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‘‘(G) requires monitoring of the manage-
ment practices and the status of the qualified
species and its habitat, and
‘‘(H) describes the technical assistance to be
provided to the taxpayer and identifies the entity
that will provide such assistance.
‘‘(3) QUALIFIED SPECIES.—The term ‘qualified
species’ means—
‘‘(A) any species listed as an endangered
species or threatened species under the Endan-
gered Species Act of 1973, or
‘‘(B) any species for which a finding has
been made under section 4(b)(3) of the Endan-
gered Species Act of 1973 that listing under such
Act may be warranted.
‘‘(4) TAKING.—The term ‘taking’ has the mean-
ing given to such term under the Endangered Species
Act of 1973.
‘‘(5) REDUCTION IN BASIS.—For purposes of this
subtitle—
‘‘(A) 
HABITAT
PROTECTION
EASEMENT
CREDIT.—The basis of any property for which a
credit is allowed under subsection (a)(1) shall be
reduced by the amount of basis which is allo-
cated, under regulations prescribed by the Sec-
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retary, to the easement granted as part of a
qualified perpetual habitat protection agreement
or a qualified 30-year habitat protection agree-
ment.
‘‘(B) HABITAT RESTORATION CREDIT.—If a
credit is allowed under subsection (a)(2) for any
expenditure with respect to any property, the in-
crease in the basis of such property which would
(but for this subparagraph) result from such ex-
penditure shall be reduced by the amount of the
credit so allowed.
‘‘(6) DENIAL OF DOUBLE BENEFIT.—No deduc-
tion or other credit shall be allowed under this chap-
ter for any amount with respect to which a credit is
allowed under subsection (a).
‘‘(7) CERTIFICATION.—No credit shall be allowed
under subsection (a) unless the appropriate Secretary
certifies that any agreement described in subsection
(c) will contribute to the recovery of a qualified spe-
cies.
‘‘(8) REQUEST
FOR
AUTHORIZATION
OF
INCI-
DENTAL TAKINGS.—The Secretary shall request the
appropriate Secretary to consider whether to author-
ize under the Endangered Species Act of 1973 takings
by an eligible taxpayer of a qualified species to which
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an agreement described in subsection (c) relates if the
takings are incidental to—
‘‘(A) the restoration, enhancement, or man-
agement of the habitat pursuant to the habitat
management plan under the agreement, or
‘‘(B) the use of the property to which the
agreement pertains at any time after the expira-
tion of the easement or the specified period de-
scribed in subsection (c)(4)(A), but only if such
use will leave the qualified species at least as
well off on the property as it was before the
agreement was made.
‘‘(9) RECAPTURE.—The Secretary shall, by regu-
lations, provide for recapturing the benefit under any
credit allowable under subsection (a) if the Secretary
determines that—
‘‘(A) the taxpayer has failed to carry out
the duties of the taxpayer under the terms of a
qualified perpetual habitat protection agreement,
a qualified 30-year habitat protection agreement,
or a qualified habitat protection agreement, and
‘‘(B) there are no other available means to
remediate such failure.’’.
(b) GAO STUDY.—
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(1) IN GENERAL.—The Comptroller General of
the United States shall undertake a study on the effec-
tiveness of the credit allowed under section 30E of the
Internal Revenue Code of 1986 (as added by this Act).
(2) ISSUES TO BE STUDIED.—The study under
paragraph (1) shall—
(A) evaluate—
(i) the contributions that habitat man-
agement plans established under such credit
have made in restoring or enhancing species
habitat and reducing threats to species, and
(ii) the implementation of the credit
allocation program established in section
30E(f)(2) of such Code (as so added), and
(B) include recommendations for improving
the effectiveness of such credit.
(3) REPORTS.—
(A) INTERIM
REPORT.—Not later than 3
years after the date of the enactment of this Act,
the Comptroller General of the United States
shall submit to Congress an interim report on
the study conducted under paragraph (1).
(B) FINAL REPORT.—Not later than 5 years
after the date of the enactment of this Act, the
Comptroller General of the United States shall
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submit to Congress a final report on the study
conducted under paragraph (1).
(c) CONFORMING AMENDMENTS.—
(1) Section 1016(a) is amended by striking
‘‘and’’ at the end of paragraph (36), by striking the
period at the end of paragraph (37) and inserting ‘‘,
and’’, and by inserting after paragraph (37) the fol-
lowing new paragraph:
‘‘(38) 
to 
the 
extent 
provided 
in 
section
30E(g)(5).’’.
(2) The table of sections for subpart B of part IV
of subchapter A of chapter 1, as amended by this Act,
is amended by inserting after the item relating to sec-
tion 30D the following new item:
‘‘Sec. 30E. Endangered species recovery and restoration credit.’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2007.
SEC. 12205. DEDUCTION FOR ENDANGERED SPECIES RE-
COVERY EXPENDITURES.
(a) DEDUCTION FOR ENDANGERED SPECIES RECOV-
ERY EXPENDITURES.—
(1) IN
GENERAL.—Paragraph (1) of section
175(c) (relating to definitions) is amended by insert-
ing after the first sentence the following new sentence:
‘‘Such term shall include expenditures paid or in-
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curred for the purpose of achieving site-specific man-
agement actions recommended in recovery plans ap-
proved pursuant to the Endangered Species Act of
1973.’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 175 is amended by inserting ‘‘,
or for endangered species recovery’’ after ‘‘pre-
vention of erosion of land used in farming’’ each
place it appears in subsections (a) and (c).
(B) The heading of section 175 is amended
by inserting ‘‘; ENDANGERED SPECIES RE-
COVERY EXPENDITURES’’ before the period.
(C) The item relating to section 175 in the
table of sections for part VI of subchapter B of
chapter 1 is amended by inserting ‘‘; endangered
species recovery expenditures’’ before the period.
(b) LIMITATIONS.—Paragraph (3) of section 175(c)
(relating to additional limitations) is amended—
(1) in the heading, by inserting ‘‘OR ENDAN-
GERED SPECIES RECOVERY PLAN’’ after ‘‘CONSERVA-
TION PLAN’’, and
(2) in subparagraph (A)(i), by inserting ‘‘or the
recovery plan approved pursuant to the Endangered
Species Act of 1973’’ after ‘‘Department of Agri-
culture’’.
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(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to expenditures paid or incurred after
the date of the enactment of this Act.
SEC. 12206. EXCLUSION FOR CERTAIN PAYMENTS AND PRO-
GRAMS RELATING TO FISH AND WILDLIFE.
(a) IN GENERAL.—Subsection (a) of section 126 (relat-
ing to certain cost-sharing payments) is amended by redes-
ignating paragraph (10) as paragraph (13) and by insert-
ing after paragraph (9) the following new paragraphs:
‘‘(10) The Partners for Fish and Wildlife Pro-
gram authorized by the Partners for Fish and Wild-
life Act.
‘‘(11) The Landowner Incentive Program, the
State Wildlife Grants Program, and the Private
Stewardship Grants Program authorized by the Fish
and Wildlife Act of 1956.
‘‘(12) The Forest Health Protection Program and
the program related to integrated pest management
authorized by the Cooperative Forestry Assistance Act
of 1978.’’.
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to payments received after the date of
the enactment of this Act.
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SEC. 12207. CREDIT FOR EASEMENTS GRANTED UNDER CER-
TAIN DEPARTMENT OF AGRICULTURE CON-
SERVATION PROGRAMS.
(a) IN GENERAL.—
(1) ALLOWANCE OF CREDIT.—Subpart B of part
IV of subchapter A of chapter 1, as amended by this
Act, is amended by adding at the end the following
new section:
‘‘SEC. 30F. AGRICULTURE CONSERVATION EASEMENT CRED-
IT.
‘‘(a) IN GENERAL.—There shall be allowed as a credit
against the tax imposed by this chapter for the taxable year
an amount equal to the sum of—
‘‘(1) the wetlands reserve conservation credit,
plus
‘‘(2) the grassland reserve conservation credit.
‘‘(b) LIMITATIONS.—
‘‘(1) LIMITATION BASED ON AMOUNT OF TAX.—
The credit allowed under this section for any taxable
year shall not exceed the excess of—
‘‘(A) the regular tax liability for the taxable
year reduced by the sum of the credits allowable
under subpart A and sections 27, 30, 30B, 30C,
30D, 30E(a)(1), and 30E(a)(2), over
‘‘(B) the tentative minimum tax for the tax-
able year.
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‘‘(2) LIMITATION BASED ON ALLOCATED PORTION
OF NATIONAL LIMITATION.—The credit allowed under
subsection (a) for any taxpayer for any taxable year
shall not exceed the excess of—
‘‘(A) the amount of the national credit limi-
tation allocated to such taxpayer under sub-
section (e) for such taxable year and all prior
taxable years, over
‘‘(B) the credit allowed under subsection (a)
for all prior taxable years.
‘‘(c) WETLANDS RESERVE CONSERVATION CREDIT.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a)(1), in the case of a wetlands reserve eligible tax-
payer, the wetlands reserve conservation credit for
any taxable year is an amount equal to the applicable
percentage of the wetlands reserve easement value.
‘‘(2) 
WETLANDS
RESERVE
ELIGIBLE
TAX-
PAYER.—For purposes of this section, the term ‘wet-
lands reserve eligible taxpayer’ means any taxpayer
who—
‘‘(A) has granted an easement to the Sec-
retary of Agriculture under the wetlands reserve
program, and
‘‘(B) who has made an election under sec-
tion 1237A(f)(5) of the Food Security Act of
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1985 to receive an allocation under subsection
(e)(2) in lieu of a payment under section
1237A(f)(1) of such Act.
‘‘(3) APPLICABLE
PERCENTAGE.—For purposes
paragraph (1), the term ‘applicable percentage’ means
the percentage equal to—
‘‘(A) 100 percent, minus
‘‘(B) the highest percentage of tax which
would apply under section 1 or 11 with respect
to the taxpayer if the taxable income of the tax-
payer were increased by an amount equal to the
wetlands reserve easement value.
‘‘(4) WETLANDS RESERVE EASEMENT VALUE.—
For purposes of this section, the term ‘wetlands re-
serve easement value’ means the lesser of—
‘‘(A) the product of—
‘‘(i) the wetlands reserve geographic
area rate for the area in which the real
property to which the easement pertains is
located, and
‘‘(ii) the number of acres to which the
easement applies, or
‘‘(B) the value of any payment to which the
taxpayer would be entitled with respect to such
easement under section 1237A(f)(1) of the Food
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Security Act of 1985 if the taxpayer had not
made an election under section 1237A(f)(5) of
such Act.
‘‘(5) WETLANDS
RESERVE
GEOGRAPHIC
AREA
RATE.—For purposes of paragraph (4)(A)(i), the wet-
lands reserve geographic area rate with respect to any
geographic area shall be the rate per acre, determined
by the Secretary in consultation with the Secretary of
Agriculture, appropriate for easements granted under
the wetlands reserve program in such area.
‘‘(d) GRASSLAND RESERVE CONSERVATION CREDIT.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a)(2), in the case of any grassland reserve eligible
taxpayer, the grassland reserve conservation credit for
any taxable year is an amount equal to the applicable
percentage of the grassland reserve easement value.
‘‘(2) 
GRASSLAND
RESERVE
ELIGIBLE
TAX-
PAYER.—For purposes of this section, the term ‘grass-
land reserve eligible taxpayer’ means any taxpayer
who—
‘‘(A) has granted an easement under the
grassland reserve program to an eligible ease-
ment holder, and
‘‘(B) who has made an election under sec-
tion 1238P(b)(2)(C) of the Food Security Act of
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1985 to receive an allocation under subsection
(e)(2) in lieu of a payment under section
1238P(b)(2)(A)(i) of such Act.
‘‘(3) APPLICABLE
PERCENTAGE.—For purposes
paragraph (1), the term ‘applicable percentage’ means
the percentage equal to—
‘‘(A) 100 percent, minus
‘‘(B) the highest percentage of tax which
would apply under section 1 or 11 with respect
to the taxpayer if the taxable income of the tax-
payer were increased by an amount equal to the
grassland reserve easement value.
‘‘(4) GRASSLAND RESERVE EASEMENT VALUE.—
For purposes of this section, the term ‘grassland re-
serve easement value’ means—
‘‘(A) in the case of a permanent conserva-
tion easement (within the meaning of section
1238N(3) of the Food Security Act of 1985), the
lesser of—
‘‘(i) the product of—
‘‘(I) the grassland reserve pro-
gram geographic area rate for the area
in which the real property to which the
easement pertains is located, and
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‘‘(II) the number of acres to which
the easement applies, or
‘‘(ii) the value of any payment to
which the taxpayer would be entitled in re-
turn for such easement under section
1238P(b)(2)(A)(i)(I) of the Food Security
Act of 1985 if the taxpayer had not made
an election under section 1238P(b)(2)(C) of
such Act, and
‘‘(B) in the case of a 30-year conservation
easement 
(within 
the 
meaning 
of 
section
1238O(b)(2) of such Act), the lesser of—
‘‘(i) 30 percent of the lesser of the
amount determined under clause (i) or (ii)
of subparagraph (A), or
‘‘(ii) the value of any payment to
which the taxpayer would be entitled in re-
turn for such easement under section
1238P(b)(1)(A)(i)(II) of such Act if the tax-
payer had not made an election under sec-
tion 1238P(b)(2)(C) of such Act.
‘‘(5) GRASSLAND
RESERVE
GEOGRAPHIC
AREA
RATE.—For purposes of paragraph (4)(A)(i)(I), the
grassland reserve geographic area rate with respect to
any geographic area shall be the rate, determined by
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the Secretary in consultation with the Secretary of
Agriculture, appropriate for easements granted under
the grassland reserve program in such area.
‘‘(e) NATIONAL CONSERVATION CREDIT LIMITATION.—
‘‘(1) IN
GENERAL.—The aggregate credits al-
lowed under subsection (a) for all taxpayers shall not
exceed $1,000,000,000.
‘‘(2) ALLOCATION.—The Secretary, in consulta-
tion with the Secretary of Agriculture, shall allocate
the credit limitation under paragraph (1) to tax-
payers who—
‘‘(A) have granted an easement—
‘‘(i) to the Secretary of Agriculture
under the wetlands reserve program, or
‘‘(ii) to an eligible easement holder
under the grassland reserve program, and
‘‘(B) make an election under such program
to receive an allocation under this paragraph in
lieu of a payment under such program.
‘‘(3) LIMITATION ON ALLOCATION.—No amount
of the credit limitation may be allocated to any tax-
payer for any taxable year which ends after Sep-
tember 30, 2012.
‘‘(f) CARRYFORWARD.—If the amount of the credit al-
lowable under subsection (a) for any taxpayer for any tax-
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able year (determined without regard to subsection (b)(1))
exceeds the limitation under subsection (b)(1), such excess
may be carried forward to the succeeding taxable year and
added to the credit allowable under subsection (a) for such
succeeding taxable year.
‘‘(g) OTHER DEFINITIONS AND SPECIAL RULES.—For
purposes of this section—
‘‘(1) WETLANDS RESERVE PROGRAM.—The term
‘wetlands reserve program’ means the wetlands reserve
program established under subchapter C of chapter 1
of subtitle D of title XII of the Food Security Act of
1985.
‘‘(2) GRASSLAND RESERVE PROGRAM.—The term
‘grassland reserve program’ means the grassland re-
serve program established under subchapter C of
chapter 2 of subtitle D of title XII of the Food Secu-
rity Act of 1985.
‘‘(3) ELIGIBLE EASEMENT HOLDER.—The term
‘eligible easement holder’ means the Secretary of Agri-
culture or a State.
‘‘(4) DENIAL OF DOUBLE BENEFIT.—No deduc-
tion or other credit shall be allowed under this chap-
ter for any amount with respect to which a credit is
allowed under subsection (a).
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‘‘(5) REDUCTION IN BASIS.—For purposes of this
subtitle, the basis of any property for which a credit
is allowed under subsection (a) shall be reduced by the
amount of basis which is allocated, under regulations
prescribed by the Secretary, to the easement granted
under the wetlands reserve program or the grassland
reserve program.
‘‘(6) RECAPTURE.—The Secretary shall, by regu-
lations, provide for recapturing the benefit of any
credit allowable under subsection (a) if the Secretary,
in consultation with the Secretary of Agriculture, de-
termines that—
‘‘(A) the eligible taxpayer has failed to
carry out the duties of the taxpayer under the
terms of the easement, and
‘‘(B) there are no other available means to
remediate such failure.’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 1016(a), as amended by this
Act, is amended by striking ‘‘and’’ at the end of
paragraph (37), by striking the period at the end
of paragraph (38) and inserting ‘‘, and’’, and by
inserting after paragraph (38) the following new
paragraph:
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‘‘(39) 
to 
the 
extent 
provided 
in 
section
30F(g)(5).’’.
(B) The table of sections for subpart B of
part IV of subchapter A of chapter 1, as amend-
ed by this Act, is amended by inserting after the
item relating to section 30E the following new
item:
‘‘Sec. 30F. Agriculture conservation easement credit.’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to easements granted
after September 30, 2007, in taxable years ending
after such date.
(b) CONFORMING AMENDMENTS TO THE FOOD SECU-
RITY ACT OF 1985.—
(1) WETLANDS
RESERVE
PROGRAM.—Section
1237A(f) of the Food Security Act of 1985 (16 U.S.C.
3837a(f)), as amended by this Act, is amended by
adding at the end the following new paragraph:
‘‘(5) ELECTION
TO
RECEIVE
TAX
CREDITS
IN
LIEU OF PAYMENTS.—
‘‘(A) IN GENERAL.—In lieu of a payment in
cash under paragraph (1), the landowner may
elect to receive an allocation of tax credits under
section 30E(e)(2) of the Internal Revenue Code of
1986.