[Congressional Record Volume 154, Number 144 (Thursday, September 11, 2008)]
[Senate]
[Pages S8392-S8414]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BAUCUS (for himself and Mr. Grassley):
  S. 3478. A bill to amend the Internal Revenue Code of 1986 to provide 
incentives for the production of energy, to provide transportation and 
domestic fuel security, and to provide incentives for energy 
conservation and energy efficiency, and for other purposes; to the 
Committee on Finance.
  Mr. BAUCUS. Mr. President, today, I join with my colleague Chuck 
Grassley, the Finance Committee's ranking Republican member, to 
introduce the Energy Independence and Innovation Act of 2008.
  This bill will create jobs. It will help consumers with high energy 
costs. It will contribute to energy security. It will help secure 
America's place as a world leader in clean energy technology. It will 
help to prepare this country to address global warming.
  For more than a year, we have been trying to pass meaningful energy 
tax legislation.
  In June of last year, the Finance Committee passed a roughly $30 
billion energy-tax package. It received a resounding bipartisan 
committee vote. The bill proposed the largest-ever series of clean 
energy tax incentives. It was largely offset with reductions in tax 
breaks for oil and gas companies.
  That package's clean energy incentives included a long-term extension 
of tax credits for wind and solar power, long-term extensions of 
credits for building efficiency, and extensions and modifications of 
credits for clean coal technology.
  The June 2007 bill also included innovative new items. It included a 
credit for consumers for plug-in hybrids. It included a new credit to 
promote capture and storage of carbon dioxide. And it included 
incentives to transform our electricity grid, so that far-flung sources 
of renewable power--like wind and solar--can be brought to market.
  But many on the other side objected to the bill, because it included 
reductions in oil and gas tax breaks. We needed 60 votes to pass the 
Senate. But our bill got 57, and died on the floor.
  We tried again in December of last year. We scaled back our oil and 
gas offsets. And we wrote a smaller, roughly $20 billion package of 
clean-energy incentives.
  But Senators--again, generally from the other side of the aisle--
continued to object to provisions cutting tax breaks for oil and gas 
companies. That bill failed as well, by just one vote.
  In response to those concerns, this year, I wrote an energy tax 
package without oil and gas offsets. That bill, S. 3335, was paid for 
by closing tax loopholes and by delaying a tax benefit for 
multinational corporations that has yet to take effect.
  That bill included about $18 billion in energy-tax provisions, 
including scaled-down versions of the original Finance Committee bill. 
This ``extenders'' bill also included billions in non-energy extenders. 
These tax incentives are vital to supporting a range of activities, 
from research and development to higher education.
  Unfortunately, S. 3335 has been objected to, as well. It has not 
cleared the Senate.
  But now energy prices are sky-high. And we have learned that many 
Senators from the other side of the aisle have come to agree that it 
makes sense to scale back oil and gas tax breaks.
  Accordingly, Senator Grassley and I have worked together to rewrite 
our original Finance Committee product. And that is largely what is 
represented in the bill that we are introducing today.
  Our bill invests about $26 billion in renewable energy. It pays for 
it largely by repealing tax breaks for oil and gas firms. These are 
largely the same tax offsets that we included in our original bill. For 
example, the bill would deny a tax benefit that was enacted in 2004, 
when oil traded at about $50 per barrel.
  Oil trades at more than $100 per barrel now. Recently it reached 
nearly $150 per barrel. I am pleased that my colleagues have come to 
agree that with energy prices this high, these oil and gas tax 
incentives are not needed.
  What do we get for repealing those oil and gas tax breaks? We get 
long-term extensions of vital clean energy incentives, like the credit 
for wind and solar electricity. With passage of tax credits for wind 
power in 2005 and 2006, the American wind energy industry has installed 
capacity in the last 2 years that equals the capacity it installed in 
the last 2\1/2\ decades.
  The solar industry is also booming. It accounts for a growing number 
of high-paying jobs in America's clean tech sector. This bill includes 
an 8-year extension of the credit for solar power. And that extension 
will fuel this already impressive job growth.
  Let's consider what happens if we do not extend these credits. 
According to a February 2008 study, failure to extend the wind and 
solar credits would result in the loss of 114,000 jobs. Renewable 
energy is simply not yet cost-competitive with fossil-based power. It 
needs the incentives in this bill.
  Absent broader mandates on renewable power, we need to continue tax 
support for renewable electricity production. With those tax 
incentives, the private sector will continue to invest in this worthy 
cause.
  This bill also contains many other important provisions. It contains 
extensions of efficiency incentives for buildings, which account for 
about 40 percent of American energy use. It contains the new plug-in 
hybrid credit for consumers, at a higher level than last year's bill--
up to $7,500. As did last year's package, the bill we introduce today 
includes a provision to promote what folks call ``smart meters,'' which 
provide real-time feedback on electricity usage. These smart meters 
have been shown to cut consumer energy costs and carbon emissions, as 
well.
  Finally, the bill includes a new production credit for carbon 
dioxide, providing an incentive for capturing and storing harmful 
carbon dioxide. This provision was also part of last year's Finance 
Committee bill. I am pleased that it is part of this bill as well.
  This bill does not do everything that I want. If I had my druthers, 
we would extend and possibly modify--many of these credits for a longer 
period. And the bill includes some items that I am not overly thrilled 
about. But those compromises are part of the legislative process. That 
process will continue after today's introduction.
  Meanwhile, I am again pleased that consensus may well be building to 
redirect tax incentives and invest in the clean technology this country 
desperately needs.
  For the sake of American jobs, for the sake of our Nation's security, 
and for the sake of our planet's environment, I urge my colleagues to 
support this bill.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.

[[Page S8393]]

  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3478

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

     SECTION 1. SHORT TITLE, ETC.

       (a) Short Title.--This Act may be cited as the ``Energy 
     Independence and Investment Act of 2008''.
       (b) Reference.--Except as otherwise expressly provided, 
     whenever in this Act an amendment or repeal is expressed in 
     terms of an amendment to, or repeal of, a section or other 
     provision, the reference shall be considered to be made to a 
     section or other provision of the Internal Revenue Code of 
     1986.
       (c) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title, etc.

                 TITLE I--ENERGY PRODUCTION INCENTIVES

                Subtitle A--Renewable Energy Incentives

Sec. 101. Renewable energy credit.
Sec. 102. Production credit for electricity produced from marine 
              renewables.
Sec. 103. Energy credit.
Sec. 104. Credit for residential energy efficient property.
Sec. 105. New clean renewable energy bonds.
Sec. 106. Energy credit for small wind property.
Sec. 107. Energy credit for geothermal heat pump systems.

           Subtitle B--Carbon Mitigation and Coal Provisions

Sec. 111. Expansion and modification of advanced coal project 
              investment credit.
Sec. 112. Expansion and modification of coal gasification investment 
              credit.
Sec. 113. Temporary increase in coal excise tax; funding of Black Lung 
              Disability Trust Fund.
Sec. 114. Special rules for refund of the coal excise tax to certain 
              coal producers and exporters.
Sec. 115. Tax credit for carbon dioxide sequestration.
Sec. 116. Carbon audit of the tax code.

     TITLE II--TRANSPORTATION AND DOMESTIC FUEL SECURITY PROVISIONS

Sec. 201. Inclusion of cellulosic biofuel in bonus depreciation for 
              biomass ethanol plant property.
Sec. 202. Credits for biodiesel and renewable diesel.
Sec. 203. Clarification that credits for fuel are designed to provide 
              an incentive for United States production.
Sec. 204. Credit for new qualified plug-in electric drive motor 
              vehicles.
Sec. 205. Extension and modification of alternative motor vehicle 
              credit.
Sec. 206. Exclusion from heavy truck tax for idling reduction units and 
              advanced insulation.
Sec. 207. Extension and modification of alternative fuel credit.
Sec. 208. Alternative fuel vehicle refueling property credit.
Sec. 209. Certain income and gains relating to alcohol fuels and 
              mixtures, biodiesel fuels and mixtures, and alternative 
              fuels and mixtures treated as qualifying income for 
              publicly traded partnerships.
Sec. 210. Extension of ethanol production credit.
Sec. 211. Credit for producers of fossil free alcohol.
Sec. 212. Extension and modification of election to expense certain 
              refineries.
Sec. 213. Extension of suspension of taxable income limit on percentage 
              depletion for oil and natural gas produced from marginal 
              properties.

        TITLE III--ENERGY CONSERVATION AND EFFICIENCY PROVISIONS

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

               TITLE IV--MISCELLANEOUS ENERGY PROVISIONS

Sec. 401. Special rule to implement FERC and State electric 
              restructuring policy.
Sec. 402. Modification of credit for production from advanced nuclear 
              power facilities.
Sec. 403. Income averaging for amounts received in connection with the 
              Exxon Valdez litigation.

                      TITLE V--REVENUE PROVISIONS

Sec. 501. Limitation of deduction for income attributable to domestic 
              production of oil, gas, or primary products thereof.
Sec. 502. Tax on crude oil and natural gas produced from the outer 
              Continental Shelf in the Gulf of Mexico.
Sec. 503. Elimination of the different treatment of foreign oil and gas 
              extraction income and foreign oil related income for 
              purposes of the foreign tax credit.
Sec. 504. Broker reporting of customer's basis in securities 
              transactions.
Sec. 505. Increase and extension of Oil Spill Liability Trust Fund tax.

                       TITLE VI--OTHER PROVISIONS

Sec. 601. Secure rural schools and community self-determination 
              program.
Sec. 602. Clarification of uniform definition of child.

                 TITLE I--ENERGY PRODUCTION INCENTIVES

                Subtitle A--Renewable Energy Incentives

     SEC. 101. RENEWABLE ENERGY CREDIT.

       (a) 3-Year Extension.--Each of the following provisions of 
     section 45(d) is amended by striking ``January 1, 2009'' and 
     inserting ``January 1, 2012'':
       (1) Paragraph (1).
       (2) Clauses (i) and (ii) of paragraph (2)(A).
       (3) Clauses (i)(I) and (ii) of paragraph (3)(A).
       (4) Paragraph (4).
       (5) Paragraph (5).
       (6) Paragraph (6).
       (7) Paragraph (7).
       (8) Paragraph (8).
       (9) Subparagraphs (A) and (B) of paragraph (9).
       (b) Modification of Refined Coal as a Qualified Energy 
     Resource.--
       (1) Elimination of increased market value test.--Section 
     45(c)(7)(A) (defining refined coal) is amended--
       (A) by striking clause (iv),
       (B) by adding ``and'' at the end of clause (ii), and
       (C) by striking ``, and'' at the end of clause (iii) and 
     inserting a period.
       (2) Increase in required emission reduction.--Section 
     45(c)(7)(B) (defining qualified emission reduction) is 
     amended by inserting ``at least 40 percent of the emissions 
     of'' after ``nitrogen oxide and''.
       (c) Trash Facility Clarification.--Paragraph (7) of section 
     45(d) is amended--
       (1) by striking ``facility which burns'' and inserting 
     ``facility (other than a facility described in paragraph (6)) 
     which uses'', and
       (2) by striking ``combustion''.
       (d) Expansion of Biomass Facilities.--
       (1) Open-loop biomass facilities.--Paragraph (3) of section 
     45(d) is amended by redesignating subparagraph (B) as 
     subparagraph (C) and by inserting after subparagraph (A) the 
     following new subparagraph:
       ``(B) Expansion of facility.--Such term shall include a new 
     unit placed in service after the date of the enactment of 
     this subparagraph in connection with a facility described in 
     subparagraph (A), but only to the extent of the increased 
     amount of electricity produced at the facility by reason of 
     such new unit.''.
       (2) Closed-loop biomass facilities.--Paragraph (2) of 
     section 45(d) is amended by redesignating subparagraph (B) as 
     subparagraph (C) and inserting after subparagraph (A) the 
     following new subparagraph:
       ``(B) Expansion of facility.--Such term shall include a new 
     unit placed in service after the date of the enactment of 
     this subparagraph in connection with a facility described in 
     subparagraph (A)(i), but only to the extent of the increased 
     amount of electricity produced at the facility by reason of 
     such new unit.''.
       (e) Modification of Rules for Hydropower Production.--
     Subparagraph (C) of section 45(c)(8) is amended to read as 
     follows:
       ``(C) Nonhydroelectric dam.--For purposes of subparagraph 
     (A), a facility is described in this subparagraph if--
       ``(i) the hydroelectric project installed on the 
     nonhydroelectric dam is licensed by the Federal Energy 
     Regulatory Commission and meets all other applicable 
     environmental, licensing, and regulatory requirements,
       ``(ii) the nonhydroelectric dam was placed in service 
     before the date of the enactment of this paragraph and 
     operated for flood control, navigation, or water supply 
     purposes and did not produce hydroelectric power on the date 
     of the enactment of this paragraph, and
       ``(iii) the hydroelectric project is operated so that the 
     water surface elevation at any given location and time that 
     would have occurred in the absence of the hydroelectric 
     project is maintained, subject to any license requirements 
     imposed under applicable law that change the water surface 
     elevation for the purpose of improving environmental quality 
     of the affected waterway.

     The Secretary, in consultation with the Federal Energy 
     Regulatory Commission, shall certify if a hydroelectric 
     project licensed at a nonhydroelectric dam meets the criteria 
     in clause (iii). Nothing in this section shall affect the 
     standards under which the Federal Energy Regulatory 
     Commission issues licenses for and regulates hydropower 
     projects under part I of the Federal Power Act.''.
       (f) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to property originally placed in service after December 31, 
     2008.
       (2) Refined coal.--The amendments made by subsection (b) 
     shall apply to coal produced and sold after December 31, 
     2008.

[[Page S8394]]

       (3) Trash facility clarification.--The amendments made by 
     subsection (c) shall apply to electricity produced and sold 
     after the date of the enactment of this Act.
       (4) Expansion of biomass facilities.--The amendments made 
     by subsection (d) shall apply to property placed in service 
     after the date of the enactment of this Act.

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

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

     SEC. 103. ENERGY CREDIT.

       (a) Extension of Credit.--
       (1) Solar energy property.--Paragraphs (2)(A)(i)(II) and 
     (3)(A)(ii) of section 48(a) are each amended by striking 
     ``January 1, 2009'' and inserting ``January 1, 2017''.
       (2) Fuel cell property.--Subparagraph (E) of section 
     48(c)(1) is amended by striking ``December 31, 2008'' and 
     inserting ``December 31, 2016''.
       (3) Microturbine property.--Subparagraph (E) of section 
     48(c)(2) is amended by striking ``December 31, 2008'' and 
     inserting ``December 31, 2016''.
       (b) Allowance of Energy Credit Against Alternative Minimum 
     Tax.--Subparagraph (B) of section 38(c)(4), as amended by the 
     Housing Assistance Tax Act of 2008, is amended by 
     redesignating clauses (v) and (vi) as clauses (vi) and (vii), 
     respectively, and by inserting after clause (iv) the 
     following new clause:
       ``(v) the credit determined under section 46 to the extent 
     that such credit is attributable to the energy credit 
     determined under section 48,''.
       (c) Energy Credit for Combined Heat and Power System 
     Property.--
       (1) In general.--Section 48(a)(3)(A) is amended by striking 
     ``or'' at the end of clause (iii), by inserting ``or'' at the 
     end of clause (iv), and by adding at the end the following 
     new clause:
       ``(v) combined heat and power system property,''.
       (2) Combined heat and power system property.--Subsection 
     (c) of section 48 is amended--
       (A) by striking ``Qualified Fuel Cell Property; Qualified 
     Microturbine Property'' in the heading and inserting 
     ``Definitions'', and
       (B) by adding at the end the following new paragraph:
       ``(3) Combined heat and power system property.--
       ``(A) Combined heat and power system property.--The term 
     `combined heat and power system property' means property 
     comprising a system--
       ``(i) which uses the same energy source for the 
     simultaneous or sequential generation of electrical power, 
     mechanical shaft power, or both, in combination with the 
     generation of steam or other forms of useful thermal energy 
     (including heating and cooling applications),
       ``(ii) which produces--

       ``(I) at least 20 percent of its total useful energy in the 
     form of thermal energy which is not used to produce 
     electrical or mechanical power (or combination thereof), and
       ``(II) at least 20 percent of its total useful energy in 
     the form of electrical or mechanical power (or combination 
     thereof),

       ``(iii) the energy efficiency percentage of which exceeds 
     60 percent, and
       ``(iv) which is placed in service before January 1, 2017.
       ``(B) Limitation.--
       ``(i) In general.--In the case of combined heat and power 
     system property with an electrical capacity in excess of the 
     applicable capacity placed in service during the taxable 
     year, the credit under subsection (a)(1) (determined without 
     regard to this paragraph) for such year shall be equal to the 
     amount which bears the same ratio to such credit as the 
     applicable capacity bears to the capacity of such property.
       ``(ii) Applicable capacity.--For purposes of clause (i), 
     the term `applicable capacity' means 15 megawatts or a 
     mechanical energy capacity of more than 20,000 horsepower or 
     an equivalent combination of electrical and mechanical energy 
     capacities.
       ``(iii) Maximum capacity.--The term `combined heat and 
     power system property' shall not include any property 
     comprising a system if such system has a capacity in excess 
     of 50 megawatts or a mechanical energy capacity in excess of 
     67,000 horsepower or an equivalent combination of electrical 
     and mechanical energy capacities.
       ``(C) Special rules.--
       ``(i) Energy efficiency percentage.--For purposes of this 
     paragraph, the energy efficiency percentage of a system is 
     the fraction--

       ``(I) the numerator of which is the total useful 
     electrical, thermal, and mechanical power produced by the 
     system at normal operating rates, and expected to be consumed 
     in its normal application, and
       ``(II) the denominator of which is the lower heating value 
     of the fuel sources for the system.

       ``(ii) Determinations made on btu basis.--The energy 
     efficiency percentage and the percentages under subparagraph 
     (A)(ii) shall be determined on a Btu basis.
       ``(iii) Input and output property not included.--The term 
     `combined heat and power system property' does not include 
     property used to transport the energy source to the facility 
     or to distribute energy produced by the facility.
       ``(D) Systems using biomass.--If a system is designed to 
     use biomass (within the meaning of paragraphs (2) and (3) of 
     section 45(c) without regard to the last sentence of 
     paragraph (3)(A)) for at least 90 percent of the energy 
     source--
       ``(i) subparagraph (A)(iii) shall not apply, but
       ``(ii) the amount of credit determined under subsection (a) 
     with respect to such system shall not exceed the amount which 
     bears the same ratio to such amount of credit (determined 
     without regard to this subparagraph) as the energy efficiency 
     percentage of such system bears to 60 percent.''.
       (d) Increase of Credit Limitation for Fuel Cell Property.--
     Subparagraph (B) of section 48(c)(1) is amended by striking 
     ``$500'' and inserting ``$1,500''.
       (e) Public Utility Property Taken Into Account.--
       (1) In general.--Paragraph (3) of section 48(a) is amended 
     by striking the second sentence thereof.
       (2) Conforming amendments.--
       (A) Paragraph (1) of section 48(c) is amended by striking 
     subparagraph (D) and redesignating subparagraph (E) as 
     subparagraph (D).
       (B) Paragraph (2) of section 48(c) is amended by striking 
     subparagraph (D) and redesignating subparagraph (E) as 
     subparagraph (D).
       (f) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall take 
     effect on the date of the enactment of this Act.
       (2) Allowance against alternative minimum tax.--The 
     amendments made by subsection (b) shall apply to credits 
     determined under section 46 of the Internal Revenue Code of 
     1986 in taxable years beginning after the date of the 
     enactment of this Act and to carrybacks of such credits.
       (3) Combined heat and power and fuel cell property.--The 
     amendments made by subsections (c) and (d) shall apply to 
     periods after the date of the enactment of this Act, in 
     taxable years ending after such date, under rules similar to 
     the rules of section 48(m) of the Internal Revenue Code of 
     1986 (as in effect on the day before the date of the 
     enactment of the Revenue Reconciliation Act of 1990).
       (4)  Public utility property.--The amendments made by 
     subsection (e) shall apply to periods after February 13, 
     2008, in taxable years ending after such date, under rules 
     similar to the rules of section 48(m) of the Internal Revenue 
     Code of 1986 (as in effect on the day before the date of the 
     enactment of the Revenue Reconciliation Act of 1990).

     SEC. 104. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT PROPERTY.

       (a) Extension.--Section 25D(g) is amended by striking 
     ``December 31, 2008'' and inserting ``December 31, 2016''.
       (b) Maximum Credit for Solar Electric Property.--
       (1) In general.--Section 25D(b)(1)(A) is amended by 
     striking ``$2,000'' and inserting ``$4,000''.

[[Page S8395]]

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

     SEC. 105. NEW CLEAN RENEWABLE ENERGY BONDS.

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

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

       ``(a) New Clean Renewable Energy Bond.--For purposes of 
     this subpart, the term `new clean renewable energy bond' 
     means any bond issued as part of an issue if--
       ``(1) 100 percent of the available project proceeds of such 
     issue are to be used for capital expenditures incurred by 
     governmental bodies, public power providers, or cooperative 
     electric companies for one or more qualified renewable energy 
     facilities,
       ``(2) the bond is issued by a qualified issuer, and
       ``(3) the issuer designates such bond for purposes of this 
     section.
       ``(b) Reduced Credit Amount.--The annual credit determined 
     under section 54A(b) with respect to any new clean renewable 
     energy bond shall be 70 percent of the amount so determined 
     without regard to this subsection.
       ``(c) Limitation on Amount of Bonds Designated.--
       ``(1) In general.--The maximum aggregate face amount of 
     bonds which may be designated under subsection (a) by any 
     issuer shall not exceed the limitation amount allocated under 
     this subsection to such issuer.
       ``(2) National limitation on amount of bonds designated.--
     There is a national new clean renewable energy bond 
     limitation of $2,000,000,000 which shall be allocated by the 
     Secretary as provided in paragraph (3), except that--
       ``(A) not more than 33\1/3\ percent thereof may be 
     allocated to qualified projects of public power providers,
       ``(B) not more than 33\1/3\ percent thereof may be 
     allocated to qualified projects of governmental bodies, and
       ``(C) not more than 33\1/3\ percent thereof may be 
     allocated to qualified projects of cooperative electric 
     companies.
       ``(3) Method of allocation.--
       ``(A) Allocation among public power providers.--After the 
     Secretary determines the qualified projects of public power 
     providers which are appropriate for receiving an allocation 
     of the national new clean renewable energy bond limitation, 
     the Secretary shall, to the maximum extent practicable, make 
     allocations among such projects in such manner that the 
     amount allocated to each such project bears the same ratio to 
     the cost of such project as the limitation under paragraph 
     (2)(A) bears to the cost of all such projects.
       ``(B) Allocation among governmental bodies and cooperative 
     electric companies.--The Secretary shall make allocations of 
     the amount of the national new clean renewable energy bond 
     limitation described in paragraphs (2)(B) and (2)(C) among 
     qualified projects of governmental bodies and cooperative 
     electric companies, respectively, in such manner as the 
     Secretary determines appropriate.
       ``(d) Definitions.--For purposes of this section--
       ``(1) Qualified renewable energy facility.--The term 
     `qualified renewable energy facility' means a qualified 
     facility (as determined under section 45(d) without regard to 
     paragraphs (8) and (10) thereof and to any placed in service 
     date) owned by a public power provider, a governmental body, 
     or a cooperative electric company.
       ``(2) Public power provider.--The term `public power 
     provider' means a State utility with a service obligation, as 
     such terms are defined in section 217 of the Federal Power 
     Act (as in effect on the date of the enactment of this 
     paragraph).

[[Page S8396]]

       ``(3) Governmental body.--The term `governmental body' 
     means any State or Indian tribal government, or any political 
     subdivision thereof.
       ``(4) Cooperative electric company.--The term `cooperative 
     electric company' means a mutual or cooperative electric 
     company described in section 501(c)(12) or section 
     1381(a)(2)(C).
       ``(5) Clean renewable energy bond lender.--The term `clean 
     renewable energy bond lender' means a lender which is a 
     cooperative which is owned by, or has outstanding loans to, 
     100 or more cooperative electric companies and is in 
     existence on February 1, 2002, and shall include any 
     affiliated entity which is controlled by such lender.
       ``(6) Qualified issuer.--The term `qualified issuer' means 
     a public power provider, a cooperative electric company, a 
     governmental body, a clean renewable energy bond lender, or a 
     not-for-profit electric utility which has received a loan or 
     loan guarantee under the Rural Electrification Act.''.
       (b) Conforming Amendments.--
       (1) Paragraph (1) of section 54A(d) is amended to read as 
     follows:
       ``(1) Qualified tax credit bond.--The term `qualified tax 
     credit bond' means--
       ``(A) a qualified forestry conservation bond, or
       ``(B) a new clean renewable energy bond,
     which is part of an issue that meets requirements of 
     paragraphs (2), (3), (4), (5), and (6).''.
       (2) Subparagraph (C) of section 54A(d)(2) is amended to 
     read as follows:
       ``(C) Qualified purpose.--For purposes of this paragraph, 
     the term `qualified purpose' means--
       ``(i) in the case of a qualified forestry conservation 
     bond, a purpose specified in section 54B(e), and
       ``(ii) in the case of a new clean renewable energy bond, a 
     purpose specified in section 54C(a)(1).''.
       (3) The table of sections for subpart I of part IV of 
     subchapter A of chapter 1 is amended by adding at the end the 
     following new item:

``Sec. 54C. Qualified clean renewable energy bonds.''.

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

     SEC. 106. ENERGY CREDIT FOR SMALL WIND PROPERTY.

       (a) In General.--Section 48(a)(3)(A), as amended by 
     subsection (c), is amended by striking ``or'' at the end of 
     clause (iv), by adding ``or'' at the end of clause (v), and 
     by inserting after clause (v) the following new clause:
       ``(vi) qualified small wind energy property,''.
       (b) 30 Percent Credit.--Section 48(a)(2)(A)(i) is amended 
     by striking ``and'' at the end of subclause (II) and by 
     inserting after subclause (III) the following new subclause:

       ``(IV) qualified small wind energy property, and''.

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

     SEC. 107. ENERGY CREDIT FOR GEOTHERMAL HEAT PUMP SYSTEMS.

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

           Subtitle B--Carbon Mitigation and Coal Provisions

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

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

[[Page S8397]]

     48A(d)(2)(A)(ii) of the Internal Revenue Code of 1986 and 
     which are allocated or reallocated after the date of the 
     enactment of this Act.
       (2) Disclosure of allocations.--The amendment made by 
     subsection (d) shall apply to certifications made after the 
     date of the enactment of this Act.
       (3) Clerical amendment.--The amendment made by subsection 
     (c)(5) shall take effect as if included in the amendment made 
     by section 1307(b) of the Energy Tax Incentives Act of 2005.

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

       (a) Modification of Credit Amount.--Section 48B(a) is 
     amended by inserting ``(30 percent in the case of credits 
     allocated under subsection (d)(1)(B))'' after ``20 percent''.
       (b) Expansion of Aggregate Credits.--Section 48B(d)(1) is 
     amended by striking ``shall not exceed $350,000,000'' and all 
     that follows and inserting ``shall not exceed--
       ``(A) $350,000,000, plus
       ``(B) $500,000,000 for qualifying gasification projects 
     that include equipment which separates and sequesters at 
     least 75 percent of such project's total carbon dioxide 
     emissions.''.
       (c) Recapture of Credit for Failure to Sequester.--Section 
     48B is amended by adding at the end the following new 
     subsection:
       ``(f) Recapture of Credit for Failure to Sequester.--The 
     Secretary shall provide for recapturing the benefit of any 
     credit allowable under subsection (a) with respect to any 
     project which fails to attain or maintain the separation and 
     sequestration requirements for such project under subsection 
     (d)(1).''.
       (d) Selection Priorities.--Section 48B(d) is amended by 
     adding at the end the following new paragraph:
       ``(4) Selection priorities.--In determining which 
     qualifying gasification projects to certify under this 
     section, the Secretary shall--
       ``(A) give highest priority to projects with the greatest 
     separation and sequestration percentage of total carbon 
     dioxide emissions, and
       ``(B) give high priority to applicant participants who have 
     a research partnership with an eligible educational 
     institution (as defined in section 529(e)(5)).''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to credits described in section 48B(d)(1)(B) of 
     the Internal Revenue Code of 1986 which are allocated or 
     reallocated after the date of the enactment of this Act.

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

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

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

       (a) Refund.--
       (1) Coal producers.--
       (A) In general.--Notwithstanding subsections (a)(1) and (c) 
     of section 6416 and section 6511 of the Internal Revenue Code 
     of 1986, if--
       (i) a coal producer establishes that such coal producer, or 
     a party related to such coal producer, exported coal produced 
     by such coal producer to a foreign country or shipped coal 
     produced by such coal producer to a possession of the United 
     States, or caused such coal to be exported or shipped, the 
     export or shipment of which was other than through an 
     exporter who meets the requirements of paragraph (2),
       (ii) such coal producer filed an excise tax return on or 
     after October 1, 1990, and on or before the date of the 
     enactment of this Act, and
       (iii) such coal producer files a claim for refund with the 
     Secretary not later than the close of the 30-day period 
     beginning on the date of the enactment of this Act,

     then the Secretary shall pay to such coal producer an amount 
     equal to the tax paid under section 4121 of such Code on such 
     coal exported or shipped by the coal producer or a party 
     related to such coal producer, or caused by the coal producer 
     or a party related to such coal producer to be exported or 
     shipped.
       (B) Special rules for certain taxpayers.--For purposes of 
     this section--
       (i) In general.--If a coal producer or a party related to a 
     coal producer has received a judgment described in clause 
     (iii), such coal producer shall be deemed to have established 
     the export of coal to a foreign country or shipment of coal 
     to a possession of the United States under subparagraph 
     (A)(i).
       (ii) Amount of payment.--If a taxpayer described in clause 
     (i) is entitled to a payment under subparagraph (A), the 
     amount of such payment shall be reduced by any amount paid 
     pursuant to the judgment described in clause (iii).
       (iii) Judgment described.--A judgment is described in this 
     subparagraph if such judgment--

       (I) is made by a court of competent jurisdiction within the 
     United States,
       (II) relates to the constitutionality of any tax paid on 
     exported coal under section 4121 of the Internal Revenue Code 
     of 1986, and
       (III) is in favor of the coal producer or the party related 
     to the coal producer.

       (2) Exporters.--Notwithstanding subsections (a)(1) and (c) 
     of section 6416 and section 6511 of the Internal Revenue Code 
     of 1986, and a judgment described in paragraph (1)(B)(iii) of 
     this subsection, if--

[[Page S8398]]

       (A) an exporter establishes that such exporter exported 
     coal to a foreign country or shipped coal to a possession of 
     the United States, or caused such coal to be so exported or 
     shipped,
       (B) such exporter filed a tax return on or after October 1, 
     1990, and on or before the date of the enactment of this Act, 
     and
       (C) such exporter files a claim for refund with the 
     Secretary not later than the close of the 30-day period 
     beginning on the date of the enactment of this Act,

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

     SEC. 115. TAX CREDIT FOR CARBON DIOXIDE SEQUESTRATION.

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

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

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

[[Page S8399]]

       (c) Clerical Amendment.--The table of sections for subpart 
     B of part IV of subchapter A of chapter 1 (relating to other 
     credits) is amended by adding at the end the following new 
     section:

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

     SEC. 116. CARBON AUDIT OF THE TAX CODE.

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

     TITLE II--TRANSPORTATION AND DOMESTIC FUEL SECURITY PROVISIONS

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

       (a) In General.--Paragraph (3) of section 168(l) is amended 
     to read as follows:
       ``(3) Cellulosic biofuel.--The term `cellulosic biofuel' 
     means any liquid fuel which is produced from any 
     lignocellulosic or hemicellulosic matter that is available on 
     a renewable or recurring basis.''.
       (b) Conforming Amendments.--Subsection (l) of section 168 
     is amended--
       (1) by striking ``cellulosic biomass ethanol'' each place 
     it appears and inserting ``cellulosic biofuel'',
       (2) by striking ``Cellulosic Biomass Ethanol'' in the 
     heading of such subsection and inserting ``Cellulosic 
     Biofuel'', and
       (3) by striking ``cellulosic biomass ethanol'' in the 
     heading of paragraph (2) thereof and inserting ``cellulosic 
     biofuel''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after the date of 
     the enactment of this Act, in taxable years ending after such 
     date.

     SEC. 202. CREDITS FOR BIODIESEL AND RENEWABLE DIESEL.

       (a) In General.--Sections 40A(g), 6426(c)(6), and 
     6427(e)(5)(B) are each amended by striking ``December 31, 
     2008'' and inserting ``December 31, 2011''.
       (b) Increase in Rate of Credit.--
       (1) Income tax credit.--Paragraphs (1)(A) and (2)(A) of 
     section 40A(b) are each amended by striking ``50 cents'' and 
     inserting ``$1.00''.
       (2) Excise tax credit.--Paragraph (2) of section 6426(c) is 
     amended to read as follows:
       ``(2) Applicable amount.--For purposes of this subsection, 
     the applicable amount is $1.00.''.
       (3) Conforming amendments.--
       (A) Subsection (b) of section 40A is amended by striking 
     paragraph (3) and by redesignating paragraphs (4) and (5) as 
     paragraphs (3) and (4), respectively.
       (B) Paragraph (2) of section 40A(f) is amended to read as 
     follows:
       ``(2) Exception.--Subsection (b)(4) shall not apply with 
     respect to renewable diesel.''.
       (C) Paragraphs (2) and (3) of section 40A(e) are each 
     amended by striking ``subsection (b)(5)(C)'' and inserting 
     ``subsection (b)(4)(C)''.
       (D) Clause (ii) of section 40A(d)(3)(C) is amended by 
     striking ``subsection (b)(5)(B)'' and inserting ``subsection 
     (b)(4)(B)''.
       (c) Uniform Treatment of Diesel Produced From Biomass.--
     Paragraph (3) of section 40A(f) is amended--
       (1) by striking ``diesel fuel'' and inserting ``liquid 
     fuel'',
       (2) by striking ``using a thermal depolymerization 
     process'', and
       (3) by striking ``or D396'' in subparagraph (B) and 
     inserting ``, D396, or other equivalent standard approved by 
     the Secretary''.
       (d) Eligibility of Certain Aviation Fuel.--Subsection (f) 
     of section 40A (relating to renewable diesel) is amended by 
     adding at the end the following new paragraph:
       ``(4) Certain aviation fuel.--
       ``(A) In general.--Except as provided in the last sentence 
     of paragraph (3), the term `renewable diesel' shall include 
     fuel derived from biomass which meets the requirements of a 
     Department of Defense specification for military jet fuel or 
     an American Society of Testing and Materials specification 
     for aviation turbine fuel.
       ``(B) Application of mixture credits.--In the case of fuel 
     which is treated as renewable diesel solely by reason of 
     subparagraph (A), subsection (b)(1) and section 6426(c) shall 
     be applied with respect to such fuel by treating kerosene as 
     though it were diesel fuel.''.
       (e) Modification of Credit for Renewable Diesel.--Section 
     40A(f) (relating to renewable diesel), as amended by 
     subsection (d), is amended by adding at the end the following 
     new paragraph:
       ``(5) Special rule for co-processed renewable diesel.--In 
     the case of a taxpayer which produces renewable diesel 
     through the co-processing of biomass and petroleum at any 
     facility, this subsection shall not apply to so much of the 
     renewable diesel produced at such facility and sold or used 
     during the taxable year in a qualified biodiesel mixture as 
     exceeds 60,000,000 gallons.''.
       (f) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to fuel produced, and sold or used, after December 31, 2008.
       (2) Coproduction of renewable diesel with petroleum 
     feedstock.--The amendments made by subsection (e) shall apply 
     to fuel produced, and sold or used, after the date of the 
     enactment of this Act.

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

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

     SEC. 204. CREDIT FOR NEW QUALIFIED PLUG-IN ELECTRIC DRIVE 
                   MOTOR VEHICLES.

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

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

       ``(a) Allowance of Credit.--
       ``(1) In general.--There shall be allowed as a credit 
     against the tax imposed by this chapter for the taxable year 
     an amount equal to the applicable amount with respect to each 
     new qualified plug-in electric drive motor vehicle placed in 
     service by the taxpayer during the taxable year.
       ``(2) Applicable amount.--For purposes of paragraph (1), 
     the applicable amount is sum of--
       ``(A) $2,500, plus
       ``(B) $400 for each kilowatt hour of traction battery 
     capacity in excess of 6 kilowatt hours.
       ``(b) Limitations.--
       ``(1) Limitation based on weight.--The amount of the credit 
     allowed under subsection (a) by reason of subsection (a)(2) 
     shall not exceed--
       ``(A) $7,500, in the case of any new qualified plug-in 
     electric drive motor vehicle with a gross vehicle weight 
     rating of not more than 10,000 pounds,
       ``(B) $10,000, in the case of any new qualified plug-in 
     electric drive motor vehicle with a gross vehicle weight 
     rating of more than 10,000 pounds but not more than 14,000 
     pounds,
       ``(C) $12,500, in the case of any new qualified plug-in 
     electric drive motor vehicle with a gross vehicle weight 
     rating of more than 14,000 pounds but not more than 26,000 
     pounds, and
       ``(D) $15,000, in the case of any new qualified plug-in 
     electric drive motor vehicle with a gross vehicle weight 
     rating of more than 26,000 pounds.
       ``(2) Limitation on number of passenger vehicles and light 
     trucks eligible for credit.--
       ``(A) In general.--In the case of a new qualified plug-in 
     electric drive motor vehicle sold during the phaseout period, 
     only the applicable percentage of the credit otherwise 
     allowable under subsection (a) shall be allowed.
       ``(B) Phaseout period.--For purposes of this subsection, 
     the phaseout period is the

[[Page S8400]]

     period beginning with the second calendar quarter following 
     the calendar quarter which includes the first date on which 
     the total number of such new qualified plug-in electric drive 
     motor vehicles sold for use in the United States after 
     December 31, 2007, is at least 250,000.
       ``(C) Applicable percentage.--For purposes of subparagraph 
     (A), the applicable percentage is--
       ``(i) 50 percent for the first 2 calendar quarters of the 
     phaseout period,
       ``(ii) 25 percent for the 3d and 4th calendar quarters of 
     the phaseout period, and
       ``(iii) 0 percent for each calendar quarter thereafter.
       ``(D) Controlled groups.--Rules similar to the rules of 
     section 30B(f)(4) shall apply for purposes of this 
     subsection.
       ``(c) New Qualified Plug-in Electric Drive Motor Vehicle.--
     For purposes of this section, the term `new qualified plug-in 
     electric drive motor vehicle' means a motor vehicle--
       ``(1) which draws propulsion primarily using a traction 
     battery with at least 6 kilowatt hours of capacity,
       ``(2) which uses an offboard source of energy to recharge 
     such battery,
       ``(3) which, in the case of a passenger vehicle or light 
     truck which has a gross vehicle weight rating of not more 
     than 8,500 pounds, has received a certificate of conformity 
     under the Clean Air Act and meets or exceeds the equivalent 
     qualifying California low emission vehicle standard under 
     section 243(e)(2) of the Clean Air Act for that make and 
     model year, and
       ``(A) in the case of a vehicle having a gross vehicle 
     weight rating of 6,000 pounds or less, the Bin 5 Tier II 
     emission standard established in regulations prescribed by 
     the Administrator of the Environmental Protection Agency 
     under section 202(i) of the Clean Air Act for that make and 
     model year vehicle, and
       ``(B) in the case of a vehicle having a gross vehicle 
     weight rating of more than 6,000 pounds but not more than 
     8,500 pounds, the Bin 8 Tier II emission standard which is so 
     established,
       ``(4) the original use of which commences with the 
     taxpayer,
       ``(5) which is acquired for use or lease by the taxpayer 
     and not for resale, and
       ``(6) which is made by a manufacturer.
       ``(d) Application With Other Credits.--
       ``(1) Business credit treated as part of general business 
     credit.--So much of the credit which would be allowed under 
     subsection (a) for any taxable year (determined without 
     regard to this subsection) that is attributable to property 
     of a character subject to an allowance for depreciation shall 
     be treated as a credit listed in section 38(b) for such 
     taxable year (and not allowed under subsection (a)).
       ``(2) Personal credit.--
       ``(A) In general.--For purposes of this title, the credit 
     allowed under subsection (a) for any taxable year (determined 
     after application of paragraph (1)) shall be treated as a 
     credit allowable under subpart A for such taxable year.
       ``(B) Limitation based on amount of tax.--In the case of a 
     taxable year to which section 26(a)(2) does not apply, the 
     credit allowed under subsection (a) for any taxable year 
     (determined after application of paragraph (1)) shall not 
     exceed the excess of--
       ``(i) the sum of the regular tax liability (as defined in 
     section 26(b)) plus the tax imposed by section 55, over
       ``(ii) the sum of the credits allowable under subpart A 
     (other than this section and sections 23 and 25D) and section 
     27 for the taxable year.
       ``(e) Other Definitions and Special Rules.--For purposes of 
     this section--
       ``(1) Motor vehicle.--The term `motor vehicle' has the 
     meaning given such term by section 30(c)(2).
       ``(2) Other terms.--The terms `passenger automobile', 
     `light truck', and `manufacturer' have the meanings given 
     such terms in regulations prescribed by the Administrator of 
     the Environmental Protection Agency for purposes of the 
     administration of title II of the Clean Air Act (42 U.S.C. 
     7521 et seq.).
       ``(3) Traction battery capacity.--Traction battery capacity 
     shall be measured in kilowatt hours from a 100 percent state 
     of charge to a zero percent state of charge.
       ``(4) Reduction in basis.--For purposes of this subtitle, 
     the basis of any property for which a credit is allowable 
     under subsection (a) shall be reduced by the amount of such 
     credit so allowed.
       ``(5) No double benefit.--The amount of any deduction or 
     other credit allowable under this chapter for a new qualified 
     plug-in electric drive motor vehicle shall be reduced by the 
     amount of credit allowed under subsection (a) for such 
     vehicle for the taxable year.
       ``(6) Property used by tax-exempt entity.--In the case of a 
     vehicle the use of which is described in paragraph (3) or (4) 
     of section 50(b) and which is not subject to a lease, the 
     person who sold such vehicle to the person or entity using 
     such vehicle shall be treated as the taxpayer that placed 
     such vehicle in service, but only if such person clearly 
     discloses to such person or entity in a document the amount 
     of any credit allowable under subsection (a) with respect to 
     such vehicle (determined without regard to subsection 
     (b)(2)).
       ``(7) Property used outside united states, etc., not 
     qualified.--No credit shall be allowable under subsection (a) 
     with respect to any property referred to in section 50(b)(1) 
     or with respect to the portion of the cost of any property 
     taken into account under section 179.
       ``(8) Recapture.--The Secretary shall, by regulations, 
     provide for recapturing the benefit of any credit allowable 
     under subsection (a) with respect to any property which 
     ceases to be property eligible for such credit (including 
     recapture in the case of a lease period of less than the 
     economic life of a vehicle).
       ``(9) Election to not take credit.--No credit shall be 
     allowed under subsection (a) for any vehicle if the taxpayer 
     elects not to have this section apply to such vehicle.
       ``(10) Interaction with air quality and motor vehicle 
     safety standards.--Unless otherwise provided in this section, 
     a motor vehicle shall not be considered eligible for a credit 
     under this section unless such vehicle is in compliance 
     with--
       ``(A) the applicable provisions of the Clean Air Act for 
     the applicable make and model year of the vehicle (or 
     applicable air quality provisions of State law in the case of 
     a State which has adopted such provision under a waiver under 
     section 209(b) of the Clean Air Act), and
       ``(B) the motor vehicle safety provisions of sections 30101 
     through 30169 of title 49, United States Code.
       ``(f) Regulations.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     Secretary shall promulgate such regulations as necessary to 
     carry out the provisions of this section.
       ``(2) Coordination in prescription of certain 
     regulations.--The Secretary of the Treasury, in coordination 
     with the Secretary of Transportation and the Administrator of 
     the Environmental Protection Agency, shall prescribe such 
     regulations as necessary to determine whether a motor vehicle 
     meets the requirements to be eligible for a credit under this 
     section.
       ``(g) Termination.--This section shall not apply to 
     property purchased after December 31, 2014.''.
       (b) Coordination With Alternative Motor Vehicle Credit.--
     Section 30B(d)(3) is amended by adding at the end the 
     following new subparagraph:
       ``(D) Exclusion of plug-in vehicles.--Any vehicle with 
     respect to which a credit is allowable under section 30D 
     (determined without regard to subsection (d) thereof) shall 
     not be taken into account under this section.''.
       (c) Credit Made Part of General Business Credit.--Section 
     38(b) is amended by striking ``plus'' at the end of paragraph 
     (33), by striking the period at the end of paragraph (34) and 
     inserting ``plus'', and by adding at the end the following 
     new paragraph:
       ``(35) the portion of the new qualified plug-in electric 
     drive motor vehicle credit to which section 30D(d)(1) 
     applies.''.
       (d) Conforming Amendments.--
       (1)(A) Section 24(b)(3)(B), as amended by section 104, is 
     amended by striking ``and 25D'' and inserting ``25D, and 
     30D''.
       (B) Section 25(e)(1)(C)(ii) is amended by inserting 
     ``30D,'' after ``25D,''.
       (C) Section 25B(g)(2), as amended by section 104, is 
     amended by striking ``and 25D'' and inserting ``, 25D, and 
     30D''.
       (D) Section 26(a)(1), as amended by section 104, is amended 
     by striking ``and 25D'' and inserting ``25D, and 30D''.
       (E) Section 1400C(d)(2) is amended by striking ``and 25D'' 
     and inserting ``25D, and 30D''.
       (2) Section 1016(a) is amended by striking ``and'' at the 
     end of paragraph (35), by striking the period at the end of 
     paragraph (36) and inserting ``, and'', and by adding at the 
     end the following new paragraph:
       ``(37) to the extent provided in section 30D(e)(4).''.
       (3) Section 6501(m) is amended by inserting ``30D(e)(9),'' 
     after ``30C(e)(5),''.
       (4) The table of sections for subpart B of part IV of 
     subchapter A of chapter 1 is amended by adding at the end the 
     following new item:

``Sec. 30D. New qualified plug-in electric drive motor vehicles.''.

       (e) Effective Date.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to taxable years beginning after December 31, 2008.
       (f) Application of EGTRRA Sunset.--The amendment made by 
     subsection (d)(1)(A) shall be subject to title IX of the 
     Economic Growth and Tax Relief Reconciliation Act of 2001 in 
     the same manner as the provision of such Act to which such 
     amendment relates.

     SEC. 205. EXTENSION AND MODIFICATION OF ALTERNATIVE MOTOR 
                   VEHICLE CREDIT.

       (a) Extension.--
       (1) New advanced lean burn technology motor vehicles and 
     heavy new qualified hybrid motor vehicles.--Paragraphs (2) 
     and (3) of section 30B(j) are amended to read as follows:
       ``(2) in the case of a new advanced lean burn technology 
     motor vehicle (as described in subsection (c)), December 31, 
     2011,
       ``(3) in the case of--
       ``(A) a new qualified hybrid motor vehicle (as described in 
     subsection (d)(2)(A)), December 31, 2010, and
       ``(B) a new qualified hybrid motor vehicle (as described in 
     subsection (d)(2)(B)), December 31, 2011, and''.
       (2) New qualified alternative fuel vehicles.--Paragraph (4) 
     of section 30B(j) is amended by striking ``December 31, 
     2010'' and inserting ``December 31, 2011''.
       (b) Increased Credit for Certain New Qualified Fuel Cell 
     Motor Vehicles.--

[[Page S8401]]

     Subparagraph (A) of section 30B(b)(1) is amended by striking 
     ``$4,000'' and inserting ``$7,500''.
       (c) Personal Credit Allowed Against Alternative Minimum 
     Tax.--
       (1) In general.--Paragraph (2) of section 30B(g) is amended 
     to read as follows:
       ``(2) Personal credit.--
       ``(A) In general.--For purposes of this title, the credit 
     allowed under subsection (a) for any taxable year (determined 
     after application of paragraph (1)) shall be treated as a 
     credit allowable under subpart A for such taxable year.
       ``(B) Limitation based on amount of tax.--In the case of a 
     taxable year to which section 26(a)(2) does not apply, the 
     credit allowed under subsection (a) (after the application of 
     paragraph (1)) for any taxable year shall not exceed the 
     excess (if any) of--
       ``(i) the sum of the regular tax liability (as defined in 
     section 26(b)) plus the tax imposed by section 55, over
       ``(ii) the sum of the credits allowable under subpart A 
     (other than this section and sections 23, 25D, and 30D) and 
     section 27 for the taxable year.''.
       (2) Conforming amendments.--
       (A)(i) Section 24(b)(3)(B), as amended by this Act, is 
     amended by striking ``and 30D'' and inserting ``30B, and 
     30D''.
       (ii) Section 25(e)(1)(C)(ii), as amended by this Act, is 
     amended by inserting ``30B,'' after ``25D,''.
       (iii) Section 25B(g)(2), as amended by this Act, is amended 
     by striking ``and 30D'' and inserting ``, 30B, and 30D''.
       (iv) Section 26(a)(1), as amended by this Act, is amended 
     by striking ``and 30D'' and inserting ``30B, and 30D''.
       (v) Section 1400C(d)(2), as amended by this Act, is amended 
     by striking ``and 30D'' and inserting ``30B, and 30D''.
       (B) Subparagraph (A) of section 30C(d)(2) is amended by 
     striking ``sections 27, 30, and 30B'' and inserting 
     ``sections 27 and 30''.
       (C) Section 55(c)(3) is amended by striking ``30B(g)(2),''.
       (d) Effective Date.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to taxable years beginning after December 31, 2008.
       (e) Application of EGTRRA Sunset.--The amendment made by 
     subsection (c)(2)(A)(i) shall be subject to title IX of the 
     Economic Growth and Tax Relief Reconciliation Act of 2001 in 
     the same manner as the provision of such Act to which such 
     amendment relates.

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

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

     SEC. 207. EXTENSION AND MODIFICATION OF ALTERNATIVE FUEL 
                   CREDIT.

       (a) Extension.--
       (1) Alternative fuel credit.--Paragraph (4) of section 
     6426(d) (relating to alternative fuel credit) is amended by 
     striking ``September 30, 2009'' and inserting ``December 31, 
     2011''.
       (2) Alternative fuel mixture credit.--Paragraph (3) of 
     section 6426(e) (relating to alternative fuel mixture credit) 
     is amended by striking ``September 30, 2009'' and inserting 
     ``December 31, 2011''.
       (3) Payments.--Subparagraph (C) of section 6427(e)(5) 
     (relating to termination) is amended by striking ``September 
     30, 2009'' and inserting ``December 31, 2011''.
       (b) Modifications.--
       (1) Alternative fuel to include compressed or liquified 
     biomass gas.--Paragraph (2) of section 6426(d) (relating to 
     alternative fuel credit) is amended by striking ``and'' at 
     the end of subparagraph (E), by redesignating subparagraph 
     (F) as subparagraph (G), and by inserting after subparagraph 
     (E) the following new subparagraph:
       ``(F) compressed or liquefied biomass gas, and''.
       (2) Credit allowed for aviation use of fuel.--Paragraph (1) 
     of section 6426(d) is amended by inserting ``sold by the 
     taxpayer for use as a fuel in aviation,'' after 
     ``motorboat,''.
       (c) Carbon Capture Requirement for Certain Fuels.--
       (1) In general.--Subsection (d) of section 6426, as amended 
     by subsection (a), is amended by redesignating paragraph (4) 
     as paragraph (5) and by inserting after paragraph (3) the 
     following new paragraph:
       ``(4) Carbon capture requirement.--
       ``(A) In general.--The requirements of this paragraph are 
     met if the fuel is certified, under such procedures as 
     required by the Secretary, as having been derived from coal 
     produced at a gasification facility which separates and 
     sequesters not less than the applicable percentage of such 
     facility's total carbon dioxide emissions.
       ``(B) Applicable percentage.--For purposes of subparagraph 
     (A), the applicable percentage is--
       ``(i) 50 percent in the case of fuel produced after the 
     date of the enactment of this paragraph and on or before the 
     earlier of--

       ``(I) the date the Secretary makes a determination under 
     subparagraph (C), or
       ``(II) December 30, 2011, and

       ``(ii) 75 percent in the case of fuel produced after the 
     date on which the applicable percentage under clause (i) 
     ceases to apply.
       ``(C) Determination to increase applicable percentage 
     before december 31, 2011.--If the Secretary, after 
     considering the recommendations of the Carbon Sequestration 
     Capability Panel, finds that the applicable percentage under 
     subparagraph (B) should be 75 percent for fuel produced 
     before December 31, 2011, the Secretary shall make a 
     determination under this subparagraph. Any determination made 
     under this subparagraph shall be made not later than 30 days 
     after the Secretary receives from the Carbon Sequestration 
     Panel the report required under section 331(c)(3)(D) of the 
     Energy Independence and Investment Act of 2008.''.
       (2) Conforming amendment.--Subparagraph (E) of section 
     6426(d)(2) is amended by inserting ``which meets the 
     requirements of paragraph (4) and which is'' after ``any 
     liquid fuel''.
       (3) Carbon sequestration capability panel.--
       (A) Establishment of panel.--There is established a panel 
     to be known as the ``Carbon Sequestration Capability Panel'' 
     (hereafter in this paragraph referred to as the ``Panel'').
       (B) Membership.--The Panel shall be composed of--
       (i) 1 representative from the National Academy of Sciences,
       (ii) 1 representative from the University of Kentucky 
     Center for Applied Energy Research, and
       (iii) 1 individual appointed jointly by the representatives 
     under clauses (i) and (ii).
       (C) Study.--The Panel shall study the appropriate 
     percentage of carbon dioxide for separation and sequestration 
     under section 6426(d)(4) of the Internal Revenue Code of 1986 
     consistent with the purposes of such section. The panel shall 
     consider whether it is feasible to separate and sequester 75 
     percent of the carbon dioxide emissions of a facility, 
     including costs and other factors associated with separating 
     and sequestering such percentage of carbon dioxide emissions.
       (D) Report.--Not later than 6 months after the date of the 
     enactment of this Act, the Panel shall report to the 
     Secretary of Treasury, the Committee on Finance of the 
     Senate, and the Committee on Ways and Means of the House of 
     Representatives on the study under subparagraph (C).
       (d) Effective Date.--The amendments made by this section 
     shall apply to fuel sold or used after the date of the 
     enactment of this Act.

     SEC. 208. ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY CREDIT.

       (a) Extension of Credit.--Paragraph (2) of section 30C(g) 
     is amended by striking ``December 31, 2009'' and inserting 
     ``December 31, 2012''.
       (b) Inclusion of Electricity as a Clean-Burning Fuel.--
     Section 30C(c)(2) is amended by adding at the end the 
     following new subparagraph:
       ``(C) Electricity.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after the date of 
     the enactment of this Act, in taxable years ending after such 
     date.

     SEC. 209. CERTAIN INCOME AND GAINS RELATING TO ALCOHOL FUELS 
                   AND MIXTURES, BIODIESEL FUELS AND MIXTURES, AND 
                   ALTERNATIVE FUELS AND MIXTURES TREATED AS 
                   QUALIFYING INCOME FOR PUBLICLY TRADED 
                   PARTNERSHIPS.

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

     SEC. 210. EXTENSION OF ETHANOL PRODUCTION CREDIT.

       (a) Credit for Alcohol Used as Fuel.--Section 40 is 
     amended--
       (1) by striking ``2010'' each place it appears in 
     subsections (e)(1)(A) and (h) and inserting ``2011'', and
       (2) by striking ``January 1, 2011'' in subsection (e)(1)(B) 
     and inserting ``January 1, 2012''.
       (b) Excise Tax Credits.--Paragraph (6) of section 6426(b) 
     is amended by striking ``2010'' and inserting ``2011''.
       (c) Payments.--Subparagraph (A) of section 6427(e)(5) is 
     amended by striking ``2010'' and inserting ``2011''.

     SEC. 211. CREDIT FOR PRODUCERS OF FOSSIL FREE ALCOHOL.

       (a) In General.--Subsection (a) of section 40 (relating to 
     alcohol used as fuel) is amended by striking ``plus'' at the 
     end of paragraph (3), by striking the period at the end of 
     paragraph (4) and inserting ``, plus'', and by adding at the 
     end the following new paragraph:

[[Page S8402]]

       ``(5) the small fossil free alcohol producer credit.''.
       (b) Small Fossil Free Alcohol Producer Credit.--Subsection 
     (b) of section 40 is amended by adding at the end the 
     following new paragraph:
       ``(7) Small fossil free alcohol producer credit.--
       ``(A) In general.--In addition to any other credit allowed 
     under this section, there shall be allowed as a credit 
     against the tax imposed by this chapter for the taxable year 
     an amount equal to 10 cents for each gallon of not more than 
     60,000,000 gallons of qualified fossil free alcohol 
     production.
       ``(B) Qualified fossil free alcohol production.--For 
     purposes of this section, the term `qualified fossil free 
     alcohol production' means alcohol which is produced by an 
     eligible small fossil free alcohol producer at a fossil free 
     alcohol production facility and which during the taxable 
     year--
       ``(i) is sold by the taxpayer to another person--

       ``(I) for use by such other person in the production of a 
     qualified alcohol mixture in such other person's trade or 
     business (other than casual off-farm production),
       ``(II) for use by such other person as a fuel in a trade or 
     business, or
       ``(III) who sells such alcohol at retail to another person 
     and places such alcohol in the fuel tank of such other 
     person, or

       ``(ii) is used or sold by the taxpayer for any purpose 
     described in clause (i).
       ``(C) Additional distillation excluded.--The qualified 
     fossil free alcohol production of any taxpayer for any 
     taxable year shall not include any alcohol which is purchased 
     by the taxpayer and with respect to which such producer 
     increases the proof of the alcohol by additional 
     distillation.''.
       (c) Eligible Small Fossil Free Alcohol Producer.--Section 
     40 is amended by adding at the end the following new 
     subsection:
       ``(i) Definitions and Special Rules for Small Fossil Free 
     Alcohol Producer.--For purposes of this section--
       ``(1) In general.--The term `eligible small fossil free 
     alcohol producer' means a person, who at all times during the 
     taxable year, has a productive capacity for alcohol from all 
     fossil free alcohol production facilities of the taxpayer 
     which is not in excess of 60,000,000 gallons.
       ``(2) Fossil free alcohol production facility.--The term 
     `fossil free alcohol production facility' means any facility 
     at which 90 percent of the energy used in the production of 
     alcohol is produced from biomass (as defined in section 
     45K(c)(3)).
       ``(3) Aggregation rule.--For purposes of the 60,000,000 
     gallon limitation under paragraph (1) and subsection 
     (b)(7)(A), all members of the same controlled group of 
     corporations (within the meaning of section 267(f)) and all 
     persons under common control (within the meaning of section 
     52(b) but determined by treating an interest of more than 50 
     percent as a controlling interest) shall be treated as 1 
     person.
       ``(4) Partnership, s corporations, and other pass-thru 
     entities.--In the case of a partnership, trust, S 
     corporation, or other pass-thru entity, the limitation 
     contained in paragraph (1) shall be applied at the entity 
     level and at the partner or similar level.
       ``(5)  Allocation.--For purposes of this subsection, in the 
     case of a facility in which more than 1 person has an 
     interest, productive capacity shall be allocated among such 
     persons in such manner as the Secretary may prescribe.
       ``(6) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary to prevent the credit 
     provided for in subsection (a)(5) from directly or indirectly 
     benefitting any person with a direct or indirect productive 
     capacity of more than 60,000,000 gallons of alcohol from 
     fossil free alcohol production facilities during the taxable 
     year.
       ``(7) Allocation of small fossil free alcohol producer 
     credit to patrons of cooperative.--Rules similar to the rules 
     under subsection (g)(6) shall apply for purposes of this 
     subsection.''.
       (d) Alcohol Not Used as a Fuel, etc.--
       (1) In general.--Paragraph (3) of section 40(d) is amended 
     by redesignating subparagraph (E) as subparagraph (F) and by 
     inserting after subparagraph (D) the following new 
     subparagraph:
       ``(E) Small fossil free alcohol producer credit.--If--
       ``(i) any credit is allowed under subsection (a)(5), and
       ``(ii) any person does not use such fuel for a purpose 
     described in subsection (b)(7)(B),
     then there is hereby imposed on such person a tax equal to 10 
     cents for each gallon of such alcohol.''.
       (2) Conforming amendment.--Subparagraph (F) of section 
     40(d)(3), as redesignated by paragraph (1) and amended by 
     this Act, is amended by striking ``or (D)'' and inserting 
     ``(D), or (E)''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to fuel produced after December 31, 2008.

     SEC. 212. EXTENSION AND MODIFICATION OF ELECTION TO EXPENSE 
                   CERTAIN REFINERIES.

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

     SEC. 213. EXTENSION OF SUSPENSION OF TAXABLE INCOME LIMIT ON 
                   PERCENTAGE DEPLETION FOR OIL AND NATURAL GAS 
                   PRODUCED FROM MARGINAL PROPERTIES.

       Subparagraph (H) of section 613A(c)(6) (relating to oil and 
     gas produced from marginal properties) is amended by striking 
     ``January 1, 2008'' and inserting ``January 1, 2011''.

        TITLE III--ENERGY CONSERVATION AND EFFICIENCY PROVISIONS

     SEC. 301. QUALIFIED ENERGY CONSERVATION BONDS.

       (a) In General.--Subpart I of part IV of subchapter A of 
     chapter 1, as amended by section 106, is amended by adding at 
     the end the following new section:

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

       ``(a) Qualified Energy Conservation Bond.--For purposes of 
     this subchapter, the term `qualified energy conservation 
     bond' means any bond issued as part of an issue if--
       ``(1) 100 percent of the available project proceeds of such 
     issue are to be used for one or more qualified conservation 
     purposes,
       ``(2) the bond is issued by a State or local government, 
     and
       ``(3) the issuer designates such bond for purposes of this 
     section.
       ``(b) Reduced Credit Amount.--The annual credit determined 
     under section 54A(b) with respect to any qualified energy 
     conservation bond shall be 70 percent of the amount so 
     determined without regard to this subsection.
       ``(c) Limitation on Amount of Bonds Designated.--The 
     maximum aggregate face amount of bonds which may be 
     designated under subsection (a) by any issuer shall not 
     exceed the limitation amount allocated to such issuer under 
     subsection (e).
       ``(d) National Limitation on Amount of Bonds Designated.--
     There is a national qualified energy conservation bond 
     limitation of $3,000,000,000.
       ``(e) Allocations.--
       ``(1) In general.--The limitation applicable under 
     subsection (d) shall be allocated by the Secretary among the 
     States in proportion to the population of the States.
       ``(2) Allocations to largest local governments.--
       ``(A) In general.--In the case of any State in which there 
     is a large local government, each such local government shall 
     be allocated a portion of such State's allocation which bears 
     the same ratio to the State's allocation (determined without 
     regard to this subparagraph) as the population of such large 
     local government bears to the population of such State.
       ``(B) Allocation of unused limitation to state.--The amount 
     allocated under this subsection to a large local government 
     may be reallocated by such local government to the State in 
     which such local government is located.
       ``(C) Large local government.--For purposes of this 
     section, the term `large local government' means any 
     municipality or county if such municipality or county has a 
     population of 100,000 or more.
       ``(3) Allocation to issuers; restriction on private 
     activity bonds.--Any allocation under this subsection to a 
     State or large local government shall be allocated by such 
     State or large local government to issuers within the State 
     in a manner that results in not less than 70 percent of the 
     allocation to such State or large local government being used 
     to designate bonds which are not private activity bonds.
       ``(f) Qualified Conservation Purpose.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified conservation 
     purpose' means any of the following:
       ``(A) Capital expenditures incurred for purposes of--
       ``(i) reducing energy consumption in publicly-owned 
     buildings by at least 20 percent,
       ``(ii) implementing green community programs,
       ``(iii) rural development involving the production of 
     electricity from renewable energy resources, or
       ``(iv) any qualified facility (as determined under section 
     45(d) without regard to paragraphs (8) and (10) thereof and 
     without regard to any placed in service date).
       ``(B) Expenditures with respect to research facilities, and 
     research grants, to support research in--
       ``(i) development of cellulosic ethanol or other nonfossil 
     fuels,
       ``(ii) technologies for the capture and sequestration of 
     carbon dioxide produced through the use of fossil fuels,
       ``(iii) increasing the efficiency of existing technologies 
     for producing nonfossil fuels,
       ``(iv) automobile battery technologies and other 
     technologies to reduce fossil fuel consumption in 
     transportation, or
       ``(v) technologies to reduce energy use in buildings.

[[Page S8403]]

       ``(C) Mass commuting facilities and related facilities that 
     reduce the consumption of energy, including expenditures to 
     reduce pollution from vehicles used for mass commuting.
       ``(D) Demonstration projects designed to promote the 
     commercialization of--
       ``(i) green building technology,
       ``(ii) conversion of agricultural waste for use in the 
     production of fuel or otherwise,
       ``(iii) advanced battery manufacturing technologies,
       ``(iv) technologies to reduce peak use of electricity, or
       ``(v) technologies for the capture and sequestration of 
     carbon dioxide emitted from combusting fossil fuels in order 
     to produce electricity.
       ``(E) Public education campaigns to promote energy 
     efficiency.
       ``(2) Special rules for private activity bonds.--For 
     purposes of this section, in the case of any private activity 
     bond, the term `qualified conservation purposes' shall not 
     include any expenditure which is not a capital expenditure.
       ``(g) Population.--
       ``(1) In general.--The population of any State or local 
     government shall be determined for purposes of this section 
     as provided in section 146(j) for the calendar year which 
     includes the date of the enactment of this section.
       ``(2) Special rule for counties.--In determining the 
     population of any county for purposes of this section, any 
     population of such county which is taken into account in 
     determining the population of any municipality which is a 
     large local government shall not be taken into account in 
     determining the population of such county.
       ``(h) Application to Indian Tribal Governments.--An Indian 
     tribal government shall be treated for purposes of this 
     section in the same manner as a large local government, 
     except that--
       ``(1) an Indian tribal government shall be treated for 
     purposes of subsection (e) as located within a State to the 
     extent of so much of the population of such government as 
     resides within such State, and
       ``(2) any bond issued by an Indian tribal government shall 
     be treated as a qualified energy conservation bond only if 
     issued as part of an issue the available project proceeds of 
     which are used for purposes for which such Indian tribal 
     government could issue bonds to which section 103(a) 
     applies.''.
       (b) Conforming Amendments.--
       (1) Paragraph (1) of section 54A(d), as amended by this 
     Act, is amended to read as follows:
       ``(1) Qualified tax credit bond.--The term `qualified tax 
     credit bond' means--
       ``(A) a qualified forestry conservation bond,
       ``(B) a new clean renewable energy bond, or
       ``(C) a qualified energy conservation bond,
     which is part of an issue that meets requirements of 
     paragraphs (2), (3), (4), (5), and (6).''.
       (2) Subparagraph (C) of section 54A(d)(2), as amended by 
     this Act, is amended to read as follows:
       ``(C) Qualified purpose.--For purposes of this paragraph, 
     the term `qualified purpose' means--
       ``(i) in the case of a qualified forestry conservation 
     bond, a purpose specified in section 54B(e),
       ``(ii) in the case of a new clean renewable energy bond, a 
     purpose specified in section 54C(a)(1), and
       ``(iii) in the case of a qualified energy conservation 
     bond, a purpose specified in section 54D(a)(1).''.
       (3) The table of sections for subpart I of part IV of 
     subchapter A of chapter 1, as amended by this Act, is amended 
     by adding at the end the following new item:

``Sec. 54D. Qualified energy conservation bonds.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to obligations issued after the date of the 
     enactment of this Act.

     SEC. 302. CREDIT FOR NONBUSINESS ENERGY PROPERTY.

       (a) Extension of Credit.--Section 25C(g) is amended by 
     striking ``placed in service after December 31, 2007'' and 
     inserting ``placed in service--
       ``(1) after December 31, 2007, and before January 1, 2009, 
     or
       ``(2) after December 31, 2011.''.
       (b) Qualified Biomass Fuel Property.--
       (1) In general.--Section 25C(d)(3) is amended--
       (A) by striking ``and'' at the end of subparagraph (D),
       (B) by striking the period at the end of subparagraph (E) 
     and inserting ``, and'', and
       (C) by adding at the end the following new subparagraph:
       ``(F) a stove which uses the burning of biomass fuel to 
     heat a dwelling unit located in the United States and used as 
     a residence by the taxpayer, or to heat water for use in such 
     a dwelling unit, and which has a thermal efficiency rating of 
     at least 75 percent.''.
       (2) Biomass fuel.--Section 25C(d) is amended by adding at 
     the end the following new paragraph:
       ``(6) Biomass fuel.--The term `biomass fuel' means any 
     plant-derived fuel available on a renewable or recurring 
     basis, including agricultural crops and trees, wood and wood 
     waste and residues (including wood pellets), plants 
     (including aquatic plants), grasses, residues, and fibers.''.
       (c) Modification of Water Heater Requirements.--Section 
     25C(d)(3)(E) is amended by inserting ``or a thermal 
     efficiency of at least 90 percent'' after ``0.80''.
       (d) Coordination With Credit for Qualified Geothermal 
     Heatpump Property Expenditures.--
       (1) In general.--Paragraph (3) of section 25C(d), as 
     amended by subsections (b) and (c), is amended by striking 
     subparagraph (C) and by redesignating subparagraphs (D), (E), 
     and (F) as subparagraphs (C), (D), and (E), respectively.
       (2) Conforming amendment.--Subparagraph (C) of section 
     25C(d)(2) is amended to read as follows:
       ``(C) Requirements and standards for air conditioners and 
     heat pumps.--The standards and requirements prescribed by the 
     Secretary under subparagraph (B) with respect to the energy 
     efficiency ratio (EER) for central air conditioners and 
     electric heat pumps--
       ``(i) shall require measurements to be based on published 
     data which is tested by manufacturers at 95 degrees 
     Fahrenheit, and
       ``(ii) may be based on the certified data of the Air 
     Conditioning and Refrigeration Institute that are prepared in 
     partnership with the Consortium for Energy Efficiency.''.
       (e) Modification of Qualified Energy Efficiency 
     Improvements.--
       (1) In general.--Paragraph (1) of section 25C(c) is amended 
     by inserting ``, or an asphalt roof with appropriate cooling 
     granules,'' before ``which meet the Energy Star program 
     requirements''.
       (2) Building envelope component.--Subparagraph (D) of 
     section 25C(c)(2) is amended--
       (A) by inserting ``or asphalt roof'' after ``metal roof'', 
     and
       (B) by inserting ``or cooling granules'' after ``pigmented 
     coatings''.
       (f) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made this section shall apply to expenditures made 
     after December 31, 2008.
       (2) Modification of qualified energy efficiency 
     improvements.--The amendments made by subsection (e) shall 
     apply to property placed in service after the date of the 
     enactment of this Act.

     SEC. 303. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

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

     SEC. 304. NEW ENERGY EFFICIENT HOME CREDIT.

       Subsection (g) of section 45L (relating to termination) is 
     amended by striking ``December 31, 2008'' and inserting 
     ``December 31, 2011''.

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

       (a) In General.--Subsection (b) of section 45M is amended 
     to read as follows:
       ``(b) Applicable Amount.--For purposes of subsection (a)--
       ``(1) Dishwashers.--The applicable amount is--
       ``(A) $45 in the case of a dishwasher which is manufactured 
     in calendar year 2008 or 2009 and which uses no more than 324 
     kilowatt hours per year and 5.8 gallons per cycle, and
       ``(B) $75 in the case of a dishwasher which is manufactured 
     in calendar year 2008, 2009, or 2010 and which uses no more 
     than 307 kilowatt hours per year and 5.0 gallons per cycle 
     (5.5 gallons per cycle for dishwashers designed for greater 
     than 12 place settings).
       ``(2) Clothes washers.--The applicable amount is--
       ``(A) $75 in the case of a residential top-loading clothes 
     washer manufactured in calendar year 2008 which meets or 
     exceeds a 1.72 modified energy factor and does not exceed a 
     8.0 water consumption factor,
       ``(B) $125 in the case of a residential top-loading clothes 
     washer manufactured in calendar year 2008 or 2009 which meets 
     or exceeds a 1.8 modified energy factor and does not exceed a 
     7.5 water consumption factor,
       ``(C) $150 in the case of a residential or commercial 
     clothes washer manufactured in calendar year 2008, 2009, or 
     2010 which meets or exceeds 2.0 modified energy factor and 
     does not exceed a 6.0 water consumption factor, and
       ``(D) $250 in the case of a residential or commercial 
     clothes washer manufactured in calendar year 2008, 2009, or 
     2010 which meets or exceeds 2.2 modified energy factor and 
     does not exceed a 4.5 water consumption factor.
       ``(3) Refrigerators.--The applicable amount is--
       ``(A) $50 in the case of a refrigerator which is 
     manufactured in calendar year 2008, and consumes at least 20 
     percent but not more than 22.9 percent less kilowatt hours 
     per year than the 2001 energy conservation standards,
       ``(B) $75 in the case of a refrigerator which is 
     manufactured in calendar year 2008 or 2009, and consumes at 
     least 23 percent but no more than 24.9 percent less kilowatt 
     hours per year than the 2001 energy conservation standards,
       ``(C) $100 in the case of a refrigerator which is 
     manufactured in calendar year 2008, 2009, or 2010, and 
     consumes at least 25 percent but not more than 29.9 percent 
     less kilowatt hours per year than the 2001 energy 
     conservation standards, and
       ``(D) $200 in the case of a refrigerator manufactured in 
     calendar year 2008, 2009, or 2010 and which consumes at least 
     30 percent less energy than the 2001 energy conservation 
     standards.''.
       (b) Eligible Production.--
       (1) Similar treatment for all appliances.--Subsection (c) 
     of section 45M is amended--

[[Page S8404]]

       (A) by striking paragraph (2),
       (B) by striking ``(1) In general'' and all that follows 
     through ``the eligible'' and inserting ``The eligible'',
       (C) by moving the text of such subsection in line with the 
     subsection heading, and
       (D) by redesignating subparagraphs (A) and (B) as 
     paragraphs (1) and (2), respectively, and by moving such 
     paragraphs 2 ems to the left.
       (2) Modification of base period.--Paragraph (2) of section 
     45M(c), as amended by paragraph (1), is amended by striking 
     ``3-calendar year'' and inserting ``2-calendar year''.
       (c) Types of Energy Efficient Appliances.--Subsection (d) 
     of section 45M is amended to read as follows:
       ``(d) Types of Energy Efficient Appliance.--For purposes of 
     this section, the types of energy efficient appliances are--
       ``(1) dishwashers described in subsection (b)(1),
       ``(2) clothes washers described in subsection (b)(2), and
       ``(3) refrigerators described in subsection (b)(3).''.
       (d) Aggregate Credit Amount Allowed.--
       (1) Increase in limit.--Paragraph (1) of section 45M(e) is 
     amended to read as follows:
       ``(1) Aggregate credit amount allowed.--The aggregate 
     amount of credit allowed under subsection (a) with respect to 
     a taxpayer for any taxable year shall not exceed $75,000,000 
     reduced by the amount of the credit allowed under subsection 
     (a) to the taxpayer (or any predecessor) for all prior 
     taxable years beginning after December 31, 2007.''.
       (2) Exception for certain refrigerator and clothes 
     washers.--Paragraph (2) of section 45M(e) is amended to read 
     as follows:
       ``(2) Amount allowed for certain refrigerators and clothes 
     washers.--Refrigerators described in subsection (b)(3)(D) and 
     clothes washers described in subsection (b)(2)(D) shall not 
     be taken into account under paragraph (1).''.
       (e) Qualified Energy Efficient Appliances.--
       (1) In general.--Paragraph (1) of section 45M(f) is amended 
     to read as follows:
       ``(1) Qualified energy efficient appliance.--The term 
     `qualified energy efficient appliance' means--
       ``(A) any dishwasher described in subsection (b)(1),
       ``(B) any clothes washer described in subsection (b)(2), 
     and
       ``(C) any refrigerator described in subsection (b)(3).''.
       (2) Clothes washer.--Section 45M(f)(3) is amended by 
     inserting ``commercial'' before ``residential'' the second 
     place it appears.
       (3) Top-loading clothes washer.--Subsection (f) of section 
     45M is amended by redesignating paragraphs (4), (5), (6), and 
     (7) as paragraphs (5), (6), (7), and (8), respectively, and 
     by inserting after paragraph (3) the following new paragraph:
       ``(4) Top-loading clothes washer.--The term `top-loading 
     clothes washer' means a clothes washer which has the clothes 
     container compartment access located on the top of the 
     machine and which operates on a vertical axis.''.
       (4) Replacement of energy factor.--Section 45M(f)(6), as 
     redesignated by paragraph (3), is amended to read as follows:
       ``(6) Modified energy factor.--The term `modified energy 
     factor' means the modified energy factor established by the 
     Department of Energy for compliance with the Federal energy 
     conservation standard.''.
       (5) Gallons per cycle; water consumption factor.--Section 
     45M(f), as amended by paragraph (3), is amended by adding at 
     the end the following:
       ``(9) Gallons per cycle.--The term `gallons per cycle' 
     means, with respect to a dishwasher, the amount of water, 
     expressed in gallons, required to complete a normal cycle of 
     a dishwasher.
       ``(10) Water consumption factor.--The term `water 
     consumption factor' means, with respect to a clothes washer, 
     the quotient of the total weighted per-cycle water 
     consumption divided by the cubic foot (or liter) capacity of 
     the clothes washer.''.
       (f) Effective Date.--The amendments made by this section 
     shall apply to appliances produced after December 31, 2007.

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

       (a) In General.--Section 168(e)(3)(C) is amended by 
     striking ``and'' at the end of clause (iv), by redesignating 
     clause (v) as clause (vii), and by inserting after clause 
     (iv) the following new clauses:
       ``(v) any qualified smart electric meter,
       ``(vi) any qualified smart electric grid system, and''.
       (b) Definitions.--Section 168(i) is amended by inserting at 
     the end the following new paragraph:
       ``(18) Qualified smart electric meters.--
       ``(A) In general.--The term `qualified smart electric 
     meter' means any smart electric meter which is placed in 
     service by a taxpayer who is a supplier of electric energy or 
     a provider of electric energy services.
       ``(B) Smart electric meter.--For purposes of subparagraph 
     (A), the term `smart electric meter' means any time-based 
     meter and related communication equipment which is capable of 
     being used by the taxpayer as part of a system that--
       ``(i) measures and records electricity usage data on a 
     time-differentiated basis in at least 24 separate time 
     segments per day,
       ``(ii) provides for the exchange of information between 
     supplier or provider and the customer's electric meter in 
     support of time-based rates or other forms of demand 
     response,
       ``(iii) provides data to such supplier or provider so that 
     the supplier or provider can provide energy usage information 
     to customers electronically, and
       ``(iv) provides net metering.
       ``(19) Qualified smart electric grid systems.--
       ``(A) In general.--The term `qualified smart electric grid 
     system' means any smart grid property used as part of a 
     system for electric distribution grid communications, 
     monitoring, and management placed in service by a taxpayer 
     who is a supplier of electric energy or a provider of 
     electric energy services.
       ``(B) Smart grid property.--For the purposes of 
     subparagraph (A), the term `smart grid property' means 
     electronics and related equipment that is capable of--
       ``(i) sensing, collecting, and monitoring data of or from 
     all portions of a utility's electric distribution grid,
       ``(ii) providing real-time, two-way communications to 
     monitor or manage such grid, and
       ``(iii) providing real time analysis of and event 
     prediction based upon collected data that can be used to 
     improve electric distribution system reliability, quality, 
     and performance.''.
       (c) Continued Application of 150 Percent Declining Balance 
     Method.--Paragraph (2) of section 168(b) is amended by 
     striking ``or'' at the end of subparagraph (B), by 
     redesignating subparagraph (C) as subparagraph (D), and by 
     inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) any property (other than property described in 
     paragraph (3)) which is a qualified smart electric meter or 
     qualified smart electric grid system, or''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after the date of 
     the enactment of this Act.

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

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

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

       (a) In General.--Section 168 is amended by adding at the 
     end the following new subsection:
       ``(m) Special Allowance for Certain Reuse and Recycling 
     Property.--
       ``(1) In general.--In the case of any qualified reuse and 
     recycling property--
       ``(A) the depreciation deduction provided by section 167(a) 
     for the taxable year in which such property is placed in 
     service shall include an allowance equal to 50 percent of the 
     adjusted basis of the qualified reuse and recycling property, 
     and
       ``(B) the adjusted basis of the qualified reuse and 
     recycling property shall be reduced by the amount of such 
     deduction before computing the amount otherwise allowable as 
     a depreciation deduction under this chapter for such taxable 
     year and any subsequent taxable year.
       ``(2) Qualified reuse and recycling property.--For purposes 
     of this subsection--
       ``(A) In general.--The term `qualified reuse and recycling 
     property' means any reuse and recycling property--
       ``(i) to which this section applies,
       ``(ii) which has a useful life of at least 5 years,
       ``(iii) the original use of which commences with the 
     taxpayer after August 31, 2008, and
       ``(iv) which is--

       ``(I) acquired by purchase (as defined in section 
     179(d)(2)) by the taxpayer after August 31, 2008, but only if 
     no written binding contract for the acquisition was in effect 
     before September 1, 2008, or
       ``(II) acquired by the taxpayer pursuant to a written 
     binding contract which was entered into after August 31, 
     2008.

       ``(B) Exceptions.--
       ``(i) Bonus depreciation property under subsection (k).--
     The term `qualified reuse and recycling property' shall not 
     include any property to which section 168(k) applies.
       ``(ii) Alternative depreciation property.--The term 
     `qualified reuse and recycling property' shall not include 
     any property to which the alternative depreciation system 
     under subsection (g) applies, determined without regard to 
     paragraph (7) of subsection (g) (relating to election to have 
     system apply).
       ``(iii) Election out.--If a taxpayer makes an election 
     under this clause with respect to any class of property for 
     any taxable year, this subsection shall not apply to all 
     property in such class placed in service during such taxable 
     year.
       ``(C) Special rule for self-constructed property.--In the 
     case of a taxpayer manufacturing, constructing, or producing 
     property for the taxpayer's own use, the requirements of 
     clause (iv) of subparagraph (A) shall be treated as met if 
     the taxpayer begins manufacturing, constructing, or producing 
     the property after August 31, 2008.

[[Page S8405]]

       ``(D) Deduction allowed in computing minimum tax.--For 
     purposes of determining alternative minimum taxable income 
     under section 55, the deduction under subsection (a) for 
     qualified reuse and recycling property shall be determined 
     under this section without regard to any adjustment under 
     section 56.
       ``(3) Definitions.--For purposes of this subsection--
       ``(A) Reuse and recycling property.--
       ``(i) In general.--The term `reuse and recycling property' 
     means any machinery and equipment (not including buildings or 
     real estate), along with all appurtenances thereto, including 
     software necessary to operate such equipment, which is used 
     exclusively to collect, distribute, or recycle qualified 
     reuse and recyclable materials.
       ``(ii) Exclusion.--Such term does not include rolling stock 
     or other equipment used to transport reuse and recyclable 
     materials.
       ``(B) Qualified reuse and recyclable materials.--
       ``(i) In general.--The term `qualified reuse and recyclable 
     materials' means scrap plastic, scrap glass, scrap textiles, 
     scrap rubber, scrap packaging, recovered fiber, scrap ferrous 
     and nonferrous metals, or electronic scrap generated by an 
     individual or business.
       ``(ii) Electronic scrap.--For purposes of clause (i), the 
     term `electronic scrap' means--

       ``(I) any cathode ray tube, flat panel screen, or similar 
     video display device with a screen size greater than 4 inches 
     measured diagonally, or
       ``(II) any central processing unit.

       ``(C) Recycling or recycle.--The term `recycling' or 
     `recycle' means that process (including sorting) by which 
     worn or superfluous materials are manufactured or processed 
     into specification grade commodities that are suitable for 
     use as a replacement or substitute for virgin materials in 
     manufacturing tangible consumer and commercial products, 
     including packaging.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to property placed in service after August 31, 
     2008.

               TITLE IV--MISCELLANEOUS ENERGY PROVISIONS

     SEC. 401. SPECIAL RULE TO IMPLEMENT FERC AND STATE ELECTRIC 
                   RESTRUCTURING POLICY.

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

     SEC. 402. MODIFICATION OF CREDIT FOR PRODUCTION FROM ADVANCED 
                   NUCLEAR POWER FACILITIES.

       (a) In General.--Paragraph (2) of section 45J(b) (relating 
     to national limitation) is amended by striking ``6,000 
     megawatts'' and inserting ``8,000 megawatts''.
       (b) Allocation of Credit to Private Partners of Tax-Exempt 
     Entities.--
       (1) In general.--Section 45J (relating to credit for 
     production from advanced nuclear power facilities) is 
     amended--
       (A) by redesignating subsection (e) as subsection (f), and
       (B) by inserting after subsection (d) the following new 
     subsection:
       ``(e) Special Rule for Public-Private Partnerships.--
       ``(1) In general.--In the case of an advanced nuclear power 
     facility which is owned by a public-private partnership, any 
     qualified public entity which is a member of such partnership 
     may transfer such entity's allocation of the credit under 
     subsection (a) to any non-public entity which is a member of 
     such partnership, except that the aggregate allocations of 
     such credit claimed by such non-public entity shall be 
     subject to the limitations under subsections (b) and (c) and 
     section 38(c).
       ``(2) Qualified public entity.--For purposes of this 
     subsection, the term `qualified public entity' means a 
     Federal, State, or local government entity, or any political 
     subdivision thereof, or a cooperative organization described 
     in section 1381(a).
       ``(3) Verification of transfer of allocation.--A qualified 
     public entity that makes a transfer under paragraph (1), and 
     a non-public entity that receives an allocation under such a 
     transfer, shall provide verification of such transfer in such 
     manner and at such time as the Secretary shall prescribe.''.
       (2) Coordination with general business credit.--Subsection 
     (c) of section 38 (relating to limitation based on amount of 
     tax) is amended by adding at the end the following new 
     paragraph:
       ``(6) Special rule for credit for production from advanced 
     nuclear power facilities.--
       ``(A) In general.--In the case of the credit for production 
     from advanced nuclear power facilities determined under 
     section 45J(a), paragraph (1) shall not apply with respect to 
     any qualified public entity (as defined in section 45J(e)(2)) 
     which transfers the entity's allocation of such credit to a 
     non-public partner as provided in section 45J(e)(1).
       ``(B) Verification of transfer.--Subparagraph (A) shall not 
     apply to any qualified public entity unless such entity 
     provides verification of a transfer of credit allocation as 
     required under section 45J(e)(3).''.
       (c) Effective Date.--
       (1) In general.--The amendment made by subsection (a) shall 
     apply to electricity produced in taxable years beginning 
     after the date of the enactment of this Act.
       (2) Allocation of credit.--The amendments made by 
     subsection (b) shall apply to taxable years beginning after 
     the date of the enactment of this Act.

     SEC. 403. INCOME AVERAGING FOR AMOUNTS RECEIVED IN CONNECTION 
                   WITH THE EXXON VALDEZ LITIGATION.

       (a) Income Averaging of Amounts Received From the Exxon 
     Valdez Litigation.--For purposes of section 1301 of the 
     Internal Revenue Code of 1986--
       (1) any qualified taxpayer who receives any qualified 
     settlement income in any taxable year shall be treated as 
     engaged in a fishing business (determined without regard to 
     the commercial nature of the business), and
       (2) such qualified settlement income shall be treated as 
     income attributable to such a fishing business for such 
     taxable year.
       (b) Contributions of Amounts Received to Retirement 
     Accounts.--
       (1) In general.--Any qualified taxpayer who receives 
     qualified settlement income during the taxable year may, at 
     any time before the end of the taxable year in which such 
     income was received, make one or more contributions to an 
     eligible retirement plan of which such qualified taxpayer is 
     a beneficiary in an aggregate amount not to exceed the lesser 
     of--
       (A) $100,000 (reduced by the amount of qualified settlement 
     income contributed to an eligible retirement plan in prior 
     taxable years pursuant to this subsection), or
       (B) the amount of qualified settlement income received by 
     the individual during the taxable year.
       (2) Time when contributions deemed made.--For purposes of 
     paragraph (1), a qualified taxpayer shall be deemed to have 
     made a contribution to an eligible retirement plan on the 
     last day of the taxable year in which such income is received 
     if the contribution is made on account of such taxable year 
     and is made not later than the time prescribed by law for 
     filing the return for such taxable year (not including 
     extensions thereof).
       (3) Treatment of contributions to eligible retirement 
     plans.--For purposes of the Internal Revenue Code of 1986, if 
     a contribution is made pursuant to paragraph (1) with respect 
     to qualified settlement income, then--
       (A) except as provided in paragraph (4)--
       (i) to the extent of such contribution, the qualified 
     settlement income shall not be included in taxable income, 
     and
       (ii) for purposes of section 72 of such Code, such 
     contribution shall not be considered to be investment in the 
     contract,
       (B) the qualified taxpayer shall, to the extent of the 
     amount of the contribution, be treated--
       (i) as having received the qualified settlement income--

       (I) in the case of a contribution to an individual 
     retirement plan (as defined under section 7701(a)(37) of such 
     Code), in a distribution described in section 408(d)(3) of 
     such Code, and
       (II) in the case of any other eligible retirement plan, in 
     an eligible rollover distribution (as defined under section 
     402(f)(2) of such Code), and

       (ii) as having transferred the amount to the eligible 
     retirement plan in a direct trustee to trustee transfer 
     within 60 days of the distribution,
       (C) section 408(d)(3)(B) of the Internal Revenue Code of 
     1986 shall not apply with respect to amounts treated as a 
     rollover under this paragraph, and

[[Page S8406]]

       (D) section 408A(c)(3)(B) of the Internal Revenue Code of 
     1986 shall not apply with respect to amounts contributed to a 
     Roth IRA (as defined under section 408A(b) of such Code) or a 
     designated Roth contribution to an applicable retirement plan 
     (within the meaning of section 402A of such Code) under this 
     paragraph.
       (4) Special rule for roth iras and roth 401(k)s.--For 
     purposes of the Internal Revenue Code of 1986, if a 
     contribution is made pursuant to paragraph (1) with respect 
     to qualified settlement income to a Roth IRA (as defined 
     under section 408A(b) of such Code) or as a designated Roth 
     contribution to an applicable retirement plan (within the 
     meaning of section 402A of such Code), then--
       (A) the qualified settlement income shall be includible in 
     taxable income, and
       (B) for purposes of section 72 of such Code, such 
     contribution shall be considered to be investment in the 
     contract.
       (5) Eligible retirement plan.--For purpose of this 
     subsection, the term ``eligible retirement plan'' has the 
     meaning given such term under section 402(c)(8)(B) of the 
     Internal Revenue Code of 1986.
       (c) Treatment of Qualified Settlement Income Under 
     Employment Taxes.--
       (1) SECA.--For purposes of chapter 2 of the Internal 
     Revenue Code of 1986 and section 211 of the Social Security 
     Act, no portion of qualified settlement income received by a 
     qualified taxpayer shall be treated as self-employment 
     income.
       (2) FICA.--For purposes of chapter 21 of the Internal 
     Revenue Code of 1986 and section 209 of the Social Security 
     Act, no portion of qualified settlement income received by a 
     qualified taxpayer shall be treated as wages.
       (d) Qualified Taxpayer.--For purposes of this section, the 
     term ``qualified taxpayer'' means--
       (1) any individual who is a plaintiff in the civil action 
     In re Exxon Valdez, No. 89-095-CV (HRH) (Consolidated) (D. 
     Alaska); or
       (2) any individual who is a beneficiary of the estate of 
     such a plaintiff who--
       (A) acquired the right to receive qualified settlement 
     income from that plaintiff; and
       (B) was the spouse or an immediate relative of that 
     plaintiff.
       (e) Qualified Settlement Income.--For purposes of this 
     section, the term ``qualified settlement income'' means any 
     interest and punitive damage awards which are--
       (1) otherwise includible in taxable income, and
       (2) received (whether as lump sums or periodic payments) in 
     connection with the civil action In re Exxon Valdez, No. 89-
     095-CV (HRH) (Consolidated) (D. Alaska) (whether pre- or 
     post-judgment and whether related to a settlement or 
     judgment).

                      TITLE V--REVENUE PROVISIONS

     SEC. 501. LIMITATION OF DEDUCTION FOR INCOME ATTRIBUTABLE TO 
                   DOMESTIC PRODUCTION OF OIL, GAS, OR PRIMARY 
                   PRODUCTS THEREOF.

       (a) Denial of Deduction for Major Integrated Oil Companies 
     and State-Owned Oil Companies for Income Attributable to 
     Domestic Production of Oil, Gas, or Primary Products 
     Thereof.--
       (1) In general.--Subparagraph (B) of section 199(c)(4) of 
     the Internal Revenue Code of 1986 (relating to exceptions) is 
     amended by striking ``or'' at the end of clause (ii), by 
     striking the period at the end of clause (iii) and inserting 
     ``, or'', and by inserting after clause (iii) the following 
     new clause:
       ``(iv) in the case of any disqualified oil company, the 
     production, refining, processing, transportation, or 
     distribution of oil, gas, or any primary product thereof.''.
       (2) Disqualified oil company.--Section 199(c) of such Code 
     is amended by adding at the end the following new paragraph:
       ``(8) Disqualified oil company.--
       ``(A) In general.--The term `disqualified oil company' 
     means--
       ``(i) any major integrated oil company (as defined in 
     section 167(h)(5)(B)) during any taxable year described in 
     section 167(h)(5)(B), or
       ``(ii) any controlled commercial entity (as defined in 
     section 892(a)(2)(B)) the commercial activities of which 
     during the taxable year includes the production, refining, 
     processing, transportation, or distribution of oil, gas, or 
     any primary product thereof.
       ``(B) Primary product.--The term `primary product' has the 
     same meaning as when used in section 927(a)(2)(C), as in 
     effect before its repeal.''.
       (b) Limitation on Oil Related Qualified Production 
     Activities Income for Taxpayers Other Than Major Integrated 
     Oil Companies and State-Owned Oil Companies.--
       (1) In general.--Section 199(d) of the Internal Revenue 
     Code of 1986 is amended by redesignating paragraph (9) as 
     paragraph (10) and by inserting after paragraph (8) the 
     following new paragraph:
       ``(9) Special rule for taxpayers with oil related qualified 
     production activities income.--
       ``(A) In general.--If a taxpayer (other than a disqualified 
     oil company) has oil related qualified production activities 
     income for any taxable year beginning after 2009, the amount 
     otherwise allowable as a deduction under subsection (a) shall 
     be reduced by 3 percent of the least of--
       ``(i) the oil related qualified production activities 
     income of the taxpayer for the taxable year,
       ``(ii) the qualified production activities income of the 
     taxpayer for the taxable year, or
       ``(iii) taxable income (determined without regard to this 
     section).
       ``(B) Oil related qualified production activities income.--
     The term `oil related qualified production activities income' 
     means for any taxable year the qualified production 
     activities income which is attributable to the production, 
     refining, processing, transportation, or distribution of oil, 
     gas, or any primary product thereof during such taxable 
     year.''.
       (2) Conforming amendment.--Section 199(d)(2) of such Code 
     (relating to application to individuals) is amended by 
     striking ``subsection (a)(1)(B)'' and inserting ``subsections 
     (a)(1)(B) and (d)(9)(A)(iii)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2008.

     SEC. 502. TAX ON CRUDE OIL AND NATURAL GAS PRODUCED FROM THE 
                   OUTER CONTINENTAL SHELF IN THE GULF OF MEXICO.

       (a) In General.--Subtitle E (relating to alcohol, tobacco, 
     and certain other excise taxes) is amended by adding at the 
     end the following new chapter:

 ``CHAPTER 56--TAX ON SEVERANCE OF CRUDE OIL AND NATURAL GAS FROM THE 
             OUTER CONTINENTAL SHELF IN THE GULF OF MEXICO

``Sec. 5896. Imposition of tax.
``Sec. 5897. Taxable crude oil or natural gas and removal price.
``Sec. 5898. Special rules and definitions.

     ``SEC. 5896. IMPOSITION OF TAX.

       ``(a) In General.--In addition to any other tax imposed 
     under this title, there is hereby imposed a tax equal to 13 
     percent of the removal price of any taxable crude oil or 
     natural gas removed from the premises during any taxable 
     period.
       ``(b) Credit for Federal Royalties Paid.--
       ``(1) In general.--There shall be allowed as a credit 
     against the tax imposed by subsection (a) with respect to the 
     production of any taxable crude oil or natural gas an amount 
     equal to the aggregate amount of royalties paid under Federal 
     law with respect to such production.
       ``(2) Limitation.--The aggregate amount of credits allowed 
     under paragraph (1) to any taxpayer for any taxable period 
     shall not exceed the amount of tax imposed by subsection (a) 
     for such taxable period.
       ``(c) Tax Paid by Producer.--The tax imposed by this 
     section shall be paid by the producer of the taxable crude 
     oil or natural gas.

     ``SEC. 5897. TAXABLE CRUDE OIL OR NATURAL GAS AND REMOVAL 
                   PRICE.

       ``(a) Taxable Crude Oil or Natural Gas.--For purposes of 
     this chapter, the term `taxable crude oil or natural gas' 
     means crude oil or natural gas which is produced from Federal 
     submerged lands on the outer Continental Shelf in the Gulf of 
     Mexico pursuant to a lease entered into with the United 
     States which authorizes the production.
       ``(b) Removal Price.--For purposes of this chapter--
       ``(1) In general.--Except as otherwise provided in this 
     subsection, the term `removal price' means--
       ``(A) in the case of taxable crude oil, the amount for 
     which a barrel of such crude oil is sold, and
       ``(B) in the case of taxable natural gas, the amount per 
     1,000 cubic feet for which such natural gas is sold.
       ``(2) Sales between related persons.--In the case of a sale 
     between related persons, the removal price shall not be less 
     than the constructive sales price for purposes of determining 
     gross income from the property under section 613.
       ``(3) Oil or gas removed from property before sale.--If 
     crude oil or natural gas is removed from the property before 
     it is sold, the removal price shall be the constructive sales 
     price for purposes of determining gross income from the 
     property under section 613.
       ``(4) Refining begun on property.--If the manufacture or 
     conversion of crude oil into refined products begins before 
     such oil is removed from the property--
       ``(A) such oil shall be treated as removed on the day such 
     manufacture or conversion begins, and
       ``(B) the removal price shall be the constructive sales 
     price for purposes of determining gross income from the 
     property under section 613.
       ``(5) Property.--The term `property' has the meaning given 
     such term by section 614.

     ``SEC. 5898. SPECIAL RULES AND DEFINITIONS.

       ``(a) Administrative Requirements.--
       ``(1) Withholding and deposit of tax.--The Secretary shall 
     provide for the withholding and deposit of the tax imposed 
     under section 5896 on a quarterly basis.
       ``(2) Records and information.--Each taxpayer liable for 
     tax under section 5896 shall keep such records, make such 
     returns, and furnish such information (to the Secretary and 
     to other persons having an interest in the taxable crude oil 
     or natural gas) with respect to such oil as the Secretary may 
     by regulations prescribe.
       ``(3) Taxable periods; return of tax.--
       ``(A) Taxable period.--Except as provided by the Secretary, 
     each calendar year shall constitute a taxable period.
       ``(B) Returns.--The Secretary shall provide for the filing, 
     and the time for filing, of the return of the tax imposed 
     under section 5896.
       ``(b) Definitions.--For purposes of this chapter--

[[Page S8407]]

       ``(1) Producer.--The term `producer' means the holder of 
     the economic interest with respect to the crude oil or 
     natural gas.
       ``(2) Crude oil.--The term `crude oil' includes crude oil 
     condensates and natural gasoline.
       ``(3) Premises and crude oil product.--The terms `premises' 
     and `crude oil product' have the same meanings as when used 
     for purposes of determining gross income from the property 
     under section 613.
       ``(c) Adjustment of Removal Price.--In determining the 
     removal price of oil or natural gas from a property in the 
     case of any transaction, the Secretary may adjust the removal 
     price to reflect clearly the fair market value of oil or 
     natural gas removed.
       ``(d) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this chapter.''.
       (b) Deductibility of Tax.--The first sentence of section 
     164(a) (relating to deduction for taxes) is amended by 
     inserting after paragraph (5) the following new paragraph:
       ``(6) The tax imposed by section 5896(a) (after application 
     of section 5896(b)) on the severance of crude oil or natural 
     gas from the outer Continental Shelf in the Gulf of 
     Mexico.''.
       (c) Clerical Amendment.--The table of chapters for subtitle 
     E is amended by adding at the end the following new item:
``Chapter 56. Tax on severance of crude oil and natural gas from the 
              outer Continental Shelf in the Gulf of Mexico.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to crude oil or natural gas removed after 
     December 31, 2008.

     SEC. 503. ELIMINATION OF THE DIFFERENT TREATMENT OF FOREIGN 
                   OIL AND GAS EXTRACTION INCOME AND FOREIGN OIL 
                   RELATED INCOME FOR PURPOSES OF THE FOREIGN TAX 
                   CREDIT.

       (a) In General.--Subsections (a) and (b) of section 907 
     (relating to special rules in case of foreign oil and gas 
     income) are amended to read as follows:
       ``(a) Reduction in Amount Allowed as Foreign Tax Under 
     Section 901.--In applying section 901, the amount of any 
     foreign oil and gas taxes paid or accrued (or deemed to have 
     been paid) during the taxable year which would (but for this 
     subsection) be taken into account for purposes of section 901 
     shall be reduced by the amount (if any) by which the amount 
     of such taxes exceeds the product of--
       ``(1) the amount of the combined foreign oil and gas income 
     for the taxable year,
       ``(2) multiplied by--
       ``(A) in the case of a corporation, the percentage which is 
     equal to the highest rate of tax specified under section 
     11(b), or
       ``(B) in the case of an individual, a fraction the 
     numerator of which is the tax against which the credit under 
     section 901(a) is taken and the denominator of which is the 
     taxpayer's entire taxable income.
       ``(b) Combined Foreign Oil and Gas Income; Foreign Oil and 
     Gas Taxes.--For purposes of this section--
       ``(1) Combined foreign oil and gas income.--The term 
     `combined foreign oil and gas income' means, with respect to 
     any taxable year, the sum of--
       ``(A) foreign oil and gas extraction income, and
       ``(B) foreign oil related income.
       ``(2) Foreign oil and gas taxes.--The term `foreign oil and 
     gas taxes' means, with respect to any taxable year, the sum 
     of--
       ``(A) oil and gas extraction taxes, and
       ``(B) any income, war profits, and excess profits taxes 
     paid or accrued (or deemed to have been paid or accrued under 
     section 902 or 960) during the taxable year with respect to 
     foreign oil related income (determined without regard to 
     subsection (c)(4)) or loss which would be taken into account 
     for purposes of section 901 without regard to this 
     section.''.
       (b) Recapture of Foreign Oil and Gas Losses.--Paragraph (4) 
     of section 907(c) (relating to recapture of foreign oil and 
     gas extraction losses by recharacterizing later extraction 
     income) is amended to read as follows:
       ``(4) Recapture of foreign oil and gas losses by 
     recharacterizing later combined foreign oil and gas income.--
       ``(A) In general.--The combined foreign oil and gas income 
     of a taxpayer for a taxable year (determined without regard 
     to this paragraph) shall be reduced--
       ``(i) first by the amount determined under subparagraph 
     (B), and
       ``(ii) then by the amount determined under subparagraph 
     (C).
     The aggregate amount of such reductions shall be treated as 
     income (from sources without the United States) which is not 
     combined foreign oil and gas income.
       ``(B) Reduction for pre-2009 foreign oil extraction 
     losses.--The reduction under this paragraph shall be equal to 
     the lesser of--
       ``(i) the foreign oil and gas extraction income of the 
     taxpayer for the taxable year (determined without regard to 
     this paragraph), or
       ``(ii) the excess of--

       ``(I) the aggregate amount of foreign oil extraction losses 
     for preceding taxable years beginning after December 31, 
     1982, and before January 1, 2009, over
       ``(II) so much of such aggregate amount as was 
     recharacterized under this paragraph (as in effect before and 
     after the date of the enactment of the Energy Independence 
     and Investment Act of 2008) for preceding taxable years 
     beginning after December 31, 1982.

       ``(C) Reduction for post-2008 foreign oil and gas losses.--
     The reduction under this paragraph shall be equal to the 
     lesser of--
       ``(i) the combined foreign oil and gas income of the 
     taxpayer for the taxable year (determined without regard to 
     this paragraph), reduced by an amount equal to the reduction 
     under subparagraph (A) for the taxable year, or
       ``(ii) the excess of--

       ``(I) the aggregate amount of foreign oil and gas losses 
     for preceding taxable years beginning after December 31, 
     2008, over
       ``(II) so much of such aggregate amount as was 
     recharacterized under this paragraph for preceding taxable 
     years beginning after December 31, 2008.

       ``(D) Foreign oil and gas loss defined.--
       ``(i) In general.--For purposes of this paragraph, the term 
     `foreign oil and gas loss' means the amount by which--

       ``(I) the gross income for the taxable year from sources 
     without the United States and its possessions (whether or not 
     the taxpayer chooses the benefits of this subpart for such 
     taxable year) taken into account in determining the combined 
     foreign oil and gas income for such year, is exceeded by
       ``(II) the sum of the deductions properly apportioned or 
     allocated thereto.

       ``(ii) Net operating loss deduction not taken into 
     account.--For purposes of clause (i), the net operating loss 
     deduction allowable for the taxable year under section 172(a) 
     shall not be taken into account.
       ``(iii) Expropriation and casualty losses not taken into 
     account.--For purposes of clause (i), there shall not be 
     taken into account--

       ``(I) any foreign expropriation loss (as defined in section 
     172(h) (as in effect on the day before the date of the 
     enactment of the Revenue Reconciliation Act of 1990)) for the 
     taxable year, or
       ``(II) any loss for the taxable year which arises from 
     fire, storm, shipwreck, or other casualty, or from theft,

     to the extent such loss is not compensated for by insurance 
     or otherwise.
       ``(iv) Foreign oil extraction loss.--For purposes of 
     subparagraph (B)(ii)(I), foreign oil extraction losses shall 
     be determined under this paragraph as in effect on the day 
     before the date of the enactment of the Energy Independence 
     and Investment Act of 2008.''.
       (c) Carryback and Carryover of Disallowed Credits.--Section 
     907(f) (relating to carryback and carryover of disallowed 
     credits) is amended--
       (1) by striking ``oil and gas extraction taxes'' each place 
     it appears and inserting ``foreign oil and gas taxes'', and
       (2) by adding at the end the following new paragraph:
       ``(4) Transition rules for pre-2009 and 2009 disallowed 
     credits.--
       ``(A) Pre-2009 credits.--In the case of any unused credit 
     year beginning before January 1, 2009, this subsection shall 
     be applied to any unused oil and gas extraction taxes carried 
     from such unused credit year to a year beginning after 
     December 31, 2008--
       ``(i) by substituting `oil and gas extraction taxes' for 
     `foreign oil and gas taxes' each place it appears in 
     paragraphs (1), (2), and (3), and
       ``(ii) by computing, for purposes of paragraph (2)(A), the 
     limitation under subparagraph (A) for the year to which such 
     taxes are carried by substituting `foreign oil and gas 
     extraction income' for `foreign oil and gas income' in 
     subsection (a).
       ``(B) 2009 credits.--In the case of any unused credit year 
     beginning in 2009, the amendments made to this subsection by 
     the Energy Independence and Investment Act of 2008 shall be 
     treated as being in effect for any preceding year beginning 
     before January 1, 2009, solely for purposes of determining 
     how much of the unused foreign oil and gas taxes for such 
     unused credit year may be deemed paid or accrued in such 
     preceding year.''.
       (d) Conforming Amendment.--Section 6501(i) is amended by 
     striking ``oil and gas extraction taxes'' and inserting 
     ``foreign oil and gas taxes''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2008.

     SEC. 504. BROKER REPORTING OF CUSTOMER'S BASIS IN SECURITIES 
                   TRANSACTIONS.

       (a) In General.--
       (1) Broker reporting for securities transactions.--Section 
     6045 is amended by adding at the end the following new 
     subsection:
       ``(g) Additional Information Required in the Case of 
     Securities Transactions, etc.--
       ``(1) In general.--If a broker is otherwise required to 
     make a return under subsection (a) with respect to the gross 
     proceeds of the sale of a covered security, the broker shall 
     include in such return the information described in paragraph 
     (2).
       ``(2) Additional information required.--
       ``(A) In general.--The information required under paragraph 
     (1) to be shown on a return with respect to a covered 
     security of a customer shall include the customer's adjusted 
     basis in such security and whether any gain or loss with 
     respect to such security is long-term or short-term (within 
     the meaning of section 1222).
       ``(B) Determination of adjusted basis.--For purposes of 
     subparagraph (A)--

[[Page S8408]]

       ``(i) In general.--The customer's adjusted basis shall be 
     determined--

       ``(I) in the case of any security (other than any stock for 
     which an average basis method is permissible under section 
     1012), in accordance with the first-in first-out method 
     unless the customer notifies the broker by means of making an 
     adequate identification of the stock sold or transferred, and
       ``(II) in the case of any stock for which an average basis 
     method is permissible under section 1012, in accordance with 
     the broker's default method unless the customer notifies the 
     broker that he elects another acceptable method under section 
     1012 with respect to the account in which such stock is held.

       ``(ii) Exception for wash sales.--Except as otherwise 
     provided by the Secretary, the customer's adjusted basis 
     shall be determined without regard to section 1091 (relating 
     to loss from wash sales of stock or securities) unless the 
     transactions occur in the same account with respect to 
     identical securities.
       ``(3) Covered security.--For purposes of this subsection--
       ``(A) In general.--The term `covered security' means any 
     specified security acquired on or after the applicable date 
     if such security--
       ``(i) was acquired through a transaction in the account in 
     which such security is held, or
       ``(ii) was transferred to such account from an account in 
     which such security was a covered security, but only if the 
     broker received a statement under section 6045A with respect 
     to the transfer.
       ``(B) Specified security.--The term `specified security' 
     means--
       ``(i) any share of stock in a corporation,
       ``(ii) any note, bond, debenture, or other evidence of 
     indebtedness,
       ``(iii) any commodity, or contract or derivative with 
     respect to such commodity, if the Secretary determines that 
     adjusted basis reporting is appropriate for purposes of this 
     subsection, and
       ``(iv) any other financial instrument with respect to which 
     the Secretary determines that adjusted basis reporting is 
     appropriate for purposes of this subsection.
       ``(C) Applicable date.--The term `applicable date' means--
       ``(i) January 1, 2010, in the case of any specified 
     security which is stock in a corporation (other than any 
     stock described in clause (ii)),
       ``(ii) January 1, 2011, in the case of any stock for which 
     an average basis method is permissible under section 1012, 
     and
       ``(iii) January 1, 2012, or such later date determined by 
     the Secretary in the case of any other specified security.
       ``(4) Treatment of s corporations.--In the case of the sale 
     of a covered security acquired by an S corporation (other 
     than a financial institution) after December 31, 2011, such S 
     corporation shall be treated in the same manner as a 
     partnership for purposes of this section.
       ``(5) Special rules for short sales.--In the case of a 
     short sale, reporting under this section shall be made for 
     the year in which such sale is closed.''.
       (2) Broker information required with respect to options.--
     Section 6045, as amended by subsection (a), is amended by 
     adding at the end the following new subsection:
       ``(h) Application to Options on Securities.--
       ``(1) Exercise of option.--For purposes of this section, if 
     a covered security is acquired or disposed of pursuant to the 
     exercise of an option that was granted or acquired in the 
     same account as the covered security, the amount received 
     with respect to the grant or paid with respect to the 
     acquisition of such option shall be treated as an adjustment 
     to gross proceeds or as an adjustment to basis, as the case 
     may be.
       ``(2) Lapse or closing transaction.--In the case of the 
     lapse (or closing transaction (as defined in section 
     1234(b)(2)(A))) of an option on a specified security or the 
     exercise of a cash-settled option on a specified security, 
     reporting under subsections (a) and (g) with respect to such 
     option shall be made for the calendar year which includes the 
     date of such lapse, closing transaction, or exercise.
       ``(3) Prospective application.--Paragraphs (1) and (2) 
     shall not apply to any option which is granted or acquired 
     before January 1, 2012.
       ``(4) Definitions.--For purposes of this subsection, the 
     terms `covered security' and `specified security' shall have 
     the meanings given such terms in subsection (g)(3).''.
       (3) Extension of period for statements sent to customers.--
       (A) In general.--Subsection (b) of section 6045 is amended 
     by striking ``January 31'' and inserting ``February 15''.
       (B) Statements related to substitute payments.--Subsection 
     (d) of section 6045 is amended--
       (i) by striking ``at such time and'', and
       (ii) by inserting after ``other item.'' the following new 
     sentence: ``The written statement required under the 
     preceding sentence shall be furnished on or before February 
     15 of the year following the calendar year in which the 
     payment was made.''.
       (C) Other statements.--Subsection (b) of section 6045 is 
     amended by adding at the end the following: ``In the case of 
     a consolidated reporting statement (as defined in 
     regulations) with respect to any account, any statement which 
     would otherwise be required to be furnished on or before 
     January 31 of a calendar year with respect to any item 
     reportable to the taxpayer shall instead be required to be 
     furnished on or before February 15 of such calendar year if 
     furnished with such consolidated reporting statement.''.
       (b) Determination of Basis of Certain Securities on Account 
     by Account or Average Basis Method.--Section 1012 is 
     amended--
       (1) by striking ``The basis of property'' and inserting the 
     following:
       ``(a) In General.--The basis of property'',
       (2) by striking ``The cost of real property'' and inserting 
     the following:
       ``(b) Special Rule for Apportioned Real Estate Taxes.--The 
     cost of real property'', and
       (3) by adding at the end the following new subsections:
       ``(c) Determinations by Account.--
       ``(1) In general.--In the case of the sale, exchange, or 
     other disposition of a specified security on or after the 
     applicable date, the conventions prescribed by regulations 
     under this section shall be applied on an account by account 
     basis.
       ``(2) Application to open-end funds.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     any stock in an open-end fund acquired before January 1, 
     2011, shall be treated as a separate account from any such 
     stock acquired on or after such date.
       ``(B) Election by open-end fund for treatment as single 
     account.--If an open-end fund elects to have this 
     subparagraph apply with respect to one or more of its 
     stockholders--
       ``(i) subparagraph (A) shall not apply with respect to any 
     stock in such fund held by such stockholders, and
       ``(ii) all stock in such fund which is held by such 
     stockholders shall be treated as covered securities described 
     in section 6045(g)(3) without regard to the date of the 
     acquisition of such stock.
     A rule similar to the rule of the preceding sentence shall 
     apply with respect to a broker holding stock in an open-end 
     fund as a nominee.
       ``(3) Definitions.--For purposes of this section--
       ``(A) Open-end fund.--The term `open-end fund' means a 
     regulated investment company (as defined in section 851) 
     which is offering for sale or has outstanding any redeemable 
     security of which it is the issuer. Any stock which is traded 
     on an established securities exchange shall not be treated as 
     stock in an open-end fund.
       ``(B) Specified security; applicable date.--The terms 
     `specified security' and `applicable date' shall have the 
     meaning given such terms in section 6045(g).
       ``(d) Average Basis for Stock Acquired Pursuant to a 
     Dividend Reinvestment Plan.--
       ``(1) In general.--In the case of any stock acquired after 
     December 31, 2010, in connection with a dividend reinvestment 
     plan, the basis of such stock while held as part of such plan 
     shall be determined using one of the methods which may be 
     used for determining the basis of stock in an open-end fund.
       ``(2) Treatment after transfer.--In the case of the 
     transfer to another account of stock to which paragraph (1) 
     applies, such stock shall have a cost basis in such other 
     account equal to its basis in the dividend reinvestment plan 
     immediately before such transfer (properly adjusted for any 
     fees or other charges taken into account in connection with 
     such transfer).
       ``(3) Separate accounts; election for treatment as single 
     account.--Rules similar to the rules of subsection (c)(2) 
     shall apply for purposes of this subsection.
       ``(4) Dividend reinvestment plan.--For purposes of this 
     subsection--
       ``(A) In general.--The term `dividend reinvestment plan' 
     means any arrangement under which dividends on any stock are 
     reinvested in stock identical to the stock with respect to 
     which the dividends are paid.
       ``(B) Initial stock acquisition treated as acquired in 
     connection with plan.--Stock shall be treated as acquired in 
     connection with a dividend reinvestment plan if such stock is 
     acquired pursuant to such plan or if the dividends paid on 
     such stock are subject to such plan.''.
       (c) Information by Transferors To Aid Brokers.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 is amended by inserting after section 6045 the 
     following new section:

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

       ``(a) Furnishing of Information.--Every applicable person 
     which transfers to a broker (as defined in section 
     6045(c)(1)) a security which is a covered security (as 
     defined in section 6045(g)(3)) in the hands of such 
     applicable person shall furnish to such broker a written 
     statement in such manner and setting forth such information 
     as the Secretary may by regulations prescribe for purposes of 
     enabling such broker to meet the requirements of section 
     6045(g).
       ``(b) Applicable Person.--For purposes of subsection (a), 
     the term `applicable person' means--
       ``(1) any broker (as defined in section 6045(c)(1)), and
       ``(2) any other person as provided by the Secretary in 
     regulations.
       ``(c) Time for Furnishing Statement.--Except as otherwise 
     provided by the Secretary, any statement required by 
     subsection (a) shall be furnished not later than 15 days 
     after the date of the transfer described in such 
     subsection.''.

[[Page S8409]]

       (2) Assessable penalties.--Paragraph (2) of section 
     6724(d), as amended by the Housing Assistance Tax Act of 
     2008, is amended by redesignating subparagraphs (I) through 
     (DD) as subparagraphs (J) through (EE), respectively, and by 
     inserting after subparagraph (H) the following new 
     subparagraph:
       ``(I) section 6045A (relating to information required in 
     connection with transfers of covered securities to 
     brokers),''.
       (3) Clerical amendment.--The table of sections for subpart 
     B of part III of subchapter A of chapter 61 is amended by 
     inserting after the item relating to section 6045 the 
     following new item:

``Sec. 6045A. Information required in connection with transfers of 
              covered securities to brokers.''.

       (d) Additional Issuer Information To Aid Brokers.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61, as amended by subsection (b), is amended by 
     inserting after section 6045A the following new section:

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

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

``Sec. 6045B. Returns relating to actions affecting basis of specified 
              securities.''.

       (e) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall take 
     effect on January 1, 2010.
       (2) Extension of period for statements sent to customers.--
     The amendments made by subsection (a)(3) shall apply to 
     statements required to be furnished after December 31, 2008.

     SEC. 505. INCREASE AND EXTENSION OF OIL SPILL LIABILITY TRUST 
                   FUND TAX.

       (a) Increase in Rate.--
       (1) In general.--Section 4611(c)(2)(B) (relating to rates) 
     is amended by striking ``5 cents'' and inserting ``12 
     cents''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply on and after the first day of the first calendar 
     quarter beginning more than 60 days after the date of the 
     enactment of this Act.
       (b) Extension.--
       (1) In general.--Section 4611(f) (relating to application 
     of Oil Spill Liability Trust Fund financing rate) is amended 
     by striking paragraphs (2) and (3) and inserting the 
     following new paragraph:
       ``(2) Termination.--The Oil Spill Liability Trust Fund 
     financing rate shall not apply after December 31, 2017.''.
       (2) Conforming amendment.--Section 4611(f)(1) is amended by 
     striking ``paragraphs (2) and (3)'' and inserting ``paragraph 
     (2)''.
       (3) Effective date.--The amendments made by this subsection 
     shall take effect on the date of the enactment of this Act.

                       TITLE VI--OTHER PROVISIONS

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

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

     ``SECTION 1. SHORT TITLE.

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

     ``SEC. 2. PURPOSES.

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

     ``SEC. 3. DEFINITIONS.

       ``In this Act:
       ``(1) Adjusted share.--The term `adjusted share' means the 
     number equal to the quotient obtained by dividing--
       ``(A) the number equal to the quotient obtained by 
     dividing--
       ``(i) the base share for the eligible county; by
       ``(ii) the income adjustment for the eligible county; by
       ``(B) the number equal to the sum of the quotients obtained 
     under subparagraph (A) and paragraph (8)(A) for all eligible 
     counties.
       ``(2) Base share.--The term `base share' means the number 
     equal to the average of--
       ``(A) the quotient obtained by dividing--
       ``(i) the number of acres of Federal land described in 
     paragraph (7)(A) in each eligible county; by
       ``(ii) the total number acres of Federal land in all 
     eligible counties in all eligible States; and
       ``(B) the quotient obtained by dividing--
       ``(i) the amount equal to the average of the 3 highest 25-
     percent payments and safety net payments made to each 
     eligible State for each eligible county during the 
     eligibility period; by
       ``(ii) the amount equal to the sum of the amounts 
     calculated under clause (i) and paragraph (9)(B)(i) for all 
     eligible counties in all eligible States during the 
     eligibility period.
       ``(3) County payment.--The term `county payment' means the 
     payment for an eligible county calculated under section 
     101(b).
       ``(4) Eligible county.--The term `eligible county' means 
     any county that--
       ``(A) contains Federal land (as defined in paragraph (7)); 
     and
       ``(B) elects to receive a share of the State payment or the 
     county payment under section 102(b).
       ``(5) Eligibility period.--The term `eligibility period' 
     means fiscal year 1986 through fiscal year 1999.
       ``(6) Eligible state.--The term `eligible State' means a 
     State or territory of the United States that received a 25-
     percent payment for 1 or more fiscal years of the eligibility 
     period.
       ``(7) Federal land.--The term `Federal land' means--

[[Page S8410]]

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

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

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

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

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

       ``(a) Payment Amounts.--Except as provided in section 103, 
     the Secretary of the Treasury shall pay to--
       ``(1) a State or territory of the United States an amount 
     equal to the sum of the amounts elected under subsection (b) 
     by each county within the State or territory for--
       ``(A) if the county is eligible for the 25-percent payment, 
     the share of the 25-percent payment; or
       ``(B) the share of the State payment of the eligible 
     county; and
       ``(2) a county an amount equal to the amount elected under 
     subsection (b) by each county for--
       ``(A) if the county is eligible for the 50-percent payment, 
     the 50-percent payment; or
       ``(B) the county payment for the eligible county.
       ``(b) Election To Receive Payment Amount.--
       ``(1) Election; submission of results.--
       ``(A) In general.--The election to receive a share of the 
     State payment, the county payment, a share of the State 
     payment and the county payment, a share of the 25-percent 
     payment, the 50-percent payment, or a share of the 25-percent 
     payment and the 50-percent payment, as applicable, shall be 
     made at the discretion of each affected county by August 1, 
     2008 (or as soon thereafter as the Secretary concerned 
     determines is practicable), and August 1 of each second 
     fiscal year thereafter, in accordance with paragraph (2), and 
     transmitted to the Secretary concerned by the Governor of 
     each eligible State.
       ``(B) Failure to transmit.--If an election for an affected 
     county is not transmitted to the Secretary concerned by the 
     date specified under subparagraph (A), the affected county 
     shall be considered to have elected to receive a share of the 
     State payment, the county payment, or a share of the State 
     payment and the county payment, as applicable.
       ``(2) Duration of election.--
       ``(A) In general.--A county election to receive a share of 
     the 25-percent payment or 50-percent payment, as applicable, 
     shall be effective for 2 fiscal years.
       ``(B) Full funding amount.--If a county elects to receive a 
     share of the State payment or the county payment, the 
     election shall be effective for all subsequent fiscal years 
     through fiscal year 2011.
       ``(3) Source of payment amounts.--The payment to an 
     eligible State or eligible county under this section for a 
     fiscal year shall be derived from--
       ``(A) any amounts that are appropriated to carry out this 
     Act;
       ``(B) any revenues, fees, penalties, or miscellaneous 
     receipts, exclusive of deposits to any relevant trust fund, 
     special account, or permanent operating funds, received by 
     the Federal Government from activities by the Bureau of Land 
     Management or the Forest Service on the applicable Federal 
     land; and
       ``(C) to the extent of any shortfall, out of any amounts in 
     the Treasury of the United States not otherwise appropriated.
       ``(c) Distribution and Expenditure of Payments.--
       ``(1) Distribution method.--A State that receives a payment 
     under subsection (a) for Federal land described in section 
     3(7)(A) shall distribute the appropriate payment amount among 
     the appropriate counties in the State in accordance with--
       ``(A) the Act of May 23, 1908 (16 U.S.C. 500); and
       ``(B) section 13 of the Act of March 1, 1911 (36 Stat. 963; 
     16 U.S.C. 500).
       ``(2) Expenditure purposes.--Subject to subsection (d), 
     payments received by a State under subsection (a) and 
     distributed to counties in accordance with paragraph (1) 
     shall be expended as required by the laws referred to in 
     paragraph (1).
       ``(d) Expenditure Rules for Eligible Counties.--
       ``(1) Allocations.--
       ``(A) Use of portion in same manner as 25-percent payment 
     or 50-percent payment, as applicable.--Except as provided in 
     paragraph (3)(B), if an eligible county elects to receive its 
     share of the State payment or the county payment, not less 
     than 80 percent, but not more than 85 percent, of the funds 
     shall be expended in the same manner in which the 25-percent 
     payments or 50-percent payment, as applicable, are required 
     to be expended.
       ``(B) Election as to use of balance.--Except as provided in 
     subparagraph (C), an eligible county shall elect to do 1 or 
     more of the following with the balance of any funds not 
     expended pursuant to subparagraph (A):
       ``(i) Reserve any portion of the balance for projects in 
     accordance with title II.
       ``(ii) Reserve not more than 7 percent of the total share 
     for the eligible county of the State payment or the county 
     payment for projects in accordance with title III.
       ``(iii) Return the portion of the balance not reserved 
     under clauses (i) and (ii) to the Treasury of the United 
     States.
       ``(C) Counties with modest distributions.--In the case of 
     each eligible county to which more than $100,000, but less 
     than $350,000, is distributed for any fiscal year pursuant to 
     either or both of paragraphs (1)(B) and (2)(B) of subsection 
     (a), the eligible county, with respect to the balance of any 
     funds not expended pursuant to subparagraph (A) for that 
     fiscal year, shall--
       ``(i) reserve any portion of the balance for--

       ``(I) carrying out projects under title II;

[[Page S8411]]

       ``(II) carrying out projects under title III; or
       ``(III) a combination of the purposes described in 
     subclauses (I) and (II); or

       ``(ii) return the portion of the balance not reserved under 
     clause (i) to the Treasury of the United States.
       ``(2) Distribution of funds.--
       ``(A) In general.--Funds reserved by an eligible county 
     under subparagraph (B)(i) or (C)(i) of paragraph (1) for 
     carrying out projects under title II shall be deposited in a 
     special account in the Treasury of the United States.
       ``(B) Availability.--Amounts deposited under subparagraph 
     (A) shall--
       ``(i) be available for expenditure by the Secretary 
     concerned, without further appropriation; and
       ``(ii) remain available until expended in accordance with 
     title II.
       ``(3) Election.--
       ``(A) Notification.--
       ``(i) In general.--An eligible county shall notify the 
     Secretary concerned of an election by the eligible county 
     under this subsection not later than September 30, 2008 (or 
     as soon thereafter as the Secretary concerned determines is 
     practicable), and September 30 of each fiscal year 
     thereafter.
       ``(ii) Failure to elect.--Except as provided in 
     subparagraph (B), if the eligible county fails to make an 
     election by the date specified in clause (i), the eligible 
     county shall--

       ``(I) be considered to have elected to expend 85 percent of 
     the funds in accordance with paragraph (1)(A); and
       ``(II) return the balance to the Treasury of the United 
     States.

       ``(B) Counties with minor distributions.--In the case of 
     each eligible county to which less than $100,000 is 
     distributed for any fiscal year pursuant to either or both of 
     paragraphs (1)(B) and (2)(B) of subsection (a), the eligible 
     county may elect to expend all the funds in the same manner 
     in which the 25-percent payments or 50-percent payments, as 
     applicable, are required to be expended.
       ``(e) Time for Payment.--The payments required under this 
     section for a fiscal year shall be made as soon as 
     practicable after the end of that fiscal year.

     ``SEC. 103. TRANSITION PAYMENTS TO STATES.

       ``(a) Definitions.--In this section:
       ``(1) Adjusted amount.--The term `adjusted amount' means, 
     with respect to a covered State--
       ``(A) for fiscal year 2008, 90 percent of--
       ``(i) the sum of the amounts paid for fiscal year 2006 
     under section 102(a)(2) (as in effect on September 29, 2006) 
     for the eligible counties in the covered State that have 
     elected under section 102(b) to receive a share of the State 
     payment for fiscal year 2008; and
       ``(ii) the sum of the amounts paid for fiscal year 2006 
     under section 103(a)(2) (as in effect on September 29, 2006) 
     for the eligible counties in the State of Oregon that have 
     elected under section 102(b) to receive the county payment 
     for fiscal year 2008;
       ``(B) for fiscal year 2009, 76 percent of--
       ``(i) the sum of the amounts paid for fiscal year 2006 
     under section 102(a)(2) (as in effect on September 29, 2006) 
     for the eligible counties in the covered State that have 
     elected under section 102(b) to receive a share of the State 
     payment for fiscal year 2009; and
       ``(ii) the sum of the amounts paid for fiscal year 2006 
     under section 103(a)(2) (as in effect on September 29, 2006) 
     for the eligible counties in the State of Oregon that have 
     elected under section 102(b) to receive the county payment 
     for fiscal year 2009; and
       ``(C) for fiscal year 2010, 65 percent of--
       ``(i) the sum of the amounts paid for fiscal year 2006 
     under section 102(a)(2) (as in effect on September 29, 2006) 
     for the eligible counties in the covered State that have 
     elected under section 102(b) to receive a share of the State 
     payment for fiscal year 2010; and
       ``(ii) the sum of the amounts paid for fiscal year 2006 
     under section 103(a)(2) (as in effect on September 29, 2006) 
     for the eligible counties in the State of Oregon that have 
     elected under section 102(b) to receive the county payment 
     for fiscal year 2010.
       ``(2) Covered state.--The term `covered State' means each 
     of the States of California, Louisiana, Oregon, Pennsylvania, 
     South Carolina, South Dakota, Texas, and Washington.
       ``(b) Transition Payments.--For each of fiscal years 2008 
     through 2010, in lieu of the payment amounts that otherwise 
     would have been made under paragraphs (1)(B) and (2)(B) of 
     section 102(a), the Secretary of the Treasury shall pay the 
     adjusted amount to each covered State and the eligible 
     counties within the covered State, as applicable.
       ``(c) Distribution of Adjusted Amount.--Except as provided 
     in subsection (d), it is the intent of Congress that the 
     method of distributing the payments under subsection (b) 
     among the counties in the covered States for each of fiscal 
     years 2008 through 2010 be in the same proportion that the 
     payments were distributed to the eligible counties in fiscal 
     year 2006.
       ``(d) Distribution of Payments in California.--The 
     following payments shall be distributed among the eligible 
     counties in the State of California in the same proportion 
     that payments under section 102(a)(2) (as in effect on 
     September 29, 2006) were distributed to the eligible counties 
     for fiscal year 2006:
       ``(1) Payments to the State of California under subsection 
     (b).
       ``(2) The shares of the eligible counties of the State 
     payment for California under section 102 for fiscal year 
     2011.
       ``(e) Treatment of Payments.--For purposes of this Act, any 
     payment made under subsection (b) shall be considered to be a 
     payment made under section 102(a).

              ``TITLE II--SPECIAL PROJECTS ON FEDERAL LAND

     ``SEC. 201. DEFINITIONS.

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

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

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

     ``SEC. 203. SUBMISSION OF PROJECT PROPOSALS.

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

[[Page S8412]]

       ``(ii) Whether the project improved the use of, or added 
     value to, any products removed from land consistent with the 
     purposes of this title.
       ``(7) An assessment that the project is to be in the public 
     interest.
       ``(c) Authorized Projects.--Projects proposed under 
     subsection (a) shall be consistent with section 2.

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

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

     ``SEC. 205. RESOURCE ADVISORY COMMITTEES.

       ``(a) Establishment and Purpose of Resource Advisory 
     Committees.--
       ``(1) Establishment.--The Secretary concerned shall 
     establish and maintain resource advisory committees to 
     perform the duties in subsection (b), except as provided in 
     paragraph (4).
       ``(2) Purpose.--The purpose of a resource advisory 
     committee shall be--
       ``(A) to improve collaborative relationships; and
       ``(B) to provide advice and recommendations to the land 
     management agencies consistent with the purposes of this 
     title.
       ``(3) Access to resource advisory committees.--To ensure 
     that each unit of Federal land has access to a resource 
     advisory committee, and that there is sufficient interest in 
     participation on a committee to ensure that membership can be 
     balanced in terms of the points of view represented and the 
     functions to be performed, the Secretary concerned may, 
     establish resource advisory committees for part of, or 1 or 
     more, units of Federal land.
       ``(4) Existing advisory committees.--
       ``(A) In general.--An advisory committee that meets the 
     requirements of this section, a resource advisory committee 
     established before September 29, 2006, or an advisory 
     committee determined by the Secretary concerned before 
     September 29, 2006, to meet the requirements of this section 
     may be deemed by the Secretary concerned to be a resource 
     advisory committee for the purposes of this title.
       ``(B) Charter.--A charter for a committee described in 
     subparagraph (A) that was filed on or before September 29, 
     2006, shall be considered to be filed for purposes of this 
     Act.
       ``(C) Bureau of land management advisory committees.--The 
     Secretary of the Interior may deem a resource advisory 
     committee meeting the requirements of subpart 1784 of part 
     1780 of title 43, Code of Federal Regulations, as a resource 
     advisory committee for the purposes of this title.
       ``(b) Duties.--A resource advisory committee shall--
       ``(1) review projects proposed under this title by 
     participating counties and other persons;
       ``(2) propose projects and funding to the Secretary 
     concerned under section 203;
       ``(3) provide early and continuous coordination with 
     appropriate land management agency officials in recommending 
     projects consistent with purposes of this Act under this 
     title;
       ``(4) provide frequent opportunities for citizens, 
     organizations, tribes, land management agencies, and other 
     interested parties to participate openly and meaningfully, 
     beginning at the early stages of the project development 
     process under this title;
       ``(5)(A) monitor projects that have been approved under 
     section 204; and

[[Page S8413]]

       ``(B) advise the designated Federal official on the 
     progress of the monitoring efforts under subparagraph (A); 
     and
       ``(6) make recommendations to the Secretary concerned for 
     any appropriate changes or adjustments to the projects being 
     monitored by the resource advisory committee.
       ``(c) Appointment by the Secretary.--
       ``(1) Appointment and term.--
       ``(A) In general.--The Secretary concerned, shall appoint 
     the members of resource advisory committees for a term of 4 
     years beginning on the date of appointment.
       ``(B) Reappointment.--The Secretary concerned may reappoint 
     members to subsequent 4-year terms.
       ``(2) Basic requirements.--The Secretary concerned shall 
     ensure that each resource advisory committee established 
     meets the requirements of subsection (d).
       ``(3) Initial appointment.--Not later than 180 days after 
     the date of the enactment of this Act, the Secretary 
     concerned shall make initial appointments to the resource 
     advisory committees.
       ``(4) Vacancies.--The Secretary concerned shall make 
     appointments to fill vacancies on any resource advisory 
     committee as soon as practicable after the vacancy has 
     occurred.
       ``(5) Compensation.--Members of the resource advisory 
     committees shall not receive any compensation.
       ``(d) Composition of Advisory Committee.--
       ``(1) Number.--Each resource advisory committee shall be 
     comprised of 15 members.
       ``(2) Community interests represented.--Committee members 
     shall be representative of the interests of the following 3 
     categories:
       ``(A) 5 persons that--
       ``(i) represent organized labor or non-timber forest 
     product harvester groups;
       ``(ii) represent developed outdoor recreation, off highway 
     vehicle users, or commercial recreation activities;
       ``(iii) represent--

       ``(I) energy and mineral development interests; or
       ``(II) commercial or recreational fishing interests;

       ``(iv) represent the commercial timber industry; or
       ``(v) hold Federal grazing or other land use permits, or 
     represent nonindustrial private forest land owners, within 
     the area for which the committee is organized.
       ``(B) 5 persons that represent--
       ``(i) nationally recognized environmental organizations;
       ``(ii) regionally or locally recognized environmental 
     organizations;
       ``(iii) dispersed recreational activities;
       ``(iv) archaeological and historical interests; or
       ``(v) nationally or regionally recognized wild horse and 
     burro interest groups, wildlife or hunting organizations, or 
     watershed associations.
       ``(C) 5 persons that--
       ``(i) hold State elected office (or a designee);
       ``(ii) hold county or local elected office;
       ``(iii) represent American Indian tribes within or adjacent 
     to the area for which the committee is organized;
       ``(iv) are school officials or teachers; or
       ``(v) represent the affected public at large.
       ``(3) Balanced representation.--In appointing committee 
     members from the 3 categories in paragraph (2), the Secretary 
     concerned shall provide for balanced and broad representation 
     from within each category.
       ``(4) Geographic distribution.--The members of a resource 
     advisory committee shall reside within the State in which the 
     committee has jurisdiction and, to extent practicable, the 
     Secretary concerned shall ensure local representation in each 
     category in paragraph (2).
       ``(5) Chairperson.--A majority on each resource advisory 
     committee shall select the chairperson of the committee.
       ``(e) Approval Procedures.--
       ``(1) In general.--Subject to paragraph (3), each resource 
     advisory committee shall establish procedures for proposing 
     projects to the Secretary concerned under this title.
       ``(2) Quorum.--A quorum must be present to constitute an 
     official meeting of the committee.
       ``(3) Approval by majority of members.--A project may be 
     proposed by a resource advisory committee to the Secretary 
     concerned under section 203(a), if the project has been 
     approved by a majority of members of the committee from each 
     of the 3 categories in subsection (d)(2).
       ``(f) Other Committee Authorities and Requirements.--
       ``(1) Staff assistance.--A resource advisory committee may 
     submit to the Secretary concerned a request for periodic 
     staff assistance from Federal employees under the 
     jurisdiction of the Secretary.
       ``(2) Meetings.--All meetings of a resource advisory 
     committee shall be announced at least 1 week in advance in a 
     local newspaper of record and shall be open to the public.
       ``(3) Records.--A resource advisory committee shall 
     maintain records of the meetings of the committee and make 
     the records available for public inspection.

     ``SEC. 206. USE OF PROJECT FUNDS.

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

     ``SEC. 207. AVAILABILITY OF PROJECT FUNDS.

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

     ``SEC. 208. TERMINATION OF AUTHORITY.

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

                       ``TITLE III--COUNTY FUNDS

     ``SEC. 301. DEFINITIONS.

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

[[Page S8414]]

     county that elects under section 102(d) to expend a portion 
     of the Federal funds received under section 102 in accordance 
     with this title.

     ``SEC. 302. USE.

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

     ``SEC. 303. CERTIFICATION.

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

     ``SEC. 304. TERMINATION OF AUTHORITY.

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

                  ``TITLE IV--MISCELLANEOUS PROVISIONS

     ``SEC. 401. REGULATIONS.

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

     ``SEC. 402. AUTHORIZATION OF APPROPRIATIONS.

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

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

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

     ``Sec. 6906. Funding

       ``For each of fiscal years 2008 through 2012--
       ``(1) each county or other eligible unit of local 
     government shall be entitled to payment under this chapter; 
     and
       ``(2) sums shall be made available to the Secretary of the 
     Interior for obligation or expenditure in accordance with 
     this chapter.''.
       (2) Conforming amendment.--The table of sections for 
     chapter 69 of title 31, United States Code, is amended by 
     striking the item relating to section 6906 and inserting the 
     following:

``6906. Funding.''.

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

     SEC. 602. CLARIFICATION OF UNIFORM DEFINITION OF CHILD.

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