I 
111TH CONGRESS 
1ST SESSION H. R. 3302 
To provide a Federal tax exemption for forest conservation bonds, and for 
other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 22, 2009 
Mr. THOMPSON
of California (for himself, Mr. REICHERT, and Mr. 
MCDERMOTT) introduced the following bill; which was referred to the 
Committee on Ways and Means 
A BILL 
To provide a Federal tax exemption for forest conservation 
bonds, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Community Forestry 
Conservation Act of 2009’’. 
SEC. 2. FOREST CONSERVATION BONDS. 
(a) TAX-EXEMPT BOND FINANCING.— 
(1) IN GENERAL.—For purposes of the Internal 
Revenue Code of 1986, any qualified forest con-
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servation bond shall be treated as an exempt facility 
bond under section 142 of such Code. 
(2) 
QUALIFIED
FOREST
CONSERVATION 
BOND.—For purposes of this section, the term 
‘‘qualified forest conservation bond’’ means any bond 
issued as part of an issue if— 
(A) 95 percent or more of the net proceeds 
(as defined in section 150(a)(3) of such Code) 
of such issue are to be used for qualified project 
costs, 
(B) such bond is issued for a qualified or-
ganization, and 
(C) such bond is issued before the date 
which is 48 months after the date of the enact-
ment of this Act. 
(3) 
LIMITATION
ON
AGGREGATE
AMOUNT 
ISSUED.— 
(A) IN GENERAL.—The maximum aggre-
gate face amount of bonds which may be issued 
under 
this 
subsection 
shall 
not 
exceed 
$3,000,000,000 for all projects (excluding re-
funding bonds). 
(B) INITIAL
ALLOCATION
OF
LIMITA-
TION.—The limitation described in subpara-
graph (A) shall be allocated by the Secretary of 
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the Treasury among qualified organizations as 
follows: 
(i) 35 percent for qualified project 
costs with respect to the cost of acquisition 
by any qualified organization in the Pacific 
Northwest region. 
(ii) 30 percent for qualified project 
costs with respect to the cost of acquisition 
by any qualified organization in the West-
ern region. 
(iii) 17.5 percent for qualified project 
costs with respect to the cost of acquisition 
by any qualified organization in the South-
east region. 
(iv) 17.5 percent for qualified project 
costs with respect to the cost of acquisition 
by any qualified organization in the North-
east region. 
(C) PROCEDURE
FOR
ISSUANCE.—The 
Secretary shall establish a system for allocating 
the limitation to qualified forest conservation 
bonds within each region, which shall be based 
on the chronological order, within each region, 
in which applications are made to the Secretary 
for an allocation of the limitation. 
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(D) 
SECONDARY
ALLOCATION
PROCE-
DURE.—If, for the period ending on the last 
day of the 24th month after the date of enact-
ment of this Act, the limitation amount for any 
region under subparagraph (B) exceeds the 
amount of bonds allocated by the Secretary of 
the Treasury during such period, the Secretary 
of the Treasury may allocate such excess among 
qualified organizations in any other region in 
such manner as the Secretary of the Treasury 
determines appropriate. 
(E) REGIONS.—For purposes of this para-
graph— 
(i) PACIFIC
NORTHWEST
REGION.— 
The term ‘‘Pacific Northwest region’’ 
means Region 6 as defined by the United 
States Forest Service of the Department of 
Agriculture under section 202.2 of title 36, 
Code of Federal Regulations. 
(ii) WESTERN
REGION.—The term 
‘‘Western region’’ means Regions 1, 2, 3, 
4, 5, and 10 (as so defined). 
(iii) SOUTHEAST REGION.—The term 
‘‘Southeast region’’ means Region 8 (as so 
defined). 
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(iv) NORTHEAST REGION.—The term 
‘‘Northeast region’’ means Region 9 (as so 
defined). 
(4) QUALIFIED PROJECT COSTS.—For purposes 
of this subsection, the term ‘‘qualified project costs’’ 
means the sum of— 
(A) the cost of acquisition (directly or 
through reimbursement or refinancing) by the 
qualified organization from an unrelated person 
of forests and forest land which at the time of 
acquisition or immediately thereafter are sub-
ject to a conservation restriction described in 
subsection (c)(2), 
(B) interest payments on the qualified for-
est conservation bonds for the 3-year period be-
ginning on the date of issuance of such bonds, 
and 
(C) credit enhancement fees which con-
stitute qualified guarantee fees (within the 
meaning of section 148 of such Code). 
(5) SPECIAL RULES.—In applying the Internal 
Revenue Code of 1986 to any qualified forest con-
servation bond, the following modifications shall 
apply: 
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(A) Section 146 of such Code (relating to 
volume cap) shall not apply. 
(B) For purposes of section 147(b) of such 
Code (relating to maturity may not exceed 120 
percent of economic life), the land and standing 
timber acquired with proceeds of qualified for-
est conservation bonds shall have an economic 
life of 35 years. 
(C) Subsections (c) and (d) of section 147 
of such Code (relating to limitations on acquisi-
tion of land and existing property) shall not 
apply. 
(D) Section 57(a)(5) of such Code (relat-
ing to tax-exempt interest) shall not apply to 
interest on qualified forest conservation bonds. 
(6) TREATMENT
OF
CURRENT
REFUNDING 
BONDS.—Paragraphs (2)(C) and (3) shall not apply 
to any bond (or series of bonds) issued to refund a 
qualified forest conservation bond issued before the 
date which is 48 months after the date of the enact-
ment of this Act, if— 
(A) the average maturity date of the issue 
of which the refunding bond is a part is not 
later than the average maturity date of the 
bonds to be refunded by such issue, 
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(B) the amount of the refunding bond does 
not exceed the outstanding amount of the re-
funded bond, and 
(C) the net proceeds of the refunding bond 
are used to redeem the refunded bond not later 
than 90 days after the date of the issuance of 
the refunding bond. 
For purposes of subparagraph (A), average maturity 
shall be determined in accordance with section 
147(b)(2)(A) of such Code. 
(7) EFFECTIVE
DATE.—This subsection shall 
apply to obligations issued on or after the date 
which is 180 days after the enactment of this Act. 
(b) ITEMS FROM QUALIFIED HARVESTING ACTIVI-
TIES NOT SUBJECT TO TAX OR TAKEN INTO ACCOUNT.— 
(1) IN GENERAL.—Income, gains, deductions, 
losses, or credits from a qualified harvesting activity 
conducted by a qualified organization shall not be 
subject to tax or taken into account under subtitle 
A of the Internal Revenue Code of 1986. 
(2) LIMITATION.—The amount of income ex-
cluded from gross income under paragraph (1) for 
any taxable year shall not exceed the amount used 
by the qualified organization to make debt service 
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payments during such taxable year for qualified for-
est conservation bonds. 
(3) QUALIFIED
HARVESTING
ACTIVITY.—For 
purposes of paragraph (1)— 
(A) IN
GENERAL.—The term ‘‘qualified 
harvesting activity’’ means the sale, lease, or 
harvesting, of standing timber— 
(i) on land owned by a qualified orga-
nization which was acquired with proceeds 
of qualified forest conservation bonds, and 
(ii) pursuant to a qualified conserva-
tion plan adopted by the qualified organi-
zation within 2 years of the acquisition. 
(B) EXCEPTIONS.— 
(i) CESSATION AS QUALIFIED ORGANI-
ZATION.—The term ‘‘qualified harvesting 
activity’’ shall not include any sale, lease, 
or harvesting for any period during which 
the organization ceases to qualify as a 
qualified organization. 
(ii) EXCEEDING
LIMITS
ON
HAR-
VESTING.—The term ‘‘qualified harvesting 
activity’’ shall not include any sale, lease, 
or harvesting of standing timber on land 
acquired with proceeds of qualified forest 
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conservation bonds to the extent that the 
average quantity of timber removed from 
such land exceeds the quantity which can 
be removed from such land annually in 
perpetuity on a sustained-yield basis meas-
ured over the harvest rotation with respect 
to such land. The limitation described in 
the preceding sentence shall not apply to 
post-fire restoration and rehabilitation or 
sanitation harvesting of timber stands 
which are substantially damaged by fire, 
windthrow, or other catastrophes, or which 
are in imminent danger from insect or dis-
ease attack. 
(4) TERMINATION.—This subsection shall not 
apply to any qualified harvesting activity of a quali-
fied organization occurring after the date on 
which— 
(A) there is no outstanding qualified forest 
conservation bond with respect to such qualified 
organization, or 
(B) any such bond ceases to be a tax-ex-
empt bond. 
(5) PARTIAL RECAPTURE OF BENEFITS IF HAR-
VESTING LIMIT EXCEEDED.—If, as of the date that 
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this subsection ceases to apply under paragraph 
(4)(B), the quantity of timber removed from the 
land 
exceeds 
the 
requirement 
of 
paragraph 
(3)(B)(ii), the tax imposed by chapter 1 of the Inter-
nal Revenue Code of 1986 shall be increased, under 
rules prescribed by the Secretary of the Treasury, by 
the sum of the tax benefits attributable to such ex-
cess and interest at the underpayment rate under 
section 6621 of such Code for the period of the un-
derpayment. 
(c) DEFINITIONS.—For purposes of this section— 
(1) QUALIFIED
CONSERVATION
PLAN.—The 
term ‘‘qualified conservation plan’’ means a multiple 
land use program or plan which— 
(A) is designed and administered primarily 
for the purposes of protecting and enhancing 
wildlife and fish, timber, scenic attributes, 
recreation, and soil and water quality of the 
forest and forest land, 
(B) mandates that conservation of forest 
and forest land is the single-most significant 
use of the forest and forest land, and 
(C) requires that timber harvesting be con-
sistent with— 
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(i) restoring and maintaining ref-
erence conditions for the region’s ecotype, 
(ii) restoring and maintaining a rep-
resentative sample of young, mid, and late 
successional forest age classes, 
(iii) maintaining or restoring the re-
sources’ ecological health for purposes of 
preventing damage from fire, insect, or dis-
ease, 
(iv) maintaining or enhancing wildlife 
or fish habitat, or 
(v) enhancing research opportunities 
in sustainable renewable resource uses. 
(2) CONSERVATION
RESTRICTION.—The con-
servation restriction described in this paragraph is a 
restriction which— 
(A) is granted (through sale or donation) 
in perpetuity to an unrelated person which is 
described in section 170(h)(3) of such Code and 
which, in the case of a nongovernmental unit, 
is organized and operated for conservation pur-
poses, 
(B) meets the requirements of clause (ii) 
or (iii)(II) of section 170(h)(4)(A) of such 
Code, 
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(C) obligates the qualified organization to 
pay the costs incurred by the holder of the con-
servation restriction in monitoring compliance 
with such restriction to the extent the holder of 
the conservation restriction does not have a 
dedicated source of such funding, and 
(D) requires an increasing level of con-
servation benefits to be provided whenever cir-
cumstances allow it. 
(3) 
QUALIFIED
ORGANIZATION.—The 
term 
‘‘qualified organization’’ means, during the time any 
qualified forest conversation bond for the organiza-
tion is outstanding, an organization exempt from tax 
under section 501(a)— 
(A) substantially all the activities of which 
are charitable, scientific or educational, includ-
ing acquiring, protecting, restoring, managing, 
sustainably harvesting, and developing forest 
lands and other renewable resources for the 
long-term charitable, educational, scientific, and 
public benefit, 
(B) which periodically conducts educational 
programs designed to inform the public of envi-
ronmentally sensitive forestry management and 
conservation techniques, 
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(C) which has at all times a board of direc-
tors— 
(i) at least 20 percent of the members 
of which are representatives of the con-
servation community, 
(ii) at least 20 percent of the mem-
bers of which are public officials, and 
(iii) not more than one-third of the 
members of which are individuals who are 
or were at any time within 5 years before 
the beginning of a term of membership on 
the board, an employee of, independent 
contractor with respect to, officer of, direc-
tor of, or held a material financial interest 
in, a commercial forest products enterprise 
with which the qualified organization has a 
contractual or other financial arrangement, 
(D) the bylaws of which require at least 
two-thirds of the members of the board of direc-
tors to vote affirmatively to approve the quali-
fied conservation plan and any change thereto, 
and 
(E) upon dissolution, is required to dedi-
cate its assets to— 
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(i) an organization described in sec-
tion 501(c)(3) of such Code which is orga-
nized and operated for conservation pur-
poses, or 
(ii) a governmental unit described in 
section 170(c)(1) of such Code. 
(4) UNRELATED
PERSON.—The term ‘‘unre-
lated person’’ means a person who is not a related 
person. 
(5) RELATED
PERSON.—A person shall be 
treated as related to another person if— 
(A) such person bears a relationship to 
such other person described in section 267(b) 
(determined without regard to paragraph (9) 
thereof), or 707(b)(1), of such Code, deter-
mined by substituting ‘‘25 percent’’ for ‘‘50 
percent’’ each place it appears therein, and 
(B) in the case such other person is a non- 
profit organization, if such person controls di-
rectly or indirectly more than 25 percent of the 
governing body of such organization. 
Æ 
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