[Congressional Record (Bound Edition), Volume 151 (2005), Part 9]
[Senate]
[Pages 12761-12765]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. CORZINE (for himself, Mr. Kennedy, Mrs. Clinton, and Mr. 
        Reed):
  S. 1249. A bill to require the Secretary of Education to rebate the 
amount of Federal Pell Grant aid lost as a result of the update to the 
tables for State and other taxes used in the Federal student aid need 
analysis for award year 2005-2006; to the Committee on Health, 
Education, Labor, and Pensions.
  Mr. CORZINE. Mr. President, I join with Senator Kennedy and others 
today in introducing an urgent and critical piece of legislation, the 
Student Fairness Act.
  This bill would provide rebates to the many college students who will 
be receiving a dramatic reduction in their Federal financial aid come 
the return of classes this September. Due to an obscure change made in 
December of 2004 to a complicated and little-known formula used by the 
Department of Education to determine Pell Grant eligibility and 
allotment, many students will see a surprising increase in their 
expected family contribution, EFC, and a decrease in their Pell Grants. 
We must act now to prevent these decreases in aid from pricing our 
students out of college, forcing them to

[[Page 12762]]

postpone their education and put their career goals on hold.
  These changes to the tax tables, at the behest of the Administration, 
have the effect of cutting $300 million from the successful Pell grant 
program, upon which more than 5 million students nationwide rely. It is 
projected that, as a result of these cuts, 1.3 million students will 
see a reduction in their Pell grants and a projected 90,000 more will 
become ineligible entirely for Pell grant assistance. According to a 
survey performed by the New York Times, some students could lose up to 
$6,000 in financial aid and the average family will have to pay an 
extra $1,700 before clearing the eligibility bar.
  Although the situation is imminent, this is not the first time the 
Senate has acted to block such changes to the Pell Grant award formula. 
I successfully secured language in the FY04 Onmibus Appropriations bill 
that blocked the administration from carrying out a similar plan for 
the 2004-2005 school year. The same provision, however, was dropped 
during the conference deliberations of the FY05 Omnibus Appropriations 
bill. In response, I, along with 31 of my Senate colleagues, introduced 
S. 187, the Ensuring College Access for All Americans Act, which would 
have prevented the new calculations from reducing Pell Grants for the 
2005-2006 academic year. Alas, the Senate has not acted with enough 
haste, and by now many financial aid departments have already 
determined their student aid packages based on the new figures. 
Students are beginning to realize the harsh reality of rising college 
tuitions matched by a government unwilling to support its own future 
leaders. Our only remaining option is to provide these students with 
these rebates so that they will not lose their financial aid for the 
coming school year.
  This bill calls on the Secretary of Education to calculate the 
increase in a student's expected family contribution due to the tax 
table modifications and then provides each such student with a rebate 
equal to that increase. The legislation would hold harmless any student 
whose expected family contribution decreased or stayed the same as a 
result of the changes. Furthermore, the rebate would be treated in the 
same manner as other financial assistance for tax purposes and would 
not affect future Pell Grant eligibility.
  In addition, our bill has recently received the endorsement of the 
Campaign for America's Future, an organization that has been a great 
advocate for students and has been actively collecting stories from 
American students about the incredible impact of financial aid on their 
lives.
  I thank the National Association of Student Financial Aid 
Administrators for their help in crafting this bill and their support 
in helping students receive the financial aid they deserve.
  I urge my colleagues to pass the Student Fairness Act immediately to 
prevent any student from putting off college because their financial 
aid has suddenly and mysteriously disappeared.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1249

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Student Fairness Act''.

     SEC. 2. REBATE REQUIRED.

       (a) Calculation of Expected Family Contribution.--Beginning 
     60 days after the date of enactment of this Act, the 
     Secretary of Education (referred to in this Act as the 
     ``Secretary'') shall, for each student who submits a 
     completed Free Application for Federal Student Aid described 
     in section 483 of the Higher Education Act of 1965 (20 U.S.C. 
     1090) for the 2005-2006 award year, calculate--
       (1) the expected family contribution, as determined for 
     such student for such award year on the basis of the 
     allowance for State and other taxes as adjusted by the 
     updated tax tables published in the Federal Register on 
     Thursday, December 23, 2004 (69 Fed. Reg. 76926-76927); and
       (2) the expected family contribution that would apply to 
     such student if such calculation was based upon the allowance 
     for State and other taxes used for the 2004-2005 award year.
       (b) Rebate the Difference in the Pell Grant Award.--
       (1) In general.--For each student for whom the amount 
     determined under subsection (a)(1) exceeds the amount 
     determined under subsection (a)(2), the Secretary shall--
       (A) determine the amount (if any) by which--
       (i) the Federal Pell Grant aid under subpart 1 of part A of 
     title IV of the Higher Education Act of 1965 (20 U.S.C. 1070a 
     et seq.) that would have been provided to such student if 
     such calculation was based upon the allowance for State and 
     other taxes for the 2004-2005 award year, exceeds
       (ii) the Federal Pell Grant aid provided to such student 
     for award year 2005-2006, based upon the updated tax tables 
     described in subsection (a)(1); and
       (B) not later than 30 days after the date of the 
     determination under subparagraph (A), provide directly to 
     such student a rebate equal to the amount of such excess.
       (2) No reduction.--If the amount determined under 
     subsection (a)(1) for a student is equal to or less than the 
     amount determined under subsection (a)(2), the Secretary 
     shall not reduce the amount of the Federal Pell Grant under 
     subpart 1 of part A of title IV of the Higher Education Act 
     of 1965 (20 U.S.C. 1070a et seq.) available for such student 
     based on the updated tax tables described in subsection 
     (a)(1) for award year 2005-2006.
       (c) Treatment of Rebate.--Any rebate amount provided to a 
     student under this section shall not be--
       (1) treated as a resource or estimated financial aid for 
     determining an overaward;
       (2) adjusted based upon the student's attendance status 
     during the 2005-2006 payment period;
       (3) included as assistance provided to such student under 
     section 484B of the Higher Education Act of 1965 (20 U.S.C. 
     1091b);
       (4) considered as income received when completing any form 
     required by the Secretary under section 483 of the Higher 
     Education Act of 1965 (20 U.S.C. 1090); and
       (5) treated as other financial aid, assets, or income for 
     purposes of determining the need for financial assistance for 
     any award year subsequent to award year 2005-2006.
       (d) Authority to Use Contractors for Administration.--
       (1) In general.--Except as provided in paragraph (2), the 
     Secretary may provide by contract for the administration of 
     the requirements of this section.
       (2) Institutions not required to perform administrative 
     tasks.--Any institution that is eligible to participate in 
     programs under subpart 1 of part A of title IV of the Higher 
     Education Act of 1965 (20 U.S.C. 1070a et seq.) shall not be 
     required to perform any administrative requirement under this 
     Act.
       (e) Use of Fafsa Data Permitted.--The Secretary may use 
     information provided on the Free Application for Federal 
     Student Aid to comply with the requirements of this section.
       (f) Required Payments of Rebate.--The Secretary shall 
     transfer any unobligated funds available to the Secretary 
     under the Consolidated Appropriations Act, 2005 (Public Law 
     108-447) as may be necessary to carry out this Act.

  Mr. KENNEDY. Mr. President, today I join Senators Corzine, Clinton, 
and Reed to introduce legislation to ease the harsh effects of the 
implementation of changes in the State and local tax tables on college 
students receiving need-based financial aid.
  When a decision is made by any administration that affects what 
families pay for college, it is important for Congress to understand 
the factors that led to the decision and the impact of the decision on 
the Nation's families.
  In light of the slumping economy, State budget crises, and rising 
college costs, the Department's proposed changes come at a very 
difficult time for students and their families. Raising the cost of 
tuition by a few hundred dollars may force a student to leave school, 
and it is our responsibility to ensure that these changes are being 
made for sound reasons.
  The Department is authorized to make annual revisions in the State 
and local tax tables, but for years the lag in the data has made 
administrations reconsider making changes. We need to look for better 
ways to make sure that the data reflect the taxes that are currently 
being paid by families before we adjust the tables.
  I urge the Department of Education to work with Congress to decide if 
these data are indeed the best information that we have. We can use the 
opportunity of the reauthorization of the Higher Education Act this 
year to find a data source that provides timely, accurate information. 
Until we have done so, I urge my colleagues to support the Kennedy-
Corzine bill, so that thousands of students who are harmed by these 
changes can retain their grants

[[Page 12763]]

of aid and continue their college education.
                                 ______
                                 
      By Mr. REID (for Mr. Jeffords (for himself, Mrs. Murray, Mr. 
        Lautenberg, Mr. Lieberman, and Mr. Chafee)):
  S. 1250. A bill to reauthorize the Great Ape Conservation Act of 
2000; to the Committee on Environment and Public Works.
  (At the request of Mr. Reid, the following statement was ordered to 
be printed in the Record.)
 Mr. JEFFORDS. Mr. President, today I introduce the Great Ape 
Conservation Reauthorization Act of 2005. Over the past decade I have 
sponsored legislation to establish and reauthorize programs designated 
for the conservation of several multinational species including African 
elephants, Asian elephants, rhinoceros and tigers, and marine turtles.
  Throughout my years in Congress, endangered species conservation has 
been among my highest priorities, but the recent birth of my first 
grandson lends new strength to my commitment to preserve the natural 
world for future generations.
  The great apes--chimpanzees, gorillas, bonobos, orangutans, and 
gibbons--constitute a group of 14 primate species that share a high 
percentage of genetic characteristics with human beings. Among them, 
certain species have demonstrated the ability to learn human behaviors. 
Left unharmed, they may live for 30 to 50 years and form complex social 
relationships. As Dr. Jane Goodall said in a BBC News article in 2002, 
``All [great ape species] have minds that can solve simple problems and 
all have feelings. So it's a moral responsibility to save them from 
extinction.''
  The United Nations Environment Programme estimates that fewer than 
100,000 Western lowland gorillas currently remain worldwide. Only 
30,000 orangutans remain in Southeast Asia. According to the U.S. Fish 
and Wildlife Service, whereas more than one million chimpanzees 
populated the dense forests of Africa in 1960, fewer than 200,000 
survive in the wild today.
  In regions of Western and Central Africa and Southeast Asia, where 
populations of these captivating creatures still remain, the continued 
existence of great ape species will depend upon finding solutions to 
various complicated threats including habitat destruction, disease, and 
poaching.
  One problem of elevated concern for scientists is the alarming number 
of new outbreaks of the ebola virus in Africa. As we have become 
increasingly aware of the substantial risk to human life that ebola and 
similar viruses pose in parts of Central and Western Africa, few 
understand the serious impact that these diseases have on great ape 
populations. A study published in the journal Nature in 2003 reports 
that when an ebola outbreak affects a given area, more than 80 percent 
of all great apes living in that area will die of the disease.
  In August 2004, the International Primatological Society released 
preliminary evidence that suggests that as many as 20,000 Western 
lowland gorillas may be at risk as the result of a new outbreak of the 
ebola virus in the Republic of Congo.
  Developing vaccines and techniques to prevent the decimation of great 
ape populations as a result of ebola will require a coordinated effort 
among conservationists, wildlife biologists, and those responding to 
human outbreaks. Supported in part by the Great Ape Conservation Fund, 
the U.S. Fish and Wildlife Service recently convened a meeting of 
experts to begin the process of developing a research and intervention 
plan. This meeting typifies this kind of collaborative conservation 
effort that the Great Ape Conservation program was designed to 
undertake.
  The Great Ape Conservation Fund has also played an invaluable role in 
protecting habitat. One of the first such projects to receive support 
from the Fund, the Goualougo Triangle Chimp Project in the Republic of 
Congo, is a success story that stands out among what can often be 
disheartening news from the frontlines of chimpanzee conservation.
  In 1993, scientists first discovered a small population of 
chimpanzees in the Goualougo Triangle that had never been hunted and 
were therefore not afraid of humans. The presence of such chimps is 
extraordinary given that their habitat coincides with a region that is 
rife with logging and bushmeat hunting.
  With help from the Great Ape program, scientists from the Wildlife 
Conservation Society produced scientific evidence to document 272 
individual chimps and acquired rare video footage of their social 
interactions. As a result of this study, conservationists convinced the 
government of Congo to protect the Goualougo chimps and their habitat 
from the eminent threat of logging and hunting and to cede the 
Goualougo Triangle to a national park.
  Over the course of merely 5 years, the Great Ape Conservation Fund 
has provided financial assistance for 94 research and restoration 
projects in 22 countries and leveraged millions of dollars in 
additional matching and in-kind funds.
  My legislation reauthorizes the Great Ape Conservation Fund, which 
receives its annual appropriation through the Multinational Species 
Conservation Fund, for 5 years and gradually raises the funding 
authorization from $5 million for each year to $7 million for fiscal 
year 2008 and $10 million for fiscal years 2009 and 2010. The bill 
raises the top threshold cap on administrative expenses from $80,000 to 
$150,000, though I should note that over the past five years, Federal 
appropriations have yet to bring the cap on administrative expenses to 
the top threshold amount.
  Additional provisions of the bill will expand the variety of 
conservation projects eligible for assistance to include those that 
address the root causes of threats to great apes in range states, 
including the illegal bushmeat trade, diseases, lack of regional or 
local capacity for conservation and habitat loss due to natural 
disasters.
  The bill also amends an existing requirement in the law that requires 
that the U.S. Fish and Wildlife Service annually convene a panel of 
experts. My bill exempts expert panels under this law from the Federal 
Advisory Committee Act and provide the administrator with greater 
flexibility to determine when it is appropriate to convene an expert 
panel.
  I remain hopeful that despite the overwhelming challenges that 
jeopardize the continued survival of great apes, we can do our part to 
sustain efforts to halt their unnecessary extinction.
  Federal assistance for the conservation of rare, threatened and 
endangered international species through the use of species 
conservation funds has received bipartisan support from Congress for 
nearly 15 years. I ask you to please join me in maintaining this 
longstanding commitment to wildlife protection.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1250

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

     SECTION 1. GREAT APE CONSERVATION ASSISTANCE.

       Section 4 of the Great Ape Conservation Act of 2000 (16 
     U.S.C. 6303) is amended--
       (1) in subsection (d)--
       (A) in paragraph (4)(C), by striking ``or'' after the 
     semicolon at the end;
       (B) in paragraph (5), by striking the period at the end and 
     inserting ``; or''; and
       (C) by adding at the end the following:
       ``(6) address root causes of threats to great apes in range 
     states, including illegal bushmeat trade, diseases, lack of 
     regional or local capacity for conservation, and habitat loss 
     due to natural disasters.''; and
       (2) in subsection (i)--
       (A) by striking ``Every'' and inserting the following:
       ``(1) In general.--Every'';
       (B) in paragraph (1) (as designated by subparagraph (A)), 
     by striking ``shall'' and inserting ``may''; and
       (C) by adding at the end the following:
       ``(2) Applicability of faca.--The Federal Advisory 
     Committee Act (5 App. U.S.C.) shall not apply to a panel 
     convened under paragraph (1).''.

[[Page 12764]]



     SEC. 2. GREAT APE CONSERVATION FUND.

       Section 5(b)(2) of the Great Ape Conservation Act of 2000 
     (16 U.S.C. 6304(b)(2)) is amended--
       (1) by striking ``expand'' and inserting ``expend''; and
       (2) by striking ``$80,000'' and inserting ``$150,000''.

     SEC. 3. AUTHORIZATION OF APPROPRIATIONS.

       The Great Ape Conservation Act of 2000 is amended by 
     striking section 6 (16 U.S.C. 6305) and inserting the 
     following:

     ``SEC. 6. AUTHORIZATION OF APPROPRIATIONS.

       ``There are authorized to be appropriated to the Fund--
       ``(1) $5,000,000 for each of fiscal years 2006 and 2007;
       ``(2) $7,000,000 for fiscal year 2008; and
       ``(3) $10,000,000 for each of fiscal years 2009 and 
     2010.''.
                                 F_____
                                 
      By Mr. COLEMAN (for himself, Mr. Pryor, Mr. DeWine, Mr. Graham, 
        and Mr. Nelson of Florida):
  S. 1253. A bill to amend the Internal Revenue Code of 1986 to allow a 
credit to holders of qualified bonds issued to finance certain rural 
development projects, and for other purposes; to the Committee on 
Finance.
  Mr. COLEMAN. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1253

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

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This Act may be cited as the ``Rural 
     Renaissance Act II of 2005''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

     SEC. 2. CREDIT TO HOLDERS OF RURAL RENAISSANCE BONDS.

       (a) In General.--Part IV of subchapter A of chapter 1 
     (relating to credits against tax) is amended by adding at the 
     end the following new subpart:

``Subpart H--Nonrefundable Credit to Holders of Rural Renaissance Bonds

``Sec. 54. Credit to holders of rural renaissance bonds.

     ``SEC. 54. CREDIT TO HOLDERS OF RURAL RENAISSANCE BONDS.

       ``(a) Allowance of Credit.--In the case of a taxpayer who 
     holds a rural renaissance bond on a credit allowance date of 
     such bond, which occurs during the taxable year, there shall 
     be allowed as a credit against the tax imposed by this 
     chapter for such taxable year an amount equal to the sum of 
     the credits determined under subsection (b) with respect to 
     credit allowance dates during such year on which the taxpayer 
     holds such bond.
       ``(b) Amount of Credit.--
       ``(1) In general.--The amount of the credit determined 
     under this subsection with respect to any credit allowance 
     date for a rural renaissance bond is 25 percent of the annual 
     credit determined with respect to such bond.
       ``(2) Annual credit.--The annual credit determined with 
     respect to any rural renaissance bond is the product of--
       ``(A) the credit rate determined by the Secretary under 
     paragraph (3) for the day on which such bond was sold, 
     multiplied by
       ``(B) the outstanding face amount of the bond.
       ``(3) Determination.--For purposes of paragraph (2), with 
     respect to any rural renaissance bond, the Secretary shall 
     determine daily or caused to be determined daily a credit 
     rate which shall apply to the first day on which there is a 
     binding, written contract for the sale or exchange of the 
     bond. The credit rate for any day is the credit rate which 
     the Secretary or the Secretary's designee estimates will 
     permit the issuance of rural renaissance bonds with a 
     specified maturity or redemption date without discount and 
     without interest cost to the qualified issuer.
       ``(4) Credit allowance date.--For purposes of this section, 
     the term `credit allowance date' means--
       ``(A) March 15,
       ``(B) June 15,
       ``(C) September 15, and
       ``(D) December 15.

     Such term also includes the last day on which the bond is 
     outstanding.
       ``(5) Special rule for issuance and redemption.--In the 
     case of a bond which is issued during the 3-month period 
     ending on a credit allowance date, the amount of the credit 
     determined under this subsection with respect to such credit 
     allowance date shall be a ratable portion of the credit 
     otherwise determined based on the portion of the 3-month 
     period during which the bond is outstanding. A similar rule 
     shall apply when the bond is redeemed or matures.
       ``(c) Limitation Based on Amount of Tax.--
       ``(1) In general.--The credit allowed under subsection (a) 
     for any 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 part 
     (other than subpart C thereof, relating to refundable 
     credits).
       ``(2) Carryover of unused credit.--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 taxable year.
       ``(d) Rural Renaissance Bond.--For purposes of this 
     section--
       ``(1) In general.--The term `rural renaissance bond' means 
     any bond issued as part of an issue if--
       ``(A) the bond is issued by a qualified issuer,
       ``(B) 95 percent or more of the proceeds from the sale of 
     such issue are to be used for capital expenditures incurred 
     for 1 or more qualified projects,
       ``(C) the qualified issuer designates such bond for 
     purposes of this section and the bond is in registered form, 
     and
       ``(D) the issue meets the requirements of subsections (e) 
     and (g).
       ``(2) Qualified project; special use rules.--
       ``(A) In general.--The term `qualified project' means 1 or 
     more projects described in subparagraph (B) located in a 
     rural area.
       ``(B) Projects described.--A project described in this 
     subparagraph is--
       ``(i) a water or waste treatment project,
       ``(ii) an affordable housing project,
       ``(iii) a community facility project, including hospitals, 
     fire and police stations, and nursing and assisted-living 
     facilities,
       ``(iv) a value-added agriculture or renewable energy 
     facility project for agricultural producers or farmer-owned 
     entities, including any project to promote the production, 
     processing, or retail sale of ethanol (including fuel at 
     least 85 percent of the volume of which consists of ethanol), 
     biodiesel, animal waste, biomass, raw commodities, or wind as 
     a fuel,
       ``(v) a distance learning or telemedicine project,
       ``(vi) a rural utility infrastructure project, including 
     any electric or telephone system,
       ``(vii) a project to expand broadband technology,
       ``(viii) a rural teleworks project, and
       ``(ix) any project described in any preceding clause 
     carried out by the Delta Regional Authority.
       ``(C) Special rules.--For purposes of this paragraph--
       ``(i) any project described in subparagraph (B)(iv) for a 
     farmer-owned entity may be considered a qualified project if 
     such entity is located in a rural area, or in the case of a 
     farmer-owned entity the headquarters of which are located in 
     a nonrural area, if the project is located in a rural area, 
     and
       ``(ii) any project for a farmer-owned entity which is a 
     facility described in subparagraph (B)(iv) for agricultural 
     producers may be considered a qualified project regardless of 
     whether the facility is located in a rural or nonrural area.
       ``(3) Special use rules.--
       ``(A) Refinancing rules.--For purposes of paragraph (1)(B), 
     a qualified project may be refinanced with proceeds of a 
     rural renaissance bond only if the indebtedness being 
     refinanced (including any obligation directly or indirectly 
     refinanced by such indebtedness) was originally incurred 
     after the date of the enactment of this section.
       ``(B) Treatment of changes in use.--For purposes of 
     paragraph (1)(B), the proceeds of an issue shall not be 
     treated as used for a qualified project to the extent that a 
     borrower takes any action within its control which causes 
     such proceeds not to be used for a qualified project. The 
     Secretary shall prescribe regulations specifying remedial 
     actions that may be taken (including conditions to taking 
     such remedial actions) to prevent an action described in the 
     preceding sentence from causing a bond to fail to be a rural 
     renaissance bond.
       ``(e) Maturity Limitations.--
       ``(1) Duration of term.--A bond shall not be treated as a 
     rural renaissance bond if such bond is issued as part of an 
     issue and--
       ``(A) the average maturity of bonds issued as a part of 
     such issue, exceeds
       ``(B) 120 percent of the average reasonable expected 
     economic life of the facilities being financed with the 
     proceeds from the sale of such issue.
       ``(2) Determination of averages.--For purposes of paragraph 
     (1), the determination of averages of an issue and economic 
     life of any facility shall be determined in accordance with 
     section 147(b).
       ``(3) Ratable principal amortization required.--A bond 
     shall not be treated as a rural renaissance bond unless it is 
     part of an issue which provides for an equal amount of 
     principal to be paid by the qualified issuer during each 
     calendar year that the issue is outstanding.
       ``(f) Credit Included in Gross Income.--Gross income 
     includes the amount of the

[[Page 12765]]

     credit allowed to the taxpayer under this section (determined 
     without regard to subsection (c)) and the amount so included 
     shall be treated as interest income.
       ``(g) Special Rules Relating to Expenditures.--
       ``(1) In general.--An issue shall be treated as meeting the 
     requirements of this subsection if--
       ``(A) at least 95 percent of the proceeds from the sale of 
     the issue are to be spent for 1 or more qualified projects 
     within the 5-year period beginning on the date of issuance of 
     the rural renaissance bond,
       ``(B) a binding commitment with a third party to spend at 
     least 10 percent of the proceeds from the sale of the issue 
     will be incurred within the 6-month period beginning on the 
     date of issuance of the rural renaissance bond or, in the 
     case of a rural renaissance bond, the proceeds of which are 
     to be loaned to 2 or more borrowers, such binding commitment 
     will be incurred within the 6-month period beginning on the 
     date of the loan of such proceeds to a borrower, and
       ``(C) such projects will be completed with due diligence 
     and the proceeds from the sale of the issue will be spent 
     with due diligence.
       ``(2) Extension of period.--Upon submission of a request 
     prior to the expiration of the period described in paragraph 
     (1)(A), the Secretary may extend such period if the qualified 
     issuer establishes that the failure to satisfy the 5-year 
     requirement is due to reasonable cause and the related 
     projects will continue to proceed with due diligence.
       ``(3) Failure to spend required amount of bond proceeds 
     within 5 years.--To the extent that less than 95 percent of 
     the proceeds of such issue are expended within such 5-year 
     period (and no extension has been obtained under paragraph 
     (2)), the qualified issuer shall redeem all of the 
     nonqualified bonds on the earliest call date subsequent to 
     the expiration of the 5-year period. If such earliest call 
     date is more than 90 days subsequent to the expiration of the 
     5-year period, the qualified issuer shall establish a yield-
     restricted defeasance escrow within such 90 days to retire 
     such nonqualified bonds on the earlier of the date which is 
     10 years after the issue date or the first call date. For 
     purposes of this paragraph, the term `nonqualified bonds' 
     means the portion of the outstanding bonds in an amount that, 
     if the remaining bonds were issued on the fifth anniversary 
     of the date of the issuance of the issue, at least 95 percent 
     of the proceeds of the remaining bonds would be used to 
     provide qualified projects.
       ``(h) Special Rules Relating to Arbitrage.--
       ``(1) In general.--A bond which is part of an issue shall 
     not be treated as a rural renaissance bond unless, with 
     respect to the issue of which the bond is a part, the 
     qualified issuer satisfies the arbitrage rebate requirements 
     of section 148 with respect to gross proceeds of the issue 
     (other than any amounts applied in accordance with subsection 
     (g)). For purposes of such requirements, yield over the term 
     of an issue shall be determined under the principles of 
     section 148 based on the qualified issuer's payments of 
     principal, interest (if any), and fees for qualified 
     guarantees on such issue.
       ``(2) Exception.--Amounts on deposit in a bona fide debt 
     service fund with regard to any rural renaissance bond are 
     not subject to the arbitrage rebate requirements of section 
     148.
       ``(i) Qualified Issuer.--For purposes of this section--
       ``(1) In general.--The term `qualified issuer' means any 
     not-for-profit cooperative lender which has as of the date of 
     the enactment of this section received a guarantee under 
     section 306 of the Rural Electrification Act and which meets 
     the requirement of paragraph (2).
       ``(2) User fee requirement.--The requirement of this 
     paragraph is met if the issuer of any rural renaissance bond 
     makes grants for economic and community development projects 
     on a semi-annual basis every year that such bond is 
     outstanding in an annual amount equal to \1/2\ of the rate on 
     United States Treasury bills of the same maturity multiplied 
     by the outstanding principal balance of rural renaissance 
     bonds issued by such issuer.
       ``(j) Special Rules Relating to Pool Bonds.--No portion of 
     a pooled financing bond may be allocable to loan unless the 
     borrower has entered into a written loan commitment for such 
     portion prior to the issue date of such issue.
       ``(k) Other Definitions and Special Rules.--For purposes of 
     this section--
       ``(1) Bond.--The term `bond' includes any obligation.
       ``(2) Pooled financing bond.--The term `pooled financing 
     bond' shall have the meaning given such term by section 
     149(f)(4)(A).
       ``(3) Rural area.--The term `rural area' means any area 
     other than--
       ``(A) a city or town which has a population of greater than 
     50,000 inhabitants, or
       ``(B) the urbanized area contiguous and adjacent to such a 
     city or town.
       ``(4) Partnership; s corporation; and other pass-thru 
     entities.--Under regulations prescribed by the Secretary, in 
     the case of a partnership, trust, S corporation, or other 
     pass-thru entity, rules similar to the rules of section 41(g) 
     shall apply with respect to the credit allowable under 
     subsection (a).
       ``(5) Bonds held by regulated investment companies.--If any 
     rural renaissance bond is held by a regulated investment 
     company, the credit determined under subsection (a) shall be 
     allowed to shareholders of such company under procedures 
     prescribed by the Secretary.
       ``(6) Treatment for estimated tax purposes.--Solely for 
     purposes of sections 6654 and 6655, the credit allowed by 
     this section to a taxpayer by reason of holding a rural 
     renaissance bond on a credit allowance date shall be treated 
     as if it were a payment of estimated tax made by the taxpayer 
     on such date.
       ``(7) Reporting.--Issuers of rural renaissance bonds shall 
     submit reports similar to the reports required under section 
     149(e).
       (b) Reporting.--Subsection (d) of section 6049 (relating to 
     returns regarding payments of interest) is amended by adding 
     at the end the following new paragraph:
       ``(8) Reporting of credit on rural renaissance bonds.--
       ``(A) In general.--For purposes of subsection (a), the term 
     `interest' includes amounts includible in gross income under 
     section 54(f) and such amounts shall be treated as paid on 
     the credit allowance date (as defined in section 54(b)(4)).
       ``(B) Reporting to corporations, etc.--Except as otherwise 
     provided in regulations, in the case of any interest 
     described in subparagraph (A), subsection (b)(4) shall be 
     applied without regard to subparagraphs (A), (H), (I), (J), 
     (K), and (L)(i) of such subsection.
       ``(C) Regulatory authority.--The Secretary may prescribe 
     such regulations as are necessary or appropriate to carry out 
     the purposes of this paragraph, including regulations which 
     require more frequent or more detailed reporting.''.
       (c) Clerical Amendments.--
       (1) The table of subparts for part IV of subchapter A of 
     chapter 1 is amended by adding at the end the following new 
     item:

``Subpart H. Nonrefundable credit to holders of rural renaissance 
              bonds.''.

       (2) Section 6401(b)(1) is amended by striking ``and G'' and 
     inserting ``G, and H''.
       (d) Issuance of Regulations.--The Secretary of Treasury 
     shall issue regulations required under section 54 of the 
     Internal Revenue Code of 1986 (as added by this section) not 
     later than 120 days after the date of the enactment of this 
     Act.
       (e) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after the date of the enactment 
     of this Act.

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