127 
‘‘(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 Reconcili-
ation Act of 1990)) for the taxable 
year, or 
‘‘(II) any loss for the taxable year 
which arises from fire, storm, ship-
wreck, 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 enact-
ment of the Energy Improvement and Ex-
tension Act of 2008.’’. 
(c) CARRYBACK
AND CARRYOVER
OF DISALLOWED 
CREDITS.—Section 907(f) (relating to carryback and carry-
over 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
128 
(2) by adding at the end the following new para-
graph: 
‘‘(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 un-
used 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 extrac-
tion 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 sub-
paragraph (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 En-
ergy Improvement and Extension Act of 2008 
shall be treated as being in effect for any pre-
129 
ceding year beginning before January 1, 2009, 
solely for purposes of determining how much of 
the unused foreign oil and gas taxes for such un-
used 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 in-
serting ‘‘foreign oil and gas taxes’’. 
(e) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2008. 
SEC. 403. BROKER REPORTING OF CUSTOMER’S BASIS IN 
SECURITIES TRANSACTIONS. 
(a) IN GENERAL.— 
(1) BROKER REPORTING FOR SECURITIES TRANS-
ACTIONS.—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 re-
quired to make a return under subsection (a) with re-
spect to the gross proceeds of the sale of a covered se-
curity, the broker shall include in such return the in-
formation described in paragraph (2). 
‘‘(2) ADDITIONAL INFORMATION REQUIRED.—
130 
‘‘(A) IN
GENERAL.—The information re-
quired under paragraph (1) to be shown on a re-
turn with respect to a covered security of a cus-
tomer 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 ad-
justed basis shall be determined— 
‘‘(I) in the case of any security 
(other than any stock for which an av-
erage 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 identi-
fication of the stock sold or transferred, 
and 
‘‘(II) in the case of any stock for 
which an average basis method is per-
missible under section 1012, in accord-
ance with the broker’s default method 
unless the customer notifies the broker
131 
that he elects another acceptable meth-
od 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 Sec-
retary, 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 secu-
rity’ means any specified security acquired on or 
after the applicable date if such security— 
‘‘(i) was acquired through a trans-
action 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 re-
ceived a statement under section 6045A 
with respect to the transfer.
132 
‘‘(B) 
SPECIFIED
SECURITY.—The 
term 
‘specified security’ means— 
‘‘(i) any share of stock in a corpora-
tion, 
‘‘(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 deter-
mines that adjusted basis reporting is ap-
propriate for purposes of this subsection. 
‘‘(C) APPLICABLE DATE.—The term ‘appli-
cable 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 meth-
od is permissible under section 1012, and
133 
‘‘(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 pur-
poses 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 RE-
SPECT 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 dis-
posed 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
134 
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 se-
curity 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 sub-
section, the terms ‘covered security’ and ‘specified se-
curity’ 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—
135 
(i) by striking ‘‘at such time and’’, and 
(ii) by inserting after ‘‘other item.’’ the 
following new sentence: ‘‘The written state-
ment 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 re-
porting statement (as defined in regulations) 
with respect to any customer, any statement 
which would otherwise be required to be fur-
nished on or before January 31 of a calendar 
year with respect to any item reportable to the 
taxpayer shall instead be required to be fur-
nished on or before February 15 of such calendar 
year if furnished with such consolidated report-
ing statement.’’. 
(b) DETERMINATION OF BASIS OF CERTAIN SECURI-
TIES ON ACCOUNT BY ACCOUNT OR AVERAGE BASIS METH-
OD.—Section 1012 is amended— 
(1) by striking ‘‘The basis of property’’ and in-
serting the following: 
‘‘(a) IN GENERAL.—The basis of property’’,
136 
(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 sub-
sections: 
‘‘(c) DETERMINATIONS BY ACCOUNT.— 
‘‘(1) IN GENERAL.—In the case of the sale, ex-
change, or other disposition of a specified security on 
or after the applicable date, the conventions pre-
scribed by regulations under this section shall be ap-
plied 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 aver-
age 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 sub-
paragraph (A) elects to have this subparagraph 
apply with respect to one or more of its stock-
holders—
137 
‘‘(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 sen-
tence 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 PURSU-
ANT TO A DIVIDEND REINVESTMENT PLAN.— 
‘‘(1) IN GENERAL.—In the case of any stock ac-
quired 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 deter-
mining 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
138 
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 pur-
poses of this subsection— 
‘‘(A) IN GENERAL.—The term ‘dividend re-
investment 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 divi-
dends paid on such stock are subject to such 
plan.’’.
143 
retary 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 per-
son, 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 Assist-
ance Tax Act of 2008, is amended by redesig-
nating 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 re-
turns 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 re-
designating subparagraphs (J) through (EE) as 
subparagraphs (K) through (FF), respectively, 
and by inserting after subparagraph (I) the fol-
lowing new subparagraph:
144 
‘‘(J) subsections (c) and (e) of section 
6045B (relating to returns relating to actions af-
fecting basis of specified securities),’’. 
(3) CLERICAL AMENDMENT.—The table of sec-
tions 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 sec-
tion 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 sec-
tion 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 para-
graph (2) and inserting ‘‘calendar year 2010’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to wages paid after December 31, 2008.
145 
SEC. 405. INCREASE AND EXTENSION OF OIL SPILL LIABIL-
ITY TRUST FUND TAX. 
(a) INCREASE IN RATE.— 
(1) IN GENERAL.—Section 4611(c)(2)(B) (relat-
ing to rates) is amended by striking ‘‘is 5 cents a bar-
rel.’’ 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 financ-
ing 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 De-
cember 31, 2017.’’.
146 
(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 
B—TAX 
EXTENDERS 
AND ALTERNATIVE MINIMUM 
TAX RELIEF 
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; 
TABLE OF CONTENTS. 
(a) SHORT TITLE.—This division may be cited as the 
‘‘Tax Extenders and Alternative Minimum Tax Relief Act 
of 2008’’. 
(b) AMENDMENT OF 1986 CODE.—Except as otherwise 
expressly provided, whenever in this division an amend-
ment 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: 
DIVISION B—TAX EXTENDERS AND ALTERNATIVE MINIMUM TAX 
RELIEF 
Sec. 1. Short title; amendment of 1986 Code; table of contents.
147 
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 contribu-
tions 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 pro-
duction 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 em-
ployees. 
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.
148 
Sec. 324. Extension of enhanced charitable deduction for contributions of book in-
ventory. 
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 re-
lief 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 feder-
ally declared disasters. 
Sec. 710. Special depreciation allowance for qualified disaster property. 
Sec. 711. Increased expensing for qualified disaster assistance property.
149 
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 RE-
LIEF 
FOR 
NONREFUNDABLE 
PERSONAL 
CREDITS. 
(a) IN GENERAL.—Paragraph (2) of section 26(a) (re-
lating 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 Decem-
ber 31, 2007. 
SEC. 102. EXTENSION OF INCREASED ALTERNATIVE MIN-
IMUM TAX EXEMPTION AMOUNT. 
(a) IN GENERAL.—Paragraph (1) of section 55(d) (re-
lating 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 begin-
ning in 2008)’’, and
150 
(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 begin-
ning in 2008)’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2007. 
SEC. 103. INCREASE OF AMT REFUNDABLE CREDIT AMOUNT 
FOR INDIVIDUALS WITH LONG-TERM UNUSED 
CREDITS FOR PRIOR YEAR MINIMUM TAX LI-
ABILITY, 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 un-
used 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 re-
fundable credit amount determined under this 
paragraph for the taxpayer’s preceding taxable
151 
year (determined without regard to subsection 
(f)(2)).’’. 
(b) TREATMENT OF CERTAIN UNDERPAYMENTS, IN-
TEREST, AND PENALTIES ATTRIBUTABLE TO THE TREAT-
MENT
OF INCENTIVE STOCK OPTIONS.—Section 53 is 
amended by adding at the end the following new subsection: 
‘‘(f) TREATMENT OF CERTAIN UNDERPAYMENTS, IN-
TEREST, AND PENALTIES ATTRIBUTABLE TO THE TREAT-
MENT OF INCENTIVE STOCK OPTIONS.— 
‘‘(1) ABATEMENT.—Any underpayment of tax 
outstanding on the date of the enactment of this sub-
section which is attributable to the application of sec-
tion 56(b)(3) for any taxable year ending before Jan-
uary 1, 2008, and any interest or penalty with re-
spect 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 INTER-
EST AND PENALTIES ALREADY PAID.—The AMT re-
fundable 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 ag-
gregate amount of the interest and penalties which
152 
were paid by the taxpayer before the date of the enact-
ment 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 para-
graph (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 en-
actment 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 Decem-
ber 31, 2007. 
SEC. 202. DEDUCTION OF QUALIFIED TUITION AND RE-
LATED EXPENSES. 
(a) IN GENERAL.—Subsection (e) of section 222 (relat-
ing to termination) is amended by striking ‘‘December 31, 
2007’’ and inserting ‘‘December 31, 2009’’.
153 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2007. 
SEC. 203. DEDUCTION FOR CERTAIN EXPENSES OF ELEMEN-
TARY AND SECONDARY SCHOOL TEACHERS. 
(a) IN
GENERAL.—Subparagraph (D) of section 
62(a)(2) (relating to certain expenses of elementary and sec-
ondary school teachers) is amended by striking ‘‘or 2007’’ 
and inserting ‘‘2007, 2008, or 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to taxable years beginning after De-
cember 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 Decem-
ber 31, 2008.
157 
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 pre-
ceding 3 taxable years shall be the amount which 
bears the same ratio to such average qualified re-
search 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 para-
graph (2), the amendments made by this section shall 
apply to taxable years beginning after December 31, 
2007. 
(2) EXTENSION.—The amendments made by sub-
section (a) shall apply to amounts paid or incurred 
after December 31, 2007.
158 
SEC. 302. NEW MARKETS TAX CREDIT. 
Subparagraph (D) of section 45D(f)(1) (relating to na-
tional 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 insert-
ing ‘‘December 31, 2009’’. 
(b) EXCEPTION TO TREATMENT AS FOREIGN PER-
SONAL HOLDING COMPANY INCOME.—Paragraph (9) of sec-
tion 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
159 
of United States shareholders with or within which such 
taxable years of foreign corporations end. 
SEC. 305. EXTENSION OF 15-YEAR STRAIGHT-LINE COST RE-
COVERY FOR QUALIFIED LEASEHOLD IM-
PROVEMENTS AND QUALIFIED RESTAURANT 
IMPROVEMENTS; 
15-YEAR 
STRAIGHT-LINE 
COST RECOVERY FOR CERTAIN IMPROVE-
MENTS TO RETAIL SPACE. 
(a) EXTENSION OF LEASEHOLD AND RESTAURANT IM-
PROVEMENTS.— 
(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 insert-
ing ‘‘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 res-
taurant property’ means any section 1250 prop-
erty which is—
160 
‘‘(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 DEPRECIA-
TION.—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 serv-
ice after December 31, 2008. 
(c) RECOVERY PERIOD FOR DEPRECIATION OF CER-
TAIN IMPROVEMENTS TO RETAIL SPACE.— 
(1) 
15-YEAR
RECOVERY
PERIOD.—Section 
168(e)(3)(E) (relating to 15-year property) is amend-
ed by striking ‘‘and’’ at the end of clause (vii), by 
striking the period at the end of clause (viii) and in-
serting ‘‘, and’’, and by adding at the end the fol-
lowing new clause: 
‘‘(ix) any qualified retail improvement 
property placed in service after December 
31, 2008, and before January 1, 2010.’’.
161 
(2) QUALIFIED
RETAIL
IMPROVEMENT
PROP-
ERTY.—Section 168(e) is amended by adding at the 
end the following new paragraph: 
‘‘(8) QUALIFIED
RETAIL
IMPROVEMENT
PROP-
ERTY.— 
‘‘(A) IN GENERAL.—The term ‘qualified re-
tail improvement property’ means any improve-
ment 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 prop-
erty 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 para-
graph (6)(B) shall apply for purposes of the pre-
ceding sentence.
162 
‘‘(C) CERTAIN
IMPROVEMENTS
NOT
IN-
CLUDED.—Such term shall not include any im-
provement for which the expenditure is attrib-
utable to— 
‘‘(i) the enlargement of the building, 
‘‘(ii) any elevator or escalator, 
‘‘(iii) any structural component bene-
fitting a common area, or 
‘‘(iv) the internal structural framework 
of the building. 
‘‘(D) EXCLUSION FROM BONUS DEPRECIA-
TION.—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
163 
the item relating to subparagraph (E)(viii) the fol-
lowing 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 ORGA-
NIZATIONS. 
(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 CORPORA-
TIONS 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.
168 
‘‘(A) IN
GENERAL.—If for any calendar 
year— 
‘‘(i) the limitation amount for any 
State, exceeds 
‘‘(ii) the amount of bonds issued dur-
ing 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 fol-
lowing 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 un-
used limitation year. For purposes of the pre-
ceding 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)
169 
shall apply to such carryover taking into account 
the calendar years to which such carryover re-
lates. 
‘‘(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 edu-
cation 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, in-
crease 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 pro-
gram (as the case may be) will be subject to the 
same academic standards and assessments as 
other students educated by the eligible local edu-
cation agency, 
‘‘(C) the comprehensive education plan of 
such public school or program is approved by the 
eligible local education agency, and
170 
‘‘(D)(i) such public school is located in an 
empowerment zone or enterprise community (in-
cluding 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 estab-
lished under the National School Lunch Act. 
‘‘(2) ELIGIBLE LOCAL EDUCATION AGENCY.—For 
purposes of this section, the term ‘eligible local edu-
cation agency’ means any local educational agency as 
defined in section 9101 of the Elementary and Sec-
ondary 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 estab-
lished, 
‘‘(B) providing equipment for use at such 
academy,
171 
‘‘(C) developing course materials for edu-
cation to be provided at such academy, and 
‘‘(D) training teachers and other school per-
sonnel in such academy. 
‘‘(4) QUALIFIED
CONTRIBUTIONS.—The term 
‘qualified contribution’ means any contribution (of a 
type and quality acceptable to the eligible local edu-
cation 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 cur-
riculum or in training teachers in order to pro-
mote appropriate market driven technology in 
the classroom, 
‘‘(C) services of employees as volunteer men-
tors, 
‘‘(D) internships, field trips, or other edu-
cational 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
172 
of subparagraph (B), by inserting ‘‘or’’ at the end of 
subparagraph (C), and by inserting after subpara-
graph (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 add-
ing at the end the following new clause: 
‘‘(iv) in the case of a qualified zone 
academy bond, a purpose specified in sec-
tion 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.
176 
(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 DIS-
TRICT 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 De-
cember 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—
177 
(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 strik-
ing ‘‘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 CON-
TRIBUTIONS OF FOOD INVENTORY. 
(a) INCREASED AMOUNT OF DEDUCTION.—
178 
(1) 
IN
GENERAL.—Clause 
(iv) 
of 
section 
170(e)(3)(C) (relating to termination) is amended by 
striking ‘‘December 31, 2007’’ and inserting ‘‘Decem-
ber 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 be-
ginning 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 quali-
fied conservation contribution which is made by a 
qualified farmer or rancher and which otherwise 
meets the requirements of such paragraph.’’.
179 
(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 DEDUC-
TION FOR CONTRIBUTIONS OF BOOK INVEN-
TORY. 
(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 SUS-
PENSION ON WOOL PRODUCTS; WOOL RE-
SEARCH 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).
180 
(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 RE-
SEARCH 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’’.
181 
TITLE IV—EXTENSION OF TAX 
ADMINISTRATION PROVISIONS 
SEC. 401. PERMANENT AUTHORITY FOR UNDERCOVER OP-
ERATIONS. 
(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 IN-
FORMATION RELATING TO TERRORIST AC-
TIVITIES. 
(a) DISCLOSURE OF RETURN INFORMATION TO AP-
PRISE APPROPRIATE OFFICIALS OF TERRORIST ACTIVI-
TIES.—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 enact-
ment of this Act.
182 
TITLE V—ADDITIONAL TAX RE-
LIEF AND OTHER TAX PROVI-
SIONS 
Subtitle A—General Provisions 
SEC. 501. $8,500 INCOME THRESHOLD USED TO CALCULATE 
REFUNDABLE PORTION OF CHILD TAX CRED-
IT. 
(a) IN GENERAL.—Section 24(d) is amended by add-
ing at the end the following new paragraph: 
‘‘(4) SPECIAL RULE FOR 2008.—Notwithstanding 
paragraph (3), in the case of any taxable year begin-
ning 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 Decem-
ber 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) (re-
lating to termination) is amended by striking ‘‘December 
31, 2008’’ and inserting ‘‘December 31, 2009’’.
183 
(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.—Para-
graph (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 per-
sonnel, directors, and producers.’’. 
(2) DEFINITION
OF
QUALIFIED
FILM.—Para-
graph (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 dis-
tributing a qualified film shall not affect the avail-
ability of the deduction under this section.’’.
184 
(3) PARTNERSHIPS.—Subparagraph (A) of sec-
tion 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 corpora-
tion, 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 di-
rectly in any film produced by such 
partnership or S corporation, and 
‘‘(II) such partnership or S cor-
poration shall be treated as having en-
gaged 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 pro-
ducers.’’. 
(e) EFFECTIVE DATES.—
185 
(1) IN GENERAL.—Except as otherwise provided 
in this subsection, the amendments made by this sec-
tion shall apply to qualified film and television pro-
ductions commencing after December 31, 2007. 
(2) DEDUCTION.—The amendments made by sub-
section (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 subpara-
graph (C) and by inserting after subparagraph (A) the fol-
lowing 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 en-
hancing the spine of such shaft (whether sold sep-
arately or incorporated as part of a finished or 
unfinished product) of a type used in the manu-
facture of any arrow which after its assembly— 
‘‘(i) measures 5⁄16 of an inch or less in 
diameter, and
186 
‘‘(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 enact-
ment of this Act. 
SEC. 504. INCOME AVERAGING FOR AMOUNTS RECEIVED IN 
CONNECTION WITH THE EXXON VALDEZ LITI-
GATION. 
(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 (deter-
mined 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 busi-
ness for such taxable year. 
(b) CONTRIBUTIONS OF AMOUNTS RECEIVED TO RE-
TIREMENT ACCOUNTS.— 
(1) IN GENERAL.—Any qualified taxpayer who 
receives qualified settlement income during the tax-
able year may, at any time before the end of the tax-
able year in which such income was received, make
187 
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 eli-
gible retirement plan in prior taxable years pur-
suant to this subsection), or 
(B) the amount of qualified settlement in-
come received by the individual during the tax-
able 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 includ-
ing extensions thereof). 
(3) TREATMENT OF CONTRIBUTIONS TO ELIGIBLE 
RETIREMENT PLANS.—For purposes of the Internal 
Revenue Code of 1986, if a contribution is made pur-
suant to paragraph (1) with respect to qualified set-
tlement income, then— 
(A) except as provided in paragraph (4)—
188 
(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 consid-
ered to be investment in the contract, 
(B) the qualified taxpayer shall, to the ex-
tent of the amount of the contribution, be treat-
ed— 
(i) as having received the qualified set-
tlement income— 
(I) in the case of a contribution to 
an individual retirement plan (as de-
fined 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 eligi-
ble retirement plan, in an eligible roll-
over distribution (as defined under sec-
tion 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,
189 
(C) section 408(d)(3)(B) of the Internal 
Revenue Code of 1986 shall not apply with re-
spect 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 re-
spect 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 para-
graph (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 in-
vestment in the contract.
190 
(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 In-
ternal 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 treat-
ed as self-employment income. 
(2) FICA.—For purposes of chapter 21 of the In-
ternal 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 treat-
ed as wages. 
(d) QUALIFIED TAXPAYER.—For purposes of this sec-
tion, 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 es-
tate of such a plaintiff who— 
(A) acquired the right to receive qualified 
settlement income from that plaintiff; and
191 
(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 de-
fined in section 263A(e)(4)), the original 
use of which commences with the taxpayer
192 
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 De-
cember 31, 2008. 
SEC. 506. MODIFICATION OF PENALTY ON UNDERSTATE-
MENT OF TAXPAYER’S LIABILITY BY TAX RE-
TURN PREPARER. 
(a) IN GENERAL.—Subsection (a) of section 6694 is 
amended to read as follows: 
‘‘(a) UNDERSTATEMENT DUE TO UNREASONABLE PO-
SITIONS.— 
‘‘(1) IN GENERAL.—If a tax return preparer— 
‘‘(A) prepares any return or claim of refund 
with respect to which any part of an understate-
ment of liability is due to a position described 
in paragraph (2), and 
‘‘(B) knew (or reasonably should have 
known) of the position,
193 
such tax return preparer shall pay a penalty with re-
spect to each such return or claim in an amount 
equal to the greater of $1,000 or 50 percent of the in-
come derived (or to be derived) by the tax return pre-
parer with respect to the return or claim. 
‘‘(2) UNREASONABLE POSITION.— 
‘‘(A) IN
GENERAL.—Except as otherwise 
provided in this paragraph, a position is de-
scribed in this paragraph unless there is or was 
substantial authority for the position. 
‘‘(B) DISCLOSED POSITIONS.—If the posi-
tion 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 rea-
sonable 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 de-
scribed in this paragraph unless it is reasonable 
to believe that the position would more likely 
than not be sustained on its merits.
194 
‘‘(3) REASONABLE CAUSE EXCEPTION.—No pen-
alty shall be imposed under this subsection if it is 
shown that there is reasonable cause for the under-
statement 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 posi-
tion 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’’.
195 
SEC. 512. MENTAL HEALTH PARITY. 
(a) AMENDMENTS TO ERISA.—Section 712 of the Em-
ployee 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 appli-
cable to such mental health or substance use 
disorder benefits are no more restrictive 
than the predominant financial require-
ments 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 sub-
stance use disorder benefits; and 
‘‘(ii) the treatment limitations applica-
ble to such mental health or substance use
196 
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 treat-
ment 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 ag-
gregate lifetime limit and an annual limit 
subject to paragraphs (1) and (2), 
‘‘(ii) PREDOMINANT.—A financial re-
quirement or treatment limit is considered 
to be predominant if it is the most common 
or frequent of such type of limit or require-
ment. 
‘‘(iii) TREATMENT
LIMITATION.—The 
term ‘treatment limitation’ includes limits 
on the frequency of treatment, number of 
visits, days of coverage, or other similar
197 
limits on the scope or duration of treat-
ment. 
‘‘(4) AVAILABILITY OF PLAN INFORMATION.—The 
criteria for medical necessity determinations made 
under the plan with respect to mental health or sub-
stance use disorder benefits (or the health insurance 
coverage offered in connection with the plan with re-
spect to such benefits) shall be made available by the 
plan administrator (or the health insurance issuer of-
fering 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 reimburse-
ment 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 ac-
cordance 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 cov-
erage for medical or surgical benefits provided by out-
198 
of-network providers, the plan or coverage shall pro-
vide coverage for mental health or substance use dis-
order 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 condi-
tions of the plan or coverage relating to such benefits 
under the plan or coverage, except as provided in sub-
section (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 per-
mits small groups to include a single indi-
vidual)’’ 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
201 
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 de-
scribed under subparagraph (C), qualifies 
for an exemption under this paragraph, 
and elects to implement the exemption, shall 
promptly notify the Secretary, the appro-
priate State agencies, and participants and 
beneficiaries in the plan of such election. 
‘‘(ii) REQUIREMENT.—A notification 
to the Secretary under clause (i) shall in-
clude— 
‘‘(I) a description of the number 
of covered lives under the plan (or cov-
erage) involved at the time of the noti-
fication, and as applicable, at the time 
of any prior election of the cost-exemp-
tion under this paragraph by such 
plan (or coverage);
202 
‘‘(II) for both the plan year upon 
which a cost exemption is sought and 
the year prior, a description of the ac-
tual total costs of coverage with respect 
to medical and surgical benefits and 
mental health and substance use dis-
order 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 notifica-
tion 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 in-
cludes— 
‘‘(I) a breakdown of States by the 
size and type of employers submitting 
such notification; and 
‘‘(II) a summary of the data re-
ceived under clause (ii).
203 
‘‘(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 actu-
arial reports prepared pursuant to subparagraph 
(C), during the 6 year period following the noti-
fication 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 applica-
ble Federal and State law. 
‘‘(5) SUBSTANCE
USE
DISORDER
BENEFITS.— 
The term ‘substance use disorder benefits’ means bene-
fits with respect to services for substance use dis-
orders, as defined under the terms of the plan and in 
accordance with applicable Federal and State law.’’; 
(5) by striking subsection (f);
204 
(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 com-
pliance of group health plans (and health insurance cov-
erage offered in connection with such plans) with the re-
quirements of this section. Such report shall include the re-
sults 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 co-
operation with the Secretaries of Health and Human Serv-
ices 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 In-
surance Commissioners concerning the requirements of this 
section and shall provide assistance concerning such re-
quirements and the continued operation of applicable State 
law. Such guidance and information shall inform partici-
pants and beneficiaries of how they may obtain assistance 
under this section, including, where appropriate, assistance 
from State consumer and insurance agencies.’’;
205 
(7) by striking ‘‘mental health benefits’’ and in-
serting ‘‘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 in-
serting ‘‘mental health or substance use disorder bene-
fits’’ each place it appears (other than in any provi-
sion 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 appli-
cable to such mental health or substance use 
disorder benefits are no more restrictive
206 
than the predominant financial require-
ments 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 sub-
stance use disorder benefits; and 
‘‘(ii) the treatment limitations applica-
ble 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 treat-
ment 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 ag-
gregate lifetime limit and an annual limit 
subject to paragraphs (1) and (2).
210 
erage) 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) in-
volved regardless of any increase in total costs. 
‘‘(B) APPLICABLE PERCENTAGE.—With re-
spect to a plan (or coverage), the applicable per-
centage 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 sub-
sequent 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 re-
port 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
211 
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 para-
graph, 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 de-
scribed under subparagraph (C), qualifies 
for an exemption under this paragraph, 
and elects to implement the exemption, shall 
promptly notify the Secretary, the appro-
priate State agencies, and participants and 
beneficiaries in the plan of such election. 
‘‘(ii) REQUIREMENT.—A notification 
to the Secretary under clause (i) shall in-
clude—
212 
‘‘(I) a description of the number 
of covered lives under the plan (or cov-
erage) involved at the time of the noti-
fication, and as applicable, at the time 
of any prior election of the cost-exemp-
tion 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 ac-
tual total costs of coverage with respect 
to medical and surgical benefits and 
mental health and substance use dis-
order 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 notifica-
tion 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
213 
itemization of such notifications, that in-
cludes— 
‘‘(I) a breakdown of States by the 
size and type of employers submitting 
such notification; and 
‘‘(II) a summary of the data re-
ceived 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 actu-
arial reports prepared pursuant to subparagraph 
(C), during the 6 year period following the noti-
fication 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
214 
the terms of the plan and in accordance with applica-
ble Federal and State law. 
‘‘(5) SUBSTANCE
USE
DISORDER
BENEFITS.— 
The term ‘substance use disorder benefits’ means bene-
fits with respect to services for substance use dis-
orders, 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 in-
serting ‘‘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 in-
serting ‘‘mental health or substance use disorder bene-
fits’’ each place it appears (other than in any provi-
sion 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.—
215 
‘‘(A) IN GENERAL.—In the case of a group 
health plan that provides both medical and sur-
gical benefits and mental health or substance use 
disorder benefits, such plan shall ensure that— 
‘‘(i) the financial requirements appli-
cable to such mental health or substance use 
disorder benefits are no more restrictive 
than the predominant financial require-
ments applied to substantially all medical 
and surgical benefits covered by the plan, 
and there are no separate cost sharing re-
quirements that are applicable only with re-
spect to mental health or substance use dis-
order benefits; and 
‘‘(ii) the treatment limitations applica-
ble 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 ben-
efits. 
‘‘(B) DEFINITIONS.—In this paragraph:
216 
‘‘(i) FINANCIAL
REQUIREMENT.—The 
term 
‘financial 
requirement’ 
includes 
deductibles, copayments, coinsurance, and 
out-of-pocket expenses, but excludes an ag-
gregate lifetime limit and an annual limit 
subject to paragraphs (1) and (2), 
‘‘(ii) PREDOMINANT.—A financial re-
quirement or treatment limit is considered 
to be predominant if it is the most common 
or frequent of such type of limit or require-
ment. 
‘‘(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 treat-
ment. 
‘‘(4) AVAILABILITY OF PLAN INFORMATION.—The 
criteria for medical necessity determinations made 
under the plan with respect to mental health or sub-
stance use disorder benefits shall be made available by 
the plan administrator in accordance with regula-
tions to any current or potential participant, bene-
ficiary, or contracting provider upon request. The 
reason for any denial under the plan of reimburse-
217 
ment 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 ac-
cordance 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-net-
work 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 pro-
vides mental health or substance use disorder benefits, 
as affecting the terms and conditions of the plan re-
lating to such benefits under the plan, except as pro-
vided in subsection (a).’’; 
(3) in subsection (c)— 
(A) by amending paragraph (1) to read as 
follows:
218 
‘‘(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 aver-
age 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 pre-
ceding calendar year. For purposes of the pre-
ceding 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
219 
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 ex-
ceeds the applicable percentage described in sub-
paragraph (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 re-
spect to a plan, the applicable percentage de-
scribed 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 sub-
sequent plan year. 
‘‘(C) DETERMINATIONS
BY
ACTUARIES.— 
Determinations as to increases in actual costs 
under a plan for purposes of this section shall be
220 
made and certified by a qualified and licensed 
actuary who is a member in good standing of the 
American Academy of Actuaries. All such deter-
minations 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 pe-
riod 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 de-
scribed under subparagraph (C), qualifies 
for an exemption under this paragraph, 
and elects to implement the exemption, shall 
promptly notify the Secretary, the appro-
priate State agencies, and participants and 
beneficiaries in the plan of such election.
221 
‘‘(ii) REQUIREMENT.—A notification 
to the Secretary under clause (i) shall in-
clude— 
‘‘(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 ac-
tual total costs of coverage with respect 
to medical and surgical benefits and 
mental health and substance use dis-
order 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 notifica-
tion to the Secretary under clause (i) shall 
be confidential. The Secretary shall make
222 
available, upon request and on not more 
than an annual basis, an anonymous 
itemization of such notifications, that in-
cludes— 
‘‘(I) a breakdown of States by the 
size and type of employers submitting 
such notification; and 
‘‘(II) a summary of the data re-
ceived 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 pursu-
ant to subparagraph (C), during the 6 year pe-
riod following the notification of such exemption 
under subparagraph (E). A State agency receiv-
ing a notification under subparagraph (E) may 
also conduct such an audit with respect to an ex-
emption 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
223 
the terms of the plan and in accordance with applica-
ble Federal and State law. 
‘‘(5) SUBSTANCE
USE
DISORDER
BENEFITS.— 
The term ‘substance use disorder benefits’ means bene-
fits with respect to services for substance use dis-
orders, 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 in-
serting ‘‘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 in-
serting ‘‘mental health or substance use disorder bene-
fits’’ each place it appears (other than in any provi-
sion 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 sub-
sections (a), (b), and (c), respectively. 
(e) EFFECTIVE DATE.— 
(1) IN
GENERAL.—The amendments made by 
this section shall apply with respect to group health
224 
plans for plan years beginning after the date that is 
1 year after the date of enactment of this Act, regard-
less 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 sun-
set 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 bar-
gaining 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 collec-
tive 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 amend-
ment made pursuant to a collective bargaining agree-
ment relating to the plan which amends the plan sole-
ly to conform to any requirement added by this sec-
225 
tion shall not be treated as a termination of such col-
lective 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 exe-
cution or revision of an interagency memorandum of under-
standing 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 respon-
sibility 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:
226 
‘‘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 in-
serting 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.’’.
227 
(h) GAO STUDY ON COVERAGE AND EXCLUSION OF 
MENTAL HEALTH AND SUBSTANCE USE DISORDER DIAG-
NOSES.— 
(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 in-
surance. 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 spe-
cific 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
228 
Congress a report on the results of the study con-
ducted 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-De-
termination 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: 
‘‘SECTION 1. SHORT TITLE. 
‘‘This Act may be cited as the ‘Secure Rural Schools 
and Community Self-Determination Act of 2000’. 
‘‘SEC. 2. PURPOSES. 
‘‘The purposes of this Act are— 
‘‘(1) to stabilize and transition payments to 
counties to provide funding for schools and roads that 
supplements other available funds; 
‘‘(2) to make additional investments in, and cre-
ate additional employment opportunities through, 
projects that— 
‘‘(A)(i) improve the maintenance of existing 
infrastructure;
229 
‘‘(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 main-
tenance; 
‘‘(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 spe-
cies; and 
‘‘(3) 
to 
improve 
cooperative 
relationships 
among— 
‘‘(A) the people that use and care for Fed-
eral land; and 
‘‘(B) the agencies that manage the Federal 
land.
230 
‘‘SEC. 3. DEFINITIONS. 
‘‘In this Act: 
‘‘(1) ADJUSTED
SHARE.—The term ‘adjusted 
share’ means the number equal to the quotient ob-
tained by dividing— 
‘‘(A) the number equal to the quotient ob-
tained by dividing— 
‘‘(i) the base share for the eligible coun-
ty; by 
‘‘(ii) the income adjustment for the eli-
gible 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 safe-
231 
ty net payments made to each eligible State 
for each eligible county during the eligi-
bility 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 pay-
ment’ means the payment for an eligible county cal-
culated 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.
232 
‘‘(7) FEDERAL LAND.—The term ‘Federal land’ 
means— 
‘‘(A) land within the National Forest Sys-
tem, 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 Na-
tional 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 De-
partment 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—
233 
‘‘(A) the number equal to the quotient ob-
tained by dividing— 
‘‘(i) the 50-percent base share for the 
eligible county; by 
‘‘(ii) the income adjustment for the eli-
gible 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 av-
erage 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
234 
‘‘(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-per-
cent payment’ means the payment that is the sum of 
the 50-percent share otherwise paid to a county pur-
suant to title II of the Act of August 28, 1937 (chap-
ter 876; 50 Stat. 875; 43 U.S.C. 1181f), and the pay-
ment 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 pre-
ceding 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
235 
‘‘(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 re-
cent 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 ‘Sec-
retary concerned’ means— 
‘‘(A) the Secretary of Agriculture or the des-
ignee 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 des-
ignee of the Secretary of the Interior with respect 
to the Federal land described in paragraph 
(7)(B). 
‘‘(16) STATE PAYMENT.—The term ‘State pay-
ment’ means the payment for an eligible State cal-
culated under section 101(a).
236 
‘‘(17) 25-PERCENT PAYMENT.—The term ‘25-per-
cent payment’ means the payment to States required 
by the sixth paragraph under the heading of ‘FOR-
EST 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
237 
‘‘(2) the full funding amount for the fiscal year. 
‘‘SEC. 102. PAYMENTS TO STATES AND COUNTIES. 
‘‘(a) PAYMENT AMOUNTS.—Except as provided in sec-
tion 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 ter-
ritory for— 
‘‘(A) if the county is eligible for the 25-per-
cent payment, the share of the 25-percent pay-
ment; 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-per-
cent 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 pay-
ment, a share of the State payment and the 
county payment, a share of the 25-percent pay-
238 
ment, 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 deter-
mines is practicable), and August 1 of each sec-
ond 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 elec-
tion 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 re-
ceive 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
239 
for all subsequent fiscal years through fiscal year 
2011. 
‘‘(3) SOURCE OF PAYMENT AMOUNTS.—The pay-
ment 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 mis-
cellaneous receipts, exclusive of deposits to any 
relevant trust fund, special account, or perma-
nent 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
PAY-
MENTS.— 
‘‘(1) DISTRIBUTION METHOD.—A State that re-
ceives 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—
240 
‘‘(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 sub-
section (d), payments received by a State under sub-
section (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 COUN-
TIES.— 
‘‘(1) ALLOCATIONS.— 
‘‘(A) USE OF PORTION IN SAME MANNER AS 
25-PERCENT PAYMENT OR 50-PERCENT PAYMENT, 
AS APPLICABLE.—Except as provided in para-
graph (3)(B), if an eligible county elects to re-
ceive its share of the State payment or the coun-
ty payment, not less than 80 percent, but not 
more than 85 percent, of the funds shall be ex-
pended in the same manner in which the 25-per-
cent payments or 50-percent payment, as appli-
cable, are required to be expended. 
‘‘(B) ELECTION AS TO USE OF BALANCE.— 
Except as provided in subparagraph (C), an eli-
gible county shall elect to do 1 or more of the fol-
241 
lowing with the balance of any funds not ex-
pended 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
DISTRIBU-
TIONS.—In the case of each eligible county to 
which more than $100,000, but less than 
$350,000, is distributed for any fiscal year pur-
suant 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;
242 
‘‘(II) carrying out projects under 
title III; or 
‘‘(III) a combination of the pur-
poses described in subclauses (I) and 
(II); or 
‘‘(ii) return the portion of the balance 
not reserved under clause (i) to the Treas-
ury 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 ac-
count 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 appro-
priation; 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
243 
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 suc-
ceeding fiscal year. 
‘‘(ii) FAILURE TO ELECT.—Except as 
provided in subparagraph (B), if the eligi-
ble 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
DISTRIBU-
TIONS.—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 para-
graphs (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.
244 
‘‘(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 eli-
gible 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 eli-
gible 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 eli-
245 
gible 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 eli-
gible 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 eli-
gible 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 eli-
gible counties in the State of Oregon that 
have elected under section 102(b) to receive 
the county payment for fiscal year 2010.
246 
‘‘(2) COVERED STATE.—The term ‘covered State’ 
means each of the States of California, Louisiana, Or-
egon, 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 sub-
section (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 eli-
gible counties in the State of California in the same propor-
tion 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).
247 
‘‘(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 con-
sidered 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 ‘par-
ticipating county’ means an eligible county that elects 
under section 102(d) to expend a portion of the Fed-
eral 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
248 
‘‘(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 Bu-
reau of Land Management for units of the Fed-
eral 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, restora-
tion, and enhancement of fish and wildlife habitat, and
249 
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 SEC-
RETARY 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 fis-
cal year 2011, each resource advisory committee shall 
submit to the Secretary concerned a description of 
any projects that the resource advisory committee pro-
poses the Secretary undertake using any project funds 
reserved by eligible counties in the area in which the 
resource advisory committee has geographic jurisdic-
tion. 
‘‘(2) PROJECTS FUNDED USING OTHER FUNDS.— 
A resource advisory committee may submit to the Sec-
retary 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 ap-
250 
propriated 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 sub-
mitting proposed projects to the Secretary concerned under 
subsection (a), a resource advisory committee shall include 
in the description of each proposed project the following in-
formation: 
‘‘(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 condi-
tions, maintenance objectives, or stewardship objec-
tives. 
‘‘(B) An estimate of the amount of any timber, 
forage, and other commodities and other economic ac-
251 
tivity, including jobs generated, if any, anticipated as 
part of the project. 
‘‘(6) A detailed monitoring plan, including fund-
ing 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 fol-
lowing: 
‘‘(i) Whether or not the project met or 
exceeded desired ecological conditions; cre-
ated local employment or training opportu-
nities, including summer youth jobs pro-
grams such as the Youth Conservation 
Corps where appropriate. 
‘‘(ii) Whether the project improved the 
use of, or added value to, any products re-
moved from land consistent with the pur-
poses 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.
252 
‘‘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 com-
mittee under section 203 only if the proposed project satis-
fies 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 re-
source 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 con-
cerned in accordance with section 203. 
‘‘(5) The project will improve the maintenance of 
existing infrastructure, implement stewardship objec-
tives that enhance forest ecosystems, and restore and 
improve land health and water quality. 
‘‘(b) ENVIRONMENTAL REVIEWS.—
253 
‘‘(1) REQUEST FOR PAYMENT BY COUNTY.—The 
Secretary concerned may request the resource advi-
sory committee submitting a proposed project to agree 
to the use of project funds to pay for any environ-
mental review, consultation, or compliance with ap-
plicable 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 with-
drawal under subparagraph (A) shall be deemed 
to be a rejection of the project for purposes of sec-
tion 207(c). 
‘‘(c) DECISIONS OF SECRETARY CONCERNED.—
254 
‘‘(1) REJECTION OF PROJECTS.— 
‘‘(A) IN GENERAL.—A decision by the Sec-
retary concerned to reject a proposed project 
shall be at the sole discretion of the Secretary 
concerned. 
‘‘(B) NO ADMINISTRATIVE APPEAL OR JUDI-
CIAL REVIEW.—Notwithstanding any other pro-
vision of law, a decision by the Secretary con-
cerned to reject a proposed project shall not be 
subject to administrative appeal or judicial re-
view. 
‘‘(C) NOTICE
OF
REJECTION.—Not later 
than 30 days after the date on which the Sec-
retary 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 Sec-
retary concerned shall publish in the Federal Register 
notice of each project approved under subsection (a) 
if the notice would be required had the project origi-
nated with the Secretary. 
‘‘(d) SOURCE AND CONDUCT OF PROJECT.—Once the 
Secretary concerned accepts a project for review under sec-
255 
tion 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 involv-
ing a contract authorized by paragraph (1) the 
Secretary concerned may elect a source for per-
formance 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 com-
plexity of the work to be done; 
‘‘(ii)(I) the ecological objectives of the 
project; and 
‘‘(II) the sensitivity of the resources 
being treated;
256 
‘‘(iii) the past experience by the con-
tractor with the type of work being done, 
using the type of equipment proposed for 
the project, and meeting or exceeding de-
sired 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 con-
cerned shall establish a pilot program to imple-
ment a certain percentage of approved projects 
involving the sale of merchantable timber using 
separate contracts for— 
‘‘(i) the harvesting or collection of mer-
chantable timber; and 
‘‘(ii) the sale of the timber. 
‘‘(B) ANNUAL
PERCENTAGES.—Under the 
pilot program, the Secretary concerned shall en-
sure 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.
257 
‘‘(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 im-
plement a project involving the sale of merchant-
able timber shall be made by the Secretary con-
cerned after the approval of the project under 
this title. 
‘‘(D) ASSISTANCE.— 
‘‘(i) IN GENERAL.—The Secretary con-
cerned may use funds from any appro-
priated account available to the Secretary 
for the Federal land to assist in the admin-
istration of projects conducted under the 
pilot program. 
‘‘(ii) MAXIMUM
AMOUNT
OF
ASSIST-
ANCE.—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 Gen-
eral shall submit to the Committees on Ag-
258 
riculture, Nutrition, and Forestry and En-
ergy and Natural Resources of the Senate 
and the Committees on Agriculture and 
Natural Resources of the House of Rep-
resentatives a report assessing the pilot pro-
gram. 
‘‘(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 Rep-
resentatives an annual report describing the 
results of the pilot program. 
‘‘(f) REQUIREMENTS FOR PROJECT FUNDS.—The Sec-
retary 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 com-
259 
mittees to perform the duties in subsection (b), except 
as provided in paragraph (4). 
‘‘(2) PURPOSE.—The purpose of a resource advi-
sory committee shall be— 
‘‘(A) to improve collaborative relationships; 
and 
‘‘(B) to provide advice and recommenda-
tions to the land management agencies consistent 
with the purposes of this title. 
‘‘(3) ACCESS TO RESOURCE ADVISORY COMMIT-
TEES.—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 com-
mittee to ensure that membership can be balanced in 
terms of the points of view represented and the func-
tions 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 re-
source advisory committee established before Sep-
tember 29, 2006, or an advisory committee deter-
mined by the Secretary concerned before Sep-
tember 29, 2006, to meet the requirements of this
260 
section may be deemed by the Secretary con-
cerned 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 ADVI-
SORY COMMITTEES.—The Secretary of the Inte-
rior 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 Sec-
retary 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
273 
‘‘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 addi-
tion 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.’’.