[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 3125 Introduced in Senate (IS)]







110th CONGRESS
  2d Session
                                S. 3125

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


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 12, 2008

  Mr. Baucus introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


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

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

SECTION 1. SHORT TITLE, ETC.

    (a) Short Title.--This Act may be cited as the ``Energy 
Independence and Tax Relief 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 TAX INCENTIVES

                Subtitle A--Energy Production Incentives

                  Part I--Renewable Energy Incentives

Sec. 101. Renewable energy credit.
Sec. 102. Production credit for electricity produced from marine 
                            renewables.
Sec. 103. Energy credit.
Sec. 104. Credit for residential energy efficient property.
Sec. 105. Special rule to implement FERC and State electric 
                            restructuring policy.
Sec. 106. New clean renewable energy bonds.
                 Part II--Carbon Mitigation 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.
Sec. 114. Special rules for refund of the coal excise tax to certain 
                            coal producers and exporters.
Sec. 115. Carbon audit of the tax code.
    Subtitle B--Transportation and Domestic Fuel Security Provisions

Sec. 121. Inclusion of cellulosic biofuel in bonus depreciation for 
                            biomass ethanol plant property.
Sec. 122. Credits for biodiesel and renewable diesel.
Sec. 123. Clarification that credits for fuel are designed to provide 
                            an incentive for United States production.
Sec. 124. Credit for new qualified plug-in electric drive motor 
                            vehicles.
Sec. 125. Exclusion from heavy truck tax for idling reduction units and 
                            advanced insulation.
Sec. 126. Restructuring of New York Liberty Zone tax credits.
Sec. 127. Transportation fringe benefit to bicycle commuters.
Sec. 128. Alternative fuel vehicle refueling property credit.
       Subtitle C--Energy Conservation and Efficiency Provisions

Sec. 141. Qualified energy conservation bonds.
Sec. 142. Credit for nonbusiness energy property.
Sec. 143. Energy efficient commercial buildings deduction.
Sec. 144. Modifications of energy efficient appliance credit for 
                            appliances produced after 2007.
Sec. 145. Accelerated recovery period for depreciation of smart meters 
                            and smart grid systems.
Sec. 146. Qualified green building and sustainable design projects.
          TITLE II--ONE-YEAR EXTENSION OF TEMPORARY PROVISIONS

                  Subtitle A--Alternative Minimum Tax

Sec. 201. Extension of alternative minimum tax relief for nonrefundable 
                            personal credits.
Sec. 202. Extension of increased alternative minimum tax exemption 
                            amount.
Sec. 203. Increase of AMT refundable credit amount for individuals with 
                            long-term unused credits for prior year 
                            minimum tax liability, etc.
         Subtitle B--Extensions Primarily Affecting Individuals

Sec. 211. Deduction for State and local sales taxes.
Sec. 212. Deduction of qualified tuition and related expenses.
Sec. 213. Treatment of certain dividends of regulated investment 
                            companies.
Sec. 214. Tax-free distributions from individual retirement plans for 
                            charitable purposes.
Sec. 215. Deduction for certain expenses of elementary and secondary 
                            school teachers.
Sec. 216. Stock in RIC for purposes of determining estates of 
                            nonresidents not citizens.
Sec. 217. Qualified investment entities.
Sec. 218. Exclusion of amounts received under qualified group legal 
                            services plans.
         Subtitle C--Extensions Primarily Affecting Businesses

Sec. 221. Extension and modification of research credit.
Sec. 222. Indian employment credit.
Sec. 223. New markets tax credit.
Sec. 224. Railroad track maintenance.
Sec. 225. Extension of mine rescue team training credit.
Sec. 226. 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. 227. Seven-year cost recovery period for motorsports racing track 
                            facility.
Sec. 228. Accelerated depreciation for business property on Indian 
                            reservation.
Sec. 229. Extension of election to expense advanced mine safety 
                            equipment.
Sec. 230. Expensing of environmental remediation costs.
Sec. 231. Deduction allowable with respect to income attributable to 
                            domestic production activities in Puerto 
                            Rico.
Sec. 232. Modification of tax treatment of certain payments to 
                            controlling exempt organizations.
Sec. 233. Qualified zone academy bonds.
Sec. 234. Tax incentives for investment in the District of Columbia.
Sec. 235. Economic development credit for American Samoa.
Sec. 236. Enhanced charitable deduction for contributions of food 
                            inventory.
Sec. 237. Enhanced charitable deduction for contributions of book 
                            inventory to public schools.
Sec. 238. Enhanced deduction for qualified computer contributions.
Sec. 239. Basis adjustment to stock of S corporations making charitable 
                            contributions of property.
Sec. 240. Work opportunity tax credit for Hurricane Katrina employees.
Sec. 241. Subpart F exception for active financing income.
Sec. 242. Look-thru rule for related controlled foreign corporations.
Sec. 243. Expensing for certain qualified film and television 
                            productions.
Sec. 244. Extension and modification of duty suspension on wool 
                            products; wool research fund; wool duty 
                            refunds.
                      Subtitle D--Other Extensions

Sec. 251. Authority to disclose information related to terrorist 
                            activities made permanent.
Sec. 252. Authority for undercover operations made permanent.
Sec. 253. Increase in limit on cover over of rum excise tax to Puerto 
                            Rico and the Virgin Islands.
                      TITLE III--ADDITIONAL RELIEF

                   Subtitle A--Individual Tax Relief

Sec. 301. Additional standard deduction for real property taxes for 
                            nonitemizers.
Sec. 302. $10,000 income threshold used to calculate refundable portion 
                            of child tax credit.
Sec. 303. Income averaging for amounts received in connection with the 
                            Exxon Valdez litigation.
                Subtitle B--Business Related Provisions

Sec. 311. Uniform treatment of attorney-advanced expenses and court 
                            costs in contingency fee cases.
Sec. 312. Provisions related to film and television productions.
Sec. 313. Modification of rate of excise tax on certain wooden arrows 
                            designed for use by children.
  Subtitle C--Modification of Penalty on Understatement of Taxpayer's 
                    Liability by Tax Return Preparer

Sec. 321. Modification of penalty on understatement of taxpayer's 
                            liability by tax return preparer.
   Subtitle D--Extension and Expansion of Certain GO Zone Incentives

Sec. 331. Certain GO Zone incentives.
                      Subtitle E--Other Provisions

Sec. 341. Secure rural schools and community self-determination 
                            program.
Sec. 342. Clarification of uniform definition of child.
                      TITLE IV--REVENUE PROVISIONS

Sec. 401. Nonqualified deferred compensation from certain tax 
                            indifferent parties.
Sec. 402. Delay in application of worldwide allocation of interest.
Sec. 403. Time for payment of corporate estimated taxes.

                     TITLE I--ENERGY TAX INCENTIVES

                Subtitle A--Energy Production Incentives

                  PART I--RENEWABLE ENERGY INCENTIVES

SEC. 101. RENEWABLE ENERGY CREDIT.

    (a) Extension of Credit.--
            (1) 1-year extension for wind facilities.--Paragraph (1) of 
        section 45(d) is amended by striking ``January 1, 2009'' and 
        inserting ``January 1, 2010''.
            (2) 3-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, 2012'':
                    (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 Credit Phaseout.--
            (1) Repeal of phaseout.--Subsection (b) of section 45 is 
        amended--
                    (A) by striking paragraph (1), and
                    (B) by striking ``the 8 cent amount in paragraph 
                (1),'' in paragraph (2) thereof.
            (2) Limitation based on investment in facility.--Subsection 
        (b) of section 45 is amended by inserting before paragraph (2) 
        the following new paragraph:
            ``(1) Limitation based on investment in facility.--
                    ``(A) In general.--In the case of any qualified 
                facility originally placed in service after December 
                31, 2009, the amount of the credit determined under 
                subsection (a) for any taxable year with respect to 
                electricity produced at such facility shall not exceed 
                the product of--
                            ``(i) the applicable percentage with 
                        respect to such facility, multiplied by
                            ``(ii) the eligible basis of such facility.
                    ``(B) Carryforward of unused limitation and excess 
                credit.--
                            ``(i) Unused limitation.--If the limitation 
                        imposed under subparagraph (A) with respect to 
                        any facility for any taxable year exceeds the 
                        prelimitation credit for such facility for such 
                        taxable year, the limitation imposed under 
                        subparagraph (A) with respect to such facility 
                        for the succeeding taxable year shall be 
                        increased by the amount of such excess.
                            ``(ii) Excess credit.--If the prelimitation 
                        credit with respect to any facility for any 
                        taxable year exceeds the limitation imposed 
                        under subparagraph (A) with respect to such 
                        facility for such taxable year, the credit 
                        determined under subsection (a) with respect to 
                        such facility for the succeeding taxable year 
                        (determined before the application of 
                        subparagraph (A) for such succeeding taxable 
                        year) shall be increased by the amount of such 
                        excess. With respect to any facility, no amount 
                        may be carried forward under this clause to any 
                        taxable year beginning after the 10-year period 
                        described in subsection (a)(2)(A)(ii) with 
                        respect to such facility.
                            ``(iii) Prelimitation credit.--The term 
                        `prelimitation credit' with respect to any 
                        facility for a taxable year means the credit 
                        determined under subsection (a) with respect to 
                        such facility for such taxable year, determined 
                        without regard to subparagraph (A) and after 
                        taking into account any increase for such 
                        taxable year under clause (ii).
                    ``(C) Applicable percentage.--For purposes of this 
                paragraph--
                            ``(i) In general.--The term `applicable 
                        percentage' means, with respect to any 
                        facility, the appropriate percentage prescribed 
                        by the Secretary for the month in which such 
                        facility is originally placed in service.
                            ``(ii) Method of prescribing applicable 
                        percentages.--The applicable percentages 
                        prescribed by the Secretary for any month under 
                        clause (i) shall be percentages which yield 
                        over a 10-year period amounts of limitation 
                        under subparagraph (A) which have a present 
                        value equal to 35 percent of the eligible basis 
                        of the facility.
                            ``(iii) Method of discounting.--The present 
                        value under clause (ii) shall be determined--
                                    ``(I) as of the last day of the 1st 
                                year of the 10-year period referred to 
                                in clause (ii),
                                    ``(II) by using a discount rate 
                                equal to the greater of 110 percent of 
                                the Federal long-term rate as in effect 
                                under section 1274(d) for the month 
                                preceding the month for which the 
                                applicable percentage is being 
                                prescribed, or 4.5 percent, and
                                    ``(III) by taking into account the 
                                limitation under subparagraph (A) for 
                                any year on the last day of such year.
                    ``(D) Eligible basis.--For purposes of this 
                paragraph--
                            ``(i) In general.--The term `eligible 
                        basis' means, with respect to any facility, the 
                        sum of--
                                    ``(I) the basis of such facility 
                                determined as of the time that such 
                                facility is originally placed in 
                                service, and
                                    ``(II) the portion of the basis of 
                                any shared qualified property which is 
                                properly allocable to such facility 
                                under clause (ii).
                            ``(ii) Rules for allocation.--For purposes 
                        of subclause (II) of clause (i), the basis of 
                        shared qualified property shall be allocated 
                        among all qualified facilities which are 
                        projected to be placed in service and which 
                        require utilization of such property in 
                        proportion to projected generation from such 
                        facilities.
                            ``(iii) Shared qualified property.--For 
                        purposes of this paragraph, the term `shared 
                        qualified property' means, with respect to any 
                        facility, any property described in section 
                        168(e)(3)(B)(vi)--
                                    ``(I) which a qualified facility 
                                will require for utilization of such 
                                facility, and
                                    ``(II) which is not a qualified 
                                facility.
                            ``(iv) Special rule relating to geothermal 
                        facilities.--In the case of any qualified 
                        facility using geothermal energy to produce 
                        electricity, the basis of such facility for 
                        purposes of this paragraph shall be determined 
                        as though intangible drilling and development 
                        costs described in section 263(c) were 
                        capitalized rather than expensed.
                    ``(E) Special rule for first and last year of 
                credit period.--In the case of any taxable year any 
                portion of which is not within the 10-year period 
                described in subsection (a)(2)(A)(ii) with respect to 
                any facility, the amount of the limitation under 
                subparagraph (A) with respect to such facility shall be 
                reduced by an amount which bears the same ratio to the 
                amount of such limitation (determined without regard to 
                this subparagraph) as such portion of the taxable year 
                which is not within such period bears to the entire 
                taxable year.
                    ``(F) Election to treat all facilities placed in 
                service in a year as 1 facility.--At the election of 
                the taxpayer, all qualified facilities which are part 
                of the same project and which are placed in service 
                during the same calendar year shall be treated for 
                purposes of this section as 1 facility which is placed 
                in service at the mid-point of such year or the first 
                day of the following calendar year.''.
    (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) Sales of Net Electricity to Regulated Public Utilities Treated 
as Sales to Unrelated Persons.--Paragraph (4) of section 45(e) is 
amended by adding at the end the following new sentence: ``The net 
amount of electricity sold by any taxpayer to a regulated public 
utility (as defined in section 7701(a)(33)) shall be treated as sold to 
an unrelated person.''.
    (f) 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.''.
    (g) 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) Repeal of credit phaseout.--The amendments made by 
        subsection (b)(1) shall apply to taxable years ending after 
        December 31, 2008.
            (3) Limitation based on investment in facility.--The 
        amendment made by subsection (b)(2) shall apply to property 
        originally placed in service after December 31, 2009.
            (4) Trash facility clarification; sales to related 
        regulated public utilities.--The amendments made by subsections 
        (c) and (e) shall apply to electricity produced and sold after 
        the date of the enactment of this Act.
            (5) 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, 2015''.
            (2) Fuel cell property.--Subparagraph (E) of section 
        48(c)(1) is amended by striking ``December 31, 2008'' and 
        inserting ``December 31, 2014''.
            (3) Microturbine property.--Subparagraph (E) of section 
        48(c)(2) is amended by striking ``December 31, 2008'' and 
        inserting ``December 31, 2014''.
    (b) Allowance of Energy Credit Against Alternative Minimum Tax.--
Subparagraph (B) of section 38(c)(4) is amended by striking ``and'' at 
the end of clause (iii), by redesignating clause (iv) as clause (v), 
and by inserting after clause (iii) the following new clause:
                            ``(iv) the credit determined under section 
                        46 to the extent that such credit is 
                        attributable to the energy credit determined 
                        under section 48, and''.
    (c) Energy Credit for Combined Heat and Power System Property.--
            (1) In general.--Section 48(a)(3)(A) (defining energy 
        property) 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.--Section 48 is 
        amended by adding at the end the following new subsection:
    ``(d) Combined Heat and Power System Property.--For purposes of 
subsection (a)(3)(A)(v)--
            ``(1) Combined heat and power system property.--The term 
        `combined heat and power system property' means property 
        comprising a system--
                    ``(A) 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),
                    ``(B) 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),
                    ``(C) the energy efficiency percentage of which 
                exceeds 60 percent, and
                    ``(D) which is placed in service before January 1, 
                2015.
            ``(2) Limitation.--
                    ``(A) 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.
                    ``(B) Applicable capacity.--For purposes of 
                subparagraph (A), 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.
                    ``(C) 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.
            ``(3) Special rules.--
                    ``(A) Energy efficiency percentage.--For purposes 
                of this subsection, 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.
                    ``(B) Determinations made on btu basis.--The energy 
                efficiency percentage and the percentages under 
                paragraph (1)(B) shall be determined on a Btu basis.
                    ``(C) 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.
            ``(4) 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--
                    ``(A) paragraph (1)(C) shall not apply, but
                    ``(B) 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 
                paragraph) as the energy efficiency percentage of such 
                system bears to 60 percent.''.
    (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. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT PROPERTY.

    (a) Extension.--Section 25D(g) is amended by striking ``December 
31, 2008'' and inserting ``December 31, 2014''.
    (b) Maximum Credit for Solar Electric Property.--
            (1) In general.--Section 25D(b)(1)(A) is amended by 
        striking ``$2,000'' and inserting ``$4,000''.
            (2) Conforming amendment.--Section 25D(e)(4)(A)(i) is 
        amended by striking ``$6,667'' and inserting ``$13,333''.
    (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.--The amendments made by this section shall 
        apply to taxable years beginning after December 31, 2007.
            (2) 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. 105. 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.

SEC. 106. 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 $2,000,000,000 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) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.

                 PART II--CARBON MITIGATION 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) 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.

    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''.

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. 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 2008 and 2009.

    Subtitle B--Transportation and Domestic Fuel Security Provisions

SEC. 121. 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. 122. 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 striking ``or D396'' in subparagraph (B) and 
        inserting ``, D396, or other equivalent standard approved by 
        the Secretary''.
    (d) Coproduction of Renewable Diesel With Petroleum Feedstock.--
            (1) In general.--Paragraph (3) of section 40A(f) (defining 
        renewable diesel) is amended by adding at the end the following 
        new sentence: ``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.--Paragraph (3) of section 
40A(f) (defining renewable diesel) is amended by adding at the end the 
following: ``The term `renewable diesel' also means 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.''.
    (f) 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 amendments made by subsection (d) shall apply 
        to fuel produced, and sold or used, after the date of the 
        enactment of this Act.

SEC. 123. CLARIFICATION THAT CREDITS FOR FUEL ARE DESIGNED TO PROVIDE 
              AN INCENTIVE FOR UNITED STATES PRODUCTION.

    (a) Alcohol Fuels Credit.--Paragraph (6) of section 40(d) is 
amended to read as follows:
            ``(6) 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. 124. CREDIT FOR NEW QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR 
              VEHICLES.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
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.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to the sum of the credit amounts determined under subsection (b) 
with respect to each new qualified plug-in electric drive motor vehicle 
placed in service by the taxpayer during the taxable year.
    ``(b) Per Vehicle Dollar Limitation.--
            ``(1) In general.--The amount determined under this 
        subsection with respect to any new qualified plug-in electric 
        drive motor vehicle is the sum of the amounts determined under 
        paragraphs (2) and (3) with respect to such vehicle.
            ``(2) Base amount.--The amount determined under this 
        paragraph is $3,000.
            ``(3) Battery capacity.--In the case of a vehicle which 
        draws propulsion energy from a battery with not less than 5 
        kilowatt hours of capacity, the amount determined under this 
        paragraph is $200, plus $200 for each kilowatt hour of capacity 
        in excess of 5 kilowatt hours. The amount determined under this 
        paragraph shall not exceed $2,000.
    ``(c) 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.
    ``(d) New Qualified Plug-In Electric Drive Motor Vehicle.--For 
purposes of this section--
            ``(1) In general.--The term `new qualified plug-in electric 
        drive motor vehicle' means a motor vehicle (as defined in 
        section 30(c)(2))--
                    ``(A) the original use of which commences with the 
                taxpayer,
                    ``(B) which is acquired for use or lease by the 
                taxpayer and not for resale,
                    ``(C) which is made by a manufacturer,
                    ``(D) which has a gross vehicle weight rating of 
                less than 14,000 pounds,
                    ``(E) which has received a certificate of 
                conformity under the Clean Air Act and meets or exceeds 
                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
                    ``(F) which is propelled to a significant extent by 
                an electric motor which draws electricity from a 
                battery which--
                            ``(i) has a capacity of not less than 4 
                        kilowatt hours, and
                            ``(ii) is capable of being recharged from 
                        an external source of electricity.
            ``(2) Exception.--The term `new qualified plug-in electric 
        drive motor vehicle' shall not include any vehicle which is not 
        a passenger automobile or light truck if such vehicle has a 
        gross vehicle weight rating of less than 8,500 pounds.
            ``(3) 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.).
            ``(4) Battery capacity.--The term `capacity' means, with 
        respect to any battery, the quantity of electricity which the 
        battery is capable of storing, expressed in kilowatt hours, as 
        measured from a 100 percent state of charge to a 0 percent 
        state of charge.
    ``(e) Limitation on Number of New Qualified Plug-In Electric Drive 
Motor Vehicles Eligible for Credit.--
            ``(1) 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.
            ``(2) 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 number of new qualified plug-in 
        electric drive motor vehicles manufactured by the manufacturer 
        of the vehicle referred to in paragraph (1) sold for use in the 
        United States after the date of the enactment of this section, 
        is at least 60,000.
            ``(3) Applicable percentage.--For purposes of paragraph 
        (1), the applicable percentage is--
                    ``(A) 50 percent for the first 2 calendar quarters 
                of the phaseout period,
                    ``(B) 25 percent for the 3d and 4th calendar 
                quarters of the phaseout period, and
                    ``(C) 0 percent for each calendar quarter 
                thereafter.
            ``(4) Controlled groups.--Rules similar to the rules of 
        section 30B(f)(4) shall apply for purposes of this subsection.
    ``(f) Special Rules.--
            ``(1) Basis reduction.--The basis of any property for which 
        a credit is allowable under subsection (a) shall be reduced by 
        the amount of such credit (determined without regard to 
        subsection (c)).
            ``(2) 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.
            ``(3) Property used outside united states, etc., not 
        qualified.--No credit shall be allowed 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.
            ``(4) Election not to take credit.--No credit shall be 
        allowed under subsection (a) for any vehicle if the taxpayer 
        elects to not have this section apply to such vehicle.
            ``(5) Property used by tax-exempt entity; interaction with 
        air quality and motor vehicle safety standards.--Rules similar 
        to the rules of paragraphs (6) and (10) of section 30B(h) shall 
        apply for purposes of this section.''.
    (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 
                (c) thereof) shall not be taken into account under this 
                section.''.
    (c) Credit Made Part of General Business Credit.--Section 38(b) is 
amended--
            (1) by striking ``and'' each place it appears at the end of 
        any paragraph,
            (2) by striking ``plus'' each place it appears at the end 
        of any paragraph,
            (3) by striking the period at the end of paragraph (32) and 
        inserting ``, plus'', and
            (4) by adding at the end the following new paragraph:
            ``(33) the portion of the new qualified plug-in electric 
        drive motor vehicle credit to which section 30D(c)(1) 
        applies.''.
    (d) Conforming Amendments.--
            (1)(A) Section 24(b)(3)(B), as amended by section 104, 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 104, is 
        amended by striking ``and 25D'' and inserting ``, 25D, and 
        30D''.
            (D) Section 26(a)(1), as amended by section 104, 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(f)(1).''.
            (3) Section 6501(m) is amended by inserting ``30D(f)(4),'' 
        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) Treatment of Alternative Motor Vehicle Credit as a Personal 
Credit.--
            (1) In general.--Paragraph (2) of section 30B(g) is amended 
        to read as follows:
            ``(2) Personal credit.--The credit allowed under subsection 
        (a) for any taxable year (after application of paragraph (1)) 
        shall be treated as a credit allowable under subpart A for such 
        taxable year.''.
            (2) Conforming amendments.--
                    (A) Subparagraph (A) of section 30C(d)(2) is 
                amended by striking ``sections 27, 30, and 30B'' and 
                inserting ``sections 27 and 30''.
                    (B) Paragraph (3) of section 55(c) is amended by 
                striking ``30B(g)(2),''.
    (f) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        taxable years beginning after December 31, 2008.
            (2) Treatment of alternative motor vehicle credit as 
        personal credit.--The amendments made by subsection (e) shall 
        apply to taxable years beginning after December 31, 2007.
    (g) 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. 125. 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. 126. RESTRUCTURING OF NEW YORK LIBERTY ZONE TAX CREDITS.

    (a) In General.--Part I of subchapter Y of chapter 1 is amended by 
redesignating section 1400L as section 1400K and by adding at the end 
the following new section:

``SEC. 1400L. NEW YORK LIBERTY ZONE TAX CREDITS.

    ``(a) In General.--In the case of a New York Liberty Zone 
governmental unit, there shall be allowed as a credit against any taxes 
imposed for any payroll period by section 3402 for which such 
governmental unit is liable under section 3403 an amount equal to so 
much of the portion of the qualifying project expenditure amount 
allocated under subsection (b)(3) to such governmental unit for the 
calendar year as is allocated by such governmental unit to such period 
under subsection (b)(4).
    ``(b) Qualifying Project Expenditure Amount.--For purposes of this 
section--
            ``(1) In general.--The term `qualifying project expenditure 
        amount' means, with respect to any calendar year, the sum of--
                    ``(A) the total expenditures paid or incurred 
                during such calendar year by all New York Liberty Zone 
                governmental units and the Port Authority of New York 
                and New Jersey for any portion of qualifying projects 
                located wholly within the City of New York, New York, 
                and
                    ``(B) any such expenditures--
                            ``(i) paid or incurred in any preceding 
                        calendar year which begins after the date of 
                        enactment of this section, and
                            ``(ii) not previously allocated under 
                        paragraph (3).
            ``(2) Qualifying project.--The term `qualifying project' 
        means any transportation infrastructure project, including 
        highways, mass transit systems, railroads, airports, ports, and 
        waterways, in or connecting with the New York Liberty Zone (as 
        defined in section 1400K(h)), which is designated as a 
        qualifying project under this section jointly by the Governor 
        of the State of New York and the Mayor of the City of New York, 
        New York.
            ``(3) General allocation.--
                    ``(A) In general.--The Governor of the State of New 
                York and the Mayor of the City of New York, New York, 
                shall jointly allocate to each New York Liberty Zone 
                governmental unit the portion of the qualifying project 
                expenditure amount which may be taken into account by 
                such governmental unit under subsection (a) for any 
                calendar year in the credit period.
                    ``(B) Aggregate limit.--The aggregate amount which 
                may be allocated under subparagraph (A) for all 
                calendar years in the credit period shall not exceed 
                $2,000,000,000.
                    ``(C) Annual limit.--The aggregate amount which may 
                be allocated under subparagraph (A) for any calendar 
                year in the credit period shall not exceed the sum of--
                            ``(i) $115,000,000 ($425,000,000 in the 
                        case of the last 2 years in the credit period), 
                        plus
                            ``(ii) the aggregate amount authorized to 
                        be allocated under this paragraph for all 
                        preceding calendar years in the credit period 
                        which was not so allocated.
                    ``(D) Unallocated amounts at end of credit 
                period.--If, as of the close of the credit period, the 
                amount under subparagraph (B) exceeds the aggregate 
                amount allocated under subparagraph (A) for all 
                calendar years in the credit period, the Governor of 
                the State of New York and the Mayor of the City of New 
                York, New York, may jointly allocate to New York 
                Liberty Zone governmental units for any calendar year 
                in the 5-year period following the credit period an 
                amount equal to--
                            ``(i) the lesser of--
                                    ``(I) such excess, or
                                    ``(II) the qualifying project 
                                expenditure amount for such calendar 
                                year, reduced by
                            ``(ii) the aggregate amount allocated under 
                        this subparagraph for all preceding calendar 
                        years.
            ``(4) Allocation to payroll periods.--Each New York Liberty 
        Zone governmental unit which has been allocated a portion of 
        the qualifying project expenditure amount under paragraph (3) 
        for a calendar year may allocate such portion to payroll 
        periods beginning in such calendar year as such governmental 
        unit determines appropriate.
    ``(c) Carryover of Unused Allocations.--
            ``(1) In general.--Except as provided in paragraph (2), if 
        the amount allocated under subsection (b)(3) to a New York 
        Liberty Zone governmental unit for any calendar year exceeds 
        the aggregate taxes imposed by section 3402 for which such 
        governmental unit is liable under section 3403 for periods 
        beginning in such year, such excess shall be carried to the 
        succeeding calendar year and added to the allocation of such 
        governmental unit for such succeeding calendar year.
            ``(2) Reallocation.--If a New York Liberty Zone 
        governmental unit does not use an amount allocated to it under 
        subsection (b)(3) within the time prescribed by the Governor of 
        the State of New York and the Mayor of the City of New York, 
        New York, then such amount shall after such time be treated for 
        purposes of subsection (b)(3) in the same manner as if it had 
        never been allocated.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Credit period.--The term `credit period' means the 
        12-year period beginning on January 1, 2009.
            ``(2) New york liberty zone governmental unit.--The term 
        `New York Liberty Zone governmental unit' means--
                    ``(A) the State of New York,
                    ``(B) the City of New York, New York, and
                    ``(C) any agency or instrumentality of such State 
                or City.
            ``(3) Treatment of funds.--Any expenditure for a qualifying 
        project taken into account for purposes of the credit under 
        this section shall be considered State and local funds for the 
        purpose of any Federal program.
            ``(4) Treatment of credit amounts for purposes of 
        withholding taxes.--For purposes of this title, a New York 
        Liberty Zone governmental unit shall be treated as having paid 
        to the Secretary, on the day on which wages are paid to 
        employees, an amount equal to the amount of the credit allowed 
        to such entity under subsection (a) with respect to such wages, 
        but only if such governmental unit deducts and withholds wages 
        for such payroll period under section 3401 (relating to wage 
        withholding).
    ``(e) Reporting.--The Governor of the State of New York and the 
Mayor of the City of New York, New York, shall jointly submit to the 
Secretary an annual report--
            ``(1) which certifies--
                    ``(A) the qualifying project expenditure amount for 
                the calendar year, and
                    ``(B) the amount allocated to each New York Liberty 
                Zone governmental unit under subsection (b)(3) for the 
                calendar year, and
            ``(2) includes such other information as the Secretary may 
        require to carry out this section.
    ``(f) Guidance.--The Secretary may prescribe such guidance as may 
be necessary or appropriate to ensure compliance with the purposes of 
this section.''.
    (b) Termination of Special Allowance and Expensing.--Subparagraph 
(A) of section 1400K(b)(2), as redesignated by subsection (a), is 
amended by striking the parenthetical therein and inserting ``(in the 
case of nonresidential real property and residential rental property, 
the date of the enactment of the Energy Independence and Tax Relief Act 
of 2008 or, if acquired pursuant to a binding contract in effect on 
such enactment date, December 31, 2009)''.
    (c) Conforming Amendments.--
            (1) Section 38(c)(3)(B) is amended by striking ``section 
        1400L(a)'' and inserting ``section 1400K(a)''.
            (2) Section 168(k)(2)(D)(ii) is amended by striking 
        ``section 1400L(c)(2)'' and inserting ``section 1400K(c)(2)''.
            (3) The table of sections for part I of subchapter Y of 
        chapter 1 is amended by redesignating the item relating to 
        section 1400L as an item relating to section 1400K and by 
        inserting after such item the following new item:

``Sec. 1400L. New York Liberty Zone tax credits.''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 127. 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.

SEC. 128. ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY CREDIT.

    (a) Increase in Credit Amount.--Section 30C is amended--
            (1) by striking ``30 percent'' in subsection (a) and 
        inserting ``50 percent'', and
            (2) by striking ``$30,000'' in subsection (b)(1) and 
        inserting ``$50,000''.
    (b) Extension of Credit.--Paragraph (2) of section 30C(g) is 
amended by striking ``December 31, 2009'' and inserting ``December 31, 
2010''.
    (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.

       Subtitle C--Energy Conservation and Efficiency Provisions

SEC. 141. QUALIFIED ENERGY CONSERVATION BONDS.

    (a) In General.--Subpart I of part IV of subchapter A of chapter 1, 
as amended by section 106, 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 
$3,000,000,000.
    ``(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 section 
        106, 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 
        section 106, 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 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. 142. CREDIT FOR NONBUSINESS ENERGY PROPERTY.

    (a) Extension of Credit.--Section 25C(g) is amended by striking 
``December 31, 2007'' and inserting ``December 31, 2008''.
    (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) Coordination With Credit for Qualified Geothermal Heat Pump 
Property Expenditures.--
            (1) In general.--Paragraph (3) of section 25C(d), as 
        amended by subsection (b), 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.''.
    (d) 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''.
    (e) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made this section shall apply to expenditures made 
        after December 31, 2007.
            (2) Modification of qualified energy efficiency 
        improvements.--The amendments made by subsection (d) shall 
        apply to property placed in service after the date of the 
        enactment of this Act.

SEC. 143. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

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

SEC. 144. 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 (defining types of energy efficient appliances) 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) (defining 
        qualified energy efficient appliance) 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. 145. 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 is 
                placed in service by a taxpayer who is a supplier of 
                electric energy or a provider of electric energy 
                services.
                    ``(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 
                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.
                    ``(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. 146. 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,''.

          TITLE II--ONE-YEAR EXTENSION OF TEMPORARY PROVISIONS

                  Subtitle A--Alternative Minimum Tax

SEC. 201. 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. 202. 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. 203. 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 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 
        amendment made by this section shall apply to taxable years 
        beginning after December 31, 2007.
            (2) Abatement.--Section 53(f)(1) of the Internal Revenue 
        Code of 1986, as added by subsection (b), shall take effect on 
        the date of the enactment of this Act.

         Subtitle B--Extensions Primarily Affecting Individuals

SEC. 211. 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, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2007.

SEC. 212. DEDUCTION OF QUALIFIED TUITION AND RELATED EXPENSES.

    (a) In General.--Subsection (e) of section 222 is amended by 
striking ``December 31, 2007'' and inserting ``December 31, 2008''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2007.

SEC. 213. 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, 2008''.
    (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, 2008''.
    (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. 214. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT PLANS FOR 
              CHARITABLE PURPOSES.

    (a) In General.--Subparagraph (F) of section 408(d)(8) is amended 
by striking ``December 31, 2007'' and inserting ``December 31, 2008''.
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions made in taxable years beginning after December 31, 
2007.

SEC. 215. DEDUCTION FOR CERTAIN EXPENSES OF ELEMENTARY AND SECONDARY 
              SCHOOL TEACHERS.

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

SEC. 216. STOCK IN RIC FOR PURPOSES OF DETERMINING ESTATES OF 
              NONRESIDENTS NOT CITIZENS.

    (a) In General.--Paragraph (3) of section 2105(d) is amended by 
striking ``December 31, 2007'' and inserting ``December 31, 2008''.
    (b) Effective Date.--The amendment made by this section shall apply 
to decedents dying after December 31, 2007.

SEC. 217. QUALIFIED INVESTMENT ENTITIES.

    (a) In General.--Clause (ii) of section 897(h)(4)(A) is amended by 
striking ``December 31, 2007'' and inserting ``December 31, 2008''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on January 1, 2008, except that such amendment shall not 
apply to the application of withholding requirements with respect to 
any payment made on or before the date of the enactment of this Act.

SEC. 218. EXCLUSION OF AMOUNTS RECEIVED UNDER QUALIFIED GROUP LEGAL 
              SERVICES PLANS.

    (a) In General.--Subsection (e) of section 120 is amended by 
striking ``shall not apply to taxable years beginning after June 30, 
1992'' and inserting ``shall apply to taxable years beginning after 
December 31, 2007, and before January 1, 2009''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

         Subtitle C--Extensions Primarily Affecting Businesses

SEC. 221. EXTENSION AND MODIFICATION OF RESEARCH CREDIT.

    (a) Extension.--Section 41(h) (relating to termination) is 
amended--
            (1) by striking ``December 31, 2007'' and inserting 
        ``December 31, 2008'' in paragraph (1)(B),
            (2) by redesignating paragraph (2) as paragraph (3), and
            (3) by inserting after paragraph (1) the following new 
        paragraph:
            ``(2) Termination of alternative incremental credit.--No 
        election under subsection (c)(4) shall apply to amounts paid or 
        incurred after December 31, 2007.''.
    (b) Modification of Alternative Simplified Credit.--Paragraph 
(5)(A) of section 41(c) (relating to election of alternative simplified 
credit) is amended to read as follows:
                    ``(A) In general.--At the election of the taxpayer, 
                the credit determined under subsection (a)(1) shall be 
                equal to 14 percent of so much of the qualified 
                research expenses for the taxable year as exceeds 50 
                percent of the average qualified research expenses for 
                the 3 taxable years preceding the taxable year for 
                which the credit is being determined.''.
    (c) Conforming Amendment.--Subparagraph (D) of section 45C(b)(1) 
(relating to special rule) is amended by striking ``December 31, 2007'' 
and inserting ``December 31, 2008''.
    (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.--The amendments made by this section shall 
apply to amounts paid or incurred after December 31, 2007.

SEC. 222. INDIAN EMPLOYMENT CREDIT.

    (a) In General.--Subsection (f) of section 45A is amended by 
striking ``December 31, 2007'' and inserting ``December 31, 2008''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2007.

SEC. 223. NEW MARKETS TAX CREDIT.

    Subparagraph (D) of section 45D(f)(1) is amended by striking ``and 
2008'' and inserting ``2008, and 2009''.

SEC. 224. 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, 2009''.
    (b) Credit Allowed Against Alternative Minimum Tax.--Subparagraph 
(B) of section 38(c)(4) (relating to specified credits), as amended by 
section 103, is amended--
            (1) by redesignating clauses (iv) and (v) as clauses (v) 
        and (vi), respectively, and
            (2) by inserting after clause (iii) the following new 
        clause:
                            ``(iv) 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 in taxable years beginning 
        after December 31, 2007, and to carrybacks of such credits.

SEC. 225. 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. 226. 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, 2009''.
            (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.--The term `qualified 
        restaurant property' means any section 1250 property which is a 
        building or 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.''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to property placed in service after the date of the 
        enactment of this Act.
    (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 before January 1, 
                        2009.''.
            (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.''.
            (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 the date of the 
        enactment of this Act.

SEC. 227. SEVEN-YEAR COST RECOVERY PERIOD FOR MOTORSPORTS RACING TRACK 
              FACILITY.

    (a) In General.--Subparagraph (D) of section 168(i)(15) is amended 
by striking ``December 31, 2007'' and inserting ``December 31, 2008''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2007.

SEC. 228. ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY ON INDIAN 
              RESERVATION.

    (a) In General.--Paragraph (8) of section 168(j) is amended by 
striking ``December 31, 2007'' and inserting ``December 31, 2008''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2007.

SEC. 229. 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. 230. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS.

    (a) In General.--Subsection (h) of section 198 is amended by 
striking ``December 31, 2007'' and inserting ``December 31, 2008''.
    (b) Effective Date.--The amendment made by this section shall apply 
to expenditures paid or incurred after December 31, 2007.

SEC. 231. DEDUCTION ALLOWABLE WITH RESPECT TO INCOME ATTRIBUTABLE TO 
              DOMESTIC PRODUCTION ACTIVITIES IN PUERTO RICO.

    (a) In General.--Subparagraph (C) of section 199(d)(8) is amended--
            (1) by striking ``first 2 taxable years'' and inserting 
        ``first 3 taxable years'', and
            (2) by striking ``January 1, 2008'' and inserting ``January 
        1, 2009''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

SEC. 232. MODIFICATION OF TAX TREATMENT OF CERTAIN PAYMENTS TO 
              CONTROLLING EXEMPT ORGANIZATIONS.

    (a) In General.--Clause (iv) of section 512(b)(13)(E) is amended by 
striking ``December 31, 2007'' and inserting ``December 31, 2008''.
    (b) Effective Date.--The amendment made by this section shall apply 
to payments received or accrued after December 31, 2007.

SEC. 233. QUALIFIED ZONE ACADEMY BONDS.

    (a) In General.--Subpart I of part IV of subchapter A of chapter 1, 
as amended by sections 106 and 141, 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, 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 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 sections 
        106 and 141, 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 
        sections 106 and 141, 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 this Act.''.
            (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. 234. 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 
        ``2008''.
            (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 ``2008''.
            (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 
        ``2009''.
            (2) Conforming amendments.--
                    (A) Section 1400B(e)(2) is amended--
                            (i) by striking ``2012'' and inserting 
                        ``2013'', and
                            (ii) by striking ``2012'' in the heading 
                        thereof and inserting ``2013''.
                    (B) Section 1400B(g)(2) is amended by striking 
                ``2012'' and inserting ``2013''.
                    (C) Section 1400F(d) is amended by striking 
                ``2012'' and inserting ``2013''.
            (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 ``2009''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to property purchased after December 31, 2007.

SEC. 235. 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 3 taxable years'', and
            (2) by striking ``January 1, 2008'' and inserting ``January 
        1, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2007.

SEC. 236. ENHANCED CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD 
              INVENTORY.

    (a) In General.--Clause (iv) of section 170(e)(3)(C) is amended by 
striking ``December 31, 2007'' and inserting ``December 31, 2008''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made after December 31, 2007.

SEC. 237. ENHANCED CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF BOOK 
              INVENTORY TO PUBLIC SCHOOLS.

    (a) In General.--Clause (iv) of section 170(e)(3)(D) is amended by 
striking ``December 31, 2007'' and inserting ``December 31, 2008''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made after December 31, 2007.

SEC. 238. 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, 2008''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made during taxable years beginning after December 31, 
2007.

SEC. 239. BASIS ADJUSTMENT TO STOCK OF S CORPORATIONS MAKING CHARITABLE 
              CONTRIBUTIONS OF PROPERTY.

    (a) In General.--The last sentence of section 1367(a)(2) is amended 
by striking ``December 31, 2007'' and inserting ``December 31, 2008''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made in taxable years beginning after December 31, 
2007.

SEC. 240. 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 ``3-year''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to individuals hired after August 27, 2007.

SEC. 241. 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. 242. 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, 
2008, and to taxable years of United States shareholders with or within 
which such taxable years of foreign corporations end.

SEC. 243. EXPENSING FOR CERTAIN QUALIFIED FILM AND TELEVISION 
              PRODUCTIONS.

    (a) In General.--Subsection (f) of section 181 is amended by 
striking ``December 31, 2008'' and inserting ``December 31, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to productions commencing after December 31, 2008.

SEC. 244. 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''.

                      Subtitle D--Other Extensions

SEC. 251. AUTHORITY TO DISCLOSE INFORMATION RELATED TO TERRORIST 
              ACTIVITIES MADE PERMANENT.

    (a) In General.--Subparagraph (C) of section 6103(i)(3) is amended 
by striking clause (iv).
    (b) Disclosure on Request.--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.

SEC. 252. AUTHORITY FOR UNDERCOVER OPERATIONS MADE PERMANENT.

    (a) In General.--Subsection (c) of section 7608 is amended by 
striking paragraph (6).
    (b) Effective Date.--The amendment made by this section shall take 
effect on January 1, 2008.

SEC. 253. 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, 2009''.
    (b) Effective Date.--The amendment made by this section shall apply 
to distilled spirits brought into the United States after December 31, 
2007.

                      TITLE III--ADDITIONAL RELIEF

                   Subtitle A--Individual Tax Relief

SEC. 301. ADDITIONAL STANDARD DEDUCTION FOR REAL PROPERTY TAXES FOR 
              NONITEMIZERS.

    (a) In General.--Section 63(c)(1) (defining standard deduction) 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) in the case of any taxable year beginning in 
                2008, the real property tax deduction.''.
    (b) Definition.--Section 63(c) is amended by adding at the end the 
following new paragraph:
            ``(7) Real property tax deduction.--For purposes of 
        paragraph (1), the real property tax deduction is the lesser 
        of--
                    ``(A) the amount allowable as a deduction under 
                this chapter for State and local taxes described in 
                section 164(a)(1), or
                    ``(B) $350 ($700 in the case of a joint return).
        Any taxes taken into account under section 62(a) shall not be 
        taken into account under this paragraph.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

SEC. 302. $10,000 INCOME THRESHOLD USED TO CALCULATE REFUNDABLE PORTION 
              OF CHILD TAX CREDIT.

    (a) In General.--Section 24(d) (relating to portion of credit 
refundable) 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 $10,000.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2007.

SEC. 303. 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).

                Subtitle B--Business Related Provisions

SEC. 311. UNIFORM TREATMENT OF ATTORNEY-ADVANCED EXPENSES AND COURT 
              COSTS IN CONTINGENCY FEE CASES.

    (a) In General.--Section 162 is amended by redesignating subsection 
(q) as subsection (r) and by inserting after subsection (p) the 
following new subsection:
    ``(q) Attorney-Advanced Expenses and Court Costs in Contingency Fee 
Cases.--In the case of any expense or court cost which is paid or 
incurred in the course of the trade or business of practicing law and 
the repayment of which is contingent on a recovery by judgment or 
settlement in the action to which such expense or cost relates, the 
deduction under subsection (a) shall be determined as if such expense 
or cost was not subject to repayment.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to expenses and costs paid or incurred in taxable years beginning after 
December 31, 2008.

SEC. 312. PROVISIONS RELATED TO FILM AND TELEVISION PRODUCTIONS.

    (a) 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.''.
    (b) 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.''.
    (c) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        taxable years beginning after December 31, 2007.
            (2) Expensing.--The amendments made by subsection (a) shall 
        apply to qualified film and television productions commencing 
        after December 31, 2007.

SEC. 313. MODIFICATION OF RATE OF EXCISE TAX ON CERTAIN WOODEN ARROWS 
              DESIGNED FOR USE BY CHILDREN.

    (a) In General.--Paragraph (2) of section 4161(b) (relating to 
arrows) 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.

  Subtitle C--Modification of Penalty on Understatement of Taxpayer's 
                    Liability by Tax Return Preparer

SEC. 321. MODIFICATION OF PENALTY ON UNDERSTATEMENT OF TAXPAYER'S 
              LIABILITY BY TAX RETURN PREPARER.

    (a) In General.--Subsection (a) of section 6694 (relating to 
understatement due to unreasonable positions) 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 D--Extension and Expansion of Certain GO Zone Incentives

SEC. 331. CERTAIN GO ZONE INCENTIVES.

    (a) Use of Amended Income Tax Returns To Take Into Account Receipt 
of Certain Hurricane-Related Casualty Loss Grants by Disallowing 
Previously Taken Casualty Loss Deductions.--
            (1) In general.--Notwithstanding any other provision of the 
        Internal Revenue Code of 1986, if a taxpayer claims a deduction 
        for any taxable year with respect to a casualty loss to a 
        principal residence (within the meaning of section 121 of such 
        Code) resulting from Hurricane Katrina, Hurricane Rita, or 
        Hurricane Wilma and in a subsequent taxable year receives a 
        grant under Public Law 109-148, 109-234, or 110-116 as 
        reimbursement for such loss, such taxpayer may elect to file an 
        amended income tax return for the taxable year in which such 
        deduction was allowed (and for any taxable year to which such 
        deduction is carried) and reduce (but not below zero) the 
        amount of such deduction by the amount of such reimbursement.
            (2) Time of filing amended return.--Paragraph (1) shall 
        apply with respect to any grant only if any amended income tax 
        returns with respect to such grant are filed not later than the 
        later of--
                    (A) the due date for filing the tax return for the 
                taxable year in which the taxpayer receives such grant, 
                or
                    (B) the date which is 1 year after the date of the 
                enactment of this Act.
            (3) Waiver of penalties and interest.--Any underpayment of 
        tax resulting from the reduction under paragraph (1) of the 
        amount otherwise allowable as a deduction shall not be subject 
        to any penalty or interest under such Code if such tax is paid 
        not later than 1 year after the filing of the amended return to 
        which such reduction relates.
    (b) Waiver of Deadline on Construction of GO Zone Property Eligible 
for Bonus Depreciation.--
            (1) In general.--Subparagraph (B) of section 1400N(d)(3) is 
        amended to read as follows:
                    ``(B) without regard to `and before January 1, 
                2009' in clause (i) thereof, and''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to property placed in service after December 31, 
        2007.
    (c) Inclusion of Certain Counties in Gulf Opportunity Zone for 
Purposes of Tax-Exempt Bond Financing.--
            (1) In general.--Subsection (a) of section 1400N is amended 
        by adding at the end the following new paragraph:
            ``(8) Inclusion of certain counties.--For purposes of this 
        subsection, the Gulf Opportunity Zone includes Colbert County, 
        Alabama and Dallas County, Alabama.''.
            (2) Effective date.--The amendment made by this subsection 
        shall take effect as if included in the provisions of the Gulf 
        Opportunity Zone Act of 2005 to which it relates.

                      Subtitle E--Other Provisions

SEC. 341. 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, 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 of each 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, 76 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, 65 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 1974l (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, 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 of each 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. 342. CLARIFICATION OF UNIFORM DEFINITION OF CHILD.

    (a) Child Must Be Younger Than Claimant.--Section 152(c)(3)(A) 
(relating to age requirements) is amended by inserting ``is younger 
than the taxpayer claiming such individual as a qualifying child and'' 
after ``such individual''.
    (b) Child Must Be Unmarried.--Section 152(c)(1) (relating to 
qualifying child) 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) who has not filed a joint return (other than 
                only for a claim of refund) with the individual's 
                spouse under section 6013 for the taxable year 
                beginning in the calendar year in which the taxable 
                year of the taxpayer begins.''.
    (c) Restrict Qualifying Child Tax Benefits to Child's Parent.--
            (1) Child tax credit.--Subsection (a) of section 24 
        (relating to child tax credit) is amended by inserting ``for 
        which the taxpayer is allowed a deduction under section 151'' 
        after ``of the taxpayer''.
            (2) Persons other than parents claiming qualifying child.--
                    (A) In general.--Paragraph (4) of section 152(c) is 
                amended by adding at the end the following new 
                subparagraph:
                    ``(C) No parent claiming qualifying child.--If the 
                parents of an individual may claim such individual as a 
                qualifying child but no parent so claims the 
                individual, such individual may be claimed as the 
                qualifying child of another taxpayer but only if the 
                adjusted gross income of such taxpayer is higher than 
                the highest adjusted gross income of any parent of the 
                individual.''.
                    (B) Conforming amendments.--
                            (i) Subparagraph (A) of section 152(c)(4) 
                        is amended by striking ``Except'' through ``2 
                        or more taxpayers'' and inserting ``Except as 
                        provided in subparagraphs (B) and (C), if (but 
                        for this paragraph) an individual may be 
                        claimed as a qualifying child by 2 or more 
                        taxpayers''.
                            (ii) The heading for paragraph (4) of 
                        section 152(c) is amended by striking 
                        ``claiming'' and inserting ``who can claim the 
                        same''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.

                      TITLE IV--REVENUE PROVISIONS

SEC. 401. 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) is amended by striking 
``and'' at the end of subparagraph (U), by striking the period at the 
end of subparagraph (V) and inserting ``, and'', and by adding at the 
end the following new subparagraph:
                    ``(W) 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) Charitable contributions of existing deferrals 
        permitted.--
                    (A) In general.--Subsection (b) of section 170 of 
                the Internal Revenue Code of 1986 shall not apply to 
                (and subsections (b) and (d) of such section shall be 
                applied without regard to) so much of the taxpayer's 
                qualified contributions made during the taxpayer's last 
                taxable year beginning before 2018 as does not exceed 
                the taxpayer's qualified inclusion amount. For purposes 
                of subsection (b) of section 170 of such Code, the 
                taxpayer's contribution base for such last taxable year 
                shall be reduced by the amount of the taxpayer's 
                qualified contributions to which such subsection does 
                not apply by reason the preceding sentence.
                    (B) Qualified contributions.--For purposes of this 
                paragraph, the term ``qualified contributions'' means 
                the aggregate charitable contributions (as defined in 
                section 170(c) of such Code) paid in cash by the 
                taxpayer to organizations described in section 
                170(b)(1)(A) of such Code (other than any organization 
                described in section 509(a)(3) of such Code or any fund 
                or account described in section 4966(d)(2) of such 
                Code).
                    (C) Qualified inclusion amount.--For purposes of 
                this paragraph, the term ``qualified inclusion amount'' 
                means the amount includible in the taxpayer's gross 
                income for the last taxable year beginning before 2018 
                by reason of paragraph (2).
            (4) 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.
            (5) 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.
            (6) 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.

SEC. 402. DELAY IN APPLICATION OF WORLDWIDE ALLOCATION OF INTEREST.

    (a) In General.--Paragraph (6) of section 864(f) is amended--
            (1) by striking ``December 31, 2008'' and inserting 
        ``December 31, 2018'',
            (2) by striking ``An election'' and inserting:
                    ``(A) In general.--Except as provided in 
                subparagraph (B), an election'', and
            (3) by adding at the end the following new subparagraph:
                    ``(B) Earlier application for certain groups 
                including holding companies.--
                            ``(i) In general.--Notwithstanding 
                        subparagraph (A), in the case of an applicable 
                        worldwide affiliated group--
                                    ``(I) the common parent of the 
                                applicable worldwide affiliated group 
                                may elect, for its first taxable year 
                                beginning after December 31, 2008, to 
                                have paragraphs (1), (2), and (3) apply 
                                to the applicable worldwide affiliated 
                                group as if it were a separate 
                                worldwide affiliated group, and
                                    ``(II) except as provided in clause 
                                (ii), such election shall apply to such 
                                applicable worldwide affiliated group 
                                for such taxable year and the 2 
                                immediately succeeding taxable years 
                                unless revoked with the consent of the 
                                Secretary.
                        Such election shall not preclude an election 
                        under subparagraph (A) with respect to the 
                        worldwide affiliated group to which such 
                        applicable worldwide affiliated group relates.
                            ``(ii) Limitation based on foreign 
                        assets.--This subsection shall not apply to a 
                        taxable year for which the election under 
                        clause (i) is otherwise in effect if the ratio 
                        (expressed as a percentage) which the foreign 
                        assets of the applicable worldwide affiliated 
                        group bear to all the assets of the applicable 
                        worldwide affiliated group exceeds 3 percent at 
                        any time during such taxable year.
                            ``(iii) Applicable worldwide affiliated 
                        group.--For purposes of this subparagraph, the 
                        term `applicable worldwide affiliated group' 
                        means, with respect to any worldwide affiliated 
                        group (as defined in paragraph (1)(C)) the 
                        common parent of which is an entity described 
                        in clause (i), (ii), or (iii) of paragraph 
                        (4)(C), a separate group consisting of those 
                        members of such worldwide affiliated group 
                        which--
                                    ``(I) are entities described in 
                                clause (i), (ii), or (iii) of paragraph 
                                (4)(C), or are subsidiaries of such 
                                entities substantially all of the 
                                activities of which are payroll, asset 
                                holding, or other activities which are 
                                integrally related to activities 
                                described in any such clause, and
                                    ``(II) were in existence, and were 
                                members of such group, as of October 
                                21, 2004.
                            ``(iv) Guidance.--The Secretary may 
                        prescribe such guidance as may be necessary to 
                        carry out the application of this subparagraph, 
                        including guidance with respect to the proper 
                        method for determining the ratio described in 
                        clause (ii) and guidance to prevent avoidance 
                        of the purposes of this subparagraph.''.
    (b) Conforming Amendment.--Paragraph (5)(D) of section 864(f) is 
amended by striking ``December 31, 2008'' and inserting ``December 31, 
2018''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.

SEC. 403. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES.

    (a) Repeal of Adjustment for 2012.--Subparagraph (B) of section 
401(1) of the Tax Increase Prevention and Reconciliation Act of 2005 is 
amended by striking the percentage contained therein and inserting 
``100 percent''.
    (b) Modification of Adjustment for 2013.--The percentage under 
subparagraph (C) of section 401(1) of the Tax Increase Prevention and 
Reconciliation Act of 2005 in effect on the date of the enactment of 
this Act is increased by 37.75 percentage points.
                                 <all>