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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1424 Enrolled Bill (ENR)]

        H.R.1424

                       One Hundred Tenth Congress

                                 of the

                        United States of America

                          AT THE SECOND SESSION

          Begun and held at the City of Washington on Thursday,
            the third day of January, two thousand and eight

                                 An Act

 
 To provide authority for the Federal Government to purchase and insure 
certain types of troubled assets for the purposes of providing stability 
  to and preventing disruption in the economy and financial system and 
  protecting taxpayers, to amend the Internal Revenue Code of 1986 to 
  provide incentives for energy production and conservation, to extend 
 certain expiring provisions, to provide individual income tax relief, 
                         and for other purposes.

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

              DIVISION A--EMERGENCY ECONOMIC STABILIZATION

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
    (a) Short Title.--This division may be cited as the ``Emergency 
Economic Stabilization Act of 2008''.
    (b) Table of Contents.--The table of contents for this division is 
as follows:

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

                 TITLE I--TROUBLED ASSETS RELIEF PROGRAM

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

                   TITLE II--BUDGET-RELATED PROVISIONS

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

                        TITLE III--TAX PROVISIONS

Sec. 301. Gain or loss from sale or exchange of certain preferred stock.
Sec. 302. Special rules for tax treatment of executive compensation of 
          employers participating in the troubled assets relief program.
Sec. 303. Extension of exclusion of income from discharge of qualified 
          principal residence indebtedness.
SEC. 2. PURPOSES.
    The purposes of this Act are--
        (1) to immediately provide authority and facilities that the 
    Secretary of the Treasury can use to restore liquidity and 
    stability to the financial system of the United States; and
        (2) to ensure that such authority and such facilities are used 
    in a manner that--
            (A) protects home values, college funds, retirement 
        accounts, and life savings;
            (B) preserves homeownership and promotes jobs and economic 
        growth;
            (C) maximizes overall returns to the taxpayers of the 
        United States; and
            (D) provides public accountability for the exercise of such 
        authority.
SEC. 3. DEFINITIONS.
    For purposes of this Act, the following definitions shall apply:
        (1) Appropriate committees of congress.--The term ``appropriate 
    committees of Congress'' means--
            (A) the Committee on Banking, Housing, and Urban Affairs, 
        the Committee on Finance, the Committee on the Budget, and the 
        Committee on Appropriations of the Senate; and
            (B) the Committee on Financial Services, the Committee on 
        Ways and Means, the Committee on the Budget, and the Committee 
        on Appropriations of the House of Representatives.
        (2) Board.--The term ``Board'' means the Board of Governors of 
    the Federal Reserve System.
        (3) Congressional support agencies.--The term ``congressional 
    support agencies'' means the Congressional Budget Office and the 
    Joint Committee on Taxation.
        (4) Corporation.--The term ``Corporation'' means the Federal 
    Deposit Insurance Corporation.
        (5) Financial institution.--The term ``financial institution'' 
    means any institution, including, but not limited to, any bank, 
    savings association, credit union, security broker or dealer, or 
    insurance company, established and regulated under the laws of the 
    United States or any State, territory, or possession of the United 
    States, the District of Columbia, Commonwealth of Puerto Rico, 
    Commonwealth of Northern Mariana Islands, Guam, American Samoa, or 
    the United States Virgin Islands, and having significant operations 
    in the United States, but excluding any central bank of, or 
    institution owned by, a foreign government.
        (6) Fund.--The term ``Fund'' means the Troubled Assets 
    Insurance Financing Fund established under section 102.
        (7) Secretary.--The term ``Secretary'' means the Secretary of 
    the Treasury.
        (8) TARP.--The term ``TARP'' means the Troubled Asset Relief 
    Program established under section 101.
        (9) Troubled assets.--The term ``troubled assets'' means--
            (A) residential or commercial mortgages and any securities, 
        obligations, or other instruments that are based on or related 
        to such mortgages, that in each case was originated or issued 
        on or before March 14, 2008, the purchase of which the 
        Secretary determines promotes financial market stability; and
            (B) any other financial instrument that the Secretary, 
        after consultation with the Chairman of the Board of Governors 
        of the Federal Reserve System, determines the purchase of which 
        is necessary to promote financial market stability, but only 
        upon transmittal of such determination, in writing, to the 
        appropriate committees of Congress.

                TITLE I--TROUBLED ASSETS RELIEF PROGRAM

    SEC. 101. PURCHASES OF TROUBLED ASSETS.
    (a) Offices; Authority.--
        (1) Authority.--The Secretary is authorized to establish the 
    Troubled Asset Relief Program (or ``TARP'') to purchase, and to 
    make and fund commitments to purchase, troubled assets from any 
    financial institution, on such terms and conditions as are 
    determined by the Secretary, and in accordance with this Act and 
    the policies and procedures developed and published by the 
    Secretary.
        (2) Commencement of program.--Establishment of the policies and 
    procedures and other similar administrative requirements imposed on 
    the Secretary by this Act are not intended to delay the 
    commencement of the TARP.
        (3) Establishment of treasury office.--
            (A) In general.--The Secretary shall implement any program 
        under paragraph (1) through an Office of Financial Stability, 
        established for such purpose within the Office of Domestic 
        Finance of the Department of the Treasury, which office shall 
        be headed by an Assistant Secretary of the Treasury, appointed 
        by the President, by and with the advice and consent of the 
        Senate, except that an interim Assistant Secretary may be 
        appointed by the Secretary.
            (B) Clerical amendments.--
                (i) Title 5.--Section 5315 of title 5, United States 
            Code, is amended in the item relating to Assistant 
            Secretaries of the Treasury, by striking ``(9)'' and 
            inserting ``(10)''.
                (ii) Title 31.--Section 301(e) of title 31, United 
            States Code, is amended by striking ``9'' and inserting 
            ``10''.
    (b) Consultation.--In exercising the authority under this section, 
the Secretary shall consult with the Board, the Corporation, the 
Comptroller of the Currency, the Director of the Office of Thrift 
Supervision, the Chairman of the National Credit Union Administration 
Board, and the Secretary of Housing and Urban Development.
    (c) Necessary Actions.--The Secretary is authorized to take such 
actions as the Secretary deems necessary to carry out the authorities 
in this Act, including, without limitation, the following:
        (1) The Secretary shall have direct hiring authority with 
    respect to the appointment of employees to administer this Act.
        (2) Entering into contracts, including contracts for services 
    authorized by section 3109 of title 5, United States Code.
        (3) Designating financial institutions as financial agents of 
    the Federal Government, and such institutions shall perform all 
    such reasonable duties related to this Act as financial agents of 
    the Federal Government as may be required.
        (4) In order to provide the Secretary with the flexibility to 
    manage troubled assets in a manner designed to minimize cost to the 
    taxpayers, establishing vehicles that are authorized, subject to 
    supervision by the Secretary, to purchase, hold, and sell troubled 
    assets and issue obligations.
        (5) Issuing such regulations and other guidance as may be 
    necessary or appropriate to define terms or carry out the 
    authorities or purposes of this Act.
    (d) Program Guidelines.--Before the earlier of the end of the 2-
business-day period beginning on the date of the first purchase of 
troubled assets pursuant to the authority under this section or the end 
of the 45-day period beginning on the date of enactment of this Act, 
the Secretary shall publish program guidelines, including the 
following:
        (1) Mechanisms for purchasing troubled assets.
        (2) Methods for pricing and valuing troubled assets.
        (3) Procedures for selecting asset managers.
        (4) Criteria for identifying troubled assets for purchase.
    (e) Preventing Unjust Enrichment.--In making purchases under the 
authority of this Act, the Secretary shall take such steps as may be 
necessary to prevent unjust enrichment of financial institutions 
participating in a program established under this section, including by 
preventing the sale of a troubled asset to the Secretary at a higher 
price than what the seller paid to purchase the asset. This subsection 
does not apply to troubled assets acquired in a merger or acquisition, 
or a purchase of assets from a financial institution in conservatorship 
or receivership, or that has initiated bankruptcy proceedings under 
title 11, United States Code.
    SEC. 102. INSURANCE OF TROUBLED ASSETS.
    (a) Authority.--
        (1) In general.--If the Secretary establishes the program 
    authorized under section 101, then the Secretary shall establish a 
    program to guarantee troubled assets originated or issued prior to 
    March 14, 2008, including mortgage-backed securities.
        (2) Guarantees.--In establishing any program under this 
    subsection, the Secretary may develop guarantees of troubled assets 
    and the associated premiums for such guarantees. Such guarantees 
    and premiums may be determined by category or class of the troubled 
    assets to be guaranteed.
        (3) Extent of guarantee.--Upon request of a financial 
    institution, the Secretary may guarantee the timely payment of 
    principal of, and interest on, troubled assets in amounts not to 
    exceed 100 percent of such payments. Such guarantee may be on such 
    terms and conditions as are determined by the Secretary, provided 
    that such terms and conditions are consistent with the purposes of 
    this Act.
    (b) Reports.--Not later than 90 days after the date of enactment of 
this Act, the Secretary shall report to the appropriate committees of 
Congress on the program established under subsection (a).
    (c) Premiums.--
        (1) In general.--The Secretary shall collect premiums from any 
    financial institution participating in the program established 
    under subsection (a). Such premiums shall be in an amount that the 
    Secretary determines necessary to meet the purposes of this Act and 
    to provide sufficient reserves pursuant to paragraph (3).
        (2) Authority to base premiums on product risk.--In 
    establishing any premium under paragraph (1), the Secretary may 
    provide for variations in such rates according to the credit risk 
    associated with the particular troubled asset that is being 
    guaranteed. The Secretary shall publish the methodology for setting 
    the premium for a class of troubled assets together with an 
    explanation of the appropriateness of the class of assets for 
    participation in the program established under this section. The 
    methodology shall ensure that the premium is consistent with 
    paragraph (3).
        (3) Minimum level.--The premiums referred to in paragraph (1) 
    shall be set by the Secretary at a level necessary to create 
    reserves sufficient to meet anticipated claims, based on an 
    actuarial analysis, and to ensure that taxpayers are fully 
    protected.
        (4) Adjustment to purchase authority.--The purchase authority 
    limit in section 115 shall be reduced by an amount equal to the 
    difference between the total of the outstanding guaranteed 
    obligations and the balance in the Troubled Assets Insurance 
    Financing Fund.
    (d) Troubled Assets Insurance Financing Fund.--
        (1) Deposits.--The Secretary shall deposit fees collected under 
    this section into the Fund established under paragraph (2).
        (2) Establishment.--There is established a Troubled Assets 
    Insurance Financing Fund that shall consist of the amounts 
    collected pursuant to paragraph (1), and any balance in such fund 
    shall be invested by the Secretary in United States Treasury 
    securities, or kept in cash on hand or on deposit, as necessary.
        (3) Payments from fund.--The Secretary shall make payments from 
    amounts deposited in the Fund to fulfill obligations of the 
    guarantees provided to financial institutions under subsection (a).
    SEC. 103. CONSIDERATIONS.
    In exercising the authorities granted in this Act, the Secretary 
shall take into consideration--
        (1) protecting the interests of taxpayers by maximizing overall 
    returns and minimizing the impact on the national debt;
        (2) providing stability and preventing disruption to financial 
    markets in order to limit the impact on the economy and protect 
    American jobs, savings, and retirement security;
        (3) the need to help families keep their homes and to stabilize 
    communities;
        (4) in determining whether to engage in a direct purchase from 
    an individual financial institution, the long-term viability of the 
    financial institution in determining whether the purchase 
    represents the most efficient use of funds under this Act;
        (5) ensuring that all financial institutions are eligible to 
    participate in the program, without discrimination based on size, 
    geography, form of organization, or the size, type, and number of 
    assets eligible for purchase under this Act;
        (6) providing financial assistance to financial institutions, 
    including those serving low- and moderate-income populations and 
    other underserved communities, and that have assets less than 
    $1,000,000,000, that were well or adequately capitalized as of June 
    30, 2008, and that as a result of the devaluation of the preferred 
    government-sponsored enterprises stock will drop one or more 
    capital levels, in a manner sufficient to restore the financial 
    institutions to at least an adequately capitalized level;
        (7) the need to ensure stability for United States public 
    instrumentalities, such as counties and cities, that may have 
    suffered significant increased costs or losses in the current 
    market turmoil;
        (8) protecting the retirement security of Americans by 
    purchasing troubled assets held by or on behalf of an eligible 
    retirement plan described in clause (iii), (iv), (v), or (vi) of 
    section 402(c)(8)(B) of the Internal Revenue Code of 1986, except 
    that such authority shall not extend to any compensation 
    arrangements subject to section 409A of such Code; and
        (9) the utility of purchasing other real estate owned and 
    instruments backed by mortgages on multifamily properties.
    SEC. 104. FINANCIAL STABILITY OVERSIGHT BOARD.
    (a) Establishment.--There is established the Financial Stability 
Oversight Board, which shall be responsible for--
        (1) reviewing the exercise of authority under a program 
    developed in accordance with this Act, including--
            (A) policies implemented by the Secretary and the Office of 
        Financial Stability created under sections 101 and 102, 
        including the appointment of financial agents, the designation 
        of asset classes to be purchased, and plans for the structure 
        of vehicles used to purchase troubled assets; and
            (B) the effect of such actions in assisting American 
        families in preserving home ownership, stabilizing financial 
        markets, and protecting taxpayers;
        (2) making recommendations, as appropriate, to the Secretary 
    regarding use of the authority under this Act; and
        (3) reporting any suspected fraud, misrepresentation, or 
    malfeasance to the Special Inspector General for the Troubled 
    Assets Relief Program or the Attorney General of the United States, 
    consistent with section 535(b) of title 28, United States Code.
    (b) Membership.--The Financial Stability Oversight Board shall be 
comprised of--
        (1) the Chairman of the Board of Governors of the Federal 
    Reserve System;
        (2) the Secretary;
        (3) the Director of the Federal Housing Finance Agency;
        (4) the Chairman of the Securities Exchange Commission; and
        (5) the Secretary of Housing and Urban Development.
    (c) Chairperson.--The chairperson of the Financial Stability 
Oversight Board shall be elected by the members of the Board from among 
the members other than the Secretary.
    (d) Meetings.--The Financial Stability Oversight Board shall meet 2 
weeks after the first exercise of the purchase authority of the 
Secretary under this Act, and monthly thereafter.
    (e) Additional Authorities.--In addition to the responsibilities 
described in subsection (a), the Financial Stability Oversight Board 
shall have the authority to ensure that the policies implemented by the 
Secretary are--
        (1) in accordance with the purposes of this Act;
        (2) in the economic interests of the United States; and
        (3) consistent with protecting taxpayers, in accordance with 
    section 113(a).
    (f) Credit Review Committee.--The Financial Stability Oversight 
Board may appoint a credit review committee for the purpose of 
evaluating the exercise of the purchase authority provided under this 
Act and the assets acquired through the exercise of such authority, as 
the Financial Stability Oversight Board determines appropriate.
    (g) Reports.--The Financial Stability Oversight Board shall report 
to the appropriate committees of Congress and the Congressional 
Oversight Panel established under section 125, not less frequently than 
quarterly, on the matters described under subsection (a)(1).
    (h) Termination.--The Financial Stability Oversight Board, and its 
authority under this section, shall terminate on the expiration of the 
15-day period beginning upon the later of--
        (1) the date that the last troubled asset acquired by the 
    Secretary under section 101 has been sold or transferred out of the 
    ownership or control of the Federal Government; or
        (2) the date of expiration of the last insurance contract 
    issued under section 102.
    SEC. 105. REPORTS.
    (a) In General.--Before the expiration of the 60-day period 
beginning on the date of the first exercise of the authority granted in 
section 101(a), or of the first exercise of the authority granted in 
section 102, whichever occurs first, and every 30-day period 
thereafter, the Secretary shall report to the appropriate committees of 
Congress, with respect to each such period--
        (1) an overview of actions taken by the Secretary, including 
    the considerations required by section 103 and the efforts under 
    section 109;
        (2) the actual obligation and expenditure of the funds provided 
    for administrative expenses by section 118 during such period and 
    the expected expenditure of such funds in the subsequent period; 
    and
        (3) a detailed financial statement with respect to the exercise 
    of authority under this Act, including--
            (A) all agreements made or renewed;
            (B) all insurance contracts entered into pursuant to 
        section 102;
            (C) all transactions occurring during such period, 
        including the types of parties involved;
            (D) the nature of the assets purchased;
            (E) all projected costs and liabilities;
            (F) operating expenses, including compensation for 
        financial agents;
            (G) the valuation or pricing method used for each 
        transaction; and
            (H) a description of the vehicles established to exercise 
        such authority.
    (b) Tranche Reports to Congress.--
        (1) Reports.--The Secretary shall provide to the appropriate 
    committees of Congress, at the times specified in paragraph (2), a 
    written report, including--
            (A) a description of all of the transactions made during 
        the reporting period;
            (B) a description of the pricing mechanism for the 
        transactions;
            (C) a justification of the price paid for and other 
        financial terms associated with the transactions;
            (D) a description of the impact of the exercise of such 
        authority on the financial system, supported, to the extent 
        possible, by specific data;
            (E) a description of challenges that remain in the 
        financial system, including any benchmarks yet to be achieved; 
        and
            (F) an estimate of additional actions under the authority 
        provided under this Act that may be necessary to address such 
        challenges.
        (2) Timing.--The report required by this subsection shall be 
    submitted not later than 7 days after the date on which commitments 
    to purchase troubled assets under the authorities provided in this 
    Act first reach an aggregate of $50,000,000,000 and not later than 
    7 days after each $50,000,000,000 interval of such commitments is 
    reached thereafter.
    (c) Regulatory Modernization Report.--The Secretary shall review 
the current state of the financial markets and the regulatory system 
and submit a written report to the appropriate committees of Congress 
not later than April 30, 2009, analyzing the current state of the 
regulatory system and its effectiveness at overseeing the participants 
in the financial markets, including the over-the-counter swaps market 
and government-sponsored enterprises, and providing recommendations for 
improvement, including--
        (1) recommendations regarding--
            (A) whether any participants in the financial markets that 
        are currently outside the regulatory system should become 
        subject to the regulatory system; and
            (B) enhancement of the clearing and settlement of over-the-
        counter swaps; and
        (2) the rationale underlying such recommendations.
    (d) Sharing of Information.--Any report required under this section 
shall also be submitted to the Congressional Oversight Panel 
established under section 125.
    (e) Sunset.--The reporting requirements under this section shall 
terminate on the later of--
        (1) the date that the last troubled asset acquired by the 
    Secretary under section 101 has been sold or transferred out of the 
    ownership or control of the Federal Government; or
        (2) the date of expiration of the last insurance contract 
    issued under section 102.
    SEC. 106. RIGHTS; MANAGEMENT; SALE OF TROUBLED ASSETS; REVENUES AND 
      SALE PROCEEDS.
    (a) Exercise of Rights.--The Secretary may, at any time, exercise 
any rights received in connection with troubled assets purchased under 
this Act.
    (b) Management of Troubled Assets.--The Secretary shall have 
authority to manage troubled assets purchased under this Act, including 
revenues and portfolio risks therefrom.
    (c) Sale of Troubled Assets.--The Secretary may, at any time, upon 
terms and conditions and at a price determined by the Secretary, sell, 
or enter into securities loans, repurchase transactions, or other 
financial transactions in regard to, any troubled asset purchased under 
this Act.
    (d) Transfer to Treasury.--Revenues of, and proceeds from the sale 
of troubled assets purchased under this Act, or from the sale, 
exercise, or surrender of warrants or senior debt instruments acquired 
under section 113 shall be paid into the general fund of the Treasury 
for reduction of the public debt.
    (e) Application of Sunset to Troubled Assets.--The authority of the 
Secretary to hold any troubled asset purchased under this Act before 
the termination date in section 120, or to purchase or fund the 
purchase of a troubled asset under a commitment entered into before the 
termination date in section 120, is not subject to the provisions of 
section 120.
    SEC. 107. CONTRACTING PROCEDURES.
    (a) Streamlined Process.--For purposes of this Act, the Secretary 
may waive specific provisions of the Federal Acquisition Regulation 
upon a determination that urgent and compelling circumstances make 
compliance with such provisions contrary to the public interest. Any 
such determination, and the justification for such determination, shall 
be submitted to the Committees on Oversight and Government Reform and 
Financial Services of the House of Representatives and the Committees 
on Homeland Security and Governmental Affairs and Banking, Housing, and 
Urban Affairs of the Senate within 7 days.
    (b) Additional Contracting Requirements.--In any solicitation or 
contract where the Secretary has, pursuant to subsection (a), waived 
any provision of the Federal Acquisition Regulation pertaining to 
minority contracting, the Secretary shall develop and implement 
standards and procedures to ensure, to the maximum extent practicable, 
the inclusion and utilization of minorities (as such term is defined in 
section 1204(c) of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 (12 U.S.C. 1811 note)) and women, and minority- 
and women-owned businesses (as such terms are defined in section 
21A(r)(4) of the Federal Home Loan Bank Act (12 U.S.C. 1441a(r)(4)), in 
that solicitation or contract, including contracts to asset managers, 
servicers, property managers, and other service providers or expert 
consultants.
    (c) Eligibility of FDIC.--Notwithstanding subsections (a) and (b), 
the Corporation--
        (1) shall be eligible for, and shall be considered in, the 
    selection of asset managers for residential mortgage loans and 
    residential mortgage-backed securities; and
        (2) shall be reimbursed by the Secretary for any services 
    provided.
    SEC. 108. CONFLICTS OF INTEREST.
    (a) Standards Required.--The Secretary shall issue regulations or 
guidelines necessary to address and manage or to prohibit conflicts of 
interest that may arise in connection with the administration and 
execution of the authorities provided under this Act, including--
        (1) conflicts arising in the selection or hiring of contractors 
    or advisors, including asset managers;
        (2) the purchase of troubled assets;
        (3) the management of the troubled assets held;
        (4) post-employment restrictions on employees; and
        (5) any other potential conflict of interest, as the Secretary 
    deems necessary or appropriate in the public interest.
    (b) Timing.--Regulations or guidelines required by this section 
shall be issued as soon as practicable after the date of enactment of 
this Act.
    SEC. 109. FORECLOSURE MITIGATION EFFORTS.
    (a) Residential Mortgage Loan Servicing Standards.--To the extent 
that the Secretary acquires mortgages, mortgage backed securities, and 
other assets secured by residential real estate, including multifamily 
housing, the Secretary shall implement a plan that seeks to maximize 
assistance for homeowners and use the authority of the Secretary to 
encourage the servicers of the underlying mortgages, considering net 
present value to the taxpayer, to take advantage of the HOPE for 
Homeowners Program under section 257 of the National Housing Act or 
other available programs to minimize foreclosures. In addition, the 
Secretary may use loan guarantees and credit enhancements to facilitate 
loan modifications to prevent avoidable foreclosures.
    (b) Coordination.--The Secretary shall coordinate with the 
Corporation, the Board (with respect to any mortgage or mortgage-backed 
securities or pool of securities held, owned, or controlled by or on 
behalf of a Federal reserve bank, as provided in section 110(a)(1)(C)), 
the Federal Housing Finance Agency, the Secretary of Housing and Urban 
Development, and other Federal Government entities that hold troubled 
assets to attempt to identify opportunities for the acquisition of 
classes of troubled assets that will improve the ability of the 
Secretary to improve the loan modification and restructuring process 
and, where permissible, to permit bona fide tenants who are current on 
their rent to remain in their homes under the terms of the lease. In 
the case of a mortgage on a residential rental property, the plan 
required under this section shall include protecting Federal, State, 
and local rental subsidies and protections, and ensuring any 
modification takes into account the need for operating funds to 
maintain decent and safe conditions at the property.
    (c) Consent to Reasonable Loan Modification Requests.--Upon any 
request arising under existing investment contracts, the Secretary 
shall consent, where appropriate, and considering net present value to 
the taxpayer, to reasonable requests for loss mitigation measures, 
including term extensions, rate reductions, principal write downs, 
increases in the proportion of loans within a trust or other structure 
allowed to be modified, or removal of other limitation on 
modifications.
    SEC. 110. ASSISTANCE TO HOMEOWNERS.
    (a) Definitions.--As used in this section--
        (1) the term ``Federal property manager'' means--
            (A) the Federal Housing Finance Agency, in its capacity as 
        conservator of the Federal National Mortgage Association and 
        the Federal Home Loan Mortgage Corporation;
            (B) the Corporation, with respect to residential mortgage 
        loans and mortgage-backed securities held by any bridge 
        depository institution pursuant to section 11(n) of the Federal 
        Deposit Insurance Act; and
            (C) the Board, with respect to any mortgage or mortgage-
        backed securities or pool of securities held, owned, or 
        controlled by or on behalf of a Federal reserve bank, other 
        than mortgages or securities held, owned, or controlled in 
        connection with open market operations under section 14 of the 
        Federal Reserve Act (12 U.S.C. 353), or as collateral for an 
        advance or discount that is not in default;
        (2) the term ``consumer'' has the same meaning as in section 
    103 of the Truth in Lending Act (15 U.S.C. 1602);
        (3) the term ``insured depository institution'' has the same 
    meaning as in section 3 of the Federal Deposit Insurance Act (12 
    U.S.C. 1813); and
        (4) the term ``servicer'' has the same meaning as in section 
    6(i)(2) of the Real Estate Settlement Procedures Act of 1974 (12 
    U.S.C. 2605(i)(2)).
    (b) Homeowner Assistance by Agencies.--
        (1) In general.--To the extent that the Federal property 
    manager holds, owns, or controls mortgages, mortgage backed 
    securities, and other assets secured by residential real estate, 
    including multifamily housing, the Federal property manager shall 
    implement a plan that seeks to maximize assistance for homeowners 
    and use its authority to encourage the servicers of the underlying 
    mortgages, and considering net present value to the taxpayer, to 
    take advantage of the HOPE for Homeowners Program under section 257 
    of the National Housing Act or other available programs to minimize 
    foreclosures.
        (2) Modifications.--In the case of a residential mortgage loan, 
    modifications made under paragraph (1) may include--
            (A) reduction in interest rates;
            (B) reduction of loan principal; and
            (C) other similar modifications.
        (3) Tenant protections.--In the case of mortgages on 
    residential rental properties, modifications made under paragraph 
    (1) shall ensure--
            (A) the continuation of any existing Federal, State, and 
        local rental subsidies and protections; and
            (B) that modifications take into account the need for 
        operating funds to maintain decent and safe conditions at the 
        property.
        (4) Timing.--Each Federal property manager shall develop and 
    begin implementation of the plan required by this subsection not 
    later than 60 days after the date of enactment of this Act.
        (5) Reports to congress.--Each Federal property manager shall, 
    60 days after the date of enactment of this Act and every 30 days 
    thereafter, report to Congress specific information on the number 
    and types of loan modifications made and the number of actual 
    foreclosures occurring during the reporting period in accordance 
    with this section.
        (6) Consultation.--In developing the plan required by this 
    subsection, the Federal property managers shall consult with one 
    another and, to the extent possible, utilize consistent approaches 
    to implement the requirements of this subsection.
    (c) Actions With Respect to Servicers.--In any case in which a 
Federal property manager is not the owner of a residential mortgage 
loan, but holds an interest in obligations or pools of obligations 
secured by residential mortgage loans, the Federal property manager 
shall--
        (1) encourage implementation by the loan servicers of loan 
    modifications developed under subsection (b); and
        (2) assist in facilitating any such modifications, to the 
    extent possible.
    (d) Limitation.--The requirements of this section shall not 
supersede any other duty or requirement imposed on the Federal property 
managers under otherwise applicable law.
    SEC. 111. EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE.
    (a) Applicability.--Any financial institution that sells troubled 
assets to the Secretary under this Act shall be subject to the 
executive compensation requirements of subsections (b) and (c) and the 
provisions under the Internal Revenue Code of 1986, as provided under 
the amendment by section 302, as applicable.
    (b) Direct Purchases.--
        (1) In general.--Where the Secretary determines that the 
    purposes of this Act are best met through direct purchases of 
    troubled assets from an individual financial institution where no 
    bidding process or market prices are available, and the Secretary 
    receives a meaningful equity or debt position in the financial 
    institution as a result of the transaction, the Secretary shall 
    require that the financial institution meet appropriate standards 
    for executive compensation and corporate governance. The standards 
    required under this subsection shall be effective for the duration 
    of the period that the Secretary holds an equity or debt position 
    in the financial institution.
        (2) Criteria.--The standards required under this subsection 
    shall include--
            (A) limits on compensation that exclude incentives for 
        senior executive officers of a financial institution to take 
        unnecessary and excessive risks that threaten the value of the 
        financial institution during the period that the Secretary 
        holds an equity or debt position in the financial institution;
            (B) a provision for the recovery by the financial 
        institution of any bonus or incentive compensation paid to a 
        senior executive officer based on statements of earnings, 
        gains, or other criteria that are later proven to be materially 
        inaccurate; and
            (C) a prohibition on the financial institution making any 
        golden parachute payment to its senior executive officer during 
        the period that the Secretary holds an equity or debt position 
        in the financial institution.
        (3) Definition.--For purposes of this section, the term 
    ``senior executive officer'' means an individual who is one of the 
    top 5 highly paid executives of a public company, whose 
    compensation is required to be disclosed pursuant to the Securities 
    Exchange Act of 1934, and any regulations issued thereunder, and 
    non-public company counterparts.
    (c) Auction Purchases.--Where the Secretary determines that the 
purposes of this Act are best met through auction purchases of troubled 
assets, and only where such purchases per financial institution in the 
aggregate exceed $300,000,000 (including direct purchases), the 
Secretary shall prohibit, for such financial institution, any new 
employment contract with a senior executive officer that provides a 
golden parachute in the event of an involuntary termination, bankruptcy 
filing, insolvency, or receivership. The Secretary shall issue guidance 
to carry out this paragraph not later than 2 months after the date of 
enactment of this Act, and such guidance shall be effective upon 
issuance.
    (d) Sunset.--The provisions of subsection (c) shall apply only to 
arrangements entered into during the period during which the 
authorities under section 101(a) are in effect, as determined under 
section 120.
    SEC. 112. COORDINATION WITH FOREIGN AUTHORITIES AND CENTRAL BANKS.
    The Secretary shall coordinate, as appropriate, with foreign 
financial authorities and central banks to work toward the 
establishment of similar programs by such authorities and central 
banks. To the extent that such foreign financial authorities or banks 
hold troubled assets as a result of extending financing to financial 
institutions that have failed or defaulted on such financing, such 
troubled assets qualify for purchase under section 101.
    SEC. 113. MINIMIZATION OF LONG-TERM COSTS AND MAXIMIZATION OF 
      BENEFITS FOR TAXPAYERS.
    (a) Long-Term Costs and Benefits.--
        (1) Minimizing negative impact.--The Secretary shall use the 
    authority under this Act in a manner that will minimize any 
    potential long-term negative impact on the taxpayer, taking into 
    account the direct outlays, potential long-term returns on assets 
    purchased, and the overall economic benefits of the program, 
    including economic benefits due to improvements in economic 
    activity and the availability of credit, the impact on the savings 
    and pensions of individuals, and reductions in losses to the 
    Federal Government.
        (2) Authority.--In carrying out paragraph (1), the Secretary 
    shall--
            (A) hold the assets to maturity or for resale for and until 
        such time as the Secretary determines that the market is 
        optimal for selling such assets, in order to maximize the value 
        for taxpayers; and
            (B) sell such assets at a price that the Secretary 
        determines, based on available financial analysis, will 
        maximize return on investment for the Federal Government.
        (3) Private sector participation.--The Secretary shall 
    encourage the private sector to participate in purchases of 
    troubled assets, and to invest in financial institutions, 
    consistent with the provisions of this section.
    (b) Use of Market Mechanisms.--In making purchases under this Act, 
the Secretary shall--
        (1) make such purchases at the lowest price that the Secretary 
    determines to be consistent with the purposes of this Act; and
        (2) maximize the efficiency of the use of taxpayer resources by 
    using market mechanisms, including auctions or reverse auctions, 
    where appropriate.
    (c) Direct Purchases.--If the Secretary determines that use of a 
market mechanism under subsection (b) is not feasible or appropriate, 
and the purposes of the Act are best met through direct purchases from 
an individual financial institution, the Secretary shall pursue 
additional measures to ensure that prices paid for assets are 
reasonable and reflect the underlying value of the asset.
    (d) Conditions on Purchase Authority for Warrants and Debt 
Instruments.--
        (1) In general.--The Secretary may not purchase, or make any 
    commitment to purchase, any troubled asset under the authority of 
    this Act, unless the Secretary receives from the financial 
    institution from which such assets are to be purchased--
            (A) in the case of a financial institution, the securities 
        of which are traded on a national securities exchange, a 
        warrant giving the right to the Secretary to receive nonvoting 
        common stock or preferred stock in such financial institution, 
        or voting stock with respect to which, the Secretary agrees not 
        to exercise voting power, as the Secretary determines 
        appropriate; or
            (B) in the case of any financial institution other than one 
        described in subparagraph (A), a warrant for common or 
        preferred stock, or a senior debt instrument from such 
        financial institution, as described in paragraph (2)(C).
        (2) Terms and conditions.--The terms and conditions of any 
    warrant or senior debt instrument required under paragraph (1) 
    shall meet the following requirements:
            (A) Purposes.--Such terms and conditions shall, at a 
        minimum, be designed--
                (i) to provide for reasonable participation by the 
            Secretary, for the benefit of taxpayers, in equity 
            appreciation in the case of a warrant or other equity 
            security, or a reasonable interest rate premium, in the 
            case of a debt instrument; and
                (ii) to provide additional protection for the taxpayer 
            against losses from sale of assets by the Secretary under 
            this Act and the administrative expenses of the TARP.
            (B) Authority to sell, exercise, or surrender.--The 
        Secretary may sell, exercise, or surrender a warrant or any 
        senior debt instrument received under this subsection, based on 
        the conditions established under subparagraph (A).
            (C) Conversion.--The warrant shall provide that if, after 
        the warrant is received by the Secretary under this subsection, 
        the financial institution that issued the warrant is no longer 
        listed or traded on a national securities exchange or 
        securities association, as described in paragraph (1)(A), such 
        warrants shall convert to senior debt, or contain appropriate 
        protections for the Secretary to ensure that the Treasury is 
        appropriately compensated for the value of the warrant, in an 
        amount determined by the Secretary.
            (D) Protections.--Any warrant representing securities to be 
        received by the Secretary under this subsection shall contain 
        anti-dilution provisions of the type employed in capital market 
        transactions, as determined by the Secretary. Such provisions 
        shall protect the value of the securities from market 
        transactions such as stock splits, stock distributions, 
        dividends, and other distributions, mergers, and other forms of 
        reorganization or recapitalization.
            (E) Exercise price.--The exercise price for any warrant 
        issued pursuant to this subsection shall be set by the 
        Secretary, in the interest of the taxpayers.
            (F) Sufficiency.--The financial institution shall guarantee 
        to the Secretary that it has authorized shares of nonvoting 
        stock available to fulfill its obligations under this 
        subsection. Should the financial institution not have 
        sufficient authorized shares, including preferred shares that 
        may carry dividend rights equal to a multiple number of common 
        shares, the Secretary may, to the extent necessary, accept a 
        senior debt note in an amount, and on such terms as will 
        compensate the Secretary with equivalent value, in the event 
        that a sufficient shareholder vote to authorize the necessary 
        additional shares cannot be obtained.
        (3) Exceptions.--
            (A) De minimis.--The Secretary shall establish de minimis 
        exceptions to the requirements of this subsection, based on the 
        size of the cumulative transactions of troubled assets 
        purchased from any one financial institution for the duration 
        of the program, at not more than $100,000,000.
            (B) Other exceptions.--The Secretary shall establish an 
        exception to the requirements of this subsection and 
        appropriate alternative requirements for any participating 
        financial institution that is legally prohibited from issuing 
        securities and debt instruments, so as not to allow 
        circumvention of the requirements of this section.
    SEC. 114. MARKET TRANSPARENCY.
    (a) Pricing.--To facilitate market transparency, the Secretary 
shall make available to the public, in electronic form, a description, 
amounts, and pricing of assets acquired under this Act, within 2 
business days of purchase, trade, or other disposition.
    (b) Disclosure.--For each type of financial institutions that sells 
troubled assets to the Secretary under this Act, the Secretary shall 
determine whether the public disclosure required for such financial 
institutions with respect to off-balance sheet transactions, 
derivatives instruments, contingent liabilities, and similar sources of 
potential exposure is adequate to provide to the public sufficient 
information as to the true financial position of the institutions. If 
such disclosure is not adequate for that purpose, the Secretary shall 
make recommendations for additional disclosure requirements to the 
relevant regulators.
    SEC. 115. GRADUATED AUTHORIZATION TO PURCHASE.
    (a) Authority.--The authority of the Secretary to purchase troubled 
assets under this Act shall be limited as follows:
        (1) Effective upon the date of enactment of this Act, such 
    authority shall be limited to $250,000,000,000 outstanding at any 
    one time.
        (2) If at any time, the President submits to the Congress a 
    written certification that the Secretary needs to exercise the 
    authority under this paragraph, effective upon such submission, 
    such authority shall be limited to $350,000,000,000 outstanding at 
    any one time.
        (3) If, at any time after the certification in paragraph (2) 
    has been made, the President transmits to the Congress a written 
    report detailing the plan of the Secretary to exercise the 
    authority under this paragraph, unless there is enacted, within 15 
    calendar days of such transmission, a joint resolution described in 
    subsection (c), effective upon the expiration of such 15-day 
    period, such authority shall be limited to $700,000,000,000 
    outstanding at any one time.
    (b) Aggregation of Purchase Prices.--The amount of troubled assets 
purchased by the Secretary outstanding at any one time shall be 
determined for purposes of the dollar amount limitations under 
subsection (a) by aggregating the purchase prices of all troubled 
assets held.
    (c) Joint Resolution of Disapproval.--
        (1) In general.--Notwithstanding any other provision of this 
    section, the Secretary may not exercise any authority to make 
    purchases under this Act with regard to any amount in excess of 
    $350,000,000,000 previously obligated, as described in this section 
    if, within 15 calendar days after the date on which Congress 
    receives a report of the plan of the Secretary described in 
    subsection (a)(3), there is enacted into law a joint resolution 
    disapproving the plan of the Secretary with respect to such 
    additional amount.
        (2) Contents of joint resolution.--For the purpose of this 
    section, the term ``joint resolution'' means only a joint 
    resolution--
            (A) that is introduced not later than 3 calendar days after 
        the date on which the report of the plan of the Secretary 
        referred to in subsection (a)(3) is received by Congress;
            (B) which does not have a preamble;
            (C) the title of which is as follows: ``Joint resolution 
        relating to the disapproval of obligations under the Emergency 
        Economic Stabilization Act of 2008''; and
            (D) the matter after the resolving clause of which is as 
        follows: ``That Congress disapproves the obligation of any 
        amount exceeding the amounts obligated as described in 
        paragraphs (1) and (2) of section 115(a) of the Emergency 
        Economic Stabilization Act of 2008.''.
    (d) Fast Track Consideration in House of Representatives.--
        (1) Reconvening.--Upon receipt of a report under subsection 
    (a)(3), the Speaker, if the House would otherwise be adjourned, 
    shall notify the Members of the House that, pursuant to this 
    section, the House shall convene not later than the second calendar 
    day after receipt of such report;
        (2) Reporting and discharge.--Any committee of the House of 
    Representatives to which a joint resolution is referred shall 
    report it to the House not later than 5 calendar days after the 
    date of receipt of the report described in subsection (a)(3). If a 
    committee fails to report the joint resolution within that period, 
    the committee shall be discharged from further consideration of the 
    joint resolution and the joint resolution shall be referred to the 
    appropriate calendar.
        (3) Proceeding to consideration.--After each committee 
    authorized to consider a joint resolution reports it to the House 
    or has been discharged from its consideration, it shall be in 
    order, not later than the sixth day after Congress receives the 
    report described in subsection (a)(3), to move to proceed to 
    consider the joint resolution in the House. All points of order 
    against the motion are waived. Such a motion shall not be in order 
    after the House has disposed of a motion to proceed on the joint 
    resolution. The previous question shall be considered as ordered on 
    the motion to its adoption without intervening motion. The motion 
    shall not be debatable. A motion to reconsider the vote by which 
    the motion is disposed of shall not be in order.
        (4) Consideration.--The joint resolution shall be considered as 
    read. All points of order against the joint resolution and against 
    its consideration are waived. The previous question shall be 
    considered as ordered on the joint resolution to its passage 
    without intervening motion except two hours of debate equally 
    divided and controlled by the proponent and an opponent. A motion 
    to reconsider the vote on passage of the joint resolution shall not 
    be in order.
    (e) Fast Track Consideration in Senate.--
        (1) Reconvening.--Upon receipt of a report under subsection 
    (a)(3), if the Senate has adjourned or recessed for more than 2 
    days, the majority leader of the Senate, after consultation with 
    the minority leader of the Senate, shall notify the Members of the 
    Senate that, pursuant to this section, the Senate shall convene not 
    later than the second calendar day after receipt of such message.
        (2) Placement on calendar.--Upon introduction in the Senate, 
    the joint resolution shall be placed immediately on the calendar.
        (3) Floor consideration.--
            (A) In general.--Notwithstanding Rule XXII of the Standing 
        Rules of the Senate, it is in order at any time during the 
        period beginning on the 4th day after the date on which 
        Congress receives a report of the plan of the Secretary 
        described in subsection (a)(3) and ending on the 6th day after 
        the date on which Congress receives a report of the plan of the 
        Secretary described in subsection (a)(3) (even though a 
        previous motion to the same effect has been disagreed to) to 
        move to proceed to the consideration of the joint resolution, 
        and all points of order against the joint resolution (and 
        against consideration of the joint resolution) are waived. The 
        motion to proceed is not debatable. The motion is not subject 
        to a motion to postpone. A motion to reconsider the vote by 
        which the motion is agreed to or disagreed to shall not be in 
        order. If a motion to proceed to the consideration of the 
        resolution is agreed to, the joint resolution shall remain the 
        unfinished business until disposed of.
            (B) Debate.--Debate on the joint resolution, and on all 
        debatable motions and appeals in connection therewith, shall be 
        limited to not more than 10 hours, which shall be divided 
        equally between the majority and minority leaders or their 
        designees. A motion further to limit debate is in order and not 
        debatable. An amendment to, or a motion to postpone, or a 
        motion to proceed to the consideration of other business, or a 
        motion to recommit the joint resolution is not in order.
            (C) Vote on passage.--The vote on passage shall occur 
        immediately following the conclusion of the debate on a joint 
        resolution, and a single quorum call at the conclusion of the 
        debate if requested in accordance with the rules of the Senate.
            (D) Rulings of the chair on procedure.--Appeals from the 
        decisions of the Chair relating to the application of the rules 
        of the Senate, as the case may be, to the procedure relating to 
        a joint resolution shall be decided without debate.
    (f) Rules Relating to Senate and House of Representatives.--
        (1) Coordination with action by other house.--If, before the 
    passage by one House of a joint resolution of that House, that 
    House receives from the other House a joint resolution, then the 
    following procedures shall apply:
            (A) The joint resolution of the other House shall not be 
        referred to a committee.
            (B) With respect to a joint resolution of the House 
        receiving the resolution--
                (i) the procedure in that House shall be the same as if 
            no joint resolution had been received from the other House; 
            but
                (ii) the vote on passage shall be on the joint 
            resolution of the other House.
        (2) Treatment of joint resolution of other house.--If one House 
    fails to introduce or consider a joint resolution under this 
    section, the joint resolution of the other House shall be entitled 
    to expedited floor procedures under this section.
        (3) Treatment of companion measures.--If, following passage of 
    the joint resolution in the Senate, the Senate then receives the 
    companion measure from the House of Representatives, the companion 
    measure shall not be debatable.
        (4) Consideration after passage.--
            (A) In general.--If Congress passes a joint resolution, the 
        period beginning on the date the President is presented with 
        the joint resolution and ending on the date the President takes 
        action with respect to the joint resolution shall be 
        disregarded in computing the 15-calendar day period described 
        in subsection (a)(3).
            (B) Vetoes.--If the President vetoes the joint resolution--
                (i) the period beginning on the date the President 
            vetoes the joint resolution and ending on the date the 
            Congress receives the veto message with respect to the 
            joint resolution shall be disregarded in computing the 15-
            calendar day period described in subsection (a)(3), and
                (ii) debate on a veto message in the Senate under this 
            section shall be 1 hour equally divided between the 
            majority and minority leaders or their designees.
        (5) Rules of house of representatives and senate.--This 
    subsection and subsections (c), (d), and (e) are enacted by 
    Congress--
            (A) as an exercise of the rulemaking power of the Senate 
        and House of Representatives, respectively, and as such it is 
        deemed a part of the rules of each House, respectively, but 
        applicable only with respect to the procedure to be followed in 
        that House in the case of a joint resolution, and it supersedes 
        other rules only to the extent that it is inconsistent with 
        such rules; and
            (B) with full recognition of the constitutional right of 
        either House to change the rules (so far as relating to the 
        procedure of that House) at any time, in the same manner, and 
        to the same extent as in the case of any other rule of that 
        House.
    SEC. 116. OVERSIGHT AND AUDITS.
    (a) Comptroller General Oversight.--
        (1) Scope of oversight.--The Comptroller General of the United 
    States shall, upon establishment of the troubled assets relief 
    program under this Act (in this section referred to as the 
    ``TARP''), commence ongoing oversight of the activities and 
    performance of the TARP and of any agents and representatives of 
    the TARP (as related to the agent or representative's activities on 
    behalf of or under the authority of the TARP), including vehicles 
    established by the Secretary under this Act. The subjects of such 
    oversight shall include the following:
            (A) The performance of the TARP in meeting the purposes of 
        this Act, particularly those involving--
                (i) foreclosure mitigation;
                (ii) cost reduction;
                (iii) whether it has provided stability or prevented 
            disruption to the financial markets or the banking system; 
            and
                (iv) whether it has protected taxpayers.
            (B) The financial condition and internal controls of the 
        TARP, its representatives and agents.
            (C) Characteristics of transactions and commitments entered 
        into, including transaction type, frequency, size, prices paid, 
        and all other relevant terms and conditions, and the timing, 
        duration and terms of any future commitments to purchase 
        assets.
            (D) Characteristics and disposition of acquired assets, 
        including type, acquisition price, current market value, sale 
        prices and terms, and use of proceeds from sales.
            (E) Efficiency of the operations of the TARP in the use of 
        appropriated funds.
            (F) Compliance with all applicable laws and regulations by 
        the TARP, its agents and representatives.
            (G) The efforts of the TARP to prevent, identify, and 
        minimize conflicts of interest involving any agent or 
        representative performing activities on behalf of or under the 
        authority of the TARP.
            (H) The efficacy of contracting procedures pursuant to 
        section 107(b), including, as applicable, the efforts of the 
        TARP in evaluating proposals for inclusion and contracting to 
        the maximum extent possible of minorities (as such term is 
        defined in 1204(c) of the Financial Institutions Reform, 
        Recovery, and Enhancement Act of 1989 (12 U.S.C. 1811 note), 
        women, and minority- and women-owned businesses, including 
        ascertaining and reporting the total amount of fees paid and 
        other value delivered by the TARP to all of its agents and 
        representatives, and such amounts paid or delivered to such 
        firms that are minority- and women-owned businesses (as such 
        terms are defined in section 21A of the Federal Home Loan Bank 
        Act (12 U.S.C. 1441a)).
        (2) Conduct and administration of oversight.--
            (A) GAO presence.--The Secretary shall provide the 
        Comptroller General with appropriate space and facilities in 
        the Department of the Treasury as necessary to facilitate 
        oversight of the TARP until the termination date established in 
        section 120.
            (B) Access to records.--To the extent otherwise consistent 
        with law, the Comptroller General shall have access, upon 
        request, to any information, data, schedules, books, accounts, 
        financial records, reports, files, electronic communications, 
        or other papers, things, or property belonging to or in use by 
        the TARP, or any vehicles established by the Secretary under 
        this Act, and to the officers, directors, employees, 
        independent public accountants, financial advisors, and other 
        agents and representatives of the TARP (as related to the agent 
        or representative's activities on behalf of or under the 
        authority of the TARP) or any such vehicle at such reasonable 
        time as the Comptroller General may request. The Comptroller 
        General shall be afforded full facilities for verifying 
        transactions with the balances or securities held by 
        depositaries, fiscal agents, and custodians. The Comptroller 
        General may make and retain copies of such books, accounts, and 
        other records as the Comptroller General deems appropriate.
            (C) Reimbursement of costs.--The Treasury shall reimburse 
        the Government Accountability Office for the full cost of any 
        such oversight activities as billed therefor by the Comptroller 
        General of the United States. Such reimbursements shall be 
        credited to the appropriation account ``Salaries and Expenses, 
        Government Accountability Office'' current when the payment is 
        received and remain available until expended.
        (3) Reporting.--The Comptroller General shall submit reports of 
    findings under this section, regularly and no less frequently than 
    once every 60 days, to the appropriate committees of Congress, and 
    the Special Inspector General for the Troubled Asset Relief Program 
    established under this Act on the activities and performance of the 
    TARP. The Comptroller may also submit special reports under this 
    subsection as warranted by the findings of its oversight 
    activities.
    (b) Comptroller General Audits.--
        (1) Annual audit.--The TARP shall annually prepare and issue to 
    the appropriate committees of Congress and the public audited 
    financial statements prepared in accordance with generally accepted 
    accounting principles, and the Comptroller General shall annually 
    audit such statements in accordance with generally accepted 
    auditing standards. The Treasury shall reimburse the Government 
    Accountability Office for the full cost of any such audit as billed 
    therefor by the Comptroller General. Such reimbursements shall be 
    credited to the appropriation account ``Salaries and Expenses, 
    Government Accountability Office'' current when the payment is 
    received and remain available until expended. The financial 
    statements prepared under this paragraph shall be on the fiscal 
    year basis prescribed under section 1102 of title 31, United States 
    Code.
        (2) Authority.--The Comptroller General may audit the programs, 
    activities, receipts, expenditures, and financial transactions of 
    the TARP and any agents and representatives of the TARP (as related 
    to the agent or representative's activities on behalf of or under 
    the authority of the TARP), including vehicles established by the 
    Secretary under this Act.
        (3) Corrective responses to audit problems.--The TARP shall--
            (A) take action to address deficiencies identified by the 
        Comptroller General or other auditor engaged by the TARP; or
            (B) certify to appropriate committees of Congress that no 
        action is necessary or appropriate.
    (c) Internal Control.--
        (1) Establishment.--The TARP shall establish and maintain an 
    effective system of internal control, consistent with the standards 
    prescribed under section 3512(c) of title 31, United States Code, 
    that provides reasonable assurance of--
            (A) the effectiveness and efficiency of operations, 
        including the use of the resources of the TARP;
            (B) the reliability of financial reporting, including 
        financial statements and other reports for internal and 
        external use; and
            (C) compliance with applicable laws and regulations.
        (2) Reporting.--In conjunction with each annual financial 
    statement issued under this section, the TARP shall--
            (A) state the responsibility of management for establishing 
        and maintaining adequate internal control over financial 
        reporting; and
            (B) state its assessment, as of the end of the most recent 
        year covered by such financial statement of the TARP, of the 
        effectiveness of the internal control over financial reporting.
    (d) Sharing of Information.--Any report or audit required under 
this section shall also be submitted to the Congressional Oversight 
Panel established under section 125.
    (e) Termination.--Any oversight, reporting, or audit requirement 
under this section shall terminate on the later of--
        (1) the date that the last troubled asset acquired by the 
    Secretary under section 101 has been sold or transferred out of the 
    ownership or control of the Federal Government; or
        (2) the date of expiration of the last insurance contract 
    issued under section 102.
    SEC. 117. STUDY AND REPORT ON MARGIN AUTHORITY.
    (a) Study.--The Comptroller General shall undertake a study to 
determine the extent to which leverage and sudden deleveraging of 
financial institutions was a factor behind the current financial 
crisis.
    (b) Content.--The study required by this section shall include--
        (1) an analysis of the roles and responsibilities of the Board, 
    the Securities and Exchange Commission, the Secretary, and other 
    Federal banking agencies with respect to monitoring leverage and 
    acting to curtail excessive leveraging;
        (2) an analysis of the authority of the Board to regulate 
    leverage, including by setting margin requirements, and what 
    process the Board used to decide whether or not to use its 
    authority;
        (3) an analysis of any usage of the margin authority by the 
    Board; and
        (4) recommendations for the Board and appropriate committees of 
    Congress with respect to the existing authority of the Board.
    (c) Report.--Not later than June 1, 2009, the Comptroller General 
shall complete and submit a report on the study required by this 
section to the Committee on Banking, Housing, and Urban Affairs of the 
Senate and the Committee on Financial Services of the House of 
Representatives.
    (d) Sharing of Information.--Any reports required under this 
section shall also be submitted to the Congressional Oversight Panel 
established under section 125.
    SEC. 118. FUNDING.
    For the purpose of the authorities granted in this Act, and for the 
costs of administering those authorities, the Secretary may use the 
proceeds of the sale of any securities issued under chapter 31 of title 
31, United States Code, and the purposes for which securities may be 
issued under chapter 31 of title 31, United States Code, are extended 
to include actions authorized by this Act, including the payment of 
administrative expenses. Any funds expended or obligated by the 
Secretary for actions authorized by this Act, including the payment of 
administrative expenses, shall be deemed appropriated at the time of 
such expenditure or obligation.
    SEC. 119. JUDICIAL REVIEW AND RELATED MATTERS.
    (a) Judicial Review.--
        (1) Standard.--Actions by the Secretary pursuant to the 
    authority of this Act shall be subject to chapter 7 of title 5, 
    United States Code, including that such final actions shall be held 
    unlawful and set aside if found to be arbitrary, capricious, an 
    abuse of discretion, or not in accordance with law.
        (2) Limitations on equitable relief.--
            (A) Injunction.--No injunction or other form of equitable 
        relief shall be issued against the Secretary for actions 
        pursuant to section 101, 102, 106, and 109, other than to 
        remedy a violation of the Constitution.
            (B) Temporary restraining order.--Any request for a 
        temporary restraining order against the Secretary for actions 
        pursuant to this Act shall be considered and granted or denied 
        by the court within 3 days of the date of the request.
            (C) Preliminary injunction.--Any request for a preliminary 
        injunction against the Secretary for actions pursuant to this 
        Act shall be considered and granted or denied by the court on 
        an expedited basis consistent with the provisions of rule 
        65(b)(3) of the Federal Rules of Civil Procedure, or any 
        successor thereto.
            (D) Permanent injunction.--Any request for a permanent 
        injunction against the Secretary for actions pursuant to this 
        Act shall be considered and granted or denied by the court on 
        an expedited basis. Whenever possible, the court shall 
        consolidate trial on the merits with any hearing on a request 
        for a preliminary injunction, consistent with the provisions of 
        rule 65(a)(2) of the Federal Rules of Civil Procedure, or any 
        successor thereto.
        (3) Limitation on actions by participating companies.--No 
    action or claims may be brought against the Secretary by any person 
    that divests its assets with respect to its participation in a 
    program under this Act, except as provided in paragraph (1), other 
    than as expressly provided in a written contract with the 
    Secretary.
        (4) Stays.--Any injunction or other form of equitable relief 
    issued against the Secretary for actions pursuant to section 101, 
    102, 106, and 109, shall be automatically stayed. The stay shall be 
    lifted unless the Secretary seeks a stay from a higher court within 
    3 calendar days after the date on which the relief is issued.
    (b) Related Matters.--
        (1) Treatment of homeowners' rights.--The terms of any 
    residential mortgage loan that is part of any purchase by the 
    Secretary under this Act shall remain subject to all claims and 
    defenses that would otherwise apply, notwithstanding the exercise 
    of authority by the Secretary under this Act.
        (2) Savings clause.--Any exercise of the authority of the 
    Secretary pursuant to this Act shall not impair the claims or 
    defenses that would otherwise apply with respect to persons other 
    than the Secretary. Except as established in any contract, a 
    servicer of pooled residential mortgages owes any duty to determine 
    whether the net present value of the payments on the loan, as 
    modified, is likely to be greater than the anticipated net recovery 
    that would result from foreclosure to all investors and holders of 
    beneficial interests in such investment, but not to any individual 
    or groups of investors or beneficial interest holders, and shall be 
    deemed to act in the best interests of all such investors or 
    holders of beneficial interests if the servicer agrees to or 
    implements a modification or workout plan when the servicer takes 
    reasonable loss mitigation actions, including partial payments.
    SEC. 120. TERMINATION OF AUTHORITY.
    (a) Termination.--The authorities provided under sections 101(a), 
excluding section 101(a)(3), and 102 shall terminate on December 31, 
2009.
    (b) Extension Upon Certification.--The Secretary, upon submission 
of a written certification to Congress, may extend the authority 
provided under this Act to expire not later than 2 years from the date 
of enactment of this Act. Such certification shall include a 
justification of why the extension is necessary to assist American 
families and stabilize financial markets, as well as the expected cost 
to the taxpayers for such an extension.
    SEC. 121. SPECIAL INSPECTOR GENERAL FOR THE TROUBLED ASSET RELIEF 
      PROGRAM.
    (a) Office of Inspector General.--There is hereby established the 
Office of the Special Inspector General for the Troubled Asset Relief 
Program.
    (b) Appointment of Inspector General; Removal.--(1) The head of the 
Office of the Special Inspector General for the Troubled Asset Relief 
Program is the Special Inspector General for the Troubled Asset Relief 
Program (in this section referred to as the ``Special Inspector 
General''), who shall be appointed by the President, by and with the 
advice and consent of the Senate.
    (2) The appointment of the Special Inspector General shall be made 
on the basis of integrity and demonstrated ability in accounting, 
auditing, financial analysis, law, management analysis, public 
administration, or investigations.
    (3) The nomination of an individual as Special Inspector General 
shall be made as soon as practicable after the establishment of any 
program under sections 101 and 102.
    (4) The Special Inspector General shall be removable from office in 
accordance with the provisions of section 3(b) of the Inspector General 
Act of 1978 (5 U.S.C. App.).
    (5) For purposes of section 7324 of title 5, United States Code, 
the Special Inspector General shall not be considered an employee who 
determines policies to be pursued by the United States in the 
nationwide administration of Federal law.
    (6) The annual rate of basic pay of the Special Inspector General 
shall be the annual rate of basic pay for an Inspector General under 
section 3(e) of the Inspector General Act of 1978 (5 U.S.C. App.).
    (c) Duties.--(1) It shall be the duty of the Special Inspector 
General to conduct, supervise, and coordinate audits and investigations 
of the purchase, management, and sale of assets by the Secretary of the 
Treasury under any program established by the Secretary under section 
101, and the management by the Secretary of any program established 
under section 102, including by collecting and summarizing the 
following information:
        (A) A description of the categories of troubled assets 
    purchased or otherwise procured by the Secretary.
        (B) A listing of the troubled assets purchased in each such 
    category described under subparagraph (A).
        (C) An explanation of the reasons the Secretary deemed it 
    necessary to purchase each such troubled asset.
        (D) A listing of each financial institution that such troubled 
    assets were purchased from.
        (E) A listing of and detailed biographical information on each 
    person or entity hired to manage such troubled assets.
        (F) A current estimate of the total amount of troubled assets 
    purchased pursuant to any program established under section 101, 
    the amount of troubled assets on the books of the Treasury, the 
    amount of troubled assets sold, and the profit and loss incurred on 
    each sale or disposition of each such troubled asset.
        (G) A listing of the insurance contracts issued under section 
    102.
    (2) The Special Inspector General shall establish, maintain, and 
oversee such systems, procedures, and controls as the Special Inspector 
General considers appropriate to discharge the duty under paragraph 
(1).
    (3) In addition to the duties specified in paragraphs (1) and (2), 
the Inspector General shall also have the duties and responsibilities 
of inspectors general under the Inspector General Act of 1978.
    (d) Powers and Authorities.--(1) In carrying out the duties 
specified in subsection (c), the Special Inspector General shall have 
the authorities provided in section 6 of the Inspector General Act of 
1978.
    (2) The Special Inspector General shall carry out the duties 
specified in subsection (c)(1) in accordance with section 4(b)(1) of 
the Inspector General Act of 1978.
    (e) Personnel, Facilities, and Other Resources.--(1) The Special 
Inspector General may select, appoint, and employ such officers and 
employees as may be necessary for carrying out the duties of the 
Special Inspector General, subject to the provisions of title 5, United 
States Code, governing appointments in the competitive service, and the 
provisions of chapter 51 and subchapter III of chapter 53 of such 
title, relating to classification and General Schedule pay rates.
    (2) The Special Inspector General may obtain services as authorized 
by section 3109 of title 5, United States Code, at daily rates not to 
exceed the equivalent rate prescribed for grade GS-15 of the General 
Schedule by section 5332 of such title.
    (3) The Special Inspector General may enter into contracts and 
other arrangements for audits, studies, analyses, and other services 
with public agencies and with private persons, and make such payments 
as may be necessary to carry out the duties of the Inspector General.
    (4)(A) Upon request of the Special Inspector General for 
information or assistance from any department, agency, or other entity 
of the Federal Government, the head of such entity shall, insofar as is 
practicable and not in contravention of any existing law, furnish such 
information or assistance to the Special Inspector General, or an 
authorized designee.
    (B) Whenever information or assistance requested by the Special 
Inspector General is, in the judgment of the Special Inspector General, 
unreasonably refused or not provided, the Special Inspector General 
shall report the circumstances to the appropriate committees of 
Congress without delay.
    (f) Reports.--(1) Not later than 60 days after the confirmation of 
the Special Inspector General, and every calendar quarter thereafter, 
the Special Inspector General shall submit to the appropriate 
committees of Congress a report summarizing the activities of the 
Special Inspector General during the 120-day period ending on the date 
of such report. Each report shall include, for the period covered by 
such report, a detailed statement of all purchases, obligations, 
expenditures, and revenues associated with any program established by 
the Secretary of the Treasury under sections 101 and 102, as well as 
the information collected under subsection (c)(1).
    (2) Nothing in this subsection shall be construed to authorize the 
public disclosure of information that is--
        (A) specifically prohibited from disclosure by any other 
    provision of law;
        (B) specifically required by Executive order to be protected 
    from disclosure in the interest of national defense or national 
    security or in the conduct of foreign affairs; or
        (C) a part of an ongoing criminal investigation.
    (3) Any reports required under this section shall also be submitted 
to the Congressional Oversight Panel established under section 125.
    (g) Funding.--(1) Of the amounts made available to the Secretary of 
the Treasury under section 118, $50,000,000 shall be available to the 
Special Inspector General to carry out this section.
    (2) The amount available under paragraph (1) shall remain available 
until expended.
    (h) Termination.--The Office of the Special Inspector General shall 
terminate on the later of--
        (1) the date that the last troubled asset acquired by the 
    Secretary under section 101 has been sold or transferred out of the 
    ownership or control of the Federal Government; or
        (2) the date of expiration of the last insurance contract 
    issued under section 102.
    SEC. 122. INCREASE IN STATUTORY LIMIT ON THE PUBLIC DEBT.
    Subsection (b) of section 3101 of title 31, United States Code, is 
amended by striking out the dollar limitation contained in such 
subsection and inserting ``$11,315,000,000,000''.
    SEC. 123. CREDIT REFORM.
    (a) In General.--Subject to subsection (b), the costs of purchases 
of troubled assets made under section 101(a) and guarantees of troubled 
assets under section 102, and any cash flows associated with the 
activities authorized in section 102 and subsections (a), (b), and (c) 
of section 106 shall be determined as provided under the Federal Credit 
Reform Act of 1990 (2 U.S.C. 661 et. seq.).
    (b) Costs.--For the purposes of section 502(5) of the Federal 
Credit Reform Act of 1990 (2 U.S.C. 661a(5))--
        (1) the cost of troubled assets and guarantees of troubled 
    assets shall be calculated by adjusting the discount rate in 
    section 502(5)(E) (2 U.S.C. 661a(5)(E)) for market risks; and
        (2) the cost of a modification of a troubled asset or guarantee 
    of a troubled asset shall be the difference between the current 
    estimate consistent with paragraph (1) under the terms of the 
    troubled asset or guarantee of the troubled asset and the current 
    estimate consistent with paragraph (1) under the terms of the 
    troubled asset or guarantee of the troubled asset, as modified.
    SEC. 124. HOPE FOR HOMEOWNERS AMENDMENTS.
    Section 257 of the National Housing Act (12 U.S.C. 1715z-23) is 
amended--
        (1) in subsection (e)--
            (A) in paragraph (1)(B), by inserting before ``a ratio'' 
        the following: ``, or thereafter is likely to have, due to the 
        terms of the mortgage being reset,'';
            (B) in paragraph (2)(B), by inserting before the period at 
        the end ``(or such higher percentage as the Board determines, 
        in the discretion of the Board)'';
            (C) in paragraph (4)(A)--
                (i) in the first sentence, by inserting after ``insured 
            loan'' the following: ``and any payments made under this 
            paragraph,''; and
                (ii) by adding at the end the following: ``Such actions 
            may include making payments, which shall be accepted as 
            payment in full of all indebtedness under the eligible 
            mortgage, to any holder of an existing subordinate 
            mortgage, in lieu of any future appreciation payments 
            authorized under subparagraph (B).''; and
        (2) in subsection (w), by inserting after ``administrative 
    costs'' the following: ``and payments pursuant to subsection 
    (e)(4)(A)''.
    SEC. 125. CONGRESSIONAL OVERSIGHT PANEL.
    (a) Establishment.--There is hereby established the Congressional 
Oversight Panel (hereafter in this section referred to as the 
``Oversight Panel'') as an establishment in the legislative branch.
    (b) Duties.--The Oversight Panel shall review the current state of 
the financial markets and the regulatory system and submit the 
following reports to Congress:
        (1) Regular reports.--
            (A) In general.--Regular reports of the Oversight Panel 
        shall include the following:
                (i) The use by the Secretary of authority under this 
            Act, including with respect to the use of contracting 
            authority and administration of the program.
                (ii) The impact of purchases made under the Act on the 
            financial markets and financial institutions.
                (iii) The extent to which the information made 
            available on transactions under the program has contributed 
            to market transparency.
                (iv) The effectiveness of foreclosure mitigation 
            efforts, and the effectiveness of the program from the 
            standpoint of minimizing long-term costs to the taxpayers 
            and maximizing the benefits for taxpayers.
            (B) Timing.--The reports required under this paragraph 
        shall be submitted not later than 30 days after the first 
        exercise by the Secretary of the authority under section 101(a) 
        or 102, and every 30 days thereafter.
        (2) Special report on regulatory reform.--The Oversight Panel 
    shall submit a special report on regulatory reform not later than 
    January 20, 2009, analyzing the current state of the regulatory 
    system and its effectiveness at overseeing the participants in the 
    financial system and protecting consumers, and providing 
    recommendations for improvement, including recommendations 
    regarding whether any participants in the financial markets that 
    are currently outside the regulatory system should become subject 
    to the regulatory system, the rationale underlying such 
    recommendation, and whether there are any gaps in existing consumer 
    protections.
    (c) Membership.--
        (1) In general.--The Oversight Panel shall consist of 5 
    members, as follows:
            (A) 1 member appointed by the Speaker of the House of 
        Representatives.
            (B) 1 member appointed by the minority leader of the House 
        of Representatives.
            (C) 1 member appointed by the majority leader of the 
        Senate.
            (D) 1 member appointed by the minority leader of the 
        Senate.
            (E) 1 member appointed by the Speaker of the House of 
        Representatives and the majority leader of the Senate, after 
        consultation with the minority leader of the Senate and the 
        minority leader of the House of Representatives.
        (2) Pay.--Each member of the Oversight Panel shall each be paid 
    at a rate equal to the daily equivalent of the annual rate of basic 
    pay for level I of the Executive Schedule for each day (including 
    travel time) during which such member is engaged in the actual 
    performance of duties vested in the Commission.
        (3) Prohibition of compensation of federal employees.--Members 
    of the Oversight Panel who are full-time officers or employees of 
    the United States or Members of Congress may not receive additional 
    pay, allowances, or benefits by reason of their service on the 
    Oversight Panel.
        (4) Travel expenses.--Each member shall receive travel 
    expenses, including per diem in lieu of subsistence, in accordance 
    with applicable provisions under subchapter I of chapter 57 of 
    title 5, United States Code.
        (5) Quorum.--Four members of the Oversight Panel shall 
    constitute a quorum but a lesser number may hold hearings.
        (6) Vacancies.--A vacancy on the Oversight Panel shall be 
    filled in the manner in which the original appointment was made.
        (7) Meetings.--The Oversight Panel shall meet at the call of 
    the Chairperson or a majority of its members.
    (d) Staff.--
        (1) In general.--The Oversight Panel may appoint and fix the 
    pay of any personnel as the Commission considers appropriate.
        (2) Experts and consultants.--The Oversight Panel may procure 
    temporary and intermittent services under section 3109(b) of title 
    5, United States Code.
        (3) Staff of agencies.--Upon request of the Oversight Panel, 
    the head of any Federal department or agency may detail, on a 
    reimbursable basis, any of the personnel of that department or 
    agency to the Oversight Panel to assist it in carrying out its 
    duties under this Act.
    (e) Powers.--
        (1) Hearings and sessions.--The Oversight Panel may, for the 
    purpose of carrying out this section, hold hearings, sit and act at 
    times and places, take testimony, and receive evidence as the Panel 
    considers appropriate and may administer oaths or affirmations to 
    witnesses appearing before it.
        (2) Powers of members and agents.--Any member or agent of the 
    Oversight Panel may, if authorized by the Oversight Panel, take any 
    action which the Oversight Panel is authorized to take by this 
    section.
        (3) Obtaining official data.--The Oversight Panel may secure 
    directly from any department or agency of the United States 
    information necessary to enable it to carry out this section. Upon 
    request of the Chairperson of the Oversight Panel, the head of that 
    department or agency shall furnish that information to the 
    Oversight Panel.
        (4) Reports.--The Oversight Panel shall receive and consider 
    all reports required to be submitted to the Oversight Panel under 
    this Act.
    (f) Termination.--The Oversight Panel shall terminate 6 months 
after the termination date specified in section 120.
    (g) Funding for Expenses.--
        (1) Authorization of appropriations.--There is authorized to be 
    appropriated to the Oversight Panel such sums as may be necessary 
    for any fiscal year, half of which shall be derived from the 
    applicable account of the House of Representatives, and half of 
    which shall be derived from the contingent fund of the Senate.
        (2) Reimbursement of amounts.--An amount equal to the expenses 
    of the Oversight Panel shall be promptly transferred by the 
    Secretary, from time to time upon the presentment of a statement of 
    such expenses by the Chairperson of the Oversight Panel, from funds 
    made available to the Secretary under this Act to the applicable 
    fund of the House of Representatives and the contingent fund of the 
    Senate, as appropriate, as reimbursement for amounts expended from 
    such account and fund under paragraph (1).
    SEC. 126. FDIC AUTHORITY.
    (a) In General.--Section 18(a) of the Federal Deposit Insurance Act 
(12 U.S.C. 1828(a)) is amended by adding at the end the following new 
paragraph:
        ``(4) False advertising, misuse of fdic names, and 
    misrepresentation to indicate insured status.--
            ``(A) Prohibition on false advertising and misuse of fdic 
        names.--No person may represent or imply that any deposit 
        liability, obligation, certificate, or share is insured or 
        guaranteed by the Corporation, if such deposit liability, 
        obligation, certificate, or share is not insured or guaranteed 
        by the Corporation--
                ``(i) by using the terms `Federal Deposit', `Federal 
            Deposit Insurance', `Federal Deposit Insurance 
            Corporation', any combination of such terms, or the 
            abbreviation `FDIC' as part of the business name or firm 
            name of any person, including any corporation, partnership, 
            business trust, association, or other business entity; or
                ``(ii) by using such terms or any other terms, sign, or 
            symbol as part of an advertisement, solicitation, or other 
            document.
            ``(B) Prohibition on misrepresentations of insured 
        status.--No person may knowingly misrepresent--
                ``(i) that any deposit liability, obligation, 
            certificate, or share is insured, under this Act, if such 
            deposit liability, obligation, certificate, or share is not 
            so insured; or
                ``(ii) the extent to which or the manner in which any 
            deposit liability, obligation, certificate, or share is 
            insured under this Act, if such deposit liability, 
            obligation, certificate, or share is not so insured, to the 
            extent or in the manner represented.
            ``(C) Authority of the appropriate federal banking 
        agency.--The appropriate Federal banking agency shall have 
        enforcement authority in the case of a violation of this 
        paragraph by any person for which the agency is the appropriate 
        Federal banking agency, or any institution-affiliated party 
        thereof.
            ``(D) Corporation authority if the appropriate federal 
        banking agency fails to follow recommendation.--
                ``(i) Recommendation.--The Corporation may recommend in 
            writing to the appropriate Federal banking agency that the 
            agency take any enforcement action authorized under section 
            8 for purposes of enforcement of this paragraph with 
            respect to any person for which the agency is the 
            appropriate Federal banking agency or any institution-
            affiliated party thereof.
                ``(ii) Agency response.--If the appropriate Federal 
            banking agency does not, within 30 days of the date of 
            receipt of a recommendation under clause (i), take the 
            enforcement action with respect to this paragraph 
            recommended by the Corporation or provide a plan acceptable 
            to the Corporation for responding to the situation 
            presented, the Corporation may take the recommended 
            enforcement action against such person or institution-
            affiliated party.
            ``(E) Additional authority.--In addition to its authority 
        under subparagraphs (C) and (D), for purposes of this 
        paragraph, the Corporation shall have, in the same manner and 
        to the same extent as with respect to a State nonmember insured 
        bank--
                ``(i) jurisdiction over--

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

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

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

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

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

                ``(ii) Effect of order.--Any temporary order issued 
            under this subparagraph shall take effect upon service.
            ``(B) Effective period of temporary order.--A temporary 
        order issued under subparagraph (A) shall remain effective and 
        enforceable, pending the completion of an administrative 
        proceeding pursuant to subsection (b)(1) in connection with the 
        notice of charges--
                ``(i) until such time as the Corporation or other 
            appropriate Federal banking agency dismisses the charges 
            specified in such notice; or
                ``(ii) if a cease-and-desist order is issued against 
            such person, until the effective date of such order.
            ``(C) Civil money penalties.--Any violation of section 
        18(a)(4) shall be subject to civil money penalties, as set 
        forth in subsection (i), except that for any person other than 
        an insured depository institution or an institution-affiliated 
        party that is found to have violated this paragraph, the 
        Corporation or other appropriate Federal banking agency shall 
        not be required to demonstrate any loss to an insured 
        depository institution.''.
    (c) Unenforceability of Certain Agreements.--Section 13(c) of the 
Federal Deposit Insurance Act (12 U.S.C. 1823(c)) is amended by adding 
at the end the following new paragraph:
        ``(11) Unenforceability of certain agreements.--No provision 
    contained in any existing or future standstill, confidentiality, or 
    other agreement that, directly or indirectly--
            ``(A) affects, restricts, or limits the ability of any 
        person to offer to acquire or acquire,
            ``(B) prohibits any person from offering to acquire or 
        acquiring, or
            ``(C) prohibits any person from using any previously 
        disclosed information in connection with any such offer to 
        acquire or acquisition of,
    all or part of any insured depository institution, including any 
    liabilities, assets, or interest therein, in connection with any 
    transaction in which the Corporation exercises its authority under 
    section 11 or 13, shall be enforceable against or impose any 
    liability on such person, as such enforcement or liability shall be 
    contrary to public policy.''.
    (d) Technical and Conforming Amendments.--Section 18 of the Federal 
Deposit Insurance Act (12 U.S.C. 1828) is amended--
        (1) in subsection (a)(3)--
            (A) by striking ``this subsection'' the first place that 
        term appears and inserting ``paragraph (1)''; and
            (B) by striking ``this subsection'' the second place that 
        term appears and inserting ``paragraph (2)''; and
        (2) in the heading for subsection (a), by striking ``Insurance 
    Logo.--'' and inserting ``Representations of Deposit Insurance.--
    ''.
    SEC. 127. COOPERATION WITH THE FBI.
    Any Federal financial regulatory agency shall cooperate with the 
Federal Bureau of Investigation and other law enforcement agencies 
investigating fraud, misrepresentation, and malfeasance with respect to 
development, advertising, and sale of financial products.
    SEC. 128. ACCELERATION OF EFFECTIVE DATE.
    Section 203 of the Financial Services Regulatory Relief Act of 2006 
(12 U.S.C. 461 note) is amended by striking ``October 1, 2011'' and 
inserting ``October 1, 2008''.
    SEC. 129. DISCLOSURES ON EXERCISE OF LOAN AUTHORITY.
    (a) In General.--Not later than 7 days after the date on which the 
Board exercises its authority under the third paragraph of section 13 
of the Federal Reserve Act (12 U.S.C. 343; relating to discounts for 
individuals, partnerships, and corporations) the Board shall provide to 
the Committee on Banking, Housing, and Urban Affairs of the Senate and 
the Committee on Financial Services of the House of Representatives a 
report which includes--
        (1) the justification for exercising the authority; and
        (2) the specific terms of the actions of the Board, including 
    the size and duration of the lending, available information 
    concerning the value of any collateral held with respect to such a 
    loan, the recipient of warrants or any other potential equity in 
    exchange for the loan, and any expected cost to the taxpayers for 
    such exercise.
    (b) Periodic Updates.--The Board shall provide updates to the 
Committees specified in subsection (a) not less frequently than once 
every 60 days while the subject loan is outstanding, including--
        (1) the status of the loan;
        (2) the value of the collateral held by the Federal reserve 
    bank which initiated the loan; and
        (3) the projected cost to the taxpayers of the loan.
    (c) Confidentiality.--The information submitted to the Congress 
under this section shall be kept confidential, upon the written request 
of the Chairman of the Board, in which case it shall be made available 
only to the Chairpersons and Ranking Members of the Committees 
described in subsection (a).
    (d) Applicability.--The provisions of this section shall be in 
force for all uses of the authority provided under section 13 of the 
Federal Reserve Act occurring during the period beginning on March 1, 
2008 and ending on the after the date of enactment of this Act, and 
reports described in subsection (a) shall be required beginning not 
later than 30 days after that date of enactment, with respect to any 
such exercise of authority.
    (e) Sharing of Information.--Any reports required under this 
section shall also be submitted to the Congressional Oversight Panel 
established under section 125.
    SEC. 130. TECHNICAL CORRECTIONS.
    (a) In General.--Section 128(b)(2) of the Truth in Lending Act (15 
U.S.C. 1638(b)(2)), as amended by section 2502 of the Mortgage 
Disclosure Improvement Act of 2008 (Public Law 110-289), is amended--
        (1) in subparagraph (A), by striking ``In the case'' and 
    inserting ``Except as provided in subparagraph (G), in the case''; 
    and
        (2) by amending subparagraph (G) to read as follows:
            ``(G)(i) In the case of an extension of credit relating to 
        a plan described in section 101(53D) of title 11, United States 
        Code--
                ``(I) the requirements of subparagraphs (A) through (E) 
            shall not apply; and
                ``(II) a good faith estimate of the disclosures 
            required under subsection (a) shall be made in accordance 
            with regulations of the Board under section 121(c) before 
            such credit is extended, or shall be delivered or placed in 
            the mail not later than 3 business days after the date on 
            which the creditor receives the written application of the 
            consumer for such credit, whichever is earlier.
            ``(ii) If a disclosure statement furnished within 3 
        business days of the written application (as provided under 
        clause (i)(II)) contains an annual percentage rate which is 
        subsequently rendered inaccurate, within the meaning of section 
        107(c), the creditor shall furnish another disclosure statement 
        at the time of settlement or consummation of the 
        transaction.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect as if included in the amendments made by section 2502 of 
the Mortgage Disclosure Improvement Act of 2008 (Public Law 110-289).
    SEC. 131. EXCHANGE STABILIZATION FUND REIMBURSEMENT.
    (a) Reimbursement.--The Secretary shall reimburse the Exchange 
Stabilization Fund established under section 5302 of title 31, United 
States Code, for any funds that are used for the Treasury Money Market 
Funds Guaranty Program for the United States money market mutual fund 
industry, from funds under this Act.
    (b) Limits on Use of Exchange Stabilization Fund.--The Secretary is 
prohibited from using the Exchange Stabilization Fund for the 
establishment of any future guaranty programs for the United States 
money market mutual fund industry.
    SEC. 132. AUTHORITY TO SUSPEND MARK-TO-MARKET ACCOUNTING.
    (a) Authority.--The Securities and Exchange Commission shall have 
the authority under the securities laws (as such term is defined in 
section 3(a)(47) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)(47)) to suspend, by rule, regulation, or order, the application 
of Statement Number 157 of the Financial Accounting Standards Board for 
any issuer (as such term is defined in section 3(a)(8) of such Act) or 
with respect to any class or category of transaction if the Commission 
determines that is necessary or appropriate in the public interest and 
is consistent with the protection of investors.
    (b) Savings Provision.--Nothing in subsection (a) shall be 
construed to restrict or limit any authority of the Securities and 
Exchange Commission under securities laws as in effect on the date of 
enactment of this Act.
    SEC. 133. STUDY ON MARK-TO-MARKET ACCOUNTING.
    (a) Study.--The Securities and Exchange Commission, in consultation 
with the Board and the Secretary, shall conduct a study on mark-to-
market accounting standards as provided in Statement Number 157 of the 
Financial Accounting Standards Board, as such standards are applicable 
to financial institutions, including depository institutions. Such a 
study shall consider at a minimum--
        (1) the effects of such accounting standards on a financial 
    institution's balance sheet;
        (2) the impacts of such accounting on bank failures in 2008;
        (3) the impact of such standards on the quality of financial 
    information available to investors;
        (4) the process used by the Financial Accounting Standards 
    Board in developing accounting standards;
        (5) the advisability and feasibility of modifications to such 
    standards; and
        (6) alternative accounting standards to those provided in such 
    Statement Number 157.
    (b) Report.--The Securities and Exchange Commission shall submit to 
Congress a report of such study before the end of the 90-day period 
beginning on the date of the enactment of this Act containing the 
findings and determinations of the Commission, including such 
administrative and legislative recommendations as the Commission 
determines appropriate.
    SEC. 134. RECOUPMENT.
    Upon the expiration of the 5-year period beginning upon the date of 
the enactment of this Act, the Director of the Office of Management and 
Budget, in consultation with the Director of the Congressional Budget 
Office, shall submit a report to the Congress on the net amount within 
the Troubled Asset Relief Program under this Act. In any case where 
there is a shortfall, the President shall submit a legislative proposal 
that recoups from the financial industry an amount equal to the 
shortfall in order to ensure that the Troubled Asset Relief Program 
does not add to the deficit or national debt.
    SEC. 135. PRESERVATION OF AUTHORITY.
    With the exception of section 131, nothing in this Act may be 
construed to limit the authority of the Secretary or the Board under 
any other provision of law.
    SEC. 136. TEMPORARY INCREASE IN DEPOSIT AND SHARE INSURANCE 
      COVERAGE.
    (a) Federal Deposit Insurance Act; Temporary Increase in Deposit 
Insurance.--
        (1) Increased amount.--Effective only during the period 
    beginning on the date of enactment of this Act and ending on 
    December 31, 2009, section 11(a)(1)(E) of the Federal Deposit 
    Insurance Act (12 U.S.C. 1821(a)(1)(E)) shall apply with 
    ``$250,000'' substituted for ``$100,000''.
        (2) Temporary increase not to be considered for setting 
    assessments.--The temporary increase in the standard maximum 
    deposit insurance amount made under paragraph (1) shall not be 
    taken into account by the Board of Directors of the Corporation for 
    purposes of setting assessments under section 7(b)(2) of the 
    Federal Deposit Insurance Act (12 U.S.C. 1817(b)(2)).
        (3) Borrowing limits temporarily lifted.--During the period 
    beginning on the date of enactment of this Act and ending on 
    December 31, 2009, the Board of Directors of the Corporation may 
    request from the Secretary, and the Secretary shall approve, a loan 
    or loans in an amount or amounts necessary to carry out this 
    subsection, without regard to the limitations on such borrowing 
    under section 14(a) and 15(c) of the Federal Deposit Insurance Act 
    (12 U.S.C. 1824(a), 1825(c)).
    (b) Federal Credit Union Act; Temporary Increase in Share 
Insurance.--
        (1) Increased amount.--Effective only during the period 
    beginning on the date of enactment of this Act and ending on 
    December 31, 2009, section 207(k)(5) of the Federal Credit Union 
    Act (12 U.S.C. 1787(k)(5)) shall apply with ``$250,000'' 
    substituted for ``$100,000''.
        (2) Temporary increase not to be considered for setting 
    insurance premium charges and insurance deposit adjustments.--The 
    temporary increase in the standard maximum share insurance amount 
    made under paragraph (1) shall not be taken into account by the 
    National Credit Union Administration Board for purposes of setting 
    insurance premium charges and share insurance deposit adjustments 
    under section 202(c)(2) of the Federal Credit Union Act (12 U.S.C. 
    1782(c)(2)).
        (3) Borrowing limits temporarily lifted.--During the period 
    beginning on the date of enactment of this Act and ending on 
    December 31, 2009, the National Credit Union Administration Board 
    may request from the Secretary, and the Secretary shall approve, a 
    loan or loans in an amount or amounts necessary to carry out this 
    subsection, without regard to the limitations on such borrowing 
    under section 203(d)(1) of the Federal Credit Union Act (12 U.S.C. 
    1783(d)(1)).
    (c) Not for Use in Inflation Adjustments.--The temporary increase 
in the standard maximum deposit insurance amount made under this 
section shall not be used to make any inflation adjustment under 
section 11(a)(1)(F) of the Federal Deposit Insurance Act (12 U.S.C. 
1821(a)(1)(F)) for purposes of that Act or the Federal Credit Union 
Act.

                  TITLE II--BUDGET-RELATED PROVISIONS

    SEC. 201. INFORMATION FOR CONGRESSIONAL SUPPORT AGENCIES.
    Upon request, and to the extent otherwise consistent with law, all 
information used by the Secretary in connection with activities 
authorized under this Act (including the records to which the 
Comptroller General is entitled under this Act) shall be made available 
to congressional support agencies (in accordance with their obligations 
to support the Congress as set out in their authorizing statutes) for 
the purposes of assisting the committees of Congress with conducting 
oversight, monitoring, and analysis of the activities authorized under 
this Act.
    SEC. 202. REPORTS BY THE OFFICE OF MANAGEMENT AND BUDGET AND THE 
      CONGRESSIONAL BUDGET OFFICE.
    (a) Reports by the Office of Management and Budget.--Within 60 days 
of the first exercise of the authority granted in section 101(a), but 
in no case later than December 31, 2008, and semiannually thereafter, 
the Office of Management and Budget shall report to the President and 
the Congress--
        (1) the estimate, notwithstanding section 502(5)(F) of the 
    Federal Credit Reform Act of 1990 (2 U.S.C. 661a(5)(F)), as of the 
    first business day that is at least 30 days prior to the issuance 
    of the report, of the cost of the troubled assets, and guarantees 
    of the troubled assets, determined in accordance with section 123;
        (2) the information used to derive the estimate, including 
    assets purchased or guaranteed, prices paid, revenues received, the 
    impact on the deficit and debt, and a description of any 
    outstanding commitments to purchase troubled assets; and
        (3) a detailed analysis of how the estimate has changed from 
    the previous report.
Beginning with the second report under subsection (a), the Office of 
Management and Budget shall explain the differences between the 
Congressional Budget Office estimates delivered in accordance with 
subsection (b) and prior Office of Management and Budget estimates.
    (b) Reports by the Congressional Budget Office.--Within 45 days of 
receipt by the Congress of each report from the Office of Management 
and Budget under subsection (a), the Congressional Budget Office shall 
report to the Congress the Congressional Budget Office's assessment of 
the report submitted by the Office of Management and Budget, 
including--
        (1) the cost of the troubled assets and guarantees of the 
    troubled assets,
        (2) the information and valuation methods used to calculate 
    such cost, and
        (3) the impact on the deficit and the debt.
    (c) Financial Expertise.--In carrying out the duties in this 
subsection or performing analyses of activities under this Act, the 
Director of the Congressional Budget Office may employ personnel and 
procure the services of experts and consultants.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to produce reports required 
by this section.
    SEC. 203. ANALYSIS IN PRESIDENT'S BUDGET.
    (a) In General.--Section 1105(a) of title 31, United States Code, 
is amended by adding at the end the following new paragraph:
        ``(35) as supplementary materials, a separate analysis of the 
    budgetary effects for all prior fiscal years, the current fiscal 
    year, the fiscal year for which the budget is submitted, and 
    ensuing fiscal years of the actions the Secretary of the Treasury 
    has taken or plans to take using any authority provided in the 
    Emergency Economic Stabilization Act of 2008, including--
            ``(A) an estimate of the current value of all assets 
        purchased, sold, and guaranteed under the authority provided in 
        the Emergency Economic Stabilization Act of 2008 using 
        methodology required by the Federal Credit Reform Act of 1990 
        (2 U.S.C. 661 et seq.) and section 123 of the Emergency 
        Economic Stabilization Act of 2008;
            ``(B) an estimate of the deficit, the debt held by the 
        public, and the gross Federal debt using methodology required 
        by the Federal Credit Reform Act of 1990 and section 123 of the 
        Emergency Economic Stabilization Act of 2008;
            ``(C) an estimate of the current value of all assets 
        purchased, sold, and guaranteed under the authority provided in 
        the Emergency Economic Stabilization Act of 2008 calculated on 
        a cash basis;
            ``(D) a revised estimate of the deficit, the debt held by 
        the public, and the gross Federal debt, substituting the cash-
        based estimates in subparagraph (C) for the estimates 
        calculated under subparagraph (A) pursuant to the Federal 
        Credit Reform Act of 1990 and section 123 of the Emergency 
        Economic Stabilization Act of 2008; and
            ``(E) the portion of the deficit which can be attributed to 
        any action taken by the Secretary using authority provided by 
        the Emergency Economic Stabilization Act of 2008 and the extent 
        to which the change in the deficit since the most recent 
        estimate is due to a reestimate using the methodology required 
        by the Federal Credit Reform Act of 1990 and section 123 of the 
        Emergency Economic Stabilization Act of 2008.''
    (b) Consultation.--In implementing this section, the Director of 
Office of Management and Budget shall consult periodically, but at 
least annually, with the Committee on the Budget of the House of 
Representatives, the Committee on the Budget of the Senate, and the 
Director of the Congressional Budget Office.
    (c) Effective Date.--This section and the amendment made by this 
section shall apply beginning with respect to the fiscal year 2010 
budget submission of the President.
    SEC. 204. EMERGENCY TREATMENT.
    All provisions of this Act are designated as an emergency 
requirement and necessary to meet emergency needs pursuant to section 
204(a) of S. Con. Res 21 (110th Congress), the concurrent resolution on 
the budget for fiscal year 2008 and rescissions of any amounts provided 
in this Act shall not be counted for purposes of budget enforcement.

                       TITLE III--TAX PROVISIONS

    SEC. 301. GAIN OR LOSS FROM SALE OR EXCHANGE OF CERTAIN PREFERRED 
      STOCK.
    (a) In General.--For purposes of the Internal Revenue Code of 1986, 
gain or loss from the sale or exchange of any applicable preferred 
stock by any applicable financial institution shall be treated as 
ordinary income or loss.
    (b) Applicable Preferred Stock.--For purposes of this section, the 
term ``applicable preferred stock'' means any stock--
        (1) which is preferred stock in--
            (A) the Federal National Mortgage Association, established 
        pursuant to the Federal National Mortgage Association Charter 
        Act (12 U.S.C. 1716 et seq.), or
            (B) the Federal Home Loan Mortgage Corporation, established 
        pursuant to the Federal Home Loan Mortgage Corporation Act (12 
        U.S.C. 1451 et seq.), and
        (2) which--
            (A) was held by the applicable financial institution on 
        September 6, 2008, or
            (B) was sold or exchanged by the applicable financial 
        institution on or after January 1, 2008, and before September 
        7, 2008.
    (c) Applicable Financial Institution.--For purposes of this 
section:
        (1) In general.--Except as provided in paragraph (2), the term 
    ``applicable financial institution'' means--
            (A) a financial institution referred to in section 
        582(c)(2) of the Internal Revenue Code of 1986, or
            (B) a depository institution holding company (as defined in 
        section 3(w)(1) of the Federal Deposit Insurance Act (12 U.S.C. 
        1813(w)(1))).
        (2) Special rules for certain sales.--In the case of--
            (A) a sale or exchange described in subsection (b)(2)(B), 
        an entity shall be treated as an applicable financial 
        institution only if it was an entity described in subparagraph 
        (A) or (B) of paragraph (1) at the time of the sale or 
        exchange, and
            (B) a sale or exchange after September 6, 2008, of 
        preferred stock described in subsection (b)(2)(A), an entity 
        shall be treated as an applicable financial institution only if 
        it was an entity described in subparagraph (A) or (B) of 
        paragraph (1) at all times during the period beginning on 
        September 6, 2008, and ending on the date of the sale or 
        exchange of the preferred stock.
    (d) Special Rule for Certain Property Not Held on September 6, 
2008.--The Secretary of the Treasury or the Secretary's delegate may 
extend the application of this section to all or a portion of the gain 
or loss from a sale or exchange in any case where--
        (1) an applicable financial institution sells or exchanges 
    applicable preferred stock after September 6, 2008, which the 
    applicable financial institution did not hold on such date, but the 
    basis of which in the hands of the applicable financial institution 
    at the time of the sale or exchange is the same as the basis in the 
    hands of the person which held such stock on such date, or
        (2) the applicable financial institution is a partner in a 
    partnership which--
            (A) held such stock on September 6, 2008, and later sold or 
        exchanged such stock, or
            (B) sold or exchanged such stock during the period 
        described in subsection (b)(2)(B).
    (e) Regulatory Authority.--The Secretary of the Treasury or the 
Secretary's delegate may prescribe such guidance, rules, or regulations 
as are necessary to carry out the purposes of this section.
    (f) Effective Date.--This section shall apply to sales or exchanges 
occurring after December 31, 2007, in taxable years ending after such 
date.
    SEC. 302. SPECIAL RULES FOR TAX TREATMENT OF EXECUTIVE COMPENSATION 
      OF EMPLOYERS PARTICIPATING IN THE TROUBLED ASSETS RELIEF PROGRAM.
    (a) Denial of Deduction.--Subsection (m) of section 162 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new paragraph:
        ``(5) Special rule for application to employers participating 
    in the troubled assets relief program.--
            ``(A) In general.--In the case of an applicable employer, 
        no deduction shall be allowed under this chapter--
                ``(i) in the case of executive remuneration for any 
            applicable taxable year which is attributable to services 
            performed by a covered executive during such applicable 
            taxable year, to the extent that the amount of such 
            remuneration exceeds $500,000, or
                ``(ii) in the case of deferred deduction executive 
            remuneration for any taxable year for services performed 
            during any applicable taxable year by a covered executive, 
            to the extent that the amount of such remuneration exceeds 
            $500,000 reduced (but not below zero) by the sum of--

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

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

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

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

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

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

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

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

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

    (c) Effective Dates.--
        (1) In general.--The amendment made by subsection (a) shall 
    apply to taxable years ending on or after the date of the enactment 
    of this Act.
        (2) Golden parachute rule.--The amendments made by subsection 
    (b) shall apply to payments with respect to severances occurring 
    during the period during which the authorities under section 101(a) 
    of this Act are in effect (determined under section 120 of this 
    Act).
    SEC. 303. EXTENSION OF EXCLUSION OF INCOME FROM DISCHARGE OF 
      QUALIFIED PRINCIPAL RESIDENCE INDEBTEDNESS.
    (a) Extension.--Subparagraph (E) of section 108(a)(1) of the 
Internal Revenue Code of 1986 is amended by striking ``January 1, 
2010'' and inserting ``January 1, 2013''.
    (b) Effective Date.--The amendment made by this section shall apply 
to discharges of indebtedness occurring on or after January 1, 2010.

        DIVISION B--ENERGY IMPROVEMENT AND EXTENSION ACT OF 2008

SEC. 1. SHORT TITLE, ETC.
    (a) Short Title.--This division may be cited as the ``Energy 
Improvement and Extension Act of 2008''.
    (b) Reference.--Except as otherwise expressly provided, whenever in 
this division an amendment or repeal is expressed in terms of an 
amendment to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provision of the 
Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents for this division is 
as follows:

Sec. 1. Short title, etc.

                  TITLE I--ENERGY PRODUCTION INCENTIVES

                 Subtitle A--Renewable Energy Incentives

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

            Subtitle B--Carbon Mitigation and Coal Provisions

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

     TITLE II--TRANSPORTATION AND DOMESTIC FUEL SECURITY PROVISIONS

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

        TITLE III--ENERGY CONSERVATION AND EFFICIENCY PROVISIONS

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

                      TITLE IV--REVENUE PROVISIONS

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

                 TITLE I--ENERGY PRODUCTION INCENTIVES
                Subtitle A--Renewable Energy Incentives

    SEC. 101. RENEWABLE ENERGY CREDIT.
    (a) Extension of Credit.--
        (1) 1-year extension for wind and refined coal facilities.--
    Paragraphs (1) and (8) of section 45(d) are each amended by 
    striking ``January 1, 2009'' and inserting ``January 1, 2010''.
        (2) 2-year extension for certain other facilities.--Each of the 
    following provisions of section 45(d) is amended by striking 
    ``January 1, 2009'' and inserting ``January 1, 2011'':
            (A) Clauses (i) and (ii) of paragraph (2)(A).
            (B) Clauses (i)(I) and (ii) of paragraph (3)(A).
            (C) Paragraph (4).
            (D) Paragraph (5).
            (E) Paragraph (6).
            (F) Paragraph (7).
            (G) Subparagraphs (A) and (B) of paragraph (9).
    (b) Modification of Refined Coal as a Qualified Energy Resource.--
        (1) Elimination of increased market value test.--Section 
    45(c)(7)(A)(i) (defining refined coal), as amended by section 108, 
    is amended--
            (A) by striking subclause (IV),
            (B) by adding ``and'' at the end of subclause (II), and
            (C) by striking ``, and'' at the end of subclause (III) and 
        inserting a period.
        (2) Increase in required emission reduction.--Section 
    45(c)(7)(B) (defining qualified emission reduction) is amended by 
    inserting ``at least 40 percent of the emissions of'' after 
    ``nitrogen oxide and''.
    (c) Trash Facility Clarification.--Paragraph (7) of section 45(d) 
is amended--
        (1) by striking ``facility which burns'' and inserting 
    ``facility (other than a facility described in paragraph (6)) which 
    uses'', and
        (2) by striking ``combustion''.
    (d) Expansion of Biomass Facilities.--
        (1) Open-loop biomass facilities.--Paragraph (3) of section 
    45(d) is amended by redesignating subparagraph (B) as subparagraph 
    (C) and by inserting after subparagraph (A) the following new 
    subparagraph:
            ``(B) Expansion of facility.--Such term shall include a new 
        unit placed in service after the date of the enactment of this 
        subparagraph in connection with a facility described in 
        subparagraph (A), but only to the extent of the increased 
        amount of electricity produced at the facility by reason of 
        such new unit.''.
        (2) Closed-loop biomass facilities.--Paragraph (2) of section 
    45(d) is amended by redesignating subparagraph (B) as subparagraph 
    (C) and inserting after subparagraph (A) the following new 
    subparagraph:
            ``(B) Expansion of facility.--Such term shall include a new 
        unit placed in service after the date of the enactment of this 
        subparagraph in connection with a facility described in 
        subparagraph (A)(i), but only to the extent of the increased 
        amount of electricity produced at the facility by reason of 
        such new unit.''.
    (e) Modification of Rules for Hydropower Production.--Subparagraph 
(C) of section 45(c)(8) is amended to read as follows:
            ``(C) Nonhydroelectric dam.--For purposes of subparagraph 
        (A), a facility is described in this subparagraph if--
                ``(i) the hydroelectric project installed on the 
            nonhydroelectric dam is licensed by the Federal Energy 
            Regulatory Commission and meets all other applicable 
            environmental, licensing, and regulatory requirements,
                ``(ii) the nonhydroelectric dam was placed in service 
            before the date of the enactment of this paragraph and 
            operated for flood control, navigation, or water supply 
            purposes and did not produce hydroelectric power on the 
            date of the enactment of this paragraph, and
                ``(iii) the hydroelectric project is operated so that 
            the water surface elevation at any given location and time 
            that would have occurred in the absence of the 
            hydroelectric project is maintained, subject to any license 
            requirements imposed under applicable law that change the 
            water surface elevation for the purpose of improving 
            environmental quality of the affected waterway.
        The Secretary, in consultation with the Federal Energy 
        Regulatory Commission, shall certify if a hydroelectric project 
        licensed at a nonhydroelectric dam meets the criteria in clause 
        (iii). Nothing in this section shall affect the standards under 
        which the Federal Energy Regulatory Commission issues licenses 
        for and regulates hydropower projects under part I of the 
        Federal Power Act.''.
    (f) Effective Date.--
        (1) In general.--Except as otherwise provided in this 
    subsection, the amendments made by this section shall apply to 
    property originally placed in service after December 31, 2008.
        (2) Refined coal.--The amendments made by subsection (b) shall 
    apply to coal produced and sold from facilities placed in service 
    after December 31, 2008.
        (3) Trash facility clarification.--The amendments made by 
    subsection (c) shall apply to electricity produced and sold after 
    the date of the enactment of this Act.
        (4) Expansion of biomass facilities.--The amendments made by 
    subsection (d) shall apply to property placed in service after the 
    date of the enactment of this Act.
    SEC. 102. PRODUCTION CREDIT FOR ELECTRICITY PRODUCED FROM MARINE 
      RENEWABLES.
    (a) In General.--Paragraph (1) of section 45(c) is amended by 
striking ``and'' at the end of subparagraph (G), by striking the period 
at the end of subparagraph (H) and inserting ``, and'', and by adding 
at the end the following new subparagraph:
            ``(I) marine and hydrokinetic renewable energy.''.
    (b) Marine Renewables.--Subsection (c) of section 45 is amended by 
adding at the end the following new paragraph:
        ``(10) Marine and hydrokinetic renewable energy.--
            ``(A) In general.--The term `marine and hydrokinetic 
        renewable energy' means energy derived from--
                ``(i) waves, tides, and currents in oceans, estuaries, 
            and tidal areas,
                ``(ii) free flowing water in rivers, lakes, and 
            streams,
                ``(iii) free flowing water in an irrigation system, 
            canal, or other man-made channel, including projects that 
            utilize nonmechanical structures to accelerate the flow of 
            water for electric power production purposes, or
                ``(iv) differentials in ocean temperature (ocean 
            thermal energy conversion).
            ``(B) Exceptions.--Such term shall not include any energy 
        which is derived from any source which utilizes a dam, 
        diversionary structure (except as provided in subparagraph 
        (A)(iii)), or impoundment for electric power production 
        purposes.''.
    (c) Definition of Facility.--Subsection (d) of section 45 is 
amended by adding at the end the following new paragraph:
        ``(11) Marine and hydrokinetic renewable energy facilities.--In 
    the case of a facility producing electricity from marine and 
    hydrokinetic renewable energy, the term `qualified facility' means 
    any facility owned by the taxpayer--
            ``(A) which has a nameplate capacity rating of at least 150 
        kilowatts, and
            ``(B) which is originally placed in service on or after the 
        date of the enactment of this paragraph and before January 1, 
        2012.''.
    (d) Credit Rate.--Subparagraph (A) of section 45(b)(4) is amended 
by striking ``or (9)'' and inserting ``(9), or (11)''.
    (e) Coordination With Small Irrigation Power.--Paragraph (5) of 
section 45(d), as amended by section 101, is amended by striking 
``January 1, 2012'' and inserting ``the date of the enactment of 
paragraph (11)''.
    (f) Effective Date.--The amendments made by this section shall 
apply to electricity produced and sold after the date of the enactment 
of this Act, in taxable years ending after such date.
    SEC. 103. ENERGY CREDIT.
    (a) Extension of Credit.--
        (1) Solar energy property.--Paragraphs (2)(A)(i)(II) and 
    (3)(A)(ii) of section 48(a) are each amended by striking ``January 
    1, 2009'' and inserting ``January 1, 2017''.
        (2) Fuel cell property.--Subparagraph (E) of section 48(c)(1) 
    is amended by striking ``December 31, 2008'' and inserting 
    ``December 31, 2016''.
        (3) Microturbine property.--Subparagraph (E) of section 
    48(c)(2) is amended by striking ``December 31, 2008'' and inserting 
    ``December 31, 2016''.
    (b) Allowance of Energy Credit Against Alternative Minimum Tax.--
        (1) In general.--Subparagraph (B) of section 38(c)(4), as 
    amended by the Housing Assistance Tax Act of 2008, is amended by 
    redesignating clause (vi) as clause (vi) and (vii), respectively, 
    and by inserting after clause (iv) the following new clause:
                ``(v) the credit determined under section 46 to the 
            extent that such credit is attributable to the energy 
            credit determined under section 48,''.
        (2) Technical amendment.--Clause (vi) of section 38(c)(4)(B), 
    as redesignated by paragraph (1), is amended by striking ``section 
    47 to the extent attributable to'' and inserting ``section 46 to 
    the extent that such credit is attributable to the rehabilitation 
    credit under section 47, but only with respect to''.
    (c) Energy Credit for Combined Heat and Power System Property.--
        (1) In general.--Section 48(a)(3)(A) is amended by striking 
    ``or'' at the end of clause (iii), by inserting ``or'' at the end 
    of clause (iv), and by adding at the end the following new clause:
                ``(v) combined heat and power system property,''.
        (2) Combined heat and power system property.--Subsection (c) of 
    section 48 is amended--
            (A) by striking ``Qualified Fuel Cell Property; Qualified 
        Microturbine Property'' in the heading and inserting 
        ``Definitions'', and
            (B) by adding at the end the following new paragraph:
        ``(3) Combined heat and power system property.--
            ``(A) Combined heat and power system property.--The term 
        `combined heat and power system property' means property 
        comprising a system--
                ``(i) which uses the same energy source for the 
            simultaneous or sequential generation of electrical power, 
            mechanical shaft power, or both, in combination with the 
            generation of steam or other forms of useful thermal energy 
            (including heating and cooling applications),
                ``(ii) which produces--

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

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

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

                ``(ii) Determinations made on btu basis.--The energy 
            efficiency percentage and the percentages under 
            subparagraph (A)(ii) shall be determined on a Btu basis.
                ``(iii) Input and output property not included.--The 
            term `combined heat and power system property' does not 
            include property used to transport the energy source to the 
            facility or to distribute energy produced by the facility.
            ``(D) Systems using biomass.--If a system is designed to 
        use biomass (within the meaning of paragraphs (2) and (3) of 
        section 45(c) without regard to the last sentence of paragraph 
        (3)(A)) for at least 90 percent of the energy source--
                ``(i) subparagraph (A)(iii) shall not apply, but
                ``(ii) the amount of credit determined under subsection 
            (a) with respect to such system shall not exceed the amount 
            which bears the same ratio to such amount of credit 
            (determined without regard to this subparagraph) as the 
            energy efficiency percentage of such system bears to 60 
            percent.''.
        (3) Conforming amendment.--Section 48(a)(1) is amended by 
    striking ``paragraphs (1)(B) and (2)(B)'' and inserting 
    ``paragraphs (1)(B), (2)(B), and (3)(B)''.
    (d) Increase of Credit Limitation for Fuel Cell Property.--
Subparagraph (B) of section 48(c)(1) is amended by striking ``$500'' 
and inserting ``$1,500''.
    (e) Public Utility Property Taken Into Account.--
        (1) In general.--Paragraph (3) of section 48(a) is amended by 
    striking the second sentence thereof.
        (2) Conforming amendments.--
            (A) Paragraph (1) of section 48(c) is amended by striking 
        subparagraph (D) and redesignating subparagraph (E) as 
        subparagraph (D).
            (B) Paragraph (2) of section 48(c) is amended by striking 
        subparagraph (D) and redesignating subparagraph (E) as 
        subparagraph (D).
    (f) Effective Date.--
        (1) In general.--Except as otherwise provided in this 
    subsection, the amendments made by this section shall take effect 
    on the date of the enactment of this Act.
        (2) Allowance against alternative minimum tax.--The amendments 
    made by subsection (b) shall apply to credits determined under 
    section 46 of the Internal Revenue Code of 1986 in taxable years 
    beginning after the date of the enactment of this Act and to 
    carrybacks of such credits.
        (3) Combined heat and power and fuel cell property.--The 
    amendments made by subsections (c) and (d) shall apply to periods 
    after the date of the enactment of this Act, in taxable years 
    ending after such date, under rules similar to the rules of section 
    48(m) of the Internal Revenue Code of 1986 (as in effect on the day 
    before the date of the enactment of the Revenue Reconciliation Act 
    of 1990).
        (4)  Public utility property.--The amendments made by 
    subsection (e) shall apply to periods after February 13, 2008, in 
    taxable years ending after such date, under rules similar to the 
    rules of section 48(m) of the Internal Revenue Code of 1986 (as in 
    effect on the day before the date of the enactment of the Revenue 
    Reconciliation Act of 1990).
    SEC. 104. ENERGY CREDIT FOR SMALL WIND PROPERTY.
    (a) In General.--Section 48(a)(3)(A), as amended by section 103, is 
amended by striking ``or'' at the end of clause (iv), by adding ``or'' 
at the end of clause (v), and by inserting after clause (v) the 
following new clause:
                ``(vi) qualified small wind energy property,''.
    (b) 30 Percent Credit.--Section 48(a)(2)(A)(i) is amended by 
striking ``and'' at the end of subclause (II) and by inserting after 
subclause (III) the following new subclause:

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

    (c) Qualified Small Wind Energy Property.--Section 48(c), as 
amended by section 103, is amended by adding at the end the following 
new paragraph:
        ``(4) Qualified small wind energy property.--
            ``(A) In general.--The term `qualified small wind energy 
        property' means property which uses a qualifying small wind 
        turbine to generate electricity.
            ``(B) Limitation.--In the case of qualified small wind 
        energy property placed in service during the taxable year, the 
        credit otherwise determined under subsection (a)(1) for such 
        year with respect to all such property of the taxpayer shall 
        not exceed $4,000.
            ``(C) Qualifying small wind turbine.--The term `qualifying 
        small wind turbine' means a wind turbine which has a nameplate 
        capacity of not more than 100 kilowatts.
            ``(D) Termination.--The term `qualified small wind energy 
        property' shall not include any property for any period after 
        December 31, 2016.''.
    (d) Conforming Amendment.--Section 48(a)(1), as amended by section 
103, is amended by striking ``paragraphs (1)(B), (2)(B), and (3)(B)'' 
and inserting ``paragraphs (1)(B), (2)(B), (3)(B), and (4)(B)''.
    (e) Effective Date.--The amendments made by this section shall 
apply to periods after the date of the enactment of this Act, in 
taxable years ending after such date, under rules similar to the rules 
of section 48(m) of the Internal Revenue Code of 1986 (as in effect on 
the day before the date of the enactment of the Revenue Reconciliation 
Act of 1990).
    SEC. 105. ENERGY CREDIT FOR GEOTHERMAL HEAT PUMP SYSTEMS.
    (a) In General.--Subparagraph (A) of section 48(a)(3), as amended 
by this Act, is amended by striking ``or'' at the end of clause (v), by 
inserting ``or'' at the end of clause (vi), and by adding at the end 
the following new clause:
                ``(vii) equipment which uses the ground or ground water 
            as a thermal energy source to heat a structure or as a 
            thermal energy sink to cool a structure, but only with 
            respect to periods ending before January 1, 2017,''.
    (b) Effective Date.--The amendments made by this section shall 
apply to periods after the date of the enactment of this Act, in 
taxable years ending after such date, under rules similar to the rules 
of section 48(m) of the Internal Revenue Code of 1986 (as in effect on 
the day before the date of the enactment of the Revenue Reconciliation 
Act of 1990).
    SEC. 106. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT PROPERTY.
    (a) Extension.--Section 25D(g) is amended by striking ``December 
31, 2008'' and inserting ``December 31, 2016''.
    (b) Removal of Limitation for Solar Electric Property.--
        (1) In general.--Section 25D(b)(1), as amended by subsections 
    (c) and (d), is amended--
            (A) by striking subparagraph (A), and
            (B) by redesignating subparagraphs (B) through (E) as 
        subparagraphs (A) through and (D), respectively.
        (2) Conforming amendment.--Section 25D(e)(4)(A), as amended by 
    subsections (c) and (d), is amended--
            (A) by striking clause (i), and
            (B) by redesignating clauses (ii) through (v) as clauses 
        (i) and (iv), respectively.
    (c) Credit for Residential Wind Property.--
        (1) In general.--Section 25D(a) is amended by striking ``and'' 
    at the end of paragraph (2), by striking the period at the end of 
    paragraph (3) and inserting ``, and'', and by adding at the end the 
    following new paragraph:
        ``(4) 30 percent of the qualified small wind energy property 
    expenditures made by the taxpayer during such year.''.
        (2) Limitation.--Section 25D(b)(1) is amended by striking 
    ``and'' at the end of subparagraph (B), by striking the period at 
    the end of subparagraph (C) and inserting ``, and'', and by adding 
    at the end the following new subparagraph:
            ``(D) $500 with respect to each half kilowatt of capacity 
        (not to exceed $4,000) of wind turbines for which qualified 
        small wind energy property expenditures are made.''.
        (3) Qualified small wind energy property expenditures.--
            (A) In general.--Section 25D(d) is amended by adding at the 
        end the following new paragraph:
        ``(4) Qualified small wind energy property expenditure.--The 
    term `qualified small wind energy property expenditure' means an 
    expenditure for property which uses a wind turbine to generate 
    electricity for use in connection with a dwelling unit located in 
    the United States and used as a residence by the taxpayer.''.
            (B) No double benefit.--Section 45(d)(1) is amended by 
        adding at the end the following new sentence: ``Such term shall 
        not include any facility with respect to which any qualified 
        small wind energy property expenditure (as defined in 
        subsection (d)(4) of section 25D) is taken into account in 
        determining the credit under such section.''.
        (4) Maximum expenditures in case of joint occupancy.--Section 
    25D(e)(4)(A) is amended by striking ``and'' at the end of clause 
    (ii), by striking the period at the end of clause (iii) and 
    inserting ``, and'', and by adding at the end the following new 
    clause:
                ``(iv) $1,667 in the case of each half kilowatt of 
            capacity (not to exceed $13,333) of wind turbines for which 
            qualified small wind energy property expenditures are 
            made.''.
    (d) Credit for Geothermal Heat pump Systems.--
        (1) In general.--Section 25D(a), as amended by subsection (c), 
    is amended by striking ``and'' at the end of paragraph (3), by 
    striking the period at the end of paragraph (4) and inserting ``, 
    and'', and by adding at the end the following new paragraph:
        ``(5) 30 percent of the qualified geothermal heat pump property 
    expenditures made by the taxpayer during such year.''.
        (2) Limitation.--Section 25D(b)(1), as amended by subsection 
    (c), is amended by striking ``and'' at the end of subparagraph (C), 
    by striking the period at the end of subparagraph (D) and inserting 
    ``, and'', and by adding at the end the following new subparagraph:
            ``(E) $2,000 with respect to any qualified geothermal heat 
        pump property expenditures.''.
        (3) Qualified geothermal heat pump property expenditure.--
    Section 25D(d), as amended by subsection (c), is amended by adding 
    at the end the following new paragraph:
        ``(5) Qualified geothermal heat pump property expenditure.--
            ``(A) In general.--The term `qualified geothermal heat pump 
        property expenditure' means an expenditure for qualified 
        geothermal heat pump property installed on or in connection 
        with a dwelling unit located in the United States and used as a 
        residence by the taxpayer.
            ``(B) Qualified geothermal heat pump property.--The term 
        `qualified geothermal heat pump property' means any equipment 
        which--
                ``(i) uses the ground or ground water as a thermal 
            energy source to heat the dwelling unit referred to in 
            subparagraph (A) or as a thermal energy sink to cool such 
            dwelling unit, and
                ``(ii) meets the requirements of the Energy Star 
            program which are in effect at the time that the 
            expenditure for such equipment is made.''.
        (4) Maximum expenditures in case of joint occupancy.--Section 
    25D(e)(4)(A), as amended by subsection (c), is amended by striking 
    ``and'' at the end of clause (iii), by striking the period at the 
    end of clause (iv) and inserting ``, and'', and by adding at the 
    end the following new clause:
                ``(v) $6,667 in the case of any qualified geothermal 
            heat pump property expenditures.''.
    (e) Credit Allowed Against Alternative Minimum Tax.--
        (1) In general.--Subsection (c) of section 25D is amended to 
    read as follows:
    ``(c) Limitation Based on Amount of Tax; Carryforward of Unused 
Credit.--
        ``(1) Limitation based on amount of tax.--In the case of a 
    taxable year to which section 26(a)(2) does not apply, the credit 
    allowed under subsection (a) for the taxable year shall not exceed 
    the excess of--
            ``(A) the sum of the regular tax liability (as defined in 
        section 26(b)) plus the tax imposed by section 55, over
            ``(B) the sum of the credits allowable under this subpart 
        (other than this section) and section 27 for the taxable year.
        ``(2) Carryforward of unused credit.--
            ``(A) Rule for years in which all personal credits allowed 
        against regular and alternative minimum tax.--In the case of a 
        taxable year to which section 26(a)(2) applies, if the credit 
        allowable under subsection (a) exceeds the limitation imposed 
        by section 26(a)(2) for such taxable year reduced by the sum of 
        the credits allowable under this subpart (other than this 
        section), such excess shall be carried to the succeeding 
        taxable year and added to the credit allowable under subsection 
        (a) for such succeeding taxable year.
            ``(B) Rule for other years.--In the case of a taxable year 
        to which section 26(a)(2) does not apply, if the credit 
        allowable under subsection (a) exceeds the limitation imposed 
        by paragraph (1) for such taxable year, such excess shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such succeeding taxable 
        year.''.
        (2) Conforming amendments.--
            (A) Section 23(b)(4)(B) is amended by inserting ``and 
        section 25D'' after ``this section''.
            (B) Section 24(b)(3)(B) is amended by striking ``and 25B'' 
        and inserting ``, 25B, and 25D''.
            (C) Section 25B(g)(2) is amended by striking ``section 23'' 
        and inserting ``sections 23 and 25D''.
            (D) Section 26(a)(1) is amended by striking ``and 25B'' and 
        inserting ``25B, and 25D''.
    (f) Effective Date.--
        (1) In general.--Except as provided in paragraph (2), the 
    amendments made by this section shall apply to taxable years 
    beginning after December 31, 2007.
        (2) Solar electric property limitation.--The amendments made by 
    subsection (b) shall apply to taxable years beginning after 
    December 31, 2008.
        (3) Application of egtrra sunset.--The amendments made by 
    subparagraphs (A) and (B) of subsection (e)(2) shall be subject to 
    title IX of the Economic Growth and Tax Relief Reconciliation Act 
    of 2001 in the same manner as the provisions of such Act to which 
    such amendments relate.
    SEC. 107. NEW CLEAN RENEWABLE ENERGY BONDS.
    (a) In General.--Subpart I of part IV of subchapter A of chapter 1 
is amended by adding at the end the following new section:
    ``SEC. 54C. NEW CLEAN RENEWABLE ENERGY BONDS.
    ``(a) New Clean Renewable Energy Bond.--For purposes of this 
subpart, the term `new clean renewable energy bond' means any bond 
issued as part of an issue if--
        ``(1) 100 percent of the available project proceeds of such 
    issue are to be used for capital expenditures incurred by 
    governmental bodies, public power providers, or cooperative 
    electric companies for one or more qualified renewable energy 
    facilities,
        ``(2) the bond is issued by a qualified issuer, and
        ``(3) the issuer designates such bond for purposes of this 
    section.
    ``(b) Reduced Credit Amount.--The annual credit determined under 
section 54A(b) with respect to any new clean renewable energy bond 
shall be 70 percent of the amount so determined without regard to this 
subsection.
    ``(c) Limitation on Amount of Bonds Designated.--
        ``(1) In general.--The maximum aggregate face amount of bonds 
    which may be designated under subsection (a) by any issuer shall 
    not exceed the limitation amount allocated under this subsection to 
    such issuer.
        ``(2) National limitation on amount of bonds designated.--There 
    is a national new clean renewable energy bond limitation of 
    $800,000,000 which shall be allocated by the Secretary as provided 
    in paragraph (3), except that--
            ``(A) not more than 33\1/3\ percent thereof may be 
        allocated to qualified projects of public power providers,
            ``(B) not more than 33\1/3\ percent thereof may be 
        allocated to qualified projects of governmental bodies, and
            ``(C) not more than 33\1/3\ percent thereof may be 
        allocated to qualified projects of cooperative electric 
        companies.
        ``(3) Method of allocation.--
            ``(A) Allocation among public power providers.--After the 
        Secretary determines the qualified projects of public power 
        providers which are appropriate for receiving an allocation of 
        the national new clean renewable energy bond limitation, the 
        Secretary shall, to the maximum extent practicable, make 
        allocations among such projects in such manner that the amount 
        allocated to each such project bears the same ratio to the cost 
        of such project as the limitation under paragraph (2)(A) bears 
        to the cost of all such projects.
            ``(B) Allocation among governmental bodies and cooperative 
        electric companies.--The Secretary shall make allocations of 
        the amount of the national new clean renewable energy bond 
        limitation described in paragraphs (2)(B) and (2)(C) among 
        qualified projects of governmental bodies and cooperative 
        electric companies, respectively, in such manner as the 
        Secretary determines appropriate.
    ``(d) Definitions.--For purposes of this section--
        ``(1) Qualified renewable energy facility.--The term `qualified 
    renewable energy facility' means a qualified facility (as 
    determined under section 45(d) without regard to paragraphs (8) and 
    (10) thereof and to any placed in service date) owned by a public 
    power provider, a governmental body, or a cooperative electric 
    company.
        ``(2) Public power provider.--The term `public power provider' 
    means a State utility with a service obligation, as such terms are 
    defined in section 217 of the Federal Power Act (as in effect on 
    the date of the enactment of this paragraph).
        ``(3) Governmental body.--The term `governmental body' means 
    any State or Indian tribal government, or any political subdivision 
    thereof.
        ``(4) Cooperative electric company.--The term `cooperative 
    electric company' means a mutual or cooperative electric company 
    described in section 501(c)(12) or section 1381(a)(2)(C).
        ``(5) Clean renewable energy bond lender.--The term `clean 
    renewable energy bond lender' means a lender which is a cooperative 
    which is owned by, or has outstanding loans to, 100 or more 
    cooperative electric companies and is in existence on February 1, 
    2002, and shall include any affiliated entity which is controlled 
    by such lender.
        ``(6) Qualified issuer.--The term `qualified issuer' means a 
    public power provider, a cooperative electric company, a 
    governmental body, a clean renewable energy bond lender, or a not-
    for-profit electric utility which has received a loan or loan 
    guarantee under the Rural Electrification Act.''.
    (b) Conforming Amendments.--
        (1) Paragraph (1) of section 54A(d) is amended to read as 
    follows:
        ``(1) Qualified tax credit bond.--The term `qualified tax 
    credit bond' means--
            ``(A) a qualified forestry conservation bond, or
            ``(B) a new clean renewable energy bond,
    which is part of an issue that meets requirements of paragraphs 
    (2), (3), (4), (5), and (6).''.
        (2) Subparagraph (C) of section 54A(d)(2) is amended to read as 
    follows:
            ``(C) Qualified purpose.--For purposes of this paragraph, 
        the term `qualified purpose' means--
                ``(i) in the case of a qualified forestry conservation 
            bond, a purpose specified in section 54B(e), and
                ``(ii) in the case of a new clean renewable energy 
            bond, a purpose specified in section 54C(a)(1).''.
        (3) The table of sections for subpart I of part IV of 
    subchapter A of chapter 1 is amended by adding at the end the 
    following new item:

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

    (c) Extension for Clean Renewable Energy Bonds.--Subsection (m) of 
section 54 is amended by striking ``December 31, 2008'' and inserting 
``December 31, 2009''.
    (d) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.
    SEC. 108. CREDIT FOR STEEL INDUSTRY FUEL.
    (a) Treatment as Refined Coal.--
        (1) In general.--Subparagraph (A) of section 45(c)(7) of the 
    Internal Revenue Code of 1986 (relating to refined coal), as 
    amended by this Act, is amended to read as follows:
            ``(A) In general.--The term `refined coal' means a fuel--
                ``(i) which--

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

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

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

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

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

                ``(ii) Modifications.--

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

                ``(iii) Modifications.--The modifications described in 
            this clause are modifications to an existing facility which 
            allow such facility to produce steel industry fuel.
                ``(iv) Barrel-of-oil equivalent.--For purposes of this 
            subparagraph, a barrel-of-oil equivalent is the amount of 
            steel industry fuel that has a Btu content of 5,800,000 
            Btus.''.
        (2) Inflation adjustment.--Paragraph (2) of section 45(b) of 
    such Code is amended by inserting ``the $3 amount in subsection 
    (e)(8)(D)(ii)(I),'' after ``subsection (e)(8)(A),''.
    (c) Termination.--Paragraph (8) of section 45(d) of the Internal 
Revenue Code of 1986 (relating to refined coal production facility), as 
amended by this Act, is amended to read as follows:
        ``(8) Refined coal production facility.--In the case of a 
    facility that produces refined coal, the term `refined coal 
    production facility' means--
            ``(A) with respect to a facility producing steel industry 
        fuel, any facility (or any modification to a facility) which is 
        placed in service before January 1, 2010, and
            ``(B) with respect to any other facility producing refined 
        coal, any facility placed in service after the date of the 
        enactment of the American Jobs Creation Act of 2004 and before 
        January 1, 2010.''.
    (d) Coordination With Credit for Producing Fuel From a 
Nonconventional Source.--
        (1) In general.--Subparagraph (B) of section 45(e)(9) of the 
    Internal Revenue Code of 1986 is amended--
            (A) by striking ``The term'' and inserting the following:
                ``(i) In general.--The term'', and
            (B) by adding at the end the following new clause:
                ``(ii) Exception for steel industry coal.--In the case 
            of a facility producing steel industry fuel, clause (i) 
            shall not apply to so much of the refined coal produced at 
            such facility as is steel industry fuel.''.
        (2) No double benefit.--Section 45K(g)(2) of such Code is 
    amended by adding at the end the following new subparagraph:
            ``(E) Coordination with section 45.--No credit shall be 
        allowed with respect to any qualified fuel which is steel 
        industry fuel (as defined in section 45(c)(7)) if a credit is 
        allowed to the taxpayer for such fuel under section 45.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to fuel produced and sold after September 30, 2008.
    SEC. 109. SPECIAL RULE TO IMPLEMENT FERC AND STATE ELECTRIC 
      RESTRUCTURING POLICY.
    (a) Extension for Qualified Electric Utilities.--
        (1) In general.--Paragraph (3) of section 451(i) is amended by 
    inserting ``(before January 1, 2010, in the case of a qualified 
    electric utility)'' after ``January 1, 2008''.
        (2) Qualified electric utility.--Subsection (i) of section 451 
    is amended by redesignating paragraphs (6) through (10) as 
    paragraphs (7) through (11), respectively, and by inserting after 
    paragraph (5) the following new paragraph:
        ``(6) Qualified electric utility.--For purposes of this 
    subsection, the term `qualified electric utility' means a person 
    that, as of the date of the qualifying electric transmission 
    transaction, is vertically integrated, in that it is both--
            ``(A) a transmitting utility (as defined in section 3(23) 
        of the Federal Power Act (16 U.S.C. 796(23))) with respect to 
        the transmission facilities to which the election under this 
        subsection applies, and
            ``(B) an electric utility (as defined in section 3(22) of 
        the Federal Power Act (16 U.S.C. 796(22))).''.
    (b) Extension of Period for Transfer of Operational Control 
Authorized by FERC.--Clause (ii) of section 451(i)(4)(B) is amended by 
striking ``December 31, 2007'' and inserting ``the date which is 4 
years after the close of the taxable year in which the transaction 
occurs''.
    (c) Property Located Outside the United States Not Treated as 
Exempt Utility Property.--Paragraph (5) of section 451(i) is amended by 
adding at the end the following new subparagraph:
            ``(C) Exception for property located outside the united 
        states.--The term `exempt utility property' shall not include 
        any property which is located outside the United States.''.
    (d) Effective Dates.--
        (1) Extension.--The amendments made by subsection (a) shall 
    apply to transactions after December 31, 2007.
        (2) Transfers of operational control.--The amendment made by 
    subsection (b) shall take effect as if included in section 909 of 
    the American Jobs Creation Act of 2004.
        (3) Exception for property located outside the united states.--
    The amendment made by subsection (c) shall apply to transactions 
    after the date of the enactment of this Act.

           Subtitle B--Carbon Mitigation and Coal Provisions

    SEC. 111. EXPANSION AND MODIFICATION OF ADVANCED COAL PROJECT 
      INVESTMENT CREDIT.
    (a) Modification of Credit Amount.--Section 48A(a) is amended by 
striking ``and'' at the end of paragraph (1), by striking the period at 
the end of paragraph (2) and inserting ``, and'', and by adding at the 
end the following new paragraph:
        ``(3) 30 percent of the qualified investment for such taxable 
    year in the case of projects described in clause (iii) of 
    subsection (d)(3)(B).''.
    (b) Expansion of Aggregate Credits.--Section 48A(d)(3)(A) is 
amended by striking ``$1,300,000,000'' and inserting 
``$2,550,000,000''.
    (c) Authorization of Additional Projects.--
        (1) In general.--Subparagraph (B) of section 48A(d)(3) is 
    amended to read as follows:
            ``(B) Particular projects.--Of the dollar amount in 
        subparagraph (A), the Secretary is authorized to certify--
                ``(i) $800,000,000 for integrated gasification combined 
            cycle projects the application for which is submitted 
            during the period described in paragraph (2)(A)(i),
                ``(ii) $500,000,000 for projects which use other 
            advanced coal-based generation technologies the application 
            for which is submitted during the period described in 
            paragraph (2)(A)(i), and
                ``(iii) $1,250,000,000 for advanced coal-based 
            generation technology projects the application for which is 
            submitted during the period described in paragraph 
            (2)(A)(ii).''.
        (2) Application period for additional projects.--Subparagraph 
    (A) of section 48A(d)(2) is amended to read as follows:
            ``(A) Application period.--Each applicant for certification 
        under this paragraph shall submit an application meeting the 
        requirements of subparagraph (B). An applicant may only submit 
        an application--
                ``(i) for an allocation from the dollar amount 
            specified in clause (i) or (ii) of paragraph (3)(B) during 
            the 3-year period beginning on the date the Secretary 
            establishes the program under paragraph (1), and
                ``(ii) for an allocation from the dollar amount 
            specified in paragraph (3)(B)(iii) during the 3-year period 
            beginning at the earlier of the termination of the period 
            described in clause (i) or the date prescribed by the 
            Secretary.''.
        (3) Capture and sequestration of carbon dioxide emissions 
    requirement.--
            (A) In general.--Section 48A(e)(1) is amended by striking 
        ``and'' at the end of subparagraph (E), by striking the period 
        at the end of subparagraph (F) and inserting ``; and'', and by 
        adding at the end the following new subparagraph:
            ``(G) in the case of any project the application for which 
        is submitted during the period described in subsection 
        (d)(2)(A)(ii), the project includes equipment which separates 
        and sequesters at least 65 percent (70 percent in the case of 
        an application for reallocated credits under subsection (d)(4)) 
        of such project's total carbon dioxide emissions.''.
            (B) Highest priority for projects which sequester carbon 
        dioxide emissions.--Section 48A(e)(3) is amended by striking 
        ``and'' at the end of subparagraph (A)(iii), by striking the 
        period at the end of subparagraph (B)(iii) and inserting ``, 
        and'', and by adding at the end the following new subparagraph:
            ``(C) give highest priority to projects with the greatest 
        separation and sequestration percentage of total carbon dioxide 
        emissions.''.
            (C) Recapture of credit for failure to sequester.--Section 
        48A is amended by adding at the end the following new 
        subsection:
    ``(i) Recapture of Credit for Failure To Sequester.--The Secretary 
shall provide for recapturing the benefit of any credit allowable under 
subsection (a) with respect to any project which fails to attain or 
maintain the separation and sequestration requirements of subsection 
(e)(1)(G).''.
        (4) Additional priority for research partnerships.--Section 
    48A(e)(3)(B), as amended by paragraph (3)(B), is amended--
            (A) by striking ``and'' at the end of clause (ii),
            (B) by redesignating clause (iii) as clause (iv), and
            (C) by inserting after clause (ii) the following new 
        clause:
                ``(iii) applicant participants who have a research 
            partnership with an eligible educational institution (as 
            defined in section 529(e)(5)), and''.
        (5) Clerical amendment.--Section 48A(e)(3) is amended by 
    striking ``integrated gasification combined cycle'' in the heading 
    and inserting ``certain''.
    (d) Disclosure of Allocations.--Section 48A(d) is amended by adding 
at the end the following new paragraph:
        ``(5) Disclosure of allocations.--The Secretary shall, upon 
    making a certification under this subsection or section 48B(d), 
    publicly disclose the identity of the applicant and the amount of 
    the credit certified with respect to such applicant.''.
    (e) Effective Dates.--
        (1) In general.--Except as otherwise provided in this 
    subsection, the amendments made by this section shall apply to 
    credits the application for which is submitted during the period 
    described in section 48A(d)(2)(A)(ii) of the Internal Revenue Code 
    of 1986 and which are allocated or reallocated after the date of 
    the enactment of this Act.
        (2) Disclosure of allocations.--The amendment made by 
    subsection (d) shall apply to certifications made after the date of 
    the enactment of this Act.
        (3) Clerical amendment.--The amendment made by subsection 
    (c)(5) shall take effect as if included in the amendment made by 
    section 1307(b) of the Energy Tax Incentives Act of 2005.
    SEC. 112. EXPANSION AND MODIFICATION OF COAL GASIFICATION 
      INVESTMENT CREDIT.
    (a) Modification of Credit Amount.--Section 48B(a) is amended by 
inserting ``(30 percent in the case of credits allocated under 
subsection (d)(1)(B))'' after ``20 percent''.
    (b) Expansion of Aggregate Credits.--Section 48B(d)(1) is amended 
by striking ``shall not exceed $350,000,000'' and all that follows and 
inserting ``shall not exceed--
            ``(A) $350,000,000, plus
            ``(B) $250,000,000 for qualifying gasification projects 
        that include equipment which separates and sequesters at least 
        75 percent of such project's total carbon dioxide emissions.''.
    (c) Recapture of Credit for Failure to Sequester.--Section 48B is 
amended by adding at the end the following new subsection:
    ``(f) Recapture of Credit for Failure to Sequester.--The Secretary 
shall provide for recapturing the benefit of any credit allowable under 
subsection (a) with respect to any project which fails to attain or 
maintain the separation and sequestration requirements for such project 
under subsection (d)(1).''.
    (d) Selection Priorities.--Section 48B(d) is amended by adding at 
the end the following new paragraph:
        ``(4) Selection priorities.--In determining which qualifying 
    gasification projects to certify under this section, the Secretary 
    shall--
            ``(A) give highest priority to projects with the greatest 
        separation and sequestration percentage of total carbon dioxide 
        emissions, and
            ``(B) give high priority to applicant participants who have 
        a research partnership with an eligible educational institution 
        (as defined in section 529(e)(5)).''.
    (e) Eligible Projects Include Transportation Grade Liquid Fuels.--
Section 48B(c)(7) (defining eligible entity) is amended by striking 
``and'' at the end of subparagraph (F), by striking the period at the 
end of subparagraph (G) and inserting ``, and'', and by adding at the 
end the following new subparagraph:
            ``(H) transportation grade liquid fuels.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to credits described in section 48B(d)(1)(B) of the Internal 
Revenue Code of 1986 which are allocated or reallocated after the date 
of the enactment of this Act.
    SEC. 113. TEMPORARY INCREASE IN COAL EXCISE TAX; FUNDING OF BLACK 
      LUNG DISABILITY TRUST FUND.
    (a) Extension of Temporary Increase.--Paragraph (2) of section 
4121(e) is amended--
        (1) by striking ``January 1, 2014'' in subparagraph (A) and 
    inserting ``December 31, 2018'', and
        (2) by striking ``January 1 after 1981'' in subparagraph (B) 
    and inserting ``December 31 after 2007''.
    (b) Restructuring of Trust Fund Debt.--
        (1) Definitions.--For purposes of this subsection--
            (A) Market value of the outstanding repayable advances, 
        plus accrued interest.--The term ``market value of the 
        outstanding repayable advances, plus accrued interest'' means 
        the present value (determined by the Secretary of the Treasury 
        as of the refinancing date and using the Treasury rate as the 
        discount rate) of the stream of principal and interest payments 
        derived assuming that each repayable advance that is 
        outstanding on the refinancing date is due on the 30th 
        anniversary of the end of the fiscal year in which the advance 
        was made to the Trust Fund, and that all such principal and 
        interest payments are made on September 30 of the applicable 
        fiscal year.
            (B) Refinancing date.--The term ``refinancing date'' means 
        the date occurring 2 days after the enactment of this Act.
            (C) Repayable advance.--The term ``repayable advance'' 
        means an amount that has been appropriated to the Trust Fund in 
        order to make benefit payments and other expenditures that are 
        authorized under section 9501 of the Internal Revenue Code of 
        1986 and are required to be repaid when the Secretary of the 
        Treasury determines that monies are available in the Trust Fund 
        for such purpose.
            (D) Treasury rate.--The term ``Treasury rate'' means a rate 
        determined by the Secretary of the Treasury, taking into 
        consideration current market yields on outstanding marketable 
        obligations of the United States of comparable maturities.
            (E) Treasury 1-year rate.--The term ``Treasury 1-year 
        rate'' means a rate determined by the Secretary of the 
        Treasury, taking into consideration current market yields on 
        outstanding marketable obligations of the United States with 
        remaining periods to maturity of approximately 1 year, to have 
        been in effect as of the close of business 1 business day prior 
        to the date on which the Trust Fund issues obligations to the 
        Secretary of the Treasury under paragraph (2)(B).
        (2) Refinancing of outstanding principal of repayable advances 
    and unpaid interest on such advances.--
            (A) Transfer to general fund.--On the refinancing date, the 
        Trust Fund shall repay the market value of the outstanding 
        repayable advances, plus accrued interest, by transferring into 
        the general fund of the Treasury the following sums:
                (i) The proceeds from obligations that the Trust Fund 
            shall issue to the Secretary of the Treasury in such 
            amounts as the Secretaries of Labor and the Treasury shall 
            determine and bearing interest at the Treasury rate, and 
            that shall be in such forms and denominations and be 
            subject to such other terms and conditions, including 
            maturity, as the Secretary of the Treasury shall prescribe.
                (ii) All, or that portion, of the appropriation made to 
            the Trust Fund pursuant to paragraph (3) that is needed to 
            cover the difference defined in that paragraph.
            (B) Repayment of obligations.--In the event that the Trust 
        Fund is unable to repay the obligations that it has issued to 
        the Secretary of the Treasury under subparagraph (A)(i) and 
        this subparagraph, or is unable to make benefit payments and 
        other authorized expenditures, the Trust Fund shall issue 
        obligations to the Secretary of the Treasury in such amounts as 
        may be necessary to make such repayments, payments, and 
        expenditures, with a maturity of 1 year, and bearing interest 
        at the Treasury 1-year rate. These obligations shall be in such 
        forms and denominations and be subject to such other terms and 
        conditions as the Secretary of the Treasury shall prescribe.
            (C) Authority to issue obligations.--The Trust Fund is 
        authorized to issue obligations to the Secretary of the 
        Treasury under subparagraphs (A)(i) and (B). The Secretary of 
        the Treasury is authorized to purchase such obligations of the 
        Trust Fund. For the purposes of making such purchases, the 
        Secretary of the Treasury may use as a public debt transaction 
        the proceeds from the sale of any securities issued under 
        chapter 31 of title 31, United States Code, and the purposes 
        for which securities may be issued under such chapter are 
        extended to include any purchase of such Trust Fund obligations 
        under this subparagraph.
        (3) One-time appropriation.--There is hereby appropriated to 
    the Trust Fund an amount sufficient to pay to the general fund of 
    the Treasury the difference between--
            (A) the market value of the outstanding repayable advances, 
        plus accrued interest; and
            (B) the proceeds from the obligations issued by the Trust 
        Fund to the Secretary of the Treasury under paragraph 
        (2)(A)(i).
        (4) Prepayment of trust fund obligations.--The Trust Fund is 
    authorized to repay any obligation issued to the Secretary of the 
    Treasury under subparagraphs (A)(i) and (B) of paragraph (2) prior 
    to its maturity date by paying a prepayment price that would, if 
    the obligation being prepaid (including all unpaid interest accrued 
    thereon through the date of prepayment) were purchased by a third 
    party and held to the maturity date of such obligation, produce a 
    yield to the third-party purchaser for the period from the date of 
    purchase to the maturity date of such obligation substantially 
    equal to the Treasury yield on outstanding marketable obligations 
    of the United States having a comparable maturity to this period.
    SEC. 114. SPECIAL RULES FOR REFUND OF THE COAL EXCISE TAX TO 
      CERTAIN COAL PRODUCERS AND EXPORTERS.
    (a) Refund.--
        (1) Coal producers.--
            (A) In general.--Notwithstanding subsections (a)(1) and (c) 
        of section 6416 and section 6511 of the Internal Revenue Code 
        of 1986, if--
                (i) a coal producer establishes that such coal 
            producer, or a party related to such coal producer, 
            exported coal produced by such coal producer to a foreign 
            country or shipped coal produced by such coal producer to a 
            possession of the United States, or caused such coal to be 
            exported or shipped, the export or shipment of which was 
            other than through an exporter who meets the requirements 
            of paragraph (2),
                (ii) such coal producer filed an excise tax return on 
            or after October 1, 1990, and on or before the date of the 
            enactment of this Act, and
                (iii) such coal producer files a claim for refund with 
            the Secretary not later than the close of the 30-day period 
            beginning on the date of the enactment of this Act,
        then the Secretary shall pay to such coal producer an amount 
        equal to the tax paid under section 4121 of such Code on such 
        coal exported or shipped by the coal producer or a party 
        related to such coal producer, or caused by the coal producer 
        or a party related to such coal producer to be exported or 
        shipped.
            (B) Special rules for certain taxpayers.--For purposes of 
        this section--
                (i) In general.--If a coal producer or a party related 
            to a coal producer has received a judgment described in 
            clause (iii), such coal producer shall be deemed to have 
            established the export of coal to a foreign country or 
            shipment of coal to a possession of the United States under 
            subparagraph (A)(i).
                (ii) Amount of payment.--If a taxpayer described in 
            clause (i) is entitled to a payment under subparagraph (A), 
            the amount of such payment shall be reduced by any amount 
            paid pursuant to the judgment described in clause (iii).
                (iii) Judgment described.--A judgment is described in 
            this subparagraph if such judgment--

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

        (2) Exporters.--Notwithstanding subsections (a)(1) and (c) of 
    section 6416 and section 6511 of the Internal Revenue Code of 1986, 
    and a judgment described in paragraph (1)(B)(iii) of this 
    subsection, if--
            (A) an exporter establishes that such exporter exported 
        coal to a foreign country or shipped coal to a possession of 
        the United States, or caused such coal to be so exported or 
        shipped,
            (B) such exporter filed a tax return on or after October 1, 
        1990, and on or before the date of the enactment of this Act, 
        and
            (C) such exporter files a claim for refund with the 
        Secretary not later than the close of the 30-day period 
        beginning on the date of the enactment of this Act,
    then the Secretary shall pay to such exporter an amount equal to 
    $0.825 per ton of such coal exported by the exporter or caused to 
    be exported or shipped, or caused to be exported or shipped, by the 
    exporter.
    (b) Limitations.--Subsection (a) shall not apply with respect to 
exported coal if a settlement with the Federal Government has been made 
with and accepted by, the coal producer, a party related to such coal 
producer, or the exporter, of such coal, as of the date that the claim 
is filed under this section with respect to such exported coal. For 
purposes of this subsection, the term ``settlement with the Federal 
Government'' shall not include any settlement or stipulation entered 
into as of the date of the enactment of this Act, the terms of which 
contemplate a judgment concerning which any party has reserved the 
right to file an appeal, or has filed an appeal.
    (c) Subsequent Refund Prohibited.--No refund shall be made under 
this section to the extent that a credit or refund of such tax on such 
exported or shipped coal has been paid to any person.
    (d) Definitions.--For purposes of this section--
        (1) Coal producer.--The term ``coal producer'' means the person 
    in whom is vested ownership of the coal immediately after the coal 
    is severed from the ground, without regard to the existence of any 
    contractual arrangement for the sale or other disposition of the 
    coal or the payment of any royalties between the producer and third 
    parties. The term includes any person who extracts coal from coal 
    waste refuse piles or from the silt waste product which results 
    from the wet washing (or similar processing) of coal.
        (2) Exporter.--The term ``exporter'' means a person, other than 
    a coal producer, who does not have a contract, fee arrangement, or 
    any other agreement with a producer or seller of such coal to 
    export or ship such coal to a third party on behalf of the producer 
    or seller of such coal and--
            (A) is indicated in the shipper's export declaration or 
        other documentation as the exporter of record, or
            (B) actually exported such coal to a foreign country or 
        shipped such coal to a possession of the United States, or 
        caused such coal to be so exported or shipped.
        (3) Related party.--The term ``a party related to such coal 
    producer'' means a person who--
            (A) is related to such coal producer through any degree of 
        common management, stock ownership, or voting control,
            (B) is related (within the meaning of section 144(a)(3) of 
        the Internal Revenue Code of 1986) to such coal producer, or
            (C) has a contract, fee arrangement, or any other agreement 
        with such coal producer to sell such coal to a third party on 
        behalf of such coal producer.
        (4) Secretary.--The term ``Secretary'' means the Secretary of 
    Treasury or the Secretary's designee.
    (e) Timing of Refund.--With respect to any claim for refund filed 
pursuant to this section, the Secretary shall determine whether the 
requirements of this section are met not later than 180 days after such 
claim is filed. If the Secretary determines that the requirements of 
this section are met, the claim for refund shall be paid not later than 
180 days after the Secretary makes such determination.
    (f) Interest.--Any refund paid pursuant to this section shall be 
paid by the Secretary with interest from the date of overpayment 
determined by using the overpayment rate and method under section 6621 
of the Internal Revenue Code of 1986.
    (g) Denial of Double Benefit.--The payment under subsection (a) 
with respect to any coal shall not exceed--
        (1) in the case of a payment to a coal producer, the amount of 
    tax paid under section 4121 of the Internal Revenue Code of 1986 
    with respect to such coal by such coal producer or a party related 
    to such coal producer, and
        (2) in the case of a payment to an exporter, an amount equal to 
    $0.825 per ton with respect to such coal exported by the exporter 
    or caused to be exported by the exporter.
    (h) Application of Section.--This section applies only to claims on 
coal exported or shipped on or after October 1, 1990, through the date 
of the enactment of this Act.
    (i) Standing Not Conferred.--
        (1) Exporters.--With respect to exporters, this section shall 
    not confer standing upon an exporter to commence, or intervene in, 
    any judicial or administrative proceeding concerning a claim for 
    refund by a coal producer of any Federal or State tax, fee, or 
    royalty paid by the coal producer.
        (2) Coal producers.--With respect to coal producers, this 
    section shall not confer standing upon a coal producer to commence, 
    or intervene in, any judicial or administrative proceeding 
    concerning a claim for refund by an exporter of any Federal or 
    State tax, fee, or royalty paid by the producer and alleged to have 
    been passed on to an exporter.
    SEC. 115. TAX CREDIT FOR CARBON DIOXIDE SEQUESTRATION.
    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business credits) is amended by adding at the end the 
following new section:
    ``SEC. 45Q. CREDIT FOR CARBON DIOXIDE SEQUESTRATION.
    ``(a) General Rule.--For purposes of section 38, the carbon dioxide 
sequestration credit for any taxable year is an amount equal to the sum 
of--
        ``(1) $20 per metric ton of qualified carbon dioxide which is--
            ``(A) captured by the taxpayer at a qualified facility, and
            ``(B) disposed of by the taxpayer in secure geological 
        storage, and
        ``(2) $10 per metric ton of qualified carbon dioxide which is--
            ``(A) captured by the taxpayer at a qualified facility, and
            ``(B) used by the taxpayer as a tertiary injectant in a 
        qualified enhanced oil or natural gas recovery project.
    ``(b) Qualified Carbon Dioxide.--For purposes of this section--
        ``(1) In general.--The term `qualified carbon dioxide' means 
    carbon dioxide captured from an industrial source which--
            ``(A) would otherwise be released into the atmosphere as 
        industrial emission of greenhouse gas, and
            ``(B) is measured at the source of capture and verified at 
        the point of disposal or injection.
        ``(2) Recycled carbon dioxide.--The term `qualified carbon 
    dioxide' includes the initial deposit of captured carbon dioxide 
    used as a tertiary injectant. Such term does not include carbon 
    dioxide that is re-captured, recycled, and re-injected as part of 
    the enhanced oil and natural gas recovery process.
    ``(c) Qualified Facility.--For purposes of this section, the term 
`qualified facility' means any industrial facility--
        ``(1) which is owned by the taxpayer,
        ``(2) at which carbon capture equipment is placed in service, 
    and
        ``(3) which captures not less than 500,000 metric tons of 
    carbon dioxide during the taxable year.
    ``(d) Special Rules and Other Definitions.--For purposes of this 
section--
        ``(1) Only carbon dioxide captured and disposed of or used 
    within the united states taken into account.--The credit under this 
    section shall apply only with respect to qualified carbon dioxide 
    the capture and disposal or use of which is within--
            ``(A) the United States (within the meaning of section 
        638(1)), or
            ``(B) a possession of the United States (within the meaning 
        of section 638(2)).
        ``(2) Secure geological storage.--The Secretary, in 
    consultation with the Administrator of the Environmental Protection 
    Agency, shall establish regulations for determining adequate 
    security measures for the geological storage of carbon dioxide 
    under subsection (a)(1)(B) such that the carbon dioxide does not 
    escape into the atmosphere. Such term shall include storage at deep 
    saline formations and unminable coal seems under such conditions as 
    the Secretary may determine under such regulations.
        ``(3) Tertiary injectant.--The term `tertiary injectant' has 
    the same meaning as when used within section 193(b)(1).
        ``(4) Qualified enhanced oil or natural gas recovery project.--
    The term `qualified enhanced oil or natural gas recovery project' 
    has the meaning given the term `qualified enhanced oil recovery 
    project' by section 43(c)(2), by substituting `crude oil or natural 
    gas' for `crude oil' in subparagraph (A)(i) thereof.
        ``(5) Credit attributable to taxpayer.--Any credit under this 
    section shall be attributable to the person that captures and 
    physically or contractually ensures the disposal of or the use as a 
    tertiary injectant of the qualified carbon dioxide, except to the 
    extent provided in regulations prescribed by the Secretary.
        ``(6) Recapture.--The Secretary shall, by regulations, provide 
    for recapturing the benefit of any credit allowable under 
    subsection (a) with respect to any qualified carbon dioxide which 
    ceases to be captured, disposed of, or used as a tertiary injectant 
    in a manner consistent with the requirements of this section.
        ``(7) Inflation adjustment.--In the case of any taxable year 
    beginning in a calendar year after 2009, there shall be substituted 
    for each dollar amount contained in subsection (a) an amount equal 
    to the product of--
            ``(A) such dollar amount, multiplied by
            ``(B) the inflation adjustment factor for such calendar 
        year determined under section 43(b)(3)(B) for such calendar 
        year, determined by substituting `2008' for `1990'.
    ``(e) Application of Section.--The credit under this section shall 
apply with respect to qualified carbon dioxide before the end of the 
calendar year in which the Secretary, in consultation with the 
Administrator of the Environmental Protection Agency, certifies that 
75,000,000 metric tons of qualified carbon dioxide have been captured 
and disposed of or used as a tertiary injectant.''.
    (b) Conforming Amendment.--Section 38(b) (relating to general 
business credit) is amended by striking ``plus'' at the end of 
paragraph (32), by striking the period at the end of paragraph (33) and 
inserting ``, plus'', and by adding at the end of following new 
paragraph:
        ``(34) the carbon dioxide sequestration credit determined under 
    section 45Q(a).''.
    (c) Clerical Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 (relating to other credits) is 
amended by adding at the end the following new section:

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

    (d) Effective Date.--The amendments made by this section shall 
apply to carbon dioxide captured after the date of the enactment of 
this Act.
    SEC. 116. CERTAIN INCOME AND GAINS RELATING TO INDUSTRIAL SOURCE 
      CARBON DIOXIDE TREATED AS QUALIFYING INCOME FOR PUBLICLY TRADED 
      PARTNERSHIPS.
    (a) In General.--Subparagraph (E) of section 7704(d)(1) (defining 
qualifying income) is amended by inserting ``or industrial source 
carbon dioxide'' after ``timber)''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act, in taxable years 
ending after such date.
    SEC. 117. CARBON AUDIT OF THE TAX CODE.
    (a) Study.--The Secretary of the Treasury shall enter into an 
agreement with the National Academy of Sciences to undertake a 
comprehensive review of the Internal Revenue Code of 1986 to identify 
the types of and specific tax provisions that have the largest effects 
on carbon and other greenhouse gas emissions and to estimate the 
magnitude of those effects.
    (b) Report.--Not later than 2 years after the date of enactment of 
this Act, the National Academy of Sciences shall submit to Congress a 
report containing the results of study authorized under this section.
    (c) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $1,500,000 for the period of 
fiscal years 2009 and 2010.

     TITLE II--TRANSPORTATION AND DOMESTIC FUEL SECURITY PROVISIONS

    SEC. 201. INCLUSION OF CELLULOSIC BIOFUEL IN BONUS DEPRECIATION FOR 
      BIOMASS ETHANOL PLANT PROPERTY.
    (a) In General.--Paragraph (3) of section 168(l) is amended to read 
as follows:
        ``(3) Cellulosic biofuel.--The term `cellulosic biofuel' means 
    any liquid fuel which is produced from any lignocellulosic or 
    hemicellulosic matter that is available on a renewable or recurring 
    basis.''.
    (b) Conforming Amendments.--Subsection (l) of section 168 is 
amended--
        (1) by striking ``cellulosic biomass ethanol'' each place it 
    appears and inserting ``cellulosic biofuel'',
        (2) by striking ``Cellulosic Biomass Ethanol'' in the heading 
    of such subsection and inserting ``Cellulosic Biofuel'', and
        (3) by striking ``cellulosic biomass ethanol'' in the heading 
    of paragraph (2) thereof and inserting ``cellulosic biofuel''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of the enactment of 
this Act, in taxable years ending after such date.
    SEC. 202. CREDITS FOR BIODIESEL AND RENEWABLE DIESEL.
    (a) In General.--Sections 40A(g), 6426(c)(6), and 6427(e)(5)(B) are 
each amended by striking ``December 31, 2008'' and inserting ``December 
31, 2009''.
    (b) Increase in Rate of Credit.--
        (1) Income tax credit.--Paragraphs (1)(A) and (2)(A) of section 
    40A(b) are each amended by striking ``50 cents'' and inserting 
    ``$1.00''.
        (2) Excise tax credit.--Paragraph (2) of section 6426(c) is 
    amended to read as follows:
        ``(2) Applicable amount.--For purposes of this subsection, the 
    applicable amount is $1.00.''.
        (3) Conforming amendments.--
            (A) Subsection (b) of section 40A is amended by striking 
        paragraph (3) and by redesignating paragraphs (4) and (5) as 
        paragraphs (3) and (4), respectively.
            (B) Paragraph (2) of section 40A(f) is amended to read as 
        follows:
        ``(2) Exception.--Subsection (b)(4) shall not apply with 
    respect to renewable diesel.''.
            (C) Paragraphs (2) and (3) of section 40A(e) are each 
        amended by striking ``subsection (b)(5)(C)'' and inserting 
        ``subsection (b)(4)(C)''.
            (D) Clause (ii) of section 40A(d)(3)(C) is amended by 
        striking ``subsection (b)(5)(B)'' and inserting ``subsection 
        (b)(4)(B)''.
    (c) Uniform Treatment of Diesel Produced From Biomass.--Paragraph 
(3) of section 40A(f) is amended--
        (1) by striking ``diesel fuel'' and inserting ``liquid fuel'',
        (2) by striking ``using a thermal depolymerization process'', 
    and
        (3) by inserting ``, or other equivalent standard approved by 
    the Secretary'' after ``D396''.
    (d) Coproduction of Renewable Diesel With Petroleum Feedstock.--
        (1) In general.--Paragraph (3) of section 40A(f) is amended by 
    adding at the end the following new sentences: ``Such term does not 
    include any fuel derived from coprocessing biomass with a feedstock 
    which is not biomass. For purposes of this paragraph, the term 
    `biomass' has the meaning given such term by section 45K(c)(3).''.
        (2) Conforming amendment.--Paragraph (3) of section 40A(f) is 
    amended by striking ``(as defined in section 45K(c)(3))''.
    (e) Eligibility of Certain Aviation Fuel.--Subsection (f) of 
section 40A (relating to renewable diesel) is amended by adding at the 
end the following new paragraph:
        ``(4) Certain aviation fuel.--
            ``(A) In general.--Except as provided in the last 3 
        sentences of paragraph (3), the term `renewable diesel' shall 
        include fuel derived from biomass which meets the requirements 
        of a Department of Defense specification for military jet fuel 
        or an American Society of Testing and Materials specification 
        for aviation turbine fuel.
            ``(B) Application of mixture credits.--In the case of fuel 
        which is treated as renewable diesel solely by reason of 
        subparagraph (A), subsection (b)(1) and section 6426(c) shall 
        be applied with respect to such fuel by treating kerosene as 
        though it were diesel fuel.''.
    (f) Modification Relating to Definition of Agri-Biodiesel.--
Paragraph (2) of section 40A(d) (relating to agri-biodiesel) is amended 
by striking ``and mustard seeds'' and inserting ``mustard seeds, and 
camelina''.
    (g) Effective Date.--
        (1) In general.--Except as otherwise provided in this 
    subsection, the amendments made by this section shall apply to fuel 
    produced, and sold or used, after December 31, 2008.
        (2) Coproduction of renewable diesel with petroleum 
    feedstock.--The amendment made by subsection (d) shall apply to 
    fuel produced, and sold or used, after the date of the enactment of 
    this Act.
    SEC. 203. CLARIFICATION THAT CREDITS FOR FUEL ARE DESIGNED TO 
      PROVIDE AN INCENTIVE FOR UNITED STATES PRODUCTION.
    (a) Alcohol Fuels Credit.--Subsection (d) of section 40 is amended 
by adding at the end the following new paragraph:
        ``(7) Limitation to alcohol with connection to the united 
    states.--No credit shall be determined under this section with 
    respect to any alcohol which is produced outside the United States 
    for use as a fuel outside the United States. For purposes of this 
    paragraph, the term `United States' includes any possession of the 
    United States.''.
    (b) Biodiesel Fuels Credit.--Subsection (d) of section 40A is 
amended by adding at the end the following new paragraph:
        ``(5) Limitation to biodiesel with connection to the united 
    states.--No credit shall be determined under this section with 
    respect to any biodiesel which is produced outside the United 
    States for use as a fuel outside the United States. For purposes of 
    this paragraph, the term `United States' includes any possession of 
    the United States.''.
    (c) Excise Tax Credit.--
        (1) In general.--Section 6426 is amended by adding at the end 
    the following new subsection:
    ``(i) Limitation to Fuels With Connection to the United States.--
        ``(1) Alcohol.--No credit shall be determined under this 
    section with respect to any alcohol which is produced outside the 
    United States for use as a fuel outside the United States.
        ``(2) Biodiesel and alternative fuels.--No credit shall be 
    determined under this section with respect to any biodiesel or 
    alternative fuel which is produced outside the United States for 
    use as a fuel outside the United States.
For purposes of this subsection, the term `United States' includes any 
possession of the United States.''.
        (2) Conforming amendment.--Subsection (e) of section 6427 is 
    amended by redesignating paragraph (5) as paragraph (6) and by 
    inserting after paragraph (4) the following new paragraph:
        ``(5) Limitation to fuels with connection to the united 
    states.--No amount shall be payable under paragraph (1) or (2) with 
    respect to any mixture or alternative fuel if credit is not allowed 
    with respect to such mixture or alternative fuel by reason of 
    section 6426(i).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to claims for credit or payment made on or after May 15, 2008.
    SEC. 204. EXTENSION AND MODIFICATION OF ALTERNATIVE FUEL CREDIT.
    (a) Extension.--
        (1) Alternative fuel credit.--Paragraph (4) of section 6426(d) 
    (relating to alternative fuel credit) is amended by striking 
    ``September 30, 2009'' and inserting ``December 31, 2009''.
        (2) Alternative fuel mixture credit.--Paragraph (3) of section 
    6426(e) (relating to alternative fuel mixture credit) is amended by 
    striking ``September 30, 2009'' and inserting ``December 31, 
    2009''.
        (3) Payments.--Subparagraph (C) of section 6427(e)(5) (relating 
    to termination) is amended by striking ``September 30, 2009'' and 
    inserting ``December 31, 2009''.
    (b) Modifications.--
        (1) Alternative fuel to include compressed or liquified biomass 
    gas.--Paragraph (2) of section 6426(d) (relating to alternative 
    fuel credit) is amended by striking ``and'' at the end of 
    subparagraph (E), by redesignating subparagraph (F) as subparagraph 
    (G), and by inserting after subparagraph (E) the following new 
    subparagraph:
            ``(F) compressed or liquefied gas derived from biomass (as 
        defined in section 45K(c)(3)), and''.
        (2) Credit allowed for aviation use of fuel.--Paragraph (1) of 
    section 6426(d) is amended by inserting ``sold by the taxpayer for 
    use as a fuel in aviation,'' after ``motorboat,''.
    (c) Carbon Capture Requirement for Certain Fuels.--
        (1) In general.--Subsection (d) of section 6426, as amended by 
    subsection (a), is amended by redesignating paragraph (4) as 
    paragraph (5) and by inserting after paragraph (3) the following 
    new paragraph:
        ``(4) Carbon capture requirement.--
            ``(A) In general.--The requirements of this paragraph are 
        met if the fuel is certified, under such procedures as required 
        by the Secretary, as having been derived from coal produced at 
        a gasification facility which separates and sequesters not less 
        than the applicable percentage of such facility's total carbon 
        dioxide emissions.
            ``(B) Applicable percentage.--For purposes of subparagraph 
        (A), the applicable percentage is--
                ``(i) 50 percent in the case of fuel produced after 
            September 30, 2009, and on or before December 30, 2009, and
                ``(ii) 75 percent in the case of fuel produced after 
            December 30, 2009.''.
        (2) Conforming amendment.--Subparagraph (E) of section 
    6426(d)(2) is amended by inserting ``which meets the requirements 
    of paragraph (4) and which is'' after ``any liquid fuel''.
    (d) Effective Date.--The amendments made by this section shall 
apply to fuel sold or used after the date of the enactment of this Act.
    SEC. 205. CREDIT FOR NEW QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR 
      VEHICLES.
    (a) Plug-in Electric Drive Motor Vehicle Credit.--Subpart B of part 
IV of subchapter A of chapter 1 (relating to other credits) is amended 
by adding at the end the following new section:
    ``SEC. 30D. NEW QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR VEHICLES.
    ``(a) Allowance of Credit.--
        ``(1) In general.--There shall be allowed as a credit against 
    the tax imposed by this chapter for the taxable year an amount 
    equal to the applicable amount with respect to each new qualified 
    plug-in electric drive motor vehicle placed in service by the 
    taxpayer during the taxable year.
        ``(2) Applicable amount.--For purposes of paragraph (1), the 
    applicable amount is sum of--
            ``(A) $2,500, plus
            ``(B) $417 for each kilowatt hour of traction battery 
        capacity in excess of 4 kilowatt hours.
    ``(b) Limitations.--
        ``(1) Limitation based on weight.--The amount of the credit 
    allowed under subsection (a) by reason of subsection (a)(2) shall 
    not exceed--
            ``(A) $7,500, in the case of any new qualified plug-in 
        electric drive motor vehicle with a gross vehicle weight rating 
        of not more than 10,000 pounds,
            ``(B) $10,000, in the case of any new qualified plug-in 
        electric drive motor vehicle with a gross vehicle weight rating 
        of more than 10,000 pounds but not more than 14,000 pounds,
            ``(C) $12,500, in the case of any new qualified plug-in 
        electric drive motor vehicle with a gross vehicle weight rating 
        of more than 14,000 pounds but not more than 26,000 pounds, and
            ``(D) $15,000, in the case of any new qualified plug-in 
        electric drive motor vehicle with a gross vehicle weight rating 
        of more than 26,000 pounds.
        ``(2) Limitation on number of passenger vehicles and light 
    trucks eligible for credit.--
            ``(A) In general.--In the case of a new qualified plug-in 
        electric drive motor vehicle sold during the phaseout period, 
        only the applicable percentage of the credit otherwise 
        allowable under subsection (a) shall be allowed.
            ``(B) Phaseout period.--For purposes of this subsection, 
        the phaseout period is the period beginning with the second 
        calendar quarter following the calendar quarter which includes 
        the first date on which the total number of such new qualified 
        plug-in electric drive motor vehicles sold for use in the 
        United States after December 31, 2008, is at least 250,000.
            ``(C) Applicable percentage.--For purposes of subparagraph 
        (A), the applicable percentage is--
                ``(i) 50 percent for the first 2 calendar quarters of 
            the phaseout period,
                ``(ii) 25 percent for the 3d and 4th calendar quarters 
            of the phaseout period, and
                ``(iii) 0 percent for each calendar quarter thereafter.
            ``(D) Controlled groups.--Rules similar to the rules of 
        section 30B(f)(4) shall apply for purposes of this subsection.
    ``(c) New Qualified Plug-in Electric Drive Motor Vehicle.--For 
purposes of this section, the term `new qualified plug-in electric 
drive motor vehicle' means a motor vehicle--
        ``(1) which draws propulsion using a traction battery with at 
    least 4 kilowatt hours of capacity,
        ``(2) which uses an offboard source of energy to recharge such 
    battery,
        ``(3) which, in the case of a passenger vehicle or light truck 
    which has a gross vehicle weight rating of not more than 8,500 
    pounds, has received a certificate of conformity under the Clean 
    Air Act and meets or exceeds the equivalent qualifying California 
    low emission vehicle standard under section 243(e)(2) of the Clean 
    Air Act for that make and model year, and
            ``(A) in the case of a vehicle having a gross vehicle 
        weight rating of 6,000 pounds or less, the Bin 5 Tier II 
        emission standard established in regulations prescribed by the 
        Administrator of the Environmental Protection Agency under 
        section 202(i) of the Clean Air Act for that make and model 
        year vehicle, and
            ``(B) in the case of a vehicle having a gross vehicle 
        weight rating of more than 6,000 pounds but not more than 8,500 
        pounds, the Bin 8 Tier II emission standard which is so 
        established,
        ``(4) the original use of which commences with the taxpayer,
        ``(5) which is acquired for use or lease by the taxpayer and 
    not for resale, and
        ``(6) which is made by a manufacturer.
    ``(d) Application With Other Credits.--
        ``(1) Business credit treated as part of general business 
    credit.--So much of the credit which would be allowed under 
    subsection (a) for any taxable year (determined without regard to 
    this subsection) that is attributable to property of a character 
    subject to an allowance for depreciation shall be treated as a 
    credit listed in section 38(b) for such taxable year (and not 
    allowed under subsection (a)).
        ``(2) Personal credit.--
            ``(A) In general.--For purposes of this title, the credit 
        allowed under subsection (a) for any taxable year (determined 
        after application of paragraph (1)) shall be treated as a 
        credit allowable under subpart A for such taxable year.
            ``(B) Limitation based on amount of tax.--In the case of a 
        taxable year to which section 26(a)(2) does not apply, the 
        credit allowed under subsection (a) for any taxable year 
        (determined after application of paragraph (1)) shall not 
        exceed the excess of--
                ``(i) the sum of the regular tax liability (as defined 
            in section 26(b)) plus the tax imposed by section 55, over
                ``(ii) the sum of the credits allowable under subpart A 
            (other than this section and sections 23 and 25D) and 
            section 27 for the taxable year.
    ``(e) Other Definitions and Special Rules.--For purposes of this 
section--
        ``(1) Motor vehicle.--The term `motor vehicle' has the meaning 
    given such term by section 30(c)(2).
        ``(2) Other terms.--The terms `passenger automobile', `light 
    truck', and `manufacturer' have the meanings given such terms in 
    regulations prescribed by the Administrator of the Environmental 
    Protection Agency for purposes of the administration of title II of 
    the Clean Air Act (42 U.S.C. 7521 et seq.).
        ``(3) Traction battery capacity.--Traction battery capacity 
    shall be measured in kilowatt hours from a 100 percent state of 
    charge to a zero percent state of charge.
        ``(4) Reduction in basis.--For purposes of this subtitle, the 
    basis of any property for which a credit is allowable under 
    subsection (a) shall be reduced by the amount of such credit so 
    allowed.
        ``(5) No double benefit.--The amount of any deduction or other 
    credit allowable under this chapter for a new qualified plug-in 
    electric drive motor vehicle shall be reduced by the amount of 
    credit allowed under subsection (a) for such vehicle for the 
    taxable year.
        ``(6) Property used by tax-exempt entity.--In the case of a 
    vehicle the use of which is described in paragraph (3) or (4) of 
    section 50(b) and which is not subject to a lease, the person who 
    sold such vehicle to the person or entity using such vehicle shall 
    be treated as the taxpayer that placed such vehicle in service, but 
    only if such person clearly discloses to such person or entity in a 
    document the amount of any credit allowable under subsection (a) 
    with respect to such vehicle (determined without regard to 
    subsection (b)(2)).
        ``(7) Property used outside united states, etc., not 
    qualified.--No credit shall be allowable under subsection (a) with 
    respect to any property referred to in section 50(b)(1) or with 
    respect to the portion of the cost of any property taken into 
    account under section 179.
        ``(8) Recapture.--The Secretary shall, by regulations, provide 
    for recapturing the benefit of any credit allowable under 
    subsection (a) with respect to any property which ceases to be 
    property eligible for such credit (including recapture in the case 
    of a lease period of less than the economic life of a vehicle).
        ``(9) Election to not take credit.--No credit shall be allowed 
    under subsection (a) for any vehicle if the taxpayer elects not to 
    have this section apply to such vehicle.
        ``(10) Interaction with air quality and motor vehicle safety 
    standards.--Unless otherwise provided in this section, a motor 
    vehicle shall not be considered eligible for a credit under this 
    section unless such vehicle is in compliance with--
            ``(A) the applicable provisions of the Clean Air Act for 
        the applicable make and model year of the vehicle (or 
        applicable air quality provisions of State law in the case of a 
        State which has adopted such provision under a waiver under 
        section 209(b) of the Clean Air Act), and
            ``(B) the motor vehicle safety provisions of sections 30101 
        through 30169 of title 49, United States Code.
    ``(f) Regulations.--
        ``(1) In general.--Except as provided in paragraph (2), the 
    Secretary shall promulgate such regulations as necessary to carry 
    out the provisions of this section.
        ``(2) Coordination in prescription of certain regulations.--The 
    Secretary of the Treasury, in coordination with the Secretary of 
    Transportation and the Administrator of the Environmental 
    Protection Agency, shall prescribe such regulations as necessary to 
    determine whether a motor vehicle meets the requirements to be 
    eligible for a credit under this section.
    ``(g) Termination.--This section shall not apply to property 
purchased after December 31, 2014.''.
    (b) Coordination With Alternative Motor Vehicle Credit.--Section 
30B(d)(3) is amended by adding at the end the following new 
subparagraph:
            ``(D) Exclusion of plug-in vehicles.--Any vehicle with 
        respect to which a credit is allowable under section 30D 
        (determined without regard to subsection (d) thereof) shall not 
        be taken into account under this section.''.
    (c) Credit Made Part of General Business Credit.--Section 38(b), as 
amended by this Act, is amended by striking ``plus'' at the end of 
paragraph (33), by striking the period at the end of paragraph (34) and 
inserting ``plus'', and by adding at the end the following new 
paragraph:
        ``(35) the portion of the new qualified plug-in electric drive 
    motor vehicle credit to which section 30D(d)(1) applies.''.
    (d) Conforming Amendments.--
        (1)(A) Section 24(b)(3)(B), as amended by section 106, is 
    amended by striking ``and 25D'' and inserting ``25D, and 30D''.
        (B) Section 25(e)(1)(C)(ii) is amended by inserting ``30D,'' 
    after ``25D,''.
        (C) Section 25B(g)(2), as amended by section 106, is amended by 
    striking ``and 25D'' and inserting ``, 25D, and 30D''.
        (D) Section 26(a)(1), as amended by section 106, is amended by 
    striking ``and 25D'' and inserting ``25D, and 30D''.
        (E) Section 1400C(d)(2) is amended by striking ``and 25D'' and 
    inserting ``25D, and 30D''.
        (2) Section 1016(a) is amended by striking ``and'' at the end 
    of paragraph (35), by striking the period at the end of paragraph 
    (36) and inserting ``, and'', and by adding at the end the 
    following new paragraph:
        ``(37) to the extent provided in section 30D(e)(4).''.
        (3) Section 6501(m) is amended by inserting ``30D(e)(9),'' 
    after ``30C(e)(5),''.
        (4) The table of sections for subpart B of part IV of 
    subchapter A of chapter 1 is amended by adding at the end the 
    following new item:

``Sec. 30D. New qualified plug-in electric drive motor vehicles.''.

    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.
    (f) Application of EGTRRA Sunset.--The amendment made by subsection 
(d)(1)(A) shall be subject to title IX of the Economic Growth and Tax 
Relief Reconciliation Act of 2001 in the same manner as the provision 
of such Act to which such amendment relates.
    SEC. 206. EXCLUSION FROM HEAVY TRUCK TAX FOR IDLING REDUCTION UNITS 
      AND ADVANCED INSULATION.
    (a) In General.--Section 4053 is amended by adding at the end the 
following new paragraphs:
        ``(9) Idling reduction device.--Any device or system of devices 
    which--
            ``(A) is designed to provide to a vehicle those services 
        (such as heat, air conditioning, or electricity) that would 
        otherwise require the operation of the main drive engine while 
        the vehicle is temporarily parked or remains stationary using 
        one or more devices affixed to a tractor, and
            ``(B) is determined by the Administrator of the 
        Environmental Protection Agency, in consultation with the 
        Secretary of Energy and the Secretary of Transportation, to 
        reduce idling of such vehicle at a motor vehicle rest stop or 
        other location where such vehicles are temporarily parked or 
        remain stationary.
        ``(10) Advanced insulation.--Any insulation that has an R value 
    of not less than R35 per inch.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to sales or installations after the date of the enactment of this Act.
    SEC. 207. ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY CREDIT.
    (a) Extension of Credit.--Paragraph (2) of section 30C(g) is 
amended by striking ``December 31, 2009'' and inserting ``December 31, 
2010''.
    (b) Inclusion of Electricity as a Clean-Burning Fuel.--Section 
30C(c)(2) is amended by adding at the end the following new 
subparagraph:
            ``(C) Electricity.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of the enactment of 
this Act, in taxable years ending after such date.
    SEC. 208. CERTAIN INCOME AND GAINS RELATING TO ALCOHOL FUELS AND 
      MIXTURES, BIODIESEL FUELS AND MIXTURES, AND ALTERNATIVE FUELS AND 
      MIXTURES TREATED AS QUALIFYING INCOME FOR PUBLICLY TRADED 
      PARTNERSHIPS.
    (a) In General.--Subparagraph (E) of section 7704(d)(1), as amended 
by this Act, is amended by striking ``or industrial source carbon 
dioxide'' and inserting ``, industrial source carbon dioxide, or the 
transportation or storage of any fuel described in subsection (b), (c), 
(d), or (e) of section 6426, or any alcohol fuel defined in section 
6426(b)(4)(A) or any biodiesel fuel as defined in section 40A(d)(1)'' 
after ``timber)''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act, in taxable years 
ending after such date.
    SEC. 209. EXTENSION AND MODIFICATION OF ELECTION TO EXPENSE CERTAIN 
      REFINERIES.
    (a) Extension.--Paragraph (1) of section 179C(c) (relating to 
qualified refinery property) is amended--
        (1) by striking ``January 1, 2012'' in subparagraph (B) and 
    inserting ``January 1, 2014'', and
        (2) by striking ``January 1, 2008'' each place it appears in 
    subparagraph (F) and inserting ``January 1, 2010''.
    (b) Inclusion of Fuel Derived From Shale and Tar Sands.--
        (1) In general.--Subsection (d) of section 179C is amended by 
    inserting ``, or directly from shale or tar sands'' after ``(as 
    defined in section 45K(c))''.
        (2) Conforming amendment.--Paragraph (2) of section 179C(e) is 
    amended by inserting ``shale, tar sands, or'' before ``qualified 
    fuels''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of the enactment of 
this Act.
    SEC. 210. EXTENSION OF SUSPENSION OF TAXABLE INCOME LIMIT ON 
      PERCENTAGE DEPLETION FOR OIL AND NATURAL GAS PRODUCED FROM 
      MARGINAL PROPERTIES.
    Subparagraph (H) of section 613A(c)(6) (relating to oil and gas 
produced from marginal properties) is amended by striking ``for any 
taxable year'' and all that follows and inserting ``for any taxable 
year--
                ``(i) beginning after December 31, 1997, and before 
            January 1, 2008, or
                ``(ii) beginning after December 31, 2008, and before 
            January 1, 2010.''.
    SEC. 211. TRANSPORTATION FRINGE BENEFIT TO BICYCLE COMMUTERS.
    (a) In General.--Paragraph (1) of section 132(f) is amended by 
adding at the end the following:
            ``(D) Any qualified bicycle commuting reimbursement.''.
    (b) Limitation on Exclusion.--Paragraph (2) of section 132(f) is 
amended by striking ``and'' at the end of subparagraph (A), by striking 
the period at the end of subparagraph (B) and inserting ``, and'', and 
by adding at the end the following new subparagraph:
            ``(C) the applicable annual limitation in the case of any 
        qualified bicycle commuting reimbursement.''.
    (c) Definitions.--Paragraph (5) of section 132(f) is amended by 
adding at the end the following:
            ``(F) Definitions related to bicycle commuting 
        reimbursement.--
                ``(i) Qualified bicycle commuting reimbursement.--The 
            term `qualified bicycle commuting reimbursement' means, 
            with respect to any calendar year, any employer 
            reimbursement during the 15-month period beginning with the 
            first day of such calendar year for reasonable expenses 
            incurred by the employee during such calendar year for the 
            purchase of a bicycle and bicycle improvements, repair, and 
            storage, if such bicycle is regularly used for travel 
            between the employee's residence and place of employment.
                ``(ii) Applicable annual limitation.--The term 
            `applicable annual limitation' means, with respect to any 
            employee for any calendar year, the product of $20 
            multiplied by the number of qualified bicycle commuting 
            months during such year.
                ``(iii) Qualified bicycle commuting month.--The term 
            `qualified bicycle commuting month' means, with respect to 
            any employee, any month during which such employee--

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

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

        TITLE III--ENERGY CONSERVATION AND EFFICIENCY PROVISIONS

    SEC. 301. QUALIFIED ENERGY CONSERVATION BONDS.
    (a) In General.--Subpart I of part IV of subchapter A of chapter 1, 
as amended by section 107, is amended by adding at the end the 
following new section:
    ``SEC. 54D. QUALIFIED ENERGY CONSERVATION BONDS.
    ``(a) Qualified Energy Conservation Bond.--For purposes of this 
subchapter, the term `qualified energy conservation bond' means any 
bond issued as part of an issue if--
        ``(1) 100 percent of the available project proceeds of such 
    issue are to be used for one or more qualified conservation 
    purposes,
        ``(2) the bond is issued by a State or local government, and
        ``(3) the issuer designates such bond for purposes of this 
    section.
    ``(b) Reduced Credit Amount.--The annual credit determined under 
section 54A(b) with respect to any qualified energy conservation bond 
shall be 70 percent of the amount so determined without regard to this 
subsection.
    ``(c) Limitation on Amount of Bonds Designated.--The maximum 
aggregate face amount of bonds which may be designated under subsection 
(a) by any issuer shall not exceed the limitation amount allocated to 
such issuer under subsection (e).
    ``(d) National Limitation on Amount of Bonds Designated.--There is 
a national qualified energy conservation bond limitation of 
$800,000,000.
    ``(e) Allocations.--
        ``(1) In general.--The limitation applicable under subsection 
    (d) shall be allocated by the Secretary among the States in 
    proportion to the population of the States.
        ``(2) Allocations to largest local governments.--
            ``(A) In general.--In the case of any State in which there 
        is a large local government, each such local government shall 
        be allocated a portion of such State's allocation which bears 
        the same ratio to the State's allocation (determined without 
        regard to this subparagraph) as the population of such large 
        local government bears to the population of such State.
            ``(B) Allocation of unused limitation to state.--The amount 
        allocated under this subsection to a large local government may 
        be reallocated by such local government to the State in which 
        such local government is located.
            ``(C) Large local government.--For purposes of this 
        section, the term `large local government' means any 
        municipality or county if such municipality or county has a 
        population of 100,000 or more.
        ``(3) Allocation to issuers; restriction on private activity 
    bonds.--Any allocation under this subsection to a State or large 
    local government shall be allocated by such State or large local 
    government to issuers within the State in a manner that results in 
    not less than 70 percent of the allocation to such State or large 
    local government being used to designate bonds which are not 
    private activity bonds.
    ``(f) Qualified Conservation Purpose.--For purposes of this 
section--
        ``(1) In general.--The term `qualified conservation purpose' 
    means any of the following:
            ``(A) Capital expenditures incurred for purposes of--
                ``(i) reducing energy consumption in publicly-owned 
            buildings by at least 20 percent,
                ``(ii) implementing green community programs,
                ``(iii) rural development involving the production of 
            electricity from renewable energy resources, or
                ``(iv) any qualified facility (as determined under 
            section 45(d) without regard to paragraphs (8) and (10) 
            thereof and without regard to any placed in service date).
            ``(B) Expenditures with respect to research facilities, and 
        research grants, to support research in--
                ``(i) development of cellulosic ethanol or other 
            nonfossil fuels,
                ``(ii) technologies for the capture and sequestration 
            of carbon dioxide produced through the use of fossil fuels,
                ``(iii) increasing the efficiency of existing 
            technologies for producing nonfossil fuels,
                ``(iv) automobile battery technologies and other 
            technologies to reduce fossil fuel consumption in 
            transportation, or
                ``(v) technologies to reduce energy use in buildings.
            ``(C) Mass commuting facilities and related facilities that 
        reduce the consumption of energy, including expenditures to 
        reduce pollution from vehicles used for mass commuting.
            ``(D) Demonstration projects designed to promote the 
        commercialization of--
                ``(i) green building technology,
                ``(ii) conversion of agricultural waste for use in the 
            production of fuel or otherwise,
                ``(iii) advanced battery manufacturing technologies,
                ``(iv) technologies to reduce peak use of electricity, 
            or
                ``(v) technologies for the capture and sequestration of 
            carbon dioxide emitted from combusting fossil fuels in 
            order to produce electricity.
            ``(E) Public education campaigns to promote energy 
        efficiency.
        ``(2) Special rules for private activity bonds.--For purposes 
    of this section, in the case of any private activity bond, the term 
    `qualified conservation purposes' shall not include any expenditure 
    which is not a capital expenditure.
    ``(g) Population.--
        ``(1) In general.--The population of any State or local 
    government shall be determined for purposes of this section as 
    provided in section 146(j) for the calendar year which includes the 
    date of the enactment of this section.
        ``(2) Special rule for counties.--In determining the population 
    of any county for purposes of this section, any population of such 
    county which is taken into account in determining the population of 
    any municipality which is a large local government shall not be 
    taken into account in determining the population of such county.
    ``(h) Application to Indian Tribal Governments.--An Indian tribal 
government shall be treated for purposes of this section in the same 
manner as a large local government, except that--
        ``(1) an Indian tribal government shall be treated for purposes 
    of subsection (e) as located within a State to the extent of so 
    much of the population of such government as resides within such 
    State, and
        ``(2) any bond issued by an Indian tribal government shall be 
    treated as a qualified energy conservation bond only if issued as 
    part of an issue the available project proceeds of which are used 
    for purposes for which such Indian tribal government could issue 
    bonds to which section 103(a) applies.''.
    (b) Conforming Amendments.--
        (1) Paragraph (1) of section 54A(d), as amended by this Act, is 
    amended to read as follows:
        ``(1) Qualified tax credit bond.--The term `qualified tax 
    credit bond' means--
            ``(A) a qualified forestry conservation bond,
            ``(B) a new clean renewable energy bond, or
            ``(C) a qualified energy conservation bond,
    which is part of an issue that meets requirements of paragraphs 
    (2), (3), (4), (5), and (6).''.
        (2) Subparagraph (C) of section 54A(d)(2), as amended by this 
    Act, is amended to read as follows:
            ``(C) Qualified purpose.--For purposes of this paragraph, 
        the term `qualified purpose' means--
                ``(i) in the case of a qualified forestry conservation 
            bond, a purpose specified in section 54B(e),
                ``(ii) in the case of a new clean renewable energy 
            bond, a purpose specified in section 54C(a)(1), and
                ``(iii) in the case of a qualified energy conservation 
            bond, a purpose specified in section 54D(a)(1).''.
        (3) The table of sections for subpart I of part IV of 
    subchapter A of chapter 1, as amended by this Act, is amended by 
    adding at the end the following new item:

``Sec. 54D. Qualified energy conservation bonds.''.

    (c) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.
    SEC. 302. CREDIT FOR NONBUSINESS ENERGY PROPERTY.
    (a) Extension of Credit.--Section 25C(g) is amended by striking 
``placed in service after December 31, 2007'' and inserting ``placed in 
service--
        ``(1) after December 31, 2007, and before January 1, 2009, or
        ``(2) after December 31, 2009.''.
    (b) Qualified Biomass Fuel Property.--
        (1) In general.--Section 25C(d)(3) is amended--
            (A) by striking ``and'' at the end of subparagraph (D),
            (B) by striking the period at the end of subparagraph (E) 
        and inserting ``, and'', and
            (C) by adding at the end the following new subparagraph:
            ``(F) a stove which uses the burning of biomass fuel to 
        heat a dwelling unit located in the United States and used as a 
        residence by the taxpayer, or to heat water for use in such a 
        dwelling unit, and which has a thermal efficiency rating of at 
        least 75 percent.''.
        (2) Biomass fuel.--Section 25C(d) is amended by adding at the 
    end the following new paragraph:
        ``(6) Biomass fuel.--The term `biomass fuel' means any plant-
    derived fuel available on a renewable or recurring basis, including 
    agricultural crops and trees, wood and wood waste and residues 
    (including wood pellets), plants (including aquatic plants), 
    grasses, residues, and fibers.''.
    (c) Modification of Water Heater Requirements.--Section 
25C(d)(3)(E) is amended by inserting ``or a thermal efficiency of at 
least 90 percent'' after ``0.80''.
    (d) Coordination With Credit for Qualified Geothermal Heat pump 
Property Expenditures.--
        (1) In general.--Paragraph (3) of section 25C(d), as amended by 
    subsections (b) and (c), is amended by striking subparagraph (C) 
    and by redesignating subparagraphs (D), (E), and (F) as 
    subparagraphs (C), (D), and (E), respectively.
        (2) Conforming amendment.--Subparagraph (C) of section 
    25C(d)(2) is amended to read as follows:
            ``(C) Requirements and standards for air conditioners and 
        heat pumps.--The standards and requirements prescribed by the 
        Secretary under subparagraph (B) with respect to the energy 
        efficiency ratio (EER) for central air conditioners and 
        electric heat pumps--
                ``(i) shall require measurements to be based on 
            published data which is tested by manufacturers at 95 
            degrees Fahrenheit, and
                ``(ii) may be based on the certified data of the Air 
            Conditioning and Refrigeration Institute that are prepared 
            in partnership with the Consortium for Energy 
            Efficiency.''.
    (e) Modification of Qualified Energy Efficiency Improvements.--
        (1) In general.--Paragraph (1) of section 25C(c) is amended by 
    inserting ``, or an asphalt roof with appropriate cooling 
    granules,'' before ``which meet the Energy Star program 
    requirements''.
        (2) Building envelope component.--Subparagraph (D) of section 
    25C(c)(2) is amended--
            (A) by inserting ``or asphalt roof'' after ``metal roof'', 
        and
            (B) by inserting ``or cooling granules'' after ``pigmented 
        coatings''.
    (f) Effective Dates.--
        (1) In general.--Except as provided in paragraph (2), the 
    amendments made this section shall apply to expenditures made after 
    December 31, 2008.
        (2) Modification of qualified energy efficiency improvements.--
    The amendments made by subsection (e) shall apply to property 
    placed in service after the date of the enactment of this Act.
    SEC. 303. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.
    Subsection (h) of section 179D is amended by striking ``December 
31, 2008'' and inserting ``December 31, 2013''.
    SEC. 304. NEW ENERGY EFFICIENT HOME CREDIT.
    Subsection (g) of section 45L (relating to termination) is amended 
by striking ``December 31, 2008'' and inserting ``December 31, 2009''.
    SEC. 305. MODIFICATIONS OF ENERGY EFFICIENT APPLIANCE CREDIT FOR 
      APPLIANCES PRODUCED AFTER 2007.
    (a) In General.--Subsection (b) of section 45M is amended to read 
as follows:
    ``(b) Applicable Amount.--For purposes of subsection (a)--
        ``(1) Dishwashers.--The applicable amount is--
            ``(A) $45 in the case of a dishwasher which is manufactured 
        in calendar year 2008 or 2009 and which uses no more than 324 
        kilowatt hours per year and 5.8 gallons per cycle, and
            ``(B) $75 in the case of a dishwasher which is manufactured 
        in calendar year 2008, 2009, or 2010 and which uses no more 
        than 307 kilowatt hours per year and 5.0 gallons per cycle (5.5 
        gallons per cycle for dishwashers designed for greater than 12 
        place settings).
        ``(2) Clothes washers.--The applicable amount is--
            ``(A) $75 in the case of a residential top-loading clothes 
        washer manufactured in calendar year 2008 which meets or 
        exceeds a 1.72 modified energy factor and does not exceed a 8.0 
        water consumption factor,
            ``(B) $125 in the case of a residential top-loading clothes 
        washer manufactured in calendar year 2008 or 2009 which meets 
        or exceeds a 1.8 modified energy factor and does not exceed a 
        7.5 water consumption factor,
            ``(C) $150 in the case of a residential or commercial 
        clothes washer manufactured in calendar year 2008, 2009, or 
        2010 which meets or exceeds 2.0 modified energy factor and does 
        not exceed a 6.0 water consumption factor, and
            ``(D) $250 in the case of a residential or commercial 
        clothes washer manufactured in calendar year 2008, 2009, or 
        2010 which meets or exceeds 2.2 modified energy factor and does 
        not exceed a 4.5 water consumption factor.
        ``(3) Refrigerators.--The applicable amount is--
            ``(A) $50 in the case of a refrigerator which is 
        manufactured in calendar year 2008, and consumes at least 20 
        percent but not more than 22.9 percent less kilowatt hours per 
        year than the 2001 energy conservation standards,
            ``(B) $75 in the case of a refrigerator which is 
        manufactured in calendar year 2008 or 2009, and consumes at 
        least 23 percent but no more than 24.9 percent less kilowatt 
        hours per year than the 2001 energy conservation standards,
            ``(C) $100 in the case of a refrigerator which is 
        manufactured in calendar year 2008, 2009, or 2010, and consumes 
        at least 25 percent but not more than 29.9 percent less 
        kilowatt hours per year than the 2001 energy conservation 
        standards, and
            ``(D) $200 in the case of a refrigerator manufactured in 
        calendar year 2008, 2009, or 2010 and which consumes at least 
        30 percent less energy than the 2001 energy conservation 
        standards.''.
    (b) Eligible Production.--
        (1) Similar treatment for all appliances.--Subsection (c) of 
    section 45M is amended--
            (A) by striking paragraph (2),
            (B) by striking ``(1) In general'' and all that follows 
        through ``the eligible'' and inserting ``The eligible'',
            (C) by moving the text of such subsection in line with the 
        subsection heading, and
            (D) by redesignating subparagraphs (A) and (B) as 
        paragraphs (1) and (2), respectively, and by moving such 
        paragraphs 2 ems to the left.
        (2) Modification of base period.--Paragraph (2) of section 
    45M(c), as amended by paragraph (1), is amended by striking ``3-
    calendar year'' and inserting ``2-calendar year''.
    (c) Types of Energy Efficient Appliances.--Subsection (d) of 
section 45M is amended to read as follows:
    ``(d) Types of Energy Efficient Appliance.--For purposes of this 
section, the types of energy efficient appliances are--
        ``(1) dishwashers described in subsection (b)(1),
        ``(2) clothes washers described in subsection (b)(2), and
        ``(3) refrigerators described in subsection (b)(3).''.
    (d) Aggregate Credit Amount Allowed.--
        (1) Increase in limit.--Paragraph (1) of section 45M(e) is 
    amended to read as follows:
        ``(1) Aggregate credit amount allowed.--The aggregate amount of 
    credit allowed under subsection (a) with respect to a taxpayer for 
    any taxable year shall not exceed $75,000,000 reduced by the amount 
    of the credit allowed under subsection (a) to the taxpayer (or any 
    predecessor) for all prior taxable years beginning after December 
    31, 2007.''.
        (2) Exception for certain refrigerator and clothes washers.--
    Paragraph (2) of section 45M(e) is amended to read as follows:
        ``(2) Amount allowed for certain refrigerators and clothes 
    washers.--Refrigerators described in subsection (b)(3)(D) and 
    clothes washers described in subsection (b)(2)(D) shall not be 
    taken into account under paragraph (1).''.
    (e) Qualified Energy Efficient Appliances.--
        (1) In general.--Paragraph (1) of section 45M(f) is amended to 
    read as follows:
        ``(1) Qualified energy efficient appliance.--The term 
    `qualified energy efficient appliance' means--
            ``(A) any dishwasher described in subsection (b)(1),
            ``(B) any clothes washer described in subsection (b)(2), 
        and
            ``(C) any refrigerator described in subsection (b)(3).''.
        (2) Clothes washer.--Section 45M(f)(3) is amended by inserting 
    ``commercial'' before ``residential'' the second place it appears.
        (3) Top-loading clothes washer.--Subsection (f) of section 45M 
    is amended by redesignating paragraphs (4), (5), (6), and (7) as 
    paragraphs (5), (6), (7), and (8), respectively, and by inserting 
    after paragraph (3) the following new paragraph:
        ``(4) Top-loading clothes washer.--The term `top-loading 
    clothes washer' means a clothes washer which has the clothes 
    container compartment access located on the top of the machine and 
    which operates on a vertical axis.''.
        (4) Replacement of energy factor.--Section 45M(f)(6), as 
    redesignated by paragraph (3), is amended to read as follows:
        ``(6) Modified energy factor.--The term `modified energy 
    factor' means the modified energy factor established by the 
    Department of Energy for compliance with the Federal energy 
    conservation standard.''.
        (5) Gallons per cycle; water consumption factor.--Section 
    45M(f), as amended by paragraph (3), is amended by adding at the 
    end the following:
        ``(9) Gallons per cycle.--The term `gallons per cycle' means, 
    with respect to a dishwasher, the amount of water, expressed in 
    gallons, required to complete a normal cycle of a dishwasher.
        ``(10) Water consumption factor.--The term `water consumption 
    factor' means, with respect to a clothes washer, the quotient of 
    the total weighted per-cycle water consumption divided by the cubic 
    foot (or liter) capacity of the clothes washer.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to appliances produced after December 31, 2007.
    SEC. 306. ACCELERATED RECOVERY PERIOD FOR DEPRECIATION OF SMART 
      METERS AND SMART GRID SYSTEMS.
    (a) In General.--Section 168(e)(3)(D) is amended by striking 
``and'' at the end of clause (i), by striking the period at the end of 
clause (ii) and inserting a comma, and by inserting after clause (ii) 
the following new clauses:
                ``(iii) any qualified smart electric meter, and
                ``(iv) any qualified smart electric grid system.''.
    (b) Definitions.--Section 168(i) is amended by inserting at the end 
the following new paragraph:
        ``(18) Qualified smart electric meters.--
            ``(A) In general.--The term `qualified smart electric 
        meter' means any smart electric meter which--
                ``(i) is placed in service by a taxpayer who is a 
            supplier of electric energy or a provider of electric 
            energy services, and
                ``(ii) does not have a class life (determined without 
            regard to subsection (e)) of less than 10 years.
            ``(B) Smart electric meter.--For purposes of subparagraph 
        (A), the term `smart electric meter' means any time-based meter 
        and related communication equipment which is capable of being 
        used by the taxpayer as part of a system that--
                ``(i) measures and records electricity usage data on a 
            time-differentiated basis in at least 24 separate time 
            segments per day,
                ``(ii) provides for the exchange of information between 
            supplier or provider and the customer's electric meter in 
            support of time-based rates or other forms of demand 
            response,
                ``(iii) provides data to such supplier or provider so 
            that the supplier or provider can provide energy usage 
            information to customers electronically, and
                ``(iv) provides net metering.
        ``(19) Qualified smart electric grid systems.--
            ``(A) In general.--The term `qualified smart electric grid 
        system' means any smart grid property which--
                ``(i) is used as part of a system for electric 
            distribution grid communications, monitoring, and 
            management placed in service by a taxpayer who is a 
            supplier of electric energy or a provider of electric 
            energy services, and
                ``(ii) does not have a class life (determined without 
            regard to subsection (e)) of less than 10 years.
            ``(B) Smart grid property.--For the purposes of 
        subparagraph (A), the term `smart grid property' means 
        electronics and related equipment that is capable of--
                ``(i) sensing, collecting, and monitoring data of or 
            from all portions of a utility's electric distribution 
            grid,
                ``(ii) providing real-time, two-way communications to 
            monitor or manage such grid, and
                ``(iii) providing real time analysis of and event 
            prediction based upon collected data that can be used to 
            improve electric distribution system reliability, quality, 
            and performance.''.
    (c) Continued Application of 150 Percent Declining Balance 
Method.--Paragraph (2) of section 168(b) is amended by striking ``or'' 
at the end of subparagraph (B), by redesignating subparagraph (C) as 
subparagraph (D), and by inserting after subparagraph (B) the following 
new subparagraph:
            ``(C) any property (other than property described in 
        paragraph (3)) which is a qualified smart electric meter or 
        qualified smart electric grid system, or''.
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of the enactment of 
this Act.
    SEC. 307. QUALIFIED GREEN BUILDING AND SUSTAINABLE DESIGN PROJECTS.
    (a) In General.--Paragraph (8) of section 142(l) is amended by 
striking ``September 30, 2009'' and inserting ``September 30, 2012''.
    (b) Treatment of Current Refunding Bonds.--Paragraph (9) of section 
142(l) is amended by striking ``October 1, 2009'' and inserting 
``October 1, 2012''.
    (c) Accountability.--The second sentence of section 701(d) of the 
American Jobs Creation Act of 2004 is amended by striking ``issuance,'' 
and inserting ``issuance of the last issue with respect to such 
project,''.
    SEC. 308. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN REUSE AND 
      RECYCLING PROPERTY.
    (a) In General.--Section 168 is amended by adding at the end the 
following new subsection:
    ``(m) Special Allowance for Certain Reuse and Recycling Property.--
        ``(1) In general.--In the case of any qualified reuse and 
    recycling property--
            ``(A) the depreciation deduction provided by section 167(a) 
        for the taxable year in which such property is placed in 
        service shall include an allowance equal to 50 percent of the 
        adjusted basis of the qualified reuse and recycling property, 
        and
            ``(B) the adjusted basis of the qualified reuse and 
        recycling property shall be reduced by the amount of such 
        deduction before computing the amount otherwise allowable as a 
        depreciation deduction under this chapter for such taxable year 
        and any subsequent taxable year.
        ``(2) Qualified reuse and recycling property.--For purposes of 
    this subsection--
            ``(A) In general.--The term `qualified reuse and recycling 
        property' means any reuse and recycling property--
                ``(i) to which this section applies,
                ``(ii) which has a useful life of at least 5 years,
                ``(iii) the original use of which commences with the 
            taxpayer after August 31, 2008, and
                ``(iv) which is--

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

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

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

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

                      TITLE IV--REVENUE PROVISIONS

    SEC. 401. LIMITATION OF DEDUCTION FOR INCOME ATTRIBUTABLE TO 
      DOMESTIC PRODUCTION OF OIL, GAS, OR PRIMARY PRODUCTS THEREOF.
    (a) In General.--Section 199(d) is amended by redesignating 
paragraph (9) as paragraph (10) and by inserting after paragraph (8) 
the following new paragraph:
        ``(9) Special rule for taxpayers with oil related qualified 
    production activities income.--
            ``(A) In general.--If a taxpayer has oil related qualified 
        production activities income for any taxable year beginning 
        after 2009, the amount otherwise allowable as a deduction under 
        subsection (a) shall be reduced by 3 percent of the least of--
                ``(i) the oil related qualified production activities 
            income of the taxpayer for the taxable year,
                ``(ii) the qualified production activities income of 
            the taxpayer for the taxable year, or
                ``(iii) taxable income (determined without regard to 
            this section).
            ``(B) Oil related qualified production activities income.--
        For purposes of this paragraph, the term `oil related qualified 
        production activities income' means for any taxable year the 
        qualified production activities income which is attributable to 
        the production, refining, processing, transportation, or 
        distribution of oil, gas, or any primary product thereof during 
        such taxable year.
            ``(C) Primary product.--For purposes of this paragraph, the 
        term `primary product' has the same meaning as when used in 
        section 927(a)(2)(C), as in effect before its repeal.''.
    (b) Conforming Amendment.--Section 199(d)(2) (relating to 
application to individuals) is amended by striking ``subsection 
(a)(1)(B)'' and inserting ``subsections (a)(1)(B) and (d)(9)(A)(iii)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.
    SEC. 402. ELIMINATION OF THE DIFFERENT TREATMENT OF FOREIGN OIL AND 
      GAS EXTRACTION INCOME AND FOREIGN OIL RELATED INCOME FOR PURPOSES 
      OF THE FOREIGN TAX CREDIT.
    (a) In General.--Subsections (a) and (b) of section 907 (relating 
to special rules in case of foreign oil and gas income) are amended to 
read as follows:
    ``(a) Reduction in Amount Allowed as Foreign Tax Under Section 
901.--In applying section 901, the amount of any foreign oil and gas 
taxes paid or accrued (or deemed to have been paid) during the taxable 
year which would (but for this subsection) be taken into account for 
purposes of section 901 shall be reduced by the amount (if any) by 
which the amount of such taxes exceeds the product of--
        ``(1) the amount of the combined foreign oil and gas income for 
    the taxable year,
        ``(2) multiplied by--
            ``(A) in the case of a corporation, the percentage which is 
        equal to the highest rate of tax specified under section 11(b), 
        or
            ``(B) in the case of an individual, a fraction the 
        numerator of which is the tax against which the credit under 
        section 901(a) is taken and the denominator of which is the 
        taxpayer's entire taxable income.
    ``(b) Combined Foreign Oil and Gas Income; Foreign Oil and Gas 
Taxes.--For purposes of this section--
        ``(1) Combined foreign oil and gas income.--The term `combined 
    foreign oil and gas income' means, with respect to any taxable 
    year, the sum of--
            ``(A) foreign oil and gas extraction income, and
            ``(B) foreign oil related income.
        ``(2) Foreign oil and gas taxes.--The term `foreign oil and gas 
    taxes' means, with respect to any taxable year, the sum of--
            ``(A) oil and gas extraction taxes, and
            ``(B) any income, war profits, and excess profits taxes 
        paid or accrued (or deemed to have been paid or accrued under 
        section 902 or 960) during the taxable year with respect to 
        foreign oil related income (determined without regard to 
        subsection (c)(4)) or loss which would be taken into account 
        for purposes of section 901 without regard to this section.''.
    (b) Recapture of Foreign Oil and Gas Losses.--Paragraph (4) of 
section 907(c) (relating to recapture of foreign oil and gas extraction 
losses by recharacterizing later extraction income) is amended to read 
as follows:
        ``(4) Recapture of foreign oil and gas losses by 
    recharacterizing later combined foreign oil and gas income.--
            ``(A) In general.--The combined foreign oil and gas income 
        of a taxpayer for a taxable year (determined without regard to 
        this paragraph) shall be reduced--
                ``(i) first by the amount determined under subparagraph 
            (B), and
                ``(ii) then by the amount determined under subparagraph 
            (C).
        The aggregate amount of such reductions shall be treated as 
        income (from sources without the United States) which is not 
        combined foreign oil and gas income.
            ``(B) Reduction for pre-2009 foreign oil extraction 
        losses.--The reduction under this paragraph shall be equal to 
        the lesser of--
                ``(i) the foreign oil and gas extraction income of the 
            taxpayer for the taxable year (determined without regard to 
            this paragraph), or
                ``(ii) the excess of--

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

            ``(C) Reduction for post-2008 foreign oil and gas losses.--
        The reduction under this paragraph shall be equal to the lesser 
        of--
                ``(i) the combined foreign oil and gas income of the 
            taxpayer for the taxable year (determined without regard to 
            this paragraph), reduced by an amount equal to the 
            reduction under subparagraph (A) for the taxable year, or
                ``(ii) the excess of--

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

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

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

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

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

            to the extent such loss is not compensated for by insurance 
            or otherwise.
                ``(iv) Foreign oil extraction loss.--For purposes of 
            subparagraph (B)(ii)(I), foreign oil extraction losses 
            shall be determined under this paragraph as in effect on 
            the day before the date of the enactment of the Energy 
            Improvement and Extension Act of 2008.''.
    (c) Carryback and Carryover of Disallowed Credits.--Section 907(f) 
(relating to carryback and carryover of disallowed credits) is 
amended--
        (1) by striking ``oil and gas extraction taxes'' each place it 
    appears and inserting ``foreign oil and gas taxes'', and
        (2) by adding at the end the following new paragraph:
        ``(4) Transition rules for pre-2009 and 2009 disallowed 
    credits.--
            ``(A) Pre-2009 credits.--In the case of any unused credit 
        year beginning before January 1, 2009, this subsection shall be 
        applied to any unused oil and gas extraction taxes carried from 
        such unused credit year to a year beginning after December 31, 
        2008--
                ``(i) by substituting `oil and gas extraction taxes' 
            for `foreign oil and gas taxes' each place it appears in 
            paragraphs (1), (2), and (3), and
                ``(ii) by computing, for purposes of paragraph (2)(A), 
            the limitation under subparagraph (A) for the year to which 
            such taxes are carried by substituting `foreign oil and gas 
            extraction income' for `foreign oil and gas income' in 
            subsection (a).
            ``(B) 2009 credits.--In the case of any unused credit year 
        beginning in 2009, the amendments made to this subsection by 
        the Energy Improvement and Extension Act of 2008 shall be 
        treated as being in effect for any preceding year beginning 
        before January 1, 2009, solely for purposes of determining how 
        much of the unused foreign oil and gas taxes for such unused 
        credit year may be deemed paid or accrued in such preceding 
        year.''.
    (d) Conforming Amendment.--Section 6501(i) is amended by striking 
``oil and gas extraction taxes'' and inserting ``foreign oil and gas 
taxes''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.
    SEC. 403. BROKER REPORTING OF CUSTOMER'S BASIS IN SECURITIES 
      TRANSACTIONS.
    (a) In General.--
        (1) Broker reporting for securities transactions.--Section 6045 
    is amended by adding at the end the following new subsection:
    ``(g) Additional Information Required in the Case of Securities 
Transactions, etc.--
        ``(1) In general.--If a broker is otherwise required to make a 
    return under subsection (a) with respect to the gross proceeds of 
    the sale of a covered security, the broker shall include in such 
    return the information described in paragraph (2).
        ``(2) Additional information required.--
            ``(A) In general.--The information required under paragraph 
        (1) to be shown on a return with respect to a covered security 
        of a customer shall include the customer's adjusted basis in 
        such security and whether any gain or loss with respect to such 
        security is long-term or short-term (within the meaning of 
        section 1222).
            ``(B) Determination of adjusted basis.--For purposes of 
        subparagraph (A)--
                ``(i) In general.--The customer's adjusted basis shall 
            be determined--

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

                ``(ii) Exception for wash sales.--Except as otherwise 
            provided by the Secretary, the customer's adjusted basis 
            shall be determined without regard to section 1091 
            (relating to loss from wash sales of stock or securities) 
            unless the transactions occur in the same account with 
            respect to identical securities.
        ``(3) Covered security.--For purposes of this subsection--
            ``(A) In general.--The term `covered security' means any 
        specified security acquired on or after the applicable date if 
        such security--
                ``(i) was acquired through a transaction in the account 
            in which such security is held, or
                ``(ii) was transferred to such account from an account 
            in which such security was a covered security, but only if 
            the broker received a statement under section 6045A with 
            respect to the transfer.
            ``(B) Specified security.--The term `specified security' 
        means--
                ``(i) any share of stock in a corporation,
                ``(ii) any note, bond, debenture, or other evidence of 
            indebtedness,
                ``(iii) any commodity, or contract or derivative with 
            respect to such commodity, if the Secretary determines that 
            adjusted basis reporting is appropriate for purposes of 
            this subsection, and
                ``(iv) any other financial instrument with respect to 
            which the Secretary determines that adjusted basis 
            reporting is appropriate for purposes of this subsection.
            ``(C) Applicable date.--The term `applicable date' means--
                ``(i) January 1, 2011, in the case of any specified 
            security which is stock in a corporation (other than any 
            stock described in clause (ii)),
                ``(ii) January 1, 2012, in the case of any stock for 
            which an average basis method is permissible under section 
            1012, and
                ``(iii) January 1, 2013, or such later date determined 
            by the Secretary in the case of any other specified 
            security.
        ``(4) Treatment of s corporations.--In the case of the sale of 
    a covered security acquired by an S corporation (other than a 
    financial institution) after December 31, 2011, such S corporation 
    shall be treated in the same manner as a partnership for purposes 
    of this section.
        ``(5) Special rules for short sales.--In the case of a short 
    sale, reporting under this section shall be made for the year in 
    which such sale is closed.''.
        (2) Broker information required with respect to options.--
    Section 6045, as amended by subsection (a), is amended by adding at 
    the end the following new subsection:
    ``(h) Application to Options on Securities.--
        ``(1) Exercise of option.--For purposes of this section, if a 
    covered security is acquired or disposed of pursuant to the 
    exercise of an option that was granted or acquired in the same 
    account as the covered security, the amount received with respect 
    to the grant or paid with respect to the acquisition of such option 
    shall be treated as an adjustment to gross proceeds or as an 
    adjustment to basis, as the case may be.
        ``(2) Lapse or closing transaction.--In the case of the lapse 
    (or closing transaction (as defined in section 1234(b)(2)(A))) of 
    an option on a specified security or the exercise of a cash-settled 
    option on a specified security, reporting under subsections (a) and 
    (g) with respect to such option shall be made for the calendar year 
    which includes the date of such lapse, closing transaction, or 
    exercise.
        ``(3) Prospective application.--Paragraphs (1) and (2) shall 
    not apply to any option which is granted or acquired before January 
    1, 2013.
        ``(4) Definitions.--For purposes of this subsection, the terms 
    `covered security' and `specified security' shall have the meanings 
    given such terms in subsection (g)(3).''.
        (3) Extension of period for statements sent to customers.--
            (A) In general.--Subsection (b) of section 6045 is amended 
        by striking ``January 31'' and inserting ``February 15''.
            (B) Statements related to substitute payments.--Subsection 
        (d) of section 6045 is amended--
                (i) by striking ``at such time and'', and
                (ii) by inserting after ``other item.'' the following 
            new sentence: ``The written statement required under the 
            preceding sentence shall be furnished on or before February 
            15 of the year following the calendar year in which the 
            payment was made.''.
            (C) Other statements.--Subsection (b) of section 6045 is 
        amended by adding at the end the following: ``In the case of a 
        consolidated reporting statement (as defined in regulations) 
        with respect to any customer, any statement which would 
        otherwise be required to be furnished on or before January 31 
        of a calendar year with respect to any item reportable to the 
        taxpayer shall instead be required to be furnished on or before 
        February 15 of such calendar year if furnished with such 
        consolidated reporting statement.''.
    (b) Determination of Basis of Certain Securities on Account by 
Account or Average Basis Method.--Section 1012 is amended--
        (1) by striking ``The basis of property'' and inserting the 
    following:
    ``(a) In General.--The basis of property'',
        (2) by striking ``The cost of real property'' and inserting the 
    following:
    ``(b) Special Rule for Apportioned Real Estate Taxes.--The cost of 
real property'', and
        (3) by adding at the end the following new subsections:
    ``(c) Determinations by Account.--
        ``(1) In general.--In the case of the sale, exchange, or other 
    disposition of a specified security on or after the applicable 
    date, the conventions prescribed by regulations under this section 
    shall be applied on an account by account basis.
        ``(2) Application to certain funds.--
            ``(A) In general.--Except as provided in subparagraph (B), 
        any stock for which an average basis method is permissible 
        under section 1012 which is acquired before January 1, 2012, 
        shall be treated as a separate account from any such stock 
        acquired on or after such date.
            ``(B) Election fund for treatment as single account.--If a 
        fund described in subparagraph (A) elects to have this 
        subparagraph apply with respect to one or more of its 
        stockholders--
                ``(i) subparagraph (A) shall not apply with respect to 
            any stock in such fund held by such stockholders, and
                ``(ii) all stock in such fund which is held by such 
            stockholders shall be treated as covered securities 
            described in section 6045(g)(3) without regard to the date 
            of the acquisition of such stock.
        A rule similar to the rule of the preceding sentence shall 
        apply with respect to a broker holding such stock as a nominee.
        ``(3) Definitions.--For purposes of this section, the terms 
    `specified security' and `applicable date' shall have the meaning 
    given such terms in section 6045(g).
    ``(d) Average Basis for Stock Acquired Pursuant to a Dividend 
Reinvestment Plan.--
        ``(1) In general.--In the case of any stock acquired after 
    December 31, 2010, in connection with a dividend reinvestment plan, 
    the basis of such stock while held as part of such plan shall be 
    determined using one of the methods which may be used for 
    determining the basis of stock in an open-end fund.
        ``(2) Treatment after transfer.--In the case of the transfer to 
    another account of stock to which paragraph (1) applies, such stock 
    shall have a cost basis in such other account equal to its basis in 
    the dividend reinvestment plan immediately before such transfer 
    (properly adjusted for any fees or other charges taken into account 
    in connection with such transfer).
        ``(3) Separate accounts; election for treatment as single 
    account.--Rules similar to the rules of subsection (c)(2) shall 
    apply for purposes of this subsection.
        ``(4) Dividend reinvestment plan.--For purposes of this 
    subsection--
            ``(A) In general.--The term `dividend reinvestment plan' 
        means any arrangement under which dividends on any stock are 
        reinvested in stock identical to the stock with respect to 
        which the dividends are paid.
            ``(B) Initial stock acquisition treated as acquired in 
        connection with plan.--Stock shall be treated as acquired in 
        connection with a dividend reinvestment plan if such stock is 
        acquired pursuant to such plan or if the dividends paid on such 
        stock are subject to such plan.''.
    (c) Information by Transferors To Aid Brokers.--
        (1) In general.--Subpart B of part III of subchapter A of 
    chapter 61 is amended by inserting after section 6045 the following 
    new section:
``SEC. 6045A. INFORMATION REQUIRED IN CONNECTION WITH TRANSFERS OF 
COVERED SECURITIES TO BROKERS.
    ``(a) Furnishing of Information.--Every applicable person which 
transfers to a broker (as defined in section 6045(c)(1)) a security 
which is a covered security (as defined in section 6045(g)(3)) in the 
hands of such applicable person shall furnish to such broker a written 
statement in such manner and setting forth such information as the 
Secretary may by regulations prescribe for purposes of enabling such 
broker to meet the requirements of section 6045(g).
    ``(b) Applicable Person.--For purposes of subsection (a), the term 
`applicable person' means--
        ``(1) any broker (as defined in section 6045(c)(1)), and
        ``(2) any other person as provided by the Secretary in 
    regulations.
    ``(c) Time for Furnishing Statement.--Except as otherwise provided 
by the Secretary, any statement required by subsection (a) shall be 
furnished not later than 15 days after the date of the transfer 
described in such subsection.''.
        (2) Assessable penalties.--Paragraph (2) of section 6724(d), as 
    amended by the Housing Assistance Tax Act of 2008, is amended by 
    redesignating subparagraphs (I) through (DD) as subparagraphs (J) 
    through (EE), respectively, and by inserting after subparagraph (H) 
    the following new subparagraph:
            ``(I) section 6045A (relating to information required in 
        connection with transfers of covered securities to brokers),''.
        (3) Clerical amendment.--The table of sections for subpart B of 
    part III of subchapter A of chapter 61 is amended by inserting 
    after the item relating to section 6045 the following new item:

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

    (d) Additional Issuer Information To Aid Brokers.--
        (1) In general.--Subpart B of part III of subchapter A of 
    chapter 61, as amended by subsection (b), is amended by inserting 
    after section 6045A the following new section:
``SEC. 6045B. RETURNS RELATING TO ACTIONS AFFECTING BASIS OF SPECIFIED 
SECURITIES.
    ``(a) In General.--According to the forms or regulations prescribed 
by the Secretary, any issuer of a specified security shall make a 
return setting forth--
        ``(1) a description of any organizational action which affects 
    the basis of such specified security of such issuer,
        ``(2) the quantitative effect on the basis of such specified 
    security resulting from such action, and
        ``(3) such other information as the Secretary may prescribe.
    ``(b) Time for Filing Return.--Any return required by subsection 
(a) shall be filed not later than the earlier of--
        ``(1) 45 days after the date of the action described in 
    subsection (a), or
        ``(2) January 15 of the year following the calendar year during 
    which such action occurred.
    ``(c) Statements To Be Furnished to Holders of Specified Securities 
or Their Nominees.--According to the forms or regulations prescribed by 
the Secretary, every person required to make a return under subsection 
(a) with respect to a specified security shall furnish to the nominee 
with respect to the specified security (or certificate holder if there 
is no nominee) a written statement showing--
        ``(1) the name, address, and phone number of the information 
    contact of the person required to make such return,
        ``(2) the information required to be shown on such return with 
    respect to such security, and
        ``(3) such other information as the Secretary may prescribe.
The written statement required under the preceding sentence shall be 
furnished to the holder on or before January 15 of the year following 
the calendar year during which the action described in subsection (a) 
occurred.
    ``(d) Specified Security.--For purposes of this section, the term 
`specified security' has the meaning given such term by section 
6045(g)(3)(B). No return shall be required under this section with 
respect to actions described in subsection (a) with respect to a 
specified security which occur before the applicable date (as defined 
in section 6045(g)(3)(C)) with respect to such security.
    ``(e) Public Reporting in Lieu of Return.--The Secretary may waive 
the requirements under subsections (a) and (c) with respect to a 
specified security, if the person required to make the return under 
subsection (a) makes publicly available, in such form and manner as the 
Secretary determines necessary to carry out the purposes of this 
section--
        ``(1) the name, address, phone number, and email address of the 
    information contact of such person, and
        ``(2) the information described in paragraphs (1), (2), and (3) 
    of subsection (a).''.
        (2) Assessable penalties.--
            (A) Subparagraph (B) of section 6724(d)(1), as amended by 
        the Housing Assistance Tax Act of 2008, is amended by 
        redesignating clause (iv) and each of the clauses which follow 
        as clauses (v) through (xxiii), respectively, and by inserting 
        after clause (iii) the following new clause:
                ``(iv) section 6045B(a) (relating to returns relating 
            to actions affecting basis of specified securities),''.
            (B) Paragraph (2) of section 6724(d), as amended by the 
        Housing Assistance Tax Act of 2008 and by subsection (c)(2), is 
        amended by redesignating subparagraphs (J) through (EE) as 
        subparagraphs (K) through (FF), respectively, and by inserting 
        after subparagraph (I) the following new subparagraph:
            ``(J) subsections (c) and (e) of section 6045B (relating to 
        returns relating to actions affecting basis of specified 
        securities),''.
        (3) Clerical amendment.--The table of sections for subpart B of 
    part III of subchapter A of chapter 61, as amended by subsection 
    (b)(3), is amended by inserting after the item relating to section 
    6045A the following new item:

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

    (e) Effective Date.--
        (1) In general.--Except as otherwise provided in this 
    subsection, the amendments made by this section shall take effect 
    on January 1, 2011.
        (2) Extension of period for statements sent to customers.--The 
    amendments made by subsection (a)(3) shall apply to statements 
    required to be furnished after December 31, 2008.
    SEC. 404. 0.2 PERCENT FUTA SURTAX.
    (a) In General.--Section 3301 (relating to rate of tax) is 
amended--
        (1) by striking ``through 2008'' in paragraph (1) and inserting 
    ``through 2009'', and
        (2) by striking ``calendar year 2009'' in paragraph (2) and 
    inserting ``calendar year 2010''.
    (b) Effective Date.--The amendments made by this section shall 
apply to wages paid after December 31, 2008.
    SEC. 405. INCREASE AND EXTENSION OF OIL SPILL LIABILITY TRUST FUND 
      TAX.
    (a) Increase in Rate.--
        (1) In general.--Section 4611(c)(2)(B) (relating to rates) is 
    amended by striking ``is 5 cents a barrel.'' and inserting ``is--
                ``(i) in the case of crude oil received or petroleum 
            products entered before January 1, 2017, 8 cents a barrel, 
            and
                ``(ii) in the case of crude oil received or petroleum 
            products entered after December 31, 2016, 9 cents a 
            barrel.''.
        (2) Effective date.--The amendment made by this subsection 
    shall apply on and after the first day of the first calendar 
    quarter beginning more than 60 days after the date of the enactment 
    of this Act.
    (b) Extension.--
        (1) In general.--Section 4611(f) (relating to application of 
    Oil Spill Liability Trust Fund financing rate) is amended by 
    striking paragraphs (2) and (3) and inserting the following new 
    paragraph:
        ``(2) Termination.--The Oil Spill Liability Trust Fund 
    financing rate shall not apply after December 31, 2017.''.
        (2) Conforming amendment.--Section 4611(f)(1) is amended by 
    striking ``paragraphs (2) and (3)'' and inserting ``paragraph 
    (2)''.
        (3) Effective date.--The amendments made by this subsection 
    shall take effect on the date of the enactment of this Act.

      DIVISION C--TAX EXTENDERS AND ALTERNATIVE MINIMUM TAX RELIEF

SEC. 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.
    (a) Short Title.--This division may be cited as the ``Tax Extenders 
and Alternative Minimum Tax Relief Act of 2008''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this division an amendment or repeal is expressed 
in terms of an amendment to, or repeal of, a section or other 
provision, the reference shall be considered to be made to a section or 
other provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents of this division is 
as follows:

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

                 TITLE I--ALTERNATIVE MINIMUM TAX RELIEF

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

            TITLE II--EXTENSION OF INDIVIDUAL TAX PROVISIONS

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

             TITLE III--EXTENSION OF BUSINESS TAX PROVISIONS

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

          TITLE IV--EXTENSION OF TAX ADMINISTRATION PROVISIONS

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

         TITLE V--ADDITIONAL TAX RELIEF AND OTHER TAX PROVISIONS

                     Subtitle A--General Provisions

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

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

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

                       TITLE VI--OTHER PROVISIONS

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

                       TITLE VII--DISASTER RELIEF

         Subtitle A--Heartland and Hurricane Ike Disaster Relief

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

                  Subtitle B--National Disaster Relief

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

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

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

                TITLE I--ALTERNATIVE MINIMUM TAX RELIEF

    SEC. 101. EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF FOR 
      NONREFUNDABLE PERSONAL CREDITS.
    (a) In General.--Paragraph (2) of section 26(a) (relating to 
special rule for taxable years 2000 through 2007) is amended--
        (1) by striking ``or 2007'' and inserting ``2007, or 2008'', 
    and
        (2) by striking ``2007'' in the heading thereof and inserting 
    ``2008''.
    (b)  Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.
    SEC. 102. EXTENSION OF INCREASED ALTERNATIVE MINIMUM TAX EXEMPTION 
      AMOUNT.
    (a) In General.--Paragraph (1) of section 55(d) (relating to 
exemption amount) is amended--
        (1) by striking ``($66,250 in the case of taxable years 
    beginning in 2007)'' in subparagraph (A) and inserting ``($69,950 
    in the case of taxable years beginning in 2008)'', and
        (2) by striking ``($44,350 in the case of taxable years 
    beginning in 2007)'' in subparagraph (B) and inserting ``($46,200 
    in the case of taxable years beginning in 2008)''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.
    SEC. 103. INCREASE OF AMT REFUNDABLE CREDIT AMOUNT FOR INDIVIDUALS 
      WITH LONG-TERM UNUSED CREDITS FOR PRIOR YEAR MINIMUM TAX 
      LIABILITY, ETC.
    (a) In General.--Paragraph (2) of section 53(e) is amended to read 
as follows:
        ``(2) AMT refundable credit amount.--For purposes of paragraph 
    (1), the term `AMT refundable credit amount' means, with respect to 
    any taxable year, the amount (not in excess of the long-term unused 
    minimum tax credit for such taxable year) equal to the greater of--
            ``(A) 50 percent of the long-term unused minimum tax credit 
        for such taxable year, or
            ``(B) the amount (if any) of the AMT refundable credit 
        amount determined under this paragraph for the taxpayer's 
        preceding taxable year (determined without regard to subsection 
        (f)(2)).''.
    (b) Treatment of Certain Underpayments, Interest, and Penalties 
Attributable to the Treatment of Incentive Stock Options.--Section 53 
is amended by adding at the end the following new subsection:
    ``(f) Treatment of Certain Underpayments, Interest, and Penalties 
Attributable to the Treatment of Incentive Stock Options.--
        ``(1) Abatement.--Any underpayment of tax outstanding on the 
    date of the enactment of this subsection which is attributable to 
    the application of section 56(b)(3) for any taxable year ending 
    before January 1, 2008, and any interest or penalty with respect to 
    such underpayment which is outstanding on such date of enactment, 
    is hereby abated. The amount determined under subsection (b)(1) 
    shall not include any tax abated under the preceding sentence.
        ``(2) Increase in credit for certain interest and penalties 
    already paid.--The AMT refundable credit amount, and the minimum 
    tax credit determined under subsection (b), for the taxpayer's 
    first 2 taxable years beginning after December 31, 2007, shall each 
    be increased by 50 percent of the aggregate amount of the interest 
    and penalties which were paid by the taxpayer before the date of 
    the enactment of this subsection and which would (but for such 
    payment) have been abated under paragraph (1).''.
    (c) Effective Date.--
        (1) In general.--Except as provided in paragraph (2), the 
    amendments made by this section shall apply to taxable years 
    beginning after December 31, 2007.
        (2) Abatement.--Section 53(f)(1), as added by subsection (b), 
    shall take effect on the date of the enactment of this Act.

            TITLE II--EXTENSION OF INDIVIDUAL TAX PROVISIONS

    SEC. 201. DEDUCTION FOR STATE AND LOCAL SALES TAXES.
    (a) In General.--Subparagraph (I) of section 164(b)(5) is amended 
by striking ``January 1, 2008'' and inserting ``January 1, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2007.
    SEC. 202. DEDUCTION OF QUALIFIED TUITION AND RELATED EXPENSES.
    (a) In General.--Subsection (e) of section 222 (relating to 
termination) is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2007.
    SEC. 203. DEDUCTION FOR CERTAIN EXPENSES OF ELEMENTARY AND 
      SECONDARY SCHOOL TEACHERS.
    (a) In General.--Subparagraph (D) of section 62(a)(2) (relating to 
certain expenses of elementary and secondary school teachers) is 
amended by striking ``or 2007'' and inserting ``2007, 2008, or 2009''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2007.
    SEC. 204. ADDITIONAL STANDARD DEDUCTION FOR REAL PROPERTY TAXES FOR 
      NONITEMIZERS.
    (a) In General.--Subparagraph (C) of section 63(c)(1), as added by 
the Housing Assistance Tax Act of 2008, is amended by inserting ``or 
2009'' after ``2008''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2008.
    SEC. 205. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT PLANS 
      FOR CHARITABLE PURPOSES.
    (a) In General.--Subparagraph (F) of section 408(d)(8) (relating to 
termination) is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions made in taxable years beginning after December 31, 
2007.
    SEC. 206. TREATMENT OF CERTAIN DIVIDENDS OF REGULATED INVESTMENT 
      COMPANIES.
    (a) Interest-Related Dividends.--Subparagraph (C) of section 
871(k)(1) (defining interest-related dividend) is amended by striking 
``December 31, 2007'' and inserting ``December 31, 2009''.
    (b) Short-Term Capital Gain Dividends.--Subparagraph (C) of section 
871(k)(2) (defining short-term capital gain dividend) is amended by 
striking ``December 31, 2007'' and inserting ``December 31, 2009''.
    (c) Effective Date.--The amendments made by this section shall 
apply to dividends with respect to taxable years of regulated 
investment companies beginning after December 31, 2007.
    SEC. 207. STOCK IN RIC FOR PURPOSES OF DETERMINING ESTATES OF 
      NONRESIDENTS NOT CITIZENS.
    (a) In General.--Paragraph (3) of section 2105(d) (relating to 
stock in a RIC) is amended by striking ``December 31, 2007'' and 
inserting ``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to decedents dying after December 31, 2007.
    SEC. 208. QUALIFIED INVESTMENT ENTITIES.
    (a) In General.--Clause (ii) of section 897(h)(4)(A) (relating to 
termination) is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2009''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on January 1, 2008.

            TITLE III--EXTENSION OF BUSINESS TAX PROVISIONS

    SEC. 301. EXTENSION AND MODIFICATION OF RESEARCH CREDIT.
    (a) Extension.--
        (1) In general.--Section 41(h) (relating to termination) is 
    amended by striking ``December 31, 2007'' and inserting ``December 
    31, 2009'' in paragraph (1)(B).
        (2) Conforming amendment.--Subparagraph (D) of section 
    45C(b)(1) (relating to special rule) is amended by striking ``after 
    December 31, 2007'' and inserting ``after December 31, 2009''.
    (b) Termination of Alternative Incremental Credit.--Section 41(h) 
is amended by redesignating paragraph (2) as paragraph (3), and by 
inserting after paragraph (1) the following new paragraph:
        ``(2) Termination of alternative incremental credit.--No 
    election under subsection (c)(4) shall apply to taxable years 
    beginning after December 31, 2008.''.
    (c) Modification of Alternative Simplified Credit.--Paragraph 
(5)(A) of section 41(c) (relating to election of alternative simplified 
credit) is amended by striking ``12 percent'' and inserting ``14 
percent (12 percent in the case of taxable years ending before January 
1, 2009)''.
    (d) Technical Correction.--Paragraph (3) of section 41(h) is 
amended to read as follows:
        ``(2) Computation for taxable year in which credit 
    terminates.--In the case of any taxable year with respect to which 
    this section applies to a number of days which is less than the 
    total number of days in such taxable year--
            ``(A) the amount determined under subsection (c)(1)(B) with 
        respect to such taxable year shall be the amount which bears 
        the same ratio to such amount (determined without regard to 
        this paragraph) as the number of days in such taxable year to 
        which this section applies bears to the total number of days in 
        such taxable year, and
            ``(B) for purposes of subsection (c)(5), the average 
        qualified research expenses for the preceding 3 taxable years 
        shall be the amount which bears the same ratio to such average 
        qualified research expenses (determined without regard to this 
        paragraph) as the number of days in such taxable year to which 
        this section applies bears to the total number of days in such 
        taxable year.''.
    (e) Effective Date.--
        (1) In general.--Except as provided in paragraph (2), the 
    amendments made by this section shall apply to taxable years 
    beginning after December 31, 2007.
        (2) Extension.--The amendments made by subsection (a) shall 
    apply to amounts paid or incurred after December 31, 2007.
    SEC. 302. NEW MARKETS TAX CREDIT.
    Subparagraph (D) of section 45D(f)(1) (relating to national 
limitation on amount of investments designated) is amended by striking 
``and 2008'' and inserting ``2008, and 2009''.
    SEC. 303. SUBPART F EXCEPTION FOR ACTIVE FINANCING INCOME.
    (a) Exempt Insurance Income.--Paragraph (10) of section 953(e) 
(relating to application) is amended--
        (1) by striking ``January 1, 2009'' and inserting ``January 1, 
    2010'', and
        (2) by striking ``December 31, 2008'' and inserting ``December 
    31, 2009''.
    (b) Exception to Treatment as Foreign Personal Holding Company 
Income.--Paragraph (9) of section 954(h) (relating to application) is 
amended by striking ``January 1, 2009'' and inserting ``January 1, 
2010''.
    SEC. 304. EXTENSION OF LOOK-THRU RULE FOR RELATED CONTROLLED 
      FOREIGN CORPORATIONS.
    (a) In General.--Subparagraph (C) of section 954(c)(6) (relating to 
application) is amended by striking ``January 1, 2009'' and inserting 
``January 1, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years of foreign corporations beginning after December 31, 
2007, and to taxable years of United States shareholders with or within 
which such taxable years of foreign corporations end.
    SEC. 305. EXTENSION OF 15-YEAR STRAIGHT-LINE COST RECOVERY FOR 
      QUALIFIED LEASEHOLD IMPROVEMENTS AND QUALIFIED RESTAURANT 
      IMPROVEMENTS; 15-YEAR STRAIGHT-LINE COST RECOVERY FOR CERTAIN 
      IMPROVEMENTS TO RETAIL SPACE.
    (a) Extension of Leasehold and Restaurant Improvements.--
        (1) In general.--Clauses (iv) and (v) of section 168(e)(3)(E) 
    (relating to 15-year property) are each amended by striking 
    ``January 1, 2008'' and inserting ``January 1, 2010''.
        (2) Effective date.--The amendments made by this subsection 
    shall apply to property placed in service after December 31, 2007.
    (b) Treatment To Include New Construction.--
        (1) In general.--Paragraph (7) of section 168(e) (relating to 
    classification of property) is amended to read as follows:
        ``(7) Qualified restaurant property.--
            ``(A) In general.--The term `qualified restaurant property' 
        means any section 1250 property which is--
                ``(i) a building, if such building is placed in service 
            after December 31, 2008, and before January 1, 2010, or
                ``(ii) an improvement to a building,
        if more than 50 percent of the building's square footage is 
        devoted to preparation of, and seating for on-premises 
        consumption of, prepared meals.
            ``(B) Exclusion from bonus depreciation.--Property 
        described in this paragraph shall not be considered qualified 
        property for purposes of subsection (k).''.
        (2) Effective date.--The amendment made by this subsection 
    shall apply to property placed in service after December 31, 2008.
    (c) Recovery Period for Depreciation of Certain Improvements to 
Retail Space.--
        (1) 15-year recovery period.--Section 168(e)(3)(E) (relating to 
    15-year property) is amended by striking ``and'' at the end of 
    clause (vii), by striking the period at the end of clause (viii) 
    and inserting ``, and'', and by adding at the end the following new 
    clause:
                ``(ix) any qualified retail improvement property placed 
            in service after December 31, 2008, and before January 1, 
            2010.''.
        (2) Qualified retail improvement property.--Section 168(e) is 
    amended by adding at the end the following new paragraph:
        ``(8) Qualified retail improvement property.--
            ``(A) In general.--The term `qualified retail improvement 
        property' means any improvement to an interior portion of a 
        building which is nonresidential real property if--
                ``(i) such portion is open to the general public and is 
            used in the retail trade or business of selling tangible 
            personal property to the general public, and
                ``(ii) such improvement is placed in service more than 
            3 years after the date the building was first placed in 
            service.
            ``(B) Improvements made by owner.--In the case of an 
        improvement made by the owner of such improvement, such 
        improvement shall be qualified retail improvement property (if 
        at all) only so long as such improvement is held by such owner. 
        Rules similar to the rules under paragraph (6)(B) shall apply 
        for purposes of the preceding sentence.
            ``(C) Certain improvements not included.--Such term shall 
        not include any improvement for which the expenditure is 
        attributable to--
                ``(i) the enlargement of the building,
                ``(ii) any elevator or escalator,
                ``(iii) any structural component benefitting a common 
            area, or
                ``(iv) the internal structural framework of the 
            building.
            ``(D) Exclusion from bonus depreciation.--Property 
        described in this paragraph shall not be considered qualified 
        property for purposes of subsection (k).
            ``(E) Termination.--Such term shall not include any 
        improvement placed in service after December 31, 2009.''.
        (3) Requirement to use straight line method.--Section 168(b)(3) 
    is amended by adding at the end the following new subparagraph:
            ``(I) Qualified retail improvement property described in 
        subsection (e)(8).''.
        (4) Alternative system.--The table contained in section 
    168(g)(3)(B) is amended by inserting after the item relating to 
    subparagraph (E)(viii) the following new item:

``(E)(ix)..................................................        39''.
 

        (5) Effective date.--The amendments made by this subsection 
    shall apply to property placed in service after December 31, 2008.
    SEC. 306. MODIFICATION OF TAX TREATMENT OF CERTAIN PAYMENTS TO 
      CONTROLLING EXEMPT ORGANIZATIONS.
    (a) In General.--Clause (iv) of section 512(b)(13)(E) (relating to 
termination) is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to payments received or accrued after December 31, 2007.
    SEC. 307. BASIS ADJUSTMENT TO STOCK OF S CORPORATIONS MAKING 
      CHARITABLE CONTRIBUTIONS OF PROPERTY.
    (a) In General.--The last sentence of section 1367(a)(2) (relating 
to decreases in basis) is amended by striking ``December 31, 2007'' and 
inserting ``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made in taxable years beginning after December 31, 
2007.
    SEC. 308. INCREASE IN LIMIT ON COVER OVER OF RUM EXCISE TAX TO 
      PUERTO RICO AND THE VIRGIN ISLANDS.
    (a) In General.--Paragraph (1) of section 7652(f) is amended by 
striking ``January 1, 2008'' and inserting ``January 1, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to distilled spirits brought into the United States after December 31, 
2007.
    SEC. 309. EXTENSION OF ECONOMIC DEVELOPMENT CREDIT FOR AMERICAN 
      SAMOA.
    (a) In General.--Subsection (d) of section 119 of division A of the 
Tax Relief and Health Care Act of 2006 is amended--
        (1) by striking ``first two taxable years'' and inserting 
    ``first 4 taxable years'', and
        (2) by striking ``January 1, 2008'' and inserting ``January 1, 
    2010''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.
    SEC. 310. EXTENSION OF MINE RESCUE TEAM TRAINING CREDIT.
    Section 45N(e) (relating to termination) is amended by striking 
``December 31, 2008'' and inserting ``December 31, 2009''.
    SEC. 311. EXTENSION OF ELECTION TO EXPENSE ADVANCED MINE SAFETY 
      EQUIPMENT.
    Section 179E(g) (relating to termination) is amended by striking 
``December 31, 2008'' and inserting ``December 31, 2009''.
    SEC. 312. DEDUCTION ALLOWABLE WITH RESPECT TO INCOME ATTRIBUTABLE 
      TO DOMESTIC PRODUCTION ACTIVITIES IN PUERTO RICO.
    (a) In General.--Subparagraph (C) of section 199(d)(8) (relating to 
termination) is amended--
        (1) by striking ``first 2 taxable years'' and inserting ``first 
    4 taxable years'', and
        (2) by striking ``January 1, 2008'' and inserting ``January 1, 
    2010''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.
    SEC. 313. QUALIFIED ZONE ACADEMY BONDS.
    (a) In General.--Subpart I of part IV of subchapter A of chapter 1 
is amended by adding at the end the following new section:
    ``SEC. 54E. QUALIFIED ZONE ACADEMY BONDS.
    ``(a) Qualified Zone Academy Bonds.--For purposes of this 
subchapter, the term `qualified zone academy bond' means any bond 
issued as part of an issue if--
        ``(1) 100 percent of the available project proceeds of such 
    issue are to be used for a qualified purpose with respect to a 
    qualified zone academy established by an eligible local education 
    agency,
        ``(2) the bond is issued by a State or local government within 
    the jurisdiction of which such academy is located, and
        ``(3) the issuer--
            ``(A) designates such bond for purposes of this section,
            ``(B) certifies that it has written assurances that the 
        private business contribution requirement of subsection (b) 
        will be met with respect to such academy, and
            ``(C) certifies that it has the written approval of the 
        eligible local education agency for such bond issuance.
    ``(b)  Private Business Contribution Requirement.--For purposes of 
subsection (a), the private business contribution requirement of this 
subsection is met with respect to any issue if the eligible local 
education agency that established the qualified zone academy has 
written commitments from private entities to make qualified 
contributions having a present value (as of the date of issuance of the 
issue) of not less than 10 percent of the proceeds of the issue.
    ``(c) Limitation on Amount of Bonds Designated.--
        ``(1) National limitation.--There is a national zone academy 
    bond limitation for each calendar year. Such limitation is 
    $400,000,000 for 2008 and 2009, and, except as provided in 
    paragraph (4), zero thereafter.
        ``(2) Allocation of limitation.--The national zone academy bond 
    limitation for a calendar year shall be allocated by the Secretary 
    among the States on the basis of their respective populations of 
    individuals below the poverty line (as defined by the Office of 
    Management and Budget). The limitation amount allocated to a State 
    under the preceding sentence shall be allocated by the State 
    education agency to qualified zone academies within such State.
        ``(3) Designation subject to limitation amount.--The maximum 
    aggregate face amount of bonds issued during any calendar year 
    which may be designated under subsection (a) with respect to any 
    qualified zone academy shall not exceed the limitation amount 
    allocated to such academy under paragraph (2) for such calendar 
    year.
        ``(4) Carryover of unused limitation.--
            ``(A) In general.--If for any calendar year--
                ``(i) the limitation amount for any State, exceeds
                ``(ii) the amount of bonds issued during such year 
            which are designated under subsection (a) with respect to 
            qualified zone academies within such State,
        the limitation amount for such State for the following calendar 
        year shall be increased by the amount of such excess.
            ``(B) Limitation on carryover.--Any carryforward of a 
        limitation amount may be carried only to the first 2 years 
        following the unused limitation year. For purposes of the 
        preceding sentence, a limitation amount shall be treated as 
        used on a first-in first-out basis.
            ``(C) Coordination with section 1397e.--Any carryover 
        determined under section 1397E(e)(4) (relating to carryover of 
        unused limitation) with respect to any State to calendar year 
        2008 or 2009 shall be treated for purposes of this section as a 
        carryover with respect to such State for such calendar year 
        under subparagraph (A), and the limitation of subparagraph (B) 
        shall apply to such carryover taking into account the calendar 
        years to which such carryover relates.
    ``(d) Definitions.--For purposes of this section--
        ``(1) Qualified zone academy.--The term `qualified zone 
    academy' means any public school (or academic program within a 
    public school) which is established by and operated under the 
    supervision of an eligible local education agency to provide 
    education or training below the postsecondary level if--
            ``(A) such public school or program (as the case may be) is 
        designed in cooperation with business to enhance the academic 
        curriculum, increase graduation and employment rates, and 
        better prepare students for the rigors of college and the 
        increasingly complex workforce,
            ``(B) students in such public school or program (as the 
        case may be) will be subject to the same academic standards and 
        assessments as other students educated by the eligible local 
        education agency,
            ``(C) the comprehensive education plan of such public 
        school or program is approved by the eligible local education 
        agency, and
            ``(D)(i) such public school is located in an empowerment 
        zone or enterprise community (including any such zone or 
        community designated after the date of the enactment of this 
        section), or
            ``(ii) there is a reasonable expectation (as of the date of 
        issuance of the bonds) that at least 35 percent of the students 
        attending such school or participating in such program (as the 
        case may be) will be eligible for free or reduced-cost lunches 
        under the school lunch program established under the National 
        School Lunch Act.
        ``(2) Eligible local education agency.--For purposes of this 
    section, the term `eligible local education agency' means any local 
    educational agency as defined in section 9101 of the Elementary and 
    Secondary Education Act of 1965.
        ``(3) Qualified purpose.--The term `qualified purpose' means, 
    with respect to any qualified zone academy--
            ``(A) rehabilitating or repairing the public school 
        facility in which the academy is established,
            ``(B) providing equipment for use at such academy,
            ``(C) developing course materials for education to be 
        provided at such academy, and
            ``(D) training teachers and other school personnel in such 
        academy.
        ``(4) Qualified contributions.--The term `qualified 
    contribution' means any contribution (of a type and quality 
    acceptable to the eligible local education agency) of--
            ``(A) equipment for use in the qualified zone academy 
        (including state-of-the-art technology and vocational 
        equipment),
            ``(B) technical assistance in developing curriculum or in 
        training teachers in order to promote appropriate market driven 
        technology in the classroom,
            ``(C) services of employees as volunteer mentors,
            ``(D) internships, field trips, or other educational 
        opportunities outside the academy for students, or
            ``(E) any other property or service specified by the 
        eligible local education agency.''.
    (b) Conforming Amendments.--
        (1) Paragraph (1) of section 54A(d), as amended by this Act, is 
    amended by striking ``or'' at the end of subparagraph (B), by 
    inserting ``or'' at the end of subparagraph (C), and by inserting 
    after subparagraph (C) the following new subparagraph:
            ``(D) a qualified zone academy bond,''.
        (2) Subparagraph (C) of section 54A(d)(2), as amended by this 
    Act, is amended by striking ``and'' at the end of clause (ii), by 
    striking the period at the end of clause (iii) and inserting ``, 
    and'', and by adding at the end the following new clause:
                ``(iv) in the case of a qualified zone academy bond, a 
            purpose specified in section 54E(a)(1).''.
        (3) Section 1397E is amended by adding at the end the following 
    new subsection:
    ``(m) Termination.--This section shall not apply to any obligation 
issued after the date of the enactment of the Tax Extenders and 
Alternative Minimum Tax Relief Act of 2008.''.
        (4) The table of sections for subpart I of part IV of 
    subchapter A of chapter 1 is amended by adding at the end the 
    following new item:

``Sec. 54E. Qualified zone academy bonds.''.

    (c) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.
    SEC. 314. INDIAN EMPLOYMENT CREDIT.
    (a) In General.--Subsection (f) of section 45A (relating to 
termination) is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2007.
    SEC. 315. ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY ON INDIAN 
      RESERVATIONS.
    (a) In General.--Paragraph (8) of section 168(j) (relating to 
termination) is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2007.
    SEC. 316. RAILROAD TRACK MAINTENANCE.
    (a) In General.--Subsection (f) of section 45G (relating to 
application of section) is amended by striking ``January 1, 2008'' and 
inserting ``January 1, 2010''.
    (b) Credit Allowed Against Alternative Minimum Tax.--Subparagraph 
(B) of section 38(c)(4), as amended by this Act, is amended--
        (1) by redesignating clauses (v), (vi), and (vii) as clauses 
    (vi), (vii), and (viii), respectively, and
        (2) by inserting after clause (iv) the following new clause:
                ``(v) the credit determined under section 45G,''.
    (c) Effective Dates.--
        (1) The amendment made by subsection (a) shall apply to 
    expenditures paid or incurred during taxable years beginning after 
    December 31, 2007.
        (2) The amendments made by subsection (b) shall apply to 
    credits determined under section 45G of the Internal Revenue Code 
    of 1986 in taxable years beginning after December 31, 2007, and to 
    carrybacks of such credits.
    SEC. 317. SEVEN-YEAR COST RECOVERY PERIOD FOR MOTORSPORTS RACING 
      TRACK FACILITY.
    (a) In General.--Subparagraph (D) of section 168(i)(15) (relating 
to termination) is amended by striking ``December 31, 2007'' and 
inserting ``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2007.
    SEC. 318. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS.
    (a) In General.--Subsection (h) of section 198 (relating to 
termination) is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to expenditures paid or incurred after December 31, 2007.
    SEC. 319. EXTENSION OF WORK OPPORTUNITY TAX CREDIT FOR HURRICANE 
      KATRINA EMPLOYEES.
    (a) In General.--Paragraph (1) of section 201(b) of the Katrina 
Emergency Tax Relief Act of 2005 is amended by striking ``2-year'' and 
inserting ``4-year''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to individuals hired after August 27, 2007.
    SEC. 320. EXTENSION OF INCREASED REHABILITATION CREDIT FOR 
      STRUCTURES IN THE GULF OPPORTUNITY ZONE.
    (a) In General.--Subsection (h) of section 1400N is amended by 
striking ``December 31, 2008'' and inserting ``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to expenditures paid or incurred after the date of the enactment of 
this Act.
    SEC. 321. ENHANCED DEDUCTION FOR QUALIFIED COMPUTER CONTRIBUTIONS.
    (a) In General.--Subparagraph (G) of section 170(e)(6) is amended 
by striking ``December 31, 2007'' and inserting ``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made during taxable years beginning after December 31, 
2007.
    SEC. 322. TAX INCENTIVES FOR INVESTMENT IN THE DISTRICT OF 
      COLUMBIA.
    (a) Designation of Zone.--
        (1) In general.--Subsection (f) of section 1400 is amended by 
    striking ``2007'' both places it appears and inserting ``2009''.
        (2) Effective date.--The amendments made by this subsection 
    shall apply to periods beginning after December 31, 2007.
    (b) Tax-Exempt Economic Development Bonds.--
        (1) In general.--Subsection (b) of section 1400A is amended by 
    striking ``2007'' and inserting ``2009''.
        (2) Effective date.--The amendment made by this subsection 
    shall apply to bonds issued after December 31, 2007.
    (c) Zero Percent Capital Gains Rate.--
        (1) In general.--Subsection (b) of section 1400B is amended by 
    striking ``2008'' each place it appears and inserting ``2010''.
        (2) Conforming amendments.--
            (A) Section 1400B(e)(2) is amended--
                (i) by striking ``2012'' and inserting ``2014'', and
                (ii) by striking ``2012'' in the heading thereof and 
            inserting ``2014''.
            (B) Section 1400B(g)(2) is amended by striking ``2012'' and 
        inserting ``2014''.
            (C) Section 1400F(d) is amended by striking ``2012'' and 
        inserting ``2014''.
        (3) Effective dates.--
            (A) Extension.--The amendments made by paragraph (1) shall 
        apply to acquisitions after December 31, 2007.
            (B) Conforming amendments.--The amendments made by 
        paragraph (2) shall take effect on the date of the enactment of 
        this Act.
    (d) First-Time Homebuyer Credit.--
        (1) In general.--Subsection (i) of section 1400C is amended by 
    striking ``2008'' and inserting ``2010''.
        (2) Effective date.--The amendment made by this subsection 
    shall apply to property purchased after December 31, 2007.
    SEC. 323. ENHANCED CHARITABLE DEDUCTIONS FOR CONTRIBUTIONS OF FOOD 
      INVENTORY.
    (a) Increased Amount of Deduction.--
        (1) In general.--Clause (iv) of section 170(e)(3)(C) (relating 
    to termination) is amended by striking ``December 31, 2007'' and 
    inserting ``December 31, 2009''.
        (2) Effective date.--The amendment made by this subsection 
    shall apply to contributions made after December 31, 2007.
    (b) Temporary Suspension of Limitations on Charitable 
Contributions.--
        (1) In general.--Section 170(b) is amended by adding at the end 
    the following new paragraph:
        ``(3) Temporary suspension of limitations on charitable 
    contributions.--In the case of a qualified farmer or rancher (as 
    defined in paragraph (1)(E)(v)), any charitable contribution of 
    food--
            ``(A) to which subsection (e)(3)(C) applies (without regard 
        to clause (ii) thereof), and
            ``(B) which is made during the period beginning on the date 
        of the enactment of this paragraph and before January 1, 2009,
    shall be treated for purposes of paragraph (1)(E) or (2)(B), 
    whichever is applicable, as if it were a qualified conservation 
    contribution which is made by a qualified farmer or rancher and 
    which otherwise meets the requirements of such paragraph.''.
        (2) Effective date.--The amendment made by this subsection 
    shall apply to taxable years ending after the date of the enactment 
    of this Act.
    SEC. 324. EXTENSION OF ENHANCED CHARITABLE DEDUCTION FOR 
      CONTRIBUTIONS OF BOOK INVENTORY.
    (a) Extension.--Clause (iv) of section 170(e)(3)(D) (relating to 
termination) is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2009''.
    (b) Clerical Amendment.--Clause (iii) of section 170(e)(3)(D) 
(relating to certification by donee) is amended by inserting ``of 
books'' after ``to any contribution''.
    (c) Effective Date.--The amendments made by this section shall 
apply to contributions made after December 31, 2007.
    SEC. 325. EXTENSION AND MODIFICATION OF DUTY SUSPENSION ON WOOL 
      PRODUCTS; WOOL RESEARCH FUND; WOOL DUTY REFUNDS.
    (a) Extension of Temporary Duty Reductions.--Each of the following 
headings of the Harmonized Tariff Schedule of the United States is 
amended by striking the date in the effective period column and 
inserting ``12/31/2014'':
        (1) Heading 9902.51.11 (relating to fabrics of worsted wool).
        (2) Heading 9902.51.13 (relating to yarn of combed wool).
        (3) Heading 9902.51.14 (relating to wool fiber, waste, 
    garnetted stock, combed wool, or wool top).
        (4) Heading 9902.51.15 (relating to fabrics of combed wool).
        (5) Heading 9902.51.16 (relating to fabrics of combed wool).
    (b) Extension of Duty Refunds and Wool Research Trust Fund.--
        (1) In general.--Section 4002(c) of the Wool Suit and Textile 
    Trade Extension Act of 2004 (Public Law 108-429; 118 Stat. 2603) is 
    amended--
            (A) in paragraph (3)(C), by striking ``2010'' and inserting 
        ``2015''; and
            (B) in paragraph (6)(A), by striking ``through 2009'' and 
        inserting ``through 2014''.
        (2) Sunset.--Section 506(f) of the Trade and Development Act of 
    2000 (Public 106-200; 114 Stat. 303 (7 U.S.C. 7101 note)) is 
    amended by striking ``2010'' and inserting ``2015''.

          TITLE IV--EXTENSION OF TAX ADMINISTRATION PROVISIONS

    SEC. 401. PERMANENT AUTHORITY FOR UNDERCOVER OPERATIONS.
    (a) In General.--Section 7608(c) (relating to rules relating to 
undercover operations) is amended by striking paragraph (6).
    (b) Effective Date.--The amendment made by this section shall apply 
to operations conducted after the date of the enactment of this Act.
    SEC. 402. PERMANENT AUTHORITY FOR DISCLOSURE OF INFORMATION 
      RELATING TO TERRORIST ACTIVITIES.
    (a) Disclosure of Return Information To Apprise Appropriate 
Officials of Terrorist Activities.--Subparagraph (C) of section 
6103(i)(3) is amended by striking clause (iv).
    (b) Disclosure Upon Request of Information Relating to Terrorist 
Activities.--Paragraph (7) of section 6103(i) is amended by striking 
subparagraph (E).
    (c) Effective Date.--The amendments made by this section shall 
apply to disclosures after the date of the enactment of this Act.

        TITLE V--ADDITIONAL TAX RELIEF AND OTHER TAX PROVISIONS
                     Subtitle A--General Provisions

    SEC. 501. $8,500 INCOME THRESHOLD USED TO CALCULATE REFUNDABLE 
      PORTION OF CHILD TAX CREDIT.
    (a) In General.--Section 24(d) is amended by adding at the end the 
following new paragraph:
        ``(4) Special rule for 2008.--Notwithstanding paragraph (3), in 
    the case of any taxable year beginning in 2008, the dollar amount 
    in effect for such taxable year under paragraph (1)(B)(i) shall be 
    $8,500.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2007.
    SEC. 502. PROVISIONS RELATED TO FILM AND TELEVISION PRODUCTIONS.
    (a) Extension of Expensing Rules for Qualified Film and Television 
Productions.--Section 181(f) (relating to termination) is amended by 
striking ``December 31, 2008'' and inserting ``December 31, 2009''.
    (b) Modification of Limitation on Expensing.--Subparagraph (A) of 
section 181(a)(2) is amended to read as follows:
            ``(A) In general.--Paragraph (1) shall not apply to so much 
        of the aggregate cost of any qualified film or television 
        production as exceeds $15,000,000.''.
    (c) Modifications to Deduction for Domestic Activities.--
        (1) Determination of w-2 wages.--Paragraph (2) of section 
    199(b) is amended by adding at the end the following new 
    subparagraph:
            ``(D) Special rule for qualified film.--In the case of a 
        qualified film, such term shall include compensation for 
        services performed in the United States by actors, production 
        personnel, directors, and producers.''.
        (2) Definition of qualified film.--Paragraph (6) of section 
    199(c) is amended by adding at the end the following: ``A qualified 
    film shall include any copyrights, trademarks, or other intangibles 
    with respect to such film. The methods and means of distributing a 
    qualified film shall not affect the availability of the deduction 
    under this section.''.
        (3) Partnerships.--Subparagraph (A) of section 199(d)(1) is 
    amended by striking ``and'' at the end of clause (ii), by striking 
    the period at the end of clause (iii) and inserting ``, and'', and 
    by adding at the end the following new clause:
                ``(iv) in the case of each partner of a partnership, or 
            shareholder of an S corporation, who owns (directly or 
            indirectly) at least 20 percent of the capital interests in 
            such partnership or of the stock of such S corporation--

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

    (d) Conforming Amendment.--Section 181(d)(3)(A) is amended by 
striking ``actors'' and all that follows and inserting ``actors, 
production personnel, directors, and producers.''.
    (e) Effective Dates.--
        (1) In general.--Except as otherwise provided in this 
    subsection, the amendments made by this section shall apply to 
    qualified film and television productions commencing after December 
    31, 2007.
        (2) Deduction.--The amendments made by subsection (c) shall 
    apply to taxable years beginning after December 31, 2007.
    SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS 
      DESIGNED FOR USE BY CHILDREN.
    (a) In General.--Paragraph (2) of section 4161(b) is amended by 
redesignating subparagraph (B) as subparagraph (C) and by inserting 
after subparagraph (A) the following new subparagraph:
            ``(B) Exemption for certain wooden arrow shafts.--
        Subparagraph (A) shall not apply to any shaft consisting of all 
        natural wood with no laminations or artificial means of 
        enhancing the spine of such shaft (whether sold separately or 
        incorporated as part of a finished or unfinished product) of a 
        type used in the manufacture of any arrow which after its 
        assembly--
                ``(i) measures \5/16\ of an inch or less in diameter, 
            and
                ``(ii) is not suitable for use with a bow described in 
            paragraph (1)(A).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to shafts first sold after the date of enactment of this Act.
    SEC. 504. INCOME AVERAGING FOR AMOUNTS RECEIVED IN CONNECTION WITH 
      THE EXXON VALDEZ LITIGATION.
    (a) Income Averaging of Amounts Received From the Exxon Valdez 
Litigation.--For purposes of section 1301 of the Internal Revenue Code 
of 1986--
        (1) any qualified taxpayer who receives any qualified 
    settlement income in any taxable year shall be treated as engaged 
    in a fishing business (determined without regard to the commercial 
    nature of the business), and
        (2) such qualified settlement income shall be treated as income 
    attributable to such a fishing business for such taxable year.
    (b) Contributions of Amounts Received to Retirement Accounts.--
        (1) In general.--Any qualified taxpayer who receives qualified 
    settlement income during the taxable year may, at any time before 
    the end of the taxable year in which such income was received, make 
    one or more contributions to an eligible retirement plan of which 
    such qualified taxpayer is a beneficiary in an aggregate amount not 
    to exceed the lesser of--
            (A) $100,000 (reduced by the amount of qualified settlement 
        income contributed to an eligible retirement plan in prior 
        taxable years pursuant to this subsection), or
            (B) the amount of qualified settlement income received by 
        the individual during the taxable year.
        (2) Time when contributions deemed made.--For purposes of 
    paragraph (1), a qualified taxpayer shall be deemed to have made a 
    contribution to an eligible retirement plan on the last day of the 
    taxable year in which such income is received if the contribution 
    is made on account of such taxable year and is made not later than 
    the time prescribed by law for filing the return for such taxable 
    year (not including extensions thereof).
        (3) Treatment of contributions to eligible retirement plans.--
    For purposes of the Internal Revenue Code of 1986, if a 
    contribution is made pursuant to paragraph (1) with respect to 
    qualified settlement income, then--
            (A) except as provided in paragraph (4)--
                (i) to the extent of such contribution, the qualified 
            settlement income shall not be included in taxable income, 
            and
                (ii) for purposes of section 72 of such Code, such 
            contribution shall not be considered to be investment in 
            the contract,
            (B) the qualified taxpayer shall, to the extent of the 
        amount of the contribution, be treated--
                (i) as having received the qualified settlement 
            income--

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

                (ii) as having transferred the amount to the eligible 
            retirement plan in a direct trustee to trustee transfer 
            within 60 days of the distribution,
            (C) section 408(d)(3)(B) of the Internal Revenue Code of 
        1986 shall not apply with respect to amounts treated as a 
        rollover under this paragraph, and
            (D) section 408A(c)(3)(B) of the Internal Revenue Code of 
        1986 shall not apply with respect to amounts contributed to a 
        Roth IRA (as defined under section 408A(b) of such Code) or a 
        designated Roth contribution to an applicable retirement plan 
        (within the meaning of section 402A of such Code) under this 
        paragraph.
        (4) Special rule for roth iras and roth 401(k)s.--For purposes 
    of the Internal Revenue Code of 1986, if a contribution is made 
    pursuant to paragraph (1) with respect to qualified settlement 
    income to a Roth IRA (as defined under section 408A(b) of such 
    Code) or as a designated Roth contribution to an applicable 
    retirement plan (within the meaning of section 402A of such Code), 
    then--
            (A) the qualified settlement income shall be includible in 
        taxable income, and
            (B) for purposes of section 72 of such Code, such 
        contribution shall be considered to be investment in the 
        contract.
        (5) Eligible retirement plan.--For purpose of this subsection, 
    the term ``eligible retirement plan'' has the meaning given such 
    term under section 402(c)(8)(B) of the Internal Revenue Code of 
    1986.
    (c) Treatment of Qualified Settlement Income Under Employment 
Taxes.--
        (1) SECA.--For purposes of chapter 2 of the Internal Revenue 
    Code of 1986 and section 211 of the Social Security Act, no portion 
    of qualified settlement income received by a qualified taxpayer 
    shall be treated as self-employment income.
        (2) FICA.--For purposes of chapter 21 of the Internal Revenue 
    Code of 1986 and section 209 of the Social Security Act, no portion 
    of qualified settlement income received by a qualified taxpayer 
    shall be treated as wages.
    (d) Qualified Taxpayer.--For purposes of this section, the term 
``qualified taxpayer'' means--
        (1) any individual who is a plaintiff in the civil action In re 
    Exxon Valdez, No. 89-095-CV (HRH) (Consolidated) (D. Alaska); or
        (2) any individual who is a beneficiary of the estate of such a 
    plaintiff who--
            (A) acquired the right to receive qualified settlement 
        income from that plaintiff; and
            (B) was the spouse or an immediate relative of that 
        plaintiff.
    (e) Qualified Settlement Income.--For purposes of this section, the 
term ``qualified settlement income'' means any interest and punitive 
damage awards which are--
        (1) otherwise includible in taxable income, and
        (2) received (whether as lump sums or periodic payments) in 
    connection with the civil action In re Exxon Valdez, No. 89-095-CV 
    (HRH) (Consolidated) (D. Alaska) (whether pre- or post-judgment and 
    whether related to a settlement or judgment).
    SEC. 505. CERTAIN FARMING BUSINESS MACHINERY AND EQUIPMENT TREATED 
      AS 5-YEAR PROPERTY.
    (a) In General.--Section 168(e)(3)(B) (defining 5-year property) is 
amended by striking ``and'' at the end of clause (v), by striking the 
period at the end of clause (vi)(III) and inserting ``, and'', and by 
inserting after clause (vi) the following new clause:
                ``(vii) any machinery or equipment (other than any 
            grain bin, cotton ginning asset, fence, or other land 
            improvement) which is used in a farming business (as 
            defined in section 263A(e)(4)), the original use of which 
            commences with the taxpayer after December 31, 2008, and 
            which is placed in service before January 1, 2010.''.
    (b) Alternative System.--The table contained in section 
168(g)(3)(B) (relating to special rule for certain property assigned to 
classes) is amended by inserting after the item relating to 
subparagraph (B)(iii) the following:

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

    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2008.
    SEC. 506. MODIFICATION OF PENALTY ON UNDERSTATEMENT OF TAXPAYER'S 
      LIABILITY BY TAX RETURN PREPARER.
    (a) In General.--Subsection (a) of section 6694 is amended to read 
as follows:
    ``(a) Understatement Due to Unreasonable Positions.--
        ``(1) In general.--If a tax return preparer--
            ``(A) prepares any return or claim of refund with respect 
        to which any part of an understatement of liability is due to a 
        position described in paragraph (2), and
            ``(B) knew (or reasonably should have known) of the 
        position,
    such tax return preparer shall pay a penalty with respect to each 
    such return or claim in an amount equal to the greater of $1,000 or 
    50 percent of the income derived (or to be derived) by the tax 
    return preparer with respect to the return or claim.
        ``(2) Unreasonable position.--
            ``(A) In general.--Except as otherwise provided in this 
        paragraph, a position is described in this paragraph unless 
        there is or was substantial authority for the position.
            ``(B) Disclosed positions.--If the position was disclosed 
        as provided in section 6662(d)(2)(B)(ii)(I) and is not a 
        position to which subparagraph (C) applies, the position is 
        described in this paragraph unless there is a reasonable basis 
        for the position.
            ``(C) Tax shelters and reportable transactions.--If the 
        position is with respect to a tax shelter (as defined in 
        section 6662(d)(2)(C)(ii)) or a reportable transaction to which 
        section 6662A applies, the position is described in this 
        paragraph unless it is reasonable to believe that the position 
        would more likely than not be sustained on its merits.
        ``(3) Reasonable cause exception.--No penalty shall be imposed 
    under this subsection if it is shown that there is reasonable cause 
    for the understatement and the tax return preparer acted in good 
    faith.''.
    (b) Effective Date.--The amendment made by this section shall 
apply--
        (1) in the case of a position other than a position described 
    in subparagraph (C) of section 6694(a)(2) of the Internal Revenue 
    Code of 1986 (as amended by this section), to returns prepared 
    after May 25, 2007, and
        (2) in the case of a position described in such subparagraph 
    (C), to returns prepared for taxable years ending after the date of 
    the enactment of this Act.

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

    SEC. 511. SHORT TITLE.
    This subtitle may be cited as the ``Paul Wellstone and Pete 
Domenici Mental Health Parity and Addiction Equity Act of 2008''.
    SEC. 512. MENTAL HEALTH PARITY.
    (a) Amendments to ERISA.--Section 712 of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1185a) is amended--
        (1) in subsection (a), by adding at the end the following:
        ``(3) Financial requirements and treatment limitations.--
            ``(A) In general.--In the case of a group health plan (or 
        health insurance coverage offered in connection with such a 
        plan) that provides both medical and surgical benefits and 
        mental health or substance use disorder benefits, such plan or 
        coverage shall ensure that--
                ``(i) the financial requirements applicable to such 
            mental health or substance use disorder benefits are no 
            more restrictive than the predominant financial 
            requirements applied to substantially all medical and 
            surgical benefits covered by the plan (or coverage), and 
            there are no separate cost sharing requirements that are 
            applicable only with respect to mental health or substance 
            use disorder benefits; and
                ``(ii) the treatment limitations applicable to such 
            mental health or substance use disorder benefits are no 
            more restrictive than the predominant treatment limitations 
            applied to substantially all medical and surgical benefits 
            covered by the plan (or coverage) and there are no separate 
            treatment limitations that are applicable only with respect 
            to mental health or substance use disorder benefits.
            ``(B) Definitions.--In this paragraph:
                ``(i) Financial requirement.--The term `financial 
            requirement' includes deductibles, copayments, coinsurance, 
            and out-of-pocket expenses, but excludes an aggregate 
            lifetime limit and an annual limit subject to paragraphs 
            (1) and (2),
                ``(ii) Predominant.--A financial requirement or 
            treatment limit is considered to be predominant if it is 
            the most common or frequent of such type of limit or 
            requirement.
                ``(iii) Treatment limitation.--The term `treatment 
            limitation' includes limits on the frequency of treatment, 
            number of visits, days of coverage, or other similar limits 
            on the scope or duration of treatment.
        ``(4) Availability of plan information.--The criteria for 
    medical necessity determinations made under the plan with respect 
    to mental health or substance use disorder benefits (or the health 
    insurance coverage offered in connection with the plan with respect 
    to such benefits) shall be made available by the plan administrator 
    (or the health insurance issuer offering such coverage) in 
    accordance with regulations to any current or potential 
    participant, beneficiary, or contracting provider upon request. The 
    reason for any denial under the plan (or coverage) of reimbursement 
    or payment for services with respect to mental health or substance 
    use disorder benefits in the case of any participant or beneficiary 
    shall, on request or as otherwise required, be made available by 
    the plan administrator (or the health insurance issuer offering 
    such coverage) to the participant or beneficiary in accordance with 
    regulations.
        ``(5) Out-of-network providers.--In the case of a plan or 
    coverage that provides both medical and surgical benefits and 
    mental health or substance use disorder benefits, if the plan or 
    coverage provides coverage for medical or surgical benefits 
    provided by out-of-network providers, the plan or coverage shall 
    provide coverage for mental health or substance use disorder 
    benefits provided by out-of-network providers in a manner that is 
    consistent with the requirements of this section.'';
        (2) in subsection (b), by amending paragraph (2) to read as 
    follows:
        ``(2) in the case of a group health plan (or health insurance 
    coverage offered in connection with such a plan) that provides 
    mental health or substance use disorder benefits, as affecting the 
    terms and conditions of the plan or coverage relating to such 
    benefits under the plan or coverage, except as provided in 
    subsection (a).'';
        (3) in subsection (c)--
            (A) in paragraph (1)(B)--
                (i) by inserting ``(or 1 in the case of an employer 
            residing in a State that permits small groups to include a 
            single individual)'' after ``at least 2'' the first place 
            that such appears; and
                (ii) by striking ``and who employs at least 2 employees 
            on the first day of the plan year''; and
            (B) by striking paragraph (2) and inserting the following:
        ``(2) Cost exemption.--
            ``(A) In general.--With respect to a group health plan (or 
        health insurance coverage offered in connection with such a 
        plan), if the application of this section to such plan (or 
        coverage) results in an increase for the plan year involved of 
        the actual total costs of coverage with respect to medical and 
        surgical benefits and mental health and substance use disorder 
        benefits under the plan (as determined and certified under 
        subparagraph (C)) by an amount that exceeds the applicable 
        percentage described in subparagraph (B) of the actual total 
        plan costs, the provisions of this section shall not apply to 
        such plan (or coverage) during the following plan year, and 
        such exemption shall apply to the plan (or coverage) for 1 plan 
        year. An employer may elect to continue to apply mental health 
        and substance use disorder parity pursuant to this section with 
        respect to the group health plan (or coverage) involved 
        regardless of any increase in total costs.
            ``(B) Applicable percentage.--With respect to a plan (or 
        coverage), the applicable percentage described in this 
        subparagraph shall be--
                ``(i) 2 percent in the case of the first plan year in 
            which this section is applied; and
                ``(ii) 1 percent in the case of each subsequent plan 
            year.
            ``(C) Determinations by actuaries.--Determinations as to 
        increases in actual costs under a plan (or coverage) for 
        purposes of this section shall be made and certified by a 
        qualified and licensed actuary who is a member in good standing 
        of the American Academy of Actuaries. All such determinations 
        shall be in a written report prepared by the actuary. The 
        report, and all underlying documentation relied upon by the 
        actuary, shall be maintained by the group health plan or health 
        insurance issuer for a period of 6 years following the 
        notification made under subparagraph (E).
            ``(D) 6-month determinations.--If a group health plan (or a 
        health insurance issuer offering coverage in connection with a 
        group health plan) seeks an exemption under this paragraph, 
        determinations under subparagraph (A) shall be made after such 
        plan (or coverage) has complied with this section for the first 
        6 months of the plan year involved.
            ``(E) Notification.--
                ``(i) In general.--A group health plan (or a health 
            insurance issuer offering coverage in connection with a 
            group health plan) that, based upon a certification 
            described under subparagraph (C), qualifies for an 
            exemption under this paragraph, and elects to implement the 
            exemption, shall promptly notify the Secretary, the 
            appropriate State agencies, and participants and 
            beneficiaries in the plan of such election.
                ``(ii) Requirement.--A notification to the Secretary 
            under clause (i) shall include--

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

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

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

            ``(F) Audits by appropriate agencies.--To determine 
        compliance with this paragraph, the Secretary may audit the 
        books and records of a group health plan or health insurance 
        issuer relating to an exemption, including any actuarial 
        reports prepared pursuant to subparagraph (C), during the 6 
        year period following the notification of such exemption under 
        subparagraph (E). A State agency receiving a notification under 
        subparagraph (E) may also conduct such an audit with respect to 
        an exemption covered by such notification.'';
        (4) in subsection (e), by striking paragraph (4) and inserting 
    the following:
        ``(4) Mental health benefits.--The term `mental health 
    benefits' means benefits with respect to services for mental health 
    conditions, as defined under the terms of the plan and in 
    accordance with applicable Federal and State law.
        ``(5) Substance use disorder benefits.--The term `substance use 
    disorder benefits' means benefits with respect to services for 
    substance use disorders, as defined under the terms of the plan and 
    in accordance with applicable Federal and State law.'';
        (5) by striking subsection (f);
        (6) by inserting after subsection (e) the following:
    ``(f) Secretary Report.--The Secretary shall, by January 1, 2012, 
and every two years thereafter, submit to the appropriate committees of 
Congress a report on compliance of group health plans (and health 
insurance coverage offered in connection with such plans) with the 
requirements of this section. Such report shall include the results of 
any surveys or audits on compliance of group health plans (and health 
insurance coverage offered in connection with such plans) with such 
requirements and an analysis of the reasons for any failures to comply.
    ``(g) Notice and Assistance.--The Secretary, in cooperation with 
the Secretaries of Health and Human Services and Treasury, as 
appropriate, shall publish and widely disseminate guidance and 
information for group health plans, participants and beneficiaries, 
applicable State and local regulatory bodies, and the National 
Association of Insurance Commissioners concerning the requirements of 
this section and shall provide assistance concerning such requirements 
and the continued operation of applicable State law. Such guidance and 
information shall inform participants and beneficiaries of how they may 
obtain assistance under this section, including, where appropriate, 
assistance from State consumer and insurance agencies.'';
        (7) by striking ``mental health benefits'' and inserting 
    ``mental health and substance use disorder benefits'' each place it 
    appears in subsections (a)(1)(B)(i), (a)(1)(C), (a)(2)(B)(i), and 
    (a)(2)(C); and
        (8) by striking ``mental health benefits'' and inserting 
    ``mental health or substance use disorder benefits'' each place it 
    appears (other than in any provision amended by the previous 
    paragraph).
    (b) Amendments to Public Health Service Act.--Section 2705 of the 
Public Health Service Act (42 U.S.C. 300gg-5) is amended--
        (1) in subsection (a), by adding at the end the following:
        ``(3) Financial requirements and treatment limitations.--
            ``(A) In general.--In the case of a group health plan (or 
        health insurance coverage offered in connection with such a 
        plan) that provides both medical and surgical benefits and 
        mental health or substance use disorder benefits, such plan or 
        coverage shall ensure that--
                ``(i) the financial requirements applicable to such 
            mental health or substance use disorder benefits are no 
            more restrictive than the predominant financial 
            requirements applied to substantially all medical and 
            surgical benefits covered by the plan (or coverage), and 
            there are no separate cost sharing requirements that are 
            applicable only with respect to mental health or substance 
            use disorder benefits; and
                ``(ii) the treatment limitations applicable to such 
            mental health or substance use disorder benefits are no 
            more restrictive than the predominant treatment limitations 
            applied to substantially all medical and surgical benefits 
            covered by the plan (or coverage) and there are no separate 
            treatment limitations that are applicable only with respect 
            to mental health or substance use disorder benefits.
            ``(B) Definitions.--In this paragraph:
                ``(i) Financial requirement.--The term `financial 
            requirement' includes deductibles, copayments, coinsurance, 
            and out-of-pocket expenses, but excludes an aggregate 
            lifetime limit and an annual limit subject to paragraphs 
            (1) and (2).
                ``(ii) Predominant.--A financial requirement or 
            treatment limit is considered to be predominant if it is 
            the most common or frequent of such type of limit or 
            requirement.
                ``(iii) Treatment limitation.--The term `treatment 
            limitation' includes limits on the frequency of treatment, 
            number of visits, days of coverage, or other similar limits 
            on the scope or duration of treatment.
        ``(4) Availability of plan information.--The criteria for 
    medical necessity determinations made under the plan with respect 
    to mental health or substance use disorder benefits (or the health 
    insurance coverage offered in connection with the plan with respect 
    to such benefits) shall be made available by the plan administrator 
    (or the health insurance issuer offering such coverage) in 
    accordance with regulations to any current or potential 
    participant, beneficiary, or contracting provider upon request. The 
    reason for any denial under the plan (or coverage) of reimbursement 
    or payment for services with respect to mental health or substance 
    use disorder benefits in the case of any participant or beneficiary 
    shall, on request or as otherwise required, be made available by 
    the plan administrator (or the health insurance issuer offering 
    such coverage) to the participant or beneficiary in accordance with 
    regulations.
        ``(5) Out-of-network providers.--In the case of a plan or 
    coverage that provides both medical and surgical benefits and 
    mental health or substance use disorder benefits, if the plan or 
    coverage provides coverage for medical or surgical benefits 
    provided by out-of-network providers, the plan or coverage shall 
    provide coverage for mental health or substance use disorder 
    benefits provided by out-of-network providers in a manner that is 
    consistent with the requirements of this section.'';
        (2) in subsection (b), by amending paragraph (2) to read as 
    follows:
        ``(2) in the case of a group health plan (or health insurance 
    coverage offered in connection with such a plan) that provides 
    mental health or substance use disorder benefits, as affecting the 
    terms and conditions of the plan or coverage relating to such 
    benefits under the plan or coverage, except as provided in 
    subsection (a).'';
        (3) in subsection (c)--
            (A) in paragraph (1), by inserting before the period the 
        following: ``(as defined in section 2791(e)(4), except that for 
        purposes of this paragraph such term shall include employers 
        with 1 employee in the case of an employer residing in a State 
        that permits small groups to include a single individual)''; 
        and
            (B) by striking paragraph (2) and inserting the following:
        ``(2) Cost exemption.--
            ``(A) In general.--With respect to a group health plan (or 
        health insurance coverage offered in connection with such a 
        plan), if the application of this section to such plan (or 
        coverage) results in an increase for the plan year involved of 
        the actual total costs of coverage with respect to medical and 
        surgical benefits and mental health and substance use disorder 
        benefits under the plan (as determined and certified under 
        subparagraph (C)) by an amount that exceeds the applicable 
        percentage described in subparagraph (B) of the actual total 
        plan costs, the provisions of this section shall not apply to 
        such plan (or coverage) during the following plan year, and 
        such exemption shall apply to the plan (or coverage) for 1 plan 
        year. An employer may elect to continue to apply mental health 
        and substance use disorder parity pursuant to this section with 
        respect to the group health plan (or coverage) involved 
        regardless of any increase in total costs.
            ``(B) Applicable percentage.--With respect to a plan (or 
        coverage), the applicable percentage described in this 
        subparagraph shall be--
                ``(i) 2 percent in the case of the first plan year in 
            which this section is applied; and
                ``(ii) 1 percent in the case of each subsequent plan 
            year.
            ``(C) Determinations by actuaries.--Determinations as to 
        increases in actual costs under a plan (or coverage) for 
        purposes of this section shall be made and certified by a 
        qualified and licensed actuary who is a member in good standing 
        of the American Academy of Actuaries. All such determinations 
        shall be in a written report prepared by the actuary. The 
        report, and all underlying documentation relied upon by the 
        actuary, shall be maintained by the group health plan or health 
        insurance issuer for a period of 6 years following the 
        notification made under subparagraph (E).
            ``(D) 6-month determinations.--If a group health plan (or a 
        health insurance issuer offering coverage in connection with a 
        group health plan) seeks an exemption under this paragraph, 
        determinations under subparagraph (A) shall be made after such 
        plan (or coverage) has complied with this section for the first 
        6 months of the plan year involved.
            ``(E) Notification.--
                ``(i) In general.--A group health plan (or a health 
            insurance issuer offering coverage in connection with a 
            group health plan) that, based upon a certification 
            described under subparagraph (C), qualifies for an 
            exemption under this paragraph, and elects to implement the 
            exemption, shall promptly notify the Secretary, the 
            appropriate State agencies, and participants and 
            beneficiaries in the plan of such election.
                ``(ii) Requirement.--A notification to the Secretary 
            under clause (i) shall include--

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

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

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

            ``(F) Audits by appropriate agencies.--To determine 
        compliance with this paragraph, the Secretary may audit the 
        books and records of a group health plan or health insurance 
        issuer relating to an exemption, including any actuarial 
        reports prepared pursuant to subparagraph (C), during the 6 
        year period following the notification of such exemption under 
        subparagraph (E). A State agency receiving a notification under 
        subparagraph (E) may also conduct such an audit with respect to 
        an exemption covered by such notification.'';
        (4) in subsection (e), by striking paragraph (4) and inserting 
    the following:
        ``(4) Mental health benefits.--The term `mental health 
    benefits' means benefits with respect to services for mental health 
    conditions, as defined under the terms of the plan and in 
    accordance with applicable Federal and State law.
        ``(5) Substance use disorder benefits.--The term `substance use 
    disorder benefits' means benefits with respect to services for 
    substance use disorders, as defined under the terms of the plan and 
    in accordance with applicable Federal and State law.'';
        (5) by striking subsection (f);
        (6) by striking ``mental health benefits'' and inserting 
    ``mental health and substance use disorder benefits'' each place it 
    appears in subsections (a)(1)(B)(i), (a)(1)(C), (a)(2)(B)(i), and 
    (a)(2)(C); and
        (7) by striking ``mental health benefits'' and inserting 
    ``mental health or substance use disorder benefits'' each place it 
    appears (other than in any provision amended by the previous 
    paragraph).
    (c) Amendments to Internal Revenue Code.--Section 9812 of the 
Internal Revenue Code of 1986 is amended--
        (1) in subsection (a), by adding at the end the following:
        ``(3) Financial requirements and treatment limitations.--
            ``(A) In general.--In the case of a group health plan that 
        provides both medical and surgical benefits and mental health 
        or substance use disorder benefits, such plan shall ensure 
        that--
                ``(i) the financial requirements applicable to such 
            mental health or substance use disorder benefits are no 
            more restrictive than the predominant financial 
            requirements applied to substantially all medical and 
            surgical benefits covered by the plan, and there are no 
            separate cost sharing requirements that are applicable only 
            with respect to mental health or substance use disorder 
            benefits; and
                ``(ii) the treatment limitations applicable to such 
            mental health or substance use disorder benefits are no 
            more restrictive than the predominant treatment limitations 
            applied to substantially all medical and surgical benefits 
            covered by the plan and there are no separate treatment 
            limitations that are applicable only with respect to mental 
            health or substance use disorder benefits.
            ``(B) Definitions.--In this paragraph:
                ``(i) Financial requirement.--The term `financial 
            requirement' includes deductibles, copayments, coinsurance, 
            and out-of-pocket expenses, but excludes an aggregate 
            lifetime limit and an annual limit subject to paragraphs 
            (1) and (2),
                ``(ii) Predominant.--A financial requirement or 
            treatment limit is considered to be predominant if it is 
            the most common or frequent of such type of limit or 
            requirement.
                ``(iii) Treatment limitation.--The term `treatment 
            limitation' includes limits on the frequency of treatment, 
            number of visits, days of coverage, or other similar limits 
            on the scope or duration of treatment.
        ``(4) Availability of plan information.--The criteria for 
    medical necessity determinations made under the plan with respect 
    to mental health or substance use disorder benefits shall be made 
    available by the plan administrator in accordance with regulations 
    to any current or potential participant, beneficiary, or 
    contracting provider upon request. The reason for any denial under 
    the plan of reimbursement or payment for services with respect to 
    mental health or substance use disorder benefits in the case of any 
    participant or beneficiary shall, on request or as otherwise 
    required, be made available by the plan administrator to the 
    participant or beneficiary in accordance with regulations.
        ``(5) Out-of-network providers.--In the case of a plan that 
    provides both medical and surgical benefits and mental health or 
    substance use disorder benefits, if the plan provides coverage for 
    medical or surgical benefits provided by out-of-network providers, 
    the plan shall provide coverage for mental health or substance use 
    disorder benefits provided by out-of-network providers in a manner 
    that is consistent with the requirements of this section.'';
        (2) in subsection (b), by amending paragraph (2) to read as 
    follows:
        ``(2) in the case of a group health plan that provides mental 
    health or substance use disorder benefits, as affecting the terms 
    and conditions of the plan relating to such benefits under the 
    plan, except as provided in subsection (a).'';
        (3) in subsection (c)--
            (A) by amending paragraph (1) to read as follows:
        ``(1) Small employer exemption.--
            ``(A) In general.--This section shall not apply to any 
        group health plan for any plan year of a small employer.
            ``(B) Small employer.--For purposes of subparagraph (A), 
        the term `small employer' means, with respect to a calendar 
        year and a plan year, an employer who employed an average of at 
        least 2 (or 1 in the case of an employer residing in a State 
        that permits small groups to include a single individual) but 
        not more than 50 employees on business days during the 
        preceding calendar year. For purposes of the preceding 
        sentence, all persons treated as a single employer under 
        subsection (b), (c), (m), or (o) of section 414 shall be 
        treated as 1 employer and rules similar to rules of 
        subparagraphs (B) and (C) of section 4980D(d)(2) shall 
        apply.''; and
            (B) by striking paragraph (2) and inserting the following:
        ``(2) Cost exemption.--
            ``(A) In general.--With respect to a group health plan, if 
        the application of this section to such plan results in an 
        increase for the plan year involved of the actual total costs 
        of coverage with respect to medical and surgical benefits and 
        mental health and substance use disorder benefits under the 
        plan (as determined and certified under subparagraph (C)) by an 
        amount that exceeds the applicable percentage described in 
        subparagraph (B) of the actual total plan costs, the provisions 
        of this section shall not apply to such plan during the 
        following plan year, and such exemption shall apply to the plan 
        for 1 plan year. An employer may elect to continue to apply 
        mental health and substance use disorder parity pursuant to 
        this section with respect to the group health plan involved 
        regardless of any increase in total costs.
            ``(B) Applicable percentage.--With respect to a plan, the 
        applicable percentage described in this subparagraph shall be--
                ``(i) 2 percent in the case of the first plan year in 
            which this section is applied; and
                ``(ii) 1 percent in the case of each subsequent plan 
            year.
            ``(C) Determinations by actuaries.--Determinations as to 
        increases in actual costs under a plan for purposes of this 
        section shall be made and certified by a qualified and licensed 
        actuary who is a member in good standing of the American 
        Academy of Actuaries. All such determinations shall be in a 
        written report prepared by the actuary. The report, and all 
        underlying documentation relied upon by the actuary, shall be 
        maintained by the group health plan for a period of 6 years 
        following the notification made under subparagraph (E).
            ``(D) 6-month determinations.--If a group health plan seeks 
        an exemption under this paragraph, determinations under 
        subparagraph (A) shall be made after such plan has complied 
        with this section for the first 6 months of the plan year 
        involved.
            ``(E) Notification.--
                ``(i) In general.--A group health plan that, based upon 
            a certification described under subparagraph (C), qualifies 
            for an exemption under this paragraph, and elects to 
            implement the exemption, shall promptly notify the 
            Secretary, the appropriate State agencies, and participants 
            and beneficiaries in the plan of such election.
                ``(ii) Requirement.--A notification to the Secretary 
            under clause (i) shall include--

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

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

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

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

``Sec. 712. Parity in mental health and substance use disorder 
          benefits.''.

        (2) PHSA heading.--The heading of section 2705 of the Public 
    Health Service Act is amended to read as follows:
``SEC. 2705. PARITY IN MENTAL HEALTH AND SUBSTANCE USE DISORDER 
BENEFITS.''.
        (3) IRC heading.--
            (A) In general.--The heading of section 9812 of the 
        Internal Revenue Code of 1986 is amended to read as follows:
``SEC. 9812. PARITY IN MENTAL HEALTH AND SUBSTANCE USE DISORDER 
BENEFITS.''.
            (B) Clerical amendment.--The table of sections for 
        subchapter B of chapter 100 of such Code is amended by striking 
        the item relating to section 9812 and inserting the following 
        new item:

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

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

                       TITLE VI--OTHER PROVISIONS

    SEC. 601. SECURE RURAL SCHOOLS AND COMMUNITY SELF-DETERMINATION 
      PROGRAM.
    (a) Reauthorization of the Secure Rural Schools and Community Self-
Determination Act of 2000.--The Secure Rural Schools and Community 
Self-Determination Act of 2000 (16 U.S.C. 500 note; Public Law 106-393) 
is amended by striking sections 1 through 403 and inserting the 
following:
``SEC. 1. SHORT TITLE.
    ``This Act may be cited as the `Secure Rural Schools and Community 
Self-Determination Act of 2000'.
``SEC. 2. PURPOSES.
    ``The purposes of this Act are--
        ``(1) to stabilize and transition payments to counties to 
    provide funding for schools and roads that supplements other 
    available funds;
        ``(2) to make additional investments in, and create additional 
    employment opportunities through, projects that--
            ``(A)(i) improve the maintenance of existing 
        infrastructure;
            ``(ii) implement stewardship objectives that enhance forest 
        ecosystems; and
            ``(iii) restore and improve land health and water quality;
            ``(B) enjoy broad-based support; and
            ``(C) have objectives that may include--
                ``(i) road, trail, and infrastructure maintenance or 
            obliteration;
                ``(ii) soil productivity improvement;
                ``(iii) improvements in forest ecosystem health;
                ``(iv) watershed restoration and maintenance;
                ``(v) the restoration, maintenance, and improvement of 
            wildlife and fish habitat;
                ``(vi) the control of noxious and exotic weeds; and
                ``(vii) the reestablishment of native species; and
        ``(3) to improve cooperative relationships among--
            ``(A) the people that use and care for Federal land; and
            ``(B) the agencies that manage the Federal land.
``SEC. 3. DEFINITIONS.
    ``In this Act:
        ``(1) Adjusted share.--The term `adjusted share' means the 
    number equal to the quotient obtained by dividing--
            ``(A) the number equal to the quotient obtained by 
        dividing--
                ``(i) the base share for the eligible county; by
                ``(ii) the income adjustment for the eligible county; 
            by
            ``(B) the number equal to the sum of the quotients obtained 
        under subparagraph (A) and paragraph (8)(A) for all eligible 
        counties.
        ``(2) Base share.--The term `base share' means the number equal 
    to the average of--
            ``(A) the quotient obtained by dividing--
                ``(i) the number of acres of Federal land described in 
            paragraph (7)(A) in each eligible county; by
                ``(ii) the total number acres of Federal land in all 
            eligible counties in all eligible States; and
            ``(B) the quotient obtained by dividing--
                ``(i) the amount equal to the average of the 3 highest 
            25-percent payments and safety net payments made to each 
            eligible State for each eligible county during the 
            eligibility period; by
                ``(ii) the amount equal to the sum of the amounts 
            calculated under clause (i) and paragraph (9)(B)(i) for all 
            eligible counties in all eligible States during the 
            eligibility period.
        ``(3) County payment.--The term `county payment' means the 
    payment for an eligible county calculated under section 101(b).
        ``(4) Eligible county.--The term `eligible county' means any 
    county that--
            ``(A) contains Federal land (as defined in paragraph (7)); 
        and
            ``(B) elects to receive a share of the State payment or the 
        county payment under section 102(b).
        ``(5) Eligibility period.--The term `eligibility period' means 
    fiscal year 1986 through fiscal year 1999.
        ``(6) Eligible state.--The term `eligible State' means a State 
    or territory of the United States that received a 25-percent 
    payment for 1 or more fiscal years of the eligibility period.
        ``(7) Federal land.--The term `Federal land' means--
            ``(A) land within the National Forest System, as defined in 
        section 11(a) of the Forest and Rangeland Renewable Resources 
        Planning Act of 1974 (16 U.S.C. 1609(a)) exclusive of the 
        National Grasslands and land utilization projects designated as 
        National Grasslands administered pursuant to the Act of July 
        22, 1937 (7 U.S.C. 1010-1012); and
            ``(B) such portions of the revested Oregon and California 
        Railroad and reconveyed Coos Bay Wagon Road grant land as are 
        or may hereafter come under the jurisdiction of the Department 
        of the Interior, which have heretofore or may hereafter be 
        classified as timberlands, and power-site land valuable for 
        timber, that shall be managed, except as provided in the former 
        section 3 of the Act of August 28, 1937 (50 Stat. 875; 43 
        U.S.C. 1181c), for permanent forest production.
        ``(8) 50-percent adjusted share.--The term `50-percent adjusted 
    share' means the number equal to the quotient obtained by 
    dividing--
            ``(A) the number equal to the quotient obtained by 
        dividing--
                ``(i) the 50-percent base share for the eligible 
            county; by
                ``(ii) the income adjustment for the eligible county; 
            by
            ``(B) the number equal to the sum of the quotients obtained 
        under subparagraph (A) and paragraph (1)(A) for all eligible 
        counties.
        ``(9) 50-percent base share.--The term `50-percent base share' 
    means the number equal to the average of--
            ``(A) the quotient obtained by dividing--
                ``(i) the number of acres of Federal land described in 
            paragraph (7)(B) in each eligible county; by
                ``(ii) the total number acres of Federal land in all 
            eligible counties in all eligible States; and
            ``(B) the quotient obtained by dividing--
                ``(i) the amount equal to the average of the 3 highest 
            50-percent payments made to each eligible county during the 
            eligibility period; by
                ``(ii) the amount equal to the sum of the amounts 
            calculated under clause (i) and paragraph (2)(B)(i) for all 
            eligible counties in all eligible States during the 
            eligibility period.
        ``(10) 50-percent payment.--The term `50-percent payment' means 
    the payment that is the sum of the 50-percent share otherwise paid 
    to a county pursuant to title II of the Act of August 28, 1937 
    (chapter 876; 50 Stat. 875; 43 U.S.C. 1181f), and the payment made 
    to a county pursuant to the Act of May 24, 1939 (chapter 144; 53 
    Stat. 753; 43 U.S.C. 1181f-1 et seq.).
        ``(11) Full funding amount.--The term `full funding amount' 
    means--
            ``(A) $500,000,000 for fiscal year 2008; and
            ``(B) for fiscal year 2009 and each fiscal year thereafter, 
        the amount that is equal to 90 percent of the full funding 
        amount for the preceding fiscal year.
        ``(12) Income adjustment.--The term `income adjustment' means 
    the square of the quotient obtained by dividing--
            ``(A) the per capita personal income for each eligible 
        county; by
            ``(B) the median per capita personal income of all eligible 
        counties.
        ``(13) Per capita personal income.--The term `per capita 
    personal income' means the most recent per capita personal income 
    data, as determined by the Bureau of Economic Analysis.
        ``(14) Safety net payments.--The term `safety net payments' 
    means the special payment amounts paid to States and counties 
    required by section 13982 or 13983 of the Omnibus Budget 
    Reconciliation Act of 1993 (Public Law 103-66; 16 U.S.C. 500 note; 
    43 U.S.C. 1181f note).
        ``(15) Secretary concerned.--The term `Secretary concerned' 
    means--
            ``(A) the Secretary of Agriculture or the designee of the 
        Secretary of Agriculture with respect to the Federal land 
        described in paragraph (7)(A); and
            ``(B) the Secretary of the Interior or the designee of the 
        Secretary of the Interior with respect to the Federal land 
        described in paragraph (7)(B).
        ``(16) State payment.--The term `State payment' means the 
    payment for an eligible State calculated under section 101(a).
        ``(17) 25-percent payment.--The term `25-percent payment' means 
    the payment to States required by the sixth paragraph under the 
    heading of `FOREST SERVICE' in the Act of May 23, 1908 (35 Stat. 
    260; 16 U.S.C. 500), and section 13 of the Act of March 1, 1911 (36 
    Stat. 963; 16 U.S.C. 500).

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

    ``SEC. 101. SECURE PAYMENTS FOR STATES CONTAINING FEDERAL LAND.
    ``(a) State Payment.--For each of fiscal years 2008 through 2011, 
the Secretary of Agriculture shall calculate for each eligible State an 
amount equal to the sum of the products obtained by multiplying--
        ``(1) the adjusted share for each eligible county within the 
    eligible State; by
        ``(2) the full funding amount for the fiscal year.
    ``(b) County Payment.--For each of fiscal years 2008 through 2011, 
the Secretary of the Interior shall calculate for each eligible county 
that received a 50-percent payment during the eligibility period an 
amount equal to the product obtained by multiplying--
        ``(1) the 50-percent adjusted share for the eligible county; by
        ``(2) the full funding amount for the fiscal year.
    ``SEC. 102. PAYMENTS TO STATES AND COUNTIES.
    ``(a) Payment Amounts.--Except as provided in section 103, the 
Secretary of the Treasury shall pay to--
        ``(1) a State or territory of the United States an amount equal 
    to the sum of the amounts elected under subsection (b) by each 
    county within the State or territory for--
            ``(A) if the county is eligible for the 25-percent payment, 
        the share of the 25-percent payment; or
            ``(B) the share of the State payment of the eligible 
        county; and
        ``(2) a county an amount equal to the amount elected under 
    subsection (b) by each county for--
            ``(A) if the county is eligible for the 50-percent payment, 
        the 50-percent payment; or
            ``(B) the county payment for the eligible county.
    ``(b) Election To Receive Payment Amount.--
        ``(1) Election; submission of results.--
            ``(A) In general.--The election to receive a share of the 
        State payment, the county payment, a share of the State payment 
        and the county payment, a share of the 25-percent payment, the 
        50-percent payment, or a share of the 25-percent payment and 
        the 50-percent payment, as applicable, shall be made at the 
        discretion of each affected county by August 1, 2008 (or as 
        soon thereafter as the Secretary concerned determines is 
        practicable), and August 1 of each second fiscal year 
        thereafter, in accordance with paragraph (2), and transmitted 
        to the Secretary concerned by the Governor of each eligible 
        State.
            ``(B) Failure to transmit.--If an election for an affected 
        county is not transmitted to the Secretary concerned by the 
        date specified under subparagraph (A), the affected county 
        shall be considered to have elected to receive a share of the 
        State payment, the county payment, or a share of the State 
        payment and the county payment, as applicable.
        ``(2) Duration of election.--
            ``(A) In general.--A county election to receive a share of 
        the 25-percent payment or 50-percent payment, as applicable, 
        shall be effective for 2 fiscal years.
            ``(B) Full funding amount.--If a county elects to receive a 
        share of the State payment or the county payment, the election 
        shall be effective for all subsequent fiscal years through 
        fiscal year 2011.
        ``(3) Source of payment amounts.--The payment to an eligible 
    State or eligible county under this section for a fiscal year shall 
    be derived from--
            ``(A) any amounts that are appropriated to carry out this 
        Act;
            ``(B) any revenues, fees, penalties, or miscellaneous 
        receipts, exclusive of deposits to any relevant trust fund, 
        special account, or permanent operating funds, received by the 
        Federal Government from activities by the Bureau of Land 
        Management or the Forest Service on the applicable Federal 
        land; and
            ``(C) to the extent of any shortfall, out of any amounts in 
        the Treasury of the United States not otherwise appropriated.
    ``(c) Distribution and Expenditure of Payments.--
        ``(1) Distribution method.--A State that receives a payment 
    under subsection (a) for Federal land described in section 3(7)(A) 
    shall distribute the appropriate payment amount among the 
    appropriate counties in the State in accordance with--
            ``(A) the Act of May 23, 1908 (16 U.S.C. 500); and
            ``(B) section 13 of the Act of March 1, 1911 (36 Stat. 963; 
        16 U.S.C. 500).
        ``(2) Expenditure purposes.--Subject to subsection (d), 
    payments received by a State under subsection (a) and distributed 
    to counties in accordance with paragraph (1) shall be expended as 
    required by the laws referred to in paragraph (1).
    ``(d) Expenditure Rules for Eligible Counties.--
        ``(1) Allocations.--
            ``(A) Use of portion in same manner as 25-percent payment 
        or 50-percent payment, as applicable.--Except as provided in 
        paragraph (3)(B), if an eligible county elects to receive its 
        share of the State payment or the county payment, not less than 
        80 percent, but not more than 85 percent, of the funds shall be 
        expended in the same manner in which the 25-percent payments or 
        50-percent payment, as applicable, are required to be expended.
            ``(B) Election as to use of balance.--Except as provided in 
        subparagraph (C), an eligible county shall elect to do 1 or 
        more of the following with the balance of any funds not 
        expended pursuant to subparagraph (A):
                ``(i) Reserve any portion of the balance for projects 
            in accordance with title II.
                ``(ii) Reserve not more than 7 percent of the total 
            share for the eligible county of the State payment or the 
            county payment for projects in accordance with title III.
                ``(iii) Return the portion of the balance not reserved 
            under clauses (i) and (ii) to the Treasury of the United 
            States.
            ``(C) Counties with modest distributions.--In the case of 
        each eligible county to which more than $100,000, but less than 
        $350,000, is distributed for any fiscal year pursuant to either 
        or both of paragraphs (1)(B) and (2)(B) of subsection (a), the 
        eligible county, with respect to the balance of any funds not 
        expended pursuant to subparagraph (A) for that fiscal year, 
        shall--
                ``(i) reserve any portion of the balance for--

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

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

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

            ``(B) Counties with minor distributions.--In the case of 
        each eligible county to which less than $100,000 is distributed 
        for any fiscal year pursuant to either or both of paragraphs 
        (1)(B) and (2)(B) of subsection (a), the eligible county may 
        elect to expend all the funds in the same manner in which the 
        25-percent payments or 50-percent payments, as applicable, are 
        required to be expended.
    ``(e) Time for Payment.--The payments required under this section 
for a fiscal year shall be made as soon as practicable after the end of 
that fiscal year.
    ``SEC. 103. TRANSITION PAYMENTS TO STATES.
    ``(a) Definitions.--In this section:
        ``(1) Adjusted amount.--The term `adjusted amount' means, with 
    respect to a covered State--
            ``(A) for fiscal year 2008, 90 percent of--
                ``(i) the sum of the amounts paid for fiscal year 2006 
            under section 102(a)(2) (as in effect on September 29, 
            2006) for the eligible counties in the covered State that 
            have elected under section 102(b) to receive a share of the 
            State payment for fiscal year 2008; and
                ``(ii) the sum of the amounts paid for fiscal year 2006 
            under section 103(a)(2) (as in effect on September 29, 
            2006) for the eligible counties in the State of Oregon that 
            have elected under section 102(b) to receive the county 
            payment for fiscal year 2008;
            ``(B) for fiscal year 2009, 81 percent of--
                ``(i) the sum of the amounts paid for fiscal year 2006 
            under section 102(a)(2) (as in effect on September 29, 
            2006) for the eligible counties in the covered State that 
            have elected under section 102(b) to receive a share of the 
            State payment for fiscal year 2009; and
                ``(ii) the sum of the amounts paid for fiscal year 2006 
            under section 103(a)(2) (as in effect on September 29, 
            2006) for the eligible counties in the State of Oregon that 
            have elected under section 102(b) to receive the county 
            payment for fiscal year 2009; and
            ``(C) for fiscal year 2010, 73 percent of--
                ``(i) the sum of the amounts paid for fiscal year 2006 
            under section 102(a)(2) (as in effect on September 29, 
            2006) for the eligible counties in the covered State that 
            have elected under section 102(b) to receive a share of the 
            State payment for fiscal year 2010; and
                ``(ii) the sum of the amounts paid for fiscal year 2006 
            under section 103(a)(2) (as in effect on September 29, 
            2006) for the eligible counties in the State of Oregon that 
            have elected under section 102(b) to receive the county 
            payment for fiscal year 2010.
        ``(2) Covered state.--The term `covered State' means each of 
    the States of California, Louisiana, Oregon, Pennsylvania, South 
    Carolina, South Dakota, Texas, and Washington.
    ``(b) Transition Payments.--For each of fiscal years 2008 through 
2010, in lieu of the payment amounts that otherwise would have been 
made under paragraphs (1)(B) and (2)(B) of section 102(a), the 
Secretary of the Treasury shall pay the adjusted amount to each covered 
State and the eligible counties within the covered State, as 
applicable.
    ``(c) Distribution of Adjusted Amount.--Except as provided in 
subsection (d), it is the intent of Congress that the method of 
distributing the payments under subsection (b) among the counties in 
the covered States for each of fiscal years 2008 through 2010 be in the 
same proportion that the payments were distributed to the eligible 
counties in fiscal year 2006.
    ``(d) Distribution of Payments in California.--The following 
payments shall be distributed among the eligible counties in the State 
of California in the same proportion that payments under section 
102(a)(2) (as in effect on September 29, 2006) were distributed to the 
eligible counties for fiscal year 2006:
        ``(1) Payments to the State of California under subsection (b).
        ``(2) The shares of the eligible counties of the State payment 
    for California under section 102 for fiscal year 2011.
    ``(e) Treatment of Payments.--For purposes of this Act, any payment 
made under subsection (b) shall be considered to be a payment made 
under section 102(a).

              ``TITLE II--SPECIAL PROJECTS ON FEDERAL LAND

    ``SEC. 201. DEFINITIONS.
    ``In this title:
        ``(1) Participating county.--The term `participating county' 
    means an eligible county that elects under section 102(d) to expend 
    a portion of the Federal funds received under section 102 in 
    accordance with this title.
        ``(2) Project funds.--The term `project funds' means all funds 
    an eligible county elects under section 102(d) to reserve for 
    expenditure in accordance with this title.
        ``(3) Resource advisory committee.--The term `resource advisory 
    committee' means--
            ``(A) an advisory committee established by the Secretary 
        concerned under section 205; or
            ``(B) an advisory committee determined by the Secretary 
        concerned to meet the requirements of section 205.
        ``(4) Resource management plan.--The term `resource management 
    plan' means--
            ``(A) a land use plan prepared by the Bureau of Land 
        Management for units of the Federal land described in section 
        3(7)(B) pursuant to section 202 of the Federal Land Policy and 
        Management Act of 1976 (43 U.S.C. 1712); or
            ``(B) a land and resource management plan prepared by the 
        Forest Service for units of the National Forest System pursuant 
        to section 6 of the Forest and Rangeland Renewable Resources 
        Planning Act of 1974 (16 U.S.C. 1604).
    ``SEC. 202. GENERAL LIMITATION ON USE OF PROJECT FUNDS.
    ``(a) Limitation.--Project funds shall be expended solely on 
projects that meet the requirements of this title.
    ``(b) Authorized Uses.--Project funds may be used by the Secretary 
concerned for the purpose of entering into and implementing cooperative 
agreements with willing Federal agencies, State and local governments, 
private and nonprofit entities, and landowners for protection, 
restoration, and enhancement of fish and wildlife habitat, and other 
resource objectives consistent with the purposes of this Act on Federal 
land and on non-Federal land where projects would benefit the resources 
on Federal land.
    ``SEC. 203. SUBMISSION OF PROJECT PROPOSALS.
    ``(a) Submission of Project Proposals to Secretary Concerned.--
        ``(1) Projects funded using project funds.--Not later than 
    September 30 for fiscal year 2008 (or as soon thereafter as the 
    Secretary concerned determines is practicable), and each September 
    30 thereafter for each succeeding fiscal year through fiscal year 
    2011, each resource advisory committee shall submit to the 
    Secretary concerned a description of any projects that the resource 
    advisory committee proposes the Secretary undertake using any 
    project funds reserved by eligible counties in the area in which 
    the resource advisory committee has geographic jurisdiction.
        ``(2) Projects funded using other funds.--A resource advisory 
    committee may submit to the Secretary concerned a description of 
    any projects that the committee proposes the Secretary undertake 
    using funds from State or local governments, or from the private 
    sector, other than project funds and funds appropriated and 
    otherwise available to do similar work.
        ``(3) Joint projects.--Participating counties or other persons 
    may propose to pool project funds or other funds, described in 
    paragraph (2), and jointly propose a project or group of projects 
    to a resource advisory committee established under section 205.
    ``(b) Required Description of Projects.--In submitting proposed 
projects to the Secretary concerned under subsection (a), a resource 
advisory committee shall include in the description of each proposed 
project the following information:
        ``(1) The purpose of the project and a description of how the 
    project will meet the purposes of this title.
        ``(2) The anticipated duration of the project.
        ``(3) The anticipated cost of the project.
        ``(4) The proposed source of funding for the project, whether 
    project funds or other funds.
        ``(5)(A) Expected outcomes, including how the project will meet 
    or exceed desired ecological conditions, maintenance objectives, or 
    stewardship objectives.
        ``(B) An estimate of the amount of any timber, forage, and 
    other commodities and other economic activity, including jobs 
    generated, if any, anticipated as part of the project.
        ``(6) A detailed monitoring plan, including funding needs and 
    sources, that--
            ``(A) tracks and identifies the positive or negative 
        impacts of the project, implementation, and provides for 
        validation monitoring; and
            ``(B) includes an assessment of the following:
                ``(i) Whether or not the project met or exceeded 
            desired ecological conditions; created local employment or 
            training opportunities, including summer youth jobs 
            programs such as the Youth Conservation Corps where 
            appropriate.
                ``(ii) Whether the project improved the use of, or 
            added value to, any products removed from land consistent 
            with the purposes of this title.
        ``(7) An assessment that the project is to be in the public 
    interest.
    ``(c) Authorized Projects.--Projects proposed under subsection (a) 
shall be consistent with section 2.
    ``SEC. 204. EVALUATION AND APPROVAL OF PROJECTS BY SECRETARY 
      CONCERNED.
    ``(a) Conditions for Approval of Proposed Project.--The Secretary 
concerned may make a decision to approve a project submitted by a 
resource advisory committee under section 203 only if the proposed 
project satisfies each of the following conditions:
        ``(1) The project complies with all applicable Federal laws 
    (including regulations).
        ``(2) The project is consistent with the applicable resource 
    management plan and with any watershed or subsequent plan developed 
    pursuant to the resource management plan and approved by the 
    Secretary concerned.
        ``(3) The project has been approved by the resource advisory 
    committee in accordance with section 205, including the procedures 
    issued under subsection (e) of that section.
        ``(4) A project description has been submitted by the resource 
    advisory committee to the Secretary concerned in accordance with 
    section 203.
        ``(5) The project will improve the maintenance of existing 
    infrastructure, implement stewardship objectives that enhance 
    forest ecosystems, and restore and improve land health and water 
    quality.
    ``(b) Environmental Reviews.--
        ``(1) Request for payment by county.--The Secretary concerned 
    may request the resource advisory committee submitting a proposed 
    project to agree to the use of project funds to pay for any 
    environmental review, consultation, or compliance with applicable 
    environmental laws required in connection with the project.
        ``(2) Conduct of environmental review.--If a payment is 
    requested under paragraph (1) and the resource advisory committee 
    agrees to the expenditure of funds for this purpose, the Secretary 
    concerned shall conduct environmental review, consultation, or 
    other compliance responsibilities in accordance with Federal laws 
    (including regulations).
        ``(3) Effect of refusal to pay.--
            ``(A) In general.--If a resource advisory committee does 
        not agree to the expenditure of funds under paragraph (1), the 
        project shall be deemed withdrawn from further consideration by 
        the Secretary concerned pursuant to this title.
            ``(B) Effect of withdrawal.--A withdrawal under 
        subparagraph (A) shall be deemed to be a rejection of the 
        project for purposes of section 207(c).
    ``(c) Decisions of Secretary Concerned.--
        ``(1) Rejection of projects.--
            ``(A) In general.--A decision by the Secretary concerned to 
        reject a proposed project shall be at the sole discretion of 
        the Secretary concerned.
            ``(B) No administrative appeal or judicial review.--
        Notwithstanding any other provision of law, a decision by the 
        Secretary concerned to reject a proposed project shall not be 
        subject to administrative appeal or judicial review.
            ``(C) Notice of rejection.--Not later than 30 days after 
        the date on which the Secretary concerned makes the rejection 
        decision, the Secretary concerned shall notify in writing the 
        resource advisory committee that submitted the proposed project 
        of the rejection and the reasons for rejection.
        ``(2) Notice of project approval.--The Secretary concerned 
    shall publish in the Federal Register notice of each project 
    approved under subsection (a) if the notice would be required had 
    the project originated with the Secretary.
    ``(d) Source and Conduct of Project.--Once the Secretary concerned 
accepts a project for review under section 203, the acceptance shall be 
deemed a Federal action for all purposes.
    ``(e) Implementation of Approved Projects.--
        ``(1) Cooperation.--Notwithstanding chapter 63 of title 31, 
    United States Code, using project funds the Secretary concerned may 
    enter into contracts, grants, and cooperative agreements with 
    States and local governments, private and nonprofit entities, and 
    landowners and other persons to assist the Secretary in carrying 
    out an approved project.
        ``(2) Best value contracting.--
            ``(A) In general.--For any project involving a contract 
        authorized by paragraph (1) the Secretary concerned may elect a 
        source for performance of the contract on a best value basis.
            ``(B) Factors.--The Secretary concerned shall determine 
        best value based on such factors as--
                ``(i) the technical demands and complexity of the work 
            to be done;
                ``(ii)(I) the ecological objectives of the project; and
                ``(II) the sensitivity of the resources being treated;
                ``(iii) the past experience by the contractor with the 
            type of work being done, using the type of equipment 
            proposed for the project, and meeting or exceeding desired 
            ecological conditions; and
                ``(iv) the commitment of the contractor to hiring 
            highly qualified workers and local residents.
        ``(3) Merchantable timber contracting pilot program.--
            ``(A) Establishment.--The Secretary concerned shall 
        establish a pilot program to implement a certain percentage of 
        approved projects involving the sale of merchantable timber 
        using separate contracts for--
                ``(i) the harvesting or collection of merchantable 
            timber; and
                ``(ii) the sale of the timber.
            ``(B) Annual percentages.--Under the pilot program, the 
        Secretary concerned shall ensure that, on a nationwide basis, 
        not less than the following percentage of all approved projects 
        involving the sale of merchantable timber are implemented using 
        separate contracts:
                ``(i) For fiscal year 2008, 35 percent.
                ``(ii) For fiscal year 2009, 45 percent.
                ``(iii) For each of fiscal years 2010 and 2011, 50 
            percent.
            ``(C) Inclusion in pilot program.--The decision whether to 
        use separate contracts to implement a project involving the 
        sale of merchantable timber shall be made by the Secretary 
        concerned after the approval of the project under this title.
            ``(D) Assistance.--
                ``(i) In general.--The Secretary concerned may use 
            funds from any appropriated account available to the 
            Secretary for the Federal land to assist in the 
            administration of projects conducted under the pilot 
            program.
                ``(ii) Maximum amount of assistance.--The total amount 
            obligated under this subparagraph may not exceed $1,000,000 
            for any fiscal year during which the pilot program is in 
            effect.
            ``(E) Review and report.--
                ``(i) Initial report.--Not later than September 30, 
            2010, the Comptroller General shall submit to the 
            Committees on Agriculture, Nutrition, and Forestry and 
            Energy and Natural Resources of the Senate and the 
            Committees on Agriculture and Natural Resources of the 
            House of Representatives a report assessing the pilot 
            program.
                ``(ii) Annual report.--The Secretary concerned shall 
            submit to the Committees on Agriculture, Nutrition, and 
            Forestry and Energy and Natural Resources of the Senate and 
            the Committees on Agriculture and Natural Resources of the 
            House of Representatives an annual report describing the 
            results of the pilot program.
    ``(f) Requirements for Project Funds.--The Secretary shall ensure 
that at least 50 percent of all project funds be used for projects that 
are primarily dedicated--
        ``(1) to road maintenance, decommissioning, or obliteration; or
        ``(2) to restoration of streams and watersheds.
    ``SEC. 205. RESOURCE ADVISORY COMMITTEES.
    ``(a) Establishment and Purpose of Resource Advisory Committees.--
        ``(1) Establishment.--The Secretary concerned shall establish 
    and maintain resource advisory committees to perform the duties in 
    subsection (b), except as provided in paragraph (4).
        ``(2) Purpose.--The purpose of a resource advisory committee 
    shall be--
            ``(A) to improve collaborative relationships; and
            ``(B) to provide advice and recommendations to the land 
        management agencies consistent with the purposes of this title.
        ``(3) Access to resource advisory committees.--To ensure that 
    each unit of Federal land has access to a resource advisory 
    committee, and that there is sufficient interest in participation 
    on a committee to ensure that membership can be balanced in terms 
    of the points of view represented and the functions to be 
    performed, the Secretary concerned may, establish resource advisory 
    committees for part of, or 1 or more, units of Federal land.
        ``(4) Existing advisory committees.--
            ``(A) In general.--An advisory committee that meets the 
        requirements of this section, a resource advisory committee 
        established before September 29, 2006, or an advisory committee 
        determined by the Secretary concerned before September 29, 
        2006, to meet the requirements of this section may be deemed by 
        the Secretary concerned to be a resource advisory committee for 
        the purposes of this title.
            ``(B) Charter.--A charter for a committee described in 
        subparagraph (A) that was filed on or before September 29, 
        2006, shall be considered to be filed for purposes of this Act.
            ``(C) Bureau of land management advisory committees.--The 
        Secretary of the Interior may deem a resource advisory 
        committee meeting the requirements of subpart 1784 of part 1780 
        of title 43, Code of Federal Regulations, as a resource 
        advisory committee for the purposes of this title.
    ``(b) Duties.--A resource advisory committee shall--
        ``(1) review projects proposed under this title by 
    participating counties and other persons;
        ``(2) propose projects and funding to the Secretary concerned 
    under section 203;
        ``(3) provide early and continuous coordination with 
    appropriate land management agency officials in recommending 
    projects consistent with purposes of this Act under this title;
        ``(4) provide frequent opportunities for citizens, 
    organizations, tribes, land management agencies, and other 
    interested parties to participate openly and meaningfully, 
    beginning at the early stages of the project development process 
    under this title;
        ``(5)(A) monitor projects that have been approved under section 
    204; and
        ``(B) advise the designated Federal official on the progress of 
    the monitoring efforts under subparagraph (A); and
        ``(6) make recommendations to the Secretary concerned for any 
    appropriate changes or adjustments to the projects being monitored 
    by the resource advisory committee.
    ``(c) Appointment by the Secretary.--
        ``(1) Appointment and term.--
            ``(A) In general.--The Secretary concerned, shall appoint 
        the members of resource advisory committees for a term of 4 
        years beginning on the date of appointment.
            ``(B) Reappointment.--The Secretary concerned may reappoint 
        members to subsequent 4-year terms.
        ``(2) Basic requirements.--The Secretary concerned shall ensure 
    that each resource advisory committee established meets the 
    requirements of subsection (d).
        ``(3) Initial appointment.--Not later than 180 days after the 
    date of the enactment of this Act, the Secretary concerned shall 
    make initial appointments to the resource advisory committees.
        ``(4) Vacancies.--The Secretary concerned shall make 
    appointments to fill vacancies on any resource advisory committee 
    as soon as practicable after the vacancy has occurred.
        ``(5) Compensation.--Members of the resource advisory 
    committees shall not receive any compensation.
    ``(d) Composition of Advisory Committee.--
        ``(1) Number.--Each resource advisory committee shall be 
    comprised of 15 members.
        ``(2) Community interests represented.--Committee members shall 
    be representative of the interests of the following 3 categories:
            ``(A) 5 persons that--
                ``(i) represent organized labor or non-timber forest 
            product harvester groups;
                ``(ii) represent developed outdoor recreation, off 
            highway vehicle users, or commercial recreation activities;
                ``(iii) represent--

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

                ``(iv) represent the commercial timber industry; or
                ``(v) hold Federal grazing or other land use permits, 
            or represent nonindustrial private forest land owners, 
            within the area for which the committee is organized.
            ``(B) 5 persons that represent--
                ``(i) nationally recognized environmental 
            organizations;
                ``(ii) regionally or locally recognized environmental 
            organizations;
                ``(iii) dispersed recreational activities;
                ``(iv) archaeological and historical interests; or
                ``(v) nationally or regionally recognized wild horse 
            and burro interest groups, wildlife or hunting 
            organizations, or watershed associations.
            ``(C) 5 persons that--
                ``(i) hold State elected office (or a designee);
                ``(ii) hold county or local elected office;
                ``(iii) represent American Indian tribes within or 
            adjacent to the area for which the committee is organized;
                ``(iv) are school officials or teachers; or
                ``(v) represent the affected public at large.
        ``(3) Balanced representation.--In appointing committee members 
    from the 3 categories in paragraph (2), the Secretary concerned 
    shall provide for balanced and broad representation from within 
    each category.
        ``(4) Geographic distribution.--The members of a resource 
    advisory committee shall reside within the State in which the 
    committee has jurisdiction and, to extent practicable, the 
    Secretary concerned shall ensure local representation in each 
    category in paragraph (2).
        ``(5) Chairperson.--A majority on each resource advisory 
    committee shall select the chairperson of the committee.
    ``(e) Approval Procedures.--
        ``(1) In general.--Subject to paragraph (3), each resource 
    advisory committee shall establish procedures for proposing 
    projects to the Secretary concerned under this title.
        ``(2) Quorum.--A quorum must be present to constitute an 
    official meeting of the committee.
        ``(3) Approval by majority of members.--A project may be 
    proposed by a resource advisory committee to the Secretary 
    concerned under section 203(a), if the project has been approved by 
    a majority of members of the committee from each of the 3 
    categories in subsection (d)(2).
    ``(f) Other Committee Authorities and Requirements.--
        ``(1) Staff assistance.--A resource advisory committee may 
    submit to the Secretary concerned a request for periodic staff 
    assistance from Federal employees under the jurisdiction of the 
    Secretary.
        ``(2) Meetings.--All meetings of a resource advisory committee 
    shall be announced at least 1 week in advance in a local newspaper 
    of record and shall be open to the public.
        ``(3) Records.--A resource advisory committee shall maintain 
    records of the meetings of the committee and make the records 
    available for public inspection.
    ``SEC. 206. USE OF PROJECT FUNDS.
    ``(a) Agreement Regarding Schedule and Cost of Project.--
        ``(1) Agreement between parties.--The Secretary concerned may 
    carry out a project submitted by a resource advisory committee 
    under section 203(a) using project funds or other funds described 
    in section 203(a)(2), if, as soon as practicable after the issuance 
    of a decision document for the project and the exhaustion of all 
    administrative appeals and judicial review of the project decision, 
    the Secretary concerned and the resource advisory committee enter 
    into an agreement addressing, at a minimum, the following:
            ``(A) The schedule for completing the project.
            ``(B) The total cost of the project, including the level of 
        agency overhead to be assessed against the project.
            ``(C) For a multiyear project, the estimated cost of the 
        project for each of the fiscal years in which it will be 
        carried out.
            ``(D) The remedies for failure of the Secretary concerned 
        to comply with the terms of the agreement consistent with 
        current Federal law.
        ``(2) Limited use of federal funds.--The Secretary concerned 
    may decide, at the sole discretion of the Secretary concerned, to 
    cover the costs of a portion of an approved project using Federal 
    funds appropriated or otherwise available to the Secretary for the 
    same purposes as the project.
    ``(b) Transfer of Project Funds.--
        ``(1) Initial transfer required.--As soon as practicable after 
    the agreement is reached under subsection (a) with regard to a 
    project to be funded in whole or in part using project funds, or 
    other funds described in section 203(a)(2), the Secretary concerned 
    shall transfer to the applicable unit of National Forest System 
    land or Bureau of Land Management District an amount of project 
    funds equal to--
            ``(A) in the case of a project to be completed in a single 
        fiscal year, the total amount specified in the agreement to be 
        paid using project funds, or other funds described in section 
        203(a)(2); or
            ``(B) in the case of a multiyear project, the amount 
        specified in the agreement to be paid using project funds, or 
        other funds described in section 203(a)(2) for the first fiscal 
        year.
        ``(2) Condition on project commencement.--The unit of National 
    Forest System land or Bureau of Land Management District concerned, 
    shall not commence a project until the project funds, or other 
    funds described in section 203(a)(2) required to be transferred 
    under paragraph (1) for the project, have been made available by 
    the Secretary concerned.
        ``(3) Subsequent transfers for multiyear projects.--
            ``(A) In general.--For the second and subsequent fiscal 
        years of a multiyear project to be funded in whole or in part 
        using project funds, the unit of National Forest System land or 
        Bureau of Land Management District concerned shall use the 
        amount of project funds required to continue the project in 
        that fiscal year according to the agreement entered into under 
        subsection (a).
            ``(B) Suspension of work.--The Secretary concerned shall 
        suspend work on the project if the project funds required by 
        the agreement in the second and subsequent fiscal years are not 
        available.
    ``SEC. 207. AVAILABILITY OF PROJECT FUNDS.
    ``(a) Submission of Proposed Projects To Obligate Funds.--By 
September 30, 2008 (or as soon thereafter as the Secretary concerned 
determines is practicable), and each September 30 thereafter for each 
succeeding fiscal year through fiscal year 2011, a resource advisory 
committee shall submit to the Secretary concerned pursuant to section 
203(a)(1) a sufficient number of project proposals that, if approved, 
would result in the obligation of at least the full amount of the 
project funds reserved by the participating county in the preceding 
fiscal year.
    ``(b) Use or Transfer of Unobligated Funds.--Subject to section 
208, if a resource advisory committee fails to comply with subsection 
(a) for a fiscal year, any project funds reserved by the participating 
county in the preceding fiscal year and remaining unobligated shall be 
available for use as part of the project submissions in the next fiscal 
year.
    ``(c) Effect of Rejection of Projects.--Subject to section 208, any 
project funds reserved by a participating county in the preceding 
fiscal year that are unobligated at the end of a fiscal year because 
the Secretary concerned has rejected one or more proposed projects 
shall be available for use as part of the project submissions in the 
next fiscal year.
    ``(d) Effect of Court Orders.--
        ``(1) In general.--If an approved project under this Act is 
    enjoined or prohibited by a Federal court, the Secretary concerned 
    shall return the unobligated project funds related to the project 
    to the participating county or counties that reserved the funds.
        ``(2) Expenditure of funds.--The returned funds shall be 
    available for the county to expend in the same manner as the funds 
    reserved by the county under subparagraph (B) or (C)(i) of section 
    102(d)(1).
    ``SEC. 208. TERMINATION OF AUTHORITY.
    ``(a) In General.--The authority to initiate projects under this 
title shall terminate on September 30, 2011.
    ``(b) Deposits in Treasury.--Any project funds not obligated by 
September 30, 2012, shall be deposited in the Treasury of the United 
States.

                       ``TITLE III--COUNTY FUNDS

    ``SEC. 301. DEFINITIONS.
    ``In this title:
        ``(1) County funds.--The term `county funds' means all funds an 
    eligible county elects under section 102(d) to reserve for 
    expenditure in accordance with this title.
        ``(2) Participating county.--The term `participating county' 
    means an eligible county that elects under section 102(d) to expend 
    a portion of the Federal funds received under section 102 in 
    accordance with this title.
    ``SEC. 302. USE.
    ``(a) Authorized Uses.--A participating county, including any 
applicable agencies of the participating county, shall use county 
funds, in accordance with this title, only--
        ``(1) to carry out activities under the Firewise Communities 
    program to provide to homeowners in fire-sensitive ecosystems 
    education on, and assistance with implementing, techniques in home 
    siting, home construction, and home landscaping that can increase 
    the protection of people and property from wildfires;
        ``(2) to reimburse the participating county for search and 
    rescue and other emergency services, including firefighting, that 
    are--
            ``(A) performed on Federal land after the date on which the 
        use was approved under subsection (b);
            ``(B) paid for by the participating county; and
        ``(3) to develop community wildfire protection plans in 
    coordination with the appropriate Secretary concerned.
    ``(b) Proposals.--A participating county shall use county funds for 
a use described in subsection (a) only after a 45-day public comment 
period, at the beginning of which the participating county shall--
        ``(1) publish in any publications of local record a proposal 
    that describes the proposed use of the county funds; and
        ``(2) submit the proposal to any resource advisory committee 
    established under section 205 for the participating county.
    ``SEC. 303. CERTIFICATION.
    ``(a) In General.--Not later than February 1 of the year after the 
year in which any county funds were expended by a participating county, 
the appropriate official of the participating county shall submit to 
the Secretary concerned a certification that the county funds expended 
in the applicable year have been used for the uses authorized under 
section 302(a), including a description of the amounts expended and the 
uses for which the amounts were expended.
    ``(b) Review.--The Secretary concerned shall review the 
certifications submitted under subsection (a) as the Secretary 
concerned determines to be appropriate.
    ``SEC. 304. TERMINATION OF AUTHORITY.
    ``(a) In General.--The authority to initiate projects under this 
title terminates on September 30, 2011.
    ``(b) Availability.--Any county funds not obligated by September 
30, 2012, shall be returned to the Treasury of the United States.

                  ``TITLE IV--MISCELLANEOUS PROVISIONS

    ``SEC. 401. REGULATIONS.
    ``The Secretary of Agriculture and the Secretary of the Interior 
shall issue regulations to carry out the purposes of this Act.
    ``SEC. 402. AUTHORIZATION OF APPROPRIATIONS.
    ``There are authorized to be appropriated such sums as are 
necessary to carry out this Act for each of fiscal years 2008 through 
2011.
    ``SEC. 403. TREATMENT OF FUNDS AND REVENUES.
    ``(a) Relation to Other Appropriations.--Funds made available under 
section 402 and funds made available to a Secretary concerned under 
section 206 shall be in addition to any other annual appropriations for 
the Forest Service and the Bureau of Land Management.
    ``(b) Deposit of Revenues and Other Funds.--All revenues generated 
from projects pursuant to title II, including any interest accrued from 
the revenues, shall be deposited in the Treasury of the United 
States.''.
    (b) Forest Receipt Payments to Eligible States and Counties.--
        (1) Act of may 23, 1908.--The sixth paragraph under the heading 
    ``FOREST SERVICE'' in the Act of May 23, 1908 (16 U.S.C. 500) is 
    amended in the first sentence by striking ``twenty-five percentum'' 
    and all that follows through ``shall be paid'' and inserting the 
    following: ``an amount equal to the annual average of 25 percent of 
    all amounts received for the applicable fiscal year and each of the 
    preceding 6 fiscal years from each national forest shall be paid''.
        (2) Weeks law.--Section 13 of the Act of March 1, 1911 
    (commonly known as the ``Weeks Law'') (16 U.S.C. 500) is amended in 
    the first sentence by striking ``twenty-five percentum'' and all 
    that follows through ``shall be paid'' and inserting the following: 
    ``an amount equal to the annual average of 25 percent of all 
    amounts received for the applicable fiscal year and each of the 
    preceding 6 fiscal years from each national forest shall be paid''.
    (c) Payments in Lieu of Taxes.--
        (1) In general.--Section 6906 of title 31, United States Code, 
    is amended to read as follows:
``Sec. 6906. Funding
    ``For each of fiscal years 2008 through 2012--
        ``(1) each county or other eligible unit of local government 
    shall be entitled to payment under this chapter; and
        ``(2) sums shall be made available to the Secretary of the 
    Interior for obligation or expenditure in accordance with this 
    chapter.''.
        (2) Conforming amendment.--The table of sections for chapter 69 
    of title 31, United States Code, is amended by striking the item 
    relating to section 6906 and inserting the following:

``6906. Funding.''.

        (3) Budget scorekeeping.--
            (A) In general.--Notwithstanding the Budget Scorekeeping 
        Guidelines and the accompanying list of programs and accounts 
        set forth in the joint explanatory statement of the committee 
        of conference accompanying Conference Report 105-217, the 
        section in this title regarding Payments in Lieu of Taxes shall 
        be treated in the baseline for purposes of section 257 of the 
        Balanced Budget and Emergency Deficit Control Act of 1985 (as 
        in effect prior to September 30, 2002), and by the Chairmen of 
        the House and Senate Budget Committees, as appropriate, for 
        purposes of budget enforcement in the House and Senate, and 
        under the Congressional Budget Act of 1974 as if Payment in 
        Lieu of Taxes (14-1114-0-1-806) were an account designated as 
        Appropriated Entitlements and Mandatories for Fiscal Year 1997 
        in the joint explanatory statement of the committee of 
        conference accompanying Conference Report 105-217.
            (B) Effective date.--This paragraph shall remain in effect 
        for the fiscal years to which the entitlement in section 6906 
        of title 31, United States Code (as amended by paragraph (1)), 
        applies.
    SEC. 602. TRANSFER TO ABANDONED MINE RECLAMATION FUND.
    Subparagraph (C) of section 402(i)(1) of the Surface Mining Control 
and Reclamation Act of 1977 (30 U.S.C. 1232(i)(1)) is amended by 
striking ``and $9,000,000 on October 1, 2009'' and inserting 
``$9,000,000 on October 1, 2009, and $9,000,000 on October 1, 2010''.

                       TITLE VII--DISASTER RELIEF
        Subtitle A--Heartland and Hurricane Ike Disaster Relief

    SEC. 701. SHORT TITLE.
    This subtitle may be cited as the ``Heartland Disaster Tax Relief 
Act of 2008''.
    SEC. 702. TEMPORARY TAX RELIEF FOR AREAS DAMAGED BY 2008 MIDWESTERN 
      SEVERE STORMS, TORNADOS, AND FLOODING.
    (a) In General.--Subject to the modifications described in this 
section, the following provisions of or relating to the Internal 
Revenue Code of 1986 shall apply to any Midwestern disaster area in 
addition to the areas to which such provisions otherwise apply:
        (1) Go zone benefits.--
            (A) Section 1400N (relating to tax benefits) other than 
        subsections (b), (d), (e), (i), (j), (m), and (o) thereof.
            (B) Section 1400O (relating to education tax benefits).
            (C) Section 1400P (relating to housing tax benefits).
            (D) Section 1400Q (relating to special rules for use of 
        retirement funds).
            (E) Section 1400R(a) (relating to employee retention credit 
        for employers).
            (F) Section 1400S (relating to additional tax relief) other 
        than subsection (d) thereof.
            (G) Section 1400T (relating to special rules for mortgage 
        revenue bonds).
        (2) Other benefits included in katrina emergency tax relief act 
    of 2005.--Sections 302, 303, 304, 401, and 405 of the Katrina 
    Emergency Tax Relief Act of 2005.
    (b) Midwestern Disaster Area.--
        (1) In general.--For purposes of this section and for applying 
    the substitutions described in subsections (d) and (e), the term 
    ``Midwestern disaster area'' means an area--
            (A) with respect to which a major disaster has been 
        declared by the President on or after May 20, 2008, and before 
        August 1, 2008, under section 401 of the Robert T. Stafford 
        Disaster Relief and Emergency Assistance Act by reason of 
        severe storms, tornados, or flooding occurring in any of the 
        States of Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, 
        Minnesota, Missouri, Nebraska, and Wisconsin, and
            (B) determined by the President to warrant individual or 
        individual and public assistance from the Federal Government 
        under such Act with respect to damages attributable to such 
        severe storms, tornados, or flooding.
        (2) Certain benefits available to areas eligible only for 
    public assistance.--For purposes of applying this section to 
    benefits under the following provisions, paragraph (1) shall be 
    applied without regard to subparagraph (B):
            (A) Sections 1400Q, 1400S(b), and 1400S(d) of the Internal 
        Revenue Code of 1986.
            (B) Sections 302, 401, and 405 of the Katrina Emergency Tax 
        Relief Act of 2005.
    (c) References.--
        (1) Area.--Any reference in such provisions to the Hurricane 
    Katrina disaster area or the Gulf Opportunity Zone shall be treated 
    as a reference to any Midwestern disaster area and any reference to 
    the Hurricane Katrina disaster area or the Gulf Opportunity Zone 
    within a State shall be treated as a reference to all Midwestern 
    disaster areas within the State.
        (2) Items attributable to disaster.--Any reference in such 
    provisions to any loss, damage, or other item attributable to 
    Hurricane Katrina shall be treated as a reference to any loss, 
    damage, or other item attributable to the severe storms, tornados, 
    or flooding giving rise to any Presidential declaration described 
    in subsection (b)(1)(A).
        (3) Applicable disaster date.--For purposes of applying the 
    substitutions described in subsections (d) and (e), the term 
    ``applicable disaster date'' means, with respect to any Midwestern 
    disaster area, the date on which the severe storms, tornados, or 
    flooding giving rise to the Presidential declaration described in 
    subsection (b)(1)(A) occurred.
    (d) Modifications to 1986 Code.--The following provisions of the 
Internal Revenue Code of 1986 shall be applied with the following 
modifications:
        (1) Tax-exempt bond financing.--Section 1400N(a)--
            (A) by substituting ``qualified Midwestern disaster area 
        bond'' for ``qualified Gulf Opportunity Zone Bond'' each place 
        it appears, except that in determining whether a bond is a 
        qualified Midwestern disaster area bond--
                (i) paragraph (2)(A)(i) shall be applied by only 
            treating costs as qualified project costs if--

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

                (ii) paragraph (2)(A)(ii) shall be applied by treating 
            an issue as a qualified mortgage issue only if 95 percent 
            or more of the net proceeds (as defined in section 
            150(a)(3)) of the issue are to be used to provide financing 
            for mortgagors who suffered damages to their principal 
            residences attributable to such severe storms, tornados, or 
            flooding.
            (B) by substituting ``any State in which a Midwestern 
        disaster area is located'' for ``the State of Alabama, 
        Louisiana, or Mississippi'' in paragraph (2)(B),
            (C) by substituting ``designated for purposes of this 
        section (on the basis of providing assistance to areas in the 
        order in which such assistance is most needed)'' for 
        ``designated for purposes of this section'' in paragraph 
        (2)(C),
            (D) by substituting ``January 1, 2013'' for ``January 1, 
        2011'' in paragraph (2)(D),
            (E) in paragraph (3)(A)--
                (i) by substituting ``$1,000'' for ``$2,500'', and
                (ii) by substituting ``before the earliest applicable 
            disaster date for Midwestern disaster areas within the 
            State'' for ``before August 28, 2005'',
            (F) by substituting ``qualified Midwestern disaster area 
        repair or construction'' for ``qualified GO Zone repair or 
        construction'' each place it appears,
            (G) by substituting ``after the date of the enactment of 
        the Heartland Disaster Tax Relief Act of 2008 and before 
        January 1, 2013'' for ``after the date of the enactment of this 
        paragraph and before January 1, 2011'' in paragraph (7)(C), and
            (H) by disregarding paragraph (8) thereof.
        (2) Low-income housing credit.--Section 1400N(c)--
            (A) only with respect to calendar years 2008, 2009, and 
        2010,
            (B) by substituting ``Disaster Recovery Assistance housing 
        amount'' for ``Gulf Opportunity housing amount'' each place it 
        appears,
            (C) in paragraph (1)(B)--
                (i) by substituting ``$8.00'' for ``$18.00'', and
                (ii) by substituting ``before the earliest applicable 
            disaster date for Midwestern disaster areas within the 
            State'' for ``before August 28, 2005'', and
            (D) determined without regard to paragraphs (2), (3), (4), 
        (5), and (6) thereof.
        (3) Expensing for certain demolition and clean-up costs.--
    Section 1400N(f)--
            (A) by substituting ``qualified Disaster Recovery 
        Assistance clean-up cost'' for ``qualified Gulf Opportunity 
        Zone clean-up cost'' each place it appears,
            (B) by substituting ``beginning on the applicable disaster 
        date and ending on December 31, 2010'' for ``beginning on 
        August 28, 2005, and ending on December 31, 2007'' in paragraph 
        (2), and
            (C) by treating costs as qualified Disaster Recovery 
        Assistance clean-up costs only if the removal of debris or 
        demolition of any structure was necessary due to damage 
        attributable to the severe storms, tornados, or flooding giving 
        rise to any Presidential declaration described in subsection 
        (b)(1)(A).
        (4) Extension of expensing for environmental remediation 
    costs.--Section 1400N(g)--
            (A) by substituting ``the applicable disaster date'' for 
        ``August 28, 2005'' each place it appears,
            (B) by substituting ``January 1, 2011'' for ``January 1, 
        2008'' in paragraph (1),
            (C) by substituting ``December 31, 2010'' for ``December 
        31, 2007'' in paragraph (1), and
            (D) by treating a site as a qualified contaminated site 
        only if the release (or threat of release) or disposal of a 
        hazardous substance at the site was attributable to the severe 
        storms, tornados, or flooding giving rise to any Presidential 
        declaration described in subsection (b)(1)(A).
        (5) Increase in rehabilitation credit.--Section 1400N(h), as 
    amended by this Act--
            (A) by substituting ``the applicable disaster date'' for 
        ``August 28, 2005'',
            (B) by substituting ``December 31, 2011'' for ``December 
        31, 2009'' in paragraph (1), and
            (C) by only applying such subsection to qualified 
        rehabilitation expenditures with respect to any building or 
        structure which was damaged or destroyed as a result of the 
        severe storms, tornados, or flooding giving rise to any 
        Presidential declaration described in subsection (b)(1)(A).
        (6) Treatment of net operating losses attributable to disaster 
    losses.--Section 1400N(k)--
            (A) by substituting ``qualified Disaster Recovery 
        Assistance loss'' for ``qualified Gulf Opportunity Zone loss'' 
        each place it appears,
            (B) by substituting ``after the day before the applicable 
        disaster date, and before January 1, 2011'' for ``after August 
        27, 2005, and before January 1, 2008'' each place it appears,
            (C) by substituting ``the applicable disaster date'' for 
        ``August 28, 2005'' in paragraph (2)(B)(ii)(I),
            (D) by substituting ``qualified Disaster Recovery 
        Assistance property'' for ``qualified Gulf Opportunity Zone 
        property'' in paragraph (2)(B)(iv), and
            (E) by substituting ``qualified Disaster Recovery 
        Assistance casualty loss'' for ``qualified Gulf Opportunity 
        Zone casualty loss'' each place it appears.
        (7) Credit to holders of tax credit bonds.--Section 1400N(l)--
            (A) by substituting ``Midwestern tax credit bond'' for 
        ``Gulf tax credit bond'' each place it appears,
            (B) by substituting ``any State in which a Midwestern 
        disaster area is located or any instrumentality of the State'' 
        for ``the State of Alabama, Louisiana, or Mississippi'' in 
        paragraph (4)(A)(i),
            (C) by substituting ``after December 31, 2008 and before 
        January 1, 2010'' for ``after December 31, 2005, and before 
        January 1, 2007'',
            (D) by substituting ``shall not exceed $100,000,000 for any 
        State with an aggregate population located in all Midwestern 
        disaster areas within the State of at least 2,000,000, 
        $50,000,000 for any State with an aggregate population located 
        in all Midwestern disaster areas within the State of at least 
        1,000,000 but less than 2,000,000, and zero for any other 
        State. The population of a State within any area shall be 
        determined on the basis of the most recent census estimate of 
        resident population released by the Bureau of Census before the 
        earliest applicable disaster date for Midwestern disaster areas 
        within the State.'' for ``shall not exceed'' and all that 
        follows in paragraph (4)(C), and
            (E) by substituting ``the earliest applicable disaster date 
        for Midwestern disaster areas within the State'' for ``August 
        28, 2005'' in paragraph (5)(A).
        (8) Education tax benefits.--Section 1400O, by substituting 
    ``2008 or 2009'' for ``2005 or 2006''.
        (9) Housing tax benefits.--Section 1400P, by substituting ``the 
    applicable disaster date'' for ``August 28, 2005'' in subsection 
    (c)(1).
        (10) Special rules for use of retirement funds.--Section 
    1400Q--
            (A) by substituting ``qualified Disaster Recovery 
        Assistance distribution'' for ``qualified hurricane 
        distribution'' each place it appears,
            (B) by substituting ``on or after the applicable disaster 
        date and before January 1, 2010'' for ``on or after August 25, 
        2005, and before January 1, 2007'' in subsection (a)(4)(A)(i),
            (C) by substituting ``the applicable disaster date'' for 
        ``August 28, 2005'' in subsections (a)(4)(A)(i) and (c)(3)(B),
            (D) by disregarding clauses (ii) and (iii) of subsection 
        (a)(4)(A) thereof,
            (E) by substituting ``qualified storm damage distribution'' 
        for ``qualified Katrina distribution'' each place it appears,
            (F) by substituting ``after the date which is 6 months 
        before the applicable disaster date and before the date which 
        is the day after the applicable disaster date'' for ``after 
        February 28, 2005, and before August 29, 2005'' in subsection 
        (b)(2)(B)(ii),
            (G) by substituting ``the Midwestern disaster area, but not 
        so purchased or constructed on account of severe storms, 
        tornados, or flooding giving rise to the designation of the 
        area as a disaster area'' for ``the Hurricane Katrina disaster 
        area, but not so purchased or constructed on account of 
        Hurricane Katrina'' in subsection (b)(2)(B)(iii),
            (H) by substituting ``beginning on the applicable disaster 
        date and ending on the date which is 5 months after the date of 
        the enactment of the Heartland Disaster Tax Relief Act of 
        2008'' for ``beginning on August 25, 2005, and ending on 
        February 28, 2006'' in subsection (b)(3)(A),
            (I) by substituting ``qualified storm damage individual'' 
        for ``qualified Hurricane Katrina individual'' each place it 
        appears,
            (J) by substituting ``December 31, 2009'' for ``December 
        31, 2006'' in subsection (c)(2)(A),
            (K) by disregarding subparagraphs (C) and (D) of subsection 
        (c)(3) thereof,
            (L) by substituting ``beginning on the date of the 
        enactment of the Heartland Disaster Tax Relief Act of 2008 and 
        ending on December 31, 2009'' for ``beginning on September 24, 
        2005, and ending on December 31, 2006'' in subsection 
        (c)(4)(A)(i),
            (M) by substituting ``the applicable disaster date'' for 
        ``August 25, 2005'' in subsection (c)(4)(A)(ii), and
            (N) by substituting ``January 1, 2010'' for ``January 1, 
        2007'' in subsection (d)(2)(A)(ii).
        (11) Employee retention credit for employers affected by severe 
    storms, tornados, and flooding.--Section 1400R(a)--
            (A) by substituting ``the applicable disaster date'' for 
        ``August 28, 2005'' each place it appears,
            (B) by substituting ``January 1, 2009'' for ``January 1, 
        2006'' both places it appears, and
            (C) only with respect to eligible employers who employed an 
        average of not more than 200 employees on business days during 
        the taxable year before the applicable disaster date.
        (12) Temporary suspension of limitations on charitable 
    contributions.--Section 1400S(a), by substituting the following 
    paragraph for paragraph (4) thereof:
        ``(4) Qualified contributions.--
            ``(A) In general.--For purposes of this subsection, the 
        term `qualified contribution' means any charitable contribution 
        (as defined in section 170(c)) if--
                ``(i) such contribution--

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

                ``(ii) the taxpayer obtains from such organization 
            contemporaneous written acknowledgment (within the meaning 
            of section 170(f)(8)) that such contribution was used (or 
            is to be used) for relief efforts in 1 or more Midwestern 
            disaster areas, and
                ``(iii) the taxpayer has elected the application of 
            this subsection with respect to such contribution.
            ``(B) Exception.--Such term shall not include a 
        contribution by a donor if the contribution is--
                ``(i) to an organization described in section 
            509(a)(3), or
                ``(ii) for establishment of a new, or maintenance of an 
            existing, donor advised fund (as defined in section 
            4966(d)(2)).
            ``(C) Application of election to partnerships and s 
        corporations.--In the case of a partnership or S corporation, 
        the election under subparagraph (A)(iii) shall be made 
        separately by each partner or shareholder.''.
        (13) Suspension of certain limitations on personal casualty 
    losses.--Section 1400S(b)(1), by substituting ``the applicable 
    disaster date'' for ``August 25, 2005''.
        (14) Special rule for determining earned income.--Section 
    1400S(d)--
            (A) by treating an individual as a qualified individual if 
        such individual's principal place of abode on the applicable 
        disaster date was located in a Midwestern disaster area,
            (B) by treating the applicable disaster date with respect 
        to any such individual as the applicable date for purposes of 
        such subsection, and
            (C) by treating an area as described in paragraph 
        (2)(B)(ii) thereof if the area is a Midwestern disaster area 
        only by reason of subsection (b)(2) of this section (relating 
        to areas eligible only for public assistance).
        (15) Adjustments regarding taxpayer and dependency status.--
    Section 1400S(e), by substituting ``2008 or 2009'' for ``2005 or 
    2006''.
    (e) Modifications to Katrina Emergency Tax Relief Act of 2005.--The 
following provisions of the Katrina Emergency Tax Relief Act of 2005 
shall be applied with the following modifications:
        (1) Additional exemption for housing displaced individual.--
    Section 302--
            (A) by substituting ``2008 or 2009'' for ``2005 or 2006'' 
        in subsection (a) thereof,
            (B) by substituting ``Midwestern displaced individual'' for 
        ``Hurricane Katrina displaced individual'' each place it 
        appears, and
            (C) by treating an area as a core disaster area for 
        purposes of applying subsection (c) thereof if the area is a 
        Midwestern disaster area without regard to subsection (b)(2) of 
        this section (relating to areas eligible only for public 
        assistance).
        (2) Increase in standard mileage rate.--Section 303, by 
    substituting ``beginning on the applicable disaster date and ending 
    on December 31, 2008'' for ``beginning on August 25, 2005, and 
    ending on December 31, 2006''.
        (3) Mileage reimbursements for charitable volunteers.--Section 
    304--
            (A) by substituting ``beginning on the applicable disaster 
        date and ending on December 31, 2008'' for ``beginning on 
        August 25, 2005, and ending on December 31, 2006'' in 
        subsection (a), and
            (B) by substituting ``the applicable disaster date'' for 
        ``August 25, 2005'' in subsection (a).
        (4) Exclusion of certain cancellation of indebtedness income.--
    Section 401--
            (A) by treating an individual whose principal place of 
        abode on the applicable disaster date was in a Midwestern 
        disaster area (determined without regard to subsection (b)(2) 
        of this section) as an individual described in subsection 
        (b)(1) thereof, and by treating an individual whose principal 
        place of abode on the applicable disaster date was in a 
        Midwestern disaster area solely by reason of subsection (b)(2) 
        of this section as an individual described in subsection (b)(2) 
        thereof,
            (B) by substituting ``the applicable disaster date'' for 
        ``August 28, 2005'' both places it appears, and
            (C) by substituting ``January 1, 2010'' for ``January 1, 
        2007'' in subsection (e).
        (5) Extension of replacement period for nonrecognition of 
    gain.--Section 405, by substituting ``on or after the applicable 
    disaster date'' for ``on or after August 25, 2005''.
    SEC. 703. REPORTING REQUIREMENTS RELATING TO DISASTER RELIEF 
      CONTRIBUTIONS.
    (a) In General.--Section 6033(b) (relating to returns of certain 
organizations described in section 501(c)(3)) is amended by striking 
``and'' at the end of paragraph (13), by redesignating paragraph (14) 
as paragraph (15), and by adding after paragraph (13) the following new 
paragraph:
        ``(14) such information as the Secretary may require with 
    respect to disaster relief activities, including the amount and use 
    of qualified contributions to which section 1400S(a) applies, 
    and''.
    (b) Effective Date.--The amendments made by this section shall 
apply to returns the due date for which (determined without regard to 
any extension) occurs after December 31, 2008.
    SEC. 704. TEMPORARY TAX-EXEMPT BOND FINANCING AND LOW-INCOME 
      HOUSING TAX RELIEF FOR AREAS DAMAGED BY HURRICANE IKE.
    (a) Tax-Exempt Bond Financing.--Section 1400N(a) of the Internal 
Revenue Code of 1986 shall apply to any Hurricane Ike disaster area in 
addition to any other area referenced in such section, but with the 
following modifications:
        (1) By substituting ``qualified Hurricane Ike disaster area 
    bond'' for ``qualified Gulf Opportunity Zone Bond'' each place it 
    appears, except that in determining whether a bond is a qualified 
    Hurricane Ike disaster area bond--
            (A) paragraph (2)(A)(i) shall be applied by only treating 
        costs as qualified project costs if--
                (i) in the case of a project involving a private 
            business use (as defined in section 141(b)(6)), either the 
            person using the property suffered a loss in a trade or 
            business attributable to Hurricane Ike or is a person 
            designated for purposes of this section by the Governor of 
            the State in which the project is located as a person 
            carrying on a trade or business replacing a trade or 
            business with respect to which another person suffered such 
            a loss, and
                (ii) in the case of a project relating to public 
            utility property, the project involves repair or 
            reconstruction of public utility property damaged by 
            Hurricane Ike, and
            (B) paragraph (2)(A)(ii) shall be applied by treating an 
        issue as a qualified mortgage issue only if 95 percent or more 
        of the net proceeds (as defined in section 150(a)(3)) of the 
        issue are to be used to provide financing for mortgagors who 
        suffered damages to their principal residences attributable to 
        Hurricane Ike.
        (2) By substituting ``any State in which any Hurricane Ike 
    disaster area is located'' for ``the State of Alabama, Louisiana, 
    or Mississippi'' in paragraph (2)(B).
        (3) By substituting ``designated for purposes of this section 
    (on the basis of providing assistance to areas in the order in 
    which such assistance is most needed)'' for ``designated for 
    purposes of this section'' in paragraph (2)(C).
        (4) By substituting ``January 1, 2013'' for ``January 1, 2011'' 
    in paragraph (2)(D).
        (5) By substituting the following for subparagraph (A) of 
    paragraph (3):
            ``(A) Aggregate amount designated.--The maximum aggregate 
        face amount of bonds which may be designated under this 
        subsection with respect to any State shall not exceed the 
        product of $2,000 multiplied by the portion of the State 
        population which is in--
                ``(i) in the case of Texas, the counties of Brazoria, 
            Chambers, Galveston, Jefferson, and Orange, and
                ``(ii) in the case of Louisiana, the parishes of 
            Calcasieu and Cameron,
        (as determined on the basis of the most recent census estimate 
        of resident population released by the Bureau of Census before 
        September 13, 2008).''.
        (6) By substituting ``qualified Hurricane Ike disaster area 
    repair or construction'' for ``qualified GO Zone repair or 
    construction'' each place it appears.
        (7) By substituting ``after the date of the enactment of the 
    Heartland Disaster Tax Relief Act of 2008 and before January 1, 
    2013'' for ``after the date of the enactment of this paragraph and 
    before January 1, 2011'' in paragraph (7)(C).
        (8) By disregarding paragraph (8) thereof.
        (9) By substituting ``any Hurricane Ike disaster area'' for 
    ``the Gulf Opportunity Zone'' each place it appears.
    (b) Low-Income Housing Credit.--Section 1400N(c) of the Internal 
Revenue Code of 1986 shall apply to any Hurricane Ike disaster area in 
addition to any other area referenced in such section, but with the 
following modifications:
        (1) Only with respect to calendar years 2008, 2009, and 2010.
        (2) By substituting ``any Hurricane Ike disaster area'' for 
    ``the Gulf Opportunity Zone'' each place it appears.
        (3) By substituting ``Hurricane Ike Recovery Assistance housing 
    amount'' for ``Gulf Opportunity housing amount'' each place it 
    appears.
        (4) By substituting the following for subparagraph (B) of 
    paragraph (1):
            ``(B) Hurricane ike housing amount.--For purposes of 
        subparagraph (A), the term `Hurricane Ike housing amount' 
        means, for any calendar year, the amount equal to the product 
        of $16.00 multiplied by the portion of the State population 
        which is in--
                ``(i) in the case of Texas, the counties of Brazoria, 
            Chambers, Galveston, Jefferson, and Orange, and
                ``(ii) in the case of Louisiana, the parishes of 
            Calcasieu and Cameron,
        (as determined on the basis of the most recent census estimate 
        of resident population released by the Bureau of Census before 
        September 13, 2008).''.
        (5) Determined without regard to paragraphs (2), (3), (4), (5), 
    and (6) thereof.
    (c) Hurricane Ike Disaster Area.--For purposes of this section and 
for applying the substitutions described in subsections (a) and (b), 
the term ``Hurricane Ike disaster area'' means an area in the State of 
Texas or Louisiana--
        (1) with respect to which a major disaster has been declared by 
    the President on September 13, 2008, under section 401 of the 
    Robert T. Stafford Disaster Relief and Emergency Assistance Act by 
    reason of Hurricane Ike, and
        (2) determined by the President to warrant individual or 
    individual and public assistance from the Federal Government under 
    such Act with respect to damages attributable to Hurricane Ike.

                  Subtitle B--National Disaster Relief

    SEC. 706. LOSSES ATTRIBUTABLE TO FEDERALLY DECLARED DISASTERS.
    (a) Waiver of Adjusted Gross Income Limitation.--
        (1) In general.--Subsection (h) of section 165 is amended by 
    redesignating paragraphs (3) and (4) as paragraphs (4) and (5), 
    respectively, and by inserting after paragraph (2) the following 
    new paragraph:
        ``(3) Special rule for losses in federally declared 
    disasters.--
            ``(A) In general.--If an individual has a net disaster loss 
        for any taxable year, the amount determined under paragraph 
        (2)(A)(ii) shall be the sum of--
                ``(i) such net disaster loss, and
                ``(ii) so much of the excess referred to in the matter 
            preceding clause (i) of paragraph (2)(A) (reduced by the 
            amount in clause (i) of this subparagraph) as exceeds 10 
            percent of the adjusted gross income of the individual.
            ``(B) Net disaster loss.--For purposes of subparagraph (A), 
        the term `net disaster loss' means the excess of--
                ``(i) the personal casualty losses--

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

                ``(ii) personal casualty gains.
            ``(C) Federally declared disaster.--For purposes of this 
        paragraph--
                ``(i) Federally declared disaster.--The term `federally 
            declared disaster' means any disaster subsequently 
            determined by the President of the United States to warrant 
            assistance by the Federal Government under the Robert T. 
            Stafford Disaster Relief and Emergency Assistance Act.
                ``(ii) Disaster area.--The term `disaster area' means 
            the area so determined to warrant such assistance.''.
        (2) Conforming amendments.--
            (A) Section 165(h)(4)(B) (as so redesignated) is amended by 
        striking ``paragraph (2)'' and inserting ``paragraphs (2) and 
        (3)''.
            (B) Section 165(i)(1) is amended by striking ``loss'' and 
        all that follows through ``Act'' and inserting ``loss occurring 
        in a disaster area (as defined by clause (ii) of subsection 
        (h)(3)(C)) and attributable to a federally declared disaster 
        (as defined by clause (i) of such subsection)''.
            (C) Section 165(i)(4) is amended by striking 
        ``Presidentially declared disaster (as defined by section 
        1033(h)(3))'' and inserting ``federally declared disaster (as 
        defined by subsection (h)(3)(C)(i)''.
            (D)(i) So much of subsection (h) of section 1033 as 
        precedes subparagraph (A) of paragraph (1) thereof is amended 
        to read as follows:
    ``(h) Special Rules for Property Damaged by Federally Declared 
Disasters.--
        ``(1) Principal residences.--If the taxpayer's principal 
    residence or any of its contents is located in a disaster area and 
    is compulsorily or involuntarily converted as a result of a 
    federally declared disaster--''.
            (ii) Paragraph (2) of section 1033(h) is amended by 
        striking ``investment'' and all that follows through 
        ``disaster'' and inserting ``investment located in a disaster 
        area and compulsorily or involuntarily converted as a result of 
        a federally declared disaster''.
            (iii) Paragraph (3) of section 1033(h) is amended to read 
        as follows:
        ``(3) Federally declared disaster; disaster area.--The terms 
    ``federally declared disaster'' and ``disaster area'' shall have 
    the respective meaning given such terms by section 165(h)(3)(C).''.
            (iv) Section 139(c)(2) is amended to read as follows:
        ``(2) federally declared disaster (as defined by section 
    165(h)(3)(C)(i)),''.
            (v) Subclause (II) of section 172(b)(1)(F)(ii) is amended 
        by striking ``Presidentially declared disasters (as defined in 
        section 1033(h)(3))'' and inserting ``federally declared 
        disasters (as defined by subsection (h)(3)(C)(i))''.
            (vi) Subclause (III) of section 172(b)(1)(F)(ii) is amended 
        by striking ``Presidentially declared disasters'' and inserting 
        ``federally declared disasters''.
            (vii) Subsection (a) of section 7508A is amended by 
        striking ``Presidentially declared disaster (as defined in 
        section 1033(h)(3))'' and inserting ``federally declared 
        disaster (as defined by section 165(h)(3)(C)(i))''.
    (b) Increase in Standard Deduction by Disaster Casualty Loss.--
        (1) In general.--Paragraph (1) of section 63(c), as amended by 
    the Housing Assistance Tax Act of 2008, is amended by striking 
    ``and'' at the end of subparagraph (B), by striking the period at 
    the end of subparagraph (C) and inserting ``, and'', and by adding 
    at the end the following new subparagraph:
            ``(D) the disaster loss deduction.''.
        (2) Disaster loss deduction.--Subsection (c) of section 63, as 
    amended by the Housing Assistance Tax Act of 2008, is amended by 
    adding at the end the following new paragraph:
        ``(8) Disaster loss deduction.--For the purposes of paragraph 
    (1), the term `disaster loss deduction' means the net disaster loss 
    (as defined in section 165(h)(3)(B)).''.
        (3) Allowance in computing alternative minimum taxable 
    income.--Subparagraph (E) of section 56(b)(1) is amended by adding 
    at the end the following new sentence: ``The preceding sentence 
    shall not apply to so much of the standard deduction as is 
    determined under section 63(c)(1)(D).''.
    (c) Increase in Limitation on Individual Loss Per Casualty.--
Paragraph (1) of section 165(h) is amended by striking ``$100'' and 
inserting ``$500 ($100 for taxable years beginning after December 31, 
2009)''.
    (d) Effective Dates.--
        (1) In general.--Except as provided by paragraph (2), the 
    amendments made by this section shall apply to disasters declared 
    in taxable years beginning after December 31, 2007.
        (2) Increase in limitation on individual loss per casualty.--
    The amendment made by subsection (c) shall apply to taxable years 
    beginning after December 31, 2008.
    SEC. 707. EXPENSING OF QUALIFIED DISASTER EXPENSES.
    (a) In General.--Part VI of subchapter B of chapter 1 is amended by 
inserting after section 198 the following new section:
``SEC. 198A. EXPENSING OF QUALIFIED DISASTER EXPENSES.
    ``(a) In General.--A taxpayer may elect to treat any qualified 
disaster expenses which are paid or incurred by the taxpayer as an 
expense which is not chargeable to capital account. Any expense which 
is so treated shall be allowed as a deduction for the taxable year in 
which it is paid or incurred.
    ``(b) Qualified Disaster Expense.--For purposes of this section, 
the term `qualified disaster expense' means any expenditure--
        ``(1) which is paid or incurred in connection with a trade or 
    business or with business-related property,
        ``(2) which is--
            ``(A) for the abatement or control of hazardous substances 
        that were released on account of a federally declared disaster 
        occurring before January 1, 2010,
            ``(B) for the removal of debris from, or the demolition of 
        structures on, real property which is business-related property 
        damaged or destroyed as a result of a federally declared 
        disaster occurring before such date, or
            ``(C) for the repair of business-related property damaged 
        as a result of a federally declared disaster occurring before 
        such date, and
        ``(3) which is otherwise chargeable to capital account.
    ``(c) Other Definitions.--For purposes of this section--
        ``(1) Business-related property.--The term `business-related 
    property' means property--
            ``(A) held by the taxpayer for use in a trade or business 
        or for the production of income, or
            ``(B) described in section 1221(a)(1) in the hands of the 
        taxpayer.
        ``(2) Federally declared disaster.--The term `federally 
    declared disaster' has the meaning given such term by section 
    165(h)(3)(C)(i).
    ``(d) Deduction Recaptured as Ordinary Income on Sale, etc.--Solely 
for purposes of section 1245, in the case of property to which a 
qualified disaster expense would have been capitalized but for this 
section--
        ``(1) the deduction allowed by this section for such expense 
    shall be treated as a deduction for depreciation, and
        ``(2) such property (if not otherwise section 1245 property) 
    shall be treated as section 1245 property solely for purposes of 
    applying section 1245 to such deduction.
    ``(e) Coordination With Other Provisions.--Sections 198, 280B, and 
468 shall not apply to amounts which are treated as expenses under this 
section.
    ``(f) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
section.''.
    (b) Clerical Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 is amended by inserting after the item 
relating to section 198 the following new item:

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

    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after December 31, 2007 in connection 
with disaster declared after such date.
    SEC. 708. NET OPERATING LOSSES ATTRIBUTABLE TO FEDERALLY DECLARED 
      DISASTERS.
    (a) In General.--Paragraph (1) of section 172(b) is amended by 
adding at the end the following new subparagraph:
            ``(J) Certain losses attributable federally declared 
        disasters.--In the case of a taxpayer who has a qualified 
        disaster loss (as defined in subsection (j)), such loss shall 
        be a net operating loss carryback to each of the 5 taxable 
        years preceding the taxable year of such loss.''.
    (b) Qualified Disaster Loss.--Section 172 is amended by 
redesignating subsections (j) and (k) as subsections (k) and (l), 
respectively, and by inserting after subsection (i) the following new 
subsection:
    ``(j) Rules Relating to Qualified Disaster Losses.--For purposes of 
this section--
        ``(1) In general.--The term `qualified disaster loss' means the 
    lesser of--
            ``(A) the sum of--
                ``(i) the losses allowable under section 165 for the 
            taxable year--

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

                ``(ii) the deduction for the taxable year for qualified 
            disaster expenses which is allowable under section 198A(a) 
            or which would be so allowable if not otherwise treated as 
            an expense, or
            ``(B) the net operating loss for such taxable year.
        ``(2) Coordination with subsection (b)(2).--For purposes of 
    applying subsection (b)(2), a qualified disaster loss for any 
    taxable year shall be treated in a manner similar to the manner in 
    which a specified liability loss is treated.
        ``(3) Election.--Any taxpayer entitled to a 5-year carryback 
    under subsection (b)(1)(J) from any loss year may elect to have the 
    carryback period with respect to such loss year determined without 
    regard to subsection (b)(1)(J). Such election shall be made in such 
    manner as may be prescribed by the Secretary and shall be made by 
    the due date (including extensions of time) for filing the 
    taxpayer's return for the taxable year of the net operating loss. 
    Such election, once made for any taxable year, shall be irrevocable 
    for such taxable year.
        ``(4) Exclusion.--The term `qualified disaster loss' shall not 
    include any loss with respect to any property described in section 
    1400N(p)(3).''.
    (c) Loss Deduction Allowed in Computing Alternative Minimum Taxable 
Income.--Subsection (d) of section 56 is amended by adding at the end 
the following new paragraph:
        ``(3) Net operating loss attributable to federally declared 
    disasters.--In the case of a taxpayer which has a qualified 
    disaster loss (as defined by section 172(b)(1)(J)) for the taxable 
    year, paragraph (1) shall be applied by increasing the amount 
    determined under subparagraph (A)(ii)(I) thereof by the sum of the 
    carrybacks and carryovers of such loss.''.
    (d) Conforming Amendments.--
        (1) Clause (ii) of section 172(b)(1)(F) is amended by inserting 
    ``or qualified disaster loss (as defined in subsection (j))'' 
    before the period at the end of the last sentence.
        (2) Paragraph (1) of section 172(i) is amended by adding at the 
    end the following new flush sentence:
    ``Such term shall not include any qualified disaster loss (as 
    defined in subsection (j)).''.
    (e) Effective Date.--The amendments made by this section shall 
apply to losses arising in taxable years beginning after December 31, 
2007, in connection with disasters declared after such date.
    SEC. 709. WAIVER OF CERTAIN MORTGAGE REVENUE BOND REQUIREMENTS 
      FOLLOWING FEDERALLY DECLARED DISASTERS.
    (a) In General.--Subsection (k) of section 143 is amended by adding 
at the end the following new paragraph:
        ``(12) Special rules for residences destroyed in federally 
    declared disasters.--
            ``(A) Principal residence destroyed.--At the election of 
        the taxpayer, if the principal residence (within the meaning of 
        section 121) of such taxpayer is--
                ``(i) rendered unsafe for use as a residence by reason 
            of a federally declared disaster occurring before January 
            1, 2010, or
                ``(ii) demolished or relocated by reason of an order of 
            the government of a State or political subdivision thereof 
            on account of a federally declared disaster occurring 
            before such date,
        then, for the 2-year period beginning on the date of the 
        disaster declaration, subsection (d)(1) shall not apply with 
        respect to such taxpayer and subsection (e) shall be applied by 
        substituting `110' for `90' in paragraph (1) thereof.
            ``(B) Principal residence damaged.--
                ``(i) In general.--At the election of the taxpayer, if 
            the principal residence (within the meaning of section 121) 
            of such taxpayer was damaged as the result of a federally 
            declared disaster occurring before January 1, 2010, any 
            owner-financing provided in connection with the repair or 
            reconstruction of such residence shall be treated as a 
            qualified rehabilitation loan.
                ``(ii) Limitation.--The aggregate owner-financing to 
            which clause (i) applies shall not exceed the lesser of--

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

            ``(C) Federally declared disaster.--For purposes of this 
        paragraph, the term `federally declared disaster' has the 
        meaning given such term by section 165(h)(3)(C)(i).
            ``(D) Election; denial of double benefit.--
                ``(i) Election.--An election under this paragraph may 
            not be revoked except with the consent of the Secretary.
                ``(ii) Denial of double benefit.--If a taxpayer elects 
            the application of this paragraph, paragraph (11) shall not 
            apply with respect to the purchase or financing of any 
            residence by such taxpayer.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to disasters occurring after December 31, 2007.
    SEC. 710. SPECIAL DEPRECIATION ALLOWANCE FOR QUALIFIED DISASTER 
      PROPERTY.
    (a) In General.--Section 168, as amended by this Act, is amended by 
adding at the end the following new subsection:
    ``(n) Special Allowance for Qualified Disaster Assistance 
Property.--
        ``(1) In general.--In the case of any qualified disaster 
    assistance property--
            ``(A) the depreciation deduction provided by section 167(a) 
        for the taxable year in which such property is placed in 
        service shall include an allowance equal to 50 percent of the 
        adjusted basis of the qualified disaster assistance property, 
        and
            ``(B) the adjusted basis of the qualified disaster 
        assistance property shall be reduced by the amount of such 
        deduction before computing the amount otherwise allowable as a 
        depreciation deduction under this chapter for such taxable year 
        and any subsequent taxable year.
        ``(2) Qualified disaster assistance property.--For purposes of 
    this subsection--
            ``(A) In general.--The term `qualified disaster assistance 
        property' means any property--
                ``(i)(I) which is described in subsection (k)(2)(A)(i), 
            or
                ``(II) which is nonresidential real property or 
            residential rental property,
                ``(ii) substantially all of the use of which is--

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

                ``(iii) which--

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

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

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

                ``(ii) Alternative depreciation property.--The term 
            `qualified disaster assistance property' shall not include 
            any property to which the alternative depreciation system 
            under subsection (g) applies, determined without regard to 
            paragraph (7) of subsection (g) (relating to election to 
            have system apply).
                ``(iii) Tax-exempt bond financed property.--Such term 
            shall not include any property any portion of which is 
            financed with the proceeds of any obligation the interest 
            on which is exempt from tax under section 103.
                ``(iv) Qualified revitalization buildings.--Such term 
            shall not include any qualified revitalization building 
            with respect to which the taxpayer has elected the 
            application of paragraph (1) or (2) of section 1400I(a).
                ``(v) Election out.--If a taxpayer makes an election 
            under this clause with respect to any class of property for 
            any taxable year, this subsection shall not apply to all 
            property in such class placed in service during such 
            taxable year.
            ``(C) Special rules.--For purposes of this subsection, 
        rules similar to the rules of subparagraph (E) of subsection 
        (k)(2) shall apply, except that such subparagraph shall be 
        applied--
                ``(i) by substituting `the applicable disaster date' 
            for `December 31, 2007' each place it appears therein,
                ``(ii) without regard to `and before January 1, 2009' 
            in clause (i) thereof, and
                ``(iii) by substituting `qualified disaster assistance 
            property' for `qualified property' in clause (iv) thereof.
            ``(D) Allowance against alternative minimum tax.--For 
        purposes of this subsection, rules similar to the rules of 
        subsection (k)(2)(G) shall apply.
        ``(3) Other definitions.--For purposes of this subsection--
            ``(A) Applicable disaster date.--The term `applicable 
        disaster date' means, with respect to any federally declared 
        disaster, the date on which such federally declared disaster 
        occurs.
            ``(B) Federally declared disaster.--The term `federally 
        declared disaster' has the meaning given such term under 
        section 165(h)(3)(C)(i).
            ``(C) Disaster area.--The term `disaster area' has the 
        meaning given such term under section 165(h)(3)(C)(ii).
            ``(D) Eligible taxpayer.--The term `eligible taxpayer' 
        means a taxpayer who has suffered an economic loss attributable 
        to a federally declared disaster.
        ``(4) Recapture.--For purposes of this subsection, rules 
    similar to the rules under section 179(d)(10) shall apply with 
    respect to any qualified disaster assistance property which ceases 
    to be qualified disaster assistance property.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2007, with respect 
disasters declared after such date.
    SEC. 711. INCREASED EXPENSING FOR QUALIFIED DISASTER ASSISTANCE 
      PROPERTY.
    (a) In General.--Section 179 is amended by adding at the end the 
following new subsection:
    ``(e) Special Rules for Qualified Disaster Assistance Property.--
        ``(1) In general.--For purposes of this section--
            ``(A) the dollar amount in effect under subsection (b)(1) 
        for the taxable year shall be increased by the lesser of--
                ``(i) $100,000, or
                ``(ii) the cost of qualified section 179 disaster 
            assistance property placed in service during the taxable 
            year, and
            ``(B) the dollar amount in effect under subsection (b)(2) 
        for the taxable year shall be increased by the lesser of--
                ``(i) $600,000, or
                ``(ii) the cost of qualified section 179 disaster 
            assistance property placed in service during the taxable 
            year.
        ``(2) Qualified section 179 disaster assistance property.--For 
    purposes of this subsection, the term `qualified section 179 
    disaster assistance property' means section 179 property (as 
    defined in subsection (d)) which is qualified disaster assistance 
    property (as defined in section 168(n)(2)).
        ``(3) Coordination with empowerment zones and renewal 
    communities.--For purposes of sections 1397A and 1400J, qualified 
    section 179 disaster assistance property shall not be treated as 
    qualified zone property or qualified renewal property, unless the 
    taxpayer elects not to take such qualified section 179 disaster 
    assistance property into account for purposes of this subsection.
        ``(4) Recapture.--For purposes of this subsection, rules 
    similar to the rules under subsection (d)(10) shall apply with 
    respect to any qualified section 179 disaster assistance property 
    which ceases to be qualified section 179 disaster assistance 
    property.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2007, with respect 
disasters declared after such date.
    SEC. 712. COORDINATION WITH HEARTLAND DISASTER RELIEF.
    The amendments made by this subtitle, other than the amendments 
made by sections 706(a)(2), 710, and 711, shall not apply to any 
disaster described in section 702(c)(1)(A), or to any expenditure or 
loss resulting from such disaster.

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

    SEC. 801. NONQUALIFIED DEFERRED COMPENSATION FROM CERTAIN TAX 
      INDIFFERENT PARTIES.
    (a) In General.--Subpart B of part II of subchapter E of chapter 1 
is amended by inserting after section 457 the following new section:
``SEC. 457A. NONQUALIFIED DEFERRED COMPENSATION FROM CERTAIN TAX 
INDIFFERENT PARTIES.
    ``(a) In General.--Any compensation which is deferred under a 
nonqualified deferred compensation plan of a nonqualified entity shall 
be includible in gross income when there is no substantial risk of 
forfeiture of the rights to such compensation.
    ``(b) Nonqualified Entity.--For purposes of this section, the term 
`nonqualified entity' means--
        ``(1) any foreign corporation unless substantially all of its 
    income is--
            ``(A) effectively connected with the conduct of a trade or 
        business in the United States, or
            ``(B) subject to a comprehensive foreign income tax, and
        ``(2) any partnership unless substantially all of its income is 
    allocated to persons other than--
            ``(A) foreign persons with respect to whom such income is 
        not subject to a comprehensive foreign income tax, and
            ``(B) organizations which are exempt from tax under this 
        title.
    ``(c) Determinability of Amounts of Compensation.--
        ``(1) In general.--If the amount of any compensation is not 
    determinable at the time that such compensation is otherwise 
    includible in gross income under subsection (a)--
            ``(A) such amount shall be so includible in gross income 
        when determinable, and
            ``(B) the tax imposed under this chapter for the taxable 
        year in which such compensation is includible in gross income 
        shall be increased by the sum of--
                ``(i) the amount of interest determined under paragraph 
            (2), and
                ``(ii) an amount equal to 20 percent of the amount of 
            such compensation.
        ``(2) Interest.--For purposes of paragraph (1)(B)(i), the 
    interest determined under this paragraph for any taxable year is 
    the amount of interest at the underpayment rate under section 6621 
    plus 1 percentage point on the underpayments that would have 
    occurred had the deferred compensation been includible in gross 
    income for the taxable year in which first deferred or, if later, 
    the first taxable year in which such deferred compensation is not 
    subject to a substantial risk of forfeiture.
    ``(d) Other Definitions and Special Rules.--For purposes of this 
section--
        ``(1) Substantial risk of forfeiture.--
            ``(A) In general.--The rights of a person to compensation 
        shall be treated as subject to a substantial risk of forfeiture 
        only if such person's rights to such compensation are 
        conditioned upon the future performance of substantial services 
        by any individual.
            ``(B) Exception for compensation based on gain recognized 
        on an investment asset.--
                ``(i) In general.--To the extent provided in 
            regulations prescribed by the Secretary, if compensation is 
            determined solely by reference to the amount of gain 
            recognized on the disposition of an investment asset, such 
            compensation shall be treated as subject to a substantial 
            risk of forfeiture until the date of such disposition.
                ``(ii) Investment asset.--For purposes of clause (i), 
            the term `investment asset' means any single asset (other 
            than an investment fund or similar entity)--

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

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

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

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

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.
```