[Congressional Record Volume 153, Number 60 (Monday, April 16, 2007)]
[Senate]
[Pages S4480-S4507]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. HATCH (for himself and Mr. Bennett):
  S. 1110. A bill to amend the Reclamation Projects Authorization and 
Adjustment Act of 1992 to provide for the conjunctive use of surface 
and ground water in Juab County, Utah; to the Committee on Energy and 
Natural Resources.
  Mr. HATCH. Mr. President, I rise today to reinforce the importance of 
water resource development projects in Juab County, UT, by introducing 
the Juab County Surface and Ground Water Study and Development Act of 
2007, S. 1110. This legislation would amend the Reclamation Projects 
Authorization and Adjustment Act of 2005 to include Juab County.
  Juab County's inclusion in that Act would allow the County to use 
Central Utah Project funds to complete water resource development 
projects, thus enabling the County to better utilize their existing 
water resources. I hope that by passing this legislation, we will 
ensure that farmers, ranchers, and other citizens of Juab County will 
have a reliable water supply and a buffer in times of drought.
  Under the original plan for the Bonneville Unit of the Central Unit 
Project, several counties in central Utah, including Juab, were to 
receive supplemental water through an irrigation and drainage delivery 
system. Over the years, however, many central Utah Counties have 
elected not to participate in the plan and no longer pay the requisite 
taxes to the Central Utah Water Conservancy District, the political 
division of the State of Utah established to manage Central Utah 
Project activities in Utah.
  Juab County, on the other hand, remained active in the Central Utah 
Water Conservatory District's efforts and has paid millions in property 
taxes to the District in hopes of benefitting from its membership. 
Currently, most of the water allocated to the Bonneville Unit of the 
Central Utah Project is planned for use in Wasatch, Salt Lake, and Utah 
Counties. This legislation would simply ensure that the citizens of 
Juab County can benefit from the system that they have financially 
supported for so many years.
  I urge my colleagues to support this bill.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1110

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Juab County Surface and 
     Ground Water Study and Development Act of 2007''.

     SEC. 2. CONJUNCTIVE USE OF SURFACE AND GROUND WATER, CENTRAL 
                   UTAH PROJECT.

       Section 202(a)(2) of the Reclamation Projects Authorization 
     and Adjustment Act of 1992 (Public Law 102-575; 106 Stat. 
     4609) is amended by inserting ``Juab,'' after ``Davis,''.
                                 ______
                                 
      By Mr. WYDEN:
  S. 1111. A bill to amend the Internal Revenue Code of 1986 to make 
the Federal income tax system simpler, fairer, and more fiscally 
responsible, and for other purposes; to the Committee on Finance.
  Mr. WYDEN. Mr. President, I have come to the floor to talk a bit 
about taxes. Millions of Americans are scrambling today to file their 
taxes, trying to pull together their 1040 forms and ``schedule this'' 
and ``form that'' and are plowing through shoe boxes and filing 
cabinets trying to find the receipts they accumulated all through this 
year.
  Millions of our citizens have to calculate their taxes twice to find 
out the hard way that they have been ensnared in the alternative 
minimum tax and that they have to pay a much larger burden than they 
had expected. I believe there is a better way for our country to handle 
taxes, one where most Americans do not have to fear tax day, do not 
have to shell out billions of dollars in order to file their taxes, do 
not have to worry about getting crushed by the alternative minimum tax 
that years ago, when it was created, was not supposed to clobber 
middle-class folks in the Pacific Northwest and across the country.
  Today I am introducing the Fair Flat Tax Act, along with my colleague 
in the other body, Congressman Rahm Emanuel of Illinois. What we are 
doing in our fair flat tax legislation is offering the country a 
proposal that offers the administrative simplicity of a flat tax with 
the sense of fairness and progressivity that our country has always 
wanted in our tax system.
  The tax reform proposal we have developed is simpler because it is 
easier to understand and use. Our legislation will include a simplified 
1040 form, one page, 30 lines for every individual taxpayer.
  The folks at Money magazine, the financial publication, took this 
one-page 1040 form, and they were able to fill out their taxes in 15 
minutes.
  We also make the tax system flatter by collapsing the current system 
of six individual tax brackets down to three brackets of 15, 25 and 35 
percent. We create a flat corporate rate of 35 percent.
  The plan is fairer because we do more to make it possible for middle-
class folks to get ahead. We are able to give a tax cut to millions of 
middle-class families because we eliminate scores and scores of 
special-interest tax breaks, close those loopholes, that, in effect, 
drain the country of revenue and never find their way to helping the 
middle class.
  We make a radical statement about tax law in our legislation. We say 
something is out of whack when the cop who is walking the beat in this 
country pays a lot higher tax rate than the person who makes all their 
money in the stock market. I wish to make it clear: we want everybody 
to get ahead, we want everybody to do well, we never want to penalize 
success. But let's make it possible for all Americans to share the 
American dream and not just the fortunate few.
  Under the current Federal Tax Code, all income is not treated fairly. 
My colleague in the other body, Congressman Emanuel, and I would change 
that. We are not interested in soaking investors. We believe in 
markets. We believe in creating wealth. But we want everybody to be 
able to share in that wealth, and under the Fair Flat Tax, they would 
be able to do it.
  The Fair Flat Tax adopts the flat tax idea to provide real relief to 
the middle class through fewer exclusions, exemptions, deductions 
deferrals, credits and special rates for certain favored businesses, 
very often, breaks that have been added to the Tax Code because those 
powerful interests have lobbyists that the middle-class folks we 
represent do not.
  We triple the standard deduction for single filers from $5,000 to 
$15,000 and from $10,000 to $30,000 for married couples. As a result, 
the vast majority of Americans would be better off claiming the 
standard deduction than having to itemize their deductions, so their 
filing will be simplified. We do keep the key deductions most used by 
middle-income folks across the country. We keep the deduction for 
mortgage interest and charity. We keep the credits for children, for 
education, and earned income.
  Nobody would have to calculate their taxes twice under the Fair Flat 
Tax Act. Our proposal eliminates the individual alternative minimum tax 
which could ensnare as many as 100 million taxpayers by the end of the 
decade. We eliminate an estimated $20 billion each year in special 
breaks for special interests.
  Eliminating those breaks would sustain current benefits for our men 
and women in uniform, our veterans, our elderly, and our disabled, as 
well as those tax incentives that promote savings and help our families 
pay for medical care and for education.
  I think an especially important feature of the Fair Flat Tax Act is 
it corrects one of the most glaring inequities in the current tax 
system; and that is regressive State and local taxes. Under current 
law, low- and middle-income taxpayers get hit with a double whammy. 
Compared to wealthier folks, they pay more of their income in State and 
local taxes. Poor families pay more than 11 percent and middle-income 
families pay about 10 percent of their

[[Page S4481]]

income in State and local taxes, while the wealthier pay only about 5 
percent.
  Because many low- and middle-income taxpayers do not itemize, they 
get no credit on their Federal form for paying State and local taxes. 
In fact, two-thirds of the Federal tax deduction for State and local 
taxes goes to those with incomes above $100,000 a year. Under the Fair 
Flat Tax Act, for the first time, the Federal Code would look at the 
entire picture of one's taxes, at an individual's combined Federal, 
State, and local tax burden, and give a credit to low- and middle-
income individuals to correct for regressive State and local taxes.
  Repealing some individual tax credits, deductions, and exclusions 
from income--along with eliminating some of those special interest 
favors in the corporate Tax Code--enables larger standard deductions 
and broader middle-class tax relief.
  What this means is that, according to the Congressional Research 
Service, under our legislation, the vast majority of taxpayers would 
see their taxes go down. The Congressional Research Service has advised 
us that on average, middle-class families and individuals with wage and 
salary incomes up to $150,000 would see tax relief. Let me repeat that. 
We are talking about on average, tax relief for middle-class families 
and families with wage and salary incomes up to approximately $150,000. 
Middle-class folks in our country would get a tax break.
  The legislation also makes concrete progress toward deficit 
reduction. Certainly, there is a long way to go to stop the 
hemorrhaging in the Federal budget, but this legislation makes a decent 
start by allowing us to start lowering the Federal deficit in 2011. It 
is essentially a revenue-neutral kind of system. But certainly, as we 
look to the future, this is going to allow us to start lowering the 
Federal deficit.
  I also point out, by simplifying the Code, there are going to be 
other benefits. For example, we have heard a great deal about the tax 
gap in the Finance and Budget Committees. It is one of the most serious 
problems our country faces as it relates to finance in America. Upwards 
of $300 billion of money that is owed to our government is not 
collected. Given the fact we have a system today where people are able 
to flout the rules, change the system, why not go to a simpler system 
that makes it harder for individuals to cheat and easier for the IRS to 
catch those who do?
  If you look at what I have proposed, the Fair Flat Tax Act--a 1040 
form that is only 30 lines long--it is going to be a lot harder to 
cheat the system under a proposal such as this, and it is going to be a 
lot easier for the IRS to catch those who try to take advantage of 
something such as this.
  I believe the Fair Flat Tax Act can make a significant contribution 
in helping this country collect those taxes that are owed and raise a 
significant amount of revenue from a source that does not increase 
taxes. What we are proposing with our fair flat tax legislation is a 
win for everybody except those who would try to rip off the system.
  I am introducing the Fair Flat Tax Act of 2007 today to provide 
Americans a plan based on common sense principles that can make the Tax 
Code work better. We are going to have a system that is simpler and we 
are going to have a system that is fairer because it closes scores of 
those special interest loopholes. It gets rid of the despised 
alternative minimum tax, and it gives everybody a chance to get ahead 
in America.
  It is not about class warfare. It is not about pitting one group 
against another. It is about giving everybody the opportunity to be a 
winner and to get ahead to provide for their family and ensure that 
when they are successful, their success can allow them to do well 
financially.
  I do think it is important to make sure those who work for a wage get 
fair treatment. That has not been the case today. I want investors to 
do well. We all look to the stock market as a major barometer of 
economic prosperity in our country. But let's make sure everybody has 
an opportunity to get ahead. Something is seriously wrong when somebody 
who works for a wage gets hit with a lot higher tax rate than somebody 
who makes their money as an investor.
  I hope we can go forward in a bipartisan way on the issue of tax 
reform. I am extremely disappointed the Bush administration has not 
chosen to follow up on tax reform. I think it is especially 
unfortunate, given the fact the President had a commission that had a 
number of good ideas as it relates to tax reform. I certainly did not 
agree with all of them, but let me talk about one example of how the 
Congress could work with the Bush administration in a bipartisan way.
  I have shown this fair flat tax form I am proposing for a reason; and 
that is, because I think it is an ideal way for the administration and 
Democrats and Republicans to work together. My form is 30 lines long--
30 lines long--and you can fill it out in under an hour. The 
President's commission had a form that is maybe six, seven lines 
longer--just a handful of additional lines. For purposes of Government 
work, there is virtually no difference between the simplified form I am 
proposing and what the President's commission has called for. We could 
get Democrats and Republicans together to work on tax reform and come 
up with a simplified form in a matter of days.
  There is very little difference between what I am proposing and what 
came out of the President's commission.
  But what is going to be important is that the President reach out to 
Democrats and Republicans in the Congress and say: Look, I want to work 
with you on simplifying the Tax Code. I want to work with you to hold 
down rates for everybody by closing out some of those special interest 
breaks. I want to see everybody have an opportunity to get ahead.
  That certainly is what President Reagan did in 1986, when he worked 
with another tall fellow who served on the Senate Finance Committee, 
our former colleague Senator Bill Bradley. I went to school on a 
basketball scholarship. My jump shot is not quite as good as Bill 
Bradley's, but I sure know the value of bipartisan teamwork.
  So today, the day before taxes are owed, I want to renew my offer to 
the Bush administration to work with them on the issue of tax reform. 
It is a natural for bipartisan leadership. We have a model; and that 
is, the reform of 1986, where, again, they simplified the system. They 
cleaned out the clutter. They got rid of some of those special interest 
loopholes. They held down rates for everybody. It was good for our 
country. We can do that again.
  The fair flat tax legislation I am introducing today provides an 
opportunity for Democrats and Republicans to come together to fix the 
Tax Code in 2007, the way Democrats and Republicans did back in 1986, 
when the late President Reagan and Bill Bradley came together and led a 
bipartisan effort.
  I think it is time to do that again. Most people clean out their 
attic every 20 years or so. We ought to clean the Tax Code every 20 
years as well. I think we know how to proceed. The question is whether 
there is political will. I urge the Bush administration to work with 
Democrats and Republicans in the Congress because the current tax 
system, which has subjected our citizens to so much hassle and 
bureaucracy over the last few months, does not have to be that way. 
There is an alternative. I have presented one. The President's 
commission has presented one. Democrats and Republicans working 
together can do better.
  I urge the President to look to the Congress, leaders of both 
political parties, to move forward on tax reform in the days ahead.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1111

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

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

       (a) Short Title.--This Act may be cited as the ``Fair Flat 
     Tax Act of 2007''.
       (b) Amendment of 1986 Code.--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.

[[Page S4482]]

       (c) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.
Sec. 2. Purpose.

                 TITLE I--INDIVIDUAL INCOME TAX REFORMS

Sec. 101. 3 progressive individual income tax rates for all forms of 
              income.
Sec. 102. Health care standard deduction.
Sec. 103. Increase in basic standard deduction.
Sec. 104. Refundable credit for State and local income, sales, and real 
              and personal property taxes.
Sec. 105. Earned income child credit and earned income credit for 
              childless taxpayers.
Sec. 106. Repeal of individual alternative minimum tax.
Sec. 107. Termination of various exclusions, exemptions, deductions, 
              and credits.

          TITLE II--CORPORATE AND BUSINESS INCOME TAX REFORMS

Sec. 201. Corporate flat tax.
Sec. 202. Treatment of travel on corporate aircraft.
Sec. 203. Termination of various preferential treatments.
Sec. 204. Elimination of tax expenditures that subsidize inefficiencies 
              in the health care system.
Sec. 205. Pass-through business entity transparency.
Sec. 206. Modification of effective date of leasing provisions of the 
              American Jobs Creation Act of 2004.
Sec. 207. Revaluation of LIFO inventories of large integrated oil 
              companies.
Sec. 208. Modifications of foreign tax credit rules applicable to large 
              integrated oil companies which are dual capacity 
              taxpayers.
Sec. 209. Repeal of lower of cost or market value of inventory rule.
Sec. 210. Reinstitution of per country foreign tax credit.
Sec. 211. Application of rules treating inverted corporations as 
              domestic corporations to certain transactions occurring 
              after March 20, 2002.

                      TITLE III--OTHER PROVISIONS

               Subtitle A--Improvements in Tax Compliance

Sec. 301. Information reporting on payments to corporations.
Sec. 302. Broker reporting of customer's basis in securities 
              transactions.
Sec. 303. Additional reporting requirements by regulation.
Sec. 304. Increase in information return penalties.
Sec. 305. E-filing requirement for certain large organizations.
Sec. 306. Implementation of standards clarifying when employee leasing 
              companies can be held liable for their clients' Federal 
              employment taxes.
Sec. 307. Modification of collection due process procedures for 
              employment tax liabilities.
Sec. 308. Expansion of IRS access to information in National Directory 
              of New Hires for tax administration purposes.
Sec. 309. Disclosure of prisoner return information to Federal Bureau 
              of Prisons.
Sec. 310. Modification of criminal penalties for willful failures 
              involving tax payments and filing requirements.
Sec. 311. Understatement of taxpayer liability by return preparers.
Sec. 312. Penalties for failure to file certain returns electronically.
Sec. 313. Penalty for filing erroneous refund claims.

                Subtitle B--Requiring Economic Substance

Sec. 321. Clarification of economic substance doctrine.
Sec. 322. Penalty for understatements attributable to transactions 
              lacking economic substance, etc.
Sec. 323. Denial of deduction for interest on underpayments 
              attributable to noneconomic substance transactions.

                       Subtitle C--Miscellaneous

Sec. 331. Denial of deduction for punitive damages.

         TITLE IV--TECHNICAL AND CONFORMING AMENDMENTS; SUNSET

Sec. 401. Technical and conforming amendments.
Sec. 402. Sunset.

     SEC. 2. PURPOSE.

       The purpose of this Act is to amend the Internal Revenue 
     Code of 1986--
       (1) to make the Federal individual income tax system 
     simpler, fairer, and more transparent by--
       (A) recognizing the overall Federal, State, and local tax 
     burden on individual Americans, especially the regressive 
     nature of State and local taxes, and providing a Federal 
     income tax credit for State and local income, sales, and 
     property taxes,
       (B) providing for an earned income tax credit for childless 
     taxpayers and a new earned income child credit,
       (C) repealing the individual alternative minimum tax,
       (D) increasing the basic standard deduction and maintaining 
     itemized deductions for principal residence mortgage interest 
     and charitable contributions,
       (E) reducing the number of exclusions, exemptions, 
     deductions, and credits, and
       (F) treating all income equally,
       (2) to make the Federal corporate income tax rate a flat 35 
     percent and eliminate special tax preferences that favor 
     particular types of businesses or activities, and
       (3) to partially offset the Federal budget deficit through 
     the increased fiscal responsibility resulting from these 
     reforms.

                 TITLE I--INDIVIDUAL INCOME TAX REFORMS

     SEC. 101. 3 PROGRESSIVE INDIVIDUAL INCOME TAX RATES FOR ALL 
                   FORMS OF INCOME.

       (a) Married Individuals Filing Joint Returns and Surviving 
     Spouses.--The table contained in section 1(a) is amended to 
     read as follows:
The tax is:e income is:
15% of taxable income. ................................................
Over $30,000 but not over $120,000.....................................

$4,500, plus 25% of the excess over $30,000 
$27,000, plus 35% of the excess over $120,000''........................
       (b) Heads of Households.--The table contained in section 
     1(b) is amended to read as follows:
The tax is:e income is:
15% of taxable income. ................................................
Over $16,000 but not over $105,000.....................................

$2,400, plus 25% of the excess over $16,000 
$24,650, plus 35% of the excess over $105,000''........................

       (c) Unmarried Individuals (Other Than Surviving Spouses and 
     Heads of Households).--The table contained in section 1(c) is 
     amended to read as follows:
The tax is:e income is:
15% of taxable income. ................................................
$2,250, plus 25% of the excess over $15,000 ...........................
$13,500, plus 35% of the excess over $60,000''.........................

       (d) Married Individuals Filing Separate Returns.--The table 
     contained in section 1(d) is amended to read as follows:
The tax is:e income is:
15% of taxable income. ................................................
$2,250, plus 25% of the excess over $15,000 ...........................
$13,500, plus 35% of the excess over $60,000''.........................

       (e) Conforming Amendments to Inflation Adjustment.--Section 
     1(f) is amended--
       (1) by striking ``1993''in paragraph (1) and inserting 
     ``2008'',
       (2) by striking ``except as provided in paragraph (8)'' in 
     paragraph (2)(A),
       (3) by striking ``1992'' in paragraph (3)(B) and inserting 
     ``2007'',
       (4) by striking paragraphs (7) and (8), and
       (5) by striking ``Phaseout of Marriage Penalty in 15-
     Percent Bracket;'' in the heading thereof.
       (f) Repeal of Rate Differential for Capital Gains and 
     Dividends.--
       (1) Repeal of 2003 rate reduction.--Section 303 of the Jobs 
     and Growth Tax Relief Reconciliation Act of 2003 is amended 
     by striking ``December 3, 2008'' and inserting ``December 31, 
     2007''.
       (2) Termination of pre-2003 capital gain rate 
     differential.--Section 1(h) is amended (after the application 
     of paragraph (1)) by adding at the end the following new 
     paragraph:
       ``(13) Termination.--This section shall not apply to 
     taxable years beginning after December 31, 2007.''.
       (g) Additional Conforming Amendments.--
       (1) Section 1 is amended by striking subsection (i).
       (2) The Internal Revenue Code of 1986 is amended by 
     striking ``calendar year 1992'' each place it appears and 
     inserting ``calendar year 2007''.
       (3) Section 1445(e)(1) (after the application of subsection 
     (g)(1)) is amended by striking ``(or, to the extent provided 
     in regulations, 20 percent)''.
       (h) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2007.

     SEC. 102. HEALTH CARE STANDARD DEDUCTION.

       (a) In General.--Section 62(a) (defining adjusted gross 
     income) is amended by inserting after paragraph (21) the 
     following new paragraph:
       ``(22) Individual shared responsibility payments.--
       ``(A) In general.--In the case of a taxpayer with gross 
     income for the taxable year exceeding 100 percent of the 
     poverty line (adjusted for the size of the family involved) 
     for the calendar year in which such taxable year begins and 
     who is enrolled in a HAPI plan under the Healthy Americans 
     Act, the deduction allowable under section 213 by reason of 
     subsection (d)(1)(D) thereof (determined without regard to 
     any income limitation under subsection (a) thereof) in an 
     amount equal to the applicable fraction times, in the case 
     of--
       ``(i) coverage of an individual, $6,025,
       ``(ii) coverage of a married couple or domestic partnership 
     (as determined by a State) without dependent children, 
     $12,050,
       ``(iii) coverage of an unmarried individual with 1 or more 
     dependent children, $8,610, plus $2,000 for each dependent 
     child, and
       ``(iv) coverage of a married couple or domestic partnership 
     (as determined by a State) with 1 or more dependent children, 
     $15,210, plus $2,000 for each dependent child.
       ``(B) Applicable fraction.--For purposes of subparagraph 
     (A), the applicable fraction is the fraction (not to exceed 
     1)--
       ``(i) the numerator of which is the gross income of the 
     taxpayer for the taxable year expressed as a percentage of 
     the poverty line

[[Page S4483]]

     (adjusted for the size of the family involved) minus such 
     poverty line for the calendar year in which such taxable year 
     begins, and
       ``(ii) the denominator of which is 400 percent of the 
     poverty line (adjusted for the size of the family involved) 
     minus such poverty line.
       ``(C) Phaseout of deduction amount.--
       ``(i) In general.--The amount otherwise determined under 
     subparagraph (A) for any taxable year shall be reduced by the 
     amount determined under clause (ii).
       ``(ii) Amount of reduction.--The amount determined under 
     this clause shall be the amount which bears the same ratio to 
     the amount determined under subparagraph (A) as--

       ``(I) the excess of the taxpayer's modified adjusted gross 
     income for such taxable year, over $62,500 ($125,000 in the 
     case of a joint return), bears to
       ``(II) $62,500 ($125,000 in the case of a joint return).

     Any amount determined under this clause which is not a 
     multiple of $1,000 shall be rounded to the next lowest 
     $1,000.
       ``(D) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2009, each dollar 
     amount contained in subparagraph (A) and subparagraph 
     (C)(ii)(I) shall be increased by an amount equal to such 
     dollar amount, multiplied by the cost-of-living adjustment 
     determined under section 1(f)(3) for the calendar year in 
     which the taxable year begins, determined by substituting 
     `calendar year 2008' for `calendar year 1992' in subparagraph 
     (B) thereof. Any increase determined under the preceding 
     sentence shall be rounded to the nearest multiple of $50 
     ($1,000 in the case of the dollar amount contained in 
     subparagraph (C)(ii)(I)).
       ``(E) Determination of modified adjusted gross income.--
       ``(i) In general.--For purposes of this paragraph, the term 
     `modified adjusted gross income' means adjusted gross 
     income--
       ``(ii) determined without regard to this section and 
     sections 86, 135, 137, 199, 221, 222, 911, 931, and 933, and
       ``(iii) increased by--

       ``(I) the amount of interest received or accrued during the 
     taxable year which is exempt from tax under this title, and
       ``(II) the amount of any social security benefits (as 
     defined in section 86(d)) received or accrued during the 
     taxable year.

       ``(F) Poverty line.--For purposes of this paragraph, the 
     term `poverty line' has the meaning given such term in 
     section 673(2) of the Community Health Services Block Grant 
     Act (42 U.S.C. 9902(2)), including any revision required by 
     such section.''.
       (b) Conforming Amendment.--Section 213(d)(1)(D) is amended 
     by inserting ``amounts paid under section 3421 and'' after 
     ``including''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2007.

     SEC. 103. INCREASE IN BASIC STANDARD DEDUCTION.

       (a) In General.--Paragraph (2) of section 63(c) (defining 
     standard deduction) is amended to read as follows:
       ``(2) Basic standard deduction.--For purposes of paragraph 
     (1), the basic standard deduction is--
       ``(A) 200 percent of the dollar amount in effect under 
     subparagraph (C) for the taxable year in the case of--
       ``(i) a joint return, or
       ``(ii) a surviving spouse (as defined in section 2(a)),
       ``(B) $26,250 in the case of a head of household (as 
     defined in section 2(b)), reduced by any deduction allowed 
     under section 62(a)(22) for such taxable year, or
       ``(C) $15,000 in any other case, reduced by any deduction 
     allowed under section 62(a)(22) for such taxable year.''.
       (b) Conforming Amendment to Inflation Adjustment.--Section 
     63(c)(4)(B)(i) is amended by striking ``(2)(B), (2)(C), or''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2007.

     SEC. 104. REFUNDABLE CREDIT FOR STATE AND LOCAL INCOME, 
                   SALES, AND REAL AND PERSONAL PROPERTY TAXES.

       (a) General Rule.--Subpart C of part IV of subchapter A of 
     chapter 1 (relating to refundable credits) is amended by 
     redesignating section 36 as section 37 and by inserting after 
     section 35 the following new section:

     ``SEC. 36. CREDIT FOR STATE AND LOCAL INCOME, SALES, AND REAL 
                   AND PERSONAL PROPERTY TAXES.

       ``(a) Allowance of Credit.--In the case of an individual, 
     there shall be allowed as a credit against the tax imposed by 
     this subtitle for the taxable year an amount equal to 10 
     percent of the qualified State and local taxes paid by the 
     taxpayer for such year.
       ``(b) Qualified State and Local Taxes.--For purposes of 
     this section, the term `qualified State and local taxes' 
     means--
       ``(1) State and local income taxes,
       ``(2) State and local general sales taxes,
       ``(3) State and local real property taxes, and
       ``(4) State and local personal property taxes.
       ``(c) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) State or local taxes.--A State or local tax includes 
     only a tax imposed by a State, a possession of the United 
     States, or a political subdivision of any of the foregoing, 
     or by the District of Columbia.
       ``(2) General sales taxes.--
       ``(A) In general.--The term `general sales tax' means a tax 
     imposed at one rate with respect to the sale at retail of a 
     broad range of classes of items.
       ``(B) Application of rules.--Rules similar to the rules 
     under subparagraphs (C), (D), (E), (F), (G), and (H) of 
     section 164(b)(5) shall apply.
       ``(3) Personal property taxes.--The term `personal property 
     tax' means an ad valorem tax which is imposed on an annual 
     basis in respect of personal property.
       ``(4) Application of rules to property taxes.--Rules 
     similar to the rules of subsections (c) and (d) of section 
     164 shall apply.
       ``(5) No credit for married individuals filing separate 
     returns.--If the taxpayer is a married individual (within the 
     meaning of section 7703), this section shall apply only if 
     the taxpayer and the taxpayer's spouse file a joint return 
     for the taxable year.
       ``(6) Denial of credit to dependents.--No credit shall be 
     allowed under this section to any individual with respect to 
     whom a deduction under section 151 is allowable to another 
     taxpayer for a taxable year beginning in the calendar year in 
     which such individual's taxable year begins.
       ``(7) Denial of double benefit.--Any amount taken into 
     account in determining the credit allowable under this 
     section may not be taken into account in determining any 
     credit or deduction under any other provision of this 
     chapter.''.
       (b) Technical Amendments.--
       (1) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting ``or from section 36 of 
     such Code'' before the period at the end.
       (2) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 is amended by striking the item 
     relating to section 36 and inserting the following:

``Sec. 36. Credit for state and local income, sales, and real and 
              personal property taxes
``Sec. 37. Overpayments of tax''.

       (c) Report Regarding Use of Credit by Renters.--Not later 
     than 180 days after the date of the enactment of this Act, 
     the Secretary of the Treasury shall report to the Committee 
     on Finance of the Senate and the Committee on Ways and Means 
     of the House of Representatives recommendations regarding the 
     treatment of a portion of rental payments in a manner similar 
     to real property taxes under section 36 of the Internal 
     Revenue Code of 1986 (as added by this section).
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2007.

     SEC. 105. EARNED INCOME CHILD CREDIT AND EARNED INCOME CREDIT 
                   FOR CHILDLESS TAXPAYERS.

       (a) In General.--Subsection (a) of section 32 (relating to 
     earned income) is amended to read as follows:
       ``(a) Allowance of Earned Income Child Credit and Earned 
     Income Credit.--
       ``(1) In general.--There shall be allowed as a credit 
     against the tax imposed by this subtitle for the taxable 
     year--
       ``(A) in the case of any eligible individual with 1 or more 
     qualifying children, an amount equal to the earned income 
     child credit amount, and
       ``(B) in the case of any eligible individual with no 
     qualifying children, an amount equal to the earned income 
     credit amount.
       ``(2) Earned income child credit amount.--For purposes of 
     this section, the earned income child credit amount is equal 
     to the sum of--
       ``(A) the credit percentage of so much of the taxpayer's 
     earned income for the taxable year as does not exceed the 
     earned income limit amount, plus
       ``(B) the supplemental child credit amount determined under 
     subsection (n) for such taxable year.
       ``(3) Earned income credit amount.--For purposes of this 
     section, the earned income credit amount is equal to the 
     credit percentage of so much of the taxpayer's earned income 
     for the taxable year as does not exceed the earned income 
     limit amount.
       ``(4) Limitation.--The amount of the credit allowable to a 
     taxpayer under paragraph (2)(A) or (3) for any taxable year 
     shall not exceed the excess (if any) of--
       ``(A) the credit percentage of the earned income amount, 
     over
       ``(B) the phaseout percentage of so much of the adjusted 
     gross income (or, if greater, the earned income) of the 
     taxpayer for the taxable year as exceeds the phaseout 
     amount.''.
       (b) Supplemental Child Credit Amount.--Section 32 is 
     amended by adding at the end the following new subsection:
       ``(n) Supplemental Child Credit Amount.--
       ``(1) In general.--For purposes of subsection (a)(2)(B), 
     the supplemental child credit amount for any taxable year is 
     equal to the lesser of--
       ``(A) the credit which would be allowed under section 24 
     for such taxable year without regard to the limitation under 
     section 24(b)(3) with respect to any qualifying child as 
     defined under subsection (c)(3), or
       ``(B) the amount by which the aggregate amount of credits 
     allowed by subpart A for such taxable year would increase if 
     the limitation imposed by section 24(b)(3) were increased by 
     the excess (if any) of--
       ``(i) 15 percent of so much of the taxpayer's earned income 
     which is taken into account in computing taxable income for 
     the taxable year as exceeds $10,000, or
       ``(ii) in the case of a taxpayer with 3 or more qualifying 
     children (as so defined), the excess (if any) of--

[[Page S4484]]

       ``(I) the taxpayer's social security taxes for the taxable 
     year, over
       ``(II) the credit allowed under this section for the 
     taxable year.

     The amount of the credit allowed under this subsection shall 
     not be treated as a credit allowed under subpart A and shall 
     reduce the amount of credit otherwise allowable under section 
     24(a) without regard to section 24(b)(3).
       ``(2) Social security taxes.--For purposes of paragraph 
     (1)--
       ``(A) In general.--The term `social security taxes' means, 
     with respect to any taxpayer for any taxable year--
       ``(i) the amount of the taxes imposed by section 3101 and 
     3201(a) on amounts received by the taxpayer during the 
     calendar year in which the taxable year begins,
       ``(ii) 50 percent of the taxes imposed by section 1401 on 
     the self-employment income of the taxpayer for the taxable 
     year, and
       ``(iii) 50 percent of the taxes imposed by section 
     3211(a)(1) on amounts received by the taxpayer during the 
     calendar year in which the taxable year begins.
       ``(B) Coordination with special refund of social security 
     taxes.--The term `social security taxes' shall not include 
     any taxes to the extent the taxpayer is entitled to a special 
     refund of such taxes under section 6413(c).
       ``(C) Special rule.--Any amounts paid pursuant to an 
     agreement under section 3121(l) (relating to agreements 
     entered into by American employers with respect to foreign 
     affiliates) which are equivalent to the taxes referred to in 
     subparagraph (A)(i) shall be treated as taxes referred to in 
     such paragraph.
       ``(3) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2007, the $10,000 
     amount contained in paragraph (1)(B) shall be increased by an 
     amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2000' 
     for `calendar year 1992' in subparagraph (B) thereof.
       ``Any increase determined under the preceding sentence 
     shall be rounded to the nearest multiple of $50.''.
       (c) Conforming Amendment.--Section 24(d) is amended by 
     adding at the end the following new paragraph:
       ``(4) Termination.--This subsection shall not apply with 
     respect to any taxable year beginning after December 31, 
     2007.''.
       (d) Certain Treatment of Earned Income Made Permanent.--
     Clause (vi) of section 32(c)(2)(B) is amended to read as 
     follows:
       ``(vi) a taxpayer may elect to treat amounts excluded from 
     gross income by reason of section 112 as earned income.''.
       (e) Repeal of Disqualified Investment Income Test.--
     Subsection (i) of section 32 is repealed.
       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2007.

     SEC. 106. REPEAL OF INDIVIDUAL ALTERNATIVE MINIMUM TAX.

       (a) In General.--Section 55(a) (relating to alternative 
     minimum tax imposed) is amended by adding at the end the 
     following new flush sentence:
       ``For purposes of this title, the tentative minimum tax on 
     any taxpayer other than a corporation for any taxable year 
     beginning after December 31, 2007, shall be zero.''.
       (b) Modification of Limitation on Use of Credit for Prior 
     Year Minimum Tax Liability.--Subsection (c) of section 53 
     (relating to credit for prior year minimum tax liability) is 
     amended to read as follows:
       ``(c) Limitation.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     credit allowable under subsection (a) for any taxable year 
     shall not exceed the excess (if any) of--
       ``(A) the regular tax liability of the taxpayer for such 
     taxable year reduced by the sum of the credits allowable 
     under subparts A, B, D, E, and F of this part, over
       ``(B) the tentative minimum tax for the taxable year.
       ``(2) Taxable years beginning after 2007.--In the case of 
     any taxable year beginning after 2007, the credit allowable 
     under subsection (a) to a taxpayer other than a corporation 
     for any taxable year shall not exceed 90 percent of the 
     regular tax liability of the taxpayer for such taxable year 
     reduced by the sum of the credits allowable under subparts A, 
     B, D, E, and F of this part.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2007.

     SEC. 107. TERMINATION OF VARIOUS EXCLUSIONS, EXEMPTIONS, 
                   DEDUCTIONS, AND CREDITS.

       (a) In General.--Subchapter C of chapter 90 (relating to 
     provisions affecting more than one subtitle) is amended by 
     adding at the end the following new section:

     ``SEC. 7875. TERMINATION OF CERTAIN PROVISIONS.

       ``The following provisions shall not apply to taxable years 
     beginning after December 31, 2007:
       ``(1) Section 67 (relating to 2-percent floor on 
     miscellaneous itemized deductions).
       ``(2) Section 74(c) (relating to exclusion of certain 
     employee achievement awards).
       ``(3) Section 79 (relating to exclusion of group-term life 
     insurance purchased for employees).
       ``(4) Section 119 (relating to exclusion of meals or 
     lodging furnished for the convenience of the employer).
       ``(5) Section 125 (relating to exclusion of cafeteria plan 
     benefits).
       ``(6) Section 132 (relating to certain fringe benefits), 
     except with respect to subsection (a)(5) thereof (relating to 
     exclusion of qualified transportation fringe).
       ``(7) Section 163(h)(4)(A)(i)(II) (relating to definition 
     of qualified residence).
       ``(8) Section 165(d) (relating to deduction for wagering 
     losses).
       ``(9) Section 217 (relating to deduction for moving 
     expenses).
       ``(10) Section 454 (relating to deferral of tax on 
     obligations issued at discount).
       ``(11) Section 501(c)(9) (relating to tax-exempt status of 
     voluntary employees' beneficiary associations).
       ``(12) Section 911 (relating to exclusion of earned income 
     of citizens or residents of the United States living abroad).
       ``(13) Section 912 (relating to exemption for certain 
     allowances).''.
       (b) Conforming Amendment.--The table of sections for 
     subchapter C of chapter 90 is amended by adding at the end 
     the following new item:

``Sec. 7875. Termination of certain provisions''.

          TITLE II--CORPORATE AND BUSINESS INCOME TAX REFORMS

     SEC. 201. CORPORATE FLAT TAX.

       (a) In General.--Subsection (b) of section 11 (relating to 
     tax imposed) is amended to read as follows:
       ``(b) Amount of Tax.--The amount of tax imposed by 
     subsection (a) shall be equal to 35 percent of the taxable 
     income.''.
       (b) Conforming Amendments.--
       (1) Section 280C(c)(3)(B)(ii)(II) is amended by striking 
     ``maximum rate of tax under section 11(b)(1)'' and inserting 
     ``rate of tax under section 11(b)''.
       (2) Sections 860E(e)(2)(B), 860E(e)(6)(A)(ii), 
     860K(d)(2)(A)(ii), 860K(e)(1)(B)(ii), 1446(b)(2)(B), and 
     7874(e)(1)(B) are each amended by striking ``highest rate of 
     tax specified in section 11(b)(1)'' and inserting ``rate of 
     tax specified in section 11(b)''.
       (3) Section 904(b)(3)(D)(ii) is amended by striking 
     ``(determined without regard to the last sentence of section 
     11(b)(1))''.
       (4) Section 962 is amended by striking subsection (c) and 
     by redesignating subsection (d) as subsection (c).
       (5) Section 1201(a) is amended by striking ``(determined 
     without regard to the last 2 sentences of section 
     11(b)(1))''.
       (6) Section 1561(a) is amended--
       (A) by striking paragraph (1) and by redesignating 
     paragraphs (2), (3), and (4) as paragraphs (1), (2), and (3), 
     respectively,
       (B) by striking ``The amounts specified in paragraph (1), 
     the'' and inserting ``The'',
       (C) by striking ``paragraph (2)'' and inserting ``paragraph 
     (1)'',
       (D) by striking ``paragraph (3)'' both places it appears 
     and inserting ``paragraph (2)'',
       (E) by striking ``paragraph (4)'' and inserting ``paragraph 
     (3)'', and
       (F) by striking the fourth sentence.
       (7) Subsection (b) of section 1561 is amended to read as 
     follows:
       ``(b) Certain Short Taxable Years.--If a corporation has a 
     short taxable year which does not include a December 31 and 
     is a component member of a controlled group of corporations 
     with respect to such taxable year, then for purposes of this 
     subtitle, the amount to be used in computing the accumulated 
     earnings credit under section 535(c)(2) and (3) of such 
     corporation for such taxable year shall be the amount 
     specified in subsection (a)(1) divided by the number of 
     corporations which are component members of such group on the 
     last day of such taxable year. For purposes of the preceding 
     sentence, section 1563(b) shall be applied as if such last 
     day were substituted for December 31.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2007.

     SEC. 202. TREATMENT OF TRAVEL ON CORPORATE AIRCRAFT.

       (a) In General.--Section 162 (relating to trade or business 
     expenses) is amended by redesignating subsection (q) as 
     subsection (r) and by inserting after subsection (p) the 
     following new subsection:
       ``(q) Treatment of Travel on Corporate Aircraft.--The rate 
     at which an amount allowable as a deduction under this 
     chapter for the use of an aircraft owned by the taxpayer is 
     determined shall not exceed the rate at which an amount paid 
     or included in income by an employee of such taxpayer for the 
     personal use of such aircraft is determined.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2007.

     SEC. 203. TERMINATION OF VARIOUS PREFERENTIAL TREATMENTS.

       (a) In General.--Section 7875, as added by section 107, is 
     amended--
       (1) by inserting ``(or transactions in the case of sections 
     referred to in paragraphs (21), (22), (23), (24), and (27))'' 
     after ``taxable years beginning'', and
       (2) by adding at the end the following new paragraphs:
       ``(14) Section 43 (relating to enhanced oil recovery 
     credit).
       ``(15) Section 263(c) (relating to intangible drilling and 
     development costs in the case of oil and gas wells and 
     geothermal wells).
       ``(16) Section 382(l)(5) (relating to exception from net 
     operating loss limitations for corporations in bankruptcy 
     proceeding).
       ``(17) Section 451(i) (relating to special rules for sales 
     or dispositions to implement

[[Page S4485]]

     Federal Energy Regulatory Commission or State electric 
     restructuring policy).
       ``(18) Section 453A (relating to special rules for 
     nondealers), but only with respect to the dollar limitation 
     under subsection (b)(1) thereof and subsection (b)(3) thereof 
     (relating to exception for personal use and farm property).
       ``(19) Section 460(e)(1) (relating to special rules for 
     long-term home construction contracts or other short-term 
     construction contracts).
       ``(20) Section 613A (relating to percentage depletion in 
     case of oil and gas wells).
       ``(21) Section 616 (relating to development costs).
       ``(22) Sections 861(a)(6), 862(a)(6), 863(b)(2), 863(b)(3), 
     and 865(b) (relating to inventory property sales source rule 
     exception).''.
       (b) Full Tax Rate on Nuclear Decommissioning Reserve 
     Fund.--Subparagraph (B) of section 468A(e)(2) is amended to 
     read as follows:
       ``(B) Rate of tax.--For purposes of subparagraph (A), the 
     rate set forth in this subparagraph is 35 percent.''.
       (c) Deferral of Active Income of Controlled Foreign 
     Corporations.--Section 952 (relating to subpart F income 
     defined) is amended by adding at the end the following new 
     subsection:
       ``(e) Special Application of Subpart.--
       ``(1) In general.--For taxable years beginning after 
     December 31, 2007, notwithstanding any other provision of 
     this subpart, the term `subpart F income' means, in the case 
     of any controlled foreign corporation, the income of such 
     corporation derived from any foreign country.
       ``(2) Applicable rules.--Rules similar to the rules under 
     the last sentence of subsection (a) and subsection (d) shall 
     apply to this subsection.''.
       (d) Deferral of Active Financing Income.--Section 
     953(e)(10) is amended--
       (1) by striking ``January 1, 2009'' and inserting ``January 
     1, 2008'', and
       (2) by striking ``December 31, 2008'' and inserting 
     ``December 31, 2007''.
       (e) Depreciation on Equipment in Excess of Alternative 
     Depreciation System.--Section 168(g)(1) (relating to 
     alternative depreciation system) is amended by striking 
     ``and'' at the end of subparagraph (D), by adding ``and'' at 
     the end of subparagraph (E), and by inserting after 
     subparagraph (E) the following new subparagraph:
       ``(F) notwithstanding subsection (a), any tangible property 
     placed in service after December 31, 2007,''.
       (f) Effective Date.--The amendments made by subsections 
     (b), (c), and (d) shall apply to taxable years beginning 
     after December 31, 2007.

     SEC. 204. ELIMINATION OF TAX EXPENDITURES THAT SUBSIDIZE 
                   INEFFICIENCIES IN THE HEALTH CARE SYSTEM.

       Not later than 180 days after the date of the enactment of 
     this Act, the Secretary of the Treasury shall report to the 
     Committee on Finance of the Senate and the Committee on Ways 
     and Means of the House of Representatives recommendations 
     regarding the elimination of Federal tax incentives which 
     subsidize inefficiencies in the health care system and if 
     eliminated would result in Federal budget savings of not less 
     than $10,000,000,000 annually.

     SEC. 205. PASS-THROUGH BUSINESS ENTITY TRANSPARENCY.

       Not later than 90 days after the date of the enactment of 
     this Act, the Secretary of the Treasury shall report to the 
     Committee on Finance of the Senate and the Committee on Ways 
     and Means of the House of Representatives regarding the 
     implementation of additional reporting requirements with 
     respect to any pass-through entity with the goal of the 
     reduction of tax avoidance through the use of such entities, 
     In addition, the Secretary shall develop procedures to share 
     such report data with State revenue agencies under the 
     disclosure requirements of section 6103(d) of the Internal 
     Revenue Code of 1986.

     SEC. 206. MODIFICATION OF EFFECTIVE DATE OF LEASING 
                   PROVISIONS OF THE AMERICAN JOBS CREATION ACT OF 
                   2004.

       (a) Leases to Foreign Entities.--Section 849(b) of the 
     American Jobs Creation Act of 2004 is amended by adding at 
     the end the following new paragraph:
       ``(5) Leases to foreign entities.--In the case of tax-
     exempt use property leased to a tax-exempt entity which is a 
     foreign person or entity, the amendments made by this part 
     shall apply to taxable years beginning after December 31, 
     2006, with respect to leases entered into on or before March 
     12, 2004.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the enactment of the 
     American Jobs Creation Act of 2004.

     SEC. 207. REVALUATION OF LIFO INVENTORIES OF LARGE INTEGRATED 
                   OIL COMPANIES.

       (a) General Rule.--Notwithstanding any other provision of 
     law, if a taxpayer is an applicable integrated oil company 
     for its last taxable year ending in calendar year 2006, the 
     taxpayer shall--
       (1) increase, effective as of the close of such taxable 
     year, the value of each historic LIFO layer of inventories of 
     crude oil, natural gas, or any other petroleum product 
     (within the meaning of section 4611) by the layer adjustment 
     amount, and
       (2) decrease its cost of goods sold for such taxable year 
     by the aggregate amount of the increases under paragraph (1).

     If the aggregate amount of the increases under paragraph (1) 
     exceed the taxpayer's cost of goods sold for such taxable 
     year, the taxpayer's gross income for such taxable year shall 
     be increased by the amount of such excess.
       (b) Layer Adjustment Amount.--For purposes of this 
     section--
       (1) In general.--The term ``layer adjustment amount'' 
     means, with respect to any historic LIFO layer, the product 
     of--
       (A) $18.75, and
       (B) the number of barrels of crude oil (or in the case of 
     natural gas or other petroleum products, the number of 
     barrel-of-oil equivalents) represented by the layer.
       (2) Barrel-of-oil equivalent.--The term ``barrel-of-oil 
     equivalent'' has the meaning given such term by section 
     29(d)(5) (as in effect before its redesignation by the Energy 
     Tax Incentives Act of 2005).
       (c) Application of Requirement.--
       (1) No change in method of accounting.--Any adjustment 
     required by this section shall not be treated as a change in 
     method of accounting.
       (2) Underpayments of estimated tax.--No addition to the tax 
     shall be made under section 6655 of the Internal Revenue Code 
     of 1986 (relating to failure by corporation to pay estimated 
     tax) with respect to any underpayment of an installment 
     required to be paid with respect to the taxable year 
     described in subsection (a) to the extent such underpayment 
     was created or increased by this section.
       (d) Applicable Integrated Oil Company.--For purposes of 
     this section, the term ``applicable integrated oil company'' 
     means an integrated oil company (as defined in section 
     291(b)(4) of the Internal Revenue Code of 1986) which has an 
     average daily worldwide production of crude oil of at least 
     500,000 barrels for the taxable year and which had gross 
     receipts in excess of $1,000,000,000 for its last taxable 
     year ending during calendar year 2006. For purposes of this 
     subsection all persons treated as a single employer under 
     subsections (a) and (b) of section 52 of the Internal Revenue 
     Code of 1986 shall be treated as 1 person and, in the case of 
     a short taxable year, the rule under section 448(c)(3)(B) 
     shall apply.

     SEC. 208. MODIFICATIONS OF FOREIGN TAX CREDIT RULES 
                   APPLICABLE TO LARGE INTEGRATED OIL COMPANIES 
                   WHICH ARE DUAL CAPACITY TAXPAYERS.

       (a) In General.--Section 901 (relating to credit for taxes 
     of foreign countries and of possessions of the United States) 
     is amended by redesignating subsection (n) as subsection (o) 
     and by inserting after subsection (l) the following new 
     subsection:
       ``(m) Special Rules Relating to Large Integrated Oil 
     Companies Which Are Dual Capacity Taxpayers.--
       ``(1) General rule.--Notwithstanding any other provision of 
     this chapter, any amount paid or accrued by a dual capacity 
     taxpayer which is a large integrated oil company to a foreign 
     country or possession of the United States for any period 
     shall not be considered a tax--
       ``(A) if, for such period, the foreign country or 
     possession does not impose a generally applicable income tax, 
     or
       ``(B) to the extent such amount exceeds the amount 
     (determined in accordance with regulations) which--
       ``(i) is paid by such dual capacity taxpayer pursuant to 
     the generally applicable income tax imposed by the country or 
     possession, or
       ``(ii) would be paid if the generally applicable income tax 
     imposed by the country or possession were applicable to such 
     dual capacity taxpayer.

     Nothing in this paragraph shall be construed to imply the 
     proper treatment of any such amount not in excess of the 
     amount determined under subparagraph (B).
       ``(2) Dual capacity taxpayer.--For purposes of this 
     subsection, the term `dual capacity taxpayer' means, with 
     respect to any foreign country or possession of the United 
     States, a person who--
       ``(A) is subject to a levy of such country or possession, 
     and
       ``(B) receives (or will receive) directly or indirectly a 
     specific economic benefit (as determined in accordance with 
     regulations) from such country or possession.
       ``(3) Generally applicable income tax.--For purposes of 
     this subsection--
       ``(A) In general.--The term `generally applicable income 
     tax' means an income tax (or a series of income taxes) which 
     is generally imposed under the laws of a foreign country or 
     possession on income derived from the conduct of a trade or 
     business within such country or possession.
       ``(B) Exceptions.--Such term shall not include a tax unless 
     it has substantial application, by its terms and in practice, 
     to--
       ``(i) persons who are not dual capacity taxpayers, and
       ``(ii) persons who are citizens or residents of the foreign 
     country or possession.
       ``(4) Large integrated oil company.--For purposes of this 
     subsection, the term `large integrated oil company' means, 
     with respect to any taxable year, an integrated oil company 
     (as defined in section 291(b)(4)) which--
       ``(A) had gross receipts in excess of $1,000,000,000 for 
     such taxable year, and
       ``(B) has an average daily worldwide production of crude 
     oil of at least 500,000 barrels for such taxable year.''
       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxes paid or accrued in taxable years beginning 
     after the date of the enactment of this Act.

[[Page S4486]]

       (2) Contrary treaty obligations upheld.--The amendments 
     made by this section shall not apply to the extent contrary 
     to any treaty obligation of the United States.

     SEC. 209. REPEAL OF LOWER OF COST OR MARKET VALUE OF 
                   INVENTORY RULE.

       (a) In General.--Subsection (a) of section 471 (relating to 
     general rules for inventories) is amended to read as follows:
       ``(a) General Rule.--Whenever in the opinion of the 
     Secretary the use of inventories is necessary in order 
     clearly to determine the income of the taxpayer, inventories 
     shall be valued at cost.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 210. REINSTITUTION OF PER COUNTRY FOREIGN TAX CREDIT.

       (a) In General.--Subsection (a) of section 904 (relating to 
     limitation on credit) is amended to read as follows:
       ``(a) Limitation.--The amount of the credit in respect of 
     the tax paid or accrued to any foreign country or possession 
     of the United States shall not exceed the same proportion of 
     the tax against which such credit is taken which the 
     taxpayer's taxable income from sources within such country or 
     possession (but not in excess of the taxpayer's entire 
     taxable income) bears to such taxpayer's entire taxable 
     income for the same taxable year.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2007.

     SEC. 211. APPLICATION OF RULES TREATING INVERTED CORPORATIONS 
                   AS DOMESTIC CORPORATIONS TO CERTAIN 
                   TRANSACTIONS OCCURRING AFTER MARCH 20, 2002.

       (a) In General.--Section 7874(b) (relating to inverted 
     corporations treated as domestic corporations) is amended to 
     read as follows:
       ``(b) Inverted Corporations Treated as Domestic 
     Corporations.--
       ``(1) In general.--Notwithstanding section 7701(a)(4), a 
     foreign corporation shall be treated for purposes of this 
     title as a domestic corporation if such corporation would be 
     a surrogate foreign corporation if subsection (a)(2) were 
     applied by substituting `80 percent' for `60 percent'.
       ``(2) Special rule for certain transactions occurring after 
     march 20, 2002.--
       ``(A) In general.--If--
       ``(i) paragraph (1) does not apply to a foreign 
     corporation, but
       ``(ii) paragraph (1) would apply to such corporation if, in 
     addition to the substitution under paragraph (1), subsection 
     (a)(2) were applied by substituting `March 20, 2002' for 
     `March 4, 2003' each place it appears,

     then paragraph (1) shall apply to such corporation but only 
     with respect to taxable years of such corporation beginning 
     after December 31, 2006.
       ``(B) Special rules.--Subject to such rules as the 
     Secretary may prescribe, in the case of a corporation to 
     which paragraph (1) applies by reason of this paragraph--
       ``(i) the corporation shall be treated, as of the close of 
     its last taxable year beginning before January 1, 2007, as 
     having transferred all of its assets, liabilities, and 
     earnings and profits to a domestic corporation in a 
     transaction with respect to which no tax is imposed under 
     this title,
       ``(ii) the bases of the assets transferred in the 
     transaction to the domestic corporation shall be the same as 
     the bases of the assets in the hands of the foreign 
     corporation, subject to any adjustments under this title for 
     built-in losses,
       ``(iii) the basis of the stock of any shareholder in the 
     domestic corporation shall be the same as the basis of the 
     stock of the shareholder in the foreign corporation for which 
     it is treated as exchanged, and
       ``(iv) the transfer of any earnings and profits by reason 
     of clause (i) shall be disregarded in determining any deemed 
     dividend or foreign tax creditable to the domestic 
     corporation with respect to such transfer.
       ``(C) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this paragraph, including regulations to prevent the 
     avoidance of the purposes of this paragraph.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

                      TITLE III--OTHER PROVISIONS

               Subtitle A--Improvements in Tax Compliance

     SEC. 301. INFORMATION REPORTING ON PAYMENTS TO CORPORATIONS.

       (a) In General.--Section 6041(a) (relating to payments of 
     $600 or more) is amended by inserting ``(including any 
     corporation other than a corporation exempt from taxation)'' 
     after ``another person''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to payments made after December 31, 2007.

     SEC. 302. BROKER REPORTING OF CUSTOMER'S BASIS IN SECURITIES 
                   TRANSACTIONS.

       (a) In General.--Section 6045 (relating to returns of 
     brokers) is amended by adding at the end the following new 
     subsection:
       ``(g) Additional Information Required in the Case of 
     Securities Transactions.--
       ``(1) In general.--If a broker is otherwise required to 
     make a return under subsection (a) with respect to any 
     applicable security, the broker shall include in such return 
     the information described in paragraph (2).
       ``(2) Additional information required.--
       ``(A) In general.--The information required under paragraph 
     (1) to be shown on a return with respect to an applicable 
     security of a customer shall include for each reported 
     applicable security the customer's adjusted basis in such 
     security.
       ``(B) Exemption from requirement.--The Secretary shall 
     issue such regulations or guidance as necessary concerning 
     the application of the requirement under subparagraph (A) in 
     cases in which a broker in making a return does not have 
     sufficient information to meet such requirement with respect 
     to the reported applicable security. Such regulations or 
     guidance may--
       ``(i) require such other information related to such 
     adjusted basis as the Secretary may prescribe, and
       ``(ii) exempt classes of cases in which the broker does not 
     have sufficient information to meet either the requirement 
     under subparagraph (A) or the requirement under clause (i).
       ``(3) Information transfers.--To the extent provided in 
     regulations, there shall be such exchanges of information 
     between brokers as such regulations may require for purposes 
     of enabling such brokers to meet the requirements of this 
     subsection.
       ``(4) Definitions.--For purposes of this subsection, the 
     term `applicable security' means any--
       ``(A) security described in subparagraph (A) or (C) of 
     section 475(c)(2),
       ``(B) interest in a regulated investment company (as 
     defined in section 851), or
       ``(C) other financial instrument designated in regulations 
     prescribed by the Secretary.''.
       (b) Determination of Basis of Certain Securities by FIFO 
     Method.--Section 1012 (relating to basis of property--cost) 
     is amended by adding at the end the following new sentence: 
     ``Except to the extent provided in regulations, the basis of 
     any applicable security reportable under section 6045 (by 
     reason of subsection (g) thereof) shall be determined on a 
     first-in, first-out method.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to sales and transfers occurring after December 
     31, 2007, with respect to securities acquired before, on, or 
     after such date.

     SEC. 303. ADDITIONAL REPORTING REQUIREMENTS BY REGULATION.

       The Secretary of the Treasury is authorized to issue 
     regulations under which with respect to payments made after 
     December 31, 2007--
       (1) any merchant acquiring bank is required to annually 
     report to the Secretary the gross reimbursement payments made 
     to merchants in a calendar year, unless the benefit of such 
     reporting does not justify the cost of compliance, as 
     determined by the Secretary,
       (2) any contractor receiving payments of $600 or more in a 
     calendar year from a particular business is required to 
     furnish such business the contractor's certified taxpayer 
     identification number or be subject to withholding on such 
     payments at a flat rate percentage selected by the 
     contractor, and
       (3) any Federal, State, or local government is required to 
     report to the Secretary any non-wage payment to procure 
     property and services, other than payments of interest, 
     payments for real property, payments to tax-exempt entities 
     or foreign governments, intergovernmental payments, and 
     payments made pursuant to a classified or confidential 
     contract.

     SEC. 304. INCREASE IN INFORMATION RETURN PENALTIES.

       (a) Failure to File Correct Information Returns.--
       (1) In general.--Section 6721(a)(1) is amended--
       (A) by striking ``$50'' and inserting ``$250'', and
       (B) by striking ``$250,000'' and inserting ``$3,000,000''.
       (2) Reduction where correction in specified period.--
       (A) Correction within 30 days.--Section 6721(b)(1) is 
     amended--
       (i) by striking ``$15'' and inserting ``$50'',
       (ii) by striking ``$50'' and inserting ``$250'', and
       (iii) by striking ``$75,000'' and inserting ``$500,000''.
       (B) Failures corrected on or before august 1.--Section 
     6721(b)(2) is amended--
       (i) by striking ``$30'' and inserting ``$100'',
       (ii) by striking ``$50'' and inserting ``$250'', and
       (iii) by striking ``$150,000'' and inserting 
     ``$1,500,000''.
       (3) Lower limitation for persons with gross receipts of not 
     more than $5,000,000.--Section 6721(d)(1) is amended--
       (A) in subparagraph (A)--
       (i) by striking ``$100,000'' and inserting ``$1,000,000'', 
     and
       (ii) by striking ``$250,000'' and inserting ``$3,000,000'',
       (B) in subparagraph (B)--
       (i) by striking ``$25,000'' and inserting ``$175,000'', and
       (ii) by striking ``$75,000'' and inserting ``$500,000'', 
     and
       (C) in subparagraph (C)--
       (i) by striking ``$50,000'' and inserting ``$500,000'', and
       (ii) by striking ``$150,000'' and inserting ``$1,500,000''.
       (4) Penalty in case of intentional disregard.--Section 
     6721(e) is amended--
       (A) by striking ``$100'' in paragraph (2) and inserting 
     ``$500'',
       (B) by striking ``$250,000'' in paragraph (3)(A) and 
     inserting ``$3,000,000''.

[[Page S4487]]

       (b) Failure to Furnish Correct Payee Statements.--
       (1) In general.--Section 6722(a) is amended--
       (A) by striking ``$50'' and inserting ``$250'', and
       (B) by striking ``$100,000'' and inserting ``$1,000,000''.
       (2) Penalty in case of intentional disregard.--Section 
     6722(c) is amended--
       (A) by striking ``$100'' in paragraph (1) and inserting 
     ``$500'', and
       (B) by striking ``$100,000'' in paragraph (2)(A) and 
     inserting ``$1,000,000''.
       (c) Failure to Comply With Other Information Reporting 
     Requirements.--Section 6723 is amended--
       (1) by striking ``$50'' and inserting ``$250'', and
       (2) by striking ``$100,000'' and inserting ``$1,000,000''.
       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to information returns required to 
     be filed on or after January 1, 2008.

     SEC. 305. E-FILING REQUIREMENT FOR CERTAIN LARGE 
                   ORGANIZATIONS.

       (a) In General.--The first sentence of section 6011(e)(2) 
     is amended to read as follows: ``In prescribing regulations 
     under paragraph (1), the Secretary shall take into account 
     (among other relevant factors) the ability of the taxpayer to 
     comply at reasonable cost with the requirements of such 
     regulations.''.
       (b) Conforming Amendment.--Section 6724 is amended by 
     striking subsection (c).
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending on or after December 31, 
     2008.

     SEC. 306. IMPLEMENTATION OF STANDARDS CLARIFYING WHEN 
                   EMPLOYEE LEASING COMPANIES CAN BE HELD LIABLE 
                   FOR THEIR CLIENTS' FEDERAL EMPLOYMENT TAXES.

       With respect to employment tax returns required to be filed 
     with respect to wages paid on or after January 1, 2008, the 
     Secretary of the Treasury shall issue regulations 
     establishing--
       (1) standards for holding employee leasing companies 
     jointly and severally liable with their clients for Federal 
     employment taxes under chapters 21, 22, 23, and 24 of the 
     Internal Revenue Code of 1986, and
       (2) standards for holding such companies solely liable for 
     such taxes.

     SEC. 307. MODIFICATION OF COLLECTION DUE PROCESS PROCEDURES 
                   FOR EMPLOYMENT TAX LIABILITIES.

       (a) In General.--Section 6330(f) (relating to jeopardy and 
     State refund collection) is amended--
       (1) by striking ``; or'' at the end of paragraph (1) and 
     inserting a comma,
       (2) by adding ``or'' at the end of paragraph (2), and
       (3) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) the Secretary has served a disqualified employment 
     tax levy,''.
       (b) Disqualified Employment Tax Levy.--Section 6330 
     (relating to notice and opportunity for hearing before levy) 
     is amended by adding at the end the following new subsection:
       ``(h) Disqualified Employment Tax Levy.--For purposes of 
     subsection (f), a disqualified employment tax levy is any 
     levy in connection with the collection of employment taxes 
     for any taxable period if the person subject to the levy (or 
     any predecessor thereof) requested a hearing under this 
     section with respect to unpaid employment taxes arising in 
     the most recent 2-year period before the beginning of the 
     taxable period with respect to which the levy is served. For 
     purposes of the preceding sentence, the term `employment 
     taxes' means any taxes under chapter 21, 22, 23, or 24.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to levies served on or after January 1, 2008.

     SEC. 308. EXPANSION OF IRS ACCESS TO INFORMATION IN NATIONAL 
                   DIRECTORY OF NEW HIRES FOR TAX ADMINISTRATION 
                   PURPOSES.

       (a) In General.--Paragraph (3) of section 453(j) of the 
     Social Security Act (42 U.S.C. 653(j)) is amended to read as 
     follows:
       ``(3) Administration of federal tax laws.--The Secretary of 
     the Treasury shall have access to the information in the 
     National Directory of New Hires for purposes of administering 
     the Internal Revenue Code of 1986.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 309. DISCLOSURE OF PRISONER RETURN INFORMATION TO 
                   FEDERAL BUREAU OF PRISONS.

       (a) Disclosure.--
       (1) In general.--Subsection (l) of section 6103 (relating 
     to disclosure of returns and return information for purposes 
     other than tax administration) is amended by adding at the 
     end the following new paragraph:
       ``(22) Disclosure of return information of prisoners to 
     federal bureau of prisons.--
       ``(A) In general.--Under such procedures as the Secretary 
     may prescribe, the Secretary may disclose return information 
     with respect to persons incarcerated in Federal prisons whom 
     the Secretary believes filed or facilitated the filing of 
     false or fraudulent returns to the head of the Federal Bureau 
     of Prisons if the Secretary determines that such disclosure 
     is necessary to permit effective tax administration.
       ``(B) Disclosure by agency to employees.--The head of the 
     Federal Bureau of Prisons may redisclose information received 
     under subparagraph (A)--
       ``(i) only to those officers and employees of the Bureau 
     who are personally and directly engaged in taking 
     administrative actions to address violations of 
     administrative rules and regulations of the prison facility, 
     and
       ``(ii) solely for the purposes described in subparagraph 
     (C).
       ``(C) Restriction on use of disclosed information.--Return 
     information disclosed under this paragraph may be used only 
     for the purposes of--
       ``(i) preventing the filing of false or fraudulent returns; 
     and
       ``(ii) taking administrative actions against individuals 
     who have filed or attempted to file false or fraudulent 
     returns.''.
       (2) Procedures and record keeping related to disclosure.--
     Subsection (p)(4) of section 6103 is amended--
       (A) by striking ``(14), or (17)'' in the matter before 
     subparagraph (A) and inserting ``(14), (17), or (22)'', and
       (B) by striking ``(9), or (16)'' in subparagraph (F)(i) and 
     inserting ``(9), (16), or (22)''.
       (3) Evaluation by treasury inspector general for tax 
     administration.--Paragraph (3) of section 7803(d) 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) not later than 3 years after the date of the 
     enactment of section 6103(l)(22), submit a written report to 
     Congress on the implementation of such section.''.
       (b) Annual Reports.--
       (1) In general.--The Secretary of the Treasury shall submit 
     to Congress and make publicly available an annual report on 
     the filing of false and fraudulent returns by individuals 
     incarcerated in Federal and State prisons.
       (2) Contents of report.--The report submitted under 
     paragraph (1) shall contain statistics on the number of false 
     or fraudulent returns associated with each Federal and State 
     prison and such other information that the Secretary 
     determines is appropriate.
       (3) Exchange of information.--For the purpose of gathering 
     information necessary for the reports required under 
     paragraph (1), the Secretary of the Treasury shall enter into 
     agreements with the head of the Federal Bureau of Prisons and 
     the heads of State agencies charged with responsibility for 
     administration of State prisons under which the head of the 
     Bureau or Agency provides to the Secretary not less 
     frequently than annually the names and other identifying 
     information of prisoners incarcerated at each facility 
     administered by the Bureau or Agency.
       (c) Effective Date.--The amendments made by this section 
     shall apply to disclosures on or after January 1, 2008.

     SEC. 310. MODIFICATION OF CRIMINAL PENALTIES FOR WILLFUL 
                   FAILURES INVOLVING TAX PAYMENTS AND FILING 
                   REQUIREMENTS.

       (a) Increase in Penalty for Attempt to Evade or Defeat 
     Tax.--Section 7201 (relating to attempt to evade or defeat 
     tax) is amended--
       (1) by striking ``$100,000'' and inserting ``$500,000'',
       (2) by striking ``$500,000'' and inserting ``$1,000,000'', 
     and
       (3) by striking ``5 years'' and inserting ``10 years''.
       (b) Modification of Penalties for Willful Failure to File 
     Return, Supply Information, or Pay Tax.--
       (1) In general.--Section 7203 (relating to willful failure 
     to file return, supply information, or pay tax) is amended--
       (A) in the first sentence--
       (i) by striking ``Any person'' and inserting the following:
       ``(a) In General.--Any person'', and
       (ii) by striking ``$25,000'' and inserting ``$50,000'',
       (B) in the third sentence, by striking ``section'' and 
     inserting ``subsection'', and
       (C) by adding at the end the following new subsection:
       ``(b) Aggravated Failure to File.--
       ``(1) In general.--In the case of any failure described in 
     paragraph (2), the first sentence of subsection (a) shall be 
     applied by substituting--
       ``(A) `felony' for `misdemeanor',
       ``(B) `$250,000 ($500,000' for `$50,000 ($100,000', and
       ``(C) `5 years' for `1 year'.
       ``(2) Failure described.--A failure described in this 
     paragraph is--
       ``(A) a failure to make a return described in subsection 
     (a) for any 3 taxable years occurring during any period of 5 
     consecutive taxable years if the aggregate tax liability for 
     such period is not less than $50,000, or
       ``(B) a failure to make a return if the tax liability 
     giving rise to the requirement to make such return is 
     attributable to an activity which is a felony under any State 
     or Federal law.''.
       (2) Penalty may be applied in addition to other 
     penalties.--Section 7204 (relating to fraudulent statement or 
     failure to make statement to employees) is amended by 
     striking ``the penalty provided in section 6674'' and 
     inserting ``the penalties provided in sections 6674 and 
     7203(b)''.
       (c) Fraud and False Statements.--Section 7206 (relating to 
     fraud and false statements) is amended--
       (1) by striking ``$100,000'' and inserting ``$500,000'',
       (2) by striking ``$500,000'' and inserting ``$1,000,000'', 
     and
       (3) by striking ``3 years'' and inserting ``5 years''.

[[Page S4488]]

       (d) Increase in Monetary Limitation for Underpayment or 
     Overpayment of Tax Due to Fraud.--Section 7206 (relating to 
     fraud and false statements), as amended by subsection (a)(3), 
     is amended--
       (1) by striking ``Any person who--'' and inserting ``(a) In 
     General.--Any person who--'', and
       (2) by adding at the end the following new subsection:
       ``(b) Increase in Monetary Limitation for Underpayment or 
     Overpayment of Tax Due to Fraud.--If any portion of any 
     underpayment (as defined in section 6664(a)) or overpayment 
     (as defined in section 6401(a)) of tax required to be shown 
     on a return is attributable to fraudulent action described in 
     subsection (a), the applicable dollar amount under subsection 
     (a) shall in no event be less than an amount equal to such 
     portion. A rule similar to the rule under section 6663(b) 
     shall apply for purposes of determining the portion so 
     attributable.''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to actions, and failures to act, occurring after 
     the date of the enactment of this Act.

     SEC. 311. UNDERSTATEMENT OF TAXPAYER LIABILITY BY RETURN 
                   PREPARERS.

       (a) Application of Return Preparer Penalties to All Tax 
     Returns.--
       (1) Definition of tax return preparer.--Paragraph (36) of 
     section 7701(a) (relating to income tax preparer) is 
     amended--
       (A) by striking ``income'' each place it appears in the 
     heading and the text, and
       (B) in subparagraph (A), by striking ``subtitle A'' each 
     place it appears and inserting ``this title''.
       (2) Conforming amendments.--
       (A)(i) Section 6060 is amended by striking ``INCOME TAX 
     RETURN PREPARERS'' in the heading and inserting ``TAX RETURN 
     PREPARERS''.
       (ii) Section 6060(a) is amended--
       (I) by striking ``an income tax return preparer'' each 
     place it appears and inserting ``a tax return preparer'',
       (II) by striking ``each income tax return preparer'' and 
     inserting ``each tax return preparer'', and
       (III) by striking ``another income tax return preparer'' 
     and inserting ``another tax return preparer''.
       (iii) The item relating to section 6060 in the table of 
     sections for subpart F of part III of subchapter A of chapter 
     61 is amended by striking ``income tax return preparers'' and 
     inserting ``tax return preparers''.
       (iv) Subpart F of part III of subchapter A of chapter 61 is 
     amended by striking ``Income Tax Return Preparers'' in the 
     heading and inserting ``Tax Return Preparers''.
       (v) The item relating to subpart F in the table of subparts 
     for part III of subchapter A of chapter 61 is amended by 
     striking ``income tax return preparers'' and inserting ``tax 
     return preparers''.
       (B) Section 6103(k)(5) is amended--
       (i) by striking ``income tax return preparer'' each place 
     it appears and inserting ``tax return preparer'', and
       (ii) by striking ``income tax return preparers'' each place 
     it appears and inserting ``tax return preparers''.
       (C)(i) Section 6107 is amended--
       (I) by striking ``INCOME TAX RETURN PREPARER'' in the 
     heading and inserting ``TAX RETURN PREPARER'',
       (II) by striking ``an income tax return preparer'' each 
     place it appears in subsections (a) and (b) and inserting ``a 
     tax return preparer'',
       (III) by striking ``Income Tax Return Preparer'' in the 
     heading for subsection (b) and inserting ``Tax Return 
     Preparer'', and
       (IV) in subsection (c), by striking ``income tax return 
     preparers'' and inserting ``tax return preparers''.
       (ii) The item relating to section 6107 in the table of 
     sections for subchapter B of chapter 61 is amended by 
     striking ``Income tax return preparer'' and inserting ``Tax 
     return preparer''.
       (D) Section 6109(a)(4) is amended--
       (i) by striking ``an income tax return preparer'' and 
     inserting ``a tax return preparer'', and
       (ii) by striking ``income return preparer'' in the heading 
     and inserting ``tax return preparer''.
       (E) Section 6503(k)(4) is amended by striking ``Income tax 
     return preparers'' and inserting ``Tax return preparers''.
       (F)(i) Section 6694 is amended--
       (I) by striking ``INCOME TAX RETURN PREPARER'' in the 
     heading and inserting ``TAX RETURN PREPARER'',
       (II) by striking ``an income tax return preparer'' each 
     place it appears and inserting ``a tax return preparer'',
       (III) in subsection (c)(2), by striking ``the income tax 
     return preparer'' and inserting ``the tax return preparer'',
       (IV) in subsection (e), by striking ``subtitle A'' and 
     inserting ``this title'', and
       (V) in subsection (f), by striking ``income tax return 
     preparer'' and inserting ``tax return preparer''.
       (ii) The item relating to section 6694 in the table of 
     sections for part I of subchapter B of chapter 68 is amended 
     by striking ``income tax return preparer'' and inserting 
     ``tax return preparer''.
       (G)(i) Section 6695 is amended--
       (I) by striking ``INCOME'' in the heading, and
       (II) by striking ``an income tax return preparer'' each 
     place it appears and inserting ``a tax return preparer''.
       (ii) Section 6695(f) is amended--
       (I) by striking ``subtitle A'' and inserting ``this 
     title'', and
       (II) by striking ``the income tax return preparer'' and 
     inserting ``the tax return preparer''.
       (iii) The item relating to section 6695 in the table of 
     sections for part I of subchapter B of chapter 68 is amended 
     by striking ``income''.
       (H) Section 6696(e) is amended by striking ``subtitle A'' 
     each place it appears and inserting ``this title''.
       (I)(i) Section 7407 is amended--
       (I) by striking ``INCOME TAX RETURN PREPARERS'' in the 
     heading and inserting ``TAX RETURN PREPARERS'',
       (II) by striking ``an income tax return preparer'' each 
     place it appears and inserting ``a tax return preparer'',
       (III) by striking ``income tax preparer'' both places it 
     appears in subsection (a) and inserting ``tax return 
     preparer'', and
       (IV) by striking ``income tax return'' in subsection (a) 
     and inserting ``tax return''.
       (ii) The item relating to section 7407 in the table of 
     sections for subchapter A of chapter 76 is amended by 
     striking ``income tax return preparers'' and inserting ``tax 
     return preparers''.
       (J)(i) Section 7427 is amended--
       (I) by striking ``INCOME TAX RETURN PREPARERS'' in the 
     heading and inserting ``TAX RETURN PREPARERS'', and
       (II) by striking ``an income tax return preparer'' and 
     inserting ``a tax return preparer''.
       (ii) The item relating to section 7427 in the table of 
     sections for subchapter B of chapter 76 is amended to read as 
     follows:

``Sec. 7427. Tax return preparers.''.

       (b) Modification of Penalty for Understatement of 
     Taxpayer's Liability by Tax Return Preparer.--Subsections (a) 
     and (b) of section 6694 are amended to read as follows:
       ``(a) Understatement Due to Unreasonable Positions.--
       ``(1) In general.--Any tax return preparer who prepares any 
     return or claim for refund with respect to which any part of 
     an understatement of liability is due to a position described 
     in paragraph (2) shall pay a penalty with respect to each 
     such return or claim in an amount equal to the greater of--
       ``(A) $1,000, or
       ``(B) 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 position is described in 
     this paragraph if--
       ``(A) the tax return preparer knew (or reasonably should 
     have known) of the position,
       ``(B) there was not a reasonable belief that the position 
     would more likely than not be sustained on its merits, and
       ``(C)(i) the position was not disclosed as provided in 
     section 6662(d)(2)(B)(ii), or
       ``(ii) there was no reasonable basis for the position.
       ``(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) Understatement Due to Willful or Reckless Conduct.--
       ``(1) In general.--Any tax return preparer who prepares any 
     return or claim for refund with respect to which any part of 
     an understatement of liability is due to a conduct described 
     in paragraph (2) shall pay a penalty with respect to each 
     such return or claim in an amount equal to the greater of--
       ``(A) $5,000, or
       ``(B) 50 percent of the income derived (or to be derived) 
     by the tax return preparer with respect to the return or 
     claim.
       ``(2) Willful or reckless conduct.--Conduct described in 
     this paragraph is conduct by the tax return preparer which 
     is--
       ``(A) a willful attempt in any manner to understate the 
     liability for tax on the return or claim, or
       ``(B) a reckless or intentional disregard of rules or 
     regulations.
       ``(3) Reduction in penalty.--The amount of any penalty 
     payable by any person by reason of this subsection for any 
     return or claim for refund shall be reduced by the amount of 
     the penalty paid by such person by reason of subsection 
     (a).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns prepared after the date of the 
     enactment of this Act.

     SEC. 312. PENALTIES FOR FAILURE TO FILE CERTAIN RETURNS 
                   ELECTRONICALLY.

       (a) In General.--Part I of subchapter A of chapter 68 
     (relating to additions to the tax, additional amounts, and 
     assessable penalties) is amended by inserting after section 
     6652 the following new section:

     ``SEC. 6652A. FAILURE TO FILE CERTAIN RETURNS ELECTRONICALLY.

       ``(a) In General.--If a person fails to file a return 
     described in section 6651 or 6652(c)(1) in electronic form as 
     required under section 6011(e)--
       ``(1) such failure shall be treated as a failure to file 
     such return (even if filed in a form other than electronic 
     form), and
       ``(2) the penalty imposed under section 6651 or 6652(c), 
     whichever is appropriate, shall be equal to the greater of--
       ``(A) the amount of the penalty under such section, 
     determined without regard to this section, or
       ``(B) the amount determined under subsection (b).
       ``(b) Amount of Penalty.--

[[Page S4489]]

       ``(1) In general.--Except as provided in paragraphs (2) and 
     (3), the penalty determined under this subsection is equal to 
     $40 for each day during which a failure described under 
     subsection (a) continues. The maximum penalty under this 
     paragraph on failures with respect to any 1 return shall not 
     exceed the lesser of $20,000 or 10 percent of the gross 
     receipts of the taxpayer for the year.
       ``(2) Increased penalties for taxpayers with gross receipts 
     between $1,000,000 and $100,000,000.--
       ``(A) Taxpayers with gross receipts between $1,000,000 and 
     $25,000,000.--In the case of a taxpayer having gross receipts 
     exceeding $1,000,000 but not exceeding $25,000,000 for any 
     year--
       ``(i) the first sentence of paragraph (1) shall be applied 
     by substituting `$200' for `$40', and
       ``(ii) in lieu of applying the second sentence of paragraph 
     (1), the maximum penalty under paragraph (1) shall not exceed 
     $100,000.
       ``(B) Taxpayers with gross receipts over $25,000,000.--
     Except as provided in paragraph (3), in the case of a 
     taxpayer having gross receipts exceeding $25,000,000 for any 
     year--
       ``(i) the first sentence of paragraph (1) shall be applied 
     by substituting `$500' for `$40', and
       ``(ii) in lieu of applying the second sentence of paragraph 
     (1), the maximum penalty under paragraph (1) shall not exceed 
     $250,000.
       ``(3) Increased penalties for certain taxpayers with gross 
     receipts exceeding $100,000,000.--In the case of a return 
     described in section 6651--
       ``(A) Taxpayers with gross receipts between $100,000,000 
     and $250,000,000.--In the case of a taxpayer having gross 
     receipts exceeding $100,000,000 but not exceeding 
     $250,000,000 for any year--
       ``(i) the amount of the penalty determined under this 
     subsection shall equal the sum of--

       ``(I) $50,000, plus
       ``(II) $1,000 for each day during which such failure 
     continues (twice such amount for each day such failure 
     continues after the first such 60 days), and

       ``(ii) the maximum amount under clause (i)(II) on failures 
     with respect to any 1 return shall not exceed $200,000.
       ``(B) Taxpayers with gross receipts over $250,000,000.--In 
     the case of a taxpayer having gross receipts exceeding 
     $250,000,000 for any year--
       ``(i) the amount of the penalty determined under this 
     subsection shall equal the sum of--

       ``(I) $250,000, plus
       ``(II) $2,500 for each day during which such failure 
     continues (twice such amount for each day such failure 
     continues after the first such 60 days), and

       ``(ii) the maximum amount under clause (i)(II) on failures 
     with respect to any 1 return shall not exceed $250,000.
       ``(C) Exception for certain returns.--Subparagraphs (A) and 
     (B) shall not apply to any return of tax imposed under 
     section 511.''.
       (b) Clerical Amendment.--The table of sections for part I 
     of subchapter A of chapter 68 is amended by inserting after 
     the item relating to section 6652 the following new item:

``Sec. 6652A. Failure to file certain returns electronically.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to returns required to be filed on or after 
     January 1, 2008.

     SEC. 313. PENALTY FOR FILING ERRONEOUS REFUND CLAIMS.

       (a) In General.--Part I of subchapter B of chapter 68 
     (relating to assessable penalties) is amended by inserting 
     after section 6675 the following new section:

     ``SEC. 6676. ERRONEOUS CLAIM FOR REFUND OR CREDIT.

       ``(a) Civil Penalty.--If a claim for refund or credit with 
     respect to income tax (other than a claim for a refund or 
     credit relating to the earned income credit under section 32) 
     is made for an excessive amount, unless it is shown that the 
     claim for such excessive amount has a reasonable basis, the 
     person making such claim shall be liable for a penalty in an 
     amount equal to 20 percent of the excessive amount.
       ``(b) Excessive Amount.--For purposes of this section, the 
     term `excessive amount' means in the case of any person the 
     amount by which the amount of the claim for refund or credit 
     for any taxable year exceeds the amount of such claim 
     allowable under this title for such taxable year.
       ``(c) Coordination With Other Penalties.--This section 
     shall not apply to any portion of the excessive amount of a 
     claim for refund or credit on which a penalty is imposed 
     under part II of subchapter A of chapter 68.''.
       (b) Conforming Amendment.--The table of sections for part I 
     of subchapter B of chapter 68 is amended by inserting after 
     the item relating to section 6675 the following new item:

``Sec. 6676. Erroneous claim for refund or credit.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to any claim--
       (1) filed or submitted after the date of the enactment of 
     this Act, or
       (2) filed or submitted prior to such date but not withdrawn 
     before the date which is 30 days after such date of 
     enactment.

                Subtitle B--Requiring Economic Substance

     SEC. 321. CLARIFICATION OF ECONOMIC SUBSTANCE DOCTRINE.

       (a) In General.--Section 7701 is amended by redesignating 
     subsection (p) as subsection (q) and by inserting after 
     subsection (o) the following new subsection:
       ``(p) Clarification of Economic Substance Doctrine; etc.--
       ``(1) General rules.--
       ``(A) In general.--In any case in which a court determines 
     that the economic substance doctrine is relevant for purposes 
     of this title to a transaction (or series of transactions), 
     such transaction (or series of transactions) shall have 
     economic substance only if the requirements of this paragraph 
     are met.
       ``(B) Definition of economic substance.--For purposes of 
     subparagraph (A)--
       ``(i) In general.--A transaction has economic substance 
     only if--

       ``(I) the transaction changes in a meaningful way (apart 
     from Federal tax effects) the taxpayer's economic position, 
     and
       ``(II) the taxpayer has a substantial nontax purpose for 
     entering into such transaction and the transaction is a 
     reasonable means of accomplishing such purpose.

     In applying subclause (II), a purpose of achieving a 
     financial accounting benefit shall not be taken into account 
     in determining whether a transaction has a substantial nontax 
     purpose if the origin of such financial accounting benefit is 
     a reduction of income tax.
       ``(ii) Special rule where taxpayer relies on profit 
     potential.--A transaction shall not be treated as having 
     economic substance by reason of having a potential for profit 
     unless--

       ``(I) the present value of the reasonably expected pre-tax 
     profit from the transaction is substantial in relation to the 
     present value of the expected net tax benefits that would be 
     allowed if the transaction were respected, and
       ``(II) the reasonably expected pre-tax profit from the 
     transaction exceeds a risk-free rate of return.

       ``(C) Treatment of fees and foreign taxes.--Fees and other 
     transaction expenses and foreign taxes shall be taken into 
     account as expenses in determining pre-tax profit under 
     subparagraph (B)(ii).
       ``(2) Special rules for transactions with tax-indifferent 
     parties.--
       ``(A) Special rules for financing transactions.--The form 
     of a transaction which is in substance the borrowing of money 
     or the acquisition of financial capital directly or 
     indirectly from a tax-indifferent party shall not be 
     respected if the present value of the deductions to be 
     claimed with respect to the transaction is substantially in 
     excess of the present value of the anticipated economic 
     returns of the person lending the money or providing the 
     financial capital. A public offering shall be treated as a 
     borrowing, or an acquisition of financial capital, from a 
     tax-indifferent party if it is reasonably expected that at 
     least 50 percent of the offering will be placed with tax-
     indifferent parties.
       ``(B) Artificial income shifting and basis adjustments.--
     The form of a transaction with a tax-indifferent party shall 
     not be respected if--
       ``(i) it results in an allocation of income or gain to the 
     tax-indifferent party in excess of such party's economic 
     income or gain, or
       ``(ii) it results in a basis adjustment or shifting of 
     basis on account of overstating the income or gain of the 
     tax-indifferent party.
       ``(3) Definitions and special rules.--For purposes of this 
     subsection--
       ``(A) Economic substance doctrine.--The term `economic 
     substance doctrine' means the common law doctrine under which 
     tax benefits under subtitle A with respect to a transaction 
     are not allowable if the transaction does not have economic 
     substance or lacks a business purpose.
       ``(B) Tax-indifferent party.--The term `tax-indifferent 
     party' means any person or entity not subject to tax imposed 
     by subtitle A. A person shall be treated as a tax-indifferent 
     party with respect to a transaction if the items taken into 
     account with respect to the transaction have no substantial 
     impact on such person's liability under subtitle A.
       ``(C) Exception for personal transactions of individuals.--
     In the case of an individual, this subsection shall apply 
     only to transactions entered into in connection with a trade 
     or business or an activity engaged in for the production of 
     income.
       ``(D) Treatment of lessors.--In applying paragraph 
     (1)(B)(ii) to the lessor of tangible property subject to a 
     lease--
       ``(i) the expected net tax benefits with respect to the 
     leased property shall not include the benefits of--

       ``(I) depreciation,
       ``(II) any tax credit, or
       ``(III) any other deduction as provided in guidance by the 
     Secretary, and

       ``(ii) subclause (II) of paragraph (1)(B)(ii) shall be 
     disregarded in determining whether any of such benefits are 
     allowable.
       ``(4) Other common law doctrines not affected.--Except as 
     specifically provided in this subsection, the provisions of 
     this subsection shall not be construed as altering or 
     supplanting any other rule of law, and the requirements of 
     this subsection shall be construed as being in addition to 
     any such other rule of law.
       ``(5) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this subsection. Such regulations may include 
     exemptions from the application of this subsection.''.

[[Page S4490]]

       (b) Effective Date.--The amendments made by this section 
     shall apply to transactions entered into after the date of 
     the enactment of this Act.

     SEC. 322. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO 
                   TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.

       (a) In General.--Subchapter A of chapter 68 is amended by 
     inserting after section 6662A the following new section:

     ``SEC. 6662B. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO 
                   TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.

       ``(a) Imposition of Penalty.--If a taxpayer has a 
     noneconomic substance transaction understatement for any 
     taxable year, there shall be added to the tax an amount equal 
     to 40 percent of the amount of such understatement.
       ``(b) Reduction of Penalty for Disclosed Transactions.--
     Subsection (a) shall be applied by substituting `20 percent' 
     for `40 percent' with respect to the portion of any 
     noneconomic substance transaction understatement with respect 
     to which the relevant facts affecting the tax treatment of 
     the item are adequately disclosed in the return or a 
     statement attached to the return.
       ``(c) Noneconomic Substance Transaction Understatement.--
     For purposes of this section--
       ``(1) In general.--The term `noneconomic substance 
     transaction understatement' means any amount which would be 
     an understatement under section 6662A(b)(1) if section 6662A 
     were applied by taking into account items attributable to 
     noneconomic substance transactions rather than items to which 
     section 6662A would apply without regard to this paragraph.
       ``(2) Noneconomic substance transaction.--The term 
     `noneconomic substance transaction' means any transaction 
     if--
       ``(A) there is a lack of economic substance (within the 
     meaning of section 7701(p)(1)) for the transaction giving 
     rise to the claimed benefit or the transaction was not 
     respected under section 7701(p)(2), or
       ``(B) the transaction fails to meet the requirements of any 
     similar rule of law.
       ``(d) Rules Applicable to Compromise of Penalty.--
       ``(1) In general.--If the first letter of proposed 
     deficiency which allows the taxpayer an opportunity for 
     administrative review in the Internal Revenue Service Office 
     of Appeals has been sent with respect to a penalty to which 
     this section applies, only the Commissioner of Internal 
     Revenue may compromise all or any portion of such penalty.
       ``(2) Applicable rules.--The rules of paragraphs (2) and 
     (3) of section 6707A(d) shall apply for purposes of paragraph 
     (1).
       ``(e) Coordination With Other Penalties.--Except as 
     otherwise provided in this part, the penalty imposed by this 
     section shall be in addition to any other penalty imposed by 
     this title.
       ``(f) Cross References.--

  ``(1) For coordination of penalty with understatements under section 
              6662 and other special rules, see section 6662A(e).
  ``(2) For reporting of penalty imposed under this section to the 
              Securities and Exchange Commission, see section 
              6707A(e).''.

       (b) Coordination With Other Understatements and 
     Penalties.--
       (1) The second sentence of section 6662(d)(2)(A) is amended 
     by inserting ``and without regard to items with respect to 
     which a penalty is imposed by section 6662B'' before the 
     period at the end.
       (2) Subsection (e) of section 6662A is amended--
       (A) in paragraph (1), by inserting ``and noneconomic 
     substance transaction understatements'' after ``reportable 
     transaction understatements'' both places it appears,
       (B) in paragraph (2)(A), by inserting ``and a noneconomic 
     substance transaction understatement'' after ``reportable 
     transaction understatement'',
       (C) in paragraph (2)(B), by inserting ``6662B or'' before 
     ``6663'',
       (D) in paragraph (2)(C)(i), by inserting ``or section 
     6662B'' before the period at the end,
       (E) in paragraph (2)(C)(ii), by inserting ``and section 
     6662B'' after ``This section'',
       (F) in paragraph (3), by inserting ``or noneconomic 
     substance transaction understatement'' after ``reportable 
     transaction understatement'', and
       (G) by adding at the end the following new paragraph:
       ``(4) Noneconomic substance transaction understatement.--
     For purposes of this subsection, the term `noneconomic 
     substance transaction understatement' has the meaning given 
     such term by section 6662B(c).''.
       (3) Subsection (e) of section 6707A is amended--
       (A) by striking ``or'' at the end of subparagraph (B), and
       (B) by striking subparagraph (C) and inserting the 
     following new subparagraphs:
       ``(C) is required to pay a penalty under section 6662B with 
     respect to any noneconomic substance transaction, or
       ``(D) is required to pay a penalty under section 6662(h) 
     with respect to any transaction and would (but for section 
     6662A(e)(2)(C)) have been subject to penalty under section 
     6662A at a rate prescribed under section 6662A(c) or under 
     section 6662B,''.
       (c) Clerical Amendment.--The table of sections for part II 
     of subchapter A of chapter 68 is amended by inserting after 
     the item relating to section 6662A the following new item:

``Sec. 6662B. Penalty for understatements attributable to transactions 
              lacking economic substance, etc.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to transactions entered into after the date of 
     the enactment of this Act.

     SEC. 323. DENIAL OF DEDUCTION FOR INTEREST ON UNDERPAYMENTS 
                   ATTRIBUTABLE TO NONECONOMIC SUBSTANCE 
                   TRANSACTIONS.

       (a) In General.--Section 163(m) (relating to interest on 
     unpaid taxes attributable to nondisclosed reportable 
     transactions) is amended--
       (1) by striking ``attributable'' and all that follows and 
     inserting the following: ``attributable to--
       ``(1) the portion of any reportable transaction 
     understatement (as defined in section 6662A(b)) with respect 
     to which the requirement of section 6664(d)(2)(A) is not met, 
     or
       ``(2) any noneconomic substance transaction understatement 
     (as defined in section 6662B(c)).'', and
       (2) by inserting ``and Noneconomic Substance Transactions'' 
     after ``Transactions''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to transactions after the date of the enactment 
     of this Act in taxable years ending after such date.

                       Subtitle C--Miscellaneous

     SEC. 331. DENIAL OF DEDUCTION FOR PUNITIVE DAMAGES.

       (a) Disallowance of Deduction.--
       (1) In general.--Section 162(g) (relating to treble damage 
     payments under the antitrust laws) is amended--
       (A) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B), respectively,
       (B) by striking ``If'' and inserting:
       ``(1) Treble damages.--If'', and
       (C) by adding at the end the following new paragraph:
       ``(2) Punitive damages.--No deduction shall be allowed 
     under this chapter for any amount paid or incurred for 
     punitive damages in connection with any judgment in, or 
     settlement of, any action. This paragraph shall not apply to 
     punitive damages described in section 104(c).''.
       (2) Conforming amendment.--The heading for section 162(g) 
     is amended by inserting ``Or Punitive Damages'' after 
     ``Laws''.
       (b) Inclusion in Income of Punitive Damages Paid by Insurer 
     or Otherwise.--
       (1) In general.--Part II of subchapter B of chapter 1 
     (relating to items specifically included in gross income) is 
     amended by adding at the end the following new section:

     ``SEC. 91. PUNITIVE DAMAGES COMPENSATED BY INSURANCE OR 
                   OTHERWISE.

       ``Gross income shall include any amount paid to or on 
     behalf of a taxpayer as insurance or otherwise by reason of 
     the taxpayer's liability (or agreement) to pay punitive 
     damages.''.
       (2) Reporting requirements.--Section 6041 (relating to 
     information at source) is amended by adding at the end the 
     following new subsection:
       ``(h) Section To Apply to Punitive Damages Compensation.--
     This section shall apply to payments by a person to or on 
     behalf of another person as insurance or otherwise by reason 
     of the other person's liability (or agreement) to pay 
     punitive damages.''.
       (3) Conforming amendment.--The table of sections for part 
     II of subchapter B of chapter 1 is amended by adding at the 
     end the following new item:

``Sec. 91. Punitive damages compensated by insurance or otherwise''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to damages paid or incurred on or after the date 
     of the enactment of this Act.

         TITLE IV--TECHNICAL AND CONFORMING AMENDMENTS; SUNSET

     SEC. 401. TECHNICAL AND CONFORMING AMENDMENTS.

       The Secretary of the Treasury or the Secretary's delegate 
     shall not later than 90 days after the date of the enactment 
     of this Act, submit to the Committee on Ways and Means of the 
     House of Representatives and the Committee on Finance of the 
     Senate a draft of any technical and conforming changes in the 
     Internal Revenue Code of 1986 which are necessary to reflect 
     throughout such Code the purposes of the provisions of, and 
     amendments made by, this Act.

     SEC. 402. SUNSET.

       (a) In General.--All provisions of, and amendments made by, 
     this Act shall not apply to taxable years beginning after 
     December 31, 2012.
       (b) Application of Code.--The Internal Revenue Code of 1986 
     shall be applied and administered to taxable years described 
     in subsection (a) as if the provisions of, and amendments 
     made by, this Act had never been enacted.
                                 ______
                                 
      By Mrs. FEINSTEIN (for herself and Mrs. Boxer):
  S. 1112. A bill to allow for the renegotiation of the payment 
schedule of contracts between the Secretary of the Interior and the 
Redwood Valley County Water District, and for other purposes; to the 
Committee on Energy and Natural Resources.
  Mrs. FEINSTEIN. Mr. President, I rise today to introduce the Redwood

[[Page S4491]]

Valley County Water District Loan Renegotiation Act of 2007. I am 
pleased that Senator Boxer is a cosponsor of this bill.
  This bill seeks to remove roadblocks to the implementation of 1988 
legislation that requires the Secretary of the Interior to renegotiate 
debts owed by the Redwood Valley County Water District to the United 
States. Enactment of this bill is necessary so that Redwood Valley can 
obtain a reliable water supply.
  In 1983, the Redwood Valley County Water District completed a project 
which supplied water to a rural agricultural community near Ukiah, CA. 
Two Bureau of Reclamation loans totaling $7.3 million contributed to 
the financing of this project.
  Unfortunately, the District was unable to repay these loans. This 
occurred for several reasons: The projected water use in the original 
feasibility study, developed by the District and reviewed by the 
Bureau, was seriously flawed; the District's ability to raise necessary 
revenues was compromised by a judicially imposed moratorium on new 
hook-ups; and concerns for endangered species reduced the District's 
potential water supply allotment by 33 percent.
  As a result, in 1988 Congress passed Section 15 of Public Law 100-516 
which indefinitely suspended the District's obligations to repay these 
Bureau loans and ordered the Secretary of Interior to renegotiate the 
loans. This loan renegotiation has yet to take place and now the 
District finds that its water supply is highly uncertain.
  In 2000 in a report on Redwood Valley, the Bureau of Reclamation 
recognized these changed conditions, and concluded that the District 
needs a reliable water supply before it can solve its current financial 
dilemma.
  The District recently identified two potential new projects, either 
of which could prove a reliable water source. No government funds will 
be sought for these projects. The District intends to rely on private 
financing, a strategy that the Bureau of Reclamation is encouraging. 
However, before the District can secure private financing for new 
projects, it must renegotiate the existing loans to provide for their 
repayment subsequent to the repayment of the new loans.
  The existing loans are an impediment to the District's attempts to 
upgrade elements of its existing plant. As an example, the District 
unsuccessfully sought private financing to build a 100 kW solar panel 
project. This project would have enabled the District to cut its energy 
costs and to qualify for energy rebates.
  Significantly, this legislation requires the District to repay to the 
United States the currently suspended loans once the District's new 
loans have been paid.
  The only difference between this bill and S. 3189, which I introduced 
last year, is to clarify that no renegotiations are required to trigger 
the District's obligations to repay the loans and the Secretary of 
Interior ``shall reschedule the payments due'' once the District has 
satisfied its additional financial obligations.
  The proposed water projects will enable the District to generate 
adequate revenues to allow the District to repay both its new private 
loans and its original loans from the United States. By providing a 
workable and reasonable solution to a longstanding problem, this 
legislation creates a win-win solution for taxpayers of the United 
States and the rate payers of the Redwood Valley County Water District.
  I urge my colleagues to support this bill and ask unanimous consent 
that the text of the bill be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1112

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

     SECTION 1. RENEGOTIATION OF PAYMENT SCHEDULE.

       Section 15 of Public Law 100-516 (102 Stat. 2573) is 
     amended as follows:
       (1) By amending paragraph (2) of subsection (a) to read as 
     follows:
       ``(2) If, as of January 1, 2006, the Secretary of the 
     Interior and the Redwood Valley County Water District have 
     not renegotiated the schedule of payment, the District may 
     enter into such additional non-Federal obligations as are 
     necessary to finance procurement of dedicated water rights 
     and improvements necessary to store and convey those rights 
     to provide for the District's water needs. The Secretary 
     shall reschedule the payments due under loans numbered 14-06-
     200-8423A and 14-06-200-8423A Amendatory and said payments 
     shall commence when such additional obligations have been 
     financially satisfied by the District. The date of the 
     initial payment owed by the District to the United States 
     shall be regarded as the start of the District's repayment 
     period and the time upon which any interest shall first be 
     computed and assessed under section 5 of the Small 
     Reclamation Projects Act of 1956 (43 U.S.C. 422a et seq.).''.
       (2) By striking subsection (c).
                                 ______
                                 
      By Mrs. FEINSTEIN (for herself and Mr. Specter):
  S. 1114. A bill to reiterate the exclusivity of the Foreign 
Intelligence Surveillance Act of 1978 as the sole authority to permit 
the conduct of electronic surveillance, to modernize surveillance 
authorities, and for other purposes; to the Committee on the Judiciary.
  Mrs. FEINSTEIN. Mr. President, I rise today to re-introduce 
legislation from the last Congress that would bring all electronic 
surveillance of terrorists under the color of law and would modernize 
the rules for conducting such surveillance. I am pleased that Senator 
Specter, the Ranking Member of the Judiciary Committee, has co-
sponsored this legislation.
  We all agree that the President and the Intelligence Community should 
have all the tools they need to find the terrorists before they have a 
chance to strike us again. This cannot be said too many times in too 
many ways.
  We also agree, though, that these intelligence tools can and should 
be used in a way that protects the constitutional and privacy rights of 
all Americans. That is the balance that this legislation attempts to 
strike.
  Nowhere is this more at issue than in electronic surveillance, where 
government officials record the content of Americans' phone and 
electronic communications. This important means of obtaining critical 
counterterrorism information is at the same time a significant, 
constitutionally recognized intrusion into Americans' privacy rights.
  It is worth reminding ourselves of this. We have recently focused on 
the use of National Security Letters, through which the FBI 
inappropriately obtained telephone records of at least hundreds of 
Americans. Electronic surveillance goes far beyond records and collects 
the actual content--the words spoken over the phone or typed in email.
  It is also worth reminding ourselves of why this legislation is 
necessary, as it has been several months before this was the top 
legislative issue before the Senate.
  For more than five years since September 11, 2001, the National 
Security Agency collected the content of calls from or to United States 
persons--citizens and permanent residents--without a court order as is 
required by the Foreign Intelligence Surveillance Act of 1978 (FISA).
  This surveillance was done without notifying and seeking 
authorization from the congressional intelligence committees. The 
President and Vice President have very closely restricted disclosure of 
information about what they call the ``Terrorist Surveillance 
Program.''
  Until this surveillance came to light through an article in The New 
York Times in December 2005, only eight members of Congress were 
briefed on it. Even after the article came out, the White House refused 
to brief the members of the House and Senate Intelligence Committees 
for several months.
  Even now, the Intelligence Committee does not have all the 
information it needs to carry out its Constitutional oversight duties.
  Throughout 2006, the Judiciary Committee debated various bills to 
authorize or prohibit electronic surveillance outside of FISA. The bill 
that Senator Specter and I authored last year, which is being re-
introduced today, was reported out of Judiciary on a bipartisan vote on 
September 13, 2006. The Senate, however, took no legislative action 
prior to adjournment.
  Then, on January 17, 2007, Attorney General Alberto Gonzales notified 
the chairman and ranking member of the Senate Judiciary Committee that 
the FISA Court had authorized the Terrorist Surveillance Program. Since 
January, the program has proceeded

[[Page S4492]]

under Court supervision, as is required by FISA.
  I was pleased that the Administration submitted the TSP to the FISA 
Court, and that the Court had found a way to issue an order approving 
this surveillance. I was pleased, but not surprised.
  I had maintained throughout the legislative debate last year that it 
would not take many changes for the TSP to fit under the confines of 
FISA. All it took was the willingness of the Administration to follow 
legal process.
  Members may ask, given the recent developments, why legislation is 
now necessary. There are two reasons.
  The first is that the Senate should enact this bill is because this 
Administration has never conceded the point that it cannot conduct 
electronic surveillance outside of the law. It has put the TSP under 
FISA Court review, but it asserts that it has the right not to do so. 
Future Administrations, if not enjoined, may take the same view.
  I disagree with this legal analysis.
  Secondly, the Director of the National Security Agency, the Director 
of the FBI, and the Attorney General have said on many occasions that 
FISA is outdated and in need of modernization. The current FISA process 
is too bureaucratic, too slow to initiate electronic surveillance from 
the time a suspected terrorist's phone or email account is identified.
  This bill addresses those concerns by providing new flexibility and 
additional resources to speed the FISA process and allow for the more 
timely collection of valuable intelligence.
  Allow me to summarize the legislation. The bill: re-iterates that 
FISA is the exclusive means for conducting electronic surveillance for 
intelligence purposes.
  Specifies that FISA's requirements cannot be written off through 
contorted interpretations of other statutes. The Administration's 
tortured argument with respect to the Authorization for the 2001 Use of 
Military Force (AUMF) notwithstanding, this legislation would specify 
that FISA's language can only be undone by a specific and direct Act of 
Congress.
  Requires that Congress, through the Intelligence Committees, be fully 
briefed on the Terrorist Surveillance Program and any related 
surveillance programs.
  Requires the Supreme Court to review, on an expedited basis, the 
constitutionality of the Terrorist Surveillance Program.
  Streamlines the current ``emergency procedures'' in FISA. Currently, 
the Attorney General can authorize surveillance prior to a Court order 
for 72 hours in an emergency. This legislation would extend the time 
to one week, which should remove any doubt as to whether Court approval 
can be sought and obtained in time. The bill also allows the Attorney 
General to delegate his authority to initiate electronic surveillance 
in an emergency to specific supervisory officials at the NSA and FBI.

  Authorizes additional personnel to expedite the writing, submission, 
and review of FISA applications. Specifically, additional FISA Court 
judges and staff are authorized, as are additional positions at the 
Department of Justice, FBI, and NSA.
  Extends the existing FISA authority--for 15 days of warrantless 
surveillance following a declaration of war--to any 30-day period 
following an authorization for the use of military force or a national 
emergency following a terrorist attack.
  Allows the National Security Agency to take full advantage of its 
capabilities to collect intelligence on foreign communications.
  While foreign-to-foreign communications are not covered now by FISA's 
requirements, the NSA can only conduct surveillance on these calls if 
it can be sure, in advance, that a telephone call of email won't 
transit the United States or unexpectedly end here. In the age of cell 
phones and the global telecommunications system, this a priori 
certification is very difficult to make. This legislation therefore 
specifies that in such inadvertent collection cases, the NSA must 
minimize the data, but that it has not violated the law.
  Finally, the legislation clarifies that FISA court orders for 
electronic surveillance must be individualized to a particular target 
that the government has probable cause to believe is a foreign power or 
an agent of a foreign power.
  From the briefings I have received as a member of the Intelligence 
Committee and the hearings held in Judiciary, I am convinced that the 
Terrorist Surveillance Program is an important anti-terrorism tool that 
should be continued.
  It is also clear from the January FISA Court ruling that the 
Terrorist Surveillance Program can be conducted within the confines of 
FISA. It is appropriate now for Congress to re-iterate that this is the 
appropriate arrangement.
  This is by no means an issue that has been overtaken by events. The 
Administration continues to support a view of plenary authority in 
which it can conduct electronic surveillance in violation of FISA. The 
NSA and the FBI continue to labor under a process that was formed 29 
years ago, prior to fundamental changes in the telecommunications 
system.
  I urge the Senate to act to ensure that the law is followed and 
privacy rights upheld, and to provide the Intelligence Community the 
tools it needs to continue to make us safe.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1114

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Foreign 
     Intelligence Surveillance Improvement and Enhancement Act of 
     2007''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.

  TITLE I--CONSTRUCTION OF FOREIGN INTELLIGENCE SURVEILLANCE AUTHORITY

Sec. 101. Reiteration of chapters 119, 121, and 206 of title 18, United 
              States Code, and Foreign Intelligence Surveillance Act of 
              1978 as exclusive means by which domestic electronic 
              surveillance may be conducted.
Sec. 102. Specific authorization required for any repeal or 
              modification of title I of the Foreign Intelligence 
              Surveillance Act of 1978.
Sec. 103. Information for Congress on the terrorist surveillance 
              program and similar programs.
Sec. 104. Supreme Court review of the Terrorist Surveillance Program.

 TITLE II--APPLICATIONS AND PROCEDURES FOR ELECTRONIC SURVEILLANCE FOR 
                     FOREIGN INTELLIGENCE PURPOSES

Sec. 201. Extension of period for applications for orders for emergency 
              electronic surveillance.
Sec. 202. Additional authority for emergency electronic surveillance.
Sec. 203. Foreign Intelligence Surveillance Court matters.
Sec. 204. Document management system for applications for orders 
              approving electronic surveillance.
Sec. 205. Additional personnel for preparation and consideration of 
              applications for orders approving electronic 
              surveillance.
Sec. 206. Training of Federal Bureau of Investigation and National 
              Security Agency personnel in foreign intelligence 
              surveillance matters.
Sec. 207. Enhancement of electronic surveillance authority in wartime.

TITLE III--CLARIFICATIONS TO THE FOREIGN INTELLIGENCE SURVEILLANCE ACT 
                                OF 1978

Sec. 301. Acquisition of foreign-foreign communications.
Sec. 302. Individualized FISA orders.

                        TITLE IV--OTHER MATTERS

Sec. 401. Authorization of appropriations.
Sec. 402. Effective date.

     SEC. 2. DEFINITIONS.

       In this Act:
       (1) Congressional intelligence committees.--The term 
     ``congressional intelligence committees'' means--
       (A) the Select Committee on Intelligence of the Senate; and
       (B) the Permanent Select Committee on Intelligence of the 
     House of Representatives.
       (2) Foreign intelligence surveillance court.--The term 
     ``Foreign Intelligence Surveillance Court'' means the court 
     established by section 103(a) of the Foreign Intelligence 
     Surveillance Act of 1978 (50 U.S.C. 1803(a)).
       (3) United states person.--The term ``United States 
     person'' has the meaning given such term in section 101(i) of 
     the Foreign Intelligence Surveillance Act of 1978 (50 U.S.C. 
     1801(i)).

[[Page S4493]]

  TITLE I--CONSTRUCTION OF FOREIGN INTELLIGENCE SURVEILLANCE AUTHORITY

     SEC. 101. REITERATION OF CHAPTERS 119, 121, AND 206 OF TITLE 
                   18, UNITED STATES CODE, AND FOREIGN 
                   INTELLIGENCE SURVEILLANCE ACT OF 1978 AS 
                   EXCLUSIVE MEANS BY WHICH DOMESTIC ELECTRONIC 
                   SURVEILLANCE MAY BE CONDUCTED.

       (a) Exclusive Means.--Notwithstanding any other provision 
     of law, chapters 119, 121, and 206 of title 18, United States 
     Code, and the Foreign Intelligence Surveillance Act of 1978 
     (50 U.S.C. 1801 et seq.) shall be the exclusive means by 
     which electronic surveillance (as that term is defined in 
     section 101(f) of the Foreign Intelligence Surveillance Act 
     of 1978 (50 U.S.C. 1801(f)) may be conducted.
       (b) Amendment to Foreign Intelligence Surveillance Act of 
     1978.--Section 109(a) of the Foreign Intelligence 
     Surveillance Act of 1978 (50 U.S.C. 1809(a)) is amended by 
     striking ``authorized by statute'' each place it appears and 
     inserting ``authorized by this title or chapter 119, 121, or 
     206 of title 18, United States Code''.
       (c) Amendment to Title 18, United States Code.--Section 
     2511(2)(a)(ii)(B) of title 18, United States Code, is amended 
     by striking ``statutory requirements'' and inserting 
     ``requirements under the Foreign Intelligence Surveillance 
     Act of 1978 (50 U.S.C. 1801 et seq.), this chapter, or 
     chapters 121 or 206 of this title''.

     SEC. 102. SPECIFIC AUTHORIZATION REQUIRED FOR ANY REPEAL OR 
                   MODIFICATION OF TITLE I OF THE FOREIGN 
                   INTELLIGENCE SURVEILLANCE ACT OF 1978.

       (a) In General.--Title I of the Foreign Intelligence 
     Surveillance Act of 1978 (50 U.S.C. 1801 et seq.) is amended 
     by inserting after section 109 the following new section:


  ``SPECIFIC AUTHORIZATION REQUIRED FOR ANY REPEAL OR MODIFICATION OF 
                                 TITLE

       ``Sec. 109A.  No provision of law shall be construed to 
     implicitly repeal or modify this title or any provision 
     thereof, nor shall any provision of law be deemed to repeal 
     or modify this title in any manner unless such provision of 
     law, if enacted after the date of the enactment of the 
     Foreign Intelligence Surveillance Improvement and Enhancement 
     Act of 2007, expressly amends or otherwise specifically cites 
     this title.''.
       (b) Clerical Amendment.--The table of contents for that Act 
     is amended by inserting after the item relating to section 
     109 the following new item:

``Sec. 109A. Specific authorization required for any repeal or 
              modification of title.''.

     SEC. 103. INFORMATION FOR CONGRESS ON THE TERRORIST 
                   SURVEILLANCE PROGRAM AND SIMILAR PROGRAMS.

       As soon as practicable after the date of the enactment of 
     this Act, but not later than seven days after such date, the 
     President shall brief and inform each member of the 
     congressional intelligence committees on the following:
       (1) The Terrorist Surveillance Program of the National 
     Security Agency.
       (2) Any program which involves, whether in part or in 
     whole, the electronic surveillance of United States persons 
     in the United States for foreign intelligence purposes, and 
     which is conducted by any department, agency, or other 
     element of the United States Government, or by any entity at 
     the direction of a department, agency, or other element of 
     the United States Government, without fully complying with 
     the procedures set forth in the Foreign Intelligence 
     Surveillance Act of 1978 (50 U.S.C. 1801 et seq.) or chapter 
     119, 121, or 206 of title 18, United States Code.

     SEC. 104. SUPREME COURT REVIEW OF THE TERRORIST SURVEILLANCE 
                   PROGRAM.

       (a) In General.--Upon petition by the United States or any 
     party to the underlying proceedings, the Supreme Court of the 
     United States shall review a final decision on the merits 
     concerning the constitutionality of the Terrorist 
     Surveillance Program in at least one case that is pending in 
     the courts of the United States on the date of enactment of 
     this Act.
       (b) Expedited Consideration.--It shall be the duty of the 
     Supreme Court of the United States to advance on the docket 
     and to expedite to the greatest possible extent the 
     disposition of any matter brought under subsection (a).
       (c) Definition.--In this section, the term ``Terrorist 
     Surveillance Program'' means the program identified by the 
     President on December 17, 2005, to intercept international 
     communications into and out of the United States of persons 
     linked to al Qaeda or related terrorist organizations.

 TITLE II--APPLICATIONS AND PROCEDURES FOR ELECTRONIC SURVEILLANCE FOR 
                     FOREIGN INTELLIGENCE PURPOSES

     SEC. 201. EXTENSION OF PERIOD FOR APPLICATIONS FOR ORDERS FOR 
                   EMERGENCY ELECTRONIC SURVEILLANCE.

       Section 105(f) of the Foreign Intelligence Surveillance Act 
     of 1978 (50 U.S.C. 1805(f)) is amended by striking ``72 
     hours'' both places it appears and inserting ``168 hours''.

     SEC. 202. ADDITIONAL AUTHORITY FOR EMERGENCY ELECTRONIC 
                   SURVEILLANCE.

       Section 105 of the Foreign Intelligence Surveillance Act of 
     1978 (50 U.S.C. 1805) is amended--
       (1) by redesignating subsections (g), (h), (i), and (j) as 
     subsections (h), (i), (j), and (k), respectively; and
       (2) by inserting after subsection (f) the following new 
     subsection (g):
       ``(g)(1)(A) Notwithstanding any other provision of this 
     title and subject to the provisions of this subsection, the 
     Attorney General may, with the concurrence of the Director of 
     National Intelligence, appoint appropriate supervisory or 
     executive personnel within the Federal Bureau of 
     Investigation and the National Security Agency to authorize 
     electronic surveillance on a United States person in the 
     United States on an emergency basis pursuant to the 
     provisions of this subsection.
       ``(B) For purposes of this subsection, an intelligence 
     agent or employee acting under the supervision of a 
     supervisor or executive appointed under subparagraph (A) may 
     conduct emergency electronic surveillance under this 
     subsection if such supervisor or executive reasonably 
     determines that--
       ``(i) an emergency situation exists with respect to the 
     employment of electronic surveillance to obtain foreign 
     intelligence information before an order authorizing such 
     surveillance can with due diligence be obtained; and
       ``(ii) the factual basis exists for the issuance of an 
     order approving such surveillance under this title.
       ``(2) The supervisors and executives appointed by the 
     Attorney General under paragraph (1) may only be officials as 
     follows:
       ``(A) In the case of the Federal Bureau of Investigation, 
     officials at or above the level of Special Agent in Charge.
       ``(B) In the case of the National Security Agency, 
     officials at or above the level of head of branch of the 
     National Security Agency.
       ``(3) A supervisor or executive responsible for the 
     emergency employment of electronic surveillance under this 
     subsection shall submit to the Attorney General a request for 
     approval of the surveillance within 24 hours of the 
     commencement of the surveillance. The request shall set forth 
     the ground for the belief specified in paragraph (1), 
     together with such other information as the Attorney General 
     shall require.
       ``(4)(A) The review of a request under paragraph (3) shall 
     be completed by the official concerned under that paragraph 
     as soon as practicable, but not more than 72 hours after the 
     commencement of the electronic surveillance concerned under 
     paragraph (1).
       ``(B)(i) If the official concerned determines that the 
     electronic surveillance does not meet the requirements of 
     paragraph (1), the surveillance shall terminate immediately 
     and may not be recommenced by any supervisor or executive 
     appointed under paragraph (1), or any agent or employee 
     acting under the supervision of such supervisor or executive, 
     absent additional facts or changes in circumstances that lead 
     a supervisor or executive appointed under paragraph (1) to 
     reasonably believe that the requirements of paragraph (1) are 
     satisfied.
       ``(ii) In the event of a determination under clause (i), 
     the Attorney General shall not be required, under section 
     106(j), to notify any United States person of the fact that 
     the electronic surveillance covered by such determination was 
     conducted before the termination of the surveillance under 
     that clause. However, the official making such determination 
     shall notify the court established by section 103(a) of such 
     determination, and shall also provide notice of such 
     determination in the first report that is submitted under 
     section 108(a) after such determination is made.
       ``(C) If the official concerned determines that the 
     surveillance meets the requirements of subsection (f), the 
     surveillance may continue, subject to the requirements of 
     paragraph (5).
       ``(5)(A) An application in accordance with this title shall 
     be made to a judge having jurisdiction under section 103 as 
     soon as practicable but not more than 168 hours after the 
     commencement of electronic surveillance under paragraph (1).
       ``(B) In the absence of a judicial order approving 
     electronic surveillance commenced under paragraph (1), the 
     surveillance shall terminate at the earlier of--
       ``(i) when the information sought is obtained;
       ``(ii) when the application under subparagraph (A) for an 
     order approving the surveillance is denied; or
       ``(iii) 168 hours after the commencement of the 
     surveillance, unless an application under subparagraph (A) is 
     pending, in which case the surveillance may continue for up 
     to an additional 24 hours while the judge has the application 
     under advisement.
       ``(C) If an application under subparagraph (A) for an order 
     approving electronic surveillance commenced under paragraph 
     (1) is denied, or in any other case in which the surveillance 
     is terminated and no order approving the surveillance is 
     issued by a court, the use of information obtained or 
     evidence derived from the surveillance shall be governed by 
     the provisions of subsection (f).
       ``(D) The denial of an application submitted under 
     subparagraph (A) may be reviewed as provided in section 103.
       ``(6) Any person who engages in the emergency employment of 
     electronic surveillance under paragraph (1) shall follow the 
     minimization procedures otherwise required by this title for 
     the issuance of a judicial order approving the conduct of 
     electronic surveillance.
       ``(7) Not later than 30 days after appointing supervisors 
     and executives under paragraph (1) to authorize the exercise 
     of authority in

[[Page S4494]]

     that paragraph, the Attorney General, in consultation with 
     the Director of National Intelligence, shall submit to the 
     court established by section 103(a), the Select Committee on 
     Intelligence of the Senate, and the Permanent Select 
     Committee on Intelligence of the House of Representatives, 
     and bring up to date as required, a report that--
       ``(A) identifies the number of supervisors and executives 
     who have been so appointed and the positions held by such 
     supervisors and executives; and
       ``(B) sets forth guidelines or other directives that 
     describe the responsibilities of such supervisors and 
     executives under this subsection.''.

     SEC. 203. FOREIGN INTELLIGENCE SURVEILLANCE COURT MATTERS.

       (a) Authority for Additional Judges.--Section 103(a) of the 
     Foreign Intelligence Surveillance Act of 1978 (50 U.S.C. 
     1803(a)) is amended--
       (1) by inserting ``(1)'' after ``(a)'';
       (2) in paragraph (1), as so designated, by inserting ``at 
     least'' before ``seven of the United States judicial 
     circuits'';
       (3) by designating the second sentence as paragraph (4) and 
     indenting such paragraph, as so designated, two ems from the 
     left margin; and
       (4) by inserting after paragraph (1), as so designated, the 
     following new paragraph:
       ``(2) In addition to the judges designated under paragraph 
     (1), the Chief Justice of the United States may designate as 
     judges of the court established by paragraph (1) such judges 
     appointed under Article III of the Constitution of the United 
     States as the Chief Justice determines appropriate in order 
     to provide for the prompt and timely consideration under 
     section 105 of applications under section 104 for electronic 
     surveillance under this title. Any judge designated under 
     this paragraph shall be designated publicly.''.
       (b) Consideration of Emergency Applications.--Such section 
     is further amended by inserting after paragraph (2), as added 
     by subsection (a)(4) of this section, the following new 
     paragraph:
       ``(3) A judge of the court shall make a determination to 
     approve, deny, or seek modification of an application 
     submitted pursuant to section subsection (f) or (g) of 
     section 105 not later than 24 hours after the receipt of such 
     application by the court.''.

     SEC. 204. DOCUMENT MANAGEMENT SYSTEM FOR APPLICATIONS FOR 
                   ORDERS APPROVING ELECTRONIC SURVEILLANCE.

       (a) System Required.--The Attorney General shall, in 
     consultation with the Director of the Federal Bureau of 
     Investigation, the Director of the National Security Agency, 
     and the Foreign Intelligence Surveillance Court, develop and 
     implement a secure, classified document management system 
     that permits the prompt preparation, modification, and review 
     by appropriate personnel of the Department of Justice, the 
     Federal Bureau of Investigation, the National Security 
     Agency, and other applicable elements of the United States 
     Government of applications under section 104 of the Foreign 
     Intelligence Surveillance Act of 1978 (50 U.S.C. 1804) before 
     their submittal to the Foreign Intelligence Surveillance 
     Court.
       (b) Scope of System.--The document management system 
     required by subsection (a) shall--
       (1) permit and facilitate the prompt submittal of 
     applications to the Foreign Intelligence Surveillance Court 
     under section 104 or 105(g)(5) of the Foreign Intelligence 
     Surveillance Act of 1978 (50 U.S.C. 1804 and 1805(g)(5)); and
       (2) permit and facilitate the prompt transmittal of rulings 
     of the Foreign Intelligence Surveillance Court to personnel 
     submitting applications described in paragraph (1).

     SEC. 205. ADDITIONAL PERSONNEL FOR PREPARATION AND 
                   CONSIDERATION OF APPLICATIONS FOR ORDERS 
                   APPROVING ELECTRONIC SURVEILLANCE.

       (a) Office of Intelligence Policy and Review.--
       (1) Additional personnel.--The Office of Intelligence 
     Policy and Review of the Department of Justice is hereby 
     authorized such additional personnel as may be necessary to 
     carry out the prompt and timely preparation, modification, 
     and review of applications under section 104 of the Foreign 
     Intelligence Surveillance Act of 1978 (50 U.S.C. 1804) for 
     orders under section 105 of that Act (50 U.S.C. 1805) 
     approving electronic surveillance for foreign intelligence 
     purposes.
       (2) Assignment.--The Attorney General shall assign 
     personnel authorized by paragraph (1) to and among 
     appropriate offices of the National Security Agency in order 
     that such personnel may directly assist personnel of the 
     Agency in preparing applications described in that paragraph.
       (b) Federal Bureau of Investigation.--
       (1) Additional legal and other personnel.--The National 
     Security Branch of the Federal Bureau of Investigation is 
     hereby authorized such additional legal and other personnel 
     as may be necessary to carry out the prompt and timely 
     preparation of applications under section 104 of the Foreign 
     Intelligence Surveillance Act of 1978 (50 U.S.C. 1804) for 
     orders under section 105 of that Act (50 U.S.C. 1805) 
     approving electronic surveillance for foreign intelligence 
     purposes.
       (2) Assignment.--The Director of the Federal Bureau of 
     Investigation shall assign personnel authorized by paragraph 
     (1) to and among the field offices of the Federal Bureau of 
     Investigation in order that such personnel may directly 
     assist personnel of the Bureau in such field offices in 
     preparing applications described in that paragraph.
       (c) Additional Legal and Other Personnel for National 
     Security Agency.--The National Security Agency is hereby 
     authorized such additional legal and other personnel as may 
     be necessary to carry out the prompt and timely preparation 
     of applications under section 104 of the Foreign Intelligence 
     Surveillance Act of 1978 (50 U.S.C. 1804) for orders under 
     section 105 of that Act (50 U.S.C. 1805) approving electronic 
     surveillance for foreign intelligence purposes.
       (d) Additional Legal and Other Personnel for Foreign 
     Intelligence Surveillance Court.--There is hereby authorized 
     for the Foreign Intelligence Surveillance Court such 
     additional staff personnel as may be necessary to facilitate 
     the prompt and timely consideration by that Court of 
     applications under section 104 of the Foreign Intelligence 
     Surveillance Act of 1978 (50 U.S.C. 1804) for orders under 
     section 105 of that Act (50 U.S.C. 1805) approving electronic 
     surveillance for foreign intelligence purposes. Personnel 
     authorized by this paragraph shall perform such duties 
     relating to the consideration of such applications as that 
     Court shall direct.
       (e) Supplement Not Supplant.--The personnel authorized by 
     this section are in addition to any other personnel 
     authorized by law.

     SEC. 206. TRAINING OF FEDERAL BUREAU OF INVESTIGATION AND 
                   NATIONAL SECURITY AGENCY PERSONNEL IN FOREIGN 
                   INTELLIGENCE SURVEILLANCE MATTERS.

       The Director of the Federal Bureau of Investigation and the 
     Director of the National Security Agency shall each, in 
     consultation with the Attorney General--
       (1) develop regulations to establish procedures for 
     conducting and seeking approval of electronic surveillance on 
     an emergency basis, and for preparing and properly submitting 
     and receiving applications and orders, under sections 104 and 
     105 of the Foreign Intelligence Surveillance Act of 1978 (50 
     U.S.C. 1804 and 1805); and
       (2) prescribe related training for the personnel of the 
     applicable agency.

     SEC. 207. ENHANCEMENT OF ELECTRONIC SURVEILLANCE AUTHORITY IN 
                   WARTIME.

       Section 111 of the Foreign Intelligence Surveillance Act of 
     1978 (50 U.S.C. 1811) is amended by striking ``fifteen 
     calendar days following a declaration of war by the 
     Congress.'' and inserting ``30 calendar days following any of 
     the following:
       ``(1) A declaration of war by the Congress.
       ``(2) An authorization for the use of military force within 
     the meaning of section 2(c)(2) of the War Powers Resolution 
     (50 U.S.C. 1541(c)(2)).
       ``(3) A national emergency created by attack upon the 
     United States, its territories or possessions, or the Armed 
     Forces within the meaning of section 2(c)(3) of the War 
     Powers Resolution (50 U.S.C. 1541(c)(3)).''.

TITLE III--CLARIFICATIONS TO THE FOREIGN INTELLIGENCE SURVEILLANCE ACT 
                                OF 1978

     SEC. 301. ACQUISITION OF FOREIGN-FOREIGN COMMUNICATIONS.

       (a) In General.--Notwithstanding any other provision of 
     this Act or the Foreign Intelligence Surveillance Act of 1978 
     (50 U.S.C. 1801 et seq.), no court order shall be required 
     for the acquisition through electronic surveillance of the 
     contents of any communication between one person who is not 
     located within the United States and another person who is 
     not located within the United States for the purpose of 
     collecting foreign intelligence information even if such 
     communication passes through, or the surveillance device is 
     located within, the United States.
       (b) Treatment of Intercepted Communications Involving 
     Domestic Party.--If surveillance conducted as described in 
     subsection (a) inadvertently collects a communication in 
     which at least one party is within the United States, the 
     contents of such communications shall be handled in 
     accordance with the minimization procedures set forth in 
     section 101(h)(4) of the Foreign Intelligence Surveillance 
     Act of 1978 (50 U.S.C. 1801(h)(4)).
       (c) Definitions.--In this section, the terms ``contents'', 
     ``electronic surveillance'', and ``foreign intelligence 
     information'' have the meaning given such terms in section 
     101 of the Foreign Intelligence Surveillance Act of 1978 (50 
     U.S.C. 1801).

     SEC. 302. INDIVIDUALIZED FISA ORDERS.

       Any order issued pursuant to section 105 of the Foreign 
     Intelligence Surveillance Act of 1978 (50 U.S.C. 1805) 
     authorizing electronic surveillance shall be supported by an 
     individualized or particularized finding of probable cause to 
     believe the target of the electronic surveillance is a 
     foreign power or an agent of a foreign power.

                        TITLE IV--OTHER MATTERS

     SEC. 401. AUTHORIZATION OF APPROPRIATIONS.

       There is authorized to be appropriated such sums as may be 
     necessary to carry out this Act and the amendments made by 
     this Act.

     SEC. 402. EFFECTIVE DATE.

       Except as provided in section 103, this Act, and the 
     amendments made by this Act, shall take effect on the date 
     that is 30 days after the date of the enactment of this Act.
                                 ______
                                 
      By Mr. BINGAMAN (for himself, Mr. Domenici, Mr. Dorgan, Mr.

[[Page S4495]]

        Lugar, Mr. Akaka, Ms. Murkowski, and Mr. Craig):
  S. 1115. A bill to promote the efficient use of oil, natural gas, and 
electricity, reduce oil consumption, and heighten energy efficiency 
standards for consumer products and industrial equipment, and for other 
purposes; to the Committee on Energy and Natural Resources.
  Mr. BINGAMAN. Mr. President, I rise to introduce a comprehensive 
Energy efficiency bill. I am pleased to have the Ranking Member of the 
Energy Committee, the senior Senator from New Mexico, as my co-sponsor, 
along with Senator Dorgan, Senator Lugar, Senator Akaka, Senator 
Murkowski and Senator Craig.
  Energy efficiency can be viewed as the Nation's largest energy 
resource. Due to actions taken to increase efficiency since the 1973 
oil crisis, we now save more energy each year than we get from any 
single energy supply resource, including oil.
  When the Energy Policy Act of 2005 was signed into law in August of 
2005, it included a strong package of energy efficiency initiatives. 
However, just a month later, when hurricanes devastated our Nation's 
primary oil and gas supply region and many of us recognized that we 
needed to enact additional and more aggressive efficiency measures.
  During the last 2 years, gasoline, natural gas, and electricity 
prices have reached all-time high levels. These price increases cost 
American families and businesses over $300 billion dollars each year. 
In the 2006 elections, voters sent us a clear message that they wanted 
Congress to address high energy prices and also to provide solutions to 
climate change. Energy efficiency policies can alleviate both of these 
problems.
  Our bill includes provisions that will improve efficiency in 
vehicles, buildings, appliances and industrial equipment. The 
legislation is also intended to motivate States and utilities to 
recognize energy efficiency as a resource and to remove current 
disincentives to programs that will benefit utility customers while 
reducing demand for electricity and natural gas.
  Improving our energy productivity through efficiency has multiple 
benefits--it lowers the costs of consumers' energy bills; decreases the 
vulnerability of the economy to energy price shocks from natural 
disasters or problems with foreign sources of supply; provides 
environmental benefits such as lower air pollution and reduced 
greenhouse gas emissions. Moreover, energy efficiency investments help 
build local jobs and improve state economies.
  The bill we are introducing today includes initiatives in six key 
areas: Promoting the development and use of advanced lighting 
technologies; Expediting new efficiency standards for appliances and 
industrial equipment; Promoting high efficiency vehicles, advanced 
batteries and energy storage; Setting aggressive goals for reducing 
gasoline consumption and improving overall energy productivity in the 
U.S.; Promoting Federal leadership in energy efficiency and renewable 
energy; and Assisting States, local governments and utilities in energy 
efficiency efforts.
  In addition to the Energy Efficiency Promotion Act, I want to 
emphasize that other Senate committees are working on complementary 
efficiency initiatives, including the energy efficiency tax provisions 
we are developing in the Finance Committee and CAFE standards 
legislation in the Commerce Committee.
  Finally, for the information on my colleagues, this bill is the 4th 
in a quartet of Energy bills that will be taken up by the Energy and 
Natural Resources Committee in the next few weeks. These bills are: S. 
987, the Biofuels for Energy Security and Transportation Act; S. 731, 
the National Carbon Dioxide Storage Capacity Assessment Act; and S. 962 
the Department of Energy Carbon Capture and Storage R D&D Act. We are 
working diligently to meet the Majority Leader's timetable for floor 
action on Energy legislation. I encourage Senators with questions or 
concerns about any of these bills to let me know so that we can try to 
address issues in a timely manner.
  I have included at the end of my statement a preliminary estimate of 
the energy savings that would result from the implementation of the 
programs in this bill. I request that this estimate be printed in the 
Record.
  There being no objection the material was ordered to be printed as 
follows.

     Energy Saving Estimate for the Energy Efficiency Promotion Act

       Potential savings from the appliance efficiency standards 
     included in Titles I and II: Electricity--At least 50 billion 
     kilowatt hours per year, or enough to power roughly 4.8 
     million typical U.S. households; Natural gas--170 million 
     therms per year or enough to heat about a quarter million 
     typical U.S. homes; Water--At least 560 million gallons per 
     day, or about 1.3 percent of total daily potable water usage; 
     and Dollars--More than $12 billion in net present benefits 
     for consumers.

  Potential Savings From Federal Government Leadership in Efficiency--
                                Title V

       The Federal Government consumed 1.1 quadrillion Btus or 
     ``quads'' of energy during Fiscal Year 2005. The Federal 
     energy bill for Fiscal Year 2005 increased by 24 percent 
     compared to Fiscal Year 2004.
       About 30 percent of the Federal energy use is in standard 
     buildings and about 60 percent is energy used by vehicles and 
     equipment. Although savings can not be estimated at this 
     time--the legislation requires the Federal Government to 
     achieve a 30 percent reduction in energy usage per square 
     foot by 2015 and to reduce its use of gasoline in fleet 
     vehicles by 30 percent in Fiscal Year 2016.

 Potential Savings From Electric and Gas Utility Efficiency Programs--
                                Title VI

       Assuming all State utility regulatory commissions and 
     nonregulated utilities adopt the energy efficiency policies 
     and cost-effective energy efficiency programs recommended in 
     this bill, the estimate cumulative potential energy savings 
     by 2020 would be 7.8 quads and the energy cost savings would 
     be $12 billion.

  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1115

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Energy 
     Efficiency Promotion Act of 2007''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definition of Secretary.

           TITLE I--PROMOTING ADVANCED LIGHTING TECHNOLOGIES

Sec. 101. Accelerated procurement of energy efficient lighting.
Sec. 102. Incandescent reflector lamp efficiency standards.
Sec. 103. Bright Tomorrow Lighting Prizes.
Sec. 104. Sense of Senate concerning efficient lighting standards.

          TITLE II--EXPEDITING NEW ENERGY EFFICIENCY STANDARDS

Sec. 201. Definition of energy conservation standard.
Sec. 202. Regional standards for heating and cooling products.
Sec. 203. Furnace fan rulemaking.
Sec. 204. Expedited rulemakings.
Sec. 205. Preemption limitation.
Sec. 206. Energy efficiency labeling for consumer products.
Sec. 207. Residential boiler efficiency standards.
Sec. 208. Technical corrections.
Sec. 209. Electric motor efficiency standards.
Sec. 210. Energy standards for home appliances.
Sec. 211. Improved energy efficiency for appliances and buildings in 
              cold climates.
Sec. 212. Deployment of new technologies for high-efficiency consumer 
              products.

TITLE III--PROMOTING HIGH EFFICIENCY VEHICLES, ADVANCED BATTERIES, AND 
                             ENERGY STORAGE

Sec. 301. Lightweight materials research and development.
Sec. 302. Loan guarantees for fuel-efficient automobile parts 
              manufacturers.
Sec. 303. Advanced technology vehicles manufacturing incentive program.
Sec. 304. Energy storage competitiveness.

               TITLE IV--SETTING ENERGY EFFICIENCY GOALS

Sec. 401. National goals for energy savings in transportation.
Sec. 402. National energy efficiency improvement goals.
Sec. 403. Nationwide media campaign to increase energy efficiency.

    TITLE V--PROMOTING FEDERAL LEADERSHIP IN ENERGY EFFICIENCY AND 
                            RENEWABLE ENERGY

Sec. 501. Federal fleet conservation requirements.
Sec. 502. Federal requirement to purchase electricity generated by 
              renewable energy.

[[Page S4496]]

Sec. 503. Energy savings performance contracts.
Sec. 504. Energy management requirements for Federal buildings.
Sec. 505. Combined heat and power and district energy installations at 
              Federal sites.
Sec. 506. Federal building energy efficiency performance standards.
Sec. 507. Application of International Energy Conservation Code to 
              public and assisted housing.

  TITLE VI--ASSISTING STATE AND LOCAL GOVERNMENTS IN ENERGY EFFICIENCY

Sec. 601. Weatherization assistance for low-income persons.
Sec. 602. State energy conservation plans.
Sec. 603. Utility energy efficiency programs.
Sec. 604. Energy efficiency and demand response program assistance.
Sec. 605. Energy and environmental block grant.
Sec. 606. Energy sustainability and efficiency grants for institutions 
              of higher education.
Sec. 607. Workforce training.
Sec. 608. Assistance to States to reduce school bus idling.

     SEC. 2. DEFINITION OF SECRETARY.

       In this Act, the term ``Secretary'' means the Secretary of 
     Energy.

           TITLE I--PROMOTING ADVANCED LIGHTING TECHNOLOGIES

     SEC. 101. ACCELERATED PROCUREMENT OF ENERGY EFFICIENT 
                   LIGHTING.

       Section 553 of the National Energy Conservation Policy Act 
     (42 U.S.C. 8259b) is amended by adding the following:
       ``(f) Accelerated Procurement of Energy Efficient 
     Lighting.--
       ``(1) In general.--Not later than October 1, 2010, in 
     accordance with guidelines issued by the Secretary, all 
     general purpose lighting in Federal buildings shall be Energy 
     Star products or products designated under the Federal Energy 
     Management Program.
       ``(2) Guidelines.--Not later than 180 days after the date 
     of enactment of this subsection, the Secretary shall issue 
     guidelines to carry out this subsection.''.

     SEC. 102. INCANDESCENT REFLECTOR LAMP EFFICIENCY STANDARDS.

       (a) Definitions.--Section 321 of the Energy Policy and 
     Conservation Act (42 U.S.C. 6291) is amended--
       (1) in paragraph (30)(C)(ii)--
       (A) in the matter preceding subclause (I)--
       (i) by striking ``or similar bulb shapes (excluding ER or 
     BR)'' and inserting ``ER, BR, BPAR, or similar bulb shapes''; 
     and
       (ii) by striking ``2.75'' and inserting ``2.25''; and
       (B) by striking ``is either--'' and all that follows 
     through subclause (II) and inserting ``has a rated wattage 
     that is 40 watts or higher''; and
       (2) by adding at the end the following:
       ``(52) BPAR incandescent reflector lamp.--The term `BPAR 
     incandescent reflector lamp' means a reflector lamp as shown 
     in figure C78.21-278 on page 32 of ANSI C78.21-2003.
       ``(53) BR incandescent reflector lamp; br30; br40.--
       ``(A) BR incandescent reflector lamp.--The term `BR 
     incandescent reflector lamp' means a reflector lamp that 
     has--
       ``(i) a bulged section below the major diameter of the bulb 
     and above the approximate baseline of the bulb, as shown in 
     figure 1 (RB) on page 7 of ANSI C79.1-1994, incorporated by 
     reference in section 430.22 of title 10, Code of Federal 
     Regulations (as in effect on the date of enactment of this 
     paragraph); and
       ``(ii) a finished size and shape shown in ANSI C78.21-1989, 
     including the referenced reflective characteristics in part 7 
     of ANSI C78.21-1989, incorporated by reference in section 
     430.22 of title 10, Code of Federal Regulations (as in effect 
     on the date of enactment of this paragraph).
       ``(B) BR30.--The term `BR30' means a BR incandescent 
     reflector lamp with a diameter of 30/8ths of an inch.
       ``(C) BR40.--The term `BR40' means a BR incandescent 
     reflector lamp with a diameter of 40/8ths of an inch.
       ``(54) ER incandescent reflector lamp; er30; er40.--
       ``(A) ER incandescent reflector lamp.--The term `ER 
     incandescent reflector lamp' means a reflector lamp that 
     has--
       ``(i) an elliptical section below the major diameter of the 
     bulb and above the approximate baseline of the bulb, as shown 
     in figure 1 (RE) on page 7 of ANSI C79.1-1994, incorporated 
     by reference in section 430.22 of title 10, Code of Federal 
     Regulations (as in effect on the date of enactment of this 
     paragraph); and
       ``(ii) a finished size and shape shown in ANSI C78.21-1989, 
     incorporated by reference in section 430.22 of title 10, Code 
     of Federal Regulations (as in effect on the date of enactment 
     of this paragraph).
       ``(B) ER30.--The term `ER30' means an ER incandescent 
     reflector lamp with a diameter of 30/8ths of an inch.
       ``(C) ER40.--The term `ER40' means an ER incandescent 
     reflector lamp with a diameter of 40/8ths of an inch.
       ``(55) R20 incandescent reflector lamp.--The term `R20 
     incandescent reflector lamp' means a reflector lamp that has 
     a face diameter of approximately 2.5 inches, as shown in 
     figure 1(R) on page 7 of ANSI C79.1-1994.''.''.
       (b) Standards for Fluorescent Lamps and Incandescent 
     Reflector Lamps.--Section 325(i) of the Energy Policy and 
     Conservation Act (42 U.S.C. 6925(i)) is amended by striking 
     paragraph (1) and inserting the following:
       ``(1) Standards.--
       ``(A) Definition of effective date.--In this paragraph 
     (other than subparagraph (D)), the term `effective date' 
     means, with respect to each type of lamp specified in a table 
     contained in subparagraph (B), the last day of the period of 
     months corresponding to that type of lamp (as specified in 
     the table) that follows October 24, 1992.
       ``(B) Minimum standards.--Each of the following general 
     service fluorescent lamps and incandescent reflector lamps 
     manufactured after the effective date specified in the tables 
     contained in this paragraph shall meet or exceed the 
     following lamp efficacy and CRI standards:

                                               ``FLUORESCENT LAMPS
----------------------------------------------------------------------------------------------------------------
                                                                                      Minimum     Effective Date
                    Lamp Type                      Nominal Lamp     Minimum CRI    Average Lamp     (Period of
                                                      Wattage                     Efficacy (LPW)      Months)
----------------------------------------------------------------------------------------------------------------
4-foot medium bi-pin............................       >35 W            69             75.0             36
                                                       35 W             45             75.0             36
2-foot U-shaped.................................       >35 W            69             68.0             36
                                                       35 W             45             64.0             36
8-foot slimline.................................        65 W            69             80.0             18
                                                       65 W             45             80.0             18
8-foot high output..............................      >100 W            69             80.0             18
                                                       100 W            45             80.0             18
----------------------------------------------------------------------------------------------------------------



                     ``INCANDESCENT REFLECTOR LAMPS
------------------------------------------------------------------------
                                              Minimum     Effective Date
          Nominal Lamp Wattage             Average Lamp     (Period of
                                          Efficacy (LPW)      Months)
------------------------------------------------------------------------
 40-50..................................       10.5             36
 51-66..................................       11.0             36
 67-85..................................       12.5             36
 86-115.................................       14.0             36
116-155.................................       14.5             36
156-205.................................       15.0             36
------------------------------------------------------------------------

       ``(C) Exemptions.--The standards specified in subparagraph 
     (B) shall not apply to the following types of incandescent 
     reflector lamps:
       ``(i) Lamps rated at 50 watts or less that are ER30, BR30, 
     BR40, or ER40 lamps.
       ``(ii) Lamps rated at 65 watts that are BR30, BR40, or ER40 
     lamps.
       ``(iii) R20 incandescent reflector lamps rated 45 watts or 
     less.
       ``(D) Effective dates.--
       ``(i) ER, br, and bpar lamps.--The standards specified in 
     subparagraph (B) shall apply with respect to ER incandescent 
     reflector lamps, BR incandescent reflector lamps, BPAR 
     incandescent reflector lamps, and similar bulb shapes on and 
     after January 1, 2008.
       ``(ii) Lamps between 2.25-2.75 inches in diameter.--The 
     standards specified in subparagraph (B) shall apply with 
     respect to incandescent reflector lamps with a diameter of 
     more than 2.25 inches, but not more than 2.75 inches, on and 
     after January 1, 2008.''.

     SEC. 103. BRIGHT TOMORROW LIGHTING PRIZES.

       (a) Establishment.--Not later than 1 year after the date of 
     enactment of this Act, as part of the program carried out 
     under section 1008 of the Energy Policy Act of 2005 (42 
     U.S.C. 16396), the Secretary shall establish and award Bright 
     Tomorrow Lighting Prizes for solid state lighting in 
     accordance with this section.
       (b) Prize Specifications.--
       (1) 60-Watt incandescent replacement lamp prize.--The 
     Secretary shall award a 60-Watt Incandescent Replacement Lamp 
     Prize to an entrant that produces a solid-state light package 
     simultaneously capable of--
       (A) producing a luminous flux greater than 900 lumens;

[[Page S4497]]

       (B) consuming less than or equal to 10 watts;
       (C) having an efficiency greater than 90 lumens per watt;
       (D) having a color rendering index greater than 90;
       (E) having a correlated color temperature of not less than 
     2,750, and not more than 3,000, degrees Kelvin;
       (F) having a lifetime exceeding 25,000 hours under typical 
     conditions expected in residential use;
       (G) having a light distribution pattern similar to a soft 
     60-watt incandescent A19 bulb;
       (H) having a size and shape similar to a 60-watt 
     incandescent A19 bulb in accordance with American National 
     Standards Institute standard C78.20-2003, figure C78.20-211;
       (I) using an incandescent bulb power receptacle; and
       (J) mass production for a competitive sales commercial 
     market satisfied by the submission of 10,000 such units equal 
     to or exceeding the criteria described in subparagraphs (A) 
     through (I).
       (2) PAR type 38 halogen replacement lamp prize.--The 
     Secretary shall award a Parabolic Aluminized Reflector Type 
     38 Halogen Replacement Lamp Prize (referred to in this 
     section as the ``PAR Type 38 Halogen Replacement Lamp 
     Prize'') to an entrant that produces a solid-state-light 
     package simultaneously capable of--
       (A) producing a luminous flux greater than or equal to 
     1,350 lumens;
       (B) consuming less than or equal to 10 watts;
       (C) having an efficiency greater than 90 lumens per watt;
       (D) having a color rendering index greater than or equal to 
     90;
       (E) having a correlated color coordinate temperature of not 
     less than 2,750, and not more than 3,000, degrees Kelvin;
       (F) having a lifetime exceeding 25,000 hours under typical 
     conditions expected in residential use;
       (G) having a light distribution pattern similar to a PAR 38 
     halogen lamp;
       (H) having a size and shape that fits within the maximum 
     dimensions of a PAR 38 halogen lamp in accordance with 
     American National Standards Institute standard C78-21-2003, 
     figure C78.21-238;
       (I) using a PAR 38 halogen power receptacle; and
       (J) mass production for a competitive sales commercial 
     market satisfied by the submission of 10,000 such units equal 
     to or exceeding the criteria described in subparagraphs (A) 
     through (I).
       (3) Twenty-first century lamp prize.--The Secretary shall 
     award a Twenty-First Century Lamp Prize to an entrant that 
     produces a solid-state-light-light capable of--
       (A) producing a light output greater than 1,200 lumens;
       (B) having an efficiency greater than 150 lumens per watt;
       (C) having a color rendering index greater than 90;
       (D) having a color coordinate temperature between 2,800 and 
     3,000 degrees Kelvin; and
       (E) having a lifetime exceeding 25,000 hours.
       (c) Private Funds.--The Secretary may accept and use 
     funding from private sources as part of the prizes awarded 
     under this section.
       (d) Technical Review.--The Secretary shall establish a 
     technical review committee composed of non-Federal officers 
     to review entrant data submitted under this section to 
     determine whether the data meets the prize specifications 
     described in subsection (b).
       (e) Third Party Administration.--The Secretary may 
     competitively select a third party to administer awards under 
     this section.
       (f) Award Amounts.--Subject to the availability of funds to 
     carry out this section, the amount of--
       (1) the 60-Watt Incandescent Replacement Lamp Prize 
     described in subsection (b)(1) shall be $10,000,000;
       (2) the PAR Type 38 Halogen Replacement Lamp Prize 
     described in subsection (b)(2) shall be $5,000,000; and
       (3) the Twenty-First Century Lamp Prize described in 
     subsection (b)(3) shall be $5,000,000.
       (g) Federal Procurement of Solid-State-Lights.--
       (1) 60-watt incandescent replacement.--Subject to paragraph 
     (3), as soon as practicable after the successful award of the 
     60-Watt Incandescent Replacement Lamp Prize under subsection 
     (b)(1), the Secretary (in consultation with the Administrator 
     of General Services) shall develop governmentwide Federal 
     purchase guidelines with a goal of replacing the use of 60-
     watt incandescent lamps in Federal Government buildings with 
     a solid-state-light package described in subsection (b)(1) by 
     not later than the date that is 5 years after the date the 
     award is made.
       (2) PAR 38 halogen replacement lamp replacement.--Subject 
     to paragraph (3), as soon as practicable after the successful 
     award of the PAR Type 38 Halogen Replacement Lamp Prize under 
     subsection (b)(2), the Secretary (in consultation with the 
     Administrator of General Services) shall develop 
     governmentwide Federal purchase guidelines with the goal of 
     replacing the use of PAR 38 halogen lamps in Federal 
     Government buildings with a solid-state-light package 
     described in subsection (b)(2) by not later than the date 
     that is 5 years after the date the award is made.
       (3) Waivers.--
       (A) In general.--The Secretary or the Administrator of 
     General Services may waive the application of paragraph (1) 
     or (2) if the Secretary or Administrator determines that the 
     return on investment from the purchase of a solid-state-light 
     package described in paragraph (1) or (2) of subsection (b), 
     respectively, is cost prohibitive.
       (B) Report of waiver.--If the Secretary or Administrator 
     waives the application of paragraph (1) or (2), the Secretary 
     or Administrator, respectively, shall submit to Congress an 
     annual report that describes the waiver and provides a 
     detailed justification for the waiver.
       (h) Bright Light Tomorrow Award Fund.--
       (1) Establishment.--There is established in the United 
     States Treasury a Bright Light Tomorrow permanent fund 
     without fiscal year limitation to award prizes under 
     paragraphs (1), (2), and (3) of subsection (b).
       (2) Sources of funding.--The fund established under 
     paragraph (1) shall accept--
       (A) fiscal year appropriations; and
       (B) private contributions authorized under subsection (c).
       (i) Authorization of Appropriations.--There are authorized 
     to be appropriated such sums as are necessary to carry out 
     this section.

     SEC. 104. SENSE OF SENATE CONCERNING EFFICIENT LIGHTING 
                   STANDARDS.

       (a) Findings.--The Senate finds that--
       (1) there are approximately 4,000,000,000 screw-based 
     sockets in the United States that contain traditional, 
     energy-inefficient, incandescent light bulbs;
       (2) incandescent light bulbs are based on technology that 
     is more than 125 years old;
       (3) there are radically more efficient lighting 
     alternatives in the market, with the promise of even more 
     choices over the next several years;
       (4) national policy can support a rapid substitution of 
     new, energy-efficient light bulbs for the less efficient 
     products in widespread use; and,
       (5) transforming the United States market to use of more 
     efficient lighting technologies can--
       (A) reduce electric costs in the United States by more than 
     $18,000,000,000 annually;
       (B) save the equivalent electricity that is produced by 80 
     base load coal-fired power plants; and
       (C) reduce fossil fuel related emissions by approximately 
     158,000,000 tons each year.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that the Senate should--
       (1) pass a set of mandatory, technology-neutral standards 
     to establish firm energy efficiency performance targets for 
     lighting products;
       (2) ensure that the standards become effective within the 
     next 10 years; and
       (3) in developing the standards--
       (A) establish the efficiency requirements to ensure that 
     replacement lamps will provide consumers with the same 
     quantity of light while using significantly less energy;
       (B) ensure that consumers will continue to have multiple 
     product choices, including energy-saving halogen, 
     incandescent, compact fluorescent, and LED light bulbs; and
       (C) work with industry and key stakeholders on measures 
     that can assist consumers and businesses in making the 
     important transition to more efficient lighting.

          TITLE II--EXPEDITING NEW ENERGY EFFICIENCY STANDARDS

     SEC. 201. DEFINITION OF ENERGY CONSERVATION STANDARD.

       Section 321 of the Energy Policy and Conservation Act (42 
     U.S.C. 6291) is amended by striking paragraph (6) and 
     inserting the following:
       ``(6) Energy conservation standard.--
       ``(A) In general.--The term `energy conservation standard' 
     means--
       ``(i) 1 or more performance standards that prescribe a 
     minimum level of energy efficiency or a maximum quantity of 
     energy use, and, in the case of a showerhead, faucet, water 
     closet, urinal, clothes washer, and dishwasher, water use, 
     for a covered product, determined in accordance with test 
     procedures prescribed under section 323; and
       ``(ii) 1 or more design requirements.
       ``(B) Inclusions.--The term `energy conservation standard' 
     includes any other requirements that the Secretary may 
     prescribe under subsections (o) and (r) of section 325.''.

     SEC. 202. REGIONAL STANDARDS FOR HEATING AND COOLING 
                   PRODUCTS.

       Section 325(o) of the Energy Policy and Conservation Act 
     (42 U.S.C. 6295(o)) is amended by adding at the end the 
     following:
       ``(6) Regional standards for heating and cooling 
     products.--
       ``(A) In general.--Notwithstanding any other provision of 
     this section, the Secretary may establish regional standards 
     for space heating and air conditioning products.
       ``(B) Maximum number of regions.--For each space heating 
     and air conditioning product, the Secretary may establish not 
     more than 3 regions with differing standards.
       ``(C) Boundaries of regions.--
       ``(i) In general.--The Secretary shall establish the 
     regions so as to achieve the maximum level of energy savings 
     that are technically feasible and economically justifiable.
       ``(ii) State boundaries.--Boundaries for a region shall 
     conform to State borders and only include contiguous States 
     (other than Alaska and Hawaii, which shall be noncontiguous).
       ``(D) Factors for establishment.--In deciding whether to 
     establish 1 or more regional standards for space heating and 
     air

[[Page S4498]]

     conditioning equipment, the Secretary shall consider all of 
     the factors described in paragraphs (1) through (4).''.

     SEC. 203. FURNACE FAN RULEMAKING.

       Section 325(f)(3) of the Energy Policy and Conservation Act 
     (42 U.S.C. 6295(f)(3)) is amended by adding at the end the 
     following:
       ``(E) Final rule.--
       ``(i) In general.--The Secretary shall publish a final rule 
     to carry out this subsection not later than December 31, 
     2012.
       ``(ii) Criteria.--The standards shall meet the criteria 
     established under subsection (o).''.

     SEC. 204. EXPEDITED RULEMAKINGS.

       Section 325 of the Energy Policy and Conservation Act (42 
     U.S.C. 6295) is amended by adding at the end the following:
       ``(hh) Expedited Rulemaking for Consensus Standards.--
       ``(1) In general.--The Secretary shall conduct an expedited 
     rulemaking based on an energy conservation standard or test 
     procedure recommended by interested persons, if--
       ``(A) the interested persons (demonstrating significant and 
     broad support from manufacturers of a covered product, 
     States, and environmental, energy efficiency, and consumer 
     advocates) submit a joint comment recommending a consensus 
     energy conservation standard or test procedure; and
       ``(B) the Secretary determines that the joint comment 
     includes evidence that (assuming no other evidence were 
     considered) provides an adequate basis for determining that 
     the proposed consensus energy conservation standard or test 
     procedure proposed in the joint comment complies with the 
     provisions and criteria of this Act (including subsection o)) 
     that apply to the type or class of covered products covered 
     by the joint comment.
       ``(2) Procedure.--
       ``(A) In general.--Notwithstanding subsection (p) or 
     section 336(a), if the Secretary receives a joint comment 
     that meets the criteria described in paragraph (1), the 
     Secretary shall conduct an expedited rulemaking with respect 
     to the standard or test procedure proposed in the joint 
     comment in accordance with this paragraph.
       ``(B) Advanced notice of proposed rulemaking.--If no 
     advanced notice of proposed rulemaking has been issued under 
     subsection (p)(1) with respect to the rulemaking covered by 
     the joint comment, the requirements of subsection (p) with 
     respect to the issuance of an advanced notice of proposed 
     rulemaking shall not apply.
       ``(C) Publication of determination.--Not later than 60 days 
     after receipt of a joint comment described in paragraph 
     (1)(A), the Secretary shall publish a description of a 
     determination as to whether the proposed standard or test 
     procedure covered by the joint comment meets the criteria 
     described in paragraph (1).
       ``(D) Proposed rule.--
       ``(i) Publication.--If the Secretary determines that the 
     proposed consensus standard or test procedure covered by the 
     joint comment meets the criteria described in paragraph (1), 
     not later than 30 days after the determination, the Secretary 
     shall publish a proposed rule proposing the consensus 
     standard or test procedure covered by the joint comment.
       ``(ii) Public comment period.--Notwithstanding paragraphs 
     (2) and (3) of subsection (p), the public comment period for 
     the proposed rule shall be the 30-day period beginning on the 
     date of the publication of the proposed rule in the Federal 
     Register.
       ``(iii) Public hearing.--Notwithstanding section 336(a), 
     the Secretary may waive the holding of a public hearing with 
     respect to the proposed rule.
       ``(E) Final rule.--Notwithstanding subsection (p)(4), the 
     Secretary--
       ``(i) may publish a final rule at any time after the 60-day 
     period beginning on the date of publication of the proposed 
     rule in the Federal Register; and
       ``(ii) shall publish a final rule not later than 120 days 
     after the date of publication of the proposed rule in the 
     Federal Register.''.

     SEC. 205. PREEMPTION LIMITATION.

       Section 327 of the Energy Policy and Conservation Act (42 
     U.S.C. 6297) is amended--
       (1) in subsection (b)--
       (A) in paragraph (6), by striking ``or'' at the end;
       (B) in paragraph (7), by striking the period at the end and 
     inserting ``; or''; and
       (C) by adding at the end the following:
       ``(8) is a State regulation for a product for which a 
     Federal energy conservation standard has not been 
     established, in that--
       ``(A) the product is excluded from or not directly affected 
     by a Federal standard; or
       ``(B) a rulemaking occurs that ultimately does not 
     prescribe a Federal energy conservation standard for the 
     product.''; and
       (2) in subsection (c)--
       (A) in paragraph (8), by striking the period at the end and 
     inserting ``; or''; and
       (B) by adding at the end the following:
       ``(9) is a State regulation for a product for which a 
     Federal energy conservation standard has not been 
     established, in that--
       ``(A) the product is excluded from or not directly affected 
     by a Federal standard; or
       ``(B) a rulemaking occurs that ultimately does not 
     prescribe a Federal energy conservation standard for the 
     product.''.

     SEC. 206. ENERGY EFFICIENCY LABELING FOR CONSUMER PRODUCTS.

       (a) In General.--Not later than 18 months after the date of 
     enactment of this Act, the Federal Trade Commission, in 
     consultation with the Secretary and the Administrator of the 
     Environmental Protection Agency (acting through the Energy 
     Star program), shall promulgate regulations to add the 
     consumer electronics product categories described in 
     subsection (b) to the Energy Guide labeling program of the 
     Commission.
       (b) Consumer Electronics Product Categories.--The consumer 
     electronics product categories referred to in subsection (a) 
     are the following:
       (1) Televisions.
       (2) Personal computers.
       (3) Cable or satellite set-top boxes.
       (4) Stand-alone digital video recorder boxes (including 
     TIVO and similar branded products).
       (5) Computer monitors.
       (c) Label Placement.--The regulations shall include 
     specific requirements for each product on the placement of 
     Energy Guide labels.
       (d) Deadline for Labeling.--Not later than 1 year after the 
     date of promulgation of regulations under subsection (a), the 
     Commission shall require labeling electronic products 
     described in subsection (b) in accordance with this section 
     (including the regulations).
       (e) Authority to Include Additional Product Categories.--
     The Commission may add additional product categories to the 
     Energy Guide labeling program if the product categories 
     include products, as determined by the Commission--
       (1) that have an annual energy use in excess of 100 
     kilowatt hours per year; and
       (2) for which there is a significant difference in energy 
     use between the most and least efficient products.

     SEC. 207. RESIDENTIAL BOILER EFFICIENCY STANDARDS.

       Section 325(f) of the Energy Policy and Conservation Act 
     (42 U.S.C. 6295(f)) is amended--
       (1) by redesignating paragraph (3) as paragraph (4); and
       (2) by inserting after paragraph (2) the following:
       ``(3) Boilers.--
       ``(A) In general.--Subject to subparagraphs (B) and (C), 
     boilers manufactured on or after September 1, 2012, shall 
     meet the following requirements:


------------------------------------------------------------------------
                                       Minimum
                                     Annual Fuel
            Boiler Type              Utilization    Design Requirements
                                      Efficiency
------------------------------------------------------------------------
Gas Hot Water                            82%        No Constant Burning
                                                           Pilot,
                                                  Automatic Means for
                                                   Adjusting Water
                                                   Temperature
------------------------------------------------------------------------
Gas Steam                                80%        No Constant Burning
                                                           Pilot
------------------------------------------------------------------------
Oil Hot Water                            84%        Automatic Means for
                                                   Adjusting Temperature
------------------------------------------------------------------------
Oil Steam                                82%               None
------------------------------------------------------------------------
Electric Hot Water                       None       Automatic Means for
                                                   Adjusting Temperature
------------------------------------------------------------------------
Electric Steam                           None              None
------------------------------------------------------------------------

       ``(B) Pilots.--The manufacturer shall not equip gas hot 
     water or steam boilers with constant-burning pilot lights.
       ``(C) Automatic means for adjusting water temperature.--
       ``(i) In general.--The manufacturer shall equip each gas, 
     oil, and electric hot water boiler (other than a boiler 
     equipped with tankless domestic water heating coils) with an 
     automatic means for adjusting the temperature of the water 
     supplied by the boiler to ensure that an incremental change 
     in inferred heat load produces a corresponding incremental 
     change in the temperature of water supplied.
       ``(ii) Certain boilers.--For a boiler that fires at 1 input 
     rate, the requirements of this subparagraph may be satisfied 
     by providing an automatic means that allows the burner or 
     heating element to fire only when the means has determined 
     that the inferred heat load cannot be met by the residual 
     heat of the water in the system.
       ``(iii) No inferred heat load.--When there is no inferred 
     heat load with respect to a hot water boiler, the automatic 
     means described in clauses (i) and (ii) shall limit the 
     temperature of the water in the boiler to not more than 140 
     degrees Fahrenheit.
       ``(iv) Operation.--A boiler described in clause (i) or (ii) 
     shall be operable only when the automatic means described in 
     clauses (i), (ii), and (iii) is installed.''.

     SEC. 208. TECHNICAL CORRECTIONS.

       Section 321(30)(B)(viii) of the Energy Policy and 
     Conservation Act (42 U.S.C. 6291(30)(B)(viii)) is amended by 
     striking ``82'' and inserting ``87''.

     SEC. 209. ELECTRIC MOTOR EFFICIENCY STANDARDS.

       (a) Definitions.--Section 340(13) of the Energy Policy and 
     Conservation Act (42 U.S.C. 6311(13)) is amended by striking 
     subparagraph (A) and inserting the following:
       ``(A)(i) The term `electric motor' means--
       ``(I) a general purpose electric motor - subtype I; and

[[Page S4499]]

       ``(II) a general purpose electric motor - subtype II.
       ``(ii) The term `general purpose electric motor - subtype 
     I' means any motor that  is considered a general purpose 
     motor under section 431.12 of title 10, Code of Federal 
     Regulations (or successor regulations).
       ``(iii) The term `general purpose electric motor - subtype 
     II' means a motor that, in addition to the design elements 
     for a general purpose electric motor - subtype I, 
     incorporates the design elements (as established in National 
     Electrical Manufacturers Association MG-1 (2006)) (or 
     successor design elements) for any of the following:
       ``(I) A U-Frame Motor.
       ``(II) A Design C Motor.
       ``(III) A close-coupled pump motor.
       ``(IV) A footless motor.
       ``(V) A vertical solid shaft normal thrust (tested in a 
     horizontal configuration).
       ``(VI) An 8-pole motor.
       ``(VII) A poly-phase motor with voltage of not more than 
     600 volts (other than 230 or 460 volts).''.
       (b) Standards.--Section 342(b) of the Energy Policy and 
     Conservation Act (42 U.S.C. 6313(13)) is amended by striking 
     paragraph (1) and inserting the following:
       ``(1) Standards.--
       ``(A) General purpose electric motors - subtype i.--
       ``(i) In general.--Except as otherwise provided in this 
     subparagraph, a general purpose electric motor - subtype I 
     with a power rating of not less than 1, and not more than 
     200, horsepower manufactured (alone or as a component of 
     another piece of equipment) after the 3-year period beginning 
     on the date of enactment of this subparagraph, shall have a 
     nominal full load efficiency established in Table 12-12 of 
     National Electrical Manufacturers Association (referred to in 
     this paragraph as `NEMA') MG-1 (2006) (or a successor table).
       ``(ii) Fire pump motors.--A fire pump motor shall have a 
     nominal full load efficiency established in Table 12-11 of 
     NEMA MG-1 (2006) (or a successor table).
       ``(B) General purpose electric motors - subtype ii .--A 
     general purpose electric motor - subtype II with a power 
     rating of not less than 1, and not more than 200, horsepower 
     manufactured (alone or as a component of another piece of 
     equipment) after the 3-year period beginning on the date of 
     enactment of this subparagraph, shall have a nominal full 
     load efficiency established in Table 12-11 of NEMA MG-1 
     (2006) (or a successor table).
       ``(C) Design b, general purpose electric motors.--A NEMA 
     Design B, general purpose electric motor with a power rating 
     of not less than 201, and not more than 500, horsepower 
     manufactured (alone or as a component of another piece of 
     equipment) after the 3-year period beginning on the date of 
     the enactment of this subparagraph shall have a nominal full 
     load efficiency established in Table 12-11 of NEMA MG-1 
     (2006) (or a successor table).''.
       (c) Effective Date.--The amendments made by this section 
     take effect on the date that is 3 years after the date of 
     enactment of this Act.

     SEC. 210. ENERGY STANDARDS FOR HOME APPLIANCES.

       (a) Definition of Energy Conservation Standard.--Section 
     321(6)(A) of the Energy Policy and Conservation Act (42 
     U.S.C. 6291(6)(A)) is amended by striking ``or, in the case 
     of'' and inserting ``and, in the case of residential clothes 
     washers, residential dishwashers,''.
       (b) Refrigerators, Refrigerator-Freezers, and Freezers.--
     Section 325(b) of the Energy Policy and Conservation Act (42 
     U.S.C. 6295(b)) is amended by adding at the end the 
     following:
       ``(4) Refrigerators, refrigerator-freezers, and freezers 
     manufactured on or after january 1, 2014.--Not later than 
     December 31, 2010, the Secretary shall publish a final rule 
     determining whether to amend the standards in effect for 
     refrigerators, refrigerator-freezers, and freezers 
     manufactured on or after January 1, 2014, and including any 
     amended standards.''.
       (c) Residential Clothes Washers and Dishwashers.--Section 
     325(g)(4) of the Energy Policy and Conservation Act (42 
     U.S.C. 6295(g)(4)) is amended by adding at the end the 
     following:
       ``(D) Clothes washers.--
       ``(i) Clothes washers manufactured on or after january 1, 
     2011.--A residential clothes washer manufactured on or after 
     January 1, 2011, shall have--

       ``(I) an energy factor of at least 1.26; and
       ``(II) a water factor of not more than 9.5.

       ``(ii) Clothes washers manufactured on or after january 1, 
     2015.--Not later than December 31, 2011, the Secretary shall 
     publish a final rule determining whether to amend the 
     standards in effect for residential clothes washers 
     manufactured on or after January 1, 2015, and including any 
     amended standards.
       ``(E) Dishwashers.--
       ``(i) Dishwashers manufactured on or after january 1, 
     2010.--A dishwasher manufactured on or after January 2, 2010, 
     shall use not more than--

       ``(I) in the case of a standard-size dishwasher, 355 kWh 
     per year or 6.5 gallons of water per cycle; and
       ``(II) in the case of a compact-size dishwasher, 260 kWh 
     per year or 4.5 gallons of water per cycle.

       ``(ii) Dishwashers manufactured on or after january 1, 
     2018.--Not later than December 31, 2015, the Secretary shall 
     publish a final rule determining whether to amend the 
     standards for dishwashers manufactured on or after January 2, 
     2018, and including any amended standards.''.
       (d) Dehumidifiers.--Section 325(cc) of the Energy Policy 
     and Conservation Act (42 U.S.C. 6295(cc)) is amended--
       (1) in paragraph (1), by inserting ``and before October 1, 
     2012,'' after ``2007,''; and
       (2) by striking paragraph (2) and inserting the following:
       ``(2) Dehumidifiers manufactured on or after october 1, 
     2012.--Dehumidifiers manufactured on or after October 1, 
     2012, shall have an Energy Factor that meets or exceeds the 
     following values:


------------------------------------------------------------------------
                                                               Minimum
                                                                Energy
               Product Capacity (pints/day):                    Factor
                                                              liters/kWh
------------------------------------------------------------------------
Up to 35.00................................................         1.35
35.01-45.00................................................         1.50
45.01-54.00................................................         1.60
54.01-75.00................................................         1.70
Greater than 75.00.........................................       2.5.''
------------------------------------------------------------------------

       (e) Energy Star Program.--Section 324A(d)(2) of the Energy 
     Policy and Conservation Act (42 U.S.C. 6294a(d)(2)) is 
     amended by striking ``2010'' and inserting ``2009''.

     SEC. 211. IMPROVED ENERGY EFFICIENCY FOR APPLIANCES AND 
                   BUILDINGS IN COLD CLIMATES.

       (a) Research.--Section 911(a)(2) of the Energy Policy Act 
     of 2005 (42 U.S.C. 16191(a)(2)) is amended--
       (1) in subparagraph (C), by striking ``and'' at the end;
       (2) in subparagraph (D), by striking the period at the end 
     and inserting ``; and''; and
       (3) by adding at the end the following:
       ``(E) technologies to improve the energy efficiency of 
     appliances and mechanical systems for buildings in cold 
     climates, including increased use of renewable resources, 
     including fuel.''.
       (b) Rebates.--Section 124 of the Energy Policy Act of 2005 
     (42 U.S.C. 15821) is amended--
       (1) in subsection (b)(1), by inserting ``, or products with 
     improved energy efficiency in cold climates,'' after 
     ``residential Energy Star products''; and
       (2) in subsection (e), by inserting ``or product with 
     improved energy efficiency in a cold climate'' after 
     ``residential Energy Star product'' each place it appears.

     SEC. 212. DEPLOYMENT OF NEW TECHNOLOGIES FOR HIGH-EFFICIENCY 
                   CONSUMER PRODUCTS.

       (a) Definitions.--In this section:
       (1) Energy savings.--The term ``energy savings'' means 
     megawatt-hours of electricity or million British thermal 
     units of natural gas saved by a product, in comparison to 
     projected energy consumption under the energy efficiency 
     standard applicable to the product.
       (2) High-efficiency consumer product.--The term ``high-
     efficiency consumer product'' means a product that exceeds 
     the energy efficiency of comparable products available in the 
     market by at least 25 percent.
       (b) Financial Incentives Program.--Effective beginning 
     October 1, 2007, the Secretary shall competitively award 
     financial incentives under this section for the manufacture 
     of high-efficiency consumer products.
       (c) Requirements.--
       (1) In general.--The Secretary shall make awards under this 
     section to manufacturers of high-efficiency consumer 
     products, based on the bid of each manufacturer in terms of 
     dollars per megawatt-hour or million British thermal units 
     saved.
       (2) Acceptance of bids.--In making awards under this 
     section, the Secretary shall--
       (A) solicit bids for reverse auction from appropriate 
     manufacturers, as determined by the Secretary; and
       (B) award financial incentives to the manufacturers that 
     submit the lowest bids that meet the requirements established 
     by the Secretary.
       (d) Forms of Awards.--An award for a high-efficiency 
     consumer product under this section shall be in the form of a 
     lump sum payment in an amount equal to the product obtained 
     by multiplying--
       (1) the amount of the bid by the manufacturer of the high-
     efficiency consumer product; and
       (2) the energy savings during the projected useful life of 
     the high-efficiency consumer product, not to exceed 10 years, 
     as determined under regulations issued by the Secretary.

TITLE III--PROMOTING HIGH EFFICIENCY VEHICLES, ADVANCED BATTERIES, AND 
                             ENERGY STORAGE

     SEC. 301. LIGHTWEIGHT MATERIALS RESEARCH AND DEVELOPMENT.

       (a) In General.--As soon as practicable after the date of 
     enactment of this Act, the Secretary shall establish a 
     research and development program to determine ways in which--
       (1) the weight of vehicles may be reduced to improve fuel 
     efficiency without compromising passenger safety; and
       (2) the cost of lightweight materials (such as steel alloys 
     and carbon fibers) required for the construction of lighter-
     weight vehicles may be reduced.
       (b) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section $60,000,000 for 
     each of fiscal years 2007 through 2012.

[[Page S4500]]

     SEC. 302. LOAN GUARANTEES FOR FUEL-EFFICIENT AUTOMOBILE PARTS 
                   MANUFACTURERS.

       (a) In General.--Section 712(a) of the Energy Policy Act of 
     2005 (42 U.S.C. 16062(a)) is amended in the second sentence 
     by striking ``grants to automobile manufacturers'' and 
     inserting ``grants and loan guarantees under section 1703 to 
     automobile manufacturers and suppliers''.
       (b) Conforming Amendment.--Section 1703(b) of the Energy 
     Policy Act of 2005 (42 U.S.C. 16513(b)) is amended by by 
     striking paragraph (8) and inserting the following:
       ``(8) Production facilities for the manufacture of fuel 
     efficient vehicles or parts of those vehicles, including 
     electric drive transportation technology and advanced diesel 
     vehicles.''.

     SEC. 303. ADVANCED TECHNOLOGY VEHICLES MANUFACTURING 
                   INCENTIVE PROGRAM.

       (a) Definitions.--In this section:
       (1) Adjusted average fuel economy.--The term ``adjusted 
     average fuel economy'' means the average fuel economy of a 
     manufacturer for all light duty vehicles produced by the 
     manufacturer, adjusted such that the fuel economy of each 
     vehicle that qualifies for an award shall be considered to be 
     equal to the average fuel economy for vehicles of a similar 
     footprint for model year 2002.
       (2) Advanced technology vehicle.--The term ``advanced 
     technology vehicle'' means a light duty vehicle that meets--
       (A) the Bin 5 Tier II emission standard established in 
     regulations issued by the Administrator of the Environmental 
     Protection Agency under section 202(i) of the Clean Air Act 
     (42 U.S.C. 7521(i)), or a lower-numbered Bin emission 
     standard;
       (B) any new emission standard for fine particulate matter 
     prescribed by the Administrator under that Act (42 U.S.C. 
     7401 et seq.); and
       (C) at least 125 percent of the average base year combined 
     fuel economy for vehicles of a substantially similar 
     footprint.
       (3) Combined fuel economy.--The term ``combined fuel 
     economy'' means--
       (A) the combined city/highway miles per gallon values, as 
     reported in accordance with section 32908 of title 49, United 
     States Code; and
       (B) in the case of an electric drive vehicle with the 
     ability to recharge from an off-board source, the reported 
     mileage, as determined in a manner consistent with the 
     Society of Automotive Engineers Recommended Practice J1711 or 
     a similar practice recommended by the Secretary .
       (4) Engineering integration costs.--The term ``engineering 
     integration costs'' includes the cost of engineering tasks 
     relating to--
       (A) incorporating qualifying components into the design of 
     advanced technology vehicles; and
       (B) designing new tooling and equipment for production 
     facilities that produce qualifying components or advanced 
     technology vehicles.
       (5) Qualifying components.--The term ``qualifying 
     components'' means components that the Secretary determines 
     to be--
       (A) specially designed for advanced technology vehicles; 
     and
       (B) installed for the purpose of meeting the performance 
     requirements of advanced technology vehicles.
       (b) Manufacturer Facility Conversion Awards.--The Secretary 
     shall provide facility conversion funding awards under this 
     section to automobile manufacturers and component suppliers 
     to pay not more than 30 percent of the cost of--
       (1) reequipping or expanding an existing manufacturing 
     facility in the United States to produce--
       (A) qualifying advanced technology vehicles; or
       (B) qualifying components; and
       (2) engineering integration performed in the United States 
     of qualifying vehicles and qualifying components.
       (c) Period of Availability.--An award under subsection (b) 
     shall apply to--
       (1) facilities and equipment placed in service before 
     December 30, 2017; and
       (2) engineering integration costs incurred during the 
     period beginning on the date of enactment of this Act and 
     ending on December 30, 2017.
       (d) Improvement.--The Secretary shall issue regulations 
     that require that, in order for an automobile manufacturer to 
     be eligible for an award under this section during a 
     particular year, the adjusted average fuel economy of the 
     manufacturer for light duty vehicles produced by the 
     manufacturer during the most recent year for which data are 
     available shall be not less than the average fuel economy for 
     all light duty vehicles of the manufacturer for model year 
     2002.

     SEC. 304. ENERGY STORAGE COMPETITIVENESS.

       (a) Short Title.--This section may be cited as the ``United 
     States Energy Storage Competitiveness Act of 2007''.
       (b) Energy Storage Systems for Motor Transportation and 
     Electricity Transmission and Distribution.--
       (1) Definitions.--In this subsection:
       (A) Council.--The term ``Council'' means the Energy Storage 
     Advisory Council established under paragraph (3).
       (B) Compressed air energy storage.--The term ``compressed 
     air energy storage'' means, in the case of an electricity 
     grid application, the storage of energy through the 
     compression of air.
       (C) Department.--The term ``Department'' means the 
     Department of Energy.
       (D) Flywheel.--The term ``flywheel'' means, in the case of 
     an electricity grid application, a device used to store 
     rotational kinetic energy.
       (E) Ultracapacitor.--The term ``ultracapacitor'' means an 
     energy storage device that has a power density comparable to 
     conventional capacitors but capable of exceeding the energy 
     density of conventional capacitors by several orders of 
     magnitude.
       (2) Program.--The Secretary shall carry out a research, 
     development, and demonstration program to support the ability 
     of the United States to remain globally competitive in energy 
     storage systems for motor transportation and electricity 
     transmission and distribution.
       (3) Energy storage advisory council.--
       (A) Establishment.--Not later than 90 days after the date 
     of enactment of this Act, the Secretary shall establish an 
     Energy Storage Advisory Council.
       (B) Composition.--
       (i) In general.--Subject to clause (ii), the Council shall 
     consist of not less than 15 individuals appointed by the 
     Secretary, based on recommendations of the National Academy 
     of Sciences.
       (ii) Energy storage industry.--The Council shall consist 
     primarily of representatives of the energy storage industry 
     of the United States.
       (iii) Chairperson.--The Secretary shall select a 
     Chairperson for the Council from among the members appointed 
     under clause (i)
       (C) Meetings.--
       (i) In general.--The Council shall meet not less than once 
     a year.
       (ii) Federal advisory committee act.--The Federal Advisory 
     Committee Act (5 U.S.C. App. 2) shall apply to a meeting of 
     the Council.
       (D) Plans.--No later than 1 year after the date of 
     enactment of this Act, in conjunction with the Secretary, the 
     Council shall develop 5-year plans for integrating basic and 
     applied research so that the United States retains a globally 
     competitive domestic energy storage industry for motor 
     transportation and electricity transmission and distribution.
       (E) Review.--The Council shall--
       (i) assess the performance of the Department in meeting the 
     goals of the plans developed under subparagraph (D); and
       (ii) make specific recommendations to the Secretary on 
     programs or activities that should be established or 
     terminated to meet those goals.
       (4) Basic research program.--
       (A) Basic research.--The Secretary shall conduct a basic 
     research program on energy storage systems to support motor 
     transportation and electricity transmission and distribution, 
     including--
       (i) materials design;
       (ii) materials synthesis and characterization;
       (iii) electrolytes, including bioelectrolytes;
       (iv) surface and interface dynamics; and
       (v) modeling and simulation.
       (B) Nanoscience centers.--The Secretary shall ensure that 
     the nanoscience centers of the Department--
       (i) support research in the areas described in subparagraph 
     (A), as part of the mission of the centers; and
       (ii) coordinate activities of the centers with activities 
     of the Council.
       (5) Applied research program.--The Secretary shall conduct 
     an applied research program on energy storage systems to 
     support motor transportation and electricity transmission and 
     distribution technologies, including--
       (A) ultracapacitors;
       (B) flywheels;
       (C) compressed air energy systems;
       (D) power conditioning electronics; and
       (E) manufacturing technologies for energy storage systems.
       (6) Energy storage research centers.--
       (A) In general.--The Secretary shall establish, through 
     competitive bids, 4 energy storage research centers to 
     translate basic research into applied technologies to advance 
     the capability of the United States to maintain a globally 
     competitive posture in energy storage systems for motor 
     transportation and electricity transmission and distribution.
       (B) Program management.--The centers shall be jointly 
     managed by the Under Secretary for Science and the Under 
     Secretary of Energy of the Department.
       (C) Participation agreements.--As a condition of 
     participating in a center, a participant shall enter into a 
     participation agreement with the center that requires that 
     activities conducted by the participant for the center 
     promote the goal of enabling the United States to compete 
     successfully in global energy storage markets.
       (D) Plans.--A center shall conduct activities that promote 
     the achievement of the goals of the plans of the Council 
     under paragraph (3)(D).
       (E) Cost sharing.--In carrying out this paragraph, the 
     Secretary shall require cost-sharing in accordance with 
     section 988 of the Energy Policy Act of 2005 (42 U.S.C. 
     16352).
       (F) National laboratories.--A national laboratory (as 
     defined in section 2 of the Energy Policy Act 2005 (42 U.S.C. 
     15801)) may participate in a center established under this 
     paragraph as part of a cooperative research and development 
     agreement (as defined in section 12(d) of the Stevenson-
     Wydler Technology Innovation Act of 1980 (15 U.S.C. 
     3710a(d))).
       (G) Intellectual property.--A participant in a center under 
     this paragraph shall

[[Page S4501]]

     have a royalty-free, exclusive nontransferable license to 
     intellectual property that the center invents from funding 
     received under this subsection.
       (7) Review by national academy of sciences.--Not later than 
     5 years after the date of enactment of this Act, the 
     Secretary shall offer to enter into an arrangement with the 
     National Academy of Sciences to assess the performance of the 
     Department in making the United States globally competitive 
     in energy storage systems for motor transportation and 
     electricity transmission and distribution.
       (8) Authorization of appropriations.--There are authorized 
     to be appropriated to carry out--
       (A) the basic research program under paragraph (4) 
     $50,000,000 for each of fiscal years 2008 through 2017;
       (B) the applied research program under paragraph (5) 
     $80,000,000 for each of fiscal years 2008 through 2017; and;
       (C) the energy storage research center program under 
     paragraph (6) $100,000,000 for each of fiscal years 2008 
     through 2017.
       (c) Advanced Battery and Electric Vehicle Technology 
     Program.--
       (1) Definitions.--In this subsection:
       (A) Battery.--The term ``battery'' means an electrochemical 
     energy storage device powered directly by electrical current.
       (B) Electric drive transportation technology.--The term 
     ``electric drive transportation technology'' means vehicle 
     systems that use stored electrical energy to provide motive 
     power, including electric motors and drivetrain systems.
       (2) Program.--The Secretary shall conduct a program of 
     research, development, demonstration, and commercial 
     application for batteries and electric drive transportation 
     technology, including--
       (A) batteries;
       (B) on-board and off-board charging components;
       (C) drivetrain systems;
       (D) vehicles systems integration; and
       (E) control systems, including systems that optimize for--
       (i) prolonging battery life;
       (ii) reduction of petroleum consumption; and
       (iii) reduction of fossil fuel emissions.
       (3) Authorization of appropriations.--There is authorized 
     to be appropriated to carry out this subsection $200,000,000 
     for each of fiscal years 2007 through 2012.

               TITLE IV--SETTING ENERGY EFFICIENCY GOALS

     SEC. 401. NATIONAL GOALS FOR ENERGY SAVINGS IN 
                   TRANSPORTATION.

       (a) Goals.--The goals of the United States are to reduce 
     gasoline usage in the United States from the levels projected 
     under subsection (b) by--
       (1) 20 percent by calendar year 2017;
       (2) 35 percent by calendar year 2025; and
       (3) 45 percent by calendar year 2030.
       (b) Measurement.--For purposes of subsection (a), reduction 
     in gasoline usage shall be measured from the estimates for 
     each year in subsection (a) contained in the reference case 
     in the report of the Energy Information Administration 
     entitled ``Annual Energy Outlook 2007''.
       (c) Strategic Plan.--
       (1) In general.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary, in cooperation with the 
     Administrator of the Environmental Protection Agency and the 
     heads of other appropriate Federal agencies, shall develop a 
     strategic plan to achieve the national goals for reduction in 
     gasoline usage established under subsection (a).
       (2) Public input and comment.--The Secretary shall develop 
     the plan in a manner that provides appropriate opportunities 
     for public comment.
       (d) Plan Contents.--The strategic plan shall--
       (1) establish future regulatory, funding, and policy 
     priorities to ensure compliance with the national goals;
       (2) include energy savings estimates for each sector; and
       (3) include data collection methodologies and compilations 
     used to establish baseline and energy savings data.
       (e) Plan Updates.--
       (1) In general.--The Secretary shall--
       (A) update the strategic plan biennially; and
       (B) include the updated strategic plan in the national 
     energy policy plan required by section 801 of the Department 
     of Energy Organization Act (42 U.S.C. 7321).
       (2) Contents.--In updating the plan, the Secretary shall--
       (A) report on progress made toward implementing efficiency 
     policies to achieve the national goals established under 
     subsection (a); and
       (B) to the maximum extent practicable, verify energy 
     savings resulting from the policies.
       (f) Report to Congress and Public.--The Secretary shall 
     submit to Congress, and make available to the public, the 
     initial strategic plan developed under subsection (c) and 
     each updated plan.

     SEC. 402. NATIONAL ENERGY EFFICIENCY IMPROVEMENT GOALS.

       (a) Goals.--The goals of the United States are--
       (1) to achieve an improvement in the overall energy 
     productivity of the United States (measured in gross domestic 
     product per unit of energy input) of at least 2.5 percent per 
     year by the year 2012; and
       (2) to maintain that annual rate of improvement each year 
     through 2030.
       (b) Strategic Plan.--
       (1) In general.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary, in cooperation with the 
     Administrator of the Environmental Protection Agency and the 
     heads of other appropriate Federal agencies, shall develop a 
     strategic plan to achieve the national goals for improvement 
     in energy productivity established under subsection (a).
       (2) Public input and comment.--The Secretary shall develop 
     the plan in a manner that provides appropriate opportunities 
     for public input and comment.
       (c) Plan Contents.--The strategic plan shall--
       (1) establish future regulatory, funding, and policy 
     priorities to ensure compliance with the national goals;
       (2) include energy savings estimates for each sector; and
       (3) include data collection methodologies and compilations 
     used to establish baseline and energy savings data.
       (d) Plan Updates.--
       (1) In general.--The Secretary shall--
       (A) update the strategic plan biennially; and
       (B) include the updated strategic plan in the national 
     energy policy plan required by section 801 of the Department 
     of Energy Organization Act (42 U.S.C. 7321).
       (2) Contents.--In updating the plan, the Secretary shall--
       (A) report on progress made toward implementing efficiency 
     policies to achieve the national goals established under 
     subsection (a); and
       (B) verify, to the maximum extent practicable, energy 
     savings resulting from the policies.
       (e) Report to Congress and Public.--The Secretary shall 
     submit to Congress, and make available to the public, the 
     initial strategic plan developed under subsection (b) and 
     each updated plan.
       (f) National Action Plan on Energy Efficiency.--The 
     Administrator of the Environmental Protection Agency and the 
     Secretary, with the heads of other Federal agencies as 
     appropriate, shall continue to support maintenance and 
     updating of the National Action Plan on Energy Efficiency to 
     help inform the development of the strategic plan under 
     subsection (b).

     SEC. 403. NATIONWIDE MEDIA CAMPAIGN TO INCREASE ENERGY 
                   EFFICIENCY.

       (a) In General.--The Secretary, acting through the 
     Assistant Secretary for Energy Efficiency and Renewable 
     Energy (referred to in this section as the ``Secretary''), 
     shall develop and conduct a national media campaign for the 
     purpose of increasing energy efficiency throughout the 
     economy of the United States over the next decade.
       (b) Contract With Entity.--The Secretary shall carry out 
     subsection (a) directly or through--
       (1) competitively bid contracts with 1 or more nationally 
     recognized media firms for the development and distribution 
     of monthly television, radio, and newspaper public service 
     announcements; or
       (2) collective agreements with 1 or more nationally 
     recognized institutes, businesses, or nonprofit organizations 
     for the funding, development, and distribution of monthly 
     television, radio, and newspaper public service 
     announcements.
       (c) Use of Funds.--
       (1) In general.--Amounts made available to carry out this 
     section shall be used for the following:
       (A) Advertising costs.--
       (i) The purchase of media time and space.
       (ii) Creative and talent costs.
       (iii) Testing and evaluation of advertising.
       (iv) Evaluation of the effectiveness of the media campaign.
       (v) The negotiated fees for the winning bidder on requests 
     from proposals issued either by the Secretary for purposes 
     otherwise authorized in this section.
       (vi) Entertainment industry outreach, interactive outreach, 
     media projects and activities, public information, news media 
     outreach, and corporate sponsorship and participation.
       (B) Administrative costs.--Operational and management 
     expenses.
       (2) Limitations.--In carrying out this section, the 
     Secretary shall allocate not less than 85 percent of funds 
     made available under subsection (e) for each fiscal year for 
     the advertising functions specified under paragraph (1)(A).
       (d) Reports.--The Secretary shall annually submit to 
     Congress a report that describes--
       (1) the strategy of the national media campaign and whether 
     specific objectives of the campaign were accomplished, 
     including--
       (A) determinations concerning the rate of change of energy 
     consumption, in both absolute and per capita terms; and
       (B) an evaluation that enables consideration whether the 
     media campaign contributed to reduction of energy 
     consumption;
       (2) steps taken to ensure that the national media campaign 
     operates in an effective and efficient manner consistent with 
     the overall strategy and focus of the campaign;
       (3) plans to purchase advertising time and space;
       (4) policies and practices implemented to ensure that 
     Federal funds are used responsibly to purchase advertising 
     time and space and eliminate the potential for waste, fraud, 
     and abuse; and
       (5) all contracts or cooperative agreements entered into 
     with a corporation, partnership,

[[Page S4502]]

     or individual working on behalf of the national media 
     campaign.
       (e) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section $5,000,000 for 
     each of fiscal years 2008 through 2012.

    TITLE V--PROMOTING FEDERAL LEADERSHIP IN ENERGY EFFICIENCY AND 
                            RENEWABLE ENERGY

     SEC. 501. FEDERAL FLEET CONSERVATION REQUIREMENTS.

       (a) Federal Fleet Conservation Requirements.--
       (1) In general.--Part J of title III of the Energy Policy 
     and Conservation Act (42 U.S.C. 6374 et seq.) is amended by 
     adding at the end the following:

     ``SEC. 400FF. FEDERAL FLEET CONSERVATION REQUIREMENTS.

       ``(a) Mandatory Reduction in Petroleum Consumption.--
       ``(1) In general.--The Secretary shall issue regulations 
     for Federal fleets subject to section 400AA requiring that 
     not later than October 1, 2015, each Federal agency achieve 
     at least a 20 percent reduction in petroleum consumption, and 
     that each Federal agency increase alternative fuel 
     consumption by 10 percent annually, as calculated from the 
     baseline established by the Secretary for fiscal year 2005.
       ``(2) Plan.--
       ``(A) Requirement.--The regulations shall require each 
     Federal agency to develop a plan to meet the required 
     petroleum reduction levels and the alternative fuel 
     consumption increases.
       ``(B) Measures.--The plan may allow an agency to meet the 
     required petroleum reduction level through--
       ``(i) the use of alternative fuels;
       ``(ii) the acquisition of vehicles with higher fuel 
     economy, including hybrid vehicles and plug-in hybrid 
     vehicles if the vehicles are commercially available;
       ``(iii) the substitution of cars for light trucks;
       ``(iv) an increase in vehicle load factors;
       ``(v) a decrease in vehicle miles traveled;
       ``(vi) a decrease in fleet size; and
       ``(vii) other measures.
       ``(b) Federal Employee Incentive Programs for Reducing 
     Petroleum Consumption.--
       ``(1) In general.--Each Federal agency shall actively 
     promote incentive programs that encourage Federal employees 
     and contractors to reduce petroleum through the use of 
     practices such as--
       ``(A) telecommuting;
       ``(B) public transit;
       ``(C) carpooling; and
       ``(D) bicycling.
       ``(2) Monitoring and support for incentive programs.--The 
     Administrator of General Services, the Director of the Office 
     of Personnel Management, and the Secretary of Energy shall 
     monitor and provide appropriate support to agency programs 
     described in paragraph (1).
       ``(3) Recognition.--The Secretary may establish a program 
     under which the Secretary recognizes private sector employers 
     and State and local governments for outstanding programs to 
     reduce petroleum usage through practices described in 
     paragraph (1).
       ``(c) Replacement Tires.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     regulations issued under subsection (a)(1) shall include a 
     requirement that, to the maximum extent practicable, each 
     Federal agency purchase energy-efficient replacement tires 
     for the respective fleet vehicles of the agency.
       ``(2) Exceptions.--This section does not apply to--
       ``(A) law enforcement motor vehicles;
       ``(B) emergency motor vehicles; or
       ``(C) motor vehicles acquired and used for military 
     purposes that the Secretary of Defense has certified to the 
     Secretary must be exempt for national security reasons.
       ``(d) Annual Reports on Compliance.--The Secretary shall 
     submit to Congress an annual report that summarizes actions 
     taken by Federal agencies to comply with this section.''.
       (2) Table of contents amendment.--The table of contents of 
     the Energy Policy and Conservation Act (42 U.S.C. prec. 6201) 
     is amended by adding at the end of the items relating to part 
     J of title III the following:

``Sec. 400FF. Federal fleet conservation requirements.''.
       (b) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out the amendment made by this 
     section $10,000,000 for the period of fiscal years 2008 
     through 2013.

     SEC. 502. FEDERAL REQUIREMENT TO PURCHASE ELECTRICITY 
                   GENERATED BY RENEWABLE ENERGY.

       Section 203 of the Energy Policy Act of 2005 (42 U.S.C. 
     15852) is amended by striking subsection (a) and inserting 
     the following:
       ``(a) Requirement.--
       ``(1) In general.--The President, acting through the 
     Secretary, shall ensure that, of the total quantity of 
     domestic electric energy the Federal Government consumes 
     during any fiscal year, the following percentages shall be 
     renewable energy from facilities placed in service after 
     January 1, 1999:
       ``(A) Not less than 10 percent in fiscal year 2010.
       ``(B) Not less than 15 percent in fiscal year 2015.
       ``(2) Capitol complex.--The Architect of the Capitol, in 
     consultation with the Secretary, shall ensure that, of the 
     total quantity of electric energy the Capitol complex 
     consumes during any fiscal year, the percentages prescribed 
     in paragraph (1) shall be renewable energy.
       ``(3) Waiver authority.--The President may reduce or waive 
     the requirement under paragraph (1) on an annual basis, if 
     the President determines that the average governmentwide cost 
     per kilowatt hour of complying with paragraph (1) will be 
     more than 50 percent higher than the average governmentwide 
     cost per kilowatt-hour for electric energy in the preceding 
     year.''.

     SEC. 503. ENERGY SAVINGS PERFORMANCE CONTRACTS.

       (a) Retention of Savings.--Section 546(c) of the National 
     Energy Conservation Policy Act (42 U.S.C. 8256(c)) is amended 
     by striking paragraph (5).
       (b) Financing Flexibility.--Section 801(a)(2) of the 
     National Energy Conservation Policy Act (42 U.S.C. 
     8287(a)(2)) is amended by adding at the end the following:
       ``(E) Separate contracts.--In carrying out a contract under 
     this title, a Federal agency may--
       ``(i) enter into a separate contract for energy services 
     and conservation measures under the contract; and
       ``(ii) provide all or part of the financing necessary to 
     carry out the contract.''.
       (c) Sunset and Reporting Requirements.--Section 801 of the 
     National Energy Conservation Policy Act (42 U.S.C. 8287) is 
     amended by striking subsection (c).
       (d) Definition of Energy Savings.--Section 804(2) of the 
     National Energy Conservation Policy Act (42 U.S.C. 8287c(2)) 
     is amended--
       (1) by redesignating subparagraphs (A), (B), and (C) as 
     clauses (i), (ii), and (iii), respectively, and indenting 
     appropriately;
       (2) by striking ``means a reduction'' and inserting 
     ``means--
       ``(A) a reduction'';
       (3) by striking the period at the end and inserting a 
     semicolon; and
       (4) by adding at the end the following:
       ``(B) the increased efficient use of an existing energy 
     source by cogeneration or heat recovery, and installation of 
     renewable energy systems;
       ``(C) the sale or transfer of electrical or thermal energy 
     generated on-site, but in excess of Federal needs, to 
     utilities or non-Federal energy users; and
       ``(D) the increased efficient use of existing water sources 
     in interior or exterior applications.''.
       (e) Energy and Cost Savings in Nonbuilding Applications.--
       (1) Definitions.--In this subsection:
       (A) Nonbuilding application.--The term ``nonbuilding 
     application'' means--
       (i) any class of vehicles, devices, or equipment that is 
     transportable under the power of the applicable vehicle, 
     device, or equipment by land, sea, or air and that consumes 
     energy from any fuel source for the purpose of--

       (I) that transportation; or
       (II) maintaining a controlled environment within the 
     vehicle, device, or equipment; and

       (ii) any federally-owned equipment used to generate 
     electricity or transport water.
       (B) Secondary savings.--
       (i) In general.--The term ``secondary savings'' means 
     additional energy or cost savings that are a direct 
     consequence of the energy savings that result from the energy 
     efficiency improvements that were financed and implemented 
     pursuant to an energy savings performance contract.
       (ii) Inclusions.--The term ``secondary savings'' includes--

       (I) energy and cost savings that result from a reduction in 
     the need for fuel delivery and logistical support;
       (II) personnel cost savings and environmental benefits; and
       (III) in the case of electric generation equipment, the 
     benefits of increased efficiency in the production of 
     electricity, including revenues received by the Federal 
     Government from the sale of electricity so produced.

       (2) Study.--
       (A) In general.--As soon as practicable after the date of 
     enactment of this Act, the Secretary and the Secretary of 
     Defense shall jointly conduct, and submit to Congress and the 
     President a report of, a study of the potential for the use 
     of energy savings performance contracts to reduce energy 
     consumption and provide energy and cost savings in 
     nonbuilding applications.
       (B) Requirements.--The study under this subsection shall 
     include--
       (i) an estimate of the potential energy and cost savings to 
     the Federal Government, including secondary savings and 
     benefits, from increased efficiency in nonbuilding 
     applications;
       (ii) an assessment of the feasibility of extending the use 
     of energy savings performance contracts to nonbuilding 
     applications, including an identification of any regulatory 
     or statutory barriers to such use; and
       (iii) such recommendations as the Secretary and Secretary 
     of Defense determine to be appropriate.

     SEC. 504. ENERGY MANAGEMENT REQUIREMENTS FOR FEDERAL 
                   BUILDINGS.

       Section 543(a)(1) of the National Energy Conservation 
     Policy Act (42 U.S.C. 8253(a)(1)) is amended by striking the 
     table and inserting the following:

``Fiscal Year                                      Percentage reduction
  2006...............................................................2 
  2007...............................................................4 
  2008...............................................................9 

[[Page S4503]]

  2009..............................................................12 
  2010..............................................................15 
  2011..............................................................18 
  2012..............................................................21 
  2013..............................................................24 
  2014..............................................................27 
  2015...........................................................30.''.

     SEC. 505. COMBINED HEAT AND POWER AND DISTRICT ENERGY 
                   INSTALLATIONS AT FEDERAL SITES.

       Section 543 of the National Energy Conservation Policy Act 
     (42 U.S.C. 8253) is amended by adding at the end the 
     following:
       ``(f) Combined Heat and Power and District Energy 
     Installations at Federal Sites.--
       ``(1) In general.--Not later than 1 year after the date of 
     enactment of this subsection, the Secretary, in consultation 
     with the Administrator of General Services and the Secretary 
     of Defense, shall identify Federal sites that could achieve 
     significant cost-effective energy savings through the use of 
     combined heat and power or district energy installations.
       ``(2) Information and technical assistance.--The Secretary 
     shall provide agencies with information and technical 
     assistance that will enable the agencies to take advantage of 
     the energy savings described in paragraph (1).
       ``(3) Energy performance requirements.--Any energy savings 
     from the installations described in paragraph (1) may be 
     applied to meet the energy performance requirements for an 
     agency under subsection (a)(1).''.

     SEC. 506. FEDERAL BUILDING ENERGY EFFICIENCY PERFORMANCE 
                   STANDARDS.

       Section 305(a)(3) of the Energy Conservation and Production 
     Act (42 U.S.C. 6834(a)(3)) is amended by striking ``(3)(A)'' 
     and all that follows through the end of subparagraph (A) and 
     inserting the following:
       ``(3) Federal building energy efficiency performance 
     standards.--
       ``(A) In general.--Not later than 1 year after the date of 
     enactment of the Energy Efficiency Promotion Act of 2007, the 
     Secretary shall establish, by rule, revised Federal building 
     energy efficiency performance standards that require that:
       ``(i) For new Federal buildings and Federal buildings 
     undergoing major renovations:

       ``(I) The buildings be designed to achieve energy 
     consumption levels that are at least 30 percent below the 
     levels established in the version of the ASHRAE Standard or 
     the International Energy Conservation Code, as appropriate, 
     that is in effect as of the date of enactment of the Energy 
     Efficiency Promotion Act of 2007.
       ``(II) The buildings be designed so that the fossil fuel-
     generated energy consumption of the buildings is reduced, as 
     compared with the fossil fuel-generated energy consumption by 
     a similar Federal building in fiscal year 2003 (as measured 
     by Commercial Buildings Energy Consumption Survey or 
     Residential Energy Consumption Survey data from the Energy 
     Information Agency), by the percentage specified in the 
     following table:


------------------------------------------------------------------------
 
------------------------------------------------------------------------
``Fiscal Year                                                 Percentage
                                                               Reduction
  2007...............................................                 50
  2010...............................................                 60
  2015...............................................                 70
  2020...............................................                 80
  2025...............................................                 90
  2030...............................................               100.
------------------------------------------------------------------------

       ``(III) Sustainable design principles are applied to the 
     siting, design, and construction of all new and replacement 
     buildings and major renovations of buildings.

       ``(ii) If water is used to achieve energy efficiency, water 
     conservation technologies shall be applied to the extent that 
     the technologies are life-cycle cost-effective.''.

     SEC. 507. APPLICATION OF INTERNATIONAL ENERGY CONSERVATION 
                   CODE TO PUBLIC AND ASSISTED HOUSING.

       Section 109 of the Cranston-Gonzalez National Affordable 
     Housing Act (42 U.S.C. 12709) is amended--
       (1) in subsection (a)(2), by striking ``the Council of 
     American'' and all that follows through ``2003'' and 
     inserting ``the 2006'';
       (2) in subsection (b)--
       (A) in the heading, by striking ``Model Energy Code.--'' 
     and inserting ``International Energy Conservation Code.--''; 
     and
       (B) by striking ``CABO'' and all that follows through 
     ``2003'' and inserting ``the 2006'';
       (3) in subsection (c)--
       (A) in the heading, by striking ``Model Energy Code and''; 
     and
       (B) by striking ``CABO'' and all that follows through 
     ``2003'' and inserting ``the 2006''; and
       (4) by adding at the end the following:
       ``(d) Failure to Amend the Standards.--Not later than 1 
     year after the requirements of the 2006 International Energy 
     Conservation Code are revised, if the Secretaries have not 
     amended the energy efficiency standards under this section or 
     made a determination under subsection (c), and if the 
     Secretary of Energy has made a determination under section 
     304 of the Energy Conservation and Production Act (42 U.S.C. 
     6833) that such revised International Energy Conservation 
     Code would improve energy efficiency, all new construction of 
     housing described in subsection (a) shall meet the 
     requirements of such revised International Energy 
     Conservation Code.''.

  TITLE VI--ASSISTING STATE AND LOCAL GOVERNMENTS IN ENERGY EFFICIENCY

     SEC. 601. WEATHERIZATION ASSISTANCE FOR LOW-INCOME PERSONS.

       Section 422 of the Energy Conservation and Production Act 
     (42 U.S.C. 6872) is amended by striking ``$700,000,000 for 
     fiscal year 2008'' and inserting ``$750,000,000 for each of 
     fiscal years 2008 through 2012''.

     SEC. 602. STATE ENERGY CONSERVATION PLANS.

       Section 365(f) of the Energy Policy and Conservation Act 
     (42 U.S.C. 6325(f)) is amended by striking ``fiscal year 
     2008'' and inserting ``each of fiscal years 2008 through 
     2012''.

     SEC. 603. UTILITY ENERGY EFFICIENCY PROGRAMS.

       (a) Electric Utilities.--Section 111(d) of the Public 
     Utility Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)) 
     is amended by adding at the end the following:
       ``(16) Integrated resource planning.--Each electric utility 
     shall--
       ``(A) integrate energy efficiency resources into utility, 
     State, and regional plans; and
       ``(B) adopt policies establishing cost-effective energy 
     efficiency as a priority resource.
       ``(17) Rate design modifications to promote energy 
     efficiency investments.--
       ``(A) In general.--The rates allowed to be charged by any 
     electric utility shall--
       ``(i) align utility incentives with the delivery of cost-
     effective energy efficiency; and
       ``(ii) promote energy efficiency investments.
       ``(B) Policy options.--In complying with subparagraph (A), 
     each State regulatory authority and each nonregulated utility 
     shall consider--
       ``(i) removing the throughput incentive and other 
     regulatory and management disincentives to energy efficiency;
       ``(ii) providing utility incentives for the successful 
     management of energy efficiency programs;
       ``(iii) including the impact on adoption of energy 
     efficiency as 1 of the goals of retail rate design, 
     recognizing that energy efficiency must be balanced with 
     other objectives;
       ``(iv) adopting rate designs that encourage energy 
     efficiency for each customer class; and
       ``(v) allowing timely recovery of energy efficiency-related 
     costs.''.
       (b) Natural Gas Utilities.--Section 303(b) of the Public 
     Utility Regulatory Policies Act of 1978 (16 U.S.C. 3203(b)) 
     is amended by adding at the end the following:
       ``(5) Energy efficiency.--Each natural gas utility shall--
       ``(A) integrate energy efficiency resources into the plans 
     and planning processes of the natural gas utility; and
       ``(B) adopt policies that establish energy efficiency as a 
     priority resource in the plans and planning processes of the 
     natural gas utility.
       ``(6) Rate design modifications to promote energy 
     efficiency investments.--
       ``(A) In general.--The rates allowed to be charged by a 
     natural gas utility shall align utility incentives with the 
     deployment of cost-effective energy efficiency.
       ``(B) Policy options.--In complying with subparagraph (A), 
     each State regulatory authority and each nonregulated utility 
     shall consider--
       ``(i) separating fixed-cost revenue recovery from the 
     volume of transportation or sales service provided to the 
     customer;
       ``(ii) providing to utilities incentives for the successful 
     management of energy efficiency programs, such as allowing 
     utilities to retain a portion of the cost-reducing benefits 
     accruing from the programs;
       ``(iii) promoting the impact on adoption of energy 
     efficiency as 1 of the goals of retail rate design, 
     recognizing that energy efficiency must be balanced with 
     other objectives; and
       ``(iv) adopting rate designs that encourage energy 
     efficiency for each customer class.''.

     SEC. 604. ENERGY EFFICIENCY AND DEMAND RESPONSE PROGRAM 
                   ASSISTANCE.

       The Secretary shall provide technical assistance regarding 
     the design and implementation of the energy efficiency and 
     demand response programs established under this title, and 
     the amendments made by this title, to State energy offices, 
     public utility regulatory commissions, and nonregulated 
     utilities through the appropriate national laboratories of 
     the Department of Energy.

     SEC. 605. ENERGY AND ENVIRONMENTAL BLOCK GRANT.

       (a) Definitions.--In this section
       (1) Eligible entity.--The term ``eligible entity'' means--
       (A) a State;
       (B) an eligible unit of local government within a State; 
     and
       (C) the District of Columbia.
       (2) Eligible unit of local government.--The term ``eligible 
     unit of local government'' means--
       (A) a city with a population of at least 35,000; and
       (B) a county with a population of at least 200,000.
       (3) State.--The term ``State'' means--
       (A) each of the several States of the United States;
       (B) the Commonwealth of Puerto Rico;
       (C) Guam;
       (D) American Samoa; and
       (E) the United States Virgin Islands.
       (b) Purpose.--The purpose of this section is to assist 
     State and local governments in implementing strategies--
       (1) to reduce fossil fuel emissions created as a result of 
     activities within the boundaries of the States or units of 
     local government;

[[Page S4504]]

       (2) to reduce the total energy use of the States and units 
     of local government; and
       (3) to improve energy efficiency in the transportation 
     sector, building sector, and any other appropriate sectors.
       (c)  Program.--
       (1) In general.--The Secretary shall provide to eligible 
     entities block grants to carry out eligible activities (as 
     specified under paragraph (2)) relating to the implementation 
     of environmentally beneficial energy strategies.
       (2) Eligible activities.--The Secretary, in consultation 
     with the Administrator of the Environmental Protection 
     Agency, the Secretary of Transportation, and the Secretary of 
     Housing and Urban Development, shall establish a list of 
     activities that are eligible for assistance under the grant 
     program.
       (3) Allocation to states and eligible units of local 
     government.--
       (A) In general.--Of the amounts made available to provide 
     grants under this subsection, the Secretary shall allocate--
       (i) 70 percent to eligible units of local government; and
       (ii) 30 percent to States.
       (B) Distribution to eligible units of local government.--
       (i) In general.--The Secretary shall establish a formula 
     for the distribution of amounts under subparagraph (A)(i) to 
     eligible units of local government, taking into account any 
     factors that the Secretary determines to be appropriate, 
     including the residential and daytime population of the 
     eligible units of local government.
       (ii) Criteria.--Amounts shall be distributed to eligible 
     units of local government under clause (i) only if the 
     eligible units of local government meet the criteria for 
     distribution established by the Secretary for units of local 
     government.
       (C) Distribution to states.--
       (i) In general.--Of the amounts provided to States under 
     subparagraph (A)(ii), the Secretary shall distribute--

       (I) at least 1.25 percent to each State; and
       (II) the remainder among the States, based on a formula, to 
     be determined by the Secretary, that takes into account the 
     population of the States and any other criteria that the 
     Secretary determines to be appropriate.

       (ii) Criteria.--Amounts shall be distributed to States 
     under clause (i) only if the States meet the criteria for 
     distribution established by the Secretary for States.
       (iii) Limitation on use of state funds.--At least 40 
     percent of the amounts distributed to States under this 
     subparagraph shall be used by the States for the conduct of 
     eligible activities in nonentitlement areas in the States, in 
     accordance with any criteria established by the Secretary.
       (4) Report.--Not later than 2 years after the date on which 
     an eligible entity first receives a grant under this section, 
     and every 2 years thereafter, the eligible entity shall 
     submit to the Secretary a report that describes any eligible 
     activities carried out using assistance provided under this 
     subsection.
       (5) Authorization of appropriations.--There are authorized 
     to be appropriated such sums as are necessary to carry out 
     this subsection for each of fiscal years 2008 through 2012.
       (d) Environmentally Beneficial Energy Strategies 
     Supplemental Grant Program.--
       (1) In general.--The Secretary shall provide to each 
     eligible entity that meets the applicable criteria under 
     subparagraph (B)(ii) or (C)(ii) of subsection (c)(3) a 
     supplemental grant to pay the Federal share of the total 
     costs of carrying out an eligible activity (as specified 
     under subsection (c)(2)) relating to the implementation of an 
     environmentally beneficial energy strategy.
       (2) Requirements.--To be eligible for a grant under 
     paragraph (1), an eligible entity shall--
       (A) demonstrate to the satisfaction of the Secretary that 
     the eligible entity meets the applicable criteria under 
     subparagraph (B)(ii) or (C)(ii) of subsection (c)(3); and
       (B) submit to the Secretary for approval a plan that 
     describes the activities to be funded by the grant.
       (3) Cost-sharing requirement.--
       (A) Federal share.--The Federal share of the cost of 
     carrying out any activities under this subsection shall be 75 
     percent.
       (B) Non-federal share.--
       (i) Form.--Not more than 50 percent of the non-Federal 
     share may be in the form of in-kind contributions.
       (ii) Limitation.--Amounts provided to an eligible entity 
     under subsection (c) shall not be used toward the non-Federal 
     share.
       (4) Maintenance of effort.--An eligible entity shall 
     provide assurances to the Secretary that funds provided to 
     the eligible entity under this subsection will be used only 
     to supplement, not to supplant, the amount of Federal, State, 
     and local funds otherwise expended by the eligible entity for 
     eligible activities under this subsection.
       (5) Authorization of appropriations.--There are authorized 
     to be appropriated such sums as are necessary to carry out 
     this subsection for each of fiscal years 2008 through 2012.
       (e) Grants to Other States and Communities.--
       (1) In general.--Of the total amount of funds that are made 
     available each fiscal year to carry out this section, the 
     Secretary shall use 2 percent of the amount to make 
     competitive grants under this section to States and units of 
     local government that are not eligible entities or to 
     consortia of such units of local government.
       (2) Applications.--To be eligible for a grant under this 
     subsection, a State, unit of local government, or consortia 
     described in paragraph (1) shall apply to the Secretary for a 
     grant to carry out an activity that would otherwise be 
     eligible for a grant under subsection (c) or (d).
       (3) Priority.--In awarding grants under this subsection, 
     the Secretary shall give priority to--
       (A) States with populations of less than 2,000,000; and
       (B) projects that would result in significant energy 
     efficiency improvements, reductions in fossil fuel use, or 
     capital improvements.

     SEC. 606. ENERGY SUSTAINABILITY AND EFFICIENCY GRANTS FOR 
                   INSTITUTIONS OF HIGHER EDUCATION.

       (a) Definitions.--In this section:
       (1) Energy sustainability.--The term ``energy 
     sustainability'' includes using a renewable energy resource 
     and a highly efficient technology for electricity generation, 
     transportation, heating, or cooling.
       (2) Institution of higher education.--The term 
     ``institution of higher education'' has the meaning given the 
     term in section 2 of the Energy Policy Act of 2005 (42 U.S.C. 
     15801).
       (b) Grants for Energy Efficiency Improvement.--
       (1) In general.--The Secretary shall award not more than 
     100 grants to institutions of higher education to carry out 
     projects to improve energy efficiency on the grounds and 
     facilities of the institution of higher education, including 
     not less than 1 grant to an institution of higher education 
     in each State.
       (2) Condition.--As a condition of receiving a grant under 
     this subsection, an institution of higher education shall 
     agree to--
       (A) implement a public awareness campaign in the community 
     in which the institution of higher education is located to 
     promote the project; and
       (B) submit to the Secretary, and make available to the 
     public, reports on any improvements achieved as part of a 
     project carried out under paragraph (1).
       (c) Grants for Innovation in Energy Sustainability.--
       (1) In general.--The Secretary shall award not more than 
     250 grants to institutions of higher education to engage in 
     innovative energy sustainability projects, including not less 
     than 2 grants to institutions of higher education in each 
     State.
       (2) Innovation projects.--An innovation project carried out 
     with a grant under this subsection shall--
       (A) involve an innovative technology that is not yet 
     commercially available;
       (B) have the greatest potential for testing or modeling new 
     technologies or processes; and
       (C) ensure active student participation in the project, 
     including the planning, implementation, evaluation, and other 
     phases of the project.
       (3) Condition.--As a condition of receiving a grant under 
     this subsection, an institution of higher education shall 
     agree to submit to the Secretary, and make available to the 
     public, reports that describe the results of the projects 
     carried out under paragraph (1).
       (d) Awarding of Grants.--
       (1) Application.--An institution of higher education that 
     seeks to receive a grant under this section may submit to the 
     Secretary an application for the grant at such time, in such 
     form, and containing such information as the Secretary may 
     prescribe.
       (2) Selection.--The Secretary shall establish a committee 
     to assist in the selection of grant recipients under this 
     section.
       (e) Allocation to Institutions of Higher Education With 
     Small Endowments.--Of the amount of grants provided for a 
     fiscal year under this section, the Secretary shall provide 
     not less 50 percent of the amount to institutions of higher 
     education that have an endowment of not more than 
     $100,000,000, with 50 percent of the allocation set aside for 
     institutions of higher education that have an endowment of 
     not more than $50,000,000.
       (f) Grant Amounts.--The maximum amount of grants for a 
     project under this section shall not exceed--
       (1) in the case of grants for energy efficiency improvement 
     under subsection (b), $1,000,000; or.
       (2) in the case of grants for innovation in energy 
     sustainability under subsection (c), $500,000.
       (g) Authorization of Appropriations.--There are authorized 
     to be appropriated such sums as are necessary to carry out 
     this section for each of fiscal years 2008 through 2012.

     SEC. 607. WORKFORCE TRAINING.

       Section 1101 of the Energy Policy Act of 2005 (42 U.S.C. 
     16411) is amended--
       (1) by redesignating subsection (d) as subsection (e); and
       (2) by inserting after subsection (c) the following:
       ``(d) Workforce Training.--
       ``(1) In general.--The Secretary, in cooperation with the 
     Secretary of Labor, shall promulgate regulations to implement 
     a program to provide workforce training to meet the high 
     demand for workers skilled in the energy efficiency and 
     renewable energy industries.
       ``(2) Consultation.--In carrying out this subsection, the 
     Secretary shall consult with

[[Page S4505]]

     representatives of the energy efficiency and renewable energy 
     industries concerning skills that are needed in those 
     industries.''.

     SEC. 608. ASSISTANCE TO STATES TO REDUCE SCHOOL BUS IDLING.

       (a) Statement of Policy.--Congress encourages each local 
     educational agency (as defined in section 9101(26) of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     7801(26))) that receives Federal funds under the Elementary 
     and Secondary Education Act of 1965 (20 U.S.C. 6301 et seq.) 
     to develop a policy to reduce the incidence of school bus 
     idling at schools while picking up and unloading students.
       (b) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary, working in coordination 
     with the Secretary of Education, $5,000,000 for each of 
     fiscal years 2007 through 2012 for use in educating States 
     and local education agencies about--
       (1) benefits of reducing school bus idling; and
       (2) ways in which school bus idling may be reduced.

  Mr. DOMENICI. Mr. President, over 18 months ago, the President signed 
into law the Energy Policy Act of 2005. The enactment of that 
comprehensive legislation was a watershed event in structuring sound 
Energy policy for this Nation's future. We did a great deal in that 
energy bill on energy conservation and improved energy efficiency.
  EPAct implemented new efficiency standards for 15 large commercial 
and residential appliances that have, in the past, consumed a great 
deal of energy, such as commercial washers, refrigerators, freezers, 
air-conditioners, and icemakers. In response to that mandate, the 
Department of Energy codified 15 new efficiency standards. Because of 
these new standards alone, we will save 50,000 megawatts of off-peak 
electricity use by 2020--which is an energy savings equal to more than 
eighty 600-megawatt power plants.
  EPAct also encourages consumers to make their homes more energy 
efficient by giving them a 10-percent personal tax credit for energy 
efficient improvements. Additionally, homebuilders get a business tax 
credit for the construction of new homes that meet a 30-percent energy 
reduction standard. The law aids businesses in saving energy by 
providing a deduction for energy-efficient commercial buildings meeting 
a 50-percent energy reduction standard. Manufacturers are also assisted 
in building more energy-efficient home products via a manufacturers' 
tax credit for energy-efficient dishwashers, clothes washers, and 
refrigerators.
  Still, there is no doubt that much can be done to improve the ways in 
which we use energy. That is why I am pleased today to introduce the 
Energy Efficiency Promotion Act of 2007 with Senator Bingaman. The bill 
we are introducing is a good starting point--but it is still a work in 
progress. I expect this bill to evolve over the course of the next 
several weeks with important input from those who will be tasked with 
implementing this policy and those who will be impacted by it. In 
particular, I am very interested in the Energy Department's views on 
this bill, and the committee will conduct a hearing next week at which 
the Department will testify.
  The Energy Efficiency Promotion Act of 2007 represents over $12 
billion in net present benefits for consumers. Potential electricity 
savings of 50 billion kilowatt hours per year equal enough energy 
savings to power almost 5 million households. Potential natural gas 
savings of 170 million therms per year equal enough energy savings to 
heat 250,000 households. And water savings from the legislation amount 
to about 560 million gallons per day.
  This bill presses for better energy efficiency in the Federal 
Government--the appropriate place to start. Title I focuses on the 
promotion of energy-efficient lighting technologies within Federal 
Government and requires all general purpose lighting in Federal 
buildings to be Energy Star rated or designated as efficient by the 
Federal Energy Management Program. Title I also contains a sense of the 
Senate that Federal policies be adopted on efficient lightbulb 
standards.
  Title II, which deals with energy efficiency standards, sets forth a 
number of consensus standards on such products as residential boilers, 
clothes washers, dishwashers, dehumidifiers, and electric motors. Such 
efficiency standards have the potential to save significant amounts of 
energy. This title also provides DOE with the authority to expedite 
rulemakings for energy-efficient consensus standards.
  Title III promotes high efficiency vehicles, advanced batteries, and 
energy storage. It provides for lightweight materials research and 
development and loan guarantee the manufacture of fuel-efficient 
vehicle parts, including hybrid and advanced diesel vehicles.
  Title IV sets forth national energy savings goals in the areas of 
transportation and the Nation's energy productivity. This title extends 
the President's goal for gasoline savings and further seeks to improve 
the Nation's overall energy productivity.
  Title V calls for increased federal leadership in energy efficiency 
and renewable energy. It directs DOE to reduce petroleum consumption 
and increases the Federal requirement to purchase electricity generated 
by renewable energy. This title also permanently authorizes the Energy 
Savings Performance Contracts Program.
  Title VI seeks to assist State and local governments with their 
ongoing efforts to improve their energy efficiency. It extends the 
authorization for both the Weatherization Assistance Program and the 
State Energy Conservation Program. This title also establishes energy 
efficiency grant programs for local governments and institutions of 
higher learning.
  Again, I think the Energy Efficiency Promotion Act of 2007 we are 
introducing today is a good starting point for our continued work in 
the energy efficiency area. I look forward to working with Senator 
Bingaman, the administration, and all affected stakeholders as we move 
forward on this bill.
                                 ______
                                 
      By Mr. BOND (for himself and Mr. Dodd):
  S. 1117. A bill to establish a grant program to provide vision care 
to children, and for other purposes; to the Committee on Health, 
Education, Labor, and Pensions.
  Mr. BOND. Mr. President, children endure a lot. They cannot always 
tell us what's wrong. Often they do not know themselves. So it takes a 
special person to work with young people and help identify their 
problems. Every child deserves the opportunity to reach their full 
potential, but it takes more than a book-bag full of pencils, paper, 
books and rulers to equip children with the tools necessary to succeed 
in school.
  The most important tool kids will take to school is their eyes. Good 
vision is critical to learning. 80 percent of what kids learn in their 
early school years is visual. Unfortunately, we overlook that fact 
sometimes. According to the CDC only one in three children receive any 
form of preventive vision care before entering school. That means many 
kids are in school with an undetected vision problem. One in four 
children has a vision problem that can interfere with learning. Some 
children are even labeled ``disruptive'' or thought to have a learning 
disability when the real reason for their difficulty is an undetected 
vision problem.
  Without any vision care, some of our children will continue to fall 
through the cracks. I sympathize with these kids because I suffer from 
permanent vision loss in one eye as a result of undiagnosed Amblyopia 
in childhood. Amblyopia is the number one cause of vision loss in young 
Americans. If discovered and treated early, vision loss from Amblyopia 
can be largely prevented. Had I been identified and treated before I 
entered school, I could have avoided a lifetime of vision loss. Parents 
are not always aware that their child may suffer from a vision problem. 
By educating parents on the importance of vision care and recognizing 
signs of visual impairment we can help children avoid unnecessary 
vision loss.
  To ensure that children get the vital vision care that they need to 
succeed, today Senator Dodd and I are introducing the Vision Care for 
Kids Act which will establish a grant program to compliment and 
encourage existing State efforts to improve children's vision care. 
More specifically, grant funds will be used to: (1) provide 
comprehensive eye exams to children that have been previously 
identified as needing such services; (2) provide treatment or services 
necessary to correct vision problems identified in that eye exam; and 
(3) develop and disseminate educational materials to recognize the 
signs of visual impairment in children

[[Page S4506]]

for parents, teachers, and health care practitioners.
  We need to do this. We must improve vision care for children to 
better equip them to succeed in school and in life. The Vision Care for 
Kids Act, endorsed by the American Academy of Ophthalmology, American 
Optometric Association, and Vision Council of America, will make a 
difference in the lives of children across the country.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1117

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Vision Care for Kids Act of 
     2007''.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) Millions of children in the United States suffer from 
     vision problems, many of which go undetected. Because 
     children with vision problems can struggle developmentally, 
     resulting in physical, emotional, and social consequences, 
     good vision is essential for proper physical development and 
     educational progress.
       (2) Vision problems in children range from common 
     conditions such as refractive errors, amblyopia, strabismus, 
     ocular trauma, and infections, to rare but potentially life- 
     or sight-threatening problems such as retinoblastoma, 
     infantile cataracts, congenital glaucoma, and genetic or 
     metabolic diseases of the eye.
       (3) Since many serious ocular conditions are treatable if 
     identified in the preschool and early school-aged years, 
     early detection provides the best opportunity for effective 
     treatment and can have far-reaching implications for vision.
       (4) Various identification methods, including vision 
     screening and comprehensive eye examinations required by 
     State laws, can be helpful in identifying children needing 
     services. A child identified as needing services through 
     vision screening should receive a comprehensive eye 
     examination followed by subsequent treatment as needed. Any 
     child identified as needing services should have access to 
     subsequent treatment as needed.
       (5) There is a need to increase public awareness about the 
     prevalence and devastating consequences of vision disorders 
     in children and to educate the public and health care 
     providers about the warning signs and symptoms of ocular and 
     vision disorders and the benefits of early detection, 
     evaluation, and treatment.

     SEC. 3. GRANTS REGARDING VISION CARE FOR CHILDREN.

       (a) In General.--The Secretary of Health and Human Services 
     (referred to in this section as the ``Secretary''), acting 
     through the Director of the Centers for Disease Control and 
     Prevention, may award grants to States on the basis of an 
     established review process for the purpose of complementing 
     existing State efforts for--
       (1) providing comprehensive eye examinations by a licensed 
     optometrist or ophthalmologist for children who have been 
     previously identified through a vision screening or eye 
     examination by a licensed health care provider or vision 
     screener as needing such services, with priority given to 
     children who are under the age of 9 years;
       (2) providing treatment or services, subsequent to the 
     examinations described in paragraph (1), necessary to correct 
     vision problems; and
       (3) developing and disseminating, to parents, teachers, and 
     health care practitioners, educational materials on 
     recognizing signs of visual impairment in children.
       (b) Criteria and Coordination.--
       (1) Criteria.--The Secretary, in consultation with 
     appropriate professional and consumer organizations including 
     individuals with knowledge of age appropriate vision 
     services, shall develop criteria--
       (A) governing the operation of the grant program under 
     subsection (a); and
       (B) for the collection of data related to vision assessment 
     and the utilization of follow up services.
       (2) Coordination.--The Secretary shall, as appropriate, 
     coordinate the program under subsection (a) with the program 
     under section 330 of the Public Health Service Act (relating 
     to health centers) (42 U.S.C. 254b), the program under title 
     XIX of the Social Security Act (relating to the Medicaid 
     program) (42 U.S.C. 1396 et seq.), the program under title 
     XXI of such Act (relating to the State children's health 
     insurance program) (42 U.S.C. 1397aa et seq.), and with other 
     Federal or State programs that provide services to children.
       (c) Application.--To be eligible to receive a grant under 
     subsection (a), a State shall submit to the Secretary an 
     application in such form, made in such manner, and containing 
     such information as the Secretary may require, including--
       (1) information on existing Federal, Federal-State, or 
     State-funded children's vision programs;
       (2) a plan for the use of grant funds, including how funds 
     will be used to complement existing State efforts (including 
     possible partnerships with non-profit entities);
       (3) a plan to determine if a grant eligible child has been 
     identified as provided for in subsection (a); and
       (4) a description of how funds will be used to provide 
     items or services, only as a secondary payer--
       (A) for an eligible child, to the extent that the child is 
     not covered for the items or services under any State 
     compensation program, under an insurance policy, or under any 
     Federal or State health benefits program; or
       (B) for an eligible child, to the extent that the child 
     receives the items or services from an entity that provides 
     health services on a prepaid basis.
       (d) Evaluations.--To be eligible to receive a grant under 
     subsection (a), a State shall agree that, not later than 1 
     year after the date on which amounts under the grant are 
     first received by the State, and annually thereafter while 
     receiving amounts under the grant, the State will submit to 
     the Secretary an evaluation of the operations and activities 
     carried out under the grant, including--
       (1) an assessment of the utilization of vision services and 
     the status of children receiving these services as a result 
     of the activities carried out under the grant;
       (2) the collection, analysis, and reporting of children's 
     vision data according to guidelines prescribed by the 
     Secretary; and
       (3) such other information as the Secretary may require.
       (e) Limitations in Expenditure of Grant.--A grant may be 
     made under subsection (a) only if the State involved agrees 
     that the State will not expend more than 20 percent of the 
     amount received under the grant to carry out the purpose 
     described in paragraph (3) of such subsection.
       (f) Definition.--For purposes of this section, the term 
     ``comprehensive eye examination'' includes an assessment of a 
     patient's history, general medical observation, external and 
     ophthalmoscopic examination, visual acuity, ocular alignment 
     and motility, refraction, and as appropriate, binocular 
     vision or gross visual fields, performed by an optometrist or 
     an ophthalmologist.
       (g) Authorization of Appropriations.--For the purpose of 
     carrying out this section, there are authorized to be 
     appropriated such sums as may be necessary for each of fiscal 
     years 2008 through 2012.

  Mr. DODD. Mr. President, today, Senator Bond and I are introducing 
the Vision Care for Kids Act of 2007. This legislation will provide 
follow-up vision care services for those children who have visual 
problems and are not covered under an insurance policy or under any 
Federal, or State health benefits program.
  Why is this legislation needed? Let's look at the facts. According to 
the 2004 Vision Problems Action Plan, published by Prevent Blindness 
America, vision problems affect one in 20 preschoolers and 80 percent 
of children under age six are not screened for vision problems before 
entering public school.
  Perhaps even more startling than the statistics I have just 
mentioned, is that 20 States do not require children to receive any 
vision care prior to entry or during their early school years. Thus, 
millions of children are at risk of having possible vision problems 
later in life.
  I am pleased that my home State of Connecticut provides annual 
screenings to children in kindergarten through grade six. In addition, 
during the ninth grade, each student also receives a vision screening. 
Following the eye tests that are administered in Connecticut's schools, 
the local superintendent sends a note to the parent or guardian of each 
student who is found to have a problem.
  Although Connecticut provides screenings in the early years, it is 
important to note that out of the 467,488 children in Connecticut, 
there are almost 70,000 who have untreated vision disorders, according 
to the most recent Census data. Nationwide, almost 6 million out of 
close to 40 million children have untreated vision disorders. The 
Centers for Disease Control and Prevention said that ``impaired vision 
can affect a child's cognitive, emotional, neurological, and physical 
development.''
  With the introduction of the Vision Care for Kids Act, Senator Bond 
and I are seeking to improve the data I have outlined. When this 
legislation is enacted, the States will have the resources to pay for 
follow-up vision treatment for children who now do not have the 
financial means to undergo this much needed care.
  Our initiative will enable Federal funding to complement existing 
State efforts in regard to: providing comprehensive eye examinations 
for children under age nine; furnishing the necessary treatment or 
services needed if an eye exam determines additional

[[Page S4507]]

care is needed; and developing educational materials for parents, 
teachers, and health care practitioners that will increase recognition 
of the signs of visual impairment in children. The Vision Care for Kids 
Act will serve as an incentive to States to provide eye care to those 
youngsters who are in need of treatment and are currently unable to 
access care.
  This year, we are working on the reauthorization of the State 
Children's Health Insurance Program (SCHIP). SCHIP was created to 
provide health care to millions of children who were previously 
uninsured. Over the last ten years, we have seen the positive impact of 
this essential program. Passage of the Vision Care for Kids Act will be 
a key component of ensuring that we have a comprehensive children's 
health care delivery system in this country. I look forward to working 
with Senator Bond and my colleagues to see that this legislation is not 
only is not only passed by this body soon, but that it is signed into 
law.
                                 ______
                                 
      By Mr. DORGAN (for himself and Mr. Craig):
  S. 1118. A bill to improve the energy security of the United States 
by raising average fuel economy standards, and for other purposes; to 
the Committee on Commerce, Science, and Transportation.
  Mr. DORGAN. Mr. President, today I am pleased to be joined by Senator 
Craig to introduce legislation called the Fuel Efficiency Act of 2007. 
This legislation is an important component of broader legislation that 
my colleague and I recently introduced on March 14, 2007. That 
legislation is a balanced plan with the overall goal to improve the 
energy security of the U.S. through a 50 percent reduction in the oil 
intensity of the economy by 2030.
  This is important to me because the United States remains dangerously 
dependent on foreign sources of oil. Today we import over 60 percent of 
our oil from Iraq, Kuwait, Saudi Arabia, Nigeria, Venezuela, and other 
unstable nations of the world. This is very troubling to me.
  Our larger proposal is grounded in four cornerstone principles. The 
first principle is achievable, stepped increases in fuel efficiency of 
the transportation fleet. The second principle promotes increased 
availability of alternative fuel sources and infrastructure. The third 
principle calls for expanded production and enhanced exploration of 
domestic and other secure oil and natural gas resources. Finally, the 
fourth principle improves the management of alliances to better secure 
global energy supplies.
  In the United States, we use about 67 percent of our oil to power our 
vehicles. This is the area where we are least secure and increasingly 
dependent. For these reasons and more, we introduced S. 875 as a bi-
partisan, balanced approach to securing our future energy through 
reducing our dependence on foreign oil.
  I am also a member of the Senate Commerce, Science and Transportation 
Committee which has jurisdiction over the fuel economy standards of our 
Nation's vehicle fleet. I look forward to working with Chairman Inouye, 
Ranking Member Stevens, and other members of the committee who are 
interested in enacting strong, fair, and forwarding-looking fuel 
economy standards.
  It should be noted that this is the first time that both Senator 
Craig and I have publicly stated our support for increased fuel economy 
standards beyond the incremental steps that the current administration 
has made to date. Our Nation's fuel economy standards have not 
significantly changed since the mid-1980s. We now have lower passenger 
vehicle fuel efficiency standards than Japan, the European Union, 
Australia, Canada, and yes, even China.
  The bill we have introduced today reforms and strengthens fuel 
efficiency standards by establishing an annual 4 percent increase in 
the fuel economy of the entire new vehicle fleet, including 
automobiles, medium trucks, and heavy trucks from 2012-2030. The 
National Highway Traffic Safety Administration will have discretion to 
invoke ``off-ramps'' if it is determined that the increase is not 
technologically achievable, creates material safety concerns, or is not 
cost effective.
  Senator Craig and I came together to develop a new pathway forward 
because we believe that bolder energy security measures must be taken 
now to address our long-term security, economic growth and 
environmental protection. There is no silver bullet to solving our 
energy dependence. Digging and drilling is a strategy I call yesterday 
forever. Conservation alone is not the answer. Renewable fuels hold 
promise, but we need to do much more here. We believe the combination 
of steps sets the right pathway to U.S. energy security, and we look 
forward to moving increased fuel economy standards through the Senate 
Commerce Committee.

                          ____________________