228 
SELF-HELP AND ASSISTED HOMEOWNERSHIP 
OPPORTUNITY PROGRAM 
For an additional amount for ‘‘Self-Help and As-
sisted Homeownership Opportunity Program’’, as author-
ized under section 11 of the Housing Opportunity Pro-
gram Extension Act of 1996, $10,000,000: Provided, That 
in awarding competitive grant funds, the Secretary of 
Housing and Urban Development shall give priority to the 
provision and rehabilitation of sustainable, affordable sin-
gle and multifamily units in low-income, high-need rural 
areas: Provided further, That in selecting projects to be 
funded, grantees shall give priority to projects that can 
award contracts based on bids within 120 days from the 
date the funds are made available to the grantee. 
HOMELESS ASSISTANCE GRANTS 
For an additional amount for ‘‘Homeless Assistance 
Grants’’, for the emergency shelter grants program as au-
thorized under subtitle B of tile IV of the McKinney-Vento 
Homeless Assistance Act, $1,500,000,000: Provided, That 
in addition to homeless prevention activities specified in 
the emergency shelter grant program, funds provided 
under this heading may be used for the provision of short- 
term or medium-term rental assistance; housing relocation 
and stabilization services including housing search, medi-
ation or outreach to property owners, legal services, credit 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00228
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
229 
repair, resolution of security or utility deposits, utility pay-
ments, rental assistance for a final month at a location, 
and moving costs assistance; or other appropriate home-
lessness prevention activities; Provided further, That these 
funds shall be allocated pursuant to the formula author-
ized by section 413 of such Act: Provided further, That 
the Secretary of Housing and Urban Development may 
waive statutory or regulatory provisions related to the obli-
gation and use of emergency shelter grant funds necessary 
to facilitate the timely expenditure of funds. 
OFFICE OF HEALTHY HOMES AND LEAD HAZARD 
CONTROL 
LEAD HAZARD REDUCTION 
For an additional amount for ‘‘Lead Hazard Reduc-
tion’’, for the Lead Hazard Reduction Program as author-
ized by section 1011 of the Residential Lead-Based Paint 
Hazard Reduction Act of 1992, $100,000,000: Provided, 
That for purposes of environmental review, pursuant to 
the National Environmental Policy Act of 1969 (42 U.S.C. 
4321 et seq.) and other provisions of law that further the 
purposes of such Act, a grant under the Healthy Homes 
Initiative, Operation Lead Elimination Action Plan 
(LEAP), or the Lead Technical Studies program under 
this heading or under prior appropriations Acts for such 
purposes under this heading, shall be considered to be 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00229
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
230 
funds for a special project for purposes of section 305(e) 
of the Multifamily Housing Property Disposition Reform 
Act of 1994: Provided further, That of the total amount 
made available under this heading, $30,000,000 shall be 
made available on a competitive basis for areas with the 
highest lead paint abatement needs. 
GENERAL PROVISIONS, THIS TITLE 
SEC. 12001. MAINTENANCE OF EFFORT AND REPORTING 
REQUIREMENTS TO ENSURE TRANSPARENCY 
AND ACCOUNTABILITY. 
(a) MAINTENANCE OF EFFORT.—Not later than 30 
days after the date of enactment of this Act, for each 
amount that is distributed to a State or agency thereof 
from an appropriation in this Act for a covered program, 
the Governor of the State shall certify that the State will 
maintain its effort with regard to State funding for the 
types of projects that are funded by the appropriation. As 
part of this certification, the Governor shall submit to the 
covered agency a statement identifying the amount of 
funds the State planned to expend as of the date of enact-
ment of this Act from non-Federal sources in the period 
beginning on the date of enactment of this Act through 
September 30, 2010, for the types of projects that are 
funded by the appropriation. 
(b) PERIODIC REPORTS.— 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00230
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
231 
(1) IN GENERAL.—Notwithstanding any other 
provision of law, each grant recipient shall submit to 
the covered agency from which they received funding 
periodic reports on the use of the funds appropriated 
in this Act for covered programs. Such reports shall 
be collected and compiled by the covered agency and 
transmitted to Congress. 
(2) CONTENTS OF REPORTS.—For amounts re-
ceived under each covered program by a grant re-
cipient under this Act, the grant recipient shall in-
clude in the periodic reports information tracking— 
(A) the amount of Federal funds appro-
priated, allocated, obligated, and outlayed under 
the appropriation; 
(B) the number of projects that have been 
put out to bid under the appropriation and the 
amount of Federal funds associated with such 
projects; 
(C) the number of projects for which con-
tracts have been awarded under the appropria-
tion and the amount of Federal funds associ-
ated with such contracts; 
(D) the number of projects for which work 
has begun under such contracts and the 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00231
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
232 
amount of Federal funds associated with such 
contracts; 
(E) the number of projects for which work 
has been completed under such contracts and 
the amount of Federal funds associated with 
such contracts; 
(F) the number of jobs created or sus-
tained by the Federal funds provided for 
projects under the appropriation, including in-
formation on job sectors and pay levels; and 
(G) for each covered program report infor-
mation tracking the actual aggregate expendi-
tures by each grant recipient from non-Federal 
sources for projects eligible for funding under 
the program during the period beginning on the 
date of enactment of this Act through Sep-
tember 30, 2010, as compared to the level of 
such expenditures that were planned to occur 
during such period as of the date of enactment 
of this Act. 
(3) TIMING OF REPORTS.—Each grant recipient 
shall submit the first of the periodic reports required 
under this subsection not later than 30 days after 
the date of enactment of this Act and shall submit 
updated reports not later than 60 days, 120 days, 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00232
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
233 
180 days, 1 year, and 3 years after such date of en-
actment. 
(c) DEFINITIONS.—In this section, the following defi-
nitions apply: 
(1) COVERED
AGENCY.—The term ‘‘covered 
agency’’ means the Federal Aviation Administration, 
the Federal Highway Administration, the Federal 
Railroad Administration, and the Federal Transit 
Administration of the Department of Transpor-
tation. 
(2) COVERED
PROGRAM.—The term ‘‘covered 
program’’ means funds appropriated in this Act for 
‘‘Grants-in-Aid for Airports’’ to the Federal Aviation 
Administration; for ‘‘Highway Infrastructure Invest-
ment’’ to the Federal Highway Administration; for 
‘‘Capital Assistance for Intercity Passenger Rail 
Service’’ to the Federal Railroad Administration; for 
‘‘Transit Capital Assistance’’, ‘‘Fixed Guideway In-
frastructure Investment’’, and ‘‘Capital Investment 
Grants’’ to the Federal Transit Administration. 
(3) GRANT RECIPIENT.—The term ‘‘grant re-
cipient’’ means a State or other recipient of assist-
ance provided under a covered program in this Act. 
Such term does not include a Federal department or 
agency. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00233
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
234 
SEC. 12002. FHA LOAN LIMITS FOR 2009. 
(a) LOAN LIMIT FLOOR BASED ON 2008 LEVELS.— 
For mortgages for which the mortgagee issues credit ap-
proval for the borrower during calendar year 2009, if the 
dollar amount limitation on the principal obligation of a 
mortgage determined under section 203(b)(2) of the Na-
tional Housing Act (12 U.S.C. 1709(b)(2)) for any size 
residence for any area is less than such dollar amount lim-
itation that was in effect for such size residence for such 
area for 2008 pursuant to section 202 of the Economic 
Stimulus Act of 2008 (Public Law 110–185; 122 Stat. 
620), notwithstanding any other provision of law, the max-
imum dollar amount limitation on the principal obligation 
of a mortgage for such size residence for such area for 
purposes of such section 203(b)(2) shall be considered (ex-
cept for purposes of section 255(g) of such Act (12 U.S.C. 
1715z–20(g))) to be such dollar amount limitation in ef-
fect for such size residence for such area for 2008. 
(b) DISCRETIONARY AUTHORITY FOR SUB-AREAS.— 
Notwithstanding any other provision of law, if the Sec-
retary of Housing and Urban Development determines, for 
any geographic area that is smaller than an area for which 
dollar amount limitations on the principal obligation of a 
mortgage are determined under section 203(b)(2) of the 
National Housing Act, that a higher such maximum dollar 
amount limitation is warranted for any particular size or 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00234
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
235 
sizes of residences in such sub-area by higher median 
home prices in such sub-area, the Secretary may, for mort-
gages for which the mortgagee issues credit approval for 
the borrower during calendar year 2009, increase the max-
imum dollar amount limitation for such size or sizes of 
residences for such sub-area that is otherwise in effect (in-
cluding pursuant to subsection (a) of this section), but in 
no case to an amount that exceeds the amount specified 
in section 202(a)(2) of the Economic Stimulus Act of 
2008. 
SEC. 12003. GSE CONFORMING LOAN LIMITS FOR 2009. 
(a) LOAN LIMIT FLOOR BASED ON 2008 LEVELS.— 
For mortgages originated during calendar year 2009, if 
the limitation on the maximum original principal obliga-
tion of a mortgage that may purchased by the Federal 
National Mortgage Association or the Federal Home Loan 
Mortgage Corporation determined under section 302(b)(2) 
of the Federal National Mortgage Association Charter Act 
(12 U.S.C. 1717(b)(2)) or section 305(a)(2) of the Fed-
eral Home Loan Mortgage Corporation Act (12 U.S.C. 
1754(a)(2)), respectively, for any size residence for any 
area is less than such maximum original principal obliga-
tion limitation that was in effect for such size residence 
for such area for 2008 pursuant to section 201 of the Eco-
nomic Stimulus Act of 2008 (Public Law 110–185; 122 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00235
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
236 
Stat. 619), notwithstanding any other provision of law, the 
limitation on the maximum original principal obligation of 
a mortgage for such Association and Corporation for such 
size residence for such area shall be such maximum limita-
tion in effect for such size residence for such area for 
2008. 
(b) DISCRETIONARY AUTHORITY FOR SUB-AREAS.— 
Notwithstanding any other provision of law, if the Direc-
tor of the Federal Housing Finance Agency determines, 
for any geographic area that is smaller than an area for 
which limitations on the maximum original principal obli-
gation of a mortgage are determined for the Federal Na-
tional Mortgage Association or the Federal Home Loan 
Mortgage Corporation, that a higher such maximum origi-
nal principal obligation limitation is warranted for any 
particular size or sizes of residences in such sub-area by 
higher median home prices in such sub-area, the Director 
may, for mortgages originated during 2009, increase the 
maximum original principal obligation limitation for such 
size or sizes of residences for such sub-area that is other-
wise in effect (including pursuant to subsection (a) of this 
section) for such Association and Corporation, but in no 
case to an amount that exceeds the amount specified in 
the matter following the comma in section 201(a)(1)(B) 
of the Economic Stimulus Act of 2008. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00236
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
237 
SEC. 12004. FHA REVERSE MORTGAGE LOAN LIMITS FOR 
2009. 
For mortgages for which the mortgagee issues credit 
approval for the borrower during calendar year 2009, the 
second sentence of section 255(g) of the National Housing 
Act (12 U.S.C. 171520(g)) shall be considered to require 
that in no case may the benefits of insurance under such 
section 255 exceed 150 percent of the maximum dollar 
amount in effect under the sixth sentence of section 
305(a)(2) of the Federal Home Loan Mortgage Corpora-
tion Act (12 U.S.C. 1454(a)(2)). 
TITLE XIII—STATE FISCAL 
STABILIZATION FUND 
DEPARTMENT OF EDUCATION 
STATE FISCAL STABILIZATION FUND 
For necessary expenses for a State Fiscal Stabiliza-
tion Fund, $79,000,000,000, which shall be administered 
by 
the 
Department 
of 
Education, 
of 
which 
$39,500,000,000 shall become available on July 1, 2009 
and remain available through September 30, 2010, and 
$39,500,000,000 shall become available on July 1, 2010 
and remain available through September 30, 2011: Pro-
vided, That the provisions of section 1103 of this Act shall 
not apply to the funds reserved under section 13001(c) 
of this title: Provided further, That the amount made 
available under section 13001(b) of this title for adminis-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00237
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
238 
tration and oversight shall take the place of the set-aside 
under section 1106 of this Act. 
GENERAL PROVISIONS, THIS TITLE 
SEC. 13001. ALLOCATIONS. 
(a) OUTLYING AREAS.—From each year’s appropria-
tion to carry out this title, the Secretary of Education 
shall first allocate one half of 1 percent to the outlying 
areas on the basis of their respective needs, as determined 
by the Secretary, for activities consistent with this title 
under such terms and conditions as the Secretary may de-
termine. 
(b) ADMINISTRATION AND OVERSIGHT.—The Sec-
retary may, in addition, reserve up to $12,500,000 each 
year for administration and oversight of this title, includ-
ing for program evaluation. 
(c) RESERVATION FOR ADDITIONAL PROGRAMS.— 
After reserving funds under subsections (a) and (b), the 
Secretary shall reserve $7,500,000,000 each year for 
grants under sections 13006 and 13007. 
(d) STATE ALLOCATIONS.—After carrying out sub-
sections (a), (b), and (c), the Secretary shall allocate the 
remaining funds made available to carry out this title to 
the States as follows: 
(1) 61 percent on the basis of their relative 
population of individuals aged 5 through 24. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00238
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
239 
(2) 39 percent on the basis of their relative 
total population. 
(e) STATE GRANTS.—From funds allocated under 
subsection (d), the Secretary shall make grants to the 
Governor of each State. 
(f) REALLOCATION.—The Governor shall return to 
the Secretary any funds received under subsection (e) that 
the Governor does not obligate within one year of receiving 
a grant, and the Secretary shall reallocate such funds to 
the remaining States in accordance with subsection (d). 
SEC. 13002. STATE USES OF FUNDS. 
(a) EDUCATION FUND.— 
(1) IN
GENERAL.—For each fiscal year, the 
Governor shall use at least 61 percent of the State’s 
allocation under section 13001 for the support of el-
ementary, secondary, and postsecondary education. 
(2) RESTORING 2008 STATE SUPPORT FOR EDU-
CATION.— 
(A) IN
GENERAL.—The Governor shall 
first use the funds described in paragraph (1)— 
(i) to provide the amount of funds, 
through the State’s principal elementary 
and secondary funding formula, that is 
needed to restore State support for elemen-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00239
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
240 
tary and secondary education to the fiscal 
year 2008 level; and 
(ii) to provide the amount of funds to 
public institutions of higher education in 
the State that is needed to restore State 
support for postsecondary education to the 
fiscal year 2008 level. 
(B) SHORTFALL.—If the Governor deter-
mines that the amount of funds available under 
paragraph (1) is insufficient to restore State 
support for education to the levels described in 
clauses (i) and (ii) of subparagraph (A), the 
Governor shall allocate those funds between 
those clauses in proportion to the relative short-
fall in State support for the education sectors 
described in those clauses. 
(3) SUBGRANTS TO IMPROVE BASIC PROGRAMS 
OPERATED
BY
LOCAL
EDUCATIONAL
AGENCIES.— 
After carrying out paragraph (2), the Governor shall 
use any funds remaining under paragraph (1) to 
provide local educational agencies in the State with 
subgrants based on their relative shares of funding 
under part A of title I of the Elementary and Sec-
ondary Education Act of 1965 (20 U.S.C. 6311 et 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00240
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
241 
seq.) for the most recent year for which data are 
available. 
(b) OTHER GOVERNMENT SERVICES.—For each fis-
cal year, the Governor may use up to 39 percent of the 
State’s allocation under section 1301 for public safety and 
other government services, which may include assistance 
for elementary and secondary education and public institu-
tions of higher education. 
SEC. 13003. USES OF FUNDS BY LOCAL EDUCATIONAL 
AGENCIES. 
(a) IN GENERAL.—A local educational agency that 
receives funds under this title may use the funds for any 
activity authorized by the Elementary and Secondary Edu-
cation Act of 1965 (20 U.S.C. 6301 et seq.) (‘‘ESEA’’), 
the Individuals with Disabilities Education Act (20 U.S.C. 
1400 et seq.) (‘‘IDEA’’), or the Carl D. Perkins Career 
and Technical Education Act of 2006 (20 U.S.C. 2301 
et seq.) (‘‘the Perkins Act’’). 
(b) PROHIBITION.—A local educational agency may 
not use funds received under this title for capital projects 
unless authorized by ESEA, IDEA, or the Perkins Act. 
SEC. 13004. USES OF FUNDS BY INSTITUTIONS OF HIGHER 
EDUCATION. 
(a) IN GENERAL.—A public institution of higher edu-
cation that receives funds under this title shall use the 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00241
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
242 
funds for education and general expenditures, and in such 
a way as to mitigate the need to raise tuition and fees 
for in-State students. 
(b) PROHIBITION.—An institution of higher edu-
cation may not use funds received under this title to in-
crease its endowment. 
(c) ADDITIONAL PROHIBITION.—An institution of 
higher education may not use funds received under this 
title for construction, renovation, or facility repair. 
SEC. 13005. STATE APPLICATIONS. 
(a) IN GENERAL.—The Governor of a State desiring 
to receive an allocation under section 13001 shall submit 
an annual application at such time, in such manner, and 
containing such information as the Secretary may reason-
ably require. 
(b) FIRST YEAR APPLICATION.—In the first of such 
applications, the Governor shall— 
(1) include the assurances described in sub-
section (e); 
(2) provide baseline data that demonstrates the 
State’s current status in each of the areas described 
in such assurances; and 
(3) describe how the State intends to use its al-
location. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00242
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
243 
(c) SECOND YEAR APPLICATION.—In the second year 
application, the Governor shall— 
(1) include the assurances described in sub-
section (e); and 
(2) describe how the State intends to use its al-
location. 
(d) INCENTIVE GRANT APPLICATION.—The Governor 
of a State seeking a grant under section 13006 shall— 
(1) submit an application for consideration; 
(2) describe the status of the State’s progress 
in each of the areas described in subsection (e), and 
the strategies the State is employing to help ensure 
that high-need students in the State continue mak-
ing progress towards meeting the State’s student 
academic achievement standards; 
(3) describe how the State would use its grant 
funding, including how it will allocate the funds to 
give priority to high-need schools and local edu-
cational agencies; and 
(4) include a plan for evaluating its progress in 
closing achievement gaps. 
(e) ASSURANCES.—An application under subsection 
(b) or (c) shall include the following assurances: 
(1) MAINTENANCE OF EFFORT.— 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00243
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
244 
(A) ELEMENTARY AND SECONDARY EDU-
CATION.—The State will, in each of fiscal years 
2009 and 2010, maintain State support for ele-
mentary and secondary education at least at 
the level of such support in fiscal year 2006. 
(B) HIGHER EDUCATION.—The State will, 
in each of fiscal years 2009 and 2010, maintain 
State support for public institutions of higher 
education (not including support for capital 
projects or for research and development) at 
least at the level of such support in fiscal year 
2006. 
(2) ACHIEVING EQUITY IN TEACHER DISTRIBU-
TION.—The State will take actions to comply with 
section 
1111(b)(8)(C) 
of 
ESEA 
(20 
U.S.C. 
6311(b)(8)(C)) in order to address inequities in the 
distribution of teachers between high-and low-pov-
erty schools, and to ensure that low-income and mi-
nority children are not taught at higher rates than 
other children by inexperienced, unqualified, or out- 
of-field teachers. 
(3) IMPROVING
COLLECTION
AND
USE
OF 
DATA.—The State will establish a longitudinal data 
system that includes the elements described in sec-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00244
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
245 
tion 6401(e)(2)(D) of the America COMPETES Act 
(20 U.S.C. 9871). 
(4) ASSESSMENTS.—The State— 
(A) will enhance the quality of academic 
assessments described in section 1111(b)(3) of 
ESEA (20 U.S.C. 6311(b)(3)) through activi-
ties such as those described in section 6112(a) 
of such Act (20 U.S.C. 7301a(a)); and 
(B) will comply with the requirements of 
paragraphs 3(C)(ix) and (6) of section 1111(b) 
of ESEA (20 U.S.C. 6311(b)) and section 
612(a)(16) of IDEA (20 U.S.C. 1412(a)(16)) 
related to the inclusion of children with disabil-
ities and limited English proficient students in 
State assessments, the development of valid and 
reliable assessments for those students, and the 
provision of accommodations that enable their 
participation in State assessments. 
SEC. 13006. STATE INCENTIVE GRANTS. 
(a) IN GENERAL.—From the total amount reserved 
under section 13001(c) that is not used for section 13007, 
the Secretary shall, in fiscal year 2010, make grants to 
States that have made significant progress in meeting the 
objectives of paragraphs (2), (3), and (4) of section 
13005(e). 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00245
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
246 
(b) BASIS FOR GRANTS.—The Secretary shall deter-
mine which States receive grants under this section, and 
the amount of those grants, on the basis of information 
provided in State applications under section 13005 and 
such other criteria as the Secretary determines appro-
priate. 
(c) SUBGRANTS
TO LOCAL EDUCATIONAL AGEN-
CIES.—Each State receiving a grant under this section 
shall use at least 50 percent of the grant to provide local 
educational agencies in the State with subgrants based on 
their relative shares of funding under part A of title I of 
ESEA (20 U.S.C. 6311 et seq.) for the most recent year. 
SEC. 13007. INNOVATION FUND. 
(a) IN GENERAL.— 
(1) PROGRAM ESTABLISHED.—From the total 
amount reserved under section 13001(c), the Sec-
retary may reserve up to $325,000,000 each year to 
establish an Innovation Fund, which shall consist of 
academic achievement awards that recognize States, 
local educational agencies, or schools that meet the 
requirements described in subsection (b). 
(2) BASIS FOR AWARDS.—The Secretary shall 
make awards to States, local educational agencies, 
or schools that have made significant gains in clos-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00246
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
247 
ing the achievement gap as described in subsection 
(b)(1)— 
(A) to allow such States, local educational 
agencies, and schools to expand their work and 
serve as models for best practices; 
(B) to allow such States, local educational 
agencies, and schools to work in partnership 
with the private sector and the philanthropic 
community; and 
(C) to identify and document best practices 
that can be shared, and taken to scale based on 
demonstrated success. 
(b) ELIGIBILITY.—To be eligible for such an award, 
a State, local educational agency, or school shall— 
(1) have significantly closed the achievement 
gaps between groups of students described in section 
1111(b)(2) of ESEA (20 U.S.C. 6311(b)(2)); 
(2) have exceeded the State’s annual measur-
able 
objectives 
consistent 
with 
such 
section 
1111(b)(2) for 2 or more consecutive years or have 
demonstrated success in significantly increasing stu-
dent academic achievement for all groups of stu-
dents described in such section through another 
measure, such as measures described in section 
1111(c)(2) of ESEA; 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00247
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
248 
(3) have made significant improvement in other 
areas, such as graduation rates or increased recruit-
ment and placement of high-quality teachers and 
school leaders, as demonstrated with meaningful 
data; and 
(4) demonstrate that they have established 
partnerships with the private sector, which may in-
clude philanthropic organizations, and that the pri-
vate sector will provide matching funds in order to 
help bring results to scale. 
SEC. 13008. STATE REPORTS. 
For each year of the program under this title, a State 
receiving funds under this title shall submit a report to 
the Secretary, at such time and in such manner as the 
Secretary may require, that describes— 
(1) the uses of funds provided under this title 
within the State; 
(2) how the State distributed the funds it re-
ceived under this title; 
(3) the number of jobs that the Governor esti-
mates were saved or created with funds the State re-
ceived under this title; 
(4) tax increases that the Governor estimates 
were averted because of the availability of funds 
from this title; 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00248
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
249 
(5) the State’s progress in reducing inequities 
in the distribution of teachers, in implementing a 
State student longitudinal data system, and in devel-
oping and implementing valid and reliable assess-
ments for limited English proficient students and 
children with disabilities; 
(6) the tuition and fee increases for in-State 
students imposed by public institutions of higher 
education in the State during the period of avail-
ability of funds under this title, and a description of 
any actions taken by the State to limit those in-
creases; and 
(7) the extent to which public institutions of 
higher education maintained, increased, or decreased 
enrollment of in-State students, including students 
eligible for Pell Grants or other need-based financial 
assistance. 
SEC. 13009. EVALUATION. 
The Comptroller General of the United States shall 
conduct evaluations of the programs under sections 13006 
and 13007 which shall include, but not be limited to, the 
criteria used for the awards made, the States selected for 
awards, award amounts, how each State used the award 
received, and the impact of this funding on the progress 
made toward closing achievement gaps. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00249
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
250 
SEC. 13010. SECRETARY’S REPORT TO CONGRESS. 
The Secretary shall submit a report to the Committee 
on Education and Labor of the House of Representatives, 
the Committee on Health, Education, Labor, and Pen-
sions of the Senate, and the Committees on Appropria-
tions of the House of Representatives and of the Senate, 
not less than 6 months following the submission of State 
reports, that evaluates the information provided in the 
State reports under section 13008. 
SEC. 13011. PROHIBITION ON PROVISION OF CERTAIN AS-
SISTANCE. 
No recipient of funds under this title shall use such 
funds to provide financial assistance to students to attend 
private elementary or secondary schools. 
SEC. 13012. DEFINITIONS. 
Except as otherwise provided in this title, as used in 
this title— 
(1) the term ‘‘institution of higher education’’ 
has the meaning given such term in section 101 of 
the Higher Education Act of 1965 (20 U.S.C. 
1001); 
(2) the term ‘‘Secretary’’ means the Secretary 
of Education; 
(3) the term ‘‘State’’ means each of the 50 
States, the District of Columbia, and the Common-
wealth of Puerto Rico; and 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00250
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
251 
(4) any other term used in this title that is de-
fined in section 9101 of ESEA (20 U.S.C. 7801) 
shall have the meaning given the term in that sec-
tion. 
DIVISION B—OTHER 
PROVISIONS 
TITLE I—TAX PROVISIONS 
SEC. 1000. SHORT TITLE, ETC. 
(a) SHORT TITLE.—This title may be cited as the 
‘‘American Recovery and Reinvestment Tax Act of 2009’’. 
(b) REFERENCE.—Except as otherwise expressly pro-
vided, whenever in this title an amendment or repeal is 
expressed in terms of an amendment to, or repeal of, a 
section or other provision, the reference shall be consid-
ered to be made to a section or other provision of the In-
ternal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.—The table of contents for 
this title is as follows: 
Sec. 1000. Short title, etc. 
Subtitle A—Making Work Pay 
Sec. 1001. Making work pay credit. 
Subtitle B—Additional Tax Relief for Families With Children 
Sec. 1101. Increase in earned income tax credit. 
Sec. 1102. Increase of refundable portion of child credit. 
Subtitle C—American Opportunity Tax Credit 
Sec. 1201. American opportunity tax credit. 
Subtitle D—Housing Incentives 
Sec. 1301. Waiver of requirement to repay first-time homebuyer credit. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00251
Fmt 6652
Sfmt 6211
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
252 
Sec. 1302. Coordination of low-income housing credit and low-income housing 
grants. 
Subtitle E—Tax Incentives for Business 
PART 1—TEMPORARY INVESTMENT INCENTIVES 
Sec. 1401. Special allowance for certain property acquired during 2009. 
Sec. 1402. Temporary increase in limitations on expensing of certain depre-
ciable business assets. 
PART 2—5-YEAR CARRYBACK OF OPERATING LOSSES 
Sec. 1411. 5-year carryback of operating losses. 
Sec. 1412. Exception for TARP recipients. 
PART 3—INCENTIVES FOR NEW JOBS 
Sec. 1421. Incentives to hire unemployed veterans and disconnected youth. 
PART 4—CLARIFICATION OF REGULATIONS RELATED TO LIMITATIONS ON 
CERTAIN BUILT-IN LOSSES FOLLOWING AN OWNERSHIP CHANGE 
Sec. 1431. Clarification of regulations related to limitations on certain built-in 
losses following an ownership change. 
Subtitle F—Fiscal Relief for State and Local Governments 
PART 1—IMPROVED MARKETABILITY FOR TAX-EXEMPT BONDS 
Sec. 1501. De minimis safe harbor exception for tax-exempt interest expense of 
financial institutions. 
Sec. 1502. Modification of small issuer exception to tax-exempt interest expense 
allocation rules for financial institutions. 
Sec. 1503. Temporary modification of alternative minimum tax limitations on 
tax-exempt bonds. 
PART 2—TAX CREDIT BONDS FOR SCHOOLS 
Sec. 1511. Qualified school construction bonds. 
Sec. 1512. Extension and expansion of qualified zone academy bonds. 
PART 3—TAXABLE BOND OPTION FOR GOVERNMENTAL BONDS 
Sec. 1521. Taxable bond option for governmental bonds. 
PART 4—RECOVERY ZONE BONDS 
Sec. 1531. Recovery zone bonds. 
Sec. 1532. Tribal economic development bonds. 
PART 5—REPEAL OF WITHHOLDING TAX ON GOVERNMENT CONTRACTORS 
Sec. 1541. Repeal of withholding tax on government contractors. 
Subtitle G—Energy Incentives 
PART 1—RENEWABLE ENERGY INCENTIVES 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00252
Fmt 6652
Sfmt 6211
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
253 
Sec. 1601. Extension of credit for electricity produced from certain renewable 
resources. 
Sec. 1602. Election of investment credit in lieu of production credit. 
Sec. 1603. Repeal of certain limitations on credit for renewable energy prop-
erty. 
Sec. 1604. Coordination with renewable energy grants. 
PART 2—INCREASED ALLOCATIONS OF NEW CLEAN RENEWABLE ENERGY 
BONDS AND QUALIFIED ENERGY CONSERVATION BONDS 
Sec. 1611. Increased limitation on issuance of new clean renewable energy 
bonds. 
Sec. 1612. Increased limitation and expansion of qualified energy conservation 
bonds. 
PART 3—ENERGY CONSERVATION INCENTIVES 
Sec. 1621. Extension and modification of credit for nonbusiness energy prop-
erty. 
Sec. 1622. Modification of credit for residential energy efficient property. 
Sec. 1623. Temporary increase in credit for alternative fuel vehicle refueling 
property. 
PART 4—ENERGY RESEARCH INCENTIVES 
Sec. 1631. Increased research credit for energy research. 
Subtitle H—Other Provisions 
PART 1—APPLICATION OF CERTAIN LABOR STANDARDS TO PROJECTS 
FINANCED WITH CERTAIN TAX-FAVORED BONDS 
Sec. 1701. Application of certain labor standards to projects financed with cer-
tain tax-favored bonds. 
PART 2—GRANTS TO PROVIDE FINANCING FOR LOW-INCOME HOUSING 
Sec. 1711. Grants to States for low-income housing projects in lieu of low-in-
come housing credit allocations for 2009. 
PART 3—GRANTS FOR SPECIFIED ENERGY PROPERTY IN LIEU OF TAX 
CREDITS 
Sec. 1721. Grants for specified energy property in lieu of tax credits. 
PART 4—STUDY OF ECONOMIC, EMPLOYMENT, AND RELATED EFFECTS OF 
THIS ACT 
Sec. 1731. Study of economic, employment, and related effects of this Act. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00253
Fmt 6652
Sfmt 6211
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
254 
Subtitle A—Making Work Pay 
SEC. 1001. MAKING WORK PAY CREDIT. 
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 is amended by inserting after sec-
tion 36 the following new section: 
‘‘SEC. 36A. MAKING WORK PAY CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli-
gible individual, there shall be allowed as a credit against 
the tax imposed by this subtitle for the taxable year an 
amount equal to the lesser of— 
‘‘(1) 6.2 percent of earned income of the tax-
payer, or 
‘‘(2) $500 ($1,000 in the case of a joint re-
turn). 
‘‘(b) LIMITATION BASED ON MODIFIED ADJUSTED 
GROSS INCOME.— 
‘‘(1) IN GENERAL.—The amount allowable as a 
credit under subsection (a) (determined without re-
gard to this paragraph) for the taxable year shall be 
reduced (but not below zero) by 2 percent of so 
much of the taxpayer’s modified adjusted gross in-
come as exceeds $75,000 ($150,000 in the case of 
a joint return). 
‘‘(2) MODIFIED
ADJUSTED
GROSS
INCOME.— 
For purposes of subparagraph (A), the term ‘modi-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00254
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
255 
fied adjusted gross income’ means the adjusted 
gross income of the taxpayer for the taxable year in-
creased by any amount excluded from gross income 
under section 911, 931, or 933. 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible 
individual’ means any individual other than— 
‘‘(A) any nonresident alien individual, 
‘‘(B) any individual with respect to whom 
a deduction under section 151 is allowable to 
another taxpayer for a taxable year beginning 
in the calendar year in which the individual’s 
taxable year begins, and 
‘‘(C) an estate or trust. 
Such term shall not include any individual unless the 
requirements of section 32(c)(1)(E) are met with re-
spect to such individual. 
‘‘(2) EARNED INCOME.—The term ‘earned in-
come’ has the meaning given such term by section 
32(c)(2), except that such term shall not include net 
earnings from self-employment which are not taken 
into account in computing taxable income. For pur-
poses of the preceding sentence, any amount ex-
cluded from gross income by reason of section 112 
shall be treated as earned income which is taken 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00255
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
256 
into account in computing taxable income for the 
taxable year. 
‘‘(d) TERMINATION.—This section shall not apply to 
taxable years beginning after December 31, 2010.’’. 
(b) TREATMENT OF POSSESSIONS.— 
(1) PAYMENTS TO POSSESSIONS.— 
(A) MIRROR CODE POSSESSION.—The Sec-
retary of the Treasury shall pay to each posses-
sion of the United States with a mirror code 
tax system amounts equal to the loss to that 
possession by reason of the amendments made 
by this section with respect to taxable years be-
ginning in 2009 and 2010. Such amounts shall 
be determined by the Secretary of the Treasury 
based on information provided by the govern-
ment of the respective possession. 
(B) OTHER POSSESSIONS.—The Secretary 
of the Treasury shall pay to each possession of 
the United States which does not have a mirror 
code tax system amounts estimated by the Sec-
retary of the Treasury as being equal to the ag-
gregate benefits that would have been provided 
to residents of such possession by reason of the 
amendments made by this section for taxable 
years beginning in 2009 and 2010 if a mirror 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00256
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
257 
code tax system had been in effect in such pos-
session. The preceding sentence shall not apply 
with respect to any possession of the United 
States unless such possession has a plan, which 
has been approved by the Secretary of the 
Treasury, under which such possession will 
promptly distribute such payments to the resi-
dents of such possession. 
(2) COORDINATION
WITH
CREDIT
ALLOWED 
AGAINST UNITED STATES INCOME TAXES.—No cred-
it shall be allowed against United States income 
taxes for any taxable year under section 36A of the 
Internal Revenue Code of 1986 (as added by this 
section) to any person— 
(A) to whom a credit is allowed against 
taxes imposed by the possession by reason of 
the amendments made by this section for such 
taxable year, or 
(B) who is eligible for a payment under a 
plan described in paragraph (1)(B) with respect 
to such taxable year. 
(3) DEFINITIONS AND SPECIAL RULES.— 
(A) 
POSSESSION
OF
THE
UNITED 
STATES.—For purposes of this subsection, the 
term ‘‘possession of the United States’’ includes 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00257
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
258 
the Commonwealth of Puerto Rico and the 
Commonwealth of the Northern Mariana Is-
lands. 
(B) MIRROR CODE TAX SYSTEM.—For pur-
poses of this subsection, the term ‘‘mirror code 
tax system’’ means, with respect to any posses-
sion of the United States, the income tax sys-
tem of such possession if the income tax liabil-
ity of the residents of such possession under 
such system is determined by reference to the 
income tax laws of the United States as if such 
possession were the United States. 
(C) TREATMENT OF PAYMENTS.—For pur-
poses of section 1324(b)(2) of title 31, United 
States Code, the payments under this sub-
section shall be treated in the same manner as 
a refund due from the credit allowed under sec-
tion 36A of the Internal Revenue Code of 1986 
(as added by this section). 
(c) REFUNDS DISREGARDED IN THE ADMINISTRA-
TION
OF FEDERAL PROGRAMS
AND FEDERALLY AS-
SISTED PROGRAMS.—Any credit or refund allowed or 
made to any individual by reason of section 36A of the 
Internal Revenue Code of 1986 (as added by this section) 
or by reason of subsection (b) of this section shall not be 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00258
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
259 
taken into account as income and shall not be taken into 
account as resources for the month of receipt and the fol-
lowing 2 months, for purposes of determining the eligi-
bility of such individual or any other individual for benefits 
or assistance, or the amount or extent of benefits or assist-
ance, under any Federal program or under any State or 
local program financed in whole or in part with Federal 
funds. 
(d) CONFORMING AMENDMENTS.— 
(1) Section 6211(b)(4)(A) is amended by insert-
ing ‘‘36A,’’ after ‘‘36,’’. 
(2) Section 1324(b)(2) of title 31, United 
States Code, is amended by inserting ‘‘36A,’’ after 
‘‘36,’’. 
(3) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 is amended by in-
serting after the item relating to section 36 the fol-
lowing new item: 
‘‘Sec. 36A. Making work pay credit.’’. 
(e) EFFECTIVE DATE.—This section shall apply to 
taxable years beginning after December 31, 2008. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00259
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
260 
Subtitle B—Additional Tax Relief 
for Families With Children 
SEC. 1101. INCREASE IN EARNED INCOME TAX CREDIT. 
(a) IN GENERAL.—Subsection (b) of section 32 is 
amended by adding at the end the following new para-
graph: 
‘‘(3) SPECIAL RULES FOR 2009 AND 2010.—In 
the case of any taxable year beginning in 2009 or 
2010— 
‘‘(A) INCREASED
CREDIT
PERCENTAGE 
FOR 3 OR MORE QUALIFYING CHILDREN.—In 
the case of a taxpayer with 3 or more qualifying 
children, the credit percentage is 45 percent. 
‘‘(B) REDUCTION
OF
MARRIAGE
PEN-
ALTY.— 
‘‘(i) IN GENERAL.—The dollar amount 
in effect under paragraph (2)(B) shall be 
$5,000. 
‘‘(ii) INFLATION
ADJUSTMENT.—In 
the case of any taxable year beginning in 
2010, the $5,000 amount in clause (i) 
shall be increased by an amount equal to— 
‘‘(I) such dollar amount, multi-
plied by 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00260
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
261 
‘‘(II) the cost of living adjust-
ment determined under section 1(f)(3) 
for the calendar year in which the tax-
able year begins determined by sub-
stituting ‘calendar year 2008’ for ‘cal-
endar year 1992’ in subparagraph (B) 
thereof. 
‘‘(iii) ROUNDING.—Subparagraph (A) 
of subsection (j)(2) shall apply after taking 
into account any increase under clause 
(ii).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 1102. INCREASE OF REFUNDABLE PORTION OF CHILD 
CREDIT. 
(a) IN GENERAL.—Paragraph (4) of section 24(d) is 
amended to read as follows: 
‘‘(4) SPECIAL RULE FOR 2009 AND 2010.—Not-
withstanding paragraph (3), in the case of any tax-
able year beginning in 2009 or 2010, the dollar 
amount in effect for such taxable year under para-
graph (1)(B)(i) shall be zero.’’. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00261
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
262 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
Subtitle C—American Opportunity 
Tax Credit 
SEC. 1201. AMERICAN OPPORTUNITY TAX CREDIT. 
(a) IN GENERAL.—Section 25A (relating to Hope 
scholarship credit) is amended by redesignating subsection 
(i) as subsection (j) and by inserting after subsection (h) 
the following new subsection: 
‘‘(i) AMERICAN OPPORTUNITY TAX CREDIT.—In the 
case of any taxable year beginning in 2009 or 2010— 
‘‘(1) INCREASE IN CREDIT.—The Hope Scholar-
ship Credit shall be an amount equal to the sum 
of— 
‘‘(A) 100 percent of so much of the quali-
fied tuition and related expenses paid by the 
taxpayer during the taxable year (for education 
furnished to the eligible student during any 
academic period beginning in such taxable year) 
as does not exceed $2,000, plus 
‘‘(B) 25 percent of such expenses so paid 
as exceeds $2,000 but does not exceed $4,000. 
‘‘(2) CREDIT ALLOWED FOR FIRST 4 YEARS OF 
POST-SECONDARY EDUCATION.—Subparagraphs (A) 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00262
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
263 
and (C) of subsection (b)(2) shall be applied by sub-
stituting ‘4’ for ‘2’. 
‘‘(3) QUALIFIED
TUITION
AND
RELATED
EX-
PENSES
TO
INCLUDE
REQUIRED
COURSE
MATE-
RIALS.—Subsection (f)(1)(A) shall be applied by 
substituting ‘tuition, fees, and course materials’ for 
‘tuition and fees’. 
‘‘(4) INCREASE
IN
AGI
LIMITS
FOR
HOPE 
SCHOLARSHIP
CREDIT.—In lieu of applying sub-
section (d) with respect to the Hope Scholarship 
Credit, such credit (determined without regard to 
this paragraph) shall be reduced (but not below 
zero) by the amount which bears the same ratio to 
such credit (as so determined) as— 
‘‘(A) the excess of— 
‘‘(i) the taxpayer’s modified adjusted 
gross income (as defined in subsection 
(d)(3)) for such taxable year, over 
‘‘(ii) $80,000 ($160,000 in the case of 
a joint return), bears to 
‘‘(B) $10,000 ($20,000 in the case of a 
joint return). 
‘‘(5) CREDIT ALLOWED AGAINST ALTERNATIVE 
MINIMUM TAX.—In the case of a taxable year to 
which section 26(a)(2) does not apply, so much of 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00263
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
264 
the credit allowed under subsection (a) as is attrib-
utable to the Hope Scholarship Credit shall not ex-
ceed the excess of— 
‘‘(A) the sum of the regular tax liability 
(as defined in section 26(b)) plus the tax im-
posed by section 55, over 
‘‘(B) the sum of the credits allowable 
under this subpart (other than this subsection 
and sections 23, 25D, and 30D) and section 27 
for the taxable year. 
Any reference in this section or section 24, 25, 26, 
25B, 904, or 1400C to a credit allowable under this 
subsection shall be treated as a reference to so much 
of the credit allowable under subsection (a) as is at-
tributable to the Hope Scholarship Credit. 
‘‘(6) PORTION
OF
CREDIT
MADE
REFUND-
ABLE.—40 percent of so much of the credit allowed 
under subsection (a) as is attributable to the Hope 
Scholarship Credit (determined after application of 
paragraph (4) and without regard to this paragraph 
and section 26(a)(2) or paragraph (5), as the case 
may be) shall be treated as a credit allowable under 
subpart C (and not allowed under subsection (a)). 
The preceding sentence shall not apply to any tax-
payer for any taxable year if such taxpayer is a child 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00264
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
266 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
(d) APPLICATION
OF
EGTRRA SUNSET.—The 
amendment made by subsection (b)(1) shall be subject to 
title IX of the Economic Growth and Tax Relief Reconcili-
ation Act of 2001 in the same manner as the provision 
of such Act to which such amendment relates. 
(e) TREASURY STUDIES REGARDING EDUCATION IN-
CENTIVES.— 
(1) STUDY
REGARDING
COORDINATION
WITH 
NON-TAX
EDUCATIONAL
INCENTIVES.—The Sec-
retary of the Treasury, or the Secretary’s delegate, 
shall study how to coordinate the credit allowed 
under section 25A of the Internal Revenue Code of 
1986 with the Federal Pell Grant program under 
section 401 of the Higher Education Act of 1965. 
(2) STUDY REGARDING IMPOSITION OF COMMU-
NITY
SERVICE
REQUIREMENTS.—The Secretary of 
the Treasury, or the Secretary’s delegate, shall study 
the feasibility of requiring students to perform com-
munity service as a condition of taking their tuition 
and related expenses into account under section 25A 
of the Internal Revenue Code of 1986. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00266
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
267 
(3) REPORT.—Not later than 1 year after the 
date of the enactment of this Act, the Secretary of 
the Treasury, or the Secretary’s delegate, shall re-
port to Congress on the results of the studies con-
ducted under this paragraph. 
Subtitle D—Housing Incentives 
SEC. 1301. WAIVER OF REQUIREMENT TO REPAY FIRST- 
TIME HOMEBUYER CREDIT. 
(a) IN GENERAL.—Paragraph (4) of section 36(f) is 
amended by adding at the end the following new subpara-
graph: 
‘‘(D) WAIVER OF RECAPTURE FOR PUR-
CHASES IN 2009.—In the case of any credit al-
lowed with respect to the purchase of a prin-
cipal residence after December 31, 2008, and 
before July 1, 2009— 
‘‘(i) paragraph (1) shall not apply, 
and 
‘‘(ii) paragraph (2) shall apply only if 
the disposition or cessation described in 
paragraph (2) with respect to such resi-
dence occurs during the 36-month period 
beginning on the date of the purchase of 
such residence by the taxpayer.’’. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00267
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
268 
(b) CONFORMING AMENDMENT.—Subsection (g) of 
section 36 is amended by striking ‘‘subsection (c)’’ and 
inserting ‘‘subsections (c) and (f)(4)(D)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to residences purchased after De-
cember 31, 2008. 
SEC. 1302. COORDINATION OF LOW-INCOME HOUSING 
CREDIT AND LOW-INCOME HOUSING GRANTS. 
Subsection (i) of section 42 of the Internal Revenue 
Code of 1986 is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(9) COORDINATION WITH LOW-INCOME HOUS-
ING GRANTS.— 
‘‘(A) REDUCTION
IN
STATE
HOUSING 
CREDIT
CEILING
FOR
LOW-INCOME
HOUSING 
GRANTS RECEIVED IN 2009.—For purposes of 
this section, the amounts described in clauses 
(i) through (iv) of subsection (h)(3)(C) with re-
spect to any State for 2009 shall each be re-
duced by so much of such amount as is taken 
into account in determining the amount of any 
grant to such State under section 1711 of the 
American Recovery and Reinvestment Tax Act 
of 2009. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00268
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
269 
‘‘(B) SPECIAL RULE FOR BASIS.—Basis of 
a qualified low-income building shall not be re-
duced by the amount of any grant described in 
subparagraph (A).’’. 
Subtitle E—Tax Incentives for 
Business 
PART 1—TEMPORARY INVESTMENT INCENTIVES 
SEC. 1401. SPECIAL ALLOWANCE FOR CERTAIN PROPERTY 
ACQUIRED DURING 2009. 
(a) IN GENERAL.—Paragraph (2) of section 168(k) 
is amended— 
(1) by striking ‘‘January 1, 2010’’ and insert-
ing ‘‘January 1, 2011’’, and 
(2) by striking ‘‘January 1, 2009’’ each place 
it appears and inserting ‘‘January 1, 2010’’. 
(b) CONFORMING AMENDMENTS.— 
(1) The heading for subsection (k) of section 
168 is amended by striking ‘‘JANUARY 1, 2009’’ and 
inserting ‘‘JANUARY 1, 2010’’. 
(2) The heading for clause (ii) of section 
168(k)(2)(B) is amended by striking ‘‘PRE-JANUARY 
1, 2009’’ and inserting ‘‘PRE-JANUARY 1, 2010’’. 
(3) Subparagraph (D) of section 168(k)(4) is 
amended— 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00269
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
270 
(A) by striking ‘‘and’’ at the end of clause 
(i), 
(B) by redesignating clause (ii) as clause 
(v), and 
(C) by inserting after clause (i) the fol-
lowing new clauses: 
‘‘(ii) ‘April 1, 2008’ shall be sub-
stituted for ‘January 1, 2008’ in subpara-
graph (A)(iii)(I) thereof, 
‘‘(iii) ‘January 1, 2009’ shall be sub-
stituted for ‘January 1, 2010’ each place it 
appears, 
‘‘(iv) ‘January 1, 2010’ shall be sub-
stituted for ‘January 1, 2011’ in subpara-
graph (A)(iv) thereof, and’’. 
(4) Subparagraph (B) of section 168(l)(5) is 
amended by striking ‘‘January 1, 2009’’ and insert-
ing ‘‘January 1, 2010’’. 
(5) Subparagraph (B) of section 1400N(d)(3) 
is amended by striking ‘‘January 1, 2009’’ and in-
serting ‘‘January 1, 2010’’. 
(c) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to property placed in service after De-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00270
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
271 
cember 31, 2008, in taxable years ending after such 
date. 
(2) 
TECHNICAL
AMENDMENT.—Section 
168(k)(4)(D)(ii) of the Internal Revenue Code of 
1986, as added by subsection (b)(3)(C), shall apply 
to taxable years ending after March 31, 2008. 
SEC. 1402. TEMPORARY INCREASE IN LIMITATIONS ON EX-
PENSING OF CERTAIN DEPRECIABLE BUSI-
NESS ASSETS. 
(a) IN GENERAL.—Paragraph (7) of section 179(b) 
is amended— 
(1) by striking ‘‘2008’’ and inserting ‘‘2008, or 
2009’’, and 
(2) by striking ‘‘2008’’ in the heading thereof 
and inserting ‘‘2008, AND 2009’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
PART 2—5-YEAR CARRYBACK OF OPERATING 
LOSSES 
SEC. 1411. 5-YEAR CARRYBACK OF OPERATING LOSSES. 
(a) IN GENERAL.—Subparagraph (H) of section 
172(b)(1) is amended to read as follows: 
‘‘(H) CARRYBACK FOR 2008 AND 2009 NET 
OPERATING LOSSES.— 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00271
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
272 
‘‘(i) IN GENERAL.—In the case of an 
applicable 2008 or 2009 net operating loss 
with respect to which the taxpayer has 
elected the application of this subpara-
graph— 
‘‘(I) such net operating loss shall 
be reduced by 10 percent of such loss 
(determined without regard to this 
subparagraph), 
‘‘(II) subparagraph (A)(i) shall 
be applied by substituting any whole 
number elected by the taxpayer which 
is more than 2 and less than 6 for ‘2’, 
‘‘(III) subparagraph (E)(ii) shall 
be applied by substituting the whole 
number which is one less than the 
whole number substituted under sub-
clause (II) for ‘2’, and 
‘‘(IV) subparagraph (F) shall not 
apply. 
‘‘(ii) APPLICABLE 2008 OR 2009 NET 
OPERATING
LOSS.—For purposes of this 
subparagraph, the term ‘applicable 2008 
or 2009 net operating loss’ means— 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00272
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
273 
‘‘(I) the taxpayer’s net operating 
loss for any taxable year ending in 
2008 or 2009, or 
‘‘(II) if the taxpayer elects to 
have this subclause apply in lieu of 
subclause (I), the taxpayer’s net oper-
ating loss for any taxable year begin-
ning in 2008 or 2009. 
‘‘(iii) ELECTION.—Any election under 
this subparagraph shall be made in such 
manner as may be prescribed by the Sec-
retary, and shall be made by the due date 
(including extension of time) for filing the 
taxpayer’s return for the taxable year of 
the net operating loss. Any such election, 
once made, shall be irrevocable. 
‘‘(iv) COORDINATION
WITH
ALTER-
NATIVE TAX NET OPERATING LOSS DEDUC-
TION.—In the case of a taxpayer who 
elects to have clause (ii)(II) apply, section 
56(d)(1)(A)(ii) shall be applied by sub-
stituting ‘ending during 2001 or 2002 or 
beginning during 2008 or 2009’ for ‘end-
ing during 2001, 2002, 2008, or 2009’.’’. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00273
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
274 
(b) ALTERNATIVE TAX NET OPERATING LOSS DE-
DUCTION.—Subclause (I) of section 56(d)(1)(A)(ii) is 
amended to read as follows: 
‘‘(I) the amount of such deduc-
tion attributable to the sum of 
carrybacks of net operating losses 
from taxable years ending during 
2001, 2002, 2008, or 2009 and 
carryovers of net operating losses to 
such taxable years, or’’. 
(c) LOSS FROM OPERATIONS OF LIFE INSURANCE 
COMPANIES.—Subsection (b) of section 810 is amended 
by adding at the end the following new paragraph: 
‘‘(4) CARRYBACK FOR 2008 AND 2009 LOSSES.— 
‘‘(A) IN GENERAL.—In the case of an ap-
plicable 2008 or 2009 loss from operations with 
respect to which the taxpayer has elected the 
application of this paragraph— 
‘‘(i) such loss from operations shall be 
reduced by 10 percent of such loss (deter-
mined without regard to this paragraph), 
and 
‘‘(ii) paragraph (1)(A) shall be ap-
plied, at the election of the taxpayer, by 
substituting ‘5’ or ‘4’ for ‘3’. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00274
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
275 
‘‘(B) APPLICABLE 2008 OR 2009 LOSS FROM 
OPERATIONS.—For purposes of this paragraph, 
the term ‘applicable 2008 or 2009 loss from op-
erations’ means— 
‘‘(i) the taxpayer’s loss from oper-
ations for any taxable year ending in 2008 
or 2009, or 
‘‘(ii) if the taxpayer elects to have this 
clause apply in lieu of clause (i), the tax-
payer’s loss from operations for any tax-
able year beginning in 2008 or 2009. 
‘‘(C) ELECTION.—Any election under this 
paragraph shall be made in such manner as 
may be prescribed by the Secretary, and shall 
be made by the due date (including extension of 
time) for filing the taxpayer’s return for the 
taxable year of the loss from operations. Any 
such election, once made, shall be irrevocable. 
‘‘(D) COORDINATION WITH ALTERNATIVE 
TAX NET OPERATING LOSS DEDUCTION.—In the 
case of a taxpayer who elects to have subpara-
graph (B)(ii) apply, section 56(d)(1)(A)(ii) shall 
be applied by substituting ‘ending during 2001 
or 2002 or beginning during 2008 or 2009’ for 
‘ending during 2001, 2002, 2008, or 2009’.’’. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00275
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
276 
(d) CONFORMING
AMENDMENT.—Section 172 is 
amended by striking subsection (k). 
(e) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to net operating losses aris-
ing in taxable years ending after December 31, 
2007. 
(2) ALTERNATIVE TAX NET OPERATING LOSS 
DEDUCTION.—The amendment made by subsection 
(b) shall apply to taxable years ending after 1997. 
(3) LOSS FROM OPERATIONS OF LIFE INSUR-
ANCE COMPANIES.—The amendment made by sub-
section (d) shall apply to losses from operations aris-
ing in taxable years ending after December 31, 
2007. 
(4) TRANSITIONAL RULE.—In the case of a net 
operating loss (or, in the case of a life insurance 
company, a loss from operations) for a taxable year 
ending before the date of the enactment of this 
Act— 
(A) any election made under section 
172(b)(3) or 810(b)(3) of the Internal Revenue 
Code of 1986 with respect to such loss may 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00276
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
277 
(notwithstanding such section) be revoked be-
fore the applicable date, 
(B) any election made under section 
172(b)(1)(H) or 810(b)(4) of such Code with 
respect to such loss shall (notwithstanding such 
section) be treated as timely made if made be-
fore the applicable date, and 
(C) any application under section 6411(a) 
of such Code with respect to such loss shall be 
treated as timely filed if filed before the appli-
cable date. 
For purposes of this paragraph, the term ‘‘applica-
ble date’’ means the date which is 60 days after the 
date of the enactment of this Act. 
SEC. 1412. EXCEPTION FOR TARP RECIPIENTS. 
The amendments made by this part shall not apply 
to— 
(1) any taxpayer if— 
(A) the Federal Government acquires, at 
any time, an equity interest in the taxpayer 
pursuant to the Emergency Economic Stabiliza-
tion Act of 2008, or 
(B) the Federal Government acquires, at 
any time, any warrant (or other right) to ac-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00277
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
278 
quire any equity interest with respect to the 
taxpayer pursuant to such Act, 
(2) the Federal National Mortgage Association 
and the Federal Home Loan Mortgage Corporation, 
and 
(3) any taxpayer which at any time in 2008 or 
2009 is a member of the same affiliated group (as 
defined in section 1504 of the Internal Revenue 
Code of 1986, determined without regard to sub-
section (b) thereof) as a taxpayer described in para-
graph (1) or (2). 
PART 3—INCENTIVES FOR NEW JOBS 
SEC. 1421. INCENTIVES TO HIRE UNEMPLOYED VETERANS 
AND DISCONNECTED YOUTH. 
(a) IN GENERAL.—Subsection (d) of section 51 is 
amended by adding at the end the following new para-
graph: 
‘‘(14) CREDIT
ALLOWED
FOR
UNEMPLOYED 
VETERANS
AND
DISCONNECTED
YOUTH
HIRED
IN 
2009 OR 2010.— 
‘‘(A) IN GENERAL.—Any unemployed vet-
eran or disconnected youth who begins work for 
the employer during 2009 or 2010 shall be 
treated as a member of a targeted group for 
purposes of this subpart. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00278
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
279 
‘‘(B) DEFINITIONS.—For purposes of this 
paragraph— 
‘‘(i) UNEMPLOYED
VETERAN.—The 
term ‘unemployed veteran’ means any vet-
eran (as defined in paragraph (3)(B), de-
termined without regard to clause (ii) 
thereof) who is certified by the designated 
local agency as— 
‘‘(I) having been discharged or 
released from active duty in the 
Armed Forces during 2008, 2009, or 
2010, and 
‘‘(II) being in receipt of unem-
ployment compensation under State or 
Federal law for not less than 4 weeks 
during the 1-year period ending on 
the hiring date. 
‘‘(ii) DISCONNECTED
YOUTH.—The 
term ‘disconnected youth’ means any indi-
vidual who is certified by the designated 
local agency— 
‘‘(I) as having attained age 16 
but not age 25 on the hiring date, 
‘‘(II) as not regularly attending 
any secondary, technical, or post-sec-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00279
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
280 
ondary school during the 6-month pe-
riod preceding the hiring date, 
‘‘(III) as not regularly employed 
during such 6-month period, and 
‘‘(IV) as not readily employable 
by reason of lacking a sufficient num-
ber of basic skills.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to individuals who begin work for 
the employer after December 31, 2008. 
PART 4—CLARIFICATION OF REGULATIONS RE-
LATED TO LIMITATIONS ON CERTAIN BUILT- 
IN 
LOSSES 
FOLLOWING 
AN 
OWNERSHIP 
CHANGE 
SEC. 1431. CLARIFICATION OF REGULATIONS RELATED TO 
LIMITATIONS ON CERTAIN BUILT-IN LOSSES 
FOLLOWING AN OWNERSHIP CHANGE. 
(a) FINDINGS.—Congress finds as follows: 
(1) The delegation of authority to the Secretary 
of the Treasury under section 382(m) of the Inter-
nal Revenue Code of 1986 does not authorize the 
Secretary to provide exemptions or special rules that 
are restricted to particular industries or classes of 
taxpayers. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00280
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
281 
(2) Internal Revenue Service Notice 2008–83 is 
inconsistent with the congressional intent in enact-
ing such section 382(m). 
(3) The legal authority to prescribe Internal 
Revenue Service Notice 2008–83 is doubtful. 
(4) However, as taxpayers should generally be 
able to rely on guidance issued by the Secretary of 
the Treasury legislation is necessary to clarify the 
force and effect of Internal Revenue Service Notice 
2008–83 and restore the proper application under 
the Internal Revenue Code of 1986 of the limitation 
on built-in losses following an ownership change of 
a bank. 
(b) DETERMINATION OF FORCE AND EFFECT OF IN-
TERNAL REVENUE SERVICE NOTICE 2008–83 EXEMPT-
ING BANKS FROM LIMITATION ON CERTAIN BUILT–IN 
LOSSES FOLLOWING OWNERSHIP CHANGE.— 
(1) IN
GENERAL.—Internal Revenue Service 
Notice 2008–83— 
(A) shall be deemed to have the force and 
effect of law with respect to any ownership 
change (as defined in section 382(g) of the In-
ternal Revenue Code of 1986) occurring on or 
before January 16, 2009, and 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00281
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
282 
(B) shall have no force or effect with re-
spect to any ownership change after such date. 
(2) 
BINDING
CONTRACTS.—Notwithstanding 
paragraph (1), Internal Revenue Service Notice 
2008–83 shall have the force and effect of law with 
respect to any ownership change (as so defined) 
which occurs after January 16, 2009 if such 
change— 
(A) is pursuant to a written binding con-
tract entered into on or before such date, or 
(B) is pursuant to a written agreement en-
tered into on or before such date and such 
agreement was described on or before such date 
in a public announcement or in a filing with the 
Securities and Exchange Commission required 
by reason of such ownership change. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00282
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
283 
Subtitle F—Fiscal Relief for State 
and Local Governments 
PART 1—IMPROVED MARKETABILITY FOR TAX- 
EXEMPT BONDS 
SEC. 1501. DE MINIMIS SAFE HARBOR EXCEPTION FOR TAX- 
EXEMPT INTEREST EXPENSE OF FINANCIAL 
INSTITUTIONS. 
(a) IN GENERAL.—Subsection (b) of section 265 is 
amended by adding at the end the following new para-
graph: 
‘‘(7) DE
MINIMIS
EXCEPTION
FOR
BONDS 
ISSUED DURING 2009 OR 2010.— 
‘‘(A) IN GENERAL.—In applying paragraph 
(2)(A), there shall not be taken into account 
tax-exempt obligations issued during 2009 or 
2010. 
‘‘(B) LIMITATION.—The amount of tax-ex-
empt obligations not taken into account by rea-
son of subparagraph (A) shall not exceed 2 per-
cent of the amount determined under para-
graph (2)(B). 
‘‘(C) REFUNDINGS.—For purposes of this 
paragraph, a refunding bond (whether a current 
or advance refunding) shall be treated as issued 
on the date of the issuance of the refunded 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00283
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
284 
bond (or in the case of a series of refundings, 
the original bond).’’. 
(b) TREATMENT AS FINANCIAL INSTITUTION PREF-
ERENCE ITEM.—Clause (iv) of section 291(e)(1)(B) is 
amended by adding at the end the following: ‘‘That por-
tion of any obligation not taken into account under para-
graph (2)(A) of section 265(b) by reason of paragraph (7) 
of such section shall be treated for purposes of this section 
as having been acquired on August 7, 1986.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after Decem-
ber 31, 2008. 
SEC. 1502. MODIFICATION OF SMALL ISSUER EXCEPTION 
TO TAX-EXEMPT INTEREST EXPENSE ALLOCA-
TION RULES FOR FINANCIAL INSTITUTIONS. 
(a) IN GENERAL.—Paragraph (3) of section 265(b) 
(relating to exception for certain tax-exempt obligations) 
is amended by adding at the end the following new sub-
paragraph: 
‘‘(G) SPECIAL
RULES
FOR
OBLIGATIONS 
ISSUED DURING 2009 AND 2010.— 
‘‘(i) INCREASE
IN
LIMITATION.—In 
the case of obligations issued during 2009 
or 2010, subparagraphs (C)(i), (D)(i), and 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00284
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
285 
(D)(iii)(II) shall each be applied by sub-
stituting ‘$30,000,000’ for ‘$10,000,000’. 
‘‘(ii) 
QUALIFIED
501(C)(3)
BONDS 
TREATED AS ISSUED BY EXEMPT ORGANI-
ZATION.—In the case of a qualified 
501(c)(3) bond (as defined in section 145) 
issued during 2009 or 2010, this para-
graph shall be applied by treating the 
501(c)(3) organization for whose benefit 
such bond was issued as the issuer. 
‘‘(iii) SPECIAL RULE FOR QUALIFIED 
FINANCINGS.—In the case of a qualified fi-
nancing issue issued during 2009 or 
2010— 
‘‘(I) subparagraph (F) shall not 
apply, and 
‘‘(II) any obligation issued as a 
part of such issue shall be treated as 
a qualified tax-exempt obligation if 
the requirements of this paragraph 
are met with respect to each qualified 
portion of the issue (determined by 
treating each qualified portion as a 
separate issue issued by the qualified 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00285
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
286 
borrower with respect to which such 
portion relates). 
‘‘(iv) QUALIFIED FINANCING ISSUE.— 
For purposes of this subparagraph, the 
term ‘qualified financing issue’ means any 
composite, pooled, or other conduit financ-
ing issue the proceeds of which are used 
directly or indirectly to make or finance 
loans to one or more ultimate borrowers 
each of whom is a qualified borrower. 
‘‘(v) QUALIFIED PORTION.—For pur-
poses of this subparagraph, the term 
‘qualified portion’ means that portion of 
the proceeds which are used with respect 
to each qualified borrower under the issue. 
‘‘(vi) QUALIFIED
BORROWER.—For 
purposes of this subparagraph, the term 
‘qualified borrower’ means a borrower 
which is a State or political subdivision 
thereof or an organization described in sec-
tion 501(c)(3) and exempt from taxation 
under section 501(a).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after Decem-
ber 31, 2008. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00286
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
287 
SEC. 1503. TEMPORARY MODIFICATION OF ALTERNATIVE 
MINIMUM TAX LIMITATIONS ON TAX-EXEMPT 
BONDS. 
(a) INTEREST ON PRIVATE ACTIVITY BONDS ISSUED 
DURING 2009 AND 2010 NOT TREATED AS TAX PREF-
ERENCE ITEM.—Subparagraph (C) of section 57(a)(5) is 
amended by adding at the end a new clause: 
‘‘(vi) EXCEPTION FOR BONDS ISSUED 
IN 2009 AND 2010.—For purposes of clause 
(i), the term ‘private activity bond’ shall 
not include any bond issued after Decem-
ber 31, 2008, and before January 1, 2011. 
For purposes of the preceding sentence, a 
refunding bond (whether a current or ad-
vance refunding) shall be treated as issued 
on the date of the issuance of the refunded 
bond (or in the case of a series of 
refundings, the original bond).’’. 
(b) NO
ADJUSTMENT
TO
ADJUSTED
CURRENT 
EARNINGS
FOR
INTEREST
ON
TAX-EXEMPT
BONDS 
ISSUED AFTER 2008.—Subparagraph (B) of section 
56(g)(4) is amended by adding at the end the following 
new clause: 
‘‘(iv) TAX
EXEMPT
INTEREST
ON 
BONDS ISSUED IN 2009 AND 2010.—Clause 
(i) shall not apply in the case of any inter-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00287
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
288 
est on a bond issued after December 31, 
2008, and before January 1, 2011. For 
purposes of the preceding sentence, a re-
funding bond (whether a current or ad-
vance refunding) shall be treated as issued 
on the date of the issuance of the refunded 
bond (or in the case of a series of 
refundings, the original bond).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after Decem-
ber 31, 2008. 
PART 2—TAX CREDIT BONDS FOR SCHOOLS 
SEC. 1511. QUALIFIED SCHOOL CONSTRUCTION BONDS. 
(a) IN GENERAL.—Subpart I of part IV of sub-
chapter A of chapter 1 is amended by adding at the end 
the following new section: 
‘‘SEC. 54F. QUALIFIED SCHOOL CONSTRUCTION BONDS. 
‘‘(a) QUALIFIED SCHOOL CONSTRUCTION BOND.— 
For purposes of this subchapter, the term ‘qualified school 
construction bond’ means any bond issued as part of an 
issue if— 
‘‘(1) 100 percent of the available project pro-
ceeds of such issue are to be used for the construc-
tion, rehabilitation, or repair of a public school facil-
ity or for the acquisition of land on which such a fa-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00288
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
289 
cility is to be constructed with part of the proceeds 
of such issue, 
‘‘(2) the bond is issued by a State or local gov-
ernment within the jurisdiction of which such school 
is located, and 
‘‘(3) the issuer designates such bond for pur-
poses of this section. 
‘‘(b) LIMITATION
ON AMOUNT
OF BONDS DES-
IGNATED.—The maximum aggregate face amount of 
bonds issued during any calendar year which may be des-
ignated under subsection (a) by any issuer shall not exceed 
the sum of— 
‘‘(1) the limitation amount allocated under sub-
section (d) for such calendar year to such issuer, 
and 
‘‘(2) if such issuer is a large local educational 
agency (as defined in subsection (e)(4)) or is issuing 
on behalf of such an agency, the limitation amount 
allocated under subsection (e) for such calendar year 
to such agency. 
‘‘(c) NATIONAL LIMITATION ON AMOUNT OF BONDS 
DESIGNATED.—There is a national qualified school con-
struction bond limitation for each calendar year. Such lim-
itation is— 
‘‘(1) $11,000,000,000 for 2009, 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00289
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
290 
‘‘(2) $11,000,000,000 for 2010, and 
‘‘(3) except as provided in subsection (f), zero 
after 2010. 
‘‘(d) 60 PERCENT
OF
LIMITATION
ALLOCATED 
AMONG STATES.— 
‘‘(1) IN GENERAL.—60 percent of the limitation 
applicable under subsection (c) for any calendar year 
shall be allocated by the Secretary among the States 
in proportion to the respective numbers of children 
in each State who have attained age 5 but not age 
18 for the most recent fiscal year ending before such 
calendar year. The limitation amount allocated to a 
State under the preceding sentence shall be allocated 
by the State to issuers within such State. 
‘‘(2) MINIMUM ALLOCATIONS TO STATES.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
adjust the allocations under this subsection for 
any calendar year for each State to the extent 
necessary to ensure that the sum of— 
‘‘(i) the amount allocated to such 
State under this subsection for such year, 
and 
‘‘(ii) the aggregate amounts allocated 
under subsection (e) to large local edu-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00290
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
291 
cational agencies in such State for such 
year, 
is not less than an amount equal to such 
State’s adjusted minimum percentage of the 
amount to be allocated under paragraph (1) for 
the calendar year. 
‘‘(B) ADJUSTED MINIMUM PERCENTAGE.— 
A State’s adjusted minimum percentage for any 
calendar year is the product of— 
‘‘(i) the minimum percentage de-
scribed in section 1124(d) of the Elemen-
tary and Secondary Education Act of 1965 
(20 U.S.C. 6334(d)) for such State for the 
most recent fiscal year ending before such 
calendar year, multiplied by 
‘‘(ii) 1.68. 
‘‘(3) 
ALLOCATIONS
TO
CERTAIN
POSSES-
SIONS.—The amount to be allocated under para-
graph (1) to any possession of the United States 
other than Puerto Rico shall be the amount which 
would have been allocated if all allocations under 
paragraph (1) were made on the basis of respective 
populations of individuals below the poverty line (as 
defined by the Office of Management and Budget). 
In making other allocations, the amount to be allo-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00291
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
292 
cated under paragraph (1) shall be reduced by the 
aggregate amount allocated under this paragraph to 
possessions of the United States. 
‘‘(4) ALLOCATIONS FOR INDIAN SCHOOLS.—In 
addition to the amounts otherwise allocated under 
this subsection, $200,000,000 for calendar year 
2009, and $200,000,000 for calendar year 2010, 
shall be allocated by the Secretary of the Interior for 
purposes of the construction, rehabilitation, and re-
pair of schools funded by the Bureau of Indian Af-
fairs. In the case of amounts allocated under the 
preceding sentence, Indian tribal governments (as 
defined in section 7701(a)(40)) shall be treated as 
qualified issuers for purposes of this subchapter. 
‘‘(e) 40 PERCENT
OF
LIMITATION
ALLOCATED 
AMONG LARGEST SCHOOL DISTRICTS.— 
‘‘(1) IN GENERAL.—40 percent of the limitation 
applicable under subsection (c) for any calendar year 
shall be allocated under paragraph (2) by the Sec-
retary among local educational agencies which are 
large local educational agencies for such year. 
‘‘(2) ALLOCATION FORMULA.—The amount to 
be allocated under paragraph (1) for any calendar 
year shall be allocated among large local educational 
agencies in proportion to the respective amounts 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00292
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
293 
each such agency received for Basic Grants under 
subpart 2 of part A of title I of the Elementary and 
Secondary Education Act of 1965 (20 U.S.C. 6331 
et seq.) for the most recent fiscal year ending before 
such calendar year. 
‘‘(3) ALLOCATION OF UNUSED LIMITATION TO 
STATE.—The amount allocated under this subsection 
to a large local educational agency for any calendar 
year may be reallocated by such agency to the State 
in which such agency is located for such calendar 
year. Any amount reallocated to a State under the 
preceding sentence may be allocated as provided in 
subsection (d)(1). 
‘‘(4) LARGE LOCAL EDUCATIONAL AGENCY.— 
For purposes of this section, the term ‘large local 
educational agency’ means, with respect to a cal-
endar year, any local educational agency if such 
agency is— 
‘‘(A) among the 100 local educational 
agencies with the largest numbers of children 
aged 5 through 17 from families living below 
the poverty level, as determined by the Sec-
retary using the most recent data available 
from the Department of Commerce that are 
satisfactory to the Secretary, or 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00293
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
294 
‘‘(B) 1 of not more than 25 local edu-
cational agencies (other than those described in 
subparagraph (A)) that the Secretary of Edu-
cation determines (based on the most recent 
data available satisfactory to the Secretary) are 
in particular need of assistance, based on a low 
level of resources for school construction, a high 
level of enrollment growth, or such other factors 
as the Secretary deems appropriate. 
‘‘(f) CARRYOVER OF UNUSED LIMITATION.—If for 
any calendar year— 
‘‘(1) the amount allocated under subsection (d) 
to any State, exceeds 
‘‘(2) the amount of bonds issued during such 
year which are designated under subsection (a) pur-
suant to such allocation, 
the limitation amount under such subsection for such 
State for the following calendar year shall be increased 
by the amount of such excess. A similar rule shall apply 
to the amounts allocated under subsection (d)(4) or (e).’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (1) of section 54A(d) is amended 
by striking ‘‘or’’ at the end of subparagraph (C), by 
inserting ‘‘or’’ at the end of subparagraph (D), and 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00294
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
295 
by inserting after subparagraph (D) the following 
new subparagraph: 
‘‘(E) 
a 
qualified 
school 
construction 
bond,’’. 
(2) Subparagraph (C) of section 54A(d)(2) is 
amended by striking ‘‘and’’ at the end of clause (iii), 
by striking the period at the end of clause (iv) and 
inserting ‘‘, and’’, and by adding at the end the fol-
lowing new clause: 
‘‘(v) in the case of a qualified school 
construction bond, a purpose specified in 
section 54F(a)(1).’’. 
(3) The table of sections for subpart I of part 
IV of subchapter A of chapter 1 is amended by add-
ing at the end the following new item: 
‘‘Sec. 54F. Qualified school construction bonds.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after Decem-
ber 31, 2008. 
SEC. 1512. EXTENSION AND EXPANSION OF QUALIFIED 
ZONE ACADEMY BONDS. 
(a) IN GENERAL.—Section 54E(c)(1) is amended by 
striking ‘‘and 2009’’ and inserting ‘‘and $1,400,000,000 
for 2009 and 2010’’. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00295
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
296 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to obligations issued after Decem-
ber 31, 2008. 
PART 3—TAXABLE BOND OPTION FOR 
GOVERNMENTAL BONDS 
SEC. 1521. TAXABLE BOND OPTION FOR GOVERNMENTAL 
BONDS. 
(a) IN GENERAL.—Part IV of subchapter A of chap-
ter 1 is amended by adding at the end the following new 
subpart: 
‘‘Subpart J—Taxable Bond Option for Governmental 
Bonds 
‘‘Sec. 54AA. Taxable bond option for governmental bonds. 
‘‘SEC. 54AA. TAXABLE BOND OPTION FOR GOVERNMENTAL 
BONDS. 
‘‘(a) IN GENERAL.—If a taxpayer holds a taxable 
governmental bond on one or more interest payment dates 
of the bond during any taxable year, 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 the credits 
determined under subsection (b) with respect to such 
dates. 
‘‘(b) AMOUNT OF CREDIT.—The amount of the credit 
determined under this subsection with respect to any in-
terest payment date for a taxable governmental bond is 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00296
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
297 
35 percent of the amount of interest payable by the issuer 
with respect to such date. 
‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.— 
‘‘(1) IN GENERAL.—The credit allowed under 
subsection (a) for any taxable year shall not exceed 
the excess of— 
‘‘(A) the sum of the regular tax liability 
(as defined in section 26(b)) plus the tax im-
posed by section 55, over 
‘‘(B) the sum of the credits allowable 
under this part (other than subpart C and this 
subpart). 
‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the 
credit allowable under subsection (a) exceeds the 
limitation imposed by paragraph (1) for such taxable 
year, such excess shall be carried to the succeeding 
taxable year and added to the credit allowable under 
subsection (a) for such taxable year (determined be-
fore the application of paragraph (1) for such suc-
ceeding taxable year). 
‘‘(d) TAXABLE GOVERNMENTAL BOND.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘taxable governmental bond’ means 
any obligation (other than a private activity bond) 
if— 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00297
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
298 
‘‘(A) the interest on such obligation would 
(but for this section) be excludable from gross 
income under section 103, and 
‘‘(B) the issuer makes an irrevocable elec-
tion to have this section apply. 
‘‘(2) APPLICABLE RULES.—For purposes of ap-
plying paragraph (1)— 
‘‘(A) a taxable governmental bond shall not 
be treated as federally guaranteed by reason of 
the credit allowed under subsection (a) or sec-
tion 6432, 
‘‘(B) the yield on a taxable governmental 
bond shall be determined without regard to the 
credit allowed under subsection (a), and 
‘‘(C) a bond shall not be treated as a tax-
able governmental bond if the issue price has 
more than a de minimis amount (determined 
under rules similar to the rules of section 
1273(a)(3)) of premium over the stated prin-
cipal amount of the bond. 
‘‘(e) INTEREST PAYMENT DATE.—For purposes of 
this section, the term ‘interest payment date’ means any 
date on which the holder of record of the taxable govern-
mental bond is entitled to a payment of interest under 
such bond. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00298
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
299 
‘‘(f) SPECIAL RULES.— 
‘‘(1) INTEREST ON TAXABLE GOVERNMENTAL 
BONDS
INCLUDIBLE
IN
GROSS
INCOME
FOR
FED-
ERAL INCOME TAX PURPOSES.—For purposes of this 
title, interest on any taxable governmental bond 
shall be includible in gross income. 
‘‘(2) APPLICATION OF CERTAIN RULES.—Rules 
similar to the rules of subsections (f), (g), (h), and 
(i) of section 54A shall apply for purposes of the 
credit allowed under subsection (a). 
‘‘(g) SPECIAL RULE FOR QUALIFIED BONDS ISSUED 
BEFORE 2011.—In the case of a qualified bond issued be-
fore January 1, 2011— 
‘‘(1) ISSUER
ALLOWED
REFUNDABLE
CRED-
IT.—In lieu of any credit allowed under this section 
with respect to such bond, the issuer of such bond 
shall be allowed a credit as provided in section 6432. 
‘‘(2) QUALIFIED BOND.—For purposes of this 
subsection, the term ‘qualified bond’ means any tax-
able governmental bond issued as part of an issue 
if— 
‘‘(A) 100 percent of the available project 
proceeds (as defined in section 54A) of such 
issue are to be used for capital expenditures, 
and 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00299
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
300 
‘‘(B) the issuer makes an irrevocable elec-
tion to have this subsection apply. 
‘‘(h) REGULATIONS.—The Secretary may prescribe 
such regulations and other guidance as may be necessary 
or appropriate to carry out this section and section 
6432.’’. 
(b) CREDIT FOR QUALIFIED BONDS ISSUED BEFORE 
2011.—Subchapter B of chapter 65, as amended by this 
Act, is amended by adding at the end the following new 
section: 
‘‘SEC. 6432. CREDIT FOR QUALIFIED BONDS ALLOWED TO 
ISSUER. 
‘‘(a) IN GENERAL.—In the case of a qualified bond 
issued before January 1, 2011, the issuer of such bond 
shall be allowed a credit with respect to each interest pay-
ment under such bond which shall be payable by the Sec-
retary as provided in subsection (b). 
‘‘(b) PAYMENT OF CREDIT.—The Secretary shall pay 
(contemporaneously with each interest payment date 
under such bond) to the issuer of such bond (or to any 
person who makes such interest payments on behalf of the 
issuer) 35 percent of the interest payable under such bond 
on such date. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00300
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
301 
‘‘(c) APPLICATION OF ARBITRAGE RULES.—For pur-
poses of section 148, the yield on a qualified bond shall 
be reduced by the credit allowed under this section. 
‘‘(d) INTEREST PAYMENT DATE.—For purposes of 
this subsection, the term ‘interest payment date’ means 
each date on which interest is payable by the issuer under 
the terms of the bond. 
‘‘(e) QUALIFIED BOND.—For purposes of this sub-
section, the term ‘qualified bond’ has the meaning given 
such term in section 54AA(h).’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 1324(b)(2) of title 31, United 
States Code, is amended by striking ‘‘or 6428’’ and 
inserting ‘‘6428, or 6432,’’. 
(2) Section 54A(c)(1)(B) is amended by strik-
ing ‘‘subpart C’’ and inserting ‘‘subparts C and J’’. 
(3) 
Sections 
54(c)(2), 
1397E(c)(2), 
and 
1400N(l)(3)(B) are each amended by striking ‘‘and 
I’’ and inserting ‘‘, I, and J’’. 
(4) Section 6401(b)(1) is amended by striking 
‘‘and I’’ and inserting ‘‘I, and J’’. 
(5) The table of subparts for part IV of sub-
chapter A of chapter 1 is amended by adding at the 
end the following new item: 
‘‘Subpart J. Taxable bond option for governmental bonds.’’. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00301
Fmt 6652
Sfmt 6211
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
302 
(6) The table of sections for subchapter B of 
chapter 65, as amended by this Act, is amended by 
adding at the end the following new item: 
‘‘Sec. 6432. Credit for qualified bonds allowed to issuer on advance basis.’’. 
(d) TRANSITIONAL
COORDINATION
WITH
STATE 
LAW.—Except as otherwise provided by a State after the 
date of the enactment of this Act, the interest on any tax-
able governmental bond (as defined in section 54AA of 
the Internal Revenue Code of 1986, as added by this sec-
tion) and the amount of any credit determined under such 
section with respect to such bond shall be treated for pur-
poses of the income tax laws of such State as being exempt 
from Federal income tax. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after the date 
of the enactment of this Act. 
PART 4—RECOVERY ZONE BONDS 
SEC. 1531. RECOVERY ZONE BONDS. 
(a) IN GENERAL.—Subchapter Y of chapter 1 is 
amended by adding at the end the following new part: 
‘‘PART III—RECOVERY ZONE BONDS 
‘‘Sec. 1400U–1. Allocation of recovery zone bonds. 
‘‘Sec. 1400U–2. Recovery zone economic development bonds. 
‘‘Sec. 1400U–3. Recovery zone facility bonds. 
‘‘SEC. 1400U–1. ALLOCATION OF RECOVERY ZONE BONDS. 
‘‘(a) ALLOCATIONS.— 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00302
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
303 
‘‘(1) IN GENERAL.—The Secretary shall allo-
cate the national recovery zone economic develop-
ment bond limitation and the national recovery zone 
facility bond limitation among the States in the pro-
portion that each such State’s 2008 State employ-
ment decline bears to the aggregate of the 2008 
State employment declines for all of the States. 
‘‘(2) 2008 STATE EMPLOYMENT DECLINE.—For 
purposes of this subsection, the term ‘2008 State 
employment decline’ means, with respect to any 
State, the excess (if any) of— 
‘‘(A) the number of individuals employed 
in such State determined for December 2007, 
over 
‘‘(B) the number of individuals employed 
in such State determined for December 2008. 
‘‘(3) ALLOCATIONS BY STATES.— 
‘‘(A) IN GENERAL.—Each State with re-
spect to which an allocation is made under 
paragraph (1) shall reallocate such allocation 
among the counties and large municipalities in 
such State in the proportion the each such 
county’s or municipality’s 2008 employment de-
cline bears to the aggregate of the 2008 em-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00303
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
304 
ployment declines for all the counties and mu-
nicipalities in such State. 
‘‘(B) LARGE
MUNICIPALITIES.—For pur-
poses of subparagraph (A), the term ‘large mu-
nicipality’ means a municipality with a popu-
lation of more than 100,000. 
‘‘(C) DETERMINATION OF LOCAL EMPLOY-
MENT DECLINES.—For purposes of this para-
graph, the employment decline of any munici-
pality or county shall be determined in the 
same manner as determining the State employ-
ment decline under paragraph (2), except that 
in the case of a municipality any portion of 
which is in a county, such portion shall be 
treated as part of such municipality and not 
part of such county. 
‘‘(4) NATIONAL LIMITATIONS.— 
‘‘(A) RECOVERY ZONE ECONOMIC DEVEL-
OPMENT BONDS.—There is a national recovery 
zone economic development bond limitation of 
$10,000,000,000. 
‘‘(B) RECOVERY ZONE FACILITY BONDS.— 
There is a national recovery zone facility bond 
limitation of $15,000,000,000. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00304
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
305 
‘‘(b) RECOVERY ZONE.—For purposes of this part, 
the term ‘recovery zone’ means— 
‘‘(1) any area designated by the issuer as hav-
ing significant poverty, unemployment, home fore-
closures, or general distress, and 
‘‘(2) any area for which a designation as an em-
powerment zone or renewal community is in effect. 
‘‘SEC. 1400U–2. RECOVERY ZONE ECONOMIC DEVELOPMENT 
BONDS. 
‘‘(a) IN GENERAL.—In the case of a recovery zone 
economic development bond— 
‘‘(1) such bond shall be treated as a qualified 
bond for purposes of section 6432, and 
‘‘(2) subsection (b) of such section shall be ap-
plied by substituting ‘55 percent’ for ‘35 percent’. 
‘‘(b) RECOVERY ZONE ECONOMIC DEVELOPMENT 
BOND.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘recovery zone economic development 
bond’ means any taxable governmental bond (as de-
fined in section 54AA(d)) issued before January 1, 
2011, as part of issue if— 
‘‘(A) 100 percent of the available project 
proceeds (as defined in section 54A) of such 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00305
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
306 
issue are to be used for one or more qualified 
economic development purposes, and 
‘‘(B) the issuer designates such bond for 
purposes of this section. 
‘‘(2) LIMITATION ON AMOUNT OF BONDS DES-
IGNATED.—The maximum aggregate face amount of 
bonds which may be designated by any issuer under 
paragraph (1) shall not exceed the amount of the re-
covery zone economic development bond limitation 
allocated to such issuer under section 1400U–1. 
‘‘(c) QUALIFIED ECONOMIC DEVELOPMENT PUR-
POSE.—For purposes of this section, the term ‘qualified 
economic development purpose’ means expenditures for 
purposes of promoting development or other economic ac-
tivity in a recovery zone, including— 
‘‘(1) capital expenditures paid or incurred with 
respect to property located in such zone, 
‘‘(2) expenditures for public infrastructure and 
construction of public facilities, and 
‘‘(3) expenditures for job training and edu-
cational programs. 
‘‘SEC. 1400U–3. RECOVERY ZONE FACILITY BONDS. 
‘‘(a) IN GENERAL.—For purposes of part IV of sub-
chapter B (relating to tax exemption requirements for 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00306
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
307 
State and local bonds), the term ‘exempt facility bond’ in-
cludes any recovery zone facility bond. 
‘‘(b) RECOVERY ZONE FACILITY BOND.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘recovery zone facility bond’ means 
any bond issued as part of an issue if— 
‘‘(A) 95 percent or more of the net pro-
ceeds (as defined in section 150(a)(3)) of such 
issue are to be used for recovery zone property, 
‘‘(B) such bond is issued before January 1, 
2011, and 
‘‘(C) the issuer designates such bond for 
purposes of this section. 
‘‘(2) LIMITATION ON AMOUNT OF BONDS DES-
IGNATED.—The maximum aggregate face amount of 
bonds which may be designated by any issuer under 
paragraph (1) shall not exceed the amount of recov-
ery zone facility bond limitation allocated to such 
issuer under section 1400U–1. 
‘‘(c) RECOVERY ZONE PROPERTY.—For purposes of 
this section— 
‘‘(1) IN
GENERAL.—The term ‘recovery zone 
property’ means any property to which section 168 
applies (or would apply but for section 179) if— 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00307
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
308 
‘‘(A) such property was acquired by the 
taxpayer by purchase (as defined in section 
179(d)(2)) after the date on which the designa-
tion of the recovery zone took effect, 
‘‘(B) the original use of which in the recov-
ery zone commences with the taxpayer, and 
‘‘(C) substantially all of the use of which 
is in the recovery zone and is in the active con-
duct of a qualified business by the taxpayer in 
such zone. 
‘‘(2) QUALIFIED BUSINESS.—The term ‘quali-
fied business’ means any trade or business except 
that— 
‘‘(A) the rental to others of real property 
located in a recovery zone shall be treated as a 
qualified business only if the property is not 
residential rental property (as defined in section 
168(e)(2)), and 
‘‘(B) such term shall not include any trade 
or business consisting of the operation of any 
facility described in section 144(c)(6)(B). 
‘‘(3) SPECIAL RULES FOR SUBSTANTIAL REN-
OVATIONS AND SALE-LEASEBACK.—Rules similar to 
the rules of subsections (a)(2) and (b) of section 
1397D shall apply for purposes of this subsection. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00308
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
309 
‘‘(d) NONAPPLICATION OF CERTAIN RULES.—Sec-
tions 146 (relating to volume cap) and 147(d) (relating 
to acquisition of existing property not permitted) shall not 
apply to any recovery zone facility bond.’’. 
(b) CLERICAL AMENDMENT.—The table of parts for 
subchapter Y of chapter 1 of such Code is amended by 
adding at the end the following new item: 
‘‘PART III. RECOVERY ZONE BONDS.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after the date 
of the enactment of this Act. 
SEC. 1532. TRIBAL ECONOMIC DEVELOPMENT BONDS. 
(a) IN GENERAL.—Section 7871 is amended by add-
ing at the end the following new subsection: 
‘‘(f) TRIBAL ECONOMIC DEVELOPMENT BONDS.— 
‘‘(1) ALLOCATION OF LIMITATION.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
allocate the national tribal economic develop-
ment bond limitation among the Indian tribal 
governments in such manner as the Secretary, 
in consultation with the Secretary of the Inte-
rior, determines appropriate. 
‘‘(B) NATIONAL LIMITATION.—There is a 
national tribal economic development bond limi-
tation of $2,000,000,000. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00309
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
310 
‘‘(2) BONDS
TREATED
AS
EXEMPT
FROM 
TAX.—In the case of a tribal economic development 
bond— 
‘‘(A) notwithstanding subsection (c), such 
bond shall be treated for purposes of this title 
in the same manner as if such bond were issued 
by a State, and 
‘‘(B) section 146 shall not apply. 
‘‘(3) 
TRIBAL
ECONOMIC
DEVELOPMENT 
BOND.— 
‘‘(A) IN GENERAL.—For purposes of this 
section, the term ‘tribal economic development 
bond’ means any bond issued by an Indian trib-
al government— 
‘‘(i) the interest on which is not ex-
empt from tax under section 103 by reason 
of subsection (c) (determined without re-
gard to this subsection) but would be so 
exempt if issued by a State or local govern-
ment, and 
‘‘(ii) which is designated by the In-
dian tribal government as a tribal eco-
nomic development bond for purposes of 
this subsection. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00310
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
311 
‘‘(B) EXCEPTIONS.—The term tribal eco-
nomic development bond shall not include any 
bond issued as part of an issue if any portion 
of the proceeds of such issue are used to fi-
nance— 
‘‘(i) any portion of a building in which 
class II or class III gaming (as defined in 
section 4 of the Indian Gaming Regulatory 
Act) is conducted or housed or any other 
property actually used in the conduct of 
such gaming, or 
‘‘(ii) any facility located outside the 
Indian reservation (as defined in section 
168(j)(6)). 
‘‘(C) LIMITATION ON AMOUNT OF BONDS 
DESIGNATED.—The maximum aggregate face 
amount of bonds which may be designated by 
any Indian tribal government under subpara-
graph (A) shall not exceed the amount of na-
tional tribal economic development bond limita-
tion allocated to such government under para-
graph (1).’’. 
(b) STUDY.—The Secretary of the Treasury, or the 
Secretary’s delegate, shall conduct a study of the effects 
of the amendment made by subsection (a). Not later than 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00311
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
312 
1 year after the date of the enactment of this Act, the 
Secretary of the Treasury, or the Secretary’s delegate, 
shall report to Congress on the results of the studies con-
ducted under this paragraph, including the Secretary’s 
recommendations regarding such amendment. 
(c) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to obligations issued after the 
date of the enactment of this Act. 
PART 5—REPEAL OF WITHHOLDING TAX ON 
GOVERNMENT CONTRACTORS 
SEC. 1541. REPEAL OF WITHHOLDING TAX ON GOVERN-
MENT CONTRACTORS. 
Section 3402 is amended by striking subsection (t). 
Subtitle G—Energy Incentives 
PART 1—RENEWABLE ENERGY INCENTIVES 
SEC. 1601. EXTENSION OF CREDIT FOR ELECTRICITY PRO-
DUCED 
FROM 
CERTAIN 
RENEWABLE 
RE-
SOURCES. 
(a) IN GENERAL.—Subsection (d) of section 45 is 
amended— 
(1) by striking ‘‘2010’’ in paragraph (1) and in-
serting ‘‘2013’’, 
(2) by striking ‘‘2011’’ each place it appears in 
paragraphs (2), (3), (4), (6), (7) and (9) and insert-
ing ‘‘2014’’, and 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00312
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
313 
(3) by striking ‘‘2012’’ in paragraph (11)(B) 
and inserting ‘‘2014’’. 
(b) TECHNICAL AMENDMENT.—Paragraph (5) of 
section 45(d) is amended by striking ‘‘and before’’ and 
all that follows and inserting ‘‘ and before October 3, 
2008.’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
subsection (a) shall apply to property placed in serv-
ice after the date of the enactment of this Act. 
(2) TECHNICAL AMENDMENT.—The amendment 
made by subsection (b) shall take effect as if in-
cluded in section 102 of the Energy Improvement 
and Extension Act of 2008. 
SEC. 1602. ELECTION OF INVESTMENT CREDIT IN LIEU OF 
PRODUCTION CREDIT. 
(a) IN GENERAL.—Subsection (a) of section 48 is 
amended by adding at the end the following new para-
graph: 
‘‘(5) ELECTION TO TREAT QUALIFIED FACILI-
TIES AS ENERGY PROPERTY.— 
‘‘(A) IN
GENERAL.—In the case of any 
qualified investment credit facility placed in 
service in 2009 or 2010— 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00313
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
314 
‘‘(i) such facility shall be treated as 
energy property for purposes of this sec-
tion, and 
‘‘(ii) the energy percentage with re-
spect to such property shall be 30 percent. 
‘‘(B) DENIAL OF PRODUCTION CREDIT.— 
No credit shall be allowed under section 45 for 
any taxable year with respect to any qualified 
investment credit facility. 
‘‘(C) QUALIFIED INVESTMENT CREDIT FA-
CILITY.—For purposes of this paragraph, the 
term ‘qualified investment credit facility’ means 
any facility described in paragraph (1), (2), (3), 
(4), (6), (7), (9), or (11) of section 45(d) if no 
credit has been allowed under section 45 with 
respect to such facility and the taxpayer makes 
an irrevocable election to have this paragraph 
apply to such facility.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to facilities placed in service after 
December 31, 2008. 
SEC. 1603. REPEAL OF CERTAIN LIMITATIONS ON CREDIT 
FOR RENEWABLE ENERGY PROPERTY. 
(a) REPEAL OF LIMITATION ON CREDIT FOR QUALI-
FIED SMALL WIND ENERGY PROPERTY.—Paragraph (4) 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00314
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
315 
of section 48(c) is amended by striking subparagraph (B) 
and by redesignating subparagraphs (C) and (D) as sub-
paragraphs (B) and (C). 
(b) REPEAL
OF LIMITATION
ON PROPERTY FI-
NANCED BY SUBSIDIZED ENERGY FINANCING.— 
(1) IN GENERAL.—Subsection (a) of section 48 
is amended by striking paragraph (4). 
(2) CONFORMING AMENDMENTS.— 
(A) Section 25C(e)(1) is amended by strik-
ing ‘‘(8), and (9)’’ and inserting ‘‘and (8)’’. 
(B) Section 25D(e) is amended by striking 
paragraph (9). 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2),the amendment made by this section shall 
apply to periods after December 31, 2008, under 
rules similar to the rules of section 48(m) of the In-
ternal Revenue Code of 1986 (as in effect on the day 
before the date of the enactment of the Revenue 
Reconciliation Act of 1990). 
(2) CONFORMING AMENDMENTS.—The amend-
ments made by subsection (b)(2) shall apply to tax-
able years beginning after December 31, 2008. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00315
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
316 
SEC. 1604. COORDINATION WITH RENEWABLE ENERGY 
GRANTS. 
Section 48 is amended by adding at the end the fol-
lowing new subsection: 
‘‘(d) COORDINATION WITH DEPARTMENT OF EN-
ERGY GRANTS.—In the case of any property with respect 
to which the Secretary of Energy makes a grant under 
section 1721 of the American Recovery and Reinvestment 
Tax Act of 2009— 
‘‘(1) DENIAL
OF
PRODUCTION
AND
INVEST-
MENT
CREDITS.—No credit shall be determined 
under this section or section 45 with respect to such 
property for the taxable year in which such grant is 
made or any subsequent taxable year. 
‘‘(2) RECAPTURE OF CREDITS FOR PROGRESS 
EXPENDITURES MADE BEFORE GRANT.—If a credit 
was determined under this section with respect to 
such property for any taxable year ending before 
such grant is made— 
‘‘(A) the tax imposed under subtitle A on 
the taxpayer for the taxable year in which such 
grant is made shall be increased by so much of 
such credit as was allowed under section 38, 
‘‘(B) the general business carryforwards 
under section 39 shall be adjusted so as to re-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00316
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
317 
capture the portion of such credit which was 
not so allowed, and 
‘‘(C) the amount of such grant shall be de-
termined without regard to any reduction in the 
basis of such property by reason of such credit. 
‘‘(3) TREATMENT OF GRANTS.—Any such grant 
shall— 
‘‘(A) not be includible in the gross income 
of the taxpayer, but 
‘‘(B) shall be taken into account in deter-
mining the basis of the property to which such 
grant relates, except that the basis of such 
property shall be reduced under section 50(c) in 
the same manner as a credit allowed under sub-
section (a).’’. 
PART 
2—INCREASED 
ALLOCATIONS 
OF 
NEW 
CLEAN RENEWABLE ENERGY BONDS AND 
QUALIFIED ENERGY CONSERVATION BONDS 
SEC. 1611. INCREASED LIMITATION ON ISSUANCE OF NEW 
CLEAN RENEWABLE ENERGY BONDS. 
Subsection (c) of section 54C is amended by adding 
at the end the following new paragraph: 
‘‘(4) ADDITIONAL
LIMITATION.—The national 
new clean renewable energy bond limitation shall be 
increased by $1,600,000,000. Such increase shall be 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00317
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
318 
allocated by the Secretary consistent with the rules 
of paragraphs (2) and (3).’’. 
SEC. 1612. INCREASED LIMITATION AND EXPANSION OF 
QUALIFIED ENERGY CONSERVATION BONDS. 
(a) INCREASED LIMITATION.—Subsection (e) of sec-
tion 54D is amended by adding at the end the following 
new paragraph: 
‘‘(4) ADDITIONAL
LIMITATION.—The national 
qualified energy conservation bond limitation shall 
be increased by $2,400,000,000. Such increase shall 
be allocated by the Secretary consistent with the 
rules of paragraphs (1), (2), and (3).’’. 
(b) LOANS
AND GRANTS
TO IMPLEMENT GREEN 
COMMUNITY PROGRAMS.— 
(1) IN GENERAL.—Subparagraph (A) of section 
54D(f)(1) is amended by inserting ‘‘(or loans or 
grants for capital expenditures to implement any 
green community program)’’ after ‘‘Capital expendi-
tures’’. 
(2) BONDS TO IMPLEMENT GREEN COMMUNITY 
PROGRAMS
NOT
TREATED
AS
PRIVATE
ACTIVITY 
BONDS FOR PURPOSES OF LIMITATIONS ON QUALI-
FIED ENERGY CONSERVATION BONDS .—Subsection 
(e) of section 54D is amended by adding at the end 
the following new paragraph: 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00318
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
319 
‘‘(4) BONDS
TO
IMPLEMENT
GREEN
COMMU-
NITY PROGRAMS NOT TREATED AS PRIVATE ACTIV-
ITY BONDS.—For purposes of paragraph (3) and 
subsection (f)(2), a bond shall not be treated as a 
private activity bond solely because proceeds of the 
issue of which such bond is a part are to be used 
for loans or grants for capital expenditures to imple-
ment any green community program.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after the date 
of the enactment of this Act. 
PART 3—ENERGY CONSERVATION INCENTIVES 
SEC. 1621. EXTENSION AND MODIFICATION OF CREDIT FOR 
NONBUSINESS ENERGY PROPERTY. 
(a) IN GENERAL.—Section 25C is amended by strik-
ing subsections (a) and (b) and inserting the following new 
subsections: 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax 
imposed by this chapter for the taxable year an amount 
equal to 30 percent of the sum of— 
‘‘(1) the amount paid or incurred by the tax-
payer during such taxable year for qualified energy 
efficiency improvements, and 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00319
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
320 
‘‘(2) the amount of the residential energy prop-
erty expenditures paid or incurred by the taxpayer 
during such taxable year. 
‘‘(b) LIMITATION.—The aggregate amount of the 
credits allowed under this section for taxable years begin-
ning in 2009 and 2010 with respect to any taxpayer shall 
not exceed $1,500.’’. 
(b) EXTENSION.—Section 25C(g)(2) is amended by 
striking ‘‘December 31, 2009’’ and inserting ‘‘December 
31, 2010’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 1622. MODIFICATION OF CREDIT FOR RESIDENTIAL 
ENERGY EFFICIENT PROPERTY. 
(a) REMOVAL OF CREDIT LIMITATION FOR PROP-
ERTY PLACED IN SERVICE.— 
(1) IN
GENERAL.—Paragraph (1) of section 
25D(b) is amended to read as follows: 
‘‘(1) MAXIMUM CREDIT FOR FUEL CELLS.—In 
the case of any qualified fuel cell property expendi-
ture, the credit allowed under subsection (a) (deter-
mined without regard to subsection (c)) for any tax-
able year shall not exceed $500 with respect to each 
half kilowatt of capacity of the qualified fuel cell 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00320
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
321 
property (as defined in section 48(c)(1)) to which 
such expenditure relates.’’. 
(2) CONFORMING AMENDMENT.—Paragraph (4) 
of section 25D(e) is amended— 
(A) by striking all that precedes subpara-
graph (B) and inserting the following: 
‘‘(4) FUEL
CELL
EXPENDITURE
LIMITATIONS 
IN CASE OF JOINT OCCUPANCY.—In the case of any 
dwelling unit with respect to which qualified fuel cell 
property expenditures are made and which is jointly 
occupied and used during any calendar year as a 
residence by two or more individuals the following 
rules shall apply: 
‘‘(A) MAXIMUM EXPENDITURES FOR FUEL 
CELLS.—The maximum amount of such ex-
penditures which may be taken into account 
under subsection (a) by all such individuals 
with respect to such dwelling unit during such 
calendar year shall be $1,667 in the case of 
each half kilowatt of capacity of qualified fuel 
cell property (as defined in section 48(c)(1)) 
with respect to which such expenditures re-
late.’’, and 
(B) by striking subparagraph (C). 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00321
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
322 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 1623. TEMPORARY INCREASE IN CREDIT FOR ALTER-
NATIVE FUEL VEHICLE REFUELING PROP-
ERTY. 
(a) IN GENERAL.—Section 30C(e) is amended by 
adding at the end the following new paragraph: 
‘‘(6) SPECIAL RULE FOR PROPERTY PLACED IN 
SERVICE
DURING
2009
AND
2010.—In the case of 
property placed in service in taxable years beginning 
after December 31, 2008, and before January 1, 
2011— 
‘‘(A) in the case of any such property 
which does not relate to hydrogen— 
‘‘(i) subsection (a) shall be applied by 
substituting ‘50 percent’ for ‘30 percent’, 
‘‘(ii) subsection (b)(1) shall be applied 
by substituting ‘$50,000’ for ‘$30,000’, 
and 
‘‘(iii) subsection (b)(2) shall be ap-
plied by substituting ‘$2,000’ for ‘$1,000’, 
and 
‘‘(B) in the case of any such property 
which relates to hydrogen, subsection (b) shall 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00322
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
323 
be applied by substituting ‘$200,000’ for 
‘$30,000’.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
PART 4—ENERGY RESEARCH INCENTIVES 
SEC. 1631. INCREASED RESEARCH CREDIT FOR ENERGY RE-
SEARCH. 
(a) IN GENERAL.—Section 41 is amended by redesig-
nating subsection (h) as subsection (i) and by inserting 
after subsection (g) the following new subsection: 
‘‘(h) ENERGY RESEARCH CREDIT.—In the case of 
any taxable year beginning in 2009 or 2010— 
‘‘(1) IN
GENERAL.—The credit determined 
under subsection (a)(1) shall be increased by 20 per-
cent of the qualified energy research expenses for 
the taxable year. 
‘‘(2) 
QUALIFIED
ENERGY
RESEARCH
EX-
PENSES.—For purposes of this subsection, the term 
‘qualified energy research expenses’ means so much 
of the taxpayer’s qualified research expenses as are 
related to the fields of fuel cells and battery tech-
nology, renewable energy, energy conservation tech-
nology, efficient transmission and distribution of 
electricity, and carbon capture and sequestration. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00323
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
324 
‘‘(3) COORDINATION
WITH
OTHER
RESEARCH 
CREDITS.— 
‘‘(A) INCREMENTAL CREDIT.—The amount 
of qualified energy research expenses taken into 
account under subsection (a)(1)(A) shall not ex-
ceed the base amount. 
‘‘(B) ALTERNATIVE SIMPLIFIED CREDIT.— 
For purposes of subsection (c)(5), the amount 
of qualified energy research expenses taken into 
account for the taxable year for which the cred-
it is being determined shall not exceed— 
‘‘(i) 
in 
the 
case 
of 
subsection 
(c)(5)(A), 50 percent of the average quali-
fied research expenses for the 3 taxable 
years preceding the taxable year for which 
the credit is being determined, and 
‘‘(ii) 
in 
the 
case 
of 
subsection 
(c)(5)(B)(ii), zero. 
‘‘(C) BASIC RESEARCH AND ENERGY RE-
SEARCH CONSORTIUM PAYMENTS.—Any amount 
taken into account under paragraph (1) shall 
not be taken into account under paragraph (2) 
or (3) of subsection (a).’’. 
(b) CONFORMING AMENDMENT.—Subparagraph (B) 
of section 41(i)(1)(B), as redesignated by subsection (a), 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00324
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
325 
is amended by inserting ‘‘(in the case of the increase in 
the credit determined under subsection (h), December 31, 
2010)’’ after ‘‘December 31, 2009’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
Subtitle H—Other Provisions 
PART 
1—APPLICATION 
OF 
CERTAIN 
LABOR 
STANDARDS TO PROJECTS FINANCED WITH 
CERTAIN TAX-FAVORED BONDS 
SEC. 1701. APPLICATION OF CERTAIN LABOR STANDARDS 
TO PROJECTS FINANCED WITH CERTAIN TAX- 
FAVORED BONDS. 
Subchapter IV of chapter 31 of the title 40, United 
States Code, shall apply to projects financed with the pro-
ceeds of— 
(1) any qualified clean renewable energy bond 
(as defined in section 54C of the Internal Revenue 
Code of 1986) issued after the date of the enact-
ment of this Act, 
(2) any qualified energy conservation bond (as 
defined in section 54D of the Internal Revenue Code 
of 1986) issued after the date of the enactment of 
this Act, 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00325
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
326 
(3) any qualified zone academy bond (as de-
fined in section 54E of the Internal Revenue Code 
of 1986) issued after the date of the enactment of 
this Act, 
(4) any qualified school construction bond (as 
defined in section 54F of the Internal Revenue Code 
of 1986), and 
(5) any recovery zone economic development 
bond (as defined in section 1400U–2 of the Internal 
Revenue Code of 1986). 
PART 2—GRANTS TO PROVIDE FINANCING FOR 
LOW-INCOME HOUSING 
SEC. 1711. GRANTS TO STATES FOR LOW-INCOME HOUSING 
PROJECTS IN LIEU OF LOW-INCOME HOUS-
ING CREDIT ALLOCATIONS FOR 2009. 
(a) IN GENERAL.—The Secretary of the Treasury 
shall make a grant to the housing credit agency of each 
State in an amount equal to such State’s low-income hous-
ing grant election amount. 
(b) LOW-INCOME
HOUSING
GRANT
ELECTION 
AMOUNT.—For purposes of this section, the term ‘‘low- 
income housing grant election amount’’ means, with re-
spect to any State, such amount as the State may elect 
which does not exceed 85 percent of the product of— 
(1) the sum of— 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00326
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
327 
(A) 100 percent of the State housing credit 
ceiling for 2009 which is attributable to 
amounts described in clauses (i) and (iii) of sec-
tion 42(h)(3)(C) of the Internal Revenue Code 
of 1986, and 
(B) 40 percent of the State housing credit 
ceiling for 2009 which is attributable to 
amounts described in clauses (ii) and (iv) of 
such section, multiplied by 
(2) 10. 
(c) SUBAWARDS FOR LOW-INCOME BUILDINGS.— 
(1) IN GENERAL.—A State housing credit agen-
cy receiving a grant under this section shall use such 
grant to make subawards to finance the construction 
or acquisition and rehabilitation of qualified low-in-
come buildings. A subaward under this section may 
be made to finance a qualified low-income building 
with or without an allocation under section 42 of the 
Internal Revenue Code of 1986, except that a State 
housing credit agency may make subawards to fi-
nance qualified low-income buildings without an allo-
cation only if it makes a determination that such use 
will increase the total funds available to the State to 
build and rehabilitate affordable housing. In com-
plying with such determination requirement, a State 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00327
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
328 
housing credit agency shall establish a process in 
which applicants that are allocated credits are re-
quired to demonstrate good faith efforts to obtain 
investment commitments for such credits before the 
agency makes such subawards. 
(2) SUBAWARDS SUBJECT TO SAME REQUIRE-
MENTS AS LOW-INCOME HOUSING CREDIT ALLOCA-
TIONS.—Any such subaward with respect to any 
qualified low-income building shall be made in the 
same manner and shall be subject to the same limi-
tations (including rent, income, and use restrictions 
on such building) as an allocation of housing credit 
dollar amount allocated by such State housing credit 
agency under section 42 of the Internal Revenue 
Code of 1986, except that such subawards shall not 
be limited by, or otherwise affect (except as provided 
in subsection (h)(3)(J) of such section), the State 
housing credit ceiling applicable to such agency. 
(3) COMPLIANCE AND ASSET MANAGEMENT.— 
The State housing credit agency shall perform asset 
management functions to ensure compliance with 
section 42 of the Internal Revenue Code of 1986 
and the long-term viability of buildings funded by 
any subaward under this section. The State housing 
credit agency may collect reasonable fees from a 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00328
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
329 
subaward recipient to cover expenses associated with 
the performance of its duties under this paragraph. 
The State housing credit agency may retain an 
agent or other private contractor to satisfy the re-
quirements of this paragraph. 
(4) RECAPTURE.—The State housing credit 
agency shall impose conditions or restrictions, in-
cluding a requirement providing for recapture, on 
any subaward under this section so as to assure that 
the building with respect to which such subaward is 
made remains a qualified low-income building during 
the compliance period. Any such recapture shall be 
payable to the Secretary of the Treasury for deposit 
in the general fund of the Treasury and may be en-
forced by means of liens or such other methods as 
the Secretary of the Treasury determines appro-
priate. 
(d) RETURN OF UNUSED GRANT FUNDS.—Any grant 
funds not used to make subawards under this section be-
fore January 1, 2011, shall be returned to the Secretary 
of the Treasury on such date. Any subawards returned 
to the State housing credit agency on or after such date 
shall be promptly returned to the Secretary of the Treas-
ury. Any amounts returned to the Secretary of the Treas-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00329
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
330 
ury under this subsection shall be deposited in the general 
fund of the Treasury. 
(e) DEFINITIONS.—Any term used in this section 
which is also used in section 42 of the Internal Revenue 
Code of 1986 shall have the same meaning for purposes 
of this section as when used in such section 42. Any ref-
erence in this section to the Secretary of the Treasury 
shall be treated as including the Secretary’s delegate. 
(f) APPROPRIATIONS.—There is hereby appropriated 
to the Secretary of the Treasury such sums as may be 
necessary to carry out this section. 
PART 3—GRANTS FOR SPECIFIED ENERGY 
PROPERTY IN LIEU OF TAX CREDITS 
SEC. 1721. GRANTS FOR SPECIFIED ENERGY PROPERTY IN 
LIEU OF TAX CREDITS. 
(a) IN GENERAL.—Upon application, the Secretary 
of Energy shall, within 60 days of the application and sub-
ject to the requirements of this section, provide a grant 
to each person who places in service specified energy prop-
erty during 2009 or 2010 to reimburse such person for 
a portion of the expense of such facility as provided in 
subsection (b). 
(b) GRANT AMOUNT.— 
(1) IN GENERAL.—The amount of the grant 
under subsection (a) with respect to any specified 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00330
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
331 
energy property shall be the applicable percentage of 
the basis of such facility. 
(2) APPLICABLE PERCENTAGE.—For purposes 
of paragraph (1), the term ‘‘applicable percentage’’ 
means— 
(A) 30 percent in the case of any property 
described in paragraphs (1) through (4) of sub-
section (c), and 
(B) 10 percent in the case of any other 
property. 
(3) DOLLAR
LIMITATIONS.—In the case of 
property described in paragraph (2), (6), or (7) of 
subsection (c), the amount of any grant under this 
section with respect to such property shall not ex-
ceed the limitation described in section 48(c)(1)(B), 
48(c)(2)(B), or 48(c)(3)(B) of the Internal Revenue 
Code of 1986, respectively, with respect to such 
property. 
(c) SPECIFIED ENERGY PROPERTY.—For purposes 
of this section, the term ‘‘specified energy property’’ 
means any of the following: 
(1) QUALIFIED
FACILITIES.—Any facility de-
scribed in paragraph (1), (2), (3), (4), (6), (7), (9), 
or (11) of section 45(d) of the Internal Revenue 
Code of 1986. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00331
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
333 
nal Revenue Code of 1986. In applying such rules, if the 
facility is disposed of, or otherwise ceases to be a qualified 
renewable energy facility, the Secretary of Energy shall 
provide for the recapture of the appropriate percentage of 
the grant amount in such manner as the Secretary of En-
ergy determines appropriate. 
(e) EXCEPTION FOR CERTAIN NON-TAXPAYERS.— 
The Secretary of Energy shall not make any grant under 
this section to any Federal, State, or local government (or 
any political subdivision, agency, or instrumentality there-
of) or any organization described in section 501(c) of the 
Internal Revenue Code of 1986 and exempt from tax 
under section 501(a) of such Code. 
(f) DEFINITIONS.—Terms used in this section which 
are also used in section 45 or 48 of the Internal Revenue 
Code of 1986 shall have the same meaning for purposes 
of this section as when used in such section 45 or 48. 
Any reference in this section to the Secretary of the Treas-
ury shall be treated as including the Secretary’s delegate. 
(g) COORDINATION BETWEEN DEPARTMENTS
OF 
TREASURY AND ENERGY.—The Secretary of the Treasury 
shall provide the Secretary of Energy with such technical 
assistance as the Secretary of Energy may require in car-
rying out this section. The Secretary of Energy shall pro-
vide the Secretary of the Treasury with such information 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00333
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
334 
as the Secretary of the Treasury may require in carrying 
out the amendment made by section 1604. 
(h) APPROPRIATIONS.—There is hereby appropriated 
to the Secretary of Energy such sums as may be necessary 
to carry out this section. 
(i) TERMINATION.—The Secretary of Energy shall 
not make any grant to any person under this section un-
less the application of such person for such grant is re-
ceived before October 1, 2011. 
PART 4—STUDY OF ECONOMIC, EMPLOYMENT, 
AND RELATED EFFECTS OF THIS ACT 
SEC. 1731. STUDY OF ECONOMIC, EMPLOYMENT, AND RE-
LATED EFFECTS OF THIS ACT. 
On February 1, 2010, and every 3 months thereafter 
in calendar year 2010, the Comptroller General of the 
United States shall submit to the Committee on Ways and 
Means a written report on the most recent national (and, 
where available, State-by-State) information on— 
(1) the economic effects of this Act; 
(2) the employment effects of this Act, includ-
ing— 
(A) a comparison of the number of jobs 
preserved and the number of jobs created as a 
result of this Act; and 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00334
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
335 
(B) a comparison of the numbers of jobs 
preserved and the number of jobs created in 
each of the public and private sectors; 
(3) the share of tax and non-tax expenditures 
provided under this Act that were spent or saved, by 
group and income class; 
(4) how the funds provided to States under this 
Act have been spent, including a breakdown of— 
(A) funds used for services provided to citi-
zens; and 
(B) wages and other compensation for 
public employees; and 
(5) a description of any funds made available 
under this Act that remain unspent, and the reasons 
why. 
TITLE II—ASSISTANCE FOR UN-
EMPLOYED 
WORKERS 
AND 
STRUGGLING FAMILIES 
SEC. 2000. SHORT TITLE. 
This title may be cited as the ‘‘Assistance for Unem-
ployed Workers and Struggling Families Act’’. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00335
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
336 
Subtitle A—Unemployment 
Insurance 
SEC. 2001. EXTENSION OF EMERGENCY UNEMPLOYMENT 
COMPENSATION PROGRAM. 
(a) IN GENERAL.—Section 4007 of the Supplemental 
Appropriations Act, 2008 (Public Law 110–252; 26 
U.S.C. 3304 note), as amended by section 4 of the Unem-
ployment Compensation Extension Act of 2008 (Public 
Law 110–449; 122 Stat. 5015), is amended— 
(1) by striking ‘‘March 31, 2009’’ each place it 
appears and inserting ‘‘December 31, 2009’’; 
(2) in the heading for subsection (b)(2), by 
striking ‘‘MARCH 31, 2009’’ and inserting ‘‘DECEM-
BER 31, 2009’’; and 
(3) in subsection (b)(3), by striking ‘‘August 
27, 2009’’ and inserting ‘‘May 31, 2010’’. 
(b) FINANCING PROVISIONS.—Section 4004 of such 
Act is amended by adding at the end the following: 
‘‘(e) TRANSFER OF FUNDS.—Notwithstanding any 
other provision of law, the Secretary of the Treasury shall 
transfer from the general fund of the Treasury (from 
funds not otherwise appropriated)— 
‘‘(1) to the extended unemployment compensa-
tion account (as established by section 905 of the 
Social Security Act) such sums as the Secretary of 
VerDate Nov 24 2008 
02:49 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00336
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
337 
Labor estimates to be necessary to make payments 
to States under this title by reason of the amend-
ments made by section 2001(a) of the Assistance for 
Unemployed Workers and Struggling Families Act; 
and 
‘‘(2) to the employment security administration 
account (as established by section 901 of the Social 
Security Act) such sums as the Secretary of Labor 
estimates to be necessary for purposes of assisting 
States in meeting administrative costs by reason of 
the amendments referred to in paragraph (1). 
There are appropriated from the general fund of the 
Treasury, without fiscal year limitation, the sums referred 
to in the preceding sentence and such sums shall not be 
required to be repaid.’’. 
SEC. 2002. INCREASE IN UNEMPLOYMENT COMPENSATION 
BENEFITS. 
(a) FEDERAL-STATE
AGREEMENTS.—Any State 
which desires to do so may enter into and participate in 
an agreement under this section with the Secretary of 
Labor (hereinafter in this section referred to as the ‘‘Sec-
retary’’). Any State which is a party to an agreement 
under this section may, upon providing 30 days’ written 
notice to the Secretary, terminate such agreement. 
(b) PROVISIONS OF AGREEMENT.— 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00337
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
338 
(1) ADDITIONAL COMPENSATION.—Any agree-
ment under this section shall provide that the State 
agency of the State will make payments of regular 
compensation to individuals in amounts and to the 
extent that they would be determined if the State 
law of the State were applied, with respect to any 
week for which the individual is (disregarding this 
section) otherwise entitled under the State law to re-
ceive regular compensation, as if such State law had 
been modified in a manner such that the amount of 
regular compensation (including dependents’ allow-
ances) payable for any week shall be equal to the 
amount determined under the State law (before the 
application of this paragraph) plus an additional 
$25. 
(2) ALLOWABLE METHODS OF PAYMENT.—Any 
additional compensation provided for in accordance 
with paragraph (1) shall be payable either— 
(A) as an amount which is paid at the 
same time and in the same manner as any reg-
ular compensation otherwise payable for the 
week involved; or 
(B) at the option of the State, by pay-
ments which are made separately from, but on 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00338
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
339 
the same weekly basis as, any regular com-
pensation otherwise payable. 
(c) NONREDUCTION RULE.—An agreement under 
this section shall not apply (or shall cease to apply) with 
respect to a State upon a determination by the Secretary 
that the method governing the computation of regular 
compensation under the State law of that State has been 
modified in a manner such that— 
(1) the average weekly benefit amount of reg-
ular compensation which will be payable during the 
period of the agreement (determined disregarding 
any additional amounts attributable to the modifica-
tion described in subsection (b)(1)) will be less than 
(2) the average weekly benefit amount of reg-
ular compensation which would otherwise have been 
payable during such period under the State law, as 
in effect on December 31, 2008. 
(d) PAYMENTS TO STATES.— 
(1) IN GENERAL.— 
(A) FULL REIMBURSEMENT.—There shall 
be paid to each State which has entered into an 
agreement under this section an amount equal 
to 100 percent of— 
(i) the total amount of additional 
compensation (as described in subsection 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00339
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
340 
(b)(1)) paid to individuals by the State 
pursuant to such agreement; and 
(ii) any additional administrative ex-
penses incurred by the State by reason of 
such agreement (as determined by the Sec-
retary). 
(B) TERMS OF PAYMENTS.—Sums payable 
to any State by reason of such State’s having 
an agreement under this section shall be pay-
able, either in advance or by way of reimburse-
ment (as determined by the Secretary), in such 
amounts as the Secretary estimates the State 
will be entitled to receive under this section for 
each calendar month, reduced or increased, as 
the case may be, by any amount by which the 
Secretary finds that his estimates for any prior 
calendar month were greater or less than the 
amounts which should have been paid to the 
State. Such estimates may be made on the 
basis of such statistical, sampling, or other 
method as may be agreed upon by the Secretary 
and the State agency of the State involved. 
(2) 
CERTIFICATIONS.—The 
Secretary 
shall 
from time to time certify to the Secretary of the 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00340
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
341 
Treasury for payment to each State the sums pay-
able to such State under this section. 
(3) APPROPRIATION.—There are appropriated 
from the general fund of the Treasury, without fiscal 
year limitation, such sums as may be necessary for 
purposes of this subsection. 
(e) APPLICABILITY.— 
(1) IN GENERAL.—An agreement entered into 
under this section shall apply to weeks of unemploy-
ment— 
(A) beginning after the date on which such 
agreement is entered into; and 
(B) ending before January 1, 2010. 
(2) TRANSITION RULE FOR INDIVIDUALS RE-
MAINING ENTITLED TO REGULAR COMPENSATION AS 
OF JANUARY 1, 2010.—In the case of any individual 
who, as of the date specified in paragraph (1)(B), 
has not yet exhausted all rights to regular com-
pensation under the State law of a State with re-
spect to a benefit year that began before such date, 
additional compensation (as described in subsection 
(b)(1)) shall continue to be payable to such indi-
vidual for any week beginning on or after such date 
for which the individual is otherwise eligible for reg-
ular compensation with respect to such benefit year. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00341
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
342 
(3) TERMINATION.—Notwithstanding any other 
provision of this subsection, no additional compensa-
tion (as described in subsection (b)(1)) shall be pay-
able for any week beginning after June 30, 2010. 
(f) FRAUD AND OVERPAYMENTS.—The provisions of 
section 4005 of the Supplemental Appropriations Act, 
2008 (Public Law 110–252; 122 Stat. 2356) shall apply 
with respect to additional compensation (as described in 
subsection (b)(1)) to the same extent and in the same 
manner as in the case of emergency unemployment com-
pensation. 
(g) APPLICATION TO OTHER UNEMPLOYMENT BENE-
FITS.— 
(1) IN GENERAL.—Each agreement under this 
section shall include provisions to provide that the 
purposes of the preceding provisions of this section 
shall be applied with respect to unemployment bene-
fits described in subsection (h)(3) to the same extent 
and in the same manner as if those benefits were 
regular compensation. 
(2) ELIGIBILITY AND TERMINATION RULES.— 
Additional compensation (as described in subsection 
(b)(1))— 
(A) shall not be payable, pursuant to this 
subsection, with respect to any unemployment 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00342
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
343 
benefits described in subsection (h)(3) for any 
week beginning on or after the date specified in 
subsection (e)(1)(B), except in the case of an 
individual who was eligible to receive additional 
compensation (as so described) in connection 
with any regular compensation or any unem-
ployment benefits described in subsection (h)(3) 
for any period of unemployment ending before 
such date; and 
(B) shall in no event be payable for any 
week beginning after the date specified in sub-
section (e)(3). 
(h) DISREGARD OF ADDITIONAL COMPENSATION FOR 
PURPOSES
OF MEDICAID
AND SCHIP.—The monthly 
equivalent of any additional compensation paid under this 
section shall be disregarded in considering the amount of 
income of an individual for any purposes under title XIX 
and title XXI of the Social Security Act. 
(i) DEFINITIONS.—For purposes of this section— 
(1) the terms ‘‘compensation’’, ‘‘regular com-
pensation’’, ‘‘benefit year’’, ‘‘State’’, ‘‘State agency’’, 
‘‘State law’’, and ‘‘week’’ have the respective mean-
ings given such terms under section 205 of the Fed-
eral-State Extended Unemployment Compensation 
Act of 1970 (26 U.S.C. 3304 note); 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00343
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
344 
(2) the term ‘‘emergency unemployment com-
pensation’’ means emergency unemployment com-
pensation under title IV of the Supplemental Appro-
priations Act, 2008 (Public Law 110–252; 122 Stat. 
2353); and 
(3) any reference to unemployment benefits de-
scribed in this paragraph shall be considered to refer 
to— 
(A) extended compensation (as defined by 
section 205 of the Federal-State Extended Un-
employment Compensation Act of 1970); and 
(B) unemployment compensation (as de-
fined by section 85(b) of the Internal Revenue 
Code of 1986) provided under any program ad-
ministered by a State under an agreement with 
the Secretary. 
SEC. 2003. SPECIAL TRANSFERS FOR UNEMPLOYMENT 
COMPENSATION MODERNIZATION. 
(a) IN GENERAL.—Section 903 of the Social Security 
Act (42 U.S.C. 1103) is amended by adding at the end 
the following: 
‘‘Special Transfers in Fiscal Years 2009, 2010, and 2011 
for Modernization 
‘‘(f)(1)(A) In addition to any other amounts, the Sec-
retary of Labor shall provide for the making of unemploy-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00344
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
345 
ment compensation modernization incentive payments 
(hereinafter ‘incentive payments’) to the accounts of the 
States in the Unemployment Trust Fund, by transfer from 
amounts reserved for that purpose in the Federal unem-
ployment account, in accordance with succeeding provi-
sions of this subsection. 
‘‘(B) The maximum incentive payment allowable 
under this subsection with respect to any State shall, as 
determined by the Secretary of Labor, be equal to the 
amount obtained by multiplying $7,000,000,000 by the 
same ratio as would apply under subsection (a)(2)(B) for 
purposes of determining such State’s share of any excess 
amount (as described in subsection (a)(1)) that would 
have been subject to transfer to State accounts, as of Oc-
tober 1, 2008, under the provisions of subsection (a). 
‘‘(C) Of the maximum incentive payment determined 
under subparagraph (B) with respect to a State— 
‘‘(i) one-third shall be transferred to the ac-
count of such State upon a certification under para-
graph (4)(B) that the State law of such State meets 
the requirements of paragraph (2); and 
‘‘(ii) the remainder shall be transferred to the 
account of such State upon a certification under 
paragraph (4)(B) that the State law of such State 
meets the requirements of paragraph (3). 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00345
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
346 
‘‘(2) The State law of a State meets the requirements 
of this paragraph if such State law— 
‘‘(A) uses a base period that includes the most 
recently completed calendar quarter before the start 
of the benefit year for purposes of determining eligi-
bility for unemployment compensation; or 
‘‘(B) provides that, in the case of an individual 
who would not otherwise be eligible for unemploy-
ment compensation under the State law because of 
the use of a base period that does not include the 
most recently completed calendar quarter before the 
start of the benefit year, eligibility shall be deter-
mined using a base period that includes such cal-
endar quarter. 
‘‘(3) The State law of a State meets the requirements 
of this paragraph if such State law includes provisions to 
carry out at least 2 of the following subparagraphs: 
‘‘(A) An individual shall not be denied regular 
unemployment compensation under any State law 
provisions relating to availability for work, active 
search for work, or refusal to accept work, solely be-
cause such individual is seeking only part-time work 
(as defined by the Secretary of Labor), except that 
the State law provisions carrying out this subpara-
graph may exclude an individual if a majority of the 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00346
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
347 
weeks of work in such individual’s base period do 
not include part-time work (as so defined). 
‘‘(B) An individual shall not be disqualified 
from regular unemployment compensation for sepa-
rating from employment if that separation is for any 
compelling family reason. For purposes of this sub-
paragraph, the term ‘compelling family reason’ 
means the following: 
‘‘(i) Domestic violence, verified by such 
reasonable and confidential documentation as 
the State law may require, which causes the in-
dividual reasonably to believe that such individ-
ual’s continued employment would jeopardize 
the safety of the individual or of any member 
of the individual’s immediate family (as defined 
by the Secretary of Labor). 
‘‘(ii) The illness or disability of a member 
of the individual’s immediate family (as those 
terms are defined by the Secretary of Labor). 
‘‘(iii) The need for the individual to accom-
pany such individual’s spouse— 
‘‘(I) to a place from which it is im-
practical for such individual to commute; 
and 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00347
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
348 
‘‘(II) due to a change in location of 
the spouse’s employment. 
‘‘(C) Weekly unemployment compensation is 
payable under this subparagraph to any individual 
who is unemployed (as determined under the State 
unemployment compensation law), has exhausted all 
rights to regular unemployment compensation under 
the State law, and is enrolled and making satisfac-
tory progress in a State-approved training program 
or in a job training program authorized under the 
Workforce Investment Act of 1998. Such programs 
shall prepare individuals who have been separated 
from a declining occupation, or who have been invol-
untarily and indefinitely separated from employment 
as a result of a permanent reduction of operations 
at the individual’s place of employment, for entry 
into a high-demand occupation. The amount of un-
employment compensation payable under this sub-
paragraph to an individual for a week of unemploy-
ment shall be equal to the individual’s average week-
ly benefit amount (including dependents’ allowances) 
for the most recent benefit year, and the total 
amount of unemployment compensation payable 
under this subparagraph to any individual shall be 
equal to at least 26 times the individual’s average 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00348
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
349 
weekly benefit amount (including dependents’ allow-
ances) for the most recent benefit year. 
‘‘(D) Dependents’ allowances are provided, in 
the case of any individual who is entitled to receive 
regular unemployment compensation and who has 
any dependents (as defined by State law), in an 
amount equal to at least $15 per dependent per 
week, subject to any aggregate limitation on such al-
lowances which the State law may establish (but 
which aggregate limitation on the total allowance for 
dependents paid to an individual may not be less 
than $50 for each week of unemployment or 50 per-
cent of the individual’s weekly benefit amount for 
the benefit year, whichever is less). 
‘‘(4)(A) Any State seeking an incentive payment 
under this subsection shall submit an application therefor 
at such time, in such manner, and complete with such in-
formation as the Secretary of Labor may within 60 days 
after the date of the enactment of this subsection prescribe 
(whether by regulation or otherwise), including informa-
tion relating to compliance with the requirements of para-
graph (2) or (3), as well as how the State intends to use 
the incentive payment to improve or strengthen the State’s 
unemployment compensation program. The Secretary of 
Labor shall, within 30 days after receiving a complete ap-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00349
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
350 
plication, notify the State agency of the State of the Sec-
retary’s findings with respect to the requirements of para-
graph (2) or (3) (or both). 
‘‘(B)(i) If the Secretary of Labor finds that the State 
law provisions (disregarding any State law provisions 
which are not then currently in effect as permanent law 
or which are subject to discontinuation) meet the require-
ments of paragraph (2) or (3), as the case may be, the 
Secretary of Labor shall thereupon make a certification 
to that effect to the Secretary of the Treasury, together 
with a certification as to the amount of the incentive pay-
ment to be transferred to the State account pursuant to 
that finding. The Secretary of the Treasury shall make 
the appropriate transfer within 7 days after receiving such 
certification. 
‘‘(ii) For purposes of clause (i), State law provisions 
which are to take effect within 12 months after the date 
of their certification under this subparagraph shall be con-
sidered to be in effect as of the date of such certification. 
‘‘(C)(i) No certification of compliance with the re-
quirements of paragraph (2) or (3) may be made with re-
spect to any State whose State law is not otherwise eligible 
for certification under section 303 or approvable under 
section 3304 of the Federal Unemployment Tax Act. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00350
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
351 
‘‘(ii) No certification of compliance with the require-
ments of paragraph (3) may be made with respect to any 
State whose State law is not in compliance with the re-
quirements of paragraph (2). 
‘‘(iii) No application under subparagraph (A) may be 
considered if submitted before the date of the enactment 
of this subsection or after the latest date necessary (as 
specified by the Secretary of Labor) to ensure that all in-
centive payments under this subsection are made before 
October 1, 2011. 
‘‘(5)(A) Except as provided in subparagraph (B), any 
amount transferred to the account of a State under this 
subsection may be used by such State only in the payment 
of cash benefits to individuals with respect to their unem-
ployment (including for dependents’ allowances and for 
unemployment compensation under paragraph (3)(C)), ex-
clusive of expenses of administration. 
‘‘(B) A State may, subject to the same conditions as 
set forth in subsection (c)(2) (excluding subparagraph (B) 
thereof, and deeming the reference to ‘subsections (a) and 
(b)’ in subparagraph (D) thereof to include this sub-
section), use any amount transferred to the account of 
such State under this subsection for the administration 
of its unemployment compensation law and public employ-
ment offices. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00351
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
352 
‘‘(6) Out of any money in the Federal unemployment 
account not otherwise appropriated, the Secretary of the 
Treasury shall reserve $7,000,000,000 for incentive pay-
ments under this subsection. Any amount so reserved shall 
not be taken into account for purposes of any determina-
tion under section 902, 910, or 1203 of the amount in 
the Federal unemployment account as of any given time. 
Any amount so reserved for which the Secretary of the 
Treasury has not received a certification under paragraph 
(4)(B) by the deadline described in paragraph (4)(C)(iii) 
shall, upon the close of fiscal year 2011, become unre-
stricted as to use as part of the Federal unemployment 
account. 
‘‘(7) For purposes of this subsection, the terms ‘ben-
efit year’, ‘base period’, and ‘week’ have the respective 
meanings given such terms under section 205 of the Fed-
eral-State Extended Unemployment Compensation Act of 
1970 (26 U.S.C. 3304 note). 
‘‘Special Transfer in Fiscal Year 2009 for Administration 
‘‘(g)(1) In addition to any other amounts, the Sec-
retary of the Treasury shall transfer from the employment 
security administration account to the account of each 
State in the Unemployment Trust Fund, within 30 days 
after the date of the enactment of this subsection, the 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00352
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
353 
amount determined with respect to such State under para-
graph (2). 
‘‘(2) The amount to be transferred under this sub-
section to a State account shall (as determined by the Sec-
retary of Labor and certified by such Secretary to the Sec-
retary of the Treasury) be equal to the amount obtained 
by multiplying $500,000,000 by the same ratio as deter-
mined under subsection (f)(1)(B) with respect to such 
State. 
‘‘(3) Any amount transferred to the account of a 
State as a result of the enactment of this subsection may 
be used by the State agency of such State only in the pay-
ment of expenses incurred by it for— 
‘‘(A) the administration of the provisions of its 
State law carrying out the purposes of subsection 
(f)(2) or any subparagraph of subsection (f)(3); 
‘‘(B) improved outreach to individuals who 
might be eligible for regular unemployment com-
pensation by virtue of any provisions of the State 
law which are described in subparagraph (A); 
‘‘(C) the improvement of unemployment benefit 
and unemployment tax operations, including re-
sponding to increased demand for unemployment 
compensation; and 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00353
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
354 
‘‘(D) staff-assisted reemployment services for 
unemployment compensation claimants.’’. 
(b) REGULATIONS.—The Secretary of Labor may 
prescribe any regulations, operating instructions, or other 
guidance necessary to carry out the amendment made by 
subsection (a). 
Subtitle B—Assistance for 
Vulnerable Individuals 
SEC. 2101. EMERGENCY FUND FOR TANF PROGRAM. 
(a) IN GENERAL.—Section 403 of the Social Security 
Act (42 U.S.C. 603) is amended by adding at the end the 
following: 
‘‘(c) EMERGENCY FUND.— 
‘‘(1) ESTABLISHMENT.—There is established in 
the Treasury of the United States a fund which 
shall be known as the ‘Emergency Contingency 
Fund for State Temporary Assistance for Needy 
Families Programs’ (in this subsection referred to as 
the ‘Emergency Fund’). 
‘‘(2) DEPOSITS INTO FUND.—Out of any money 
in the Treasury of the United States not otherwise 
appropriated, there are appropriated such sums as 
are necessary for payment to the Emergency Fund. 
‘‘(3) GRANTS.— 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00354
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
355 
‘‘(A) GRANT RELATED TO CASELOAD IN-
CREASES.— 
‘‘(i) IN GENERAL.—For each calendar 
quarter in fiscal year 2009 or 2010, the 
Secretary shall make a grant from the 
Emergency Fund to each State that— 
‘‘(I) requests a grant under this 
subparagraph for the quarter; and 
‘‘(II) meets the requirement of 
clause (ii) for the quarter. 
‘‘(ii) CASELOAD INCREASE REQUIRE-
MENT.—A State meets the requirement of 
this clause for a quarter if the average 
monthly assistance caseload of the State 
for the quarter exceeds the average month-
ly assistance caseload of the State for the 
corresponding quarter in the emergency 
fund base year of the State. 
‘‘(iii) AMOUNT OF GRANT.—Subject to 
paragraph (5), the amount of the grant to 
be made to a State under this subpara-
graph for a quarter shall be 80 percent of 
the amount (if any) by which the total ex-
penditures of the State for basic assistance 
(as defined by the Secretary) in the quar-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00355
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
356 
ter, whether under the State program 
funded under this part or as qualified 
State expenditures, exceeds the total ex-
penditures of the State for such assistance 
for the corresponding quarter in the emer-
gency fund base year of the State. 
‘‘(B) GRANT RELATED TO INCREASED EX-
PENDITURES
FOR
NON-RECURRENT
SHORT 
TERM BENEFITS.— 
‘‘(i) IN GENERAL.—For each calendar 
quarter in fiscal year 2009 or 2010, the 
Secretary shall make a grant from the 
Emergency Fund to each State that— 
‘‘(I) requests a grant under this 
subparagraph for the quarter; and 
‘‘(II) meets the requirement of 
clause (ii) for the quarter. 
‘‘(ii) NON-RECURRENT
SHORT
TERM 
EXPENDITURE
REQUIREMENT.—A State 
meets the requirement of this clause for a 
quarter if the total expenditures of the 
State for non-recurrent short term benefits 
in the quarter, whether under the State 
program funded under this part or as 
qualified State expenditures, exceeds the 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00356
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
357 
total such expenditures of the State for 
non-recurrent short term benefits in the 
corresponding quarter in the emergency 
fund base year of the State. 
‘‘(iii) AMOUNT OF GRANT.—Subject to 
paragraph (5), the amount of the grant to 
be made to a State under this subpara-
graph for a quarter shall be an amount 
equal to 80 percent of the excess described 
in clause (ii). 
‘‘(C) GRANT RELATED TO INCREASED EX-
PENDITURES FOR SUBSIDIZED EMPLOYMENT.— 
‘‘(i) IN GENERAL.—For each calendar 
quarter in fiscal year 2009 or 2010, the 
Secretary shall make a grant from the 
Emergency Fund to each State that— 
‘‘(I) requests a grant under this 
subparagraph for the quarter; and 
‘‘(II) meets the requirement of 
clause (ii) for the quarter. 
‘‘(ii) SUBSIDIZED
EMPLOYMENT
EX-
PENDITURE
REQUIREMENT.—A 
State 
meets the requirement of this clause for a 
quarter if the total expenditures of the 
State for subsidized employment in the 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00357
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
358 
quarter, whether under the State program 
funded under this part or as qualified 
State expenditures, exceeds the total of 
such expenditures of the State in the cor-
responding quarter in the emergency fund 
base year of the State. 
‘‘(iii) AMOUNT OF GRANT.—Subject to 
paragraph (5), the amount of the grant to 
be made to a State under this subpara-
graph for a quarter shall be an amount 
equal to 80 percent of the excess described 
in clause (ii). 
‘‘(4) AUTHORITY TO MAKE NECESSARY ADJUST-
MENTS TO DATA AND COLLECT NEEDED DATA.—In 
determining the size of the caseload of a State and 
the expenditures of a State for basic assistance, non- 
recurrent short-term benefits, and subsidized em-
ployment, during any period for which the State re-
quests funds under this subsection, and during the 
emergency fund base year of the State, the Sec-
retary may make appropriate adjustments to the 
data to ensure that the data reflect expenditures 
under the State program funded under this part and 
qualified State expenditures. The Secretary may de-
velop a mechanism for collecting expenditure data, 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00358
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
359 
including procedures which allow States to make 
reasonable estimates, and may set deadlines for 
making revisions to the data. 
‘‘(5) LIMITATION.—The total amount payable 
to a single State under subsection (b) and this sub-
section for a fiscal year shall not exceed 25 percent 
of the State family assistance grant. 
‘‘(6) LIMITATIONS ON USE OF FUNDS.—A State 
to which an amount is paid under this subsection 
may use the amount only as authorized by section 
404. 
‘‘(7) TIMING OF IMPLEMENTATION.—The Sec-
retary shall implement this subsection as quickly as 
reasonably possible, pursuant to appropriate guid-
ance to States. 
‘‘(8) DEFINITIONS.—In this subsection: 
‘‘(A) 
AVERAGE
MONTHLY
ASSISTANCE 
CASELOAD.—The term ‘average monthly assist-
ance caseload’ means, with respect to a State 
and a quarter, the number of families receiving 
assistance during the quarter under the State 
program funded under this part or as qualified 
State expenditures, subject to adjustment under 
paragraph (4). 
‘‘(B) EMERGENCY FUND BASE YEAR.— 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00359
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
360 
‘‘(i) IN GENERAL.—The term ‘emer-
gency fund base year’ means, with respect 
to a State and a category described in 
clause (ii), whichever of fiscal year 2007 or 
2008 is the fiscal year in which the 
amount described by the category with re-
spect to the State is the lesser. 
‘‘(ii) CATEGORIES
DESCRIBED.—The 
categories described in this clause are the 
following: 
‘‘(I) The average monthly assist-
ance caseload of the State. 
‘‘(II) The total expenditures of 
the State for non-recurrent short term 
benefits, whether under the State pro-
gram funded under this part or as 
qualified State expenditures. 
‘‘(III) The total expenditures of 
the State for subsidized employment, 
whether under the State program 
funded under this part or as qualified 
State expenditures. 
‘‘(C) QUALIFIED STATE EXPENDITURES.— 
The term ‘qualified State expenditures’ has the 
meaning given the term in section 409(a)(7).’’. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00360
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
361 
(b) TEMPORARY MODIFICATION OF CASELOAD RE-
DUCTION CREDIT.—Section 407(b)(3)(A)(i) of such Act 
(42 U.S.C. 607(b)(3)(A)(i)) is amended by inserting ‘‘(or 
if the immediately preceding fiscal year is fiscal year 2009 
or 2010, then, at State option, during the emergency fund 
base year of the State with respect to the average monthly 
assistance caseload of the State (within the meaning of 
section 403(c)(8)(B)))’’ before ‘‘under the State’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act. 
SEC. 2102. ONE-TIME EMERGENCY PAYMENT TO SSI RECIPI-
ENTS. 
(a) PAYMENT AUTHORITY.— 
(1) IN GENERAL.—At the earliest practicable 
date in calendar year 2009 but not later than 120 
days after the date of the enactment of this section, 
the Commissioner of Social Security shall make a 
one-time payment to each individual who is deter-
mined by the Commissioner in calendar year 2009 to 
be an individual who— 
(A) is entitled to a cash benefit under the 
supplemental security income program under 
title XVI of the Social Security Act (other than 
pursuant to section 1611(e)(1)(B) of such Act) 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00361
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
362 
for at least 1 day in the calendar month in 
which the first payment under this section is to 
be made; or 
(B)(i) was entitled to such a cash benefit 
(other than pursuant to section 1611(e)(1)(B) 
of such Act) for at least 1 day in the 2-month 
period preceding that calendar month; and 
(ii) whose entitlement to that benefit 
ceased in that 2-month period solely because 
the income of the individual (and the income of 
the spouse, if any, of the individual) exceeded 
the applicable income limit described in para-
graph (1)(A) or (2)(A) of section 1611(a) of 
such Act. 
(2) AMOUNT
OF
PAYMENT.—Subject to sub-
section (b)(1) of this section, the amount of the pay-
ment shall be— 
(A) in the case of an individual eligible for 
a payment under this section who does not have 
a spouse eligible for such a payment, an 
amount equal to the average of the cash bene-
fits payable in the aggregate under section 
1611 or 1619(a) of the Social Security Act to 
eligible individuals who do not have an eligible 
spouse, for the most recent month for which 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00362
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
363 
data on payment of the benefits are available, 
as determined by the Commissioner of Social 
Security; or 
(B) in the case of an individual eligible for 
a payment under this section who has a spouse 
eligible for such a payment, an amount equal to 
the average of the cash benefits payable in the 
aggregate under section 1611 or 1619(a) of the 
Social Security Act to eligible individuals who 
have an eligible spouse, for the most recent 
month for which data on payment of the bene-
fits are available, as so determined. 
(b) ADMINISTRATIVE PROVISIONS.— 
(1) AUTHORITY
TO
WITHHOLD
PAYMENT
TO 
RECOVER PRIOR OVERPAYMENT OF SSI BENEFITS.— 
The Commissioner of Social Security may withhold 
part or all of a payment otherwise required to be 
made under subsection (a) of this section to an indi-
vidual, in order to recover a prior overpayment of 
benefits to the individual under the supplemental se-
curity income program under title XVI of the Social 
Security Act, subject to the limitations of section 
1631(b) of such Act. 
(2) PAYMENT TO BE DISREGARDED IN DETER-
MINING
UNDERPAYMENTS
UNDER
THE
SSI
PRO-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00363
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
364 
GRAM.—A payment under subsection (a) shall be 
disregarded in determining whether there has been 
an underpayment of benefits under the supplemental 
security income program under title XVI of the So-
cial Security Act. 
(3) NONASSIGNMENT.—The provisions of sec-
tion 1631(d) of the Social Security Act shall apply 
with respect to payments under this section to the 
same extent as they apply in the case of title XVI 
of such Act. 
(c) PAYMENTS TO BE DISREGARDED FOR PURPOSES 
OF ALL FEDERAL
AND FEDERALLY ASSISTED PRO-
GRAMS.—A payment under subsection (a) shall not be re-
garded as income to the recipient, and shall not be re-
garded as a resource of the recipient for the month of re-
ceipt and the following 6 months, for purposes of deter-
mining the eligibility of any individual for benefits or as-
sistance, or the amount or extent of benefits or assistance, 
under any Federal program or under any State or local 
program financed in whole or in part with Federal funds. 
(d) APPROPRIATION.—Out of any sums in the Treas-
ury of the United States not otherwise appropriated, there 
are appropriated such sums as may be necessary to carry 
out this section. 
VerDate Nov 24 2008 
02:49 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00364
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
365 
SEC. 2103. TEMPORARY RESUMPTION OF PRIOR CHILD 
SUPPORT LAW. 
During the period that begins with October 1, 2008, 
and ends with September 30, 2010, section 455(a)(1) of 
the Social Security Act shall be applied and administered 
as if the phrase ‘‘from amounts paid to the State under 
section 458 or’’ did not appear in such section. 
TITLE III—HEALTH INSURANCE 
ASSISTANCE FOR THE UNEM-
PLOYED 
SEC. 3001. SHORT TITLE AND TABLE OF CONTENTS OF 
TITLE. 
(a) SHORT TITLE OF TITLE.—This title may be cited 
as the ‘‘Health Insurance Assistance for the Unemployed 
Act of 2009’’. 
(b) TABLE OF CONTENTS OF TITLE.—The table of 
contents of this title is as follows: 
Sec. 3001. Short title and table of contents of title. 
Sec. 3002. Premium assistance for COBRA benefits and extension of COBRA 
benefits for older or long-term employees. 
Sec. 3003. Temporary optional Medicaid coverage for the unemployed. 
SEC. 3002. PREMIUM ASSISTANCE FOR COBRA BENEFITS 
AND EXTENSION OF COBRA BENEFITS FOR 
OLDER OR LONG-TERM EMPLOYEES. 
(a) PREMIUM ASSISTANCE FOR COBRA CONTINU-
ATION COVERAGE FOR INDIVIDUALS AND THEIR FAMI-
LIES.— 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00365
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
366 
(1) PROVISION OF PREMIUM ASSISTANCE.— 
(A) 
REDUCTION
OF
PREMIUMS
PAY-
ABLE.—In the case of any premium for a pe-
riod of coverage beginning on or after the date 
of the enactment of this Act for COBRA con-
tinuation coverage with respect to any assist-
ance eligible individual, such individual shall be 
treated for purposes of any COBRA continu-
ation provision as having paid the amount of 
such premium if such individual pays 35 per-
cent of the amount of such premium (as deter-
mined without regard to this subsection). 
(B) PREMIUM REIMBURSEMENT.—For pro-
visions providing the balance of such premium, 
see section 6431 of the Internal Revenue Code 
of 1986, as added by paragraph (12). 
(2) LIMITATION OF PERIOD OF PREMIUM AS-
SISTANCE.— 
(A) IN GENERAL.—Paragraph (1)(A) shall 
not apply with respect to any assistance eligible 
individual for months of coverage beginning on 
or after the earlier of— 
(i) the first date that such individual 
is eligible for coverage under any other 
group health plan (other than coverage 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00366
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
367 
consisting of only dental, vision, coun-
seling, or referral services (or a combina-
tion thereof), coverage under a health re-
imbursement arrangement or a health 
flexible spending arrangement, or coverage 
of treatment that is furnished in an on-site 
medical facility maintained by the em-
ployer and that consists primarily of first- 
aid services, prevention and wellness care, 
or similar care (or a combination thereof)) 
or is eligible for benefits under title XVIII 
of the Social Security Act, or 
(ii) the earliest of— 
(I) the date which is 12 months 
after the first day of the first month 
that paragraph (1)(A) applies with re-
spect to such individual, 
(II) the date following the expira-
tion of the maximum period of con-
tinuation coverage required under the 
applicable COBRA continuation cov-
erage provision, or 
(III) the date following the expi-
ration of the period of continuation 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00367
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
368 
coverage allowed under paragraph 
(4)(B)(ii). 
(B) TIMING
OF
ELIGIBILITY
FOR
ADDI-
TIONAL COVERAGE.—For purposes of subpara-
graph (A)(i), an individual shall not be treated 
as eligible for coverage under a group health 
plan before the first date on which such indi-
vidual could be covered under such plan. 
(C) 
NOTIFICATION
REQUIREMENT.—An 
assistance eligible individual shall notify in writ-
ing the group health plan with respect to which 
paragraph (1)(A) applies if such paragraph 
ceases to apply by reason of subparagraph 
(A)(i). Such notice shall be provided to the 
group health plan in such time and manner as 
may be specified by the Secretary of Labor. 
(3) ASSISTANCE
ELIGIBLE
INDIVIDUAL.—For 
purposes of this section, the term ‘‘assistance eligible 
individual’’ means any qualified beneficiary if— 
(A) at any time during the period that be-
gins with September 1, 2008, and ends with 
December 31, 2009, such qualified beneficiary 
is eligible for COBRA continuation coverage, 
(B) such qualified beneficiary elects such 
coverage, and 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00368
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
369 
(C) the qualifying event with respect to the 
COBRA continuation coverage consists of the 
involuntary termination of the covered employ-
ee’s employment and occurred during such pe-
riod. 
(4) EXTENSION OF ELECTION PERIOD AND EF-
FECT ON COVERAGE.— 
(A) IN
GENERAL.—Notwithstanding sec-
tion 605(a) of the Employee Retirement Income 
Security Act of 1974, section 4980B(f)(5)(A) of 
the Internal Revenue Code of 1986, section 
2205(a) of the Public Health Service Act, and 
section 8905a(c)(2) of title 5, United States 
Code, in the case of an individual who is a 
qualified beneficiary described in paragraph 
(3)(A) as of the date of the enactment of this 
Act and has not made the election referred to 
in paragraph (3)(B) as of such date, such indi-
vidual may elect the COBRA continuation cov-
erage under the COBRA continuation coverage 
provisions containing such sections during the 
60-day period commencing with the date on 
which the notification required under paragraph 
(7)(C) is provided to such individual. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00369
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
370 
(B) COMMENCEMENT
OF
COVERAGE; NO 
REACH-BACK.—Any COBRA continuation cov-
erage elected by a qualified beneficiary during 
an extended election period under subparagraph 
(A)— 
(i) shall commence on the date of the 
enactment of this Act, and 
(ii) shall not extend beyond the period 
of COBRA continuation coverage that 
would have been required under the appli-
cable COBRA continuation coverage provi-
sion if the coverage had been elected as re-
quired under such provision. 
(C) PREEXISTING CONDITIONS.—With re-
spect to a qualified beneficiary who elects 
COBRA continuation coverage pursuant to sub-
paragraph (A), the period— 
(i) beginning on the date of the quali-
fying event, and 
(ii) ending with the day before the 
date of the enactment of this Act, 
shall be disregarded for purposes of deter-
mining the 63-day periods referred to in section 
701)(2) of the Employee Retirement Income 
Security Act of 1974, section 9801(c)(2) of the 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00370
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
371 
Internal Revenue Code of 1986, and section 
2701(c)(2) of the Public Health Service Act. 
(5) EXPEDITED REVIEW OF DENIALS OF PRE-
MIUM ASSISTANCE.—In any case in which an indi-
vidual requests treatment as an assistance eligible 
individual and is denied such treatment by the group 
health plan by reason of such individual’s ineligi-
bility for COBRA continuation coverage, the Sec-
retary of Labor (or the Secretary of Health and 
Human services in connection with COBRA continu-
ation coverage which is provided other than pursu-
ant to part 6 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974), in con-
sultation with the Secretary of the Treasury, shall 
provide for expedited review of such denial. An indi-
vidual shall be entitled to such review upon applica-
tion to such Secretary in such form and manner as 
shall be provided by such Secretary. Such Secretary 
shall make a determination regarding such individ-
ual’s eligibility within 10 business days after receipt 
of such individual’s application for review under this 
paragraph. 
(6) DISREGARD OF SUBSIDIES FOR PURPOSES 
OF
FEDERAL
AND
STATE
PROGRAMS.—Notwith-
standing any other provision of law, any premium 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00371
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
372 
reduction with respect to an assistance eligible indi-
vidual under this subsection shall not be considered 
income or resources in determining eligibility for, or 
the amount of assistance or benefits provided under, 
any other public benefit provided under Federal law 
or the law of any State or political subdivision there-
of. 
(7) NOTICES TO INDIVIDUALS.— 
(A) GENERAL NOTICE.— 
(i) IN GENERAL.—In the case of no-
tices provided under section 606(4) of the 
Employee Retirement Income Security Act 
of 1974 (29 U.S.C. 1166(4)), section 
4980B(f)(6)(D) of the Internal Revenue 
Code of 1986, section 2206(4) of the Pub-
lic Health Service Act (42 U.S.C. 300bb- 
6(4)), or section 8905a(f)(2)(A) of title 5, 
United States Code, with respect to indi-
viduals who, during the period described in 
paragraph (3)(A), become entitled to elect 
COBRA continuation coverage, such no-
tices shall include an additional notifica-
tion to the recipient of the availability of 
premium reduction with respect to such 
coverage under this subsection. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00372
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
373 
(ii) ALTERNATIVE
NOTICE.—In the 
case of COBRA continuation coverage to 
which the notice provision under such sec-
tions does not apply, the Secretary of 
Labor, in consultation with the Secretary 
of the Treasury and the Secretary of 
Health and Human Services, shall, in co-
ordination with administrators of the 
group health plans (or other entities) that 
provide or administer the COBRA continu-
ation coverage involved, provide rules re-
quiring the provision of such notice. 
(iii) FORM.—The requirement of the 
additional notification under this subpara-
graph may be met by amendment of exist-
ing notice forms or by inclusion of a sepa-
rate document with the notice otherwise 
required. 
(B) SPECIFIC REQUIREMENTS.—Each ad-
ditional notification under subparagraph (A) 
shall include— 
(i) the forms necessary for estab-
lishing eligibility for premium reduction 
under this subsection, 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00373
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
374 
(ii) the name, address, and telephone 
number necessary to contact the plan ad-
ministrator and any other person main-
taining relevant information in connection 
with such premium reduction, 
(iii) a description of the extended elec-
tion period provided for in paragraph 
(4)(A), 
(iv) a description of the obligation of 
the qualified beneficiary under paragraph 
(2)(C) to notify the plan providing continu-
ation coverage of eligibility for subsequent 
coverage under another group health plan 
or eligibility for benefits under title XVIII 
of the Social Security Act and the penalty 
provided for failure to so notify the plan, 
and 
(v) a description, displayed in a 
prominent manner, of the qualified bene-
ficiary’s right to a reduced premium and 
any conditions on entitlement to the re-
duced premium. 
(C) NOTICE
RELATING
TO
RETROACTIVE 
COVERAGE.—In the case of an individual de-
scribed in paragraph (3)(A) who has elected 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00374
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
375 
COBRA continuation coverage as of the date of 
enactment of this Act or an individual described 
in paragraph (4)(A), the administrator of the 
group health plan (or other entity) involved 
shall provide (within 60 days after the date of 
enactment of this Act) for the additional notifi-
cation required to be provided under subpara-
graph (A). 
(D) MODEL NOTICES.—Not later than 30 
days after the date of enactment of this Act, 
the Secretary of the Labor, in consultation with 
the Secretary of the Treasury and the Secretary 
of Health and Human Services, shall prescribe 
models for the additional notification required 
under this paragraph. 
(8) SAFEGUARDS.—The Secretary of the Treas-
ury shall provide such rules, procedures, regulations, 
and other guidance as may be necessary and appro-
priate to prevent fraud and abuse under this sub-
section. 
(9) OUTREACH.—The Secretary of Labor, in 
consultation with the Secretary of the Treasury and 
the Secretary of Health and Human Services, shall 
provide outreach consisting of public education and 
enrollment assistance relating to premium reduction 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00375
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
376 
provided under this subsection. Such outreach shall 
target employers, group health plan administrators, 
public assistance programs, States, insurers, and 
other entities as determined appropriate by such 
Secretaries. Such outreach shall include an initial 
focus on those individuals electing continuation cov-
erage who are referred to in paragraph (7)(C). In-
formation on such premium reduction, including en-
rollment, shall also be made available on website of 
the Departments of Labor, Treasury, and Health 
and Human Services. 
(10) DEFINITIONS.—For purposes of this sub-
section— 
(A) ADMINISTRATOR.—The term ‘‘admin-
istrator’’ has the meaning given such term in 
section 3(16) of the Employee Retirement In-
come Security Act of 1974. 
(B) COBRA CONTINUATION COVERAGE.— 
The term ‘‘COBRA continuation coverage’’ 
means continuation coverage provided pursuant 
to part 6 of subtitle B of title I of the Em-
ployee Retirement Income Security Act of 1974 
(other than under section 609), title XXII of 
the Public Health Service Act, section 4980B of 
the Internal Revenue Code of 1986 (other than 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00376
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
377 
subsection (f)(1) of such section insofar as it 
relates to pediatric vaccines), or section 8905a 
of title 5, United States Code, or under a State 
program that provides continuation coverage 
comparable to such continuation coverage. Such 
term does not include coverage under a health 
flexible spending arrangement. 
(C) COBRA CONTINUATION PROVISION.— 
The term ‘‘COBRA continuation provision’’ 
means the provisions of law described in sub-
paragraph (B). 
(D) 
COVERED
EMPLOYEE.—The 
term 
‘‘covered employee’’ has the meaning given such 
term in section 607(2) of the Employee Retire-
ment Income Security Act of 1974. 
(E) QUALIFIED BENEFICIARY.—The term 
‘‘qualified beneficiary’’ has the meaning given 
such term in section 607(3) of the Employee 
Retirement Income Security Act of 1974. 
(F) GROUP
HEALTH
PLAN.—The term 
‘‘group health plan’’ has the meaning given 
such term in section 607(1) of the Employee 
Retirement Income Security Act of 1974. 
(G) STATE.—The term ‘‘State’’ includes 
the District of Columbia, the Commonwealth of 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00377
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
378 
Puerto Rico, the Virgin Islands, Guam, Amer-
ican Samoa, and the Commonwealth of the 
Northern Mariana Islands. 
(11) REPORTS.— 
(A) INTERIM REPORT.—The Secretary of 
the Treasury shall submit an interim report to 
the Committee on Education and Labor, the 
Committee on Ways and Means, and the Com-
mittee on Energy and Commerce of the House 
of Representatives and the Committee on 
Health, Education, Labor, and Pensions and 
the Committee on Finance of the Senate re-
garding the premium reduction provided under 
this subsection that includes— 
(i) the number of individuals provided 
such assistance as of the date of the re-
port; and 
(ii) the total amount of expenditures 
incurred (with administrative expenditures 
noted separately) in connection with such 
assistance as of the date of the report. 
(B) FINAL
REPORT.—As soon as prac-
ticable after the last period of COBRA continu-
ation coverage for which premium reduction is 
provided under this section, the Secretary of the 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00378
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
379 
Treasury shall submit a final report to each 
Committee referred to in subparagraph (A) that 
includes— 
(i) the number of individuals provided 
premium reduction under this section; 
(ii) 
the 
average 
dollar 
amount 
(monthly and annually) of premium reduc-
tions provided to such individuals; and 
(iii) the total amount of expenditures 
incurred (with administrative expenditures 
noted separately) in connection with pre-
mium reduction under this section. 
(12) COBRA PREMIUM ASSISTANCE.— 
(A) IN GENERAL.—Subchapter B of chap-
ter 65 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following 
new section: 
‘‘SEC. 6431. COBRA PREMIUM ASSISTANCE. 
‘‘(a) IN GENERAL.—The entity to whom premiums 
are payable under COBRA continuation coverage shall be 
reimbursed for the amount of premiums not paid by plan 
beneficiaries by reason of section 3002(a) of the Health 
Insurance Assistance for the Unemployed Act of 2009. 
Such amount shall be treated as a credit against the re-
quirement of such entity to make deposits of payroll taxes 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00379
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
380 
and the liability of such entity for payroll taxes. To the 
extent that such amount exceeds the amount of such 
taxes, the Secretary shall pay to such entity the amount 
of such excess. No payment may be made under this sub-
section to an entity with respect to any assistance eligible 
individual until after such entity has received the reduced 
premium from such individual required under section 
3002(a)(1)(A) of such Act. 
‘‘(b) PAYROLL TAXES.—For purposes of this section, 
the term ‘payroll taxes’ means— 
‘‘(1) amounts required to be deducted and with-
held for the payroll period under section 3401 (relat-
ing to wage withholding), 
‘‘(2) amounts required to be deducted for the 
payroll period under section 3102 (relating to FICA 
employee taxes), and 
‘‘(3) amounts of the taxes imposed for the pay-
roll period under section 3111 (relating to FICA em-
ployer taxes). 
‘‘(c) TREATMENT OF CREDIT.—Except as otherwise 
provided by the Secretary, the credit described in sub-
section (a) shall be applied as though the employer had 
paid to the Secretary, on the day that the qualified bene-
ficiary’s premium payment is received, an amount equal 
to such credit. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00380
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
381 
‘‘(d) TREATMENT OF PAYMENT.—For purposes of 
section 1324(b)(2) of title 31, United States Code, any 
payment under this section shall be treated in the same 
manner as a refund of the credit under section 35. 
‘‘(e) REPORTING.— 
‘‘(1) IN GENERAL.—Each entity entitled to re-
imbursement under subsection (a) for any period 
shall submit such reports as the Secretary may re-
quire, including— 
‘‘(A) an attestation of involuntary termi-
nation of employment for each covered em-
ployee on the basis of whose termination entitle-
ment to reimbursement is claimed under sub-
section (a), and 
‘‘(B) a report of the amount of payroll 
taxes offset under subsection (a) for the report-
ing period and the estimated offsets of such 
taxes for the subsequent reporting period in 
connection with reimbursements under sub-
section (a). 
‘‘(2) TIMING
OF
REPORTS
RELATING
TO 
AMOUNT
OF
PAYROLL
TAXES.—Reports required 
under paragraph (1)(B) shall be submitted at the 
same time as deposits of taxes imposed by chapters 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00381
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
382 
21, 22, and 24 or at such time as is specified by the 
Secretary. 
‘‘(f) REGULATIONS.—The Secretary may issue such 
regulations or other guidance as may be necessary or ap-
propriate to carry out this section, including the require-
ment to report information or the establishment of other 
methods for verifying the correct amounts of payments 
and credits under this section. The Secretary shall issue 
such regulations or guidance with respect to the applica-
tion of this section to group health plans that are multiem-
ployer plans (as defined in section 3(37) of the Employee 
Retirement Income Security Act of 1974).’’. 
(B) SOCIAL SECURITY TRUST FUNDS HELD 
HARMLESS.—In determining any amount trans-
ferred or appropriated to any fund under the 
Social Security Act, section 6431 of the Inter-
nal Revenue Code of 1986 shall not be taken 
into account. 
(C) CLERICAL AMENDMENT.—The table of 
sections for subchapter B of chapter 65 of the 
Internal Revenue Code of 1986 is amended by 
adding at the end the following new item: 
‘‘Sec. 6431. COBRA premium assistance.’’. 
(D) EFFECTIVE DATE.—The amendments 
made by this paragraph shall apply to pre-
miums to which subsection (a)(1)(A) applies. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00382
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
383 
(13) PENALTY
FOR
FAILURE
TO
NOTIFY 
HEALTH PLAN OF CESSATION OF ELIGIBILITY FOR 
PREMIUM ASSISTANCE.— 
(A) IN GENERAL.—Part I of subchapter B 
of chapter 68 of the Internal Revenue Code of 
1986 is amended by adding at the end the fol-
lowing new section: 
‘‘SEC. 6720C. PENALTY FOR FAILURE TO NOTIFY HEALTH 
PLAN OF CESSATION OF ELIGIBILITY FOR 
COBRA PREMIUM ASSISTANCE. 
‘‘(a) IN GENERAL.—Any person required to notify a 
group health plan under section 3002(a)(2)(C)) of the 
Health Insurance Assistance for the Unemployed Act of 
2009 who fails to make such a notification at such time 
and in such manner as the Secretary of Labor may require 
shall pay a penalty of 110 percent of the premium reduc-
tion provided under such section after termination of eligi-
bility under such subsection. 
‘‘(b) REASONABLE CAUSE EXCEPTION.—No penalty 
shall be imposed under subsection (a) with respect to any 
failure if it is shown that such failure is due to reasonable 
cause and not to willful neglect.’’. 
(B) CLERICAL AMENDMENT.—The table of 
sections of part I of subchapter B of chapter 68 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00383
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
384 
of such Code is amended by adding at the end 
the following new item: 
‘‘Sec. 6720C. Penalty for failure to notify health plan of cessation of eligibility 
for COBRA premium assistance.’’. 
(C) EFFECTIVE DATE.—The amendments 
made by this paragraph shall apply to failures 
occurring after the date of the enactment of 
this Act. 
(14) COORDINATION WITH HCTC.— 
(A) IN GENERAL.—Subsection (g) of sec-
tion 35 of the Internal Revenue Code of 1986 
is amended by redesignating paragraph (9) as 
paragraph (10) and inserting after paragraph 
(8) the following new paragraph: 
‘‘(9) COBRA PREMIUM
ASSISTANCE.—In the 
case of an assistance eligible individual who receives 
premium reduction for COBRA continuation cov-
erage under section 3002(a) of the Health Insurance 
Assistance for the Unemployed Act of 2009 for any 
month during the taxable year, such individual shall 
not be treated as an eligible individual, a certified 
individual, or a qualifying family member for pur-
poses of this section or section 7527 with respect to 
such month.’’. 
(B) EFFECTIVE
DATE.—The amendment 
made by subparagraph (A) shall apply to tax-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00384
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
385 
able years ending after the date of the enact-
ment of this Act. 
(15) EXCLUSION OF COBRA PREMIUM ASSIST-
ANCE FROM GROSS INCOME.— 
(A) IN GENERAL.—Part III of subchapter 
B of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after section 
139B the following new section: 
‘‘SEC. 139C. COBRA PREMIUM ASSISTANCE. 
‘‘In the case of an assistance eligible individual (as 
defined in section 3002 of the Health Insurance Assist-
ance for the Unemployed Act of 2009), gross income does 
not include any premium reduction provided under sub-
section (a) of such section.’’. 
(B) CLERICAL AMENDMENT.—The table of 
sections for part III of subchapter B of chapter 
1 of such Code is amended by inserting after 
the item relating to section 139B the following 
new item: 
‘‘Sec. 139C. COBRA premium assistance.’’. 
(C) EFFECTIVE DATE.—The amendments 
made by this paragraph shall apply to taxable 
years ending after the date of the enactment of 
this Act. 
(b) EXTENSION OF COBRA BENEFITS FOR OLDER 
OR LONG-TERM EMPLOYEES.— 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00385
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
386 
(1) ERISA AMENDMENT.—Section 602(2)(A) 
of the Employee Retirement Income Security Act of 
1974 is amended by adding at the end the following 
new clauses: 
‘‘(x) SPECIAL RULE FOR OLDER OR 
LONG-TERM EMPLOYEES GENERALLY.—In 
the case of a qualifying event described in 
section 603(2) with respect to a covered 
employee who (as of such qualifying event) 
has attained age 55 or has completed 10 
or more years of service with the entity 
that is the employer at the time of the 
qualifying event, clauses (i) and (ii) shall 
not apply. For purposes of this clause, in 
the case of a group health plan that is a 
multiemployer plan, service by the covered 
employee performed for 2 or more employ-
ers during periods for which such employ-
ers contributed to such plan shall be treat-
ed as service performed for the entity re-
ferred to in the preceding sentence. 
‘‘(xi) YEAR OF SERVICE.— For pur-
poses of this subparagraph, the term ‘year 
of service’ shall have the meaning provided 
in section 202(a)(3).’’. 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00386
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
387 
(2) IRC AMENDMENT.—Clause (i) of section 
4980B(f)(2)(B) of the Internal Revenue Code of 
1986 is amended by adding at the end the following 
new subclauses: 
‘‘(X) SPECIAL RULE FOR OLDER 
OR
LONG-TERM
EMPLOYEES
GEN-
ERALLY.—In the case of a qualifying 
event described in paragraph (3)(B) 
with respect to a covered employee 
who (as of such qualifying event) has 
attained age 55 or has completed 10 
or more years of service with the enti-
ty that is the employer at the time of 
the qualifying event, subclauses (I) 
and (II) shall not apply. For purposes 
of this subclause, in the case of a 
group health plan that is a multiem-
ployer plan (as defined in section 
3(37) of the Employee Retirement In-
come Security Act of 1974), service by 
the covered employee performed for 2 
or more employers during periods for 
which such employers contributed to 
such plan shall be treated as service 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00387
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
388 
performed for the entity referred to in 
the preceding sentence. 
‘‘(XI) YEAR OF SERVICE.— For 
purposes of this clause, the term ‘year 
of service’ shall have the meaning pro-
vided in section 202(a)(3) of the Em-
ployee Retirement Income Security 
Act of 1974.’’. 
(3) PHSA AMENDMENT.—Section 2202(2)(A) 
of the Public Health Service Act is amended by add-
ing at the end the following new clauses: 
‘‘(viii) SPECIAL RULE FOR OLDER OR 
LONG-TERM EMPLOYEES GENERALLY.—In 
the case of a qualifying event described in 
section 2203(2) with respect to a covered 
employee who (as of such qualifying event) 
has attained age 55 or has completed 10 
or more years of service with the entity 
that is the employer at the time of the 
qualifying event, clauses (i) and (ii) shall 
not apply. For purposes of this clause, in 
the case of a group health plan that is a 
multiemployer plan (as defined in section 
3(37) of the Employee Retirement Income 
Security Act of 1974), service by the cov-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00388
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
389 
ered employee performed for 2 or more 
employers during periods for which such 
employers contributed to such plan shall be 
treated as service performed for the entity 
referred to in the preceding sentence. 
‘‘(ix) YEAR OF SERVICE.— For pur-
poses of this subparagraph, the term ‘year 
of service’ shall have the meaning provided 
in section 202(a)(3) of the Employee Re-
tirement Income Security Act of 1974.’’. 
(4) EFFECTIVE DATE OF AMENDMENTS.—The 
amendments made by this subsection shall apply to 
periods of coverage which would (without regard to 
the amendments made by this section) end on or 
after the date of the enactment of this Act. 
SEC. 3003. TEMPORARY OPTIONAL MEDICAID COVERAGE 
FOR THE UNEMPLOYED. 
(a) IN GENERAL.—Section 1902 of the Social Secu-
rity Act (42 U.S.C. 1396b) is amended— 
(1) in subsection (a)(10)(A)(ii)— 
(A) by striking ‘‘or’’ at the end of sub-
clause (XVIII); 
(B) by adding ‘‘or’’ at the end of subclause 
(XIX); and 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00389
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
390 
(C) by adding at the end the following new 
subclause 
‘‘(XX) who are described in sub-
section (dd)(1) (relating to certain un-
employed individuals and their fami-
lies);’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(dd)(1) Individuals described in this paragraph 
are— 
‘‘(A) individuals who— 
‘‘(i) are within one or more of the categories de-
scribed in paragraph (2), as elected under the State 
plan; and 
‘‘(ii) meet the applicable requirements of para-
graph (3); and 
‘‘(B) individuals who— 
‘‘(i) are the spouse, or dependent child under 
19 years of age, of an individual described in sub-
paragraph (A); and 
‘‘(ii) meet the requirement of paragraph (3)(B). 
‘‘(2) The categories of individuals described in this 
paragraph are each of the following: 
‘‘(A)(i) Individuals who are receiving unemploy-
ment compensation benefits; and 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00390
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
391 
‘‘(ii) individuals who were receiving, but have 
exhausted, unemployment compensation benefits on 
or after July 1, 2008. 
‘‘(B) Individuals who are involuntarily unem-
ployed and were involuntarily separated from em-
ployment on or after September 1, 2008, and before 
January 1, 2011, whose family gross income does 
not exceed a percentage specified by the State (not 
to exceed 200 percent) of the income official poverty 
line (as defined by the Office of Management and 
Budget, and revised annually in accordance with sec-
tion 673(2) of the Omnibus Budget Reconciliation 
Act of 1981) applicable to a family of the size in-
volved, 
and 
who, 
but 
for 
subsection 
(a)(10)(A)(ii)(XX), are not eligible for medical as-
sistance under this title or health assistance under 
title XXI. 
‘‘(C) Individuals who are involuntarily unem-
ployed and were involuntarily separated from em-
ployment on or after September 1, 2008, and before 
January 1, 2011, who are members of households 
participating in the supplemental nutrition assist-
ance program established under the Food and Nutri-
tion Act of 2008 (7 U.S.C. 2011 et seq), and who, 
but for subsection (a)(10)(A)(ii)(XX), are not eligi-
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00391
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
392 
ble for medical assistance under this title or health 
assistance under title XXI. 
‘‘(3) The requirements of this paragraph with respect 
to an individual are the following: 
‘‘(A) In the case of individuals within a cat-
egory described in subparagraph (A)(i) of paragraph 
(2), the individual was involuntarily separated from 
employment on or after September 1, 2008, and be-
fore January 1, 2011, or meets such comparable re-
quirement as the Secretary specifies through rule, 
guidance, or otherwise in the case of an individual 
who was an independent contractor. 
‘‘(B) The individual is not otherwise covered 
under creditable coverage, as defined in section 
2701(c) of the Public Health Service Act (42 U.S.C. 
300gg(c)), but applied without regard to paragraph 
(1)(F) of such section and without regard to cov-
erage provided by reason of the application of sub-
section (a)(10)(A)(ii)(XX). 
‘‘(4)(A) No income or resources test shall be applied 
with respect to any category of individuals described in 
subparagraph (A) or (C) of paragraph (2) who are eligible 
for medical assistance only by reason of the application 
of subsection (a)(10)(A)(ii)(XX). 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00392
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS
393 
‘‘(B) Nothing in this subsection shall be construed 
to prevent a State from imposing a resource test for the 
category of individuals described in paragraph (2)(B)). 
‘‘(C) In the case of individuals described in paragraph 
(2)(A) or (2)(C), the requirements of subsections (i)(22) 
and (x) in section 1903 shall not apply.’’. 
(b) 100 PERCENT FEDERAL MATCHING RATE.— 
(1) FMAP FOR
TIME-LIMITED
PERIOD.—The 
third sentence of section 1905(b) of such Act (42 
U.S.C. 1396d(b)) is amended by inserting before the 
period at the end the following: ‘‘and for items and 
services furnished on or after the date of enactment 
of this Act and before January 1, 2011, to individ-
uals who are eligible for medical assistance only by 
reason 
of 
the 
application 
of 
section 
1902(a)(10)(A)(ii)(XX)’’. 
(2) CERTAIN ENROLLMENT-RELATED ADMINIS-
TRATIVE COSTS.—Notwithstanding any other provi-
sion of law, for purposes of applying section 1903(a) 
of the Social Security Act (42 U.S.C. 1396b(a)), 
with respect to expenditures incurred on or after the 
date of the enactment of this Act and before Janu-
ary 1, 2011, for costs of administration (including 
outreach and the modification and operation of eligi-
bility information systems) attributable to eligibility 
VerDate Nov 24 2008 
01:08 Jan 27, 2009
Jkt 079200
PO 00000
Frm 00393
Fmt 6652
Sfmt 6201
E:\BILLS\H1.IH
H1
jbell on PROD1PC69 with BILLS