[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6408 Introduced in House (IH)]







109th CONGRESS
  2d Session
                                H. R. 6408

     To amend the Internal Revenue Code of 1986 to extend expiring 
                  provisions, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            December 7, 2006

  Mr. Thomas introduced the following bill; which was referred to the 
   Committee on Ways and Means, and in addition to the Committees on 
   Energy and Commerce, Resources, Education and the Workforce, and 
 Government Reform, for a period to be subsequently determined by the 
  Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL



     To amend the Internal Revenue Code of 1986 to extend expiring 
                  provisions, and for other purposes.

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

SECTION 1. SHORT TITLE, ETC.

    (a) Short Title.--This Act may be cited as the ``Tax Relief and 
Health Care Act of 2006''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title, etc.
 DIVISION A--EXTENSION AND EXPANSION OF CERTAIN TAX RELIEF PROVISIONS, 
                        AND OTHER TAX PROVISIONS

Sec. 100. Reference.
       TITLE I--EXTENSION AND MODIFICATION OF CERTAIN PROVISIONS

Sec. 101. Deduction for qualified tuition and related expenses.
Sec. 102. Extension and modification of new markets tax credit.
Sec. 103. Election to deduct State and local general sales taxes.
Sec. 104. Extension and modification of research credit.
Sec. 105. Work opportunity tax credit and welfare-to-work credit.
Sec. 106. Election to include combat pay as earned income for purposes 
                            of earned income credit.
Sec. 107. Extension and modification of qualified zone academy bonds.
Sec. 108. Above-the-line deduction for certain expenses of elementary 
                            and secondary school teachers.
Sec. 109. Extension and expansion of expensing of brownfields 
                            remediation costs.
Sec. 110. Tax incentives for investment in the District of Columbia.
Sec. 111. Indian employment tax credit.
Sec. 112. Accelerated depreciation for business property on Indian 
                            reservations.
Sec. 113. Fifteen-year straight-line cost recovery for qualified 
                            leasehold improvements and qualified 
                            restaurant property.
Sec. 114. Cover over of tax on distilled spirits.
Sec. 115. Parity in application of certain limits to mental health 
                            benefits.
Sec. 116. Corporate donations of scientific property used for research 
                            and of computer technology and equipment.
Sec. 117. Availability of medical savings accounts.
Sec. 118. Taxable income limit on percentage depletion for oil and 
                            natural gas produced from marginal 
                            properties.
Sec. 119. American Samoa economic development credit.
Sec. 120. Extension of bonus depreciation for certain qualified Gulf 
                            Opportunity Zone property.
Sec. 121. Authority for undercover operations.
Sec. 122. Disclosures of certain tax return information.
Sec. 123. Special rule for elections under expired provisions.
                    TITLE II--ENERGY TAX PROVISIONS

Sec. 201. Credit for electricity produced from certain renewable 
                            resources.
Sec. 202. Credit to holders of clean renewable energy bonds.
Sec. 203. Performance standards for sulfur dioxide removal in advanced 
                            coal-based generation technology units 
                            designed to use subbituminous coal.
Sec. 204. Deduction for energy efficient commercial buildings.
Sec. 205. Credit for new energy efficient homes.
Sec. 206. Credit for residential energy efficient property.
Sec. 207. Energy credit.
Sec. 208. Special rule for qualified methanol or ethanol fuel.
Sec. 209. Special depreciation allowance for cellulosic biomass ethanol 
                            plant property.
Sec. 210. Expenditures permitted from the Leaking Underground Storage 
                            Tank Trust Fund.
Sec. 211. Treatment of coke and coke gas.
                   TITLE III--HEALTH SAVINGS ACCOUNTS

Sec. 301. Short title.
Sec. 302. FSA and HRA terminations to fund HSAs.
Sec. 303. Repeal of annual deductible limitation on HSA contributions.
Sec. 304. Modification of cost-of-living adjustment.
Sec. 305. Contribution limitation not reduced for part-year coverage.
Sec. 306. Exception to requirement for employers to make comparable 
                            health savings account contributions.
Sec. 307. One-time distribution from individual retirement plans to 
                            fund HSAs.
                       TITLE IV--OTHER PROVISIONS

Sec. 401. Deduction allowable with respect to income attributable to 
                            domestic production activities in Puerto 
                            Rico.
Sec. 402. Credit for prior year minimum tax liability made refundable 
                            after period of years.
Sec. 403. Returns required in connection with certain options.
Sec. 404. Partial expensing for advanced mine safety equipment.
Sec. 405. Mine rescue team training tax credit.
Sec. 406. Whistleblower reforms.
Sec. 407. Frivolous tax submissions.
Sec. 408. Addition of meningococcal and human papillomavirus vaccines 
                            to list of taxable vaccines.
Sec. 409. Clarification of taxation of certain settlement funds made 
                            permanent.
Sec. 410. Modification of active business definition under section 355 
                            made permanent.
Sec. 411. Revision of State veterans limit made permanent.
Sec. 412. Capital gains treatment for certain self-created musical 
                            works made permanent.
Sec. 413. Reduction in minimum vessel tonnage which qualifies for 
                            tonnage tax made permanent.
Sec. 414. Modification of special arbitrage rule for certain funds made 
                            permanent.
Sec. 415. Great Lakes domestic shipping to not disqualify vessel from 
                            tonnage tax.
Sec. 416. Use of qualified mortgage bonds to finance residences for 
                            veterans without regard to first-time 
                            homebuyer requirement.
Sec. 417. Exclusion of gain from sale of a principal residence by 
                            certain employees of the intelligence 
                            community.
Sec. 418. Sale of property by judicial officers.
Sec. 419. Premiums for mortgage insurance.
Sec. 420. Modification of refunds for kerosene used in aviation.
Sec. 421. Regional income tax agencies treated as States for purposes 
                            of confidentiality and disclosure 
                            requirements.
Sec. 422. Designation of wines by semi-generic names.
Sec. 423. Modification of railroad track maintenance credit.
Sec. 424. Modification of excise tax on unrelated business taxable 
                            income of charitable remainder trusts.
Sec. 425. Loans to qualified continuing care facilities made permanent.
Sec. 426. Technical corrections.
            DIVISION B--MEDICARE AND OTHER HEALTH PROVISIONS

Sec. 1. Short title of division.
        TITLE I--MEDICARE IMPROVED QUALITY AND PROVIDER PAYMENTS

Sec. 101. Physician payment and quality improvement.
Sec. 102. Extension of floor on Medicare work geographic adjustment.
Sec. 103. Update to the composite rate component of the basic case-mix 
                            adjusted prospective payment system for 
                            dialysis services.
Sec. 104. Extension of treatment of certain physician pathology 
                            services under Medicare.
Sec. 105. Extension of Medicare reasonable costs payments for certain 
                            clinical diagnostic laboratory tests 
                            furnished to hospital patients in certain 
                            rural areas.
Sec. 106. Hospital Medicare reports and clarifications.
Sec. 107. Payment for brachytherapy.
Sec. 108. Payment process under the competitive acquisition program 
                            (CAP).
Sec. 109. Quality reporting for hospital outpatient services and 
                            ambulatory surgical center services.
Sec. 110. Reporting of anemia quality indicators for Medicare part B 
                            cancer anti-anemia drugs.
Sec. 111. Clarification of hospice satellite designation.
               TITLE II--MEDICARE BENEFICIARY PROTECTIONS

Sec. 201. Extension of exceptions process for Medicare therapy caps.
Sec. 202. Payment for administration of part D vaccines.
Sec. 203. OIG study of never events.
Sec. 204. Medicare medical home demonstration project.
Sec. 205. Medicare DRA technical corrections.
             TITLE III--MEDICARE PROGRAM INTEGRITY EFFORTS

Sec. 301. Offsetting adjustment in Medicare Advantage Stabilization 
                            Fund.
Sec. 302. Extension and expansion of recovery audit contractor program 
                            under the Medicare Integrity Program.
Sec. 303. Funding for the Health Care Fraud and Abuse Control Account.
Sec. 304. Implementation funding.
             TITLE IV--MEDICAID AND OTHER HEALTH PROVISIONS

Sec. 401.  Extension of Transitional Medical Assistance (TMA) and 
                            abstinence education program.
Sec. 402. Grants for research on vaccine against Valley Fever.
Sec. 403. Change in threshold for Medicaid indirect hold harmless 
                            provision of broad-based health care taxes.
Sec. 404. DSH allotments for fiscal year 2007 for Tennessee and Hawaii.
Sec. 405. Certain Medicaid DRA technical corrections.
                      DIVISION C--OTHER PROVISIONS

                TITLE I--GULF OF MEXICO ENERGY SECURITY

Sec. 101. Short title.
Sec. 102. Definitions.
Sec. 103. Offshore oil and gas leasing in 181 Area and 181 south Area 
                            of Gulf of Mexico.
Sec. 104. Moratorium on oil and gas leasing in certain areas of Gulf of 
                            Mexico.
Sec. 105. Disposition of qualified outer Continental Shelf revenues 
                            from 181 Area, 181 south Area, and 2002-
                            2007 planning areas of Gulf of Mexico.
TITLE II--SURFACE MINING CONTROL AND RECLAMATION ACT AMENDMENTS OF 2006

Sec. 200. Short title.
               Subtitle A--Mining Control and Reclamation

Sec. 201. Abandoned Mine Reclamation Fund and purposes.
Sec. 202. Reclamation fee.
Sec. 203. Objectives of Fund.
Sec. 204. Reclamation of rural land.
Sec. 205. Liens.
Sec. 206. Certification.
Sec. 207. Remining incentives.
Sec. 208. Extension of limitation on application of prohibition on 
                            issuance of permit.
Sec. 209. Tribal regulation of surface coal mining and reclamation 
                            operations.
          Subtitle B--Coal Industry Retiree Health Benefit Act

Sec. 211. Certain related persons and successors in interest relieved 
                            of liability if premiums prepaid.
Sec. 212. Transfers to funds; premium relief.
Sec. 213. Other provisions.
                      TITLE III--OTHER PROVISIONS

Sec. 301. Tobacco personal use quantity exception to not apply to 
                            delivery sales.
Sec. 302. Ethanol Tariff Schedule.
Sec. 303. Withdrawal of certain Federal land and interests in certain 
                            Federal land from location, entry, and 
                            patent under the mining laws and 
                            disposition under the mineral and 
                            geothermal leasing laws.
Sec. 304. Continuing eligibility for certain students under District of 
                            Columbia School Choice Program.
Sec. 305. Study on Establishing Uniform National Database on Elder 
                            Abuse.

 DIVISION A--EXTENSION AND EXPANSION OF CERTAIN TAX RELIEF PROVISIONS, 
                        AND OTHER TAX PROVISIONS

SEC. 100. REFERENCE.

    Except as otherwise expressly provided, whenever in this division 
an amendment or repeal is expressed in terms of an amendment to, or 
repeal of, a section or other provision, the reference shall be 
considered to be made to a section or other provision of the Internal 
Revenue Code of 1986.

       TITLE I--EXTENSION AND MODIFICATION OF CERTAIN PROVISIONS

SEC. 101. DEDUCTION FOR QUALIFIED TUITION AND RELATED EXPENSES.

    (a) In General.--Section 222(e) is amended by striking ``2005''and 
inserting ``2007''.
    (b) Conforming Amendments.--Section 222(b)(2)(B) is amended--
            (1) by striking ``a taxable year beginning in 2004 or 
        2005'' and inserting ``any taxable year beginning after 2003'', 
        and
            (2) by striking ``2004 and 2005'' in the heading and 
        inserting ``After 2003''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

SEC. 102. EXTENSION AND MODIFICATION OF NEW MARKETS TAX CREDIT.

    (a) Extension.--Section 45D(f)(1)(D) is amended by striking ``and 
2007'' and inserting ``, 2007, and 2008''.
    (b) Regulations Regarding Non-Metropolitan Counties.--Section 
45D(i) is amended by striking ``and'' at the end of paragraph (4), by 
striking the period at the end of paragraph (5) and inserting ``, 
and'', and by adding at the end the following new paragraph:
            ``(6) which ensure that non-metropolitan counties receive a 
        proportional allocation of qualified equity investments.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 103. ELECTION TO DEDUCT STATE AND LOCAL GENERAL SALES TAXES.

    (a) In General.--Section 164(b)(5)(I) is amended by striking 
``2006'' and inserting ``2008''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

SEC. 104. EXTENSION AND MODIFICATION OF RESEARCH CREDIT.

    (a) Extension.--
            (1) In general.--Section 41(h)(1)(B) is amended by striking 
        ``2005'' and inserting ``2007''.
            (2) Conforming amendment.--Section 45C(b)(1)(D) is amended 
        by striking ``2005'' and inserting ``2007''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to amounts paid or incurred after December 31, 
        2005.
    (b) Increase in Rates of Alternative Incremental Credit.--
            (1) In general.--Subparagraph (A) of section 41(c)(4) 
        (relating to election of alternative incremental credit) is 
        amended--
                    (A) by striking ``2.65 percent'' and inserting ``3 
                percent'',
                    (B) by striking ``3.2 percent'' and inserting ``4 
                percent'', and
                    (C) by striking ``3.75 percent'' and inserting ``5 
                percent''.
            (2) Effective date.--Except as provided in paragraph (3), 
        the amendments made by this subsection shall apply to taxable 
        years ending after December 31, 2006.
            (3) Transition rule.--
                    (A) In general.--In the case of a specified 
                transitional taxable year for which an election under 
                section 41(c)(4) of the Internal Revenue Code of 1986 
                applies, the credit determined under section 41(a)(1) 
                of such Code shall be equal to the sum of--
                            (i) the applicable 2006 percentage 
                        multiplied by the amount determined under 
                        section 41(c)(4)(A) of such Code (as in effect 
                        for taxable years ending on December 31, 2006), 
                        plus
                            (ii) the applicable 2007 percentage 
                        multiplied by the amount determined under 
                        section 41(c)(4)(A) of such Code (as in effect 
                        for taxable years ending on January 1, 2007).
                    (B) Definitions.--For purposes of subparagraph 
                (A)--
                            (i) Specified transitional taxable year.--
                        The term ``specified transitional taxable 
                        year'' means any taxable year which ends after 
                        December 31, 2006, and which includes such 
                        date.
                            (ii) Applicable 2006 percentage.--The term 
                        ``applicable 2006 percentage'' means the number 
                        of days in the specified transitional taxable 
                        year before January 1, 2007, divided by the 
                        number of days in such taxable year.
                            (iii) Applicable 2007 percentage.--The term 
                        ``applicable 2007 percentage'' means the number 
                        of days in the specified transitional taxable 
                        year after December 31, 2006, divided by the 
                        number of days in such taxable year.
    (c) Alternative Simplified Credit for Qualified Research 
Expenses.--
            (1) In general.--Subsection (c) of section 41 (relating to 
        base amount) is amended by redesignating paragraphs (5) and (6) 
        as paragraphs (6) and (7), respectively, and by inserting after 
        paragraph (4) the following new paragraph:
            ``(5) Election of alternative simplified credit.--
                    ``(A) In general.--At the election of the taxpayer, 
                the credit determined under subsection (a)(1) shall be 
                equal to 12 percent of so much of the qualified 
                research expenses for the taxable year as exceeds 50 
                percent of the average qualified research expenses for 
                the 3 taxable years preceding the taxable year for 
                which the credit is being determined.
                    ``(B) Special rule in case of no qualified research 
                expenses in any of 3 preceding taxable years.--
                            ``(i) Taxpayers to which subparagraph 
                        applies.--The credit under this paragraph shall 
                        be determined under this subparagraph if the 
                        taxpayer has no qualified research expenses in 
                        any one of the 3 taxable years preceding the 
                        taxable year for which the credit is being 
                        determined.
                            ``(ii) Credit rate.--The credit determined 
                        under this subparagraph shall be equal to 6 
                        percent of the qualified research expenses for 
                        the taxable year.
                    ``(C) Election.--An election under this paragraph 
                shall apply to the taxable year for which made and all 
                succeeding taxable years unless revoked with the 
                consent of the Secretary. An election under this 
                paragraph may not be made for any taxable year to which 
                an election under paragraph (4) applies.''.
            (2) Transition rule for deemed revocation of election of 
        alternative incremental credit.--In the case of an election 
        under section 41(c)(4) of the Internal Revenue Code of 1986 
        which applies to the taxable year which includes January 1, 
        2007, such election shall be treated as revoked with the 
        consent of the Secretary of the Treasury if the taxpayer makes 
        an election under section 41(c)(5) of such Code (as added by 
        this subsection) for such year.
            (3) Effective date.--Except as provided in paragraph (4), 
        the amendments made by this subsection shall apply to taxable 
        years ending after December 31, 2006.
            (4) Transition rule for noncalendar taxable years.--
                    (A) In general.--In the case of a specified 
                transitional taxable year for which an election under 
                section 41(c)(5) of the Internal Revenue Code of 1986 
                (as added by this subsection) applies, the credit 
                determined under section 41(a)(1) of such Code shall be 
                equal to the sum of--
                            (i) the applicable 2006 percentage 
                        multiplied by the amount determined under 
                        section 41(a)(1) of such Code (as in effect for 
                        taxable years ending on December 31, 2006), 
                        plus
                            (ii) the applicable 2007 percentage 
                        multiplied by the amount determined under 
                        section 41(c)(5) of such Code (as in effect for 
                        taxable years ending on January 1, 2007).
                    (B) Definitions and special rules.--For purposes of 
                subparagraph (A)--
                            (i) Definitions.--Terms used in this 
                        paragraph which are also used in subsection 
                        (b)(3) shall have the respective meanings given 
                        such terms in such subsection.
                            (ii) Dual elections permitted.--Elections 
                        under paragraphs (4) and (5) of section 41(c) 
                        of such Code may both apply for the specified 
                        transitional taxable year.
                            (iii) Deferral of deemed election 
                        revocation.--Any election under section 
                        41(c)(4) of the Internal Revenue Code of 1986 
                        treated as revoked under paragraph (2) shall be 
                        treated as revoked for the taxable year after 
                        the specified transitional taxable year.

SEC. 105. WORK OPPORTUNITY TAX CREDIT AND WELFARE-TO-WORK CREDIT.

    (a) In General.--Sections 51(c)(4)(B) and 51A(f) are each amended 
by striking ``2005'' and inserting ``2007''.
    (b) Eligibility of Ex-Felons Determined Without Regard to Family 
Income.--Paragraph (4) of section 51(d) is amended by adding ``and'' at 
the end of subparagraph (A), by striking ``, and'' at the end of 
subparagraph (B) and inserting a period, and by striking all that 
follows subparagraph (B).
    (c) Increase in Maximum Age for Eligibility of Food Stamp 
Recipients.--Clause (i) of section 51(d)(8)(A) is amended by striking 
``25'' and inserting ``40''.
    (d) Extension of Paperwork Filing Deadline.--Section 
51(d)(12)(A)(ii)(II) is amended by striking ``21st day'' and inserting 
``28th day''.
    (e) Consolidation of Work Opportunity Credit With Welfare-to-Work 
Credit.--
            (1) In general.--Paragraph (1) of section 51(d) is amended 
        by striking ``or'' at the end of subparagraph (G), by striking 
        the period at the end of subparagraph (H) and inserting ``, 
        or'', and by adding at the end the following new subparagraph:
                    ``(I) a long-term family assistance recipient.''.
            (2) Long-term family assistance recipient.--Subsection (d) 
        of section 51 is amended by redesignating paragraphs (10) 
        through (12) as paragraphs (11) through (13), respectively, and 
        by inserting after paragraph (9) the following new paragraph:
            ``(10) Long-term family assistance recipient.--The term 
        `long-term family assistance recipient' means any individual 
        who is certified by the designated local agency--
                    ``(A) as being a member of a family receiving 
                assistance under a IV-A program (as defined in 
                paragraph (2)(B)) for at least the 18-month period 
                ending on the hiring date,
                    ``(B)(i) as being a member of a family receiving 
                such assistance for 18 months beginning after August 5, 
                1997, and
                    ``(ii) as having a hiring date which is not more 
                than 2 years after the end of the earliest such 18-
                month period, or
                    ``(C)(i) as being a member of a family which ceased 
                to be eligible for such assistance by reason of any 
                limitation imposed by Federal or State law on the 
                maximum period such assistance is payable to a family, 
                and
                    ``(ii) as having a hiring date which is not more 
                than 2 years after the date of such cessation.''.
            (3) Increased credit for employment of long-term family 
        assistance recipients.--Section 51 is amended by inserting 
        after subsection (d) the following new subsection:
    ``(e) Credit for Second-Year Wages for Employment of Long-Term 
Family Assistance Recipients.--
            ``(1) In general.--With respect to the employment of a 
        long-term family assistance recipient--
                    ``(A) the amount of the work opportunity credit 
                determined under this section for the taxable year 
                shall include 50 percent of the qualified second-year 
                wages for such year, and
                    ``(B) in lieu of applying subsection (b)(3), the 
                amount of the qualified first-year wages, and the 
                amount of qualified second-year wages, which may be 
                taken into account with respect to such a recipient 
                shall not exceed $10,000 per year.
            ``(2) Qualified second-year wages.--For purposes of this 
        subsection, the term `qualified second-year wages' means 
        qualified wages--
                    ``(A) which are paid to a long-term family 
                assistance recipient, and
                    ``(B) which are attributable to service rendered 
                during the 1-year period beginning on the day after the 
                last day of the 1-year period with respect to such 
                recipient determined under subsection (b)(2).
            ``(3) Special rules for agricultural and railway labor.--If 
        such recipient is an employee to whom subparagraph (A) or (B) 
        of subsection (h)(1) applies, rules similar to the rules of 
        such subparagraphs shall apply except that--
                    ``(A) such subparagraph (A) shall be applied by 
                substituting `$10,000' for `$6,000', and
                    ``(B) such subparagraph (B) shall be applied by 
                substituting `$833.33' for `$500'.''.
            (4) Repeal of separate welfare-to-work credit.--
                    (A) In general.--Section 51A is hereby repealed.
                    (B) Clerical amendment.--The table of sections for 
                subpart F of part IV of subchapter A of chapter 1 is 
                amended by striking the item relating to section 51A.
    (f) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to individuals who 
        begin work for the employer after December 31, 2005.
            (2) Consolidation.--The amendments made by subsections (b), 
        (c), (d), and (e) shall apply to individuals who begin work for 
        the employer after December 31, 2006.

SEC. 106. ELECTION TO INCLUDE COMBAT PAY AS EARNED INCOME FOR PURPOSES 
              OF EARNED INCOME CREDIT.

    (a) In General.--Section 32(c)(2)(B)(vi)(II) is amended by striking 
``2007'' and inserting ``2008''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2006.

SEC. 107. EXTENSION AND MODIFICATION OF QUALIFIED ZONE ACADEMY BONDS.

    (a) In General.--Paragraph (1) of section 1397E(e) is amended by 
striking ``and 2005'' and inserting ``2005, 2006, and 2007''.
    (b) Special Rules Relating to Expenditures, Arbitrage, and 
Reporting.--
            (1) In general.--Section 1397E is amended--
                    (A) in subsection (d)(1), by striking ``and'' at 
                the end of subparagraph (C)(iii), by striking the 
                period at the end of subparagraph (D) and inserting ``, 
                and'', and by adding at the end the following new 
                subparagraph:
                    ``(E) the issue meets the requirements of 
                subsections (f), (g), and (h).'', and
                    (B) by redesignating subsections (f), (g), (h), and 
                (i) as subsection (i), (j), (k), and (l), respectively, 
                and by inserting after subsection (e) the following new 
                subsections:
    ``(f) Special Rules Relating to Expenditures.--
            ``(1) In general.--An issue shall be treated as meeting the 
        requirements of this subsection if, as of the date of issuance, 
        the issuer reasonably expects--
                    ``(A) at least 95 percent of the proceeds from the 
                sale of the issue are to be spent for 1 or more 
                qualified purposes with respect to qualified zone 
                academies within the 5-year period beginning on the 
                date of issuance of the qualified zone academy bond,
                    ``(B) a binding commitment with a third party to 
                spend at least 10 percent of the proceeds from the sale 
                of the issue will be incurred within the 6-month period 
                beginning on the date of issuance of the qualified zone 
                academy bond, and
                    ``(C) such purposes will be completed with due 
                diligence and the proceeds from the sale of the issue 
                will be spent with due diligence.
            ``(2) Extension of period.--Upon submission of a request 
        prior to the expiration of the period described in paragraph 
        (1)(A), the Secretary may extend such period if the issuer 
        establishes that the failure to satisfy the 5-year requirement 
        is due to reasonable cause and the related purposes will 
        continue to proceed with due diligence.
            ``(3) Failure to spend required amount of bond proceeds 
        within 5 years.--To the extent that less than 95 percent of the 
        proceeds of such issue are expended by the close of the 5-year 
        period beginning on the date of issuance (or if an extension 
        has been obtained under paragraph (2), by the close of the 
        extended period), the issuer shall redeem all of the 
        nonqualified bonds within 90 days after the end of such period. 
        For purposes of this paragraph, the amount of the nonqualified 
        bonds required to be redeemed shall be determined in the same 
        manner as under section 142.
    ``(g) Special Rules Relating to Arbitrage.--An issue shall be 
treated as meeting the requirements of this subsection if the issuer 
satisfies the arbitrage requirements of section 148 with respect to 
proceeds of the issue.
    ``(h) Reporting.--Issuers of qualified academy zone bonds shall 
submit reports similar to the reports required under section 149(e).''.
            (2) Conforming amendments.--Sections 54(l)(3)(B) and 
        1400N(l)(7)(B)(ii) are each amended by striking ``section 
        1397E(i)'' and inserting ``section 1397E(l)''.
    (c) Effective Dates.--
            (1) Extension.--The amendment made by subsection (a) shall 
        apply to obligations issued after December 31, 2005.
            (2) Special rules.--The amendments made by subsection (b) 
        shall apply to obligations issued after the date of the 
        enactment of this Act pursuant to allocations of the national 
        zone academy bond limitation for calendar years after 2005.

SEC. 108. ABOVE-THE-LINE DEDUCTION FOR CERTAIN EXPENSES OF ELEMENTARY 
              AND SECONDARY SCHOOL TEACHERS.

    (a) In General.--Subparagraph (D) of section 62(a)(2) is amended by 
striking ``or 2005'' and inserting ``2005, 2006, or 2007''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2005.

SEC. 109. EXTENSION AND EXPANSION OF EXPENSING OF BROWNFIELDS 
              REMEDIATION COSTS.

    (a) Extension.--Subsection (h) of section 198 is amended by 
striking ``2005'' and inserting ``2007''.
    (b) Expansion.--Section 198(d)(1) (defining hazardous substance) is 
amended by striking ``and'' at the end of subparagraph (A), by striking 
the period at the end of subparagraph (B) and inserting ``, and'', and 
by adding at the end the following new subparagraph:
                    ``(C) any petroleum product (as defined in section 
                4612(a)(3)).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to expenditures paid or incurred after December 31, 2005.

SEC. 110. TAX INCENTIVES FOR INVESTMENT IN THE DISTRICT OF COLUMBIA.

    (a) Designation of Zone.--
            (1) In general.--Subsection (f) of section 1400 is amended 
        by striking ``2005'' both places it appears and inserting 
        ``2007''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to periods beginning after December 31, 2005.
    (b) Tax-Exempt Economic Development Bonds.--
            (1) In general.--Subsection (b) of section 1400A is amended 
        by striking ``2005'' and inserting ``2007''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to bonds issued after December 31, 2005.
    (c) Zero Percent Capital Gains Rate.--
            (1) In general.--Subsection (b) of section 1400B is amended 
        by striking ``2006'' each place it appears and inserting 
        ``2008''.
            (2) Conforming amendments.--
                    (A) Section 1400B(e)(2) is amended--
                            (i) by striking ``2010'' and inserting 
                        ``2012'', and
                            (ii) by striking ``2010'' in the heading 
                        thereof and inserting ``2012''.
                    (B) Section 1400B(g)(2) is amended by striking 
                ``2010'' and inserting ``2012''.
                    (C) Section 1400F(d) is amended by striking 
                ``2010'' and inserting ``2012''.
            (3) Effective dates.--
                    (A) Extension.--The amendments made by paragraph 
                (1) shall apply to acquisitions after December 31, 
                2005.
                    (B) Conforming amendments.--The amendments made by 
                paragraph (2) shall take effect on the date of the 
                enactment of this Act.
    (d) First-Time Homebuyer Credit.--
            (1) In general.--Subsection (i) of section 1400C is amended 
        by striking ``2006'' and inserting ``2008''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to property purchased after December 31, 2005.

SEC. 111. INDIAN EMPLOYMENT TAX CREDIT.

    (a) In General.--Section 45A(f) is amended by striking ``2005'' and 
inserting ``2007''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2005.

SEC. 112. ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY ON INDIAN 
              RESERVATIONS.

    (a) In General.--Section 168(j)(8) is amended by striking ``2005'' 
and inserting ``2007''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2005.

SEC. 113. FIFTEEN-YEAR STRAIGHT-LINE COST RECOVERY FOR QUALIFIED 
              LEASEHOLD IMPROVEMENTS AND QUALIFIED RESTAURANT PROPERTY.

    (a) In General.--Clauses (iv) and (v) of section 168(e)(3)(E) are 
each amended by striking ``2006'' and inserting ``2008''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to property placed in service after December 31, 2005.

SEC. 114. COVER OVER OF TAX ON DISTILLED SPIRITS.

    (a) In General.--Section 7652(f)(1) is amended by striking ``2006'' 
and inserting ``2008''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to articles brought into the United States after December 31, 
2005.

SEC. 115. PARITY IN APPLICATION OF CERTAIN LIMITS TO MENTAL HEALTH 
              BENEFITS.

    (a) Amendment to the Internal Revenue Code of 1986.--Section 
9812(f)(3) is amended by striking ``2006'' and inserting ``2007''.
    (b) Amendment to the Employee Retirement Income Security Act of 
1974.--Section 712(f) of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1185a(f)) is amended by striking ``2006'' and inserting 
``2007''.
    (c) Amendment to the Public Health Service Act.--Section 2705(f) of 
the Public Health Service Act (42 U.S.C. 300gg-5(f)) is amended by 
striking ``2006''and inserting ``2007''.

SEC. 116. CORPORATE DONATIONS OF SCIENTIFIC PROPERTY USED FOR RESEARCH 
              AND OF COMPUTER TECHNOLOGY AND EQUIPMENT.

    (a) Extension of Computer Technology and Equipment Donation.--
            (1) In general.--Section 170(e)(6)(G) is amended by 
        striking ``2005'' and inserting ``2007''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to contributions made in taxable years beginning 
        after December 31, 2005.
    (b) Expansion of Charitable Contribution Allowed for Scientific 
Property Used for Research and for Computer Technology and Equipment 
Used for Educational Purposes.--
            (1) Scientific property used for research.--
                    (A) In general.--Clause (ii) of section 
                170(e)(4)(B) (defining qualified research 
                contributions) is amended by inserting ``or assembled'' 
                after ``constructed''.
                    (B) Conforming amendment.--Clause (iii) of section 
                170(e)(4)(B) is amended by inserting ``or assembly'' 
                after ``construction''.
            (2) Computer technology and equipment for educational 
        purposes.--
                    (A) In general.--Clause (ii) of section 
                170(e)(6)(B) is amended by inserting ``or assembled'' 
                after ``constructed'' and ``or assembling'' after 
                ``construction''.
                    (B) Conforming amendment.--Subparagraph (D) of 
                section 170(e)(6) is amended by inserting ``or 
                assembled'' after ``constructed'' and ``or assembly'' 
                after ``construction''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 2005.

SEC. 117. AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS.

    (a) In General.--Paragraphs (2) and (3)(B) of section 220(i) are 
each amended by striking ``2005'' each place it appears in the text and 
headings and inserting ``2007''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 220(j) is amended--
                    (A) in the text by striking ``or 2004'' each place 
                it appears and inserting ``2004, 2005, or 2006'', and
                    (B) in the heading by striking ``or 2004'' and 
                inserting ``2004, 2005, or 2006'' .
            (2) Subparagraph (A) of section 220(j)(4) is amended by 
        striking ``and 2004'' and inserting ``2004, 2005, and 2006''.
    (c) Time for Filing Reports, etc.--
            (1) The report required by section 220(j)(4) of the 
        Internal Revenue Code of 1986 to be made on August 1, 2005, or 
        August 1, 2006, as the case may be, shall be treated as timely 
        if made before the close of the 90-day period beginning on the 
        date of the enactment of this Act.
            (2) The determination and publication required by section 
        220(j)(5) of such Code with respect to calendar year 2005 or 
        calendar year 2006, as the case may be, shall be treated as 
        timely if made before the close of the 120-day period beginning 
        on the date of the enactment of this Act. If the determination 
        under the preceding sentence is that 2005 or 2006 is a cut-off 
        year under section 220(i) of such Code, the cut-off date under 
        such section 220(i) shall be the last day of such 120-day 
        period.

SEC. 118. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLETION FOR OIL AND 
              NATURAL GAS PRODUCED FROM MARGINAL PROPERTIES.

    (a) In General.--Section 613A(c)(6)(H) is amended by striking 
``2006'' and inserting ``2008''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2005.

SEC. 119. AMERICAN SAMOA ECONOMIC DEVELOPMENT CREDIT.

    (a) In General.--For purposes of section 30A of the Internal 
Revenue Code of 1986, a domestic corporation shall be treated as a 
qualified domestic corporation to which such section applies if such 
corporation--
            (1) is an existing credit claimant with respect to American 
        Samoa, and
            (2) elected the application of section 936 of the Internal 
        Revenue Code of 1986 for its last taxable year beginning before 
        January 1, 2006.
    (b) Special Rules for Application of Section.--The following rules 
shall apply in applying section 30A of the Internal Revenue Code of 
1986 for purposes of this section:
            (1) Amount of credit.--Notwithstanding section 30A(a)(1) of 
        such Code, the amount of the credit determined under section 
        30A(a)(1) of such Code for any taxable year shall be the amount 
        determined under section 30A(d) of such Code, except that 
        section 30A(d) shall be applied without regard to paragraph (3) 
        thereof.
            (2) Separate application.--In applying section 30A(a)(3) of 
        such Code in the case of a corporation treated as a qualified 
        domestic corporation by reason of this section, section 30A of 
        such Code (and so much of section 936 of such Code as relates 
        to such section 30A) shall be applied separately with respect 
        to American Samoa.
            (3) Foreign tax credit allowed.--Notwithstanding section 
        30A(e) of such Code, the provisions of section 936(c) of such 
        Code shall not apply with respect to the credit allowed by 
        reason of this section.
    (c) Definitions.--For purposes of this section, any term which is 
used in this section which is also used in section 30A or 936 of such 
Code shall have the same meaning given such term by such section 30A or 
936.
    (d) Application of Section.--Notwithstanding section 30A(h) or 
section 936(j) of such Code, this section (and so much of section 30A 
and section 936 of such Code as relates to this section) shall apply to 
the first two taxable years of a corporation to which subsection (a) 
applies which begin after December 31, 2005, and before January 1, 
2008.

SEC. 120. EXTENSION OF BONUS DEPRECIATION FOR CERTAIN QUALIFIED GULF 
              OPPORTUNITY ZONE PROPERTY.

    (a) In General.--Subsection (d) of section 1400N is amended by 
adding at the end the following new paragraph:
            ``(6) Extension for certain property.--
                    ``(A) In general.--In the case of any specified 
                Gulf Opportunity Zone extension property, paragraph 
                (2)(A) shall be applied without regard to clause (v) 
                thereof.
                    ``(B) Specified gulf opportunity zone extension 
                property.--For purposes of this paragraph, the term 
                `specified Gulf Opportunity Zone extension property' 
                means property--
                            ``(i) substantially all of the use of which 
                        is in one or more specified portions of the GO 
                        Zone, and
                            ``(ii) which is--
                                    ``(I) nonresidential real property 
                                or residential rental property which is 
                                placed in service by the taxpayer on or 
                                before December 31, 2010, or
                                    ``(II) in the case of a taxpayer 
                                who places a building described in 
                                subclause (I) in service on or before 
                                December 31, 2010, property described 
                                in section 168(k)(2)(A)(i) if 
                                substantially all of the use of such 
                                property is in such building and such 
                                property is placed in service by the 
                                taxpayer not later than 90 days after 
                                such building is placed in service.
                    ``(C) Specified portions of the go zone.--For 
                purposes of this paragraph, the term `specified 
                portions of the GO Zone' means those portions of the GO 
                Zone which are in any county or parish which is 
                identified by the Secretary as being a county or parish 
                in which hurricanes occurring during 2005 damaged (in 
                the aggregate) more than 60 percent of the housing 
                units in such county or parish which were occupied 
                (determined according to the 2000 Census).
                    ``(D) Only pre-january 1, 2010, basis of real 
                property eligible for additional allowance.--In the 
                case of property which is qualified Gulf Opportunity 
                Zone property solely by reason of subparagraph 
                (B)(ii)(I), paragraph (1) shall apply only to the 
                extent of the adjusted basis thereof attributable to 
                manufacture, construction, or production before January 
                1, 2010.''.
    (b) Extension Not Applicable to Increased Section 179 Expensing.--
Paragraph (2) of section 1400N(e) is amended by inserting ``without 
regard to subsection (d)(6)'' after ``subsection (d)(2)''.
    (c) Effective Date.--The amendments made by this section shall take 
effect as if included in section 101 of the Gulf Opportunity Zone Act 
of 2005.

SEC. 121. AUTHORITY FOR UNDERCOVER OPERATIONS.

    Paragraph (6) of section 7608(c) (relating to application of 
section) is amended by striking ``2007'' both places it appears and 
inserting ``2008''.

SEC. 122. DISCLOSURES OF CERTAIN TAX RETURN INFORMATION.

    (a) Disclosures To Facilitate Combined Employment Tax Reporting.--
            (1) In general.--Subparagraph (B) of section 6103(d)(5) 
        (relating to termination) is amended by striking ``2006'' and 
        inserting ``2007''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to disclosures after December 31, 2006.
    (b) Disclosures Relating to Terrorist Activities.--
            (1) In general.--Clause (iv) of section 6103(i)(3)(C) and 
        subparagraph (E) of section 6103(i)(7) are each amended by 
        striking ``2006'' and inserting ``2007''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to disclosures after December 31, 2006.
    (c) Disclosures Relating to Student Loans.--
            (1) In general.--Subparagraph (D) of section 6103(l)(13) 
        (relating to termination) is amended by striking ``2006'' and 
        inserting ``2007''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to requests made after December 31, 2006.

SEC. 123. SPECIAL RULE FOR ELECTIONS UNDER EXPIRED PROVISIONS.

    (a) Research Credit Elections.--In the case of any taxable year 
ending after December 31, 2005, and before the date of the enactment of 
this Act, any election under section 41(c)(4) or section 280C(c)(3)(C) 
of the Internal Revenue Code of 1986 shall be treated as having been 
timely made for such taxable year if such election is made not later 
than the later of April 15, 2007, or such time as the Secretary of the 
Treasury, or his designee, may specify. Such election shall be made in 
the manner prescribed by such Secretary or designee.
    (b) Other Elections.--Except as otherwise provided by such 
Secretary or designee, a rule similar to the rule of subsection (a) 
shall apply with respect to elections under any other expired provision 
of the Internal Revenue Code of 1986 the applicability of which is 
extended by reason of the amendments made by this title.

                    TITLE II--ENERGY TAX PROVISIONS

SEC. 201. CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE 
              RESOURCES.

    Subsection (d) of section 45 is amended by striking ``January 1, 
2008'' each place it appears and inserting ``January 1, 2009''.

SEC. 202. CREDIT TO HOLDERS OF CLEAN RENEWABLE ENERGY BONDS.

    (a) In General.--Section 54 is amended--
            (1) by striking ``$800,000,000'' in subsection (f)(1) and 
        inserting ``$1,200,000,000'',
            (2) by striking ``$500,000,000'' in subsection (f)(2) and 
        inserting ``$750,000,000'', and
            (3) by striking ``December 31, 2007'' in subsection (m) and 
        inserting ``December 31, 2008''.
    (b) Effective Dates.--
            (1) In general.--The amendments made by paragraphs (1) and 
        (3) of subsection (a) shall apply to bonds issued after 
        December 31, 2006.
            (2) Allocations.--The amendment made by subsection (a)(2) 
        shall apply to allocations or reallocations after December 31, 
        2006.

SEC. 203. PERFORMANCE STANDARDS FOR SULFUR DIOXIDE REMOVAL IN ADVANCED 
              COAL-BASED GENERATION TECHNOLOGY UNITS DESIGNED TO USE 
              SUBBITUMINOUS COAL.

    (a) In General.--Paragraph (1) of section 48A(f) (relating to 
advanced coal-based generation technology) is amended by adding at the 
end the following new flush sentence:
        ``For purposes of the performance requirement specified for the 
        removal of SO<INF>2</INF> in the table contained in 
        subparagraph (B), the SO<INF>2</INF> removal design level in 
        the case of a unit designed for the use of feedstock 
        substantially all of which is subbituminous coal shall be 99 
        percent SO<INF>2</INF> removal or the achievement of an 
        emission level of 0.04 pounds or less of SO<INF>2</INF> per 
        million Btu, determined on a 30-day average.''.
    (b) Effective Date.--The amendment made by this section shall take 
apply with respect to applications for certification under section 
48A(d)(2) of the Internal Revenue Code of 1986 submitted after October 
2, 2006.

SEC. 204. DEDUCTION FOR ENERGY EFFICIENT COMMERCIAL BUILDINGS.

    Subsection (h) of section 179D is amended by striking ``December 
31, 2007'' and inserting ``December 31, 2008''.

SEC. 205. CREDIT FOR NEW ENERGY EFFICIENT HOMES.

    Subsection (g) of section 45L is amended by striking ``December 31, 
2007'' and inserting ``December 31, 2008''.

SEC. 206. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT PROPERTY.

    (a) Extension.--Subsection (g) of section 25D is amended by 
striking ``December 31, 2007'' and inserting ``December 31, 2008''.
    (b) Clarification of Term.--
            (1) Subsections (a)(1), (b)(1)(A), and (e)(4)(A)(i) of 
        section 25D are each amended by striking ``qualified 
        photovoltaic property expenditures'' and inserting ``qualified 
        solar electric property expenditures''.
            (2) Section 25D(d)(2) is amended--
                    (A) by striking ``qualified photovoltaic property 
                expenditure'' and inserting ``qualified solar electric 
                property expenditure'', and
                    (B) in the heading by striking ``qualified 
                photovoltaic property expenditure'' and inserting 
                ``qualified solar electric property expenditure''.

SEC. 207. ENERGY CREDIT.

    Section 48 is amended--
            (1) by striking ``January 1, 2008'' both places it appears 
        and inserting ``January 1, 2009'', and
            (2) by striking ``December 31, 2007'' both places it 
        appears and inserting ``December 31, 2008''.

SEC. 208. SPECIAL RULE FOR QUALIFIED METHANOL OR ETHANOL FUEL.

    (a) Extension.--Subparagraph (D) of section 4041(b)(2) is amended 
by striking ``October 1, 2007'' and inserting ``January 1, 2009''.
    (b) Applicable Blender Rate.--Section 4041(b)(2)(C)(ii) is amended 
by striking ``2007'' and inserting ``2008''.
    (c) Clerical Amendment.--The heading for section 4041(b)(2)(B) is 
amended to read as follows: ``Qualified methanol and ethanol fuel 
produced from coal''.

SEC. 209. SPECIAL DEPRECIATION ALLOWANCE FOR CELLULOSIC BIOMASS ETHANOL 
              PLANT PROPERTY.

    (a) In General.--Section 168 (relating to accelerated cost recovery 
system) is amended by adding at the end the following:
    ``(l) Special Allowance for Cellulosic Biomass Ethanol Plant 
Property.--
            ``(1) Additional allowance.--In the case of any qualified 
        cellulosic biomass ethanol plant property--
                    ``(A) the depreciation deduction provided by 
                section 167(a) for the taxable year in which such 
                property is placed in service shall include an 
                allowance equal to 50 percent of the adjusted basis of 
                such property, and
                    ``(B) the adjusted basis of such property shall be 
                reduced by the amount of such deduction before 
                computing the amount otherwise allowable as a 
                depreciation deduction under this chapter for such 
                taxable year and any subsequent taxable year.
            ``(2) Qualified cellulosic biomass ethanol plant 
        property.--The term `qualified cellulosic biomass ethanol plant 
        property' means property of a character subject to the 
        allowance for depreciation--
                    ``(A) which is used in the United States solely to 
                produce cellulosic biomass ethanol,
                    ``(B) the original use of which commences with the 
                taxpayer after the date of the enactment of this 
                subsection,
                    ``(C) which is acquired by the taxpayer by purchase 
                (as defined in section 179(d)) after the date of the 
                enactment of this subsection, but only if no written 
                binding contract for the acquisition was in effect on 
                or before the date of the enactment of this subsection, 
                and
                    ``(D) which is placed in service by the taxpayer 
                before January 1, 2013.
            ``(3) Cellulosic biomass ethanol.--For purposes of this 
        subsection, the term `cellulosic biomass ethanol' means ethanol 
        produced by enzymatic hydrolysis of any lignocellulosic or 
        hemicellulosic matter that is available on a renewable or 
        recurring basis.
            ``(4) Exceptions.--
                    ``(A) Alternative depreciation property.--Such term 
                shall not include any property described in section 
                168(k)(2)(D)(i).
                    ``(B) Tax-exempt bond-financed property.--Such term 
                shall not include any property any portion of which is 
                financed with the proceeds of any obligation the 
                interest on which is exempt from tax under section 103.
                    ``(C) Election out.--If a taxpayer makes an 
                election under this subparagraph with respect to any 
                class of property for any taxable year, this subsection 
                shall not apply to all property in such class placed in 
                service during such taxable year.
            ``(5) Special rules.--For purposes of this subsection, 
        rules similar to the rules of subparagraph (E) of section 
        168(k)(2) shall apply, except that such subparagraph shall be 
        applied--
                    ``(A) by substituting `the date of the enactment of 
                subsection (l)' for `September 10, 2001' each place it 
                appears therein,
                    ``(B) by substituting `January 1, 2013' for 
                `January 1, 2005' in clause (i) thereof, and
                    ``(C) by substituting `qualified cellulosic biomass 
                ethanol plant property' for `qualified property' in 
                clause (iv) thereof.
            ``(6) Allowance against alternative minimum tax.--For 
        purposes of this subsection, rules similar to the rules of 
        section 168(k)(2)(G) shall apply.
            ``(7) Recapture.--For purposes of this subsection, rules 
        similar to the rules under section 179(d)(10) shall apply with 
        respect to any qualified cellulosic biomass ethanol plant 
        property which ceases to be qualified cellulosic biomass 
        ethanol plant property.
            ``(8) Denial of double benefit.--Paragraph (1) shall not 
        apply to any qualified cellulosic biomass ethanol plant 
        property with respect to which an election has been made under 
        section 179C (relating to election to expense certain 
        refineries).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after the date of the enactment of this 
Act in taxable years ending after such date.

SEC. 210. EXPENDITURES PERMITTED FROM THE LEAKING UNDERGROUND STORAGE 
              TANK TRUST FUND.

    (a) In General.--Subsection (c) of section 9508 is amended--
            (1) by striking ``section 9003(h)'' and inserting 
        ``sections 9003(h), 9003(i), 9003(j), 9004(f), 9005(c), 9010, 
        9011, 9012, and 9013'', and
            (2) by striking ``Superfund Amendments and Reauthorization 
        Act of 1986'' and inserting ``Public Law 109-168''.
    (b) Conforming Amendments.--Section 9014(2) of the Solid Waste 
Disposal Act is amended by striking ``Fund, notwithstanding section 
9508(c)(1) of the Internal Revenue Code of 1986'' and inserting 
``Fund''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 211. TREATMENT OF COKE AND COKE GAS.

    (a) Nonapplication of Phaseout.--Section 45K(g)(2) is amended by 
adding at the end the following new subparagraph:
                    ``(D) Nonapplication of phaseout.--Subsection 
                (b)(1) shall not apply.''.
    (b) Clarification of Qualifying Facility.--Section 45K(g)(1) is 
amended by inserting ``(other than from petroleum based products)'' 
after ``coke or coke gas''.
    (c) Effective Date.--The amendments made by this section shall take 
effect as if included in section 1321 of the Energy Policy Act of 2005.

                   TITLE III--HEALTH SAVINGS ACCOUNTS

SEC. 301. SHORT TITLE.

    This title may be cited as the ``Health Opportunity Patient 
Empowerment Act of 2006''.

SEC. 302. FSA AND HRA TERMINATIONS TO FUND HSAS.

    (a) In General.--Section 106 (relating to contributions by employer 
to accident and health plans) is amended by adding at the end the 
following new subsection:
    ``(e) FSA and HRA Terminations to Fund HSAs.--
            ``(1) In general.--A plan shall not fail to be treated as a 
        health flexible spending arrangement or health reimbursement 
        arrangement under this section or section 105 merely because 
        such plan provides for a qualified HSA distribution.
            ``(2) Qualified hsa distribution.--The term `qualified HSA 
        distribution' means a distribution from a health flexible 
        spending arrangement or health reimbursement arrangement to the 
        extent that such distribution--
                    ``(A) does not exceed the lesser of the balance in 
                such arrangement on September 21, 2006, or as of the 
                date of such distribution, and
                    ``(B) is contributed by the employer directly to 
                the health savings account of the employee before 
                January 1, 2012.
        Such term shall not include more than 1 distribution with 
        respect to any arrangement.
            ``(3) Additional tax for failure to maintain high 
        deductible health plan coverage.--
                    ``(A) In general.--If, at any time during the 
                testing period, the employee is not an eligible 
                individual, then the amount of the qualified HSA 
                distribution--
                            ``(i) shall be includible in the gross 
                        income of the employee for the taxable year in 
                        which occurs the first month in the testing 
                        period for which such employee is not an 
                        eligible individual, and
                            ``(ii) the tax imposed by this chapter for 
                        such taxable year on the employee shall be 
                        increased by 10 percent of the amount which is 
                        so includible.
                    ``(B) Exception for disability or death.--Clauses 
                (i) and (ii) of subparagraph (A) shall not apply if the 
                employee ceases to be an eligible individual by reason 
                of the death of the employee or the employee becoming 
                disabled (within the meaning of section 72(m)(7)).
            ``(4) Definitions and special rules.--For purposes of this 
        subsection--
                    ``(A) Testing period.--The term `testing period' 
                means the period beginning with the month in which the 
                qualified HSA distribution is contributed to the health 
                savings account and ending on the last day of the 12th 
                month following such month.
                    ``(B) Eligible individual.--The term `eligible 
                individual' has the meaning given such term by section 
                223(c)(1).
                    ``(C) Treatment as rollover contribution.--A 
                qualified HSA distribution shall be treated as a 
                rollover contribution described in section 223(f)(5).
            ``(5) Tax treatment relating to distributions.--For 
        purposes of this title--
                    ``(A) In general.--A qualified HSA distribution 
                shall be treated as a payment described in subsection 
                (d).
                    ``(B) Comparability excise tax.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), section 4980G shall not apply to 
                        qualified HSA distributions.
                            ``(ii) Failure to offer to all employees.--
                        In the case of a qualified HSA distribution to 
                        any employee, the failure to offer such 
                        distribution to any eligible individual covered 
                        under a high deductible health plan of the 
                        employer shall (notwithstanding section 
                        4980G(d)) be treated for purposes of section 
                        4980G as a failure to meet the requirements of 
                        section 4980G(b).''.
    (b) Certain FSA Coverage Disregarded Coverage.--Subparagraph (B) of 
section 223(c)(1) (relating to certain coverage disregarded) is amended 
by striking ``and'' at the end of clause (i), by striking the period at 
the end of clause (ii) and inserting ``, and'', and by inserting after 
clause (ii) the following new clause:
                            ``(iii) for taxable years beginning after 
                        December 31, 2006, coverage under a health 
                        flexible spending arrangement during any period 
                        immediately following the end of a plan year of 
                        such arrangement during which unused benefits 
                        or contributions remaining at the end of such 
                        plan year may be paid or reimbursed to plan 
                        participants for qualified benefit expenses 
                        incurred during such period if--
                                    ``(I) the balance in such 
                                arrangement at the end of such plan 
                                year is zero, or
                                    ``(II) the individual is making a 
                                qualified HSA distribution (as defined 
                                in section 106(e)) in an amount equal 
                                to the remaining balance in such 
                                arrangement as of the end of such plan 
                                year, in accordance with rules 
                                prescribed by the Secretary.''.
    (c) Application of Section.--
            (1) Subsection (a).--The amendment made by subsection (a) 
        shall apply to distributions on or after the date of the 
        enactment of this Act.
            (2) Subsection (b).--The amendment made by subsection (b) 
        shall take effect on the date of the enactment of this Act.

SEC. 303. REPEAL OF ANNUAL DEDUCTIBLE LIMITATION ON HSA CONTRIBUTIONS.

    (a) In General.--Paragraph (2) of section 223(b) (relating to 
monthly limitation) is amended--
            (1) in subparagraph (A) by striking ``the lesser of--'' and 
        all that follows and inserting ``$2,250.'', and
            (2) in subparagraph (B) by striking ``the lesser of--'' and 
        all that follows and inserting ``$4,500.''.
    (b) Conforming Amendment.--Section 223(d)(1)(A)(ii)(I) is amended 
by striking ``subsection (b)(2)(B)(ii)'' and inserting ``subsection 
(b)(2)(B)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2006.

SEC. 304. MODIFICATION OF COST-OF-LIVING ADJUSTMENT.

    Paragraph (1) of section 223(g) (relating to cost-of-living 
adjustment) is amended by adding at the end the following new flush 
sentence:
        ``In the case of adjustments made for any taxable year 
        beginning after 2007, section 1(f)(4) shall be applied for 
        purposes of this paragraph by substituting `March 31' for 
        `August 31', and the Secretary shall publish the adjusted 
        amounts under subsections (b)(2) and (c)(2)(A) for taxable 
        years beginning in any calendar year no later than June 1 of 
        the preceding calendar year.''.

SEC. 305. CONTRIBUTION LIMITATION NOT REDUCED FOR PART-YEAR COVERAGE.

    (a) Increase in Limit for Individuals Becoming Eligible Individuals 
After Beginning of the Year.--Subsection (b) of section 223 (relating 
to limitations) is amended by adding at the end the following new 
paragraph:
            ``(8) Increase in limit for individuals becoming eligible 
        individuals after the beginning of the year.--
                    ``(A) In general.--For purposes of computing the 
                limitation under paragraph (1) for any taxable year, an 
                individual who is an eligible individual during the 
                last month of such taxable year shall be treated--
                            ``(i) as having been an eligible individual 
                        during each of the months in such taxable year, 
                        and
                            ``(ii) as having been enrolled, during each 
                        of the months such individual is treated as an 
                        eligible individual solely by reason of clause 
                        (i), in the same high deductible health plan in 
                        which the individual was enrolled for the last 
                        month of such taxable year.
                    ``(B) Failure to maintain high deductible health 
                plan coverage.--
                            ``(i) In general.--If, at any time during 
                        the testing period, the individual is not an 
                        eligible individual, then--
                                    ``(I) gross income of the 
                                individual for the taxable year in 
                                which occurs the first month in the 
                                testing period for which such 
                                individual is not an eligible 
                                individual is increased by the 
                                aggregate amount of all contributions 
                                to the health savings account of the 
                                individual which could not have been 
                                made but for subparagraph (A), and
                                    ``(II) the tax imposed by this 
                                chapter for any taxable year on the 
                                individual shall be increased by 10 
                                percent of the amount of such increase.
                            ``(ii) Exception for disability or death.--
                        Subclauses (I) and (II) of clause (i) shall not 
                        apply if the individual ceased to be an 
                        eligible individual by reason of the death of 
                        the individual or the individual becoming 
                        disabled (within the meaning of section 
                        72(m)(7)).
                            ``(iii) Testing period.--The term `testing 
                        period' means the period beginning with the 
                        last month of the taxable year referred to in 
                        subparagraph (A) and ending on the last day of 
                        the 12th month following such month.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2006.

SEC. 306. EXCEPTION TO REQUIREMENT FOR EMPLOYERS TO MAKE COMPARABLE 
              HEALTH SAVINGS ACCOUNT CONTRIBUTIONS.

    (a) In General.--Section 4980G (relating to failure of employer to 
make comparable health savings account contributions) is amended by 
adding at the end the following new subsection:
    ``(d) Exception.--For purposes of applying section 4980E to a 
contribution to a health savings account of an employee who is not a 
highly compensated employee (as defined in section 414(q)), highly 
compensated employees shall not be treated as comparable participating 
employees.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2006.

SEC. 307. ONE-TIME DISTRIBUTION FROM INDIVIDUAL RETIREMENT PLANS TO 
              FUND HSAS.

    (a) In General.--Subsection (d) of section 408 (relating to 
taxability of beneficiary of employees' trust) is amended by adding at 
the end the following new paragraph:
            ``(9) Distribution for health savings account funding.--
                    ``(A) In general.--In the case of an individual who 
                is an eligible individual (as defined in section 
                223(c)) and who elects the application of this 
                paragraph for a taxable year, gross income of the 
                individual for the taxable year does not include a 
                qualified HSA funding distribution to the extent such 
                distribution is otherwise includible in gross income.
                    ``(B) Qualified hsa funding distribution.--For 
                purposes of this paragraph, the term `qualified HSA 
                funding distribution' means a distribution from an 
                individual retirement plan (other than a plan described 
                in subsection (k) or (p)) of the employee to the extent 
                that such distribution is contributed to the health 
                savings account of the individual in a direct trustee-
                to-trustee transfer.
                    ``(C) Limitations.--
                            ``(i) Maximum dollar limitation.--The 
                        amount excluded from gross income by 
                        subparagraph (A) shall not exceed the excess 
                        of--
                                    ``(I) the annual limitation under 
                                section 223(b) computed on the basis of 
                                the type of coverage under the high 
                                deductible health plan covering the 
                                individual at the time of the qualified 
                                HSA funding distribution, over
                                    ``(II) in the case of a 
                                distribution described in clause 
                                (ii)(II), the amount of the earlier 
                                qualified HSA funding distribution.
                            ``(ii) One-time transfer.--
                                    ``(I) In general.--Except as 
                                provided in subclause (II), an 
                                individual may make an election under 
                                subparagraph (A) only for one qualified 
                                HSA funding distribution during the 
                                lifetime of the individual. Such an 
                                election, once made, shall be 
                                irrevocable.
                                    ``(II) Conversion from self-only to 
                                family coverage.--If a qualified HSA 
                                funding distribution is made during a 
                                month in a taxable year during which an 
                                individual has self-only coverage under 
                                a high deductible health plan as of the 
                                first day of the month, the individual 
                                may elect to make an additional 
                                qualified HSA funding distribution 
                                during a subsequent month in such 
                                taxable year during which the 
                                individual has family coverage under a 
                                high deductible health plan as of the 
                                first day of the subsequent month.
                    ``(D) Failure to maintain high deductible health 
                plan coverage.--
                            ``(i) In general.--If, at any time during 
                        the testing period, the individual is not an 
                        eligible individual, then the aggregate amount 
                        of all contributions to the health savings 
                        account of the individual made under 
                        subparagraph (A)--
                                    ``(I) shall be includible in the 
                                gross income of the individual for the 
                                taxable year in which occurs the first 
                                month in the testing period for which 
                                such individual is not an eligible 
                                individual, and
                                    ``(II) the tax imposed by this 
                                chapter for any taxable year on the 
                                individual shall be increased by 10 
                                percent of the amount which is so 
                                includible.
                            ``(ii) Exception for disability or death.--
                        Subclauses (I) and (II) of clause (i) shall not 
                        apply if the individual ceased to be an 
                        eligible individual by reason of the death of 
                        the individual or the individual becoming 
                        disabled (within the meaning of section 
                        72(m)(7)).
                            ``(iii) Testing period.--The term `testing 
                        period' means the period beginning with the 
                        month in which the qualified HSA funding 
                        distribution is contributed to a health savings 
                        account and ending on the last day of the 12th 
                        month following such month.
                    ``(E) Application of section 72.--Notwithstanding 
                section 72, in determining the extent to which an 
                amount is treated as otherwise includible in gross 
                income for purposes of subparagraph (A), the aggregate 
                amount distributed from an individual retirement plan 
                shall be treated as includible in gross income to the 
                extent that such amount does not exceed the aggregate 
                amount which would have been so includible if all 
                amounts from all individual retirement plans were 
                distributed. Proper adjustments shall be made in 
                applying section 72 to other distributions in such 
                taxable year and subsequent taxable years.''.
    (b) Coordination With Limitation on Contributions to HSAs.--Section 
223(b)(4) (relating to coordination with other contributions) is 
amended by striking ``and'' at the end of subparagraph (A), by striking 
the period at the end of subparagraph (B) and inserting ``, and'', and 
by inserting after subparagraph (B) the following new subparagraph:
                    ``(C) the aggregate amount contributed to health 
                savings accounts of such individual for such taxable 
                year under section 408(d)(9) (and such amount shall not 
                be allowed as a deduction under subsection (a)).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2006.

                       TITLE IV--OTHER PROVISIONS

SEC. 401. DEDUCTION ALLOWABLE WITH RESPECT TO INCOME ATTRIBUTABLE TO 
              DOMESTIC PRODUCTION ACTIVITIES IN PUERTO RICO.

    (a) In General.--Subsection (d) of section 199 (relating to 
definitions and special rules) is amended by redesignating paragraph 
(8) as paragraph (9) and by inserting after paragraph (7) the following 
new paragraph:
            ``(8) Treatment of activities in puerto rico.--
                    ``(A) In general.--In the case of any taxpayer with 
                gross receipts for any taxable year from sources within 
                the Commonwealth of Puerto Rico, if all of such 
                receipts are taxable under section 1 or 11 for such 
                taxable year, then for purposes of determining the 
                domestic production gross receipts of such taxpayer for 
                such taxable year under subsection (c)(4), the term 
                `United States' shall include the Commonwealth of 
                Puerto Rico.
                    ``(B) Special rule for applying wage limitation.--
                In the case of any taxpayer described in subparagraph 
                (A), for purposes of applying the limitation under 
                subsection (b) for any taxable year, the determination 
                of W-2 wages of such taxpayer shall be made without 
                regard to any exclusion under section 3401(a)(8) for 
                remuneration paid for services performed in Puerto 
                Rico.
                    ``(C) Termination.--This paragraph shall apply only 
                with respect to the first 2 taxable years of the 
                taxpayer beginning after December 31, 2005, and before 
                January 1, 2008.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to taxable years beginning after December 31, 2005.

SEC. 402. CREDIT FOR PRIOR YEAR MINIMUM TAX LIABILITY MADE REFUNDABLE 
              AFTER PERIOD OF YEARS.

    (a) In General.--Section 53 (relating to credit for prior year 
minimum tax liability) is amended by adding at the end the following 
new subsection:
    ``(e) Special Rule for Individuals With Long-Term Unused Credits.--
            ``(1) In general.--If an individual has a long-term unused 
        minimum tax credit for any taxable year beginning before 
        January 1, 2013, the amount determined under subsection (c) for 
        such taxable year shall not be less than the AMT refundable 
        credit amount for such taxable year.
            ``(2) Amt refundable credit amount.--For purposes of 
        paragraph (1)--
                    ``(A) In general.--The term `AMT refundable credit 
                amount' means, with respect to any taxable year, the 
                amount equal to the greater of--
                            ``(i) the lesser of--
                                    ``(I) $5,000, or
                                    ``(II) the amount of long-term 
                                unused minimum tax credit for such 
                                taxable year, or
                            ``(ii) 20 percent of the amount of such 
                        credit.
                    ``(B) Phaseout of amt refundable credit amount.--
                            ``(i) In general.--In the case of an 
                        individual whose adjusted gross income for any 
                        taxable year exceeds the threshold amount 
                        (within the meaning of section 151(d)(3)(C)), 
                        the AMT refundable credit amount determined 
                        under subparagraph (A) for such taxable year 
                        shall be reduced by the applicable percentage 
                        (within the meaning of section 151(d)(3)(B)).
                            ``(ii) Adjusted gross income.--For purposes 
                        of clause (i), adjusted gross income shall be 
                        determined without regard to sections 911, 931, 
                        and 933.
            ``(3) Long-term unused minimum tax credit.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `long-term unused minimum tax credit' means, 
                with respect to any taxable year, the portion of the 
                minimum tax credit determined under subsection (b) 
                attributable to the adjusted net minimum tax for 
                taxable years before the 3rd taxable year immediately 
                preceding such taxable year.
                    ``(B) First-in, first-out ordering rule.--For 
                purposes of subparagraph (A), credits shall be treated 
                as allowed under subsection (a) on a first-in, first-
                out basis.
            ``(4) Credit refundable.--For purposes of this title (other 
        than this section), the credit allowed by reason of this 
        subsection shall be treated as if it were allowed under subpart 
        C.''.
    (b) Conforming Amendments.--
            (1) Section 6211(b)(4)(A) is amended by striking ``and 34'' 
        and inserting ``34, and 53(e)''.
            (2) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting ``or 53(e)'' after 
        ``section 35''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 403. RETURNS REQUIRED IN CONNECTION WITH CERTAIN OPTIONS.

    (a) In General.--So much of section 6039(a) as follows paragraph 
(2) is amended to read as follows:
``shall, for such calendar year, make a return at such time and in such 
manner, and setting forth such information, as the Secretary may by 
regulations prescribe.''.
    (b) Statements to Persons With Respect to Whom Information Is 
Furnished.--Section 6039 is amended by redesignating subsections (b) 
and (c) as subsection (c) and (d), respectively, and by inserting after 
subsection (a) the following new subsection:
    ``(b) Statements To Be Furnished to Persons With Respect to Whom 
Information Is Reported.--Every corporation making a return under 
subsection (a) shall furnish to each person whose name is set forth in 
such return a written statement setting forth such information as the 
Secretary may by regulations prescribe. The written statement required 
under the preceding sentence shall be furnished to such person on or 
before January 31 of the year following the calendar year for which the 
return under subsection (a) was made.''.
    (c) Conforming Amendments.--
            (1) Section 6724(d)(1)(B) is amended by striking ``or'' at 
        the end of clause (xvii), by striking ``and'' at the end of 
        clause (xviii) and inserting ``or'', and by adding at the end 
        the following new clause:
                            ``(xix) section 6039(a) (relating to 
                        returns required with respect to certain 
                        options), and''.
            (2) Section 6724(d)(2)(B) is amended by striking ``section 
        6039(a)'' and inserting ``section 6039(b)''.
            (3) The heading of section 6039 and the item relating to 
        such section in the table of sections of subpart A of part III 
        of subchapter A of chapter 61 of such Code are each amended by 
        striking ``Information'' and inserting ``Returns''.
            (4) The heading of subsection (a) of section 6039 is 
        amended by striking ``Furnishing of Information'' and inserting 
        ``Requirement of Reporting''.
    (d) Effective Date.--The amendments made by this section shall 
apply to calendar years beginning after the date of the enactment of 
this Act.

SEC. 404. PARTIAL EXPENSING FOR ADVANCED MINE SAFETY EQUIPMENT.

    (a) In General.--Part VI of subchapter B of chapter 1 is amended by 
inserting after section 179D the following new section:

``SEC. 179E. ELECTION TO EXPENSE ADVANCED MINE SAFETY EQUIPMENT.

    ``(a) Treatment as Expenses.--A taxpayer may elect to treat 50 
percent of the cost of any qualified advanced mine safety equipment 
property as an expense which is not chargeable to capital account. Any 
cost so treated shall be allowed as a deduction for the taxable year in 
which the qualified advanced mine safety equipment property is placed 
in service.
    ``(b) Election.--
            ``(1) In general.--An election under this section for any 
        taxable year shall be made on the taxpayer's return of the tax 
        imposed by this chapter for the taxable year. Such election 
        shall specify the advanced mine safety equipment property to 
        which the election applies and shall be made in such manner as 
        the Secretary may by regulations prescribe.
            ``(2) Election irrevocable.--Any election made under this 
        section may not be revoked except with the consent of the 
        Secretary.
    ``(c) Qualified Advanced Mine Safety Equipment Property.--For 
purposes of this section, the term `qualified advanced mine safety 
equipment property' means any advanced mine safety equipment property 
for use in any underground mine located in the United States--
            ``(1) the original use of which commences with the 
        taxpayer, and
            ``(2) which is placed in service by the taxpayer after the 
        date of the enactment of this section.
    ``(d) Advanced Mine Safety Equipment Property.--For purposes of 
this section, the term `advanced mine safety equipment property' means 
any of the following:
            ``(1) Emergency communication technology or device which is 
        used to allow a miner to maintain constant communication with 
        an individual who is not in the mine.
            ``(2) Electronic identification and location device which 
        allows an individual who is not in the mine to track at all 
        times the movements and location of miners working in or at the 
        mine.
            ``(3) Emergency oxygen-generating, self-rescue device which 
        provides oxygen for at least 90 minutes.
            ``(4) Pre-positioned supplies of oxygen which (in 
        combination with self-rescue devices) can be used to provide 
        each miner on a shift, in the event of an accident or other 
        event which traps the miner in the mine or otherwise 
        necessitates the use of such a self-rescue device, the ability 
        to survive for at least 48 hours.
            ``(5) Comprehensive atmospheric monitoring system which 
        monitors the levels of carbon monoxide, methane, and oxygen 
        that are present in all areas of the mine and which can detect 
        smoke in the case of a fire in a mine.
    ``(e) Coordination With Section 179.--No expenditures shall be 
taken into account under subsection (a) with respect to the portion of 
the cost of any property specified in an election under section 179.
    ``(f) Reporting.--No deduction shall be allowed under subsection 
(a) to any taxpayer for any taxable year unless such taxpayer files 
with the Secretary a report containing such information with respect to 
the operation of the mines of the taxpayer as the Secretary shall 
require.
    ``(g) Termination.--This section shall not apply to property placed 
in service after December 31, 2008.''.
    (b) Conforming Amendments.--
            (1) Section 263(a)(1) is amended by striking ``or'' at the 
        end of subparagraph (J), by striking the period at the end of 
        subparagraph (K) and inserting ``, or'', and by inserting after 
        subparagraph (K) the following new subparagraph:
                    ``(L) expenditures for which a deduction is allowed 
                under section 179E.''.
            (2) Section 312(k)(3)(B) is amended by striking ``or 179D'' 
        each place it appears in the heading and text thereof and 
        inserting ``179D, or 179E''.
            (3) Paragraphs (2)(C) and (3)(C) of section 1245(a) are 
        each amended by inserting ``179E,'' after ``179D,''.
            (4) The table of sections for part VI of subchapter B of 
        chapter 1 is amended by inserting after the item relating to 
        section 179D the following new item:

``Sec. 179E. Election to expense advanced mine safety equipment.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to costs paid or incurred after the date of the enactment of this 
Act.

SEC. 405. MINE RESCUE TEAM TRAINING TAX CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits) is amended by adding at the end 
the following new section:

``SEC. 45N. MINE RESCUE TEAM TRAINING CREDIT.

    ``(a) Amount of Credit.--For purposes of section 38, the mine 
rescue team training credit determined under this section with respect 
to each qualified mine rescue team employee of an eligible employer for 
any taxable year is an amount equal to the lesser of--
            ``(1) 20 percent of the amount paid or incurred by the 
        taxpayer during the taxable year with respect to the training 
        program costs of such qualified mine rescue team employee 
        (including wages of such employee while attending such 
        program), or
            ``(2) $10,000.
    ``(b) Qualified Mine Rescue Team Employee.--For purposes of this 
section, the term `qualified mine rescue team employee' means with 
respect to any taxable year any full-time employee of the taxpayer who 
is--
            ``(1) a miner eligible for more than 6 months of such 
        taxable year to serve as a mine rescue team member as a result 
        of completing, at a minimum, an initial 20-hour course of 
        instruction as prescribed by the Mine Safety and Health 
        Administration's Office of Educational Policy and Development, 
        or
            ``(2) a miner eligible for more than 6 months of such 
        taxable year to serve as a mine rescue team member by virtue of 
        receiving at least 40 hours of refresher training in such 
        instruction.
    ``(c) Eligible Employer.--For purposes of this section, the term 
`eligible employer' means any taxpayer which employs individuals as 
miners in underground mines in the United States.
    ``(d) Wages.--For purposes of this section, the term `wages' has 
the meaning given to such term by subsection (b) of section 3306 
(determined without regard to any dollar limitation contained in such 
section).
    ``(e) Termination.--This section shall not apply to taxable years 
beginning after December 31, 2008.''.
    (b) Credit Made Part of General Business Credit.--Section 38(b) is 
amended by striking ``and'' at the end of paragraph (29), by striking 
the period at the end of paragraph (30) and inserting ``, plus'', and 
by adding at the end the following new paragraph:
            ``(31) the mine rescue team training credit determined 
        under section 45N(a).''.
    (c) No Double Benefit.--Section 280C is amended by adding at the 
end the following new subsection:
    ``(e) Mine Rescue Team Training Credit.--No deduction shall be 
allowed for that portion of the expenses otherwise allowable as a 
deduction for the taxable year which is equal to the amount of the 
credit determined for the taxable year under section 45N(a).''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by adding at the end 
the following new item:

``Sec. 45N. Mine rescue team training credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

SEC. 406. WHISTLEBLOWER REFORMS.

    (a) Awards to Whistleblowers.--
            (1) In general.--Section 7623 (relating to expenses of 
        detection of underpayments and fraud, etc.) is amended--
                    (A) by striking ``The Secretary'' and inserting 
                ``(a) In General.--The Secretary'',
                    (B) by striking ``and'' at the end of paragraph (1) 
                and inserting ``or'',
                    (C) by striking ``(other than interest)'', and
                    (D) by adding at the end the following new 
                subsection:
    ``(b) Awards to Whistleblowers.--
            ``(1) In general.--If the Secretary proceeds with any 
        administrative or judicial action described in subsection (a) 
        based on information brought to the Secretary's attention by an 
        individual, such individual shall, subject to paragraph (2), 
        receive as an award at least 15 percent but not more than 30 
        percent of the collected proceeds (including penalties, 
        interest, additions to tax, and additional amounts) resulting 
        from the action (including any related actions) or from any 
        settlement in response to such action. The determination of the 
        amount of such award by the Whistleblower Office shall depend 
        upon the extent to which the individual substantially 
        contributed to such action.
            ``(2) Award in case of less substantial contribution.--
                    ``(A) In general.--In the event the action 
                described in paragraph (1) is one which the 
                Whistleblower Office determines to be based principally 
                on disclosures of specific allegations (other than 
                information provided by the individual described in 
                paragraph (1)) resulting from a judicial or 
                administrative hearing, from a governmental report, 
                hearing, audit, or investigation, or from the news 
                media, the Whistleblower Office may award such sums as 
                it considers appropriate, but in no case more than 10 
                percent of the collected proceeds (including penalties, 
                interest, additions to tax, and additional amounts) 
                resulting from the action (including any related 
                actions) or from any settlement in response to such 
                action, taking into account the significance of the 
                individual's information and the role of such 
                individual and any legal representative of such 
                individual in contributing to such action.
                    ``(B) Nonapplication of paragraph where individual 
                is original source of information.--Subparagraph (A) 
                shall not apply if the information resulting in the 
                initiation of the action described in paragraph (1) was 
                originally provided by the individual described in 
                paragraph (1).
            ``(3) Reduction in or denial of award.--If the 
        Whistleblower Office determines that the claim for an award 
        under paragraph (1) or (2) is brought by an individual who 
        planned and initiated the actions that led to the underpayment 
        of tax or actions described in subsection (a)(2), then the 
        Whistleblower Office may appropriately reduce such award. If 
        such individual is convicted of criminal conduct arising from 
        the role described in the preceding sentence, the Whistleblower 
        Office shall deny any award.
            ``(4) Appeal of award determination.--Any determination 
        regarding an award under paragraph (1), (2), or (3) may, within 
        30 days of such determination, be appealed to the Tax Court 
        (and the Tax Court shall have jurisdiction with respect to such 
        matter).
            ``(5) Application of this subsection.--This subsection 
        shall apply with respect to any action--
                    ``(A) against any taxpayer, but in the case of any 
                individual, only if such individual's gross income 
                exceeds $200,000 for any taxable year subject to such 
                action, and
                    ``(B) if the tax, penalties, interest, additions to 
                tax, and additional amounts in dispute exceed 
                $2,000,000.
            ``(6) Additional rules.--
                    ``(A) No contract necessary.--No contract with the 
                Internal Revenue Service is necessary for any 
                individual to receive an award under this subsection.
                    ``(B) Representation.--Any individual described in 
                paragraph (1) or (2) may be represented by counsel.
                    ``(C) Submission of information.--No award may be 
                made under this subsection based on information 
                submitted to the Secretary unless such information is 
                submitted under penalty of perjury.''.
            (2) Assignment to special trial judges.--
                    (A) In general.--Section 7443A(b) (relating to 
                proceedings which may be assigned to special trial 
                judges) is amended by striking ``and'' at the end of 
                paragraph (5), by redesignating paragraph (6) as 
                paragraph (7), and by inserting after paragraph (5) the 
                following new paragraph:
            ``(6) any proceeding under section 7623(b)(4), and''.
                    (B) Conforming amendment.--Section 7443A(c) is 
                amended by striking ``or (5)'' and inserting ``(5), or 
                (6)''.
            (3) Deduction allowed whether or not taxpayer itemizes.--
        Subsection (a) of section 62 (relating to general rule defining 
        adjusted gross income) is amended by inserting after paragraph 
        (20) the following new paragraph:
            ``(21) Attorneys fees relating to awards to 
        whistleblowers.--Any deduction allowable under this chapter for 
        attorney fees and court costs paid by, or on behalf of, the 
        taxpayer in connection with any award under section 7623(b) 
        (relating to awards to whistleblowers). The preceding sentence 
        shall not apply to any deduction in excess of the amount 
        includible in the taxpayer's gross income for the taxable year 
        on account of such award.''.
    (b) Whistleblower Office.--
            (1) In general.--Not later than the date which is 12 months 
        after the date of the enactment of this Act, the Secretary of 
        the Treasury shall issue guidance for the operation of a 
        whistleblower program to be administered in the Internal 
        Revenue Service by an office to be known as the ``Whistleblower 
        Office'' which--
                    (A) shall at all times operate at the direction of 
                the Commissioner of Internal Revenue and coordinate and 
                consult with other divisions in the Internal Revenue 
                Service as directed by the Commissioner of Internal 
                Revenue,
                    (B) shall analyze information received from any 
                individual described in section 7623(b) of the Internal 
                Revenue Code of 1986 and either investigate the matter 
                itself or assign it to the appropriate Internal Revenue 
                Service office, and
                    (C) in its sole discretion, may ask for additional 
                assistance from such individual or any legal 
                representative of such individual.
            (2) Request for assistance.--The guidance issued under 
        paragraph (1) shall specify that any assistance requested under 
        paragraph (1)(C) shall be under the direction and control of 
        the Whistleblower Office or the office assigned to investigate 
        the matter under paragraph (1)(A). No individual or legal 
        representative whose assistance is so requested may by reason 
        of such request represent himself or herself as an employee of 
        the Federal Government.
    (c) Report by Secretary.--The Secretary of the Treasury shall each 
year conduct a study and report to Congress on the use of section 7623 
of the Internal Revenue Code of 1986, including--
            (1) an analysis of the use of such section during the 
        preceding year and the results of such use, and
            (2) any legislative or administrative recommendations 
        regarding the provisions of such section and its application.
    (d) Effective Date.--The amendments made by subsection (a) shall 
apply to information provided on or after the date of the enactment of 
this Act.

SEC. 407. FRIVOLOUS TAX SUBMISSIONS.

    (a) Civil Penalties.--Section 6702 is amended to read as follows:

``SEC. 6702. FRIVOLOUS TAX SUBMISSIONS.

    ``(a) Civil Penalty for Frivolous Tax Returns.--A person shall pay 
a penalty of $5,000 if--
            ``(1) such person files what purports to be a return of a 
        tax imposed by this title but which--
                    ``(A) does not contain information on which the 
                substantial correctness of the self-assessment may be 
                judged, or
                    ``(B) contains information that on its face 
                indicates that the self-assessment is substantially 
                incorrect, and
            ``(2) the conduct referred to in paragraph (1)--
                    ``(A) is based on a position which the Secretary 
                has identified as frivolous under subsection (c), or
                    ``(B) reflects a desire to delay or impede the 
                administration of Federal tax laws.
    ``(b) Civil Penalty for Specified Frivolous Submissions.--
            ``(1) Imposition of penalty.--Except as provided in 
        paragraph (3), any person who submits a specified frivolous 
        submission shall pay a penalty of $5,000.
            ``(2) Specified frivolous submission.--For purposes of this 
        section--
                    ``(A) Specified frivolous submission.--The term 
                `specified frivolous submission' means a specified 
                submission if any portion of such submission--
                            ``(i) is based on a position which the 
                        Secretary has identified as frivolous under 
                        subsection (c), or
                            ``(ii) reflects a desire to delay or impede 
                        the administration of Federal tax laws.
                    ``(B) Specified submission.--The term `specified 
                submission' means--
                            ``(i) a request for a hearing under--
                                    ``(I) section 6320 (relating to 
                                notice and opportunity for hearing upon 
                                filing of notice of lien), or
                                    ``(II) section 6330 (relating to 
                                notice and opportunity for hearing 
                                before levy), and
                            ``(ii) an application under--
                                    ``(I) section 6159 (relating to 
                                agreements for payment of tax liability 
                                in installments),
                                    ``(II) section 7122 (relating to 
                                compromises), or
                                    ``(III) section 7811 (relating to 
                                taxpayer assistance orders).
            ``(3) Opportunity to withdraw submission.--If the Secretary 
        provides a person with notice that a submission is a specified 
        frivolous submission and such person withdraws such submission 
        within 30 days after such notice, the penalty imposed under 
        paragraph (1) shall not apply with respect to such submission.
    ``(c) Listing of Frivolous Positions.--The Secretary shall 
prescribe (and periodically revise) a list of positions which the 
Secretary has identified as being frivolous for purposes of this 
subsection. The Secretary shall not include in such list any position 
that the Secretary determines meets the requirement of section 
6662(d)(2)(B)(ii)(II).
    ``(d) Reduction of Penalty.--The Secretary may reduce the amount of 
any penalty imposed under this section if the Secretary determines that 
such reduction would promote compliance with and administration of the 
Federal tax laws.
    ``(e) Penalties in Addition to Other Penalties.--The penalties 
imposed by this section shall be in addition to any other penalty 
provided by law.''.
    (b) Treatment of Frivolous Requests for Hearings Before Levy.--
            (1) Frivolous requests disregarded.--Section 6330 (relating 
        to notice and opportunity for hearing before levy) is amended 
        by adding at the end the following new subsection:
    ``(g) Frivolous Requests for Hearing, etc.--Notwithstanding any 
other provision of this section, if the Secretary determines that any 
portion of a request for a hearing under this section or section 6320 
meets the requirement of clause (i) or (ii) of section 6702(b)(2)(A), 
then the Secretary may treat such portion as if it were never submitted 
and such portion shall not be subject to any further administrative or 
judicial review.''.
            (2) Preclusion from raising frivolous issues at hearing.--
        Section 6330(c)(4) is amended--
                    (A) by striking ``(A)'' and inserting ``(A)(i)'';
                    (B) by striking ``(B)'' and inserting ``(ii)'';
                    (C) by striking the period at the end of the first 
                sentence and inserting ``; or''; and
                    (D) by inserting after subparagraph (A)(ii) (as so 
                redesignated) the following:
                    ``(B) the issue meets the requirement of clause (i) 
                or (ii) of section 6702(b)(2)(A).''.
            (3) Statement of grounds.--Section 6330(b)(1) is amended by 
        striking ``under subsection (a)(3)(B)'' and inserting ``in 
        writing under subsection (a)(3)(B) and states the grounds for 
        the requested hearing''.
    (c) Treatment of Frivolous Requests for Hearings Upon Filing of 
Notice of Lien.--Section 6320 is amended--
            (1) in subsection (b)(1), by striking ``under subsection 
        (a)(3)(B)'' and inserting ``in writing under subsection 
        (a)(3)(B) and states the grounds for the requested hearing'', 
        and
            (2) in subsection (c), by striking ``and (e)'' and 
        inserting ``(e), and (g)''.
    (d) Treatment of Frivolous Applications for Offers-in-Compromise 
and Installment Agreements.--Section 7122 is amended by adding at the 
end the following new subsection:
    ``(f) Frivolous Submissions, etc.--Notwithstanding any other 
provision of this section, if the Secretary determines that any portion 
of an application for an offer-in-compromise or installment agreement 
submitted under this section or section 6159 meets the requirement of 
clause (i) or (ii) of section 6702(b)(2)(A), then the Secretary may 
treat such portion as if it were never submitted and such portion shall 
not be subject to any further administrative or judicial review.''.
    (e) Clerical Amendment.--The table of sections for part I of 
subchapter B of chapter 68 is amended by striking the item relating to 
section 6702 and inserting the following new item:

``Sec. 6702. Frivolous tax submissions.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to submissions made and issues raised after the date on which the 
Secretary first prescribes a list under section 6702(c) of the Internal 
Revenue Code of 1986, as amended by subsection (a).

SEC. 408. ADDITION OF MENINGOCOCCAL AND HUMAN PAPILLOMAVIRUS VACCINES 
              TO LIST OF TAXABLE VACCINES.

    (a) Meningococcal Vaccine.--Section 4132(a)(1) (defining taxable 
vaccine) is amended by adding at the end the following new 
subparagraph:
                    ``(O) Any meningococcal vaccine.''.
    (b) Human Papillomavirus Vaccine.--Section 4132(a)(1), as amended 
by subsection (a), is amended by adding at the end the following new 
subparagraph:
                    ``(P) Any vaccine against the human 
                papillomavirus.''.
    (c) Effective Date.--
            (1) Sales, etc.--The amendments made by this section shall 
        apply to sales and uses on or after the first day of the first 
        month which begins more than 4 weeks after the date of the 
        enactment of this Act.
            (2) Deliveries.--For purposes of paragraph (1) and section 
        4131 of the Internal Revenue Code of 1986, in the case of sales 
        on or before the effective date described in such paragraph for 
        which delivery is made after such date, the delivery date shall 
        be considered the sale date.

SEC. 409. CLARIFICATION OF TAXATION OF CERTAIN SETTLEMENT FUNDS MADE 
              PERMANENT.

    (a) In General.--Subsection (g) of section 468B is amended by 
striking paragraph (3).
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in section 201 of the Tax Increase Prevention and 
Reconciliation Act of 2005.

SEC. 410. MODIFICATION OF ACTIVE BUSINESS DEFINITION UNDER SECTION 355 
              MADE PERMANENT.

    (a) In General.--Subparagraphs (A) and (D) of section 355(b)(3) are 
each amended by striking ``and on or before December 31, 2010''.
    (b) Effective Date.--The amendments made by this section shall take 
effect as if included in section 202 of the Tax Increase Prevention and 
Reconciliation Act of 2005.

SEC. 411. REVISION OF STATE VETERANS LIMIT MADE PERMANENT.

    (a) In General.--Subparagraph (B) of section 143(l)(3) is amended 
by striking clause (iv).
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in section 203 of the Tax Increase Prevention and 
Reconciliation Act of 2005.

SEC. 412. CAPITAL GAINS TREATMENT FOR CERTAIN SELF-CREATED MUSICAL 
              WORKS MADE PERMANENT.

    (a) In General.--Paragraph (3) of section 1221(b) is amended by 
striking ``before January 1, 2011,''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in section 204 of the Tax Increase Prevention and 
Reconciliation Act of 2005.

SEC. 413. REDUCTION IN MINIMUM VESSEL TONNAGE WHICH QUALIFIES FOR 
              TONNAGE TAX MADE PERMANENT.

    (a) In General.--Paragraph (4) of section 1355(a) is amended by 
striking ``10,000 (6,000, in the case of taxable years beginning after 
December 31, 2005, and ending before January 1, 2011)'' and inserting 
``6,000''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in section 205 of the Tax Increase Prevention and 
Reconciliation Act of 2005.

SEC. 414. MODIFICATION OF SPECIAL ARBITRAGE RULE FOR CERTAIN FUNDS MADE 
              PERMANENT.

    (a) In General.--Section 206 of the Tax Increase Prevention and 
Reconciliation Act of 2005 is amended by striking ``and before August 
31, 2009''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in section 206 of the Tax Increase Prevention and 
Reconciliation Act of 2005.

SEC. 415. GREAT LAKES DOMESTIC SHIPPING TO NOT DISQUALIFY VESSEL FROM 
              TONNAGE TAX.

    (a) In General.--Section 1355 (relating to definitions and special 
rules) is amended by redesignating subsection (g) as subsection (h) and 
by inserting after subsection (f) the following new subsection:
    ``(g) Great Lakes Domestic Shipping to Not Disqualify Vessel.--
            ``(1) In general.--If the electing corporation elects (at 
        such time and in such manner as the Secretary may require) to 
        apply this subsection for any taxable year to any qualifying 
        vessel which is used in qualified zone domestic trade during 
        the taxable year--
                    ``(A) solely for purposes of subsection (a)(4), 
                such use shall be treated as use in United States 
                foreign trade (and not as use in United States domestic 
                trade), and
                    ``(B) subsection (f) shall not apply with respect 
                to such vessel for such taxable year.
            ``(2) Effect of temporarily operating vessel in united 
        states domestic trade.--In the case of a qualifying vessel to 
        which this subsection applies--
                    ``(A) In general.--An electing corporation shall be 
                treated as using such vessel in qualified zone domestic 
                trade during any period of temporary use in the United 
                States domestic trade (other than qualified zone 
                domestic trade) if the electing corporation gives 
                timely notice to the Secretary stating--
                            ``(i) that it temporarily operates or has 
                        operated in the United States domestic trade 
                        (other than qualified zone domestic trade) a 
                        qualifying vessel which had been used in the 
                        United States foreign trade or qualified zone 
                        domestic trade, and
                            ``(ii) its intention to resume operation of 
                        the vessel in the United States foreign trade 
                        or qualified zone domestic trade.
                    ``(B) Notice.--Notice shall be deemed timely if 
                given not later than the due date (including 
                extensions) for the corporation's tax return for the 
                taxable year in which the temporary cessation begins.
                    ``(C) Period disregard in effect.--The period of 
                temporary use under subparagraph (A) continues until 
                the earlier of the date of which--
                            ``(i) the electing corporation abandons its 
                        intention to resume operations of the vessel in 
                        the United States foreign trade or qualified 
                        zone domestic trade, or
                            ``(ii) the electing corporation resumes 
                        operation of the vessel in the United States 
                        foreign trade or qualified zone domestic trade.
                    ``(D) No disregard if domestic trade use exceeds 30 
                days.--Subparagraph (A) shall not apply to any 
                qualifying vessel which is operated in the United 
                States domestic trade (other than qualified zone 
                domestic trade) for more than 30 days during the 
                taxable year.
            ``(3) Allocation of income and deductions to qualifying 
        shipping activities.--In the case of a qualifying vessel to 
        which this subsection applies, the Secretary shall prescribe 
        rules for the proper allocation of income, expenses, losses, 
        and deductions between the qualified shipping activities and 
        the other activities of such vessel.
            ``(4) Qualified zone domestic trade.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified zone 
                domestic trade' means the transportation of goods or 
                passengers between places in the qualified zone if such 
                transportation is in the United States domestic trade.
                    ``(B) Qualified zone.--The term `qualified zone' 
                means the Great Lakes Waterway and the St. Lawrence 
                Seaway.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 416. USE OF QUALIFIED MORTGAGE BONDS TO FINANCE RESIDENCES FOR 
              VETERANS WITHOUT REGARD TO FIRST-TIME HOMEBUYER 
              REQUIREMENT.

    (a) In General.--Section 143(d)(2) (relating to exceptions to 3-
year requirement) is amended by striking ``and'' at the end of 
subparagraph (B), by adding ``and'' at the end of subparagraph (C), and 
by inserting after subparagraph (C) the following new subparagraph:
                    ``(D) in the case of bonds issued after the date of 
                the enactment of this subparagraph and before January 
                1, 2008, financing of any residence for a veteran (as 
                defined in section 101 of title 38, United States 
                Code), if such veteran has not previously qualified for 
                and received such financing by reason of this 
                subparagraph,''.
    (b) Effective Date.--The amendments made by this section shall 
apply to bonds issued after the date of the enactment of this Act.

SEC. 417. EXCLUSION OF GAIN FROM SALE OF A PRINCIPAL RESIDENCE BY 
              CERTAIN EMPLOYEES OF THE INTELLIGENCE COMMUNITY.

    (a) In General.--Subparagraph (A) of section 121(d)(9) (relating to 
exclusion of gain from sale of principal residence) is amended by 
striking ``duty'' and all that follows and inserting ``duty--
                            ``(i) as a member of the uniformed 
                        services,
                            ``(ii) as a member of the Foreign Service 
                        of the United States, or
                            ``(iii) as an employee of the intelligence 
                        community.''.
    (b) Employee of Intelligence Community Defined.--Subparagraph (C) 
of section 121(d)(9) is amended by redesignating clause (iv) as clause 
(v) and by inserting after clause (iii) the following new clause:
                            ``(iv) Employee of intelligence 
                        community.--The term `employee of the 
                        intelligence community' means an employee (as 
                        defined by section 2105 of title 5, United 
                        States Code) of--
                                    ``(I) the Office of the Director of 
                                National Intelligence,
                                    ``(II) the Central Intelligence 
                                Agency,
                                    ``(III) the National Security 
                                Agency,
                                    ``(IV) the Defense Intelligence 
                                Agency,
                                    ``(V) the National Geospatial-
                                Intelligence Agency,
                                    ``(VI) the National Reconnaissance 
                                Office,
                                    ``(VII) any other office within the 
                                Department of Defense for the 
                                collection of specialized national 
                                intelligence through reconnaissance 
                                programs,
                                    ``(VIII) any of the intelligence 
                                elements of the Army, the Navy, the Air 
                                Force, the Marine Corps, the Federal 
                                Bureau of Investigation, the Department 
                                of Treasury, the Department of Energy, 
                                and the Coast Guard,
                                    ``(IX) the Bureau of Intelligence 
                                and Research of the Department of 
                                State, or
                                    ``(X) any of the elements of the 
                                Department of Homeland Security 
                                concerned with the analyses of foreign 
                                intelligence information.''.
    (c) Special Rule.--Subparagraph (C) of section 121(d)(9), as 
amended by subsection (b), is amended by adding at the end the 
following new clause:
                            ``(vi) Special rule relating to 
                        intelligence community.--An employee of the 
                        intelligence community shall not be treated as 
                        serving on qualified extended duty unless such 
                        duty is at a duty station located outside the 
                        United States.''.
    (d) Conforming Amendment.--The heading for section 121(d)(9) is 
amended to read as follows: ``Uniformed services, foreign service, and 
intelligence community''.
    (e) Effective Date.--The amendments made by this section shall 
apply to sales or exchanges after the date of the enactment of this Act 
and before January 1, 2011.

SEC. 418. SALE OF PROPERTY BY JUDICIAL OFFICERS.

    (a) In General.--Section 1043(b) (relating to the sale of property 
to comply with conflict-of-interest requirements) is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (A), by inserting ``, or a 
                judicial officer,'' after ``an officer or employee of 
                the executive branch''; and
                    (B) in subparagraph (B), by inserting ``judicial 
                canon,'' after ``any statute, regulation, rule,'';
            (2) in paragraph (2)--
                    (A) in subparagraph (A), by inserting ``judicial 
                canon,'' after ``any Federal conflict of interest 
                statute, regulation, rule,''; and
                    (B) in subparagraph (B), by inserting after ``the 
                Director of the Office of Government Ethics,'' the 
                following: ``in the case of executive branch officers 
                or employees, or by the Judicial Conference of the 
                United States (or its designee), in the case of 
                judicial officers,''; and
            (3) in paragraph (5)(B), by inserting ``judicial canon,'' 
        after ``any statute, regulation, rule,''.
    (b) Judicial Officer Defined.--Section 1043(b) is amended by adding 
at the end the following new paragraph:
            ``(6) Judicial officer.--The term `judicial officer' means 
        the Chief Justice of the United States, the Associate Justices 
        of the Supreme Court, and the judges of the United States 
        courts of appeals, United States district courts, including the 
        district courts in Guam, the Northern Mariana Islands, and the 
        Virgin Islands, Court of Appeals for the Federal Circuit, Court 
        of International Trade, Tax Court, Court of Federal Claims, 
        Court of Appeals for Veterans Claims, United States Court of 
        Appeals for the Armed Forces, and any court created by Act of 
        Congress, the judges of which are entitled to hold office 
        during good behavior.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to sales after the date of enactment of this Act.

SEC. 419. PREMIUMS FOR MORTGAGE INSURANCE.

    (a) In General.--Section 163(h)(3) (relating to qualified residence 
interest) is amended by adding at the end the following new 
subparagraph:
                    ``(E) Mortgage insurance premiums treated as 
                interest.--
                            ``(i) In general.--Premiums paid or accrued 
                        for qualified mortgage insurance by a taxpayer 
                        during the taxable year in connection with 
                        acquisition indebtedness with respect to a 
                        qualified residence of the taxpayer shall be 
                        treated for purposes of this section as 
                        interest which is qualified residence interest.
                            ``(ii) Phaseout.--The amount otherwise 
                        treated as interest under clause (i) shall be 
                        reduced (but not below zero) by 10 percent of 
                        such amount for each $1,000 ($500 in the case 
                        of a married individual filing a separate 
                        return) (or fraction thereof) that the 
                        taxpayer's adjusted gross income for the 
                        taxable year exceeds $100,000 ($50,000 in the 
                        case of a married individual filing a separate 
                        return).
                            ``(iii) Limitation.--Clause (i) shall not 
                        apply with respect to any mortgage insurance 
                        contracts issued before January 1, 2007.
                            ``(iv) Termination.--Clause (i) shall not 
                        apply to amounts--
                                    ``(I) paid or accrued after 
                                December 31, 2007, or
                                    ``(II) properly allocable to any 
                                period after such date.''.
    (b) Definition and Special Rules.--Section 163(h)(4) (relating to 
other definitions and special rules) is amended by adding at the end 
the following new subparagraphs:
                    ``(E) Qualified mortgage insurance.--The term 
                `qualified mortgage insurance' means--
                            ``(i) mortgage insurance provided by the 
                        Veterans Administration, the Federal Housing 
                        Administration, or the Rural Housing 
                        Administration, and
                            ``(ii) private mortgage insurance (as 
                        defined by section 2 of the Homeowners 
                        Protection Act of 1998 (12 U.S.C. 4901), as in 
                        effect on the date of the enactment of this 
                        subparagraph).
                    ``(F) Special rules for prepaid qualified mortgage 
                insurance.--Any amount paid by the taxpayer for 
                qualified mortgage insurance that is properly allocable 
                to any mortgage the payment of which extends to periods 
                that are after the close of the taxable year in which 
                such amount is paid shall be chargeable to capital 
                account and shall be treated as paid in such periods to 
                which so allocated. No deduction shall be allowed for 
                the unamortized balance of such account if such 
                mortgage is satisfied before the end of its term. The 
                preceding sentences shall not apply to amounts paid for 
                qualified mortgage insurance provided by the Veterans 
                Administration or the Rural Housing Administration.''.
    (c) Information Returns Relating to Mortgage Insurance.--Section 
6050H (relating to returns relating to mortgage interest received in 
trade or business from individuals) is amended by adding at the end the 
following new subsection:
    ``(h) Returns Relating to Mortgage Insurance Premiums.--
            ``(1) In general.--The Secretary may prescribe, by 
        regulations, that any person who, in the course of a trade or 
        business, receives from any individual premiums for mortgage 
        insurance aggregating $600 or more for any calendar year, shall 
        make a return with respect to each such individual. Such return 
        shall be in such form, shall be made at such time, and shall 
        contain such information as the Secretary may prescribe.
            ``(2) Statement to be furnished to individuals with respect 
        to whom information is required.--Every person required to make 
        a return under paragraph (1) shall furnish to each individual 
        with respect to whom a return is made a written statement 
        showing such information as the Secretary may prescribe. Such 
        written statement shall be furnished on or before January 31 of 
        the year following the calendar year for which the return under 
        paragraph (1) was required to be made.
            ``(3) Special rules.--For purposes of this subsection--
                    ``(A) rules similar to the rules of subsection (c) 
                shall apply, and
                    ``(B) the term `mortgage insurance' means--
                            ``(i) mortgage insurance provided by the 
                        Veterans Administration, the Federal Housing 
                        Administration, or the Rural Housing 
                        Administration, and
                            ``(ii) private mortgage insurance (as 
                        defined by section 2 of the Homeowners 
                        Protection Act of 1998 (12 U.S.C. 4901), as in 
                        effect on the date of the enactment of this 
                        subsection).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to amounts paid or accrued after December 31, 2006.

SEC. 420. MODIFICATION OF REFUNDS FOR KEROSENE USED IN AVIATION.

    (a) In General.--Paragraph (4) of section 6427(l) (relating to 
nontaxable uses of diesel fuel and kerosene) is amended to read as 
follows:
            ``(4) Refunds for kerosene used in aviation.--
                    ``(A) Kerosene used in commercial aviation.--In the 
                case of kerosene used in commercial aviation (as 
                defined in section 4083(b)) (other than supplies for 
                vessels or aircraft within the meaning of section 
                4221(d)(3)), paragraph (1) shall not apply to so much 
                of the tax imposed by section 4041 or 4081, as the case 
                may be, as is attributable to--
                            ``(i) the Leaking Underground Storage Tank 
                        Trust Fund financing rate imposed by such 
                        section, and
                            ``(ii) so much of the rate of tax specified 
                        in section 4041(c) or 4081(a)(2)(A)(iii), as 
                        the case may be, as does not exceed 4.3 cents 
                        per gallon.
                    ``(B) Kerosene used in noncommercial aviation.--In 
                the case of kerosene used in aviation that is not 
                commercial aviation (as so defined) (other than any use 
                which is exempt from the tax imposed by section 4041(c) 
                other than by reason of a prior imposition of tax), 
                paragraph (1) shall not apply to--
                            ``(i) any tax imposed by subsection (c) or 
                        (d)(2) of section 4041, and
                            ``(ii) so much of the tax imposed by 
                        section 4081 as is attributable to--
                                    ``(I) the Leaking Underground 
                                Storage Tank Trust Fund financing rate 
                                imposed by such section, and
                                    ``(II) so much of the rate of tax 
                                specified in section 4081(a)(2)(A)(iii) 
                                as does not exceed the rate specified 
                                in section 4081(a)(2)(C)(ii).
                    ``(C) Payments to ultimate, registered vendor.--
                            ``(i) In general.--With respect to any 
                        kerosene used in aviation (other than kerosene 
                        described in clause (ii) or kerosene to which 
                        paragraph (5) applies), if the ultimate 
                        purchaser of such kerosene waives (at such time 
                        and in such form and manner as the Secretary 
                        shall prescribe) the right to payment under 
                        paragraph (1) and assigns such right to the 
                        ultimate vendor, then the Secretary shall pay 
                        the amount which would be paid under paragraph 
                        (1) to such ultimate vendor, but only if such 
                        ultimate vendor--
                                    ``(I) is registered under section 
                                4101, and
                                    ``(II) meets the requirements of 
                                subparagraph (A), (B), or (D) of 
                                section 6416(a)(1).
                            ``(ii) Payments for kerosene used in 
                        noncommercial aviation.--The amount which would 
                        be paid under paragraph (1) with respect to any 
                        kerosene to which subparagraph (B) applies 
                        shall be paid only to the ultimate vendor of 
                        such kerosene. A payment shall be made to such 
                        vendor if such vendor--
                                    ``(I) is registered under section 
                                4101, and
                                    ``(II) meets the requirements of 
                                subparagraph (A), (B), or (D) of 
                                section 6416(a)(1).''.
    (b) Conforming Amendments.--
            (1) Section 6427(l) is amended by striking paragraph (5) 
        and by redesignating paragraph (6) as paragraph (5).
            (2) Section 4082(d)(2)(B) is amended by striking ``section 
        6427(l)(6)(B)'' and inserting ``section 6427(l)(5)(B)''.
            (3) Section 6427(i)(4)(A) is amended--
                    (A) by striking ``paragraph (4)(B), (5), or (6)'' 
                each place it appears and inserting ``paragraph (4)(C) 
                or (5)'', and
                    (B) by striking ``(l)(5), and (l)(6)'' and 
                inserting ``(l)(4)(C)(ii), and (l)(5)''.
            (4) Section 6427(l)(1) is amended by striking ``paragraph 
        (4)(B)'' and inserting ``paragraph (4)(C)(i)''.
            (5) Section 9502(d) is amended--
                    (A) in paragraph (2), by striking ``and (l)(5)'', 
                and
                    (B) in paragraph (3), by striking ``or (5)''.
            (6) Section 9503(c)(7) is amended--
                    (A) by amending subparagraphs (A) and (B) to read 
                as follows:
                    ``(A) 4.3 cents per gallon of kerosene subject to 
                section 6427(l)(4)(A) with respect to which a payment 
                has been made by the Secretary under section 6427(l), 
                and
                    ``(B) 21.8 cents per gallon of kerosene subject to 
                section 6427(l)(4)(B) with respect to which a payment 
                has been made by the Secretary under section 
                6427(l).'', and
                    (B) in the matter following subparagraph (B), by 
                striking ``or (5)''.
    (c) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to kerosene sold after September 30, 2005.
            (2) Special rule for pending claims.--In the case of 
        kerosene sold for use in aviation (other than kerosene to which 
        section 6427(l)(4)(C)(ii) of the Internal Revenue Code of 1986 
        (as added by subsection (a)) applies or kerosene to which 
        section 6427(l)(5) of such Code (as redesignated by subsection 
        (b)) applies) after September 30, 2005, and before the date of 
        the enactment of this Act, the ultimate purchaser shall be 
        treated as having waived the right to payment under section 
        6427(l)(1) of such Code and as having assigned such right to 
        the ultimate vendor if such ultimate vendor has met the 
        requirements of subparagraph (A), (B), or (D) of section 
        6416(a)(1) of such Code.
    (d) Special Rule for Kerosene Used in Aviation on a Farm for 
Farming Purposes.--
            (1) Refunds for purchases after december 31, 2004, and 
        before october 1, 2005.--The Secretary of the Treasury shall 
        pay to the ultimate purchaser of any kerosene which is used in 
        aviation on a farm for farming purposes and which was purchased 
        after December 31, 2004, and before October 1, 2005, an amount 
        equal to the aggregate amount of tax imposed on such fuel under 
        section 4041 or 4081 of the Internal Revenue Code of 1986, as 
        the case may be, reduced by any payment to the ultimate vendor 
        under section 6427(l)(5)(C) of such Code (as in effect on the 
        day before the date of the enactment of the Safe, Accountable, 
        Flexible, Efficient Transportation Equity Act: a Legacy for 
        Users).
            (2) Use on a farm for farming purposes.--For purposes of 
        paragraph (1), kerosene shall be treated as used on a farm for 
        farming purposes if such kerosene is used for farming purposes 
        (within the meaning of section 6420(c)(3) of the Internal 
        Revenue Code of 1986) in carrying on a trade or business on a 
        farm situated in the United States. For purposes of the 
        preceding sentence, rules similar to the rules of section 
        6420(c)(4) of such Code shall apply.
            (3) Time for filing claims.--No claim shall be allowed 
        under paragraph (1) unless the ultimate purchaser files such 
        claim before the date that is 3 months after the date of the 
        enactment of this Act.
            (4) No double benefit.--No amount shall be paid under 
        paragraph (1) or section 6427(l) of the Internal Revenue Code 
        of 1986 with respect to any kerosene described in paragraph (1) 
        to the extent that such amount is in excess of the tax imposed 
        on such kerosene under section 4041 or 4081 of such Code, as 
        the case may be.
            (5) Applicable laws.--For purposes of this subsection, 
        rules similar to the rules of section 6427(j) of the Internal 
        Revenue Code of 1986 shall apply.

SEC. 421. REGIONAL INCOME TAX AGENCIES TREATED AS STATES FOR PURPOSES 
              OF CONFIDENTIALITY AND DISCLOSURE REQUIREMENTS.

    (a) In General.--Paragraph (5) of section 6103(b) is amended to 
read as follows:
            ``(5) State.--
                    ``(A) In general.--The term `State' means--
                            ``(i) any of the 50 States, the District of 
                        Columbia, the Commonwealth of Puerto Rico, the 
                        Virgin Islands, the Canal Zone, Guam, American 
                        Samoa, and the Commonwealth of the Northern 
                        Mariana Islands,
                            ``(ii) for purposes of subsections (a)(2), 
                        (b)(4), (d)(1), (h)(4), and (p), any 
                        municipality--
                                    ``(I) with a population in excess 
                                of 250,000 (as determined under the 
                                most recent decennial United States 
                                census data available),
                                    ``(II) which imposes a tax on 
                                income or wages, and
                                    ``(III) with which the Secretary 
                                (in his sole discretion) has entered 
                                into an agreement regarding disclosure, 
                                and
                            ``(iii) for purposes of subsections (a)(2), 
                        (b)(4), (d)(1), (h)(4), and (p), any 
                        governmental entity--
                                    ``(I) which is formed and operated 
                                by a qualified group of municipalities, 
                                and
                                    ``(II) with which the Secretary (in 
                                his sole discretion) has entered into 
                                an agreement regarding disclosure.
                    ``(B) Regional income tax agencies.--For purposes 
                of subparagraph (A)(iii)--
                            ``(i) Qualified group of municipalities.--
                        The term `qualified group of municipalities' 
                        means, with respect to any governmental entity, 
                        2 or more municipalities--
                                    ``(I) each of which imposes a tax 
                                on income or wages,
                                    ``(II) each of which, under the 
                                authority of a State statute, 
                                administers the laws relating to the 
                                imposition of such taxes through such 
                                entity, and
                                    ``(III) which collectively have a 
                                population in excess of 250,000 (as 
                                determined under the most recent 
                                decennial United States census data 
                                available).
                            ``(ii) References to state law, etc.--For 
                        purposes of applying subparagraph (A)(iii) to 
                        the subsections referred to in such 
                        subparagraph, any reference in such subsections 
                        to State law, proceedings, or tax returns shall 
                        be treated as references to the law, 
                        proceedings, or tax returns, as the case may 
                        be, of the municipalities which form and 
                        operate the governmental entity referred to in 
                        such subparagraph.
                            ``(iii) Disclosure to contractors and other 
                        agents.--Notwithstanding any other provision of 
                        this section, no return or return information 
                        shall be disclosed to any contractor or other 
                        agent of a governmental entity referred to in 
                        subparagraph (A)(iii) unless such entity, to 
                        the satisfaction of the Secretary--
                                    ``(I) has requirements in effect 
                                which require each such contractor or 
                                other agent which would have access to 
                                returns or return information to 
                                provide safeguards (within the meaning 
                                of subsection (p)(4)) to protect the 
                                confidentiality of such returns or 
                                return information,
                                    ``(II) agrees to conduct an on-site 
                                review every 3 years (or a mid-point 
                                review in the case of contracts or 
                                agreements of less than 3 years in 
                                duration) of each contractor or other 
                                agent to determine compliance with such 
                                requirements,
                                    ``(III) submits the findings of the 
                                most recent review conducted under 
                                subclause (II) to the Secretary as part 
                                of the report required by subsection 
                                (p)(4)(E), and
                                    ``(IV) certifies to the Secretary 
                                for the most recent annual period that 
                                such contractor or other agent is in 
                                compliance with all such requirements.
                        The certification required by subclause (IV) 
                        shall include the name and address of each 
                        contractor and other agent, a description of 
                        the contract or agreement with such contractor 
                        or other agent, and the duration of such 
                        contract or agreement. The requirements of this 
                        clause shall not apply to disclosures pursuant 
                        to subsection (n) for purposes of Federal tax 
                        administration and a rule similar to the rule 
                        of subsection (p)(8)(B) shall apply for 
                        purposes of this clause.''.
    (b) Special Rules for Disclosure.--Subsection (d) of section 6103 
is amended by adding at the end the following new paragraph:
            ``(6) Limitation on disclosure regarding regional income 
        tax agencies treated as states.--For purposes of paragraph (1), 
        inspection by or disclosure to an entity described in 
        subsection (b)(5)(A)(iii) shall be for the purpose of, and only 
        to the extent necessary in, the administration of the laws of 
        the member municipalities in such entity relating to the 
        imposition of a tax on income or wages. Such entity may not 
        redisclose any return or return information received pursuant 
        to paragraph (1) to any such member municipality.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to disclosures made after December 31, 2006.

SEC. 422. DESIGNATION OF WINES BY SEMI-GENERIC NAMES.

    (a) In General.--Subsection (c) of section 5388 (relating to use of 
semi-generic designations) is amended by adding at the end the 
following new paragraph:
            ``(3) Special rule for use of certain semi-generic 
        designations.--
                    ``(A) In general.--In the case of any wine to which 
                this paragraph applies--
                            ``(i) paragraph (1) shall not apply,
                            ``(ii) in the case of wine of the European 
                        Community, designations referred to in 
                        subparagraph (C)(i) may be used for such wine 
                        only if the requirement of subparagraph (B)(ii) 
                        is met, and
                            ``(iii) in the case any other wine bearing 
                        a brand name, or brand name and fanciful name, 
                        semi-generic designations may be used for such 
                        wine only if the requirements of clauses (i), 
                        (ii), and (iii) of subparagraph (B) are met.
                    ``(B) Requirements.--
                            ``(i) The requirement of this clause is met 
                        if there appears in direct conjunction with the 
                        semi-generic designation an appropriate 
                        appellation of origin disclosing the origin of 
                        the wine.
                            ``(ii) The requirement of this clause is 
                        met if the wine conforms to the standard of 
                        identity, if any, for such wine contained in 
                        the regulations under this section or, if there 
                        is no such standard, to the trade understanding 
                        of such class or type.
                            ``(iii) The requirement of this clause is 
                        met if the person, or its successor in 
                        interest, using the semi-generic designation 
                        held a Certificate of Label Approval or 
                        Certificate of Exemption from Label Approval 
                        issued by the Secretary for a wine label 
                        bearing such brand name, or brand name and 
                        fanciful name, before March 10, 2006, on which 
                        such semi-generic designation appeared.
                    ``(C) Wines to which paragraph applies.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), this paragraph shall apply to any 
                        grape wine which is designated as Burgundy, 
                        Claret, Chablis, Champagne, Chianti, Malaga, 
                        Marsala, Madeira, Moselle, Port, Retsina, Rhine 
                        Wine or Hock, Sauterne, Haut Sauterne, Sherry, 
                        or Tokay.
                            ``(ii) Exception.--This paragraph shall not 
                        apply to wine which--
                                    ``(I) contains less than 7 percent 
                                or more than 24 percent alcohol by 
                                volume,
                                    ``(II) is intended for sale outside 
                                the United States, or
                                    ``(III) does not bear a brand 
                                name.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to wine imported or bottled in the United States on or after the 
date of enactment of this Act.

SEC. 423. MODIFICATION OF RAILROAD TRACK MAINTENANCE CREDIT.

    (a) In General.--Section 45G(d) (defining qualified railroad track 
maintenance expenditures) is amended--
            (1) by inserting ``gross'' after ``means'', and
            (2) by inserting ``(determined without regard to any 
        consideration for such expenditures given by the Class II or 
        Class III railroad which made the assignment of such track)'' 
        after ``Class II or Class III railroad''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in the amendment made by section 245(a) of the 
American Jobs Creation Act of 2004.

SEC. 424. MODIFICATION OF EXCISE TAX ON UNRELATED BUSINESS TAXABLE 
              INCOME OF CHARITABLE REMAINDER TRUSTS.

    (a) In General.--Subsection (c) of section 664 (relating to 
exemption from income taxes) is amended to read as follows:
    ``(c) Taxation of Trusts.--
            ``(1) Income tax.--A charitable remainder annuity trust and 
        a charitable remainder unitrust shall, for any taxable year, 
        not be subject to any tax imposed by this subtitle.
            ``(2) Excise tax.--
                    ``(A) In general.--In the case of a charitable 
                remainder annuity trust or a charitable remainder 
                unitrust which has unrelated business taxable income 
                (within the meaning of section 512, determined as if 
                part III of subchapter F applied to such trust) for a 
                taxable year, there is hereby imposed on such trust or 
                unitrust an excise tax equal to the amount of such 
                unrelated business taxable income.
                    ``(B) Certain rules to apply.--The tax imposed by 
                subparagraph (A) shall be treated as imposed by chapter 
                42 for purposes of this title other than subchapter E 
                of chapter 42.
                    ``(C) Tax court proceedings.--For purposes of this 
                paragraph, the references in section 6212(c)(1) to 
                section 4940 shall be deemed to include references to 
                this paragraph.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2006.

SEC. 425. LOANS TO QUALIFIED CONTINUING CARE FACILITIES MADE PERMANENT.

    (a) In General.--Subsection (h) of section 7872 (relating to 
exception for loans to qualified continuing care facilities) is amended 
by striking paragraph (4).
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in section 209 of the Tax Increase Prevention and 
Reconciliation Act of 2005.

SEC. 426. TECHNICAL CORRECTIONS.

    (a) Technical Correction Relating to Look-Through Treatment of 
Payments Between Related Controlled Foreign Corporations Under the 
Foreign Personal Holding Company Rules.--
            (1) In general.--
                    (A) The first sentence of section 954(c)(6)(A) is 
                amended by striking ``which is not subpart F income'' 
                and inserting ``which is neither subpart F income nor 
                income treated as effectively connected with the 
                conduct of a trade or business in the United States''.
                    (B) Section 954(c)(6)(A) is amended by striking the 
                last sentence and inserting the following: ``The 
                Secretary shall prescribe such regulations as may be 
                necessary or appropriate to carry out this paragraph, 
                including such regulations as may be necessary or 
                appropriate to prevent the abuse of the purposes of 
                this paragraph.''
            (2) Effective date.--The amendments made by this subsection 
        shall take effect as if included in section 103(b) of the Tax 
        Increase Prevention and Reconciliation Act of 2005.
    (b) Technical Correction Regarding Authority to Exercise Reasonable 
Cause and Good Faith Exception.--
            (1) In general.--Section 903(d)(2)(B)(iii) of the American 
        Jobs Creation Act of 2004, as amended by section 303(a) of the 
        Gulf Opportunity Zone Act of 2005, is amended by inserting ``or 
        the Secretary's delegate'' after ``the Secretary of the 
        Treasury''.
            (2) Effective date.--The amendment made by this subsection 
        shall take effect as if included in the provisions of the 
        American Jobs Creation Act of 2004 to which it relates.

            DIVISION B--MEDICARE AND OTHER HEALTH PROVISIONS

SEC. 1. SHORT TITLE OF DIVISION.

    This division may be cited as the ``Medicare Improvements and 
Extension Act of 2006''.

        TITLE I--MEDICARE IMPROVED QUALITY AND PROVIDER PAYMENTS

SEC. 101. PHYSICIAN PAYMENT AND QUALITY IMPROVEMENT.

    (a) One-Year Increase in Medicare Physician Fee Schedule Conversion 
Factor.--Section 1848(d) of the Social Security Act (42 U.S.C. 1395w-
4(d)) is amended by adding at the end the following new paragraph:
            ``(7) Conversion factor for 2007.--
                    ``(A) In general.--The conversion factor that would 
                otherwise be applicable under this subsection for 2007 
                shall be the amount of such conversion factor divided 
                by the product of--
                            ``(i) 1 plus the Secretary's estimate of 
                        the percentage increase in the MEI (as defined 
                        in section 1842(i)(3)) for 2007 (divided by 
                        100); and
                            ``(ii) 1 plus the Secretary's estimate of 
                        the update adjustment factor under paragraph 
                        (4)(B) for 2007.
                    ``(B) No effect on computation of conversion factor 
                for 2008.--The conversion factor under this subsection 
                shall be computed under paragraph (1)(A) for 2008 as if 
                subparagraph (A) had never applied.''.
    (b) Quality Reporting System.--Section 1848 of the Social Security 
Act (42 U.S.C. 1395w-4) is amended by adding at the end the following 
new subsection:
    ``(k) Quality Reporting System.--
            ``(1) In general.--The Secretary shall implement a system 
        for the reporting by eligible professionals of data on quality 
        measures specified under paragraph (2). Such data shall be 
        submitted in a form and manner specified by the Secretary (by 
        program instruction or otherwise), which may include submission 
        of such data on claims under this part.
            ``(2) Use of consensus-based quality measures.--
                    ``(A) For 2007.--
                            ``(i) In general.--For purposes of applying 
                        this subsection for the reporting of data on 
                        quality measures for covered professional 
                        services furnished during the period beginning 
                        July 1, 2007, and ending December 31, 2007, the 
                        quality measures specified under this paragraph 
                        are the measures identified as 2007 physician 
                        quality measures under the Physician Voluntary 
                        Reporting Program as published on the public 
                        website of the Centers for Medicare & Medicaid 
                        Services as of the date of the enactment of 
                        this subsection, except as may be changed by 
                        the Secretary based on the results of a 
                        consensus-based process in January of 2007, if 
                        such change is published on such website by not 
                        later than April 1, 2007.
                            ``(ii) Subsequent refinements in 
                        application permitted.--The Secretary may, from 
                        time to time (but not later than July 1, 2007), 
                        publish on such website (without notice or 
                        opportunity for public comment) modifications 
                        or refinements (such as code additions, 
                        corrections, or revisions) for the application 
                        of quality measures previously published under 
                        clause (i), but may not, under this clause, 
                        change the quality measures under the reporting 
                        system.
                            ``(iii) Implementation.--Notwithstanding 
                        any other provision of law, the Secretary may 
                        implement by program instruction or otherwise 
                        this subsection for 2007.
                    ``(B) For 2008.--
                            ``(i) In general.--For purposes of 
                        reporting data on quality measures for covered 
                        professional services furnished during 2008, 
                        the quality measures specified under this 
                        paragraph for covered professional services 
                        shall be measures that have been adopted or 
                        endorsed by a consensus organization (such as 
                        the National Quality Forum or AQA), that 
                        include measures that have been submitted by a 
                        physician specialty, and that the Secretary 
                        identifies as having used a consensus-based 
                        process for developing such measures. Such 
                        measures shall include structural measures, 
                        such as the use of electronic health records 
                        and electronic prescribing technology.
                            ``(ii) Proposed set of measures.--Not later 
                        than August 15, 2007, the Secretary shall 
                        publish in the Federal Register a proposed set 
                        of quality measures that the Secretary 
                        determines are described in clause (i) and 
                        would be appropriate for eligible professionals 
                        to use to submit data to the Secretary in 2008. 
                        The Secretary shall provide for a period of 
                        public comment on such set of measures.
                            ``(iii) Final set of measures.--Not later 
                        than November 15, 2007, the Secretary shall 
                        publish in the Federal Register a final set of 
                        quality measures that the Secretary determines 
                        are described in clause (i) and would be 
                        appropriate for eligible professionals to use 
                        to submit data to the Secretary in 2008.
            ``(3) Covered professional services and eligible 
        professionals defined.--For purposes of this subsection:
                    ``(A) Covered professional services.--The term 
                `covered professional services' means services for 
                which payment is made under, or is based on, the fee 
                schedule established under this section and which are 
                furnished by an eligible professional.
                    ``(B) Eligible professional.--The term `eligible 
                professional' means any of the following:
                            ``(i) A physician.
                            ``(ii) A practitioner described in section 
                        1842(b)(18)(C).
                            ``(iii) A physical or occupational 
                        therapist or a qualified speech-language 
                        pathologist.
            ``(4) Use of registry-based reporting.--As part of the 
        publication of proposed and final quality measures for 2008 
        under clauses (ii) and (iii) of paragraph (2)(B), the Secretary 
        shall address a mechanism whereby an eligible professional may 
        provide data on quality measures through an appropriate medical 
        registry (such as the Society of Thoracic Surgeons National 
        Database), as identified by the Secretary.
            ``(5) Identification units.--For purposes of applying this 
        subsection, the Secretary may identify eligible professionals 
        through billing units, which may include the use of the 
        Provider Identification Number, the unique physician 
        identification number (described in section 1833(q)(1)), the 
        taxpayer identification number, or the National Provider 
        Identifier. For purposes of applying this subsection for 2007, 
        the Secretary shall use the taxpayer identification number as 
        the billing unit.
            ``(6) Education and outreach.--The Secretary shall provide 
        for education and outreach to eligible professionals on the 
        operation of this subsection.
            ``(7) Limitations on review.--There shall be no 
        administrative or judicial review under section 1869, section 
        1878, or otherwise, of the development and implementation of 
        the reporting system under paragraph (1), including 
        identification of quality measures under paragraph (2) and the 
        application of paragraphs (4) and (5).
            ``(8) Implementation.--The Secretary shall carry out this 
        subsection acting through the Administrator of the Centers for 
        Medicare & Medicaid Services.''.
    (c) Transitional Bonus Incentive Payments for Quality Reporting in 
2007.--
            (1) In general.--With respect to covered professional 
        services furnished during a reporting period (as defined in 
        paragraph (6)(C)) by an eligible professional, if--
                    (A) there are any quality measures that have been 
                established under the physician reporting system that 
                are applicable to any such services furnished by such 
                professional for such period, and
                    (B) the eligible professional satisfactorily 
                submits (as determined under paragraph (2)) to the 
                Secretary data on such quality measures in accordance 
                with such reporting system for such reporting period,
        in addition to the amount otherwise paid under part B of title 
        XVIII of the Social Security Act, subject to paragraph (3), 
        there also shall be paid to the eligible professional (or to an 
        employer or facility in the cases described in clause (A) of 
        section 1842(b)(6) of the Social Security Act (42 U.S.C. 
        1395u(b)(6))) from the Federal Supplementary Medical Insurance 
        Trust Fund established under section 1841 of such Act (42 
        U.S.C. 1395t) an amount equal to 1.5 percent of the Secretary's 
        estimate (based on claims submitted not later than two months 
        after the end of the reporting period) of the allowed charges 
        under such part for all such covered professional services 
        furnished during the reporting period.
            (2) Satisfactory reporting described.--For purposes of 
        paragraph (1), an eligible professional shall be treated as 
        satisfactorily submitting data on quality measures for covered 
        professional services for a reporting period if quality 
        measures have been reported as follows:
                    (A) Three or fewer quality measures applicable.--If 
                there are no more than 3 quality measures that are 
                provided under the physician reporting system and that 
                are applicable to such services of such professional 
                furnished during the period, each such quality measure 
                has been reported under such system in at least 80 
                percent of the cases in which such measure is 
                reportable under the system.
                    (B) Four or more quality measures applicable.--If 
                there are 4 or more quality measures that are provided 
                under the physician reporting system and that are 
                applicable to such services of such professional 
                furnished during the period, at least 3 such quality 
                measures have been reported under such system in at 
                least 80 percent of the cases in which the respective 
                measure is reportable under the system.
            (3) Payment limitation.--
                    (A) In general.--In no case shall the total payment 
                made under this subsection to an eligible professional 
                (or to an employer or facility in the cases described 
                in clause (A) of section 1842(b)(6) of the Social 
                Security Act) exceed the product of--
                            (i) the total number of quality measures 
                        for which data are submitted under the 
                        physician reporting system for covered 
                        professional services of such professional that 
                        are furnished during the reporting period; and
                            (ii) 300 percent of the average per measure 
                        payment amount specified in subparagraph (B).
                    (B) Average per measure payment amount specified.--
                The average per measure payment amount specified in 
                this subparagraph is an amount, estimated by the 
                Secretary (based on claims submitted not later than two 
                months after the end of the reporting period), equal 
                to--
                            (i) the total of the amount of allowed 
                        charges under part B of title XVIII of the 
                        Social Security Act for all covered 
                        professional services furnished during the 
                        reporting period on claims for which quality 
                        measures are reported under the physician 
                        reporting system; divided by
                            (ii) the total number of quality measures 
                        for which data are reported under such system 
                        for covered professional services furnished 
                        during the reporting period.
            (4) Form of payment.--The payment under this subsection 
        shall be in the form of a single consolidated payment.
            (5) Application.--
                    (A) Physician reporting system rules.--Paragraphs 
                (5), (6), and (8) of section 1848(k) of the Social 
                Security Act, as added by subsection (b), shall apply 
                for purposes of this subsection in the same manner as 
                they apply for purposes of such section.
                    (B) Coordination with other bonus payments.--The 
                provisions of this subsection shall not be taken into 
                account in applying subsections (m) and (u) of section 
                1833 of the Social Security Act (42 U.S.C. 1395l) and 
                any payment under such subsections shall not be taken 
                into account in computing allowable charges under this 
                subsection.
                    (C) Implementation.--Notwithstanding any other 
                provision of law, the Secretary may implement by 
                program instruction or otherwise this subsection.
                    (D) Validation.--
                            (i) In general.--Subject to the succeeding 
                        provisions of this subparagraph, for purposes 
                        of determining whether a measure is applicable 
                        to the covered professional services of an 
                        eligible professional under paragraph (2), the 
                        Secretary shall presume that if an eligible 
                        professional submits data for a measure, such 
                        measure is applicable to such professional.
                            (ii) Method.--The Secretary shall validate 
                        (by sampling or other means as the Secretary 
                        determines to be appropriate) whether measures 
                        applicable to covered professional services of 
                        an eligible professional have been reported.
                            (iii) Denial of payment authority.--If the 
                        Secretary determines that an eligible 
                        professional has not reported measures 
                        applicable to covered professional services of 
                        such professional, the Secretary shall not pay 
                        the bonus incentive payment.
                    (E) Limitations on review.--
                            (i) In general.--There shall be no 
                        administrative or judicial review under section 
                        1869 or 1878 of the Social Security Act or 
                        otherwise of--
                                    (I) the determination of measures 
                                applicable to services furnished by 
                                eligible professionals under this 
                                subsection;
                                    (II) the determination of 
                                satisfactory reporting under paragraph 
                                (2);
                                    (III) the determination of the 
                                payment limitation under paragraph (3); 
                                and
                                    (IV) the determination of the bonus 
                                incentive payment under this 
                                subsection.
                            (ii) Treatment of determinations.--A 
                        determination under this subsection shall not 
                        be treated as a determination for purposes of 
                        section 1869 of the Social Security Act.
            (6) Definitions.--For purposes of this subsection:
                    (A) Eligible professional; covered professional 
                services.--The terms ``eligible professional'' and 
                ``covered professional services'' have the meanings 
                given such terms in section 1848(k)(3) of the Social 
                Security Act, as added by subsection (b).
                    (B) Physician reporting system.--The term 
                ``physician reporting system'' means the system 
                established under section 1848(k) of the Social 
                Security Act, as added by subsection (b).
                    (C) Reporting period.--The term ``reporting 
                period'' means the period beginning on July 1, 2007, 
                and ending on December 31, 2007.
                    (D) Secretary.--The term ``Secretary'' means the 
                Secretary of Health and Human Services.
    (d) Physician Assistance and Quality Initiative Fund.--Section 1848 
of the Social Security Act, as amended by subsection (b), is further 
amended by adding at the end the following new subsection:
    ``(l) Physician Assistance and Quality Initiative Fund.--
            ``(1) Establishment.--The Secretary shall establish under 
        this subsection a Physician Assistance and Quality Initiative 
        Fund (in this subsection referred to as the `Fund') which shall 
        be available to the Secretary for physician payment and quality 
        improvement initiatives, which may include application of an 
        adjustment to the update of the conversion factor under 
        subsection (d).
            ``(2) Funding.--
                    ``(A) Amount available.--There shall be available 
                to the Fund for expenditures an amount equal to 
                $1,350,000,000.
                    ``(B) Timely obligation of all available funds for 
                services furnished during 2008.--The Secretary shall 
                provide for expenditures from the Fund in a manner 
                designed to provide (to the maximum extent feasible) 
                for the obligation of the entire amount specified in 
                subparagraph (A) for payment with respect to 
                physicians' services furnished during 2008.
                    ``(C) Payment from trust fund.--The amount 
                specified in subparagraph (A) shall be available to the 
                Fund, as expenditures are made from the Fund, from the 
                Federal Supplementary Medical Insurance Trust Fund 
                under section 1841.
                    ``(D) Funding limitation.--Amounts in the Fund 
                shall be available in advance of appropriations in 
                accordance with subparagraph (B) but only if the total 
                amount obligated from the Fund does not exceed the 
                amount available to the Fund under subparagraph (A). 
                The Secretary may obligate funds from the Fund only if 
                the Secretary determines (and the Chief Actuary of the 
                Centers for Medicare & Medicaid Services and the 
                appropriate budget officer certify) that there are 
                available in the Fund sufficient amounts to cover all 
                such obligations incurred consistent with the previous 
                sentence.
                    ``(E) Construction.--In the case that expenditures 
                from the Fund are applied to, or otherwise affect, a 
                conversion factor under subsection (d) for a year, the 
                conversion factor under such subsection shall be 
                computed for a subsequent year as if such application 
                or effect had never occurred.''.
    (e) Implementation.--For purposes of implementing the provisions 
of, and amendments made by, this section, the Secretary of Health and 
Human Services shall provide for the transfer, from the Federal 
Supplementary Medical Insurance Trust Fund established under section 
1841 of the Social Security Act (42 U.S.C. 1395t), of $60,000,000 to 
the Centers for Medicare & Medicaid Services Program Management Account 
for the period of fiscal years 2007, 2008, and 2009.

SEC. 102. EXTENSION OF FLOOR ON MEDICARE WORK GEOGRAPHIC ADJUSTMENT.

    Section 1848(e)(1)(E) of the Social Security Act (42 U.S.C. 1395w-
4(e)(1)(E)) is amended by striking ``before January 1, 2007'' and 
inserting ``before January 1, 2008''.

SEC. 103. UPDATE TO THE COMPOSITE RATE COMPONENT OF THE BASIC CASE-MIX 
              ADJUSTED PROSPECTIVE PAYMENT SYSTEM FOR DIALYSIS 
              SERVICES.

    (a) In General.--Section 1881(b)(12)(G) of the Social Security Act 
(42 U.S.C. 1395rr(b)(12)(G)) is amended to read as follows:
    ``(G) The Secretary shall increase the amount of the composite rate 
component of the basic case-mix adjusted system under subparagraph (B) 
for dialysis services--
            ``(i) furnished on or after January 1, 2006, and before 
        April 1, 2007, by 1.6 percent above the amount of such 
        composite rate component for such services furnished on 
        December 31, 2005; and
            ``(ii) furnished on or after April 1, 2007, by 1.6 percent 
        above the amount of such composite rate component for such 
        services furnished on March 31, 2007.''.
    (b) GAO Report on Home Dialysis Payment.--Not later than January 1, 
2009, the Comptroller General of the United States shall submit to 
Congress a report on the costs for home hemodialysis treatment and 
patient training for both home hemodialysis and peritoneal dialysis. 
Such report shall also include recommendations for a payment 
methodology for payment under section 1881 of the Social Security Act 
(42 U.S.C. 1395rr) that measures, and is based on, the costs of 
providing such services and takes into account the case mix of 
patients.

SEC. 104. EXTENSION OF TREATMENT OF CERTAIN PHYSICIAN PATHOLOGY 
              SERVICES UNDER MEDICARE.

    Section 542(c) of the Medicare, Medicaid, and SCHIP Benefits 
Improvement and Protection Act of 2000 (as enacted into law by section 
1(a)(6) of Public Law 106-554), as amended by section 732 of the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(Public Law 108-173), is amended by striking ``and 2006'' and inserting 
``, 2006, and 2007''.

SEC. 105. EXTENSION OF MEDICARE REASONABLE COSTS PAYMENTS FOR CERTAIN 
              CLINICAL DIAGNOSTIC LABORATORY TESTS FURNISHED TO 
              HOSPITAL PATIENTS IN CERTAIN RURAL AREAS.

    Effective as if included in the enactment of section 416 of the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(42 U.S.C. 1395l-4), subsection (b) of such section is amended by 
striking ``2-year period'' and inserting ``3-year period''.

SEC. 106. HOSPITAL MEDICARE REPORTS AND CLARIFICATIONS.

    (a) Correction of Mid-Year Reclassification Expiration.--
Notwithstanding any other provision of law, in the case of a subsection 
(d) hospital (as defined for purposes of section 1886 of the Social 
Security Act (42 U.S.C. 1395ww)) with respect to which a 
reclassification of its wage index for purposes of such section would 
(but for this subsection) expire on March 31, 2007, such 
reclassification of such hospital shall be extended through September 
30, 2007. The previous sentence shall not be effected in a budget-
neutral manner.
    (b) Revision of the Medicare Wage Index Classification System.--
            (1) Medpac report.--
                    (A) In general.--The Medicare Payment Advisory 
                Commission shall submit to Congress, by not later than 
                June 30, 2007, a report on its study of the wage index 
                classification system applied under Medicare 
                prospective payment systems, including under section 
                1886(d)(3)(E) of the Social Security Act (42 U.S.C. 
                1395ww(d)(3)(E)). Such report shall include any 
                alternatives the Commission recommends to the method to 
                compute the wage index under such section.
                    (B) Funding.--Out of any funds in the Treasury not 
                otherwise appropriated, there are appropriated to the 
                Medicare Payment Advisory Commission, $2,000,000 for 
                fiscal year 2007 to carry out this paragraph.
            (2) Proposal to revise the hospital wage index 
        classification system.--The Secretary of Health and Human 
        Services, taking into account the recommendations described in 
        the report under paragraph (1), shall include in the proposed 
        rule published under section 1886(e)(5)(A) of the Social 
        Security Act (42 U.S.C. 1395ww(e)(5)(A)) for fiscal year 2009 
        one or more proposals to revise the wage index adjustment 
        applied under section 1886(d)(3)(E) of such Act (42 U.S.C. 
        1395ww(d)(3)(E)) for purposes of the Medicare prospective 
        payment system for inpatient hospital services. Such proposal 
        (or proposals) shall consider each of the following:
                    (A) Problems associated with the definition of 
                labor markets for purposes of such wage index 
                adjustment.
                    (B) The modification or elimination of geographic 
                reclassifications and other adjustments.
                    (C) The use of Bureau of Labor Statistics data, or 
                other data or methodologies, to calculate relative 
                wages for each geographic area involved.
                    (D) Minimizing variations in wage index adjustments 
                between and within Metropolitan Statistical Areas and 
                Statewide rural areas.
                    (E) The feasibility of applying all components of 
                the proposal to other settings, including home health 
                agencies and skilled nursing facilities.
                    (F) Methods to minimize the volatility of wage 
                index adjustments, while maintaining the principle of 
                budget neutrality in applying such adjustments.
                    (G) The effect that the implementation of the 
                proposal would have on health care providers and on 
                each region of the country.
                    (H) Methods for implementing the proposal, 
                including methods to phase-in such implementation.
                    (I) Issues relating to occupational mix, such as 
                staffing practices and any evidence on the effect on 
                quality of care and patient safety and any 
                recommendations for alternative calculations.
    (c) Elimination of Unnecessary Report.--Section 1886 of the Social 
Security Act (42 U.S.C. 1395ww) is amended--
            (1) in subsection (d)(4)(C), by striking clause (iv); and
            (2) in subsection (e), by striking paragraph (3).

SEC. 107. PAYMENT FOR BRACHYTHERAPY.

    (a) Extension of Payment Rule.--Section 1833(t)(16)(C) of the 
Social Security Act (42 U.S.C. 1395l(t)(16)(C)) is amended by striking 
``January 1, 2007'' and inserting ``January 1, 2008''.
    (b) Establishment of Separate Payment Groups.--
            (1) In general.--Section 1833(t)(2)(H) of such Act (42 
        U.S.C. 1395l(t)(2)(H)) is amended by inserting ``and for 
        stranded and non-stranded devices furnished on or after July 1, 
        2007'' before the period at the end.
            (2) Implementation.--The Secretary of Health and Human 
        Services may implement the amendment made by paragraph (1) by 
        program instruction or otherwise.

SEC. 108. PAYMENT PROCESS UNDER THE COMPETITIVE ACQUISITION PROGRAM 
              (CAP).

    (a) In General.--Section 1847B(a)(3) of the Social Security Act (42 
U.S.C. 1395w-3b(a)(3)) is amended--
            (1) in subparagraph (A)(iii), by striking ``and 
        biologicals'' and all that follows and inserting ``and 
        biologicals shall be made only to such contractor upon receipt 
        of a claim for a drug or biological supplied by the contractor 
        for administration to a beneficiary.''; and
            (2) by adding at the end the following new subparagraph:
                    ``(D) Post-payment review process.--The Secretary 
                shall establish (by program instruction or otherwise) a 
                post-payment review process (which may include the use 
                of statistical sampling) to assure that payment is made 
                for a drug or biological under this section only if the 
                drug or biological has been administered to a 
                beneficiary. The Secretary shall recoup, offset, or 
                collect any overpayments determined by the Secretary 
                under such process.''.
    (b) Construction.--Nothing in this section shall be construed as--
            (1) requiring the conduct of any additional competition 
        under subsection (b)(1) of section 1847B of the Social Security 
        Act (42 U.S.C. 1395w-3b); or
            (2) requiring any additional process for elections by 
        physicians under subsection (a)(1)(A)(ii) of such section or 
        additional selection by a selecting physician of a contractor 
        under subsection (a)(5) of such section.
    (c) Effective Date.--The amendments made by subsection (a) shall 
apply to payment for drugs and biologicals supplied under section 1847B 
of the Social Security Act (42 U.S.C. 1395w-3b)--
            (1) on or after April 1, 2007; and
            (2) on or after July 1, 2006, and before April 1, 2007, for 
        claims that are unpaid as of April 1, 2007.

SEC. 109. QUALITY REPORTING FOR HOSPITAL OUTPATIENT SERVICES AND 
              AMBULATORY SURGICAL CENTER SERVICES.

    (a) Outpatient Hospital Services.--
            (1) In general.--Section 1833(t) of the Social Security Act 
        (42 U.S.C. 1395l(t)) is amended--
                    (A) in paragraph (3)(C)(iv), by inserting ``subject 
                to paragraph (17),'' after ``For purposes of this 
                subparagraph,''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(17) Quality reporting.--
                    ``(A) Reduction in update for failure to report.--
                            ``(i) In general.--For purposes of 
                        paragraph (3)(C)(iv) for 2009 and each 
                        subsequent year, in the case of a subsection 
                        (d) hospital (as defined in section 
                        1886(d)(1)(B)) that does not submit, to the 
                        Secretary in accordance with this paragraph, 
                        data required to be submitted on measures 
                        selected under this paragraph with respect to 
                        such a year, the OPD fee schedule increase 
                        factor under paragraph (3)(C)(iv) for such year 
                        shall be reduced by 2.0 percentage points.
                            ``(ii) Non-cumulative application.--A 
                        reduction under this subparagraph shall apply 
                        only with respect to the year involved and the 
                        Secretary shall not take into account such 
                        reduction in computing the OPD fee schedule 
                        increase factor for a subsequent year.
                    ``(B) Form and manner of submission.--Each 
                subsection (d) hospital shall submit data on measures 
                selected under this paragraph to the Secretary in a 
                form and manner, and at a time, specified by the 
                Secretary for purposes of this paragraph.
                    ``(C) Development of outpatient measures.--
                            ``(i) In general.--The Secretary shall 
                        develop measures that the Secretary determines 
                        to be appropriate for the measurement of the 
                        quality of care (including medication errors) 
                        furnished by hospitals in outpatient settings 
                        and that reflect consensus among affected 
                        parties and, to the extent feasible and 
                        practicable, shall include measures set forth 
                        by one or more national consensus building 
                        entities.
                            ``(ii) Construction.--Nothing in this 
                        paragraph shall be construed as preventing the 
                        Secretary from selecting measures that are the 
                        same as (or a subset of) the measures for which 
                        data are required to be submitted under section 
                        1886(b)(3)(B)(viii).
                    ``(D) Replacement of measures.--For purposes of 
                this paragraph, the Secretary may replace any measures 
                or indicators in appropriate cases, such as where all 
                hospitals are effectively in compliance or the measures 
                or indicators have been subsequently shown not to 
                represent the best clinical practice.
                    ``(E) Availability of data.--The Secretary shall 
                establish procedures for making data submitted under 
                this paragraph available to the public. Such procedures 
                shall ensure that a hospital has the opportunity to 
                review the data that are to be made public with respect 
                to the hospital prior to such data being made public. 
                The Secretary shall report quality measures of process, 
                structure, outcome, patients' perspectives on care, 
                efficiency, and costs of care that relate to services 
                furnished in outpatient settings in hospitals on the 
                Internet website of the Centers for Medicare & Medicaid 
                Services.''.
            (2) Conforming amendment.--Section 1886(b)(3)(B)(viii)(III) 
        of such Act (42 U.S.C. 1395ww(b)(3)(B)(viii)(III)) is amended 
        by inserting ``(including medication errors)'' after ``quality 
        of care''.
    (b) Application to Ambulatory Surgical Centers.--Section 1833(i) of 
such Act (42 U.S.C. 1935l(i)) is amended--
            (1) in paragraph (2)(D), by redesignating clause (iv) as 
        clause (v) and by inserting after clause (iii) the following 
        new clause:
    ``(iv) The Secretary may implement such system in a manner so as to 
provide for a reduction in any annual update for failure to report on 
quality measures in accordance with paragraph (7).''; and
            (2) by adding at the end the following new paragraph:
    ``(7)(A) For purposes of paragraph (2)(D)(iv), the Secretary may 
provide, in the case of an ambulatory surgical center that does not 
submit, to the Secretary in accordance with this paragraph, data 
required to be submitted on measures selected under this paragraph with 
respect to a year, any annual increase provided under the system 
established under paragraph (2)(D) for such year shall be reduced by 
2.0 percentage points. A reduction under this subparagraph shall apply 
only with respect to the year involved and the Secretary shall not take 
into account such reduction in computing any annual increase factor for 
a subsequent year.
    ``(B) Except as the Secretary may otherwise provide, the provisions 
of subparagraphs (B), (C), (D), and (E) of paragraph (17) of section 
1833(t) shall apply with respect to services of ambulatory surgical 
centers under this paragraph in a similar manner to the manner in which 
they apply under such paragraph and, for purposes of this subparagraph, 
any reference to a hospital, outpatient setting, or outpatient hospital 
services is deemed a reference to an ambulatory surgical center, the 
setting of such a center, or services of such a center, 
respectively.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to payment for services furnished on or after January 1, 2009.

SEC. 110. REPORTING OF ANEMIA QUALITY INDICATORS FOR MEDICARE PART B 
              CANCER ANTI-ANEMIA DRUGS.

    (a) In General.--Section 1842 of the Social Security Act (42 U.S.C. 
1395u) is amended by adding at the end the following new subsection:
    ``(u) Each request for payment, or bill submitted, for a drug 
furnished to an individual for the treatment of anemia in connection 
with the treatment of cancer shall include (in a form and manner 
specified by the Secretary) information on the hemoglobin or hematocrit 
levels for the individual.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to drugs furnished on or after January 1, 2008. The Secretary of 
Health and Human Services shall address the implementation of such 
amendment in the rulemaking process under section 1848 of the Social 
Security Act (42 U.S.C. 1395w-4) for payment for physicians' services 
for 2008, consistent with the previous sentence.

SEC. 111. CLARIFICATION OF HOSPICE SATELLITE DESIGNATION.

    Notwithstanding any other provision of law, for purposes of 
calculating the hospice aggregate payment cap for 2004, 2005, and 2006 
for a hospice program under section 1814(i)(2)(A) of the Social 
Security Act (42 U.S.C. 1395f(i)(2)(A)) for hospice care provided on or 
after November 1, 2003, and before December 27, 2005, Medicare provider 
number 29-1511 is deemed to be a multiple location of Medicare provider 
number 29-1500.

               TITLE II--MEDICARE BENEFICIARY PROTECTIONS

SEC. 201. EXTENSION OF EXCEPTIONS PROCESS FOR MEDICARE THERAPY CAPS.

    Section 1833(g)(5) of the Social Security Act (42 U.S.C. 
1395l(g)(5)) is amended by striking ``2006'' and inserting ``the period 
beginning on January 1, 2006, and ending on December 31, 2007,''.

SEC. 202. PAYMENT FOR ADMINISTRATION OF PART D VACCINES.

    (a) Transition for 2007.--Notwithstanding any other provision of 
law, in the case of a vaccine that is a covered part D drug under 
section 1860D-2(e) of the Social Security Act (42 U.S.C. 1395w-102(e)) 
and that is administered during 2007, the administration of such 
vaccine shall be paid under part B of title XVIII of such Act as if it 
were the administration of a vaccine described in section 
1861(s)(10)(B) of such Act (42 U.S.C. 1395w(s)(10)(B)).
    (b) Administration Included in Coverage of Covered Part D Drugs 
Beginning in 2008.--Section 1860D-2(e)(1) of the Social Security Act 
(42 U.S.C. 1395w-102(e)(1)) is amended, in the matter following 
subparagraph (B), by inserting ``(and, for vaccines administered on or 
after January 1, 2008, its administration)'' after ``Public Health 
Service Act''.

SEC. 203. OIG STUDY OF NEVER EVENTS.

    (a) Study.--
            (1) In general.--The Inspector General in the Department of 
        Health and Human Services shall conduct a study on--
                    (A) incidences of never events for Medicare 
                beneficiaries, including types of such events and 
                payments by any party for such events;
                    (B) the extent to which the Medicare program paid, 
                denied payment, or recouped payment for services 
                furnished in connection with such events and the extent 
                to which beneficiaries paid for such services; and
                    (C) the administrative processes of the Centers for 
                Medicare & Medicaid Services to detect such events and 
                to deny or recoup payments for services furnished in 
                connection with such an event.
            (2) Conduct of study.--In conducting the study under 
        paragraph (1), the Inspector General--
                    (A) shall audit a representative sample of claims 
                and medical records of Medicare beneficiaries to 
                identify never events and any payment (or recoupment) 
                for services furnished in connection with such events;
                    (B) may request access to such claims and records 
                from any Medicare contractor; and
                    (C) shall not release individually identifiable 
                information or facility-specific information.
    (b) Report.--Not later than 2 years after the date of the enactment 
of this Act, the Inspector General shall submit a report to Congress on 
the study conducted under this section. Such report shall include 
recommendations for such legislation and administrative action, such as 
a noncoverage policy or denial of payments, as the Inspector General 
determines appropriate, including--
            (1) recommendations on processes to identify never events 
        and to deny or recoup payments for services furnished in 
        connection with such events; and
            (2) a recommendation on a potential process (or processes) 
        for public disclosure of never events which--
                    (A) will ensure protection of patient privacy; and
                    (B) will permit the use of the disclosed 
                information for a root cause analysis to inform the 
                public and the medical community about safety issues 
                involved.
    (c) Funding.--Out of any funds in the Treasury not otherwise 
appropriated, there are appropriated to the Inspector General of the 
Department of Health and Human Services $3,000,000 to carry out this 
section, to be available until January 1, 2010.
    (d) Never Events Defined.--For purposes of this section, the term 
``never event'' means an event that is listed and endorsed as a serious 
reportable event by the National Quality Forum as of November 16, 2006.

SEC. 204. MEDICARE MEDICAL HOME DEMONSTRATION PROJECT.

    (a) In General.--The Secretary of Health and Human Services (in 
this section referred to as the ``Secretary'') shall establish under 
title XVIII of the Social Security Act a medical home demonstration 
project (in this section referred to as the ``project'') to redesign 
the health care delivery system to provide targeted, accessible, 
continuous and coordinated, family-centered care to high-need 
populations and under which--
            (1) care management fees are paid to persons performing 
        services as personal physicians; and
            (2) incentive payments are paid to physicians participating 
        in practices that provide services as a medical home under 
        subsection (d).
For purposes of this subsection, the term ``high-need population'' 
means individuals with multiple chronic illnesses that require regular 
medical monitoring, advising, or treatment.
    (b) Details.--
            (1) Duration; scope.--The project shall operate during a 
        period of three years and shall include urban, rural, and 
        underserved areas in a total of no more than 8 States.
            (2) Encouraging participation of small physician 
        practices.--The project shall be designed to include the 
        participation of physicians in practices with fewer than three 
        full-time equivalent physicians, as well as physicians in 
        larger practices particularly in rural and underserved areas.
    (c) Personal Physician Defined.--
            (1) In general.--For purposes of this section, the term 
        ``personal physician'' means a physician (as defined in section 
        1861(r)(1) of the Social Security Act (42 U.S.C. 1395x(r)(1)) 
        who--
                    (A) meets the requirements described in paragraph 
                (2); and
                    (B) performs the services described in paragraph 
                (3).
        Nothing in this paragraph shall be construed as preventing such 
        a physician from being a specialist or subspecialist for an 
        individual requiring ongoing care for a specific chronic 
        condition or multiple chronic conditions (such as severe 
        asthma, complex diabetes, cardiovascular disease, rheumatologic 
        disorder) or for an individual with a prolonged illness.
            (2) Requirements.--The requirements described in this 
        paragraph for a personal physician are as follows:
                    (A) The physician is a board certified physician 
                who provides first contact and continuous care for 
                individuals under the physician's care.
                    (B) The physician has the staff and resources to 
                manage the comprehensive and coordinated health care of 
                each such individual.
            (3) Services performed.--A personal physician shall perform 
        or provide for the performance of at least the following 
        services:
                    (A) Advocates for and provides ongoing support, 
                oversight, and guidance to implement a plan of care 
                that provides an integrated, coherent, cross-discipline 
                plan for ongoing medical care developed in partnership 
                with patients and including all other physicians 
                furnishing care to the patient involved and other 
                appropriate medical personnel or agencies (such as home 
                health agencies).
                    (B) Uses evidence-based medicine and clinical 
                decision support tools to guide decision-making at the 
                point-of-care based on patient-specific factors.
                    (C) Uses health information technology, that may 
                include remote monitoring and patient registries, to 
                monitor and track the health status of patients and to 
                provide patients with enhanced and convenient access to 
                health care services.
                    (D) Encourages patients to engage in the management 
                of their own health through education and support 
                systems.
    (d) Medical Home Defined.--For purposes of this section, the term 
``medical home'' means a physician practice that--
            (1) is in charge of targeting beneficiaries for 
        participation in the project; and
            (2) is responsible for--
                    (A) providing safe and secure technology to promote 
                patient access to personal health information;
                    (B) developing a health assessment tool for the 
                individuals targeted; and
                    (C) providing training programs for personnel 
                involved in the coordination of care.
    (e) Payment Mechanisms.--
            (1) Personal physician care management fee.--Under the 
        project, the Secretary shall provide for payment under section 
        1848 of the Social Security Act (42 U.S.C. 1395w-4) of a care 
        management fee to personal physicians providing care management 
        under the project. Under such section and using the relative 
        value scale update committee (RUC) process under such section, 
        the Secretary shall develop a care management fee code for such 
        payments and a value for such code.
            (2) Medical home sharing in savings.--The Secretary shall 
        provide for payment under the project of a medical home based 
        on the payment methodology applied to physician group practices 
        under section 1866A of the Social Security Act (42 U.S.C. 
        1395cc-1). Under such methodology, 80 percent of the reductions 
        in expenditures under title XVIII of the Social Security Act 
        resulting from participation of individuals that are 
        attributable to the medical home (as reduced by the total care 
        managements fees paid to the medical home under the project) 
        shall be paid to the medical home. The amount of such 
        reductions in expenditures shall be determined by using 
        assumptions with respect to reductions in the occurrence of 
        health complications, hospitalization rates, medical errors, 
        and adverse drug reactions.
            (3) Source.--Payments paid under the project shall be made 
        from the Federal Supplementary Medical Insurance Trust Fund 
        under section 1841 of the Social Security Act (42 U.S.C. 
        1395t).
    (f) Evaluations and Reports.--
            (1) Annual interim evaluations and reports.--For each year 
        of the project, the Secretary shall provide for an evaluation 
        of the project and shall submit to Congress, by a date 
        specified by the Secretary, a report on the project and on the 
        evaluation of the project for each such year.
            (2) Final evaluation and report.--The Secretary shall 
        provide for an evaluation of the project and shall submit to 
        Congress, not later than one year after completion of the 
        project, a report on the project and on the evaluation of the 
        project.

SEC. 205. MEDICARE DRA TECHNICAL CORRECTIONS.

    (a) PACE Clarification.--Paragraph (7) of section 5302(c) of the 
Deficit Reduction Act of 2005 (42 U.S.C. 1395eee note) is amended to 
read as follows:
            ``(7) Appropriation.--
                    ``(A) In general.--Out of funds in the Treasury not 
                otherwise appropriated, there are appropriated to the 
                Secretary $10,000,000 to carry out this subsection for 
                the period of fiscal years 2006 through 2010.
                    ``(B) Availability.--Funds appropriated under 
                subparagraph (A) shall remain available for obligation 
                through fiscal year 2010.''.
    (b) Miscellaneous Technical Corrections.--
            (1) Correction of margin (section 5001).--Section 
        1886(b)(3)(B) of the Social Security Act (42 U.S.C. 
        1395ww(b)(3)(B)), as amended by section 5001(a) of the Deficit 
        Reduction Act of 2005 (Public Law 109-171), is amended by 
        moving clause (viii) (including subclauses (I) through (VII) of 
        such clause) 6 ems to the left.
            (2) Reference correction (section 5114).--Section 
        5114(a)(2) of the Deficit Reduction Act of 2005 (Public Law 
        109-171), in the matter preceding subparagraph (A), is amended 
        by striking ``1842(b)(6)(F) of such Act (42 U.S.C. 
        1395u(b)(6)(F))'' and inserting ``1842(b)(6) of such Act (42 
        U.S.C. 1395u(b)(6))''.
    (c) Effective Date.--The amendments made by this section shall take 
effect as if included in the enactment of the Deficit Reduction Act of 
2005 (Public Law 109-171).

             TITLE III--MEDICARE PROGRAM INTEGRITY EFFORTS

SEC. 301. OFFSETTING ADJUSTMENT IN MEDICARE ADVANTAGE STABILIZATION 
              FUND.

    Section 1858(e)(2)(A)(i) of the Social Security Act (42 U.S.C. 
1395w-27a(e)(2)(A)(i)) is amended by striking ``2007,'' and 
``$10,000,000,000'' and inserting ``2012,'' and ``$3,500,000,000'', 
respectively.

SEC. 302. EXTENSION AND EXPANSION OF RECOVERY AUDIT CONTRACTOR PROGRAM 
              UNDER THE MEDICARE INTEGRITY PROGRAM.

    (a) In General.--Section 1893 of the Social Security Act (42 U.S.C. 
1395ddd) is amended by adding at the end the following new subsection:
    ``(h) Use of Recovery Audit Contractors.--
            ``(1) In general.--Under the Program, the Secretary shall 
        enter into contracts with recovery audit contractors in 
        accordance with this subsection for the purpose of identifying 
        underpayments and overpayments and recouping overpayments under 
        this title with respect to all services for which payment is 
        made under part A or B. Under the contracts--
                    ``(A) payment shall be made to such a contractor 
                only from amounts recovered;
                    ``(B) from such amounts recovered, payment--
                            ``(i) shall be made on a contingent basis 
                        for collecting overpayments; and
                            ``(ii) may be made in such amounts as the 
                        Secretary may specify for identifying 
                        underpayments; and
                    ``(C) the Secretary shall retain a portion of the 
                amounts recovered which shall be available to the 
                program management account of the Centers for Medicare 
                & Medicaid Services for purposes of activities 
                conducted under the recovery audit program under this 
                subsection.
            ``(2) Disposition of remaining recoveries.--The amounts 
        recovered under such contracts that are not paid to the 
        contractor under paragraph (1) or retained by the Secretary 
        under paragraph (1)(C) shall be applied to reduce expenditures 
        under parts A and B.
            ``(3) Nationwide coverage.--The Secretary shall enter into 
        contracts under paragraph (1) in a manner so as to provide for 
        activities in all States under such a contract by not later 
        than January 1, 2010.
            ``(4) Audit and recovery periods.--Each such contract shall 
        provide that audit and recovery activities may be conducted 
        during a fiscal year with respect to payments made under part A 
        or B--
                    ``(A) during such fiscal year; and
                    ``(B) retrospectively (for a period of not more 
                than 4 fiscal years prior to such fiscal year).
            ``(5) Waiver.--The Secretary shall waive such provisions of 
        this title as may be necessary to provide for payment of 
        recovery audit contractors under this subsection in accordance 
        with paragraph (1).
            ``(6) Qualifications of contractors.--
                    ``(A) In general.--The Secretary may not enter into 
                a contract under paragraph (1) with a recovery audit 
                contractor unless the contractor has staff that has the 
                appropriate clinical knowledge of, and experience with, 
                the payment rules and regulations under this title or 
                the contractor has, or will contract with, another 
                entity that has such knowledgeable and experienced 
                staff.
                    ``(B) Ineligibility of certain contractors.--The 
                Secretary may not enter into a contract under paragraph 
                (1) with a recovery audit contractor to the extent the 
                contractor is a fiscal intermediary under section 1816, 
                a carrier under section 1842, or a medicare 
                administrative contractor under section 1874A.
                    ``(C) Preference for entities with demonstrated 
                proficiency.--In awarding contracts to recovery audit 
                contractors under paragraph (1), the Secretary shall 
                give preference to those risk entities that the 
                Secretary determines have demonstrated more than 3 
                years direct management experience and a proficiency 
                for cost control or recovery audits with private 
                insurers, health care providers, health plans, under 
                the Medicaid program under title XIX, or under this 
                title.
            ``(7) Construction relating to conduct of investigation of 
        fraud.--A recovery of an overpayment to a individual or entity 
        by a recovery audit contractor under this subsection shall not 
        be construed to prohibit the Secretary or the Attorney General 
        from investigating and prosecuting, if appropriate, allegations 
        of fraud or abuse arising from such overpayment.
            ``(8) Annual report.--The Secretary shall annually submit 
        to Congress a report on the use of recovery audit contractors 
        under this subsection. Each such report shall include 
        information on the performance of such contractors in 
        identifying underpayments and overpayments and recouping 
        overpayments, including an evaluation of the comparative 
        performance of such contractors and savings to the program 
        under this title.''.
    (b) Access to Coordination of Benefits Contractor Database.--The 
Secretary of Health and Human Services shall provide for access by 
recovery audit contractors conducting audit and recovery activities 
under section 1893(h) of the Social Security Act, as added by 
subsection (a), to the database of the Coordination of Benefits 
Contractor of the Centers for Medicare & Medicaid Services with respect 
to the audit and recovery periods described in paragraph (4) of such 
section 1893(h).
    (c) Conforming Amendments to Current Demonstration Project.--
Section 306 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (Public Law 108-173; 117 Stat. 2256) is 
amended--
            (1) in subsection (b)(2), by striking ``last for not longer 
        than 3 years'' and inserting ``continue until contracts are 
        entered into under section 1893(h) of the Social Security 
        Act''; and
            (2) by striking subsection (f).

SEC. 303. FUNDING FOR THE HEALTH CARE FRAUD AND ABUSE CONTROL ACCOUNT.

    (a) Departments of Health and Human Services and Justice.--
            (1) In general.--Section 1817(k)(3)(A)(i) of the Social 
        Security Act (42 U.S.C. 1395i(k)(3)(A)(i)) is amended--
                    (A) in the matter preceding subclause (I), by 
                inserting ``until expended'' after ``without further 
                appropriation'';
                    (B) in subclause (II), by striking ``and'' at the 
                end;
                    (C) in subclause (III)--
                            (i) by striking ``for each fiscal year 
                        after fiscal year 2003'' and inserting ``for 
                        each of fiscal years 2004, 2005, and 2006''; 
                        and
                            (ii) by striking the period at the end and 
                        inserting a semicolon; and
                    (D) by adding at the end the following new 
                subclauses:
                                    ``(IV) for each of fiscal years 
                                2007, 2008, 2009, and 2010, the limit 
                                under this clause for the preceding 
                                fiscal year, increased by the 
                                percentage increase in the consumer 
                                price index for all urban consumers 
                                (all items; United States city average) 
                                over the previous year; and
                                    ``(V) for each fiscal year after 
                                fiscal year 2010, the limit under this 
                                clause for fiscal year 2010.''.
            (2) Office of the inspector general of the department of 
        health and human services.--Section 1817(k)(3)(A)(ii) of such 
        Act (42 U.S.C. 1395i(k)(3)(A)(ii)) is amended--
                    (A) in subclause (VI), by striking ``and'' at the 
                end;
                    (B) in subclause (VII)--
                            (i) by striking ``for each fiscal year 
                        after fiscal year 2002'' and inserting ``for 
                        each of fiscal years 2003, 2004, 2005, and 
                        2006''; and
                            (ii) by striking the period at the end and 
                        inserting a semicolon; and
                    (C) by adding at the end the following new 
                subclauses:
                                    ``(VIII) for fiscal year 2007, not 
                                less than $160,000,000, increased by 
                                the percentage increase in the consumer 
                                price index for all urban consumers 
                                (all items; United States city average) 
                                over the previous year;
                                    ``(IX) for each of fiscal years 
                                2008, 2009, and 2010, not less than the 
                                amount required under this clause for 
                                the preceding fiscal year, increased by 
                                the percentage increase in the consumer 
                                price index for all urban consumers 
                                (all items; United States city average) 
                                over the previous year; and
                                    ``(X) for each fiscal year after 
                                fiscal year 2010, not less than the 
                                amount required under this clause for 
                                fiscal year 2010.''.
    (b) Federal Bureau of Investigation.--Section 1817(k)(3)(B) of the 
Social Security Act (42 U.S.C. 1395i(k)(3)(B)) is amended--
            (1) in the matter preceding clause (i), by inserting 
        ``until expended'' after ``without further appropriation'';
            (2) in clause (vi), by striking ``and'' at the end;
            (3) in clause (vii)--
                    (A) by striking ``for each fiscal year after fiscal 
                year 2002'' and inserting ``for each of fiscal years 
                2003, 2004, 2005, and 2006''; and
                    (B) by striking the period at the end and inserting 
                a semicolon; and
            (4) by adding at the end the following new clauses:
                            ``(viii) for each of fiscal years 2007, 
                        2008, 2009, and 2010, the amount to be 
                        appropriated under this subparagraph for the 
                        preceding fiscal year, increased by the 
                        percentage increase in the consumer price index 
                        for all urban consumers (all items; United 
                        States city average) over the previous year; 
                        and
                            ``(ix) for each fiscal year after fiscal 
                        year 2010, the amount to be appropriated under 
                        this subparagraph for fiscal year 2010.''.

SEC. 304. IMPLEMENTATION FUNDING.

    For purposes of implementing the provisions of, and amendments made 
by, this title and titles I and II of this division, other than section 
203, the Secretary of Health and Human Services shall provide for the 
transfer, in appropriate part from the Federal Hospital Insurance Trust 
Fund established under section 1817 of the Social Security Act (42 
U.S.C. 1395i) and the Federal Supplementary Medical Insurance Trust 
Fund established under section 1841 of such Act (42 U.S.C. 1395t), of 
$45,000,000 to the Centers for Medicare & Medicaid Services Program 
Management Account for the period of fiscal years 2007 and 2008.

             TITLE IV--MEDICAID AND OTHER HEALTH PROVISIONS

SEC. 401. EXTENSION OF TRANSITIONAL MEDICAL ASSISTANCE (TMA) AND 
              ABSTINENCE EDUCATION PROGRAM.

    Activities authorized by sections 510 and 1925 of the Social 
Security Act shall continue through June 30, 2007, in the manner 
authorized for fiscal year 2006, notwithstanding section 1902(e)(1)(A) 
of such Act, and out of any money in the Treasury of the United States 
not otherwise appropriated, there are hereby appropriated such sums as 
may be necessary for such purpose. Grants and payments may be made 
pursuant to this authority through the third quarter of fiscal year 
2007 at the level provided for such activities through the third 
quarter of fiscal year 2006.

SEC. 402. GRANTS FOR RESEARCH ON VACCINE AGAINST VALLEY FEVER.

    (a) In General.--In supporting research on the development of 
vaccines against human diseases, the Secretary of Health and Human 
Services shall make grants for the purpose of conducting research 
toward the development of a vaccine against coccidioidomycosis 
(commonly known as Valley Fever).
    (b) Sunset.--No grant may be made under subsection (a) on or after 
October 1, 2012. The preceding sentence does not have any legal effect 
on payments under grants for which amounts appropriated under 
subsection (c) were obligated prior to such date.
    (c) Authorization of Appropriations.--For the purpose of making 
grants under subsection (a), there are authorized to be appropriated 
$40,000,000 for the period of fiscal years 2007 through 2012.

SEC. 403. CHANGE IN THRESHOLD FOR MEDICAID INDIRECT HOLD HARMLESS 
              PROVISION OF BROAD-BASED HEALTH CARE TAXES.

    Section 1903(w)(4)(C) of the Social Security Act (42 U.S.C. 
1396b(w)(4)(C)) is amended--
            (1) by inserting ``(i)'' after ``(C)''; and
            (2) by adding at the end the following:
            ``(ii) For purposes of clause (i), a determination of the 
        existence of an indirect guarantee shall be made under 
        paragraph (3)(i) of section 433.68(f) of title 42, Code of 
        Federal Regulations, as in effect on November 1, 2006, except 
        that for portions of fiscal years beginning on or after January 
        1, 2008, and before October 1, 2011, `5.5 percent' shall be 
        substituted for `6 percent' each place it appears.''.

SEC. 404. DSH ALLOTMENTS FOR FISCAL YEAR 2007 FOR TENNESSEE AND HAWAII.

    Section 1923(f)(6) of the Social Security Act (42 U.S.C. 1396r-
4(f)(6)) is amended to read as follows:
            ``(6) Allotment adjustments for fiscal year 2007.--
                    ``(A) Tennessee.--
                            ``(i) In general.--Only with respect to 
                        fiscal year 2007, the DSH allotment for 
                        Tennessee for such fiscal year, notwithstanding 
                        the table set forth in paragraph (2) or the 
                        terms of the TennCare Demonstration Project in 
                        effect for the State, shall be the greater of--
                                    ``(I) the amount that the Secretary 
                                determines is equal to the Federal 
                                medical assistance percentage component 
                                attributable to disproportionate share 
                                hospital payment adjustments for the 
                                demonstration year ending in 2006 that 
                                is reflected in the budget neutrality 
                                provision of the TennCare Demonstration 
                                Project; and
                                    ``(II) $280,000,000.
                            ``(ii) Limitation on amount of payment 
                        adjustments eligible for federal financial 
                        participation.--Payment under section 1903(a) 
                        shall not be made to Tennessee with respect to 
                        the aggregate amount of any payment adjustments 
                        made under this section for hospitals in the 
                        State for fiscal year 2007 that is in excess of 
                        30 percent of the DSH allotment for the State 
                        for such fiscal year determined pursuant to 
                        clause (i).
                            ``(iii) State plan amendment.--The 
                        Secretary shall permit Tennessee to submit an 
                        amendment to its State plan under this title 
                        that describes the methodology to be used by 
                        the State to identify and make payments to 
                        disproportionate share hospitals, including 
                        children's hospitals and institutions for 
                        mental diseases or other mental health 
                        facilities. The Secretary may not approve such 
                        plan amendment unless the methodology described 
                        in the amendment is consistent with the 
                        requirements under this section for making 
                        payment adjustments to disproportionate share 
                        hospitals. For purposes of demonstrating budget 
                        neutrality under the TennCare Demonstration 
                        Project, payment adjustments made pursuant to a 
                        State plan amendment approved in accordance 
                        with this subparagraph shall be considered 
                        expenditures under such project.
                            ``(iv) Offset of federal share of payment 
                        adjustments for fiscal year 2007 against 
                        essential access hospital supplemental pool 
                        payments under the tenncare demonstration 
                        project.--
                                    ``(I) The total amount of Essential 
                                Access Hospital supplemental pool 
                                payments that may be made under the 
                                TennCare Demonstration Project for 
                                fiscal year 2007 shall be reduced on a 
                                dollar for dollar basis by the amount 
                                of any payments made under section 
                                1903(a) to Tennessee with respect to 
                                payment adjustments made under this 
                                section for hospitals in the State for 
                                such fiscal year.
                                    ``(II) The sum of the total amount 
                                of payments made under section 1903(a) 
                                to Tennessee with respect to payment 
                                adjustments made under this section for 
                                hospitals in the State for fiscal year 
                                2007 and the total amount of Essential 
                                Access Hospital supplemental pool 
                                payments made under the TennCare 
                                Demonstration Project for such fiscal 
                                year shall not exceed the State's DSH 
                                allotment for such fiscal year 
                                established under clause (i).
                    ``(B) Hawaii.--
                            ``(i) In general.--Only with respect to 
                        fiscal year 2007, the DSH allotment for Hawaii 
                        for such fiscal year, notwithstanding the table 
                        set forth in paragraph (2), shall be 
                        $10,000,000.
                            ``(ii) State plan amendment.--The Secretary 
                        shall permit Hawaii to submit an amendment to 
                        its State plan under this title that describes 
                        the methodology to be used by the State to 
                        identify and make payments to disproportionate 
                        share hospitals, including children's hospitals 
                        and institutions for mental diseases or other 
                        mental health facilities. The Secretary may not 
                        approve such plan amendment unless the 
                        methodology described in the amendment is 
                        consistent with the requirements under this 
                        section for making payment adjustments to 
                        disproportionate share hospitals.''.

SEC. 405. CERTAIN MEDICAID DRA TECHNICAL CORRECTIONS.

    (a) Technical Corrections Relating to State Option for Alternative 
Premiums and Cost Sharing (Sections 6041 Through 6043).--
            (1) Clarification of continued application of regular cost 
        sharing rules for individuals with family income not exceeding 
        100 percent of the poverty line.--Section 1916A of the Social 
        Security Act, as inserted by section 6041(a) of the Deficit 
        Reduction Act of 2005 and amended by sections 6042 and 6043 of 
        such Act, is amended--
                    (A) in subsection (a)(1)--
                            (i) by inserting ``but subject to paragraph 
                        (2),'' after ``1902(a)(10)(B),''; and
                            (ii) by inserting ``and non-emergency 
                        services furnished in a hospital emergency 
                        department for which cost sharing may be 
                        imposed under subsection (e)'' after ``(c)'';
                    (B) by redesignating paragraph (2) of subsection 
                (a) as paragraph (3);
                    (C) in subsection (a), by inserting after paragraph 
                (1) the following:
            ``(2) Exemption for individuals with family income not 
        exceeding 100 percent of the poverty line.--
                    ``(A) In general.--Paragraph (1) and subsection (d) 
                shall not apply, and sections 1916 and 1902(a)(10)(B) 
                shall continue to apply, in the case of an individual 
                whose family income does not exceed 100 percent of the 
                poverty line applicable to a family of the size 
                involved.
                    ``(B) Limit on aggregate cost sharing.--To the 
                extent cost sharing under subsection (c) and (e) or 
                under section 1916 is imposed against individuals 
                described in subparagraph (A), the limitation under 
                subsection (b)(1)(B)(ii) on the total aggregate amount 
                of cost sharing shall apply to such cost sharing for 
                all individuals in a family described in subparagraph 
                (A) in the same manner as such limitations apply to 
                cost sharing and families described in subsection 
                (b)(1)(B)(ii).'';
                    (D) in subsections (c)(2)(C) and (e)(2)(C), by 
                inserting ``under subsection (a)(2)(B) or'' after ``cap 
                on cost sharing applied''; and
                    (E) in subsection (e)(2)(A), by inserting ``who is 
                not described in subparagraph (B)'' after ``subsection 
                (b)(1)''.
            (2) Clarification of treatment of non-preferred drug and 
        non-emergency cost-sharing.--Such section is further amended--
                    (A) in subsections (b)(1) and (b)(2), by striking 
                ``, subject to subsections (c)(2) and (e)(2)(A)'';
                    (B) in subsection (c)(1), in the matter preceding 
                subparagraph (A), by striking ``least (or less) costly 
                effective'' and inserting ``most (or more) cost 
                effective'';
                    (C) in subsection (c)(1)(B), by striking 
                ``otherwise be imposed under'' and inserting ``be 
                imposed under subsection (a) due to the application 
                of'';
                    (D) in subsection (c)(2)(B), by striking 
                ``otherwise not subject to cost sharing due to the 
                application of subsection (b)(3)(B)'' and inserting 
                ``not subject to cost sharing under subsection (a) due 
                to the application of paragraph (1)(B)'';
                    (E) in subsection (e)(2)(A)--
                            (i) by amending the heading to read as 
                        follows: ``Individuals with family income 
                        between 100 and 150 percent of the poverty 
                        line.--''; and
                            (ii) by striking ``under subsection 
                        (b)(1)'' and inserting ``under subsection 
                        (b)(1)(B)(ii)'';
                    (F) in subsection (e)(2)(B), by striking ``who is 
                otherwise not subject to cost sharing under subsection 
                (b)(3)'' and inserting ``described in subsection 
                (a)(2)(A) or who is not subject to cost sharing under 
                subsection (b)(3)(B) with respect to non-emergency 
                services described in paragraph (1)'' and
                    (G) in subsection (e)(2)(C), by inserting ``or 
                section 1916'' after ``subsection (a)''.
            (3) Clarification of cost sharing rules applicable to 
        disabled children provided medical assistance under the 
        eligibility category added by the family opportunity act.--Such 
        section is further amended--
                    (A) in subsection (a)(1), in the second sentence, 
                by striking ``section 1916(g)'' and inserting 
                ``subsection (g) or (i) of section 1916''; and
                    (B) in subsection (b)(3)--
                            (i) in subparagraph (A), by adding at the 
                        end the following:
                            ``(vi) Disabled children who are receiving 
                        medical assistance by virtue of the application 
                        of sections 1902(a)(10)(A)(ii)(XIX) and 
                        1902(cc).''; and
                            (ii) in subparagraph (B), by adding at the 
                        end the following:
                            ``(ix) Services furnished to disabled 
                        children who are receiving medical assistance 
                        by virtue of the application of sections 
                        1902(a)(10)(A)(ii)(XIX) and 1902(cc).''.
            (4) Correction of iv-b references.--Such section is further 
        amended in subsection (b)(3)--
                    (A) in subparagraph (A)(i), by striking ``aid or 
                assistance is made available under part B of title IV 
                to children in foster care'' and inserting ``child 
                welfare services are made available under part B of 
                title IV on the basis of being a child in foster 
                care''; and
                    (B) in subparagraph (B)(i), by striking ``aid or 
                assistance is made available under part B of title IV 
                to children in foster care'' and inserting ``child 
                welfare services are made available under part B of 
                title IV on the basis of being a child in foster care 
                or''.
            (5) Non-emergency services.--Section 1916A(e)(4)(A) of the 
        Social Security Act, as added by section 6043(a) of the Deficit 
        Reduction Act of 2005, is amended by striking ``the physician 
        determines''.
            (6) Effective date.--The amendments made by this subsection 
        shall take effect as if included in the amendments made by 
        sections 6041(a) of the Deficit Reduction Act of 2005, except 
        that insofar as such amendments are to, or relate to, 
        subsection (c) or (e) of section 1916A of the Social Security 
        Act, such amendments shall take effect as if included in the 
        amendments made by section 6042 or 6043, respectively, of the 
        Deficit Reduction Act of 2005.
    (b) Clarifying Treatment of Certain Annuities (Section 6012).--
            (1) In general.--Section 1917(c)(1)(F)(i) of the Social 
        Security Act (42 U.S.C. 1396p(c)(1)(F)(i)), as added by section 
        6012(b) of the Deficit Reduction Act of 2005, is amended by 
        striking ``annuitant'' and inserting ``institutionalized 
        individual''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall be effective as if included in the enactment of section 
        6012 of the Deficit Reduction Act of 2005.
    (c) Additional Miscellaneous Technical Corrections.--
            (1) Documentation (section 6036).--
                    (A) In general.--Effective as if included in the 
                amendment made by section 6036(a)(2) of the Deficit 
                Reduction Act of 2005, section 1903(x) of the Social 
                Security Act (42 U.S.C. 1396b(x)), as inserted by such 
                section 6036(a)(2), is amended--
                            (i) in paragraph (1), by striking 
                        ``(i)(23)'' and inserting ``(i)(22)'';
                            (ii) in paragraph (2)--
                                    (I) in the matter preceding 
                                subparagraph (A), by striking ``alien'' 
                                and inserting ``individual declaring to 
                                be a citizen or national of the United 
                                States'';
                                    (II) by striking subparagraph (B) 
                                and inserting the following:
                    ``(B) and is receiving--
                            ``(i) disability insurance benefits under 
                        section 223 or monthly insurance benefits under 
                        section 202 based on such individual's 
                        disability (as defined in section 223(d)); or
                            ``(ii) supplemental security income 
                        benefits under title XVI;'';
                                    (III) in subparagraph (C)--
                                            (aa) by striking ``other''; 
                                        and
                                            (bb) by striking ``had'' 
                                        and inserting ``has'';
                                    (IV) by redesignating subparagraph 
                                (C) as subparagraph (D); and
                                    (V) by inserting after subparagraph 
                                (B) the following new subparagraph:
                    ``(C) and with respect to whom--
                            ``(i) child welfare services are made 
                        available under part B of title IV on the basis 
                        of being a child in foster care; or
                            ``(ii) adoption or foster care assistance 
                        is made available under part E of title IV; 
                        or''; and
                            (iii) in paragraph (3)(C)(iii), by striking 
                        ``I-97'' and inserting ``I-197''.
                    (B) Assurance of state foster care agency 
                verification of citizenship or legal status.--
                            (i) State plan amendment.--Section 471(a) 
                        of the Social Security Act (42 U.S.C. 671(a)) 
                        is amended--
                                    (I) in paragraph (25), by striking 
                                ``and'' at the end;
                                    (II) in paragraph (26)(C), by 
                                striking the period at the end and 
                                inserting ``; and''; and
                                    (III) by adding at the end the 
                                following:
            ``(27) provides that, with respect to any child in foster 
        care under the responsibility of the State under this part or 
        part B and without regard to whether foster care maintenance 
        payments are made under section 472 on behalf of the child, the 
        State has in effect procedures for verifying the citizenship or 
        immigration status of the child.''.
                            (ii) Inclusion in reviews of child and 
                        family services programs.--Section 1123A(b)(2) 
                        of the Social Security Act (42 U.S.C. 1320a-
                        2a(b)(2)) is amended by inserting ``(which 
                        shall include determining whether the State 
                        program is in conformity with the requirement 
                        of section 471(a)(27))'' after ``review''.
                            (iii) Effective date.--The amendments made 
                        by this subparagraph shall take effect on the 
                        date that is 6 months after the date of the 
                        enactment of this Act.
            (2) Miscellaneous technical corrections.--
                    (A) Effective as if included in the enactment of 
                the Deficit Reduction Act of 2005 (Public Law 109-171), 
                the following sections of such Act are amended as 
                follows:
                            (i) Section 5114(a)(2) is amended by 
                        striking ``section 1842(b)(6)(F) of such Act 
                        (42 U.S.C. 1395u(b)(6)(F))'' and inserting 
                        ``section 1842(b)(6) of such Act (42 U.S.C. 
                        1395u(b)(6))''.
                            (ii) Section 6003(b)(2) is amended, by 
                        striking ``subsection (k)'' and inserting 
                        ``subsection (k)(1)''.
                            (iii) Sections 6031(b), 6032(b), and 
                        6035(c) are each amended by striking ``section 
                        6035(e)'' and inserting ``section 6034(e)''.
                            (iv) Section 6034(b) is amended by striking 
                        ``section 6033(a)'' and inserting ``section 
                        6032(a)''.
                            (v) Section 6036 is amended--
                                    (I) in subsection (b), by striking 
                                ``section 1903(z)'' and inserting 
                                ``section 1903(x)''; and
                                    (II) in subsection (c), by striking 
                                ``(i)(23)'' and inserting ``(i)(22)''.
                    (B) Effective as if included in the amendment made 
                by section 6015(a)(1) of the Deficit Reduction Act of 
                2005, section 1919(c)(5)(A)(i)(II) of the Social 
                Security Act (42 U.S.C. 1396r(c)(5)(A)(i)(II)) is 
                amended by striking ``clause (v)'' and inserting 
                ``subparagraph (B)(v)''.

                      DIVISION C--OTHER PROVISIONS

                TITLE I--GULF OF MEXICO ENERGY SECURITY

SEC. 101. SHORT TITLE.

    This title may be cited as the ``Gulf of Mexico Energy Security Act 
of 2006''.

SEC. 102. DEFINITIONS.

    In this title:
            (1) 181 area.--The term ``181 Area'' means the area 
        identified in map 15, page 58, of the Proposed Final Outer 
        Continental Shelf Oil and Gas Leasing Program for 1997-2002, 
        dated August 1996, of the Minerals Management Service, 
        available in the Office of the Director of the Minerals 
        Management Service, excluding the area offered in OCS Lease 
        Sale 181, held on December 5, 2001.
            (2) 181 south area.--The term ``181 South Area'' means any 
        area--
                    (A) located--
                            (i) south of the 181 Area;
                            (ii) west of the Military Mission Line; and
                            (iii) in the Central Planning Area;
                    (B) excluded from the Proposed Final Outer 
                Continental Shelf Oil and Gas Leasing Program for 1997-
                2002, dated August 1996, of the Minerals Management 
                Service; and
                    (C) included in the areas considered for oil and 
                gas leasing, as identified in map 8, page 37 of the 
                document entitled ``Draft Proposed Program Outer 
                Continental Shelf Oil and Gas Leasing Program 2007-
                2012'', dated February 2006.
            (3) Bonus or royalty credit.--The term ``bonus or royalty 
        credit'' means a legal instrument or other written 
        documentation, or an entry in an account managed by the 
        Secretary, that may be used in lieu of any other monetary 
        payment for--
                    (A) a bonus bid for a lease on the outer 
                Continental Shelf; or
                    (B) a royalty due on oil or gas production from any 
                lease located on the outer Continental Shelf.
            (4) Central planning area.--The term ``Central Planning 
        Area'' means the Central Gulf of Mexico Planning Area of the 
        outer Continental Shelf, as designated in the document entitled 
        ``Draft Proposed Program Outer Continental Shelf Oil and Gas 
        Leasing Program 2007-2012'', dated February 2006.
            (5) Eastern planning area.--The term ``Eastern Planning 
        Area'' means the Eastern Gulf of Mexico Planning Area of the 
        outer Continental Shelf, as designated in the document entitled 
        ``Draft Proposed Program Outer Continental Shelf Oil and Gas 
        Leasing Program 2007-2012'', dated February 2006.
            (6) 2002-2007 planning area.--The term ``2002-2007 planning 
        area'' means any area--
                    (A) located in--
                            (i) the Eastern Planning Area, as 
                        designated in the Proposed Final Outer 
                        Continental Shelf Oil and Gas Leasing Program 
                        2002-2007, dated April 2002, of the Minerals 
                        Management Service;
                            (ii) the Central Planning Area, as 
                        designated in the Proposed Final Outer 
                        Continental Shelf Oil and Gas Leasing Program 
                        2002-2007, dated April 2002, of the Minerals 
                        Management Service; or
                            (iii) the Western Planning Area, as 
                        designated in the Proposed Final Outer 
                        Continental Shelf Oil and Gas Leasing Program 
                        2002-2007, dated April 2002, of the Minerals 
                        Management Service; and
                    (B) not located in--
                            (i) an area in which no funds may be 
                        expended to conduct offshore preleasing, 
                        leasing, and related activities under sections 
                        104 through 106 of the Department of the 
                        Interior, Environment, and Related Agencies 
                        Appropriations Act, 2006 (Public Law 109-54; 
                        119 Stat. 521) (as in effect on August 2, 
                        2005);
                            (ii) an area withdrawn from leasing under 
                        the ``Memorandum on Withdrawal of Certain Areas 
                        of the United States Outer Continental Shelf 
                        from Leasing Disposition'', from 34 Weekly 
                        Comp. Pres. Doc. 1111, dated June 12, 1998; or
                            (iii) the 181 Area or 181 South Area.
            (7) Gulf producing state.--The term ``Gulf producing 
        State'' means each of the States of Alabama, Louisiana, 
        Mississippi, and Texas.
            (8) Military mission line.--The term ``Military Mission 
        Line'' means the north-south line at 8641' W. longitude.
            (9) Qualified outer continental shelf revenues.--
                    (A) In general.--The term ``qualified outer 
                Continental Shelf revenues'' means--
                            (i) in the case of each of fiscal years 
                        2007 through 2016, all rentals, royalties, 
                        bonus bids, and other sums due and payable to 
                        the United States from leases entered into on 
                        or after the date of enactment of this Act 
                        for--
                                    (I) areas in the 181 Area located 
                                in the Eastern Planning Area; and
                                    (II) the 181 South Area; and
                            (ii) in the case of fiscal year 2017 and 
                        each fiscal year thereafter, all rentals, 
                        royalties, bonus bids, and other sums due and 
                        payable to the United States received on or 
                        after October 1, 2016, from leases entered into 
                        on or after the date of enactment of this Act 
                        for--
                                    (I) the 181 Area;
                                    (II) the 181 South Area; and
                                    (III) the 2002-2007 planning area.
                    (B) Exclusions.--The term ``qualified outer 
                Continental Shelf revenues'' does not include--
                            (i) revenues from the forfeiture of a bond 
                        or other surety securing obligations other than 
                        royalties, civil penalties, or royalties taken 
                        by the Secretary in-kind and not sold; or
                            (ii) revenues generated from leases subject 
                        to section 8(g) of the Outer Continental Shelf 
                        Lands Act (43 U.S.C. 1337(g)).
            (10) Coastal political subdivision.--The term ``coastal 
        political subdivision'' means a political subdivision of a Gulf 
        producing State any part of which political subdivision is--
                    (A) within the coastal zone (as defined in section 
                304 of the Coastal Zone Management Act of 1972 (16 
                U.S.C. 1453)) of the Gulf producing State as of the 
                date of enactment of this Act; and
                    (B) not more than 200 nautical miles from the 
                geographic center of any leased tract.
            (11) Secretary.--The term ``Secretary'' means the Secretary 
        of the Interior.

SEC. 103. OFFSHORE OIL AND GAS LEASING IN 181 AREA AND 181 SOUTH AREA 
              OF GULF OF MEXICO.

    (a) 181 Area Lease Sale.--Except as provided in section 104, the 
Secretary shall offer the 181 Area for oil and gas leasing pursuant to 
the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.) as soon 
as practicable, but not later than 1 year, after the date of enactment 
of this Act.
    (b) 181 South Area Lease Sale.--The Secretary shall offer the 181 
South Area for oil and gas leasing pursuant to the Outer Continental 
Shelf Lands Act (43 U.S.C. 1331 et seq.) as soon as practicable after 
the date of enactment of this Act.
    (c) Leasing Program.--The 181 Area and 181 South Area shall be 
offered for lease under this section notwithstanding the omission of 
the 181 Area or the 181 South Area from any outer Continental Shelf 
leasing program under section 18 of the Outer Continental Shelf Lands 
Act (43 U.S.C. 1344).
    (d) Conforming Amendment.--Section 105 of the Department of the 
Interior, Environment, and Related Agencies Appropriations Act, 2006 
(Public Law 109-54; 119 Stat. 522) is amended by inserting ``(other 
than the 181 South Area (as defined in section 102 of the Gulf of 
Mexico Energy Security Act of 2006))'' after ``lands located outside 
Sale 181''.

SEC. 104. MORATORIUM ON OIL AND GAS LEASING IN CERTAIN AREAS OF GULF OF 
              MEXICO.

    (a) In General.--Effective during the period beginning on the date 
of enactment of this Act and ending on June 30, 2022, the Secretary 
shall not offer for leasing, preleasing, or any related activity--
            (1) any area east of the Military Mission Line in the Gulf 
        of Mexico;
            (2) any area in the Eastern Planning Area that is within 
        125 miles of the coastline of the State of Florida; or
            (3) any area in the Central Planning Area that is--
                    (A) within--
                            (i) the 181 Area; and
                            (ii) 100 miles of the coastline of the 
                        State of Florida; or
                    (B)(i) outside the 181 Area;
                    (ii) east of the western edge of the Pensacola 
                Official Protraction Diagram (UTM X coordinate 
                1,393,920 (NAD 27 feet)); and
                    (iii) within 100 miles of the coastline of the 
                State of Florida.
    (b) Military Mission Line.--Notwithstanding subsection (a), the 
United States reserves the right to designate by and through the 
Secretary of Defense, with the approval of the President, national 
defense areas on the outer Continental Shelf pursuant to section 12(d) 
of the Outer Continental Shelf Lands Act (43 U.S.C. 1341(d)).
    (c) Exchange of Certain Leases.--
            (1) In general.--The Secretary shall permit any person 
        that, as of the date of enactment of this Act, has entered into 
        an oil or gas lease with the Secretary in any area described in 
        paragraph (2) or (3) of subsection (a) to exchange the lease 
        for a bonus or royalty credit that may only be used in the Gulf 
        of Mexico.
            (2) Valuation of existing lease.--The amount of the bonus 
        or royalty credit for a lease to be exchanged shall be equal 
        to--
                    (A) the amount of the bonus bid; and
                    (B) any rental paid for the lease as of the date 
                the lessee notifies the Secretary of the decision to 
                exchange the lease.
            (3) Revenue distribution.--No bonus or royalty credit may 
        be used under this subsection in lieu of any payment due under, 
        or to acquire any interest in, a lease subject to the revenue 
        distribution provisions of section 8(g) of the Outer 
        Continental Shelf Lands Act (43 U.S.C. 1337(g)).
            (4) Regulations.--Not later than 1 year after the date of 
        enactment of this Act, the Secretary shall promulgate 
        regulations that shall provide a process for--
                    (A) notification to the Secretary of a decision to 
                exchange an eligible lease;
                    (B) issuance of bonus or royalty credits in 
                exchange for relinquishment of the existing lease;
                    (C) transfer of the bonus or royalty credit to any 
                other person; and
                    (D) determining the proper allocation of bonus or 
                royalty credits to each lease interest owner.

SEC. 105. DISPOSITION OF QUALIFIED OUTER CONTINENTAL SHELF REVENUES 
              FROM 181 AREA, 181 SOUTH AREA, AND 2002-2007 PLANNING 
              AREAS OF GULF OF MEXICO.

    (a) In General.--Notwithstanding section 9 of the Outer Continental 
Shelf Lands Act (43 U.S.C. 1338) and subject to the other provisions of 
this section, for each applicable fiscal year, the Secretary of the 
Treasury shall deposit--
            (1) 50 percent of qualified outer Continental Shelf 
        revenues in the general fund of the Treasury; and
            (2) 50 percent of qualified outer Continental Shelf 
        revenues in a special account in the Treasury from which the 
        Secretary shall disburse--
                    (A) 75 percent to Gulf producing States in 
                accordance with subsection (b); and
                    (B) 25 percent to provide financial assistance to 
                States in accordance with section 6 of the Land and 
                Water Conservation Fund Act of 1965 (16 U.S.C. 460l-8), 
                which shall be considered income to the Land and Water 
                Conservation Fund for purposes of section 2 of that Act 
                (16 U.S.C. 460l-5).
    (b) Allocation Among Gulf Producing States and Coastal Political 
Subdivisions.--
            (1) Allocation among gulf producing states for fiscal years 
        2007 through 2016.--
                    (A) In general.--Subject to subparagraph (B), 
                effective for each of fiscal years 2007 through 2016, 
                the amount made available under subsection (a)(2)(A) 
                shall be allocated to each Gulf producing State in 
                amounts (based on a formula established by the 
                Secretary by regulation) that are inversely 
                proportional to the respective distances between the 
                point on the coastline of each Gulf producing State 
                that is closest to the geographic center of the 
                applicable leased tract and the geographic center of 
                the leased tract.
                    (B) Minimum allocation.--The amount allocated to a 
                Gulf producing State each fiscal year under 
                subparagraph (A) shall be at least 10 percent of the 
                amounts available under subsection (a)(2)(A).
            (2) Allocation among gulf producing states for fiscal year 
        2017 and thereafter.--
                    (A) In general.--Subject to subparagraphs (B) and 
                (C), effective for fiscal year 2017 and each fiscal 
                year thereafter--
                            (i) the amount made available under 
                        subsection (a)(2)(A) from any lease entered 
                        into within the 181 Area or the 181 South Area 
                        shall be allocated to each Gulf producing State 
                        in amounts (based on a formula established by 
                        the Secretary by regulation) that are inversely 
                        proportional to the respective distances 
                        between the point on the coastline of each Gulf 
                        producing State that is closest to the 
                        geographic center of the applicable leased 
                        tract and the geographic center of the leased 
                        tract; and
                            (ii) the amount made available under 
                        subsection (a)(2)(A) from any lease entered 
                        into within the 2002-2007 planning area shall 
                        be allocated to each Gulf producing State in 
                        amounts that are inversely proportional to the 
                        respective distances between the point on the 
                        coastline of each Gulf producing State that is 
                        closest to the geographic center of each 
                        historical lease site and the geographic center 
                        of the historical lease site, as determined by 
                        the Secretary.
                    (B) Minimum allocation.--The amount allocated to a 
                Gulf producing State each fiscal year under 
                subparagraph (A) shall be at least 10 percent of the 
                amounts available under subsection (a)(2)(A).
                    (C) Historical lease sites.--
                            (i) In general.--Subject to clause (ii), 
                        for purposes of subparagraph (A)(ii), the 
                        historical lease sites in the 2002-2007 
                        planning area shall include all leases entered 
                        into by the Secretary for an area in the Gulf 
                        of Mexico during the period beginning on 
                        October 1, 1982 (or an earlier date if 
                        practicable, as determined by the Secretary), 
                        and ending on December 31, 2015.
                            (ii) Adjustment.--Effective January 1, 
                        2022, and every 5 years thereafter, the ending 
                        date described in clause (i) shall be extended 
                        for an additional 5 calendar years.
            (3) Payments to coastal political subdivisions.--
                    (A) In general.--The Secretary shall pay 20 percent 
                of the allocable share of each Gulf producing State, as 
                determined under paragraphs (1) and (2), to the coastal 
                political subdivisions of the Gulf producing State.
                    (B) Allocation.--The amount paid by the Secretary 
                to coastal political subdivisions shall be allocated to 
                each coastal political subdivision in accordance with 
                subparagraphs (B), (C), and (E) of section 31(b)(4) of 
                the Outer Continental Shelf Lands Act (43 U.S.C. 
                1356a(b)(4)).
    (c) Timing.--The amounts required to be deposited under paragraph 
(2) of subsection (a) for the applicable fiscal year shall be made 
available in accordance with that paragraph during the fiscal year 
immediately following the applicable fiscal year.
    (d) Authorized Uses.--
            (1) In general.--Subject to paragraph (2), each Gulf 
        producing State and coastal political subdivision shall use all 
        amounts received under subsection (b) in accordance with all 
        applicable Federal and State laws, only for 1 or more of the 
        following purposes:
                    (A) Projects and activities for the purposes of 
                coastal protection, including conservation, coastal 
                restoration, hurricane protection, and infrastructure 
                directly affected by coastal wetland losses.
                    (B) Mitigation of damage to fish, wildlife, or 
                natural resources.
                    (C) Implementation of a federally-approved marine, 
                coastal, or comprehensive conservation management plan.
                    (D) Mitigation of the impact of outer Continental 
                Shelf activities through the funding of onshore 
                infrastructure projects.
                    (E) Planning assistance and the administrative 
                costs of complying with this section.
            (2) Limitation.--Not more than 3 percent of amounts 
        received by a Gulf producing State or coastal political 
        subdivision under subsection (b) may be used for the purposes 
        described in paragraph (1)(E).
    (e) Administration.--Amounts made available under subsection (a)(2) 
shall--
            (1) be made available, without further appropriation, in 
        accordance with this section;
            (2) remain available until expended; and
            (3) be in addition to any amounts appropriated under--
                    (A) the Outer Continental Shelf Lands Act (43 
                U.S.C. 1331 et seq.);
                    (B) the Land and Water Conservation Fund Act of 
                1965 (16 U.S.C. 460l-4 et seq.); or
                    (C) any other provision of law.
    (f) Limitations on Amount of Distributed Qualified Outer 
Continental Shelf Revenues.--
            (1) In general.--Subject to paragraph (2), the total amount 
        of qualified outer Continental Shelf revenues made available 
        under subsection (a)(2) shall not exceed $500,000,000 for each 
        of fiscal years 2016 through 2055.
            (2) Expenditures.--For the purpose of paragraph (1), for 
        each of fiscal years 2016 through 2055, expenditures under 
        subsection (a)(2) shall be net of receipts from that fiscal 
        year from any area in the 181 Area in the Eastern Planning Area 
        and the 181 South Area.
            (3) Pro rata reductions.--If paragraph (1) limits the 
        amount of qualified outer Continental Shelf revenue that would 
        be paid under subparagraphs (A) and (B) of subsection (a)(2)--
                    (A) the Secretary shall reduce the amount of 
                qualified outer Continental Shelf revenue provided to 
                each recipient on a pro rata basis; and
                    (B) any remainder of the qualified outer 
                Continental Shelf revenues shall revert to the general 
                fund of the Treasury.

TITLE II--SURFACE MINING CONTROL AND RECLAMATION ACT AMENDMENTS OF 2006

SEC. 200. SHORT TITLE.

    This title may be cited as the ``Surface Mining Control and 
Reclamation Act Amendments of 2006''.

               Subtitle A--Mining Control and Reclamation

SEC. 201. ABANDONED MINE RECLAMATION FUND AND PURPOSES.

    (a) In General.--Section 401 of the Surface Mining Control and 
Reclamation Act of 1977 (30 U.S.C. 1231) is amended--
            (1) in subsection (c)--
                    (A) by striking paragraphs (2) and (6); and
                    (B) by redesignating paragraphs (3), (4), and (5) 
                and paragraphs (7) through (13) as paragraphs (2) 
                through (11), respectively;
            (2) by striking subsection (d) and inserting the following:
    ``(d) Availability of Moneys; No Fiscal Year Limitation.--
            ``(1) In general.--Moneys from the fund for expenditures 
        under subparagraphs (A) through (D) of section 402(g)(3) shall 
        be available only when appropriated for those subparagraphs.
            ``(2) No fiscal year limitation.--Appropriations described 
        in paragraph (1) shall be made without fiscal year limitation.
            ``(3) Other purposes.--Moneys from the fund shall be 
        available for all other purposes of this title without prior 
        appropriation as provided in subsection (f).'';
            (3) in subsection (e)--
                    (A) in the second sentence, by striking ``the needs 
                of such fund'' and inserting ``achieving the purposes 
                of the transfers under section 402(h)''; and
                    (B) in the third sentence, by inserting before the 
                period the following: ``for the purpose of the 
                transfers under section 402(h)''; and
            (4) by adding at the end the following:
    ``(f) General Limitation on Obligation Authority.--
            ``(1) In general.--From amounts deposited into the fund 
        under subsection (b), the Secretary shall distribute during 
        each fiscal year beginning after September 30, 2007, an amount 
        determined under paragraph (2).
            ``(2) Amounts.--
                    ``(A) For fiscal years 2008 through 2022.--For each 
                of fiscal years 2008 through 2022, the amount 
                distributed by the Secretary under this subsection 
                shall be equal to--
                            ``(i) the amounts deposited into the fund 
                        under paragraphs (1), (2), and (4) of 
                        subsection (b) for the preceding fiscal year 
                        that were allocated under paragraphs (1) and 
                        (5) of section 402(g); plus
                            ``(ii) the amount needed for the adjustment 
                        under section 402(g)(8) for the current fiscal 
                        year.
                    ``(B) Fiscal years 2023 and thereafter.--For fiscal 
                year 2023 and each fiscal year thereafter, to the 
                extent that funds are available, the Secretary shall 
                distribute an amount equal to the amount distributed 
                under subparagraph (A) during fiscal year 2022.
            ``(3) Distribution.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), for each fiscal year, of the amount 
                to be distributed to States and Indian tribes pursuant 
                to paragraph (2), the Secretary shall distribute--
                            ``(i) the amounts allocated under paragraph 
                        (1) of section 402(g), the amounts allocated 
                        under paragraph (5) of section 402(g), and any 
                        amount reallocated under section 411(h)(3) in 
                        accordance with section 411(h)(2), for grants 
                        to States and Indian tribes under section 
                        402(g)(5); and
                            ``(ii) the amounts allocated under section 
                        402(g)(8).
                    ``(B) Exclusion.--Beginning on October 1, 2007, 
                certified States shall be ineligible to receive amounts 
                under section 402(g)(1).
            ``(4) Availability.--Amounts in the fund available to the 
        Secretary for obligation under this subsection shall be 
        available until expended.
            ``(5) Addition.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                amount distributed under this subsection for each 
                fiscal year shall be in addition to the amount 
                appropriated from the fund during the fiscal year.
                    ``(B) Exceptions.--Notwithstanding paragraph (3), 
                the amount distributed under this subsection for the 
                first 4 fiscal years beginning on and after October 1, 
                2007, shall be equal to the following percentage of the 
                amount otherwise required to be distributed:
                            ``(i) 50 percent in fiscal year 2008.
                            ``(ii) 50 percent in fiscal year 2009.
                            ``(iii) 75 percent in fiscal year 2010.
                            ``(iv) 75 percent in fiscal year 2011.''.
    (b) Conforming Amendment.--Section 712(b) of the Surface Mining 
Control and Reclamation Act of 1977 (30 U.S.C. 1302(b)) is amended by 
striking ``section 401(c)(11)'' and inserting ``section 401(c)(9)''.

SEC. 202. RECLAMATION FEE.

    (a) Amounts.--
            (1) Fiscal years 2008-2012.--Effective October 1, 2007, 
        section 402(a) of the Surface Mining Control and Reclamation 
        Act of 1977 (30 U.S.C. 1232(a)) is amended--
                    (A) by striking ``35'' and inserting ``31.5'';
                    (B) by striking ``15'' and inserting ``13.5''; and
                    (C) by striking ``10 cents'' and inserting ``9 
                cents''.
            (2) Fiscal years 2013-2021.--Effective October 1, 2012, 
        section 402(a) of the Surface Mining Control and Reclamation 
        Act of 1977 (30 U.S.C. 1232(a)) (as amended by paragraph (1)) 
        is amended--
                    (A) by striking ``31.5'' and inserting ``28'';
                    (B) by striking ``13.5'' and inserting ``12''; and
                    (C) by striking ``9 cents'' and inserting ``8 
                cents''.
    (b) Duration.--Effective September 30, 2007, section 402(b) of the 
Surface Mining Control and Reclamation Act of 1977 (30 U.S.C. 1232(b)) 
(as amended by section 7007 of the Emergency Supplemental 
Appropriations Act for Defense, the Global War on Terror, and Hurricane 
Recovery, 2006 (Public Law 109-234; 120 Stat. 484)) is amended by 
striking ``September 30, 2007'' and all that follows through the end of 
the sentence and inserting ``September 30, 2021.''.
    (c) Allocation of Funds.--Section 402(g) of the Surface Mining 
Control and Reclamation Act of 1977 (30 U.S.C. 1232(g)) is amended--
            (1) in paragraph (1)(D)--
                    (A) by inserting ``(except for grants awarded 
                during fiscal years 2008, 2009, and 2010 to the extent 
                not expended within 5 years)'' after ``this 
                paragraph''; and
                    (B) by striking ``in any area under paragraph (2), 
                (3), (4), or (5)'' and inserting ``under paragraph 
                (5)'';
            (2) by striking paragraph (2) and inserting:
    ``(2) In making the grants referred to in paragraph (1)(C) and the 
grants referred to in paragraph (5), the Secretary shall ensure strict 
compliance by the States and Indian tribes with the priorities 
described in section 403(a) until a certification is made under section 
411(a).'';
            (3) in paragraph (3)--
                    (A) in the matter preceding subparagraph (A), by 
                striking ``paragraphs (2) and'' and inserting 
                ``paragraph'';
                    (B) in subparagraph (A), by striking ``401(c)(11)'' 
                and inserting ``401(c)(9)''; and
                    (C) by adding at the end the following:
            ``(E) For the purpose of paragraph (8).'';
            (4) in paragraph (5)--
                    (A) by inserting ``(A)'' after ``(5)'';
                    (B) in the first sentence, by striking ``40'' and 
                inserting ``60'';
                    (C) in the last sentence, by striking ``Funds 
                allocated or expended by the Secretary under paragraphs 
                (2), (3), or (4)'' and inserting ``Funds made available 
                under paragraph (3) or (4)''; and
                    (D) by adding at the end the following:
    ``(B) Any amount that is reallocated and available under section 
411(h)(3) shall be in addition to amounts that are allocated under 
subparagraph (A).''; and
            (5) by striking paragraphs (6) through (8) and inserting 
        the following:
    ``(6)(A) Any State with an approved abandoned mine reclamation 
program pursuant to section 405 may receive and retain, without regard 
to the 3-year limitation referred to in paragraph (1)(D), up to 30 
percent of the total of the grants made annually to the State under 
paragraphs (1) and (5) if those amounts are deposited into an acid mine 
drainage abatement and treatment fund established under State law, from 
which amounts (together with all interest earned on the amounts) are 
expended by the State for the abatement of the causes and the treatment 
of the effects of acid mine drainage in a comprehensive manner within 
qualified hydrologic units affected by coal mining practices.
    ``(B) In this paragraph, the term `qualified hydrologic unit' means 
a hydrologic unit--
            ``(i) in which the water quality has been significantly 
        affected by acid mine drainage from coal mining practices in a 
        manner that adversely impacts biological resources; and
            ``(ii) that contains land and water that are--
                    ``(I) eligible pursuant to section 404 and include 
                any of the priorities described in section 403(a); and
                    ``(II) the subject of expenditures by the State 
                from the forfeiture of bonds required under section 509 
                or from other States sources to abate and treat acid 
                mine drainage.
    ``(7) In complying with the priorities described in section 403(a), 
any State or Indian tribe may use amounts available in grants made 
annually to the State or tribe under paragraphs (1) and (5) for the 
reclamation of eligible land and water described in section 403(a)(3) 
before the completion of reclamation projects under paragraphs (1) and 
(2) of section 403(a) only if the expenditure of funds for the 
reclamation is done in conjunction with the expenditure before, on, or 
after the date of enactment of the Surface Mining Control and 
Reclamation Act Amendments of 2006 of funds for reclamation projects 
under paragraphs (1) and (2) of section 403(a).
    ``(8)(A) In making funds available under this title, the Secretary 
shall ensure that the grant awards total not less than $3,000,000 
annually to each State and each Indian tribe having an approved 
abandoned mine reclamation program pursuant to section 405 and eligible 
land and water pursuant to section 404, so long as an allocation of 
funds to the State or tribe is necessary to achieve the priorities 
stated in paragraphs (1) and (2) of section 403(a).
    ``(B) Notwithstanding any other provision of law, this paragraph 
applies to the States of Tennessee and Missouri.''.
    (d) Transfers of Interest Earned by Abandoned Mine Reclamation 
Fund.--Section 402 of the Surface Mining Control and Reclamation Act of 
1977 (30 U.S.C. 1232) is amended by striking subsection (h) and 
inserting the following:
    ``(h) Transfers of Interest Earned by Fund.--
            ``(1) In general.--
                    ``(A) Transfers to combined benefit fund.--As soon 
                as practicable after the beginning of fiscal year 2007 
                and each fiscal year thereafter, and before making any 
                allocation with respect to the fiscal year under 
                subsection (g), the Secretary shall use an amount not 
                to exceed the amount of interest that the Secretary 
                estimates will be earned and paid to the fund during 
                the fiscal year to transfer to the Combined Benefit 
                Fund such amounts as are estimated by the trustees of 
                such fund to offset the amount of any deficit in net 
                assets in the Combined Benefit Fund as of October 1, 
                2006, and to make the transfer described in paragraph 
                (2)(A).
                    ``(B) Transfers to 1992 and 1993 plans.--As soon as 
                practicable after the beginning of fiscal year 2008 and 
                each fiscal year thereafter, and before making any 
                allocation with respect to the fiscal year under 
                subsection (g), the Secretary shall use an amount not 
                to exceed the amount of interest that the Secretary 
                estimates will be earned and paid to the fund during 
                the fiscal year (reduced by the amount used under 
                subparagraph (A)) to make the transfers described in 
                paragraphs (2)(B) and (2)(C).
            ``(2) Transfers described.--The transfers referred to in 
        paragraph (1) are the following:
                    ``(A) United mine workers of america combined 
                benefit fund.--A transfer to the United Mine Workers of 
                America Combined Benefit Fund equal to the amount that 
                the trustees of the Combined Benefit Fund estimate will 
                be expended from the fund for the fiscal year in which 
                the transfer is made, reduced by--
                            ``(i) the amount the trustees of the 
                        Combined Benefit Fund estimate the Combined 
                        Benefit Fund will receive during the fiscal 
                        year in--
                                    ``(I) required premiums; and
                                    ``(II) payments paid by Federal 
                                agencies in connection with benefits 
                                provided by the Combined Benefit Fund; 
                                and
                            ``(ii) the amount the trustees of the 
                        Combined Benefit Fund estimate will be expended 
                        during the fiscal year to provide health 
                        benefits to beneficiaries who are unassigned 
                        beneficiaries solely as a result of the 
                        application of section 9706(h)(1) of the 
                        Internal Revenue Code of 1986, but only to the 
                        extent that such amount does not exceed the 
                        amounts described in subsection (i)(1)(A) that 
                        the Secretary estimates will be available to 
                        pay such estimated expenditures.
                    ``(B) United mine workers of america 1992 benefit 
                plan.--A transfer to the United Mine Workers of America 
                1992 Benefit Plan, in an amount equal to the difference 
                between--
                            ``(i) the amount that the trustees of the 
                        1992 UMWA Benefit Plan estimate will be 
                        expended from the 1992 UMWA Benefit Plan during 
                        the next calendar year to provide the benefits 
                        required by the 1992 UMWA Benefit Plan on the 
                        date of enactment of this subparagraph; minus
                            ``(ii) the amount that the trustees of the 
                        1992 UMWA Benefit Plan estimate the 1992 UMWA 
                        Benefit Plan will receive during the next 
                        calendar year in--
                                    ``(I) required monthly per 
                                beneficiary premiums, including the 
                                amount of any security provided to the 
                                1992 UMWA Benefit Plan that is 
                                available for use in the provision of 
                                benefits; and
                                    ``(II) payments paid by Federal 
                                agencies in connection with benefits 
                                provided by the 1992 UMWA benefit plan.
                    ``(C) Multiemployer health benefit plan.--A 
                transfer to the Multiemployer Health Benefit Plan 
                established after July 20, 1992, by the parties that 
                are the settlors of the 1992 UMWA Benefit Plan referred 
                to in subparagraph (B) (referred to in this 
                subparagraph and subparagraph (D) as `the Plan'), in an 
                amount equal to the excess (if any) of--
                            ``(i) the amount that the trustees of the 
                        Plan estimate will be expended from the Plan 
                        during the next calendar year, to provide 
                        benefits no greater than those provided by the 
                        Plan as of December 31, 2006; over
                            ``(ii) the amount that the trustees 
                        estimated the Plan will receive during the next 
                        calendar year in payments paid by Federal 
                        agencies in connection with benefits provided 
                        by the Plan.
                Such excess shall be calculated by taking into account 
                only those beneficiaries actually enrolled in the Plan 
                as of December 31, 2006, who are eligible to receive 
                benefits under the Plan on the first day of the 
                calendar year for which the transfer is made.
                    ``(D) Individuals considered enrolled.--For 
                purposes of subparagraph (C), any individual who was 
                eligible to receive benefits from the Plan as of the 
                date of enactment of this subsection, even though 
                benefits were being provided to the individual pursuant 
                to a settlement agreement approved by order of a 
                bankruptcy court entered on or before September 30, 
                2004, will be considered to be actually enrolled in the 
                Plan and shall receive benefits from the Plan beginning 
                on December 31, 2006.
            ``(3) Adjustment.--If, for any fiscal year, the amount of a 
        transfer under subparagraph (A), (B), or (C) of paragraph (2) 
        is more or less than the amount required to be transferred 
        under that subparagraph, the Secretary shall appropriately 
        adjust the amount transferred under that subparagraph for the 
        next fiscal year.
            ``(4) Additional amounts.--
                    ``(A) Previously credited interest.--
                Notwithstanding any other provision of law, any 
                interest credited to the fund that has not previously 
                been transferred to the Combined Benefit Fund referred 
                to in paragraph (2)(A) under this section--
                            ``(i) shall be held in reserve by the 
                        Secretary until such time as necessary to make 
                        the payments under subparagraphs (A) and (B) of 
                        subsection (i)(1), as described in clause (ii); 
                        and
                            ``(ii) in the event that the amounts 
                        described in subsection (i)(1) are insufficient 
                        to make the maximum payments described in 
                        subparagraphs (A) and (B) of subsection (i)(1), 
                        shall be used by the Secretary to supplement 
                        the payments so that the maximum amount 
                        permitted under those paragraphs is paid.
                    ``(B) Previously allocated amounts.--All amounts 
                allocated under subsection (g)(2) before the date of 
                enactment of this subparagraph for the program 
                described in section 406, but not appropriated before 
                that date, shall be available to the Secretary to make 
                the transfers described in paragraph (2).
                    ``(C) Adequacy of previously credited interest.--
                The Secretary shall--
                            ``(i) consult with the trustees of the 
                        plans described in paragraph (2) at reasonable 
                        intervals; and
                            ``(ii) notify Congress if a determination 
                        is made that the amounts held in reserve under 
                        subparagraph (A) are insufficient to meet 
                        future requirements under subparagraph (A)(ii).
                    ``(D) Additional reserve amounts.--In addition to 
                amounts held in reserve under subparagraph (A), there 
                is authorized to be appropriated such sums as may be 
                necessary for transfer to the fund to carry out the 
                purposes of subparagraph (A)(ii).
                    ``(E) Inapplicability of cap.--The limitation 
                described in subsection (i)(3)(A) shall not apply to 
                payments made from the reserve fund under this 
                paragraph.
            ``(5) Limitations.--
                    ``(A) Availability of funds for next fiscal year.--
                The Secretary may make transfers under subparagraphs 
                (B) and (C) of paragraph (2) for a calendar year only 
                if the Secretary determines, using actuarial 
                projections provided by the trustees of the Combined 
                Benefit Fund referred to in paragraph (2)(A), that 
                amounts will be available under paragraph (1), after 
                the transfer, for the next fiscal year for making the 
                transfer under paragraph (2)(A).
                    ``(B) Rate of contributions of obligors.--
                            ``(i) In general.--
                                    ``(I) Rate.--A transfer under 
                                paragraph (2)(C) shall not be made for 
                                a calendar year unless the persons that 
                                are obligated to contribute to the plan 
                                referred to in paragraph (2)(C) on the 
                                date of the transfer are obligated to 
                                make the contributions at rates that 
                                are no less than those in effect on the 
                                date which is 30 days before the date 
                                of enactment of this subsection.
                                    ``(II) Application.--The 
                                contributions described in subclause 
                                (I) shall be applied first to the 
                                provision of benefits to those plan 
                                beneficiaries who are not described in 
                                paragraph (2)(C)(ii).
                            ``(ii) Initial contributions.--
                                    ``(I) In general.--From the date of 
                                enactment of the Surface Mining Control 
                                and Reclamation Act Amendments of 2006 
                                through December 31, 2010, the persons 
                                that, on the date of enactment of that 
                                Act, are obligated to contribute to the 
                                plan referred to in paragraph (2)(C) 
                                shall be obligated, collectively, to 
                                make contributions equal to the amount 
                                described in paragraph (2)(C), less the 
                                amount actually transferred due to the 
                                operation of subparagraph (C).
                                    ``(II) First calendar year.--
                                Calendar year 2006 is the first 
                                calendar year for which contributions 
                                are required under this clause.
                                    ``(III) Amount of contribution for 
                                2006.--Except as provided in subclause 
                                (IV), the amount described in paragraph 
                                (2)(C) for calendar year 2006 shall be 
                                calculated as if paragraph (2)(C) had 
                                been in effect during 2005.
                                    ``(IV) Limitation.--The 
                                contributions required under this 
                                clause for calendar year 2006 shall not 
                                exceed the amount necessary for 
                                solvency of the plan described in 
                                paragraph (2)(C), measured as of 
                                December 31, 2006 and taking into 
                                account all assets held by the plan as 
                                of that date.
                            ``(iii) Division.--The collective annual 
                        contribution obligation required under clause 
                        (ii) shall be divided among the persons subject 
                        to the obligation, and applied uniformly, based 
                        on the hours worked for which contributions 
                        referred to in clause (i) would be owed.
                    ``(C) Phase-in of transfers.--For each of calendar 
                years 2008 through 2010, the transfers required under 
                subparagraphs (B) and (C) of paragraph (2) shall equal 
                the following amounts:
                            ``(i) For calendar year 2008, the Secretary 
                        shall make transfers equal to 25 percent of the 
                        amounts that would otherwise be required under 
                        subparagraphs (B) and (C) of paragraph (2).
                            ``(ii) For calendar year 2009, the 
                        Secretary shall make transfers equal to 50 
                        percent of the amounts that would otherwise be 
                        required under subparagraphs (B) and (C) of 
                        paragraph (2).
                            ``(iii) For calendar year 2010, the 
                        Secretary shall make transfers equal to 75 
                        percent of the amounts that would otherwise be 
                        required under subparagraphs (B) and (C) of 
                        paragraph (2).
    ``(i) Funding.--
            ``(1) In general.--Subject to paragraph (3), out of any 
        funds in the Treasury not otherwise appropriated, the Secretary 
        of the Treasury shall transfer to the plans described in 
        subsection (h)(2) such sums as are necessary to pay the 
        following amounts:
                    ``(A) To the Combined Fund (as defined in section 
                9701(a)(5) of the Internal Revenue Code of 1986 and 
                referred to in this paragraph as the `Combined Fund'), 
                the amount that the trustees of the Combined Fund 
                estimate will be expended from premium accounts 
                maintained by the Combined Fund for the fiscal year to 
                provide benefits for beneficiaries who are unassigned 
                beneficiaries solely as a result of the application of 
                section 9706(h)(1) of the Internal Revenue Code of 
                1986, subject to the following limitations:
                            ``(i) For fiscal year 2008, the amount paid 
                        under this subparagraph shall equal--
                                    ``(I) the amount described in 
                                subparagraph (A); minus
                                    ``(II) the amounts required under 
                                section 9706(h)(3)(A) of the Internal 
                                Revenue Code of 1986.
                            ``(ii) For fiscal year 2009, the amount 
                        paid under this subparagraph shall equal--
                                    ``(I) the amount described in 
                                subparagraph (A); minus
                                    ``(II) the amounts required under 
                                section 9706(h)(3)(B) of the Internal 
                                Revenue Code of 1986.
                            ``(iii) For fiscal year 2010, the amount 
                        paid under this subparagraph shall equal--
                                    ``(I) the amount described in 
                                subparagraph (A); minus
                                    ``(II) the amounts required under 
                                section 9706(h)(3)(C) of the Internal 
                                Revenue Code of 1986.
                    ``(B) On certification by the trustees of any plan 
                described in subsection (h)(2) that the amount 
                available for transfer by the Secretary pursuant to 
                this section (determined after application of any 
                limitation under subsection (h)(5)) is less than the 
                amount required to be transferred, to the plan the 
                amount necessary to meet the requirement of subsection 
                (h)(2).
                    ``(C) To the Combined Fund, $9,000,000 on October 
                1, 2007, $9,000,000 on October 1, 2008, and $9,000,000 
                on October 1, 2009 (which amounts shall not be 
                exceeded) to provide a refund of any premium (as 
                described in section 9704(a) of the Internal Revenue 
                Code of 1986) paid on or before September 7, 2000, to 
                the Combined Fund, plus interest on the premium 
                calculated at the rate of 7.5 percent per year, on a 
                proportional basis and to be paid not later than 60 
                days after the date on which each payment is received 
                by the Combined Fund, to those signatory operators (to 
                the extent that the Combined Fund has not previously 
                returned the premium amounts to the operators), or any 
                related persons to the operators (as defined in section 
                9701(c) of the Internal Revenue Code of 1986), or their 
                heirs, successors, or assigns who have been denied the 
                refunds as the result of final judgments or settlements 
                if--
                            ``(i) prior to the date of enactment of 
                        this paragraph, the signatory operator (or any 
                        related person to the operator)--
                                    ``(I) had all of its beneficiary 
                                assignments made under section 9706 of 
                                the Internal Revenue Code of 1986 
                                voided by the Commissioner of the 
                                Social Security Administration; and
                                    ``(II) was subject to a final 
                                judgment or final settlement of 
                                litigation adverse to a claim by the 
                                operator that the assignment of 
                                beneficiaries under section 9706 of the 
                                Internal Revenue Code of 1986 was 
                                unconstitutional as applied to the 
                                operator; and
                            ``(ii) on or before September 7, 2000, the 
                        signatory operator (or any related person to 
                        the operator) had paid to the Combined Fund any 
                        premium amount that had not been refunded.
            ``(2) Payments to states and indian tribes.--Subject to 
        paragraph (3), out of any funds in the Treasury not otherwise 
        appropriated, the Secretary of the Treasury shall transfer to 
        the Secretary of the Interior for distribution to States and 
        Indian tribes such sums as are necessary to pay amounts 
        described in paragraphs (1)(A) and (2)(A) of section 411(h).
            ``(3) Limitations.--
                    ``(A) Cap.--The total amount transferred under this 
                subsection for any fiscal year shall not exceed 
                $490,000,000.
                    ``(B) Insufficient amounts.--In a case in which the 
                amount required to be transferred without regard to 
                this paragraph exceeds the maximum annual limitation in 
                subparagraph (A), the Secretary shall adjust the 
                transfers of funds so that--
                            ``(i) each transfer for the fiscal year is 
                        a percentage of the amount described;
                            ``(ii) the amount is determined without 
                        regard to subsection (h)(5)(A); and
                            ``(iii) the percentage transferred is the 
                        same for all transfers made under this 
                        subsection for the fiscal year.
            ``(4) Availability of funds.--Funds shall be transferred 
        under paragraph (1) and (2) beginning in fiscal year 2008 and 
        each fiscal year thereafter, and shall remain available until 
        expended.''.

SEC. 203. OBJECTIVES OF FUND.

    Section 403 of the Surface Mining Control and Reclamation Act of 
1977 (30 U.S.C. 1233) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)--
                            (i) by striking ``(1) the protection'' and 
                        inserting the following:
            ``(1)(A) the protection;'';
                            (ii) in subparagraph (A) (as designated by 
                        clause (i)), by striking ``general welfare,''; 
                        and
                            (iii) by adding at the end the following:
            ``(B) the restoration of land and water resources and the 
        environment that--
                    ``(i) have been degraded by the adverse effects of 
                coal mining practices; and
                    ``(ii) are adjacent to a site that has been or will 
                be remediated under subparagraph (A);'';
                    (B) in paragraph (2)--
                            (i) by striking ``(2) the protection'' and 
                        inserting the following:
            ``(2)(A) the protection'';
                            (ii) in subparagraph (A) (as designated by 
                        clause (i), by striking ``health, safety, and 
                        general welfare'' and inserting ``health and 
                        safety''; and
                            (iii) by adding at the end the following:
            ``(B) the restoration of land and water resources and the 
        environment that--
                    ``(i) have been degraded by the adverse effects of 
                coal mining practices; and
                    ``(ii) are adjacent to a site that has been or will 
                be remediated under subparagraph (A); and'';
                    (C) in paragraph (3), by striking the semicolon at 
                the end and inserting a period; and
                    (D) by striking paragraphs (4) and (5);
            (2) in subsection (b)--
                    (A) by striking the subsection heading and 
                inserting ``Water Supply Restoration.--''; and
                    (B) in paragraph (1), by striking ``up to 30 
                percent of the''; and
            (3) in the second sentence of subsection (c), by inserting 
        ``, subject to the approval of the Secretary,'' after 
        ``amendments''.

SEC. 204. RECLAMATION OF RURAL LAND.

    (a) Administration.--Section 406(h) of the Surface Mining Control 
and Reclamation Act of 1977 (30 U.S.C. 1236(h)) is amended by striking 
``Soil Conservation Service'' and inserting ``Natural Resources 
Conservation Service''.
    (b) Authorization of Appropriations for Carrying Out Rural Land 
Reclamation.--Section 406 of the Surface Mining Control and Reclamation 
Act of 1977 (30 U.S.C. 1236) is amended by adding at the end the 
following:
    ``(i) There are authorized to be appropriated to the Secretary of 
Agriculture, from amounts in the Treasury other than amounts in the 
fund, such sums as may be necessary to carry out this section.''.

SEC. 205. LIENS.

    Section 408(a) of the Surface Mining Control and Reclamation Act of 
1977 (30 U.S.C. 1238) is amended in the last sentence by striking ``who 
owned the surface prior to May 2, 1977, and''.

SEC. 206. CERTIFICATION.

    Section 411 of the Surface Mining Control and Reclamation Act of 
1977 (30 U.S.C. 1240a) is amended--
            (1) in subsection (a)--
                    (A) by inserting ``(1)'' before the first sentence; 
                and
                    (B) by adding at the end the following:
    ``(2)(A) The Secretary may, on the initiative of the Secretary, 
make the certification referred to in paragraph (1) on behalf of any 
State or Indian tribe referred to in paragraph (1) if on the basis of 
the inventory referred to in section 403(c) all reclamation projects 
relating to the priorities described in section 403(a) for eligible 
land and water pursuant to section 404 in the State or tribe have been 
completed.
    ``(B) The Secretary shall only make the certification after notice 
in the Federal Register and opportunity for public comment.''; and
            (2) by adding at the end the following:
    ``(h) Payments to States and Indian Tribes.--
            ``(1) In general.--
                    ``(A) Payments.--
                            ``(i) In general.--Notwithstanding section 
                        401(f)(3)(B), from funds referred to in section 
                        402(i)(2), the Secretary shall make payments to 
                        States or Indian tribes for the amount due for 
                        the aggregate unappropriated amount allocated 
                        to the State or Indian tribe under subparagraph 
                        (A) or (B) of section 402(g)(1).
                            ``(ii) Conversion as equivalent payments.--
                        Amounts allocated under subparagraphs (A) or 
                        (B) of section 402(g)(1) shall be reallocated 
                        to the allocation established in section 
                        402(g)(5) in amounts equivalent to payments 
                        made to States or Indian tribes under this 
                        paragraph.
                    ``(B) Amount due.--In this paragraph, the term 
                `amount due' means the unappropriated amount allocated 
                to a State or Indian tribe before October 1, 2007, 
                under subparagraph (A) or (B) of section 402(g)(1).
                    ``(C) Schedule.--Payments under subparagraph (A) 
                shall be made in 7 equal annual installments, beginning 
                with fiscal year 2008.
                    ``(D) Use of funds.--
                            ``(i) Certified states and indian tribes.--
                        A State or Indian tribe that makes a 
                        certification under subsection (a) in which the 
                        Secretary concurs shall use any amounts 
                        provided under this paragraph for the purposes 
                        established by the State legislature or tribal 
                        council of the Indian tribe, with priority 
                        given for addressing the impacts of mineral 
                        development.
                            ``(ii) Uncertified states and indian 
                        tribes.--A State or Indian tribe that has not 
                        made a certification under subsection (a) in 
                        which the Secretary has concurred shall use any 
                        amounts provided under this paragraph for the 
                        purposes described in section 403.
            ``(2) Subsequent state and indian tribe share for certified 
        states and indian tribes.--
                    ``(A) In general.--Notwithstanding section 
                401(f)(3)(B), from funds referred to in section 
                402(i)(2), the Secretary shall pay to each certified 
                State or Indian tribe an amount equal to the sum of the 
                aggregate unappropriated amount allocated on or after 
                October 1, 2007, to the certified State or Indian tribe 
                under subparagraph (A) or (B) of section 402(g)(1).
                    ``(B) Certified state or indian tribe defined.--In 
                this paragraph the term `certified State or Indian 
                tribe' means a State or Indian tribe for which a 
                certification is made under subsection (a) in which the 
                Secretary concurs.
            ``(3) Manner of payment.--
                    ``(A) In general.--Subject to subparagraph (B), 
                payments to States or Indian tribes under this 
                subsection shall be made without regard to any 
                limitation in section 401(d) and concurrently with 
                payments to States under that section.
                    ``(B) Initial payments.--The first 3 payments made 
                to any State or Indian tribe shall be reduced to 25 
                percent, 50 percent, and 75 percent, respectively, of 
                the amounts otherwise required under paragraph (2)(A).
                    ``(C) Installments.--Amounts withheld from the 
                first 3 annual installments as provided under 
                subparagraph (B) shall be paid in 2 equal annual 
                installments beginning with fiscal year 2018.
            ``(4) Reallocation.--
                    ``(A) In general.--The amount allocated to any 
                State or Indian tribe under subparagraph (A) or (B) of 
                section 402(g)(1) that is paid to the State or Indian 
                tribe as a result of a payment under paragraph (1) or 
                (2) shall be reallocated and available for grants under 
                section 402(g)(5).
                    ``(B) Allocation.--The grants shall be allocated 
                based on the amount of coal historically produced 
                before August 3, 1977, in the same manner as under 
                section 402(g)(5).''.

SEC. 207. REMINING INCENTIVES.

    Title IV of the Surface Mining Control and Reclamation Act of 1977 
(30 U.S.C. 1231 et seq.) is amended by adding at the following:

``SEC. 415. REMINING INCENTIVES.

    ``(a) In General.--Notwithstanding any other provision of this Act, 
the Secretary may, after opportunity for public comment, promulgate 
regulations that describe conditions under which amounts in the fund 
may be used to provide incentives to promote remining of eligible land 
under section 404 in a manner that leverages the use of amounts from 
the fund to achieve more reclamation with respect to the eligible land 
than would be achieved without the incentives.
    ``(b) Requirements.--Any regulations promulgated under subsection 
(a) shall specify that the incentives shall apply only if the Secretary 
determines, with the concurrence of the State regulatory authority 
referred to in title V, that, without the incentives, the eligible land 
would not be likely to be remined and reclaimed.
    ``(c) Incentives.--
            ``(1) In general.--Incentives that may be considered for 
        inclusion in the regulations promulgated under subsection (a) 
        include, but are not limited to--
                    ``(A) a rebate or waiver of the reclamation fees 
                required under section 402(a); and
                    ``(B) the use of amounts in the fund to provide 
                financial assurance for remining operations in lieu of 
                all or a portion of the performance bonds required 
                under section 509.
            ``(2) Limitations.--
                    ``(A) Use.--A rebate or waiver under paragraph 
                (1)(A) shall be used only for operations that--
                            ``(i) remove or reprocess abandoned coal 
                        mine waste; or
                            ``(ii) conduct remining activities that 
                        meet the priorities specified in paragraph (1) 
                        or (2) of section 403(a).
                    ``(B) Amount.--The amount of a rebate or waiver 
                provided as an incentive under paragraph (1)(A) to 
                remine or reclaim eligible land shall not exceed the 
                estimated cost of reclaiming the eligible land under 
                this section.''.

SEC. 208. EXTENSION OF LIMITATION ON APPLICATION OF PROHIBITION ON 
              ISSUANCE OF PERMIT.

    Section 510(e) of the Surface Mining Control and Reclamation Act of 
1977 (30 U.S.C. 1260(e)) is amended by striking the last sentence.

SEC. 209. TRIBAL REGULATION OF SURFACE COAL MINING AND RECLAMATION 
              OPERATIONS.

    (a) In General.--Section 710 of the Surface Mining Control and 
Reclamation Act of 1977 (30 U.S.C. 1300) is amended by adding at the 
end the following:
    ``(j) Tribal Regulatory Authority.--
            ``(1) Tribal regulatory programs.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, an Indian tribe may apply for, and 
                obtain the approval of, a tribal program under section 
                503 regulating in whole or in part surface coal mining 
                and reclamation operations on reservation land under 
                the jurisdiction of the Indian tribe using the 
                procedures of section 504(e).
                    ``(B) References to state.--For purposes of this 
                subsection and the implementation and administration of 
                a tribal program under title V, any reference to a 
                `State' in this Act shall be considered to be a 
                reference to a `tribe'.
            ``(2) Conflicts of interest.--
                    ``(A) In general.--The fact that an individual is a 
                member of an Indian tribe does not in itself constitute 
                a violation of section 201(f).
                    ``(B) Employees of tribal regulatory authority.--
                Any employee of a tribal regulatory authority shall not 
                be eligible for a per capita distribution of any 
                proceeds from coal mining operations conducted on 
                Indian reservation lands under this Act.
            ``(3) Sovereign immunity.--To receive primary regulatory 
        authority under section 504(e), an Indian tribe shall waive 
        sovereign immunity for purposes of section 520 and paragraph 
        (4).
            ``(4) Judicial review.--
                    ``(A) Civil actions.--
                            ``(i) In general.--After exhausting all 
                        tribal remedies with respect to a civil action 
                        arising under a tribal program approved under 
                        section 504(e), an interested party may file a 
                        petition for judicial review of the civil 
                        action in the United States circuit court for 
                        the circuit in which the surface coal mining 
                        operation named in the petition is located.
                            ``(ii) Scope of review.--
                                    ``(I) Questions of law.--The United 
                                States circuit court shall review de 
                                novo any questions of law under clause 
                                (i).
                                    ``(II) Findings of fact.--The 
                                United States circuit court shall 
                                review findings of fact under clause 
                                (i) using a clearly erroneous standard.
                    ``(B) Criminal actions.--Any criminal action 
                brought under section 518 with respect to surface coal 
                mining or reclamation operations on Indian reservation 
                lands shall be brought in--
                            ``(i) the United States District Court for 
                        the District of Columbia; or
                            ``(ii) the United States district court in 
                        which the criminal activity is alleged to have 
                        occurred.
            ``(5) Grants.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), grants for developing, administering, 
                and enforcing tribal programs approved in accordance 
                with section 504(e) shall be provided to an Indian 
                tribe in accordance with section 705.
                    ``(B) Exception.--Notwithstanding subparagraph (A), 
                the Federal share of the costs of developing, 
                administering, and enforcing an approved tribal program 
                shall be 100 percent.
            ``(6) Report.--Not later than 18 months after the date on 
        which a tribal program is approved under subsection (e) of 
        section 504, the Secretary shall submit to the appropriate 
        committees of Congress a report, developed in cooperation with 
        the applicable Indian tribe, on the tribal program that 
        includes a recommendation of the Secretary on whether primary 
        regulatory authority under that subsection should be expanded 
        to include additional Indian lands.''.
    (b) Conforming Amendment.--Section 710(i) of the Surface Mining 
Control and Reclamation Act of 1977 (30 U.S.C. 1300(i)) is amended in 
the first sentence by striking ``, except'' and all that follows 
through ``section 503''.

          Subtitle B--Coal Industry Retiree Health Benefit Act

SEC. 211. CERTAIN RELATED PERSONS AND SUCCESSORS IN INTEREST RELIEVED 
              OF LIABILITY IF PREMIUMS PREPAID.

    (a) Combined Benefit Fund.--Section 9704 of the Internal Revenue 
Code of 1986 (relating to liability of assigned operators) is amended 
by adding at the end the following new subsection:
    ``(j) Prepayment of Premium Liability.--
            ``(1) In general.--If--
                    ``(A) a payment meeting the requirements of 
                paragraph (3) is made to the Combined Fund by or on 
                behalf of--
                            ``(i) any assigned operator to which this 
                        subsection applies, or
                            ``(ii) any related person to any assigned 
                        operator described in clause (i), and
                    ``(B) the common parent of the controlled group of 
                corporations described in paragraph (2)(B) is jointly 
                and severally liable for any premium under this section 
                which (but for this subsection) would be required to be 
                paid by the assigned operator or related person,
        then such common parent (and no other person) shall be liable 
        for such premium.
            ``(2) Assigned operators to which subsection applies.--
                    ``(A) In general.--This subsection shall apply to 
                any assigned operator if--
                            ``(i) the assigned operator (or a related 
                        person to the assigned operator)--
                                    ``(I) made contributions to the 
                                1950 UMWA Benefit Plan and the 1974 
                                UMWA Benefit Plan for employment during 
                                the period covered by the 1988 
                                agreement; and
                                    ``(II) is not a 1988 agreement 
                                operator,
                            ``(ii) the assigned operator (and all 
                        related persons to the assigned operator) are 
                        not actively engaged in the production of coal 
                        as of July 1, 2005, and
                            ``(iii) the assigned operator was, as of 
                        July 20, 1992, a member of a controlled group 
                        of corporations described in subparagraph (B).
                    ``(B) Controlled group of corporations.--A 
                controlled group of corporations is described in this 
                subparagraph if the common parent of such group is a 
                corporation the shares of which are publicly traded on 
                a United States exchange.
                    ``(C) Coordination with repeal of assignments.--A 
                person shall not fail to be treated as an assigned 
                operator to which this subsection applies solely 
                because the person ceases to be an assigned operator by 
                reason of section 9706(h)(1) if the person otherwise 
                meets the requirements of this subsection and is liable 
                for the payment of premiums under section 9706(h)(3).
                    ``(D) Controlled group.--For purposes of this 
                subsection, the term `controlled group of corporations' 
                has the meaning given such term by section 52(a).
            ``(3) Requirements.--A payment meets the requirements of 
        this paragraph if--
                    ``(A) the amount of the payment is not less than 
                the present value of the total premium liability under 
                this chapter with respect to the Combined Fund of the 
                assigned operators or related persons described in 
                paragraph (1) or their assignees, as determined by the 
                operator's or related person's enrolled actuary (as 
                defined in section 7701(a)(35)) using actuarial methods 
                and assumptions each of which is reasonable and which 
                are reasonable in the aggregate, as determined by such 
                enrolled actuary;
                    ``(B) such enrolled actuary files with the 
                Secretary of Labor a signed actuarial report 
                containing--
                            ``(i) the date of the actuarial valuation 
                        applicable to the report; and
                            ``(ii) a statement by the enrolled actuary 
                        signing the report that, to the best of the 
                        actuary's knowledge, the report is complete and 
                        accurate and that in the actuary's opinion the 
                        actuarial assumptions used are in the aggregate 
                        reasonably related to the experience of the 
                        operator and to reasonable expectations; and
                    ``(C) 90 calendar days have elapsed after the 
                report required by subparagraph (B) is filed with the 
                Secretary of Labor, and the Secretary of Labor has not 
                notified the assigned operator in writing that the 
                requirements of this paragraph have not been satisfied.
            ``(4) Use of prepayment.--The Combined Fund shall--
                    ``(A) establish and maintain an account for each 
                assigned operator or related person by, or on whose 
                behalf, a payment described in paragraph (3) was made,
                    ``(B) credit such account with such payment (and 
                any earnings thereon), and
                    ``(C) use all amounts in such account exclusively 
                to pay premiums that would (but for this subsection) be 
                required to be paid by the assigned operator.
        Upon termination of the obligations for the premium liability 
        of any assigned operator or related person for which such 
        account is maintained, all funds remaining in such account (and 
        earnings thereon) shall be refunded to such person as may be 
        designated by the common parent described in paragraph 
        (1)(B).''.
    (b) Individual Employer Plans.--Section 9711(c) of the Internal 
Revenue Code of 1986 (relating to joint and several liability) is 
amended to read as follows:
    ``(c) Joint and Several Liability of Related Persons.--
            ``(1) In general.--Except as provided in paragraph (2), 
        each related person of a last signatory operator to which 
        subsection (a) or (b) applies shall be jointly and severally 
        liable with the last signatory operator for the provision of 
        health care coverage described in subsection (a) or (b).
            ``(2) Liability limited if security provided.--If--
                    ``(A) security meeting the requirements of 
                paragraph (3) is provided by or on behalf of--
                            ``(i) any last signatory operator which is 
                        an assigned operator described in section 
                        9704(j)(2), or
                            ``(ii) any related person to any last 
                        signatory operator described in clause (i), and
                    ``(B) the common parent of the controlled group of 
                corporations described in section 9704(j)(2)(B) is 
                jointly and severally liable for the provision of 
                health care under this section which, but for this 
                paragraph, would be required to be provided by the last 
                signatory operator or related person,
        then, as of the date the security is provided, such common 
        parent (and no other person) shall be liable for the provision 
        of health care under this section which the last signatory 
        operator or related person would otherwise be required to 
        provide. Security may be provided under this paragraph without 
        regard to whether a payment was made under section 9704(j).
            ``(3) Security.--Security meets the requirements of this 
        paragraph if--
                    ``(A) the security--
                            ``(i) is in the form of a bond, letter of 
                        credit, or cash escrow,
                            ``(ii) is provided to the trustees of the 
                        1992 UMWA Benefit Plan solely for the purpose 
                        of paying premiums for beneficiaries who would 
                        be described in section 9712(b)(2)(B) if the 
                        requirements of this section were not met by 
                        the last signatory operator, and
                            ``(iii) is in an amount equal to 1 year of 
                        liability of the last signatory operator under 
                        this section, determined by using the average 
                        cost of such operator's liability during the 
                        prior 3 calendar years;
                    ``(B) the security is in addition to any other 
                security required under any other provision of this 
                title; and
                    ``(C) the security remains in place for 5 years.
            ``(4) Refunds of security.--The remaining amount of any 
        security provided under this subsection (and earnings thereon) 
        shall be refunded to the last signatory operator as of the 
        earlier of--
                    ``(A) the termination of the obligations of the 
                last signatory operator under this section, or
                    ``(B) the end of the 5-year period described in 
                paragraph (4)(C).''.
    (c) 1992 UMWA Benefit Plan.--Section 9712(d)(4) of the Internal 
Revenue Code of 1986 (relating to joint and several liability) is 
amended by adding at the end the following new sentence: ``The 
provisions of section 9711(c)(2) shall apply to any last signatory 
operator described in such section (without regard to whether security 
is provided under such section, a payment is made under section 
9704(j), or both) and if security meeting the requirements of section 
9711(c)(3) is provided, the common parent described in section 
9711(c)(2)(B) shall be exclusively responsible for any liability for 
premiums under this section which, but for this sentence, would be 
required to be paid by the last signatory operator or any related 
person.''.
    (d) Successor in Interest.--Section 9701(c) of the Internal Revenue 
Code of 1986 (relating to terms relating to operators) is amended by 
adding at the end the following new paragraph:
            ``(8) Successor in interest.--
                    ``(A) Safe harbor.--The term `successor in 
                interest' shall not include any person who--
                            ``(i) is an unrelated person to an eligible 
                        seller described in subparagraph (C); and
                            ``(ii) purchases for fair market value 
                        assets, or all of the stock, of a related 
                        person to such seller, in a bona fide, arm's-
                        length sale.
                    ``(B) Unrelated person.--The term `unrelated 
                person' means a purchaser who does not bear a 
                relationship to the eligible seller described in 
                section 267(b).
                    ``(C) Eligible seller.--For purposes of this 
                paragraph, the term `eligible seller' means an assigned 
                operator described in section 9704(j)(2) or a related 
                person to such assigned operator.''.
    (e) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act, except that the 
amendment made by subsection (d) shall apply to transactions after the 
date of the enactment of this Act.

SEC. 212. TRANSFERS TO FUNDS; PREMIUM RELIEF.

    (a) Combined Fund.--
            (1) Federal transfers.--Section 9705(b) of the Internal 
        Revenue Code of 1986 (relating to transfers from Abandoned Mine 
        Reclamation Fund) is amended--
                    (A) in paragraph (1), by striking ``section 
                402(h)'' and inserting ``subsections (h) and (i) of 
                section 402'';
                    (B) by striking paragraph (2) and inserting the 
                following new paragraph:
            ``(2) Use of funds.--Any amount transferred under paragraph 
        (1) for any fiscal year shall be used to pay benefits and 
        administrative costs of beneficiaries of the Combined Fund or 
        for such other purposes as are specifically provided in the 
        Acts described in paragraph (1).''; and
                    (C) by striking ``From Abandoned Mine Reclamation 
                Fund'' in the heading thereof.
            (2) Modifications of premiums to reflect federal 
        transfers.--
                    (A) Elimination of unassigned beneficiaries 
                premium.--Section 9704(d) of such Code (establishing 
                unassigned beneficiaries premium) is amended to read as 
                follows:
    ``(d) Unassigned Beneficiaries Premium.--
            ``(1) Plan years ending on or before september 30, 2006.--
        For plan years ending on or before September 30, 2006, the 
        unassigned beneficiaries premium for any assigned operator 
        shall be equal to the applicable percentage of the product of 
        the per beneficiary premium for the plan year multiplied by the 
        number of eligible beneficiaries who are not assigned under 
        section 9706 to any person for such plan year.
            ``(2) Plan years beginning on or after october 1, 2006.--
                    ``(A) In general.--For plan years beginning on or 
                after October 1, 2006, subject to subparagraph (B), 
                there shall be no unassigned beneficiaries premium, and 
                benefit costs with respect to eligible beneficiaries 
                who are not assigned under section 9706 to any person 
                for any such plan year shall be paid from amounts 
                transferred under section 9705(b).
                    ``(B) Inadequate transfers.--If, for any plan year 
                beginning on or after October 1, 2006, the amounts 
                transferred under section 9705(b) are less than the 
                amounts required to be transferred to the Combined Fund 
                under subsection (h)(2)(A) or (i) of section 402 of the 
                Surface Mining Control and Reclamation Act of 1977 (30 
                U.S.C. 1232)), then the unassigned beneficiaries 
                premium for any assigned operator shall be equal to the 
                operator's applicable percentage of the amount required 
                to be so transferred which was not so transferred.''.
                    (B) Premium accounts.--
                            (i) Crediting of accounts.--Section 
                        9704(e)(1) of such Code (relating to premium 
                        accounts; adjustments) is amended by inserting 
                        ``and amounts transferred under section 
                        9705(b)'' after ``premiums received''.
                            (ii) Surpluses attributable to public 
                        funding.--Section 9704(e)(3)(A) of such Code is 
                        amended by adding at the end the following new 
                        sentence: ``Amounts credited to an account from 
                        amounts transferred under section 9705(b) shall 
                        not be taken into account in determining 
                        whether there is a surplus in the account for 
                        purposes of this paragraph.''
                    (C) Applicable percentage.--Section 9704(f)(2) of 
                such Code (relating to annual adjustments) is amended 
                by adding at the end the following new subparagraph:
                    ``(C) In the case of plan years beginning on or 
                after October 1, 2007, the total number of assigned 
                eligible beneficiaries shall be reduced by the eligible 
                beneficiaries whose assignments have been revoked under 
                section 9706(h).''.
            (3) Assignments and reassignment.--Section 9706 of the 
        Internal Revenue Code of 1986 (relating to assignment of 
        eligible beneficiaries) is amended by adding at the end the 
        following:
    ``(h) Assignments as of October 1, 2007.--
            ``(1) In general.--Subject to the premium obligation set 
        forth in paragraph (3), the Commissioner of Social Security 
        shall--
                    ``(A) revoke all assignments to persons other than 
                1988 agreement operators for purposes of assessing 
                premiums for plan years beginning on and after October 
                1, 2007; and
                    ``(B) make no further assignments to persons other 
                than 1988 agreement operators, except that no 
                individual who becomes an unassigned beneficiary by 
                reason of subparagraph (A) may be assigned to a 1988 
                agreement operator.
            ``(2) Reassignment upon purchase.--This subsection shall 
        not be construed to prohibit the reassignment under subsection 
        (b)(2) of an eligible beneficiary.
            ``(3) Liability of persons during three fiscal years 
        beginning on and after october 1, 2007.--In the case of each of 
        the fiscal years beginning on October 1, 2007, 2008, and 2009, 
        each person other than a 1988 agreement operator shall pay to 
        the Combined Fund the following percentage of the amount of 
        annual premiums that such person would otherwise be required to 
        pay under section 9704(a), determined on the basis of 
        assignments in effect without regard to the revocation of 
        assignments under paragraph (1)(A):
                    ``(A) For the fiscal year beginning on October 1, 
                2007, 55 percent.
                    ``(B) For the fiscal year beginning on October 1, 
                2008, 40 percent.
                    ``(C) For the fiscal year beginning on October 1, 
                2009, 15 percent.''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to plan years of the Combined Fund beginning after 
        September 30, 2006.
    (b) 1992 UMWA Benefit and Other Plans.--
            (1) Transfers to plans.--Section 9712(a) of the Internal 
        Revenue Code of 1986 (relating to the establishment and 
        coverage of the 1992 UMWA Benefit Plan) is amended by adding at 
        the end the following:
            ``(3) Transfers under other federal statutes.--
                    ``(A) In general.--The 1992 UMWA Benefit Plan shall 
                include any amount transferred to the plan under 
                subsections (h) and (i) of section 402 of the Surface 
                Mining Control and Reclamation Act of 1977 (30 U.S.C. 
                1232).
                    ``(B) Use of funds.--Any amount transferred under 
                subparagraph (A) for any fiscal year shall be used to 
                provide the health benefits described in subsection (c) 
                with respect to any beneficiary for whom no monthly per 
                beneficiary premium is paid pursuant to paragraph 
                (1)(A) or (3) of subsection (d).
            ``(4) Special rule for 1993 plan.--
                    ``(A) In general.--The plan described in section 
                402(h)(2)(C) of the Surface Mining Control and 
                Reclamation Act of 1977 (30 U.S.C. 1232(h)(2)(C)) shall 
                include any amount transferred to the plan under 
                subsections (h) and (i) of the Surface Mining Control 
                and Reclamation Act of 1977 (30 U.S.C. 1232).
                    ``(B) Use of funds.--Any amount transferred under 
                subparagraph (A) for any fiscal year shall be used to 
                provide the health benefits described in section 
                402(h)(2)(C)(i) of the Surface Mining Control and 
                Reclamation Act of 1977 (30 U.S.C. 1232(h)(2)(C)(i)) to 
                individuals described in section 402(h)(2)(C) of such 
                Act (30 U.S.C. 1232(h)(2)(C)).''.
            (2) Premium adjustments.--
                    (A) In general.--Section 9712(d)(1) of such Code 
                (relating to guarantee of benefits) is amended to read 
                as follows:
            ``(1) In general.--All 1988 last signatory operators shall 
        be responsible for financing the benefits described in 
        subsection (c) by meeting the following requirements in 
        accordance with the contribution requirements established in 
        the 1992 UMWA Benefit Plan:
                    ``(A) The payment of a monthly per beneficiary 
                premium by each 1988 last signatory operator for each 
                eligible beneficiary of such operator who is described 
                in subsection (b)(2) and who is receiving benefits 
                under the 1992 UMWA benefit plan.
                    ``(B) The provision of a security (in the form of a 
                bond, letter of credit, or cash escrow) in an amount 
                equal to a portion of the projected future cost to the 
                1992 UMWA Benefit Plan of providing health benefits for 
                eligible and potentially eligible beneficiaries 
                attributable to the 1988 last signatory operator.
                    ``(C) If the amounts transferred under subsection 
                (a)(3) are less than the amounts required to be 
                transferred to the 1992 UMWA Benefit Plan under 
                subsections (h) and (i) of section 402 of the Surface 
                Mining Control and Reclamation Act of 1977 (30 U.S.C. 
                1232), the payment of an additional backstop premium by 
                each 1988 last signatory operator which is equal to 
                such operator's share of the amounts required to be so 
                transferred but which were not so transferred, 
                determined on the basis of the number of eligible and 
                potentially eligible beneficiaries attributable to the 
                operator.''.
                    (B) Conforming amendments.--Section 9712(d) of such 
                Code is amended--
                            (i) in paragraph (2)(B), by striking 
                        ``prefunding'' and inserting ``backstop'', and
                            (ii) in paragraph (3), by striking 
                        ``paragraph (1)(B)'' and inserting ``paragraph 
                        (1) (A)''.
                    (C) Effective date.--The amendments made by this 
                paragraph shall apply to fiscal years beginning on or 
                after October 1, 2010.

SEC. 213. OTHER PROVISIONS.

    (a) Board of Trustees.--Section 9702(b) of the Internal Revenue 
Code of 1986 (relating to board of trustees of the Combined Fund) is 
amended to read as follows:
    ``(b) Board of Trustees.--
            ``(1) In general.--For purposes of subsection (a), the 
        board of trustees for the Combined Fund shall be appointed as 
        follows:
                    ``(A) 2 individuals who represent employers in the 
                coal mining industry shall be designated by the BCOA;
                    ``(B) 2 individuals designated by the United Mine 
                Workers of America; and
                    ``(C) 3 individuals selected by the individuals 
                appointed under subparagraphs (A) and (B).
            ``(2) Successor trustees.--Any successor trustee shall be 
        appointed in the same manner as the trustee being succeeded. 
        The plan establishing the Combined Fund shall provide for the 
        removal of trustees.
            ``(3) Special rule.--If the BCOA ceases to exist, any 
        trustee or successor under paragraph (1)(A) shall be designated 
        by the 3 employers who were members of the BCOA on the 
        enactment date and who have been assigned the greatest number 
        of eligible beneficiaries under section 9706.''.
    (b) Enforcement of Obligations.--
            (1) Failure to pay premiums.--Section 9707(a) of the 
        Internal Revenue Code of 1986 is amended to read as follows:
    ``(a) Failures to Pay.--
            ``(1) Premiums for eligible beneficiaries.--There is hereby 
        imposed a penalty on the failure of any assigned operator to 
        pay any premium required to be paid under section 9704 with 
        respect to any eligible beneficiary.
            ``(2) Contributions required under the mining laws.--There 
        is hereby imposed a penalty on the failure of any person to 
        make a contribution required under section 402(h)(5)(B)(ii) of 
        the Surface Mining Control and Reclamation Act of 1977 to a 
        plan referred to in section 402(h)(2)(C) of such Act. For 
        purposes of applying this section, each such required monthly 
        contribution for the hours worked of any individual shall be 
        treated as if it were a premium required to be paid under 
        section 9704 with respect to an eligible beneficiary.''.
            (2) Civil enforcement.--Section 9721 of such Code is 
        amended to read as follows:

``SEC. 9721. CIVIL ENFORCEMENT.

    ``The provisions of section 4301 of the Employee Retirement Income 
Security Act of 1974 shall apply, in the same manner as any claim 
arising out of an obligation to pay withdrawal liability under subtitle 
E of title IV of such Act, to any claim--
            ``(1) arising out of an obligation to pay any amount 
        required to be paid by this chapter; or
            ``(2) arising out of an obligation to pay any amount 
        required by section 402(h)(5)(B)(ii) of the Surface Mining 
        Control and Reclamation Act of 1977 (30 U.S.C. 
        1232(h)(5)(B)(ii)).''.

                      TITLE III--OTHER PROVISIONS

SEC. 301. TOBACCO PERSONAL USE QUANTITY EXCEPTION TO NOT APPLY TO 
              DELIVERY SALES.

    (a) Definitions.--Section 801 of the Tariff Act of 1930 (19 U.S.C. 
1681) is amended by adding at the end the following:
            ``(3) Delivery sale.--The term `delivery sale' means any 
        sale of cigarettes or a smokeless tobacco product to a consumer 
        if--
                    ``(A) the consumer submits the order for such sale 
                by means of a telephone or other method of voice 
                transmission, the mail, or the Internet or other online 
                service, or the seller is otherwise not in the physical 
                presence of the buyer when the request for purchase or 
                order is made; or
                    ``(B) the cigarettes or smokeless tobacco product 
                is delivered by use of a common carrier, private 
                delivery service, or the mail, or the seller is not in 
                the physical presence of the buyer when the buyer 
                obtains personal possession of the delivered cigarettes 
                or smokeless tobacco product.''.
    (b) Inapplicability of Exemptions From Requirements for Entry of 
Certain Cigarettes and Smokeless Tobacco Products.--Section 802(b)(1) 
of the Tariff Act of 1930 (19 U.S.C. 1681a(b)(1)) is amended by adding 
at the end the following new sentence: ``The preceding sentence shall 
not apply to any cigarettes or smokeless tobacco products sold in 
connection with a delivery sale.''.
    (c) State Access to Customs Certifications.--Section 802 of the 
Tariff Act of 1930 (19 U.S.C. 1681a) is amended by adding at the end 
the following new subsection:
    ``(d) State Access to Customs Certifications.--A State, through its 
Attorney General, shall be entitled to obtain copies of any 
certification required under subsection (c) directly--
            ``(1) upon request to the agency of the United States 
        responsible for collecting such certification; or
            ``(2) upon request to the importer, manufacturer, or 
        authorized official of such importer or manufacturer.''.
    (d) Enforcement Provisions.--Section 803(b) of the Tariff Act of 
1930 (19 U.S.C. 1681b(b)) is amended--
            (1) in the first sentence, by inserting before the period 
        at the end the following: ``, or to any State in which such 
        tobacco product, cigarette papers, or tube is found''; and
            (2) in the second sentence, by inserting ``, or to any 
        State,'' after ``the United States''.
    (e) Inclusion of Smokeless Tobacco.--
            (1) Sections 802 and 803(a) of the Tariff Act of 1930 (19 
        U.S.C. 1681a and 1681b(a)) (other than the last sentence of 
        section 802(b)(1), as added by subsection (b) of this section) 
        are further amended by inserting ``or smokeless tobacco 
        products'' after ``cigarettes'' each place it appears.
            (2) Section 802 of such Act is further amended--
                    (A) in subsection (a)--
                            (i) in paragraph (1), by inserting ``or 
                        section 4 of the Comprehensive Smokeless 
                        Tobacco Health Education Act of 1986 (15 U.S.C. 
                        4403), as the case may be'' after ``section 7 
                        of the Federal Cigarette Labeling and 
                        Advertising Act (15 U.S.C. 1335a)'';
                            (ii) in paragraph (2), by inserting ``or 
                        section 3 of the Comprehensive Smokeless 
                        Tobacco Health Education Act of 1986 (15 U.S.C. 
                        4402), as the case may be,'' after ``section 4 
                        of the Federal Cigarette Labeling and 
                        Advertising Act (15 U.S.C. 1333)''; and
                            (iii) in paragraph (3), by inserting ``or 
                        section 3(d) of the Comprehensive Smokeless 
                        Tobacco Health Education Act of 1986 (15 U.S.C. 
                        4402(d)), as the case may be'' after ``section 
                        4(c) of the Federal Cigarette Labeling and 
                        Advertising Act (15 U.S.C. 1333(c))'';
                    (B) in subsection (b)--
                            (i) in the heading of paragraph (1), by 
                        inserting ``or smokeless tobacco products'' 
                        after ``cigarettes''; and
                            (ii) in the heading of paragraphs (2) and 
                        (3), by inserting ``or smokeless tobacco 
                        products'' after ``cigarettes''; and
                    (C) in subsection (c)--
                            (i) in the heading, by inserting ``or 
                        smokeless tobacco product'' after 
                        ``cigarette'';
                            (ii) in paragraph (1), by inserting ``or 
                        section 4 of the Comprehensive Smokeless 
                        Tobacco Health Education Act of 1986 (15 U.S.C. 
                        4403), as the case may be'' after ``section 7 
                        of the Federal Cigarette Labeling and 
                        Advertising Act (15 U.S.C. 1335a)'';
                            (iii) in paragraph (2)(A), by inserting 
                        ``or section 3 of the Comprehensive Smokeless 
                        Tobacco Health Education Act of 1986 (15 U.S.C. 
                        4402), as the case may be,'' after ``section 4 
                        of the Federal Cigarette Labeling and 
                        Advertising Act (15 U.S.C. 1333)''; and
                            (iv) in paragraph (2)(B), by inserting ``or 
                        section 3(d) of the Comprehensive Smokeless 
                        Tobacco Health Education Act of 1986 (15 U.S.C. 
                        4402(d)), as the case may be'' after ``section 
                        4(c) of the Federal Cigarette Labeling and 
                        Advertising Act (15 U.S.C. 1333(c))''.
            (3) Section 803(b) of such Act, as amended by subsection 
        (d)(1) of this section, is further amended by inserting ``, or 
        any smokeless tobacco product,'' after ``or tube'' the first 
        place it appears.
            (4)(A) The heading of title VIII of such Act is amended by 
        inserting ``AND SMOKELESS TOBACCO PRODUCTS'' after 
        ``CIGARETTES''.
            (B) The heading of section 802 of such Act is amended by 
        inserting ``and smokeless tobacco products'' after 
        ``cigarettes''.
    (f) Application of Civil Penalties to Relandings of Tobacco 
Products Sold in a Delivery Sale.--
            (1) In general.--Section 5761 of the Internal Revenue Code 
        of 1986 (relating to civil penalties) is amended by 
        redesignating subsections (d) and (e) as subsections (e) and 
        (f), respectively, and inserting after subsection (c) the 
        following new subsection:
    ``(d) Personal Use Quantities.--
            ``(1) In general.--No quantity of tobacco products other 
        than the quantity referred to in paragraph (2) may be relanded 
        or received as a personal use quantity.
            ``(2) Exception for personal use quantity.--Subsection (c) 
        and section 5754 shall not apply to any person who relands or 
        receives tobacco products in the quantity allowed entry free of 
        tax and duty under chapter 98 of the Harmonized Tariff Schedule 
        of the United States, and such person may voluntarily 
        relinquish to the Secretary at the time of entry any excess of 
        such quantity without incurring the penalty under subsection 
        (c).
            ``(3) Special rule for delivery sales.--
                    ``(A) In general.--Paragraph (2) shall not apply to 
                any tobacco product sold in connection with a delivery 
                sale.
                    ``(B) Delivery sale.--For purposes of subparagraph 
                (A), the term `delivery sale' means any sale of a 
                tobacco product to a consumer if--
                            ``(i) the consumer submits the order for 
                        such sale by means of a telephone or other 
                        method of voice transmission, the mail, or the 
                        Internet or other online service, or the seller 
                        is otherwise not in the physical presence of 
                        the buyer when the request for purchase or 
                        order is made, or
                            ``(ii) the tobacco product is delivered by 
                        use of a common carrier, private delivery 
                        service, or the mail, or the seller is not in 
                        the physical presence of the buyer when the 
                        buyer obtains personal possession of the 
                        tobacco product.''.
            (2) Conforming amendments.--
                    (A) Subsection (c) of section 5761 of such Code is 
                amended by striking the last two sentences.
                    (B) Paragraph (1) of section 5754(c) of such Code 
                is amended by striking ``section 5761(c)'' and 
                inserting ``section 5761(d)''.
    (g) Effective Date.--The amendments made by this section shall 
apply with respect to goods entered, or withdrawn from warehouse for 
consumption, on or after the 15th day after the date of the enactment 
of this Act.

SEC. 302. ETHANOL TARIFF SCHEDULE.

    Headings 9901.00.50 and 9901.00.52 of the Harmonized Tariff 
Schedule of the United States are each amended in the effective period 
column by striking ``10/1/2007'' each place it appears and inserting 
``1/1/2009''.

SEC. 303. WITHDRAWAL OF CERTAIN FEDERAL LAND AND INTERESTS IN CERTAIN 
              FEDERAL LAND FROM LOCATION, ENTRY, AND PATENT UNDER THE 
              MINING LAWS AND DISPOSITION UNDER THE MINERAL AND 
              GEOTHERMAL LEASING LAWS.

    (a) Definitions.--In this section:
            (1) Bureau of land management land.--The term ``Bureau of 
        Land Management land'' means the Bureau of Land Management land 
        and any federally-owned minerals located south of the Blackfeet 
        Indian Reservation and east of the Lewis and Clark National 
        Forest to the eastern edge of R. 8 W., beginning in T. 29 N. 
        down to and including T. 19 N. and all of T. 18 N., R. 7 W.
            (2) Eligible federal land.--The term ``eligible Federal 
        land'' means the Bureau of Land Management land and the Forest 
        Service land, as generally depicted on the map.
            (3) Forest service land.--The term ``Forest Service land'' 
        means--
                    (A) the Forest Service land and any federally-owned 
                minerals located in the Rocky Mountain Division of the 
                Lewis and Clark National Forest, including the 
                approximately 356,111 acres of land made unavailable 
                for leasing by the August 28, 1997, Record of Decision 
                for the Lewis and Clark National Forest Oil and Gas 
                Leasing Environmental Impact Statement and that is 
                located from T. 31 N. to T. 16 N. and R. 13 W. to R. 7 
                W.; and
                    (B) the Forest Service land and any federally-owned 
                minerals located within the Badger Two Medicine area of 
                the Flathead National Forest, including--
                            (i) the land located in T. 29 N. from the 
                        western edge of R. 16 W. to the eastern edge of 
                        R. 13 W.; and
                            (ii) the land located in T. 28 N., Rs. 13 
                        and 14 W.
            (4) Map.--The term ``map'' means the map entitled ``Rocky 
        Mountain Front Mineral Withdrawal Area'' and dated December 31, 
        2006.
    (b) Withdrawal.--
            (1) In general.--Subject to valid existing rights, the 
        eligible Federal land (including any interest in the eligible 
        Federal land) is withdrawn from--
                    (A) all forms of location, entry, and patent under 
                the mining laws; and
                    (B) disposition under all laws relating to mineral 
                and geothermal leasing.
            (2) Availability of map.--The map shall be on file and 
        available for inspection in the Office of the Chief of the 
        Forest Service.
    (c) Tax Incentive for Sale of Existing Mineral and Geothermal 
Rights to Tax-Exempt Entities.--
            (1) Exclusion.--For purposes of the Internal Revenue Code 
        of 1986, gross income shall not include 25 percent of the 
        qualifying gain from a conservation sale of a qualifying 
        mineral or geothermal interest.
            (2) Qualifying gain.--For purposes of this subsection, the 
        term ``qualifying gain'' means any gain which would be 
        recognized as long-term capital gain under such Code.
            (3) Conservation sale.--For purposes of this subsection, 
        the term ``conservation sale'' means a sale which meets the 
        following requirements:
                    (A) Transferee is an eligible entity.--The 
                transferee of the qualifying mineral or geothermal 
                interest is an eligible entity.
                    (B) Qualifying letter of intent required.--At the 
                time of the sale, such transferee provides the taxpayer 
                with a qualifying letter of intent.
                    (C) Nonapplication to certain sales.--The sale is 
                not made pursuant to an order of condemnation or 
                eminent domain.
            (4) Qualifying mineral or geothermal interest.--For 
        purposes of this subsection--
                    (A) In general.--The term ``qualifying mineral or 
                geothermal interest'' means an interest in any mineral 
                or geothermal deposit located on eligible Federal land 
                which constitutes a taxpayer's entire interest in such 
                deposit.
                    (B) Entire interest.--For purposes of subparagraph 
                (A)--
                            (i) an interest in any mineral or 
                        geothermal deposit is not a taxpayer's entire 
                        interest if such interest in such mineral or 
                        geothermal deposit was divided in order to 
                        avoid the requirements of such subparagraph or 
                        section 170(f)(3)(A) of such Code, and
                            (ii) a taxpayer's entire interest in such 
                        deposit does not fail to satisfy such 
                        subparagraph solely because the taxpayer has 
                        retained an interest in other deposits, even if 
                        the other deposits are contiguous with such 
                        certain deposit and were acquired by the 
                        taxpayer along with such certain deposit in a 
                        single conveyance.
            (5) Other definitions.--For purposes of this subsection--
                    (A) Eligible entity.--The term ``eligible entity'' 
                means--
                            (i) a governmental unit referred to in 
                        section 170(c)(1) of such Code, or an agency or 
                        department thereof operated primarily for 1 or 
                        more of the conservation purposes specified in 
                        clause (i), (ii), or (iii) of section 
                        170(h)(4)(A) of such Code, or
                            (ii) an entity which is--
                                    (I) described in section 
                                170(b)(1)(A)(vi) or section 
                                170(h)(3)(B) of such Code, and
                                    (II) organized and at all times 
                                operated primarily for 1 or more of the 
                                conservation purposes specified in 
                                clause (i), (ii), or (iii) of section 
                                170(h)(4)(A) of such Code.
                    (B) Qualifying letter of intent.--The term 
                ``qualifying letter of intent'' means a written letter 
                of intent which includes the following statement: ``The 
                transferee's intent is that this acquisition will serve 
                1 or more of the conservation purposes specified in 
                clause (i), (ii), or (iii) of section 170(h)(4)(A) of 
                the Internal Revenue Code of 1986, that the 
                transferee's use of the deposits so acquired will be 
                consistent with section 170(h)(5) of such Code, and 
                that the use of the deposits will continue to be 
                consistent with such section, even if ownership or 
                possession of such deposits is subsequently transferred 
                to another person.''.
            (6) Tax on subsequent transfers.--
                    (A) In general.--A tax is hereby imposed on any 
                subsequent transfer by an eligible entity of ownership 
                or possession, whether by sale, exchange, or lease, of 
                an interest acquired directly or indirectly in--
                            (i) a conservation sale described in 
                        paragraph (1), or
                            (ii) a transfer described in clause (i), 
                        (ii), or (iii) of subparagraph (D).
                    (B) Amount of tax.--The amount of tax imposed by 
                subparagraph (A) on any transfer shall be equal to the 
                sum of--
                            (i) 20 percent of the fair market value 
                        (determined at the time of the transfer) of the 
                        interest the ownership or possession of which 
                        is transferred, plus
                            (ii) the product of--
                                    (I) the highest rate of tax 
                                specified in section 11 of such Code, 
                                times
                                    (II) any gain or income realized by 
                                the transferor as a result of the 
                                transfer.
                    (C) Liability.--The tax imposed by subparagraph (A) 
                shall be paid by the transferor.
                    (D) Relief from liability.--The person (otherwise 
                liable for any tax imposed by subparagraph (A)) shall 
                be relieved of liability for the tax imposed by 
                subparagraph (A) with respect to any transfer if--
                            (i) the transferee is an eligible entity 
                        which provides such person, at the time of 
                        transfer, a qualifying letter of intent,
                            (ii) in any case where the transferee is 
                        not an eligible entity, it is established to 
                        the satisfaction of the Secretary of the 
                        Treasury, that the transfer of ownership or 
                        possession, as the case may be, will be 
                        consistent with section 170(h)(5) of such Code, 
                        and the transferee provides such person, at the 
                        time of transfer, a qualifying letter of 
                        intent, or
                            (iii) tax has previously been paid under 
                        this paragraph as a result of a prior transfer 
                        of ownership or possession of the same 
                        interest.
                    (E) Administrative provisions.--For purposes of 
                subtitle F of such Code, the taxes imposed by this 
                paragraph shall be treated as excise taxes with respect 
                to which the deficiency procedures of such subtitle 
                apply.
            (7) Reporting.--The Secretary of the Treasury may require 
        such reporting as may be necessary or appropriate to further 
        the purpose under this subsection that any conservation use be 
        in perpetuity.
    (d) Effective Dates.--
            (1) Moratorium.--Subsection (b) shall take effect on the 
        date of the enactment of this Act.
            (2) Tax incentive.--Subsection (c) shall apply to sales 
        occurring on or after the date of the enactment of this Act.

SEC. 304. CONTINUING ELIGIBILITY FOR CERTAIN STUDENTS UNDER DISTRICT OF 
              COLUMBIA SCHOOL CHOICE PROGRAM.

    (a) In General.--Section 307(a)(4) of the DC School Choice 
Incentive Act of 2003 (sec. 38--1851.06(a)(4), D.C. Official Code) is 
amended by striking ``200 percent'' and inserting the following: ``200 
percent (or, in the case of an eligible student whose first year of 
participation in the program is an academic year ending in June 2005 or 
June 2006 and whose second or succeeding year is an academic year 
ending on or before June 2009, 300 percent)''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect as if included in the enactment of the DC School Choice 
Incentive Act of 2003.

SEC. 305. STUDY ON ESTABLISHING UNIFORM NATIONAL DATABASE ON ELDER 
              ABUSE.

    (a) Study.--
            (1) In general.--The Secretary of Health and Human 
        Services, in consultation with the Attorney General, shall 
        conduct a study on establishing a uniform national database on 
        elder abuse.
            (2) Issues studied.--The study conducted under paragraph 
        (1) may consider the following:
                    (A) Current methodologies used for collecting data 
                on elder abuse, including a determination of the 
                shortcomings, strengths, and commonalities of existing 
                data collection efforts and reporting forms, and how a 
                uniform national database would capitalize on such 
                efforts.
                    (B) The process by which uniform national standards 
                for reporting on elder abuse could be implemented, 
                including the identification and involvement of 
                necessary stakeholders, financial resources needed, 
                timelines, and the treatment of existing standards with 
                respect to elder abuse.
                    (C) Potential conflicts in Federal, State, and 
                local laws, and enforcement and jurisdictional issues 
                that could occur as a result of the creation of a 
                uniform national database on elder abuse.
                    (D) The scope, purpose, and variability of existing 
                definitions used by Federal, State, and local agencies 
                with respect to elder abuse.
            (3) Duration.--The study conducted under paragraph (1) 
        shall be conducted for a period not to exceed 2 years.
    (b) Report.--Not later than 180 days after the completion of the 
study conducted under subsection (a)(1), the Secretary of Health and 
Human Services shall submit a report to the Committee on Finance of the 
Senate and the Committee on Ways and Means of the House of 
Representatives containing the findings of the study, together with 
recommendations on how to implement a uniform national database on 
elder abuse.
    (c) Authorization.--There are authorized to be appropriated to 
carry out this section, $500,000 for each of fiscal years 2007 and 
2008.
                                 <all>