[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6049 Engrossed Amendment Senate (EAS)]

  
  
  
  
  
  
  
  
  
  

                  In the Senate of the United States,

                    September 23 (legislative day, September 17), 2008.
    Resolved, That the bill from the House of Representatives (H.R. 
6049) entitled ``An Act to amend the Internal Revenue Code of 1986 to 
provide incentives for energy production and conservation, to extend 
certain expiring provisions, to provide individual income tax relief, 
and for other purposes.'', do pass with the following

                               AMENDMENT:

            Strike all after the enacting clause and insert the 
      following:

SECTION 1. SHORT TITLE, ETC.

    (a) Short Title.--This Act may be cited as the ``Energy Improvement 
and Extension Act of 2008''.
    (b) Reference.--Except as otherwise expressly provided, whenever in 
this Act 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.
    (c) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title, etc.

                 TITLE I--ENERGY PRODUCTION INCENTIVES

                Subtitle A--Renewable Energy Incentives

Sec. 101. Renewable energy credit.
Sec. 102. Production credit for electricity produced from marine 
                            renewables.
Sec. 103. Energy credit.
Sec. 104. Energy credit for small wind property.
Sec. 105. Energy credit for geothermal heat pump systems.
Sec. 106. Credit for residential energy efficient property.
Sec. 107. New clean renewable energy bonds.
Sec. 108. Credit for steel industry fuel.
Sec. 109. Special rule to implement FERC and State electric 
                            restructuring policy.

           Subtitle B--Carbon Mitigation and Coal Provisions

Sec. 111. Expansion and modification of advanced coal project 
                            investment credit.
Sec. 112. Expansion and modification of coal gasification investment 
                            credit.
Sec. 113. Temporary increase in coal excise tax; funding of Black Lung 
                            Disability Trust Fund.
Sec. 114. Special rules for refund of the coal excise tax to certain 
                            coal producers and exporters.
Sec. 115. Tax credit for carbon dioxide sequestration.
Sec. 116. Certain income and gains relating to industrial source carbon 
                            dioxide treated as qualifying income for 
                            publicly traded partnerships.
Sec. 117. Carbon audit of the tax code.

     TITLE II--TRANSPORTATION AND DOMESTIC FUEL SECURITY PROVISIONS

Sec. 201. Inclusion of cellulosic biofuel in bonus depreciation for 
                            biomass ethanol plant property.
Sec. 202. Credits for biodiesel and renewable diesel.
Sec. 203. Clarification that credits for fuel are designed to provide 
                            an incentive for United States production.
Sec. 204. Extension and modification of alternative fuel credit.
Sec. 205. Credit for new qualified plug-in electric drive motor 
                            vehicles.
Sec. 206. Exclusion from heavy truck tax for idling reduction units and 
                            advanced insulation.
Sec. 207. Alternative fuel vehicle refueling property credit.
Sec. 208. Certain income and gains relating to alcohol fuels and 
                            mixtures, biodiesel fuels and mixtures, and 
                            alternative fuels and mixtures treated as 
                            qualifying income for publicly traded 
                            partnerships.
Sec. 209. Extension and modification of election to expense certain 
                            refineries.
Sec. 210. Extension of suspension of taxable income limit on percentage 
                            depletion for oil and natural gas produced 
                            from marginal properties.
Sec. 211. Transportation fringe benefit to bicycle commuters.

        TITLE III--ENERGY CONSERVATION AND EFFICIENCY PROVISIONS

Sec. 301. Qualified energy conservation bonds.
Sec. 302. Credit for nonbusiness energy property.
Sec. 303. Energy efficient commercial buildings deduction.
Sec. 304. New energy efficient home credit.
Sec. 305. Modifications of energy efficient appliance credit for 
                            appliances produced after 2007.
Sec. 306. Accelerated recovery period for depreciation of smart meters 
                            and smart grid systems.
Sec. 307. Qualified green building and sustainable design projects.
Sec. 308. Special depreciation allowance for certain reuse and 
                            recycling property.

                      TITLE IV--REVENUE PROVISIONS

Sec. 401. Limitation of deduction for income attributable to domestic 
                            production of oil, gas, or primary products 
                            thereof.
Sec. 402. Elimination of the different treatment of foreign oil and gas 
                            extraction income and foreign oil related 
                            income for purposes of the foreign tax 
                            credit.
Sec. 403. Broker reporting of customer's basis in securities 
                            transactions.
Sec. 404. 0.2 percent FUTA surtax.
Sec. 405. Increase and extension of Oil Spill Liability Trust Fund tax.

                 TITLE I--ENERGY PRODUCTION INCENTIVES

                Subtitle A--Renewable Energy Incentives

SEC. 101. RENEWABLE ENERGY CREDIT.

    (a) Extension of Credit.--
            (1) 1-year extension for wind and refined coal 
        facilities.--Paragraphs (1) and (8) of section 45(d) are each 
        amended by striking ``January 1, 2009'' and inserting ``January 
        1, 2010''.
            (2) 2-year extension for certain other facilities.--Each of 
        the following provisions of section 45(d) is amended by 
        striking ``January 1, 2009'' and inserting ``January 1, 2011'':
                    (A) Clauses (i) and (ii) of paragraph (2)(A).
                    (B) Clauses (i)(I) and (ii) of paragraph (3)(A).
                    (C) Paragraph (4).
                    (D) Paragraph (5).
                    (E) Paragraph (6).
                    (F) Paragraph (7).
                    (G) Subparagraphs (A) and (B) of paragraph (9).
    (b) Modification of Refined Coal as a Qualified Energy Resource.--
            (1) Elimination of increased market value test.--Section 
        45(c)(7)(A)(i) (defining refined coal), as amended by section 
        108, is amended--
                    (A) by striking subclause (IV),
                    (B) by adding ``and'' at the end of subclause (II), 
                and
                    (C) by striking ``, and'' at the end of subclause 
                (III) and inserting a period.
            (2) Increase in required emission reduction.--Section 
        45(c)(7)(B) (defining qualified emission reduction) is amended 
        by inserting ``at least 40 percent of the emissions of'' after 
        ``nitrogen oxide and''.
    (c) Trash Facility Clarification.--Paragraph (7) of section 45(d) 
is amended--
            (1) by striking ``facility which burns'' and inserting 
        ``facility (other than a facility described in paragraph (6)) 
        which uses'', and
            (2) by striking ``combustion''.
    (d) Expansion of Biomass Facilities.--
            (1) Open-loop biomass facilities.--Paragraph (3) of section 
        45(d) is amended by redesignating subparagraph (B) as 
        subparagraph (C) and by inserting after subparagraph (A) the 
        following new subparagraph:
                    ``(B) Expansion of facility.--Such term shall 
                include a new unit placed in service after the date of 
                the enactment of this subparagraph in connection with a 
                facility described in subparagraph (A), but only to the 
                extent of the increased amount of electricity produced 
                at the facility by reason of such new unit.''.
            (2) Closed-loop biomass facilities.--Paragraph (2) of 
        section 45(d) is amended by redesignating subparagraph (B) as 
        subparagraph (C) and inserting after subparagraph (A) the 
        following new subparagraph:
                    ``(B) Expansion of facility.--Such term shall 
                include a new unit placed in service after the date of 
                the enactment of this subparagraph in connection with a 
                facility described in subparagraph (A)(i), but only to 
                the extent of the increased amount of electricity 
                produced at the facility by reason of such new unit.''.
    (e) Modification of Rules for Hydropower Production.--Subparagraph 
(C) of section 45(c)(8) is amended to read as follows:
                    ``(C) Nonhydroelectric dam.--For purposes of 
                subparagraph (A), a facility is described in this 
                subparagraph if--
                            ``(i) the hydroelectric project installed 
                        on the nonhydroelectric dam is licensed by the 
                        Federal Energy Regulatory Commission and meets 
                        all other applicable environmental, licensing, 
                        and regulatory requirements,
                            ``(ii) the nonhydroelectric dam was placed 
                        in service before the date of the enactment of 
                        this paragraph and operated for flood control, 
                        navigation, or water supply purposes and did 
                        not produce hydroelectric power on the date of 
                        the enactment of this paragraph, and
                            ``(iii) the hydroelectric project is 
                        operated so that the water surface elevation at 
                        any given location and time that would have 
                        occurred in the absence of the hydroelectric 
                        project is maintained, subject to any license 
                        requirements imposed under applicable law that 
                        change the water surface elevation for the 
                        purpose of improving environmental quality of 
                        the affected waterway.
                The Secretary, in consultation with the Federal Energy 
                Regulatory Commission, shall certify if a hydroelectric 
                project licensed at a nonhydroelectric dam meets the 
                criteria in clause (iii). Nothing in this section shall 
                affect the standards under which the Federal Energy 
                Regulatory Commission issues licenses for and regulates 
                hydropower projects under part I of the Federal Power 
                Act.''.
    (f) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        property originally placed in service after December 31, 2008.
            (2) Refined coal.--The amendments made by subsection (b) 
        shall apply to coal produced and sold from facilities placed in 
        service after December 31, 2008.
            (3) Trash facility clarification.--The amendments made by 
        subsection (c) shall apply to electricity produced and sold 
        after the date of the enactment of this Act.
            (4) Expansion of biomass facilities.--The amendments made 
        by subsection (d) shall apply to property placed in service 
        after the date of the enactment of this Act.

SEC. 102. PRODUCTION CREDIT FOR ELECTRICITY PRODUCED FROM MARINE 
              RENEWABLES.

    (a) In General.--Paragraph (1) of section 45(c) is amended by 
striking ``and'' at the end of subparagraph (G), by striking the period 
at the end of subparagraph (H) and inserting ``, and'', and by adding 
at the end the following new subparagraph:
                    ``(I) marine and hydrokinetic renewable energy.''.
    (b) Marine Renewables.--Subsection (c) of section 45 is amended by 
adding at the end the following new paragraph:
            ``(10) Marine and hydrokinetic renewable energy.--
                    ``(A) In general.--The term `marine and 
                hydrokinetic renewable energy' means energy derived 
                from--
                            ``(i) waves, tides, and currents in oceans, 
                        estuaries, and tidal areas,
                            ``(ii) free flowing water in rivers, lakes, 
                        and streams,
                            ``(iii) free flowing water in an irrigation 
                        system, canal, or other man-made channel, 
                        including projects that utilize nonmechanical 
                        structures to accelerate the flow of water for 
                        electric power production purposes, or
                            ``(iv) differentials in ocean temperature 
                        (ocean thermal energy conversion).
                    ``(B) Exceptions.--Such term shall not include any 
                energy which is derived from any source which utilizes 
                a dam, diversionary structure (except as provided in 
                subparagraph (A)(iii)), or impoundment for electric 
                power production purposes.''.
    (c) Definition of Facility.--Subsection (d) of section 45 is 
amended by adding at the end the following new paragraph:
            ``(11) Marine and hydrokinetic renewable energy 
        facilities.--In the case of a facility producing electricity 
        from marine and hydrokinetic renewable energy, the term 
        `qualified facility' means any facility owned by the taxpayer--
                    ``(A) which has a nameplate capacity rating of at 
                least 150 kilowatts, and
                    ``(B) which is originally placed in service on or 
                after the date of the enactment of this paragraph and 
                before January 1, 2012.''.
    (d) Credit Rate.--Subparagraph (A) of section 45(b)(4) is amended 
by striking ``or (9)'' and inserting ``(9), or (11)''.
    (e) Coordination With Small Irrigation Power.--Paragraph (5) of 
section 45(d), as amended by section 101, is amended by striking 
``January 1, 2012'' and inserting ``the date of the enactment of 
paragraph (11)''.
    (f) Effective Date.--The amendments made by this section shall 
apply to electricity produced and sold after the date of the enactment 
of this Act, in taxable years ending after such date.

SEC. 103. ENERGY CREDIT.

    (a) Extension of Credit.--
            (1) Solar energy property.--Paragraphs (2)(A)(i)(II) and 
        (3)(A)(ii) of section 48(a) are each amended by striking 
        ``January 1, 2009'' and inserting ``January 1, 2017''.
            (2) Fuel cell property.--Subparagraph (E) of section 
        48(c)(1) is amended by striking ``December 31, 2008'' and 
        inserting ``December 31, 2016''.
            (3) Microturbine property.--Subparagraph (E) of section 
        48(c)(2) is amended by striking ``December 31, 2008'' and 
        inserting ``December 31, 2016''.
    (b) Allowance of Energy Credit Against Alternative Minimum Tax.--
            (1) In general.--Subparagraph (B) of section 38(c)(4), as 
        amended by the Housing Assistance Tax Act of 2008, is amended 
        by redesignating clause (vi) as clause (vi) and (vii), 
        respectively, and by inserting after clause (iv) the following 
        new clause:
                            ``(v) the credit determined under section 
                        46 to the extent that such credit is 
                        attributable to the energy credit determined 
                        under section 48,''.
            (2) Technical amendment.--Clause (vi) of section 
        38(c)(4)(B), as redesignated by paragraph (1), is amended by 
        striking ``section 47 to the extent attributable to'' and 
        inserting ``section 46 to the extent that such credit is 
        attributable to the rehabilitation credit under section 47, but 
        only with respect to''.
    (c) Energy Credit for Combined Heat and Power System Property.--
            (1) In general.--Section 48(a)(3)(A) is amended by striking 
        ``or'' at the end of clause (iii), by inserting ``or'' at the 
        end of clause (iv), and by adding at the end the following new 
        clause:
                            ``(v) combined heat and power system 
                        property,''.
            (2) Combined heat and power system property.--Subsection 
        (c) of section 48 is amended--
                    (A) by striking ``Qualified Fuel Cell Property; 
                Qualified Microturbine Property'' in the heading and 
                inserting ``Definitions'', and
                    (B) by adding at the end the following new 
                paragraph:
            ``(3) Combined heat and power system property.--
                    ``(A) Combined heat and power system property.--The 
                term `combined heat and power system property' means 
                property comprising a system--
                            ``(i) which uses the same energy source for 
                        the simultaneous or sequential generation of 
                        electrical power, mechanical shaft power, or 
                        both, in combination with the generation of 
                        steam or other forms of useful thermal energy 
                        (including heating and cooling applications),
                            ``(ii) which produces--
                                    ``(I) at least 20 percent of its 
                                total useful energy in the form of 
                                thermal energy which is not used to 
                                produce electrical or mechanical power 
                                (or combination thereof), and
                                    ``(II) at least 20 percent of its 
                                total useful energy in the form of 
                                electrical or mechanical power (or 
                                combination thereof),
                            ``(iii) the energy efficiency percentage of 
                        which exceeds 60 percent, and
                            ``(iv) which is placed in service before 
                        January 1, 2017.
                    ``(B) Limitation.--
                            ``(i) In general.--In the case of combined 
                        heat and power system property with an 
                        electrical capacity in excess of the applicable 
                        capacity placed in service during the taxable 
                        year, the credit under subsection (a)(1) 
                        (determined without regard to this paragraph) 
                        for such year shall be equal to the amount 
                        which bears the same ratio to such credit as 
                        the applicable capacity bears to the capacity 
                        of such property.
                            ``(ii) Applicable capacity.--For purposes 
                        of clause (i), the term `applicable capacity' 
                        means 15 megawatts or a mechanical energy 
                        capacity of more than 20,000 horsepower or an 
                        equivalent combination of electrical and 
                        mechanical energy capacities.
                            ``(iii) Maximum capacity.--The term 
                        `combined heat and power system property' shall 
                        not include any property comprising a system if 
                        such system has a capacity in excess of 50 
                        megawatts or a mechanical energy capacity in 
                        excess of 67,000 horsepower or an equivalent 
                        combination of electrical and mechanical energy 
                        capacities.
                    ``(C) Special rules.--
                            ``(i) Energy efficiency percentage.--For 
                        purposes of this paragraph, the energy 
                        efficiency percentage of a system is the 
                        fraction--
                                    ``(I) the numerator of which is the 
                                total useful electrical, thermal, and 
                                mechanical power produced by the system 
                                at normal operating rates, and expected 
                                to be consumed in its normal 
                                application, and
                                    ``(II) the denominator of which is 
                                the lower heating value of the fuel 
                                sources for the system.
                            ``(ii) Determinations made on btu basis.--
                        The energy efficiency percentage and the 
                        percentages under subparagraph (A)(ii) shall be 
                        determined on a Btu basis.
                            ``(iii) Input and output property not 
                        included.--The term `combined heat and power 
                        system property' does not include property used 
                        to transport the energy source to the facility 
                        or to distribute energy produced by the 
                        facility.
                    ``(D) Systems using biomass.--If a system is 
                designed to use biomass (within the meaning of 
                paragraphs (2) and (3) of section 45(c) without regard 
                to the last sentence of paragraph (3)(A)) for at least 
                90 percent of the energy source--
                            ``(i) subparagraph (A)(iii) shall not 
                        apply, but
                            ``(ii) the amount of credit determined 
                        under subsection (a) with respect to such 
                        system shall not exceed the amount which bears 
                        the same ratio to such amount of credit 
                        (determined without regard to this 
                        subparagraph) as the energy efficiency 
                        percentage of such system bears to 60 
                        percent.''.
            (3) Conforming amendment.--Section 48(a)(1) is amended by 
        striking ``paragraphs (1)(B) and (2)(B)'' and inserting 
        ``paragraphs (1)(B), (2)(B), and (3)(B)''.
    (d) Increase of Credit Limitation for Fuel Cell Property.--
Subparagraph (B) of section 48(c)(1) is amended by striking ``$500'' 
and inserting ``$1,500''.
    (e) Public Utility Property Taken Into Account.--
            (1) In general.--Paragraph (3) of section 48(a) is amended 
        by striking the second sentence thereof.
            (2) Conforming amendments.--
                    (A) Paragraph (1) of section 48(c) is amended by 
                striking subparagraph (D) and redesignating 
                subparagraph (E) as subparagraph (D).
                    (B) Paragraph (2) of section 48(c) is amended by 
                striking subparagraph (D) and redesignating 
                subparagraph (E) as subparagraph (D).
    (f) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall take 
        effect on the date of the enactment of this Act.
            (2) Allowance against alternative minimum tax.--The 
        amendments made by subsection (b) shall apply to credits 
        determined under section 46 of the Internal Revenue Code of 
        1986 in taxable years beginning after the date of the enactment 
        of this Act and to carrybacks of such credits.
            (3) Combined heat and power and fuel cell property.--The 
        amendments made by subsections (c) and (d) shall apply to 
        periods after the date of the enactment of this Act, in taxable 
        years ending after such date, under rules similar to the rules 
        of section 48(m) of the Internal Revenue Code of 1986 (as in 
        effect on the day before the date of the enactment of the 
        Revenue Reconciliation Act of 1990).
            (4)  Public utility property.--The amendments made by 
        subsection (e) shall apply to periods after February 13, 2008, 
        in taxable years ending after such date, under rules similar to 
        the rules of section 48(m) of the Internal Revenue Code of 1986 
        (as in effect on the day before the date of the enactment of 
        the Revenue Reconciliation Act of 1990).

SEC. 104. ENERGY CREDIT FOR SMALL WIND PROPERTY.

    (a) In General.--Section 48(a)(3)(A), as amended by section 103, is 
amended by striking ``or'' at the end of clause (iv), by adding ``or'' 
at the end of clause (v), and by inserting after clause (v) the 
following new clause:
                            ``(vi) qualified small wind energy 
                        property,''.
    (b) 30 Percent Credit.--Section 48(a)(2)(A)(i) is amended by 
striking ``and'' at the end of subclause (II) and by inserting after 
subclause (III) the following new subclause:
                                    ``(IV) qualified small wind energy 
                                property, and''.
    (c) Qualified Small Wind Energy Property.--Section 48(c), as 
amended by section 103, is amended by adding at the end the following 
new paragraph:
            ``(4) Qualified small wind energy property.--
                    ``(A) In general.--The term `qualified small wind 
                energy property' means property which uses a qualifying 
                small wind turbine to generate electricity.
                    ``(B) Limitation.--In the case of qualified small 
                wind energy property placed in service during the 
                taxable year, the credit otherwise determined under 
                subsection (a)(1) for such year with respect to all 
                such property of the taxpayer shall not exceed $4,000.
                    ``(C) Qualifying small wind turbine.--The term 
                `qualifying small wind turbine' means a wind turbine 
                which has a nameplate capacity of not more than 100 
                kilowatts.
                    ``(D) Termination.--The term `qualified small wind 
                energy property' shall not include any property for any 
                period after December 31, 2016.''.
    (d) Conforming Amendment.--Section 48(a)(1), as amended by section 
103, is amended by striking ``paragraphs (1)(B), (2)(B), and (3)(B)'' 
and inserting ``paragraphs (1)(B), (2)(B), (3)(B), and (4)(B)''.
    (e) Effective Date.--The amendments made by this section shall 
apply to periods after the date of the enactment of this Act, in 
taxable years ending after such date, under rules similar to the rules 
of section 48(m) of the Internal Revenue Code of 1986 (as in effect on 
the day before the date of the enactment of the Revenue Reconciliation 
Act of 1990).

SEC. 105. ENERGY CREDIT FOR GEOTHERMAL HEAT PUMP SYSTEMS.

    (a) In General.--Subparagraph (A) of section 48(a)(3), as amended 
by this Act, is amended by striking ``or'' at the end of clause (v), by 
inserting ``or'' at the end of clause (vi), and by adding at the end 
the following new clause:
                            ``(vii) equipment which uses the ground or 
                        ground water as a thermal energy source to heat 
                        a structure or as a thermal energy sink to cool 
                        a structure, but only with respect to periods 
                        ending before January 1, 2017,''.
    (b) Effective Date.--The amendments made by this section shall 
apply to periods after the date of the enactment of this Act, in 
taxable years ending after such date, under rules similar to the rules 
of section 48(m) of the Internal Revenue Code of 1986 (as in effect on 
the day before the date of the enactment of the Revenue Reconciliation 
Act of 1990).

SEC. 106. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT PROPERTY.

    (a) Extension.--Section 25D(g) is amended by striking ``December 
31, 2008'' and inserting ``December 31, 2016''.
    (b) Removal of Limitation for Solar Electric Property.--
            (1) In general.--Section 25D(b)(1), as amended by 
        subsections (c) and (d), is amended--
                    (A) by striking subparagraph (A), and
                    (B) by redesignating subparagraphs (B) through (E) 
                as subparagraphs (A) through and (D), respectively.
            (2) Conforming amendment.--Section 25D(e)(4)(A), as amended 
        by subsections (c) and (d), is amended--
                    (A) by striking clause (i), and
                    (B) by redesignating clauses (ii) through (v) as 
                clauses (i) and (iv), respectively.
    (c) Credit for Residential Wind Property.--
            (1) In general.--Section 25D(a) is amended by striking 
        ``and'' at the end of paragraph (2), by striking the period at 
        the end of paragraph (3) and inserting ``, and'', and by adding 
        at the end the following new paragraph:
            ``(4) 30 percent of the qualified small wind energy 
        property expenditures made by the taxpayer during such year.''.
            (2) Limitation.--Section 25D(b)(1) is amended by striking 
        ``and'' at the end of subparagraph (B), by striking the period 
        at the end of subparagraph (C) and inserting ``, and'', and by 
        adding at the end the following new subparagraph:
                    ``(D) $500 with respect to each half kilowatt of 
                capacity (not to exceed $4,000) of wind turbines for 
                which qualified small wind energy property expenditures 
                are made.''.
            (3) Qualified small wind energy property expenditures.--
                    (A) In general.--Section 25D(d) is amended by 
                adding at the end the following new paragraph:
            ``(4) Qualified small wind energy property expenditure.--
        The term `qualified small wind energy property expenditure' 
        means an expenditure for property which uses a wind turbine to 
        generate electricity for use in connection with a dwelling unit 
        located in the United States and used as a residence by the 
        taxpayer.''.
                    (B) No double benefit.--Section 45(d)(1) is amended 
                by adding at the end the following new sentence: ``Such 
                term shall not include any facility with respect to 
                which any qualified small wind energy property 
                expenditure (as defined in subsection (d)(4) of section 
                25D) is taken into account in determining the credit 
                under such section.''.
            (4) Maximum expenditures in case of joint occupancy.--
        Section 25D(e)(4)(A) is amended by striking ``and'' at the end 
        of clause (ii), by striking the period at the end of clause 
        (iii) and inserting ``, and'', and by adding at the end the 
        following new clause:
                            ``(iv) $1,667 in the case of each half 
                        kilowatt of capacity (not to exceed $13,333) of 
                        wind turbines for which qualified small wind 
                        energy property expenditures are made.''.
    (d) Credit for Geothermal Heat pump Systems.--
            (1) In general.--Section 25D(a), as amended by subsection 
        (c), is amended by striking ``and'' at the end of paragraph 
        (3), by striking the period at the end of paragraph (4) and 
        inserting ``, and'', and by adding at the end the following new 
        paragraph:
            ``(5) 30 percent of the qualified geothermal heat pump 
        property expenditures made by the taxpayer during such year.''.
            (2) Limitation.--Section 25D(b)(1), as amended by 
        subsection (c), is amended by striking ``and'' at the end of 
        subparagraph (C), by striking the period at the end of 
        subparagraph (D) and inserting ``, and'', and by adding at the 
        end the following new subparagraph:
                    ``(E) $2,000 with respect to any qualified 
                geothermal heat pump property expenditures.''.
            (3) Qualified geothermal heat pump property expenditure.--
        Section 25D(d), as amended by subsection (c), is amended by 
        adding at the end the following new paragraph:
            ``(5) Qualified geothermal heat pump property 
        expenditure.--
                    ``(A) In general.--The term `qualified geothermal 
                heat pump property expenditure' means an expenditure 
                for qualified geothermal heat pump property installed 
                on or in connection with a dwelling unit located in the 
                United States and used as a residence by the taxpayer.
                    ``(B) Qualified geothermal heat pump property.--The 
                term `qualified geothermal heat pump property' means 
                any equipment which--
                            ``(i) uses the ground or ground water as a 
                        thermal energy source to heat the dwelling unit 
                        referred to in subparagraph (A) or as a thermal 
                        energy sink to cool such dwelling unit, and
                            ``(ii) meets the requirements of the Energy 
                        Star program which are in effect at the time 
                        that the expenditure for such equipment is 
                        made.''.
            (4) Maximum expenditures in case of joint occupancy.--
        Section 25D(e)(4)(A), as amended by subsection (c), is amended 
        by striking ``and'' at the end of clause (iii), by striking the 
        period at the end of clause (iv) and inserting ``, and'', and 
        by adding at the end the following new clause:
                            ``(v) $6,667 in the case of any qualified 
                        geothermal heat pump property expenditures.''.
    (e) Credit Allowed Against Alternative Minimum Tax.--
            (1) In general.--Subsection (c) of section 25D is amended 
        to read as follows:
    ``(c) Limitation Based on Amount of Tax; Carryforward of Unused 
Credit.--
            ``(1) Limitation based on amount of tax.--In the case of a 
        taxable year to which section 26(a)(2) does not apply, the 
        credit allowed under subsection (a) for the taxable year shall 
        not exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                subpart (other than this section) and section 27 for 
                the taxable year.
            ``(2) Carryforward of unused credit.--
                    ``(A) Rule for years in which all personal credits 
                allowed against regular and alternative minimum tax.--
                In the case of a taxable year to which section 26(a)(2) 
                applies, if the credit allowable under subsection (a) 
                exceeds the limitation imposed by section 26(a)(2) for 
                such taxable year reduced by the sum of the credits 
                allowable under this subpart (other than this section), 
                such excess shall be carried to the succeeding taxable 
                year and added to the credit allowable under subsection 
                (a) for such succeeding taxable year.
                    ``(B) Rule for other years.--In the case of a 
                taxable year to which section 26(a)(2) does not apply, 
                if the credit allowable under subsection (a) exceeds 
                the limitation imposed by paragraph (1) for such 
                taxable year, such excess shall be carried to the 
                succeeding taxable year and added to the credit 
                allowable under subsection (a) for such succeeding 
                taxable year.''.
            (2) Conforming amendments.--
                    (A) Section 23(b)(4)(B) is amended by inserting 
                ``and section 25D'' after ``this section''.
                    (B) Section 24(b)(3)(B) is amended by striking 
                ``and 25B'' and inserting ``, 25B, and 25D''.
                    (C) Section 25B(g)(2) is amended by striking 
                ``section 23'' and inserting ``sections 23 and 25D''.
                    (D) Section 26(a)(1) is amended by striking ``and 
                25B'' and inserting ``25B, and 25D''.
    (f) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after December 31, 2007.
            (2) Solar electric property limitation.--The amendments 
        made by subsection (b) shall apply to taxable years beginning 
        after December 31, 2008.
            (3) Application of egtrra sunset.--The amendments made by 
        subparagraphs (A) and (B) of subsection (e)(2) shall be subject 
        to title IX of the Economic Growth and Tax Relief 
        Reconciliation Act of 2001 in the same manner as the provisions 
        of such Act to which such amendments relate.

SEC. 107. NEW CLEAN RENEWABLE ENERGY BONDS.

    (a) In General.--Subpart I of part IV of subchapter A of chapter 1 
is amended by adding at the end the following new section:

``SEC. 54C. NEW CLEAN RENEWABLE ENERGY BONDS.

    ``(a) New Clean Renewable Energy Bond.--For purposes of this 
subpart, the term `new clean renewable energy bond' means any bond 
issued as part of an issue if--
            ``(1) 100 percent of the available project proceeds of such 
        issue are to be used for capital expenditures incurred by 
        governmental bodies, public power providers, or cooperative 
        electric companies for one or more qualified renewable energy 
        facilities,
            ``(2) the bond is issued by a qualified issuer, and
            ``(3) the issuer designates such bond for purposes of this 
        section.
    ``(b) Reduced Credit Amount.--The annual credit determined under 
section 54A(b) with respect to any new clean renewable energy bond 
shall be 70 percent of the amount so determined without regard to this 
subsection.
    ``(c) Limitation on Amount of Bonds Designated.--
            ``(1) In general.--The maximum aggregate face amount of 
        bonds which may be designated under subsection (a) by any 
        issuer shall not exceed the limitation amount allocated under 
        this subsection to such issuer.
            ``(2) National limitation on amount of bonds designated.--
        There is a national new clean renewable energy bond limitation 
        of $800,000,000 which shall be allocated by the Secretary as 
        provided in paragraph (3), except that--
                    ``(A) not more than 33\1/3\ percent thereof may be 
                allocated to qualified projects of public power 
                providers,
                    ``(B) not more than 33\1/3\ percent thereof may be 
                allocated to qualified projects of governmental bodies, 
                and
                    ``(C) not more than 33\1/3\ percent thereof may be 
                allocated to qualified projects of cooperative electric 
                companies.
            ``(3) Method of allocation.--
                    ``(A) Allocation among public power providers.--
                After the Secretary determines the qualified projects 
                of public power providers which are appropriate for 
                receiving an allocation of the national new clean 
                renewable energy bond limitation, the Secretary shall, 
                to the maximum extent practicable, make allocations 
                among such projects in such manner that the amount 
                allocated to each such project bears the same ratio to 
                the cost of such project as the limitation under 
                paragraph (2)(A) bears to the cost of all such 
                projects.
                    ``(B) Allocation among governmental bodies and 
                cooperative electric companies.--The Secretary shall 
                make allocations of the amount of the national new 
                clean renewable energy bond limitation described in 
                paragraphs (2)(B) and (2)(C) among qualified projects 
                of governmental bodies and cooperative electric 
                companies, respectively, in such manner as the 
                Secretary determines appropriate.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Qualified renewable energy facility.--The term 
        `qualified renewable energy facility' means a qualified 
        facility (as determined under section 45(d) without regard to 
        paragraphs (8) and (10) thereof and to any placed in service 
        date) owned by a public power provider, a governmental body, or 
        a cooperative electric company.
            ``(2) Public power provider.--The term `public power 
        provider' means a State utility with a service obligation, as 
        such terms are defined in section 217 of the Federal Power Act 
        (as in effect on the date of the enactment of this paragraph).
            ``(3) Governmental body.--The term `governmental body' 
        means any State or Indian tribal government, or any political 
        subdivision thereof.
            ``(4) Cooperative electric company.--The term `cooperative 
        electric company' means a mutual or cooperative electric 
        company described in section 501(c)(12) or section 
        1381(a)(2)(C).
            ``(5) Clean renewable energy bond lender.--The term `clean 
        renewable energy bond lender' means a lender which is a 
        cooperative which is owned by, or has outstanding loans to, 100 
        or more cooperative electric companies and is in existence on 
        February 1, 2002, and shall include any affiliated entity which 
        is controlled by such lender.
            ``(6) Qualified issuer.--The term `qualified issuer' means 
        a public power provider, a cooperative electric company, a 
        governmental body, a clean renewable energy bond lender, or a 
        not-for-profit electric utility which has received a loan or 
        loan guarantee under the Rural Electrification Act.''.
    (b) Conforming Amendments.--
            (1) Paragraph (1) of section 54A(d) is amended to read as 
        follows:
            ``(1) Qualified tax credit bond.--The term `qualified tax 
        credit bond' means--
                    ``(A) a qualified forestry conservation bond, or
                    ``(B) a new clean renewable energy bond,
        which is part of an issue that meets requirements of paragraphs 
        (2), (3), (4), (5), and (6).''.
            (2) Subparagraph (C) of section 54A(d)(2) is amended to 
        read as follows:
                    ``(C) Qualified purpose.--For purposes of this 
                paragraph, the term `qualified purpose' means--
                            ``(i) in the case of a qualified forestry 
                        conservation bond, a purpose specified in 
                        section 54B(e), and
                            ``(ii) in the case of a new clean renewable 
                        energy bond, a purpose specified in section 
                        54C(a)(1).''.
            (3) The table of sections for subpart I of part IV of 
        subchapter A of chapter 1 is amended by adding at the end the 
        following new item:

``Sec. 54C. Qualified clean renewable energy bonds.''.
    (c) Extension for Clean Renewable Energy Bonds.--Subsection (m) of 
section 54 is amended by striking ``December 31, 2008'' and inserting 
``December 31, 2009''.
    (d) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.

SEC. 108. CREDIT FOR STEEL INDUSTRY FUEL.

    (a) Treatment as Refined Coal.--
            (1) In general.--Subparagraph (A) of section 45(c)(7) of 
        the Internal Revenue Code of 1986 (relating to refined coal), 
        as amended by this Act, is amended to read as follows:
                    ``(A) In general.--The term `refined coal' means a 
                fuel--
                            ``(i) which--
                                    ``(I) is a liquid, gaseous, or 
                                solid fuel produced from coal 
                                (including lignite) or high carbon fly 
                                ash, including such fuel used as a 
                                feedstock,
                                    ``(II) is sold by the taxpayer with 
                                the reasonable expectation that it will 
                                be used for purpose of producing steam,
                                    ``(III) is certified by the 
                                taxpayer as resulting (when used in the 
                                production of steam) in a qualified 
                                emission reduction, and
                                    ``(IV) is produced in such a manner 
                                as to result in an increase of at least 
                                50 percent in the market value of the 
                                refined coal (excluding any increase 
                                caused by materials combined or added 
                                during the production process), as 
                                compared to the value of the feedstock 
                                coal, or
                            ``(ii) which is steel industry fuel.''.
            (2) Steel industry fuel defined.--Paragraph (7) of section 
        45(c) of such Code is amended by adding at the end the 
        following new subparagraph:
                    ``(C) Steel industry fuel.--
                            ``(i) In general.--The term `steel industry 
                        fuel' means a fuel which--
                                    ``(I) is produced through a process 
                                of liquifying coal waste sludge and 
                                distributing it on coal, and
                                    ``(II) is used as a feedstock for 
                                the manufacture of coke.
                            ``(ii) Coal waste sludge.--The term `coal 
                        waste sludge' means the tar decanter sludge and 
                        related byproducts of the coking process, 
                        including such materials that have been stored 
                        in ground, in tanks and in lagoons, that have 
                        been treated as hazardous wastes under 
                        applicable Federal environmental rules absent 
                        liquefaction and processing with coal into a 
                        feedstock for the manufacture of coke.''.
    (b) Credit Amount.--
            (1) In general.--Paragraph (8) of section 45(e) of the 
        Internal Revenue Code of 1986 (relating to refined coal 
        production facilities) is amended by adding at the end the 
        following new subparagraph
                    ``(D) Special rule for steel industry fuel.--
                            ``(i) In general.--In the case of a 
                        taxpayer who produces steel industry fuel--
                                    ``(I) this paragraph shall be 
                                applied separately with respect to 
                                steel industry fuel and other refined 
                                coal, and
                                    ``(II) in applying this paragraph 
                                to steel industry fuel, the 
                                modifications in clause (ii) shall 
                                apply.
                            ``(ii) Modifications.--
                                    ``(I) Credit amount.--Subparagraph 
                                (A) shall be applied by substituting 
                                `$2 per barrel-of-oil equivalent' for 
                                `$4.375 per ton'.
                                    ``(II) Credit period.--In lieu of 
                                the 10-year period referred to in 
                                clauses (i) and (ii)(II) of 
                                subparagraph (A), the credit period 
                                shall be the period beginning on the 
                                later of the date such facility was 
                                originally placed in service, the date 
                                the modifications described in clause 
                                (iii) were placed in service, or 
                                October 1, 2008, and ending on the 
                                later of December 31, 2009, or the date 
                                which is 1 year after the date such 
                                facility or the modifications described 
                                in clause (iii) were placed in service.
                                    ``(III) No phaseout.--Subparagraph 
                                (B) shall not apply.
                            ``(iii) Modifications.--The modifications 
                        described in this clause are modifications to 
                        an existing facility which allow such facility 
                        to produce steel industry fuel.
                            ``(iv) Barrel-of-oil equivalent.--For 
                        purposes of this subparagraph, a barrel-of-oil 
                        equivalent is the amount of steel industry fuel 
                        that has a Btu content of 5,800,000 Btus.''.
            (2) Inflation adjustment.--Paragraph (2) of section 45(b) 
        of such Code is amended by inserting ``the $3 amount in 
        subsection (e)(8)(D)(ii)(I),'' after ``subsection (e)(8)(A),''.
    (c) Termination.--Paragraph (8) of section 45(d) of the Internal 
Revenue Code of 1986 (relating to refined coal production facility), as 
amended by this Act, is amended to read as follows:
            ``(8) Refined coal production facility.--In the case of a 
        facility that produces refined coal, the term `refined coal 
        production facility' means--
                    ``(A) with respect to a facility producing steel 
                industry fuel, any facility (or any modification to a 
                facility) which is placed in service before January 1, 
                2010, and
                    ``(B) with respect to any other facility producing 
                refined coal, any facility placed in service after the 
                date of the enactment of the American Jobs Creation Act 
                of 2004 and before January 1, 2010.''.
    (d) Coordination With Credit for Producing Fuel From a 
Nonconventional Source.--
            (1) In general.--Subparagraph (B) of section 45(e)(9) of 
        the Internal Revenue Code of 1986 is amended--
                    (A) by striking ``The term'' and inserting the 
                following:
                            ``(i) In general.--The term'', and
                    (B) by adding at the end the following new clause:
                            ``(ii) Exception for steel industry coal.--
                        In the case of a facility producing steel 
                        industry fuel, clause (i) shall not apply to so 
                        much of the refined coal produced at such 
                        facility as is steel industry fuel.''.
            (2) No double benefit.--Section 45K(g)(2) of such Code is 
        amended by adding at the end the following new subparagraph:
                    ``(E) Coordination with section 45.--No credit 
                shall be allowed with respect to any qualified fuel 
                which is steel industry fuel (as defined in section 
                45(c)(7)) if a credit is allowed to the taxpayer for 
                such fuel under section 45.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to fuel produced and sold after September 30, 2008.

SEC. 109. SPECIAL RULE TO IMPLEMENT FERC AND STATE ELECTRIC 
              RESTRUCTURING POLICY.

    (a) Extension for Qualified Electric Utilities.--
            (1) In general.--Paragraph (3) of section 451(i) is amended 
        by inserting ``(before January 1, 2010, in the case of a 
        qualified electric utility)'' after ``January 1, 2008''.
            (2) Qualified electric utility.--Subsection (i) of section 
        451 is amended by redesignating paragraphs (6) through (10) as 
        paragraphs (7) through (11), respectively, and by inserting 
        after paragraph (5) the following new paragraph:
            ``(6) Qualified electric utility.--For purposes of this 
        subsection, the term `qualified electric utility' means a 
        person that, as of the date of the qualifying electric 
        transmission transaction, is vertically integrated, in that it 
        is both--
                    ``(A) a transmitting utility (as defined in section 
                3(23) of the Federal Power Act (16 U.S.C. 796(23))) 
                with respect to the transmission facilities to which 
                the election under this subsection applies, and
                    ``(B) an electric utility (as defined in section 
                3(22) of the Federal Power Act (16 U.S.C. 796(22))).''.
    (b) Extension of Period for Transfer of Operational Control 
Authorized by FERC.--Clause (ii) of section 451(i)(4)(B) is amended by 
striking ``December 31, 2007'' and inserting ``the date which is 4 
years after the close of the taxable year in which the transaction 
occurs''.
    (c) Property Located Outside the United States Not Treated as 
Exempt Utility Property.--Paragraph (5) of section 451(i) is amended by 
adding at the end the following new subparagraph:
                    ``(C) Exception for property located outside the 
                united states.--The term `exempt utility property' 
                shall not include any property which is located outside 
                the United States.''.
    (d) Effective Dates.--
            (1) Extension.--The amendments made by subsection (a) shall 
        apply to transactions after December 31, 2007.
            (2) Transfers of operational control.--The amendment made 
        by subsection (b) shall take effect as if included in section 
        909 of the American Jobs Creation Act of 2004.
            (3) Exception for property located outside the united 
        states.--The amendment made by subsection (c) shall apply to 
        transactions after the date of the enactment of this Act.

           Subtitle B--Carbon Mitigation and Coal Provisions

SEC. 111. EXPANSION AND MODIFICATION OF ADVANCED COAL PROJECT 
              INVESTMENT CREDIT.

    (a) Modification of Credit Amount.--Section 48A(a) is amended by 
striking ``and'' at the end of paragraph (1), by striking the period at 
the end of paragraph (2) and inserting ``, and'', and by adding at the 
end the following new paragraph:
            ``(3) 30 percent of the qualified investment for such 
        taxable year in the case of projects described in clause (iii) 
        of subsection (d)(3)(B).''.
    (b) Expansion of Aggregate Credits.--Section 48A(d)(3)(A) is 
amended by striking ``$1,300,000,000'' and inserting 
``$2,550,000,000''.
    (c) Authorization of Additional Projects.--
            (1) In general.--Subparagraph (B) of section 48A(d)(3) is 
        amended to read as follows:
                    ``(B) Particular projects.--Of the dollar amount in 
                subparagraph (A), the Secretary is authorized to 
                certify--
                            ``(i) $800,000,000 for integrated 
                        gasification combined cycle projects the 
                        application for which is submitted during the 
                        period described in paragraph (2)(A)(i),
                            ``(ii) $500,000,000 for projects which use 
                        other advanced coal-based generation 
                        technologies the application for which is 
                        submitted during the period described in 
                        paragraph (2)(A)(i), and
                            ``(iii) $1,250,000,000 for advanced coal-
                        based generation technology projects the 
                        application for which is submitted during the 
                        period described in paragraph (2)(A)(ii).''.
            (2) Application period for additional projects.--
        Subparagraph (A) of section 48A(d)(2) is amended to read as 
        follows:
                    ``(A) Application period.--Each applicant for 
                certification under this paragraph shall submit an 
                application meeting the requirements of subparagraph 
                (B). An applicant may only submit an application--
                            ``(i) for an allocation from the dollar 
                        amount specified in clause (i) or (ii) of 
                        paragraph (3)(B) during the 3-year period 
                        beginning on the date the Secretary establishes 
                        the program under paragraph (1), and
                            ``(ii) for an allocation from the dollar 
                        amount specified in paragraph (3)(B)(iii) 
                        during the 3-year period beginning at the 
                        earlier of the termination of the period 
                        described in clause (i) or the date prescribed 
                        by the Secretary.''.
            (3) Capture and sequestration of carbon dioxide emissions 
        requirement.--
                    (A) In general.--Section 48A(e)(1) is amended by 
                striking ``and'' at the end of subparagraph (E), by 
                striking the period at the end of subparagraph (F) and 
                inserting ``; and'', and by adding at the end the 
                following new subparagraph:
                    ``(G) in the case of any project the application 
                for which is submitted during the period described in 
                subsection (d)(2)(A)(ii), the project includes 
                equipment which separates and sequesters at least 65 
                percent (70 percent in the case of an application for 
                reallocated credits under subsection (d)(4)) of such 
                project's total carbon dioxide emissions.''.
                    (B) Highest priority for projects which sequester 
                carbon dioxide emissions.--Section 48A(e)(3) is amended 
                by striking ``and'' at the end of subparagraph 
                (A)(iii), by striking the period at the end of 
                subparagraph (B)(iii) and inserting ``, and'', and by 
                adding at the end the following new subparagraph:
                    ``(C) give highest priority to projects with the 
                greatest separation and sequestration percentage of 
                total carbon dioxide emissions.''.
                    (C) Recapture of credit for failure to sequester.--
                Section 48A is amended by adding at the end the 
                following new subsection:
    ``(i) Recapture of Credit for Failure To Sequester.--The Secretary 
shall provide for recapturing the benefit of any credit allowable under 
subsection (a) with respect to any project which fails to attain or 
maintain the separation and sequestration requirements of subsection 
(e)(1)(G).''.
            (4) Additional priority for research partnerships.--Section 
        48A(e)(3)(B), as amended by paragraph (3)(B), is amended--
                    (A) by striking ``and'' at the end of clause (ii),
                    (B) by redesignating clause (iii) as clause (iv), 
                and
                    (C) by inserting after clause (ii) the following 
                new clause:
                            ``(iii) applicant participants who have a 
                        research partnership with an eligible 
                        educational institution (as defined in section 
                        529(e)(5)), and''.
            (5) Clerical amendment.--Section 48A(e)(3) is amended by 
        striking ``integrated gasification combined cycle'' in the 
        heading and inserting ``certain''.
    (d) Disclosure of Allocations.--Section 48A(d) is amended by adding 
at the end the following new paragraph:
            ``(5) Disclosure of allocations.--The Secretary shall, upon 
        making a certification under this subsection or section 48B(d), 
        publicly disclose the identity of the applicant and the amount 
        of the credit certified with respect to such applicant.''.
    (e) Effective Dates.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        credits the application for which is submitted during the 
        period described in section 48A(d)(2)(A)(ii) of the Internal 
        Revenue Code of 1986 and which are allocated or reallocated 
        after the date of the enactment of this Act.
            (2) Disclosure of allocations.--The amendment made by 
        subsection (d) shall apply to certifications made after the 
        date of the enactment of this Act.
            (3) Clerical amendment.--The amendment made by subsection 
        (c)(5) shall take effect as if included in the amendment made 
        by section 1307(b) of the Energy Tax Incentives Act of 2005.

SEC. 112. EXPANSION AND MODIFICATION OF COAL GASIFICATION INVESTMENT 
              CREDIT.

    (a) Modification of Credit Amount.--Section 48B(a) is amended by 
inserting ``(30 percent in the case of credits allocated under 
subsection (d)(1)(B))'' after ``20 percent''.
    (b) Expansion of Aggregate Credits.--Section 48B(d)(1) is amended 
by striking ``shall not exceed $350,000,000'' and all that follows and 
inserting ``shall not exceed--
                    ``(A) $350,000,000, plus
                    ``(B) $250,000,000 for qualifying gasification 
                projects that include equipment which separates and 
                sequesters at least 75 percent of such project's total 
                carbon dioxide emissions.''.
    (c) Recapture of Credit for Failure to Sequester.--Section 48B is 
amended by adding at the end the following new subsection:
    ``(f) Recapture of Credit for Failure to Sequester.--The Secretary 
shall provide for recapturing the benefit of any credit allowable under 
subsection (a) with respect to any project which fails to attain or 
maintain the separation and sequestration requirements for such project 
under subsection (d)(1).''.
    (d) Selection Priorities.--Section 48B(d) is amended by adding at 
the end the following new paragraph:
            ``(4) Selection priorities.--In determining which 
        qualifying gasification projects to certify under this section, 
        the Secretary shall--
                    ``(A) give highest priority to projects with the 
                greatest separation and sequestration percentage of 
                total carbon dioxide emissions, and
                    ``(B) give high priority to applicant participants 
                who have a research partnership with an eligible 
                educational institution (as defined in section 
                529(e)(5)).''.
    (e) Eligible Projects Include Transportation Grade Liquid Fuels.--
Section 48B(c)(7) (defining eligible entity) is amended by striking 
``and'' at the end of subparagraph (F), by striking the period at the 
end of subparagraph (G) and inserting ``, and'', and by adding at the 
end the following new subparagraph:
                    ``(H) transportation grade liquid fuels.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to credits described in section 48B(d)(1)(B) of the Internal 
Revenue Code of 1986 which are allocated or reallocated after the date 
of the enactment of this Act.

SEC. 113. TEMPORARY INCREASE IN COAL EXCISE TAX; FUNDING OF BLACK LUNG 
              DISABILITY TRUST FUND.

    (a) Extension of Temporary Increase.--Paragraph (2) of section 
4121(e) is amended--
            (1) by striking ``January 1, 2014'' in subparagraph (A) and 
        inserting ``December 31, 2018'', and
            (2) by striking ``January 1 after 1981'' in subparagraph 
        (B) and inserting ``December 31 after 2007''.
    (b) Restructuring of Trust Fund Debt.--
            (1) Definitions.--For purposes of this subsection--
                    (A) Market value of the outstanding repayable 
                advances, plus accrued interest.--The term ``market 
                value of the outstanding repayable advances, plus 
                accrued interest'' means the present value (determined 
                by the Secretary of the Treasury as of the refinancing 
                date and using the Treasury rate as the discount rate) 
                of the stream of principal and interest payments 
                derived assuming that each repayable advance that is 
                outstanding on the refinancing date is due on the 30th 
                anniversary of the end of the fiscal year in which the 
                advance was made to the Trust Fund, and that all such 
                principal and interest payments are made on September 
                30 of the applicable fiscal year.
                    (B) Refinancing date.--The term ``refinancing 
                date'' means the date occurring 2 days after the 
                enactment of this Act.
                    (C) Repayable advance.--The term ``repayable 
                advance'' means an amount that has been appropriated to 
                the Trust Fund in order to make benefit payments and 
                other expenditures that are authorized under section 
                9501 of the Internal Revenue Code of 1986 and are 
                required to be repaid when the Secretary of the 
                Treasury determines that monies are available in the 
                Trust Fund for such purpose.
                    (D) Treasury rate.--The term ``Treasury rate'' 
                means a rate determined by the Secretary of the 
                Treasury, taking into consideration current market 
                yields on outstanding marketable obligations of the 
                United States of comparable maturities.
                    (E) Treasury 1-year rate.--The term ``Treasury 1-
                year rate'' means a rate determined by the Secretary of 
                the Treasury, taking into consideration current market 
                yields on outstanding marketable obligations of the 
                United States with remaining periods to maturity of 
                approximately 1 year, to have been in effect as of the 
                close of business 1 business day prior to the date on 
                which the Trust Fund issues obligations to the 
                Secretary of the Treasury under paragraph (2)(B).
            (2) Refinancing of outstanding principal of repayable 
        advances and unpaid interest on such advances.--
                    (A) Transfer to general fund.--On the refinancing 
                date, the Trust Fund shall repay the market value of 
                the outstanding repayable advances, plus accrued 
                interest, by transferring into the general fund of the 
                Treasury the following sums:
                            (i) The proceeds from obligations that the 
                        Trust Fund shall issue to the Secretary of the 
                        Treasury in such amounts as the Secretaries of 
                        Labor and the Treasury shall determine and 
                        bearing interest at the Treasury rate, and that 
                        shall be in such forms and denominations and be 
                        subject to such other terms and conditions, 
                        including maturity, as the Secretary of the 
                        Treasury shall prescribe.
                            (ii) All, or that portion, of the 
                        appropriation made to the Trust Fund pursuant 
                        to paragraph (3) that is needed to cover the 
                        difference defined in that paragraph.
                    (B) Repayment of obligations.--In the event that 
                the Trust Fund is unable to repay the obligations that 
                it has issued to the Secretary of the Treasury under 
                subparagraph (A)(i) and this subparagraph, or is unable 
                to make benefit payments and other authorized 
                expenditures, the Trust Fund shall issue obligations to 
                the Secretary of the Treasury in such amounts as may be 
                necessary to make such repayments, payments, and 
                expenditures, with a maturity of 1 year, and bearing 
                interest at the Treasury 1-year rate. These obligations 
                shall be in such forms and denominations and be subject 
                to such other terms and conditions as the Secretary of 
                the Treasury shall prescribe.
                    (C) Authority to issue obligations.--The Trust Fund 
                is authorized to issue obligations to the Secretary of 
                the Treasury under subparagraphs (A)(i) and (B). The 
                Secretary of the Treasury is authorized to purchase 
                such obligations of the Trust Fund. For the purposes of 
                making such purchases, the Secretary of the Treasury 
                may use as a public debt transaction the proceeds from 
                the sale of any securities issued under chapter 31 of 
                title 31, United States Code, and the purposes for 
                which securities may be issued under such chapter are 
                extended to include any purchase of such Trust Fund 
                obligations under this subparagraph.
            (3) One-time appropriation.--There is hereby appropriated 
        to the Trust Fund an amount sufficient to pay to the general 
        fund of the Treasury the difference between--
                    (A) the market value of the outstanding repayable 
                advances, plus accrued interest; and
                    (B) the proceeds from the obligations issued by the 
                Trust Fund to the Secretary of the Treasury under 
                paragraph (2)(A)(i).
            (4) Prepayment of trust fund obligations.--The Trust Fund 
        is authorized to repay any obligation issued to the Secretary 
        of the Treasury under subparagraphs (A)(i) and (B) of paragraph 
        (2) prior to its maturity date by paying a prepayment price 
        that would, if the obligation being prepaid (including all 
        unpaid interest accrued thereon through the date of prepayment) 
        were purchased by a third party and held to the maturity date 
        of such obligation, produce a yield to the third-party 
        purchaser for the period from the date of purchase to the 
        maturity date of such obligation substantially equal to the 
        Treasury yield on outstanding marketable obligations of the 
        United States having a comparable maturity to this period.

SEC. 114. SPECIAL RULES FOR REFUND OF THE COAL EXCISE TAX TO CERTAIN 
              COAL PRODUCERS AND EXPORTERS.

    (a) Refund.--
            (1) Coal producers.--
                    (A) In general.--Notwithstanding subsections (a)(1) 
                and (c) of section 6416 and section 6511 of the 
                Internal Revenue Code of 1986, if--
                            (i) a coal producer establishes that such 
                        coal producer, or a party related to such coal 
                        producer, exported coal produced by such coal 
                        producer to a foreign country or shipped coal 
                        produced by such coal producer to a possession 
                        of the United States, or caused such coal to be 
                        exported or shipped, the export or shipment of 
                        which was other than through an exporter who 
                        meets the requirements of paragraph (2),
                            (ii) such coal producer filed an excise tax 
                        return on or after October 1, 1990, and on or 
                        before the date of the enactment of this Act, 
                        and
                            (iii) such coal producer files a claim for 
                        refund with the Secretary not later than the 
                        close of the 30-day period beginning on the 
                        date of the enactment of this Act,
                then the Secretary shall pay to such coal producer an 
                amount equal to the tax paid under section 4121 of such 
                Code on such coal exported or shipped by the coal 
                producer or a party related to such coal producer, or 
                caused by the coal producer or a party related to such 
                coal producer to be exported or shipped.
                    (B) Special rules for certain taxpayers.--For 
                purposes of this section--
                            (i) In general.--If a coal producer or a 
                        party related to a coal producer has received a 
                        judgment described in clause (iii), such coal 
                        producer shall be deemed to have established 
                        the export of coal to a foreign country or 
                        shipment of coal to a possession of the United 
                        States under subparagraph (A)(i).
                            (ii) Amount of payment.--If a taxpayer 
                        described in clause (i) is entitled to a 
                        payment under subparagraph (A), the amount of 
                        such payment shall be reduced by any amount 
                        paid pursuant to the judgment described in 
                        clause (iii).
                            (iii) Judgment described.--A judgment is 
                        described in this subparagraph if such 
                        judgment--
                                    (I) is made by a court of competent 
                                jurisdiction within the United States,
                                    (II) relates to the 
                                constitutionality of any tax paid on 
                                exported coal under section 4121 of the 
                                Internal Revenue Code of 1986, and
                                    (III) is in favor of the coal 
                                producer or the party related to the 
                                coal producer.
            (2) Exporters.--Notwithstanding subsections (a)(1) and (c) 
        of section 6416 and section 6511 of the Internal Revenue Code 
        of 1986, and a judgment described in paragraph (1)(B)(iii) of 
        this subsection, if--
                    (A) an exporter establishes that such exporter 
                exported coal to a foreign country or shipped coal to a 
                possession of the United States, or caused such coal to 
                be so exported or shipped,
                    (B) such exporter filed a tax return on or after 
                October 1, 1990, and on or before the date of the 
                enactment of this Act, and
                    (C) such exporter files a claim for refund with the 
                Secretary not later than the close of the 30-day period 
                beginning on the date of the enactment of this Act,
        then the Secretary shall pay to such exporter an amount equal 
        to $0.825 per ton of such coal exported by the exporter or 
        caused to be exported or shipped, or caused to be exported or 
        shipped, by the exporter.
    (b) Limitations.--Subsection (a) shall not apply with respect to 
exported coal if a settlement with the Federal Government has been made 
with and accepted by, the coal producer, a party related to such coal 
producer, or the exporter, of such coal, as of the date that the claim 
is filed under this section with respect to such exported coal. For 
purposes of this subsection, the term ``settlement with the Federal 
Government'' shall not include any settlement or stipulation entered 
into as of the date of the enactment of this Act, the terms of which 
contemplate a judgment concerning which any party has reserved the 
right to file an appeal, or has filed an appeal.
    (c) Subsequent Refund Prohibited.--No refund shall be made under 
this section to the extent that a credit or refund of such tax on such 
exported or shipped coal has been paid to any person.
    (d) Definitions.--For purposes of this section--
            (1) Coal producer.--The term ``coal producer'' means the 
        person in whom is vested ownership of the coal immediately 
        after the coal is severed from the ground, without regard to 
        the existence of any contractual arrangement for the sale or 
        other disposition of the coal or the payment of any royalties 
        between the producer and third parties. The term includes any 
        person who extracts coal from coal waste refuse piles or from 
        the silt waste product which results from the wet washing (or 
        similar processing) of coal.
            (2) Exporter.--The term ``exporter'' means a person, other 
        than a coal producer, who does not have a contract, fee 
        arrangement, or any other agreement with a producer or seller 
        of such coal to export or ship such coal to a third party on 
        behalf of the producer or seller of such coal and--
                    (A) is indicated in the shipper's export 
                declaration or other documentation as the exporter of 
                record, or
                    (B) actually exported such coal to a foreign 
                country or shipped such coal to a possession of the 
                United States, or caused such coal to be so exported or 
                shipped.
            (3) Related party.--The term ``a party related to such coal 
        producer'' means a person who--
                    (A) is related to such coal producer through any 
                degree of common management, stock ownership, or voting 
                control,
                    (B) is related (within the meaning of section 
                144(a)(3) of the Internal Revenue Code of 1986) to such 
                coal producer, or
                    (C) has a contract, fee arrangement, or any other 
                agreement with such coal producer to sell such coal to 
                a third party on behalf of such coal producer.
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of Treasury or the Secretary's designee.
    (e) Timing of Refund.--With respect to any claim for refund filed 
pursuant to this section, the Secretary shall determine whether the 
requirements of this section are met not later than 180 days after such 
claim is filed. If the Secretary determines that the requirements of 
this section are met, the claim for refund shall be paid not later than 
180 days after the Secretary makes such determination.
    (f) Interest.--Any refund paid pursuant to this section shall be 
paid by the Secretary with interest from the date of overpayment 
determined by using the overpayment rate and method under section 6621 
of the Internal Revenue Code of 1986.
    (g) Denial of Double Benefit.--The payment under subsection (a) 
with respect to any coal shall not exceed--
            (1) in the case of a payment to a coal producer, the amount 
        of tax paid under section 4121 of the Internal Revenue Code of 
        1986 with respect to such coal by such coal producer or a party 
        related to such coal producer, and
            (2) in the case of a payment to an exporter, an amount 
        equal to $0.825 per ton with respect to such coal exported by 
        the exporter or caused to be exported by the exporter.
    (h) Application of Section.--This section applies only to claims on 
coal exported or shipped on or after October 1, 1990, through the date 
of the enactment of this Act.
    (i) Standing Not Conferred.--
            (1) Exporters.--With respect to exporters, this section 
        shall not confer standing upon an exporter to commence, or 
        intervene in, any judicial or administrative proceeding 
        concerning a claim for refund by a coal producer of any Federal 
        or State tax, fee, or royalty paid by the coal producer.
            (2) Coal producers.--With respect to coal producers, this 
        section shall not confer standing upon a coal producer to 
        commence, or intervene in, any judicial or administrative 
        proceeding concerning a claim for refund by an exporter of any 
        Federal or State tax, fee, or royalty paid by the producer and 
        alleged to have been passed on to an exporter.

SEC. 115. TAX CREDIT FOR CARBON DIOXIDE SEQUESTRATION.

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

``SEC. 45Q. CREDIT FOR CARBON DIOXIDE SEQUESTRATION.

    ``(a) General Rule.--For purposes of section 38, the carbon dioxide 
sequestration credit for any taxable year is an amount equal to the sum 
of--
            ``(1) $20 per metric ton of qualified carbon dioxide which 
        is--
                    ``(A) captured by the taxpayer at a qualified 
                facility, and
                    ``(B) disposed of by the taxpayer in secure 
                geological storage, and
            ``(2) $10 per metric ton of qualified carbon dioxide which 
        is--
                    ``(A) captured by the taxpayer at a qualified 
                facility, and
                    ``(B) used by the taxpayer as a tertiary injectant 
                in a qualified enhanced oil or natural gas recovery 
                project.
    ``(b) Qualified Carbon Dioxide.--For purposes of this section--
            ``(1) In general.--The term `qualified carbon dioxide' 
        means carbon dioxide captured from an industrial source which--
                    ``(A) would otherwise be released into the 
                atmosphere as industrial emission of greenhouse gas, 
                and
                    ``(B) is measured at the source of capture and 
                verified at the point of disposal or injection.
            ``(2) Recycled carbon dioxide.--The term `qualified carbon 
        dioxide' includes the initial deposit of captured carbon 
        dioxide used as a tertiary injectant. Such term does not 
        include carbon dioxide that is re-captured, recycled, and re-
        injected as part of the enhanced oil and natural gas recovery 
        process.
    ``(c) Qualified Facility.--For purposes of this section, the term 
`qualified facility' means any industrial facility--
            ``(1) which is owned by the taxpayer,
            ``(2) at which carbon capture equipment is placed in 
        service, and
            ``(3) which captures not less than 500,000 metric tons of 
        carbon dioxide during the taxable year.
    ``(d) Special Rules and Other Definitions.--For purposes of this 
section--
            ``(1) Only carbon dioxide captured and disposed of or used 
        within the united states taken into account.--The credit under 
        this section shall apply only with respect to qualified carbon 
        dioxide the capture and disposal or use of which is within--
                    ``(A) the United States (within the meaning of 
                section 638(1)), or
                    ``(B) a possession of the United States (within the 
                meaning of section 638(2)).
            ``(2) Secure geological storage.--The Secretary, in 
        consultation with the Administrator of the Environmental 
        Protection Agency, shall establish regulations for determining 
        adequate security measures for the geological storage of carbon 
        dioxide under subsection (a)(1)(B) such that the carbon dioxide 
        does not escape into the atmosphere. Such term shall include 
        storage at deep saline formations and unminable coal seems 
        under such conditions as the Secretary may determine under such 
        regulations.
            ``(3) Tertiary injectant.--The term `tertiary injectant' 
        has the same meaning as when used within section 193(b)(1).
            ``(4) Qualified enhanced oil or natural gas recovery 
        project.--The term `qualified enhanced oil or natural gas 
        recovery project' has the meaning given the term `qualified 
        enhanced oil recovery project' by section 43(c)(2), by 
        substituting `crude oil or natural gas' for `crude oil' in 
        subparagraph (A)(i) thereof.
            ``(5) Credit attributable to taxpayer.--Any credit under 
        this section shall be attributable to the person that captures 
        and physically or contractually ensures the disposal of or the 
        use as a tertiary injectant of the qualified carbon dioxide, 
        except to the extent provided in regulations prescribed by the 
        Secretary.
            ``(6) Recapture.--The Secretary shall, by regulations, 
        provide for recapturing the benefit of any credit allowable 
        under subsection (a) with respect to any qualified carbon 
        dioxide which ceases to be captured, disposed of, or used as a 
        tertiary injectant in a manner consistent with the requirements 
        of this section.
            ``(7) Inflation adjustment.--In the case of any taxable 
        year beginning in a calendar year after 2009, there shall be 
        substituted for each dollar amount contained in subsection (a) 
        an amount equal to the product of--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the inflation adjustment factor for such 
                calendar year determined under section 43(b)(3)(B) for 
                such calendar year, determined by substituting `2008' 
                for `1990'.
    ``(e) Application of Section.--The credit under this section shall 
apply with respect to qualified carbon dioxide before the end of the 
calendar year in which the Secretary, in consultation with the 
Administrator of the Environmental Protection Agency, certifies that 
75,000,000 metric tons of qualified carbon dioxide have been captured 
and disposed of or used as a tertiary injectant.''.
    (b) Conforming Amendment.--Section 38(b) (relating to general 
business credit) is amended by striking ``plus'' at the end of 
paragraph (32), by striking the period at the end of paragraph (33) and 
inserting ``, plus'', and by adding at the end of following new 
paragraph:
            ``(34) the carbon dioxide sequestration credit determined 
        under section 45Q(a).''.
    (c) Clerical Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 (relating to other credits) is 
amended by adding at the end the following new section:

``Sec. 45Q. Credit for carbon dioxide sequestration.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to carbon dioxide captured after the date of the enactment of 
this Act.

SEC. 116. CERTAIN INCOME AND GAINS RELATING TO INDUSTRIAL SOURCE CARBON 
              DIOXIDE TREATED AS QUALIFYING INCOME FOR PUBLICLY TRADED 
              PARTNERSHIPS.

    (a) In General.--Subparagraph (E) of section 7704(d)(1) (defining 
qualifying income) is amended by inserting ``or industrial source 
carbon dioxide'' after ``timber)''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act, in taxable years 
ending after such date.

SEC. 117. CARBON AUDIT OF THE TAX CODE.

    (a) Study.--The Secretary of the Treasury shall enter into an 
agreement with the National Academy of Sciences to undertake a 
comprehensive review of the Internal Revenue Code of 1986 to identify 
the types of and specific tax provisions that have the largest effects 
on carbon and other greenhouse gas emissions and to estimate the 
magnitude of those effects.
    (b) Report.--Not later than 2 years after the date of enactment of 
this Act, the National Academy of Sciences shall submit to Congress a 
report containing the results of study authorized under this section.
    (c) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $1,500,000 for the period of 
fiscal years 2009 and 2010.

     TITLE II--TRANSPORTATION AND DOMESTIC FUEL SECURITY PROVISIONS

SEC. 201. INCLUSION OF CELLULOSIC BIOFUEL IN BONUS DEPRECIATION FOR 
              BIOMASS ETHANOL PLANT PROPERTY.

    (a) In General.--Paragraph (3) of section 168(l) is amended to read 
as follows:
            ``(3) Cellulosic biofuel.--The term `cellulosic biofuel' 
        means any liquid fuel which is produced from any 
        lignocellulosic or hemicellulosic matter that is available on a 
        renewable or recurring basis.''.
    (b) Conforming Amendments.--Subsection (l) of section 168 is 
amended--
            (1) by striking ``cellulosic biomass ethanol'' each place 
        it appears and inserting ``cellulosic biofuel'',
            (2) by striking ``Cellulosic Biomass Ethanol'' in the 
        heading of such subsection and inserting ``Cellulosic 
        Biofuel'', and
            (3) by striking ``cellulosic biomass ethanol'' in the 
        heading of paragraph (2) thereof and inserting ``cellulosic 
        biofuel''.
    (c) Effective Date.--The amendments 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. 202. CREDITS FOR BIODIESEL AND RENEWABLE DIESEL.

    (a) In General.--Sections 40A(g), 6426(c)(6), and 6427(e)(5)(B) are 
each amended by striking ``December 31, 2008'' and inserting ``December 
31, 2009''.
    (b) Increase in Rate of Credit.--
            (1) Income tax credit.--Paragraphs (1)(A) and (2)(A) of 
        section 40A(b) are each amended by striking ``50 cents'' and 
        inserting ``$1.00''.
            (2) Excise tax credit.--Paragraph (2) of section 6426(c) is 
        amended to read as follows:
            ``(2) Applicable amount.--For purposes of this subsection, 
        the applicable amount is $1.00.''.
            (3) Conforming amendments.--
                    (A) Subsection (b) of section 40A is amended by 
                striking paragraph (3) and by redesignating paragraphs 
                (4) and (5) as paragraphs (3) and (4), respectively.
                    (B) Paragraph (2) of section 40A(f) is amended to 
                read as follows:
            ``(2) Exception.--Subsection (b)(4) shall not apply with 
        respect to renewable diesel.''.
                    (C) Paragraphs (2) and (3) of section 40A(e) are 
                each amended by striking ``subsection (b)(5)(C)'' and 
                inserting ``subsection (b)(4)(C)''.
                    (D) Clause (ii) of section 40A(d)(3)(C) is amended 
                by striking ``subsection (b)(5)(B)'' and inserting 
                ``subsection (b)(4)(B)''.
    (c) Uniform Treatment of Diesel Produced From Biomass.--Paragraph 
(3) of section 40A(f) is amended--
            (1) by striking ``diesel fuel'' and inserting ``liquid 
        fuel'',
            (2) by striking ``using a thermal depolymerization 
        process'', and
            (3) by inserting ``, or other equivalent standard approved 
        by the Secretary'' after ``D396''.
    (d) Coproduction of Renewable Diesel With Petroleum Feedstock.--
            (1) In general.--Paragraph (3) of section 40A(f) is amended 
        by adding at the end the following new sentences: ``Such term 
        does not include any fuel derived from coprocessing biomass 
        with a feedstock which is not biomass. For purposes of this 
        paragraph, the term `biomass' has the meaning given such term 
        by section 45K(c)(3).''.
            (2) Conforming amendment.--Paragraph (3) of section 40A(f) 
        is amended by striking ``(as defined in section 45K(c)(3))''.
    (e) Eligibility of Certain Aviation Fuel.--Subsection (f) of 
section 40A (relating to renewable diesel) is amended by adding at the 
end the following new paragraph:
            ``(4) Certain aviation fuel.--
                    ``(A) In general.--Except as provided in the last 3 
                sentences of paragraph (3), the term `renewable diesel' 
                shall include fuel derived from biomass which meets the 
                requirements of a Department of Defense specification 
                for military jet fuel or an American Society of Testing 
                and Materials specification for aviation turbine fuel.
                    ``(B) Application of mixture credits.--In the case 
                of fuel which is treated as renewable diesel solely by 
                reason of subparagraph (A), subsection (b)(1) and 
                section 6426(c) shall be applied with respect to such 
                fuel by treating kerosene as though it were diesel 
                fuel.''.
    (f) Modification Relating to Definition of Agri-Biodiesel.--
Paragraph (2) of section 40A(d) (relating to agri-biodiesel) is amended 
by striking ``and mustard seeds'' and inserting ``mustard seeds, and 
camelina''.
    (g) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        fuel produced, and sold or used, after December 31, 2008.
            (2) Coproduction of renewable diesel with petroleum 
        feedstock.--The amendment made by subsection (d) shall apply to 
        fuel produced, and sold or used, after the date of the 
        enactment of this Act.

SEC. 203. CLARIFICATION THAT CREDITS FOR FUEL ARE DESIGNED TO PROVIDE 
              AN INCENTIVE FOR UNITED STATES PRODUCTION.

    (a) Alcohol Fuels Credit.--Subsection (d) of section 40 is amended 
by adding at the end the following new paragraph:
            ``(7) Limitation to alcohol with connection to the united 
        states.--No credit shall be determined under this section with 
        respect to any alcohol which is produced outside the United 
        States for use as a fuel outside the United States. For 
        purposes of this paragraph, the term `United States' includes 
        any possession of the United States.''.
    (b) Biodiesel Fuels Credit.--Subsection (d) of section 40A is 
amended by adding at the end the following new paragraph:
            ``(5) Limitation to biodiesel with connection to the united 
        states.--No credit shall be determined under this section with 
        respect to any biodiesel which is produced outside the United 
        States for use as a fuel outside the United States. For 
        purposes of this paragraph, the term `United States' includes 
        any possession of the United States.''.
    (c) Excise Tax Credit.--
            (1) In general.--Section 6426 is amended by adding at the 
        end the following new subsection:
    ``(i) Limitation to Fuels With Connection to the United States.--
            ``(1) Alcohol.--No credit shall be determined under this 
        section with respect to any alcohol which is produced outside 
        the United States for use as a fuel outside the United States.
            ``(2) Biodiesel and alternative fuels.--No credit shall be 
        determined under this section with respect to any biodiesel or 
        alternative fuel which is produced outside the United States 
        for use as a fuel outside the United States.
For purposes of this subsection, the term `United States' includes any 
possession of the United States.''.
            (2) Conforming amendment.--Subsection (e) of section 6427 
        is amended by redesignating paragraph (5) as paragraph (6) and 
        by inserting after paragraph (4) the following new paragraph:
            ``(5) Limitation to fuels with connection to the united 
        states.--No amount shall be payable under paragraph (1) or (2) 
        with respect to any mixture or alternative fuel if credit is 
        not allowed with respect to such mixture or alternative fuel by 
        reason of section 6426(i).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to claims for credit or payment made on or after May 15, 2008.

SEC. 204. EXTENSION AND MODIFICATION OF ALTERNATIVE FUEL CREDIT.

    (a) Extension.--
            (1) Alternative fuel credit.--Paragraph (4) of section 
        6426(d) (relating to alternative fuel credit) is amended by 
        striking ``September 30, 2009'' and inserting ``December 31, 
        2009''.
            (2) Alternative fuel mixture credit.--Paragraph (3) of 
        section 6426(e) (relating to alternative fuel mixture credit) 
        is amended by striking ``September 30, 2009'' and inserting 
        ``December 31, 2009''.
            (3) Payments.--Subparagraph (C) of section 6427(e)(5) 
        (relating to termination) is amended by striking ``September 
        30, 2009'' and inserting ``December 31, 2009''.
    (b) Modifications.--
            (1) Alternative fuel to include compressed or liquified 
        biomass gas.--Paragraph (2) of section 6426(d) (relating to 
        alternative fuel credit) is amended by striking ``and'' at the 
        end of subparagraph (E), by redesignating subparagraph (F) as 
        subparagraph (G), and by inserting after subparagraph (E) the 
        following new subparagraph:
                    ``(F) compressed or liquefied gas derived from 
                biomass (as defined in section 45K(c)(3)), and''.
            (2) Credit allowed for aviation use of fuel.--Paragraph (1) 
        of section 6426(d) is amended by inserting ``sold by the 
        taxpayer for use as a fuel in aviation,'' after ``motorboat,''.
    (c) Carbon Capture Requirement for Certain Fuels.--
            (1) In general.--Subsection (d) of section 6426, as amended 
        by subsection (a), is amended by redesignating paragraph (4) as 
        paragraph (5) and by inserting after paragraph (3) the 
        following new paragraph:
            ``(4) Carbon capture requirement.--
                    ``(A) In general.--The requirements of this 
                paragraph are met if the fuel is certified, under such 
                procedures as required by the Secretary, as having been 
                derived from coal produced at a gasification facility 
                which separates and sequesters not less than the 
                applicable percentage of such facility's total carbon 
                dioxide emissions.
                    ``(B) Applicable percentage.--For purposes of 
                subparagraph (A), the applicable percentage is--
                            ``(i) 50 percent in the case of fuel 
                        produced after September 30, 2009, and on or 
                        before December 30, 2009, and
                            ``(ii) 75 percent in the case of fuel 
                        produced after December 30, 2009.''.
            (2) Conforming amendment.--Subparagraph (E) of section 
        6426(d)(2) is amended by inserting ``which meets the 
        requirements of paragraph (4) and which is'' after ``any liquid 
        fuel''.
    (d) Effective Date.--The amendments made by this section shall 
apply to fuel sold or used after the date of the enactment of this Act.

SEC. 205. CREDIT FOR NEW QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR 
              VEHICLES.

    (a) Plug-in Electric Drive Motor Vehicle Credit.--Subpart B of part 
IV of subchapter A of chapter 1 (relating to other credits) is amended 
by adding at the end the following new section:

``SEC. 30D. NEW QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR VEHICLES.

    ``(a) Allowance of Credit.--
            ``(1) In general.--There shall be allowed as a credit 
        against the tax imposed by this chapter for the taxable year an 
        amount equal to the applicable amount with respect to each new 
        qualified plug-in electric drive motor vehicle placed in 
        service by the taxpayer during the taxable year.
            ``(2) Applicable amount.--For purposes of paragraph (1), 
        the applicable amount is sum of--
                    ``(A) $2,500, plus
                    ``(B) $417 for each kilowatt hour of traction 
                battery capacity in excess of 4 kilowatt hours.
    ``(b) Limitations.--
            ``(1) Limitation based on weight.--The amount of the credit 
        allowed under subsection (a) by reason of subsection (a)(2) 
        shall not exceed--
                    ``(A) $7,500, in the case of any new qualified 
                plug-in electric drive motor vehicle with a gross 
                vehicle weight rating of not more than 10,000 pounds,
                    ``(B) $10,000, in the case of any new qualified 
                plug-in electric drive motor vehicle with a gross 
                vehicle weight rating of more than 10,000 pounds but 
                not more than 14,000 pounds,
                    ``(C) $12,500, in the case of any new qualified 
                plug-in electric drive motor vehicle with a gross 
                vehicle weight rating of more than 14,000 pounds but 
                not more than 26,000 pounds, and
                    ``(D) $15,000, in the case of any new qualified 
                plug-in electric drive motor vehicle with a gross 
                vehicle weight rating of more than 26,000 pounds.
            ``(2) Limitation on number of passenger vehicles and light 
        trucks eligible for credit.--
                    ``(A) In general.--In the case of a new qualified 
                plug-in electric drive motor vehicle sold during the 
                phaseout period, only the applicable percentage of the 
                credit otherwise allowable under subsection (a) shall 
                be allowed.
                    ``(B) Phaseout period.--For purposes of this 
                subsection, the phaseout period is the period beginning 
                with the second calendar quarter following the calendar 
                quarter which includes the first date on which the 
                total number of such new qualified plug-in electric 
                drive motor vehicles sold for use in the United States 
                after December 31, 2008, is at least 250,000.
                    ``(C) Applicable percentage.--For purposes of 
                subparagraph (A), the applicable percentage is--
                            ``(i) 50 percent for the first 2 calendar 
                        quarters of the phaseout period,
                            ``(ii) 25 percent for the 3d and 4th 
                        calendar quarters of the phaseout period, and
                            ``(iii) 0 percent for each calendar quarter 
                        thereafter.
                    ``(D) Controlled groups.--Rules similar to the 
                rules of section 30B(f)(4) shall apply for purposes of 
                this subsection.
    ``(c) New Qualified Plug-in Electric Drive Motor Vehicle.--For 
purposes of this section, the term `new qualified plug-in electric 
drive motor vehicle' means a motor vehicle--
            ``(1) which draws propulsion using a traction battery with 
        at least 4 kilowatt hours of capacity,
            ``(2) which uses an offboard source of energy to recharge 
        such battery,
            ``(3) which, in the case of a passenger vehicle or light 
        truck which has a gross vehicle weight rating of not more than 
        8,500 pounds, has received a certificate of conformity under 
        the Clean Air Act and meets or exceeds the equivalent 
        qualifying California low emission vehicle standard under 
        section 243(e)(2) of the Clean Air Act for that make and model 
        year, and
                    ``(A) in the case of a vehicle having a gross 
                vehicle weight rating of 6,000 pounds or less, the Bin 
                5 Tier II emission standard established in regulations 
                prescribed by the Administrator of the Environmental 
                Protection Agency under section 202(i) of the Clean Air 
                Act for that make and model year vehicle, and
                    ``(B) in the case of a vehicle having a gross 
                vehicle weight rating of more than 6,000 pounds but not 
                more than 8,500 pounds, the Bin 8 Tier II emission 
                standard which is so established,
            ``(4) the original use of which commences with the 
        taxpayer,
            ``(5) which is acquired for use or lease by the taxpayer 
        and not for resale, and
            ``(6) which is made by a manufacturer.
    ``(d) Application With Other Credits.--
            ``(1) Business credit treated as part of general business 
        credit.--So much of the credit which would be allowed under 
        subsection (a) for any taxable year (determined without regard 
        to this subsection) that is attributable to property of a 
        character subject to an allowance for depreciation shall be 
        treated as a credit listed in section 38(b) for such taxable 
        year (and not allowed under subsection (a)).
            ``(2) Personal credit.--
                    ``(A) In general.--For purposes of this title, the 
                credit allowed under subsection (a) for any taxable 
                year (determined after application of paragraph (1)) 
                shall be treated as a credit allowable under subpart A 
                for such taxable year.
                    ``(B) Limitation based on amount of tax.--In the 
                case of a taxable year to which section 26(a)(2) does 
                not apply, the credit allowed under subsection (a) for 
                any taxable year (determined after application of 
                paragraph (1)) shall not exceed the excess of--
                            ``(i) the sum of the regular tax liability 
                        (as defined in section 26(b)) plus the tax 
                        imposed by section 55, over
                            ``(ii) the sum of the credits allowable 
                        under subpart A (other than this section and 
                        sections 23 and 25D) and section 27 for the 
                        taxable year.
    ``(e) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Motor vehicle.--The term `motor vehicle' has the 
        meaning given such term by section 30(c)(2).
            ``(2) Other terms.--The terms `passenger automobile', 
        `light truck', and `manufacturer' have the meanings given such 
        terms in regulations prescribed by the Administrator of the 
        Environmental Protection Agency for purposes of the 
        administration of title II of the Clean Air Act (42 U.S.C. 7521 
        et seq.).
            ``(3) Traction battery capacity.--Traction battery capacity 
        shall be measured in kilowatt hours from a 100 percent state of 
        charge to a zero percent state of charge.
            ``(4) Reduction in basis.--For purposes of this subtitle, 
        the basis of any property for which a credit is allowable under 
        subsection (a) shall be reduced by the amount of such credit so 
        allowed.
            ``(5) No double benefit.--The amount of any deduction or 
        other credit allowable under this chapter for a new qualified 
        plug-in electric drive motor vehicle shall be reduced by the 
        amount of credit allowed under subsection (a) for such vehicle 
        for the taxable year.
            ``(6) Property used by tax-exempt entity.--In the case of a 
        vehicle the use of which is described in paragraph (3) or (4) 
        of section 50(b) and which is not subject to a lease, the 
        person who sold such vehicle to the person or entity using such 
        vehicle shall be treated as the taxpayer that placed such 
        vehicle in service, but only if such person clearly discloses 
        to such person or entity in a document the amount of any credit 
        allowable under subsection (a) with respect to such vehicle 
        (determined without regard to subsection (b)(2)).
            ``(7) Property used outside united states, etc., not 
        qualified.--No credit shall be allowable under subsection (a) 
        with respect to any property referred to in section 50(b)(1) or 
        with respect to the portion of the cost of any property taken 
        into account under section 179.
            ``(8) Recapture.--The Secretary shall, by regulations, 
        provide for recapturing the benefit of any credit allowable 
        under subsection (a) with respect to any property which ceases 
        to be property eligible for such credit (including recapture in 
        the case of a lease period of less than the economic life of a 
        vehicle).
            ``(9) Election to not take credit.--No credit shall be 
        allowed under subsection (a) for any vehicle if the taxpayer 
        elects not to have this section apply to such vehicle.
            ``(10) Interaction with air quality and motor vehicle 
        safety standards.--Unless otherwise provided in this section, a 
        motor vehicle shall not be considered eligible for a credit 
        under this section unless such vehicle is in compliance with--
                    ``(A) the applicable provisions of the Clean Air 
                Act for the applicable make and model year of the 
                vehicle (or applicable air quality provisions of State 
                law in the case of a State which has adopted such 
                provision under a waiver under section 209(b) of the 
                Clean Air Act), and
                    ``(B) the motor vehicle safety provisions of 
                sections 30101 through 30169 of title 49, United States 
                Code.
    ``(f) Regulations.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        Secretary shall promulgate such regulations as necessary to 
        carry out the provisions of this section.
            ``(2) Coordination in prescription of certain 
        regulations.--The Secretary of the Treasury, in coordination 
        with the Secretary of Transportation and the Administrator of 
        the Environmental Protection Agency, shall prescribe such 
        regulations as necessary to determine whether a motor vehicle 
        meets the requirements to be eligible for a credit under this 
        section.
    ``(g) Termination.--This section shall not apply to property 
purchased after December 31, 2014.''.
    (b) Coordination With Alternative Motor Vehicle Credit.--Section 
30B(d)(3) is amended by adding at the end the following new 
subparagraph:
                    ``(D) Exclusion of plug-in vehicles.--Any vehicle 
                with respect to which a credit is allowable under 
                section 30D (determined without regard to subsection 
                (d) thereof) shall not be taken into account under this 
                section.''.
    (c) Credit Made Part of General Business Credit.--Section 38(b), as 
amended by this Act, is amended by striking ``plus'' at the end of 
paragraph (33), by striking the period at the end of paragraph (34) and 
inserting ``plus'', and by adding at the end the following new 
paragraph:
            ``(35) the portion of the new qualified plug-in electric 
        drive motor vehicle credit to which section 30D(d)(1) 
        applies.''.
    (d) Conforming Amendments.--
            (1)(A) Section 24(b)(3)(B), as amended by section 106, is 
        amended by striking ``and 25D'' and inserting ``25D, and 30D''.
            (B) Section 25(e)(1)(C)(ii) is amended by inserting 
        ``30D,'' after ``25D,''.
            (C) Section 25B(g)(2), as amended by section 106, is 
        amended by striking ``and 25D'' and inserting ``, 25D, and 
        30D''.
            (D) Section 26(a)(1), as amended by section 106, is amended 
        by striking ``and 25D'' and inserting ``25D, and 30D''.
            (E) Section 1400C(d)(2) is amended by striking ``and 25D'' 
        and inserting ``25D, and 30D''.
            (2) Section 1016(a) is amended by striking ``and'' at the 
        end of paragraph (35), by striking the period at the end of 
        paragraph (36) and inserting ``, and'', and by adding at the 
        end the following new paragraph:
            ``(37) to the extent provided in section 30D(e)(4).''.
            (3) Section 6501(m) is amended by inserting ``30D(e)(9),'' 
        after ``30C(e)(5),''.
            (4) The table of sections for subpart B of part IV of 
        subchapter A of chapter 1 is amended by adding at the end the 
        following new item:

``Sec. 30D. New qualified plug-in electric drive motor vehicles.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.
    (f) Application of EGTRRA Sunset.--The amendment made by subsection 
(d)(1)(A) shall be subject to title IX of the Economic Growth and Tax 
Relief Reconciliation Act of 2001 in the same manner as the provision 
of such Act to which such amendment relates.

SEC. 206. EXCLUSION FROM HEAVY TRUCK TAX FOR IDLING REDUCTION UNITS AND 
              ADVANCED INSULATION.

    (a) In General.--Section 4053 is amended by adding at the end the 
following new paragraphs:
            ``(9) Idling reduction device.--Any device or system of 
        devices which--
                    ``(A) is designed to provide to a vehicle those 
                services (such as heat, air conditioning, or 
                electricity) that would otherwise require the operation 
                of the main drive engine while the vehicle is 
                temporarily parked or remains stationary using one or 
                more devices affixed to a tractor, and
                    ``(B) is determined by the Administrator of the 
                Environmental Protection Agency, in consultation with 
                the Secretary of Energy and the Secretary of 
                Transportation, to reduce idling of such vehicle at a 
                motor vehicle rest stop or other location where such 
                vehicles are temporarily parked or remain stationary.
            ``(10) Advanced insulation.--Any insulation that has an R 
        value of not less than R35 per inch.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to sales or installations after the date of the enactment of this Act.

SEC. 207. ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY CREDIT.

    (a) Extension of Credit.--Paragraph (2) of section 30C(g) is 
amended by striking ``December 31, 2009'' and inserting ``December 31, 
2010''.
    (b) Inclusion of Electricity as a Clean-Burning Fuel.--Section 
30C(c)(2) is amended by adding at the end the following new 
subparagraph:
                    ``(C) Electricity.''.
    (c) Effective Date.--The amendments 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. 208. CERTAIN INCOME AND GAINS RELATING TO ALCOHOL FUELS AND 
              MIXTURES, BIODIESEL FUELS AND MIXTURES, AND ALTERNATIVE 
              FUELS AND MIXTURES TREATED AS QUALIFYING INCOME FOR 
              PUBLICLY TRADED PARTNERSHIPS.

    (a) In General.--Subparagraph (E) of section 7704(d)(1), as amended 
by this Act, is amended by striking ``or industrial source carbon 
dioxide'' and inserting ``, industrial source carbon dioxide, or the 
transportation or storage of any fuel described in subsection (b), (c), 
(d), or (e) of section 6426, or any alcohol fuel defined in section 
6426(b)(4)(A) or any biodiesel fuel as defined in section 40A(d)(1)'' 
after ``timber)''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act, in taxable years 
ending after such date.

SEC. 209. EXTENSION AND MODIFICATION OF ELECTION TO EXPENSE CERTAIN 
              REFINERIES.

    (a) Extension.--Paragraph (1) of section 179C(c) (relating to 
qualified refinery property) is amended--
            (1) by striking ``January 1, 2012'' in subparagraph (B) and 
        inserting ``January 1, 2014'', and
            (2) by striking ``January 1, 2008'' each place it appears 
        in subparagraph (F) and inserting ``January 1, 2010''.
    (b) Inclusion of Fuel Derived From Shale and Tar Sands.--
            (1) In general.--Subsection (d) of section 179C is amended 
        by inserting ``, or directly from shale or tar sands'' after 
        ``(as defined in section 45K(c))''.
            (2) Conforming amendment.--Paragraph (2) of section 179C(e) 
        is amended by inserting ``shale, tar sands, or'' before 
        ``qualified fuels''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of the enactment of 
this Act.

SEC. 210. EXTENSION OF SUSPENSION OF TAXABLE INCOME LIMIT ON PERCENTAGE 
              DEPLETION FOR OIL AND NATURAL GAS PRODUCED FROM MARGINAL 
              PROPERTIES.

    Subparagraph (H) of section 613A(c)(6) (relating to oil and gas 
produced from marginal properties) is amended by striking ``for any 
taxable year'' and all that follows and inserting ``for any taxable 
year--
                            ``(i) beginning after December 31, 1997, 
                        and before January 1, 2008, or
                            ``(ii) beginning after December 31, 2008, 
                        and before January 1, 2010.''.

SEC. 211. TRANSPORTATION FRINGE BENEFIT TO BICYCLE COMMUTERS.

    (a) In General.--Paragraph (1) of section 132(f) is amended by 
adding at the end the following:
                    ``(D) Any qualified bicycle commuting 
                reimbursement.''.
    (b) Limitation on Exclusion.--Paragraph (2) of section 132(f) 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) the applicable annual limitation in the case 
                of any qualified bicycle commuting reimbursement.''.
    (c) Definitions.--Paragraph (5) of section 132(f) is amended by 
adding at the end the following:
                    ``(F) Definitions related to bicycle commuting 
                reimbursement.--
                            ``(i) Qualified bicycle commuting 
                        reimbursement.--The term `qualified bicycle 
                        commuting reimbursement' means, with respect to 
                        any calendar year, any employer reimbursement 
                        during the 15-month period beginning with the 
                        first day of such calendar year for reasonable 
                        expenses incurred by the employee during such 
                        calendar year for the purchase of a bicycle and 
                        bicycle improvements, repair, and storage, if 
                        such bicycle is regularly used for travel 
                        between the employee's residence and place of 
                        employment.
                            ``(ii) Applicable annual limitation.--The 
                        term `applicable annual limitation' means, with 
                        respect to any employee for any calendar year, 
                        the product of $20 multiplied by the number of 
                        qualified bicycle commuting months during such 
                        year.
                            ``(iii) Qualified bicycle commuting 
                        month.--The term `qualified bicycle commuting 
                        month' means, with respect to any employee, any 
                        month during which such employee--
                                    ``(I) regularly uses the bicycle 
                                for a substantial portion of the travel 
                                between the employee's residence and 
                                place of employment, and
                                    ``(II) does not receive any benefit 
                                described in subparagraph (A), (B), or 
                                (C) of paragraph (1).''.
    (d) Constructive Receipt of Benefit.--Paragraph (4) of section 
132(f) is amended by inserting ``(other than a qualified bicycle 
commuting reimbursement)'' after ``qualified transportation fringe''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.

        TITLE III--ENERGY CONSERVATION AND EFFICIENCY PROVISIONS

SEC. 301. QUALIFIED ENERGY CONSERVATION BONDS.

    (a) In General.--Subpart I of part IV of subchapter A of chapter 1, 
as amended by section 107, is amended by adding at the end the 
following new section:

``SEC. 54D. QUALIFIED ENERGY CONSERVATION BONDS.

    ``(a) Qualified Energy Conservation Bond.--For purposes of this 
subchapter, the term `qualified energy conservation bond' means any 
bond issued as part of an issue if--
            ``(1) 100 percent of the available project proceeds of such 
        issue are to be used for one or more qualified conservation 
        purposes,
            ``(2) the bond is issued by a State or local government, 
        and
            ``(3) the issuer designates such bond for purposes of this 
        section.
    ``(b) Reduced Credit Amount.--The annual credit determined under 
section 54A(b) with respect to any qualified energy conservation bond 
shall be 70 percent of the amount so determined without regard to this 
subsection.
    ``(c) Limitation on Amount of Bonds Designated.--The maximum 
aggregate face amount of bonds which may be designated under subsection 
(a) by any issuer shall not exceed the limitation amount allocated to 
such issuer under subsection (e).
    ``(d) National Limitation on Amount of Bonds Designated.--There is 
a national qualified energy conservation bond limitation of 
$800,000,000.
    ``(e) Allocations.--
            ``(1) In general.--The limitation applicable under 
        subsection (d) shall be allocated by the Secretary among the 
        States in proportion to the population of the States.
            ``(2) Allocations to largest local governments.--
                    ``(A) In general.--In the case of any State in 
                which there is a large local government, each such 
                local government shall be allocated a portion of such 
                State's allocation which bears the same ratio to the 
                State's allocation (determined without regard to this 
                subparagraph) as the population of such large local 
                government bears to the population of such State.
                    ``(B) Allocation of unused limitation to state.--
                The amount allocated under this subsection to a large 
                local government may be reallocated by such local 
                government to the State in which such local government 
                is located.
                    ``(C) Large local government.--For purposes of this 
                section, the term `large local government' means any 
                municipality or county if such municipality or county 
                has a population of 100,000 or more.
            ``(3) Allocation to issuers; restriction on private 
        activity bonds.--Any allocation under this subsection to a 
        State or large local government shall be allocated by such 
        State or large local government to issuers within the State in 
        a manner that results in not less than 70 percent of the 
        allocation to such State or large local government being used 
        to designate bonds which are not private activity bonds.
    ``(f) Qualified Conservation Purpose.--For purposes of this 
section--
            ``(1) In general.--The term `qualified conservation 
        purpose' means any of the following:
                    ``(A) Capital expenditures incurred for purposes 
                of--
                            ``(i) reducing energy consumption in 
                        publicly-owned buildings by at least 20 
                        percent,
                            ``(ii) implementing green community 
                        programs,
                            ``(iii) rural development involving the 
                        production of electricity from renewable energy 
                        resources, or
                            ``(iv) any qualified facility (as 
                        determined under section 45(d) without regard 
                        to paragraphs (8) and (10) thereof and without 
                        regard to any placed in service date).
                    ``(B) Expenditures with respect to research 
                facilities, and research grants, to support research 
                in--
                            ``(i) development of cellulosic ethanol or 
                        other nonfossil fuels,
                            ``(ii) technologies for the capture and 
                        sequestration of carbon dioxide produced 
                        through the use of fossil fuels,
                            ``(iii) increasing the efficiency of 
                        existing technologies for producing nonfossil 
                        fuels,
                            ``(iv) automobile battery technologies and 
                        other technologies to reduce fossil fuel 
                        consumption in transportation, or
                            ``(v) technologies to reduce energy use in 
                        buildings.
                    ``(C) Mass commuting facilities and related 
                facilities that reduce the consumption of energy, 
                including expenditures to reduce pollution from 
                vehicles used for mass commuting.
                    ``(D) Demonstration projects designed to promote 
                the commercialization of--
                            ``(i) green building technology,
                            ``(ii) conversion of agricultural waste for 
                        use in the production of fuel or otherwise,
                            ``(iii) advanced battery manufacturing 
                        technologies,
                            ``(iv) technologies to reduce peak use of 
                        electricity, or
                            ``(v) technologies for the capture and 
                        sequestration of carbon dioxide emitted from 
                        combusting fossil fuels in order to produce 
                        electricity.
                    ``(E) Public education campaigns to promote energy 
                efficiency.
            ``(2) Special rules for private activity bonds.--For 
        purposes of this section, in the case of any private activity 
        bond, the term `qualified conservation purposes' shall not 
        include any expenditure which is not a capital expenditure.
    ``(g) Population.--
            ``(1) In general.--The population of any State or local 
        government shall be determined for purposes of this section as 
        provided in section 146(j) for the calendar year which includes 
        the date of the enactment of this section.
            ``(2) Special rule for counties.--In determining the 
        population of any county for purposes of this section, any 
        population of such county which is taken into account in 
        determining the population of any municipality which is a large 
        local government shall not be taken into account in determining 
        the population of such county.
    ``(h) Application to Indian Tribal Governments.--An Indian tribal 
government shall be treated for purposes of this section in the same 
manner as a large local government, except that--
            ``(1) an Indian tribal government shall be treated for 
        purposes of subsection (e) as located within a State to the 
        extent of so much of the population of such government as 
        resides within such State, and
            ``(2) any bond issued by an Indian tribal government shall 
        be treated as a qualified energy conservation bond only if 
        issued as part of an issue the available project proceeds of 
        which are used for purposes for which such Indian tribal 
        government could issue bonds to which section 103(a) 
        applies.''.
    (b) Conforming Amendments.--
            (1) Paragraph (1) of section 54A(d), as amended by this 
        Act, is amended to read as follows:
            ``(1) Qualified tax credit bond.--The term `qualified tax 
        credit bond' means--
                    ``(A) a qualified forestry conservation bond,
                    ``(B) a new clean renewable energy bond, or
                    ``(C) a qualified energy conservation bond,
        which is part of an issue that meets requirements of paragraphs 
        (2), (3), (4), (5), and (6).''.
            (2) Subparagraph (C) of section 54A(d)(2), as amended by 
        this Act, is amended to read as follows:
                    ``(C) Qualified purpose.--For purposes of this 
                paragraph, the term `qualified purpose' means--
                            ``(i) in the case of a qualified forestry 
                        conservation bond, a purpose specified in 
                        section 54B(e),
                            ``(ii) in the case of a new clean renewable 
                        energy bond, a purpose specified in section 
                        54C(a)(1), and
                            ``(iii) in the case of a qualified energy 
                        conservation bond, a purpose specified in 
                        section 54D(a)(1).''.
            (3) The table of sections for subpart I of part IV of 
        subchapter A of chapter 1, as amended by this Act, is amended 
        by adding at the end the following new item:

``Sec. 54D. Qualified energy conservation bonds.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.

SEC. 302. CREDIT FOR NONBUSINESS ENERGY PROPERTY.

    (a) Extension of Credit.--Section 25C(g) is amended by striking 
``placed in service after December 31, 2007'' and inserting ``placed in 
service--
            ``(1) after December 31, 2007, and before January 1, 2009, 
        or
            ``(2) after December 31, 2009.''.
    (b) Qualified Biomass Fuel Property.--
            (1) In general.--Section 25C(d)(3) is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (D),
                    (B) by striking the period at the end of 
                subparagraph (E) and inserting ``, and'', and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(F) a stove which uses the burning of biomass 
                fuel to heat a dwelling unit located in the United 
                States and used as a residence by the taxpayer, or to 
                heat water for use in such a dwelling unit, and which 
                has a thermal efficiency rating of at least 75 
                percent.''.
            (2) Biomass fuel.--Section 25C(d) is amended by adding at 
        the end the following new paragraph:
            ``(6) Biomass fuel.--The term `biomass fuel' means any 
        plant-derived fuel available on a renewable or recurring basis, 
        including agricultural crops and trees, wood and wood waste and 
        residues (including wood pellets), plants (including aquatic 
        plants), grasses, residues, and fibers.''.
    (c) Modification of Water Heater Requirements.--Section 
25C(d)(3)(E) is amended by inserting ``or a thermal efficiency of at 
least 90 percent'' after ``0.80''.
    (d) Coordination With Credit for Qualified Geothermal Heat pump 
Property Expenditures.--
            (1) In general.--Paragraph (3) of section 25C(d), as 
        amended by subsections (b) and (c), is amended by striking 
        subparagraph (C) and by redesignating subparagraphs (D), (E), 
        and (F) as subparagraphs (C), (D), and (E), respectively.
            (2) Conforming amendment.--Subparagraph (C) of section 
        25C(d)(2) is amended to read as follows:
                    ``(C) Requirements and standards for air 
                conditioners and heat pumps.--The standards and 
                requirements prescribed by the Secretary under 
                subparagraph (B) with respect to the energy efficiency 
                ratio (EER) for central air conditioners and electric 
                heat pumps--
                            ``(i) shall require measurements to be 
                        based on published data which is tested by 
                        manufacturers at 95 degrees Fahrenheit, and
                            ``(ii) may be based on the certified data 
                        of the Air Conditioning and Refrigeration 
                        Institute that are prepared in partnership with 
                        the Consortium for Energy Efficiency.''.
    (e) Modification of Qualified Energy Efficiency Improvements.--
            (1) In general.--Paragraph (1) of section 25C(c) is amended 
        by inserting ``, or an asphalt roof with appropriate cooling 
        granules,'' before ``which meet the Energy Star program 
        requirements''.
            (2) Building envelope component.--Subparagraph (D) of 
        section 25C(c)(2) is amended--
                    (A) by inserting ``or asphalt roof'' after ``metal 
                roof'', and
                    (B) by inserting ``or cooling granules'' after 
                ``pigmented coatings''.
    (f) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made this section shall apply to expenditures made 
        after December 31, 2008.
            (2) Modification of qualified energy efficiency 
        improvements.--The amendments made by subsection (e) shall 
        apply to property placed in service after the date of the 
        enactment of this Act.

SEC. 303. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

    Subsection (h) of section 179D is amended by striking ``December 
31, 2008'' and inserting ``December 31, 2013''.

SEC. 304. NEW ENERGY EFFICIENT HOME CREDIT.

    Subsection (g) of section 45L (relating to termination) is amended 
by striking ``December 31, 2008'' and inserting ``December 31, 2009''.

SEC. 305. MODIFICATIONS OF ENERGY EFFICIENT APPLIANCE CREDIT FOR 
              APPLIANCES PRODUCED AFTER 2007.

    (a) In General.--Subsection (b) of section 45M is amended to read 
as follows:
    ``(b) Applicable Amount.--For purposes of subsection (a)--
            ``(1) Dishwashers.--The applicable amount is--
                    ``(A) $45 in the case of a dishwasher which is 
                manufactured in calendar year 2008 or 2009 and which 
                uses no more than 324 kilowatt hours per year and 5.8 
                gallons per cycle, and
                    ``(B) $75 in the case of a dishwasher which is 
                manufactured in calendar year 2008, 2009, or 2010 and 
                which uses no more than 307 kilowatt hours per year and 
                5.0 gallons per cycle (5.5 gallons per cycle for 
                dishwashers designed for greater than 12 place 
                settings).
            ``(2) Clothes washers.--The applicable amount is--
                    ``(A) $75 in the case of a residential top-loading 
                clothes washer manufactured in calendar year 2008 which 
                meets or exceeds a 1.72 modified energy factor and does 
                not exceed a 8.0 water consumption factor,
                    ``(B) $125 in the case of a residential top-loading 
                clothes washer manufactured in calendar year 2008 or 
                2009 which meets or exceeds a 1.8 modified energy 
                factor and does not exceed a 7.5 water consumption 
                factor,
                    ``(C) $150 in the case of a residential or 
                commercial clothes washer manufactured in calendar year 
                2008, 2009, or 2010 which meets or exceeds 2.0 modified 
                energy factor and does not exceed a 6.0 water 
                consumption factor, and
                    ``(D) $250 in the case of a residential or 
                commercial clothes washer manufactured in calendar year 
                2008, 2009, or 2010 which meets or exceeds 2.2 modified 
                energy factor and does not exceed a 4.5 water 
                consumption factor.
            ``(3) Refrigerators.--The applicable amount is--
                    ``(A) $50 in the case of a refrigerator which is 
                manufactured in calendar year 2008, and consumes at 
                least 20 percent but not more than 22.9 percent less 
                kilowatt hours per year than the 2001 energy 
                conservation standards,
                    ``(B) $75 in the case of a refrigerator which is 
                manufactured in calendar year 2008 or 2009, and 
                consumes at least 23 percent but no more than 24.9 
                percent less kilowatt hours per year than the 2001 
                energy conservation standards,
                    ``(C) $100 in the case of a refrigerator which is 
                manufactured in calendar year 2008, 2009, or 2010, and 
                consumes at least 25 percent but not more than 29.9 
                percent less kilowatt hours per year than the 2001 
                energy conservation standards, and
                    ``(D) $200 in the case of a refrigerator 
                manufactured in calendar year 2008, 2009, or 2010 and 
                which consumes at least 30 percent less energy than the 
                2001 energy conservation standards.''.
    (b) Eligible Production.--
            (1) Similar treatment for all appliances.--Subsection (c) 
        of section 45M is amended--
                    (A) by striking paragraph (2),
                    (B) by striking ``(1) In general'' and all that 
                follows through ``the eligible'' and inserting ``The 
                eligible'',
                    (C) by moving the text of such subsection in line 
                with the subsection heading, and
                    (D) by redesignating subparagraphs (A) and (B) as 
                paragraphs (1) and (2), respectively, and by moving 
                such paragraphs 2 ems to the left.
            (2) Modification of base period.--Paragraph (2) of section 
        45M(c), as amended by paragraph (1), is amended by striking 
        ``3-calendar year'' and inserting ``2-calendar year''.
    (c) Types of Energy Efficient Appliances.--Subsection (d) of 
section 45M is amended to read as follows:
    ``(d) Types of Energy Efficient Appliance.--For purposes of this 
section, the types of energy efficient appliances are--
            ``(1) dishwashers described in subsection (b)(1),
            ``(2) clothes washers described in subsection (b)(2), and
            ``(3) refrigerators described in subsection (b)(3).''.
    (d) Aggregate Credit Amount Allowed.--
            (1) Increase in limit.--Paragraph (1) of section 45M(e) is 
        amended to read as follows:
            ``(1) Aggregate credit amount allowed.--The aggregate 
        amount of credit allowed under subsection (a) with respect to a 
        taxpayer for any taxable year shall not exceed $75,000,000 
        reduced by the amount of the credit allowed under subsection 
        (a) to the taxpayer (or any predecessor) for all prior taxable 
        years beginning after December 31, 2007.''.
            (2) Exception for certain refrigerator and clothes 
        washers.--Paragraph (2) of section 45M(e) is amended to read as 
        follows:
            ``(2) Amount allowed for certain refrigerators and clothes 
        washers.--Refrigerators described in subsection (b)(3)(D) and 
        clothes washers described in subsection (b)(2)(D) shall not be 
        taken into account under paragraph (1).''.
    (e) Qualified Energy Efficient Appliances.--
            (1) In general.--Paragraph (1) of section 45M(f) is amended 
        to read as follows:
            ``(1) Qualified energy efficient appliance.--The term 
        `qualified energy efficient appliance' means--
                    ``(A) any dishwasher described in subsection 
                (b)(1),
                    ``(B) any clothes washer described in subsection 
                (b)(2), and
                    ``(C) any refrigerator described in subsection 
                (b)(3).''.
            (2) Clothes washer.--Section 45M(f)(3) is amended by 
        inserting ``commercial'' before ``residential'' the second 
        place it appears.
            (3) Top-loading clothes washer.--Subsection (f) of section 
        45M is amended by redesignating paragraphs (4), (5), (6), and 
        (7) as paragraphs (5), (6), (7), and (8), respectively, and by 
        inserting after paragraph (3) the following new paragraph:
            ``(4) Top-loading clothes washer.--The term `top-loading 
        clothes washer' means a clothes washer which has the clothes 
        container compartment access located on the top of the machine 
        and which operates on a vertical axis.''.
            (4) Replacement of energy factor.--Section 45M(f)(6), as 
        redesignated by paragraph (3), is amended to read as follows:
            ``(6) Modified energy factor.--The term `modified energy 
        factor' means the modified energy factor established by the 
        Department of Energy for compliance with the Federal energy 
        conservation standard.''.
            (5) Gallons per cycle; water consumption factor.--Section 
        45M(f), as amended by paragraph (3), is amended by adding at 
        the end the following:
            ``(9) Gallons per cycle.--The term `gallons per cycle' 
        means, with respect to a dishwasher, the amount of water, 
        expressed in gallons, required to complete a normal cycle of a 
        dishwasher.
            ``(10) Water consumption factor.--The term `water 
        consumption factor' means, with respect to a clothes washer, 
        the quotient of the total weighted per-cycle water consumption 
        divided by the cubic foot (or liter) capacity of the clothes 
        washer.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to appliances produced after December 31, 2007.

SEC. 306. ACCELERATED RECOVERY PERIOD FOR DEPRECIATION OF SMART METERS 
              AND SMART GRID SYSTEMS.

    (a) In General.--Section 168(e)(3)(D) is amended by striking 
``and'' at the end of clause (i), by striking the period at the end of 
clause (ii) and inserting a comma, and by inserting after clause (ii) 
the following new clauses:
                            ``(iii) any qualified smart electric meter, 
                        and
                            ``(iv) any qualified smart electric grid 
                        system.''.
    (b) Definitions.--Section 168(i) is amended by inserting at the end 
the following new paragraph:
            ``(18) Qualified smart electric meters.--
                    ``(A) In general.--The term `qualified smart 
                electric meter' means any smart electric meter which--
                            ``(i) is placed in service by a taxpayer 
                        who is a supplier of electric energy or a 
                        provider of electric energy services, and
                            ``(ii) does not have a class life 
                        (determined without regard to subsection (e)) 
                        of less than 10 years.
                    ``(B) Smart electric meter.--For purposes of 
                subparagraph (A), the term `smart electric meter' means 
                any time-based meter and related communication 
                equipment which is capable of being used by the 
                taxpayer as part of a system that--
                            ``(i) measures and records electricity 
                        usage data on a time-differentiated basis in at 
                        least 24 separate time segments per day,
                            ``(ii) provides for the exchange of 
                        information between supplier or provider and 
                        the customer's electric meter in support of 
                        time-based rates or other forms of demand 
                        response,
                            ``(iii) provides data to such supplier or 
                        provider so that the supplier or provider can 
                        provide energy usage information to customers 
                        electronically, and
                            ``(iv) provides net metering.
            ``(19) Qualified smart electric grid systems.--
                    ``(A) In general.--The term `qualified smart 
                electric grid system' means any smart grid property 
                which--
                            ``(i) is used as part of a system for 
                        electric distribution grid communications, 
                        monitoring, and management placed in service by 
                        a taxpayer who is a supplier of electric energy 
                        or a provider of electric energy services, and
                            ``(ii) does not have a class life 
                        (determined without regard to subsection (e)) 
                        of less than 10 years.
                    ``(B) Smart grid property.--For the purposes of 
                subparagraph (A), the term `smart grid property' means 
                electronics and related equipment that is capable of--
                            ``(i) sensing, collecting, and monitoring 
                        data of or from all portions of a utility's 
                        electric distribution grid,
                            ``(ii) providing real-time, two-way 
                        communications to monitor or manage such grid, 
                        and
                            ``(iii) providing real time analysis of and 
                        event prediction based upon collected data that 
                        can be used to improve electric distribution 
                        system reliability, quality, and 
                        performance.''.
    (c) Continued Application of 150 Percent Declining Balance 
Method.--Paragraph (2) of section 168(b) is amended by striking ``or'' 
at the end of subparagraph (B), by redesignating subparagraph (C) as 
subparagraph (D), and by inserting after subparagraph (B) the following 
new subparagraph:
                    ``(C) any property (other than property described 
                in paragraph (3)) which is a qualified smart electric 
                meter or qualified smart electric grid system, or''.
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of the enactment of 
this Act.

SEC. 307. QUALIFIED GREEN BUILDING AND SUSTAINABLE DESIGN PROJECTS.

    (a) In General.--Paragraph (8) of section 142(l) is amended by 
striking ``September 30, 2009'' and inserting ``September 30, 2012''.
    (b) Treatment of Current Refunding Bonds.--Paragraph (9) of section 
142(l) is amended by striking ``October 1, 2009'' and inserting 
``October 1, 2012''.
    (c) Accountability.--The second sentence of section 701(d) of the 
American Jobs Creation Act of 2004 is amended by striking ``issuance,'' 
and inserting ``issuance of the last issue with respect to such 
project,''.

SEC. 308. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN REUSE AND 
              RECYCLING PROPERTY.

    (a) In General.--Section 168 is amended by adding at the end the 
following new subsection:
    ``(m) Special Allowance for Certain Reuse and Recycling Property.--
            ``(1) In general.--In the case of any qualified reuse and 
        recycling 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 
                the qualified reuse and recycling property, and
                    ``(B) the adjusted basis of the qualified reuse and 
                recycling 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 reuse and recycling property.--For purposes 
        of this subsection--
                    ``(A) In general.--The term `qualified reuse and 
                recycling property' means any reuse and recycling 
                property--
                            ``(i) to which this section applies,
                            ``(ii) which has a useful life of at least 
                        5 years,
                            ``(iii) the original use of which commences 
                        with the taxpayer after August 31, 2008, and
                            ``(iv) which is--
                                    ``(I) acquired by purchase (as 
                                defined in section 179(d)(2)) by the 
                                taxpayer after August 31, 2008, but 
                                only if no written binding contract for 
                                the acquisition was in effect before 
                                September 1, 2008, or
                                    ``(II) acquired by the taxpayer 
                                pursuant to a written binding contract 
                                which was entered into after August 31, 
                                2008.
                    ``(B) Exceptions.--
                            ``(i) Bonus depreciation property under 
                        subsection (k).--The term `qualified reuse and 
                        recycling property' shall not include any 
                        property to which section 168(k) applies.
                            ``(ii) Alternative depreciation property.--
                        The term `qualified reuse and recycling 
                        property' shall not include any property to 
                        which the alternative depreciation system under 
                        subsection (g) applies, determined without 
                        regard to paragraph (7) of subsection (g) 
                        (relating to election to have system apply).
                            ``(iii) Election out.--If a taxpayer makes 
                        an election under this clause 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.
                    ``(C) Special rule for self-constructed property.--
                In the case of a taxpayer manufacturing, constructing, 
                or producing property for the taxpayer's own use, the 
                requirements of clause (iv) of subparagraph (A) shall 
                be treated as met if the taxpayer begins manufacturing, 
                constructing, or producing the property after August 
                31, 2008.
                    ``(D) Deduction allowed in computing minimum tax.--
                For purposes of determining alternative minimum taxable 
                income under section 55, the deduction under subsection 
                (a) for qualified reuse and recycling property shall be 
                determined under this section without regard to any 
                adjustment under section 56.
            ``(3) Definitions.--For purposes of this subsection--
                    ``(A) Reuse and recycling property.--
                            ``(i) In general.--The term `reuse and 
                        recycling property' means any machinery and 
                        equipment (not including buildings or real 
                        estate), along with all appurtenances thereto, 
                        including software necessary to operate such 
                        equipment, which is used exclusively to 
                        collect, distribute, or recycle qualified reuse 
                        and recyclable materials.
                            ``(ii) Exclusion.--Such term does not 
                        include rolling stock or other equipment used 
                        to transport reuse and recyclable materials.
                    ``(B) Qualified reuse and recyclable materials.--
                            ``(i) In general.--The term `qualified 
                        reuse and recyclable materials' means scrap 
                        plastic, scrap glass, scrap textiles, scrap 
                        rubber, scrap packaging, recovered fiber, scrap 
                        ferrous and nonferrous metals, or electronic 
                        scrap generated by an individual or business.
                            ``(ii) Electronic scrap.--For purposes of 
                        clause (i), the term `electronic scrap' means--
                                    ``(I) any cathode ray tube, flat 
                                panel screen, or similar video display 
                                device with a screen size greater than 
                                4 inches measured diagonally, or
                                    ``(II) any central processing unit.
                    ``(C) Recycling or recycle.--The term `recycling' 
                or `recycle' means that process (including sorting) by 
                which worn or superfluous materials are manufactured or 
                processed into specification grade commodities that are 
                suitable for use as a replacement or substitute for 
                virgin materials in manufacturing tangible consumer and 
                commercial products, including packaging.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after August 31, 2008.

                      TITLE IV--REVENUE PROVISIONS

SEC. 401. LIMITATION OF DEDUCTION FOR INCOME ATTRIBUTABLE TO DOMESTIC 
              PRODUCTION OF OIL, GAS, OR PRIMARY PRODUCTS THEREOF.

    (a) In General.--Section 199(d) is amended by redesignating 
paragraph (9) as paragraph (10) and by inserting after paragraph (8) 
the following new paragraph:
            ``(9) Special rule for taxpayers with oil related qualified 
        production activities income.--
                    ``(A) In general.--If a taxpayer has oil related 
                qualified production activities income for any taxable 
                year beginning after 2009, the amount otherwise 
                allowable as a deduction under subsection (a) shall be 
                reduced by 3 percent of the least of--
                            ``(i) the oil related qualified production 
                        activities income of the taxpayer for the 
                        taxable year,
                            ``(ii) the qualified production activities 
                        income of the taxpayer for the taxable year, or
                            ``(iii) taxable income (determined without 
                        regard to this section).
                    ``(B) Oil related qualified production activities 
                income.--For purposes of this paragraph, the term `oil 
                related qualified production activities income' means 
                for any taxable year the qualified production 
                activities income which is attributable to the 
                production, refining, processing, transportation, or 
                distribution of oil, gas, or any primary product 
                thereof during such taxable year.
                    ``(C) Primary product.--For purposes of this 
                paragraph, the term `primary product' has the same 
                meaning as when used in section 927(a)(2)(C), as in 
                effect before its repeal.''.
    (b) Conforming Amendment.--Section 199(d)(2) (relating to 
application to individuals) is amended by striking ``subsection 
(a)(1)(B)'' and inserting ``subsections (a)(1)(B) and (d)(9)(A)(iii)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.

SEC. 402. ELIMINATION OF THE DIFFERENT TREATMENT OF FOREIGN OIL AND GAS 
              EXTRACTION INCOME AND FOREIGN OIL RELATED INCOME FOR 
              PURPOSES OF THE FOREIGN TAX CREDIT.

    (a) In General.--Subsections (a) and (b) of section 907 (relating 
to special rules in case of foreign oil and gas income) are amended to 
read as follows:
    ``(a) Reduction in Amount Allowed as Foreign Tax Under Section 
901.--In applying section 901, the amount of any foreign oil and gas 
taxes paid or accrued (or deemed to have been paid) during the taxable 
year which would (but for this subsection) be taken into account for 
purposes of section 901 shall be reduced by the amount (if any) by 
which the amount of such taxes exceeds the product of--
            ``(1) the amount of the combined foreign oil and gas income 
        for the taxable year,
            ``(2) multiplied by--
                    ``(A) in the case of a corporation, the percentage 
                which is equal to the highest rate of tax specified 
                under section 11(b), or
                    ``(B) in the case of an individual, a fraction the 
                numerator of which is the tax against which the credit 
                under section 901(a) is taken and the denominator of 
                which is the taxpayer's entire taxable income.
    ``(b) Combined Foreign Oil and Gas Income; Foreign Oil and Gas 
Taxes.--For purposes of this section--
            ``(1) Combined foreign oil and gas income.--The term 
        `combined foreign oil and gas income' means, with respect to 
        any taxable year, the sum of--
                    ``(A) foreign oil and gas extraction income, and
                    ``(B) foreign oil related income.
            ``(2) Foreign oil and gas taxes.--The term `foreign oil and 
        gas taxes' means, with respect to any taxable year, the sum 
        of--
                    ``(A) oil and gas extraction taxes, and
                    ``(B) any income, war profits, and excess profits 
                taxes paid or accrued (or deemed to have been paid or 
                accrued under section 902 or 960) during the taxable 
                year with respect to foreign oil related income 
                (determined without regard to subsection (c)(4)) or 
                loss which would be taken into account for purposes of 
                section 901 without regard to this section.''.
    (b) Recapture of Foreign Oil and Gas Losses.--Paragraph (4) of 
section 907(c) (relating to recapture of foreign oil and gas extraction 
losses by recharacterizing later extraction income) is amended to read 
as follows:
            ``(4) Recapture of foreign oil and gas losses by 
        recharacterizing later combined foreign oil and gas income.--
                    ``(A) In general.--The combined foreign oil and gas 
                income of a taxpayer for a taxable year (determined 
                without regard to this paragraph) shall be reduced--
                            ``(i) first by the amount determined under 
                        subparagraph (B), and
                            ``(ii) then by the amount determined under 
                        subparagraph (C).
                The aggregate amount of such reductions shall be 
                treated as income (from sources without the United 
                States) which is not combined foreign oil and gas 
                income.
                    ``(B) Reduction for pre-2009 foreign oil extraction 
                losses.--The reduction under this paragraph shall be 
                equal to the lesser of--
                            ``(i) the foreign oil and gas extraction 
                        income of the taxpayer for the taxable year 
                        (determined without regard to this paragraph), 
                        or
                            ``(ii) the excess of--
                                    ``(I) the aggregate amount of 
                                foreign oil extraction losses for 
                                preceding taxable years beginning after 
                                December 31, 1982, and before January 
                                1, 2009, over
                                    ``(II) so much of such aggregate 
                                amount as was recharacterized under 
                                this paragraph (as in effect before and 
                                after the date of the enactment of the 
                                Energy Improvement and Extension Act of 
                                2008) for preceding taxable years 
                                beginning after December 31, 1982.
                    ``(C) Reduction for post-2008 foreign oil and gas 
                losses.--The reduction under this paragraph shall be 
                equal to the lesser of--
                            ``(i) the combined foreign oil and gas 
                        income of the taxpayer for the taxable year 
                        (determined without regard to this paragraph), 
                        reduced by an amount equal to the reduction 
                        under subparagraph (A) for the taxable year, or
                            ``(ii) the excess of--
                                    ``(I) the aggregate amount of 
                                foreign oil and gas losses for 
                                preceding taxable years beginning after 
                                December 31, 2008, over
                                    ``(II) so much of such aggregate 
                                amount as was recharacterized under 
                                this paragraph for preceding taxable 
                                years beginning after December 31, 
                                2008.
                    ``(D) Foreign oil and gas loss defined.--
                            ``(i) In general.--For purposes of this 
                        paragraph, the term `foreign oil and gas loss' 
                        means the amount by which--
                                    ``(I) the gross income for the 
                                taxable year from sources without the 
                                United States and its possessions 
                                (whether or not the taxpayer chooses 
                                the benefits of this subpart for such 
                                taxable year) taken into account in 
                                determining the combined foreign oil 
                                and gas income for such year, is 
                                exceeded by
                                    ``(II) the sum of the deductions 
                                properly apportioned or allocated 
                                thereto.
                            ``(ii) Net operating loss deduction not 
                        taken into account.--For purposes of clause 
                        (i), the net operating loss deduction allowable 
                        for the taxable year under section 172(a) shall 
                        not be taken into account.
                            ``(iii) Expropriation and casualty losses 
                        not taken into account.--For purposes of clause 
                        (i), there shall not be taken into account--
                                    ``(I) any foreign expropriation 
                                loss (as defined in section 172(h) (as 
                                in effect on the day before the date of 
                                the enactment of the Revenue 
                                Reconciliation Act of 1990)) for the 
                                taxable year, or
                                    ``(II) any loss for the taxable 
                                year which arises from fire, storm, 
                                shipwreck, or other casualty, or from 
                                theft,
                        to the extent such loss is not compensated for 
                        by insurance or otherwise.
                            ``(iv) Foreign oil extraction loss.--For 
                        purposes of subparagraph (B)(ii)(I), foreign 
                        oil extraction losses shall be determined under 
                        this paragraph as in effect on the day before 
                        the date of the enactment of the Energy 
                        Improvement and Extension Act of 2008.''.
    (c) Carryback and Carryover of Disallowed Credits.--Section 907(f) 
(relating to carryback and carryover of disallowed credits) is 
amended--
            (1) by striking ``oil and gas extraction taxes'' each place 
        it appears and inserting ``foreign oil and gas taxes'', and
            (2) by adding at the end the following new paragraph:
            ``(4) Transition rules for pre-2009 and 2009 disallowed 
        credits.--
                    ``(A) Pre-2009 credits.--In the case of any unused 
                credit year beginning before January 1, 2009, this 
                subsection shall be applied to any unused oil and gas 
                extraction taxes carried from such unused credit year 
                to a year beginning after December 31, 2008--
                            ``(i) by substituting `oil and gas 
                        extraction taxes' for `foreign oil and gas 
                        taxes' each place it appears in paragraphs (1), 
                        (2), and (3), and
                            ``(ii) by computing, for purposes of 
                        paragraph (2)(A), the limitation under 
                        subparagraph (A) for the year to which such 
                        taxes are carried by substituting `foreign oil 
                        and gas extraction income' for `foreign oil and 
                        gas income' in subsection (a).
                    ``(B) 2009 credits.--In the case of any unused 
                credit year beginning in 2009, the amendments made to 
                this subsection by the Energy Improvement and Extension 
                Act of 2008 shall be treated as being in effect for any 
                preceding year beginning before January 1, 2009, solely 
                for purposes of determining how much of the unused 
                foreign oil and gas taxes for such unused credit year 
                may be deemed paid or accrued in such preceding 
                year.''.
    (d) Conforming Amendment.--Section 6501(i) is amended by striking 
``oil and gas extraction taxes'' and inserting ``foreign oil and gas 
taxes''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.

SEC. 403. BROKER REPORTING OF CUSTOMER'S BASIS IN SECURITIES 
              TRANSACTIONS.

    (a) In General.--
            (1) Broker reporting for securities transactions.--Section 
        6045 is amended by adding at the end the following new 
        subsection:
    ``(g) Additional Information Required in the Case of Securities 
Transactions, etc.--
            ``(1) In general.--If a broker is otherwise required to 
        make a return under subsection (a) with respect to the gross 
        proceeds of the sale of a covered security, the broker shall 
        include in such return the information described in paragraph 
        (2).
            ``(2) Additional information required.--
                    ``(A) In general.--The information required under 
                paragraph (1) to be shown on a return with respect to a 
                covered security of a customer shall include the 
                customer's adjusted basis in such security and whether 
                any gain or loss with respect to such security is long-
                term or short-term (within the meaning of section 
                1222).
                    ``(B) Determination of adjusted basis.--For 
                purposes of subparagraph (A)--
                            ``(i) In general.--The customer's adjusted 
                        basis shall be determined--
                                    ``(I) in the case of any security 
                                (other than any stock for which an 
                                average basis method is permissible 
                                under section 1012), in accordance with 
                                the first-in first-out method unless 
                                the customer notifies the broker by 
                                means of making an adequate 
                                identification of the stock sold or 
                                transferred, and
                                    ``(II) in the case of any stock for 
                                which an average basis method is 
                                permissible under section 1012, in 
                                accordance with the broker's default 
                                method unless the customer notifies the 
                                broker that he elects another 
                                acceptable method under section 1012 
                                with respect to the account in which 
                                such stock is held.
                            ``(ii) Exception for wash sales.--Except as 
                        otherwise provided by the Secretary, the 
                        customer's adjusted basis shall be determined 
                        without regard to section 1091 (relating to 
                        loss from wash sales of stock or securities) 
                        unless the transactions occur in the same 
                        account with respect to identical securities.
            ``(3) Covered security.--For purposes of this subsection--
                    ``(A) In general.--The term `covered security' 
                means any specified security acquired on or after the 
                applicable date if such security--
                            ``(i) was acquired through a transaction in 
                        the account in which such security is held, or
                            ``(ii) was transferred to such account from 
                        an account in which such security was a covered 
                        security, but only if the broker received a 
                        statement under section 6045A with respect to 
                        the transfer.
                    ``(B) Specified security.--The term `specified 
                security' means--
                            ``(i) any share of stock in a corporation,
                            ``(ii) any note, bond, debenture, or other 
                        evidence of indebtedness,
                            ``(iii) any commodity, or contract or 
                        derivative with respect to such commodity, if 
                        the Secretary determines that adjusted basis 
                        reporting is appropriate for purposes of this 
                        subsection, and
                            ``(iv) any other financial instrument with 
                        respect to which the Secretary determines that 
                        adjusted basis reporting is appropriate for 
                        purposes of this subsection.
                    ``(C) Applicable date.--The term `applicable date' 
                means--
                            ``(i) January 1, 2011, in the case of any 
                        specified security which is stock in a 
                        corporation (other than any stock described in 
                        clause (ii)),
                            ``(ii) January 1, 2012, in the case of any 
                        stock for which an average basis method is 
                        permissible under section 1012, and
                            ``(iii) January 1, 2013, or such later date 
                        determined by the Secretary in the case of any 
                        other specified security.
            ``(4) Treatment of s corporations.--In the case of the sale 
        of a covered security acquired by an S corporation (other than 
        a financial institution) after December 31, 2011, such S 
        corporation shall be treated in the same manner as a 
        partnership for purposes of this section.
            ``(5) Special rules for short sales.--In the case of a 
        short sale, reporting under this section shall be made for the 
        year in which such sale is closed.''.
            (2) Broker information required with respect to options.--
        Section 6045, as amended by subsection (a), is amended by 
        adding at the end the following new subsection:
    ``(h) Application to Options on Securities.--
            ``(1) Exercise of option.--For purposes of this section, if 
        a covered security is acquired or disposed of pursuant to the 
        exercise of an option that was granted or acquired in the same 
        account as the covered security, the amount received with 
        respect to the grant or paid with respect to the acquisition of 
        such option shall be treated as an adjustment to gross proceeds 
        or as an adjustment to basis, as the case may be.
            ``(2) Lapse or closing transaction.--In the case of the 
        lapse (or closing transaction (as defined in section 
        1234(b)(2)(A))) of an option on a specified security or the 
        exercise of a cash-settled option on a specified security, 
        reporting under subsections (a) and (g) with respect to such 
        option shall be made for the calendar year which includes the 
        date of such lapse, closing transaction, or exercise.
            ``(3) Prospective application.--Paragraphs (1) and (2) 
        shall not apply to any option which is granted or acquired 
        before January 1, 2013.
            ``(4) Definitions.--For purposes of this subsection, the 
        terms `covered security' and `specified security' shall have 
        the meanings given such terms in subsection (g)(3).''.
            (3) Extension of period for statements sent to customers.--
                    (A) In general.--Subsection (b) of section 6045 is 
                amended by striking ``January 31'' and inserting 
                ``February 15''.
                    (B) Statements related to substitute payments.--
                Subsection (d) of section 6045 is amended--
                            (i) by striking ``at such time and'', and
                            (ii) by inserting after ``other item.'' the 
                        following new sentence: ``The written statement 
                        required under the preceding sentence shall be 
                        furnished on or before February 15 of the year 
                        following the calendar year in which the 
                        payment was made.''.
                    (C) Other statements.--Subsection (b) of section 
                6045 is amended by adding at the end the following: 
                ``In the case of a consolidated reporting statement (as 
                defined in regulations) with respect to any customer, 
                any statement which would otherwise be required to be 
                furnished on or before January 31 of a calendar year 
                with respect to any item reportable to the taxpayer 
                shall instead be required to be furnished on or before 
                February 15 of such calendar year if furnished with 
                such consolidated reporting statement.''.
    (b) Determination of Basis of Certain Securities on Account by 
Account or Average Basis Method.--Section 1012 is amended--
            (1) by striking ``The basis of property'' and inserting the 
        following:
    ``(a) In General.--The basis of property'',
            (2) by striking ``The cost of real property'' and inserting 
        the following:
    ``(b) Special Rule for Apportioned Real Estate Taxes.--The cost of 
real property'', and
            (3) by adding at the end the following new subsections:
    ``(c) Determinations by Account.--
            ``(1) In general.--In the case of the sale, exchange, or 
        other disposition of a specified security on or after the 
        applicable date, the conventions prescribed by regulations 
        under this section shall be applied on an account by account 
        basis.
            ``(2) Application to certain funds.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), any stock for which an average basis 
                method is permissible under section 1012 which is 
                acquired before January 1, 2012, shall be treated as a 
                separate account from any such stock acquired on or 
                after such date.
                    ``(B) Election fund for treatment as single 
                account.--If a fund described in subparagraph (A) 
                elects to have this subparagraph apply with respect to 
                one or more of its stockholders--
                            ``(i) subparagraph (A) shall not apply with 
                        respect to any stock in such fund held by such 
                        stockholders, and
                            ``(ii) all stock in such fund which is held 
                        by such stockholders shall be treated as 
                        covered securities described in section 
                        6045(g)(3) without regard to the date of the 
                        acquisition of such stock.
                A rule similar to the rule of the preceding sentence 
                shall apply with respect to a broker holding such stock 
                as a nominee.
            ``(3) Definitions.--For purposes of this section, the terms 
        `specified security' and `applicable date' shall have the 
        meaning given such terms in section 6045(g).
    ``(d) Average Basis for Stock Acquired Pursuant to a Dividend 
Reinvestment Plan.--
            ``(1) In general.--In the case of any stock acquired after 
        December 31, 2010, in connection with a dividend reinvestment 
        plan, the basis of such stock while held as part of such plan 
        shall be determined using one of the methods which may be used 
        for determining the basis of stock in an open-end fund.
            ``(2) Treatment after transfer.--In the case of the 
        transfer to another account of stock to which paragraph (1) 
        applies, such stock shall have a cost basis in such other 
        account equal to its basis in the dividend reinvestment plan 
        immediately before such transfer (properly adjusted for any 
        fees or other charges taken into account in connection with 
        such transfer).
            ``(3) Separate accounts; election for treatment as single 
        account.--Rules similar to the rules of subsection (c)(2) shall 
        apply for purposes of this subsection.
            ``(4) Dividend reinvestment plan.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `dividend reinvestment 
                plan' means any arrangement under which dividends on 
                any stock are reinvested in stock identical to the 
                stock with respect to which the dividends are paid.
                    ``(B) Initial stock acquisition treated as acquired 
                in connection with plan.--Stock shall be treated as 
                acquired in connection with a dividend reinvestment 
                plan if such stock is acquired pursuant to such plan or 
                if the dividends paid on such stock are subject to such 
                plan.''.
    (c) Information by Transferors To Aid Brokers.--
            (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61 is amended by inserting after section 6045 the 
        following new section:

``SEC. 6045A. INFORMATION REQUIRED IN CONNECTION WITH TRANSFERS OF 
              COVERED SECURITIES TO BROKERS.

    ``(a) Furnishing of Information.--Every applicable person which 
transfers to a broker (as defined in section 6045(c)(1)) a security 
which is a covered security (as defined in section 6045(g)(3)) in the 
hands of such applicable person shall furnish to such broker a written 
statement in such manner and setting forth such information as the 
Secretary may by regulations prescribe for purposes of enabling such 
broker to meet the requirements of section 6045(g).
    ``(b) Applicable Person.--For purposes of subsection (a), the term 
`applicable person' means--
            ``(1) any broker (as defined in section 6045(c)(1)), and
            ``(2) any other person as provided by the Secretary in 
        regulations.
    ``(c) Time for Furnishing Statement.--Except as otherwise provided 
by the Secretary, any statement required by subsection (a) shall be 
furnished not later than 15 days after the date of the transfer 
described in such subsection.''.
            (2) Assessable penalties.--Paragraph (2) of section 
        6724(d), as amended by the Housing Assistance Tax Act of 2008, 
        is amended by redesignating subparagraphs (I) through (DD) as 
        subparagraphs (J) through (EE), respectively, and by inserting 
        after subparagraph (H) the following new subparagraph:
                    ``(I) section 6045A (relating to information 
                required in connection with transfers of covered 
                securities to brokers),''.
            (3) Clerical amendment.--The table of sections for subpart 
        B of part III of subchapter A of chapter 61 is amended by 
        inserting after the item relating to section 6045 the following 
        new item:

``Sec. 6045A. Information required in connection with transfers of 
                            covered securities to brokers.''.
    (d) Additional Issuer Information To Aid Brokers.--
            (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61, as amended by subsection (b), is amended by 
        inserting after section 6045A the following new section:

``SEC. 6045B. RETURNS RELATING TO ACTIONS AFFECTING BASIS OF SPECIFIED 
              SECURITIES.

    ``(a) In General.--According to the forms or regulations prescribed 
by the Secretary, any issuer of a specified security shall make a 
return setting forth--
            ``(1) a description of any organizational action which 
        affects the basis of such specified security of such issuer,
            ``(2) the quantitative effect on the basis of such 
        specified security resulting from such action, and
            ``(3) such other information as the Secretary may 
        prescribe.
    ``(b) Time for Filing Return.--Any return required by subsection 
(a) shall be filed not later than the earlier of--
            ``(1) 45 days after the date of the action described in 
        subsection (a), or
            ``(2) January 15 of the year following the calendar year 
        during which such action occurred.
    ``(c) Statements To Be Furnished to Holders of Specified Securities 
or Their Nominees.--According to the forms or regulations prescribed by 
the Secretary, every person required to make a return under subsection 
(a) with respect to a specified security shall furnish to the nominee 
with respect to the specified security (or certificate holder if there 
is no nominee) a written statement showing--
            ``(1) the name, address, and phone number of the 
        information contact of the person required to make such return,
            ``(2) the information required to be shown on such return 
        with respect to such security, and
            ``(3) such other information as the Secretary may 
        prescribe.
The written statement required under the preceding sentence shall be 
furnished to the holder on or before January 15 of the year following 
the calendar year during which the action described in subsection (a) 
occurred.
    ``(d) Specified Security.--For purposes of this section, the term 
`specified security' has the meaning given such term by section 
6045(g)(3)(B). No return shall be required under this section with 
respect to actions described in subsection (a) with respect to a 
specified security which occur before the applicable date (as defined 
in section 6045(g)(3)(C)) with respect to such security.
    ``(e) Public Reporting in Lieu of Return.--The Secretary may waive 
the requirements under subsections (a) and (c) with respect to a 
specified security, if the person required to make the return under 
subsection (a) makes publicly available, in such form and manner as the 
Secretary determines necessary to carry out the purposes of this 
section--
            ``(1) the name, address, phone number, and email address of 
        the information contact of such person, and
            ``(2) the information described in paragraphs (1), (2), and 
        (3) of subsection (a).''.
            (2) Assessable penalties.--
                    (A) Subparagraph (B) of section 6724(d)(1), as 
                amended by the Housing Assistance Tax Act of 2008, is 
                amended by redesignating clause (iv) and each of the 
                clauses which follow as clauses (v) through (xxiii), 
                respectively, and by inserting after clause (iii) the 
                following new clause:
                            ``(iv) section 6045B(a) (relating to 
                        returns relating to actions affecting basis of 
                        specified securities),''.
                    (B) Paragraph (2) of section 6724(d), as amended by 
                the Housing Assistance Tax Act of 2008 and by 
                subsection (c)(2), is amended by redesignating 
                subparagraphs (J) through (EE) as subparagraphs (K) 
                through (FF), respectively, and by inserting after 
                subparagraph (I) the following new subparagraph:
                    ``(J) subsections (c) and (e) of section 6045B 
                (relating to returns relating to actions affecting 
                basis of specified securities),''.
            (3) Clerical amendment.--The table of sections for subpart 
        B of part III of subchapter A of chapter 61, as amended by 
        subsection (b)(3), is amended by inserting after the item 
        relating to section 6045A the following new item:

``Sec. 6045B. Returns relating to actions affecting basis of specified 
                            securities.''.
    (e) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall take 
        effect on January 1, 2011.
            (2) Extension of period for statements sent to customers.--
        The amendments made by subsection (a)(3) shall apply to 
        statements required to be furnished after December 31, 2008.

SEC. 404. 0.2 PERCENT FUTA SURTAX.

    (a) In General.--Section 3301 (relating to rate of tax) is 
amended--
            (1) by striking ``through 2008'' in paragraph (1) and 
        inserting ``through 2009'', and
            (2) by striking ``calendar year 2009'' in paragraph (2) and 
        inserting ``calendar year 2010''.
    (b) Effective Date.--The amendments made by this section shall 
apply to wages paid after December 31, 2008.

SEC. 405. INCREASE AND EXTENSION OF OIL SPILL LIABILITY TRUST FUND TAX.

    (a) Increase in Rate.--
            (1) In general.--Section 4611(c)(2)(B) (relating to rates) 
        is amended by striking ``is 5 cents a barrel.'' and inserting 
        ``is--
                            ``(i) in the case of crude oil received or 
                        petroleum products entered before January 1, 
                        2017, 8 cents a barrel, and
                            ``(ii) in the case of crude oil received or 
                        petroleum products entered after December 31, 
                        2016, 9 cents a barrel.''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply on and after the first day of the first calendar 
        quarter beginning more than 60 days after the date of the 
        enactment of this Act.
    (b) Extension.--
            (1) In general.--Section 4611(f) (relating to application 
        of Oil Spill Liability Trust Fund financing rate) is amended by 
        striking paragraphs (2) and (3) and inserting the following new 
        paragraph:
            ``(2) Termination.--The Oil Spill Liability Trust Fund 
        financing rate shall not apply after December 31, 2017.''.
            (2) Conforming amendment.--Section 4611(f)(1) is amended by 
        striking ``paragraphs (2) and (3)'' and inserting ``paragraph 
        (2)''.
            (3) Effective date.--The amendments made by this subsection 
        shall take effect on the date of the enactment of this Act.

      DIVISION B--TAX EXTENDERS AND ALTERNATIVE MINIMUM TAX RELIEF

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

    (a) Short Title.--This division may be cited as the ``Tax Extenders 
and Alternative Minimum Tax Relief Act of 2008''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this division an 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.
    (c) Table of Contents.--The table of contents of this division is 
as follows:

      DIVISION B--TAX EXTENDERS AND ALTERNATIVE MINIMUM TAX RELIEF

Sec. 1. Short title; amendment of 1986 Code; table of contents.

                TITLE I--ALTERNATIVE MINIMUM TAX RELIEF

Sec. 101. Extension of alternative minimum tax relief for nonrefundable 
                            personal credits.
Sec. 102. Extension of increased alternative minimum tax exemption 
                            amount.
Sec. 103. Increase of AMT refundable credit amount for individuals with 
                            long-term unused credits for prior year 
                            minimum tax liability, etc.

            TITLE II--EXTENSION OF INDIVIDUAL TAX PROVISIONS

Sec. 201. Deduction for State and local sales taxes.
Sec. 202. Deduction of qualified tuition and related expenses.
Sec. 203. Deduction for certain expenses of elementary and secondary 
                            school teachers.
Sec. 204. Additional standard deduction for real property taxes for 
                            nonitemizers.
Sec. 205. Tax-free distributions from individual retirement plans for 
                            charitable purposes.
Sec. 206. Treatment of certain dividends of regulated investment 
                            companies.
Sec. 207. Stock in RIC for purposes of determining estates of 
                            nonresidents not citizens.
Sec. 208. Qualified investment entities.

            TITLE III--EXTENSION OF BUSINESS TAX PROVISIONS

Sec. 301. Extension and modification of research credit.
Sec. 302. New markets tax credit.
Sec. 303. Subpart F exception for active financing income.
Sec. 304. Extension of look-thru rule for related controlled foreign 
                            corporations.
Sec. 305. Extension of 15-year straight-line cost recovery for 
                            qualified leasehold improvements and 
                            qualified restaurant improvements; 15-year 
                            straight-line cost recovery for certain 
                            improvements to retail space.
Sec. 306. Modification of tax treatment of certain payments to 
                            controlling exempt organizations.
Sec. 307. Basis adjustment to stock of S corporations making charitable 
                            contributions of property.
Sec. 308. Increase in limit on cover over of rum excise tax to Puerto 
                            Rico and the Virgin Islands.
Sec. 309. Extension of economic development credit for American Samoa.
Sec. 310. Extension of mine rescue team training credit.
Sec. 311. Extension of election to expense advanced mine safety 
                            equipment.
Sec. 312. Deduction allowable with respect to income attributable to 
                            domestic production activities in Puerto 
                            Rico.
Sec. 313. Qualified zone academy bonds.
Sec. 314. Indian employment credit.
Sec. 315. Accelerated depreciation for business property on Indian 
                            reservations.
Sec. 316. Railroad track maintenance.
Sec. 317. Seven-year cost recovery period for motorsports racing track 
                            facility.
Sec. 318. Expensing of environmental remediation costs.
Sec. 319. Extension of work opportunity tax credit for Hurricane 
                            Katrina employees.
Sec. 320. Extension of increased rehabilitation credit for structures 
                            in the Gulf Opportunity Zone.
Sec. 321. Enhanced deduction for qualified computer contributions.
Sec. 322. Tax incentives for investment in the District of Columbia.
Sec. 323. Enhanced charitable deductions for contributions of food 
                            inventory.
Sec. 324. Extension of enhanced charitable deduction for contributions 
                            of book inventory.
Sec. 325. Extension and modification of duty suspension on wool 
                            products; wool research fund; wool duty 
                            refunds.

          TITLE IV--EXTENSION OF TAX ADMINISTRATION PROVISIONS

Sec. 401. Permanent authority for undercover operations.
Sec. 402. Permanent authority for disclosure of information relating to 
                            terrorist activities.

        TITLE V--ADDITIONAL TAX RELIEF AND OTHER TAX PROVISIONS

                     Subtitle A--General Provisions

Sec. 501. $8,500 income threshold used to calculate refundable portion 
                            of child tax credit.
Sec. 502. Provisions related to film and television productions.
Sec. 503. Exemption from excise tax for certain wooden arrows designed 
                            for use by children.
Sec. 504. Income averaging for amounts received in connection with the 
                            Exxon Valdez litigation.
Sec. 505. Certain farming business machinery and equipment treated as 
                            5-year property.
Sec. 506. Modification of penalty on understatement of taxpayer's 
                            liability by tax return preparer.

 Subtitle B--Paul Wellstone and Pete Domenici Mental Health Parity and 
                      Addiction Equity Act of 2008

Sec. 511. Short title.
Sec. 512. Mental health parity.

                       TITLE VI--OTHER PROVISIONS

Sec. 601. Secure rural schools and community self-determination 
                            program.
Sec. 602. Transfer to abandoned mine reclamation fund.

                       TITLE VII--DISASTER RELIEF

        Subtitle A--Heartland and Hurricane Ike Disaster Relief

Sec. 701. Short title.
Sec. 702. Temporary tax relief for areas damaged by 2008 Midwestern 
                            severe storms, tornados, and flooding.
Sec. 703. Reporting requirements relating to disaster relief 
                            contributions.
Sec. 704. Temporary tax-exempt bond financing and low-income housing 
                            tax relief for areas damaged by Hurricane 
                            Ike.

                  Subtitle B--National Disaster Relief

Sec. 706. Losses attributable to federally declared disasters.
Sec. 707. Expensing of Qualified Disaster Expenses.
Sec. 708. Net operating losses attributable to federally declared 
                            disasters.
Sec. 709. Waiver of certain mortgage revenue bond requirements 
                            following federally declared disasters.
Sec. 710. Special depreciation allowance for qualified disaster 
                            property.
Sec. 711. Increased expensing for qualified disaster assistance 
                            property.
Sec. 712. Coordination with Heartland disaster relief.

TITLE VIII--SPENDING REDUCTIONS AND APPROPRIATE REVENUE RAISERS FOR NEW 
                           TAX RELIEF POLICY

Sec. 801. Nonqualified deferred compensation from certain tax 
                            indifferent parties.

                TITLE I--ALTERNATIVE MINIMUM TAX RELIEF

SEC. 101. EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF FOR NONREFUNDABLE 
              PERSONAL CREDITS.

    (a) In General.--Paragraph (2) of section 26(a) (relating to 
special rule for taxable years 2000 through 2007) is amended--
            (1) by striking ``or 2007'' and inserting ``2007, or 
        2008'', and
            (2) by striking ``2007'' in the heading thereof and 
        inserting ``2008''.
    (b)  Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

SEC. 102. EXTENSION OF INCREASED ALTERNATIVE MINIMUM TAX EXEMPTION 
              AMOUNT.

    (a) In General.--Paragraph (1) of section 55(d) (relating to 
exemption amount) is amended--
            (1) by striking ``($66,250 in the case of taxable years 
        beginning in 2007)'' in subparagraph (A) and inserting 
        ``($69,950 in the case of taxable years beginning in 2008)'', 
        and
            (2) by striking ``($44,350 in the case of taxable years 
        beginning in 2007)'' in subparagraph (B) and inserting 
        ``($46,200 in the case of taxable years beginning in 2008)''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

SEC. 103. INCREASE OF AMT REFUNDABLE CREDIT AMOUNT FOR INDIVIDUALS WITH 
              LONG-TERM UNUSED CREDITS FOR PRIOR YEAR MINIMUM TAX 
              LIABILITY, ETC.

    (a) In General.--Paragraph (2) of section 53(e) is amended to read 
as follows:
            ``(2) AMT refundable credit amount.--For purposes of 
        paragraph (1), the term `AMT refundable credit amount' means, 
        with respect to any taxable year, the amount (not in excess of 
        the long-term unused minimum tax credit for such taxable year) 
        equal to the greater of--
                    ``(A) 50 percent of the long-term unused minimum 
                tax credit for such taxable year, or
                    ``(B) the amount (if any) of the AMT refundable 
                credit amount determined under this paragraph for the 
                taxpayer's preceding taxable year (determined without 
                regard to subsection (f)(2)).''.
    (b) Treatment of Certain Underpayments, Interest, and Penalties 
Attributable to the Treatment of Incentive Stock Options.--Section 53 
is amended by adding at the end the following new subsection:
    ``(f) Treatment of Certain Underpayments, Interest, and Penalties 
Attributable to the Treatment of Incentive Stock Options.--
            ``(1) Abatement.--Any underpayment of tax outstanding on 
        the date of the enactment of this subsection which is 
        attributable to the application of section 56(b)(3) for any 
        taxable year ending before January 1, 2008, and any interest or 
        penalty with respect to such underpayment which is outstanding 
        on such date of enactment, is hereby abated. The amount 
        determined under subsection (b)(1) shall not include any tax 
        abated under the preceding sentence.
            ``(2) Increase in credit for certain interest and penalties 
        already paid.--The AMT refundable credit amount, and the 
        minimum tax credit determined under subsection (b), for the 
        taxpayer's first 2 taxable years beginning after December 31, 
        2007, shall each be increased by 50 percent of the aggregate 
        amount of the interest and penalties which were paid by the 
        taxpayer before the date of the enactment of this subsection 
        and which would (but for such payment) have been abated under 
        paragraph (1).''.
    (c) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after December 31, 2007.
            (2) Abatement.--Section 53(f)(1), as added by subsection 
        (b), shall take effect on the date of the enactment of this 
        Act.

            TITLE II--EXTENSION OF INDIVIDUAL TAX PROVISIONS

SEC. 201. DEDUCTION FOR STATE AND LOCAL SALES TAXES.

    (a) In General.--Subparagraph (I) of section 164(b)(5) is amended 
by striking ``January 1, 2008'' and inserting ``January 1, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2007.

SEC. 202. DEDUCTION OF QUALIFIED TUITION AND RELATED EXPENSES.

    (a) In General.--Subsection (e) of section 222 (relating to 
termination) is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2007.

SEC. 203. DEDUCTION FOR CERTAIN EXPENSES OF ELEMENTARY AND SECONDARY 
              SCHOOL TEACHERS.

    (a) In General.--Subparagraph (D) of section 62(a)(2) (relating to 
certain expenses of elementary and secondary school teachers) is 
amended by striking ``or 2007'' and inserting ``2007, 2008, or 2009''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2007.

SEC. 204. ADDITIONAL STANDARD DEDUCTION FOR REAL PROPERTY TAXES FOR 
              NONITEMIZERS.

    (a) In General.--Subparagraph (C) of section 63(c)(1), as added by 
the Housing Assistance Tax Act of 2008, is amended by inserting ``or 
2009'' after ``2008''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2008.

SEC. 205. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT PLANS FOR 
              CHARITABLE PURPOSES.

    (a) In General.--Subparagraph (F) of section 408(d)(8) (relating to 
termination) is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions made in taxable years beginning after December 31, 
2007.

SEC. 206. TREATMENT OF CERTAIN DIVIDENDS OF REGULATED INVESTMENT 
              COMPANIES.

    (a) Interest-Related Dividends.--Subparagraph (C) of section 
871(k)(1) (defining interest-related dividend) is amended by striking 
``December 31, 2007'' and inserting ``December 31, 2009''.
    (b) Short-Term Capital Gain Dividends.--Subparagraph (C) of section 
871(k)(2) (defining short-term capital gain dividend) is amended by 
striking ``December 31, 2007'' and inserting ``December 31, 2009''.
    (c) Effective Date.--The amendments made by this section shall 
apply to dividends with respect to taxable years of regulated 
investment companies beginning after December 31, 2007.

SEC. 207. STOCK IN RIC FOR PURPOSES OF DETERMINING ESTATES OF 
              NONRESIDENTS NOT CITIZENS.

    (a) In General.--Paragraph (3) of section 2105(d) (relating to 
stock in a RIC) is amended by striking ``December 31, 2007'' and 
inserting ``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to decedents dying after December 31, 2007.

SEC. 208. QUALIFIED INVESTMENT ENTITIES.

    (a) In General.--Clause (ii) of section 897(h)(4)(A) (relating to 
termination) is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2009''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on January 1, 2008.

            TITLE III--EXTENSION OF BUSINESS TAX PROVISIONS

SEC. 301. EXTENSION AND MODIFICATION OF RESEARCH CREDIT.

    (a) Extension.--
            (1) In general.--Section 41(h) (relating to termination) is 
        amended by striking ``December 31, 2007'' and inserting 
        ``December 31, 2009'' in paragraph (1)(B).
            (2) Conforming amendment.--Subparagraph (D) of section 
        45C(b)(1) (relating to special rule) is amended by striking 
        ``after December 31, 2007'' and inserting ``after December 31, 
        2009''.
    (b) Termination of Alternative Incremental Credit.--Section 41(h) 
is amended by redesignating paragraph (2) as paragraph (3), and by 
inserting after paragraph (1) the following new paragraph:
            ``(2) Termination of alternative incremental credit.--No 
        election under subsection (c)(4) shall apply to taxable years 
        beginning after December 31, 2008.''.
    (c) Modification of Alternative Simplified Credit.--Paragraph 
(5)(A) of section 41(c) (relating to election of alternative simplified 
credit) is amended by striking ``12 percent'' and inserting ``14 
percent (12 percent in the case of taxable years ending before January 
1, 2009)''.
    (d) Technical Correction.--Paragraph (3) of section 41(h) is 
amended to read as follows:
            ``(2) Computation for taxable year in which credit 
        terminates.--In the case of any taxable year with respect to 
        which this section applies to a number of days which is less 
        than the total number of days in such taxable year--
                    ``(A) the amount determined under subsection 
                (c)(1)(B) with respect to such taxable year shall be 
                the amount which bears the same ratio to such amount 
                (determined without regard to this paragraph) as the 
                number of days in such taxable year to which this 
                section applies bears to the total number of days in 
                such taxable year, and
                    ``(B) for purposes of subsection (c)(5), the 
                average qualified research expenses for the preceding 3 
                taxable years shall be the amount which bears the same 
                ratio to such average qualified research expenses 
                (determined without regard to this paragraph) as the 
                number of days in such taxable year to which this 
                section applies bears to the total number of days in 
                such taxable year.''.
    (e) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after December 31, 2007.
            (2) Extension.--The amendments made by subsection (a) shall 
        apply to amounts paid or incurred after December 31, 2007.

SEC. 302. NEW MARKETS TAX CREDIT.

    Subparagraph (D) of section 45D(f)(1) (relating to national 
limitation on amount of investments designated) is amended by striking 
``and 2008'' and inserting ``2008, and 2009''.

SEC. 303. SUBPART F EXCEPTION FOR ACTIVE FINANCING INCOME.

    (a) Exempt Insurance Income.--Paragraph (10) of section 953(e) 
(relating to application) is amended--
            (1) by striking ``January 1, 2009'' and inserting ``January 
        1, 2010'', and
            (2) by striking ``December 31, 2008'' and inserting 
        ``December 31, 2009''.
    (b) Exception to Treatment as Foreign Personal Holding Company 
Income.--Paragraph (9) of section 954(h) (relating to application) is 
amended by striking ``January 1, 2009'' and inserting ``January 1, 
2010''.

SEC. 304. EXTENSION OF LOOK-THRU RULE FOR RELATED CONTROLLED FOREIGN 
              CORPORATIONS.

    (a) In General.--Subparagraph (C) of section 954(c)(6) (relating to 
application) is amended by striking ``January 1, 2009'' and inserting 
``January 1, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years of foreign corporations beginning after December 31, 
2007, and to taxable years of United States shareholders with or within 
which such taxable years of foreign corporations end.

SEC. 305. EXTENSION OF 15-YEAR STRAIGHT-LINE COST RECOVERY FOR 
              QUALIFIED LEASEHOLD IMPROVEMENTS AND QUALIFIED RESTAURANT 
              IMPROVEMENTS; 15-YEAR STRAIGHT-LINE COST RECOVERY FOR 
              CERTAIN IMPROVEMENTS TO RETAIL SPACE.

    (a) Extension of Leasehold and Restaurant Improvements.--
            (1) In general.--Clauses (iv) and (v) of section 
        168(e)(3)(E) (relating to 15-year property) are each amended by 
        striking ``January 1, 2008'' and inserting ``January 1, 2010''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to property placed in service after December 31, 
        2007.
    (b) Treatment to Include New Construction.--
            (1) In general.--Paragraph (7) of section 168(e) (relating 
        to classification of property) is amended to read as follows:
            ``(7) Qualified restaurant property.--
                    ``(A) In general.--The term `qualified restaurant 
                property' means any section 1250 property which is--
                            ``(i) a building, if such building is 
                        placed in service after December 31, 2008, and 
                        before January 1, 2010, or
                            ``(ii) an improvement to a building,
                if more than 50 percent of the building's square 
                footage is devoted to preparation of, and seating for 
                on-premises consumption of, prepared meals.
                    ``(B) Exclusion from bonus depreciation.--Property 
                described in this paragraph shall not be considered 
                qualified property for purposes of subsection (k).''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to property placed in service after December 31, 
        2008.
    (c) Recovery Period for Depreciation of Certain Improvements to 
Retail Space.--
            (1) 15-year recovery period.--Section 168(e)(3)(E) 
        (relating to 15-year property) is amended by striking ``and'' 
        at the end of clause (vii), by striking the period at the end 
        of clause (viii) and inserting ``, and'', and by adding at the 
        end the following new clause:
                            ``(ix) any qualified retail improvement 
                        property placed in service after December 31, 
                        2008, and before January 1, 2010.''.
            (2) Qualified retail improvement property.--Section 168(e) 
        is amended by adding at the end the following new paragraph:
            ``(8) Qualified retail improvement property.--
                    ``(A) In general.--The term `qualified retail 
                improvement property' means any improvement to an 
                interior portion of a building which is nonresidential 
                real property if--
                            ``(i) such portion is open to the general 
                        public and is used in the retail trade or 
                        business of selling tangible personal property 
                        to the general public, and
                            ``(ii) such improvement is placed in 
                        service more than 3 years after the date the 
                        building was first placed in service.
                    ``(B) Improvements made by owner.--In the case of 
                an improvement made by the owner of such improvement, 
                such improvement shall be qualified retail improvement 
                property (if at all) only so long as such improvement 
                is held by such owner. Rules similar to the rules under 
                paragraph (6)(B) shall apply for purposes of the 
                preceding sentence.
                    ``(C) Certain improvements not included.--Such term 
                shall not include any improvement for which the 
                expenditure is attributable to--
                            ``(i) the enlargement of the building,
                            ``(ii) any elevator or escalator,
                            ``(iii) any structural component 
                        benefitting a common area, or
                            ``(iv) the internal structural framework of 
                        the building.
                    ``(D) Exclusion from bonus depreciation.--Property 
                described in this paragraph shall not be considered 
                qualified property for purposes of subsection (k).
                    ``(E) Termination.--Such term shall not include any 
                improvement placed in service after December 31, 
                2009.''.
            (3) Requirement to use straight line method.--Section 
        168(b)(3) is amended by adding at the end the following new 
        subparagraph:
                    ``(I) Qualified retail improvement property 
                described in subsection (e)(8).''.
            (4) Alternative system.--The table contained in section 
        168(g)(3)(B) is amended by inserting after the item relating to 
        subparagraph (E)(viii) the following new item:

``(E)(ix)..................................................        39''.
 

            (5) Effective date.--The amendments made by this subsection 
        shall apply to property placed in service after December 31, 
        2008.

SEC. 306. MODIFICATION OF TAX TREATMENT OF CERTAIN PAYMENTS TO 
              CONTROLLING EXEMPT ORGANIZATIONS.

    (a) In General.--Clause (iv) of section 512(b)(13)(E) (relating to 
termination) is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to payments received or accrued after December 31, 2007.

SEC. 307. BASIS ADJUSTMENT TO STOCK OF S CORPORATIONS MAKING CHARITABLE 
              CONTRIBUTIONS OF PROPERTY.

    (a) In General.--The last sentence of section 1367(a)(2) (relating 
to decreases in basis) is amended by striking ``December 31, 2007'' and 
inserting ``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made in taxable years beginning after December 31, 
2007.

SEC. 308. INCREASE IN LIMIT ON COVER OVER OF RUM EXCISE TAX TO PUERTO 
              RICO AND THE VIRGIN ISLANDS.

    (a) In General.--Paragraph (1) of section 7652(f) is amended by 
striking ``January 1, 2008'' and inserting ``January 1, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to distilled spirits brought into the United States after December 31, 
2007.

SEC. 309. EXTENSION OF ECONOMIC DEVELOPMENT CREDIT FOR AMERICAN SAMOA.

    (a) In General.--Subsection (d) of section 119 of division A of the 
Tax Relief and Health Care Act of 2006 is amended--
            (1) by striking ``first two taxable years'' and inserting 
        ``first 4 taxable years'', and
            (2) by striking ``January 1, 2008'' and inserting ``January 
        1, 2010''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

SEC. 310. EXTENSION OF MINE RESCUE TEAM TRAINING CREDIT.

    Section 45N(e) (relating to termination) is amended by striking 
``December 31, 2008'' and inserting ``December 31, 2009''.

SEC. 311. EXTENSION OF ELECTION TO EXPENSE ADVANCED MINE SAFETY 
              EQUIPMENT.

    Section 179E(g) (relating to termination) is amended by striking 
``December 31, 2008'' and inserting ``December 31, 2009''.

SEC. 312. DEDUCTION ALLOWABLE WITH RESPECT TO INCOME ATTRIBUTABLE TO 
              DOMESTIC PRODUCTION ACTIVITIES IN PUERTO RICO.

    (a) In General.--Subparagraph (C) of section 199(d)(8) (relating to 
termination) is amended--
            (1) by striking ``first 2 taxable years'' and inserting 
        ``first 4 taxable years'', and
            (2) by striking ``January 1, 2008'' and inserting ``January 
        1, 2010''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

SEC. 313. QUALIFIED ZONE ACADEMY BONDS.

    (a) In General.--Subpart I of part IV of subchapter A of chapter 1 
is amended by adding at the end the following new section:

``SEC. 54E. QUALIFIED ZONE ACADEMY BONDS.

    ``(a) Qualified Zone Academy Bonds.--For purposes of this 
subchapter, the term `qualified zone academy bond' means any bond 
issued as part of an issue if--
            ``(1) 100 percent of the available project proceeds of such 
        issue are to be used for a qualified purpose with respect to a 
        qualified zone academy established by an eligible local 
        education agency,
            ``(2) the bond is issued by a State or local government 
        within the jurisdiction of which such academy is located, and
            ``(3) the issuer--
                    ``(A) designates such bond for purposes of this 
                section,
                    ``(B) certifies that it has written assurances that 
                the private business contribution requirement of 
                subsection (b) will be met with respect to such 
                academy, and
                    ``(C) certifies that it has the written approval of 
                the eligible local education agency for such bond 
                issuance.
    ``(b)  Private Business Contribution Requirement.--For purposes of 
subsection (a), the private business contribution requirement of this 
subsection is met with respect to any issue if the eligible local 
education agency that established the qualified zone academy has 
written commitments from private entities to make qualified 
contributions having a present value (as of the date of issuance of the 
issue) of not less than 10 percent of the proceeds of the issue.
    ``(c) Limitation on Amount of Bonds Designated.--
            ``(1) National limitation.--There is a national zone 
        academy bond limitation for each calendar year. Such limitation 
        is $400,000,000 for 2008 and 2009, and, except as provided in 
        paragraph (4), zero thereafter.
            ``(2) Allocation of limitation.--The national zone academy 
        bond limitation for a calendar year shall be allocated by the 
        Secretary among the States on the basis of their respective 
        populations of individuals below the poverty line (as defined 
        by the Office of Management and Budget). The limitation amount 
        allocated to a State under the preceding sentence shall be 
        allocated by the State education agency to qualified zone 
        academies within such State.
            ``(3) Designation subject to limitation amount.--The 
        maximum aggregate face amount of bonds issued during any 
        calendar year which may be designated under subsection (a) with 
        respect to any qualified zone academy shall not exceed the 
        limitation amount allocated to such academy under paragraph (2) 
        for such calendar year.
            ``(4) Carryover of unused limitation.--
                    ``(A) In general.--If for any calendar year--
                            ``(i) the limitation amount for any State, 
                        exceeds
                            ``(ii) the amount of bonds issued during 
                        such year which are designated under subsection 
                        (a) with respect to qualified zone academies 
                        within such State,
                the limitation amount for such State for the following 
                calendar year shall be increased by the amount of such 
                excess.
                    ``(B) Limitation on carryover.--Any carryforward of 
                a limitation amount may be carried only to the first 2 
                years following the unused limitation year. For 
                purposes of the preceding sentence, a limitation amount 
                shall be treated as used on a first-in first-out basis.
                    ``(C) Coordination with section 1397e.--Any 
                carryover determined under section 1397E(e)(4) 
                (relating to carryover of unused limitation) with 
                respect to any State to calendar year 2008 or 2009 
                shall be treated for purposes of this section as a 
                carryover with respect to such State for such calendar 
                year under subparagraph (A), and the limitation of 
                subparagraph (B) shall apply to such carryover taking 
                into account the calendar years to which such carryover 
                relates.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Qualified zone academy.--The term `qualified zone 
        academy' means any public school (or academic program within a 
        public school) which is established by and operated under the 
        supervision of an eligible local education agency to provide 
        education or training below the postsecondary level if--
                    ``(A) such public school or program (as the case 
                may be) is designed in cooperation with business to 
                enhance the academic curriculum, increase graduation 
                and employment rates, and better prepare students for 
                the rigors of college and the increasingly complex 
                workforce,
                    ``(B) students in such public school or program (as 
                the case may be) will be subject to the same academic 
                standards and assessments as other students educated by 
                the eligible local education agency,
                    ``(C) the comprehensive education plan of such 
                public school or program is approved by the eligible 
                local education agency, and
                    ``(D)(i) such public school is located in an 
                empowerment zone or enterprise community (including any 
                such zone or community designated after the date of the 
                enactment of this section), or
                    ``(ii) there is a reasonable expectation (as of the 
                date of issuance of the bonds) that at least 35 percent 
                of the students attending such school or participating 
                in such program (as the case may be) will be eligible 
                for free or reduced-cost lunches under the school lunch 
                program established under the National School Lunch 
                Act.
            ``(2) Eligible local education agency.--For purposes of 
        this section, the term `eligible local education agency' means 
        any local educational agency as defined in section 9101 of the 
        Elementary and Secondary Education Act of 1965.
            ``(3) Qualified purpose.--The term `qualified purpose' 
        means, with respect to any qualified zone academy--
                    ``(A) rehabilitating or repairing the public school 
                facility in which the academy is established,
                    ``(B) providing equipment for use at such academy,
                    ``(C) developing course materials for education to 
                be provided at such academy, and
                    ``(D) training teachers and other school personnel 
                in such academy.
            ``(4) Qualified contributions.--The term `qualified 
        contribution' means any contribution (of a type and quality 
        acceptable to the eligible local education agency) of--
                    ``(A) equipment for use in the qualified zone 
                academy (including state-of-the-art technology and 
                vocational equipment),
                    ``(B) technical assistance in developing curriculum 
                or in training teachers in order to promote appropriate 
                market driven technology in the classroom,
                    ``(C) services of employees as volunteer mentors,
                    ``(D) internships, field trips, or other 
                educational opportunities outside the academy for 
                students, or
                    ``(E) any other property or service specified by 
                the eligible local education agency.''.
    (b) Conforming Amendments.--
            (1) Paragraph (1) of section 54A(d), as amended by this 
        Act, is amended by striking ``or'' at the end of subparagraph 
        (B), by inserting ``or'' at the end of subparagraph (C), and by 
        inserting after subparagraph (C) the following new 
        subparagraph:
                    ``(D) a qualified zone academy bond,''.
            (2) Subparagraph (C) of section 54A(d)(2), as amended by 
        this Act, is amended by striking ``and'' at the end of clause 
        (ii), by striking the period at the end of clause (iii) and 
        inserting ``, and'', and by adding at the end the following new 
        clause:
                            ``(iv) in the case of a qualified zone 
                        academy bond, a purpose specified in section 
                        54E(a)(1).''.
            (3) Section 1397E is amended by adding at the end the 
        following new subsection:
    ``(m) Termination.--This section shall not apply to any obligation 
issued after the date of the enactment of the Tax Extenders and 
Alternative Minimum Tax Relief Act of 2008.''.
            (4) The table of sections for subpart I of part IV of 
        subchapter A of chapter 1 is amended by adding at the end the 
        following new item:

``Sec. 54E. Qualified zone academy bonds.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.

SEC. 314. INDIAN EMPLOYMENT CREDIT.

    (a) In General.--Subsection (f) of section 45A (relating to 
termination) is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2007.

SEC. 315. ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY ON INDIAN 
              RESERVATIONS.

    (a) In General.--Paragraph (8) of section 168(j) (relating to 
termination) is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2007.

SEC. 316. RAILROAD TRACK MAINTENANCE.

    (a) In General.--Subsection (f) of section 45G (relating to 
application of section) is amended by striking ``January 1, 2008'' and 
inserting ``January 1, 2010''.
    (b) Credit Allowed Against Alternative Minimum Tax.--Subparagraph 
(B) of section 38(c)(4), as amended by this Act, is amended--
            (1) by redesignating clauses (v), (vi), and (vii) as 
        clauses (vi), (vii), and (viii), respectively, and
            (2) by inserting after clause (iv) the following new 
        clause:
                            ``(v) the credit determined under section 
                        45G,''.
    (c) Effective Dates.--
            (1) The amendment made by subsection (a) shall apply to 
        expenditures paid or incurred during taxable years beginning 
        after December 31, 2007.
            (2) The amendments made by subsection (b) shall apply to 
        credits determined under section 45G of the Internal Revenue 
        Code of 1986 in taxable years beginning after December 31, 
        2007, and to carrybacks of such credits.

SEC. 317. SEVEN-YEAR COST RECOVERY PERIOD FOR MOTORSPORTS RACING TRACK 
              FACILITY.

    (a) In General.--Subparagraph (D) of section 168(i)(15) (relating 
to termination) is amended by striking ``December 31, 2007'' and 
inserting ``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2007.

SEC. 318. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS.

    (a) In General.--Subsection (h) of section 198 (relating to 
termination) is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to expenditures paid or incurred after December 31, 2007.

SEC. 319. EXTENSION OF WORK OPPORTUNITY TAX CREDIT FOR HURRICANE 
              KATRINA EMPLOYEES.

    (a) In General.--Paragraph (1) of section 201(b) of the Katrina 
Emergency Tax Relief Act of 2005 is amended by striking ``2-year'' and 
inserting ``4-year''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to individuals hired after August 27, 2007.

SEC. 320. EXTENSION OF INCREASED REHABILITATION CREDIT FOR STRUCTURES 
              IN THE GULF OPPORTUNITY ZONE.

    (a) In General.--Subsection (h) of section 1400N is amended by 
striking ``December 31, 2008'' and inserting ``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to expenditures paid or incurred after the date of the enactment of 
this Act.

SEC. 321. ENHANCED DEDUCTION FOR QUALIFIED COMPUTER CONTRIBUTIONS.

    (a) In General.--Subparagraph (G) of section 170(e)(6) is amended 
by striking ``December 31, 2007'' and inserting ``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made during taxable years beginning after December 31, 
2007.

SEC. 322. 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 ``2007'' both places it appears and inserting 
        ``2009''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to periods beginning after December 31, 2007.
    (b) Tax-Exempt Economic Development Bonds.--
            (1) In general.--Subsection (b) of section 1400A is amended 
        by striking ``2007'' and inserting ``2009''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to bonds issued after December 31, 2007.
    (c) Zero Percent Capital Gains Rate.--
            (1) In general.--Subsection (b) of section 1400B is amended 
        by striking ``2008'' each place it appears and inserting 
        ``2010''.
            (2) Conforming amendments.--
                    (A) Section 1400B(e)(2) is amended--
                            (i) by striking ``2012'' and inserting 
                        ``2014'', and
                            (ii) by striking ``2012'' in the heading 
                        thereof and inserting ``2014''.
                    (B) Section 1400B(g)(2) is amended by striking 
                ``2012'' and inserting ``2014''.
                    (C) Section 1400F(d) is amended by striking 
                ``2012'' and inserting ``2014''.
            (3) Effective dates.--
                    (A) Extension.--The amendments made by paragraph 
                (1) shall apply to acquisitions after December 31, 
                2007.
                    (B) Conforming amendments.--The amendments made by 
                paragraph (2) shall take effect on the date of the 
                enactment of this Act.
    (d) First-Time Homebuyer Credit.--
            (1) In general.--Subsection (i) of section 1400C is amended 
        by striking ``2008'' and inserting ``2010''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to property purchased after December 31, 2007.

SEC. 323. ENHANCED CHARITABLE DEDUCTIONS FOR CONTRIBUTIONS OF FOOD 
              INVENTORY.

    (a) Increased Amount of Deduction.--
            (1) In general.--Clause (iv) of section 170(e)(3)(C) 
        (relating to termination) is amended by striking ``December 31, 
        2007'' and inserting ``December 31, 2009''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to contributions made after December 31, 2007.
    (b) Temporary Suspension of Limitations on Charitable 
Contributions.--
            (1) In general.--Section 170(b) is amended by adding at the 
        end the following new paragraph:
            ``(3) Temporary suspension of limitations on charitable 
        contributions.--In the case of a qualified farmer or rancher 
        (as defined in paragraph (1)(E)(v)), any charitable 
        contribution of food--
                    ``(A) to which subsection (e)(3)(C) applies 
                (without regard to clause (ii) thereof), and
                    ``(B) which is made during the period beginning on 
                the date of the enactment of this paragraph and before 
                January 1, 2009,
        shall be treated for purposes of paragraph (1)(E) or (2)(B), 
        whichever is applicable, as if it were a qualified conservation 
        contribution which is made by a qualified farmer or rancher and 
        which otherwise meets the requirements of such paragraph.''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to taxable years ending after the date of the 
        enactment of this Act.

SEC. 324. EXTENSION OF ENHANCED CHARITABLE DEDUCTION FOR CONTRIBUTIONS 
              OF BOOK INVENTORY.

    (a) Extension.--Clause (iv) of section 170(e)(3)(D) (relating to 
termination) is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2009''.
    (b) Clerical Amendment.--Clause (iii) of section 170(e)(3)(D) 
(relating to certification by donee) is amended by inserting ``of 
books'' after ``to any contribution''.
    (c) Effective Date.--The amendments made by this section shall 
apply to contributions made after December 31, 2007.

SEC. 325. EXTENSION AND MODIFICATION OF DUTY SUSPENSION ON WOOL 
              PRODUCTS; WOOL RESEARCH FUND; WOOL DUTY REFUNDS.

    (a) Extension of Temporary Duty Reductions.--Each of the following 
headings of the Harmonized Tariff Schedule of the United States is 
amended by striking the date in the effective period column and 
inserting ``12/31/2014'':
            (1) Heading 9902.51.11 (relating to fabrics of worsted 
        wool).
            (2) Heading 9902.51.13 (relating to yarn of combed wool).
            (3) Heading 9902.51.14 (relating to wool fiber, waste, 
        garnetted stock, combed wool, or wool top).
            (4) Heading 9902.51.15 (relating to fabrics of combed 
        wool).
            (5) Heading 9902.51.16 (relating to fabrics of combed 
        wool).
    (b) Extension of Duty Refunds and Wool Research Trust Fund.--
            (1) In general.--Section 4002(c) of the Wool Suit and 
        Textile Trade Extension Act of 2004 (Public Law 108-429; 118 
        Stat. 2603) is amended--
                    (A) in paragraph (3)(C), by striking ``2010'' and 
                inserting ``2015''; and
                    (B) in paragraph (6)(A), by striking ``through 
                2009'' and inserting ``through 2014''.
            (2) Sunset.--Section 506(f) of the Trade and Development 
        Act of 2000 (Public 106-200; 114 Stat. 303 (7 U.S.C. 7101 
        note)) is amended by striking ``2010'' and inserting ``2015''.

          TITLE IV--EXTENSION OF TAX ADMINISTRATION PROVISIONS

SEC. 401. PERMANENT AUTHORITY FOR UNDERCOVER OPERATIONS.

    (a) In General.--Section 7608(c) (relating to rules relating to 
undercover operations) is amended by striking paragraph (6).
    (b) Effective Date.--The amendment made by this section shall apply 
to operations conducted after the date of the enactment of this Act.

SEC. 402. PERMANENT AUTHORITY FOR DISCLOSURE OF INFORMATION RELATING TO 
              TERRORIST ACTIVITIES.

    (a) Disclosure of Return Information to Apprise Appropriate 
Officials of Terrorist Activities.--Subparagraph (C) of section 
6103(i)(3) is amended by striking clause (iv).
    (b) Disclosure Upon Request of Information Relating to Terrorist 
Activities.--Paragraph (7) of section 6103(i) is amended by striking 
subparagraph (E).
    (c) Effective Date.--The amendments made by this section shall 
apply to disclosures after the date of the enactment of this Act.

        TITLE V--ADDITIONAL TAX RELIEF AND OTHER TAX PROVISIONS

                     Subtitle A--General Provisions

SEC. 501. $8,500 INCOME THRESHOLD USED TO CALCULATE REFUNDABLE PORTION 
              OF CHILD TAX CREDIT.

    (a) In General.--Section 24(d) is amended by adding at the end the 
following new paragraph:
            ``(4) Special rule for 2008.--Notwithstanding paragraph 
        (3), in the case of any taxable year beginning in 2008, the 
        dollar amount in effect for such taxable year under paragraph 
        (1)(B)(i) shall be $8,500.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2007.

SEC. 502. PROVISIONS RELATED TO FILM AND TELEVISION PRODUCTIONS.

    (a) Extension of Expensing Rules for Qualified Film and Television 
Productions.--Section 181(f) (relating to termination) is amended by 
striking ``December 31, 2008'' and inserting ``December 31, 2009''.
    (b) Modification of Limitation on Expensing.--Subparagraph (A) of 
section 181(a)(2) is amended to read as follows:
                    ``(A) In general.--Paragraph (1) shall not apply to 
                so much of the aggregate cost of any qualified film or 
                television production as exceeds $15,000,000.''.
    (c) Modifications to Deduction for Domestic Activities.--
            (1) Determination of w-2 wages.--Paragraph (2) of section 
        199(b) is amended by adding at the end the following new 
        subparagraph:
                    ``(D) Special rule for qualified film.--In the case 
                of a qualified film, such term shall include 
                compensation for services performed in the United 
                States by actors, production personnel, directors, and 
                producers.''.
            (2) Definition of qualified film.--Paragraph (6) of section 
        199(c) is amended by adding at the end the following: ``A 
        qualified film shall include any copyrights, trademarks, or 
        other intangibles with respect to such film. The methods and 
        means of distributing a qualified film shall not affect the 
        availability of the deduction under this section.''.
            (3) Partnerships.--Subparagraph (A) of section 199(d)(1) is 
        amended by striking ``and'' at the end of clause (ii), by 
        striking the period at the end of clause (iii) and inserting 
        ``, and'', and by adding at the end the following new clause:
                            ``(iv) in the case of each partner of a 
                        partnership, or shareholder of an S 
                        corporation, who owns (directly or indirectly) 
                        at least 20 percent of the capital interests in 
                        such partnership or of the stock of such S 
                        corporation--
                                    ``(I) such partner or shareholder 
                                shall be treated as having engaged 
                                directly in any film produced by such 
                                partnership or S corporation, and
                                    ``(II) such partnership or S 
                                corporation shall be treated as having 
                                engaged directly in any film produced 
                                by such partner or shareholder.''.
    (d) Conforming Amendment.--Section 181(d)(3)(A) is amended by 
striking ``actors'' and all that follows and inserting ``actors, 
production personnel, directors, and producers.''.
    (e) Effective Dates.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        qualified film and television productions commencing after 
        December 31, 2007.
            (2) Deduction.--The amendments made by subsection (c) shall 
        apply to taxable years beginning after December 31, 2007.

SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS DESIGNED 
              FOR USE BY CHILDREN.

    (a) In General.--Paragraph (2) of section 4161(b) is amended by 
redesignating subparagraph (B) as subparagraph (C) and by inserting 
after subparagraph (A) the following new subparagraph:
                    ``(B) Exemption for certain wooden arrow shafts.--
                Subparagraph (A) shall not apply to any shaft 
                consisting of all natural wood with no laminations or 
                artificial means of enhancing the spine of such shaft 
                (whether sold separately or incorporated as part of a 
                finished or unfinished product) of a type used in the 
                manufacture of any arrow which after its assembly--
                            ``(i) measures \5/16\ of an inch or less in 
                        diameter, and
                            ``(ii) is not suitable for use with a bow 
                        described in paragraph (1)(A).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to shafts first sold after the date of enactment of this Act.

SEC. 504. INCOME AVERAGING FOR AMOUNTS RECEIVED IN CONNECTION WITH THE 
              EXXON VALDEZ LITIGATION.

    (a) Income Averaging of Amounts Received From the Exxon Valdez 
Litigation.--For purposes of section 1301 of the Internal Revenue Code 
of 1986--
            (1) any qualified taxpayer who receives any qualified 
        settlement income in any taxable year shall be treated as 
        engaged in a fishing business (determined without regard to the 
        commercial nature of the business), and
            (2) such qualified settlement income shall be treated as 
        income attributable to such a fishing business for such taxable 
        year.
    (b) Contributions of Amounts Received to Retirement Accounts.--
            (1) In general.--Any qualified taxpayer who receives 
        qualified settlement income during the taxable year may, at any 
        time before the end of the taxable year in which such income 
        was received, make one or more contributions to an eligible 
        retirement plan of which such qualified taxpayer is a 
        beneficiary in an aggregate amount not to exceed the lesser 
        of--
                    (A) $100,000 (reduced by the amount of qualified 
                settlement income contributed to an eligible retirement 
                plan in prior taxable years pursuant to this 
                subsection), or
                    (B) the amount of qualified settlement income 
                received by the individual during the taxable year.
            (2) Time when contributions deemed made.--For purposes of 
        paragraph (1), a qualified taxpayer shall be deemed to have 
        made a contribution to an eligible retirement plan on the last 
        day of the taxable year in which such income is received if the 
        contribution is made on account of such taxable year and is 
        made not later than the time prescribed by law for filing the 
        return for such taxable year (not including extensions 
        thereof).
            (3) Treatment of contributions to eligible retirement 
        plans.--For purposes of the Internal Revenue Code of 1986, if a 
        contribution is made pursuant to paragraph (1) with respect to 
        qualified settlement income, then--
                    (A) except as provided in paragraph (4)--
                            (i) to the extent of such contribution, the 
                        qualified settlement income shall not be 
                        included in taxable income, and
                            (ii) for purposes of section 72 of such 
                        Code, such contribution shall not be considered 
                        to be investment in the contract,
                    (B) the qualified taxpayer shall, to the extent of 
                the amount of the contribution, be treated--
                            (i) as having received the qualified 
                        settlement income--
                                    (I) in the case of a contribution 
                                to an individual retirement plan (as 
                                defined under section 7701(a)(37) of 
                                such Code), in a distribution described 
                                in section 408(d)(3) of such Code, and
                                    (II) in the case of any other 
                                eligible retirement plan, in an 
                                eligible rollover distribution (as 
                                defined under section 402(f)(2) of such 
                                Code), and
                            (ii) as having transferred the amount to 
                        the eligible retirement plan in a direct 
                        trustee to trustee transfer within 60 days of 
                        the distribution,
                    (C) section 408(d)(3)(B) of the Internal Revenue 
                Code of 1986 shall not apply with respect to amounts 
                treated as a rollover under this paragraph, and
                    (D) section 408A(c)(3)(B) of the Internal Revenue 
                Code of 1986 shall not apply with respect to amounts 
                contributed to a Roth IRA (as defined under section 
                408A(b) of such Code) or a designated Roth contribution 
                to an applicable retirement plan (within the meaning of 
                section 402A of such Code) under this paragraph.
            (4) Special rule for roth iras and roth 401(k)s.--For 
        purposes of the Internal Revenue Code of 1986, if a 
        contribution is made pursuant to paragraph (1) with respect to 
        qualified settlement income to a Roth IRA (as defined under 
        section 408A(b) of such Code) or as a designated Roth 
        contribution to an applicable retirement plan (within the 
        meaning of section 402A of such Code), then--
                    (A) the qualified settlement income shall be 
                includible in taxable income, and
                    (B) for purposes of section 72 of such Code, such 
                contribution shall be considered to be investment in 
                the contract.
            (5) Eligible retirement plan.--For purpose of this 
        subsection, the term ``eligible retirement plan'' has the 
        meaning given such term under section 402(c)(8)(B) of the 
        Internal Revenue Code of 1986.
    (c) Treatment of Qualified Settlement Income Under Employment 
Taxes.--
            (1) SECA.--For purposes of chapter 2 of the Internal 
        Revenue Code of 1986 and section 211 of the Social Security 
        Act, no portion of qualified settlement income received by a 
        qualified taxpayer shall be treated as self-employment income.
            (2) FICA.--For purposes of chapter 21 of the Internal 
        Revenue Code of 1986 and section 209 of the Social Security 
        Act, no portion of qualified settlement income received by a 
        qualified taxpayer shall be treated as wages.
    (d) Qualified Taxpayer.--For purposes of this section, the term 
``qualified taxpayer'' means--
            (1) any individual who is a plaintiff in the civil action 
        In re Exxon Valdez, No. 89-095-CV (HRH) (Consolidated) (D. 
        Alaska); or
            (2) any individual who is a beneficiary of the estate of 
        such a plaintiff who--
                    (A) acquired the right to receive qualified 
                settlement income from that plaintiff; and
                    (B) was the spouse or an immediate relative of that 
                plaintiff.
    (e) Qualified Settlement Income.--For purposes of this section, the 
term ``qualified settlement income'' means any interest and punitive 
damage awards which are--
            (1) otherwise includible in taxable income, and
            (2) received (whether as lump sums or periodic payments) in 
        connection with the civil action In re Exxon Valdez, No. 89-
        095-CV (HRH) (Consolidated) (D. Alaska) (whether pre- or post-
        judgment and whether related to a settlement or judgment).

SEC. 505. CERTAIN FARMING BUSINESS MACHINERY AND EQUIPMENT TREATED AS 
              5-YEAR PROPERTY.

    (a) In General.--Section 168(e)(3)(B) (defining 5-year property) is 
amended by striking ``and'' at the end of clause (v), by striking the 
period at the end of clause (vi)(III) and inserting ``, and'', and by 
inserting after clause (vi) the following new clause:
                            ``(vii) any machinery or equipment (other 
                        than any grain bin, cotton ginning asset, 
                        fence, or other land improvement) which is used 
                        in a farming business (as defined in section 
                        263A(e)(4)), the original use of which 
                        commences with the taxpayer after December 31, 
                        2008, and which is placed in service before 
                        January 1, 2010.''.
    (b) Alternative System.--The table contained in section 
168(g)(3)(B) (relating to special rule for certain property assigned to 
classes) is amended by inserting after the item relating to 
subparagraph (B)(iii) the following:

 
 
 
  (B)(vii)................................    10''.
 

    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2008.

SEC. 506. MODIFICATION OF PENALTY ON UNDERSTATEMENT OF TAXPAYER'S 
              LIABILITY BY TAX RETURN PREPARER.

    (a) In General.--Subsection (a) of section 6694 is amended to read 
as follows:
    ``(a) Understatement Due to Unreasonable Positions.--
            ``(1) In general.--If a tax return preparer--
                    ``(A) prepares any return or claim of refund with 
                respect to which any part of an understatement of 
                liability is due to a position described in paragraph 
                (2), and
                    ``(B) knew (or reasonably should have known) of the 
                position,
        such tax return preparer shall pay a penalty with respect to 
        each such return or claim in an amount equal to the greater of 
        $1,000 or 50 percent of the income derived (or to be derived) 
        by the tax return preparer with respect to the return or claim.
            ``(2) Unreasonable position.--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, a position is described in this 
                paragraph unless there is or was substantial authority 
                for the position.
                    ``(B) Disclosed positions.--If the position was 
                disclosed as provided in section 6662(d)(2)(B)(ii)(I) 
                and is not a position to which subparagraph (C) 
                applies, the position is described in this paragraph 
                unless there is a reasonable basis for the position.
                    ``(C) Tax shelters and reportable transactions.--If 
                the position is with respect to a tax shelter (as 
                defined in section 6662(d)(2)(C)(ii)) or a reportable 
                transaction to which section 6662A applies, the 
                position is described in this paragraph unless it is 
                reasonable to believe that the position would more 
                likely than not be sustained on its merits.
            ``(3) Reasonable cause exception.--No penalty shall be 
        imposed under this subsection if it is shown that there is 
        reasonable cause for the understatement and the tax return 
        preparer acted in good faith.''.
    (b) Effective Date.--The amendment made by this section shall 
apply--
            (1) in the case of a position other than a position 
        described in subparagraph (C) of section 6694(a)(2) of the 
        Internal Revenue Code of 1986 (as amended by this section), to 
        returns prepared after May 25, 2007, and
            (2) in the case of a position described in such 
        subparagraph (C), to returns prepared for taxable years ending 
        after the date of the enactment of this Act.

 Subtitle B--Paul Wellstone and Pete Domenici Mental Health Parity and 
                      Addiction Equity Act of 2008

SEC. 511. SHORT TITLE.

    This subtitle may be cited as the ``Paul Wellstone and Pete 
Domenici Mental Health Parity and Addiction Equity Act of 2008''.

SEC. 512. MENTAL HEALTH PARITY.

    (a) Amendments to ERISA.--Section 712 of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1185a) is amended--
            (1) in subsection (a), by adding at the end the following:
            ``(3) Financial requirements and treatment limitations.--
                    ``(A) In general.--In the case of a group health 
                plan (or health insurance coverage offered in 
                connection with such a plan) that provides both medical 
                and surgical benefits and mental health or substance 
                use disorder benefits, such plan or coverage shall 
                ensure that--
                            ``(i) the financial requirements applicable 
                        to such mental health or substance use disorder 
                        benefits are no more restrictive than the 
                        predominant financial requirements applied to 
                        substantially all medical and surgical benefits 
                        covered by the plan (or coverage), and there 
                        are no separate cost sharing requirements that 
                        are applicable only with respect to mental 
                        health or substance use disorder benefits; and
                            ``(ii) the treatment limitations applicable 
                        to such mental health or substance use disorder 
                        benefits are no more restrictive than the 
                        predominant treatment limitations applied to 
                        substantially all medical and surgical benefits 
                        covered by the plan (or coverage) and there are 
                        no separate treatment limitations that are 
                        applicable only with respect to mental health 
                        or substance use disorder benefits.
                    ``(B) Definitions.--In this paragraph:
                            ``(i) Financial requirement.--The term 
                        `financial requirement' includes deductibles, 
                        copayments, coinsurance, and out-of-pocket 
                        expenses, but excludes an aggregate lifetime 
                        limit and an annual limit subject to paragraphs 
                        (1) and (2),
                            ``(ii) Predominant.--A financial 
                        requirement or treatment limit is considered to 
                        be predominant if it is the most common or 
                        frequent of such type of limit or requirement.
                            ``(iii) Treatment limitation.--The term 
                        `treatment limitation' includes limits on the 
                        frequency of treatment, number of visits, days 
                        of coverage, or other similar limits on the 
                        scope or duration of treatment.
            ``(4) Availability of plan information.--The criteria for 
        medical necessity determinations made under the plan with 
        respect to mental health or substance use disorder benefits (or 
        the health insurance coverage offered in connection with the 
        plan with respect to such benefits) shall be made available by 
        the plan administrator (or the health insurance issuer offering 
        such coverage) in accordance with regulations to any current or 
        potential participant, beneficiary, or contracting provider 
        upon request. The reason for any denial under the plan (or 
        coverage) of reimbursement or payment for services with respect 
        to mental health or substance use disorder benefits in the case 
        of any participant or beneficiary shall, on request or as 
        otherwise required, be made available by the plan administrator 
        (or the health insurance issuer offering such coverage) to the 
        participant or beneficiary in accordance with regulations.
            ``(5) Out-of-network providers.--In the case of a plan or 
        coverage that provides both medical and surgical benefits and 
        mental health or substance use disorder benefits, if the plan 
        or coverage provides coverage for medical or surgical benefits 
        provided by out-of-network providers, the plan or coverage 
        shall provide coverage for mental health or substance use 
        disorder benefits provided by out-of-network providers in a 
        manner that is consistent with the requirements of this 
        section.'';
            (2) in subsection (b), by amending paragraph (2) to read as 
        follows:
            ``(2) in the case of a group health plan (or health 
        insurance coverage offered in connection with such a plan) that 
        provides mental health or substance use disorder benefits, as 
        affecting the terms and conditions of the plan or coverage 
        relating to such benefits under the plan or coverage, except as 
        provided in subsection (a).'';
            (3) in subsection (c)--
                    (A) in paragraph (1)(B)--
                            (i) by inserting ``(or 1 in the case of an 
                        employer residing in a State that permits small 
                        groups to include a single individual)'' after 
                        ``at least 2'' the first place that such 
                        appears; and
                            (ii) by striking ``and who employs at least 
                        2 employees on the first day of the plan 
                        year''; and
                    (B) by striking paragraph (2) and inserting the 
                following:
            ``(2) Cost exemption.--
                    ``(A) In general.--With respect to a group health 
                plan (or health insurance coverage offered in 
                connection with such a plan), if the application of 
                this section to such plan (or coverage) results in an 
                increase for the plan year involved of the actual total 
                costs of coverage with respect to medical and surgical 
                benefits and mental health and substance use disorder 
                benefits under the plan (as determined and certified 
                under subparagraph (C)) by an amount that exceeds the 
                applicable percentage described in subparagraph (B) of 
                the actual total plan costs, the provisions of this 
                section shall not apply to such plan (or coverage) 
                during the following plan year, and such exemption 
                shall apply to the plan (or coverage) for 1 plan year. 
                An employer may elect to continue to apply mental 
                health and substance use disorder parity pursuant to 
                this section with respect to the group health plan (or 
                coverage) involved regardless of any increase in total 
                costs.
                    ``(B) Applicable percentage.--With respect to a 
                plan (or coverage), the applicable percentage described 
                in this subparagraph shall be--
                            ``(i) 2 percent in the case of the first 
                        plan year in which this section is applied; and
                            ``(ii) 1 percent in the case of each 
                        subsequent plan year.
                    ``(C) Determinations by actuaries.--Determinations 
                as to increases in actual costs under a plan (or 
                coverage) for purposes of this section shall be made 
                and certified by a qualified and licensed actuary who 
                is a member in good standing of the American Academy of 
                Actuaries. All such determinations shall be in a 
                written report prepared by the actuary. The report, and 
                all underlying documentation relied upon by the 
                actuary, shall be maintained by the group health plan 
                or health insurance issuer for a period of 6 years 
                following the notification made under subparagraph (E).
                    ``(D) 6-month determinations.--If a group health 
                plan (or a health insurance issuer offering coverage in 
                connection with a group health plan) seeks an exemption 
                under this paragraph, determinations under subparagraph 
                (A) shall be made after such plan (or coverage) has 
                complied with this section for the first 6 months of 
                the plan year involved.
                    ``(E) Notification.--
                            ``(i) In general.--A group health plan (or 
                        a health insurance issuer offering coverage in 
                        connection with a group health plan) that, 
                        based upon a certification described under 
                        subparagraph (C), qualifies for an exemption 
                        under this paragraph, and elects to implement 
                        the exemption, shall promptly notify the 
                        Secretary, the appropriate State agencies, and 
                        participants and beneficiaries in the plan of 
                        such election.
                            ``(ii) Requirement.--A notification to the 
                        Secretary under clause (i) shall include--
                                    ``(I) a description of the number 
                                of covered lives under the plan (or 
                                coverage) involved at the time of the 
                                notification, and as applicable, at the 
                                time of any prior election of the cost-
                                exemption under this paragraph by such 
                                plan (or coverage);
                                    ``(II) for both the plan year upon 
                                which a cost exemption is sought and 
                                the year prior, a description of the 
                                actual total costs of coverage with 
                                respect to medical and surgical 
                                benefits and mental health and 
                                substance use disorder benefits under 
                                the plan; and
                                    ``(III) for both the plan year upon 
                                which a cost exemption is sought and 
                                the year prior, the actual total costs 
                                of coverage with respect to mental 
                                health and substance use disorder 
                                benefits under the plan.
                            ``(iii) Confidentiality.--A notification to 
                        the Secretary under clause (i) shall be 
                        confidential. The Secretary shall make 
                        available, upon request and on not more than an 
                        annual basis, an anonymous itemization of such 
                        notifications, that includes--
                                    ``(I) a breakdown of States by the 
                                size and type of employers submitting 
                                such notification; and
                                    ``(II) a summary of the data 
                                received under clause (ii).
                    ``(F) Audits by appropriate agencies.--To determine 
                compliance with this paragraph, the Secretary may audit 
                the books and records of a group health plan or health 
                insurance issuer relating to an exemption, including 
                any actuarial reports prepared pursuant to subparagraph 
                (C), during the 6 year period following the 
                notification of such exemption under subparagraph (E). 
                A State agency receiving a notification under 
                subparagraph (E) may also conduct such an audit with 
                respect to an exemption covered by such 
                notification.'';
            (4) in subsection (e), by striking paragraph (4) and 
        inserting the following:
            ``(4) Mental health benefits.--The term `mental health 
        benefits' means benefits with respect to services for mental 
        health conditions, as defined under the terms of the plan and 
        in accordance with applicable Federal and State law.
            ``(5) Substance use disorder benefits.--The term `substance 
        use disorder benefits' means benefits with respect to services 
        for substance use disorders, as defined under the terms of the 
        plan and in accordance with applicable Federal and State 
        law.'';
            (5) by striking subsection (f);
            (6) by inserting after subsection (e) the following:
    ``(f) Secretary Report.--The Secretary shall, by January 1, 2012, 
and every two years thereafter, submit to the appropriate committees of 
Congress a report on compliance of group health plans (and health 
insurance coverage offered in connection with such plans) with the 
requirements of this section. Such report shall include the results of 
any surveys or audits on compliance of group health plans (and health 
insurance coverage offered in connection with such plans) with such 
requirements and an analysis of the reasons for any failures to comply.
    ``(g) Notice and Assistance.--The Secretary, in cooperation with 
the Secretaries of Health and Human Services and Treasury, as 
appropriate, shall publish and widely disseminate guidance and 
information for group health plans, participants and beneficiaries, 
applicable State and local regulatory bodies, and the National 
Association of Insurance Commissioners concerning the requirements of 
this section and shall provide assistance concerning such requirements 
and the continued operation of applicable State law. Such guidance and 
information shall inform participants and beneficiaries of how they may 
obtain assistance under this section, including, where appropriate, 
assistance from State consumer and insurance agencies.'';
            (7) by striking ``mental health benefits'' and inserting 
        ``mental health and substance use disorder benefits'' each 
        place it appears in subsections (a)(1)(B)(i), (a)(1)(C), 
        (a)(2)(B)(i), and (a)(2)(C); and
            (8) by striking ``mental health benefits'' and inserting 
        ``mental health or substance use disorder benefits'' each place 
        it appears (other than in any provision amended by the previous 
        paragraph).
    (b) Amendments to Public Health Service Act.--Section 2705 of the 
Public Health Service Act (42 U.S.C. 300gg-5) is amended--
            (1) in subsection (a), by adding at the end the following:
            ``(3) Financial requirements and treatment limitations.--
                    ``(A) In general.--In the case of a group health 
                plan (or health insurance coverage offered in 
                connection with such a plan) that provides both medical 
                and surgical benefits and mental health or substance 
                use disorder benefits, such plan or coverage shall 
                ensure that--
                            ``(i) the financial requirements applicable 
                        to such mental health or substance use disorder 
                        benefits are no more restrictive than the 
                        predominant financial requirements applied to 
                        substantially all medical and surgical benefits 
                        covered by the plan (or coverage), and there 
                        are no separate cost sharing requirements that 
                        are applicable only with respect to mental 
                        health or substance use disorder benefits; and
                            ``(ii) the treatment limitations applicable 
                        to such mental health or substance use disorder 
                        benefits are no more restrictive than the 
                        predominant treatment limitations applied to 
                        substantially all medical and surgical benefits 
                        covered by the plan (or coverage) and there are 
                        no separate treatment limitations that are 
                        applicable only with respect to mental health 
                        or substance use disorder benefits.
                    ``(B) Definitions.--In this paragraph:
                            ``(i) Financial requirement.--The term 
                        `financial requirement' includes deductibles, 
                        copayments, coinsurance, and out-of-pocket 
                        expenses, but excludes an aggregate lifetime 
                        limit and an annual limit subject to paragraphs 
                        (1) and (2).
                            ``(ii) Predominant.--A financial 
                        requirement or treatment limit is considered to 
                        be predominant if it is the most common or 
                        frequent of such type of limit or requirement.
                            ``(iii) Treatment limitation.--The term 
                        `treatment limitation' includes limits on the 
                        frequency of treatment, number of visits, days 
                        of coverage, or other similar limits on the 
                        scope or duration of treatment.
            ``(4) Availability of plan information.--The criteria for 
        medical necessity determinations made under the plan with 
        respect to mental health or substance use disorder benefits (or 
        the health insurance coverage offered in connection with the 
        plan with respect to such benefits) shall be made available by 
        the plan administrator (or the health insurance issuer offering 
        such coverage) in accordance with regulations to any current or 
        potential participant, beneficiary, or contracting provider 
        upon request. The reason for any denial under the plan (or 
        coverage) of reimbursement or payment for services with respect 
        to mental health or substance use disorder benefits in the case 
        of any participant or beneficiary shall, on request or as 
        otherwise required, be made available by the plan administrator 
        (or the health insurance issuer offering such coverage) to the 
        participant or beneficiary in accordance with regulations.
            ``(5) Out-of-network providers.--In the case of a plan or 
        coverage that provides both medical and surgical benefits and 
        mental health or substance use disorder benefits, if the plan 
        or coverage provides coverage for medical or surgical benefits 
        provided by out-of-network providers, the plan or coverage 
        shall provide coverage for mental health or substance use 
        disorder benefits provided by out-of-network providers in a 
        manner that is consistent with the requirements of this 
        section.'';
            (2) in subsection (b), by amending paragraph (2) to read as 
        follows:
            ``(2) in the case of a group health plan (or health 
        insurance coverage offered in connection with such a plan) that 
        provides mental health or substance use disorder benefits, as 
        affecting the terms and conditions of the plan or coverage 
        relating to such benefits under the plan or coverage, except as 
        provided in subsection (a).'';
            (3) in subsection (c)--
                    (A) in paragraph (1), by inserting before the 
                period the following: ``(as defined in section 
                2791(e)(4), except that for purposes of this paragraph 
                such term shall include employers with 1 employee in 
                the case of an employer residing in a State that 
                permits small groups to include a single individual)''; 
                and
                    (B) by striking paragraph (2) and inserting the 
                following:
            ``(2) Cost exemption.--
                    ``(A) In general.--With respect to a group health 
                plan (or health insurance coverage offered in 
                connection with such a plan), if the application of 
                this section to such plan (or coverage) results in an 
                increase for the plan year involved of the actual total 
                costs of coverage with respect to medical and surgical 
                benefits and mental health and substance use disorder 
                benefits under the plan (as determined and certified 
                under subparagraph (C)) by an amount that exceeds the 
                applicable percentage described in subparagraph (B) of 
                the actual total plan costs, the provisions of this 
                section shall not apply to such plan (or coverage) 
                during the following plan year, and such exemption 
                shall apply to the plan (or coverage) for 1 plan year. 
                An employer may elect to continue to apply mental 
                health and substance use disorder parity pursuant to 
                this section with respect to the group health plan (or 
                coverage) involved regardless of any increase in total 
                costs.
                    ``(B) Applicable percentage.--With respect to a 
                plan (or coverage), the applicable percentage described 
                in this subparagraph shall be--
                            ``(i) 2 percent in the case of the first 
                        plan year in which this section is applied; and
                            ``(ii) 1 percent in the case of each 
                        subsequent plan year.
                    ``(C) Determinations by actuaries.--Determinations 
                as to increases in actual costs under a plan (or 
                coverage) for purposes of this section shall be made 
                and certified by a qualified and licensed actuary who 
                is a member in good standing of the American Academy of 
                Actuaries. All such determinations shall be in a 
                written report prepared by the actuary. The report, and 
                all underlying documentation relied upon by the 
                actuary, shall be maintained by the group health plan 
                or health insurance issuer for a period of 6 years 
                following the notification made under subparagraph (E).
                    ``(D) 6-month determinations.--If a group health 
                plan (or a health insurance issuer offering coverage in 
                connection with a group health plan) seeks an exemption 
                under this paragraph, determinations under subparagraph 
                (A) shall be made after such plan (or coverage) has 
                complied with this section for the first 6 months of 
                the plan year involved.
                    ``(E) Notification.--
                            ``(i) In general.--A group health plan (or 
                        a health insurance issuer offering coverage in 
                        connection with a group health plan) that, 
                        based upon a certification described under 
                        subparagraph (C), qualifies for an exemption 
                        under this paragraph, and elects to implement 
                        the exemption, shall promptly notify the 
                        Secretary, the appropriate State agencies, and 
                        participants and beneficiaries in the plan of 
                        such election.
                            ``(ii) Requirement.--A notification to the 
                        Secretary under clause (i) shall include--
                                    ``(I) a description of the number 
                                of covered lives under the plan (or 
                                coverage) involved at the time of the 
                                notification, and as applicable, at the 
                                time of any prior election of the cost-
                                exemption under this paragraph by such 
                                plan (or coverage);
                                    ``(II) for both the plan year upon 
                                which a cost exemption is sought and 
                                the year prior, a description of the 
                                actual total costs of coverage with 
                                respect to medical and surgical 
                                benefits and mental health and 
                                substance use disorder benefits under 
                                the plan; and
                                    ``(III) for both the plan year upon 
                                which a cost exemption is sought and 
                                the year prior, the actual total costs 
                                of coverage with respect to mental 
                                health and substance use disorder 
                                benefits under the plan.
                            ``(iii) Confidentiality.--A notification to 
                        the Secretary under clause (i) shall be 
                        confidential. The Secretary shall make 
                        available, upon request and on not more than an 
                        annual basis, an anonymous itemization of such 
                        notifications, that includes--
                                    ``(I) a breakdown of States by the 
                                size and type of employers submitting 
                                such notification; and
                                    ``(II) a summary of the data 
                                received under clause (ii).
                    ``(F) Audits by appropriate agencies.--To determine 
                compliance with this paragraph, the Secretary may audit 
                the books and records of a group health plan or health 
                insurance issuer relating to an exemption, including 
                any actuarial reports prepared pursuant to subparagraph 
                (C), during the 6 year period following the 
                notification of such exemption under subparagraph (E). 
                A State agency receiving a notification under 
                subparagraph (E) may also conduct such an audit with 
                respect to an exemption covered by such 
                notification.'';
            (4) in subsection (e), by striking paragraph (4) and 
        inserting the following:
            ``(4) Mental health benefits.--The term `mental health 
        benefits' means benefits with respect to services for mental 
        health conditions, as defined under the terms of the plan and 
        in accordance with applicable Federal and State law.
            ``(5) Substance use disorder benefits.--The term `substance 
        use disorder benefits' means benefits with respect to services 
        for substance use disorders, as defined under the terms of the 
        plan and in accordance with applicable Federal and State 
        law.'';
            (5) by striking subsection (f);
            (6) by striking ``mental health benefits'' and inserting 
        ``mental health and substance use disorder benefits'' each 
        place it appears in subsections (a)(1)(B)(i), (a)(1)(C), 
        (a)(2)(B)(i), and (a)(2)(C); and
            (7) by striking ``mental health benefits'' and inserting 
        ``mental health or substance use disorder benefits'' each place 
        it appears (other than in any provision amended by the previous 
        paragraph).
    (c) Amendments to Internal Revenue Code.--Section 9812 of the 
Internal Revenue Code of 1986 is amended--
            (1) in subsection (a), by adding at the end the following:
            ``(3) Financial requirements and treatment limitations.--
                    ``(A) In general.--In the case of a group health 
                plan that provides both medical and surgical benefits 
                and mental health or substance use disorder benefits, 
                such plan shall ensure that--
                            ``(i) the financial requirements applicable 
                        to such mental health or substance use disorder 
                        benefits are no more restrictive than the 
                        predominant financial requirements applied to 
                        substantially all medical and surgical benefits 
                        covered by the plan, and there are no separate 
                        cost sharing requirements that are applicable 
                        only with respect to mental health or substance 
                        use disorder benefits; and
                            ``(ii) the treatment limitations applicable 
                        to such mental health or substance use disorder 
                        benefits are no more restrictive than the 
                        predominant treatment limitations applied to 
                        substantially all medical and surgical benefits 
                        covered by the plan and there are no separate 
                        treatment limitations that are applicable only 
                        with respect to mental health or substance use 
                        disorder benefits.
                    ``(B) Definitions.--In this paragraph:
                            ``(i) Financial requirement.--The term 
                        `financial requirement' includes deductibles, 
                        copayments, coinsurance, and out-of-pocket 
                        expenses, but excludes an aggregate lifetime 
                        limit and an annual limit subject to paragraphs 
                        (1) and (2),
                            ``(ii) Predominant.--A financial 
                        requirement or treatment limit is considered to 
                        be predominant if it is the most common or 
                        frequent of such type of limit or requirement.
                            ``(iii) Treatment limitation.--The term 
                        `treatment limitation' includes limits on the 
                        frequency of treatment, number of visits, days 
                        of coverage, or other similar limits on the 
                        scope or duration of treatment.
            ``(4) Availability of plan information.--The criteria for 
        medical necessity determinations made under the plan with 
        respect to mental health or substance use disorder benefits 
        shall be made available by the plan administrator in accordance 
        with regulations to any current or potential participant, 
        beneficiary, or contracting provider upon request. The reason 
        for any denial under the plan of reimbursement or payment for 
        services with respect to mental health or substance use 
        disorder benefits in the case of any participant or beneficiary 
        shall, on request or as otherwise required, be made available 
        by the plan administrator to the participant or beneficiary in 
        accordance with regulations.
            ``(5) Out-of-network providers.--In the case of a plan that 
        provides both medical and surgical benefits and mental health 
        or substance use disorder benefits, if the plan provides 
        coverage for medical or surgical benefits provided by out-of-
        network providers, the plan shall provide coverage for mental 
        health or substance use disorder benefits provided by out-of-
        network providers in a manner that is consistent with the 
        requirements of this section.'';
            (2) in subsection (b), by amending paragraph (2) to read as 
        follows:
            ``(2) in the case of a group health plan that provides 
        mental health or substance use disorder benefits, as affecting 
        the terms and conditions of the plan relating to such benefits 
        under the plan, except as provided in subsection (a).'';
            (3) in subsection (c)--
                    (A) by amending paragraph (1) to read as follows:
            ``(1) Small employer exemption.--
                    ``(A) In general.--This section shall not apply to 
                any group health plan for any plan year of a small 
                employer.
                    ``(B) Small employer.--For purposes of subparagraph 
                (A), the term `small employer' means, with respect to a 
                calendar year and a plan year, an employer who employed 
                an average of at least 2 (or 1 in the case of an 
                employer residing in a State that permits small groups 
                to include a single individual) but not more than 50 
                employees on business days during the preceding 
                calendar year. For purposes of the preceding sentence, 
                all persons treated as a single employer under 
                subsection (b), (c), (m), or (o) of section 414 shall 
                be treated as 1 employer and rules similar to rules of 
                subparagraphs (B) and (C) of section 4980D(d)(2) shall 
                apply.''; and
                    (B) by striking paragraph (2) and inserting the 
                following:
            ``(2) Cost exemption.--
                    ``(A) In general.--With respect to a group health 
                plan, if the application of this section to such plan 
                results in an increase for the plan year involved of 
                the actual total costs of coverage with respect to 
                medical and surgical benefits and mental health and 
                substance use disorder benefits under the plan (as 
                determined and certified under subparagraph (C)) by an 
                amount that exceeds the applicable percentage described 
                in subparagraph (B) of the actual total plan costs, the 
                provisions of this section shall not apply to such plan 
                during the following plan year, and such exemption 
                shall apply to the plan for 1 plan year. An employer 
                may elect to continue to apply mental health and 
                substance use disorder parity pursuant to this section 
                with respect to the group health plan involved 
                regardless of any increase in total costs.
                    ``(B) Applicable percentage.--With respect to a 
                plan, the applicable percentage described in this 
                subparagraph shall be--
                            ``(i) 2 percent in the case of the first 
                        plan year in which this section is applied; and
                            ``(ii) 1 percent in the case of each 
                        subsequent plan year.
                    ``(C) Determinations by actuaries.--Determinations 
                as to increases in actual costs under a plan for 
                purposes of this section shall be made and certified by 
                a qualified and licensed actuary who is a member in 
                good standing of the American Academy of Actuaries. All 
                such determinations shall be in a written report 
                prepared by the actuary. The report, and all underlying 
                documentation relied upon by the actuary, shall be 
                maintained by the group health plan for a period of 6 
                years following the notification made under 
                subparagraph (E).
                    ``(D) 6-month determinations.--If a group health 
                plan seeks an exemption under this paragraph, 
                determinations under subparagraph (A) shall be made 
                after such plan has complied with this section for the 
                first 6 months of the plan year involved.
                    ``(E) Notification.--
                            ``(i) In general.--A group health plan 
                        that, based upon a certification described 
                        under subparagraph (C), qualifies for an 
                        exemption under this paragraph, and elects to 
                        implement the exemption, shall promptly notify 
                        the Secretary, the appropriate State agencies, 
                        and participants and beneficiaries in the plan 
                        of such election.
                            ``(ii) Requirement.--A notification to the 
                        Secretary under clause (i) shall include--
                                    ``(I) a description of the number 
                                of covered lives under the plan 
                                involved at the time of the 
                                notification, and as applicable, at the 
                                time of any prior election of the cost-
                                exemption under this paragraph by such 
                                plan;
                                    ``(II) for both the plan year upon 
                                which a cost exemption is sought and 
                                the year prior, a description of the 
                                actual total costs of coverage with 
                                respect to medical and surgical 
                                benefits and mental health and 
                                substance use disorder benefits under 
                                the plan; and
                                    ``(III) for both the plan year upon 
                                which a cost exemption is sought and 
                                the year prior, the actual total costs 
                                of coverage with respect to mental 
                                health and substance use disorder 
                                benefits under the plan.
                            ``(iii) Confidentiality.--A notification to 
                        the Secretary under clause (i) shall be 
                        confidential. The Secretary shall make 
                        available, upon request and on not more than an 
                        annual basis, an anonymous itemization of such 
                        notifications, that includes--
                                    ``(I) a breakdown of States by the 
                                size and type of employers submitting 
                                such notification; and
                                    ``(II) a summary of the data 
                                received under clause (ii).
                    ``(F) Audits by appropriate agencies.--To determine 
                compliance with this paragraph, the Secretary may audit 
                the books and records of a group health plan relating 
                to an exemption, including any actuarial reports 
                prepared pursuant to subparagraph (C), during the 6 
                year period following the notification of such 
                exemption under subparagraph (E). A State agency 
                receiving a notification under subparagraph (E) may 
                also conduct such an audit with respect to an exemption 
                covered by such notification.'';
            (4) in subsection (e), by striking paragraph (4) and 
        inserting the following:
            ``(4) Mental health benefits.--The term `mental health 
        benefits' means benefits with respect to services for mental 
        health conditions, as defined under the terms of the plan and 
        in accordance with applicable Federal and State law.
            ``(5) Substance use disorder benefits.--The term `substance 
        use disorder benefits' means benefits with respect to services 
        for substance use disorders, as defined under the terms of the 
        plan and in accordance with applicable Federal and State 
        law.'';
            (5) by striking subsection (f);
            (6) by striking ``mental health benefits'' and inserting 
        ``mental health and substance use disorder benefits'' each 
        place it appears in subsections (a)(1)(B)(i), (a)(1)(C), 
        (a)(2)(B)(i), and (a)(2)(C); and
            (7) by striking ``mental health benefits'' and inserting 
        ``mental health or substance use disorder benefits'' each place 
        it appears (other than in any provision amended by the previous 
        paragraph).
    (d) Regulations.--Not later than 1 year after the date of enactment 
of this Act, the Secretaries of Labor, Health and Human Services, and 
the Treasury shall issue regulations to carry out the amendments made 
by subsections (a), (b), and (c), respectively.
    (e) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply with respect to group health plans for plan years 
        beginning after the date that is 1 year after the date of 
        enactment of this Act, regardless of whether regulations have 
        been issued to carry out such amendments by such effective 
        date, except that the amendments made by subsections (a)(5), 
        (b)(5), and (c)(5), relating to striking of certain sunset 
        provisions, shall take effect on January 1, 2009.
            (2) Special rule for collective bargaining agreements.--In 
        the case of a group health plan maintained pursuant to one or 
        more collective bargaining agreements between employee 
        representatives and one or more employers ratified before the 
        date of the enactment of this Act, the amendments made by this 
        section shall not apply to plan years beginning before the 
        later of--
                    (A) the date on which the last of the collective 
                bargaining agreements relating to the plan terminates 
                (determined without regard to any extension thereof 
                agreed to after the date of the enactment of this Act), 
                or
                    (B) January 1, 2009.
        For purposes of subparagraph (A), any plan amendment made 
        pursuant to a collective bargaining agreement relating to the 
        plan which amends the plan solely to conform to any requirement 
        added by this section shall not be treated as a termination of 
        such collective bargaining agreement.
    (f) Assuring Coordination.--The Secretary of Health and Human 
Services, the Secretary of Labor, and the Secretary of the Treasury may 
ensure, through the execution or revision of an interagency memorandum 
of understanding among such Secretaries, that--
            (1) regulations, rulings, and interpretations issued by 
        such Secretaries relating to the same matter over which two or 
        more such Secretaries have responsibility under this section 
        (and the amendments made by this section) are administered so 
        as to have the same effect at all times; and
            (2) coordination of policies relating to enforcing the same 
        requirements through such Secretaries in order to have a 
        coordinated enforcement strategy that avoids duplication of 
        enforcement efforts and assigns priorities in enforcement.
    (g) Conforming Clerical Amendments.--
            (1) ERISA heading.--
                    (A) In general.--The heading of section 712 of the 
                Employee Retirement Income Security Act of 1974 is 
                amended to read as follows:

``SEC. 712. PARITY IN MENTAL HEALTH AND SUBSTANCE USE DISORDER 
              BENEFITS.''.

                    (B) Clerical amendment.--The table of contents in 
                section 1 of such Act is amended by striking the item 
                relating to section 712 and inserting the following new 
                item:

``Sec. 712. Parity in mental health and substance use disorder 
                            benefits.''.
            (2) PHSA heading.--The heading of section 2705 of the 
        Public Health Service Act is amended to read as follows:

``SEC. 2705. PARITY IN MENTAL HEALTH AND SUBSTANCE USE DISORDER 
              BENEFITS.''.

            (3) IRC heading.--
                    (A) In general.--The heading of section 9812 of the 
                Internal Revenue Code of 1986 is amended to read as 
                follows:

``SEC. 9812. PARITY IN MENTAL HEALTH AND SUBSTANCE USE DISORDER 
              BENEFITS.''.

                    (B) Clerical amendment.--The table of sections for 
                subchapter B of chapter 100 of such Code is amended by 
                striking the item relating to section 9812 and 
                inserting the following new item:

``Sec. 9812. Parity in mental health and substance use disorder 
                            benefits.''.
    (h) GAO Study on Coverage and Exclusion of Mental Health and 
Substance Use Disorder Diagnoses.--
            (1) In general.--The Comptroller General of the United 
        States shall conduct a study that analyzes the specific rates, 
        patterns, and trends in coverage and exclusion of specific 
        mental health and substance use disorder diagnoses by health 
        plans and health insurance. The study shall include an analysis 
        of--
                    (A) specific coverage rates for all mental health 
                conditions and substance use disorders;
                    (B) which diagnoses are most commonly covered or 
                excluded;
                    (C) whether implementation of this Act has affected 
                trends in coverage or exclusion of such diagnoses; and
                    (D) the impact of covering or excluding specific 
                diagnoses on participants' and enrollees' health, their 
                health care coverage, and the costs of delivering 
                health care.
            (2) Reports.--Not later than 3 years after the date of the 
        enactment of this Act, and 2 years after the date of submission 
        the first report under this paragraph, the Comptroller General 
        shall submit to Congress a report on the results of the study 
        conducted under paragraph (1).

                       TITLE VI--OTHER PROVISIONS

SEC. 601. SECURE RURAL SCHOOLS AND COMMUNITY SELF-DETERMINATION 
              PROGRAM.

    (a) Reauthorization of the Secure Rural Schools and Community Self-
Determination Act of 2000.--The Secure Rural Schools and Community 
Self-Determination Act of 2000 (16 U.S.C. 500 note; Public Law 106-393) 
is amended by striking sections 1 through 403 and inserting the 
following:

``SECTION 1. SHORT TITLE.

    ``This Act may be cited as the `Secure Rural Schools and Community 
Self-Determination Act of 2000'.

``SEC. 2. PURPOSES.

    ``The purposes of this Act are--
            ``(1) to stabilize and transition payments to counties to 
        provide funding for schools and roads that supplements other 
        available funds;
            ``(2) to make additional investments in, and create 
        additional employment opportunities through, projects that--
                    ``(A)(i) improve the maintenance of existing 
                infrastructure;
                    ``(ii) implement stewardship objectives that 
                enhance forest ecosystems; and
                    ``(iii) restore and improve land health and water 
                quality;
                    ``(B) enjoy broad-based support; and
                    ``(C) have objectives that may include--
                            ``(i) road, trail, and infrastructure 
                        maintenance or obliteration;
                            ``(ii) soil productivity improvement;
                            ``(iii) improvements in forest ecosystem 
                        health;
                            ``(iv) watershed restoration and 
                        maintenance;
                            ``(v) the restoration, maintenance, and 
                        improvement of wildlife and fish habitat;
                            ``(vi) the control of noxious and exotic 
                        weeds; and
                            ``(vii) the reestablishment of native 
                        species; and
            ``(3) to improve cooperative relationships among--
                    ``(A) the people that use and care for Federal 
                land; and
                    ``(B) the agencies that manage the Federal land.

``SEC. 3. DEFINITIONS.

    ``In this Act:
            ``(1) Adjusted share.--The term `adjusted share' means the 
        number equal to the quotient obtained by dividing--
                    ``(A) the number equal to the quotient obtained by 
                dividing--
                            ``(i) the base share for the eligible 
                        county; by
                            ``(ii) the income adjustment for the 
                        eligible county; by
                    ``(B) the number equal to the sum of the quotients 
                obtained under subparagraph (A) and paragraph (8)(A) 
                for all eligible counties.
            ``(2) Base share.--The term `base share' means the number 
        equal to the average of--
                    ``(A) the quotient obtained by dividing--
                            ``(i) the number of acres of Federal land 
                        described in paragraph (7)(A) in each eligible 
                        county; by
                            ``(ii) the total number acres of Federal 
                        land in all eligible counties in all eligible 
                        States; and
                    ``(B) the quotient obtained by dividing--
                            ``(i) the amount equal to the average of 
                        the 3 highest 25-percent payments and safety 
                        net payments made to each eligible State for 
                        each eligible county during the eligibility 
                        period; by
                            ``(ii) the amount equal to the sum of the 
                        amounts calculated under clause (i) and 
                        paragraph (9)(B)(i) for all eligible counties 
                        in all eligible States during the eligibility 
                        period.
            ``(3) County payment.--The term `county payment' means the 
        payment for an eligible county calculated under section 101(b).
            ``(4) Eligible county.--The term `eligible county' means 
        any county that--
                    ``(A) contains Federal land (as defined in 
                paragraph (7)); and
                    ``(B) elects to receive a share of the State 
                payment or the county payment under section 102(b).
            ``(5) Eligibility period.--The term `eligibility period' 
        means fiscal year 1986 through fiscal year 1999.
            ``(6) Eligible state.--The term `eligible State' means a 
        State or territory of the United States that received a 25-
        percent payment for 1 or more fiscal years of the eligibility 
        period.
            ``(7) Federal land.--The term `Federal land' means--
                    ``(A) land within the National Forest System, as 
                defined in section 11(a) of the Forest and Rangeland 
                Renewable Resources Planning Act of 1974 (16 U.S.C. 
                1609(a)) exclusive of the National Grasslands and land 
                utilization projects designated as National Grasslands 
                administered pursuant to the Act of July 22, 1937 (7 
                U.S.C. 1010-1012); and
                    ``(B) such portions of the revested Oregon and 
                California Railroad and reconveyed Coos Bay Wagon Road 
                grant land as are or may hereafter come under the 
                jurisdiction of the Department of the Interior, which 
                have heretofore or may hereafter be classified as 
                timberlands, and power-site land valuable for timber, 
                that shall be managed, except as provided in the former 
                section 3 of the Act of August 28, 1937 (50 Stat. 875; 
                43 U.S.C. 1181c), for permanent forest production.
            ``(8) 50-percent adjusted share.--The term `50-percent 
        adjusted share' means the number equal to the quotient obtained 
        by dividing--
                    ``(A) the number equal to the quotient obtained by 
                dividing--
                            ``(i) the 50-percent base share for the 
                        eligible county; by
                            ``(ii) the income adjustment for the 
                        eligible county; by
                    ``(B) the number equal to the sum of the quotients 
                obtained under subparagraph (A) and paragraph (1)(A) 
                for all eligible counties.
            ``(9) 50-percent base share.--The term `50-percent base 
        share' means the number equal to the average of--
                    ``(A) the quotient obtained by dividing--
                            ``(i) the number of acres of Federal land 
                        described in paragraph (7)(B) in each eligible 
                        county; by
                            ``(ii) the total number acres of Federal 
                        land in all eligible counties in all eligible 
                        States; and
                    ``(B) the quotient obtained by dividing--
                            ``(i) the amount equal to the average of 
                        the 3 highest 50-percent payments made to each 
                        eligible county during the eligibility period; 
                        by
                            ``(ii) the amount equal to the sum of the 
                        amounts calculated under clause (i) and 
                        paragraph (2)(B)(i) for all eligible counties 
                        in all eligible States during the eligibility 
                        period.
            ``(10) 50-percent payment.--The term `50-percent payment' 
        means the payment that is the sum of the 50-percent share 
        otherwise paid to a county pursuant to title II of the Act of 
        August 28, 1937 (chapter 876; 50 Stat. 875; 43 U.S.C. 1181f), 
        and the payment made to a county pursuant to the Act of May 24, 
        1939 (chapter 144; 53 Stat. 753; 43 U.S.C. 1181f-1 et seq.).
            ``(11) Full funding amount.--The term `full funding amount' 
        means--
                    ``(A) $500,000,000 for fiscal year 2008; and
                    ``(B) for fiscal year 2009 and each fiscal year 
                thereafter, the amount that is equal to 90 percent of 
                the full funding amount for the preceding fiscal year.
            ``(12) Income adjustment.--The term `income adjustment' 
        means the square of the quotient obtained by dividing--
                    ``(A) the per capita personal income for each 
                eligible county; by
                    ``(B) the median per capita personal income of all 
                eligible counties.
            ``(13) Per capita personal income.--The term `per capita 
        personal income' means the most recent per capita personal 
        income data, as determined by the Bureau of Economic Analysis.
            ``(14) Safety net payments.--The term `safety net payments' 
        means the special payment amounts paid to States and counties 
        required by section 13982 or 13983 of the Omnibus Budget 
        Reconciliation Act of 1993 (Public Law 103-66; 16 U.S.C. 500 
        note; 43 U.S.C. 1181f note).
            ``(15) Secretary concerned.--The term `Secretary concerned' 
        means--
                    ``(A) the Secretary of Agriculture or the designee 
                of the Secretary of Agriculture with respect to the 
                Federal land described in paragraph (7)(A); and
                    ``(B) the Secretary of the Interior or the designee 
                of the Secretary of the Interior with respect to the 
                Federal land described in paragraph (7)(B).
            ``(16) State payment.--The term `State payment' means the 
        payment for an eligible State calculated under section 101(a).
            ``(17) 25-percent payment.--The term `25-percent payment' 
        means the payment to States required by the sixth paragraph 
        under the heading of `FOREST SERVICE' in the Act of May 23, 
        1908 (35 Stat. 260; 16 U.S.C. 500), and section 13 of the Act 
        of March 1, 1911 (36 Stat. 963; 16 U.S.C. 500).

 ``TITLE I--SECURE PAYMENTS FOR STATES AND COUNTIES CONTAINING FEDERAL 
                                  LAND

``SEC. 101. SECURE PAYMENTS FOR STATES CONTAINING FEDERAL LAND.

    ``(a) State Payment.--For each of fiscal years 2008 through 2011, 
the Secretary of Agriculture shall calculate for each eligible State an 
amount equal to the sum of the products obtained by multiplying--
            ``(1) the adjusted share for each eligible county within 
        the eligible State; by
            ``(2) the full funding amount for the fiscal year.
    ``(b) County Payment.--For each of fiscal years 2008 through 2011, 
the Secretary of the Interior shall calculate for each eligible county 
that received a 50-percent payment during the eligibility period an 
amount equal to the product obtained by multiplying--
            ``(1) the 50-percent adjusted share for the eligible 
        county; by
            ``(2) the full funding amount for the fiscal year.

``SEC. 102. PAYMENTS TO STATES AND COUNTIES.

    ``(a) Payment Amounts.--Except as provided in section 103, the 
Secretary of the Treasury shall pay to--
            ``(1) a State or territory of the United States an amount 
        equal to the sum of the amounts elected under subsection (b) by 
        each county within the State or territory for--
                    ``(A) if the county is eligible for the 25-percent 
                payment, the share of the 25-percent payment; or
                    ``(B) the share of the State payment of the 
                eligible county; and
            ``(2) a county an amount equal to the amount elected under 
        subsection (b) by each county for--
                    ``(A) if the county is eligible for the 50-percent 
                payment, the 50-percent payment; or
                    ``(B) the county payment for the eligible county.
    ``(b) Election To Receive Payment Amount.--
            ``(1) Election; submission of results.--
                    ``(A) In general.--The election to receive a share 
                of the State payment, the county payment, a share of 
                the State payment and the county payment, a share of 
                the 25-percent payment, the 50-percent payment, or a 
                share of the 25-percent payment and the 50-percent 
                payment, as applicable, shall be made at the discretion 
                of each affected county by August 1, 2008 (or as soon 
                thereafter as the Secretary concerned determines is 
                practicable), and August 1 of each second fiscal year 
                thereafter, in accordance with paragraph (2), and 
                transmitted to the Secretary concerned by the Governor 
                of each eligible State.
                    ``(B) Failure to transmit.--If an election for an 
                affected county is not transmitted to the Secretary 
                concerned by the date specified under subparagraph (A), 
                the affected county shall be considered to have elected 
                to receive a share of the State payment, the county 
                payment, or a share of the State payment and the county 
                payment, as applicable.
            ``(2) Duration of election.--
                    ``(A) In general.--A county election to receive a 
                share of the 25-percent payment or 50-percent payment, 
                as applicable, shall be effective for 2 fiscal years.
                    ``(B) Full funding amount.--If a county elects to 
                receive a share of the State payment or the county 
                payment, the election shall be effective for all 
                subsequent fiscal years through fiscal year 2011.
            ``(3) Source of payment amounts.--The payment to an 
        eligible State or eligible county under this section for a 
        fiscal year shall be derived from--
                    ``(A) any amounts that are appropriated to carry 
                out this Act;
                    ``(B) any revenues, fees, penalties, or 
                miscellaneous receipts, exclusive of deposits to any 
                relevant trust fund, special account, or permanent 
                operating funds, received by the Federal Government 
                from activities by the Bureau of Land Management or the 
                Forest Service on the applicable Federal land; and
                    ``(C) to the extent of any shortfall, out of any 
                amounts in the Treasury of the United States not 
                otherwise appropriated.
    ``(c) Distribution and Expenditure of Payments.--
            ``(1) Distribution method.--A State that receives a payment 
        under subsection (a) for Federal land described in section 
        3(7)(A) shall distribute the appropriate payment amount among 
        the appropriate counties in the State in accordance with--
                    ``(A) the Act of May 23, 1908 (16 U.S.C. 500); and
                    ``(B) section 13 of the Act of March 1, 1911 (36 
                Stat. 963; 16 U.S.C. 500).
            ``(2) Expenditure purposes.--Subject to subsection (d), 
        payments received by a State under subsection (a) and 
        distributed to counties in accordance with paragraph (1) shall 
        be expended as required by the laws referred to in paragraph 
        (1).
    ``(d) Expenditure Rules for Eligible Counties.--
            ``(1) Allocations.--
                    ``(A) Use of portion in same manner as 25-percent 
                payment or 50-percent payment, as applicable.--Except 
                as provided in paragraph (3)(B), if an eligible county 
                elects to receive its share of the State payment or the 
                county payment, not less than 80 percent, but not more 
                than 85 percent, of the funds shall be expended in the 
                same manner in which the 25-percent payments or 50-
                percent payment, as applicable, are required to be 
                expended.
                    ``(B) Election as to use of balance.--Except as 
                provided in subparagraph (C), an eligible county shall 
                elect to do 1 or more of the following with the balance 
                of any funds not expended pursuant to subparagraph (A):
                            ``(i) Reserve any portion of the balance 
                        for projects in accordance with title II.
                            ``(ii) Reserve not more than 7 percent of 
                        the total share for the eligible county of the 
                        State payment or the county payment for 
                        projects in accordance with title III.
                            ``(iii) Return the portion of the balance 
                        not reserved under clauses (i) and (ii) to the 
                        Treasury of the United States.
                    ``(C) Counties with modest distributions.--In the 
                case of each eligible county to which more than 
                $100,000, but less than $350,000, is distributed for 
                any fiscal year pursuant to either or both of 
                paragraphs (1)(B) and (2)(B) of subsection (a), the 
                eligible county, with respect to the balance of any 
                funds not expended pursuant to subparagraph (A) for 
                that fiscal year, shall--
                            ``(i) reserve any portion of the balance 
                        for--
                                    ``(I) carrying out projects under 
                                title II;
                                    ``(II) carrying out projects under 
                                title III; or
                                    ``(III) a combination of the 
                                purposes described in subclauses (I) 
                                and (II); or
                            ``(ii) return the portion of the balance 
                        not reserved under clause (i) to the Treasury 
                        of the United States.
            ``(2) Distribution of funds.--
                    ``(A) In general.--Funds reserved by an eligible 
                county under subparagraph (B)(i) or (C)(i) of paragraph 
                (1) for carrying out projects under title II shall be 
                deposited in a special account in the Treasury of the 
                United States.
                    ``(B) Availability.--Amounts deposited under 
                subparagraph (A) shall--
                            ``(i) be available for expenditure by the 
                        Secretary concerned, without further 
                        appropriation; and
                            ``(ii) remain available until expended in 
                        accordance with title II.
            ``(3) Election.--
                    ``(A) Notification.--
                            ``(i) In general.--An eligible county shall 
                        notify the Secretary concerned of an election 
                        by the eligible county under this subsection 
                        not later than September 30, 2008 (or as soon 
                        thereafter as the Secretary concerned 
                        determines is practicable), and each September 
                        30 thereafter for each succeeding fiscal year.
                            ``(ii) Failure to elect.--Except as 
                        provided in subparagraph (B), if the eligible 
                        county fails to make an election by the date 
                        specified in clause (i), the eligible county 
                        shall--
                                    ``(I) be considered to have elected 
                                to expend 85 percent of the funds in 
                                accordance with paragraph (1)(A); and
                                    ``(II) return the balance to the 
                                Treasury of the United States.
                    ``(B) Counties with minor distributions.--In the 
                case of each eligible county to which less than 
                $100,000 is distributed for any fiscal year pursuant to 
                either or both of paragraphs (1)(B) and (2)(B) of 
                subsection (a), the eligible county may elect to expend 
                all the funds in the same manner in which the 25-
                percent payments or 50-percent payments, as applicable, 
                are required to be expended.
    ``(e) Time for Payment.--The payments required under this section 
for a fiscal year shall be made as soon as practicable after the end of 
that fiscal year.

``SEC. 103. TRANSITION PAYMENTS TO STATES.

    ``(a) Definitions.--In this section:
            ``(1) Adjusted amount.--The term `adjusted amount' means, 
        with respect to a covered State--
                    ``(A) for fiscal year 2008, 90 percent of--
                            ``(i) the sum of the amounts paid for 
                        fiscal year 2006 under section 102(a)(2) (as in 
                        effect on September 29, 2006) for the eligible 
                        counties in the covered State that have elected 
                        under section 102(b) to receive a share of the 
                        State payment for fiscal year 2008; and
                            ``(ii) the sum of the amounts paid for 
                        fiscal year 2006 under section 103(a)(2) (as in 
                        effect on September 29, 2006) for the eligible 
                        counties in the State of Oregon that have 
                        elected under section 102(b) to receive the 
                        county payment for fiscal year 2008;
                    ``(B) for fiscal year 2009, 81 percent of--
                            ``(i) the sum of the amounts paid for 
                        fiscal year 2006 under section 102(a)(2) (as in 
                        effect on September 29, 2006) for the eligible 
                        counties in the covered State that have elected 
                        under section 102(b) to receive a share of the 
                        State payment for fiscal year 2009; and
                            ``(ii) the sum of the amounts paid for 
                        fiscal year 2006 under section 103(a)(2) (as in 
                        effect on September 29, 2006) for the eligible 
                        counties in the State of Oregon that have 
                        elected under section 102(b) to receive the 
                        county payment for fiscal year 2009; and
                    ``(C) for fiscal year 2010, 73 percent of--
                            ``(i) the sum of the amounts paid for 
                        fiscal year 2006 under section 102(a)(2) (as in 
                        effect on September 29, 2006) for the eligible 
                        counties in the covered State that have elected 
                        under section 102(b) to receive a share of the 
                        State payment for fiscal year 2010; and
                            ``(ii) the sum of the amounts paid for 
                        fiscal year 2006 under section 103(a)(2) (as in 
                        effect on September 29, 2006) for the eligible 
                        counties in the State of Oregon that have 
                        elected under section 102(b) to receive the 
                        county payment for fiscal year 2010.
            ``(2) Covered state.--The term `covered State' means each 
        of the States of California, Louisiana, Oregon, Pennsylvania, 
        South Carolina, South Dakota, Texas, and Washington.
    ``(b) Transition Payments.--For each of fiscal years 2008 through 
2010, in lieu of the payment amounts that otherwise would have been 
made under paragraphs (1)(B) and (2)(B) of section 102(a), the 
Secretary of the Treasury shall pay the adjusted amount to each covered 
State and the eligible counties within the covered State, as 
applicable.
    ``(c) Distribution of Adjusted Amount.--Except as provided in 
subsection (d), it is the intent of Congress that the method of 
distributing the payments under subsection (b) among the counties in 
the covered States for each of fiscal years 2008 through 2010 be in the 
same proportion that the payments were distributed to the eligible 
counties in fiscal year 2006.
    ``(d) Distribution of Payments in California.--The following 
payments shall be distributed among the eligible counties in the State 
of California in the same proportion that payments under section 
102(a)(2) (as in effect on September 29, 2006) were distributed to the 
eligible counties for fiscal year 2006:
            ``(1) Payments to the State of California under subsection 
        (b).
            ``(2) The shares of the eligible counties of the State 
        payment for California under section 102 for fiscal year 2011.
    ``(e) Treatment of Payments.--For purposes of this Act, any payment 
made under subsection (b) shall be considered to be a payment made 
under section 102(a).

              ``TITLE II--SPECIAL PROJECTS ON FEDERAL LAND

``SEC. 201. DEFINITIONS.

    ``In this title:
            ``(1) Participating county.--The term `participating 
        county' means an eligible county that elects under section 
        102(d) to expend a portion of the Federal funds received under 
        section 102 in accordance with this title.
            ``(2) Project funds.--The term `project funds' means all 
        funds an eligible county elects under section 102(d) to reserve 
        for expenditure in accordance with this title.
            ``(3) Resource advisory committee.--The term `resource 
        advisory committee' means--
                    ``(A) an advisory committee established by the 
                Secretary concerned under section 205; or
                    ``(B) an advisory committee determined by the 
                Secretary concerned to meet the requirements of section 
                205.
            ``(4) Resource management plan.--The term `resource 
        management plan' means--
                    ``(A) a land use plan prepared by the Bureau of 
                Land Management for units of the Federal land described 
                in section 3(7)(B) pursuant to section 202 of the 
                Federal Land Policy and Management Act of 1976 (43 
                U.S.C. 1712); or
                    ``(B) a land and resource management plan prepared 
                by the Forest Service for units of the National Forest 
                System pursuant to section 6 of the Forest and 
                Rangeland Renewable Resources Planning Act of 1974 (16 
                U.S.C. 1604).

``SEC. 202. GENERAL LIMITATION ON USE OF PROJECT FUNDS.

    ``(a) Limitation.--Project funds shall be expended solely on 
projects that meet the requirements of this title.
    ``(b) Authorized Uses.--Project funds may be used by the Secretary 
concerned for the purpose of entering into and implementing cooperative 
agreements with willing Federal agencies, State and local governments, 
private and nonprofit entities, and landowners for protection, 
restoration, and enhancement of fish and wildlife habitat, and other 
resource objectives consistent with the purposes of this Act on Federal 
land and on non-Federal land where projects would benefit the resources 
on Federal land.

``SEC. 203. SUBMISSION OF PROJECT PROPOSALS.

    ``(a) Submission of Project Proposals to Secretary Concerned.--
            ``(1) Projects funded using project funds.--Not later than 
        September 30 for fiscal year 2008 (or as soon thereafter as the 
        Secretary concerned determines is practicable), and each 
        September 30 thereafter for each succeeding fiscal year through 
        fiscal year 2011, each resource advisory committee shall submit 
        to the Secretary concerned a description of any projects that 
        the resource advisory committee proposes the Secretary 
        undertake using any project funds reserved by eligible counties 
        in the area in which the resource advisory committee has 
        geographic jurisdiction.
            ``(2) Projects funded using other funds.--A resource 
        advisory committee may submit to the Secretary concerned a 
        description of any projects that the committee proposes the 
        Secretary undertake using funds from State or local 
        governments, or from the private sector, other than project 
        funds and funds appropriated and otherwise available to do 
        similar work.
            ``(3) Joint projects.--Participating counties or other 
        persons may propose to pool project funds or other funds, 
        described in paragraph (2), and jointly propose a project or 
        group of projects to a resource advisory committee established 
        under section 205.
    ``(b) Required Description of Projects.--In submitting proposed 
projects to the Secretary concerned under subsection (a), a resource 
advisory committee shall include in the description of each proposed 
project the following information:
            ``(1) The purpose of the project and a description of how 
        the project will meet the purposes of this title.
            ``(2) The anticipated duration of the project.
            ``(3) The anticipated cost of the project.
            ``(4) The proposed source of funding for the project, 
        whether project funds or other funds.
            ``(5)(A) Expected outcomes, including how the project will 
        meet or exceed desired ecological conditions, maintenance 
        objectives, or stewardship objectives.
            ``(B) An estimate of the amount of any timber, forage, and 
        other commodities and other economic activity, including jobs 
        generated, if any, anticipated as part of the project.
            ``(6) A detailed monitoring plan, including funding needs 
        and sources, that--
                    ``(A) tracks and identifies the positive or 
                negative impacts of the project, implementation, and 
                provides for validation monitoring; and
                    ``(B) includes an assessment of the following:
                            ``(i) Whether or not the project met or 
                        exceeded desired ecological conditions; created 
                        local employment or training opportunities, 
                        including summer youth jobs programs such as 
                        the Youth Conservation Corps where appropriate.
                            ``(ii) Whether the project improved the use 
                        of, or added value to, any products removed 
                        from land consistent with the purposes of this 
                        title.
            ``(7) An assessment that the project is to be in the public 
        interest.
    ``(c) Authorized Projects.--Projects proposed under subsection (a) 
shall be consistent with section 2.

``SEC. 204. EVALUATION AND APPROVAL OF PROJECTS BY SECRETARY CONCERNED.

    ``(a) Conditions for Approval of Proposed Project.--The Secretary 
concerned may make a decision to approve a project submitted by a 
resource advisory committee under section 203 only if the proposed 
project satisfies each of the following conditions:
            ``(1) The project complies with all applicable Federal laws 
        (including regulations).
            ``(2) The project is consistent with the applicable 
        resource management plan and with any watershed or subsequent 
        plan developed pursuant to the resource management plan and 
        approved by the Secretary concerned.
            ``(3) The project has been approved by the resource 
        advisory committee in accordance with section 205, including 
        the procedures issued under subsection (e) of that section.
            ``(4) A project description has been submitted by the 
        resource advisory committee to the Secretary concerned in 
        accordance with section 203.
            ``(5) The project will improve the maintenance of existing 
        infrastructure, implement stewardship objectives that enhance 
        forest ecosystems, and restore and improve land health and 
        water quality.
    ``(b) Environmental Reviews.--
            ``(1) Request for payment by county.--The Secretary 
        concerned may request the resource advisory committee 
        submitting a proposed project to agree to the use of project 
        funds to pay for any environmental review, consultation, or 
        compliance with applicable environmental laws required in 
        connection with the project.
            ``(2) Conduct of environmental review.--If a payment is 
        requested under paragraph (1) and the resource advisory 
        committee agrees to the expenditure of funds for this purpose, 
        the Secretary concerned shall conduct environmental review, 
        consultation, or other compliance responsibilities in 
        accordance with Federal laws (including regulations).
            ``(3) Effect of refusal to pay.--
                    ``(A) In general.--If a resource advisory committee 
                does not agree to the expenditure of funds under 
                paragraph (1), the project shall be deemed withdrawn 
                from further consideration by the Secretary concerned 
                pursuant to this title.
                    ``(B) Effect of withdrawal.--A withdrawal under 
                subparagraph (A) shall be deemed to be a rejection of 
                the project for purposes of section 207(c).
    ``(c) Decisions of Secretary Concerned.--
            ``(1) Rejection of projects.--
                    ``(A) In general.--A decision by the Secretary 
                concerned to reject a proposed project shall be at the 
                sole discretion of the Secretary concerned.
                    ``(B) No administrative appeal or judicial 
                review.--Notwithstanding any other provision of law, a 
                decision by the Secretary concerned to reject a 
                proposed project shall not be subject to administrative 
                appeal or judicial review.
                    ``(C) Notice of rejection.--Not later than 30 days 
                after the date on which the Secretary concerned makes 
                the rejection decision, the Secretary concerned shall 
                notify in writing the resource advisory committee that 
                submitted the proposed project of the rejection and the 
                reasons for rejection.
            ``(2) Notice of project approval.--The Secretary concerned 
        shall publish in the Federal Register notice of each project 
        approved under subsection (a) if the notice would be required 
        had the project originated with the Secretary.
    ``(d) Source and Conduct of Project.--Once the Secretary concerned 
accepts a project for review under section 203, the acceptance shall be 
deemed a Federal action for all purposes.
    ``(e) Implementation of Approved Projects.--
            ``(1) Cooperation.--Notwithstanding chapter 63 of title 31, 
        United States Code, using project funds the Secretary concerned 
        may enter into contracts, grants, and cooperative agreements 
        with States and local governments, private and nonprofit 
        entities, and landowners and other persons to assist the 
        Secretary in carrying out an approved project.
            ``(2) Best value contracting.--
                    ``(A) In general.--For any project involving a 
                contract authorized by paragraph (1) the Secretary 
                concerned may elect a source for performance of the 
                contract on a best value basis.
                    ``(B) Factors.--The Secretary concerned shall 
                determine best value based on such factors as--
                            ``(i) the technical demands and complexity 
                        of the work to be done;
                            ``(ii)(I) the ecological objectives of the 
                        project; and
                            ``(II) the sensitivity of the resources 
                        being treated;
                            ``(iii) the past experience by the 
                        contractor with the type of work being done, 
                        using the type of equipment proposed for the 
                        project, and meeting or exceeding desired 
                        ecological conditions; and
                            ``(iv) the commitment of the contractor to 
                        hiring highly qualified workers and local 
                        residents.
            ``(3) Merchantable timber contracting pilot program.--
                    ``(A) Establishment.--The Secretary concerned shall 
                establish a pilot program to implement a certain 
                percentage of approved projects involving the sale of 
                merchantable timber using separate contracts for--
                            ``(i) the harvesting or collection of 
                        merchantable timber; and
                            ``(ii) the sale of the timber.
                    ``(B) Annual percentages.--Under the pilot program, 
                the Secretary concerned shall ensure that, on a 
                nationwide basis, not less than the following 
                percentage of all approved projects involving the sale 
                of merchantable timber are implemented using separate 
                contracts:
                            ``(i) For fiscal year 2008, 35 percent.
                            ``(ii) For fiscal year 2009, 45 percent.
                            ``(iii) For each of fiscal years 2010 and 
                        2011, 50 percent.
                    ``(C) Inclusion in pilot program.--The decision 
                whether to use separate contracts to implement a 
                project involving the sale of merchantable timber shall 
                be made by the Secretary concerned after the approval 
                of the project under this title.
                    ``(D) Assistance.--
                            ``(i) In general.--The Secretary concerned 
                        may use funds from any appropriated account 
                        available to the Secretary for the Federal land 
                        to assist in the administration of projects 
                        conducted under the pilot program.
                            ``(ii) Maximum amount of assistance.--The 
                        total amount obligated under this subparagraph 
                        may not exceed $1,000,000 for any fiscal year 
                        during which the pilot program is in effect.
                    ``(E) Review and report.--
                            ``(i) Initial report.--Not later than 
                        September 30, 2010, the Comptroller General 
                        shall submit to the Committees on Agriculture, 
                        Nutrition, and Forestry and Energy and Natural 
                        Resources of the Senate and the Committees on 
                        Agriculture and Natural Resources of the House 
                        of Representatives a report assessing the pilot 
                        program.
                            ``(ii) Annual report.--The Secretary 
                        concerned shall submit to the Committees on 
                        Agriculture, Nutrition, and Forestry and Energy 
                        and Natural Resources of the Senate and the 
                        Committees on Agriculture and Natural Resources 
                        of the House of Representatives an annual 
                        report describing the results of the pilot 
                        program.
    ``(f) Requirements for Project Funds.--The Secretary shall ensure 
that at least 50 percent of all project funds be used for projects that 
are primarily dedicated--
            ``(1) to road maintenance, decommissioning, or 
        obliteration; or
            ``(2) to restoration of streams and watersheds.

``SEC. 205. RESOURCE ADVISORY COMMITTEES.

    ``(a) Establishment and Purpose of Resource Advisory Committees.--
            ``(1) Establishment.--The Secretary concerned shall 
        establish and maintain resource advisory committees to perform 
        the duties in subsection (b), except as provided in paragraph 
        (4).
            ``(2) Purpose.--The purpose of a resource advisory 
        committee shall be--
                    ``(A) to improve collaborative relationships; and
                    ``(B) to provide advice and recommendations to the 
                land management agencies consistent with the purposes 
                of this title.
            ``(3) Access to resource advisory committees.--To ensure 
        that each unit of Federal land has access to a resource 
        advisory committee, and that there is sufficient interest in 
        participation on a committee to ensure that membership can be 
        balanced in terms of the points of view represented and the 
        functions to be performed, the Secretary concerned may, 
        establish resource advisory committees for part of, or 1 or 
        more, units of Federal land.
            ``(4) Existing advisory committees.--
                    ``(A) In general.--An advisory committee that meets 
                the requirements of this section, a resource advisory 
                committee established before September 29, 2006, or an 
                advisory committee determined by the Secretary 
                concerned before September 29, 2006, to meet the 
                requirements of this section may be deemed by the 
                Secretary concerned to be a resource advisory committee 
                for the purposes of this title.
                    ``(B) Charter.--A charter for a committee described 
                in subparagraph (A) that was filed on or before 
                September 29, 2006, shall be considered to be filed for 
                purposes of this Act.
                    ``(C) Bureau of land management advisory 
                committees.--The Secretary of the Interior may deem a 
                resource advisory committee meeting the requirements of 
                subpart 1784 of part 1780 of title 43, Code of Federal 
                Regulations, as a resource advisory committee for the 
                purposes of this title.
    ``(b) Duties.--A resource advisory committee shall--
            ``(1) review projects proposed under this title by 
        participating counties and other persons;
            ``(2) propose projects and funding to the Secretary 
        concerned under section 203;
            ``(3) provide early and continuous coordination with 
        appropriate land management agency officials in recommending 
        projects consistent with purposes of this Act under this title;
            ``(4) provide frequent opportunities for citizens, 
        organizations, tribes, land management agencies, and other 
        interested parties to participate openly and meaningfully, 
        beginning at the early stages of the project development 
        process under this title;
            ``(5)(A) monitor projects that have been approved under 
        section 204; and
            ``(B) advise the designated Federal official on the 
        progress of the monitoring efforts under subparagraph (A); and
            ``(6) make recommendations to the Secretary concerned for 
        any appropriate changes or adjustments to the projects being 
        monitored by the resource advisory committee.
    ``(c) Appointment by the Secretary.--
            ``(1) Appointment and term.--
                    ``(A) In general.--The Secretary concerned, shall 
                appoint the members of resource advisory committees for 
                a term of 4 years beginning on the date of appointment.
                    ``(B) Reappointment.--The Secretary concerned may 
                reappoint members to subsequent 4-year terms.
            ``(2) Basic requirements.--The Secretary concerned shall 
        ensure that each resource advisory committee established meets 
        the requirements of subsection (d).
            ``(3) Initial appointment.--Not later than 180 days after 
        the date of the enactment of this Act, the Secretary concerned 
        shall make initial appointments to the resource advisory 
        committees.
            ``(4) Vacancies.--The Secretary concerned shall make 
        appointments to fill vacancies on any resource advisory 
        committee as soon as practicable after the vacancy has 
        occurred.
            ``(5) Compensation.--Members of the resource advisory 
        committees shall not receive any compensation.
    ``(d) Composition of Advisory Committee.--
            ``(1) Number.--Each resource advisory committee shall be 
        comprised of 15 members.
            ``(2) Community interests represented.--Committee members 
        shall be representative of the interests of the following 3 
        categories:
                    ``(A) 5 persons that--
                            ``(i) represent organized labor or non-
                        timber forest product harvester groups;
                            ``(ii) represent developed outdoor 
                        recreation, off highway vehicle users, or 
                        commercial recreation activities;
                            ``(iii) represent--
                                    ``(I) energy and mineral 
                                development interests; or
                                    ``(II) commercial or recreational 
                                fishing interests;
                            ``(iv) represent the commercial timber 
                        industry; or
                            ``(v) hold Federal grazing or other land 
                        use permits, or represent nonindustrial private 
                        forest land owners, within the area for which 
                        the committee is organized.
                    ``(B) 5 persons that represent--
                            ``(i) nationally recognized environmental 
                        organizations;
                            ``(ii) regionally or locally recognized 
                        environmental organizations;
                            ``(iii) dispersed recreational activities;
                            ``(iv) archaeological and historical 
                        interests; or
                            ``(v) nationally or regionally recognized 
                        wild horse and burro interest groups, wildlife 
                        or hunting organizations, or watershed 
                        associations.
                    ``(C) 5 persons that--
                            ``(i) hold State elected office (or a 
                        designee);
                            ``(ii) hold county or local elected office;
                            ``(iii) represent American Indian tribes 
                        within or adjacent to the area for which the 
                        committee is organized;
                            ``(iv) are school officials or teachers; or
                            ``(v) represent the affected public at 
                        large.
            ``(3) Balanced representation.--In appointing committee 
        members from the 3 categories in paragraph (2), the Secretary 
        concerned shall provide for balanced and broad representation 
        from within each category.
            ``(4) Geographic distribution.--The members of a resource 
        advisory committee shall reside within the State in which the 
        committee has jurisdiction and, to extent practicable, the 
        Secretary concerned shall ensure local representation in each 
        category in paragraph (2).
            ``(5) Chairperson.--A majority on each resource advisory 
        committee shall select the chairperson of the committee.
    ``(e) Approval Procedures.--
            ``(1) In general.--Subject to paragraph (3), each resource 
        advisory committee shall establish procedures for proposing 
        projects to the Secretary concerned under this title.
            ``(2) Quorum.--A quorum must be present to constitute an 
        official meeting of the committee.
            ``(3) Approval by majority of members.--A project may be 
        proposed by a resource advisory committee to the Secretary 
        concerned under section 203(a), if the project has been 
        approved by a majority of members of the committee from each of 
        the 3 categories in subsection (d)(2).
    ``(f) Other Committee Authorities and Requirements.--
            ``(1) Staff assistance.--A resource advisory committee may 
        submit to the Secretary concerned a request for periodic staff 
        assistance from Federal employees under the jurisdiction of the 
        Secretary.
            ``(2) Meetings.--All meetings of a resource advisory 
        committee shall be announced at least 1 week in advance in a 
        local newspaper of record and shall be open to the public.
            ``(3) Records.--A resource advisory committee shall 
        maintain records of the meetings of the committee and make the 
        records available for public inspection.

``SEC. 206. USE OF PROJECT FUNDS.

    ``(a) Agreement Regarding Schedule and Cost of Project.--
            ``(1) Agreement between parties.--The Secretary concerned 
        may carry out a project submitted by a resource advisory 
        committee under section 203(a) using project funds or other 
        funds described in section 203(a)(2), if, as soon as 
        practicable after the issuance of a decision document for the 
        project and the exhaustion of all administrative appeals and 
        judicial review of the project decision, the Secretary 
        concerned and the resource advisory committee enter into an 
        agreement addressing, at a minimum, the following:
                    ``(A) The schedule for completing the project.
                    ``(B) The total cost of the project, including the 
                level of agency overhead to be assessed against the 
                project.
                    ``(C) For a multiyear project, the estimated cost 
                of the project for each of the fiscal years in which it 
                will be carried out.
                    ``(D) The remedies for failure of the Secretary 
                concerned to comply with the terms of the agreement 
                consistent with current Federal law.
            ``(2) Limited use of federal funds.--The Secretary 
        concerned may decide, at the sole discretion of the Secretary 
        concerned, to cover the costs of a portion of an approved 
        project using Federal funds appropriated or otherwise available 
        to the Secretary for the same purposes as the project.
    ``(b) Transfer of Project Funds.--
            ``(1) Initial transfer required.--As soon as practicable 
        after the agreement is reached under subsection (a) with regard 
        to a project to be funded in whole or in part using project 
        funds, or other funds described in section 203(a)(2), the 
        Secretary concerned shall transfer to the applicable unit of 
        National Forest System land or Bureau of Land Management 
        District an amount of project funds equal to--
                    ``(A) in the case of a project to be completed in a 
                single fiscal year, the total amount specified in the 
                agreement to be paid using project funds, or other 
                funds described in section 203(a)(2); or
                    ``(B) in the case of a multiyear project, the 
                amount specified in the agreement to be paid using 
                project funds, or other funds described in section 
                203(a)(2) for the first fiscal year.
            ``(2) Condition on project commencement.--The unit of 
        National Forest System land or Bureau of Land Management 
        District concerned, shall not commence a project until the 
        project funds, or other funds described in section 203(a)(2) 
        required to be transferred under paragraph (1) for the project, 
        have been made available by the Secretary concerned.
            ``(3) Subsequent transfers for multiyear projects.--
                    ``(A) In general.--For the second and subsequent 
                fiscal years of a multiyear project to be funded in 
                whole or in part using project funds, the unit of 
                National Forest System land or Bureau of Land 
                Management District concerned shall use the amount of 
                project funds required to continue the project in that 
                fiscal year according to the agreement entered into 
                under subsection (a).
                    ``(B) Suspension of work.--The Secretary concerned 
                shall suspend work on the project if the project funds 
                required by the agreement in the second and subsequent 
                fiscal years are not available.

``SEC. 207. AVAILABILITY OF PROJECT FUNDS.

    ``(a) Submission of Proposed Projects To Obligate Funds.--By 
September 30, 2008 (or as soon thereafter as the Secretary concerned 
determines is practicable), and each September 30 thereafter for each 
succeeding fiscal year through fiscal year 2011, a resource advisory 
committee shall submit to the Secretary concerned pursuant to section 
203(a)(1) a sufficient number of project proposals that, if approved, 
would result in the obligation of at least the full amount of the 
project funds reserved by the participating county in the preceding 
fiscal year.
    ``(b) Use or Transfer of Unobligated Funds.--Subject to section 
208, if a resource advisory committee fails to comply with subsection 
(a) for a fiscal year, any project funds reserved by the participating 
county in the preceding fiscal year and remaining unobligated shall be 
available for use as part of the project submissions in the next fiscal 
year.
    ``(c) Effect of Rejection of Projects.--Subject to section 208, any 
project funds reserved by a participating county in the preceding 
fiscal year that are unobligated at the end of a fiscal year because 
the Secretary concerned has rejected one or more proposed projects 
shall be available for use as part of the project submissions in the 
next fiscal year.
    ``(d) Effect of Court Orders.--
            ``(1) In general.--If an approved project under this Act is 
        enjoined or prohibited by a Federal court, the Secretary 
        concerned shall return the unobligated project funds related to 
        the project to the participating county or counties that 
        reserved the funds.
            ``(2) Expenditure of funds.--The returned funds shall be 
        available for the county to expend in the same manner as the 
        funds reserved by the county under subparagraph (B) or (C)(i) 
        of section 102(d)(1).

``SEC. 208. TERMINATION OF AUTHORITY.

    ``(a) In General.--The authority to initiate projects under this 
title shall terminate on September 30, 2011.
    ``(b) Deposits in Treasury.--Any project funds not obligated by 
September 30, 2012, shall be deposited in the Treasury of the United 
States.

                       ``TITLE III--COUNTY FUNDS

``SEC. 301. DEFINITIONS.

    ``In this title:
            ``(1) County funds.--The term `county funds' means all 
        funds an eligible county elects under section 102(d) to reserve 
        for expenditure in accordance with this title.
            ``(2) Participating county.--The term `participating 
        county' means an eligible county that elects under section 
        102(d) to expend a portion of the Federal funds received under 
        section 102 in accordance with this title.

``SEC. 302. USE.

    ``(a) Authorized Uses.--A participating county, including any 
applicable agencies of the participating county, shall use county 
funds, in accordance with this title, only--
            ``(1) to carry out activities under the Firewise 
        Communities program to provide to homeowners in fire-sensitive 
        ecosystems education on, and assistance with implementing, 
        techniques in home siting, home construction, and home 
        landscaping that can increase the protection of people and 
        property from wildfires;
            ``(2) to reimburse the participating county for search and 
        rescue and other emergency services, including firefighting, 
        that are--
                    ``(A) performed on Federal land after the date on 
                which the use was approved under subsection (b);
                    ``(B) paid for by the participating county; and
            ``(3) to develop community wildfire protection plans in 
        coordination with the appropriate Secretary concerned.
    ``(b) Proposals.--A participating county shall use county funds for 
a use described in subsection (a) only after a 45-day public comment 
period, at the beginning of which the participating county shall--
            ``(1) publish in any publications of local record a 
        proposal that describes the proposed use of the county funds; 
        and
            ``(2) submit the proposal to any resource advisory 
        committee established under section 205 for the participating 
        county.

``SEC. 303. CERTIFICATION.

    ``(a) In General.--Not later than February 1 of the year after the 
year in which any county funds were expended by a participating county, 
the appropriate official of the participating county shall submit to 
the Secretary concerned a certification that the county funds expended 
in the applicable year have been used for the uses authorized under 
section 302(a), including a description of the amounts expended and the 
uses for which the amounts were expended.
    ``(b) Review.--The Secretary concerned shall review the 
certifications submitted under subsection (a) as the Secretary 
concerned determines to be appropriate.

``SEC. 304. TERMINATION OF AUTHORITY.

    ``(a) In General.--The authority to initiate projects under this 
title terminates on September 30, 2011.
    ``(b) Availability.--Any county funds not obligated by September 
30, 2012, shall be returned to the Treasury of the United States.

                  ``TITLE IV--MISCELLANEOUS PROVISIONS

``SEC. 401. REGULATIONS.

    ``The Secretary of Agriculture and the Secretary of the Interior 
shall issue regulations to carry out the purposes of this Act.

``SEC. 402. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated such sums as are 
necessary to carry out this Act for each of fiscal years 2008 through 
2011.

``SEC. 403. TREATMENT OF FUNDS AND REVENUES.

    ``(a) Relation to Other Appropriations.--Funds made available under 
section 402 and funds made available to a Secretary concerned under 
section 206 shall be in addition to any other annual appropriations for 
the Forest Service and the Bureau of Land Management.
    ``(b) Deposit of Revenues and Other Funds.--All revenues generated 
from projects pursuant to title II, including any interest accrued from 
the revenues, shall be deposited in the Treasury of the United 
States.''.
    (b) Forest Receipt Payments to Eligible States and Counties.--
            (1) Act of may 23, 1908.--The sixth paragraph under the 
        heading ``FOREST SERVICE'' in the Act of May 23, 1908 (16 
        U.S.C. 500) is amended in the first sentence by striking 
        ``twenty-five percentum'' and all that follows through ``shall 
        be paid'' and inserting the following: ``an amount equal to the 
        annual average of 25 percent of all amounts received for the 
        applicable fiscal year and each of the preceding 6 fiscal years 
        from each national forest shall be paid''.
            (2) Weeks law.--Section 13 of the Act of March 1, 1911 
        (commonly known as the ``Weeks Law'') (16 U.S.C. 500) is 
        amended in the first sentence by striking ``twenty-five 
        percentum'' and all that follows through ``shall be paid'' and 
        inserting the following: ``an amount equal to the annual 
        average of 25 percent of all amounts received for the 
        applicable fiscal year and each of the preceding 6 fiscal years 
        from each national forest shall be paid''.
    (c) Payments in Lieu of Taxes.--
            (1) In general.--Section 6906 of title 31, United States 
        Code, is amended to read as follows:
``Sec. 6906. Funding
    ``For each of fiscal years 2008 through 2012--
            ``(1) each county or other eligible unit of local 
        government shall be entitled to payment under this chapter; and
            ``(2) sums shall be made available to the Secretary of the 
        Interior for obligation or expenditure in accordance with this 
        chapter.''.
            (2) Conforming amendment.--The table of sections for 
        chapter 69 of title 31, United States Code, is amended by 
        striking the item relating to section 6906 and inserting the 
        following:

``6906. Funding.''.
            (3) Budget scorekeeping.--
                    (A) In general.--Notwithstanding the Budget 
                Scorekeeping Guidelines and the accompanying list of 
                programs and accounts set forth in the joint 
                explanatory statement of the committee of conference 
                accompanying Conference Report 105-217, the section in 
                this title regarding Payments in Lieu of Taxes shall be 
                treated in the baseline for purposes of section 257 of 
                the Balanced Budget and Emergency Deficit Control Act 
                of 1985 (as in effect prior to September 30, 2002), and 
                by the Chairmen of the House and Senate Budget 
                Committees, as appropriate, for purposes of budget 
                enforcement in the House and Senate, and under the 
                Congressional Budget Act of 1974 as if Payment in Lieu 
                of Taxes (14-1114-0-1-806) were an account designated 
                as Appropriated Entitlements and Mandatories for Fiscal 
                Year 1997 in the joint explanatory statement of the 
                committee of conference accompanying Conference Report 
                105-217.
                    (B) Effective date.--This paragraph shall remain in 
                effect for the fiscal years to which the entitlement in 
                section 6906 of title 31, United States Code (as 
                amended by paragraph (1)), applies.

SEC. 602. TRANSFER TO ABANDONED MINE RECLAMATION FUND.

    Subparagraph (C) of section 402(i)(1) of the Surface Mining Control 
and Reclamation Act of 1977 (30 U.S.C. 1232(i)(1)) is amended by 
striking ``and $9,000,000 on October 1, 2009'' and inserting 
``$9,000,000 on October 1, 2009, and $9,000,000 on October 1, 2010''.

                       TITLE VII--DISASTER RELIEF

        Subtitle A--Heartland and Hurricane Ike Disaster Relief

SEC. 701. SHORT TITLE.

    This subtitle may be cited as the ``Heartland Disaster Tax Relief 
Act of 2008''.

SEC. 702. TEMPORARY TAX RELIEF FOR AREAS DAMAGED BY 2008 MIDWESTERN 
              SEVERE STORMS, TORNADOS, AND FLOODING.

    (a) In General.--Subject to the modifications described in this 
section, the following provisions of or relating to the Internal 
Revenue Code of 1986 shall apply to any Midwestern disaster area in 
addition to the areas to which such provisions otherwise apply:
            (1) Go zone benefits.--
                    (A) Section 1400N (relating to tax benefits) other 
                than subsections (b), (d), (e), (i), (j), (m), and (o) 
                thereof.
                    (B) Section 1400O (relating to education tax 
                benefits).
                    (C) Section 1400P (relating to housing tax 
                benefits).
                    (D) Section 1400Q (relating to special rules for 
                use of retirement funds).
                    (E) Section 1400R(a) (relating to employee 
                retention credit for employers).
                    (F) Section 1400S (relating to additional tax 
                relief) other than subsection (d) thereof.
                    (G) Section 1400T (relating to special rules for 
                mortgage revenue bonds).
            (2) Other benefits included in katrina emergency tax relief 
        act of 2005.--Sections 302, 303, 304, 401, and 405 of the 
        Katrina Emergency Tax Relief Act of 2005.
    (b) Midwestern Disaster Area.--
            (1) In general.--For purposes of this section and for 
        applying the substitutions described in subsections (d) and 
        (e), the term ``Midwestern disaster area'' means an area--
                    (A) with respect to which a major disaster has been 
                declared by the President on or after May 20, 2008, and 
                before August 1, 2008, under section 401 of the Robert 
                T. Stafford Disaster Relief and Emergency Assistance 
                Act by reason of severe storms, tornados, or flooding 
                occurring in any of the States of Arkansas, Illinois, 
                Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, 
                Nebraska, and Wisconsin, and
                    (B) determined by the President to warrant 
                individual or individual and public assistance from the 
                Federal Government under such Act with respect to 
                damages attributable to such severe storms, tornados, 
                or flooding.
            (2) Certain benefits available to areas eligible only for 
        public assistance.--For purposes of applying this section to 
        benefits under the following provisions, paragraph (1) shall be 
        applied without regard to subparagraph (B):
                    (A) Sections 1400Q, 1400S(b), and 1400S(d) of the 
                Internal Revenue Code of 1986.
                    (B) Sections 302, 401, and 405 of the Katrina 
                Emergency Tax Relief Act of 2005.
    (c) References.--
            (1) Area.--Any reference in such provisions to the 
        Hurricane Katrina disaster area or the Gulf Opportunity Zone 
        shall be treated as a reference to any Midwestern disaster area 
        and any reference to the Hurricane Katrina disaster area or the 
        Gulf Opportunity Zone within a State shall be treated as a 
        reference to all Midwestern disaster areas within the State.
            (2) Items attributable to disaster.--Any reference in such 
        provisions to any loss, damage, or other item attributable to 
        Hurricane Katrina shall be treated as a reference to any loss, 
        damage, or other item attributable to the severe storms, 
        tornados, or flooding giving rise to any Presidential 
        declaration described in subsection (b)(1)(A).
            (3) Applicable disaster date.--For purposes of applying the 
        substitutions described in subsections (d) and (e), the term 
        ``applicable disaster date'' means, with respect to any 
        Midwestern disaster area, the date on which the severe storms, 
        tornados, or flooding giving rise to the Presidential 
        declaration described in subsection (b)(1)(A) occurred.
    (d) Modifications to 1986 Code.--The following provisions of the 
Internal Revenue Code of 1986 shall be applied with the following 
modifications:
            (1) Tax-exempt bond financing.--Section 1400N(a)--
                    (A) by substituting ``qualified Midwestern disaster 
                area bond'' for ``qualified Gulf Opportunity Zone 
                Bond'' each place it appears, except that in 
                determining whether a bond is a qualified Midwestern 
                disaster area bond--
                            (i) paragraph (2)(A)(i) shall be applied by 
                        only treating costs as qualified project costs 
                        if--
                                    (I) in the case of a project 
                                involving a private business use (as 
                                defined in section 141(b)(6)), either 
                                the person using the property suffered 
                                a loss in a trade or business 
                                attributable to the severe storms, 
                                tornados, or flooding giving rise to 
                                any Presidential declaration described 
                                in subsection (b)(1)(A) or is a person 
                                designated for purposes of this section 
                                by the Governor of the State in which 
                                the project is located as a person 
                                carrying on a trade or business 
                                replacing a trade or business with 
                                respect to which another person 
                                suffered such a loss, and
                                    (II) in the case of a project 
                                relating to public utility property, 
                                the project involves repair or 
                                reconstruction of public utility 
                                property damaged by such severe storms, 
                                tornados, or flooding, and
                            (ii) paragraph (2)(A)(ii) shall be applied 
                        by treating an issue as a qualified mortgage 
                        issue only if 95 percent or more of the net 
                        proceeds (as defined in section 150(a)(3)) of 
                        the issue are to be used to provide financing 
                        for mortgagors who suffered damages to their 
                        principal residences attributable to such 
                        severe storms, tornados, or flooding.
                    (B) by substituting ``any State in which a 
                Midwestern disaster area is located'' for ``the State 
                of Alabama, Louisiana, or Mississippi'' in paragraph 
                (2)(B),
                    (C) by substituting ``designated for purposes of 
                this section (on the basis of providing assistance to 
                areas in the order in which such assistance is most 
                needed)'' for ``designated for purposes of this 
                section'' in paragraph (2)(C),
                    (D) by substituting ``January 1, 2013'' for 
                ``January 1, 2011'' in paragraph (2)(D),
                    (E) in paragraph (3)(A)--
                            (i) by substituting ``$1,000'' for 
                        ``$2,500'', and
                            (ii) by substituting ``before the earliest 
                        applicable disaster date for Midwestern 
                        disaster areas within the State'' for ``before 
                        August 28, 2005'',
                    (F) by substituting ``qualified Midwestern disaster 
                area repair or construction'' for ``qualified GO Zone 
                repair or construction'' each place it appears,
                    (G) by substituting ``after the date of the 
                enactment of the Heartland Disaster Tax Relief Act of 
                2008 and before January 1, 2013'' for ``after the date 
                of the enactment of this paragraph and before January 
                1, 2011'' in paragraph (7)(C), and
                    (H) by disregarding paragraph (8) thereof.
            (2) Low-income housing credit.--Section 1400N(c)--
                    (A) only with respect to calendar years 2008, 2009, 
                and 2010,
                    (B) by substituting ``Disaster Recovery Assistance 
                housing amount'' for ``Gulf Opportunity housing 
                amount'' each place it appears,
                    (C) in paragraph (1)(B)--
                            (i) by substituting ``$8.00'' for 
                        ``$18.00'', and
                            (ii) by substituting ``before the earliest 
                        applicable disaster date for Midwestern 
                        disaster areas within the State'' for ``before 
                        August 28, 2005'', and
                    (D) determined without regard to paragraphs (2), 
                (3), (4), (5), and (6) thereof.
            (3) Expensing for certain demolition and clean-up costs.--
        Section 1400N(f)--
                    (A) by substituting ``qualified Disaster Recovery 
                Assistance clean-up cost'' for ``qualified Gulf 
                Opportunity Zone clean-up cost'' each place it appears,
                    (B) by substituting ``beginning on the applicable 
                disaster date and ending on December 31, 2010'' for 
                ``beginning on August 28, 2005, and ending on December 
                31, 2007'' in paragraph (2), and
                    (C) by treating costs as qualified Disaster 
                Recovery Assistance clean-up costs only if the removal 
                of debris or demolition of any structure was necessary 
                due to damage attributable to the severe storms, 
                tornados, or flooding giving rise to any Presidential 
                declaration described in subsection (b)(1)(A).
            (4) Extension of expensing for environmental remediation 
        costs.--Section 1400N(g)--
                    (A) by substituting ``the applicable disaster 
                date'' for ``August 28, 2005'' each place it appears,
                    (B) by substituting ``January 1, 2011'' for 
                ``January 1, 2008'' in paragraph (1),
                    (C) by substituting ``December 31, 2010'' for 
                ``December 31, 2007'' in paragraph (1), and
                    (D) by treating a site as a qualified contaminated 
                site only if the release (or threat of release) or 
                disposal of a hazardous substance at the site was 
                attributable to the severe storms, tornados, or 
                flooding giving rise to any Presidential declaration 
                described in subsection (b)(1)(A).
            (5) Increase in rehabilitation credit.--Section 1400N(h), 
        as amended by this Act--
                    (A) by substituting ``the applicable disaster 
                date'' for ``August 28, 2005'',
                    (B) by substituting ``December 31, 2011'' for 
                ``December 31, 2009'' in paragraph (1), and
                    (C) by only applying such subsection to qualified 
                rehabilitation expenditures with respect to any 
                building or structure which was damaged or destroyed as 
                a result of the severe storms, tornados, or flooding 
                giving rise to any Presidential declaration described 
                in subsection (b)(1)(A).
            (6) Treatment of net operating losses attributable to 
        disaster losses.--Section 1400N(k)--
                    (A) by substituting ``qualified Disaster Recovery 
                Assistance loss'' for ``qualified Gulf Opportunity Zone 
                loss'' each place it appears,
                    (B) by substituting ``after the day before the 
                applicable disaster date, and before January 1, 2011'' 
                for ``after August 27, 2005, and before January 1, 
                2008'' each place it appears,
                    (C) by substituting ``the applicable disaster 
                date'' for ``August 28, 2005'' in paragraph 
                (2)(B)(ii)(I),
                    (D) by substituting ``qualified Disaster Recovery 
                Assistance property'' for ``qualified Gulf Opportunity 
                Zone property'' in paragraph (2)(B)(iv), and
                    (E) by substituting ``qualified Disaster Recovery 
                Assistance casualty loss'' for ``qualified Gulf 
                Opportunity Zone casualty loss'' each place it appears.
            (7) Credit to holders of tax credit bonds.--Section 
        1400N(l)--
                    (A) by substituting ``Midwestern tax credit bond'' 
                for ``Gulf tax credit bond'' each place it appears,
                    (B) by substituting ``any State in which a 
                Midwestern disaster area is located or any 
                instrumentality of the State'' for ``the State of 
                Alabama, Louisiana, or Mississippi'' in paragraph 
                (4)(A)(i),
                    (C) by substituting ``after December 31, 2008 and 
                before January 1, 2010'' for ``after December 31, 2005, 
                and before January 1, 2007'',
                    (D) by substituting ``shall not exceed $100,000,000 
                for any State with an aggregate population located in 
                all Midwestern disaster areas within the State of at 
                least 2,000,000, $50,000,000 for any State with an 
                aggregate population located in all Midwestern disaster 
                areas within the State of at least 1,000,000 but less 
                than 2,000,000, and zero for any other State. The 
                population of a State within any area shall be 
                determined on the basis of the most recent census 
                estimate of resident population released by the Bureau 
                of Census before the earliest applicable disaster date 
                for Midwestern disaster areas within the State.'' for 
                ``shall not exceed'' and all that follows in paragraph 
                (4)(C), and
                    (E) by substituting ``the earliest applicable 
                disaster date for Midwestern disaster areas within the 
                State'' for ``August 28, 2005'' in paragraph (5)(A).
            (8) Education tax benefits.--Section 1400O, by substituting 
        ``2008 or 2009'' for ``2005 or 2006''.
            (9) Housing tax benefits.--Section 1400P, by substituting 
        ``the applicable disaster date'' for ``August 28, 2005'' in 
        subsection (c)(1).
            (10) Special rules for use of retirement funds.--Section 
        1400Q--
                    (A) by substituting ``qualified Disaster Recovery 
                Assistance distribution'' for ``qualified hurricane 
                distribution'' each place it appears,
                    (B) by substituting ``on or after the applicable 
                disaster date and before January 1, 2010'' for ``on or 
                after August 25, 2005, and before January 1, 2007'' in 
                subsection (a)(4)(A)(i),
                    (C) by substituting ``the applicable disaster 
                date'' for ``August 28, 2005'' in subsections 
                (a)(4)(A)(i) and (c)(3)(B),
                    (D) by disregarding clauses (ii) and (iii) of 
                subsection (a)(4)(A) thereof,
                    (E) by substituting ``qualified storm damage 
                distribution'' for ``qualified Katrina distribution'' 
                each place it appears,
                    (F) by substituting ``after the date which is 6 
                months before the applicable disaster date and before 
                the date which is the day after the applicable disaster 
                date'' for ``after February 28, 2005, and before August 
                29, 2005'' in subsection (b)(2)(B)(ii),
                    (G) by substituting ``the Midwestern disaster area, 
                but not so purchased or constructed on account of 
                severe storms, tornados, or flooding giving rise to the 
                designation of the area as a disaster area'' for ``the 
                Hurricane Katrina disaster area, but not so purchased 
                or constructed on account of Hurricane Katrina'' in 
                subsection (b)(2)(B)(iii),
                    (H) by substituting ``beginning on the applicable 
                disaster date and ending on the date which is 5 months 
                after the date of the enactment of the Heartland 
                Disaster Tax Relief Act of 2008'' for ``beginning on 
                August 25, 2005, and ending on February 28, 2006'' in 
                subsection (b)(3)(A),
                    (I) by substituting ``qualified storm damage 
                individual'' for ``qualified Hurricane Katrina 
                individual'' each place it appears,
                    (J) by substituting ``December 31, 2009'' for 
                ``December 31, 2006'' in subsection (c)(2)(A),
                    (K) by disregarding subparagraphs (C) and (D) of 
                subsection (c)(3) thereof,
                    (L) by substituting ``beginning on the date of the 
                enactment of the Heartland Disaster Tax Relief Act of 
                2008 and ending on December 31, 2009'' for ``beginning 
                on September 24, 2005, and ending on December 31, 
                2006'' in subsection (c)(4)(A)(i),
                    (M) by substituting ``the applicable disaster 
                date'' for ``August 25, 2005'' in subsection 
                (c)(4)(A)(ii), and
                    (N) by substituting ``January 1, 2010'' for 
                ``January 1, 2007'' in subsection (d)(2)(A)(ii).
            (11) Employee retention credit for employers affected by 
        severe storms, tornados, and flooding.--Section 1400R(a)--
                    (A) by substituting ``the applicable disaster 
                date'' for ``August 28, 2005'' each place it appears,
                    (B) by substituting ``January 1, 2009'' for 
                ``January 1, 2006'' both places it appears, and
                    (C) only with respect to eligible employers who 
                employed an average of not more than 200 employees on 
                business days during the taxable year before the 
                applicable disaster date.
            (12) Temporary suspension of limitations on charitable 
        contributions.--Section 1400S(a), by substituting the following 
        paragraph for paragraph (4) thereof:
            ``(4) Qualified contributions.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `qualified contribution' means any charitable 
                contribution (as defined in section 170(c)) if--
                            ``(i) such contribution--
                                    ``(I) is paid during the period 
                                beginning on the earliest applicable 
                                disaster date for all States and ending 
                                on December 31, 2008, in cash to an 
                                organization described in section 
                                170(b)(1)(A), and
                                    ``(II) is made for relief efforts 
                                in 1 or more Midwestern disaster areas,
                            ``(ii) the taxpayer obtains from such 
                        organization contemporaneous written 
                        acknowledgment (within the meaning of section 
                        170(f)(8)) that such contribution was used (or 
                        is to be used) for relief efforts in 1 or more 
                        Midwestern disaster areas, and
                            ``(iii) the taxpayer has elected the 
                        application of this subsection with respect to 
                        such contribution.
                    ``(B) Exception.--Such term shall not include a 
                contribution by a donor if the contribution is--
                            ``(i) to an organization described in 
                        section 509(a)(3), or
                            ``(ii) for establishment of a new, or 
                        maintenance of an existing, donor advised fund 
                        (as defined in section 4966(d)(2)).
                    ``(C) Application of election to partnerships and s 
                corporations.--In the case of a partnership or S 
                corporation, the election under subparagraph (A)(iii) 
                shall be made separately by each partner or 
                shareholder.''.
            (13) Suspension of certain limitations on personal casualty 
        losses.--Section 1400S(b)(1), by substituting ``the applicable 
        disaster date'' for ``August 25, 2005''.
            (14) Special rule for determining earned income.--Section 
        1400S(d)--
                    (A) by treating an individual as a qualified 
                individual if such individual's principal place of 
                abode on the applicable disaster date was located in a 
                Midwestern disaster area,
                    (B) by treating the applicable disaster date with 
                respect to any such individual as the applicable date 
                for purposes of such subsection, and
                    (C) by treating an area as described in paragraph 
                (2)(B)(ii) thereof if the area is a Midwestern disaster 
                area only by reason of subsection (b)(2) of this 
                section (relating to areas eligible only for public 
                assistance).
            (15) Adjustments regarding taxpayer and dependency 
        status.--Section 1400S(e), by substituting ``2008 or 2009'' for 
        ``2005 or 2006''.
    (e) Modifications to Katrina Emergency Tax Relief Act of 2005.--The 
following provisions of the Katrina Emergency Tax Relief Act of 2005 
shall be applied with the following modifications:
            (1) Additional exemption for housing displaced 
        individual.--Section 302--
                    (A) by substituting ``2008 or 2009'' for ``2005 or 
                2006'' in subsection (a) thereof,
                    (B) by substituting ``Midwestern displaced 
                individual'' for ``Hurricane Katrina displaced 
                individual'' each place it appears, and
                    (C) by treating an area as a core disaster area for 
                purposes of applying subsection (c) thereof if the area 
                is a Midwestern disaster area without regard to 
                subsection (b)(2) of this section (relating to areas 
                eligible only for public assistance).
            (2) Increase in standard mileage rate.--Section 303, by 
        substituting ``beginning on the applicable disaster date and 
        ending on December 31, 2008'' for ``beginning on August 25, 
        2005, and ending on December 31, 2006''.
            (3) Mileage reimbursements for charitable volunteers.--
        Section 304--
                    (A) by substituting ``beginning on the applicable 
                disaster date and ending on December 31, 2008'' for 
                ``beginning on August 25, 2005, and ending on December 
                31, 2006'' in subsection (a), and
                    (B) by substituting ``the applicable disaster 
                date'' for ``August 25, 2005'' in subsection (a).
            (4) Exclusion of certain cancellation of indebtedness 
        income.--Section 401--
                    (A) by treating an individual whose principal place 
                of abode on the applicable disaster date was in a 
                Midwestern disaster area (determined without regard to 
                subsection (b)(2) of this section) as an individual 
                described in subsection (b)(1) thereof, and by treating 
                an individual whose principal place of abode on the 
                applicable disaster date was in a Midwestern disaster 
                area solely by reason of subsection (b)(2) of this 
                section as an individual described in subsection (b)(2) 
                thereof,
                    (B) by substituting ``the applicable disaster 
                date'' for ``August 28, 2005'' both places it appears, 
                and
                    (C) by substituting ``January 1, 2010'' for 
                ``January 1, 2007'' in subsection (e).
            (5) Extension of replacement period for nonrecognition of 
        gain.--Section 405, by substituting ``on or after the 
        applicable disaster date'' for ``on or after August 25, 2005''.

SEC. 703. REPORTING REQUIREMENTS RELATING TO DISASTER RELIEF 
              CONTRIBUTIONS.

    (a) In General.--Section 6033(b) (relating to returns of certain 
organizations described in section 501(c)(3)) is amended by striking 
``and'' at the end of paragraph (13), by redesignating paragraph (14) 
as paragraph (15), and by adding after paragraph (13) the following new 
paragraph:
            ``(14) such information as the Secretary may require with 
        respect to disaster relief activities, including the amount and 
        use of qualified contributions to which section 1400S(a) 
        applies, and''.
    (b) Effective Date.--The amendments made by this section shall 
apply to returns the due date for which (determined without regard to 
any extension) occurs after December 31, 2008.

SEC. 704. TEMPORARY TAX-EXEMPT BOND FINANCING AND LOW-INCOME HOUSING 
              TAX RELIEF FOR AREAS DAMAGED BY HURRICANE IKE.

    (a) Tax-Exempt Bond Financing.--Section 1400N(a) of the Internal 
Revenue Code of 1986 shall apply to any Hurricane Ike disaster area in 
addition to any other area referenced in such section, but with the 
following modifications:
            (1) By substituting ``qualified Hurricane Ike disaster area 
        bond'' for ``qualified Gulf Opportunity Zone Bond'' each place 
        it appears, except that in determining whether a bond is a 
        qualified Hurricane Ike disaster area bond--
                    (A) paragraph (2)(A)(i) shall be applied by only 
                treating costs as qualified project costs if--
                            (i) in the case of a project involving a 
                        private business use (as defined in section 
                        141(b)(6)), either the person using the 
                        property suffered a loss in a trade or business 
                        attributable to Hurricane Ike or is a person 
                        designated for purposes of this section by the 
                        Governor of the State in which the project is 
                        located as a person carrying on a trade or 
                        business replacing a trade or business with 
                        respect to which another person suffered such a 
                        loss, and
                            (ii) in the case of a project relating to 
                        public utility property, the project involves 
                        repair or reconstruction of public utility 
                        property damaged by Hurricane Ike, and
                    (B) paragraph (2)(A)(ii) shall be applied by 
                treating an issue as a qualified mortgage issue only if 
                95 percent or more of the net proceeds (as defined in 
                section 150(a)(3)) of the issue are to be used to 
                provide financing for mortgagors who suffered damages 
                to their principal residences attributable to Hurricane 
                Ike.
            (2) By substituting ``any State in which any Hurricane Ike 
        disaster area is located'' for ``the State of Alabama, 
        Louisiana, or Mississippi'' in paragraph (2)(B).
            (3) By substituting ``designated for purposes of this 
        section (on the basis of providing assistance to areas in the 
        order in which such assistance is most needed)'' for 
        ``designated for purposes of this section'' in paragraph 
        (2)(C).
            (4) By substituting ``January 1, 2013'' for ``January 1, 
        2011'' in paragraph (2)(D).
            (5) By substituting the following for subparagraph (A) of 
        paragraph (3):
                    ``(A) Aggregate amount designated.--The maximum 
                aggregate face amount of bonds which may be designated 
                under this subsection with respect to any State shall 
                not exceed the product of $2,000 multiplied by the 
                portion of the State population which is in--
                            ``(i) in the case of Texas, the counties of 
                        Brazoria, Chambers, Galveston, Jefferson, and 
                        Orange, and
                            ``(ii) in the case of Louisiana, the 
                        parishes of Calcasieu and Cameron,
                (as determined on the basis of the most recent census 
                estimate of resident population released by the Bureau 
                of Census before September 13, 2008).''.
            (6) By substituting ``qualified Hurricane Ike disaster area 
        repair or construction'' for ``qualified GO Zone repair or 
        construction'' each place it appears.
            (7) By substituting ``after the date of the enactment of 
        the Heartland Disaster Tax Relief Act of 2008 and before 
        January 1, 2013'' for ``after the date of the enactment of this 
        paragraph and before January 1, 2011'' in paragraph (7)(C).
            (8) By disregarding paragraph (8) thereof.
            (9) By substituting ``any Hurricane Ike disaster area'' for 
        ``the Gulf Opportunity Zone'' each place it appears.
    (b) Low-Income Housing Credit.--Section 1400N(c) of the Internal 
Revenue Code of 1986 shall apply to any Hurricane Ike disaster area in 
addition to any other area referenced in such section, but with the 
following modifications:
            (1) Only with respect to calendar years 2008, 2009, and 
        2010.
            (2) By substituting ``any Hurricane Ike disaster area'' for 
        ``the Gulf Opportunity Zone'' each place it appears.
            (3) By substituting ``Hurricane Ike Recovery Assistance 
        housing amount'' for ``Gulf Opportunity housing amount'' each 
        place it appears.
            (4) By substituting the following for subparagraph (B) of 
        paragraph (1):
                    ``(B) Hurricane ike housing amount.--For purposes 
                of subparagraph (A), the term `Hurricane Ike housing 
                amount' means, for any calendar year, the amount equal 
                to the product of $16.00 multiplied by the portion of 
                the State population which is in--
                            ``(i) in the case of Texas, the counties of 
                        Brazoria, Chambers, Galveston, Jefferson, and 
                        Orange, and
                            ``(ii) in the case of Louisiana, the 
                        parishes of Calcasieu and Cameron,
                (as determined on the basis of the most recent census 
                estimate of resident population released by the Bureau 
                of Census before September 13, 2008).''.
            (5) Determined without regard to paragraphs (2), (3), (4), 
        (5), and (6) thereof.
    (c) Hurricane Ike Disaster Area.--For purposes of this section and 
for applying the substitutions described in subsections (a) and (b), 
the term ``Hurricane Ike disaster area'' means an area in the State of 
Texas or Louisiana--
            (1) with respect to which a major disaster has been 
        declared by the President on September 13, 2008, under section 
        401 of the Robert T. Stafford Disaster Relief and Emergency 
        Assistance Act by reason of Hurricane Ike, and
            (2) determined by the President to warrant individual or 
        individual and public assistance from the Federal Government 
        under such Act with respect to damages attributable to 
        Hurricane Ike.

                  Subtitle B--National Disaster Relief

SEC. 706. LOSSES ATTRIBUTABLE TO FEDERALLY DECLARED DISASTERS.

    (a) Waiver of Adjusted Gross Income Limitation.--
            (1) In general.--Subsection (h) of section 165 is amended 
        by redesignating paragraphs (3) and (4) as paragraphs (4) and 
        (5), respectively, and by inserting after paragraph (2) the 
        following new paragraph:
            ``(3) Special rule for losses in federally declared 
        disasters.--
                    ``(A) In general.--If an individual has a net 
                disaster loss for any taxable year, the amount 
                determined under paragraph (2)(A)(ii) shall be the sum 
                of--
                            ``(i) such net disaster loss, and
                            ``(ii) so much of the excess referred to in 
                        the matter preceding clause (i) of paragraph 
                        (2)(A) (reduced by the amount in clause (i) of 
                        this subparagraph) as exceeds 10 percent of the 
                        adjusted gross income of the individual.
                    ``(B) Net disaster loss.--For purposes of 
                subparagraph (A), the term `net disaster loss' means 
                the excess of--
                            ``(i) the personal casualty losses--
                                    ``(I) attributable to a federally 
                                declared disaster occurring before 
                                January 1, 2010, and
                                    ``(II) occurring in a disaster 
                                area, over
                            ``(ii) personal casualty gains.
                    ``(C) Federally declared disaster.--For purposes of 
                this paragraph--
                            ``(i) Federally declared disaster.--The 
                        term `federally declared disaster' means any 
                        disaster subsequently determined by the 
                        President of the United States to warrant 
                        assistance by the Federal Government under the 
                        Robert T. Stafford Disaster Relief and 
                        Emergency Assistance Act.
                            ``(ii) Disaster area.--The term `disaster 
                        area' means the area so determined to warrant 
                        such assistance.''.
            (2) Conforming amendments.--
                    (A) Section 165(h)(4)(B) (as so redesignated) is 
                amended by striking ``paragraph (2)'' and inserting 
                ``paragraphs (2) and (3)''.
                    (B) Section 165(i)(1) is amended by striking 
                ``loss'' and all that follows through ``Act'' and 
                inserting ``loss occurring in a disaster area (as 
                defined by clause (ii) of subsection (h)(3)(C)) and 
                attributable to a federally declared disaster (as 
                defined by clause (i) of such subsection)''.
                    (C) Section 165(i)(4) is amended by striking 
                ``Presidentially declared disaster (as defined by 
                section 1033(h)(3))'' and inserting ``federally 
                declared disaster (as defined by subsection 
                (h)(3)(C)(i)''.
                    (D)(i) So much of subsection (h) of section 1033 as 
                precedes subparagraph (A) of paragraph (1) thereof is 
                amended to read as follows:
    ``(h) Special Rules for Property Damaged by Federally Declared 
Disasters.--
            ``(1) Principal residences.--If the taxpayer's principal 
        residence or any of its contents is located in a disaster area 
        and is compulsorily or involuntarily converted as a result of a 
        federally declared disaster--''.
                    (ii) Paragraph (2) of section 1033(h) is amended by 
                striking ``investment'' and all that follows through 
                ``disaster'' and inserting ``investment located in a 
                disaster area and compulsorily or involuntarily 
                converted as a result of a federally declared 
                disaster''.
                    (iii) Paragraph (3) of section 1033(h) is amended 
                to read as follows:
            ``(3) Federally declared disaster; disaster area.--The 
        terms ``federally declared disaster'' and ``disaster area'' 
        shall have the respective meaning given such terms by section 
        165(h)(3)(C).''.
                    (iv) Section 139(c)(2) is amended to read as 
                follows:
            ``(2) federally declared disaster (as defined by section 
        165(h)(3)(C)(i)),''.
                    (v) Subclause (II) of section 172(b)(1)(F)(ii) is 
                amended by striking ``Presidentially declared disasters 
                (as defined in section 1033(h)(3))'' and inserting 
                ``federally declared disasters (as defined by 
                subsection (h)(3)(C)(i))''.
                    (vi) Subclause (III) of section 172(b)(1)(F)(ii) is 
                amended by striking ``Presidentially declared 
                disasters'' and inserting ``federally declared 
                disasters''.
                    (vii) Subsection (a) of section 7508A is amended by 
                striking ``Presidentially declared disaster (as defined 
                in section 1033(h)(3))'' and inserting ``federally 
                declared disaster (as defined by section 
                165(h)(3)(C)(i))''.
    (b) Increase in Standard Deduction by Disaster Casualty Loss.--
            (1) In general.--Paragraph (1) of section 63(c), as amended 
        by the Housing Assistance Tax Act of 2008, is amended by 
        striking ``and'' at the end of subparagraph (B), by striking 
        the period at the end of subparagraph (C) and inserting ``, 
        and'', and by adding at the end the following new subparagraph:
                    ``(D) the disaster loss deduction.''.
            (2) Disaster loss deduction.--Subsection (c) of section 63, 
        as amended by the Housing Assistance Tax Act of 2008, is 
        amended by adding at the end the following new paragraph:
            ``(8) Disaster loss deduction.--For the purposes of 
        paragraph (1), the term `disaster loss deduction' means the net 
        disaster loss (as defined in section 165(h)(3)(B)).''.
            (3) Allowance in computing alternative minimum taxable 
        income.--Subparagraph (E) of section 56(b)(1) is amended by 
        adding at the end the following new sentence: ``The preceding 
        sentence shall not apply to so much of the standard deduction 
        as is determined under section 63(c)(1)(D).''.
    (c) Increase in Limitation on Individual Loss Per Casualty.--
Paragraph (1) of section 165(h) is amended by striking ``$100'' and 
inserting ``$500 ($100 for taxable years beginning after December 31, 
2009)''.
    (d) Effective Dates.--
            (1) In general.--Except as provided by paragraph (2), the 
        amendments made by this section shall apply to disasters 
        declared in taxable years beginning after December 31, 2007.
            (2) Increase in limitation on individual loss per 
        casualty.--The amendment made by subsection (c) shall apply to 
        taxable years beginning after December 31, 2008.

SEC. 707. EXPENSING OF QUALIFIED DISASTER EXPENSES.

    (a) In General.--Part VI of subchapter B of chapter 1 is amended by 
inserting after section 198 the following new section:

``SEC. 198A. EXPENSING OF QUALIFIED DISASTER EXPENSES.

    ``(a) In General.--A taxpayer may elect to treat any qualified 
disaster expenses which are paid or incurred by the taxpayer as an 
expense which is not chargeable to capital account. Any expense which 
is so treated shall be allowed as a deduction for the taxable year in 
which it is paid or incurred.
    ``(b) Qualified Disaster Expense.--For purposes of this section, 
the term `qualified disaster expense' means any expenditure--
            ``(1) which is paid or incurred in connection with a trade 
        or business or with business-related property,
            ``(2) which is--
                    ``(A) for the abatement or control of hazardous 
                substances that were released on account of a federally 
                declared disaster occurring before January 1, 2010,
                    ``(B) for the removal of debris from, or the 
                demolition of structures on, real property which is 
                business-related property damaged or destroyed as a 
                result of a federally declared disaster occurring 
                before such date, or
                    ``(C) for the repair of business-related property 
                damaged as a result of a federally declared disaster 
                occurring before such date, and
            ``(3) which is otherwise chargeable to capital account.
    ``(c) Other Definitions.--For purposes of this section--
            ``(1) Business-related property.--The term `business-
        related property' means property--
                    ``(A) held by the taxpayer for use in a trade or 
                business or for the production of income, or
                    ``(B) described in section 1221(a)(1) in the hands 
                of the taxpayer.
            ``(2) Federally declared disaster.--The term `federally 
        declared disaster' has the meaning given such term by section 
        165(h)(3)(C)(i).
    ``(d) Deduction Recaptured as Ordinary Income on Sale, etc.--Solely 
for purposes of section 1245, in the case of property to which a 
qualified disaster expense would have been capitalized but for this 
section--
            ``(1) the deduction allowed by this section for such 
        expense shall be treated as a deduction for depreciation, and
            ``(2) such property (if not otherwise section 1245 
        property) shall be treated as section 1245 property solely for 
        purposes of applying section 1245 to such deduction.
    ``(e) Coordination With Other Provisions.--Sections 198, 280B, and 
468 shall not apply to amounts which are treated as expenses under this 
section.
    ``(f) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
section.''.
    (b) Clerical Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 is amended by inserting after the item 
relating to section 198 the following new item:

``Sec. 198A. Expensing of Qualified Disaster Expenses.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after December 31, 2007 in connection 
with disaster declared after such date.

SEC. 708. NET OPERATING LOSSES ATTRIBUTABLE TO FEDERALLY DECLARED 
              DISASTERS.

    (a) In General.--Paragraph (1) of section 172(b) is amended by 
adding at the end the following new subparagraph:
                    ``(J) Certain losses attributable federally 
                declared disasters.--In the case of a taxpayer who has 
                a qualified disaster loss (as defined in subsection 
                (j)), such loss shall be a net operating loss carryback 
                to each of the 5 taxable years preceding the taxable 
                year of such loss.''.
    (b) Qualified Disaster Loss.--Section 172 is amended by 
redesignating subsections (j) and (k) as subsections (k) and (l), 
respectively, and by inserting after subsection (i) the following new 
subsection:
    ``(j) Rules Relating to Qualified Disaster Losses.--For purposes of 
this section--
            ``(1) In general.--The term `qualified disaster loss' means 
        the lesser of--
                    ``(A) the sum of--
                            ``(i) the losses allowable under section 
                        165 for the taxable year--
                                    ``(I) attributable to a federally 
                                declared disaster (as defined in 
                                section 165(h)(3)(C)(i)) occurring 
                                before January 1, 2010, and
                                    ``(II) occurring in a disaster area 
                                (as defined in section 
                                165(h)(3)(C)(ii)), and
                            ``(ii) the deduction for the taxable year 
                        for qualified disaster expenses which is 
                        allowable under section 198A(a) or which would 
                        be so allowable if not otherwise treated as an 
                        expense, or
                    ``(B) the net operating loss for such taxable year.
            ``(2) Coordination with subsection (b)(2).--For purposes of 
        applying subsection (b)(2), a qualified disaster loss for any 
        taxable year shall be treated in a manner similar to the manner 
        in which a specified liability loss is treated.
            ``(3) Election.--Any taxpayer entitled to a 5-year 
        carryback under subsection (b)(1)(J) from any loss year may 
        elect to have the carryback period with respect to such loss 
        year determined without regard to subsection (b)(1)(J). Such 
        election shall be made in such manner as may be prescribed by 
        the Secretary and shall be made by the due date (including 
        extensions of time) for filing the taxpayer's return for the 
        taxable year of the net operating loss. Such election, once 
        made for any taxable year, shall be irrevocable for such 
        taxable year.
            ``(4) Exclusion.--The term `qualified disaster loss' shall 
        not include any loss with respect to any property described in 
        section 1400N(p)(3).''.
    (c) Loss Deduction Allowed in Computing Alternative Minimum Taxable 
Income.--Subsection (d) of section 56 is amended by adding at the end 
the following new paragraph:
            ``(3) Net operating loss attributable to federally declared 
        disasters.--In the case of a taxpayer which has a qualified 
        disaster loss (as defined by section 172(b)(1)(J)) for the 
        taxable year, paragraph (1) shall be applied by increasing the 
        amount determined under subparagraph (A)(ii)(I) thereof by the 
        sum of the carrybacks and carryovers of such loss.''.
    (d) Conforming Amendments.--
            (1) Clause (ii) of section 172(b)(1)(F) is amended by 
        inserting ``or qualified disaster loss (as defined in 
        subsection (j))'' before the period at the end of the last 
        sentence.
            (2) Paragraph (1) of section 172(i) is amended by adding at 
        the end the following new flush sentence:
        ``Such term shall not include any qualified disaster loss (as 
        defined in subsection (j)).''.
    (e) Effective Date.--The amendments made by this section shall 
apply to losses arising in taxable years beginning after December 31, 
2007, in connection with disasters declared after such date.

SEC. 709. WAIVER OF CERTAIN MORTGAGE REVENUE BOND REQUIREMENTS 
              FOLLOWING FEDERALLY DECLARED DISASTERS.

    (a) In General.--Subsection (k) of section 143 is amended by adding 
at the end the following new paragraph:
            ``(12) Special rules for residences destroyed in federally 
        declared disasters.--
                    ``(A) Principal residence destroyed.--At the 
                election of the taxpayer, if the principal residence 
                (within the meaning of section 121) of such taxpayer 
                is--
                            ``(i) rendered unsafe for use as a 
                        residence by reason of a federally declared 
                        disaster occurring before January 1, 2010, or
                            ``(ii) demolished or relocated by reason of 
                        an order of the government of a State or 
                        political subdivision thereof on account of a 
                        federally declared disaster occurring before 
                        such date,
                then, for the 2-year period beginning on the date of 
                the disaster declaration, subsection (d)(1) shall not 
                apply with respect to such taxpayer and subsection (e) 
                shall be applied by substituting `110' for `90' in 
                paragraph (1) thereof.
                    ``(B) Principal residence damaged.--
                            ``(i) In general.--At the election of the 
                        taxpayer, if the principal residence (within 
                        the meaning of section 121) of such taxpayer 
                        was damaged as the result of a federally 
                        declared disaster occurring before January 1, 
                        2010, any owner-financing provided in 
                        connection with the repair or reconstruction of 
                        such residence shall be treated as a qualified 
                        rehabilitation loan.
                            ``(ii) Limitation.--The aggregate owner-
                        financing to which clause (i) applies shall not 
                        exceed the lesser of--
                                    ``(I) the cost of such repair or 
                                reconstruction, or
                                    ``(II) $150,000.
                    ``(C) Federally declared disaster.--For purposes of 
                this paragraph, the term `federally declared disaster' 
                has the meaning given such term by section 
                165(h)(3)(C)(i).
                    ``(D) Election; denial of double benefit.--
                            ``(i) Election.--An election under this 
                        paragraph may not be revoked except with the 
                        consent of the Secretary.
                            ``(ii) Denial of double benefit.--If a 
                        taxpayer elects the application of this 
                        paragraph, paragraph (11) shall not apply with 
                        respect to the purchase or financing of any 
                        residence by such taxpayer.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to disasters occurring after December 31, 2007.

SEC. 710. SPECIAL DEPRECIATION ALLOWANCE FOR QUALIFIED DISASTER 
              PROPERTY.

    (a) In General.--Section 168, as amended by this Act, is amended by 
adding at the end the following new subsection:
    ``(n) Special Allowance for Qualified Disaster Assistance 
Property.--
            ``(1) In general.--In the case of any qualified disaster 
        assistance 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 
                the qualified disaster assistance property, and
                    ``(B) the adjusted basis of the qualified disaster 
                assistance 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 disaster assistance property.--For purposes 
        of this subsection--
                    ``(A) In general.--The term `qualified disaster 
                assistance property' means any property--
                            ``(i)(I) which is described in subsection 
                        (k)(2)(A)(i), or
                            ``(II) which is nonresidential real 
                        property or residential rental property,
                            ``(ii) substantially all of the use of 
                        which is--
                                    ``(I) in a disaster area with 
                                respect to a federally declared 
                                disaster occurring before January 1, 
                                2010, and
                                    ``(II) in the active conduct of a 
                                trade or business by the taxpayer in 
                                such disaster area,
                            ``(iii) which--
                                    ``(I) rehabilitates property 
                                damaged, or replaces property destroyed 
                                or condemned, as a result of such 
                                federally declared disaster, except 
                                that, for purposes of this clause, 
                                property shall be treated as replacing 
                                property destroyed or condemned if, as 
                                part of an integrated plan, such 
                                property replaces property which is 
                                included in a continuous area which 
                                includes real property destroyed or 
                                condemned, and
                                    ``(II) is similar in nature to, and 
                                located in the same county as, the 
                                property being rehabilitated or 
                                replaced,
                            ``(iv) the original use of which in such 
                        disaster area commences with an eligible 
                        taxpayer on or after the applicable disaster 
                        date,
                            ``(v) which is acquired by such eligible 
                        taxpayer by purchase (as defined in section 
                        179(d)) on or after the applicable disaster 
                        date, but only if no written binding contract 
                        for the acquisition was in effect before such 
                        date, and
                            ``(vi) which is placed in service by such 
                        eligible taxpayer on or before the date which 
                        is the last day of the third calendar year 
                        following the applicable disaster date (the 
                        fourth calendar year in the case of 
                        nonresidential real property and residential 
                        rental property).
                    ``(B) Exceptions.--
                            ``(i) Other bonus depreciation property.--
                        The term `qualified disaster assistance 
                        property' shall not include--
                                    ``(I) any property to which 
                                subsection (k) (determined without 
                                regard to paragraph (4)), (l), or (m) 
                                applies,
                                    ``(II) any property to which 
                                section 1400N(d) applies, and
                                    ``(III) any property described in 
                                section 1400N(p)(3).
                            ``(ii) Alternative depreciation property.--
                        The term `qualified disaster assistance 
                        property' shall not include any property to 
                        which the alternative depreciation system under 
                        subsection (g) applies, determined without 
                        regard to paragraph (7) of subsection (g) 
                        (relating to election to have system apply).
                            ``(iii) 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.
                            ``(iv) Qualified revitalization 
                        buildings.--Such term shall not include any 
                        qualified revitalization building with respect 
                        to which the taxpayer has elected the 
                        application of paragraph (1) or (2) of section 
                        1400I(a).
                            ``(v) Election out.--If a taxpayer makes an 
                        election under this clause 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.
                    ``(C) Special rules.--For purposes of this 
                subsection, rules similar to the rules of subparagraph 
                (E) of subsection (k)(2) shall apply, except that such 
                subparagraph shall be applied--
                            ``(i) by substituting `the applicable 
                        disaster date' for `December 31, 2007' each 
                        place it appears therein,
                            ``(ii) without regard to `and before 
                        January 1, 2009' in clause (i) thereof, and
                            ``(iii) by substituting `qualified disaster 
                        assistance property' for `qualified property' 
                        in clause (iv) thereof.
                    ``(D) Allowance against alternative minimum tax.--
                For purposes of this subsection, rules similar to the 
                rules of subsection (k)(2)(G) shall apply.
            ``(3) Other definitions.--For purposes of this subsection--
                    ``(A) Applicable disaster date.--The term 
                `applicable disaster date' means, with respect to any 
                federally declared disaster, the date on which such 
                federally declared disaster occurs.
                    ``(B) Federally declared disaster.--The term 
                `federally declared disaster' has the meaning given 
                such term under section 165(h)(3)(C)(i).
                    ``(C) Disaster area.--The term `disaster area' has 
                the meaning given such term under section 
                165(h)(3)(C)(ii).
                    ``(D) Eligible taxpayer.--The term `eligible 
                taxpayer' means a taxpayer who has suffered an economic 
                loss attributable to a federally declared disaster.
            ``(4) Recapture.--For purposes of this subsection, rules 
        similar to the rules under section 179(d)(10) shall apply with 
        respect to any qualified disaster assistance property which 
        ceases to be qualified disaster assistance property.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2007, with respect 
disasters declared after such date.

SEC. 711. INCREASED EXPENSING FOR QUALIFIED DISASTER ASSISTANCE 
              PROPERTY.

    (a) In General.--Section 179 is amended by adding at the end the 
following new subsection:
    ``(e) Special Rules for Qualified Disaster Assistance Property.--
            ``(1) In general.--For purposes of this section--
                    ``(A) the dollar amount in effect under subsection 
                (b)(1) for the taxable year shall be increased by the 
                lesser of--
                            ``(i) $100,000, or
                            ``(ii) the cost of qualified section 179 
                        disaster assistance property placed in service 
                        during the taxable year, and
                    ``(B) the dollar amount in effect under subsection 
                (b)(2) for the taxable year shall be increased by the 
                lesser of--
                            ``(i) $600,000, or
                            ``(ii) the cost of qualified section 179 
                        disaster assistance property placed in service 
                        during the taxable year.
            ``(2) Qualified section 179 disaster assistance property.--
        For purposes of this subsection, the term `qualified section 
        179 disaster assistance property' means section 179 property 
        (as defined in subsection (d)) which is qualified disaster 
        assistance property (as defined in section 168(n)(2)).
            ``(3) Coordination with empowerment zones and renewal 
        communities.--For purposes of sections 1397A and 1400J, 
        qualified section 179 disaster assistance property shall not be 
        treated as qualified zone property or qualified renewal 
        property, unless the taxpayer elects not to take such qualified 
        section 179 disaster assistance property into account for 
        purposes of this subsection.
            ``(4) Recapture.--For purposes of this subsection, rules 
        similar to the rules under subsection (d)(10) shall apply with 
        respect to any qualified section 179 disaster assistance 
        property which ceases to be qualified section 179 disaster 
        assistance property.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2007, with respect 
disasters declared after such date.

SEC. 712. COORDINATION WITH HEARTLAND DISASTER RELIEF.

    The amendments made by this subtitle, other than the amendments 
made by sections 706(a)(2), 710, and 711, shall not apply to any 
disaster described in section 702(c)(1)(A), or to any expenditure or 
loss resulting from such disaster.

TITLE VIII--SPENDING REDUCTIONS AND APPROPRIATE REVENUE RAISERS FOR NEW 
                           TAX RELIEF POLICY

SEC. 801. NONQUALIFIED DEFERRED COMPENSATION FROM CERTAIN TAX 
              INDIFFERENT PARTIES.

    (a) In General.--Subpart B of part II of subchapter E of chapter 1 
is amended by inserting after section 457 the following new section:

``SEC. 457A. NONQUALIFIED DEFERRED COMPENSATION FROM CERTAIN TAX 
              INDIFFERENT PARTIES.

    ``(a) In General.--Any compensation which is deferred under a 
nonqualified deferred compensation plan of a nonqualified entity shall 
be includible in gross income when there is no substantial risk of 
forfeiture of the rights to such compensation.
    ``(b) Nonqualified Entity.--For purposes of this section, the term 
`nonqualified entity' means--
            ``(1) any foreign corporation unless substantially all of 
        its income is--
                    ``(A) effectively connected with the conduct of a 
                trade or business in the United States, or
                    ``(B) subject to a comprehensive foreign income 
                tax, and
            ``(2) any partnership unless substantially all of its 
        income is allocated to persons other than--
                    ``(A) foreign persons with respect to whom such 
                income is not subject to a comprehensive foreign income 
                tax, and
                    ``(B) organizations which are exempt from tax under 
                this title.
    ``(c) Determinability of Amounts of Compensation.--
            ``(1) In general.--If the amount of any compensation is not 
        determinable at the time that such compensation is otherwise 
        includible in gross income under subsection (a)--
                    ``(A) such amount shall be so includible in gross 
                income when determinable, and
                    ``(B) the tax imposed under this chapter for the 
                taxable year in which such compensation is includible 
                in gross income shall be increased by the sum of--
                            ``(i) the amount of interest determined 
                        under paragraph (2), and
                            ``(ii) an amount equal to 20 percent of the 
                        amount of such compensation.
            ``(2) Interest.--For purposes of paragraph (1)(B)(i), the 
        interest determined under this paragraph for any taxable year 
        is the amount of interest at the underpayment rate under 
        section 6621 plus 1 percentage point on the underpayments that 
        would have occurred had the deferred compensation been 
        includible in gross income for the taxable year in which first 
        deferred or, if later, the first taxable year in which such 
        deferred compensation is not subject to a substantial risk of 
        forfeiture.
    ``(d) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Substantial risk of forfeiture.--
                    ``(A) In general.--The rights of a person to 
                compensation shall be treated as subject to a 
                substantial risk of forfeiture only if such person's 
                rights to such compensation are conditioned upon the 
                future performance of substantial services by any 
                individual.
                    ``(B) Exception for compensation based on gain 
                recognized on an investment asset.--
                            ``(i) In general.--To the extent provided 
                        in regulations prescribed by the Secretary, if 
                        compensation is determined solely by reference 
                        to the amount of gain recognized on the 
                        disposition of an investment asset, such 
                        compensation shall be treated as subject to a 
                        substantial risk of forfeiture until the date 
                        of such disposition.
                            ``(ii) Investment asset.--For purposes of 
                        clause (i), the term `investment asset' means 
                        any single asset (other than an investment fund 
                        or similar entity)--
                                    ``(I) acquired directly by an 
                                investment fund or similar entity,
                                    ``(II) with respect to which such 
                                entity does not (nor does any person 
                                related to such entity) participate in 
                                the active management of such asset (or 
                                if such asset is an interest in an 
                                entity, in the active management of the 
                                activities of such entity), and
                                    ``(III) substantially all of any 
                                gain on the disposition of which (other 
                                than such deferred compensation) is 
                                allocated to investors in such entity.
                            ``(iii) Coordination with special rule.--
                        Paragraph (3)(B) shall not apply to any 
                        compensation to which clause (i) applies.
            ``(2) Comprehensive foreign income tax.--The term 
        `comprehensive foreign income tax' means, with respect to any 
        foreign person, the income tax of a foreign country if--
                    ``(A) such person is eligible for the benefits of a 
                comprehensive income tax treaty between such foreign 
                country and the United States, or
                    ``(B) such person demonstrates to the satisfaction 
                of the Secretary that such foreign country has a 
                comprehensive income tax.
            ``(3) Nonqualified deferred compensation plan.--
                    ``(A) In general.--The term `nonqualified deferred 
                compensation plan' has the meaning given such term 
                under section 409A(d), except that such term shall 
                include any plan that provides a right to compensation 
                based on the appreciation in value of a specified 
                number of equity units of the service recipient.
                    ``(B) Exception.--Compensation shall not be treated 
                as deferred for purposes of this section if the service 
                provider receives payment of such compensation not 
                later than 12 months after the end of the taxable year 
                of the service recipient during which the right to the 
                payment of such compensation is no longer subject to a 
                substantial risk of forfeiture.
            ``(4) Exception for certain compensation with respect to 
        effectively connected income.--In the case a foreign 
        corporation with income which is taxable under section 882, 
        this section shall not apply to compensation which, had such 
        compensation had been paid in cash on the date that such 
        compensation ceased to be subject to a substantial risk of 
        forfeiture, would have been deductible by such foreign 
        corporation against such income.
            ``(5) Application of rules.--Rules similar to the rules of 
        paragraphs (5) and (6) of section 409A(d) shall apply.
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
section, including regulations disregarding a substantial risk of 
forfeiture in cases where necessary to carry out the purposes of this 
section.''.
    (b) Conforming Amendment.--Section 26(b)(2), as amended by the 
Housing Assistance Tax Act of 2008, is amended by striking ``and'' at 
the end of subparagraph (V), by striking the period at the end of 
subparagraph (W) and inserting ``, and'', and by adding at the end the 
following new subparagraph:
                    ``(X) section 457A(c)(1)(B) (relating to 
                determinability of amounts of compensation).''.
    (c) Clerical Amendment.--The table of sections of subpart B of part 
II of subchapter E of chapter 1 is amended by inserting after the item 
relating to section 457 the following new item:

``Sec. 457A. Nonqualified deferred compensation from certain tax 
                            indifferent parties.''.
    (d) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        amounts deferred which are attributable to services performed 
        after December 31, 2008.
            (2) Application to existing deferrals.--In the case of any 
        amount deferred to which the amendments made by this section do 
        not apply solely by reason of the fact that the amount is 
        attributable to services performed before January 1, 2009, to 
        the extent such amount is not includible in gross income in a 
        taxable year beginning before 2018, such amounts shall be 
        includible in gross income in the later of--
                    (A) the last taxable year beginning before 2018, or
                    (B) the taxable year in which there is no 
                substantial risk of forfeiture of the rights to such 
                compensation (determined in the same manner as 
                determined for purposes of section 457A of the Internal 
                Revenue Code of 1986, as added by this section).
            (3) Accelerated payments.--No later than 120 days after the 
        date of the enactment of this Act, the Secretary shall issue 
        guidance providing a limited period of time during which a 
        nonqualified deferred compensation arrangement attributable to 
        services performed on or before December 31, 2008, may, without 
        violating the requirements of section 409A(a) of the Internal 
        Revenue Code of 1986, be amended to conform the date of 
        distribution to the date the amounts are required to be 
        included in income.
            (4) Certain back-to-back arrangements.--If the taxpayer is 
        also a service recipient and maintains one or more nonqualified 
        deferred compensation arrangements for its service providers 
        under which any amount is attributable to services performed on 
        or before December 31, 2008, the guidance issued under 
        paragraph (4) shall permit such arrangements to be amended to 
        conform the dates of distribution under such arrangement to the 
        date amounts are required to be included in the income of such 
        taxpayer under this subsection.
            (5) Accelerated payment not treated as material 
        modification.--Any amendment to a nonqualified deferred 
        compensation arrangement made pursuant to paragraph (4) or (5) 
        shall not be treated as a material modification of the 
        arrangement for purposes of section 409A of the Internal 
        Revenue Code of 1986.

            Attest:

                                                             Secretary.
110th CONGRESS

  2d Session

                               H.R. 6049

_______________________________________________________________________

                               AMENDMENT