BONDS.— 

23 (1) IN GENERAL.—Subsection (b) of section 

24 1400A is amended by striking ‘‘2007’’ and inserting 

25 ‘‘2008’’. 


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1 (2) EFFECTIVE DATE.—The amendment made 

2 by this subsection shall apply to bonds issued after 

3 December 31, 2007. 

4 (c) ZERO PERCENT CAPITAL GAINS RATE.— 

5 (1) IN GENERAL.—Subsection (b) of section 

6 1400B is amended by striking ‘‘2008’’ each place it 

7 appears and inserting ‘‘2009’’. 

8 (2) CONFORMING AMENDMENTS.— 

9 (A) Section 1400B(e)(2) is amended— 

10 (i) by striking ‘‘2012’’ and inserting 

11 ‘‘2013’’, and 

12 (ii) by striking ‘‘2012’’ in the heading 

13 thereof and inserting ‘‘2013’’. 

14 (B) Section 1400B(g)(2) is amended by 

15 striking ‘‘2012’’ and inserting ‘‘2013’’. 

16 (C) Section 1400F(d) is amended by strik17 ing ‘‘2012’’ and inserting ‘‘2013’’. 

18 (3) EFFECTIVE DATES.— 

19 (A) EXTENSION.—The amendments made 

20 by paragraph (1) shall apply to acquisitions 

21 after December 31, 2007. 

22 (B) CONFORMING AMENDMENTS.—The 

23 amendments made by paragraph (2) shall take 

24 effect on the date of the enactment of this Act. 

25 (d) FIRST-TIME HOMEBUYER CREDIT.— 


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1 (1) IN GENERAL.—Subsection (i) of section 

2 1400C is amended by striking ‘‘2008’’ and inserting 

3 ‘‘2009’’. 

4 (2) EFFECTIVE DATE.—The amendment made 

5 by this subsection shall apply to property purchased 

6 after December 31, 2007. 

7 SEC. 235. ECONOMIC DEVELOPMENT CREDIT FOR AMER8 ICAN SAMOA. 

9 (a) IN GENERAL.—Subsection (d) of section 119 of 

10 division A of the Tax Relief and Health Care Act of 2006 

11 is amended— 

12 (1) by striking ‘‘first two taxable years’’ and in13 serting ‘‘first 3 taxable years’’, and 

14 (2) by striking ‘‘January 1, 2008’’ and insert15 ing ‘‘January 1, 2009’’. 

16 (b) EFFECTIVE DATE.—The amendment made by 

17 this section shall apply to taxable years beginning after 

18 December 31, 2007. 

19 SEC. 236. EXTENSION AND EXPANSION OF CHARITABLE DE20 DUCTION FOR CONTRIBUTIONS OF FOOD IN21 VENTORY. 

22 (a) IN GENERAL.—Section 170(e)(3)(C) is amend23 ed— 

24 (1) by striking ‘‘December 31, 2007’’ in clause 

25 (iv) and inserting ‘‘December 31, 2008’’, and 


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1 (2) by redesignating clauses (iii) and (iv) as 

2 clauses (iv) and (v), respectively, and by inserting 

3 after clause (ii) the following new clause: 

4 ‘‘(iii) DETERMINATION OF BASIS.—If 

5 a taxpayer— 

6 ‘‘(I) does not account for inven7 tories under section 471, and 

8 ‘‘(II) is not required to capitalize 

9 indirect costs under section 263A, 

10 the taxpayer may elect, solely for purposes 

11 of subparagraph (B), to treat the basis of 

12 any apparently wholesome food as being 

13 equal to 25 percent of the fair market 

14 value of such food.’’. 

15 (b) TEMPORARY SUSPENSION OF LIMITATIONS ON

16 CHARITABLE CONTRIBUTIONS.— 

17 (1) IN GENERAL.—Section 170(b) is amended 

18 by adding at the end the following new paragraph: 

19 ‘‘(3) TEMPORARY SUSPENSION OF LIMITATIONS

20 ON CHARITABLE CONTRIBUTIONS.—In the case of a 

21 qualified farmer or rancher (as defined in paragraph 

22 (1)(E)(v)), any charitable contribution of food— 

23 ‘‘(A) to which subsection (e)(3)(C) applies 

24 (without regard to clause (ii) thereof), and 


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1 ‘‘(B) which is made during the period be2 ginning on the date of the enactment of this 

3 paragraph and before January 1, 2009, 

4 shall be treated for purposes of paragraph (1)(E) or 

5 (2)(B), whichever is applicable, as if it were a quali6 fied conservation contribution which is made by a 

7 qualified farmer or rancher and which otherwise 

8 meets the requirements of such paragraph.’’. 

9 (2) EFFECTIVE DATE.—The amendment made 

10 by this subsection shall apply to taxable years end11 ing after the date of the enactment of this Act. 

12 (c) EFFECTIVE DATE.—The amendments made by 

13 subsection (a) shall apply to contributions made after De14 cember 31, 2007. 

15 SEC. 237. ENHANCED CHARITABLE DEDUCTION FOR CON16 TRIBUTIONS OF BOOK INVENTORY TO PUB17 LIC SCHOOLS. 

18 (a) IN GENERAL.—Clause (iv) of section 

19 170(e)(3)(D) is amended by striking ‘‘December 31, 

20 2007’’ and inserting ‘‘December 31, 2008’’. 

21 (b) CLERICAL AMENDMENT.—Clause (iii) of section 

22 170(e)(3)(D) is amended by inserting ‘‘of books’’ after ‘‘to 

23 any contribution’’. 


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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to contributions made after De3 cember 31, 2007. 

4 SEC. 238. ENHANCED DEDUCTION FOR QUALIFIED COM5 PUTER CONTRIBUTIONS. 

6 (a) IN GENERAL.—Subparagraph (G) of section 

7 170(e)(6) is amended by striking ‘‘December 31, 2007’’ 

8 and inserting ‘‘December 31, 2008’’. 

9 (b) EFFECTIVE DATE.—The amendment made by 

10 this section shall apply to contributions made during tax11 able years beginning after December 31, 2007. 

12 SEC. 239. BASIS ADJUSTMENT TO STOCK OF S CORPORA13 TIONS MAKING CHARITABLE CONTRIBU14 TIONS OF PROPERTY. 

15 (a) IN GENERAL.—The last sentence of section 

16 1367(a)(2) is amended by striking ‘‘December 31, 2007’’ 

17 and inserting ‘‘December 31, 2008’’. 

18 (b) EFFECTIVE DATE.—The amendment made by 

19 this section shall apply to contributions made in taxable 

20 years beginning after December 31, 2007. 

21 SEC. 240. WORK OPPORTUNITY TAX CREDIT FOR HURRI22 CANE KATRINA EMPLOYEES. 

23 (a) IN GENERAL.—Paragraph (1) of section 201(b) 

24 of the Katrina Emergency Tax Relief Act of 2005 is 

25 amended by striking ‘‘2-year’’ and inserting ‘‘3-year’’. 


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1 (b) EFFECTIVE DATE.—The amendment made by 

2 subsection (a) shall apply to individuals hired after August 

3 27, 2007. 

4 SEC. 241. SUBPART F EXCEPTION FOR ACTIVE FINANCING 

5 INCOME. 

6 (a) EXEMPT INSURANCE INCOME.—Paragraph (10) 

7 of section 953(e) is amended— 

8 (1) by striking ‘‘January 1, 2009’’ and insert9 ing ‘‘January 1, 2010’’, and 

10 (2) by striking ‘‘December 31, 2008’’ and in11 serting ‘‘December 31, 2009’’. 

12 (b) EXCEPTION TO TREATMENT AS FOREIGN PER13 SONAL HOLDING COMPANY INCOME.—Paragraph (9) of 

14 section 954(h) is amended by striking ‘‘January 1, 2009’’ 

15 and inserting ‘‘January 1, 2010’’. 

16 SEC. 242. LOOK-THRU RULE FOR RELATED CONTROLLED 

17 FOREIGN CORPORATIONS. 

18 (a) IN GENERAL.—Subparagraph (C) of section 

19 954(c)(6) is amended by striking ‘‘January 1, 2009’’ and 

20 inserting ‘‘January 1, 2010’’. 

21 (b) EFFECTIVE DATE.—The amendment made by 

22 this section shall apply to taxable years of foreign corpora23 tions beginning after December 31, 2008, and to taxable 

24 years of United States shareholders with or within which 

25 such taxable years of foreign corporations end. 


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1 SEC. 243. EXPENSING FOR CERTAIN QUALIFIED FILM AND 

2 TELEVISION PRODUCTIONS. 

3 (a) IN GENERAL.—Subsection (f) of section 181 is 

4 amended by striking ‘‘December 31, 2008’’ and inserting 

5 ‘‘December 31, 2009’’. 

6 (b) EFFECTIVE DATE.—The amendment made by 

7 this section shall apply to productions commencing after 

8 December 31, 2008. 

9 SEC. 244. EXTENSION AND MODIFICATION OF DUTY SUS10 PENSION ON WOOL PRODUCTS; WOOL RE11 SEARCH FUND; WOOL DUTY REFUNDS. 

12 (a) EXTENSION OF TEMPORARY DUTY REDUC13 TIONS.—Each of the following headings of the Har14 monized Tariff Schedule of the United States is amended 

15 by striking the date in the effective period column and 

16 inserting ‘‘12/31/2014’’: 

17 (1) Heading 9902.51.11 (relating to fabrics of 

18 worsted wool). 

19 (2) Heading 9902.51.13 (relating to yarn of 

20 combed wool). 

21 (3) Heading 9902.51.14 (relating to wool fiber, 

22 waste, garnetted stock, combed wool, or wool top). 

23 (4) Heading 9902.51.15 (relating to fabrics of 

24 combed wool). 

25 (5) Heading 9902.51.16 (relating to fabrics of 

26 combed wool). 


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1 (b) EXTENSION OF DUTY REFUNDS AND WOOL RE2 SEARCH TRUST FUND.— 

3 (1) IN GENERAL.—Section 4002(c) of the Wool 

4 Suit and Textile Trade Extension Act of 2004 (Pub5 lic Law 108–429; 118 Stat. 2603) is amended— 

6 (A) in paragraph (3)(C), by striking 

7 ‘‘2010’’ and inserting ‘‘2015’’; and 

8 (B) in paragraph (6)(A), by striking 

9 ‘‘through 2009’’ and inserting ‘‘through 2014’’. 

10 (2) SUNSET.—Section 506(f) of the Trade and 

11 Development Act of 2000 (Public 106–200; 114 

12 Stat. 303 (7 U.S.C. 7101 note)) is amended by 

13 striking ‘‘2010’’ and inserting ‘‘2015’’. 

14 Subtitle D—Other Extensions 

15 SEC. 251. AUTHORITY TO DISCLOSE INFORMATION RE16 LATED TO TERRORIST ACTIVITIES MADE 

17 PERMANENT. 

18 (a) IN GENERAL.—Subparagraph (C) of section 

19 6103(i)(3) is amended by striking clause (iv). 

20 (b) DISCLOSURE ON REQUEST.—Paragraph (7) of 

21 section 6103(i) is amended by striking subparagraph (E). 

22 (c) EFFECTIVE DATE.—The amendments made by 

23 this section shall apply to disclosures after the date of the 

24 enactment of this Act. 


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1 SEC. 252. AUTHORITY FOR UNDERCOVER OPERATIONS 

2 MADE PERMANENT. 

3 (a) IN GENERAL.—Subsection (c) of section 7608 is 

4 amended by striking paragraph (6). 

5 (b) EFFECTIVE DATE.—The amendment made by 

6 this section shall take effect on January 1, 2008. 

7 SEC. 253. INCREASE IN LIMIT ON COVER OVER OF RUM EX8 CISE TAX TO PUERTO RICO AND THE VIRGIN 

9 ISLANDS. 

10 (a) IN GENERAL.—Paragraph (1) of section 7652(f) 

11 is amended by striking ‘‘January 1, 2008’’ and inserting 

12 ‘‘January 1, 2009’’. 

13 (b) EFFECTIVE DATE.—The amendment made by 

14 this section shall apply to distilled spirits brought into the 

15 United States after December 31, 2007. 

16 TITLE III—ADDITIONAL RELIEF 

17 Subtitle A—Individual Tax Relief 

18 SEC. 301. $8,500 INCOME THRESHOLD USED TO CALCULATE 

19 REFUNDABLE PORTION OF CHILD TAX CRED20 IT. 

21 (a) IN GENERAL.—Section 24(d) is amended by add22 ing at the end the following new paragraph: 

23 ‘‘(4) SPECIAL RULE FOR 2008.—Notwith24 standing paragraph (3), in the case of any taxable 

25 year beginning in 2008, the dollar amount in effect 


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1 for such taxable year under paragraph (1)(B)(i) 

2 shall be $8,500.’’. 

3 (b) EFFECTIVE DATE.—The amendment made by 

4 this section shall apply to taxable years beginning after 

5 December 31, 2007. 

6 SEC. 302. INCOME AVERAGING FOR AMOUNTS RECEIVED IN 

7 CONNECTION WITH THE EXXON VALDEZ LITI8 GATION. 

9 (a) INCOME AVERAGING OF AMOUNTS RECEIVED

10 FROM THE EXXON VALDEZ LITIGATION.—For purposes 

11 of section 1301 of the Internal Revenue Code of 1986— 

12 (1) any qualified taxpayer who receives any 

13 qualified settlement income in any taxable year shall 

14 be treated as engaged in a fishing business (deter15 mined without regard to the commercial nature of 

16 the business), and 

17 (2) such qualified settlement income shall be 

18 treated as income attributable to such a fishing busi19 ness for such taxable year. 

20 (b) CONTRIBUTIONS OF AMOUNTS RECEIVED TO RE21 TIREMENT ACCOUNTS.— 

22 (1) IN GENERAL.—Any qualified taxpayer who 

23 receives qualified settlement income during the tax24 able year may, at any time before the end of the tax25 able year in which such income was received, make 


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1 one or more contributions to an eligible retirement 

2 plan of which such qualified taxpayer is a bene3 ficiary in an aggregate amount not to exceed the 

4 lesser of— 

5 (A) $100,000 (reduced by the amount of 

6 qualified settlement income contributed to an 

7 eligible retirement plan in prior taxable years 

8 pursuant to this subsection), or 

9 (B) the amount of qualified settlement in10 come received by the individual during the tax11 able year. 

12 (2) TIME WHEN CONTRIBUTIONS DEEMED

13 MADE.—For purposes of paragraph (1), a qualified 

14 taxpayer shall be deemed to have made a contribu15 tion to an eligible retirement plan on the last day of 

16 the taxable year in which such income is received if 

17 the contribution is made on account of such taxable 

18 year and is made not later than the time prescribed 

19 by law for filing the return for such taxable year 

20 (not including extensions thereof). 

21 (3) TREATMENT OF CONTRIBUTIONS TO ELIGI22 BLE RETIREMENT PLANS.—For purposes of the In23 ternal Revenue Code of 1986, if a contribution is 

24 made pursuant to paragraph (1) with respect to 

25 qualified settlement income, then— 


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1 (A) except as provided in paragraph (4)— 

2 (i) to the extent of such contribution, 

3 the qualified settlement income shall not 

4 be included in taxable income, and 

5 (ii) for purposes of section 72 of such 

6 Code, such contribution shall not be con7 sidered to be investment in the contract, 

8 (B) the qualified taxpayer shall, to the ex9 tent of the amount of the contribution, be treat10 ed— 

11 (i) as having received the qualified 

12 settlement income— 

13 (I) in the case of a contribution 

14 to an individual retirement plan (as 

15 defined under section 7701(a)(37) of 

16 such Code), in a distribution described 

17 in section 408(d)(3) of such Code, 

18 and 

19 (II) in the case of any other eligi20 ble retirement plan, in an eligible roll21 over distribution (as defined under 

22 section 402(f)(2) of such Code), and 

23 (ii) as having transferred the amount 

24 to the eligible retirement plan in a direct 


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1 trustee to trustee transfer within 60 days 

2 of the distribution, 

3 (C) section 408(d)(3)(B) of the Internal 

4 Revenue Code of 1986 shall not apply with re5 spect to amounts treated as a rollover under 

6 this paragraph, and 

7 (D) section 408A(c)(3)(B) of the Internal 

8 Revenue Code of 1986 shall not apply with re9 spect to amounts contributed to a Roth IRA (as 

10 defined under section 408A(b) of such Code) or 

11 a designated Roth contribution to an applicable 

12 retirement plan (within the meaning of section 

13 402A of such Code) under this paragraph. 

14 (4) SPECIAL RULE FOR ROTH IRAS AND ROTH

15 401(k)S.—For purposes of the Internal Revenue 

16 Code of 1986, if a contribution is made pursuant to 

17 paragraph (1) with respect to qualified settlement 

18 income to a Roth IRA (as defined under section 

19 408A(b) of such Code) or as a designated Roth con20 tribution to an applicable retirement plan (within 

21 the meaning of section 402A of such Code), then— 

22 (A) the qualified settlement income shall 

23 be includible in taxable income, and 


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1 (B) for purposes of section 72 of such 

2 Code, such contribution shall be considered to 

3 be investment in the contract. 

4 (5) ELIGIBLE RETIREMENT PLAN.—For pur5 pose of this subsection, the term ‘‘eligible retirement 

6 plan’’ has the meaning given such term under sec7 tion 402(c)(8)(B) of the Internal Revenue Code of 

8 1986. 

9 (c) TREATMENT OF QUALIFIED SETTLEMENT IN10 COME UNDER EMPLOYMENT TAXES.— 

11 (1) SECA.—For purposes of chapter 2 of the 

12 Internal Revenue Code of 1986 and section 211 of 

13 the Social Security Act, no portion of qualified set14 tlement income received by a qualified taxpayer shall 

15 be treated as self-employment income. 

16 (2) FICA.—For purposes of chapter 21 of the 

17 Internal Revenue Code of 1986 and section 209 of 

18 the Social Security Act, no portion of qualified set19 tlement income received by a qualified taxpayer shall 

20 be treated as wages. 

21 (d) QUALIFIED TAXPAYER.—For purposes of this 

22 section, the term ‘‘qualified taxpayer’’ means— 

23 (1) any individual who is a plaintiff in the civil 

24 action In re Exxon Valdez, No. 89–095–CV (HRH) 

25 (Consolidated) (D. Alaska); or 


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1 (2) any individual who is a beneficiary of the 

2 estate of such a plaintiff who— 

3 (A) acquired the right to receive qualified 

4 settlement income from that plaintiff; and 

5 (B) was the spouse or an immediate rel6 ative of that plaintiff. 

7 (e) QUALIFIED SETTLEMENT INCOME.—For pur8 poses of this section, the term ‘‘qualified settlement in9 come’’ means any interest and punitive damage awards 

10 which are— 

11 (1) otherwise includible in taxable income, and 

12 (2) received (whether as lump sums or periodic 

13 payments) in connection with the civil action In re 

14 Exxon Valdez, No. 89–095–CV (HRH) (Consoli15 dated) (D. Alaska) (whether pre- or post-judgment 

16 and whether related to a settlement or judgment). 

17 Subtitle B—Business Related 

18 Provisions 

19 SEC. 311. PROVISIONS RELATED TO FILM AND TELEVISION 

20 PRODUCTIONS. 

21 (a) MODIFICATION OF LIMITATION ON EXPENS22 ING.—Subparagraph (A) of section 181(a)(2) is amended 

23 to read as follows: 

24 ‘‘(A) IN GENERAL.—Paragraph (1) shall 

25 not apply to so much of the aggregate cost of 


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1 any qualified film or television production as ex2 ceeds $15,000,000.’’. 

3 (b) MODIFICATIONS TO DEDUCTION FOR DOMESTIC

4 ACTIVITIES.— 

5 (1) DETERMINATION OF W–2 WAGES.—Para6 graph (2) of section 199(b) is amended by adding at 

7 the end the following new subparagraph: 

8 ‘‘(D) SPECIAL RULE FOR QUALIFIED

9 FILM.—In the case of a qualified film, such 

10 term shall include compensation for services 

11 performed in the United States by actors, pro12 duction personnel, directors, and producers.’’. 

13 (2) DEFINITION OF QUALIFIED FILM.—Para14 graph (6) of section 199(c) is amended by adding at 

15 the end the following: ‘‘A qualified film shall include 

16 any copyrights, trademarks, or other intangibles 

17 with respect to such film. The methods and means 

18 of distributing a qualified film shall not affect the 

19 availability of the deduction under this section.’’. 

20 (3) PARTNERSHIPS.—Subparagraph (A) of sec21 tion 199(d)(1) is amended by striking ‘‘and’’ at the 

22 end of clause (ii), by striking the period at the end 

23 of clause (iii) and inserting ‘‘, and’’, and by adding 

24 at the end the following new clause: 


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1 ‘‘(iv) in the case of each partner of a 

2 partnership, or shareholder of an S cor3 poration, who owns (directly or indirectly) 

4 at least 20 percent of the capital interests 

5 in such partnership or of the stock of such 

6 S corporation— 

7 ‘‘(I) such partner or shareholder 

8 shall be treated as having engaged di9 rectly in any film produced by such 

10 partnership or S corporation, and 

11 ‘‘(II) such partnership or S cor12 poration shall be treated as having en13 gaged directly in any film produced by 

14 such partner or shareholder.’’. 

15 (c) EFFECTIVE DATE.— 

16 (1) IN GENERAL.—Except as otherwise pro17 vided in this subsection, the amendments made by 

18 this section shall apply to taxable years beginning 

19 after December 31, 2007. 

20 (2) EXPENSING.—The amendments made by 

21 subsection (a) shall apply to qualified film and tele22 vision productions commencing after December 31, 

23 2007. 


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1 SEC. 312. MODIFICATION OF RATE OF EXCISE TAX ON CER2 TAIN WOODEN ARROWS DESIGNED FOR USE 

3 BY CHILDREN. 

4 (a) IN GENERAL.—Paragraph (2) of section 4161(b) 

5 is amended by redesignating subparagraph (B) as sub6 paragraph (C) and by inserting after subparagraph (A) 

7 the following new subparagraph: 

8 ‘‘(B) EXEMPTION FOR CERTAIN WOODEN

9 ARROW SHAFTS.—Subparagraph (A) shall not 

10 apply to any shaft consisting of all natural 

11 wood with no laminations or artificial means of 

12 enhancing the spine of such shaft (whether sold 

13 separately or incorporated as part of a finished 

14 or unfinished product) of a type used in the 

15 manufacture of any arrow which after its as16 sembly— 

‘‘(i) measures 5 17 ⁄16 of an inch or less in 

18 diameter, and 

19 ‘‘(ii) is not suitable for use with a bow 

20 described in paragraph (1)(A).’’. 

21 (b) EFFECTIVE DATE.—The amendments made by 

22 this section shall apply to shafts first sold after the date 

23 of enactment of this Act. 


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1 SEC. 313. MENTAL HEALTH PARITY. 

2 (a) AMENDMENTS TO ERISA.—Section 712 of the 

3 Employee Retirement Income Security Act of 1974 (29 

4 U.S.C. 1185a) is amended— 

5 (1) in subsection (a), by adding at the end the 

6 following: 

7 ‘‘(3) FINANCIAL REQUIREMENTS AND TREAT8 MENT LIMITATIONS.— 

9 ‘‘(A) IN GENERAL.—In the case of a group 

10 health plan (or health insurance coverage of11 fered in connection with such a plan) that pro12 vides both medical and surgical benefits and 

13 mental health or substance use disorder bene14 fits, such plan or coverage shall ensure that— 

15 ‘‘(i) the financial requirements appli16 cable to such mental health or substance 

17 use disorder benefits are no more restric18 tive than the predominant financial re19 quirements applied to substantially all 

20 medical and surgical benefits covered by 

21 the plan (or coverage), and there are no 

22 separate cost sharing requirements that 

23 are applicable only with respect to mental 

24 health or substance use disorder benefits; 

25 and 


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1 ‘‘(ii) the treatment limitations applica2 ble to such mental health or substance use 

3 disorder benefits are no more restrictive 

4 than the predominant treatment limita5 tions applied to substantially all medical 

6 and surgical benefits covered by the plan 

7 (or coverage) and there are no separate 

8 treatment limitations that are applicable 

9 only with respect to mental health or sub10 stance use disorder benefits. 

11 ‘‘(B) DEFINITIONS.—In this paragraph: 

12 ‘‘(i) FINANCIAL REQUIREMENT.—The 

13 term ‘financial requirement’ includes 

14 deductibles, copayments, coinsurance, and 

15 out-of-pocket expenses, but excludes an ag16 gregate lifetime limit and an annual limit 

17 subject to paragraphs (1) and (2). 

18 ‘‘(ii) PREDOMINANT.—A financial re19 quirement or treatment limit is considered 

20 to be predominant if it is the most com21 mon or frequent of such type of limit or 

22 requirement. 

23 ‘‘(iii) TREATMENT LIMITATION.—The 

24 term ‘treatment limitation’ includes limits 

25 on the frequency of treatment, number of 


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1 visits, days of coverage, or other similar 

2 limits on the scope or duration of treat3 ment. 

4 ‘‘(4) AVAILABILITY OF PLAN INFORMATION.— 

5 The criteria for medical necessity determinations 

6 made under the plan with respect to mental health 

7 or substance use disorder benefits (or the health in8 surance coverage offered in connection with the plan 

9 with respect to such benefits) shall be made avail10 able by the plan administrator (or the health insur11 ance issuer offering such coverage) in accordance 

12 with regulations to any current or potential partici13 pant, beneficiary, or contracting provider upon re14 quest. The reason for any denial under the plan (or 

15 coverage) of reimbursement or payment for services 

16 with respect to mental health or substance use dis17 order benefits in the case of any participant or bene18 ficiary shall, on request or as otherwise required, be 

19 made available by the plan administrator (or the 

20 health insurance issuer offering such coverage) to 

21 the participant or beneficiary in accordance with 

22 regulations. 

23 ‘‘(5) OUT-OF-NETWORK PROVIDERS.—In the 

24 case of a plan or coverage that provides both med25 ical and surgical benefits and mental health or subVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00147 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 stance use disorder benefits, if the plan or coverage 

2 provides coverage for medical or surgical benefits 

3 provided by out-of-network providers, the plan or 

4 coverage shall provide coverage for mental health or 

5 substance use disorder benefits provided by out-of6 network providers in a manner that is consistent 

7 with the requirements of this section.’’; 

8 (2) in subsection (b), by amending paragraph 

9 (2) to read as follows: 

10 ‘‘(2) in the case of a group health plan (or 

11 health insurance coverage offered in connection with 

12 such a plan) that provides mental health or sub13 stance use disorder benefits, as affecting the terms 

14 and conditions of the plan or coverage relating to 

15 such benefits under the plan or coverage, except as 

16 provided in subsection (a).’’; 

17 (3) in subsection (c)— 

18 (A) in paragraph (1)(B)— 

19 (i) by inserting ‘‘(or 1 in the case of 

20 an employer residing in a State that per21 mits small groups to include a single indi22 vidual)’’ after ‘‘at least 2’’ the first place 

23 that such appears; and 


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1 (ii) by striking ‘‘and who employs at 

2 least 2 employees on the first day of the 

3 plan year’’; and 

4 (B) by striking paragraph (2) and insert5 ing the following: 

6 ‘‘(2) COST EXEMPTION.— 

7 ‘‘(A) IN GENERAL.—With respect to a 

8 group health plan (or health insurance coverage 

9 offered in connection with such a plan), if the 

10 application of this section to such plan (or cov11 erage) results in an increase for the plan year 

12 involved of the actual total costs of coverage 

13 with respect to medical and surgical benefits 

14 and mental health and substance use disorder 

15 benefits under the plan (as determined and cer16 tified under subparagraph (C)) by an amount 

17 that exceeds the applicable percentage described 

18 in subparagraph (B) of the actual total plan 

19 costs, the provisions of this section shall not 

20 apply to such plan (or coverage) during the fol21 lowing plan year, and such exemption shall 

22 apply to the plan (or coverage) for 1 plan year. 

23 An employer may elect to continue to apply 

24 mental health and substance use disorder parity 

25 pursuant to this section with respect to the 


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1 group health plan (or coverage) involved regard2 less of any increase in total costs. 

3 ‘‘(B) APPLICABLE PERCENTAGE.—With re4 spect to a plan (or coverage), the applicable 

5 percentage described in this subparagraph shall 

6 be— 

7 ‘‘(i) 2 percent in the case of the first 

8 plan year in which this section is applied; 

9 and 

10 ‘‘(ii) 1 percent in the case of each 

11 subsequent plan year. 

12 ‘‘(C) DETERMINATIONS BY ACTUARIES.— 

13 Determinations as to increases in actual costs 

14 under a plan (or coverage) for purposes of this 

15 section shall be made and certified by a quali16 fied and licensed actuary who is a member in 

17 good standing of the American Academy of Ac18 tuaries. All such determinations shall be in a 

19 written report prepared by the actuary. The re20 port, and all underlying documentation relied 

21 upon by the actuary, shall be maintained by the 

22 group health plan or health insurance issuer for 

23 a period of 6 years following the notification 

24 made under subparagraph (E). 


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1 ‘‘(D) 6-MONTH DETERMINATIONS.—If a 

2 group health plan (or a health insurance issuer 

3 offering coverage in connection with a group 

4 health plan) seeks an exemption under this 

5 paragraph, determinations under subparagraph 

6 (A) shall be made after such plan (or coverage) 

7 has complied with this section for the first 6 

8 months of the plan year involved. 

9 ‘‘(E) NOTIFICATION.— 

10 ‘‘(i) IN GENERAL.—A group health 

11 plan (or a health insurance issuer offering 

12 coverage in connection with a group health 

13 plan) that, based upon a certification de14 scribed under subparagraph (C), qualifies 

15 for an exemption under this paragraph, 

16 and elects to implement the exemption, 

17 shall notify the Secretary, the appropriate 

18 State agencies, and participants and bene19 ficiaries in the plan of such election in a 

20 timely manner promptly following such cer21 tification. 

22 ‘‘(ii) REQUIREMENT.—A notification 

23 to the Secretary under clause (i) shall in24 clude— 


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1 ‘‘(I) a description of the number 

2 of covered lives under the plan (or 

3 coverage) involved at the time of the 

4 notification, and as applicable, at the 

5 time of any prior election of the cost6 exemption under this paragraph by 

7 such plan (or coverage); 

8 ‘‘(II) for both the plan year upon 

9 which a cost exemption is sought and 

10 the year prior, a description of the ac11 tual total costs of coverage with re12 spect to medical and surgical benefits 

13 and mental health and substance use 

14 disorder benefits under the plan; and 

15 ‘‘(III) for both the plan year 

16 upon which a cost exemption is sought 

17 and the year prior, the actual total 

18 costs of coverage with respect to men19 tal health and substance use disorder 

20 benefits under the plan. 

21 ‘‘(iii) CONFIDENTIALITY.—A notifica22 tion to the Secretary under clause (i) shall 

23 be confidential. The Secretary shall make 

24 available, upon request and on not more 

25 than an annual basis, an anonymous 


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1 itemization of such notifications, that in2 cludes— 

3 ‘‘(I) a breakdown of States by 

4 the size and type of employers submit5 ting such notification; and 

6 ‘‘(II) a summary of the data re7 ceived under clause (ii). 

8 ‘‘(F) AUDITS BY APPROPRIATE AGEN9 CIES.—To determine compliance with this para10 graph, the Secretary may audit the books and 

11 records of a group health plan or health insur12 ance issuer relating to an exemption, including 

13 any actuarial reports prepared pursuant to sub14 paragraph (C), during the 6 year period fol15 lowing the notification of such exemption under 

16 subparagraph (E). A State agency receiving a 

17 notification under subparagraph (E) may also 

18 conduct such an audit with respect to an ex19 emption covered by such notification.’’; 

20 (4) in subsection (e), by striking paragraph (4) 

21 and inserting the following: 

22 ‘‘(4) MENTAL HEALTH BENEFITS.—The term 

23 ‘mental health benefits’ means benefits with respect 

24 to services for mental health conditions, as defined 


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1 under the terms of the plan and in accordance with 

2 applicable Federal and State law. 

3 ‘‘(5) SUBSTANCE USE DISORDER BENEFITS.— 

4 The term ‘substance use disorder benefits’ means 

5 benefits with respect to services for substance use 

6 disorders, as defined under the terms of the plan 

7 and in accordance with applicable Federal and State 

8 law.’’; 

9 (5) by striking subsection (f); 

10 (6) by inserting after subsection (e) the fol11 lowing: 

12 ‘‘(f) SECRETARY REPORT.—The Secretary shall, by 

13 January 1, 2012, and every two years thereafter, submit 

14 to the appropriate committees of Congress a report on 

15 compliance of group health plans (and health insurance 

16 coverage offered in connection with such plans) with the 

17 requirements of this section. Such report shall include the 

18 results of any surveys or audits on compliance of group 

19 health plans (and health insurance coverage offered in 

20 connection with such plans) with such requirements and 

21 an analysis of the reasons for any failures to comply. 

22 ‘‘(g) NOTICE AND ASSISTANCE.—The Secretary, in 

23 cooperation with the Secretaries of Health and Human 

24 Services and Treasury, as appropriate, shall publish and 

25 widely disseminate guidance and information for group 


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1 health plans, participants and beneficiaries, applicable 

2 State and local regulatory bodies, and the National Asso3 ciation of Insurance Commissioners concerning the re4 quirements of this section and shall provide assistance 

5 concerning such requirements and the continued operation 

6 of applicable State law. Such guidance and information 

7 shall inform participants and beneficiaries of how they 

8 may obtain assistance under this section, including, where 

9 appropriate, assistance from State consumer and insur10 ance agencies.’’; 

11 (7) by striking ‘‘mental health benefits’’ and in12 serting ‘‘mental health and substance use disorder 

13 benefits’’ each place it appears in subsections 

14 (a)(1)(B)(i), (a)(1)(C), (a)(2)(B)(i), and (a)(2)(C); 

15 and 

16 (8) by striking ‘‘mental health benefits’’ and in17 serting ‘‘mental health or substance use disorder 

18 benefits’’ each place it appears (other than in any 

19 provision amended by the previous paragraph). 

20 (b) AMENDMENTS TO PUBLIC HEALTH SERVICE

21 ACT.—Section 2705 of the Public Health Service Act (42 

22 U.S.C. 300gg–5) is amended— 

23 (1) in subsection (a), by adding at the end the 

24 following: 


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1 ‘‘(3) FINANCIAL REQUIREMENTS AND TREAT2 MENT LIMITATIONS.— 

3 ‘‘(A) IN GENERAL.—In the case of a group 

4 health plan (or health insurance coverage of5 fered in connection with such a plan) that pro6 vides both medical and surgical benefits and 

7 mental health or substance use disorder bene8 fits, such plan or coverage shall ensure that— 

9 ‘‘(i) the financial requirements appli10 cable to such mental health or substance 

11 use disorder benefits are no more restric12 tive than the predominant financial re13 quirements applied to substantially all 

14 medical and surgical benefits covered by 

15 the plan (or coverage), and there are no 

16 separate cost sharing requirements that 

17 are applicable only with respect to mental 

18 health or substance use disorder benefits; 

19 and 

20 ‘‘(ii) the treatment limitations applica21 ble to such mental health or substance use 

22 disorder benefits are no more restrictive 

23 than the predominant treatment limita24 tions applied to substantially all medical 

25 and surgical benefits covered by the plan 


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1 (or coverage) and there are no separate 

2 treatment limitations that are applicable 

3 only with respect to mental health or sub4 stance use disorder benefits. 

5 ‘‘(B) DEFINITIONS.—In this paragraph: 

6 ‘‘(i) FINANCIAL REQUIREMENT.—The 

7 term ‘financial requirement’ includes 

8 deductibles, copayments, coinsurance, and 

9 out-of-pocket expenses, but excludes an ag10 gregate lifetime limit and an annual limit 

11 subject to paragraphs (1) and (2). 

12 ‘‘(ii) PREDOMINANT.—A financial re13 quirement or treatment limit is considered 

14 to be predominant if it is the most com15 mon or frequent of such type of limit or 

16 requirement. 

17 ‘‘(iii) TREATMENT LIMITATION.—The 

18 term ‘treatment limitation’ includes limits 

19 on the frequency of treatment, number of 

20 visits, days of coverage, or other similar 

21 limits on the scope or duration of treat22 ment. 

23 ‘‘(4) AVAILABILITY OF PLAN INFORMATION.— 

24 The criteria for medical necessity determinations 

25 made under the plan with respect to mental health 


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1 or substance use disorder benefits (or the health in2 surance coverage offered in connection with the plan 

3 with respect to such benefits) shall be made avail4 able by the plan administrator (or the health insur5 ance issuer offering such coverage) in accordance 

6 with regulations to any current or potential partici7 pant, beneficiary, or contracting provider upon re8 quest. The reason for any denial under the plan (or 

9 coverage) of reimbursement or payment for services 

10 with respect to mental health or substance use dis11 order benefits in the case of any participant or bene12 ficiary shall, on request or as otherwise required, be 

13 made available by the plan administrator (or the 

14 health insurance issuer offering such coverage) to 

15 the participant or beneficiary in accordance with 

16 regulations. 

17 ‘‘(5) OUT-OF-NETWORK PROVIDERS.—In the 

18 case of a plan or coverage that provides both med19 ical and surgical benefits and mental health or sub20 stance use disorder benefits, if the plan or coverage 

21 provides coverage for medical or surgical benefits 

22 provided by out-of-network providers, the plan or 

23 coverage shall provide coverage for mental health or 

24 substance use disorder benefits provided by out-ofVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00158 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 network providers in a manner that is consistent 

2 with the requirements of this section.’’; 

3 (2) in subsection (b), by amending paragraph 

4 (2) to read as follows: 

5 ‘‘(2) in the case of a group health plan (or 

6 health insurance coverage offered in connection with 

7 such a plan) that provides mental health or sub8 stance use disorder benefits, as affecting the terms 

9 and conditions of the plan or coverage relating to 

10 such benefits under the plan or coverage, except as 

11 provided in subsection (a).’’; 

12 (3) in subsection (c)— 

13 (A) in paragraph (1), by inserting before 

14 the period the following: ‘‘(as defined in section 

15 2791(e)(4), except that for purposes of this 

16 paragraph such term shall include employers 

17 with 1 employee in the case of an employer re18 siding in a State that permits small groups to 

19 include a single individual)’’; and 

20 (B) by striking paragraph (2) and insert21 ing the following: 

22 ‘‘(2) COST EXEMPTION.— 

23 ‘‘(A) IN GENERAL.—With respect to a 

24 group health plan (or health insurance coverage 

25 offered in connection with such a plan), if the 


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1 application of this section to such plan (or cov2 erage) results in an increase for the plan year 

3 involved of the actual total costs of coverage 

4 with respect to medical and surgical benefits 

5 and mental health and substance use disorder 

6 benefits under the plan (as determined and cer7 tified under subparagraph (C)) by an amount 

8 that exceeds the applicable percentage described 

9 in subparagraph (B) of the actual total plan 

10 costs, the provisions of this section shall not 

11 apply to such plan (or coverage) during the fol12 lowing plan year, and such exemption shall 

13 apply to the plan (or coverage) for 1 plan year. 

14 An employer may elect to continue to apply 

15 mental health and substance use disorder parity 

16 pursuant to this section with respect to the 

17 group health plan (or coverage) involved regard18 less of any increase in total costs. 

19 ‘‘(B) APPLICABLE PERCENTAGE.—With re20 spect to a plan (or coverage), the applicable 

21 percentage described in this subparagraph shall 

22 be— 

23 ‘‘(i) 2 percent in the case of the first 

24 plan year in which this section is applied; 

25 and 


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1 ‘‘(ii) 1 percent in the case of each 

2 subsequent plan year. 

3 ‘‘(C) DETERMINATIONS BY ACTUARIES.— 

4 Determinations as to increases in actual costs 

5 under a plan (or coverage) for purposes of this 

6 section shall be made and certified by a quali7 fied and licensed actuary who is a member in 

8 good standing of the American Academy of Ac9 tuaries. All such determinations shall be in a 

10 written report prepared by the actuary. The re11 port, and all underlying documentation relied 

12 upon by the actuary, shall be maintained by the 

13 group health plan or health insurance issuer for 

14 a period of 6 years following the notification 

15 made under subparagraph (E). 

16 ‘‘(D) 6-MONTH DETERMINATIONS.—If a 

17 group health plan (or a health insurance issuer 

18 offering coverage in connection with a group 

19 health plan) seeks an exemption under this 

20 paragraph, determinations under subparagraph 

21 (A) shall be made after such plan (or coverage) 

22 has complied with this section for the first 6 

23 months of the plan year involved. 

24 ‘‘(E) NOTIFICATION.— 


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1 ‘‘(i) IN GENERAL.—A group health 

2 plan (or a health insurance issuer offering 

3 coverage in connection with a group health 

4 plan) that, based upon a certification de5 scribed under subparagraph (C), qualifies 

6 for an exemption under this paragraph, 

7 and elects to implement the exemption, 

8 shall notify the Secretary, the appropriate 

9 State agencies, and participants and bene10 ficiaries in the plan of such election in a 

11 timely manner promptly following such cer12 tification. 

13 ‘‘(ii) REQUIREMENT.—A notification 

14 to the Secretary under clause (i) shall in15 clude— 

16 ‘‘(I) a description of the number 

17 of covered lives under the plan (or 

18 coverage) involved at the time of the 

19 notification, and as applicable, at the 

20 time of any prior election of the cost21 exemption under this paragraph by 

22 such plan (or coverage); 

23 ‘‘(II) for both the plan year upon 

24 which a cost exemption is sought and 

25 the year prior, a description of the acVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00162 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 tual total costs of coverage with re2 spect to medical and surgical benefits 

3 and mental health and substance use 

4 disorder benefits under the plan; and 

5 ‘‘(III) for both the plan year 

6 upon which a cost exemption is sought 

7 and the year prior, the actual total 

8 costs of coverage with respect to men9 tal health and substance use disorder 

10 benefits under the plan. 

11 ‘‘(iii) CONFIDENTIALITY.—A notifica12 tion to the Secretary under clause (i) shall 

13 be confidential. The Secretary shall make 

14 available, upon request and on not more 

15 than an annual basis, an anonymous 

16 itemization of such notifications, that in17 cludes— 

18 ‘‘(I) a breakdown of States by 

19 the size and type of employers submit20 ting such notification; and 

21 ‘‘(II) a summary of the data re22 ceived under clause (ii). 

23 ‘‘(F) AUDITS BY APPROPRIATE AGEN24 CIES.—To determine compliance with this para25 graph, the Secretary may audit the books and 


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1 records of a group health plan or health insur2 ance issuer relating to an exemption, including 

3 any actuarial reports prepared pursuant to sub4 paragraph (C), during the 6 year period fol5 lowing the notification of such exemption under 

6 subparagraph (E). A State agency receiving a 

7 notification under subparagraph (E) may also 

8 conduct such an audit with respect to an ex9 emption covered by such notification.’’; 

10 (4) in subsection (e), by striking paragraph (4) 

11 and inserting the following: 

12 ‘‘(4) MENTAL HEALTH BENEFITS.—The term 

13 ‘mental health benefits’ means benefits with respect 

14 to services for mental health conditions, as defined 

15 under the terms of the plan and in accordance with 

16 applicable Federal and State law. 

17 ‘‘(5) SUBSTANCE USE DISORDER BENEFITS.— 

18 The term ‘substance use disorder benefits’ means 

19 benefits with respect to services for substance use 

20 disorders, as defined under the terms of the plan 

21 and in accordance with applicable Federal and State 

22 law.’’; 

23 (5) by striking subsection (f); 

24 (6) by striking ‘‘mental health benefits’’ and in25 serting ‘‘mental health and substance use disorder 


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1 benefits’’ each place it appears in subsections 

2 (a)(1)(B)(i), (a)(1)(C), (a)(2)(B)(i), and (a)(2)(C); 

3 and 

4 (7) by striking ‘‘mental health benefits’’ and in5 serting ‘‘mental health or substance use disorder 

6 benefits’’ each place it appears (other than in any 

7 provision amended by the previous paragraph). 

8 (c) AMENDMENTS TO INTERNAL REVENUE CODE.— 

9 Section 9812 is amended— 

10 (1) in subsection (a), by adding at the end the 

11 following: 

12 ‘‘(3) FINANCIAL REQUIREMENTS AND TREAT13 MENT LIMITATIONS.— 

14 ‘‘(A) IN GENERAL.—In the case of a group 

15 health plan that provides both medical and sur16 gical benefits and mental health or substance 

17 use disorder benefits, such plan shall ensure 

18 that— 

19 ‘‘(i) the financial requirements appli20 cable to such mental health or substance 

21 use disorder benefits are no more restric22 tive than the predominant financial re23 quirements applied to substantially all 

24 medical and surgical benefits covered by 

25 the plan, and there are no separate cost 


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1 sharing requirements that are applicable 

2 only with respect to mental health or sub3 stance use disorder benefits; and 

4 ‘‘(ii) the treatment limitations applica5 ble to such mental health or substance use 

6 disorder benefits are no more restrictive 

7 than the predominant treatment limita8 tions applied to substantially all medical 

9 and surgical benefits covered by the plan 

10 and there are no separate treatment limi11 tations that are applicable only with re12 spect to mental health or substance use 

13 disorder benefits. 

14 ‘‘(B) DEFINITIONS.—In this paragraph: 

15 ‘‘(i) FINANCIAL REQUIREMENT.—The 

16 term ‘financial requirement’ includes 

17 deductibles, copayments, coinsurance, and 

18 out-of-pocket expenses, but excludes an ag19 gregate lifetime limit and an annual limit 

20 subject to paragraphs (1) and (2). 

21 ‘‘(ii) PREDOMINANT.—A financial re22 quirement or treatment limit is considered 

23 to be predominant if it is the most com24 mon or frequent of such type of limit or 

25 requirement. 


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1 ‘‘(iii) TREATMENT LIMITATION.—The 

2 term ‘treatment limitation’ includes limits 

3 on the frequency of treatment, number of 

4 visits, days of coverage, or other similar 

5 limits on the scope or duration of treat6 ment. 

7 ‘‘(4) AVAILABILITY OF PLAN INFORMATION.— 

8 The criteria for medical necessity determinations 

9 made under the plan with respect to mental health 

10 or substance use disorder benefits shall be made 

11 available by the plan administrator in accordance 

12 with regulations to any current or potential partici13 pant, beneficiary, or contracting provider upon re14 quest. The reason for any denial under the plan of 

15 reimbursement or payment for services with respect 

16 to mental health or substance use disorder benefits 

17 in the case of any participant or beneficiary shall, on 

18 request or as otherwise required, be made available 

19 by the plan administrator to the participant or bene20 ficiary in accordance with regulations. 

21 ‘‘(5) OUT-OF-NETWORK PROVIDERS.—In the 

22 case of a plan that provides both medical and sur23 gical benefits and mental health or substance use 

24 disorder benefits, if the plan provides coverage for 

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1 work providers, the plan shall provide coverage for 

2 mental health or substance use disorder benefits pro3 vided by out-of-network providers in a manner that 

4 is consistent with the requirements of this section.’’; 

5 (2) in subsection (b), by amending paragraph 

6 (2) to read as follows: 

7 ‘‘(2) in the case of a group health plan that 

8 provides mental health or substance use disorder 

9 benefits, as affecting the terms and conditions of the 

10 plan relating to such benefits under the plan, except 

11 as provided in subsection (a).’’; 

12 (3) in subsection (c)— 

13 (A) by amending paragraph (1) to read as 

14 follows: 

15 ‘‘(1) SMALL EMPLOYER EXEMPTION.— 

16 ‘‘(A) IN GENERAL.—This section shall not 

17 apply to any group health plan for any plan 

18 year of a small employer. 

19 ‘‘(B) SMALL EMPLOYER.—For purposes of 

20 subparagraph (A), the term ‘small employer’ 

21 means, with respect to a calendar year and a 

22 plan year, an employer who employed an aver23 age of at least 2 (or 1 in the case of an em24 ployer residing in a State that permits small 

25 groups to include a single individual) but not 


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1 more than 50 employees on business days dur2 ing the preceding calendar year. For purposes 

3 of the preceding sentence, all persons treated as 

4 a single employer under subsection (b), (c), 

5 (m), or (o) of section 414 shall be treated as 1 

6 employer and rules similar to rules of subpara7 graphs (B) and (C) of section 4980D(d)(2) 

8 shall apply.’’; and 

9 (B) by striking paragraph (2) and insert10 ing the following: 

11 ‘‘(2) COST EXEMPTION.— 

12 ‘‘(A) IN GENERAL.—With respect to a 

13 group health plan, if the application of this sec14 tion to such plan results in an increase for the 

15 plan year involved of the actual total costs of 

16 coverage with respect to medical and surgical 

17 benefits and mental health and substance use 

18 disorder benefits under the plan (as determined 

19 and certified under subparagraph (C)) by an 

20 amount that exceeds the applicable percentage 

21 described in subparagraph (B) of the actual 

22 total plan costs, the provisions of this section 

23 shall not apply to such plan during the fol24 lowing plan year, and such exemption shall 

25 apply to the plan for 1 plan year. An employer 


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1 may elect to continue to apply mental health 

2 and substance use disorder parity pursuant to 

3 this section with respect to the group health 

4 plan involved regardless of any increase in total 

5 costs. 

6 ‘‘(B) APPLICABLE PERCENTAGE.—With re7 spect to a plan, the applicable percentage de8 scribed in this subparagraph shall be— 

9 ‘‘(i) 2 percent in the case of the first 

10 plan year in which this section is applied; 

11 and 

12 ‘‘(ii) 1 percent in the case of each 

13 subsequent plan year. 

14 ‘‘(C) DETERMINATIONS BY ACTUARIES.— 

15 Determinations as to increases in actual costs 

16 under a plan for purposes of this section shall 

17 be made and certified by a qualified and li18 censed actuary who is a member in good stand19 ing of the American Academy of Actuaries. All 

20 such determinations shall be in a written report 

21 prepared by the actuary. The report, and all 

22 underlying documentation relied upon by the 

23 actuary, shall be maintained by the group 

24 health plan for a period of 6 years following the 

25 notification made under subparagraph (E). 


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1 ‘‘(D) 6-MONTH DETERMINATIONS.—If a 

2 group health plan seeks an exemption under 

3 this paragraph, determinations under subpara4 graph (A) shall be made after such plan has 

5 complied with this section for the first 6 

6 months of the plan year involved. 

7 ‘‘(E) NOTIFICATION.— 

8 ‘‘(i) IN GENERAL.—A group health 

9 plan that, based upon a certification de10 scribed under subparagraph (C), qualifies 

11 for an exemption under this paragraph, 

12 and elects to implement the exemption, 

13 shall notify the Secretary, the appropriate 

14 State agencies, and participants and bene15 ficiaries in the plan of such election in a 

16 timely manner promptly following such cer17 tification. 

18 ‘‘(ii) REQUIREMENT.—A notification 

19 to the Secretary under clause (i) shall in20 clude— 

21 ‘‘(I) a description of the number 

22 of covered lives under the plan in23 volved at the time of the notification, 

24 and as applicable, at the time of any 


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1 prior election of the cost-exemption 

2 under this paragraph by such plan; 

3 ‘‘(II) for both the plan year upon 

4 which a cost exemption is sought and 

5 the year prior, a description of the ac6 tual total costs of coverage with re7 spect to medical and surgical benefits 

8 and mental health and substance use 

9 disorder benefits under the plan; and 

10 ‘‘(III) for both the plan year 

11 upon which a cost exemption is sought 

12 and the year prior, the actual total 

13 costs of coverage with respect to men14 tal health and substance use disorder 

15 benefits under the plan. 

16 ‘‘(iii) CONFIDENTIALITY.—A notifica17 tion to the Secretary under clause (i) shall 

18 be confidential. The Secretary shall make 

19 available, upon request and on not more 

20 than an annual basis, an anonymous 

21 itemization of such notifications, that in22 cludes— 

23 ‘‘(I) a breakdown of States by 

24 the size and type of employers submit25 ting such notification; and 


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1 ‘‘(II) a summary of the data re2 ceived under clause (ii). 

3 ‘‘(F) AUDITS BY APPROPRIATE AGEN4 CIES.—To determine compliance with this para5 graph, the Secretary may audit the books and 

6 records of a group health plan relating to an 

7 exemption, including any actuarial reports pre8 pared pursuant to subparagraph (C), during 

9 the 6 year period following the notification of 

10 such exemption under subparagraph (E). A 

11 State agency receiving a notification under sub12 paragraph (E) may also conduct such an audit 

13 with respect to an exemption covered by such 

14 notification.’’; 

15 (4) in subsection (e), by striking paragraph (4) 

16 and inserting the following: 

17 ‘‘(4) MENTAL HEALTH BENEFITS.—The term 

18 ‘mental health benefits’ means benefits with respect 

19 to services for mental health conditions, as defined 

20 under the terms of the plan and in accordance with 

21 applicable Federal and State law. 

22 ‘‘(5) SUBSTANCE USE DISORDER BENEFITS.— 

23 The term ‘substance use disorder benefits’ means 

24 benefits with respect to services for substance use 

25 disorders, as defined under the terms of the plan 


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1 and in accordance with applicable Federal and State 

2 law.’’; 

3 (5) by striking subsection (f); 

4 (6) by striking ‘‘mental health benefits’’ and in5 serting ‘‘mental health and substance use disorder 

6 benefits’’ each place it appears in subsections 

7 (a)(1)(B)(i), (a)(1)(C), (a)(2)(B)(i), and (a)(2)(C); 

8 and 

9 (7) by striking ‘‘mental health benefits’’ and in10 serting ‘‘mental health or substance use disorder 

11 benefits’’ each place it appears (other than in any 

12 provision amended by the previous paragraph). 

13 (d) REGULATIONS.—Not later than 1 year after the 

14 date of enactment of this Act, the Secretaries of Labor, 

15 Health and Human Services, and the Treasury shall issue 

16 regulations to carry out the amendments made by sub17 sections (a), (b), and (c), respectively. 

18 (e) EFFECTIVE DATE.— 

19 (1) IN GENERAL.—The amendments made by 

20 this section shall apply with respect to group health 

21 plans for plan years beginning after the date that is 

22 1 year after the date of enactment of this Act, re23 gardless of whether regulations have been issued to 

24 carry out such amendment by such effective date, 

25 except that the amendments made by subsections 


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1 (a)(5), (b)(5), and (c)(5) shall take effect on Janu2 ary 1, 2009. 

3 (2) SPECIAL RULE FOR COLLECTIVE BAR4 GAINING AGREEMENTS.—In the case of a group 

5 health plan maintained pursuant to one or more col6 lective bargaining agreements between employee rep7 resentatives and one or more employers ratified be8 fore the date of the enactment of this Act, the 

9 amendments made by this section shall not apply to 

10 plan years beginning before the later of— 

11 (A) the date on which the last of the col12 lective bargaining agreements relating to the 

13 plan terminates (determined without regard to 

14 any extension thereof agreed to after the date 

15 of the enactment of this Act), or 

16 (B) January 1, 2009. 

17 For purposes of subparagraph (A), any plan amend18 ment made pursuant to a collective bargaining 

19 agreement relating to the plan which amends the 

20 plan solely to conform to any requirement added by 

21 this section shall not be treated as a termination of 

22 such collective bargaining agreement. 

23 (f) ASSURING COORDINATION.—The Secretary of 

24 Health and Human Services, the Secretary of Labor, and 

25 the Secretary of the Treasury may ensure, through the 


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1 execution or revision of an interagency memorandum of 

2 understanding among such Secretaries, that— 

3 (1) regulations, rulings, and interpretations 

4 issued by such Secretaries relating to the same mat5 ter over which two or more such Secretaries have re6 sponsibility under this section (and the amendments 

7 made by this section) are administered so as to have 

8 the same effect at all times; and 

9 (2) coordination of policies relating to enforcing 

10 the same requirements through such Secretaries in 

11 order to have a coordinated enforcement strategy 

12 that avoids duplication of enforcement efforts and 

13 assigns priorities in enforcement. 

14 (g) CONFORMING CLERICAL AMENDMENTS.— 

15 (1) ERISA HEADING.— 

16 (A) IN GENERAL.—The heading of section 

17 712 of the Employee Retirement Income Secu18 rity Act of 1974 is amended to read as follows: 

19 ‘‘SEC. 712. PARITY IN MENTAL HEALTH AND SUBSTANCE 

20 USE DISORDER BENEFITS.’’. 

21 (B) CLERICAL AMENDMENT.—The table of 

22 contents in section 1 of such Act is amended by 

23 striking the item relating to section 712 and in24 serting the following new item: 

‘‘Sec. 712. Parity in mental health and substance use disorder benefits.’’. 


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1 (2) PHSA HEADING.—The heading of section 

2 2705 of the Public Health Service Act is amended 

3 to read as follows: 

4 ‘‘SEC. 2705. PARITY IN MENTAL HEALTH AND SUBSTANCE 

5 USE DISORDER BENEFITS.’’. 

6 (3) IRC HEADING.— 

7 (A) IN GENERAL.—The heading of section 

8 9812 is amended to read as follows: 

9 ‘‘SEC. 9812. PARITY IN MENTAL HEALTH AND SUBSTANCE 

10 USE DISORDER BENEFITS.’’. 

11 (B) CLERICAL AMENDMENT.—The table of 

12 sections for subchapter B of chapter 100 is 

13 amended by striking the item relating to section 

14 9812 and inserting the following new item: 

‘‘Sec. 9812. Parity in mental health and substance use disorder benefits.’’. 

15 (h) GAO STUDY ON COVERAGE AND EXCLUSION OF

16 MENTAL HEALTH AND SUBSTANCE USE DISORDER DIAG17 NOSES.— 

18 (1) IN GENERAL.—The Comptroller General of 

19 the United States shall conduct a study that ana20 lyzes the specific rates, patterns, and trends in cov21 erage and exclusion of specific mental health and 

22 substance use disorder diagnoses by health plans 

23 and health insurance. The study shall include an 

24 analysis of— 


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1 (A) specific coverage rates for all mental 

2 health conditions and substance use disorders; 

3 (B) which diagnoses are most commonly 

4 covered or excluded; 

5 (C) whether implementation of this Act 

6 has affected trends in coverage or exclusion of 

7 such diagnoses; and 

8 (D) the impact of covering or excluding 

9 specific diagnoses on participants’ and enroll10 ees’ health, their health care coverage, and the 

11 costs of delivering health care. 

12 (2) REPORTS.—Not later than 3 years after the 

13 date of the enactment of this Act, and 2 years after 

14 the date of submission the first report under this 

15 paragraph, the Comptroller General shall submit to 

16 Congress a report on the results of the study con17 ducted under paragraph (1). 


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1 Subtitle C—Modification of Penalty 

2 on Understatement of Tax3 payer’s Liability by Tax Return 

4 Preparer 

5 SEC. 321. MODIFICATION OF PENALTY ON UNDERSTATE6 MENT OF TAXPAYER’S LIABILITY BY TAX RE7 TURN PREPARER. 

8 (a) IN GENERAL.—Subsection (a) of section 6694 is 

9 amended to read as follows: 

10 ‘‘(a) UNDERSTATEMENT DUE TO UNREASONABLE

11 POSITIONS.— 

12 ‘‘(1) IN GENERAL.—If a tax return preparer— 

13 ‘‘(A) prepares any return or claim of re14 fund with respect to which any part of an un15 derstatement of liability is due to a position de16 scribed in paragraph (2), and 

17 ‘‘(B) knew (or reasonably should have 

18 known) of the position, 

19 such tax return preparer shall pay a penalty with re20 spect to each such return or claim in an amount 

21 equal to the greater of $1,000 or 50 percent of the 

22 income derived (or to be derived) by the tax return 

23 preparer with respect to the return or claim. 

24 ‘‘(2) UNREASONABLE POSITION.— 


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1 ‘‘(A) IN GENERAL.—Except as otherwise 

2 provided in this paragraph, a position is de3 scribed in this paragraph unless there is or was 

4 substantial authority for the position. 

5 ‘‘(B) DISCLOSED POSITIONS.—If the posi6 tion was disclosed as provided in section 

7 6662(d)(2)(B)(ii)(I) and is not a position to 

8 which subparagraph (C) applies, the position is 

9 described in this paragraph unless there is a 

10 reasonable basis for the position. 

11 ‘‘(C) TAX SHELTERS AND REPORTABLE

12 TRANSACTIONS.—If the position is with respect 

13 to a tax shelter (as defined in section 

14 6662(d)(2)(C)(ii)) or a reportable transaction 

15 to which section 6662A applies, the position is 

16 described in this paragraph unless it is reason17 able to believe that the position would more 

18 likely than not be sustained on its merits. 

19 ‘‘(3) REASONABLE CAUSE EXCEPTION.—No 

20 penalty shall be imposed under this subsection if it 

21 is shown that there is reasonable cause for the un22 derstatement and the tax return preparer acted in 

23 good faith.’’. 

24 (b) EFFECTIVE DATE.—The amendment made by 

25 this section shall apply— 


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1 (1) in the case of a position other than a posi2 tion described in subparagraph (C) of section 

3 6694(a)(2) of the Internal Revenue Code of 1986 

4 (as amended by this section), to returns prepared 

5 after May 25, 2007, and 

6 (2) in the case of a position described in such 

7 subparagraph (C), to returns prepared for taxable 

8 years ending after the date of the enactment of this 

9 Act. 

10 Subtitle D—Other Provisions 

11 SEC. 331. SECURE RURAL SCHOOLS AND COMMUNITY SELF12 DETERMINATION PROGRAM. 

13 (a) REAUTHORIZATION OF THE SECURE RURAL

14 SCHOOLS AND COMMUNITY SELF-DETERMINATION ACT

15 OF 2000.—The Secure Rural Schools and Community 

16 Self-Determination Act of 2000 (16 U.S.C. 500 note; Pub17 lic Law 106–393) is amended by striking sections 1 

18 through 403 and inserting the following: 

19 ‘‘SECTION 1. SHORT TITLE. 

20 ‘‘This Act may be cited as the ‘Secure Rural Schools 

21 and Community Self-Determination Act of 2000’. 

22 ‘‘SEC. 2. PURPOSES. 

23 ‘‘The purposes of this Act are— 


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1 ‘‘(1) to stabilize and transition payments to 

2 counties to provide funding for schools and roads 

3 that supplements other available funds; 

4 ‘‘(2) to make additional investments in, and 

5 create additional employment opportunities through, 

6 projects that— 

7 ‘‘(A)(i) improve the maintenance of exist8 ing infrastructure; 

9 ‘‘(ii) implement stewardship objectives that 

10 enhance forest ecosystems; and 

11 ‘‘(iii) restore and improve land health and 

12 water quality; 

13 ‘‘(B) enjoy broad-based support; and 

14 ‘‘(C) have objectives that may include— 

15 ‘‘(i) road, trail, and infrastructure 

16 maintenance or obliteration; 

17 ‘‘(ii) soil productivity improvement; 

18 ‘‘(iii) improvements in forest eco19 system health; 

20 ‘‘(iv) watershed restoration and main21 tenance; 

22 ‘‘(v) the restoration, maintenance, and 

23 improvement of wildlife and fish habitat; 

24 ‘‘(vi) the control of noxious and exotic 

25 weeds; and 


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1 ‘‘(vii) the reestablishment of native 

2 species; and 

3 ‘‘(3) to improve cooperative relationships 

4 among— 

5 ‘‘(A) the people that use and care for Fed6 eral land; and 

7 ‘‘(B) the agencies that manage the Federal 

8 land. 

9 ‘‘SEC. 3. DEFINITIONS. 

10 ‘‘In this Act: 

11 ‘‘(1) ADJUSTED SHARE.—The term ‘adjusted 

12 share’ means the number equal to the quotient ob13 tained by dividing— 

14 ‘‘(A) the number equal to the quotient ob15 tained by dividing— 

16 ‘‘(i) the base share for the eligible 

17 county; by 

18 ‘‘(ii) the income adjustment for the el19 igible county; by 

20 ‘‘(B) the number equal to the sum of the 

21 quotients obtained under subparagraph (A) and 

22 paragraph (8)(A) for all eligible counties. 

23 ‘‘(2) BASE SHARE.—The term ‘base share’ 

24 means the number equal to the average of— 

25 ‘‘(A) the quotient obtained by dividing— 


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1 ‘‘(i) the number of acres of Federal 

2 land described in paragraph (7)(A) in each 

3 eligible county; by 

4 ‘‘(ii) the total number acres of Fed5 eral land in all eligible counties in all eligi6 ble States; and 

7 ‘‘(B) the quotient obtained by dividing— 

8 ‘‘(i) the amount equal to the average 

9 of the 3 highest 25-percent payments and 

10 safety net payments made to each eligible 

11 State for each eligible county during the 

12 eligibility period; by 

13 ‘‘(ii) the amount equal to the sum of 

14 the amounts calculated under clause (i) 

15 and paragraph (9)(B)(i) for all eligible 

16 counties in all eligible States during the 

17 eligibility period. 

18 ‘‘(3) COUNTY PAYMENT.—The term ‘county 

19 payment’ means the payment for an eligible county 

20 calculated under section 101(b). 

21 ‘‘(4) ELIGIBLE COUNTY.—The term ‘eligible 

22 county’ means any county that— 

23 ‘‘(A) contains Federal land (as defined in 

24 paragraph (7)); and 


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1 ‘‘(B) elects to receive a share of the State 

2 payment or the county payment under section 

3 102(b). 

4 ‘‘(5) ELIGIBILITY PERIOD.—The term ‘eligi5 bility period’ means fiscal year 1986 through fiscal 

6 year 1999. 

7 ‘‘(6) ELIGIBLE STATE.—The term ‘eligible 

8 State’ means a State or territory of the United 

9 States that received a 25-percent payment for 1 or 

10 more fiscal years of the eligibility period. 

11 ‘‘(7) FEDERAL LAND.—The term ‘Federal land’ 

12 means— 

13 ‘‘(A) land within the National Forest Sys14 tem, as defined in section 11(a) of the Forest 

15 and Rangeland Renewable Resources Planning 

16 Act of 1974 (16 U.S.C. 1609(a)) exclusive of 

17 the National Grasslands and land utilization 

18 projects designated as National Grasslands ad19 ministered pursuant to the Act of July 22, 

20 1937 (7 U.S.C. 1010–1012); and 

21 ‘‘(B) such portions of the revested Oregon 

22 and California Railroad and reconveyed Coos 

23 Bay Wagon Road grant land as are or may 

24 hereafter come under the jurisdiction of the De25 partment of the Interior, which have heretofore 


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1 or may hereafter be classified as timberlands, 

2 and power-site land valuable for timber, that 

3 shall be managed, except as provided in the 

4 former section 3 of the Act of August 28, 1937 

5 (50 Stat. 875; 43 U.S.C. 1181c), for permanent 

6 forest production. 

7 ‘‘(8) 50-PERCENT ADJUSTED SHARE.—The 

8 term ‘50-percent adjusted share’ means the number 

9 equal to the quotient obtained by dividing— 

10 ‘‘(A) the number equal to the quotient ob11 tained by dividing— 

12 ‘‘(i) the 50-percent base share for the 

13 eligible county; by 

14 ‘‘(ii) the income adjustment for the el15 igible county; by 

16 ‘‘(B) the number equal to the sum of the 

17 quotients obtained under subparagraph (A) and 

18 paragraph (1)(A) for all eligible counties. 

19 ‘‘(9) 50-PERCENT BASE SHARE.—The term ‘50- 

20 percent base share’ means the number equal to the 

21 average of— 

22 ‘‘(A) the quotient obtained by dividing— 

23 ‘‘(i) the number of acres of Federal 

24 land described in paragraph (7)(B) in each 

25 eligible county; by 


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1 ‘‘(ii) the total number acres of Fed2 eral land in all eligible counties in all eligi3 ble States; and 

4 ‘‘(B) the quotient obtained by dividing— 

5 ‘‘(i) the amount equal to the average 

6 of the 3 highest 50-percent payments made 

7 to each eligible county during the eligibility 

8 period; by 

9 ‘‘(ii) the amount equal to the sum of 

10 the amounts calculated under clause (i) 

11 and paragraph (2)(B)(i) for all eligible 

12 counties in all eligible States during the 

13 eligibility period. 

14 ‘‘(10) 50-PERCENT PAYMENT.—The term ‘50- 

15 percent payment’ means the payment that is the 

16 sum of the 50-percent share otherwise paid to a 

17 county pursuant to title II of the Act of August 28, 

18 1937 (chapter 876; 50 Stat. 875; 43 U.S.C. 1181f), 

19 and the payment made to a county pursuant to the 

20 Act of May 24, 1939 (chapter 144; 53 Stat. 753; 43 

21 U.S.C. 1181f–1 et seq.). 

22 ‘‘(11) FULL FUNDING AMOUNT.—The term ‘full 

23 funding amount’ means— 

24 ‘‘(A) $500,000,000 for fiscal year 2008; 

25 and 


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1 ‘‘(B) for fiscal year 2009 and each fiscal 

2 year thereafter, the amount that is equal to 90 

3 percent of the full funding amount for the pre4 ceding fiscal year. 

5 ‘‘(12) INCOME ADJUSTMENT.—The term ‘in6 come adjustment’ means the square of the quotient 

7 obtained by dividing— 

8 ‘‘(A) the per capita personal income for 

9 each eligible county; by 

10 ‘‘(B) the median per capita personal in11 come of all eligible counties. 

12 ‘‘(13) PER CAPITA PERSONAL INCOME.—The 

13 term ‘per capita personal income’ means the most 

14 recent per capita personal income data, as deter15 mined by the Bureau of Economic Analysis. 

16 ‘‘(14) SAFETY NET PAYMENTS.—The term 

17 ‘safety net payments’ means the special payment 

18 amounts paid to States and counties required by 

19 section 13982 or 13983 of the Omnibus Budget 

20 Reconciliation Act of 1993 (Public Law 103–66; 16 

21 U.S.C. 500 note; 43 U.S.C. 1181f note). 

22 ‘‘(15) SECRETARY CONCERNED.—The term 

23 ‘Secretary concerned’ means— 

24 ‘‘(A) the Secretary of Agriculture or the 

25 designee of the Secretary of Agriculture with 


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1 respect to the Federal land described in para2 graph (7)(A); and 

3 ‘‘(B) the Secretary of the Interior or the 

4 designee of the Secretary of the Interior with 

5 respect to the Federal land described in para6 graph (7)(B). 

7 ‘‘(16) STATE PAYMENT.—The term ‘State pay8 ment’ means the payment for an eligible State cal9 culated under section 101(a). 

10 ‘‘(17) 25-PERCENT PAYMENT.—The term ‘25- 

11 percent payment’ means the payment to States re12 quired by the sixth paragraph under the heading of 

13 ‘FOREST SERVICE’ in the Act of May 23, 1908 

14 (35 Stat. 260; 16 U.S.C. 500), and section 13 of the 

15 Act of March 1, 1911 (36 Stat. 963; 16 U.S.C. 

16 500). 

17 ‘‘TITLE I—SECURE PAYMENTS 

18 FOR STATES AND COUNTIES 

19 CONTAINING FEDERAL LAND 

20 ‘‘SEC. 101. SECURE PAYMENTS FOR STATES CONTAINING 

21 FEDERAL LAND. 

22 ‘‘(a) STATE PAYMENT.—For each of fiscal years 

23 2008 through 2011, the Secretary of Agriculture shall cal24 culate for each eligible State an amount equal to the sum 

25 of the products obtained by multiplying— 


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1 ‘‘(1) the adjusted share for each eligible county 

2 within the eligible State; by 

3 ‘‘(2) the full funding amount for the fiscal year. 

4 ‘‘(b) COUNTY PAYMENT.—For each of fiscal years 

5 2008 through 2011, the Secretary of the Interior shall cal6 culate for each eligible county that received a 50-percent 

7 payment during the eligibility period an amount equal to 

8 the product obtained by multiplying— 

9 ‘‘(1) the 50-percent adjusted share for the eligi10 ble county; by 

11 ‘‘(2) the full funding amount for the fiscal year. 

12 ‘‘SEC. 102. PAYMENTS TO STATES AND COUNTIES. 

13 ‘‘(a) PAYMENT AMOUNTS.—Except as provided in 

14 section 103, the Secretary of the Treasury shall pay to— 

15 ‘‘(1) a State or territory of the United States 

16 an amount equal to the sum of the amounts elected 

17 under subsection (b) by each county within the State 

18 or territory for— 

19 ‘‘(A) if the county is eligible for the 25- 

20 percent payment, the share of the 25-percent 

21 payment; or 

22 ‘‘(B) the share of the State payment of the 

23 eligible county; and 

24 ‘‘(2) a county an amount equal to the amount 

25 elected under subsection (b) by each county for— 


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1 ‘‘(A) if the county is eligible for the 50- 

2 percent payment, the 50-percent payment; or 

3 ‘‘(B) the county payment for the eligible 

4 county. 

5 ‘‘(b) ELECTION TO RECEIVE PAYMENT AMOUNT.— 

6 ‘‘(1) ELECTION; SUBMISSION OF RESULTS.— 

7 ‘‘(A) IN GENERAL.—The election to receive 

8 a share of the State payment, the county pay9 ment, a share of the State payment and the 

10 county payment, a share of the 25-percent pay11 ment, the 50-percent payment, or a share of the 

12 25-percent payment and the 50-percent pay13 ment, as applicable, shall be made at the discre14 tion of each affected county by August 1, 2008 

15 (or as soon thereafter as the Secretary con16 cerned determines is practicable), and August 1 

17 of each second fiscal year thereafter, in accord18 ance with paragraph (2), and transmitted to 

19 the Secretary concerned by the Governor of 

20 each eligible State. 

21 ‘‘(B) FAILURE TO TRANSMIT.—If an elec22 tion for an affected county is not transmitted to 

23 the Secretary concerned by the date specified 

24 under subparagraph (A), the affected county 

25 shall be considered to have elected to receive a 


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1 share of the State payment, the county pay2 ment, or a share of the State payment and the 

3 county payment, as applicable. 

4 ‘‘(2) DURATION OF ELECTION.— 

5 ‘‘(A) IN GENERAL.—A county election to 

6 receive a share of the 25-percent payment or 

7 50-percent payment, as applicable, shall be ef8 fective for 2 fiscal years. 

9 ‘‘(B) FULL FUNDING AMOUNT.—If a coun10 ty elects to receive a share of the State payment 

11 or the county payment, the election shall be ef12 fective for all subsequent fiscal years through 

13 fiscal year 2011. 

14 ‘‘(3) SOURCE OF PAYMENT AMOUNTS.—The 

15 payment to an eligible State or eligible county under 

16 this section for a fiscal year shall be derived from— 

17 ‘‘(A) any amounts that are appropriated to 

18 carry out this Act; 

19 ‘‘(B) any revenues, fees, penalties, or mis20 cellaneous receipts, exclusive of deposits to any 

21 relevant trust fund, special account, or perma22 nent operating funds, received by the Federal 

23 Government from activities by the Bureau of 

24 Land Management or the Forest Service on the 

25 applicable Federal land; and 


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1 ‘‘(C) to the extent of any shortfall, out of 

2 any amounts in the Treasury of the United 

3 States not otherwise appropriated. 

4 ‘‘(c) DISTRIBUTION AND EXPENDITURE OF PAY5 MENTS.— 

6 ‘‘(1) DISTRIBUTION METHOD.—A State that re7 ceives a payment under subsection (a) for Federal 

8 land described in section 3(7)(A) shall distribute the 

9 appropriate payment amount among the appropriate 

10 counties in the State in accordance with— 

11 ‘‘(A) the Act of May 23, 1908 (16 U.S.C. 

12 500); and 

13 ‘‘(B) section 13 of the Act of March 1, 

14 1911 (36 Stat. 963; 16 U.S.C. 500). 

15 ‘‘(2) EXPENDITURE PURPOSES.—Subject to 

16 subsection (d), payments received by a State under 

17 subsection (a) and distributed to counties in accord18 ance with paragraph (1) shall be expended as re19 quired by the laws referred to in paragraph (1). 

20 ‘‘(d) EXPENDITURE RULES FOR ELIGIBLE COUN21 TIES.— 

22 ‘‘(1) ALLOCATIONS.— 

23 ‘‘(A) USE OF PORTION IN SAME MANNER

24 AS 25-PERCENT PAYMENT OR 50-PERCENT PAY25 MENT, AS APPLICABLE.—Except as provided in 


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1 paragraph (3)(B), if an eligible county elects to 

2 receive its share of the State payment or the 

3 county payment, not less than 80 percent, but 

4 not more than 85 percent, of the funds shall be 

5 expended in the same manner in which the 25- 

6 percent payments or 50-percent payment, as 

7 applicable, are required to be expended. 

8 ‘‘(B) ELECTION AS TO USE OF BAL9 ANCE.—Except as provided in subparagraph 

10 (C), an eligible county shall elect to do 1 or 

11 more of the following with the balance of any 

12 funds not expended pursuant to subparagraph 

13 (A): 

14 ‘‘(i) Reserve any portion of the bal15 ance for projects in accordance with title 

16 II. 

17 ‘‘(ii) Reserve not more than 7 percent 

18 of the total share for the eligible county of 

19 the State payment or the county payment 

20 for projects in accordance with title III. 

21 ‘‘(iii) Return the portion of the bal22 ance not reserved under clauses (i) and (ii) 

23 to the Treasury of the United States. 

24 ‘‘(C) COUNTIES WITH MODEST DISTRIBU25 TIONS.—In the case of each eligible county to 


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1 which more than $100,000, but less than 

2 $350,000, is distributed for any fiscal year pur3 suant to either or both of paragraphs (1)(B) 

4 and (2)(B) of subsection (a), the eligible coun5 ty, with respect to the balance of any funds not 

6 expended pursuant to subparagraph (A) for 

7 that fiscal year, shall— 

8 ‘‘(i) reserve any portion of the balance 

9 for— 

10 ‘‘(I) carrying out projects under 

11 title II; 

12 ‘‘(II) carrying out projects under 

13 title III; or 

14 ‘‘(III) a combination of the pur15 poses described in subclauses (I) and 

16 (II); or 

17 ‘‘(ii) return the portion of the balance 

18 not reserved under clause (i) to the Treas19 ury of the United States. 

20 ‘‘(2) DISTRIBUTION OF FUNDS.— 

21 ‘‘(A) IN GENERAL.—Funds reserved by an 

22 eligible county under subparagraph (B)(i) or 

23 (C)(i) of paragraph (1) for carrying out 

24 projects under title II shall be deposited in a 


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1 special account in the Treasury of the United 

2 States. 

3 ‘‘(B) AVAILABILITY.—Amounts deposited 

4 under subparagraph (A) shall— 

5 ‘‘(i) be available for expenditure by 

6 the Secretary concerned, without further 

7 appropriation; and 

8 ‘‘(ii) remain available until expended 

9 in accordance with title II. 

10 ‘‘(3) ELECTION.— 

11 ‘‘(A) NOTIFICATION.— 

12 ‘‘(i) IN GENERAL.—An eligible county 

13 shall notify the Secretary concerned of an 

14 election by the eligible county under this 

15 subsection not later than September 30, 

16 2008 (or as soon thereafter as the Sec17 retary concerned determines is prac18 ticable), and September 30 of each fiscal 

19 year thereafter. 

20 ‘‘(ii) FAILURE TO ELECT.—Except as 

21 provided in subparagraph (B), if the eligi22 ble county fails to make an election by the 

23 date specified in clause (i), the eligible 

24 county shall— 


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1 ‘‘(I) be considered to have elected 

2 to expend 85 percent of the funds in 

3 accordance with paragraph (1)(A); 

4 and 

5 ‘‘(II) return the balance to the 

6 Treasury of the United States. 

7 ‘‘(B) COUNTIES WITH MINOR DISTRIBU8 TIONS.—In the case of each eligible county to 

9 which less than $100,000 is distributed for any 

10 fiscal year pursuant to either or both of para11 graphs (1)(B) and (2)(B) of subsection (a), the 

12 eligible county may elect to expend all the funds 

13 in the same manner in which the 25-percent 

14 payments or 50-percent payments, as applica15 ble, are required to be expended. 

16 ‘‘(e) TIME FOR PAYMENT.—The payments required 

17 under this section for a fiscal year shall be made as soon 

18 as practicable after the end of that fiscal year. 

19 ‘‘SEC. 103. TRANSITION PAYMENTS TO STATES. 

20 ‘‘(a) DEFINITIONS.—In this section: 

21 ‘‘(1) ADJUSTED AMOUNT.—The term ‘adjusted 

22 amount’ means, with respect to a covered State— 

23 ‘‘(A) for fiscal year 2008, 90 percent of— 

24 ‘‘(i) the sum of the amounts paid for 

25 fiscal year 2006 under section 102(a)(2) 


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1 (as in effect on September 29, 2006) for 

2 the eligible counties in the covered State 

3 that have elected under section 102(b) to 

4 receive a share of the State payment for 

5 fiscal year 2008; and 

6 ‘‘(ii) the sum of the amounts paid for 

7 fiscal year 2006 under section 103(a)(2) 

8 (as in effect on September 29, 2006) for 

9 the eligible counties in the State of Oregon 

10 that have elected under section 102(b) to 

11 receive the county payment for fiscal year 

12 2008; 

13 ‘‘(B) for fiscal year 2009, 76 percent of— 

14 ‘‘(i) the sum of the amounts paid for 

15 fiscal year 2006 under section 102(a)(2) 

16 (as in effect on September 29, 2006) for 

17 the eligible counties in the covered State 

18 that have elected under section 102(b) to 

19 receive a share of the State payment for 

20 fiscal year 2009; and 

21 ‘‘(ii) the sum of the amounts paid for 

22 fiscal year 2006 under section 103(a)(2) 

23 (as in effect on September 29, 2006) for 

24 the eligible counties in the State of Oregon 

25 that have elected under section 102(b) to 


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1 receive the county payment for fiscal year 

2 2009; and 

3 ‘‘(C) for fiscal year 2010, 65 percent of— 

4 ‘‘(i) the sum of the amounts paid for 

5 fiscal year 2006 under section 102(a)(2) 

6 (as in effect on September 29, 2006) for 

7 the eligible counties in the covered State 

8 that have elected under section 102(b) to 

9 receive a share of the State payment for 

10 fiscal year 2010; and 

11 ‘‘(ii) the sum of the amounts paid for 

12 fiscal year 2006 under section 103(a)(2) 

13 (as in effect on September 29, 2006) for 

14 the eligible counties in the State of Oregon 

15 that have elected under section 102(b) to 

16 receive the county payment for fiscal year 

17 2010. 

18 ‘‘(2) COVERED STATE.—The term ‘covered 

19 State’ means each of the States of California, Lou20 isiana, Oregon, Pennsylvania, South Carolina, South 

21 Dakota, Texas, and Washington. 

22 ‘‘(b) TRANSITION PAYMENTS.—For each of fiscal 

23 years 2008 through 2010, in lieu of the payment amounts 

24 that otherwise would have been made under paragraphs 

25 (1)(B) and (2)(B) of section 102(a), the Secretary of the 


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1 Treasury shall pay the adjusted amount to each covered 

2 State and the eligible counties within the covered State, 

3 as applicable. 

4 ‘‘(c) DISTRIBUTION OF ADJUSTED AMOUNT.—Ex5 cept as provided in subsection (d), it is the intent of Con6 gress that the method of distributing the payments under 

7 subsection (b) among the counties in the covered States 

8 for each of fiscal years 2008 through 2010 be in the same 

9 proportion that the payments were distributed to the eligi10 ble counties in fiscal year 2006. 

11 ‘‘(d) DISTRIBUTION OF PAYMENTS IN CALI12 FORNIA.—The following payments shall be distributed 

13 among the eligible counties in the State of California in 

14 the same proportion that payments under section 

15 102(a)(2) (as in effect on September 29, 2006) were dis16 tributed to the eligible counties for fiscal year 2006: 

17 ‘‘(1) Payments to the State of California under 

18 subsection (b). 

19 ‘‘(2) The shares of the eligible counties of the 

20 State payment for California under section 102 for 

21 fiscal year 2011. 

22 ‘‘(e) TREATMENT OF PAYMENTS.—For purposes of 

23 this Act, any payment made under subsection (b) shall be 

24 considered to be a payment made under section 102(a). 


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1 ‘‘TITLE II—SPECIAL PROJECTS 

2 ON FEDERAL LAND 

3 ‘‘SEC. 201. DEFINITIONS. 

4 ‘‘In this title: 

5 ‘‘(1) PARTICIPATING COUNTY.—The term ‘par6 ticipating county’ means an eligible county that 

7 elects under section 102(d) to expend a portion of 

8 the Federal funds received under section 102 in ac9 cordance with this title. 

10 ‘‘(2) PROJECT FUNDS.—The term ‘project 

11 funds’ means all funds an eligible county elects 

12 under section 102(d) to reserve for expenditure in 

13 accordance with this title. 

14 ‘‘(3) RESOURCE ADVISORY COMMITTEE.—The 

15 term ‘resource advisory committee’ means— 

16 ‘‘(A) an advisory committee established by 

17 the Secretary concerned under section 205; or 

18 ‘‘(B) an advisory committee determined by 

19 the Secretary concerned to meet the require20 ments of section 205. 

21 ‘‘(4) RESOURCE MANAGEMENT PLAN.—The 

22 term ‘resource management plan’ means— 

23 ‘‘(A) a land use plan prepared by the Bu24 reau of Land Management for units of the Fed25 eral land described in section 3(7)(B) pursuant 


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1 to section 202 of the Federal Land Policy and 

2 Management Act of 1976 (43 U.S.C. 1712); or 

3 ‘‘(B) a land and resource management 

4 plan prepared by the Forest Service for units of 

5 the National Forest System pursuant to section 

6 6 of the Forest and Rangeland Renewable Re7 sources Planning Act of 1974 (16 U.S.C. 

8 1604). 

9 ‘‘SEC. 202. GENERAL LIMITATION ON USE OF PROJECT 

10 FUNDS. 

11 ‘‘(a) LIMITATION.—Project funds shall be expended 

12 solely on projects that meet the requirements of this title. 

13 ‘‘(b) AUTHORIZED USES.—Project funds may be 

14 used by the Secretary concerned for the purpose of enter15 ing into and implementing cooperative agreements with 

16 willing Federal agencies, State and local governments, pri17 vate and nonprofit entities, and landowners for protection, 

18 restoration, and enhancement of fish and wildlife habitat, 

19 and other resource objectives consistent with the purposes 

20 of this Act on Federal land and on non-Federal land where 

21 projects would benefit the resources on Federal land. 

22 ‘‘SEC. 203. SUBMISSION OF PROJECT PROPOSALS. 

23 ‘‘(a) SUBMISSION OF PROJECT PROPOSALS TO SEC24 RETARY CONCERNED.— 


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1 ‘‘(1) PROJECTS FUNDED USING PROJECT

2 FUNDS.—Not later than September 30 for fiscal 

3 year 2008 (or as soon thereafter as the Secretary 

4 concerned determines is practicable), and each Sep5 tember 30 thereafter for each succeeding fiscal year 

6 through fiscal year 2011, each resource advisory 

7 committee shall submit to the Secretary concerned a 

8 description of any projects that the resource advi9 sory committee proposes the Secretary undertake 

10 using any project funds reserved by eligible counties 

11 in the area in which the resource advisory committee 

12 has geographic jurisdiction. 

13 ‘‘(2) PROJECTS FUNDED USING OTHER

14 FUNDS.—A resource advisory committee may submit 

15 to the Secretary concerned a description of any 

16 projects that the committee proposes the Secretary 

17 undertake using funds from State or local govern18 ments, or from the private sector, other than project 

19 funds and funds appropriated and otherwise avail20 able to do similar work. 

21 ‘‘(3) JOINT PROJECTS.—Participating counties 

22 or other persons may propose to pool project funds 

23 or other funds, described in paragraph (2), and 

24 jointly propose a project or group of projects to a reVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00203 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 source advisory committee established under section 

2 205. 

3 ‘‘(b) REQUIRED DESCRIPTION OF PROJECTS.—In 

4 submitting proposed projects to the Secretary concerned 

5 under subsection (a), a resource advisory committee shall 

6 include in the description of each proposed project the fol7 lowing information: 

8 ‘‘(1) The purpose of the project and a descrip9 tion of how the project will meet the purposes of this 

10 title. 

11 ‘‘(2) The anticipated duration of the project. 

12 ‘‘(3) The anticipated cost of the project. 

13 ‘‘(4) The proposed source of funding for the 

14 project, whether project funds or other funds. 

15 ‘‘(5)(A) Expected outcomes, including how the 

16 project will meet or exceed desired ecological condi17 tions, maintenance objectives, or stewardship objec18 tives. 

19 ‘‘(B) An estimate of the amount of any timber, 

20 forage, and other commodities and other economic 

21 activity, including jobs generated, if any, anticipated 

22 as part of the project. 

23 ‘‘(6) A detailed monitoring plan, including 

24 funding needs and sources, that— 


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1 ‘‘(A) tracks and identifies the positive or 

2 negative impacts of the project, implementation, 

3 and provides for validation monitoring; and 

4 ‘‘(B) includes an assessment of the fol5 lowing: 

6 ‘‘(i) Whether or not the project met or 

7 exceeded desired ecological conditions; cre8 ated local employment or training opportu9 nities, including summer youth jobs pro10 grams such as the Youth Conservation 

11 Corps where appropriate. 

12 ‘‘(ii) Whether the project improved 

13 the use of, or added value to, any products 

14 removed from land consistent with the pur15 poses of this title. 

16 ‘‘(7) An assessment that the project is to be in 

17 the public interest. 

18 ‘‘(c) AUTHORIZED PROJECTS.—Projects proposed 

19 under subsection (a) shall be consistent with section 2. 

20 ‘‘SEC. 204. EVALUATION AND APPROVAL OF PROJECTS BY 

21 SECRETARY CONCERNED. 

22 ‘‘(a) CONDITIONS FOR APPROVAL OF PROPOSED

23 PROJECT.—The Secretary concerned may make a decision 

24 to approve a project submitted by a resource advisory comVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00205 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 mittee under section 203 only if the proposed project satis2 fies each of the following conditions: 

3 ‘‘(1) The project complies with all applicable 

4 Federal laws (including regulations). 

5 ‘‘(2) The project is consistent with the applica6 ble resource management plan and with any water7 shed or subsequent plan developed pursuant to the 

8 resource management plan and approved by the Sec9 retary concerned. 

10 ‘‘(3) The project has been approved by the re11 source advisory committee in accordance with sec12 tion 205, including the procedures issued under sub13 section (e) of that section. 

14 ‘‘(4) A project description has been submitted 

15 by the resource advisory committee to the Secretary 

16 concerned in accordance with section 203. 

17 ‘‘(5) The project will improve the maintenance 

18 of existing infrastructure, implement stewardship ob19 jectives that enhance forest ecosystems, and restore 

20 and improve land health and water quality. 

21 ‘‘(b) ENVIRONMENTAL REVIEWS.— 

22 ‘‘(1) REQUEST FOR PAYMENT BY COUNTY.— 

23 The Secretary concerned may request the resource 

24 advisory committee submitting a proposed project to 

25 agree to the use of project funds to pay for any enviVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00206 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 ronmental review, consultation, or compliance with 

2 applicable environmental laws required in connection 

3 with the project. 

4 ‘‘(2) CONDUCT OF ENVIRONMENTAL REVIEW.— 

5 If a payment is requested under paragraph (1) and 

6 the resource advisory committee agrees to the ex7 penditure of funds for this purpose, the Secretary 

8 concerned shall conduct environmental review, con9 sultation, or other compliance responsibilities in ac10 cordance with Federal laws (including regulations). 

11 ‘‘(3) EFFECT OF REFUSAL TO PAY.— 

12 ‘‘(A) IN GENERAL.—If a resource advisory 

13 committee does not agree to the expenditure of 

14 funds under paragraph (1), the project shall be 

15 deemed withdrawn from further consideration 

16 by the Secretary concerned pursuant to this 

17 title. 

18 ‘‘(B) EFFECT OF WITHDRAWAL.—A with19 drawal under subparagraph (A) shall be deemed 

20 to be a rejection of the project for purposes of 

21 section 207(c). 

22 ‘‘(c) DECISIONS OF SECRETARY CONCERNED.— 

23 ‘‘(1) REJECTION OF PROJECTS.— 

24 ‘‘(A) IN GENERAL.—A decision by the Sec25 retary concerned to reject a proposed project 


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1 shall be at the sole discretion of the Secretary 

2 concerned. 

3 ‘‘(B) NO ADMINISTRATIVE APPEAL OR JU4 DICIAL REVIEW.—Notwithstanding any other 

5 provision of law, a decision by the Secretary 

6 concerned to reject a proposed project shall not 

7 be subject to administrative appeal or judicial 

8 review. 

9 ‘‘(C) NOTICE OF REJECTION.—Not later 

10 than 30 days after the date on which the Sec11 retary concerned makes the rejection decision, 

12 the Secretary concerned shall notify in writing 

13 the resource advisory committee that submitted 

14 the proposed project of the rejection and the 

15 reasons for rejection. 

16 ‘‘(2) NOTICE OF PROJECT APPROVAL.—The 

17 Secretary concerned shall publish in the Federal 

18 Register notice of each project approved under sub19 section (a) if the notice would be required had the 

20 project originated with the Secretary. 

21 ‘‘(d) SOURCE AND CONDUCT OF PROJECT.—Once the 

22 Secretary concerned accepts a project for review under 

23 section 203, the acceptance shall be deemed a Federal ac24 tion for all purposes. 

25 ‘‘(e) IMPLEMENTATION OF APPROVED PROJECTS.— 


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1 ‘‘(1) COOPERATION.—Notwithstanding chapter 

2 63 of title 31, United States Code, using project 

3 funds the Secretary concerned may enter into con4 tracts, grants, and cooperative agreements with 

5 States and local governments, private and nonprofit 

6 entities, and landowners and other persons to assist 

7 the Secretary in carrying out an approved project. 

8 ‘‘(2) BEST VALUE CONTRACTING.— 

9 ‘‘(A) IN GENERAL.—For any project in10 volving a contract authorized by paragraph (1) 

11 the Secretary concerned may elect a source for 

12 performance of the contract on a best value 

13 basis. 

14 ‘‘(B) FACTORS.—The Secretary concerned 

15 shall determine best value based on such factors 

16 as— 

17 ‘‘(i) the technical demands and com18 plexity of the work to be done; 

19 ‘‘(ii)(I) the ecological objectives of the 

20 project; and 

21 ‘‘(II) the sensitivity of the resources 

22 being treated; 

23 ‘‘(iii) the past experience by the con24 tractor with the type of work being done, 

25 using the type of equipment proposed for 


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1 the project, and meeting or exceeding de2 sired ecological conditions; and 

3 ‘‘(iv) the commitment of the con4 tractor to hiring highly qualified workers 

5 and local residents. 

6 ‘‘(3) MERCHANTABLE TIMBER CONTRACTING

7 PILOT PROGRAM.— 

8 ‘‘(A) ESTABLISHMENT.—The Secretary 

9 concerned shall establish a pilot program to im10 plement a certain percentage of approved 

11 projects involving the sale of merchantable tim12 ber using separate contracts for— 

13 ‘‘(i) the harvesting or collection of 

14 merchantable timber; and 

15 ‘‘(ii) the sale of the timber. 

16 ‘‘(B) ANNUAL PERCENTAGES.—Under the 

17 pilot program, the Secretary concerned shall en18 sure that, on a nationwide basis, not less than 

19 the following percentage of all approved projects 

20 involving the sale of merchantable timber are 

21 implemented using separate contracts: 

22 ‘‘(i) For fiscal year 2008, 35 percent. 

23 ‘‘(ii) For fiscal year 2009, 45 percent. 

24 ‘‘(iii) For each of fiscal years 2010 

25 and 2011, 50 percent. 


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1 ‘‘(C) INCLUSION IN PILOT PROGRAM.—The 

2 decision whether to use separate contracts to 

3 implement a project involving the sale of mer4 chantable timber shall be made by the Sec5 retary concerned after the approval of the 

6 project under this title. 

7 ‘‘(D) ASSISTANCE.— 

8 ‘‘(i) IN GENERAL.—The Secretary 

9 concerned may use funds from any appro10 priated account available to the Secretary 

11 for the Federal land to assist in the ad12 ministration of projects conducted under 

13 the pilot program. 

14 ‘‘(ii) MAXIMUM AMOUNT OF ASSIST15 ANCE.—The total amount obligated under 

16 this subparagraph may not exceed 

17 $1,000,000 for any fiscal year during 

18 which the pilot program is in effect. 

19 ‘‘(E) REVIEW AND REPORT.— 

20 ‘‘(i) INITIAL REPORT.—Not later than 

21 September 30, 2010, the Comptroller Gen22 eral shall submit to the Committees on Ag23 riculture, Nutrition, and Forestry and En24 ergy and Natural Resources of the Senate 

25 and the Committees on Agriculture and 


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1 Natural Resources of the House of Rep2 resentatives a report assessing the pilot 

3 program. 

4 ‘‘(ii) ANNUAL REPORT.—The Sec5 retary concerned shall submit to the Com6 mittees on Agriculture, Nutrition, and For7 estry and Energy and Natural Resources 

8 of the Senate and the Committees on Agri9 culture and Natural Resources of the 

10 House of Representatives an annual report 

11 describing the results of the pilot program. 

12 ‘‘(f) REQUIREMENTS FOR PROJECT FUNDS.—The 

13 Secretary shall ensure that at least 50 percent of all 

14 project funds be used for projects that are primarily dedi15 cated— 

16 ‘‘(1) to road maintenance, decommissioning, or 

17 obliteration; or 

18 ‘‘(2) to restoration of streams and watersheds. 

19 ‘‘SEC. 205. RESOURCE ADVISORY COMMITTEES. 

20 ‘‘(a) ESTABLISHMENT AND PURPOSE OF RESOURCE

21 ADVISORY COMMITTEES.— 

22 ‘‘(1) ESTABLISHMENT.—The Secretary con23 cerned shall establish and maintain resource advi24 sory committees to perform the duties in subsection 

25 (b), except as provided in paragraph (4). 


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1 ‘‘(2) PURPOSE.—The purpose of a resource ad2 visory committee shall be— 

3 ‘‘(A) to improve collaborative relationships; 

4 and 

5 ‘‘(B) to provide advice and recommenda6 tions to the land management agencies con7 sistent with the purposes of this title. 

8 ‘‘(3) ACCESS TO RESOURCE ADVISORY COMMIT9 TEES.—To ensure that each unit of Federal land 

10 has access to a resource advisory committee, and 

11 that there is sufficient interest in participation on a 

12 committee to ensure that membership can be bal13 anced in terms of the points of view represented and 

14 the functions to be performed, the Secretary con15 cerned may, establish resource advisory committees 

16 for part of, or 1 or more, units of Federal land. 

17 ‘‘(4) EXISTING ADVISORY COMMITTEES.— 

18 ‘‘(A) IN GENERAL.—An advisory com19 mittee that meets the requirements of this sec20 tion, a resource advisory committee established 

21 before September 29, 2006, or an advisory com22 mittee determined by the Secretary concerned 

23 before September 29, 2006, to meet the re24 quirements of this section may be deemed by 


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1 the Secretary concerned to be a resource advi2 sory committee for the purposes of this title. 

3 ‘‘(B) CHARTER.—A charter for a com4 mittee described in subparagraph (A) that was 

5 filed on or before September 29, 2006, shall be 

6 considered to be filed for purposes of this Act. 

7 ‘‘(C) BUREAU OF LAND MANAGEMENT AD8 VISORY COMMITTEES.—The Secretary of the In9 terior may deem a resource advisory committee 

10 meeting the requirements of subpart 1784 of 

11 part 1780 of title 43, Code of Federal Regula12 tions, as a resource advisory committee for the 

13 purposes of this title. 

14 ‘‘(b) DUTIES.—A resource advisory committee 

15 shall— 

16 ‘‘(1) review projects proposed under this title by 

17 participating counties and other persons; 

18 ‘‘(2) propose projects and funding to the Sec19 retary concerned under section 203; 

20 ‘‘(3) provide early and continuous coordination 

21 with appropriate land management agency officials 

22 in recommending projects consistent with purposes 

23 of this Act under this title; 

24 ‘‘(4) provide frequent opportunities for citizens, 

25 organizations, tribes, land management agencies, 


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1 and other interested parties to participate openly 

2 and meaningfully, beginning at the early stages of 

3 the project development process under this title; 

4 ‘‘(5)(A) monitor projects that have been ap5 proved under section 204; and 

6 ‘‘(B) advise the designated Federal official on 

7 the progress of the monitoring efforts under sub8 paragraph (A); and 

9 ‘‘(6) make recommendations to the Secretary 

10 concerned for any appropriate changes or adjust11 ments to the projects being monitored by the re12 source advisory committee. 

13 ‘‘(c) APPOINTMENT BY THE SECRETARY.— 

14 ‘‘(1) APPOINTMENT AND TERM.— 

15 ‘‘(A) IN GENERAL.—The Secretary con16 cerned, shall appoint the members of resource 

17 advisory committees for a term of 4 years be18 ginning on the date of appointment. 

19 ‘‘(B) REAPPOINTMENT.—The Secretary 

20 concerned may reappoint members to subse21 quent 4-year terms. 

22 ‘‘(2) BASIC REQUIREMENTS.—The Secretary 

23 concerned shall ensure that each resource advisory 

24 committee established meets the requirements of 

25 subsection (d). 


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1 ‘‘(3) INITIAL APPOINTMENT.—Not later than 

2 180 days after the date of the enactment of this Act, 

3 the Secretary concerned shall make initial appoint4 ments to the resource advisory committees. 

5 ‘‘(4) VACANCIES.—The Secretary concerned 

6 shall make appointments to fill vacancies on any re7 source advisory committee as soon as practicable 

8 after the vacancy has occurred. 

9 ‘‘(5) COMPENSATION.—Members of the re10 source advisory committees shall not receive any 

11 compensation. 

12 ‘‘(d) COMPOSITION OF ADVISORY COMMITTEE.— 

13 ‘‘(1) NUMBER.—Each resource advisory com14 mittee shall be comprised of 15 members. 

15 ‘‘(2) COMMUNITY INTERESTS REPRESENTED.— 

16 Committee members shall be representative of the 

17 interests of the following 3 categories: 

18 ‘‘(A) 5 persons that— 

19 ‘‘(i) represent organized labor or non20 timber forest product harvester groups; 

21 ‘‘(ii) represent developed outdoor 

22 recreation, off highway vehicle users, or 

23 commercial recreation activities; 

24 ‘‘(iii) represent— 


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1 ‘‘(I) energy and mineral develop2 ment interests; or 

3 ‘‘(II) commercial or recreational 

4 fishing interests; 

5 ‘‘(iv) represent the commercial timber 

6 industry; or 

7 ‘‘(v) hold Federal grazing or other 

8 land use permits, or represent nonindus9 trial private forest land owners, within the 

10 area for which the committee is organized. 

11 ‘‘(B) 5 persons that represent— 

12 ‘‘(i) nationally recognized environ13 mental organizations; 

14 ‘‘(ii) regionally or locally recognized 

15 environmental organizations; 

16 ‘‘(iii) dispersed recreational activities; 

17 ‘‘(iv) archaeological and historical in18 terests; or 

19 ‘‘(v) nationally or regionally recog20 nized wild horse and burro interest groups, 

21 wildlife or hunting organizations, or water22 shed associations. 

23 ‘‘(C) 5 persons that— 

24 ‘‘(i) hold State elected office (or a 

25 designee); 


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1 ‘‘(ii) hold county or local elected of2 fice; 

3 ‘‘(iii) represent American Indian 

4 tribes within or adjacent to the area for 

5 which the committee is organized; 

6 ‘‘(iv) are school officials or teachers; 

7 or 

8 ‘‘(v) represent the affected public at 

9 large. 

10 ‘‘(3) BALANCED REPRESENTATION.—In ap11 pointing committee members from the 3 categories 

12 in paragraph (2), the Secretary concerned shall pro13 vide for balanced and broad representation from 

14 within each category. 

15 ‘‘(4) GEOGRAPHIC DISTRIBUTION.—The mem16 bers of a resource advisory committee shall reside 

17 within the State in which the committee has juris18 diction and, to extent practicable, the Secretary con19 cerned shall ensure local representation in each cat20 egory in paragraph (2). 

21 ‘‘(5) CHAIRPERSON.—A majority on each re22 source advisory committee shall select the chair23 person of the committee. 

24 ‘‘(e) APPROVAL PROCEDURES.— 


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1 ‘‘(1) IN GENERAL.—Subject to paragraph (3), 

2 each resource advisory committee shall establish pro3 cedures for proposing projects to the Secretary con4 cerned under this title. 

5 ‘‘(2) QUORUM.—A quorum must be present to 

6 constitute an official meeting of the committee. 

7 ‘‘(3) APPROVAL BY MAJORITY OF MEMBERS.— 

8 A project may be proposed by a resource advisory 

9 committee to the Secretary concerned under section 

10 203(a), if the project has been approved by a major11 ity of members of the committee from each of the 

12 3 categories in subsection (d)(2). 

13 ‘‘(f) OTHER COMMITTEE AUTHORITIES AND RE14 QUIREMENTS.— 

15 ‘‘(1) STAFF ASSISTANCE.—A resource advisory 

16 committee may submit to the Secretary concerned a 

17 request for periodic staff assistance from Federal 

18 employees under the jurisdiction of the Secretary. 

19 ‘‘(2) MEETINGS.—All meetings of a resource 

20 advisory committee shall be announced at least 1 

21 week in advance in a local newspaper of record and 

22 shall be open to the public. 

23 ‘‘(3) RECORDS.—A resource advisory committee 

24 shall maintain records of the meetings of the comVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00219 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 mittee and make the records available for public in2 spection. 

3 ‘‘SEC. 206. USE OF PROJECT FUNDS. 

4 ‘‘(a) AGREEMENT REGARDING SCHEDULE AND COST

5 OF PROJECT.— 

6 ‘‘(1) AGREEMENT BETWEEN PARTIES.—The 

7 Secretary concerned may carry out a project sub8 mitted by a resource advisory committee under sec9 tion 203(a) using project funds or other funds de10 scribed in section 203(a)(2), if, as soon as prac11 ticable after the issuance of a decision document for 

12 the project and the exhaustion of all administrative 

13 appeals and judicial review of the project decision, 

14 the Secretary concerned and the resource advisory 

15 committee enter into an agreement addressing, at a 

16 minimum, the following: 

17 ‘‘(A) The schedule for completing the 

18 project. 

19 ‘‘(B) The total cost of the project, includ20 ing the level of agency overhead to be assessed 

21 against the project. 

22 ‘‘(C) For a multiyear project, the esti23 mated cost of the project for each of the fiscal 

24 years in which it will be carried out. 


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1 ‘‘(D) The remedies for failure of the Sec2 retary concerned to comply with the terms of 

3 the agreement consistent with current Federal 

4 law. 

5 ‘‘(2) LIMITED USE OF FEDERAL FUNDS.—The 

6 Secretary concerned may decide, at the sole discre7 tion of the Secretary concerned, to cover the costs 

8 of a portion of an approved project using Federal 

9 funds appropriated or otherwise available to the Sec10 retary for the same purposes as the project. 

11 ‘‘(b) TRANSFER OF PROJECT FUNDS.— 

12 ‘‘(1) INITIAL TRANSFER REQUIRED.—As soon 

13 as practicable after the agreement is reached under 

14 subsection (a) with regard to a project to be funded 

15 in whole or in part using project funds, or other 

16 funds described in section 203(a)(2), the Secretary 

17 concerned shall transfer to the applicable unit of Na18 tional Forest System land or Bureau of Land Man19 agement District an amount of project funds equal 

20 to— 

21 ‘‘(A) in the case of a project to be com22 pleted in a single fiscal year, the total amount 

23 specified in the agreement to be paid using 

24 project funds, or other funds described in sec25 tion 203(a)(2); or 


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1 ‘‘(B) in the case of a multiyear project, the 

2 amount specified in the agreement to be paid 

3 using project funds, or other funds described in 

4 section 203(a)(2) for the first fiscal year. 

5 ‘‘(2) CONDITION ON PROJECT COMMENCE6 MENT.—The unit of National Forest System land or 

7 Bureau of Land Management District concerned, 

8 shall not commence a project until the project funds, 

9 or other funds described in section 203(a)(2) re10 quired to be transferred under paragraph (1) for the 

11 project, have been made available by the Secretary 

12 concerned. 

13 ‘‘(3) SUBSEQUENT TRANSFERS FOR MULTIYEAR

14 PROJECTS.— 

15 ‘‘(A) IN GENERAL.—For the second and 

16 subsequent fiscal years of a multiyear project to 

17 be funded in whole or in part using project 

18 funds, the unit of National Forest System land 

19 or Bureau of Land Management District con20 cerned shall use the amount of project funds re21 quired to continue the project in that fiscal year 

22 according to the agreement entered into under 

23 subsection (a). 

24 ‘‘(B) SUSPENSION OF WORK.—The Sec25 retary concerned shall suspend work on the 


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1 project if the project funds required by the 

2 agreement in the second and subsequent fiscal 

3 years are not available. 

4 ‘‘SEC. 207. AVAILABILITY OF PROJECT FUNDS. 

5 ‘‘(a) SUBMISSION OF PROPOSED PROJECTS TO OBLI6 GATE FUNDS.—By September 30, 2008 (or as soon there7 after as the Secretary concerned determines is prac8 ticable), and each September 30 thereafter for each suc9 ceeding fiscal year through fiscal year 2011, a resource 

10 advisory committee shall submit to the Secretary con11 cerned pursuant to section 203(a)(1) a sufficient number 

12 of project proposals that, if approved, would result in the 

13 obligation of at least the full amount of the project funds 

14 reserved by the participating county in the preceding fiscal 

15 year. 

16 ‘‘(b) USE OR TRANSFER OF UNOBLIGATED

17 FUNDS.—Subject to section 208, if a resource advisory 

18 committee fails to comply with subsection (a) for a fiscal 

19 year, any project funds reserved by the participating coun20 ty in the preceding fiscal year and remaining unobligated 

21 shall be available for use as part of the project submissions 

22 in the next fiscal year. 

23 ‘‘(c) EFFECT OF REJECTION OF PROJECTS.—Subject 

24 to section 208, any project funds reserved by a partici25 pating county in the preceding fiscal year that are unobliVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00223 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 gated at the end of a fiscal year because the Secretary 

2 concerned has rejected one or more proposed projects shall 

3 be available for use as part of the project submissions in 

4 the next fiscal year. 

5 ‘‘(d) EFFECT OF COURT ORDERS.— 

6 ‘‘(1) IN GENERAL.—If an approved project 

7 under this Act is enjoined or prohibited by a Federal 

8 court, the Secretary concerned shall return the un9 obligated project funds related to the project to the 

10 participating county or counties that reserved the 

11 funds. 

12 ‘‘(2) EXPENDITURE OF FUNDS.—The returned 

13 funds shall be available for the county to expend in 

14 the same manner as the funds reserved by the coun15 ty under subparagraph (B) or (C)(i) of section 

16 102(d)(1). 

17 ‘‘SEC. 208. TERMINATION OF AUTHORITY. 

18 ‘‘(a) IN GENERAL.—The authority to initiate projects 

19 under this title shall terminate on September 30, 2011. 

20 ‘‘(b) DEPOSITS IN TREASURY.—Any project funds 

21 not obligated by September 30, 2012, shall be deposited 

22 in the Treasury of the United States. 

23 ‘‘TITLE III—COUNTY FUNDS 

24 ‘‘SEC. 301. DEFINITIONS. 

25 ‘‘In this title: 


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1 ‘‘(1) COUNTY FUNDS.—The term ‘county funds’ 

2 means all funds an eligible county elects under sec3 tion 102(d) to reserve for expenditure in accordance 

4 with this title. 

5 ‘‘(2) PARTICIPATING COUNTY.—The term ‘par6 ticipating county’ means an eligible county that 

7 elects under section 102(d) to expend a portion of 

8 the Federal funds received under section 102 in ac9 cordance with this title. 

10 ‘‘SEC. 302. USE. 

11 ‘‘(a) AUTHORIZED USES.—A participating county, 

12 including any applicable agencies of the participating 

13 county, shall use county funds, in accordance with this 

14 title, only— 

15 ‘‘(1) to carry out activities under the Firewise 

16 Communities program to provide to homeowners in 

17 fire-sensitive ecosystems education on, and assist18 ance with implementing, techniques in home siting, 

19 home construction, and home landscaping that can 

20 increase the protection of people and property from 

21 wildfires; 

22 ‘‘(2) to reimburse the participating county for 

23 search and rescue and other emergency services, in24 cluding firefighting, that are— 


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1 ‘‘(A) performed on Federal land after the 

2 date on which the use was approved under sub3 section (b); 

4 ‘‘(B) paid for by the participating county; 

5 and 

6 ‘‘(3) to develop community wildfire protection 

7 plans in coordination with the appropriate Secretary 

8 concerned. 

9 ‘‘(b) PROPOSALS.—A participating county shall use 

10 county funds for a use described in subsection (a) only 

11 after a 45-day public comment period, at the beginning 

12 of which the participating county shall— 

13 ‘‘(1) publish in any publications of local record 

14 a proposal that describes the proposed use of the 

15 county funds; and 

16 ‘‘(2) submit the proposal to any resource advi17 sory committee established under section 205 for the 

18 participating county. 

19 ‘‘SEC. 303. CERTIFICATION. 

20 ‘‘(a) IN GENERAL.—Not later than February 1 of the 

21 year after the year in which any county funds were ex22 pended by a participating county, the appropriate official 

23 of the participating county shall submit to the Secretary 

24 concerned a certification that the county funds expended 

25 in the applicable year have been used for the uses authorVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00226 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 ized under section 302(a), including a description of the 

2 amounts expended and the uses for which the amounts 

3 were expended. 

4 ‘‘(b) REVIEW.—The Secretary concerned shall review 

5 the certifications submitted under subsection (a) as the 

6 Secretary concerned determines to be appropriate. 

7 ‘‘SEC. 304. TERMINATION OF AUTHORITY. 

8 ‘‘(a) IN GENERAL.—The authority to initiate projects 

9 under this title terminates on September 30, 2011. 

10 ‘‘(b) AVAILABILITY.—Any county funds not obligated 

11 by September 30, 2012, shall be returned to the Treasury 

12 of the United States. 

13 ‘‘TITLE IV—MISCELLANEOUS 

14 PROVISIONS 

15 ‘‘SEC. 401. REGULATIONS. 

16 ‘‘The Secretary of Agriculture and the Secretary of 

17 the Interior shall issue regulations to carry out the pur18 poses of this Act. 

19 ‘‘SEC. 402. AUTHORIZATION OF APPROPRIATIONS. 

20 ‘‘There are authorized to be appropriated such sums 

21 as are necessary to carry out this Act for each of fiscal 

22 years 2008 through 2011. 

23 ‘‘SEC. 403. TREATMENT OF FUNDS AND REVENUES. 

24 ‘‘(a) RELATION TO OTHER APPROPRIATIONS.— 

25 Funds made available under section 402 and funds made 


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1 available to a Secretary concerned under section 206 shall 

2 be in addition to any other annual appropriations for the 

3 Forest Service and the Bureau of Land Management. 

4 ‘‘(b) DEPOSIT OF REVENUES AND OTHER FUNDS.— 

5 All revenues generated from projects pursuant to title II, 

6 including any interest accrued from the revenues, shall be 

7 deposited in the Treasury of the United States.’’. 

8 (b) FOREST RECEIPT PAYMENTS TO ELIGIBLE

9 STATES AND COUNTIES.— 

10 (1) ACT OF MAY 23, 1908.—The sixth paragraph 

11 under the heading ‘‘FOREST SERVICE’’ in the Act 

12 of May 23, 1908 (16 U.S.C. 500) is amended in the 

13 first sentence by striking ‘‘twenty-five percentum’’ 

14 and all that follows through ‘‘shall be paid’’ and in15 serting the following: ‘‘an amount equal to the an16 nual average of 25 percent of all amounts received 

17 for the applicable fiscal year and each of the pre18 ceding 6 fiscal years from each national forest shall 

19 be paid’’. 

20 (2) WEEKS LAW.—Section 13 of the Act of 

21 March 1, 1911 (commonly known as the ‘‘Weeks 

22 Law’’) (16 U.S.C. 500) is amended in the first sen23 tence by striking ‘‘twenty-five percentum’’ and all 

24 that follows through ‘‘shall be paid’’ and inserting 

25 the following: ‘‘an amount equal to the annual averVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00228 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 age of 25 percent of all amounts received for the ap2 plicable fiscal year and each of the preceding 6 fiscal 

3 years from each national forest shall be paid’’. 

4 (c) PAYMENTS IN LIEU OF TAXES.— 

5 (1) IN GENERAL.—Section 6906 of title 31, 

6 United States Code, is amended to read as follows: 

7 ‘‘§ 6906. Funding 

8 ‘‘For each of fiscal years 2008 through 2012— 

9 ‘‘(1) each county or other eligible unit of local 

10 government shall be entitled to payment under this 

11 chapter; and 

12 ‘‘(2) sums shall be made available to the Sec13 retary of the Interior for obligation or expenditure in 

14 accordance with this chapter.’’. 

15 (2) CONFORMING AMENDMENT.—The table of 

16 sections for chapter 69 of title 31, United States 

17 Code, is amended by striking the item relating to 

18 section 6906 and inserting the following: 

‘‘6906. Funding.’’. 

19 (3) BUDGET SCOREKEEPING.— 

20 (A) IN GENERAL.—Notwithstanding the 

21 Budget Scorekeeping Guidelines and the accom22 panying list of programs and accounts set forth 

23 in the joint explanatory statement of the com24 mittee of conference accompanying Conference 

25 Report 105–217, the section in this title reVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00229 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 garding Payments in Lieu of Taxes shall be 

2 treated in the baseline for purposes of section 

3 257 of the Balanced Budget and Emergency 

4 Deficit Control Act of 1985 (as in effect prior 

5 to September 30, 2002), and by the Chairmen 

6 of the House and Senate Budget Committees, 

7 as appropriate, for purposes of budget enforce8 ment in the House and Senate, and under the 

9 Congressional Budget Act of 1974 as if Pay10 ment in Lieu of Taxes (14–1114–0–1–806) 

11 were an account designated as Appropriated 

12 Entitlements and Mandatories for Fiscal Year 

13 1997 in the joint explanatory statement of the 

14 committee of conference accompanying Con15 ference Report 105–217. 

16 (B) EFFECTIVE DATE.—This paragraph 

17 shall remain in effect for the fiscal years to 

18 which the entitlement in section 6906 of title 

19 31, United States Code (as amended by para20 graph (1)), applies. 

21 SEC. 332. CLARIFICATION OF UNIFORM DEFINITION OF 

22 CHILD. 

23 (a) CHILD MUST BE YOUNGER THAN CLAIMANT.— 

24 Section 152(c)(3)(A) is amended by inserting ‘‘is younger 


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1 than the taxpayer claiming such individual as a qualifying 

2 child and’’ after ‘‘such individual’’. 

3 (b) CHILD MUST BE UNMARRIED.—Section 

4 152(c)(1) is amended by striking ‘‘and’’ at the end of sub5 paragraph (C), by striking the period at the end of sub6 paragraph (D) and inserting ‘‘, and’’, and by adding at 

7 the end the following new subparagraph: 

8 ‘‘(E) who has not filed a joint return 

9 (other than only for a claim of refund) with the 

10 individual’s spouse under section 6013 for the 

11 taxable year beginning in the calendar year in 

12 which the taxable year of the taxpayer begins.’’. 

13 (c) RESTRICT QUALIFYING CHILD TAX BENEFITS TO

14 CHILD’S PARENT.— 

15 (1) CHILD TAX CREDIT.—Subsection (a) of sec16 tion 24 is amended by inserting ‘‘for which the tax17 payer is allowed a deduction under section 151’’ 

18 after ‘‘of the taxpayer’’. 

19 (2) PERSONS OTHER THAN PARENTS CLAIMING

20 QUALIFYING CHILD.— 

21 (A) IN GENERAL.—Paragraph (4) of sec22 tion 152(c) is amended by adding at the end 

23 the following new subparagraph: 

24 ‘‘(C) NO PARENT CLAIMING QUALIFYING

25 CHILD.—If the parents of an individual may 


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1 claim such individual as a qualifying child but 

2 no parent so claims the individual, such indi3 vidual may be claimed as the qualifying child of 

4 another taxpayer but only if the adjusted gross 

5 income of such taxpayer is higher than the 

6 highest adjusted gross income of any parent of 

7 the individual.’’. 

8 (B) CONFORMING AMENDMENTS.— 

9 (i) Subparagraph (A) of section 

10 152(c)(4) is amended by striking ‘‘Except’’ 

11 through ‘‘2 or more taxpayers’’ and insert12 ing ‘‘Except as provided in subparagraphs 

13 (B) and (C), if (but for this paragraph) an 

14 individual may be claimed as a qualifying 

15 child by 2 or more taxpayers’’. 

16 (ii) The heading for paragraph (4) of 

17 section 152(c) is amended by striking 

18 ‘‘CLAIMING’’ and inserting ‘‘WHO CAN

19 CLAIM THE SAME’’. 

20 (d) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to taxable years beginning after 

22 December 31, 2008. 


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1 TITLE IV—TRANSPORTATION 

2 AND INFRASTRUCTURE 

3 SEC. 401. RESTORATION OF HIGHWAY TRUST FUND BAL4 ANCE. 

5 (a) IN GENERAL.—Subsection (f) of section 9503 is 

6 amended— 

7 (1) by redesignating paragraphs (1) and (2) as 

8 subparagraphs (A) and (B), respectively, and by 

9 moving such subparagraphs 2 ems to the right, 

10 (2) by striking ‘‘For purposes’’ and inserting 

11 the following: 

12 ‘‘(1) IN GENERAL.—For purposes’’, 

13 (3) by moving the flush sentence at the end of 

14 paragraph (1), as so amended, 2 ems to the right, 

15 and 

16 (4) by adding at the end the following new 

17 paragraph: 

18 ‘‘(2) RESTORATION OF FUND BALANCE.—Out 

19 of money in the Treasury not otherwise appro20 priated, there is hereby appropriated to the Highway 

21 Trust Fund $8,017,000,000.’’. 

22 (b) CONFORMING AMENDMENT.—The last sentence 

23 of section 9503(f)(1), as amended by subsection (a), is 

24 amended by striking ‘‘subsection’’ and inserting ‘‘para25 graph’’. 


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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall take effect on September 30, 2008. 

3 TITLE V—DISASTER RELIEF 

4 Subtitle A—Relief for Federally 

5 Declared Disasters 

6 SEC. 501. LOSSES ATTRIBUTABLE TO FEDERALLY DE7 CLARED DISASTERS. 

8 (a) WAIVER OF ADJUSTED GROSS INCOME LIMITA9 TION.— 

10 (1) IN GENERAL.—Subsection (h) of section 

11 165 is amended by redesignating paragraphs (3) and 

12 (4) as paragraphs (4) and (5), respectively, and by 

13 inserting after paragraph (2) the following new 

14 paragraph: 

15 ‘‘(3) SPECIAL RULE FOR LOSSES IN FEDERALLY

16 DECLARED DISASTERS.— 

17 ‘‘(A) IN GENERAL.—If an individual has a 

18 net disaster loss for any taxable year, the 

19 amount determined under paragraph (2)(A)(ii) 

20 shall be the sum of— 

21 ‘‘(i) such net disaster loss, and 

22 ‘‘(ii) so much of the excess referred to 

23 in the matter preceding clause (i) of para24 graph (2)(A) (reduced by the amount in 

25 clause (i) of this subparagraph) as exceeds 


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1 10 percent of the adjusted gross income of 

2 the individual. 

3 ‘‘(B) NET DISASTER LOSS.—For purposes 

4 of subparagraph (A), the term ‘net disaster 

5 loss’ means the excess of— 

6 ‘‘(i) the personal casualty losses— 

7 ‘‘(I) attributable to a federally 

8 declared disaster, and 

9 ‘‘(II) occurring in a disaster 

10 area, over 

11 ‘‘(ii) personal casualty gains. 

12 ‘‘(C) FEDERALLY DECLARED DISASTER.— 

13 For purposes of this paragraph— 

14 ‘‘(i) FEDERALLY DECLARED DIS15 ASTER.—The term ‘federally declared dis16 aster’ means any disaster subsequently de17 termined by the President of the United 

18 States to warrant assistance by the Fed19 eral Government under the Robert T. Staf20 ford Disaster Relief and Emergency Assist21 ance Act. 

22 ‘‘(ii) DISASTER AREA.—The term ‘dis23 aster area’ means the area so determined 

24 to warrant such assistance.’’. 

25 (2) CONFORMING AMENDMENTS.— 


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1 (A) Section 165(h)(4)(B) (as so redesig2 nated) is amended by striking ‘‘paragraph (2)’’ 

3 and inserting ‘‘paragraphs (2) and (3)’’. 

4 (B) Section 165(i)(1) is amended by strik5 ing ‘‘loss’’ and all that follows through ‘‘Act’’ 

6 and inserting ‘‘loss occurring in a disaster area 

7 (as defined by clause (ii) of subsection 

8 (h)(3)(C)) and attributable to a federally de9 clared disaster (as defined by clause (i) of such 

10 subsection)’’. 

11 (C) Section 165(i)(4) is amended by strik12 ing ‘‘Presidentially declared disaster (as defined 

13 by section 1033(h)(3))’’ and inserting ‘‘federally 

14 declared disaster (as defined by subsection 

15 (h)(3)(C)(i)’’. 

16 (D)(i) So much of subsection (h) of section 

17 1033 as precedes subparagraph (A) of para18 graph (1) thereof is amended to read as follows: 

19 ‘‘(h) SPECIAL RULES FOR PROPERTY DAMAGED BY

20 FEDERALLY DECLARED DISASTERS.— 

21 ‘‘(1) PRINCIPAL RESIDENCES.—If the tax22 payer’s principal residence or any of its contents is 

23 located in a disaster area and is compulsorily or in24 voluntarily converted as a result of a federally de25 clared disaster—’’. 


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1 (ii) Paragraph (2) of section 1033(h) is 

2 amended by striking ‘‘investment’’ and all that 

3 follows through ‘‘disaster’’ and inserting ‘‘in4 vestment located in a disaster area and 

5 compulsorily or involuntarily converted as a re6 sult of a federally declared disaster’’. 

7 (iii) Paragraph (3) of section 1033(h) is 

8 amended to read as follows: 

9 ‘‘(3) FEDERALLY DECLARED DISASTER; DIS10 ASTER AREA.—The terms ‘‘federally declared dis11 aster’’ and ‘‘disaster area’’ shall have the respective 

12 meaning given such terms by section 165(h)(3)(C).’’. 

13 (iv) Section 139(c)(2) is amended to read 

14 as follows: 

15 ‘‘(2) federally declared disaster (as defined by 

16 section 165(h)(3)(C)(i)),’’. 

17 (v) Subclause (II) of section 

18 172(b)(1)(F)(ii) is amended by striking ‘‘Presi19 dentially declared disasters (as defined in sec20 tion 1033(h)(3))’’ and inserting ‘‘federally de21 clared disasters (as defined by subsection 

22 (h)(3)(C)(i))’’. 

23 (vi) Subclause (III) of section 

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1 dentially declared disasters’’ and inserting ‘‘fed2 erally declared disasters’’. 

3 (vii) Subsection (a) of section 7508A is 

4 amended by striking ‘‘Presidentially declared 

5 disaster (as defined in section 1033(h)(3))’’ and 

6 inserting ‘‘federally declared disaster (as de7 fined by section 165(h)(3)(C)(i))’’. 

8 (b) INCREASE IN STANDARD DEDUCTION BY DIS9 ASTER CASUALTY LOSS.— 

10 (1) IN GENERAL.—Paragraph (1) of section 

11 63(c)is amended by striking ‘‘and’’ at the end of 

12 subparagraph (B), by striking the period at the end 

13 of subparagraph (C) and inserting ‘‘, and’’, and by 

14 adding at the end the following new subparagraph: 

15 ‘‘(D) the disaster loss deduction.’’. 

16 (2) DISASTER LOSS DEDUCTION.—Subsection 

17 (c) of section 63 is amended by adding at the end 

18 the following new paragraph: 

19 ‘‘(8) DISASTER LOSS DEDUCTION.—For the 

20 purposes of paragraph (1), the term ‘disaster loss 

21 deduction’ means the net disaster loss (as defined in 

22 section 165(h)(3)(B)).’’. 

23 (3) ALLOWANCE IN COMPUTING ALTERNATIVE

24 MINIMUM TAXABLE INCOME.—Subparagraph (E) of 

25 section 56(b)(1) is amended by adding at the end 


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1 the following new sentence: ‘‘The preceding sentence 

2 shall not apply to so much of the standard deduction 

3 as is determined under section 63(c)(1)(D).’’. 

4 (c) INCREASE IN LIMITATION ON INDIVIDUAL LOSS

5 PER CASUALTY.—Paragraph (1) of section 165(h) is 

6 amended by striking ‘‘$100’’ and inserting ‘‘$500’’. 

7 (d) EFFECTIVE DATES.— 

8 (1) IN GENERAL.—Except as provided by para9 graph (2), the amendments made by this section 

10 shall apply to taxable years beginning after Decem11 ber 31, 2007. 

12 (2) INCREASE IN LIMITATION ON INDIVIDUAL

13 LOSS PER CASUALTY.—The amendment made by 

14 subsection (c) shall apply to taxable years beginning 

15 after December 31, 2008. 

16 SEC. 502. EXPENSING OF QUALIFIED DISASTER EXPENSES. 

17 (a) IN GENERAL.—Part VI of subchapter B of chap18 ter 1 is amended by inserting after section 198 the fol19 lowing new section: 

20 ‘‘SEC. 198A. EXPENSING OF QUALIFIED DISASTER EX21 PENSES. 

22 ‘‘(a) IN GENERAL.—A taxpayer may elect to treat 

23 any qualified disaster expenses which are paid or incurred 

24 by the taxpayer as an expense which is not chargeable to 

25 capital account. Any expense which is so treated shall be 


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1 allowed as a deduction for the taxable year in which it 

2 is paid or incurred. 

3 ‘‘(b) QUALIFIED DISASTER EXPENSE.—For purposes 

4 of this section, the term ‘qualified disaster expense’ means 

5 any expenditure— 

6 ‘‘(1) which is paid or incurred in connection 

7 with a trade or business or with business-related 

8 property, 

9 ‘‘(2) which is— 

10 ‘‘(A) for the abatement or control of haz11 ardous substances that were released on ac12 count of a federally declared disaster, 

13 ‘‘(B) for the removal of debris from, or the 

14 demolition of structures on, real property which 

15 is business-related property damaged or de16 stroyed as a result of a federally declared dis17 aster, or 

18 ‘‘(C) for the repair of business-related 

19 property damaged as a result of a federally de20 clared disaster, and 

21 ‘‘(3) is otherwise chargeable to capital account. 

22 ‘‘(c) OTHER DEFINITIONS.—For purposes of this 

23 section— 

24 ‘‘(1) BUSINESS-RELATED PROPERTY.—The 

25 term ‘business-related property’ means property— 


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1 ‘‘(A) held by the taxpayer for use in a 

2 trade or business or for the production of in3 come, or 

4 ‘‘(B) described in section 1221(a)(1) in the 

5 hands of the taxpayer. 

6 ‘‘(2) FEDERALLY DECLARED DISASTER.—The 

7 term ‘federally declared disaster’ has the meaning 

8 given such term by section 165(h)(3)(C)(i). 

9 ‘‘(d) DEDUCTION RECAPTURED AS ORDINARY IN10 COME ON SALE, ETC.—Solely for purposes of section 

11 1245, in the case of property to which a qualified disaster 

12 expense would have been capitalized but for this section— 

13 ‘‘(1) the deduction allowed by this section for 

14 such expense shall be treated as a deduction for de15 preciation, and 

16 ‘‘(2) such property (if not otherwise section 

17 1245 property) shall be treated as section 1245 

18 property solely for purposes of applying section 1245 

19 to such deduction. 

20 ‘‘(e) COORDINATION WITH OTHER PROVISIONS.— 

21 Sections 198, 280B, and 468 shall not apply to amounts 

22 which are treated as expenses under this section. 

23 ‘‘(f) REGULATIONS.—The Secretary shall prescribe 

24 such regulations as may be necessary or appropriate to 

25 carry out the purposes of this section.’’. 


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1 (b) CLERICAL AMENDMENT.—The table of sections 

2 for part VI of subchapter B of chapter 1 is amended by 

3 inserting after the item relating to section 198 the fol4 lowing new item: 

‘‘Sec. 198A. Expensing of Qualified Disaster Expenses.’’. 

5 (c) EFFECTIVE DATE.—The amendments made by 

6 this section shall apply to amounts paid or incurred after 

7 December 31, 2007. 

8 SEC. 503. NET OPERATING LOSSES ATTRIBUTABLE TO FED9 ERALLY DECLARED DISASTERS. 

10 (a) IN GENERAL.—Paragraph (1) of section 172(b) 

11 is amended by adding at the end the following new sub12 paragraph: 

13 ‘‘(J) CERTAIN LOSSES ATTRIBUTABLE

14 FEDERALLY DECLARED DISASTERS.—In the 

15 case of a taxpayer who has a qualified disaster 

16 loss (as defined in subsection (j)), such loss 

17 shall be a net operating loss carryback to each 

18 of the 5 taxable years preceding the taxable 

19 year of such loss.’’. 

20 (b) QUALIFIED DISASTER LOSS.—Section 172 is 

21 amended by redesignating subsections (j) and (k) as sub22 sections (k) and (l), respectively, and by inserting after 

23 subsection (i) the following new subsection: 

24 ‘‘(j) RULES RELATING TO QUALIFIED DISASTER

25 LOSSES.—For purposes of this section— 


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1 ‘‘(1) IN GENERAL.—The term ‘qualified dis2 aster loss’ means the lesser of— 

3 ‘‘(A) the sum of— 

4 ‘‘(i) the losses allowable under section 

5 165 for the taxable year— 

6 ‘‘(I) attributable to a federally 

7 declared disaster (as defined in sec8 tion 165(h)(3)(C)(i)), and 

9 ‘‘(II) occurring in a disaster area 

10 (as defined in section 

11 165(h)(3)(C)(ii)), and 

12 ‘‘(ii) the deduction for the taxable 

13 year for qualified disaster expenses which 

14 is allowable under section 198A(a) or 

15 which would be so allowable if not other16 wise treated as an expense, or 

17 ‘‘(B) the net operating loss for such tax18 able year. 

19 ‘‘(2) COORDINATION WITH SUBSECTION

20 (b)(2).—For purposes of applying subsection (b)(2), 

21 a qualified disaster loss for any taxable year shall be 

22 treated in a manner similar to the manner in which 

23 a specified liability loss is treated. 

24 ‘‘(3) ELECTION.—Any taxpayer entitled to a 5- 

25 year carryback under subsection (b)(1)(J) from any 


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1 loss year may elect to have the carryback period 

2 with respect to such loss year determined without re3 gard to subsection (b)(1)(J). Such election shall be 

4 made in such manner as may be prescribed by the 

5 Secretary and shall be made by the due date (includ6 ing extensions of time) for filing the taxpayer’s re7 turn for the taxable year of the net operating loss. 

8 Such election, once made for any taxable year, shall 

9 be irrevocable for such taxable year.’’. 

10 (c) LOSS DEDUCTION ALLOWED IN COMPUTING AL11 TERNATIVE MINIMUM TAXABLE INCOME.—Subsection (d) 

12 of section 55 is amended by adding at the end the fol13 lowing new paragraph: 

14 ‘‘(3) NET OPERATING LOSS ATTRIBUTABLE TO

15 FEDERALLY DECLARED DISASTERS.—In the case of 

16 a taxpayer which has a qualified disaster loss (as de17 fined by section 172(b)(1)(J)) for the taxable year, 

18 paragraph (1) shall be applied by increasing the 

19 amount determined under subparagraph (A)(ii)(I) 

20 thereof by the sum of the carrybacks and carryovers 

21 of such loss.’’. 

22 (d) CONFORMING AMENDMENTS.— 

23 (1) Clause (ii) of section 172(b)(1)(F) is 

24 amended by inserting ‘‘or qualified disaster loss (as 


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1 defined in subsection (j))’’ before the period at the 

2 end of the last sentence. 

3 (2) Paragraph (1) of section 172(i) is amended 

4 by adding at the end the following new flush sen5 tence: 

6 ‘‘Such term shall not include any qualified disaster 

7 loss (as defined in subsection (j)).’ ’’’. 

8 (e) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to losses arising in taxable years 

10 beginning after December 31, 2007. 

11 SEC. 504. WAIVER OF CERTAIN MORTGAGE REVENUE BOND 

12 REQUIREMENTS FOLLOWING FEDERALLY DE13 CLARED DISASTERS. 

14 (a) IN GENERAL.—Paragraph (11) of section 143(k) 

15 is amended to read as follows: 

16 ‘‘(11) SPECIAL RULES FOR FEDERALLY DE17 CLARED DISASTERS.— 

18 ‘‘(A) PRINCIPAL RESIDENCE DE19 STROYED.—If the principal residence (within 

20 the meaning of section 121) of a taxpayer is— 

21 ‘‘(i) rendered unsafe for use as a resi22 dence by reason of a federally declared dis23 aster, or 

24 ‘‘(ii) demolished or relocated by rea25 son of an order of the government of a 


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1 State or political subdivision thereof on ac2 count of a federally declared disaster, 

3 then for the 2-year period beginning on the 

4 date of the disaster declaration, subsection 

5 (d)(1) shall not apply with respect to such tax6 payer and subsection (e) shall be applied by 

7 substituting ‘110’ for ‘90’ in paragraph (1) 

8 thereof. 

9 ‘‘(B) PRINCIPLE RESIDENCE DAMAGED.— 

10 ‘‘(i) IN GENERAL.—If the principal 

11 residence (within the meaning of section 

12 121) of a taxpayer resulting from a feder13 ally declared disaster was damaged, any 

14 owner-financing provided in connection 

15 with the repair or reconstruction of such 

16 residence shall be treated as a qualified re17 habilitation loan. 

18 ‘‘(ii) LIMITATION.—The aggregate 

19 owner-financing to which clause (i) applies 

20 shall not exceed the lesser of— 

21 ‘‘(I) the cost of such repair or re22 construction, or 

23 ‘‘(II) $150,000. 

24 ‘‘(C) FEDERALLY DECLARED DISASTER.— 

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1 erally declared disaster’ has the meaning given 

2 such term by section 165(h)(3)(C)(i).’’. 

3 (b) EFFECTIVE DATE.—The amendment made by 

4 subsection (a) shall apply to disasters occurring after De5 cember 31, 2007. 

6 SEC. 505. OTHER RELIEF FOR FEDERALLY DECLARED DIS7 ASTERS. 

8 (a) IN GENERAL.—Chapter 1 is amended by adding 

9 at the end the following new subchapter: 

10 ‘‘Subchapter Z—Relief for Federally Declared 

11 Disasters 

‘‘Sec. 1400U. Tax benefits for federally declared disaster areas. 

12 ‘‘SEC. 1400U. TAX BENEFITS FOR FEDERALLY DECLARED 

13 DISASTER AREAS. 

14 ‘‘(a) FEDERALLY DECLARED DISASTER.—For pur15 poses of this section— 

16 ‘‘(1) FEDERALLY DECLARED DISASTER.—The 

17 term ‘federally declared disaster’ means any disaster 

18 subsequently determined by the President of the 

19 United States to warrant assistance by the Federal 

20 Government under the Robert T. Stafford Disaster 

21 Relief and Emergency Assistance Act. 

22 ‘‘(2) DISASTER AREA.—The term ‘disaster area’ 

23 means the area so determined to warrant such as24 sistance. 


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1 ‘‘(b) SPECIAL RULES FOR USE OF RETIREMENT

2 FUNDS.— 

3 ‘‘(1) TAX-FAVORED WITHDRAWALS FROM RE4 TIREMENT PLANS.— 

5 ‘‘(A) IN GENERAL.—Section 72(t) shall not 

6 apply to any qualified disaster distribution. 

7 ‘‘(B) AGGREGATE DOLLAR LIMITATION.— 

8 ‘‘(i) IN GENERAL.—For purposes of 

9 this paragraph, the aggregate amount of 

10 distributions received by an individual 

11 which may be treated as qualified disaster 

12 distributions for any taxable year shall not 

13 exceed the excess (if any) of— 

14 ‘‘(I) $100,000, over 

15 ‘‘(II) the aggregate amounts 

16 treated as qualified disaster distribu17 tions received by such individual for 

18 all prior taxable years. 

19 ‘‘(ii) TREATMENT OF PLAN DISTRIBU20 TIONS.—If a distribution to an individual 

21 would (without regard to clause (i)) be a 

22 qualified disaster distribution, a plan shall 

23 not be treated as violating any requirement 

24 of this title merely because the plan treats 

25 such distribution as a qualified disaster 


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1 distribution, unless the aggregate amount 

2 of such distributions from all plans main3 tained by the employer (and any member 

4 of any controlled group which includes the 

5 employer) to such individual exceeds 

6 $100,000. 

7 ‘‘(iii) CONTROLLED GROUP.—For pur8 poses of clause (ii), the term ‘controlled 

9 group’ means any group treated as a single 

10 employer under subsection (b), (c), (m), or 

11 (o) of section 414. 

12 ‘‘(C) AMOUNT DISTRIBUTED MAY BE RE13 PAID.— 

14 ‘‘(i) IN GENERAL.—Any individual 

15 who receives a qualified disaster distribu16 tion may, at any time during the 3-year 

17 period beginning on the day after the date 

18 on which such distribution was received, 

19 make one or more contributions in an ag20 gregate amount not to exceed the amount 

21 of such distribution to an eligible retire22 ment plan of which such individual is a 

23 beneficiary and to which a rollover con24 tribution of such distribution could be 

25 made under section 402(c), 403(a)(4), 


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1 403(b)(8), 408(d)(3), or 457(e)(16), as the 

2 case may be. 

3 ‘‘(ii) TREATMENT OF REPAYMENTS OF

4 DISTRIBUTIONS FROM ELIGIBLE RETIRE5 MENT PLANS OTHER THAN IRAS.—For 

6 purposes of this title, if a contribution is 

7 made pursuant to clause (i) with respect to 

8 a qualified disaster distribution from an el9 igible retirement plan other than an indi10 vidual retirement plan, then the taxpayer 

11 shall, to the extent of the amount of the 

12 contribution, be treated as having received 

13 the qualified disaster distribution in an eli14 gible rollover distribution (as defined in 

15 section 402(c)(4)) and as having trans16 ferred the amount to the eligible retire17 ment plan in a direct trustee to trustee 

18 transfer within 60 days of the distribution. 

19 ‘‘(iii) TREATMENT OF REPAYMENTS

20 FOR DISTRIBUTIONS FROM IRAS.—For 

21 purposes of this title, if a contribution is 

22 made pursuant to clause (i) with respect to 

23 a qualified disaster distribution from an in24 dividual retirement plan (as defined by sec25 tion 7701(a)(37)), then, to the extent of 


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1 the amount of the contribution, the quali2 fied disaster distribution shall be treated 

3 as a distribution described in section 

4 408(d)(3) and as having been transferred 

5 to the eligible retirement plan in a direct 

6 trustee to trustee transfer within 60 days 

7 of the distribution. 

8 ‘‘(D) DEFINITIONS.—For purposes of this 

9 paragraph— 

10 ‘‘(i) QUALIFIED DISASTER DISTRIBU11 TION.—Except as provided in subpara12 graph (B), the term ‘qualified disaster dis13 tribution’ means, with respect to any feder14 ally declared disaster, any distribution— 

15 ‘‘(I) from an eligible retirement 

16 plan made during the 15-month pe17 riod beginning on the date on which 

18 such disaster occurred, and 

19 ‘‘(II) to an individual whose prin20 cipal place of abode on the date on 

21 which such disaster occurred is lo22 cated in the federally declared disaster 

23 area and who has sustained an eco24 nomic loss attributable to the federally 

25 declared disaster, 


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1 ‘‘(ii) ELIGIBLE RETIREMENT PLAN.— 

2 The term ‘eligible retirement plan’ shall 

3 have the meaning given such term by sec4 tion 402(c)(8)(B). 

5 ‘‘(E) INCOME INCLUSION SPREAD OVER 3- 

6 YEAR PERIOD.— 

7 ‘‘(i) IN GENERAL.—In the case of any 

8 qualified disaster distribution, unless the 

9 taxpayer elects not to have this subpara10 graph apply for any taxable year, any 

11 amount required to be included in gross in12 come for such taxable year shall be so in13 cluded ratably over the 3-taxable year pe14 riod beginning with such taxable year. 

15 ‘‘(ii) SPECIAL RULE.—For purposes of 

16 clause (i), rules similar to the rules of sub17 paragraph (E) of section 408A(d)(3) shall 

18 apply. 

19 ‘‘(F) SPECIAL RULES.— 

20 ‘‘(i) EXEMPTION OF DISTRIBUTIONS

21 FROM TRUSTEE TO TRUSTEE TRANSFER

22 AND WITHHOLDING RULES.—For purposes 

23 of sections 401(a)(31), 402(f), and 3405, 

24 qualified disaster distributions shall not be 

25 treated as eligible rollover distributions. 


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1 ‘‘(ii) QUALIFIED DISASTER DISTRIBU2 TIONS TREATED AS MEETING PLAN DIS3 TRIBUTION REQUIREMENTS.—For pur4 poses this title, a qualified disaster dis5 tribution shall be treated as meeting the 

6 requirements of sections 401(k)(2)(B)(i), 

7 403(b)(7)(A)(ii), 403(b)(11), and 

8 457(d)(1)(A). 

9 ‘‘(2) RECONTRIBUTIONS OF WITHDRAWALS FOR

10 HOME PURCHASES.— 

11 ‘‘(A) RECONTRIBUTIONS.— 

12 ‘‘(i) IN GENERAL.—Any individual 

13 who received a qualified distribution may, 

14 during the applicable period, make one or 

15 more contributions in an aggregate amount 

16 not to exceed the amount of such qualified 

17 distribution to an eligible retirement plan 

18 (as defined in section 402(c)(8)(B)) of 

19 which such individual is a beneficiary and 

20 to which a rollover contribution of such 

21 distribution could be made under section 

22 402(c), 403(a)(4), 403(b)(8), or 408(d)(3), 

23 as the case may be. 

24 ‘‘(ii) TREATMENT OF REPAYMENTS.— 

25 Rules similar to the rules of clauses (ii) 


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1 and (iii) of paragraph (1)(C) shall apply 

2 for purposes of this paragraph. 

3 ‘‘(B) QUALIFIED DISTRIBUTION.—For 

4 purposes of this paragraph, the term ‘qualified 

5 distribution’ means, with respect to any feder6 ally declared disaster, any distribution— 

7 ‘‘(i) described in section 

8 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but 

9 only to the extent such distribution relates 

10 to financial hardship), 403(b)(11)(B), or 

11 72(t)(2)(F), 

12 ‘‘(ii) received during the 6-month pe13 riod ending on the date on which the dis14 aster occurred, and 

15 ‘‘(iii) which was to be used to pur16 chase or construct a principal residence in 

17 the disaster area, but which was not so 

18 purchased or constructed on account of the 

19 federally declared disaster. 

20 ‘‘(C) APPLICABLE PERIOD.—For purposes 

21 of this paragraph, the term ‘applicable period’ 

22 means, with respect to any federally declared 

23 disaster, the 6-month period beginning on the 

24 date on which the disaster occurred. 

25 ‘‘(3) LOANS FROM QUALIFIED PLANS.— 


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1 ‘‘(A) INCREASE IN LIMIT ON LOANS NOT

2 TREATED AS DISTRIBUTIONS.—In the case of 

3 any loan from a qualified employer plan (as de4 fined under section 72(p)(4)) to a qualified in5 dividual with respect to a federally declared dis6 aster made during the 18-month period begin7 ning on the date on which such disaster oc8 curs— 

9 ‘‘(i) clause (i) of section 72(p)(2)(A) 

10 shall be applied by substituting ‘$100,000’ 

11 for ‘$50,000’, and 

12 ‘‘(ii) clause (ii) of such section shall 

13 be applied by substituting ‘the present 

14 value of the nonforfeitable accrued benefit 

15 of the employee under the plan’ for ‘one16 half of the present value of the nonforfeit17 able accrued benefit of the employee under 

18 the plan’. 

19 ‘‘(B) DELAY OF REPAYMENT.—In the case 

20 of a qualified individual with an outstanding 

21 loan on or after the date on which the federally 

22 declared disaster occurs from a qualified em23 ployer plan (as defined in section 72(p)(4))— 

24 ‘‘(i) if the due date pursuant to sub25 paragraph (B) or (C) of section 72(p)(2) 


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1 for any repayment with respect to such 

2 loan occurs during the 18-month period be3 ginning on the date on which the federally 

4 declared disaster occurs, such due date 

5 shall be delayed for 1 year, 

6 ‘‘(ii) any subsequent repayments with 

7 respect to any such loan shall be appro8 priately adjusted to reflect the delay in the 

9 due date under clause (i) and any interest 

10 accruing during such delay, and 

11 ‘‘(iii) in determining the 5-year period 

12 and the term of a loan under subpara13 graph (B) or (C) of section 72(p)(2), the 

14 period described in clause (i) shall be dis15 regarded. 

16 ‘‘(C) QUALIFIED INDIVIDUAL.—For pur17 poses of this subsection, the term ‘qualified in18 dividual’ means, with respect to any federally 

19 declared disaster, any individual whose principal 

20 place of abode on the date on which the feder21 ally declared disaster occurs is located in the 

22 disaster area and who has sustained an eco23 nomic loss by reason of such disaster. 

24 ‘‘(4) PROVISIONS RELATING TO PLAN AMEND25 MENTS.— 


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1 ‘‘(A) IN GENERAL.—If this paragraph ap2 plies to any amendment to any plan or annuity 

3 contract, such plan or contract shall be treated 

4 as being operated in accordance with the terms 

5 of the plan during the period described in sub6 paragraph (B)(ii)(I). 

7 ‘‘(B) AMENDMENTS TO WHICH PARAGRAPH

8 APPLIES.— 

9 ‘‘(i) IN GENERAL.—In the case of any 

10 federally declared disaster, this paragraph 

11 shall apply to any amendment to any plan 

12 or annuity contract which is made— 

13 ‘‘(I) pursuant to any provision of 

14 this subsection, or pursuant to any 

15 regulation issued by the Secretary or 

16 the Secretary of Labor under any pro17 vision of this subsection, and 

18 ‘‘(II) on or before the last day of 

19 the first plan year beginning on or 

20 after the first day of the second cal21 endar year following the calendar year 

22 in which the federally declared dis23 aster occurs, or such later date as the 

24 Secretary may prescribe. 


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1 In the case of a governmental plan (as de2 fined in section 414(d)), subclause (II) 

3 shall be applied by substituting the date 

4 which is 2 years after the date otherwise 

5 applied under subclause (II). 

6 ‘‘(ii) CONDITIONS.—In the case of any 

7 federally declared disaster, this paragraph 

8 shall not apply to any amendment unless— 

9 ‘‘(I) during the period beginning 

10 on the date that this subsection or the 

11 regulation described in clause (i)(I) 

12 takes effect with respect to such dis13 aster (or in the case of a plan or con14 tract amendment not required by this 

15 subsection or such regulation, the ef16 fective date specified by the plan with 

17 respect to such disaster) and ending 

18 on the date described in clause (i)(II) 

19 with respect to such disaster (or, if 

20 earlier, the date the plan or contract 

21 amendment is adopted), the plan or 

22 contract is operated as if such plan or 

23 contract amendment were in effect, 

24 and 


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1 ‘‘(II) such plan or contract 

2 amendment applies retroactively for 

3 such period. 

4 ‘‘(c) ADDITIONAL EXEMPTION FOR INDIVIDUALS

5 DISPLACED BY FEDERALLY DECLARED DISASTERS.— 

6 ‘‘(1) IN GENERAL.—In the case of taxable years 

7 of a natural person beginning in the taxable year in 

8 which a federally declared disaster occurs and the 

9 following taxable year, for purposes of this title, tax10 able income shall be reduced by $500 for each quali11 fied displaced individual of the taxpayer for the tax12 able year. 

13 ‘‘(2) LIMITATIONS.— 

14 ‘‘(A) DOLLAR LIMITATION.—The reduction 

15 under paragraph (1) with respect to any feder16 ally declared disaster, shall not exceed $2,000, 

17 reduced by the amount of the reduction under 

18 this subsection with respect to such disaster for 

19 all prior taxable years. 

20 ‘‘(B) INDIVIDUALS TAKEN INTO ACCOUNT

21 ONLY ONCE.—An individual shall not be taken 

22 into account under paragraph (1) with respect 

23 to any federally declared disaster if such indi24 vidual was taken into account under such paraVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00259 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 graph with respect to such disaster by the tax2 payer for any prior taxable year. 

3 ‘‘(C) IDENTIFYING INFORMATION RE4 QUIRED.—An individual shall not be taken into 

5 account under paragraph (1) for a taxable year 

6 unless the taxpayer identification number of 

7 such individual is included on the return of the 

8 taxpayer for such taxable year. 

9 ‘‘(3) QUALIFIED DISPLACED INDIVIDUAL.—For 

10 purposes of this section, in the case of any federally 

11 declared disaster, the term ‘qualified displaced indi12 vidual’ means, with respect to any taxpayer for any 

13 taxable year, any natural person if— 

14 ‘‘(A) such person’s principal place of abode 

15 on the date on which the disaster occurred was 

16 in the disaster area, 

17 ‘‘(B)(i) in the case of such an abode lo18 cated in the portion of a disaster area with re19 spect to which the President has determined in20 dividual or individual and public assistance is 

21 warranted from the Federal government, such 

22 person is displaced from such abode, or 

23 ‘‘(ii) in the case of such an abode located 

24 in any other portion of a disaster area, such 

25 person is displaced from such abode, and 


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1 ‘‘(I) such abode was damaged by the 

2 disaster, or 

3 ‘‘(II) such person was evacuated from 

4 such abode by reason of the disaster, and 

5 ‘‘(C) such person is provided housing free 

6 of charge by the taxpayer in the principal resi7 dence of the taxpayer for a period of 60 con8 secutive days which ends in such taxable year. 

9 Such term shall not include the spouse or any de10 pendent of the taxpayer. 

11 ‘‘(4) COMPENSATION FOR HOUSING.—No de12 duction shall be allowed under this subsection if the 

13 taxpayer receives any rent or other amount (from 

14 any source) in connection with the providing of such 

15 housing. 

16 ‘‘(d) EMPLOYEE RETENTION CREDIT FOR EMPLOY17 ERS AFFECTED BY FEDERALLY DECLARED DISASTER.— 

18 ‘‘(1) IN GENERAL.—For purposes of section 38, 

19 in the case of an eligible employer, the employee dis20 aster retention credit for any taxable year is an 

21 amount equal to 40 percent of the qualified wages 

22 with respect to each eligible employee of such em23 ployer for such taxable year. For purposes of the 

24 preceding sentence, the amount of qualified wages 


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1 which may be taken into account with respect to any 

2 individual shall not exceed $6,000. 

3 ‘‘(2) DEFINITIONS.—For purposes of this sub4 section— 

5 ‘‘(A) ELIGIBLE EMPLOYER.—The term ‘eli6 gible employer’ means, with respect to any fed7 erally declared disaster, any employer— 

8 ‘‘(i) which conducted an active trade 

9 or business on the date such disaster oc10 curred in the disaster area, and 

11 ‘‘(ii) with respect to whom the trade 

12 or business described in clause (i) is inop13 erable on any day during the 4-month pe14 riod beginning on the date the disaster oc15 curred, as a result of damage sustained by 

16 reason of the disaster. 

17 ‘‘(B) ELIGIBLE EMPLOYEE.—In the case 

18 of any federally declared disaster, the term ‘eli19 gible employee’ means, with respect to an eligi20 ble employer, an employee whose principal place 

21 of employment on the date on which such dis22 aster occurred, with such eligible employer was 

23 in the disaster area. 

24 ‘‘(C) QUALIFIED WAGES.—The term 

25 ‘qualified wages’ means wages (as defined in 


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1 section 51(c)(1), but without regard to section 

2 3306(b)(2)(B)) paid or incurred by an eligible 

3 employer with respect to an eligible employee on 

4 any day during any portion of the 4-month pe5 riod described in subparagraph (A)(ii) during 

6 which the trade or business described in sub7 paragraph (A) is inoperable at the principal 

8 place of employment by reason of the federally 

9 declared disaster. For purposes of this subpara10 graph, a trade or business shall be treated as 

11 inoperable if it is unable to conduct significant 

12 operations. Such term shall include wages paid 

13 without regard to whether the employee per14 forms no services, performs services at a dif15 ferent place of employment than such principal 

16 place of employment, or performs services at 

17 such principal place of employment before sig18 nificant operations have resumed. 

19 ‘‘(3) CERTAIN RULES TO APPLY.—For purposes 

20 of this subsection, rules similar to the rules of sec21 tions 51(i)(1) and 52 shall apply. 

22 ‘‘(4) EMPLOYEE NOT TAKEN INTO ACCOUNT

23 MORE THAN ONCE.—An employee shall not be treat24 ed as an eligible employee for purposes of this sub25 section for any period with respect to any employer 


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1 if such employer is allowed a credit under section 51 

2 with respect to such employee for such period. 

3 ‘‘(e) EXCLUSIONS OF CERTAIN CANCELLATIONS OF

4 INDEBTEDNESS BY REASON OF FEDERALLY DECLARED

5 DISASTERS.— 

6 ‘‘(1) IN GENERAL.—For purposes of this title, 

7 gross income shall not include any amount which 

8 (but for this subsection) would be includible in gross 

9 income by reason of the discharge (in whole or in 

10 part) of indebtedness of a natural person described 

11 in paragraph (2) by an applicable entity (as defined 

12 in section 6050P(c)(1) of such Code) during the 18- 

13 month period beginning on the date on which the 

14 disaster described in paragraph (2) occurs. 

15 ‘‘(2) PERSONS DESCRIBED.—A natural person 

16 is described in this paragraph with respect to any 

17 federally declared disaster if the principal place of 

18 abode of such person on the date on which the dis19 aster occurred was located— 

20 ‘‘(A) in any portion of the disaster area 

21 with respect to which the President has deter22 mined individual or individual and public assist23 ance is warranted from the Federal govern24 ment, or 


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1 ‘‘(B) in the disaster area (but outside the 

2 portion of the disaster area described in sub3 paragraph (A)) and such person suffered eco4 nomic loss by reason of the disaster. 

5 ‘‘(3) EXCEPTIONS.— 

6 ‘‘(A) BUSINESS INDEBTEDNESS.—Para7 graph (1) shall not apply to any indebtedness 

8 incurred in connection with a trade or business. 

9 ‘‘(B) REAL PROPERTY OUTSIDE CORE DIS10 ASTER AREA.—Paragraph (1) shall not apply to 

11 any discharge of indebtedness to the extent that 

12 real property constituting security for such in13 debtedness is located outside of the disaster 

14 area. 

15 ‘‘(4) DENIAL OF DOUBLE BENEFIT.—For pur16 poses of this title, the amount excluded from gross 

17 income under paragraph (1) shall be treated in the 

18 same manner as an amount excluded under section 

19 108(a). 

20 ‘‘(f) EXTENSION OF REPLACEMENT PERIOD FOR

21 NONRECOGNITION OF GAIN FOR PROPERTY LOCATED IN

22 FEDERALLY DECLARED DISASTER AREAS.—In the case 

23 of any federally declared disaster area, clause (i) of section 

24 1033(a)(2)(B) shall be applied by substituting ‘5 years’ 

25 for ‘2 years’ with respect to property in the disaster area 


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1 which is compulsorily or involuntarily converted on or 

2 after the date on which such disaster occurred, by reason 

3 of the disaster, but only if substantially all of the use of 

4 the replacement property is in such area. 

5 ‘‘(g) TEMPORARY SUSPENSION OF LIMITATIONS ON

6 CHARITABLE CONTRIBUTIONS.— 

7 ‘‘(1) IN GENERAL.—Except as otherwise pro8 vided in paragraph (2), section 170(b) shall not 

9 apply to qualified contributions and such contribu10 tions shall not be taken into account for purposes of 

11 applying subsections (b) and (d) of section 170 to 

12 other contributions. 

13 ‘‘(2) TREATMENT OF EXCESS CONTRIBU14 TIONS.—For purposes of section 170— 

15 ‘‘(A) INDIVIDUALS.—In the case of an in16 dividual— 

17 ‘‘(i) LIMITATION.—Any qualified con18 tribution shall be allowed only to the ex19 tent that the aggregate of such contribu20 tions does not exceed the excess of the tax21 payer’s contribution base (as defined in 

22 subparagraph (G) of section 170(b)(1)) 

23 over the amount of all other charitable 

24 contributions allowed under section 

25 170(b)(1). 


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1 ‘‘(ii) CARRYOVER.—If the aggregate 

2 amount of qualified contributions made in 

3 the contribution year (within the meaning 

4 of section 170(d)(1)) exceeds the limitation 

5 of clause (i), such excess shall be added to 

6 the excess described in the portion of sub7 paragraph (A) of such section which pre8 cedes clause (i) thereof for purposes of ap9 plying such section. 

10 ‘‘(B) CORPORATIONS.—In the case of a 

11 corporation— 

12 ‘‘(i) LIMITATION.—Any qualified con13 tribution shall be allowed only to the ex14 tent that the aggregate of such contribu15 tions does not exceed the excess of the tax16 payer’s taxable income (as determined 

17 under paragraph (2) of section 170(b)) 

18 over the amount of all other charitable 

19 contributions allowed under such para20 graph. 

21 ‘‘(ii) CARRYOVER.—Rules similar to 

22 the rules of subparagraph (A)(ii) shall 

23 apply for purposes of this subparagraph. 

24 ‘‘(3) EXCEPTION TO OVERALL LIMITATION ON

25 ITEMIZED DEDUCTIONS.—So much of any deduction 


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1 allowed under section 170 as does not exceed the 

2 qualified contributions paid during the taxable year 

3 shall not be treated as an itemized deduction for 

4 purposes of section 68. 

5 ‘‘(4) QUALIFIED CONTRIBUTIONS.— 

6 ‘‘(A) IN GENERAL.—For purposes of this 

7 subsection, the term ‘qualified contribution’ 

8 means, with respect to an federally declared dis9 aster, any charitable contribution (as defined in 

10 section 170(c)) if— 

11 ‘‘(i) such contribution— 

12 ‘‘(I) is paid during the 18-month 

13 period beginning on the date on which 

14 the disaster occurs in cash to an orga15 nization described in section 

16 170(b)(1)(A), and 

17 ‘‘(II) is made for relief efforts in 

18 the disaster area, 

19 ‘‘(ii) the taxpayer obtains from such 

20 organization contemporaneous written ac21 knowledgment (within the meaning of sec22 tion 170(f)(8)) that such contribution was 

23 used (or is to be used) for relief efforts in 

24 the disaster area, and 


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1 ‘‘(iii) the taxpayer has elected the ap2 plication of this subsection with respect to 

3 such contribution. 

4 ‘‘(B) EXCEPTION.—Such term shall not in5 clude a contribution by a donor if the contribu6 tion is— 

7 ‘‘(i) to an organization described in 

8 section 509(a)(3), or 

9 ‘‘(ii) for establishment of a new, or 

10 maintenance of an existing, donor advised 

11 fund (as defined in section 4966(d)(2)). 

12 ‘‘(C) APPLICATION OF ELECTION TO PART13 NERSHIPS AND S CORPORATIONS.—In the case 

14 of a partnership or S corporation, the election 

15 under subparagraph (A)(iii) shall be made sepa16 rately by each partner or shareholder. 

17 ‘‘(h) INCREASE IN STANDARD MILEAGE RATE FOR

18 CHARITABLE USE OF VEHICLES.—In the case of a feder19 ally declared disaster, notwithstanding section 170(i), for 

20 purposes of computing the deduction under section 170 

21 for use of a vehicle described in subsection (f)(12)(E)(i) 

22 of such section for provision of relief related to the disaster 

23 during the 18-month period beginning on the date on 

24 which such disaster occurred, the standard mileage rate 

25 shall be 70 percent of the standard mileage rate in effect 


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1 under section 162(a) at the time of such use. Any increase 

2 under this subsection shall be rounded to the next highest 

3 cent. 

4 ‘‘(i) MILEAGE REIMBURSEMENTS TO CHARITABLE

5 VOLUNTEERS EXCLUDED FROM GROSS INCOME.— 

6 ‘‘(1) IN GENERAL.—For purposes of this title, 

7 in the case of a federally declared disaster, gross in8 come of an individual for taxable years ending on or 

9 after the date on which the disaster occurs, does not 

10 include amounts received, from an organization de11 scribed in section 170(c), as reimbursement of oper12 ating expenses with respect to use of a passenger 

13 automobile for the benefit of such organization in 

14 connection with providing relief relating to the dis15 aster during the 18-month period beginning on the 

16 date on which such disaster occurred. The preceding 

17 sentence shall apply only to the extent that the ex18 penses which are reimbursed would be deductible 

19 under this chapter if section 274(d) were applied— 

20 ‘‘(A) by using the standard business mile21 age rate in effect under section 162(a) at the 

22 time of such use, and 

23 ‘‘(B) as if the individual were an employee 

24 of an organization not described in section 

25 170(c). 


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1 ‘‘(2) APPLICATION TO VOLUNTEER SERVICES

2 ONLY.—Paragraph (1) shall not apply with respect 

3 to any expenses relating to the performance of serv4 ices for compensation. 

5 ‘‘(3) NO DOUBLE BENEFIT.—No deduction or 

6 credit shall be allowed under any other provision of 

7 this title with respect to the expenses excludable 

8 from gross income under paragraph (1).’’. 

9 (b) CONFORMING AMENDMENT.—Section 38(b) is 

10 amended by striking ‘‘plus’’ at the end of paragraph (32), 

11 by striking the period at the end of paragraph (33) and 

12 inserting ‘‘, plus’’, and by adding at the end the following 

13 new paragraph: 

14 ‘‘(34) the employee disaster retention credit 

15 under section 1400U(d).’’. 

16 (c) CLERICAL AMENDMENT.—The table of sub17 chapters for chapter 1 is amended by adding at the end 

18 the following new item: 

‘‘SUBCHAPTER Z—RELIEF FOR FEDERALLY DECLARED DISASTERS’’. 

19 (d) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to disasters occurring after Decem21 ber 31, 2007. 

22 SEC. 506. SUNSET. 

23 The amendments made by this subtitle shall not 

24 apply to federally declared disasters (as defined in section 

25 165(h)(3)(C)(i) of the Internal Revenue Code of 1986, as 


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1 added by this subtitle) (casualties, in the case of the 

2 amendment made by section 511(c)) occurring after De3 cember 31, 2009. The Internal Revenue Code of 1986 

4 shall be applied and administered with respect to disasters 

5 and casualties described in the preceding sentence as if 

6 the amendments so described had never been enacted. 

7 Subtitle B—Other Disaster Relief 

8 Provisions 

9 SEC. 511. RESTRUCTURING OF NEW YORK LIBERTY ZONE 

10 TAX CREDITS. 

11 (a) IN GENERAL.—Part I of subchapter Y of chapter 

12 1 is amended by redesignating section 1400L as section 

13 1400K and by adding at the end the following new section: 

14 ‘‘SEC. 1400L. NEW YORK LIBERTY ZONE TAX CREDITS. 

15 ‘‘(a) IN GENERAL.—In the case of a New York Lib16 erty Zone governmental unit, there shall be allowed as a 

17 credit against any taxes imposed for any payroll period 

18 by section 3402 for which such governmental unit is liable 

19 under section 3403 an amount equal to so much of the 

20 portion of the qualifying project expenditure amount allo21 cated under subsection (b)(3) to such governmental unit 

22 for the calendar year as is allocated by such governmental 

23 unit to such period under subsection (b)(4). 

24 ‘‘(b) QUALIFYING PROJECT EXPENDITURE

25 AMOUNT.—For purposes of this section— 


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1 ‘‘(1) IN GENERAL.—The term ‘qualifying 

2 project expenditure amount’ means, with respect to 

3 any calendar year, the sum of— 

4 ‘‘(A) the total expenditures paid or in5 curred during such calendar year by all New 

6 York Liberty Zone governmental units and the 

7 Port Authority of New York and New Jersey 

8 for any portion of qualifying projects located 

9 wholly within the City of New York, New York, 

10 and 

11 ‘‘(B) any such expenditures— 

12 ‘‘(i) paid or incurred in any preceding 

13 calendar year which begins after the date 

14 of enactment of this section, and 

15 ‘‘(ii) not previously allocated under 

16 paragraph (3). 

17 ‘‘(2) QUALIFYING PROJECT.—The term ‘quali18 fying project’ means any transportation infrastruc19 ture project, including highways, mass transit sys20 tems, railroads, airports, ports, and waterways, in or 

21 connecting with the New York Liberty Zone (as de22 fined in section 1400K(h)), which is designated as a 

23 qualifying project under this section jointly by the 

24 Governor of the State of New York and the Mayor 

25 of the City of New York, New York. 


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1 ‘‘(3) GENERAL ALLOCATION.— 

2 ‘‘(A) IN GENERAL.—The Governor of the 

3 State of New York and the Mayor of the City 

4 of New York, New York, shall jointly allocate to 

5 each New York Liberty Zone governmental unit 

6 the portion of the qualifying project expenditure 

7 amount which may be taken into account by 

8 such governmental unit under subsection (a) for 

9 any calendar year in the credit period. 

10 ‘‘(B) AGGREGATE LIMIT.—The aggregate 

11 amount which may be allocated under subpara12 graph (A) for all calendar years in the credit 

13 period shall not exceed $2,000,000,000. 

14 ‘‘(C) ANNUAL LIMIT.—The aggregate 

15 amount which may be allocated under subpara16 graph (A) for any calendar year in the credit 

17 period shall not exceed the sum of— 

18 ‘‘(i) $115,000,000 ($425,000,000 in 

19 the case of the last 2 years in the credit 

20 period), plus 

21 ‘‘(ii) the aggregate amount authorized 

22 to be allocated under this paragraph for all 

23 preceding calendar years in the credit pe24 riod which was not so allocated. 


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1 ‘‘(D) UNALLOCATED AMOUNTS AT END OF

2 CREDIT PERIOD.—If, as of the close of the cred3 it period, the amount under subparagraph (B) 

4 exceeds the aggregate amount allocated under 

5 subparagraph (A) for all calendar years in the 

6 credit period, the Governor of the State of New 

7 York and the Mayor of the City of New York, 

8 New York, may jointly allocate to New York 

9 Liberty Zone governmental units for any cal10 endar year in the 5-year period following the 

11 credit period an amount equal to— 

12 ‘‘(i) the lesser of— 

13 ‘‘(I) such excess, or 

14 ‘‘(II) the qualifying project ex15 penditure amount for such calendar 

16 year, reduced by 

17 ‘‘(ii) the aggregate amount allocated 

18 under this subparagraph for all preceding 

19 calendar years. 

20 ‘‘(4) ALLOCATION TO PAYROLL PERIODS.— 

21 Each New York Liberty Zone governmental unit 

22 which has been allocated a portion of the qualifying 

23 project expenditure amount under paragraph (3) for 

24 a calendar year may allocate such portion to payroll 


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1 periods beginning in such calendar year as such gov2 ernmental unit determines appropriate. 

3 ‘‘(c) CARRYOVER OF UNUSED ALLOCATIONS.— 

4 ‘‘(1) IN GENERAL.—Except as provided in para5 graph (2), if the amount allocated under subsection 

6 (b)(3) to a New York Liberty Zone governmental 

7 unit for any calendar year exceeds the aggregate 

8 taxes imposed by section 3402 for which such gov9 ernmental unit is liable under section 3403 for peri10 ods beginning in such year, such excess shall be car11 ried to the succeeding calendar year and added to 

12 the allocation of such governmental unit for such 

13 succeeding calendar year. 

14 ‘‘(2) REALLOCATION.—If a New York Liberty 

15 Zone governmental unit does not use an amount al16 located to it under subsection (b)(3) within the time 

17 prescribed by the Governor of the State of New York 

18 and the Mayor of the City of New York, New York, 

19 then such amount shall after such time be treated 

20 for purposes of subsection (b)(3) in the same man21 ner as if it had never been allocated. 

22 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur23 poses of this section— 


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1 ‘‘(1) CREDIT PERIOD.—The term ‘credit period’ 

2 means the 12-year period beginning on January 1, 

3 2009. 

4 ‘‘(2) NEW YORK LIBERTY ZONE GOVERN5 MENTAL UNIT.—The term ‘New York Liberty Zone 

6 governmental unit’ means— 

7 ‘‘(A) the State of New York, 

8 ‘‘(B) the City of New York, New York, and 

9 ‘‘(C) any agency or instrumentality of such 

10 State or City. 

11 ‘‘(3) TREATMENT OF FUNDS.—Any expenditure 

12 for a qualifying project taken into account for pur13 poses of the credit under this section shall be consid14 ered State and local funds for the purpose of any 

15 Federal program. 

16 ‘‘(4) TREATMENT OF CREDIT AMOUNTS FOR

17 PURPOSES OF WITHHOLDING TAXES.—For purposes 

18 of this title, a New York Liberty Zone governmental 

19 unit shall be treated as having paid to the Secretary, 

20 on the day on which wages are paid to employees, 

21 an amount equal to the amount of the credit allowed 

22 to such entity under subsection (a) with respect to 

23 such wages, but only if such governmental unit de24 ducts and withholds wages for such payroll period 

25 under section 3401 (relating to wage withholding). 


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1 ‘‘(e) REPORTING.—The Governor of the State of New 

2 York and the Mayor of the City of New York, New York, 

3 shall jointly submit to the Secretary an annual report— 

4 ‘‘(1) which certifies— 

5 ‘‘(A) the qualifying project expenditure 

6 amount for the calendar year, and 

7 ‘‘(B) the amount allocated to each New 

8 York Liberty Zone governmental unit under 

9 subsection (b)(3) for the calendar year, and 

10 ‘‘(2) includes such other information as the 

11 Secretary may require to carry out this section. 

12 ‘‘(f) GUIDANCE.—The Secretary may prescribe such 

13 guidance as may be necessary or appropriate to ensure 

14 compliance with the purposes of this section.’’. 

15 (b) TERMINATION OF SPECIAL ALLOWANCE AND EX16 PENSING.—Subparagraph (A) of section 1400K(b)(2), as 

17 redesignated by subsection (a), is amended by striking the 

18 parenthetical therein and inserting ‘‘(in the case of non19 residential real property and residential rental property, 

20 the date of the enactment of the Jobs, Energy, Families, 

21 and Disaster Relief Act of 2008 or, if acquired pursuant 

22 to a binding contract in effect on such enactment date, 

23 December 31, 2009)’’. 

24 (c) CONFORMING AMENDMENTS.— 


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1 (1) Section 38(c)(3)(B) is amended by striking 

2 ‘‘section 1400L(a)’’ and inserting ‘‘section 

3 1400K(a)’’. 

4 (2) Section 168(k)(2)(D)(ii) is amended by 

5 striking ‘‘section 1400L(c)(2)’’ and inserting ‘‘sec6 tion 1400K(c)(2)’’. 

7 (3) The table of sections for part I of sub8 chapter Y of chapter 1 is amended by redesignating 

9 the item relating to section 1400L as an item relat10 ing to section 1400K and by inserting after such 

11 item the following new item: 

‘‘Sec. 1400L. New York Liberty Zone tax credits.’’. 

12 (d) EFFECTIVE DATE.—The amendments made by 

13 this section shall take effect on the date of the enactment 

14 of this Act. 

15 SEC. 512. REPORTING REQUIREMENTS RELATING TO DIS16 ASTER RELIEF CONTRIBUTIONS. 

17 (a) IN GENERAL.—Section 6033(b) is amended by 

18 striking ‘‘and’’ at the end of paragraph (13), by redesig19 nating paragraph (14) as paragraph (15), and by adding 

20 after paragraph (13) the following new paragraph: 

21 ‘‘(14) such information as the Secretary may 

22 require with respect to disaster relief activities, in23 cluding the amount and use of qualified contribu24 tions to which sections 1400S(a) and 1400U(g) 

25 apply, and’’. 


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1 (b) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to returns the due date for which 

3 (determined without regard to any extension) occurs after 

4 December 31, 2008. 

5 TITLE VI—REVENUE 

6 PROVISIONS 

7 SEC. 601. NONQUALIFIED DEFERRED COMPENSATION 

8 FROM CERTAIN TAX INDIFFERENT PARTIES. 

9 (a) IN GENERAL.—Subpart B of part II of sub10 chapter E of chapter 1 is amended by inserting after sec11 tion 457 the following new section: 

12 ‘‘SEC. 457A. NONQUALIFIED DEFERRED COMPENSATION 

13 FROM CERTAIN TAX INDIFFERENT PARTIES. 

14 ‘‘(a) IN GENERAL.—Any compensation which is de15 ferred under a nonqualified deferred compensation plan of 

16 a nonqualified entity shall be includible in gross income 

17 when there is no substantial risk of forfeiture of the rights 

18 to such compensation. 

19 ‘‘(b) NONQUALIFIED ENTITY.—For purposes of this 

20 section, the term ‘nonqualified entity’ means— 

21 ‘‘(1) any foreign corporation unless substan22 tially all of its income is— 

23 ‘‘(A) effectively connected with the conduct 

24 of a trade or business in the United States, or 


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1 ‘‘(B) subject to a comprehensive foreign in2 come tax, and 

3 ‘‘(2) any partnership unless substantially all of 

4 its income is allocated to persons other than— 

5 ‘‘(A) foreign persons with respect to whom 

6 such income is not subject to a comprehensive 

7 foreign income tax, and 

8 ‘‘(B) organizations which are exempt from 

9 tax under this title. 

10 ‘‘(c) DETERMINABILITY OF AMOUNTS OF COMPENSA11 TION.— 

12 ‘‘(1) IN GENERAL.—If the amount of any com13 pensation is not determinable at the time that such 

14 compensation is otherwise includible in gross income 

15 under subsection (a)— 

16 ‘‘(A) such amount shall be so includible in 

17 gross income when determinable, and 

18 ‘‘(B) the tax imposed under this chapter 

19 for the taxable year in which such compensation 

20 is includible in gross income shall be increased 

21 by the sum of— 

22 ‘‘(i) the amount of interest determined 

23 under paragraph (2), and 

24 ‘‘(ii) an amount equal to 20 percent of 

25 the amount of such compensation. 


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1 ‘‘(2) INTEREST.—For purposes of paragraph 

2 (1)(B)(i), the interest determined under this para3 graph for any taxable year is the amount of interest 

4 at the underpayment rate under section 6621 plus 

5 1 percentage point on the underpayments that would 

6 have occurred had the deferred compensation been 

7 includible in gross income for the taxable year in 

8 which first deferred or, if later, the first taxable year 

9 in which such deferred compensation is not subject 

10 to a substantial risk of forfeiture. 

11 ‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.— 

12 For purposes of this section— 

13 ‘‘(1) SUBSTANTIAL RISK OF FORFEITURE.— 

14 ‘‘(A) IN GENERAL.—The rights of a person 

15 to compensation shall be treated as subject to 

16 a substantial risk of forfeiture only if such per17 son’s rights to such compensation are condi18 tioned upon the future performance of substan19 tial services by any individual. 

20 ‘‘(B) EXCEPTION FOR COMPENSATION

21 BASED ON GAIN RECOGNIZED ON AN INVEST22 MENT ASSET.— 

23 ‘‘(i) IN GENERAL.—To the extent pro24 vided in regulations prescribed by the Sec25 retary, if compensation is determined solely 


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1 by reference to the amount of gain recog2 nized on the disposition of an investment 

3 asset, such compensation shall be treated 

4 as subject to a substantial risk of for5 feiture until the date of such disposition. 

6 ‘‘(ii) INVESTMENT ASSET.—For pur7 poses of clause (i), the term ‘investment 

8 asset’ means any single asset (other than 

9 an investment fund or similar entity)— 

10 ‘‘(I) acquired directly by an in11 vestment fund or similar entity, 

12 ‘‘(II) with respect to which such 

13 entity does not (nor does any person 

14 related to such entity) participate in 

15 the active management of such asset 

16 (or if such asset is an interest in an 

17 entity, in the active management of 

18 the activities of such entity), and 

19 ‘‘(III) substantially all of any 

20 gain on the disposition of which (other 

21 than such deferred compensation) is 

22 allocated to investors in such entity. 

23 ‘‘(iii) COORDINATION WITH SPECIAL

24 RULE.—Paragraph (3)(B) shall not apply 


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1 to any compensation to which clause (i) 

2 applies. 

3 ‘‘(2) COMPREHENSIVE FOREIGN INCOME TAX.— 

4 The term ‘comprehensive foreign income tax’ means, 

5 with respect to any foreign person, the income tax 

6 of a foreign country if— 

7 ‘‘(A) such person is eligible for the benefits 

8 of a comprehensive income tax treaty between 

9 such foreign country and the United States, or 

10 ‘‘(B) such person demonstrates to the sat11 isfaction of the Secretary that such foreign 

12 country has a comprehensive income tax. 

13 ‘‘(3) NONQUALIFIED DEFERRED COMPENSA14 TION PLAN.— 

15 ‘‘(A) IN GENERAL.—The term ‘non16 qualified deferred compensation plan’ has the 

17 meaning given such term under section 

18 409A(d), except that such term shall include 

19 any plan that provides a right to compensation 

20 based on the appreciation in value of a specified 

21 number of equity units of the service recipient. 

22 ‘‘(B) EXCEPTION.—Compensation shall 

23 not be treated as deferred for purposes of this 

24 section if the service provider receives payment 

25 of such compensation not later than 12 months 


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1 after the end of the taxable year of the service 

2 recipient during which the right to the payment 

3 of such compensation is no longer subject to a 

4 substantial risk of forfeiture. 

5 ‘‘(4) EXCEPTION FOR CERTAIN COMPENSATION

6 WITH RESPECT TO EFFECTIVELY CONNECTED IN7 COME.—In the case a foreign corporation with in8 come which is taxable under section 882, this section 

9 shall not apply to compensation which, had such 

10 compensation had been paid in cash on the date that 

11 such compensation ceased to be subject to a sub12 stantial risk of forfeiture, would have been deduct13 ible by such foreign corporation against such income. 

14 ‘‘(5) APPLICATION OF RULES.—Rules similar to 

15 the rules of paragraphs (5) and (6) of section 

16 409A(d) shall apply. 

17 ‘‘(e) REGULATIONS.—The Secretary shall prescribe 

18 such regulations as may be necessary or appropriate to 

19 carry out the purposes of this section, including regula20 tions disregarding a substantial risk of forfeiture in cases 

21 where necessary to carry out the purposes of this section. 

22 ‘‘(f) TERMINATION.—This section shall not apply to 

23 amounts deferred which are attributable to services per24 formed after December 31, 2018.’’. 


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1 (b) CONFORMING AMENDMENT.—Section 26(b)(2), 

2 as amended by the Housing Assistance Tax Act of 2008, 

3 is amended by striking ‘‘and’’ at the end of subparagraph 

4 (V), by striking the period at the end of subparagraph 

5 (W) and inserting ‘‘, and’’, and by adding at the end the 

6 following new subparagraph: 

7 ‘‘(X) section 457A(c)(1)(B) (relating to de8 terminability of amounts of compensation).’’. 

9 (c) CLERICAL AMENDMENT.—The table of sections 

10 of subpart B of part II of subchapter E of chapter 1 is 

11 amended by inserting after the item relating to section 

12 457 the following new item: 

‘‘Sec. 457A. Nonqualified deferred compensation from certain tax indifferent 

parties.’’. 

13 (d) EFFECTIVE DATE.— 

14 (1) IN GENERAL.—Except as otherwise pro15 vided in this subsection, the amendments made by 

16 this section shall apply to amounts deferred which 

17 are attributable to services performed after Decem18 ber 31, 2008. 

19 (2) APPLICATION TO EXISTING DEFERRALS.— 

20 In the case of any amount deferred to which the 

21 amendments made by this section do not apply solely 

22 by reason of the fact that the amount is attributable 

23 to services performed before January 1, 2009, to the 

24 extent such amount is not includible in gross income 


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1 in a taxable year beginning before 2018, such 

2 amounts shall be includible in gross income in the 

3 later of— 

4 (A) the last taxable year beginning before 

5 2018, or 

6 (B) the taxable year in which there is no 

7 substantial risk of forfeiture of the rights to 

8 such compensation (determined in the same 

9 manner as determined for purposes of section 

10 457A of the Internal Revenue Code of 1986, as 

11 added by this section). 

12 (3) CHARITABLE CONTRIBUTIONS OF EXISTING

13 DEFERRALS PERMITTED.— 

14 (A) IN GENERAL.—Subsection (b) of sec15 tion 170 of the Internal Revenue Code of 1986 

16 shall not apply to (and subsections (b) and (d) 

17 of such section shall be applied without regard 

18 to) so much of the taxpayer’s qualified con19 tributions made during the taxpayer’s last tax20 able year beginning before 2018 as does not ex21 ceed the taxpayer’s qualified inclusion amount. 

22 For purposes of subsection (b) of section 170 of 

23 such Code, the taxpayer’s contribution base for 

24 such last taxable year shall be reduced by the 

25 amount of the taxpayer’s qualified contributions 


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1 to which such subsection does not apply by rea2 son the preceding sentence. 

3 (B) QUALIFIED CONTRIBUTIONS.—For 

4 purposes of this paragraph, the term ‘‘qualified 

5 contributions’’ means the aggregate charitable 

6 contributions (as defined in section 170(c) of 

7 such Code) paid in cash by the taxpayer to or8 ganizations described in section 170(b)(1)(A) of 

9 such Code (other than any organization de10 scribed in section 509(a)(3) of such Code or 

11 any fund or account described in section 

12 4966(d)(2) of such Code). 

13 (C) QUALIFIED INCLUSION AMOUNT.—For 

14 purposes of this paragraph, the term ‘‘qualified 

15 inclusion amount’’ means the amount includible 

16 in the taxpayer’s gross income for the last tax17 able year beginning before 2018 by reason of 

18 paragraph (2). 

19 (4) ACCELERATED PAYMENTS.—No later than 

20 120 days after the date of the enactment of this Act, 

21 the Secretary shall issue guidance providing a lim22 ited period of time during which a nonqualified de23 ferred compensation arrangement attributable to 

24 services performed on or before December 31, 2008, 

25 may, without violating the requirements of section 


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1 409A(a) of the Internal Revenue Code of 1986, be 

2 amended to conform the date of distribution to the 

3 date the amounts are required to be included in in4 come. 

5 (5) CERTAIN BACK-TO-BACK ARRANGEMENTS.— 

6 If the taxpayer is also a service recipient and main7 tains one or more nonqualified deferred compensa8 tion arrangements for its service providers under 

9 which any amount is attributable to services per10 formed on or before December 31, 2008, the guid11 ance issued under paragraph (4) shall permit such 

12 arrangements to be amended to conform the dates of 

13 distribution under such arrangement to the date 

14 amounts are required to be included in the income 

15 of such taxpayer under this subsection. 

16 (6) ACCELERATED PAYMENT NOT TREATED AS

17 MATERIAL MODIFICATION.—Any amendment to a 

18 nonqualified deferred compensation arrangement 

19 made pursuant to paragraph (4) or (5) shall not be 

20 treated as a material modification of the arrange21 ment for purposes of section 409A of the Internal 

22 Revenue Code of 1986. 


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1 SEC. 602. DELAY IN APPLICATION OF WORLDWIDE ALLOCA2 TION OF INTEREST. 

3 (a) IN GENERAL.—Paragraph (6) of section 864(f), 

4 as amended by the Housing Assistance Tax Act of 2008, 

5 is amended by striking ‘‘December 31, 2010’’ and insert6 ing ‘‘December 31, 2018’’. 

7 (b) CONFORMING AMENDMENT.—Paragraph (5)(D) 

8 of section 864(f) is amended by striking ‘‘December 31, 

9 2008’’ and inserting ‘‘December 31, 2018’’. 

10 (c) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to taxable years beginning after 

12 December 31, 2008. 

13 SEC. 603. BROKER REPORTING OF CUSTOMER’S BASIS IN 

14 SECURITIES TRANSACTIONS. 

15 (a) IN GENERAL.— 

16 (1) BROKER REPORTING FOR SECURITIES

17 TRANSACTIONS.—Section 6045 is amended by add18 ing at the end the following new subsection: 

19 ‘‘(g) ADDITIONAL INFORMATION REQUIRED IN THE

20 CASE OF SECURITIES TRANSACTIONS, ETC.— 

21 ‘‘(1) IN GENERAL.—If a broker is otherwise re22 quired to make a return under subsection (a) with 

23 respect to the gross proceeds of the sale of a covered 

24 security, the broker shall include in such return the 

25 information described in paragraph (2). 

26 ‘‘(2) ADDITIONAL INFORMATION REQUIRED.— 


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1 ‘‘(A) IN GENERAL.—The information re2 quired under paragraph (1) to be shown on a 

3 return with respect to a covered security of a 

4 customer shall include the customer’s adjusted 

5 basis in such security and whether any gain or 

6 loss with respect to such security is long-term 

7 or short-term (within the meaning of section 

8 1222). 

9 ‘‘(B) DETERMINATION OF ADJUSTED

10 BASIS.—For purposes of subparagraph (A)— 

11 ‘‘(i) IN GENERAL.—The customer’s 

12 adjusted basis shall be determined— 

13 ‘‘(I) in the case of any security 

14 (other than any stock for which an av15 erage basis method is permissible 

16 under section 1012), in accordance 

17 with the first-in first-out method un18 less the customer notifies the broker 

19 by means of making an adequate 

20 identification of the stock sold or 

21 transferred, and 

22 ‘‘(II) in the case of any stock for 

23 which an average basis method is per24 missible under section 1012, in ac25 cordance with the broker’s default 


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1 method unless the customer notifies 

2 the broker that he elects another ac3 ceptable method under section 1012 

4 with respect to the account in which 

5 such stock is held. 

6 ‘‘(ii) EXCEPTION FOR WASH SALES.— 

7 Except as otherwise provided by the Sec8 retary, the customer’s adjusted basis shall 

9 be determined without regard to section 

10 1091 (relating to loss from wash sales of 

11 stock or securities) unless the transactions 

12 occur in the same account with respect to 

13 identical securities. 

14 ‘‘(3) COVERED SECURITY.—For purposes of 

15 this subsection— 

16 ‘‘(A) IN GENERAL.—The term ‘covered se17 curity’ means any specified security acquired on 

18 or after the applicable date if such security— 

19 ‘‘(i) was acquired through a trans20 action in the account in which such secu21 rity is held, or 

22 ‘‘(ii) was transferred to such account 

23 from an account in which such security 

24 was a covered security, but only if the 


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1 broker received a statement under section 

2 6045A with respect to the transfer. 

3 ‘‘(B) SPECIFIED SECURITY.—The term 

4 ‘specified security’ means— 

5 ‘‘(i) any share of stock in a corpora6 tion, 

7 ‘‘(ii) any note, bond, debenture, or 

8 other evidence of indebtedness, 

9 ‘‘(iii) any commodity, or contract or 

10 derivative with respect to such commodity, 

11 if the Secretary determines that adjusted 

12 basis reporting is appropriate for purposes 

13 of this subsection, and 

14 ‘‘(iv) any other financial instrument 

15 with respect to which the Secretary deter16 mines that adjusted basis reporting is ap17 propriate for purposes of this subsection. 

18 ‘‘(C) APPLICABLE DATE.—The term ‘appli19 cable date’ means— 

20 ‘‘(i) January 1, 2010, in the case of 

21 any specified security which is stock in a 

22 corporation (other than any stock de23 scribed in clause (ii)), 


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1 ‘‘(ii) January 1, 2011, in the case of 

2 any stock for which an average basis meth3 od is permissible under section 1012, and 

4 ‘‘(iii) January 1, 2012, or such later 

5 date determined by the Secretary in the 

6 case of any other specified security. 

7 ‘‘(4) TREATMENT OF S CORPORATIONS.—In the 

8 case of the sale of a covered security acquired by an 

9 S corporation (other than a financial institution) 

10 after December 31, 2011, such S corporation shall 

11 be treated in the same manner as a partnership for 

12 purposes of this section. 

13 ‘‘(5) SPECIAL RULES FOR SHORT SALES.—In 

14 the case of a short sale, reporting under this section 

15 shall be made for the year in which such sale is 

16 closed.’’. 

17 (2) BROKER INFORMATION REQUIRED WITH RE18 SPECT TO OPTIONS.—Section 6045, as amended by 

19 subsection (a), is amended by adding at the end the 

20 following new subsection: 

21 ‘‘(h) APPLICATION TO OPTIONS ON SECURITIES.— 

22 ‘‘(1) EXERCISE OF OPTION.—For purposes of 

23 this section, if a covered security is acquired or dis24 posed of pursuant to the exercise of an option that 

25 was granted or acquired in the same account as the 


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1 covered security, the amount received with respect to 

2 the grant or paid with respect to the acquisition of 

3 such option shall be treated as an adjustment to 

4 gross proceeds or as an adjustment to basis, as the 

5 case may be. 

6 ‘‘(2) LAPSE OR CLOSING TRANSACTION.—In the 

7 case of the lapse (or closing transaction (as defined 

8 in section 1234(b)(2)(A))) of an option on a speci9 fied security or the exercise of a cash-settled option 

10 on a specified security, reporting under subsections 

11 (a) and (g) with respect to such option shall be 

12 made for the calendar year which includes the date 

13 of such lapse, closing transaction, or exercise. 

14 ‘‘(3) PROSPECTIVE APPLICATION.—Paragraphs 

15 (1) and (2) shall not apply to any option which is 

16 granted or acquired before January 1, 2012. 

17 ‘‘(4) DEFINITIONS.—For purposes of this sub18 section, the terms ‘covered security’ and ‘specified 

19 security’ shall have the meanings given such terms 

20 in subsection (g)(3).’’. 

21 (3) EXTENSION OF PERIOD FOR STATEMENTS

22 SENT TO CUSTOMERS.— 

23 (A) IN GENERAL.—Subsection (b) of sec24 tion 6045 is amended by striking ‘‘January 31’’ 

25 and inserting ‘‘February 15’’. 


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1 (B) STATEMENTS RELATED TO SUB2 STITUTE PAYMENTS.—Subsection (d) of section 

3 6045 is amended— 

4 (i) by striking ‘‘at such time and’’, 

5 and 

6 (ii) by inserting after ‘‘other item.’’ 

7 the following new sentence: ‘‘The written 

8 statement required under the preceding 

9 sentence shall be furnished on or before 

10 February 15 of the year following the cal11 endar year in which the payment was 

12 made.’’. 

13 (C) OTHER STATEMENTS.—Subsection (b) 

14 of section 6045 is amended by adding at the 

15 end the following: ‘‘In the case of a consolidated 

16 reporting statement (as defined in regulations) 

17 with respect to any account, any statement 

18 which would otherwise be required to be fur19 nished on or before January 31 of a calendar 

20 year with respect to any item reportable to the 

21 taxpayer shall instead be required to be fur22 nished on or before February 15 of such cal23 endar year if furnished with such consolidated 

24 reporting statement.’’. 


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1 (b) DETERMINATION OF BASIS OF CERTAIN SECURI2 TIES ON ACCOUNT BY ACCOUNT OR AVERAGE BASIS

3 METHOD.—Section 1012 is amended— 

4 (1) by striking ‘‘The basis of property’’ and in5 serting the following: 

6 ‘‘(a) IN GENERAL.—The basis of property’’, 

7 (2) by striking ‘‘The cost of real property’’ and 

8 inserting the following: 

9 ‘‘(b) SPECIAL RULE FOR APPORTIONED REAL ES10 TATE TAXES.—The cost of real property’’, and 

11 (3) by adding at the end the following new sub12 sections: 

13 ‘‘(c) DETERMINATIONS BY ACCOUNT.— 

14 ‘‘(1) IN GENERAL.—In the case of the sale, ex15 change, or other disposition of a specified security 

16 on or after the applicable date, the conventions pre17 scribed by regulations under this section shall be ap18 plied on an account by account basis. 

19 ‘‘(2) APPLICATION TO OPEN-END FUNDS.— 

20 ‘‘(A) IN GENERAL.—Except as provided in 

21 subparagraph (B), any stock in an open-end 

22 fund acquired before January 1, 2011, shall be 

23 treated as a separate account from any such 

24 stock acquired on or after such date. 


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1 ‘‘(B) ELECTION BY OPEN-END FUND FOR

2 TREATMENT AS SINGLE ACCOUNT.—If an open3 end fund elects to have this subparagraph apply 

4 with respect to one or more of its stock5 holders— 

6 ‘‘(i) subparagraph (A) shall not apply 

7 with respect to any stock in such fund held 

8 by such stockholders, and 

9 ‘‘(ii) all stock in such fund which is 

10 held by such stockholders shall be treated 

11 as covered securities described in section 

12 6045(g)(3) without regard to the date of 

13 the acquisition of such stock. 

14 A rule similar to the rule of the preceding sen15 tence shall apply with respect to a broker hold16 ing stock in an open-end fund as a nominee. 

17 ‘‘(3) DEFINITIONS.—For purposes of this sec18 tion— 

19 ‘‘(A) OPEN-END FUND.—The term ‘open20 end fund’ means a regulated investment com21 pany (as defined in section 851) which is offer22 ing for sale or has outstanding any redeemable 

23 security of which it is the issuer. Any stock 

24 which is traded on an established securities exVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00298 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 change shall not be treated as stock in an open2 end fund. 

3 ‘‘(B) SPECIFIED SECURITY; APPLICABLE

4 DATE.—The terms ‘specified security’ and ‘ap5 plicable date’ shall have the meaning given such 

6 terms in section 6045(g). 

7 ‘‘(d) AVERAGE BASIS FOR STOCK ACQUIRED PURSU8 ANT TO A DIVIDEND REINVESTMENT PLAN.— 

9 ‘‘(1) IN GENERAL.—In the case of any stock ac10 quired after December 31, 2010, in connection with 

11 a dividend reinvestment plan, the basis of such stock 

12 while held as part of such plan shall be determined 

13 using one of the methods which may be used for de14 termining the basis of stock in an open-end fund. 

15 ‘‘(2) TREATMENT AFTER TRANSFER.—In the 

16 case of the transfer to another account of stock to 

17 which paragraph (1) applies, such stock shall have 

18 a cost basis in such other account equal to its basis 

19 in the dividend reinvestment plan immediately before 

20 such transfer (properly adjusted for any fees or 

21 other charges taken into account in connection with 

22 such transfer). 

23 ‘‘(3) SEPARATE ACCOUNTS; ELECTION FOR

24 TREATMENT AS SINGLE ACCOUNT.—Rules similar to 


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1 the rules of subsection (c)(2) shall apply for pur2 poses of this subsection. 

3 ‘‘(4) DIVIDEND REINVESTMENT PLAN.—For 

4 purposes of this subsection— 

5 ‘‘(A) IN GENERAL.—The term ‘dividend re6 investment plan’ means any arrangement under 

7 which dividends on any stock are reinvested in 

8 stock identical to the stock with respect to 

9 which the dividends are paid. 

10 ‘‘(B) INITIAL STOCK ACQUISITION TREAT11 ED AS ACQUIRED IN CONNECTION WITH

12 PLAN.—Stock shall be treated as acquired in 

13 connection with a dividend reinvestment plan if 

14 such stock is acquired pursuant to such plan or 

15 if the dividends paid on such stock are subject 

16 to such plan.’’. 

17 (c) INFORMATION BY TRANSFERORS TO AID BRO18 KERS.— 

19 (1) IN GENERAL.—Subpart B of part III of 

20 subchapter A of chapter 61 is amended by inserting 

21 after section 6045 the following new section: 


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1 ‘‘SEC. 6045A. INFORMATION REQUIRED IN CONNECTION 

2 WITH TRANSFERS OF COVERED SECURITIES 

3 TO BROKERS. 

4 ‘‘(a) FURNISHING OF INFORMATION.—Every applica5 ble person which transfers to a broker (as defined in sec6 tion 6045(c)(1)) a security which is a covered security (as 

7 defined in section 6045(g)(3)) in the hands of such appli8 cable person shall furnish to such broker a written state9 ment in such manner and setting forth such information 

10 as the Secretary may by regulations prescribe for purposes 

11 of enabling such broker to meet the requirements of sec12 tion 6045(g). 

13 ‘‘(b) APPLICABLE PERSON.—For purposes of sub14 section (a), the term ‘applicable person’ means— 

15 ‘‘(1) any broker (as defined in section 

16 6045(c)(1)), and 

17 ‘‘(2) any other person as provided by the Sec18 retary in regulations. 

19 ‘‘(c) TIME FOR FURNISHING STATEMENT.—Except 

20 as otherwise provided by the Secretary, any statement re21 quired by subsection (a) shall be furnished not later than 

22 15 days after the date of the transfer described in such 

23 subsection.’’. 

24 (2) ASSESSABLE PENALTIES.—Paragraph (2) 

25 of section 6724(d), as amended by the Housing As26 sistance Tax Act of 2008, is amended by redesigVerDate Aug 31 2005 22:57 Jul 25, 2008 Jkt 069200 PO 00000 Frm 00301 Fmt 6652 Sfmt 6201 E:\BILLS\S3335.PCS S3335

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1 nating subparagraphs (I) through (DD) as subpara2 graphs (J) through (EE), respectively, and by in3 serting after subparagraph (H) the following new 

4 subparagraph: 

5 ‘‘(I) section 6045A (relating to information 

6 required in connection with transfers of covered 

7 securities to brokers),’’. 

8 (3) CLERICAL AMENDMENT.—The table of sec9 tions for subpart B of part III of subchapter A of 

10 chapter 61 is amended by inserting after the item 

11 relating to section 6045 the following new item: 

‘‘Sec. 6045A. Information required in connection with transfers of covered securities to brokers.’’. 

12 (d) ADDITIONAL ISSUER INFORMATION TO AID BRO13 KERS.— 

14 (1) IN GENERAL.—Subpart B of part III of 

15 subchapter A of chapter 61, as amended by sub16 section (b), is amended by inserting after section 

17 6045A the following new section: 

18 ‘‘SEC. 6045B. RETURNS RELATING TO ACTIONS AFFECTING 

19 BASIS OF SPECIFIED SECURITIES. 

20 ‘‘(a) IN GENERAL.—According to the forms or regu21 lations prescribed by the Secretary, any issuer of a speci22 fied security shall make a return setting forth— 


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1 ‘‘(1) a description of any organizational action 

2 which affects the basis of such specified security of 

3 such issuer, 

4 ‘‘(2) the quantitative effect on the basis of such 

5 specified security resulting from such action, and 

6 ‘‘(3) such other information as the Secretary 

7 may prescribe. 

8 ‘‘(b) TIME FOR FILING RETURN.—Any return re9 quired by subsection (a) shall be filed not later than the 

10 earlier of— 

11 ‘‘(1) 45 days after the date of the action de12 scribed in subsection (a), or 

13 ‘‘(2) January 15 of the year following the cal14 endar year during which such action occurred. 

15 ‘‘(c) STATEMENTS TO BE FURNISHED TO HOLDERS

16 OF SPECIFIED SECURITIES OR THEIR NOMINEES.—Ac17 cording to the forms or regulations prescribed by the Sec18 retary, every person required to make a return under sub19 section (a) with respect to a specified security shall furnish 

20 to the nominee with respect to the specified security (or 

21 certificate holder if there is no nominee) a written state22 ment showing— 

23 ‘‘(1) the name, address, and phone number of 

24 the information contact of the person required to 

25 make such return, 


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1 ‘‘(2) the information required to be shown on 

2 such return with respect to such security, and 

3 ‘‘(3) such other information as the Secretary 

4 may prescribe. 

5 The written statement required under the preceding sen6 tence shall be furnished to the holder on or before January 

7 15 of the year following the calendar year during which 

8 the action described in subsection (a) occurred. 

9 ‘‘(d) SPECIFIED SECURITY.—For purposes of this 

10 section, the term ‘specified security’ has the meaning given 

11 such term by section 6045(g)(3)(B). No return shall be 

12 required under this section with respect to actions de13 scribed in subsection (a) with respect to a specified secu14 rity which occur before the applicable date (as defined in 

15 section 6045(g)(3)(C)) with respect to such security. 

16 ‘‘(e) PUBLIC REPORTING IN LIEU OF RETURN.—The 

17 Secretary may waive the requirements under subsections 

18 (a) and (c) with respect to a specified security, if the per19 son required to make the return under subsection (a) 

20 makes publicly available, in such form and manner as the 

21 Secretary determines necessary to carry out the purposes 

22 of this section— 

23 ‘‘(1) the name, address, phone number, and 

24 email address of the information contact of such 

25 person, and 


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1 ‘‘(2) the information described in paragraphs 

2 (1), (2), and (3) of subsection (a).’’. 

3 (2) ASSESSABLE PENALTIES.— 

4 (A) Subparagraph (B) of section 

5 6724(d)(1), as amended by the Housing Assist6 ance Tax Act of 2008, is amended by redesig7 nating clause (iv) and each of the clauses which 

8 follow as clauses (v) through (xxiii), respec9 tively, and by inserting after clause (iii) the fol10 lowing new clause: 

11 ‘‘(iv) section 6045B(a) (relating to re12 turns relating to actions affecting basis of 

13 specified securities),’’. 

14 (B) Paragraph (2) of section 6724(d), as 

15 amended by the Housing Assistance Tax Act of 

16 2008 and by subsection (c)(2), is amended by 

17 redesignating subparagraphs (J) through (EE) 

18 as subparagraphs (K) through (FF), respec19 tively, and by inserting after subparagraph (I) 

20 the following new subparagraph: 

21 ‘‘(J) subsections (c) and (e) of section 

22 6045B (relating to returns relating to actions 

23 affecting basis of specified securities),’’. 

24 (3) CLERICAL AMENDMENT.—The table of sec25 tions for subpart B of part III of subchapter A of 


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1 chapter 61, as amended by subsection (b)(3), is 

2 amended by inserting after the item relating to sec3 tion 6045A the following new item: 

‘‘Sec. 6045B. Returns relating to actions affecting basis of specified securities.’’. 

4 (e) EFFECTIVE DATE.— 

5 (1) IN GENERAL.—Except as otherwise pro6 vided in this subsection, the amendments made by 

7 this section shall take effect on January 1, 2010. 

8 (2) EXTENSION OF PERIOD FOR STATEMENTS

9 SENT TO CUSTOMERS.—The amendments made by 

10 subsection (a)(3) shall apply to statements required 

11 to be furnished after December 31, 2008. 

12 SEC. 604. TIME FOR PAYMENT OF CORPORATE ESTIMATED 

13 TAXES. 

14 The percentage under subparagraph (C) of section 

15 401(1) of the Tax Increase Prevention and Reconciliation 

16 Act of 2005 in effect on the date of the enactment of this 

17 Act is increased by 47.5 percentage points. 


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Calendar No. 898 

110TH CONGRESS 

2D SESSION S. 3335 

A BILL 

To amend the Internal Revenue Code of 1986 to 

purposes. extend certain expiring provisions, and for other 

JULY 25, 2008 

Read the second time and placed on the calendar 


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