[Congressional Record (Bound Edition), Volume 155 (2009), Part 3]
[House]
[Pages 3887-4104]
[From the U.S. Government Publishing Office, www.gpo.gov]




CONFERENCE REPORT ON H.R. 1, AMERICAN RECOVERY AND REINVESTMENT ACT OF 
                                  2009

  Mr. OBEY submitted the following conference report and statement on 
the bill (H.R. 1) making supplemental appropriations for job 
preservation and creation, infrastructure investment, energy efficiency 
and science, assistance to the unemployed, and State and local fiscal 
stabilization, for the fiscal year ending September 30, 2009, and for 
other purposes:

                  Conference Report (H. Rept. 111-16)

       The committee of conference on the disagreeing votes of the 
     two Houses on the amendment of the Senate to the bill (H.R. 
     1) ``making supplemental appropriations for job preservation 
     and creation, infrastructure investment, energy efficiency 
     and science, assistance to the unemployed, and State and 
     local fiscal stabilization, for the fiscal year ending 
     September 30, 2009, and for other purposes'', having met, 
     after full and free conference, have agreed to recommend and 
     do recommend to their respective Houses as follows:
       That the House recede from its disagreement to the 
     amendment of the Senate, and agree to the same with an 
     amendment, as follows:
       In lieu of the matter stricken and inserted by said 
     amendment, insert:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``American Recovery and 
     Reinvestment Act of 2009''.

     SEC. 2. TABLE OF CONTENTS.

       The table of contents for this Act is as follows:

                 DIVISION A--APPROPRIATIONS PROVISIONS

TITLE I--AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, 
              AND RELATED AGENCIES
TITLE II--COMMERCE, JUSTICE, SCIENCE, AND RELATED AGENCIES
TITLE III--DEPARTMENT OF DEFENSE
TITLE IV--ENERGY AND WATER DEVELOPMENT
TITLE V--FINANCIAL SERVICES AND GENERAL GOVERNMENT
TITLE VI--DEPARTMENT OF HOMELAND SECURITY
TITLE VII--INTERIOR, ENVIRONMENT, AND RELATED AGENCIES
TITLE VIII--DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND 
              EDUCATION, AND RELATED AGENCIES

[[Page 3888]]

TITLE IX--LEGISLATIVE BRANCH
TITLE X--MILITARY CONSTRUCTION AND VETERANS AFFAIRS AND RELATED 
              AGENCIES
TITLE XI--STATE, FOREIGN OPERATIONS, AND RELATED PROGRAMS
TITLE XII--TRANSPORTATION, HOUSING AND URBAN DEVELOPMENT, AND RELATED 
              AGENCIES
TITLE XIII--HEALTH INFORMATION TECHNOLOGY
TITLE XIV--STATE FISCAL STABILIZATION FUND
TITLE XV--ACCOUNTABILITY AND TRANSPARENCY
TITLE XVI--GENERAL PROVISIONS--THIS ACT

 DIVISION B--TAX, UNEMPLOYMENT, HEALTH, STATE FISCAL RELIEF, AND OTHER 
                               PROVISIONS

TITLE I--TAX PROVISIONS
TITLE II--ASSISTANCE FOR UNEMPLOYED WORKERS AND STRUGGLING FAMILIES
TITLE III--PREMIUM ASSISTANCE FOR COBRA BENEFITS
TITLE IV--MEDICARE AND MEDICAID HEALTH INFORMATION TECHNOLOGY; 
              MISCELLANEOUS MEDICARE PROVISIONS
TITLE V--STATE FISCAL RELIEF
TITLE VI--BROADBAND TECHNOLOGY OPPORTUNITIES PROGRAM
TITLE VII--LIMITS ON EXECUTIVE COMPENSATION

     SEC. 3. PURPOSES AND PRINCIPLES.

       (a) Statement of Purposes.--The purposes of this Act 
     include the following:
       (1) To preserve and create jobs and promote economic 
     recovery.
       (2) To assist those most impacted by the recession.
       (3) To provide investments needed to increase economic 
     efficiency by spurring technological advances in science and 
     health.
       (4) To invest in transportation, environmental protection, 
     and other infrastructure that will provide long-term economic 
     benefits.
       (5) To stabilize State and local government budgets, in 
     order to minimize and avoid reductions in essential services 
     and counterproductive state and local tax increases.
       (b) General Principles Concerning Use of Funds.--The 
     President and the heads of Federal departments and agencies 
     shall manage and expend the funds made available in this Act 
     so as to achieve the purposes specified in subsection (a), 
     including commencing expenditures and activities as quickly 
     as possible consistent with prudent management.

     SEC. 4. REFERENCES.

        Except as expressly provided otherwise, any reference to 
     ``this Act'' contained in any division of this Act shall be 
     treated as referring only to the provisions of that division.

     SEC. 5. EMERGENCY DESIGNATIONS.

       (a) In General.--Each amount in this Act is designated as 
     an emergency requirement and necessary to meet emergency 
     needs pursuant to section 204(a) of S. Con. Res. 21 (110th 
     Congress) and section 301(b)(2) of S. Con. Res. 70 (110th 
     Congress), the concurrent resolutions on the budget for 
     fiscal years 2008 and 2009.
       (b) Pay-as-You-Go.--All applicable provisions in this Act 
     are designated as an emergency for purposes of pay-as-you-go 
     principles.

                 DIVISION A--APPROPRIATIONS PROVISIONS

       That the following sums are appropriated, out of any money 
     in the Treasury not otherwise appropriated, for the fiscal 
     year ending September 30, 2009, and for other purposes, 
     namely:

TITLE I--AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, 
                          AND RELATED AGENCIES

                       DEPARTMENT OF AGRICULTURE

        Agriculture Buildings and Facilities and Rental Payments

       For an additional amount for ``Agriculture Buildings and 
     Facilities and Rental Payments'', $24,000,000, for necessary 
     construction, repair, and improvement activities.

                      office of inspector general

       For an additional amount for ``Office of Inspector 
     General'', $22,500,000, to remain available until September 
     30, 2013, for oversight and audit of programs, grants, and 
     activities funded by this Act and administered by the 
     Department of Agriculture.

                     Agricultural Research Service

                        buildings and facilities

       For an additional amount for ``Buildings and Facilities'', 
     $176,000,000, for work on deferred maintenance at 
     Agricultural Research Service facilities: Provided, That 
     priority in the use of such funds shall be given to critical 
     deferred maintenance, to projects that can be completed, and 
     to activities that can commence promptly following enactment 
     of this Act.

                          Farm Service Agency

                         salaries and expenses

       For an additional amount for ``Farm Service Agency, 
     Salaries and Expenses,'' $50,000,000, for the purpose of 
     maintaining and modernizing the information technology 
     system.

                 Natural Resources Conservation Service

               watershed and flood prevention operations

        For an additional amount for ``Watershed and Flood 
     Prevention Operations'', $290,000,000, of which $145,000,000 
     is for necessary expenses to purchase and restore floodplain 
     easements as authorized by section 403 of the Agricultural 
     Credit Act of 1978 (16 U.S.C. 2203) (except that no more than 
     $30,000,000 of the amount provided for the purchase of 
     floodplain easements may be obligated for projects in any one 
     State): Provided, That such funds shall be allocated to 
     projects that can be fully funded and completed with the 
     funds appropriated in this Act, and to activities that can 
     commence promptly following enactment of this Act.

                    watershed rehabilitation program

       For an additional amount for ``Watershed Rehabilitation 
     Program'', $50,000,000: Provided, That such funds shall be 
     allocated to projects that can be fully funded and completed 
     with the funds appropriated in this Act, and to activities 
     that can commence promptly following enactment of this Act.

                         Rural Housing Service

              rural housing insurance fund program account

       For an additional amount for gross obligations for the 
     principal amount of direct and guaranteed loans as authorized 
     by title V of the Housing Act of 1949, to be available from 
     funds in the rural housing insurance fund, as follows: 
     $1,000,000,000 for section 502 direct loans; and 
     $10,472,000,000 for section 502 unsubsidized guaranteed 
     loans.
       For an additional amount for the cost of direct and 
     guaranteed loans, including the cost of modifying loans, as 
     defined in section 502 of the Congressional Budget Act of 
     1974, as follows: $67,000,000 for section 502 direct loans; 
     and $133,000,000 for section 502 unsubsidized guaranteed 
     loans.

               rural community facilities program account

       For an additional amount for the cost of direct loans and 
     grants for rural community facilities programs as authorized 
     by section 306 and described in section 381E(d)(1) of the 
     Consolidated Farm and Rural Development Act, $130,000,000.

                  Rural Business--Cooperative Service

                     rural business program account

       For an additional amount for the cost of guaranteed loans 
     and grants as authorized by sections 310B(a)(2)(A) and 
     310B(c) of the Consolidated Farm and Rural Development Act (7 
     U.S.C. 1932), $150,000,000.

                        Rural Utilities Service

             rural water and waste disposal program account

       For an additional amount for the cost of direct loans and 
     grants for the rural water, waste water, and waste disposal 
     programs authorized by sections 306 and 310B and described in 
     section 381E(d)(2) of the Consolidated Farm and Rural 
     Development Act, $1,380,000,000.

         distance learning, telemedicine, and broadband program

       For an additional amount for the cost of broadband loans 
     and loan guarantees, as authorized by the Rural 
     Electrification Act of 1936 (7 U.S.C. 901 et seq.) and for 
     grants (including for technical assistance), $2,500,000,000: 
     Provided, That the cost of direct and guaranteed loans shall 
     be as defined in section 502 of the Congressional Budget Act 
     of 1974: Provided further, That, notwithstanding title VI of 
     the Rural Electrification Act of 1936, this amount is 
     available for grants, loans and loan guarantees for broadband 
     infrastructure in any area of the United States: Provided 
     further, That at least 75 percent of the area to be served by 
     a project receiving funds from such grants, loans or loan 
     guarantees shall be in a rural area without sufficient access 
     to high speed broadband service to facilitate rural economic 
     development, as determined by the Secretary of Agriculture: 
     Provided further, That priority for awarding such funds shall 
     be given to project applications for broadband systems that 
     will deliver end users a choice of more than one service 
     provider: Provided further, That priority for awarding funds 
     made available under this paragraph shall be given to 
     projects that provide service to the highest proportion of 
     rural residents that do not have access to broadband service: 
     Provided further, That priority shall be given for project 
     applications from borrowers or former borrowers under title 
     II of the Rural Electrification Act of 1936 and for project 
     applications that include such borrowers or former borrowers: 
     Provided further, That priority for awarding such funds shall 
     be given to project applications that demonstrate that, if 
     the application is approved, all project elements will be 
     fully funded: Provided further, That priority for awarding 
     such funds shall be given to project applications for 
     activities that can be completed if the requested funds are 
     provided: Provided further, That priority for awarding such 
     funds shall be given to activities that can commence promptly 
     following approval: Provided further, That no area of a 
     project funded with amounts made available under this 
     paragraph may receive funding to provide broadband service 
     under the Broadband Technology Opportunities Program: 
     Provided further, That the Secretary shall submit a report on 
     planned spending and actual obligations describing the use of 
     these funds not later than 90 days after the date of 
     enactment of this Act, and quarterly thereafter until all 
     funds are obligated, to the Committees on Appropriations of 
     the House of Representatives and the Senate.

          food and nutrition service child nutrition programs

       For an additional amount for the Richard B. Russell 
     National School Lunch Act (42 U.S.C. 1751 et seq.), except 
     section 21, and the Child

[[Page 3889]]

     Nutrition Act of 1966 (42 U.S.C. 1771 et. seq.), except 
     sections 17 and 21, $100,000,000, to carry out a grant 
     program for National School Lunch Program equipment 
     assistance: Provided, That such funds shall be provided to 
     States administering a school lunch program in a manner 
     proportional with each State's administrative expense 
     allocation: Provided further, That the States shall provide 
     competitive grants to school food authorities based upon the 
     need for equipment assistance in participating schools with 
     priority given to schools in which not less than 50 percent 
     of the students are eligible for free or reduced price meals 
     under the Richard B. Russell National School Lunch Act.

special supplemental nutrition program for women, infants, and children 
                                 (wic)

       For an additional amount for the special supplemental 
     nutrition program as authorized by section 17 of the Child 
     Nutrition Act of 1966 (42 U.S.C. 1786), $500,000,000, of 
     which $400,000,000 shall be placed in reserve to be allocated 
     as the Secretary deems necessary, notwithstanding section 
     17(i) of such Act, to support participation should cost or 
     participation exceed budget estimates, and of which 
     $100,000,000 shall be for the purposes specified in section 
     17(h)(10)(B)(ii): Provided, That up to one percent of the 
     funding provided for the purposes specified in section 
     17(h)(10)(B)(ii) may be reserved by the Secretary for Federal 
     administrative activities in support of those purposes.

                      commodity assistance program

       For an additional amount for the emergency food assistance 
     program as authorized by section 27(a) of the Food and 
     Nutrition Act of 2008 (7 U.S.C. 2036(a)) and section 
     204(a)(1) of the Emergency Food Assistance Act of 1983 (7 
     U.S.C. 7508(a)(1)), $150,000,000: Provided, That of the funds 
     made available, the Secretary may use up to $50,000,000 for 
     costs associated with the distribution of commodities, of 
     which up to $25,000,000 shall be made available in fiscal 
     year 2009.

                     GENERAL PROVISIONS--THIS TITLE

       Sec. 101. Temporary Increase in Benefits Under the 
     Supplemental Nutrition Assistance Program. (a) Maximum 
     Benefit Increase.--
       (1) In general.--Beginning the first month that begins not 
     less than 25 days after the date of enactment of this Act, 
     the value of benefits determined under section 8(a) of the 
     Food and Nutrition Act of 2008 and consolidated block grants 
     for Puerto Rico and American Samoa determined under section 
     19(a) of such Act shall be calculated using 113.6 percent of 
     the June 2008 value of the thrifty food plan as specified 
     under section 3(o) of such Act.
       (2) Termination.--
       (A) The authority provided by this subsection shall 
     terminate after September 30, 2009.
       (B) Notwithstanding subparagraph (A), the Secretary of 
     Agriculture may not reduce the value of the maximum 
     allotments, minimum allotments or consolidated block grants 
     for Puerto Rico and American Samoa below the level in effect 
     for fiscal year 2009 as a result of paragraph (1).
       (b) Requirements for the Secretary.--In carrying out this 
     section, the Secretary shall--
       (1) consider the benefit increases described in subsection 
     (a) to be a ``mass change'';
       (2) require a simple process for States to notify 
     households of the increase in benefits;
       (3) consider section 16(c)(3)(A) of the Food and Nutrition 
     Act of 2008 (7 U.S.C. 2025(c)(3)(A)) to apply to any errors 
     in the implementation of this section, without regard to the 
     120-day limit described in that section;
       (4) disregard the additional amount of benefits that a 
     household receives as a result of this section in determining 
     the amount of overissuances under section 13 of the Food and 
     Nutrition Act of 2008 (7 U.S.C. 2022); and
       (5) set the tolerance level for excluding small errors for 
     the purposes of section 16(c) of the Food and Nutrition Act 
     of 2008 (7 U.S.C. 2025(c)) at $50 through September 30, 2009.
       (c) Administrative Expenses.--
       (1) In general.--For the costs of State administrative 
     expenses associated with carrying out this section and 
     administering the supplemental nutrition assistance program 
     established under the Food and Nutrition Act of 2008 (7 
     U.S.C. 2011 et seq.), the Secretary shall make available 
     $145,000,000 in fiscal year 2009 and $150,000,000 in fiscal 
     year 2010, of which $4,500,000 is for necessary expenses of 
     the Food and Nutrition Service for management and oversight 
     of the program and for monitoring the integrity and 
     evaluating the effects of the payments made under this 
     section.
       (2) Timing for fiscal year 2009.--Not later than 60 days 
     after the date of enactment of this Act, the Secretary shall 
     make available to States amounts for fiscal year 2009 under 
     paragraph (1).
       (3) Allocation of funds.--Except as provided for management 
     and oversight, funds described in paragraph (1) shall be made 
     available as grants to State agencies for each fiscal year as 
     follows:
       (A) 75 percent of the amounts available for each fiscal 
     year shall be allocated to States based on the share of each 
     State of households that participate in the supplemental 
     nutrition assistance program as reported to the Department of 
     Agriculture for the most recent 12-month period for which 
     data are available, adjusted by the Secretary (as of the date 
     of enactment) for participation in disaster programs under 
     section 5(h) of the Food and Nutrition Act of 2008 (7 U.S.C. 
     2014(h)); and
       (B) 25 percent of the amounts available for each fiscal 
     year shall be allocated to States based on the increase in 
     the number of households that participate in the supplemental 
     nutrition assistance program as reported to the Department of 
     Agriculture over the most recent 12-month period for which 
     data are available, adjusted by the Secretary (as of the date 
     of enactment) for participation in disaster programs under 
     section 5(h) of the Food and Nutrition Act of 2008 (7 U.S.C. 
     2014(h)).
       (d) Food Distribution Program on Indian Reservations.--For 
     the costs relating to facility improvements and equipment 
     upgrades associated with the Food Distribution Program on 
     Indian Reservations, as established under section 4(b) of the 
     Food and Nutrition Act of 2008 (7 U.S.C. 2013(b)), the 
     Secretary shall make available $5,000,000: Provided, That 
     administrative cost-sharing requirements are not applicable 
     to funds provided in accordance with this provision.
       (e) Treatment of Jobless Workers.--
       (1) Remainder of fiscal year 2009 through fiscal year 
     2010.--Beginning with the first month that begins not less 
     than 25 days after the date of enactment of this Act and for 
     each subsequent month through September 30, 2010, eligibility 
     for supplemental nutrition assistance program benefits shall 
     not be limited under section 6(o)(2) of the Food and 
     Nutrition Act of 2008 unless an individual does not comply 
     with the requirements of a program offered by the State 
     agency that meets the standards of subparagraphs (B) or (C) 
     of that paragraph.
       (2) Fiscal year 2011 and thereafter.--Beginning on October 
     1, 2010, for the purposes of section 6(o) of the Food and 
     Nutrition Act of 2008 (7 U.S.C. 2015(o)), a State agency 
     shall disregard any period during which an individual 
     received benefits under the supplemental nutrition assistance 
     program prior to October 1, 2010.
       (f)  Funding.--There are appropriated to the Secretary out 
     of funds of the Treasury not otherwise appropriated such sums 
     as are necessary to carry out this section.
       Sec. 102. Agricultural Disaster Assistance Transition. (a) 
     Federal Crop Insurance Act. Section 531(g) of the Federal 
     Crop Insurance Act (7 U.S.C. 1531(g)) is amended by adding at 
     the end the following:
       ``(7) 2008 transition assistance.--
       ``(A) In general.--Eligible producers on a farm described 
     in subparagraph (A) of paragraph (4) that failed to timely 
     pay the appropriate fee described in that subparagraph shall 
     be eligible for assistance under this section in accordance 
     with subparagraph (B) if the eligible producers on the farm--
       ``(i) pay the appropriate fee described in paragraph (4)(A) 
     not later than 90 days after the date of enactment of this 
     paragraph; and
       ``(ii)(I) in the case of each insurable commodity of the 
     eligible producers on the farm, excluding grazing land, agree 
     to obtain a policy or plan of insurance under subtitle A 
     (excluding a crop insurance pilot program under that 
     subtitle) for the next insurance year for which crop 
     insurance is available to the eligible producers on the farm 
     at a level of coverage equal to 70 percent or more of the 
     recorded or appraised average yield indemnified at 100 
     percent of the expected market price, or an equivalent 
     coverage; and
       ``(II) in the case of each noninsurable commodity of the 
     eligible producers on the farm, agree to file the required 
     paperwork, and pay the administrative fee by the applicable 
     State filing deadline, for the noninsured crop assistance 
     program for the next year for which a policy is available.
       ``(B) Amount of assistance.--Eligible producers on a farm 
     that meet the requirements of subparagraph (A) shall be 
     eligible to receive assistance under this section as if the 
     eligible producers on the farm--
       ``(i) in the case of each insurable commodity of the 
     eligible producers on the farm, had obtained a policy or plan 
     of insurance for the 2008 crop year at a level of coverage 
     not to exceed 70 percent or more of the recorded or appraised 
     average yield indemnified at 100 percent of the expected 
     market price, or an equivalent coverage; and
       ``(ii) in the case of each noninsurable commodity of the 
     eligible producers on the farm, had filed the required 
     paperwork, and paid the administrative fee by the applicable 
     State filing deadline, for the noninsured crop assistance 
     program for the 2008 crop year, except that in determining 
     the level of coverage, the Secretary shall use 70 percent of 
     the applicable yield.
       ``(C) Equitable relief.--Except as provided in subparagraph 
     (D), eligible producers on a farm that met the requirements 
     of paragraph (1) before the deadline described in paragraph 
     (4)(A) and are eligible to receive, a disaster assistance 
     payment under this section for a production loss during the 
     2008 crop year shall be eligible to receive an amount equal 
     to the greater of--
       ``(i) the amount that would have been calculated under 
     subparagraph (B) if the eligible producers on the farm had 
     paid the appropriate fee under that subparagraph; or
       ``(ii) the amount that would have been calculated under 
     subparagraph (A) of subsection (b)(3) if--

       ``(I) in clause (i) of that subparagraph, `120 percent' is 
     substituted for `115 percent'; and
       ``(II) in clause (ii) of that subparagraph, `125' is 
     substituted for `120 percent'.

       ``(D) Limitation.--For amounts made available under this 
     paragraph, the Secretary may make such adjustments as are 
     necessary to ensure that no producer receives a payment under 
     this paragraph for an amount in excess of the assistance 
     received by a similarly situated producer that had purchased 
     the same or higher

[[Page 3890]]

     level of crop insurance prior to the date of enactment of 
     this paragraph.
       ``(E) Authority of the secretary.--The Secretary may 
     provide such additional assistance as the Secretary considers 
     appropriate to provide equitable treatment for eligible 
     producers on a farm that suffered production losses in the 
     2008 crop year that result in multiyear production losses, as 
     determined by the Secretary.
       ``(F) Lack of access.--Notwithstanding any other provision 
     of this section, the Secretary may provide assistance under 
     this section to eligible producers on a farm that--
       ``(i) suffered a production loss due to a natural cause 
     during the 2008 crop year; and
       ``(ii) as determined by the Secretary--

       ``(I)(aa) except as provided in item (bb), lack access to a 
     policy or plan of insurance under subtitle A; or

       ``(bb) do not qualify for a written agreement because 1 or 
     more farming practices, which the Secretary has determined 
     are good farming practices, of the eligible producers on the 
     farm differ significantly from the farming practices used by 
     producers of the same crop in other regions of the United 
     States; and
       ``(II) are not eligible for the noninsured crop disaster 
     assistance program established by section 196 of the Federal 
     Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 
     7333).''.

       (b) Trade Act of 1974.--Section 901(g) of the Trade Act of 
     1974 (19 U.S.C. 2497(g)) is amended by adding at the end the 
     following:
       ``(7) 2008 transition assistance.--
       ``(A) In general.--Eligible producers on a farm described 
     in subparagraph (A) of paragraph (4) that failed to timely 
     pay the appropriate fee described in that subparagraph shall 
     be eligible for assistance under this section in accordance 
     with subparagraph (B) if the eligible producers on the farm--
       ``(i) pay the appropriate fee described in paragraph (4)(A) 
     not later than 90 days after the date of enactment of this 
     paragraph; and
       ``(ii)(I) in the case of each insurable commodity of the 
     eligible producers on the farm, excluding grazing land, agree 
     to obtain a policy or plan of insurance under the Federal 
     Crop Insurance Act (7 U.S.C. 1501 et seq.) (excluding a crop 
     insurance pilot program under that Act) for the next 
     insurance year for which crop insurance is available to the 
     eligible producers on the farm at a level of coverage equal 
     to 70 percent or more of the recorded or appraised average 
     yield indemnified at 100 percent of the expected market 
     price, or an equivalent coverage; and
       ``(II) in the case of each noninsurable commodity of the 
     eligible producers on the farm, agree to file the required 
     paperwork, and pay the administrative fee by the applicable 
     State filing deadline, for the noninsured crop assistance 
     program for the next year for which a policy is available.
       ``(B) Amount of assistance.--Eligible producers on a farm 
     that meet the requirements of subparagraph (A) shall be 
     eligible to receive assistance under this section as if the 
     eligible producers on the farm--
       ``(i) in the case of each insurable commodity of the 
     eligible producers on the farm, had obtained a policy or plan 
     of insurance for the 2008 crop year at a level of coverage 
     not to exceed 70 percent or more of the recorded or appraised 
     average yield indemnified at 100 percent of the expected 
     market price, or an equivalent coverage; and
       ``(ii) in the case of each noninsurable commodity of the 
     eligible producers on the farm, had filed the required 
     paperwork, and paid the administrative fee by the applicable 
     State filing deadline, for the noninsured crop assistance 
     program for the 2008 crop year, except that in determining 
     the level of coverage, the Secretary shall use 70 percent of 
     the applicable yield.
       ``(C) Equitable relief.--Except as provided in subparagraph 
     (D), eligible producers on a farm that met the requirements 
     of paragraph (1) before the deadline described in paragraph 
     (4)(A) and are eligible to receive, a disaster assistance 
     payment under this section for a production loss during the 
     2008 crop year shall be eligible to receive an amount equal 
     to the greater of--
       ``(i) the amount that would have been calculated under 
     subparagraph (B) if the eligible producers on the farm had 
     paid the appropriate fee under that subparagraph; or
       ``(ii) the amount that would have been calculated under 
     subparagraph (A) of subsection (b)(3) if--

       ``(I) in clause (i) of that subparagraph, `120 percent' is 
     substituted for `115 percent'; and
       ``(II) in clause (ii) of that subparagraph, `125' is 
     substituted for `120 percent'.

       ``(D) Limitation.--For amounts made available under this 
     paragraph, the Secretary may make such adjustments as are 
     necessary to ensure that no producer receives a payment under 
     this paragraph for an amount in excess of the assistance 
     received by a similarly situated producer that had purchased 
     the same or higher level of crop insurance prior to the date 
     of enactment of this paragraph.
       ``(E) Authority of the secretary.--The Secretary may 
     provide such additional assistance as the Secretary considers 
     appropriate to provide equitable treatment for eligible 
     producers on a farm that suffered production losses in the 
     2008 crop year that result in multiyear production losses, as 
     determined by the Secretary.
       ``(F) Lack of access.--Notwithstanding any other provision 
     of this section, the Secretary may provide assistance under 
     this section to eligible producers on a farm that--
       ``(i) suffered a production loss due to a natural cause 
     during the 2008 crop year; and
       ``(ii) as determined by the Secretary--

       ``(I)(aa) except as provided in item (bb), lack access to a 
     policy or plan of insurance under subtitle A; or
       ``(bb) do not qualify for a written agreement because 1 or 
     more farming practices, which the Secretary has determined 
     are good farming practices, of the eligible producers on the 
     farm differ significantly from the farming practices used by 
     producers of the same crop in other regions of the United 
     States; and
       ``(II) are not eligible for the noninsured crop disaster 
     assistance program established by section 196 of the Federal 
     Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 
     7333).''.

       (c) Farm Operating Loans.--
       (1) In general.--For the principal amount of direct farm 
     operating loans under section 311 of the Consolidated Farm 
     and Rural Development Act (7 U.S.C. 1941), $173,367,000.
       (2) Direct farm operating loans.--For the cost of direct 
     farm operating loans, including the cost of modifying loans, 
     as defined in section 502 of the Congressional Budget Act of 
     1974 (2 U.S.C. 661a), $20,440,000.
       (d) 2008 Aquaculture Assistance.--
       (1) Definitions.--In this subsection:
       (A) Eligible aquaculture producer.--The term ``eligible 
     aquaculture producer'' means an aquaculture producer that 
     during the 2008 calendar year, as determined by the 
     Secretary--
       (i) produced an aquaculture species for which feed costs 
     represented a substantial percentage of the input costs of 
     the aquaculture operation; and
       (ii) experienced a substantial price increase of feed costs 
     above the previous 5-year average.
       (B) Secretary.--The term ``Secretary'' means the Secretary 
     of Agriculture.
       (2) Grant program.--
       (A) In general.--Of the funds of the Commodity Credit 
     Corporation, the Secretary shall use not more than 
     $50,000,000, to remain available until September 30, 2010, to 
     carry out a program of grants to States to assist eligible 
     aquaculture producers for losses associated with high feed 
     input costs during the 2008 calendar year.
       (B) Notification.--Not later than 60 days after the date of 
     enactment of this Act, the Secretary shall notify the State 
     department of agriculture (or similar entity) in each State 
     of the availability of funds to assist eligible aquaculture 
     producers, including such terms as determined by the 
     Secretary to be necessary for the equitable treatment of 
     eligible aquaculture producers.
       (C) Provision of grants.--
       (i) In general.--The Secretary shall make grants to States 
     under this subsection on a pro rata basis based on the amount 
     of aquaculture feed used in each State during the 2007 
     calendar year, as determined by the Secretary.
       (ii) Timing.--Not later than 120 days after the date of 
     enactment of this Act, the Secretary shall make grants to 
     States to provide assistance under this subsection.
       (D) Requirements.--The Secretary shall make grants under 
     this subsection only to States that demonstrate to the 
     satisfaction of the Secretary that the State will--
       (i) use grant funds to assist eligible aquaculture 
     producers;
       (ii) provide assistance to eligible aquaculture producers 
     not later than 60 days after the date on which the State 
     receives grant funds; and
       (iii) not later than 30 days after the date on which the 
     State provides assistance to eligible aquaculture producers, 
     submit to the Secretary a report that describes--

       (I) the manner in which the State provided assistance;
       (II) the amounts of assistance provided per species of 
     aquaculture; and
       (III) the process by which the State determined the levels 
     of assistance to eligible aquaculture producers.

       (3) Reduction in payments.--An eligible aquaculture 
     producer that receives assistance under this subsection shall 
     not be eligible to receive any other assistance under the 
     supplemental agricultural disaster assistance program 
     established under section 531 of the Federal Crop Insurance 
     Act (7 U.S.C. 1531) and section 901 of the Trade Act of 1974 
     (19 U.S.C. 2497) for any losses in 2008 relating to the same 
     species of aquaculture.
       (4) Report to congress.--Not later than 180 days after the 
     date of enactment of this Act, the Secretary shall submit to 
     the appropriate committees of Congress a report that--
       (A) describes in detail the manner in which this subsection 
     has been carried out; and
       (B) includes the information reported to the Secretary 
     under paragraph (2)(D)(iii).
       Sec. 103. For fiscal years 2009 and 2010, in the case of 
     each program established or amended by the Food, 
     Conservation, and Energy Act of 2008 (Public Law 110-246), 
     other than by title I of such Act, that is authorized or 
     required to be carried out using funds of the Commodity 
     Credit Corporation--
       (1) such funds shall be available for the purpose of 
     covering salaries and related administrative expenses, 
     including technical assistance, associated with the 
     implementation of the program, without regard to the 
     limitation on the total amount of allotments and fund 
     transfers contained in section 11 of the Commodity Credit 
     Corporation Charter Act (15 U.S.C. 714i); and
       (2) the use of such funds for such purpose shall not be 
     considered to be a fund transfer or allotment for purposes of 
     applying the limitation on the total amount of allotments and 
     fund transfers contained in such section.
       Sec. 104. In addition to other available funds, of the 
     funds made available to the Rural Development mission area in 
     this title, not more than

[[Page 3891]]

     3 percent of the funds can be used for administrative costs 
     to carry out loan, loan guarantee and grant activities funded 
     in this title, which shall be transferred to and merged with 
     the appropriation for ``Rural Development, Salaries and 
     Expenses'': Provided, That of this amount $1,750,000 shall be 
     committed to agency projects associated with maintaining the 
     compliance, safety, and soundness of the portfolio of loans 
     guaranteed through the section 502 guaranteed loan program.
       Sec. 105. Of the amounts appropriated in this title to the 
     ``Rural Housing Service, Rural Community Facilities Program 
     Account'', the ``Rural Business-Cooperative Service, Rural 
     Business Program Account'', and the "Rural Utilities Service, 
     Rural Water and Waste Disposal Program Account'', at least 10 
     percent shall be allocated for assistance in persistent 
     poverty counties: Provided, That for the purposes of this 
     section, the term ``persistent poverty counties'' means any 
     county that has had 20 percent or more of its population 
     living in poverty over the past 30 years, as measured by the 
     1980, 1990, and 2000 decennial censuses.

       TITLE II--COMMERCE, JUSTICE, SCIENCE, AND RELATED AGENCIES

                         DEPARTMENT OF COMMERCE

                  Economic Development Administration

                economic development assistance programs

       For an additional amount for ``Economic Development 
     Assistance Programs'', $150,000,000: Provided, That 
     $50,000,000 shall be for economic adjustment assistance as 
     authorized by section 209 of the Public Works and Economic 
     Development Act of 1965, as amended (42 U.S.C. 3149): 
     Provided further, That in allocating the funds provided in 
     the previous proviso, the Secretary of Commerce shall give 
     priority consideration to areas of the Nation that have 
     experienced sudden and severe economic dislocation and job 
     loss due to corporate restructuring: Provided further, That 
     not to exceed 2 percent of the funds provided under this 
     heading may be transferred to and merged with the 
     appropriation for ``Salaries and Expenses'' for purposes of 
     program administration and oversight: Provided further, That 
     up to $50,000,000 of the funds provided under this heading 
     may be transferred to federally authorized regional economic 
     development commissions.

                          Bureau of the Census

                     periodic censuses and programs

       For an additional amount for ``Periodic Censuses and 
     Programs'', $1,000,000,000.

       National Telecommunications and Information Administration

               broadband technology opportunities program

       For an amount for ``Broadband Technology Opportunities 
     Program'', $4,700,000,000: Provided, That of the funds 
     provided under this heading, not less than $4,350,000,000 
     shall be expended pursuant to division B of this Act, of 
     which: not less than $200,000,000 shall be available for 
     competitive grants for expanding public computer center 
     capacity, including at community colleges and public 
     libraries; not less than $250,000,000 shall be available for 
     competitive grants for innovative programs to encourage 
     sustainable adoption of broadband service; and $10,000,000 
     shall be transferred to ``Department of Commerce, Office of 
     Inspector General'' for the purposes of audits and oversight 
     of funds provided under this heading and such funds shall 
     remain available until expended: Provided further, That of 
     the funds provided under this heading, up to $350,000,000 may 
     be expended pursuant to Public Law 110-385 (47 U.S.C. 1301 
     note) and for the purposes of developing and maintaining a 
     broadband inventory map pursuant to division B of this Act: 
     Provided further, That of the funds provided under this 
     heading, amounts deemed necessary and appropriate by the 
     Secretary of Commerce, in consultation with the Federal 
     Communications Commission (FCC), may be transferred to the 
     FCC for the purposes of developing a national broadband plan 
     or for carrying out any other FCC responsibilities pursuant 
     to division B of this Act, and only if the Committees on 
     Appropriations of the House and the Senate are notified not 
     less than 15 days in advance of the transfer of such funds: 
     Provided further, That not more than 3 percent of funds 
     provided under this heading may be used for administrative 
     costs, and this limitation shall apply to funds which may be 
     transferred to the FCC.

                digital-to-analog converter box program

       For an amount for ``Digital-to-Analog Converter Box 
     Program'', $650,000,000, for additional coupons and related 
     activities under the program implemented under section 3005 
     of the Digital Television Transition and Public Safety Act of 
     2005: Provided, That of the amounts provided under this 
     heading, $90,000,000 may be for education and outreach, 
     including grants to organizations for programs to educate 
     vulnerable populations, including senior citizens, minority 
     communities, people with disabilities, low-income 
     individuals, and people living in rural areas, about the 
     transition and to provide one-on-one assistance to vulnerable 
     populations, including help with converter box installation: 
     Provided further, That the amounts provided in the previous 
     proviso may be transferred to the Federal Communications 
     Commission (FCC) if deemed necessary and appropriate by the 
     Secretary of Commerce in consultation with the FCC, and only 
     if the Committees on Appropriations of the House and the 
     Senate are notified not less than 5 days in advance of 
     transfer of such funds.

             National Institute of Standards and Technology

             scientific and technical research and services

        For an additional amount for ``Scientific and Technical 
     Research and Services'', $220,000,000.

                  construction of research facilities

       For an additional amount for ``Construction of Research 
     Facilities'', $360,000,000, of which $180,000,000 shall be 
     for a competitive construction grant program for research 
     science buildings.

            National Oceanic and Atmospheric Administration

                  operations, research, and facilities

       For an additional amount for ``Operations, Research, and 
     Facilities'', $230,000,000.

               procurement, acquisition and construction

       For an additional amount for ``Procurement, Acquisition and 
     Construction'', $600,000,000.

                      Office of Inspector General

       For an additional amount for ``Office of Inspector 
     General'', $6,000,000, to remain available until September 
     30, 2013.

                         DEPARTMENT OF JUSTICE

                         General Administration

                      office of inspector general

       For an additional amount for ``Office of Inspector 
     General'', $2,000,000, to remain available until September 
     30, 2013.

               State and Local Law Enforcement Activities

                    Office on Violence Against Women

       violence against women prevention and prosecution programs

       For an additional amount for ``Violence Against Women 
     Prevention and Prosecution Programs'', $225,000,000 for 
     grants to combat violence against women, as authorized by 
     part T of the Omnibus Crime Control and Safe Streets Act of 
     1968 (42 U.S.C. 3796gg et seq.): Provided, That, $50,000,000 
     shall be for transitional housing assistance grants for 
     victims of domestic violence, stalking or sexual assault as 
     authorized by section 40299 of the Violent Crime Control and 
     Law Enforcement Act of 1994 (Public Law 103-322).

                       Office of Justice Programs

               state and local law enforcement assistance

       For an additional amount for ``State and Local Law 
     Enforcement Assistance'', $2,000,000,000, for the Edward 
     Byrne Memorial Justice Assistance Grant program as authorized 
     by subpart 1 of part E of title I of the Omnibus Crime 
     Control and Safe Streets Act of 1968 (``1968 Act''), (except 
     that section 1001(c), and the special rules for Puerto Rico 
     under section 505(g), of the 1968 Act, shall not apply for 
     purposes of this Act).
       For an additional amount for ``State and Local Law 
     Enforcement Assistance'', $225,000,000, for competitive 
     grants to improve the functioning of the criminal justice 
     system, to assist victims of crime (other than compensation), 
     and youth mentoring grants.
       For an additional amount for ``State and Local Law 
     Enforcement Assistance'', $40,000,000, for competitive grants 
     to provide assistance and equipment to local law enforcement 
     along the Southern border and in High-Intensity Drug 
     Trafficking Areas to combat criminal narcotics activity 
     stemming from the Southern border, of which $10,000,000 shall 
     be transferred to ``Bureau of Alcohol, Tobacco, Firearms and 
     Explosives, Salaries and Expenses'' for the ATF Project 
     Gunrunner.
       For an additional amount for ``State and Local Law 
     Enforcement Assistance'', $225,000,000, for assistance to 
     Indian tribes, notwithstanding Public Law 108-199, division 
     B, title I, section 112(a)(1) (118 Stat. 62), which shall be 
     available for grants under section 20109 of subtitle A of 
     title II of the Violent Crime Control and Law Enforcement Act 
     of 1994 (Public Law 103-322).
       For an additional amount for ``State and Local Law 
     Enforcement Assistance'', $100,000,000, to be distributed by 
     the Office for Victims of Crime in accordance with section 
     1402(d)(4) of the Victims of Crime Act of 1984 (Public Law 
     98-473).
       For an additional amount for ``State and Local Law 
     Enforcement Assistance'', $125,000,000, for assistance to law 
     enforcement in rural States and rural areas, to prevent and 
     combat crime, especially drug-related crime.
       For an additional amount for ``State and Local Law 
     Enforcement Assistance'', $50,000,000, for Internet Crimes 
     Against Children (ICAC) initiatives.

                  Community Oriented Policing Services

       For an additional amount for ``Community Oriented Policing 
     Services'', for grants under section 1701 of title I of the 
     1968 Omnibus Crime Control and Safe Streets Act (42 U.S.C. 
     3796dd) for hiring and rehiring of additional career law 
     enforcement officers under part Q of such title, 
     notwithstanding subsection (i) of such section, 
     $1,000,000,000.

                         Salaries and Expenses

       For an additional amount, not elsewhere specified in this 
     title, for management and administration and oversight of 
     programs within the Office on Violence Against Women, the 
     Office of Justice Programs, and the Community Oriented 
     Policing Services Office, $10,000,000.

[[Page 3892]]



                                SCIENCE

             National Aeronautics and Space Administration

                                science

       For an additional amount for ``Science'', $400,000,000.

                              aeronautics

        For an additional amount for ``Aeronautics'', 
     $150,000,000.

                              exploration

       For an additional amount for ``Exploration'', $400,000,000.

                          cross agency support

       For an additional amount for ``Cross Agency Support'', 
     $50,000,000.

                      office of inspector general

       For an additional amount for ``Office of Inspector 
     General'', $2,000,000, to remain available until September 
     30, 2013.

                      National Science Foundation

                    research and related activities

        For an additional amount for ``Research and Related 
     Activities'', $2,500,000,000: Provided, That $300,000,000 
     shall be available solely for the Major Research 
     Instrumentation program and $200,000,000 shall be for 
     activities authorized by title II of Public Law 100-570 for 
     academic research facilities modernization.

                     education and human resources

        For an additional amount for ``Education and Human 
     Resources'', $100,000,000.

          major research equipment and facilities construction

       For an additional amount for ``Major Research Equipment and 
     Facilities Construction'', $400,000,000.

                      office of inspector general

       For an additional amount for ``Office of Inspector 
     General'', $2,000,000, to remain available until September 
     30, 2013.

                     GENERAL PROVISION--THIS TITLE

       Sec. 201. Sections 1701(g) and 1704(c) of the Omnibus Crime 
     Control and Safe Streets Act of 1968 (42 U.S.C. 3796dd(g) and 
     3796dd-3(c)) shall not apply with respect to funds 
     appropriated in this or any other Act making appropriations 
     for fiscal year 2009 or 2010 for Community Oriented Policing 
     Services authorized under part Q of such Act of 1968.

                    TITLE III--DEPARTMENT OF DEFENSE

                       OPERATION AND MAINTENANCE

                    Operation and Maintenance, Army

       For an additional amount for ``Operation and Maintenance, 
     Army'', $1,474,525,000, to remain available for obligation 
     until September 30, 2010, to improve, repair and modernize 
     Department of Defense facilities, restore and modernize real 
     property to include barracks, and invest in the energy 
     efficiency of Department of Defense facilities.

                    Operation and Maintenance, Navy

       For an additional amount for ``Operation and Maintenance, 
     Navy'', $657,051,000, to remain available for obligation 
     until September 30, 2010, to improve, repair and modernize 
     Department of Defense facilities, restore and modernize real 
     property to include barracks, and invest in the energy 
     efficiency of Department of Defense facilities.

                Operation and Maintenance, Marine Corps

       For an additional amount for ``Operation and Maintenance, 
     Marine Corps'', $113,865,000, to remain available for 
     obligation until September 30, 2010, to improve, repair and 
     modernize Department of Defense facilities, restore and 
     modernize real property to include barracks, and invest in 
     the energy efficiency of Department of Defense facilities.

                  Operation and Maintenance, Air Force

       For an additional amount for ``Operation and Maintenance, 
     Air Force'', $1,095,959,000, to remain available for 
     obligation until September 30, 2010, to improve, repair and 
     modernize Department of Defense facilities, restore and 
     modernize real property to include barracks, and invest in 
     the energy efficiency of Department of Defense facilities.

                Operation and Maintenance, Army Reserve

       For an additional amount for ``Operation and Maintenance, 
     Army Reserve'', $98,269,000, to remain available for 
     obligation until September 30, 2010, to improve, repair and 
     modernize Department of Defense facilities, restore and 
     modernize real property to include barracks, and invest in 
     the energy efficiency of Department of Defense facilities.

                Operation and Maintenance, Navy Reserve

       For an additional amount for ``Operation and Maintenance, 
     Navy Reserve'', $55,083,000, to remain available for 
     obligation until September 30, 2010, to improve, repair and 
     modernize Department of Defense facilities, restore and 
     modernize real property to include barracks, and invest in 
     the energy efficiency of Department of Defense facilities.

            Operation and Maintenance, Marine Corps Reserve

       For an additional amount for ``Operation and Maintenance, 
     Marine Corps Reserve'', $39,909,000, to remain available for 
     obligation until September 30, 2010, to improve, repair and 
     modernize Department of Defense facilities, restore and 
     modernize real property to include barracks, and invest in 
     the energy efficiency of Department of Defense facilities.

              Operation and Maintenance, Air Force Reserve

       For an additional amount for ``Operation and Maintenance, 
     Air Force Reserve'', $13,187,000, to remain available for 
     obligation until September 30, 2010, to improve, repair and 
     modernize Department of Defense facilities, restore and 
     modernize real property to include barracks, and invest in 
     the energy efficiency of Department of Defense facilities.

             Operation and Maintenance, Army National Guard

       For an additional amount for ``Operation and Maintenance, 
     Army National Guard'', $266,304,000, to remain available for 
     obligation until September 30, 2010, to improve, repair and 
     modernize Department of Defense facilities, restore and 
     modernize real property to include barracks, and invest in 
     the energy efficiency of Department of Defense facilities.

             Operation and Maintenance, Air National Guard

       For an additional amount for ``Operation and Maintenance, 
     Air National Guard'', $25,848,000, to remain available for 
     obligation until September 30, 2010, to improve, repair and 
     modernize Department of Defense facilities, restore and 
     modernize real property to include barracks, and invest in 
     the energy efficiency of Department of Defense facilities.

               RESEARCH, DEVELOPMENT, TEST AND EVALUATION

            Research, Development, Test and Evaluation, Army

       For an additional amount for ``Research, Development, Test 
     and Evaluation, Army'', $75,000,000, to remain available for 
     obligation until September 30, 2010.

            Research, Development, Test and Evaluation, Navy

       For an additional amount for ``Research, Development, Test 
     and Evaluation, Navy'', $75,000,000, to remain available for 
     obligation until September 30, 2010.

         Research, Development, Test and Evaluation, Air Force

       For an additional amount for ``Research, Development, Test 
     and Evaluation, Air Force'', $75,000,000, to remain available 
     for obligation until September 30, 2010.

        Research, Development, Test and Evaluation, Defense-Wide

       For an additional amount for ``Research, Development, Test 
     and Evaluation, Defense-Wide'', $75,000,000, to remain 
     available for obligation until September 30, 2010.

                  OTHER DEPARTMENT OF DEFENSE PROGRAMS

                         Defense Health Program

       For an additional amount for ``Defense Health Program'', 
     $400,000,000 for operation and maintenance, to remain 
     available for obligation until September 30, 2010, to 
     improve, repair and modernize military medical facilities, 
     and invest in the energy efficiency of military medical 
     facilities.

                    Office of the Inspector General

       For an additional amount for ``Office of the Inspector 
     General'', $15,000,000 for operation and maintenance, to 
     remain available for obligation until September 30, 2011.

                 TITLE IV--ENERGY AND WATER DEVELOPMENT

                      DEPARTMENT OF DEFENSE--CIVIL

                         Department of the Army

                       Corps of Engineers--Civil

                             investigations

       For an additional amount for ``Investigations'', 
     $25,000,000: Provided, That funds provided under this heading 
     in this title shall only be used for programs, projects or 
     activities that heretofore or hereafter receive funds 
     provided in Acts making appropriations available for Energy 
     and Water Development: Provided further, That funds provided 
     under this heading in this title shall be used for programs, 
     projects or activities or elements of programs, projects or 
     activities that can be completed within the funds made 
     available in that account and that will not require new 
     budget authority to complete: Provided further, That for 
     projects that are being completed with funds appropriated in 
     this Act that would otherwise be expired for obligation, 
     expired funds appropriated in this Act may be used to pay the 
     cost of associated supervision, inspection, overhead, 
     engineering and design on those projects and on subsequent 
     claims, if any: Provided further, That the Secretary of the 
     Army shall submit a quarterly report to the Committees on 
     Appropriations of the House of Representatives and the Senate 
     detailing the allocation, obligation and expenditures of 
     these funds, beginning not later than 45 days after enactment 
     of this Act: Provided further, That the Secretary shall have 
     unlimited reprogramming authority for these funds provided 
     under this heading.

                              construction

       For an additional amount for ``Construction'', 
     $2,000,000,000: Provided, That not less than $200,000,000 of 
     the funds provided shall be for water-related environmental 
     infrastructure assistance: Provided further, That section 102 
     of Public Law 109-103 (33 U.S.C. 2221) shall not apply to 
     funds provided in this title: Provided further, That 
     notwithstanding any other provision of law, funds provided in 
     this paragraph shall not be cost shared with the Inland 
     Waterways Trust Fund as authorized in Public Law 99-662: 
     Provided further, That funds provided under this heading in 
     this title shall only be used for programs, projects or 
     activities that heretofore or hereafter receive funds 
     provided in Acts making appropriations available for Energy 
     and Water Development: Provided further,

[[Page 3893]]

     That funds provided under this heading in this title shall be 
     used for programs, projects or activities or elements of 
     programs, projects or activities that can be completed within 
     the funds made available in that account and that will not 
     require new budget authority to complete: Provided further, 
     That the limitation concerning total project costs in section 
     902 of the Water Resources Development Act of 1986, as 
     amended (33 U.S.C. 2280), shall not apply during fiscal year 
     2009 to any project that received funds provided in this 
     title: Provided further, That funds appropriated under this 
     heading may be used by the Secretary of the Army, acting 
     through the Chief of Engineers, to undertake work authorized 
     to be carried out in accordance with section 14 of the Flood 
     Control Act of 1946 (33 U.S.C. 701r); section 205 of the 
     Flood Control Act of 1948 (33 U.S.C. 701s); section 206 of 
     the Water Resources Development Act of 1996 (33 U.S.C. 2330); 
     or section 1135 of the Water Resources Development Act of 
     1986 (33 U.S.C. 2309a), notwithstanding the program cost 
     limitations set forth in those sections: Provided further, 
     That for projects that are being completed with funds 
     appropriated in this Act that would otherwise be expired for 
     obligation, expired funds appropriated in this Act may be 
     used to pay the cost of associated supervision, inspection, 
     overhead, engineering and design on those projects and on 
     subsequent claims, if any: Provided further, That the 
     Secretary of the Army shall submit a quarterly report to the 
     Committees on Appropriations of the House of Representatives 
     and the Senate detailing the allocation, obligation and 
     expenditures of these funds, beginning not later than 45 days 
     after enactment of this Act: Provided further, That the 
     Secretary shall have unlimited reprogramming authority for 
     these funds provided under this heading.

                   mississippi river and tributaries

       For an additional amount for ``Mississippi River and 
     Tributaries'', $375,000,000: Provided, That funds provided 
     under this heading in this title shall only be used for 
     programs, projects or activities that heretofore or hereafter 
     receive funds provided in Acts making appropriations 
     available for Energy and Water Development: Provided further, 
     That funds provided under this heading in this title shall be 
     used for programs, projects or activities or elements of 
     programs, projects or activities that can be completed within 
     the funds made available in that account and that will not 
     require new budget authority to complete: Provided further, 
     That the limitation concerning total project costs in section 
     902 of the Water Resources Development Act of 1986, as 
     amended (33 U.S.C. 2280), shall not apply during fiscal year 
     2009 to any project that received funds provided in this 
     title: Provided further, That for projects that are being 
     completed with funds appropriated in this Act that would 
     otherwise be expired for obligation, expired funds 
     appropriated in this Act may be used to pay the cost of 
     associated supervision, inspection, overhead engineering, and 
     design on those projects and on subsequent claims, if any: 
     Provided further, That the Secretary of the Army shall submit 
     a quarterly report to the Committees on Appropriations of the 
     House of Representatives and the Senate detailing the 
     allocation, obligation and expenditures of these funds, 
     beginning not later than 45 days after enactment of this Act: 
     Provided further, That the Secretary shall have unlimited 
     reprogramming authority for these funds provided under this 
     heading.

                       operation and maintenance

       For an additional amount for ``Operation and Maintenance'', 
     $2,075,000,000: Provided, That funds provided under this 
     heading in this title shall only be used for programs, 
     projects or activities that heretofore or hereafter receive 
     funds provided in Acts making appropriations available for 
     Energy and Water Development: Provided further, That funds 
     provided under this heading in this title shall be used for 
     programs, projects or activities or elements of programs, 
     projects or activities that can be completed within the funds 
     made available in that account and that will not require new 
     budget authority to complete: Provided further, That section 
     9006 of Public Law 110-114 shall not apply to funds provided 
     in this title: Provided further, That for projects that are 
     being completed with funds appropriated in this Act that 
     would otherwise be expired for obligation, expired funds 
     appropriated in this Act may be used to pay the cost of 
     associated supervision, inspection, overhead, engineering and 
     design on those projects and on subsequent claims, if any: 
     Provided further, That the Secretary of the Army shall submit 
     a quarterly report to the Committees on Appropriations of the 
     House of Representatives and the Senate detailing the 
     allocation, obligation and expenditures of these funds, 
     beginning not later than 45 days after enactment of this Act: 
     Provided further, That the Secretary shall have unlimited 
     reprogramming authority for these funds provided under this 
     heading.

                           regulatory program

       For an additional amount for ``Regulatory Program'', 
     $25,000,000.

            formerly utilized sites remedial action program

       For an additional amount for ``Formerly Utilized Sites 
     Remedial Action Program'', $100,000,000: Provided, That funds 
     provided under this heading in this title shall be used for 
     programs, projects or activities or elements of programs, 
     projects or activities that can be completed within the funds 
     made available in that account and that will not require new 
     budget authority to complete: Provided further, That for 
     projects that are being completed with funds appropriated in 
     this Act that would otherwise be expired for obligation, 
     expired funds appropriated in this Act may be used to pay the 
     cost of associated supervision, inspection, overhead, 
     engineering and design on those projects and on subsequent 
     claims, if any: Provided further, That the Secretary of the 
     Army shall submit a quarterly report to the Committees on 
     Appropriations of the House of Representatives and the Senate 
     detailing the allocation, obligation and expenditures of 
     these funds, beginning not later than 45 days after enactment 
     of this Act: Provided further, That the Secretary shall have 
     unlimited reprogramming authority for these funds provided 
     under this heading.

                       DEPARTMENT OF THE INTERIOR

                         Bureau of Reclamation

                      water and related resources

       For an additional amount for ``Water and Related 
     Resources'', $1,000,000,000: Provided, That of the amount 
     appropriated under this heading, not less than $126,000,000 
     shall be used for water reclamation and reuse projects 
     authorized under title XVI of Public Law 102-575: Provided 
     further, That funds provided in this Act shall be used for 
     elements of projects, programs or activities that can be 
     completed within these funding amounts and not create 
     budgetary obligations in future fiscal years: Provided 
     further, That $50,000,000 of the funds provided under this 
     heading may be transferred to the Department of the Interior 
     for programs, projects and activities authorized by the 
     Central Utah Project Completion Act (titles II-V of Public 
     Law 102-575): Provided further, That $50,000,000 of the funds 
     provided under this heading may be used for programs, 
     projects, and activities authorized by the California Bay-
     Delta Restoration Act (Public Law 108-361): Provided further, 
     That not less than $60,000,000 of the funds provided under 
     this heading shall be used for rural water projects and shall 
     be expended primarily on water intake and treatment 
     facilities of such projects: Provided further, That not less 
     than $10,000,000 of the funds provided under this heading 
     shall be used for a bureau-wide inspection of canals program 
     in urbanized areas: Provided further, That the costs of 
     extraordinary maintenance and replacement activities carried 
     out with funds provided in this Act shall be repaid pursuant 
     to existing authority, except the length of repayment period 
     shall be as determined by the Commissioner, but in no case 
     shall the repayment period exceed 50 years and the repayment 
     shall include interest, at a rate determined by the Secretary 
     of the Treasury as of the beginning of the fiscal year in 
     which the work is commenced, on the basis of average market 
     yields on outstanding marketable obligations of the United 
     States with the remaining periods of maturity comparable to 
     the applicable reimbursement period of the project adjusted 
     to the nearest one-eighth of 1 percent on the unamortized 
     balance of any portion of the loan: Provided further, That 
     for projects that are being completed with funds appropriated 
     in this Act that would otherwise be expired for obligation, 
     expired funds appropriated in this Act may be used to pay the 
     cost of associated supervision, inspection, overhead, 
     engineering and design on those projects and on subsequent 
     claims, if any: Provided further, That the Secretary of the 
     Interior shall submit a quarterly report to the Committees on 
     Appropriations of the House of Representatives and the Senate 
     detailing the allocation, obligation and expenditures of 
     these funds, beginning not later than 45 days after enactment 
     of this Act: Provided further, That the Secretary shall have 
     unlimited reprogramming authority for these funds provided 
     under this heading.

                          DEPARTMENT OF ENERGY

                            ENERGY PROGRAMS

                 Energy Efficiency and Renewable Energy

       For an additional amount for ``Energy Efficiency and 
     Renewable Energy'', $16,800,000,000: Provided, That 
     $3,200,000,000 shall be available for Energy Efficiency and 
     Conservation Block Grants for implementation of programs 
     authorized under subtitle E of title V of the Energy 
     Independence and Security Act of 2007 (42 U.S.C. 17151 et 
     seq.), of which $2,800,000,000 is available through the 
     formula in subtitle E: Provided further, That the Secretary 
     may use the most recent and accurate population data 
     available to satisfy the requirements of section 543(b) of 
     the Energy Independence and Security Act of 2007: Provided 
     further, That the remaining $400,000,000 shall be awarded on 
     a competitive basis: Provided further, That $5,000,000,000 
     shall be for the Weatherization Assistance Program under part 
     A of title IV of the Energy Conservation and Production Act 
     (42 U.S.C. 6861 et seq.): Provided further, That 
     $3,100,000,000 shall be for the State Energy Program 
     authorized under part D of title III of the Energy Policy and 
     Conservation Act (42 U.S.C. 6321): Provided further, That 
     $2,000,000,000 shall be available for grants for the 
     manufacturing of advanced batteries and components and the 
     Secretary shall provide facility funding awards under this 
     section to manufacturers of advanced battery systems and 
     vehicle batteries that are produced in the United States, 
     including advanced lithium ion batteries, hybrid electrical 
     systems, component manufacturers, and software designers: 
     Provided further, That notwithstanding section 3304 of title 
     5, United States Code, and without regard to the provisions 
     of sections 3309 through 3318 of such title 5, the Secretary 
     of Energy, upon a determination that there is a severe 
     shortage of candidates or a critical hiring need for 
     particular

[[Page 3894]]

     positions, may from within the funds provided, recruit and 
     directly appoint highly qualified individuals into the 
     competitive service: Provided further, That such authority 
     shall not apply to positions in the Excepted Service or the 
     Senior Executive Service: Provided further, That any action 
     authorized herein shall be consistent with the merit 
     principles of section 2301 of such title 5, and the 
     Department shall comply with the public notice requirements 
     of section 3327 of such title 5.

              Electricity Delivery and Energy Reliability

       For an additional amount for ``Electricity Delivery and 
     Energy Reliability,'' $4,500,000,000: Provided, That funds 
     shall be available for expenses necessary for electricity 
     delivery and energy reliability activities to modernize the 
     electric grid, to include demand responsive equipment, 
     enhance security and reliability of the energy 
     infrastructure, energy storage research, development, 
     demonstration and deployment, and facilitate recovery from 
     disruptions to the energy supply, and for implementation of 
     programs authorized under title XIII of the Energy 
     Independence and Security Act of 2007 (42 U.S.C. 17381 et 
     seq.): Provided further, That $100,000,000 shall be available 
     for worker training activities: Provided further, That 
     notwithstanding section 3304 of title 5, United States Code, 
     and without regard to the provisions of sections 3309 through 
     3318 of such title 5, the Secretary of Energy, upon a 
     determination that there is a severe shortage of candidates 
     or a critical hiring need for particular positions, may from 
     within the funds provided, recruit and directly appoint 
     highly qualified individuals into the competitive service: 
     Provided further, That such authority shall not apply to 
     positions in the Excepted Service or the Senior Executive 
     Service: Provided further, That any action authorized herein 
     shall be consistent with the merit principles of section 2301 
     of such title 5, and the Department shall comply with the 
     public notice requirements of section 3327 of such title 5: 
     Provided further, That for the purpose of facilitating the 
     development of regional transmission plans, the Office of 
     Electricity Delivery and Energy Reliability within the 
     Department of Energy is provided $80,000,000 within the 
     available funds to conduct a resource assessment and an 
     analysis of future demand and transmission requirements after 
     consultation with the Federal Energy Regulatory Commission: 
     Provided further, That the Office of Electricity Delivery and 
     Energy Reliability in coordination with the Federal Energy 
     Regulatory Commission will provide technical assistance to 
     the North American Electric Reliability Corporation, the 
     regional reliability entities, the States, and other 
     transmission owners and operators for the formation of 
     interconnection-based transmission plans for the Eastern and 
     Western Interconnections and ERCOT: Provided further, That 
     such assistance may include modeling, support to regions and 
     States for the development of coordinated State electricity 
     policies, programs, laws, and regulations: Provided further, 
     That $10,000,000 is provided to implement section 1305 of 
     Public Law 110-140: Provided further, That the Secretary of 
     Energy may use or transfer amounts provided under this 
     heading to carry out new authority for transmission 
     improvements, if such authority is enacted in any subsequent 
     Act, consistent with existing fiscal management practices and 
     procedures.

                 Fossil Energy Research and Development

       For an additional amount for ``Fossil Energy Research and 
     Development'', $3,400,000,000.

                   Non-Defense Environmental Cleanup

       For an additional amount for ``Non-Defense Environmental 
     Cleanup'', $483,000,000.

      Uranium Enrichment Decontamination and Decommissioning Fund

       For an additional amount for ``Uranium Enrichment 
     Decontamination and Decommissioning Fund'', $390,000,000, of 
     which $70,000,000 shall be available in accordance with title 
     X, subtitle A of the Energy Policy Act of 1992.

                                Science

       For an additional amount for ``Science'', $1,600,000,000.

               Advanced Research Projects Agency--Energy

       For the Advanced Research Projects Agency--Energy, 
     $400,000,000, as authorized under section 5012 of the America 
     COMPETES Act (42 U.S.C. 16538).

         Title 17--Innovative Technology Loan Guarantee Program

       For an additional amount for the cost of guaranteed loans 
     authorized by section 1705 of the Energy Policy Act of 2005, 
     $6,000,000,000, available until expended, to pay the costs of 
     guarantees made under this section: Provided, That of the 
     amount provided for title XVII, $25,000,000 shall be used for 
     administrative expenses in carrying out the guaranteed loan 
     program: Provided further, That of the amounts provided for 
     title XVII, $10,000,000 shall be transferred to and available 
     for administrative expenses for the Advanced Technology 
     Vehicles Manufacturing Loan Program.

                    Office of the Inspector General

       For necessary expenses of the Office of the Inspector 
     General in carrying out the provisions of the Inspector 
     General Act of 1978, as amended, $15,000,000, to remain 
     available until September 30, 2012.

               ENVIRONMENTAL AND OTHER DEFENSE ACTIVITIES

                     Defense Environmental Cleanup

       For an additional amount for ``Defense Environmental 
     Cleanup,'' $5,127,000,000.

Construction, Rehabilitation, Operation, and Maintenance, Western Area 
                          Power Administration

       For carrying out the functions authorized by title III, 
     section 302(a)(1)(E) of the Act of August 4, 1977 (42 U.S.C. 
     7152), and other related activities including conservation 
     and renewable resources programs as authorized, $10,000,000, 
     to remain available until expended: Provided, That the 
     Administrator shall establish such personnel staffing levels 
     as he deems necessary to economically and efficiently 
     complete the activities pursued under the authority granted 
     by section 402 of this Act: Provided further, That this 
     appropriation is non-reimbursable.

                     GENERAL PROVISIONS--THIS TITLE

       Sec. 401.  Bonneville Power Administration Borrowing 
     Authority. For the purposes of providing funds to assist in 
     financing the construction, acquisition, and replacement of 
     the transmission system of the Bonneville Power 
     Administration and to implement the authority of the 
     Administrator of the Bonneville Power Administration under 
     the Pacific Northwest Electric Power Planning and 
     Conservation Act (16 U.S.C. 839 et seq.), an additional 
     $3,250,000,000 in borrowing authority is made available under 
     the Federal Columbia River Transmission System Act (16 U.S.C. 
     838 et seq.), to remain outstanding at any time.
       Sec. 402.  Western Area Power Administration Borrowing 
     Authority. The Hoover Power Plant Act of 1984 (Public Law 98-
     381) is amended by adding at the end the following:

                    ``TITLE III--BORROWING AUTHORITY

     ``SEC. 301. WESTERN AREA POWER ADMINISTRATION BORROWING 
                   AUTHORITY.

       ``(a) Definitions.--In this section:
       ``(1) Administrator.--The term `Administrator' means the 
     Administrator of the Western Area Power Administration.
       ``(2) Secretary.--The term `Secretary' means the Secretary 
     of the Treasury.
       ``(b) Authority.--
       ``(1) In general.--Notwithstanding any other provision of 
     law, subject to paragraphs (2) through (5)--
       ``(A) the Western Area Power Administration may borrow 
     funds from the Treasury; and
       ``(B) the Secretary shall, without further appropriation 
     and without fiscal year limitation, loan to the Western Area 
     Power Administration, on such terms as may be fixed by the 
     Administrator and the Secretary, such sums (not to exceed, in 
     the aggregate (including deferred interest), $3,250,000,000 
     in outstanding repayable balances at any one time) as, in the 
     judgment of the Administrator, are from time to time required 
     for the purpose of--
       ``(i) constructing, financing, facilitating, planning, 
     operating, maintaining, or studying construction of new or 
     upgraded electric power transmission lines and related 
     facilities with at least one terminus within the area served 
     by the Western Area Power Administration; and
       ``(ii) delivering or facilitating the delivery of power 
     generated by renewable energy resources constructed or 
     reasonably expected to be constructed after the date of 
     enactment of this section.
       ``(2) Interest.--The rate of interest to be charged in 
     connection with any loan made pursuant to this subsection 
     shall be fixed by the Secretary, taking into consideration 
     market yields on outstanding marketable obligations of the 
     United States of comparable maturities as of the date of the 
     loan.
       ``(3) Refinancing.--The Western Area Power Administration 
     may refinance loans taken pursuant to this section within the 
     Treasury.
       ``(4) Participation.--The Administrator may permit other 
     entities to participate in the financing, construction and 
     ownership projects financed under this section.
       ``(5) Congressional review of disbursement.--Effective upon 
     the date of enactment of this section, the Administrator 
     shall have the authority to have utilized $1,750,000,000 at 
     any one time. If the Administrator seeks to borrow funds 
     above $1,750,000,000, the funds will be disbursed unless 
     there is enacted, within 90 calendar days of the first such 
     request, a joint resolution that rescinds the remainder of 
     the balance of the borrowing authority provided in this 
     section.
       ``(c) Transmission Line and Related Facility Projects.--
       ``(1) In general.--For repayment purposes, each 
     transmission line and related facility project in which the 
     Western Area Power Administration participates pursuant to 
     this section shall be treated as separate and distinct from--
       ``(A) each other such project; and
       ``(B) all other Western Area Power Administration power and 
     transmission facilities.
       ``(2) Proceeds.--The Western Area Power Administration 
     shall apply the proceeds from the use of the transmission 
     capacity from an individual project under this section to the 
     repayment of the principal and interest of the loan from the 
     Treasury attributable to that project, after reserving such 
     funds as the Western Area Power Administration determines are 
     necessary--
       ``(A) to pay for any ancillary services that are provided; 
     and
       ``(B) to meet the costs of operating and maintaining the 
     new project from which the revenues are derived.
       ``(3) Source of revenue.--Revenue from the use of projects 
     under this section shall be the only source of revenue for--

[[Page 3895]]

       ``(A) repayment of the associated loan for the project; and
       ``(B) payment of expenses for ancillary services and 
     operation and maintenance.
       ``(4) Limitation on authority.--Nothing in this section 
     confers on the Administrator any additional authority or 
     obligation to provide ancillary services to users of 
     transmission facilities developed under this section.
       ``(5) Treatment of certain revenues.--Revenue from 
     ancillary services provided by existing Federal power systems 
     to users of transmission projects funded pursuant to this 
     section shall be treated as revenue to the existing power 
     system that provided the ancillary services.
       ``(d) Certification.--
       ``(1) In general.--For each project in which the Western 
     Area Power Administration participates pursuant to this 
     section, the Administrator shall certify, prior to committing 
     funds for any such project, that--
       ``(A) the project is in the public interest;
       ``(B) the project will not adversely impact system 
     reliability or operations, or other statutory obligations; 
     and
       ``(C) it is reasonable to expect that the proceeds from the 
     project shall be adequate to make repayment of the loan.
       ``(2) Forgiveness of balances.--
       ``(A) In general.--If, at the end of the useful life of a 
     project, there is a remaining balance owed to the Treasury 
     under this section, the balance shall be forgiven.
       ``(B) Unconstructed projects.--Funds expended to study 
     projects that are considered pursuant to this section but 
     that are not constructed shall be forgiven.
       ``(C) Notification.--The Administrator shall notify the 
     Secretary of such amounts as are to be forgiven under this 
     paragraph.
       ``(e) Public Processes.--
       ``(1) Policies and practices.--Prior to requesting any 
     loans under this section, the Administrator shall use a 
     public process to develop practices and policies that 
     implement the authority granted by this section.
       ``(2) Requests for interest.--In the course of selecting 
     potential projects to be funded under this section, the 
     Administrator shall seek Requests For Interest from entities 
     interested in identifying potential projects through one or 
     more notices published in the Federal Register.''
       Sec. 403. Set-aside for Management and Oversight. Up to 0.5 
     percent of each amount appropriated in this title may be used 
     for the expenses of management and oversight of the programs, 
     grants, and activities funded by such appropriation, and may 
     be transferred by the head of the Federal department or 
     agency involved to any other appropriate account within the 
     department or agency for that purpose: Provided, That the 
     Secretary will provide a report to the Committees on 
     Appropriations of the House of Representatives and the Senate 
     30 days prior to the transfer: Provided further, That funds 
     set aside under this section shall remain available for 
     obligation until September 30, 2012.
       Sec. 404. Technical Corrections to the Energy Independence 
     and Security Act of 2007. (a) Section 543(a) of the Energy 
     Independence and Security Act of 2007 (42 U.S.C. 17153(a)) is 
     amended--
       (1) by redesignating paragraphs (2) through (4) as 
     paragraphs (3) through (5), respectively; and
       (2) by striking paragraph (1) and inserting the following:
       ``(1) 34 percent to eligible units of local government--
     alternative 1, in accordance with subsection (b);
       ``(2) 34 percent to eligible units of local government--
     alternative 2, in accordance with subsection (b);''.
       (b) Section 543(b) of the Energy Independence and Security 
     Act of 2007 (42 U.S.C. 17153(b)) is amended by striking 
     ``subsection (a)(1)'' and inserting ``subsection (a)(1) or 
     (2)''.
       (c) Section 548(a)(1) of the Energy Independence and 
     Security Act of 2007 (42 U.S.C. 17158(a)(1)) is amending by 
     striking ``; provided'' and all that follows through 
     ``541(3)(B)''.
       Sec. 405. Amendments to Title XIII of the Energy 
     Independence and Security Act of 2007. Title XIII of the 
     Energy Independence and Security Act of 2007 (42 U.S.C. 17381 
     and following) is amended as follows:
       (1) By amending subparagraph (A) of section 1304(b)(3) to 
     read as follows:
       ``(A) In general.--In carrying out the initiative, the 
     Secretary shall provide financial support to smart grid 
     demonstration projects in urban, suburban, tribal, and rural 
     areas, including areas where electric system assets are 
     controlled by nonprofit entities and areas where electric 
     system assets are controlled by investor-owned utilities.''.
       (2) By amending subparagraph (C) of section 1304(b)(3) to 
     read as follows:
       ``(C) Federal share of cost of technology investments.--The 
     Secretary shall provide to an electric utility described in 
     subparagraph (B) or to other parties financial assistance for 
     use in paying an amount equal to not more than 50 percent of 
     the cost of qualifying advanced grid technology investments 
     made by the electric utility or other party to carry out a 
     demonstration project.''.
       (3) By inserting after section 1304(b)(3)(D) the following 
     new subparagraphs:
       ``(E) Availability of data.--The Secretary shall establish 
     and maintain a smart grid information clearinghouse in a 
     timely manner which will make data from smart grid 
     demonstration projects and other sources available to the 
     public. As a condition of receiving financial assistance 
     under this subsection, a utility or other participant in a 
     smart grid demonstration project shall provide such 
     information as the Secretary may require to become available 
     through the smart grid information clearinghouse in the form 
     and within the timeframes as directed by the Secretary. The 
     Secretary shall assure that business proprietary information 
     and individual customer information is not included in the 
     information made available through the clearinghouse.
       ``(F) Open protocols and standards.--The Secretary shall 
     require as a condition of receiving funding under this 
     subsection that demonstration projects utilize open protocols 
     and standards (including Internet-based protocols and 
     standards) if available and appropriate.''.
       (4) By amending paragraph (2) of section 1304(c) to read as 
     follows:
       ``(2) to carry out subsection (b), such sums as may be 
     necessary.''.
       (5) By amending subsection (a) of section 1306 by striking 
     ``reimbursement of one-fifth (20 percent)'' and inserting 
     ``grants of up to one-half (50 percent)''.
       (6) By striking the last sentence of subsection (b)(9) of 
     section 1306.
       (7) By striking ``are eligible for'' in subsection (c)(1) 
     of section 1306 and inserting ``utilize''.
       (8) By amending subsection (e) of section 1306 to read as 
     follows:
       ``(e) Procedures and Rules.--(1) The Secretary shall, 
     within 60 days after the enactment of the American Recovery 
     and Reinvestment Act of 2009, by means of a notice of intent 
     and subsequent solicitation of grant proposals--
       ``(A) establish procedures by which applicants can obtain 
     grants of not more than one-half of their documented costs;
       ``(B) require as a condition of receiving funding under 
     this subsection that demonstration projects utilize open 
     protocols and standards (including Internet-based protocols 
     and standards) if available and appropriate;
       ``(C) establish procedures to ensure that there is no 
     duplication or multiple payment for the same investment or 
     costs, that the grant goes to the party making the actual 
     expenditures for the qualifying Smart Grid investments, and 
     that the grants made have a significant effect in encouraging 
     and facilitating the development of a smart grid;
       ``(D) establish procedures to ensure there will be public 
     records of grants made, recipients, and qualifying Smart Grid 
     investments which have received grants; and
       ``(E) establish procedures to provide advance payment of 
     moneys up to the full amount of the grant award.
       ``(2) The Secretary shall have discretion and exercise 
     reasonable judgment to deny grants for investments that do 
     not qualify.''.
       Sec. 406. Renewable Energy and Electric Power Transmission 
     Loan Guarantee Program. (a) Amendment.--Title XVII of the 
     Energy Policy Act of 2005 (42 U.S.C. 16511 et seq.) is 
     amended by adding the following at the end:

     ``SEC. 1705. TEMPORARY PROGRAM FOR RAPID DEPLOYMENT OF 
                   RENEWABLE ENERGY AND ELECTRIC POWER 
                   TRANSMISSION PROJECTS.

       ``(a) In General.--Notwithstanding section 1703, the 
     Secretary may make guarantees under this section only for the 
     following categories of projects that commence construction 
     not later than September 30, 2011:
       ``(1) Renewable energy systems, including incremental 
     hydropower, that generate electricity or thermal energy, and 
     facilities that manufacture related components.
       ``(2) Electric power transmission systems, including 
     upgrading and reconductoring projects.
       ``(3) Leading edge biofuel projects that will use 
     technologies performing at the pilot or demonstration scale 
     that the Secretary determines are likely to become commercial 
     technologies and will produce transportation fuels that 
     substantially reduce life-cycle greenhouse gas emissions 
     compared to other transportation fuels.
       ``(b) Factors Relating to Electric Power Transmission 
     Systems.--In determining to make guarantees to projects 
     described in subsection (a)(2), the Secretary may consider 
     the following factors:
       ``(1) The viability of the project without guarantees.
       ``(2) The availability of other Federal and State 
     incentives.
       ``(3) The importance of the project in meeting reliability 
     needs.
       ``(4) The effect of the project in meeting a State or 
     region's environment (including climate change) and energy 
     goals.
       ``(c) Wage Rate Requirements.--The Secretary shall require 
     that each recipient of support under this section provide 
     reasonable assurance that all laborers and mechanics employed 
     in the performance of the project for which the assistance is 
     provided, including those employed by contractors or 
     subcontractors, will be paid wages at rates not less than 
     those prevailing on similar work in the locality as 
     determined by the Secretary of Labor in accordance with 
     subchapter IV of chapter 31 of part A of subtitle II of title 
     40, United States Code (commonly referred to as the `Davis-
     Bacon Act').
       ``(d) Limitation.--Funding under this section for projects 
     described in subsection (a)(3) shall not exceed $500,000,000.
       ``(e) Sunset.--The authority to enter into guarantees under 
     this section shall expire on September 30, 2011.''.
       (b) Table of Contents Amendment.--The table of contents for 
     the Energy Policy Act of 2005 is amended by inserting after 
     the item relating to section 1704 the following new item:


[[Page 3896]]


``Sec. 1705. Temporary program for rapid deployment of renewable energy 
              and electric power transmission projects.''.
       Sec. 407. Weatherization Assistance Program Amendments. (a) 
     Income Level.--Section 412(7) of the Energy Conservation and 
     Production Act (42 U.S.C. 6862(7)) is amended by striking 
     ``150 percent'' both places it appears and inserting ``200 
     percent''.
       (b) Assistance Level Per Dwelling Unit.--Section 415(c)(1) 
     of the Energy Conservation and Production Act (42 U.S.C. 
     6865(c)(1)) is amended by striking ``$2,500'' and inserting 
     ``$6,500''.
       (c) Effective Use of Funds.--In providing funds made 
     available by this Act for the Weatherization Assistance 
     Program, the Secretary may encourage States to give priority 
     to using such funds for the most cost-effective efficiency 
     activities, which may include insulation of attics, if, in 
     the Secretary's view, such use of funds would increase the 
     effectiveness of the program.
       (d) Training and Technical Assistance.--Section 416 of the 
     Energy Conservation and Production Act (42 U.S.C. 6866) is 
     amended by striking ``10 percent'' and inserting ``up to 20 
     percent''.
       (e) Assistance for Previously Weatherized Dwelling Units.--
     Section 415(c)(2) of the Energy Conservation and Production 
     Act (42 U.S.C. 6865(c)(2)) is amended by striking ``September 
     30, 1979'' and inserting ``September 30, 1994''.
       Sec. 408. Technical Corrections to Public Utility 
     Regulatory Policies Act of 1978. (a) Section 111(d) of the 
     Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 
     2621(d)) is amended by redesignating paragraph (16) relating 
     to consideration of smart grid investments (added by section 
     1307(a) of Public Law 110-140) as paragraph (18) and by 
     redesignating paragraph (17) relating to smart grid 
     information (added by section 1308(a) of Public Law 110-140) 
     as paragraph (19).
       (b) Subsections (b) and (d) of section 112 of the Public 
     Utility Regulatory Policies Act of 1978 (16 U.S.C. 2622) are 
     each amended by striking ``(17) through (18)'' in each place 
     it appears and inserting ``(16) through (19)''.
       Sec. 409. Renewable Electricity Transmission Study. In 
     completing the 2009 National Electric Transmission Congestion 
     Study, the Secretary of Energy shall include--
       (1) an analysis of the significant potential sources of 
     renewable energy that are constrained in accessing 
     appropriate market areas by lack of adequate transmission 
     capacity;
       (2) an analysis of the reasons for failure to develop the 
     adequate transmission capacity;
       (3) recommendations for achieving adequate transmission 
     capacity;
       (4) an analysis of the extent to which legal challenges 
     filed at the State and Federal level are delaying the 
     construction of transmission necessary to access renewable 
     energy; and
       (5) an explanation of assumptions and projections made in 
     the Study, including--
       (A) assumptions and projections relating to energy 
     efficiency improvements in each load center;
       (B) assumptions and projections regarding the location and 
     type of projected new generation capacity; and
       (C) assumptions and projections regarding projected 
     deployment of distributed generation infrastructure.
       Sec. 410. Additional State Energy Grants. (a) In General.--
     Amounts appropriated under the heading ``Department of 
     Energy--Energy Programs--Energy Efficiency and Renewable 
     Energy'' in this title shall be available to the Secretary of 
     Energy for making additional grants under part D of title III 
     of the Energy Policy and Conservation Act (42 U.S.C. 6321 et 
     seq.). The Secretary shall make grants under this section in 
     excess of the base allocation established for a State under 
     regulations issued pursuant to the authorization provided in 
     section 365(f) of such Act only if the governor of the 
     recipient State notifies the Secretary of Energy in writing 
     that the governor has obtained necessary assurances that each 
     of the following will occur:
       (1) The applicable State regulatory authority will seek to 
     implement, in appropriate proceedings for each electric and 
     gas utility, with respect to which the State regulatory 
     authority has ratemaking authority, a general policy that 
     ensures that utility financial incentives are aligned with 
     helping their customers use energy more efficiently and that 
     provide timely cost recovery and a timely earnings 
     opportunity for utilities associated with cost-effective 
     measurable and verifiable efficiency savings, in a way that 
     sustains or enhances utility customers' incentives to use 
     energy more efficiently.
       (2) The State, or the applicable units of local government 
     that have authority to adopt building codes, will implement 
     the following:
       (A) A building energy code (or codes) for residential 
     buildings that meets or exceeds the most recently published 
     International Energy Conservation Code, or achieves 
     equivalent or greater energy savings.
       (B) A building energy code (or codes) for commercial 
     buildings throughout the State that meets or exceeds the 
     ANSI/ASHRAE/IESNA Standard 90.1-2007, or achieves equivalent 
     or greater energy savings.
       (C) A plan for the jurisdiction achieving compliance with 
     the building energy code or codes described in subparagraphs 
     (A) and (B) within 8 years of the date of enactment of this 
     Act in at least 90 percent of new and renovated residential 
     and commercial building space. Such plan shall include active 
     training and enforcement programs and measurement of the rate 
     of compliance each year.
       (3) The State will to the extent practicable prioritize the 
     grants toward funding energy efficiency and renewable energy 
     programs, including--
       (A) the expansion of existing energy efficiency programs 
     approved by the State or the appropriate regulatory 
     authority, including energy efficiency retrofits of buildings 
     and industrial facilities, that are funded--
       (i) by the State; or
       (ii) through rates under the oversight of the applicable 
     regulatory authority, to the extent applicable;
       (B) the expansion of existing programs, approved by the 
     State or the appropriate regulatory authority, to support 
     renewable energy projects and deployment activities, 
     including programs operated by entities which have the 
     authority and capability to manage and distribute grants, 
     loans, performance incentives, and other forms of financial 
     assistance; and
       (C) cooperation and joint activities between States to 
     advance more efficient and effective use of this funding to 
     support the priorities described in this paragraph.
       (b) State Match.--The State cost share requirement under 
     the item relating to ``Department of Energy; Energy 
     Conservation'' in title II of the Department of the Interior 
     and Related Agencies Appropriations Act, 1985 (42 U.S.C. 
     6323a; 98 Stat. 1861) shall not apply to assistance provided 
     under this section.
       (c) Equipment and Materials for Energy Efficiency Measures 
     and Renewable Energy Measures.--No limitation on the 
     percentage of funding that may be used for the purchase and 
     installation of equipment and materials for energy efficiency 
     measures and renewable energy measures under grants provided 
     under part D of title III of the Energy Policy and 
     Conservation Act (42 U.S.C. 6321 et seq.) shall apply to 
     assistance provided under this section.

           TITLE V--FINANCIAL SERVICES AND GENERAL GOVERNMENT

                       DEPARTMENT OF THE TREASURY

           Treasury Inspector General for Tax Administration


                         SALARIES AND EXPENSES

       For an additional amount for necessary expenses of the 
     Treasury Inspector General for Tax Administration in carrying 
     out the Inspector General Act of 1978, $7,000,000, to remain 
     available until September 30, 2013, for oversight and audits 
     of the administration of the making work pay tax credit and 
     economic recovery payments under the American Recovery and 
     Reinvestment Act of 2009.

   Community Development Financial Institutions Fund Program Account

       For an additional amount for ``Community Development 
     Financial Institutions Fund Program Account'', $100,000,000, 
     to remain available until September 30, 2010, for qualified 
     applicants under the fiscal year 2009 funding round of the 
     Community Development Financial Institutions Program, of 
     which up to $8,000,000 may be for financial assistance, 
     technical assistance, training and outreach programs designed 
     to benefit Native American, Native Hawaiian, and Alaskan 
     Native communities and provided primarily through qualified 
     community development lender organizations with experience 
     and expertise in community development banking and lending in 
     Indian country, Native American organizations, tribes and 
     tribal organizations and other suitable providers and up to 
     $2,000,000 may be used for administrative expenses: Provided, 
     That for the purpose of the fiscal year 2009 funding round, 
     the following statutory provisions are hereby waived: 12 
     U.S.C. 4707(e) and 12 U.S.C. 4707(d): Provided further, That 
     no awardee, together with its subsidiaries and affiliates, 
     may be awarded more than 5 percent of the aggregate funds 
     available during fiscal year 2009 from the Community 
     Development Financial Institutions Program: Provided further, 
     That no later than 60 days after the date of enactment of 
     this Act, the Department of the Treasury shall submit to the 
     Committees on Appropriations of the House of Representatives 
     and the Senate a detailed expenditure plan for funds provided 
     under this heading.

                        Internal Revenue Service


               HEALTH INSURANCE TAX CREDIT ADMINISTRATION

       For an additional amount to implement the health insurance 
     tax credit under the TAA Health Coverage Improvement Act of 
     2009, $80,000,000, to remain available until September 30, 
     2010.

                    GENERAL SERVICES ADMINISTRATION

                        Real Property Activities


                         federal buildings fund

                 limitations on availability of revenue

                     (including transfer of funds)

       For an additional amount to be deposited in the Federal 
     Buildings Fund, $5,550,000,000, to carry out the purposes of 
     the Fund, of which not less than $750,000,000 shall be 
     available for Federal buildings and United States 
     courthouses, not less than $300,000,000 shall be available 
     for border stations and land ports of entry, and not less 
     than $4,500,000,000 shall be available for measures necessary 
     to convert GSA facilities to High-Performance Green 
     Buildings, as defined in section 401 of Public Law 110-140: 
     Provided, That not to exceed $108,000,000 of the amounts 
     provided under this heading may be expended for rental of 
     space, related to leasing of temporary space in connection 
     with projects funded under this heading: Provided further,

[[Page 3897]]

     That not to exceed $127,000,000 of the amounts provided under 
     this heading may be expended for building operations, for the 
     administrative costs of completing projects funded under this 
     heading: Provided further, That not to exceed $3,000,000 of 
     the funds provided shall be for on-the-job pre-apprenticeship 
     and apprenticeship training programs registered with the 
     Department of Labor, for the construction, repair, and 
     alteration of Federal buildings: Provided further, That not 
     less than $5,000,000,000 of the funds provided under this 
     heading shall be obligated by September 30, 2010, and the 
     remainder of the funds provided under this heading shall be 
     obligated not later than September 30, 2011: Provided 
     further, That, hereafter, the Administrator of General 
     Services is authorized to initiate design, construction, 
     repair, alteration, and other projects through existing 
     authorities of the Administrator: Provided further, That the 
     General Services Administration shall submit a detailed plan, 
     by project, regarding the use of funds made available in this 
     Act to the Committees on Appropriations of the House of 
     Representatives and the Senate within 45 days of enactment of 
     this Act, and shall provide notification to the Committees 
     within 15 days prior to any changes regarding the use of 
     these funds: Provided further, That, hereafter, the 
     Administrator shall report to the Committees on the 
     obligation of these funds on a quarterly basis beginning on 
     June 30, 2009: Provided further, That of the amounts 
     provided, $4,000,000 shall be transferred to and merged with 
     ``Government-Wide Policy'', for the Office of Federal High-
     Performance Green Buildings as authorized in the Energy 
     Independence and Security Act of 2007 (Public Law 110-140): 
     Provided further, That amounts provided under this heading 
     that are savings or cannot be used for the activity for which 
     originally obligated may be deobligated and, notwithstanding 
     any other provision of law, reobligated for the purposes 
     identified in the plan required under this heading not less 
     than 15 days after notification has been provided to the 
     Committees on Appropriations of the House of Representatives 
     and the Senate.

        Energy-Efficient Federal Motor Vehicle Fleet Procurement

       For capital expenditures and necessary expenses of 
     acquiring motor vehicles with higher fuel economy, including: 
     hybrid vehicles; electric vehicles; and commercially-
     available, plug-in hybrid vehicles, $300,000,000, to remain 
     available until September 30, 2011: Provided, That none of 
     these funds may be obligated until the Administrator of 
     General Services submits to the Committees on Appropriations 
     of the House of Representatives and the Senate, within 90 
     days after enactment of this Act, a plan for expenditure of 
     the funds that details the current inventory of the Federal 
     fleet owned by the General Services Administration, as well 
     as other Federal agencies, and the strategy to expend these 
     funds to replace a portion of the Federal fleet with the goal 
     of substantially increasing energy efficiency over the 
     current status, including increasing fuel efficiency and 
     reducing emissions: Provided further, That, hereafter, the 
     Administrator shall report to the Committees on the 
     obligation of these funds on a quarterly basis beginning on 
     September 30, 2009.

                      Office of Inspector General

       For an additional amount for the Office of the Inspector 
     General, to remain available until September 30, 2013, for 
     oversight and audit of programs, grants, and projects funded 
     under this title, $7,000,000.

           RECOVERY ACT ACCOUNTABILITY AND TRANSPARENCY BOARD

       For necessary expenses of the Recovery Act Accountability 
     and Transparency Board to carry out the provisions of title 
     XV of this Act, $84,000,000, to remain available until 
     September 30, 2011.

                     SMALL BUSINESS ADMINISTRATION

                         Salaries and Expenses

       For an additional amount, to remain available until 
     September 30, 2010, $69,000,000, of which $24,000,000 is for 
     marketing, management, and technical assistance under section 
     7(m) of the Small Business Act (15 U.S.C. 636(m)(4)) by 
     intermediaries that make microloans under the microloan 
     program, and of which $20,000,000 is for improving, 
     streamlining, and automating information technology systems 
     related to lender processes and lender oversight: Provided, 
     That no later than 60 days after the date of enactment of 
     this Act, the Small Business Administration shall submit to 
     the Committees on Appropriations of the House of 
     Representatives and the Senate a detailed expenditure plan 
     for funds provided under the heading ``Small Business 
     Administration'' in this Act.

                      Office of Inspector General

       For an additional amount for the Office of Inspector 
     General in carrying out the provisions of the Inspector 
     General Act of 1978, $10,000,000, to remain available until 
     September 30, 2013, for oversight and audit of programs, 
     grants, and projects funded under this title.

                 Surety Bond Guarantees Revolving Fund

       For additional capital for the Surety Bond Guarantees 
     Revolving Fund, authorized by the Small Business Investment 
     Act of 1958, $15,000,000, to remain available until expended.

                     Business Loans Program Account

       For an additional amount for the cost of direct loans, 
     $6,000,000, to remain available until September 30, 2010, and 
     for an additional amount for the cost of guaranteed loans, 
     $630,000,000, to remain available until September 30, 2010: 
     Provided, That of the amount for the cost of guaranteed 
     loans, $375,000,000 shall be for reimbursements, loan 
     subsidies and loan modifications for loans to small business 
     concerns authorized in section 501 of this title; and 
     $255,000,000 shall be for loan subsidies and loan 
     modifications for loans to small business concerns authorized 
     in section 506 of this title: Provided further, That such 
     costs, including the cost of modifying such loans, shall be 
     as defined in section 502 of the Congressional Budget Act of 
     1974.

        Administrative Provisions--Small Business Administration

       Sec. 501. Fee Reductions. (a) Administrative Provisions 
     Small Business Administration.--Until September 30, 2010, and 
     to the extent that the cost of such elimination or reduction 
     of fees is offset by appropriations, with respect to each 
     loan guaranteed under section 7(a) of the Small Business Act 
     (15 U.S.C. 636(a)) and section 502 of this title, for which 
     the application is approved on or after the date of enactment 
     of this Act, the Administrator shall--
       (1) in lieu of the fee otherwise applicable under section 
     7(a)(23)(A) of the Small Business Act (15 U.S.C. 
     636(a)(23)(A)), collect no fee or reduce fees to the maximum 
     extent possible; and
       (2) in lieu of the fee otherwise applicable under section 
     7(a)(18)(A) of the Small Business Act (15 U.S.C. 
     636(a)(18)(A)), collect no fee or reduce fees to the maximum 
     extent possible.
       (b) Temporary Fee Elimination for the 504 Loan Program.--
       (1) In general.--Until September 30, 2010, and to the 
     extent the cost of such elimination in fees is offset by 
     appropriations, with respect to each project or loan 
     guaranteed by the Administrator pursuant to title V of the 
     Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.) 
     for which an application is approved or pending approval on 
     or after the date of enactment of this Act--
       (A) the Administrator shall, in lieu of the fee otherwise 
     applicable under section 503(d)(2) of the Small Business 
     Investment Act of 1958 (15 U.S.C. 697(d)(2)), collect no fee;
       (B) a development company shall, in lieu of the processing 
     fee under section 120.971(a)(1) of title 13, Code of Federal 
     Regulations (relating to fees paid by borrowers), or any 
     successor thereto, collect no fee.
       (2) Reimbursement for waived fees.--
       (A) In general.--To the extent that the cost of such 
     payments is offset by appropriations, the Administrator shall 
     reimburse each development company that does not collect a 
     processing fee pursuant to paragraph (1)(B).
       (B) Amount.--The payment to a development company under 
     subparagraph (A) shall be in an amount equal to 1.5 percent 
     of the net debenture proceeds for which the development 
     company does not collect a processing fee pursuant to 
     paragraph (1)(B).
       (c) Application of Fee Eliminations.--
       (1) To the extent that amounts are made available to the 
     Administrator for the purpose of fee eliminations or 
     reductions under subsection (a), the Administrator shall--
       (A) first use any amounts provided to eliminate or reduce 
     fees paid by small business borrowers under clauses (i) 
     through (iii) of paragraph (18)(A), to the maximum extent 
     possible; and
       (B) then use any amounts provided to eliminate or reduce 
     fees under paragraph (23)(A) paid by small business lenders 
     with assets less than $1,000,000,000 as of the date of 
     enactment; and
       (C) then use any remaining amounts appropriated under this 
     title to reduce fees paid by small business lenders other 
     than those with assets less than $1,000,000,000.
       (2) The Administrator shall eliminate fees under 
     subsections (a) and (b) until the amount provided for such 
     purposes, as applicable, under the heading ``Business Loans 
     Program Account'' under the heading ``Small Business 
     Administration'' under this Act are expended.
       Sec. 502. Economic Stimulus Lending Program for Small 
     Businesses. (a) Purpose.--The purpose of this section is to 
     permit the Small Business Administration to guarantee up to 
     90 percent of qualifying small business loans made by 
     eligible lenders.
       (b) Definitions.--For purposes of this section:
       (1) The term ``Administrator'' means the Administrator of 
     the Small Business Administration.
       (2) The term ``qualifying small business loan'' means any 
     loan to a small business concern pursuant to section 7(a) of 
     the Small Business Act (15 U.S.C. 636) or title V of the 
     Small Business Investment Act of 1958 (15 U.S.C. 695 and 
     following) except for such loans made under section 7(a)(31).
       (3) The term ``small business concern'' has the same 
     meaning as provided by section 3 of the Small Business Act 
     (15 U.S.C. 632).
       (c) Qualified Borrowers.--
       (1) Aliens unlawfully present in the united states.--A loan 
     guarantee may not be made under this section for a loan made 
     to a concern if an individual who is an alien unlawfully 
     present in the United States--
       (A) has an ownership interest in that concern; or
       (B) has an ownership interest in another concern that 
     itself has an ownership interest in that concern.
       (2) Firms in violation of immigration laws.--No loan 
     guarantee may be made under this section for a loan to any 
     entity found, based on a determination by the Secretary of 
     Homeland Security or the Attorney General to have engaged in 
     a pattern or practice of hiring, recruiting or referring for 
     a fee, for employment in the United States an alien knowing 
     the person is an unauthorized alien.

[[Page 3898]]

       (d) Criminal Background Checks.--Prior to the approval of 
     any loan guarantee under this section, the Administrator may 
     verify the applicant's criminal background, or lack thereof, 
     through the best available means, including, if possible, use 
     of the National Crime Information Center computer system at 
     the Federal Bureau of Investigation.
       (e) Application of Other Law.--Nothing in this section 
     shall be construed to exempt any activity of the 
     Administrator under this section from the Federal Credit 
     Reform Act of 1990 (title V of the Congressional Budget and 
     Impoundment Control Act of 1974; 2 U.S.C. 661 and following).
       (f) Sunset.--Loan guarantees may not be issued under this 
     section after the date 12 months after the date of enactment 
     of this Act.
       (g) Small Business Act Provisions.--The provisions of the 
     Small Business Act applicable to loan guarantees under 
     section 7 of that Act and regulations promulgated thereunder 
     as of the date of enactment of this Act shall apply to loan 
     guarantees under this section except as otherwise provided in 
     this section.
       (h) Authorization.--There are authorized to be appropriated 
     such sums as may be necessary to carry out this section.
       Sec. 503. Establishment of SBA Secondary Market Guarantee 
     Authority. (a) Purpose.--The purpose of this section is to 
     provide the Administrator with the authority to establish the 
     SBA Secondary Market Guarantee Authority within the SBA to 
     provide a Federal guarantee for pools of first lien 504 loans 
     that are to be sold to third-party investors.
       (b) Definitions.--For purposes of this section:
       (1) The term ``Administrator'' means the Administrator of 
     the Small Business Administration.
       (2) The term ``first lien position 504 loan'' means the 
     first mortgage position, non-federally guaranteed loans made 
     by private sector lenders made under title V of the Small 
     Business Investment Act.
       (c) Establishment of Authority.--
       (1) Organization.--
       (A) The Administrator shall establish a Secondary Market 
     Guarantee Authority within the Small Business Administration.
       (B) The Administrator shall appoint a Director of the 
     Authority who shall report to the Administrator.
       (C) The Administrator is authorized to hire such personnel 
     as are necessary to operate the Authority and may contract 
     such operations of the Authority as necessary to qualified 
     third party companies or individuals.
       (D) The Administrator is authorized to contract with 
     private sector fiduciary and custom dial agents as necessary 
     to operate the Authority.
       (2) Guarantee process.--
       (A) The Administrator shall establish, by rule, a process 
     in which private sector entities may apply to the 
     Administration for a Federal guarantee on pools of first lien 
     position 504 loans that are to be sold to third-party 
     investors.
       (B) The Administrator is authorized to contract with 
     private sector fiduciary and custom dial agents as necessary 
     to operate the Authority.
       (3) Responsibilities.--
       (A) The Administrator shall establish, by rule, a process 
     in which private sector entities may apply to the SBA for a 
     Federal guarantee on pools of first lien position 504 loans 
     that are to be sold to third-party investors.
       (B) The rule under this section shall provide for a process 
     for the Administrator to consider and make decisions 
     regarding whether to extend a Federal guarantee referred to 
     in clause (i). Such rule shall also provide that:
       (i) The seller of the pools purchasing a guarantee under 
     this section retains not less than 5 percent of the dollar 
     amount of the pools to be sold to third-party investors.
       (ii) The Administrator shall charge fees, upfront or 
     annual, at a specified percentage of the loan amount that is 
     at such a rate that the cost of the program under the Federal 
     Credit Reform Act of 1990 (title V of the Congressional 
     Budget and Impoundment Control Act of 1974; 2 U.S.C. 661) 
     shall be equal to zero.
       (iii) The Administrator may guarantee not more than 
     $3,000,000,000 of pools under this authority.
       (C) The Administrator shall establish documents, legal 
     covenants, and other required documentation to protect the 
     interests of the United States.
       (D) The Administrator shall establish a process to receive 
     and disburse funds to entities under the authority 
     established in this section.
       (d) Limitations.--
       (1) The Administrator shall ensure that entities purchasing 
     a guarantee under this section are using such guarantee for 
     the purpose of selling 504 first lien position pools to 
     third-party investors.
       (2) If the Administrator finds that any such guarantee was 
     used for a purpose other than that specified in paragraph 
     (1), the Administrator shall--
       (A) prohibit the purchaser of the guarantee or its 
     affiliates (within the meaning of the regulations under 13 
     CFR 121.103) from using the authority of this section in the 
     future; and
       (B) take any other actions the Administrator, in 
     consultation with the Attorney General of the United States 
     deems appropriate.
       (e) Oversight.--The Administrator shall submit a report to 
     Congress not later than the third business day of each month 
     setting forth each of the following:
       (1) The aggregate amount of guarantees extended under this 
     section during the preceding month.
       (2) The aggregate amount of guarantees outstanding.
       (3) Defaults and payments on defaults made under this 
     section.
       (4) The identity of each purchaser of a guarantee found by 
     the Administrator to have misused guarantees under this 
     section.
       (5) Any other information the Administrator deems necessary 
     to fully inform Congress of undue risk to the United States 
     associated with the issuance of guarantees under this 
     section.
       (f) Duration of Program.--The authority of this section 
     shall terminate on the date 2 years after the date of 
     enactment of this section.
       (g) Funding.--Such sums as necessary are authorized to be 
     appropriated to carry out the provisions of this section.
       (h) Budget Treatment.--Nothing in this section shall be 
     construed to exempt any activity of the Administrator under 
     this section from the Federal Credit Reform Act of 1990 
     (title V of the Congressional Budget and Impoundment Control 
     Act of 1974; 2 U.S.C. 661 and following).
       (i) Emergency Rulemaking Authority.--The Administrator 
     shall issue regulations under this section within 15 days 
     after the date of enactment of this section. The notice 
     requirements of section 553(b) of title 5, United States Code 
     shall not apply to the promulgation of such regulations.
       Sec. 504. Stimulus for Community Development Lending. (a) 
     Low Interest Refinancing Under the Local Development Business 
     Loan Program.--Section 502 of the Small Business Investment 
     Act of 1958 (15 U.S.C. 696) is amended by adding at the end 
     the following:
       ``(7) Permissible debt refinancing.--
       ``(A) In general.--Any financing approved under this title 
     may include a limited amount of debt refinancing.
       ``(B) Expansions.--If the project involves expansion of a 
     small business concern, any amount of existing indebtedness 
     that does not exceed 50 percent of the project cost of the 
     expansion may be refinanced and added to the expansion cost, 
     if--
       ``(i) the proceeds of the indebtedness were used to acquire 
     land, including a building situated thereon, to construct a 
     building thereon, or to purchase equipment;
       ``(ii) the existing indebtedness is collateralized by fixed 
     assets;
       ``(iii) the existing indebtedness was incurred for the 
     benefit of the small business concern;
       ``(iv) the financing under this title will be used only for 
     refinancing existing indebtedness or costs relating to the 
     project financed under this title;
       ``(v) the financing under this title will provide a 
     substantial benefit to the borrower when prepayment 
     penalties, financing fees, and other financing costs are 
     accounted for;
       ``(vi) the borrower has been current on all payments due on 
     the existing debt for not less than 1 year preceding the date 
     of refinancing; and
       ``(vii) the financing under section 504 will provide better 
     terms or rate of interest than the existing indebtedness at 
     the time of refinancing.''.
       (b) Job Creation Goals.--Section 501(e)(1) and section 
     501(e)(2) of the Small Business Investment Act (15 U.S.C. 
     695) are each amended by striking ``$50,000'' and inserting 
     ``$65,000''.
       Sec. 505. Increasing Small Business Investment. (a) 
     Simplified Maximum Leverage Limits.--Section 303(b) of the 
     Small Business Investment Act of 1958 (15 U.S.C. 683(b)) is 
     amended as follows:
       (1) By striking so much of paragraph (2) as precedes 
     subparagraphs (C) and (D) and inserting the following:
       ``(2) Maximum leverage.--
       ``(A) In general.--The maximum amount of outstanding 
     leverage made available to any one company licensed under 
     section 301(c) of this Act may not exceed the lesser of--
       ``(i) 300 percent of such company's private capital; or
       ``(ii) $150,000,000.
       ``(B) Multiple licenses under common control.--The maximum 
     amount of outstanding leverage made available to two or more 
     companies licensed under section 301(c) of this Act that are 
     commonly controlled (as determined by the Administrator) and 
     not under capital impairment may not exceed $225,000,000.'';
       (2) By amending paragraph (2)(C) by inserting ``(i)'' 
     before ``In calculating'' and adding the following at the end 
     thereof:
       ``(ii) The maximum amount of outstanding leverage made 
     available to--

       ``(I) any 1 company described in clause (iii) may not 
     exceed the lesser of 300 percent of private capital of the 
     company, or $175,000,000; and
       ``(II) 2 or more companies described in clause (iii) that 
     are under common control (as determined by the Administrator) 
     may not exceed $250,000,000.
       ``(iii) A company described in this clause is a company 
     licensed under section 301(c) in the first fiscal year after 
     the date of enactment of this clause or any fiscal year 
     thereafter that certifies in writing that not less than 50 
     percent of the dollar amount of investments of that company 
     shall be made in companies that are located in a low-income 
     geographic area (as that term is defined in section 351).''.

       (3) By striking paragraph (4).
       (b) Simplified Aggregate Investment Limitations.--Section 
     306(a) of the Small Business Investment Act of 1958 (15 
     U.S.C. 686(a)) is amended to read as follows:
       ``(a) Percentage Limitation on Private Capital.--If any 
     small business investment company has obtained financing from 
     the Administrator and such financing remains outstanding, the 
     aggregate amount of securities acquired and for which 
     commitments may be

[[Page 3899]]

     issued by such company under the provisions of this title for 
     any single enterprise shall not, without the approval of the 
     Administrator, exceed 10 percent of the sum of--
       ``(1) the private capital of such company; and
       ``(2) the total amount of leverage projected by the company 
     in the company's business plan that was approved by the 
     Administrator at the time of the grant of the company's 
     license.''.
       (c) Investments in Smaller Enterprises.--Section 303(d) of 
     the Small Business Investment Act of 1958 (15 U.S.C. 683(d)) 
     is amended to read as follows:
       ``(d) Investments in Smaller Enterprises.--The 
     Administrator shall require each licensee, as a condition of 
     approval of an application for leverage, to certify in 
     writing that not less than 25 percent of the aggregate dollar 
     amount of financings of that licensee shall be provided to 
     smaller enterprises.''.
       Sec. 506. Business Stabilization Program. (a) In General.--
     Subject to the availability of appropriations, the 
     Administrator of the Small Business Administration shall 
     carry out a program to provide loans on a deferred basis to 
     viable (as such term is determined pursuant to regulation by 
     the Administrator of the Small Business Administration) small 
     business concerns that have a qualifying small business loan 
     and are experiencing immediate financial hardship.
       (b) Eligible Borrower.--A small business concern as defined 
     under section 3 of the Small Business Act (15 U.S.C. 632).
       (c) Qualifying Small Business Loan.--A loan made to a small 
     business concern that meets the eligibility standards in 
     section 7(a) of the Small Business Act (15 U.S.C. 636(a)) but 
     shall not include loans guarantees (or loan guarantee 
     commitments made) by the Administrator prior to the date of 
     enactment of this Act.
       (d) Loan Size.--Loans guaranteed under this section may not 
     exceed $35,000.
       (e) Purpose.--Loans guaranteed under this program shall be 
     used to make periodic payment of principal and interest, 
     either in full or in part, on an existing qualifying small 
     business loan for a period of time not to exceed 6 months.
       (f) Loan Terms.--Loans made under this section shall:
       (1) carry a 100 percent guaranty; and
       (2) have interest fully subsidized for the period of 
     repayment.
       (g) Repayment.--Repayment for loans made under this section 
     shall--
       (1) be amortized over a period of time not to exceed 5 
     years; and
       (2) not begin until 12 months after the final disbursement 
     of funds is made.
       (h) Collateral.--The Administrator of the Small Business 
     Administration may accept any available collateral, including 
     subordinated liens, to secure loans made under this section.
       (i) Fees.--The Administrator of the Small Business 
     Administration is prohibited from charging any processing 
     fees, origination fees, application fees, points, brokerage 
     fees, bonus points, prepayment penalties, and other fees that 
     could be charged to a loan applicant for loans under this 
     section.
       (j) Sunset.--The Administrator of the Small Business 
     Administration shall not issue loan guarantees under this 
     section after September 30, 2010.
       (k) Emergency Rulemaking Authority.--The Administrator of 
     the Small Business Administration shall issue regulations 
     under this section within 15 days after the date of enactment 
     of this section. The notice requirements of section 553(b) of 
     title 5, United States Code shall not apply to the 
     promulgation of such regulations.

     SEC. 507. GAO REPORT.

       (a) Report.--Not later than 60 days after the enactment of 
     this Act, the Comptroller General of the United States shall 
     report to the Congress on the actions of the Administrator in 
     implementing the authorities established in the 
     administrative provisions of this title.
       (b) Included Item.--The report under this section shall 
     include a summary of the activity of the Administrator under 
     this title and an analysis of whether he is accomplishing the 
     purpose of increasing liquidity in the secondary market for 
     Small Business Administration loans.

     SEC. 508. SURETY BONDS.

       (a) Maximum Bond Amount.--Section 4119a)(1) of the Small 
     Business Investment Act of 1958 (15 U.S.C. 694b(a)(1)) is 
     amended--
       (1) by inserting ``(A)'' after ``(1)'';
       (2) by striking ``$2,000,000'' and inserting ``$5,00,000''; 
     and
       (3) by adding at the end the following:
       ``(B) The Administrator may guarantee a surety under 
     subparagraph (A) for a total work order or contract amount 
     that does not exceed $10,000,000, if a contracting officer of 
     a Federal agency certifies that such a guarantee is 
     necessary.''.
       (b) Denial of Liability.--
       Section 411 of the Small Business Investment Act of 1958 
     (15 U.S.C. 694b) is amended
       (1) by striking subsection (c) and inserting the following:
       ``(c) Reimbursement of surety; conditions
       Pursuant to any such guarantee or agreement, the 
     Administration shall reimburse the surety, as provided in 
     subsection (c) of this section, except that the 
     Administration shall be relieved of liability (in whole or in 
     part within the discretion of the Administration) if--
       (1) the surety obtained such guarantee or agreement, or 
     applied for such reimbursement, by fraud or material 
     misrepresentation,
       (2) the total contract amount at the time of execution of 
     the bond or bonds exceeds $5,000,000,
       (3) the surety has breached a material term or condition of 
     such guarantee agreement, or
       (4) the surety has substantially violated the regulations 
     promulgated by the Administration pursuant to subsection 
     (d).''
       (2) by adding at the end the following:
       ``(k) For bonds made or executed with the prior approval of 
     the Administration, the Administration shall not deny 
     liability to a surety based upon material information that 
     was provided as part of the guaranty application.''
       (c) Size Standards.--Section 410 of the Small Business 
     Investment Act of 1958 (15 U.S.C. 694a) is amended by adding 
     at the end the following:
       ``(9) Notwithstanding any other provision of law or any 
     rule, regulation, or order of the Administration, for 
     purposes of sections 410, 411, and 412 the term `small 
     business concern' means a business concern that meets the 
     size standard for the primary industry in which such business 
     concern, and the affiliates of such business concern, is 
     engaged, as determined by the Administrator in accordance 
     with the North American Industry Classification System.''.
       (d) Study The Administrator of the Small Business 
     Administration shall conduct a study of the current funding 
     structure of the surety bond program carried out under part B 
     (15 U.S.C. 694a et seq.) of title IV of the Small Business 
     Investment Act of 1958. The study shall include--
       (1) an assessment of whether the program's current funding 
     framework and program fees are inhibiting the program's 
     growth:
       (2) an assessment of whether surety companies and small 
     business concerns could benefit from an alternative funding 
     structure; and
       (e) Report--Not later than 180 days after the date of the 
     enactment of this Act, the Administrator shall submit to 
     Congress a report on the results of the study required under 
     subsection (d).
       (f) Sunset--The amendments made by this section shall 
     remain in effect until September 30, 2010.

     SEC. 509. ESTABLISHMENT OF SBA SECONDARY MARKET LENDING 
                   AUTHORITY

       (a) Purpose.--The purpose of this section is to provide the 
     Small Business Administration with the authority to establish 
     a Secondary Market Lending Authority within the SBA to make 
     loans to the systemically important SBA secondary market 
     broker-dealers who operate the SBA secondary market.
       (b) Definitions.--For purposes of this section.
       (1) The term `` Administrator'' means the Administrator of 
     the SBA.
       (2) The term ``SBA'' means the Small Business 
     Administration.
       (3) The terms ``Secondary Market Lending Authority'' and 
     ``Authority'' mean the office established under subsection 
     (c).
       (4) The term ``SBA secondary market'' means the market for 
     the purchase and sale of loans originated, underwritten, and 
     closed under the Small Business Act.
       (5) The term ``Systemically Important Secondary Market 
     Broker-Dealers'' mean those entities designated under 
     subsection (c)(1) as vital to the continued operation of the 
     SBA secondary market by reason of their purchase and sale of 
     the government guaranteed portion of loans, or pools of 
     loans, originated, underwritten, and closed under the Small 
     Business Act.
       (c) Responsibilities, Authorities, Organization, and 
     Limitations.--
       (1) Designation of systemically important sba secondary 
     market broker-dealers.--The Administrator shall establish a 
     process to designate, in consultation with the Board of 
     Governors of the Federal Reserve and the Secretary of the 
     Treasury, Systemically Important Secondary Market Broker-
     Dealers.
       (2)Establishment of sba secondary market lending 
     authority.--
       (A) Organization.--
       (i) The Administrator shall establish within the SBA an 
     office to provide loans to Systemically Important Secondary 
     Market Broker-dealers to be used for the purpose of financing 
     the inventory of the government guaranteed portion of loans, 
     originated, underwritten, and closed under the Small Business 
     Act or pools of such loans.
       (ii) The Administrator shall appoint a Director of the 
     Authority who shall report to the Administrator.
       (iii) The Administrator is authorized to hire such 
     personnel as are necessary to operate the Authority.
       (iv) The Administrator may contract such Authority 
     operations as he determines necessary to qualified third-
     party companies or individuals.
       (v) The Administrator is authorized to contract with 
     private sector fiduciary and custodial agents as necessary to 
     operate the Authority.
       (B) Loans.--
       (i) The Administrator shall establish by rule a process 
     under which Systemically Important SBA Secondary Market 
     Broker-Dealers designated under paragraph (1) may apply to 
     the Administrator for loans under this section.
       (ii) The rule under clause (i) shall provide a process for 
     the Administrator to consider and make decisions regarding 
     whether or not to extend a loan applied for under this 
     section. Such rule shall include provisions to assure each of 
     the following:
       (I) That loans made under this section are for the sole 
     purpose of financing the inventory of the government 
     guaranteed portion of loans, originated, underwritten, and 
     closed under the Small Business Act or pools of such loans.
       (II) That loans made under this section are fully 
     collateralized to the satisfaction of the Administrator.

[[Page 3900]]

       (III) That there is no limit to the frequency in which a 
     borrower may borrow under this section unless the 
     Administrator determines that doing so would create an undue 
     risk of loss to the agency or the United States.
       (IV) That there is no limit on the size of a loan, subject 
     to the discretion of the Administrator.
       (iii) Interest on loans under this section shall not exceed 
     the Federal Funds target rate as established by the Federal 
     Reserve Board of Governors plus 25 basis points.
       (iv) The rule under this section shall provide for such 
     loan documents, legal covenants, collateral requirements and 
     other required documentation as necessary to protect the 
     interests of the agency, the United States, and the taxpayer.
       (v) The Administrator shall establish custodial accounts to 
     safeguard any collateral pledged to the SBA in connection 
     with a loan under this section.
       (vi) The Administrator shall establish a process to 
     disburse and receive funds to and from borrowers under this 
     section.
       (C) Limitations on use of loan proceeds by systemically 
     important secondary market broker-dealers.--The Administrator 
     shall ensure that borrowers under this section are using 
     funds provided under this section only for the purpose 
     specified in subparagraph (B)(ii)(I). If the Administrator 
     finds that such funds were used for any other purpose, the 
     Administrator shall--
       (i) require immediate repayment of outstanding loans;
       (ii) prohibit the borrower, its affiliates, or any future 
     corporate manifestation of the borrower from using the 
     Authority; and
       (iii) take any other actions the Administrator, in 
     consultation with the Attorney General of the United States, 
     deems appropriate.
       (d) Report to Congress.--The Administrator shall submit a 
     report to Congress not later than the third business day of 
     each month containing a statement of each of the following:
       (1) The aggregate loan amounts extended during the 
     preceding month under this section.
       (2) The aggregate loan amounts repaid under this section 
     during the proceeding month.
       (3) The aggregate loan amount outstanding under this 
     section.
       (4) The aggregate value of assets held as collateral under 
     this section;
       (5) The amount of any defaults or delinquencies on loans 
     made under this section.
       (6) The identity of any borrower found by the Administrator 
     to misuse funds made available under this section.
       (7) Any other information the Administrator deems necessary 
     to fully inform Congress of undue risk of financial loss to 
     the United States in connection with loans made under this 
     section.
       (e) Duration.--The authority of this section shall remain 
     in effect for a period of 2 years after the date of enactment 
     of this section.
       (f) Fees.--The Administrator shall charge fees, up front, 
     annual or both, at a specified percentage of the loan amount 
     that is at such a rate that the cost of the program under the 
     Federal Credit Reform Act of 1990 ((title V of the 
     Congressional Budget and Impoundment Control Act of 1974; 2 
     U.S.C. 661) shall be equal to zero.
       (h) Budget Treatment.--Nothing in this section shall be 
     construed to exempt any activity of the Administrator under 
     this section from the Federal Credit Reform Act of 1990 
     (title V of the Congressional Budget and Impoundment Control 
     Act of 1974; 2 U.S.C. 661 and following).
       (i) Emergency Rulemaking Authority.--The Administrator 
     shall promulgate regulations under this section within 30 
     days after the date of enactment of this section. In 
     promulgating these regulations, the Administrator the notice 
     requirements of section 553(b) of title 5 of the United 
     States Code shall not apply.

               TITLE VI--DEPARTMENT OF HOMELAND SECURITY

              Office of the Under Secretary for Management

       For an additional amount for the ``Office of the Under 
     Secretary for Management'', $200,000,000 for planning, 
     design, construction costs, site security, information 
     technology infrastructure, fixtures, and related costs to 
     consolidate the Department of Homeland Security headquarters: 
     Provided, That no later than 60 days after the date of 
     enactment of this Act, the Secretary of Homeland Security, in 
     consultation with the Administrator of General Services, 
     shall submit to the Committees on Appropriations of the 
     Senate and the House of Representatives a plan for the 
     expenditure of these funds.

                      office of inspector general

       For an additional amount for the ``Office of Inspector 
     General'', $5,000,000, to remain available until September 
     30, 2012, for oversight and audit of programs, grants, and 
     projects funded under this title.

                   U.S. Customs and Border Protection

                         salaries and expenses

       For an additional amount for ``Salaries and Expenses'', 
     $160,000,000, of which $100,000,000 shall be for the 
     procurement and deployment of non-intrusive inspection 
     systems; and of which $60,000,000 shall be for procurement 
     and deployment of tactical communications equipment and 
     radios: Provided, That no later than 45 days after the date 
     of enactment of this Act, the Secretary of Homeland Security 
     shall submit to the Committees on Appropriations of the 
     Senate and the House of Representatives a plan for 
     expenditure of these funds.

        border security fencing, infrastructure, and technology

       For an additional amount for ``Border Security Fencing, 
     Infrastructure, and Technology'', $100,000,000 for expedited 
     development and deployment of border security technology on 
     the Southwest border: Provided, That no later than 45 days 
     after the date of enactment of this Act, the Secretary of 
     Homeland Security shall submit to the Committees on 
     Appropriations of the Senate and the House of Representatives 
     a plan for expenditure of these funds.

                              construction

       For an additional amount for ``Construction'', $420,000,000 
     solely for planning, management, design, alteration, and 
     construction of U.S. Customs and Border Protection owned land 
     border ports of entry: Provided, That no later than 45 days 
     after the date of enactment of this Act, the Secretary of 
     Homeland Security shall submit to the Committees on 
     Appropriations of the Senate and the House of Representatives 
     a plan for expenditure of these funds.

                U.S. Immigration and Customs Enforcement

                        automation modernization

       For an additional amount for ``Automation Modernization'', 
     $20,000,000 for the procurement and deployment of tactical 
     communications equipment and radios: Provided, That no later 
     than 45 days after the date of enactment of this Act, the 
     Secretary of Homeland Security shall submit to the Committees 
     on Appropriations of the Senate and the House of 
     Representatives a plan for expenditure of these funds.

                 Transportation Security Administration

                           aviation security

       For an additional amount for ``Aviation Security'', 
     $1,000,000,000 for procurement and installation of checked 
     baggage explosives detection systems and checkpoint 
     explosives detection equipment: Provided, That the Assistant 
     Secretary of Homeland Security (Transportation Security 
     Administration) shall prioritize the award of these funds to 
     accelerate the installations at locations with completed 
     design plans: Provided further, That no later than 45 days 
     after the date of enactment of this Act, the Secretary of 
     Homeland Security shall submit to the Committees on 
     Appropriations of the Senate and the House of Representatives 
     a plan for the expenditure of these funds.

                              Coast Guard

              acquisition, construction, and improvements

       For an additional amount for ``Acquisition, Construction, 
     and Improvements'', $98,000,000 for shore facilities and aids 
     to navigation facilities; for priority procurements due to 
     materials and labor cost increases; and for costs to repair, 
     renovate, assess, or improve vessels: Provided, That no later 
     than 45 days after the date of enactment of this Act, the 
     Secretary of Homeland Security shall submit to the Committees 
     on Appropriations of the Senate and the House of 
     Representatives a plan for the expenditure of these funds.

                         alteration of bridges

        For an additional amount for ``Alteration of Bridges'', 
     $142,000,000 for alteration or removal of obstructive 
     bridges, as authorized by section 6 of the Truman-Hobbs Act 
     (33 U.S.C. 516): Provided, That the Coast Guard shall award 
     these funds to those bridges that are ready to proceed to 
     construction: Provided further, That no later than 45 days 
     after the date of enactment of this Act, the Secretary of 
     Homeland Security shall submit to the Committees on 
     Appropriations of the Senate and the House of Representatives 
     a plan for the expenditure of these funds.

                  Federal Emergency Management Agency

                        state and local programs

       For an additional amount for grants, $300,000,000, to be 
     allocated as follows:
       (1) $150,000,000 for Public Transportation Security 
     Assistance and Railroad Security Assistance under sections 
     1406 and 1513 of the Implementing Recommendations of the 9/11 
     Commission Act of 2007 (Public Law 110-53; 6 U.S.C. 1135 and 
     1163).
       (2) $150,000,000 for Port Security Grants in accordance 
     with 46 U.S.C. 70107, notwithstanding 46 U.S.C. 70107(c).

                     firefighter assistance grants

       For an additional amount for competitive grants, 
     $210,000,000 for modifying, upgrading, or constructing non-
     Federal fire stations: Provided, That up to 5 percent shall 
     be for program administration: Provided further, That no 
     grant shall exceed $15,000,000.

            disaster assistance direct loan program account

       Notwithstanding section 417(b) of the Robert T. Stafford 
     Disaster Relief and Emergency Assistance Act, the amount of 
     any such loan issued pursuant to this section for major 
     disasters occurring in calendar year 2008 may exceed 
     $5,000,000, and may be equal to not more than 50 percent of 
     the annual operating budget of the local government in any 
     case in which that local government has suffered a loss of 25 
     percent or more in tax revenues: Provided, That the cost of 
     modifying such loans shall be as defined in section 502 of 
     the Congressional Budget Act of 1974 (2 U.S.C. 661a).

                       emergency food and shelter

       For an additional amount to carry out the emergency food 
     and shelter program pursuant to title III of the McKinney-
     Vento Homeless Assistance Act (42 U.S.C. 11331 et seq.), 
     $100,000,000: Provided, That total administrative costs shall 
     not exceed 3.5 percent of the total amount made available 
     under this heading.

[[Page 3901]]



                     GENERAL PROVISIONS--THIS TITLE

       Sec. 601.  Notwithstanding any other provision of law, the 
     President shall establish an arbitration panel under the 
     Federal Emergency Management Agency public assistance program 
     to expedite the recovery efforts from Hurricanes Katrina and 
     Rita within the Gulf Coast Region. The arbitration panel 
     shall have sufficient authority regarding the award or denial 
     of disputed public assistance applications for covered 
     hurricane damage under section 403, 406, or 407 of the Robert 
     T. Stafford Disaster Relief and Emergency Assistance Act (42 
     U.S.C. 5170b, 5172, or 5173) for a project the total amount 
     of which is more than $500,000.
       Sec. 602.  The Administrator of the Federal Emergency 
     Management Agency may not prohibit or restrict the use of 
     funds designated under the hazard mitigation grant program 
     for damage caused by Hurricanes Katrina and Rita if the 
     homeowner who is an applicant for assistance under such 
     program commenced work otherwise eligible for hazard 
     mitigation grant program assistance under section 404 of the 
     Robert T. Stafford Disaster Relief and Emergency Assistance 
     Act (42 U.S.C. 5170c) without approval in writing from the 
     Administrator.
       Sec. 603. Subparagraph (E) of section 34(a)(1) of the 
     Federal Fire Prevention and Control Act of 1974 (15 U.S.C. 
     2229a(a)(1)(E)) shall not apply with respect to funds 
     appropriated in this or any other Act making appropriations 
     for fiscal year 2009 or 2010 for grants under such section 
     34.
       Sec. 604. (a) Requirement.--Except as provided in 
     subsections (c) through (g), funds appropriated or otherwise 
     available to the Department of Homeland Security may not be 
     used for the procurement of an item described in subsection 
     (b) if the item is not grown, reprocessed, reused, or 
     produced in the United States.
       (b) Covered Items.--An item referred to in subsection (a) 
     is any of the following, if the item is directly related to 
     the national security interests of the United States:
       (1) An article or item of--
       (A) clothing and the materials and components thereof, 
     other than sensors, electronics, or other items added to, and 
     not normally associated with, clothing (and the materials and 
     components thereof);
       (B) tents, tarpaulins, covers, textile belts, bags, 
     protective equipment (including but not limited to body 
     armor), sleep systems, load carrying equipment (including but 
     not limited to fieldpacks), textile marine equipment, 
     parachutes, or bandages;
       (C) cotton and other natural fiber products, woven silk or 
     woven silk blends, spun silk yarn for cartridge cloth, 
     synthetic fabric or coated synthetic fabric (including all 
     textile fibers and yarns that are for use in such fabrics), 
     canvas products, or wool (whether in the form of fiber or 
     yarn or contained in fabrics, materials, or manufactured 
     articles); or
       (D) any item of individual equipment manufactured from or 
     containing such fibers, yarns, fabrics, or materials.
       (c) Availability Exception.--Subsection (a) does not apply 
     to the extent that the Secretary of Homeland Security 
     determines that satisfactory quality and sufficient quantity 
     of any such article or item described in subsection (b)(1) 
     grown, reprocessed, reused, or produced in the United States 
     cannot be procured as and when needed at United States market 
     prices. This section is not applicable to covered items that 
     are, or include, materials determined to be non-available in 
     accordance with Federal Acquisition Regulation 25.104 
     Nonavailable Articles.
       (d) De Minimis Exception.--Notwithstanding subsection (a), 
     the Secretary of Homeland Security may accept delivery of an 
     item covered by subsection (b) that contains non-compliant 
     fibers if the total value of non-compliant fibers contained 
     in the end item does not exceed 10 percent of the total 
     purchase price of the end item.
       (e) Exception for Certain Procurements Outside the United 
     States.--Subsection (a) does not apply to the following:
       (1) Procurements by vessels in foreign waters.
       (2) Emergency procurements.
       (f) Exception for Small Purchases.--Subsection (a) does not 
     apply to purchases for amounts not greater than the 
     simplified acquisition threshold referred to in section 
     2304(g) of title 10, United States Code.
       (g) Applicability to Contracts and Subcontracts for 
     Procurement of Commercial Items.--This section is applicable 
     to contracts and subcontracts for the procurement of 
     commercial items not withstanding section 34 of the Office of 
     Federal Procurement Policy Act (41 U.S.C. 430), with the 
     exception of commercial items listed under subsections 
     (b)(1)(C) and (b)(1)(D) above. For the purposes of this 
     section, ``commercial'' shall be as defined in the Federal 
     Acquisition Regulation--Part 2.
       (h) Geographic Coverage.--In this section, the term 
     ``United States'' includes the possessions of the United 
     States.
       (i) Notification Required Within 7 Days After Contract 
     Award if Certain Exceptions Applied.--In the case of any 
     contract for the procurement of an item described in 
     subsection (b)(1), if the Secretary of Homeland Security 
     applies an exception set forth in subsection (c) with respect 
     to that contract, the Secretary shall, not later than 7 days 
     after the award of the contract, post a notification that the 
     exception has been applied on the Internet site maintained by 
     the General Services Administration known as FedBizOps.gov 
     (or any successor site).
       (j) Training During Fiscal Year 2009.--
       (1) In general.--The Secretary of Homeland Security shall 
     ensure that each member of the acquisition workforce in the 
     Department of Homeland Security who participates personally 
     and substantially in the acquisition of textiles on a regular 
     basis receives training during fiscal year 2009 on the 
     requirements of this section and the regulations implementing 
     this section.
       (2) Inclusion of information in new training programs.--The 
     Secretary shall ensure that any training program for the 
     acquisition workforce developed or implemented after the date 
     of the enactment of this Act includes comprehensive 
     information on the requirements described in paragraph (1).
       (k) Consistency with International Agreements.--This 
     section shall be applied in a manner consistent with United 
     States obligations under international agreements.
       (l) Effective Date.--This section applies with respect to 
     contracts entered into by the Department of Homeland Security 
     180 days after the date of the enactment of this Act.

         TITLE VII--INTERIOR, ENVIRONMENT, AND RELATED AGENCIES

                       DEPARTMENT OF THE INTERIOR

                       Bureau of Land Management

                   management of lands and resources

       For an additional amount for ``Management of Lands and 
     Resources'', for activities on all Bureau of Land Management 
     lands including maintenance, rehabilitation, and restoration 
     of facilities, property, trails and lands and for remediation 
     of abandoned mines and wells, $125,000,000.

                              construction

       For an additional amount for ``Construction'', for 
     activities on all Bureau of Land Management lands including 
     construction, reconstruction, decommissioning and repair of 
     roads, bridges, trails, property, and facilities and for 
     energy efficient retrofits of existing facilities, 
     $180,000,000.

                        wildland fire management

       For an additional amount for ``Wildland Fire Management'', 
     for hazardous fuels reduction, $15,000,000.

                United States Fish and Wildlife Service

                          resource management

       For an additional amount for ``Resource Management'', for 
     deferred maintenance, construction, and capital improvement 
     projects on national wildlife refuges and national fish 
     hatcheries and for high priority habitat restoration 
     projects, $165,000,000.

                              construction

       For an additional amount for ``Construction'', for 
     construction, reconstruction, and repair of roads, bridges, 
     property, and facilities and for energy efficient retrofits 
     of existing facilities, $115,000,000.

                         National Park Service

                 operation of the national park system

       For an additional amount for ``Operation of the National 
     Park System'', for deferred maintenance of facilities and 
     trails and for other critical repair and rehabilitation 
     projects, $146,000,000.


                       Historic Preservation Fund

       For an additional amount for ``Historic Preservation 
     Fund'', for historic preservation projects at historically 
     black colleges and universities as authorized by the Historic 
     Preservation Fund Act of 1996 and the Omnibus Parks and 
     Public Lands Act of 1996, $15,000,000: Provided, That any 
     matching requirements otherwise required for such projects 
     are waived.

                              construction

       For an additional amount for ``Construction'', for repair 
     and restoration of roads; construction of facilities, 
     including energy efficient retrofits of existing facilities; 
     equipment replacement; preservation and repair of historical 
     resources within the National Park System; cleanup of 
     abandoned mine sites on park lands; and other critical 
     infrastructure projects, $589,000,000.

                    United States Geological Survey

                 surveys, investigations, and research

       For an additional amount for ``Surveys, Investigations, and 
     Research'', $140,000,000, for repair, construction and 
     restoration of facilities; equipment replacement and upgrades 
     including stream gages, and seismic and volcano monitoring 
     systems; national map activities; and other critical deferred 
     maintenance and improvement projects.

                        Bureau of Indian Affairs

                      operation of indian programs

       For an additional amount for ``Operation of Indian 
     Programs'', for workforce training programs and the housing 
     improvement program, $40,000,000.

                              construction

       For an additional amount for ``Construction'', for repair 
     and restoration of roads; replacement school construction; 
     school improvements and repairs; and detention center 
     maintenance and repairs, $450,000,000: Provided, That section 
     1606 of this Act shall not apply to tribal contracts entered 
     into by the Bureau of Indian Affairs with this appropriation.

                 indian guaranteed loan program account

       For an additional amount for ``Indian Guaranteed Loan 
     Program Account'', $10,000,000.

                      Office of Inspector General

                         salaries and expenses

       For an additional amount for ``Office of Inspector 
     General'', $15,000,000, to remain available until September 
     30, 2012.

[[Page 3902]]



                     ENVIROMENTAL PROTECTION AGENCY

                      Office of Inspector General

       For an additional amount for ``Office of Inspector 
     General'', $20,000,000, to remain available until September 
     30, 2012.

                     Hazardous Substance Superfund

       For an additional amount for ``Hazardous Substance 
     Superfund'', $600,000,000, which shall be for the Superfund 
     Remedial program: Provided, That the Administrator of the 
     Environmental Protection Agency (Administrator) may retain up 
     to 3 percent of the funds appropriated herein for management 
     and oversight purposes.

          Leaking Underground Storage Tank Trust Fund Program

       For an additional amount for ``Leaking Underground Storage 
     Tank Trust Fund Program'', $200,000,000, which shall be for 
     cleanup activities authorized by section 9003(h) of the Solid 
     Waste Disposal Act: Provided, That none of these funds shall 
     be subject to cost share requirements under section 
     9003(h)(7)(B) of such Act: Provided further, That the 
     Administrator may retain up to 1.5 percent of the funds 
     appropriated herein for management and oversight purposes.

                   State and Tribal Assistance Grants

                     (including transfers of funds)

       For an additional amount for ``State and Tribal Assistance 
     Grants'', $6,400,000,000, which shall be allocated as 
     follows:
       (1) $4,000,000,000 shall be for capitalization grants for 
     the Clean Water State Revolving Funds under title VI of the 
     Federal Water Pollution Control Act and $2,000,000,000 shall 
     be for capitalization grants under section 1452 of the Safe 
     Drinking Water Act: Provided, That the Administrator may 
     retain up to 1 percent of the funds appropriated herein for 
     management and oversight purposes: Provided further, That 
     funds appropriated herein shall not be subject to the 
     matching or cost share requirements of sections 602(b)(2), 
     602(b)(3) or 202 of the Federal Water Pollution Control Act 
     nor the matching requirements of section 1452(e) of the Safe 
     Drinking Water Act: Provided further, That the Administrator 
     shall reallocate funds appropriated herein for the Clean and 
     Drinking Water State Revolving Funds (Revolving Funds) where 
     projects are not under contract or construction within 12 
     months of the date of enactment of this Act: Provided 
     further, That notwithstanding the priority rankings they 
     would otherwise receive under each program, priority for 
     funds appropriated herein shall be given to projects on a 
     State priority list that are ready to proceed to construction 
     within 12 months of the date of enactment of this Act: 
     Provided further, That notwithstanding the requirements of 
     section 603(d) of the Federal Water Pollution Control Act or 
     section 1452(f) of the Safe Drinking Water Act, for the funds 
     appropriated herein, each State shall use not less than 50 
     percent of the amount of its capitalization grants to provide 
     additional subsidization to eligible recipients in the form 
     of forgiveness of principal, negative interest loans or 
     grants or any combination of these: Provided further, That, 
     to the extent there are sufficient eligible project 
     applications, not less than 20 percent of the funds 
     appropriated herein for the Revolving Funds shall be for 
     projects to address green infrastructure, water or energy 
     efficiency improvements or other environmentally innovative 
     activities: Provided further, That notwithstanding the 
     limitation on amounts specified in section 518(c) of the 
     Federal Water Pollution Control Act, up to 1.5 percent of the 
     funds appropriated herein for the Clean Water State Revolving 
     Funds may be reserved by the Administrator for tribal grants 
     under section 518(c) of such Act: Provided further, That up 
     to 4 percent of the funds appropriated herein for tribal set-
     asides under the Revolving Funds may be transferred to the 
     Indian Health Service to support management and oversight of 
     tribal projects: Provided further, That none of the funds 
     appropriated herein shall be available for the purchase of 
     land or easements as authorized by section 603(c) of the 
     Federal Water Pollution Control Act or for activities 
     authorized by section 1452(k) of the Safe Drinking Water Act: 
     Provided further, That notwithstanding section 603(d)(2) of 
     the Federal Water Pollution Control Act and section 
     1452(f)(2) of the Safe Drinking Water Act, funds may be used 
     to buy, refinance or restructure the debt obligations of 
     eligible recipients only where such debt was incurred on or 
     after October 1, 2008;
       (2) $100,000,000 shall be to carry out Brownfields projects 
     authorized by section 104(k) of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980: Provided, That the Administrator may reserve up to 3.5 
     percent of the funds appropriated herein for management and 
     oversight purposes: Provided further, That none of the funds 
     appropriated herein shall be subject to cost share 
     requirements under section 104(k)(9)(B)(iii) of such Act; and
       (3) $300,000,000 shall be for Diesel Emission Reduction Act 
     grants pursuant to title VII, subtitle G of the Energy Policy 
     Act of 2005: Provided, That the Administrator may reserve up 
     to 2 percent of the funds appropriated herein for management 
     and oversight purposes: Provided further, That none of the 
     funds appropriated herein for Diesel Emission Reduction Act 
     grants shall be subject to the State Grant and Loan Program 
     Matching Incentive provisions of section 793(c)(3) of such 
     Act.

       Administrative Provision, Environmental Protection Agency


                     (Including Transfers of Funds)

       Funds made available to the Environmental Protection Agency 
     by this Act for management and oversight purposes shall 
     remain available until September 30, 2011, and may be 
     transferred to the ``Environmental Programs and Management'' 
     account as needed.

                       DEPARTMENT OF AGRICULTURE

                             Forest Service

                  capital improvement and maintenance

       For an additional amount for ``Capital Improvement and 
     Maintenance'', $650,000,000, for priority road, bridge and 
     trail maintenance and decommissioning, including related 
     watershed restoration and ecosystem enhancement projects; 
     facilities improvement, maintenance and renovation; 
     remediation of abandoned mine sites; and support costs 
     necessary to carry out this work.

                        wildland fire management

       For an additional amount for ``Wildland Fire Management'', 
     $500,000,000, of which $250,000,000 is for hazardous fuels 
     reduction, forest health protection, rehabilitation and 
     hazard mitigation activities on Federal lands and of which 
     $250,000,000 is for State and private forestry activities 
     including hazardous fuels reduction, forest health and 
     ecosystem improvement activities on State and private lands 
     using all authorities available to the Forest Service: 
     Provided, That up to $50,000,000 of the total funding may be 
     used to make wood-to-energy grants to promote increased 
     utilization of biomass from Federal, State and private lands: 
     Provided further, That funds provided for activities on State 
     and private lands shall not be subject to matching or cost 
     share requirements.

                DEPARTMENT OF HEALTH AND HUMAN SERVICES

                         Indian Health Service

                         indian health services

       For an additional amount for ``Indian Health Services'', 
     for health information technology activities, $85,000,000: 
     Provided, That such funds may be used for both telehealth 
     services development and related infrastructure requirements 
     that are typically funded through the ``Indian Health 
     Facilities'' account: Provided further, That notwithstanding 
     any other provision of law, health information technology 
     funds provided within this title shall be allocated at the 
     discretion of the Director of the Indian Health Service.

                        indian health facilities

       For an additional amount for ``Indian Health Facilities'', 
     for facilities construction projects, deferred maintenance 
     and improvement projects, the backlog of sanitation projects 
     and the purchase of equipment, $415,000,000, of which 
     $227,000,000 is provided within the health facilities 
     construction activity for the completion of up to two 
     facilities from the current priority list for which work has 
     already been initiated: Provided, That for the purposes of 
     this Act, spending caps included within the annual 
     appropriation for ``Indian Health Facilities'' for the 
     purchase of medical equipment shall not apply: Provided 
     further, That section 1606 of this Act shall not apply to 
     tribal contracts entered into by the Service with this 
     appropriation.

                         OTHER RELATED AGENCIES

                        Smithsonian Institution


                           Facilities Capital

       For an additional amount for ``Facilities Capital'', for 
     repair and revitalization of existing facilities, 
     $25,000,000.

           National Foundation on the Arts and the Humanities

                    National Endowment for the Arts

                       grants and administration

       For an additional amount for ``Grants and Administration'', 
     $50,000,000, to be distributed in direct grants to fund arts 
     projects and activities which preserve jobs in the non-profit 
     arts sector threatened by declines in philanthropic and other 
     support during the current economic downturn: Provided, That 
     40 percent of such funds shall be distributed to State arts 
     agencies and regional arts organizations in a manner similar 
     to the agency's current practice and 60 percent of such funds 
     shall be for competitively selected arts projects and 
     activities according to sections 2 and 5(c) of the National 
     Foundation on the Arts and Humanities Act of 1965 (20 U.S.C. 
     951, 954(c)): Provided further, That matching requirements 
     under section 5(e) of such Act shall be waived.

                     GENERAL PROVISIONS--THIS TITLE

       Sec. 701. (a) Within 30 days of enactment of this Act, each 
     agency receiving funds under this title shall submit a 
     general plan for the expenditure of such funds to the House 
     and Senate Committees on Appropriations.
       (b) Within 90 days of enactment of this Act, each agency 
     receiving funds under this title shall submit to the 
     Committees a report containing detailed project level 
     information associated with the general plan submitted 
     pursuant to subsection (a).
       Sec. 702.  In carrying out the work for which funds in this 
     title are being made available, the Secretary of the Interior 
     and the Secretary of Agriculture shall utilize, where 
     practicable, the Public Lands Corps, Youth Conservation 
     Corps, Student Conservation Association, Job Corps and other 
     related partnerships with Federal, State, local, tribal or 
     non-profit groups that serve young adults.

[[Page 3903]]

       Sec. 703. Each agency receiving funds under this title may 
     transfer up to 10 percent of the funds in any account to 
     other appropriation accounts within the agency, if the head 
     of the agency (1) determines that the transfer will enhance 
     the efficiency or effectiveness of the use of the funds 
     without changing the intended purpose; and (2) notifies the 
     Committees on Appropriations of the House of Representatives 
     and the Senate 10 days prior to the transfer.

   TITLE VIII--DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND 
                    EDUCATION, AND RELATED AGENCIES

                          DEPARTMENT OF LABOR

                 Employment and Training Administration

                    training and employment services

       For an additional amount for ``Training and Employment 
     Services'' for activities under the Workforce Investment Act 
     of 1998 (``WIA''), $3,950,000,000, which shall be available 
     for obligation on the date of enactment of this Act, as 
     follows:
       (1) $500,000,000 for grants to the States for adult 
     employment and training activities, including supportive 
     services and needs-related payments described in section 
     134(e)(2) and (3) of the WIA: Provided, That a priority use 
     of these funds shall be services to individuals described in 
     134(d)(4)(E) of the WIA;
       (2) $1,200,000,000 for grants to the States for youth 
     activities, including summer employment for youth: Provided, 
     That no portion of such funds shall be reserved to carry out 
     section 127(b)(1)(A) of the WIA: Provided further, That for 
     purposes of section 127(b)(1)(C)(iv) of the WIA, funds 
     available for youth activities shall be allotted as if the 
     total amount available for youth activities in the fiscal 
     year does not exceed $1,000,000,000: Provided further, That 
     with respect to the youth activities provided with such 
     funds, section 101(13)(A) of the WIA shall be applied by 
     substituting ``age 24'' for ``age 21'': Provided further, 
     That the work readiness performance indicator described in 
     section 136(b)(2)(A)(ii)(I) of the WIA shall be the only 
     measure of performance used to assess the effectiveness of 
     summer employment for youth provided with such funds;
       (3) $1,250,000,000 for grants to the States for dislocated 
     worker employment and training activities;
       (4) $200,000,000 for the dislocated workers assistance 
     national reserve;
       (5) $50,000,000 for YouthBuild activities: Provided, That 
     for program years 2008 and 2009, the YouthBuild program may 
     serve an individual who has dropped out of high school and 
     re-enrolled in an alternative school, if that re-enrollment 
     is part of a sequential service strategy; and
       (6) $750,000,000 for a program of competitive grants for 
     worker training and placement in high growth and emerging 
     industry sectors: Provided, That $500,000,000 shall be for 
     research, labor exchange and job training projects that 
     prepare workers for careers in energy efficiency and 
     renewable energy as described in section 171(e)(1)(B) of the 
     WIA: Provided further, That in awarding grants from those 
     funds not designated in the preceding proviso, the Secretary 
     of Labor shall give priority to projects that prepare workers 
     for careers in the health care sector:
     Provided, That funds made available in this paragraph shall 
     remain available through June 30, 2010: Provided further, 
     That a local board may award a contract to an institution of 
     higher education or other eligible training provider if the 
     local board determines that it would facilitate the training 
     of multiple individuals in high-demand occupations, if such 
     contract does not limit customer choice.

            community service employment for older americans

        For an additional amount for ``Community Service 
     Employment for Older Americans'' to carry out title V of the 
     Older Americans Act of 1965, $120,000,000, which shall be 
     available for obligation on the date of enactment of this Act 
     and shall remain available through June 30, 2010: Provided, 
     That funds shall be allotted within 30 days of such enactment 
     to current grantees in proportion to their allotment in 
     program year 2008: Provided further, That funds made 
     available under this heading in this Act may, in accordance 
     with section 517(c) of the Older Americans Act of 1965, be 
     recaptured and reobligated.

     state unemployment insurance and employment service operations

       For an additional amount for ``State Unemployment Insurance 
     and Employment Service Operations'' for grants to States in 
     accordance with section 6 of the Wagner-Peyser Act, 
     $400,000,000, which may be expended from the Employment 
     Security Administration Account in the Unemployment Trust 
     Fund, and which shall be available for obligation on the date 
     of enactment of this Act: Provided, That such funds shall 
     remain available to the States through September 30, 2010: 
     Provided further, That $250,000,000 of such funds shall be 
     used by States for reemployment services for unemployment 
     insurance claimants (including the integrated Employment 
     Service and Unemployment Insurance information technology 
     required to identify and serve the needs of such claimants): 
     Provided further, That the Secretary of Labor shall establish 
     planning and reporting procedures necessary to provide 
     oversight of funds used for reemployment services.

                        Departmental Management

                         salaries and expenses

                     (including transfer of funds)

       For an additional amount for ``Departmental Management'', 
     $80,000,000, for the enforcement of worker protection laws 
     and regulations, oversight, and coordination activities 
     related to the infrastructure and unemployment insurance 
     investments in this Act: Provided, That the Secretary of 
     Labor may transfer such sums as necessary to ``Employment and 
     Standards Administration'', ``Employee Benefits Security 
     Administration'', ``Occupational Safety and Health 
     Administration'', and ``Employment and Training 
     Administration--Program Administration'' for enforcement, 
     oversight, and coordination activities: Provided further, 
     That prior to obligating any funds proposed to be transferred 
     from this account, the Secretary shall provide to the 
     Committees on Appropriations of the House of Representatives 
     and the Senate an operating plan describing the planned uses 
     of each amount proposed to be transferred.

                          office of job corps

       For an additional amount for ``Office of Job Corps'', 
     $250,000,000, for construction, rehabilitation and 
     acquisition of Job Corps Centers, which shall be available 
     upon the date of enactment of this Act and remain available 
     for obligation through June 30, 2010: Provided, That section 
     1552(a) of title 31, United States Code shall not apply if 
     funds are used for a multi-year lease agreement that will 
     result in construction activities that can commence within 
     120 days of enactment of this Act: Provided further, That 
     notwithstanding section 3324(a) of title 31, United States 
     Code, the funds used for an agreement under the preceding 
     proviso may be used for advance, progress, and other 
     payments: Provided further, That the Secretary of Labor may 
     transfer up to 15 percent of such funds to meet the 
     operational needs of such centers, which may include training 
     for careers in the energy efficiency, renewable energy, and 
     environmental protection industries: Provided further, That 
     the Secretary shall provide to the Committees on 
     Appropriations of the House of Representatives and the Senate 
     an operating plan describing the allocation of funds, and a 
     report on the actual obligations, expenditures, and 
     unobligated balances for each activity funded under this 
     heading not later than September 30, 2009 and quarterly 
     thereafter as long as funding provided under this heading is 
     available for obligation or expenditure.

                      office of inspector general

       For an additional amount for the ``Office of Inspector 
     General'', $6,000,000, which shall remain available through 
     September 30, 2012, for salaries and expenses necessary for 
     oversight and audit of programs, grants, and projects funded 
     in this Act.

                DEPARTMENT OF HEALTH AND HUMAN SERVICES

              Health Resources and Services Administration

                     health resources and services

       For an additional amount for ``Health Resources and 
     Services'', $2,500,000,000 which shall be used as follows:
       (1) $500,000,000 shall be for grants to health centers 
     authorized under section 330 of the Public Health Service Act 
     (``PHS Act'');
       (2) $1,500,000,000 shall be available for grants for 
     construction, renovation and equipment, and for the 
     acquisition of health information technology systems, for 
     health centers including health center controlled networks 
     receiving operating grants under section 330 of the PHS Act, 
     notwithstanding the limitation in section 330(e)(3); and
       (3) $500,000,000 to address health professions workforce 
     shortages, of which $75,000,000 for the National Health 
     Service Corps shall remain available through September 30, 
     2011: Provided, That funds may be used to provide 
     scholarships, loan repayment, and grants to training programs 
     for equipment as authorized in the PHS Act, and grants 
     authorized in sections 330L, 747, 767 and 768 of the PHS Act: 
     Provided further, That 20 percent of the funds allocated to 
     the National Health Service Corps shall be used for field 
     operations:
       Provided, That up to 0.5 percent of funds provided in this 
     paragraph may used for administration of such funds: Provided 
     further, That the Secretary shall provide to the Committees 
     on Appropriations of the House of Representatives and the 
     Senate an operating plan detailing activities to be supported 
     and timelines for expenditure prior to making any Federal 
     obligations of funds provided in this paragraph but not later 
     than 90 days after the date of enactment of this Act: 
     Provided further, That the Secretary shall provide to the 
     Committees on Appropriations of the House of Representatives 
     and the Senate a report on the actual obligations, 
     expenditures, and unobligated balances for each activity 
     funded in this paragraph not later than November 1, 2009 and 
     every 6 months thereafter as long as funding provided in this 
     paragraph is available for obligation or expenditure.

                     National Institutes of Health

                 national center for research resources

       For an additional amount for ``National Center for Research 
     Resources'', $1,300,000,000, of which $1,000,000,000 shall be 
     for grants or contracts under section 481A of the Public 
     Health Service Act to construct, renovate or repair existing 
     non-Federal research facilities: Provided, That sections 
     481A(c)(1)(B)(ii), paragraphs (1), (3), and (4) of section 
     481A(e), and section 481B of such Act shall not apply to the 
     use of such funds: Provided further, That the references to 
     ``20 years'' in subsections (c)(1)(B)(i) and (f) of

[[Page 3904]]

     section 481A of such Act are deemed to be references to ``10 
     years'' for purposes of using such funds: Provided further, 
     That the National Center for Research Resources may also use 
     $300,000,000 to provide, under the authority of section 301 
     and title IV of such Act, shared instrumentation and other 
     capital research equipment to recipients of grants and 
     contracts under section 481A of such Act and other 
     appropriate entities: Provided further, That the Director of 
     the Center shall provide to the Committees on Appropriations 
     of the House of Representatives and the Senate an annual 
     report indicating the number of institutions receiving awards 
     of a grant or contract under section 481A of such Act, the 
     proposed use of the funding, the average award size, a list 
     of grant or contract recipients, and the amount of each 
     award.

                         office of the director

                     (including transfer of funds)

       For an additional amount for ``Office of the Director'', 
     $8,200,000,000: Provided, That $7,400,000,000 shall be 
     transferred to the Institutes and Centers of the National 
     Institutes of Health (``NIH'') and to the Common Fund 
     established under section 402A(c)(1) of the Public Health 
     Service Act in proportion to the appropriations otherwise 
     made to such Institutes, Centers, and Common Fund for fiscal 
     year 2009: Provided further, That these funds shall be used 
     to support additional scientific research and shall be merged 
     with and be available for the same purposes as the 
     appropriation or fund to which transferred: Provided further, 
     That this transfer authority is in addition to any other 
     transfer authority available to the NIH: Provided further, 
     That none of these funds may be transferred to ``National 
     Institutes of Health--Buildings and Facilities'', the Center 
     for Scientific Review, the Center for Information Technology, 
     the Clinical Center, or the Global Fund for HIV/AIDS, 
     Tuberculosis and Malaria: Provided further, That the funds 
     provided in this Act to the NIH shall not be subject to the 
     provisions of 15 U.S.C. 638(f)(1) and 15 U.S.C. 638(n)(1): 
     Provided further, That $400,000,000 may be used to carry out 
     section 215 of division G of Public Law 110-161.

                        buildings and facilities

       For an additional amount for ``Buildings and Facilities'', 
     $500,000,000, to fund high-priority repair, construction and 
     improvement projects for National Institutes of Health 
     facilities on the Bethesda, Maryland campus and other agency 
     locations.

               Agency for Healthcare Research and Quality

                    healthcare research and quality

                     (including transfer of funds)

       For an additional amount for ``Healthcare Research and 
     Quality'' to carry out titles III and IX of the Public Health 
     Service Act, part A of title XI of the Social Security Act, 
     and section 1013 of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003, $700,000,000 for 
     comparative effectiveness research: Provided, That of the 
     amount appropriated in this paragraph, $400,000,000 shall be 
     transferred to the Office of the Director of the National 
     Institutes of Health (``Office of the Director'') to conduct 
     or support comparative effectiveness research under section 
     301 and title IV of the Public Health Service Act: Provided 
     further, That funds transferred to the Office of the Director 
     may be transferred to the Institutes and Centers of the 
     National Institutes of Health and to the Common Fund 
     established under section 402A(c)(1) of the Public Health 
     Service Act: Provided further, That this transfer authority 
     is in addition to any other transfer authority available to 
     the National Institutes of Health: Provided further, That 
     within the amount available in this paragraph for the Agency 
     for Healthcare Research and Quality, not more than 1 percent 
     shall be made available for additional full-time equivalents.
       In addition, $400,000,000 shall be available for 
     comparative effectiveness research to be allocated at the 
     discretion of the Secretary of Health and Human Services 
     (``Secretary''): Provided, That the funding appropriated in 
     this paragraph shall be used to accelerate the development 
     and dissemination of research assessing the comparative 
     effectiveness of health care treatments and strategies, 
     through efforts that: (1) conduct, support, or synthesize 
     research that compares the clinical outcomes, effectiveness, 
     and appropriateness of items, services, and procedures that 
     are used to prevent, diagnose, or treat diseases, disorders, 
     and other health conditions; and (2) encourage the 
     development and use of clinical registries, clinical data 
     networks, and other forms of electronic health data that can 
     be used to generate or obtain outcomes data: Provided 
     further, That the Secretary shall enter into a contract with 
     the Institute of Medicine, for which no more than $1,500,000 
     shall be made available from funds provided in this 
     paragraph, to produce and submit a report to the Congress and 
     the Secretary by not later than June 30, 2009, that includes 
     recommendations on the national priorities for comparative 
     effectiveness research to be conducted or supported with the 
     funds provided in this paragraph and that considers input 
     from stakeholders: Provided further, That the Secretary shall 
     consider any recommendations of the Federal Coordinating 
     Council for Comparative Effectiveness Research established by 
     section 804 of this Act and any recommendations included in 
     the Institute of Medicine report pursuant to the preceding 
     proviso in designating activities to receive funds provided 
     in this paragraph and may make grants and contracts with 
     appropriate entities, which may include agencies within the 
     Department of Health and Human Services and other 
     governmental agencies, as well as private sector entities, 
     that have demonstrated experience and capacity to achieve the 
     goals of comparative effectiveness research: Provided 
     further, That the Secretary shall publish information on 
     grants and contracts awarded with the funds provided under 
     this heading within a reasonable time of the obligation of 
     funds for such grants and contracts and shall disseminate 
     research findings from such grants and contracts to 
     clinicians, patients, and the general public, as appropriate: 
     Provided further, That, to the extent feasible, the Secretary 
     shall ensure that the recipients of the funds provided by 
     this paragraph offer an opportunity for public comment on the 
     research: Provided further, That research conducted with 
     funds appropriated under this paragraph shall be consistent 
     with Departmental policies relating to the inclusion of women 
     and minorities in research: Provided further, That the 
     Secretary shall provide the Committees on Appropriations of 
     the House of Representatives and the Senate, the Committee on 
     Energy and Commerce and the Committee on Ways and Means of 
     the House of Representatives, and the Committee on Health, 
     Education, Labor, and Pensions and the Committee on Finance 
     of the Senate with an annual report on the research conducted 
     or supported through the funds provided under this heading: 
     Provided further, That the Secretary, jointly with the 
     Directors of the Agency for Healthcare Research and Quality 
     and the National Institutes of Health, shall provide the 
     Committees on Appropriations of the House of Representatives 
     and the Senate a fiscal year 2009 operating plan for the 
     funds appropriated under this heading prior to making any 
     Federal obligations of such funds in fiscal year 2009, but 
     not later than July 30, 2009, and a fiscal year 2010 
     operating plan for such funds prior to making any Federal 
     obligations of such funds in fiscal year 2010, but not later 
     than November 1, 2009, that detail the type of research being 
     conducted or supported, including the priority conditions 
     addressed; and specify the allocation of resources within the 
     Department of Health and Human Services: Provided further, 
     That the Secretary, jointly with the Directors of the Agency 
     for Healthcare Research and Quality and the National 
     Institutes of Health, shall provide to the Committees on 
     Appropriations of the House of Representatives and the Senate 
     a report on the actual obligations, expenditures, and 
     unobligated balances for each activity funded under this 
     heading not later than November 1, 2009, and every 6 months 
     thereafter as long as funding provided under this heading is 
     available for obligation or expenditure.

                Administration for Children and Families

   payments to states for the child care and development block grant

       For an additional amount for ``Payments to States for the 
     Child Care and Development Block Grant'', $2,000,000,000, 
     which shall be used to supplement, not supplant State general 
     revenue funds for child care assistance for low-income 
     families: Provided, That, in addition to the amounts required 
     to be reserved by the States under section 658G of the Child 
     Care and Development Block Grant Act of 1990, $255,186,000 
     shall be reserved by the States for activities authorized 
     under section 658G, of which $93,587,000 shall be for 
     activities that improve the quality of infant and toddler 
     care.

                children and families services programs

       For an additional amount for ``Children and Families 
     Services Programs'', $3,150,000,000, which shall be used as 
     follows:
       (1) $1,000,000,000 for carrying out activities under the 
     Head Start Act.
       (2) $1,100,000,000 for expansion of Early Head Start 
     programs, as described in section 645A of the Head Start Act: 
     Provided, That of the funds provided in this paragraph, up to 
     10 percent shall be available for the provision of training 
     and technical assistance to such programs consistent with 
     section 645A(g)(2) of such Act, and up to 3 percent shall be 
     available for monitoring the operation of such programs 
     consistent with section 641A of such Act.
       (3) $1,000,000,000 for carrying out activities under 
     sections 674 through 679 of the Community Services Block 
     Grant Act, of which no part shall be subject to section 
     674(b)(3) of such Act: Provided, That notwithstanding section 
     675C(a)(1) and 675C(b) of such Act, 1 percent of the funds 
     made available to each State from this additional amount 
     shall be used for benefits enrollment coordination activities 
     relating to the identification and enrollment of eligible 
     individuals and families in Federal, State, and local benefit 
     programs: Provided further, That all funds remaining 
     available to a State from this additional amount after 
     application of the previous proviso shall be distributed to 
     eligible entities as defined in section 673(1) of such Act: 
     Provided further, That for services furnished under such Act 
     during fiscal years 2009 and 2010, States may apply the last 
     sentence of section 673(2) of such Act by substituting ``200 
     percent'' for ``125 percent''.
       (4) $50,000,000 for carrying out activities under section 
     1110 of the Social Security Act.

                        Administration on Aging

                        aging services programs

       For an additional amount for ``Aging Services Programs'' 
     under subparts 1 and 2 of part C, of title III, and under 
     title VI, of the Older Americans Act of 1965, $100,000,000, 
     of which $65,000,000 shall be for Congregate Nutrition 
     Services, $32,000,000 shall be for Home-Delivered

[[Page 3905]]

     Nutrition Services and $3,000,000 shall be for Nutrition 
     Services for Native Americans.

                        Office of the Secretary

  office of the national coordinator for health information technology

                     (including transfer of funds)

       For an additional amount for ``Office of the National 
     Coordinator for Health Information Technology'', 
     $2,000,000,000, to carry out title XIII of this Act, to 
     remain available until expended: Provided, That of such 
     amount, the Secretary of Health and Human Services shall 
     transfer $20,000,000 to the Director of the National 
     Institute of Standards and Technology in the Department of 
     Commerce for continued work on advancing health care 
     information enterprise integration through activities such as 
     technical standards analysis and establishment of conformance 
     testing infrastructure, so long as such activities are 
     coordinated with the Office of the National Coordinator for 
     Health Information Technology: Provided further, that 
     $300,000,000 is to support regional or sub-national efforts 
     toward health information exchange: Provided further, That 
     0.25 percent of the funds provided in this paragraph may be 
     used for administration of such funds: Provided further, That 
     funds available under this heading shall become available for 
     obligation only upon submission of an annual operating plan 
     by the Secretary to the Committees on Appropriations of the 
     House of Representatives and the Senate: Provided further, 
     That the fiscal year 2009 operating plan shall be provided 
     not later than 90 days after enactment of this Act and that 
     subsequent annual operating plans shall be provided not later 
     than November 1 of each year: Provided further, That these 
     operating plans shall describe how expenditures are aligned 
     with the specific objectives, milestones, and metrics of the 
     Federal Health Information Technology Strategic Plan, 
     including any subsequent updates to the Plan; the allocation 
     of resources within the Department of Health and Human 
     Services and other Federal agencies; and the identification 
     of programs and activities that are supported: Provided 
     further, That the Secretary shall provide to the Committees 
     on Appropriations of the House of Representatives and the 
     Senate a report on the actual obligations, expenditures, and 
     unobligated balances for each major set of activities not 
     later than November 1, 2009, and every 6 months thereafter as 
     long as funding provided under this heading is available for 
     obligation or expenditure.

                      office of inspector general

       For an additional amount for the ``Office of Inspector 
     General'', $17,000,000 which shall remain available until 
     September 30, 2012.

            public health and social services emergency fund

       For an additional amount for ``Public Health and Social 
     Services Emergency Fund'' to improve information technology 
     security at the Department of Health and Human Services, 
     $50,000,000.

                      prevention and wellness fund

                     (including transfer of funds)

       For necessary expenses for a ``Prevention and Wellness 
     Fund'' to be administered through the Department of Health 
     and Human Services, Office of the Secretary, $1,000,000,000: 
     Provided, That of the amount provided in this paragraph, 
     $300,000,000 shall be transferred to the Centers for Disease 
     Control and Prevention (``CDC'') as an additional amount to 
     carry out the immunization program (``section 317 
     immunization program'') authorized by section 317(a), (j), 
     and (k)(1) of the Public Health Service Act (``PHS Act''): 
     Provided further, That of the amount provided in this 
     paragraph, $650,000,000 shall be to carry out evidence-based 
     clinical and community-based prevention and wellness 
     strategies authorized by the PHS Act, as determined by the 
     Secretary, that deliver specific, measurable health outcomes 
     that address chronic disease rates: Provided further, That 
     funds appropriated in the preceding proviso may be 
     transferred to other appropriation accounts of the Department 
     of Health and Human Services, as determined by the Secretary 
     to be appropriate: Provided further, That of the amount 
     appropriated in this paragraph, $50,000,000 shall be provided 
     to States for an additional amount to carry out activities to 
     implement healthcare-associated infections reduction 
     strategies: Provided further, That not more than 0.5 percent 
     of funds made available in this paragraph may be used for 
     management and oversight expenses in the office or division 
     of the Department of Health and Human Services administering 
     the funds: Provided further, That the Secretary shall, 
     directly or through contracts with public or private 
     entities, provide for annual evaluations of programs carried 
     out with funds provided under this heading in order to 
     determine the quality and effectiveness of the programs: 
     Provided further, That the Secretary shall, not later than 1 
     year after the date of enactment of this Act, submit to the 
     Committees on Appropriations of the House of Representatives 
     and the Senate, the Committee on Energy and Commerce of the 
     House of Representatives, and the Committee on Health, 
     Education, Labor, and Pensions of the Senate, a report 
     summarizing the annual evaluations of programs from the 
     preceding proviso: Provided further, That the Secretary shall 
     provide to the Committees on Appropriations of the House of 
     Representatives and the Senate an operating plan for the 
     Prevention and Wellness Fund prior to making any Federal 
     obligations of funds provided in this paragraph (excluding 
     funds to carry out the section 317 immunization program), but 
     not later than 90 days after the date of enactment of this 
     Act, that indicates the prevention priorities to be 
     addressed; provides measurable goals for each prevention 
     priority; details the allocation of resources within the 
     Department of Health and Human Services; and identifies which 
     programs or activities are supported, including descriptions 
     of any new programs or activities: Provided further, That the 
     Secretary shall provide to the Committees on Appropriations 
     of the House of Representatives and the Senate a report on 
     the actual obligations, expenditures, and unobligated 
     balances for each activity funded under this heading not 
     later than November 1, 2009, and every 6 months thereafter as 
     long as funding provided under this heading is available for 
     obligation or expenditure.

                        DEPARTMENT OF EDUCATION

                    Education for the Disadvantaged

       For an additional amount for ``Education for the 
     Disadvantaged'' to carry out title I of the Elementary and 
     Secondary Education Act of 1965 (``ESEA''), $13,000,000,000: 
     Provided, That $5,000,000,000 shall be available for targeted 
     grants under section 1125 of the ESEA: Provided further, That 
     $5,000,000,000 shall be available for education finance 
     incentive grants under section 1125A of the ESEA: Provided 
     further, That $3,000,000,000 shall be for school improvement 
     grants under section 1003(g) of the ESEA: Provided further, 
     That each local educational agency receiving funds available 
     under this paragraph shall be required to file with the State 
     educational agency, no later than December 1, 2009, a school-
     by-school listing of per-pupil educational expenditures from 
     State and local sources during the 2008-2009 academic year: 
     Provided further, That each State educational agency shall 
     report that information to the Secretary of Education by 
     March 31, 2010.

                               Impact Aid

       For an additional amount for ``Impact Aid'' to carry out 
     section 8007 of title VIII of the Elementary and Secondary 
     Education Act of 1965, $100,000,000, which shall be expended 
     pursuant to the requirements of section 805.

                      School Improvement Programs

       For an additional amount for ``School Improvement 
     Programs'' to carry out subpart 1, part D of title II of the 
     Elementary and Secondary Education Act of 1965 (``ESEA''), 
     and subtitle B of title VII of the McKinney-Vento Homeless 
     Assistance Act, $720,000,000: Provided, That $650,000,000 
     shall be available for subpart 1, part D of title II of the 
     ESEA: Provided further, That the Secretary shall allot 
     $70,000,000 for grants under McKinney-Vento to each State in 
     proportion to the number of homeless students identified by 
     the State during the 2007-2008 school year relative to the 
     number of such children identified nationally during that 
     school year: Provided further, That State educational 
     agencies shall subgrant the McKinney-Vento funds to local 
     educational agencies on a competitive basis or according to a 
     formula based on the number of homeless students identified 
     by the local educational agencies in the State: Provided 
     further, That the Secretary shall distribute the McKinney-
     Vento funds to the States not later than 60 days after the 
     date of the enactment of this Act: Provided further, That 
     each State shall subgrant the McKinney-Vento funds to local 
     educational agencies not later than 120 days after receiving 
     its grant from the Secretary.

                       Innovation and Improvement

       For an additional amount for ``Innovation and Improvement'' 
     to carry out subpart 1, part D of title V of the Elementary 
     and Secondary Education Act of 1965 (``ESEA''), $200,000,000: 
     Provided, That these funds shall be expended as directed in 
     the fifth, sixth, and seventh provisos under the heading 
     ``Innovation and Improvement'' in the Department of Education 
     Appropriations Act, 2008: Provided further, That a portion of 
     these funds shall also be used for a rigorous national 
     evaluation by the Institute of Education Sciences, utilizing 
     randomized controlled methodology to the extent feasible, 
     that assesses the impact of performance-based teacher and 
     principal compensation systems supported by the funds 
     provided in this Act on teacher and principal recruitment and 
     retention in high-need schools and subjects: Provided 
     further, That the Secretary may reserve up to 1 percent of 
     the amount made available under this heading for management 
     and oversight of the activities supported with those funds.

                           Special Education

       For an additional amount for ``Special Education'' for 
     carrying out parts B and C of the Individuals with 
     Disabilities Education Act (``IDEA''), $12,200,000,000, of 
     which $11,300,000,000 shall be available for section 611 of 
     the IDEA: Provided, That if every State, as defined by 
     section 602(31) of the IDEA, reaches its maximum allocation 
     under section 611(d)(3)(B)(iii) of the IDEA, and there are 
     remaining funds, such funds shall be proportionally allocated 
     to each State subject to the maximum amounts contained in 
     section 611(a)(2) of the IDEA: Provided further, That by July 
     1, 2009, the Secretary of Education shall reserve the amount 
     needed for grants under section 643(e) of the IDEA, with any 
     remaining funds to be allocated in accordance with section 
     643(c) of the IDEA: Provided further, That the total amount 
     for each of sections 611(b)(2) and 643(b)(1) of the IDEA, 
     under this and all other Acts, for fiscal year 2009, whenever 
     enacted, shall be equal to the amounts respectively available 
     for these activities under these sections during fiscal year 
     2008 increased by the amount of inflation as specified in 
     section 619(d)(2)(B) of

[[Page 3906]]

     the IDEA: Provided further, That $400,000,000 shall be 
     available for section 619 of the IDEA and $500,000,000 shall 
     be available for part C of the IDEA.

            Rehabilitation Services and Disability Research

       For an additional amount for ``Rehabilitation Services and 
     Disability Research'' for providing grants to States to carry 
     out the Vocational Rehabilitation Services program under part 
     B of title I and parts B and C of chapter 1 and chapter 2 of 
     title VII of the Rehabilitation Act of 1973, $680,000,000: 
     Provided, That $540,000,000 shall be available for part B of 
     title I of the Rehabilitation Act: Provided further, That 
     funds provided herein shall not be considered in determining 
     the amount required to be appropriated under section 
     100(b)(1) of the Rehabilitation Act of 1973 in any fiscal 
     year: Provided further, That, notwithstanding section 
     7(14)(A), the Federal share of the costs of vocational 
     rehabilitation services provided with the funds provided 
     herein shall be 100 percent: Provided further, That 
     $140,000,000 shall be available for parts B and C of chapter 
     1 and chapter 2 of title VII of the Rehabilitation Act: 
     Provided further, That $18,200,000 shall be for State Grants, 
     $87,500,000 shall be for independent living centers, and 
     $34,300,000 shall be for services for older blind 
     individuals.

                      Student Financial Assistance

       For an additional amount for ``Student Financial 
     Assistance'' to carry out subpart 1 of part A and part C of 
     title IV of the Higher Education Act of 1965 (``HEA''), 
     $15,840,000,000, which shall remain available through 
     September 30, 2011: Provided, That $15,640,000,000 shall be 
     available for subpart 1 of part A of title IV of the HEA: 
     Provided further, That $200,000,000 shall be available for 
     part C of title IV of the HEA.
       The maximum Pell Grant for which a student shall be 
     eligible during award year 2009-2010 shall be $4,860.

                       Student Aid Administration

       For an additional amount for ``Student Aid Administration'' 
     to carry out part D of title I, and subparts 1, 3, and 4 of 
     part A, and parts B, C, D, and E of title IV of the Higher 
     Education Act of 1965, $60,000,000.

                            Higher Education

       For an additional amount for ``Higher Education'' to carry 
     out part A of title II of the Higher Education Act of 1965, 
     $100,000,000.

                    Institute of Education Sciences

       For an additional amount for ``Institute of Education 
     Sciences'' to carry out section 208 of the Educational 
     Technical Assistance Act, $250,000,000, which may be used for 
     Statewide data systems that include postsecondary and 
     workforce information, of which up to $5,000,000 may be used 
     for State data coordinators and for awards to public or 
     private organizations or agencies to improve data 
     coordination.

                        Departmental Management

                    office of the inspector general

       For an additional amount for the ``Office of the Inspector 
     General'', $14,000,000, which shall remain available through 
     September 30, 2012, for salaries and expenses necessary for 
     oversight and audit of programs, grants, and projects funded 
     in this Act.

                            RELATED AGENCIES

             Corporation for National and Community Service


                           Operating Expenses

                     (including transfer of funds)

       For an additional amount for ``Operating Expenses'' to 
     carry out the Domestic Volunteer Service Act of 1973 (``1973 
     Act'') and the National and Community Service Act of 1990 
     (``1990 Act''), $160,000,000: Provided, That $89,000,000 of 
     the funds made available in this paragraph shall be used to 
     make additional awards to existing AmeriCorps grantees and 
     may be used to provide adjustments to awards under subtitle C 
     of title I of the 1990 Act made prior to September 30, 2010 
     for which the Chief Executive Officer of the Corporation for 
     National and Community Service (``CEO'') determines that a 
     waiver of the Federal share limitation is warranted under 
     section 2521.70 of title 45 of the Code of Federal 
     Regulations: Provided further, That of the amount made 
     available in this paragraph, not less than $6,000,000 shall 
     be transferred to ``Salaries and Expenses'' for necessary 
     expenses relating to information technology upgrades, of 
     which up to $800,000 may be used to administer the funds 
     provided in this paragraph: Provided further, That of the 
     amount provided in this paragraph, not less than $65,000,000 
     shall be for programs under title I, part A of the 1973 Act: 
     Provided further, That funds provided in the previous proviso 
     shall not be made available in connection with cost-share 
     agreements authorized under section 192A(g)(10) of the 1990 
     Act: Provided further, That of the funds available under this 
     heading, up to 20 percent of funds allocated to grants 
     authorized under section 124(b) of title I, subtitle C of the 
     1990 Act may be used to administer, reimburse, or support any 
     national service program under section 129(d)(2) of the 1990 
     Act: Provided further, That, except as provided herein and in 
     addition to requirements identified herein, funds provided in 
     this paragraph shall be subject to the terms and conditions 
     under which funds were appropriated in fiscal year 2008: 
     Provided further, That the CEO shall provide the Committees 
     on Appropriations of the House of Representatives and the 
     Senate a fiscal year 2009 operating plan for the funds 
     appropriated in this paragraph prior to making any Federal 
     obligations of such funds in fiscal year 2009, but not later 
     than 90 days after the date of enactment of this Act, and a 
     fiscal year 2010 operating plan for such funds prior to 
     making any Federal obligations of such funds in fiscal year 
     2010, but not later than November 1, 2009, that detail the 
     allocation of resources and the increased number of members 
     supported by the AmeriCorps programs: Provided further, That 
     the CEO shall provide to the Committees on Appropriations of 
     the House of Representatives and the Senate a report on the 
     actual obligations, expenditures, and unobligated balances 
     for each activity funded under this heading not later than 
     November 1, 2009, and every 6 months thereafter as long as 
     funding provided under this heading is available for 
     obligation or expenditure.

                      Office of Inspector General

       For an additional amount for the ``Office of Inspector 
     General'', $1,000,000, which shall remain available until 
     September 30, 2012.

                         National Service Trust

                     (including transfer of funds)

       For an additional amount for ``National Service Trust'' 
     established under subtitle D of title I of the National and 
     Community Service Act of 1990 (``1990 Act''), $40,000,000, 
     which shall remain available until expended: Provided, That 
     the Corporation for National and Community Service may 
     transfer additional funds from the amount provided within 
     ``Operating Expenses'' for grants made under subtitle C of 
     title I of the 1990 Act to this appropriation upon 
     determination that such transfer is necessary to support the 
     activities of national service participants and after notice 
     is transmitted to the Committees on Appropriations of the 
     House of Representatives and the Senate: Provided further, 
     That the amount appropriated for or transferred to the 
     National Service Trust may be invested under section 145(b) 
     of the 1990 Act without regard to the requirement to 
     apportion funds under 31 U.S.C. 1513(b).

                     Social Security Administration


                 Limitation on Administrative Expenses

                     (including transfer of funds)

       For an additional amount for ``Limitation on Administrative 
     Expenses'', $1,000,000,000 shall be available as follows:
       (1) $500,000,000 shall remain available until expended for 
     necessary expenses of the replacement of the National 
     Computer Center and the information technology costs 
     associated with such Center: Provided, That the Commissioner 
     of Social Security shall notify the Committees on 
     Appropriations of the House of Representatives and the Senate 
     not later than 10 days prior to each public notice soliciting 
     bids related to site selection and construction and prior to 
     the lease or purchase of such site: Provided further, That 
     the construction plan and site selection for such center 
     shall be subject to review and approval by the Office of 
     Management and Budget: Provided further, That such center 
     shall continue to be a government-operated facility; and
       (2) $500,000,000 for processing disability and retirement 
     workloads, including information technology acquisitions and 
     research in support of such activities: Provided, That up to 
     $40,000,000 may be used by the Commissioner of Social 
     Security for health information technology research and 
     activities to facilitate the adoption of electronic medical 
     records in disability claims, including the transfer of funds 
     to ``Supplemental Security Income Program'' to carry out 
     activities under section 1110 of the Social Security Act.

                      Office of Inspector General

       For an additional amount for the ``Office of Inspector 
     General'', $2,000,000, which shall remain available through 
     September 30, 2012, for salaries and expenses necessary for 
     oversight and audit of programs, projects, and activities 
     funded in this Act.

                     GENERAL PROVISIONS--THIS TITLE

       Sec. 801. (a) Up to 1 percent of the funds made available 
     to the Department of Labor in this title may be used for the 
     administration, management, and oversight of the programs, 
     grants, and activities funded by such appropriation, 
     including the evaluation of the use of such funds.
       (b) Funds designated for these purposes may be available 
     for obligation through September 30, 2010.
       (c) Not later than 30 days after enactment of this Act, the 
     Secretary of Labor shall provide an operating plan describing 
     the proposed use of funds for the purposes described in (a).
       Sec. 802.  Report on the Impact of Past and Future Minimum 
     Wage Increases.  (a) In General.--Section 8104 of the U.S. 
     Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq 
     Accountability Appropriations Act, 2007 (Public Law 110-28; 
     121 Stat. 189) is amended to read as follows:

     ``SEC. 8104. REPORT ON THE IMPACT OF PAST AND FUTURE MINIMUM 
                   WAGE INCREASES.

       ``(a) Study.--Beginning on the date that is 60 days after 
     the date of enactment of this Act, and every year thereafter 
     until the minimum wage in the respective territory is $7.25 
     per hour, the Government Accountability Office shall conduct 
     a study to--
       ``(1) assess the impact of the minimum wage increases that 
     occurred in American Samoa and the Commonwealth of the 
     Northern Mariana Islands in 2007 and 2008, as required under 
     Public Law 110-28, on the rates of employment and the living 
     standards of workers, with full consideration of the other 
     factors that impact rates of employment and the living 
     standards of workers

[[Page 3907]]

     such as inflation in the cost of food, energy, and other 
     commodities; and
       ``(2) estimate the impact of any further wage increases on 
     rates of employment and the living standards of workers in 
     American Samoa and the Commonwealth of the Northern Mariana 
     Islands, with full consideration of the other factors that 
     may impact the rates of employment and the living standards 
     of workers, including assessing how the profitability of 
     major private sector firms may be impacted by wage increases 
     in comparison to other factors such as energy costs and the 
     value of tax benefits.
       ``(b) Report.--No earlier than March 15, 2010, and not 
     later than April 15, 2010, the Government Accountability 
     Office shall transmit its first report to Congress concerning 
     the findings of the study required under subsection (a). The 
     Government Accountability Office shall transmit any 
     subsequent reports to Congress concerning the findings of a 
     study required by subsection (a) between March 15 and April 
     15 of each year.
       ``(c) Economic Information.--To provide sufficient economic 
     data for the conduct of the study under subsection (a) the 
     Bureau of the Census of the Department of Commerce shall 
     include and separately report on American Samoa, the 
     Commonwealth of the Northern Mariana Islands, Guam, and the 
     Virgin Islands in its County Business Patterns data with the 
     same regularity and to the same extent as each Bureau 
     collects and reports such data for the 50 States. In the 
     event that the inclusion of American Samoa, the Commonwealth 
     of the Northern Mariana Islands, Guam, and the Virgin Islands 
     in such surveys and data compilations requires time to 
     structure and implement, the Bureau of the Census shall in 
     the interim annually report the best available data that can 
     feasibly be secured with respect to such territories. Such 
     interim report shall describe the steps the Bureau will take 
     to improve future data collection in the territories to 
     achieve comparability with the data collected in the United 
     States. The Bureau of the Census, together with the 
     Department of the Interior, shall coordinate their efforts to 
     achieve such improvements.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of enactment of this Act.
       Sec. 803.  Eligible Employees in the Recreational Marine 
     Industry. Section 2(3)(F) of the Longshore and Harbor 
     Workers' Compensation Act (33 U.S.C. 902(3)(F)) is amended--
       (1) by striking ``, repair or dismantle''; and
       (2) by striking the semicolon and inserting ``, or 
     individuals employed to repair any recreational vessel, or to 
     dismantle any part of a recreational vessel in connection 
     with the repair of such vessel;''.
       Sec. 804. Federal Coordinating Council for Comparative 
     Effectiveness Research. (a) Establishment.--There is hereby 
     established a Federal Coordinating Council for Comparative 
     Effectiveness Research (in this section referred to as the 
     ``Council'').
       (b) Purpose.--The Council shall foster optimum coordination 
     of comparative effectiveness and related health services 
     research conducted or supported by relevant Federal 
     departments and agencies, with the goal of reducing 
     duplicative efforts and encouraging coordinated and 
     complementary use of resources.
       (c) Duties.--The Council shall--
       (1) assist the offices and agencies of the Federal 
     Government, including the Departments of Health and Human 
     Services, Veterans Affairs, and Defense, and other Federal 
     departments or agencies, to coordinate the conduct or support 
     of comparative effectiveness and related health services 
     research; and
       (2) advise the President and Congress on--
       (A) strategies with respect to the infrastructure needs of 
     comparative effectiveness research within the Federal 
     Government; and
       (B) organizational expenditures for comparative 
     effectiveness research by relevant Federal departments and 
     agencies.
       (d) Membership.--
       (1) Number and appointment.--The Council shall be composed 
     of not more than 15 members, all of whom are senior Federal 
     officers or employees with responsibility for health-related 
     programs, appointed by the President, acting through the 
     Secretary of Health and Human Services (in this section 
     referred to as the ``Secretary''). Members shall first be 
     appointed to the Council not later than 30 days after the 
     date of the enactment of this Act.
       (2) Members.--
       (A) In general.--The members of the Council shall include 
     one senior officer or employee from each of the following 
     agencies:
       (i) The Agency for Healthcare Research and Quality.
       (ii) The Centers for Medicare and Medicaid Services.
       (iii) The National Institutes of Health.
       (iv) The Office of the National Coordinator for Health 
     Information Technology.
       (v) The Food and Drug Administration.
       (vi) The Veterans Health Administration within the 
     Department of Veterans Affairs.
       (vii) The office within the Department of Defense 
     responsible for management of the Department of Defense 
     Military Health Care System.
       (B) Qualifications.--At least half of the members of the 
     Council shall be physicians or other experts with clinical 
     expertise.
       (3) Chairman; vice chairman.--The Secretary shall serve as 
     Chairman of the Council and shall designate a member to serve 
     as Vice Chairman.
       (e) Reports.--
       (1) Initial report.--Not later than June 30, 2009, the 
     Council shall submit to the President and the Congress a 
     report containing information describing current Federal 
     activities on comparative effectiveness research and 
     recommendations for such research conducted or supported from 
     funds made available for allotment by the Secretary for 
     comparative effectiveness research in this Act.
       (2) Annual report.--The Council shall submit to the 
     President and Congress an annual report regarding its 
     activities and recommendations concerning the infrastructure 
     needs, organizational expenditures and opportunities for 
     better coordination of comparative effectiveness research by 
     relevant Federal departments and agencies.
       (f) Staffing; Support.--From funds made available for 
     allotment by the Secretary for comparative effectiveness 
     research in this Act, the Secretary shall make available not 
     more than 1 percent to the Council for staff and 
     administrative support.
       (g) Rules of Construction.--
       (1) Coverage.--Nothing in this section shall be construed 
     to permit the Council to mandate coverage, reimbursement, or 
     other policies for any public or private payer.
       (2) Reports and recommendations.--None of the reports 
     submitted under this section or recommendations made by the 
     Council shall be construed as mandates or clinical guidelines 
     for payment, coverage, or treatment.
       Sec. 805. Grants for Impact Aid Construction. (a) 
     Reservation for Management and Oversight.--From the funds 
     appropriated to carry out this section, the Secretary may 
     reserve up to 1 percent for management and oversight of the 
     activities carried out with those funds.
       (b) Construction Payments.--
       (1) Formula grants.--(A) In General.--From 40 percent of 
     the amount not reserved under subsection (a), the Secretary 
     shall make payments in accordance with section 8007(a) of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     7707(a)), except that the amount of such payments shall be 
     determined in accordance with subparagraph (B).
       (B) Amount of payments.--The Secretary shall make a payment 
     to each local educational agency eligible for a payment under 
     section 8007(a) of the Elementary and Secondary Education Act 
     of 1965 (20 U.S.C. 7707(a)) in an amount that bears the same 
     relationship to the funds made available under subparagraph 
     (A) as the number of children determined under subparagraphs 
     (B), (C), and (D)(i) of section 8003(a)(1) of the Elementary 
     and Secondary Education Act of 1965 (20 U.S.C. 7703(a)(1)(B), 
     (C), and (D)(i)) who were in average daily attendance in the 
     local educational agency for the most recent year for which 
     such information is available bears to the number of such 
     children in all the local educational agencies eligible for a 
     payment under section 8007(a) of the Elementary and Secondary 
     Education Act of 1965 (20 U.S.C. 7707(a)).
       (2) Competitive grants.--From 60 percent of the amount not 
     reserved under subsection (a), the Secretary--
       (A) shall award emergency grants in accordance with section 
     8007(b) of the Elementary and Secondary Education Act of 1965 
     (20 U.S.C. 7707(b)) to eligible local educational agencies to 
     enable the agencies to carry out emergency repairs of school 
     facilities; and
       (B) may award modernization grants in accordance with 
     section 8007(b) of the Elementary and Secondary Education Act 
     of 1965 (20 U.S.C. 7707(b)) to eligible local educational 
     agencies to enable the agencies to carry out the 
     modernization of school facilities.
       (3) Provisions not to apply.--Paragraphs (2), (3), (4), 
     (5)(A)(i), and (5)(A)(vi) of section 8007(b) of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     7707(b)(2), (3), (4), (5)(A)(i), and (5)(A)(vi)) shall not 
     apply to grants made under paragraph (2).
       (4) Eligibility.--A local educational agency is eligible to 
     receive a grant under paragraph (2) if the local educational 
     agency--
       (A) was eligible to receive a payment under section 8002 or 
     8003 of the Elementary and Secondary Education Act of 1965 
     (20 U.S.C. 7702 and 7703) for fiscal year 2008; and
       (B) has--
       (i) a total taxable assessed value of real property that 
     may be taxed for school purposes of less than $100,000,000; 
     or
       (ii) an assessed value of real property per student that 
     may be taxed for school purposes that is less than the 
     average of the assessed value of real property per student 
     that may be taxed for school purposes in the State in which 
     the local educational agency is located.
       (5) Criteria for grants.--In awarding grants under 
     paragraph (2), the Secretary shall consider the following 
     criteria:
       (A) Whether the facility poses a health or safety threat to 
     students and school personnel, including noncompliance with 
     building codes and inaccessibility for persons with 
     disabilities, or whether the existing building capacity meets 
     the needs of the current enrollment and supports the 
     provision of comprehensive educational services to meet 
     current standards in the State in which the local educational 
     agency is located.
       (B) The extent to which the new design and proposed 
     construction utilize energy efficient and recyclable 
     materials.
       (C) The extent to which the new design and proposed 
     construction utilizes non-traditional or alternative building 
     methods to expedite construction and project completion and 
     maximize cost efficiency.
       (D) The feasibility of project completion within 24 months 
     from award.
       (E) The availability of other resources for the proposed 
     project.

[[Page 3908]]

       Sec. 806. Mandatory Pell Grants. Section 401(b)(9)(A) of 
     the Higher Education Act of 1965 (20 U.S.C. 1070a(b)(9)(A)) 
     is amended--
       (1) in clause (ii), by striking ``$2,090,000,000'' and 
     inserting ``$2,733,000,000''; and
       (2) in clause (iii), by striking ``$3,030,000,000'' and 
     inserting ``$3,861,000,000''.
       Sec. 807. (a) In General.--Notwithstanding any other 
     provision of law, and in order to begin expenditures and 
     activities under this Act as quickly as possible consistent 
     with prudent management, the Secretary of Education may--
       (1) award fiscal year 2009 funds to States and local 
     educational agencies on the basis of eligibility 
     determinations made for the award of fiscal year 2008 funds; 
     and
       (2) require States to make prompt allocations to local 
     educational agencies.
       (b) Interest Not to Accrue.--Notwithstanding sections 3335 
     and 6503 of title 31, United States Code, or any other 
     provision of law, the United States shall not be liable to 
     any State or other entity for any interest or fee with 
     respect to any funds under this Act that are allocated by the 
     Secretary of Education to the State or other entity within 30 
     days of the date on which they are available for obligation.

                      TITLE IX--LEGISLATIVE BRANCH

                    GOVERNMENT ACCOUNTABILITY OFFICE

                         Salaries and Expenses

       For an additional amount for ``Salaries and Expenses'' of 
     the Government Accountability Office, $25,000,000, to remain 
     available until September 30, 2010.

                     GENERAL PROVISIONS--THIS TITLE

       Sec. 901.  Government Accountability Office Reviews and 
     Reports.  (a) Reviews and Reports.--
       (1) In General.--The Comptroller General shall conduct 
     bimonthly reviews and prepare reports on such reviews on the 
     use by selected States and localities of funds made available 
     in this Act. Such reports, along with any audits conducted by 
     the Comptroller General of such funds, shall be posted on the 
     Internet and linked to the website established under this Act 
     by the Recovery Accountability and Transparency Board.
       (2) Redactions.--Any portion of a report or audit under 
     this subsection may be redacted when made publicly available, 
     if that portion would disclose information that is not 
     subject to disclosure under section 552 of title 5, United 
     States Code (commonly known as the Freedom of Information 
     Act).
       (b) Examination of Records.--The Comptroller General may 
     examine any records related to obligations and use by any 
     Federal, State, or local government agency of funds made 
     available in this Act.
       Sec. 902.  Access of Government Accountability Office. (a) 
     Access.--Each contract awarded using funds made available in 
     this Act shall provide that the Comptroller General and his 
     representatives are authorized--
       (1) to examine any records of the contractor or any of its 
     subcontractors, or any State or local agency administering 
     such contract, that directly pertain to, and involve 
     transactions relating to, the contract or subcontract; and
       (2) to interview any officer or employee of the contractor 
     or any of its subcontractors, or of any State or local 
     government agency administering the contract, regarding such 
     transactions.
       (b) Relationship to Existing Authority.--Nothing in this 
     section shall be interpreted to limit or restrict in any way 
     any existing authority of the Comptroller General.

          TITLE X--MILITARY CONSTRUCTION AND VETERANS AFFAIRS

                         DEPARTMENT OF DEFENSE

                      Military Construction, Army

        For an additional amount for ``Military Construction, 
     Army'', $180,000,000, to remain available until September 30, 
     2013: Provided, That notwithstanding any other provision of 
     law, such funds may be obligated and expended to carry out 
     planning and design and military construction projects in the 
     United States not otherwise authorized by law: Provided 
     further, That of the amount provided under this heading, 
     $80,000,000 shall be for child development centers, and 
     $100,000,000 shall be for warrior transition complexes: 
     Provided further, That not later than 30 days after the date 
     of enactment of this Act, the Secretary of Defense shall 
     submit to the Committees on Appropriations of both Houses of 
     Congress an expenditure plan for funds provided under this 
     heading.

              Military Construction, Navy and Marine Corps

        For an additional amount for ``Military Construction, Navy 
     and Marine Corps'', $280,000,000, to remain available until 
     September 30, 2013: Provided, That notwithstanding any other 
     provision of law, such funds may be obligated and expended to 
     carry out planning and design and military construction 
     projects in the United States not otherwise authorized by 
     law: Provided further, That of the amount provided under this 
     heading, $100,000,000 shall be for troop housing, $80,000,000 
     shall be for child development centers, and $100,000,000 
     shall be for energy conservation and alternative energy 
     projects: Provided further, That not later than 30 days after 
     the date of enactment of this Act, the Secretary of Defense 
     shall submit to the Committees on Appropriations of both 
     Houses of Congress an expenditure plan for funds provided 
     under this heading.

                    Military Construction, Air Force

        For an additional amount for ``Military Construction, Air 
     Force'', $180,000,000, to remain available until September 
     30, 2013: Provided, That notwithstanding any other provision 
     of law, such funds may be obligated and expended to carry out 
     planning and design and military construction projects in the 
     United States not otherwise authorized by law: Provided 
     further, That of the amount provided under this heading, 
     $100,000,000 shall be for troop housing and $80,000,000 shall 
     be for child development centers: Provided further, That not 
     later than 30 days after the date of enactment of this Act, 
     the Secretary of Defense shall submit to the Committees on 
     Appropriations of both Houses of Congress an expenditure plan 
     for funds provided under this heading.

                  Military Construction, Defense-Wide

       For an additional amount for ``Military Construction, 
     Defense-Wide'', $1,450,000,000, to remain available until 
     September 30, 2013: Provided, That notwithstanding any other 
     provision of law, such funds may be obligated and expended to 
     carry out planning and design and military construction 
     projects in the United States not otherwise authorized by 
     law: Provided further, That of the amount provided under this 
     heading, $1,330,000,000 shall be for the construction of 
     hospitals and $120,000,000 shall be for the Energy 
     Conservation Investment Program: Provided further, That not 
     later than 30 days after the date of enactment of this Act, 
     the Secretary of Defense shall submit to the Committees on 
     Appropriations of both Houses of Congress an expenditure plan 
     for funds provided under this heading.

               Military Construction, Army National Guard

       For an additional amount for ``Military Construction, Army 
     National Guard'', $50,000,000, to remain available until 
     September 30, 2013: Provided, That notwithstanding any other 
     provision of law, such funds may be obligated and expended to 
     carry out planning and design and military construction 
     projects in the United States not otherwise authorized by 
     law: Provided further, That not later than 30 days after the 
     date of enactment of this Act, the Secretary of Defense, in 
     consultation with the Director of the Army National Guard, 
     shall submit to the Committees on Appropriations of both 
     Houses of Congress an expenditure plan for funds provided 
     under this heading.

               Military Construction, Air National Guard

       For an additional amount for ``Military Construction, Air 
     National Guard'', $50,000,000, to remain available until 
     September 30, 2013: Provided, That notwithstanding any other 
     provision of law, such funds may be obligated and expended to 
     carry out planning and design and military construction 
     projects in the United States not otherwise authorized by 
     law: Provided further, That not later than 30 days after the 
     date of enactment of this Act, the Secretary of Defense, in 
     consultation with the Director of the Air National Guard, 
     shall submit to the Committees on Appropriations of both 
     Houses of Congress an expenditure plan for funds provided 
     under this heading.

                   Family Housing Construction, Army

       For an additional amount for ``Family Housing Construction, 
     Army'', $34,507,000, to remain available until September 30, 
     2013: Provided, That notwithstanding any other provision of 
     law, such funds may be obligated and expended to carry out 
     planning and design and military construction projects in the 
     United States not otherwise authorized by law: Provided 
     further, That within 30 days of enactment of this Act, the 
     Secretary of Defense shall submit to the Committees on 
     Appropriations of both Houses of Congress an expenditure plan 
     for funds provided under this heading.

             Family Housing Operation and Maintenance, Army

       For an additional amount for ``Family Housing Operation and 
     Maintenance, Army'', $3,932,000: Provided, That 
     notwithstanding any other provision of law, such funds may be 
     obligated and expended for maintenance and repair and minor 
     construction projects in the United States not otherwise 
     authorized by law.

                 Family Housing Construction, Air Force

       For an additional amount for ``Family Housing Construction, 
     Air Force'', $80,100,000, to remain available until September 
     30, 2013: Provided, That notwithstanding any other provision 
     of law, such funds may be obligated and expended to carry out 
     planning and design and military construction projects in the 
     United States not otherwise authorized by law: Provided 
     further, That within 30 days of enactment of this Act, the 
     Secretary of Defense shall submit to the Committees on 
     Appropriations of both Houses of Congress an expenditure plan 
     for funds provided under this heading.

          Family Housing Operation and Maintenance, Air Force

       For an additional amount for ``Family Housing Operation and 
     Maintenance, Air Force'', $16,461,000: Provided, That 
     notwithstanding any other provision of law, such funds may be 
     obligated and expended for maintenance and repair and minor 
     construction projects in the United States not otherwise 
     authorized by law.

                       Homeowners Assistance Fund

       For an additional amount for ``Homeowners Assistance 
     Fund'', established by section 1013 of the Demonstration 
     Cities and Metropolitan Development Act of 1966, as amended 
     (42 U.S.C. 3374), $555,000,000, to remain available until 
     expended: Provided, That the Secretary of Defense

[[Page 3909]]

     shall submit quarterly reports to the Committees on 
     Appropriations of both Houses of Congress on the expenditure 
     of funds made available under this heading in this or any 
     other Act.

                        Administrative Provision

       Sec. 1001. (a) Temporary Expansion of Homeowners Assistance 
     Program to Respond to Mortgage Foreclosure and Credit Crisis. 
     Section 1013 of the Demonstration Cities and Metropolitan 
     Development Act of 1966 (42 U.S.C. 3374) is amended--
       (1) in subsection (a)--
       (A) by redesignating paragraphs (1), (2), and (3) as 
     clauses (i), (ii), and (iii), respectively, and indenting 
     such subparagraphs, as so redesignated, 6 ems from the left 
     margin;
       (B) by striking ``Notwithstanding any other provision of 
     law'' and inserting the following:
       ``(1) Acquisition of property at or near military 
     installations that have been ordered to be closed.--
     Notwithstanding any other provision of law'';
       (C) by striking ``if he determines'' and inserting ``if--
       ``(A) the Secretary determines--'';
       (D) in clause (iii), as redesignated by subparagraph (A), 
     by striking the period at the end and inserting ``; or''; and
       (E) by adding at the end the following:
       ``(B) the Secretary determines--
       ``(i) that the conditions in clauses (i) and (ii) of 
     subparagraph (A) have been met;
       ``(ii) that the closing or realignment of the base or 
     installation resulted from a realignment or closure carried 
     out under the 2005 round of defense base closure and 
     realignment under the Defense Base Closure and Realignment 
     Act of 1990 (part XXIX of Public Law 101-510; 10 U.S.C. 2687 
     note);
       ``(iii) that the property was purchased by the owner before 
     July 1, 2006;
       ``(iv) that the property was sold by the owner between July 
     1, 2006, and September 30, 2012, or an earlier end date 
     designated by the Secretary;
       ``(v) that the property is the primary residence of the 
     owner; and
       ``(vi) that the owner has not previously received benefit 
     payments authorized under this subsection.
       ``(2) Homeowner assistance for wounded members of the armed 
     forces, department of defense and united states coast guard 
     civilian employees, and their spouses.--Notwithstanding any 
     other provision of law, the Secretary of Defense is 
     authorized to acquire title to, hold, manage, and dispose of, 
     or, in lieu thereof, to reimburse for certain losses upon 
     private sale of, or foreclosure against, any property 
     improved with a one- or two-family dwelling which was at the 
     time of the relevant wound, injury, or illness, the primary 
     residence of--
       ``(A) any member of the Armed Forces in medical transition 
     who--
       ``(i) incurred a wound, injury, or illness in the line of 
     duty during a deployment in support of the Armed Forces;
       ``(ii) is disabled to a degree of 30 percent or more as a 
     result of such wound, injury, or illness, as determined by 
     the Secretary of Defense; and
       ``(iii) is reassigned in furtherance of medical treatment 
     or rehabilitation, or due to medical retirement in connection 
     with such disability;
       ``(B) any civilian employee of the Department of Defense or 
     the United States Coast Guard who--
       ``(i) was wounded, injured, or became ill in the 
     performance of his or her duties during a forward deployment 
     occurring on or after September 11, 2001, in support of the 
     Armed Forces; and
       ``(ii) is reassigned in furtherance of medical treatment, 
     rehabilitation, or due to medical retirement resulting from 
     the sustained disability; or
       ``(C) the spouse of a member of the Armed Forces or a 
     civilian employee of the Department of Defense or the United 
     States Coast Guard if--
       ``(i) the member or employee was killed in the line of duty 
     or in the performance of his or her duties during a 
     deployment on or after September 11, 2001, in support of the 
     Armed Forces or died from a wound, injury, or illness 
     incurred in the line of duty during such a deployment; and
       ``(ii) the spouse relocates from such residence within 2 
     years after the death of such member or employee.
       ``(3) Temporary homeowner assistance for members of the 
     armed forces permanently reassigned during specified mortgage 
     crisis.--Notwithstanding any other provision of law, the 
     Secretary of Defense is authorized to acquire title to, hold, 
     manage, and dispose of, or, in lieu thereof, to reimburse for 
     certain losses upon private sale of, or foreclosure against, 
     any property improved with a one- or two-family dwelling 
     situated at or near a military base or installation, if the 
     Secretary determines--
       ``(A) that the owner is a member of the Armed Forces 
     serving on permanent assignment;
       ``(B) that the owner is permanently reassigned by order of 
     the United States Government to a duty station or home port 
     outside a 50-mile radius of the base or installation;
       ``(C) that the reassignment was ordered between February 1, 
     2006, and September 30, 2012, or an earlier end date 
     designated by the Secretary;
       ``(D) that the property was purchased by the owner before 
     July 1, 2006;
       ``(E) that the property was sold by the owner between July 
     1, 2006, and September 30, 2012, or an earlier end date 
     designated by the Secretary;
       ``(F) that the property is the primary residence of the 
     owner; and
       ``(G) that the owner has not previously received benefit 
     payments authorized under this subsection.'';
       (2) in subsection (b), by striking ``this section'' each 
     place it appears and inserting ``subsection (a)(1)'';
       (3) in subsection (c)--
       (A) by striking ``Such persons'' and inserting the 
     following:
       ``(1) Homeowner assistance related to closed military 
     installations.--
       ``(A) In general.--Such persons'';
       (B) by striking ``set forth above shall elect either (1) to 
     receive'' and inserting the following: ``set forth in 
     subsection (a)(1) shall elect either--
       ``(i) to receive'';
       (C) by striking ``difference between (A) 95 per centum'' 
     and all that follows through ``(B) the fair market value'' 
     and inserting the following: ``difference between--

       ``(I) 95 per centum of the fair market value of their 
     property (as such value is determined by the Secretary of 
     Defense) prior to public announcement of intention to close 
     all or part of the military base or installation; and
       ``(II) the fair market value'';

       (D) by striking ``time of the sale, or (2) to receive'' and 
     inserting the following: ``time of the sale; or
       ``(ii) to receive'';
       (E) by striking ``outstanding mortgages. The Secretary may 
     also pay a person who elects to receive a cash payment under 
     clause (1) of the preceding sentence an amount'' and 
     inserting ``outstanding mortgages.
       ``(B) Reimbursement of expenses.--The Secretary may also 
     pay a person who elects to receive a cash payment under 
     subparagraph (A) an amount''; and
       (F) by striking ``best interest of the Federal Government. 
     Cash payment'' and inserting the following: ``best interest 
     of the United States.
       ``(2) Homeowner assistance for wounded individuals and 
     their spouses.--
       ``(A) In general.--Persons eligible under the criteria set 
     forth in subsection (a)(2) may elect either--
       ``(i) to receive a cash payment as compensation for losses 
     which may be or have been sustained in a private sale, in an 
     amount not to exceed the difference between--

       ``(I) 95 per centum of prior fair market value of their 
     property (as such value is determined by the Secretary of 
     Defense); and
       ``(II) the fair market value of such property (as such 
     value is determined by the Secretary of Defense) at the time 
     of sale; or

       ``(ii) to receive, as purchase price for their property an 
     amount not to exceed 90 per centum of prior fair market value 
     as such value is determined by the Secretary of Defense, or 
     the amount of the outstanding mortgages.
       ``(B) Determination of benefits.--The Secretary may also 
     pay a person who elects to receive a cash payment under 
     subparagraph (A) an amount that the Secretary determines 
     appropriate to reimburse the person for the costs incurred by 
     the person in the sale of the property if the Secretary 
     determines that such payment will benefit the person and is 
     in the best interest of the United States.
       ``(3) Homeowner assistance for permanently reassigned 
     individuals.--
       ``(A) In general.--Persons eligible under the criteria set 
     forth in subsection (a)(3) may elect either--
       ``(i) to receive a cash payment as compensation for losses 
     which may be or have been sustained in a private sale, in an 
     amount not to exceed the difference between--

       ``(I) 95 per centum of prior fair market value of their 
     property (as such value is determined by the Secretary of 
     Defense); and
       ``(II) the fair market value of such property (as such 
     value is determined by the Secretary of Defense) at the time 
     of sale; or

       ``(ii) to receive, as purchase price for their property an 
     amount not to exceed 90 per centum of prior fair market value 
     as such value is determined by the Secretary of Defense, or 
     the amount of the outstanding mortgages.
       ``(B) Determination of benefits.--The Secretary may also 
     pay a person who elects to receive a cash payment under 
     subparagraph (A) an amount that the Secretary determines 
     appropriate to reimburse the person for the costs incurred by 
     the person in the sale of the property if the Secretary 
     determines that such payment will benefit the person and is 
     in the best interest of the United States.
       ``(4) Compensation and limitations related to foreclosures 
     and encumbrances.--Cash payment'';
       (4) by striking subsection (g);
       (5) in subsection (l), by striking ``(a)(2)'' and inserting 
     ``(a)(1)(A)(ii)'';
       (6) in subsection (m), by striking ``this section'' and 
     inserting ``subsection (a)(1)'';
       (7) in subsection (n)--
       (A) in paragraph (1), by striking ``this section'' and 
     inserting ``subsection (a)(1)''; and
       (B) in paragraph (2), by striking ``this section'' and 
     inserting ``subsection (a)(1)'';
       (8) in subsection (o)--
       (A) in paragraph (1), by striking ``this section'' and 
     inserting ``subsection (a)(1)'';
       (B) in paragraph (2), by striking ``this section'' and 
     inserting ``subsection (a)(1)''; and
       (C) by striking paragraph (4); and
       (9) by adding at the end the following new subsection:
       ``(p) Definitions.--In this section:
       ``(1) the term `Armed Forces' has the meaning given the 
     term `armed forces' in section 101(a) of title 10, United 
     States Code;
       ``(2) the term `civilian employee' has the meaning given 
     the term `employee' in section 2105(a) of title 5, United 
     States Code;

[[Page 3910]]

       ``(3) the term `medical transition', in the case of a 
     member of the Armed Forces, means a member who--
       ``(A) is in Medical Holdover status;
       ``(B) is in Active Duty Medical Extension status;
       ``(C) is in Medical Hold status;
       ``(D) is in a status pending an evaluation by a medical 
     evaluation board;
       ``(E) has a complex medical need requiring six or more 
     months of medical treatment; or
       ``(F) is assigned or attached to an Army Warrior Transition 
     Unit, an Air Force Patient Squadron, a Navy Patient 
     Multidisciplinary Care Team, or a Marine Patient Affairs 
     Team/Wounded Warrior Regiment; and
       ``(4) the term `nonappropriated fund instrumentality 
     employee' means a civilian employee who--
       ``(A) is a citizen of the United States; and
       ``(B) is paid from nonappropriated funds of Army and Air 
     Force Exchange Service, Navy Resale and Services Support 
     Office, Marine Corps exchanges, or any other instrumentality 
     of the United States under the jurisdiction of the Armed 
     Forces which is conducted for the comfort, pleasure, 
     contentment, or physical or mental improvement of members of 
     the Armed Forces.''.
       (b) Clerical Amendment.--Such section is further amended in 
     the section heading by inserting ``and certain property owned 
     by members of the Armed Forces, Department of Defense and 
     United States Coast Guard civilian employees, and surviving 
     spouses'' after ``ordered to be closed''.
       (c) Authority to Use Appropriated Funds.--Notwithstanding 
     subsection (i) of such section, amounts appropriated or 
     otherwise made available by this title under the heading 
     ``Homeowners Assistance Fund'' may be used for the Homeowners 
     Assistance Fund established under such section.

                     DEPARTMENT OF VETERANS AFFAIRS

                     Veterans Health Administration

                           medical facilities

        For an additional amount for ``Medical Facilities'' for 
     non-recurring maintenance, including energy projects, 
     $1,000,000,000, to remain available until September 30, 2010: 
     Provided, That not later than 30 days after the date of 
     enactment of this Act, the Secretary of Veterans Affairs 
     shall submit to the Committees on Appropriations of both 
     Houses of Congress an expenditure plan for funds provided 
     under this heading.

                    National Cemetery Administration

       For an additional amount for ``National Cemetery 
     Administration'' for monument and memorial repairs, including 
     energy projects, $50,000,000, to remain available until 
     September 30, 2010: Provided, That not later than 30 days 
     after the date of enactment of this Act, the Secretary of 
     Veterans Affairs shall submit to the Committees on 
     Appropriations of both Houses of Congress an expenditure plan 
     for funds provided under this heading.

                      Departmental Administration

                       general operating expenses

       For an additional amount for ``General Operating 
     Expenses'', $150,000,000, to remain available until September 
     30, 2010, for additional expenses related to hiring and 
     training temporary surge claims processors.

                     information technology systems

       For an additional amount for ``Information Technology 
     Systems'', $50,000,000, to remain available until September 
     30, 2010, for the Veterans Benefits Administration: Provided, 
     That not later than 30 days after the enactment of this Act, 
     the Secretary of Veterans Affairs shall submit to the 
     Committees on Appropriations of both Houses of Congress an 
     expenditure plan for funds provided under this heading.

                      office of inspector general

       For an additional amount for ``Office of Inspector 
     General'', $1,000,000, to remain available until September 
     30, 2011, for oversight and audit of programs, grants and 
     projects funded under this title.

       grants for construction of state extended care facilities

       For an additional amount for ``Grants for Construction of 
     State Extended Care Facilities'', $150,000,000, to remain 
     available until September 30, 2010, for grants to assist 
     States to acquire or construct State nursing home and 
     domiciliary facilities and to remodel, modify, or alter 
     existing hospital, nursing home, and domiciliary facilities 
     in State homes, for furnishing care to veterans as authorized 
     by sections 8131 through 8137 of title 38, United States 
     Code.

                        Administrative Provision

       Sec. 1002.  Payments to Eligible Persons Who Served in the 
     United States Armed Forces in the Far East During World War 
     II.  (a) Findings.--Congress makes the following findings:
       (1) The Philippine islands became a United States 
     possession in 1898 when they were ceded from Spain following 
     the Spanish-American War.
       (2) During World War II, Filipinos served in a variety of 
     units, some of which came under the direct control of the 
     United States Armed Forces.
       (3) The regular Philippine Scouts, the new Philippine 
     Scouts, the Guerrilla Services, and more than 100,000 members 
     of the Philippine Commonwealth Army were called into the 
     service of the United States Armed Forces of the Far East on 
     July 26, 1941, by an executive order of President Franklin D. 
     Roosevelt.
       (4) Even after hostilities had ceased, wartime service of 
     the new Philippine Scouts continued as a matter of law until 
     the end of 1946, and the force gradually disbanded and was 
     disestablished in 1950.
       (5) Filipino veterans who were granted benefits prior to 
     the enactment of the so-called Rescissions Acts of 1946 
     (Public Laws 79-301 and 79-391) currently receive full 
     benefits under laws administered by the Secretary of Veterans 
     Affairs, but under section 107 of title 38, United States 
     Code, the service of certain other Filipino veterans is 
     deemed not to be active service for purposes of such laws.
       (6) These other Filipino veterans only receive certain 
     benefits under title 38, United States Code, and, depending 
     on where they legally reside, are paid such benefit amounts 
     at reduced rates.
       (7) The benefits such veterans receive include service-
     connected compensation benefits paid under chapter 11 of 
     title 38, United States Code, dependency indemnity 
     compensation survivor benefits paid under chapter 13 of title 
     38, United States Code, and burial benefits under chapters 23 
     and 24 of title 38, United States Code, and such benefits are 
     paid to beneficiaries at the rate of $0.50 per dollar 
     authorized, unless they lawfully reside in the United States.
       (8) Dependents' educational assistance under chapter 35 of 
     title 38, United States Code, is also payable for the 
     dependents of such veterans at the rate of $0.50 per dollar 
     authorized, regardless of the veterans' residency.
       (b) Compensation Fund.--
       (1) In General.--There is in the general fund of the 
     Treasury a fund to be known as the ``Filipino Veterans Equity 
     Compensation Fund'' (in this section referred to as the 
     ``compensation fund'').
       (2) Availability of Funds.--Subject to the availability of 
     appropriations for such purpose, amounts in the fund shall be 
     available to the Secretary of Veterans Affairs without fiscal 
     year limitation to make payments to eligible persons in 
     accordance with this section.
       (c) Payments.--
       (1) In General.--The Secretary may make a payment from the 
     compensation fund to an eligible person who, during the one-
     year period beginning on the date of the enactment of this 
     Act, submits to the Secretary a claim for benefits under this 
     section. The application for the claim shall contain such 
     information and evidence as the Secretary may require.
       (2) Payment to Surviving Spouse.--If an eligible person who 
     has filed a claim for benefits under this section dies before 
     payment is made under this section, the payment under this 
     section shall be made instead to the surviving spouse, if 
     any, of the eligible person.
       (d) Eligible Persons.--An eligible person is any person 
     who--
       (1) served--
       (A) before July 1, 1946, in the organized military forces 
     of the Government of the Commonwealth of the Philippines, 
     while such forces were in the service of the Armed Forces of 
     the United States pursuant to the military order of the 
     President dated July 26, 1941, including among such military 
     forces organized guerrilla forces under commanders appointed, 
     designated, or subsequently recognized by the Commander in 
     Chief, Southwest Pacific Area, or other competent authority 
     in the Army of the United States; or
       (B) in the Philippine Scouts under section 14 of the Armed 
     Forces Voluntary Recruitment Act of 1945 (59 Stat. 538); and
       (2) was discharged or released from service described in 
     paragraph (1) under conditions other than dishonorable.
       (e) Payment Amounts.--Each payment under this section shall 
     be--
       (1) in the case of an eligible person who is not a citizen 
     of the United States, in the amount of $9,000; and
       (2) in the case of an eligible person who is a citizen of 
     the United States, in the amount of $15,000.
       (f) Limitation.--The Secretary may not make more than one 
     payment under this section for each eligible person described 
     in subsection (d).
       (g) Clarification of Treatment of Payments Under Certain 
     Laws.--Amounts paid to a person under this section--
       (1) shall be treated for purposes of the internal revenue 
     laws of the United States as damages for human suffering; and
       (2) shall not be included in income or resources for 
     purposes of determining--
       (A) eligibility of an individual to receive benefits 
     described in section 3803(c)(2)(C) of title 31, United States 
     Code, or the amount of such benefits;
       (B) eligibility of an individual to receive benefits under 
     title VIII of the Social Security Act, or the amount of such 
     benefits; or
       (C) eligibility of an individual for, or the amount of 
     benefits under, any other Federal or federally assisted 
     program.
       (h) Release.--
       (1) In General.--Except as provided in paragraph (2), the 
     acceptance by an eligible person or surviving spouse, as 
     applicable, of a payment under this section shall be final, 
     and shall constitute a complete release of any claim against 
     the United States by reason of any service described in 
     subsection (d).
       (2) Payment of Prior Eligibility Status.--Nothing in this 
     section shall prohibit a person from receiving any benefit 
     (including health care, survivor, or burial benefits) which 
     the person would have been eligible to receive based on laws 
     in effect as of the day before the date of the enactment of 
     this Act.

[[Page 3911]]

       (i) Recognition of Service.--The service of a person as 
     described in subsection (d) is hereby recognized as active 
     military service in the Armed Forces for purposes of, and to 
     the extent provided in, this section.
       (j) Administration.--
       (1) The Secretary shall promptly issue application forms 
     and instructions to ensure the prompt and efficient 
     administration of the provisions of this section.
       (2) The Secretary shall administer the provisions of this 
     section in a manner consistent with applicable provisions of 
     title 38, United States Code, and other provisions of law, 
     and shall apply the definitions in section 101 of such title 
     in the administration of such provisions, except to the 
     extent otherwise provided in this section.
       (k) Reports.--The Secretary shall include, in documents 
     submitted to Congress by the Secretary in support of the 
     President's budget for each fiscal year, detailed information 
     on the operation of the compensation fund, including the 
     number of applicants, the number of eligible persons 
     receiving benefits, the amounts paid out of the compensation 
     fund, and the administration of the compensation fund for the 
     most recent fiscal year for which such data is available.
       (l) Authorization of Appropriation.--There is authorized to 
     be appropriated to the compensation fund $198,000,000, to 
     remain available until expended, to make payments under this 
     section.

       TITLE XI--STATE, FOREIGN OPERATIONS, AND RELATED PROGRAMS

                          DEPARTMENT OF STATE

                   Administration of Foreign Affairs

                    diplomatic and consular programs

       For an additional amount for ``Diplomatic and Consular 
     Programs'' for urgent domestic facilities requirements for 
     passport and training functions, $90,000,000: Provided, That 
     the Secretary of State shall submit to the Committees on 
     Appropriations within 90 days of enactment of this Act a 
     detailed spending plan for funds appropriated under this 
     heading: Provided further, That with respect to the funds 
     made available for passport agencies, such plan shall be 
     developed in consultation with the Department of Homeland 
     Security and the General Services Administration and shall 
     coordinate and co-locate, to the extent feasible, passport 
     agencies with other Federal facilities.

                        capital investment fund


                     (including transfer of funds)

       For an additional amount for ``Capital Investment Fund'', 
     $290,000,000, for information technology security and 
     upgrades to support mission-critical operations, of which up 
     to $38,000,000 shall be transferred to, and merged with, 
     funds made available under the heading ``Capital Investment 
     Fund'' of the United States Agency for International 
     Development: Provided, That the Secretary of State and the 
     Administrator of the United States Agency for International 
     Development shall coordinate information technology systems, 
     where appropriate, to increase efficiencies and eliminate 
     redundancies, to include co-location of backup information 
     management facilities, and shall submit to the Committees on 
     Appropriations within 90 days of enactment of this Act a 
     detailed spending plan for funds appropriated under this 
     heading.

                      office of inspector general

       For an additional amount for ``Office of Inspector 
     General'' for oversight requirements, $2,000,000.

                       International Commissions


 International Boundary and Water Commission, United States and Mexico

                              construction

                     (including transfer of funds)

       For an additional amount for ``Construction'' for the water 
     quantity program to meet immediate repair and rehabilitation 
     requirements, $220,000,000: Provided, That up to $2,000,000 
     may be transferred to, and merged with, funds available under 
     the heading ``International Boundary and Water Commission, 
     United States and Mexico--Salaries and Expenses'': Provided 
     further, That the Secretary of State shall submit to the 
     Committees on Appropriations within 90 days of enactment of 
     this Act a detailed spending plan for funds appropriated 
     under this heading.

   TITLE XII--TRANSPORTATION AND HOUSING AND URBAN DEVELOPMENT, AND 
                            RELATED AGENCIES

                      DEPARTMENT OF TRANSPORTATION

                        Office of the Secretary


supplemental discretionary grants for a national surface transportation 
                                 system

       For an additional amount for capital investments in surface 
     transportation infrastructure, $1,500,000,000, to remain 
     available through September 30, 2011: Provided, That the 
     Secretary of Transportation shall distribute funds provided 
     under this heading as discretionary grants to be awarded to 
     State and local governments or transit agencies on a 
     competitive basis for projects that will have a significant 
     impact on the Nation, a metropolitan area, or a region: 
     Provided further, That projects eligible for funding provided 
     under this heading shall include, but not be limited to, 
     highway or bridge projects eligible under title 23, United 
     States Code, including interstate rehabilitation, 
     improvements to the rural collector road system, the 
     reconstruction of overpasses and interchanges, bridge 
     replacements, seismic retrofit projects for bridges, and road 
     realignments; public transportation projects eligible under 
     chapter 53 of title 49, United States Code, including 
     investments in projects participating in the New Starts or 
     Small Starts programs that will expedite the completion of 
     those projects and their entry into revenue service; 
     passenger and freight rail transportation projects; and port 
     infrastructure investments, including projects that connect 
     ports to other modes of transportation and improve the 
     efficiency of freight movement: Provided further, That of the 
     amount made available under this paragraph, the Secretary may 
     use an amount not to exceed $200,000,000 for the purpose of 
     paying the subsidy and administrative costs of projects 
     eligible for federal credit assistance under chapter 6 of 
     title 23, United States Code, if the Secretary finds that 
     such use of the funds would advance the purposes of this 
     paragraph: Provided further, That in distributing funds 
     provided under this heading, the Secretary shall take such 
     measures so as to ensure an equitable geographic distribution 
     of funds and an appropriate balance in addressing the needs 
     of urban and rural communities: Provided further, That a 
     grant funded under this heading shall be not less than 
     $20,000,000 and not greater than $300,000,000: Provided 
     further, That the Secretary may waive the minimum grant size 
     cited in the preceding proviso for the purpose of funding 
     significant projects in smaller cities, regions, or States: 
     Provided further, That not more than 20 percent of the funds 
     made available under this paragraph may be awarded to 
     projects in a single State: Provided further, That the 
     Federal share of the costs for which an expenditure is made 
     under this heading may be up to 100 percent: Provided 
     further, That the Secretary shall give priority to projects 
     that require a contribution of Federal funds in order to 
     complete an overall financing package, and to projects that 
     are expected to be completed within 3 years of enactment of 
     this Act: Provided further, That the Secretary shall publish 
     criteria on which to base the competition for any grants 
     awarded under this heading not later than 90 days after 
     enactment of this Act: Provided further, That the Secretary 
     shall require applications for funding provided under this 
     heading to be submitted not later than 180 days after the 
     publication of such criteria, and announce all projects 
     selected to be funded from such funds not later than 1 year 
     after enactment of this Act: Provided further, That projects 
     conducted using funds provided under this heading must comply 
     with the requirements of subchapter IV of chapter 31 of title 
     40, United States Code: Provided further, That the Secretary 
     may retain up to $1,500,000 of the funds provided under this 
     heading, and may transfer portions of those funds to the 
     Administrators of the Federal Highway Administration, the 
     Federal Transit Administration, the Federal Railroad 
     Administration and the Maritime Administration, to fund the 
     award and oversight of grants made under this heading.

                    Federal Aviation Administration

           supplemental funding for facilities and equipment

       For an additional amount for necessary investments in 
     Federal Aviation Administration infrastructure, $200,000,000, 
     to remain available through September 30, 2010: Provided, 
     That funding provided under this heading shall be used to 
     make improvements to power systems, air route traffic control 
     centers, air traffic control towers, terminal radar approach 
     control facilities, and navigation and landing equipment: 
     Provided further, That priority be given to such projects or 
     activities that will be completed within 2 years of enactment 
     of this Act: Provided further, That amounts made available 
     under this heading may be provided through grants in addition 
     to the other instruments authorized under section 106(l)(6) 
     of title 49, United States Code: Provided further, That the 
     Federal share of the costs for which an expenditure is made 
     under this heading shall be 100 percent: Provided further, 
     That amounts provided under this heading may be used for 
     expenses the agency incurs in administering this program: 
     Provided further, That not more than 60 days after enactment 
     of this Act, the Administrator shall establish a process for 
     applying, reviewing and awarding grants and cooperative and 
     other transaction agreements, including the form and content 
     of an application, and requirements for the maintenance of 
     records that are necessary to facilitate an effective audit 
     of the use of the funding provided: Provided further, That 
     section 50101 of title 49, United States Code, shall apply to 
     funds provided under this heading.


                       Grants-In-Aid for Airports

       For an additional amount for ``Grants-In-Aid for 
     Airports'', to enable the Secretary of Transportation to make 
     grants for discretionary projects as authorized by subchapter 
     1 of chapter 471 and subchapter 1 of chapter 475 of title 49, 
     United States Code, and for the procurement, installation and 
     commissioning of runway incursion prevention devices and 
     systems at airports of such title, $1,100,000,000, to remain 
     available through September 30, 2010: Provided, That such 
     funds shall not be subject to apportionment formulas, special 
     apportionment categories, or minimum percentages under 
     chapter 471: Provided further, That the Secretary shall 
     distribute funds provided under this heading as discretionary 
     grants to airports, with priority given to those projects 
     that demonstrate to his satisfaction their ability to be 
     completed within 2 years of enactment of this Act, and serve 
     to

[[Page 3912]]

     supplement and not supplant planned expenditures from 
     airport-generated revenues or from other State and local 
     sources on such activities: Provided further, That the 
     Secretary shall award grants totaling not less than 50 
     percent of the funds made available under this heading within 
     120 days of enactment of this Act, and award grants for the 
     remaining amounts not later than 1 year after enactment of 
     this Act: Provided further, That the Federal share payable of 
     the costs for which a grant is made under this heading shall 
     be 100 percent: Provided further, That the amount made 
     available under this heading shall not be subject to any 
     limitation on obligations for the Grants-in-Aid for Airports 
     program set forth in any Act: Provided further, That the 
     Administrator of the Federal Aviation Administration may 
     retain up to 0.2 percent of the funds provided under this 
     heading to fund the award and oversight by the Administrator 
     of grants made under this heading.

                     Federal Highway Administration


                   highway infrastructure investment

       For an additional amount for restoration, repair, 
     construction and other activities eligible under paragraph 
     (b) of section 133 of title 23, United States Code, and for 
     passenger and freight rail transportation and port 
     infrastructure projects eligible for assistance under 
     subsection 601(a)(8) of such title, $27,500,000,000, to 
     remain available through September 30, 2010: Provided, That, 
     after making the set-asides required under this heading, 50 
     percent of the funds made available under this heading shall 
     be apportioned to States using the formula set forth in 
     section 104(b)(3) of title 23, United States Code, and the 
     remaining funds shall be apportioned to States in the same 
     ratio as the obligation limitation for fiscal year 2008 was 
     distributed among the States in accordance with the formula 
     specified in section 120(a)(6) of division K of Public Law 
     110-161: Provided further, That funds made available under 
     this heading shall be apportioned not later than 21 days 
     after the date of enactment of this Act: Provided further, 
     That in selecting projects to be carried out with funds 
     apportioned under this heading, priority shall be given to 
     projects that are projected for completion within a 3-year 
     time frame, and are located in economically distressed areas 
     as defined by section 301 of the Public Works and Economic 
     Development Act of 1965, as amended (42 U.S.C. 3161): 
     Provided further, That 120 days following the date of such 
     apportionment, the Secretary of Transportation shall withdraw 
     from each State an amount equal to 50 percent of the funds 
     awarded to that State (excluding funds suballocated within 
     the State) less the amount of funding obligated (excluding 
     funds suballocated within the State), and the Secretary shall 
     redistribute such amounts to other States that have had no 
     funds withdrawn under this proviso in the manner described in 
     section 120(c) of division K of Public Law 110-161: Provided 
     further, That 1 year following the date of such 
     apportionment, the Secretary shall withdraw from each 
     recipient of funds apportioned under this heading any 
     unobligated funds, and the Secretary shall redistribute such 
     amounts to States that have had no funds withdrawn under this 
     proviso (excluding funds suballocated within the State) in 
     the manner described in section 120(c) of division K of 
     Public Law 110-161: Provided further, That at the request of 
     a State, the Secretary of Transportation may provide an 
     extension of such 1-year period only to the extent that he 
     feels satisfied that the State has encountered extreme 
     conditions that create an unworkable bidding environment or 
     other extenuating circumstances: Provided further, That 
     before granting such an extension, the Secretary shall send a 
     letter to the House and Senate Committees on Appropriations 
     that provides a thorough justification for the extension: 
     Provided further, That 3 percent of the funds apportioned to 
     a State under this heading shall be set aside for the 
     purposes described in subsection 133(d)(2) of title 23, 
     United States Code (without regard to the comparison to 
     fiscal year 2005): Provided further, That 30 percent of the 
     funds apportioned to a State under this heading shall be 
     suballocated within the State in the manner and for the 
     purposes described in the first sentence of subsection 
     133(d)(3)(A), in subsection 133(d)(3)(B), and in subsection 
     133(d)(3)(D): Provided further, That such suballocation shall 
     be conducted in every State Provided further, That funds 
     suballocated within a State to urbanized areas and other 
     areas shall not be subject to the redistribution of amounts 
     required 120 days following the date of apportionment of 
     funds provided under this heading: Provided further, That of 
     the funds provided under this heading, $105,000,000 shall be 
     for the Puerto Rico highway program authorized under section 
     165 of title 23, United States Code, and $45,000,000 shall be 
     for the territorial highway program authorized under section 
     215 of title 23, United States Code: Provided further, That 
     of the funds provided under this heading, $60,000,000 shall 
     be for capital expenditures eligible under section 147 of 
     title 23, United States Code (without regard to 
     subsection(d)): Provided further, That the Secretary of 
     Transportation shall distribute such $60,000,000 as 
     competitive discretionary grants to States, with priority 
     given to those projects that demonstrate to his satisfaction 
     their ability to be completed within 2 years of enactment of 
     this Act: Provided further, That of the funds provided under 
     this heading, $550,000,000 shall be for investments in 
     transportation at Indian reservations and Federal lands: 
     Provided further, That of the funds identified in the 
     preceding proviso, $310,000,000 shall be for the Indian 
     Reservation Roads program, $170,000,000 shall be for the Park 
     Roads and Parkways program, $60,000,000 shall be for the 
     Forest Highway Program, and $10,000,000 shall be for the 
     Refuge Roads program: Provided further, That for investments 
     at Indian reservations and Federal lands, priority shall be 
     given to capital investments, and to projects and activities 
     that can be completed within 2 years of enactment of this 
     Act: Provided further, That 1 year following the enactment of 
     this Act, to ensure the prompt use of the $550,000,000 
     provided for investments at Indian reservations and Federal 
     lands, the Secretary shall have the authority to redistribute 
     unobligated funds within the respective program for which the 
     funds were appropriated: Provided further, That up to 4 
     percent of the funding provided for Indian Reservation Roads 
     may be used by the Secretary of the Interior for program 
     management and oversight and project-related administrative 
     expenses: Provided further, That section 134(f)(3)(C)(ii)(II) 
     of title 23, United States Code, shall not apply to funds 
     provided under this heading: Provided further, That of the 
     funds made available under this heading, $20,000,000 shall be 
     for highway surface transportation and technology training 
     under section 140(b) of title 23, United States Code, and 
     $20,000,000 shall be for disadvantaged business enterprises 
     bonding assistance under section 332(e) of title 49, United 
     States Code: Provided further, That funds made available 
     under this heading shall be administered as if apportioned 
     under chapter 1 of title 23, United States Code, except for 
     funds made available for investments in transportation at 
     Indian reservations and Federal lands, and for the 
     territorial highway program, which shall be administered in 
     accordance with chapter 2 of title 23, United States Code, 
     and except for funds made available for disadvantaged 
     business enterprises bonding assistance, which shall be 
     administered in accordance with chapter 3 of title 49, United 
     States Code: Provided further, That the Federal share payable 
     on account of any project or activity carried out with funds 
     made available under this heading shall be, at the option of 
     the recipient, up to 100 percent of the total cost thereof: 
     Provided further, That funds made available by this Act shall 
     not be obligated for the purposes authorized under section 
     115(b) of title 23, United States Code: Provided further, 
     That funding provided under this heading shall be in addition 
     to any and all funds provided for fiscal years 2009 and 2010 
     in any other Act for ``Federal-aid Highways'' and shall not 
     affect the distribution of funds provided for ``Federal-aid 
     Highways'' in any other Act: Provided further, That the 
     amount made available under this heading shall not be subject 
     to any limitation on obligations for Federal-aid highways or 
     highwaty safety construction programs set forth in any Act: 
     Provided further, That section 1101(b) of Public Law 109-59 
     shall apply to funds apportioned under this heading: Provided 
     further, That the Administrator of the Federal Highway 
     Administration may retain up to $40,000,000 of the funds 
     provided under this heading to fund the oversight by the 
     Administrator of projects and activities carried out with 
     funds made available to the Federal Highway Administration in 
     this Act and such funds shall be available through September 
     30, 2012.

                    Federal Railroad Administration


    Capital Assistance for High Speed Rail Corridors and Intercity 
                         Passenger Rail Service

       For an additional amount for section 501 of Public Law 110-
     432 and discretionary grants to States to pay for the cost of 
     projects described in paragraphs (2)(A) and (2)(B) of section 
     24401 of title 49, United States Code, subsection (b) of 
     section 24105 of such title, $8,000,000,000, to remain 
     available through September 30, 2012: Provided, That the 
     Secretary of Transportation shall give priority to projects 
     that support the development of intercity high speed rail 
     service: Provided further, That within 60 days of the 
     enactment of this Act, the Secretary shall submit to the 
     House and Senate Committees on Appropriations a strategic 
     plan that describes how the Secretary will use the funding 
     provided under this heading to improve and deploy high speed 
     passenger rail systems: Provided further, That within 120 
     days of enactment of this Act, the Secretary shall issue 
     interim guidance to applicants covering grant terms, 
     conditions, and procedures until final regulations are 
     issued: Provided further, That such interim guidance shall 
     provide separate instructions for the high speed rail 
     corridor program, capital assistance for intercity passenger 
     rail service grants, and congestion grants: Provided further, 
     That the Secretary shall waive the requirement that a project 
     conducted using funds provided under this heading be in a 
     State rail plan developed under chapter 227 of title 49, 
     United States Code: Provided further, That the Federal share 
     payable of the costs for which a grant is made under this 
     heading shall be, at the option of the recipient, up to 100 
     percent: Provided further, That projects conducted using 
     funds provided under this heading must comply with the 
     requirements of subchapter IV of chapter 31 of title 40, 
     United States Code: Provided further, That section 24405 of 
     title 49, United States Code, shall apply to funds provided 
     under this heading: Provided further, That the Administrator 
     of the Federal Railroad Administration may retain up to one-
     quarter of 1 percent of the funds provided under this heading 
     to fund the award and oversight by the Administrator of 
     grants made under this heading, and funds retained for said 
     purposes shall remain available through September 30, 2014.

[[Page 3913]]




     capital grants to the national railroad passenger corporation

       For an additional amount for the National Railroad 
     Passenger Corporation (Amtrak) to enable the Secretary of 
     Transportation to make capital grants to Amtrak as authorized 
     by section 101(c) of the Passenger Rail Investment and 
     Improvement Act of 2008 (Public Law 110-432), $1,300,000,000, 
     to remain available through September 30, 2010, of which 
     $450,000,000 shall be used for capital security grants: 
     Provided, That priority for the use of non-security funds 
     shall be given to projects for the repair, rehabilitation, or 
     upgrade of railroad assets or infrastructure, and for capital 
     projects that expand passenger rail capacity including the 
     rehabilitation of rolling stock: Provided further, That none 
     of the funds under this heading shall be used to subsidize 
     the operating losses of Amtrak: Provided further, That funds 
     provided under this heading shall be awarded not later than 
     30 days after the date of enactment of this Act: Provided 
     further, That the Secretary shall take measures to ensure 
     that projects funded under this heading shall be completed 
     within 2 years of enactment of this Act, and shall serve to 
     supplement and not supplant planned expenditures for such 
     activities from other Federal, State, local and corporate 
     sources: Provided further, That the Secretary shall certify 
     to the House and Senate Committees on Appropriations in 
     writing compliance with the preceding proviso: Provided 
     further, That not more than 60 percent of the funds provided 
     for non-security activities under this heading may be used 
     for capital projects along the Northeast Corridor: Provided 
     further, That of the funding provided under this heading, 
     $5,000,000 shall be made available for the Amtrak Office of 
     Inspector General and made available through September 30, 
     2013.

                     Federal Transit Administration


                       transit capital assistance

       For an additional amount for transit capital assistance 
     grants authorized under section 5302(a)(1) of title 49, 
     United States Code, $6,900,000,000, to remain available 
     through September 30, 2010: Provided, That the Secretary of 
     Transportation shall provide 80 percent of the funds 
     appropriated under this heading for grants under section 5307 
     of title 49, United States Code, and apportion such funds in 
     accordance with section 5336 of such title (other than 
     subsections (i)(1) and (j)): Provided further, That the 
     Secretary shall apportion 10 percent of the funds 
     appropriated under this heading in accordance with section 
     5340 of such title: Provided further, That the Secretary 
     shall provide 10 percent of the funds appropriated under this 
     heading for grants under section 5311 of title 49, United 
     States Code, and apportion such funds in accordance with such 
     section: Provided further, That funds apportioned under this 
     heading shall be apportioned not later than 21 days after the 
     date of enactment of this Act: Provided further, That 180 
     days following the date of such apportionment, the Secretary 
     shall withdraw from each urbanized area or State an amount 
     equal to 50 percent of the funds apportioned to such 
     urbanized areas or States less the amount of funding 
     obligated, and the Secretary shall redistribute such amounts 
     to other urbanized areas or States that have had no funds 
     withdrawn under this proviso utilizing whatever method he 
     deems appropriate to ensure that all funds redistributed 
     under this proviso shall be utilized promptly: Provided 
     further, That 1 year following the date of such 
     apportionment, the Secretary shall withdraw from each 
     urbanized area or State any unobligated funds, and the 
     Secretary shall redistribute such amounts to other urbanized 
     areas or States that have had no funds withdrawn under this 
     proviso utilizing whatever method he deems appropriate to 
     ensure that all funds redistributed under this proviso shall 
     be utilized promptly: Provided further, That at the request 
     of an urbanized area or State, the Secretary of 
     Transportation may provide an extension of such 1-year period 
     if he feels satisfied that the urbanized area or State has 
     encountered an unworkable bidding environment or other 
     extenuating circumstances: Provided further, That before 
     granting such an extension, the Secretary shall send a letter 
     to the House and Senate Committees on Appropriations that 
     provides a thorough justification for the extension: Provided 
     further, That of the funds provided for section 5311 of title 
     49, United States Code, 2.5 percent shall be made available 
     for section 5311(c)(1): Provided further, That of the funding 
     provided under this heading, $100,000,000 shall be 
     distributed as discretionary grants to public transit 
     agencies for capital investments that will assist in reducing 
     the energy consumption or greenhouse gas emissions of their 
     public transportation systems: Provided further, That for 
     such grants on energy-related investments, priority shall be 
     given to projects based on the total energy savings that are 
     projected to result from the investment, and projected energy 
     savings as a percentage of the total energy usage of the 
     public transit agency: Provided further, That applicable 
     chapter 53 requirements shall apply to funding provided under 
     this heading, except that the Federal share of the costs for 
     which any grant is made under this heading shall be, at the 
     option of the recipient, up to 100 percent: Provided further, 
     That the amount made available under this heading shall not 
     be subject to any limitation on obligations for transit 
     programs set forth in any Act: Provided further, That section 
     1101(b) of Public Law 109-59 shall apply to funds 
     appropriated under this heading: Provided further, That the 
     funds appropriated under this heading shall not be comming 
     led with any prior year funds: Provided further, That 
     notwithstanding any other provision of law, three-quarters of 
     1 percent of the funds provided for grants under section 5307 
     and section 5340, and one-half of 1 percent of the funds 
     provided for grants under section 5311, shall be available 
     for administrative expenses and program management oversight, 
     and such funds shall be available through September 30, 2012.

                fixed guideway infrastructure investment

       For an amount for capital expenditures authorized under 
     section 5309(b)(2) of title 49, United States Code, 
     $750,000,000, to remain available through September 30, 2010: 
     Provided, That the Secretary of Transportation shall 
     apportion funds under this heading pursuant to the formula 
     set forth in section 5337 of title 49, United States Code: 
     Provided further, That the funds appropriated under this 
     heading shall not be commingled with any prior year funds: 
     Provided further, That funds made available under this 
     heading shall be apportioned not later than 21 days after the 
     date of enactment of this Act: Provided further, That 180 
     days following the date of such apportionment, the Secretary 
     shall withdraw from each urbanized area an amount equal to 50 
     percent of the funds apportioned to such urbanized area 
     amounts to other urbanized areas that have had no funds 
     withdrawn under this proviso utilizing whatever method he or 
     she deems appropriate to ensure that all funds redistributed 
     under this proviso shall be utilized promptly: Provided 
     further, That 1 year following the date of such 
     apportionment, the Secretary shall withdraw from each 
     urbanized area any unobligated funds, and the Secretary shall 
     redistribute such amounts to other urbanized areas that have 
     had no funds withdrawn under this provision utilizing 
     whatever method he or she deems appropriate to ensure that 
     all funds redistributed under this proviso shall be utilized 
     promptly: Provided further, That at the request of an 
     urbanized area, the Secretary of Transportation may provide 
     an extension of such 1-year period if he or she feels 
     satisfied that the urbanized area has encountered an 
     unworkable bidding environment or other extenuating 
     circumstances: Provided further, That hbefore granting such 
     an extension, the Secretary shall send a letter to the House 
     and Senate Committees on Appropriations that provides a 
     thorough justification for the extension: Provided further, 
     That applicable chapter 53 requirements shall apply except 
     that the Federal share of the costs for which a grant is made 
     under this heading shall be, at the option of the recipient, 
     up to 100 percent: Provided further, That the provisions of 
     section 1101(b) of Public Law 109-59 shall apply to funds 
     made available under this heading: Provided further, That 
     notwithstanding any other provision of law, up to 1 percent 
     of the funds under this heading shall be available for 
     administrative expenses and program management oversight and 
     shall remain available for obligation until September 30, 
     2012.


                       capital investment grants

        For an additional amount for ``Capital Investment 
     Grants'', as authorized under section 5338(c)(4) of title 49, 
     United States Code, and allocated under section 5309(m)(2)(A) 
     of such title, to enable the Secretary of Transportation to 
     make discretionary grants as authorized by section 5309(d) 
     and (e) of such title, $750,000,000, to remain available 
     through September 30, 2010: Provided, That such amount shall 
     be allocated without regard to the limitation under section 
     5309(m)(2)(A)(i): Provided further, That in selecting 
     projects to be funded, priority shall be given to projects 
     that are currently in construction or are able to obligate 
     funds within 150 days of enactment of this Act: Provided 
     further, That the provisions of section 1101(b) of Public Law 
     109-59 shall apply to funds made available under this 
     heading: Provided further, That funds appropriated under this 
     heading shall not be commingled with any prior year funds: 
     Provided further, That applicable chapter 53 requirements 
     shall apply, except that notwithstanding any other provision 
     of law, up to 1 percent of the funds provided under this 
     heading shall be available for administrative expenses and 
     program management oversight, and shall remain available 
     through September 30, 2012.

                        Maritime Administration


         supplemental grants for assistance to small shipyards

       To make grants to qualified shipyards as authorized under 
     section 3508 of Public Law 110-417 or section 54101 of title 
     46, United States Code, $100,000,000, to remain available 
     through September 30, 2010: Provided, That the Secretary of 
     Transportation shall institute measures to ensure that funds 
     provided under this heading shall be obligated within 180 
     days of the date of their distribution: Provided further, 
     That the Maritime Administrator may retain and transfer to 
     ``Maritime Administration, Operations and Training'' up to 2 
     percent of the funds provided under this heading to fund the 
     award and oversight by the Administrator of grants made under 
     this heading.

                      Office of Inspector General


                         salaries and expenses

       For an additional amount for necessary expenses of the 
     Office of Inspector General to carry out the provisions of 
     the Inspector General Act of 1978, as amended, $20,000,000, 
     to remain available through September 30, 2013: Provided, 
     That the funding made available under this heading shall be 
     used for conducting audits and investigations of projects and 
     activities carried out with funds made available in this Act 
     to the Department of Transportation: Provided further, That 
     the Inspector General shall have all necessary authority, in 
     carrying out the duties specified in the Inspector General 
     Act, as

[[Page 3914]]

     amended (5 U.S.C. App. 3), to investigate allegations of 
     fraud, including false statements to the Government (18 
     U.S.C. 1001), by any person or entity that is subject to 
     regulation by the Department.

            GENERAL PROVISION--DEPARTMENT OF TRANSPORTATION

       Sec. 1201. (a) Maintenance of Effort.--Not later than 30 
     days after the date of enactment of this Act, for each amount 
     that is distributed to a State or agency thereof from an 
     appropriation in this Act for a covered program, the Governor 
     of the State shall certify to the Secretary of Transportation 
     that the State will maintain its effort with regard to State 
     funding for the types of projects that are funded by the 
     appropriation. As part of this certification, the Governor 
     shall submit to the Secretary of Transportation a statement 
     identifying the amount of funds the State planned to expend 
     from State sources as of the date of enactment of this Act 
     during the period beginning on the date of enactment of this 
     Act through September 30, 2010, for the types of projects 
     that are funded by the appropriation.
       (b) Failure To Maintain Effort.--
       If a State is unable to maintain the level of effort 
     certified pursuant to subsection (a), the State will be 
     prohibited by the Secretary of Transportation from receiving 
     additional limitation pursuant to the redistribution of the 
     limitation on obligations for Federal-aid highway and highway 
     safety construction programs that occurs after August 1 for 
     fiscal year 2011.
       (c) Periodic Reports.--
       (1) In general.--Notwithstanding any other provision of 
     law, each grant recipient shall submit to the covered agency 
     from which they received funding periodic reports on the use 
     of the funds appropriated in this Act for covered programs. 
     Such reports shall be collected and compiled by the covered 
     agency and transmitted to Congress. Covered agencies may 
     develop such reports on behalf of grant recipients to ensure 
     the accuracy and consistency of such reports.
       (2) Contents of Reports.--For amounts received under each 
     covered program by a grant recipient under this Act, the 
     grant recipient shall include in the periodic reports 
     information tracking-
       (A) the amount of Federal funds appropriated, allocated, 
     obligated, and outlayed under the appropriation;
       (B) the number of projects that have been put out to bid 
     under the appropriation and the amount of Federal funds 
     associated with such projects;
       (C) the number of projects for which contracts have been 
     awarded under the appropriation and the amount of Federal 
     funds associated with such contracts;
       (D) the number of projects for which work has begun under 
     such contracts and the amount of Federal funds associated 
     with such contracts;
       (E) the number of projects for which work has been 
     completed under such contracts and the amount of Federal 
     funds associated with such contracts;
       (F) the number of direct, on-project jobs created or 
     sustained by the Federal funds provided for projects under 
     the appropriation and, to the extent possible, the estimated 
     indirect jobs created or sustained in the associated 
     supplying industries, including the number of job-years 
     created and the total increase in employment since the date 
     of enactment of this Act; and
       (G) for each covered program report information tracking 
     the actual aggregate expenditures by each grant recipient 
     from State sources for projects eligible for funding under 
     the program during the period beginning on the date of 
     enactment of this Act through September 30, 2010, as compared 
     to the level of such expenditures that were planned to occur 
     during such period as of the date of enactment of this Act.
       (3) Timing of Reports.--Each grant recipient shall submit 
     the first of the periodic reports required under this 
     subsection not later than 90 days after the date of enactment 
     of this Act and shall submit updated reports not later than 
     180 days, 1 year, 2 years, and 3 years after such date of 
     enactment.
       (d) Definitions.--In this section, the following 
     definitions apply:
       (1) Covered Agency.--The term ``covered agency'' means the 
     Office of the Secretary of Transportation, the Federal 
     Aviation Administration, the Federal Highway Administration, 
     the Federal Railroad Administration, the Federal Transit 
     Administration and the Maritime Administration of the 
     Department of Transportation.
       (2) Covered Program.--The term ``covered program'' means 
     funds appropriated in this Act for ``Supplemental 
     Discretionary Grants for a National Surface Transportation 
     System'' to the Office of the Secretary of Transportation, 
     for ``Supplemental Funding for Facilities and Equipment'' and 
     ``Grants-in-Aid for Airports'' to the Federal Aviation 
     Administration; for ``Highway Infrastructure Investment'' to 
     the Federal Highway Administration; for ``Capital Assistance 
     for High Speed Rail Corridors and Intercity Passenger Rail 
     Service'' and ``Capital Grants to the National Railroad 
     Passenger Corporation'' to the Federal Railroad 
     Administration; for ``Transit Capital Assistance'', ``Fixed 
     Guideway Infrastructure Investment'', and ``Capital 
     Investment Grants'' to the Federal Transit Administration; 
     and ``Supplemental Grants for Assistance to Small Shipyards'' 
     to the Maritime Administration.
       (3) Grant recipient.--The term ``grant recipient'' means a 
     State or other recipient of assistance provided under a 
     covered program in this Act. Such term does not include a 
     Federal department or agency.
       (e) Notwithstanding any other provision of law, sections 
     3501-3521 of title 44, United States Code, shall not apply to 
     the provisions of this section.

              DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

                       Public and Indian Housing


                      public housing capital fund

       For an additional amount for the ``Public Housing Capital 
     Fund'' to carry out capital and management activities for 
     public housing agencies, as authorized under section 9 of the 
     United States Housing Act of 1937 (42 U.S.C. 1437g) (the 
     ``Act''), $4,000,000,000, to remain available until September 
     30, 2011: Provided, That the Secretary of Housing and Urban 
     Development shall distribute $3,000,000,000 of this amount by 
     the same formula used for amounts made available in fiscal 
     year 2008, except that the Secretary may determine not to 
     allocate funding to public housing agencies currently 
     designated as troubled or to public housing agencies that 
     elect not to accept such funding: Provided further, That the 
     Secretary shall obligate funds allocated by formula within 30 
     days of enactment of this Act: Provided further, That the 
     Secretary shall make available $1,000,000,000 by competition 
     for priority investments, including investments that leverage 
     private sector funding or financing for renovations and 
     energy conservation retrofit investments: Provided further, 
     That the Secretary shall obligate competitive funding by 
     September 30, 2009: Provided further, That public housing 
     authorities shall give priority to capital projects that can 
     award contracts based on bids within 120 days from the date 
     the funds are made available to the public housing 
     authorities: Provided further, That public housing agencies 
     shall give priority consideration to the rehabilitation of 
     vacant rental units: Provided further, That public housing 
     agencies shall prioritize capital projects that are already 
     underway or included in the 5-year capital fund plans 
     required by the Act (42 U.S.C. 1437c-1(a)): Provided further, 
     That notwithstanding any other provision of law, (1) funding 
     provided under this heading may not be used for operating or 
     rental assistance activities, and (2) any restriction of 
     funding to replacement housing uses shall be inapplicable: 
     Provided further, That notwithstanding any other provision of 
     law, the Secretary shall institute measures to ensure that 
     funds provided under this heading shall serve to supplement 
     and not supplant expenditures from other Federal, State, or 
     local sources or funds independently generated by the 
     grantee: Provided further, That notwithstanding section 9(j), 
     public housing agencies shall obligate 100 percent of the 
     funds within 1 year of the date on which funds become 
     available to the agency for obligation, shall expend at least 
     60 percent of funds within 2 years of the date on which funds 
     become available to the agency for obligation, and shall 
     expend 100 percent of the funds within 3 years of such date: 
     Provided further, That if a public housing agency fails to 
     comply with the 1-year obligation requirement, the Secretary 
     shall recapture all remaining unobligated funds awarded to 
     the public housing agency and reallocate such funds to 
     agencies that are in compliance with those requirements: 
     Provided further, That if a public housing agency fails to 
     comply with either the 2-year or the 3-year expenditure 
     requirement, the Secretary shall recapture the balance of the 
     funds awarded to the public housing agency and reallocate 
     such funds to agencies that are in compliance with those 
     requirements: Provided further, That in administering funds 
     appropriated or otherwise made available under this heading, 
     the Secretary may waive or specify alternative requirements 
     for any provision of any statute or regulation in connection 
     with the obligation by the Secretary or the use of these 
     funds (except for requirements related to fair housing, 
     nondiscrimination, labor standards, and the environment), 
     upon a finding that such a waiver is necessary to expedite or 
     facilitate the use of such funds: Provided further, That, in 
     addition to waivers authorized under the previous proviso, 
     the Secretary may direct that requirements relating to the 
     procurement of goods and services arising under state and 
     local laws and regulations shall not apply to amounts made 
     available under this heading: Provided further, That of the 
     funds made available under this heading, up to .5 percent 
     shall be available for staffing, training, technical 
     assistance, technology, monitoring, travel, enforcement, 
     research and evaluation activities: Provided further, That 
     funds set aside in the previous proviso shall remain 
     available until September 30, 2012: Provided further, That 
     any funds made available under this heading used by the 
     Secretary for personnel expenses related to administering 
     funding under this heading shall be transferred to 
     ``Personnel Compensation and Benefits, Office of Public and 
     Indian Housing'' and shall retain the terms and conditions of 
     this account, including reprogramming provisions, except that 
     the period of availability set forth in the previous proviso 
     shall govern such transferred funds: Provided further, That 
     any funds made available under this heading used by the 
     Secretary for training or other administrative expenses shall 
     be transferred to ``Administration, Operations, and 
     Management'', for non-personnel expenses of the Department of 
     Housing and Urban Development: Provided further, That any 
     funds made available under this heading used by the Secretary 
     for technology shall be transferred to ``Working Capital 
     Fund''.

                  Native American Housing Block Grants

       For an additional amount for ``Native American Housing 
     Block Grants'', as authorized

[[Page 3915]]

     under title I of the Native American Housing Assistance and 
     Self-Determination Act of 1996 (``NAHASDA'') (25 U.S.C. 4111 
     et seq.), $510,000,000 to remain available until September 
     30, 2011: Provided, That $255,000,000 of the amount provided 
     under this heading shall be distributed according to the same 
     funding formula used in fiscal year 2008: Provided further, 
     That the Secretary shall obligate funds allocated by formula 
     within 30 days of enactment of this Act: Provided further, 
     That the amounts distributed through the formula shall be 
     used for new construction, acquisition, rehabilitation 
     including energy efficiency and conservation, and 
     infrastructure development: Provided further, That in 
     selecting projects to be funded, recipients shall give 
     priority to projects for which contracts can be awarded 
     within 180 days from the date that funds are available to the 
     recipients: Provided further, that the Secretary may obligate 
     $255,000,000 of the amount provided under this heading for 
     competitive grants to eligible entities that apply for funds 
     authorized under NAHASDA: Provided further, That the 
     Secretary shall obligate competitive funding by September 30, 
     2009: Provided further, That in awarding competitive funds, 
     the Secretary shall give priority to projects that will spur 
     construction and rehabilitation and will create employment 
     opportunities for low-income and unemployed persons: Provided 
     further, That recipients of funds under this heading shall 
     obligate 100 percent of such funds within 1 year of the date 
     funds are made available to a recipient, expend at least 50 
     percent of such funds within 2 years of the date on which 
     funds become available to such recipients for obligation and 
     expend 100 percent of such funds within 3 years of such date: 
     Provided further, That if a recipient fails to comply with 
     the 2-year expenditure requirement, the Secretary shall 
     recapture all remaining funds awarded to the recipient and 
     reallocate such funds through the funding formula to 
     recipients that are in compliance with these requirements: 
     Provided further, That if a recipient fails to comply with 
     the 3-year expenditure requirement, the Secretary shall 
     recapture the balance of the funds originally awarded to the 
     recipient: Provided further, That notwithstanding any other 
     provision of law, the Secretary may set aside up to 2 percent 
     of funds made available under this paragraph for a housing 
     entity eligible to receive funding under title VIII of 
     NAHASDA (25 U.S.C. 4221 et seq.): Provided further, That in 
     administering funds appropriated or otherwise made available 
     under this heading, the Secretary may waive or specify 
     alternative requirements for any provision of any statute or 
     regulation in connection with the obligation by the Secretary 
     or the use of these funds (except for requirements related to 
     fair housing, nondiscrimination, labor standards, and the 
     environment), upon a finding that such a waiver is necessary 
     to expedite or facilitate the use of such funds: Provided 
     further, That of the funds made available under this heading, 
     up to .5 percent shall be available for staffing, training, 
     technical assistance, technology, monitoring, travel, 
     enforcement, research and evaluation activities: Provided 
     further, That funds set aside in the previous proviso shall 
     remain available until September 30, 2012: Provided further, 
     That any funds made available under this heading used by the 
     Secretary for personnel expenses related to administering 
     funding under this heading shall be transferred to 
     ``Personnel Compensation and Benefits, Office of Public and 
     Indian Housing'' and shall retain the terms and conditions of 
     this account, including reprogramming provisions, except that 
     the period of availability set forth in the previous proviso 
     shall govern such transferred funds: Provided further, That 
     any funds made available under this heading used by the 
     Secretary for training or other administrative expenses shall 
     be transferred to ``Administration, Operations, and 
     Management'', for non-personnel expenses of the Department of 
     Housing and Urban Development: Provided further, That any 
     funds made available under this heading used by the Secretary 
     for technology shall be transferred to ``Working Capital 
     Fund''.

                   Community Planning and Development


                       community development fund

       For an additional amount for ``Community Development Fund'' 
     $1,000,000,000, to remain available until September 30, 2010 
     to carry out the community development block grant program 
     under title I of the Housing and Community Development Act of 
     1974 (42 U.S.C. 5301 et seq.): Provided, That the amount 
     appropriated in this paragraph shall be distributed pursuant 
     to 42 U.S.C. 5306 to grantees that received funding in fiscal 
     year 2008: Provided further, That in administering the funds 
     appropriated in this paragraph, the Secretary of Housing and 
     Urban Development shall establish requirements to expedite 
     the use of the funds: Provided further, That in selecting 
     projects to be funded, recipients shall give priority to 
     projects that can award contracts based on bids within 120 
     days from the date the funds are made available to the 
     recipients: Provided further, That in administering funds 
     appropriated or otherwise made available under this heading, 
     the Secretary may waive or specify alternative requirements 
     for any provision of any statute or regulation in connection 
     with the obligation by the Secretary or the use by the 
     recipient of these funds (except for requirements related to 
     fair housing, nondiscrimination, labor standards, and the 
     environment), upon a finding that such waiver is necessary to 
     expedite or facilitate the timely use of such funds and would 
     not be inconsistent with the overall purpose of the statute.
       For the provision of emergency assistance for the 
     redevelopment of abandoned and foreclosed homes, as 
     authorized under division B, title III of the Housing and 
     Economic Recovery Act of 2008 (``the Act'') (Public Law 110-
     289) (42 U.S.C. 5301 note), $2,000,000,000, to remain 
     available until September 30, 2010: Provided, That grantees 
     shall expend at least 50 percent of allocated funds within 2 
     years of the date funds become available to the grantee for 
     obligation, and 100 percent of such funds within 3 years of 
     such date: Provided further, That unless otherwise noted 
     herein, the provisions of the Act govern the use of the 
     additional funds made available under this heading: Provided 
     further, That notwithstanding the provisions of sections 
     2301(b) and (c)(1) and section 2302 of the Act, funding under 
     this paragraph shall be allocated by competitions for which 
     eligible entities shall be States, units of general local 
     government, and nonprofit entities or consortia of nonprofit 
     entities, which may submit proposals in partnership with for 
     profit entities: Provided further, That in selecting 
     grantees, the Secretary of Housing and Urban Development 
     shall ensure that the grantees are in areas with the greatest 
     number and percentage of foreclosures and can expend funding 
     within the period allowed under this heading: Provided 
     further, That additional award criteria for such competitions 
     shall include demonstrated grantee capacity to execute 
     projects, leveraging potential, concentration of investment 
     to achieve neighborhood stabilization, and any additional 
     factors determined by the Secretary of Housing and Urban 
     Development: Provided further, That the Secretary may 
     establish a minimum grant size: Provided further, That the 
     Secretary shall publish criteria on which to base competition 
     for any grants awarded under this heading not later than 75 
     days after the enactment of this Act and applications shall 
     be due to HUD not later than 150 days after the enactment of 
     this Act: Provided further, That the Secretary shall obligate 
     all funding within 1 year of enactment of this Act: Provided 
     further, That section 2301(d)(4) of the Act is repealed: 
     Provided further, That section 2301(c)(3)(C) of the Act is 
     amended to read ``establish and operate land banks for homes 
     and residential properties that have been foreclosed upon'': 
     Provided further, That funding used for section 2301(c)(3)(E) 
     of the Act shall be available only for the redevelopment of 
     demolished or vacant properties as housing: Provided further, 
     That no amounts made available from a grant under this 
     heading may be used to demolish any public housing (as such 
     term is defined in section 3 of the United States Housing Act 
     of 1937 (42 U.S.C. 1437a)): Provided further, That a grantee 
     may not use more than 10 percent of its grant under this 
     heading for demolition activities under section 2301(c)(3)(C) 
     and (D) unless the Secretary determines that such use 
     represents an appropriate response to local market 
     conditions: Provided further, That the recipient of any grant 
     or loan from amounts made available under this heading or, 
     after the date of enactment under division B, title III of 
     the Housing and Economic Recovery Act of 2008, may not refuse 
     to lease a dwelling unit in housing with such loan or grant 
     to a participant under section 8 of the United States Housing 
     Act of 1937 (42 U.S.C. 1437f) because of the status of the 
     prospective tenant as such a participant: Provided further, 
     That in addition to the eligible uses in section 2301, the 
     Secretary may also use up to 10 percent of the funds provided 
     under this heading for grantees for the provision of capacity 
     building of and support for local communities receiving 
     funding under section 2301 of the Act or under this heading: 
     Provided further, That in administering funds appropriated or 
     otherwise made available under this section, the Secretary 
     may waive or specify alternative requirements for any 
     provision of any statute or regulation in connection with the 
     obligation by the Secretary or the use of funds except for 
     requirements related to fair housing, nondiscrimination, 
     labor standards and the environment, upon a finding that such 
     a waiver is necessary to expedite or facilitate the use of 
     such funds: Provided further, That in the case of any 
     acquisition of a foreclosed upon dwelling or residential real 
     property acquired after the date of enactment with any 
     amounts made available under this heading or under division 
     B, title III of the Housing and Economic Recovery Act of 2008 
     (Public Law 110-289), the initial successor in interest in 
     such property pursuant to the foreclosure shall assume such 
     interest subject to: (1) the provision by such successor in 
     interest of a notice to vacate to any bona fide tenant at 
     least 90 days before the effective date of such notice; and 
     (2) the rights of any bona fide tenant, as of the date of 
     such notice of foreclosure: (A) under any bona fide lease 
     entered into before the notice of foreclosure to occupy the 
     premises until the end of the remaining term of the lease, 
     except that a successor in interest may terminate a lease 
     effective on the date of sale of the unit to a purchaser who 
     will occupy the unit as a primary residence, subject to the 
     receipt by the tenant of the 90-day notice under this 
     paragraph; or (B) without a lease or with a lease terminable 
     at will under State law, subject to the receipt by the tenant 
     of the 90-day notice under this paragraph, except that 
     nothing in this paragraph shall affect the requirements for 
     termination of any Federal- or State-subsidized tenancy or of 
     any State or local law that provides longer time periods or 
     other additional protections for tenants: Provided further, 
     That, for purposes of this paragraph, a lease or tenancy 
     shall be considered bona fide only if: (1) the mortgagor 
     under the contract is not the tenant; (2) the lease or 
     tenancy was the result of an arms-length transaction; and (3) 
     the lease or

[[Page 3916]]

     tenancy requires the receipt of rent that is not 
     substantially less than fair market rent for the property: 
     Provided further, That the recipient of any grant or loan 
     from amounts made available under this heading or, after the 
     date of enactment, under division B, title III of the Housing 
     and Economic Recovery Act of 2008 (Public Law 110-289) may 
     not refuse to lease a dwelling unit in housing assisted with 
     such loan or grant to a holder of a voucher or certificate of 
     eligibility under section 8 of the United States Housing Act 
     of 1937 (42 U.S.C. 1437f) because of the status of the 
     prospective tenant as such a holder: Provided further, That 
     in the case of any qualified foreclosed housing for which 
     funds made available under this heading or, after the date of 
     enactment, under division B, title III of the Housing and 
     Economic Recovery Act of 2008 (Public Law 110-289) are used 
     and in which a recipient of assistance under section 8(o) of 
     the U.S. Housing Act of 1937 resides at the time of 
     foreclosure, the initial successor in interest shall be 
     subject to the lease and to the housing assistance payments 
     contract for the occupied unit: Provided further, That 
     vacating the property prior to sale shall not constitute good 
     cause for termination of the tenancy unless the property is 
     unmarketable while occupied or unless the owner or subsequent 
     purchaser desires the unit for personal or family use: 
     Provided further, That if a public housing agency is unable 
     to make payments under the contract to the immediate 
     successor in interest after foreclosures, due to (1) an 
     action or inaction by the successor in interest, including 
     the rejection of payments or the failure of the successor to 
     maintain the unit in compliance with section 8(o)(8) of the 
     United States Housing Act of 1937 (42 U.S.C.1437f) or (2) an 
     inability to identify the successor, the agency may use funds 
     that would have been used to pay the rental amount on behalf 
     of the family--(i) to pay for utilities that are the 
     responsibility of the owner under the lease or applicable 
     law, after taking reasonable steps to notify the owner that 
     it intends to make payments to a utility provider in lieu of 
     payments to the owner, except prior notification shall not be 
     required in any case in which the unit will be or has been 
     rendered uninhabitable due to the termination or threat of 
     termination of service, in which case the public housing 
     agency shall notify the owner within a reasonable time after 
     making such payment; or (ii) for the family's reasonable 
     moving costs, including security deposit costs: Provided 
     further, That this paragraph shall not preempt any Federal, 
     State or local law that provides more protections for 
     tenants: Provided further, That of the funds made available 
     under this heading, up to 1 percent shall be available for 
     staffing, training, technical assistance, technology, 
     monitoring, travel, enforcement, research and evaluation 
     activities: Provided further, That funds set aside in the 
     previous proviso shall remain available until September 30, 
     2012: Provided further, That any funds made available under 
     this heading used by the Secretary for personnel expenses 
     related to administering funding under this heading shall be 
     transferred to ``Personnel Compensation and Benefits, 
     Community Planning and Development'' and shall retain the 
     terms and conditions of this account, including reprogramming 
     provisions, except that the period of availability set forth 
     in the previous proviso shall govern such transferred funds: 
     Provided further, That any funds made available under this 
     heading used by the Secretary for training or other 
     administrative expenses shall be transferred to 
     ``Administration, Operations, and management'', for non-
     personnel expenses of the Department of Housing and Urban 
     Development: Provided further, That any funds made available 
     under this heading used by the Secretary for technology shall 
     be transferred to ``Working Capital Funds''.

                  Home Investment Partnerships Program

       For an additional amount for capital investments in low-
     income housing tax credit projects, $2,250,000,000, to remain 
     available until September 30, 2011: Provided, That such funds 
     shall be made available to State housing credit agencies, as 
     defined in section 42(h) of the Internal Revenue Code of 
     1986, and shall be apportioned among the States based on the 
     percentage of HOME funds apportioned to each State and the 
     participating jurisdictions therein for Fiscal Year 2008: 
     Provided further, That the housing credit agencies in each 
     State shall distribute these funds competitively under this 
     heading and pursuant to their qualified allocation plan (as 
     defined in section 42(m) of the Internal Revenue Code of 
     1986) to owners of projects who have received or receive 
     simultaneously an award of low-income housing tax credits 
     under section 42(h) of the Internal Revenue Code of 1986: 
     Provided further, That housing credit agencies in each State 
     shall commit not less than 75 percent of such funds within 
     one year of the date of enactment of this Act, and shall 
     demonstrate that the project owners shall have expended 75 
     percent of the funds made available under this heading within 
     two years of the date of enactment of this Act, and shall 
     have expended 100 percent of the funds within 3 years of the 
     date of enactment of this Act: Provided further, That failure 
     by an owner to expend funds within the parameters required 
     within the previous proviso shall result in a redistribution 
     of these funds by a housing credit agency to a more deserving 
     project in such State, except any funds not expended after 3 
     years from enactment shall be redistributed by the Secretary 
     to other States that have fully utilized the funds made 
     available to them: Provided further, That projects awarded 
     low income housing tax credits under section 42(h) of the IRC 
     of 1986 in fiscal years 2007, 2008, or 2009 shall be eligible 
     for funding under this heading: Provided further, That 
     housing credit agencies shall give priority to projects that 
     are expected to be completed within 3 years of enactment: 
     Provided further, That any assistance provided to an eligible 
     low income housing tax credit project under this heading 
     shall be made in the same manner and be subject to the same 
     limitations (including rent, income, and use restrictions, in 
     lieu of corresponding limitations under the HOME program) as 
     required by the state housing credit agency with respect to 
     an award of low income housing credits under section 42 of 
     the IRC of 1986: Provided further, That the housing credit 
     agency shall perform asset management functions, or shall 
     contract for the performance of such services, in either 
     case, at the owner's expense, to ensure compliance with 
     section 42 of the IRC of 1986, and the long term viability of 
     buildings funded by assistance under this heading: Provided 
     further, That the term eligible basis (as such term is 
     defined in such section 42) of a qualified low-income housing 
     tax credit building receiving assistance under this heading 
     shall not be reduced by the amount of any grant described 
     under this heading: Provided further, That the Secretary 
     shall be given access upon reasonable notice to a State 
     housing credit agency to information related to the award of 
     Federal funds from such housing credit agency pursuant to 
     this heading and shall establish an Internet site that shall 
     identify all projects selected for an award, including the 
     amount of the award and such site shall provide linkage to 
     the housing credit agency allocation plan which describes the 
     process that was used to make the award decision, Provided 
     further, That in administering funds under this heading, the 
     Secretary may waive any provision of any statute or 
     regulation that the Secretary administers in connection with 
     the obligation by the Secretary or the use by the recipient 
     of these funds except for requirements imposed by this 
     heading and requirements related to fair housing, non-
     discrimination, labor standards and the environment, upon a 
     finding that such waiver is required to expedite the use of 
     such funds: Provided further, That for purposes of 
     environmental compliance review, funds under this heading 
     that are made available to State housing credit agencies for 
     distribution to projects awarded low income housing tax 
     credits shall be treated as funds under the HOME program and 
     shall be subject to Section 288 of the HOME Investment 
     Partnership Act.

                      Homelessness Prevention Fund

       For homelessness prevention and rapid re-housing 
     activities, $1,500,000,000, to remain available until 
     September 30, 2011: Provided, That funds provided under this 
     heading shall be used for the provision of short-term or 
     medium-term rental assistance; housing relocation and 
     stabilization services including housing search, mediation or 
     outreach to property owners, credit repair, security or 
     utility deposits, utility payments, rental assistance for a 
     final month at a location, moving cost assistance, and case 
     management; or other appropriate activities for homelessness 
     prevention and rapid re-housing of persons who have become 
     homeless: Provided further, That grantees receiving such 
     assistance shall collect data on the use of the funds awarded 
     and persons served with this assistance in the HUD Homeless 
     Management Information System (``HMIS'') or other comparable 
     database: Provided further, That grantees may use up to 5 
     percent of any grant for administrative costs: Provided 
     further, That funding made available under this heading shall 
     be allocated to eligible grantees (as defined and designated 
     in sections 411 and 412 of subtitle B of title IV of the 
     McKinney-Vento Homeless Assistance Act, (the ``Act'')) 
     pursuant to the formula authorized by section 413 of the Act: 
     Provided further, That the Secretary may establish a minimum 
     grant size: Provided further, That grantees shall expend at 
     least 60 percent of funds within 2 years of the date that 
     funds became available to them for obligation, and 100 
     percent of funds within 3 years of such date, and the 
     Secretary may recapture unexpended funds in violation of the 
     2-year expenditure requirement and reallocate such funds to 
     grantees in compliance with that requirement: Provided 
     further, That the Secretary may waive statutory or regulatory 
     provisions (except provisions for fair housing, 
     nondiscrimination, labor standards, and the environment) 
     necessary to facilitate the timely expenditure of funds: 
     Provided further, That the Secretary shall publish a notice 
     to establish such requirements as may be necessary to carry 
     out the provisions of this section within 30 days of 
     enactment of this Act and that this notice shall take effect 
     upon issuance: Provided further, That of the funds provided 
     under this heading, up to .5 percent shall be available for 
     staffing, training, technical assistance, technology, 
     monitoring, research and evaluation activities: Provided 
     further, That funds set aside under the previous proviso 
     shall remain available until September 30, 2012: Provided 
     further, That any funds made available under this heading 
     used by the Secretary for personnel expenses related to 
     administering funding under this heading shall be transferred 
     to ``Community Planning and Development Personnel 
     Compensation and Benefits'' and shall retain the terms and 
     conditions of this account including reprogramming provisions 
     except that the period of availability set forth in the 
     previous proviso shall govern such transferred funds: 
     Provided further, That any funds made available under this 
     heading used by the Secretary for training or other 
     administrative expenses shall be transferred to 
     ``Administration, Operations, and Management'' for non-
     personnel expenses of the

[[Page 3917]]

     Department of Housing and Urban Development: Provided 
     further, That any funding made available under this heading 
     used by the Secretary for technology shall be transferred to 
     ``Working Capital Fund.''

                            Housing Programs

  assisted housing stability and energy and green retrofit investments

       For assistance to owners of properties receiving project-
     based assistance pursuant to section 202 of the Housing Act 
     of 1959 (12 U.S.C. 17012), section 811 of the Cranston-
     Gonzalez National Affordable Housing Act (42 U.S.C. 8013), or 
     section 8 of the United States Housing Act of 1937 as amended 
     (42 U.S.C. 1437f), $2,250,000,000, of which $2,000,000,000 
     shall be for an additional amount for paragraph (1) under the 
     heading ``Project-Based Rental Assistance'' in Public Law 
     110-161 for payments to owners for 12-month periods, and of 
     which $250,000,000 shall be for grants or loans for energy 
     retrofit and green investments in such assisted housing: 
     Provided, That projects funded with grants or loans provided 
     under this heading must comply with the requirements of 
     subchapter IV of chapter 31 of title 40, United States Code: 
     Provided further, That such grants or loans shall be provided 
     through the policies, procedures, contracts, and 
     transactional infrastructure of the authorized programs 
     administered by the Office of Affordable Housing Preservation 
     of the Department of Housing and Urban Development, on such 
     terms and conditions as the Secretary of Housing and Urban 
     Development deems appropriate to ensure the maintenance and 
     preservation of the property, the continued operation and 
     maintenance of energy efficiency technologies, and the timely 
     expenditure of funds: Provided further, That the Secretary 
     may provide incentives to owners to undertake energy or green 
     retrofits as a part of such grant or loan terms, including, 
     but not limited to, fees to cover investment oversight and 
     implementation by said owner, or to encourage job creation 
     for low-income or very low-income individuals: Provided 
     further, That the Secretary may share in a portion of future 
     property utility savings resulting from improvements made by 
     grants or loans made available under this heading: Provided 
     further, That the grants or loans shall include a financial 
     assessment and physical inspection of such property: Provided 
     further, That eligible owners must have at least a 
     satisfactory management review rating, be in substantial 
     compliance with applicable performance standards and legal 
     requirements, and commit to an additional period of 
     affordability determined by the Secretary, but of not fewer 
     than 15 years: Provided further, That the Secretary shall 
     undertake appropriate underwriting and oversight with respect 
     to grant and loan transactions and may set aside up to 5 
     percent of the funds made available under this heading for 
     grants or loans for such purpose: Provided further, That the 
     Secretary shall take steps necessary to ensure that owners 
     receiving funding for energy and green retrofit investments 
     under this heading shall expend such funding within 2 years 
     of the date they received the funding: Provided further, That 
     in administering funds appropriated or otherwise made 
     available under this heading, the Secretary may waive or 
     specify alternative requirements for any provision of any 
     statute or regulation in connection with the obligation by 
     the Secretary or the use of these funds (except for 
     requirements related to fair housing, nondiscrimination, 
     labor standards, and the environment), upon a finding that 
     such a waiver is necessary to expedite or facilitate the use 
     of such funds: Provided further, That of the funds provided 
     under this heading for grants and loans, up to 1 percent 
     shall be available for staffing, training, technical 
     assistance, technology, monitoring, research and evaluation 
     activities: Provided further, That funds set aside in the 
     previous proviso shall remain available until September 30, 
     2012: Provided further, That funding made available under 
     this heading and used by the Secretary for personnel expenses 
     related to administering funding under this heading shall be 
     transferred to ``Housing Personnel Compensation and 
     Benefits'' and shall retain the terms and conditions of this 
     account including reprogramming provisos except that the 
     period of availability set forth in the previous proviso 
     shall govern such transferred funds: Provided further, That 
     any funding made available under this heading used by the 
     Secretary for training and other administrative expenses 
     shall be transferred to ``Administration, Operations and 
     Management'' for non-personnel expenses of the Department of 
     Housing and Urban Development: Provided further, That any 
     funding made available under this heading used by the 
     Secretary for technology shall be transferred to ``Working 
     Capital Fund.''

            Office of Lead Hazard Control and Healthy Homes

       For an additional amount for the ``Lead Hazard Reduction 
     Program'', as authorized by section 1011 of the Residential 
     Lead-Based Paint Hazard Reduction Act of 1992, and by 
     sections 501 and 502 of the Housing and Urban Development Act 
     of 1974, $100,000,000, to remain available until September 
     30, 2011: Provided, That for purposes of environmental 
     review, pursuant to the National Environmental Policy Act of 
     1969 (42 U.S.C. 4321 et seq.) and other provisions of law 
     that further the purposes of such Act, a grant under the 
     Healthy Homes Initiative, Operation Lead Elimination Action 
     Plan (LEAP), or the Lead Technical Studies program under this 
     heading or under prior appropriations Acts for such purposes 
     under this heading, shall be considered to be funds for a 
     special project for purposes of section 305(e) of the 
     Multifamily Housing Property Disposition Reform Act of 1994: 
     Provided further, That funds shall be awarded first to 
     applicants which had applied under the Lead Hazard Reduction 
     Program Notices of Funding Availability for fiscal year 2008, 
     and were found in the application review to be qualified for 
     award, but were not awarded because of funding limitations, 
     and that any funds which remain after reservation of funds 
     for such grants shall be added to the amount of funds to be 
     awarded under the Lead Hazard Reduction Program Notices of 
     Funding Availability for fiscal year 2009: Provided further, 
     That each applicant for the Lead Hazard Program Notices of 
     Funding Availability for fiscal year 2009 shall submit a 
     detailed plan and strategy that demonstrates adequate 
     capacity that is acceptable to the Secretary to carry out the 
     proposed use of funds: Provided further, That recipients of 
     funds under this heading shall expend at least 50 percent of 
     such funds within 2 years of the date on which funds become 
     available to such jurisdictions for obligation, and expend 
     100 percent of such funds within 3 years of such date: 
     Provided further, That if a recipient fails to comply with 
     the 2-year expenditure requirement, the Secretary shall 
     recapture all remaining funds awarded to the recipient and 
     reallocate such funds to recipients that are in compliance 
     with those requirements: Provided further, That if a 
     recipient fails to comply with the 3-year expenditure 
     requirement, the Secretary shall recapture the balance of the 
     funds awarded to the recipient: Provided further, That in 
     administering funds appropriated or otherwise made available 
     under this heading, the Secretary may waive or specify 
     alternative requirements for any provision of any statute or 
     regulation in connection with the obligation by the Secretary 
     or the use of these funds (except for requirements related to 
     fair housing, nondiscrimination, labor standards and the 
     environment), upon a finding that such a waiver is necessary 
     to expedite or facilitate the use of such funds: Provided 
     further, That of the funds made available under this heading, 
     up to .5 percent shall be available for staffing, training, 
     technical assistance, technology, monitoring, travel, 
     enforcement, research and evaluation activities: Provided 
     further, That funds set aside in the previous proviso shall 
     remain available until September 30, 2012: Provided further, 
     That any funds made available under this heading used by the 
     Secretary for personnel expenses related to administering 
     funding under this heading shall be transferred to 
     ``Personnel Compensation and Benefits, Office of Lead Hazard 
     Control and Healthy Homes'' and shall retain the terms and 
     conditions of this account, including reprogramming 
     provisions, except that the period of availability set forth 
     in the previous proviso shall govern such transferred funds: 
     Provided further, That any funds made available under this 
     heading used by the Secretary for training or other 
     administrative expenses shall be transferred to 
     ``Administration, Operations, and Management'', for non-
     personnel expenses of the Department of Housing and Urban 
     Development: Provided further, That any funds made available 
     under this heading used by the Secretary for technology shall 
     be transferred to ``Working Capital Fund''.

                     Management and Administration

                      office of inspector general

       For an additional amount for the necessary salaries and 
     expenses of the Office of Inspector General in carrying out 
     the Inspector General Act of 1978, as amended, $15,000,000, 
     to remain available until September 30, 2013: Provided, That 
     the Inspector General shall have independent authority over 
     all personnel issues within this office.

    GENERAL PROVISIONS--DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

       Sec. 1202. FHA Loan Limits for 2009. (a) Loan Limit Floor 
     Based on 2008 Levels.--For mortgages for which the mortgagee 
     issues credit approval for the borrower during calendar year 
     2009, if the dollar amount limitation on the principal 
     obligation of a mortgage determined under section 203(b)(2) 
     of the National Housing Act (12 U.S.C. 1709(b)(2)) for any 
     size residence for any area is less than such dollar amount 
     limitation that was in effect for such size residence for 
     such area for 2008 pursuant to section 202 of the Economic 
     Stimulus Act of 2008 (Public Law 110-185; 122 Stat. 620), 
     notwithstanding any other provision of law, the maximum 
     dollar amount limitation on the principal obligation of a 
     mortgage for such size residence for such area for purposes 
     of such section 203(b)(2) shall be considered (except for 
     purposes of section 255(g) of such Act (12 U.S.C. 1715z-
     20(g))) to be such dollar amount limitation in effect for 
     such size residence for such area for 2008.
       (b) Discretionary Authority for Sub-Areas.--Notwithstanding 
     any other provision of law, if the Secretary of Housing and 
     Urban Development determines, for any geographic area that is 
     smaller than an area for which dollar amount limitations on 
     the principal obligation of a mortgage are determined under 
     section 203(b)(2) of the National Housing Act, that a higher 
     such maximum dollar amount limitation is warranted for any 
     particular size or sizes of residences in such sub-area by 
     higher median home prices in such sub-area, the Secretary 
     may, for mortgages for which the mortgagee issues credit 
     approval for the borrower during calendar year 2009, increase 
     the maximum dollar amount limitation for such size or sizes 
     of residences for such sub-area that is otherwise in effect 
     (including pursuant to subsection (a) of this section), but 
     in no case to an amount that exceeds the amount specified in 
     section 202(a)(2) of the Economic Stimulus Act of 2008.

[[Page 3918]]

       Sec. 1203. GSE Conforming Loan Limits for 2009. (a) Loan 
     Limit Floor Based on 2008 Levels.--For mortgages originated 
     during calendar year 2009, if the limitation on the maximum 
     original principal obligation of a mortgage that may be 
     purchased by the Federal National Mortgage Association or the 
     Federal Home Loan Mortgage Corporation determined under 
     section 302(b)(2) of the Federal National Mortgage 
     Association Charter Act (12 U.S.C. 1717(b)(2)) or section 
     305(a)(2) of the Federal Home Loan Mortgage Corporation Act 
     (12 U.S.C. 1754(a)(2)), respectively, for any size residence 
     for any area is less than such maximum original principal 
     obligation limitation that was in effect for such size 
     residence for such area for 2008 pursuant to section 201 of 
     the Economic Stimulus Act of 2008 (Public Law 110-185; 122 
     Stat. 619), notwithstanding any other provision of law, the 
     limitation on the maximum original principal obligation of a 
     mortgage for such Association and Corporation for such size 
     residence for such area shall be such maximum limitation in 
     effect for such size residence for such area for 2008.
       (b) Discretionary Authority for Sub-Areas.--Notwithstanding 
     any other provision of law, if the Director of the Federal 
     Housing Finance Agency determines, for any geographic area 
     that is smaller than an area for which limitations on the 
     maximum original principal obligation of a mortgage are 
     determined for the Federal National Mortgage Association or 
     the Federal Home Loan Mortgage Corporation, that a higher 
     such maximum original principal obligation limitation is 
     warranted for any particular size or sizes of residences in 
     such sub-area by higher median home prices in such sub-area, 
     the Director may, for mortgages originated during 2009, 
     increase the maximum original principal obligation limitation 
     for such size or sizes of residences for such sub-area that 
     is otherwise in effect (including pursuant to subsection (a) 
     of this section) for such Association and Corporation, but in 
     no case to an amount that exceeds the amount specified in the 
     matter following the comma in section 201(a)(1)(B) of the 
     Economic Stimulus Act of 2008.
       Sec. 1204. FHA Reverse Mortgage Loan Limits for 2009. For 
     mortgages for which the mortgagee issues credit approval for 
     the borrower during calendar year 2009, the second sentence 
     of section 255(g) of the National Housing Act (12 U.S.C. 
     1715z-20(g)) shall be considered to require that in no case 
     may the benefits of insurance under such section 255 exceed 
     150 percent of the maximum dollar amount in effect under the 
     sixth sentence of section 305(a)(2) of the Federal Home Loan 
     Mortgage Corporation Act (12 U.S.C. 1454(a)(2)).

               TITLE XIII--HEALTH INFORMATION TECHNOLOGY

     SEC. 13001. SHORT TITLE; TABLE OF CONTENTS OF TITLE.

       (a) Short Title.--This title (and title IV of division B) 
     may be cited as the ``Health Information Technology for 
     Economic and Clinical Health Act'' or the ``HITECH Act''.
       (b) Table of Contents of Title.--The table of contents of 
     this title is as follows:

Sec. 13001. Short title; table of contents of title.

         Subtitle A--Promotion of Health Information Technology

     Part 1--Improving Health Care Quality, Safety, and Efficiency

Sec. 13101. ONCHIT; standards development and adoption.

         ``TITLE XXX--HEALTH INFORMATION TECHNOLOGY AND QUALITY

``Sec. 3000. Definitions.

        ``Subtitle A--Promotion of Health Information Technology

``Sec. 3001. Office of the National Coordinator for Health Information 
              Technology.
``Sec. 3002. HIT Policy Committee.
``Sec. 3003. HIT Standards Committee.
``Sec. 3004. Process for adoption of endorsed recommendations; adoption 
              of initial set of standards, implementation 
              specifications, and certification criteria.
``Sec. 3005. Application and use of adopted standards and 
              implementation specifications by Federal agencies.
``Sec. 3006. Voluntary application and use of adopted standards and 
              implementation specifications by private entities.
``Sec. 3007. Federal health information technology.
``Sec. 3008. Transitions.
``Sec. 3009. Miscellaneous provisions.
Sec. 13102. Technical amendment.

 Part 2--Application and Use of Adopted Health Information Technology 
                           Standards; Reports

Sec. 13111. Coordination of Federal activities with adopted standards 
              and implementation specifications.
Sec. 13112. Application to private entities.
Sec. 13113. Study and reports.

          Subtitle B--Testing of Health Information Technology

Sec. 13201. National Institute for Standards and Technology testing.
Sec. 13202. Research and development programs.

                  Subtitle C--Grants and Loans Funding

Sec. 13301. Grant, loan, and demonstration programs.

 ``Subtitle B--Incentives for the Use of Health Information Technology

``Sec. 3011. Immediate funding to strengthen the health information 
              technology infrastructure.
``Sec. 3012. Health information technology implementation assistance.
``Sec. 3013. State grants to promote health information technology.
``Sec. 3014. Competitive grants to States and Indian tribes for the 
              development of loan programs to facilitate the widespread 
              adoption of certified EHR technology.
``Sec. 3015. Demonstration program to integrate information technology 
              into clinical education.
``Sec. 3016. Information technology professionals in health care.
``Sec. 3017. General grant and loan provisions.
``Sec. 3018. Authorization for appropriations.

                          Subtitle D--Privacy

Sec. 13400. Definitions.

      Part 1--Improved Privacy Provisions and Security Provisions

Sec. 13401. Application of security provisions and penalties to 
              business associates of covered entities; annual guidance 
              on security provisions.
Sec. 13402. Notification in the case of breach.
Sec. 13403. Education on health information privacy.
Sec. 13404. Application of privacy provisions and penalties to business 
              associates of covered entities.
Sec. 13405. Restrictions on certain disclosures and sales of health 
              information; accounting of certain protected health 
              information disclosures; access to certain information in 
              electronic format.
Sec. 13406. Conditions on certain contacts as part of health care 
              operations.
Sec. 13407. Temporary breach notification requirement for vendors of 
              personal health records and other non-HIPAA covered 
              entities.
Sec. 13408. Business associate contracts required for certain entities.
Sec. 13409. Clarification of application of wrongful disclosures 
              criminal penalties.
Sec. 13410. Improved enforcement.
Sec. 13411. Audits.

 Part 2--Relationship to Other Laws; Regulatory References; Effective 
                             Date; Reports

Sec. 13421. Relationship to other laws.
Sec. 13422. Regulatory references.
Sec. 13423. Effective date.
Sec. 13424. Studies, reports, guidance.

         Subtitle A--Promotion of Health Information Technology

     PART 1--IMPROVING HEALTH CARE QUALITY, SAFETY, AND EFFICIENCY

     SEC. 13101. ONCHIT; STANDARDS DEVELOPMENT AND ADOPTION.

       The Public Health Service Act (42 U.S.C. 201 et seq.) is 
     amended by adding at the end the following:

         ``TITLE XXX--HEALTH INFORMATION TECHNOLOGY AND QUALITY

     ``SEC. 3000. DEFINITIONS.

       ``In this title:
       ``(1) Certified ehr technology.--The term `certified EHR 
     technology' means a qualified electronic health record that 
     is certified pursuant to section 3001(c)(5) as meeting 
     standards adopted under section 3004 that are applicable to 
     the type of record involved (as determined by the Secretary, 
     such as an ambulatory electronic health record for office-
     based physicians or an inpatient hospital electronic health 
     record for hospitals).
       ``(2) Enterprise integration.--The term `enterprise 
     integration' means the electronic linkage of health care 
     providers, health plans, the government, and other interested 
     parties, to enable the electronic exchange and use of health 
     information among all the components in the health care 
     infrastructure in accordance with applicable law, and such 
     term includes related application protocols and other related 
     standards.
       ``(3) Health care provider.--The term `health care 
     provider' includes a hospital, skilled nursing facility, 
     nursing facility, home health entity or other long term care 
     facility, health care clinic, community mental health center 
     (as defined in section 1913(b)(1)), renal dialysis facility, 
     blood center, ambulatory surgical center described in section 
     1833(i) of the Social Security Act, emergency medical 
     services provider, Federally qualified health center, group 
     practice, a pharmacist, a pharmacy, a laboratory, a physician 
     (as defined in section 1861(r) of the Social Security Act), a 
     practitioner (as described in section 1842(b)(18)(C) of the 
     Social Security Act), a provider operated by, or under 
     contract with, the Indian Health Service or by an Indian 
     tribe (as defined in the Indian Self-Determination and 
     Education Assistance Act), tribal organization, or urban 
     Indian organization (as defined in section 4 of the Indian 
     Health Care Improvement Act), a rural health clinic, a 
     covered entity under section 340B, an ambulatory surgical 
     center described in section 1833(i) of the Social Security 
     Act, a therapist (as

[[Page 3919]]

     defined in section 1848(k)(3)(B)(iii) of the Social Security 
     Act), and any other category of health care facility, entity, 
     practitioner, or clinician determined appropriate by the 
     Secretary.
       ``(4) Health information.--The term `health information' 
     has the meaning given such term in section 1171(4) of the 
     Social Security Act.
       ``(5) Health information technology.--The term `health 
     information technology' means hardware, software, integrated 
     technologies or related licenses, intellectual property, 
     upgrades, or packaged solutions sold as services that are 
     designed for or support the use by health care entities or 
     patients for the electronic creation, maintenance, access, or 
     exchange of health information
       ``(6) Health plan.--The term `health plan' has the meaning 
     given such term in section 1171(5) of the Social Security 
     Act.
       ``(7) HIT policy committee.--The term `HIT Policy 
     Committee' means such Committee established under section 
     3002(a).
       ``(8) HIT standards committee.--The term `HIT Standards 
     Committee' means such Committee established under section 
     3003(a).
       ``(9) Individually identifiable health information.--The 
     term `individually identifiable health information' has the 
     meaning given such term in section 1171(6) of the Social 
     Security Act.
       ``(10) Laboratory.--The term `laboratory' has the meaning 
     given such term in section 353(a).
       ``(11) National coordinator.--The term `National 
     Coordinator' means the head of the Office of the National 
     Coordinator for Health Information Technology established 
     under section 3001(a).
       ``(12) Pharmacist.--The term `pharmacist' has the meaning 
     given such term in section 804(2) of the Federal Food, Drug, 
     and Cosmetic Act.
       ``(13) Qualified electronic health record.--The term 
     `qualified electronic health record' means an electronic 
     record of health-related information on an individual that--
       ``(A) includes patient demographic and clinical health 
     information, such as medical history and problem lists; and
       ``(B) has the capacity--
       ``(i) to provide clinical decision support;
       ``(ii) to support physician order entry;
       ``(iii) to capture and query information relevant to health 
     care quality; and
       ``(iv) to exchange electronic health information with, and 
     integrate such information from other sources.
       ``(14) State.--The term `State' means each of the several 
     States, the District of Columbia, Puerto Rico, the Virgin 
     Islands, Guam, American Samoa, and the Northern Mariana 
     Islands.

        ``Subtitle A--Promotion of Health Information Technology

     ``SEC. 3001. OFFICE OF THE NATIONAL COORDINATOR FOR HEALTH 
                   INFORMATION TECHNOLOGY.

       ``(a) Establishment.--There is established within the 
     Department of Health and Human Services an Office of the 
     National Coordinator for Health Information Technology 
     (referred to in this section as the `Office'). The Office 
     shall be headed by a National Coordinator who shall be 
     appointed by the Secretary and shall report directly to the 
     Secretary.
       ``(b) Purpose.--The National Coordinator shall perform the 
     duties under subsection (c) in a manner consistent with the 
     development of a nationwide health information technology 
     infrastructure that allows for the electronic use and 
     exchange of information and that--
       ``(1) ensures that each patient's health information is 
     secure and protected, in accordance with applicable law;
       ``(2) improves health care quality, reduces medical errors, 
     reduces health disparities, and advances the delivery of 
     patient-centered medical care;
       ``(3) reduces health care costs resulting from 
     inefficiency, medical errors, inappropriate care, duplicative 
     care, and incomplete information;
       ``(4) provides appropriate information to help guide 
     medical decisions at the time and place of care;
       ``(5) ensures the inclusion of meaningful public input in 
     such development of such infrastructure;
       ``(6) improves the coordination of care and information 
     among hospitals, laboratories, physician offices, and other 
     entities through an effective infrastructure for the secure 
     and authorized exchange of health care information;
       ``(7) improves public health activities and facilitates the 
     early identification and rapid response to public health 
     threats and emergencies, including bioterror events and 
     infectious disease outbreaks;
       ``(8) facilitates health and clinical research and health 
     care quality;
       ``(9) promotes early detection, prevention, and management 
     of chronic diseases;
       ``(10) promotes a more effective marketplace, greater 
     competition, greater systems analysis, increased consumer 
     choice, and improved outcomes in health care services; and
       ``(11) improves efforts to reduce health disparities.
       ``(c) Duties of the National Coordinator.--
       ``(1) Standards.--The National Coordinator shall--
       ``(A) review and determine whether to endorse each 
     standard, implementation specification, and certification 
     criterion for the electronic exchange and use of health 
     information that is recommended by the HIT Standards 
     Committee under section 3003 for purposes of adoption under 
     section 3004;
       ``(B) make such determinations under subparagraph (A), and 
     report to the Secretary such determinations, not later than 
     45 days after the date the recommendation is received by the 
     Coordinator; and
       ``(C) review Federal health information technology 
     investments to ensure that Federal health information 
     technology programs are meeting the objectives of the 
     strategic plan published under paragraph (3).
       ``(2) HIT policy coordination.--
       ``(A) In general.--The National Coordinator shall 
     coordinate health information technology policy and programs 
     of the Department with those of other relevant executive 
     branch agencies with a goal of avoiding duplication of 
     efforts and of helping to ensure that each agency undertakes 
     health information technology activities primarily within the 
     areas of its greatest expertise and technical capability and 
     in a manner towards a coordinated national goal.
       ``(B) HIT policy and standards committees.--The National 
     Coordinator shall be a leading member in the establishment 
     and operations of the HIT Policy Committee and the HIT 
     Standards Committee and shall serve as a liaison among those 
     two Committees and the Federal Government.
       ``(3) Strategic plan.--
       ``(A) In general.--The National Coordinator shall, in 
     consultation with other appropriate Federal agencies 
     (including the National Institute of Standards and 
     Technology), update the Federal Health IT Strategic Plan 
     (developed as of June 3, 2008) to include specific 
     objectives, milestones, and metrics with respect to the 
     following:
       ``(i) The electronic exchange and use of health information 
     and the enterprise integration of such information.
       ``(ii) The utilization of an electronic health record for 
     each person in the United States by 2014.
       ``(iii) The incorporation of privacy and security 
     protections for the electronic exchange of an individual's 
     individually identifiable health information.
       ``(iv) Ensuring security methods to ensure appropriate 
     authorization and electronic authentication of health 
     information and specifying technologies or methodologies for 
     rendering health information unusable, unreadable, or 
     indecipherable.
       ``(v) Specifying a framework for coordination and flow of 
     recommendations and policies under this subtitle among the 
     Secretary, the National Coordinator, the HIT Policy 
     Committee, the HIT Standards Committee, and other health 
     information exchanges and other relevant entities.
       ``(vi) Methods to foster the public understanding of health 
     information technology.
       ``(vii) Strategies to enhance the use of health information 
     technology in improving the quality of health care, reducing 
     medical errors, reducing health disparities, improving public 
     health, increasing prevention and coordination with community 
     resources, and improving the continuity of care among health 
     care settings.
       ``(viii) Specific plans for ensuring that populations with 
     unique needs, such as children, are appropriately addressed 
     in the technology design, as appropriate, which may include 
     technology that automates enrollment and retention for 
     eligible individuals.
       ``(B) Collaboration.--The strategic plan shall be updated 
     through collaboration of public and private entities.
       ``(C) Measurable outcome goals.--The strategic plan update 
     shall include measurable outcome goals.
       ``(D) Publication.--The National Coordinator shall 
     republish the strategic plan, including all updates.
       ``(4) Website.--The National Coordinator shall maintain and 
     frequently update an Internet website on which there is 
     posted information on the work, schedules, reports, 
     recommendations, and other information to ensure transparency 
     in promotion of a nationwide health information technology 
     infrastructure.
       ``(5) Certification.--
       ``(A) In general.--The National Coordinator, in 
     consultation with the Director of the National Institute of 
     Standards and Technology, shall keep or recognize a program 
     or programs for the voluntary certification of health 
     information technology as being in compliance with applicable 
     certification criteria adopted under this subtitle. Such 
     program shall include, as appropriate, testing of the 
     technology in accordance with section 13201(b) of the Health 
     Information Technology for Economic and Clinical Health Act.
       ``(B) Certification criteria described.--In this title, the 
     term `certification criteria' means, with respect to 
     standards and implementation specifications for health 
     information technology, criteria to establish that the 
     technology meets such standards and implementation 
     specifications.
       ``(6) Reports and publications.--
       ``(A) Report on additional funding or authority needed.--
     Not later than 12 months after the date of the enactment of 
     this title, the National Coordinator shall submit to the 
     appropriate committees of jurisdiction of the House of 
     Representatives and the Senate a report on any additional 
     funding or authority the Coordinator or the HIT Policy 
     Committee or HIT Standards Committee requires to evaluate and 
     develop standards, implementation specifications, and 
     certification criteria, or to achieve full participation of 
     stakeholders in the adoption of a nationwide health 
     information technology infrastructure that allows for the 
     electronic use and exchange of health information.

[[Page 3920]]

       ``(B) Implementation report.--The National Coordinator 
     shall prepare a report that identifies lessons learned from 
     major public and private health care systems in their 
     implementation of health information technology, including 
     information on whether the technologies and practices 
     developed by such systems may be applicable to and usable in 
     whole or in part by other health care providers.
       ``(C) Assessment of impact of hit on communities with 
     health disparities and uninsured, underinsured, and medically 
     underserved areas.--The National Coordinator shall assess and 
     publish the impact of health information technology in 
     communities with health disparities and in areas with a high 
     proportion of individuals who are uninsured, underinsured, 
     and medically underserved individuals (including urban and 
     rural areas) and identify practices to increase the adoption 
     of such technology by health care providers in such 
     communities, and the use of health information technology to 
     reduce and better manage chronic diseases.
       ``(D) Evaluation of benefits and costs of the electronic 
     use and exchange of health information.--The National 
     Coordinator shall evaluate and publish evidence on the 
     benefits and costs of the electronic use and exchange of 
     health information and assess to whom these benefits and 
     costs accrue.
       ``(E) Resource requirements.--The National Coordinator 
     shall estimate and publish resources required annually to 
     reach the goal of utilization of an electronic health record 
     for each person in the United States by 2014, including--
       ``(i) the required level of Federal funding;
       ``(ii) expectations for regional, State, and private 
     investment;
       ``(iii) the expected contributions by volunteers to 
     activities for the utilization of such records; and
       ``(iv) the resources needed to establish a health 
     information technology workforce sufficient to support this 
     effort (including education programs in medical informatics 
     and health information management).
       ``(7) Assistance.--The National Coordinator may provide 
     financial assistance to consumer advocacy groups and not-for-
     profit entities that work in the public interest for purposes 
     of defraying the cost to such groups and entities to 
     participate under, whether in whole or in part, the National 
     Technology Transfer Act of 1995 (15 U.S.C. 272 note).
       ``(8) Governance for nationwide health information 
     network.--The National Coordinator shall establish a 
     governance mechanism for the nationwide health information 
     network.
       ``(d) Detail of Federal Employees.--
       ``(1) In general.--Upon the request of the National 
     Coordinator, the head of any Federal agency is authorized to 
     detail, with or without reimbursement from the Office, any of 
     the personnel of such agency to the Office to assist it in 
     carrying out its duties under this section.
       ``(2) Effect of detail.--Any detail of personnel under 
     paragraph (1) shall--
       ``(A) not interrupt or otherwise affect the civil service 
     status or privileges of the Federal employee; and
       ``(B) be in addition to any other staff of the Department 
     employed by the National Coordinator.
       ``(3) Acceptance of detailees.--Notwithstanding any other 
     provision of law, the Office may accept detailed personnel 
     from other Federal agencies without regard to whether the 
     agency described under paragraph (1) is reimbursed.
       ``(e) Chief Privacy Officer of the Office of the National 
     Coordinator.--Not later than 12 months after the date of the 
     enactment of this title, the Secretary shall appoint a Chief 
     Privacy Officer of the Office of the National Coordinator, 
     whose duty it shall be to advise the National Coordinator on 
     privacy, security, and data stewardship of electronic health 
     information and to coordinate with other Federal agencies 
     (and similar privacy officers in such agencies), with State 
     and regional efforts, and with foreign countries with regard 
     to the privacy, security, and data stewardship of electronic 
     individually identifiable health information.

     ``SEC. 3002. HIT POLICY COMMITTEE.

       ``(a) Establishment.--There is established a HIT Policy 
     Committee to make policy recommendations to the National 
     Coordinator relating to the implementation of a nationwide 
     health information technology infrastructure, including 
     implementation of the strategic plan described in section 
     3001(c)(3).
       ``(b) Duties.--
       ``(1) Recommendations on health information technology 
     infrastructure.--The HIT Policy Committee shall recommend a 
     policy framework for the development and adoption of a 
     nationwide health information technology infrastructure that 
     permits the electronic exchange and use of health information 
     as is consistent with the strategic plan under section 
     3001(c)(3) and that includes the recommendations under 
     paragraph (2). The Committee shall update such 
     recommendations and make new recommendations as appropriate.
       ``(2) Specific areas of standard development.--
       ``(A) In general.--The HIT Policy Committee shall recommend 
     the areas in which standards, implementation specifications, 
     and certification criteria are needed for the electronic 
     exchange and use of health information for purposes of 
     adoption under section 3004 and shall recommend an order of 
     priority for the development, harmonization, and recognition 
     of such standards, specifications, and certification criteria 
     among the areas so recommended. Such standards and 
     implementation specifications shall include named standards, 
     architectures, and software schemes for the authentication 
     and security of individually identifiable health information 
     and other information as needed to ensure the reproducible 
     development of common solutions across disparate entities.
       ``(B) Areas required for consideration.--For purposes of 
     subparagraph (A), the HIT Policy Committee shall make 
     recommendations for at least the following areas:
       ``(i) Technologies that protect the privacy of health 
     information and promote security in a qualified electronic 
     health record, including for the segmentation and protection 
     from disclosure of specific and sensitive individually 
     identifiable health information with the goal of minimizing 
     the reluctance of patients to seek care (or disclose 
     information about a condition) because of privacy concerns, 
     in accordance with applicable law, and for the use and 
     disclosure of limited data sets of such information.
       ``(ii) A nationwide health information technology 
     infrastructure that allows for the electronic use and 
     accurate exchange of health information.
       ``(iii) The utilization of a certified electronic health 
     record for each person in the United States by 2014.
       ``(iv) Technologies that as a part of a qualified 
     electronic health record allow for an accounting of 
     disclosures made by a covered entity (as defined for purposes 
     of regulations promulgated under section 264(c) of the Health 
     Insurance Portability and Accountability Act of 1996) for 
     purposes of treatment, payment, and health care operations 
     (as such terms are defined for purposes of such regulations).
       ``(v) The use of certified electronic health records to 
     improve the quality of health care, such as by promoting the 
     coordination of health care and improving continuity of 
     health care among health care providers, by reducing medical 
     errors, by improving population health, by reducing health 
     disparities, by reducing chronic disease, and by advancing 
     research and education.
       ``(vi) Technologies that allow individually identifiable 
     health information to be rendered unusable, unreadable, or 
     indecipherable to unauthorized individuals when such 
     information is transmitted in the nationwide health 
     information network or physically transported outside of the 
     secured, physical perimeter of a health care provider, health 
     plan, or health care clearinghouse.
       ``(vii) The use of electronic systems to ensure the 
     comprehensive collection of patient demographic data, 
     including, at a minimum, race, ethnicity, primary language, 
     and gender information.
       ``(viii) Technologies that address the needs of children 
     and other vulnerable populations.
       ``(C) Other areas for consideration.--In making 
     recommendations under subparagraph (A), the HIT Policy 
     Committee may consider the following additional areas:
       ``(i) The appropriate uses of a nationwide health 
     information infrastructure, including for purposes of--

       ``(I) the collection of quality data and public reporting;
       ``(II) biosurveillance and public health;
       ``(III) medical and clinical research; and
       ``(IV) drug safety.

       ``(ii) Self-service technologies that facilitate the use 
     and exchange of patient information and reduce wait times.
       ``(iii) Telemedicine technologies, in order to reduce 
     travel requirements for patients in remote areas.
       ``(iv) Technologies that facilitate home health care and 
     the monitoring of patients recuperating at home.
       ``(v) Technologies that help reduce medical errors.
       ``(vi) Technologies that facilitate the continuity of care 
     among health settings.
       ``(vii) Technologies that meet the needs of diverse 
     populations.
       ``(viii) Methods to facilitate secure access by an 
     individual to such individual's protected health information.
       ``(ix) Methods, guidelines, and safeguards to facilitate 
     secure access to patient information by a family member, 
     caregiver, or guardian acting on behalf of a patient due to 
     age-related and other disability, cognitive impairment, or 
     dementia.
       ``(x) Any other technology that the HIT Policy Committee 
     finds to be among the technologies with the greatest 
     potential to improve the quality and efficiency of health 
     care.
       ``(3) Forum.--The HIT Policy Committee shall serve as a 
     forum for broad stakeholder input with specific expertise in 
     policies relating to the matters described in paragraphs (1) 
     and (2).
       ``(4) Consistency with evaluation conducted under mippa.--
       ``(A) Requirement for consistency.--The HIT Policy 
     Committee shall ensure that recommendations made under 
     paragraph (2)(B)(vi) are consistent with the evaluation 
     conducted under section 1809(a) of the Social Security Act.
       ``(B) Scope.--Nothing in subparagraph (A) shall be 
     construed to limit the recommendations under paragraph 
     (2)(B)(vi) to the elements described in section 1809(a)(3) of 
     the Social Security Act.
       ``(C) Timing.--The requirement under subparagraph (A) shall 
     be applicable to the extent that evaluations have been 
     conducted under section 1809(a) of the Social Security Act, 
     regardless of whether the report described in subsection (b) 
     of such section has been submitted.

[[Page 3921]]

       ``(c) Membership and Operations.--
       ``(1) In general.--The National Coordinator shall take a 
     leading position in the establishment and operations of the 
     HIT Policy Committee.
       ``(2) Membership.--The HIT Policy Committee shall be 
     composed of members to be appointed as follows:
       ``(A) 3 members shall be appointed by the Secretary, 1 of 
     whom shall be appointed to represent the Department of Health 
     and Human Services and 1 of whom shall be a public health 
     official.
       ``(B) 1 member shall be appointed by the majority leader of 
     the Senate.
       ``(C) 1 member shall be appointed by the minority leader of 
     the Senate.
       ``(D) 1 member shall be appointed by the Speaker of the 
     House of Representatives.
       ``(E) 1 member shall be appointed by the minority leader of 
     the House of Representatives.
       ``(F) Such other members as shall be appointed by the 
     President as representatives of other relevant Federal 
     agencies.
       ``(G) 13 members shall be appointed by the Comptroller 
     General of the United States of whom--
       ``(i) 3 members shall advocates for patients or consumers;
       ``(ii) 2 members shall represent health care providers, one 
     of which shall be a physician;
       ``(iii) 1 member shall be from a labor organization 
     representing health care workers;
       ``(iv) 1 member shall have expertise in health information 
     privacy and security;
       ``(v) 1 member shall have expertise in improving the health 
     of vulnerable populations;
       ``(vi) 1 member shall be from the research community;
       ``(vii) 1 member shall represent health plans or other 
     third-party payers;
       ``(viii) 1 member shall represent information technology 
     vendors;
       ``(ix) 1 member shall represent purchasers or employers; 
     and
       ``(x) 1 member shall have expertise in health care quality 
     measurement and reporting.
       ``(3) Participation.--The members of the HIT Policy 
     Committee appointed under paragraph (2) shall represent a 
     balance among various sectors of the health care system so 
     that no single sector unduly influences the recommendations 
     of the Policy Committee.
       ``(4) Terms.--
       ``(A) In general.--The terms of the members of the HIT 
     Policy Committee shall be for 3 years, except that the 
     Comptroller General shall designate staggered terms for the 
     members first appointed.
       ``(B) Vacancies.--Any member appointed to fill a vacancy in 
     the membership of the HIT Policy Committee that occurs prior 
     to the expiration of the term for which the member's 
     predecessor was appointed shall be appointed only for the 
     remainder of that term. A member may serve after the 
     expiration of that member's term until a successor has been 
     appointed. A vacancy in the HIT Policy Committee shall be 
     filled in the manner in which the original appointment was 
     made.
       ``(5) Outside involvement.--The HIT Policy Committee shall 
     ensure an opportunity for the participation in activities of 
     the Committee of outside advisors, including individuals with 
     expertise in the development of policies for the electronic 
     exchange and use of health information, including in the 
     areas of health information privacy and security.
       ``(6) Quorum.--A majority of the member of the HIT Policy 
     Committee shall constitute a quorum for purposes of voting, 
     but a lesser number of members may meet and hold hearings.
       ``(7) Failure of initial appointment.--If, on the date that 
     is 45 days after the date of enactment of this title, an 
     official authorized under paragraph (2) to appoint one or 
     more members of the HIT Policy Committee has not appointed 
     the full number of members that such paragraph authorizes 
     such official to appoint, the Secretary is authorized to 
     appoint such members.
       ``(8) Consideration.--The National Coordinator shall ensure 
     that the relevant and available recommendations and comments 
     from the National Committee on Vital and Health Statistics 
     are considered in the development of policies.
       ``(d) Application of FACA.--The Federal Advisory Committee 
     Act (5 U.S.C. App.), other than section 14 of such Act, shall 
     apply to the HIT Policy Committee.
       ``(e) Publication.--The Secretary shall provide for 
     publication in the Federal Register and the posting on the 
     Internet website of the Office of the National Coordinator 
     for Health Information Technology of all policy 
     recommendations made by the HIT Policy Committee under this 
     section.

     ``SEC. 3003. HIT STANDARDS COMMITTEE.

       ``(a) Establishment.--There is established a committee to 
     be known as the HIT Standards Committee to recommend to the 
     National Coordinator standards, implementation 
     specifications, and certification criteria for the electronic 
     exchange and use of health information for purposes of 
     adoption under section 3004, consistent with the 
     implementation of the strategic plan described in section 
     3001(c)(3) and beginning with the areas listed in section 
     3002(b)(2)(B) in accordance with policies developed by the 
     HIT Policy Committee.
       ``(b) Duties.--
       ``(1) Standards development.--
       ``(A) In general.--The HIT Standards Committee shall 
     recommend to the National Coordinator standards, 
     implementation specifications, and certification criteria 
     described in subsection (a) that have been developed, 
     harmonized, or recognized by the HIT Standards Committee. The 
     HIT Standards Committee shall update such recommendations and 
     make new recommendations as appropriate, including in 
     response to a notification sent under section 3004(a)(2)(B). 
     Such recommendations shall be consistent with the latest 
     recommendations made by the HIT Policy Committee.
       ``(B) Harmonization.--The HIT Standards Committee recognize 
     harmonized or updated standards from an entity or entities 
     for the purpose of harmonizing or updating standards and 
     implementation specifications in order to achieve uniform and 
     consistent implementation of the standards and implementation 
     specifications.
       ``(C) Pilot testing of standards and implementation 
     specifications.--In the development, harmonization, or 
     recognition of standards and implementation specifications, 
     the HIT Standards Committee shall, as appropriate, provide 
     for the testing of such standards and specifications by the 
     National Institute for Standards and Technology under section 
     13201(a) of the Health Information Technology for Economic 
     and Clinical Health Act.
       ``(D) Consistency.--The standards, implementation 
     specifications, and certification criteria recommended under 
     this subsection shall be consistent with the standards for 
     information transactions and data elements adopted pursuant 
     to section 1173 of the Social Security Act.
       ``(2) Forum.--The HIT Standards Committee shall serve as a 
     forum for the participation of a broad range of stakeholders 
     to provide input on the development, harmonization, and 
     recognition of standards, implementation specifications, and 
     certification criteria necessary for the development and 
     adoption of a nationwide health information technology 
     infrastructure that allows for the electronic use and 
     exchange of health information.
       ``(3) Schedule.--Not later than 90 days after the date of 
     the enactment of this title, the HIT Standards Committee 
     shall develop a schedule for the assessment of policy 
     recommendations developed by the HIT Policy Committee under 
     section 3002. The HIT Standards Committee shall update such 
     schedule annually. The Secretary shall publish such schedule 
     in the Federal Register.
       ``(4) Public input.--The HIT Standards Committee shall 
     conduct open public meetings and develop a process to allow 
     for public comment on the schedule described in paragraph (3) 
     and recommendations described in this subsection. Under such 
     process comments shall be submitted in a timely manner after 
     the date of publication of a recommendation under this 
     subsection.
       ``(5) Consideration.--The National Coordinator shall ensure 
     that the relevant and available recommendations and comments 
     from the National Committee on Vital and Health Statistics 
     are considered in the development of standards.
       ``(c) Membership and Operations.--
       ``(1) In general.--The National Coordinator shall take a 
     leading position in the establishment and operations of the 
     HIT Standards Committee.
       ``(2) Membership.--The membership of the HIT Standards 
     Committee shall at least reflect providers, ancillary 
     healthcare workers, consumers, purchasers, health plans, 
     technology vendors, researchers, relevant Federal agencies, 
     and individuals with technical expertise on health care 
     quality, privacy and security, and on the electronic exchange 
     and use of health information.
       ``(3) Participation.--The members of the HIT Standards 
     Committee appointed under this subsection shall represent a 
     balance among various sectors of the health care system so 
     that no single sector unduly influences the recommendations 
     of such Committee.
       ``(4) Outside involvement.--The HIT Policy Committee shall 
     ensure an opportunity for the participation in activities of 
     the Committee of outside advisors, including individuals with 
     expertise in the development of standards for the electronic 
     exchange and use of health information, including in the 
     areas of health information privacy and security.
       ``(5) Balance among sectors.--In developing the procedures 
     for conducting the activities of the HIT Standards Committee, 
     the HIT Standards Committee shall act to ensure a balance 
     among various sectors of the health care system so that no 
     single sector unduly influences the actions of the HIT 
     Standards Committee.
       ``(6) Assistance.--For the purposes of carrying out this 
     section, the Secretary may provide or ensure that financial 
     assistance is provided by the HIT Standards Committee to 
     defray in whole or in part any membership fees or dues 
     charged by such Committee to those consumer advocacy groups 
     and not for profit entities that work in the public interest 
     as a part of their mission.
       ``(d) Application of FACA.--The Federal Advisory Committee 
     Act (5 U.S.C. App.), other than section 14, shall apply to 
     the HIT Standards Committee.
       ``(e) Publication.--The Secretary shall provide for 
     publication in the Federal Register and the posting on the 
     Internet website of the Office of the National Coordinator 
     for Health Information Technology of all recommendations made 
     by the HIT Standards Committee under this section.

     ``SEC. 3004. PROCESS FOR ADOPTION OF ENDORSED 
                   RECOMMENDATIONS; ADOPTION OF INITIAL SET OF 
                   STANDARDS, IMPLEMENTATION SPECIFICATIONS, AND 
                   CERTIFICATION CRITERIA.

       ``(a) Process for Adoption of Endorsed Recommendations.--

[[Page 3922]]

       ``(1) Review of endorsed standards, implementation 
     specifications, and certification criteria.--Not later than 
     90 days after the date of receipt of standards, 
     implementation specifications, or certification criteria 
     endorsed under section 3001(c), the Secretary, in 
     consultation with representatives of other relevant Federal 
     agencies, shall jointly review such standards, implementation 
     specifications, or certification criteria and shall determine 
     whether or not to propose adoption of such standards, 
     implementation specifications, or certification criteria.
       ``(2) Determination to adopt standards, implementation 
     specifications, and certification criteria.--If the Secretary 
     determines--
       ``(A) to propose adoption of any grouping of such 
     standards, implementation specifications, or certification 
     criteria, the Secretary shall, by regulation under section 
     553 of title 5, United States Code, determine whether or not 
     to adopt such grouping of standards, implementation 
     specifications, or certification criteria; or
       ``(B) not to propose adoption of any grouping of standards, 
     implementation specifications, or certification criteria, the 
     Secretary shall notify the National Coordinator and the HIT 
     Standards Committee in writing of such determination and the 
     reasons for not proposing the adoption of such 
     recommendation.
       ``(3) Publication.--The Secretary shall provide for 
     publication in the Federal Register of all determinations 
     made by the Secretary under paragraph (1).
       ``(b) Adoption of Standards, Implementation Specifications, 
     and Certification Criteria.--
       ``(1) In general.--Not later than December 31, 2009, the 
     Secretary shall, through the rulemaking process consistent 
     with subsection (a)(2)(A), adopt an initial set of standards, 
     implementation specifications, and certification criteria for 
     the areas required for consideration under section 
     3002(b)(2)(B). The rulemaking for the initial set of 
     standards, implementation specifications, and certification 
     criteria may be issued on an interim, final basis.
       ``(2) Application of current standards, implementation 
     specifications, and certification criteria.--The standards, 
     implementation specifications, and certification criteria 
     adopted before the date of the enactment of this title 
     through the process existing through the Office of the 
     National Coordinator for Health Information Technology may be 
     applied towards meeting the requirement of paragraph (1).
       ``(3) Subsequent standards activity.--The Secretary shall 
     adopt additional standards, implementation specifications, 
     and certification criteria as necessary and consistent with 
     the schedule published under section 3003(b)(2).

     ``SEC. 3005. APPLICATION AND USE OF ADOPTED STANDARDS AND 
                   IMPLEMENTATION SPECIFICATIONS BY FEDERAL 
                   AGENCIES.

       ``For requirements relating to the application and use by 
     Federal agencies of the standards and implementation 
     specifications adopted under section 3004, see section 13111 
     of the Health Information Technology for Economic and 
     Clinical Health Act.

     ``SEC. 3006. VOLUNTARY APPLICATION AND USE OF ADOPTED 
                   STANDARDS AND IMPLEMENTATION SPECIFICATIONS BY 
                   PRIVATE ENTITIES.

       ``(a) In General.--Except as provided under section 13112 
     of the HITECH Act, nothing in such Act or in the amendments 
     made by such Act shall be construed--
       ``(1) to require a private entity to adopt or comply with a 
     standard or implementation specification adopted under 
     section 3004; or
       ``(2) to provide a Federal agency authority, other than the 
     authority such agency may have under other provisions of law, 
     to require a private entity to comply with such a standard or 
     implementation specification.
       ``(b) Rule of Construction.--Nothing in this subtitle shall 
     be construed to require that a private entity that enters 
     into a contract with the Federal Government apply or use the 
     standards and implementation specifications adopted under 
     section 3004 with respect to activities not related to the 
     contract.

     ``SEC. 3007. FEDERAL HEALTH INFORMATION TECHNOLOGY.

       ``(a) In General.--The National Coordinator shall support 
     the development and routine updating of qualified electronic 
     health record technology (as defined in section 3000) 
     consistent with subsections (b) and (c) and make available 
     such qualified electronic health record technology unless the 
     Secretary determines through an assessment that the needs and 
     demands of providers are being substantially and adequately 
     met through the marketplace.
       ``(b) Certification.--In making such electronic health 
     record technology publicly available, the National 
     Coordinator shall ensure that the qualified electronic health 
     record technology described in subsection (a) is certified 
     under the program developed under section 3001(c)(3) to be in 
     compliance with applicable standards adopted under section 
     3003(a).
       ``(c) Authorization To Charge a Nominal Fee.--The National 
     Coordinator may impose a nominal fee for the adoption by a 
     health care provider of the health information technology 
     system developed or approved under subsection (a) and (b). 
     Such fee shall take into account the financial circumstances 
     of smaller providers, low income providers, and providers 
     located in rural or other medically underserved areas.
       ``(d) Rule of Construction.--Nothing in this section shall 
     be construed to require that a private or government entity 
     adopt or use the technology provided under this section.

     ``SEC. 3008. TRANSITIONS.

       ``(a) ONCHIT.--To the extent consistent with section 3001, 
     all functions, personnel, assets, liabilities, and 
     administrative actions applicable to the National Coordinator 
     for Health Information Technology appointed under Executive 
     Order No. 13335 or the Office of such National Coordinator on 
     the date before the date of the enactment of this title shall 
     be transferred to the National Coordinator appointed under 
     section 3001(a) and the Office of such National Coordinator 
     as of the date of the enactment of this title.
       ``(b) National EHealth Collaborative.--Nothing in sections 
     3002 or 3003 or this subsection shall be construed as 
     prohibiting the AHIC Successor, Inc. doing business as the 
     National eHealth Collaborative from modifying its charter, 
     duties, membership, and any other structure or function 
     required to be consistent with section 3002 and 3003 so as to 
     allow the Secretary to recognize such AHIC Successor, Inc. as 
     the HIT Policy Committee or the HIT Standards Committee.
       ``(c) Consistency of Recommendations.--In carrying out 
     section 3003(b)(1)(A), until recommendations are made by the 
     HIT Policy Committee, recommendations of the HIT Standards 
     Committee shall be consistent with the most recent 
     recommendations made by such AHIC Successor, Inc.

     ``SEC. 3009. MISCELLANEOUS PROVISIONS.

       ``(a) Relation to HIPAA Privacy and Security Law.--
       ``(1) In general.--With respect to the relation of this 
     title to HIPAA privacy and security law:
       ``(A) This title may not be construed as having any effect 
     on the authorities of the Secretary under HIPAA privacy and 
     security law.
       ``(B) The purposes of this title include ensuring that the 
     health information technology standards and implementation 
     specifications adopted under section 3004 take into account 
     the requirements of HIPAA privacy and security law.
       ``(2) Definition.--For purposes of this section, the term 
     `HIPAA privacy and security law' means--
       ``(A) the provisions of part C of title XI of the Social 
     Security Act, section 264 of the Health Insurance Portability 
     and Accountability Act of 1996, and subtitle D of title IV of 
     the Health Information Technology for Economic and Clinical 
     Health Act; and
       ``(B) regulations under such provisions.
       ``(b) Flexibility.--In administering the provisions of this 
     title, the Secretary shall have flexibility in applying the 
     definition of health care provider under section 3000(3), 
     including the authority to omit certain entities listed in 
     such definition when applying such definition under this 
     title, where appropriate.''.

     SEC. 13102. TECHNICAL AMENDMENT.

       Section 1171(5) of the Social Security Act (42 U.S.C. 
     1320d) is amended by striking ``or C'' and inserting ``C, or 
     D''.

 PART 2--APPLICATION AND USE OF ADOPTED HEALTH INFORMATION TECHNOLOGY 
                           STANDARDS; REPORTS

     SEC. 13111. COORDINATION OF FEDERAL ACTIVITIES WITH ADOPTED 
                   STANDARDS AND IMPLEMENTATION SPECIFICATIONS.

       (a) Spending on Health Information Technology Systems.--As 
     each agency (as defined by the Director of the Office of 
     Management and Budget, in consultation with the Secretary of 
     Health and Human Services) implements, acquires, or upgrades 
     health information technology systems used for the direct 
     exchange of individually identifiable health information 
     between agencies and with non-Federal entities, it shall 
     utilize, where available, health information technology 
     systems and products that meet standards and implementation 
     specifications adopted under section 3004 of the Public 
     Health Service Act, as added by section 13101.
       (b) Federal Information Collection Activities.--With 
     respect to a standard or implementation specification adopted 
     under section 3004 of the Public Health Service Act, as added 
     by section 13101, the President shall take measures to ensure 
     that Federal activities involving the broad collection and 
     submission of health information are consistent with such 
     standard or implementation specification, respectively, 
     within three years after the date of such adoption.
       (c) Application of Definitions.--The definitions contained 
     in section 3000 of the Public Health Service Act, as added by 
     section 13101, shall apply for purposes of this part.

     SEC. 13112. APPLICATION TO PRIVATE ENTITIES.

       Each agency (as defined in such Executive Order issued on 
     August 22, 2006, relating to promoting quality and efficient 
     health care in Federal government administered or sponsored 
     health care programs) shall require in contracts or 
     agreements with health care providers, health plans, or 
     health insurance issuers that as each provider, plan, or 
     issuer implements, acquires, or upgrades health information 
     technology systems, it shall utilize, where available, health 
     information technology systems and products that meet 
     standards and implementation specifications adopted under 
     section 3004 of the Public Health Service Act, as added by 
     section 13101.

     SEC. 13113. STUDY AND REPORTS.

       (a) Report on Adoption of Nationwide System.--Not later 
     than 2 years after the date of the enactment of this Act and 
     annually thereafter, the Secretary of Health and Human 
     Services shall submit to the appropriate committees of 
     jurisdiction of the House of Representatives and the Senate a 
     report that--

[[Page 3923]]

       (1) describes the specific actions that have been taken by 
     the Federal Government and private entities to facilitate the 
     adoption of a nationwide system for the electronic use and 
     exchange of health information;
       (2) describes barriers to the adoption of such a nationwide 
     system; and
       (3) contains recommendations to achieve full implementation 
     of such a nationwide system.
       (b) Reimbursement Incentive Study and Report.--
       (1) Study.--The Secretary of Health and Human Services 
     shall carry out, or contract with a private entity to carry 
     out, a study that examines methods to create efficient 
     reimbursement incentives for improving health care quality in 
     Federally qualified health centers, rural health clinics, and 
     free clinics.
       (2) Report.--Not later than 2 years after the date of the 
     enactment of this Act, the Secretary of Health and Human 
     Services shall submit to the appropriate committees of 
     jurisdiction of the House of Representatives and the Senate a 
     report on the study carried out under paragraph (1).
       (c) Aging Services Technology Study and Report.--
       (1) In general.--The Secretary of Health and Human Services 
     shall carry out, or contract with a private entity to carry 
     out, a study of matters relating to the potential use of new 
     aging services technology to assist seniors, individuals with 
     disabilities, and their caregivers throughout the aging 
     process.
       (2) Matters to be studied.--The study under paragraph (1) 
     shall include--
       (A) an evaluation of--
       (i) methods for identifying current, emerging, and future 
     health technology that can be used to meet the needs of 
     seniors and individuals with disabilities and their 
     caregivers across all aging services settings, as specified 
     by the Secretary;
       (ii) methods for fostering scientific innovation with 
     respect to aging services technology within the business and 
     academic communities; and
       (iii) developments in aging services technology in other 
     countries that may be applied in the United States; and
       (B) identification of--
       (i) barriers to innovation in aging services technology and 
     devising strategies for removing such barriers; and
       (ii) barriers to the adoption of aging services technology 
     by health care providers and consumers and devising 
     strategies to removing such barriers.
       (3) Report.--Not later than 24 months after the date of the 
     enactment of this Act, the Secretary shall submit to the 
     appropriate committees of jurisdiction of the House of 
     Representatives and of the Senate a report on the study 
     carried out under paragraph (1).
       (4) Definitions.--For purposes of this subsection:
       (A) Aging services technology.--The term ``aging services 
     technology'' means health technology that meets the health 
     care needs of seniors, individuals with disabilities, and the 
     caregivers of such seniors and individuals.
       (B) Senior.--The term ``senior'' has such meaning as 
     specified by the Secretary.

          Subtitle B--Testing of Health Information Technology

     SEC. 13201. NATIONAL INSTITUTE FOR STANDARDS AND TECHNOLOGY 
                   TESTING.

       (a) Pilot Testing of Standards and Implementation 
     Specifications.--In coordination with the HIT Standards 
     Committee established under section 3003 of the Public Health 
     Service Act, as added by section 13101, with respect to the 
     development of standards and implementation specifications 
     under such section, the Director of the National Institute 
     for Standards and Technology shall test such standards and 
     implementation specifications, as appropriate, in order to 
     assure the efficient implementation and use of such standards 
     and implementation specifications.
       (b) Voluntary Testing Program.--In coordination with the 
     HIT Standards Committee established under section 3003 of the 
     Public Health Service Act, as added by section 13101, with 
     respect to the development of standards and implementation 
     specifications under such section, the Director of the 
     National Institute of Standards and Technology shall support 
     the establishment of a conformance testing infrastructure, 
     including the development of technical test beds. The 
     development of this conformance testing infrastructure may 
     include a program to accredit independent, non-Federal 
     laboratories to perform testing.

     SEC. 13202. RESEARCH AND DEVELOPMENT PROGRAMS.

       (a) Health Care Information Enterprise Integration Research 
     Centers.--
       (1) In general.--The Director of the National Institute of 
     Standards and Technology, in consultation with the Director 
     of the National Science Foundation and other appropriate 
     Federal agencies, shall establish a program of assistance to 
     institutions of higher education (or consortia thereof which 
     may include nonprofit entities and Federal Government 
     laboratories) to establish multidisciplinary Centers for 
     Health Care Information Enterprise Integration.
       (2) Review; competition.--Grants shall be awarded under 
     this subsection on a merit-reviewed, competitive basis.
       (3) Purpose.--The purposes of the Centers described in 
     paragraph (1) shall be--
       (A) to generate innovative approaches to health care 
     information enterprise integration by conducting cutting-
     edge, multidisciplinary research on the systems challenges to 
     health care delivery; and
       (B) the development and use of health information 
     technologies and other complementary fields.
       (4) Research areas.--Research areas may include--
       (A) interfaces between human information and communications 
     technology systems;
       (B) voice-recognition systems;
       (C) software that improves interoperability and 
     connectivity among health information systems;
       (D) software dependability in systems critical to health 
     care delivery;
       (E) measurement of the impact of information technologies 
     on the quality and productivity of health care;
       (F) health information enterprise management;
       (G) health information technology security and integrity; 
     and
       (H) relevant health information technology to reduce 
     medical errors.
       (5) Applications.--An institution of higher education (or a 
     consortium thereof) seeking funding under this subsection 
     shall submit an application to the Director of the National 
     Institute of Standards and Technology at such time, in such 
     manner, and containing such information as the Director may 
     require. The application shall include, at a minimum, a 
     description of--
       (A) the research projects that will be undertaken by the 
     Center established pursuant to assistance under paragraph (1) 
     and the respective contributions of the participating 
     entities;
       (B) how the Center will promote active collaboration among 
     scientists and engineers from different disciplines, such as 
     information technology, biologic sciences, management, social 
     sciences, and other appropriate disciplines;
       (C) technology transfer activities to demonstrate and 
     diffuse the research results, technologies, and knowledge; 
     and
       (D) how the Center will contribute to the education and 
     training of researchers and other professionals in fields 
     relevant to health information enterprise integration.
       (b) National Information Technology Research and 
     Development Program.--The National High-Performance Computing 
     Program established by section 101 of the High-Performance 
     Computing Act of 1991 (15 U.S.C. 5511) shall include Federal 
     research and development programs related to health 
     information technology.

                  Subtitle C--Grants and Loans Funding

     SEC. 13301. GRANT, LOAN, AND DEMONSTRATION PROGRAMS.

       Title XXX of the Public Health Service Act, as added by 
     section 13101, is amended by adding at the end the following 
     new subtitle:

 ``Subtitle B--Incentives for the Use of Health Information Technology

     ``SEC. 3011. IMMEDIATE FUNDING TO STRENGTHEN THE HEALTH 
                   INFORMATION TECHNOLOGY INFRASTRUCTURE.

       ``(a) In General.--The Secretary shall, using amounts 
     appropriated under section 3018, invest in the infrastructure 
     necessary to allow for and promote the electronic exchange 
     and use of health information for each individual in the 
     United States consistent with the goals outlined in the 
     strategic plan developed by the National Coordinator (and as 
     available) under section 3001. The Secretary shall invest 
     funds through the different agencies with expertise in such 
     goals, such as the Office of the National Coordinator for 
     Health Information Technology, the Health Resources and 
     Services Administration, the Agency for Healthcare Research 
     and Quality, the Centers of Medicare & Medicaid Services, the 
     Centers for Disease Control and Prevention, and the Indian 
     Health Service to support the following:
       ``(1) Health information technology architecture that will 
     support the nationwide electronic exchange and use of health 
     information in a secure, private, and accurate manner, 
     including connecting health information exchanges, and which 
     may include updating and implementing the infrastructure 
     necessary within different agencies of the Department of 
     Health and Human Services to support the electronic use and 
     exchange of health information.
       ``(2) Development and adoption of appropriate certified 
     electronic health records for categories of health care 
     providers not eligible for support under title XVIII or XIX 
     of the Social Security Act for the adoption of such records.
       ``(3) Training on and dissemination of information on best 
     practices to integrate health information technology, 
     including electronic health records, into a provider's 
     delivery of care, consistent with best practices learned from 
     the Health Information Technology Research Center developed 
     under section 3012(b), including community health centers 
     receiving assistance under section 330, covered entities 
     under section 340B, and providers participating in one or 
     more of the programs under titles XVIII, XIX, and XXI of the 
     Social Security Act (relating to Medicare, Medicaid, and the 
     State Children's Health Insurance Program).
       ``(4) Infrastructure and tools for the promotion of 
     telemedicine, including coordination among Federal agencies 
     in the promotion of telemedicine.
       ``(5) Promotion of the interoperability of clinical data 
     repositories or registries.
       ``(6) Promotion of technologies and best practices that 
     enhance the protection of health information by all holders 
     of individually identifiable health information.
       ``(7) Improvement and expansion of the use of health 
     information technology by public health departments.

[[Page 3924]]

       ``(b) Coordination.--The Secretary shall ensure funds under 
     this section are used in a coordinated manner with other 
     health information promotion activities.
       ``(c) Additional Use of Funds.--In addition to using funds 
     as provided in subsection (a), the Secretary may use amounts 
     appropriated under section 3018 to carry out health 
     information technology activities that are provided for under 
     laws in effect on the date of the enactment of this title.
       ``(d) Standards for Acquisition of Health Information 
     Technology.--To the greatest extent practicable, the 
     Secretary shall ensure that where funds are expended under 
     this section for the acquisition of health information 
     technology, such funds shall be used to acquire health 
     information technology that meets applicable standards 
     adopted under section 3004. Where it is not practicable to 
     expend funds on health information technology that meets such 
     applicable standards, the Secretary shall ensure that such 
     health information technology meets applicable standards 
     otherwise adopted by the Secretary.

     ``SEC. 3012. HEALTH INFORMATION TECHNOLOGY IMPLEMENTATION 
                   ASSISTANCE.

       ``(a) Health Information Technology Extension Program.--To 
     assist health care providers to adopt, implement, and 
     effectively use certified EHR technology that allows for the 
     electronic exchange and use of health information, the 
     Secretary, acting through the Office of the National 
     Coordinator, shall establish a health information technology 
     extension program to provide health information technology 
     assistance services to be carried out through the Department 
     of Health and Human Services. The National Coordinator shall 
     consult with other Federal agencies with demonstrated 
     experience and expertise in information technology services, 
     such as the National Institute of Standards and Technology, 
     in developing and implementing this program.
       ``(b) Health Information Technology Research Center.--
       ``(1) In general.--The Secretary shall create a Health 
     Information Technology Research Center (in this section 
     referred to as the `Center') to provide technical assistance 
     and develop or recognize best practices to support and 
     accelerate efforts to adopt, implement, and effectively 
     utilize health information technology that allows for the 
     electronic exchange and use of information in compliance with 
     standards, implementation specifications, and certification 
     criteria adopted under section 3004.
       ``(2) Input.--The Center shall incorporate input from--
       ``(A) other Federal agencies with demonstrated experience 
     and expertise in information technology services such as the 
     National Institute of Standards and Technology;
       ``(B) users of health information technology, such as 
     providers and their support and clerical staff and others 
     involved in the care and care coordination of patients, from 
     the health care and health information technology industry; 
     and
       ``(C) others as appropriate.
       ``(3) Purposes.--The purposes of the Center are to--
       ``(A) provide a forum for the exchange of knowledge and 
     experience;
       ``(B) accelerate the transfer of lessons learned from 
     existing public and private sector initiatives, including 
     those currently receiving Federal financial support;
       ``(C) assemble, analyze, and widely disseminate evidence 
     and experience related to the adoption, implementation, and 
     effective use of health information technology that allows 
     for the electronic exchange and use of information including 
     through the regional centers described in subsection (c);
       ``(D) provide technical assistance for the establishment 
     and evaluation of regional and local health information 
     networks to facilitate the electronic exchange of information 
     across health care settings and improve the quality of health 
     care;
       ``(E) provide technical assistance for the development and 
     dissemination of solutions to barriers to the exchange of 
     electronic health information; and
       ``(F) learn about effective strategies to adopt and utilize 
     health information technology in medically underserved 
     communities.
       ``(c) Health Information Technology Regional Extension 
     Centers.--
       ``(1) In general.--The Secretary shall provide assistance 
     for the creation and support of regional centers (in this 
     subsection referred to as `regional centers') to provide 
     technical assistance and disseminate best practices and other 
     information learned from the Center to support and accelerate 
     efforts to adopt, implement, and effectively utilize health 
     information technology that allows for the electronic 
     exchange and use of information in compliance with standards, 
     implementation specifications, and certification criteria 
     adopted under section 3004. Activities conducted under this 
     subsection shall be consistent with the strategic plan 
     developed by the National Coordinator, (and, as available) 
     under section 3001.
       ``(2) Affiliation.--Regional centers shall be affiliated 
     with any United States-based nonprofit institution or 
     organization, or group thereof, that applies and is awarded 
     financial assistance under this section. Individual awards 
     shall be decided on the basis of merit.
       ``(3) Objective.--The objective of the regional centers is 
     to enhance and promote the adoption of health information 
     technology through--
       ``(A) assistance with the implementation, effective use, 
     upgrading, and ongoing maintenance of health information 
     technology, including electronic health records, to 
     healthcare providers nationwide;
       ``(B) broad participation of individuals from industry, 
     universities, and State governments;
       ``(C) active dissemination of best practices and research 
     on the implementation, effective use, upgrading, and ongoing 
     maintenance of health information technology, including 
     electronic health records, to health care providers in order 
     to improve the quality of healthcare and protect the privacy 
     and security of health information;
       ``(D) participation, to the extent practicable, in health 
     information exchanges;
       ``(E) utilization, when appropriate, of the expertise and 
     capability that exists in Federal agencies other than the 
     Department; and
       ``(F) integration of health information technology, 
     including electronic health records, into the initial and 
     ongoing training of health professionals and others in the 
     healthcare industry that would be instrumental to improving 
     the quality of healthcare through the smooth and accurate 
     electronic use and exchange of health information.
       ``(4) Regional assistance.--Each regional center shall aim 
     to provide assistance and education to all providers in a 
     region, but shall prioritize any direct assistance first to 
     the following:
       ``(A) Public or not-for-profit hospitals or critical access 
     hospitals.
       ``(B) Federally qualified health centers (as defined in 
     section 1861(aa)(4) of the Social Security Act).
       ``(C) Entities that are located in rural and other areas 
     that serve uninsured, underinsured, and medically underserved 
     individuals (regardless of whether such area is urban or 
     rural).
       ``(D) Individual or small group practices (or a consortium 
     thereof) that are primarily focused on primary care.
       ``(5) Financial support.--The Secretary may provide 
     financial support to any regional center created under this 
     subsection for a period not to exceed four years. The 
     Secretary may not provide more than 50 percent of the capital 
     and annual operating and maintenance funds required to create 
     and maintain such a center, except in an instance of national 
     economic conditions which would render this cost-share 
     requirement detrimental to the program and upon notification 
     to Congress as to the justification to waive the cost-share 
     requirement.
       ``(6) Notice of program description and availability of 
     funds.--The Secretary shall publish in the Federal Register, 
     not later than 90 days after the date of the enactment of 
     this title, a draft description of the program for 
     establishing regional centers under this subsection. Such 
     description shall include the following:
       ``(A) A detailed explanation of the program and the 
     programs goals.
       ``(B) Procedures to be followed by the applicants.
       ``(C) Criteria for determining qualified applicants.
       ``(D) Maximum support levels expected to be available to 
     centers under the program.
       ``(7) Application review.--The Secretary shall subject each 
     application under this subsection to merit review. In making 
     a decision whether to approve such application and provide 
     financial support, the Secretary shall consider at a minimum 
     the merits of the application, including those portions of 
     the application regarding--
       ``(A) the ability of the applicant to provide assistance 
     under this subsection and utilization of health information 
     technology appropriate to the needs of particular categories 
     of health care providers;
       ``(B) the types of service to be provided to health care 
     providers;
       ``(C) geographical diversity and extent of service area; 
     and
       ``(D) the percentage of funding and amount of in-kind 
     commitment from other sources.
       ``(8) Biennial evaluation.--Each regional center which 
     receives financial assistance under this subsection shall be 
     evaluated biennially by an evaluation panel appointed by the 
     Secretary. Each evaluation panel shall be composed of private 
     experts, none of whom shall be connected with the center 
     involved, and of Federal officials. Each evaluation panel 
     shall measure the involved center's performance against the 
     objective specified in paragraph (3). The Secretary shall not 
     continue to provide funding to a regional center unless its 
     evaluation is overall positive.
       ``(9) Continuing support.--After the second year of 
     assistance under this subsection, a regional center may 
     receive additional support under this subsection if it has 
     received positive evaluations and a finding by the Secretary 
     that continuation of Federal funding to the center was in the 
     best interest of provision of health information technology 
     extension services.

     ``SEC. 3013. STATE GRANTS TO PROMOTE HEALTH INFORMATION 
                   TECHNOLOGY.

       ``(a) In General.--The Secretary, acting through the 
     National Coordinator, shall establish a program in accordance 
     with this section to facilitate and expand the electronic 
     movement and use of health information among organizations 
     according to nationally recognized standards.
       ``(b) Planning Grants.--The Secretary may award a grant to 
     a State or qualified State-designated entity (as described in 
     subsection (f)) that submits an application to the Secretary 
     at such time, in such manner, and containing such information 
     as the Secretary may specify, for the purpose of planning 
     activities described in subsection (d).

[[Page 3925]]

       ``(c) Implementation Grants.--The Secretary may award a 
     grant to a State or qualified State designated entity that--
       ``(1) has submitted, and the Secretary has approved, a plan 
     described in subsection (e) (regardless of whether such plan 
     was prepared using amounts awarded under subsection (b); and
       ``(2) submits an application at such time, in such manner, 
     and containing such information as the Secretary may specify.
       ``(d) Use of Funds.--Amounts received under a grant under 
     subsection (c) shall be used to conduct activities to 
     facilitate and expand the electronic movement and use of 
     health information among organizations according to 
     nationally recognized standards through activities that 
     include--
       ``(1) enhancing broad and varied participation in the 
     authorized and secure nationwide electronic use and exchange 
     of health information;
       ``(2) identifying State or local resources available 
     towards a nationwide effort to promote health information 
     technology;
       ``(3) complementing other Federal grants, programs, and 
     efforts towards the promotion of health information 
     technology;
       ``(4) providing technical assistance for the development 
     and dissemination of solutions to barriers to the exchange of 
     electronic health information;
       ``(5) promoting effective strategies to adopt and utilize 
     health information technology in medically underserved 
     communities;
       ``(6) assisting patients in utilizing health information 
     technology;
       ``(7) encouraging clinicians to work with Health 
     Information Technology Regional Extension Centers as 
     described in section 3012, to the extent they are available 
     and valuable;
       ``(8) supporting public health agencies' authorized use of 
     and access to electronic health information;
       ``(9) promoting the use of electronic health records for 
     quality improvement including through quality measures 
     reporting; and
       ``(10) such other activities as the Secretary may specify.
       ``(e) Plan.--
       ``(1) In general.--A plan described in this subsection is a 
     plan that describes the activities to be carried out by a 
     State or by the qualified State-designated entity within such 
     State to facilitate and expand the electronic movement and 
     use of health information among organizations according to 
     nationally recognized standards and implementation 
     specifications.
       ``(2) Required elements.--A plan described in paragraph (1) 
     shall--
       ``(A) be pursued in the public interest;
       ``(B) be consistent with the strategic plan developed by 
     the National Coordinator, (and, as available) under section 
     3001;
       ``(C) include a description of the ways the State or 
     qualified State-designated entity will carry out the 
     activities described in subsection (b); and
       ``(D) contain such elements as the Secretary may require.
       ``(f) Qualified State-Designated Entity.--For purposes of 
     this section, to be a qualified State-designated entity, with 
     respect to a State, an entity shall--
       ``(1) be designated by the State as eligible to receive 
     awards under this section;
       ``(2) be a not-for-profit entity with broad stakeholder 
     representation on its governing board;
       ``(3) demonstrate that one of its principal goals is to use 
     information technology to improve health care quality and 
     efficiency through the authorized and secure electronic 
     exchange and use of health information;
       ``(4) adopt nondiscrimination and conflict of interest 
     policies that demonstrate a commitment to open, fair, and 
     nondiscriminatory participation by stakeholders; and
       ``(5) conform to such other requirements as the Secretary 
     may establish.
       ``(g) Required Consultation.--In carrying out activities 
     described in subsections (b) and (c), a State or qualified 
     State-designated entity shall consult with and consider the 
     recommendations of--
       ``(1) health care providers (including providers that 
     provide services to low income and underserved populations);
       ``(2) health plans;
       ``(3) patient or consumer organizations that represent the 
     population to be served;
       ``(4) health information technology vendors;
       ``(5) health care purchasers and employers;
       ``(6) public health agencies;
       ``(7) health professions schools, universities and 
     colleges;
       ``(8) clinical researchers;
       ``(9) other users of health information technology such as 
     the support and clerical staff of providers and others 
     involved in the care and care coordination of patients; and
       ``(10) such other entities, as may be determined 
     appropriate by the Secretary.
       ``(h) Continuous Improvement.--The Secretary shall annually 
     evaluate the activities conducted under this section and 
     shall, in awarding grants under this section, implement the 
     lessons learned from such evaluation in a manner so that 
     awards made subsequent to each such evaluation are made in a 
     manner that, in the determination of the Secretary, will lead 
     towards the greatest improvement in quality of care, decrease 
     in costs, and the most effective authorized and secure 
     electronic exchange of health information.
       ``(i) Required Match.--
       ``(1) In general.--For a fiscal year (beginning with fiscal 
     year 2011), the Secretary may not make a grant under this 
     section to a State unless the State agrees to make available 
     non-Federal contributions (which may include in-kind 
     contributions) toward the costs of a grant awarded under 
     subsection (c) in an amount equal to--
       ``(A) for fiscal year 2011, not less than $1 for each $10 
     of Federal funds provided under the grant;
       ``(B) for fiscal year 2012, not less than $1 for each $7 of 
     Federal funds provided under the grant; and
       ``(C) for fiscal year 2013 and each subsequent fiscal year, 
     not less than $1 for each $3 of Federal funds provided under 
     the grant.
       ``(2) Authority to require state match for fiscal years 
     before fiscal year 2011.--For any fiscal year during the 
     grant program under this section before fiscal year 2011, the 
     Secretary may determine the extent to which there shall be 
     required a non-Federal contribution from a State receiving a 
     grant under this section.

     ``SEC. 3014. COMPETITIVE GRANTS TO STATES AND INDIAN TRIBES 
                   FOR THE DEVELOPMENT OF LOAN PROGRAMS TO 
                   FACILITATE THE WIDESPREAD ADOPTION OF CERTIFIED 
                   EHR TECHNOLOGY.

       ``(a) In General.--The National Coordinator may award 
     competitive grants to eligible entities for the establishment 
     of programs for loans to health care providers to conduct the 
     activities described in subsection (e).
       ``(b) Eligible Entity Defined.--For purposes of this 
     subsection, the term `eligible entity' means a State or 
     Indian tribe (as defined in the Indian Self-Determination and 
     Education Assistance Act) that--
       ``(1) submits to the National Coordinator an application at 
     such time, in such manner, and containing such information as 
     the National Coordinator may require;
       ``(2) submits to the National Coordinator a strategic plan 
     in accordance with subsection (d) and provides to the 
     National Coordinator assurances that the entity will update 
     such plan annually in accordance with such subsection;
       ``(3) provides assurances to the National Coordinator that 
     the entity will establish a Loan Fund in accordance with 
     subsection (c);
       ``(4) provides assurances to the National Coordinator that 
     the entity will not provide a loan from the Loan Fund to a 
     health care provider unless the provider agrees to--
       ``(A) submit reports on quality measures adopted by the 
     Federal Government (by not later than 90 days after the date 
     on which such measures are adopted), to--
       ``(i) the Administrator of the Centers for Medicare & 
     Medicaid Services (or his or her designee), in the case of an 
     entity participating in the Medicare program under title 
     XVIII of the Social Security Act or the Medicaid program 
     under title XIX of such Act; or
       ``(ii) the Secretary in the case of other entities;
       ``(B) demonstrate to the satisfaction of the Secretary 
     (through criteria established by the Secretary) that any 
     certified EHR technology purchased, improved, or otherwise 
     financially supported under a loan under this section is used 
     to exchange health information in a manner that, in 
     accordance with law and standards (as adopted under section 
     3004) applicable to the exchange of information, improves the 
     quality of health care, such as promoting care coordination; 
     and
       ``(C) comply with such other requirements as the entity or 
     the Secretary may require;
       ``(D) include a plan on how health care providers involved 
     intend to maintain and support the certified EHR technology 
     over time;
       ``(E) include a plan on how the health care providers 
     involved intend to maintain and support the certified EHR 
     technology that would be purchased with such loan, including 
     the type of resources expected to be involved and any such 
     other information as the State or Indian Tribe, respectively, 
     may require; and
       ``(5) agrees to provide matching funds in accordance with 
     subsection (h).
       ``(c) Establishment of Fund.--For purposes of subsection 
     (b)(3), an eligible entity shall establish a certified EHR 
     technology loan fund (referred to in this subsection as a 
     `Loan Fund') and comply with the other requirements contained 
     in this section. A grant to an eligible entity under this 
     section shall be deposited in the Loan Fund established by 
     the eligible entity. No funds authorized by other provisions 
     of this title to be used for other purposes specified in this 
     title shall be deposited in any Loan Fund.
       ``(d) Strategic Plan.--
       ``(1) In general.--For purposes of subsection (b)(2), a 
     strategic plan of an eligible entity under this subsection 
     shall identify the intended uses of amounts available to the 
     Loan Fund of such entity.
       ``(2) Contents.--A strategic plan under paragraph (1), with 
     respect to a Loan Fund of an eligible entity, shall include 
     for a year the following:
       ``(A) A list of the projects to be assisted through the 
     Loan Fund during such year.
       ``(B) A description of the criteria and methods established 
     for the distribution of funds from the Loan Fund during the 
     year.
       ``(C) A description of the financial status of the Loan 
     Fund as of the date of submission of the plan.
       ``(D) The short-term and long-term goals of the Loan Fund.
       ``(e) Use of Funds.--Amounts deposited in a Loan Fund, 
     including loan repayments and interest earned on such 
     amounts, shall be used only for awarding loans or loan 
     guarantees, making reimbursements described in subsection 
     (g)(4)(A), or as a source of reserve and security

[[Page 3926]]

     for leveraged loans, the proceeds of which are deposited in 
     the Loan Fund established under subsection (c). Loans under 
     this section may be used by a health care provider to--
       ``(1) facilitate the purchase of certified EHR technology;
       ``(2) enhance the utilization of certified EHR technology 
     (which may include costs associated with upgrading health 
     information technology so that it meets criteria necessary to 
     be a certified EHR technology);
       ``(3) train personnel in the use of such technology; or
       ``(4) improve the secure electronic exchange of health 
     information.
       ``(f) Types of Assistance.--Except as otherwise limited by 
     applicable State law, amounts deposited into a Loan Fund 
     under this section may only be used for the following:
       ``(1) To award loans that comply with the following:
       ``(A) The interest rate for each loan shall not exceed the 
     market interest rate.
       ``(B) The principal and interest payments on each loan 
     shall commence not later than 1 year after the date the loan 
     was awarded, and each loan shall be fully amortized not later 
     than 10 years after the date of the loan.
       ``(C) The Loan Fund shall be credited with all payments of 
     principal and interest on each loan awarded from the Loan 
     Fund.
       ``(2) To guarantee, or purchase insurance for, a local 
     obligation (all of the proceeds of which finance a project 
     eligible for assistance under this subsection) if the 
     guarantee or purchase would improve credit market access or 
     reduce the interest rate applicable to the obligation 
     involved.
       ``(3) As a source of revenue or security for the payment of 
     principal and interest on revenue or general obligation bonds 
     issued by the eligible entity if the proceeds of the sale of 
     the bonds will be deposited into the Loan Fund.
       ``(4) To earn interest on the amounts deposited into the 
     Loan Fund.
       ``(5) To make reimbursements described in subsection 
     (g)(4)(A).
       ``(g) Administration of Loan Funds.--
       ``(1) Combined financial administration.--An eligible 
     entity may (as a convenience and to avoid unnecessary 
     administrative costs) combine, in accordance with applicable 
     State law, the financial administration of a Loan Fund 
     established under this subsection with the financial 
     administration of any other revolving fund established by the 
     entity if otherwise not prohibited by the law under which the 
     Loan Fund was established.
       ``(2) Cost of administering fund.--Each eligible entity may 
     annually use not to exceed 4 percent of the funds provided to 
     the entity under a grant under this section to pay the 
     reasonable costs of the administration of the programs under 
     this section, including the recovery of reasonable costs 
     expended to establish a Loan Fund which are incurred after 
     the date of the enactment of this title.
       ``(3) Guidance and regulations.--The National Coordinator 
     shall publish guidance and promulgate regulations as may be 
     necessary to carry out the provisions of this section, 
     including--
       ``(A) provisions to ensure that each eligible entity 
     commits and expends funds allotted to the entity under this 
     section as efficiently as possible in accordance with this 
     title and applicable State laws; and
       ``(B) guidance to prevent waste, fraud, and abuse.
       ``(4) Private sector contributions.--
       ``(A) In general.--A Loan Fund established under this 
     section may accept contributions from private sector 
     entities, except that such entities may not specify the 
     recipient or recipients of any loan issued under this 
     subsection. An eligible entity may agree to reimburse a 
     private sector entity for any contribution made under this 
     subparagraph, except that the amount of such reimbursement 
     may not be greater than the principal amount of the 
     contribution made.
       ``(B) Availability of information.--An eligible entity 
     shall make publicly available the identity of, and amount 
     contributed by, any private sector entity under subparagraph 
     (A) and may issue letters of commendation or make other 
     awards (that have no financial value) to any such entity.
       ``(h) Matching Requirements.--
       ``(1) In general.--The National Coordinator may not make a 
     grant under subsection (a) to an eligible entity unless the 
     entity agrees to make available (directly or through 
     donations from public or private entities) non-Federal 
     contributions in cash to the costs of carrying out the 
     activities for which the grant is awarded in an amount equal 
     to not less than $1 for each $5 of Federal funds provided 
     under the grant.
       ``(2) Determination of amount of non-federal 
     contribution.--In determining the amount of non-Federal 
     contributions that an eligible entity has provided pursuant 
     to subparagraph (A), the National Coordinator may not include 
     any amounts provided to the entity by the Federal Government.
       ``(i) Effective Date.--The Secretary may not make an award 
     under this section prior to January 1, 2010.

     ``SEC. 3015. DEMONSTRATION PROGRAM TO INTEGRATE INFORMATION 
                   TECHNOLOGY INTO CLINICAL EDUCATION.

       ``(a) In General.--The Secretary may award grants under 
     this section to carry out demonstration projects to develop 
     academic curricula integrating certified EHR technology in 
     the clinical education of health professionals. Such awards 
     shall be made on a competitive basis and pursuant to peer 
     review.
       ``(b) Eligibility.--To be eligible to receive a grant under 
     subsection (a), an entity shall--
       ``(1) submit to the Secretary an application at such time, 
     in such manner, and containing such information as the 
     Secretary may require;
       ``(2) submit to the Secretary a strategic plan for 
     integrating certified EHR technology in the clinical 
     education of health professionals to reduce medical errors, 
     increase access to prevention, reduce chronic diseases, and 
     enhance health care quality;
       ``(3) be--
       ``(A) a school of medicine, osteopathic medicine, 
     dentistry, or pharmacy, a graduate program in behavioral or 
     mental health, or any other graduate health professions 
     school;
       ``(B) a graduate school of nursing or physician assistant 
     studies;
       ``(C) a consortium of two or more schools described in 
     subparagraph (A) or (B); or
       ``(D) an institution with a graduate medical education 
     program in medicine, osteopathic medicine, dentistry, 
     pharmacy, nursing, or physician assistance studies;
       ``(4) provide for the collection of data regarding the 
     effectiveness of the demonstration project to be funded under 
     the grant in improving the safety of patients, the efficiency 
     of health care delivery, and in increasing the likelihood 
     that graduates of the grantee will adopt and incorporate 
     certified EHR technology, in the delivery of health care 
     services; and
       ``(5) provide matching funds in accordance with subsection 
     (d).
       ``(c) Use of Funds.--
       ``(1) In general.--With respect to a grant under subsection 
     (a), an eligible entity shall--
       ``(A) use grant funds in collaboration with 2 or more 
     disciplines; and
       ``(B) use grant funds to integrate certified EHR technology 
     into community-based clinical education.
       ``(2) Limitation.--An eligible entity shall not use amounts 
     received under a grant under subsection (a) to purchase 
     hardware, software, or services.
       ``(d) Financial Support.--The Secretary may not provide 
     more than 50 percent of the costs of any activity for which 
     assistance is provided under subsection (a), except in an 
     instance of national economic conditions which would render 
     the cost-share requirement under this subsection detrimental 
     to the program and upon notification to Congress as to the 
     justification to waive the cost-share requirement.
       ``(e) Evaluation.--The Secretary shall take such action as 
     may be necessary to evaluate the projects funded under this 
     section and publish, make available, and disseminate the 
     results of such evaluations on as wide a basis as is 
     practicable.
       ``(f) Reports.--Not later than 1 year after the date of 
     enactment of this title, and annually thereafter, the 
     Secretary shall submit to the Committee on Health, Education, 
     Labor, and Pensions and the Committee on Finance of the 
     Senate, and the Committee on Energy and Commerce of the House 
     of Representatives a report that--
       ``(1) describes the specific projects established under 
     this section; and
       ``(2) contains recommendations for Congress based on the 
     evaluation conducted under subsection (e).

     ``SEC. 3016. INFORMATION TECHNOLOGY PROFESSIONALS IN HEALTH 
                   CARE.

       ``(a) In General.--The Secretary, in consultation with the 
     Director of the National Science Foundation, shall provide 
     assistance to institutions of higher education (or consortia 
     thereof) to establish or expand medical health informatics 
     education programs, including certification, undergraduate, 
     and masters degree programs, for both health care and 
     information technology students to ensure the rapid and 
     effective utilization and development of health information 
     technologies (in the United States health care 
     infrastructure).
       ``(b) Activities.--Activities for which assistance may be 
     provided under subsection (a) may include the following:
       ``(1) Developing and revising curricula in medical health 
     informatics and related disciplines.
       ``(2) Recruiting and retaining students to the program 
     involved.
       ``(3) Acquiring equipment necessary for student instruction 
     in these programs, including the installation of testbed 
     networks for student use.
       ``(4) Establishing or enhancing bridge programs in the 
     health informatics fields between community colleges and 
     universities.
       ``(c) Priority.--In providing assistance under subsection 
     (a), the Secretary shall give preference to the following:
       ``(1) Existing education and training programs.
       ``(2) Programs designed to be completed in less than six 
     months.

     ``SEC. 3017. GENERAL GRANT AND LOAN PROVISIONS.

       ``(a) Reports.--The Secretary may require that an entity 
     receiving assistance under this subtitle shall submit to the 
     Secretary, not later than the date that is 1 year after the 
     date of receipt of such assistance, a report that includes--
       ``(1) an analysis of the effectiveness of the activities 
     for which the entity receives such assistance, as compared to 
     the goals for such activities; and
       ``(2) an analysis of the impact of the project on health 
     care quality and safety.
       ``(b) Requirement to Improve Quality of Care and Decrease 
     in Costs.--The National Coordinator shall annually evaluate 
     the activities conducted under this subtitle and shall, in

[[Page 3927]]

     awarding grants, implement the lessons learned from such 
     evaluation in a manner so that awards made subsequent to each 
     such evaluation are made in a manner that, in the 
     determination of the National Coordinator, will result in the 
     greatest improvement in the quality and efficiency of health 
     care.

     ``SEC. 3018. AUTHORIZATION FOR APPROPRIATIONS.

       ``For the purposes of carrying out this subtitle, there is 
     authorized to be appropriated such sums as may be necessary 
     for each of the fiscal years 2009 through 2013.''.

                          Subtitle D--Privacy

     SEC. 13400. DEFINITIONS.

       In this subtitle, except as specified otherwise:
       (1) Breach.--
       (A) In general.--The term ``breach'' means the unauthorized 
     acquisition, access, use, or disclosure of protected health 
     information which compromises the security or privacy of such 
     information, except where an unauthorized person to whom such 
     information is disclosed would not reasonably have been able 
     to retain such information.
       (B) Exceptions.--The term ``breach'' does not include--
       (i) any unintentional acquisition, access, or use of 
     protected health information by an employee or individual 
     acting under the authority of a covered entity or business 
     associate if--

       (I) such acquisition, access, or use was made in good faith 
     and within the course and scope of the employment or other 
     professional relationship of such employee or individual, 
     respectively, with the covered entity or business associate; 
     and
       (II) such information is not further acquired, accessed, 
     used, or disclosed by any person; or

       (ii) any inadvertent disclosure from an individual who is 
     otherwise authorized to access protected health information 
     at a facility operated by a covered entity or business 
     associate to another similarly situated individual at same 
     facility; and
       (iii) any such information received as a result of such 
     disclosure is not further acquired, accessed, used, or 
     disclosed without authorization by any person.
       (2) Business associate.--The term ``business associate'' 
     has the meaning given such term in section 160.103 of title 
     45, Code of Federal Regulations.
       (3) Covered entity.--The term ``covered entity'' has the 
     meaning given such term in section 160.103 of title 45, Code 
     of Federal Regulations.
       (4) Disclose.--The terms ``disclose'' and ``disclosure'' 
     have the meaning given the term ``disclosure'' in section 
     160.103 of title 45, Code of Federal Regulations.
       (5) Electronic health record.--The term ``electronic health 
     record'' means an electronic record of health-related 
     information on an individual that is created, gathered, 
     managed, and consulted by authorized health care clinicians 
     and staff.
       (6) Health care operations.--The term ``health care 
     operation'' has the meaning given such term in section 
     164.501 of title 45, Code of Federal Regulations.
       (7) Health care provider.--The term ``health care 
     provider'' has the meaning given such term in section 160.103 
     of title 45, Code of Federal Regulations.
       (8) Health plan.--The term ``health plan'' has the meaning 
     given such term in section 160.103 of title 45, Code of 
     Federal Regulations.
       (9) National coordinator.--The term ``National 
     Coordinator'' means the head of the Office of the National 
     Coordinator for Health Information Technology established 
     under section 3001(a) of the Public Health Service Act, as 
     added by section 13101.
       (10) Payment.--The term ``payment'' has the meaning given 
     such term in section 164.501 of title 45, Code of Federal 
     Regulations.
       (11) Personal health record.--The term ``personal health 
     record'' means an electronic record of PHR identifiable 
     health information (as defined in section 13407(f)(2)) on an 
     individual that can be drawn from multiple sources and that 
     is managed, shared, and controlled by or primarily for the 
     individual.
       (12) Protected health information.--The term ``protected 
     health information'' has the meaning given such term in 
     section 160.103 of title 45, Code of Federal Regulations.
       (13) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       (14) Security.--The term ``security'' has the meaning given 
     such term in section 164.304 of title 45, Code of Federal 
     Regulations.
       (15) State.--The term ``State'' means each of the several 
     States, the District of Columbia, Puerto Rico, the Virgin 
     Islands, Guam, American Samoa, and the Northern Mariana 
     Islands.
       (16) Treatment.--The term ``treatment'' has the meaning 
     given such term in section 164.501 of title 45, Code of 
     Federal Regulations.
       (17) Use.--The term ``use'' has the meaning given such term 
     in section 160.103 of title 45, Code of Federal Regulations.
       (18) Vendor of personal health records.--The term ``vendor 
     of personal health records'' means an entity, other than a 
     covered entity (as defined in paragraph (3)), that offers or 
     maintains a personal health record.

      PART 1--IMPROVED PRIVACY PROVISIONS AND SECURITY PROVISIONS

     SEC. 13401. APPLICATION OF SECURITY PROVISIONS AND PENALTIES 
                   TO BUSINESS ASSOCIATES OF COVERED ENTITIES; 
                   ANNUAL GUIDANCE ON SECURITY PROVISIONS.

       (a) Application of Security Provisions.--Sections 164.308, 
     164.310, 164.312, and 164.316 of title 45, Code of Federal 
     Regulations, shall apply to a business associate of a covered 
     entity in the same manner that such sections apply to the 
     covered entity. The additional requirements of this title 
     that relate to security and that are made applicable with 
     respect to covered entities shall also be applicable to such 
     a business associate and shall be incorporated into the 
     business associate agreement between the business associate 
     and the covered entity.
       (b) Application of Civil and Criminal Penalties.--In the 
     case of a business associate that violates any security 
     provision specified in subsection (a), sections 1176 and 1177 
     of the Social Security Act (42 U.S.C. 1320d-5, 1320d-6) shall 
     apply to the business associate with respect to such 
     violation in the same manner such sections apply to a covered 
     entity that violates such security provision.
       (c) Annual Guidance.--For the first year beginning after 
     the date of the enactment of this Act and annually 
     thereafter, the Secretary of Health and Human Services shall, 
     after consultation with stakeholders, annually issue guidance 
     on the most effective and appropriate technical safeguards 
     for use in carrying out the sections referred to in 
     subsection (a) and the security standards in subpart C of 
     part 164 of title 45, Code of Federal Regulations, including 
     the use of standards developed under section 
     3002(b)(2)(B)(vi) of the Public Health Service Act, as added 
     by section 13101 of this Act, as such provisions are in 
     effect as of the date before the enactment of this Act.

     SEC. 13402. NOTIFICATION IN THE CASE OF BREACH.

       (a) In General.--A covered entity that accesses, maintains, 
     retains, modifies, records, stores, destroys, or otherwise 
     holds, uses, or discloses unsecured protected health 
     information (as defined in subsection (h)(1)) shall, in the 
     case of a breach of such information that is discovered by 
     the covered entity, notify each individual whose unsecured 
     protected health information has been, or is reasonably 
     believed by the covered entity to have been, accessed, 
     acquired, or disclosed as a result of such breach.
       (b) Notification of Covered Entity by Business Associate.--
     A business associate of a covered entity that accesses, 
     maintains, retains, modifies, records, stores, destroys, or 
     otherwise holds, uses, or discloses unsecured protected 
     health information shall, following the discovery of a breach 
     of such information, notify the covered entity of such 
     breach. Such notice shall include the identification of each 
     individual whose unsecured protected health information has 
     been, or is reasonably believed by the business associate to 
     have been, accessed, acquired, or disclosed during such 
     breach.
       (c) Breaches Treated as Discovered.--For purposes of this 
     section, a breach shall be treated as discovered by a covered 
     entity or by a business associate as of the first day on 
     which such breach is known to such entity or associate, 
     respectively, (including any person, other than the 
     individual committing the breach, that is an employee, 
     officer, or other agent of such entity or associate, 
     respectively) or should reasonably have been known to such 
     entity or associate (or person) to have occurred.
       (d) Timeliness of Notification.--
       (1) In general.--Subject to subsection (g), all 
     notifications required under this section shall be made 
     without unreasonable delay and in no case later than 60 
     calendar days after the discovery of a breach by the covered 
     entity involved (or business associate involved in the case 
     of a notification required under subsection (b)).
       (2) Burden of proof.--The covered entity involved (or 
     business associate involved in the case of a notification 
     required under subsection (b)), shall have the burden of 
     demonstrating that all notifications were made as required 
     under this part, including evidence demonstrating the 
     necessity of any delay.
       (e) Methods of Notice.--
       (1) Individual notice.--Notice required under this section 
     to be provided to an individual, with respect to a breach, 
     shall be provided promptly and in the following form:
       (A) Written notification by first-class mail to the 
     individual (or the next of kin of the individual if the 
     individual is deceased) at the last known address of the 
     individual or the next of kin, respectively, or, if specified 
     as a preference by the individual, by electronic mail. The 
     notification may be provided in one or more mailings as 
     information is available.
       (B) In the case in which there is insufficient, or out-of-
     date contact information (including a phone number, email 
     address, or any other form of appropriate communication) that 
     precludes direct written (or, if specified by the individual 
     under subparagraph (A), electronic) notification to the 
     individual, a substitute form of notice shall be provided, 
     including, in the case that there are 10 or more individuals 
     for which there is insufficient or out-of-date contact 
     information, a conspicuous posting for a period determined by 
     the Secretary on the home page of the Web site of the covered 
     entity involved or notice in major print or broadcast media, 
     including major media in geographic areas where the 
     individuals affected by the breach likely reside. Such a 
     notice in media or web posting will include a toll-free phone 
     number where an individual can learn whether or not the 
     individual's unsecured protected health information is 
     possibly included in the breach.
       (C) In any case deemed by the covered entity involved to 
     require urgency because of possible imminent misuse of 
     unsecured protected health information, the covered entity, 
     in addition to notice provided under subparagraph (A), may 
     provide information to individuals by telephone or other 
     means, as appropriate.

[[Page 3928]]

       (2) Media notice.--Notice shall be provided to prominent 
     media outlets serving a State or jurisdiction, following the 
     discovery of a breach described in subsection (a), if the 
     unsecured protected health information of more than 500 
     residents of such State or jurisdiction is, or is reasonably 
     believed to have been, accessed, acquired, or disclosed 
     during such breach.
       (3) Notice to secretary.--Notice shall be provided to the 
     Secretary by covered entities of unsecured protected health 
     information that has been acquired or disclosed in a breach. 
     If the breach was with respect to 500 or more individuals 
     than such notice must be provided immediately. If the breach 
     was with respect to less than 500 individuals, the covered 
     entity may maintain a log of any such breach occurring and 
     annually submit such a log to the Secretary documenting such 
     breaches occurring during the year involved.
       (4) Posting on hhs public website.--The Secretary shall 
     make available to the public on the Internet website of the 
     Department of Health and Human Services a list that 
     identifies each covered entity involved in a breach described 
     in subsection (a) in which the unsecured protected health 
     information of more than 500 individuals is acquired or 
     disclosed.
       (f) Content of Notification.--Regardless of the method by 
     which notice is provided to individuals under this section, 
     notice of a breach shall include, to the extent possible, the 
     following:
       (1) A brief description of what happened, including the 
     date of the breach and the date of the discovery of the 
     breach, if known.
       (2) A description of the types of unsecured protected 
     health information that were involved in the breach (such as 
     full name, Social Security number, date of birth, home 
     address, account number, or disability code).
       (3) The steps individuals should take to protect themselves 
     from potential harm resulting from the breach.
       (4) A brief description of what the covered entity involved 
     is doing to investigate the breach, to mitigate losses, and 
     to protect against any further breaches.
       (5) Contact procedures for individuals to ask questions or 
     learn additional information, which shall include a toll-free 
     telephone number, an e-mail address, Web site, or postal 
     address.
       (g) Delay of Notification Authorized for Law Enforcement 
     Purposes.--If a law enforcement official determines that a 
     notification, notice, or posting required under this section 
     would impede a criminal investigation or cause damage to 
     national security, such notification, notice, or posting 
     shall be delayed in the same manner as provided under section 
     164.528(a)(2) of title 45, Code of Federal Regulations, in 
     the case of a disclosure covered under such section.
       (h) Unsecured Protected Health Information.--
       (1) Definition.--
       (A) In general.--Subject to subparagraph (B), for purposes 
     of this section, the term ``unsecured protected health 
     information'' means protected health information that is not 
     secured through the use of a technology or methodology 
     specified by the Secretary in the guidance issued under 
     paragraph (2).
       (B) Exception in case timely guidance not issued.--In the 
     case that the Secretary does not issue guidance under 
     paragraph (2) by the date specified in such paragraph, for 
     purposes of this section, the term ``unsecured protected 
     health information'' shall mean protected health information 
     that is not secured by a technology standard that renders 
     protected health information unusable, unreadable, or 
     indecipherable to unauthorized individuals and is developed 
     or endorsed by a standards developing organization that is 
     accredited by the American National Standards Institute.
       (2) Guidance.--For purposes of paragraph (1) and section 
     13407(f)(3), not later than the date that is 60 days after 
     the date of the enactment of this Act, the Secretary shall, 
     after consultation with stakeholders, issue (and annually 
     update) guidance specifying the technologies and 
     methodologies that render protected health information 
     unusable, unreadable, or indecipherable to unauthorized 
     individuals, including the use of standards developed under 
     section 3002(b)(2)(B)(vi) of the Public Health Service Act, 
     as added by section 13101 of this Act.
       (i) Report to Congress on Breaches.--
       (1) In general.--Not later than 12 months after the date of 
     the enactment of this Act and annually thereafter, the 
     Secretary shall prepare and submit to the Committee on 
     Finance and the Committee on Health, Education, Labor, and 
     Pensions of the Senate and the Committee on Ways and Means 
     and the Committee on Energy and Commerce of the House of 
     Representatives a report containing the information described 
     in paragraph (2) regarding breaches for which notice was 
     provided to the Secretary under subsection (e)(3).
       (2) Information.--The information described in this 
     paragraph regarding breaches specified in paragraph (1) shall 
     include--
       (A) the number and nature of such breaches; and
       (B) actions taken in response to such breaches.
       (j) Regulations; Effective Date.--To carry out this 
     section, the Secretary of Health and Human Services shall 
     promulgate interim final regulations by not later than the 
     date that is 180 days after the date of the enactment of this 
     title. The provisions of this section shall apply to breaches 
     that are discovered on or after the date that is 30 days 
     after the date of publication of such interim final 
     regulations.

     SEC. 13403. EDUCATION ON HEALTH INFORMATION PRIVACY.

       (a) Regional Office Privacy Advisors.--Not later than 6 
     months after the date of the enactment of this Act, the 
     Secretary shall designate an individual in each regional 
     office of the Department of Health and Human Services to 
     offer guidance and education to covered entities, business 
     associates, and individuals on their rights and 
     responsibilities related to Federal privacy and security 
     requirements for protected health information.
       (b) Education Initiative on Uses of Health Information.--
     Not later than 12 months after the date of the enactment of 
     this Act, the Office for Civil Rights within the Department 
     of Health and Human Services shall develop and maintain a 
     multi-faceted national education initiative to enhance public 
     transparency regarding the uses of protected health 
     information, including programs to educate individuals about 
     the potential uses of their protected health information, the 
     effects of such uses, and the rights of individuals with 
     respect to such uses. Such programs shall be conducted in a 
     variety of languages and present information in a clear and 
     understandable manner.

     SEC. 13404. APPLICATION OF PRIVACY PROVISIONS AND PENALTIES 
                   TO BUSINESS ASSOCIATES OF COVERED ENTITIES.

       (a) Application of Contract Requirements.--In the case of a 
     business associate of a covered entity that obtains or 
     creates protected health information pursuant to a written 
     contract (or other written arrangement) described in section 
     164.502(e)(2) of title 45, Code of Federal Regulations, with 
     such covered entity, the business associate may use and 
     disclose such protected health information only if such use 
     or disclosure, respectively, is in compliance with each 
     applicable requirement of section 164.504(e) of such title. 
     The additional requirements of this subtitle that relate to 
     privacy and that are made applicable with respect to covered 
     entities shall also be applicable to such a business 
     associate and shall be incorporated into the business 
     associate agreement between the business associate and the 
     covered entity.
       (b) Application of Knowledge Elements Associated With 
     Contracts.--Section 164.504(e)(1)(ii) of title 45, Code of 
     Federal Regulations, shall apply to a business associate 
     described in subsection (a), with respect to compliance with 
     such subsection, in the same manner that such section applies 
     to a covered entity, with respect to compliance with the 
     standards in sections 164.502(e) and 164.504(e) of such 
     title, except that in applying such section 164.504(e)(1)(ii) 
     each reference to the business associate, with respect to a 
     contract, shall be treated as a reference to the covered 
     entity involved in such contract.
       (c) Application of Civil and Criminal Penalties.--In the 
     case of a business associate that violates any provision of 
     subsection (a) or (b), the provisions of sections 1176 and 
     1177 of the Social Security Act (42 U.S.C. 1320d-5, 1320d-6) 
     shall apply to the business associate with respect to such 
     violation in the same manner as such provisions apply to a 
     person who violates a provision of part C of title XI of such 
     Act.

     SEC. 13405. RESTRICTIONS ON CERTAIN DISCLOSURES AND SALES OF 
                   HEALTH INFORMATION; ACCOUNTING OF CERTAIN 
                   PROTECTED HEALTH INFORMATION DISCLOSURES; 
                   ACCESS TO CERTAIN INFORMATION IN ELECTRONIC 
                   FORMAT.

       (a) Requested Restrictions on Certain Disclosures of Health 
     Information.--In the case that an individual requests under 
     paragraph (a)(1)(i)(A) of section 164.522 of title 45, Code 
     of Federal Regulations, that a covered entity restrict the 
     disclosure of the protected health information of the 
     individual, notwithstanding paragraph (a)(1)(ii) of such 
     section, the covered entity must comply with the requested 
     restriction if--
       (1) except as otherwise required by law, the disclosure is 
     to a health plan for purposes of carrying out payment or 
     health care operations (and is not for purposes of carrying 
     out treatment); and
       (2) the protected health information pertains solely to a 
     health care item or service for which the health care 
     provider involved has been paid out of pocket in full.
       (b) Disclosures Required To Be Limited to the Limited Data 
     Set or the Minimum Necessary.--
       (1) In general.--
       (A) In general.--Subject to subparagraph (B), a covered 
     entity shall be treated as being in compliance with section 
     164.502(b)(1) of title 45, Code of Federal Regulations, with 
     respect to the use, disclosure, or request of protected 
     health information described in such section, only if the 
     covered entity limits such protected health information, to 
     the extent practicable, to the limited data set (as defined 
     in section 164.514(e)(2) of such title) or, if needed by such 
     entity, to the minimum necessary to accomplish the intended 
     purpose of such use, disclosure, or request, respectively.
       (B) Guidance.--Not later than 18 months after the date of 
     the enactment of this section, the Secretary shall issue 
     guidance on what constitutes ``minimum necessary'' for 
     purposes of subpart E of part 164 of title 45, Code of 
     Federal Regulation. In issuing such guidance the Secretary 
     shall take into consideration the guidance under section 
     13424(c) and the information necessary to improve patient 
     outcomes and to detect, prevent, and manage chronic disease.
       (C) Sunset.--Subparagraph (A) shall not apply on and after 
     the effective date on which

[[Page 3929]]

     the Secretary issues the guidance under subparagraph (B).
       (2) Determination of minimum necessary.--For purposes of 
     paragraph (1), in the case of the disclosure of protected 
     health information, the covered entity or business associate 
     disclosing such information shall determine what constitutes 
     the minimum necessary to accomplish the intended purpose of 
     such disclosure.
       (3) Application of exceptions.--The exceptions described in 
     section 164.502(b)(2) of title 45, Code of Federal 
     Regulations, shall apply to the requirement under paragraph 
     (1) as of the effective date described in section 13423 in 
     the same manner that such exceptions apply to section 
     164.502(b)(1) of such title before such date.
       (4) Rule of construction.--Nothing in this subsection shall 
     be construed as affecting the use, disclosure, or request of 
     protected health information that has been de-identified.
       (c) Accounting of Certain Protected Health Information 
     Disclosures Required if Covered Entity Uses Electronic Health 
     Record.--
       ``(1) In general.--In applying section 164.528 of title 45, 
     Code of Federal Regulations, in the case that a covered 
     entity uses or maintains an electronic health record with 
     respect to protected health information--
       ``(A) the exception under paragraph (a)(1)(i) of such 
     section shall not apply to disclosures through an electronic 
     health record made by such entity of such information; and
       ``(B) an individual shall have a right to receive an 
     accounting of disclosures described in such paragraph of such 
     information made by such covered entity during only the three 
     years prior to the date on which the accounting is requested.
       ``(2) Regulations.--The Secretary shall promulgate 
     regulations on what information shall be collected about each 
     disclosure referred to in paragraph (1), not later than 6 
     months after the date on which the Secretary adopts standards 
     on accounting for disclosure described in the section 
     3002(b)(2)(B)(iv) of the Public Health Service Act, as added 
     by section 13101. Such regulations shall only require such 
     information to be collected through an electronic health 
     record in a manner that takes into account the interests of 
     the individuals in learning the circumstances under which 
     their protected health information is being disclosed and 
     takes into account the administrative burden of accounting 
     for such disclosures.
       ``(3) Process.--In response to an request from an 
     individual for an accounting, a covered entity shall elect to 
     provide either an--
       ``(A) accounting, as specified under paragraph (1), for 
     disclosures of protected health information that are made by 
     such covered entity and by a business associate acting on 
     behalf of the covered entity; or
       ``(B) accounting, as specified under paragraph (1), for 
     disclosures that are made by such covered entity and provide 
     a list of all business associates acting on behalf of the 
     covered entity, including contact information for such 
     associates (such as mailing address, phone, and email 
     address).
     A business associate included on a list under subparagraph 
     (B) shall provide an accounting of disclosures (as required 
     under paragraph (1) for a covered entity) made by the 
     business associate upon a request made by an individual 
     directly to the business associate for such an accounting.
       ``(4) Effective date.--
       ``(A) Current users of electronic records.--In the case of 
     a covered entity insofar as it acquired an electronic health 
     record as of January 1, 2009, paragraph (1) shall apply to 
     disclosures, with respect to protected health information, 
     made by the covered entity from such a record on and after 
     January 1, 2014.
       ``(B) Others.--In the case of a covered entity insofar as 
     it acquires an electronic health record after January 1, 
     2009, paragraph (1) shall apply to disclosures, with respect 
     to protected health information, made by the covered entity 
     from such record on and after the later of the following:
       ``(i) January 1, 2011; or
       ``(ii) the date that it acquires an electronic health 
     record.
       ``(C) Later date.--The Secretary may set an effective date 
     that is later that the date specified under subparagraph (A) 
     or (B) if the Secretary determines that such later date is 
     necessary, but in no case may the date specified under--
       ``(i) subparagraph (A) be later than 2016; or
       ``(ii) subparagraph (B) be later than 2013.''
       (d) Prohibition on Sale of Electronic Health Records or 
     Protected Health Information.--
       (1) In general.--Except as provided in paragraph (2), a 
     covered entity or business associate shall not directly or 
     indirectly receive remuneration in exchange for any protected 
     health information of an individual unless the covered entity 
     obtained from the individual, in accordance with section 
     164.508 of title 45, Code of Federal Regulations, a valid 
     authorization that includes, in accordance with such section, 
     a specification of whether the protected health information 
     can be further exchanged for remuneration by the entity 
     receiving protected health information of that individual.
       (2) Exceptions.--Paragraph (1) shall not apply in the 
     following cases:
       (A) The purpose of the exchange is for public health 
     activities (as described in section 164.512(b) of title 45, 
     Code of Federal Regulations).
       (B) The purpose of the exchange is for research (as 
     described in sections 164.501 and 164.512(i) of title 45, 
     Code of Federal Regulations) and the price charged reflects 
     the costs of preparation and transmittal of the data for such 
     purpose.
       (C) The purpose of the exchange is for the treatment of the 
     individual, subject to any regulation that the Secretary may 
     promulgate to prevent protected health information from 
     inappropriate access, use, or disclosure.
       (D) The purpose of the exchange is the health care 
     operation specifically described in subparagraph (iv) of 
     paragraph (6) of the definition of healthcare operations in 
     section 164.501 of title 45, Code of Federal Regulations.
       (E) The purpose of the exchange is for remuneration that is 
     provided by a covered entity to a business associate for 
     activities involving the exchange of protected health 
     information that the business associate undertakes on behalf 
     of and at the specific request of the covered entity pursuant 
     to a business associate agreement.
       (F) The purpose of the exchange is to provide an individual 
     with a copy of the individual's protected health information 
     pursuant to section 164.524 of title 45, Code of Federal 
     Regulations.
       (G) The purpose of the exchange is otherwise determined by 
     the Secretary in regulations to be similarly necessary and 
     appropriate as the exceptions provided in subparagraphs (A) 
     through (F).
       (3) Regulations.--Not later than 18 months after the date 
     of enactment of this title, the Secretary shall promulgate 
     regulations to carry out this subsection. In promulgating 
     such regulations, the Secretary--
       (A) shall evaluate the impact of restricting the exception 
     described in paragraph (2)(A) to require that the price 
     charged for the purposes described in such paragraph reflects 
     the costs of the preparation and transmittal of the data for 
     such purpose, on research or public health activities, 
     including those conducted by or for the use of the Food and 
     Drug Administration; and
       (B) may further restrict the exception described in 
     paragraph (2)(A) to require that the price charged for the 
     purposes described in such paragraph reflects the costs of 
     the preparation and transmittal of the data for such purpose, 
     if the Secretary finds that such further restriction will not 
     impede such research or public health activities.
       (4) Effective date.--Paragraph (1) shall apply to exchanges 
     occurring on or after the date that is 6 months after the 
     date of the promulgation of final regulations implementing 
     this subsection.
       (e) Access to Certain Information in Electronic Format.--In 
     applying section 164.524 of title 45, Code of Federal 
     Regulations, in the case that a covered entity uses or 
     maintains an electronic health record with respect to 
     protected health information of an individual--
       (1) the individual shall have a right to obtain from such 
     covered entity a copy of such information in an electronic 
     format and, if the individual chooses, to direct the covered 
     entity to transmit such copy directly to an entity or person 
     designated by the individual, provided that any such choice 
     is clear, conspicuous, and specific; and
       (2) notwithstanding paragraph (c)(4) of such section, any 
     fee that the covered entity may impose for providing such 
     individual with a copy of such information (or a summary or 
     explanation of such information) if such copy (or summary or 
     explanation) is in an electronic form shall not be greater 
     than the entity's labor costs in responding to the request 
     for the copy (or summary or explanation).

     SEC. 13406. CONDITIONS ON CERTAIN CONTACTS AS PART OF HEALTH 
                   CARE OPERATIONS.

       (a) Marketing.--
       (1) In general.--A communication by a covered entity or 
     business associate that is about a product or service and 
     that encourages recipients of the communication to purchase 
     or use the product or service shall not be considered a 
     health care operation for purposes of subpart E of part 164 
     of title 45, Code of Federal Regulations, unless the 
     communication is made as described in subparagraph (i), (ii), 
     or (iii) of paragraph (1) of the definition of marketing in 
     section 164.501 of such title.
       (2) Payment for certain communications.--A communication by 
     a covered entity or business associate that is described in 
     subparagraph (i), (ii), or (iii) of paragraph (1) of the 
     definition of marketing in section 164.501 of title 45, Code 
     of Federal Regulations, shall not be considered a health care 
     operation for purposes of subpart E of part 164 of title 45, 
     Code of Federal Regulations if the covered entity receives or 
     has received direct or indirect payment in exchange for 
     making such communication, except where--
       (A)(i) such communication describes only a drug or biologic 
     that is currently being prescribed for the recipient of the 
     communication; and
       (ii) any payment received by such covered entity in 
     exchange for making a communication described in clause (i) 
     is reasonable in amount;
       (B) each of the following conditions apply--
       (i) the communication is made by the covered entity; and
       (ii) the covered entity making such communication obtains 
     from the recipient of the communication, in accordance with 
     section 164.508 of title 45, Code of Federal Regulations, a 
     valid authorization (as described in paragraph (b) of such 
     section) with respect to such communication; or
       (C) each of the following conditions apply--
       (i) the communication is made by a business associate on 
     behalf of the covered entity; and
       (ii) the communication is consistent with the written 
     contract (or other written arrangement

[[Page 3930]]

     described in section 164.502(e)(2) of such title) between 
     such business associate and covered entity.
       (3) Reasonable in amount defined.--For purposes of 
     paragraph (2), the term ``reasonable in amount'' shall have 
     the meaning given such term by the Secretary by regulation.
       (4) Direct or indirect payment.--For purposes of paragraph 
     (2), the term ``direct or indirect payment'' shall not 
     include any payment for treatment (as defined in section 
     164.501 of title 45, Code of Federal Regulations) of an 
     individual.
       (b) Opportunity to Opt Out of Fundraising.--The Secretary 
     shall by rule provide that any written fundraising 
     communication that is a healthcare operation as defined under 
     section 164.501 of title 45, Code of Federal Regulations, 
     shall, in a clear and conspicuous manner, provide an 
     opportunity for the recipient of the communications to elect 
     not to receive any further such communication. When an 
     individual elects not to receive any further such 
     communication, such election shall be treated as a revocation 
     of authorization under section 164.508 of title 45, Code of 
     Federal Regulations.
       (c) Effective Date.--This section shall apply to written 
     communications occurring on or after the effective date 
     specified under section 13423.

     SEC. 13407. TEMPORARY BREACH NOTIFICATION REQUIREMENT FOR 
                   VENDORS OF PERSONAL HEALTH RECORDS AND OTHER 
                   NON-HIPAA COVERED ENTITIES.

       (a) In General.--In accordance with subsection (c), each 
     vendor of personal health records, following the discovery of 
     a breach of security of unsecured PHR identifiable health 
     information that is in a personal health record maintained or 
     offered by such vendor, and each entity described in clause 
     (ii), (iii), or (iv) of section 13424(b)(1)(A), following the 
     discovery of a breach of security of such information that is 
     obtained through a product or service provided by such 
     entity, shall--
       (1) notify each individual who is a citizen or resident of 
     the United States whose unsecured PHR identifiable health 
     information was acquired by an unauthorized person as a 
     result of such a breach of security; and
       (2) notify the Federal Trade Commission.
       (b) Notification by Third Party Service Providers.--A third 
     party service provider that provides services to a vendor of 
     personal health records or to an entity described in clause 
     (ii), (iii). or (iv) of section 13424(b)(1)(A) in connection 
     with the offering or maintenance of a personal health record 
     or a related product or service and that accesses, maintains, 
     retains, modifies, records, stores, destroys, or otherwise 
     holds, uses, or discloses unsecured PHR identifiable health 
     information in such a record as a result of such services 
     shall, following the discovery of a breach of security of 
     such information, notify such vendor or entity, respectively, 
     of such breach. Such notice shall include the identification 
     of each individual whose unsecured PHR identifiable health 
     information has been, or is reasonably believed to have been, 
     accessed, acquired, or disclosed during such breach.
       (c) Application of Requirements for Timeliness, Method, and 
     Content of Notifications.--Subsections (c), (d), (e), and (f) 
     of section 13402 shall apply to a notification required under 
     subsection (a) and a vendor of personal health records, an 
     entity described in subsection (a) and a third party service 
     provider described in subsection (b), with respect to a 
     breach of security under subsection (a) of unsecured PHR 
     identifiable health information in such records maintained or 
     offered by such vendor, in a manner specified by the Federal 
     Trade Commission.
       (d) Notification of the Secretary.--Upon receipt of a 
     notification of a breach of security under subsection (a)(2), 
     the Federal Trade Commission shall notify the Secretary of 
     such breach.
       (e) Enforcement.--A violation of subsection (a) or (b) 
     shall be treated as an unfair and deceptive act or practice 
     in violation of a regulation under section 18(a)(1)(B) of the 
     Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)) 
     regarding unfair or deceptive acts or practices.
       (f) Definitions.--For purposes of this section:
       (1) Breach of security.--The term ``breach of security'' 
     means, with respect to unsecured PHR identifiable health 
     information of an individual in a personal health record, 
     acquisition of such information without the authorization of 
     the individual.
       (2) PHR identifiable health information.--The term ``PHR 
     identifiable health information'' means individually 
     identifiable health information, as defined in section 
     1171(6) of the Social Security Act (42 U.S.C. 1320d(6)), and 
     includes, with respect to an individual, information--
       (A) that is provided by or on behalf of the individual; and
       (B) that identifies the individual or with respect to which 
     there is a reasonable basis to believe that the information 
     can be used to identify the individual.
       (3) Unsecured phr identifiable health information.--
       (A) In general.--Subject to subparagraph (B), the term 
     ``unsecured PHR identifiable health information'' means PHR 
     identifiable health information that is not protected through 
     the use of a technology or methodology specified by the 
     Secretary in the guidance issued under section 13402(h)(2).
       (B) Exception in case timely guidance not issued.--In the 
     case that the Secretary does not issue guidance under section 
     13402(h)(2) by the date specified in such section, for 
     purposes of this section, the term ``unsecured PHR 
     identifiable health information'' shall mean PHR identifiable 
     health information that is not secured by a technology 
     standard that renders protected health information unusable, 
     unreadable, or indecipherable to unauthorized individuals and 
     that is developed or endorsed by a standards developing 
     organization that is accredited by the American National 
     Standards Institute.
       (g) Regulations; Effective Date; Sunset.--
       (1) Regulations; effective date.--To carry out this 
     section, the Federal Trade Commission shall promulgate 
     interim final regulations by not later than the date that is 
     180 days after the date of the enactment of this section. The 
     provisions of this section shall apply to breaches of 
     security that are discovered on or after the date that is 30 
     days after the date of publication of such interim final 
     regulations.
       (2) Sunset.--If Congress enacts new legislation 
     establishing requirements for notification in the case of a 
     breach of security, that apply to entities that are not 
     covered entities or business associates, the provisions of 
     this section shall not apply to breaches of security 
     discovered on or after the effective date of regulations 
     implementing such legislation.

     SEC. 13408. BUSINESS ASSOCIATE CONTRACTS REQUIRED FOR CERTAIN 
                   ENTITIES.

       Each organization, with respect to a covered entity, that 
     provides data transmission of protected health information to 
     such entity (or its business associate) and that requires 
     access on a routine basis to such protected health 
     information, such as a Health Information Exchange 
     Organization, Regional Health Information Organization, E-
     prescribing Gateway, or each vendor that contracts with a 
     covered entity to allow that covered entity to offer a 
     personal health record to patients as part of its electronic 
     health record, is required to enter into a written contract 
     (or other written arrangement) described in section 
     164.502(e)(2) of title 45, Code of Federal Regulations and a 
     written contract (or other arrangement) described in section 
     164.308(b) of such title, with such entity and shall be 
     treated as a business associate of the covered entity for 
     purposes of the provisions of this subtitle and subparts C 
     and E of part 164 of title 45, Code of Federal Regulations, 
     as such provisions are in effect as of the date of enactment 
     of this title.

     SEC. 13409. CLARIFICATION OF APPLICATION OF WRONGFUL 
                   DISCLOSURES CRIMINAL PENALTIES.

       Section 1177(a) of the Social Security Act (42 U.S.C. 
     1320d-6(a)) is amended by adding at the end the following new 
     sentence: ``For purposes of the previous sentence, a person 
     (including an employee or other individual) shall be 
     considered to have obtained or disclosed individually 
     identifiable health information in violation of this part if 
     the information is maintained by a covered entity (as defined 
     in the HIPAA privacy regulation described in section 
     1180(b)(3)) and the individual obtained or disclosed such 
     information without authorization.''.

     SEC. 13410. IMPROVED ENFORCEMENT.

       (a) In General.--
       (1) Noncompliance due to willful neglect.--Section 1176 of 
     the Social Security Act (42 U.S.C. 1320d-5) is amended--
       (A) in subsection (b)(1), by striking ``the act constitutes 
     an offense punishable under section 1177'' and inserting ``a 
     penalty has been imposed under section 1177 with respect to 
     such act''; and
       (B) by adding at the end the following new subsection:
       ``(c) Noncompliance Due to Willful Neglect.--
       ``(1) In general.--A violation of a provision of this part 
     due to willful neglect is a violation for which the Secretary 
     is required to impose a penalty under subsection (a)(1).
       ``(2) Required investigation.--For purposes of paragraph 
     (1), the Secretary shall formally investigate any complaint 
     of a violation of a provision of this part if a preliminary 
     investigation of the facts of the complaint indicate such a 
     possible violation due to willful neglect.''.
       (2) Enforcement under social security act.--Any violation 
     by a covered entity under thus subtitle is subject to 
     enforcement and penalties under section 1176 and 1177 of the 
     Social Security Act.
       (b) Effective Date; Regulations.--
       (1) The amendments made by subsection (a) shall apply to 
     penalties imposed on or after the date that is 24 months 
     after the date of the enactment of this title.
       (2) Not later than 18 months after the date of the 
     enactment of this title, the Secretary of Health and Human 
     Services shall promulgate regulations to implement such 
     amendments.
       (c) Distribution of Certain Civil Monetary Penalties 
     Collected.--
       (1) In general.--Subject to the regulation promulgated 
     pursuant to paragraph (3), any civil monetary penalty or 
     monetary settlement collected with respect to an offense 
     punishable under this subtitle or section 1176 of the Social 
     Security Act (42 U.S.C. 1320d-5) insofar as such section 
     relates to privacy or security shall be transferred to the 
     Office for Civil Rights of the Department of Health and Human 
     Services to be used for purposes of enforcing the provisions 
     of this subtitle and subparts C and E of part 164 of title 
     45, Code of Federal Regulations, as such provisions are in 
     effect as of the date of enactment of this Act.
       (2) GAO report.--Not later than 18 months after the date of 
     the enactment of this title, the Comptroller General shall 
     submit to the Secretary a report including recommendations 
     for a methodology under which an individual who is

[[Page 3931]]

     harmed by an act that constitutes an offense referred to in 
     paragraph (1) may receive a percentage of any civil monetary 
     penalty or monetary settlement collected with respect to such 
     offense.
       (3) Establishment of methodology to distribute percentage 
     of cmps collected to harmed individuals.--Not later than 3 
     years after the date of the enactment of this title, the 
     Secretary shall establish by regulation and based on the 
     recommendations submitted under paragraph (2), a methodology 
     under which an individual who is harmed by an act that 
     constitutes an offense referred to in paragraph (1) may 
     receive a percentage of any civil monetary penalty or 
     monetary settlement collected with respect to such offense.
       (4) Application of methodology.--The methodology under 
     paragraph (3) shall be applied with respect to civil monetary 
     penalties or monetary settlements imposed on or after the 
     effective date of the regulation.
       (d) Tiered Increase in Amount of Civil Monetary 
     Penalties.--
       (1) In general.--Section 1176(a)(1) of the Social Security 
     Act (42 U.S.C. 1320d-5(a)(1)) is amended by striking ``who 
     violates a provision of this part a penalty of not more 
     than'' and all that follows and inserting the following: 
     ``who violates a provision of this part--
       ``(A) in the case of a violation of such provision in which 
     it is established that the person did not know (and by 
     exercising reasonable diligence would not have known) that 
     such person violated such provision, a penalty for each such 
     violation of an amount that is at least the amount described 
     in paragraph (3)(A) but not to exceed the amount described in 
     paragraph (3)(D);
       ``(B) in the case of a violation of such provision in which 
     it is established that the violation was due to reasonable 
     cause and not to willful neglect, a penalty for each such 
     violation of an amount that is at least the amount described 
     in paragraph (3)(B) but not to exceed the amount described in 
     paragraph (3)(D); and
       ``(C) in the case of a violation of such provision in which 
     it is established that the violation was due to willful 
     neglect--
       ``(i) if the violation is corrected as described in 
     subsection (b)(3)(A), a penalty in an amount that is at least 
     the amount described in paragraph (3)(C) but not to exceed 
     the amount described in paragraph (3)(D); and
       ``(ii) if the violation is not corrected as described in 
     such subsection, a penalty in an amount that is at least the 
     amount described in paragraph (3)(D).
     In determining the amount of a penalty under this section for 
     a violation, the Secretary shall base such determination on 
     the nature and extent of the violation and the nature and 
     extent of the harm resulting from such violation.''.
       (2) Tiers of penalties described.--Section 1176(a) of such 
     Act (42 U.S.C. 1320d-5(a)) is further amended by adding at 
     the end the following new paragraph:
       ``(3) Tiers of penalties described.--For purposes of 
     paragraph (1), with respect to a violation by a person of a 
     provision of this part--
       ``(A) the amount described in this subparagraph is $100 for 
     each such violation, except that the total amount imposed on 
     the person for all such violations of an identical 
     requirement or prohibition during a calendar year may not 
     exceed $25,000;
       ``(B) the amount described in this subparagraph is $1,000 
     for each such violation, except that the total amount imposed 
     on the person for all such violations of an identical 
     requirement or prohibition during a calendar year may not 
     exceed $100,000;
       ``(C) the amount described in this subparagraph is $10,000 
     for each such violation, except that the total amount imposed 
     on the person for all such violations of an identical 
     requirement or prohibition during a calendar year may not 
     exceed $250,000; and
       ``(D) the amount described in this subparagraph is $50,000 
     for each such violation, except that the total amount imposed 
     on the person for all such violations of an identical 
     requirement or prohibition during a calendar year may not 
     exceed $1,500,000.''.
       (3) Conforming amendments.--Section 1176(b) of such Act (42 
     U.S.C. 1320d-5(b)) is amended--
       (A) by striking paragraph (2) and redesignating paragraphs 
     (3) and (4) as paragraphs (2) and (3), respectively; and
       (B) in paragraph (2), as so redesignated--
       (i) in subparagraph (A), by striking ``in subparagraph (B), 
     a penalty may not be imposed under subsection (a) if'' and 
     all that follows through ``the failure to comply is 
     corrected'' and inserting ``in subparagraph (B) or subsection 
     (a)(1)(C), a penalty may not be imposed under subsection (a) 
     if the failure to comply is corrected''; and
       (ii) in subparagraph (B), by striking ``(A)(ii)'' and 
     inserting ``(A)'' each place it appears.
       (4) Effective date.--The amendments made by this subsection 
     shall apply to violations occurring after the date of the 
     enactment of this title.
       (e) Enforcement Through State Attorneys General.--
       (1) In general.--Section 1176 of the Social Security Act 
     (42 U.S.C. 1320d-5) is amended by adding at the end the 
     following new subsection:
       ``(d) Enforcement by State Attorneys General.--
       ``(1) Civil action.--Except as provided in subsection (b), 
     in any case in which the attorney general of a State has 
     reason to believe that an interest of one or more of the 
     residents of that State has been or is threatened or 
     adversely affected by any person who violates a provision of 
     this part, the attorney general of the State, as parens 
     patriae, may bring a civil action on behalf of such residents 
     of the State in a district court of the United States of 
     appropriate jurisdiction--
       ``(A) to enjoin further such violation by the defendant; or
       ``(B) to obtain damages on behalf of such residents of the 
     State, in an amount equal to the amount determined under 
     paragraph (2).
       ``(2) Statutory damages.--
       ``(A) In general.--For purposes of paragraph (1)(B), the 
     amount determined under this paragraph is the amount 
     calculated by multiplying the number of violations by up to 
     $100. For purposes of the preceding sentence, in the case of 
     a continuing violation, the number of violations shall be 
     determined consistent with the HIPAA privacy regulations (as 
     defined in section 1180(b)(3)) for violations of subsection 
     (a).
       ``(B) Limitation.--The total amount of damages imposed on 
     the person for all violations of an identical requirement or 
     prohibition during a calendar year may not exceed $25,000.
       ``(C) Reduction of damages.--In assessing damages under 
     subparagraph (A), the court may consider the factors the 
     Secretary may consider in determining the amount of a civil 
     money penalty under subsection (a) under the HIPAA privacy 
     regulations.
       ``(3) Attorney fees.--In the case of any successful action 
     under paragraph (1), the court, in its discretion, may award 
     the costs of the action and reasonable attorney fees to the 
     State.
       ``(4) Notice to secretary.--The State shall serve prior 
     written notice of any action under paragraph (1) upon the 
     Secretary and provide the Secretary with a copy of its 
     complaint, except in any case in which such prior notice is 
     not feasible, in which case the State shall serve such notice 
     immediately upon instituting such action. The Secretary shall 
     have the right--
       ``(A) to intervene in the action;
       ``(B) upon so intervening, to be heard on all matters 
     arising therein; and
       ``(C) to file petitions for appeal.
       ``(5) Construction.--For purposes of bringing any civil 
     action under paragraph (1), nothing in this section shall be 
     construed to prevent an attorney general of a State from 
     exercising the powers conferred on the attorney general by 
     the laws of that State.
       ``(6) Venue; service of process.--
       ``(A) Venue.--Any action brought under paragraph (1) may be 
     brought in the district court of the United States that meets 
     applicable requirements relating to venue under section 1391 
     of title 28, United States Code.
       ``(B) Service of process.--In an action brought under 
     paragraph (1), process may be served in any district in which 
     the defendant--
       ``(i) is an inhabitant; or
       ``(ii) maintains a physical place of business.
       ``(7) Limitation on state action while federal action is 
     pending.--If the Secretary has instituted an action against a 
     person under subsection (a) with respect to a specific 
     violation of this part, no State attorney general may bring 
     an action under this subsection against the person with 
     respect to such violation during the pendency of that action.
       ``(8) Application of cmp statute of limitation.--A civil 
     action may not be instituted with respect to a violation of 
     this part unless an action to impose a civil money penalty 
     may be instituted under subsection (a) with respect to such 
     violation consistent with the second sentence of section 
     1128A(c)(1).''.
       (2) Conforming amendments.--Subsection (b) of such section, 
     as amended by subsection (d)(3), is amended--
       (A) in paragraph (1), by striking ``A penalty may not be 
     imposed under subsection (a)'' and inserting ``No penalty may 
     be imposed under subsection (a) and no damages obtained under 
     subsection (d)'';
       (B) in paragraph (2)(A)--
       (i) after ``subsection (a)(1)(C),'', by striking ``a 
     penalty may not be imposed under subsection (a)'' and 
     inserting ``no penalty may be imposed under subsection (a) 
     and no damages obtained under subsection (d)''; and
       (ii) in clause (ii), by inserting ``or damages'' after 
     ``the penalty'';
       (C) in paragraph (2)(B)(i), by striking ``The period'' and 
     inserting ``With respect to the imposition of a penalty by 
     the Secretary under subsection (a), the period''; and
       (D) in paragraph (3), by inserting ``and any damages under 
     subsection (d)'' after ``any penalty under subsection (a)''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to violations occurring after the date of the 
     enactment of this Act.
       (f) Allowing Continued Use of Corrective Action.--Such 
     section is further amended by adding at the end the following 
     new subsection:
       ``(e) Allowing Continued Use of Corrective Action.--Nothing 
     in this section shall be construed as preventing the Office 
     for Civil Rights of the Department of Health and Human 
     Services from continuing, in its discretion, to use 
     corrective action without a penalty in cases where the person 
     did not know (and by exercising reasonable diligence would 
     not have known) of the violation involved.''.

     SEC. 13411. AUDITS.

       The Secretary shall provide for periodic audits to ensure 
     that covered entities and business associates that are 
     subject to the requirements of this subtitle and subparts C 
     and E of part 164 of title 45, Code of Federal Regulations, 
     as such provisions are in effect as of the date of enactment 
     of this Act, comply with such requirements.

[[Page 3932]]



 PART 2--RELATIONSHIP TO OTHER LAWS; REGULATORY REFERENCES; EFFECTIVE 
                             DATE; REPORTS

     SEC. 13421. RELATIONSHIP TO OTHER LAWS.

       (a) Application of Hipaa State Preemption.--Section 1178 of 
     the Social Security Act (42 U.S.C. 1320d-7) shall apply to a 
     provision or requirement under this subtitle in the same 
     manner that such section applies to a provision or 
     requirement under part C of title XI of such Act or a 
     standard or implementation specification adopted or 
     established under sections 1172 through 1174 of such Act.
       (b) Health Insurance Portability and Accountability Act.--
     The standards governing the privacy and security of 
     individually identifiable health information promulgated by 
     the Secretary under sections 262(a) and 264 of the Health 
     Insurance Portability and Accountability Act of 1996 shall 
     remain in effect to the extent that they are consistent with 
     this subtitle. The Secretary shall by rule amend such Federal 
     regulations as required to make such regulations consistent 
     with this subtitle.
       (c) Construction.--Nothing in this subtitle shall 
     constitute a waiver of any privilege otherwise applicable to 
     an individual with respect to the protected health 
     information of such individual.

     SEC. 13422. REGULATORY REFERENCES.

       Each reference in this subtitle to a provision of the Code 
     of Federal Regulations refers to such provision as in effect 
     on the date of the enactment of this title (or to the most 
     recent update of such provision).

     SEC. 13423. EFFECTIVE DATE.

       Except as otherwise specifically provided, the provisions 
     of part I shall take effect on the date that is 12 months 
     after the date of the enactment of this title.

     SEC. 13424. STUDIES, REPORTS, GUIDANCE.

       (a) Report on Compliance.--
       (1) In general.--For the first year beginning after the 
     date of the enactment of this Act and annually thereafter, 
     the Secretary shall prepare and submit to the Committee on 
     Health, Education, Labor, and Pensions of the Senate and the 
     Committee on Ways and Means and the Committee on Energy and 
     Commerce of the House of Representatives a report concerning 
     complaints of alleged violations of law, including the 
     provisions of this subtitle as well as the provisions of 
     subparts C and E of part 164 of title 45, Code of Federal 
     Regulations, (as such provisions are in effect as of the date 
     of enactment of this Act) relating to privacy and security of 
     health information that are received by the Secretary during 
     the year for which the report is being prepared. Each such 
     report shall include, with respect to such complaints 
     received during the year--
       (A) the number of such complaints;
       (B) the number of such complaints resolved informally, a 
     summary of the types of such complaints so resolved, and the 
     number of covered entities that received technical assistance 
     from the Secretary during such year in order to achieve 
     compliance with such provisions and the types of such 
     technical assistance provided;
       (C) the number of such complaints that have resulted in the 
     imposition of civil monetary penalties or have been resolved 
     through monetary settlements, including the nature of the 
     complaints involved and the amount paid in each penalty or 
     settlement;
       (D) the number of compliance reviews conducted and the 
     outcome of each such review;
       (E) the number of subpoenas or inquiries issued;
       (F) the Secretary's plan for improving compliance with and 
     enforcement of such provisions for the following year; and
       (G) the number of audits performed and a summary of audit 
     findings pursuant to section 13411.
       (2) Availability to public.--Each report under paragraph 
     (1) shall be made available to the public on the Internet 
     website of the Department of Health and Human Services.
       (b) Study and Report on Application of Privacy and Security 
     Requirements to Non-Hipaa Covered Entities.--
       (1) Study.--Not later than one year after the date of the 
     enactment of this title, the Secretary, in consultation with 
     the Federal Trade Commission, shall conduct a study, and 
     submit a report under paragraph (2), on privacy and security 
     requirements for entities that are not covered entities or 
     business associates as of the date of the enactment of this 
     title, including--
       (A) requirements relating to security, privacy, and 
     notification in the case of a breach of security or privacy 
     (including the applicability of an exemption to notification 
     in the case of individually identifiable health information 
     that has been rendered unusable, unreadable, or 
     indecipherable through technologies or methodologies 
     recognized by appropriate professional organization or 
     standard setting bodies to provide effective security for the 
     information) that should be applied to--
       (i) vendors of personal health records;
       (ii) entities that offer products or services through the 
     website of a vendor of personal health records;
       (iii) entities that are not covered entities and that offer 
     products or services through the websites of covered entities 
     that offer individuals personal health records;
       (iv) entities that are not covered entities and that access 
     information in a personal health record or send information 
     to a personal health record; and
       (v) third party service providers used by a vendor or 
     entity described in clause (i), (ii), (iii), or (iv) to 
     assist in providing personal health record products or 
     services;
       (B) a determination of which Federal government agency is 
     best equipped to enforce such requirements recommended to be 
     applied to such vendors, entities, and service providers 
     under subparagraph (A); and
       (C) a timeframe for implementing regulations based on such 
     findings.
       (2) Report.--The Secretary shall submit to the Committee on 
     Finance, the Committee on Health, Education, Labor, and 
     Pensions, and the Committee on Commerce of the Senate and the 
     Committee on Ways and Means and the Committee on Energy and 
     Commerce of the House of Representatives a report on the 
     findings of the study under paragraph (1) and shall include 
     in such report recommendations on the privacy and security 
     requirements described in such paragraph.
       (c) Guidance on Implementation Specification to De-Identify 
     Protected Health Information.--Not later than 12 months after 
     the date of the enactment of this title, the Secretary shall, 
     in consultation with stakeholders, issue guidance on how best 
     to implement the requirements for the de-identification of 
     protected health information under section 164.514(b) of 
     title 45, Code of Federal Regulations.
       (d) GAO Report on Treatment Disclosures.--Not later than 
     one year after the date of the enactment of this title, the 
     Comptroller General of the United States shall submit to the 
     Committee on Health, Education, Labor, and Pensions of the 
     Senate and the Committee on Ways and Means and the Committee 
     on Energy and Commerce of the House of Representatives a 
     report on the best practices related to the disclosure among 
     health care providers of protected health information of an 
     individual for purposes of treatment of such individual. Such 
     report shall include an examination of the best practices 
     implemented by States and by other entities, such as health 
     information exchanges and regional health information 
     organizations, an examination of the extent to which such 
     best practices are successful with respect to the quality of 
     the resulting health care provided to the individual and with 
     respect to the ability of the health care provider to manage 
     such best practices, and an examination of the use of 
     electronic informed consent for disclosing protected health 
     information for treatment, payment, and health care 
     operations.
       (e) Report Required.--Not later than 5 years after the date 
     of enactment of this section, the Government Accountability 
     Office shall submit to Congress and the Secretary of Health 
     and Human Services a report on the impact of any of the 
     provisions of this Act on health insurance premiums, overall 
     health care costs, adoption of electronic health records by 
     providers, and reduction in medical errors and other quality 
     improvements.
       (f) Study.--The Secretary shall study the definition of 
     ``psychotherapy notes'' in section 164.501 of title 45, Code 
     of Federal Regulations, with regard to including test data 
     that is related to direct responses, scores, items, forms, 
     protocols, manuals, or other materials that are part of a 
     mental health evaluation, as determined by the mental health 
     professional providing treatment or evaluation in such 
     definitions and may, based on such study, issue regulations 
     to revise such definition.

               TITLE XIV--STATE FISCAL STABILIZATION FUND

                        DEPARTMENT OF EDUCATION

                    State Fiscal Stabilization Fund

       For necessary expenses for a State Fiscal Stabilization 
     Fund, $53,600,000,000, which shall be administered by the 
     Department of Education.

                     GENERAL PROVISIONS--THIS TITLE

     SEC. 14001. ALLOCATIONS.

       (a) Outlying Areas.--From the amount appropriated to carry 
     out this title, the Secretary of Education shall first 
     allocate up to one-half of 1 percent to the outlying areas on 
     the basis of their respective needs, as determined by the 
     Secretary, in consultation with the Secretary of the 
     Interior, for activities consistent with this title under 
     such terms and conditions as the Secretary may determine.
       (b) Administration and Oversight.--The Secretary may, in 
     addition, reserve up to $14,000,000 for administration and 
     oversight of this title, including for program evaluation.
       (c) Reservation for Additional Programs.--After reserving 
     funds under subsections (a) and (b), the Secretary shall 
     reserve $5,000,000,000 for grants under sections 14006 and 
     14007.
       (d) State Allocations.--After carrying out subsections (a), 
     (b), and (c), the Secretary shall allocate the remaining 
     funds made available to carry out this title to the States as 
     follows:
       (1) 61 percent on the basis of their relative population of 
     individuals aged 5 through 24.
       (2) 39 percent on the basis of their relative total 
     population.
       (e) State Grants.--From funds allocated under subsection 
     (d), the Secretary shall make grants to the Governor of each 
     State.
       (f) Reallocation.--The Governor shall return to the 
     Secretary any funds received under subsection (e) that the 
     Governor does not award as subgrants or otherwise commit 
     within two years of receiving such funds, and the Secretary 
     shall reallocate such funds to the remaining States in 
     accordance with subsection (d).

     SEC. 14002. STATE USES OF FUNDS.

       (a) Education Fund.--
       (1) In general.--For each fiscal year, the Governor shall 
     use 81.8 percent of the State's allocation under section 
     14001(d) for the support of elementary, secondary, and 
     postsecondary education and, as applicable, early childhood 
     education programs and services.

[[Page 3933]]

       (2) Restoring state support for education.--
       (A) In general.--The Governor shall first use the funds 
     described in paragraph (1)--
       (i) to provide the amount of funds, through the State's 
     primary elementary and secondary funding formulae, that is 
     needed--

       (I) to restore, in each of fiscal years 2009, 2010, and 
     2011, the level of State support provided through such 
     formulae to the greater of the fiscal year 2008 or fiscal 
     year 2009 level; and
       (II) where applicable, to allow existing State formulae 
     increases to support elementary and secondary education for 
     fiscal years 2010 and 2011 to be implemented and allow 
     funding for phasing in State equity and adequacy adjustments, 
     if such increases were enacted pursuant to State law prior to 
     October 1, 2008.

       (ii) to provide, in each of fiscal years 2009, 2010, and 
     2011, the amount of funds to public institutions of higher 
     education in the State that is needed to restore State 
     support for such institutions (excluding tuition and fees 
     paid by students) to the greater of the fiscal year 2008 or 
     fiscal year 2009 level.
       (B) Shortfall.--If the Governor determines that the amount 
     of funds available under paragraph (1) is insufficient to 
     support, in each of fiscal years 2009, 2010, and 2011, public 
     elementary, secondary, and higher education at the levels 
     described in clauses (i) and (ii) of subparagraph (A), the 
     Governor shall allocate those funds between those clauses in 
     proportion to the relative shortfall in State support for the 
     education sectors described in those clauses.
       (C) Fiscal year.--For purposes of this paragraph, the term 
     ``fiscal year'' shall have the meaning given such term under 
     State law.
       (3) Subgrants to improve basic programs operated by local 
     educational agencies.--After carrying out paragraph (2), the 
     Governor shall use any funds remaining under paragraph (1) to 
     provide local educational agencies in the State with 
     subgrants based on their relative shares of funding under 
     part A of title I of the Elementary and Secondary Education 
     Act of 1965 (20 U.S.C. 6311 et seq.) for the most recent year 
     for which data are available.
       (b) Other Government Services.--
       (1) In general.--The Governor shall use 18.2 percent of the 
     State's allocation under section 14001 for public safety and 
     other government services, which may include assistance for 
     elementary and secondary education and public institutions of 
     higher education, and for modernization, renovation, or 
     repair of public school facilities and institutions of higher 
     education facilities, including modernization, renovation, 
     and repairs that are consistent with a recognized green 
     building rating system.
       (2) Availability to all institutions of higher education.--
     A Governor shall not consider the type or mission of an 
     institution of higher education, and shall consider any 
     institution for funding for modernization, renovation, and 
     repairs within the State that--
       (A) qualifies as an institution of higher education, as 
     defined in subsection 14013(3); and
       (B) continues to be eligible to participate in the programs 
     under title IV of the Higher Education Act of 1965.
       (c) Rule of Construction.--Nothing in this section shall 
     allow a local educational agency to engage in school 
     modernization, renovation, or repair that is inconsistent 
     with State law.

     SEC. 14003. USES OF FUNDS BY LOCAL EDUCATIONAL AGENCIES.

       (a) In General.--A local educational agency that receives 
     funds under this title may use the funds for any activity 
     authorized by the Elementary and Secondary Education Act of 
     1965 (20 U.S.C. 6301 et seq.) (``ESEA''), the Individuals 
     with Disabilities Education Act (20 U.S.C. 1400 et seq.) 
     (``IDEA''), the Adult and Family Literacy Act (20 U.S.C. 1400 
     et seq.), or the Carl D. Perkins Career and Technical 
     Education Act of 2006 (20 U.S.C. 2301 et seq.) (``the Perkins 
     Act'') or for modernization, renovation, or repair of public 
     school facilities, including modernization, renovation, and 
     repairs that are consistent with a recognized green building 
     rating system.
       (b) Prohibition.--A local educational agency may not use 
     funds received under this title for--
       (1) payment of maintenance costs;
       (2) stadiums or other facilities primarily used for 
     athletic contests or exhibitions or other events for which 
     admission is charged to the general public;
       (3) purchase or upgrade of vehicles; or
       (4) improvement of stand-alone facilities whose purpose is 
     not the education of children, including central office 
     administration or operations or logistical support 
     facilities.
       (c) Rule of Construction.--Nothing in this section shall 
     allow a local educational agency to engage in school 
     modernization, renovation, or repair that is inconsistent 
     with State law.

     SEC. 14004. USES OF FUNDS BY INSTITUTIONS OF HIGHER 
                   EDUCATION.

       (a) In General.--A public institution of higher education 
     that receives funds under this title shall use the funds for 
     education and general expenditures, and in such a way as to 
     mitigate the need to raise tuition and fees for in-State 
     students, or for modernization, renovation, or repair of 
     institution of higher education facilities that are primarily 
     used for instruction, research, or student housing, including 
     modernization, renovation, and repairs that are consistent 
     with a recognized green building rating system.
       (b) Prohibition.--An institution of higher education may 
     not use funds received under this title to increase its 
     endowment.
       (c) Additional Prohibition.--No funds awarded under this 
     title may be used for--
       (1) the maintenance of systems, equipment, or facilities;
       (2) modernization, renovation, or repair of stadiums or 
     other facilities primarily used for athletic contests or 
     exhibitions or other events for which admission is charged to 
     the general public; or
       (3) modernization, renovation, or repair of facilities--
       (A) used for sectarian instruction or religious worship; or
       (B) in which a substantial portion of the functions of the 
     facilities are subsumed in a religious mission.

     SEC. 14005. STATE APPLICATIONS.

       (a) In General.--The Governor of a State desiring to 
     receive an allocation under section 14001 shall submit an 
     application at such time, in such manner, and containing such 
     information as the Secretary may reasonably require.
       (b) Application.--In such application, the Governor shall--
       (1) include the assurances described in subsection (d);
       (2) provide baseline data that demonstrates the State's 
     current status in each of the areas described in such 
     assurances; and
       (3) describe how the State intends to use its allocation, 
     including whether the State will use such allocation to meet 
     maintenance of effort requirements under the ESEA and IDEA 
     and, in such cases, what amount will be used to meet such 
     requirements.
       (c) Incentive Grant Application.--The Governor of a State 
     seeking a grant under section 14006 shall--
       (1) submit an application for consideration;
       (2) describe the status of the State's progress in each of 
     the areas described in subsection (d), and the strategies the 
     State is employing to help ensure that students in the 
     subgroups described in section 1111(b)(2)(C)(v)(II) of the 
     ESEA (20 U.S.C. 6311(b)(2)(C)(v)(II)) who have not met the 
     State's proficiency targets continue making progress toward 
     meeting the State's student academic achievement standards;
       (3) describe the achievement and graduation rates (as 
     described in section 1111(b)(2)(C)(vi) of the ESEA (20 U.S.C. 
     6311(b)(2)(C)(vi)) and as clarified in section 200.19(b)(1) 
     of title 34, Code of Federal Regulations) of public 
     elementary and secondary school students in the State, and 
     the strategies the State is employing to help ensure that all 
     subgroups of students identified in section 1111(b)(2) of the 
     ESEA (20 U.S.C. 6311(b)(2)) in the State continue making 
     progress toward meeting the State's student academic 
     achievement standards;
       (4) describe how the State would use its grant funding to 
     improve student academic achievement in the State, including 
     how it will allocate the funds to give priority to high-need 
     local educational agencies; and
       (5) include a plan for evaluating the State's progress in 
     closing achievement gaps.
       (d) Assurances.--An application under subsection (b) shall 
     include the following assurances:
       (1) Maintenance of effort.--
       (A) Elementary and secondary education.--The State will, in 
     each of fiscal years 2009, 2010, and 2011, maintain State 
     support for elementary and secondary education at least at 
     the level of such support in fiscal year 2006.
       (B) Higher education.--The State will, in each of fiscal 
     years 2009, 2010, and 2011, maintain State support for public 
     institutions of higher education (not including support for 
     capital projects or for research and development or tuition 
     and fees paid by students) at least at the level of such 
     support in fiscal year 2006.
       (2) Achieving equity in teacher distribution.--The State 
     will take actions to improve teacher effectiveness and comply 
     with section 1111(b)(8)(C) of the ESEA (20 U.S.C. 
     6311(b)(8)(C)) in order to address inequities in the 
     distribution of highly qualified teachers between high- and 
     low-poverty schools, and to ensure that low-income and 
     minority children are not taught at higher rates than other 
     children by inexperienced, unqualified, or out-of-field 
     teachers.
       (3) Improving collection and use of data.--The State will 
     establish a longitudinal data system that includes the 
     elements described in section 6401(e)(2)(D) of the America 
     COMPETES Act (20 U.S.C. 9871).
       (4) Standards and assessments.--The State--
       (A) will enhance the quality of the academic assessments it 
     administers pursuant to section 1111(b)(3) of the ESEA (20 
     U.S.C. 6311(b)(3)) through activities such as those described 
     in section 6112(a) of such Act (20 U.S.C. 7301a(a));
       (B) will comply with the requirements of paragraphs 
     (3)(C)(ix) and (6) of section 1111(b) of the ESEA (20 U.S.C. 
     6311(b)) and section 612(a)(16) of the IDEA (20 U.S.C. 
     1412(a)(16)) related to the inclusion of children with 
     disabilities and limited English proficient students in State 
     assessments, the development of valid and reliable 
     assessments for those students, and the provision of 
     accommodations that enable their participation in State 
     assessments; and
       (C) will take steps to improve State academic content 
     standards and student academic achievement standards 
     consistent with section 6401(e)(1)(9)(A)(ii) of the America 
     COMPETES Act.
       (5) Supporting struggling schools.--The State will ensure 
     compliance with the requirements of section 1116(a)(7)(C)(iv) 
     and section 1116(a)(8)(B) of the ESEA with respect to schools 
     identified under such sections.

     SEC. 14006. STATE INCENTIVE GRANTS.

       (a) In General.--

[[Page 3934]]

       (1) Reservation.--From the total amount reserved under 
     section 14001(c) that is not used for section 14007, the 
     Secretary may reserve up to 1 percent for technical 
     assistance to States to assist them in meeting the objectives 
     of paragraphs (2), (3), (4), and (5) of section 14005(d).
       (2) Remainder.--Of the remaining funds, the Secretary 
     shall, in fiscal year 2010, make grants to States that have 
     made significant progress in meeting the objectives of 
     paragraphs (2), (3), (4), and (5) of section 14005(d).
       (b) Basis for Grants.--The Secretary shall determine which 
     States receive grants under this section, and the amount of 
     those grants, on the basis of information provided in State 
     applications under section 14005 and such other criteria as 
     the Secretary determines appropriate, which may include a 
     State's need for assistance to help meet the objective of 
     paragraphs (2), (3), (4), and (5) of section 14005(d).
       (c) Subgrants to Local Educational Agencies.--Each State 
     receiving a grant under this section shall use at least 50 
     percent of the grant to provide local educational agencies in 
     the State with subgrants based on their relative shares of 
     funding under part A of title I of the ESEA (20 U.S.C. 6311 
     et seq.) for the most recent year.

     SEC. 14007. INNOVATION FUND.

       (a) In General.--
       (1) Eligible entities.--For the purposes of this section, 
     the term ``eligible entity'' means--
       (A) a local educational agency; or
       (B) a partnership between a nonprofit organization and--
       (i) one or more local educational agencies; or
       (ii) a consortium of schools.
       (2) Program established.--From the total amount reserved 
     under section 14001(c), the Secretary may reserve up to 
     $650,000,000 to establish an Innovation Fund, which shall 
     consist of academic achievement awards that recognize 
     eligible entities that meet the requirements described in 
     subsection (b).
       (3) Basis for awards.--The Secretary shall make awards to 
     eligible entities that have made significant gains in closing 
     the achievement gap as described in subsection (b)(1)--
       (A) to allow such eligible entities to expand their work 
     and serve as models for best practices;
       (B) to allow such eligible entities to work in partnership 
     with the private sector and the philanthropic community; and
       (C) to identify and document best practices that can be 
     shared, and taken to scale based on demonstrated success.
       (b) Eligibility.--To be eligible for such an award, an 
     eligible entity shall--
       (1) have significantly closed the achievement gaps between 
     groups of students described in section 1111(b)(2) of the 
     ESEA (20 U.S.C. 6311(b)(2));
       (2) have exceeded the State's annual measurable objectives 
     consistent with such section 1111(b)(2) for 2 or more 
     consecutive years or have demonstrated success in 
     significantly increasing student academic achievement for all 
     groups of students described in such section through another 
     measure, such as measures described in section 1111(c)(2) of 
     the ESEA;
       (3) have made significant improvement in other areas, such 
     as graduation rates or increased recruitment and placement of 
     high-quality teachers and school leaders, as demonstrated 
     with meaningful data; and
       (4) demonstrate that they have established partnerships 
     with the private sector, which may include philanthropic 
     organizations, and that the private sector will provide 
     matching funds in order to help bring results to scale.
       (c) Special Rule.--In the case of an eligible entity that 
     includes a nonprofit organization, the eligible entity shall 
     be considered to have met the eligibility requirements of 
     paragraphs (1), (2), (3) of subsection (b) if such nonprofit 
     organization has a record of meeting such requirements.

     SEC. 14008. STATE REPORTS.

       For each year of the program under this title, a State 
     receiving funds under this title shall submit a report to the 
     Secretary, at such time and in such manner as the Secretary 
     may require, that describes--
       (1) the uses of funds provided under this title within the 
     State;
       (2) how the State distributed the funds it received under 
     this title;
       (3) the number of jobs that the Governor estimates were 
     saved or created with funds the State received under this 
     title;
       (4) tax increases that the Governor estimates were averted 
     because of the availability of funds from this title;
       (5) the State's progress in reducing inequities in the 
     distribution of highly qualified teachers, in implementing a 
     State longitudinal data system, and in developing and 
     implementing valid and reliable assessments for limited 
     English proficient students and children with disabilities;
       (6) the tuition and fee increases for in-State students 
     imposed by public institutions of higher education in the 
     State during the period of availability of funds under this 
     title, and a description of any actions taken by the State to 
     limit those increases;
       (7) the extent to which public institutions of higher 
     education maintained, increased, or decreased enrollment of 
     in-State students, including students eligible for Pell 
     Grants or other need-based financial assistance; and
       (8) a description of each modernization, renovation and 
     repair project funded, which shall include the amounts 
     awarded and project costs.

     SEC. 14009. EVALUATION.

       The Comptroller General of the United States shall conduct 
     evaluations of the programs under sections 14006 and 14007 
     which shall include, but not be limited to, the criteria used 
     for the awards made, the States selected for awards, award 
     amounts, how each State used the award received, and the 
     impact of this funding on the progress made toward closing 
     achievement gaps.

     SEC. 14010. SECRETARY'S REPORT TO CONGRESS.

       The Secretary shall submit a report to the Committee on 
     Education and Labor of the House of Representatives, the 
     Committee on Health, Education, Labor, and Pensions of the 
     Senate, and the Committees on Appropriations of the House of 
     Representatives and of the Senate, not less than 6 months 
     following the submission of State reports, that evaluates the 
     information provided in the State reports under section 14008 
     and the information required by section 14005(b)(3) including 
     State-by-State information.

     SEC. 14011. PROHIBITION ON PROVISION OF CERTAIN ASSISTANCE.

       No recipient of funds under this title shall use such funds 
     to provide financial assistance to students to attend private 
     elementary or secondary schools.

     SEC. 14012. FISCAL RELIEF.

       (a) In General.--For the purpose of relieving fiscal 
     burdens on States and local educational agencies that have 
     experienced a precipitous decline in financial resources, the 
     Secretary of Education may waive or modify any requirement of 
     this title relating to maintaining fiscal effort.
       (b) Duration.--A waiver or modification under this section 
     shall be for any of fiscal year 2009, fiscal year 2010, or 
     fiscal year 2011, as determined by the Secretary.
       (c) Criteria.--The Secretary shall not grant a waiver or 
     modification under this section unless the Secretary 
     determines that the State or local educational agency 
     receiving such waiver or modification will not provide for 
     elementary and secondary education, for the fiscal year under 
     consideration, a smaller percentage of the total revenues 
     available to the State or local educational agency than the 
     amount provided for such purpose in the preceding fiscal 
     year.
       (d) Maintenance of Effort.--Upon prior approval from the 
     Secretary, a State or local educational agency that receives 
     funds under this title may treat any portion of such funds 
     that is used for elementary, secondary, or postsecondary 
     education as non-Federal funds for the purpose of any 
     requirement to maintain fiscal effort under any other 
     program, including part C of the Individuals with 
     Disabilities Education Act (20 U.S.C. 1431 et seq.), 
     administered by the Secretary.
       (e) Subsequent Level of Effort.--Notwithstanding (d), the 
     level of effort required by a State or local educational 
     agency for the following fiscal year shall not be reduced.

     SEC. 14013. DEFINITIONS.

       Except as otherwise provided in this title, as used in this 
     title--
       (1) the terms ``elementary education'' and ``secondary 
     education'' have the meaning given such terms under State 
     law;
       (2) the term ``high-need local educational agency'' means a 
     local educational agency--
       (A) that serves not fewer than 10,000 children from 
     families with incomes below the poverty line; or
       (B) for which not less than 20 percent of the children 
     served by the agency are from families with incomes below the 
     poverty line;
       (3) the term ``institution of higher education'' has the 
     meaning given such term in section 101 of the Higher 
     Education Act of 1965 (20 U.S.C. 1001);
       (4) the term ``Secretary'' means the Secretary of 
     Education;
       (5) the term ``State'' means each of the 50 States, the 
     District of Columbia, and the Commonwealth of Puerto Rico; 
     and
       (6) any other term used that is defined in section 9101 of 
     the ESEA (20 U.S.C. 7801) shall have the meaning given the 
     term in such section.

               TITLE XV--ACCOUNTABILITY AND TRANSPARENCY

     SEC. 1501. DEFINITIONS.

       In this title:
       (1) Agency.--The term ``agency'' has the meaning given 
     under section 551 of title 5, United States Code.
       (2) Board.--The term ``Board'' means the Recovery 
     Accountability and Transparency Board established in section 
     1521.
       (3) Chairperson.--The term ``Chairperson'' means the 
     Chairperson of the Board.
       (4) Covered funds.--The term ``covered funds'' means any 
     funds that are expended or obligated from appropriations made 
     under this Act.
       (5) Panel.--The term ``Panel'' means the Recovery 
     Independent Advisory Panel established in section 1541.

          Subtitle A--Transparency and Oversight Requirements

     SEC. 1511. CERTIFICATIONS.

       With respect to covered funds made available to State or 
     local governments for infrastructure investments, the 
     Governor, mayor, or other chief executive, as appropriate, 
     shall certify that the infrastructure investment has received 
     the full review and vetting required by law and that the 
     chief executive accepts responsibility that the 
     infrastructure investment is an appropriate use of taxpayer 
     dollars. Such certification shall include a description of 
     the investment, the estimated total cost, and the amount of 
     covered funds to be used, and shall be posted on a website 
     and linked to the website established by

[[Page 3935]]

     section 1526. A State or local agency may not receive 
     infrastructure investment funding from funds made available 
     in this Act unless this certification is made and posted.

     SEC. 1512. REPORTS ON USE OF FUNDS.

       (a) Short Title.--This section may be cited as the ``Jobs 
     Accountability Act''.
       (b) Definitions.--In this section:
       (1) Recipient.--The term ``recipient''--
       (A) means any entity that receives recovery funds directly 
     from the Federal Government (including recovery funds 
     received through grant, loan, or contract) other than an 
     individual; and
       (B) includes a State that receives recovery funds.
       (2) Recovery funds.--The term ``recovery funds'' means any 
     funds that are made available from appropriations made under 
     this Act.
       (c) Recipient Reports.--Not later than 10 days after the 
     end of each calendar quarter, each recipient that received 
     recovery funds from a Federal agency shall submit a report to 
     that agency that contains--
       (1) the total amount of recovery funds received from that 
     agency;
       (2) the amount of recovery funds received that were 
     expended or obligated to projects or activities; and
       (3) a detailed list of all projects or activities for which 
     recovery funds were expended or obligated, including--
       (A) the name of the project or activity;
       (B) a description of the project or activity;
       (C) an evaluation of the completion status of the project 
     or activity;
       (D) an estimate of the number of jobs created and the 
     number of jobs retained by the project or activity; and
       (E) for infrastructure investments made by State and local 
     governments, the purpose, total cost, and rationale of the 
     agency for funding the infrastructure investment with funds 
     made available under this Act, and name of the person to 
     contact at the agency if there are concerns with the 
     infrastructure investment.
       (4) Detailed information on any subcontracts or subgrants 
     awarded by the recipient to include the data elements 
     required to comply with the Federal Funding Accountability 
     and Transparency Act of 2006 (Public Law 109-282), allowing 
     aggregate reporting on awards below $25,000 or to 
     individuals, as prescribed by the Director of the Office of 
     Management and Budget.
       (d) Agency Reports.--Not later than 30 days after the end 
     of each calendar quarter, each agency that made recovery 
     funds available to any recipient shall make the information 
     in reports submitted under subsection (c) publicly available 
     by posting the information on a website.
       (e) Other Reports.--The Congressional Budget Office and the 
     Government Accountability Office shall comment on the 
     information described in subsection (c)(3)(D) for any reports 
     submitted under subsection (c). Such comments shall be due 
     within 45 days after such reports are submitted.
       (f) Compliance.--Within 180 days of enactment, as a 
     condition of receipt of funds under this Act, Federal 
     agencies shall require any recipient of such funds to provide 
     the information required under subsection (c).
       (g) Guidance.--Federal agencies, in coordination with the 
     Director of the Office of Management and Budget, shall 
     provide for user-friendly means for recipients of covered 
     funds to meet the requirements of this section.
       (h) Registration.--Funding recipients required to report 
     information per subsection (c)(4) must register with the 
     Central Contractor Registration database or complete other 
     registration requirements as determined by the Director of 
     the Office of Management and Budget.

     SEC. 1513. REPORTS OF THE COUNCIL OF ECONOMIC ADVISERS.

       (a) In General.--In consultation with the Director of the 
     Office of Management and Budget and the Secretary of the 
     Treasury, the Chairperson of the Council of Economic Advisers 
     shall submit quarterly reports to the Committees on 
     Appropriations of the Senate and House of Representatives 
     that detail the impact of programs funded through covered 
     funds on employment, estimated economic growth, and other key 
     economic indicators.
       (b) Submission of Reports.--
       (1) First report.--The first report submitted under 
     subsection (a) shall be submitted not later than 45 days 
     after the end of the first full quarter following the date of 
     enactment of this Act.
       (2) Last report.--The last report required to be submitted 
     under subsection (a) shall apply to the quarter in which the 
     Board terminates under section 1530.

     SEC. 1514. INSPECTOR GENERAL REVIEWS.

       (a) Reviews.--Any inspector general of a Federal department 
     or executive agency shall review, as appropriate, any 
     concerns raised by the public about specific investments 
     using funds made available in this Act. Any findings of such 
     reviews not related to an ongoing criminal proceeding shall 
     be relayed immediately to the head of the department or 
     agency concerned. In addition, the findings of such reviews, 
     along with any audits conducted by any inspector general of 
     funds made available in this Act, shall be posted on the 
     inspector general's website and linked to the website 
     established by section 1526, except that portions of reports 
     may be redacted to the extent the portions would disclose 
     information that is protected from public disclosure under 
     sections 552 and 552a of title 5, United States Code.

     SEC. 1515. ACCESS OF OFFICES OF INSPECTOR GENERAL TO CERTAIN 
                   RECORDS AND EMPLOYEES.

       (a) Access.--With respect to each contract or grant awarded 
     using covered funds, any representative of an appropriate 
     inspector general appointed under section 3 or 8G of the 
     Inspector General Act of 1978 (5 U.S.C. App.), is 
     authorized--
       (1) to examine any records of the contractor or grantee, 
     any of its subcontractors or subgrantees, or any State or 
     local agency administering such contract, that pertain to, 
     and involve transactions relating to, the contract, 
     subcontract, grant, or subgrant; and
       (2) to interview any officer or employee of the contractor, 
     grantee, subgrantee, or agency regarding such transactions.
       (b) Relationship to Existing Authority.--Nothing in this 
     section shall be interpreted to limit or restrict in any way 
     any existing authority of an inspector general.

       Subtitle B--Recovery Accountability and Transparency Board

     SEC. 1521. ESTABLISHMENT OF THE RECOVERY ACCOUNTABILITY AND 
                   TRANSPARENCY BOARD.

       There is established the Recovery Accountability and 
     Transparency Board to coordinate and conduct oversight of 
     covered funds to prevent fraud, waste, and abuse.

     SEC. 1522. COMPOSITION OF BOARD.

       (a) Chairperson.--
       (1) Designation or appointment.--The President shall--
       (A) designate the Deputy Director for Management of the 
     Office of Management and Budget to serve as Chairperson of 
     the Board;
       (B) designate another Federal officer who was appointed by 
     the President to a position that required the advice and 
     consent of the Senate, to serve as Chairperson of the Board; 
     or
       (C) appoint an individual as the Chairperson of the Board, 
     by and with the advice and consent of the Senate.
       (2) Compensation.--
       (A) Designation of federal officer.--If the President 
     designates a Federal officer under paragraph (1)(A) or (B) to 
     serve as Chairperson, that Federal officer may not receive 
     additional compensation for services performed as 
     Chairperson.
       (B) Appointment of non-federal officer.--If the President 
     appoints an individual as Chairperson under paragraph (1)(C), 
     that individual shall be compensated at the rate of basic pay 
     prescribed for level IV of the Executive Schedule under 
     section 5315 of title 5, United States Code.
       (b) Members.--The members of the Board shall include--
       (1) the Inspectors General of the Departments of 
     Agriculture, Commerce, Education, Energy, Health and Human 
     Services, Homeland Security, Justice, Transportation, 
     Treasury, and the Treasury Inspector General for Tax 
     Administration; and
       (2) any other Inspector General as designated by the 
     President from any agency that expends or obligates covered 
     funds.

     SEC. 1523. FUNCTIONS OF THE BOARD.

       (a) Functions.--
       (1) In general.--The Board shall coordinate and conduct 
     oversight of covered funds in order to prevent fraud, waste, 
     and abuse.
       (2) Specific functions.--The functions of the Board shall 
     include--
       (A) reviewing whether the reporting of contracts and grants 
     using covered funds meets applicable standards and specifies 
     the purpose of the contract or grant and measures of 
     performance;
       (B) reviewing whether competition requirements applicable 
     to contracts and grants using covered funds have been 
     satisfied;
       (C) auditing or reviewing covered funds to determine 
     whether wasteful spending, poor contract or grant management, 
     or other abuses are occurring and referring matters it 
     considers appropriate for investigation to the inspector 
     general for the agency that disbursed the covered funds;
       (D) reviewing whether there are sufficient qualified 
     acquisition and grant personnel overseeing covered funds;
       (E) reviewing whether personnel whose duties involve 
     acquisitions or grants made with covered funds receive 
     adequate training; and
       (F) reviewing whether there are appropriate mechanisms for 
     interagency collaboration relating to covered funds, 
     including coordinating and collaborating to the extent 
     practicable with the Inspectors General Council on Integrity 
     and Efficiency established by the Inspector General Reform 
     Act of 2008 (Public Law 110-409).
       (b) Reports.--
       (1) Flash and other reports.--The Board shall submit to the 
     President and Congress, including the Committees on 
     Appropriations of the Senate and House of Representatives, 
     reports, to be known as ``flash reports'', on potential 
     management and funding problems that require immediate 
     attention. The Board also shall submit to Congress such other 
     reports as the Board considers appropriate on the use and 
     benefits of funds made available in this Act.
       (2) Quarterly reports.--The Board shall submit quarterly 
     reports to the President and Congress, including the 
     Committees on Appropriations of the Senate and House of 
     Representatives, summarizing the findings of the Board and 
     the findings of inspectors general of agencies. The Board may 
     submit additional reports as appropriate.
       (3) Annual reports.--The Board shall submit annual reports 
     to the President and Congress, including the Committees on 
     Appropriations of the Senate and House of Representatives, 
     consolidating applicable quarterly reports on the use of 
     covered funds.

[[Page 3936]]

       (4) Public availability.--
       (A) In general.--All reports submitted under this 
     subsection shall be made publicly available and posted on the 
     website established by section 1526.
       (B) Redactions.--Any portion of a report submitted under 
     this subsection may be redacted when made publicly available, 
     if that portion would disclose information that is not 
     subject to disclosure under sections 552 and 552a of title 5, 
     United States Code.
       (c) Recommendations.--
       (1) In general.--The Board shall make recommendations to 
     agencies on measures to prevent fraud, waste, and abuse 
     relating to covered funds.
       (2) Responsive reports.--Not later than 30 days after 
     receipt of a recommendation under paragraph (1), an agency 
     shall submit a report to the President, the congressional 
     committees of jurisdiction, including the Committees on 
     Appropriations of the Senate and House of Representatives, 
     and the Board on--
       (A) whether the agency agrees or disagrees with the 
     recommendations; and
       (B) any actions the agency will take to implement the 
     recommendations.

     SEC. 1524. POWERS OF THE BOARD.

       (a) In General.--The Board shall conduct audits and reviews 
     of spending of covered funds and coordinate on such 
     activities with the inspectors general of the relevant agency 
     to avoid duplication and overlap of work.
       (b) Audits and Reviews.--The Board may--
       (1) conduct its own independent audits and reviews relating 
     to covered funds; and
       (2) collaborate on audits and reviews relating to covered 
     funds with any inspector general of an agency.
       (c) Authorities.--
       (1) Audits and reviews.--In conducting audits and reviews, 
     the Board shall have the authorities provided under section 6 
     of the Inspector General Act of 1978 (5 U.S.C. App.). 
     Additionally, the Board may issue subpoenas to compel the 
     testimony of persons who are not Federal officers or 
     employees and may enforce such subpoenas in the same manner 
     as provided for inspector general subpoenas under section 6 
     of the Inspector General Act of 1978 (5 U.S.C. App.).
       (2) Standards and guidelines.--The Board shall carry out 
     the powers under subsections (a) and (b) in accordance with 
     section 4(b)(1) of the Inspector General Act of 1978 (5 
     U.S.C. App.).
       (d) Public Hearings.--The Board may hold public hearings 
     and Board personnel may conduct necessary inquiries. The head 
     of each agency shall make all officers and employees of that 
     agency available to provide testimony to the Board and Board 
     personnel. The Board may issue subpoenas to compel the 
     testimony of persons who are not Federal officers or 
     employees at such public hearings. Any such subpoenas may be 
     enforced in the same manner as provided for inspector general 
     subpoenas under section 6 of the Inspector General Act of 
     1978 (5 U.S.C. App.).
       (e) Contracts.--The Board may enter into contracts to 
     enable the Board to discharge its duties under this subtitle, 
     including contracts and other arrangements for audits, 
     studies, analyses, and other services with public agencies 
     and with private persons, and make such payments as may be 
     necessary to carry out the duties of the Board.
       (f) Transfer of Funds.--The Board may transfer funds 
     appropriated to the Board for expenses to support 
     administrative support services and audits, reviews, or other 
     activities related to oversight by the Board of covered funds 
     to any office of inspector general, the Office of Management 
     and Budget, the General Services Administration, and the 
     Panel.

     SEC. 1525. EMPLOYMENT, PERSONNEL, AND RELATED AUTHORITIES.

       (a) Employment and Personnel Authorities.--
       (1) In general.--
       (A) Authorities.--Subject to paragraph (2), the Board may 
     exercise the authorities of subsections (b) through (i) of 
     section 3161 of title 5, United States Code (without regard 
     to subsection (a) of that section).
       (B) Application.--For purposes of exercising the 
     authorities described under subparagraph (A), the term 
     ``Chairperson of the Board'' shall be substituted for the 
     term ``head of a temporary organization''.
       (C) Consultation.--In exercising the authorities described 
     under subparagraph (A), the Chairperson shall consult with 
     members of the Board.
       (2) Employment authorities.--In exercising the employment 
     authorities under subsection (b) of section 3161 of title 5, 
     United States Code, as provided under paragraph (1) of this 
     subsection--
       (A) paragraph (2) of subsection (b) of section 3161 of that 
     title (relating to periods of appointments) shall not apply; 
     and
       (B) no period of appointment may exceed the date on which 
     the Board terminates under section 1530.
       (b) Information and Assistance.--
       (1) In general.--Upon request of the Board for information 
     or assistance from any agency or other entity of the Federal 
     Government, the head of such entity shall, insofar as is 
     practicable and not in contravention of any existing law, 
     furnish such information or assistance to the Board, or an 
     authorized designee.
       (2) Report of refusals.--Whenever information or assistance 
     requested by the Board is, in the judgment of the Board, 
     unreasonably refused or not provided, the Board shall report 
     the circumstances to the congressional committees of 
     jurisdiction, including the Committees on Appropriations of 
     the Senate and House of Representatives, without delay.
       (c) Administrative Support.--The General Services 
     Administration shall provide the Board with administrative 
     support services, including the provision of office space and 
     facilities.

     SEC. 1526. BOARD WEBSITE.

       (a) Establishment.--The Board shall establish and maintain, 
     no later than 30 days after enactment of this Act, a user-
     friendly, public-facing website to foster greater 
     accountability and transparency in the use of covered funds.
       (b) Purpose.--The website established and maintained under 
     subsection (a) shall be a portal or gateway to key 
     information relating to this Act and provide connections to 
     other Government websites with related information.
       (c) Content and Function.--In establishing the website 
     established and maintained under subsection (a), the Board 
     shall ensure the following:
       (1) The website shall provide materials explaining what 
     this Act means for citizens. The materials shall be easy to 
     understand and regularly updated.
       (2) The website shall provide accountability information, 
     including findings from audits, inspectors general, and the 
     Government Accountability Office.
       (3) The website shall provide data on relevant economic, 
     financial, grant, and contract information in user-friendly 
     visual presentations to enhance public awareness of the use 
     of covered funds.
       (4) The website shall provide detailed data on contracts 
     awarded by the Federal Government that expend covered funds, 
     including information about the competitiveness of the 
     contracting process, information about the process that was 
     used for the award of contracts, and for contracts over 
     $500,000 a summary of the contract.
       (5) The website shall include printable reports on covered 
     funds obligated by month to each State and congressional 
     district.
       (6) The website shall provide a means for the public to 
     give feedback on the performance of contracts that expend 
     covered funds.
       (7) The website shall include detailed information on 
     Federal Government contracts and grants that expend covered 
     funds, to include the data elements required to comply with 
     the Federal Funding Accountability and Transparency Act of 
     2006 (Public Law 109-282), allowing aggregate reporting on 
     awards below $25,000 or to individuals, as prescribed by the 
     Director of the Office of Management and Budget.
       (8) The website shall provide a link to estimates of the 
     jobs sustained or created by the Act.
       (9) The website shall provide a link to information about 
     announcements of grant competitions and solicitations for 
     contracts to be awarded.
       (10) The website shall include appropriate links to other 
     government websites with information concerning covered 
     funds, including Federal agency and State websites.
       (11) The website shall include a plan from each Federal 
     agency for using funds made available in this Act to the 
     agency.
       (12) The website shall provide information on Federal 
     allocations of formula grants and awards of competitive 
     grants using covered funds.
       (13) The website shall provide information on Federal 
     allocations of mandatory and other entitlement programs by 
     State, county, or other appropriate geographical unit.
       (14) To the extent practical, the website shall provide, 
     organized by the location of the job opportunities involved, 
     links to and information about how to access job 
     opportunities, including, if possible, links to or 
     information about local employment agencies, job banks 
     operated by State workforce agencies, the Department of 
     Labor's CareerOneStop website, State, local and other public 
     agencies receiving Federal funding, and private firms 
     contracted to perform work with Federal funding, in order to 
     direct job seekers to job opportunities created by this Act.
       (15) The website shall be enhanced and updated as necessary 
     to carry out the purposes of this subtitle.
       (d) Waiver.--The Board may exclude posting contractual or 
     other information on the website on a case-by-case basis when 
     necessary to protect national security or to protect 
     information that is not subject to disclosure under sections 
     552 and 552a of title 5, United States Code.

     SEC. 1527. INDEPENDENCE OF INSPECTORS GENERAL.

       (a) Independent Authority.--Nothing in this subtitle shall 
     affect the independent authority of an inspector general to 
     determine whether to conduct an audit or investigation of 
     covered funds.
       (b) Requests by Board.--If the Board requests that an 
     inspector general conduct or refrain from conducting an audit 
     or investigation and the inspector general rejects the 
     request in whole or in part, the inspector general shall, not 
     later than 30 days after rejecting the request, submit a 
     report to the Board, the head of the applicable agency, and 
     the congressional committees of jurisdiction, including the 
     Committees on Appropriations of the Senate and House of 
     Representatives. The report shall state the reasons that the 
     inspector general has rejected the request in whole or in 
     part. The inspector general's decision shall be final.

[[Page 3937]]



     SEC. 1528. COORDINATION WITH THE COMPTROLLER GENERAL AND 
                   STATE AUDITORS.

       The Board shall coordinate its oversight activities with 
     the Comptroller General of the United States and State 
     auditors.

     SEC. 1529. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated such sums as 
     necessary to carry out this subtitle.

     SEC. 1530. TERMINATION OF THE BOARD.

       The Board shall terminate on September 30, 2013.

            Subtitle C--Recovery Independent Advisory Panel

     SEC. 1541. ESTABLISHMENT OF RECOVERY INDEPENDENT ADVISORY 
                   PANEL.

       (a) Establishment.--There is established the Recovery 
     Independent Advisory Panel.
       (b) Membership.--The Panel shall be composed of 5 members 
     who shall be appointed by the President.
       (c) Qualifications.--Members shall be appointed on the 
     basis of expertise in economics, public finance, contracting, 
     accounting, or any other relevant field.
       (d) Initial Meeting.--Not later than 30 days after the date 
     on which all members of the Panel have been appointed, the 
     Panel shall hold its first meeting.
       (e) Meetings.--The Panel shall meet at the call of the 
     Chairperson of the Panel.
       (f) Quorum.--A majority of the members of the Panel shall 
     constitute a quorum, but a lesser number of members may hold 
     hearings.
       (g) Chairperson and Vice Chairperson.--The Panel shall 
     select a Chairperson and Vice Chairperson from among its 
     members.

     SEC. 1542. DUTIES OF THE PANEL.

       The Panel shall make recommendations to the Board on 
     actions the Board could take to prevent fraud, waste, and 
     abuse relating to covered funds.

     SEC. 1543. POWERS OF THE PANEL.

       (a) Hearings.--The Panel may hold such hearings, sit and 
     act at such times and places, take such testimony, and 
     receive such evidence as the Panel considers advisable to 
     carry out this subtitle.
       (b) Information From Federal Agencies.--The Panel may 
     secure directly from any agency such information as the Panel 
     considers necessary to carry out this subtitle. Upon request 
     of the Chairperson of the Panel, the head of such agency 
     shall furnish such information to the Panel.
       (c) Postal Services.--The Panel may use the United States 
     mails in the same manner and under the same conditions as 
     agencies of the Federal Government.
       (d) Gifts.--The Panel may accept, use, and dispose of gifts 
     or donations of services or property.

     SEC. 1544. PANEL PERSONNEL MATTERS.

       (a) Compensation of Members.--Each member of the Panel who 
     is not an officer or employee of the Federal Government shall 
     be compensated at a rate equal to the daily equivalent of the 
     annual rate of basic pay prescribed for level IV of the 
     Executive Schedule under section 5315 of title 5, United 
     States Code, for each day (including travel time) during 
     which such member is engaged in the performance of the duties 
     of the Panel. All members of the Panel who are officers or 
     employees of the United States shall serve without 
     compensation in addition to that received for their services 
     as officers or employees of the United States.
       (b) Travel Expenses.--The members of the Panel shall be 
     allowed travel expenses, including per diem in lieu of 
     subsistence, at rates authorized for employees of agencies 
     under subchapter I of chapter 57 of title 5, United States 
     Code, while away from their homes or regular places of 
     business in the performance of services for the Panel.
       (c) Staff.--
       (1) In general.--The Chairperson of the Panel may, without 
     regard to the civil service laws and regulations, appoint and 
     terminate an executive director and such other additional 
     personnel as may be necessary to enable the Panel to perform 
     its duties. The employment of an executive director shall be 
     subject to confirmation by the Panel.
       (2) Compensation.--The Chairperson of the Panel may fix the 
     compensation of the executive director and other personnel 
     without regard to chapter 51 and subchapter III of chapter 53 
     of title 5, United States Code, relating to classification of 
     positions and General Schedule pay rates, except that the 
     rate of pay for the executive director and other personnel 
     may not exceed the rate payable for level V of the Executive 
     Schedule under section 5316 of such title.
       (3) Personnel as federal employees.--
       (A) In general.--The executive director and any personnel 
     of the Panel who are employees shall be employees under 
     section 2105 of title 5, United States Code, for purposes of 
     chapters 63, 81, 83, 84, 85, 87, 89, 89A, 89B, and 90 of that 
     title.
       (B) Members of panel.--Subparagraph (A) shall not be 
     construed to apply to members of the Panel.
       (d) Detail of Government Employees.--Any Federal Government 
     employee may be detailed to the Panel without reimbursement, 
     and such detail shall be without interruption or loss of 
     civil service status or privilege.
       (e) Procurement of Temporary and Intermittent Services.--
     The Chairperson of the Panel may procure temporary and 
     intermittent services under section 3109(b) of title 5, 
     United States Code, at rates for individuals which do not 
     exceed the daily equivalent of the annual rate of basic pay 
     prescribed for level V of the Executive Schedule under 
     section 5316 of such title.
       (f) Administrative Support.--The General Services 
     Administration shall provide the Panel with administrative 
     support services, including the provision of office space and 
     facilities.

     SEC. 1545. TERMINATION OF THE PANEL.

       The Panel shall terminate on September 30, 2013.

     SEC. 1546. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated such sums as 
     necessary to carry out this subtitle.

  Subtitle D--Additional Accountability and Transparency Requirements

     SEC. 1551. AUTHORITY TO ESTABLISH SEPARATE FUNDING ACCOUNTS.

       Although this Act provides supplemental appropriations for 
     programs, projects, and activities in existing Treasury 
     accounts, to facilitate tracking these funds through Treasury 
     and agency accounting systems, the Secretary of the Treasury 
     shall ensure that all funds appropriated in this Act shall be 
     established in separate Treasury accounts, unless a waiver 
     from this provision is approved by the Director of the Office 
     of Management and Budget.

     SEC. 1552. SET-ASIDE FOR STATE AND LOCAL GOVERNMENT REPORTING 
                   AND RECORDKEEPING.

       Federal agencies receiving funds under this Act, may, after 
     following the notice and comment rulemaking requirements 
     under the Administrative Procedures Act (5 U.S.C. 500), 
     reasonably adjust applicable limits on administrative 
     expenditures for Federal awards to help award recipients 
     defray the costs of data collection requirements initiated 
     pursuant to this Act.

     SEC. 1553. PROTECTING STATE AND LOCAL GOVERNMENT AND 
                   CONTRACTOR WHISTLEBLOWERS.

       (a) Prohibition of Reprisals.--An employee of any non-
     Federal employer receiving covered funds may not be 
     discharged, demoted, or otherwise discriminated against as a 
     reprisal for disclosing, including a disclosure made in the 
     ordinary course of an employee's duties, to the Board, an 
     inspector general, the Comptroller General, a member of 
     Congress, a State or Federal regulatory or law enforcement 
     agency, a person with supervisory authority over the employee 
     (or such other person working for the employer who has the 
     authority to investigate, discover, or terminate misconduct), 
     a court or grand jury, the head of a Federal agency, or their 
     representatives, information that the employee reasonably 
     believes is evidence of--
       (1) gross mismanagement of an agency contract or grant 
     relating to covered funds;
       (2) a gross waste of covered funds;
       (3) a substantial and specific danger to public health or 
     safety related to the implementation or use of covered funds;
       (4) an abuse of authority related to the implementation or 
     use of covered funds; or
       (5) a violation of law, rule, or regulation related to an 
     agency contract (including the competition for or negotiation 
     of a contract) or grant, awarded or issued relating to 
     covered funds.
       (b) Investigation of Complaints.--
       (1) In general.--A person who believes that the person has 
     been subjected to a reprisal prohibited by subsection (a) may 
     submit a complaint regarding the reprisal to the appropriate 
     inspector general. Except as provided under paragraph (3), 
     unless the inspector general determines that the complaint is 
     frivolous, does not relate to covered funds, or another 
     Federal or State judicial or administrative proceeding has 
     previously been invoked to resolve such complaint, the 
     inspector general shall investigate the complaint and, upon 
     completion of such investigation, submit a report of the 
     findings of the investigation to the person, the person's 
     employer, the head of the appropriate agency, and the Board.
       (2) Time limitations for actions.--
       (A) In general.--Except as provided under subparagraph (B), 
     the inspector general shall, not later than 180 days after 
     receiving a complaint under paragraph (1)--
       (i) make a determination that the complaint is frivolous, 
     does not relate to covered funds, or another Federal or State 
     judicial or administrative proceeding has previously been 
     invoked to resolve such complaint; or
       (ii) submit a report under paragraph (1).
       (B) Extensions.--
       (i) Voluntary extension agreed to between inspector general 
     and complainant.--If the inspector general is unable to 
     complete an investigation under this section in time to 
     submit a report within the 180-day period specified under 
     subparagraph (A) and the person submitting the complaint 
     agrees to an extension of time, the inspector general shall 
     submit a report under paragraph (1) within such additional 
     period of time as shall be agreed upon between the inspector 
     general and the person submitting the complaint.
       (ii) Extension granted by inspector general.--If the 
     inspector general is unable to complete an investigation 
     under this section in time to submit a report within the 180-
     day period specified under subparagraph (A), the inspector 
     general may extend the period for not more than 180 days 
     without agreeing with the person submitting the complaint to 
     such extension, provided that the inspector general provides 
     a written explanation (subject to the authority to exclude 
     information under paragraph (4)(C)) for the decision, which 
     shall be provided to both the person submitting the complaint 
     and the non-Federal employer.

[[Page 3938]]

       (iii) Semi-annual report on extensions.--The inspector 
     general shall include in semi-annual reports to Congress a 
     list of those investigations for which the inspector general 
     received an extension.
       (3) Discretion not to investigate complaints.--
       (A) In general.--The inspector general may decide not to 
     conduct or continue an investigation under this section upon 
     providing to the person submitting the complaint and the non-
     Federal employer a written explanation (subject to the 
     authority to exclude information under paragraph (4)(C)) for 
     such decision.
       (B) Assumption of rights to civil remedy.--Upon receipt of 
     an explanation of a decision not to conduct or continue an 
     investigation under subparagraph (A), the person submitting a 
     complaint shall immediately assume the right to a civil 
     remedy under subsection (c)(3) as if the 210-day period 
     specified under such subsection has already passed.
       (C) Semi-annual report.--The inspector general shall 
     include in semi-annual reports to Congress a list of those 
     investigations the inspector general decided not to conduct 
     or continue under this paragraph.
       (4) Access to investigative file of inspector general.--
       (A) In general.--The person alleging a reprisal under this 
     section shall have access to the investigation file of the 
     appropriate inspector general in accordance with section 552a 
     of title 5, United States Code (commonly referred to as the 
     ``Privacy Act''). The investigation of the inspector general 
     shall be deemed closed for purposes of disclosure under such 
     section when an employee files an appeal to an agency head or 
     a court of competent jurisdiction.
       (B) Civil action.--In the event the person alleging the 
     reprisal brings suit under subsection (c)(3), the person 
     alleging the reprisal and the non-Federal employer shall have 
     access to the investigative file of the inspector general in 
     accordance with the Privacy Act.
       (C) Exception.--The inspector general may exclude from 
     disclosure--
       (i) information protected from disclosure by a provision of 
     law; and
       (ii) any additional information the inspector general 
     determines disclosure of which would impede a continuing 
     investigation, provided that such information is disclosed 
     once such disclosure would no longer impede such 
     investigation, unless the inspector general determines that 
     disclosure of law enforcement techniques, procedures, or 
     information could reasonably be expected to risk 
     circumvention of the law or disclose the identity of a 
     confidential source.
       (5) Privacy of information.--An inspector general 
     investigating an alleged reprisal under this section may not 
     respond to any inquiry or disclose any information from or 
     about any person alleging such reprisal, except in accordance 
     with the provisions of section 552a of title 5, United States 
     Code, or as required by any other applicable Federal law.
       (c) Remedy and Enforcement Authority.--
       (1) Burden of proof.--
       (A) Disclosure as contributing factor in reprisal.--
       (i) In general.--A person alleging a reprisal under this 
     section shall be deemed to have affirmatively established the 
     occurrence of the reprisal if the person demonstrates that a 
     disclosure described in subsection (a) was a contributing 
     factor in the reprisal.
       (ii) Use of circumstantial evidence.--A disclosure may be 
     demonstrated as a contributing factor in a reprisal for 
     purposes of this paragraph by circumstantial evidence, 
     including--

       (I) evidence that the official undertaking the reprisal 
     knew of the disclosure; or
       (II) evidence that the reprisal occurred within a period of 
     time after the disclosure such that a reasonable person could 
     conclude that the disclosure was a contributing factor in the 
     reprisal.

       (B) Opportunity for rebuttal.--The head of an agency may 
     not find the occurrence of a reprisal with respect to a 
     reprisal that is affirmatively established under subparagraph 
     (A) if the non-Federal employer demonstrates by clear and 
     convincing evidence that the non-Federal employer would have 
     taken the action constituting the reprisal in the absence of 
     the disclosure.
       (2) Agency action.--Not later than 30 days after receiving 
     an inspector general report under subsection (b), the head of 
     the agency concerned shall determine whether there is 
     sufficient basis to conclude that the non-Federal employer 
     has subjected the complainant to a reprisal prohibited by 
     subsection (a) and shall either issue an order denying relief 
     in whole or in part or shall take 1 or more of the following 
     actions:
       (A) Order the employer to take affirmative action to abate 
     the reprisal.
       (B) Order the employer to reinstate the person to the 
     position that the person held before the reprisal, together 
     with the compensation (including back pay), compensatory 
     damages, employment benefits, and other terms and conditions 
     of employment that would apply to the person in that position 
     if the reprisal had not been taken.
       (C) Order the employer to pay the complainant an amount 
     equal to the aggregate amount of all costs and expenses 
     (including attorneys' fees and expert witnesses' fees) that 
     were reasonably incurred by the complainant for, or in 
     connection with, bringing the complaint regarding the 
     reprisal, as determined by the head of the agency or a court 
     of competent jurisdiction.
       (3) Civil action.--If the head of an agency issues an order 
     denying relief in whole or in part under paragraph (1), has 
     not issued an order within 210 days after the submission of a 
     complaint under subsection (b), or in the case of an 
     extension of time under subsection (b)(2)(B)(i), within 30 
     days after the expiration of the extension of time, or 
     decides under subsection (b)(3) not to investigate or to 
     discontinue an investigation, and there is no showing that 
     such delay or decision is due to the bad faith of the 
     complainant, the complainant shall be deemed to have 
     exhausted all administrative remedies with respect to the 
     complaint, and the complainant may bring a de novo action at 
     law or equity against the employer to seek compensatory 
     damages and other relief available under this section in the 
     appropriate district court of the United States, which shall 
     have jurisdiction over such an action without regard to the 
     amount in controversy. Such an action shall, at the request 
     of either party to the action, be tried by the court with a 
     jury.
       (4) Judicial enforcement of order.--Whenever a person fails 
     to comply with an order issued under paragraph (2), the head 
     of the agency shall file an action for enforcement of such 
     order in the United States district court for a district in 
     which the reprisal was found to have occurred. In any action 
     brought under this paragraph, the court may grant appropriate 
     relief, including injunctive relief, compensatory and 
     exemplary damages, and attorneys fees and costs.
       (5) Judicial review.--Any person adversely affected or 
     aggrieved by an order issued under paragraph (2) may obtain 
     review of the order's conformance with this subsection, and 
     any regulations issued to carry out this section, in the 
     United States court of appeals for a circuit in which the 
     reprisal is alleged in the order to have occurred. No 
     petition seeking such review may be filed more than 60 days 
     after issuance of the order by the head of the agency. Review 
     shall conform to chapter 7 of title 5, United States Code.
       (d) Nonenforceability of Certain Provisions Waiving Rights 
     and Remedies or Requiring Arbitration of Disputes.--
       (1) Waiver of rights and remedies.--Except as provided 
     under paragraph (3), the rights and remedies provided for in 
     this section may not be waived by any agreement, policy, 
     form, or condition of employment, including by any predispute 
     arbitration agreement.
       (2) Predispute arbitration agreements.--Except as provided 
     under paragraph (3), no predispute arbitration agreement 
     shall be valid or enforceable if it requires arbitration of a 
     dispute arising under this section.
       (3) Exception for collective bargaining agreements.--
     Notwithstanding paragraphs (1) and (2), an arbitration 
     provision in a collective bargaining agreement shall be 
     enforceable as to disputes arising under the collective 
     bargaining agreement.
       (e) Requirement to Post Notice of Rights and Remedies.--Any 
     employer receiving covered funds shall post notice of the 
     rights and remedies provided under this section.
       (f) Rules of Construction.--
       (1) No implied authority to retaliate for non-protected 
     disclosures.--Nothing in this section may be construed to 
     authorize the discharge of, demotion of, or discrimination 
     against an employee for a disclosure other than a disclosure 
     protected by subsection (a) or to modify or derogate from a 
     right or remedy otherwise available to the employee.
       (2) Relationship to state laws.--Nothing may be construed 
     to preempt, preclude, or limit the protections provided for 
     public or private employees under State whistleblower laws.
       (g) Definitions.--In this section:
       (1) Abuse of authority.--The term ``abuse of authority'' 
     means an arbitrary and capricious exercise of authority by a 
     contracting official or employee that adversely affects the 
     rights of any person, or that results in personal gain or 
     advantage to the official or employee or to preferred other 
     persons.
       (2) Covered funds.--The term ``covered funds'' means any 
     contract, grant, or other payment received by any non-Federal 
     employer if--
       (A) the Federal Government provides any portion of the 
     money or property that is provided, requested, or demanded; 
     and
       (B) at least some of the funds are appropriated or 
     otherwise made available by this Act.
       (3) Employee.--The term ``employee''--
       (A) except as provided under subparagraph (B), means an 
     individual performing services on behalf of an employer; and
       (B) does not include any Federal employee or member of the 
     uniformed services (as that term is defined in section 
     101(a)(5) of title 10, United States Code).
       (4) Non-federal employer.--The term ``non-Federal 
     employer''--
       (A) means any employer--
       (i) with respect to covered funds--

       (I) the contractor, subcontractor, grantee, or recipient, 
     as the case may be, if the contractor, subcontractor, 
     grantee, or recipient is an employer; and
       (II) any professional membership organization, 
     certification or other professional body, any agent or 
     licensee of the Federal government, or any person acting 
     directly or indirectly in the interest of an employer 
     receiving covered funds; or

       (ii) with respect to covered funds received by a State or 
     local government, the State or local government receiving the 
     funds and any contractor or subcontractor of the State or 
     local government; and
       (B) does not mean any department, agency, or other entity 
     of the Federal Government.
       (5) State or local government.--The term ``State or local 
     government'' means--

[[Page 3939]]

       (A) the government of each of the several States, the 
     District of Columbia, the Commonwealth of Puerto Rico, Guam, 
     American Samoa, the Virgin Islands, the Commonwealth of the 
     Northern Mariana Islands, or any other territory or 
     possession of the United States; or
       (B) the government of any political subdivision of a 
     government listed in subparagraph (A).

     SEC. 1554. SPECIAL CONTRACTING PROVISIONS.

       To the maximum extent possible, contracts funded under this 
     Act shall be awarded as fixed-price contracts through the use 
     of competitive procedures. A summary of any contract awarded 
     with such funds that is not fixed-price and not awarded using 
     competitive procedures shall be posted in a special section 
     of the website established in section 1526.

                TITLE XVI--GENERAL PROVISIONS--THIS ACT


                  RELATIONSHIP TO OTHER APPROPRIATIONS

       Sec. 1601.  Each amount appropriated or made available in 
     this Act is in addition to amounts otherwise appropriated for 
     the fiscal year involved. Enactment of this Act shall have no 
     effect on the availability of amounts under the Continuing 
     Appropriations Resolution, 2009 (division A of Public Law 
     110-329).


                 PREFERENCE FOR QUICK-START ACTIVITIES

       Sec. 1602. In using funds made available in this Act for 
     infrastructure investment, recipients shall give preference 
     to activities that can be started and completed 
     expeditiously, including a goal of using at least 50 percent 
     of the funds for activities that can be initiated not later 
     than 120 days after the date of the enactment of this Act. 
     Recipients shall also use grant funds in a manner that 
     maximizes job creation and economic benefit.


                         PERIOD OF AVAILABILITY

       Sec. 1603. All funds appropriated in this Act shall remain 
     available for obligation until September 30, 2010, unless 
     expressly provided otherwise in this Act.


                             LIMIT ON FUNDS

       Sec. 1604. None of the funds appropriated or otherwise made 
     available in this Act may be used by any State or local 
     government, or any private entity, for any casino or other 
     gambling establishment, aquarium, zoo, golf course, or 
     swimming pool.


                              BUY AMERICAN

       Sec. 1605.  Use of American Iron, Steel, and Manufactured 
     Goods. (a) None of the funds appropriated or otherwise made 
     available by this Act may be used for a project for the 
     construction, alteration, maintenance, or repair of a public 
     building or public work unless all of the iron, steel, and 
     manufactured goods used in the project are produced in the 
     United States.
       (b) Subsection (a) shall not apply in any case or category 
     of cases in which the head of the Federal department or 
     agency involved finds that--
       (1) applying subsection (a) would be inconsistent with the 
     public interest;
       (2) iron, steel, and the relevant manufactured goods are 
     not produced in the United States in sufficient and 
     reasonably available quantities and of a satisfactory 
     quality; or
       (3) inclusion of iron, steel, and manufactured goods 
     produced in the United States will increase the cost of the 
     overall project by more than 25 percent.
       (c) If the head of a Federal department or agency 
     determines that it is necessary to waive the application of 
     subsection (a) based on a finding under subsection (b), the 
     head of the department or agency shall publish in the Federal 
     Register a detailed written justification as to why the 
     provision is being waived.
       (d) This section shall be applied in a manner consistent 
     with United States obligations under international 
     agreements.


                         WAGE RATE REQUIREMENTS

       Sec. 1606. Notwithstanding any other provision of law and 
     in a manner consistent with other provisions in this Act, all 
     laborers and mechanics employed by contractors and 
     subcontractors on projects funded directly by or assisted in 
     whole or in part by and through the Federal Government 
     pursuant to this Act shall be paid wages at rates not less 
     than those prevailing on projects of a character similar in 
     the locality as determined by the Secretary of Labor in 
     accordance with subchapter IV of chapter 31 of title 40, 
     United States Code. With respect to the labor standards 
     specified in this section, the Secretary of Labor shall have 
     the authority and functions set forth in Reorganization Plan 
     Numbered 14 of 1950 (64 Stat. 1267; 5 U.S.C. App.) and 
     section 3145 of title 40, United States Code.


  ADDITIONAL FUNDING DISTRIBUTION AND ASSURANCE OF APPROPRIATE USE OF 
                                 FUNDS

       Sec. 1607. (a) Certification by Governor.--Not later than 
     45 days after the date of enactment of this Act, for funds 
     provided to any State or agency thereof, the Governor of the 
     State shall certify that: (1) the State will request and use 
     funds provided by this Act; and (2) the funds will be used to 
     create jobs and promote economic growth.
       (b) Acceptance by State Legislature.--If funds provided to 
     any State in any division of this Act are not accepted for 
     use by the Governor, then acceptance by the State 
     legislature, by means of the adoption of a concurrent 
     resolution, shall be sufficient to provide funding to such 
     State.
       (c) Distribution.--After the adoption of a State 
     legislature's concurrent resolution, funding to the State 
     will be for distribution to local governments, councils of 
     government, public entities, and public-private entities 
     within the State either by formula or at the State's 
     discretion.


                   economic stabilization contracting

       Sec. 1608. Reform of Contracting Procedures Under EESA. 
     Section 107(b) of the Emergency Economic Stabilization Act of 
     2008 (12 U.S.C. 5217(b)) is amended by inserting ``and 
     individuals with disabilities and businesses owned by 
     individuals with disabilities (for purposes of this 
     subsection the term `individual with disability' has the same 
     meaning as the term `handicapped individual' as that term is 
     defined in section 3(f) of the Small Business Act (15 U.S.C. 
     632(f)),'' after ``(12 U.S.C. 1441a(r)(4)),''.
       Sec. 1609. (a) Findings.--
       (1) The National Environmental Policy Act protects public 
     health, safety and environmental quality: by ensuring 
     transparency, accountability and public involvement in 
     federal actions and in the use of public funds;
       (2) When President Nixon signed the National Environmental 
     Policy Act into law on January 1, 1970, he said that the Act 
     provided the ``direction'' for the country to ``regain a 
     productive harmony between man and nature'';
       (3) The National Environmental Policy Act helps to provide 
     an orderly process for considering federal actions and 
     funding decisions and prevents ligation and delay that would 
     otherwise be inevitable and existed prior to the 
     establishment of the National Environmental Policy Act.
       (b) Adequate resources within this bill must be devoted to 
     ensuring that applicable environmental reviews under the 
     National Environmental Policy Act are completed on an 
     expeditious basis and that the shortest existing applicable 
     process under the National Environmental Policy Act shall be 
     utilized.
       (c) The President shall report to the Senate Environment 
     and Public Works Committee and the House Natural Resources 
     Committee every 90 days following the date of enactment until 
     September 30, 2011 on the status and progress of projects and 
     activities funded by this Act with respect to compliance with 
     National Environmental Policy Act requirements and 
     documentation.
       Sec. 1610. (a) None of the funds appropriated or otherwise 
     made available by this Act, for projects initiated after the 
     effective date of this Act, may be used by an executive 
     agency to enter into any Federal contract unless such 
     contract is entered into in accordance with the Federal 
     Property and Administrative Services Act (41 U.S.C. 253) or 
     chapter 137 of title 10, United States Code, and the Federal 
     Acquisition Regulation, unless such contract is otherwise 
     authorized by statute to be entered into without regard to 
     the above referenced statutes.
       (b) All projects to be conducted under the authority of the 
     Indian Self-Determination and Education Assistance Act, the 
     Tribally-Controlled Schools Act, the Sanitation and 
     Facilities Act, the Native American Housing and Self-
     Determination Assistance Act and the Buy-Indian Act shall be 
     identified by the appropriate Secretary and the appropriate 
     Secretary shall incorporate provisions to ensure that the 
     agreement conforms with the provisions of this Act regarding 
     the timing for use of funds and transparency, oversight, 
     reporting, and accountability, including review by the 
     Inspectors General, the Accountability and Transparency 
     Board, and Government Accountability Office, consistent with 
     the objectives of this Act.
       Sec. 1611. Hiring American Workers in Companies Receiving 
     TARP Funding. (a) Short Title.--This section may be cited as 
     the ``Employ American Workers Act''.
       (b) Prohibition.--
       (1) In general.--Notwithstanding any other provision of 
     law, it shall be unlawful for any recipient of funding under 
     title I of the Emergency Economic Stabilization Act of 2008 
     (Public Law 110-343) or section 13 of the Federal Reserve Act 
     (12 U.S.C. 342 et seq.) to hire any nonimmigrant described in 
     section 101(a)(15)(h)(i)(b) of the Immigration and 
     Nationality Act (8 U.S.C. 1101(a)(15)(h)(i)(b)) unless the 
     recipient is in compliance with the requirements for an H-1B 
     dependent employer (as defined in section 212(n)(3) of such 
     Act (8 U.S.C. 1182(n)(3))), except that the second sentence 
     of section 212(n)(1)(E)(ii) of such Act shall not apply.
       (2) Defined term.--In this subsection, the term ``hire'' 
     means to permit a new employee to commence a period of 
     employment.
       (c) Sunset Provision.--This section shall be effective 
     during the 2-year period beginning on the date of the 
     enactment of this Act.
       Sec. 1612. During the current fiscal year not to exceed 1 
     percent of any appropriation made available by this Act may 
     be transferred by an agency head between such appropriations 
     funded in this Act of that department or agency: Provided, 
     That such appropriations shall be merged with and available 
     for the same purposes, and for the same time period, as the 
     appropriation to which transferred: Provided further, That 
     the agency head shall notify the Committees on Appropriations 
     of the Senate and House of Representatives of the transfer 15 
     days in advance: Provided further, That notice of any 
     transfer made pursuant to this authority be posted on the 
     website established by the Recovery Act Accountability and 
     Transparency Board 15 days following such transfer: Provided 
     further, That the authority contained in this section is in 
     addition to transfer authorities otherwise available under 
     current law: Provided further, That the authority provided in 
     this section shall not apply to any appropriation that is 
     subject to transfer provisions included elsewhere in this 
     Act.

[[Page 3940]]



 DIVISION B--TAX, UNEMPLOYMENT, HEALTH, STATE FISCAL RELIEF, AND OTHER 
                               PROVISIONS

                        TITLE I--TAX PROVISIONS

     SEC. 1000. SHORT TITLE, ETC.

       (a) Short Title.--This title may be cited as the ``American 
     Recovery and Reinvestment Tax Act of 2009''.
       (b) Reference.--Except as otherwise expressly provided, 
     whenever in this title 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 
     title is as follows:

                        TITLE I--TAX PROVISIONS

Sec. 1000. Short title, etc.

          Subtitle A--Tax Relief for Individuals and Families

                       PART I--General Tax Relief

Sec. 1001. Making work pay credit.
Sec. 1002. Temporary increase in earned income tax credit.
Sec. 1003. Temporary increase of refundable portion of child credit.
Sec. 1004. American opportunity tax credit.
Sec. 1005. Computer technology and equipment allowed as a qualified 
              higher education expense for section 529 accounts in 2009 
              and 2010.
Sec. 1006. Extension of and increase in first-time homebuyer credit; 
              waiver of requirement to repay.
Sec. 1007. Suspension of tax on portion of unemployment compensation.
Sec. 1008. Additional deduction for State sales tax and excise tax on 
              the purchase of certain motor vehicles.

                PART II--Alternative Minimum Tax Relief

Sec. 1011. Extension of alternative minimum tax relief for 
              nonrefundable personal credits.
Sec. 1012. Extension of increased alternative minimum tax exemption 
              amount.

                     Subtitle B--Energy Incentives

                  PART I--Renewable Energy Incentives

Sec. 1101. Extension of credit for electricity produced from certain 
              renewable resources.
Sec. 1102. Election of investment credit in lieu of production credit.
Sec. 1103. Repeal of certain limitations on credit for renewable energy 
              property.
Sec. 1104. Coordination with renewable energy grants.

PART II--Increased Allocations of New Clean Renewable Energy Bonds and 
                  Qualified Energy Conservation Bonds

Sec. 1111. Increased limitation on issuance of new clean renewable 
              energy bonds.
Sec. 1112. Increased limitation on issuance of qualified energy 
              conservation bonds.

                PART III--Energy Conservation Incentives

Sec. 1121. Extension and modification of credit for nonbusiness energy 
              property.
Sec. 1122. Modification of credit for residential energy efficient 
              property.
Sec. 1123. Temporary increase in credit for alternative fuel vehicle 
              refueling property.

    PART IV--Modification of Credit for Carbon Dioxide Sequestration

Sec. 1131. Application of monitoring requirements to carbon dioxide 
              used as a tertiary injectant.

             PART V--Plug-in Electric Drive Motor Vehicles

Sec. 1141. Credit for new qualified plug-in electric drive motor 
              vehicles.
Sec. 1142. Credit for certain plug-in electric vehicles.
Sec. 1143. Conversion kits.
Sec. 1144. Treatment of alternative motor vehicle credit as a personal 
              credit allowed against AMT.

           PART VI--Parity for Transportation Fringe Benefits

Sec. 1151. Increased exclusion amount for commuter transit benefits and 
              transit passes.

                Subtitle C--Tax Incentives for Business

                PART I--Temporary Investment Incentives

Sec. 1201. Special allowance for certain property acquired during 2009.
Sec. 1202. Temporary increase in limitations on expensing of certain 
              depreciable business assets.

                   PART II--Small Business Provisions

Sec. 1211. 5-year carryback of operating losses of small businesses.
Sec. 1212. Decreased required estimated tax payments in 2009 for 
              certain small businesses.

                   PART III--Incentives for New Jobs

Sec. 1221. Incentives to hire unemployed veterans and disconnected 
              youth.

              PART IV--Rules Relating to Debt Instruments

Sec. 1231. Deferral and ratable inclusion of income arising from 
              business indebtedness discharged by the reacquisition of 
              a debt instrument.
Sec. 1232. Modifications of rules for original issue discount on 
              certain high yield obligations.

                 PART V--Qualified Small Business Stock

Sec. 1241. Special rules applicable to qualified small business stock 
              for 2009 and 2010.

                        PART VI--S Corporations

Sec. 1251. Temporary reduction in recognition period for built-in gains 
              tax.

             PART VII--Rules Relating to Ownership Changes

Sec. 1261. Clarification of regulations related to limitations on 
              certain built-in losses following an ownership change.
Sec. 1262. Treatment of certain ownership changes for purposes of 
              limitations on net operating loss carryforwards and 
              certain built-in losses.

             Subtitle D--Manufacturing Recovery Provisions

Sec. 1301. Temporary expansion of availability of industrial 
              development bonds to facilities manufacturing intangible 
              property.
Sec. 1302. Credit for investment in advanced energy facilities.

                  Subtitle E--Economic Recovery Tools

Sec. 1401. Recovery zone bonds.
Sec. 1402. Tribal economic development bonds.
Sec. 1403. Increase in new markets tax credit.
Sec. 1404. Coordination of low-income housing credit and low-income 
              housing grants.

               Subtitle F--Infrastructure Financing Tools

          PART I--Improved Marketability for Tax-Exempt Bonds

Sec. 1501. De minimis safe harbor exception for tax-exempt interest 
              expense of financial institutions.
Sec. 1502. Modification of small issuer exception to tax-exempt 
              interest expense allocation rules for financial 
              institutions.
Sec. 1503. Temporary modification of alternative minimum tax 
              limitations on tax-exempt bonds.
Sec. 1504. Modification to high speed intercity rail facility bonds.

    PART II--Delay in Application of Withholding Tax on Government 
                              Contractors

Sec. 1511. Delay in application of withholding tax on government 
              contractors.

                 PART III--Tax Credit Bonds for Schools

Sec. 1521. Qualified school construction bonds.
Sec. 1522. Extension and expansion of qualified zone academy bonds.

                      PART IV--Build America Bonds

Sec. 1531. Build America bonds.

PART V--Regulated Investment Companies Allowed to Pass-Thru Tax Credit 
                              Bond Credits

Sec. 1541. Regulated investment companies allowed to pass-thru tax 
              credit bond credits.

                      Subtitle G--Other Provisions

Sec. 1601. Application of certain labor standards to projects financed 
              with certain tax-favored bonds.
Sec. 1602. Grants to States for low-income housing projects in lieu of 
              low-income housing credit allocations for 2009.
Sec. 1603. Grants for specified energy property in lieu of tax credits.
Sec. 1604. Increase in public debt limit.

 Subtitle H--Prohibition on Collection of Certain Payments Made Under 
          the Continued Dumping and Subsidy Offset Act of 2000

Sec. 1701. Prohibition on collection of certain payments made under the 
              Continued Dumping and Subsidy Offset Act of 2000.

                Subtitle I--Trade Adjustment Assistance

Sec. 1800. Short title.

            PART I--Trade Adjustment Assistance for Workers

   subpart a--trade adjustment assistance for service sector workers

Sec. 1801. Extension of trade adjustment assistance to service sector 
              and public agency workers; shifts in production.
Sec. 1802. Separate basis for certification.
Sec. 1803. Determinations by Secretary of Labor.
Sec. 1804. Monitoring and reporting relating to service sector.

    subpart b--industry notifications following certain affirmative 
                             determinations

Sec. 1811. Notifications following certain affirmative determinations.
Sec. 1812. Notification to Secretary of Commerce.

                      subpart c--program benefits

Sec. 1821. Qualifying Requirements for Workers.
Sec. 1822. Weekly amounts.
Sec. 1823. Limitations on trade readjustment allowances; allowances for 
              extended training and breaks in training.
Sec. 1824. Special rules for calculation of eligibility period.
Sec. 1825. Application of State laws and regulations on good cause for 
              waiver of time limits or late filing of claims.
Sec. 1826. Employment and case management services.

[[Page 3941]]

Sec. 1827. Administrative expenses and employment and case management 
              services.
Sec. 1828. Training funding.
Sec. 1829. Prerequisite education; approved training programs.
Sec. 1830. Pre-layoff and part-time training.
Sec. 1831. On-the-job training.
Sec. 1832. Eligibility for unemployment insurance and program benefits 
              while in training.
Sec. 1833. Job search and relocation allowances.

      subpart d--reemployment trade adjustment assistance program

Sec. 1841. Reemployment trade adjustment assistance program.

                        subpart e--other matters

Sec. 1851. Office of Trade Adjustment Assistance.
Sec. 1852. Accountability of State agencies; collection and publication 
              of program data; agreements with States.
Sec. 1853. Verification of eligibility for program benefits.
Sec. 1854. Collection of data and reports; information to workers.
Sec. 1855. Fraud and recovery of overpayments.
Sec. 1856. Sense of Congress on application of trade adjustment 
              assistance.
Sec. 1857. Consultations in promulgation of regulations.
Sec. 1858. Technical corrections.

             PART II--Trade Adjustment Assistance for Firms

Sec. 1861. Expansion to service sector firms.
Sec. 1862. Modification of requirements for certification.
Sec. 1863. Basis for determinations.
Sec. 1864. Oversight and administration; authorization of 
              appropriations.
Sec. 1865. Increased penalties for false statements.
Sec. 1866. Annual report on trade adjustment assistance for firms.
Sec. 1867. Technical corrections.

         PART III--Trade Adjustment Assistance for Communities

Sec. 1871. Purpose.
Sec. 1872. Trade adjustment assistance for communities.
Sec. 1873. Conforming amendments.

            PART IV--Trade Adjustment Assistance for Farmers

Sec. 1881. Definitions.
Sec. 1882. Eligibility.
Sec. 1883. Benefits.
Sec. 1884. Report.
Sec. 1885. Fraud and recovery of overpayments.
Sec. 1886. Determination of increases of imports for certain fishermen.
Sec. 1887. Extension of trade adjustment assistance for farmers.

                       PART V--General Provisions

Sec. 1891. Effective date.
Sec. 1892. Extension of trade adjustment assistance programs.
Sec. 1893. Termination; related provisions.
Sec. 1894. Government Accountability Office report.
Sec. 1895. Emergency designation.

                  PART VI--Health Coverage Improvement

Sec. 1899. Short title.
Sec. 1899A. Improvement of the affordability of the credit.
Sec. 1899B. Payment for monthly premiums paid prior to commencement of 
              advance payments of credit.
Sec. 1899C. TAA recipients not enrolled in training programs eligible 
              for credit.
Sec. 1899D. TAA pre-certification period rule for purposes of 
              determining whether there is a 63-day lapse in creditable 
              coverage.
Sec. 1899E. Continued qualification of family members after certain 
              events.
Sec. 1899F. Extension of COBRA benefits for certain TAA-eligible 
              individuals and PBGC recipients.
Sec. 1899G. Addition of coverage through voluntary employees' 
              beneficiary associations.
Sec. 1899H. Notice requirements.
Sec. 1899I. Survey and report on enhanced health coverage tax credit 
              program.
Sec. 1899J. Authorization of appropriations.
Sec. 1899K. Extension of national emergency grants.
Sec. 1899L. GAO study and report.

          Subtitle A--Tax Relief for Individuals and Families

                       PART I--GENERAL TAX RELIEF

     SEC. 1001. MAKING WORK PAY CREDIT.

       (a) In General.--Subpart C of part IV of subchapter A of 
     chapter 1 is amended by inserting after section 36 the 
     following new section:

     ``SEC. 36A. MAKING WORK PAY CREDIT.

       ``(a) Allowance of Credit.--In the case of an eligible 
     individual, there shall be allowed as a credit against the 
     tax imposed by this subtitle for the taxable year an amount 
     equal to the lesser of--
       ``(1) 6.2 percent of earned income of the taxpayer, or
       ``(2) $400 ($800 in the case of a joint return).
       ``(b) Limitation Based on Modified Adjusted Gross Income.--
       ``(1) In general.--The amount allowable as a credit under 
     subsection (a) (determined without regard to this paragraph 
     and subsection (c)) for the taxable year shall be reduced 
     (but not below zero) by 2 percent of so much of the 
     taxpayer's modified adjusted gross income as exceeds $75,000 
     ($150,000 in the case of a joint return).
       ``(2) Modified adjusted gross income.--For purposes of 
     subparagraph (A), the term `modified adjusted gross income' 
     means the adjusted gross income of the taxpayer for the 
     taxable year increased by any amount excluded from gross 
     income under section 911, 931, or 933.
       ``(c) Reduction for Certain Other Payments.--The credit 
     allowed under subsection (a) for any taxable year shall be 
     reduced by the amount of any payments received by the 
     taxpayer during such taxable year under section 2201, and any 
     credit allowed to the taxpayer under section 2202, of the 
     American Recovery and Reinvestment Tax Act of 2009.
       ``(d) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Eligible individual.--
       ``(A) In general.--The term `eligible individual' means any 
     individual other than--
       ``(i) any nonresident alien individual,
       ``(ii) any individual with respect to whom a deduction 
     under section 151 is allowable to another taxpayer for a 
     taxable year beginning in the calendar year in which the 
     individual's taxable year begins, and
       ``(iii) an estate or trust.
       ``(B) Identification number requirement.--Such term shall 
     not include any individual who does not include on the return 
     of tax for the taxable year--
       ``(i) such individual's social security account number, and
       ``(ii) in the case of a joint return, the social security 
     account number of one of the taxpayers on such return.
     For purposes of the preceding sentence, the social security 
     account number shall not include a TIN issued by the Internal 
     Revenue Service.
       ``(2) Earned income.--The term `earned income' has the 
     meaning given such term by section 32(c)(2), except that such 
     term shall not include net earnings from self-employment 
     which are not taken into account in computing taxable income. 
     For purposes of the preceding sentence, any amount excluded 
     from gross income by reason of section 112 shall be treated 
     as earned income which is taken into account in computing 
     taxable income for the taxable year.
       ``(e) Termination.--This section shall not apply to taxable 
     years beginning after December 31, 2010.''.
       (b) Treatment of Possessions.--
       (1) Payments to possessions.--
       (A) Mirror code possession.--The Secretary of the Treasury 
     shall pay to each possession of the United States with a 
     mirror code tax system amounts equal to the loss to that 
     possession by reason of the amendments made by this section 
     with respect to taxable years beginning in 2009 and 2010. 
     Such amounts shall be determined by the Secretary of the 
     Treasury based on information provided by the government of 
     the respective possession.
       (B) Other possessions.--The Secretary of the Treasury shall 
     pay to each possession of the United States which does not 
     have a mirror code tax system amounts estimated by the 
     Secretary of the Treasury as being equal to the aggregate 
     benefits that would have been provided to residents of such 
     possession by reason of the amendments made by this section 
     for taxable years beginning in 2009 and 2010 if a mirror code 
     tax system had been in effect in such possession. The 
     preceding sentence shall not apply with respect to any 
     possession of the United States unless such possession has a 
     plan, which has been approved by the Secretary of the 
     Treasury, under which such possession will promptly 
     distribute such payments to the residents of such possession.
       (2) Coordination with credit allowed against united states 
     income taxes.--No credit shall be allowed against United 
     States income taxes for any taxable year under section 36A of 
     the Internal Revenue Code of 1986 (as added by this section) 
     to any person--
       (A) to whom a credit is allowed against taxes imposed by 
     the possession by reason of the amendments made by this 
     section for such taxable year, or
       (B) who is eligible for a payment under a plan described in 
     paragraph (1)(B) with respect to such taxable year.
       (3) Definitions and special rules.--
       (A) Possession of the united states.--For purposes of this 
     subsection, the term ``possession of the United States'' 
     includes the Commonwealth of Puerto Rico and the Commonwealth 
     of the Northern Mariana Islands.
       (B) Mirror code tax system.--For purposes of this 
     subsection, the term ``mirror code tax system'' means, with 
     respect to any possession of the United States, the income 
     tax system of such possession if the income tax liability of 
     the residents of such possession under such system is 
     determined by reference to the income tax laws of the United 
     States as if such possession were the United States.
       (C) Treatment of payments.--For purposes of section 
     1324(b)(2) of title 31, United States Code, the payments 
     under this subsection shall be treated in the same manner as 
     a refund due from the credit allowed under section 36A of the 
     Internal Revenue Code of 1986 (as added by this section).
       (c) Refunds Disregarded in the Administration of Federal 
     Programs and Federally Assisted Programs.--Any credit or 
     refund allowed or made to any individual by reason of section 
     36A of the Internal Revenue Code of 1986 (as added by this 
     section) or by reason of subsection (b) of this section shall 
     not be

[[Page 3942]]

     taken into account as income and shall not be taken into 
     account as resources for the month of receipt and the 
     following 2 months, for purposes of determining the 
     eligibility of such individual or any other individual for 
     benefits or assistance, or the amount or extent of benefits 
     or assistance, under any Federal program or under any State 
     or local program financed in whole or in part with Federal 
     funds.
       (d) Authority Relating to Clerical Errors.--Section 
     6213(g)(2) is amended by striking ``and'' at the end of 
     subparagraph (L)(ii), by striking the period at the end of 
     subparagraph (M) and inserting ``, and'', and by adding at 
     the end the following new subparagraph:
       ``(N) an omission of the reduction required under section 
     36A(c) with respect to the credit allowed under section 36A 
     or an omission of the correct social security account number 
     required under section 36A(d)(1)(B).''.
       (e) Conforming Amendments.--
       (1) Section 6211(b)(4)(A) is amended by inserting ``36A,'' 
     after ``36,''.
       (2) Section 1324(b)(2) of title 31, United States Code, is 
     amended by inserting ``36A,'' after ``36,''.
       (3) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 is amended by inserting after the 
     item relating to section 36 the following new item:

``Sec. 36A. Making work pay credit.''.

       (f) Effective Date.--This section, and the amendments made 
     by this section, shall apply to taxable years beginning after 
     December 31, 2008.

     SEC. 1002. TEMPORARY INCREASE IN EARNED INCOME TAX CREDIT.

       (a) In General.--Subsection (b) of section 32 is amended by 
     adding at the end the following new paragraph:
       ``(3) Special rules for 2009 and 2010.--In the case of any 
     taxable year beginning in 2009 or 2010--
       ``(A) Increased credit percentage for 3 or more qualifying 
     children.--In the case of a taxpayer with 3 or more 
     qualifying children, the credit percentage is 45 percent.
       ``(B) Reduction of marriage penalty.--
       ``(i) In general.--The dollar amount in effect under 
     paragraph (2)(B) shall be $5,000.
       ``(ii) Inflation adjustment.--In the case of any taxable 
     year beginning in 2010, the $5,000 amount in clause (i) shall 
     be increased by an amount equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost of living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins determined by substituting `calendar year 2008' 
     for `calendar year 1992' in subparagraph (B) thereof.

       ``(iii) Rounding.--Subparagraph (A) of subsection (j)(2) 
     shall apply after taking into account any increase under 
     clause (ii).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2008.

     SEC. 1003. TEMPORARY INCREASE OF REFUNDABLE PORTION OF CHILD 
                   CREDIT.

       (a) In General.--Paragraph (4) of section 24(d) is amended 
     to read as follows:
       ``(4) Special rule for 2009 and 2010.--Notwithstanding 
     paragraph (3), in the case of any taxable year beginning in 
     2009 or 2010, the dollar amount in effect for such taxable 
     year under paragraph (1)(B)(i) shall be $3,000.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2008.

     SEC. 1004. AMERICAN OPPORTUNITY TAX CREDIT.

       (a) In General.--Section 25A (relating to Hope scholarship 
     credit) is amended by redesignating subsection (i) as 
     subsection (j) and by inserting after subsection (h) the 
     following new subsection:
       ``(i) American Opportunity Tax Credit.--In the case of any 
     taxable year beginning in 2009 or 2010--
       ``(1) Increase in credit.--The Hope Scholarship Credit 
     shall be an amount equal to the sum of--
       ``(A) 100 percent of so much of the qualified tuition and 
     related expenses paid by the taxpayer during the taxable year 
     (for education furnished to the eligible student during any 
     academic period beginning in such taxable year) as does not 
     exceed $2,000, plus
       ``(B) 25 percent of such expenses so paid as exceeds $2,000 
     but does not exceed $4,000.
       ``(2) Credit allowed for first 4 years of post-secondary 
     education.--Subparagraphs (A) and (C) of subsection (b)(2) 
     shall be applied by substituting `4' for `2'.
       ``(3) Qualified tuition and related expenses to include 
     required course materials.--Subsection (f)(1)(A) shall be 
     applied by substituting `tuition, fees, and course materials' 
     for `tuition and fees'.
       ``(4) Increase in agi limits for hope scholarship credit.--
     In lieu of applying subsection (d) with respect to the Hope 
     Scholarship Credit, such credit (determined without regard to 
     this paragraph) shall be reduced (but not below zero) by the 
     amount which bears the same ratio to such credit (as so 
     determined) as--
       ``(A) the excess of--
       ``(i) the taxpayer's modified adjusted gross income (as 
     defined in subsection (d)(3)) for such taxable year, over
       ``(ii) $80,000 ($160,000 in the case of a joint return), 
     bears to
       ``(B) $10,000 ($20,000 in the case of a joint return).
       ``(5) Credit allowed against alternative minimum tax.--In 
     the case of a taxable year to which section 26(a)(2) does not 
     apply, so much of the credit allowed under subsection (a) as 
     is attributable to the Hope Scholarship Credit 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 subsection and sections 23, 25D, and 30D) 
     and section 27 for the taxable year.

     Any reference in this section or section 24, 25, 26, 25B, 
     904, or 1400C to a credit allowable under this subsection 
     shall be treated as a reference to so much of the credit 
     allowable under subsection (a) as is attributable to the Hope 
     Scholarship Credit.
       ``(6) Portion of credit made refundable.--40 percent of so 
     much of the credit allowed under subsection (a) as is 
     attributable to the Hope Scholarship Credit (determined after 
     application of paragraph (4) and without regard to this 
     paragraph and section 26(a)(2) or paragraph (5), as the case 
     may be) shall be treated as a credit allowable under subpart 
     C (and not allowed under subsection (a)). The preceding 
     sentence shall not apply to any taxpayer for any taxable year 
     if such taxpayer is a child to whom subsection (g) of section 
     1 applies for such taxable year.
       ``(7) Coordination with midwestern disaster area 
     benefits.--In the case of a taxpayer with respect to whom 
     section 702(a)(1)(B) of the Heartland Disaster Tax Relief Act 
     of 2008 applies for any taxable year, such taxpayer may elect 
     to waive the application of this subsection to such taxpayer 
     for such taxable year.''.
       (b) Conforming Amendments.--
       (1) Section 24(b)(3)(B) is amended by inserting ``25A(i),'' 
     after ``23,''.
       (2) Section 25(e)(1)(C)(ii) is amended by inserting 
     ``25A(i),'' after ``24,''.
       (3) Section 26(a)(1) is amended by inserting ``25A(i),'' 
     after ``24,''.
       (4) Section 25B(g)(2) is amended by inserting ``25A(i),'' 
     after ``23,''.
       (5) Section 904(i) is amended by inserting ``25A(i),'' 
     after ``24,''.
       (6) Section 1400C(d)(2) is amended by inserting ``25A(i),'' 
     after ``24,''.
       (7) Section 6211(b)(4)(A) is amended by inserting ``25A by 
     reason of subsection (i)(6) thereof,'' after ``24(d),''.
       (8) Section 1324(b)(2) of title 31, United States Code, is 
     amended by inserting ``25A,'' before ``35''.
       (c) Treatment of Possessions.--
       (1) Payments to possessions.--
       (A) Mirror code possession.--The Secretary of the Treasury 
     shall pay to each possession of the United States with a 
     mirror code tax system amounts equal to the loss to that 
     possession by reason of the application of section 25A(i)(6) 
     of the Internal Revenue Code of 1986 (as added by this 
     section) with respect to taxable years beginning in 2009 and 
     2010. Such amounts shall be determined by the Secretary of 
     the Treasury based on information provided by the government 
     of the respective possession.
       (B) Other possessions.--The Secretary of the Treasury shall 
     pay to each possession of the United States which does not 
     have a mirror code tax system amounts estimated by the 
     Secretary of the Treasury as being equal to the aggregate 
     benefits that would have been provided to residents of such 
     possession by reason of the application of section 25A(i)(6) 
     of such Code (as so added) for taxable years beginning in 
     2009 and 2010 if a mirror code tax system had been in effect 
     in such possession. The preceding sentence shall not apply 
     with respect to any possession of the United States unless 
     such possession has a plan, which has been approved by the 
     Secretary of the Treasury, under which such possession will 
     promptly distribute such payments to the residents of such 
     possession.
       (2) Coordination with credit allowed against united states 
     income taxes.--Section 25A(i)(6) of such Code (as added by 
     this section) shall not apply to a bona fide resident of any 
     possession of the United States.
       (3) Definitions and special rules.--
       (A) Possession of the united states.--For purposes of this 
     subsection, the term ``possession of the United States'' 
     includes the Commonwealth of Puerto Rico and the Commonwealth 
     of the Northern Mariana Islands.
       (B) Mirror code tax system.--For purposes of this 
     subsection, the term ``mirror code tax system'' means, with 
     respect to any possession of the United States, the income 
     tax system of such possession if the income tax liability of 
     the residents of such possession under such system is 
     determined by reference to the income tax laws of the United 
     States as if such possession were the United States.
       (C) Treatment of payments.--For purposes of section 
     1324(b)(2) of title 31, United States Code, the payments 
     under this subsection shall be treated in the same manner as 
     a refund due from the credit allowed under section 25A of the 
     Internal Revenue Code of 1986 by reason of subsection (i)(6) 
     of such section (as added by this section).
       (d) Effective Date.--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 (b)(1) 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.
       (f) Treasury Studies Regarding Education Incentives.--
       (1) Study regarding coordination with non-tax student 
     financial assistance.--The Secretary of the Treasury and the 
     Secretary of Education, or their delegates, shall--

[[Page 3943]]

       (A) study how to coordinate the credit allowed under 
     section 25A of the Internal Revenue Code of 1986 with the 
     Federal Pell Grant program under section 401 of the Higher 
     Education Act of 1965 to maximize their effectiveness at 
     promoting college affordability, and
       (B) examine ways to expedite the delivery of the tax 
     credit.
       (2) Study regarding inclusion of community service 
     requirements.--The Secretary of the Treasury and the 
     Secretary of Education, or their delegates, shall study the 
     feasibility of requiring including community service as a 
     condition of taking their tuition and related expenses into 
     account under section 25A of the Internal Revenue Code of 
     1986.
       (3) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Secretary of the Treasury, or the 
     Secretary's delegate, shall report to Congress on the results 
     of the studies conducted under this paragraph.

     SEC. 1005. COMPUTER TECHNOLOGY AND EQUIPMENT ALLOWED AS A 
                   QUALIFIED HIGHER EDUCATION EXPENSE FOR SECTION 
                   529 ACCOUNTS IN 2009 AND 2010.

       (a) In General.--Section 529(e)(3)(A) is amended by 
     striking ``and'' at the end of clause (i), by striking the 
     period at the end of clause (ii), and by adding at the end 
     the following:
       ``(iii) expenses paid or incurred in 2009 or 2010 for the 
     purchase of any computer technology or equipment (as defined 
     in section 170(e)(6)(F)(i)) or Internet access and related 
     services, if such technology, equipment, or services are to 
     be used by the beneficiary and the beneficiary's family 
     during any of the years the beneficiary is enrolled at an 
     eligible educational institution.
     Clause (iii) shall not include expenses for computer software 
     designed for sports, games, or hobbies unless the software is 
     predominantly educational in nature.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to expenses paid or incurred after December 31, 
     2008.

     SEC. 1006. EXTENSION OF AND INCREASE IN FIRST-TIME HOMEBUYER 
                   CREDIT; WAIVER OF REQUIREMENT TO REPAY.

       (a) Extension.--
       (1) In general.--Section 36(h) is amended by striking 
     ``July 1, 2009'' and inserting ``December 1, 2009''.
       (2) Conforming amendment.--Section 36(g) is amended by 
     striking ``July 1, 2009'' and inserting ``December 1, 2009''.
       (b) Increase.--
       (1) In general.--Section 36(b) is amended by striking 
     ``$7,500'' each place it appears and inserting ``$8,000''.
       (2) Conforming amendment.--Section 36(b)(1)(B) is amended 
     by striking ``$3,750'' and inserting ``$4,000''.
       (c) Waiver of Recapture.--
       (1) In general.--Paragraph (4) of section 36(f) is amended 
     by adding at the end the following new subparagraph:
       ``(D) Waiver of recapture for purchases in 2009.--In the 
     case of any credit allowed with respect to the purchase of a 
     principal residence after December 31, 2008, and before 
     December 1, 2009--
       ``(i) paragraph (1) shall not apply, and
       ``(ii) paragraph (2) shall apply only if the disposition or 
     cessation described in paragraph (2) with respect to such 
     residence occurs during the 36-month period beginning on the 
     date of the purchase of such residence by the taxpayer.''.
       (2) Conforming amendment.--Subsection (g) of section 36 is 
     amended by striking ``subsection (c)'' and inserting 
     ``subsections (c) and (f)(4)(D)''.
       (d) Coordination With First-Time Homebuyer Credit for 
     District of Columbia.--
       (1) In general.--Subsection (e) of section 1400C is amended 
     by adding at the end the following new paragraph:
       ``(4) Coordination with national first-time homebuyers 
     credit.--No credit shall be allowed under this section to any 
     taxpayer with respect to the purchase of a residence after 
     December 31, 2008, and before December 1, 2009, if a credit 
     under section 36 is allowable to such taxpayer (or the 
     taxpayer's spouse) with respect to such purchase.''.
       (2) Conforming amendment.--Section 36(d) is amended by 
     striking paragraph (1).
       (e) Removal of Prohibition on Financing by Mortgage Revenue 
     Bonds.--Section 36(d), as amended by subsection (c)(2), is 
     amended by striking paragraph (2) and by redesignating 
     paragraphs (3) and (4) as paragraphs (1) and (2), 
     respectively.
       (f) Effective Date.--The amendments made by this section 
     shall apply to residences purchased after December 31, 2008.

     SEC. 1007. SUSPENSION OF TAX ON PORTION OF UNEMPLOYMENT 
                   COMPENSATION.

       (a) In General.--Section 85 of the Internal Revenue Code of 
     1986 (relating to unemployment compensation) is amended by 
     adding at the end the following new subsection:
       ``(c) Special Rule for 2009.--In the case of any taxable 
     year beginning in 2009, gross income shall not include so 
     much of the unemployment compensation received by an 
     individual as does not exceed $2,400.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2008.

     SEC. 1008. ADDITIONAL DEDUCTION FOR STATE SALES TAX AND 
                   EXCISE TAX ON THE PURCHASE OF CERTAIN MOTOR 
                   VEHICLES.

       (a) In General.--Subsection (a) of section 164 is amended 
     by inserting after paragraph (5) the following new paragraph:
       ``(6) Qualified motor vehicle taxes.''.
       (b) Qualified Motor Vehicle Taxes.--Subsection (b) of 
     section 164 is amended by adding at the end the following new 
     paragraph:
       ``(6) Qualified motor vehicle taxes.--
       ``(A) In general.--For purposes of this section, the term 
     `qualified motor vehicle taxes' means any State or local 
     sales or excise tax imposed on the purchase of a qualified 
     motor vehicle.
       ``(B) Limitation based on vehicle price.--The amount of any 
     State or local sales or excise tax imposed on the purchase of 
     a qualified motor vehicle taken into account under 
     subparagraph (A) shall not exceed the portion of such tax 
     attributable to so much of the purchase price as does not 
     exceed $49,500.
       ``(C) Income limitation.--The amount otherwise taken into 
     account under subparagraph (A) (after the application of 
     subparagraph (B)) for any taxable year shall be reduced (but 
     not below zero) by the amount which bears the same ratio to 
     the amount which is so treated as--
       ``(i) the excess (if any) of--

       ``(I) the taxpayer's modified adjusted gross income for 
     such taxable year, over
       ``(II) $125,000 ($250,000 in the case of a joint return), 
     bears to

       ``(ii) $10,000.

     For purposes of the preceding sentence, the term `modified 
     adjusted gross income' means the adjusted gross income of the 
     taxpayer for the taxable year (determined without regard to 
     sections 911, 931, and 933).
       ``(D) Qualified motor vehicle.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `qualified motor vehicle' 
     means--

       ``(I) a passenger automobile or light truck which is 
     treated as a motor vehicle for purposes of title II of the 
     Clean Air Act, the gross vehicle weight rating of which is 
     not more than 8,500 pounds, and the original use of which 
     commences with the taxpayer,
       ``(II) a motorcycle the gross vehicle weight rating of 
     which is not more than 8,500 pounds and the original use of 
     which commences with the taxpayer, and
       ``(III) a motor home the original use of which commences 
     with the taxpayer.

       ``(ii) Other terms.--The terms `motorcycle' and `motor 
     home' have the meanings given such terms under section 571.3 
     of title 49, Code of Federal Regulations (as in effect on the 
     date of the enactment of this paragraph).
       ``(E) Qualified motor vehicle taxes not included in cost of 
     acquired property.--The last sentence of subsection (a) shall 
     not apply to any qualified motor vehicle taxes.
       ``(F) Coordination with general sales tax.--This paragraph 
     shall not apply in the case of a taxpayer who makes an 
     election under paragraph (5) for the taxable year.
       ``(G) Termination.--This paragraph shall not apply to 
     purchases after December 31, 2009.''.
       (c) Deduction Allowed to Nonitemizers.--
       (1) In general.--Paragraph (1) of section 63(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) the motor vehicle sales tax deduction.''.
       (2) Definition.--Section 63(c) is amended by adding at the 
     end the following new paragraph:
       ``(9) Motor vehicle sales tax deduction.--For purposes of 
     paragraph (1), the term `motor vehicle sales tax deduction' 
     means the amount allowable as a deduction under section 
     164(a)(6). Such term shall not include any amount taken into 
     account under section 62(a).''.
       (d) Treatment of Deduction Under Alternative Minimum Tax.--
     The last sentence of section 56(b)(1)(E) is amended by 
     striking ``section 63(c)(1)(D)'' and inserting 
     ``subparagraphs (D) and (E) of section 63(c)(1)''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to purchases on or after the date of the 
     enactment of this Act in taxable years ending after such 
     date.

                PART II--ALTERNATIVE MINIMUM TAX RELIEF

     SEC. 1011. EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF FOR 
                   NONREFUNDABLE PERSONAL CREDITS.

       (a) In General.--Paragraph (2) of section 26(a) (relating 
     to special rule for taxable years 2000 through 2008) is 
     amended--
       (1) by striking ``or 2008'' and inserting ``2008, or 
     2009'', and
       (2) by striking ``2008'' in the heading thereof and 
     inserting ``2009''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2008.

     SEC. 1012. EXTENSION OF INCREASED ALTERNATIVE MINIMUM TAX 
                   EXEMPTION AMOUNT.

       (a) In General.--Paragraph (1) of section 55(d) (relating 
     to exemption amount) is amended--
       (1) by striking ``($69,950 in the case of taxable years 
     beginning in 2008)'' in subparagraph (A) and inserting 
     ``($70,950 in the case of taxable years beginning in 2009)'', 
     and
       (2) by striking ``($46,200 in the case of taxable years 
     beginning in 2008)'' in subparagraph (B) and inserting 
     ``($46,700 in the case of taxable years beginning in 2009)''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2008.

[[Page 3944]]



                     Subtitle B--Energy Incentives

                  PART I--RENEWABLE ENERGY INCENTIVES

     SEC. 1101. EXTENSION OF CREDIT FOR ELECTRICITY PRODUCED FROM 
                   CERTAIN RENEWABLE RESOURCES.

       (a) In General.--Subsection (d) of section 45 is amended--
       (1) by striking ``2010'' in paragraph (1) and inserting 
     ``2013'',
       (2) by striking ``2011'' each place it appears in 
     paragraphs (2), (3), (4), (6), (7) and (9) and inserting 
     ``2014'', and
       (3) by striking ``2012'' in paragraph (11)(B) and inserting 
     ``2014''.
       (b) Technical Amendment.--Paragraph (5) of section 45(d) is 
     amended by striking ``and before'' and all that follows and 
     inserting `` and before October 3, 2008.''.
       (c) Effective Date.--
       (1) In general.--The amendments made by subsection (a) 
     shall apply to property placed in service after the date of 
     the enactment of this Act.
       (2) Technical amendment.--The amendment made by subsection 
     (b) shall take effect as if included in section 102 of the 
     Energy Improvement and Extension Act of 2008.

     SEC. 1102. ELECTION OF INVESTMENT CREDIT IN LIEU OF 
                   PRODUCTION CREDIT.

       (a) In General.--Subsection (a) of section 48 is amended by 
     adding at the end the following new paragraph:
       ``(5) Election to treat qualified facilities as energy 
     property.--
       ``(A) In general.--In the case of any qualified property 
     which is part of a qualified investment credit facility--
       ``(i) such property shall be treated as energy property for 
     purposes of this section, and
       ``(ii) the energy percentage with respect to such property 
     shall be 30 percent.
       ``(B) Denial of production credit.--No credit shall be 
     allowed under section 45 for any taxable year with respect to 
     any qualified investment credit facility.
       ``(C) Qualified investment credit facility.--For purposes 
     of this paragraph, the term `qualified investment credit 
     facility' means any of the following facilities if no credit 
     has been allowed under section 45 with respect to such 
     facility and the taxpayer makes an irrevocable election to 
     have this paragraph apply to such facility:
       ``(i) Wind facilities.--Any qualified facility (within the 
     meaning of section 45) described in paragraph (1) of section 
     45(d) if such facility is placed in service in 2009, 2010, 
     2011, or 2012.
       ``(ii) Other facilities.--Any qualified facility (within 
     the meaning of section 45) described in paragraph (2), (3), 
     (4), (6), (7), (9), or (11) of section 45(d) if such facility 
     is placed in service in 2009, 2010, 2011, 2012, or 2013.
       ``(D) Qualified property.--For purposes of this paragraph, 
     the term `qualified property' means property--
       ``(i) which is--

       ``(I) tangible personal property, or
       ``(II) other tangible property (not including a building or 
     its structural components), but only if such property is used 
     as an integral part of the qualified investment credit 
     facility, and

       ``(ii) with respect to which depreciation (or amortization 
     in lieu of depreciation) is allowable.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to facilities placed in service after December 
     31, 2008.

     SEC. 1103. REPEAL OF CERTAIN LIMITATIONS ON CREDIT FOR 
                   RENEWABLE ENERGY PROPERTY.

       (a) Repeal of Limitation on Credit for Qualified Small Wind 
     Energy Property.-- Paragraph (4) of section 48(c) is amended 
     by striking subparagraph (B) and by redesignating 
     subparagraphs (C) and (D) as subparagraphs (B) and (C).
       (b) Repeal of Limitation on Property Financed by Subsidized 
     Energy Financing.--
       (1) In general.--Section 48(a)(4) is amended by adding at 
     the end the following new subparagraph:
       ``(D) Termination.--This paragraph shall not apply to 
     periods after December 31, 2008, under rules similar to the 
     rules of section 48(m) (as in effect on the day before the 
     date of the enactment of the Revenue Reconciliation Act of 
     1990).''.
       (2) Conforming amendments.--
       (A) Section 25C(e)(1) is amended by striking ``(8), and 
     (9)'' and inserting ``and (8)''.
       (B) Section 25D(e) is amended by striking paragraph (9).
       (C) Section 48A(b)(2) is amended by inserting ``(without 
     regard to subparagraph (D) thereof)'' after ``section 
     48(a)(4)''.
       (D) Section 48B(b)(2) is amended by inserting ``(without 
     regard to subparagraph (D) thereof)'' after ``section 
     48(a)(4)''.
       (c) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendment made by this section shall apply to periods after 
     December 31, 2008, 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).
       (2) Conforming amendments.--The amendments made by 
     subparagraphs (A) and (B) of subsection (b)(2) shall apply to 
     taxable years beginning after December 31, 2008.

     SEC. 1104. COORDINATION WITH RENEWABLE ENERGY GRANTS.

       Section 48 is amended by adding at the end the following 
     new subsection:
       ``(d) Coordination With Department of Treasury Grants.--In 
     the case of any property with respect to which the Secretary 
     makes a grant under section 1603 of the American Recovery and 
     Reinvestment Tax Act of 2009--
       ``(1) Denial of production and investment credits.--No 
     credit shall be determined under this section or section 45 
     with respect to such property for the taxable year in which 
     such grant is made or any subsequent taxable year.
       ``(2) Recapture of credits for progress expenditures made 
     before grant.--If a credit was determined under this section 
     with respect to such property for any taxable year ending 
     before such grant is made--
       ``(A) the tax imposed under subtitle A on the taxpayer for 
     the taxable year in which such grant is made shall be 
     increased by so much of such credit as was allowed under 
     section 38,
       ``(B) the general business carryforwards under section 39 
     shall be adjusted so as to recapture the portion of such 
     credit which was not so allowed, and
       ``(C) the amount of such grant shall be determined without 
     regard to any reduction in the basis of such property by 
     reason of such credit.
       ``(3) Treatment of grants.--Any such grant shall--
       ``(A) not be includible in the gross income of the 
     taxpayer, but
       ``(B) shall be taken into account in determining the basis 
     of the property to which such grant relates, except that the 
     basis of such property shall be reduced under section 50(c) 
     in the same manner as a credit allowed under subsection 
     (a).''.

PART II--INCREASED ALLOCATIONS OF NEW CLEAN RENEWABLE ENERGY BONDS AND 
                  QUALIFIED ENERGY CONSERVATION BONDS

     SEC. 1111. INCREASED LIMITATION ON ISSUANCE OF NEW CLEAN 
                   RENEWABLE ENERGY BONDS.

       Subsection (c) of section 54C is amended by adding at the 
     end the following new paragraph:
       ``(4) Additional limitation.--The national new clean 
     renewable energy bond limitation shall be increased by 
     $1,600,000,000. Such increase shall be allocated by the 
     Secretary consistent with the rules of paragraphs (2) and 
     (3).''.

     SEC. 1112. INCREASED LIMITATION ON ISSUANCE OF QUALIFIED 
                   ENERGY CONSERVATION BONDS.

       (a) In General.--Section 54D(d) is amended by striking 
     ``$800,000,000'' and inserting ``$3,200,000,000''.
       (b) Clarification With Respect to Green Community 
     Programs.--
       (1) In general.--Clause (ii) of section 54D(f)(1)(A) is 
     amended by inserting ``(including the use of loans, grants, 
     or other repayment mechanisms to implement such programs)'' 
     after ``green community programs''.
       (2) Special rules for bonds for implementing green 
     community programs.--Subsection (e) of section 54D is amended 
     by adding at the end the following new paragraph:
       ``(4) Special rules for bonds to implement green community 
     programs.--In the case of any bond issued for the purpose of 
     providing loans, grants, or other repayment mechanisms for 
     capital expenditures to implement green community programs, 
     such bond shall not be treated as a private activity bond for 
     purposes of paragraph (3).''.

                PART III--ENERGY CONSERVATION INCENTIVES

     SEC. 1121. EXTENSION AND MODIFICATION OF CREDIT FOR 
                   NONBUSINESS ENERGY PROPERTY.

       (a) In General.--Section 25C is amended by striking 
     subsections (a) and (b) and inserting the following new 
     subsections:
       ``(a) Allowance of Credit.--In the case of an individual, 
     there shall be allowed as a credit against the tax imposed by 
     this chapter for the taxable year an amount equal to 30 
     percent of the sum of--
       ``(1) the amount paid or incurred by the taxpayer during 
     such taxable year for qualified energy efficiency 
     improvements, and
       ``(2) the amount of the residential energy property 
     expenditures paid or incurred by the taxpayer during such 
     taxable year.
       ``(b) Limitation.--The aggregate amount of the credits 
     allowed under this section for taxable years beginning in 
     2009 and 2010 with respect to any taxpayer shall not exceed 
     $1,500.''.
       (b) Modifications of Standards for Energy-Efficient 
     Building Property.--
       (1) Electric heat pumps.--Subparagraph (B) of section 
     25C(d)(3) is amended to read as follows:
       ``(B) an electric heat pump which achieves the highest 
     efficiency tier established by the Consortium for Energy 
     Efficiency, as in effect on January 1, 2009.''.
       (2) Central air conditioners.--Subparagraph (C) of section 
     25C(d)(3) is amended by striking ``2006'' and inserting 
     ``2009''.
       (3) Water heaters.--Subparagraph (D) of section 25C(d)(3) 
     is amended to read as follows:
       ``(D) a natural gas, propane, or oil water heater which has 
     either an energy factor of at least 0.82 or a thermal 
     efficiency of at least 90 percent.''.
       (4) Wood stoves.--Subparagraph (E) of section 25C(d)(3) is 
     amended by inserting ``, as measured using a lower heating 
     value'' after ``75 percent''.
       (c) Modifications of Standards for Oil Furnaces and Hot 
     Water Boilers.--
       (1) In general.--Paragraph (4) of section 25C(d) is amended 
     to read as follows:
       ``(4) Qualified natural gas, propane, and oil furnaces and 
     hot water boilers.--
       ``(A) Qualified natural gas furnace.--The term `qualified 
     natural gas furnace' means any

[[Page 3945]]

     natural gas furnace which achieves an annual fuel utilization 
     efficiency rate of not less than 95.
       ``(B) Qualified natural gas hot water boiler.--The term 
     `qualified natural gas hot water boiler' means any natural 
     gas hot water boiler which achieves an annual fuel 
     utilization efficiency rate of not less than 90.
       ``(C) Qualified propane furnace.--The term `qualified 
     propane furnace' means any propane furnace which achieves an 
     annual fuel utilization efficiency rate of not less than 95.
       ``(D) Qualified propane hot water boiler.--The term 
     `qualified propane hot water boiler' means any propane hot 
     water boiler which achieves an annual fuel utilization 
     efficiency rate of not less than 90.
       ``(E) Qualified oil furnaces.--The term `qualified oil 
     furnace' means any oil furnace which achieves an annual fuel 
     utilization efficiency rate of not less than 90.
       ``(F) Qualified oil hot water boiler.--The term `qualified 
     oil hot water boiler' means any oil hot water boiler which 
     achieves an annual fuel utilization efficiency rate of not 
     less than 90.''.
       (2) Conforming amendment.--Clause (ii) of section 
     25C(d)(2)(A) is amended to read as follows:
       ``(ii) any qualified natural gas furnace, qualified propane 
     furnace, qualified oil furnace, qualified natural gas hot 
     water boiler, qualified propane hot water boiler, or 
     qualified oil hot water boiler, or''.
       (d) Modifications of Standards for Qualified Energy 
     Efficiency Improvements.--
       (1) Qualifications for exterior windows, doors, and 
     skylights.--Subsection (c) of section 25C is amended by 
     adding at the end the following new paragraph:
       ``(4) Qualifications for exterior windows, doors, and 
     skylights.--Such term shall not include any component 
     described in subparagraph (B) or (C) of paragraph (2) unless 
     such component is equal to or below a U factor of 0.30 and 
     SHGC of 0.30.''.
       (2) Additional qualification for insulation.--Subparagraph 
     (A) of section 25C(c)(2) is amended by inserting ``and meets 
     the prescriptive criteria for such material or system 
     established by the 2009 International Energy Conservation 
     Code, as such Code (including supplements) is in effect on 
     the date of the enactment of the American Recovery and 
     Reinvestment Tax Act of 2009'' after ``such dwelling unit''.
       (e) Extension.--Section 25C(g)(2) is amended by striking 
     ``December 31, 2009'' and inserting ``December 31, 2010''.
       (f) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning after December 31, 2008.
       (2) Efficiency standards.--The amendments made by 
     paragraphs (1), (2), and (3) of subsection (b) and 
     subsections (c) and (d) shall apply to property placed in 
     service after the date of the enactment of this Act.

     SEC. 1122. MODIFICATION OF CREDIT FOR RESIDENTIAL ENERGY 
                   EFFICIENT PROPERTY.

       (a) Removal of Credit Limitation for Property Placed in 
     Service.--
       (1) In general.--Paragraph (1) of section 25D(b) is amended 
     to read as follows:
       ``(1) Maximum credit for fuel cells.--In the case of any 
     qualified fuel cell property expenditure, the credit allowed 
     under subsection (a) (determined without regard to subsection 
     (c)) for any taxable year shall not exceed $500 with respect 
     to each half kilowatt of capacity of the qualified fuel cell 
     property (as defined in section 48(c)(1)) to which such 
     expenditure relates.''.
       (2) Conforming amendment.--Paragraph (4) of section 25D(e) 
     is amended--
       (A) by striking all that precedes subparagraph (B) and 
     inserting the following:
       ``(4) Fuel cell expenditure limitations in case of joint 
     occupancy.--In the case of any dwelling unit with respect to 
     which qualified fuel cell property expenditures are made and 
     which is jointly occupied and used during any calendar year 
     as a residence by two or more individuals, the following 
     rules shall apply:
       ``(A) Maximum expenditures for fuel cells.--The maximum 
     amount of such expenditures which may be taken into account 
     under subsection (a) by all such individuals with respect to 
     such dwelling unit during such calendar year shall be $1,667 
     in the case of each half kilowatt of capacity of qualified 
     fuel cell property (as defined in section 48(c)(1)) with 
     respect to which such expenditures relate.'', and
       (B) by striking subparagraph (C).
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2008.

     SEC. 1123. TEMPORARY INCREASE IN CREDIT FOR ALTERNATIVE FUEL 
                   VEHICLE REFUELING PROPERTY.

       (a) In General.--Section 30C(e) is amended by adding at the 
     end the following new paragraph:
       ``(6) Special rule for property placed in service during 
     2009 and 2010.--In the case of property placed in service in 
     taxable years beginning after December 31, 2008, and before 
     January 1, 2011--
       ``(A) in the case of any such property which does not 
     relate to hydrogen--
       ``(i) subsection (a) shall be applied by substituting `50 
     percent' for `30 percent',
       ``(ii) subsection (b)(1) shall be applied by substituting 
     `$50,000' for `$30,000', and
       ``(iii) subsection (b)(2) shall be applied by substituting 
     `$2,000' for `$1,000', and
       ``(B) in the case of any such property which relates to 
     hydrogen, subsection (b)(1) shall be applied by substituting 
     `$200,000' for `$30,000'.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2008.

    PART IV--MODIFICATION OF CREDIT FOR CARBON DIOXIDE SEQUESTRATION

     SEC. 1131. APPLICATION OF MONITORING REQUIREMENTS TO CARBON 
                   DIOXIDE USED AS A TERTIARY INJECTANT.

       (a) In General.--Section 45Q(a)(2) is amended by striking 
     ``and'' at the end of subparagraph (A), by striking the 
     period at the end of subparagraph (B) and inserting ``, 
     and'', and by adding at the end the following new 
     subparagraph:
       ``(C) disposed of by the taxpayer in secure geological 
     storage.''.
       (b) Conforming Amendments.--
       (1) Section 45Q(d)(2) is amended--
       (A) by striking ``subsection (a)(1)(B)'' and inserting 
     ``paragraph (1)(B) or (2)(C) of subsection (a)'',
       (B) by striking ``and unminable coal seems'' and inserting 
     ``, oil and gas reservoirs, and unminable coal seams'', and
       (C) by inserting ``the Secretary of Energy, and the 
     Secretary of the Interior,'' after ``Environmental Protection 
     Agency''.
       (2) Section 45Q(a)(1)(B) is amended by inserting ``and not 
     used by the taxpayer as described in paragraph (2)(B)'' after 
     ``storage''.
       (3) Section 45Q(e) is amended by striking ``captured and 
     disposed of or used as a tertiary injectant'' and inserting 
     ``taken into account in accordance with subsection (a)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to carbon dioxide captured after the date of the 
     enactment of this Act.

             PART V--PLUG-IN ELECTRIC DRIVE MOTOR VEHICLES

     SEC. 1141. CREDIT FOR NEW QUALIFIED PLUG-IN ELECTRIC DRIVE 
                   MOTOR VEHICLES.

       (a) In General.--Section 30D is amended to read as follows:

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

       ``(a) Allowance of Credit.--There shall be allowed as a 
     credit against the tax imposed by this chapter for the 
     taxable year an amount equal to the sum of the credit amounts 
     determined under subsection (b) with respect to each new 
     qualified plug-in electric drive motor vehicle placed in 
     service by the taxpayer during the taxable year.
       ``(b) Per Vehicle Dollar Limitation.--
       ``(1) In general.--The amount determined under this 
     subsection with respect to any new qualified plug-in electric 
     drive motor vehicle is the sum of the amounts determined 
     under paragraphs (2) and (3) with respect to such vehicle.
       ``(2) Base amount.--The amount determined under this 
     paragraph is $2,500.
       ``(3) Battery capacity.--In the case of a vehicle which 
     draws propulsion energy from a battery with not less than 5 
     kilowatt hours of capacity, the amount determined under this 
     paragraph is $417, plus $417 for each kilowatt hour of 
     capacity in excess of 5 kilowatt hours. The amount determined 
     under this paragraph shall not exceed $5,000.
       ``(c) Application With Other Credits.--
       ``(1) Business credit treated as part of general business 
     credit.--So much of the credit which would be allowed under 
     subsection (a) for any taxable year (determined without 
     regard to this subsection) that is attributable to property 
     of a character subject to an allowance for depreciation shall 
     be treated as a credit listed in section 38(b) for such 
     taxable year (and not allowed under subsection (a)).
       ``(2) Personal credit.--
       ``(A) In general.--For purposes of this title, the credit 
     allowed under subsection (a) for any taxable year (determined 
     after application of paragraph (1)) shall be treated as a 
     credit allowable under subpart A for such taxable year.
       ``(B) Limitation based on amount of tax.--In the case of a 
     taxable year to which section 26(a)(2) does not apply, the 
     credit allowed under subsection (a) for any taxable year 
     (determined after application of paragraph (1)) shall not 
     exceed the excess of--
       ``(i) the sum of the regular tax liability (as defined in 
     section 26(b)) plus the tax imposed by section 55, over
       ``(ii) the sum of the credits allowable under subpart A 
     (other than this section and sections 23 and 25D) and section 
     27 for the taxable year.
       ``(d) New Qualified Plug-in Electric Drive Motor Vehicle.--
     For purposes of this section--
       ``(1) In general.--The term `new qualified plug-in electric 
     drive motor vehicle' means a motor vehicle--
       ``(A) the original use of which commences with the 
     taxpayer,
       ``(B) which is acquired for use or lease by the taxpayer 
     and not for resale,
       ``(C) which is made by a manufacturer,
       ``(D) which is treated as a motor vehicle for purposes of 
     title II of the Clean Air Act,
       ``(E) which has a gross vehicle weight rating of less than 
     14,000 pounds, and
       ``(F) which is propelled to a significant extent by an 
     electric motor which draws electricity from a battery which--
       ``(i) has a capacity of not less than 4 kilowatt hours, and
       ``(ii) is capable of being recharged from an external 
     source of electricity.
       ``(2) Motor vehicle.--The term `motor vehicle' means any 
     vehicle which is manufactured primarily for use on public 
     streets, roads, and

[[Page 3946]]

     highways (not including a vehicle operated exclusively on a 
     rail or rails) and which has at least 4 wheels.
       ``(3) Manufacturer.--The term `manufacturer' has the 
     meaning given such term in regulations prescribed by the 
     Administrator of the Environmental Protection Agency for 
     purposes of the administration of title II of the Clean Air 
     Act (42 U.S.C. 7521 et seq.).
       ``(4) Battery capacity.--The term `capacity' means, with 
     respect to any battery, the quantity of electricity which the 
     battery is capable of storing, expressed in kilowatt hours, 
     as measured from a 100 percent state of charge to a 0 percent 
     state of charge.
       ``(e) Limitation on Number of New Qualified Plug-in 
     Electric Drive Motor Vehicles Eligible for Credit.--
       ``(1) In general.--In the case of a new qualified plug-in 
     electric drive motor vehicle sold during the phaseout period, 
     only the applicable percentage of the credit otherwise 
     allowable under subsection (a) shall be allowed.
       ``(2) Phaseout period.--For purposes of this subsection, 
     the phaseout period is the period beginning with the second 
     calendar quarter following the calendar quarter which 
     includes the first date on which the number of new qualified 
     plug-in electric drive motor vehicles manufactured by the 
     manufacturer of the vehicle referred to in paragraph (1) sold 
     for use in the United States after December 31, 2009, is at 
     least 200,000.
       ``(3) Applicable percentage.--For purposes of paragraph 
     (1), the applicable percentage is--
       ``(A) 50 percent for the first 2 calendar quarters of the 
     phaseout period,
       ``(B) 25 percent for the 3d and 4th calendar quarters of 
     the phaseout period, and
       ``(C) 0 percent for each calendar quarter thereafter.
       ``(4) Controlled groups.--Rules similar to the rules of 
     section 30B(f)(4) shall apply for purposes of this 
     subsection.
       ``(f) Special Rules.--
       ``(1) Basis reduction.--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.
       ``(2) 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.
       ``(3) 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 (c)).
       ``(4) Property used outside united states not qualified.--
     No credit shall be allowable under subsection (a) with 
     respect to any property referred to in section 50(b)(1).
       ``(5) 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.
       ``(6) Election not to take credit.--No credit shall be 
     allowed under subsection (a) for any vehicle if the taxpayer 
     elects to not have this section apply to such vehicle.
       ``(7) Interaction with air quality and motor vehicle safety 
     standards.--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.''.
       (b) Conforming Amendments.--
       (1) Section 30B(d)(3)(D) is amended by striking 
     ``subsection (d) thereof'' and inserting ``subsection (c) 
     thereof''.
       (2) Section 38(b)(35) is amended by striking ``30D(d)(1)'' 
     and inserting ``30D(c)(1)''.
       (3) Section 1016(a)(25) is amended by striking ``section 
     30D(e)(4)'' and inserting ``section 30D(f)(1)''.
       (4) Section 6501(m) is amended by striking ``section 
     30D(e)(9)'' and inserting ``section 30D(e)(4)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to vehicles acquired after December 31, 2009.

     SEC. 1142. CREDIT FOR CERTAIN PLUG-IN ELECTRIC VEHICLES.

       (a) In General.--Section 30 is amended to read as follows:

     ``SEC. 30. CERTAIN PLUG-IN ELECTRIC VEHICLES.

       ``(a) Allowance of Credit.--There shall be allowed as a 
     credit against the tax imposed by this chapter for the 
     taxable year an amount equal to 10 percent of the cost of any 
     qualified plug-in electric vehicle placed in service by the 
     taxpayer during the taxable year.
       ``(b) Per Vehicle Dollar Limitation.--The amount of the 
     credit allowed under subsection (a) with respect to any 
     vehicle shall not exceed $2,500.
       ``(c) Application With Other Credits.--
       ``(1) Business credit treated as part of general business 
     credit.--So much of the credit which would be allowed under 
     subsection (a) for any taxable year (determined without 
     regard to this subsection) that is attributable to property 
     of a character subject to an allowance for depreciation shall 
     be treated as a credit listed in section 38(b) for such 
     taxable year (and not allowed under subsection (a)).
       ``(2) Personal credit.--
       ``(A) In general.--For purposes of this title, the credit 
     allowed under subsection (a) for any taxable year (determined 
     after application of paragraph (1)) shall be treated as a 
     credit allowable under subpart A for such taxable year.
       ``(B) Limitation based on amount of tax.--In the case of a 
     taxable year to which section 26(a)(2) does not apply, the 
     credit allowed under subsection (a) for any taxable year 
     (determined after application of paragraph (1)) shall not 
     exceed the excess of--
       ``(i) the sum of the regular tax liability (as defined in 
     section 26(b)) plus the tax imposed by section 55, over
       ``(ii) the sum of the credits allowable under subpart A 
     (other than this section and sections 23, 25D, and 30D) and 
     section 27 for the taxable year.
       ``(d) Qualified Plug-in Electric Vehicle.--For purposes of 
     this section--
       ``(1) In general.--The term `qualified plug-in electric 
     vehicle' means a specified vehicle--
       ``(A) the original use of which commences with the 
     taxpayer,
       ``(B) which is acquired for use or lease by the taxpayer 
     and not for resale,
       ``(C) which is made by a manufacturer,
       ``(D) which is manufactured primarily for use on public 
     streets, roads, and highways,
       ``(E) which has a gross vehicle weight rating of less than 
     14,000 pounds, and
       ``(F) which is propelled to a significant extent by an 
     electric motor which draws electricity from a battery which--
       ``(i) has a capacity of not less than 4 kilowatt hours (2.5 
     kilowatt hours in the case of a vehicle with 2 or 3 wheels), 
     and
       ``(ii) is capable of being recharged from an external 
     source of electricity.
       ``(2) Specified vehicle.--The term `specified vehicle' 
     means any vehicle which--
       ``(A) is a low speed vehicle within the meaning of section 
     571.3 of title 49, Code of Federal Regulations (as in effect 
     on the date of the enactment of the American Recovery and 
     Reinvestment Tax Act of 2009), or
       ``(B) has 2 or 3 wheels.
       ``(3) Manufacturer.--The term `manufacturer' has the 
     meaning given such term in regulations prescribed by the 
     Administrator of the Environmental Protection Agency for 
     purposes of the administration of title II of the Clean Air 
     Act (42 U.S.C. 7521 et seq.).
       ``(4) Battery capacity.--The term `capacity' means, with 
     respect to any battery, the quantity of electricity which the 
     battery is capable of storing, expressed in kilowatt hours, 
     as measured from a 100 percent state of charge to a 0 percent 
     state of charge.
       ``(e) Special Rules.--
       ``(1) Basis reduction.--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.
       ``(2) 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 allowable under subsection (a) for such 
     vehicle.
       ``(3) 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 (c)).
       ``(4) Property used outside united states not qualified.--
     No credit shall be allowable under subsection (a) with 
     respect to any property referred to in section 50(b)(1).
       ``(5) 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.
       ``(6) Election not to take credit.--No credit shall be 
     allowed under subsection (a) for any vehicle if the taxpayer 
     elects to not have this section apply to such vehicle.
       ``(f) Termination.--This section shall not apply to any 
     vehicle acquired after December 31, 2011.''.
       (b) Conforming Amendments.--
       (1)(A) Section 24(b)(3)(B) is amended by inserting ``30,'' 
     after ``25D,''.
       (B) Section 25(e)(1)(C)(ii) is amended by inserting ``30,'' 
     after ``25D,''.
       (C) Section 25B(g)(2) is amended by inserting ``30,'' after 
     ``25D,''.
       (D) Section 26(a)(1) is amended by inserting ``30,'' after 
     ``25D,''.
       (E) Section 904(i) is amended by striking ``and 25B'' and 
     inserting ``25B, 30, and 30D''.
       (F) Section 1400C(d)(2) is amended by striking ``and 25D'' 
     and inserting ``25D, and 30''.

[[Page 3947]]

       (2) Paragraph (1) of section 30B(h) is amended to read as 
     follows:
       ``(1) Motor vehicle.--The term `motor vehicle' means any 
     vehicle which is manufactured primarily for use on public 
     streets, roads, and highways (not including a vehicle 
     operated exclusively on a rail or rails) and which has at 
     least 4 wheels.''.
       (3) Section 30C(d)(2)(A) is amended by striking ``, 30,''.
       (4)(A) Section 53(d)(1)(B) is amended by striking clause 
     (iii) and redesignating clause (iv) as clause (iii).
       (B) Subclause (II) of section 53(d)(1)(B)(iii), as so 
     redesignated, is amended by striking ``increased in the 
     manner provided in clause (iii)''.
       (5) Section 55(c)(3) is amended by striking ``30(b)(3),''.
       (6) Section 1016(a)(25) is amended by striking ``section 
     30(d)(1)'' and inserting ``section 30(e)(1)''.
       (7) Section 6501(m) is amended by striking ``section 
     30(d)(4)'' and inserting ``section 30(e)(6)''.
       (8) The item in the table of sections for subpart B of part 
     IV of subchapter A of chapter 1 is amended to read as 
     follows:

``Sec. 30. Certain plug-in electric vehicles.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to vehicles acquired after the date of the 
     enactment of this Act.
       (d) Transitional Rule.--In the case of a vehicle acquired 
     after the date of the enactment of this Act and before 
     January 1, 2010, no credit shall be allowed under section 30 
     of the Internal Revenue Code of 1986, as added by this 
     section, if credit is allowable under section 30D of such 
     Code with respect to such vehicle.
       (e) Application of EGTRRA Sunset.--The amendment made by 
     subsection (b)(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. 1143. CONVERSION KITS.

       (a) In General.--Section 30B (relating to alternative motor 
     vehicle credit) is amended by redesignating subsections (i) 
     and (j) as subsections (j) and (k), respectively, and by 
     inserting after subsection (h) the following new subsection:
       ``(i) Plug-in Conversion Credit.--
       ``(1) In general.--For purposes of subsection (a), the 
     plug-in conversion credit determined under this subsection 
     with respect to any motor vehicle which is converted to a 
     qualified plug-in electric drive motor vehicle is 10 percent 
     of so much of the cost of the converting such vehicle as does 
     not exceed $40,000.
       ``(2) Qualified plug-in electric drive motor vehicle.--For 
     purposes of this subsection, the term `qualified plug-in 
     electric drive motor vehicle' means any new qualified plug-in 
     electric drive motor vehicle (as defined in section 30D, 
     determined without regard to whether such vehicle is made by 
     a manufacturer or whether the original use of such vehicle 
     commences with the taxpayer).
       ``(3) Credit allowed in addition to other credits.--The 
     credit allowed under this subsection shall be allowed with 
     respect to a motor vehicle notwithstanding whether a credit 
     has been allowed with respect to such motor vehicle under 
     this section (other than this subsection) in any preceding 
     taxable year.
       ``(4) Termination.--This subsection shall not apply to 
     conversions made after December 31, 2011.''.
       (b) Credit Treated as Part of Alternative Motor Vehicle 
     Credit.--Section 30B(a) 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) the plug-in conversion credit determined under 
     subsection (i).''.
       (c) No Recapture for Vehicles Converted to Qualified Plug-
     in Electric Drive Motor Vehicles.--Paragraph (8) of section 
     30B(h) is amended by adding at the end the following: ``, 
     except that no benefit shall be recaptured if such property 
     ceases to be eligible for such credit by reason of conversion 
     to a qualified plug-in electric drive motor vehicle.''.
       (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. 1144. TREATMENT OF ALTERNATIVE MOTOR VEHICLE CREDIT AS A 
                   PERSONAL CREDIT ALLOWED AGAINST AMT.

       (a) 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) 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, 25D, 30, and 30D) 
     and section 27 for the taxable year.''.
       (b) Conforming Amendments.--
       (1)(A) Section 24(b)(3)(B), as amended by this Act, is 
     amended by inserting ``30B,'' after ``30,''.
       (B) Section 25(e)(1)(C)(ii), as amended by this Act, is 
     amended by inserting ``30B,'' after ``30,''.
       (C) Section 25B(g)(2), as amended by this Act, is amended 
     by inserting ``30B,'' after ``30,''.
       (D) Section 26(a)(1), as amended by this Act, is amended by 
     inserting ``30B,'' after ``30,''.
       (E) Section 904(i), as amended by this Act, is amended by 
     inserting ``30B,'' after ``30''.
       (F) Section 1400C(d)(2), as amended by this Act, is amended 
     by striking ``and 30'' and inserting ``30, and 30B''.
       (2) Section 30C(d)(2)(A), as amended by this Act, is 
     amended by striking ``sections 27 and 30B'' and inserting 
     ``section 27''.
       (3) Section 55(c)(3) is amended by striking ``30B(g)(2),''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2008.
       (d) Application of EGTRRA Sunset.--The amendment made by 
     subsection (b)(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.

           PART VI--PARITY FOR TRANSPORTATION FRINGE BENEFITS

     SEC. 1151. INCREASED EXCLUSION AMOUNT FOR COMMUTER TRANSIT 
                   BENEFITS AND TRANSIT PASSES.

       (a) In General.--Paragraph (2) of section 132(f) is amended 
     by adding at the end the following flush sentence:
     ``In the case of any month beginning on or after the date of 
     the enactment of this sentence and before January 1, 2011, 
     subparagraph (A) shall be applied as if the dollar amount 
     therein were the same as the dollar amount in effect for such 
     month under subparagraph (B).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to months beginning on or after the date of the 
     enactment of this section.

                Subtitle C--Tax Incentives for Business

                PART I--TEMPORARY INVESTMENT INCENTIVES

     SEC. 1201. SPECIAL ALLOWANCE FOR CERTAIN PROPERTY ACQUIRED 
                   DURING 2009.

       (a) Extension of Special Allowance.--
       (1) In general.--Paragraph (2) of section 168(k) is 
     amended--
       (A) by striking ``January 1, 2010'' and inserting ``January 
     1, 2011'', and
       (B) by striking ``January 1, 2009'' each place it appears 
     and inserting ``January 1, 2010''.
       (2) Conforming amendments.--
       (A) The heading for subsection (k) of section 168 is 
     amended by striking ``January 1, 2009'' and inserting 
     ``January 1, 2010''.
       (B) The heading for clause (ii) of section 168(k)(2)(B) is 
     amended by striking ``pre-january 1, 2009'' and inserting 
     ``pre-january 1, 2010''.
       (C) Subparagraph (B) of section 168(l)(5) is amended by 
     striking ``January 1, 2009'' and inserting ``January 1, 
     2010''.
       (D) Subparagraph (C) of section 168(n)(2) is amended by 
     striking ``January 1, 2009'' and inserting ``January 1, 
     2010''.
       (E) Subparagraph (B) of section 1400N(d)(3) is amended by 
     striking ``January 1, 2009'' and inserting ``January 1, 
     2010''.
       (3) Technical amendments.--
       (A) Subparagraph (D) of section 168(k)(4) is amended--
       (i) by striking ``and'' at the end of clause (i),
       (ii) by redesignating clause (ii) as clause (iii), and
       (iii) by inserting after clause (i) the following new 
     clause:
       ``(ii) `April 1, 2008' shall be substituted for `January 1, 
     2008' in subparagraph (A)(iii)(I) thereof, and''.
       (B) Subparagraph (A) of section 6211(b)(4) is amended by 
     inserting ``168(k)(4),'' after ``53(e),''.
       (b) Extension of Election to Accelerate the Amt and 
     Research Credits in Lieu of Bonus Depreciation.--
       (1) In general.--Section 168(k)(4) (relating to election to 
     accelerate the AMT and research credits in lieu of bonus 
     depreciation) is amended--
       (A) by striking ``2009'' and inserting ``2010''in 
     subparagraph (D)(iii) (as redesignated by subsection (a)(3)), 
     and
       (B) by adding at the end the following new subparagraph:
       ``(H) Special rules for extension property.--
       ``(i) Taxpayers previously electing acceleration.--In the 
     case of a taxpayer who made the election under subparagraph 
     (A) for its first taxable year ending after March 31, 2008--

       ``(I) the taxpayer may elect not to have this paragraph 
     apply to extension property, but
       ``(II) if the taxpayer does not make the election under 
     subclause (I), in applying this paragraph to the taxpayer a 
     separate bonus depreciation amount, maximum amount, and 
     maximum increase amount shall be computed and applied to 
     eligible qualified property which is extension property and 
     to eligible qualified property which is not extension 
     property.

       ``(ii) Taxpayers not previously electing acceleration.--In 
     the case of a taxpayer who did not make the election under 
     subparagraph (A) for its first taxable year ending after 
     March 31, 2008--

       ``(I) the taxpayer may elect to have this paragraph apply 
     to its first taxable year ending after December 31, 2008, and 
     each subsequent taxable year, and
       ``(II) if the taxpayer makes the election under subclause 
     (I), this paragraph shall only apply to eligible qualified 
     property which is extension property.

       ``(iii) Extension property.--For purposes of this 
     subparagraph, the term `extension property'

[[Page 3948]]

     means property which is eligible qualified property solely by 
     reason of the extension of the application of the special 
     allowance under paragraph (1) pursuant to the amendments made 
     by section 1201(a) of the American Recovery and Reinvestment 
     Tax Act of 2009 (and the application of such extension to 
     this paragraph pursuant to the amendment made by section 
     1201(b)(1) of such Act).''.
       (2) Technical amendment.--Section 6211(b)(4)(A) is amended 
     by inserting ``168(k)(4),'' after ``53(e),''.
       (c) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to property 
     placed in service after December 31, 2008, in taxable years 
     ending after such date.
       (2) Technical amendments.--The amendments made by 
     subsections (a)(3) and (b)(2) shall apply to taxable years 
     ending after March 31, 2008.

     SEC. 1202. TEMPORARY INCREASE IN LIMITATIONS ON EXPENSING OF 
                   CERTAIN DEPRECIABLE BUSINESS ASSETS.

       (a) In General.--Paragraph (7) of section 179(b) is 
     amended--
       (1) by striking ``2008'' and inserting ``2008, or 2009'', 
     and
       (2) by striking ``2008'' in the heading thereof and 
     inserting ``2008, and 2009''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2008.

                   PART II--SMALL BUSINESS PROVISIONS

     SEC. 1211. 5-YEAR CARRYBACK OF OPERATING LOSSES OF SMALL 
                   BUSINESSES.

       (a) In General.--Subparagraph (H) of section 172(b)(1) is 
     amended to read as follows:
       ``(H) Carryback for 2008 net operating losses of small 
     businesses.--
       ``(i) In general.--If an eligible small business elects the 
     application of this subparagraph with respect to an 
     applicable 2008 net operating loss--

       ``(I) subparagraph (A)(i) shall be applied by substituting 
     any whole number elected by the taxpayer which is more than 2 
     and less than 6 for `2',
       ``(II) subparagraph (E)(ii) shall be applied by 
     substituting the whole number which is one less than the 
     whole number substituted under subclause (I) for `2', and
       ``(III) subparagraph (F) shall not apply.

       ``(ii) Applicable 2008 net operating loss.--For purposes of 
     this subparagraph, the term `applicable 2008 net operating 
     loss' means--

       ``(I) the taxpayer's net operating loss for any taxable 
     year ending in 2008, or
       ``(II) if the taxpayer elects to have this subclause apply 
     in lieu of subclause (I), the taxpayer's net operating loss 
     for any taxable year beginning in 2008.

       ``(iii) Election.--Any election under this subparagraph 
     shall be made in such manner as may be prescribed by the 
     Secretary, and shall be made by the due date (including 
     extension of time) for filing the taxpayer's return for the 
     taxable year of the net operating loss. Any such election, 
     once made, shall be irrevocable. Any election under this 
     subparagraph may be made only with respect to 1 taxable year.
       ``(iv) Eligible small business.--For purposes of this 
     subparagraph, the term `eligible small business' has the 
     meaning given such term by subparagraph (F)(iii), except that 
     in applying such subparagraph, section 448(c) shall be 
     applied by substituting `$15,000,000' for `$5,000,000' each 
     place it appears.''.
       (b) Conforming Amendment.--Section 172 is amended by 
     striking subsection (k) and by redesignating subsection (l) 
     as subsection (k).
       (c) Anti-Abuse Rules.--The Secretary of Treasury or the 
     Secretary's designee shall prescribe such rules as are 
     necessary to prevent the abuse of the purposes of the 
     amendments made by this section, including anti-stuffing 
     rules, anti-churning rules (including rules relating to sale-
     leasebacks), and rules similar to the rules under section 
     1091 of the Internal Revenue Code of 1986 relating to losses 
     from wash sales.
       (d) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to net operating losses arising in taxable years ending after 
     December 31, 2007.
       (2) Transitional rule.--In the case of a net operating loss 
     for a taxable year ending before the date of the enactment of 
     this Act--
       (A) any election made under section 172(b)(3) of the 
     Internal Revenue Code of 1986 with respect to such loss may 
     (notwithstanding such section) be revoked before the 
     applicable date,
       (B) any election made under section 172(b)(1)(H) of such 
     Code with respect to such loss shall (notwithstanding such 
     section) be treated as timely made if made before the 
     applicable date, and
       (C) any application under section 6411(a) of such Code with 
     respect to such loss shall be treated as timely filed if 
     filed before the applicable date.
     For purposes of this paragraph, the term ``applicable date'' 
     means the date which is 60 days after the date of the 
     enactment of this Act.

     SEC. 1212. DECREASED REQUIRED ESTIMATED TAX PAYMENTS IN 2009 
                   FOR CERTAIN SMALL BUSINESSES.

       Paragraph (1) of section 6654(d) is amended by adding at 
     the end the following new subparagraph:
       ``(D) Special rule for 2009.--
       ``(i) In general.--Notwithstanding subparagraph (C), in the 
     case of any taxable year beginning in 2009, clause (ii) of 
     subparagraph (B) shall be applied to any qualified individual 
     by substituting `90 percent' for `100 percent'.
       ``(ii) Qualified individual.--For purposes of this 
     subparagraph, the term `qualified individual' means any 
     individual if--

       ``(I) the adjusted gross income shown on the return of such 
     individual for the preceding taxable year is less than 
     $500,000, and
       ``(II) such individual certifies that more than 50 percent 
     of the gross income shown on the return of such individual 
     for the preceding taxable year was income from a small 
     business.

     A certification under subclause (II) shall be in such form 
     and manner and filed at such time as the Secretary may by 
     regulations prescribe.
       ``(iii) Income from a small business.--For purposes of 
     clause (ii), income from a small business means, with respect 
     to any individual, income from a trade or business the 
     average number of employees of which was less than 500 
     employees for the calendar year ending with or within the 
     preceding taxable year of the individual.
       ``(iv) Separate returns.--In the case of a married 
     individual (within the meaning of section 7703) who files a 
     separate return for the taxable year for which the amount of 
     the installment is being determined, clause (ii)(I) shall be 
     applied by substituting `$250,000' for `$500,000'.
       ``(v) Estates and trusts.--In the case of an estate or 
     trust, adjusted gross income shall be determined as provided 
     in section 67(e).''.

                   PART III--INCENTIVES FOR NEW JOBS

     SEC. 1221. INCENTIVES TO HIRE UNEMPLOYED VETERANS AND 
                   DISCONNECTED YOUTH.

       (a) In General.--Subsection (d) of section 51 is amended by 
     adding at the end the following new paragraph:
       ``(14) Credit allowed for unemployed veterans and 
     disconnected youth hired in 2009 or 2010.--
       ``(A) In general.--Any unemployed veteran or disconnected 
     youth who begins work for the employer during 2009 or 2010 
     shall be treated as a member of a targeted group for purposes 
     of this subpart.
       ``(B) Definitions.--For purposes of this paragraph--
       ``(i) Unemployed veteran.--The term `unemployed veteran' 
     means any veteran (as defined in paragraph (3)(B), determined 
     without regard to clause (ii) thereof) who is certified by 
     the designated local agency as--

       ``(I) having been discharged or released from active duty 
     in the Armed Forces at any time during the 5-year period 
     ending on the hiring date, and
       ``(II) being in receipt of unemployment compensation under 
     State or Federal law for not less than 4 weeks during the 1-
     year period ending on the hiring date.

       ``(ii) Disconnected youth.--The term `disconnected youth' 
     means any individual who is certified by the designated local 
     agency--

       ``(I) as having attained age 16 but not age 25 on the 
     hiring date,
       ``(II) as not regularly attending any secondary, technical, 
     or post-secondary school during the 6-month period preceding 
     the hiring date,
       ``(III) as not regularly employed during such 6-month 
     period, and
       ``(IV) as not readily employable by reason of lacking a 
     sufficient number of basic skills.''.

       (b) Effective Date.--The amendments made by this section 
     shall apply to individuals who begin work for the employer 
     after December 31, 2008.

              PART IV--RULES RELATING TO DEBT INSTRUMENTS

     SEC. 1231. DEFERRAL AND RATABLE INCLUSION OF INCOME ARISING 
                   FROM BUSINESS INDEBTEDNESS DISCHARGED BY THE 
                   REACQUISITION OF A DEBT INSTRUMENT.

       (a) In General.--Section 108 (relating to income from 
     discharge of indebtedness) is amended by adding at the end 
     the following new subsection:
       ``(i) Deferral and Ratable Inclusion of Income Arising From 
     Business Indebtedness Discharged by the Reacquisition of a 
     Debt Instrument.--
       ``(1) In general.--At the election of the taxpayer, income 
     from the discharge of indebtedness in connection with the 
     reacquisition after December 31, 2008, and before January 1, 
     2011, of an applicable debt instrument shall be includible in 
     gross income ratably over the 5-taxable-year period beginning 
     with--
       ``(A) in the case of a reacquisition occurring in 2009, the 
     fifth taxable year following the taxable year in which the 
     reacquisition occurs, and
       ``(B) in the case of a reacquisition occurring in 2010, the 
     fourth taxable year following the taxable year in which the 
     reacquisition occurs.
       ``(2) Deferral of deduction for original issue discount in 
     debt for debt exchanges.--
       ``(A) In general.--If, as part of a reacquisition to which 
     paragraph (1) applies, any debt instrument is issued for the 
     applicable debt instrument being reacquired (or is treated as 
     so issued under subsection (e)(4) and the regulations 
     thereunder) and there is any original issue discount 
     determined under subpart A of part V

[[Page 3949]]

     of subchapter P of this chapter with respect to the debt 
     instrument so issued--
       ``(i) except as provided in clause (ii), no deduction 
     otherwise allowable under this chapter shall be allowed to 
     the issuer of such debt instrument with respect to the 
     portion of such original issue discount which--

       ``(I) accrues before the 1st taxable year in the 5-taxable-
     year period in which income from the discharge of 
     indebtedness attributable to the reacquisition of the debt 
     instrument is includible under paragraph (1), and
       ``(II) does not exceed the income from the discharge of 
     indebtedness with respect to the debt instrument being 
     reacquired, and

       ``(ii) the aggregate amount of deductions disallowed under 
     clause (i) shall be allowed as a deduction ratably over the 
     5-taxable-year period described in clause (i)(I).

     If the amount of the original issue discount accruing before 
     such 1st taxable year exceeds the income from the discharge 
     of indebtedness with respect to the applicable debt 
     instrument being reacquired, the deductions shall be 
     disallowed in the order in which the original issue discount 
     is accrued.
       ``(B) Deemed debt for debt exchanges.--For purposes of 
     subparagraph (A), if any debt instrument is issued by an 
     issuer and the proceeds of such debt instrument are used 
     directly or indirectly by the issuer to reacquire an 
     applicable debt instrument of the issuer, the debt instrument 
     so issued shall be treated as issued for the debt instrument 
     being reacquired. If only a portion of the proceeds from a 
     debt instrument are so used, the rules of subparagraph (A) 
     shall apply to the portion of any original issue discount on 
     the newly issued debt instrument which is equal to the 
     portion of the proceeds from such instrument used to 
     reacquire the outstanding instrument.
       ``(3) Applicable debt instrument.--For purposes of this 
     subsection--
       ``(A) Applicable debt instrument.--The term `applicable 
     debt instrument' means any debt instrument which was issued 
     by--
       ``(i) a C corporation, or
       ``(ii) any other person in connection with the conduct of a 
     trade or business by such person.
       ``(B) Debt instrument.--The term `debt instrument' means a 
     bond, debenture, note, certificate, or any other instrument 
     or contractual arrangement constituting indebtedness (within 
     the meaning of section 1275(a)(1)).
       ``(4) Reacquisition.--For purposes of this subsection--
       ``(A) In general.--The term `reacquisition' means, with 
     respect to any applicable debt instrument, any acquisition of 
     the debt instrument by--
       ``(i) the debtor which issued (or is otherwise the obligor 
     under) the debt instrument, or
       ``(ii) a related person to such debtor.
       ``(B) Acquisition.--The term `acquisition' shall, with 
     respect to any applicable debt instrument, include an 
     acquisition of the debt instrument for cash, the exchange of 
     the debt instrument for another debt instrument (including an 
     exchange resulting from a modification of the debt 
     instrument), the exchange of the debt instrument for 
     corporate stock or a partnership interest, and the 
     contribution of the debt instrument to capital. Such term 
     shall also include the complete forgiveness of the 
     indebtedness by the holder of the debt instrument.
       ``(5) Other definitions and rules.--For purposes of this 
     subsection--
       ``(A) Related person.--The determination of whether a 
     person is related to another person shall be made in the same 
     manner as under subsection (e)(4).
       ``(B) Election.--
       ``(i) In general.--An election under this subsection with 
     respect to any applicable debt instrument shall be made by 
     including with the return of tax imposed by chapter 1 for the 
     taxable year in which the reacquisition of the debt 
     instrument occurs a statement which--

       ``(I) clearly identifies such instrument, and
       ``(II) includes the amount of income to which paragraph (1) 
     applies and such other information as the Secretary may 
     prescribe.

       ``(ii) Election irrevocable.--Such election, once made, is 
     irrevocable.
       ``(iii) Pass-thru entities.--In the case of a partnership, 
     S corporation, or other pass-thru entity, the election under 
     this subsection shall be made by the partnership, the S 
     corporation, or other entity involved.
       ``(C) Coordination with other exclusions.--If a taxpayer 
     elects to have this subsection apply to an applicable debt 
     instrument, subparagraphs (A), (B), (C), and (D) of 
     subsection (a)(1) shall not apply to the income from the 
     discharge of such indebtedness for the taxable year of the 
     election or any subsequent taxable year.
       ``(D) Acceleration of deferred items.--
       ``(i) In general.--In the case of the death of the 
     taxpayer, the liquidation or sale of substantially all the 
     assets of the taxpayer (including in a title 11 or similar 
     case), the cessation of business by the taxpayer, or similar 
     circumstances, any item of income or deduction which is 
     deferred under this subsection (and has not previously been 
     taken into account) shall be taken into account in the 
     taxable year in which such event occurs (or in the case of a 
     title 11 or similar case, the day before the petition is 
     filed).
       ``(ii) Special rule for pass-thru entities.--The rule of 
     clause (i) shall also apply in the case of the sale or 
     exchange or redemption of an interest in a partnership, S 
     corporation, or other pass-thru entity by a partner, 
     shareholder, or other person holding an ownership interest in 
     such entity.
       ``(6) Special rule for partnerships.--In the case of a 
     partnership, any income deferred under this subsection shall 
     be allocated to the partners in the partnership immediately 
     before the discharge in the manner such amounts would have 
     been included in the distributive shares of such partners 
     under section 704 if such income were recognized at such 
     time. Any decrease in a partner's share of partnership 
     liabilities as a result of such discharge shall not be taken 
     into account for purposes of section 752 at the time of the 
     discharge to the extent it would cause the partner to 
     recognize gain under section 731. Any decrease in partnership 
     liabilities deferred under the preceding sentence shall be 
     taken into account by such partner at the same time, and to 
     the extent remaining in the same amount, as income deferred 
     under this subsection is recognized.
       ``(7) Secretarial authority.--The Secretary may prescribe 
     such regulations, rules, or other guidance as may be 
     necessary or appropriate for purposes of applying this 
     subsection, including--
       ``(A) extending the application of the rules of paragraph 
     (5)(D) to other circumstances where appropriate,
       ``(B) requiring reporting of the election (and such other 
     information as the Secretary may require) on returns of tax 
     for subsequent taxable years, and
       ``(C) rules for the application of this subsection to 
     partnerships, S corporations, and other pass-thru entities, 
     including for the allocation of deferred deductions.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to discharges in taxable years ending after 
     December 31, 2008.

     SEC. 1232. MODIFICATIONS OF RULES FOR ORIGINAL ISSUE DISCOUNT 
                   ON CERTAIN HIGH YIELD OBLIGATIONS.

       (a) Suspension of Special Rules.--Section 163(e)(5) 
     (relating to special rules for original issue discount on 
     certain high yield obligations) is amended by redesignating 
     subparagraph (F) as subparagraph (G) and by inserting after 
     subparagraph (E) the following new subparagraph:
       ``(F) Suspension of application of paragraph.--
       ``(i) Temporary suspension.--This paragraph shall not apply 
     to any applicable high yield discount obligation issued 
     during the period beginning on September 1, 2008, and ending 
     on December 31, 2009, in exchange (including an exchange 
     resulting from a modification of the debt instrument) for an 
     obligation which is not an applicable high yield discount 
     obligation and the issuer (or obligor) of which is the same 
     as the issuer (or obligor) of such applicable high yield 
     discount obligation. The preceding sentence shall not apply 
     to any obligation the interest on which is interest described 
     in section 871(h)(4) (without regard to subparagraph (D) 
     thereof) or to any obligation issued to a related person 
     (within the meaning of section 108(e)(4)).
       ``(ii) Successive application.--Any obligation to which 
     clause (i) applies shall not be treated as an applicable high 
     yield discount obligation for purposes of applying this 
     subparagraph to any other obligation issued in exchange for 
     such obligation.
       ``(iii) Secretarial authority to suspend application.--The 
     Secretary may apply this paragraph with respect to debt 
     instruments issued in periods following the period described 
     in clause (i) if the Secretary determines that such 
     application is appropriate in light of distressed conditions 
     in the debt capital markets.''.
       (b) Interest Rate Used in Determining High Yield 
     Obligations.--The last sentence of section 163(i)(1) is 
     amended--
       (1) by inserting ``(i)'' after ``regulation'', and
       (2) by inserting ``, or (ii) permit, on a temporary basis, 
     a rate to be used with respect to any debt instrument which 
     is higher than the applicable Federal rate if the Secretary 
     determines that such rate is appropriate in light of 
     distressed conditions in the debt capital markets'' before 
     the period at the end.
       (c) Effective Date.--
       (1) Suspension.--The amendments made by subsection (a) 
     shall apply to obligations issued after August 31, 2008, in 
     taxable years ending after such date.
       (2) Interest rate authority.--The amendments made by 
     subsection (b) shall apply to obligations issued after 
     December 31, 2009, in taxable years ending after such date.

                 PART V--QUALIFIED SMALL BUSINESS STOCK

     SEC. 1241. SPECIAL RULES APPLICABLE TO QUALIFIED SMALL 
                   BUSINESS STOCK FOR 2009 AND 2010.

       (a) In General.--Section 1202(a) is amended by adding at 
     the end the following new paragraph:
       ``(3) Special rules for 2009 and 2010.--In the case of 
     qualified small business stock acquired after the date of the 
     enactment of this paragraph and before January 1, 2011--
       ``(A) paragraph (1) shall be applied by substituting `75 
     percent' for `50 percent', and
       ``(B) paragraph (2) shall not apply.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to stock acquired after the date of the enactment 
     of this Act.

                        PART VI--S CORPORATIONS

     SEC. 1251. TEMPORARY REDUCTION IN RECOGNITION PERIOD FOR 
                   BUILT-IN GAINS TAX.

       (a) In General.--Paragraph (7) of section 1374(d) (relating 
     to definitions and special rules) is amended to read as 
     follows:
       ``(7) Recognition period.--
       ``(A) In general.--The term `recognition period' means the 
     10-year period beginning with the 1st day of the 1st taxable 
     year for which the corporation was an S corporation.

[[Page 3950]]

       ``(B) Special rule for 2009 and 2010.--In the case of any 
     taxable year beginning in 2009 or 2010, no tax shall be 
     imposed on the net recognized built-in gain of an S 
     corporation if the 7th taxable year in the recognition period 
     preceded such taxable year. The preceding sentence shall be 
     applied separately with respect to any asset to which 
     paragraph (8) applies.
       ``(C) Special rule for distributions to shareholders.--For 
     purposes of applying this section to any amount includible in 
     income by reason of distributions to shareholders pursuant to 
     section 593(e)--
       ``(i) subparagraph (A) shall be applied without regard to 
     the phrase `10-year', and
       ``(ii) subparagraph (B) shall not apply.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2008.

             PART VII--RULES RELATING TO OWNERSHIP CHANGES

     SEC. 1261. CLARIFICATION OF REGULATIONS RELATED TO 
                   LIMITATIONS ON CERTAIN BUILT-IN LOSSES 
                   FOLLOWING AN OWNERSHIP CHANGE.

       (a) Findings.--Congress finds as follows:
       (1) The delegation of authority to the Secretary of the 
     Treasury under section 382(m) of the Internal Revenue Code of 
     1986 does not authorize the Secretary to provide exemptions 
     or special rules that are restricted to particular industries 
     or classes of taxpayers.
       (2) Internal Revenue Service Notice 2008-83 is inconsistent 
     with the congressional intent in enacting such section 
     382(m).
       (3) The legal authority to prescribe Internal Revenue 
     Service Notice 2008-83 is doubtful.
       (4) However, as taxpayers should generally be able to rely 
     on guidance issued by the Secretary of the Treasury 
     legislation is necessary to clarify the force and effect of 
     Internal Revenue Service Notice 2008-83 and restore the 
     proper application under the Internal Revenue Code of 1986 of 
     the limitation on built-in losses following an ownership 
     change of a bank.
       (b) Determination of Force and Effect of Internal Revenue 
     Service Notice 2008-83 Exempting Banks From Limitation on 
     Certain Built-in Losses Following Ownership Change.--
       (1) In general.--Internal Revenue Service Notice 2008-83--
       (A) shall be deemed to have the force and effect of law 
     with respect to any ownership change (as defined in section 
     382(g) of the Internal Revenue Code of 1986) occurring on or 
     before January 16, 2009, and
       (B) shall have no force or effect with respect to any 
     ownership change after such date.
       (2) Binding contracts.--Notwithstanding paragraph (1), 
     Internal Revenue Service Notice 2008-83 shall have the force 
     and effect of law with respect to any ownership change (as so 
     defined) which occurs after January 16, 2009, if such 
     change--
       (A) is pursuant to a written binding contract entered into 
     on or before such date, or
       (B) is pursuant to a written agreement entered into on or 
     before such date and such agreement was described on or 
     before such date in a public announcement or in a filing with 
     the Securities and Exchange Commission required by reason of 
     such ownership change.

     SEC. 1262. TREATMENT OF CERTAIN OWNERSHIP CHANGES FOR 
                   PURPOSES OF LIMITATIONS ON NET OPERATING LOSS 
                   CARRYFORWARDS AND CERTAIN BUILT-IN LOSSES.

       (a) In General.--Section 382 is amended by adding at the 
     end the following new subsection:
       ``(n) Special Rule for Certain Ownership Changes.--
       ``(1) In general.--The limitation contained in subsection 
     (a) shall not apply in the case of an ownership change which 
     is pursuant to a restructuring plan of a taxpayer which--
       ``(A) is required under a loan agreement or a commitment 
     for a line of credit entered into with the Department of the 
     Treasury under the Emergency Economic Stabilization Act of 
     2008, and
       ``(B) is intended to result in a rationalization of the 
     costs, capitalization, and capacity with respect to the 
     manufacturing workforce of, and suppliers to, the taxpayer 
     and its subsidiaries.
       ``(2) Subsequent acquisitions.--Paragraph (1) shall not 
     apply in the case of any subsequent ownership change unless 
     such ownership change is described in such paragraph.
       ``(3) Limitation based on control in corporation.--
       ``(A) In general.--Paragraph (1) shall not apply in the 
     case of any ownership change if, immediately after such 
     ownership change, any person (other than a voluntary 
     employees' beneficiary association under section 501(c)(9)) 
     owns stock of the new loss corporation possessing 50 percent 
     or more of the total combined voting power of all classes of 
     stock entitled to vote, or of the total value of the stock of 
     such corporation.
       ``(B) Treatment of related persons.--
       ``(i) In general.--Related persons shall be treated as a 
     single person for purposes of this paragraph.
       ``(ii) Related persons.--For purposes of clause (i), a 
     person shall be treated as related to another person if--

       ``(I) such person bears a relationship to such other person 
     described in section 267(b) or 707(b), or
       ``(II) such persons are members of a group of persons 
     acting in concert.''.

       (b) Effective Date.--The amendment made by this section 
     shall apply to ownership changes after the date of the 
     enactment of this Act.

             Subtitle D--Manufacturing Recovery Provisions

     SEC. 1301. TEMPORARY EXPANSION OF AVAILABILITY OF INDUSTRIAL 
                   DEVELOPMENT BONDS TO FACILITIES MANUFACTURING 
                   INTANGIBLE PROPERTY.

       (a) In General.--Subparagraph (C) of section 144(a)(12) is 
     amended--
       (1) by striking ``For purposes of this paragraph, the 
     term'' and inserting ``For purposes of this paragraph--
       ``(i) In general.--The term'', and
       (2) by striking the last sentence and inserting the 
     following new clauses:
       ``(ii) Certain facilities included.--Such term includes 
     facilities which are directly related and ancillary to a 
     manufacturing facility (determined without regard to this 
     clause) if--

       ``(I) such facilities are located on the same site as the 
     manufacturing facility, and
       ``(II) not more than 25 percent of the net proceeds of the 
     issue are used to provide such facilities.

       ``(iii) Special rules for bonds issued in 2009 and 2010.--
     In the case of any issue made after the date of enactment of 
     this clause and before January 1, 2011, clause (ii) shall not 
     apply and the net proceeds from a bond shall be considered to 
     be used to provide a manufacturing facility if such proceeds 
     are used to provide--

       ``(I) a facility which is used in the creation or 
     production of intangible property which is described in 
     section 197(d)(1)(C)(iii), or
       ``(II) a facility which is functionally related and 
     subordinate to a manufacturing facility (determined without 
     regard to this subclause) if such facility is located on the 
     same site as the manufacturing facility.''.

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

     SEC. 1302. CREDIT FOR INVESTMENT IN ADVANCED ENERGY 
                   FACILITIES.

       (a) In General.--Section 46 (relating to amount of credit) 
     is amended by striking ``and'' at the end of paragraph (3), 
     by striking the period at the end of paragraph (4), and by 
     adding at the end the following new paragraph:
       ``(5) the qualifying advanced energy project credit.''.
       (b) Amount of Credit.--Subpart E of part IV of subchapter A 
     of chapter 1 (relating to rules for computing investment 
     credit) is amended by inserting after section 48B the 
     following new section:

     ``SEC. 48C. QUALIFYING ADVANCED ENERGY PROJECT CREDIT.

       ``(a) In General.--For purposes of section 46, the 
     qualifying advanced energy project credit for any taxable 
     year is an amount equal to 30 percent of the qualified 
     investment for such taxable year with respect to any 
     qualifying advanced energy project of the taxpayer.
       ``(b) Qualified Investment.--
       ``(1) In general.--For purposes of subsection (a), the 
     qualified investment for any taxable year is the basis of 
     eligible property placed in service by the taxpayer during 
     such taxable year which is part of a qualifying advanced 
     energy project.
       ``(2) Certain qualified progress expenditures rules made 
     applicable.--Rules similar to the rules of subsections (c)(4) 
     and (d) of section 46 (as in effect on the day before the 
     enactment of the Revenue Reconciliation Act of 1990) shall 
     apply for purposes of this section.
       ``(3) Limitation.--The amount which is treated for all 
     taxable years with respect to any qualifying advanced energy 
     project shall not exceed the amount designated by the 
     Secretary as eligible for the credit under this section.
       ``(c) Definitions.--
       ``(1) Qualifying advanced energy project.--
       ``(A) In general.--The term `qualifying advanced energy 
     project' means a project--
       ``(i) which re-equips, expands, or establishes a 
     manufacturing facility for the production of--

       ``(I) property designed to be used to produce energy from 
     the sun, wind, geothermal deposits (within the meaning of 
     section 613(e)(2)), or other renewable resources,
       ``(II) fuel cells, microturbines, or an energy storage 
     system for use with electric or hybrid-electric motor 
     vehicles,
       ``(III) electric grids to support the transmission of 
     intermittent sources of renewable energy, including storage 
     of such energy,
       ``(IV) property designed to capture and sequester carbon 
     dioxide emissions,
       ``(V) property designed to refine or blend renewable fuels 
     or to produce energy conservation technologies (including 
     energy-conserving lighting technologies and smart grid 
     technologies),
       ``(VI) new qualified plug-in electric drive motor vehicles 
     (as defined by section 30D), qualified plug-in electric 
     vehicles (as defined by section 30(d)), or components which 
     are designed specifically for use with such vehicles, 
     including electric motors, generators, and power control 
     units, or
       ``(VII) other advanced energy property designed to reduce 
     greenhouse gas emissions as may be determined by the 
     Secretary, and

       ``(ii) any portion of the qualified investment of which is 
     certified by the Secretary under subsection (d) as eligible 
     for a credit under this section.
       ``(B) Exception.--Such term shall not include any portion 
     of a project for the production of any property which is used 
     in the refining or blending of any transportation fuel (other 
     than renewable fuels).
       ``(2) Eligible property.--The term `eligible property' 
     means any property--

[[Page 3951]]

       ``(A) which is necessary for the production of property 
     described in paragraph (1)(A)(i),
       ``(B) which is--
       ``(i) tangible personal property, or
       ``(ii) other tangible property (not including a building or 
     its structural components), but only if such property is used 
     as an integral part of the qualified investment credit 
     facility, and
       ``(C) with respect to which depreciation (or amortization 
     in lieu of depreciation) is allowable.
       ``(d) Qualifying Advanced Energy Project Program.--
       ``(1) Establishment.--
       ``(A) In general.--Not later than 180 days after the date 
     of enactment of this section, the Secretary, in consultation 
     with the Secretary of Energy, shall establish a qualifying 
     advanced energy project program to consider and award 
     certifications for qualified investments eligible for credits 
     under this section to qualifying advanced energy project 
     sponsors.
       ``(B) Limitation.--The total amount of credits that may be 
     allocated under the program shall not exceed $2,300,000,000.
       ``(2) Certification.--
       ``(A) Application period.--Each applicant for certification 
     under this paragraph shall submit an application containing 
     such information as the Secretary may require during the 2-
     year period beginning on the date the Secretary establishes 
     the program under paragraph (1).
       ``(B) Time to meet criteria for certification.--Each 
     applicant for certification shall have 1 year from the date 
     of acceptance by the Secretary of the application during 
     which to provide to the Secretary evidence that the 
     requirements of the certification have been met.
       ``(C) Period of issuance.--An applicant which receives a 
     certification shall have 3 years from the date of issuance of 
     the certification in order to place the project in service 
     and if such project is not placed in service by that time 
     period, then the certification shall no longer be valid.
       ``(3) Selection criteria.--In determining which qualifying 
     advanced energy projects to certify under this section, the 
     Secretary--
       ``(A) shall take into consideration only those projects 
     where there is a reasonable expectation of commercial 
     viability, and
       ``(B) shall take into consideration which projects--
       ``(i) will provide the greatest domestic job creation (both 
     direct and indirect) during the credit period,
       ``(ii) will provide the greatest net impact in avoiding or 
     reducing air pollutants or anthropogenic emissions of 
     greenhouse gases,
       ``(iii) have the greatest potential for technological 
     innovation and commercial deployment,
       ``(iv) have the lowest levelized cost of generated or 
     stored energy, or of measured reduction in energy consumption 
     or greenhouse gas emission (based on costs of the full supply 
     chain), and
       ``(v) have the shortest project time from certification to 
     completion.
       ``(4) Review and redistribution.--
       ``(A) Review.--Not later than 4 years after the date of 
     enactment of this section, the Secretary shall review the 
     credits allocated under this section as of such date.
       ``(B) Redistribution.--The Secretary may reallocate credits 
     awarded under this section if the Secretary determines that--
       ``(i) there is an insufficient quantity of qualifying 
     applications for certification pending at the time of the 
     review, or
       ``(ii) any certification made pursuant to paragraph (2) has 
     been revoked pursuant to paragraph (2)(B) because the project 
     subject to the certification has been delayed as a result of 
     third party opposition or litigation to the proposed project.
       ``(C) Reallocation.--If the Secretary determines that 
     credits under this section are available for reallocation 
     pursuant to the requirements set forth in paragraph (2), the 
     Secretary is authorized to conduct an additional program for 
     applications for certification.
       ``(5) Disclosure of allocations.--The Secretary shall, upon 
     making a certification under this subsection, publicly 
     disclose the identity of the applicant and the amount of the 
     credit with respect to such applicant.
       ``(e) Denial of Double Benefit.--A credit shall not be 
     allowed under this section for any qualified investment for 
     which a credit is allowed under section 48, 48A, or 48B.''.
       (c) Conforming Amendments.--
       (1) Section 49(a)(1)(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 after 
     clause (iv) the following new clause:
       ``(v) the basis of any property which is part of a 
     qualifying advanced energy project under section 48C.''.
       (2) The table of sections for subpart E of part IV of 
     subchapter A of chapter 1 is amended by inserting after the 
     item relating to section 48B the following new item:

``48C. Qualifying advanced energy project credit.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to periods after the date of the enactment of 
     this Act, 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 E--Economic Recovery Tools

     SEC. 1401. RECOVERY ZONE BONDS.

       (a) In General.--Subchapter Y of chapter 1 is amended by 
     adding at the end the following new part:

                    ``PART III--RECOVERY ZONE BONDS

``Sec. 1400U-1. Allocation of recovery zone bonds.
``Sec. 1400U-2. Recovery zone economic development bonds.
``Sec. 1400U-3. Recovery zone facility bonds.

     ``SEC. 1400U-1. ALLOCATION OF RECOVERY ZONE BONDS.

       ``(a) Allocations.--
       ``(1) In general.--
       ``(A) General allocation.--The Secretary shall allocate the 
     national recovery zone economic development bond limitation 
     and the national recovery zone facility bond limitation among 
     the States in the proportion that each such State's 2008 
     State employment decline bears to the aggregate of the 2008 
     State employment declines for all of the States.
       ``(B) Minimum allocation.--The Secretary shall adjust the 
     allocations under subparagraph (A) for any calendar year for 
     each State to the extent necessary to ensure that no State 
     receives less than 0.9 percent of the national recovery zone 
     economic development bond limitation and 0.9 percent of the 
     national recovery zone facility bond limitation.
       ``(2) 2008 state employment decline.--For purposes of this 
     subsection, the term `2008 State employment decline' means, 
     with respect to any State, the excess (if any) of--
       ``(A) the number of individuals employed in such State 
     determined for December 2007, over
       ``(B) the number of individuals employed in such State 
     determined for December 2008.
       ``(3) Allocations by states.--
       ``(A) In general.--Each State with respect to which an 
     allocation is made under paragraph (1) shall reallocate such 
     allocation among the counties and large municipalities in 
     such State in the proportion to each such county's or 
     municipality's 2008 employment decline bears to the aggregate 
     of the 2008 employment declines for all the counties and 
     municipalities in such State. A county or municipality may 
     waive any portion of an allocation made under this 
     subparagraph.
       ``(B) Large municipalities.--For purposes of subparagraph 
     (A), the term `large municipality' means a municipality with 
     a population of more than 100,000.
       ``(C) Determination of local employment declines.--For 
     purposes of this paragraph, the employment decline of any 
     municipality or county shall be determined in the same manner 
     as determining the State employment decline under paragraph 
     (2), except that in the case of a municipality any portion of 
     which is in a county, such portion shall be treated as part 
     of such municipality and not part of such county.
       ``(4) National limitations.--
       ``(A) Recovery zone economic development bonds.--There is a 
     national recovery zone economic development bond limitation 
     of $10,000,000,000.
       ``(B) Recovery zone facility bonds.--There is a national 
     recovery zone facility bond limitation of $15,000,000,000.
       ``(b) Recovery Zone.--For purposes of this part, the term 
     `recovery zone' means--
       ``(1) any area designated by the issuer as having 
     significant poverty, unemployment, rate of home foreclosures, 
     or general distress,
       ``(2) any area designated by the issuer as economically 
     distressed by reason of the closure or realignment of a 
     military installation pursuant to the Defense Base Closure 
     and Realignment Act of 1990, and
       ``(3) any area for which a designation as an empowerment 
     zone or renewal community is in effect.

     ``SEC. 1400U-2. RECOVERY ZONE ECONOMIC DEVELOPMENT BONDS.

       ``(a) In General.--In the case of a recovery zone economic 
     development bond--
       ``(1) such bond shall be treated as a qualified bond for 
     purposes of section 6431, and
       ``(2) subsection (b) of such section shall be applied by 
     substituting `45 percent' for `35 percent'.
       ``(b) Recovery Zone Economic Development Bond.--
       ``(1) In general.--For purposes of this section, the term 
     `recovery zone economic development bond' means any build 
     America bond (as defined in section 54AA(d)) issued before 
     January 1, 2011, as part of issue if--
       ``(A) 100 percent of the excess of--
       ``(i) the available project proceeds (as defined in section 
     54A) of such issue, over
       ``(ii) the amounts in a reasonably required reserve (within 
     the meaning of section 150(a)(3)) with respect to such issue,
     are to be used for one or more qualified economic development 
     purposes, and
       ``(B) the issuer designates such bond for purposes of this 
     section.
       ``(2) Limitation on amount of bonds designated.--The 
     maximum aggregate face amount of bonds which may be 
     designated by any issuer under paragraph (1) shall not exceed 
     the amount of the recovery zone economic development bond 
     limitation allocated to such issuer under section 1400U-1.
       ``(c) Qualified Economic Development Purpose.--For purposes 
     of this section, the term `qualified economic development 
     purpose' means expenditures for purposes of promoting 
     development or other economic activity in a recovery zone, 
     including--
       ``(1) capital expenditures paid or incurred with respect to 
     property located in such zone,
       ``(2) expenditures for public infrastructure and 
     construction of public facilities, and
       ``(3) expenditures for job training and educational 
     programs.

[[Page 3952]]



     ``SEC. 1400U-3. RECOVERY ZONE FACILITY BONDS.

       ``(a) In General.--For purposes of part IV of subchapter B 
     (relating to tax exemption requirements for State and local 
     bonds), the term `exempt facility bond' includes any recovery 
     zone facility bond.
       ``(b) Recovery Zone Facility Bond.--
       ``(1) In general.--For purposes of this section, the term 
     `recovery zone facility bond' means any bond issued as part 
     of an issue if--
       ``(A) 95 percent or more of the net proceeds (as defined in 
     section 150(a)(3)) of such issue are to be used for recovery 
     zone property,
       ``(B) such bond is issued before January 1, 2011, and
       ``(C) the issuer designates such bond for purposes of this 
     section.
       ``(2) Limitation on amount of bonds designated.--The 
     maximum aggregate face amount of bonds which may be 
     designated by any issuer under paragraph (1) shall not exceed 
     the amount of recovery zone facility bond limitation 
     allocated to such issuer under section 1400U-1.
       ``(c) Recovery Zone Property.--For purposes of this 
     section--
       ``(1) In general.--The term `recovery zone property' means 
     any property to which section 168 applies (or would apply but 
     for section 179) if--
       ``(A) such property was constructed, reconstructed, 
     renovated, or acquired by purchase (as defined in section 
     179(d)(2)) by the taxpayer after the date on which the 
     designation of the recovery zone took effect,
       ``(B) the original use of which in the recovery zone 
     commences with the taxpayer, and
       ``(C) substantially all of the use of which is in the 
     recovery zone and is in the active conduct of a qualified 
     business by the taxpayer in such zone.
       ``(2) Qualified business.--The term `qualified business' 
     means any trade or business except that--
       ``(A) the rental to others of real property located in a 
     recovery zone shall be treated as a qualified business only 
     if the property is not residential rental property (as 
     defined in section 168(e)(2)), and
       ``(B) such term shall not include any trade or business 
     consisting of the operation of any facility described in 
     section 144(c)(6)(B).
       ``(3) Special rules for substantial renovations and sale-
     leaseback.--Rules similar to the rules of subsections (a)(2) 
     and (b) of section 1397D shall apply for purposes of this 
     subsection.
       ``(d) Nonapplication of Certain Rules.--Sections 146 
     (relating to volume cap) and 147(d) (relating to acquisition 
     of existing property not permitted) shall not apply to any 
     recovery zone facility bond.''.
       (b) Clerical Amendment.--The table of parts for subchapter 
     Y of chapter 1 of such Code is amended by adding at the end 
     the following new item:

                  ``Part III. Recovery Zone 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. 1402. TRIBAL ECONOMIC DEVELOPMENT BONDS.

       (a) In General.--Section 7871 is amended by adding at the 
     end the following new subsection:
       ``(f) Tribal Economic Development Bonds.--
       ``(1) Allocation of limitation.--
       ``(A) In general.--The Secretary shall allocate the 
     national tribal economic development bond limitation among 
     the Indian tribal governments in such manner as the 
     Secretary, in consultation with the Secretary of the 
     Interior, determines appropriate.
       ``(B) National limitation.--There is a national tribal 
     economic development bond limitation of $2,000,000,000.
       ``(2) Bonds treated as exempt from tax.--In the case of a 
     tribal economic development bond--
       ``(A) notwithstanding subsection (c), such bond shall be 
     treated for purposes of this title in the same manner as if 
     such bond were issued by a State,
       ``(B) the Indian tribal government issuing such bond and 
     any instrumentality of such Indian tribal government shall be 
     treated as a State for purposes of section 141, and
       ``(C) section 146 shall not apply.
       ``(3) Tribal economic development bond.--
       ``(A) In general.--For purposes of this section, the term 
     `tribal economic development bond' means any bond issued by 
     an Indian tribal government--
       ``(i) the interest on which would be exempt from tax under 
     section 103 if issued by a State or local government, and
       ``(ii) which is designated by the Indian tribal government 
     as a tribal economic development bond for purposes of this 
     subsection.
       ``(B) Exceptions.--Such term shall not include any bond 
     issued as part of an issue if any portion of the proceeds of 
     such issue are used to finance--
       ``(i) any portion of a building in which class II or class 
     III gaming (as defined in section 4 of the Indian Gaming 
     Regulatory Act) is conducted or housed or any other property 
     actually used in the conduct of such gaming, or
       ``(ii) any facility located outside the Indian reservation 
     (as defined in section 168(j)(6)).
       ``(C) Limitation on amount of bonds designated.--The 
     maximum aggregate face amount of bonds which may be 
     designated by any Indian tribal government under subparagraph 
     (A) shall not exceed the amount of national tribal economic 
     development bond limitation allocated to such government 
     under paragraph (1).''.
       (b) Study.--The Secretary of the Treasury, or the 
     Secretary's delegate, shall conduct a study of the effects of 
     the amendment made by subsection (a). Not later than 1 year 
     after the date of the enactment of this Act, the Secretary of 
     the Treasury, or the Secretary's delegate, shall report to 
     Congress on the results of the study conducted under this 
     paragraph, including the Secretary's recommendations 
     regarding such amendment.
       (c) Effective Date.--The amendment made by subsection (a) 
     shall apply to obligations issued after the date of the 
     enactment of this Act.

     SEC. 1403. INCREASE IN NEW MARKETS TAX CREDIT.

       (a) In General.--Section 45D(f)(1) is amended--
       (1) by striking ``and'' at the end of subparagraph (C),
       (2) by striking ``, 2007, 2008, and 2009.'' in subparagraph 
     (D), and inserting ``and 2007,'', and
       (3) by adding at the end the following new subparagraphs:
       ``(E) $5,000,000,000 for 2008, and
       ``(F) $5,000,000,000 for 2009.''.
       (b) Special Rule for Allocation of Increased 2008 
     Limitation.--The amount of the increase in the new markets 
     tax credit limitation for calendar year 2008 by reason of the 
     amendments made by subsection (a) shall be allocated in 
     accordance with section 45D(f)(2) of the Internal Revenue 
     Code of 1986 to qualified community development entities (as 
     defined in section 45D(c) of such Code) which--
       (1) submitted an allocation application with respect to 
     calendar year 2008, and
       (2)(A) did not receive an allocation for such calendar 
     year, or
       (B) received an allocation for such calendar year in an 
     amount less than the amount requested in the allocation 
     application.

     SEC. 1404. COORDINATION OF LOW-INCOME HOUSING CREDIT AND LOW-
                   INCOME HOUSING GRANTS.

       Subsection (i) of section 42 is amended by adding at the 
     end the following new paragraph:
       ``(9) Coordination with low-income housing grants.--
       ``(A) Reduction in state housing credit ceiling for low-
     income housing grants received in 2009.--For purposes of this 
     section, the amounts described in clauses (i) through (iv) of 
     subsection (h)(3)(C) with respect to any State for 2009 shall 
     each be reduced by so much of such amount as is taken into 
     account in determining the amount of any grant to such State 
     under section 1602 of the American Recovery and Reinvestment 
     Tax Act of 2009.
       ``(B) Special rule for basis.--Basis of a qualified low-
     income building shall not be reduced by the amount of any 
     grant described in subparagraph (A).''.

               Subtitle F--Infrastructure Financing Tools

          PART I--IMPROVED MARKETABILITY FOR TAX-EXEMPT BONDS

     SEC. 1501. DE MINIMIS SAFE HARBOR EXCEPTION FOR TAX-EXEMPT 
                   INTEREST EXPENSE OF FINANCIAL INSTITUTIONS.

       (a) In General.--Subsection (b) of section 265 is amended 
     by adding at the end the following new paragraph:
       ``(7) De minimis exception for bonds issued during 2009 or 
     2010.--
       ``(A) In general.--In applying paragraph (2)(A), there 
     shall not be taken into account tax-exempt obligations issued 
     during 2009 or 2010.
       ``(B) Limitation.--The amount of tax-exempt obligations not 
     taken into account by reason of subparagraph (A) shall not 
     exceed 2 percent of the amount determined under paragraph 
     (2)(B).
       ``(C) Refundings.--For purposes of this paragraph, a 
     refunding bond (whether a current or advance refunding) shall 
     be treated as issued on the date of the issuance of the 
     refunded bond (or in the case of a series of refundings, the 
     original bond).''.
       (b) Treatment as Financial Institution Preference Item.--
     Clause (iv) of section 291(e)(1)(B) is amended by adding at 
     the end the following: ``That portion of any obligation not 
     taken into account under paragraph (2)(A) of section 265(b) 
     by reason of paragraph (7) of such section shall be treated 
     for purposes of this section as having been acquired on 
     August 7, 1986.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to obligations issued after December 31, 2008.

     SEC. 1502. MODIFICATION OF SMALL ISSUER EXCEPTION TO TAX-
                   EXEMPT INTEREST EXPENSE ALLOCATION RULES FOR 
                   FINANCIAL INSTITUTIONS.

       (a) In General.--Paragraph (3) of section 265(b) (relating 
     to exception for certain tax-exempt obligations) is amended 
     by adding at the end the following new subparagraph:
       ``(G) Special rules for obligations issued during 2009 and 
     2010.--
       ``(i) Increase in limitation.--In the case of obligations 
     issued during 2009 or 2010, subparagraphs (C)(i), (D)(i), and 
     (D)(iii)(II) shall each be applied by substituting 
     `$30,000,000' for `$10,000,000'.
       ``(ii) Qualified 501(c)(3) bonds treated as issued by 
     exempt organization.--In the case of a qualified 501(c)(3) 
     bond (as defined in section 145) issued during 2009 or 2010, 
     this paragraph shall be applied by treating the 501(c)(3) 
     organization for whose benefit such bond was issued as the 
     issuer.
       ``(iii) Special rule for qualified financings.--In the case 
     of a qualified financing issue issued during 2009 or 2010--

[[Page 3953]]

       ``(I) subparagraph (F) shall not apply, and
       ``(II) any obligation issued as a part of such issue shall 
     be treated as a qualified tax-exempt obligation if the 
     requirements of this paragraph are met with respect to each 
     qualified portion of the issue (determined by treating each 
     qualified portion as a separate issue which is issued by the 
     qualified borrower with respect to which such portion 
     relates).

       ``(iv) Qualified financing issue.--For purposes of this 
     subparagraph, the term `qualified financing issue' means any 
     composite, pooled, or other conduit financing issue the 
     proceeds of which are used directly or indirectly to make or 
     finance loans to 1 or more ultimate borrowers each of whom is 
     a qualified borrower.
       ``(v) Qualified portion.--For purposes of this 
     subparagraph, the term `qualified portion' means that portion 
     of the proceeds which are used with respect to each qualified 
     borrower under the issue.
       ``(vi) Qualified borrower.--For purposes of this 
     subparagraph, the term `qualified borrower' means a borrower 
     which is a State or political subdivision thereof or an 
     organization described in section 501(c)(3) and exempt from 
     taxation under section 501(a).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to obligations issued after December 31, 2008.

     SEC. 1503. TEMPORARY MODIFICATION OF ALTERNATIVE MINIMUM TAX 
                   LIMITATIONS ON TAX-EXEMPT BONDS.

       (a) Interest on Private Activity Bonds Issued During 2009 
     and 2010 Not Treated as Tax Preference Item.--Subparagraph 
     (C) of section 57(a)(5) is amended by adding at the end a new 
     clause:
       ``(vi) Exception for bonds issued in 2009 and 2010.--

       ``(I) In general.--For purposes of clause (i), the term 
     `private activity bond' shall not include any bond issued 
     after December 31, 2008, and before January 1, 2011.
       ``(II) Treatment of refunding bonds.--For purposes of 
     subclause (I), a refunding bond (whether a current or advance 
     refunding) shall be treated as issued on the date of the 
     issuance of the refunded bond (or in the case of a series of 
     refundings, the original bond).
       ``(III) Exception for certain refunding bonds.--Subclause 
     (II) shall not apply to any refunding bond which is issued to 
     refund any bond which was issued after December 31, 2003, and 
     before January 1, 2009.''.

       (b) No Adjustment to Adjusted Current Earnings for Interest 
     on Tax-Exempt Bonds Issued During 2009 and 2010.--
     Subparagraph (B) of section 56(g)(4) is amended by adding at 
     the end the following new clause:
       ``(iv) Tax exempt interest on bonds issued in 2009 and 
     2010.--

       ``(I) In general.--Clause (i) shall not apply in the case 
     of any interest on a bond issued after December 31, 2008, and 
     before January 1, 2011.
       ``(II) Treatment of refunding bonds.--For purposes of 
     subclause (I), a refunding bond (whether a current or advance 
     refunding) shall be treated as issued on the date of the 
     issuance of the refunded bond (or in the case of a series of 
     refundings, the original bond).
       ``(III) Exception for certain refunding bonds.--Subclause 
     (II) shall not apply to any refunding bond which is issued to 
     refund any bond which was issued after December 31, 2003, and 
     before January 1, 2009.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to obligations issued after December 31, 2008.

     SEC. 1504. MODIFICATION TO HIGH SPEED INTERCITY RAIL FACILITY 
                   BONDS.

       (a) In General.--Paragraph (1) of section 142(i) is amended 
     by striking ``operate at speeds in excess of'' and inserting 
     ``be capable of attaining a maximum speed in excess of''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to obligations issued after the date of the 
     enactment of this Act.

    PART II--DELAY IN APPLICATION OF WITHHOLDING TAX ON GOVERNMENT 
                              CONTRACTORS

     SEC. 1511. DELAY IN APPLICATION OF WITHHOLDING TAX ON 
                   GOVERNMENT CONTRACTORS.

       Subsection (b) of section 511 of the Tax Increase 
     Prevention and Reconciliation Act of 2005 is amended by 
     striking ``December 31, 2010'' and inserting ``December 31, 
     2011''.

                 PART III--TAX CREDIT BONDS FOR SCHOOLS

     SEC. 1521. QUALIFIED SCHOOL CONSTRUCTION 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. 54F. QUALIFIED SCHOOL CONSTRUCTION BONDS.

       ``(a) Qualified School Construction Bond.--For purposes of 
     this subchapter, the term `qualified school construction 
     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 the construction, rehabilitation, or 
     repair of a public school facility or for the acquisition of 
     land on which such a facility is to be constructed with part 
     of the proceeds of such issue,
       ``(2) the bond is issued by a State or local government 
     within the jurisdiction of which such school is located, and
       ``(3) the issuer designates such bond for purposes of this 
     section.
       ``(b) Limitation on Amount of Bonds Designated.--The 
     maximum aggregate face amount of bonds issued during any 
     calendar year which may be designated under subsection (a) by 
     any issuer shall not exceed the limitation amount allocated 
     under subsection (d) for such calendar year to such issuer.
       ``(c) National Limitation on Amount of Bonds Designated.--
     There is a national qualified school construction bond 
     limitation for each calendar year. Such limitation is--
       ``(1) $11,000,000,000 for 2009,
       ``(2) $11,000,000,000 for 2010, and
       ``(3) except as provided in subsection (e), zero after 
     2010.
       ``(d) Allocation of Limitation.--
       ``(1) Allocation among states.--Except as provided in 
     paragraph (2)(C), the limitation applicable under subsection 
     (c) for any calendar year shall be allocated by the Secretary 
     among the States in proportion to the respective amounts each 
     such State is eligible to receive under section 1124 of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     6333) for the most recent fiscal year ending before such 
     calendar year. The limitation amount allocated to a State 
     under the preceding sentence shall be allocated by the State 
     to issuers within such State.
       ``(2) 40 percent of limitation allocated among largest 
     school districts.--
       ``(A) In general.--40 percent of the limitation applicable 
     under subsection (c) for any calendar year shall be allocated 
     under subparagraph (B) by the Secretary among local 
     educational agencies which are large local educational 
     agencies for such year.
       ``(B) Allocation formula.--The amount to be allocated under 
     subparagraph (A) for any calendar year shall be allocated 
     among large local educational agencies in proportion to the 
     respective amounts each such agency received under section 
     1124 of the Elementary and Secondary Education Act of 1965 
     (20 U.S.C. 6333) for the most recent fiscal year ending 
     before such calendar year.
       ``(C) Reduction in state allocation.--The allocation to any 
     State under paragraph (1) shall be reduced by the aggregate 
     amount of the allocations under this paragraph to large local 
     educational agencies within such State.
       ``(D) Allocation of unused limitation to state.--The amount 
     allocated under this paragraph to a large local educational 
     agency for any calendar year may be reallocated by such 
     agency to the State in which such agency is located for such 
     calendar year. Any amount reallocated to a State under the 
     preceding sentence may be allocated as provided in paragraph 
     (1).
       ``(E) Large local educational agency.--For purposes of this 
     paragraph, the term `large local educational agency' means, 
     with respect to a calendar year, any local educational agency 
     if such agency is--
       ``(i) among the 100 local educational agencies with the 
     largest numbers of children aged 5 through 17 from families 
     living below the poverty level, as determined by the 
     Secretary using the most recent data available from the 
     Department of Commerce that are satisfactory to the 
     Secretary, or
       ``(ii) 1 of not more than 25 local educational agencies 
     (other than those described in clause (i)) that the Secretary 
     of Education determines (based on the most recent data 
     available satisfactory to the Secretary) are in particular 
     need of assistance, based on a low level of resources for 
     school construction, a high level of enrollment growth, or 
     such other factors as the Secretary deems appropriate.
       ``(3) Allocations to certain possessions.--The amount to be 
     allocated under paragraph (1) to any possession of the United 
     States other than Puerto Rico shall be the amount which would 
     have been allocated if all allocations under paragraph (1) 
     were made on the basis of respective populations of 
     individuals below the poverty line (as defined by the Office 
     of Management and Budget). In making other allocations, the 
     amount to be allocated under paragraph (1) shall be reduced 
     by the aggregate amount allocated under this paragraph to 
     possessions of the United States.
       ``(4) Allocations for indian schools.--In addition to the 
     amounts otherwise allocated under this subsection, 
     $200,000,000 for calendar year 2009, and $200,000,000 for 
     calendar year 2010, shall be allocated by the Secretary of 
     the Interior for purposes of the construction, 
     rehabilitation, and repair of schools funded by the Bureau of 
     Indian Affairs. In the case of amounts allocated under the 
     preceding sentence, Indian tribal governments (as defined in 
     section 7701(a)(40)) shall be treated as qualified issuers 
     for purposes of this subchapter.
       ``(e) Carryover of Unused Limitation.--If for any calendar 
     year--
       ``(1) the amount allocated under subsection (d) to any 
     State, exceeds
       ``(2) the amount of bonds issued during such year which are 
     designated under subsection (a) pursuant to such allocation,

     the limitation amount under such subsection for such State 
     for the following calendar year shall be increased by the 
     amount of such excess. A similar rule shall apply to the 
     amounts allocated under subsection (d)(4).''.
       (b) Conforming Amendments.--
       (1) Paragraph (1) of section 54A(d) is amended by striking 
     ``or'' at the end of subparagraph (C), by inserting ``or'' at 
     the end of subparagraph (D), and by inserting after 
     subparagraph (D) the following new subparagraph:
       ``(E) a qualified school construction bond,''.
       (2) Subparagraph (C) of section 54A(d)(2) is amended by 
     striking ``and'' at the end of clause (iii), by striking the 
     period at the end of clause

[[Page 3954]]

     (iv) and inserting ``, and'', and by adding at the end the 
     following new clause:
       ``(v) in the case of a qualified school construction bond, 
     a purpose specified in section 54F(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. 54F. Qualified school construction 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. 1522. EXTENSION AND EXPANSION OF QUALIFIED ZONE ACADEMY 
                   BONDS.

       (a) In General.--Section 54E(c)(1) is amended by striking 
     ``and 2009'' and inserting ``and $1,400,000,000 for 2009 and 
     2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to obligations issued after December 31, 2008.

                      PART IV--BUILD AMERICA BONDS

     SEC. 1531. BUILD AMERICA BONDS.

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

                    ``Subpart J--Build America Bonds

``Sec. 54AA. Build America bonds.

     ``SEC. 54AA. BUILD AMERICA BONDS.

       ``(a) In General.--If a taxpayer holds a build America bond 
     on one or more interest payment dates of the bond during any 
     taxable year, there shall be allowed as a credit against the 
     tax imposed by this chapter for the taxable year an amount 
     equal to the sum of the credits determined under subsection 
     (b) with respect to such dates.
       ``(b) Amount of Credit.--The amount of the credit 
     determined under this subsection with respect to any interest 
     payment date for a build America bond is 35 percent of the 
     amount of interest payable by the issuer with respect to such 
     date .
       ``(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 and this subpart).
       ``(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 
     (determined before the application of paragraph (1) for such 
     succeeding taxable year).
       ``(d) Build America Bond.--
       ``(1) In general.--For purposes of this section, the term 
     `build America bond' means any obligation (other than a 
     private activity bond) if--
       ``(A) the interest on such obligation would (but for this 
     section) be excludable from gross income under section 103,
       ``(B) such obligation is issued before January 1, 2011, and
       ``(C) the issuer makes an irrevocable election to have this 
     section apply.
       ``(2) Applicable rules.--For purposes of applying paragraph 
     (1)--
       ``(A) for purposes of section 149(b), a build America bond 
     shall not be treated as federally guaranteed by reason of the 
     credit allowed under subsection (a) or section 6431,
       ``(B) for purposes of section 148, the yield on a build 
     America bond shall be determined without regard to the credit 
     allowed under subsection (a), and
       ``(C) a bond shall not be treated as a build America bond 
     if the issue price has more than a de minimis amount 
     (determined under rules similar to the rules of section 
     1273(a)(3)) of premium over the stated principal amount of 
     the bond.
       ``(e) Interest Payment Date.--For purposes of this section, 
     the term `interest payment date' means any date on which the 
     holder of record of the build America bond is entitled to a 
     payment of interest under such bond.
       ``(f) Special Rules.--
       ``(1) Interest on build america bonds includible in gross 
     income for federal income tax purposes.--For purposes of this 
     title, interest on any build America bond shall be includible 
     in gross income.
       ``(2) Application of certain rules.--Rules similar to the 
     rules of subsections (f), (g), (h), and (i) of section 54A 
     shall apply for purposes of the credit allowed under 
     subsection (a).
       ``(g) Special Rule for Qualified Bonds Issued Before 
     2011.--In the case of a qualified bond issued before January 
     1, 2011--
       ``(1) Issuer allowed refundable credit.--In lieu of any 
     credit allowed under this section with respect to such bond, 
     the issuer of such bond shall be allowed a credit as provided 
     in section 6431.
       ``(2) Qualified bond.--For purposes of this subsection, the 
     term `qualified bond' means any build America bond issued as 
     part of an issue if--
       ``(A) 100 percent of the excess of--
       ``(i) the available project proceeds (as defined in section 
     54A) of such issue, over
       ``(ii) the amounts in a reasonably required reserve (within 
     the meaning of section 150(a)(3)) with respect to such issue,
     are to be used for capital expenditures, and
       ``(B) the issuer makes an irrevocable election to have this 
     subsection apply.
       ``(h) Regulations.--The Secretary may prescribe such 
     regulations and other guidance as may be necessary or 
     appropriate to carry out this section and section 6431.''.
       (b) Credit for Qualified Bonds Issued Before 2011.--
     Subchapter B of chapter 65 is amended by adding at the end 
     the following new section:

     ``SEC. 6431. CREDIT FOR QUALIFIED BONDS ALLOWED TO ISSUER.

       ``(a) In General.--In the case of a qualified bond issued 
     before January 1, 2011, the issuer of such bond shall be 
     allowed a credit with respect to each interest payment under 
     such bond which shall be payable by the Secretary as provided 
     in subsection (b).
       ``(b) Payment of Credit.--The Secretary shall pay 
     (contemporaneously with each interest payment date under such 
     bond) to the issuer of such bond (or to any person who makes 
     such interest payments on behalf of the issuer) 35 percent of 
     the interest payable under such bond on such date.
       ``(c) Application of Arbitrage Rules.--For purposes of 
     section 148, the yield on a qualified bond shall be reduced 
     by the credit allowed under this section.
       ``(d) Interest Payment Date.--For purposes of this 
     subsection, the term `interest payment date' means each date 
     on which interest is payable by the issuer under the terms of 
     the bond.
       ``(e) Qualified Bond.--For purposes of this subsection, the 
     term `qualified bond' has the meaning given such term in 
     section 54AA(g).''.
       (c) Conforming Amendments.--
       (1) Section 1324(b)(2) of title 31, United States Code, is 
     amended by striking ``or 6428'' and inserting ``6428, or 
     6431,''.
       (2) Section 54A(c)(1)(B) is amended by striking ``subpart 
     C'' and inserting ``subparts C and J''.
       (3) Sections 54(c)(2), 1397E(c)(2), and 1400N(l)(3)(B) are 
     each amended by striking ``and I'' and inserting ``, I, and 
     J''.
       (4) Section 6211(b)(4)(A) is amended by striking ``and 
     6428'' and inserting ``6428, and 6431''.
       (5) Section 6401(b)(1) is amended by striking ``and I'' and 
     inserting ``I, and J''.
       (6) 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 j. build america bonds.''.

       (7) The table of section for subchapter B of chapter 65 is 
     amended by adding at the end the following new item:

``Sec. 6431. Credit for qualified bonds allowed to issuer.''.
       (d) Transitional Coordination With State Law.--Except as 
     otherwise provided by a State after the date of the enactment 
     of this Act, the interest on any build America bond (as 
     defined in section 54AA of the Internal Revenue Code of 1986, 
     as added by this section) and the amount of any credit 
     determined under such section with respect to such bond shall 
     be treated for purposes of the income tax laws of such State 
     as being exempt from Federal income tax.
       (e) Effective Date.--The amendments made by this section 
     shall apply to obligations issued after the date of the 
     enactment of this Act.

PART V--REGULATED INVESTMENT COMPANIES ALLOWED TO PASS-THRU TAX CREDIT 
                              BOND CREDITS

     SEC. 1541. REGULATED INVESTMENT COMPANIES ALLOWED TO PASS-
                   THRU TAX CREDIT BOND CREDITS.

       (a) In General.--Part I of subchapter M of chapter 1 is 
     amended by inserting after section 853 the following new 
     section:

     ``SEC. 853A. CREDITS FROM TAX CREDIT BONDS ALLOWED TO 
                   SHAREHOLDERS.

       ``(a) General Rule.--A regulated investment company--
       ``(1) which holds (directly or indirectly) one or more tax 
     credit bonds on one or more applicable dates during the 
     taxable year, and
       ``(2) which meets the requirements of section 852(a) for 
     the taxable year,
     may elect the application of this section with respect to 
     credits allowable to the investment company during such 
     taxable year with respect to such bonds.
       ``(b) Effect of Election.--If the election provided in 
     subsection (a) is in effect for any taxable year--
       ``(1) the regulated investment company shall not be allowed 
     any credits to which subsection (a) applies for such taxable 
     year,
       ``(2) the regulated investment company shall--
       ``(A) include in gross income (as interest) for such 
     taxable year an amount equal to the amount that such 
     investment company would have included in gross income with 
     respect to such credits if this section did not apply, and
       ``(B) increase the amount of the dividends paid deduction 
     for such taxable year by the amount of such income, and
       ``(3) each shareholder of such investment company shall--
       ``(A) include in gross income an amount equal to such 
     shareholder's proportionate share of the interest income 
     attributable to such credits, and
       ``(B) be allowed the shareholder's proportionate share of 
     such credits against the tax imposed by this chapter.
       ``(c) Notice to Shareholders.--For purposes of subsection 
     (b)(3), the shareholder's proportionate share of--
       ``(1) credits described in subsection (a), and
       ``(2) gross income in respect of such credits,
     shall not exceed the amounts so designated by the regulated 
     investment company in a written notice mailed to its 
     shareholders not later than 60 days after the close of its 
     taxable year.
       ``(d) Manner of Making Election and Notifying 
     Shareholders.--The election provided in subsection (a) and 
     the notice to shareholders required by subsection (c) shall 
     be made in such manner as the Secretary may prescribe.

[[Page 3955]]

       ``(e) Definitions and Special Rules.--
       ``(1) Definitions.--For purposes of this subsection--
       ``(A) Tax credit bond.--The term `tax credit bond' means--
       ``(i) a qualified tax credit bond (as defined in section 
     54A(d)),
       ``(ii) a build America bond (as defined in section 
     54AA(d)), and
       ``(iii) any bond for which a credit is allowable under 
     subpart H of part IV of subchapter A of this chapter.
       ``(B) Applicable date.--The term `applicable date' means--
       ``(i) in the case of a qualified tax credit bond or a bond 
     described in subparagraph (A)(iii), any credit allowance date 
     (as defined in section 54A(e)(1)), and
       ``(ii) in the case of a build America bond (as defined in 
     section 54AA(d)), any interest payment date (as defined in 
     section 54AA(e)).
       ``(2) Stripped tax credit bonds.--If the ownership of a tax 
     credit bond is separated from the credit with respect to such 
     bond, subsection (a) shall be applied by reference to the 
     instruments evidencing the entitlement to the credit rather 
     than the tax credit bond.
       ``(f) Regulations, etc.--The Secretary shall prescribe such 
     regulations or other guidance as may be necessary or 
     appropriate to carry out the purposes of this section, 
     including methods for determining a shareholder's 
     proportionate share of credits.''.
       (b) Conforming Amendments.--
       (1) Section 54(l) is amended by striking paragraph (4) and 
     by redesignating paragraphs (5) and (6) as paragraphs (4) and 
     (5), respectively.
       (2) Section 54A(h) is amended to read as follows:
       ``(h) Bonds Held by Real Estate Investment Trusts.--If any 
     qualified tax credit bond is held by a real estate investment 
     trust, the credit determined under subsection (a) shall be 
     allowed to beneficiaries of such trust (and any gross income 
     included under subsection (f) with respect to such credit 
     shall be distributed to such beneficiaries) under procedures 
     prescribed by the Secretary.''.
       (3) The table of sections for part I of subchapter M of 
     chapter 1 is amended by inserting after the item relating to 
     section 853 the following new item:

``Sec. 853A. Credits from tax credit bonds allowed to shareholders.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

                      Subtitle G--Other Provisions

     SEC. 1601. APPLICATION OF CERTAIN LABOR STANDARDS TO PROJECTS 
                   FINANCED WITH CERTAIN TAX-FAVORED BONDS.

       Subchapter IV of chapter 31 of the title 40, United States 
     Code, shall apply to projects financed with the proceeds of--
       (1) any new clean renewable energy bond (as defined in 
     section 54C of the Internal Revenue Code of 1986) issued 
     after the date of the enactment of this Act,
       (2) any qualified energy conservation bond (as defined in 
     section 54D of the Internal Revenue Code of 1986) issued 
     after the date of the enactment of this Act,
       (3) any qualified zone academy bond (as defined in section 
     54E of the Internal Revenue Code of 1986) issued after the 
     date of the enactment of this Act,
       (4) any qualified school construction bond (as defined in 
     section 54F of the Internal Revenue Code of 1986), and
       (5) any recovery zone economic development bond (as defined 
     in section 1400U-2 of the Internal Revenue Code of 1986).

     SEC. 1602. GRANTS TO STATES FOR LOW-INCOME HOUSING PROJECTS 
                   IN LIEU OF LOW-INCOME HOUSING CREDIT 
                   ALLOCATIONS FOR 2009.

       (a) In General.--The Secretary of the Treasury shall make a 
     grant to the housing credit agency of each State in an amount 
     equal to such State's low-income housing grant election 
     amount.
       (b) Low-Income Housing Grant Election Amount.--For purposes 
     of this section, the term ``low-income housing grant election 
     amount'' means, with respect to any State, such amount as the 
     State may elect which does not exceed 85 percent of the 
     product of--
       (1) the sum of--
       (A) 100 percent of the State housing credit ceiling for 
     2009 which is attributable to amounts described in clauses 
     (i) and (iii) of section 42(h)(3)(C) of the Internal Revenue 
     Code of 1986, and
       (B) 40 percent of the State housing credit ceiling for 2009 
     which is attributable to amounts described in clauses (ii) 
     and (iv) of such section, multiplied by
       (2) 10.
       (c) Subawards for Low-Income Buildings.--
       (1) In general.--A State housing credit agency receiving a 
     grant under this section shall use such grant to make 
     subawards to finance the construction or acquisition and 
     rehabilitation of qualified low-income buildings. A subaward 
     under this section may be made to finance a qualified low-
     income building with or without an allocation under section 
     42 of the Internal Revenue Code of 1986, except that a State 
     housing credit agency may make subawards to finance qualified 
     low-income buildings without an allocation only if it makes a 
     determination that such use will increase the total funds 
     available to the State to build and rehabilitate affordable 
     housing. In complying with such determination requirement, a 
     State housing credit agency shall establish a process in 
     which applicants that are allocated credits are required to 
     demonstrate good faith efforts to obtain investment 
     commitments for such credits before the agency makes such 
     subawards.
       (2) Subawards subject to same requirements as low-income 
     housing credit allocations.--Any such subaward with respect 
     to any qualified low-income building shall be made in the 
     same manner and shall be subject to the same limitations 
     (including rent, income, and use restrictions on such 
     building) as an allocation of housing credit dollar amount 
     allocated by such State housing credit agency under section 
     42 of the Internal Revenue Code of 1986, except that such 
     subawards shall not be limited by, or otherwise affect 
     (except as provided in subsection (h)(3)(J) of such section), 
     the State housing credit ceiling applicable to such agency.
       (3) Compliance and asset management.--The State housing 
     credit agency shall perform asset management functions to 
     ensure compliance with section 42 of the Internal Revenue 
     Code of 1986 and the long-term viability of buildings funded 
     by any subaward under this section. The State housing credit 
     agency may collect reasonable fees from a subaward recipient 
     to cover expenses associated with the performance of its 
     duties under this paragraph. The State housing credit agency 
     may retain an agent or other private contractor to satisfy 
     the requirements of this paragraph.
       (4) Recapture.--The State housing credit agency shall 
     impose conditions or restrictions, including a requirement 
     providing for recapture, on any subaward under this section 
     so as to assure that the building with respect to which such 
     subaward is made remains a qualified low-income building 
     during the compliance period. Any such recapture shall be 
     payable to the Secretary of the Treasury for deposit in the 
     general fund of the Treasury and may be enforced by means of 
     liens or such other methods as the Secretary of the Treasury 
     determines appropriate.
       (d) Return of Unused Grant Funds.--Any grant funds not used 
     to make subawards under this section before January 1, 2011, 
     shall be returned to the Secretary of the Treasury on such 
     date. Any subawards returned to the State housing credit 
     agency on or after such date shall be promptly returned to 
     the Secretary of the Treasury. Any amounts returned to the 
     Secretary of the Treasury under this subsection shall be 
     deposited in the general fund of the Treasury.
       (e) Definitions.--Any term used in this section which is 
     also used in section 42 of the Internal Revenue Code of 1986 
     shall have the same meaning for purposes of this section as 
     when used in such section 42. Any reference in this section 
     to the Secretary of the Treasury shall be treated as 
     including the Secretary's delegate.
       (f) Appropriations.--There is hereby appropriated to the 
     Secretary of the Treasury such sums as may be necessary to 
     carry out this section.

     SEC. 1603. GRANTS FOR SPECIFIED ENERGY PROPERTY IN LIEU OF 
                   TAX CREDITS.

       (a) In General.--Upon application, the Secretary of the 
     Treasury shall, subject to the requirements of this section, 
     provide a grant to each person who places in service 
     specified energy property to reimburse such person for a 
     portion of the expense of such property as provided in 
     subsection (b). No grant shall be made under this section 
     with respect to any property unless such property--
       (1) is placed in service during 2009 or 2010, or
       (2) is placed in service after 2010 and before the credit 
     termination date with respect to such property, but only if 
     the construction of such property began during 2009 or 2010.
       (b) Grant Amount.--
       (1) In general.--The amount of the grant under subsection 
     (a) with respect to any specified energy property shall be 
     the applicable percentage of the basis of such property.
       (2) Applicable percentage.--For purposes of paragraph (1), 
     the term ``applicable percentage'' means--
       (A) 30 percent in the case of any property described in 
     paragraphs (1) through (4) of subsection (d), and
       (B) 10 percent in the case of any other property.
       (3) Dollar limitations.--In the case of property described 
     in paragraph (2), (6), or (7) of subsection (d), the amount 
     of any grant under this section with respect to such property 
     shall not exceed the limitation described in section 
     48(c)(1)(B), 48(c)(2)(B), or 48(c)(3)(B) of the Internal 
     Revenue Code of 1986, respectively, with respect to such 
     property.
       (c) Time for Payment of Grant.--The Secretary of the 
     Treasury shall make payment of any grant under subsection (a) 
     during the 60-day period beginning on the later of--
       (1) the date of the application for such grant, or
       (2) the date the specified energy property for which the 
     grant is being made is placed in service.
       (d) Specified Energy Property.--For purposes of this 
     section, the term ``specified energy property'' means any of 
     the following:
       (1) Qualified facilities.--Any qualified property (as 
     defined in section 48(a)(5)(D) of the Internal Revenue Code 
     of 1986) which is part of a qualified facility (within the 
     meaning of section 45 of such Code) described in paragraph 
     (1), (2), (3), (4), (6), (7), (9), or (11) of section 45(d) 
     of such Code.
       (2) Qualified fuel cell property.--Any qualified fuel cell 
     property (as defined in section 48(c)(1) of such Code).

[[Page 3956]]

       (3) Solar property.--Any property described in clause (i) 
     or (ii) of section 48(a)(3)(A) of such Code.
       (4) Qualified small wind energy property.--Any qualified 
     small wind energy property (as defined in section 48(c)(4) of 
     such Code).
       (5) Geothermal property.--Any property described in clause 
     (iii) of section 48(a)(3)(A) of such Code.
       (6) Qualified microturbine property.--Any qualified 
     microturbine property (as defined in section 48(c)(2) of such 
     Code).
       (7) Combined heat and power system property.--Any combined 
     heat and power system property (as defined in section 
     48(c)(3) of such Code).
       (8) Geothermal heat pump property.--Any property described 
     in clause (vii) of section 48(a)(3)(A) of such Code.

     Such term shall not include any property unless depreciation 
     (or amortization in lieu of depreciation) is allowable with 
     respect to such property.
       (e) Credit Termination Date.--For purposes of this section, 
     the term ``credit termination date'' means--
       (1) in the case of any specified energy property which is 
     part of a facility described in paragraph (1) of section 
     45(d) of the Internal Revenue Code of 1986, January 1, 2013,
       (2) in the case of any specified energy property which is 
     part of a facility described in paragraph (2), (3), (4), (6), 
     (7), (9), or (11) of section 45(d) of such Code, January 1, 
     2014, and
       (3) in the case of any specified energy property described 
     in section 48 of such Code, January 1, 2017.

     In the case of any property which is described in paragraph 
     (3) and also in another paragraph of this subsection, 
     paragraph (3) shall apply with respect to such property.
       (f) Application of Certain Rules.--In making grants under 
     this section, the Secretary of the Treasury shall apply rules 
     similar to the rules of section 50 of the Internal Revenue 
     Code of 1986. In applying such rules, if the property is 
     disposed of, or otherwise ceases to be specified energy 
     property, the Secretary of the Treasury shall provide for the 
     recapture of the appropriate percentage of the grant amount 
     in such manner as the Secretary of the Treasury determines 
     appropriate.
       (g) Exception for Certain Non-Taxpayers.--The Secretary of 
     the Treasury shall not make any grant under this section to--
       (1) any Federal, State, or local government (or any 
     political subdivision, agency, or instrumentality thereof),
       (2) any organization described in section 501(c) of the 
     Internal Revenue Code of 1986 and exempt from tax under 
     section 501(a) of such Code,
       (3) any entity referred to in paragraph (4) of section 
     54(j) of such Code, or
       (4) any partnership or other pass-thru entity any partner 
     (or other holder of an equity or profits interest) of which 
     is described in paragraph (1), (2) or (3).
       (h) Definitions.--Terms used in this section which are also 
     used in section 45 or 48 of the Internal Revenue Code of 1986 
     shall have the same meaning for purposes of this section as 
     when used in such section 45 or 48. Any reference in this 
     section to the Secretary of the Treasury shall be treated as 
     including the Secretary's delegate.
       (i) Appropriations.--There is hereby appropriated to the 
     Secretary of the Treasury such sums as may be necessary to 
     carry out this section.
       (j) Termination.--The Secretary of the Treasury shall not 
     make any grant to any person under this section unless the 
     application of such person for such grant is received before 
     October 1, 2011.

     SEC. 1604. INCREASE IN PUBLIC DEBT LIMIT.

       Subsection (b) of section 3101 of title 31, United States 
     Code, is amended by striking out the dollar limitation 
     contained in such subsection and inserting 
     ``$12,104,000,000,000''.

 Subtitle H--Prohibition on Collection of Certain Payments Made Under 
          the Continued Dumping and Subsidy Offset Act of 2000

     SEC. 1701. PROHIBITION ON COLLECTION OF CERTAIN PAYMENTS MADE 
                   UNDER THE CONTINUED DUMPING AND SUBSIDY OFFSET 
                   ACT OF 2000.

       (a) In General.--Notwithstanding any other provision of 
     law, neither the Secretary of Homeland Security nor any other 
     person may--
       (1) require repayment of, or attempt in any other way to 
     recoup, any payments described in subsection (b); or
       (2) offset any past, current, or future distributions of 
     antidumping or countervailing duties assessed with respect to 
     imports from countries that are not parties to the North 
     American Free Trade Agreement in an attempt to recoup any 
     payments described in subsection (b).
       (b) Payments Described.--Payments described in this 
     subsection are payments of antidumping or countervailing 
     duties made pursuant to the Continued Dumping and Subsidy 
     Offset Act of 2000 (section 754 of the Tariff Act of 1930 (19 
     U.S.C. 1675c; repealed by subtitle F of title VII of the 
     Deficit Reduction Act of 2005 (Public Law 109-171; 120 Stat. 
     154))) that were--
       (1) assessed and paid on imports of goods from countries 
     that are parties to the North American Free Trade Agreement; 
     and
       (2) distributed on or after January 1, 2001, and before 
     January 1, 2006.
       (c) Payment of Funds Collected or Withheld.--Not later than 
     the date that is 60 days after the date of the enactment of 
     this Act, the Secretary of Homeland Security shall--
       (1) refund any repayments, or any other recoupment, of 
     payments described in subsection (b); and
       (2) fully distribute any antidumping or countervailing 
     duties that the U.S. Customs and Border Protection is 
     withholding as an offset as described in subsection (a)(2).
       (d) Limitation.--Nothing in this section shall be construed 
     to prevent the Secretary of Homeland Security, or any other 
     person, from requiring repayment of, or attempting to 
     otherwise recoup, any payments described in subsection (b) as 
     a result of--
       (1) a finding of false statements or other misconduct by a 
     recipient of such a payment; or
       (2) the reliquidation of an entry with respect to which 
     such a payment was made.

                Subtitle I--Trade Adjustment Assistance

     SEC. 1800. SHORT TITLE.

       This subtitle may be cited as the ``Trade and Globalization 
     Adjustment Assistance Act of 2009''.

            PART I--TRADE ADJUSTMENT ASSISTANCE FOR WORKERS

   Subpart A--Trade Adjustment Assistance for Service Sector Workers

     SEC. 1801. EXTENSION OF TRADE ADJUSTMENT ASSISTANCE TO 
                   SERVICE SECTOR AND PUBLIC AGENCY WORKERS; 
                   SHIFTS IN PRODUCTION.

       (a) Definitions.--Section 247 of the Trade Act of 1974 (19 
     U.S.C. 2319) is amended--
       (1) in paragraph (1)--
       (A) by striking ``or appropriate subdivision of a firm''; 
     and
       (B) by striking ``or subdivision'';
       (2) in paragraph (2), by striking ``employment--'' and all 
     that follows and inserting ``employment, has been totally or 
     partially separated from such employment.'';
       (3) by inserting after paragraph (2) the following:
       ``(3) Subject to section 222(d)(5), the term `firm' means--
       ``(A) a firm, including an agricultural firm, service 
     sector firm, or public agency; or
       ``(B) an appropriate subdivision thereof.'';
       (4) by inserting after paragraph (6) the following:
       ``(7) The term `public agency' means a department or agency 
     of a State or local government or of the Federal Government, 
     or a subdivision thereof.'';
       (5) in paragraph (11), by striking ``, or in a subdivision 
     of which,''; and
       (6) by adding at the end the following:
       ``(18) The term `service sector firm' means a firm engaged 
     in the business of supplying services.''.
       (b) Group Eligibility Requirements.--Section 222 of the 
     Trade Act of 1974 (19 U.S.C. 2272) is amended--
       (1) in subsection (a)(2)--
       (A) by amending subparagraph (A)(ii) to read as follows:
       ``(ii)(I) imports of articles or services like or directly 
     competitive with articles produced or services supplied by 
     such firm have increased;
       ``(II) imports of articles like or directly competitive 
     with articles--
       ``(aa) into which one or more component parts produced by 
     such firm are directly incorporated, or
       ``(bb) which are produced directly using services supplied 
     by such firm,

     have increased; or
       ``(III) imports of articles directly incorporating one or 
     more component parts produced outside the United States that 
     are like or directly competitive with imports of articles 
     incorporating one or more component parts produced by such 
     firm have increased; and''; and
       (B) by amending subparagraph (B) to read as follows:
       ``(B)(i)(I) there has been a shift by such workers' firm to 
     a foreign country in the production of articles or the supply 
     of services like or directly competitive with articles which 
     are produced or services which are supplied by such firm; or
       ``(II) such workers' firm has acquired from a foreign 
     country articles or services that are like or directly 
     competitive with articles which are produced or services 
     which are supplied by such firm; and
       ``(ii) the shift described in clause (i)(I) or the 
     acquisition of articles or services described in clause 
     (i)(II) contributed importantly to such workers' separation 
     or threat of separation.'';
       (2) by redesignating subsections (b) and (c) as subsections 
     (c) and (d), respectively; and
       (3) by inserting after subsection (a) the following:
       ``(b) Adversely Affected Workers in Public Agencies.--A 
     group of workers in a public agency shall be certified by the 
     Secretary as eligible to apply for adjustment assistance 
     under this chapter pursuant to a petition filed under section 
     221 if the Secretary determines that--
       ``(1) a significant number or proportion of the workers in 
     the public agency have become totally or partially separated, 
     or are threatened to become totally or partially separated;
       ``(2) the public agency has acquired from a foreign country 
     services like or directly competitive with services which are 
     supplied by such agency; and
       ``(3) the acquisition of services described in paragraph 
     (2) contributed importantly to such workers' separation or 
     threat of separation.''.
       (c) Basis for Secretary's Determinations.--Section 222 of 
     the Trade Act of 1974 (19 U.S.C. 2272), as amended, is 
     further amended by adding at the end the following:

[[Page 3957]]

       ``(e) Basis for Secretary's Determinations.--
       ``(1) In general.--The Secretary shall, in determining 
     whether to certify a group of workers under section 223, 
     obtain from the workers' firm, or a customer of the workers' 
     firm, information the Secretary determines to be necessary to 
     make the certification, through questionnaires and in such 
     other manner as the Secretary determines appropriate.
       ``(2) Additional information.--The Secretary may seek 
     additional information to determine whether to certify a 
     group of workers under subsection (a), (b), or (c)--
       ``(A) by contacting--
       ``(i) officials or employees of the workers' firm;
       ``(ii) officials of customers of the workers' firm;
       ``(iii) officials of certified or recognized unions or 
     other duly authorized representatives of the group of 
     workers; or
       ``(iv) one-stop operators or one-stop partners (as defined 
     in section 101 of the Workforce Investment Act of 1998 (29 
     U.S.C. 2801)); or
       ``(B) by using other available sources of information.
       ``(3) Verification of information.--
       ``(A) Certification.--The Secretary shall require a firm or 
     customer to certify--
       ``(i) all information obtained under paragraph (1) from the 
     firm or customer (as the case may be) through questionnaires; 
     and
       ``(ii) all other information obtained under paragraph (1) 
     from the firm or customer (as the case may be) on which the 
     Secretary relies in making a determination under section 223, 
     unless the Secretary has a reasonable basis for determining 
     that such information is accurate and complete without being 
     certified.
       ``(B) Use of subpoenas.--The Secretary shall require the 
     workers' firm or a customer of the workers' firm to provide 
     information requested by the Secretary under paragraph (1) by 
     subpoena pursuant to section 249 if the firm or customer (as 
     the case may be) fails to provide the information within 20 
     days after the date of the Secretary's request, unless the 
     firm or customer (as the case may be) demonstrates to the 
     satisfaction of the Secretary that the firm or customer (as 
     the case may be) will provide the information within a 
     reasonable period of time.
       ``(C) Protection of confidential information.--The 
     Secretary may not release information obtained under 
     paragraph (1) that the Secretary considers to be confidential 
     business information unless the firm or customer (as the case 
     may be) submitting the confidential business information had 
     notice, at the time of submission, that the information would 
     be released by the Secretary, or the firm or customer (as the 
     case may be) subsequently consents to the release of the 
     information. Nothing in this subparagraph shall be construed 
     to prohibit the Secretary from providing such confidential 
     business information to a court in camera or to another party 
     under a protective order issued by a court.''.
       (d) Penalties.--Section 244 of the Trade Act of 1974 (19 
     U.S.C. 2316) is amended to read as follows:

     ``SEC. 244. PENALTIES.

       ``Any person who--
       ``(1) makes a false statement of a material fact knowing it 
     to be false, or knowingly fails to disclose a material fact, 
     for the purpose of obtaining or increasing for that person or 
     for any other person any payment authorized to be furnished 
     under this chapter or pursuant to an agreement under section 
     239, or
       ``(2) makes a false statement of a material fact knowing it 
     to be false, or knowingly fails to disclose a material fact, 
     when providing information to the Secretary during an 
     investigation of a petition under section 221,

     shall be imprisoned for not more than one year, or fined 
     under title 18, United States Code, or both.''.
       (e) Conforming Amendments.--
       (1) Section 221(a) of the Trade Act of 1974 (19 U.S.C. 
     2271(a)) is amended--
       (A) in paragraph (1)--
       (i) in the matter preceding subparagraph (A)--

       (I) by striking ``Secretary'' and inserting ``Secretary of 
     Labor''; and
       (II) by striking ``or subdivision'' and inserting ``(as 
     defined in section 247)''; and

       (ii) in subparagraph (A), by striking ``(including workers 
     in an agricultural firm or subdivision of any agricultural 
     firm)'';
       (B) in paragraph (2)(A), by striking ``rapid response 
     assistance'' and inserting ``rapid response activities''; and
       (C) in paragraph (3), by inserting ``and on the website of 
     the Department of Labor'' after ``Federal Register''.
       (2) Section 222 of the Trade Act of 1974 (19 U.S.C. 2272), 
     as amended, is further amended--
       (A) by striking ``(including workers in any agricultural 
     firm or subdivision of an agricultural firm)'' each place it 
     appears;
       (B) in subsection (a)--
       (i) in paragraph (1), by striking ``, or an appropriate 
     subdivision of the firm,''; and
       (ii) in paragraph (2), by striking ``or subdivision'' each 
     place it appears;
       (C) in subsection (c) (as redesignated)--
       (i) in paragraph (2)--

       (I) by striking ``(or subdivision)'' each place it appears;
       (II) by inserting ``or service'' after ``the article''; and
       (III) by striking ``(c) (3)'' and inserting ``(d) (3)''; 
     and

       (ii) in paragraph (3), by striking ``(or subdivision)'' 
     each place it appears; and
       (D) in subsection (d) (as redesignated)--
       (i) by striking ``For purposes'' and inserting 
     ``Definitions.--For purposes'';
       (ii) in paragraph (2), by striking ``, or appropriate 
     subdivision of a firm,'' each place it appears;
       (iii) by amending paragraph (3) to read as follows:
       ``(3) Downstream producer.--
       ``(A) In general.--The term `downstream producer' means a 
     firm that performs additional, value-added production 
     processes or services directly for another firm for articles 
     or services with respect to which a group of workers in such 
     other firm has been certified under subsection (a).
       ``(B) Value-added production processes or services.--For 
     purposes of subparagraph (A), value-added production 
     processes or services include final assembly, finishing, 
     testing, packaging, or maintenance or transportation 
     services.'';
       (iv) in paragraph (4)--

       (I) by striking ``(or subdivision)''; and
       (II) by inserting ``, or services, used in the production 
     of articles or in the supply of services, as the case may 
     be,'' after ``for articles''; and

       (v) by adding at the end the following:
       ``(5) Reference to firm.--For purposes of subsection (a), 
     the term `firm' does not include a public agency.''.
       (3) Section 231(a)(2) of the Trade Act of 1974 (19 U.S.C. 
     2291(a)(2)) is amended--
       (A) in the matter preceding subparagraph (A), by striking 
     ``or subdivision of a firm''; and
       (B) in subparagraph (C), by striking ``or subdivision''.

     SEC. 1802. SEPARATE BASIS FOR CERTIFICATION.

       Section 222 of the Trade Act of 1974 (19 U.S.C. 2272), as 
     amended, is further amended by adding at the end the 
     following:
       ``(f) Firms Identified by the International Trade 
     Commission.--Notwithstanding any other provision of this 
     chapter, a group of workers covered by a petition filed under 
     section 221 shall be certified under subsection (a) as 
     eligible to apply for adjustment assistance under this 
     chapter if--
       ``(1) the workers' firm is publicly identified by name by 
     the International Trade Commission as a member of a domestic 
     industry in an investigation resulting in--
       ``(A) an affirmative determination of serious injury or 
     threat thereof under section 202(b)(1);
       ``(B) an affirmative determination of market disruption or 
     threat thereof under section 421(b)(1); or
       ``(C) an affirmative final determination of material injury 
     or threat thereof under section 705(b)(1)(A) or 735(b)(1)(A) 
     of the Tariff Act of 1930 (19 U.S.C. 1671d(b)(1)(A) and 
     1673d(b)(1)(A));
       ``(2) the petition is filed during the one-year period 
     beginning on the date on which--
       ``(A) a summary of the report submitted to the President by 
     the International Trade Commission under section 202(f)(1) 
     with respect to the affirmative determination described in 
     paragraph (1)(A) is published in the Federal Register under 
     section 202(f)(3); or
       ``(B) notice of an affirmative determination described in 
     subparagraph (B) or (C) of paragraph (1) is published in the 
     Federal Register; and
       ``(3) the workers have become totally or partially 
     separated from the workers' firm within--
       ``(A) the one-year period described in paragraph (2); or
       ``(B) notwithstanding section 223(b), the one-year period 
     preceding the one-year period described in paragraph (2).''.

     SEC. 1803. DETERMINATIONS BY SECRETARY OF LABOR.

       Section 223 of the Trade Act of 1974 (19 U.S.C. 2273) is 
     amended--
       (1) in subsection (b), by striking ``or appropriate 
     subdivision of the firm before his application'' and all that 
     follows and inserting ``before the worker's application under 
     section 231 occurred more than one year before the date of 
     the petition on which such certification was granted.'';
       (2) in subsection (c), by striking ``together with his 
     reasons'' and inserting ``and on the website of the 
     Department of Labor, together with the Secretary's reasons'';
       (3) in subsection (d)--
       (A) by striking ``or subdivision of the firm'' and all that 
     follows through ``he shall'' and inserting ``, that total or 
     partial separations from such firm are no longer attributable 
     to the conditions specified in section 222, the Secretary 
     shall''; and
       (B) by striking ``together with his reasons'' and inserting 
     ``and on the website of the Department of Labor, together 
     with the Secretary's reasons''; and
       (4) by adding at the end the following:
       ``(e) Standards for Investigations and Determinations.--
       ``(1) In general.--The Secretary shall establish standards, 
     including data requirements, for investigations of petitions 
     filed under section 221 and criteria for making 
     determinations under subsection (a).
       ``(2) Consultations.--Not less than 90 days before issuing 
     a final rule with respect to the standards required under 
     paragraph (1), the Secretary shall consult with the Committee 
     on Finance of the Senate and the Committee on Ways and Means 
     of the House of Representatives with respect to such rule.''.

     SEC. 1804. MONITORING AND REPORTING RELATING TO SERVICE 
                   SECTOR.

       (a) In General.--Section 282 of the Trade Act of 1974 (19 
     U.S.C. 2393) is amended--

[[Page 3958]]

       (1) in the heading, by striking ``SYSTEM'' and inserting 
     ``AND DATA COLLECTION'';
       (2) in the first sentence--
       (A) by striking ``The Secretary'' and inserting ``(a) 
     Monitoring Programs.--The Secretary'';
       (B) by inserting ``and services'' after ``imports of 
     articles'';
       (C) by inserting ``and domestic supply of services'' after 
     ``domestic production'';
       (D) by inserting ``or supplying services'' after 
     ``producing articles''; and
       (E) by inserting ``, or supply of services,'' after 
     ``changes in production''; and
       (3) by adding at the end the following:
       ``(b) Collection of Data and Reports on Service Sector.--
       ``(1) Secretary of labor.--Not later than 90 days after the 
     date of the enactment of this subsection, the Secretary of 
     Labor shall implement a system to collect data on adversely 
     affected workers employed in the service sector that includes 
     the number of workers by State and industry, and by the cause 
     of the dislocation of each worker, as identified in the 
     certification.
       ``(2) Secretary of commerce.--Not later than 1 year after 
     such date of enactment, the Secretary of Commerce shall, in 
     consultation with the Secretary of Labor, conduct a study and 
     submit to the Committee on Finance of the Senate and the 
     Committee on Ways and Means of the House of Representatives a 
     report on ways to improve the timeliness and coverage of data 
     on trade in services, including methods to identify increased 
     imports due to the relocation of United States firms to 
     foreign countries, and increased imports due to United States 
     firms acquiring services from firms in foreign countries.''.
       (b) Clerical Amendment.--The table of contents of the Trade 
     Act of 1974 is amended by striking the item relating to 
     section 282 and inserting the following:

``Sec. 282. Trade monitoring and data collection.''.

       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

    Subpart B--Industry Notifications Following Certain Affirmative 
                             Determinations

     SEC. 1811. NOTIFICATIONS FOLLOWING CERTAIN AFFIRMATIVE 
                   DETERMINATIONS.

       (a) In General.--Section 224 of the Trade Act of 1974 (19 
     U.S.C. 2274) is amended--
       (1) by amending the heading to read as follows:

     ``SEC. 224. STUDY AND NOTIFICATIONS REGARDING CERTAIN 
                   AFFIRMATIVE DETERMINATIONS; INDUSTRY 
                   NOTIFICATION OF ASSISTANCE.'';

       (2) in subsection (a), by striking ``Whenever'' and 
     inserting ``Study of Domestic Industry.--Whenever'';
       (3) in subsection (b)--
       (A) by striking ``The report'' and inserting ``Report by 
     the Secretary.--The report''; and
       (B) by inserting ``and on the website of the Department of 
     Labor'' after ``Federal Register''; and
       (4) by adding at the end the following:
       ``(c) Notifications Following Affirmative Global Safeguard 
     Determinations.--Upon making an affirmative determination 
     under section 202(b)(1), the Commission shall promptly notify 
     the Secretary of Labor and the Secretary of Commerce and, in 
     the case of a determination with respect to an agricultural 
     commodity, the Secretary of Agriculture, of the 
     determination.
       ``(d) Notifications Following Affirmative Bilateral or 
     Plurilateral Safeguard Determinations.--
       ``(1) Notifications of determinations of market 
     disruption.--Upon making an affirmative determination under 
     section 421(b)(1), the Commission shall promptly notify the 
     Secretary of Labor and the Secretary of Commerce and, in the 
     case of a determination with respect to an agricultural 
     commodity, the Secretary of Agriculture, of the 
     determination.
       ``(2) Notifications regarding trade agreement safeguards.--
     Upon making an affirmative determination in a proceeding 
     initiated under an applicable safeguard provision (other than 
     a provision described in paragraph (3)) that is enacted to 
     implement a trade agreement to which the United States is a 
     party, the Commission shall promptly notify the Secretary of 
     Labor and the Secretary of Commerce and, in the case of a 
     determination with respect to an agricultural commodity, the 
     Secretary of Agriculture, of the determination.
       ``(3) Notifications regarding textile and apparel 
     safeguards.--Upon making an affirmative determination in a 
     proceeding initiated under any safeguard provision relating 
     to textile and apparel articles that is enacted to implement 
     a trade agreement to which the United States is a party, the 
     President shall promptly notify the Secretary of Labor and 
     the Secretary of Commerce of the determination.
       ``(e) Notifications Following Certain Affirmative 
     Determinations Under Title Vii of the Tariff Act of 1930.--
     Upon making an affirmative determination under section 
     705(b)(1)(A) or 735(b)(1)(A) of the Tariff Act of 1930 (19 
     U.S.C. 1671d(b)(1)(A) and 1673d(b)(1)(A)), the Commission 
     shall promptly notify the Secretary of Labor and the 
     Secretary of Commerce and, in the case of a determination 
     with respect to an agricultural commodity, the Secretary of 
     Agriculture, of the determination.
       ``(f) Industry Notification of Assistance.--Upon receiving 
     a notification of a determination under subsection (c), (d), 
     or (e) with respect to a domestic industry--
       ``(1) the Secretary of Labor shall--
       ``(A) notify the representatives of the domestic industry 
     affected by the determination, firms publicly identified by 
     name during the course of the proceeding relating to the 
     determination, and any certified or recognized union or, to 
     the extent practicable, other duly authorized representative 
     of workers employed by such representatives of the domestic 
     industry, of--
       ``(i) the allowances, training, employment services, and 
     other benefits available under this chapter;
       ``(ii) the manner in which to file a petition and apply for 
     such benefits; and
       ``(iii) the availability of assistance in filing such 
     petitions;
       ``(B) notify the Governor of each State in which one or 
     more firms in the industry described in subparagraph (A) are 
     located of the Commission's determination and the identity of 
     the firms; and
       ``(C) upon request, provide any assistance that is 
     necessary to file a petition under section 221;
       ``(2) the Secretary of Commerce shall--
       ``(A) notify the representatives of the domestic industry 
     affected by the determination and any firms publicly 
     identified by name during the course of the proceeding 
     relating to the determination of--
       ``(i) the benefits available under chapter 3;
       ``(ii) the manner in which to file a petition and apply for 
     such benefits; and
       ``(iii) the availability of assistance in filing such 
     petitions; and
       ``(B) upon request, provide any assistance that is 
     necessary to file a petition under section 251; and
       ``(3) in the case of an affirmative determination based 
     upon imports of an agricultural commodity, the Secretary of 
     Agriculture shall--
       ``(A) notify representatives of the domestic industry 
     affected by the determination and any agricultural commodity 
     producers publicly identified by name during the course of 
     the proceeding relating to the determination of--
       ``(i) the benefits available under chapter 6;
       ``(ii) the manner in which to file a petition and apply for 
     such benefits; and
       ``(iii) the availability of assistance in filing such 
     petitions; and
       ``(B) upon request, provide any assistance that is 
     necessary to file a petition under section 292.
       ``(g) Representatives of the Domestic Industry.--For 
     purposes of subsection (f), the term `representatives of the 
     domestic industry' means the persons that petitioned for 
     relief in connection with--
       ``(1) a proceeding under section 202 or 421 of this Act;
       ``(2) a proceeding under section 702(b) or 732(b) of the 
     Tariff Act of 1930 (19 U.S.C. 1671d(b) and 1673d(b)); or
       ``(3) any safeguard investigation described in subsection 
     (d)(2) or (d)(3).''.
       (b) Clerical Amendment.--The table of contents of the Trade 
     Act of 1974 is amended by striking the item relating to 
     section 224 and inserting the following:

``Sec. 224. Study and notifications regarding certain affirmative 
              determinations; industry notification of assistance.''.

     SEC. 1812. NOTIFICATION TO SECRETARY OF COMMERCE.

       Section 225 of the Trade Act of 1974 (19 U.S.C. 2275) is 
     amended by adding at the end the following:
       ``(c) Upon issuing a certification under section 223, the 
     Secretary shall notify the Secretary of Commerce of the 
     identity of each firm covered by the certification.''.

                      Subpart C--Program Benefits

     SEC. 1821. QUALIFYING REQUIREMENTS FOR WORKERS.

       (a) In General.--Section 231(a)(5)(A)(ii) of the Trade Act 
     of 1974 (19 U.S.C. 2291 (a)(5)(A)(ii)) is amended--
       (1) by striking subclauses (I) and (II) and inserting the 
     following:
       ``(I) in the case of a worker whose most recent total 
     separation from adversely affected employment that meets the 
     requirements of paragraphs (1) and (2) occurs after the date 
     on which the Secretary issues a certification covering the 
     worker, the last day of the 26th week after such total 
     separation,
       ``(II) in the case of a worker whose most recent total 
     separation from adversely affected employment that meets the 
     requirements of paragraphs (1) and (2) occurs before the date 
     on which the Secretary issues a certification covering the 
     worker, the last day of the 26th week after the date of such 
     certification,'';
       (2) in subclause (III)--
       (A) by striking ``later of the dates specified in subclause 
     (I) or (II)'' and inserting ``date specified in subclause (I) 
     or (II), as the case may be''; and
       (B) by striking ``or'' at the end;
       (3) by redesignating subclause (IV) as subclause (V); and
       (4) by inserting after subclause (III) the following:
       ``(IV) in the case of a worker who fails to enroll by the 
     date required by subclause (I), (II), or (III), as the case 
     may be, due to the failure to provide the worker with timely 
     information regarding the date specified in such subclause, 
     the last day of a period determined by the Secretary, or''.
       (b) Waivers of Training Requirements.--Section 231(c) of 
     the Trade Act of 1974 (19 U.S.C. 2291(c)) is amended--
       (1) in paragraph (1)(B)--
       (A) by striking ``The worker possesses'' and inserting the 
     following:

[[Page 3959]]

       ``(i) In general.--The worker possesses''; and
       (B) by adding at the end the following:
       ``(ii) Marketable skills defined.--For purposes of clause 
     (i), the term `marketable skills' may include the possession 
     of a postgraduate degree from an institution of higher 
     education (as defined in section 102 of the Higher Education 
     Act of 1965 (20 U.S.C. 1002)) or an equivalent institution, 
     or the possession of an equivalent postgraduate certification 
     in a specialized field.'';
       (2) in paragraph (2)(A), by striking ``A waiver'' and 
     inserting ``Except as provided in paragraph (3)(B), a 
     waiver''; and
       (3) in paragraph (3)--
       (A) in subparagraph (A), by striking ``Pursuant to an 
     agreement under section 239, the Secretary may authorize a'' 
     and inserting ``An agreement under section 239 shall 
     authorize a'';
       (B) by redesignating subparagraph (B) as subparagraph (C); 
     and
       (C) by inserting after subparagraph (A) the following:
       ``(B) Review of waivers.--An agreement under section 239 
     shall require a cooperating State to review each waiver 
     issued by the State under subparagraph (A), (B), (D), (E), or 
     (F) of paragraph (1)--
       ``(i) 3 months after the date on which the State issues the 
     waiver; and
       ``(ii) on a monthly basis thereafter.''.
       (c) Conforming Amendments.--
       (1) Section 231 of the Trade Act of 1974 (19 U.S.C. 2291), 
     as amended, is further amended--
       (A) in subsection (a), in the matter preceding paragraph 
     (1), by striking ``more than 60 days'' and all that follows 
     through ``section 221'' and inserting ``on or after the date 
     of such certification''; and
       (B) in subsection (b)--
       (i) by striking paragraph (2); and
       (ii) in paragraph (1)--

       (I) by striking ``(1)'';
       (II) by redesignating subparagraphs (A) and (B) as 
     paragraphs (1) and (2), respectively;
       (III) by redesignating clauses (i) and (ii) as 
     subparagraphs (A) and (B), respectively; and
       (IV) by redesignating subclauses (I) and (II) as clauses 
     (i) and (ii), respectively.

       (2) Section 233 of the Trade Act of 1974 (19 U.S.C. 2293) 
     is amended--
       (A) by striking subsection (b); and
       (B) by redesignating subsections (c) through (g) as 
     subsections (b) through (f), respectively.

     SEC. 1822. WEEKLY AMOUNTS.

       Section 232 of the Trade Act of 1974 (19 U.S.C. 2292) is 
     amended--
       (1) in subsection (a)--
       (A) by striking ``subsections (b) and (c)'' and inserting 
     ``subsections (b), (c), and (d)'';
       (B) by striking ``total unemployment'' the first place it 
     appears and inserting ``unemployment''; and
       (C) in paragraph (2), by inserting before the period the 
     following: ``, except that in the case of an adversely 
     affected worker who is participating in training under this 
     chapter, such income shall not include earnings from work for 
     such week that are equal to or less than the most recent 
     weekly benefit amount of the unemployment insurance payable 
     to the worker for a week of total unemployment preceding the 
     worker's first exhaustion of unemployment insurance (as 
     determined for purposes of section 231(a)(3)(B))''; and
       (2) by adding at the end the following:
       ``(d) Election of Trade Readjustment Allowance or 
     Unemployment Insurance.--Notwithstanding section 
     231(a)(3)(B), an adversely affected worker may elect to 
     receive a trade readjustment allowance instead of 
     unemployment insurance during any week with respect to which 
     the worker--
       ``(1) is entitled to receive unemployment insurance as a 
     result of the establishment by the worker of a new benefit 
     year under State law, based in whole or in part upon part-
     time or short-term employment in which the worker engaged 
     after the worker's most recent total separation from 
     adversely affected employment; and
       ``(2) is otherwise entitled to a trade readjustment 
     allowance.''.

     SEC. 1823. LIMITATIONS ON TRADE READJUSTMENT ALLOWANCES; 
                   ALLOWANCES FOR EXTENDED TRAINING AND BREAKS IN 
                   TRAINING.

       Section 233(a) of the Trade Act of 1974 (19 U.S.C. 2293(a)) 
     is amended--
       (1) in paragraph (2), by inserting ``under paragraph (1)'' 
     after ``trade readjustment allowance''; and
       (2) in paragraph (3)--
       (A) in the matter preceding subparagraph (A)--
       (i) by striking ``training approved for him'' and inserting 
     ``a training program approved for the worker'';
       (ii) by striking ``52 additional weeks'' and inserting ``78 
     additional weeks''; and
       (iii) by striking ``52-week'' and inserting ``91-week''; 
     and
       (B) in the matter following subparagraph (B), by striking 
     ``52-week'' and inserting ``91-week''.

     SEC. 1824. SPECIAL RULES FOR CALCULATION OF ELIGIBILITY 
                   PERIOD.

       Section 233 of the Trade Act of 1974 (19 U.S.C. 2293), as 
     amended, is further amended by adding at the end the 
     following:
       ``(g) Special Rule for Calculating Separation.--
     Notwithstanding any other provision of this chapter, any 
     period during which a judicial or administrative appeal is 
     pending with respect to the denial by the Secretary of a 
     petition under section 223 shall not be counted for purposes 
     of calculating the period of separation under subsection 
     (a)(2).
       ``(h) Special Rule for Justifiable Cause.--If the Secretary 
     determines that there is justifiable cause, the Secretary may 
     extend the period during which trade readjustment allowances 
     are payable to an adversely affected worker under paragraphs 
     (2) and (3) of subsection (a) (but not the maximum amounts of 
     such allowances that are payable under this section).
       ``(i) Special Rule With Respect to Military Service.--
       ``(1) In general.--Notwithstanding any other provision of 
     this chapter, the Secretary may waive any requirement of this 
     chapter that the Secretary determines is necessary to ensure 
     that an adversely affected worker who is a member of a 
     reserve component of the Armed Forces and serves a period of 
     duty described in paragraph (2) is eligible to receive a 
     trade readjustment allowance, training, and other benefits 
     under this chapter in the same manner and to the same extent 
     as if the worker had not served the period of duty.
       ``(2) Period of duty described.--An adversely affected 
     worker serves a period of duty described in this paragraph 
     if, before completing training under section 236, the 
     worker--
       ``(A) serves on active duty for a period of more than 30 
     days under a call or order to active duty of more than 30 
     days; or
       ``(B) in the case of a member of the Army National Guard of 
     the United States or Air National Guard of the United States, 
     performs full-time National Guard duty under section 502(f) 
     of title 32, United States Code, for 30 consecutive days or 
     more when authorized by the President or the Secretary of 
     Defense for the purpose of responding to a national emergency 
     declared by the President and supported by Federal funds.''.

     SEC. 1825. APPLICATION OF STATE LAWS AND REGULATIONS ON GOOD 
                   CAUSE FOR WAIVER OF TIME LIMITS OR LATE FILING 
                   OF CLAIMS.

       Section 234 of the Trade Act of 1974 (19 U.S.C. 2294) is 
     amended--
       (1) by striking ``Except where inconsistent'' and inserting 
     ``(a) In General.--Except where inconsistent''; and
       (2) by adding at the end the following:
       ``(b) Special Rule With Respect to State Laws and 
     Regulations on Good Cause for Waiver of Time Limits or Late 
     Filing of Claims.--Any law, regulation, policy, or practice 
     of a cooperating State that allows for a waiver for good 
     cause of any time limitation relating to the administration 
     of the State unemployment insurance law shall, in the 
     administration of the program under this chapter by the 
     State, apply to any time limitation with respect to an 
     application for a trade readjustment allowance or enrollment 
     in training under this chapter.''.

     SEC. 1826. EMPLOYMENT AND CASE MANAGEMENT SERVICES.

       (a) In General.--Section 235 of the Trade Act of 1974 (19 
     U.S.C. 2295) is amended to read as follows:

     ``SEC. 235. EMPLOYMENT AND CASE MANAGEMENT SERVICES.

       ``The Secretary shall make available, directly or through 
     agreements with States under section 239, to adversely 
     affected workers and adversely affected incumbent workers 
     covered by a certification under subchapter A of this chapter 
     the following employment and case management services:
       ``(1) Comprehensive and specialized assessment of skill 
     levels and service needs, including through--
       ``(A) diagnostic testing and use of other assessment tools; 
     and
       ``(B) in-depth interviewing and evaluation to identify 
     employment barriers and appropriate employment goals.
       ``(2) Development of an individual employment plan to 
     identify employment goals and objectives, and appropriate 
     training to achieve those goals and objectives.
       ``(3) Information on training available in local and 
     regional areas, information on individual counseling to 
     determine which training is suitable training, and 
     information on how to apply for such training.
       ``(4) Information on how to apply for financial aid, 
     including referring workers to educational opportunity 
     centers described in section 402F of the Higher Education Act 
     of 1965 (20 U.S.C. 1070a-16), where applicable, and notifying 
     workers that the workers may request financial aid 
     administrators at institutions of higher education (as 
     defined in section 102 of such Act (20 U.S.C. 1002)) to use 
     the administrators' discretion under section 479A of such Act 
     (20 U.S.C. 1087tt) to use current year income data, rather 
     than preceding year income data, for determining the amount 
     of need of the workers for Federal financial assistance under 
     title IV of such Act (20 U.S.C. 1070 et seq.).
       ``(5) Short-term prevocational services, including 
     development of learning skills, communications skills, 
     interviewing skills, punctuality, personal maintenance 
     skills, and professional conduct to prepare individuals for 
     employment or training.
       ``(6) Individual career counseling, including job search 
     and placement counseling, during the period in which the 
     individual is receiving a trade adjustment allowance or 
     training under this chapter, and after receiving such 
     training for purposes of job placement.
       ``(7) Provision of employment statistics information, 
     including the provision of accurate information relating to 
     local, regional, and national labor market areas, including--
       ``(A) job vacancy listings in such labor market areas;
       ``(B) information on jobs skills necessary to obtain jobs 
     identified in job vacancy listings described in subparagraph 
     (A);

[[Page 3960]]

       ``(C) information relating to local occupations that are in 
     demand and earnings potential of such occupations; and
       ``(D) skills requirements for local occupations described 
     in subparagraph (C).
       ``(8) Information relating to the availability of 
     supportive services, including services relating to child 
     care, transportation, dependent care, housing assistance, and 
     need-related payments that are necessary to enable an 
     individual to participate in training.''.
       (b) Clerical Amendment.--The table of contents of the Trade 
     Act of 1974 is amended by striking the item relating to 
     section 235 and inserting the following:

``235. Employment and case management services.''.

     SEC. 1827. ADMINISTRATIVE EXPENSES AND EMPLOYMENT AND CASE 
                   MANAGEMENT SERVICES.

       (a) In General.--Part II of subchapter B of chapter 2 of 
     title II of the Trade Act of 1974 (19 U.S.C. 2295 et seq.) is 
     amended by inserting after section 235 the following:

     ``SEC. 235A. FUNDING FOR ADMINISTRATIVE EXPENSES AND 
                   EMPLOYMENT AND CASE MANAGEMENT SERVICES.

       ``(a) Funding for Administrative Expenses and Employment 
     and Case Management Services.--
       ``(1) In general.--In addition to any funds made available 
     to a State to carry out section 236 for a fiscal year, the 
     State shall receive for the fiscal year a payment in an 
     amount that is equal to 15 percent of the amount of such 
     funds.
       ``(2) Use of funds.--A State that receives a payment under 
     paragraph (1) shall--
       ``(A) use not more than \2/3\ of such payment for the 
     administration of the trade adjustment assistance for workers 
     program under this chapter, including for--
       ``(i) processing waivers of training requirements under 
     section 231;
       ``(ii) collecting, validating, and reporting data required 
     under this chapter; and
       ``(iii) providing reemployment trade adjustment assistance 
     under section 246; and
       ``(B) use not less than \1/3\ of such payment for 
     employment and case management services under section 235.
       ``(b) Additional Funding for Employment and Case Management 
     Services.--
       ``(1) In general.--In addition to any funds made available 
     to a State to carry out section 236 and the payment under 
     subsection (a)(1) for a fiscal year, the Secretary shall 
     provide to the State for the fiscal year a payment in the 
     amount of $350,000.
       ``(2) Use of funds.--A State that receives a payment under 
     paragraph (1) shall use such payment for the purpose of 
     providing employment and case management services under 
     section 235.
       ``(3) Voluntary return of funds.--A State that receives a 
     payment under paragraph (1) may decline or otherwise return 
     such payment to the Secretary.''.
       (b) Clerical Amendment.--The table of contents of the Trade 
     Act of 1974 is amended by inserting after the item relating 
     to section 235 the following:

``Sec. 235A. Funding for administrative expenses and employment and 
              case management services.''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 1828. TRAINING FUNDING.

       (a) In General.--Section 236(a)(2) of the Trade Act of 1974 
     (19 U.S.C. 2296(a)(2)) is amended to read as follows:
       ``(2)(A) The total amount of payments that may be made 
     under paragraph (1) shall not exceed--
       ``(i) for each of the fiscal years 2009 and 2010, 
     $575,000,000; and
       ``(ii) for the period beginning October 1, 2010, and ending 
     December 31, 2010, $143,750,000.
       ``(B)(i) The Secretary shall, as soon as practicable after 
     the beginning of each fiscal year, make an initial 
     distribution of the funds made available to carry out this 
     section, in accordance with the requirements of subparagraph 
     (C).
       ``(ii) The Secretary shall ensure that not less than 90 
     percent of the funds made available to carry out this section 
     for a fiscal year are distributed to the States by not later 
     than July 15 of that fiscal year.
       ``(C)(i) In making the initial distribution of funds 
     pursuant to subparagraph (B)(i) for a fiscal year, the 
     Secretary shall hold in reserve 35 percent of the funds made 
     available to carry out this section for that fiscal year for 
     additional distributions during the remainder of the fiscal 
     year.
       ``(ii) Subject to clause (iii), in determining how to 
     apportion the initial distribution of funds pursuant to 
     subparagraph (B)(i) in a fiscal year, the Secretary shall 
     take into account, with respect to each State--
       ``(I) the trend in the number of workers covered by 
     certifications of eligibility under this chapter during the 
     most recent 4 consecutive calendar quarters for which data 
     are available;
       ``(II) the trend in the number of workers participating in 
     training under this section during the most recent 4 
     consecutive calendar quarters for which data are available;
       ``(III) the number of workers estimated to be participating 
     in training under this section during the fiscal year;
       ``(IV) the amount of funding estimated to be necessary to 
     provide training approved under this section to such workers 
     during the fiscal year; and
       ``(V) such other factors as the Secretary considers 
     appropriate relating to the provision of training under this 
     section.
       ``(iii) In no case may the amount of the initial 
     distribution to a State pursuant to subparagraph (B)(i) in a 
     fiscal year be less than 25 percent of the initial 
     distribution to the State in the preceding fiscal year.
       ``(D) The Secretary shall establish procedures for the 
     distribution of the funds that remain available for the 
     fiscal year after the initial distribution required under 
     subparagraph (B)(i). Such procedures may include the 
     distribution of funds pursuant to requests submitted by 
     States in need of such funds.
       ``(E) If, during a fiscal year, the Secretary estimates 
     that the amount of funds necessary to pay the costs of 
     training approved under this section will exceed the dollar 
     amount limitation specified in subparagraph (A), the 
     Secretary shall decide how the amount of funds made available 
     to carry out this section that have not been distributed at 
     the time of the estimate will be apportioned among the States 
     for the remainder of the fiscal year.''.
       (b) Determinations Regarding Training.--Section 236(a)(9) 
     of the Trade Act of 1974 (19 U.S.C. 2296(a)(9)) is amended--
       (1) by striking ``The Secretary'' and inserting ``(A) 
     Subject to subparagraph (B), the Secretary''; and
       (2) by adding at the end the following:
       ``(B)(i) In determining under paragraph (1)(E) whether a 
     worker is qualified to undertake and complete training, the 
     Secretary may approve training for a period longer than the 
     worker's period of eligibility for trade readjustment 
     allowances under part I if the worker demonstrates a 
     financial ability to complete the training after the 
     expiration of the worker's period of eligibility for such 
     trade readjustment allowances.
       ``(ii) In determining the reasonable cost of training under 
     paragraph (1)(F) with respect to a worker, the Secretary may 
     consider whether other public or private funds are reasonably 
     available to the worker, except that the Secretary may not 
     require a worker to obtain such funds as a condition of 
     approval of training under paragraph (1).''.
       (c) Regulations.--Section 236 of the Trade Act of 1974 (19 
     U.S.C. 2296) is amended by adding at the end the following:
       ``(g) Regulations With Respect to Apportionment of Training 
     Funds to States.--
       ``(1) In general.--Not later than 1 year after the date of 
     the enactment of this subsection, the Secretary shall issue 
     such regulations as may be necessary to carry out the 
     provisions of subsection (a)(2).
       ``(2) Consultations.--The Secretary shall consult with the 
     Committee on Finance of the Senate and the Committee on Ways 
     and Means of the House of Representatives not less than 90 
     days before issuing any regulation pursuant to paragraph 
     (1).''.
       (d) Effective Date.--This section and the amendments made 
     by this section shall take effect upon the expiration of the 
     90-day period beginning on the date of the enactment of this 
     Act, except that--
       (1) subparagraph (A) of section 236(a)(2) of the Trade Act 
     of 1974, as amended by subsection (a) of this section, shall 
     take effect on the date of the enactment of this Act; and
       (2) subparagraphs (B), (C), and (D) of such section 
     236(a)(2) shall take effect on October 1, 2009.

     SEC. 1829. PREREQUISITE EDUCATION; APPROVED TRAINING 
                   PROGRAMS.

       (a) In General.--Section 236(a)(5) of the Trade Act of 1974 
     (19 U.S.C. 2296(a)(5)) is amended--
       (1) in subparagraph (A)--
       (A) by striking ``and'' at the end of clause (i);
       (B) by adding ``and'' at the end of clause (ii); and
       (C) by inserting after clause (ii) the following:
       ``(iii) apprenticeship programs registered under the Act of 
     August 16, 1937 (commonly known as the `National 
     Apprenticeship Act'; 50 Stat. 664, chapter 663; 29 U.S.C. 50 
     et seq.),'';
       (2) by redesignating subparagraphs (E) and (F) as 
     subparagraphs (F) and (G), respectively;
       (3) by inserting after subparagraph (D) the following:
       ``(E) any program of prerequisite education or coursework 
     required to enroll in training that may be approved under 
     this section,'';
       (4) in subparagraph (F)(ii), as redesignated by paragraph 
     (2), by striking ``and'' at the end;
       (5) in subparagraph (G), as redesignated by paragraph (2), 
     by striking the period at the end and inserting ``, and''; 
     and
       (6) by adding at the end the following:
       ``(H) any training program or coursework at an accredited 
     institution of higher education (described in section 102 of 
     the Higher Education Act of 1965 (20 U.S.C. 1002)), including 
     a training program or coursework for the purpose of--
       ``(i) obtaining a degree or certification; or
       ``(ii) completing a degree or certification that the worker 
     had previously begun at an accredited institution of higher 
     education.
     The Secretary may not limit approval of a training program 
     under paragraph (1) to a program provided pursuant to title I 
     of the Workforce Investment Act of 1998 (29 U.S.C. 2801 et 
     seq.).''.
       (b) Conforming Amendments.--Section 233 of the Trade Act of 
     1974 (19 U.S.C. 2293) is amended--
       (1) in subsection (a)(2), by inserting ``prerequisite 
     education or'' after ``requires a program of''; and
       (2) in subsection (f) (as redesignated by section 1821(c) 
     of this subtitle), by inserting ``prerequisite education or'' 
     after ``includes a program of''.

[[Page 3961]]

       (c) Technical Corrections.--Section 236 of the Trade Act of 
     1974 (19 U.S.C. 2296) is amended--
       (1) in subsection (a)--
       (A) in paragraph (1), in the flush text, by striking ``his 
     behalf'' and inserting ``the worker's behalf''; and
       (B) in paragraph (3), by striking ``this paragraph (1)'' 
     and inserting ``paragraph (1)''; and
       (2) in subsection (b)(2), by striking ``, and'' and 
     inserting a period.

     SEC. 1830. PRE-LAYOFF AND PART-TIME TRAINING.

       (a) Pre-Layoff Training.--
       (1) In general.--Section 236(a) of the Trade Act of 1974 
     (19 U.S.C. 2296(a)) is amended--
       (A) in paragraph (1), by inserting after ``determines'' the 
     following: ``, with respect to an adversely affected worker 
     or an adversely affected incumbent worker,'';
       (B) in paragraph (4)--
       (i) in subparagraphs (A) and (B), by inserting ``or an 
     adversely affected incumbent worker'' after ``an adversely 
     affected worker'' each place it appears; and
       (ii) in subparagraph (C), by inserting ``or adversely 
     affected incumbent worker'' after ``adversely affected 
     worker'' each place it appears;
       (C) in paragraph (5), in the matter preceding subparagraph 
     (A), by striking ``The training programs'' and inserting 
     ``Except as provided in paragraph (10), the training 
     programs'';
       (D) in paragraph (6)(B), by inserting ``or adversely 
     affected incumbent worker'' after ``adversely affected 
     worker'';
       (E) in paragraph (7)(B), by inserting ``or adversely 
     affected incumbent worker'' after ``adversely affected 
     worker''; and
       (F) by inserting after paragraph (9) the following:
       ``(10) In the case of an adversely affected incumbent 
     worker, the Secretary may not approve--
       ``(A) on-the-job training under paragraph (5)(A)(i); or
       ``(B) customized training under paragraph (5)(A)(ii), 
     unless such training is for a position other than the 
     worker's adversely affected employment.
       ``(11) If the Secretary determines that an adversely 
     affected incumbent worker for whom the Secretary approved 
     training under this section is no longer threatened with a 
     total or partial separation, the Secretary shall terminate 
     the approval of such training.''.
       (2) Definitions.--Section 247 of the Trade Act of 1974 (19 
     U.S.C. 2319), as amended, is further amended by adding at the 
     end the following:
       ``(19) The term `adversely affected incumbent worker' means 
     a worker who--
       ``(A) is a member of a group of workers who have been 
     certified as eligible to apply for adjustment assistance 
     under subchapter A;
       ``(B) has not been totally or partially separated from 
     adversely affected employment; and
       ``(C) the Secretary determines, on an individual basis, is 
     threatened with total or partial separation.''.
       (b) Part-Time Training.--Section 236 of the Trade Act of 
     1974 (19 U.S.C. 2296), as amended, is further amended by 
     adding at the end the following:
       ``(h) Part-Time Training.--
       ``(1) In general.--The Secretary may approve full-time or 
     part-time training for a worker under subsection (a).
       ``(2) Limitation.--Notwithstanding paragraph (1), a worker 
     participating in part-time training approved under subsection 
     (a) may not receive a trade readjustment allowance under 
     section 231.''.

     SEC. 1831. ON-THE-JOB TRAINING.

       (a) In General.--Section 236(c) of the Trade Act of 1974 
     (19 U.S.C. 2296(c)) is amended--
       (1) by redesignating paragraphs (1) through (10) as 
     subparagraphs (A) through (J) and moving such subparagraphs 2 
     ems to the right;
       (2) by striking ``(c) The Secretary shall'' and all that 
     follows through ``such costs,'' and inserting the following:
       ``(c) On-the-Job Training Requirements.--
       ``(1) In general.--The Secretary may approve on-the-job 
     training for any adversely affected worker if--
       ``(A) the worker meets the requirements for training to be 
     approved under subsection (a)(1);
       ``(B) the Secretary determines that on-the-job training--
       ``(i) can reasonably be expected to lead to suitable 
     employment with the employer offering the on-the-job 
     training;
       ``(ii) is compatible with the skills of the worker;
       ``(iii) includes a curriculum through which the worker will 
     gain the knowledge or skills to become proficient in the job 
     for which the worker is being trained; and
       ``(iv) can be measured by benchmarks that indicate that the 
     worker is gaining such knowledge or skills; and
       ``(C) the State determines that the on-the-job training 
     program meets the requirements of clauses (iii) and (iv) of 
     subparagraph (B).
       ``(2) Monthly payments.--The Secretary shall pay the costs 
     of on-the-job training approved under paragraph (1) in 
     monthly installments.
       ``(3) Contracts for on-the-job training.--
       ``(A) In general.--The Secretary shall ensure, in entering 
     into a contract with an employer to provide on-the-job 
     training to a worker under this subsection, that the skill 
     requirements of the job for which the worker is being 
     trained, the academic and occupational skill level of the 
     worker, and the work experience of the worker are taken into 
     consideration.
       ``(B) Term of contract.--Training under any such contract 
     shall be limited to the period of time required for the 
     worker receiving on-the-job training to become proficient in 
     the job for which the worker is being trained, but may not 
     exceed 104 weeks in any case.
       ``(4) Exclusion of certain employers.--The Secretary shall 
     not enter into a contract for on-the-job training with an 
     employer that exhibits a pattern of failing to provide 
     workers receiving on-the-job training from the employer 
     with--
       ``(A) continued, long-term employment as regular employees; 
     and
       ``(B) wages, benefits, and working conditions that are 
     equivalent to the wages, benefits, and working conditions 
     provided to regular employees who have worked a similar 
     period of time and are doing the same type of work as workers 
     receiving on-the-job training from the employer.
       ``(5) Labor standards.--The Secretary may pay the costs of 
     on-the-job training,''; and
       (3) in paragraph (5), as redesignated--
       (A) in subparagraph (I), as redesignated by paragraph (1) 
     of this section, by striking ``paragraphs (1), (2), (3), (4), 
     (5), and (6)'' and inserting ``subparagraphs (A), (B), (C), 
     (D), (E), and (F)''; and
       (B) in subparagraph (J), as redesignated by paragraph (1) 
     of this section, by striking ``paragraph (8)'' and inserting 
     ``subparagraph (H)''.
       (b) Repeal of Preference for Training on the Job.--Section 
     236(a)(1) of the Trade Act of 1974 (19 U.S.C. 2296(a)(1)) is 
     amended by striking the last sentence.

     SEC. 1832. ELIGIBILITY FOR UNEMPLOYMENT INSURANCE AND PROGRAM 
                   BENEFITS WHILE IN TRAINING.

       Section 236(d) of the Trade Act of 1974 (19 U.S.C. 2296(d)) 
     is amended to read as follows:
       ``(d) Eligibility.--An adversely affected worker may not be 
     determined to be ineligible or disqualified for unemployment 
     insurance or program benefits under this subchapter--
       ``(1) because the worker--
       ``(A) is enrolled in training approved under subsection 
     (a);
       ``(B) left work--
       ``(i) that was not suitable employment in order to enroll 
     in such training; or
       ``(ii) that the worker engaged in on a temporary basis 
     during a break in such training or a delay in the 
     commencement of such training; or
       ``(C) left on-the-job training not later than 30 days after 
     commencing such training because the training did not meet 
     the requirements of subsection (c)(1)(B); or
       ``(2) because of the application to any such week in 
     training of the provisions of State law or Federal 
     unemployment insurance law relating to availability for work, 
     active search for work, or refusal to accept work.''.

     SEC. 1833. JOB SEARCH AND RELOCATION ALLOWANCES.

       (a) Job Search Allowances.--Section 237 of the Trade Act of 
     1974 (19 U.S.C. 2297) is amended--
       (1) in subsection (a)(2)(C)(ii), by striking ``, unless the 
     worker received a waiver under section 231(c)''; and
       (2) in subsection (b)--
       (A) in paragraph (1), by striking ``90 percent of the cost 
     of'' and inserting ``all''; and
       (B) in paragraph (2), by striking ``$1,250'' and inserting 
     ``$1,500''.
       (b) Relocation Allowances.--Section 238 of the Trade Act of 
     1974 (19 U.S.C. 2298) is amended--
       (1) in subsection (a)(2)(E)(ii), by striking ``, unless the 
     worker received a waiver under section 231(c)''; and
       (2) in subsection (b)--
       (A) in paragraph (1), by striking ``90 percent of the'' and 
     inserting ``all''; and
       (B) in paragraph (2), by striking ``$1,250'' and inserting 
     ``$1,500''.

      Subpart D--Reemployment Trade Adjustment Assistance Program

     SEC. 1841. REEMPLOYMENT TRADE ADJUSTMENT ASSISTANCE PROGRAM.

       (a) In General.--Section 246 of the Trade Act of 1974 (19 
     U.S.C. 2318) is amended--
       (1) by amending the heading to read as follows:

     ``SEC. 246. REEMPLOYMENT TRADE ADJUSTMENT ASSISTANCE 
                   PROGRAM.'';

       (2) in subsection (a)--
       (A) in paragraph (1)--
       (i) by striking ``Not later than'' and all that follows 
     through ``2002, the Secretary'' and inserting ``The 
     Secretary''; and
       (ii) by striking ``an alternative trade adjustment 
     assistance program for older workers'' and inserting ``a 
     reemployment trade adjustment assistance program'';
       (B) in paragraph (2)--
       (i) in subparagraph (A)--

       (I) in the matter preceding clause (i), by striking ``for a 
     period not to exceed 2 years'' and inserting ``for the 
     eligibility period under subparagraph (A) or (B) of paragraph 
     (4) (as the case may be)''; and
       (II) by striking clauses (i) and (ii) and inserting the 
     following:

       ``(i) the wages received by the worker at the time of 
     separation; and
       ``(ii) the wages received by the worker from 
     reemployment.'';
       (ii) in subparagraph (B)--

       (I) by striking ``for a period not to exceed 2 years'' and 
     inserting ``for the eligibility period under subparagraph (A) 
     or (B) of paragraph (4) (as the case may be)''; and
       (II) by striking ``, as added by section 201 of the Trade 
     Act of 2002''; and

       (iii) by adding at the end the following:
       ``(C) Training and other services.--A worker described in 
     paragraph (3)(B) participating in

[[Page 3962]]

     the program established under paragraph (1) is eligible to 
     receive training approved under section 236 and employment 
     and case management services under section 235.''; and
       (C) by striking paragraphs (3) through (5) and inserting 
     the following:
       ``(3) Eligibility.--
       ``(A) In general.--A group of workers certified under 
     subchapter A as eligible for adjustment assistance under 
     subchapter A is eligible for benefits described in paragraph 
     (2) under the program established under paragraph (1).
       ``(B) Individual eligibility.--A worker in a group of 
     workers described in subparagraph (A) may elect to receive 
     benefits described in paragraph (2) under the program 
     established under paragraph (1) if the worker--
       ``(i) is at least 50 years of age;
       ``(ii) earns not more than $55,000 each year in wages from 
     reemployment;
       ``(iii)(I) is employed on a full-time basis as defined by 
     the law of the State in which the worker is employed and is 
     not enrolled in a training program approved under section 
     236; or
       ``(II) is employed at least 20 hours per week and is 
     enrolled in a training program approved under section 236; 
     and
       ``(iv) is not employed at the firm from which the worker 
     was separated.
       ``(4) Eligibility period for payments.--
       ``(A) Worker who has not received trade readjustment 
     allowance.--In the case of a worker described in paragraph 
     (3)(B) who has not received a trade readjustment allowance 
     under part I of subchapter B pursuant to the certification 
     described in paragraph (3)(A), the worker may receive 
     benefits described in paragraph (2) for a period not to 
     exceed 2 years beginning on the earlier of--
       ``(i) the date on which the worker exhausts all rights to 
     unemployment insurance based on the separation of the worker 
     from the adversely affected employment that is the basis of 
     the certification; or
       ``(ii) the date on which the worker obtains reemployment 
     described in paragraph (3)(B).
       ``(B) Worker who has received trade readjustment 
     allowance.--In the case of a worker described in paragraph 
     (3)(B) who has received a trade readjustment allowance under 
     part I of subchapter B pursuant to the certification 
     described in paragraph (3)(A), the worker may receive 
     benefits described in paragraph (2) for a period of 104 weeks 
     beginning on the date on which the worker obtains 
     reemployment described in paragraph (3)(B), reduced by the 
     total number of weeks for which the worker received such 
     trade readjustment allowance.
       ``(5) Total amount of payments.--
       ``(A) In general.--The payments described in paragraph 
     (2)(A) made to a worker may not exceed--
       ``(i) $12,000 per worker during the eligibility period 
     under paragraph (4)(A); or
       ``(ii) the amount described in subparagraph (B) per worker 
     during the eligibility period under paragraph (4)(B).
       ``(B) Amount described.--The amount described in this 
     subparagraph is the amount equal to the product of--
       ``(i) $12,000, and
       ``(ii) the ratio of--

       ``(I) the total number of weeks in the eligibility period 
     under paragraph (4)(B) with respect to the worker, to
       ``(II) 104 weeks.

       ``(6) Calculation of amount of payments for certain 
     workers.--
       ``(A) In general.--In the case of a worker described in 
     paragraph (3)(B)(iii)(II), paragraph (2)(A) shall be applied 
     by substituting the percentage described in subparagraph (B) 
     for `50 percent'.
       ``(B) Percentage described.--The percentage described in 
     this subparagraph is the percentage--
       ``(i) equal to \1/2\ of the ratio of--

       ``(I) the number of weekly hours of employment of the 
     worker referred to in paragraph (3)(B)(iii)(II), to
       ``(II) the number of weekly hours of employment of the 
     worker at the time of separation, but

       ``(ii) in no case more than 50 percent.
       ``(7) Limitation on other benefits.--A worker described in 
     paragraph (3)(B) may not receive a trade readjustment 
     allowance under part I of subchapter B pursuant to the 
     certification described in paragraph (3)(A) during any week 
     for which the worker receives a payment described in 
     paragraph (2)(A).''; and
       (3) in subsection (b)(2), by striking ``subsection 
     (a)(3)(B)'' and inserting ``subsection (a)(3)''.
       (b) Extension of Program.--Section 246(b)(1) of the Trade 
     Act of 1974 (19 U.S.C. 2318(b)(1)) is amended by striking 
     ``the date that is 5 years'' and all that follows through the 
     end period and inserting ``December 31, 2010.''.
       (c) Clerical Amendment.--The table of contents of the Trade 
     Act of 1974 is amended by striking the item relating to 
     section 246 and inserting the following:

``Sec. 246. Reemployment trade adjustment assistance program.''.

                        Subpart E--Other Matters

     SEC. 1851. OFFICE OF TRADE ADJUSTMENT ASSISTANCE.

       (a) In General.--Subchapter C of chapter 2 of title II of 
     the Trade Act of 1974 (19 U.S.C. 2311 et seq.) is amended by 
     adding at the end the following:

     ``SEC. 249A. OFFICE OF TRADE ADJUSTMENT ASSISTANCE.

       ``(a) Establishment.--There is established in the 
     Department of Labor an office to be known as the Office of 
     Trade Adjustment Assistance (in this section referred to as 
     the `Office').
       ``(b) Head of Office.--The head of the Office shall be an 
     administrator, who shall report directly to the Deputy 
     Assistant Secretary for Employment and Training.
       ``(c) Principal Functions.--The principal functions of the 
     administrator of the Office shall be--
       ``(1) to oversee and implement the administration of trade 
     adjustment assistance program under this chapter; and
       ``(2) to carry out functions delegated to the Secretary of 
     Labor under this chapter, including--
       ``(A) making determinations under section 223;
       ``(B) providing information under section 225 about trade 
     adjustment assistance to workers and assisting such workers 
     to prepare petitions or applications for program benefits;
       ``(C) providing assistance to employers of groups of 
     workers that have filed petitions under section 221 in 
     submitting information required by the Secretary relating to 
     the petitions;
       ``(D) ensuring workers covered by a certification of 
     eligibility under subchapter A receive the employment and 
     case management services described in section 235;
       ``(E) ensuring that States fully comply with agreements 
     entered into under section 239;
       ``(F) advocating for workers applying for benefits 
     available under this chapter;
       ``(G) establishing and overseeing a hotline that workers, 
     employers, and other entities may call to obtain information 
     regarding eligibility criteria, procedural requirements, and 
     benefits available under this chapter; and
       ``(H) carrying out such other duties with respect to this 
     chapter as the Secretary specifies for purposes of this 
     section.
       ``(d) Administration.--
       ``(1) Designation.--The administrator shall designate an 
     employee of the Department of Labor with appropriate 
     experience and expertise to carry out the duties described in 
     paragraph (2).
       ``(2) Duties.--The employee designated under paragraph (1) 
     shall--
       ``(A) receive complaints and requests for assistance 
     related to the trade adjustment assistance program under this 
     chapter;
       ``(B) resolve such complaints and requests for assistance, 
     in coordination with other employees of the Office;
       ``(C) compile basic information concerning such complaints 
     and requests for assistance; and
       ``(D) carry out such other duties with respect to this 
     chapter as the Secretary specifies for purposes of this 
     section.''.
       (b) Clerical Amendment.--The table of contents of the Trade 
     Act of 1974 is amended by inserting after the item relating 
     to section 249 the following:

``Sec. 249A. Office of Trade Adjustment Assistance.''.

     SEC. 1852. ACCOUNTABILITY OF STATE AGENCIES; COLLECTION AND 
                   PUBLICATION OF PROGRAM DATA; AGREEMENTS WITH 
                   STATES.

       (a) In General.--Section 239(a) of the Trade Act of 1974 
     (19 U.S.C. 2311(a)) is amended--
       (1) by amending clause (2) to read as follows: ``(2) in 
     accordance with subsection (f), shall make available to 
     adversely affected workers and adversely affected incumbent 
     workers covered by a certification under subchapter A the 
     employment and case management services described in section 
     235,''; and
       (2) by striking ``will'' each place it appears and 
     inserting ``shall''.
       (b) Form and Manner of Data.--Section 239 of the Trade Act 
     of 1974 (19 U.S.C. 2311) is amended--
       (1) by redesignating subsections (c) through (g) as 
     subsections (d) through (h), respectively; and
       (2) by inserting after subsection (b) the following:
       ``(c) Form and Manner of Data.--Each agreement under this 
     subchapter shall--
       ``(1) provide the Secretary with the authority to collect 
     any data the Secretary determines necessary to meet the 
     requirements of this chapter; and
       ``(2) specify the form and manner in which any such data 
     requested by the Secretary shall be reported.''.
       (c) State Activities.--Section 239(g) of the Trade Act of 
     1974 (as redesignated) is amended--
       (1) in paragraph (3), by striking ``and'' at the end;
       (2) by amending paragraph (4) to read as follows:
       ``(4) perform outreach to, intake of, and orientation for 
     adversely affected workers and adversely affected incumbent 
     workers covered by a certification under subchapter A with 
     respect to assistance and benefits available under this 
     chapter, and''; and
       (3) by adding at the end the following:
       ``(5) make employment and case management services 
     described in section 235 available to adversely affected 
     workers and adversely affected incumbent workers covered by a 
     certification under subchapter A and, if funds provided to 
     carry out this chapter are insufficient to make such services 
     available, make arrangements to make such services available 
     through other Federal programs.''.
       (d) Reporting Requirement.--Section 239(h) of the Trade Act 
     of 1974 (as redesignated) is amended by striking ``1998.'' 
     and inserting ``1998 (29 U.S.C. 2822(b)) and a description of 
     the State's rapid response activities under section 
     221(a)(2)(A).''.
       (e) Control Measures.--Section 239 of the Trade Act of 1974 
     (19 U.S.C. 2311), as amended,

[[Page 3963]]

     is further amended by adding at the end the following:
       ``(i) Control Measures.--
       ``(1) In general.--The Secretary shall require each 
     cooperating State and cooperating State agency to implement 
     effective control measures and to effectively oversee the 
     operation and administration of the trade adjustment 
     assistance program under this chapter, including by means of 
     monitoring the operation of control measures to improve the 
     accuracy and timeliness of the data being collected and 
     reported.
       ``(2) Definition.--For purposes of paragraph (1), the term 
     `control measures' means measures that--
       ``(A) are internal to a system used by a State to collect 
     data; and
       ``(B) are designed to ensure the accuracy and verifiability 
     of such data.
       ``(j) Data Reporting.--
       ``(1) In general.--Any agreement entered into under this 
     section shall require the cooperating State or cooperating 
     State agency to report to the Secretary on a quarterly basis 
     comprehensive performance accountability data, to consist 
     of--
       ``(A) the core indicators of performance described in 
     paragraph (2)(A);
       ``(B) the additional indicators of performance described in 
     paragraph (2)(B), if any; and
       ``(C) a description of efforts made to improve outcomes for 
     workers under the trade adjustment assistance program.
       ``(2) Core indicators described.--
       ``(A) In general.--The core indicators of performance 
     described in this paragraph are--
       ``(i) the percentage of workers receiving benefits under 
     this chapter who are employed during the second calendar 
     quarter following the calendar quarter in which the workers 
     cease receiving such benefits;
       ``(ii) the percentage of such workers who are employed in 
     each of the third and fourth calendar quarters following the 
     calendar quarter in which the workers cease receiving such 
     benefits; and
       ``(iii) the earnings of such workers in each of the third 
     and fourth calendar quarters following the calendar quarter 
     in which the workers cease receiving such benefits.
       ``(B) Additional indicators.--The Secretary and a 
     cooperating State or cooperating State agency may agree upon 
     additional indicators of performance for the trade adjustment 
     assistance program under this chapter, as appropriate.
       ``(3) Standards with respect to reliability of data.--In 
     preparing the quarterly report required by paragraph (1), 
     each cooperating State or cooperating State agency shall 
     establish procedures that are consistent with guidelines to 
     be issued by the Secretary to ensure that the data reported 
     are valid and reliable.''.

     SEC. 1853. VERIFICATION OF ELIGIBILITY FOR PROGRAM BENEFITS.

       Section 239 of the Trade Act of 1974 (19 U.S.C. 2311), as 
     amended, is further amended by adding at the end the 
     following:
       ``(k) Verification of Eligibility for Program Benefits.--
       ``(1) In general.--An agreement under this subchapter shall 
     provide that the State shall periodically redetermine that a 
     worker receiving benefits under this subchapter who is not a 
     citizen or national of the United States remains in a 
     satisfactory immigration status. Once satisfactory 
     immigration status has been initially verified through the 
     immigration status verification system described in section 
     1137(d) of the Social Security Act (42 U.S.C. 1320b-7(d)) for 
     purposes of establishing a worker's eligibility for 
     unemployment compensation, the State shall reverify the 
     worker's immigration status if the documentation provided 
     during initial verification will expire during the period in 
     which that worker is potentially eligible to receive benefits 
     under this subchapter. The State shall conduct such 
     redetermination in a timely manner, utilizing the immigration 
     status verification system described in section 1137(d) of 
     the Social Security Act (42 U.S.C. 1320b-7(d)).
       ``(2) Procedures.--The Secretary shall establish procedures 
     to ensure the uniform application by the States of the 
     requirements of this subsection.''.

     SEC. 1854. COLLECTION OF DATA AND REPORTS; INFORMATION TO 
                   WORKERS.

       (a) In General.--Subchapter C of chapter 2 of title II of 
     the Trade Act of 1974 (19 U.S.C. 2311 et seq.), as amended, 
     is further amended by adding at the end the following:

     ``SEC. 249B. COLLECTION AND PUBLICATION OF DATA AND REPORTS; 
                   INFORMATION TO WORKERS.

       ``(a) In General.--Not later than 180 days after the date 
     of the enactment of this section, the Secretary shall 
     implement a system to collect and report the data described 
     in subsection (b), as well as any other information that the 
     Secretary considers appropriate to effectively carry out this 
     chapter.
       ``(b) Data to Be Included.--The system required under 
     subsection (a) shall include collection of and reporting on 
     the following data for each fiscal year:
       ``(1) Data on petitions filed, certified, and denied.--
       ``(A) The number of petitions filed, certified, and denied 
     under this chapter.
       ``(B) The number of workers covered by petitions filed, 
     certified, and denied.
       ``(C) The number of petitions, classified by--
       ``(i) the basis for certification, including increased 
     imports, shifts in production, and other bases of 
     eligibility; and
       ``(ii) congressional district of the United States.
       ``(D) The average time for processing such petitions.
       ``(2) Data on benefits received.--
       ``(A) The number of workers receiving benefits under this 
     chapter.
       ``(B) The number of workers receiving each type of benefit, 
     including training, trade readjustment allowances, employment 
     and case management services, and relocation and job search 
     allowances, and, to the extent feasible, credits for health 
     insurance costs under section 35 of the Internal Revenue Code 
     of 1986.
       ``(C) The average time during which such workers receive 
     each such type of benefit.
       ``(3) Data on training.--
       ``(A) The number of workers enrolled in training approved 
     under section 236, classified by major types of training, 
     including classroom training, training through distance 
     learning, on-the-job training, and customized training.
       ``(B) The number of workers enrolled in full-time training 
     and part-time training.
       ``(C) The average duration of training.
       ``(D) The number of training waivers granted under section 
     231(c), classified by type of waiver.
       ``(E) The number of workers who complete training and the 
     duration of such training.
       ``(F) The number of workers who do not complete training.
       ``(4) Data on outcomes.--
       ``(A) A summary of the quarterly reports required under 
     section 239(j).
       ``(B) The sectors in which workers are employed after 
     receiving benefits under this chapter.
       ``(5) Data on rapid response activities.--Whether rapid 
     response activities were provided with respect to each 
     petition filed under section 221.
       ``(c) Classification of Data.--To the extent possible, in 
     collecting and reporting the data described in subsection 
     (b), the Secretary shall classify the data by industry, 
     State, and national totals.
       ``(d) Report.--Not later than December 15 of each year, the 
     Secretary shall submit to the Committee on Finance of the 
     Senate and the Committee on Ways and Means of the House of 
     Representatives a report that includes--
       ``(1) a summary of the information collected under this 
     section for the preceding fiscal year;
       ``(2) information on the distribution of funds to each 
     State pursuant to section 236(a)(2); and
       ``(3) any recommendations of the Secretary with respect to 
     changes in eligibility requirements, benefits, or training 
     funding under this chapter based on the data collected under 
     this section.
       ``(e) Availability of Data.--
       ``(1) In general.--The Secretary shall make available to 
     the public, by publishing on the website of the Department of 
     Labor and by other means, as appropriate--
       ``(A) the report required under subsection (d);
       ``(B) the data collected under this section, in a 
     searchable format; and
       ``(C) a list of cooperating States and cooperating State 
     agencies that failed to submit the data required by this 
     section to the Secretary in a timely manner.
       ``(2) Updates.--The Secretary shall update the data under 
     paragraph (1) on a quarterly basis.''.
       (b) Clerical Amendment.--The table of contents of the Trade 
     Act of 1974 is amended by inserting after the item relating 
     to section 249A the following:

       ``Sec. 249B. Collection and publication of data and 
           reports; information to workers.''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 1855. FRAUD AND RECOVERY OF OVERPAYMENTS.

       Section 243(a)(1) of the Trade Act of 1974 (19 U.S.C. 
     2315(a)(1)) is amended--
       (1) in the matter preceding subparagraph (A)--
       (A) by striking ``may waive'' and inserting ``shall 
     waive''; and
       (B) by striking ``, in accordance with guidelines 
     prescribed by the Secretary,''; and
       (2) in subparagraph (B), by striking ``would be contrary to 
     equity and good conscience'' and inserting ``would cause a 
     financial hardship for the individual (or the individual's 
     household, if applicable) when taking into consideration the 
     income and resources reasonably available to the individual 
     (or household) and other ordinary living expenses of the 
     individual (or household)''.

     SEC. 1856. SENSE OF CONGRESS ON APPLICATION OF TRADE 
                   ADJUSTMENT ASSISTANCE.

       (a) In General.--Chapter 5 of title II of the Trade Act of 
     1974 (19 U.S.C. 2391 et seq.) is amended by adding at the end 
     the following:

     ``SEC. 288. SENSE OF CONGRESS.

       ``It is the sense of Congress that the Secretaries of 
     Labor, Commerce, and Agriculture should apply the provisions 
     of chapter 2 (relating to adjustment assistance for workers), 
     chapter 3 (relating to adjustment assistance for firms), 
     chapter 4 (relating to adjustment assistance for 
     communities), and chapter 6 (relating to adjustment 
     assistance for farmers), respectively, with the utmost regard 
     for the interests of workers, firms, communities, and farmers 
     petitioning for benefits under such chapters.''.
       (b) Clerical Amendment.--The table of contents of the Trade 
     Act of 1974 is amended by inserting after the item relating 
     to section 287 the following:


[[Page 3964]]


       ``Sec. 288. Sense of Congress.''.

     SEC. 1857. CONSULTATIONS IN PROMULGATION OF REGULATIONS.

       Section 248 of the Trade Act of 1974 (19 U.S.C. 2320) is 
     amended--
       (1) by striking ``The Secretary shall'' and inserting the 
     following:
       ``(a) In General.--The Secretary shall''; and
       (2) by adding at the end the following:
       ``(b) Consultations.--Not later than 90 days before issuing 
     a regulation under subsection (a), the Secretary shall 
     consult with the Committee on Finance of the Senate and the 
     Committee on Ways and Means of the House of Representatives 
     with respect to the regulation.''.

     SEC. 1858. TECHNICAL CORRECTIONS.

       (a) Determinations by Secretary of Labor.--Section 223(c) 
     of the Trade Act of 1974 (19 U.S.C. 2273(c)) is amended by 
     striking ``his determination'' and inserting ``a 
     determination''.
       (b) Qualifying Requirements for Workers.--Section 231(a) of 
     the Trade Act of 1974 (19 U.S.C. 2291(a)) is amended--
       (1) in paragraph (1)--
       (A) in the matter preceding subparagraph (A), by striking 
     ``his application'' and inserting ``the worker's 
     application''; and
       (B) in subparagraph (A), by striking ``he is covered'' and 
     inserting ``the worker is covered'';
       (2) in paragraph (2)--
       (A) in subparagraph (A), by striking the period and 
     inserting a comma; and
       (B) in subparagraph (D), by striking ``5 U.S.C. 
     8521(a)(1)'' and inserting ``section 8521(a)(1) of title 5, 
     United States Code''; and
       (3) in paragraph (3)--
       (A) by striking ``he'' each place it appears and inserting 
     ``the worker''; and
       (B) in subparagraph (C), by striking ``him'' and inserting 
     ``the worker''.
       (c) Subpoena Power.--Section 249 of the Trade Act of 1974 
     (19 U.S.C. 2321) is amended--
       (1) in the section heading, by striking ``SUBPENA'' and 
     inserting ``SUBPOENA'';
       (2) by striking ``subpena'' and inserting ``subpoena'' each 
     place it appears; and
       (3) in subsection (a), by striking ``him'' and inserting 
     ``the Secretary''.
       (d) Clerical Amendment.--The table of contents of the Trade 
     Act of 1974 is amended by striking the item relating to 
     section 249 and inserting the following:

``Sec. 249. Subpoena power.''.

             PART II--TRADE ADJUSTMENT ASSISTANCE FOR FIRMS

     SEC. 1861. EXPANSION TO SERVICE SECTOR FIRMS.

       (a) In General.--Section 251 of the Trade Act of 1974 (19 
     U.S.C. 2341) is amended by inserting ``or service sector 
     firm'' after ``agricultural firm'' each place it appears.
       (b) Definition of Service Sector Firm.--Section 261 of the 
     Trade Act of 1974 (19 U.S.C. 2351) is amended--
       (1) by striking ``chapter,'' and inserting ``chapter:'';
       (2) by striking ``the term `firm''' and inserting the 
     following:
       ``(1) Firm.--The term `firm'''; and
       (3) by adding at the end the following:
       ``(2) Service sector firm.--The term `service sector firm' 
     means a firm engaged in the business of supplying 
     services.''.
       (c) Conforming Amendments.--
       (1) Section 251(c)(1)(C) of the Trade Act of 1974 (19 
     U.S.C. 2341(c)(1)(C)) is amended--
       (A) by inserting ``or services'' after ``articles'' the 
     first place it appears; and
       (B) by inserting ``or services which are supplied'' after 
     ``produced''.
       (2) Section 251(c)(2)(B)(ii) of such Act is amended to read 
     as follows:
       ``(ii) Any firm that engages in exploration or drilling for 
     oil or natural gas, or otherwise produces oil or natural gas, 
     shall be considered to be producing articles directly 
     competitive with imports of oil and with imports of natural 
     gas.''.

     SEC. 1862. MODIFICATION OF REQUIREMENTS FOR CERTIFICATION.

       Section 251(c)(1)(B) of the Trade Act of 1974 (19 U.S.C. 
     2341(c)(1)(B)) is amended to read as follows:
       ``(B) that--
       ``(i) sales or production, or both, of the firm have 
     decreased absolutely,
       ``(ii) sales or production, or both, of an article or 
     service that accounted for not less than 25 percent of the 
     total sales or production of the firm during the 12-month 
     period preceding the most recent 12-month period for which 
     date are available have decreased absolutely,
       ``(iii) sales or production, or both, of the firm during 
     the most recent 12-month period for which data are available 
     have decreased compared to--
       ``(I) the average annual sales or production for the firm 
     during the 24-month period preceding that 12-month period, or
       ``(II) the average annual sales or production for the firm 
     during the 36-month period preceding that 12-month period, 
     and
       ``(iv) sales or production, or both, of an article or 
     service that accounted for not less than 25 percent of the 
     total sales or production of the firm during the most recent 
     12-month period for which data are available have decreased 
     compared to--
       ``(I) the average annual sales or production for the 
     article or service during the 24-month period preceding that 
     12-month period, or
       ``(II) the average annual sales or production for the 
     article or service during the 36-month period preceding that 
     12-month period, and''.

     SEC. 1863. BASIS FOR DETERMINATIONS.

       Section 251 of the Trade Act of 1974 (19 U.S.C. 2341), as 
     amended, is further amended by adding at the end the 
     following:
       ``(e) Basis for Secretary's Determinations.--For purposes 
     of subsection (c)(1)(C), the Secretary may determine that 
     there are increased imports of like or directly competitive 
     articles or services, if customers accounting for a 
     significant percentage of the decrease in the sales or 
     production of the firm certify to the Secretary that such 
     customers have increased their imports of such articles or 
     services from a foreign country, either absolutely or 
     relative to their acquisition of such articles or services 
     from suppliers located in the United States.
       ``(f) Notification to Firms of Availability of Benefits.--
     Upon receiving notice from the Secretary of Labor under 
     section 225 of the identity of a firm that is covered by a 
     certification issued under section 223, the Secretary of 
     Commerce shall notify the firm of the availability of 
     adjustment assistance under this chapter.''.

     SEC. 1864. OVERSIGHT AND ADMINISTRATION; AUTHORIZATION OF 
                   APPROPRIATIONS.

       (a) In General.--Chapter 3 of title II of the Trade Act of 
     1974 (19 U.S.C. 2341 et seq.) is amended--
       (1) by striking sections 254, 255, 256, and 257;
       (2) by redesignating sections 258, 259, 260, 261, 262, 264, 
     and 265, as sections 256, 257, 258, 259, 260, 261, and 262, 
     respectively; and
       (3) by inserting after section 253 the following:

     ``SEC. 254. OVERSIGHT AND ADMINISTRATION.

       ``(a) In General.--The Secretary shall, to such extent and 
     in such amounts as are provided in appropriations Acts, 
     provide grants to intermediary organizations (referred to in 
     section 253(b)(1)) throughout the United States pursuant to 
     agreements with such intermediary organizations. Each such 
     agreement shall require the intermediary organization to 
     provide benefits to firms certified under section 251. The 
     Secretary shall, to the maximum extent practicable, provide 
     by October 1, 2010, that contracts entered into with 
     intermediary organizations be for a 12-month period and that 
     all such contracts have the same beginning date and the same 
     ending date.
       ``(b) Distribution of Funds.--
       ``(1) In general.--Not later than 90 days after the date of 
     the enactment of this subsection, the Secretary shall develop 
     a methodology for the distribution of funds among the 
     intermediary organizations described in subsection (a).
       ``(2) Prompt initial distribution.--The methodology 
     described in paragraph (1) shall ensure the prompt initial 
     distribution of funds and establish additional criteria 
     governing the apportionment and distribution of the remainder 
     of such funds among the intermediary organizations.
       ``(3) Criteria.--The methodology described in paragraph (1) 
     shall include criteria based on the data in the annual report 
     on the trade adjustment assistance for firms program 
     described in section 1866 of the Trade and Globalization 
     Adjustment Assistance Act of 2009.
       ``(c) Requirements for Contracts.--An agreement with an 
     intermediary organization described in subsection (a) shall 
     require the intermediary organization to contract for the 
     supply of services to carry out grants under this chapter in 
     accordance with terms and conditions that are consistent with 
     guidelines established by the Secretary.
       ``(d) Consultations.--
       ``(1) Consultations regarding methodology.--The Secretary 
     shall consult with the Committee on Finance of the Senate and 
     the Committee on Ways and Means of the House of 
     Representatives--
       ``(A) not less than 30 days before finalizing the 
     methodology described in subsection (b); and
       ``(B) not less than 60 days before adopting any changes to 
     such methodology.
       ``(2) Consultations regarding guidelines.--The Secretary 
     shall consult with the Committee on Finance of the Senate and 
     the Committee on Ways and Means of the House of 
     Representatives not less than 60 days before finalizing the 
     guidelines described in subsection (c) or adopting any 
     subsequent changes to such guidelines.

     ``SEC. 255. AUTHORIZATION OF APPROPRIATIONS.

       ``(a) In General.--There are authorized to be appropriated 
     to the Secretary $50,000,000 for each of the fiscal years 
     2009 through 2010, and $12,501,000 for the period beginning 
     October 1, 2010, and ending December 31, 2010, to carry out 
     the provisions of this chapter. Amounts appropriated pursuant 
     to this subsection shall--
       ``(1) be available to provide adjustment assistance to 
     firms that file a petition for such assistance pursuant to 
     this chapter on or before December 31, 2010; and
       ``(2) otherwise remain available until expended.
       ``(b) Personnel.--Of the amounts appropriated pursuant to 
     this section for each fiscal year, $350,000 shall be 
     available for full-time positions in the Department of 
     Commerce to administer the provisions of this chapter. Of 
     such funds the Secretary shall make available to the Economic 
     Development Administration such sums as may be necessary to 
     establish the position of Director of Adjustment Assistance 
     for Firms and such other full-time positions as may be 
     appropriate to administer the provisions of this chapter.''.
       (b) Residual Authority.--The Secretary of Commerce shall 
     have the authority to modify, terminate, resolve, liquidate, 
     or take any other action with respect to a loan, guarantee, 
     contract, or any other financial assistance that was extended 
     under section 254, 255, 256, or 257 of the Trade Act of 1974 
     (19 U.S.C. 2344, 2345, 2346,

[[Page 3965]]

     and 2347), as in effect on the day before the effective date 
     set forth in section 1891.
       (c) Conforming Amendments.--
       (1) Section 256 of the Trade Act of 1974, as redesignated 
     by subsection (a) of this section, is amended by striking 
     subsection (d).
       (2) Section 258 of the Trade Act of 1974, as redesignated 
     by subsection (a) of this section, is amended--
       (A) in the first sentence, by striking ``and financial''; 
     and
       (B) in the last sentence--
       (i) by striking ``sections 253 and 254'' and inserting 
     ``section 253''; and
       (ii) by striking ``title 28 of the United States Code'' and 
     inserting ``title 28, United States Code''.
       (d) Clerical Amendments.--The table of contents of the 
     Trade Act of 1974 is amended by striking the items relating 
     to sections 254, 255, 256, 257, 258, 259, 260, 261, 262, 264, 
     and 265, and inserting the following:

``Sec. 254. Oversight and administration.
``Sec. 255. Authorization of appropriations.
``Sec. 256. Protective provisions.
``Sec. 257. Penalties.
``Sec. 258. Civil actions.
``Sec. 259. Definitions.
``Sec. 260. Regulations.
``Sec. 261. Study by Secretary of Commerce when International Trade 
              Commission begins investigation; action where there is 
              affirmative finding.
``Sec. 262. Assistance to industries.''.
       (e) Effective Date.--This section and the amendments made 
     by this section shall take effect upon the expiration of the 
     90-day period beginning on the date of the enactment of this 
     Act, except that subsections (b) and (d) of section 254 of 
     the Trade Act of 1974 (as added by subsection (a) of this 
     section) shall take effect on such date of enactment.

     SEC. 1865. INCREASED PENALTIES FOR FALSE STATEMENTS.

       Section 257 of the Trade Act of 1974, as redesignated by 
     section 1864(a), is amended to read as follows:

     ``SEC. 257. PENALTIES.

       ``Any person who--
       ``(1) makes a false statement of a material fact knowing it 
     to be false, or knowingly fails to disclose a material fact, 
     or willfully overvalues any security, for the purpose of 
     influencing in any way a determination under this chapter, or 
     for the purpose of obtaining money, property, or anything of 
     value under this chapter, or
       ``(2) makes a false statement of a material fact knowing it 
     to be false, or knowingly fails to disclose a material fact, 
     when providing information to the Secretary during an 
     investigation of a petition under this chapter,
     shall be imprisoned for not more than 2 years, or fined under 
     title 18, United States Code, or both.''.

     SEC. 1866. ANNUAL REPORT ON TRADE ADJUSTMENT ASSISTANCE FOR 
                   FIRMS.

       (a) In General.--Not later than December 15, 2009, and each 
     year thereafter, the Secretary of Commerce shall prepare a 
     report containing data regarding the trade adjustment 
     assistance for firms program provided for in chapter 3 of 
     title II of the Trade Act of 1974 (19 U.S.C. 2341 et seq.) 
     for the preceding fiscal year. The data shall include the 
     following:
       (1) The number of firms that inquired about the program.
       (2) The number of petitions filed under section 251.
       (3) The number of petitions certified and denied.
       (4) The average time for processing petitions.
       (5) The number of petitions filed and firms certified for 
     each congressional district of the United States.
       (6) The number of firms that received assistance in 
     preparing their petitions.
       (7) The number of firms that received assistance developing 
     business recovery plans.
       (8) The number of business recovery plans approved and 
     denied by the Secretary of Commerce.
       (9) Sales, employment, and productivity at each firm 
     participating in the program at the time of certification.
       (10) Sales, employment, and productivity at each firm upon 
     completion of the program and each year for the 2-year period 
     following completion.
       (11) The financial assistance received by each firm 
     participating in the program.
       (12) The financial contribution made by each firm 
     participating in the program.
       (13) The types of technical assistance included in the 
     business recovery plans of firms participating in the 
     program.
       (14) The number of firms leaving the program before 
     completing the project or projects in their business recovery 
     plans and the reason the project was not completed.
       (b) Classification of Data.--To the extent possible, in 
     collecting and reporting the data described in subsection 
     (a), the Secretary shall classify the data by intermediary 
     organization, State, and national totals.
       (c) Report to Congress; Publication.--The Secretary of 
     Commerce shall--
       (1) submit the report described in subsection (a) to the 
     Committee on Finance of the Senate and the Committee on Ways 
     and Means of the House of Representatives; and
       (2) publish the report in the Federal Register and on the 
     website of the Department of Commerce.
       (d) Protection of Confidential Information.--The Secretary 
     of Commerce may not release information described in 
     subsection (a) that the Secretary considers to be 
     confidential business information unless the person 
     submitting the confidential business information had notice, 
     at the time of submission, that such information would be 
     released by the Secretary, or such person subsequently 
     consents to the release of the information. Nothing in this 
     subsection shall be construed to prohibit the Secretary from 
     providing such confidential business information to a court 
     in camera or to another party under a protective order issued 
     by a court.

     SEC. 1867. TECHNICAL CORRECTIONS.

       (a) In General.--Section 251 of the Trade Act of 1974 (19 
     U.S.C. 2341), as amended, is further amended--
       (1) in subsection (a), by striking ``he has'' and inserting 
     ``the Secretary has''; and
       (2) in subsection (d), by striking ``60 days'' and 
     inserting ``40 days''.
       (b) Technical Assistance.--Section 253(a)(3) of the Trade 
     Act of 1974 (19 U.S.C. 2343(a)(3)) is amended by striking 
     ``of a certified firm'' and inserting ``to a certified 
     firm''.

         PART III--TRADE ADJUSTMENT ASSISTANCE FOR COMMUNITIES

     SEC. 1871. PURPOSE.

       The purpose of the amendments made by this part is to 
     assist communities impacted by trade with economic adjustment 
     through the coordination of Federal, State, and local 
     resources, the creation of community-based development 
     strategies, and the development and provision of programs 
     that meet the training needs of workers covered by 
     certifications under section 223.

     SEC. 1872. TRADE ADJUSTMENT ASSISTANCE FOR COMMUNITIES.

       (a) In General.--Chapter 4 of title II of the Trade Act of 
     1974 (19 U.S.C. 2371 et seq.) is amended to read as follows:

        ``CHAPTER 4--TRADE ADJUSTMENT ASSISTANCE FOR COMMUNITIES

      ``Subchapter A--Trade Adjustment Assistance for Communities

     ``SEC. 271. DEFINITIONS.

       ``In this subchapter:
       ``(1) Agricultural commodity producer.--The term 
     `agricultural commodity producer' has the meaning given that 
     term in section 291.
       ``(2) Community.--The term `community' means a city, 
     county, or other political subdivision of a State or a 
     consortium of political subdivisions of a State.
       ``(3) Community impacted by trade.--The term `community 
     impacted by trade' means a community described in section 
     273(b)(2).
       ``(4) Eligible community.--The term `eligible community' 
     means a community that the Secretary has determined under 
     section 273(b)(1) is eligible to apply for assistance under 
     this subchapter.
       ``(5) Secretary.--The term `Secretary' means the Secretary 
     of Commerce.

     ``SEC. 272. ESTABLISHMENT OF TRADE ADJUSTMENT ASSISTANCE FOR 
                   COMMUNITIES PROGRAM.

       ``Not later than August 1, 2009, the Secretary shall 
     establish a trade adjustment assistance for communities 
     program at the Department of Commerce under which the 
     Secretary shall--
       ``(1) provide technical assistance under section 274 to 
     communities impacted by trade to facilitate the economic 
     adjustment of those communities; and
       ``(2) award grants to communities impacted by trade to 
     carry out strategic plans developed under section 276.

     ``SEC. 273. ELIGIBILITY; NOTIFICATION.

       ``(a) Petition.--
       ``(1) In general.--A community may submit a petition to the 
     Secretary for an affirmative determination under subsection 
     (b)(1) that the community is eligible to apply for assistance 
     under this subchapter if--
       ``(A) on or after August 1, 2009, one or more 
     certifications described in subsection (b)(3) are made with 
     respect to the community; and
       ``(B) the community submits the petition not later than 180 
     days after the date of the most recent certification.
       ``(2) Special rule with respect to certain communities.--In 
     the case of a community with respect to which one or more 
     certifications described in subsection (b)(3) were made on or 
     after January 1, 2007, and before August 1, 2009, the 
     community may submit not later than February 1, 2010, a 
     petition to the Secretary for an affirmative determination 
     under subsection (b)(1).
       ``(b) Affirmative Determination.--
       ``(1) In general.--The Secretary shall make an affirmative 
     determination that a community is eligible to apply for 
     assistance under this subchapter if the Secretary determines 
     that the community is a community impacted by trade.
       ``(2) Community impacted by trade.--A community is a 
     community impacted by trade if--
       ``(A) one or more certifications described in paragraph (3) 
     are made with respect to the community; and
       ``(B) the Secretary determines that the community is 
     significantly affected by the threat to, or the loss of, jobs 
     associated with any such certification.
       ``(3) Certification described.--A certification described 
     in this paragraph is a certification--
       ``(A) by the Secretary of Labor that a group of workers in 
     the community is eligible to apply for assistance under 
     section 223;
       ``(B) by the Secretary of Commerce that a firm located in 
     the community is eligible to apply for adjustment assistance 
     under section 251; or
       ``(C) by the Secretary of Agriculture that a group of 
     agricultural commodity producers in

[[Page 3966]]

     the community is eligible to apply for adjustment assistance 
     under section 293.
       ``(c) Notifications.--
       ``(1) Notification to the governor.--The Governor of a 
     State shall be notified promptly--
       ``(A) by the Secretary of Labor, upon making a 
     determination that a group of workers in the State is 
     eligible for assistance under section 223;
       ``(B) by the Secretary of Commerce, upon making a 
     determination that a firm in the State is eligible for 
     assistance under section 251; and
       ``(C) by the Secretary of Agriculture, upon making a 
     determination that a group of agricultural commodity 
     producers in the State is eligible for assistance under 
     section 293.
       ``(2) Notification to community.--Upon making an 
     affirmative determination under subsection (b)(1) that a 
     community is eligible to apply for assistance under this 
     subchapter, the Secretary shall promptly notify the community 
     and the Governor of the State in which the community is 
     located--
       ``(A) of the affirmative determination;
       ``(B) of the applicable provisions of this subchapter; and
       ``(C) of the means for obtaining assistance under this 
     subchapter and other appropriate economic assistance that may 
     be available to the community.

     ``SEC. 274. TECHNICAL ASSISTANCE.

       ``(a) In General.--The Secretary shall provide 
     comprehensive technical assistance to an eligible community 
     to assist the community to--
       ``(1) diversify and strengthen the economy in the 
     community;
       ``(2) identify significant impediments to economic 
     development that result from the impact of trade on the 
     community; and
       ``(3) develop a strategic plan under section 276 to address 
     economic adjustment and workforce dislocation in the 
     community, including unemployment among agricultural 
     commodity producers.
       ``(b) Coordination of Federal Response.--The Secretary 
     shall coordinate the Federal response to an eligible 
     community by--
       ``(1) identifying Federal, State, and local resources that 
     are available to assist the community in responding to 
     economic distress; and
       ``(2) assisting the community in accessing available 
     Federal assistance and ensuring that such assistance is 
     provided in a targeted, integrated manner.
       ``(c) Interagency Community Assistance Working Group.--
       ``(1) In general.--The Secretary shall establish an 
     interagency Community Assistance Working Group, to be chaired 
     by the Secretary or the Secretary's designee, which shall 
     assist the Secretary with the coordination of the Federal 
     response pursuant to subsection (b).
       ``(2) Membership.--The Working Group shall consist of 
     representatives of any Federal department or agency with 
     responsibility for providing economic adjustment assistance, 
     including the Department of Agriculture, the Department of 
     Defense, the Department of Education, the Department of 
     Labor, the Department of Housing and Urban Development, the 
     Department of Health and Human Services, the Small Business 
     Administration, the Department of the Treasury, and any other 
     Federal, State, or regional public department or agency the 
     Secretary determines to be appropriate.

     ``SEC. 275. GRANTS FOR ELIGIBLE COMMUNITIES.

       ``(a) In General.--The Secretary may award a grant under 
     this section to an eligible community to assist the community 
     in carrying out any project or program that is included in a 
     strategic plan developed by the community under section 276.
       ``(b) Application.--
       ``(1) In general.--An eligible community seeking to receive 
     a grant under this section shall submit a grant application 
     to the Secretary that contains--
       ``(A) the strategic plan developed by the community under 
     section 276(a)(1)(A) and approved by the Secretary under 
     section 276(a)(1)(B); and
       ``(B) a description of the project or program included in 
     the strategic plan with respect to which the community seeks 
     the grant.
       ``(2) Coordination among grant programs.--If an entity in 
     an eligible community is seeking or plans to seek a Community 
     College and Career Training Grant under section 278 or a 
     Sector Partnership Grant under section 279A while the 
     eligible community is seeking a grant under this section, the 
     eligible community shall include in the grant application a 
     description of how the eligible community will integrate any 
     projects or programs carried out using a grant under this 
     section with any projects or programs that may be carried out 
     using such other grants.
       ``(c) Limitation.--An eligible community may not be awarded 
     more than $5,000,000 under this section.
       ``(d) Cost-Sharing.--
       ``(1) Federal share.--The Federal share of a project or 
     program for which a grant is awarded under this section may 
     not exceed 95 percent of the cost of such project or program.
       ``(2) Community share.--The Secretary shall require, as a 
     condition of awarding a grant to an eligible community under 
     this section, that the eligible community contribute not less 
     than an amount equal to 5 percent of the amount of the grant 
     toward the cost of the project or program for which the grant 
     is awarded.
       ``(e) Grants to Small- and Medium-Sized Communities.--The 
     Secretary shall give priority to grant applications submitted 
     under this section by eligible communities that are small- 
     and medium-sized communities.
       ``(f) Annual Report.--Not later than December 15 in each of 
     the calendar years 2009 through 2011, the Secretary shall 
     submit to the Committee on Finance of the Senate and the 
     Committee on Ways and Means of the House of Representatives a 
     report--
       ``(1) describing each grant awarded under this section 
     during the preceding fiscal year; and
       ``(2) assessing the impact on the eligible community of 
     each such grant awarded in a fiscal year before the fiscal 
     year referred to in paragraph (1).

     ``SEC. 276. STRATEGIC PLANS.

       ``(a) In General.--
       ``(1) Development.--An eligible community that intends to 
     apply for a grant under section 275 shall--
       ``(A) develop a strategic plan for the community's economic 
     adjustment to the impact of trade; and
       ``(B) submit the plan to the Secretary for evaluation and 
     approval.
       ``(2) Involvement of private and public entities.--
       ``(A) In general.--To the extent practicable, an eligible 
     community shall consult with entities described in 
     subparagraph (B) in developing a strategic plan under 
     paragraph (1).
       ``(B) Entities described.--Entities described in this 
     subparagraph are public and private entities within the 
     eligible community, including--
       ``(i) local, county, or State government agencies serving 
     the community;
       ``(ii) firms, including small- and medium-sized firms, 
     within the community;
       ``(iii) local workforce investment boards established under 
     section 117 of the Workforce Investment Act of 1998 (29 
     U.S.C. 2832);
       ``(iv) labor organizations, including State labor 
     federations and labor-management initiatives, representing 
     workers in the community; and
       ``(v) educational institutions, local educational agencies, 
     or other training providers serving the community.
       ``(b) Contents.--The strategic plan shall, at a minimum, 
     contain the following:
       ``(1) A description and analysis of the capacity of the 
     eligible community to achieve economic adjustment to the 
     impact of trade.
       ``(2) An analysis of the economic development challenges 
     and opportunities facing the community as well as the 
     strengths and weaknesses of the economy of the community.
       ``(3) An assessment of the commitment of the eligible 
     community to the strategic plan over the long term and the 
     participation and input of members of the community affected 
     by economic dislocation.
       ``(4) A description of the role and the participation of 
     the entities described in subsection (a)(2)(B) in developing 
     the strategic plan.
       ``(5) A description of the projects to be undertaken by the 
     eligible community under the strategic plan.
       ``(6) A description of how the strategic plan and the 
     projects to be undertaken by the eligible community will 
     facilitate the community's economic adjustment.
       ``(7) A description of the educational and training 
     programs available to workers in the eligible community and 
     the future employment needs of the community.
       ``(8) An assessment of the cost of implementing the 
     strategic plan, the timing of funding required by the 
     eligible community to implement the strategic plan, and the 
     method of financing to be used to implement the strategic 
     plan.
       ``(9) A strategy for continuing the economic adjustment of 
     the eligible community after the completion of the projects 
     described in paragraph (5).
       ``(c) Grants to Develop Strategic Plans.--
       ``(1) In general.--The Secretary, upon receipt of an 
     application from an eligible community, may award a grant to 
     the community to assist the community in developing a 
     strategic plan under subsection (a)(1). A grant awarded under 
     this paragraph shall not exceed 75 percent of the cost of 
     developing the strategic plan.
       ``(2) Funds to be used.--Of the funds appropriated pursuant 
     to section 277(c), the Secretary may make available not more 
     than $25,000,000 for each of the fiscal years 2009 and 2010, 
     and $6,250,000 for the period beginning October 1, 2010, and 
     ending December 31, 2010, to provide grants to eligible 
     communities under paragraph (1).

     ``SEC. 277. GENERAL PROVISIONS.

       ``(a) Regulations.--
       ``(1) In general.--The Secretary shall prescribe such 
     regulations as are necessary to carry out the provisions of 
     this subchapter, including--
       ``(A) establishing specific guidelines for the submission 
     and evaluation of strategic plans under section 276;
       ``(B) establishing specific guidelines for the submission 
     and evaluation of grant applications under section 275; and
       ``(C) administering the grant programs established under 
     sections 275 and 276.
       ``(2) Consultations.--The Secretary shall consult with the 
     Committee on Finance of the Senate and the Committee on Ways 
     and Means of the House of Representatives not less than 90 
     days prior to promulgating any final rule or regulation 
     pursuant to paragraph (1).
       ``(b) Personnel.--The Secretary shall designate such staff 
     as may be necessary to carry out the responsibilities 
     described in this subchapter.
       ``(c) Authorization of Appropriations.--
       ``(1) In general.--There are authorized to be appropriated 
     to the Secretary $150,000,000 for each of the fiscal years 
     2009 and 2010, and $37,500,000 for the period beginning 
     October 1, 2010, and ending December 31, 2010, to carry out 
     this subchapter.

[[Page 3967]]

       ``(2) Availability.--Amounts appropriated pursuant to this 
     subchapter--
       ``(A) shall be available to provide adjustment assistance 
     to communities that have been approved for assistance 
     pursuant to this chapter on or before December 31, 2010; and
       ``(B) shall otherwise remain available until expended.
       ``(3) Supplement not supplant.--Funds appropriated pursuant 
     to this subchapter shall be used to supplement and not 
     supplant other Federal, State, and local public funds 
     expended to provide economic development assistance for 
     communities.

  ``Subchapter B--Community College and Career Training Grant Program

     ``SEC. 278. COMMUNITY COLLEGE AND CAREER TRAINING GRANT 
                   PROGRAM.

       ``(a) Grants Authorized.--
       ``(1) In general.--Beginning August 1, 2009, the Secretary 
     may award Community College and Career Training Grants to 
     eligible institutions for the purpose of developing, 
     offering, or improving educational or career training 
     programs for workers eligible for training under section 236.
       ``(2) Limitations.--An eligible institution may not be 
     awarded--
       ``(A) more than one grant under this section; or
       ``(B) a grant under this section in excess of $1,000,000.
       ``(b) Definitions.--In this section:
       ``(1) Eligible institution.--The term `eligible 
     institution' means an institution of higher education (as 
     defined in section 102 of the Higher Education Act of 1965 
     (20 U.S.C. 1002)), but only with respect to a program offered 
     by the institution that can be completed in not more than 2 
     years.
       ``(2) Secretary.--The term `Secretary' means the Secretary 
     of Labor.
       ``(c) Grant Proposals.--
       ``(1) In general.--An eligible institution seeking to 
     receive a grant under this section shall submit a grant 
     proposal to the Secretary at such time, in such manner, and 
     containing such information as the Secretary may require.
       ``(2) Guidelines.--Not later than June 1, 2009, the 
     Secretary shall--
       ``(A) promulgate guidelines for the submission of grant 
     proposals under this section; and
       ``(B) publish and maintain such guidelines on the website 
     of the Department of Labor.
       ``(3) Assistance.--The Secretary shall offer assistance in 
     preparing a grant proposal to any eligible institution that 
     requests such assistance.
       ``(4) General requirements for grant proposals.--
       ``(A) In general.--A grant proposal submitted to the 
     Secretary under this section shall include a detailed 
     description of--
       ``(i) the specific project for which the grant proposal is 
     submitted, including the manner in which the grant will be 
     used to develop, offer, or improve an educational or career 
     training program that is suited to workers eligible for 
     training under section 236;
       ``(ii) the extent to which the project for which the grant 
     proposal is submitted will meet the educational or career 
     training needs of workers in the community served by the 
     eligible institution who are eligible for training under 
     section 236;
       ``(iii) the extent to which the project for which the grant 
     proposal is submitted fits within any overall strategic plan 
     developed by an eligible community under section 276;
       ``(iv) the extent to which the project for which the grant 
     proposal is submitted relates to any project funded by a 
     Sector Partnership Grant awarded under section 279A; and
       ``(v) any previous experience of the eligible institution 
     in providing educational or career training programs to 
     workers eligible for training under section 236.
       ``(B) Absence of experience.--The absence of any previous 
     experience in providing educational or career training 
     programs described in subparagraph (A)(v) shall not 
     automatically disqualify an eligible institution from 
     receiving a grant under this section.
       ``(5) Community outreach required.--In order to be 
     considered by the Secretary, a grant proposal submitted by an 
     eligible institution under this section shall--
       ``(A) demonstrate that the eligible institution--
       ``(i) reached out to employers, and other entities 
     described in section 276(a)(2)(B) to identify--

       ``(I) any shortcomings in existing educational and career 
     training opportunities available to workers in the community; 
     and
       ``(II) any future employment opportunities within the 
     community and the educational and career training skills 
     required for workers to meet the future employment demand;

       ``(ii) reached out to other similarly situated institutions 
     in an effort to benefit from any best practices that may be 
     shared with respect to providing educational or career 
     training programs to workers eligible for training under 
     section 236; and
       ``(iii) reached out to any eligible partnership in the 
     community that has sought or received a Sector Partnership 
     Grant under section 279A to enhance the effectiveness of each 
     grant and avoid duplication of efforts; and
       ``(B) include a detailed description of--
       ``(i) the extent and outcome of the outreach conducted 
     under subparagraph (A);
       ``(ii) the extent to which the project for which the grant 
     proposal is submitted will contribute to meeting any 
     shortcomings identified under subparagraph (A)(i)(I) or any 
     educational or career training needs identified under 
     subparagraph (A)(i)(II); and
       ``(iii) the extent to which employers, including small- and 
     medium-sized firms within the community, have demonstrated a 
     commitment to employing workers who would benefit from the 
     project for which the grant proposal is submitted.
       ``(d) Criteria for Award of Grants.--
       ``(1) In general.--Subject to the appropriation of funds, 
     the Secretary shall award a grant under this section based 
     on--
       ``(A) a determination of the merits of the grant proposal 
     submitted by the eligible institution to develop, offer, or 
     improve educational or career training programs to be made 
     available to workers eligible for training under section 236;
       ``(B) an evaluation of the likely employment opportunities 
     available to workers who complete an educational or career 
     training program that the eligible institution proposes to 
     develop, offer, or improve; and
       ``(C) an evaluation of prior demand for training programs 
     by workers eligible for training under section 236 in the 
     community served by the eligible institution, as well as the 
     availability and capacity of existing training programs to 
     meet future demand for training programs.
       ``(2) Priority for certain communities.--In awarding grants 
     under this section, the Secretary shall give priority to an 
     eligible institution that serves a community that the 
     Secretary of Commerce has determined under section 273 is 
     eligible to apply for assistance under subchapter A within 
     the 5-year period preceding the date on which the grant 
     proposal is submitted to the Secretary under this section.
       ``(3) Matching requirements.--A grant awarded under this 
     section may not be used to satisfy any private matching 
     requirement under any other provision of law.
       ``(e) Annual Report.--Not later than December 15 in each of 
     the calendar years 2009 through 2011, the Secretary shall 
     submit to the Committee on Finance of the Senate and the 
     Committee on Ways and Means of the House of Representatives a 
     report--
       ``(1) describing each grant awarded under this section 
     during the preceding fiscal year; and
       ``(2) assessing the impact of each award of a grant under 
     this section in a fiscal year preceding the fiscal year 
     referred to in paragraph (1) on workers receiving training 
     under section 236.

     ``SEC. 279. AUTHORIZATION OF APPROPRIATIONS.

       ``(a) Authorization of Appropriations.--There are 
     authorized to be appropriated to the Secretary of Labor 
     $40,000,000 for each of the fiscal years 2009 and 2010, and 
     $10,000,000 for the period beginning October 1, 2010, and 
     ending December 31, 2010, to fund the Community College and 
     Career Training Grant Program. Funds appropriated pursuant to 
     this section shall remain available until expended.
       ``(b) Supplement Not Supplant.--Funds appropriated pursuant 
     to this section shall be used to supplement and not supplant 
     other Federal, State, and local public funds expended to 
     support community college and career training programs.

   ``Subchapter C--Industry or Sector Partnership Grant Program for 
                     Communities Impacted by Trade

     ``SEC. 279A. INDUSTRY OR SECTOR PARTNERSHIP GRANT PROGRAM FOR 
                   COMMUNITIES IMPACTED BY TRADE.

       ``(a) Purpose.--The purpose of this subchapter is to 
     facilitate efforts by industry or sector partnerships to 
     strengthen and revitalize industries and create employment 
     opportunities for workers in communities impacted by trade.
       ``(b) Definitions.--In this subchapter:
       ``(1) Community impacted by trade.--The term `community 
     impacted by trade' has the meaning given that term in section 
     271.
       ``(2) Dislocated worker.--The term `dislocated worker' 
     means a worker who has been totally or partially separated, 
     or is threatened with total or partial separation, from 
     employment in an industry or sector in a community impacted 
     by trade.
       ``(3) Eligible partnership.--The term `eligible 
     partnership' means a voluntary partnership composed of public 
     and private persons, firms, or other entities within a 
     community impacted by trade, that shall include 
     representatives of--
       ``(A) an industry or sector within the community, including 
     an industry association;
       ``(B) local, county, or State government;
       ``(C) multiple firms in the industry or sector, including 
     small- and medium-sized firms, within the community;
       ``(D) local workforce investment boards established under 
     section 117 of the Workforce Investment Act of 1998 (29 
     U.S.C. 2832);
       ``(E) labor organizations, including State labor 
     federations and labor-management initiatives, representing 
     workers in the community; and
       ``(F) educational institutions, local educational agencies, 
     or other training providers serving the community.
       ``(4) Lead entity.--The term `lead entity' means--
       ``(A) an entity designated by the eligible partnership to 
     be responsible for submitting a grant proposal under 
     subsection (e) and serving as the eligible partnership's 
     fiscal agent in expending any Sector Partnership Grant 
     awarded under this section; or
       ``(B) a State agency designated by the Governor of the 
     State to carry out the responsibilities described in 
     subparagraph (A).
       ``(5) Secretary.--The term `Secretary' means the Secretary 
     of Labor.

[[Page 3968]]

       ``(6) Targeted industry or sector.--The term `targeted 
     industry or sector' means the industry or sector represented 
     by an eligible partnership.
       ``(c) Sector Partnership Grants Authorized.--Beginning on 
     August 1, 2009, and subject to the appropriation of funds, 
     the Secretary shall award Sector Partnership Grants to 
     eligible partnerships to assist the eligible partnerships in 
     carrying out projects, over periods of not more than 3 years, 
     to strengthen and revitalize industries and sectors and 
     create employment opportunities for dislocated workers.
       ``(d) Use of Sector Partnership Grants.--An eligible 
     partnership may use a Sector Partnership Grant to carry out 
     any project that the Secretary determines will further the 
     purpose of this subchapter, which may include--
       ``(1) identifying the skill needs of the targeted industry 
     or sector and any gaps in the available supply of skilled 
     workers in the community impacted by trade, and developing 
     strategies for filling the gaps, including by--
       ``(A) developing systems to better link firms in the 
     targeted industry or sector to available skilled workers;
       ``(B) helping firms in the targeted industry or sector to 
     obtain access to new sources of qualified job applicants;
       ``(C) retraining dislocated and incumbent workers; or
       ``(D) facilitating the training of new skilled workers by 
     aligning the instruction provided by local suppliers of 
     education and training services with the needs of the 
     targeted industry or sector;
       ``(2) analyzing the skills and education levels of 
     dislocated and incumbent workers and developing training to 
     address skill gaps that prevent such workers from obtaining 
     jobs in the targeted industry or sector;
       ``(3) helping firms, especially small- and medium-sized 
     firms, in the targeted industry or sector increase their 
     productivity and the productivity of their workers;
       ``(4) helping such firms retain incumbent workers;
       ``(5) developing learning consortia of small- and medium-
     sized firms in the targeted industry or sector with similar 
     training needs to enable the firms to combine their purchases 
     of training services, and thereby lower their training costs;
       ``(6) providing information and outreach activities to 
     firms in the targeted industry or sector regarding the 
     activities of the eligible partnership and other local 
     service suppliers that could assist the firms in meeting 
     needs for skilled workers;
       ``(7) seeking, applying, and disseminating best practices 
     learned from similarly situated communities impacted by trade 
     in the development and implementation of economic growth and 
     revitalization strategies; and
       ``(8) identifying additional public and private resources 
     to support the activities described in this subsection, which 
     may include the option to apply for a community grant under 
     section 275 or a Community College and Career Training Grant 
     under section 278 (subject to meeting any additional 
     requirements of those sections).
       ``(e) Grant Proposals.--
       ``(1) In general.--The lead entity of an eligible 
     partnership seeking to receive a Sector Partnership Grant 
     under this section shall submit a grant proposal to the 
     Secretary at such time, in such manner, and containing such 
     information as the Secretary may require.
       ``(2) General requirements of grant proposals.--A grant 
     proposal submitted under paragraph (1) shall, at a minimum--
       ``(A) identify the members of the eligible partnership;
       ``(B) identify the targeted industry or sector for which 
     the eligible partnership intends to carry out projects using 
     the Sector Partnership Grant;
       ``(C) describe the goals that the eligible partnership 
     intends to achieve to promote the targeted industry or 
     sector;
       ``(D) describe the projects that the eligible partnership 
     will undertake to achieve such goals;
       ``(E) demonstrate that the eligible partnership has the 
     organizational capacity to carry out the projects described 
     in subparagraph (D);
       ``(F) explain--
       ``(i) whether--

       ``(I) the community impacted by trade has sought or 
     received a community grant under section 275;
       ``(II) an eligible institution in the community has sought 
     or received a Community College and Career Training Grant 
     under section 278; or
       ``(III) any other entity in the community has received 
     funds pursuant to any other federally funded training 
     project; and

       ``(ii) how the eligible partnership will coordinate its use 
     of a Sector Partnership Grant with the use of such other 
     grants or funds in order to enhance the effectiveness of each 
     grant and any such funds and avoid duplication of efforts; 
     and
       ``(G) include performance measures, developed based on the 
     performance measures issued by the Secretary under subsection 
     (g)(2), and a timeline for measuring progress toward 
     achieving the goals described in subparagraph (C).
       ``(f) Award of Grants.--
       ``(1) In general.--Upon application by the lead entity of 
     an eligible partnership, the Secretary may award a Sector 
     Partnership Grant to the eligible partnership to assist the 
     partnership in carrying out any of the projects in the grant 
     proposal that the Secretary determines will further the 
     purposes of this subchapter.
       ``(2) Limitations.--An eligible partnership may not be 
     awarded--
       ``(A) more than one Sector Partnership Grant; or
       ``(B) a total grant award under this subchapter in excess 
     of--
       ``(i) except as provided in clause (ii), $2,500,000; or
       ``(ii) in the case of an eligible partnership located 
     within a community impacted by trade that is not served by an 
     institution receiving a Community College and Career Training 
     Grant under section 278, $3,000,000.
       ``(g) Administration by the Secretary.--
       ``(1) Technical assistance and oversight.--
       ``(A) In general.--The Secretary shall provide technical 
     assistance to, and oversight of, the lead entity of an 
     eligible partnership in applying for and administering Sector 
     Partnership Grants awarded under this section.
       ``(B) Technical assistance.--Technical assistance provided 
     under subparagraph (A) shall include providing conferences 
     and such other methods of collecting and disseminating 
     information on best practices developed by eligible 
     partnerships as the Secretary determines appropriate.
       ``(C) Grants or contracts for technical assistance.--The 
     Secretary may award a grant or contract to one or more 
     national or State organizations to provide technical 
     assistance to foster the planning, formation, and 
     implementation of eligible partnerships.
       ``(2) Performance measures.--The Secretary shall issue a 
     range of performance measures, with quantifiable benchmarks, 
     and methodologies that eligible partnerships may use to 
     measure progress toward the goals described in subsection 
     (e). In developing such measures, the Secretary shall 
     consider the benefits of the eligible partnership and its 
     activities for workers, firms, industries, and communities.
       ``(h) Reports.--
       ``(1) Progress report.--Not later than 1 year after 
     receiving a Sector Partnership Grant, and 3 years thereafter, 
     the lead entity shall submit to the Secretary, on behalf of 
     the eligible partnership, a report containing--
       ``(A) a detailed description of the progress made toward 
     achieving the goals described in subsection (e)(2)(C), using 
     the performance measures required under subsection (e)(2)(G);
       ``(B) a detailed evaluation of the impact of the grant 
     award on workers and employers in the community impacted by 
     trade; and
       ``(C) a detailed description of all expenditures of funds 
     awarded to the eligible partnership under the Sector 
     Partnership Grant approved by the Secretary under this 
     subchapter.
       ``(2) Annual report.--Not later than December 15 in each of 
     the calendar years 2009 through 2011, the Secretary shall 
     submit to the Committee on Finance of the Senate and the 
     Committee on Ways and Means of the House of Representatives a 
     report--
       ``(A) describing each Sector Partnership Grant awarded to 
     an eligible partnership during the preceding fiscal year; and
       ``(B) assessing the impact of each Sector Partnership Grant 
     awarded in a fiscal year preceding the fiscal year referred 
     to in subparagraph (A) on workers and employers in 
     communities impacted by trade.

     ``SEC. 279B. AUTHORIZATION OF APPROPRIATIONS.

       ``(a) In General.--There are authorized to be appropriated 
     to the Secretary of Labor $40,000,000 for each of the fiscal 
     years 2009 and 2010, and $10,000,000 for the period beginning 
     October 1, 2010, and ending December 31, 2010, to carry out 
     the Sector Partnership Grant program under section 279A. 
     Funds appropriated pursuant to this section shall remain 
     available until expended.
       ``(b) Supplement Not Supplant.--Funds appropriated pursuant 
     to this section shall be used to supplement and not supplant 
     other Federal, State, and local public funds expended to 
     support the economic development of local communities.
       ``(c) Administrative Costs.--The Secretary may retain not 
     more than 5 percent of the funds appropriated pursuant to 
     this section for each fiscal year to administer the Sector 
     Partnership Grant program under section 279A.

                   ``Subchapter D--General Provisions

     ``SEC. 279C. RULE OF CONSTRUCTION.

       ``Nothing in this chapter prevents a worker from receiving 
     trade adjustment assistance under chapter 2 of this title at 
     the same time the worker is receiving assistance in any 
     manner from--
       ``(1) a community receiving a community grant under 
     subchapter A;
       ``(2) an eligible institution receiving a Community College 
     and Career Training Grant under subchapter B; or
       ``(3) an eligible partnership receiving a Sector 
     Partnership Grant under subchapter C.''.

     SEC. 1873. CONFORMING AMENDMENTS.

       (a) Table of Contents.--The table of contents of the Trade 
     Act of 1974 is amended by striking the items relating to 
     chapter 4 of title II and inserting the following:

        ``Chapter 4--Trade Adjustment Assistance for Communities

      ``Subchapter A--Trade Adjustment Assistance for Communities

``Sec. 271. Definitions.
``Sec. 272. Establishment of trade adjustment assistance for 
              communities program.
``Sec. 273. Eligibility; notification.
``Sec. 274. Technical assistance.
``Sec. 275. Grants for eligible communities.
``Sec. 276. Strategic plans.
``Sec. 277. General provisions.

[[Page 3969]]

  ``Subchapter B--Community College and Career Training Grant Program

``Sec. 278. Community college and career training grant program.
``Sec. 279. Authorization of appropriations.

   ``Subchapter C--Industry or Sector Partnership Grant Program for 
                     Communities Impacted by Trade

``Sec. 279A. Industry or sector partnership grant program for 
              communities impacted by trade.
``Sec. 279B. Authorization of appropriations.

                   ``Subchapter D--General Provisions

``Sec. 279C. Rule of construction.''
       (b) Judicial Review.--
       (1) Section 284(a) of the Trade Act of 1974 (19 U.S.C. 
     2395(a)) is amended--
       (A) by inserting ``or 296'' after ``section 293'';
       (B) by striking ``or any other interested domestic party'' 
     and inserting ``or authorized representative of a 
     community''; and
       (C) by striking ``section 271'' and inserting ``section 
     273''.
       (2) Section 1581(d) of title 28, United States Code, is 
     amended--
       (A) in paragraph (2), by striking ``; and'' and inserting a 
     semicolon;
       (B) in paragraph (3)--
       (i) by striking ``271'' and inserting ``273''; and
       (ii) by striking the period and inserting ``; and''; and
       (C) by adding at the end the following:
       ``(4) any final determination of the Secretary of 
     Agriculture under section 293 or 296 of the Trade Act of 1974 
     (19 U.S.C. 2401b) with respect to the eligibility of a group 
     of agricultural commodity producers for adjustment assistance 
     under such Act.''.

            PART IV--TRADE ADJUSTMENT ASSISTANCE FOR FARMERS

     SEC. 1881. DEFINITIONS.

       Section 291 of the Trade Act of 1974 (19 U.S.C. 2401) is 
     amended--
       (1) by amending paragraph (1) to read as follows:
       ``(1) Agricultural commodity.--The term `agricultural 
     commodity' includes--
       ``(A) any agricultural commodity (including livestock) in 
     its raw or natural state;
       ``(B) any class of goods within an agricultural commodity; 
     and
       ``(C) in the case of an agricultural commodity producer 
     described in paragraph (2)(B), wild-caught aquatic 
     species.'';
       (2) by amending paragraph (2) to read as follows:
       ``(2) Agricultural commodity producer.--The term 
     `agricultural commodity producer' means--
       ``(A) a person that shares in the risk of producing an 
     agricultural commodity and that is entitled to a share of the 
     commodity for marketing, including an operator, a 
     sharecropper, or a person that owns or rents the land on 
     which the commodity is produced; or
       ``(B) a person that reports gain or loss from the trade or 
     business of fishing on the person's annual Federal income tax 
     return for the taxable year that most closely corresponds to 
     the marketing year with respect to which a petition is filed 
     under section 292.''; and
       (3) by adding at the end the following:
       ``(7) Marketing year.--The term `marketing year' means--
       ``(A) a marketing year designated by the Secretary with 
     respect to an agricultural commodity; or
       ``(B) in the case of an agricultural commodity with respect 
     to which the Secretary does not designate a marketing year, a 
     calendar year.''.

     SEC. 1882. ELIGIBILITY.

       (a) In General.--Section 292 of the Trade Act of 1974 (19 
     U.S.C. 2401a) is amended by striking subsections (c) through 
     (e) and inserting the following:
       ``(c) Group Eligibility Requirements.--The Secretary shall 
     certify a group of agricultural commodity producers as 
     eligible to apply for adjustment assistance under this 
     chapter if the Secretary determines that--
       ``(1)(A) the national average price of the agricultural 
     commodity produced by the group during the most recent 
     marketing year for which data are available is less than 85 
     percent of the average of the national average price for the 
     commodity in the 3 marketing years preceding such marketing 
     year;
       ``(B) the quantity of production of the agricultural 
     commodity produced by the group during such marketing year is 
     less than 85 percent of the average of the quantity of 
     production of the commodity produced by the group in the 3 
     marketing years preceding such marketing year;
       ``(C) the value of production of the agricultural commodity 
     produced by the group during such marketing year is less than 
     85 percent of the average value of production of the 
     commodity produced by the group in the 3 marketing years 
     preceding such marketing year; or
       ``(D) the cash receipts for the agricultural commodity 
     produced by the group during such marketing year are less 
     than 85 percent of the average of the cash receipts for the 
     commodity produced by the group in the 3 marketing years 
     preceding such marketing year;
       ``(2) the volume of imports of articles like or directly 
     competitive with the agricultural commodity produced by the 
     group in the marketing year with respect to which the group 
     files the petition increased compared to the average volume 
     of such imports during the 3 marketing years preceding such 
     marketing year; and
       ``(3) the increase in such imports contributed importantly 
     to the decrease in the national average price, quantity of 
     production, or value of production of, or cash receipts for, 
     the agricultural commodity, as described in paragraph (1).
       ``(d) Eligibility of Certain Other Producers.--An 
     agricultural commodity producer or group of producers that 
     resides outside of the State or region identified in the 
     petition filed under subsection (a) may file a request to 
     become a party to that petition not later than 15 days after 
     the date the notice is published in the Federal Register 
     under subsection (a) with respect to that petition.
       ``(e) Treatment of Classes of Goods Within a Commodity.--In 
     any case in which there are separate classes of goods within 
     an agricultural commodity, the Secretary shall treat each 
     class as a separate commodity in determining under subsection 
     (c)--
       ``(1) group eligibility;
       ``(2) the national average price, quantity of production, 
     or value of production, or cash receipts; and
       ``(3) the volume of imports.''.
       (b) Conforming Amendments.--Section 293 of the Trade Act of 
     1974 (19 U.S.C. 2401b) is amended--
       (1) in subsection (a), by striking ``section 292 (c) or 
     (d), as the case may be,'' and inserting ``section 292(c)''; 
     and
       (2) in subsection (c), by striking ``decline in price for'' 
     and inserting ``decrease in the national average price, 
     quantity of production, or value of production of, or cash 
     receipts for,''.

     SEC. 1883. BENEFITS.

       (a) In General.--Section 296 of the Trade Act of 1974 (19 
     U.S.C. 2401e) is amended to read as follows:

     ``SEC. 296. QUALIFYING REQUIREMENTS AND BENEFITS FOR 
                   AGRICULTURAL COMMODITY PRODUCERS.

       ``(a) In General.--
       ``(1) Requirements.--
       ``(A) In general.--Benefits under this chapter shall be 
     available to an agricultural commodity producer covered by a 
     certification under this chapter who files an application for 
     such benefits not later than 90 days after the date on which 
     the Secretary makes a determination and issues a 
     certification of eligibility under section 293, if the 
     producer submits to the Secretary sufficient information to 
     establish that--
       ``(i) the producer produced the agricultural commodity 
     covered by the application filed under this subsection in the 
     marketing year with respect to which the petition is filed 
     and in at least 1 of the 3 marketing years preceding that 
     marketing year;
       ``(ii)(I) the quantity of the agricultural commodity that 
     was produced by the producer in the marketing year with 
     respect to which the petition is filed has decreased compared 
     to the most recent marketing year preceding that marketing 
     year for which data are available; or
       ``(II)(aa) the price received for the agricultural 
     commodity by the producer during the marketing year with 
     respect to which the petition is filed has decreased compared 
     to the average price for the commodity received by the 
     producer in the 3 marketing years preceding that marketing 
     year; or
       ``(bb) the county level price maintained by the Secretary 
     for the agricultural commodity on the date on which the 
     petition is filed has decreased compared to the average 
     county level price for the commodity in the 3 marketing years 
     preceding the date on which the petition is filed; and
       ``(iii) the producer is not receiving--

       ``(I) cash benefits under chapter 2 or 3; or
       ``(II) benefits based on the production of an agricultural 
     commodity covered by another petition filed under this 
     chapter.

       ``(B) Special rule with respect to crops not grown every 
     year.--For purposes of subparagraph (A)(ii)(II)(aa), if a 
     petition is filed with respect to an agricultural commodity 
     that is not produced by the producer every year, an 
     agricultural commodity producer producing that commodity may 
     establish the average price received for the commodity by the 
     producer in the 3 marketing years preceding the year with 
     respect to which the petition is filed by using average price 
     data for the 3 most recent marketing years in which the 
     producer produced the commodity and for which data are 
     available.
       ``(2) Limitations based on adjusted gross income.--
       ``(A) In general.--Notwithstanding any other provision of 
     this chapter, an agricultural commodity producer shall not be 
     eligible for assistance under this chapter in any year in 
     which the average adjusted gross income (as defined in 
     section 1001D(a) of the Food Security Act of 1985 (7 U.S.C. 
     1308-3a(a))) of the producer exceeds the level set forth in 
     subparagraph (A) or (B) of section 1001D(b)(1) of the Food 
     Security Act of 1985 (7 U.S.C. 1308-3a(b)(1)), whichever is 
     applicable.
       ``(B) Demonstration of compliance.--An agricultural 
     commodity producer shall provide to the Secretary such 
     information as the Secretary determines necessary to 
     demonstrate that the producer is in compliance with the 
     limitation under subparagraph (A).
       ``(C) Counter-cyclical and acre payments.--The total amount 
     of payments made to an agricultural commodity producer under 
     this chapter during any crop year may not exceed the 
     limitations on payments set forth in subsections (b)(2), 
     (b)(3), (c)(2), and (c)(3) of section 1001 of the Food 
     Security Act of 1985 (7 U.S.C. 1308).
       ``(b) Technical Assistance.--
       ``(1) Initial technical assistance.--
       ``(A) In general.--An agricultural commodity producer that 
     files an application and meets the

[[Page 3970]]

     requirements under subsection (a)(1) shall be entitled to 
     receive initial technical assistance designed to improve the 
     competitiveness of the production and marketing of the 
     agricultural commodity with respect to which the producer was 
     certified under this chapter. Such assistance shall include 
     information regarding--
       ``(i) improving the yield and marketing of that 
     agricultural commodity; and
       ``(ii) the feasibility and desirability of substituting one 
     or more alternative agricultural commodities for that 
     agricultural commodity.
       ``(B) Transportation and subsistence expenses.--
       ``(i) In general.--The Secretary may authorize supplemental 
     assistance necessary to defray reasonable transportation and 
     subsistence expenses incurred by an agricultural commodity 
     producer in connection with initial technical assistance 
     under subparagraph (A) if such assistance is provided at 
     facilities that are not within normal commuting distance of 
     the regular place of residence of the producer.
       ``(ii) Exceptions.--The Secretary may not authorize 
     payments to an agricultural commodity producer under clause 
     (i)--

       ``(I) for subsistence expenses that exceed the lesser of--

       ``(aa) the actual per diem expenses for subsistence 
     incurred by the producer; or
       ``(bb) the prevailing per diem allowance rate authorized 
     under Federal travel regulations; or

       ``(II) for travel expenses that exceed the prevailing 
     mileage rate authorized under the Federal travel regulations.

       ``(2) Intensive technical assistance.--A producer that has 
     completed initial technical assistance under paragraph (1) 
     shall be eligible to participate in intensive technical 
     assistance. Such assistance shall consist of--
       ``(A) a series of courses to further assist the producer in 
     improving the competitiveness of the producer in producing--
       ``(i) the agricultural commodity with respect to which the 
     producer was certified under this chapter; or
       ``(ii) another agricultural commodity; and
       ``(B) assistance in developing an initial business plan 
     based on the courses completed under subparagraph (A).
       ``(3) Initial business plan.--
       ``(A) Approval by secretary.--The Secretary shall approve 
     an initial business plan developed under paragraph (2)(B) if 
     the plan--
       ``(i) reflects the skills gained by the producer through 
     the courses described in paragraph (2)(A); and
       ``(ii) demonstrates how the producer will apply those 
     skills to the circumstances of the producer.
       ``(B) Financial assistance for implementing initial 
     business plan.--Upon approval of the producer's initial 
     business plan by the Secretary under subparagraph (A), a 
     producer shall be entitled to an amount not to exceed $4,000 
     to--
       ``(i) implement the initial business plan; or
       ``(ii) develop a long-term business adjustment plan under 
     paragraph (4).
       ``(4) Long-term business adjustment plan.--
       ``(A) In general.--A producer that has completed intensive 
     technical assistance under paragraph (2) and whose initial 
     business plan has been approved under paragraph (3)(A) shall 
     be eligible for, in addition to the amount under subparagraph 
     (C), assistance in developing a long-term business adjustment 
     plan.
       ``(B) Approval of long-term business adjustment plans.--The 
     Secretary shall approve a long-term business adjustment plan 
     developed under subparagraph (A) if the Secretary determines 
     that the plan--
       ``(i) includes steps reasonably calculated to materially 
     contribute to the economic adjustment of the producer to 
     changing market conditions;
       ``(ii) takes into consideration the interests of the 
     workers employed by the producer; and
       ``(iii) demonstrates that the producer will have sufficient 
     resources to implement the business plan.
       ``(C) Plan implementation.--Upon approval of the producer's 
     long-term business adjustment plan under subparagraph (B), a 
     producer shall be entitled to an amount not to exceed $8,000 
     to implement the long-term business adjustment plan.
       ``(c) Maximum Amount of Assistance.--An agricultural 
     commodity producer may receive not more than $12,000 under 
     paragraphs (3) and (4) of subsection (b) in the 36-month 
     period following certification under section 293.
       ``(d) Limitations on Other Assistance.--An agricultural 
     commodity producer that receives benefits under this chapter 
     (other than initial technical assistance under subsection 
     (b)(1)) shall not be eligible for cash benefits under chapter 
     2 or 3.''.
       (b) Clerical Amendment.--The table of contents of the Trade 
     Act of 1974 is amended by striking the item relating to 
     section 296 and inserting the following:

``Sec. 296. Qualifying requirements and benefits for agricultural 
              commodity producers.''.

     SEC. 1884. REPORT.

       Section 293 of the Trade Act of 1974 (19 U.S.C. 2401b) is 
     amended by adding at the end the following:
       ``(d) Report by the Secretary.--Not later than January 30, 
     2010, and annually thereafter, the Secretary of Agriculture 
     shall submit to the Committee on Finance of the Senate and 
     the Committee on Ways and Means of the House of 
     Representatives a report containing the following information 
     with respect to adjustment assistance provided under this 
     chapter during the preceding fiscal year:
       ``(1) A list of the agricultural commodities covered by a 
     certification under this chapter.
       ``(2) The States or regions in which such commodities are 
     produced and the aggregate amount of such commodities 
     produced in each such State or region.
       ``(3) The total number of agricultural commodity producers, 
     by congressional district, receiving benefits under this 
     chapter.
       ``(4) The total number of agricultural commodity producers, 
     by congressional district, receiving technical assistance 
     under this chapter.''.

     SEC. 1885. FRAUD AND RECOVERY OF OVERPAYMENTS.

       Section 297(a)(1) of the Trade Act of 1974 (19 U.S.C. 
     2401f(a)(1)) is amended by inserting ``or has expended funds 
     received under this chapter for a purpose that was not 
     approved by the Secretary,'' after ``entitled,''.

     SEC. 1886. DETERMINATION OF INCREASES OF IMPORTS FOR CERTAIN 
                   FISHERMEN.

       For purposes of chapters 2 and 6 of title II of the Trade 
     Act of 1974 (19 U.S.C. 2251 et seq.), in the case of an 
     agricultural commodity producer that--
       (1) is a fisherman or aquaculture producer, and
       (2) is otherwise eligible for adjustment assistance under 
     chapter 2 or 6, as the case may be,
     the increase in imports of articles like or directly 
     competitive with the agricultural commodity produced by such 
     producer may be based on imports of wild-caught seafood, 
     farm-raised seafood, or both.

     SEC. 1887. EXTENSION OF TRADE ADJUSTMENT ASSISTANCE FOR 
                   FARMERS.

       Section 298(a) of the Trade Act of 1974 (19 U.S.C. 
     2401g(a)) is amended by striking ``fiscal years 2003 through 
     2007'' and all that follows through the end period and 
     inserting ``fiscal years 2009 and 2010, and $22,500,000 for 
     the period beginning October 1, 2010, and ending December 31, 
     2010, to carry out the purposes of this chapter, including 
     administrative costs, and salaries and expenses of employees 
     of the Department of Agriculture.''.

                       PART V--GENERAL PROVISIONS

     SEC. 1891. EFFECTIVE DATE.

       (a) In General.--Except as otherwise provided in this 
     subtitle, and subsection (b) of this section, this subtitle 
     and the amendments made by this subtitle--
       (1) shall take effect upon the expiration of the 90-day 
     period beginning on the date of the enactment of this Act; 
     and
       (2) shall apply to--
       (A) petitions for certification filed under chapter 2, 3, 
     or 6 of title II of the Trade Act of 1974 on or after the 
     effective date described in paragraph (1); and
       (B) petitions for assistance and proposals for grants filed 
     under chapter 4 of title II of the Trade Act of 1974 on or 
     after such effective date.
       (b) Certifications Made Before Effective Date.--
     Notwithstanding subsection (a)--
       (1) a worker shall continue to receive (or be eligible to 
     receive) trade adjustment assistance and other benefits under 
     subchapter B of chapter 2 of title II of the Trade Act of 
     1974, as in effect on the day before the effective date 
     described in subsection (a)(1), for any week for which the 
     worker meets the eligibility requirements of such chapter 2 
     as in effect on the day before such effective date, if the 
     worker--
       (A) is certified as eligible for trade adjustment 
     assistance benefits under such chapter 2 pursuant to a 
     petition filed under section 221 of the Trade Act of 1974 on 
     or before such effective date; and
       (B) would otherwise be eligible to receive trade adjustment 
     assistance benefits under such chapter as in effect on the 
     day before such effective date;
       (2) a worker shall continue to receive (or be eligible to 
     receive) benefits under section 246(a)(2) of the Trade Act of 
     1974, as in effect on the day before the effective date 
     described in subsection (a)(1), for such period for which the 
     worker meets the eligibility requirements of section 246 of 
     that Act as in effect on the day before such effective date, 
     if the worker--
       (A) is certified as eligible for benefits under such 
     section 246 pursuant to a petition filed under section 221 of 
     the Trade Act of 1974 on or before such effective date; and
       (B) would otherwise be eligible to receive benefits under 
     such section 246(a)(2) as in effect on the day before such 
     effective date; and
       (3) a firm shall continue to receive (or be eligible to 
     receive) adjustment assistance under chapter 3 of title II of 
     the Trade Act of 1974, as in effect on the day before the 
     effective date described in subsection (a)(1), for such 
     period for which the firm meets the eligibility requirements 
     of such chapter 3 as in effect on the day before such 
     effective date, if the firm--
       (A) is certified as eligible for benefits under such 
     chapter 3 pursuant to a petition filed under section 251 of 
     the Trade Act of 1974 on or before such effective date; and
       (B) would otherwise be eligible to receive benefits under 
     such chapter 3 as in effect on the day before such effective 
     date.

     SEC. 1892. EXTENSION OF TRADE ADJUSTMENT ASSISTANCE PROGRAMS.

       (a) For Workers.--Section 245(a) of the Trade Act of 1974 
     (19 U.S.C. 2317(a)) is amended by striking ``December 31, 
     2007'' and inserting ``December 31, 2010''.
       (b) Termination.--Section 285 of the Trade Act of 1974 (19 
     U.S.C. 2271 note prec.) is amended--
       (1) in subsection (a), by striking ``December 31, 2007'' 
     each place it appears and inserting ``December 31, 2010''; 
     and

[[Page 3971]]

       (2) by amending subsection (b) to read as follows:
       ``(b) Other Assistance.--
       ``(1) Assistance for firms.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     technical assistance and grants may not be provided under 
     chapter 3 after December 31, 2010.
       ``(B) Exception.--Notwithstanding subparagraph (A), any 
     technical assistance or grant approved under chapter 3 on or 
     before December 31, 2010, may be provided--
       ``(i) to the extent funds are available pursuant to such 
     chapter for such purpose; and
       ``(ii) to the extent the recipient of the technical 
     assistance or grant is otherwise eligible to receive such 
     technical assistance or grant, as the case may be.
       ``(2) Farmers.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     technical assistance and financial assistance may not be 
     provided under chapter 6 after December 31, 2010.
       ``(B) Exception.--Notwithstanding subparagraph (A), any 
     technical or financial assistance approved under chapter 6 on 
     or before December 31, 2010, may be provided--
       ``(i) to the extent funds are available pursuant to such 
     chapter for such purpose; and
       ``(ii) to the extent the recipient of the technical or 
     financial assistance is otherwise eligible to receive such 
     technical or financial assistance, as the case may be.
       ``(3) Assistance for communities.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     technical assistance and grants may not be provided under 
     chapter 4 after December 31, 2010.
       ``(B) Exception.--Notwithstanding subparagraph (A), any 
     technical assistance or grant approved under chapter 4 on or 
     before December 31, 2010, may be provided--
       ``(i) to the extent funds are available pursuant to such 
     chapter for such purpose; and
       ``(ii) to the extent the recipient of the technical 
     assistance or grant is otherwise eligible to receive such 
     technical assistance or grant, as the case may be.''.

     SEC. 1893. TERMINATION; RELATED PROVISIONS.

       (a) Sunset.--
       (1) In general.--Subject to paragraph (2), the amendments 
     made by this subtitle to chapters 2, 3, 4, 5, and 6 of title 
     II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.) shall 
     not apply on or after January 1, 2011.
       (2) Exception.--The amendments made by this subtitle to 
     section 285 of the Trade Act of 1974 shall continue to apply 
     on and after January 1, 2011, with respect to--
       (A) workers certified as eligible for trade adjustment 
     assistance benefits under chapter 2 of title II of that Act 
     pursuant to petitions filed under section 221 of that Act 
     before January 1, 2011;
       (B) firms certified as eligible for technical assistance or 
     grants under chapter 3 of title II of that Act pursuant to 
     petitions filed under section 251 of that Act before January 
     1, 2011;
       (C) recipients approved for technical assistance or grants 
     under chapter 4 of title II of that Act pursuant to petitions 
     for assistance or proposals for grants (as the case may be) 
     filed pursuant to such chapter before January 1, 2011; and
       (D) agricultural commodity producers certified as eligible 
     for technical or financial assistance under chapter 6 of 
     title II of that Act pursuant to petitions filed under 
     section 292 of that Act before January 1, 2011.
       (b) Application of Prior Law.--Chapters 2, 3, 4, 5, and 6 
     of title II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.) 
     shall be applied and administered beginning January 1, 2011, 
     as if the amendments made by this subtitle (other than part 
     VI) had never been enacted, except that in applying and 
     administering such chapters--
       (1) section 245 of that Act shall be applied and 
     administered by substituting ``2011'' for ``2007'';
       (2) section 246(b) of that Act shall be applied and 
     administered by substituting ``December 31, 2011'' for ``the 
     date that is 5 years'' and all that follows through 
     ``State'';
       (3) section 256(b) of that Act shall be applied and 
     administered by substituting ``the 1-year period beginning 
     January 1, 2011'' for ``each of fiscal years 2003 through 
     2007, and $4,000,000 for the 3-month period beginning October 
     1, 2007'';
       (4) section 298(a) of that Act shall be applied and 
     administered by substituting ``the 1-year period beginning 
     January 1, 2011'' for ``each of the fiscal years'' and all 
     that follows through ``October 1, 2007''; and
       (5) subject to subsection (a)(2), section 285 of that Act 
     shall be applied and administered--
       (A) in subsection (a), by substituting ``2011'' for 
     ``2007'' each place it appears; and
       (B) by applying and administering subsection (b) as if it 
     read as follows:
       ``(b) Other Assistance.--
       ``(1) Assistance for firms.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     assistance may not be provided under chapter 3 after December 
     31, 2011.
       ``(B) Exception.--Notwithstanding subparagraph (A), any 
     assistance approved under chapter 3 on or before December 31, 
     2011, may be provided--
       ``(i) to the extent funds are available pursuant to such 
     chapter for such purpose; and
       ``(ii) to the extent the recipient of the assistance is 
     otherwise eligible to receive such assistance.
       ``(2) Farmers.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     assistance may not be provided under chapter 6 after December 
     31, 2011.
       ``(B) Exception.--Notwithstanding subparagraph (A), any 
     assistance approved under chapter 6 on or before December 31, 
     2011, may be provided--
       ``(i) to the extent funds are available pursuant to such 
     chapter for such purpose; and
       ``(ii) to the extent the recipient of the assistance is 
     otherwise eligible to receive such assistance.''.

     SEC. 1894. GOVERNMENT ACCOUNTABILITY OFFICE REPORT.

       Not later than September 30, 2012, the Comptroller General 
     of the United States shall prepare and submit to the 
     Committee on Finance of the Senate and the Committee on Ways 
     and Means of the House of Representatives a comprehensive 
     report on the operation and effectiveness of the amendments 
     made by this subtitle to chapters 2, 3, 4, and 6 of the Trade 
     Act of 1974.

     SEC. 1895. EMERGENCY DESIGNATION.

       Amounts appropriated pursuant to this subtitle are 
     designated as an emergency requirement and necessary to meet 
     emergency needs pursuant to section 204(a) of S. Con. Res. 21 
     (110th Congress) and section 301(b)(2) of S. Con. Res. 70 
     (110th Congress), the concurrent resolutions on the budget 
     for fiscal years 2008 and 2009.

                  PART VI--HEALTH COVERAGE IMPROVEMENT

     SEC. 1899. SHORT TITLE.

       This part may be cited as the ``TAA Health Coverage 
     Improvement Act of 2009''.

     SEC. 1899A. IMPROVEMENT OF THE AFFORDABILITY OF THE CREDIT.

       (a) Improvement of Affordability.--
       (1) In general.--Section 35(a) of the Internal Revenue Code 
     of 1986 (relating to credit for health insurance costs of 
     eligible individuals) is amended by inserting ``(80 percent 
     in the case of eligible coverage months beginning before 
     January 1, 2011)'' after ``65 percent''.
       (2) Conforming amendment.--Section 7527(b) of such Code 
     (relating to advance payment of credit for health insurance 
     costs of eligible individuals) is amended by inserting ``(80 
     percent in the case of eligible coverage months beginning 
     before January 1, 2011)'' after ``65 percent''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to coverage months beginning on or after the 
     first day of the first month beginning 60 days after the date 
     of the enactment of this Act.

     SEC. 1899B. PAYMENT FOR MONTHLY PREMIUMS PAID PRIOR TO 
                   COMMENCEMENT OF ADVANCE PAYMENTS OF CREDIT.

       (a) Payment for Premiums Due Prior to Commencement of 
     Advance Payments of Credit.--Section 7527 of the Internal 
     Revenue Code of 1986 (relating to advance payment of credit 
     for health insurance costs of eligible individuals) is 
     amended by adding at the end the following new subsection:
       ``(e) Payment for Premiums Due Prior to Commencement of 
     Advance Payments.--In the case of eligible coverage months 
     beginning before January 1, 2011--
       ``(1) In general.--The program established under subsection 
     (a) shall provide that the Secretary shall make 1 or more 
     retroactive payments on behalf of a certified individual in 
     an aggregate amount equal to 80 percent of the premiums for 
     coverage of the taxpayer and qualifying family members under 
     qualified health insurance for eligible coverage months (as 
     defined in section 35(b)) occurring prior to the first month 
     for which an advance payment is made on behalf of such 
     individual under subsection (a).
       ``(2) Reduction of payment for amounts received under 
     national emergency grants.--The amount of any payment 
     determined under paragraph (1) shall be reduced by the amount 
     of any payment made to the taxpayer for the purchase of 
     qualified health insurance under a national emergency grant 
     pursuant to section 173(f) of the Workforce Investment Act of 
     1998 for a taxable year including the eligible coverage 
     months described in paragraph (1).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to coverage months beginning after December 31, 
     2008.
       (c) Transitional Rule.--The Secretary of the Treasury shall 
     not be required to make any payments under section 7527(e) of 
     the Internal Revenue Code of 1986, as added by this section, 
     until after the date that is 6 months after the date of the 
     enactment of this Act.

     SEC. 1899C. TAA RECIPIENTS NOT ENROLLED IN TRAINING PROGRAMS 
                   ELIGIBLE FOR CREDIT.

       (a) In General.--Paragraph (2) of section 35(c) of the 
     Internal Revenue Code of 1986 (defining eligible TAA 
     recipient) is amended to read as follows:
       ``(2) Eligible taa recipient.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `eligible TAA recipient' means, with respect to any 
     month, any individual who is receiving for any day of such 
     month a trade readjustment allowance under chapter 2 of title 
     II of the Trade Act of 1974 or who would be eligible to 
     receive such allowance if section 231 of such Act were 
     applied without regard to subsection (a)(3)(B) of such 
     section. An individual shall continue to be treated as an 
     eligible TAA recipient during the first month that such 
     individual would otherwise cease to be an eligible TAA 
     recipient by reason of the preceding sentence.
       ``(B) Special rule.--In the case of any eligible coverage 
     month beginning after the date of the enactment of this 
     paragraph and before January 1, 2011, the term `eligible TAA 
     recipient'

[[Page 3972]]

     means, with respect to any month, any individual who--
       ``(i) is receiving for any day of such month a trade 
     readjustment allowance under chapter 2 of title II of the 
     Trade Act of 1974,
       ``(ii) would be eligible to receive such allowance except 
     that such individual is in a break in training provided under 
     a training program approved under section 236 of such Act 
     that exceeds the period specified in section 233(e) of such 
     Act, but is within the period for receiving such allowances 
     provided under section 233(a) of such Act, or
       ``(iii) is receiving unemployment compensation (as defined 
     in section 85(b)) for any day of such month and who would be 
     eligible to receive such allowance for such month if section 
     231 of such Act were applied without regard to subsections 
     (a)(3)(B) and (a)(5) thereof.
     An individual shall continue to be treated as an eligible TAA 
     recipient during the first month that such individual would 
     otherwise cease to be an eligible TAA recipient by reason of 
     the preceding sentence.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to coverage months beginning after the date of 
     the enactment of this Act.

     SEC. 1899D. TAA PRE-CERTIFICATION PERIOD RULE FOR PURPOSES OF 
                   DETERMINING WHETHER THERE IS A 63-DAY LAPSE IN 
                   CREDITABLE COVERAGE.

       (a) IRC Amendment.--Section 9801(c)(2) of the Internal 
     Revenue Code of 1986 (relating to not counting periods before 
     significant breaks in creditable coverage) is amended by 
     adding at the end the following new subparagraph:
       ``(D) TAA-eligible individuals.--In the case of plan years 
     beginning before January 1, 2011--
       ``(i) TAA pre-certification period rule.--In the case of a 
     TAA-eligible individual, the period beginning on the date the 
     individual has a TAA-related loss of coverage and ending on 
     the date which is 7 days after the date of the issuance by 
     the Secretary (or by any person or entity designated by the 
     Secretary) of a qualified health insurance costs credit 
     eligibility certificate for such individual for purposes of 
     section 7527 shall not be taken into account in determining 
     the continuous period under subparagraph (A).
       ``(ii) Definitions.--The terms `TAA-eligible individual' 
     and `TAA-related loss of coverage' have the meanings given 
     such terms in section 4980B(f)(5)(C)(iv).''.
       (b) ERISA Amendment.--Section 701(c)(2) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1181(c)(2)) 
     is amended by adding at the end the following new 
     subparagraph:
       ``(C) TAA-eligible individuals.--In the case of plan years 
     beginning before January 1, 2011--
       ``(i) TAA pre-certification period rule.--In the case of a 
     TAA-eligible individual, the period beginning on the date the 
     individual has a TAA-related loss of coverage and ending on 
     the date that is 7 days after the date of the issuance by the 
     Secretary (or by any person or entity designated by the 
     Secretary) of a qualified health insurance costs credit 
     eligibility certificate for such individual for purposes of 
     section 7527 of the Internal Revenue Code of 1986 shall not 
     be taken into account in determining the continuous period 
     under subparagraph (A).
       ``(ii) Definitions.--The terms `TAA-eligible individual' 
     and `TAA-related loss of coverage' have the meanings given 
     such terms in section 605(b)(4).''.
       (c) PHSA Amendment.--Section 2701(c)(2) of the Public 
     Health Service Act (42 U.S.C. 300gg(c)(2)) is amended by 
     adding at the end the following new subparagraph:
       ``(C) TAA-eligible individuals.--In the case of plan years 
     beginning before January 1, 2011--
       ``(i) TAA pre-certification period rule.--In the case of a 
     TAA-eligible individual, the period beginning on the date the 
     individual has a TAA-related loss of coverage and ending on 
     the date that is 7 days after the date of the issuance by the 
     Secretary (or by any person or entity designated by the 
     Secretary) of a qualified health insurance costs credit 
     eligibility certificate for such individual for purposes of 
     section 7527 of the Internal Revenue Code of 1986 shall not 
     be taken into account in determining the continuous period 
     under subparagraph (A).
       ``(ii) Definitions.--The terms `TAA-eligible individual' 
     and `TAA-related loss of coverage' have the meanings given 
     such terms in section 2205(b)(4).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after the date of the 
     enactment of this Act.

     SEC. 1899E. CONTINUED QUALIFICATION OF FAMILY MEMBERS AFTER 
                   CERTAIN EVENTS.

       (a) In General.--Subsection (g) of section 35 of such Code 
     is amended by redesignating paragraph (9) as paragraph (10) 
     and inserting after paragraph (8) the following new 
     paragraph:
       ``(9) Continued qualification of family members after 
     certain events.--In the case of eligible coverage months 
     beginning before January 1, 2011--
       ``(A) Medicare eligibility.--In the case of any month which 
     would be an eligible coverage month with respect to an 
     eligible individual but for subsection (f)(2)(A), such month 
     shall be treated as an eligible coverage month with respect 
     to such eligible individual solely for purposes of 
     determining the amount of the credit under this section with 
     respect to any qualifying family members of such individual 
     (and any advance payment of such credit under section 7527). 
     This subparagraph shall only apply with respect to the first 
     24 months after such eligible individual is first entitled to 
     the benefits described in subsection (f)(2)(A).
       ``(B) Divorce.--In the case of the finalization of a 
     divorce between an eligible individual and such individual's 
     spouse, such spouse shall be treated as an eligible 
     individual for purposes of this section and section 7527 for 
     a period of 24 months beginning with the date of such 
     finalization, except that the only qualifying family members 
     who may be taken into account with respect to such spouse are 
     those individuals who were qualifying family members 
     immediately before such finalization.
       ``(C) Death.--In the case of the death of an eligible 
     individual--
       ``(i) any spouse of such individual (determined at the time 
     of such death) shall be treated as an eligible individual for 
     purposes of this section and section 7527 for a period of 24 
     months beginning with the date of such death, except that the 
     only qualifying family members who may be taken into account 
     with respect to such spouse are those individuals who were 
     qualifying family members immediately before such death, and
       ``(ii) any individual who was a qualifying family member of 
     the decedent immediately before such death (or, in the case 
     of an individual to whom paragraph (4) applies, the taxpayer 
     to whom the deduction under section 151 is allowable) shall 
     be treated as an eligible individual for purposes of this 
     section and section 7527 for a period of 24 months beginning 
     with the date of such death, except that in determining the 
     amount of such credit only such qualifying family member may 
     be taken into account.''.
       (b) Conforming Amendment.--Section 173(f) of the Workforce 
     Investment Act of 1998 (29 U.S.C. 2918(f)) is amended by 
     adding at the end the following:
       ``(8) Continued qualification of family members after 
     certain events.--In the case of eligible coverage months 
     beginning before January 1, 2011--
       ``(A) Medicare eligibility.--In the case of any month which 
     would be an eligible coverage month with respect to an 
     eligible individual but for paragraph (7)(B)(i), such month 
     shall be treated as an eligible coverage month with respect 
     to such eligible individual solely for purposes of 
     determining the eligibility of qualifying family members of 
     such individual under this subsection. This subparagraph 
     shall only apply with respect to the first 24 months after 
     such eligible individual is first entitled to the benefits 
     described in paragraph (7)(B)(i).
       ``(B) Divorce.--In the case of the finalization of a 
     divorce between an eligible individual and such individual's 
     spouse, such spouse shall be treated as an eligible 
     individual for purposes of this subsection for a period of 24 
     months beginning with the date of such finalization, except 
     that the only qualifying family members who may be taken into 
     account with respect to such spouse are those individuals who 
     were qualifying family members immediately before such 
     finalization.
       ``(C) Death.--In the case of the death of an eligible 
     individual--
       ``(i) any spouse of such individual (determined at the time 
     of such death) shall be treated as an eligible individual for 
     purposes of this subsection for a period of 24 months 
     beginning with the date of such death, except that the only 
     qualifying family members who may be taken into account with 
     respect to such spouse are those individuals who were 
     qualifying family members immediately before such death, and
       ``(ii) any individual who was a qualifying family member of 
     the decedent immediately before such death shall be treated 
     as an eligible individual for purposes this subsection for a 
     period of 24 months beginning with the date of such death, 
     except that no qualifying family members may be taken into 
     account with respect to such individual.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to months beginning after December 31, 2009.

     SEC. 1899F. EXTENSION OF COBRA BENEFITS FOR CERTAIN TAA-
                   ELIGIBLE INDIVIDUALS AND PBGC RECIPIENTS.

       (a) ERISA Amendments.--Section 602(2)(A) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1162(2)(A)) 
     is amended--
       (1) by moving clause (v) to after clause (iv) and before 
     the flush left sentence beginning with ``In the case of a 
     qualified beneficiary'';
       (2) by striking ``In the case of a qualified beneficiary'' 
     and inserting the following:
       ``(vi) Special rule for disability.--In the case of a 
     qualified beneficiary''; and
       (3) by redesignating clauses (v) and (vi), as amended by 
     paragraphs (1) and (2), as clauses (vii) and (viii), 
     respectively, and by inserting after clause (iv) the 
     following new clauses:
       ``(v) Special rule for pbgc recipients.--In the case of a 
     qualifying event described in section 603(2) with respect to 
     a covered employee who (as of such qualifying event) has a 
     nonforfeitable right to a benefit any portion of which is to 
     be paid by the Pension Benefit Guaranty Corporation under 
     title IV, notwithstanding clause (i) or (ii), the date of the 
     death of the covered employee, or in the case of the 
     surviving spouse or dependent children of the covered 
     employee, 24 months after the date of the death of the 
     covered employee. The preceding sentence shall not require 
     any period of coverage to extend beyond December 31, 2010.
       ``(vi) Special rule for taa-eligible individuals.--In the 
     case of a qualifying event described in section 603(2) with 
     respect to a covered employee who is (as of the date that the 
     period of coverage would, but for this clause or clause 
     (vii), otherwise terminate under clause (i) or (ii)) a TAA-
     eligible individual (as defined in section 605(b)(4)(B)), the 
     period of coverage

[[Page 3973]]

     shall not terminate by reason of clause (i) or (ii), as the 
     case may be, before the later of the date specified in such 
     clause or the date on which such individual ceases to be such 
     a TAA-eligible individual. The preceding sentence shall not 
     require any period of coverage to extend beyond December 31, 
     2010.''.
       (b) IRC Amendments.--Clause (i) of section 4980B(f)(2)(B) 
     of the Internal Revenue Code of 1986 is amended--
       (1) by striking ``In the case of a qualified beneficiary'' 
     and inserting the following:

       ``(VI) Special rule for disability.--In the case of a 
     qualified beneficiary'', and

       (2) by redesignating subclauses (V) and (VI), as amended by 
     paragraph (1), as subclauses (VII) and (VIII), respectively, 
     and by inserting after clause (IV) the following new 
     subclauses:

       ``(V) Special rule for pbgc recipients.--In the case of a 
     qualifying event described in paragraph (3)(B) with respect 
     to a covered employee who (as of such qualifying event) has a 
     nonforfeitable right to a benefit any portion of which is to 
     be paid by the Pension Benefit Guaranty Corporation under 
     title IV of the Employee Retirement Income Security Act of 
     1974, notwithstanding subclause (I) or (II), the date of the 
     death of the covered employee, or in the case of the 
     surviving spouse or dependent children of the covered 
     employee, 24 months after the date of the death of the 
     covered employee. The preceding sentence shall not require 
     any period of coverage to extend beyond December 31, 2010.
       ``(VI) Special rule for taa-eligible individuals.--In the 
     case of a qualifying event described in paragraph (3)(B) with 
     respect to a covered employee who is (as of the date that the 
     period of coverage would, but for this subclause or subclause 
     (VII), otherwise terminate under subclause (I) or (II)) a 
     TAA-eligible individual (as defined in paragraph 
     (5)(C)(iv)(II)), the period of coverage shall not terminate 
     by reason of subclause (I) or (II), as the case may be, 
     before the later of the date specified in such subclause or 
     the date on which such individual ceases to be such a TAA-
     eligible individual. The preceding sentence shall not require 
     any period of coverage to extend beyond December 31, 2010.''.

       (c) PHSA Amendments.--Section 2202(2)(A) of the Public 
     Health Service Act (42 U.S.C. 300bb-2(2)(A)) is amended--
       (1) by striking ``In the case of a qualified beneficiary'' 
     and inserting the following:
       ``(v) Special rule for disability.--In the case of a 
     qualified beneficiary''; and
       (2) by redesignating clauses (iv) and (v), as amended by 
     paragraph (1), as clauses (v) and (vi), respectively, and by 
     inserting after clause (iii) the following new clause:
       ``(iv) Special rule for taa-eligible individuals.--In the 
     case of a qualifying event described in section 2203(2) with 
     respect to a covered employee who is (as of the date that the 
     period of coverage would, but for this clause or clause (v), 
     otherwise terminate under clause (i) or (ii)) a TAA-eligible 
     individual (as defined in section 2205(b)(4)(B)), the period 
     of coverage shall not terminate by reason of clause (i) or 
     (ii), as the case may be, before the later of the date 
     specified in such clause or the date on which such individual 
     ceases to be such a TAA-eligible individual. The preceding 
     sentence shall not require any period of coverage to extend 
     beyond December 31, 2010.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to periods of coverage which would (without 
     regard to the amendments made by this section) end on or 
     after the date of the enactment of this Act.

     SEC. 1899G. ADDITION OF COVERAGE THROUGH VOLUNTARY EMPLOYEES' 
                   BENEFICIARY ASSOCIATIONS.

       (a) In General.--Paragraph (1) of section 35(e) of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new subparagraph:
       ``(K) In the case of eligible coverage months beginning 
     before January 1, 2011, coverage under an employee benefit 
     plan funded by a voluntary employees' beneficiary association 
     (as defined in section 501(c)(9)) established pursuant to an 
     order of a bankruptcy court, or by agreement with an 
     authorized representative, as provided in section 1114 of 
     title 11, United States Code.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to coverage months beginning after the date of 
     the enactment of this Act.

     SEC. 1899H. NOTICE REQUIREMENTS.

       (a) In General.--Subsection (d) of section 7527 of the 
     Internal Revenue Code of 1986 (relating to qualified health 
     insurance costs credit eligibility certificate) is amended to 
     read as follows:
       ``(d) Qualified Health Insurance Costs Eligibility 
     Certificate.--
       ``(1) In general.--For purposes of this section, the term 
     `qualified health insurance costs eligibility certificate' 
     means any written statement that an individual is an eligible 
     individual (as defined in section 35(c)) if such statement 
     provides such information as the Secretary may require for 
     purposes of this section and--
       ``(A) in the case of an eligible TAA recipient (as defined 
     in section 35(c)(2)) or an eligible alternative TAA recipient 
     (as defined in section 35(c)(3)), is certified by the 
     Secretary of Labor (or by any other person or entity 
     designated by the Secretary), or
       ``(B) in the case of an eligible PBGC pension recipient (as 
     defined in section 35(c)(4)), is certified by the Pension 
     Benefit Guaranty Corporation (or by any other person or 
     entity designated by the Secretary).
       ``(2) Inclusion of certain information.--In the case of any 
     statement described in paragraph (1) which is issued before 
     January 1, 2011, such statement shall not be treated as a 
     qualified health insurance costs credit eligibility 
     certificate unless such statement includes--
       ``(A) the name, address, and telephone number of the State 
     office or offices responsible for providing the individual 
     with assistance with enrollment in qualified health insurance 
     (as defined in section 35(e)),
       ``(B) a list of the coverage options that are treated as 
     qualified health insurance (as so defined) by the State in 
     which the individual resides, and
       ``(C) in the case of a TAA-eligible individual (as defined 
     in section 4980B(f)(5)(C)(iv)(II)), a statement informing the 
     individual that the individual has 63 days from the date that 
     is 7 days after the date of the issuance of such certificate 
     to enroll in such insurance without a lapse in creditable 
     coverage (as defined in section 9801(c)).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to certificates issued after the date that is 6 
     months after the date of the enactment of this Act.

     SEC. 1899I. SURVEY AND REPORT ON ENHANCED HEALTH COVERAGE TAX 
                   CREDIT PROGRAM.

       (a) Survey.--
       (1) In general.--The Secretary of the Treasury shall 
     conduct a biennial survey of eligible individuals (as defined 
     in section 35(c) of the Internal Revenue Code of 1986) 
     relating to the health coverage tax credit under section 35 
     of the Internal Revenue Code of 1986 (hereinafter in this 
     section referred to as the ``health coverage tax credit'').
       (2) Information obtained.--The survey conducted under 
     subsection (a) shall obtain the following information:
       (A) HCTC participants.--In the case of eligible individuals 
     receiving the health coverage tax credit (including 
     individuals participating in the health coverage tax credit 
     program under section 7527 of such Code, hereinafter in this 
     section referred to as the ``HCTC program'')--
       (i) demographic information of such individuals, including 
     income and education levels,
       (ii) satisfaction of such individuals with the enrollment 
     process in the HCTC program,
       (iii) satisfaction of such individuals with available 
     health coverage options under the credit, including level of 
     premiums, benefits, deductibles, cost-sharing requirements, 
     and the adequacy of provider networks, and
       (iv) any other information that the Secretary determines is 
     appropriate.
       (B) Non-HCTC participants.--In the case of eligible 
     individuals not receiving the health coverage tax credit--
       (i) demographic information of each individual, including 
     income and education levels,
       (ii) whether the individual was aware of the health 
     coverage tax credit or the HCTC program,
       (iii) the reasons the individual has not enrolled in the 
     HCTC program, including whether such reasons include the 
     burden of the process of enrollment and the affordability of 
     coverage,
       (iv) whether the individual has health insurance coverage, 
     and, if so, the source of such coverage, and
       (v) any other information that the Secretary determines is 
     appropriate.
       (3) Report.--Not later than December 31 of each year in 
     which a survey is conducted under paragraph (1) (beginning in 
     2010), the Secretary of the Treasury shall report to the 
     Committee on Finance and the Committee on Health, Education, 
     Labor, and Pensions of the Senate and the Committee on Ways 
     and Means, the Committee on Education and Labor, and the 
     Committee on Energy and Commerce of the House of 
     Representatives the findings of the most recent survey 
     conducted under paragraph (1).
       (b) Report.--Not later than October 1 of each year 
     (beginning in 2010), the Secretary of the Treasury (after 
     consultation with the Secretary of Health and Human Services, 
     and, in the case of the information required under paragraph 
     (7), the Secretary of Labor) shall report to the Committee on 
     Finance and the Committee on Health, Education, Labor, and 
     Pensions of the Senate and the Committee on Ways and Means, 
     the Committee on Education and Labor, and the Committee on 
     Energy and Commerce of the House of Representatives the 
     following information with respect to the most recent taxable 
     year ending before such date:
       (1) In each State and nationally--
       (A) the total number of eligible individuals (as defined in 
     section 35(c) of the Internal Revenue Code of 1986) and the 
     number of eligible individuals receiving the health coverage 
     tax credit,
       (B) the total number of such eligible individuals who 
     receive an advance payment of the health coverage tax credit 
     through the HCTC program,
       (C) the average length of the time period of the 
     participation of eligible individuals in the HCTC program, 
     and
       (D) the total number of participating eligible individuals 
     in the HCTC program who are enrolled in each category of 
     coverage as described in section 35(e)(1) of such Code,
     with respect to each category of eligible individuals 
     described in section 35(c)(1) of such Code.
       (2) In each State and nationally, an analysis of--
       (A) the range of monthly health insurance premiums, for 
     self-only coverage and for family coverage, for individuals 
     receiving the health coverage tax credit, and
       (B) the average and median monthly health insurance 
     premiums, for self-only coverage and for family coverage, for 
     individuals receiving the health coverage tax credit,

[[Page 3974]]

     with respect to each category of coverage as described in 
     section 35(e)(1) of such Code.
       (3) In each State and nationally, an analysis of the 
     following information with respect to the health insurance 
     coverage of individuals receiving the health coverage tax 
     credit who are enrolled in coverage described in 
     subparagraphs (B) through (H) of section 35(e)(1) of such 
     Code:
       (A) Deductible amounts.
       (B) Other out-of-pocket cost-sharing amounts.
       (C) A description of any annual or lifetime limits on 
     coverage or any other significant limits on coverage 
     services, or benefits.
     The information required under this paragraph shall be 
     reported with respect to each category of coverage described 
     in such subparagraphs.
       (4) In each State and nationally, the gender and average 
     age of eligible individuals (as defined in section 35(c) of 
     such Code) who receive the health coverage tax credit, in 
     each category of coverage described in section 35(e)(1) of 
     such Code, with respect to each category of eligible 
     individuals described in such section.
       (5) The steps taken by the Secretary of the Treasury to 
     increase the participation rates in the HCTC program among 
     eligible individuals, including outreach and enrollment 
     activities.
       (6) The cost of administering the HCTC program by function, 
     including the cost of subcontractors, and recommendations on 
     ways to reduce administrative costs, including recommended 
     statutory changes.
       (7) The number of States applying for and receiving 
     national emergency grants under section 173(f) of the 
     Workforce Investment Act of 1998 (29 U.S.C. 2918(f)), the 
     activities funded by such grants on a State-by-State basis, 
     and the time necessary for application approval of such 
     grants.

     SEC. 1899J. AUTHORIZATION OF APPROPRIATIONS.

       There is authorized to be appropriated $80,000,000 for the 
     period of fiscal years 2009 through 2010 to implement the 
     amendments made by, and the provisions of, sections 1899 
     through 1899I of this part.

     SEC. 1899K. EXTENSION OF NATIONAL EMERGENCY GRANTS.

       (a) In General.--Section 173(f) of the Workforce Investment 
     Act of 1998 (29 U.S.C. 2918(f)), as amended by this Act, is 
     amended--
       (1) by striking paragraph (1) and inserting the following 
     new paragraph:
       ``(1) Use of funds.--
       ``(A) Health insurance coverage for eligible individuals in 
     order to obtain qualified health insurance that has 
     guaranteed issue and other consumer protections.--Funds made 
     available to a State or entity under paragraph (4)(A) of 
     subsection (a) may be used to provide an eligible individual 
     described in paragraph (4)(C) and such individual's 
     qualifying family members with health insurance coverage for 
     the 3-month period that immediately precedes the first 
     eligible coverage month (as defined in section 35(b) of the 
     Internal Revenue Code of 1986) in which such eligible 
     individual and such individual's qualifying family members 
     are covered by qualified health insurance that meets the 
     requirements described in clauses (i) through (v) of section 
     35(e)(2)(A) of the Internal Revenue Code of 1986 (or such 
     longer minimum period as is necessary in order for such 
     eligible individual and such individual's qualifying family 
     members to be covered by qualified health insurance that 
     meets such requirements).
       ``(B) Additional uses.--Funds made available to a State or 
     entity under paragraph (4)(A) of subsection (a) may be used 
     by the State or entity for the following:
       ``(i) Health insurance coverage.--To assist an eligible 
     individual and such individual's qualifying family members 
     with enrolling in health insurance coverage and qualified 
     health insurance or paying premiums for such coverage or 
     insurance.
       ``(ii) Administrative expenses and start-up expenses to 
     establish group health plan coverage options for qualified 
     health insurance.--To pay the administrative expenses related 
     to the enrollment of eligible individuals and such 
     individuals' qualifying family members in health insurance 
     coverage and qualified health insurance, including--

       ``(I) eligibility verification activities;
       ``(II) the notification of eligible individuals of 
     available health insurance and qualified health insurance 
     options;
       ``(III) processing qualified health insurance costs credit 
     eligibility certificates provided for under section 7527 of 
     the Internal Revenue Code of 1986;

       ``(IV) providing assistance to eligible individuals in 
     enrolling in health insurance coverage and qualified health 
     insurance;
       ``(V) the development or installation of necessary data 
     management systems; and
       ``(VI) any other expenses determined appropriate by the 
     Secretary, including start-up costs and on going 
     administrative expenses, in order for the State to treat the 
     coverage described in subparagraphs (C) through (H) of 
     section 35(e)(1) of the Internal Revenue Code of 1986 as 
     qualified health insurance under that section.

       ``(iii) Outreach.--To pay for outreach to eligible 
     individuals to inform such individuals of available health 
     insurance and qualified health insurance options, including 
     outreach consisting of notice to eligible individuals of such 
     options made available after the date of enactment of this 
     clause and direct assistance to help potentially eligible 
     individuals and such individual's qualifying family members 
     qualify and remain eligible for the credit established under 
     section 35 of the Internal Revenue Code of 1986 and advance 
     payment of such credit under section 7527 of such Code.
       ``(iv) Bridge funding.--To assist potentially eligible 
     individuals to purchase qualified health insurance coverage 
     prior to issuance of a qualified health insurance costs 
     credit eligibility certificate under section 7527 of the 
     Internal Revenue Code of 1986 and commencement of advance 
     payment, and receipt of expedited payment, under subsections 
     (a) and (e), respectively, of that section.
       ``(C) Rule of construction.--The inclusion of a permitted 
     use under this paragraph shall not be construed as 
     prohibiting a similar use of funds permitted under subsection 
     (g).''; and
       (2) by striking paragraph (2) and inserting the following 
     new paragraph:
       ``(2) Qualified health insurance.--For purposes of this 
     subsection and subsection (g), the term `qualified health 
     insurance' has the meaning given that term in section 35(e) 
     of the Internal Revenue Code of 1986.''.
       (b) Funding.--Section 174(c)(1) of the Workforce Investment 
     Act of 1998 (29 U.S.C. 2919(c)(1)) is amended--
       (1) in the paragraph heading, by striking ``Authorization 
     and appropriation for fiscal year 2002'' and inserting 
     ``Appropriations''; and
       (2) by striking subparagraph (A) and inserting the 
     following new subparagraph:
       ``(A) to carry out subsection (a)(4)(A) of section 173--
       ``(i) $10,000,000 for fiscal year 2002; and
       ``(ii) $150,000,000 for the period of fiscal years 2009 
     through 2010; and''.

     SEC. 1899L. GAO STUDY AND REPORT.

       (a) Study.--The Comptroller General of the United States 
     shall conduct a study regarding the health insurance tax 
     credit allowed under section 35 of the Internal Revenue Code 
     of 1986.
       (b) Report.--Not later than March 1, 2010, the Comptroller 
     General shall submit a report to Congress regarding the 
     results of the study conducted under subsection (a). Such 
     report shall include an analysis of--
       (1) the administrative costs--
       (A) of the Federal Government with respect to such credit 
     and the advance payment of such credit under section 7527 of 
     such Code, and
       (B) of providers of qualified health insurance with respect 
     to providing such insurance to eligible individuals and their 
     qualifying family members,
       (2) the health status and relative risk status of eligible 
     individuals and qualifying family members covered under such 
     insurance,
       (3) participation in such credit and the advance payment of 
     such credit by eligible individuals and their qualifying 
     family members, including the reasons why such individuals 
     did or did not participate and the effect of the amendments 
     made by this part on such participation, and
       (4) the extent to which eligible individuals and their 
     qualifying family members--
       (A) obtained health insurance other than qualifying health 
     insurance, or
       (B) went without health insurance coverage.
       (c) Access to Records.--For purposes of conducting the 
     study required under this section, the Comptroller General 
     and any of his duly authorized representatives shall have 
     access to, and the right to examine and copy, all documents, 
     records, and other recorded information--
       (1) within the possession or control of providers of 
     qualified health insurance, and
       (2) determined by the Comptroller General (or any such 
     representative) to be relevant to the study.
     The Comptroller General shall not disclose the identity of 
     any provider of qualified health insurance or any eligible 
     individual in making any information obtained under this 
     section available to the public.
       (d) Definitions.--Any term which is defined in section 35 
     of the Internal Revenue Code of 1986 shall have the same 
     meaning when used in this section.

  TITLE II--ASSISTANCE FOR UNEMPLOYED WORKERS AND STRUGGLING FAMILIES

     SEC. 2000. SHORT TITLE; TABLE OF CONTENTS OF TITLE.

       (a) Short Title.--This title may be cited as the 
     ``Assistance for Unemployed Workers and Struggling Families 
     Act''.
       (b) Table of Contents of Title.--The table of contents of 
     this title is as follows:

  TITLE II--ASSISTANCE FOR UNEMPLOYED WORKERS AND STRUGGLING FAMILIES

Sec. 2000. Short title; table of contents of title.

                   Subtitle A--Unemployment Insurance

Sec. 2001. Extension of emergency unemployment compensation program.
Sec. 2002. Increase in unemployment compensation benefits.
Sec. 2003. Special transfers for unemployment compensation 
              modernization.
Sec. 2004. Temporary assistance for states with advances.
Sec. 2005. Full Federal funding of extended unemployment compensation 
              for a limited period.
Sec. 2006. Temporary increase in extended unemployment benefits under 
              the Railroad Unemployment Insurance Act.

           Subtitle B--Assistance for Vulnerable Individuals

Sec. 2101. Emergency fund for TANF program.
Sec. 2102. Extension of TANF supplemental grants.
Sec. 2103. Clarification of authority of States to use TANF funds 
              carried over from prior years to provide TANF benefits 
              and services.

[[Page 3975]]

Sec. 2104. Temporary resumption of prior child support law.

     Subtitle C--Economic Recovery Payments to Certain Individuals

Sec. 2201. Economic recovery payment to recipients of social security, 
              supplemental security income, railroad retirement 
              benefits, and veterans disability compensation or pension 
              benefits.
Sec. 2202. Special credit for certain government retirees.

                   Subtitle A--Unemployment Insurance

     SEC. 2001. EXTENSION OF EMERGENCY UNEMPLOYMENT COMPENSATION 
                   PROGRAM.

       (a) In General.--Section 4007 of the Supplemental 
     Appropriations Act, 2008 (Public Law 110-252; 26 U.S.C. 3304 
     note), as amended by section 4 of the Unemployment 
     Compensation Extension Act of 2008 (Public Law 110-449; 122 
     Stat. 5015), is amended--
       (1) by striking ``March 31, 2009'' each place it appears 
     and inserting ``December 31, 2009'';
       (2) in the heading for subsection (b)(2), by striking 
     ``march 31, 2009'' and inserting ``december 31, 2009''; and
       (3) in subsection (b)(3), by striking ``August 27, 2009'' 
     and inserting ``May 31, 2010''.
       (b) Financing Provisions.--Section 4004 of such Act is 
     amended by adding at the end the following:
       ``(e) Transfer of Funds.--Notwithstanding any other 
     provision of law, the Secretary of the Treasury shall 
     transfer from the general fund of the Treasury (from funds 
     not otherwise appropriated)--
       ``(1) to the extended unemployment compensation account (as 
     established by section 905 of the Social Security Act) such 
     sums as the Secretary of Labor estimates to be necessary to 
     make payments to States under this title by reason of the 
     amendments made by section 2001(a) of the Assistance for 
     Unemployed Workers and Struggling Families Act; and
       ``(2) to the employment security administration account (as 
     established by section 901 of the Social Security Act) such 
     sums as the Secretary of Labor estimates to be necessary for 
     purposes of assisting States in meeting administrative costs 
     by reason of the amendments referred to in paragraph (1).
     There are appropriated from the general fund of the Treasury, 
     without fiscal year limitation, the sums referred to in the 
     preceding sentence and such sums shall not be required to be 
     repaid.''.

     SEC. 2002. INCREASE IN UNEMPLOYMENT COMPENSATION BENEFITS.

       (a) Federal-State Agreements.--Any State which desires to 
     do so may enter into and participate in an agreement under 
     this section with the Secretary of Labor (hereinafter in this 
     section referred to as the ``Secretary''). Any State which is 
     a party to an agreement under this section may, upon 
     providing 30 days' written notice to the Secretary, terminate 
     such agreement.
       (b) Provisions of Agreement.--
       (1) Additional compensation.--Any agreement under this 
     section shall provide that the State agency of the State will 
     make payments of regular compensation to individuals in 
     amounts and to the extent that they would be determined if 
     the State law of the State were applied, with respect to any 
     week for which the individual is (disregarding this section) 
     otherwise entitled under the State law to receive regular 
     compensation, as if such State law had been modified in a 
     manner such that the amount of regular compensation 
     (including dependents' allowances) payable for any week shall 
     be equal to the amount determined under the State law (before 
     the application of this paragraph) plus an additional $25.
       (2) Allowable methods of payment.--Any additional 
     compensation provided for in accordance with paragraph (1) 
     shall be payable either--
       (A) as an amount which is paid at the same time and in the 
     same manner as any regular compensation otherwise payable for 
     the week involved; or
       (B) at the option of the State, by payments which are made 
     separately from, but on the same weekly basis as, any regular 
     compensation otherwise payable.
       (c) Nonreduction Rule.--An agreement under this section 
     shall not apply (or shall cease to apply) with respect to a 
     State upon a determination by the Secretary that the method 
     governing the computation of regular compensation under the 
     State law of that State has been modified in a manner such 
     that--
       (1) the average weekly benefit amount of regular 
     compensation which will be payable during the period of the 
     agreement (determined disregarding any additional amounts 
     attributable to the modification described in subsection 
     (b)(1)) will be less than
       (2) the average weekly benefit amount of regular 
     compensation which would otherwise have been payable during 
     such period under the State law, as in effect on December 31, 
     2008.
       (d) Payments to States.--
       (1) In general.--
       (A) Full reimbursement.--There shall be paid to each State 
     which has entered into an agreement under this section an 
     amount equal to 100 percent of--
       (i) the total amount of additional compensation (as 
     described in subsection (b)(1)) paid to individuals by the 
     State pursuant to such agreement; and
       (ii) any additional administrative expenses incurred by the 
     State by reason of such agreement (as determined by the 
     Secretary).
       (B) Terms of payments.--Sums payable to any State by reason 
     of such State's having an agreement under this section shall 
     be payable, either in advance or by way of reimbursement (as 
     determined by the Secretary), in such amounts as the 
     Secretary estimates the State will be entitled to receive 
     under this section for each calendar month, reduced or 
     increased, as the case may be, by any amount by which the 
     Secretary finds that his estimates for any prior calendar 
     month were greater or less than the amounts which should have 
     been paid to the State. Such estimates may be made on the 
     basis of such statistical, sampling, or other method as may 
     be agreed upon by the Secretary and the State agency of the 
     State involved.
       (2) Certifications.--The Secretary shall from time to time 
     certify to the Secretary of the Treasury for payment to each 
     State the sums payable to such State under this section.
       (3) Appropriation.--There are appropriated from the general 
     fund of the Treasury, without fiscal year limitation, such 
     sums as may be necessary for purposes of this subsection.
       (e) Applicability.--
       (1) In general.--An agreement entered into under this 
     section shall apply to weeks of unemployment--
       (A) beginning after the date on which such agreement is 
     entered into; and
       (B) ending before January 1, 2010.
       (2) Transition rule for individuals remaining entitled to 
     regular compensation as of january 1, 2010.--In the case of 
     any individual who, as of the date specified in paragraph 
     (1)(B), has not yet exhausted all rights to regular 
     compensation under the State law of a State with respect to a 
     benefit year that began before such date, additional 
     compensation (as described in subsection (b)(1)) shall 
     continue to be payable to such individual for any week 
     beginning on or after such date for which the individual is 
     otherwise eligible for regular compensation with respect to 
     such benefit year.
       (3) Termination.--Notwithstanding any other provision of 
     this subsection, no additional compensation (as described in 
     subsection (b)(1)) shall be payable for any week beginning 
     after June 30, 2010.
       (f) Fraud and Overpayments.--The provisions of section 4005 
     of the Supplemental Appropriations Act, 2008 (Public Law 110-
     252; 122 Stat. 2356) shall apply with respect to additional 
     compensation (as described in subsection (b)(1)) to the same 
     extent and in the same manner as in the case of emergency 
     unemployment compensation.
       (g) Application to Other Unemployment Benefits.--
       (1) In general.--Each agreement under this section shall 
     include provisions to provide that the purposes of the 
     preceding provisions of this section shall be applied with 
     respect to unemployment benefits described in subsection 
     (i)(3) to the same extent and in the same manner as if those 
     benefits were regular compensation.
       (2) Eligibility and termination rules.--Additional 
     compensation (as described in subsection (b)(1))--
       (A) shall not be payable, pursuant to this subsection, with 
     respect to any unemployment benefits described in subsection 
     (i)(3) for any week beginning on or after the date specified 
     in subsection (e)(1)(B), except in the case of an individual 
     who was eligible to receive additional compensation (as so 
     described) in connection with any regular compensation or any 
     unemployment benefits described in subsection (i)(3) for any 
     period of unemployment ending before such date; and
       (B) shall in no event be payable for any week beginning 
     after the date specified in subsection (e)(3).
       (h)  Disregard of Additional Compensation for Purposes of 
     Medicaid and SCHIP.--The monthly equivalent of any additional 
     compensation paid under this section shall be disregarded in 
     considering the amount of income of an individual for any 
     purposes under title XIX and title XXI of the Social Security 
     Act.
       (i) Definitions.--For purposes of this section--
       (1) the terms ``compensation'', ``regular compensation'', 
     ``benefit year'', ``State'', ``State agency'', ``State law'', 
     and ``week'' have the respective meanings given such terms 
     under section 205 of the Federal-State Extended Unemployment 
     Compensation Act of 1970 (26 U.S.C. 3304 note);
       (2) the term ``emergency unemployment compensation'' means 
     emergency unemployment compensation under title IV of the 
     Supplemental Appropriations Act, 2008 (Public Law 110-252; 
     122 Stat. 2353); and
       (3) any reference to unemployment benefits described in 
     this paragraph shall be considered to refer to--
       (A) extended compensation (as defined by section 205 of the 
     Federal-State Extended Unemployment Compensation Act of 
     1970); and
       (B) unemployment compensation (as defined by section 85(b) 
     of the Internal Revenue Code of 1986) provided under any 
     program administered by a State under an agreement with the 
     Secretary.

     SEC. 2003. SPECIAL TRANSFERS FOR UNEMPLOYMENT COMPENSATION 
                   MODERNIZATION.

       (a) In General.--Section 903 of the Social Security Act (42 
     U.S.C. 1103) is amended by adding at the end the following:

     ``Special Transfers in Fiscal Years 2009, 2010, and 2011 for 
                             Modernization

       ``(f)(1)(A) In addition to any other amounts, the Secretary 
     of Labor shall provide for the making of unemployment 
     compensation modernization incentive payments (hereinafter 
     `incentive payments') to the accounts of the States

[[Page 3976]]

     in the Unemployment Trust Fund, by transfer from amounts 
     reserved for that purpose in the Federal unemployment 
     account, in accordance with succeeding provisions of this 
     subsection.
       ``(B) The maximum incentive payment allowable under this 
     subsection with respect to any State shall, as determined by 
     the Secretary of Labor, be equal to the amount obtained by 
     multiplying $7,000,000,000 by the same ratio as would apply 
     under subsection (a)(2)(B) for purposes of determining such 
     State's share of any excess amount (as described in 
     subsection (a)(1)) that would have been subject to transfer 
     to State accounts, as of October 1, 2008, under the 
     provisions of subsection (a).
       ``(C) Of the maximum incentive payment determined under 
     subparagraph (B) with respect to a State--
       ``(i) one-third shall be transferred to the account of such 
     State upon a certification under paragraph (4)(B) that the 
     State law of such State meets the requirements of paragraph 
     (2); and
       ``(ii) the remainder shall be transferred to the account of 
     such State upon a certification under paragraph (4)(B) that 
     the State law of such State meets the requirements of 
     paragraph (3).
       ``(2) The State law of a State meets the requirements of 
     this paragraph if such State law--
       ``(A) uses a base period that includes the most recently 
     completed calendar quarter before the start of the benefit 
     year for purposes of determining eligibility for unemployment 
     compensation; or
       ``(B) provides that, in the case of an individual who would 
     not otherwise be eligible for unemployment compensation under 
     the State law because of the use of a base period that does 
     not include the most recently completed calendar quarter 
     before the start of the benefit year, eligibility shall be 
     determined using a base period that includes such calendar 
     quarter.
       ``(3) The State law of a State meets the requirements of 
     this paragraph if such State law includes provisions to carry 
     out at least 2 of the following subparagraphs:
       ``(A) An individual shall not be denied regular 
     unemployment compensation under any State law provisions 
     relating to availability for work, active search for work, or 
     refusal to accept work, solely because such individual is 
     seeking only part-time work (as defined by the Secretary of 
     Labor), except that the State law provisions carrying out 
     this subparagraph may exclude an individual if a majority of 
     the weeks of work in such individual's base period do not 
     include part-time work (as so defined).
       ``(B) An individual shall not be disqualified from regular 
     unemployment compensation for separating from employment if 
     that separation is for any compelling family reason. For 
     purposes of this subparagraph, the term `compelling family 
     reason' means the following:
       ``(i) Domestic violence, verified by such reasonable and 
     confidential documentation as the State law may require, 
     which causes the individual reasonably to believe that such 
     individual's continued employment would jeopardize the safety 
     of the individual or of any member of the individual's 
     immediate family (as defined by the Secretary of Labor).
       ``(ii) The illness or disability of a member of the 
     individual's immediate family (as those terms are defined by 
     the Secretary of Labor).
       ``(iii) The need for the individual to accompany such 
     individual's spouse--
       ``(I) to a place from which it is impractical for such 
     individual to commute; and
       ``(II) due to a change in location of the spouse's 
     employment.
       ``(C)(i) Weekly unemployment compensation is payable under 
     this subparagraph to any individual who is unemployed (as 
     determined under the State unemployment compensation law), 
     has exhausted all rights to regular unemployment compensation 
     under the State law, and is enrolled and making satisfactory 
     progress in a State-approved training program or in a job 
     training program authorized under the Workforce Investment 
     Act of 1998, except that such compensation is not required to 
     be paid to an individual who is receiving similar stipends or 
     other training allowances for non-training costs.
       ``(ii) Each State-approved training program or job training 
     program referred to in clause (i) shall prepare individuals 
     who have been separated from a declining occupation, or who 
     have been involuntarily and indefinitely separated from 
     employment as a result of a permanent reduction of operations 
     at the individual's place of employment, for entry into a 
     high-demand occupation.
       ``(iii) The amount of unemployment compensation payable 
     under this subparagraph to an individual for a week of 
     unemployment shall be equal to--
       ``(I) the individual's average weekly benefit amount 
     (including dependents' allowances) for the most recent 
     benefit year, less
       ``(II) any deductible income, as determined under State 
     law.
     The total amount of unemployment compensation payable under 
     this subparagraph to any individual shall be equal to at 
     least 26 times the individual's average weekly benefit amount 
     (including dependents' allowances) for the most recent 
     benefit year.
       ``(D) Dependents' allowances are provided, in the case of 
     any individual who is entitled to receive regular 
     unemployment compensation and who has any dependents (as 
     defined by State law), in an amount equal to at least $15 per 
     dependent per week, subject to any aggregate limitation on 
     such allowances which the State law may establish (but which 
     aggregate limitation on the total allowance for dependents 
     paid to an individual may not be less than $50 for each week 
     of unemployment or 50 percent of the individual's weekly 
     benefit amount for the benefit year, whichever is less), 
     except that a State law may provide for a reasonable 
     reduction in the amount of any such allowance for a week of 
     less than total unemployment.
       ``(4)(A) Any State seeking an incentive payment under this 
     subsection shall submit an application therefor at such time, 
     in such manner, and complete with such information as the 
     Secretary of Labor may within 60 days after the date of the 
     enactment of this subsection prescribe (whether by regulation 
     or otherwise), including information relating to compliance 
     with the requirements of paragraph (2) or (3), as well as how 
     the State intends to use the incentive payment to improve or 
     strengthen the State's unemployment compensation program. The 
     Secretary of Labor shall, within 30 days after receiving a 
     complete application, notify the State agency of the State of 
     the Secretary's findings with respect to the requirements of 
     paragraph (2) or (3) (or both).
       ``(B)(i) If the Secretary of Labor finds that the State law 
     provisions (disregarding any State law provisions which are 
     not then currently in effect as permanent law or which are 
     subject to discontinuation) meet the requirements of 
     paragraph (2) or (3), as the case may be, the Secretary of 
     Labor shall thereupon make a certification to that effect to 
     the Secretary of the Treasury, together with a certification 
     as to the amount of the incentive payment to be transferred 
     to the State account pursuant to that finding. The Secretary 
     of the Treasury shall make the appropriate transfer within 7 
     days after receiving such certification.
       ``(ii) For purposes of clause (i), State law provisions 
     which are to take effect within 12 months after the date of 
     their certification under this subparagraph shall be 
     considered to be in effect as of the date of such 
     certification.
       ``(C)(i) No certification of compliance with the 
     requirements of paragraph (2) or (3) may be made with respect 
     to any State whose State law is not otherwise eligible for 
     certification under section 303 or approvable under section 
     3304 of the Federal Unemployment Tax Act.
       ``(ii) No certification of compliance with the requirements 
     of paragraph (3) may be made with respect to any State whose 
     State law is not in compliance with the requirements of 
     paragraph (2).
       ``(iii) No application under subparagraph (A) may be 
     considered if submitted before the date of the enactment of 
     this subsection or after the latest date necessary (as 
     specified by the Secretary of Labor) to ensure that all 
     incentive payments under this subsection are made before 
     October 1, 2011.
       ``(5)(A) Except as provided in subparagraph (B), any amount 
     transferred to the account of a State under this subsection 
     may be used by such State only in the payment of cash 
     benefits to individuals with respect to their unemployment 
     (including for dependents' allowances and for unemployment 
     compensation under paragraph (3)(C)), exclusive of expenses 
     of administration.
       ``(B) A State may, subject to the same conditions as set 
     forth in subsection (c)(2) (excluding subparagraph (B) 
     thereof, and deeming the reference to `subsections (a) and 
     (b)' in subparagraph (D) thereof to include this subsection), 
     use any amount transferred to the account of such State under 
     this subsection for the administration of its unemployment 
     compensation law and public employment offices.
       ``(6) Out of any money in the Federal unemployment account 
     not otherwise appropriated, the Secretary of the Treasury 
     shall reserve $7,000,000,000 for incentive payments under 
     this subsection. Any amount so reserved shall not be taken 
     into account for purposes of any determination under section 
     902, 910, or 1203 of the amount in the Federal unemployment 
     account as of any given time. Any amount so reserved for 
     which the Secretary of the Treasury has not received a 
     certification under paragraph (4)(B) by the deadline 
     described in paragraph (4)(C)(iii) shall, upon the close of 
     fiscal year 2011, become unrestricted as to use as part of 
     the Federal unemployment account.
       ``(7) For purposes of this subsection, the terms `benefit 
     year', `base period', and `week' have the respective meanings 
     given such terms under section 205 of the Federal-State 
     Extended Unemployment Compensation Act of 1970 (26 U.S.C. 
     3304 note).

       ``Special Transfer in Fiscal Year 2009 for Administration

       ``(g)(1) In addition to any other amounts, the Secretary of 
     the Treasury shall transfer from the employment security 
     administration account to the account of each State in the 
     Unemployment Trust Fund, within 30 days after the date of the 
     enactment of this subsection, the amount determined with 
     respect to such State under paragraph (2).
       ``(2) The amount to be transferred under this subsection to 
     a State account shall (as determined by the Secretary of 
     Labor and certified by such Secretary to the Secretary of the 
     Treasury) be equal to the amount obtained by multiplying 
     $500,000,000 by the same ratio as determined under subsection 
     (f)(1)(B) with respect to such State.
       ``(3) Any amount transferred to the account of a State as a 
     result of the enactment of this subsection may be used by the 
     State agency of such State only in the payment of expenses 
     incurred by it for--
       ``(A) the administration of the provisions of its State law 
     carrying out the purposes of subsection (f)(2) or any 
     subparagraph of subsection (f)(3);

[[Page 3977]]

       ``(B) improved outreach to individuals who might be 
     eligible for regular unemployment compensation by virtue of 
     any provisions of the State law which are described in 
     subparagraph (A);
       ``(C) the improvement of unemployment benefit and 
     unemployment tax operations, including responding to 
     increased demand for unemployment compensation; and
       ``(D) staff-assisted reemployment services for unemployment 
     compensation claimants.''.
       (b) Regulations.--The Secretary of Labor may prescribe any 
     regulations, operating instructions, or other guidance 
     necessary to carry out the amendment made by subsection (a).

     SEC. 2004. TEMPORARY ASSISTANCE FOR STATES WITH ADVANCES.

       Section 1202(b) of the Social Security Act (42 U.S.C. 
     1322(b)) is amended by adding at the end the following new 
     paragraph:
       ``(10)(A) With respect to the period beginning on the date 
     of enactment of this paragraph and ending on December 31, 
     2010--
       ``(i) any interest payment otherwise due from a State under 
     this subsection during such period shall be deemed to have 
     been made by the State; and
       ``(ii) no interest shall accrue during such period on any 
     advance or advances made under section 1201 to a State.
       ``(B) The provisions of subparagraph (A) shall have no 
     effect on the requirement for interest payments under this 
     subsection after the period described in such subparagraph or 
     on the accrual of interest under this subsection after such 
     period.''.

     SEC. 2005. FULL FEDERAL FUNDING OF EXTENDED UNEMPLOYMENT 
                   COMPENSATION FOR A LIMITED PERIOD.

       (a) In General.--In the case of sharable extended 
     compensation and sharable regular compensation paid for weeks 
     of unemployment beginning after the date of the enactment of 
     this section and before January 1, 2010, section 204(a)(1) of 
     the Federal-State Extended Unemployment Compensation Act of 
     1970 (26 U.S.C. 3304 note) shall be applied by substituting 
     ``100 percent of'' for ``one-half of''.
       (b) Special Rule.--At the option of a State, for any weeks 
     of unemployment beginning after the date of the enactment of 
     this section and before January 1, 2010, an individual's 
     eligibility period (as described in section 203(c) of the 
     Federal-State Extended Unemployment Compensation Act of 1970) 
     shall, for purposes of any determination of eligibility for 
     extended compensation under the State law of such State, be 
     considered to include any week which begins--
       (1) after the date as of which such individual exhausts all 
     rights to emergency unemployment compensation; and
       (2) during an extended benefit period that began on or 
     before the date described in paragraph (1).
       (c) Limited Extension.--In the case of an individual who 
     receives extended compensation with respect to 1 or more 
     weeks of unemployment beginning after the date of the 
     enactment of this Act and before January 1, 2010, the 
     provisions of subsections (a) and (b) shall, at the option of 
     a State, be applied by substituting ``ending before June 1, 
     2010'' for ``before January 1, 2010''.
       (d) Extension of Temporary Federal Matching for the First 
     Week of Extended Benefits for States With No Waiting Week.--
       (1) In general.--Section 5 of the Unemployment Compensation 
     Extension Act of 2008 (Public Law 110-449) is amended by 
     striking ``December 8, 2009'' and inserting ``May 30, 2010''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall take effect as if included in the enactment of the 
     Unemployment Compensation Extension Act of 2008 (Public Law 
     110-449).
       (e) Definitions.--For purposes of this section--
       (1) the terms ``sharable extended compensation'' and 
     ``sharable regular compensation'' have the respective 
     meanings given such terms under section 204 of the Federal-
     State Extended Unemployment Compensation Act of 1970;
       (2) the terms ``extended compensation'', ``State'', ``State 
     law'', and ``week'' have the respective meanings given such 
     terms under section 205 of the Federal-State Extended 
     Unemployment Compensation Act of 1970;
       (3) the term ``emergency unemployment compensation'' means 
     benefits payable to individuals under title IV of the 
     Supplemental Appropriations Act, 2008 with respect to their 
     unemployment; and
       (4) the term ``extended benefit period'' means an extended 
     benefit period as determined in accordance with applicable 
     provisions of the Federal-State Extended Unemployment 
     Compensation Act of 1970.
       (f) Regulations.--The Secretary of Labor may prescribe any 
     operating instructions or regulations necessary to carry out 
     this section.

     SEC. 2006. TEMPORARY INCREASE IN EXTENDED UNEMPLOYMENT 
                   BENEFITS UNDER THE RAILROAD UNEMPLOYMENT 
                   INSURANCE ACT.

       (a) In General.--Section 2(c)(2) of the Railroad 
     Unemployment Insurance Act (45 U.S.C. 352(c)(2)) is amended 
     by adding at the end the following:
       ``(D) Temporary increase in extended unemployment 
     benefits.--
       ``(i) Employees with 10 or more years of service.--Subject 
     to clause (iii), in the case of an employee who has 10 or 
     more years of service (as so defined), with respect to 
     extended unemployment benefits--

       ``(I) subparagraph (A) shall be applied by substituting 
     `130 days of unemployment' for `65 days of unemployment'; and
       ``(II) subparagraph (B) shall be applied by inserting `(or, 
     in the case of unemployment benefits, 13 consecutive 14-day 
     periods)' after `7 consecutive 14-day periods'.

       ``(ii) Employees with less than 10 years of service.--
     Subject to clause (iii), in the case of an employee who has 
     less than 10 years of service (as so defined), with respect 
     to extended unemployment benefits, this paragraph shall apply 
     to such an employee in the same manner as this paragraph 
     would apply to an employee described in clause (i) if such 
     clause had not been enacted.
       ``(iii) Application.--The provisions of clauses (i) and 
     (ii) shall apply to an employee who received normal benefits 
     for days of unemployment under this Act during the period 
     beginning July 1, 2008, and ending on June 30, 2009, except 
     that no extended benefit period under this paragraph shall 
     begin after December 31, 2009. Notwithstanding the preceding 
     sentence, no benefits shall be payable under this 
     subparagraph and clauses (i) and (ii) shall no longer be 
     applicable upon the exhaustion of the funds appropriated 
     under clause (iv) for payment of benefits under this 
     subparagraph.
       ``(iv) Appropriation.--Out of any funds in the Treasury not 
     otherwise appropriated, there are appropriated $20,000,000 to 
     cover the cost of additional extended unemployment benefits 
     provided under this subparagraph, to remain available until 
     expended.''.
       (b) Funding for Administration.--Out of any funds in the 
     Treasury not otherwise appropriated, there are appropriated 
     to the Railroad Retirement Board $80,000 to cover the 
     administrative expenses associated with the payment of 
     additional extended unemployment benefits under section 
     2(c)(2)(D) of the Railroad Unemployment Insurance Act, as 
     added by subsection (a), to remain available until expended.

           Subtitle B--Assistance for Vulnerable Individuals

     SEC. 2101. EMERGENCY FUND FOR TANF PROGRAM.

       (a) Temporary Fund.--
       (1) In general.--Section 403 of the Social Security Act (42 
     U.S.C. 603) is amended by adding at the end the following:
       ``(c) Emergency Fund.--
       ``(1) Establishment.--There is established in the Treasury 
     of the United States a fund which shall be known as the 
     `Emergency Contingency Fund for State Temporary Assistance 
     for Needy Families Programs' (in this subsection referred to 
     as the `Emergency Fund').
       ``(2) Deposits into fund.--
       ``(A) In general.--Out of any money in the Treasury of the 
     United States not otherwise appropriated, there are 
     appropriated for fiscal year 2009, $5,000,000,000 for payment 
     to the Emergency Fund.
       ``(B) Availability and use of funds.--The amounts 
     appropriated to the Emergency Fund under subparagraph (A) 
     shall remain available through fiscal year 2010 and shall be 
     used to make grants to States in each of fiscal years 2009 
     and 2010 in accordance with the requirements of paragraph 
     (3).
       ``(C) Limitation.--In no case may the Secretary make a 
     grant from the Emergency Fund for a fiscal year after fiscal 
     year 2010.
       ``(3) Grants.--
       ``(A) Grant related to caseload increases.--
       ``(i) In general.--For each calendar quarter in fiscal year 
     2009 or 2010, the Secretary shall make a grant from the 
     Emergency Fund to each State that--

       ``(I) requests a grant under this subparagraph for the 
     quarter; and
       ``(II) meets the requirement of clause (ii) for the 
     quarter.

       ``(ii) Caseload increase requirement.--A State meets the 
     requirement of this clause for a quarter if the average 
     monthly assistance caseload of the State for the quarter 
     exceeds the average monthly assistance caseload of the State 
     for the corresponding quarter in the emergency fund base year 
     of the State.
       ``(iii) Amount of grant.--Subject to paragraph (5), the 
     amount of the grant to be made to a State under this 
     subparagraph for a quarter shall be an amount equal to 80 
     percent of the amount (if any) by which the total 
     expenditures of the State for basic assistance (as defined by 
     the Secretary) in the quarter, whether under the State 
     program funded under this part or as qualified State 
     expenditures, exceeds the total expenditures of the State for 
     such assistance for the corresponding quarter in the 
     emergency fund base year of the State.
       ``(B) Grant related to increased expenditures for non-
     recurrent short term benefits.--
       ``(i) In general.--For each calendar quarter in fiscal year 
     2009 or 2010, the Secretary shall make a grant from the 
     Emergency Fund to each State that--

       ``(I) requests a grant under this subparagraph for the 
     quarter; and
       ``(II) meets the requirement of clause (ii) for the 
     quarter.

       ``(ii) Non-recurrent short term expenditure requirement.--A 
     State meets the requirement of this clause for a quarter if 
     the total expenditures of the State for non-recurrent short 
     term benefits in the quarter, whether under the State program 
     funded under this part or as qualified State expenditures, 
     exceeds the total expenditures of the State for non-recurrent 
     short term benefits in the corresponding quarter in the 
     emergency fund base year of the State.
       ``(iii) Amount of grant.--Subject to paragraph (5), the 
     amount of the grant to be made

[[Page 3978]]

     to a State under this subparagraph for a quarter shall be an 
     amount equal to 80 percent of the excess described in clause 
     (ii).
       ``(C) Grant related to increased expenditures for 
     subsidized employment.--
       ``(i) In general.--For each calendar quarter in fiscal year 
     2009 or 2010, the Secretary shall make a grant from the 
     Emergency Fund to each State that--

       ``(I) requests a grant under this subparagraph for the 
     quarter; and
       ``(II) meets the requirement of clause (ii) for the 
     quarter.

       ``(ii) Subsidized employment expenditure requirement.--A 
     State meets the requirement of this clause for a quarter if 
     the total expenditures of the State for subsidized employment 
     in the quarter, whether under the State program funded under 
     this part or as qualified State expenditures, exceeds the 
     total such expenditures of the State in the corresponding 
     quarter in the emergency fund base year of the State.
       ``(iii) Amount of grant.--Subject to paragraph (5), the 
     amount of the grant to be made to a State under this 
     subparagraph for a quarter shall be an amount equal to 80 
     percent of the excess described in clause (ii).
       ``(4) Authority to make necessary adjustments to data and 
     collect needed data.--In determining the size of the caseload 
     of a State and the expenditures of a State for basic 
     assistance, non-recurrent short-term benefits, and subsidized 
     employment, during any period for which the State requests 
     funds under this subsection, and during the emergency fund 
     base year of the State, the Secretary may make appropriate 
     adjustments to the data, on a State-by-State basis, to ensure 
     that the data are comparable with respect to the groups of 
     families served and the types of aid provided. The Secretary 
     may develop a mechanism for collecting expenditure data, 
     including procedures which allow States to make reasonable 
     estimates, and may set deadlines for making revisions to the 
     data.
       ``(5) Limitation.--The total amount payable to a single 
     State under subsection (b) and this subsection for fiscal 
     years 2009 and 2010 combined shall not exceed 50 percent of 
     the annual State family assistance grant.
       ``(6) Limitations on use of funds.--A State to which an 
     amount is paid under this subsection may use the amount only 
     as authorized by section 404.
       ``(7) Timing of implementation.--The Secretary shall 
     implement this subsection as quickly as reasonably possible, 
     pursuant to appropriate guidance to States.
       ``(8) Application to indian tribes.--This subsection shall 
     apply to an Indian tribe with an approved tribal family 
     assistance plan under section 412 in the same manner as this 
     subsection applies to a State.
       ``(9) Definitions.--In this subsection:
       ``(A) Average monthly assistance caseload defined.--The 
     term `average monthly assistance caseload' means, with 
     respect to a State and a quarter, the number of families 
     receiving assistance during the quarter under the State 
     program funded under this part or as qualified State 
     expenditures, subject to adjustment under paragraph (4).
       ``(B) Emergency fund base year.--
       ``(i) In general.--The term `emergency fund base year' 
     means, with respect to a State and a category described in 
     clause (ii), whichever of fiscal year 2007 or 2008 is the 
     fiscal year in which the amount described by the category 
     with respect to the State is the lesser.
       ``(ii) Categories described.--The categories described in 
     this clause are the following:

       ``(I) The average monthly assistance caseload of the State.
       ``(II) The total expenditures of the State for non-
     recurrent short term benefits, whether under the State 
     program funded under this part or as qualified State 
     expenditures.

       ``(III) The total expenditures of the State for subsidized 
     employment, whether under the State program funded under this 
     part or as qualified State expenditures.

       ``(C) Qualified state expenditures.--The term `qualified 
     State expenditures' has the meaning given the term in section 
     409(a)(7).''.
       (2) Repeal.--Effective October 1, 2010, subsection (c) of 
     section 403 of the Social Security Act (42 U.S.C. 603) (as 
     added by paragraph (1)) is repealed, except that paragraph 
     (9) of such subsection shall remain in effect until October 
     1, 2011, but only with respect to section 407(b)(3)(A)(i) of 
     such Act.
       (b) Temporary Modification of Caseload Reduction Credit.--
     Section 407(b)(3)(A)(i) of such Act (42 U.S.C. 
     607(b)(3)(A)(i)) is amended by inserting ``(or if the 
     immediately preceding fiscal year is fiscal year 2008, 2009, 
     or 2010, then, at State option, during the emergency fund 
     base year of the State with respect to the average monthly 
     assistance caseload of the State (within the meaning of 
     section 403(c)(9)), except that, if a State elects such 
     option for fiscal year 2008, the emergency fund base year of 
     the State with respect to such caseload shall be fiscal year 
     2007))'' before ``under the State''.
       (c) Disregard From Limitation on Total Payments to 
     Territories.--Section 1108(a)(2) of the Social Security Act 
     (42 U.S.C. 1308(a)(2)) is amended by inserting ``403(c)(3),'' 
     after ``403(a)(5),''.
       (d) Sunset of Other Temporary Provisions.--
       (1) Disregard from limitation on total payments to 
     territories.--Effective October 1, 2010, section 1108(a)(2) 
     of the Social Security Act (42 U.S.C. 1308(a)(2)) is amended 
     by striking ``403(c)(3),'' (as added by subsection (c)).
       (2) Caseload reduction credit.--Effective October 1, 2011, 
     section 407(b)(3)(A)(i) of such Act (42 U.S.C. 
     607(b)(3)(A)(i)) is amended by striking ``(or if the 
     immediately preceding fiscal year is fiscal year 2008, 2009, 
     or 2010, then, at State option, during the emergency fund 
     base year of the State with respect to the average monthly 
     assistance caseload of the State (within the meaning of 
     section 403(c)(9)), except that, if a State elects such 
     option for fiscal year 2008, the emergency fund base year of 
     the State with respect to such caseload shall be fiscal year 
     2007))'' (as added by subsection (b)).

     SEC. 2102. EXTENSION OF TANF SUPPLEMENTAL GRANTS.

       (a) Extension Through Fiscal Year 2010.--Section 7101(a) of 
     the Deficit Reduction Act of 2005 (Public Law 109-171; 120 
     Stat. 135), as amended by section 301(a) of the Medicare 
     Improvements for Patients and Providers Act of 2008 (Public 
     Law 110-275), is amended by striking ``fiscal year 2009'' and 
     inserting ``fiscal year 2010''.
       (b) Conforming Amendment.--Section 403(a)(3)(H)(ii) of the 
     Social Security Act (42 U.S.C. 603(a)(3)(H)(ii)) is amended 
     to read as follows:
       ``(ii) subparagraph (G) shall be applied as if `fiscal year 
     2010' were substituted for `fiscal year 2001'; and''.

     SEC. 2103. CLARIFICATION OF AUTHORITY OF STATES TO USE TANF 
                   FUNDS CARRIED OVER FROM PRIOR YEARS TO PROVIDE 
                   TANF BENEFITS AND SERVICES.

       Section 404(e) of the Social Security Act (42 U.S.C. 
     604(e)) is amended to read as follows:
       ``(e) Authority to Carry Over Certain Amounts for Benefits 
     or Services or for Future Contingencies.--A State or tribe 
     may use a grant made to the State or tribe under this part 
     for any fiscal year to provide, without fiscal year 
     limitation, any benefit or service that may be provided under 
     the State or tribal program funded under this part.''.

     SEC. 2104. TEMPORARY RESUMPTION OF PRIOR CHILD SUPPORT LAW.

       During the period that begins on October 1, 2008, and ends 
     on September 30, 2010, section 455(a)(1) of the Social 
     Security Act (42 U.S.C. 655(a)(1)) shall be applied and 
     administered as if the phrase ``from amounts paid to the 
     State under section 458 or'' does not appear in such section.

     Subtitle C--Economic Recovery Payments to Certain Individuals

     SEC. 2201. ECONOMIC RECOVERY PAYMENT TO RECIPIENTS OF SOCIAL 
                   SECURITY, SUPPLEMENTAL SECURITY INCOME, 
                   RAILROAD RETIREMENT BENEFITS, AND VETERANS 
                   DISABILITY COMPENSATION OR PENSION BENEFITS.

       (a) Authority to Make Payments.--
       (1) Eligibility.--
       (A) In general.--Subject to paragraph (5)(B), the Secretary 
     of the Treasury shall disburse a $250 payment to each 
     individual who, for any month during the 3-month period 
     ending with the month which ends prior to the month that 
     includes the date of the enactment of this Act, is entitled 
     to a benefit payment described in clause (i), (ii), or (iii) 
     of subparagraph (B) or is eligible for a SSI cash benefit 
     described in subparagraph (C).
       (B) Benefit payment described.--For purposes of 
     subparagraph (A):
       (i) Title ii benefit.--A benefit payment described in this 
     clause is a monthly insurance benefit payable (without regard 
     to sections 202(j)(1) and 223(b) of the Social Security Act 
     (42 U.S.C. 402(j)(1), 423(b)) under--

       (I) section 202(a) of such Act (42 U.S.C. 402(a));
       (II) section 202(b) of such Act (42 U.S.C. 402(b));
       (III) section 202(c) of such Act (42 U.S.C. 402(c));
       (IV) section 202(d)(1)(B)(ii) of such Act (42 U.S.C. 
     402(d)(1)(B)(ii));
       (V) section 202(e) of such Act (42 U.S.C. 402(e));
       (VI) section 202(f) of such Act (42 U.S.C. 402(f));

       (VII) section 202(g) of such Act (42 U.S.C. 402(g));
       (VIII) section 202(h) of such Act (42 U.S.C. 402(h));
       (IX) section 223(a) of such Act (42 U.S.C. 423(a));
       (X) section 227 of such Act (42 U.S.C. 427); or
       (XI) section 228 of such Act (42 U.S.C. 428).

       (ii) Railroad retirement benefit.--A benefit payment 
     described in this clause is a monthly annuity or pension 
     payment payable (without regard to section 5(a)(ii) of the 
     Railroad Retirement Act of 1974 (45 U.S.C. 231d(a)(ii))) 
     under--

       (I) section 2(a)(1) of such Act (45 U.S.C. 231a(a)(1));
       (II) section 2(c) of such Act (45 U.S.C. 231a(c));
       (III) section 2(d)(1)(i) of such Act (45 U.S.C. 
     231a(d)(1)(i));
       (IV) section 2(d)(1)(ii) of such Act (45 U.S.C. 
     231a(d)(1)(ii));
       (V) section 2(d)(1)(iii)(C) of such Act to an adult 
     disabled child (45 U.S.C. 231a(d)(1)(iii)(C));
       (VI) section 2(d)(1)(iv) of such Act (45 U.S.C. 
     231a(d)(1)(iv));
       (VII) section 2(d)(1)(v) of such Act (45 U.S.C. 
     231a(d)(1)(v)); or
       (VIII) section 7(b)(2) of such Act (45 U.S.C. 231f(b)(2)) 
     with respect to any of the benefit payments described in 
     clause (i) of this subparagraph.

       (iii) Veterans benefit.--A benefit payment described in 
     this clause is a compensation or pension payment payable 
     under--

       (I) section 1110, 1117, 1121, 1131, 1141, or 1151 of title 
     38, United States Code;

[[Page 3979]]

       (II) section 1310, 1312, 1313, 1315, 1316, or 1318 of title 
     38, United States Code;
       (III) section 1513, 1521, 1533, 1536, 1537, 1541, 1542, or 
     1562 of title 38, United States Code; or
       (IV) section 1805, 1815, or 1821 of title 38, United States 
     Code,

     to a veteran, surviving spouse, child, or parent as described 
     in paragraph (2), (3), (4)(A)(ii), or (5) of section 101, 
     title 38, United States Code, who received that benefit 
     during any month within the 3 month period ending with the 
     month which ends prior to the month that includes the date of 
     the enactment of this Act.
       (C) Ssi cash benefit described.--A SSI cash benefit 
     described in this subparagraph is a cash benefit payable 
     under section 1611 (other than under subsection (e)(1)(B) of 
     such section) or 1619(a) of the Social Security Act (42 
     U.S.C. 1382, 1382h).
       (2) Requirement.--A payment shall be made under paragraph 
     (1) only to individuals who reside in 1 of the 50 States, the 
     District of Columbia, Puerto Rico, Guam, the United States 
     Virgin Islands, American Samoa, or the Northern Mariana 
     Islands. For purposes of the preceding sentence, the 
     determination of the individual's residence shall be based on 
     the current address of record under a program specified in 
     paragraph (1).
       (3) No double payments.--An individual shall be paid only 1 
     payment under this section, regardless of whether the 
     individual is entitled to, or eligible for, more than 1 
     benefit or cash payment described in paragraph (1).
       (4) Limitation.--A payment under this section shall not be 
     made--
       (A) in the case of an individual entitled to a benefit 
     specified in paragraph (1)(B)(i) or paragraph 
     (1)(B)(ii)(VIII) if, for the most recent month of such 
     individual's entitlement in the 3-month period described in 
     paragraph (1), such individual's benefit under such paragraph 
     was not payable by reason of subsection (x) or (y) of section 
     202 the Social Security Act (42 U.S.C. 402) or section 1129A 
     of such Act (42 U.S.C. 1320a-8a);
       (B) in the case of an individual entitled to a benefit 
     specified in paragraph (1)(B)(iii) if, for the most recent 
     month of such individual's entitlement in the 3 month period 
     described in paragraph (1), such individual's benefit under 
     such paragraph was not payable, or was reduced, by reason of 
     section 1505, 5313, or 5313B of title 38, United States Code;
       (C) in the case of an individual entitled to a benefit 
     specified in paragraph (1)(C) if, for such most recent month, 
     such individual's benefit under such paragraph was not 
     payable by reason of subsection (e)(1)(A) or (e)(4) of 
     section 1611 (42 U.S.C. 1382) or section 1129A of such Act 
     (42 U.S.C. 1320a-8a); or
       (D) in the case of any individual whose date of death 
     occurs before the date on which the individual is certified 
     under subsection (b) to receive a payment under this section.
       (5) Timing and manner of payments.--
       (A) In general.--The Secretary of the Treasury shall 
     commence disbursing payments under this section at the 
     earliest practicable date but in no event later than 120 days 
     after the date of enactment of this Act. The Secretary of the 
     Treasury may disburse any payment electronically to an 
     individual in such manner as if such payment was a benefit 
     payment or cash benefit to such individual under the 
     applicable program described in subparagraph (B) or (C) of 
     paragraph (1).
       (B) Deadline.--No payments shall be disbursed under this 
     section after December 31, 2010, regardless of any 
     determinations of entitlement to, or eligibility for, such 
     payments made after such date.
       (b) Identification of Recipients.--The Commissioner of 
     Social Security, the Railroad Retirement Board, and the 
     Secretary of Veterans Affairs shall certify the individuals 
     entitled to receive payments under this section and provide 
     the Secretary of the Treasury with the information needed to 
     disburse such payments. A certification of an individual 
     shall be unaffected by any subsequent determination or 
     redetermination of the individual's entitlement to, or 
     eligibility for, a benefit specified in subparagraph (B) or 
     (C) of subsection (a)(1).
       (c) Treatment of Payments.--
       (1) Payment to be disregarded for purposes of all federal 
     and federally assisted programs.--A payment under subsection 
     (a) shall not be regarded as income and shall not be regarded 
     as a resource for the month of receipt and the following 9 
     months, for purposes of determining the eligibility of the 
     recipient (or the recipient's spouse or family) for benefits 
     or assistance, or the amount or extent of benefits or 
     assistance, under any Federal program or under any State or 
     local program financed in whole or in part with Federal 
     funds.
       (2) Payment not considered income for purposes of 
     taxation.--A payment under subsection (a) shall not be 
     considered as gross income for purposes of the Internal 
     Revenue Code of 1986.
       (3) Payments protected from assignment.--The provisions of 
     sections 207 and 1631(d)(1) of the Social Security Act (42 
     U.S.C. 407, 1383(d)(1)), section 14(a) of the Railroad 
     Retirement Act of 1974 (45 U.S.C. 231m(a)), and section 5301 
     of title 38, United States Code, shall apply to any payment 
     made under subsection (a) as if such payment was a benefit 
     payment or cash benefit to such individual under the 
     applicable program described in subparagraph (B) or (C) of 
     subsection (a)(1).
       (4) Payments subject to offset.--Notwithstanding paragraph 
     (3), for purposes of section 3716 of title 31, United States 
     Code, any payment made under this section shall not be 
     considered a benefit payment or cash benefit made under the 
     applicable program described in subparagraph (B) or (C) of 
     subsection (a)(1) and all amounts paid shall be subject to 
     offset to collect delinquent debts.
       (d) Payment to Representative Payees and Fiduciaries.--
       (1) In general.--In any case in which an individual who is 
     entitled to a payment under subsection (a) and whose benefit 
     payment or cash benefit described in paragraph (1) of that 
     subsection is paid to a representative payee or fiduciary, 
     the payment under subsection (a) shall be made to the 
     individual's representative payee or fiduciary and the entire 
     payment shall be used only for the benefit of the individual 
     who is entitled to the payment.
       (2) Applicability.--
       (A) Payment on the basis of a title ii or ssi benefit.--
     Section 1129(a)(3) of the Social Security Act (42 U.S.C. 
     1320a-8(a)(3)) shall apply to any payment made on the basis 
     of an entitlement to a benefit specified in paragraph 
     (1)(B)(i) or (1)(C) of subsection (a) in the same manner as 
     such section applies to a payment under title II or XVI of 
     such Act.
       (B) Payment on the basis of a railroad retirement 
     benefit.--Section 13 of the Railroad Retirement Act (45 
     U.S.C. 231l) shall apply to any payment made on the basis of 
     an entitlement to a benefit specified in paragraph (1)(B)(ii) 
     of subsection (a) in the same manner as such section applies 
     to a payment under such Act.
       (C) Payment on the basis of a veterans benefit.--Sections 
     5502, 6106, and 6108 of title 38, United States Code, shall 
     apply to any payment made on the basis of an entitlement to a 
     benefit specified in paragraph (1)(B)(iii) of subsection (a) 
     in the same manner as those sections apply to a payment under 
     that title.
       (e) Appropriation.--Out of any sums in the Treasury of the 
     United States not otherwise appropriated, the following sums 
     are appropriated for the period of fiscal years 2009 through 
     2011, to remain available until expended, to carry out this 
     section:
       (1) For the Secretary of the Treasury, $131,000,000 for 
     administrative costs incurred in carrying out this section, 
     section 2202, section 36A of the Internal Revenue Code of 
     1986 (as added by this Act), and other provisions of this Act 
     or the amendments made by this Act relating to the Internal 
     Revenue Code of 1986.
       (2) For the Commissioner of Social Security--
       (A) such sums as may be necessary for payments to 
     individuals certified by the Commissioner of Social Security 
     as entitled to receive a payment under this section; and
       (B) $90,000,000 for the Social Security Administration's 
     Limitation on Administrative Expenses for costs incurred in 
     carrying out this section.
       (3) For the Railroad Retirement Board--
       (A) such sums as may be necessary for payments to 
     individuals certified by the Railroad Retirement Board as 
     entitled to receive a payment under this section; and
       (B) $1,400,000 to the Railroad Retirement Board's 
     Limitation on Administration for administrative costs 
     incurred in carrying out this section.
       (4)(A) For the Secretary of Veterans Affairs--
       (i) such sums as may be necessary for the Compensation and 
     Pensions account, for payments to individuals certified by 
     the Secretary of Veterans Affairs as entitled to receive a 
     payment under this section; and
       (ii) $100,000 for the Information Systems Technology 
     account and $7,100,000 for the General Operating Expenses 
     account for administrative costs incurred in carrying out 
     this section.
       (B) The Department of Veterans Affairs Compensation and 
     Pensions account shall hereinafter be available for payments 
     authorized under subsection (a)(1)(A) to individuals entitled 
     to a benefit payment described in subsection (a)(1)(B)(iii).

     SEC. 2202. SPECIAL CREDIT FOR CERTAIN GOVERNMENT RETIREES.

       (a) In General.--In the case of an eligible individual, 
     there shall be allowed as a credit against the tax imposed by 
     subtitle A of the Internal Revenue Code of 1986 for the first 
     taxable year beginning in 2009 an amount equal $250 ($500 in 
     the case of a joint return where both spouses are eligible 
     individuals).
       (b) Eligible Individual.--For purposes of this section--
       (1) In general.--The term ``eligible individual'' means any 
     individual--
       (A) who receives during the first taxable year beginning in 
     2009 any amount as a pension or annuity for service performed 
     in the employ of the United States or any State, or any 
     instrumentality thereof, which is not considered employment 
     for purposes of chapter 21 of the Internal Revenue Code of 
     1986, and
       (B) who does not receive a payment under section 2201 
     during such taxable year.
       (2) Identification number requirement.--Such term shall not 
     include any individual who does not include on the return of 
     tax for the taxable year--
       (A) such individual's social security account number, and
       (B) in the case of a joint return, the social security 
     account number of one of the taxpayers on such return.

     For purposes of the preceding sentence, the social security 
     account number shall not include a TIN (as defined in section 
     7701(a)(41) of the Internal Revenue Code of 1986) issued by 
     the Internal Revenue Service. Any omission of a correct 
     social security account number required

[[Page 3980]]

     under this subparagraph shall be treated as a mathematical or 
     clerical error for purposes of applying section 6213(g)(2) of 
     such Code to such omission.
       (c) Treatment of Credit.--
       (1) Refundable credit.--
       (A) In general.--The credit allowed by subsection (a) shall 
     be treated as allowed by subpart C of part IV of subchapter A 
     of chapter 1 of the Internal Revenue Code of 1986.
       (B) Appropriations.--For purposes of section 1324(b)(2) of 
     title 31, United States Code, the credit allowed by 
     subsection (a) shall be treated in the same manner a refund 
     from the credit allowed under section 36A of the Internal 
     Revenue Code of 1986 (as added by this Act).
       (2) Deficiency rules.--For purposes of section 
     6211(b)(4)(A) of the Internal Revenue Code of 1986, the 
     credit allowable by subsection (a) shall be treated in the 
     same manner as the credit allowable under section 36A of the 
     Internal Revenue Code of 1986 (as added by this Act).
       (d) Refunds Disregarded in the Administration of Federal 
     Programs and Federally Assisted Programs.--Any credit or 
     refund allowed or made to any individual by reason of this 
     section shall not be taken into account as income and shall 
     not be taken into account as resources for the month of 
     receipt and the following 2 months, for purposes of 
     determining the eligibility of such individual or any other 
     individual for benefits or assistance, or the amount or 
     extent of benefits or assistance, under any Federal program 
     or under any State or local program financed in whole or in 
     part with Federal funds.

            TITLE III--PREMIUM ASSISTANCE FOR COBRA BENEFITS

     SEC. 3000. TABLE OF CONTENTS.

       The table of contents of this title is as follows:

            TITLE III--PREMIUM ASSISTANCE FOR COBRA BENEFITS

Sec. 3000. Table of contents.
Sec. 3001. Premium assistance for COBRA benefits.

     SEC. 3001. PREMIUM ASSISTANCE FOR COBRA BENEFITS.

       (a) Premium Assistance for COBRA Continuation Coverage for 
     Individuals and Their Families.--
       (1) Provision of premium assistance.--
       (A) Reduction of premiums payable.--In the case of any 
     premium for a period of coverage beginning on or after the 
     date of the enactment of this Act for COBRA continuation 
     coverage with respect to any assistance eligible individual, 
     such individual shall be treated for purposes of any COBRA 
     continuation provision as having paid the amount of such 
     premium if such individual pays (or a person other than such 
     individual's employer pays on behalf of such individual) 35 
     percent of the amount of such premium (as determined without 
     regard to this subsection).
       (B) Plan enrollment option.--
       (i) In general.--Notwithstanding the COBRA continuation 
     provisions, an assistance eligible individual may, not later 
     than 90 days after the date of notice of the plan enrollment 
     option described in this subparagraph, elect to enroll in 
     coverage under a plan offered by the employer involved, or 
     the employee organization involved (including, for this 
     purpose, a joint board of trustees of a multiemployer trust 
     affiliated with one or more multiemployer plans), that is 
     different than coverage under the plan in which such 
     individual was enrolled at the time the qualifying event 
     occurred, and such coverage shall be treated as COBRA 
     continuation coverage for purposes of the applicable COBRA 
     continuation coverage provision.
       (ii) Requirements.--An assistance eligible individual may 
     elect to enroll in different coverage as described in clause 
     (i) only if--

       (I) the employer involved has made a determination that 
     such employer will permit assistance eligible individuals to 
     enroll in different coverage as provided for this 
     subparagraph;
       (II) the premium for such different coverage does not 
     exceed the premium for coverage in which the individual was 
     enrolled at the time the qualifying event occurred;
       (III) the different coverage in which the individual elects 
     to enroll is coverage that is also offered to the active 
     employees of the employer at the time at which such election 
     is made; and
       (IV) the different coverage is not--

       (aa) coverage that provides only dental, vision, 
     counseling, or referral services (or a combination of such 
     services);
       (bb) a flexible spending arrangement (as defined in section 
     106(c)(2) of the Internal Revenue Code of 1986); or
       (cc) coverage that provides coverage for services or 
     treatments furnished in an on-site medical facility 
     maintained by the employer and that consists primarily of 
     first-aid services, prevention and wellness care, or similar 
     care (or a combination of such care).
       (C) Premium reimbursement.--For provisions providing the 
     balance of such premium, see section 6432 of the Internal 
     Revenue Code of 1986, as added by paragraph (12).
       (2) Limitation of period of premium assistance.--
       (A) In general.--Paragraph (1)(A) shall not apply with 
     respect to any assistance eligible individual for months of 
     coverage beginning on or after the earlier of--
       (i) the first date that such individual is eligible for 
     coverage under any other group health plan (other than 
     coverage consisting of only dental, vision, counseling, or 
     referral services (or a combination thereof), coverage under 
     a flexible spending arrangement (as defined in section 
     106(c)(2) of the Internal Revenue Code of 1986), or coverage 
     of treatment that is furnished in an on-site medical facility 
     maintained by the employer and that consists primarily of 
     first-aid services, prevention and wellness care, or similar 
     care (or a combination thereof)) or is eligible for benefits 
     under title XVIII of the Social Security Act, or
       (ii) the earliest of--

       (I) the date which is 9 months after the first day of the 
     first month that paragraph (1)(A) applies with respect to 
     such individual,
       (II) the date following the expiration of the maximum 
     period of continuation coverage required under the applicable 
     COBRA continuation coverage provision, or

       (III) the date following the expiration of the period of 
     continuation coverage allowed under paragraph (4)(B)(ii).

       (B) Timing of eligibility for additional coverage.--For 
     purposes of subparagraph (A)(i), an individual shall not be 
     treated as eligible for coverage under a group health plan 
     before the first date on which such individual could be 
     covered under such plan.
       (C) Notification requirement.--An assistance eligible 
     individual shall notify in writing the group health plan with 
     respect to which paragraph (1)(A) applies if such paragraph 
     ceases to apply by reason of subparagraph (A)(i). Such notice 
     shall be provided to the group health plan in such time and 
     manner as may be specified by the Secretary of Labor.
       (3) Assistance eligible individual.--For purposes of this 
     section, the term ``assistance eligible individual'' means 
     any qualified beneficiary if--
       (A) at any time during the period that begins with 
     September 1, 2008, and ends with December 31, 2009, such 
     qualified beneficiary is eligible for COBRA continuation 
     coverage,
       (B) such qualified beneficiary elects such coverage, and
       (C) the qualifying event with respect to the COBRA 
     continuation coverage consists of the involuntary termination 
     of the covered employee's employment and occurred during such 
     period.
       (4) Extension of election period and effect on coverage.--
       (A) In general.--For purposes of applying section 605(a) of 
     the Employee Retirement Income Security Act of 1974, section 
     4980B(f)(5)(A) of the Internal Revenue Code of 1986, section 
     2205(a) of the Public Health Service Act, and section 
     8905a(c)(2) of title 5, United States Code, in the case of an 
     individual who does not have an election of COBRA 
     continuation coverage in effect on the date of the enactment 
     of this Act but who would be an assistance eligible 
     individual if such election were so in effect, such 
     individual may elect the COBRA continuation coverage under 
     the COBRA continuation coverage provisions containing such 
     sections during the period beginning on the date of the 
     enactment of this Act and ending 60 days after the date on 
     which the notification required under paragraph (7)(C) is 
     provided to such individual.
       (B) Commencement of coverage; no reach-back.--Any COBRA 
     continuation coverage elected by a qualified beneficiary 
     during an extended election period under subparagraph (A)--
       (i) shall commence with the first period of coverage 
     beginning on or after the date of the enactment of this Act, 
     and
       (ii) shall not extend beyond the period of COBRA 
     continuation coverage that would have been required under the 
     applicable COBRA continuation coverage provision if the 
     coverage had been elected as required under such provision.
       (C) Preexisting conditions.--With respect to a qualified 
     beneficiary who elects COBRA continuation coverage pursuant 
     to subparagraph (A), the period--
       (i) beginning on the date of the qualifying event, and
       (ii) ending with the beginning of the period described in 
     subparagraph (B)(i), shall be disregarded for purposes of 
     determining the 63-day periods referred to in section 
     701(c)(2) of the Employee Retirement Income Security Act of 
     1974, section 9801(c)(2) of the Internal Revenue Code of 
     1986, and section 2701(c)(2) of the Public Health Service 
     Act.
       (5) Expedited review of denials of premium assistance.--In 
     any case in which an individual requests treatment as an 
     assistance eligible individual and is denied such treatment 
     by the group health plan, the Secretary of Labor (or the 
     Secretary of Health and Human Services in connection with 
     COBRA continuation coverage which is provided other than 
     pursuant to part 6 of subtitle B of title I of the Employee 
     Retirement Income Security Act of 1974), in consultation with 
     the Secretary of the Treasury, shall provide for expedited 
     review of such denial. An individual shall be entitled to 
     such review upon application to such Secretary in such form 
     and manner as shall be provided by such Secretary. Such 
     Secretary shall make a determination regarding such 
     individual's eligibility within 15 business days after 
     receipt of such individual's application for review under 
     this paragraph. Either Secretary's determination upon review 
     of the denial shall be de novo and shall be the final 
     determination of such Secretary. A reviewing court shall 
     grant deference to such Secretary's determination. The 
     provisions of this paragraph, paragraphs (1) through (4), and 
     paragraph (7) shall be treated as provisions of title I of 
     the Employee Retirement Income Security Act of 1974 for 
     purposes of part 5 of subtitle B of such title.

[[Page 3981]]

       (6) Disregard of subsidies for purposes of federal and 
     state programs.--Notwithstanding any other provision of law, 
     any premium reduction with respect to an assistance eligible 
     individual under this subsection shall not be considered 
     income or resources in determining eligibility for, or the 
     amount of assistance or benefits provided under, any other 
     public benefit provided under Federal law or the law of any 
     State or political subdivision thereof.
       (7) Notices to individuals.--
       (A) General notice.--
       (i) In general.--In the case of notices provided under 
     section 606(a)(4) of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1166(4)), section 4980B(f)(6)(D) of 
     the Internal Revenue Code of 1986, section 2206(4) of the 
     Public Health Service Act (42 U.S.C. 300bb-6(4)), or section 
     8905a(f)(2)(A) of title 5, United States Code, with respect 
     to individuals who, during the period described in paragraph 
     (3)(A), become entitled to elect COBRA continuation coverage, 
     the requirements of such sections shall not be treated as met 
     unless such notices include an additional notification to the 
     recipient of--

       (I) the availability of premium reduction with respect to 
     such coverage under this subsection, and
       (II) the option to enroll in different coverage if the 
     employer permits assistance eligible individuals to elect 
     enrollment in different coverage (as described in paragraph 
     (1)(B)).

       (ii) Alternative notice.--In the case of COBRA continuation 
     coverage to which the notice provision under such sections 
     does not apply, the Secretary of Labor, in consultation with 
     the Secretary of the Treasury and the Secretary of Health and 
     Human Services, shall, in consultation with administrators of 
     the group health plans (or other entities) that provide or 
     administer the COBRA continuation coverage involved, provide 
     rules requiring the provision of such notice.
       (iii) Form.--The requirement of the additional notification 
     under this subparagraph may be met by amendment of existing 
     notice forms or by inclusion of a separate document with the 
     notice otherwise required.
       (B) Specific requirements.--Each additional notification 
     under subparagraph (A) shall include--
       (i) the forms necessary for establishing eligibility for 
     premium reduction under this subsection,
       (ii) the name, address, and telephone number necessary to 
     contact the plan administrator and any other person 
     maintaining relevant information in connection with such 
     premium reduction,
       (iii) a description of the extended election period 
     provided for in paragraph (4)(A),
       (iv) a description of the obligation of the qualified 
     beneficiary under paragraph (2)(C) to notify the plan 
     providing continuation coverage of eligibility for subsequent 
     coverage under another group health plan or eligibility for 
     benefits under title XVIII of the Social Security Act and the 
     penalty provided under section 6720C of the Internal Revenue 
     Code of 1986 for failure to so notify the plan,
       (v) a description, displayed in a prominent manner, of the 
     qualified beneficiary's right to a reduced premium and any 
     conditions on entitlement to the reduced premium, and
       (vi) a description of the option of the qualified 
     beneficiary to enroll in different coverage if the employer 
     permits such beneficiary to elect to enroll in such different 
     coverage under paragraph (1)(B).
       (C) Notice in connection with extended election periods.--
     In the case of any assistance eligible individual (or any 
     individual described in paragraph (4)(A)) who became entitled 
     to elect COBRA continuation coverage before the date of the 
     enactment of this Act, the administrator of the group health 
     plan (or other entity) involved shall provide (within 60 days 
     after the date of enactment of this Act) for the additional 
     notification required to be provided under subparagraph (A) 
     and failure to provide such notice shall be treated as a 
     failure to meet the notice requirements under the applicable 
     COBRA continuation provision.
       (D) Model notices.--Not later than 30 days after the date 
     of enactment of this Act--
       (i) the Secretary of the Labor, in consultation with the 
     Secretary of the Treasury and the Secretary of Health and 
     Human Services, shall prescribe models for the additional 
     notification required under this paragraph (other than the 
     additional notification described in clause (ii)), and
       (ii) in the case of any additional notification provided 
     pursuant to subparagraph (A) under section 8905a(f)(2)(A) of 
     title 5, United States Code, the Office of Personnel 
     Management shall prescribe a model for such additional 
     notification.
       (8) Regulations.--The Secretary of the Treasury may 
     prescribe such regulations or other guidance as may be 
     necessary or appropriate to carry out the provisions of this 
     subsection, including the prevention of fraud and abuse under 
     this subsection, except that the Secretary of Labor and the 
     Secretary of Health and Human Services may prescribe such 
     regulations (including interim final regulations) or other 
     guidance as may be necessary or appropriate to carry out the 
     provisions of paragraphs (5), (7), and (9).
       (9) Outreach.--The Secretary of Labor, in consultation with 
     the Secretary of the Treasury and the Secretary of Health and 
     Human Services, shall provide outreach consisting of public 
     education and enrollment assistance relating to premium 
     reduction provided under this subsection. Such outreach shall 
     target employers, group health plan administrators, public 
     assistance programs, States, insurers, and other entities as 
     determined appropriate by such Secretaries. Such outreach 
     shall include an initial focus on those individuals electing 
     continuation coverage who are referred to in paragraph 
     (7)(C). Information on such premium reduction, including 
     enrollment, shall also be made available on websites of the 
     Departments of Labor, Treasury, and Health and Human 
     Services.
       (10) Definitions.--For purposes of this section--
       (A) Administrator.--The term ``administrator'' has the 
     meaning given such term in section 3(16)(A) of the Employee 
     Retirement Income Security Act of 1974.
       (B) COBRA continuation coverage.--The term ``COBRA 
     continuation coverage'' means continuation coverage provided 
     pursuant to part 6 of subtitle B of title I of the Employee 
     Retirement Income Security Act of 1974 (other than under 
     section 609), title XXII of the Public Health Service Act, 
     section 4980B of the Internal Revenue Code of 1986 (other 
     than subsection (f)(1) of such section insofar as it relates 
     to pediatric vaccines), or section 8905a of title 5, United 
     States Code, or under a State program that provides 
     comparable continuation coverage. Such term does not include 
     coverage under a health flexible spending arrangement under a 
     cafeteria plan within the meaning of section 125 of the 
     Internal Revenue Code of 1986.
       (C) COBRA continuation provision.--The term ``COBRA 
     continuation provision'' means the provisions of law 
     described in subparagraph (B).
       (D) Covered employee.--The term ``covered employee'' has 
     the meaning given such term in section 607(2) of the Employee 
     Retirement Income Security Act of 1974.
       (E) Qualified beneficiary.--The term ``qualified 
     beneficiary'' has the meaning given such term in section 
     607(3) of the Employee Retirement Income Security Act of 
     1974.
       (F) Group health plan.--The term ``group health plan'' has 
     the meaning given such term in section 607(1) of the Employee 
     Retirement Income Security Act of 1974.
       (G) State.--The term ``State'' includes the District of 
     Columbia, the Commonwealth of Puerto Rico, the Virgin 
     Islands, Guam, American Samoa, and the Commonwealth of the 
     Northern Mariana Islands.
       (H) Period of coverage.--Any reference in this subsection 
     to a period of coverage shall be treated as a reference to a 
     monthly or shorter period of coverage with respect to which 
     premiums are charged with respect to such coverage.
       (11) Reports.--
       (A) Interim report.--The Secretary of the Treasury shall 
     submit an interim report to the Committee on Education and 
     Labor, the Committee on Ways and Means, and the Committee on 
     Energy and Commerce of the House of Representatives and the 
     Committee on Health, Education, Labor, and Pensions and the 
     Committee on Finance of the Senate regarding the premium 
     reduction provided under this subsection that includes--
       (i) the number of individuals provided such assistance as 
     of the date of the report; and
       (ii) the total amount of expenditures incurred (with 
     administrative expenditures noted separately) in connection 
     with such assistance as of the date of the report.
       (B) Final report.--As soon as practicable after the last 
     period of COBRA continuation coverage for which premium 
     reduction is provided under this section, the Secretary of 
     the Treasury shall submit a final report to each Committee 
     referred to in subparagraph (A) that includes--
       (i) the number of individuals provided premium reduction 
     under this section;
       (ii) the average dollar amount (monthly and annually) of 
     premium reductions provided to such individuals; and
       (iii) the total amount of expenditures incurred (with 
     administrative expenditures noted separately) in connection 
     with premium reduction under this section.
       (12) COBRA premium assistance.--
       (A) In general.--Subchapter B of chapter 65 of the Internal 
     Revenue Code of 1986, as amended by this Act, is amended by 
     adding at the end the following new section:

     ``SEC. 6432. COBRA PREMIUM ASSISTANCE.

       ``(a) In General.--The person to whom premiums are payable 
     under COBRA continuation coverage shall be reimbursed as 
     provided in subsection (c) for the amount of premiums not 
     paid by assistance eligible individuals by reason of section 
     3002(a) of the Health Insurance Assistance for the Unemployed 
     Act of 2009.
       ``(b) Person Entitled to Reimbursement.--For purposes of 
     subsection (a), except as otherwise provided by the 
     Secretary, the person to whom premiums are payable under 
     COBRA continuation coverage shall be treated as being--
       ``(1) in the case of any group health plan which is a 
     multiemployer plan (as defined in section 3(37) of the 
     Employee Retirement Income Security Act of 1974), the plan,
       ``(2) in the case of any group health plan not described in 
     paragraph (1)--
       ``(A) which is subject to the COBRA continuation provisions 
     contained in--
       ``(i) the Internal Revenue Code of 1986,
       ``(ii) the Employee Retirement Income Security Act of 1974,
       ``(iii) the Public Health Service Act, or
       ``(iv) title 5, United States Code, or
       ``(B) under which some or all of the coverage is not 
     provided by insurance,
     the employer maintaining the plan, and

[[Page 3982]]

       ``(3) in the case of any group health plan not described in 
     paragraph (1) or (2), the insurer providing the coverage 
     under the group health plan.
       ``(c) Method of Reimbursement.--Except as otherwise 
     provided by the Secretary--
       ``(1) Treatment as payment of payroll taxes.--Each person 
     entitled to reimbursement under subsection (a) (and filing a 
     claim for such reimbursement at such time and in such manner 
     as the Secretary may require) shall be treated for purposes 
     of this title and section 1324(b)(2) of title 31, United 
     States Code, as having paid to the Secretary, on the date 
     that the assistance eligible individual's premium payment is 
     received, payroll taxes in an amount equal to the portion of 
     such reimbursement which relates to such premium. To the 
     extent that the amount treated as paid under the preceding 
     sentence exceeds the amount of such person's liability for 
     such taxes, the Secretary shall credit or refund such excess 
     in the same manner as if it were an overpayment of such 
     taxes.
       ``(2) Overstatements.--Any overstatement of the 
     reimbursement to which a person is entitled under this 
     section (and any amount paid by the Secretary as a result of 
     such overstatement) shall be treated as an underpayment of 
     payroll taxes by such person and may be assessed and 
     collected by the Secretary in the same manner as payroll 
     taxes.
       ``(3) Reimbursement contingent on payment of remaining 
     premium.--No reimbursement may be made under this section to 
     a person with respect to any assistance eligible individual 
     until after the reduced premium required under section 
     3002(a)(1)(A) of such Act with respect to such individual has 
     been received.
       ``(d) Definitions.--For purposes of this section--
       ``(1) Payroll taxes.--The term `payroll taxes' means--
       ``(A) amounts required to be deducted and withheld for the 
     payroll period under section 3402 (relating to wage 
     withholding),
       ``(B) amounts required to be deducted for the payroll 
     period under section 3102 (relating to FICA employee taxes), 
     and
       ``(C) amounts of the taxes imposed for the payroll period 
     under section 3111 (relating to FICA employer taxes).
       ``(2) Person.--The term `person' includes any governmental 
     entity.
       ``(e) Reporting.--Each person entitled to reimbursement 
     under subsection (a) for any period shall submit such reports 
     (at such time and in such manner) as the Secretary may 
     require, including--
       ``(1) an attestation of involuntary termination of 
     employment for each covered employee on the basis of whose 
     termination entitlement to reimbursement is claimed under 
     subsection (a),
       ``(2) a report of the amount of payroll taxes offset under 
     subsection (a) for the reporting period and the estimated 
     offsets of such taxes for the subsequent reporting period in 
     connection with reimbursements under subsection (a), and
       ``(3) a report containing the TINs of all covered 
     employees, the amount of subsidy reimbursed with respect to 
     each covered employee and qualified beneficiaries, and a 
     designation with respect to each covered employee as to 
     whether the subsidy reimbursement is for coverage of 1 
     individual or 2 or more individuals.
       ``(f) Regulations.--The Secretary shall issue such 
     regulations or other guidance as may be necessary or 
     appropriate to carry out this section, including--
       ``(1) the requirement to report information or the 
     establishment of other methods for verifying the correct 
     amounts of reimbursements under this section, and
       ``(2) the application of this section to group health plans 
     that are multiemployer plans (as defined in section 3(37) of 
     the Employee Retirement Income Security Act of 1974).''.
       (B) Social security trust funds held harmless.--In 
     determining any amount transferred or appropriated to any 
     fund under the Social Security Act, section 6432 of the 
     Internal Revenue Code of 1986 shall not be taken into 
     account.
       (C) Clerical amendment.--The table of sections for 
     subchapter B of chapter 65 of the Internal Revenue Code of 
     1986 is amended by adding at the end the following new item:

``Sec. 6432. COBRA premium assistance.''.
       (D) Effective date.--The amendments made by this paragraph 
     shall apply to premiums to which subsection (a)(1)(A) 
     applies.
       (E) Special rule.--
       (i) In general.--In the case of an assistance eligible 
     individual who pays, with respect to the first period of 
     COBRA continuation coverage to which subsection (a)(1)(A) 
     applies or the immediately subsequent period, the full 
     premium amount for such coverage, the person to whom such 
     payment is payable shall--

       (I) make a reimbursement payment to such individual for the 
     amount of such premium paid in excess of the amount required 
     to be paid under subsection (a)(1)(A); or
       (II) provide credit to the individual for such amount in a 
     manner that reduces one or more subsequent premium payments 
     that the individual is required to pay under such subsection 
     for the coverage involved.

       (ii) Reimbursing employer.--A person to which clause (i) 
     applies shall be reimbursed as provided for in section 6432 
     of the Internal Revenue Code of 1986 for any payment made, or 
     credit provided, to the employee under such clause.
       (iii) Payment or credits.--Unless it is reasonable to 
     believe that the credit for the excess payment in clause 
     (i)(II) will be used by the assistance eligible individual 
     within 180 days of the date on which the person receives from 
     the individual the payment of the full premium amount, a 
     person to which clause (i) applies shall make the payment 
     required under such clause to the individual within 60 days 
     of such payment of the full premium amount. If, as of any day 
     within the 180-day period, it is no longer reasonable to 
     believe that the credit will be used during that period, 
     payment equal to the remainder of the credit outstanding 
     shall be made to the individual within 60 days of such day.
       (13) Penalty for failure to notify health plan of cessation 
     of eligibility for premium assistance.--
       (A) In general.--Part I of subchapter B of chapter 68 of 
     the Internal Revenue Code of 1986 is amended by adding at the 
     end the following new section:

     ``SEC. 6720C. PENALTY FOR FAILURE TO NOTIFY HEALTH PLAN OF 
                   CESSATION OF ELIGIBILITY FOR COBRA PREMIUM 
                   ASSISTANCE.

       ``(a) In General.--Any person required to notify a group 
     health plan under section 3002(a)(2)(C)) of the Health 
     Insurance Assistance for the Unemployed Act of 2009 who fails 
     to make such a notification at such time and in such manner 
     as the Secretary of Labor may require shall pay a penalty of 
     110 percent of the premium reduction provided under such 
     section after termination of eligibility under such 
     subsection.
       ``(b) Reasonable Cause Exception.--No penalty shall be 
     imposed under subsection (a) with respect to any failure if 
     it is shown that such failure is due to reasonable cause and 
     not to willful neglect.''.
       (B) Clerical amendment.--The table of sections of part I of 
     subchapter B of chapter 68 of such Code is amended by adding 
     at the end the following new item:

``Sec. 6720C. Penalty for failure to notify health plan of cessation of 
              eligibility for COBRA premium assistance.''.
       (C) Effective date.--The amendments made by this paragraph 
     shall apply to failures occurring after the date of the 
     enactment of this Act.
       (14) Coordination with hctc.--
       (A) In general.--Subsection (g) of section 35 of the 
     Internal Revenue Code of 1986 is amended by redesignating 
     paragraph (9) as paragraph (10) and inserting after paragraph 
     (8) the following new paragraph:
       ``(9) COBRA premium assistance.--In the case of an 
     assistance eligible individual who receives premium reduction 
     for COBRA continuation coverage under section 3002(a) of the 
     Health Insurance Assistance for the Unemployed Act of 2009 
     for any month during the taxable year, such individual shall 
     not be treated as an eligible individual, a certified 
     individual, or a qualifying family member for purposes of 
     this section or section 7527 with respect to such month.''.
       (B) Effective date.--The amendment made by subparagraph (A) 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.
       (15) Exclusion of cobra premium assistance from gross 
     income.--
       (A) In general.--Part III of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 is amended by inserting 
     after section 139B the following new section:

     ``SEC. 139C. COBRA PREMIUM ASSISTANCE.

       ``In the case of an assistance eligible individual (as 
     defined in section 3002 of the Health Insurance Assistance 
     for the Unemployed Act of 2009), gross income does not 
     include any premium reduction provided under subsection (a) 
     of such section.''.
       (B) Clerical amendment.--The table of sections for part III 
     of subchapter B of chapter 1 of such Code is amended by 
     inserting after the item relating to section 139B the 
     following new item:

``Sec. 139C. COBRA premium assistance.''.

       (C) Effective date.--The amendments made by this paragraph 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.
       (b) Elimination of Premium Subsidy for High-Income 
     Individuals.--
       (1) Recapture of subsidy for high-income individuals.--If--
       (A) premium assistance is provided under this section with 
     respect to any COBRA continuation coverage which covers the 
     taxpayer, the taxpayer's spouse, or any dependent (within the 
     meaning of section 152 of the Internal Revenue Code of 1986, 
     determined without regard to subsections (b)(1), (b)(2), and 
     (d)(1)(B) thereof) of the taxpayer during any portion of the 
     taxable year, and
       (B) the taxpayer's modified adjusted gross income for such 
     taxable year exceeds $125,000 ($250,000 in the case of a 
     joint return),

     then the tax imposed by chapter 1 of such Code with respect 
     to the taxpayer for such taxable year shall be increased by 
     the amount of such assistance.
       (2) Phase-in of recapture.--
       (A) In general.--In the case of a taxpayer whose modified 
     adjusted gross income for the taxable year does not exceed 
     $145,000 ($290,000 in the case of a joint return), the 
     increase in the tax imposed under paragraph (1) shall not 
     exceed the phase-in percentage of such increase (determined 
     without regard to this paragraph).
       (B) Phase-in percentage.--For purposes of this subsection, 
     the term ``phase-in percentage'' means the ratio (expressed 
     as a percentage) obtained by dividing--
       (i) the excess of described in subparagraph (B) of 
     paragraph (1), by

[[Page 3983]]

       (ii) $20,000 ($40,000 in the case of a joint return).
       (3) Option for high-income individuals to waive assistance 
     and avoid recapture.--Notwithstanding subsection (a)(3), an 
     individual shall not be treated as an assistance eligible 
     individual for purposes of this section and section 6432 of 
     the Internal Revenue Code of 1986 if such individual--
       (A) makes a permanent election (at such time and in such 
     form and manner as the Secretary of the Treasury may 
     prescribe) to waive the right to the premium assistance 
     provided under this section, and
       (B) notifies the entity to whom premiums are reimbursed 
     under section 6432(a) of such Code of such election.
       (4) Modified adjusted gross income.--For purposes of this 
     subsection, the term ``modified adjusted gross income'' means 
     the adjusted gross income (as defined in section 62 of the 
     Internal Revenue Code of 1986) of the taxpayer for the 
     taxable year increased by any amount excluded from gross 
     income under section 911, 931, or 933 of such Code.
       (5) Credits not allowed against tax, etc.--For purposes 
     determining regular tax liability under section 26(b) of such 
     Code, the increase in tax under this subsection shall not be 
     treated as a tax imposed under chapter 1 of such Code.
       (6) Regulations.--The Secretary of the Treasury shall issue 
     such regulations or other guidance as are necessary or 
     appropriate to carry out this subsection, including 
     requirements that the entity to whom premiums are reimbursed 
     under section 6432(a) of the Internal Revenue Code of 1986 
     report to the Secretary, and to each assistance eligible 
     individual, the amount of premium assistance provided under 
     subsection (a) with respect to each such individual.
       (7) Effective date.--The provisions of this subsection 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

    TITLE IV--MEDICARE AND MEDICAID HEALTH INFORMATION TECHNOLOGY; 
                   MISCELLANEOUS MEDICARE PROVISIONS

     SEC. 4001. TABLE OF CONTENTS OF TITLE.

       The table of contents of this title is as follows:

    TITLE IV--MEDICARE AND MEDICAID HEALTH INFORMATION TECHNOLOGY; 
                   MISCELLANEOUS MEDICARE PROVISIONS

Sec. 4001. Table of contents of title.

                    Subtitle A--Medicare Incentives

Sec. 4101. Incentives for eligible professionals.
Sec. 4102. Incentives for hospitals.
Sec. 4103. Treatment of payments and savings; implementation funding.
Sec. 4104. Studies and reports on health information technology.

                    Subtitle B--Medicaid Incentives

Sec. 4201. Medicaid provider HIT adoption and operation payments; 
              implementation funding.

             Subtitle C--Miscellaneous Medicare Provisions

Sec. 4301. Moratoria on certain Medicare regulations.
Sec. 4302. Long-term care hospital technical corrections.

                    Subtitle A--Medicare Incentives

     SEC. 4101. INCENTIVES FOR ELIGIBLE PROFESSIONALS.

       (a) Incentive Payments.--Section 1848 of the Social 
     Security Act (42 U.S.C. 1395w-4) is amended by adding at the 
     end the following new subsection:
       ``(o) Incentives for Adoption and Meaningful Use of 
     Certified EHR Technology.--
       ``(1) Incentive payments.--
       ``(A) In general.--
       ``(i) In general.--Subject to the succeeding subparagraphs 
     of this paragraph, with respect to covered professional 
     services furnished by an eligible professional during a 
     payment year (as defined in subparagraph (E)), if the 
     eligible professional is a meaningful EHR user (as determined 
     under paragraph (2)) for the EHR reporting period with 
     respect to such year, in addition to the amount otherwise 
     paid under this part, there also shall be paid to the 
     eligible professional (or to an employer or facility in the 
     cases described in clause (A) of section 1842(b)(6)), from 
     the Federal Supplementary Medical Insurance Trust Fund 
     established under section 1841 an amount equal to 75 percent 
     of the Secretary's estimate (based on claims submitted not 
     later than 2 months after the end of the payment year) of the 
     allowed charges under this part for all such covered 
     professional services furnished by the eligible professional 
     during such year.
       ``(ii) No incentive payments with respect to years after 
     2016.--No incentive payments may be made under this 
     subsection with respect to a year after 2016.
       ``(B) Limitations on amounts of incentive payments.--
       ``(i) In general.--In no case shall the amount of the 
     incentive payment provided under this paragraph for an 
     eligible professional for a payment year exceed the 
     applicable amount specified under this subparagraph with 
     respect to such eligible professional and such year.
       ``(ii) Amount.--Subject to clauses (iii) through (v), the 
     applicable amount specified in this subparagraph for an 
     eligible professional is as follows:

       ``(I) For the first payment year for such professional, 
     $15,000 (or, if the first payment year for such eligible 
     professional is 2011 or 2012, $18,000).
       ``(II) For the second payment year for such professional, 
     $12,000.
       ``(III) For the third payment year for such professional, 
     $8,000.
       ``(IV) For the fourth payment year for such professional, 
     $4,000.
       ``(V) For the fifth payment year for such professional, 
     $2,000.
       ``(VI) For any succeeding payment year for such 
     professional, $0.

       ``(iii) Phase down for eligible professionals first 
     adopting ehr after 2013.--If the first payment year for an 
     eligible professional is after 2013, then the amount 
     specified in this subparagraph for a payment year for such 
     professional is the same as the amount specified in clause 
     (ii) for such payment year for an eligible professional whose 
     first payment year is 2013.
       ``(iv) Increase for certain eligible professionals.--In the 
     case of an eligible professional who predominantly furnishes 
     services under this part in an area that is designated by the 
     Secretary (under section 332(a)(1)(A) of the Public Health 
     Service Act) as a health professional shortage area, the 
     amount that would otherwise apply for a payment year for such 
     professional under subclauses (I) through (V) of clause (ii) 
     shall be increased by 10 percent. In implementing the 
     preceding sentence, the Secretary may, as determined 
     appropriate, apply provisions of subsections (m) and (u) of 
     section 1833 in a similar manner as such provisions apply 
     under such subsection.
       ``(v) No incentive payment if first adopting after 2014.--
     If the first payment year for an eligible professional is 
     after 2014 then the applicable amount specified in this 
     subparagraph for such professional for such year and any 
     subsequent year shall be $0.
       ``(C) Non-application to hospital-based eligible 
     professionals.--
       ``(i) In general.--No incentive payment may be made under 
     this paragraph in the case of a hospital-based eligible 
     professional.
       ``(ii) Hospital-based eligible professional.--For purposes 
     of clause (i), the term `hospital-based eligible 
     professional' means, with respect to covered professional 
     services furnished by an eligible professional during the EHR 
     reporting period for a payment year, an eligible 
     professional, such as a pathologist, anesthesiologist, or 
     emergency physician, who furnishes substantially all of such 
     services in a hospital setting (whether inpatient or 
     outpatient) and through the use of the facilities and 
     equipment, including qualified electronic health records, of 
     the hospital. The determination of whether an eligible 
     professional is a hospital-based eligible professional shall 
     be made on the basis of the site of service (as defined by 
     the Secretary) and without regard to any employment or 
     billing arrangement between the eligible professional and any 
     other provider.
       ``(D) Payment.--
       ``(i) Form of payment.--The payment under this paragraph 
     may be in the form of a single consolidated payment or in the 
     form of such periodic installments as the Secretary may 
     specify.
       ``(ii) Coordination of application of limitation for 
     professionals in different practices.--In the case of an 
     eligible professional furnishing covered professional 
     services in more than one practice (as specified by the 
     Secretary), the Secretary shall establish rules to coordinate 
     the incentive payments, including the application of the 
     limitation on amounts of such incentive payments under this 
     paragraph, among such practices.
       ``(iii) Coordination with medicaid.--The Secretary shall 
     seek, to the maximum extent practicable, to avoid duplicative 
     requirements from Federal and State governments to 
     demonstrate meaningful use of certified EHR technology under 
     this title and title XIX. The Secretary may also adjust the 
     reporting periods under such title and such subsections in 
     order to carry out this clause.
       ``(E) Payment year defined.--
       ``(i) In general.--For purposes of this subsection, the 
     term `payment year' means a year beginning with 2011.
       ``(ii) First, second, etc. payment year.--The term `first 
     payment year' means, with respect to covered professional 
     services furnished by an eligible professional, the first 
     year for which an incentive payment is made for such services 
     under this subsection. The terms `second payment year', 
     `third payment year', `fourth payment year', and `fifth 
     payment year' mean, with respect to covered professional 
     services furnished by such eligible professional, each 
     successive year immediately following the first payment year 
     for such professional.
       ``(2) Meaningful ehr user.--
       ``(A) In general.--For purposes of paragraph (1), an 
     eligible professional shall be treated as a meaningful EHR 
     user for an EHR reporting period for a payment year (or, for 
     purposes of subsection (a)(7), for an EHR reporting period 
     under such subsection for a year) if each of the following 
     requirements is met:
       ``(i) Meaningful use of certified ehr technology.--The 
     eligible professional demonstrates to the satisfaction of the 
     Secretary, in accordance with subparagraph (C)(i), that 
     during such period the professional is using certified EHR 
     technology in a meaningful manner, which shall include the 
     use of electronic prescribing as determined to be appropriate 
     by the Secretary.
       ``(ii) Information exchange.--The eligible professional 
     demonstrates to the satisfaction of the Secretary, in 
     accordance with subparagraph (C)(i), that during such period 
     such certified EHR technology is connected in a manner that

[[Page 3984]]

     provides, in accordance with law and standards applicable to 
     the exchange of information, for the electronic exchange of 
     health information to improve the quality of health care, 
     such as promoting care coordination.
       ``(iii) Reporting on measures using ehr.--Subject to 
     subparagraph (B)(ii) and using such certified EHR technology, 
     the eligible professional submits information for such 
     period, in a form and manner specified by the Secretary, on 
     such clinical quality measures and such other measures as 
     selected by the Secretary under subparagraph (B)(i).
     The Secretary may provide for the use of alternative means 
     for meeting the requirements of clauses (i), (ii), and (iii) 
     in the case of an eligible professional furnishing covered 
     professional services in a group practice (as defined by the 
     Secretary). The Secretary shall seek to improve the use of 
     electronic health records and health care quality over time 
     by requiring more stringent measures of meaningful use 
     selected under this paragraph.
       ``(B) Reporting on measures.--
       ``(i) Selection.--The Secretary shall select measures for 
     purposes of subparagraph (A)(iii) but only consistent with 
     the following:

       ``(I) The Secretary shall provide preference to clinical 
     quality measures that have been endorsed by the entity with a 
     contract with the Secretary under section 1890(a).
       ``(II) Prior to any measure being selected under this 
     subparagraph, the Secretary shall publish in the Federal 
     Register such measure and provide for a period of public 
     comment on such measure.

       ``(ii) Limitation.--The Secretary may not require the 
     electronic reporting of information on clinical quality 
     measures under subparagraph (A)(iii) unless the Secretary has 
     the capacity to accept the information electronically, which 
     may be on a pilot basis.
       ``(iii) Coordination of reporting of information.--In 
     selecting such measures, and in establishing the form and 
     manner for reporting measures under subparagraph (A)(iii), 
     the Secretary shall seek to avoid redundant or duplicative 
     reporting otherwise required, including reporting under 
     subsection (k)(2)(C).
       ``(C) Demonstration of meaningful use of certified ehr 
     technology and information exchange.--
       ``(i) In general.--A professional may satisfy the 
     demonstration requirement of clauses (i) and (ii) of 
     subparagraph (A) through means specified by the Secretary, 
     which may include--

       ``(I) an attestation;
       ``(II) the submission of claims with appropriate coding 
     (such as a code indicating that a patient encounter was 
     documented using certified EHR technology);
       ``(III) a survey response;
       ``(IV) reporting under subparagraph (A)(iii); and
       ``(V) other means specified by the Secretary.

       ``(ii) Use of part d data.--Notwithstanding sections 1860D-
     15(d)(2)(B) and 1860D-15(f)(2), the Secretary may use data 
     regarding drug claims submitted for purposes of section 
     1860D-15 that are necessary for purposes of subparagraph (A).
       ``(3) Application.--
       ``(A) Physician reporting system rules.--Paragraphs (5), 
     (6), and (8) of subsection (k) shall apply for purposes of 
     this subsection in the same manner as they apply for purposes 
     of such subsection.
       ``(B) Coordination with other payments.--The provisions of 
     this subsection shall not be taken into account in applying 
     the provisions of subsection (m) of this section and of 
     section 1833(m) and any payment under such provisions shall 
     not be taken into account in computing allowable charges 
     under this subsection.
       ``(C) Limitations on review.--There shall be no 
     administrative or judicial review under section 1869, section 
     1878, or otherwise, of--
       ``(i) the methodology and standards for determining payment 
     amounts under this subsection and payment adjustments under 
     subsection (a)(7)(A), including the limitation under 
     paragraph (1)(B) and coordination under clauses (ii) and 
     (iii) of paragraph (1)(D);
       ``(ii) the methodology and standards for determining a 
     meaningful EHR user under paragraph (2), including selection 
     of measures under paragraph (2)(B), specification of the 
     means of demonstrating meaningful EHR use under paragraph 
     (2)(C), and the hardship exception under subsection 
     (a)(7)(B);
       ``(iii) the methodology and standards for determining a 
     hospital-based eligible professional under paragraph (1)(C); 
     and
       ``(iv) the specification of reporting periods under 
     paragraph (5) and the selection of the form of payment under 
     paragraph (1)(D)(i).
       ``(D) Posting on website.--The Secretary shall post on the 
     Internet website of the Centers for Medicare & Medicaid 
     Services, in an easily understandable format, a list of the 
     names, business addresses, and business phone numbers of the 
     eligible professionals who are meaningful EHR users and, as 
     determined appropriate by the Secretary, of group practices 
     receiving incentive payments under paragraph (1).
       ``(4) Certified ehr technology defined.--For purposes of 
     this section, the term `certified EHR technology' means a 
     qualified electronic health record (as defined in section 
     3000(13) of the Public Health Service Act) that is certified 
     pursuant to section 3001(c)(5) of such Act as meeting 
     standards adopted under section 3004 of such Act that are 
     applicable to the type of record involved (as determined by 
     the Secretary, such as an ambulatory electronic health record 
     for office-based physicians or an inpatient hospital 
     electronic health record for hospitals).
       ``(5) Definitions.--For purposes of this subsection:
       ``(A) Covered professional services.--The term `covered 
     professional services' has the meaning given such term in 
     subsection (k)(3).
       ``(B) EHR reporting period.--The term `EHR reporting 
     period' means, with respect to a payment year, any period (or 
     periods) as specified by the Secretary.
       ``(C) Eligible professional.--The term `eligible 
     professional' means a physician, as defined in section 
     1861(r).''.
       (b) Incentive Payment Adjustment.--Section 1848(a) of the 
     Social Security Act (42 U.S.C. 1395w-4(a)) is amended by 
     adding at the end the following new paragraph:
       ``(7) Incentives for meaningful use of certified ehr 
     technology.--
       ``(A) Adjustment.--
       ``(i) In general.--Subject to subparagraphs (B) and (D), 
     with respect to covered professional services furnished by an 
     eligible professional during 2015 or any subsequent payment 
     year, if the eligible professional is not a meaningful EHR 
     user (as determined under subsection (o)(2)) for an EHR 
     reporting period for the year, the fee schedule amount for 
     such services furnished by such professional during the year 
     (including the fee schedule amount for purposes of 
     determining a payment based on such amount) shall be equal to 
     the applicable percent of the fee schedule amount that would 
     otherwise apply to such services under this subsection 
     (determined after application of paragraph (3) but without 
     regard to this paragraph).
       ``(ii) Applicable percent.--Subject to clause (iii), for 
     purposes of clause (i), the term `applicable percent' means--

       ``(I) for 2015, 99 percent (or, in the case of an eligible 
     professional who was subject to the application of the 
     payment adjustment under section 1848(a)(5) for 2014, 98 
     percent);
       ``(II) for 2016, 98 percent; and
       ``(III) for 2017 and each subsequent year, 97 percent.

       ``(iii) Authority to decrease applicable percentage for 
     2018 and subsequent years.--For 2018 and each subsequent 
     year, if the Secretary finds that the proportion of eligible 
     professionals who are meaningful EHR users (as determined 
     under subsection (o)(2)) is less than 75 percent, the 
     applicable percent shall be decreased by 1 percentage point 
     from the applicable percent in the preceding year, but in no 
     case shall the applicable percent be less than 95 percent.
       ``(B) Significant hardship exception.--The Secretary may, 
     on a case-by-case basis, exempt an eligible professional from 
     the application of the payment adjustment under subparagraph 
     (A) if the Secretary determines, subject to annual renewal, 
     that compliance with the requirement for being a meaningful 
     EHR user would result in a significant hardship, such as in 
     the case of an eligible professional who practices in a rural 
     area without sufficient Internet access. In no case may an 
     eligible professional be granted an exemption under this 
     subparagraph for more than 5 years.
       ``(C) Application of physician reporting system rules.--
     Paragraphs (5), (6), and (8) of subsection (k) shall apply 
     for purposes of this paragraph in the same manner as they 
     apply for purposes of such subsection.
       ``(D) Non-application to hospital-based eligible 
     professionals.--No payment adjustment may be made under 
     subparagraph (A) in the case of hospital-based eligible 
     professionals (as defined in subsection (o)(1)(C)(ii)).
       ``(E) Definitions.--For purposes of this paragraph:
       ``(i) Covered professional services.--The term `covered 
     professional services' has the meaning given such term in 
     subsection (k)(3).
       ``(ii) EHR reporting period.--The term `EHR reporting 
     period' means, with respect to a year, a period (or periods) 
     specified by the Secretary.
       ``(iii) Eligible professional.--The term `eligible 
     professional' means a physician, as defined in section 
     1861(r).''.
       (c) Application to Certain MA-Affiliated Eligible 
     Professionals.--Section 1853 of the Social Security Act (42 
     U.S.C. 1395w-23) is amended by adding at the end the 
     following new subsection:
       ``(l) Application of Eligible Professional Incentives for 
     Certain MA Organizations for Adoption and Meaningful Use of 
     Certified EHR Technology.--
       ``(1) In general.--Subject to paragraphs (3) and (4), in 
     the case of a qualifying MA organization, the provisions of 
     sections 1848(o) and 1848(a)(7) shall apply with respect to 
     eligible professionals described in paragraph (2) of the 
     organization who the organization attests under paragraph (6) 
     to be meaningful EHR users in a similar manner as they apply 
     to eligible professionals under such sections. Incentive 
     payments under paragraph (3) shall be made to and payment 
     adjustments under paragraph (4) shall apply to such 
     qualifying organizations.
       ``(2) Eligible professional described.--With respect to a 
     qualifying MA organization, an eligible professional 
     described in this paragraph is an eligible professional (as 
     defined for purposes of section 1848(o)) who--
       ``(A)(i) is employed by the organization; or
       ``(ii)(I) is employed by, or is a partner of, an entity 
     that through contract with the organization furnishes at 
     least 80 percent of the entity's Medicare patient care 
     services to enrollees of such organization; and
       ``(II) furnishes at least 80 percent of the professional 
     services of the eligible professional covered under this 
     title to enrollees of the organization; and

[[Page 3985]]

       ``(B) furnishes, on average, at least 20 hours per week of 
     patient care services.
       ``(3) Eligible professional incentive payments.--
       ``(A) In general.--In applying section 1848(o) under 
     paragraph (1), instead of the additional payment amount under 
     section 1848(o)(1)(A) and subject to subparagraph (B), the 
     Secretary may substitute an amount determined by the 
     Secretary to the extent feasible and practical to be similar 
     to the estimated amount in the aggregate that would be 
     payable if payment for services furnished by such 
     professionals was payable under part B instead of this part.
       ``(B) Avoiding duplication of payments.--
       ``(i) In general.--In the case of an eligible professional 
     described in paragraph (2)--

       ``(I) that is eligible for the maximum incentive payment 
     under section 1848(o)(1)(A) for the same payment period, the 
     payment incentive shall be made only under such section and 
     not under this subsection; and
       ``(II) that is eligible for less than such maximum 
     incentive payment for the same payment period, the payment 
     incentive shall be made only under this subsection and not 
     under section 1848(o)(1)(A).

       ``(ii) Methods.--In the case of an eligible professional 
     described in paragraph (2) who is eligible for an incentive 
     payment under section 1848(o)(1)(A) but is not described in 
     clause (i) for the same payment period, the Secretary shall 
     develop a process--

       ``(I) to ensure that duplicate payments are not made with 
     respect to an eligible professional both under this 
     subsection and under section 1848(o)(1)(A); and
       ``(II) to collect data from Medicare Advantage 
     organizations to ensure against such duplicate payments.

       ``(C) Fixed schedule for application of limitation on 
     incentive payments for all eligible professionals.--In 
     applying section 1848(o)(1)(B)(ii) under subparagraph (A), in 
     accordance with rules specified by the Secretary, a 
     qualifying MA organization shall specify a year (not earlier 
     than 2011) that shall be treated as the first payment year 
     for all eligible professionals with respect to such 
     organization.
       ``(4) Payment adjustment.--
       ``(A) In general.--In applying section 1848(a)(7) under 
     paragraph (1), instead of the payment adjustment being an 
     applicable percent of the fee schedule amount for a year 
     under such section, subject to subparagraph (D), the payment 
     adjustment under paragraph (1) shall be equal to the percent 
     specified in subparagraph (B) for such year of the payment 
     amount otherwise provided under this section for such year.
       ``(B) Specified percent.--The percent specified under this 
     subparagraph for a year is 100 percent minus a number of 
     percentage points equal to the product of--
       ``(i) the number of percentage points by which the 
     applicable percent (under section 1848(a)(7)(A)(ii)) for the 
     year is less than 100 percent; and
       ``(ii) the Medicare physician expenditure proportion 
     specified in subparagraph (C) for the year.
       ``(C) Medicare physician expenditure proportion.--The 
     Medicare physician expenditure proportion under this 
     subparagraph for a year is the Secretary's estimate of the 
     proportion, of the expenditures under parts A and B that are 
     not attributable to this part, that are attributable to 
     expenditures for physicians' services.
       ``(D) Application of payment adjustment.--In the case that 
     a qualifying MA organization attests that not all eligible 
     professionals of the organization are meaningful EHR users 
     with respect to a year, the Secretary shall apply the payment 
     adjustment under this paragraph based on the proportion of 
     all such eligible professionals of the organization that are 
     not meaningful EHR users for such year.
       ``(5) Qualifying ma organization defined.--In this 
     subsection and subsection (m), the term `qualifying MA 
     organization' means a Medicare Advantage organization that is 
     organized as a health maintenance organization (as defined in 
     section 2791(b)(3) of the Public Health Service Act).
       ``(6) Meaningful ehr user attestation.--For purposes of 
     this subsection and subsection (m), a qualifying MA 
     organization shall submit an attestation, in a form and 
     manner specified by the Secretary which may include the 
     submission of such attestation as part of submission of the 
     initial bid under section 1854(a)(1)(A)(iv), identifying--
       ``(A) whether each eligible professional described in 
     paragraph (2), with respect to such organization is a 
     meaningful EHR user (as defined in section 1848(o)(2)) for a 
     year specified by the Secretary; and
       ``(B) whether each eligible hospital described in 
     subsection (m)(1), with respect to such organization, is a 
     meaningful EHR user (as defined in section 1886(n)(3)) for an 
     applicable period specified by the Secretary.
       ``(7) Posting on website.--The Secretary shall post on the 
     Internet website of the Centers for Medicare & Medicaid 
     Services, in an easily understandable format, a list of the 
     names, business addresses, and business phone numbers of--
       ``(A) each qualifying MA organization receiving an 
     incentive payment under this subsection for eligible 
     professionals of the organization; and
       ``(B) the eligible professionals of such organization for 
     which such incentive payment is based.
       ``(8) Limitation on review.--There shall be no 
     administrative or judicial review under section 1869, section 
     1878, or otherwise, of--
       ``(A) the methodology and standards for determining payment 
     amounts and payment adjustments under this subsection, 
     including avoiding duplication of payments under paragraph 
     (3)(B) and the specification of rules for the fixed schedule 
     for application of limitation on incentive payments for all 
     eligible professionals under paragraph (3)(C);
       ``(B) the methodology and standards for determining 
     eligible professionals under paragraph (2); and
       ``(C) the methodology and standards for determining a 
     meaningful EHR user under section 1848(o)(2), including 
     specification of the means of demonstrating meaningful EHR 
     use under section 1848(o)(3)(C) and selection of measures 
     under section 1848(o)(3)(B).''.
       (d) Study and Report Relating to MA Organizations.--
       (1) Study.--The Secretary of Health and Human Services 
     shall conduct a study on the extent to which and manner in 
     which payment incentives and adjustments (such as under 
     sections 1848(o) and 1848(a)(7) of the Social Security Act) 
     could be made available to professionals, as defined in 
     1861(r), who are not eligible for HIT incentive payments 
     under section 1848(o) and receive payments for Medicare 
     patient services nearly-exclusively through contractual 
     arrangements with one or more Medicare Advantage 
     organizations, or an intermediary organization or 
     organizations with contracts with Medicare Advantage 
     organizations. Such study shall assess approaches for 
     measuring meaningful use of qualified EHR technology among 
     such professionals and mechanisms for delivering incentives 
     and adjustments to those professionals, including through 
     incentive payments and adjustments through Medicare Advantage 
     organizations or intermediary organizations.
       (2) Report.--Not later than 120 days after the date of the 
     enactment of this Act, the Secretary of Health and Human 
     Services shall submit to Congress a report on the findings 
     and the conclusions of the study conducted under paragraph 
     (1), together with recommendations for such legislation and 
     administrative action as the Secretary determines 
     appropriate.
       (e) Conforming Amendments.--Section 1853 of the Social 
     Security Act (42 U.S.C. 1395w-23) is amended--
       (1) in subsection (a)(1)(A), by striking ``and (i)'' and 
     inserting ``(i), and (l)'';
       (2) in subsection (c)--
       (A) in paragraph (1)(D)(i), by striking ``section 1886(h)'' 
     and inserting ``sections 1848(o) and 1886(h)''; and
       (B) in paragraph (6)(A), by inserting after ``under part 
     B,'' the following: ``excluding expenditures attributable to 
     subsections (a)(7) and (o) of section 1848,''; and
       (3) in subsection (f), by inserting ``and for payments 
     under subsection (l)'' after ``with the organization''.
       (f) Conforming Amendments to E-Prescribing.--
       (1) Section 1848(a)(5)(A) of the Social Security Act (42 
     U.S.C. 1395w-4(a)(5)(A)) is amended--
       (A) in clause (i), by striking ``or any subsequent year'' 
     and inserting ``, 2013 or 2014''; and
       (B) in clause (ii), by striking ``and each subsequent 
     year''.
       (2) Section 1848(m)(2) of such Act (42 U.S.C. 1395w-
     4(m)(2)) is amended--
       (A) in subparagraph (A), by striking ``For 2009'' and 
     inserting ``Subject to subparagraph (D), for 2009''; and
       (B) by adding at the end the following new subparagraph:
       ``(D) Limitation with respect to ehr incentive payments.--
     The provisions of this paragraph shall not apply to an 
     eligible professional (or, in the case of a group practice 
     under paragraph (3)(C), to the group practice) if, for the 
     EHR reporting period the eligible professional (or group 
     practice) receives an incentive payment under subsection 
     (o)(1)(A) with respect to a certified EHR technology (as 
     defined in subsection (o)(4)) that has the capability of 
     electronic prescribing.''.

     SEC. 4102. INCENTIVES FOR HOSPITALS.

       (a) Incentive Payment.--
       (1) In general.--Section 1886 of the Social Security Act 
     (42 U.S.C. 1395ww) is amended by adding at the end the 
     following new subsection:
       ``(n) Incentives for Adoption and Meaningful Use of 
     Certified EHR Technology.--
       ``(1) In general.--Subject to the succeeding provisions of 
     this subsection, with respect to inpatient hospital services 
     furnished by an eligible hospital during a payment year (as 
     defined in paragraph (2)(G)), if the eligible hospital is a 
     meaningful EHR user (as determined under paragraph (3)) for 
     the EHR reporting period with respect to such year, in 
     addition to the amount otherwise paid under this section, 
     there also shall be paid to the eligible hospital, from the 
     Federal Hospital Insurance Trust Fund established under 
     section 1817, an amount equal to the applicable amount 
     specified in paragraph (2)(A) for the hospital for such 
     payment year.
       ``(2) Payment amount.--
       ``(A) In general.--Subject to the succeeding subparagraphs 
     of this paragraph, the applicable amount specified in this 
     subparagraph for an eligible hospital for a payment year is 
     equal to the product of the following:
       ``(i) Initial amount.--The sum of--

       ``(I) the base amount specified in subparagraph (B); plus
       ``(II) the discharge related amount specified in 
     subparagraph (C) for a 12-month period selected by the 
     Secretary with respect to such payment year.

[[Page 3986]]

       ``(ii) Medicare share.--The Medicare share as specified in 
     subparagraph (D) for the eligible hospital for a period 
     selected by the Secretary with respect to such payment year.
       ``(iii) Transition factor.--The transition factor specified 
     in subparagraph (E) for the eligible hospital for the payment 
     year.
       ``(B) Base amount.--The base amount specified in this 
     subparagraph is $2,000,000.
       ``(C) Discharge related amount.--The discharge related 
     amount specified in this subparagraph for a 12-month period 
     selected by the Secretary shall be determined as the sum of 
     the amount, estimated based upon total discharges for the 
     eligible hospital (regardless of any source of payment) for 
     the period, for each discharge up to the 23,000th discharge 
     as follows:
       ``(i) For the first through 1,149th discharge, $0.
       ``(ii) For the 1,150th through the 23,000th discharge, 
     $200.
       ``(iii) For any discharge greater than the 23,000th, $0.
       ``(D) Medicare share.--The Medicare share specified under 
     this subparagraph for an eligible hospital for a period 
     selected by the Secretary for a payment year is equal to the 
     fraction--
       ``(i) the numerator of which is the sum (for such period 
     and with respect to the eligible hospital) of--

       ``(I) the estimated number of inpatient-bed-days (as 
     established by the Secretary) which are attributable to 
     individuals with respect to whom payment may be made under 
     part A; and
       ``(II) the estimated number of inpatient-bed-days (as so 
     established) which are attributable to individuals who are 
     enrolled with a Medicare Advantage organization under part C; 
     and

       ``(ii) the denominator of which is the product of--

       ``(I) the estimated total number of inpatient-bed-days with 
     respect to the eligible hospital during such period; and
       ``(II) the estimated total amount of the eligible 
     hospital's charges during such period, not including any 
     charges that are attributable to charity care (as such term 
     is used for purposes of hospital cost reporting under this 
     title), divided by the estimated total amount of the 
     hospital's charges during such period.

     Insofar as the Secretary determines that data are not 
     available on charity care necessary to calculate the portion 
     of the formula specified in clause (ii)(II), the Secretary 
     shall use data on uncompensated care and may adjust such data 
     so as to be an appropriate proxy for charity care including a 
     downward adjustment to eliminate bad debt data from 
     uncompensated care data. In the absence of the data 
     necessary, with respect to a hospital, for the Secretary to 
     compute the amount described in clause (ii)(II), the amount 
     under such clause shall be deemed to be 1. In the absence of 
     data, with respect to a hospital, necessary to compute the 
     amount described in clause (i)(II), the amount under such 
     clause shall be deemed to be 0.
       ``(E) Transition factor specified.--
       ``(i) In general.--Subject to clause (ii), the transition 
     factor specified in this subparagraph for an eligible 
     hospital for a payment year is as follows:

       ``(I) For the first payment year for such hospital, 1.
       ``(II) For the second payment year for such hospital, \3/
     4\.

       ``(III) For the third payment year for such hospital, \1/
     2\.
       ``(IV) For the fourth payment year for such hospital, \1/
     4\.
       ``(V) For any succeeding payment year for such hospital, 0.

       ``(ii) Phase down for eligible hospitals first adopting ehr 
     after 2013.--If the first payment year for an eligible 
     hospital is after 2013, then the transition factor specified 
     in this subparagraph for a payment year for such hospital is 
     the same as the amount specified in clause (i) for such 
     payment year for an eligible hospital for which the first 
     payment year is 2013. If the first payment year for an 
     eligible hospital is after 2015 then the transition factor 
     specified in this subparagraph for such hospital and for such 
     year and any subsequent year shall be 0.
       ``(F) Form of payment.--The payment under this subsection 
     for a payment year may be in the form of a single 
     consolidated payment or in the form of such periodic 
     installments as the Secretary may specify.
       ``(G) Payment year defined.--
       ``(i) In general.--For purposes of this subsection, the 
     term `payment year' means a fiscal year beginning with fiscal 
     year 2011.
       ``(ii) First, second, etc. payment year.--The term `first 
     payment year' means, with respect to inpatient hospital 
     services furnished by an eligible hospital, the first fiscal 
     year for which an incentive payment is made for such services 
     under this subsection. The terms `second payment year', 
     `third payment year', and `fourth payment year' mean, with 
     respect to an eligible hospital, each successive year 
     immediately following the first payment year for that 
     hospital.
       ``(3) Meaningful ehr user.--
       ``(A) In general.--For purposes of paragraph (1), an 
     eligible hospital shall be treated as a meaningful EHR user 
     for an EHR reporting period for a payment year (or, for 
     purposes of subsection (b)(3)(B)(ix), for an EHR reporting 
     period under such subsection for a fiscal year) if each of 
     the following requirements are met:
       ``(i) Meaningful use of certified ehr technology.--The 
     eligible hospital demonstrates to the satisfaction of the 
     Secretary, in accordance with subparagraph (C)(i), that 
     during such period the hospital is using certified EHR 
     technology in a meaningful manner.
       ``(ii) Information exchange.--The eligible hospital 
     demonstrates to the satisfaction of the Secretary, in 
     accordance with subparagraph (C)(i), that during such period 
     such certified EHR technology is connected in a manner that 
     provides, in accordance with law and standards applicable to 
     the exchange of information, for the electronic exchange of 
     health information to improve the quality of health care, 
     such as promoting care coordination.
       ``(iii) Reporting on measures using ehr.--Subject to 
     subparagraph (B)(ii) and using such certified EHR technology, 
     the eligible hospital submits information for such period, in 
     a form and manner specified by the Secretary, on such 
     clinical quality measures and such other measures as selected 
     by the Secretary under subparagraph (B)(i).
     The Secretary shall seek to improve the use of electronic 
     health records and health care quality over time by requiring 
     more stringent measures of meaningful use selected under this 
     paragraph.
       ``(B) Reporting on measures.--
       ``(i) Selection.--The Secretary shall select measures for 
     purposes of subparagraph (A)(iii) but only consistent with 
     the following:

       ``(I) The Secretary shall provide preference to clinical 
     quality measures that have been selected for purposes of 
     applying subsection (b)(3)(B)(viii) or that have been 
     endorsed by the entity with a contract with the Secretary 
     under section 1890(a).
       ``(II) Prior to any measure (other than a clinical quality 
     measure that has been selected for purposes of applying 
     subsection (b)(3)(B)(viii)) being selected under this 
     subparagraph, the Secretary shall publish in the Federal 
     Register such measure and provide for a period of public 
     comment on such measure.

       ``(ii) Limitations.--The Secretary may not require the 
     electronic reporting of information on clinical quality 
     measures under subparagraph (A)(iii) unless the Secretary has 
     the capacity to accept the information electronically, which 
     may be on a pilot basis.
       ``(iii) Coordination of reporting of information.--In 
     selecting such measures, and in establishing the form and 
     manner for reporting measures under subparagraph (A)(iii), 
     the Secretary shall seek to avoid redundant or duplicative 
     reporting with reporting otherwise required, including 
     reporting under subsection (b)(3)(B)(viii).
       ``(C) Demonstration of meaningful use of certified ehr 
     technology and information exchange.--
       ``(i) In general.--An eligible hospital may satisfy the 
     demonstration requirement of clauses (i) and (ii) of 
     subparagraph (A) through means specified by the Secretary, 
     which may include--

       ``(I) an attestation;
       ``(II) the submission of claims with appropriate coding 
     (such as a code indicating that inpatient care was documented 
     using certified EHR technology);
       ``(III) a survey response;
       ``(IV) reporting under subparagraph (A)(iii); and
       ``(V) other means specified by the Secretary.

       ``(ii) Use of part d data.--Notwithstanding sections 1860D-
     15(d)(2)(B) and 1860D-15(f)(2), the Secretary may use data 
     regarding drug claims submitted for purposes of section 
     1860D-15 that are necessary for purposes of subparagraph (A).
       ``(4) Application.--
       ``(A) Limitations on review.--There shall be no 
     administrative or judicial review under section 1869, section 
     1878, or otherwise, of--
       ``(i) the methodology and standards for determining payment 
     amounts under this subsection and payment adjustments under 
     subsection (b)(3)(B)(ix), including selection of periods 
     under paragraph (2) for determining, and making estimates or 
     using proxies of, discharges under paragraph (2)(C) and 
     inpatient-bed-days, hospital charges, charity charges, and 
     Medicare share under paragraph (2)(D);
       ``(ii) the methodology and standards for determining a 
     meaningful EHR user under paragraph (3), including selection 
     of measures under paragraph (3)(B), specification of the 
     means of demonstrating meaningful EHR use under paragraph 
     (3)(C), and the hardship exception under subsection 
     (b)(3)(B)(ix)(II); and
       ``(iii) the specification of EHR reporting periods under 
     paragraph (6)(B) and the selection of the form of payment 
     under paragraph (2)(F).
       ``(B) Posting on website.--The Secretary shall post on the 
     Internet website of the Centers for Medicare & Medicaid 
     Services, in an easily understandable format, a list of the 
     names of the eligible hospitals that are meaningful EHR users 
     under this subsection or subsection (b)(3)(B)(ix) (and a list 
     of the names of critical access hospitals to which paragraph 
     (3) or (4) of section 1814(l) applies), and other relevant 
     data as determined appropriate by the Secretary. The 
     Secretary shall ensure that an eligible hospital (or critical 
     access hospital) has the opportunity to review the other 
     relevant data that are to be made public with respect to the 
     hospital (or critical access hospital) prior to such data 
     being made public.
       ``(5) Certified ehr technology defined.--The term 
     `certified EHR technology' has the meaning given such term in 
     section 1848(o)(4).
       ``(6) Definitions.--For purposes of this subsection:
       ``(A) EHR reporting period.--The term `EHR reporting 
     period' means, with respect to a payment year, any period (or 
     periods) as specified by the Secretary.

[[Page 3987]]

       ``(B) Eligible hospital.--The term `eligible hospital' 
     means a subsection (d) hospital.''.
       (2) Critical access hospitals.--Section 1814(l) of the 
     Social Security Act (42 U.S.C. 1395f(l)) is amended--
       (A) in paragraph (1), by striking ``paragraph (2)'' and 
     inserting ``the subsequent paragraphs of this subsection''; 
     and
       (B) by adding at the end the following new paragraph:
       ``(3)(A) The following rules shall apply in determining 
     payment and reasonable costs under paragraph (1) for costs 
     described in subparagraph (C) for a critical access hospital 
     that would be a meaningful EHR user (as would be determined 
     under paragraph (3) of section 1886(n)) for an EHR reporting 
     period for a cost reporting period beginning during a payment 
     year if such critical access hospital was treated as an 
     eligible hospital under such section:
       ``(i) The Secretary shall compute reasonable costs by 
     expensing such costs in a single payment year and not 
     depreciating such costs over a period of years (and shall 
     include as costs with respect to cost reporting periods 
     beginning during a payment year costs from previous cost 
     reporting periods to the extent they have not been fully 
     depreciated as of the period involved).
       ``(ii) There shall be substituted for the Medicare share 
     that would otherwise be applied under paragraph (1) a percent 
     (not to exceed 100 percent) equal to the sum of--
       ``(I) the Medicare share (as would be specified under 
     paragraph (2)(D) of section 1886(n)) for such critical access 
     hospital if such critical access hospital was treated as an 
     eligible hospital under such section; and
       ``(II) 20 percentage points.
       ``(B) The payment under this paragraph with respect to a 
     critical access hospital shall be paid through a prompt 
     interim payment (subject to reconciliation) after submission 
     and review of such information (as specified by the 
     Secretary) necessary to make such payment, including 
     information necessary to apply this paragraph. In no case may 
     payment under this paragraph be made with respect to a cost 
     reporting period beginning during a payment year after 2015 
     and in no case may a critical access hospital receive payment 
     under this paragraph with respect to more than 4 consecutive 
     payment years.
       ``(C) The costs described in this subparagraph are costs 
     for the purchase of certified EHR technology to which 
     purchase depreciation (excluding interest) would apply if 
     payment was made under paragraph (1) and not under this 
     paragraph.
       ``(D) For purposes of this paragraph, paragraph (4), and 
     paragraph (5), the terms `certified EHR technology', 
     `eligible hospital', `EHR reporting period', and `payment 
     year' have the meanings given such terms in sections 
     1886(n).''.
       (b) Incentive Market Basket Adjustment.--
       (1) In general.--Section 1886(b)(3)(B) of the Social 
     Security Act (42 U.S.C. 1395ww(b)(3)(B)) is amended--
       (A) in clause (viii)(I), by inserting ``(or, beginning with 
     fiscal year 2015, by one-quarter)'' after ``2.0 percentage 
     points''; and
       (B) by adding at the end the following new clause:
       ``(ix)(I) For purposes of clause (i) for fiscal year 2015 
     and each subsequent fiscal year, in the case of an eligible 
     hospital (as defined in subsection (n)(6)(A)) that is not a 
     meaningful EHR user (as defined in subsection (n)(3)) for an 
     EHR reporting period for such fiscal year, three-quarters of 
     the applicable percentage increase otherwise applicable under 
     clause (i) for such fiscal year shall be reduced by 33\1/3\ 
     percent for fiscal year 2015, 66\2/3\ percent for fiscal year 
     2016, and 100 percent for fiscal year 2017 and each 
     subsequent fiscal year. Such reduction shall apply only with 
     respect to the fiscal year involved and the Secretary shall 
     not take into account such reduction in computing the 
     applicable percentage increase under clause (i) for a 
     subsequent fiscal year.
       ``(II) The Secretary may, on a case-by-case basis, exempt a 
     subsection (d) hospital from the application of subclause (I) 
     with respect to a fiscal year if the Secretary determines, 
     subject to annual renewal, that requiring such hospital to be 
     a meaningful EHR user during such fiscal year would result in 
     a significant hardship, such as in the case of a hospital in 
     a rural area without sufficient Internet access. In no case 
     may a hospital be granted an exemption under this subclause 
     for more than 5 years.
       ``(III) For fiscal year 2015 and each subsequent fiscal 
     year, a State in which hospitals are paid for services under 
     section 1814(b)(3) shall adjust the payments to each 
     subsection (d) hospital in the State that is not a meaningful 
     EHR user (as defined in subsection (n)(3)) in a manner that 
     is designed to result in an aggregate reduction in payments 
     to hospitals in the State that is equivalent to the aggregate 
     reduction that would have occurred if payments had been 
     reduced to each subsection (d) hospital in the State in a 
     manner comparable to the reduction under the previous 
     provisions of this clause. The State shall report to the 
     Secretary the methodology it will use to make the payment 
     adjustment under the previous sentence.
       ``(IV) For purposes of this clause, the term `EHR reporting 
     period' means, with respect to a fiscal year, any period (or 
     periods) as specified by the Secretary.''.
       (2) Critical access hospitals.--Section 1814(l) of the 
     Social Security Act (42 U.S.C. 1395f(l)), as amended by 
     subsection (a)(2), is further amended by adding at the end 
     the following new paragraphs:
       ``(4)(A) Subject to subparagraph (C), for cost reporting 
     periods beginning in fiscal year 2015 or a subsequent fiscal 
     year, in the case of a critical access hospital that is not a 
     meaningful EHR user (as would be determined under paragraph 
     (3) of section 1886(n) if such critical access hospital was 
     treated as an eligible hospital under such section) for an 
     EHR reporting period with respect to such fiscal year, 
     paragraph (1) shall be applied by substituting the applicable 
     percent under subparagraph (B) for the percent described in 
     such paragraph (1).
       ``(B) The percent described in this subparagraph is--
       ``(i) for fiscal year 2015, 100.66 percent;
       ``(ii) for fiscal year 2016, 100.33 percent; and
       ``(iii) for fiscal year 2017 and each subsequent fiscal 
     year, 100 percent.
       ``(C) The provisions of subclause (II) of section 
     1886(b)(3)(B)(ix) shall apply with respect to subparagraph 
     (A) for a critical access hospital with respect to a cost 
     reporting period beginning in a fiscal year in the same 
     manner as such subclause applies with respect to subclause 
     (I) of such section for a subsection (d) hospital with 
     respect to such fiscal year.
       ``(5) There shall be no administrative or judicial review 
     under section 1869, section 1878, or otherwise, of--
       ``(A) the methodology and standards for determining the 
     amount of payment and reasonable cost under paragraph (3) and 
     payment adjustments under paragraph (4), including selection 
     of periods under section 1886(n)(2) for determining, and 
     making estimates or using proxies of, inpatient-bed-days, 
     hospital charges, charity charges, and Medicare share under 
     subparagraph (D) of section 1886(n)(2);
       ``(B) the methodology and standards for determining a 
     meaningful EHR user under section 1886(n)(3) as would apply 
     if the hospital was treated as an eligible hospital under 
     section 1886(n), and the hardship exception under paragraph 
     (4)(C);
       ``(C) the specification of EHR reporting periods under 
     section 1886(n)(6)(B) as applied under paragraphs (3) and 
     (4); and
       ``(D) the identification of costs for purposes of paragraph 
     (3)(C).''.
       (c) Application to Certain MA-Affiliated Eligible 
     Hospitals.--Section 1853 of the Social Security Act (42 
     U.S.C. 1395w-23), as amended by section 4101(c), is further 
     amended by adding at the end the following new subsection:
       ``(m) Application of Eligible Hospital Incentives for 
     Certain MA Organizations for Adoption and Meaningful Use of 
     Certified EHR Technology.--
       ``(1) Application.--Subject to paragraphs (3) and (4), in 
     the case of a qualifying MA organization, the provisions of 
     sections 1886(n) and 1886(b)(3)(B)(ix) shall apply with 
     respect to eligible hospitals described in paragraph (2) of 
     the organization which the organization attests under 
     subsection (l)(6) to be meaningful EHR users in a similar 
     manner as they apply to eligible hospitals under such 
     sections. Incentive payments under paragraph (3) shall be 
     made to and payment adjustments under paragraph (4) shall 
     apply to such qualifying organizations.
       ``(2) Eligible hospital described.--With respect to a 
     qualifying MA organization, an eligible hospital described in 
     this paragraph is an eligible hospital (as defined in section 
     1886(n)(6)(A)) that is under common corporate governance with 
     such organization and serves individuals enrolled under an MA 
     plan offered by such organization.
       ``(3) Eligible hospital incentive payments.--
       ``(A) In general.--In applying section 1886(n)(2) under 
     paragraph (1), instead of the additional payment amount under 
     section 1886(n)(2), there shall be substituted an amount 
     determined by the Secretary to be similar to the estimated 
     amount in the aggregate that would be payable if payment for 
     services furnished by such hospitals was payable under part A 
     instead of this part. In implementing the previous sentence, 
     the Secretary--
       ``(i) shall, insofar as data to determine the discharge 
     related amount under section 1886(n)(2)(C) for an eligible 
     hospital are not available to the Secretary, use such 
     alternative data and methodology to estimate such discharge 
     related amount as the Secretary determines appropriate; and
       ``(ii) shall, insofar as data to determine the medicare 
     share described in section 1886(n)(2)(D) for an eligible 
     hospital are not available to the Secretary, use such 
     alternative data and methodology to estimate such share, 
     which data and methodology may include use of the inpatient-
     bed-days (or discharges) with respect to an eligible hospital 
     during the appropriate period which are attributable to both 
     individuals for whom payment may be made under part A or 
     individuals enrolled in an MA plan under a Medicare Advantage 
     organization under this part as a proportion of the estimated 
     total number of patient-bed-days (or discharges) with respect 
     to such hospital during such period.
       ``(B) Avoiding duplication of payments.--
       ``(i) In general.--In the case of a hospital that for a 
     payment year is an eligible hospital described in paragraph 
     (2) and for which at least one-third of their discharges (or 
     bed-days) of Medicare patients for the year are covered under 
     part A, payment for the payment year shall be made only under 
     section 1886(n) and not under this subsection.
       ``(ii) Methods.--In the case of a hospital that is an 
     eligible hospital described in paragraph (2) and also is 
     eligible for an incentive payment under section 1886(n) but 
     is not described in clause (i) for the same payment period, 
     the Secretary shall develop a process--

[[Page 3988]]

       ``(I) to ensure that duplicate payments are not made with 
     respect to an eligible hospital both under this subsection 
     and under section 1886(n); and
       ``(II) to collect data from Medicare Advantage 
     organizations to ensure against such duplicate payments.

       ``(4) Payment adjustment.--
       ``(A) Subject to paragraph (3), in the case of a qualifying 
     MA organization (as defined in section 1853(l)(5)), if, 
     according to the attestation of the organization submitted 
     under subsection (l)(6) for an applicable period, one or more 
     eligible hospitals (as defined in section 1886(n)(6)(A)) that 
     are under common corporate governance with such organization 
     and that serve individuals enrolled under a plan offered by 
     such organization are not meaningful EHR users (as defined in 
     section 1886(n)(3)) with respect to a period, the payment 
     amount payable under this section for such organization for 
     such period shall be the percent specified in subparagraph 
     (B) for such period of the payment amount otherwise provided 
     under this section for such period.
       ``(B) Specified percent.--The percent specified under this 
     subparagraph for a year is 100 percent minus a number of 
     percentage points equal to the product of--
       ``(i) the number of the percentage point reduction effected 
     under section 1886(b)(3)(B)(ix)(I) for the period; and
       ``(ii) the Medicare hospital expenditure proportion 
     specified in subparagraph (C) for the year.
       ``(C) Medicare hospital expenditure proportion.--The 
     Medicare hospital expenditure proportion under this 
     subparagraph for a year is the Secretary's estimate of the 
     proportion, of the expenditures under parts A and B that are 
     not attributable to this part, that are attributable to 
     expenditures for inpatient hospital services.
       ``(D) Application of payment adjustment.--In the case that 
     a qualifying MA organization attests that not all eligible 
     hospitals are meaningful EHR users with respect to an 
     applicable period, the Secretary shall apply the payment 
     adjustment under this paragraph based on a methodology 
     specified by the Secretary, taking into account the 
     proportion of such eligible hospitals, or discharges from 
     such hospitals, that are not meaningful EHR users for such 
     period.
       ``(5) Posting on website.--The Secretary shall post on the 
     Internet website of the Centers for Medicare & Medicaid 
     Services, in an easily understandable format--
       ``(A) a list of the names, business addresses, and business 
     phone numbers of each qualifying MA organization receiving an 
     incentive payment under this subsection for eligible 
     hospitals described in paragraph (2); and
       ``(B) a list of the names of the eligible hospitals for 
     which such incentive payment is based.
       ``(6) Limitations on review.--There shall be no 
     administrative or judicial review under section 1869, section 
     1878, or otherwise, of--
       ``(A) the methodology and standards for determining payment 
     amounts and payment adjustments under this subsection, 
     including avoiding duplication of payments under paragraph 
     (3)(B);
       ``(B) the methodology and standards for determining 
     eligible hospitals under paragraph (2); and
       ``(C) the methodology and standards for determining a 
     meaningful EHR user under section 1886(n)(3), including 
     specification of the means of demonstrating meaningful EHR 
     use under subparagraph (C) of such section and selection of 
     measures under subparagraph (B) of such section.''.
       (d) Conforming Amendments.--
       (1) Section 1814(b) of the Social Security Act (42 U.S.C. 
     1395f(b)) is amended--
       (A) in paragraph (3), in the matter preceding subparagraph 
     (A), by inserting ``, subject to section 
     1886(d)(3)(B)(ix)(III),'' after ``then''; and
       (B) by adding at the end the following: ``For purposes of 
     applying paragraph (3), there shall be taken into account 
     incentive payments, and payment adjustments under subsection 
     (b)(3)(B)(ix) or (n) of section 1886.''.
       (2) Section 1851(i)(1) of the Social Security Act (42 
     U.S.C. 1395w-21(i)(1)) is amended by striking ``and 
     1886(h)(3)(D)'' and inserting ``1886(h)(3)(D), and 1853(m)''.
       (3) Section 1853 of the Social Security Act (42 U.S.C. 
     1395w-23), as amended by section 4101(d), is amended--
       (A) in subsection (c)--
       (i) in paragraph (1)(D)(i), by striking ``1848(o)'' and 
     inserting ``, 1848(o), and 1886(n)''; and
       (ii) in paragraph (6)(A), by inserting ``and subsections 
     (b)(3)(B)(ix) and (n) of section 1886'' after ``section 
     1848''; and
       (B) in subsection (f), by inserting ``and subsection (m)'' 
     after ``under subsection (l)''.

     SEC. 4103. TREATMENT OF PAYMENTS AND SAVINGS; IMPLEMENTATION 
                   FUNDING.

       (a) Premium Hold Harmless.--
       (1) In general.--Section 1839(a)(1) of the Social Security 
     Act (42 U.S.C. 1395r(a)(1)) is amended by adding at the end 
     the following: ``In applying this paragraph there shall not 
     be taken into account additional payments under section 
     1848(o) and section 1853(l)(3) and the Government 
     contribution under section 1844(a)(3).''.
       (2) Payment.--Section 1844(a) of such Act (42 U.S.C. 
     1395w(a)) is amended--
       (A) in paragraph (2), by striking the period at the end and 
     inserting ``; plus''; and
       (B) by adding at the end the following new paragraph:
       ``(3) a Government contribution equal to the amount of 
     payment incentives payable under sections 1848(o) and 
     1853(l)(3).''.
       (b) Medicare Improvement Fund.--Section 1898 of the Social 
     Security Act (42 U.S.C. 1395iii), as added by section 7002(a) 
     of the Supplemental Appropriations Act, 2008 (Public Law 110-
     252) and as amended by section 188(a)(2) of the Medicare 
     Improvements for Patients and Providers Act of 2008 (Public 
     Law 110-275; 122 Stat. 2589) and by section 6 of the QI 
     Program Supplemental Funding Act of 2008, is amended--
       (1) in subsection (a)--
       (A) by inserting ``medicare'' before ``fee-for-service''; 
     and
       (B) by inserting before the period at the end the 
     following: ``including, but not limited to, an increase in 
     the conversion factor under section 1848(d) to address, in 
     whole or in part, any projected shortfall in the conversion 
     factor for 2014 relative to the conversion factor for 2008 
     and adjustments to payments for items and services furnished 
     by providers of services and suppliers under such original 
     medicare fee-for-service program''; and
       (2) in subsection (b)--
       (A) in paragraph (1), by striking ``during fiscal year 
     2014,'' and all that follows and inserting the following: 
     ``during--
       ``(A) fiscal year 2014, $22,290,000,000; and
       ``(B) fiscal year 2020 and each subsequent fiscal year, the 
     Secretary's estimate, as of July 1 of the fiscal year, of the 
     aggregate reduction in expenditures under this title during 
     the preceding fiscal year directly resulting from the 
     reduction in payment amounts under sections 1848(a)(7), 
     1853(l)(4), 1853(m)(4), and 1886(b)(3)(B)(ix).''; and
       (B) by adding at the end the following new paragraph:
       ``(4) No effect on payments in subsequent years.--In the 
     case that expenditures from the Fund are applied to, or 
     otherwise affect, a payment rate for an item or service under 
     this title for a year, the payment rate for such item or 
     service shall be computed for a subsequent year as if such 
     application or effect had never occurred.''.
       (c) Implementation Funding.--In addition to funds otherwise 
     available, out of any funds in the Treasury not otherwise 
     appropriated, there are appropriated to the Secretary of 
     Health and Human Services for the Center for Medicare & 
     Medicaid Services Program Management Account, $100,000,000 
     for each of fiscal years 2009 through 2015 and $45,000,000 
     for fiscal year 2016, which shall be available for purposes 
     of carrying out the provisions of (and amendments made by) 
     this subtitle. Amounts appropriated under this subsection for 
     a fiscal year shall be available until expended.

     SEC. 4104. STUDIES AND REPORTS ON HEALTH INFORMATION 
                   TECHNOLOGY.

       (a) Study and Report on Application of EHR Payment 
     Incentives for Providers Not Receiving Other Incentive 
     Payments.--
       (1) Study.--
       (A) In general.--The Secretary of Health and Human Services 
     shall conduct a study to determine the extent to which and 
     manner in which payment incentives (such as under title XVIII 
     or XIX of the Social Security Act) and other funding for 
     purposes of implementing and using certified EHR technology 
     (as defined in section 1848(o)(4) of the Social Security Act, 
     as added by section 4101(a)) should be made available to 
     health care providers who are receiving minimal or no payment 
     incentives or other funding under this Act, under title XIII 
     of division A, under title XVIII or XIX of such Act, or 
     otherwise, for such purposes.
       (B) Details of study.--Such study shall include an 
     examination of--
       (i) the adoption rates of certified EHR technology by such 
     health care providers;
       (ii) the clinical utility of such technology by such health 
     care providers;
       (iii) whether the services furnished by such health care 
     providers are appropriate for or would benefit from the use 
     of such technology;
       (iv) the extent to which such health care providers work in 
     settings that might otherwise receive an incentive payment or 
     other funding under this Act, under title XIII of division A, 
     under title XVIII or XIX of the Social Security Act, or 
     otherwise;
       (v) the potential costs and the potential benefits of 
     making payment incentives and other funding available to such 
     health care providers; and
       (vi) any other issues the Secretary deems to be 
     appropriate.
       (2) Report.--Not later than June 30, 2010, the Secretary 
     shall submit to Congress a report on the findings and 
     conclusions of the study conducted under paragraph (1).
       (b) Study and Report on Availability of Open Source Health 
     Information Technology Systems.--
       (1) Study.--
       (A) In general.--The Secretary of Health and Human Services 
     shall, in consultation with the Under Secretary for Health of 
     the Veterans Health Administration, the Director of the 
     Indian Health Service, the Secretary of Defense, the Director 
     of the Agency for Healthcare Research and Quality, the 
     Administrator of the Health Resources and Services 
     Administration, and the Chairman of the Federal 
     Communications Commission, conduct a study on--
       (i) the current availability of open source health 
     information technology systems to Federal safety net 
     providers (including small, rural providers);
       (ii) the total cost of ownership of such systems in 
     comparison to the cost of proprietary commercial products 
     available;

[[Page 3989]]

       (iii) the ability of such systems to respond to the needs 
     of, and be applied to, various populations (including 
     children and disabled individuals); and
       (iv) the capacity of such systems to facilitate 
     interoperability.
       (B) Considerations.--In conducting the study under 
     subparagraph (A), the Secretary of Health and Human Services 
     shall take into account the circumstances of smaller health 
     care providers, health care providers located in rural or 
     other medically underserved areas, and safety net providers 
     that deliver a significant level of health care to uninsured 
     individuals, Medicaid beneficiaries, SCHIP beneficiaries, and 
     other vulnerable individuals.
       (2) Report.--Not later than October 1, 2010, the Secretary 
     of Health and Human Services shall submit to Congress a 
     report on the findings and the conclusions of the study 
     conducted under paragraph (1), together with recommendations 
     for such legislation and administrative action as the 
     Secretary determines appropriate.

                    Subtitle B--Medicaid Incentives

     SEC. 4201. MEDICAID PROVIDER HIT ADOPTION AND OPERATION 
                   PAYMENTS; IMPLEMENTATION FUNDING.

       (a) In General.--Section 1903 of the Social Security Act 
     (42 U.S.C. 1396b) is amended--
       (1) in subsection (a)(3)--
       (A) by striking ``and'' at the end of subparagraph (D);
       (B) by striking ``plus'' at the end of subparagraph (E) and 
     inserting ``and''; and
       (C) by adding at the end the following new subparagraph:
       ``(F)(i) 100 percent of so much of the sums expended during 
     such quarter as are attributable to payments to Medicaid 
     providers described in subsection (t)(1) to encourage the 
     adoption and use of certified EHR technology; and
       ``(ii) 90 percent of so much of the sums expended during 
     such quarter as are attributable to payments for reasonable 
     administrative expenses related to the administration of 
     payments described in clause (i) if the State meets the 
     condition described in subsection (t)(9); plus''; and
       (2) by inserting after subsection (s) the following new 
     subsection:
       ``(t)(1) For purposes of subsection (a)(3)(F), the payments 
     described in this paragraph to encourage the adoption and use 
     of certified EHR technology are payments made by the State in 
     accordance with this subsection--
       ``(A) to Medicaid providers described in paragraph (2)(A) 
     not in excess of 85 percent of net average allowable costs 
     (as defined in paragraph (3)(E)) for certified EHR technology 
     (and support services including maintenance and training that 
     is for, or is necessary for the adoption and operation of, 
     such technology) with respect to such providers; and
       ``(B) to Medicaid providers described in paragraph (2)(B) 
     not in excess of the maximum amount permitted under paragraph 
     (5) for the provider involved.
       ``(2) In this subsection and subsection (a)(3)(F), the term 
     `Medicaid provider' means--
       ``(A) an eligible professional (as defined in paragraph 
     (3)(B))--
       ``(i) who is not hospital-based and has at least 30 percent 
     of the professional's patient volume (as estimated in 
     accordance with a methodology established by the Secretary) 
     attributable to individuals who are receiving medical 
     assistance under this title;
       ``(ii) who is not described in clause (i), who is a 
     pediatrician, who is not hospital-based, and who has at least 
     20 percent of the professional's patient volume (as estimated 
     in accordance with a methodology established by the 
     Secretary) attributable to individuals who are receiving 
     medical assistance under this title; and
       ``(iii) who practices predominantly in a Federally 
     qualified health center or rural health clinic and has at 
     least 30 percent of the professional's patient volume (as 
     estimated in accordance with a methodology established by the 
     Secretary) attributable to needy individuals (as defined in 
     paragraph (3)(F)); and
       ``(B)(i) a children's hospital, or
       ``(ii) an acute-care hospital that is not described in 
     clause (i) and that has at least 10 percent of the hospital's 
     patient volume (as estimated in accordance with a methodology 
     established by the Secretary) attributable to individuals who 
     are receiving medical assistance under this title.

     An eligible professional shall not qualify as a Medicaid 
     provider under this subsection unless any right to payment 
     under sections 1848(o) and 1853(l) with respect to the 
     eligible professional has been waived in a manner specified 
     by the Secretary. For purposes of calculating patient volume 
     under subparagraph (A)(iii), insofar as it is related to 
     uncompensated care, the Secretary may require the adjustment 
     of such uncompensated care data so that it would be an 
     appropriate proxy for charity care, including a downward 
     adjustment to eliminate bad debt data from uncompensated 
     care. In applying subparagraphs (A) and (B)(ii), the 
     methodology established by the Secretary for patient volume 
     shall include individuals enrolled in a Medicaid managed care 
     plan (under section 1903(m) or section 1932).
       ``(3) In this subsection and subsection (a)(3)(F):
       ``(A) The term `certified EHR technology' means a qualified 
     electronic health record (as defined in 3000(13) of the 
     Public Health Service Act) that is certified pursuant to 
     section 3001(c)(5) of such Act as meeting standards adopted 
     under section 3004 of such Act that are applicable to the 
     type of record involved (as determined by the Secretary, such 
     as an ambulatory electronic health record for office-based 
     physicians or an inpatient hospital electronic health record 
     for hospitals).
       ``(B) The term `eligible professional' means a--
       ``(i) physician;
       ``(ii) dentist;
       ``(iii) certified nurse mid-wife;
       ``(iv) nurse practitioner; and
       ``(v) physician assistant insofar as the assistant is 
     practicing in a rural health clinic that is led by a 
     physician assistant or is practicing in a Federally qualified 
     health center that is so led.
       ``(C) The term `average allowable costs' means, with 
     respect to certified EHR technology of Medicaid providers 
     described in paragraph (2)(A) for--
       ``(i) the first year of payment with respect to such a 
     provider, the average costs for the purchase and initial 
     implementation or upgrade of such technology (and support 
     services including training that is for, or is necessary for 
     the adoption and initial operation of, such technology) for 
     such providers, as determined by the Secretary based upon 
     studies conducted under paragraph (4)(C); and
       ``(ii) a subsequent year of payment with respect to such a 
     provider, the average costs not described in clause (i) 
     relating to the operation, maintenance, and use of such 
     technology for such providers, as determined by the Secretary 
     based upon studies conducted under paragraph (4)(C).
       ``(D) The term `hospital-based' means, with respect to an 
     eligible professional, a professional (such as a pathologist, 
     anesthesiologist, or emergency physician) who furnishes 
     substantially all of the individual's professional services 
     in a hospital setting (whether inpatient or outpatient) and 
     through the use of the facilities and equipment, including 
     qualified electronic health records, of the hospital. The 
     determination of whether an eligible professional is a 
     hospital-based eligible professional shall be made on the 
     basis of the site of service (as defined by the Secretary) 
     and without regard to any employment or billing arrangement 
     between the eligible professional and any other provider.
       ``(E) The term `net average allowable costs' means, with 
     respect to a Medicaid provider described in paragraph (2)(A), 
     average allowable costs reduced by any payment that is made 
     to such Medicaid provider from any other source (other than 
     under this subsection or by a State or local government) that 
     is directly attributable to payment for certified EHR 
     technology or support services described in subparagraph (C).
       ``(F) The term `needy individual' means, with respect to a 
     Medicaid provider, an individual--
       ``(i) who is receiving assistance under this title;
       ``(ii) who is receiving assistance under title XXI;
       ``(iii) who is furnished uncompensated care by the 
     provider; or
       ``(iv) for whom charges are reduced by the provider on a 
     sliding scale basis based on an individual's ability to pay.
       ``(4)(A) With respect to a Medicaid provider described in 
     paragraph (2)(A), subject to subparagraph (B), in no case 
     shall--
       ``(i) the net average allowable costs under this subsection 
     for the first year of payment (which may not be later than 
     2016), which is intended to cover the costs described in 
     paragraph (3)(C)(i), exceed $25,000 (or such lesser amount as 
     the Secretary determines based on studies conducted under 
     subparagraph (C));
       ``(ii) the net average allowable costs under this 
     subsection for a subsequent year of payment, which is 
     intended to cover costs described in paragraph (3)(C)(ii), 
     exceed $10,000; and
       ``(iii) payments be made for costs described in clause (ii) 
     after 2021 or over a period of longer than 5 years.
       ``(B) In the case of Medicaid provider described in 
     paragraph (2)(A)(ii), the dollar amounts specified in 
     subparagraph (A) shall be \2/3\ of the dollar amounts 
     otherwise specified.
       ``(C) For the purposes of determining average allowable 
     costs under this subsection, the Secretary shall study the 
     average costs to Medicaid providers described in paragraph 
     (2)(A) of purchase and initial implementation and upgrade of 
     certified EHR technology described in paragraph (3)(C)(i) and 
     the average costs to such providers of operations, 
     maintenance, and use of such technology described in 
     paragraph (3)(C)(ii). In determining such costs for such 
     providers, the Secretary may utilize studies of such amounts 
     submitted by States.
       ``(5)(A) In no case shall the payments described in 
     paragraph (1)(B) with respect to a Medicaid provider 
     described in paragraph (2)(B) exceed--
       ``(i) in the aggregate the product of--
       ``(I) the overall hospital EHR amount for the provider 
     computed under subparagraph (B); and
       ``(II) the Medicaid share for such provider computed under 
     subparagraph (C);
       ``(ii) in any year 50 percent of the product described in 
     clause (i); and
       ``(iii) in any 2-year period 90 percent of such product.
       ``(B) For purposes of this paragraph, the overall hospital 
     EHR amount, with respect to a Medicaid provider, is the sum 
     of the applicable amounts specified in section 1886(n)(2)(A) 
     for such provider for the first 4 payment years (as estimated 
     by the Secretary) determined as if the Medicare share 
     specified in clause (ii) of such section were 1. The 
     Secretary shall establish, in consultation with the State, 
     the overall hospital EHR amount for each such Medicaid 
     provider

[[Page 3990]]

     eligible for payments under paragraph (1)(B). For purposes of 
     this subparagraph in computing the amounts under section 
     1886(n)(2)(C) for payment years after the first payment year, 
     the Secretary shall assume that in subsequent payment years 
     discharges increase at the average annual rate of growth of 
     the most recent 3 years for which discharge data are 
     available per year.
       ``(C) The Medicaid share computed under this subparagraph, 
     for a Medicaid provider for a period specified by the 
     Secretary, shall be calculated in the same manner as the 
     Medicare share under section 1886(n)(2)(D) for such a 
     hospital and period, except that there shall be substituted 
     for the numerator under clause (i) of such section the amount 
     that is equal to the number of inpatient-bed-days (as 
     established by the Secretary) which are attributable to 
     individuals who are receiving medical assistance under this 
     title and who are not described in section 1886(n)(2)(D)(i). 
     In computing inpatient-bed-days under the previous sentence, 
     the Secretary shall take into account inpatient-bed-days 
     attributable to inpatient-bed-days that are paid for 
     individuals enrolled in a Medicaid managed care plan (under 
     section 1903(m) or section 1932).
       ``(D) In no case may the payments described in paragraph 
     (1)(B) with respect to a Medicaid provider described in 
     paragraph (2)(B) be paid--
       ``(i) for any year beginning after 2016 unless the provider 
     has been provided payment under paragraph (1)(B) for the 
     previous year; and
       ``(ii) over a period of more than 6 years of payment.
       ``(6) Payments described in paragraph (1) are not in 
     accordance with this subsection unless the following 
     requirements are met:
       ``(A)(i) The State provides assurances satisfactory to the 
     Secretary that amounts received under subsection (a)(3)(F) 
     with respect to payments to a Medicaid provider are paid, 
     subject to clause (ii), directly to such provider (or to an 
     employer or facility to which such provider has assigned 
     payments) without any deduction or rebate.
       ``(ii) Amounts described in clause (i) may also be paid to 
     an entity promoting the adoption of certified EHR technology, 
     as designated by the State, if participation in such a 
     payment arrangement is voluntary for the eligible 
     professional involved and if such entity does not retain more 
     than 5 percent of such payments for costs not related to 
     certified EHR technology (and support services including 
     maintenance and training) that is for, or is necessary for 
     the operation of, such technology.
       ``(B) A Medicaid provider described in paragraph (2)(A) is 
     responsible for payment of the remaining 15 percent of the 
     net average allowable cost.
       ``(C)(i) Subject to clause (ii), with respect to payments 
     to a Medicaid provider--
       ``(I) for the first year of payment to the Medicaid 
     provider under this subsection, the Medicaid provider 
     demonstrates that it is engaged in efforts to adopt, 
     implement, or upgrade certified EHR technology; and
       ``(II) for a year of payment, other than the first year of 
     payment to the Medicaid provider under this subsection, the 
     Medicaid provider demonstrates meaningful use of certified 
     EHR technology through a means that is approved by the State 
     and acceptable to the Secretary, and that may be based upon 
     the methodologies applied under section 1848(o) or 1886(n).
       ``(ii) In the case of a Medicaid provider who has completed 
     adopting, implementing, or upgrading such technology prior to 
     the first year of payment to the Medicaid provider under this 
     subsection, clause (i)(I) shall not apply and clause (i)(II) 
     shall apply to each year of payment to the Medicaid provider 
     under this subsection, including the first year of payment.
       ``(D) To the extent specified by the Secretary, the 
     certified EHR technology is compatible with State or Federal 
     administrative management systems.
     For purposes of subparagraph (B), a Medicaid provider 
     described in paragraph (2)(A) may accept payments for the 
     costs described in such subparagraph from a State or local 
     government. For purposes of subparagraph (C), in establishing 
     the means described in such subparagraph, which may include 
     clinical quality reporting to the State, the State shall 
     ensure that populations with unique needs, such as children, 
     are appropriately addressed.
       ``(7) With respect to Medicaid providers described in 
     paragraph (2)(A), the Secretary shall ensure coordination of 
     payment with respect to such providers under sections 1848(o) 
     and 1853(l) and under this subsection to assure no 
     duplication of funding. Such coordination shall include, to 
     the extent practicable, a data matching process between State 
     Medicaid agencies and the Centers for Medicare & Medicaid 
     Services using national provider identifiers. For such 
     purposes, the Secretary may require the submission of such 
     data relating to payments to such Medicaid providers as the 
     Secretary may specify.
       ``(8) In carrying out paragraph (6)(C), the State and 
     Secretary shall seek, to the maximum extent practicable, to 
     avoid duplicative requirements from Federal and State 
     governments to demonstrate meaningful use of certified EHR 
     technology under this title and title XVIII. In doing so, the 
     Secretary may deem satisfaction of requirements for such 
     meaningful use for a payment year under title XVIII to be 
     sufficient to qualify as meaningful use under this 
     subsection. The Secretary may also specify the reporting 
     periods under this subsection in order to carry out this 
     paragraph.
       ``(9) In order to be provided Federal financial 
     participation under subsection (a)(3)(F)(ii), a State must 
     demonstrate to the satisfaction of the Secretary, that the 
     State--
       ``(A) is using the funds provided for the purposes of 
     administering payments under this subsection, including 
     tracking of meaningful use by Medicaid providers;
       ``(B) is conducting adequate oversight of the program under 
     this subsection, including routine tracking of meaningful use 
     attestations and reporting mechanisms; and
       ``(C) is pursuing initiatives to encourage the adoption of 
     certified EHR technology to promote health care quality and 
     the exchange of health care information under this title, 
     subject to applicable laws and regulations governing such 
     exchange.
       ``(10) The Secretary shall periodically submit reports to 
     the Committee on Energy and Commerce of the House of 
     Representatives and the Committee on Finance of the Senate on 
     status, progress, and oversight of payments described in 
     paragraph (1), including steps taken to carry out paragraph 
     (7). Such reports shall also describe the extent of adoption 
     of certified EHR technology among Medicaid providers 
     resulting from the provisions of this subsection and any 
     improvements in health outcomes, clinical quality, or 
     efficiency resulting from such adoption.''.
       (b) Implementation Funding.--In addition to funds otherwise 
     available, out of any funds in the Treasury not otherwise 
     appropriated, there are appropriated to the Secretary of 
     Health and Human Services for the Centers for Medicare & 
     Medicaid Services Program Management Account, $40,000,000 for 
     each of fiscal years 2009 through 2015 and $20,000,000 for 
     fiscal year 2016, which shall be available for purposes of 
     carrying out the provisions of (and the amendments made by) 
     this section. Amounts appropriated under this subsection for 
     a fiscal year shall be available until expended.

             Subtitle C--Miscellaneous Medicare Provisions

     SEC. 4301. MORATORIA ON CERTAIN MEDICARE REGULATIONS.

       (a) Delay in Phase Out of Medicare Hospice Budget 
     Neutrality Adjustment Factor During Fiscal Year 2009.--
     Notwithstanding any other provision of law, including the 
     final rule published on August 8, 2008, 73 Federal Register 
     46464 et seq., relating to Medicare Program; Hospice Wage 
     Index for Fiscal Year 2009, the Secretary of Health and Human 
     Services shall not phase out or eliminate the budget 
     neutrality adjustment factor in the Medicare hospice wage 
     index before October 1, 2009, and the Secretary shall 
     recompute and apply the final Medicare hospice wage index for 
     fiscal year 2009 as if there had been no reduction in the 
     budget neutrality adjustment factor.
       (b) Non-Application of Phased-Out Indirect Medical 
     Education (IME) Adjustment Factor for Fiscal Year 2009.--
       (1) In general.--Section 412.322 of title 42, Code of 
     Federal Regulations, shall be applied without regard to 
     paragraph (c) of such section, and the Secretary of Health 
     and Human Services shall recompute payments for discharges 
     occurring on or after October 1, 2008, as if such paragraph 
     had never been in effect.
       (2) No effect on subsequent years.--Nothing in paragraph 
     (1) shall be construed as having any effect on the 
     application of paragraph (d) of section 412.322 of title 42, 
     Code of Federal Regulations.
       (c) Funding for Implementation.--In addition to funds 
     otherwise available, for purposes of implementing the 
     provisions of subsections (a) and (b), including costs 
     incurred in reprocessing claims in carrying out such 
     provisions, the Secretary of Health and Human Services shall 
     provide for the transfer from the Federal Hospital Insurance 
     Trust Fund established under section 1817 of the Social 
     Security Act (42 U.S.C. 1395i) to the Centers for Medicare & 
     Medicaid Services Program Management Account of $2,000,000 
     for fiscal year 2009.

     SEC. 4302. LONG-TERM CARE HOSPITAL TECHNICAL CORRECTIONS.

       (a) Payment.--Subsection (c) of section 114 of the 
     Medicare, Medicaid, and SCHIP Extension Act of 2007 (Public 
     Law 110-173) is amended--
       (1) in paragraph (1)--
       (A) by amending the heading to read as follows: ``Delay in 
     application of 25 percent patient threshold payment 
     adjustment'';
       (B) by striking ``the date of the enactment of this Act'' 
     and inserting ``July 1, 2007,''; and
       (C) in subparagraph (A), by inserting ``or to a long-term 
     care hospital, or satellite facility, that as of December 29, 
     2007, was co-located with an entity that is a provider-based, 
     off-campus location of a subsection (d) hospital which did 
     not provide services payable under section 1886(d) of the 
     Social Security Act at the off-campus location'' after 
     ``freestanding long-term care hospitals''; and
       (2) in paragraph (2)--
       (A) in subparagraph (B)(ii), by inserting ``or that is 
     described in section 412.22(h)(3)(i) of such title'' before 
     the period; and
       (B) in subparagraph (C), by striking ``the date of the 
     enactment of this Act'' and inserting ``October 1, 2007 (or 
     July 1, 2007, in the case of a satellite facility described 
     in section 412.22(h)(3)(i) of title 42, Code of Federal 
     Regulations)''.
       (b) Moratorium.--Subsection (d)(3)(A) of such section is 
     amended by striking ``if the hospital or facility'' and 
     inserting ``if the hospital or facility obtained a 
     certificate of need for an increase in beds that is in a 
     State for which such certificate of need is required and that 
     was issued on or after April 1, 2005, and before December 29, 
     2007, or if the hospital or facility''.

[[Page 3991]]

       (c) Effective Date.--The amendments made by this section 
     shall be effective and apply as if included in the enactment 
     of the Medicare, Medicaid, and SCHIP Extension Act of 2007 
     (Public Law 110-173).

                      TITLE V--STATE FISCAL RELIEF

     SEC. 5000. PURPOSES; TABLE OF CONTENTS.

       (a) Purposes.--The purposes of this title are as follows:
       (1) To provide fiscal relief to States in a period of 
     economic downturn.
       (2) To protect and maintain State Medicaid programs during 
     a period of economic downturn, including by helping to avert 
     cuts to provider payment rates and benefits or services, and 
     to prevent constrictions of income eligibility requirements 
     for such programs, but not to promote increases in such 
     requirements.
       (b) Table of Contents.--The table of contents for this 
     title is as follows:

                      TITLE V--STATE FISCAL RELIEF

Sec. 5000. Purposes; table of contents.
Sec. 5001. Temporary increase of Medicaid FMAP.
Sec. 5002. Temporary increase in DSH allotments during recession.
Sec. 5003. Extension of moratoria on certain Medicaid final 
              regulations.
Sec. 5004. Extension of transitional medical assistance (TMA).
Sec. 5005. Extension of the qualifying individual (QI) program.
Sec. 5006. Protections for Indians under Medicaid and CHIP.
Sec. 5007. Funding for oversight and implementation.
Sec. 5008. GAO study and report regarding State needs during periods of 
              national economic downturn.

     SEC. 5001. TEMPORARY INCREASE OF MEDICAID FMAP.

       (a) Permitting Maintenance of Fmap.--Subject to subsections 
     (e), (f), and (g), if the FMAP determined without regard to 
     this section for a State for--
       (1) fiscal year 2009 is less than the FMAP as so determined 
     for fiscal year 2008, the FMAP for the State for fiscal year 
     2008 shall be substituted for the State's FMAP for fiscal 
     year 2009, before the application of this section;
       (2) fiscal year 2010 is less than the FMAP as so determined 
     for fiscal year 2008 or fiscal year 2009 (after the 
     application of paragraph (1)), the greater of such FMAP for 
     the State for fiscal year 2008 or fiscal year 2009 shall be 
     substituted for the State's FMAP for fiscal year 2010, before 
     the application of this section; and
       (3) fiscal year 2011 is less than the FMAP as so determined 
     for fiscal year 2008, fiscal year 2009 (after the application 
     of paragraph (1)), or fiscal year 2010 (after the application 
     of paragraph (2)), the greatest of such FMAP for the State 
     for fiscal year 2008, fiscal year 2009, or fiscal year 2010 
     shall be substituted for the State's FMAP for fiscal year 
     2011, before the application of this section, but only for 
     the first calendar quarter in fiscal year 2011.
       (b) General 6.2 Percentage Point Increase.--
       (1) In general.--Subject to subsections (e), (f), and (g) 
     and paragraph (2), for each State for calendar quarters 
     during the recession adjustment period (as defined in 
     subsection (h)(3)), the FMAP (after the application of 
     subsection (a)) shall be increased (without regard to any 
     limitation otherwise specified in section 1905(b) of the 
     Social Security Act (42 U.S.C. 1396d(b))) by 6.2 percentage 
     points.
       (2) Special election for territories.--In the case of a 
     State that is not one of the 50 States or the District of 
     Columbia, paragraph (1) shall only apply if the State makes a 
     one-time election, in a form and manner specified by the 
     Secretary and for the entire recession adjustment period, to 
     apply the increase in FMAP under paragraph (1) and a 15 
     percent increase under subsection (d) instead of applying a 
     30 percent increase under subsection (d).
       (c) Additional Relief Based on Increase in Unemployment.--
       (1) In general.--Subject to subsections (e), (f), and (g), 
     if a State is a qualifying State under paragraph (2) for a 
     calendar quarter occurring during the recession adjustment 
     period, the FMAP for the State shall be further increased by 
     the number of percentage points equal to the product of--
       (A) the State percentage applicable for the State under 
     section 1905(b) of the Social Security Act (42 U.S.C. 
     1396d(b)) after the application of subsection (a) and after 
     the application of \1/2\ of the increase under subsection 
     (b); and
       (B) the applicable percent determined in paragraph (3) for 
     the calendar quarter (or, if greater, for a previous such 
     calendar quarter).
       (2) Qualifying criteria.--
       (A) In general.--For purposes of paragraph (1), a State 
     qualifies for additional relief under this subsection for a 
     calendar quarter occurring during the recession adjustment 
     period if the State is 1 of the 50 States or the District of 
     Columbia and the State satisfies any of the following 
     criteria for the quarter:
       (i) The State unemployment increase percentage (as defined 
     in paragraph (4)) for the quarter is at least 1.5 percentage 
     points but less than 2.5 percentage points.
       (ii) The State unemployment increase percentage for the 
     quarter is at least 2.5 percentage points but less than 3.5 
     percentage points.
       (iii) The State unemployment increase percentage for the 
     quarter is at least 3.5 percentage points.
       (B) Maintenance of status.--If a State qualifies for 
     additional relief under this subsection for a calendar 
     quarter, it shall be deemed to have qualified for such relief 
     for each subsequent calendar quarter ending before July 1, 
     2010.
       (3) Applicable percent.--
       (A) In general.--For purposes of paragraph (1), subject to 
     subparagraph (B), the applicable percent is--
       (i) 5.5 percent, if the State satisfies the criteria 
     described in paragraph (2)(A)(i) for the calendar quarter;
       (ii) 8.5 percent if the State satisfies the criteria 
     described in paragraph (2)(A)(ii) for the calendar quarter; 
     and
       (iii) 11.5 percent if the State satisfies the criteria 
     described in paragraph (2)(A)(iii) for the calendar quarter.
       (B) Maintenance of higher applicable percent.--
       (i) Hold harmless period.--If the percent applied to a 
     State under subparagraph (A) for any calendar quarter in the 
     recession adjustment period beginning on or after January 1, 
     2009, and ending before July 1, 2010, (determined without 
     regard to this subparagraph) is less than the percent applied 
     for the preceding quarter (as so determined), the higher 
     applicable percent shall continue in effect for each 
     subsequent calendar quarter ending before July 1, 2010.
       (ii) Notice of lower applicable percent.--The Secretary 
     shall notify a State at least 60 days prior to applying any 
     lower applicable percent to the State under this paragraph.
       (4) Computation of state unemployment increase 
     percentage.--
       (A) In general.--In this subsection, the ``State 
     unemployment increase percentage'' for a State for a calendar 
     quarter is equal to the number of percentage points (if any) 
     by which--
       (i) the average monthly unemployment rate for the State for 
     months in the most recent previous 3-consecutive-month period 
     for which data are available, subject to subparagraph (C); 
     exceeds
       (ii) the lowest average monthly unemployment rate for the 
     State for any 3-consecutive-month period preceding the period 
     described in clause (i) and beginning on or after January 1, 
     2006.
       (B) Average monthly unemployment rate defined.--In this 
     paragraph, the term ``average monthly unemployment rate'' 
     means the average of the monthly number unemployed, divided 
     by the average of the monthly civilian labor force, 
     seasonally adjusted, as determined based on the most recent 
     monthly publications of the Bureau of Labor Statistics of the 
     Department of Labor.
       (C) Special rule.--With respect to--
       (i) the first 2 calendar quarters of the recession 
     adjustment period, the most recent previous 3-consecutive-
     month period described in subparagraph (A)(i) shall be the 3-
     consecutive-month period beginning with October 2008; and
       (ii) the last 2 calendar quarters of the recession 
     adjustment period, the most recent previous 3-consecutive-
     month period described in such subparagraph shall be the 3-
     consecutive-month period beginning with December 2009, or, if 
     it results in a higher applicable percent under paragraph 
     (3), the 3-consecutive-month period beginning with January 
     2010.
       (d) Increase in Cap on Medicaid Payments to Territories.--
     Subject to subsections (f) and (g), with respect to entire 
     fiscal years occurring during the recession adjustment period 
     and with respect to fiscal years only a portion of which 
     occurs during such period (and in proportion to the portion 
     of the fiscal year that occurs during such period), the 
     amounts otherwise determined for Puerto Rico, the Virgin 
     Islands, Guam, the Northern Mariana Islands, and American 
     Samoa under subsections (f) and (g) of section 1108 of the 
     Social Security Act (42 6 U.S.C. 1308) shall each be 
     increased by 30 percent (or, in the case of an election under 
     subsection (b)(2), 15 percent). In the case of such an 
     election by a territory, subsection (a)(1) of such section 
     shall be applied without regard to any increase in payment 
     made to the territory under part E of title IV of such Act 
     that is attributable to the increase in FMAP effected under 
     subsection (b) for the territory.
       (e) Scope of Application.--The increases in the FMAP for a 
     State under this section shall apply for purposes of title 
     XIX of the Social Security Act and shall not apply with 
     respect to--
       (1) disproportionate share hospital payments described in 
     section 1923 of such Act (42 U.S.C. 1396r-4);
       (2) payments under title IV of such Act (42 U.S.C. 601 et 
     seq.) (except that the increases under subsections (a) and 
     (b) shall apply to payments under part E of title IV of such 
     Act (42 U.S.C. 670 et seq.) and, for purposes of the 
     application of this section to the District of Columbia, 
     payments under such part shall be deemed to be made on the 
     basis of the FMAP applied with respect to such District for 
     purposes of title XIX and as increased under subsection (b));
       (3) payments under title XXI of such Act (42 U.S.C. 1397aa 
     et seq.);
       (4) any payments under title XIX of such Act that are based 
     on the enhanced FMAP described in section 2105(b) of such Act 
     (42 U.S.C. 1397ee(b)); or
       (5) any payments under title XIX of such Act that are 
     attributable to expenditures for medical assistance provided 
     to individuals made eligible under a State plan under title 
     XIX of the Social Security Act (including under any waiver 
     under such title or under section 1115 of such Act (42 U.S.C. 
     1315)) because of income standards (expressed as a percentage 
     of the poverty line) for eligibility for medical assistance 
     that are higher than the income standards (as so expressed) 
     for such eligibility as in effect on July 1, 2008, (including 
     as such standards were proposed to be

[[Page 3992]]

     in effect under a State law enacted but not effective as of 
     such date or a State plan amendment or waiver request under 
     title XIX of such Act that was pending approval on such 
     date).
       (f) State Ineligibility; Limitation; Special Rules.--
       (1) Maintenance of eligibility requirements.--
       (A) In general.--Subject to subparagraphs (B) and (C), a 
     State is not eligible for an increase in its FMAP under 
     subsection (a), (b), or (c), or an increase in a cap amount 
     under subsection (d), if eligibility standards, 
     methodologies, or procedures under its State plan under title 
     XIX of the Social Security Act (including any waiver under 
     such title or under section 1115 of such Act (42 U.S.C. 
     1315)) are more restrictive than the eligibility standards, 
     methodologies, or procedures, respectively, under such plan 
     (or waiver) as in effect on July 1, 2008.
       (B) State reinstatement of eligibility permitted.--Subject 
     to subparagraph (C), a State that has restricted eligibility 
     standards, methodologies, or procedures under its State plan 
     under title XIX of the Social Security Act (including any 
     waiver under such title or under section 1115 of such Act (42 
     U.S.C. 1315)) after July 1, 2008, is no longer ineligible 
     under subparagraph (A) beginning with the first calendar 
     quarter in which the State has reinstated eligibility 
     standards, methodologies, or procedures that are no more 
     restrictive than the eligibility standards, methodologies, or 
     procedures, respectively, under such plan (or waiver) as in 
     effect on July 1, 2008.
       (C) Special rules.--A State shall not be ineligible under 
     subparagraph (A)--
       (i) for the calendar quarters before July 1, 2009, on the 
     basis of a restriction that was applied after July 1, 2008, 
     and before the date of the enactment of this Act, if the 
     State prior to July 1, 2009, has reinstated eligibility 
     standards, methodologies, or procedures that are no more 
     restrictive than the eligibility standards, methodologies, or 
     procedures, respectively, under such plan (or waiver) as in 
     effect on July 1, 2008; or
       (ii) on the basis of a restriction that was directed to be 
     made under State law as in effect on July 1, 2008, and would 
     have been in effect as of such date, but for a delay in the 
     effective date of a waiver under section 1115 of such Act 
     with respect to such restriction.
       (2) Compliance with prompt pay requirements.--
       (A) Application to practitioners.--
       (i) In general.--Subject to the succeeding provisions of 
     this subparagraph, no State shall be eligible for an 
     increased FMAP rate as provided under this section for any 
     claim received by a State from a practitioner subject to the 
     terms of section 1902(a)(37)(A) of the Social Security Act 
     (42 U.S.C. 1396a(a)(37)(A)) for such days during any period 
     in which that State has failed to pay claims in accordance 
     with such section as applied under title XIX of such Act.
       (ii) Reporting requirement.--Each State shall report to the 
     Secretary, on a quarterly basis, its compliance with the 
     requirements of clause (i) as such requirements pertain to 
     claims made for covered services during each month of the 
     preceding quarter.
       (iii) Waiver authority.--The Secretary may waive the 
     application of clause (i) to a State, or the reporting 
     requirement imposed under clause (ii), during any period in 
     which there are exigent circumstances, including natural 
     disasters, that prevent the timely processing of claims or 
     the submission of such a report.
       (iv) Application to claims.--Clauses (i) and (ii) shall 
     only apply to claims made for covered services after the date 
     of enactment of this Act.
       (B) Application to nursing facilities and hospitals.--
       (i) In general.--Subject to clause (ii), the provisions of 
     subparagraph (A) shall apply with respect to a nursing 
     facility or hospital, insofar as it is paid under title XIX 
     of the Social Security Act on the basis of submission of 
     claims, in the same or similar manner (but within the same 
     timeframe) as such provisions apply to practitioners 
     described in such subparagraph.
       (ii) Grace period.--Notwithstanding clause (i), no period 
     of ineligibility shall be imposed against a State prior to 
     June 1, 2009, on the basis of the State failing to pay a 
     claim in accordance with such clause.
       (3) State's application toward rainy day fund.--A State is 
     not eligible for an increase in its FMAP under subsection (b) 
     or (c), or an increase in a cap amount under subsection (d), 
     if any amounts attributable (directly or indirectly) to such 
     increase are deposited or credited into any reserve or rainy 
     day fund of the State.
       (4) No waiver authority.--Except as provided in paragraph 
     (2)(A)(iii), the Secretary may not waive the application of 
     this subsection or subsection (g) under section 1115 of the 
     Social Security Act or otherwise.
       (5) Limitation of fmap to 100 percent.--In no case shall an 
     increase in FMAP under this section result in an FMAP that 
     exceeds 100 percent.
       (6) Treatment of certain expenditures.--With respect to 
     expenditures described in section 2105(a)(1)(B) of the Social 
     Security Act (42 U.S.C. 1397ee(a)(1)(B)), as in effect before 
     April 1, 2009, that are made during the period beginning on 
     October 1, 2008, and ending on March 31, 2009, any additional 
     Federal funds that are paid to a State as a result of this 
     section that are attributable to such expenditures shall not 
     be counted against any allotment under section 2104 of such 
     Act (42 U.S.C. 1397dd).
       (g) Requirements.--
       (1) State reports.--Each State that is paid additional 
     Federal funds as a result of this section shall, not later 
     than September 30, 2011, submit a report to the Secretary, in 
     such form and such manner as the Secretary shall determine, 
     regarding how the additional Federal funds were expended.
       (2) Additional requirement for certain states.--In the case 
     of a State that requires political subdivisions within the 
     State to contribute toward the non-Federal share of 
     expenditures under the State Medicaid plan required under 
     section 1902(a)(2) of the Social Security Act (42 U.S.C. 
     1396a(a)(2)), the State is not eligible for an increase in 
     its FMAP under subsection (b) or (c), or an increase in a cap 
     amount under subsection (d), if it requires that such 
     political subdivisions pay for quarters during the recession 
     adjustment period a greater percentage of the non-Federal 
     share of such expenditures, or a greater percentage of the 
     non-Federal share of payments under section 1923, than the 
     respective percentage that would have been required by the 
     State under such plan on September 30, 2008, prior to 
     application of this section.
       (h) Definitions.--In this section, except as otherwise 
     provided:
       (1) FMAP.--The term ``FMAP'' means the Federal medical 
     assistance percentage, as defined in section 1905(b) of the 
     Social Security Act (42 U.S.C. 1396d(b)), as determined 
     without regard to this section except as otherwise specified.
       (2) Poverty line.--The term ``poverty line'' has the 
     meaning given such term in section 673(2) of the Community 
     Services Block Grant Act (42 U.S.C. 9902(2)), including any 
     revision required by such section.
       (3) Recession adjustment period.--The term ``recession 
     adjustment period'' means the period beginning on October 1, 
     2008, and ending on December 31, 2010.
       (4) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       (5) State.--The term ``State'' has the meaning given such 
     term in section 1101(a)(1) of the Social Security Act (42 
     U.S.C. 1301(a)(1)) for purposes of title XIX of the Social 
     Security Act (42 U.S.C. 1396 et seq.).
       (i) Sunset.--This section shall not apply to items and 
     services furnished after the end of the recession adjustment 
     period.
       (j) Limitation on FMAP Change.--The increase in FMAP 
     effected under section 614 of the Children's Health Insurance 
     Program Reauthorization Act of 2009 shall not apply in the 
     computation of the enhanced FMAP under title XXI or XIX of 
     the Social Security Act for any period (notwithstanding 
     subsection (i)).

     SEC. 5002. TEMPORARY INCREASE IN DSH ALLOTMENTS DURING 
                   RECESSION.

       Section 1923(f)(3) of the Social Security Act (42 U.S.C. 
     1396r-4(f)(3)) is amended--
       (1) in subparagraph (A), by striking ``paragraph (6)'' and 
     inserting ``paragraph (6) and subparagraph (E)''; and
       (2) by adding at the end the following new subparagraph:
       ``(E) Temporary increase in allotments during recession.--
       ``(i) In general.--Subject to clause (ii), the DSH 
     allotment for any State--

       ``(I) for fiscal year 2009 is equal to 102.5 percent of the 
     DSH allotment that would be determined under this paragraph 
     for the State for fiscal year 2009 without application of 
     this subparagraph, notwithstanding subparagraphs (B) and (C);
       ``(II) for fiscal year 2010 is equal to 102.5 percent of 
     the DSH allotment for the State for fiscal year 2009, as 
     determined under subclause (I); and
       ``(III) for each succeeding fiscal year is equal to the DSH 
     allotment for the State under this paragraph determined 
     without applying subclauses (I) and (II).

       ``(ii) Application.--Clause (i) shall not apply to a State 
     for a year in the case that the DSH allotment for such State 
     for such year under this paragraph determined without 
     applying clause (i) would grow higher than the DSH allotment 
     specified under clause (i) for the State for such year.''.

     SEC. 5003. EXTENSION OF MORATORIA ON CERTAIN MEDICAID FINAL 
                   REGULATIONS.

       (a) Final Regulations Relating to Optional Case Management 
     Services and Allowable Provider Taxes.--Section 7001(a)(3)(A) 
     of the Supplemental Appropriations Act, 2008 (Public Law 110-
     252) is amended by striking ``April 1, 2009'' and inserting 
     ``July 1, 2009''.
       (b) Final Regulation Relating to School-Based 
     Administration and School-Based Transportation.--Section 206 
     of the Medicare, Medicaid, and SCHIP Extension Act of 2007 
     (Public Law 110-173), as amended by section 7001(a)(2) of the 
     Supplemental Appropriations Act, 2008 (Public Law 110-252), 
     is amended by inserting ``(July 1, 2009, in the case of the 
     final regulation relating to school-based administration and 
     school-based transportation)'' after ``April 1, 2009,''.
       (c) Final Regulation Relating to Outpatient Hospital 
     Facility Services.--Notwithstanding any other provision of 
     law, with respect to expenditures for services furnished 
     during the period beginning on December 8, 2008, and ending 
     on June 30, 2009, the Secretary of Health and Human Services 
     shall not take any action (through promulgation of 
     regulation, issuance of regulatory guidance, use of Federal 
     payment audit procedures, or other administrative action, 
     policy, or practice, including a Medical Assistance Manual 
     transmittal or letter to

[[Page 3993]]

     State Medicaid directors) to implement the final regulation 
     relating to clarification of the definition of outpatient 
     hospital facility services under the Medicaid program 
     published on November 7, 2008 (73 Federal Register 66187).
       (d) Sense of Congress.--It is the sense of Congress that 
     the Secretary of Health and Human Services should not 
     promulgate as final regulations any of the following proposed 
     Medicaid regulations:
       (1) Cost limits for certain providers.--The proposed 
     regulation published on January 18, 2007, (72 Federal 
     Register 2236) (and the purported final regulation published 
     on May 29, 2007 (72 Federal Register 29748) and determined by 
     the United States District Court for the District of Columbia 
     to have been ``improperly promulgated'', Alameda County 
     Medical Center, et al., v. Leavitt, et al., Civil Action No. 
     08-0422, Mem. at 4 (D.D.C. May 23, 2008)).
       (2) Payments for graduate medical education.--The proposed 
     regulation published on May 23, 2007 (72 Federal Register 
     28930).
       (3) Rehabilitative services.--The proposed regulation 
     published on August 13, 2007 (72 Federal Register 45201).

     SEC. 5004. EXTENSION OF TRANSITIONAL MEDICAL ASSISTANCE 
                   (TMA).

       (a) 18-Month Extension.--
       (1) In general.--Sections 1902(e)(1)(B) and 1925(f) of the 
     Social Security Act (42 U.S.C. 1396a(e)(1)(B), 1396r-6(f)) 
     are each amended by striking ``September 30, 2003'' and 
     inserting ``December 31, 2010''.
       (2) Effective date.--The amendments made by this subsection 
     shall take effect on July 1, 2009.
       (b) State Option of Initial 12-Month Eligibility.--Section 
     1925 of the Social Security Act (42 U.S.C. 1396r-6) is 
     amended--
       (1) in subsection (a)(1), by inserting ``but subject to 
     paragraph (5)'' after ``Notwithstanding any other provision 
     of this title'';
       (2) by adding at the end of subsection (a) the following:
       ``(5) Option of 12-month initial eligibility period.--A 
     State may elect to treat any reference in this subsection to 
     a 6-month period (or 6 months) as a reference to a 12-month 
     period (or 12 months). In the case of such an election, 
     subsection (b) shall not apply.''; and
       (3) in subsection (b)(1), by inserting ``but subject to 
     subsection (a)(5)'' after ``Notwithstanding any other 
     provision of this title''.
       (c) Removal of Requirement for Previous Receipt of Medical 
     Assistance.--Section 1925(a)(1) of such Act (42 U.S.C. 1396r-
     6(a)(1)), as amended by subsection (b)(1), is further 
     amended--
       (1) by inserting ``subparagraph (B) and'' before 
     ``paragraph (5)'';
       (2) by redesignating the matter after ``Requirement.--'' as 
     a subparagraph (A) with the heading ``In general.--'' and 
     with the same indentation as subparagraph (B) (as added by 
     paragraph (3)); and
       (3) by adding at the end the following:
       ``(B) State option to waive requirement for 3 months before 
     receipt of medical assistance.--A State may, at its option, 
     elect also to apply subparagraph (A) in the case of a family 
     that was receiving such aid for fewer than three months or 
     that had applied for and was eligible for such aid for fewer 
     than 3 months during the 6 immediately preceding months 
     described in such subparagraph.''.
       (d) CMS Report on Enrollment and Participation Rates Under 
     TMA.--Section 1925 of such Act (42 U.S.C. 1396r-6), as 
     amended by this section, is further amended by adding at the 
     end the following new subsection:
       ``(g) Collection and Reporting of Participation 
     Information.--
       ``(1) Collection of information from states.--Each State 
     shall collect and submit to the Secretary (and make publicly 
     available), in a format specified by the Secretary, 
     information on average monthly enrollment and average monthly 
     participation rates for adults and children under this 
     section and of the number and percentage of children who 
     become ineligible for medical assistance under this section 
     whose medical assistance is continued under another 
     eligibility category or who are enrolled under the State's 
     child health plan under title XXI. Such information shall be 
     submitted at the same time and frequency in which other 
     enrollment information under this title is submitted to the 
     Secretary.
       ``(2) Annual reports to congress.--Using the information 
     submitted under paragraph (1), the Secretary shall submit to 
     Congress annual reports concerning enrollment and 
     participation rates described in such paragraph.''.
       (e) Effective Date.--The amendments made by subsections (b) 
     through (d) shall take effect on July 1, 2009.

     SEC. 5005. EXTENSION OF THE QUALIFYING INDIVIDUAL (QI) 
                   PROGRAM.

       (a) Extension.--Section 1902(a)(10)(E)(iv) of the Social 
     Security Act (42 U.S.C. 1396a(a)(10)(E)(iv)) is amended by 
     striking ``December 2009'' and inserting ``December 2010''.
       (b) Extending Total Amount Available for Allocation.--
     Section 1933(g) of such Act (42 U.S.C. 1396u-3(g)) is 
     amended--
       (1) in paragraph (2)--
       (A) by striking ``and'' at the end of subparagraph (K);
       (B) in subparagraph (L), by striking the period at the end 
     and inserting a semicolon; and
       (C) by adding at the end the following new subparagraphs:
       ``(M) for the period that begins on January 1, 2010, and 
     ends on September 30, 2010, the total allocation amount is 
     $412,500,000; and
       ``(N) for the period that begins on October 1, 2010, and 
     ends on December 31, 2010, the total allocation amount is 
     $150,000,000.''; and
       (2) in paragraph (3), in the matter preceding subparagraph 
     (A), by striking ``or (L)'' and inserting ``(L), or (N)''.

     SEC. 5006. PROTECTIONS FOR INDIANS UNDER MEDICAID AND CHIP.

       (a) Premiums and Cost Sharing Protection Under Medicaid.--
       (1) In general.--Section 1916 of the Social Security Act 
     (42 U.S.C. 1396o) is amended--
       (A) in subsection (a), in the matter preceding paragraph 
     (1), by striking ``and (i)'' and inserting ``, (i), and 
     (j)''; and
       (B) by adding at the end the following new subsection:
       ``(j) No Premiums or Cost Sharing for Indians Furnished 
     Items or Services Directly by Indian Health Programs or 
     Through Referral Under Contract Health Services.--
       ``(1) No cost sharing for items or services furnished to 
     indians through indian health programs.--
       ``(A) In general.--No enrollment fee, premium, or similar 
     charge, and no deduction, copayment, cost sharing, or similar 
     charge shall be imposed against an Indian who is furnished an 
     item or service directly by the Indian Health Service, an 
     Indian Tribe, Tribal Organization, or Urban Indian 
     Organization or through referral under contract health 
     services for which payment may be made under this title.
       ``(B) No reduction in amount of payment to indian health 
     providers.--Payment due under this title to the Indian Health 
     Service, an Indian Tribe, Tribal Organization, or Urban 
     Indian Organization, or a health care provider through 
     referral under contract health services for the furnishing of 
     an item or service to an Indian who is eligible for 
     assistance under such title, may not be reduced by the amount 
     of any enrollment fee, premium, or similar charge, or any 
     deduction, copayment, cost sharing, or similar charge that 
     would be due from the Indian but for the operation of 
     subparagraph (A).
       ``(2) Rule of construction.--Nothing in this subsection 
     shall be construed as restricting the application of any 
     other limitations on the imposition of premiums or cost 
     sharing that may apply to an individual receiving medical 
     assistance under this title who is an Indian.''.
       (2) Conforming amendment.--Section 1916A(b)(3) of such Act 
     (42 U.S.C. 1396o-1(b)(3)) is amended--
       (A) in subparagraph (A), by adding at the end the following 
     new clause:
       ``(vii) An Indian who is furnished an item or service 
     directly by the Indian Health Service, an Indian Tribe, 
     Tribal Organization or Urban Indian Organization or through 
     referral under contract health services.''; and
       (B) in subparagraph (B), by adding at the end the following 
     new clause:
       ``(x) Items and services furnished to an Indian directly by 
     the Indian Health Service, an Indian Tribe, Tribal 
     Organization or Urban Indian Organization or through referral 
     under contract health services.''.
       (b) Treatment of Certain Property From Resources for 
     Medicaid and CHIP Eligibility.--
       (1) Medicaid.--Section 1902 of the Social Security Act (42 
     U.S.C. 1396a), as amended by sections 203(c) and 
     211(a)(1)(A)(ii) of the Children's Health Insurance Program 
     Reauthorization Act of 2009 (Public Law 111-3), is amended by 
     adding at the end the following new subsection:
       ``(ff) Notwithstanding any other requirement of this title 
     or any other provision of Federal or State law, a State shall 
     disregard the following property from resources for purposes 
     of determining the eligibility of an individual who is an 
     Indian for medical assistance under this title:
       ``(1) Property, including real property and improvements, 
     that is held in trust, subject to Federal restrictions, or 
     otherwise under the supervision of the Secretary of the 
     Interior, located on a reservation, including any federally 
     recognized Indian Tribe's reservation, pueblo, or colony, 
     including former reservations in Oklahoma, Alaska Native 
     regions established by the Alaska Native Claims Settlement 
     Act, and Indian allotments on or near a reservation as 
     designated and approved by the Bureau of Indian Affairs of 
     the Department of the Interior.
       ``(2) For any federally recognized Tribe not described in 
     paragraph (1), property located within the most recent 
     boundaries of a prior Federal reservation.
       ``(3) Ownership interests in rents, leases, royalties, or 
     usage rights related to natural resources (including 
     extraction of natural resources or harvesting of timber, 
     other plants and plant products, animals, fish, and 
     shellfish) resulting from the exercise of federally protected 
     rights.
       ``(4) Ownership interests in or usage rights to items not 
     covered by paragraphs (1) through (3) that have unique 
     religious, spiritual, traditional, or cultural significance 
     or rights that support subsistence or a traditional lifestyle 
     according to applicable tribal law or custom.''.
       (2) Application to chip.--Section 2107(e)(1) of such Act 
     (42 U.S.C. 1397gg(e)(1)), as amended by sections 203(a)(2), 
     203(d)(2), 214(b), 501(d)(2), and 503(a)(1) of the Children's 
     Health Insurance Program Reauthorization Act of 2009 (Public 
     Law 111-3), is amended--
       (A) by redesignating subparagraphs (C) through (I), as 
     subparagraphs (D) through (J), respectively; and
       (B) by inserting after subparagraph (B), the following new 
     subparagraph:
       ``(C) Section 1902(ff) (relating to disregard of certain 
     property for purposes of making eligibility 
     determinations).''.

[[Page 3994]]

       (c) Continuation of Current Law Protections of Certain 
     Indian Property From Medicaid Estate Recovery.--Section 
     1917(b)(3) of the Social Security Act (42 U.S.C. 1396p(b)(3)) 
     is amended--
       (1) by inserting ``(A)'' after ``(3)''; and
       (2) by adding at the end the following new subparagraph:
       ``(B) The standards specified by the Secretary under 
     subparagraph (A) shall require that the procedures 
     established by the State agency under subparagraph (A) exempt 
     income, resources, and property that are exempt from the 
     application of this subsection as of April 1, 2003, under 
     manual instructions issued to carry out this subsection (as 
     in effect on such date) because of the Federal responsibility 
     for Indian Tribes and Alaska Native Villages. Nothing in this 
     subparagraph shall be construed as preventing the Secretary 
     from providing additional estate recovery exemptions under 
     this title for Indians.''.
       (d) Rules Applicable Under Medicaid and Chip to Managed 
     Care Entities With Respect to Indian Enrollees and Indian 
     Health Care Providers and Indian Managed Care Entities.--
       (1) In general.--Section 1932 of the Social Security Act 
     (42 U.S.C. 1396u-2) is amended by adding at the end the 
     following new subsection:
       ``(h) Special Rules With Respect to Indian Enrollees, 
     Indian Health Care Providers, and Indian Managed Care 
     Entities.--
       ``(1) Enrollee option to select an indian health care 
     provider as primary care provider.--In the case of a non-
     Indian Medicaid managed care entity that--
       ``(A) has an Indian enrolled with the entity; and
       ``(B) has an Indian health care provider that is 
     participating as a primary care provider within the network 
     of the entity,

     insofar as the Indian is otherwise eligible to receive 
     services from such Indian health care provider and the Indian 
     health care provider has the capacity to provide primary care 
     services to such Indian, the contract with the entity under 
     section 1903(m) or under section 1905(t)(3) shall require, as 
     a condition of receiving payment under such contract, that 
     the Indian shall be allowed to choose such Indian health care 
     provider as the Indian's primary care provider under the 
     entity.
       ``(2) Assurance of payment to indian health care providers 
     for provision of covered services.--Each contract with a 
     managed care entity under section 1903(m) or under section 
     1905(t)(3) shall require any such entity, as a condition of 
     receiving payment under such contract, to satisfy the 
     following requirements:
       ``(A) Demonstration of access to indian health care 
     providers and application of alternative payment 
     arrangements.--Subject to subparagraph (C), to--
       ``(i) demonstrate that the number of Indian health care 
     providers that are participating providers with respect to 
     such entity are sufficient to ensure timely access to covered 
     Medicaid managed care services for those Indian enrollees who 
     are eligible to receive services from such providers; and
       ``(ii) agree to pay Indian health care providers, whether 
     such providers are participating or nonparticipating 
     providers with respect to the entity, for covered Medicaid 
     managed care services provided to those Indian enrollees who 
     are eligible to receive services from such providers at a 
     rate equal to the rate negotiated between such entity and the 
     provider involved or, if such a rate has not been negotiated, 
     at a rate that is not less than the level and amount of 
     payment which the entity would make for the services if the 
     services were furnished by a participating provider which is 
     not an Indian health care provider.

     The Secretary shall establish procedures for applying the 
     requirements of clause (i) in States where there are no or 
     few Indian health providers.
       ``(B) Prompt payment.--To agree to make prompt payment 
     (consistent with rule for prompt payment of providers under 
     section 1932(f)) to Indian health care providers that are 
     participating providers with respect to such entity or, in 
     the case of an entity to which subparagraph (A)(ii) or (C) 
     applies, that the entity is required to pay in accordance 
     with that subparagraph.
       ``(C) Application of special payment requirements for 
     federally-qualified health centers and for services provided 
     by certain indian health care providers.--
       ``(i) Federally-qualified health centers.--

       ``(I) Managed care entity payment requirement.--To agree to 
     pay any Indian health care provider that is a federally-
     qualified health center under this title but not a 
     participating provider with respect to the entity, for the 
     provision of covered Medicaid managed care services by such 
     provider to an Indian enrollee of the entity at a rate equal 
     to the amount of payment that the entity would pay a 
     federally-qualified health center that is a participating 
     provider with respect to the entity but is not an Indian 
     health care provider for such services.
       ``(II) Continued application of state requirement to make 
     supplemental payment.--Nothing in subclause (I) or 
     subparagraph (A) or (B) shall be construed as waiving the 
     application of section 1902(bb)(5) regarding the State plan 
     requirement to make any supplemental payment due under such 
     section to a federally-qualified health center for services 
     furnished by such center to an enrollee of a managed care 
     entity (regardless of whether the federally-qualified health 
     center is or is not a participating provider with the 
     entity).

       ``(ii) Payment rate for services provided by certain indian 
     health care providers.--If the amount paid by a managed care 
     entity to an Indian health care provider that is not a 
     federally-qualified health center for services provided by 
     the provider to an Indian enrollee with the managed care 
     entity is less than the rate that applies to the provision of 
     such services by the provider under the State plan, the plan 
     shall provide for payment to the Indian health care provider, 
     whether the provider is a participating or nonparticipating 
     provider with respect to the entity, of the difference 
     between such applicable rate and the amount paid by the 
     managed care entity to the provider for such services.
       ``(D) Construction.--Nothing in this paragraph shall be 
     construed as waiving the application of section 
     1902(a)(30)(A) (relating to application of standards to 
     assure that payments are consistent with efficiency, economy, 
     and quality of care).
       ``(3) Special rule for enrollment for indian managed care 
     entities.--Regarding the application of a Medicaid managed 
     care program to Indian Medicaid managed care entities, an 
     Indian Medicaid managed care entity may restrict enrollment 
     under such program to Indians in the same manner as Indian 
     Health Programs may restrict the delivery of services to 
     Indians.
       ``(4) Definitions.--For purposes of this subsection:
       ``(A) Indian health care provider.--The term `Indian health 
     care provider' means an Indian Health Program or an Urban 
     Indian Organization.
       ``(B) Indian medicaid managed care entity.--The term 
     `Indian Medicaid managed care entity' means a managed care 
     entity that is controlled (within the meaning of the last 
     sentence of section 1903(m)(1)(C)) by the Indian Health 
     Service, a Tribe, Tribal Organization, or Urban Indian 
     Organization, or a consortium, which may be composed of 1 or 
     more Tribes, Tribal Organizations, or Urban Indian 
     Organizations, and which also may include the Service.
       ``(C) Non-indian medicaid managed care entity.--The term 
     `non-Indian Medicaid managed care entity' means a managed 
     care entity that is not an Indian Medicaid managed care 
     entity.
       ``(D) Covered medicaid managed care services.--The term 
     `covered Medicaid managed care services' means, with respect 
     to an individual enrolled with a managed care entity, items 
     and services for which benefits are available with respect to 
     the individual under the contract between the entity and the 
     State involved.
       ``(E) Medicaid managed care program.--The term `Medicaid 
     managed care program' means a program under sections 1903(m), 
     1905(t), and 1932 and includes a managed care program 
     operating under a waiver under section 1915(b) or 1115 or 
     otherwise.''.
       (2) Application to chip.--Section 2107(e)(1) of such Act 
     (42 U.S.C. 1397gg(1)), as amended by subsection (b)(2), is 
     amended--
       (A) by redesignating subparagraph (J) as subparagraph (K); 
     and
       (B) by inserting after subparagraph (I) the following new 
     subparagraph:
       ``(J) Subsections (a)(2)(C) and (h) of section 1932.''.
       (e) Consultation on Medicaid, Chip, and Other Health Care 
     Programs Funded Under the Social Security Act Involving 
     Indian Health Programs and Urban Indian Organizations.--
       (1) Consultation with tribal technical advisory group 
     (ttag).--The Secretary of Health and Human Services shall 
     maintain within the Centers for Medicaid & Medicare Services 
     (CMS) a Tribal Technical Advisory Group (TTAG), which was 
     first established in accordance with requirements of the 
     charter dated September 30, 2003, and the Secretary of Health 
     and Human Services shall include in such Group a 
     representative of a national urban Indian health organization 
     and a representative of the Indian Health Service. The 
     inclusion of a representative of a national urban Indian 
     health organization in such Group shall not affect the 
     nonapplication of the Federal Advisory Committee Act (5 
     U.S.C. App.) to such Group.
       (2) Solicitation of advice under medicaid and chip.--
       (A) Medicaid state plan amendment.--Section 1902(a) of the 
     Social Security Act (42 U.S.C. 1396a(a)), as amended by 
     section 501(d)(1) of the Children's Health Insurance Program 
     Reauthorization Act of 2009 (Public Law 111-3), (42 U.S.C. 
     1396a(a)) is amended--
       (i) in paragraph (71), by striking ``and'' at the end;
       (ii) in paragraph (72), by striking the period at the end 
     and inserting ``; and''; and
       (iii) by inserting after paragraph (72), the following new 
     paragraph:
       ``(73) in the case of any State in which 1 or more Indian 
     Health Programs or Urban Indian Organizations furnishes 
     health care services, provide for a process under which the 
     State seeks advice on a regular, ongoing basis from designees 
     of such Indian Health Programs and Urban Indian Organizations 
     on matters relating to the application of this title that are 
     likely to have a direct effect on such Indian Health Programs 
     and Urban Indian Organizations and that--
       ``(A) shall include solicitation of advice prior to 
     submission of any plan amendments, waiver requests, and 
     proposals for demonstration projects likely to have a direct 
     effect on Indians, Indian Health Programs, or Urban Indian 
     Organizations; and
       ``(B) may include appointment of an advisory committee and 
     of a designee of such Indian

[[Page 3995]]

     Health Programs and Urban Indian Organizations to the medical 
     care advisory committee advising the State on its State plan 
     under this title.''.
       (B) Application to chip.--Section 2107(e)(1) of such Act 
     (42 U.S.C. 1397gg(1)), as amended by subsections (b)(2) and 
     (d) (2), is amended--
       (i) by redesignating subparagraphs (B), (C), (D), (E), (F), 
     (G), (H), (I), (J), and (K) as subparagraphs (D), (F), (B), 
     (E), (G), (I), (H), (J), (K), and (L), respectively;
       (ii) by moving such subparagraphs so as to appear in 
     alphabetical order; and
       (iii) by inserting after subparagraph (B) (as so 
     redesiganted and moved) the following new subparagraph:
       ``(C) Section 1902(a)(73) (relating to requiring certain 
     States to seek advice from designees of Indian Health 
     Programs and Urban Indian Organizations).''.
       (3) Rule of construction.--Nothing in the amendments made 
     by this subsection shall be construed as superseding existing 
     advisory committees, working groups, guidance, or other 
     advisory procedures established by the Secretary of Health 
     and Human Services or by any State with respect to the 
     provision of health care to Indians.
       (f) Effective Date.--The amendments made by this section 
     shall take effect on July 1, 2009.

     SEC. 5007. FUNDING FOR OVERSIGHT AND IMPLEMENTATION.

       (a) Oversight.--For purposes of ensuring the proper 
     expenditure of Federal funds under title XIX of the Social 
     Security Act (42 U.S.C. 1396 et seq.), there is appropriated 
     to the Office of the Inspector General of the Department of 
     Health and Human Services, out of any money in the Treasury 
     not otherwise appropriated and without further appropriation, 
     $31,250,000 for fiscal year 2009, which shall remain 
     available for expenditure until September 30, 2011, and shall 
     be in addition to any other amounts appropriated or made 
     available to such Office for such purposes.
       (b) Implementation of Increased FMAP.--For purposes of 
     carrying out section 5001, there is appropriated to the 
     Secretary of Health and Human Services, out of any money in 
     the Treasury not otherwise appropriated and without further 
     appropriation, $5,000,000 for fiscal year 2009, which shall 
     remain available for expenditure until September 30, 2011, 
     and shall be in addition to any other amounts appropriated or 
     made available to such Secretary for such purposes.

     SEC. 5008. GAO STUDY AND REPORT REGARDING STATE NEEDS DURING 
                   PERIODS OF NATIONAL ECONOMIC DOWNTURN.

       (a) In General.--The Comptroller General of the United 
     States shall study the period of national economic downturn 
     in effect on the date of enactment of this Act, as well as 
     previous periods of national economic downturn since 1974, 
     for the purpose of developing recommendations for addressing 
     the needs of States during such periods. As part of such 
     analysis, the Comptroller General shall study the past and 
     projected effects of temporary increases in the Federal 
     medical assistance percentage under the Medicaid program with 
     respect to such periods.
       (b) Report.--Not later than April 1, 2011, the Comptroller 
     General of the United States shall submit a report to the 
     appropriate committees of Congress on the results of the 
     study conducted under paragraph (1). Such report shall 
     include the following:
       (1) Such recommendations as the Comptroller General 
     determines appropriate for modifying the national economic 
     downturn assistance formula for temporary adjustment of the 
     Federal medical assistance percentage under Medicaid (also 
     referred to as a ``countercyclical FMAP'') described in GAO 
     report number GAO-07-97 to improve the effectiveness of the 
     application of such percentage in addressing the needs of 
     States during periods of national economic downturn, 
     including recommendations for--
       (A) improvements to the factors that would begin and end 
     the application of such percentage;
       (B) how the determination of the amount of such percentage 
     could be adjusted to address State and regional economic 
     variations during such periods; and
       (C) how the determination of the amount of such percentage 
     could be adjusted to be more responsive to actual Medicaid 
     costs incurred by States during such periods.
       (2) An analysis of the impact on States during such periods 
     of--
       (A) declines in private health benefits coverage;
       (B) declines in State revenues; and
       (C) caseload maintenance and growth under Medicaid, the 
     Children's Health Insurance Program, or any other publicly-
     funded programs to provide health benefits coverage for State 
     residents.
       (3) Identification of, and recommendations for addressing, 
     the effects on States of any other specific economic 
     indicators that the Comptroller General determines 
     appropriate.

          TITLE VI--BROADBAND TECHNOLOGY OPPORTUNITIES PROGRAM

     SEC. 6000. TABLE OF CONTENTS.

       The table of contents of this title is as follows:

          TITLE VI--BROADBAND TECHNOLOGY OPPORTUNITIES PROGRAM

Sec. 6000. Table of contents.
Sec. 6001. Broadband Technology Opportunities Program.

     SEC. 6001. BROADBAND TECHNOLOGY OPPORTUNITIES PROGRAM.

       (a) The Assistant Secretary of Commerce for Communications 
     and Information (Assistant Secretary), in consultation with 
     the Federal Communications Commission (Commission), shall 
     establish a national broadband service development and 
     expansion program in conjunction with the technology 
     opportunities program, which shall be referred to as the 
     Broadband Technology Opportunities Program. The Assistant 
     Secretary shall ensure that the program complements and 
     enhances and does not conflict with other Federal broadband 
     initiatives and programs.
       (b) The purposes of the program are to--
       (1) provide access to broadband service to consumers 
     residing in unserved areas of the United States;
       (2) provide improved access to broadband service to 
     consumers residing in underserved areas of the United States;
       (3) provide broadband education, awareness, training, 
     access, equipment, and support to--
       (A) schools, libraries, medical and healthcare providers, 
     community colleges and other institutions of higher 
     education, and other community support organizations and 
     entities to facilitate greater use of broadband service by or 
     through these organizations;
       (B) organizations and agencies that provide outreach, 
     access, equipment, and support services to facilitate greater 
     use of broadband service by low-income, unemployed, aged, and 
     otherwise vulnerable populations; and
       (C) job-creating strategic facilities located within a 
     State-designated economic zone, Economic Development District 
     designated by the Department of Commerce, Renewal Community 
     or Empowerment Zone designated by the Department of Housing 
     and Urban Development, or Enterprise Community designated by 
     the Department of Agriculture;
       (4) improve access to, and use of, broadband service by 
     public safety agencies; and
       (5) stimulate the demand for broadband, economic growth, 
     and job creation.
       (c) The Assistant Secretary may consult a State, the 
     District of Columbia, or territory or possession of the 
     United States with respect to--
       (1) the identification of areas described in subsection 
     (b)(1) or (2) located in that State; and
       (2) the allocation of grant funds within that State for 
     projects in or affecting the State.
       (d) The Assistant Secretary shall--
       (1) establish and implement the grant program as 
     expeditiously as practicable;
       (2) ensure that all awards are made before the end of 
     fiscal year 2010;
       (3) seek such assurances as may be necessary or appropriate 
     from grantees under the program that they will substantially 
     complete projects supported by the program in accordance with 
     project timelines, not to exceed 2 years following an award; 
     and
       (4) report on the status of the program to the Committees 
     on Appropriations of the House of Representatives and the 
     Senate, the Committee on Energy and Commerce of the House of 
     Representatives, and the Committee on Commerce, Science, and 
     Transportation of the Senate, every 90 days.
       (e) To be eligible for a grant under the program, an 
     applicant shall--
       (1)(A) be a State or political subdivision thereof, the 
     District of Columbia, a territory or possession of the United 
     States, an Indian tribe (as defined in section 4 of the 
     Indian Self-Determination and Education Assistance Act (25 
     U.S.C. 450(b)) or native Hawaiian organization;
       (B) a nonprofit--
       (i) foundation,
       (ii) corporation,
       (iii) institution, or
       (iv) association; or
       (C) any other entity, including a broadband service or 
     infrastructure provider, that the Assistant Secretary finds 
     by rule to be in the public interest. In establishing such 
     rule, the Assistant Secretary shall to the extent practicable 
     promote the purposes of this section in a technologically 
     neutral manner;
       (2) submit an application, at such time, in such form, and 
     containing such information as the Assistant Secretary may 
     require;
       (3) provide a detailed explanation of how any amount 
     received under the program will be used to carry out the 
     purposes of this section in an efficient and expeditious 
     manner, including a showing that the project would not have 
     been implemented during the grant period without Federal 
     grant assistance;
       (4) demonstrate, to the satisfaction of the Assistant 
     Secretary, that it is capable of carrying out the project or 
     function to which the application relates in a competent 
     manner in compliance with all applicable Federal, State, and 
     local laws;
       (5) demonstrate, to the satisfaction of the Assistant 
     Secretary, that it will appropriate (if the applicant is a 
     State or local government agency) or otherwise 
     unconditionally obligate, from non-Federal sources, funds 
     required to meet the requirements of subsection (f);
       (6) disclose to the Assistant Secretary the source and 
     amount of other Federal or State funding sources from which 
     the applicant receives, or has applied for, funding for 
     activities or projects to which the application relates; and
       (7) provide such assurances and procedures as the Assistant 
     Secretary may require to ensure that grant funds are used and 
     accounted for in an appropriate manner.
       (f) The Federal share of any project may not exceed 80 
     percent, except that the Assistant Secretary may increase the 
     Federal share of a project above 80 percent if--
       (1) the applicant petitions the Assistant Secretary for a 
     waiver; and

[[Page 3996]]

       (2) the Assistant Secretary determines that the petition 
     demonstrates financial need.
       (g) The Assistant Secretary may make competitive grants 
     under the program to--
       (1) acquire equipment, instrumentation, networking 
     capability, hardware and software, digital network 
     technology, and infrastructure for broadband services;
       (2) construct and deploy broadband service related 
     infrastructure;
       (3) ensure access to broadband service by community anchor 
     institutions;
       (4) facilitate access to broadband service by low-income, 
     unemployed, aged, and otherwise vulnerable populations in 
     order to provide educational and employment opportunities to 
     members of such populations;
       (5) construct and deploy broadband facilities that improve 
     public safety broadband communications services; and
       (6) undertake such other projects and activities as the 
     Assistant Secretary finds to be consistent with the purposes 
     for which the program is established.
       (h) The Assistant Secretary, in awarding grants under this 
     section, shall, to the extent practical--
       (1) award not less than 1 grant in each State;
       (2) consider whether an application to deploy 
     infrastructure in an area--
       (A) will, if approved, increase the affordability of, and 
     subscribership to, service to the greatest population of 
     users in the area;
       (B) will, if approved, provide the greatest broadband speed 
     possible to the greatest population of users in the area;
       (C) will, if approved, enhance service for health care 
     delivery, education, or children to the greatest population 
     of users in the area; and
       (D) will, if approved, not result in unjust enrichment as a 
     result of support for non-recurring costs through another 
     Federal program for service in the area; and
       (3) consider whether the applicant is a socially and 
     economically disadvantaged small business concern as defined 
     under section 8(a) of the Small Business Act (15 U.S.C. 637).
       (i) The Assistant Secretary--
       (1) shall require any entity receiving a grant pursuant to 
     this section to report quarterly, in a format specified by 
     the Assistant Secretary, on such entity's use of the 
     assistance and progress fulfilling the objectives for which 
     such funds were granted, and the Assistant Secretary shall 
     make these reports available to the public;
       (2) may establish additional reporting and information 
     requirements for any recipient of any assistance made 
     available pursuant to this section;
       (3) shall establish appropriate mechanisms to ensure 
     appropriate use and compliance with all terms of any use of 
     funds made available pursuant to this section;
       (4) may, in addition to other authority under applicable 
     law, deobligate awards to grantees that demonstrate an 
     insufficient level of performance, or wasteful or fraudulent 
     spending, as defined in advance by the Assistant Secretary, 
     and award these funds competitively to new or existing 
     applicants consistent with this section; and
       (5) shall create and maintain a fully searchable database, 
     accessible on the Internet at no cost to the public, that 
     contains at least a list of each entity that has applied for 
     a grant under this section, a description of each 
     application, the status of each such application, the name of 
     each entity receiving funds made available pursuant to this 
     section, the purpose for which such entity is receiving such 
     funds, each quarterly report submitted by the entity pursuant 
     to this section, and such other information sufficient to 
     allow the public to understand and monitor grants awarded 
     under the program.
       (j) Concurrent with the issuance of the Request for 
     Proposal for grant applications pursuant to this section, the 
     Assistant Secretary shall, in coordination with the 
     Commission, publish the non-discrimination and network 
     interconnection obligations that shall be contractual 
     conditions of grants awarded under this section, including, 
     at a minimum, adherence to the principles contained in the 
     Commission's broadband policy statement (FCC 05-15, adopted 
     August 5, 2005).
       (k)(1) Not later than 1 year after the date of enactment of 
     this section, the Commission shall submit to the Committee on 
     Energy and Commerce of the House of Representatives and the 
     Committee on Commerce, Science, and Transportation of the 
     Senate, a report containing a national broadband plan.
       (2) The national broadband plan required by this section 
     shall seek to ensure that all people of the United States 
     have access to broadband capability and shall establish 
     benchmarks for meeting that goal. The plan shall also 
     include--
       (A) an analysis of the most effective and efficient 
     mechanisms for ensuring broadband access by all people of the 
     United States;
       (B) a detailed strategy for achieving affordability of such 
     service and maximum utilization of broadband infrastructure 
     and service by the public;
       (C) an evaluation of the status of deployment of broadband 
     service, including progress of projects supported by the 
     grants made pursuant to this section; and
       (D) a plan for use of broadband infrastructure and services 
     in advancing consumer welfare, civic participation, public 
     safety and homeland security, community development, health 
     care delivery, energy independence and efficiency, education, 
     worker training, private sector investment, entrepreneurial 
     activity, job creation and economic growth, and other 
     national purposes.
       (3) In developing the plan, the Commission shall have 
     access to data provided to other Government agencies under 
     the Broadband Data Improvement Act (47 U.S.C. 1301 note).
       (l) The Assistant Secretary shall develop and maintain a 
     comprehensive nationwide inventory map of existing broadband 
     service capability and availability in the United States that 
     depicts the geographic extent to which broadband service 
     capability is deployed and available from a commercial 
     provider or public provider throughout each State. Not later 
     than 2 years after the date of the enactment of this Act, the 
     Assistant Secretary shall make the broadband inventory map 
     developed and maintained pursuant to this section accessible 
     by the public on a World Wide Web site of the National 
     Telecommunications and Information Administration in a form 
     that is interactive and searchable.
       (m) The Assistant Secretary shall have the authority to 
     prescribe such rules as are necessary to carry out the 
     purposes of this section.

              TITLE VII--LIMITS ON EXECUTIVE COMPENSATION

     SEC. 7000. TABLE OF CONTENTS.

       The table of contents of this title is as follows:

              TITLE VII--LIMITS ON EXECUTIVE COMPENSATION

Sec. 7000. Table of contents.
Sec. 7001. Executive compensation and corporate governance.
Sec. 7002. Applicability with respect to loan modifications.

     SEC. 7001. EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE.

       Section 111 of the Emergency Economic Stabilization Act of 
     2008 (12 U.S.C. 5221) is amended to read as follows:

     ``SEC. 111. EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE.

       ``(a) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       ``(1) Senior executive officer.--The term `senior executive 
     officer' means an individual who is 1 of the top 5 most 
     highly paid executives of a public company, whose 
     compensation is required to be disclosed pursuant to the 
     Securities Exchange Act of 1934, and any regulations issued 
     thereunder, and non-public company counterparts.
       ``(2) Golden parachute payment.--The term `golden parachute 
     payment' means any payment to a senior executive officer for 
     departure from a company for any reason, except for payments 
     for services performed or benefits accrued.
       ``(3) TARP recipient.--The term `TARP recipient' means any 
     entity that has received or will receive financial assistance 
     under the financial assistance provided under the TARP.
       ``(4) Commission.--The term `Commission' means the 
     Securities and Exchange Commission.
       ``(5) Period in which obligation is outstanding; rule of 
     construction.--For purposes of this section, the period in 
     which any obligation arising from financial assistance 
     provided under the TARP remains outstanding does not include 
     any period during which the Federal Government only holds 
     warrants to purchase common stock of the TARP recipient.
       ``(b) Executive Compensation and Corporate Governance.--
       ``(1) Establishment of standards.--During the period in 
     which any obligation arising from financial assistance 
     provided under the TARP remains outstanding, each TARP 
     recipient shall be subject to--
       ``(A) the standards established by the Secretary under this 
     section; and
       ``(B) the provisions of section 162(m)(5) of the Internal 
     Revenue Code of 1986, as applicable.
       ``(2) Standards required.--The Secretary shall require each 
     TARP recipient to meet appropriate standards for executive 
     compensation and corporate governance.
       ``(3) Specific requirements.--The standards established 
     under paragraph (2) shall include the following:
       ``(A) Limits on compensation that exclude incentives for 
     senior executive officers of the TARP recipient to take 
     unnecessary and excessive risks that threaten the value of 
     such recipient during the period in which any obligation 
     arising from financial assistance provided under the TARP 
     remains outstanding.
       ``(B) A provision for the recovery by such TARP recipient 
     of any bonus, retention award, or incentive compensation paid 
     to a senior executive officer and any of the next 20 most 
     highly-compensated employees of the TARP recipient based on 
     statements of earnings, revenues, gains, or other criteria 
     that are later found to be materially inaccurate.
       ``(C) A prohibition on such TARP recipient making any 
     golden parachute payment to a senior executive officer or any 
     of the next 5 most highly-compensated employees of the TARP 
     recipient during the period in which any obligation arising 
     from financial assistance provided under the TARP remains 
     outstanding.
       ``(D)(i) A prohibition on such TARP recipient paying or 
     accruing any bonus, retention award, or incentive 
     compensation during the period in which any obligation 
     arising from financial assistance provided under the TARP 
     remains outstanding, except that any prohibition developed 
     under this paragraph shall not apply to the payment of long-
     term restricted stock by such TARP recipient, provided that 
     such long-term restricted stock--
       ``(I) does not fully vest during the period in which any 
     obligation arising from financial assistance provided to that 
     TARP recipient remains outstanding;
       ``(II) has a value in an amount that is not greater than 
     \1/3\ of the total amount of annual compensation of the 
     employee receiving the stock; and

[[Page 3997]]

       ``(III) is subject to such other terms and conditions as 
     the Secretary may determine is in the public interest.
       ``(ii) The prohibition required under clause (i) shall 
     apply as follows:
       ``(I) For any financial institution that received financial 
     assistance provided under the TARP equal to less than 
     $25,000,000, the prohibition shall apply only to the most 
     highly compensated employee of the financial institution.
       ``(II) For any financial institution that received 
     financial assistance provided under the TARP equal to at 
     least $25,000,000, but less than $250,000,000, the 
     prohibition shall apply to at least the 5 most highly-
     compensated employees of the financial institution, or such 
     higher number as the Secretary may determine is in the public 
     interest with respect to any TARP recipient.
       ``(III) For any financial institution that received 
     financial assistance provided under the TARP equal to at 
     least $250,000,000, but less than $500,000,000, the 
     prohibition shall apply to the senior executive officers and 
     at least the 10 next most highly-compensated employees, or 
     such higher number as the Secretary may determine is in the 
     public interest with respect to any TARP recipient.
       ``(IV) For any financial institution that received 
     financial assistance provided under the TARP equal to 
     $500,000,000 or more, the prohibition shall apply to the 
     senior executive officers and at least the 20 next most 
     highly-compensated employees, or such higher number as the 
     Secretary may determine is in the public interest with 
     respect to any TARP recipient.
       ``(iii) The prohibition required under clause (i) shall not 
     be construed to prohibit any bonus payment required to be 
     paid pursuant to a written employment contract executed on or 
     before February 11, 2009, as such valid employment contracts 
     are determined by the Secretary or the designee of the 
     Secretary.
       ``(E) A prohibition on any compensation plan that would 
     encourage manipulation of the reported earnings of such TARP 
     recipient to enhance the compensation of any of its 
     employees.
       ``(F) A requirement for the establishment of a Board 
     Compensation Committee that meets the requirements of 
     subsection (c).
       ``(4) Certification of compliance.--The chief executive 
     officer and chief financial officer (or the equivalents 
     thereof) of each TARP recipient shall provide a written 
     certification of compliance by the TARP recipient with the 
     requirements of this section--
       ``(A) in the case of a TARP recipient, the securities of 
     which are publicly traded, to the Securities and Exchange 
     Commission, together with annual filings required under the 
     securities laws; and
       ``(B) in the case of a TARP recipient that is not a 
     publicly traded company, to the Secretary.
       ``(c) Board Compensation Committee.--
       ``(1) Establishment of board required.--Each TARP recipient 
     shall establish a Board Compensation Committee, comprised 
     entirely of independent directors, for the purpose of 
     reviewing employee compensation plans.
       ``(2) Meetings.--The Board Compensation Committee of each 
     TARP recipient shall meet at least semiannually to discuss 
     and evaluate employee compensation plans in light of an 
     assessment of any risk posed to the TARP recipient from such 
     plans.
       ``(3) Compliance by non-sec registrants.--In the case of 
     any TARP recipient, the common or preferred stock of which is 
     not registered pursuant to the Securities Exchange Act of 
     1934, and that has received $25,000,000 or less of TARP 
     assistance, the duties of the Board Compensation Committee 
     under this subsection shall be carried out by the board of 
     directors of such TARP recipient.
       ``(d) Limitation on Luxury Expenditures.--The board of 
     directors of any TARP recipient shall have in place a 
     company-wide policy regarding excessive or luxury 
     expenditures, as identified by the Secretary, which may 
     include excessive expenditures on--
       ``(1) entertainment or events;
       ``(2) office and facility renovations;
       ``(3) aviation or other transportation services; or
       ``(4) other activities or events that are not reasonable 
     expenditures for staff development, reasonable performance 
     incentives, or other similar measures conducted in the normal 
     course of the business operations of the TARP recipient.
       ``(e) Shareholder Approval of Executive Compensation.--
       ``(1) Annual shareholder approval of executive 
     compensation.--Any proxy or consent or authorization for an 
     annual or other meeting of the shareholders of any TARP 
     recipient during the period in which any obligation arising 
     from financial assistance provided under the TARP remains 
     outstanding shall permit a separate shareholder vote to 
     approve the compensation of executives, as disclosed pursuant 
     to the compensation disclosure rules of the Commission (which 
     disclosure shall include the compensation discussion and 
     analysis, the compensation tables, and any related material).
       ``(2) Nonbinding vote.--A shareholder vote described in 
     paragraph (1) shall not be binding on the board of directors 
     of a TARP recipient, and may not be construed as overruling a 
     decision by such board, nor to create or imply any additional 
     fiduciary duty by such board, nor shall such vote be 
     construed to restrict or limit the ability of shareholders to 
     make proposals for inclusion in proxy materials related to 
     executive compensation.
       ``(3) Deadline for rulemaking.--Not later than 1 year after 
     the date of enactment of the American Recovery and 
     Reinvestment Act of 2009, the Commission shall issue any 
     final rules and regulations required by this subsection.
       ``(f) Review of Prior Payments to Executives.--
       ``(1) In general.--The Secretary shall review bonuses, 
     retention awards, and other compensation paid to the senior 
     executive officers and the next 20 most highly-compensated 
     employees of each entity receiving TARP assistance before the 
     date of enactment of the American Recovery and Reinvestment 
     Act of 2009, to determine whether any such payments were 
     inconsistent with the purposes of this section or the TARP or 
     were otherwise contrary to the public interest.
       ``(2) Negotiations for reimbursement.--If the Secretary 
     makes a determination described in paragraph (1), the 
     Secretary shall seek to negotiate with the TARP recipient and 
     the subject employee for appropriate reimbursements to the 
     Federal Government with respect to compensation or bonuses.
       ``(g) No Impediment to Withdrawal by TARP Recipients.--
     Subject to consultation with the appropriate Federal banking 
     agency (as that term is defined in section 3 of the Federal 
     Deposit Insurance Act), if any, the Secretary shall permit a 
     TARP recipient to repay any assistance previously provided 
     under the TARP to such financial institution, without regard 
     to whether the financial institution has replaced such funds 
     from any other source or to any waiting period, and when such 
     assistance is repaid, the Secretary shall liquidate warrants 
     associated with such assistance at the current market price.
       ``(h) Regulations.--The Secretary shall promulgate 
     regulations to implement this section.''.

     SEC. 7002. APPLICABILITY WITH RESPECT TO LOAN MODIFICATIONS.

       Section 109(a) of the Emergency Economic Stabilization Act 
     of 2008 (12 U.S.C. 5219(a)) is amended--
       (1) by striking ``To the extent'' and inserting the 
     following:
       ``(1) In general.--To the extent''; and
       (2) by adding at the end the following:
       ``(2) Waiver of certain provisions in connection with loan 
     modifications.--The Secretary shall not be required to apply 
     executive compensation restrictions under section 111, or to 
     receive warrants or debt instruments under section 113, 
     solely in connection with any loan modification under this 
     section.''.
       And the Senate agreed to the same.

     David Obey,
     Charles Rangel,
     Henry Waxman,
                                Managers on the Part of the House.

     Daniel K. Inouye,
      Max Baucus,
     Harry Reid,
                               Managers on the Part of the Senate.

       JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE

       The managers on the part of the House and Senate at the 
     conference on the disagreeing votes of the two Houses on the 
     amendment of the Senate to the bill (H.R. 1), a bill making 
     supplemental appropriations for job preservation and 
     creation, infrastructure investment, energy efficiency and 
     science, assistance to the unemployed, and State and local 
     fiscal stabilization, for the fiscal year ending September 
     30, 2009, and for other purposes, submit the following joint 
     statement to the House and Senate in explanation of the 
     effect of the action agreed upon by the managers and 
     recommended in the accompanying conference report.
       The Senate amendment to the text deleted the entire House 
     bill after the enacting clause and inserted the Senate bill. 
     This conference agreement includes a revised bill.
       The conference agreement designates amounts in the Act as 
     emergency requirements pursuant to section 204(a) of S. Con. 
     Res. 21 (110th Congress) and section 301(b)(2) of S. Con. 
     Res. 70 (110th Congress), the concurrent resolutions on the 
     budget for fiscal years 2008 and 2009. All applicable 
     provisions in the Act are designated as an emergency for 
     purposes of pay-as-you-go principles.

                 DIVISION A--APPROPRIATIONS PROVISIONS

TITLE I--AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, 
                          AND RELATED AGENCIES

                       Department of Agriculture


        AGRICULTURE BUILDINGS AND FACILITIES AND RENTAL PAYMENTS

       The conference agreement provides $24,000,000 for the 
     Agriculture Buildings and Facilities and Rental Payments 
     account instead of $44,000,000 as proposed by the House. The 
     Senate bill contained no such account.
       The conference agreement provides funding to address 
     priority maintenance, repair, and modernization investments 
     in USDA's headquarter buildings and facilities.

                      Office of Inspector General

       The conference agreement provides $22,500,000 for the 
     Office of Inspector General as proposed by both the House and 
     Senate.
       The conference agreement provides funding to enhance 
     oversight and improve accountability of the use of economic 
     recovery funds appropriated to the Department of Agriculture 
     in this Act, including $7,500,000 for the U.S. Forest 
     Service.

                     Agricultural Research Service


                        BUILDINGS AND FACILITIES

       The conference agreement provides $176,000,000 for the 
     Agricultural Research

[[Page 3998]]

     Service, Buildings and Facilities account instead of 
     $209,000,000 as proposed by the House. The Senate bill 
     contained no such account.
       The conference agreement provides funding to address 
     critical deferred maintenance of the agency's aging 
     laboratory and research infrastructure.

                          Farm Service Agency


                         SALARIES AND EXPENSES

       The conference agreement provides $50,000,000 for the Farm 
     Service Agency, Salaries and Expenses account instead of 
     $245,000,000 as proposed by the House. The Senate bill 
     contained no such account.
       The conference agreement provides funding to maintain and 
     modernize the information technology system.

                 Natural Resources Conservation Service


               WATERSHED AND FLOOD PREVENTION OPERATIONS

       The conference agreement provides $290,000,000 for the 
     Watershed and Flood Prevention Operations program instead of 
     $350,000,000 as proposed by the House and $275,000,000 as 
     proposed by the Senate.
       Of the total amount, $145,000,000 is for purchasing and 
     restoring floodplain easements under the authorities of the 
     Emergency Watershed Protection Program. Funding is provided 
     for conducting a floodplain restoration enrollment process 
     that encompasses multiple regions of the country and that 
     will provide the greatest public and environmental benefits.
       The conference agreement provides funding to invest in both 
     structural and non-structural watershed infrastructure 
     improvements. When considering project applications, the 
     agency is directed to prioritize funding for projects that 
     most cost-effectively provide the greatest public safety, 
     flood protection, economic, and environmental benefits.
       With the funds provided, the agency is directed to complete 
     existing infrastructure projects that have already initiated 
     planning, design, or construction work, as well as prioritize 
     funding for projects that are prepared to initiate work as 
     soon as possible. The agency is further directed to fully 
     fund the cost of completing discrete functional components of 
     both structural and non-structural projects initiated with 
     the dollars provided in this conference agreement.


                    WATERSHED REHABILITATION PROGRAM

       The conference agreement provides $50,000,000 for the 
     Watershed Rehabilitation Program as proposed by the House 
     instead of $65,000,000 as proposed by the Senate.
       The conference agreement provides funding to rehabilitate 
     aging flood control infrastructure. The agency is directed to 
     prioritize funding for projects that are at greatest risk of 
     failure and present threats to public safety. The agency is 
     further directed to prioritize funding for projects that can 
     obligate and expend funds both cost effectively and rapidly. 
     Finally, the agency is directed to fully fund the cost of 
     completing rehabilitation projects initiated with the dollars 
     provided in this conference agreement.

                         Rural Housing Service


              RURAL HOUSING INSURANCE FUND PROGRAM ACCOUNT

       The conference agreement provides $200,000,000 in budget 
     authority as proposed by the Senate instead of $500,000,000 
     as proposed by the House. The amount of funding provided by 
     the conference agreement will support $11,472,000,000 in 
     direct and guaranteed single family housing loans under the 
     Rural Housing Insurance Fund, of which $1,000,000,000 is for 
     direct single family housing loans and $10,472,000,000 is for 
     guaranteed single family housing loans.


               RURAL COMMUNITY FACILITIES PROGRAM ACCOUNT

       The conference agreement includes $130,000,000 in budget 
     authority for loans and grants for rural community facilities 
     instead of $200,000,000 as proposed by the House and 
     $127,000,000 as proposed by the Senate.
       The conference agreement provides funding to support 
     $1,234,000,000 in loans and grants for essential rural 
     community facilities including hospitals, health clinics, 
     health and safety vehicles and equipment, public buildings, 
     and child and elder care facilities. Of this amount, 
     $1,171,000,000 is for direct community facility loans and 
     $63,000,000 is for community facility grants.

                  Rural Business--Cooperative Service


                     RURAL BUSINESS PROGRAM ACCOUNT

       The conference agreement includes $150,000,000 in budget 
     authority for rural business loans and grants as proposed by 
     the Senate instead of $100,000,000 as proposed by the House. 
     The amount of funding provided by the conference agreement 
     will support $3,010,000,000 in rural business loans and 
     grants. Of this amount, $2,990,000,000 is for guaranteed 
     business and industry loans and $20,000,000 is for rural 
     business enterprise grants.

                        Rural Utilities Service


             RURAL WATER AND WASTE DISPOSAL PROGRAM ACCOUNT

       The conference agreement includes $1,380,000,000 in budget 
     authority for loans and grants for water and waste disposal 
     facilities instead of $1,500,000,000 as proposed by the House 
     and $1,375,000,000 as proposed by the Senate. The amount of 
     funding provided by the conference agreement will support 
     $3,788,000,000 in loans and grants for water and waste 
     disposal facilities in rural areas. Of this amount, 
     $2,820,000,000 is for direct loans and $968,000,000 is for 
     grants.


         DISTANCE LEARNING, TELEMEDICINE, AND BROADBAND PROGRAM

       The conference agreement includes $2,500,000,000 for the 
     distance learning, telemedicine, and broadband program 
     instead of $2,825,000,000 as proposed by the House and 
     $100,000,000 as proposed by the Senate.

                       Food and Nutrition Service


                        CHILD NUTRITION PROGRAMS

       The conference agreement includes $100,000 for a grant 
     program for National School Lunch Program equipment 
     assistance as proposed by the Senate. The House bill 
     contained no such account.


SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN 
                                 (WIC)

       The conference agreement includes $500,000,000 for the 
     Special Supplemental Nutrition Program for Women, Infants, 
     and Children (WIC) as proposed by the Senate instead of 
     $100,000,000 as proposed by the House.
       Of the total amount provided by the conference agreement, 
     $400,000,000 is for the program's contingency reserve to 
     ensure that the WIC program will have adequate funds to cover 
     potential increased participation or food costs as a result 
     of economic uncertainty. The conference agreement also 
     provides $100,000,000 from the total amount to help state 
     agencies implement new management information systems or 
     improve existing management information systems for the 
     program.


                      COMMODITY ASSISTANCE PROGRAM

       The conference agreement includes $150,000,000 for the 
     Emergency Food Assistance Program for food purchases as 
     proposed by both the House and Senate. Of the total amount 
     provided by the conference agreement, up to $50,000,000 may 
     be used for administrative funding.

                     GENERAL PROVISIONS--THIS TITLE

       SEC. 101. The conference agreement includes language to 
     increase the value of benefits provided through the 
     Supplemental Nutrition Assistance Program by 13.6 percent. 
     The conference agreement also includes $295,000,000 for the 
     cost of state administrative expenses and $5,000,000 in 
     administrative funding for the Food Distribution Program on 
     Indian Reservations.
       SEC. 102. The conference agreement includes language to 
     provide for transitional agricultural disaster assistance.
       SEC. 103. The conference agreement includes language to 
     carry out the Food, Conservation, and Energy Act of 2008.
       SEC. 104. The conference agreement includes language to 
     carry out the rural development loan and grant programs 
     funded in this title.
       SEC. 105. The conference agreement includes language to 
     specify the use of funds in persistent poverty counties.

       TITLE II--COMMERCE, JUSTICE, SCIENCE, AND RELATED AGENCIES

                         DEPARTMENT OF COMMERCE

       The Department is directed to submit to the House and 
     Senate Committees on Appropriations spending plans, signed by 
     the Secretary, detailing its intended allocation of funds 
     provided in this Act within 60 days of enactment of this Act.

                  Economic Development Administration


                ECONOMIC DEVELOPMENT ASSISTANCE PROGRAMS

       The conference agreement includes $150,000,000 for Economic 
     Development Assistance Programs to leverage private 
     investment, stimulate employment and increase incomes in 
     economically distressed communities. Of the amounts provided, 
     $50,000,000 shall be for economic adjustment assistance to 
     help communities recover from sudden and severe economic 
     dislocation and massive job losses due to corporate 
     restructuring and $50,000,000 may be transferred to federally 
     authorized, regional economic development commissions.

                          Bureau of the Census


                     PERIODIC CENSUSES AND PROGRAMS

       To ensure a successful 2010 Decennial, the conference 
     agreement includes $1,000,000,000 to hire additional 
     personnel, provide required training, increase targeted media 
     purchases, and improve management of other operational and 
     programmatic risks. Of the amounts provided, up to 
     $250,000,000 shall be for partnership and outreach efforts to 
     minority communities and hard-to-reach populations.

       National Telecommunications and Information Administration


               BROADBAND TECHNOLOGY OPPORTUNITIES PROGRAM

       The conference agreement includes $4,700,000,000 for NTIA's 
     Broadband Technology Opportunities Program (TOP), to be 
     available until September 30, 2010. Funding is provided to 
     award competitive grants to accelerate broadband deployment 
     in unserved and underserved areas and to strategic 
     institutions that are likely to create jobs or provide 
     significant public benefits. Of

[[Page 3999]]

     the amounts provided, $350,000,000 shall establish the State 
     Broadband Data and Development Grant program, as authorized 
     by Public Law 110-385 and for the development and maintenance 
     of a national broadband inventory map as authorized by 
     division B of this Act. In addition, $200,000,000 shall be 
     for competitive grants for expanding public computer center 
     capacity; $250,000,000 shall be for competitive grants for 
     innovative programs to encourage sustainable broadband 
     adoption; and $10,000,000 is to be transferred to the 
     Department of Commerce Inspector General for audits and 
     oversight of funds provided under this heading, to be 
     available until expended.


                DIGITAL-TO-ANALOG CONVERTER BOX PROGRAM

       The conference agreement includes $650,000,000 for 
     additional implementation and administration of the digital-
     to-analog converter box coupon program, including additional 
     coupons to meet new projected demands and consumer support, 
     outreach and administration. Of the amounts provided, up to 
     $90,000,000 may be used for education and outreach to 
     vulnerable populations, including one-on-one assistance for 
     converter box installation.

             National Institute of Standards and Technology


             SCIENTIFIC AND TECHNICAL RESEARCH AND SERVICES

       The conference agreement includes $220,000,000 for 
     research, competitive grants, additional research fellowships 
     and advanced research and measurement equipment and supplies. 
     In addition, $20,000,000 is provided by transfer from the 
     Health Information Technology (HIT) initiative within this 
     Act. For HIT activities, NIST is directed to create and test 
     standards related to health security and interoperability in 
     conjunction with partners at the Department of Health and 
     Human Services.


                  CONSTRUCTION OF RESEARCH FACILITIES

       The conference agreement includes $360,000,000 to address 
     NIST's backlog of maintenance and renovation and for 
     construction of new facilities and laboratories. Of the 
     amounts provided, $180,000,000 shall be for the competitive 
     construction grant program for research science buildings, 
     including fiscal year 2008 and 2009 competitions.

            National Oceanic and Atmospheric Administration


                  OPERATIONS, RESEARCH, AND FACILITIES

       The conference agreement includes $230,000,000 for NOAA 
     operations, research, and facilities to address a backlog of 
     research, restoration, navigation, conservation and 
     management activities.

               Procurement, Acquisition and Construction

       The conference agreement includes $600,000,000 for 
     construction and repair of NOAA facilities, ships and 
     equipment, to improve weather forecasting and to support 
     satellite development. Of the amounts provided, $170,000,000 
     shall address critical gaps in climate modeling and establish 
     climate data records for continuing research into the cause, 
     effects and ways to mitigate climate change.


                      OFFICE OF INSPECTOR GENERAL

       The conference agreement includes $6,000,000 for the Office 
     of Inspector General, to remain available until September 30, 
     2013.

                         DEPARTMENT OF JUSTICE

       The Department is directed to submit to the House and 
     Senate Committees on Appropriations a spending plan, signed 
     by the Attorney General, detailing its intended allocation of 
     funds provided in this Act within 60 days of enactment of 
     this Act.

                         General Administration


                      OFFICE OF INSPECTOR GENERAL

       The conference agreement includes $2,000,000 for the Office 
     of Inspector General, to be available until September 30, 
     2013.

               State and Local Law Enforcement Activities


                    Office on Violence Against Women


       VIOLENCE AGAINST WOMEN PREVENTION AND PROSECUTION PROGRAMS

       The conference agreement provides $225,000,000 for Violence 
     Against Women Prevention and Prosecution Programs, to be 
     available until September 30, 2010, of which $175,000,000 is 
     for the STOP Violence Against Women Formula Assistance 
     Program, and $50,000,000 is for transitional housing 
     assistance grants. No administrative overhead costs shall be 
     deducted from the programs funded under this accout.

                       Office of Justice Programs


               STATE AND LOCAL LAW ENFORCEMENT ASSISTANCE

       The conference agreement includes a total of $2,765,000,000 
     for the following state and local law enforcement assistance 
     programs, to be available until September 30, 2010. No 
     administrative overhead costs shall be deducted from the 
     programs funded under this account.
Edward Byrne Memorial Justice Assistance Grants..........$2,000,000,000
Byrne competitive grants....................................225,000,000
Rural Law Enforcement.......................................125,000,000
Southwest Border/Project Gunrunner...........................40,000,000
Victims Compensation........................................100,000,000
Tribal Law Enforcement Assistance...........................225,000,000
Internet Crimes Against Children Task Force..................50,000,000
                                                       ________________
                                                       
  Total...................................................2,765,000,000
       Byrne-Justice Assistance Grants.--The conference agreement 
     provides $2,000,000,000 for Edward Byrne Memorial Justice 
     Assistance Grants. This funding is allocated by formula to 
     State and local law enforcement agencies to help prevent, 
     fight, and prosecute crime.
       Byrne Competitive Grants.--The conference agreement 
     provides $225,000,000 for competitive, peer-reviewed grants 
     to units of State, local, and tribal government, and to 
     national, regional, and local non-profit organizations to 
     prevent crime, improve the administration of justice, provide 
     services to victims of. crime, support critical nurturing and 
     mentoring of at-risk children and youth, and for other 
     similar activities.
       Rural Law Enforcement.--The conference agreement provides 
     $125,000,000 for grants to combat the persistent problems of 
     drug-related crime in rural America. Funds will be available 
     on a competitive basis for drug enforcement and other law 
     enforcement activities in rural states and rural areas, 
     including for the hiring of police officers and for community 
     drug prevention and treatment programs.
       Southwest Border/Project Gunrunner.--The conference 
     agreement provides $40,000,000 for competitive grants for 
     programs that provide assistance and equipment to local law 
     enforcement along the Southern border or in High-Intensity 
     Drug Trafficking Areas to combat criminal narcotic activity, 
     of which $10,000,000 shall be available, by transfer, to the 
     Bureau of Alcohol, Tobacco, Firearms, and Explosives for 
     Project Gunrunner.
       Victims Compensation.--The conference agreement provides 
     $100,000,000 for formula grants to be administered through 
     the Justice Department's Office for Victims of Crime to 
     support State compensation and assistance programs for 
     victims and survivors of domestic violence, sexual assault, 
     child abuse, drunk driving, homicide, and other Federal and 
     state crimes.
       Tribal Law Enforcement Assistance.--The conference 
     agreement provides $225,000,000 for grants to assist American 
     Indian and Alaska Native tribes, to be distributed under the 
     guidelines set forth by the Correctional Facilities on Tribal 
     Lands program. The Department is directed to coordinate with 
     the Bureau of Indian Affairs, and to consider the following 
     in the grant approval process: (1) the detention bed space 
     needs of an applicant tribe; and (2) the violent crime 
     statistics of the tribe.
       Internet Crimes Against Children (ICAC) Task Force 
     Program.--The conference agreement provides $50,000,000 to 
     help State and local law enforcement agencies enhance 
     investigative responses to offenders who use the Internet, 
     online communication systems, or other computer technology to 
     sexually exploit children.

                  Community Oriented Policing Services

       COPS Hiring Grants.--The conference agreement provides 
     $1,000,000,000 for grants to State, local, and tribal 
     governments for the hiring of additional law enforcement 
     officers, to be available until September 30, 2010. No 
     administrative overhead costs shall be deducted from the 
     programs funded under this account.


                         SALARIES AND EXPENSES

       The conference agreement provides $10,000,000 for 
     management and administrative costs of Department of Justice 
     grants funded in this Act.

                                SCIENCE

             National Aeronautics and Space Administration

       NASA is directed to submit to the House and Senate 
     Committees on Appropriations a spending plan, signed by the 
     Administrator, detailing its intended allocation of funds 
     provided in this Act within 60 days of enactment of this Act.


                                SCIENCE

       The conference agreement includes $400,000,000 for Science, 
     to remain available until September 30, 2010. Funding is 
     included herein to accelerate the development of the tier 1 
     set of Earth science climate research missions recommended by 
     the National Academies Decadal Survey and to increase the 
     agency's supercomputing capabilities.


                              AERONAUTICS

       The conference agreement includes $150,000,000 for 
     aeronautics, to remain available until September 30, 2010. 
     These funds are available for system-level research, 
     development and demonstration activities related to aviation 
     safety, environmental impact mitigation and the Next 
     Generation Air Transportation System (NextGen).


                              EXPLORATION

       The conference agreement includes $400,000,000 for 
     exploration, to remain available until September 30, 2010.


                          CROSS AGENCY SUPPORT

       The conference agreement includes $50,000,000 for cross 
     agency support, to remain available until September 30, 2010. 
     In allocating these funds, NASA shall give its

[[Page 4000]]

     highest priority to restore NASA-owned facilities damaged 
     from hurricanes and other natural disasters occurring during 
     calendar year 2008.


                      OFFICE OF INSPECTOR GENERAL

       The conference agreement includes $2,000,000 for the Office 
     of Inspector General, to remain available until September 30, 
     2013.

                      National Science Foundation

       NSF is directed to submit to the House and Senate 
     Committees on Appropriations a spending plan, signed by the 
     Director, detailing its intended allocation of funds provided 
     in this Act within 60 days of enactment of this Act.


                    RESEARCH AND RELATED ACTIVITIES

       For research and related activities, the conference 
     agreement provides a total of $2,500,000,000, to remain 
     available until September 30, 2010. Within this amount, 
     $300,000,000 shall be available solely for the major research 
     instrumentation program and $200,000,000 shall be available 
     for activities authorized by title II of Public Law 100-570 
     for academic facilities modernization. In allocating the 
     resources provided under this heading, the conferees direct 
     that NSF support all research divisions and support 
     advancements in supercomputing technology.


                     EDUCATION AND HUMAN RESOURCES

       The conference agreement includes $100,000,000 for 
     education and human resources, to remain available until 
     September 30, 2010. These funds shall be allocated as 
     follows:
Robert Noyce Scholarship Program............................$60,000,000
Math and Science Partnerships................................25,000,000
Professional Science Master's Programs.......................15,000,000


          MAJOR RESEARCH EQUIPMENT AND FACILITIES CONSTRUCTION

       The conference agreement includes $400,000,000 for major 
     research equipment and facilities construction, to remain 
     available until September 30, 2010.


                      OFFICE OF INSPECTOR GENERAL

       The conference agreement includes $2,000,000 for the Office 
     of Inspector General, to remain available until September 30, 
     2013.

                     GENERAL PROVISION--THIS TITLE

       Sec. 201. For COPS Hiring Grants, waives the $75,000 per 
     officer cap codified at 42 U.S.C. 6dd-3(c) and the 25 percent 
     local match requirement codified at 42 U.S.C. 3796dd(g).

                           TITLE III--DEFENSE

                         DEPARTMENT OF DEFENSE

              Facility Infrastructure Investments, Defense

       Facilities Sustainment, Restoration and Modernization 
     covers expenses associated with maintaining the physical 
     plant at Department of Defense posts, camps and stations. The 
     conference agreement provides $4,240,000,000 for Facilities 
     Sustainment, Restoration and Modernization and directs that 
     this funding shall only be available for facilities in the 
     United States and its territories. Further, of the funds 
     provided, $400,000,000 is for the Defense Health Program as 
     described elsewhere in this statement. Of the funds provided 
     in Operation and Maintenance, Army, $153,500,000 shall be 
     used for barracks renovations. The remainder of the funds 
     provided shall be used to invest in energy efficiency 
     projects and to repair and modernize Department of Defense 
     facilities. The Secretary of Defense shall provide a written 
     report to the congressional defense committees no later than 
     60 days after enactment of this Act with a project listing of 
     how these funds will be obligated.

   Near Term Energy Efficiency Technology Demonstrations and Research

       The conference agreement provides $75,000,000 for Research, 
     Development, Test and Evaluation, Army; $75,000,000 for 
     Research, Development, Test and Evaluation, Navy; $75,000,000 
     for Research, Development, Test and Evaluation, Air Force; 
     and $75,000,000 for Research, Development, Test and 
     Evaluation, Defense-Wide only for the funding of research, 
     development, test and evaluation projects, including pilot 
     projects, demonstrations and energy efficient manufacturing 
     enhancements. Funds are for improvements in energy generation 
     and efficiency, transmission, regulation, storage, and for 
     use on military installations and within operational forces, 
     to include research and development of energy from fuel 
     cells, wind, solar, and other renewable energy sources to 
     include biofuels and bioenergy. The Secretary of Defense is 
     directed to provide a report to the congressional defense 
     committees detailing the planned use of these funds within 60 
     days after enactment of this Act. Additionally, the Secretary 
     of Defense is directed to provide a report on the progress 
     made by this effort to the congressional defense committees 
     not later than one year after enactment of this Act and an 
     additional report not later than two years after enactment of 
     this Act.

                         Defense Health Program

       The conference agreement provides $400,000,000 for 
     Facilities Sustainment, Restoration, and Modernization. Of 
     these funds, $220,000,000 shall be for the Army, $50,000,000 
     shall be for the Navy, and $130,000,000 shall be for the Air 
     Force. Funds shall be used to invest in energy efficiency 
     projects and to improve, repair and modernize military 
     medical facilities in the United States and its territories. 
     The Service Surgeons General shall provide written reports to 
     the congressional defense committees no later than 60 days 
     after enactment of this Act with a project listing of how and 
     when these funds will be obligated.

                    Office of the Inspector General

       The conference agreement provides $15,000,000 for the 
     Office of the Inspector General to conduct vigorous oversight 
     of Department of Defense programs.

                 TITLE IV--ENERGY AND WATER DEVELOPMENT

                      DEPARTMENT OF DEFENSE--CIVIL

                         Department of the Army

                       Corps of Engineers--Civil


                              INTRODUCTION

       The conferees agree to provide an additional $4,600,000,000 
     for the Corps of Engineers as proposed by the Senate instead 
     of $4,500,000,000 as proposed by the House. The conferees 
     direct the Corps to consider the following criteria when 
     allocating funds:
       (a) Programs, projects, or activities that can be 
     obligated/executed quickly;
       (b) Programs, projects, or activities that will result in 
     high, immediate employment;
       (c) Programs, projects, or activities that have little 
     schedule risk;
       (d) Programs, projects, or activities that will be executed 
     by contract or direct hire of temporary labor; and
       (e) Programs, projects, or activities that will complete 
     either a project phase, a project, or will provide a useful 
     service that does not require additional funding.
       Further, the Corps is directed to utilize the criteria 
     above to execute authorized projects in order to maximize 
     national benefits without regard to the business line amounts 
     proposed in the Senate report, except where statutory 
     language specifies an amount.


                             INVESTIGATIONS

       The conferees agree to provide an additional $25,000,000 as 
     proposed by the Senate. The House proposed no funding for 
     this account. The conference agreement includes or modifies 
     several provisions proposed by the Senate related to 
     availability of funds and reprogramming.


                              CONSTRUCTION

       The conferees agree to provide an additional $2,000,000,000 
     as proposed by both the House and the Senate.
       The conference agreement includes a provision proposed by 
     the Senate regarding availability of funds for authorized 
     environmental infrastructure projects. The House bill 
     included no similar provision.
       The conference agreement includes several provisions 
     proposed by the House and the Senate regarding limitations on 
     reimbursement, annual program and total project cost limits, 
     the Inland Waterways Trust Fund, and availability of funds.
       The conference agreement deletes a provision proposed by 
     the House directing the prioritization of funds. The Senate 
     carried report language addressing prioritization.
       The conference agreement includes a provision proposed by 
     the Senate granting the Secretary of the Army unlimited 
     reprogramming authority for funds provided under this 
     heading. The House bill included no similar provision.
       The conference agreement includes a provision proposed by 
     the House requiring specific reports on obligation and 
     expenditure of funds provided in this Act. The Senate bill 
     included no similar provision.


                   MISSISSIPPI RIVER AND TRIBUTARIES

       The conferees agree to provide an additional $375,000,000 
     instead of $250,000,000 as proposed by the House and 
     $500,000,000 as proposed by the Senate.
       The conference agreement deletes a provision proposed by 
     the House directing the prioritization of funds. The Senate 
     carried report language addressing prioritization.
       The conference agreement includes several provisions 
     proposed by the House and the Senate regarding total project 
     cost limits and availability of funds.
       The conference agreement includes a provision proposed by 
     the Senate granting the Secretary of the Army unlimited 
     reprogramming authority for funds provided under this 
     heading. The House bill included no similar provision.
       The conference agreement includes a provision proposed by 
     the House requiring specific reports on obligation and 
     expenditure of funds provided in this Act. The Senate bill 
     included no similar provision.


                       OPERATION AND MAINTENANCE

       The conferees agree to provide an additional $2,075,000,000 
     instead of $2,225,000,000 as proposed by the House and 
     $1,900,000,000 as proposed by the Senate.
       The conference agreement deletes a provision proposed by 
     the House directing the prioritization of funds. The Senate 
     carried report language addressing prioritization.
       The conference agreement includes several provisions 
     proposed by the House and the Senate regarding total project 
     cost limits and availability of funds.
       The conference agreement deletes a provision proposed by 
     the Senate relating to activities authorized in section 9004 
     of Public

[[Page 4001]]

     Law 110-114. The House bill included no similar provision.
       The conference agreement includes a provision proposed by 
     the Senate relating to annual project limitations set forth 
     in section 9006 of Public Law 110-114. The House bill 
     included no similar provision.
       The conference agreement includes a provision proposed by 
     the Senate granting the Secretary of the Army unlimited 
     reprogramming authority for funds provided under this 
     heading. The House bill included no similar provision.
       The conference agreement includes a provision proposed by 
     the House requiring specific reports on obligation and 
     expenditure of funds provided in this Act. The Senate bill 
     included no similar provision.


                           REGULATORY PROGRAM

       The conferees agree to provide an additional $25,000,000 as 
     proposed by both the House and the Senate.


            FORMERLY UTILIZED SITES REMEDIAL ACTION PROGRAM

       The conferees agree to provide an additional $100,000,000 
     as proposed by the Senate. The House proposed no funding for 
     this account.
       The conference agreement includes or modifies several 
     provisions proposed by the Senate related to availability of 
     funds and reprogramming.
       The conference agreement includes a new provision requiring 
     specific reports on obligation and expenditure of funds 
     provided in this Act.


                 FLOOD CONTROL AND COASTAL EMERGENCIES

       The conferees provide no additional funds, as proposed by 
     the House, instead of $50,000,000 as proposed by the Senate.

                         DEPARTMENT OF INTERIOR

                         Bureau of Reclamation


                      WATER AND RELATED RESOURCES

       The conferees agree to provide an additional $1,000,000,000 
     for Water and Related Resources instead of $500,000,000 as 
     proposed by the House and $1,400,000,000 as proposed by the 
     Senate. The conferees direct the Bureau to consider the 
     following criteria when allocating funds:
       (a) Programs, projects, or activities that can be 
     obligated/executed quickly;
       (b) Programs, projects, or activities that will result in 
     high, immediate employment;
       (c) Programs, projects, or activities that have little 
     schedule risk;
       (d) Programs, projects, or activities that will be executed 
     by contract or direct hire of temporary labor; and
       (e) Programs, projects, or activities that will complete 
     either a project phase, a project, or will provide a useful 
     service that does not require additional funding.
       Further, the Bureau is directed to utilize the criteria 
     above to execute authorized projects in order to maximize 
     national benefits without regard to the amounts proposed in 
     the Senate report by purpose, except where statutory language 
     specifies an amount.
       The conference agreement includes a provision proposed by 
     the House related to expenditures for authorized title XVI 
     projects. The Senate bill included a similar provision.
       The conference agreement deletes several provisions 
     proposed by the Senate related to the Bureau of Reclamation's 
     special fee account; contributed funds; funds advanced under 
     43 U.S.C. 397a; and limitations on funding programs, projects 
     or activities that receive funding in Acts making 
     appropriations for Energy and Water Development. The House 
     bill included no similar provisions.
       The conference agreement includes provisions proposed by 
     the Senate relating to availability of funds for projects 
     that can be completed with funds provided in this Act and the 
     availability of funds for authorized activities under the 
     Central Utah Project Completion Act, California-Bay Delta 
     Restoration Act, and the bureau-wide inspection of canals 
     program in urbanized areas. The House bill included no 
     similar provisions.
       The conference agreement includes a provision proposed by 
     the Senate relating to authorized rural water projects. The 
     House bill included a similar provision.
       The conference agreement modifies provisions proposed by 
     both the House and the Senate relating to repayment of 
     reimbursable activities.
       The conference agreement includes a provision proposed by 
     the Senate relating to availability of funds for costs 
     associated with supervision, inspection, overhead, 
     engineering and design on projects. The House bill included 
     no similar provision.
       The conference agreement includes a provision proposed by 
     the Senate granting the Secretary of Interior unlimited 
     reprogramming authority for funds provided under this 
     heading. The House bill included no similar provision.
       The conference agreement includes a new provision requiring 
     specific reports on obligation and expenditure of funds 
     provided in this Act.

                          DEPARTMENT OF ENERGY

                            Energy Programs


                 ENERGY EFFICIENCY AND RENEWABLE ENERGY

       The conferees agree to provide an additional 
     $16,800,000,000 for the Energy Efficiency and Renewable 
     Energy program, instead of $18,500,000,000 as proposed by the 
     House and $14,398,000,000 as proposed by the Senate. The 
     conference agreement includes $2,500,000,000 for applied 
     research, development, demonstration and deployment 
     activities to include $800,000,000 for projects related to 
     biomass and $400,000,000 for geothermal activities and 
     projects. Within available funds, the conferees direct 
     $50,000,000 for the Department to support research to 
     increase the efficiency of information and communications 
     technology and improve standards.
       Funds under this heading include $3,200,000,000 for the 
     Energy Efficiency and Conservation Block Grant (EECBG) 
     program, instead of $3,500,000,000 as proposed by the House 
     and $4,200,000,000 as proposed by the Senate. Of the funds 
     provided for the EECBG program, $400,000,000 shall be awarded 
     on a competitive basis to grant applicants.
       Funds under this heading include $5,000,000,000 for the 
     Weatherization Assistance Program, instead of $6,200,000,000 
     as proposed in the House bill. The Senate proposed 
     $2,900,000,000 in report language.
       Funds under this heading include $3,100,000,000 for the 
     State Energy Program, instead of $3,400,000,000 as proposed 
     in the House bill. The Senate proposed $500,000,000 in report 
     language.
       Funds under this heading include $2,000,000,000 for 
     Advanced Battery Manufacturing grants to support the 
     manufacturing of advanced vehicle batteries and components, 
     as proposed by the Senate, instead of $1,000,000,000 as 
     proposed by the House. The conference agreement does not 
     include the Advanced Battery Loan Guarantee program as 
     proposed by the House. The Senate bill carried no similar 
     provision.
       Funds under this heading include $300,000,000 for the 
     Alternative Fueled Vehicles Pilot Grant Program, instead of 
     $400,000,000 as proposed in the House bill. The Senate 
     proposed $350,000,000 in report language.
       Funds under this heading include $400,000,000 for 
     Transportation Electrification, instead of $200,000,000 as 
     proposed in the House bill. The Senate proposed $200,000,000 
     in report language.
       Funds under this heading include $300,000,000 for the 
     Energy Efficient Appliance Rebate program and the Energy Star 
     Program as proposed by the House. The Senate bill carried no 
     similar provision.
       The conference agreement includes language proposed by both 
     the House and Senate that accelerates the hiring of personnel 
     for the Energy Efficiency and Renewable Energy program.
       The conference agreement does not include $500,000,000 for 
     incentives for Energy Recovery of Industrial Waste Heat, as 
     proposed by the House. The Senate bill carried no similar 
     provision.
       The conference agreement does not include $1,000,000,000 
     for grants to Institutional Entities for Energy 
     Sustainability and Efficiency as proposed in the House bill. 
     The Senate proposed $1,600,000,000 in report language.
       The conference agreement does not include $500,000,000 for 
     the cost of guaranteed loans to Institutional Entities for 
     Energy Sustainability and Efficiency as proposed in the House 
     bill. The Senate bill carried no similar provision.


              ELECTRICITY DELIVERY AND ENERGY RELIABILITY

       The conferees agree to provide an additional $4,500,000,000 
     for the Electricity Delivery and Energy Reliability program, 
     as proposed by the House and the Senate. The conferees 
     provide $100,000,000 within these funds for worker training, 
     as proposed by the House and the Senate.
       The conferees include language enabling the Secretary to 
     use funds for transmission improvements authorized in any 
     subsequent Act, as proposed by the House. The Senate bill 
     contained no similar provision.
       The conferees include language proposed by the Senate that 
     accelerates the hiring of personnel for the Electricity 
     Delivery and Energy Reliability program. The House bill 
     contained no similar provision.
       The conference agreement modifies bill language proposed by 
     the Senate providing funds to conduct a resource assessment 
     of future demand and transmission requirements. The House 
     bill contained no similar provision.
       The conference agreement modifies bill language proposed by 
     the Senate for technical assistance to the North American 
     Electric Reliability Corporation, the regional reliability 
     entities, the States, and other transmission owners and 
     operators for the formation of interconnection-based 
     transmission plans for the Eastern and Western 
     Interconnections and ERCOT. The House bill contained no 
     similar provision.
       The conference agreement includes bill language proposed by 
     the Senate providing $10,000,000 to implement section 1305 of 
     Public Law 110-140. The House bill contained no similar 
     provision.


                 FOSSIL ENERGY RESEARCH AND DEVELOPMENT

       The conferees agree to provide an additional $3,400,000,000 
     for the Fossil Energy Research and Development program, 
     instead of $2,400,000,000 as proposed by the House and 
     $4,600,000,000 as proposed by the Senate.
       Funds under this heading include $1,000,000,000 for fossil 
     energy research and

[[Page 4002]]

     development programs; $800,000,000 for additional amounts for 
     the Clean Coal Power Initiative Round III Funding Opportunity 
     Announcement; $1,520,000,000 for a competitive solicitation 
     for a range of industrial carbon capture and energy 
     efficiency improvement projects, including a small allocation 
     for innovative concepts for beneficial CO2 reuse; 
     $50,000,000 for a competitive solicitation for site 
     characterization activities in geologic formations; 
     $20,000,000 for geologic sequestration training and research 
     grants; and $10,000,000 for program direction funding.
       The conference agreement does not include $2,400,000,000 
     for Section 702 of the Energy Independence and Security Act 
     of 2007, as proposed by the House. The Senate bill contained 
     no similar provision.
       The conference agreement deletes several provisions 
     proposed by the Senate delineating funding within this 
     account. The House bill contained no similar provisions.


                   NON-DEFENSE ENVIRONMENTAL CLEANUP

       The conferees agree to provide an additional $483,000,000 
     for the Non-Defense Environmental Cleanup program, as 
     proposed by the Senate. The House bill carried no similar 
     provision.


      URANIUM ENRICHMENT DECONTAMINATION AND DECOMMISSIONING FUND

       The conferees agree to provide an additional $390,000,000 
     for the Uranium Enrichment Decontamination and 
     Decommissioning Fund, as proposed by the Senate. The House 
     bill carried no similar provision. Within available funds, 
     $70,000,000 is provided for the title X uranium and thorium 
     program.


                                SCIENCE

       The conferees agree to provide an additional $1,600,000,000 
     for the Science program. After taking into account the 
     additional $400,000,000 provided for Advanced Research 
     Projects Agency-Energy (ARPA-E) in a separate account, the 
     funding level for Science is the same as proposed by the 
     House, instead of $330,000,000 as proposed by the Senate.
       The conference agreement does not include $100,000,000 for 
     advanced scientific computing as proposed in the House bill. 
     The Senate bill carried no similar provision.


                ADVANCED RESEARCH PROJECTS AGENCY-ENERGY

       The conferees agree to provide $400,000,000 for the 
     Advanced Research Projects Agency-Energy authorized under 
     section 5012 of the America COMPETES Act (42 U.S.C. 16538). 
     This funding was provided by the House under ``Science''. The 
     Senate bill carried no similar provision.


         TITLE 17--INNOVATIVE TECHNOLOGY LOAN GUARANTEE PROGRAM

       The conference agreement includes $6,000,000,000 for the 
     cost of guaranteed loans authorized by section 1705 of the 
     Energy Policy Act of 2005, instead of $8,000,000,000 as 
     proposed by the House and $9,500,000,000 as proposed by the 
     Senate.
       This new loan program would provide loan guarantees for 
     renewable technologies and transmission technologies. The 
     $6,000,000,000 in appropriated funds is expected to support 
     more than $60,000,000,000 in loans for these projects.
       Funds under this heading include $10,000,000 for 
     administrative expenses to support the Advanced Technology 
     Vehicles Manufacturing Loan program. The House bill and the 
     Senate bill included no similar provision.
       The conference agreement does not include a provision 
     proposed by the Senate providing $50,000,000,000 in 
     additional loan authority for commitments to guarantee loans 
     under section 1702(b)(2) of the Energy Policy Act of 2005. 
     The House bill contained no similar provision.


                    OFFICE OF THE INSPECTOR GENERAL

       The conferees agree to provide an additional $15,000,000 
     for the Office of Inspector General, as proposed by the 
     House. The Senate bill included a similar provision.

                    ATOMIC ENERGY DEFENSE ACTIVITIES

                National Nuclear Security Administration


                           WEAPONS ACTIVITIES

       The conference agreement does not provide $1,000,000,000 
     for the National Nuclear Security Administration, Weapons 
     Activities, as proposed by the Senate. The House bill 
     contained no similar provision.

               Environmental and Other Defense Activities


                     DEFENSE ENVIRONMENTAL CLEANUP

       The conferees agree to provide an additional $5,127,000,000 
     for the Defense Environmental Cleanup program, instead of 
     $500,000,000 as proposed by the House and $5,527,000,000 as 
     proposed by the Senate.

Construction, Rehabilitation, Operation, and Maintenance, Western Area 
                          Power Administration

       The conference agreement includes bill language proposed by 
     the Senate providing $10,000,000 in non-reimbursable funds 
     for construction, rehabilitation, operations, and maintenance 
     for the Western Area Power Administration (WAPA). The House 
     bill contained no similar provision.
       The conference agreement includes bill language proposed by 
     the Senate providing additional staffing levels for the WAPA. 
     The House bill contained no similar provision.
       Legislative language is also included in the General 
     Provisions of this title providing the WAPA with 
     $3,250,000,000 in borrowing authority, as proposed by both 
     the House and the Senate.

                     GENERAL PROVISIONS--THIS TITLE

       The conference agreement includes a provision proposed by 
     both the House and Senate increasing the borrowing authority 
     ceiling for the Bonneville Power Administration by 
     $3,250,000,000.
       The conference agreement includes a provision proposed by 
     the Senate providing the Western Area Power Administration 
     $3,250,000,000 in borrowing authority. The House bill 
     contained a similar provision.
       The conference agreement modifies a provision proposed by 
     the House granting transfer authority to the Secretary of 
     Energy under specific circumstances. The Senate bill 
     contained no similar provision.
       The conference agreement includes a provision proposed by 
     the House making technical corrections to section 543(a) of 
     the Energy Independence and Security Act of 2007. The Senate 
     bill contained no similar provision.
       The conference agreement modifies a provision proposed by 
     the House amending title XIII of the Energy Independence and 
     Security Act of 2007 to provide financial support to smart 
     grid demonstration projects including those in urban, 
     suburban, rural and tribal areas including areas where 
     electric system assets are controlled by nonprofit entities 
     and areas where the electric system assets are controlled by 
     investor owned utilities. The Senate bill contained a similar 
     provision.
       The conference agreement modifies a provision proposed by 
     the House amending title XVII of the Energy Independence and 
     Security Act of 2007 creating a temporary loan guarantee 
     program for the rapid deployment of renewable energy and 
     electric power transmission projects. The Senate bill 
     contained a similar provision.
       The conference agreement modifies a provision proposed by 
     the House expanding the eligibility of low income households 
     for the Weatherization Assistance Program and increasing the 
     funding assistance level per dwelling unit. The provision 
     also provides guidance on effective use of funds. The Senate 
     bill contained a similar provision.
       The conference agreement includes a provision proposed by 
     the Senate making technical corrections to redesignate two 
     paragraphs of the Public Utility Regulatory Policies Act of 
     1978. The House bill contained no similar provision.
       The conference agreement includes a provision proposed by 
     the House providing the Secretary of Energy further direction 
     in completing the 2009 National Electric Transmission 
     Congestion Study. The Senate bill contained no similar 
     provision.
       The conference agreement includes a provision proposed by 
     the House requiring as a condition of receipt of State Energy 
     Program grants, a Governor to notify the Secretary of Energy 
     that the Governor has obtained certain assurances, regarding 
     certain regulatory policies, building code requirements and 
     the prioritization of existing state programs. The Senate 
     bill contained a similar provision.
       The conference agreement deletes a provision proposed by 
     the House waiving per project limitations for grants provided 
     under section 399A(f)(2), (3), and (4) of the Energy Policy 
     and Conservation Act and establishes that grants shall be 
     available for not more than an amount equal to 80 percent of 
     the costs of the project for which the grant is provided. The 
     Senate bill contained no similar provision.

           TITLE V--FINANCIAL SERVICES AND GENERAL GOVERNMENT

                       DEPARTMENT OF THE TREASURY

           Treasury Inspector General for Tax Administration


                         salaries and expenses

       The conference agreement provides $7,000,000 for oversight 
     and audits of the administration of the making work pay tax 
     credit and economic recovery payments under the American 
     Recovery and Reinvestment Act, as proposed by the Senate. The 
     House did not include funds for this account.

   Community Development Financial Institutions Fund Program Account

       The conference agreement provides $100,000,000 for 
     qualified applicants under the fiscal year 2009 funding round 
     of the Community Development Financial Institutions Fund 
     program, instead of no funds as proposed by the House and 
     $250,000,000 as proposed by the Senate.

                        Internal Revenue Service


               HEALTH INSURANCE TAX CREDIT ADMINISTRATION

       The conference agreement provides $80,000,000 to cover 
     expected additional costs associated with implementation of 
     the TAA Health Coverage Improvement Act of 2009.

                          DISTRICT OF COLUMBIA

                            Federal Payments


              FEDERAL PAYMENT TO THE DISTRICT OF COLUMBIA

                       WATER AND SEWER AUTHORITY

       The conference agreement does not provide funding for the 
     District of Columbia Water

[[Page 4003]]

     and Sewer Authority, instead of $125,000,000 as proposed by 
     the Senate.

                    GENERAL SERVICES ADMINISTRATION

                        Real Property Activities


                         FEDERAL BUILDINGS FUND

                 LIMITATIONS ON AVAILABILITY OF REVENUE

                     (INCLUDING TRANSFER OF FUNDS)

       The conference agreement provides $5,550,000,000, for the 
     Federal Buildings Fund, instead of $7,700,000,000 as proposed 
     by the House and $5,548,000,000 as proposed by the Senate. Of 
     the amounts provided, the conference agreement includes 
     $750,000,000 for Federal buildings and United States 
     courthouses, $450,000,000 of which shall be for a new 
     headquarters for the Department of Homeland Security; 
     $300,000,000 for border stations and land ports of entry; and 
     not less than $4,500,000,000 to convert GSA facilities to 
     High-Performance Green buildings as defined in P.L. 110-140. 
     The conference agreement provides $4,000,000 for the Office 
     of Federal High-Performance Green Buildings, authorized in 
     the Energy Independence and Security Act of 2007. The 
     agreement also provides $3,000,000 for a training and 
     apprenticeship program for construction, repair and 
     alteration of Federal buildings. With any funds in the Act 
     that are used for new United States courthouse construction, 
     the conferees advise GSA to consider projects for which the 
     design provides courtroom space for senior judges for up to 
     10 years from eligibility for senior status, not to exceed 
     one courtroom for every two senior judges.

        Energy-Efficient Federal Motor Vehicle Fleet Procurement

       The conference agreement includes $300,000,000 for the 
     acquisition of motor vehicles for the Federal fleet as 
     proposed by the Senate, instead of $600,000,000 as proposed 
     by the House. The conferees expect that the funds provided 
     for Federal motor vehicle fleet procurement will help to 
     stimulate the market for high-efficiency motor vehicles and 
     will increase the fuel efficiency and reduce carbon emissions 
     of the Federal motor vehicle fleet. The conferees remain 
     hopeful that domestically produced plug-in hybrid-electric 
     vehicles will be commercially available in sufficient 
     quantities before September 30, 2010, such that these funds 
     could be used to acquire this technology for the Federal 
     fleet. Vehicles must be replaced on at least a one-for-one 
     basis. Each vehicle purchased must have a higher fuel 
     economy, as measured by EPA, than the vehicle being replaced 
     and the overall government-purchased vehicles must have an 
     improved fuel economy at least 10 percent greater than the 
     vehicles being replaced.

                      Office of Inspector General

       The conference agreement provides $7,000,000 for the 
     General Services Administration Office of Inspector General, 
     as proposed by the Senate, instead of $15,000,000 as proposed 
     by the House. Funds are available through September 30, 2013 
     for oversight and audit of programs, activities, and projects 
     under this title.

           Recovery Act Accountability and Transparency Board

       The conference agreement provides $84,000,000 for the 
     Recovery Act Accountability and Transparency Board, instead 
     of $14,000,000 as provided by the House and $7,000,000 as 
     provided by the Senate. Funding will support activities 
     related to accountability, transparency, and oversight of 
     spending under the Act. Funds may be transferred to support 
     the operations of the Recovery Independent Advisory Panel 
     established under section 1541 of the Act and for technical 
     and administrative services and support provided by the 
     General Services Administration. Funds may also be 
     transferred to the Office of Management and Budget for 
     coordinating and overseeing the implementation of the 
     reporting requirements established under section 1526 of the 
     Act. Funds may be transferred not less than 15 days following 
     the notification of such transfer to the Committees on 
     Appropriations of the House of Representatives and the 
     Senate.

                     SMALL BUSINESS ADMINISTRATION


                         SALARIES AND EXPENSES

       The conference agreement provides $69,000,000 for Salaries 
     and Expenses of the Small Business Administration, instead of 
     $84,000,000 as proposed by the Senate. The House did not 
     include funds for this account. Of the amount provided, 
     $24,000,000 is for marketing, management, and technical 
     assistance under the Microloan program, $20,000,000 is for 
     improving, streamlining, and automating information 
     technology systems related to lender processes and lender 
     oversight, and $25,000,000 is for administrative expenses to 
     ensure the efficient and effective management of small 
     business programs.

                      Office of Inspector General

       The conference agreement provides $10,000,000 for the 
     Office of Inspector General, as proposed by the House and the 
     Senate. Funds are made available through September 30, 2013 
     for oversight and audit of programs, activities, and projects 
     under this title.

                 Surety Bond Guarantees Revolving Fund

       The conference agreement provides $15,000,000 for the 
     Surety Bond Guarantees Revolving Fund, as proposed by the 
     Senate. The House did not include funds for this account.

                     Business Loans Program Account

       The conference agreement provides $636,000,000 for the 
     Business Loans Program Account, instead of $430,000,000 as 
     proposed by the House and $621,000,000 as proposed by the 
     Senate. Of this amount, $6,000,000 is for the cost of direct 
     loans provided under the Microloan program. The remaining 
     $630,000,000 will implement the fee reductions and new loan 
     guarantee authorities under sections 501 and 506 of this 
     title.

        Administrative Provisions--Small Business Administration

       Section 501 authorizes temporary fee reductions or 
     eliminations in the 7(a) loan guarantee program and the 504 
     loan program. The Senate proposed similar language.
       Section 502 authorizes up to a 90 percent Small Business 
     Administration guarantee on 7(a) loans. The House proposed 
     similar language.
       Section 503 authorizes the establishment of a SBA Secondary 
     Market Guarantee Authority to provide a Federal guarantee for 
     pools of first lien 504 loans that are to be sold to third-
     party investors. The House proposed similar language.
       Section 504 authorizes SBA to refinance community 
     development loans under its 504 program and revises the job 
     creation goals of the program. The House and the Senate 
     proposed similar language.
       Section 505 simplifies the maximum leverage limits and 
     aggregate investment limits required of Small Business 
     Investment Companies. The House and the Senate proposed 
     similar language.
       Section 506 authorizes the Small Business Administration to 
     carry out a program to provide loans on a deferred basis to 
     viable small business concerns that have a qualifying small 
     business loan and are experiencing immediate financial 
     hardship.
       Section 507 requires the Government Accountability Office 
     to report to Congress on the implementation of the Small 
     Business Administration provisions. The House proposed a 
     similar provision.
       Section 508 provides an increase in the surety bond maximum 
     amount and modifies size standards. The Senate proposed 
     similar language.
       Section 509 establishes a secondary market lending 
     authority within the Small Business Administration. The House 
     proposed similar language.
       The conference agreement does not include a provision, 
     proposed by the House, to establish a new lending and 
     refinancing authority within the Small Business 
     Administration.
       The conference agreement does not include a provision, 
     proposed by the Senate, regarding the 7(a) loan maximum 
     amount.
       The conference agreement does not include a provision, 
     proposed by the Senate, regarding definitions under the 
     heading ``Small Business Administration'' in this title. The 
     conference agreement includes provisions relating to 
     definitions of terms within the individual sections.

               TITLE VI--DEPARTMENT OF HOMELAND SECURITY

              Office of the Under Secretary for Management

       The conferees provide $200,000,000 for the Office of the 
     Under Secretary for Management instead of $198,000,000 as 
     proposed by the Senate and no funding proposed by the House. 
     These funds are for planning, design, and construction costs 
     necessary to consolidate the Department of Homeland Security 
     (DHS) headquarters. DHS estimates that this project will 
     create direct employment opportunities for 32,800 people in 
     the region, largely within the construction and renovation 
     industry. The conferees include bill language as proposed by 
     the Senate to require an expenditure plan.

                      Office of Inspector General

       The conferees provide $5,000,000 for the Office of 
     Inspector General (OIG) as proposed by the Senate instead of 
     $2,000,000 as proposed by the House. Funding is available 
     until September 30, 2012. These funds shall be used for 
     oversight and audit programs, grants, and projects funded in 
     this Title. The OIG estimates that this funding will provide 
     for approximately 25 temporary federal positions and 40 
     contractor positions.

                   U.S. Customs and Border Protection


                         SALARIES AND EXPENSES

       The conferees provide $160,000,000 for U.S. Customs and 
     Border Protection (CBP) Salaries and Expenses instead of 
     $100,000,000 as proposed by the House and $198,000,000 as 
     proposed by the Senate. This includes $100,000,000 for the 
     procurement and deployment of new or replacement non-
     intrusive inspection (NII) systems, and $60,000,000 for 
     tactical communications. DHS estimates that funding for NII 
     systems will create 148 new government and private sector 
     jobs, and funding for tactical communications will create an 
     estimated 319 contract positions, as well as manufacturing 
     and systems software jobs. The conferees include bill 
     language as proposed by the Senate to require an expenditure 
     plan.


        BORDER SECURITY FENCING, INFRASTRUCTURE, AND TECHNOLOGY

       The conferees provide $100,000,000 for Border Security 
     Fencing, Infrastructure, and

[[Page 4004]]

     Technology instead of $200,000,000 as proposed by the Senate 
     and no funding proposed by the House. The conferees include 
     bill language as proposed by the Senate to require an 
     expenditure plan.


                              CONSTRUCTION

       The conferees provide $420,000,000 for Construction, 
     instead of $150,000,000 as proposed by the House and 
     $800,000,000 as proposed by the Senate. The conferees include 
     bill language as proposed by the Senate to make funding 
     available for planning, management, design, alteration, and 
     construction of land ports of entry that are owned by U.S. 
     Customs and Border Protection. Up to five percent of these 
     funds may be used to enhance management and oversight of this 
     construction. DHS estimates that this project will create 
     employment for 4,584 people in the border communities, 
     largely within the construction and renovation industry. The 
     conferees include bill language as proposed by the Senate to 
     require an expenditure plan.

                U.S. Immigration and Customs Enforcement


                        AUTOMATION MODERNIZATION

       The conferees provide $20,000,000 for Automation 
     Modernization instead of $27,800,000 as proposed by the 
     Senate and no funding proposed by the House. U.S. Immigration 
     and Customs Enforcement has estimated this investment will 
     create more than 120 new jobs related to the planning, 
     manufacture, programming and installation of this equipment. 
     The conferees include bill language as proposed by the Senate 
     to require an expenditure plan.

                 Transportation Security Administration


                           AVIATION SECURITY

       The conferees provide $1,000,000,000 for Aviation Security 
     as proposed by the Senate instead of $500,000,000 as proposed 
     by the House. This funding shall be used to procure and 
     install checked baggage explosives detection systems and 
     checkpoint explosives detection equipment. The Assistant 
     Secretary of the Transportation Security Administration (TSA) 
     should prioritize the award of these funds based on risk to 
     accelerate the installation at locations with completed 
     design plans. Funds must be competitively awarded. TSA 
     estimates that this funding will create about 3,537 
     manufacturing and construction jobs as well as a small number 
     of Federal positions.
       The conferees include bill language as proposed by the 
     Senate to require an expenditure plan. Consistent with 
     direction provided previously for fiscal year 2009, if a new 
     requirement occurs after the expenditure plan is submitted, 
     TSA shall reassess and reallocate these funds after notifying 
     the Committees on Appropriations. In addition, TSA shall 
     brief the Committees quarterly on these expenditures.

                              Coast Guard

              Acquisition, Construction, and Improvements

       The conferees provide $98,000,000 for Acquisition, 
     Construction, and Improvements instead of $450,000,000 as 
     proposed by the Senate and no funding proposed by the House. 
     This funding cannot be used for pre-acquisition survey, 
     design, or construction of a new polar icebreaker. The 
     conferees include bill language as proposed by the Senate to 
     require an expenditure plan. The Coast Guard estimates that 
     this funding will create or preserve at least 435 jobs.

                         ALTERATION OF BRIDGES

       The conferees provide $142,000,000 for Alteration of 
     Bridges instead of $150,000,000 as proposed by the House and 
     $240,400,000 as proposed by the Senate. The conferees include 
     bill language as proposed by the Senate to require an 
     expenditure plan. The Coast Guard estimates that this funding 
     will create approximately 1,200 jobs.

                  Federal Emergency Management Agency


                        STATE AND LOCAL PROGRAMS

       The conferees provide $300,000,000 for State and Local 
     Programs instead of $950,000,000 as proposed by the Senate 
     and no funding proposed by the House. Of the amount made 
     available, $150,000,000 is for Public Transportation Security 
     Assistance and Railroad Security Assistance, including Amtrak 
     security, and $150,000,000 is for Port Security Grants. The 
     Secretary shall not require a cost share for grants provided 
     for Public Transportation Security Assistance and Railroad 
     Security Assistance (including Amtrak security). In addition, 
     the bill includes a provision waiving the cost-share for Port 
     Security Grants funded in this Act.
       The conferees expect funding provided under this heading to 
     support nearly 2,900 jobs based on an estimate by the 
     Department of Homeland Security. The conferees direct that 
     priority be given to construction projects which address the 
     most significant risks and can also be completed in a timely 
     fashion.


                     FIREFIGHTER ASSISTANCE GRANTS

       The conferees provide $210,000,000 for firefighter 
     assistance grants instead of $500,000,000 as proposed by the 
     Senate and no funding proposed by the House. As proposed by 
     the Senate, funds are provided for modifying, upgrading or 
     constructing non-Federal fire stations, not to exceed 
     $15,000,000 per grant. The conferees expect this funding to 
     support nearly 2,000 jobs based on an estimate by the 
     Department of Homeland Security.


            DISASTER ASSISTANCE DIRECT LOAN PROGRAM ACCOUNT

       The conferees include bill language as proposed by the 
     Senate allowing loans related to calendar year 2008 disasters 
     to exceed $5,000,000 and equal not more than 50 percent of 
     the operating budget of local governments if that local 
     government has suffered a loss of 25 percent or more in tax 
     revenues. The House bill contained no comparable provision.


                       EMERGENCY FOOD AND SHELTER

       The conferees provide $100,000,000 for Emergency Food and 
     Shelter as proposed by the Senate instead of $200,000,000 as 
     proposed by the House.

                     GENERAL PROVISIONS--THIS TITLE

       Section 601. The conferees include a provision, as proposed 
     by the Senate, related to Hurricanes Katrina and Rita 
     establishing an arbitration panel under the Federal Emergency 
     Management Agency.
       Section 602. The conferees include a provision, as proposed 
     by the Senate, regarding the Federal Emergency Management 
     Agency's hazard mitigation grant program related to 
     Hurricanes Katrina and Rita.
       Section 603. The conferees include a provision, as proposed 
     by the House, waiving the cost-share for grants under section 
     34 of the Federal Fire Prevention and Control Act of 1974 for 
     fiscal years 2009 and 2010.
       Section 604. The conferees include and modify a provision, 
     as proposed by the House, related to the procurement of 
     apparel and textile products by the Department of Homeland 
     Security. This language is modeled after the Berry Amendment 
     (10 U.S.C. 2533a), which has required the Department of 
     Defense to purchase domestically-manufactured textiles and 
     apparel.

                         PROVISIONS NOT ADOPTED

       The conferees do not include section 1114 of the House 
     bill, which relates to the E-Verify program; and sections 
     7001 through 7004 of the House bill, which House relate to 
     authorization of the Basic Pilot system.

    TITLE VII--DEPARTMENT OF THE INTERIOR, ENVIRONMENT, AND RELATED 
                                AGENCIES

                       DEPARTMENT OF THE INTERIOR

                       Bureau of Land Management


                   MANAGEMENT OF LANDS AND RESOURCES

       The conference agreement provides $125,000,000 for 
     management of lands and resources instead of $135,000,000 
     proposed by the Senate; there was no House proposal. The 
     conference agreement provides flexibility to the agency in 
     determining the allocation of this funding among various 
     program activities and sub-activities. The conferees 
     encourage that selection of individual projects be based on a 
     prioritization process which weighs the capacity of proposals 
     to create the largest number of jobs in the shortest period 
     of time and which creates lasting value for the American 
     public. While maximizing jobs, the Bureau should consider 
     projects on all Bureau managed lands including deferred 
     maintenance, abandoned mine and well site remediation, road 
     and trail maintenance, watershed improvement, and high 
     priority habitat restoration.


                              CONSTRUCTION

       The conference agreement provides $180,000,000 for 
     construction as proposed by the Senate instead of 
     $325,000,000 proposed by the House. The conference agreement 
     provides flexibility to the agency in determining the 
     allocation of this funding among various program activities 
     and sub-activities. The conferees encourage that selection of 
     individual projects be based on a prioritization process 
     which weighs the capacity of proposals to create the largest 
     number of jobs in the shortest period of time and which 
     creates lasting value for the American public. While 
     maximizing jobs, the Bureau should consider priority road, 
     bridge, and trail repair or decommissioning, critical 
     deferred maintenance projects, facilities construction and 
     renovation, and remediation of abandoned mine and well sites 
     on all Bureau managed lands.


                        WILDLAND FIRE MANAGEMENT

       The conference agreement provides $15,000,000 for wildland 
     fire management as proposed by the Senate; there was no House 
     proposal. The funds should be used for high priority 
     hazardous fuels reduction projects on Federal lands.

                United States Fish and Wildlife Service


                          RESOURCE MANAGEMENT

       The conference agreement provides $165,000,000 for resource 
     management, as proposed by the Senate; there was no House 
     proposal for this account. The conference agreement provides 
     flexibility to the agency in determining the allocation of 
     this funding among various program activities and sub-
     activities. The conferees encourage that selection of 
     individual projects be based on a prioritization process 
     which weighs the capacity of proposals to create the largest 
     number of jobs in the shortest period of time and which 
     creates lasting value for the American public. While 
     maximizing jobs, the Service should consider priority 
     critical deferred maintenance and capital improvement

[[Page 4005]]

     projects, trail maintenance, and habitat restoration on 
     National Wildlife Refuges, National Fish Hatcheries, and 
     other Service properties.


                              CONSTRUCTION

       The conference agreement provides $115,000,000 for 
     construction instead of $110,000,000 as proposed by the 
     Senate and $300,000,000 as proposed by the House. The 
     conference agreement provides flexibility to the agency in 
     determining the allocation of this funding among various 
     program activities and sub-activities. The conferees 
     encourage that selection of individual projects be based on a 
     prioritization process which weighs the capacity of proposals 
     to create the largest number of jobs in the shortest period 
     of time and which creates lasting value for the American 
     public. While maximizing jobs, the Service should consider 
     priority construction, reconstruction and repair, critical 
     deferred maintenance and capital improvement projects, road 
     maintenance, energy conservation projects and habitat 
     restoration on National Wildlife Refuges, National Fish 
     Hatcheries and other Service properties.

                         National Park Service


                 OPERATION OF THE NATIONAL PARK SYSTEM

       Appropriates $146,000,000 for operation of the national 
     park system instead of $158,000,000, as proposed by the 
     Senate. The House bill included all National Park Service 
     funding under the construction account. Eligible projects to 
     be funded within this account include but are not limited to 
     repair and rehabilitation of facilities and other 
     infrastructure, trail maintenance projects and other critical 
     infrastructure needs. The conference agreement provides 
     flexibility to the agency in determining the allocation of 
     this funding among various program activities and sub-
     activities. The conferees encourage that selection of 
     individual projects by the National Park Service be based on 
     a prioritization process which weighs the capacity of 
     proposals to create the largest number of jobs in the 
     shortest period of time and which creates lasting value for 
     the Park System and its visitors.


                          CENTENNIAL CHALLENGE

       No funds are included for the Centennial Challenge program 
     in the conference agreement. The House bill included 
     $100,000,000 for this program. No funding was included by the 
     Senate.


                       HISTORIC PRESERVATION FUND

       $15,000,000 has been included for historic preservation 
     grants for historically black colleges and universities as 
     authorized by the Historic Preservation Fund Act, as amended. 
     Projects will be selected competitively but the agreement 
     waives matching requirements for grants made with these 
     funds. The House bill included $15,000,000 for this activity 
     under the ``Construction'' account. The Senate bill did not 
     fund this program.


                              CONSTRUCTION

       Appropriates $589,000,000 for Construction as proposed by 
     the Senate instead of $1,700,000,000 as proposed by the 
     House. Eligible projects include but are not limited to major 
     facility construction, road maintenance, abandoned mine 
     cleanup, equipment replacement, and preservation and 
     rehabilitation of historic assets. The conference agreement 
     provides flexibility to the agency in determining the 
     allocation of this funding among various program activities 
     and sub-activities. The conferees encourage that selection of 
     individual projects by the National Park Service be based on 
     a prioritization process which weighs the capacity of 
     proposals to create the largest number of jobs in the 
     shortest period of time and which creates lasting value for 
     the Park System and its visitors. Funding for historically 
     black colleges and universities has been provided under the 
     Historic Preservation Fund account.

                    United States Geological Survey


                 SURVEYS, INVESTIGATIONS, AND RESEARCH

       The conference agreement provides $140,000,000 for Surveys, 
     Investigations and Research instead of $135,000,000 proposed 
     by the Senate and $200,000,000 proposed by the House. The 
     Survey should consider a wide variety of activities, 
     including repair, construction and restoration of facilities; 
     equipment replacement and upgrades including stream gages, 
     seismic and volcano monitoring systems; national map 
     activities; and other critical deferred maintenance and 
     improvement projects which can maximize jobs and provide 
     lasting improvement to our Nation's science capacity.

                        Bureau of Indian Affairs


                      OPERATION OF INDIAN PROGRAMS

       The conference agreement includes $40,000,000 for the 
     operation of Indian programs as proposed by the Senate; there 
     was no House proposal for this account. While maximizing 
     jobs, the Bureau should fund workforce development and 
     training programs and the housing improvement program.


                              CONSTRUCTION

       The conference agreement provides $450,000,000 for 
     construction instead of $522,000,000 as proposed by the 
     Senate and $500,000,000 as proposed by the House. The 
     conference agreement provides flexibility to the agency in 
     determining the allocation of this funding among various 
     program activities and sub-activities. The conferees 
     encourage that selection of individual projects be based on a 
     prioritization process which weighs the capacity of proposals 
     to create the largest number of jobs in the shortest period 
     of time and which creates lasting value for the American 
     public. While maximizing jobs, the Bureau should consider 
     priority critical facility improvement and repair, repair and 
     restoration of roads, school replacement, school improvement 
     and repair and detention center maintenance and repair.


                     INDIAN GUARANTEED LOAN PROGRAM

       The conference agreement includes $10,000,000 for 
     construction as proposed by the Senate; there was no House 
     proposal for this account.

                          Departmental Offices

                            INSULAR AFFAIRS


                       ASSISTANCE TO TERRITORIES

       The conference agreement provides no funding for Assistance 
     to Territories as proposed by the House instead of 
     $62,000,000 proposed the Senate. The managers note that the 
     territories receive funding under many of the infrastructure 
     programs elsewhere in this bill.

                      Office of Inspector General


                         SALARIES AND EXPENSES

       The conference agreement provides $15,000,000 for the 
     Office of Inspector General as proposed by the Senate in this 
     title and as proposed by the House as part of Title I, 
     section 1107. In order to provide adequate oversight of the 
     Department of the Interior, these funds are available through 
     September 30, 2012.

                        Department-Wide Programs


                    CENTRAL HAZARDOUS MATERIALS FUND

       The conference agreement does not provide funding for the 
     central hazardous materials fund as proposed by the House 
     instead of $20,000,000 proposed by the Senate.

                    Environmental Protection Agency

       The amended bill includes $7,220,000,000 for the 
     Environmental Protection Agency instead of $9,420,000,000 as 
     proposed by the House and $7,200,000,000 as proposed by the 
     Senate. For each account, the amended bill includes 
     provisions to fund the Agency's program oversight and 
     management costs. The Conferees have included an 
     Administrative Provision which makes available until 
     September 30, 2011 the funds provided for Agency program 
     management and oversight and allows funds appropriated in the 
     State and Tribal Assistance Grants account for that purpose 
     to be transferred to the Environmental Programs and 
     Management account, as needed.


                      OFFICE OF INSPECTOR GENERAL

       The amended bill provides $20,000,000 for the Office of 
     Inspector General account, as proposed by the House and 
     instead of unspecified amounts included in each 
     administrative set aside by the Senate. These funds are 
     available until September 30, 2012.


                     HAZARDOUS SUBSTANCE SUPERFUND

       The amended bill provides $600,000,000 for the Hazardous 
     Substance Superfund as proposed by the Senate and instead of 
     $800,000,000 as proposed by the House. The funds are limited 
     to the Superfund Remedial program, as proposed by the House. 
     The bill allows the Administrator to retain up to 3 percent 
     of the funds for program management and oversight. The 
     Administrator is directed to coordinate oversight activities 
     with the Inspector General.


          LEAKING UNDERGROUND STORAGE TANK TRUST FUND PROGRAM

       The amended bill provides $200,000,000 for the Leaking 
     Underground Storage Tank Trust Fund Account as proposed by 
     both the House and the Senate. The funds are provided for 
     clean up of leaking underground storage tanks as authorized 
     by section 9003(h) of the Solid Waste Disposal Act. The bill 
     allows the Administrator to retain up to 1.5 percent of the 
     funds for program management and oversight. To expedite use 
     of these funds, the bill waives the state matching 
     requirements in section 9003(h)(7)(B) of the Solid Waste 
     Disposal Act.


                   STATE AND TRIBAL ASSISTANCE GRANTS

                     (INCLUDING TRANSFERS OF FUNDS)

       The amended bill provides $6,400,000,000 for the State and 
     Tribal Assistance Grants account as proposed by the Senate 
     and instead of $8,400,000,000 as proposed by the House. The 
     amended bill includes the following program funding levels 
     and directives:
       Clean Water and Drinking Water State Revolving Funds: The 
     amended bill provides $4,000,000,000 for the Clean Water 
     State Revolving Funds and $2,000,000,000 for the Drinking 
     Water State Revolving Funds. To provide for the Agency's 
     management and oversight of these programs, the bill allows 
     the Administrator to retain up to 1 percent of the combined 
     total provided for the Revolving Funds and provides transfer 
     authority to the Environmental Programs and Management 
     account as needed. To expedite use of the funds, the bill 
     waives the mandatory 20 percent State and District of 
     Columbia matching requirements for both Revolving Funds.

[[Page 4006]]

       To ensure that the funds appropriated herein for the 
     Revolving Funds are used expeditiously to create jobs, the 
     Conferees have included two important provisions. First, the 
     Administrator is directed to reallocate Revolving Fund monies 
     where projects are not under contract or construction within 
     12 months of the date of enactment. Second, bill language 
     directs priority funding to projects on State priority lists 
     that are ready to proceed to construction within 12 months of 
     enactment.
       The bill includes language to require that not less than 50 
     percent of the capitalization grants each State receives be 
     used to provide assistance for additional subsidization in 
     the form of forgiveness of principal, negative interest 
     loans, or grants, or any combination of these. This provision 
     provides relief to communities by requiring a greater Federal 
     share for local clean and drinking water projects and 
     provides flexibility for States to reach communities that 
     would otherwise not have the resources to repay a loan with 
     interest. The Conferees expect EPA to strongly encourage the 
     States to maximize the use of additional subsidies and to 
     work with the States to ensure expedited award of grants 
     under the additional subsidy provisions. The Conferees also 
     expect the States to continue implementation of their base 
     loan programs funded through the annual appropriations bill. 
     The bill does not include language proposed by the House that 
     would require a specific amount for communities that meet 
     affordability criteria set by the Governor. However, the 
     Conferees expect the States to target, as much as possible, 
     the additional subsidized monies to communities that could 
     not otherwise afford an SRF loan.
       The bill requires not less than 20 percent of each 
     Revolving Fund be available for projects to address to green 
     infrastructure, water and/or energy efficiency, innovative 
     water quality improvements, decentralized wastewater 
     treatment, stormwater runoff mitigation, and water 
     conservation. The bill allows States to use less than 20 
     percent for these types of projects only if the States lack 
     sufficient applications. Further, the States must certify to 
     the Agency that they lack sufficient, eligible applications 
     for these types of projects prior to using funds for 
     conventional projects.
       Consistent with the annual appropriations bill, the 
     Conferees have increased the tribal set-aside from the Clean 
     Water State Revolving Funds to up to 1.5 percent of the total 
     amount appropriated. Language has also been included to allow 
     EPA to transfer to the Indian Health Service up to 4 percent 
     of the tribal set-aside amount in each Revolving Fund for 
     administration and management of the projects in Indian 
     country. This amount is consistent with the amount allowed by 
     law for the States to manage their capitalization grants.
       Language also has been included to prohibit the use of both 
     Revolving Funds for the purchase of land or easements and to 
     prohibit other set asides under section 1452(k) of the Safe 
     Drinking Water Act that do not directly create jobs. To 
     ensure that funds are used to create jobs, the bill also 
     limits the use of the Revolving Funds to buy, refinance or 
     restructure debt incurred prior to October 1, 2008.
       Brownfields Projects: The amended bill provides 
     $100,000,000 for Brownfields projects, as proposed by the 
     both House and the Senate. The funds are provided to 
     implement section 104(k) of the Comprehensive Environmental 
     Response, Compensation, and Liability Act (CERCLA), as 
     proposed by the House. The bill allows the Administrator to 
     retain up to 3.5 percent of the funds for program management 
     and oversight, with transfer authority to the Environmental 
     Programs and Management account as needed. Bill language also 
     waives the cost share requirements under section 
     104(k)(9)(B)(iii) of CERCLA.
       Diesel Emission Reduction Act (DERA) Grants: The amended 
     bill provides $300,000,000 for DERA grants as proposed by 
     both the House and the Senate. The bill allows the 
     Administrator to retain up to 2 percent of the funds for 
     program management and oversight, with transfer authority to 
     the Environmental Programs and Management account as needed. 
     The amended bill does not include language proposed by the 
     Senate to waive the statutory limitation on State funds. 
     Instead, the Conferees have included language to waive the 
     State Grant and Loan Program matching incentive provisions of 
     DERA. The Conferees expect the DERA funds provided here to be 
     used on projects that spur job creation, while achieving 
     direct, measurable reductions in diesel emissions.
       Competitive Grants: The Conferees expect the Agency to 
     award both the Brownfields and DERA funds in an expeditious 
     manner, consistent with fair and open competition. To ensure 
     the additional goal of creating jobs as quickly as possible, 
     the Agency may make awards for meritorious and quality 
     proposals submitted under competitions that were initiated 
     within the past 18 months.

       ADMINISTRATIVE PROVISIONS, ENVIRONMENTAL PROTECTION AGENCY


                     (INCLUDING TRANSFERS OF FUNDS)

       The amended bill includes language that makes set-asides 
     for program management and oversight available through 
     September 30, 2011. It also allows the funds provided for 
     this purpose in the State and Tribal Assistance Grants 
     account to be transferred to the Environmental Programs and 
     Management account, as needed.

                       DEPARTMENT OF AGRICULTURE

                             Forest Service


                  CAPITAL IMPROVEMENT AND MAINTENANCE

       The conference agreement provides $650,000,000 for Capital 
     Improvement and Maintenance as proposed by both the House and 
     the Senate. The conference agreement provides flexibility to 
     the agency in determining the allocation of this funding 
     among various program activities and sub-activities. The 
     conferees encourage that selection of individual projects be 
     based on a prioritization process which weighs the capacity 
     of proposals to create the largest number of jobs in the 
     shortest period of time and which creates lasting value for 
     the American public. While maximizing jobs, the Service 
     should consider projects involving reconstruction, capital 
     improvement, decommissioning, and maintenance of forest 
     roads, bridges and trails; alternative energy technologies, 
     and deferred maintenance at Federal facilities; and 
     remediation of abandoned mine sites, and other related 
     critical habitat, forest improvement and watershed 
     enhancement projects.


                        WILDLAND FIRE MANAGEMENT

       The conference agreement provides $500,000,000 for Wildland 
     Fire Management instead of $485,000,000 proposed by the 
     Senate and $850,000,000 proposed by the House. This includes 
     $250,000,000 for hazardous fuels reduction, forest health 
     protection, rehabilitation and hazard mitigation activities 
     on Federal lands and $250,000,000 for cooperative activities 
     to benefit State and private lands. The conference agreement 
     provides flexibility to the Service to allocate funds among 
     existing State and private assistance programs to choose 
     programs that provide the maximum public benefit. The 
     Conferees encourage the Service to select individual projects 
     based on a prioritization process which weighs the capacity 
     of proposals to create the largest number of jobs in the 
     shortest period of time and to create lasting value for the 
     American public. The bill allows the Service to use up to 
     $50,000,000 to make competitive grants for the purpose of 
     creating incentives for increased use of biomass from federal 
     and non-federal forested lands. To better address current 
     economic conditions at the state and local level, funds 
     provided for State and private forestry activities shall not 
     be subject to matching or cost share requirements.

                DEPARTMENT OF HEALTH AND HUMAN SERVICES

                         Indian Health Service


                         INDIAN HEALTH SERVICES

       The conference agreement includes $85,000,000 for Indian 
     Health Services instead of $135,000,000 as proposed by the 
     Senate; the House had no proposal for this account. The 
     funding is for Health Information Technology for 
     infrastructure development and deployment.


                        INDIAN HEALTH FACILITIES

       The conference agreement includes $415,000,000 for Indian 
     Health Facilities instead of $410,000,000 as proposed by the 
     Senate and $550,000,000 as proposed by the House. Within this 
     amount, $100,000,000 is for maintenance and improvement, 
     $68,000,000 is for sanitation facilities construction, 
     $227,000,000 is for health care facilities construction, and 
     $20,000,000 is for equipment.
       The Indian Health Service is directed to use the funding 
     provided for health care facilities construction to complete 
     ongoing high priority facilities construction projects.
       The agreement includes language proposed by the Senate that 
     exempts the funds provided in this bill for the purchase of 
     medical equipment from spending caps carried in the annual 
     appropriation bill in order to provide the maximum 
     flexibility to the Service in meeting the highest priority 
     needs of the tribes.
       Funds are provided for the Department of Health and Human 
     Services (HHS) under title VIII (Labor, Health and Human 
     Services, and Education) of this Act for the purpose of 
     providing oversight capability over all HHS programs, 
     including the Indian Health Service.

                         OTHER RELATED AGENCIES

                        Smithsonian Institution


                           FACILITIES CAPITAL

       $25,000,000 is included in the bill for the Smithsonian 
     Institution. The House bill included $150,000,000 for the 
     Smithsonian and the Senate bill included $75,000,000.

             NATIONAL FOUNDATION ON THE ARTS AND HUMANITIES

                    National Endowment for the Arts


                       GRANTS AND ADMINISTRATION

       The conference agreement includes a total of $50,000,000 
     for the National Endowment for the Arts as proposed by the 
     House. No funds were included in the Senate bill for this 
     purpose.

                     GENERAL PROVISIONS--TITLE VII

               Interior, Environment and Related Agencies

       Sec. 701. The agreement includes language proposed by the 
     Senate requiring that agencies receiving funding in the 
     Interior and Environment sections of this Act submit a 
     general spending plan for these appropriations

[[Page 4007]]

     to the Committees on Appropriations within 30 days of 
     enactment and that they submit detailed project level 
     information within 90 days of enactment. The Conferees 
     further direct that the agencies submit bi-annual progress 
     reports on implementation of the provisions of this Act under 
     their jurisdiction.
       Sec. 702. Modifies language proposed by the Senate 
     requiring that the Secretaries of Interior and Agriculture 
     utilize the Public Lands Corps, the Youth Conservation Corps, 
     the Job Corps and the Student Conservation Corps where 
     practicable. The House bill did not include a similar 
     provision.
       Sec. 703. Includes a new general provision not included in 
     either the House or Senate bills providing limited transfer 
     authority to move not to exceed 10 percent of funds from one 
     appropriation to another if such move will increase the 
     number of jobs created or the speed with which projects can 
     be undertaken. Transfers are limited to accounts within a 
     particular agency.
       Administrative and support costs: The Conferees have agreed 
     that, except where otherwise provided in the bill or this 
     accompanying statement, amounts for administrative and 
     support costs associated with the implementation of title VII 
     activities of this Act shall not exceed five percent of any 
     specific appropriation. The conferees note that this amount 
     is a cap and encourage agencies to balance carefully the goal 
     of proper management and fiscal prudence when setting funding 
     levels for administrative support. In staffing up to handle 
     the increased, but temporary, workloads associated with 
     funding provided in the bill, it is important that the 
     agencies limit the permanent expansion of their workforces 
     and utilize temporary, term or contract personnel as much as 
     possible.

   TITLE VIII--DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND 
                    EDUCATION, AND RELATED AGENCIES

                          DEPARTMENT OF LABOR

                 EMPLOYMENT AND TRAINING ADMINISTRATION


                    TRAINING AND EMPLOYMENT SERVICES

       The conference agreement includes $3,950,000,000 for 
     Workforce Investment Act programs, instead of $4,000,000,000 
     as proposed by the House and $3,250,000,000 as proposed by 
     the Senate.
       Within this amount, $2,950,000,000 is provided for formula 
     grants to the States for training and employment services. 
     These funds are to be allotted to States within 30 days of 
     enactment. Since these funds will be made available during 
     program year 2008, they shall remain available to the States 
     only as long as the other funds allotted in that program 
     year.The conferees intend for these funds 
     to be spent quickly and effectively. To facilitate increased 
     training of individuals for high-demand occupations, the 
     conference agreement modifies language proposed by the Senate 
     to provide the authority for local workforce investment 
     boards to contract with institutions of higher education and 
     other eligible training providers as long as that authority 
     is not used to limit customer choice.
       Within the State formula grant programs, $500,000,000 is 
     provided for services for adults. The conference agreement 
     includes language proposed by the Senate to ensure that 
     supportive services and needs-related payments are available 
     to support the employment and training needs of priority 
     populations, including recipients of public assistance and 
     other low-income individuals.
       For youth services, $1,200,000,000 is provided. The 
     conferees are particularly interested in these funds being 
     used to create summer employment opportunities for youth and 
     language applying the work readiness performance indicator to 
     such summer jobs is included as an appropriate measure for 
     those activities. Year-round youth activities are also 
     envisioned and the age of eligibility for youth services 
     provided with the additional funds is extended through age 24 
     to allow local programs to reach young adults who have become 
     disconnected from both education and the labor market.
       For dislocated worker services $1,250,000,000 is provided. 
     The conferees urge the Secretary to provide guidance on how 
     States and local workforce areas can establish policies that 
     assure that supportive services and needs-related payments 
     that may be necessary for an individual's participation in 
     job training are a part of the dislocated worker service 
     strategy.
       The conferees believe that the Department should integrate 
     reporting on the expenditure of these additional formula 
     funds into its regular reporting system, including the 
     provision of needs-related payments and supportive services, 
     the number of individuals from priority service populations 
     participating in employment and training activities, and the 
     number of youth engaged in summer employment programs. The 
     conferees strongly urge the Department to establish 
     appropriate procedures for monitoring the execution of 
     priority of service provisions.
       The conference agreement also includes $200,000,000 for the 
     dislocated worker assistance national reserve, as proposed by 
     the Senate, instead of $500,000,000 as proposed by the House. 
     These funds will allow the Secretary of Labor to award 
     national emergency grants to respond to plant closings, mass 
     layoffs and other worker dislocations. The funds in the 
     national reserve are also available for dislocated worker 
     activities for the outlying areas, consistent with the 
     provisions of the Workforce Investment Act.
       The conference agreement includes $50,000,000 for the 
     YouthBuild program, as proposed by the House, instead of 
     $100,000,000 as proposed by the Senate. These funds will 
     allow for expanded services for at-risk youth, who gain 
     education and occupational credentials while constructing or 
     rehabilitating affordable housing. The conference agreement 
     includes language to allow YouthBuild grantees to serve 
     individuals who have dropped out of school and reenrolled in 
     an alternative school, if that reenrollment is part of a 
     sequential service strategy.
       The conference agreement includes $750,000,000 for a 
     program of competitive grants for worker training and 
     placement in high growth and emerging industry sectors, as 
     proposed by the House, rather than $250,000,000 for a similar 
     program proposed by the Senate. Within the amount provided, 
     $500,000,000 is designated for projects that prepare workers 
     for careers in energy efficiency and renewable energy as 
     described in the Green Jobs Act of 2007. Priority 
     consideration for the balance of funds shall be given to 
     projects that prepare workers for careers in the health care 
     sector, which continues to grow despite the economic 
     downturn. The conferees believe that training for wireless 
     and broadband deployment is an eligible activity for grants 
     for high growth and emerging industry sectors, along with 
     advanced manufacturing and other high demand industry sectors 
     identified by local workforce areas. In carrying out the 
     program of competitive grants for worker training and 
     placement in high growth and emerging industry sectors, the 
     conferees expect the Department to use a limited portion of 
     the program funds for technical assistance and related 
     research.


            COMMUNITY SERVICE EMPLOYMENT FOR OLDER AMERICANS

       The conference agreement includes $120,000,000 for the 
     Community Service Employment for Older Americans program, as 
     proposed by both the House and the Senate. The economic 
     recovery funds are to be distributed to current grantees to 
     support additional employment opportunities for low income 
     seniors. The wages paid to these low-income seniors will 
     provide a direct stimulus to the economies of local 
     communities, which will also benefit from the community 
     service work performed by participants. The conference 
     agreement includes language to allow for the recapture and 
     reobligation of such funds, as proposed by the Senate and as 
     authorized under Title V of the Older Americans Act.


     STATE UNEMPLOYMENT INSURANCE AND EMPLOYMENT SERVICE OPERATIONS

       The conference agreement includes $400,000,000, as proposed 
     by the Senate, instead of $500,000,000 as proposed by the 
     House. Within this amount, $250,000,000 is designated for 
     reemployment services to connect unemployment insurance 
     claimants to employment and training opportunities that will 
     facilitate their reentry to employment. The funds provided 
     will be distributed by the existing Wagner-Peyser formula, as 
     proposed by the Senate, rather than under an alternative 
     formula proposed by the House.

                        Departmental Management


                         SALARIES AND EXPENSES

                     (INCLUDING TRANSFER OF FUNDS)

       The conference agreement includes $80,000,000 within the 
     Departmental Management account for worker protection, 
     oversight, and coordination activities, as proposed by the 
     House. The Senate provided funds for this and other purposes 
     through a set-aside of funds available to the Department 
     rather than through a direct appropriation. The conference 
     agreement modifies language providing the Secretary of Labor 
     with the ability to transfer such funds to a number of 
     Department of Labor agencies which have responsibility for 
     enforcement of worker protection laws that apply to the 
     infrastructure investments in this economic recovery bill, 
     and for oversight and coordination of recovery activities, 
     including those provided for unemployment insurance.


                          OFFICE OF JOB CORPS

       The conference agreement includes $250,000,000 for the 
     Office of Job Corps, rather than $300,000,000 as proposed by 
     the House and $160,000,000 as proposed by the Senate. The 
     funds will support construction and modernization of a 
     network of residential facilities serving at-risk youth. The 
     funds will allow the Office of Job Corps to move forward on a 
     number of ready-to-go rehabilitation and construction 
     projects, including those where competitions have already 
     been concluded. The conference agreement modifies language 
     proposed by the House to allow funds to be used in support of 
     multi-year arrangements where such arrangement will result in 
     construction that can commence within 120 days of enactment. 
     A portion of the funds are available for the operational 
     needs of the Job Corps program, including activities to 
     provide additional training for careers in the energy 
     efficiency, renewable energy, and environmental protection 
     industries.

[[Page 4008]]




                      OFFICE OF INSPECTOR GENERAL

       The conference agreement includes $6,000,000 for the 
     Department of Labor Office of Inspector General, as proposed 
     by the House, rather than $3,000,000 as proposed by the 
     Senate. These funds will be available through September 30, 
     2012 to support oversight and audit of Department of Labor 
     programs, grants, and projects funded in this Act.

                DEPARTMENT OF HEALTH AND HUMAN SERVICES

              Health Resources and Services Administration


                     HEALTH RESOURCES AND SERVICES

       The conference agreement includes $2,500,000,000 for health 
     resources and services instead of $2,188,000,000 as proposed 
     by the House and $1,958,000,000 as proposed by the Senate.
       The conference agreement includes $500,000,000 for services 
     provided at community health centers as proposed by the 
     House. The Senate did not provide similar funding. These 
     funds are to be used to support new sites and service areas, 
     to increase services at existing sites, and to provide 
     supplemental payments for spikes in uninsured populations. 
     Grants for new sites and service areas are to be two years in 
     length as startup is phased in. The conferees encourage the 
     Health Resources and Services Administration (HRSA) to 
     consider supporting currently unfunded but approved community 
     health center applications.
       The agreement also includes $1,500,000,000 for 
     construction, renovation and equipment, and for the 
     acquisition of health information technology systems, for 
     community health centers, including health center controlled 
     networks receiving operating grants under section 330 of the 
     Public Health Service (``PHS'') Act, notwithstanding the 
     limitation in section 330(e)(3). The House proposed 
     $1,000,000,000 for this activity, while the Senate proposed 
     $1,870,000,000.
       No funding is provided for a competitive lease procurement 
     to renovate or replace the headquarters building for the 
     Public Health Service. The House and Senate proposed 
     $88,000,000 for this purpose.
       The conference agreement provides $500,000,000 for health 
     professions training programs instead of $600,000,000 as 
     proposed by the House. Within this total, $300,000,000 is 
     allocated for National Health Service Corps (NHSC) 
     recruitment and field activities, with $75,000,000 available 
     through September 30, 2011 for extending service contracts 
     and the recapture and reallocation of funds in the event that 
     a participant fails to fulfill his or her term of service. 
     Twenty percent of the NHSC funding shall be used for field 
     operations.
       The remaining $200,000,000 is allocated for all the 
     disciplines trained through the primary care medicine and 
     dentistry program, the public health and preventive medicine 
     program, the scholarship and loan repayment programs 
     authorized in Title VII (Health Professions) and Title VIII 
     (Nurse Training) of the PHS Act, and grants to training 
     programs for equipment. Funds may also be used to foster 
     cross-State licensing agreements for healthcare specialists.
       The conference agreement provides that up to 0.5 percent of 
     the funds provided in this account may be used for 
     administration. HRSA is required to provide an operating plan 
     to the Committees on Appropriations of the House of 
     Representatives and the Senate within 90 days of enactment of 
     this Act describing activities to be supported and timelines 
     for expenditure, as well as a report every six months on 
     actual obligations and expenditures.

               Centers For Disease Control and Prevention


                DISEASE CONTROL, RESEARCH, AND TRAINING

       The conference agreement does not include funding for 
     building and facilities at the Centers for Disease Control 
     and Prevention (CDC). The House proposed $462,000,000 and the 
     Senate proposed $412,000,000 for this activity.

                     National Institutes of Health

       The conference agreement provides $10,000,000,000 for the 
     National Institutes of Health (NIH) as proposed by the Senate 
     instead of $3,500,000,000 as proposed by the House. The 
     components of this total are as follows:


                 NATIONAL CENTER FOR RESEARCH RESOURCES

       The conference agreement includes $1,300,000,000 for the 
     National Center for Research Resources (NCRR) instead of 
     $1,500,000,000 as proposed by the House and $300,000,000 as 
     proposed by the Senate. Bill language identifies 
     $1,000,000,000 of this total for competitive awards for the 
     construction and renovation of extramural research 
     facilities. The conference agreement also provides 
     $300,000,000 for the acquisition of shared instrumentation 
     and other capital research equipment. The conference 
     agreement includes bill language proposed by the House for 
     extramural facilities relating to waiver of non-Federal match 
     requirements, primate centers, and limitation on the term of 
     Federal interest. The conference agreement includes language 
     proposed by the House mandating several reporting 
     requirements on the use of the funds. The conferees expect 
     that NCRR will give priority to those applications that are 
     expected to generate demonstrable energy-saving or beneficial 
     environmental effects.


                         OFFICE OF THE DIRECTOR

                     (INCLUDING TRANSFER OF FUNDS)

       The conference agreement provides $8,200,000,000 for the 
     Office of the Director instead of $1,500,000,000 as proposed 
     by the House and $9,200,000,000 as proposed by the Senate. Of 
     this amount, $7,400,000,000 is designated for transfer to 
     Institutes and Centers and to the Common Fund instead of 
     $7,850,000,000 as proposed by the Senate. The conference 
     agreement adopts the Senate guidance that, to the extent 
     possible, the $800,000,000 retained in the Office of the 
     Director shall be used for purposes that can be completed 
     within two years; priority shall be placed on short-term 
     grants that focus on specific scientific challenges, new 
     research that expands the scope of ongoing projects, and 
     research on public and international health priorities. Bill 
     language is included to permit the Director of NIH to use 
     $400,000,000 of the funds provided in this account for the 
     flexible research authority authorized in section 215 of 
     Division G of P.L. 110-161.
       The funds available to NIH can be used to enhance central 
     research support activities, such as equipment for the 
     clinical center or intramural activities, centralized 
     information support systems, and other related activities as 
     determined by the Director. The conferees intend that NIH 
     take advantage of scientific opportunities using any funding 
     mechanisms and authorities at the agency's disposal that 
     maximize scientific and health benefit. The conferees include 
     bill language indicating that the funds provided in this Act 
     to NIH are not subject to Small Business Innovation Research 
     and Small Business Technology Transfer set-aside 
     requirements.


                        BUILDINGS AND FACILITIES

       The conference agreement provides $500,000,000 for 
     Buildings and Facilities as proposed by the House and the 
     Senate. Bill language permits funding to be used for 
     construction as well as renovation, as proposed by the 
     Senate. The House language permitted only renovation. These 
     funds are to be used to construct, improve, and repair NIH 
     buildings and facilities, including projects identified in 
     the Master Plan for Building 10.

               Agency For Healthcare Research and Quality


                    HEALTHCARE RESEARCH AND QUALITY

                     (INCLUDING TRANSFER OF FUNDS)

       The conference agreement includes $1,100,000,000 for 
     comparative effectiveness research, which is the same level 
     as proposed by both the House and the Senate. The conference 
     agreement uses the term, ``comparative effectiveness 
     research'', as proposed by the House and deletes without 
     prejudice the term ``clinical'', which was included by the 
     Senate. Within the total, $300,000,000 shall be administered 
     by the Agency for Healthcare Research and Quality (AHRQ), 
     $400,000,000 shall be transferred to the National Institutes 
     of Health (NIH), and $400,000,000 shall be allocated at the 
     discretion of the Secretary of Health and Human Services.
       The conferees do not intend for the comparative 
     effectiveness research funding included in the conference 
     agreement to be used to mandate coverage, reimbursement, or 
     other policies for any public or private payer. The funding 
     in the conference agreement shall be used to conduct or 
     support research to evaluate and compare the clinical 
     outcomes, effectiveness, risk, and benefits of two or more 
     medical treatments and services that address a particular 
     medical condition. Further, the conferees recognize that a 
     ``one-size-fits-all'' approach to patient treatment is not 
     the most medically appropriate solution to treating various 
     conditions and include language to ensure that subpopulations 
     are considered when research is conducted or supported with 
     the funds provided in the conference agreement.

                Administration For Children And Families


                   LOW-INCOME HOME ENERGY ASSISTANCE

       The conference agreement does not include funding for the 
     Low-Income Home Energy Assistance Program proposed by the 
     House. The Senate did not provide funding for this program.


   PAYMENTS TO STATES FOR THE CHILD CARE AND DEVELOPMENT BLOCK GRANT

       The conference agreement includes $2,000,000,000 for the 
     Child Care and Development Block Grant, as proposed by both 
     the House and Senate. The conference agreement adopts the 
     Senate language to make the entire amount available upon 
     enactment, instead of the House language to divide the amount 
     by fiscal year. The conference agreement also adopts the 
     Senate proposal to set aside $255,186,000 of these funds for 
     quality improvement activities, of which $93,587,000 shall be 
     for activities to improve the quality of infant and toddler 
     care.


                      SOCIAL SERVICES BLOCK GRANT

       The conference agreement does not include funding for the 
     Social Services Block Grant proposed by the Senate. The House 
     did not provide funding for this program.


                CHILDREN AND FAMILIES SERVICES PROGRAMS

       The conference agreement includes $3,150,000,000 for 
     Children and Families Services Programs, instead of 
     $3,200,000,000 as

[[Page 4009]]

     proposed by the House and $1,250,000,000 as proposed by the 
     Senate. The conference agreement adopts the Senate language 
     to make the entire amount available upon enactment, instead 
     of the House language to divide the amount by fiscal year.
       Within the total provided for Children and Families 
     Services Programs, $1,000,000,000 is provided for Head Start, 
     as proposed by the House, instead of $500,000,000 as proposed 
     by the Senate. The Head Start funds shall be allocated 
     according to the current statutory formula. The conferees 
     expect the Department of Health and Human Services (HHS) to 
     work with Head Start grantees in order to manage these 
     resources in order to sustain fiscal year 2009 awards through 
     fiscal year 2010.
       The conference agreement also provides $1,100,000,000 for 
     Early Head Start as proposed by the House, instead of 
     $550,000,000 as proposed by the Senate. These funds will be 
     awarded on a competitive basis. The conferees expect HHS to 
     manage these resources in order to sustain fiscal year 2009 
     awards through fiscal year 2010. The conferees intend for 
     regional and American Indian and Alaska Native Early Head 
     Start programs and Migrant and Seasonal Head Start programs 
     to benefit from the Early Head Start funds, taking into 
     consideration the needs of the communities served by such 
     programs. The conferees remind the Secretary of the authority 
     to temporarily increase or waive the limit on the Federal 
     share of a Head Start or Early Head Start grant under the 
     circumstances described in the authorizing statute and 
     support the Secretary's exercise of that authority where 
     appropriate.
       Within the total provided for Children and Families 
     Services Programs, $1,000,000,000 is provided for the 
     Community Services Block Grant (CSBG), as proposed by the 
     House, instead of $200,000,000 as proposed by the Senate. The 
     conference agreement adopts the Senate language to make the 
     entire amount available upon enactment, instead of the House 
     language to divide the amount by fiscal year. The agreement 
     includes bill language requiring States to reserve 1 percent 
     of their allocation for benefit coordination services and to 
     distribute the remaining funds directly to local eligible 
     entities. It also permits States to increase the income 
     eligibility ceiling from 125 percent to 200 percent of the 
     Federal poverty level for services furnished under the CSBG 
     Act during fiscal years 2009 and 2010, as proposed by the 
     House. The Senate did not propose similar language.
       Within the total provided for Children and Families 
     Services Programs, $50,000,000 is provided under section 1110 
     of the Social Security Act to establish a new initiative to 
     award capacity-building grants directly to nonprofit 
     organizations, instead of $100,000,000 for the Compassion 
     Capital Fund as proposed by the House. The Senate did not 
     propose funds for this purpose in this account. The conferees 
     intend that this program will expand the delivery of social 
     services to individuals and communities affected by the 
     economic downturn. The conferees expect that grantees have 
     clear and measurable goals, and must be able to evaluate the 
     success of their program.

                        Administration On Aging


                        AGING SERVICES PROGRAMS

       The conference agreement includes $100,000,000 for senior 
     meals programs as proposed by the Senate, instead of 
     $200,000,000 as proposed by the House. Within this amount, 
     $65,000,000 is provided for Congregate Nutrition Services and 
     $32,000,000 is provided for Home-Delivered Nutrition Services 
     under Title III of the Older Americans Act of 1965, and 
     $3,000,000 is provided for Native American nutrition services 
     under Title VI of such Act. The conference agreement adopts 
     the Senate proposal that makes all of these funds available 
     upon enactment.

                        Office Of The Secretary


  OFFICE OF THE NATIONAL COORDINATOR FOR HEALTH INFORMATION TECHNOLOGY

                     (INCLUDING TRANSFER OF FUNDS)

       The conference agreement includes $2,000,000,000 for this 
     activity, as proposed by the House. The Senate provided 
     $3,000,000,000. The conferees include bill language creating 
     a 0.25 percent set-aside of the funds provided for the Office 
     of the National Coordinator for Health Information Technology 
     for management and oversight activities. The House proposed 
     similar language. Within the funds provided, the conferees 
     appropriate $300,000,000 to support regional or sub-national 
     efforts toward health information exchange. The conferees 
     include bill language proposed by the House regarding certain 
     operating plan requirements for the Office of the National 
     Coordinator.


                      OFFICE OF INSPECTOR GENERAL

       The conference agreement includes $17,000,000 for the 
     Office of Inspector General instead of $19,000,000 as 
     proposed by both the House and Senate. These funds are 
     available until September 30, 2012 as proposed by the Senate 
     instead of September 30, 2013 as proposed by the House.


            PUBLIC HEALTH AND SOCIAL SERVICES EMERGENCY FUND

       The conference agreement includes $50,000,000 for the 
     Public Health and Social Services Emergency Fund (PHSSEF), 
     instead of $900,000,000 as proposed by the House. The Senate 
     did not propose funding for PHSSEF. Funding is provided to 
     improve information technology security at the Department of 
     Health and Human Services as proposed by the House--the 
     Senate did not propose funding for this activity. As proposed 
     by the Senate, the conference agreement does not include 
     funding for pandemic influenza preparedness and biomedical 
     advanced research and development. The House proposed 
     $420,000,000 for pandemic influenza and $430,000,000 for 
     biomedical advanced research and development.


                      PREVENTION AND WELLNESS FUND

                     (INCLUDING TRANSFER OF FUNDS)

       The conference agreement includes $1,000,000,000 for the 
     Prevention and Wellness Fund, instead of $3,000,000,000 as 
     proposed by the House. The Senate did not propose funding for 
     a Prevention and Wellness Fund. As proposed by the House, up 
     to 0.5 percent of the funds provided may be used for 
     management and oversight expenses. Additionally, the 
     conference agreement includes language proposed by the House 
     that funding may be transferred to other appropriation 
     accounts of the Department of Health and Human Services 
     (HHS), as determined by the Secretary of HHS to be 
     appropriate.
       Within the total, the conference agreement includes 
     $300,000,000 to be transferred to the Centers for Disease 
     Control and Prevention (CDC) to carry out the section 317 
     immunization program rather than $954,000,000 as proposed by 
     the House. The Senate did not propose funding for this 
     activity.
       Also within the total, the conference agreement includes 
     $50,000,000 to be provided to States for carrying out 
     activities to implement healthcare-associated infections 
     (HAI) reduction strategies. The House proposed $150,000,000 
     for similar HAI prevention activities. The Senate did not 
     propose funding for similar activities.
       Also within the total, the conference agreement includes 
     $650,000,000 to carry out evidence-based clinical and 
     community-based prevention and wellness strategies authorized 
     by the Public Health Service Act, as determined by the 
     Secretary, that deliver specific, measurable health outcomes 
     that address chronic disease rates. The House proposed 
     $500,000,000 for similar activities. The Senate did not 
     propose funding for similar activities.

                        DEPARTMENT OF EDUCATION

                    Education For The Disadvantaged

       The conference agreement includes $13,000,000,000 for the 
     Education for the Disadvantaged account, as proposed by the 
     House. The Senate proposed $12,400,000,000 for this account. 
     The total conference agreement includes $10,000,000,000 for 
     title I formula grants and $3,000,000,000 for School 
     Improvement grants. Both the House and the Senate proposed 
     $11,000,000,000 for title I formula grants, but the House 
     proposed $2,000,000,000 for School Improvement grants, and 
     the Senate proposed $1,400,000,000.
       The conferees intend that these funds should be available 
     during school years 2009-2010 and 2010-2011 to help school 
     districts mitigate the effect of the recent reduction in 
     local revenues and State support for education.
       The conferees specify that within the total provided for 
     title I formula grants, $5,000,000,000 shall be allocated 
     through the targeted formula and the same amount should be 
     allocated through the education finance incentive grant 
     formula. This language was proposed by the House and the 
     Senate.
       The conferees expect States to use some of the funding 
     provided for early childhood programs and activities, as 
     proposed by the Senate. The House did not propose similar 
     language.
       The conferees direct the Department to encourage States to 
     use 40 percent of their School Improvement allocation for 
     middle and high schools, as proposed by the Senate. The House 
     did not propose similar language.
       Each school district that receives this funding shall 
     report to its State educational agency, a school-by-school 
     listing of per pupil expenditures, from State and local 
     services, during the 2008-2009 academic year, no later than 
     December 1, 2009 as proposed by the Senate. Further, the 
     conferees require each State to compile and submit this 
     information to the Secretary no later than March 1, 2010.

                               Impact Aid

       The conference agreement includes $100,000,000 for the 
     Impact Aid account, as proposed by the House. The Senate did 
     not propose funding for this account.
       The conferees modify current law, exclusively for the 
     purposes of the American Recovery and Reinvestment Act, to 
     allow for greater participation of school districts impacted 
     by both students whose parents are associated with the 
     military and students residing on tribal lands, and to allow 
     funding to be better targeted to districts that have ``shovel 
     ready'' facility projects, including those that address 
     health and safety and ADA compliance issues, among other 
     things.

                      School Improvement Programs

       The conference agreement includes $720,000,000 for the 
     School Improvement Programs account, instead of the 
     $1,066,000,000 as proposed by the House and $1,070,000,000 as 
     proposed by the Senate. Within the total, the

[[Page 4010]]

     conference agreement includes $650,000,000 for the Enhancing 
     Education through Technology program. Both the House and 
     Senate proposed $1,000,000,000 for this program. The 
     conference agreement also includes $70,000,000 for Education 
     for the Homeless Children and Youth program, which is the 
     same amount proposed by the Senate. The House proposed 
     $66,000,000 for this program.
       The conferees intend that these funds should be available 
     during school years 2009-2010 and 2010-2011 to help school 
     districts mitigate the effect of the recent reduction in 
     local revenues and State support for education.
       The amount provided for the Education for Homeless Children 
     and Youth programs reflects the conferees' understanding of 
     the impact the economic crisis has had on this group of 
     disadvantaged students, and their commitment to helping 
     mitigate the effects. The Secretary shall provide each State 
     a grant that is proportionate to the number of homeless 
     students identified as such during the 2007-2008 academic 
     year relative to the number of homeless children nationally 
     during the same year. States shall award subgrants to local 
     educational agencies on a competitive basis, or using a 
     formula based on the number of homeless students identified 
     in each school district in the State. This language was 
     proposed by the Senate; the House did not propose similar 
     language.

                       Innovation And Improvement

       The conference agreement includes $200,000,000 for the 
     Innovation and Improvement account, instead of the 
     $225,000,000 proposed by the House. The Senate did not 
     propose any money for this account. All of the funding 
     provided is for the Teacher Incentive Fund (TIF) program.
       The conferees require the Institute for Education Sciences 
     to conduct a rigorous national evaluation of TIF to assess 
     the impact of performance-based teacher and principal 
     compensation systems. This language was proposed by the 
     House; the Senate did not propose similar language.
       The conferees specify that these funds must be expended as 
     directed in the 5th, 6th, and 7th provisos under the 
     ``Innovation and Improvement'' account in the Department of 
     Education Appropriations Act, 2008. This language was 
     proposed by the House; the Senate did not propose similar 
     language.
       The conferees provide that 1 percent of the total 
     appropriation shall be for management and oversight of the 
     Teacher Incentive Fund. This language was proposed by the 
     House; the Senate did not propose similar language.
       The conference agreement does not provide funding for the 
     Credit Enhancement for Charter Schools program.

                           Special Education

       The conference agreement includes $12,200,000,000 for the 
     Special Education account, instead of $13,600,000,000 as 
     proposed by the House and $13,500,000,000 as proposed by the 
     Senate. Within the total, the conference agreement includes 
     $11,300,000,000 for section 611 of part B, $400,000,000 for 
     section 619 of part B, and $500,000,000 for part C of IDEA. 
     The House proposed $13,000,000,000 for section 611and 
     $600,000,000 for part C, whereas the Senate proposed the same 
     amount for section 611 and $500,000,000 for part C.
       The conferees intend that these funds should be available 
     during school years 2009-2010 and 2010-2011 to help school 
     districts mitigate the effect of the recent reduction in 
     local revenues and State support for education.
       Within the amount provided for part C of IDEA, the 
     Secretary is required to reserve the amount needed for grants 
     under section 643(e), and allocate any remaining funds in 
     accordance with section 643(c) of IDEA as specified by both 
     the House and Senate.
       The conferees provide that the amount set aside for the 
     Department of Interior transfer for Native Americans shall be 
     equal to the lesser amount available during fiscal year 2008, 
     increased by inflation or the percentage increase in the 
     funds appropriated under section 611(i) (Secretary of the 
     Interior). This language was proposed by the Senate, the 
     House did not propose similar language.

            Rehabilitation Services And Disability Research

       The conference agreement includes $680,000,000 for the 
     Rehabilitation Services and Disability Research account as 
     opposed to $700,000,000 as proposed by the House and 
     $610,000,000 as proposed by the Senate. Within the total 
     provided, $540,000,000 is available for Vocational 
     Rehabilitation State Grants, as opposed to $500,000,000 
     proposed by the House and the Senate. The conferees include 
     $140,000,000 for Independent Living programs. The House 
     proposed $200,000,000 for Independent Living programs, 
     whereas the Senate proposed $110,000,000 for Independent 
     Living programs. Specifically, of the $140,000,000 available 
     for Independent Living programs, the funding is allocated as 
     follows: $18,200,000 for State Grants; $87,500,000 for 
     Independent Living Centers; and $34,300,000 for Services for 
     Older Blind Individuals.

                      Student Financial Assistance

       The conference agreement includes $15,840,000,000 for the 
     Student Financial Assistance account as opposed to 
     $16,126,000,000 as proposed by the House and $13,930,000,000 
     as proposed by the Senate. Within the total provided, 
     $15,640,000,000 shall be available for Pell Grants, and 
     $200,000,000 shall be available for Work-Study. The House 
     proposed $15,636,000,000 for Pell Grants and $490,000,000 for 
     Work-Study; whereas the Senate proposed $13,869,000,000 for 
     Pell Grants and no money for Work-Study.
       The conference agreement does not provide funding for 
     Perkins Loans.
       The conference agreement specifies that funding is 
     available to support a $4,860 maximum Pell Grant award for 
     the 2009-2010 award year, as specified in the House bill. 
     With the additional $490 in mandatory funding, combined with 
     the increase in the fiscal year 2009 omnibus, the maximum 
     Pell Grant award will be $5,350. This language was proposed 
     by the House; the Senate did not propose similar language.

                       Student Aid Administration

       The conference agreement includes $60,000,000 for the 
     Student Aid Administration account, as opposed to the 
     $50,000,000 as proposed by the House and $0 as proposed by 
     the Senate.

                            Higher Education

       The conference agreement includes $100,000,000 for the 
     Higher Education account, the same amount proposed by the 
     House. The Senate proposed $50,000,000.

                    Institute Of Education Sciences

       The conference agreement includes $250,000,000 for the 
     Institute of Education Sciences account, as proposed by the 
     House. The Senate did not propose any funding for this 
     program. Within this total, up to $5,000,000 may be used for 
     State data coordinator and for awards to public or private 
     organizations or agencies to improve data coordination, as 
     proposed by the House.

                        Departmental Management


                    OFFICE OF THE INSPECTOR GENERAL

       The conference agreement includes $14,000,000 for the 
     Office of the Inspector General, as proposed by the House and 
     the Senate.

                            RELATED AGENCIES

            Corportation for National and Community Service


                           OPERATING EXPENSES

                     (INCLUDING TRANSFER OF FUNDS)

       The conference agreement includes $160,000,000 for the 
     operating expenses of the programs administered by the 
     Corporation for National and Community Service (CNCS), which 
     is the same level as proposed by both the House and the 
     Senate. The conference agreement includes language, as 
     proposed by the Senate, permitting funds to be used to 
     provide adjustments to awards for which the Chief Executive 
     Officer of CNCS determines that a waiver of the Federal share 
     limitation is warranted.
       Within the total provided for Operating Expenses, the 
     conference agreement includes the following amounts:
       (1) $89,000,000 shall be used to make additional awards to 
     existing AmeriCorps State and national grantees and to 
     provide adjustments to awards made prior to September 30, 
     2010 for which the Chief Executive Officer of the CNCS 
     determines that a waiver is warranted the--House proposed 
     similar language with regard to the existing grantees and the 
     Senate proposed similar waiver language;
       (2) $6,000,000 shall be transferred to CNCS ``Salaries and 
     Expenses'' for necessary expenses relating to information 
     technology upgrades, of which up to $800,000 may be used to 
     administer the funds provided for CNCS programs--the House 
     proposed similar language with regard to management and 
     oversight of funds and the Senate proposed similar language 
     with regard to information technology upgrades;
       (3) not less than $65,000,000, as proposed by the Senate, 
     for the AmeriCorps Volunteers in Service to America (VISTA) 
     program--the House did not propose similar language; and,
       (4) up to 20 percent of the funding provided for AmeriCorps 
     State and National grants may be used for national direct 
     grants.
       The conference agreement does not include the funding set-
     asides proposed by the Senate for the National Civilian 
     Community Corps, one-time supplement grants to State 
     commissions, or national service research activities. The 
     House did not propose similar language.

                      Office of Inspector General

       The conference agreement includes $1,000,000 for the Office 
     of Inspector General, which is the same level as that 
     proposed by both the House and Senate.


                         NATIONAL SERVICE TRUST

                     (INCLUDING TRANSFER OF FUNDS)

       The conference agreement includes $40,000,000 for the 
     National Service Trust (Trust), to be available until 
     expended, which is the same level as that proposed by both 
     the House and the Senate. The conference agreement includes 
     language that allows funds appropriated for the Trust to be 
     invested without regard to apportionment requirements. 
     Additionally, bill language is included allowing for funds to 
     be transferred to the Trust from the Operating Expenses 
     account upon determination that such transfer is necessary to 
     support the activities of national service participants and 
     after notice is transmitted to the Committees on 
     Appropriations of the House of Representatives and the 
     Senate.

[[Page 4011]]



                     Social Security Administration


                 LIMITATION ON ADMINISTRATIVE EXPENSES

                     (INCLUDING TRANSFER OF FUNDS)

       The conference agreement includes $1,000,000,000 for the 
     Social Security Administration (SSA), instead of $900,000,000 
     as proposed by the House and $890,000,000 as proposed by the 
     Senate. Funds are provided for both infrastructure 
     improvements and critical agency operations.
       Within the amount provided, $500,000,000 is provided for a 
     replacement of the SSA National Computer Center (NCC), which 
     is nearly 30 years old and will soon be unable to support the 
     critical systems necessary to SSA's mission. Funds may also 
     be used for the technology costs associated with the new 
     center. Language proposed by both the House and Senate is 
     modified to provide for critical oversight of the site 
     selection, construction and operation of the NCC, and the 
     Committees on Appropriations of the House and the Senate 
     expect regular updates on the progress on site selection and 
     key construction milestones prior to solicitations of bids 
     for these activities.
       Within the amount provided, $500,000,000 is provided for 
     processing disability and retirement workloads, including 
     information technology acquisitions and research in support 
     of such activities. These additional funds will allow SSA to 
     process a growing workload of claims in a timely manner and 
     to accelerate activities to reduce the backlog of disability 
     claims. As the largest repository of electronic medical 
     images in the world, SSA has a vital interest in exploring 
     how health information technology can be integrated into the 
     disability process through the widespread adoption of 
     electronic medical records. The funds provided for 
     agency operations therefore include resources for SSA health 
     information technology research and activities to facilitate 
     the adoption of electronic medical records in disability 
     claims.

                      Office of Inspector General

       The conference agreement includes $2,000,000 for the Social 
     Security Administration Office of Inspector General, as 
     proposed by the House, rather than $3,000,000 as proposed by 
     the Senate. These funds will be available through September 
     30, 2012 to support oversight and audit of Social Security 
     Administration activities funded in this Act.

                     GENERAL PROVISIONS--THIS TITLE


     ADMINISTRATION AND OVERSIGHT OF DEPARTMENT OF LABOR ACTIVITIES

       The conference agreement includes a provision similar to 
     one proposed by the Senate that provides that up to 1 percent 
     of the funds made available to the Department of Labor in 
     this title may be used for the administration, management, 
     and oversight of the programs, grants, and activities funded 
     by such appropriation, including the evaluation of the use of 
     such funds, subject to the provision of an operating 
     plan. The House bill contained a set-aside for 
     similar purposes.


                           MINIMUM WAGE STUDY

       The conference agreement includes a modification of a 
     provision proposed by the Senate, requiring the Government 
     Accountability Office (GAO) to conduct a study to assess the 
     impact of minimum wage increases that have occurred, and are 
     scheduled to occur, in American Samoa and the Commonwealth of 
     Northern Mariana Islands. To provide sufficient economic 
     information for this study, additional Federal agency 
     economic data collection in the U.S. territories is required.


  FEDERAL COORDINATING COUNCIL FOR COMPARATIVE EFFECTIVENESS RESEARCH

       The conference agreement includes a general provision 
     establishing a Federal Coordinating Council for Comparative 
     Effectiveness Research (Council), as proposed by the House. 
     The Senate language proposed a similar Council, but included 
     the word, ``Clinical'', in the title and throughout the bill 
     language.
       The conference agreement includes language to clarify that 
     the purpose of the Council is to reduce duplication of 
     comparative effectiveness research activities within the 
     Federal government. Duties of the Council are to (1) foster 
     coordination of comparative effectiveness and related health 
     services research conducted or supported by the Federal 
     government; and (2) advise the President and Congress on 
     strategies with respect to the infrastructure needs of 
     comparative effectiveness research and organizational 
     expenditures.
       Additionally, the conference agreement includes language 
     that nothing shall be construed to permit the Council to 
     mandate coverage, reimbursement, or other policies for any 
     public or private payer. Further, the conference agreement 
     includes language to clarify that none of the reports 
     submitted or recommendations made by the Council shall be 
     construed as mandates or clinical guidelines for payment, 
     coverage, or treatment.


                   GRANTS FOR IMPACT AID CONSTRUCTION

       The conference agreement authorizes Impact Aid construction 
     payments. Neither the House nor Senate included this 
     provision.


                         MANDATORY PELL GRANTS

       The conference agreement provides $1,474,000,000 for the 
     mandatory part of the Pell Grant program, as proposed by the 
     House. The Senate did not propose any funding for this 
     program.
       The additional funding will enable the mandatory add-on to 
     be provided in both award years 2009-2010 and 2010-2011, for 
     a total maximum Pell Grant award of $5,350 in award year 
     2009-2010.


                PROMPT ALLOCATION OF FUNDS FOR EDUCATION

       The conference agreement includes a provision enabling the 
     Department of Education to quickly disperse funds provided 
     under this Act. Neither the House nor Senate included this 
     provision.

                      TITLE IX--LEGISLATIVE BRANCH

                    Government Accountability Office


                         SALARIES AND EXPENSES

       The conference agreement provides $25,000,000 as proposed 
     by the House instead of $20,000,000 as proposed by the Senate 
     for the Government Accountability Office to hire temporary 
     personnel and obtain contract services to support the 
     agency's oversight responsibilities under this Act.

                     GENERAL PROVISIONS--THIS TITLE

       Section 901. Charges the Government Accountability Office 
     (GAO) with bimonthly reviews and reporting on selected States 
     and localities' use of funds provided in this Act. These 
     reports are to be posted on the Internet and linked to the 
     website established under this Act by the Recovery 
     Accountability and Transparency Board. GAO is authorized to 
     examine any records related to the obligation and use of 
     funds made available in this Act.
       Section 902. Provides GAO authority to examine records 
     related to contracts awarded under this Act and to interview 
     relevant employees.

          TITLE X--MILITARY CONSTRUCTION AND VETERANS AFFAIRS

       Job creation.--The conferees note that the Associated 
     General Contractors of America estimates that each 
     $1,000,000,000 in non-residential construction spending will 
     create or sustain 28,500 jobs. Based on this estimate and 
     data provided by the Department of Defense and the Department 
     of Veterans Affairs, the conferees estimate that the 
     construction funds and other programs in this title will 
     create or sustain 97,200 jobs.

                         DEPARTMENT OF DEFENSE

                      Military Construction, Army

       The conferees agree to provide $180,000,000, instead of 
     $920,000,000 as proposed by the House and $637,875,000 as 
     proposed by the Senate. Within the amount, the conferees 
     agree to provide $80,000,000 for child development centers 
     and $100,000,000 for warrior transition complexes.

              Military Construction, Navy and Marine Corps

       The conferees agree to provide $280,000,000, instead of 
     $350,000,000 as proposed by the House and $990,092,000 as 
     proposed by the Senate. Within the amount, the conferees 
     agree to provide $100,000,000 for troop housing, $80,000,000 
     for child development centers, and $100,000,000 for energy 
     conservation and alternative energy projects.

                    Military Construction, Air Force

       The conferees agree to provide $180,000,000, instead of 
     $280,000,000 as proposed by the House and $871,332,000 as 
     proposed by the Senate. Within the amount, the conferees 
     agree to provide $100,000,000 for troop housing and 
     $80,000,000 for child development centers.

                  Military Construction, Defense-Wide

       The conferees agree to provide $1,450,000,000, instead of 
     $3,750,000,000 as proposed by the House and $118,560,000 as 
     proposed by the Senate. Within the amount, the conferees 
     agree to provide $1,330,000,000 for the construction of 
     hospitals and $120,000,000 for the Energy Conservation 
     Investment Program.

               Military Construction, Army National Guard

       The conferees agree to provide $50,000,000, instead of 
     $140,000,000 as proposed by the House and $150,000,000 as 
     proposed by the Senate.

               Military Construction, Air National Guard

       The conferees agree to provide $50,000,000, instead of 
     $70,000,000 as proposed by the House and $110,000,000 as 
     proposed by the Senate.

                  Military Construction, Army Reserve

       The conferees agree to provide no funds as proposed by the 
     Senate, instead of $100,000,000 as proposed by the House.

                  Military Construction, Navy Reserve

       The conferees agree to provide no funds as proposed by the 
     Senate, instead of $30,000,000 as proposed by the House.

                Military Construction, Air Force Reserve

       The conferees agree to provide no funds as proposed by the 
     Senate, instead of $60,000,000 as proposed by the House.

                   Family Housing Construction, Army

       The conferees agree to provide $34,507,000, instead of no 
     funds as proposed by the House and $34,570,000 as proposed by 
     the Senate.

             Family Housing Operation And Maintenance, Army

       The conferees agree to provide $3,932,000 as proposed by 
     the Senate, instead of no funds as proposed by the House.

[[Page 4012]]



                 Family Housing Construction, Air Force

       The conferees agree to provide $80,100,000 as proposed by 
     the Senate, instead of no funds as proposed by the House.

          Family Housing Operation And Maintenance, Air Force

       The conferees agree to provide $16,461,000 as proposed by 
     the Senate, instead of no funds as proposed by the House.

                       Homeowners Assistance Fund

       The conferees agree to provide $555,000,000, instead of no 
     funds as proposed by the House and $410,973,000 as proposed 
     by the Senate.

            Department Of Defense Base Closure Account 1990

       The conferees agree to provide no funds as proposed by the 
     Senate, instead of $300,000,000 as proposed by the House.

                        Administrative Provision

       The conferees agree to include a provision (Sec. 1001) as 
     proposed by the Senate, with technical changes, providing for 
     a temporary expansion of homeowners assistance to respond to 
     the foreclosure and credit crisis.

                     DEPARTMENT OF VETERANS AFFAIRS

                     Veterans Health Administration


                     MEDICAL SUPPORT AND COMPLIANCE

       The conferees agree to provide no funds as proposed by the 
     House, instead of $5,000,000 as proposed by the Senate.


                           MEDICAL FACILITIES

       The conferees agree to provide $1,000,000,000, instead of 
     $950,000,000 as proposed by the House and $1,370,459,000 as 
     proposed by the Senate.

                    National Cemetery Administration

       The conferees agree to provide $50,000,000 as proposed by 
     the House, instead of $64,961,000 as proposed by the Senate.

                      Departmental Administration


                       GENERAL OPERATING EXPENSES

       The conferees agree to provide $150,000,000 for a temporary 
     increase in claims processing staff, instead of no funds as 
     proposed by the House and $1,125,000 as proposed by the 
     Senate for contract administration.


                     INFORMATION TECHNOLOGY SYSTEMS

       The conferees agree to provide $50,000,000 for the Veterans 
     Benefits Administration, instead of no funds as proposed by 
     the House and $195,000,000 as proposed by the Senate.


                      OFFICE OF INSPECTOR GENERAL

       The conferees agree to provide $1,000,000 as proposed by 
     the House, instead of $4,400,000 as proposed by the Senate.


                      CONSTRUCTION, MAJOR PROJECTS

       The conferees agree to provide no funds as proposed by the 
     House, instead of $1,105,333,000 as proposed by the Senate.


                      CONSTRUCTION, MINOR PROJECTS

       The conferees agree to provide no funds as proposed by the 
     House, instead of $939,836,000 as proposed by the Senate.


       GRANTS FOR CONSTRUCTION OF STATE EXTENDED CARE FACILITIES

       The conferees agree to provide $150,000,000, instead of no 
     funds as proposed by the House and $257,986,000 as proposed 
     by the Senate.

                        Administrative Provision

       The conferees agree to include a provision (Sec. 1002) 
     authorizing the Filipino Veterans Equity Compensation Fund.

                      DEPARTMENT OF DEFENSE--CIVIL

                       Cemeterial Expenses, Army


                         SALARIES AND EXPENSES

       The conferees agree to provide no funds as proposed by the 
     House, instead of $60,300,000 as proposed by the Senate.

       TITLE XI--STATE, FOREIGN OPERATIONS, AND RELATED PROGRAMS

                          DEPARTMENT OF STATE

                   Administration Of Foreign Affairs


                    DIPLOMATIC AND CONSULAR PROGRAMS

       The conference agreement includes $90,000,000 for urgent 
     domestic facilities requirements for passport and training 
     functions, the same amount as proposed by the Senate. The 
     House did not include any funds for this purpose. Funds under 
     the heading are available for obligation through September 
     30, 2010.
       The Department of State estimates that these investments 
     will create up to 655 jobs in the United States and improve 
     the operational and training capabilities of the Department. 
     The conference agreement includes funds to expand passport 
     agencies, to continue design and begin construction of a 
     consolidated security training facility, and to enlarge 
     domestic facilities to accommodate increased language 
     training requirements for diplomatic and development 
     personnel. The conferees direct that funds made available for 
     a consolidated security training facility should be obligated 
     in accordance with United States General Services 
     Administration procedures.
       The conference agreement requires the Secretary of State to 
     submit to the Committees on Appropriations a detailed 
     spending plan for funds made available under the heading not 
     later than 90 days after enactment of this Act. For passport 
     agencies, the spending plan is to be developed in 
     consultation with the Department of Homeland Security and the 
     General Services Administration to coordinate and/or co-
     locate such agencies with other Federal facilities, to the 
     extent feasible. Funds provided shall be subject to the 
     regular notification procedures of the Committees on 
     Appropriations.


                        CAPITAL INVESTMENT FUND

                     (INCLUDING TRANSFER OF FUNDS)

       The conference agreement includes $290,000,000 for 
     immediate information technology security and upgrades to 
     support mission-critical operations, instead of $276,000,000 
     as proposed by the House and $228,000,000 as proposed by the 
     Senate. Funds under the heading are available for obligation 
     through September 30, 2010.
       Within the funds made available under the heading, the 
     conference agreement directs that up to $38,000,000 shall be 
     transferred to, and merged with, funds made available under 
     the heading ``Capital Investment Fund'' of the United States 
     Agency for International Development (USAID) for immediate 
     information technology investments. The conferees direct that 
     the Inspector General of USAID allocate sufficient resources 
     to conduct oversight of the transferred funds.
       The Department of State and USAID estimate that these 
     investments will create at least 400 jobs in the United 
     States and improve the security, efficiency, and capability 
     of Department of State and USAID information technology 
     systems. These investments will address the critical 
     requirement of establishing back-up information management 
     facilities in the United States to protect the systems from 
     mission failures, enhance cyber-security, and secure 
     immediate hardware and software upgrades.
       The conference agreement includes language requiring the 
     Secretary of State and the USAID Administrator to coordinate 
     information technology systems, where appropriate, in order 
     to increase efficiencies and eliminate redundancies. Such 
     coordination should factor in the costs, service 
     requirements, and program needs of both agencies and should 
     include efforts to co-locate backup information management 
     facilities and improve cyber-security.
       The conference agreement requires the Secretary of State 
     and the USAID Administrator to submit to the Committees on 
     Appropriations, not later than 90 days after enactment of 
     this Act, a detailed spending plan for funds made available 
     under the heading. Funds provided shall be subject to the 
     regular notification procedures of the Committees on 
     Appropriations.


                      OFFICE OF INSPECTOR GENERAL

       The conference agreement includes $2,000,000 for the Office 
     of Inspector General to conduct oversight of the funds made 
     available to the Department of State by this Act, instead of 
     $1,500,000 as proposed by the Senate. The House bill did not 
     include a separate appropriation for this purpose. Funds 
     provided are available for obligation through September 30, 
     2010.

                       International Commissions


 INTERNATIONAL BOUNDARY AND WATER COMMISSION, UNITED STATES AND MEXICO 
                              CONSTRUCTION

                     (INCLUDING TRANSFER OF FUNDS)

       The conference agreement includes $220,000,000 for 
     immediate repair and rehabilitation requirements in the water 
     quantity program, instead of $224,000,000 as proposed by the 
     House and Senate. Funds are available for obligation through 
     September 30, 2010.
       These funds will be used for immediate infrastructure 
     upgrades along 506 miles of flood control levees to 
     rehabilitate the following projects identified by the 
     International Boundary and Water Commission--United States 
     and Mexico in their fiscal year 2009 budget request as 
     unfunded needs: Rio Grande Flood Control System; Safety of 
     Dams; Colorado Boundary; and Capacity Preservation. The 
     Department of State estimates that these investments will 
     create 305 jobs in the United States.
       Within the amount provided, the conference agreement 
     provides that up to $2,000,000 may be transferred to, and 
     merged with, funds made available under the heading 
     ``Salaries and Expenses'' of the Commission. The conference 
     agreement also requires the Secretary of State to submit to 
     the Committees on Appropriations, not later than 90 days 
     after enactment of this Act, a detailed spending plan for 
     funds made available under the heading. Funds provided shall 
     be subject to the regular notification procedures of the 
     Committees on Appropriations.

           UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT

                  Funds Appropriated To The President


                        CAPITAL INVESTMENT FUND

       The conference agreement does not include a direct 
     appropriation under this heading of $58,000,000 as proposed 
     by the Senate. Instead, the agreement directs the transfer to 
     USAID of up to $38,000,000, from funds made available in this 
     Act under the heading ``Capital Investment Fund'' of the 
     Department of State, for immediate information technology 
     investments. The House bill did not include funds for this 
     purpose. Funds transferred are subject to the regular 
     notification procedures of the Committees on Appropriations.


    OPERATING EXPENSES OF THE UNITED STATES AGENCY FOR INTERNATIONAL

                DEVELOPMENT OFFICE OF INSPECTOR GENERAL

       The conference agreement does not include $500,000 under 
     this heading, as proposed by

[[Page 4013]]

      the Senate. The Office of Inspector General of the United 
     States Agency for International Development is directed to 
     conduct oversight of the funds transferred in this Act to 
     USAID from within available funds.

   TITLE XII--TRANSPORTATION AND HOUSING AND URBAN DEVELOPMENT, AND 
                            RELATED AGENCIES

                      DEPARTMENT OF TRANSPORTATION

                        Office Of The Secretary


SUPPLEMENTAL DISCRETIONARY GRANTS FOR A NATIONAL SURFACE TRANSPORTATION 
                                 SYSTEM

       The conference agreement provides $1,500,000,000 instead of 
     $5,500,000,000 as proposed by the Senate. The House did not 
     include a similar provision. Funds will be used to award 
     grants on a competitive basis for projects across all surface 
     transportation modes that will have a significant impact on 
     the Nation, a metropolitan area or a region. Provisions 
     require the Secretary to ensure an equitable geographic 
     distribution of funds and an appropriate balance in 
     addressing the needs of urban and rural communities.

                    Federal Aviation Administration


           SUPPLEMENTAL FUNDING FOR FACILITIES AND EQUIPMENT

       The conference agreement includes $200,000,000 as proposed 
     by the Senate. The House did not include a similar provision. 
     Within the funds provided, $50,000,000 is included to upgrade 
     the Federal Aviation Administration's (FAA) power systems; 
     $50,000,000 is included to modernize aging en route air 
     traffic control centers; $80,000,000 to replace air traffic 
     control towers and TRACONs; and, $20,000,000 is included to 
     install airport lighting, navigation and landing equipment.


                       GRANTS-IN-AID FOR AIRPORTS

       The conference agreement provides $1,100,000,000 as 
     proposed by the Senate instead of $3,000,000,000 as proposed 
     by the House. Funds will be used by the Federal Aviation 
     Administration to provide discretionary airport grants to 
     repair and improve critical infrastructure at our nation's 
     airports. These investments will serve to provide important 
     safety and capacity benefits.

                     Federal Highway Administration


                   HIGHWAY INFRASTRUCTURE INVESTMENT

       The conference agreement provides $27,500,000,000, instead 
     of $30,000,000,000 as proposed by the House and 
     $27,060,000,000 as proposed by the Senate. Funds are 
     distributed by formula, with a portion of the funds within 
     each State being suballocated by population areas. Set asides 
     are also provided for: management and oversight; Indian 
     reservation roads; park roads and parkways; forest highways; 
     refuge roads; ferry boats; on-the-job training programs 
     focused on minorities, women, and the socially and 
     economically disadvantaged; a bonding assistance program for 
     minority and disadvantaged businesses; Puerto Rico and the 
     territories; and environmentally friendly transportation 
     enhancements.

                    Federal Railroad Administration


    CAPITAL ASSISTANCE FOR HIGH SPEED RAIL CORRIDORS AND INTERCITY 
                         PASSENGER RAIL SERVICE

       The conference agreement provides $8,000,000,000 instead of 
     $300,000,000 as proposed by the House and $2,250,000,000 as 
     proposed by the Senate. The conferees appropriated funds for 
     purposes outlined in both the Capital Assistance to States 
     and the High Speed Passenger Rail program under a combined 
     heading. The conferees have provided the Secretary 
     flexibility in allocating resources between the programs to 
     advance the goal of deploying intercity high speed rail 
     systems in the United States. The Capital Assistance to 
     States program first received funding in fiscal year 2008. 
     The High Speed Passenger Rail program is a new initiative 
     recently authorized under the Passenger Rail Investment and 
     Improvement Act of 2008.


                     CAPITAL GRANTS TO THE NATIONAL

                     RAILROAD PASSENGER CORPORATION

       The conference agreement provides $1,300,000,000 instead of 
     $800,000,000 as proposed by the House and $850,000,000 as 
     proposed by the Senate. Of the total funds appropriated, the 
     conferees provide $450,000,000 for capital grants for 
     security improvements to include life safety improvements. 
     The conferees also provide that no more than 60% of the 
     remaining funds shall be spent for capital improvements on 
     the Northeast Corridor.

                     Federal Transit Administration


                       TRANSIT CAPITAL ASSISTANCE

       The conference agreement provides $6,900,000,000 instead of 
     $8,400,000,000 as proposed by the Senate and $7,500,000,000 
     as proposed by the House. Within the total amount, 80 percent 
     of the funds shall be provided through the Federal Transit 
     Administration's (FTA) urbanized formula; 10 percent shall be 
     provided through FTA's rural formula, and, 10 percent shall 
     be provided through FTA's growing states and high density 
     formula. In addition, the conference agreement provides 2.5 
     percent of the rural funds for tribal transit needs and 
     includes $100,000,000 (instead of $200,000,000 as proposed by 
     the Senate) for discretionary grants to public transit 
     agencies for capital investments that will assist in reducing 
     the energy consumption or greenhouse gas emissions of their 
     public transit agencies.


                FIXED GUIDEWAY INFRASTRUCTURE INVESTMENT

       The conference agreement provides $750,000,000 instead of 
     $2,000,000,000 as proposed by the House. The Senate did not 
     include a similar provision. These funds will be distributed 
     through an existing authorized formula for capital projects 
     to modernize or improve existing fixed guideway systems, 
     including purchase and rehabilitation of rolling stock, 
     track, equipment and facilities. It is estimated that the 
     state-of-good-repair capital backlog for existing fixed 
     guideway systems is nearly $50 billion.


                       CAPITAL INVESTMENT GRANTS

       The conference agreement provides $750,000,000 instead of 
     $2,500,000,000 as proposed by the House. The Senate did not 
     include a similar provision. The funds will be distributed on 
     a discretionary basis for New Starts and Small Starts 
     projects that are already in construction or are nearly ready 
     to begin construction.

                        Maritime Administration


         SUPPLEMENTAL GRANTS FOR ASSISTANCE TO SMALL SHIPYARDS

       The conference agreement provides $100,000,000 for grants 
     to small shipyards as proposed by the Senate. The House did 
     not include a similar provision.

                      Office of Inspector General


                         SALARIES AND EXPENSES

       The conference agreement provides $20,000,000 as proposed 
     by the House and the Senate.

            GENERAL PROVISION--DEPARTMENT OF TRANSPORTATION

       Section 1201 ensures continued State investment in certain 
     identified programs for which the State receives funding in 
     this Act and requires grant recipients to report regularly on 
     the use of those funds as proposed by the House. The Senate 
     did not include a similar provision.
       The conference agreement does not include a provision as 
     proposed by the Senate which extends the Federal Transit 
     Administration's contingent commitment authority.

              DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

                       Public and Indian Housing


                      PUBLIC HOUSING CAPITAL FUND

       The conference agreement provides $4,000,000,000, instead 
     of $5,000,000,000 as proposed by both the House and the 
     Senate. This funding will assist public housing authorities 
     in rehabilitating and retrofitting public housing units, 
     including increasing the energy efficiency of units and 
     making critical safety repairs. Of the funding provided, 
     $3,000,000,000 will be distributed to public housing 
     authorities through the existing formula and $1,000,000,000 
     will be awarded through a competitive process.


                  NATIVE AMERICAN HOUSING BLOCK GRANTS

       The conference agreement provides $510,000,000, as proposed 
     by the Senate, instead of $500,000,000, as proposed by the 
     House. This funding will rehabilitate and improve energy 
     efficiency in housing units maintained by Native American 
     housing programs. Half of the funding will be distributed by 
     formula and half will be competitively awarded to projects 
     that can be started quickly.

                   Community Planning and Development


                       COMMUNITY DEVELOPMENT FUND

       The conference agreement provides $3,000,000,000, of which 
     $1,000,000,000 is appropriated for the Community Development 
     Block Grant program and $2,000,000,000 is available for the 
     Neighborhood Stabilization Program. This funding is provided 
     instead of the $5,190,000,000 proposed by the House. Funding 
     was not provided in the Senate. The Neighborhood 
     Stabilization Program funding will assist states, local 
     governments, and nonprofits in the purchase and 
     rehabilitation of foreclosed, vacant properties in order to 
     create more affordable housing and reduce neighborhood 
     blight.


                  HOME INVESTMENT PARTNERSHIPS PROGRAM

       The conference agreement provides $2,250,000,000, as 
     proposed by the Senate, instead of $1,500,000,000, as 
     proposed by the House. Funds are provided to coordinate with 
     the Low Income Housing Tax Credit to fill financing gaps 
     caused by the collapse of the tax credit market and to 
     jumpstart stalled housing development projects, thereby 
     creating jobs.


        SELF-HELP AND ASSISTED HOMEOWNERSHIP OPPORTUNITY PROGRAM

       The conference agreement does not provide funding for this 
     account. The House proposed $10,000,000 for this account, but 
     the Senate did not propose funding under this heading.


                      HOMELESSNESS PREVENTION FUND

       The conference agreement provides $1,500,000,000, as 
     proposed by both the House and the Senate. Funding will 
     provide short term rental assistance, housing relocation, and 
     stabilization services for families who may become homeless 
     due to the economic crisis. Funds are distributed by formula.
       The conference agreement directs the Secretary of HUD to 
     submit a report to the House and Senate Committees on 
     Appropriations one year after enactment of the Act that 
     details how the funding provided in this

[[Page 4014]]

     account has been used to alleviate the effects of the 
     Nation's current economic recession and prevent homelessness.

                            Housing Programs


  ASSISTED HOUSING STABILITY AND ENERGY AND GREEN RETROFIT INVESTMENTS

       The conference agreement provides $2,250,000,000 as 
     proposed by the Senate instead of $2,500,000,000 as proposed 
     by the House. Of this amount, $2,000,000,000 will provide 
     full-year payments to landlords participating in the Section 
     8 Project-Based program, and $250,000,000 will support a 
     program to upgrade HUD sponsored low-income housing to 
     increase energy efficiency, including new insulation, 
     windows, and furnaces.

            Office of Lead Hazard Control and Healthy Homes

       The conference agreement provides $100,000,000, as proposed 
     by both the House and the Senate. Funding is provided for 
     competitive grants to local governments and nonprofit 
     organizations to remove lead-based paint hazards in low-
     income housing. Projects that were highly rated in 2008 
     competitions but were not funded due to constrained resources 
     will be the focus of these resources, thereby ensuring that 
     the funds are spent quickly and effectively.

                     Management and Administration


                      OFFICE OF INSPECTOR GENERAL

       The conference agreement provides $15,000,000 as proposed 
     by the House and Senate. This funding will assist the IG in 
     monitoring the use of these funds to ensure that funding 
     provided in this bill is used in an effective and efficient 
     manner.

                           GENERAL PROVISIONS

              DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

       Section 1202 raises the Federal Housing Administration 
     (FHA) loan limits for calendar year 2009 to the level set in 
     calendar year 2008, as proposed by the House.
       Section 1203 raises the Government Sponsored Enterprise 
     (GSE) conforming loan limit for calendar year 2009, as 
     proposed by the House.
       Section 1204 raises the Home Equity Conversion Mortgage 
     (HECM) loan limit for calendar year 2009, as proposed by the 
     House.
       The conference agreement does not include a provision as 
     proposed by the Senate regarding changes to the Hope for 
     Homeowners program.

               TITLE XIII--HEALTH INFORMATION TECHNOLOGY

Health Information Technology..........................................
  Short Title; Table of Contents of Title. (House bill Sec. 4001; 
    Senate bill Sec. 1301; Conference agreement Sec. 13001)...........1
Subtitle A--Promotion of Health Information Technology................1
  Part I--Improving Health Care Quality, Safety, and Efficiency.......1
    ONCHIT; Standards Development and Adoption. (House bill Sec. 4101; 
      Senate bill Sec. 13101; Conference agreement Sec. 13101)........1
      Sec. 3000. Definitions..........................................1
      Sec. 3001. Office of the National Coordinator for Health 
        Information Technology........................................1
      Sec. 3002. HIT Policy Committee.................................1
      Sec. 3003. HIT Standards Committee..............................1
      Sec. 3004. Process for Adoption of endorsed Recommendations; 
        Adoption of Initial Set of Standards, Implementation 
        Specifications, and Certification Criteria....................1
      Sec. 3005. Application and Use of Adopted Standards and 
        Implementation Specifications by Federal Agencies.............1
      Sec. 3006. Voluntary Application and Use of Adopted Standards and 
        Implementation Specifications by Private Entities.............1
      Sec. 3007. Federal Health Information Technology................1
      Sec. 3008. Transitions..........................................1
      Sec. 3009. Relation to HIPAA Privacy and Security Law...........1
      Sec. 3010. Authorization for Appropriations.....................1
    Technical Amendment. (House bill Sec. 4102; Senate bill Sec. 13102; 
      Conference agreement Sec. 13102)................................1
  Part II--Application and Use of Adopted health Information Technology 
    Standards; Reports................................................1
    Coordination of Federal Activities with Adopted Standards and 
      Implementation Specifications. (House bill Sec. 4111; Senate bill 
      Sec. 13111; Conference agreement Sec. 13111)....................1
    Application to Private Entities. (House bill Sec. 4112; Senate bill 
      Sec. 13112; Conference agreement Sec. 13112)....................1
    Study and Reports. (House bill Sec. 4113; Senate bill Sec. 1313; 
      Conference agreement Sec. 13113)................................1
Subtitle B--Testing of Health Information Technology..................1
  National Institute for Standards and Technology Testing. (House bill 
    Sec. 4201; Senate bill Sec. 13201; Conference agreement Sec. 132011
  Research and Development Programs. (House bill Sec. 4202; Senate bill 
    Sec. 13202; Conference agreement Sec. 13202)......................1
Subtitle C--Incentives for the Use of Health Information Technology...1
  Part I--Grants and Loans Funding....................................1
    Grant, Loan, and Demonstration Programs. (House bill Sec. 4301; 
      Senate bill Sec. 13301; Conference agreement Sec. 13301)........1
      Sec. 3011. Immediate Funding to Strengthen the Health Information 
        Technology Infrastructure.....................................1
      Sec. 3012. Health Information Technology Implementation 
        Assistance....................................................1
      Sec. 3013. State Grants to Promote Health Information Technology1
      Sec. 3104. Competitive Grants to States and Indian Tribes for the 
        Development of Loan Programs to Facilitate the Widespread 
        Adoption of Certified EHR Technology..........................1
      Sec. 3015. Demonstration Program to Integrate Information 
        Technology into Clinical Education............................1
      Sec. 3016. Information Technology Professionals in Health Care..1
      Sec. 3017. General Grant and Loan Provision.....................1
      Sec. 3018. Authorization for Appropriations.....................1
Subtitle D--Privacy...................................................1
    Definitions. (House bill Sec. 4400; Senate bill Sec. 13400; 
      Conference agreement Sec. 13400)................................1
  Part I--Improved Privacy Provisions and Security Provisions.........1
    Application of Security Provisions and Penalties to Business 
      Associates of Covered Entities; Annual Guidance on Security 
      Provisions. (House bill Sec. 4401; Senate bill Sec. 13401; 
      Conference agreement Sec. 13401)................................1
    Notification in the Case of Breach. (House bill Sec. 4402; Senate 
      bill Sec. 13402; Conference agreement Sec. 13402)...............1
    Education on Health Information Privacy. (House bill Sec. 4403; 
      Senate bill Sec. 13403; Conference agreement Sec. 13403)........1
    Application of Privacy Provisions and Penalties to Business 
      Associates of Covered Entities. (House bill Sec. 4404; Senate 
      bill Sec. 13404; Conference agreement Sec. 13404)...............1
    Restrictions on Certain Disclosures and Sales of Health 
      Information; Accounting of Certain Protected Health Information 
      Disclosures; Access to Certain Information in Electronic Format. 
      (House bill Sec. 4405; Senate bill Sec. 13405; Conference 
      agreement Sec. 13405)...........................................1
    Conditions of Certain Contracts as Part of Health Care Operations. 
      (House bill sec. 4406; Senate bill Sec. 13406; Conference 
      agreement Sec. 13406)...........................................1
    Temporary Breach Notification Requirement for Vendors or Personal 
      Health Records and Other Non-HIPAA Covered Entities. (House bill 
      Sec. 4407; Senate bill Sec. 13407; Conference agreement Sec. 
      13407)..........................................................1
    Business Associate Contracts Required for Certain Entities. (House 
      bill Sec. 4408; Senate bill Sec. 13408; Conference agreement Sec. 
      13408)..........................................................1
    Clarification of Application of Wrongful Disclosures Criminal 
      Penalties. (House bill Sec. 4409; Senate bill Sec. 13409; 
      Conference agreement Sec. 13409.................................1
    Improved Enforcement. (House bill Sec. 4410; Senate bill Sec. 
      13410; Conference agreement Sec. 13410..........................1
    Audits. (House bill Sec. 4411; Senate bill Sec. 13411; Conference 
      agreement Sec. 13411)...........................................1
    Special Rule for Information to Reduce Medication Errors and 
      Improve Patient Safety. (House bill Sec. 4412)..................1
  Part II--Relationship to Other Laws; Regulatory References; Effective 
    Date; Reports.....................................................1
    Relationship to Other Laws. (House bill Sec. 4421; Senate bill Sec. 
      13421; Conference agreement Sec. 13421).........................1
    Regulatory References. (House bill Sec. 4422; Senate bill Sec. 
      13422; Conference agreement Sec. 13422).........................1
    Effective Date. (House bill Sec. 4423; Senate bill Sec. 13423; 
      Conference agreement Sec. 13423)................................1
    Studies, Reports, Guidance. (House bill Sec. 4424; Senate bill Sec. 
      13424; Conference agreement Sec. 13424).........................1

[[Page 4015]]



                     Health Information Technology

     Short Title; Table of Contents of Title. (House bill Sec. 
         4001; Senate bill Sec. 13101; Conference agreement Sec. 
         13001)
       This provision specifies that the title may be cited as the 
     ``Health Information Technology for Economic and Clinical 
     Health Act'' or the ``HITECH Act.''

         Subtitle A--Promotion of Health Information Technology


     Part I--Improving Health Care Quality, Safety, and Efficiency

     ONCHIT; Standards Development and Adoption. (House bill Sec. 
         4101; Senate bill Sec. 13101; Conference agreement Sec. 
         13101)
     Current Law
       There are no existing statutory provisions regarding the 
     current Office of the National Coordinator for Health 
     Information Technology (ONCHIT) within the Department of 
     Health and Human Services (HHS). ONCHIT was created by 
     Executive Order 13335, signed by the President on April 27, 
     2004. The National Coordinator was instructed to develop, 
     maintain, and direct a strategic plan to guide the nationwide 
     implementation of interoperable health information technology 
     (HIT) in the public and private health care sectors. In 2005, 
     the Secretary created the American Health Information 
     Community (AHIC), a public-private advisory body, to make 
     recommendations to the Secretary on how to accelerate the 
     development and adoption of interoperable HIT using a market-
     driven approach. The AHIC charter required it to provide the 
     Secretary with recommendations to create a successor entity 
     based in the private sector. AHIC Successor, Inc. was 
     established in July 2008 to transition AHIC's accomplishments 
     into a new public-private partnership. That partnership, the 
     National eHealth Collaborative (NeHC), was launched on 
     January 8, 2009.
       ONCHIT awarded a contract to the American National 
     Standards Institute (ANSI) to establish a public-private 
     collaborative, known as the Healthcare Information Technology 
     Standards Panel (HITSP), to harmonize existing HIT standards 
     and identify and establish standards to fill gaps. To date, 
     the Secretary has recognized over 100 harmonized standards, 
     including many that allow interoperability of electronic 
     health records (EHRs). To ensure that these standards are 
     incorporated into products, a second contract was awarded to 
     the Certification Commission for Healthcare Information 
     Technology (CCHIT), a private, nonprofit organization created 
     by HIT industry associations, which establishes criteria for 
     certifying products that use recognized standards. CCHIT has 
     certified over 150 ambulatory and inpatient EHR products.
     House Bill
       The House bill would establish in the Public Health Service 
     Act (PHSA; 42 USC 201 et seq.) a new Title XXX--Health 
     Information Technology and Quality, comprising the following 
     sections.
       Sec. 3000. Definitions. The House bill defines the 
     following terms: certified EHR technology, enterprise 
     integration, health care provider, health information, health 
     information technology, health plan, HIT Policy Committee, 
     HIT Standards Committee, individually identifiable health 
     information, laboratory, National Coordinator, pharmacist, 
     qualified electronic health record, and state.
       Sec. 3001. Office of the National Coordinator for Health 
     Information Technology. The House bill would establish within 
     HHS the Office of the National Coordinator for Health 
     Information Technology (ONCHIT). The National Coordinator 
     would be appointed by the Secretary and report directly to 
     the Secretary. The National Coordinator would be charged with 
     the following duties. First, the National Coordinator would 
     be required to review and determine whether to endorse 
     standards recommended by the HIT Standards Committee 
     (described below). Second, the National Coordinator would be 
     responsible for coordinating HIT policy and programs within 
     HHS and with those of other federal agencies and would be a 
     leading member in the establishment of the HIT Policy 
     Committee and the HIT Standards Committee and act as a 
     liaison among these Committees and the federal government. 
     Third, the National Coordinator would be required to update 
     the Federal Health IT Strategic Plan (developed as of June 3, 
     2008) to include specific objectives, milestones, and metrics 
     with respect to the electronic exchange and use of health 
     information, the utilization of an EHR for each person in the 
     United States by 2014, and the incorporation of privacy and 
     security protections for the electronic exchange of an 
     individual's health information, among other things. The plan 
     would include measurable outcome goals and the National 
     Coordinator would be required to republish the plan, 
     including all updates. Fourth, the National Coordinator would 
     maintain and update a website to post relevant information 
     about the work related to efforts to promote a nationwide 
     health information technology infrastructure. Fifth, the 
     National Coordinator would be required, in consultation with 
     the National Institute of Standards and Technology (NIST), to 
     develop a program for the voluntary certification of HIT as 
     being in compliance with applicable certification criteria 
     adopted by the Secretary. Sixth, the National Coordination 
     would have to prepare several reports, including a report on 
     any additional funding or authority needed to evaluate and 
     develop standards for a nationwide health information 
     technology infrastructure; a report on lessons learned from 
     HIT implementation by major public and private health care 
     systems; a report on the benefits and costs of the electronic 
     use and exchange of health information; an assessment of the 
     impact of HIT on communities with health disparities and in 
     areas that serve uninsured, underinsured, and medically 
     underserved individuals; and an estimate of the public and 
     private resources needed annually to achieve utilization of 
     an EHR for each person in the United States by 2014. Seventh, 
     the National Coordinator would be required to establish a 
     national governance mechanism for the national health 
     information network. Finally, the National Coordinator would 
     be permitted to accept or request federal detailees and would 
     be required, within 12 months of enactment, to appoint a 
     Chief Privacy Officer of the Office of the National 
     Coordinator to advise the National Coordinator on privacy, 
     security, and data stewardship.
       Sec. 3002. HIT Policy Committee. The House bill would 
     establish an HIT Policy committee to make policy 
     recommendations to the National Coordinator relating to the 
     implementation of a nationwide health information technology 
     infrastructure. The duties of the HIT Policy Committee would 
     include providing recommendations on a policy framework for 
     the development and adoption of a nationwide health 
     information technology infrastructure, recommending areas in 
     which standards are needed for the electronic exchange and 
     use of health information, and recommending an order of 
     priority for the development of such standards. The Committee 
     would be required to provide recommendations in six areas: 
     (1) technologies that protect the privacy and security of 
     electronic health information; (2) a nationwide HIT 
     infrastructure that enables electronic information exchange; 
     (3) nationwide adoption of certified EHRs; (4) EHR 
     technologies that allow for an accounting of disclosures; (5) 
     using EHRs to improve health care quality; and (6) encryption 
     technologies that render individually identifiable health 
     information unusable, unreadable, and indecipherable to 
     unauthorized individuals. The bill describes other areas that 
     the committee might consider, including using HIT to reduce 
     medical errors, and telemedicine. The membership of the HIT 
     Policy Committee would reflect (at least) providers, 
     ancillary healthcare workers, consumers, purchasers, health 
     plans, technology vendors, researchers, relevant federal 
     agencies, and individuals with technical expertise on health 
     care quality and privacy and security. The National 
     Coordinator must ensure that the Committee's recommendations 
     are considered in the development of policies, and the 
     Secretary would be required to publish all of the Committee's 
     recommendations in the Federal Register and post them on a 
     website. The provisions of the Federal Advisory Committee 
     Act, other than section 14, would apply to the HIT Policy 
     Committee.
       Sec. 3003. HIT Standards Committee. The House bill would 
     establish an HIT Standards Committee to recommend to the 
     National Coordinator standards, implementation 
     specifications, and certification criteria for the electronic 
     exchange of health information. Duties of the HIT Standards 
     Committee would include the development and pilot testing of 
     standards, and serving as a forum for the participation of a 
     broad range of stakeholders to provide input on the 
     development, harmonization, and recognition of standards. Not 
     later than 90 days after enactment, the HIT Standards 
     Committee would outline (and annually update) a schedule for 
     assessing the policy recommendations developed by the HIT 
     Policy Committee, and this schedule would be published in the 
     Federal Register. In addition, the Committee would be 
     required to conduct open public meetings and develop a 
     process to allow for public comment on this schedule. The 
     membership of the HIT Standards Committee would reflect (at 
     least) providers, ancillary healthcare workers, consumers, 
     purchasers, health plans, technology vendors, researchers, 
     relevant federal agencies, and individuals with technical 
     expertise on health care quality and privacy and security. 
     The National Coordinator would be required to ensure that the 
     Committee's recommendations are considered in the development 
     of policies; the Secretary would be authorized to provide 
     financial assistance to Committee members that are non-profit 
     or consumer advocacy groups in order to defray costs 
     associated with participating in the Committee's activities, 
     and the Committee would be required to publish all its 
     recommendations in the Federal Register and post them on a 
     website. The provisions of the Federal Advisory Committee 
     Act, other than section 14, would apply to the HIT Standards 
     Committee.
       Sec. 3004. Process for Adoption of endorsed 
     Recommendations; Adoption of Initial Set of Standards, 
     Implementation Specifications, and Certification Criteria. 
     The House bill would require the Secretary, within 90 days

[[Page 4016]]

     of receiving from the National Coordinator a recommendation 
     for HIT standards, implementation specifications, or 
     certification criteria, to determine in consultation with 
     representatives of other relevant federal agencies, whether 
     or not to propose adoption of such standards, implementation 
     specifications, or certification criteria. Adoption would be 
     accomplished through regulation, whereas a decision by the 
     Secretary not to adopt would have to be conveyed in writing 
     to the National Coordinator and the HIT Standard Committee. 
     The Secretary would be required to adopt, through rulemaking, 
     an initial set of standards by December 31, 2009.
       Sec. 3005. Application and Use of Adopted Standards and 
     Implementation Specifications by Federal Agencies. The House 
     bill refers to Section 4111 (see below) for the requirements 
     relating to the application and use of adopted standards by 
     federal agencies.
       Sec. 3006. Voluntary Application and Use of Adopted 
     Standards and Implementation Specifications by Private 
     Entities. The House bill would make the application and use 
     of adopted standards voluntary for private entities.
       Sec. 3007. Federal Health Information Technology. The House 
     bill would require the National Coordinator to support the 
     development, routine updating and provision of qualified EHR 
     technology unless the Secretary determined that the needs and 
     demands of providers are being substantially and adequately 
     met through the marketplace. The National Coordinator would 
     be permitted to charge a nominal fee to providers for the 
     adoption of this health information technology system.
       Sec. 3008. Transitions. The House bill would provide for 
     the transfer of all functions, personnel, assets, 
     liabilities, and administrative actions of the existing 
     ONCHIT, created under Executive Order 13335, to the new 
     ONCHIT established by this Act. Similarly, all functions, 
     personnel, assets, liabilities applicable to AHIC Successor, 
     Inc., now operating as the National eHealth Collaborative 
     (NeHC), would be transferred to the HIT Policy Committee or 
     the HIT Standards Committee, as appropriate. Nothing in the 
     bill would require the creation of a new entity to the extent 
     that the existing ONCHIT is consistent with the provision of 
     Section 3001. Similarly, nothing in the bill would prohibit 
     NeHC from modifying its charter, duties, membership, and 
     other functions to be consistent with Sections 3002 and 3003 
     in a manner that would permit the Secretary to recognize it 
     as the HIT Policy Committee or the HIT Standards Committee.
       Sec. 3009. Relation to HIPAA Privacy and Security Law. The 
     House bill specifies that this title may not be construed as 
     having any effect on the authorities of the Secretary under 
     HIPAA privacy and security law.
       Sec. 3010. Authorization for Appropriations. The House bill 
     would authorize an appropriation of $250 million for FY2009 
     for implementing this subtitle.
     Senate Bill
       The Senate bill includes the same provisions as the House 
     bill, other than an authorization for appropriations (Sec. 
     3010), but with the following additional language: (1) the 
     definition of health care provider is broader than in the 
     House bill; (2) the duties of the National Coordinator would 
     include reviewing federal HIT investments to ensure that 
     federal HIT programs are meeting the objectives of the 
     strategic plan, and providing comments and advice on federal 
     HIT programs at the request of the Office of Management and 
     Budget (OMB); (3) the updated HIT Strategic Plan would 
     include specific plans for ensuring that populations with 
     unique needs, such as children, are appropriately addressed 
     in the technology design; (4) the Secretary would be 
     authorized to recognize an entity or entities for harmonizing 
     or updating standards and implementation specifications; and 
     (5) the National Coordinator's report on resource 
     requirements for achieving nationwide EHR utilization by 2014 
     would include resources for health informatics and management 
     education programs to ensure a sufficient HIT workforce.
       In addition, the Senate bill would require the HIT Policy 
     Committee to provide recommendations on the use of electronic 
     systems to collect patient demographic data (consistent with 
     the evaluation of health disparities data under Sec. 1809 of 
     the Social Security Act) and on technologies and design 
     features that address the needs of children and other 
     vulnerable populations, instead of providing recommendations 
     on encryption technologies as required in the House bill. To 
     the list of other areas that the HIT Policy Committee might 
     consider, the Senate bill includes methods for allowing 
     individuals and their caregivers secure access to protected 
     health information. Unlike the House bill, the Senate bill 
     specifies the size and composition of the HIT Policy 
     Committee, and outlines certain details of its operation.
       The Senate bill includes additional provisions regarding 
     the operations of the HIT Standards Committee. They include 
     conducting open and public meetings, adopting a consensus 
     approach to standards development and harmonization, and 
     providing an opportunity for public comment. Unlike the House 
     bill, which would make the HIT Standards Committee subject to 
     the Federal Advisory Committee Act, the Senate bill would 
     apply OMB Circular A-119 (Federal Participation in the 
     Development and Use of Voluntary Consensus Standards) to the 
     Committee. It also would require the Secretary, as necessary 
     and consistent with the HIT Standards Committee's published 
     schedule, to adopt additional standards, implementation 
     specifications, and certification criteria following the 
     adoption of the initial set of requirements by December 31, 
     2009.
       The Senate bill's transition provision states that nothing 
     in the bill would require the creation of a new ONCHIT, to 
     the extent that the existing office is consistent with the 
     Act. Further, nothing in the bill would prohibit National 
     eHealth Collaborative from modifying its structure and 
     function in order to be recognized as the HIT Standards 
     Committee. Finally, the Senate bill specifies that until 
     recommendations are made by the HIT Policy Committee, 
     recommendations of the HIT Standards Committee would have to 
     be consistent with the most recent recommendations of AHIC 
     Successor, Inc.
     Conference Agreement
       The conference agreement is largely similar to the 
     provisions in both bills. Here are some additions or 
     distinctions:
     Sec. 3000.
       Definitions. The conference agreement includes a broader 
     definition of health care provider, including additions by 
     the Senate and House. The conference agreement clarified the 
     definition of health information technology to include 
     internet based products and HIT aimed at usage by patients. 
     The term ``qualified electronic health record'' includes 
     computerized provider order entry systems.
     Sec. 3001.
       Office of the National Coordinator of Health Information 
     Technology. The duties of the National Coordinator include 
     the review of federal health information technology 
     investments from the Senate bill.
       The elements of the strategic plan developed by the 
     National Coordinator include the Senate language regarding 
     strategies to enhance increase prevention and coordination of 
     community resources and plans for ensuring that populations 
     with unique needs are addressed in technology design, as 
     appropriate.
       The section on harmonization included in the Senate bill 
     was modified and moved to Section 3003 and ensures that 
     harmonization standards or updates developed by other 
     entities can be recognized by the HIT Standards Committee.
       The conference agreement retains the intent of the Senate 
     language requiring the National Coordinator to estimate 
     resources needed to establish a sufficient health information 
     technology workforce.
       To the extent that this section calls the National 
     Coordinator to ensure that every person in the United States 
     have an EHR by 2014, this goal is not intended to require 
     individuals to receive services from providers that have 
     electronic health records and is aimed at having the National 
     Coordinator take steps to help providers adopt electronic 
     health records. This provision does not constitute a legal 
     requirement on any patient to have an electronic health 
     record. For religious or other reasons, non-traditional 
     health care providers may also choose not to use an 
     electronic health record.
     Sec. 3002.
       HIT Policy Committee. The conference agreement includes the 
     House language on areas required for consideration regarding 
     security of transmitted individually identifiable health 
     information and includes the Senate language regarding 
     collection of demographic data and modified the Senate 
     language regarding technology to address the needs of 
     children.
       The language on other areas of consideration includes the 
     Senate language regarding methods to facilitate secure access 
     by an individual to their protected health information and 
     modified the Senate language regarding access to such 
     information by a family member, caregiver, or guardian acting 
     on behalf of a patient.
       The conference agreement adopted the Senate specifics on 
     the membership of the HIT Policy Committee. The conference 
     agreement modified the language by increasing the members 
     appointed by the Secretary and those representing patients or 
     consumers and modified the Senate language regarding 
     participation on the Committee and to allow the Secretary to 
     fill seats if membership has not been filled by 45 days after 
     enactment.
     Sec. 3003.
       HIT Standards Committee. The Conference report includes 
     provisions from the House and Senate bills. The principal 
     changes from the House-passed bill are: (1) there is a new 
     provision allowing the Standards Committee to recognize 
     harmonized standards from an outside entity; (2) there is a 
     new provision requiring balanced membership and that that no 
     single sector unduly influence the recommendations or 
     procedures of the committee; and (3) there is a new provision 
     requiring the involvement of outside experts with relevant 
     expertise. The principal change from the Senate-passed bill 
     is that the Standards Committee is subject to the Federal 
     Advisory Committee Act.
     Sec. 3004.
       Process for Adoption of endorsed Recommendations; Adoption 
     of Initial Set of

[[Page 4017]]

     Standards, Implementation Specifications, and Certification 
     Criteria. The Conference report includes provisions from the 
     House and Senate bills. The principal change from the House-
     passed bill and the Senate-passed bill is that there is 
     explicit authority to allow the Secretary to issue the 
     initial set of standards as interim final rules. This 
     clarification should not be read to impact the authority or 
     discretion of the Secretary in future regulations regarding 
     standards.
     Sec. 3005.
       Application and Use of Adopted Standards and Implementation 
     Specifications by Federal Agencies. The conference report 
     includes this provision unaltered.
     Sec. 3006.
       Voluntary Application and Use of Adopted Standards and 
     Implementation Specifications by Private Entities. The 
     Conference report contains the same policy as the House and 
     Senate bills, with language modified for technical purposes.
     Sec. 3007.
       Federal Health Information Technology. The Conference 
     report includes provisions from the House and Senate bills. 
     The principal change from the House-passed bill is that the 
     Secretary is authorized to ``make available'' rather than 
     ``provide'' the technology specified under the Section. The 
     principal change from the Senate-passed bill is that only the 
     Secretary is charged with making the assessment of market 
     failure.
     Sec. 3008.
       Transitions. The Conference report contains the same policy 
     as the House and Senate with language modified for technical 
     purposes.
     Sec. 3009.
       Relation to HIPAA Privacy and Security Law. The Conference 
     report contains the same Policy as the House and Senate 
     bills, with language modified for technical purposes. In 
     addition, the conference report includes a provision 
     clarifying the discretion of the Secretary.
     Sec. 3010.
       Authorization for Appropriations. The Conference report 
     does not include this section.
     Technical Amendment. (House bill Sec. 4102; Senate bill Sec. 
         13102; Conference agreement Sec. 13102)
     Current Law
       Under HIPAA, the definition of a health plan (42 USC 
     1320(d)(5)) includes Parts A, B, and C of the Medicare 
     program.
     House Bill
       The House bill would amend the HIPAA definition of health 
     plan to include Medicare Part D.
     Senate Bill
       Same provision.
     Conference Agreement
       Same provision.

Part II--Application and Use of Adopted Health. Information Technology 
                           Standards; Reports

     Coordination of Federal Activities with Adopted Standards and 
         Implementation Specifications. (House bill Sec. 4111; 
         Senate bill Sec. 13111; Conference agreement Sec. 13111)
     Current Law
       No provisions; however, in August 2006, the President 
     issued Executive Order 13410 committing federal agencies that 
     purchase and deliver health care to require the use of HIT 
     that is based on interoperability standards recognized by the 
     Secretary.
     House Bill
       The House bill would require federal agencies that 
     implement, acquire, or upgrade HIT systems for the electronic 
     exchange of health information to use HIT systems and 
     products that meet the standards adopted by the Secretary 
     under this Act. The President would be required to ensure 
     that federal activities involving the collection and 
     submission of health information are consistent with such 
     standards within three years of their adoption.
     Senate Bill
       Same provision.
     Conference Agreement
       Same provision.
     Application to Private Entities. (House bill Sec. 4112; 
         Senate bill Sec. 13112; Conference agreement Sec. 13112)
     Current Law
       No provisions.
     House Bill
       The House bill would require health care payers and 
     providers that contract with the federal government to use 
     HIT systems and products that meet the standards adopted by 
     the Secretary under this Act.
     Senate Bill
       Same provision.
     Conference Agreement
       Same provision.
     Study and Reports. (House bill Sec. 4113; Senate bill Sec. 
         13113; Conference agreement Sec. 13113)
     Current Law
       No provisions.
     House Bill
       The House bill would require the Secretary, within two 
     years and annually thereafter, to report to Congress on 
     efforts to facilitate the adoption of a nationwide system for 
     the electronic exchange of health information; to conduct a 
     study, not later than two years after enactment, that 
     examines methods to create efficient reimbursement incentives 
     for improving health care quality in Federally qualified 
     health centers, rural health clinical and free clinics; and 
     to conduct a study, not later than 24 months after enactment, 
     of matters relating to the potential use of new aging 
     services technology to assist seniors, individuals with 
     disabilities and their caregivers throughout the aging 
     process.
     Senate Bill
       Same provision.
     Conference Agreement
       Same provision.

          Subtitle B--Testing of Health Information Technology

     National Institute for Standards and Technology Testing. 
         (House bill Sec. 4201; Senate bill Sec. 13201; Conference 
         agreement Sec. 13201)
     Current Law
       No provisions; however, ONCHIT is working with the National 
     Institute for Standards and Technology (NISI) on testing HIT 
     standards. NIST is assisting with the HITSP standards 
     harmonization process and with CCHIT's certification 
     activities.
     House Bill
       The House bill would require NIST, in coordination with the 
     HIT Standards Committee, to test HIT standards, as well as 
     support the establishment of a voluntary testing program by 
     accredited testing laboratories.
     Senate Bill
       Same provision.
     Conference Agreement
       Same provision.
     Research and Development Programs. (House bill Sec. 4202; 
         Senate bill Sec. 13202; Conference agreement Sec. 13202)
     Current Law
       No provisions.
     House Bill
       The House bill would require NIST, in consultation with the 
     National Science Foundation and other federal agencies, to 
     award competitive grants to universities (or research 
     consortia) to establish multidisciplinary Centers for Health 
     Care Information Enterprise Integration. The purpose of the 
     Centers would be to generate innovative approaches to the 
     development of a fully interoperable national health care 
     infrastructure, as well as to develop and use HIT. The bill 
     requires the National High-Performance Computing Program to 
     coordinate federal research and development programs related 
     to the deployment of HIT.
     Senate Bill
       The Senate would authorize but not require the National 
     High-Performance Computing Program to review federal research 
     and development programs relating to the deployment of HIT.
     Conference Agreement
       The conference agreement has the Senate language with an 
     amendment. The Conference agreement retains the House and 
     Senate language directing NIST to award competitive grants to 
     universities to establish multidisciplinary Centers for 
     Health Care Information Enterprise Integration. With respect 
     to the National High-Performance Computing Program, the 
     agreement notes that the ongoing work of the National 
     Information Technology Research and Development (NITRD) 
     program authorized by section 101 of the High-Performance 
     Computing Act of 1991 (15 U.S.C. 5511) shall include health 
     information technology research and development.

  Subtitle C--Incentives for the Use of Health Information Technology


                    Part I--Grants and Loans Funding

     Grant, Loan, and Demonstration Programs. (House bill Sec. 
         4301; Senate bill Sec. 13301; Conference agreement Sec. 
         13301)
     Current Law
       No provisions; however, since 2004, the Agency for 
     Healthcare Research and Quality (AHRQ) has awarded $260 
     million to support and stimulate investment in HIT. AHRQ-
     funded projects, many of which are focused on rural and 
     underserved populations, cover a broad range of HIT tools and 
     systems including EHRs, personal health records (a term that 
     refers to health information collected by and under the 
     control of the patient), e-prescribing, privacy and security, 
     quality measurement, and Medicaid technical assistance.
     House Bill
       The House bill would amend PHSA Title XXX (as added by this 
     Act) by adding a new Subtitle B--Incentives for the Use of 
     Information Technology.
       Sec. 3011. Immediate Funding to Strengthen the Health 
     Information Technology Infrastructure. The House bill would 
     require the Secretary, using funds appropriated under Section 
     3018 and in a manner consistent with

[[Page 4018]]

     the National Coordinator's strategic plan, to invest in HIT 
     so as to promote the use and exchange of electronic health 
     information. The Secretary must, to the greatest extent 
     practicable, ensure that the funds are used to acquire HIT 
     that meets current standards and certification criteria. 
     Funds would be administered through different agencies with 
     relevant expertise, including ONCHIT, AHRQ, CMS, the Centers 
     for Disease Control and Prevention (CDC), and the Indian 
     Health Service (IHS), to support the following: (1) HIT 
     architecture to support the secure electronic exchange of 
     information; (2) electronic health records for providers not 
     eligible for HIT incentive payments under Medicare and 
     Medicaid; (3) training and dissemination of information on 
     best practices to integrate HIT into health care delivery; 
     (4) telemedicine; (5) interoperable clinical data 
     repositories; (6) technologies and best practices for 
     protecting health information; and (7) HIT use by public 
     health departments. The Secretary must invest $300 million to 
     support regional health information exchanges, and may use 
     funds to carry out other activities authorized under this Act 
     and other relevant laws.
       Sec. 3012. Health Information Technology Implementation 
     Assistance. The House bill would require the National 
     Coordinator, in consultation with NIST and other agencies 
     with experience in IT services, to establish an HIT extension 
     program to assist providers in adopting and using certified 
     EHR technology. The Secretary would be required to create an 
     HIT Research Center to serve as a forum for exchanging 
     knowledge and experience, disseminating information on 
     lessons learned and best practices, providing technical 
     assistance to health information networks, and learning about 
     using HIT in medically underserved communities.
       The Secretary also would be required to support HIT 
     Regional Extension Centers, affiliated with nonprofit 
     organizations, to provide assistance to providers in the 
     region. Priority would be given to public, nonprofit, and 
     critical access hospitals, community health centers, 
     individual and small group practices, and entities that serve 
     the uninsured, underinsured, and medically underserved 
     individuals. Centers would be permitted to receive up to 4 
     years of funding to cover up to 50% of their capital and 
     annual operating and maintenance expenditures. The Secretary 
     would be required, within 90 days of enactment, to publish a 
     notice describing the program and the availability of funds. 
     Each regional center receiving funding would be required to 
     submit to a biennial evaluation of its performance against 
     specified objectives. Continued funding after two years of 
     support would be contingent on receiving a positive 
     evaluation.
       Sec. 3013. State Grants to Promote Health Information 
     Technology. The National Coordinator would be authorized to 
     award planning and implementation grants to states or 
     qualified state-designated entities to facilitate and expand 
     electronic health information exchange. To qualify as a 
     state-designated entity, an entity would have to be a 
     nonprofit organization with broad stakeholder representation 
     on its governing board and adopt nondiscrimination and 
     conflict of interest policies. In order to receive an 
     implementation grant, a state or qualified state-designated 
     entity would have to submit a plan describing the activities 
     to be carried out (consistent with the National Coordinator's 
     strategic plan) to facilitate and expand electronic health 
     information exchange. The Secretary would be required 
     annually to evaluate the grant activity under this section 
     and implement the lessons learned from each evaluation in the 
     subsequent round of awards in such a manner as to realize the 
     greatest improvement in health care quality, decrease in 
     costs, and the most effective and secure electronic 
     information exchange. Grants would require a match of at 
     least $1 for each $10 of federal funds in FY2011, at least $1 
     for each $7 of federal funds in FY2012, and at least $1 for 
     each $3 of federal funds in FY2013 and each subsequent fiscal 
     year. For fiscal years before FY2011, the Secretary would 
     determine whether a state match is required.
       Sec. 3104. Competitive Grants to States and Indian Tribes 
     for the Development of Loan Programs to Facilitate the 
     Widespread Adoption of Certified EHR Technology. The House 
     bill would authorize the National Coordinator to award 
     competitive grants to states or Indian tribes to establish 
     loan programs for health care providers to purchase certified 
     EHR technology, train personnel in the use of such 
     technology, and improve the secure electronic exchange of 
     health information. To be eligible, grantees would be 
     required to: (1) establish a qualified HIT loan fund; (2) 
     submit a strategic plan, updated annually, describing the 
     intended uses of the funds and providing assurances that 
     loans will only be given to health care providers that submit 
     required reports on quality measures and use the certified 
     EHR technology supported by the loan for the electronic 
     exchange of health information to improve the quality of 
     care; and (3) provide matching funds of at least $1 for every 
     $5 of federal funding. Loans would be repayable over a period 
     of up to 10 years. Each year, the National Coordinator would 
     be required to provide a report to Congress summarizing the 
     annual reports submitted by grantees. Awards would not be 
     permitted before January 1, 2010.
       Sec. 3015. Demonstration Program to Integrate Information 
     Technology into Clinical Education. The House bill would 
     authorize the Secretary to create a demonstration program for 
     awarding competitive grants to medical, dental, and nursing 
     schools, and to other graduate health education programs to 
     integrate HIT into the clinical education of health care 
     professionals. To be eligible, grantees would have to submit 
     a strategic plan. A grant could not cover more than 50% of 
     the costs of any activity for which assistance is provided, 
     though the Secretary would have the authority to waive that 
     cost-sharing requirement. The Secretary would be required 
     annually to report to designated House and Senate Committees 
     on the demonstrations, with recommendations.
       Sec. 3016. Information Technology Professionals in Health 
     Care. The House bill would require the Secretary, in 
     consultation with the Director of the National Science 
     Foundation, to provide financial assistance to universities 
     to establish or expand medical informatics programs. A grant 
     could not cover more than 50% of the costs of any activity 
     for which assistance is provided, though the Secretary would 
     have the authority to waive that cost-sharing requirement.
       Sec. 3017. General Grant and Loan Provision. The Secretary 
     would be permitted to require that grantees, within one year 
     of receiving an award, report on the effectiveness of the 
     activities for which the funds were provided and the impact 
     of the project on health care quality and safety. The House 
     bill would require the National Coordinator annually to 
     evaluate the grant activities under this title and implement 
     the lessons learned from each evaluation in the subsequent 
     round of awards in such a manner as to realize the greatest 
     improvement in the quality and efficiency of health care.
       Sec. 3018. Authorization for Appropriations. The House bill 
     would authorize the appropriation of such sums as may be 
     necessary for each of FY2009 through FY2013 to carry out this 
     subtitle. Amounts so appropriated would remain available 
     until expended.
     Senate Bill
       The Senate bill includes the same provisions as the House 
     bill, but with the following additional language: (1) the 
     list of activities for which state implementation grants may 
     be used includes establishing models that promote lifetime 
     access to health records; and (2) the use of loan funds by 
     providers may include upgrading HIT to meet certification 
     criteria.
     Conference Agreement
       The Conference report includes the provision from the 
     Senate that the use of loan funds by providers may include 
     upgrading HIT to meet certification criteria. The Conference 
     report does not include the provision from the Senate that 
     the list of activities for which state implementation grants 
     may be used includes establishing models that promote 
     lifetime access to health records.
       The Conference report modifies Section 3011 to no longer 
     include a specific description of $300 million in funding for 
     promoting regional and sub-national health information 
     exchange. This funding is reflected in the corresponding 
     sections of the Economic Recovery and Reinvestment Act that 
     appropriate funds for activities authorized under this title.
       The Conference report modifies Section 3016 to no longer 
     require matching funds from universities participating in 
     this program.
       As a result of the incentives and appropriations for health 
     information technology provided in this bill, it is expected 
     that nonprofit organizations may be formed to facilitate the 
     electronic use and exchange of health-related information 
     consistent with standards adopted by HHS, and that such 
     organizations may seek exemption from income tax as 
     organizations described in IRC sec. 501(c)(3). Consequently, 
     if a nonprofit organization otherwise organized and operated 
     exclusively for exempt purposes described in IRC sec. 
     501(c)(3) engages in activities to facilitate the electronic 
     use or exchange of health-related information to advance the 
     purposes of the bill, consistent with standards adopted by 
     HHS, such activities will be considered activities that 
     substantially further an exempt purpose under IRC sec. 
     501(c)(3), specifically the purpose of lessening the burdens 
     of government. Private benefit attributable to cost savings 
     realized from the conduct of such activities will be viewed 
     as incidental to the accomplishment of the nonprofit 
     organization's exempt purpose.

                          Subtitle D--Privacy

     Definitions. (House bill Sec. 4400; Senate bill Sec. 13400; 
         Conference agreement Sec. 13400)
     Current Law
       Under the Administrative Simplification provisions of the 
     Health Insurance Portability and Accountability Act of 1996 
     (HIPAA; P.L. 104-191), Congress set itself a three-year 
     deadline to enact health information privacy legislation. If, 
     as turned out to be the case, lawmakers were unable to pass 
     such legislation before the deadline, the HHS Secretary was 
     instructed to promulgate regulations containing standards to 
     protect the

[[Page 4019]]

     privacy of individually identifiable health information. The 
     HIPAA privacy rule (45 CFR Parts 160, 164) established a set 
     of patient rights, including the right of access to one's 
     medical information, and placed certain limitations on when 
     and how health plans and health care providers may use and 
     disclose such protected health information (PHI). Generally, 
     plans and providers may use and disclose health information 
     for the purpose of treatment, payment, and other health care 
     operations without the individual's authorization and with 
     few restrictions. In certain other circumstances (e.g., 
     disclosures to family members and friends), the rule requires 
     plans and providers to give the individual the opportunity to 
     object to the disclosure. The rule also permits the use and 
     disclosure of health information without the individual's 
     permission for various specified activities (e.g., public 
     health oversight, law enforcement) that are not directly 
     connected to the treatment of the individual. For all uses 
     and disclosures of health information that are not otherwise 
     required or permitted by the rule, plans and providers must 
     obtain a patient's written authorization.
       The HIPAA privacy rule also permits health plans and health 
     care providers--referred to as HIPAA covered entities--to 
     share health information with their business associates who 
     provide a wide variety of functions for them, including 
     legal, actuarial, accounting, data aggregation, management, 
     administrative, accreditation, and financial services. A 
     covered entity is permitted to disclose health information to 
     a business associate or to allow a business associate to 
     create or receive health information on its behalf, provided 
     the covered entity receives satisfactory assurance in the 
     form of a written contract that the business associate will 
     appropriately safeguard the information.
       In addition to health information privacy standards, 
     HIPAA's Administrative Simplification provisions instructed 
     the Secretary to issue security standards to safeguard PHI in 
     electronic form against unauthorized access, use, and 
     disclosure. The security rule (45 CFR Parts 160, 164) 
     specifies a series of administrative, technical, and physical 
     security procedures for providers and plans to use to ensure 
     the confidentiality of electronic health information.
     House Bill
       The House bill defines the following key privacy and 
     security terms, in most cases by reference to definitions in 
     the HIPAA Administrative Simplification standards: breach, 
     business associate, covered entity, disclose, electronic 
     health record, electronic medical record, health care 
     operations, health care provider, health plan, National 
     Coordinator, payment, personal health record, protected 
     health information, Secretary, security, state, treatment, 
     use, and vendor of personal health records.
     Senate Bill
       Same provision.
     Conference Agreement
       The Conference report includes some technical modifications 
     to the definitions.
       One set of such modifications is included in the definition 
     of ``breach''. The Conference report includes a technical 
     change to clarify that some inadvertent disclosures can 
     constitute a breach under the meaning of this subtitle. The 
     conference report clarifies the definition to stipulate that 
     disclosures (as defined in 45 CFR 164.103) constitute a 
     breach, except as otherwise provided under the definition. 
     The definition provides that a disclosure where a person 
     would not reasonably be able to retain the information 
     disclosed is not a breach. Also not a breach is any 
     inadvertent disclosure from an individual who is otherwise 
     authorized to access protected health information at a 
     facility operated by a covered entity or business associate 
     to another similarly situated individual at same facility 
     provided that any such information received as a result of 
     such disclosure is not further acquired, accessed, used, or 
     disclosed without authorization by any person.
       Another set of such modifications pertains to the 
     definition of Personal Health Records. Specifically, the 
     report clarifies that Personal Health Records are ``managed, 
     shared, and controlled by or primarily for the individual.'' 
     This technical change clarifies that PHRs include the kinds 
     of records managed by or for individuals, but does not 
     include the kinds of records managed by or primarily for 
     commercial enterprises, such as life insurance companies that 
     maintain such records for their own business purposes. By 
     extension, a life insurance company would not be considered a 
     PHR vendor under this subtitle. A second clarification in the 
     definition of PHR is the use of the term ``PHR individual 
     identifiable health information'' (as defined in section 
     13407(0(2)). In the House and Senate bills, the term 
     ``individually identifiable health information'' was used. 
     Use of that term would have required that, to be considered a 
     PHR, an electronic record would have to include information 
     that was ``created or received by a health care provider, 
     health plan, employer, or health care clearinghouse.'' 
     However, there is increasing use of electronic records that 
     contain personal health information that has not been created 
     or received by a health care provider, health plan, employer, 
     or health care clearinghouse. Use of the term ``individually 
     identifiable health information'' would have thus improperly 
     narrowed the scope of the term Personal Health Record under 
     this subtitle. Thus, the conference report included the 
     broader term, PHR individual identifiable health information, 
     so that the scope of the term Personal Health Record would 
     properly include electronic records of personal health 
     information, regardless of whether they have been ``created 
     or received by a health care provider, health plan, employer, 
     or health care clearinghouse.''


      Part I--Improved Privacy Provisions and Security Provisions

     Application of Security Provisions and Penalties to Business 
         Associates of Covered Entities; Annual Guidance on 
         Security Provisions. (House bill Sec. 4401; Senate bill 
         Sec. 13401; Conference agreement Sec. 13401)
     Current Law
       The Security Rule promulgated pursuant to the Health 
     Insurance Portability and Accountability Act (HIPAA) include 
     three sets of safeguards: administrative, physical, and 
     technical, required of covered entities (providers, health 
     plans and healthcare clearinghouses). Administrative 
     safeguards include such functions as assigning or delegating 
     security responsibilities to employees, as well as security 
     training requirements. Physical safeguards are intended to 
     protect electronic systems and data from threats, 
     environmental hazards, and unauthorized access. Technical 
     safeguards are primarily IT functions used to protect and 
     control access to data.
       HIPAA permits business associates (those who perform 
     business functions for covered entities) to create, receive, 
     maintain or transmit electronic health information on behalf 
     of that covered entity, provided the covered entity receives 
     satisfactory assurance in the form of a written contract that 
     the business associate will implement administrative, 
     technical, and physical safeguards that reasonably and 
     appropriately protect the information.
       Violations cannot be enforced directly against business 
     associates. Although providers and health plans are not 
     liable for, or required to monitor, the actions of their 
     business associates, if it finds out about a material breach 
     or violation of the contract by a business associate, it must 
     take reasonable steps to remedy the situation, and, if 
     unsuccessful, terminate the contract. If termination is not 
     feasible, the covered entity must notify HHS.
     House Bill
       The House bill would apply the HIPAA security standards and 
     the civil and criminal penalties for violating those 
     standards to business associates in the same manner as they 
     apply to the providers and health plans for whom they are 
     working. It also would require the Secretary, in consultation 
     with stakeholders, to issue annual guidance on the most 
     effective and appropriate technical safeguards, including the 
     technologies that render information unusable, unreadable, or 
     indecipherable recommended by the HIT Policy Committee, for 
     protecting electronic health information.
     Senate Bill
       Same provision, but without any reference to recommended 
     safeguard technologies standards.
     Conference Agreement
       The conference agreement includes language contained in the 
     House bill.
     Notification in the Case of Breach. (House bill Sec. 4402; 
         Senate bill Sec. 13402; Conference agreement Sec. 13402)
     Current Law
       The Privacy and Security Rules promulgated pursuant to 
     HIPAA does not require covered entities, providers, health 
     plans or healthcare clearinghouses, to notify HHS or 
     individuals of a breach of the privacy, security, or 
     integrity of their protected health information.
     House Bill
       In the event of a breach of unsecured PHI that is 
     discovered by a covered entity, the House bill would require 
     the covered entity to notify each individual whose 
     information has been, or is reasonably believed to have been, 
     accessed, acquired, or disclosed as a result of such breach. 
     Exceptions to the breach notification requirement are for 
     unintentional acquisition, access, use or disclosure of 
     protected health information. For a breach of unsecured PHI 
     under the control of a business associate, the business 
     associate upon discovery of the breach would be required to 
     notify the covered entity. Notice of the breach would have to 
     be provided to the Secretary and prominent media outlets 
     serving a particular area if more than 500 individuals in 
     that area were impacted. If the breach impacted fewer than 
     500 individuals, the covered entity involved would have to 
     maintain a log of such breaches and annually submit it to the 
     Secretary.
       The House bill would define unsecured PHI as information 
     that is not secured through the use of a technology or 
     methodology identified by the Secretary as rendering the 
     information unusable, unreadable, and undecipherable to 
     unauthorized individuals.

[[Page 4020]]

       The House bill would require the Secretary each year to 
     report to appropriate committees in Congress on the number 
     and type of breaches, actions taken in response, and 
     recommendations made by the National Coordinator on how to 
     reduce the number of breaches. Within 180 days of enactment, 
     the Secretary would be required to issue interim final 
     regulations to implement this section. The provisions in the 
     section would apply to breaches discovered at least 30 days 
     after the regulations were published.
     Senate Bill
       Same provision, but without any reference to recommended 
     encryption standards in issuing annual guidance on securing 
     PHI.
     Conference Agreement
       Similar provision to the House bill with one difference; 
     notifications in cases of unintentional disclosures would be 
     required unless such disclosure is to an individual 
     authorized to access health information at the same facility.
     Education on Health Information Privacy. (House bill Sec. 
         4403; Senate bill Sec. 13403; Conference agreement Sec. 
         13403)
     Current Law
       The Privacy Rule promulgated pursuant to HIPAA requires 
     each covered entity to designate a privacy official for the 
     development and implementation of its policies and 
     procedures.
     House Bill
       Within six months of enactment, the House bill would 
     require the Secretary to designate a privacy advisor in each 
     HHS regional office to offer education and guidance to 
     covered entities and business associates on their federal 
     health information privacy and security rights and 
     responsibilities. Within 12 months of enactment, OCR would be 
     required to develop and maintain a national education program 
     to educate the public about their privacy rights and the 
     potential uses of their PHI.
     Senate Bill
       Same provision.
     Conference Agreement
       Same provision.
     Application of Privacy Provisions and Penalties to Business 
         Associates of Covered Entities. (House bill Sec. 4404; 
         Senate bill Sec. 13404; Conference agreement Sec. 13404)
     Current Law
       The Privacy Rule promulgated pursuant to HIPAA permits a 
     covered entity to disclose health information to a business 
     associate or to allow a business associate to create or 
     receive health information on its behalf, provided the 
     covered entity receives satisfactory assurance in the form of 
     a written contract that the business associate will 
     appropriately safeguard the information.
       Violations cannot be enforced directly against business 
     associates. Although covered entities are not liable for, or 
     required to monitor, the actions of their business 
     associates, if it finds out about a material breach or 
     violation of the contract by a business associate, it must 
     take reasonable steps to remedy the situation, and, if 
     unsuccessful, terminate the contract. If termination is not 
     feasible, the covered entity must notify HHS.
     House Bill
       The House bill would apply the HIPAA Privacy Rule, the 
     additional privacy requirements, and the civil and criminal 
     penalties for violating those standards to business 
     associates in the same manner as they apply to the providers 
     and health plans for whom they are working.
     Senate Bill
       Same provision.
     Conference Agreement
       Same provision.
     Restrictions on Certain Disclosures and Sales of Health 
         Information; Accounting of Certain Protected Health 
         Information Disclosures; Access to Certain Information in 
         Electronic Format. (House bill Sec. 4405; Senate bill 
         Sec. 13405; Conference agreement Sec. 13405)
     Current Law
       The privacy rule established several individual privacy 
     rights. First, it established a new federal legal right for 
     individuals to see and obtain a copy of their own PHI in the 
     form or format requested by the individual, if it is readily 
     producible in such form or format. If not, then the 
     information must be provided in hard copy or such form or 
     format as agreed to by the covered entity and the individual. 
     The covered entity can impose reasonable, cost-based fees for 
     providing the information. Second, the rule gives individuals 
     the right to amend or supplement their own PHI. The covered 
     entity must act on an individual's request for amendment 
     within 60 days of receiving the request. That deadline may be 
     extended up to 30 days. Third, individuals have the right to 
     request that a covered entity restrict the use and disclosure 
     of their PHI for the purposes of treatment, payment, or 
     health care operations. However, the covered entity is not 
     required to agree to such a restriction unless it has entered 
     into an agreement to restrict, in which case it must abide by 
     the agreement. Finally, individuals have the right to an 
     accounting of disclosures of their PHI by a covered entity 
     during the previous six years, with certain exceptions. For 
     example, a covered entity is not required to provide an 
     accounting of disclosures that have been made to carry out 
     treatment, payment, and health care operations.
       The privacy rule incorporates a minimum necessary standard. 
     Whenever a covered entity uses or discloses PHI or requests 
     such information from another covered entity, it must make 
     reasonable efforts to limit the information to the minimum 
     necessary to accomplish the intended purpose of the use or 
     disclosure. There are a number of circumstances in which the 
     minimum necessary standard does not apply; for example, 
     disclosures to or requests by a health care provider for 
     treatment purposes. The rule also permits the disclosure of a 
     ``limited data set'' for certain specified purposes (e.g., 
     research), pursuant to a data use agreement with the 
     recipient. A limited data set, while not meeting the rule's 
     definition of de-identified information (see below), has most 
     direct identifiers removed and is considered by HHS to pose a 
     low privacy risk.
     House Bill
       The House bill would give individuals the right to receive 
     an electronic copy of their PHI, if it is maintained in an 
     electronic health record. Any associated fee charged by the 
     covered entity could only cover its labor costs for providing 
     the electronic copy. The bill would require a health care 
     provider to honor a patient's request that the PHI regarding 
     a specific health care item or service not be disclosed to a 
     health plan for purposes of payment or health care 
     operations, if the patient paid out-of-pocket in full for 
     that item or service. The House bill also would give an 
     individual the right to receive an accounting of PHI 
     disclosures made by covered entities or their business 
     associates for treatment, payment, and health care operations 
     during the previous three years, if the disclosures were 
     through an electronic health record. Within 18 months of 
     adopting standards on accounting of disclosures (as required 
     under PHSA Section 3002, as added by Section 4101 of this 
     Act), the Secretary would be required to issue regulations on 
     what information shall be collected about each disclosure. 
     For current users of electronic health records, the 
     accounting requirements would apply to disclosures made on or 
     after January 1, 2014. For covered entities yet to acquire 
     electronic health records, the accounting requirements would 
     apply to disclosures on or after January 1, 2011, or the date 
     of electronic health record acquisition, whichever is later.
       The House bill would require covered entities to limit the 
     use, disclosure, or, request of PHI, to the extent 
     practicable, to a limited data set or, if needed, to the 
     minimum necessary to accomplish the intended purpose of such 
     use, disclosure, or request. This requirement would sunset at 
     such a time as the Secretary issues guidance on what 
     constitutes minimum necessary. The Secretary would have 18 
     months to issue such guidance. In addition, the bill would 
     clarify that the entity disclosing the PHI (as opposed to the 
     requester) makes the minimum necessary determination. The 
     HIPAA privacy rule's exceptions to the minimum necessary 
     standard would continue to apply.
       Within 18 months of enactment, the Secretary would be 
     required to issue regulations to eliminate from the 
     definition of health care operations those activities that 
     can reasonably and efficiently be conducted with de-
     identified information or that should require authorization 
     for the use or disclosure of PHI.
       The House bill would prohibit the sale of PHI by a covered 
     entity or business associate without patient authorization 
     except in certain specified circumstances, such as to recoup 
     the costs of preparing and transmitting data for public 
     health or research activities (as defined in the HIPAA 
     privacy rule), or to provide an individual with a copy of his 
     or her PHI. Within 18 months of enactment, the Secretary 
     would be required to issue regulations governing the sale of 
     PHI.
       Finally, the House bill specifies that none of its 
     provisions would constitute a waiver of any health privacy 
     privilege otherwise applicable to an individual.
     Senate Bill
       The Senate bill includes all the same provisions as the 
     House bill, other than the final provision protecting an 
     individual's health privacy privileges, but with the 
     following additional language: (1) in developing guidance on 
     what constitutes minimum necessary, the Secretary would be 
     required to take into consideration the information necessary 
     to improve patient outcomes and to manage chronic disease; 
     (2) in developing regulations on the accounting of 
     disclosures through an EHR, the Secretary would be required 
     to take into account an individual's interest in learning 
     when the PHI was disclosed and to whom, as well as the cost 
     of accounting for such disclosures; (3) regarding the 
     definition of health care operations, the Secretary would be 
     required to review and evaluate the definition and, to the 
     extent necessary, eliminate those activities that could 
     reasonably and efficiently be conducted using de-identified 
     information or that should require authorization; (4) the 
     Secretary could not require the use of de-identified 
     information or

[[Page 4021]]

     require authorization for the use and disclosure of 
     information for activities within a covered entity that are 
     described in paragraph one of the definition of health care 
     operations; and (6) in developing regulation governing the 
     sale of PHI, the Secretary would be required to evaluate the 
     impact of charging an amount to cover the costs of preparing 
     and transmitting data for public health or research 
     activities.
     Conference Agreement
       The conference agreement maintains most of these provisions 
     but makes small modifications. The conference agreement takes 
     the Senate changes on issuing guidance on what constitutes 
     minimum necessary and what factors have to be considered. The 
     conference agreement requires an accounting of disclosures 
     but has a longer timeframe for allowing providers to come 
     into compliance with this requirement than the House bill and 
     shorter than the Senate bill. The requirement to account for 
     disclosures under this section is prospective. For example, a 
     covered entity that acquires an electronic health record as 
     of June 30, 2012 would be required to account for disclosures 
     made through that electronic health record as of June 30, 
     2012 and forward. The covered entity would be required to 
     retain that accounting for a period of three years. Thus, if 
     an individual requested an accounting for disclosures on June 
     30, 2015, the covered entity would be required to provide 
     that accounting for the period of June 30, 2012 to June 30, 
     2015, with respect to such individual, consistent with the 
     requirements of Section 13405. However, if an individual 
     requested an accounting of disclosures on June 30, 2013, the 
     covered entity would be required to provide such accounting 
     only for the period of June 30, 2012 to June 30, 2013.
       Section 13405(c)(4) of the Senate-passed bill included a 
     provision allowing the imposition of a reasonable fee for the 
     accounting for disclosures required under this Section. 
     However, this statutory provision was duplicative of an 
     existing provision under 45 CFR 164.528(c)(2) which already 
     allows for the imposition of a reasonable fee for providing 
     such accounting, so the provision from the Senate passed bill 
     was struck.
       The conference agreement strikes the provision requiring 
     the Secretary to review the definition of health care 
     operations. The conference agreement permits the sale of 
     protected health information in cases of research but only 
     limited to costs of preparing and transmitting data. It also 
     permits the sale of protected health information for public 
     health activities the Secretary is required to study and 
     determine whether costs should be limited. The conference 
     agreement allows an individual to request their health 
     information in an electronic format if it is maintained in 
     such a format for a reasonable cost based fee as it was in 
     the House and Senate bills. The conference agreement permits 
     the individual to designate that the information be sent to 
     another entity or person. Finally, the conference agreement 
     specifies that none of its provisions would constitute a 
     waiver of any health privacy privilege otherwise applicable 
     to an individual, but moves this provision to section 13421 
     Relationship to Other Laws.
     Conditions of Certain Contacts as Part of Health Care 
         Operations. (House bill Sec. 4406; Senate bill Sec. 
         13406; Conference agreement Sec. 13406)
     Current Law
       Generally, covered entities may use and disclose health 
     information for the purpose of treatment, payment, and other 
     health care operations without the individual's authorization 
     and with few restrictions. Health care operations are broadly 
     defined to include quality assessment and improvement 
     activities, case management and care coordination, evaluation 
     of health care professionals, underwriting, legal services, 
     business planning, customer services, grievance resolution, 
     and fundraising.
       Under the Privacy Rule promulgated pursuant to HIPAA, a 
     covered entity may not disclose health information to a third 
     party (e.g., pharmaceutical company), in exchange for direct 
     or indirect remuneration, for the marketing activities of the 
     third party without first obtaining a patient's 
     authorization. Similarly, a covered entity may not use or 
     disclose health information for its own marketing activities 
     without authorization. Marketing is defined as a 
     communication about a product or service that encourages the 
     recipient to purchase or use the product or service. However, 
     communications made by a covered entity (or its business 
     associate) to encourage a patient to purchase or use a health 
     care-related product or service are excluded from this 
     definition and, therefore, do not require the patient's 
     authorization, even if the covered entity is paid by a third 
     party to engage in such activities.
     House Bill
       The House bill would clarify that a marketing communication 
     by a covered entity or business associate about a product or 
     service that encourages the recipient to purchase or use the 
     product or service may not be considered a health care 
     operation, unless the communication relates to a health care-
     related product or service. Further, it would prohibit a 
     covered entity or business associate from receiving direct or 
     indirect payment for marketing a health care-related product 
     or service without first obtaining the recipient's 
     authorization. Business associates would be permitted to 
     receive payment from a covered entity for making any such 
     communication on behalf of the covered entity that is 
     consistent with the contract. Fundraising using a patient's 
     protected health information would not be permitted without a 
     patient's authorization.
     Senate Bill
       Like the House bill, the Senate bill would clarify that a 
     marketing communication by a covered entity or business 
     associate about a product or service that encourages the 
     recipient to purchase or use the product or service may not 
     be considered a health care operation, unless the 
     communication relates to a health care-related product or 
     service. Further, the Senate bill states that a communication 
     about a health care-related product or service would be 
     permitted as a healthcare operation including where the 
     covered entity receives payment for making the communications 
     where (1) the communication only describes a health care item 
     or service previously prescribed for or administered to the 
     recipient, or (2) the covered entity or business associate 
     obtains authorization. Finally, the Senate bill does not 
     include the House provision on fundraising.
     Conference Agreement
       The conference agreement retains the general rules about 
     marketing in both the House and Senate bills. The conference 
     report makes an exception and allows providers to be paid 
     reasonable fees as determined by the Secretary to make a 
     communication to their patients about a drug or biologic that 
     the patient is currently prescribed. The conference agreement 
     continues to permit fundraising activities by the provider 
     using a patient's protected health information so long as any 
     written fundraising provide an opportunity to opt out of 
     future fundraising communications. If the recipient chooses 
     to opt out of future fundraising communications, that choice 
     is treated as a revocation of authorization under 45 CFR 
     164.508. All the protections that apply under 45 CFR 164.508 
     to an individual who has revoked an authorization would thus 
     apply to a recipient of communications who chooses to opt out 
     of receiving future fundraising communications, including the 
     right not to be denied treatment as a result of making that 
     choice.
     Temporary Breach Notification Requirement for Vendors of 
         Personal Health Records and Other Non-HIPAA Covered 
         Entities. (House bill Sec. 4407; Senate bill Sec. 13407; 
         Conference agreement Sec. 13407)
     Current Law
       There is no Federal law that requires entities to notify 
     individual when their health information has been breached.
     House Bill
       The House bill would require personal health record (PHR) 
     vendors and entities offering products and services through a 
     PHR vendor's website, upon discovery of a breach of security 
     of unsecured PHR health information, to notify the 
     individuals impacted and the FTC. Further, third party 
     service providers that provide services to PHR vendors and to 
     other entities offering products and services through a PHR 
     vendor's website and, as a result, that handle unsecured PHR 
     health information would, following the discovery of a breach 
     of security of such information, be required to notify the 
     vendor or other entity. The requirements in Section 4402 for 
     the content and timeliness of notifications also would apply 
     to this section. Unsecured PHR health information means PHR 
     health information that is not protected through the use of a 
     technology or methodology specified by the Secretary in 
     guidance issued pursuant to Section 4402.
       The FTC would be required to notify HHS of any breach 
     notices it received and would given enforcement authority 
     regarding such breaches of unsecured PHR health information. 
     Within 180 days, the Secretary would be required to issue 
     interim final regulations to implement this section. The 
     provisions in the section would apply to breaches discovered 
     no sooner than 30 days after the regulations are published. 
     The provisions in this section would no longer apply to 
     breaches occurring after HHS or FTC had adopted new privacy 
     and security standards for non-HIPAA covered entities, 
     including requirements relating to breach notification.
     Senate Bill
       The Senate bill includes the same provisions.
     Conference Agreement
       The conference agreement is the same as the House and 
     Senate language with minor clarifications. The conference 
     agreement requires the FTC issue regulations as opposed to 
     the Secretary of HHS. The conference agreement applies the 
     breach notification provision to entities that access and 
     receive health information to and from a personal health 
     record.
     Business Associate Contracts Required for Certain Entities. 
         (House bill Sec. 4408; Senate bill Sec. 13408; Conference 
         agreement Sec. 13408)
     Current Law
       A covered entity (a provider, health plan, of 
     clearinghouse) is permitted to disclose

[[Page 4022]]

     health information to a business associate or to allow a 
     business associate to create or receive health information on 
     its behalf, provided the covered entity receives satisfactory 
     assurance in the form of a written contract that the business 
     associate will appropriately safeguard the information. 
     Current law does not explicitly include or exclude regional 
     health information exchanges, regional health information 
     organizations, and others offering personal health records 
     for a covered entity from regulation under the Privacy Rule 
     promulgated under HIPAA.
     House Bill
       The House bill requires organizations that contract with 
     covered entities for the purpose of exchanging electronic 
     health information, for example, Health Information 
     Exchanges, Regional Health Information Organizations (RHIOs), 
     and PHR vendors that offer their products through or for a 
     provider or health plan, to have business associate contracts 
     with those providers or health plans.
     Senate Bill
       Same provision.
     Conference Agreement
       Same provision.
     Clarification of Application of Wrongful Disclosures Criminal 
         Penalties. (House bill Sec. 4409; Senate bill Sec. 13409; 
         Conference agreement Sec. 13409)
     Current Law
       The HIPAA criminal penalties include fines of up to 
     $250,000 and up to 10 years in prison for disclosing or 
     obtaining health information with the intent to sell, 
     transfer or use it for commercial advantage, personal gain, 
     or malicious harm. In July 2005, the Justice Department 
     Office of Legal Counsel (OLC) addressed which persons may be 
     prosecuted under HIPAA and concluded that only a covered 
     entity could be criminally liable.
     House Bill
       The House bill clarifies that criminal penalties for 
     wrongful disclosure of PHI apply to individuals who without 
     authorization obtain or disclose such information maintained 
     by a covered entity, whether they are employees or not.
     Senate Bill
       Same provision.
     Conference Agreement
       Same provision.
     Improved Enforcement. (House bill Sec. 4410; Senate bill Sec. 
         13410; Conference agreement Sec. 13410)
     Current Law
       HIPAA authorized the Secretary to impose civil monetary 
     penalties on any person failing to comply with the privacy 
     and security standards. The maximum civil fine is $100 per 
     violation and up to $25,000 for all violations of an 
     identical requirement or prohibition during a calendar year. 
     Civil monetary penalties may not be imposed if (1) the 
     violation is a criminal offense under HIPAA's criminal 
     penalty provisions (see below); (2) the person did not have 
     actual or constructive knowledge of the violation; or (3) the 
     failure to comply was due to reasonable cause and not to 
     willful neglect, and the failure to comply was corrected 
     during a 30-day period beginning on the first date the person 
     liable for the penalty knew, or by exercising reasonable 
     diligence would have known, that the failure to comply 
     occurred. For certain wrongful disclosures of PHI, OCR may 
     refer the case to the Department of Justice for criminal 
     prosecution. HIPAA's criminal penalties include fines of up 
     to $250,000 and up to 10 years in prison for disclosing or 
     obtaining health information with the intent to sell, 
     transfer or use it for commercial advantage, personal gain, 
     or malicious harm.
     House Bill
       The House bill would amend HIPAA to permit OCR to pursue an 
     investigation and the imposition of civil monetary penalties 
     against any individual for an alleged criminal violation of 
     the Privacy and Security Rule of HIPAA if the Justice 
     Department had not prosecuted the individual. In addition, 
     the bill would amend HIPAA to require a formal investigation 
     of complaints and the imposition of civil monetary penalties 
     for violations due to willful neglect. The Secretary would be 
     required to issue regulations within 18 months to implement 
     those amendments. The bill also would require that any civil 
     monetary penalties collected be transferred to OCR to be used 
     for enforcing the HIPAA privacy and security standards. 
     Within 18 months of enactment, GAO would be required to 
     submit recommendations for giving a percentage of any civil 
     monetary penalties collected to the individuals harmed. Based 
     on those recommendations, the Secretary, within three years 
     of enactment, would be required to establish by regulation a 
     methodology to distribute a percentage of any collected 
     penalties to harmed individuals.
       The House bill would increase and tier the penalties for 
     violations of HIPAA. It would preserve the current 
     requirement that a civil fine not be imposed if the violation 
     was due to reasonable cause and was corrected within 30 days.
       Finally, the House bill would authorize State Attorneys 
     General to bring a civil action in Federal district court 
     against individuals who violate the HIPAA privacy and 
     security standards, in order to enjoin further such violation 
     and seek damages of up to $100 per violation, capped at 
     $25,000 for all violations of an identical requirement or 
     prohibition in any calendar year. State action against a 
     person would not be permitted if a federal civil action 
     against that same individual was pending. Nothing in this 
     section would prevent OCR from continuing to use corrective 
     action without a penalty in cases where the person did not 
     know, and by exercising reasonable diligence would not have 
     known, about the violation.
     Senate Bill
       Same provision.
     Conference Agreement
       Same provision.
     Audits. (House bill Sec. 4411; Senate bill Sec. 13411; 
         Conference agreement Sec. 13411)
     Current Law
       The Secretary is authorized to conduct compliance reviews 
     to determine whether covered entities are complying with 
     HIPAA standards.
     House Bill
       The House bill would require the Secretary to perform 
     periodic audits to ensure compliance with the Privacy and 
     Security Rule promulgated pursuant to HIPAA and the 
     requirements of this subtitle.
     Senate Bill
       Same provision.
     Conference Agreement
       Same provision.
     Special Rule for Information to Reduce Medication Errors and 
         Improve Patient Safety. (House bill Sec. 4412)
     Current Law
       Under the privacy rule, communications made by a covered 
     entity (or its business associate) to encourage a patient to 
     purchase or use a health care-related product or service are 
     excluded from the definition of marketing and, therefore, do 
     not require the patient's authorization, even if the covered 
     entity is paid by a third party to engage in such activities.
     House Bill
       The House bill states that none of the privacy provisions 
     in the bill would prevent a pharmacist from communicating 
     with patients to reduce medication errors and improve patient 
     safety provided there is no remuneration other than for 
     treatment of the individual and payment for such treatment. 
     The Secretary would be permitted by regulation to allow 
     pharmacists to receive reasonable, cost-based payment for 
     such communications, if it is determined that this would 
     improve patient care and protect PHI.
     Senate Bill
       Tile Senate bill does not include this same provision, but 
     has corresponding limitation in section 13406 of the Senate 
     bill.
     Conference Agreement
       The conference agreement does not include this same 
     provision, but has corresponding limitations in section 
     13406.


 Part H--Relationship to Other Laws; Regulatory References; Effective 
                             Date; Reports

     Relationship to Other Laws. (House bill Sec. 4421; Senate 
         bill Sec. 13421; Conference agreement Sec. 13421)
     Current Law
       Under Section 1178 of the Social Security Act, as amended 
     by HIPAA, the security standards preempt any contrary 
     provision of state law, with certain specified exceptions 
     (e.g., public health reporting). Pursuant to HIPAA Section 
     264, however, the privacy rule does not preempt a contrary 
     provision of state law that is more protective of patient 
     medical privacy. Psychotherapy notes (i.e., notes recorded by 
     a mental health professional during counseling) are afforded 
     special protection under the privacy rule. Almost all uses 
     and disclosures of such information require patient 
     authorization.
     House Bill
       The House bill would apply the preemption provisions in SSA 
     Section 1178 to the requirements of this subtitle and 
     preserve the HIPAA privacy and security standards to the 
     extent that they are consistent with the subtitle. The 
     Secretary would be required by rulemaking to amend such 
     standards as necessary to make them consistent with this 
     subtitle.
     Senate Bill
       The Senate bill includes the same provisions; with the 
     additional requirement that the Secretary revise the 
     definition of psychotherapy notes to include test data that 
     are part of a mental health evaluation.
     Conference Agreement
       The conference agreement takes language from the House 
     bill. The provision related to psychotherapy notes is moved 
     in the conference report.
     Regulatory References. (House bill Sec. 4422; Senate bill 
         Sec. 13422; Conference agreement Sec. 13422)
     Current Law
       No provision.
     House Bill
       The House bill states that each reference in this subtitle 
     to a federal regulation refers to the most recent version of 
     the regulation.
     Senate Bill
       Same provision.

[[Page 4023]]


     Conference Agreement
       Same provision.
     Effective Date. (House bill Sec. 4423; Senate bill Sec. 
         13423; Conference agreement Sec. 13423)
     Current Law
       No provision.
     House Bill
       Except as otherwise specifically provided, the provisions 
     in this subtitle would become effective 12 months after 
     enactment.
     Senate Bill
       Same provision.
     Conference Agreement
       Same provision.
     Studies, Reports, Guidance. (House bill Sec. 4424; Senate 
         bill Sec. 13424; Conference agreement Sec. 13424)
     Current Law
       Any person who believes a covered entity is not complying 
     with the privacy rule may file a complaint with HHS. The rule 
     authorizes the Secretary to conduct investigations to 
     determine whether covered entities are in compliance. HIPAA 
     does not require the Secretary to issue a compliance report.
       The HIPAA Administrative Simplification standards apply to 
     individual and group health plans that provide or pay for 
     medical care; health care clearinghouses (i.e., entities that 
     facilitate and process the flow of information between health 
     care providers and payers); and health care providers. In 
     addition, the privacy and security standards apply to 
     business associates with whom covered entities share health 
     information. They do not apply directly to other entities 
     that collect and maintain health information, including 
     Health Information Exchanges, RHIOs, and PHR vendors, unless 
     they are acting as providers or plans.
       The HIPAA standards are intended to protect individually 
     identifiable health information; de-identified information is 
     not subject to the regulations. Under the privacy rule, 
     health information is de-identified if 18 specific 
     identifiers (e.g., name, social security number, address) 
     have been removed, or if a qualified statistician, using 
     accepted principles, determines that the risk if very small 
     that the individual could be identified.
       Generally, plans and providers may use and disclose health 
     information for the purpose of treatment, payment, and other 
     health care operations without the individual's authorization 
     and with few restrictions. Covered entities may, but are not 
     required, to obtain an individual's general consent to use or 
     disclose PHI for treatment, payment, or health care 
     operations.
     House Bill
       The Secretary would be required annually to submit to 
     specified Congressional Committees and post online a 
     compliance report containing information on (1) the number 
     and nature of complaints of alleged violations and how they 
     were resolved, including the imposition of civil fines, (2) 
     the number of covered entities receiving technical assistance 
     in order to achieve compliance, as well as the types of 
     assistance provided, (3) the number of audits performed and a 
     summary of their findings, and (4) the Secretary's plan for 
     the following year for improving compliance with and 
     enforcement of the HIPAA standards and the provisions of this 
     subtitle.
       The House bill would require the Secretary, within one year 
     and in consultation with the Federal Trade Commission (FTC), 
     to study the application of health information privacy and 
     security requirements (including breach notification) to non-
     HIPAA covered entities and report the findings to specified 
     House (Ways and Means, Energy and Commerce) and Senate 
     (Finance, HELP) Committees. The report should include an 
     examination of PHR vendors and other entities that offer 
     products and services through the websites of PHR vendors and 
     covered entities, provide a determination of which federal 
     agency is best equipped to enforce new requirements for non-
     HIPAA covered entities, and include a time frame for 
     implementing regulations.
       The House bill would require the Secretary, within one year 
     of enactment and in consultation with stakeholders, to issue 
     guidance on how best to implement the HIPAA privacy rule's 
     requirements for de-identifying PHI.
       The House bill would require GAO, within one year, to 
     report to the House Ways and Means and Energy and Commerce 
     Committees and the Senate Finance Committee on best practices 
     related to the disclosure of PHI among health care providers 
     for the purpose of treatment. The report must include an 
     examination of practices implemented by states and other 
     entities, such as health information exchanges, and how those 
     practices improve the quality of care, as well as an 
     examination of the use of electronic informed consent for 
     disclosing PHI for treatment, payment, and health care 
     operations.
     Senate Bill
       The Senate bill includes the same provisions, with the 
     additional requirement that GAO, within one year, report to 
     Congress and the Secretary on the impact of the bill's 
     privacy provisions on health care costs.
     Conference Agreement
       The conference agreement maintains most all study language 
     and add a study to requires the Secretary to review the 
     definition of ``psychotherapy notes'' with regard to 
     including test data that are part of a mental health 
     evaluation. The Secretary may revise the definition by 
     regulation based on the recommendations of the study. In 
     addition, the conference agreement broadened the study added 
     by the Senate on the impact of the bill's privacy provisions 
     on health care costs. It requires the GAO to study all impact 
     of all the provisions of the HITECH Act on health care costs, 
     adoption of electronic health record by providers, and 
     reductions in medical errors and other quality improvements.

               TITLE XIV--STATE FISCAL STABILIZATION FUND

                        DEPARTMENT OF EDUCATION


                    STATE FISCAL STABILIZATION FUND

       The conference agreement provides $53,600,000,000 for a 
     State Fiscal Stabilization Fund, instead of $79,000,000,000 
     as provided by the House and $39,000,000,000 as provided by 
     the Senate. The conference agreement makes the entire amount 
     available upon enactment of the bill as proposed by the 
     Senate. House bill designated half of these funds to become 
     available on July 1, 2009, and half of the funds to become 
     available on July 1, 2010. The economic recovery bill 
     includes these funds in order to provide fiscal relief to the 
     States to prevent tax increases and cutbacks in critical 
     education and other services.

                     GENERAL PROVISIONS--THIS TITLE

                              Allocations

       The conference agreement provides that up to one-half of 1 
     percent of the State Fiscal Stabilization Fund is allocated 
     to the outlying areas, based on their respective needs; an 
     additional $14,000,000 is allocated to the Department of 
     Education for administration, oversight, and evaluation; and 
     $5,000,000,000 is reserved for the Secretary of Education for 
     State Incentive Grants and an Innovation Fund. The agreement 
     provides that any remaining funds shall be allocated to 
     States on the following basis: 61 percent based on population 
     ages 5 through 24 and 39 percent based on total population. 
     The House and Senate included similar provisions, except that 
     the House bill provided $15,000,000,000 and the Senate bill 
     provided $7,500,000,000 for State Incentive Grants and an 
     Innovation Fund.

                          State Uses of Funds

       The conference agreement requires Governors to use 81.8 
     percent of their State allocations to support elementary, 
     secondary, and higher education. Funding received must first 
     be used to restore State aid to school districts under the 
     State's primary elementary and secondary education funding 
     formulae to the greater of the fiscal year 2008 or 2009 level 
     in each of fiscal years 2009, 2010, and 2011, and, where 
     applicable, to allow existing formula increases for 
     elementary and secondary education for fiscal years 2010 and 
     2011 to be implemented; and to restore State support to 
     public institutions of higher education to the greater of the 
     fiscal year 2008 or fiscal year 2009 level, to the extent 
     feasible given available Stabilization funds. Any remaining 
     education funds must be allocated to school districts based 
     on the Federal Title I formula. The conference agreement also 
     provides that Governors shall use 18.2 percent of State 
     allocations for public safety and other government services, 
     which may include education services. These funds may also be 
     used for elementary, secondary, and higher education 
     modernization, renovation and repair activities that are 
     consistent with State laws. The agreement also provides that 
     Governors shall consider for modernization funding any 
     institution of higher education in the State that meets 
     certain criteria.
       The House and Senate bills contained similar provisions, 
     except that the House bill did not provide for Stabilization 
     funds to be used for existing formula increases for 
     elementary and secondary education for fiscal years 2010 and 
     2011, while the Senate bill did not provide Stabilization 
     funds for a Governor's discretionary fund for public safety 
     and other government services. Neither House nor Senate bill 
     provided for the use of these funds for facility 
     modernization activities.

              Uses of Funds by Local Educational Agencies

       The conference agreement provides that school districts 
     receiving Stabilization funds may only use the funds for 
     activities authorized under the Elementary and Secondary 
     Education Act (ESEA), the Individuals with Disabilities Act 
     (IDEA), the Carl D. Perkins Career and Technical Education 
     Act of 2006 (Perkins), and for school modernization, 
     renovation, and repair of public school facilities (including 
     charter schools), which may include modernization, 
     renovation, and repairs consistent with a recognized green 
     building rating system. School district modernization 
     activities must be consistent with State laws.
       The House and Senate bills included similar provisions, 
     except that neither bill permitted funds for capital projects 
     unless authorized under ESEA, IDEA, or the Perkins Act.

           Uses of Funds by Institutions of Higher Education

       The conference agreement provides that public institutions 
     of higher education receiving Stabilization funds must use 
     these

[[Page 4024]]

     funds for educational and general expenditures, and in such a 
     way as to mitigate the need to raise tuition and fees, or for 
     modernization, renovation, or repairs of facilities that are 
     primarily used for instruction, research, or student housing. 
     Use of funds for endowments and certain types of facilities 
     such as athletic stadiums are prohibited. The House and 
     Senate bills included similar provisions, except that neither 
     bill permitted funds for higher education modernization, 
     renovation, or repair projects.

                           State Applications

       The conference agreement requires that Governors shall 
     submit applications in order to receive Stabilization funds, 
     which shall include certain assurances, provide baseline data 
     regarding each of the areas described in such assurances, and 
     describe how States intend to use their allocations. Such 
     assurances shall include that the State will: in each of 
     fiscal years 2009, 2010, and 2011, maintain State support for 
     elementary, secondary, and public postsecondary education at 
     least at the levels in fiscal year 2006, and address 4 key 
     areas: (1) achieve equity in teacher distribution, (2) 
     establish a longitudinal data system that includes the 
     elements described in the America COMPETES Act, (3) enhance 
     the quality of academic assessments relating to English 
     language learners and students with disabilities, and improve 
     State academic content standards and student academic 
     achievement standards, and (4) ensure compliance with 
     corrective actions required for low-performing schools. The 
     agreement further provides that, in order to receive an 
     Incentive Grant, a Governor shall: submit an application that 
     describes the State's progress in each of the assurances and 
     how the State would use grant funding to continue making 
     progress toward meeting the State's student academic 
     achievement standards. The House and Senate bills contained 
     similar provisions, except both bills included slightly 
     difference requirements pertaining to assurances.

                         State Incentive Grants

       The conference agreement authorizes the Secretary of 
     Education to award, in fiscal year 2010, Incentive Grants to 
     States that have made significant progress in achieving 
     equity in teacher distribution, establishing a longitudinal 
     data system, and enhancing assessments for English language 
     learners and students with disabilities. Each State receiving 
     an Incentive Grant shall use at least 50 percent of its grant 
     to provide school districts with subgrants based on their 
     most recent relative Title I allocations. The House and 
     Senate bills included similar provisions.

                            Innovation Fund

       The conference agreement authorizes up to $650,000,000 for 
     an Innovation Fund, awarded by the Secretary of Education, 
     which shall consist of academic achievement awards to 
     recognize school districts, or partnerships between nonprofit 
     organizations and State educational agencies, school 
     districts, or one or more schools that have made achievement 
     gains. The House and Senate bills included similar 
     provisions.

                             State Reports

       The conference agreement requires that a State receiving 
     Stabilization funds shall submit an annual report to the 
     Secretary describing the uses of funds provided within the 
     State; the distribution of funds received; the number of jobs 
     saved or created; tax increases averted; the State's progress 
     in reducing inequities in the distribution of highly-
     qualified teachers, developing a longitudinal data system, 
     and implementing valid assessments; actions taken to limit 
     tuition and fee increases at public institutions of higher 
     education; and the extent to which public institutions of 
     higher education maintained, increased, or decreased 
     enrollments of in-State students. The House and Senate bills 
     included similar provisions.

                               Evaluation

       The conference agreement requires the Government 
     Accountability Office to conduct evaluations of the programs 
     under this title, which shall include, but not be limited to, 
     the impact of the funding provided on the progress made 
     toward closing achievement gaps. The House and Senate bills 
     included identical provisions.

                     Secretary's Report to Congress

       The conference agreement provides that the Secretary of 
     Education shall submit a report to certain committees of the 
     House of Representatives and the Senate that evaluates the 
     information provided in the State reports submitted under 
     section 14008. The House and Senate bills included identical 
     provisions.

             Prohibition on Provision of Certain Assistance

       The conference agreement provides that no recipient of 
     funds under this title shall use such funds to provide 
     financial assistance to students to attend private elementary 
     or secondary schools, except provided in section 14003. The 
     House and Senate bills included similar provisions, although 
     the House bill did not include such exception.

                             Fiscal Relief

       The conference agreement provides that the Secretary of 
     Education may waive or modify any requirement of this title 
     relating to maintenance of effort, for States and school 
     districts that have experienced a precipitous decline in 
     financial resources. In granting such a waiver, the Secretary 
     shall determine that the State or school district will 
     maintain the proportionate share of total revenues for 
     elementary and secondary education as in the preceding fiscal 
     year. The House bill did not include a similar provision. The 
     Senate bill included different provisions to waive 
     maintenance of effort and the use of Federal funds to 
     supplement, not supplant, non-Federal funds.

                              Definitions

       The conference agreement defines certain terms used in this 
     title. The House and Senate bills included nearly identical 
     provisions.

               TITLE XV--ACCOUNTABILITY AND TRANSPARENCY

       Sec. 1501. Definitions.--The conference agreement includes 
     a section providing various definitions for purposes of this 
     title, as proposed by the Senate.

          Subtitle A--Transparency and Oversight Requirements

       Sec. 1511. Certifications.--With respect to funds under 
     this Act made available to state or local governments for 
     infrastructure investments, the conference agreement requires 
     a certification from the governor, mayor or other chief 
     executive that the project in question has received the full 
     review and vetting required by law and is an appropriate use 
     of taxpayer dollars. This is a modification of provisions 
     contained in both the House and Senate versions of this 
     legislation.
       Sec. 1512. Reports on Use of Funds.--The conference 
     agreement requires reporting of various matters by 
     governments and organizations receiving funds from the 
     Federal government under this Act, including amounts 
     received, projects or activities for which the funds are to 
     be used, estimated numbers of jobs created or retained, and 
     information regarding subcontracts and subgrants. This is a 
     modification of provisions in the House and Senate bills.
       Sec. 1513. Reports of the Council of Economic Advisors.--
     The conference report requires quarterly reports from the 
     Council of Economic Advisors regarding the estimated impact 
     of this Act on employment, economic growth, and other key 
     economic indicators. Similar provisions were proposed by the 
     House and the Senate.
       Sec. 1514. Inspector General Reviews.--The conference 
     report includes a modified version of a House provision 
     requiring agency inspectors general to review any concerns 
     raised by the public about specific investments using funds 
     made available in this Act, and to relay findings of their 
     reviews to the head of the agency concerned. Subsection (b) 
     of the House provision, relating to inspector general access 
     to records, has been deleted because the matter is addressed 
     more comprehensively in section 1515 of the conference 
     report.
       Sec. 1515. Inspector General Access to Records.--The 
     agreement includes a modification of a House provision 
     authorizing agency inspectors general to examine records and 
     interview employees of contractors and grantees receiving 
     funds under this Act. The House provision related only to 
     contractors but applied to the Government Accountability 
     Office (GAO) as well as inspectors general. GAO access is 
     addressed in a separate provision in the Legislative Branch 
     title of this conference report.

       Subtitle B--Recovery Accountability and Transparency Board

       Sec. 1521. Establishment of Board.--The conference 
     agreement, like the House and Senate bills, establishes a 
     Recovery Accountability and Transparency Board to coordinate 
     and conduct oversight of Federal spending under this Act to 
     prevent fraud, waste, and abuse.
       Sec. 1522. Composition of Board.--The conference agreement 
     specifies that the Board shall be chaired by an individual to 
     be designated by the President, and shall consist of 
     inspectors general of certain specified agencies and such 
     others as the President may designate. This is quite similar 
     to the Senate provision. The House version called for a 
     somewhat smaller Board chaired by the President's Chief 
     Performance Officer and made up of a combination of 
     inspectors general and agency deputy secretaries.
       Secs. 1523 through 1525. Board Functions, Powers and 
     Personnel.--These sections of the conference report, which 
     generally follow the Senate provisions, set out the functions 
     and powers of the Board and provide various authorities 
     related to personnel, details, and information and assistance 
     from other Federal agencies.
       Sec. 1526. Board Website.--The conference report requires 
     the Board to establish a website to foster greater 
     accountability and transparency in use of funds in this Act, 
     and specifies a number of categories of information to be 
     posted on that website. This is a modification of language 
     from both the House and the Senate.
       Sec. 1527. Independence of Inspectors General.--Like the 
     House and Senate bills, the conference report specifies that 
     it is not intended to affect the independent authority of 
     inspectors general as to whether to conduct audits or 
     investigations of funds under this Act, but requires an 
     inspector general (IG)

[[Page 4025]]

     which rejects a Board recommendation regarding investigations 
     to submit a report to the Board, the agency head, and 
     congressional committees stating the reasons for that action. 
     The conference report adds language clarifying that the 
     decision of an IG is to be final.
       Sec. 1529. Authorization of Appropriations.--The conference 
     report, like the Senate bill, authorizes appropriations of 
     such sums as may be necessary for the Board. The House 
     version did not contain an explicit authorization, but did 
     make an appropriation. In the conference report, an 
     appropriation for the Board is contained in the Financial 
     Services and General Government title.
       The conferees note that funding appropriated to the Board 
     will support activities related to accountability, 
     transparency, and oversight of spending under the Act. 
     ``Funds may be transferred to support the operations of the 
     Recovery Independent Advisory Panel established under section 
     1541 of the Act and for technical and administrative services 
     and support provided by the General Services 
     Administration. Funds may also be transferred to the 
     Office of Management and Budget for coordinating and 
     overseeing the implementation of the reporting requirements 
     established under section 1526 of the Act.''
       Sec. 1530. Termination of the Board.--The conference report 
     terminates the Board on September 30, 2013--one year later 
     than proposed by the Senate. The House proposed to terminate 
     the Board 1 year after 90 percent of funds appropriated in 
     this Act have been spent.

            Subtitle C--Recovery Independent Advisory Panel

       Secs. 1541 through 1546. Independent Advisory Panel.--Like 
     both the House and Senate bills, the conference report 
     establishes an Independent Advisory Panel to advise the 
     Board. The conference report is very similar to the Senate 
     version.

  Subtitle D--Additional Accountability and Transparency Requirements

       Sec. 1551. Authority To Establish Separate Funding 
     Accounts.--The conference agreement contains new language 
     requiring funds appropriated in this Act to be made available 
     in separate Treasury accounts to facilitate tracking of these 
     funds, unless a waiver is granted by the Director of the 
     Office of Management and Budget.
       Sec. 1552. Set-Aside for State and Local Government 
     Reporting and Recordkeeping.--The conference agreement 
     includes new language allowing agencies, after notice and 
     comment rulemaking, to reasonably adjust limits on 
     administrative expenditures for Federal grants to help 
     recipients defray costs of data collection requirements under 
     this Act.
       Sec. 1553. Protecting State and Local Government and 
     Contractor Whistleblowers.--The conference agreement includes 
     language providing new protections against reprisals for 
     employees of State and local governments or private 
     contractors who disclose to Federal officials information 
     reasonably believed to be evidence of gross mismanagement, 
     gross waste, or violations of law related to contracts or 
     grants using funds in this Act. This is a modification of 
     provisions appearing in both versions of the legislation. 
     Among other things, the conference version modifies time 
     limits on investigations of complaints and clarifies the 
     burden of proof required to establish violations.
       Sec. 1554. Special Contracting Provisions.--The conference 
     report includes a modification of a provision proposed by the 
     House specifying that, to the maximum extent feasible, 
     contracts using funds in this Act shall be awarded as fixed-
     price contracts and through competitive procedures.
       Protection for Federal Whistleblowers.--The conference 
     report does not include language proposed by the House 
     relating to protections for Federal employee whistleblowers.

                TITLE--XVI GENERAL PROVISIONS--THIS ACT

       Section 1601 provides that each amount appropriated or made 
     available in this Act is in addition to amounts otherwise 
     appropriated for the fiscal year involved. Further, enactment 
     of this Act shall have no effect on the availability of 
     amounts under the continuing resolution for fiscal year 2009.
       Section 1602 provides for quick-start activities. For 
     infrastructure investment funds, recipients of funds provided 
     in this Act should give preference to activities that can be 
     started and completed expeditiously, with a goal of using at 
     least 50 percent for activities that can be initiated within 
     120 days of enactment. Also recipients should use grant funds 
     in a manner that maximizes job creation and economic benefit.
       Section 1603 provides that funds appropriated in this Act 
     shall be available until September 30, 2010, unless expressly 
     provided otherwise in this Act.
       Section 1604 prohibits the use of funds for particular 
     activities.
       Section 1605 provides for the use of American iron, steel 
     and manufactured goods, except in certain instances. Section 
     1605(d) is not intended to repeal by implication the 
     President's authority under Title III of the Trade Agreements 
     Act of 1979. The conferees anticipate that the Administration 
     will rely on the authority under 19 U.S.C. 2511(b) to the 
     extent necessary to comply with U.S. obligations under the 
     WTO Agreement on Government Procurement and under U.S. free 
     trade agreements and so that section 1605 will not apply to 
     least developed countries to the same extent that it does not 
     apply to the parties to those international agreements. The 
     conferees also note that waiver authority under section 
     2511(b)(2) has not been used.
       Section 1606 provides for specific wage rate requirements. 
     All laborers and mechanics employed by contractors and 
     subcontractors on projects funded directly by or assisted in 
     whole or in part by and through the Federal government 
     pursuant to this Act shall be paid not less than the wages 
     prevailing in the locality for similar projects as determined 
     by the Secretary of Labor in accordance with the Davis-Bacon 
     Act.
       Section 1607 provides additional funding distribution and 
     assurance of the appropriate use of funds. Not later than 45 
     days after the enactment of this Act, the governor of each 
     state shall certify that the state will request and use funds 
     provided by this Act to the state and its agencies. If funds 
     made available to a state in any division of this Act are not 
     accepted for use by its governor, then acceptance by the 
     state legislature, by adoption of a concurrent resolution, 
     shall be sufficient to provide funding to the state. After 
     adoption of a concurrent resolution, funding to the State 
     will be for distribution to local governments, councils of 
     governments, public entities, and public-private entities 
     within the State, either by formula or at the State's 
     discretion.
       Section 1608 amends section 107(b) of the Emergency 
     Economic Stabilization Act of 2008 (relating to contracting 
     procedures) to include individuals with disabilities and 
     businesses owned by such individuals.
       Section 1609 makes various findings regarding the National 
     Environmental Policy Act (NEPA). In addition, this section 
     provides that adequate resources within this Act must be 
     devoted to ensuring that NEPA reviews are completed 
     expeditiously. The President shall report quarterly to the 
     appropriate congressional committees regarding NEPA 
     requirements and documentation for projects funded in this 
     Act.
       Section 1610 prohibits the use of funds for contracts and 
     grants not awarded in accordance with the Federal Property 
     and Administration Services Act, or chapter 137 of title 10, 
     United States Code and Federal Acquisition Regulation, or as 
     otherwise authorized by statute. The provision is not 
     intended to override other specific statutory authorizations 
     for procurements, including the Small Business Act and the 
     Javits-Wagner-O'Day Act.
       Section 1611 provides that it shall be unlawful for any 
     recipient of funding of Title I of the Emergency Economic 
     Stabilization Act of 2008 or section 13 of the Federal 
     Reserve Act to hire any nonimmigrant described in section 
     101(a)(15)(h)(i)(b) of the Immigration and Nationality Act 
     unless the recipient is in compliance with the requirements 
     for an.H-1B dependent employer as defined in that Act. This 
     requirement is effective for a two-year period beginning on 
     the date of enactment of this Act.
       Section 1612 provides limited transfer authority. The 
     conferees recognize the challenges that the Administration 
     will face in determining how best to respond to the current 
     economic crisis. Accordingly, the Senate and House passed 
     bills each included permissive authority to reprogram or 
     transfer funds within certain agencies and programs to 
     mitigate these concerns.
       It is clearly understood that as the Administration 
     attempts to find the best means to respond to the crisis, the 
     priority and utility of different programs could shift. As 
     such, the conferees have agreed to provide authority during 
     current fiscal year for Agency heads to transfer up to 1% of 
     certain funds within their jurisdiction from the amounts 
     provided in this Act. The conferees do not intend for this 1% 
     transfer provision to either nullify or expand upon the 
     transfer authorities provided for selected agencies and 
     programs elsewhere in this Act. The Committees on 
     Appropriations intend to carefully monitor the use of this 
     authority and expect Agency heads to exercise its use in 
     accordance with established reprogramming practices and only 
     after consulting with the Committees on Appropriations before 
     pursuing any transfer.
       The conference agreement does not include the following 
     provisions proposed by the House: requirements for timely 
     award of grants; use it or lose it requirements for grantees; 
     set-asides for management and oversight; as these issues' 
     have been addressed, in certain circumstances, within the 
     appropriate appropriating paragraphs. In addition, the 
     conference agreement does not include the following 
     provisions proposed by the House: requirements regarding 
     funding for the State of Illinois; and requirements for 
     participation in E-Verify.

                   Conference Total--With Comparisons

       The total new budget (obligational) authority for the 
     fiscal year 2009 recommended by the Committee of Conference, 
     comparisons to the House and Senate bills for 2009 follow:

[[Page 4026]]



                        [in thousands of dollars]
 
 
 
House bill, fiscal year 2009..........................       361,038,500
Senate bill, fiscal year 2009.........................       289,794,425
Conference agreement, fiscal year 2009................       311,197,500
Conference agreement compared with:...................
  House bill, fiscal year 2009........................       -49,841,000
  Senate bill, fiscal year 2009.......................       +21,403,075
 

 DIVISION B--TAX, UNEMPLOYMENT, HEALTH, STATE FISCAL RELIEF, AND OTHER 
                               PROVISIONS

                        TITLE I--TAX PROVISIONS

               A. Tax Relief for Individuals and Families

     1. Making Work Pay Credit (sec. 1001 of the House bill, sec. 
         1001 of the Senate amendment, sec. 1001 of the conference 
         agreement, and new sec. 36A of the Code)


                              Present Law

     Earned income tax credit
       Low- and moderate-income workers may be eligible for the 
     refundable earned income tax credit (``EITC''). Eligibility 
     for the EITC is based on earned income, adjusted gross 
     income, investment income, filing status, and immigration and 
     work status in the United States. The amount of the EITC is 
     based on the presence and number of qualifying children in 
     the worker's family, as well as on adjusted gross income and 
     earned income.
       The EITC generally equals a specified percentage of earned 
     income\1\ up to a maximum dollar amount. The maximum amount 
     applies over a certain income range and then diminishes to 
     zero over a specified phaseout range. For taxpayers with 
     earned income (or adjusted gross income (``AGI''), if 
     greater) in excess of the beginning of the phaseout range, 
     the maximum EITC amount is reduced by the phaseout rate 
     multiplied by the amount of earned income (or AGI, if 
     greater) in excess of the beginning of the phaseout range. 
     For taxpayers with earned income (or AGI, if greater) in 
     excess of the end of the phaseout range, no credit is 
     allowed.
---------------------------------------------------------------------------
     \1\Earned income is defined as (1) wages, salaries, tips, and 
     other employee compensation, but only if such amounts are 
     includible in gross income, plus (2) the amount of the 
     individual's net self-employment earnings.
---------------------------------------------------------------------------
       The EITC is a refundable credit, meaning that if the amount 
     of the credit exceeds the taxpayer's Federal income tax 
     liability, the excess is payable to the taxpayer as a direct 
     transfer payment. Under an advance payment system, eligible 
     taxpayers may elect to receive the credit in their paychecks, 
     rather than waiting to claim a refund on their tax returns 
     filed by April 15 of the following year.
     Child credit
       An individual may claim a tax credit for each qualifying 
     child under the age of 17. The amount of the credit per child 
     is $1,000 through 2010 and $500 thereafter. A child who is 
     not a citizen, national, or resident of the United States 
     cannot be a qualifying child.
       The credit is phased out for individuals with income over 
     certain threshold amounts. Specifically, the otherwise 
     allowable child tax credit is reduced by $50 for each $1,000 
     (or fraction thereof) of modified adjusted gross income over 
     $75,000 for single individuals or heads of households, 
     $110,000 for married individuals filing joint returns, and 
     $55,000 for married individuals filing separate returns. For 
     purposes of this limitation, modified adjusted gross income 
     includes certain otherwise excludable income earned by U.S. 
     citizens or residents living abroad or in certain U.S. 
     territories.
       The credit is allowable against the regular tax and the 
     alternative minimum tax. To the extent the child credit 
     exceeds the taxpayer's tax liability, the taxpayer is 
     eligible for a refundable credit (the additional child tax 
     credit) equal to 15 percent of earned income in excess of a 
     threshold dollar amount (the ``earned income'' formula). The 
     threshold dollar amount is $12,550 (for 2009), and is indexed 
     for inflation.
       Families with three or more children may determine the 
     additional child tax credit using the ``alternative 
     formula,'' if this results in a larger credit than determined 
     under the earned income formula. Under the alternative 
     formula, the additional child tax credit equals the amount by 
     which the taxpayer's social security taxes exceed the 
     taxpayer's earned income tax credit.
       Earned income is defined as the sum of wages, salaries, 
     tips, and other taxable employee compensation plus net self-
     employment earnings. Unlike the EITC, which also includes the 
     preceding items in its definition of earned income, the 
     additional child tax credit is based only on earned income to 
     the extent it is included in computing taxable income. For 
     example, some ministers' parsonage allowances are considered 
     self-employment income, and thus are considered earned income 
     for purposes of computing the EITC, but the allowances are 
     excluded from gross income for individual income tax 
     purposes, and thus are not considered earned income for 
     purposes of the additional child tax credit.


                               House Bill

     In general
       The provision provides eligible individuals a refundable 
     income tax credit for two years (taxable years beginning in 
     2009 and 2010).
       The credit is the lesser of (1) 6.2 percent of an 
     individual's earned income or (2) $500 ($1,000 in the case of 
     a joint return). For these purposes, the earned income 
     definition is the same as for the earned income tax credit 
     with two modifications. First, earned income for these 
     purposes does not include net earnings from self-employment 
     which are not taken into account in computing taxable income. 
     Second, earned income for these purposes includes combat pay 
     excluded from gross income under section 112.\2\
---------------------------------------------------------------------------
     \2\Unless otherwise stated, all section references are to the 
     Internal Revenue Code of 1986, as amended (the ``Code'').
---------------------------------------------------------------------------
       The credit is phased out at a rate of two percent of the 
     eligible individual's modified adjusted gross income above 
     $75,000 ($150,000 in the case of a joint return). For these 
     purposes an eligible individual's modified adjusted gross 
     income is the eligible individual's adjusted gross income 
     increased by any amount excluded from gross income under 
     sections 911, 931, or 933. An eligible individual means any 
     individual other than: (1) a nonresident alien; (2) an 
     individual with respect to whom another individual may claim 
     a dependency deduction for a taxable year beginning in a 
     calendar year in which the eligible individual's taxable year 
     begins; and (3) an estate or trust. Each eligible individual 
     must satisfy identical taxpayer identification number 
     requirements to those applicable to the earned income tax 
     credit.
     Treatment of the U.S. possessions
       Mirror code possessions\3\
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     \3\Possessions with mirror code tax systems are the United 
     States Virgin Islands, Guam, and the Commonwealth of the 
     Northern Mariana Islands.
---------------------------------------------------------------------------
       The U.S. Treasury will make payments to each mirror code 
     possession in an amount equal to the aggregate amount of the 
     credits allowable by reason of the provision to that 
     possession's residents against its income tax. This amount 
     will be determined by the Treasury Secretary based on 
     information provided by the government of the respective 
     possession. For purposes of these payments, a possession is a 
     mirror code possession if the income tax liability of 
     residents of the possession under that possession's income 
     tax system is determined by reference to the U.S. income tax 
     laws as if the possession were the United States.
       Non-mirror code possessions\4\
---------------------------------------------------------------------------
     \4\Possessions that do not have mirror code tax systems are 
     Puerto Rico and American Samoa.
---------------------------------------------------------------------------
       To each possession that does not have a mirror code tax 
     system, the U.S. Treasury will make two payments (for 2009 
     and 2010, respectively) in an amount estimated by the 
     Secretary as being equal to the aggregate credits that would 
     have been allowed to residents of that possession if a mirror 
     code tax system had been in effect in that possession. 
     Accordingly, the amount of each payment to a non-mirror Code 
     possession will be an estimate of the aggregate amount of the 
     credits that would be allowed to the possession's residents 
     if the credit provided by the provision to U.S. residents 
     were provided by the possession to its residents. This 
     payment will not be made to any U.S. possession unless that 
     possession has a plan that has been approved by the Secretary 
     under which the possession will promptly distribute the 
     payment to its residents.
       General rules
       No credit against U.S. income tax is permitted under the 
     provision for any person to whom a credit is allowed against 
     possession income taxes as a result of the provision (for 
     example, under that possession's mirror income tax). 
     Similarly, no credit against U.S. income tax is permitted for 
     any person who is eligible for a payment under a non-mirror 
     code possession's plan for distributing to its residents the 
     payment described above from the U.S. Treasury.
       For purposes of the payments to the possessions, the 
     Commonwealth of Puerto Rico and the Commonwealth of the 
     Northern Mariana Islands are considered possessions of the 
     United States.
       For purposes of the rule permitting the Treasury Secretary 
     to disburse appropriated amounts for refunds due from certain 
     credit provisions of the Internal Revenue Code of 1986, the 
     payments required to be made to possessions under the 
     provision are treated in the same manner as a refund due from 
     the credit allowed under the provision.
     Federal programs or Federally-assisted programs
       Any credit or refund allowed or made to an individual under 
     this provision (including to

[[Page 4027]]

     any resident of a U.S. possession) is not taken into account 
     as income and shall not be taken into account as resources 
     for the month of receipt and the following two months for 
     purposes of determining eligibility of such individual or any 
     other individual for benefits or assistance, or the amount or 
     extent of benefits or assistance, under any Federal program 
     or under any State or local program financed in whole or in 
     part with Federal funds.
     Income tax withholding
       Taxpayers' reduced tax liability under the provision shall 
     be expeditiously implemented through revised income tax 
     withholding schedules produced by the Internal Revenue 
     Service. These revised income tax withholding schedules 
     should be designed to reduce taxpayers' income tax withheld 
     for each remaining pay period in the remainder of 2009 by an 
     amount equal to the amount that withholding would have been 
     reduced had the provision been reflected in the income tax 
     withholding schedules for the entire taxable year.
     Effective date
       The provision applies to taxable years beginning after 
     December 31, 2008.


                            Senate Amendment

     In general
       The Senate is the same as the House bill, except that the 
     credit is phased out at a rate of four percent (rather than 
     two percent) of the eligible individual's modified adjusted 
     gross income above $70,000 ($140,000 in the case of a joint 
     return).
       Also, the Senate amendment provides that the otherwise 
     allowable credit allowed under the provision is reduced by 
     the amount of any payment received by the taxpayer pursuant 
     to the provisions of the bill providing economic recovery 
     payments under the Veterans Administration, Railroad 
     Retirement Board, and the Social Security Administration. The 
     provision treats the failure to reduce the credit by the 
     amount of these payments, and the omission of the correct 
     TIN, as clerical errors. This allows the IRS to assess any 
     tax resulting from such failure or omission without the 
     requirement to send the taxpayer a notice of deficiency 
     allowing the taxpayer the right to file a petition with the 
     Tax Court.
     Income tax withholding
       The Senate amendment also provides for a more accelerated 
     delivery of the credit in 2009 through revised income tax 
     withholding schedules produced by the Department of the 
     Treasury.
       Under the Senate amendment, these revised income tax 
     withholding schedules would be designed to reduce taxpayers' 
     income tax withheld for the remainder of 2009 in such a 
     manner that the full annual benefit of the provision is 
     reflected in income tax withheld during the remainder of 
     2009.


                          Conference Agreement

     In general
       The provision provides eligible individuals a refundable 
     income tax credit for two years (taxable years beginning in 
     2009 and 2010).
       The credit is the lesser of (1) 6.2 percent of an 
     individual's earned income or (2) $400 ($800 in the case of a 
     joint return). For these purposes, the earned income 
     definition is the same as for the earned income tax credit 
     with two modifications. First, earned income for these 
     purposes does not include net earnings from self-employment 
     which are not taken into account in computing taxable income. 
     Second, earned income for these purposes includes combat pay 
     excluded from gross income under section 112.
       The credit is phased out at a rate of two percent of the 
     eligible individual's modified adjusted gross income above 
     $75,000 ($150,000 in the case of a joint return). For these 
     purposes an eligible individual's modified adjusted gross 
     income is the eligible individual's adjusted gross income 
     increased by any amount excluded from gross income under 
     sections 911, 931, or 933. An eligible individual means any 
     individual other than: (1) a nonresident alien; (2) an 
     individual with respect to whom another individual may claim 
     a dependency deduction for a taxable year beginning in a 
     calendar year in which the eligible individual's taxable year 
     begins; and (3) an estate or trust.
       Also, the conference agreement provides that the otherwise 
     allowable making work pay credit allowed under the provision 
     is reduced by the amount of any payment received by the 
     taxpayer pursuant to the provisions of the bill providing 
     economic recovery payments under the Veterans Administration, 
     Railroad Retirement Board, and the Social Security 
     Administration and a temporary refundable tax credit for 
     certain government retirees.\5\ The conference agreement 
     treats the failure to reduce the making work pay credit by 
     the amount of such payments or credit, and the omission of 
     the correct TIN, as clerical errors. This allows the IRS to 
     assess any tax resulting from such failure or omission 
     without the requirement to send the taxpayer a notice of 
     deficiency allowing the taxpayer the right to file a petition 
     with the Tax Court.
---------------------------------------------------------------------------
     \5\The credit for certain government employees is available 
     for 2009. The credit is $250 ($500 for a joint return where 
     both spouses are eligible individuals). An eligible 
     individual for these purposes is an individual: (1) who 
     receives an amount as a pension or annuity for service 
     performed in the employ of the United States or any State or 
     any instrumentality thereof, which is not considered 
     employment for purposes of Social Security taxes; and (2) who 
     does not receive an economic recovery payment under the 
     Veterans Administration, Railroad Retirement Board, or the 
     Social Security Administration.
---------------------------------------------------------------------------
       Each tax return on which this credit is claimed must 
     include the social security number of the taxpayer (in the 
     case of a joint return, the social security number of at 
     least one spouse).
     Treatment of the U.S. possessions
       The conference agreement follows the House bill and the 
     Senate amendment.
     Federal programs or Federally-assisted programs
       The conference agreement follows the House bill and the 
     Senate amendment.
     Income tax withholding
       The conference agreement follows the Senate amendment.
     Effective date
       The provision applies to taxable years beginning after 
     December 31, 2008.
     2. Increase in the earned income tax credit (sec. 1101 of the 
         House bill, sec. 1002 of the Senate amendment, sec. 1002 
         of the conference agreement, and sec. 32 of the Code)


                              Present Law

     Overview
       Low- and moderate-income workers may be eligible for the 
     refundable earned income tax credit (``EITC''). Eligibility 
     for the EITC is based on earned income, adjusted gross 
     income, investment income, filing status, and immigration and 
     work status in the United States. The amount of the EITC is 
     based on the presence and number of qualifying children in 
     the worker's family, as well as on adjusted gross income and 
     earned income.
       The EITC generally equals a specified percentage of earned 
     income\6\ up to a maximum dollar amount. The maximum amount 
     applies over a certain income range and then diminishes to 
     zero over a specified phaseout range. For taxpayers with 
     earned income (or adjusted gross income (AGI), if greater) in 
     excess of the beginning of the phaseout range, the maximum 
     EITC amount is reduced by the phaseout rate multiplied by the 
     amount of earned income (or AGI, if greater) in excess of the 
     beginning of the phaseout range. For taxpayers with earned 
     income (or AGI, if greater) in excess of the end of the 
     phaseout range, no credit is allowed.
---------------------------------------------------------------------------
     \6\Earned income is defined as (1) wages, salaries, tips, and 
     other employee compensation, but only if such amounts are 
     includible in gross income, plus (2) the amount of the 
     individual's net self-employment earnings.
---------------------------------------------------------------------------
       An individual is not eligible for the EITC if the aggregate 
     amount of disqualified income of the taxpayer for the taxable 
     year exceeds $3,100 (for 2009). This threshold is indexed for 
     inflation. Disqualified income is the sum of: (1) interest 
     (taxable and tax exempt); (2) dividends; (3) net rent and 
     royalty income (if greater than zero); (4) capital gains net 
     income; and (5) net passive income (if greater than zero) 
     that is not self-employment income.
       The EITC is a refundable credit, meaning that if the amount 
     of the credit exceeds the taxpayer's Federal income tax 
     liability, the excess is payable to the taxpayer as a direct 
     transfer payment. Under an advance payment system, eligible 
     taxpayers may elect to receive the credit in their paychecks, 
     rather than waiting to claim a refund on their tax returns 
     filed by April 15 of the following year.
     Filing status
       An unmarried individual may claim the EITC if he or she 
     files as a single filer or as a head of household. Married 
     individuals generally may not claim the EITC unless they file 
     jointly. An exception to the joint return filing requirement 
     applies to certain spouses who are separated. Under this 
     exception, a married taxpayer who is separated from his or 
     her spouse for the last six months of the taxable year shall 
     not be considered as married (and, accordingly, may file a 
     return as head of household and claim the EITC), provided 
     that the taxpayer maintains a household that constitutes the 
     principal place of abode for a dependent child (including a 
     son, stepson, daughter, stepdaughter, adopted child, or a 
     foster child) for over half the taxable year,\7\ and pays 
     over half the cost of maintaining the household in which he 
     or she resides with the child during the year.
---------------------------------------------------------------------------
     \7\A foster child must reside with the taxpayer for the 
     entire taxable year.
---------------------------------------------------------------------------
     Presence of qualifying children and amount of the earned 
         income credit
       Three separate credit schedules apply: one schedule for 
     taxpayers with no qualifying children, one schedule for 
     taxpayers with no qualifying child, and one schedule for 
     taxpayers with more than one qualifying child.\8\
---------------------------------------------------------------------------
     \8\All income thresholds are indexed for inflation annually.
---------------------------------------------------------------------------
       Taxpayers with no qualifying children may claim a credit if 
     they are over age 24 and below age 65. The credit is 7.65 
     percent of earnings up to $5,970, resulting in a maximum 
     credit of $457 for 2009. The maximum is available for those 
     with incomes between

[[Page 4028]]

     $5,970 and $7,470 ($10,590 if married filing jointly). The 
     credit begins to phase down at a rate of 7.65 percent of 
     earnings above $7,470 ($10,590 if married filing jointly) 
     resulting in a $0 credit at $13,440 of earnings ($16,560 if 
     married filing jointly).
       Taxpayers with one qualifying child may claim a credit in 
     2009 of 34 percent of their earnings up to $8,950, resulting 
     in a maximum credit of $3,043. The maximum credit is 
     available for those with earnings between $8,950 and $16,420 
     ($19,540 if married filing jointly). The credit begins to 
     phase down at a rate of 15.98 percent of earnings above 
     $16,420 ($19,540 if married filing jointly). The credit is 
     phased down to $0 at $35,463 of earnings ($38,583 if married 
     filing jointly).
       Taxpayers with more than one qualifying child may claim a 
     credit in 2009 of 40 percent of earnings up to $12,570, 
     resulting in a maximum credit of $5,028. The maximum credit 
     is available for those with earnings between $12,570 and 
     $16,420 ($19,540 if married filing jointly). The credit 
     begins to phase down at a rate of 21.06 percent of earnings 
     above $16,420 ($19,540 if married filing jointly). The credit 
     is phased down to $0 at $40,295 of earnings ($43,415 if 
     married filing jointly).
       If more than one taxpayer lives with a qualifying child, 
     only one of these taxpayers may claim the child for purposes 
     of the EITC. If multiple eligible taxpayers actually claim 
     the same qualifying child, then a tiebreaker rule determines 
     which taxpayer is entitled to the EITC with respect to the 
     qualifying child. Any eligible taxpayer with at least one 
     qualifying child who does not claim the EITC with respect to 
     qualifying children due to failure to meet certain 
     identification requirements with respect to such children 
     (i.e., providing the name, age and taxpayer identification 
     number of each of such children) may not claim the EITC for 
     taxpayers without qualifying children.


                               House Bill

     Three or more qualifying children
       The provision increases the EITC credit percentage for 
     families with three or more qualifying children to 45 percent 
     for 2009 and 2010. For example, in 2009 taxpayers with three 
     or more qualifying children may claim a credit of 45 percent 
     of earnings up to $12,570, resulting in a maximum credit of 
     $5,656.50.
     Provide additional marriage penalty relief through higher 
         threshold phase-out amounts for married couples filing 
         joint returns
       The provision increases the threshold phase-out amounts for 
     married couples filing joint returns to $5,000\9\ above the 
     threshold phase-out amounts for singles, surviving spouses, 
     and heads of households for 2009 and 2010. For example, in 
     2009 the maximum credit of $3,043 for one qualifying child is 
     available for those with earnings between $8,950 and $16,420 
     ($21,420 if married filing jointly). The credit begins to 
     phase down at a rate of 15.98 percent of earnings above 
     $16,420 ($21,420 if married filing jointly). The credit is 
     phased down to $0 at $35,463 of earnings ($40,463 if married 
     filing jointly).
---------------------------------------------------------------------------
     \9\The $5,000 is indexed for inflation in the case of taxable 
     years beginning in 2010.
---------------------------------------------------------------------------
     Effective date
       The provision is effective for taxable years beginning 
     after December 31, 2008.


                            Senate Amendment

       The Senate amendment is the same as the House bill.


                          Conference Agreement

       The conference agreement follows the House bill and the 
     Senate amendment.
     3. Increase of refundable portion of the child credit (sec. 
         1102 of the House bill, sec. 1003 of the Senate 
         amendment, sec. 1003 of the conference agreement and sec. 
         24 of the Code)


                              Present Law

       An individual may claim a tax credit for each qualifying 
     child under the age of 17. The amount of the credit per child 
     is $1,000 through 2010, and $500 thereafter. A child who is 
     not a citizen, national, or resident of the United States 
     cannot be a qualifying child.
       The credit is phased out for individuals with income over 
     certain threshold amounts. Specifically, the otherwise 
     allowable child tax credit is reduced by $50 for each $1,000 
     (or fraction thereof) of modified adjusted gross income over 
     $75,000 for single individuals or heads of households, 
     $110,000 for married individuals filing joint returns, and 
     $55,000 for married individuals filing separate returns. For 
     purposes of this limitation, modified adjusted gross income 
     includes certain otherwise excludable income earned by U.S. 
     citizens or residents living abroad or in certain U.S. 
     territories.
       The credit is allowable against the regular tax and the 
     alternative minimum tax. To the extent the child credit 
     exceeds the taxpayer's tax liability, the taxpayer is 
     eligible for a refundable credit (the additional child tax 
     credit) equal to 15 percent of earned income in excess of a 
     threshold dollar amount (the ``earned income'' formula). The 
     threshold dollar amount is $12,550 (for 2009), and is indexed 
     for inflation.
       Families with three or more children may determine the 
     additional child tax credit using the ``alternative 
     formula,'' if this results in a larger credit than determined 
     under the earned income formula. Under the alternative 
     formula, the additional child tax credit equals the amount by 
     which the taxpayer's social security taxes exceed the 
     taxpayer's earned income tax credit (``EITC'').
       Earned income is defined as the sum of wages, salaries, 
     tips, and other taxable employee compensation plus net self-
     employment earnings. Unlike the EITC, which also includes the 
     preceding items in its definition of earned income, the 
     additional child tax credit is based only on earned income to 
     the extent it is included in computing taxable income. For 
     example, some ministers' parsonage allowances are considered 
     self-employment income and thus, are considered earned income 
     for purposes of computing the EITC, but the allowances are 
     excluded from gross income for individual income tax purposes 
     and thus, are not considered earned income for purposes of 
     the additional child tax credit.
       Any credit or refund allowed or made to an individual under 
     this provision (including to any resident of a U.S. 
     possession) is not taken into account as income and shall not 
     be taken into account as resources for the month of receipt 
     and the following two months for purposes of determining 
     eligibility of such individual or any other individual for 
     benefits or assistance, or the amount or extent of benefits 
     or assistance, under any Federal program or under any State 
     or local program financed in whole or in part with Federal 
     funds.


                               House Bill

       The provision modifies the earned income formula for the 
     determination of the refundable child credit to apply to 15 
     percent of earned income in excess of $0 for taxable years 
     beginning in 2009 and 2010.
       Effective date.--The provision is effective for taxable 
     years beginning after December 31,


                            Senate Amendment

       The Senate amendment is the same as the House bill except 
     that the refundable child credit is calculated to apply to 15 
     percent of earned income in excess of $8,100 for taxable 
     years beginning in 2009 and 2010.


                          Conference Agreement

       The conference agreement follows the House bill and the 
     Senate amendment except that the refundable child credit is 
     calculated to apply to 15 percent of earned income in excess 
     of $3,000 for taxable years beginning in 2009 and 2010.
     4. American Opportunity Tax credit (sec. 1201 of the House 
         bill, sec. 1004 of the Senate amendment, sec. 1004 of the 
         conference agreement, and sec. 25A of the Code)


                              Present Law

       Individual taxpayers are allowed to claim a nonrefundable 
     credit, the Hope credit, against Federal income taxes of up 
     to $1,800 (for 2009) per eligible student per year for 
     qualified tuition and related expenses paid the first two 
     years of the student's post-secondary education in a degree 
     or certificate program\10\ The Hope credit rate is 100 
     percent on the first $1,200 of qualified tuition and related 
     expenses, and 50 percent on the next $1,200 of qualified 
     tuition and related expenses; these dollar amounts are 
     indexed for inflation, with the amount rounded down to the 
     next lowest multiple of $100. Thus, for example, a taxpayer 
     who incurs $1,200 of qualified tuition and related expenses 
     for an eligible student is eligible (subject to the adjusted 
     gross income phaseout described below) for a $1,200 Hope 
     credit. If a taxpayer incurs $2,400 of qualified tuition and 
     related expenses for an eligible student, then he or she is 
     eligible for a $1,800 Hope credit.
---------------------------------------------------------------------------
     \10\Sec. 25A. The Hope credit generally may not be claimed 
     against a taxpayer's alternative minimum tax liability. 
     However, the credit may be claimed against a taxpayer's 
     alternative minimum tax liability for taxable years beginning 
     prior to January 1, 2009.
---------------------------------------------------------------------------
       The Hope credit that a taxpayer may otherwise claim is 
     phased out ratably for taxpayers with modified adjusted gross 
     income between $50,000 and $60,000 ($100,000 and $120,000 for 
     married taxpayers filing a joint return) for 2009. The 
     adjusted gross income phaseout ranges are indexed for 
     inflation, with the amount rounded down to the next lowest 
     multiple of $1,000.
       The qualified tuition and related expenses must be incurred 
     on behalf of the taxpayer, the taxpayer's spouse, or a 
     dependent of the taxpayer. The Hope credit is available with 
     respect to an individual student for two taxable years, 
     provided that the student has not completed the first two 
     years of post-secondary education before the beginning of the 
     second taxable year.
       The Hope credit is available in the taxable year the 
     expenses are paid, subject to the requirement that the 
     education is furnished to the student during that year or 
     during an academic period beginning during the first three 
     months of the next taxable year. Qualified tuition and 
     related expenses paid with the proceeds of a loan generally 
     are eligible for the Hope credit. The repayment of a loan 
     itself is not a qualified tuition or related expense.
       A taxpayer may claim the Hope credit with respect to an 
     eligible student who is not the taxpayer or the taxpayer's 
     spouse (e.g., in cases in which the student is the taxpayer's 
     child) only if the taxpayer claims the student as a dependent 
     for the taxable year for which the credit is claimed. If a 
     student is

[[Page 4029]]

     claimed as a dependent, the student is not entitled to claim 
     a Hope credit for that taxable year on the student's own tax 
     return. If a parent (or other taxpayer) claims a student as a 
     dependent, any qualified tuition and related expenses paid by 
     the student are treated as paid by the parent (or other 
     taxpayer) for purposes of determining the amount of qualified 
     tuition and related expenses paid by such parent (or other 
     taxpayer) under the provision. In addition, for each taxable 
     year, a taxpayer may elect either the Hope credit, the 
     Lifetime Learning credit, or an above-the-line deduction for 
     qualified tuition and related expenses with respect to an 
     eligible student.
       The Hope credit is available for ``qualified tuition and 
     related expenses,'' which include tuition and fees (excluding 
     nonacademic fees) required to be paid to an eligible 
     educational institution as a condition of enrollment or 
     attendance of an eligible student at the institution. Charges 
     and fees associated with meals, lodging, insurance, 
     transportation, and similar personal, living, or family 
     expenses are not eligible for the credit. The expenses of 
     education involving sports, games, or hobbies are not 
     qualified tuition and related expenses unless this education 
     is part of the student's degree program.
       Qualified tuition and related expenses generally include 
     only out-of-pocket expenses. Qualified tuition and related 
     expenses do not include expenses covered by employer-provided 
     educational assistance and scholarships that are not required 
     to be included in the gross income of either the student or 
     the taxpayer claiming the credit. Thus, total qualified 
     tuition and related expenses are reduced by any scholarship 
     or fellowship grants excludable from gross income under 
     section 117 and any other tax-free educational benefits 
     received by the student (or the taxpayer claiming the credit) 
     during the taxable year. The Hope credit is not allowed with 
     respect to any education expense for which a deduction is 
     claimed under section 162 or any other section of the Code.
       An eligible student for purposes of the Hope credit is an 
     individual who is enrolled in a degree, certificate, or other 
     program (including a program of study abroad approved for 
     credit by the institution at which such student is enrolled) 
     leading to a recognized educational credential at an eligible 
     educational institution. The student must pursue a course of 
     study on at least a half-time basis. A student is considered 
     to pursue a course of study on at least a half-time basis if 
     the student carries at least one half the normal full-time 
     work load for the course of study the student is pursuing for 
     at least one academic period that begins during the taxable 
     year. To be eligible for the Hope credit, a student must not 
     have been convicted of a Federal or State felony consisting 
     of the possession or distribution of a controlled substance.
       Eligible educational institutions generally are accredited 
     post-secondary educational institutions offering credit 
     toward a bachelor's degree, an associate's degree, or another 
     recognized post-secondary credential. Certain proprietary 
     institutions and post-secondary vocational institutions also 
     are eligible educational institutions. To qualify as an 
     eligible educational institution, an institution must be 
     eligible to participate in Department of Education student 
     aid programs.
       Effective for taxable years beginning after December 31, 
     2010, the changes to the Hope credit made by the Economic 
     Growth and Tax Relief Reconciliation Act of 2001 (``EGTRRA'') 
     no longer apply. The principal EGTRRA change scheduled to 
     expire is the change that permitted a taxpayer to claim a 
     Hope credit in the same year that he or she claims an 
     exclusion from a Coverdell education savings account. Thus, 
     after 2010, a taxpayer cannot claim a Hope credit in the same 
     year he or she claims an exclusion from a Coverdell education 
     savings account.


                               House Bill

       The provision modifies the Hope credit for taxable years 
     beginning in 2009 or 2010. The modified credit is referred to 
     as the American Opportunity Tax credit. The allowable 
     modified credit is up to $2,500 per eligible student per year 
     for qualified tuition and related expenses paid for each of 
     the first four years of the student's post-secondary 
     education in a degree or certificate program. The modified 
     credit rate is 100 percent on the first $2,000 of qualified 
     tuition and related expenses, and 25 percent on the next 
     $2,000 of qualified tuition and related expenses. For 
     purposes of the modified credit, the definition of qualified 
     tuition and related expenses is expanded to include course 
     materials.
       Under the provision, the modified credit is available with 
     respect to an individual student for four years, provided 
     that the student has not completed the first four years of 
     post-secondary education before the beginning of the fourth 
     taxable year. Thus, the modified credit, in addition to other 
     modifications, extends the application of the Hope credit to 
     two more years of post-secondary education.
       The modified credit that a taxpayer may otherwise claim is 
     phased out ratably for taxpayers with modified adjusted gross 
     income between $80,000 and $90,000 ($160,000 and $180,000 for 
     married taxpayers filing a joint return). The modified credit 
     may be claimed against a taxpayer's alternative minimum tax 
     liability.
       Forty percent of a taxpayer's otherwise allowable modified 
     credit is refundable. However, no portion of the modified 
     credit is refundable if the taxpayer claiming the credit is a 
     child to whom section 1(g) applies for such taxable year 
     (generally, any child under age 18 or any child under age 24 
     who is a student providing less than one-half of his or her 
     own support, who has at least one living parent and does not 
     file a joint return).
       In addition, the provision requires the Secretary of the 
     Treasury to conduct two studies and submit a report to 
     Congress on the results of those studies within one year 
     after the date of enactment. The first study shall examine 
     how to coordinate the Hope and Lifetime Learning credits with 
     the Pell grant program. The second study shall examine 
     requiring students to perform community service as a 
     condition of taking their tuition and related expenses into 
     account for purposes of the Hope and Lifetime Learning 
     credits.
       Effective date.--The provision is effective with respect to 
     taxable years beginning after December 31, 2008.


                            Senate Amendment

       The Senate amendment is the same as the House bill, except 
     that the Senate amendment provides that only 30 percent of a 
     taxpayer's otherwise allowable modified credit is refundable.


                          Conference Agreement

       The conference agreement follows the House bill, with the 
     following modifications. Under the conference agreement, bona 
     fide residents of the U.S. possessions (American Samoa, 
     Commonwealth of the Northern Mariana Islands, Commonwealth of 
     Puerto Rico, Guam, Virgin Islands) are not permitted to claim 
     the refundable portion of the American opportunity credit in 
     the United States. Rather, a bona fide resident of a mirror 
     code possession (Commonwealth of the Northern Mariana 
     Islands, Guam, Virgin Islands) may claim the refundable 
     portion of the credit in the possession in which the 
     individual is a resident. Similarly, a bona fide resident of 
     a non-mirror code possession (Commonwealth of Puerto Rico, 
     American Samoa) may claim the refundable portion of the 
     credit in the possession in which the individual is a 
     resident, but only if that possession establishes a plan for 
     permitting the claim under its internal law.
       The conference agreement provides that the U.S. Treasury 
     will make payments to the possessions in respect of credits 
     allowable to their residents under their internal laws. 
     Specifically, the U.S. Treasury will make payments for to 
     each mirror code possession in an amount equal to the 
     aggregate amount of the refundable portion of the credits 
     allowable by reason of the provision to that possession's 
     residents against its income tax. This amount will be 
     determined by the Treasury Secretary based on information 
     provided by the government of the respective possession. To 
     each possession that does not have a mirror code tax system, 
     the U.S. Treasury will make two payments (for 2009 and 2010, 
     respectively) in an amount estimated by the Secretary as 
     being equal to the aggregate amount of the refundable portion 
     of the credits that would have been allowed to residents of 
     that possession if a minor code tax system had been in effect 
     in that possession. Accordingly, the amount of each payment 
     to a non-mirror code possession will be an estimate of the 
     aggregate amount of the refundable portion of the credits 
     that would be allowed to the possession's residents if the 
     credit provided by the provision to U.S. residents were 
     provided by the possession to its residents. This payment 
     will not be made to any U.S. possession unless that 
     possession has a plan that has been approved by the Secretary 
     under which the possession will promptly distribute the 
     payment to its residents.
     5. Temporarily allow computer technology and equipment as a 
         qualified higher education expense for qualified tuition 
         programs (sec. 1005 of the Senate amendment, sec. 1005 of 
         the conference agreement, and sec. 529 of the Code)


                              Present Law

       Section 529 provides specified income tax and transfer tax 
     rules for the treatment of accounts and contracts established 
     under qualified tuition programs.\11\ VA qualified tuition 
     program is a program established and maintained by a State or 
     agency or instrumentality thereof, or by one or more eligible 
     educational institutions, which satisfies certain 
     requirements and under which a person may purchase tuition 
     credits or certificates on behalf of a designated beneficiary 
     that entitle the beneficiary to the waiver or payment of 
     qualified higher education expenses of the beneficiary (a 
     ``prepaid tuition program''). In the case of a program 
     established and maintained by a State or agency or 
     instrumentality thereof, a qualified tuition program also 
     includes a program under which a person may make 
     contributions to an account that is established for the 
     purpose of satisfying the qualified higher education expenses 
     of the designated beneficiary

[[Page 4030]]

     of the account, provided it satisfies certain specified 
     requirements (a ``savings account program''). Under both 
     types of qualified tuition programs, a contributor 
     establishes an account for the benefit of a particular 
     designated beneficiary to provide for that beneficiary's 
     higher education expenses.
---------------------------------------------------------------------------
     \11\For purposes of this description, the term ``account'' is 
     used interchangeably to refer to a prepaid tuition benefit 
     contract or a tuition savings account established pursuant to 
     a qualified tuition program.
---------------------------------------------------------------------------
       For this purpose, qualified higher education expenses means 
     tuition, fees, books, supplies, and equipment required for 
     the enrollment or attendance of a designated beneficiary at 
     an eligible educational institution, and expenses for special 
     needs services in the case of a special needs beneficiary 
     that are incurred in connection with such enrollment or 
     attendance. Qualified higher education expenses generally 
     also include room and board for students who are enrolled at 
     least half-time.
       Contributions to a qualified tuition program must be made 
     in cash. Section 529 does not impose a specific dollar limit 
     on the amount of contributions, account balances, or prepaid 
     tuition benefits relating to a qualified tuition account; 
     however, the program is required to have adequate safeguards 
     to prevent contributions in excess of amounts necessary to 
     provide for the beneficiary's qualified higher education 
     expenses. Contributions generally are treated as a completed 
     gift eligible for the gift tax annual exclusion. 
     Contributions are not tax deductible for Federal income tax 
     purposes, although they may be deductible for State income 
     tax purposes. Amounts in the account accumulate on a tax-free 
     basis (i.e., income on accounts in the plan is not subject to 
     current income tax).
       Distributions from a qualified tuition program are 
     excludable from the distributee's gross income to the extent 
     that the total distribution does not exceed the qualified 
     higher education expenses incurred for the beneficiary. If a 
     distribution from a qualified tuition program exceeds the 
     qualified higher education expenses incurred for the 
     beneficiary, the portion of the excess that is treated as 
     earnings generally is subject to income tax and an additional 
     10-percent tax. Amounts in a qualified tuition program may be 
     rolled over to another qualified tuition program for the same 
     beneficiary or for a member of the family of that beneficiary 
     without income tax consequences.
       In general, prepaid tuition contracts and tuition savings 
     accounts established under a qualified tuition program 
     involve prepayments or contributions made by one or more 
     individuals for the benefit of a designated beneficiary, with 
     decisions with respect to the contract or account to be made 
     by an individual who is not the designated beneficiary. 
     Qualified tuition accounts or contracts generally require the 
     designation of a person (generally referred to as an 
     ``account owner'') whom the program administrator (oftentimes 
     a third party administrator retained by the State or by the 
     educational institution that established the program) may 
     look to for decisions, recordkeeping, and reporting with 
     respect to the account established for a designated 
     beneficiary. The person or persons who make the contributions 
     to the account need not be the same person who is regarded as 
     the account owner for purposes of administering the account. 
     Under many qualified tuition programs, the account owner 
     generally has control over the account or contract, including 
     the ability to change designated beneficiaries and to 
     withdraw funds at any time and for any purpose. Thus, in 
     practice, qualified tuition accounts or contracts generally 
     involve a contributor, a designated beneficiary, an account 
     owner (who oftentimes is not the contributor or the 
     designated beneficiary), and an administrator of the account 
     or contract.\12\
---------------------------------------------------------------------------
     \12\Section 529 refers to contributors and designated 
     beneficiaries, but does not define or otherwise refer to the 
     term account owner, which is a commonly used term among 
     qualified tuition programs.
---------------------------------------------------------------------------


                               House Bill

       No provision.


                            Senate Amendment

       The provision expands the definition of qualified higher 
     education expenses for expenses paid or incurred in 2009 and 
     2010 to include expenses for certain computer technology and 
     equipment to be used by the designated beneficiary while 
     enrolled at an eligible educational institution.
       Effective date.--The provision is effective for expenses 
     paid or incurred after December 31, 2008.


                          Conference Agreement

       The conference agreement follows the Senate amendment.
     6. Modifications to homebuyer credit (sec. 1301 of the House 
         bill, sec. 1006 of the Senate amendment, sec. 1006 of the 
         conference agreement, and sec. 36 of the Code)


                              Present Law

       A taxpayer who is a first-time homebuyer is allowed a 
     refundable tax credit equal to the lesser of $7,500 ($3,750 
     for a married individual filing separately) or 10 percent of 
     the purchase price of a principal residence. The credit is 
     allowed for the tax year in which the taxpayer purchases the 
     home unless the taxpayer makes an election as described 
     below. The credit is allowed for qualifying home purchases on 
     or after April 9, 2008 and before July 1, 2009 (without 
     regard to whether there was a binding contract to purchase 
     prior to April 9, 2008).
       The credit phases out for individual taxpayers with 
     modified adjusted gross income between $75,000 and $95,000 
     ($150,000 and $170,000 for joint filers) for the year of 
     purchase.
       A taxpayer is considered a first-time homebuyer if such 
     individual had no ownership interest in a principal residence 
     in the United States during the three-year period prior to 
     the purchase of the home to which the credit applies.
       No credit is allowed if the D.C. homebuyer credit is 
     allowable for the taxable year the residence is purchased or 
     a prior taxable year. A taxpayer is not permitted to claim 
     the credit if the taxpayer's financing is from tax-exempt 
     mortgage revenue bonds, if the taxpayer is a nonresident 
     alien, or if the taxpayer disposes of the residence (or it 
     ceases to be a principal residence) before the close of a 
     taxable year for which a credit otherwise would be allowable.
       The credit is recaptured ratably over fifteen years with no 
     interest charge beginning in the second taxable year after 
     the taxable year in which the home is purchased. For example, 
     if the taxpayer purchases a home in 2008, the credit is 
     allowed on the 2008 tax return, and repayments commence with 
     the 2010 tax return. If the taxpayer sells the home (or the 
     home ceases to be used as the principal residence of the 
     taxpayer or the taxpayer's spouse) prior to complete 
     repayment of the credit, any remaining credit repayment 
     amount is due on the tax return for the year in which the 
     home is sold (or ceases to be used as the principal 
     residence). However, the credit repayment amount may not 
     exceed the amount of gain from the sale of the residence to 
     an unrelated person. For this purpose, gain is determined by 
     reducing the basis of the residence by the amount of the 
     credit to the extent not previously recaptured. No amount is 
     recaptured after the death of a taxpayer. In the case of an 
     involuntary conversion of the home, recapture is not 
     accelerated if a new principal residence is acquired within a 
     two year period. In the case of a transfer of the residence 
     to a spouse or to a former spouse incident to divorce, the 
     transferee spouse (and not the transferor spouse) will be 
     responsible for any future recapture.
       An election is provided to treat a home purchased in the 
     eligible period in 2009 as if purchased on December 31, 2008 
     for purposes of claiming the credit on the 2008 tax return 
     and for establishing the beginning of the recapture period. 
     Taxpayers may amend their returns for this purpose.


                               House Bill

       The provision waives the recapture of the credit for 
     qualifying home purchases after December 31, 2008 and before 
     July 1, 2009. This waiver of recapture applies without regard 
     to whether the taxpayer elects to treat the purchase in 2009 
     as occurring on December 31, 2008. If the taxpayer disposes 
     of the home or the home otherwise ceases to be the principal 
     residence of the taxpayer within 36 months from the date of 
     purchase, the present law rules for recapture of the credit 
     will still apply.
       Effective date.--The provision applies to residences 
     purchased after December 31, 2008.


                            Senate Amendment

       The Senate amendment repeals the existing section 36 for 
     purchases on or after the date of enactment of the American 
     Recovery and Reinvestment Act of 2009.
       A taxpayer is allowed a new nonrefundable tax credit equal 
     to the lesser of $15,000 ($7,500 for a married individual 
     filing separately) or 10 percent of the purchase price of a 
     principal residence. The credit is allowed for the tax year 
     in which the taxpayer purchases the home unless the taxpayer 
     makes an election as described below. The credit is allowed 
     for qualifying home purchases after the date of enactment of 
     the American Recovery and Reinvestment Act and on or before 
     the date that is one year after such date of enactment.
       The credit is limited to the excess of regular tax 
     liability plus alternative minimum tax liability over the sum 
     of other nonrefundable personal credits.
       No credit is allowed for any purchase for which the section 
     36 first-time homebuyer credit or the D.C. homebuyer credit 
     is allowable. If a credit is allowed under this provision in 
     the case of any individual (and such individual's spouse, if 
     married) with respect to the purchase of any principal 
     residence, no credit is allowed with respect to the purchase 
     of any other principal residence by such individual or a 
     spouse of such individual.
       If the taxpayer disposes of the residence (or it ceases to 
     be a principal residence) at any time within 24 months after 
     the date on which the taxpayer purchased the residence, then 
     the credit shall be subject to recapture for the taxable year 
     in which such disposition occurred (or in which the taxpayer 
     failed to occupy the residence as a principal residence). No 
     amount is recaptured after the death of a taxpayer or in the 
     case of a member of the Armed Forces of the United States on 
     active duty who fails to meet the residency requirement 
     pursuant to a military order and incident to a permanent

[[Page 4031]]

     change of station. In the case of an involuntary conversion 
     of the home, recapture is not accelerated if a new principal 
     residence is acquired within a two year period. In the case 
     of a transfer of the residence to a spouse or to a former 
     spouse incident to divorce, the transferee spouse (and not 
     the transferor spouse) will be responsible for any future 
     recapture.
       A further election is provided to treat a home purchased in 
     the eligible period as if purchased on December 31, 2008 for 
     purposes of claiming the credit on the 2008 tax return. 
     Taxpayers may amend their returns for this purpose.
       Effective date.--The provision applies to purchases after 
     the date of enactment.


                          Conference Agreement

       The conference agreement extends the existing homebuyer 
     credit for qualifying home purchases before December 1, 2009. 
     In addition, it increases the maximum credit amount to $8,000 
     ($4,000 for a married individual filing separately) and 
     waives the recapture of the credit for qualifying home 
     purchases after December 31, 2008 and before December 1, 
     2009. This waiver of recapture applies without regard to 
     whether the taxpayer elects to treat the purchase in 2009 as 
     occurring on December 31, 2008. If the taxpayer disposes of 
     the home or the home otherwise ceases to be the principal 
     residence of the taxpayer within 36 months from the date of 
     purchase, the present law rules for recapture of the credit 
     will apply.
       The conference agreement modifies the coordination with the 
     first-time homebuyer credit for residents of the District of 
     Columbia under section 1400C. No credit under section 1400C 
     shall be allowed to any taxpayer with respect to the purchase 
     of a residence during 2009 if a credit under section 36 is 
     allowable to such taxpayer (or the taxpayer's spouse) with 
     respect to such purchase. Taxpayers thus qualify for the more 
     generous national first-time homebuyer credit rather than the 
     D.C. homebuyer credit for qualifying purchases in 2009. No 
     credit under section 36 is allowed for a taxpayer who claimed 
     the D.C. homebuyer credit in any prior taxable year.
       The conference agreement removes the prohibition on 
     claiming the credit if the residence is financed by the 
     proceeds of a mortgage revenue bond, a qualified mortgage 
     issue the interest on which is exempt from tax under section 
     103.
       Effective date.--The provision applies to residences 
     purchased after December 31, 2008.
     7. Election to substitute grants to states for low-income 
         housing projects in lieu of low-income housing credit 
         allocation for 2009 (secs. 1302 and 1711 of the House 
         bill, secs. 1404 and 1602 of the conference agreement, 
         and sec. 42 of the Code)


                              Present Law

     In general
       The low-income housing credit may be claimed over a 10-year 
     period by owners of certain residential rental property for 
     the cost of rental housing occupied by tenants having incomes 
     below specified levels.\13\ The amount of the credit for any 
     taxable year in the credit period is the applicable 
     percentage of the qualified basis of each qualified low-
     income building. The qualified basis of any qualified low-
     income building for any taxable year equals the applicable 
     fraction of the eligible basis of the building.
---------------------------------------------------------------------------
     \13\Sec. 42.
---------------------------------------------------------------------------
     Volume limits
       A low-income housing credit is allowable only if the owner 
     of a qualified building receives a housing credit allocation 
     from the State or local housing credit agency. Generally, the 
     aggregate credit authority provided annually to each State 
     for calendar year 2009 is $2.30 per resident, with a minimum 
     annual cap of $2,665,000 for certain small population 
     States.\14\ These amounts are indexed for inflation. Projects 
     that also receive financing with proceeds of tax-exempt bonds 
     issued subject to the private activity bond volume limit do 
     not require an allocation of the low-income housing credit.
---------------------------------------------------------------------------
     \14\Rev. Proc. 2008-66.
---------------------------------------------------------------------------
     Basic rule for Federal grants
       The basis of a qualified building must be reduced by the 
     amount of any federal grant with respect to such building.


                               House Bill

     Low-income housing grant election amount
       The Secretary of the Treasury shall make a grant to the 
     State housing credit agency of each State in an amount equal 
     to the low-income housing grant election amount.
       The low-income housing grant election amount for a State is 
     an amount elected by the State subject to certain limits. The 
     maximum low-income housing grant election amount for a State 
     may not exceed 85 percent of the product of ten and the sum 
     of the State's: (1) unused housing credit ceiling for 2008; 
     (2) any returns to the State during 2009 of credit 
     allocations previously made by the State; (3) 40 percent of 
     the State's 2009 credit allocation; and (4) 40 percent of the 
     State's share of the national pool allocated in 2009, if any.
       Grants under this provision are not taxable income to 
     recipients.
     Subawards to low-income housing credit buildings
       A State receiving a grant under this provision is to use 
     these monies to make subawards to finance the construction, 
     or acquisition and rehabilitation of qualified low-income 
     buildings as defined under the low-income housing credit. A 
     subaward may be made to finance a qualified low-income 
     building regardless of whether the building has an allocation 
     of low-income housing credit. However, in the case of 
     qualified low-income buildings without allocations of the 
     low-income housing credit, the State housing credit agency 
     must make a determination that the subaward with respect to 
     such building will increase the total funds available to the 
     State to build and rehabilitate affordable housing. In 
     conjunction with this determination the State housing credit 
     agency must establish a process in which applicants for the 
     subawards must demonstrate good faith efforts to obtain 
     investment commitments before the agency makes such 
     subawards.
       Any building receiving grant money from a subaward is 
     required to satisfy the low-income housing credit rules. The 
     State housing credit agency shall perform asset management 
     functions to ensure compliance with the low-income housing 
     credit rules and the long-term viability of buildings 
     financed with these subawards.\15\ Failure to satisfy the 
     low-income housing credit rules will result in recapture 
     enforced by means of liens or other methods that the 
     Secretary of the Treasury (or delegate) deems appropriate. 
     Any such recapture will be payable to the Secretary of the 
     Treasury for deposit in the general fund of the Treasury.
---------------------------------------------------------------------------
     \15\The State housing credit agency may collect reasonable 
     fees from subaward recipients to cover the expenses of the 
     agency's asset management duties. Alternatively, the State 
     housing credit agency may retain a thirdparty to perform 
     these asset management duties.
---------------------------------------------------------------------------
       Any grant funds not used to make subawards before January 
     1, 2011 and any grant monies from subawards returned on or 
     after January 1, 2011 must be returned to the Secretary of 
     the Treasury.
     Basic rule for Federal grants
       The grants received under this provision do not reduce tax 
     basis of a qualified low-income building.
     Reduction in low-income housing credit volume limit for 2009
       The otherwise applicable low-income housing credit volume 
     limit for any State for 2009 is reduced by the amount taken 
     into account in determining the low-income housing grant 
     election amount.
     Appropriations
       The provision appropriates to the Secretary of the Treasury 
     such sums as may be necessary to carry out this provision.
     Effective date
       The provision is effective on the date of enactment.


                            Senate Amendment

       No provision.


                          Conference Agreement

       The conference agreement follows the House bill.
     8. Election to accelerate the low-income housing credit 
         allocation (sec. 1903 of the Senate amendment)


                              Present Law

     In general
       The low-income housing credit may be claimed over a 10-year 
     period by owners of certain residential rental property for 
     the cost of rental housing occupied by tenants having incomes 
     below specified levels.\16\ The amount of the credit for any 
     taxable year in the credit period is the applicable 
     percentage of the qualified basis of each qualified low-
     income building. The qualified basis of any qualified low-
     income building for any taxable year equals the applicable 
     fraction of the eligible basis of the building.
---------------------------------------------------------------------------
     \16\Sec. 42.
---------------------------------------------------------------------------
     Volume limits
       A low-income housing credit is allowable only if the owner 
     of a qualified building receives a housing credit allocation 
     from the State or local housing credit agency. Generally, the 
     aggregate credit authority provided annually to each State 
     for calendar year 2009 is $2.30 per resident, with a minimum 
     annual cap of $2,665,000 for certain small population 
     States.\17\ These amounts are indexed for inflation. Projects 
     that also receive financing with proceeds of tax-exempt bonds 
     issued subject to the private activity bond volume limit do 
     not require an allocation of the low-income housing credit.
---------------------------------------------------------------------------
     \17\Rev. Proc. 2008-66.
---------------------------------------------------------------------------


                               House Bill

       No provision.


                            Senate Amendment

       The provision allows a taxpayer election to double the 
     amount of the otherwise allowable low-income housing tax 
     credit with respect to a project for each of the taxpayer's 
     first three taxable years beginning after December 31, 2008. 
     The otherwise allowable low-income housing tax credit over 
     the remaining credit period for the project with respect to a 
     taxpayer making the election will be reduced on a pro rata 
     basis by an amount equal to the acceleration in the first 
     three years.

[[Page 4032]]

       The election is only available for non federally subsidized 
     low-income housing projects placed in service after December 
     31, 2008 which are pursuant to a low-income housing credit 
     allocation from a State housing credit ceiling before 2011 
     (e.g. an allocation of 2011 credit ceiling makes the project 
     ineligible for the election). Further, the election is 
     limited to low-income housing tax credit initial investments 
     made pursuant to a binding agreement by the taxpayer after 
     December 31, 2008 and before January 1, 2011. For example, a 
     taxpayer could not make this election with respect to initial 
     investments made pursuant to a binding agreement in existence 
     on January 1, 2008 even though the building is not placed-in-
     service until after December 31, 2008.
       The election shall be made in a time and manner prescribed 
     by the Secretary of the Treasury (or his delegate). The 
     election is irrevocable. In the case of a partnership the 
     election can only be made at the partnership level, not by 
     individual partners.
       Effective date.--The provision is effective on the date of 
     enactment.


                          Conference Agreement

       The conference agreement does not follow the Senate 
     amendment.
     9. Exclusion from gross income for unemployment compensation 
         benefits (sec. 1007 of the Senate amendment, sec. 1007 of 
         the conference agreement, and sec. 85 of the Code)


                              Present Law

       An individual must include in gross income any unemployment 
     compensation benefits received under the laws of the United 
     States or any State.


                               House Bill

       No provision.


                            Senate Amendment

       The Senate amendment provides that up to $2,400 of 
     unemployment compensation benefits received in 2009 are 
     excluded from gross income by the recipient.
       Effective date.--The provision is effective for taxable 
     years beginning after December 31, 2008.


                          Conference Agreement

       The conference agreement follows the Senate amendment.
     10. Deduction for interest on indebtedness for the purchase 
         of qualified motor vehicles (sec. 1008 of the Senate 
         amendment)


                              Present Law

       In the case of a taxpayer other than a corporation, no 
     deduction is allowed for personal interest paid or accrued 
     during the taxable year. Personal interest is all interest 
     other than 1) interest paid or accrued on indebtedness 
     properly allocable to a trade or business; 2) investment 
     interest; 3) interest which is taken into account in 
     computing income or loss from a passive activity of the 
     taxpayer; 4) qualified home mortgage interest; 5) certain 
     estate tax related interest; and 6) certain interest on 
     educational loans.


                               House Bill

       No provision.


                            Senate Amendment

       The Senate amendment provides an above-the-line deduction 
     for qualified motor vehicle interest. Qualified motor vehicle 
     interest means any interest paid or accrued during the 
     taxable year on any indebtedness incurred after November 12, 
     2008 and before January 1, 2010 to acquire a qualified motor 
     vehicle and secured by such vehicle. It also includes 
     interest on any indebtedness secured by such qualified motor 
     vehicle resulting from the refinancing of otherwise qualified 
     motor vehicle interest. The amount of qualified indebtedness 
     is limited to $49,500 ($24,750 in the case of a married 
     individual filing separately). The deduction is phased out 
     for taxpayers with modified adjusted gross income between 
     $125,000 and $135,000 ($250,000 and $260,000 in the case of a 
     joint return).
       If the indebtedness includes the amounts of any State or 
     local sales or excise taxes paid or accrued by the taxpayer 
     in connection with the acquisition of a qualified motor 
     vehicle for which a deduction is allowed under section 
     164(a)(6) (relating to the deduction of State and local sales 
     or excise taxes on qualified motor vehicles), the aggregate 
     amount of such indebtedness taken into account shall be 
     reduced, but not below zero, by the amount of any such taxes 
     for which such deduction is allowed.
       A qualified motor vehicle means a passenger automobile or 
     light truck acquired for use by the taxpayer and not for 
     resale after November 12, 2008 and before January 1, 2010, 
     the original use of which commences with the taxpayer and 
     which has a gross vehicle weight rating of not more than 
     8,500 pounds.
       Any person who is engaged in a trade or business and 
     receives from any individual $600 or more of qualified motor 
     vehicle interest for any calendar year is required to report 
     certain information as the Secretary may prescribe and 
     furnish information to such individual on or before January 
     31 of the year following the calendar year for which the 
     interest is received.
       Effective date.--The provision is effective for taxable 
     years beginning after December 31, 2008.


                          Conference Agreement

       The conference agreement does not follow the Senate 
     amendment.
     11. Deduction for State sales tax and excise tax on the 
         purchase of qualified motor vehicles (sec. 1009 of the 
         Senate amendment, sec. 1008 of the conference agreement, 
         and secs. 63 and 164 of the Code)


                              Present Law

       In general, a deduction from gross income is allowed for 
     certain taxes for the taxable year within which the taxes are 
     paid or accrued. These include State and local, and foreign, 
     real property taxes; State and local personal property taxes; 
     State, local, and foreign income, war profits, and excess 
     profit taxes; generation skipping transfer taxes; 
     environmental taxes imposed by section 59A; and taxes paid or 
     accrued within the taxable year in carrying on a trade or 
     business or an activity described in section 212 (relating to 
     the expenses for production of income). At the election of 
     the taxpayer for the taxable year, a taxpayer may deduct 
     State and local sales taxes in lieu of State and local income 
     taxes. No deduction is allowed for any general sales tax 
     imposed with respect to an item at a rate other than the 
     general rate of tax, except in the case of a lower rate of 
     tax applicable to items of food, clothing, medical supplies, 
     and motor vehicles. In the case of motor vehicles, if the 
     rate of tax exceeds the general rate, such excess shall be 
     disregarded and the general rate shall be treated as the rate 
     of tax.


                               House Bill

       No provision.


                            Senate Amendment

       The Senate amendment provides an above-the-line deduction 
     for qualified motor vehicle taxes. Qualified motor vehicle 
     taxes include any State or local sales or excise tax imposed 
     on the purchase of a qualified motor vehicle. A qualified 
     motor vehicle means a passenger automobile or light truck 
     acquired for use by the taxpayer and not for resale after 
     November 12, 2008 and before January 1, 2010, the original 
     use of which commences with the taxpayer and which has a 
     gross vehicle weight rating of not more than 8,500 pounds.
       The deduction is limited to sales tax of up to $49,500.
       The deduction is phased out for taxpayers with modified 
     adjusted gross income between $125,000 and $135,000 ($250,000 
     and $260,000 in the case of a joint return).
       Notwithstanding other provisions of present law, qualified 
     motor vehicle taxes are not treated as part of the cost of 
     acquired property or, in the case of a disposition, as a 
     reduction in the amount realized on the disposition.
       A taxpayer who makes an election to deduct State and local 
     sales taxes for the taxable year shall not be allowed the 
     above-the-line deduction for qualified motor vehicle taxes.
       If the indebtedness described in section 163(h)(5)(A) 
     includes the amounts of any State or local sales or excise 
     taxes paid or accrued by the taxpayer in connection with the 
     acquisition of a qualified motor vehicle, the aggregate 
     amount of such indebtedness taken into account shall be 
     reduced, but not below zero, by the amount of any such taxes 
     for which a deduction is allowed.
       Effective date.--The provision is effective for taxable 
     years beginning after December 31, 2008.


                          Conference Agreement

       The conference agreement does not include the House bill or 
     the Senate amendment. The conference agreement provides a 
     deduction for qualified motor vehicle taxes. It expands the 
     definition of taxes allowed as a deduction to include 
     qualified motor vehicle taxes paid or accrued within the 
     taxable year. A taxpayer who itemizes and makes an election 
     to deduct State and local sales taxes for qualified motor 
     vehicles for the taxable year shall not be allowed the 
     increased standard deduction for qualified motor vehicle 
     taxes.
       Qualified motor vehicle taxes include any State or local 
     sales or excise tax imposed on the purchase of a qualified 
     motor vehicle. A qualified motor vehicle means a passenger 
     automobile, light truck, or motorcycle which has a gross 
     vehicle weight rating of not more than 8,500 pounds, or a 
     motor home acquired for use by the taxpayer after the date of 
     enactment and before January 1, 2010, the original use of 
     which commences with the taxpayer.
       The deduction is limited to the tax on up to $49,500 of the 
     purchase price of a qualified motor vehicle. The deduction is 
     phased out for taxpayers with modified adjusted gross income 
     between $125,000 and $135,000 ($250,000 and $260,000 in the 
     case of a joint return).
       Effective date.--The provision is effective for purchases 
     on or after the date of enactment and before January 1, 2010.
     12. Extend alternative minimum tax relief for individuals 
         (secs. 1011 and 1012 of the Senate amendment, secs. 1011 
         and 1012 of the conference agreement, and secs. 26 and 55 
         of the Code)


                              Present Law

       Present law imposes an alternative minimum tax (``AMT'') on 
     individuals. The AMT is the amount by which the tentative 
     minimum tax exceeds the regular income tax.

[[Page 4033]]

     An individual's tentative minimum tax is the sum of (1) 26 
     percent of so much of the taxable excess as does not exceed 
     $175,000 ($87,500 in the case of a married individual filing 
     a separate return) and (2) 28 percent of the remaining 
     taxable excess. The taxable excess is so much of the 
     alternative minimum taxable income (``AMTI'') as exceeds the 
     exemption amount. The maximum tax rates on net capital gain 
     and dividends used in computing the regular tax are used in 
     computing the tentative minimum tax. AMTI is the individual's 
     taxable income adjusted to take account of specified 
     preferences and adjustments.
       The exemption amounts are: (1) $69,950 for taxable years 
     beginning in 2008 and $45,000 in taxable years beginning 
     after 2008 in the case of married individuals filing a joint 
     return and surviving spouses; (2) $46,200 for taxable years 
     beginning in 2008 and $33,750 in taxable years beginning 
     after 2008 in the case of other unmarried individuals; (3) 
     $34,975 for taxable years beginning in 2008 and $22,500 in 
     taxable years beginning after 2008 in the case of married 
     individuals filing separate returns; and (4) $22,500 in the 
     case of an estate or trust. The exemption amount is phased 
     out by an amount equal to 25 percent of the amount by which 
     the individual's AMTI exceeds (1) $150,000 in the case of 
     married individuals filing a joint return and surviving 
     spouses, (2) $112,500 in the case of other unmarried 
     individuals, and (3) $75,000 in the case of married 
     individuals filing separate returns or an estate or a trust. 
     These amounts are not indexed for inflation.
       Present law provides for certain nonrefundable personal tax 
     credits (i.e., the dependent care credit, the credit for the 
     elderly and disabled, the adoption credit, the child credit, 
     the credit for interest on certain home mortgages, the Hope 
     Scholarship and Lifetime Learning credits, the credit for 
     savers, the credit for certain nonbusiness energy property, 
     the credit for residential energy efficient property, the 
     credit for plug-in electric drive motor vehicles; and the 
     D.C. first-time homebuyer credit).
       For taxable years beginning before 2009, the nonrefundable 
     personal credits are allowed to the extent of the full amount 
     of the individual's regular tax and alternative minimum tax.
       For taxable years beginning after 2008, the nonrefundable 
     personal credits (other than the adoption credit, the child 
     credit, the credit for savers, the credit for residential 
     energy efficient property, and the credit for plug-in 
     electric drive motor vehicles) are allowed only to the extent 
     that the individual's regular income tax liability exceeds 
     the individual's tentative minimum tax, determined without 
     regard to the minimum tax foreign tax credit. The adoption 
     credit, the child credit, the credit for savers, the credit 
     for residential energy efficient property, and the credit for 
     plug-in electric drive motor vehicles are allowed to the full 
     extent of the individual's regular tax and alternative 
     minimum tax.\18\
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     \18\The rule applicable to the adoption credit and child 
     credit is subject to the EGTRRA sunset.
---------------------------------------------------------------------------


                               House Bill

       No provision.


                            Senate Amendment

       The Senate amendment provides that the individual AMT 
     exemption amount for taxable years beginning in 2009 is 
     $70,950, in the case of married individuals filing a joint 
     return and surviving spouses; (2) $46,700 in the case of 
     other unmarried individuals; and (3) $35,475 in the case of 
     married individuals filing separate returns.
       For taxable years beginning in 2009, the provision allows 
     an individual to offset the entire regular tax liability and 
     alternative minimum tax liability by the nonrefundable 
     personal credits.
       Effective date.--The provision is effective for taxable 
     years beginning in 2009.


                          Conference Agreement

       The conference agreement follows the Senate amendment.

                     B. Tax Incentives for Business

     1. Special allowance for certain property acquired during 
         2009 and extension of election to accelerate AMT and 
         research credits in lieu of bonus depreciation (sec. 1401 
         of the House bill, sec. 1201 of the Senate amendment, 
         sec. 1201 of the conference agreement, and sec. 168(k) of 
         the Code)


                              Present Law

       An additional first-year depreciation deduction is allowed 
     equal to 50 percent of the adjusted basis of qualified 
     property placed in service during 2008 (and 2009 for certain 
     longer-lived and transportation property).\19\ The additional 
     first-year depreciation deduction is allowed for both regular 
     tax and alteative minimum tax purposes for the taxable year 
     in which the property is placed in service.\20\ The basis of 
     the property and the depreciation allowances in the year of 
     purchase and later years are appropriately adjusted to 
     reflect the additional first-year depreciation deduction. In 
     addition, there are no adjustments to the allowable amount of 
     depreciation for purposes of computing a taxpayer's 
     alternative minimum taxable income with respect to property 
     to which the provision applies. The amount of the additional 
     first-year depreciation deduction is not affected by a short 
     taxable year. The taxpayer may elect out of additional first-
     year depreciation for any class of property for any taxable 
     year.
---------------------------------------------------------------------------
     \19\Sec. 168(k). The additional first-year depreciation 
     deduction is subject to the general rules regarding whether 
     an item is deductible under section 162 or instead is subject 
     to capitalization under section 263 or section 263A.
     \20\However, the additional first-year depreciation deduction 
     is not allowed for purposes of computing earnings and 
     profits.
---------------------------------------------------------------------------
       The interaction of the additional first-year depreciation 
     allowance with the otherwise applicable depreciation 
     allowance may be illustrated as follows. Assume that in 2008, 
     a taxpayer purchases new depreciable property and places it 
     in service.\21\ The property's cost is $1,000, and it is 
     five-year property subject to the half-year convention. The 
     amount of additional first-year depreciation allowed is $500. 
     The remaining $500 of the cost of the property is deductible 
     under the rules applicable to 5-year property. Thus, 20 
     percent, or $100, is also allowed as a depreciation deduction 
     in 2008. The total depreciation deduction with respect to the 
     property for 2008 is $600. The remaining $400 cost of the 
     property is recovered under otherwise applicable rules for 
     computing depreciation.
---------------------------------------------------------------------------
     \21\Assume that the cost of the property is not eligible for 
     expensing under section 179.
---------------------------------------------------------------------------
       In order for property to qualify for the additional first-
     year depreciation deduction it must meet all of the following 
     requirements. First, the property must be (1) property to 
     which MACRS applies with an applicable recovery period of 20 
     years or less, (2) water utility property (as defined in 
     section 168(e)(5)), (3) computer software other than computer 
     software covered by section 197, or (4) qualified leasehold 
     improvement property (as defined in section 168(k)(3)).\22\
---------------------------------------------------------------------------
     \22\A special rule precludes the additional first-year 
     depreciation deduction for any property that is required to 
     be depreciated under the alternative depreciation system of 
     MACRS.
---------------------------------------------------------------------------
       Second, the original use\23\ of the property must commence 
     with the taxpayer after December 31, 2007.\24\ Third, the 
     taxpayer must purchase the property within the applicable 
     time period. Finally, the property must be placed in service 
     after December 31, 2007, and before January 1, 2009. An 
     extension of the placed in service date of one year (i.e., to 
     January 1, 2010) is provided for certain property with a 
     recovery period of ten years or longer and certain 
     transportation property.\25\ Transportation property is 
     defined as tangible personal property used in the trade or 
     business of transporting persons or property.
---------------------------------------------------------------------------
     \23\The term ``original use'' means the first use to which 
     the property is put, whether or not such use corresponds to 
     the use of such property by the taxpayer.
     If in the normal course of its business a taxpayer sells 
     fractional interests in property to unrelated third parties, 
     then the original use of such property begins with the first 
     user of each fractional interest (i,e., each fractional owner 
     is considered the original user of its proportionate share of 
     the property).
     \24\A special rule applies in the case of certain leased 
     property. In the case of any property that is originally 
     placed in service by a person and that is sold to the 
     taxpayer and leased back to such person by the taxpayer 
     within three months after the date that the property was 
     placed in service, the property would be treated as 
     originally placed in service by the taxpayer not earlier than 
     the date that the property is used under the leaseback.
     If property is originally placed in service by a lessor 
     (including by operation of section 168(k)(2)(D)(i)), such 
     property is sold within three months after the date that the 
     property was placed in service, and the user of such property 
     does not change, then the property is treated as originally 
     placed in service by the taxpayer not earlier than the date 
     of such sale.
     \25\In order for property to qualify for the extended placed 
     in service date, the property is required to have an 
     estimated production period exceeding one year and a cost 
     exceeding $1 million.
---------------------------------------------------------------------------
       The applicable time period for acquired property is (1) 
     after December 31, 2007, and before January 1, 2009, but only 
     if no binding written contract for the acquisition is in 
     effect before January 1, 2008, or (2) pursuant to a binding 
     written contract which was entered into after December 31, 
     2007, and before January 1, 2009.\26\ With respect to 
     property that is manufactured, constructed, or produced by 
     the taxpayer for use by the taxpayer, the taxpayer must begin 
     the manufacture, construction, or production of the property 
     after December 31, 2007, and before January 1, 2009. Property 
     that is manufactured, constructed, or produced for the 
     taxpayer by another person under a contract that is entered 
     into prior to the manufacture, construction, or production of 
     the property is considered to be manufactured, constructed, 
     or produced by the taxpayer. For property eligible for the 
     extended placed in service date, a special rule limits the 
     amount of costs eligible for the additional first-year 
     depreciation. With respect to such property, only the portion 
     of the basis that is properly attributable to the costs 
     incurred before January 1, 2009 (``progress expenditures'') 
     is eligible for the additional first-year depreciation.\27\
---------------------------------------------------------------------------
     \26\Property does not fail to qualify for the additional 
     first-year depreciation merely because a binding written 
     contract to acquire a component of the property is in effect 
     prior to January 1, 2008.
     \27\For purposes of determining the amount of eligible 
     progress expenditures, it is intended that rules similar to 
     sec. 46(d)(3) as in effect prior to the Tax Reform Act of 
     1986 shall apply.
---------------------------------------------------------------------------
       Property does not qualify for the additional first-year 
     depreciation deduction

[[Page 4034]]

     when the user of such property (or a related party) would not 
     have been eligible for the additional first-year depreciation 
     deduction if the user (or a related party) were treated as 
     the owner. For example, if a taxpayer sells to a related 
     party property that was under construction prior to January 
     1, 2008, the property does not qualify for the additional 
     first-year depreciation deduction. Similarly, if a taxpayer 
     sells to a related party property that was subject to a 
     binding written contract prior to January 1, 2008, the 
     property does not qualify for the additional first-year 
     depreciation deduction. As a further example, if a taxpayer 
     (the lessee) sells property in a sale-leaseback arrangement, 
     and the property otherwise would not have qualified for the 
     additional first-year depreciation deduction if it were owned 
     by the taxpayer-lessee, then the lessor is not entitled to 
     the additional first-year depreciation deduction.
       The limitation on the amount of depreciation deductions 
     allowed with respect to certain passenger automobiles (sec. 
     280F) is increased in the first year by $8,000 for 
     automobiles that qualify (and do not elect out of the 
     increased first year deduction). The $8,000 increase is not 
     indexed for inflation.
       Corporations otherwise eligible for additional first year 
     depreciation under section 168(k) may elect to claim 
     additional research or minimum tax credits in lieu of 
     claiming depreciation under section 168(k) for ``eligible 
     qualified property'' placed in service after March 31, 2008 
     and before December 31, 2008.\28\ A corporation making the 
     election forgoes the depreciation deductions allowable under 
     section 168(k) and instead increases the limitation under 
     section 38(c) on the use of research credits or section 53(c) 
     on the use of minimum tax credits.\29\ The increases in the 
     allowable credits are treated as refundable for purposes of 
     this provision. The depreciation for qualified property is 
     calculated for both regular tax and AMT purposes using the 
     straight-line method in place of the method that would 
     otherwise be used absent the election under this provision.
---------------------------------------------------------------------------
     \28\Sec. 168(k)(4). In the case of an electing corporation 
     that is a partner in a partnership, the corporate partner's 
     distributive share of partnership items is determined as if 
     section 168(k) does not apply to any eligible qualified 
     property and the straight line method is used to calculate 
     depreciation of such property.
     \29\Special rules apply to an applicable partnership.
---------------------------------------------------------------------------
       The research credit or minimum tax credit limitation is 
     increased by the bonus depreciation amount, which is equal to 
     20 percent of bonus depreciation\30\ for certain eligible 
     qualified property that could be claimed absent an election 
     under this provision. Generally, eligible qualified property 
     included in the calculation is bonus depreciation property 
     that meets the following requirements: (1) the original use 
     of the property must commence with the taxpayer after March 
     31, 2008; (2) the taxpayer must purchase the property either 
     (a) after March 31, 2008, and before January 1, 2009, but 
     only if no binding written contract for the acquisition is in 
     effect before April 1, 2008,\31\ or (b) pursuant to binding 
     written contract which was entered into after March 31, 2008, 
     and before January 1, 2009;\32\ and (3) the property must be 
     placed in service after March 31, 2008, and before January 1, 
     2009 (January 1, 2010 for certain longer-lived and 
     transportation property).
---------------------------------------------------------------------------
     \30\For this purpose, bonus depreciation is the difference 
     between (i) the aggregate amount of depreciation for all 
     eligible qualified property determined if section 168(k)(1) 
     applied using the most accelerated depreciation method 
     (determined without regard to this provision), and shortest 
     life allowable for each property, and (ii) the amount of 
     depreciation that would be determined if section 168(k)(1) 
     did pot ply using the same method and life for each property.
     \31\In the case of passenger aircraft, the written binding 
     contract limitation does not apply.
     \32\Special rules apply to property manufactured, 
     constructed, or produced by the taxpayer for use by the 
     taxpayer.
---------------------------------------------------------------------------
       The bonus depreciation amount is limited to the lesser of: 
     (1) $30 million, or (2) six percent of the sum of research 
     credit carryforwards from taxable years beginning before 
     January 1, 2006 and minimum tax credits allocable to the 
     adjusted minimum tax imposed for taxable years beginning 
     before January 1, 2006. All corporations treated as a single 
     employer under section 52(a) are treated as one taxpayer for 
     purposes of the limitation, as well as for electing the 
     application of this provision.


                               House Bill

       The provision extends the additional first-year 
     depreciation deduction for one year generally through 2009 
     (through 2010 for certain longer-lived and transportation 
     property).\33\
---------------------------------------------------------------------------
     \33\The provision does not modify the property eligible for 
     the election to accelerate AMT and research credits in lieu 
     of bonus depreciation under section 168(k)(4). However, the 
     provision includes a technical amendment to section 
     168(k)(4)(D) providing that no written binding contract for 
     the acquisition of eligible qualified property may be in 
     effect before April 1, 2008 (effective for taxable years 
     ending after March 31, 2008).
---------------------------------------------------------------------------
       Effective date.--The provision is effective for property 
     placed in service after December 31, 2008.


                            Senate Amendment

       The provision extends the additional first-year 
     depreciation deduction for one year, generally through 2009 
     (through 2010 for certain longer-lived and transportation 
     property).
       The provision generally permits corporations to increase 
     the research credit or minimum tax credit limitation by the 
     bonus depreciation amount with respect to certain property 
     placed in service in 2009 (2010 in the case of certain 
     longer-lived and transportation property). The provision 
     applies with respect to extension property, which is defined 
     as property that is eligible qualified property solely 
     because it meets the requirements under the extension of the 
     special allowance for certain property acquired during 2009.
       Under the provision, a taxpayer that has made an election 
     to increase the research credit or minimum tax credit 
     limitation for eligible qualified property for its first 
     taxable year ending after March 31, 2008, may choose not to 
     make this election for extension property. Further, the 
     provision allows a taxpayer that has not made an election for 
     eligible qualified property for its first taxable year ending 
     after March 31, 2008, to make the election for extension 
     property for its first taxable year ending after December 31, 
     2008, and for each subsequent year. In the case of a taxpayer 
     electing to increase the research or minimum tax credit for 
     both eligible qualified property and extension property, a 
     separate bonus depreciation amount, maximum amount, and 
     maximum increase amount is computed and applied to each group 
     of property.\34\
---------------------------------------------------------------------------
     \34\In computing the maximum amount, the maximum increase 
     amount for extension property is reduced by bonus 
     depreciation amounts for preceding taxable years only with 
     respect to extension property.
---------------------------------------------------------------------------
       Effective date.--The extension of the additional first-year 
     depreciation deduction is generally effective for property 
     placed in service after December 31, 2008.
       The extension of the election to accelerate AMT and 
     research credits in lieu of bonus depreciation is effective 
     for taxable years ending after December 31, 2008.


                          Conference Agreement

       The conference agreement follows the Senate amendment.
     2. Temporary increase in limitations on expensing of certain 
         depreciable business assets (sec. 1402 of the House bill, 
         sec. 1202 of the Senate amendment, sec. 1202 of the 
         conference agreement, and sec. 179 of the Code)


                              Present Law

       In lieu of depreciation, a taxpayer with a sufficiently 
     small amount of annual investment may elect to deduct (or 
     ``expense'') such costs under section 179. Present law 
     provides that the maximum amount a taxpayer may expense for 
     taxable years beginnin in 2008 is $250,000 of the cost of 
     qualifying property placed in service for the taxable 
     year.\35\ For taxable years beginning in 2009 and 2010, the 
     limitation is $125,000. In general, qualifying property is 
     defined as depreciable tangible personal property that is 
     purchased for use in the active conduct of a trade or 
     business. Off-the-shelf computer software placed in service 
     in taxable years beginning before 2011 is treated as 
     qualifying property. For taxable years beginning in 2008, the 
     $250,000 amount is reduced (but not below zero) by the amount 
     by which the cost of qualifying property placed in service 
     during the taxable year exceeds $800,000. For taxable years 
     beginning in 2009 and 2010, the $125,000 amount is reduced 
     (but not below zero) by the amount by which the cost of 
     qualifying property placed in service during the taxable year 
     exceeds $500,000. The $125,000 and $500,000 amounts are 
     indexed for inflation in taxable years beginning in 2009 and 
     2010.
---------------------------------------------------------------------------
     \35\Additional section 179 incentives are provided with 
     respect to qualified property meeting applicable requirements 
     that is used by a business in an empowerment zone (sec. 
     1397A) or a renewal community (sec. 1400J), qualified section 
     179 Gulf Opportunity Zone property (sec. 1400N(e)), qualified 
     Recovery Assistance property placed in service in the Kansas 
     disaster area (Pub. L. No. 110-234, sec. 15345 (2008)), and 
     qualified disaster assistance property (sec. 179(e)).
---------------------------------------------------------------------------
       The amount eligible to be expensed for a taxable year may 
     not exceed the taxable income for a taxable year that is 
     derived from the active conduct of a trade or business 
     (determined without regard to this provision). Any amount 
     that is not allowed as a deduction because of the taxable 
     income limitation may be carried forward to succeeding 
     taxable years (subject to similar limitations). No general 
     business credit under section 38 is allowed with respect to 
     any amount for which a deduction is allowed under section 
     179. An expensing election is made under rules prescribed by 
     the Secretary.\36\
---------------------------------------------------------------------------
     \36\Sec. 179(c)(1). Under Treas. Reg. sec. 1.179-5, 
     applicable to property placed in service in taxable years 
     beginning after 2002 and before 2008, a taxpayer is permitted 
     to make or revoke an election under section 179 without the 
     consent of the Commissioner on an amended Federal tax return 
     for that taxable year. This amended return must be filed 
     within the time prescribed by law for filing an amended 
     return for the taxable year. T.D. 9209, July 12, 2005.
---------------------------------------------------------------------------
       For taxable years beginning in 2011 and thereafter (or 
     before 2003), the following rules apply. A taxpayer with a 
     sufficiently small amount of annual investment may

[[Page 4035]]

     elect to deduct up to $25,000 of the cost of qualifying 
     property placed in service for the taxable year. The $25,000 
     amount is reduced (but not below zero) by the amount by which 
     the cost of qualifying property placed in service during the 
     taxable year exceeds $200,000. The $25,000 and $200,000 
     amounts are not indexed for inflation. In general, qualifying 
     property is defined as depreciable tangible personal property 
     that is purchased for use in the active conduct of a trade or 
     business (not including off-the-shelf computer software). An 
     expensing election may be revoked only with consent of the 
     Commissioner.\37\
---------------------------------------------------------------------------
     \37\Sec. 179(c)(2).
---------------------------------------------------------------------------


                               House Bill

       The provision extends the $250,000 and $800,000 amounts to 
     taxable years beginning in 2009.
       Effective date.--The provision is effective for taxable 
     years beginning after December 31, 2008.


                            Senate Amendment

       The Senate amendment is the same as the House bill.


                          Conference Agreement

       The conference agreement follows the House bill and the 
     Senate amendment.
     3. Five-year carryback of operating losses (secs. 1411 and 
         1412 of the House bill, secs. 1211 and 1212 of the Senate 
         amendment, sec. 1211 of the conference agreement, and 
         sec. 172 of the Code)


                              Present Law

       Under present law, a net operating loss (``NOL'') generally 
     means the amount by which a taxpayer's business deductions 
     exceed its gross income. In general, an NOL may be carried 
     back two years and carried over 20 years to offset taxable 
     income in such years.\38\ NOLs offset taxable income in the 
     order of the taxable years to which the NOL may be 
     carried.\39\
---------------------------------------------------------------------------
     \38\Sec. 172(b)(1)(A).
     \39\Sec. 172(b)(2).
---------------------------------------------------------------------------
       The alternative minimum tax rules provide that a taxpayer's 
     NOL deduction cannot reduce the taxpayer's alternative 
     minimum taxable income (``AMTI'') by more than 90 percent of 
     the AMTI.
       Different rules apply with respect to NOLs arising in 
     certain circumstances. A three-year carryback applies with 
     respect to NOLs (1) arising from casualty or theft losses of 
     individuals, or (2) attributable to Presidentially declared 
     disasters for taxpayers engaged in a farming business or a 
     small business. A five-year carryback applies to NOLs (1) 
     arising from a farming loss (regardless of whether the loss 
     was incurred in a Presidentially declared disaster area), (2) 
     certain amounts related to Hurricane Katrina, Gulf 
     Opportunity Zone, and Midwestern Disaster Area, or (3) 
     qualified disaster losses.\40\ Special rules also apply to 
     real estate investment trusts (no carryback), specified 
     liability losses (10-year carryback), and excess interest 
     losses (no carryback to any year preceding a corporate equity 
     reduction transaction). Additionally, a special rule applies 
     to certain electric utility companies.
---------------------------------------------------------------------------
     \40\Sec. 172(b)(1)(J).
---------------------------------------------------------------------------
       In the case of a life insurance company, present law allows 
     a deduction for the operations loss carryovers and carrybacks 
     to the taxable year, in lieu of the deduction for net 
     operation losses allowed to other corporations.\41\ A life 
     insurance company is permitted to treat a loss from 
     operations (as defined under section 810(c)) for any taxable 
     year as an operations loss carryback to each of the three 
     taxable years preceding the loss year and an operations loss 
     carryover to each of the 15 taxable years following the loss 
     year.\42\ Special rules apply to new life insurance 
     companies.
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     \41\Secs. 810, 805(a)(5).
     \42\Sec. 810(b)(1).
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                               House Bill

       The House bill provides an election\43\ to increase the 
     present-law carryback period for an applicable 2008 or 2009 
     NOL from two years to any whole number of years elected by 
     the taxpayer which is more than two and less than six. An 
     applicable NOL is the taxpayer's NOL for any taxable year 
     ending in 2008 or 2009, or if elected by the taxpayer, the 
     NOL for any taxable year beginning in 2008 or 2009. If an 
     election is made to increase the carryback period, the 
     applicable NOL is permanently reduced by 10 percent.
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     \43\For all elections under this provision, the common parent 
     of a group of corporations filing a consolidated return makes 
     the election, which is binding on all such corporations.
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       These provisions may be illustrated by the following 
     example. Taxpayer incurs a $100 NOL for its taxable year 
     ended January 31, 2008 and elects to carryback the NOL five 
     years to its taxable year ended January 31, 2003. Under the 
     provision, Taxpayer must first permanently reduce the NOL by 
     10 percent, or $10, and then may carryback the $90 NOL to its 
     taxable year ended January 31, 2003.
       The provision also suspends the 90-percent limitation on 
     the use of any alternative tax NOL deduction attributable to 
     carrybacks of losses from taxable years ending during 2008 or 
     2009, and carryovers of losses to such taxable years (this 
     rule applies to taxable years beginning in 2008 or 2009 if an 
     election is in place to use such years as applicable NOLs).
       For life insurance companies, the provision provides an 
     election to increase the present-law carryback period for an 
     applicable loss from operations from three years to four or 
     five years. An applicable loss from operations is the 
     taxpayer's loss from operations for any taxable year ending 
     in 2008 or 2009, or if elected by the taxpayer, the loss from 
     operations for any taxable year beginning in 2008 or 2009. If 
     an election is made to increase the carryback period, the 
     applicable loss from operations is permanently reduced by 10 
     percent.
       The provision does not apply to: (1) any taxpayer if (a) 
     the Federal Government acquires, at any time,\44\ an equity 
     interest in the taxpayer pursuant to the Emergency Economic 
     Stabilization Act of 2008, or (b) the Federal Government 
     acquires, at any time, any warrant (or other right) to 
     acquire any equity interest with respect to the taxpayer 
     pursuant to such Act; (2) the Federal National Mortgage 
     Association and the Federal Home Loan Mortgage Corporation; 
     or (3) any taxpayer that in 2008 or 2009\45\ is a member of 
     the same affiliated group (as defined in section 1504 without 
     regard to subsection (b) thereof) as a taxpayer to which the 
     provision does not otherwise apply.
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     \44\For example, if the Federal government acquires an equity 
     interest in the taxpayer during 2010, or in later years, the 
     taxpayer is not entitled to the extended carryback rules 
     under this provision. If the carryback has previously been 
     claimed, amended filings may be necessary to reflect this 
     disallowance.
     \45\For example, a taxpayer with an NOL in 2008 that in 2010 
     joins an affiliated group with a member in which the Federal 
     Government has an equity interest pursuant to the Emergency 
     Economic Stabilization Act of 2008 may not utilize the 
     extended carryback rules under this provision with regard to 
     the 2008 NOL. The taxpayer is required to amend prior filings 
     to reflect the permitted carryback period.
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       Effective date.--The provision is generally effective for 
     net operating losses arising in taxable years ending after 
     December 31, 2007. The modification to the alternative tax 
     NOL deduction applies to taxable years ending after 1997.\46\ 
     The modification with respect to operating loss deductions of 
     life insurance companies applies to losses from operations 
     arising in taxable years ending after December 31, 2007.
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     \46\NOL deductions from as early as taxable years ending 
     after 1997 may be carried forward to 2008 and utilize the 
     provision suspending the 90 percent limitation on alternative 
     tax NOL deductions.
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       For an NOL or loss from operations for a taxable year 
     ending before the enactment of the provision, the provision 
     includes the following transition rules: (1) any election to 
     waive the carryback period under either sections 172(b)(3) or 
     810(b)(3) with respect to such loss may be revoked before the 
     applicable date; (2) any election to increase the carryback 
     period under this provision is treated as timely made if made 
     before the applicable date; and (3) any application for a 
     tentative carryback adjustment under section 6411(a) with 
     respect to such loss is treated as timely filed if filed 
     before the applicable date. For purposes of the transition 
     rules, the applicable date is the date which is 60 days after 
     the date of the enactment of the provision.


                            Senate Amendment

       The Senate amendment is generally the same as the House 
     bill, except that the Senate amendment does not include the 
     permanent reduction of the NOL for taxpayers electing to 
     increase the carryback period.
       Effective date.--The effective date follows the House bill.


                          Conference Agreement

       The conference agreement provides an eligible small 
     business with an election to increase the present-law 
     carryback period for an applicable 2008 NOL from two years to 
     any whole number of years elected by the taxpayer that is 
     more than two and less than six.\47\ An eligible small 
     business is a taxpayer meeting a $15,000,000 gross receipts 
     test.\48\ An applicable NOL is the taxpayer's NOL for any 
     taxable year ending in 2008, or if elected by the taxpayer, 
     the NOL for any taxable year beginning in 2008. However, any 
     election under this provision may be made only with respect 
     to one taxable year.
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     \47\For all elections under this provision, the common parent 
     of a group of corporations filing a consolidated return makes 
     the election, which is binding on all such corporations.
     \48\For this purpose, the gross receipt test of sec. 448(c) 
     is applied by substituting $15,000,000 for, $5,000,000 each 
     place it appears.
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       Effective date.--The conference agreement provision is 
     effective for net operating losses arising in taxable yea 
     ending after December 31, 2007.
       For an NOL for a taxable year ending before the enactment 
     of the provision, the provision includes the following 
     transition rules: (1) any election to waive the carryback 
     period under either section 172(b)(3) with respect to such 
     loss may be revoked before the applicable date; (2) any 
     election to increase the carryback period under this 
     provision is treated as timely made if made before the 
     applicable date; and (3) any application for a tentative 
     carryback adjustment under section 6411(a) with respect to 
     such loss is treated as timely filed if filed before the 
     applicable date. For purposes of the transition rules, the 
     applicable date is the date which is

[[Page 4036]]

     60 days after the date of the enactment of the provision.
     4. Estimated tax payments (sec. 1212 of the conference 
         agreement and sec. 6654 of the Code)


                              Present Law

       Under present law, the income tax system is designed to 
     ensure that taxpayers pay taxes throughout the year based on 
     their income and deductions. To the extent that tax is not 
     collected through withholding, taxpayers are required to make 
     quarterly estimated payments of tax, the amount of which is 
     determined by reference to the required annual payment. The 
     required annual payment is the lesser of 90 percent of the 
     tax shown on the return or 100 percent of the tax shown on 
     the return for the prior taxable year (110 percent if the 
     adjusted gross income for the preceding year exceeded 
     $150,000). An underpayment results if the required payment 
     exceeds the amount (if any) of the installment paid on or 
     before the due date of the installment. The period of the 
     underpayment runs from the due date of the installment to the 
     earlier of (1) the 15th day of the fourth month following the 
     close of the taxable year or (2) the date on which each 
     portion of the underpayment is made. If a taxpayer fails to 
     pay the required estimated tax payments under the rules, a 
     penalty is imposed in an amount determined by applying the 
     underpayment interest rate to the amount of the underpayment 
     for the period of the underpayment. The penalty for failure 
     to pay estimated tax is the equivalent of interest, which is 
     based on the time value of money.
       Taxpayers are not liable for a penalty for the failure to 
     pay estimated tax in certain circumstances. The statute 
     provides exceptions for U.S. persons who did not have a tax 
     liability the preceding year, if the tax shown on the return 
     for the taxable year (or, if no return is filed, the tax), 
     reduced by withholding, is less than $1,000, or the taxpayer 
     is a recently retired or disabled person who satisfies the 
     reasonable cause exception.


                               House Bill

       No provision.


                            Senate Amendment

       No provision.


                          Conference Agreement

       The conference agreement provides that the required annual 
     estimated tax payments of a qualified individual for taxable 
     years beginning in 2009 is not greater than 90 percent of the 
     tax liability shown on the tax return for the preceding 
     taxable year. A qualified individual means any individual if 
     the adjusted gross income shown on the tax return for the 
     preceding taxable year is less than $500,000 ($250,000 if 
     married filing separately) and the individual certifies that 
     at least 50 percent of the gross income shown on the return 
     for the preceding taxable year was income from a small trade 
     or business. For purposes of this provision, a small trade or 
     business means any trade or business that employed no more 
     than 500 persons, on average, during the calendar year ending 
     in or with the preceding taxable year.
       Effective date.--The proposal is effective on the date of 
     enactment.
     5. Modification of work opportunity tax credit (sec. 1421 of 
         the House bill, sec. 1221 of the Senate amendment, sec. 
         1221 of the conference agreement, and sec. 51 of the 
         Code)


                              Present Law

     In general
       The work opportunity tax credit is available on an elective 
     basis for employers hiring individuals from one or more of 
     nine targeted groups. The amount of the credit available to 
     an employer is determined by the amount of qualified wages 
     paid by the employer. Generally, qualified wages consist of 
     wages attributable to service rendered by a member of a 
     targeted group during the one-year period beginning with the 
     day the individual begins work for the employer (two years in 
     the case of an individual in the long-term family assistance 
     recipient category).
     Targeted groups eligible for the credit
       Generally an employer is eligible for the credit only for 
     qualified wages paid to members of a targeted group.
       (1) Families receiving TANF
       An eligible recipient is an individual certified by a 
     designated local employment agency (e.g., a State employment 
     agency) as being a member of a family eligible to receive 
     benefits under the Temporary Assistance for Needy Families 
     Program (``TANF'') for a period of at least nine months part 
     of which is during the 18-month period ending on the hiring 
     date. For these purposes, members of the family are defined 
     to include only those individuals taken into account for 
     purposes of determining eligibility for the TANF.
       (2) Qualified veteran
       There are two subcategories of qualified veterans related 
     to eligibility for Food stamps and compensation for a 
     service-connected disability.
       Food stamps
       A qualified veteran is a veteran who is certified by the 
     designated local agency as a member of a family receiving 
     assistance under a food stamp program under the Food Stamp 
     Act of 1977.
       Entitled to compensation for a service-connection 
           disability
       A qualified veteran also includes an individual who is 
     certified as entitled to compensation for a service-connected 
     disability and: (1) having a hiring date which is not more 
     than one year after having been discharged or released from 
     active duty in the Armed Forces of the United States; or (2) 
     having been unemployed for six months or more (whether or not 
     consecutive) during the one-year period ending on the date of 
     hiring.
       Definitions
       For these purposes, being entitled to compensation for a 
     service-connected disability is defined with reference to 
     section 101 of Title 38, U.S. Code, which means having a 
     disability rating of 10 percent or higher for service 
     connected injuries.
       For these purposes, a veteran is an individual who has 
     served on active duty (other than for training) in the Armed 
     Forces for more than 180 days or who has been discharged or 
     released from active duty in the Armed Forces for a service-
     connected disability. However, any individual who has served 
     for a period of more than 90 days during which the individual 
     was on active duty (other than for training) is not a 
     qualified veteran if any of this active duty occurred during 
     the 60-day period ending on the date the individual was hired 
     by the employer. This latter rule is intended to prevent 
     employers who hire current members of the armed services (or 
     those departed from service within the last 60 days) from 
     receiving the credit.
       (3) Qualified ex-felon
       A qualified ex-felon is an individual certified as: (1) 
     having been convicted of a felony under any State or Federal 
     law; and (2) having a hiring date within one year of release 
     from prison or the date of conviction.
       (4) Designated community residents
       A designated community resident is an individual certified 
     as being at least age 18 but not yet age 40 on the hiring 
     date and as having a principal place of abode within an 
     empowerment zone, enterprise community, renewal community or 
     a rural renewal community. For these purposes, a rural 
     renewal county is a county outside a metropolitan statistical 
     area (as defined by the Office of Management and Budget) 
     which had a net population loss during the five-year periods 
     1990-1994 and 1995-1999. Qualified wages do not include wages 
     paid or incurred for services performed after the individual 
     moves outside an empowerment zone, enterprise community, 
     renewal community or a rural renewal community.
       (5) Vocational rehabilitation referral
       A vocational rehabilitation referral is an individual who 
     is certified by a designated local agency as an individual 
     who has a physical or mental disability that constitutes a 
     substantial handicap to employment and who has been referred 
     to the employer while receiving, or after completing: (a) 
     vocational rehabilitation services under an individualized, 
     written plan for employment under a State plan approved under 
     the Rehabilitation Act of 1973; (b) under a rehabilitation 
     plan for veterans carried out under Chapter 31 of Title 38, 
     U.S. Code; or (c) an individual work plan developed and 
     implemented by an employment network pursuant to subsection 
     (g) of section 1148 of the Social Security Act. Certification 
     will be provided by the designated local employment agency 
     upon assurances from the vocational rehabilitation agency 
     that the employee has met the above conditions.
       (6) Qualified summer youth employee
       A qualified summer youth employee is an individual: (a) who 
     performs services during any 90-day period between May 1 and 
     September 15; (b) who is certified by the designated local 
     agency as being 16 or 17 years of age on the hiring date; (c) 
     who has not been an employee of that employer before; and (d) 
     who is certified by the designated local agency as having a 
     principal place of abode within an empowerment zone, 
     enterprise community, or renewal community (as defined under 
     Subchapter U of Subtitle A, Chapter 1 of the Internal Revenue 
     Code). As with designated community residents, no credit is 
     available on wages paid or incurred for service performed 
     after the qualified summer youth moves outside of an 
     empowerment zone, enterprise community, or renewal community. 
     If, after the end of the 90-day period, the employer 
     continues to employ a youth who was certified during the 90-
     day period as a member of another targeted group, the limit 
     on qualified first year wages will take into account wages 
     paid to the youth while a qualified summer youth employee.
       (7) Qualified food stamp recipient
       A qualified food stamp recipient is an individual at least 
     age 18 but not yet age 40 certified by a designated local 
     employment agency as being a member of a family receiving 
     assistance under a food stamp program under the Food Stamp 
     Act of 1977 for a period of at least six months ending on the 
     hiring date. In the case of families that cease to be 
     eligible for food stamps under section 6(o) of the Food Stamp 
     Act of 1977, the six-month requirement is replaced with a 
     requirement

[[Page 4037]]

     that the family has been receiving food stamps for at least 
     three of the five months ending on the date of hire. For 
     these purposes, members of the family are defined to include 
     only those individuals taken into account for purposes of 
     determining eligibility for a food stamp program under the 
     Food Stamp Act of 1977.
       (8) Qualified SSI recipient
       A qualified SSI recipient is an individual designated by a 
     local agency as receiving supplemental security income 
     (``SSI'') benefits under Title XVI of the Social Security Act 
     for any month ending within the 60-day period ending on the 
     hiring date.
       (9) Long-term family assistance recipients
       A qualified long-term family assistance recipient is an 
     individual certified by a designated local agency as being: 
     (a) a member of a family that has received family assistance 
     for at least 18 consecutive months ending on the hiring date; 
     (b) a member of a family that has received such family 
     assistance for a total of at least 18 months (whether or not 
     consecutive) after August 5, 1997 (the date of enactment of 
     the welfare-to-work tax credit\49\ if the individual is hired 
     within two years after the date that the 18-month total is 
     reached; or (c) a member of a family who is no longer 
     eligible for family assistance because of either Federal or 
     State time limits, if the individual is hired within two 
     years after the Federal or State time limits made the family 
     ineligible for family assistance.
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     \49\The welfare-to-work tax credit was consolidated into the 
     work .opportunity tax credit in the Tax Relief and Health 
     Care Act of 2006, for qualified individuals who begin to work 
     for an employer after December 31, 2006.
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     Qualified wages
       Generally, qualified wages are defined as cash wages paid 
     by the employer to a member of a targeted group. The 
     employer's deduction for wages is reduced by the amount of 
     the credit.
       For purposes of the credit, generally, wages are defined by 
     reference to the FUTA definition of wages contained in sec. 
     3306(b) (without regard to the dollar limitation therein 
     contained). Special rules apply in the case of certain 
     agricultural labor and certain railroad labor.
     Calculation of the credit
       The credit available to an employer for qualified wages 
     paid to members of all targeted groups except for long-term 
     family assistance recipients equals 40 percent (25 percent 
     for employment of 400 hours or less) of qualified first-year 
     wages. Generally, qualified first-year wages are qualified 
     wages (not in excess of $6,000) attributable to service 
     rendered by a member of a targeted group during the one-year 
     period beginning with the day the individual began work for 
     the employer. Therefore, the maximum credit per employee is 
     $2,400 (40 percent, of the first $6,000 of qualified first-
     year wages). With respect to qualified summer youth 
     employees, the maximum credit is $1,200 (40 percent of the 
     first $3,000 of qualified first-year wages). Except for long-
     term family assistance recipients, no credit is allowed for 
     second-year wages.
       In the case of long-term family assistance recipients, the 
     credit equals 40 percent (25 percent for employment of 400 
     hours or less) of $10,000 for qualified first-year wages and 
     50 percent of the first $10,000 of qualified second-year 
     wages. Generally, qualified second-year wages are qualified 
     wages (not in excess of $10,000) attributable to service 
     rendered by a member of the long-term family assistance 
     category during the one-year period beginning on the day 
     after the one-year period beginning with the day the 
     individual began work for the employer. Therefore, the 
     maximum credit per employee is $9,000 (40 percent of the 
     first $10,000 of qualified first-year wages plus 50 percent 
     of the first $10,000 of qualified second-year wages).
       In the case of a qualified veteran who is entitled to 
     compensation for a service connected disability, the credit 
     equals 40 percent of $12,000 of qualified first-year wages. 
     This expanded definition of qualified first-year wages does 
     not apply to the veterans qualified with reference to a food 
     stamp program, as defined under present law.
     Certification rules
       An individual is not treated as a member of a targeted 
     group unless: (1) on or before the day on which an individual 
     begins work for an employer, the employer has received a 
     certification from a designated local agency that such 
     individual is a member of a targeted group; or (2) on or 
     before the day an individual is offered employment with the 
     employer, a prescreening notice is completed by the employer 
     with respect to such individual, and not later than the 28th 
     day after the individual begins work for the employer, the 
     employer submits such notice, signed by the employer and the 
     individual under penalties of perjury, to the designated 
     local agency as part of a written request for certification. 
     For these purposes, a pre-screening notice is a document (in 
     such form as the Secretary may prescribe) which contains 
     information provided by the individual on the basis of which 
     the employer believes that the individual is a member of a 
     targeted group.
     Minimum employment period
       No credit is allowed for qualified wages paid to employees 
     who work less than 120 hours in the first year of employment.
     Other rules
       The work opportunity tax credit is not allowed for wages 
     paid to a relative or dependent of the taxpayer. No credit is 
     allowed for wages paid to an individual who is a more than 
     fifty percent owner of the entity. Similarly, wages paid to 
     replacement workers during a strike or lockout are not 
     eligible for the work opportunity tax credit. Wages paid to 
     any employee during any period for which the employer 
     received on-the-job training program payments with respect to 
     that employee are not eligible for the work opportunity tax 
     credit. The work opportunity tax credit generally is not 
     allowed for wages paid to individuals who had previously been 
     employed by the employer. In addition, many other technical 
     rules apply.
     Expiration
       The work opportunity tax credit is not available for 
     individuals who begin work for an employer after August 31, 
     2011.


                               house bill

     In general
       The provision creates a new targeted group for the work 
     opportunity tax credit. That new category is unemployed 
     veterans and disconnected youth who begin work for the 
     employer in 2009 or 2010.
       An unemployed veteran is defined as an individual certified 
     by the designated local agency as someone who: (1) has served 
     on active duty (other than for training) in the Armed Forces 
     for more than 180 days or who has been discharged or released 
     from active duty in the Armed Forces for a service-connected 
     disability; (2) has been discharged or released from active 
     duty in the Armed Forces during 2008, 2009, or 2010; and (3) 
     has received unemployment compensation under State or Federal 
     law for not less than four weeks during the one-year period 
     ending on the hiring date.
       A disconnected youth is defined as an individual certified 
     by the designated local agency as someone: (1) at least age 
     16 but not yet age 25 on the hiring date; (2) not regularly 
     attending any secondary, technical, or post-secondary school 
     during the six-month period preceding the hiring date; (3) 
     not regularly employed during the six-month period preceding 
     the hiring date; and (4) not readily employable by reason of 
     lacking a sufficient number of skills.
     Effective date
       The provisions are effective for individuals who begin work 
     for an employer after December 31, 2008.


                            senate amendment

       The Senate amendment is the same as the House bill except 
     that the otherwise applicable definition of unemployed 
     veterans is expanded to include individuals who were 
     discharged or released from active duty in the Armed Forces 
     during the period beginning on September 1, 2001 and ending 
     on December 31, 2010.


                          conference agreement

       The conference agreement follows the House bill and the 
     Senate amendment with one modification. Under this 
     modification an unemployed veteran for purposes of this new 
     targeted group is defined below:
       An unemployed veteran is defined as an individual certified 
     by the designated local agency as someone who: (1) has served 
     on active duty (other than for training) in the Armed Forces 
     for more than 180 days or who has been discharged or released 
     from active duty in the Armed Forces for a service-connected 
     disability; (2) has been discharged or released from active 
     duty in the Armed Forces during the five-year period ending 
     on the hiring date; and (3) has received unemployment 
     compensation under State or Federal law for not less than 
     four weeks during the one-year period ending on the hiring 
     date.
       For purposes of the disconnected youths, it is intended 
     that a low-level of formal education may satisfy the 
     requirement that an individual is not readily employable by 
     reason of lacking a sufficient number of skills. Further, it 
     is intended that the Internal Revenue Service, when providing 
     general guidance regarding the various new criteria, shall 
     take into account the administrability of the program by the 
     State agencies.
     6. Clarification of regulations related to limitations on 
         certain built-in losses following an ownership change 
         (sec. 1431 of the House bill, sec. 1281 of the Senate 
         amendment, sec. 1261 of the conference agreement, and 
         sec. 382 of the Code)


                              present law

       Section 382 limits the extent to which a ``loss 
     corporation'' that experiences an ``ownership change'' may 
     offset taxable income in any post-change taxable year by pre-
     change net operating losses, certain built-in losses, and 
     deductions attributable to the pre-change period.\50\ In 
     general, the amount

[[Page 4038]]

     of income in any post-change year that may be offset by such 
     net operating losses, built-in losses and deductions is 
     limited to an amount (referred to as the ``section 382 
     limitation'') determined by multiplying the value of the loss 
     corporation immediately before the ownership change by the 
     long-term tax-exempt interest.\51\
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     \50\Sec. 383 imposes similar limitations, under regulations, 
     on the use of carryforwards of general business credits, 
     alternative minimum tax credits, foreign tax credits, and net 
     capital loss carryforwards. Sec. 383 generally refers to sec. 
     382 for the meanings of its terms, but requires appropriate 
     adjustments to take account of its application to credits and 
     net capital losses.
     \51\If the loss corporation had a ``net unrealized built-in 
     gain'' (or NUBIG) at the time of the ownership change, then 
     the sec. 382 limitation for any taxable year may be increased 
     by the amount of the ``recognized built-in gains'' (discussed 
     further below) for that year. A NUBIG is defined as the 
     amount by which the fair market value of the assets of the 
     corporation immediately before an ownership change exceeds 
     the aggregate adjusted basis of such assets at such time. 
     However, if the amount of the NUBIG does not exceed the 
     lesser of (i) 15 percent of the fair market value of the 
     corporation's assets or (ii) $10,000,000, then the amount of 
     the NUBIG is treated as zero. Sec. 382(h)(1).
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       A ``loss corporation'' is defined as a corporation entitled 
     to use a net operating loss carryover or having a net 
     operating loss carryover for the taxable year in which the 
     ownership change occurs. Except to the extent provided in 
     regulations, such term includes any corporation with a ``net 
     unrealized built-in loss'' (or NUBIL)\52\ defined as the 
     amount by which the fair market value of the assets of the 
     corporation immediately before an ownership change is less 
     than the aggregate adjusted basis of such assets at such 
     time. However, if the amount of the NUBIL does not exceed the 
     lesser of (i) 15 percent of the fair market value of the 
     corporation's assets or (ii) $10,000,000, then the amount of 
     the NUBIL is treated as zero.\53\
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     \52\Sec. 382(k)(1).
     \53\Sec. 382(h)(3).
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       An ownership change is defined generally as an increase by 
     more than 50-percentage points in the percentage of stock of 
     a loss corporation that is owned yAny one or more five-
     percent (or greater) shareholders (as defined) within a 
     three-year period.\54\ Treasury regulations provide generally 
     that this measurement is to be made as of any ``testing 
     date,'' which is any date on which the ownership of one or 
     more persons who were or who become five-percent shareholders 
     increase.\55\
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     \54\Determinations of the percentage of stock of any 
     corporation held by any person are made on the basis of 
     value. Sec. 382(k)(6)(C).
     \55\See Treas. Reg. sec. 1.382-2(a)(4) (providing that ``a 
     loss corporation is required to determine whether an 
     ownership change has occurred immediately after any owner 
     shift, or issuance or transfer (including an issuance or 
     transfer described in Treas. Reg. sec. 1.382-4(d)(8)(i) or 
     (ii)) of an option with respect to stock of the loss 
     corporation that is treated as exercised under Treas. Reg. 
     sec. 1.382-4(d)(2)'' and defining a ``testing date'' as 
     ``each date on which a loss corporation is required to make a 
     determination of whether an ownership change has occurred'') 
     and Temp. Treas. Reg. sec. 1.382-2T(e)(1) (defining an 
     ``owner shift'' as ``any change in the ownership of the stock 
     of a loss corporation that affects the percentage of such 
     stock owned by any 5-percent shareholder''). Treasury 
     regulations under section 382 provide that, in computing 
     stock ownership on specified testing dates, certain 
     unexercised options must be treated as exercised if certain 
     ownership, control, or income tests are met. These tests are 
     met only if ``a principal purpose of the issuance, transfer, 
     or structuring of the option (alone or in combination with 
     other arrangements) is to avoid or ameliorate the impact of 
     an ownership change of the loss corporation.'' Treas. Reg. 
     sec. 1.382-4(d). Compare prior temporary regulations, Temp. 
     Reg. sec. 1.382-2T(h)(4) (``Solely for the purpose of 
     determining whether there is an ownership change on any 
     testing date, stock of the loss corporation that is subject 
     to an option shall be treated as acquired on any such date, 
     pursuant to an exercise of the option by its owner on that 
     date, if such deemed exercise would result in an ownership 
     change.''). Internal Revenue Service Notice 2008-76, I.R.B. 
     2008-39 (September 29, 2008), released September 7, 2008, 
     provides that the Treasury Department intends to issue 
     regulations modifying the term ``testing date'' under sec. 
     382 to exclude any date on or after which the United States 
     acquires stock or options to acquire stock in certain 
     corporations with respect to which there is a ``Housing Act 
     Acquisition'' pursuant to the Housing and Economic Recovery 
     Act of 2008 (P.L. 110-289). The Notice states that the 
     regulations will apply on and after September 7, 2008, unless 
     and until there is additional guidance. Internal Revenue 
     Service Notice 2008-84, I.R.B. 2008-41 (October 14, 2008), 
     provides that the Treasury Department intends to issue 
     regulations modifying the term ``testing date'' under sec. 
     382 to exclude any date as of the close of which the United 
     States owns, directly or indirectly, a more than 50 percent 
     interest in a loss corporation, which regulations will apply 
     unless and until there is additional guidance. Internal 
     Revenue Service Notice 2008-100, 2008-14 I.R.B. 1081 
     (released October 15, 2008) provides that the Treasury 
     Department intends to issue regulations providing, among 
     other things, that certain instruments acquired by the 
     Treasury Department under the Capital Purchase Program (CPP) 
     pursuant to the Emergency Economic Stabilization Act of 2008 
     (P.L. 100-343) (''EESA'') shall not be treated as stock for 
     certain purposes. The Notice also provides that certain 
     capital contributions made by Treasury pursuant to the CPP 
     shall not be considered to have been made as part of a plan 
     the principal purpose of which was to avoid or increase any 
     sec. 382 limitation (for purposes of section 382(1)(1)). The 
     Notice states that taxpayers may rely on the rules described 
     unless and until there is further guidance; and that any 
     contrary guidance will not apply to instruments (i) held by 
     Treasury that were acquired pursuant to the CCP prior to 
     publication of that guidance, or (ii) issued to Treasury 
     pursuant to the CCP under written binding contracts entered 
     into prior to the publication of that guidance. Internal 
     Revenue Service Notice 2009-14, 2009-7 I.R.B. 1 (January 30, 
     2009) amplifies and supersedes Notice 2008-100, and provides 
     additional guidance regarding the application of sec. 382 and 
     other provisions of law to corporations whose instruments are 
     acquired by the Treasury Department under certain programs 
     pursuant to EESA.
---------------------------------------------------------------------------
       Section 382(h) governs the treatment of certain built-in 
     losses and built-in gains recognized with respect to assets 
     held by the loss corporation at the time of the ownership 
     change. In the case of a loss corporation that has a NUBIL 
     (measured immediately before an ownership change), section 
     382(h)(1) provides that any ``recognized built-in loss'' (or 
     RBIL) for any taxable year during a ``recognition period'' 
     (consisting of the five years beginning on the ownership 
     change date) is subject to the section 382 limitation in the 
     same manner as if it were a pre-change net operating 
     loss.\56\ An RBIL is defined for this purpose as any loss 
     recognized during the recognition period on the disposition 
     of any asset held by the loss corporation immediately before 
     the ownership change date, to the extent that such loss is 
     attributable to an excess of the adjusted basis of the asset 
     on the change date over its fair market value on that 
     date.\57\ An RBIL also includes any amount allowable as 
     depreciation, amortization or depletion during the 
     recognition period, to the extent that such amount is 
     attributable to excess of the adjusted basis of the asset 
     over its fair market value on the ownership change day.\58\ 
     In addition, any amount that is allowable as a deduction 
     during the recognition period (determined without regard to 
     any carryover) but which is attributable to periods before 
     the ownership change date is treated as an RBIL for the 
     taxable year in which it is allowable as a deduction.\59\
---------------------------------------------------------------------------
     \56\Sec. 382(h)(2). The total amount of the loss 
     corporation's RBILs that are subject to the section 382 
     limitation cannot exceed the amount of the corporation's 
     NUBIL.
     \57\Sec. 382(h)(2)(B).
     \58\Id.
     \59\Sec. 382(h)(6)(B).
---------------------------------------------------------------------------
       As indicated above, section 382(h)(1) provides in the case 
     of a loss corporation that has a NUBIG that the section 382 
     limitation may be increased for any taxable year during the 
     recognition period by the amount of recognized built-in gains 
     (or RBIGs) for such taxable year.\60\ An RBIG is defined for 
     this purpose as any gain recognized during the recognition 
     period on the disposition of any asset held by the loss 
     corporation immediately before the ownership change date, to 
     the extent that such gain is attributable to an excess of the 
     fair market value of the asset on the change date over its 
     adjusted basis on that date.\61\ In addition, any item of 
     income that is properly taken into account during the 
     recognition period but which is attributable to periods 
     before the ownership change date is treated as an RBIG for 
     the taxable year in which it is properly taken into 
     account.\62\
---------------------------------------------------------------------------
     \60\The total amount of such increases cannot exceed the 
     amount of the corporation's NUBIG.
     \61\Sec. 382(h)(2)(A).
     \62\Sec. 382(h)(6)(A).
---------------------------------------------------------------------------
       Internal Revenue Service Notice 2003-65\63\ provides two 
     alternative safe harbor approaches for the identification of 
     built-in items for purposes of section 382(h): the ``1374 
     approach'' and the ``338. approach''
---------------------------------------------------------------------------
     \63\2003-2 C.B. 747.
---------------------------------------------------------------------------
       Under the 1374 approach,\64\ NUBIG or NUBIL is the net 
     amount of gain or loss that would be recognized in a 
     hypothetical sale of the assets of the loss corporation 
     immediately before the ownership change.\65\ The amount of 
     gain or loss recognized during the recognition period on the 
     sale or exchange of an asset held at the time of the 
     ownership change is RBIG or RBIL, respectively, to the extent 
     it is attributable to a difference between the adjusted basis 
     and the fair market value of the asset on the change date, as 
     described above. However, the 1374 approach generally relies 
     on the accrual method of accounting to identify items of 
     income or deduction as RBIG or RBIL, respectively. Generally, 
     items of income or deduction properly included in income or 
     allowed as a deduction during the recognition period are 
     considered attributable to period before the change date (and 
     thus are treated as RBIG or RBIL, respectively), if a 
     taxpayer using an accrual method of accounting would have 
     included the item in income or been allowed a deduction for 
     the item before the change date. However, the 1374 approach 
     includes a number of exceptions to this general rule, 
     including a special rule dealing with bad debt deductions 
     under section 166. Under this special rule, any deduction 
     item properly taken into account during the first 12 months 
     of the recognition period as a bad debt deduction under 
     section 166 is treated as RBIL if the item arises from a debt 
     owed to the loss corporation at the beginning of the 
     recognition period (and deductions for such items properly 
     taken into account after the first 12

[[Page 4039]]

     months of the recognition period are not RBILs).\66\
---------------------------------------------------------------------------
     \64\The 1374 approach generally incorporates rules similar to 
     those of section 1374(d) and the Treasury regulations 
     thereunder in calculating NUBIG and NUBIL and identifying 
     RBIG and RBIL.
     \65\More specifically, NUBIG or NUBIL is calculated by 
     determining the amount that would be realized if immediately 
     before the ownership change the loss corporation had sold all 
     of its assets, including goodwill, at fair market value to a 
     third party that assumed all of its liabilities, decreased by 
     the sum of any deductible liabilities of the loss corporation 
     that would be included in the amount realized on the 
     hypothetical sale and the loss corporation's aggregate 
     adjusted basis in all of its assets, increased or decreased 
     by the corporation's section 481 adjustments that would be 
     taken into account on a hypothetical sale, and increased by 
     any RBIL that would not be allowed as a deduction under 
     section 382, 383 or 384 on the hypothetical sale.
     \66\Notice 2003-65, section III.B.2.b.
---------------------------------------------------------------------------
       The 338 approach identifies items of RBIG and RBIL 
     generally by comparing the loss corporation's actual items of 
     income, gain, deduction and loss with those that would have 
     resulted if a section 338 election had been made with respect 
     to a hypothetical purchase of all of the outstanding stock of 
     the loss corporation on the change date. Under the 338 
     approach, NUBIG or NUBIL is calculated in the same manner as 
     it is under the 1374 approach.\67\ The 338 approach 
     identifies RBIG or RBIL by comparing the loss corporation's 
     actual items of income, gain, deduction and loss with the 
     items of income, gain, deduction and loss that would result 
     if a section 338 election had been made for the hypothetical 
     purchase. The loss corporation is treated for this purpose as 
     using those accounting methods that the loss corporation 
     actually uses. The 338 approach does not include any special 
     rule with regard to bad debt deductions under section 166.
---------------------------------------------------------------------------
     \67\Accordingly, unlike the case in which a section 338 
     election is actually made, contingent consideration 
     (including a contingent liability) is taken into account in 
     the initial calculation of NUBIG or NUBIL, and no further 
     adjustments are made to reflect subsequent changes in deemed 
     consideration.
---------------------------------------------------------------------------
       Section 166 generally allows a deduction in respect of any 
     debt that becomes worthless, in whole or in part, during the 
     taxable year.\68\ The determination of whether a debt is 
     worthless, in whole or in part, is a question of fact. 
     However, in the case of a bank or other corporation that is 
     subject to supervision by Federal authorities, or by State 
     authorities maintaining substantially equivalent standards, 
     the Treasury regulations under section 166 provide a 
     presumption of worthlessness to the extent that a debt is 
     charged off during the taxable year pursuant to a specific 
     order of such an authority or in accordance with established 
     policies of such an authority (and in the latter case, the 
     authority confirms in writing upon the first subsequent audit 
     of the bank or other corporation that the charge-off would 
     have been required if the audit had been made at the time of 
     the charge-off). The presumption does not apply if the 
     taxpayer does not claim the amount so charged off as a 
     deduction for the taxable year in which the charge-off takes 
     place. In that case, the charge-off is treated as having been 
     involuntary; however, in order to claim the section 166 
     deduction in a later taxable year, the taxpayer must produce 
     sufficient evidence to show that the debt became partially 
     worthless in the later year or became recoverable only in 
     part subsequent to the taxable year of the charge-off, as the 
     case may be, and to the extent that the deduction claimed in 
     the later year for a partially worthless debt was not 
     involuntarily charged off in prior taxable years, it was 
     charged off in the later taxable year.\69\
---------------------------------------------------------------------------
     \68\Section 166 does not apply, however, to a debt which is 
     evidenced by a security, defined for this purpose (by cross-
     reference to section 165(g)(2)(C)) as a bond, debenture, note 
     or certificate or other evidence of indebtedness issued by a 
     corporation or by a government or political subdivision 
     thereof, with interest coupons or in registered form. Sec. 
     166(e).
     \69\See Treas. Reg. sec. 1.166-2(d)(1) and (2).
---------------------------------------------------------------------------
       The Treasury regulations also permit a bank (generally as 
     defined for purposes of section 581, with certain 
     modifications) that is subject to supervision by Federal 
     authorities, or State authorities maintaining substantially 
     equivalent standards, to make a ``conformity election'' under 
     which debts charged off for regulatory purposes during a 
     taxable year are conclusively presumed to be worthless for 
     tax purposes to the same extent, provided that the charge-off 
     results from a specific order of the regulatory authority or 
     corresponds to the institution's classification of the debt 
     as a ``loss asset'' pursuant to loan loss classification 
     standards that are consistent with those of certain specified 
     bank regulatory, authorities. The conformity election is 
     treated as the adoption of a method of accounting.\70\
---------------------------------------------------------------------------
     \70\See Treas. Reg. sec. 1.166-2(d)(3); cf. Priv. Let. Rul. 
     9248048 (July 7, 1992); Tech. Ad. Mem. 9122001 (Feb. 8, 
     1991).
---------------------------------------------------------------------------
       Internal Revenue Service Notice 2008-83,\71\ released on 
     October 1, 2008, provides that ``[f]or purposes of section 
     382(h), any deduction properly allowed after an ownership 
     change (as defined in section 382(g)) to a bank with respect 
     to losses on loans or bad debts (including any deduction for 
     a reasonable addition to a reserve for bad debts) shall ne 
     treated as a built-in loss or a deduction that is 
     attributable to periods before the change date.''\72\ The 
     Notice further states that the Internal Revenue Service and 
     the Treasury Department are studying the proper treatment 
     under section 382(h) of certain items of deduction or loss 
     allowed after an ownership change to a corporation that is a 
     bank (as defined in section 581) both immediately before and 
     after the change date, and that any such corporation may rely 
     on the treatment set forth in Notice 2008-83 unless and until 
     there is additional guidance.
---------------------------------------------------------------------------
     \71\2008-42 I.R.B. 2008-42 (Oct. 20, 2008).
     \72\Notice 2008-83, section 2.
---------------------------------------------------------------------------


                               House Bill

       The provision states that Congress finds as follows: (1) 
     The delegation of authority to the Secretary of the Treasury, 
     or his delegate, under section 382(m) does not authorize the 
     Secretary to provide exemptions or special rules that are 
     restricted to particular industries or classes of taxpayers; 
     (2) Internal Revenue Service Notice 2008-83 is inconsistent 
     with the congressional intent in enacting such section 
     382(m); (3) the legal authority to prescribe Notice 2008-83 
     is doubtful; (4) however, as taxpayers should generally be 
     able to rely on guidance issued by the Secretary of the 
     Treasury, legislation is necessary to clarify the force and 
     effect of Notice 200883 and restore the proper application 
     under the Internal Revenue Code of the limitation on built-in 
     losses following an ownership change of a bank.
       Under the provision, Treasury Notice 2008-83 shall be 
     deemed to have the force and effect of law with respect to 
     any ownership change (as defined in section 382(g)) occurring 
     on or before January 16, 2009, and with respect to any 
     ownership change (as so defined) which occurs after January 
     16, 2009, if such change (1) is pursuant to a written binding 
     contract entered in to on or before such date or (2) is 
     pursuant to a written agreement entered into on or before 
     such date and such agreement was described on or before such 
     date in a public announcement or in a filing with the 
     Securities and Exchange Commission required by reason of such 
     ownership change, but shall otherwise have no force or effect 
     with respect to any ownership change after such date.
       Effective date.--The provision is effective on the date of 
     enactment.


                            Senate Amendment

       The Senate amendment is the same as the House bill.


                          Conference Agreement

       The conference agreement follows the House bill and the 
     Senate amendment.
     7. Treatment of certain ownership changes for purposes of 
         limitations on net operating loss carryforwards and 
         certain built-in losses (sec. 1262 of the conference 
         agreement and sec. 382 of the Code)


                              Present Law

       Section 382 limits the extent to which a ``loss 
     corporation'' that experiences an ``ownership change'' may 
     offset taxable income in any post-change taxable year by pre-
     change net orating losses, certain built-in losses, and 
     deductions attributable to the pre-change period.\73\ In 
     general, the amount of income in any post-change year that 
     may be offset by such net operating losses, built-in losses 
     and deductions is limited to an amount (referred to as the 
     ``section 382 limitation'') determined by multiplying the 
     value of the loss corporation immediately before the 
     ownership change by the long-term tax-exempt interest 
     rate.\74\
---------------------------------------------------------------------------
     \73\Section 383 imposes similar limitations, under 
     regulations, on the use of carryforwards of general business 
     credits, alternative minimum tax credits, foreign tax 
     credits, and net capital loss carryforwards. Section 383 
     generally refers to section 382 for the meanings of its 
     terms, but requires appropriate adjustments to take account 
     of its application to credits and net capital losses.
     \74\If the loss corporation had a ``net unrealized built in 
     gain'' (or NUBIG) at the time of the ownership change, then 
     the section 382 limitation for any taxable year may be 
     increased by the amount of the ``recognized built-in gains'' 
     (discussed further below) for that year. A NUBIG is defined 
     as the amount by which the fair market value of the assets of 
     the corporation immediately before an ownership change 
     exceeds the aggregate adjusted basis of such assets at such 
     time. However, if the amount of the NUBIG does not exceed the 
     lesser of (i) 15 percent of the fair market value of the 
     corporation's assets or (ii) $10,000,000, then the amount of 
     the NUBIG is treated as zero. Sec. 382(h)(1).
---------------------------------------------------------------------------
       A ``loss corporation'' is defined as a corporation entitled 
     to use a net operating loss carryover or having a net 
     operating loss carryover for the taxable year in which the 
     ownership change occurs. Except to the extent provided in 
     regulations, such term includes any corporation with a ``net 
     unrealized built-in loss'' (or NUBIL),\75\ defined as the 
     amount by which the fair market value of the assets of the 
     corporation immediately before an ownership change is less 
     than the aggregate adjusted basis of such assets at such 
     time. However, if the amount of the NUBIL does not exceed the 
     lesser of (i) 15 percent of the fair market value of the 
     corporation's assets or (ii) $10,000,000, then the amount of 
     the NUBIL is treated as zero.\76\
---------------------------------------------------------------------------
     \75\Sec. 382(k)(1).
     \76\Sec. 382(h)(3).
---------------------------------------------------------------------------
       An ownership change is defined generally as an increase by 
     more than 50-percentage points in the percentage of stock of 
     a loss corporation that is owned by any one or more five-
     percent (or greater) shareholders (as defined) within a three 
     year period.\77\ Treasury regulations provide generally that 
     this measurement is to be made as of any ``testing date,'' 
     which is any date on which the ownership of one or more 
     persons who were or who become five-percent shareholders 
     increases.\78\
---------------------------------------------------------------------------
     \77\Determinations of the percentage of stock of any 
     corporation held by any person are made on the basis of 
     value. Sec. 382(k)(6)(C).
     \78\See Treas. Reg. sec. 1.382-2(a)(4) (providing that ``a 
     loss corporation is required to determine whether an 
     ownership change has occurred immediately after any owner 
     shift, or issuance or transfer (including an issuance or 
     transfer described in Treas. Reg. sec. 1.382-4(d)(8)(i) or 
     (ii)) of an option with respect to stock of the loss 
     corporation that is treated as exercised under Treas. Reg. 
     sec. 1.382-4(d)(2)'' and defining a ``testing date'' as 
     ``each date on which a loss corporation is required to make a 
     determination of whether an ownership change has occurred'') 
     and Temp. Treas. Reg. sec. I .382-2T(e)(1) (defining an 
     ``owner shift'' as ``any change in the ownership of the stock 
     of a loss corporation that affects percentage of such stock 
     owned by any 5-percent shareholder''). Treasury regulations 
     under section 382 provide that, in computing stock ownership 
     on specified testing dates, certain unexercised options must 
     be treated as exercised if certain ownership, control, or 
     income tests are met. These tests are met only if ``a 
     principal purpose of the issuance, transfer, or structuring 
     of the option (alone or in combination with other 
     arrangements) is to avoid or ameliorate the impact of an 
     ownership change of the loss corporation.'' Treas. Reg. sec. 
     1.382-4(d). Compare prior temporary regulations, Temp. Reg. 
     sec. 1.382-2T(h)(4) (``Solely for the purpose of determining 
     whether there is an ownership change on any testing date, 
     stock of the loss corporation that is subject to an option 
     shall be treated as acquired on any such date, pursuant to an 
     exercise of the option by its owner on that date, if such 
     deemed exercise would result in an ownership change.''). 
     Internal Revenue Service Notice 2008-76, I.R.B. 2008-39 
     (September 29, 2008), released September 7, 2008, provides 
     that the Treasury Department intends to issue regulations 
     modifying the term ``testing date'' under section 382 to 
     exclude any date on or after which the United States acquires 
     stock or options to acquire stock in certain corporations 
     with respect to which there is a ``Housing Act Acquisition'' 
     pursuant to the Housing and Economic Recovery Act of 2008 
     (P.L. 110-289). The Notice states that the regulations will 
     apply on and after September 7, 2008, unless and until there 
     is additional guidance. Internal Revenue Service Notice 2008-
     84, I.R.B. 2008-41 (October 14, 2008), provides that the 
     Treasury Department intends to issue regulations modifying 
     the term ``testing date'' under section 382 to exclude any 
     date as of the close of which the United States owns, 
     directly or indirectly, a more than 50 percent interest in a 
     loss corporation, which regulations will apply unless and 
     until there is additional guidance. Internal Revenue Service 
     Notice 2008-100, 2008-14 I.R.B. 1081 (released October 15, 
     2008) provides that the Treasury Department intends to issue 
     regulations providing, among other things, that certain 
     instruments acquired by the Treasury Department under the 
     Capital Purchase Program (CPP) pursuant to the Emergency 
     Economic Stabilization Act of 2008 (P.L. 100-
     343)(''EESA'')shall not be treated as stock for certain 
     purposes. The Notice also provides that certain capital 
     contributions made by Treasury pursuant to the CPP shall not 
     be considered to have been made as part of a plan the 
     principal purpose of which was to avoid or increase any 
     section 382 limitation (for purposes of section 382(1)(1)). 
     The Notice states that taxpayers may rely on the rules 
     described unless and until there is further guidance; and 
     that any contrary guidance will not apply to instruments (i) 
     held by Treasury that were acquired pursuant to the CCP prior 
     to publication of that guidance, or (ii) issued to Treasury 
     pursuant to the CCP under written binding contracts entered 
     into prior to the publication of that guidance. Internal 
     Revenue Service Notice 2009-14, 2009-7 I.R.B. 1 (January 30, 
     2009) amplifies and supersedes Notice 2008-100, and provides 
     additional guidance regarding the application of section 382 
     and other provisions of law to corporations whose instruments 
     are acquired by the Treasury Department under certain 
     programs pursuant to EESA.

[[Page 4040]]




                               House Bill

       No provision.


                            Senate Amendment

       No provision.


                          Conference Agreement

       The conference agreement amends section 382 of the Code to 
     provide an exception from the application of the section 382 
     limitation. Under the provision, the section 382 limitation 
     that would otherwise arise as a result of an ownership change 
     shall not apply in the case of an ownership change that 
     occurs pursuant to a restructuring plan of a taxpayer which 
     is required under a loan agreement or commitment for a line 
     of credit entered into with the Department of the Treasury 
     under the Emergency Economic Stabilization Act of 2008, and 
     is intended to result in a rationalization of the costs, 
     capitalization, and capacity with respect to the 
     manufacturing workforce of, and suppliers to, the taxpayer 
     and its subsidiaries.\79\
---------------------------------------------------------------------------
     \79\This exception shall not apply in the case of any 
     subsequent ownership change unless such subsequent ownership 
     change also meets the requirements of the exception.
---------------------------------------------------------------------------
       However, an ownership change that would otherwise be 
     excepted from the section 382 limitation under the provision 
     will instead remain subject to the section 382 limitation if, 
     immediately after such ownership change, any person (other 
     than a voluntary employees' beneficiary association within 
     the meaning of section 501(c)(9)) owns stock of the new loss 
     corporation possessing 50 percent or more of the total 
     combined voting power of all classes of stock entitled to 
     vote or of the total value of the stock of such corporation. 
     For purposes of this rule, persons who bear a relationship to 
     one another described in section 267(b) or 707(b)(1), or who 
     are members of a group of persons acting in concert, are 
     treated as a single person.
       The exception from the application of the section 382 
     limitation under the provision. not change the fact that an 
     ownership change has occurred for other purposes of section 
     382.\80\
---------------------------------------------------------------------------
     \80\For example, an ownership change has occurred for 
     purposes of determining the testing period under section 
     382(i)(2).
---------------------------------------------------------------------------
       Effective date.--The conference agreement applies to 
     ownership changes after the date of enactment.
     8. Deferral of certain income from the discharge of 
         indebtedness (sec. 1231 of the Senate amendment, sec. 
         1231 of the conference agreement, and sec. 108 of the 
         Code)


                              Present Law

       In general, gross income includes income that is realized 
     by a debtor from the discharge of indebtedness, subject to 
     certain exceptions for debtors in title 11 bankruptcy cases, 
     insolvent debtors, certain student loans, certain farm 
     indebtedness, certain real property business indebtedness, 
     and certain qualified principal residence indebtedness.\81\ 
     In cases involving discharges of indebtedness that are 
     excluded from gross income under the exceptions to the 
     general rule, taxpayers generally are required to reduce 
     certain tax attributes, including net operating losses, 
     general business credits, minimum tax c its, capital loss 
     carryovers, and basis in property, by the amount of the 
     discharge of indebtedness.\82\
---------------------------------------------------------------------------
     \81\See sections 61(a)(12) and 108. But see sec. 102 (a debt 
     cancellation which constitutes a gift or bequest is not 
     treated as income to the donee debtor).
     \82\Sec. 108(b).
---------------------------------------------------------------------------
       The amount of discharge of indebtedness excluded from 
     income by an insolvent debtor not in a title 11 bankruptcy 
     case cannot exceed the amount by which the debtor is 
     insolvent. In the case of a discharge in bankruptcy or where 
     the debtor is insolvent, any reduction in basis may not 
     exceed the excess of the aggregate bases of properties held 
     by the taxpayer immediately after the discharge over the 
     aggregate of the liabilities of the taxpayer immediately 
     after the discharge.\83\
---------------------------------------------------------------------------
     \83\Sec. 1017.
---------------------------------------------------------------------------
       For all taxpayers, the amount of discharge of indebtedness 
     generally is equal to the excess of the adjusted issue price 
     of the indebtedness being satisfied over the amount paid (or 
     deemed paid) to satisfy such indebtedness.\84\ This rule 
     generally applies to (1) the acquisition by the debtor of its 
     debt instrument in exchange for cash, (2) the issuance of a 
     debt instrument by the debtor in satisfaction of its 
     indebtedness, including a modification of indebtedness that 
     is treated as an exchange (a debt-for-debt exchange), (3) the 
     transfer by a debtor corporation of stock, or a debtor 
     partnership of a capital or profits interest in such 
     partnership, in satisfaction of its indebtedness (an equity-
     for-debt exchange), and (4) the acquisition by a debtor 
     corporation of its indebtedness from a shareholder as a 
     contribution to capital.
---------------------------------------------------------------------------
     \84\Treas. Reg. sec. 1.61-12(c)(2)(ii). Treas. Reg. sec. 
     1.1275-1(b) defines ``adjusted issue price.''
---------------------------------------------------------------------------
       Debt-for-debt exchanges
       If a debtor issues a debt instrument in satisfaction of its 
     indebtedness, the debtor is treated as having satisfied the 
     indebtedness with an amount of money equal to the issue price 
     of the newly issued debt instrument.\85\ The issue price of 
     such newly issued debt instrument generally is determined 
     under sections 1273 and 1274.\86\ Similarly, a ``significant 
     modification'' of a debt instrument, within the meaning of 
     Treas. Reg. sec. 1.1001-3, results in an exchange of the 
     original debt instrument for a modified instrument. In such 
     cases, where the issue price of the modified debt instrument 
     is less than the adjusted issue price of the original debt 
     instrument, the debtor will have income from the cancellation 
     of indebtedness.
---------------------------------------------------------------------------
     \85\Sec. 108(e)(1 0)(A).
     \86\Sec. 108(e)(10)(B).
---------------------------------------------------------------------------
       If any new debt instrument is issued (including as a result 
     of a significant modification to a debt instrument), such 
     debt instrument will have original issue discount equal to 
     the excess (if any) of such debt instrument's stated 
     redemption price at maturity over its issue price.\87\ In 
     general, an issuer of a debt instrument with original issue 
     discount may deduct for any taxable year, with respect to 
     such debt instrument, an amount of original issue discount 
     equal the aggregate daily portions of the original issue 
     discount for days during such taxable year.\88\
---------------------------------------------------------------------------
     \87\Sec. 1273.
     \88\Sec. 163(e).
---------------------------------------------------------------------------


                       Equity-for-debt exchanges

       If a corporation transfers stock, or a partnership 
     transfers a capital or profits interest in such partnership, 
     to a creditor in satisfaction of its indebtedness, then such 
     corporation or partnership is treated as having satisfied its 
     indebtedness with an amount of money equal to the fair market 
     value of the stock or interest.\89\
---------------------------------------------------------------------------
     \89\Sec. 108(e)(8).
---------------------------------------------------------------------------
       Related party acquisitions
       Indebtedness directly or indirectly acquired by a person 
     who bears a relationship to the debtor described in section 
     267(b) or section 707(b) is treated as if it were acquired by 
     the debtor.\90\ Thus, where a debtor's indebtedness is 
     acquired for less than its adjusted issue price by a person 
     related to the debtor (within the meaning of section 267(b) 
     or 707(b)), the debtor recognizes income from the 
     cancellation of indebtedness. Regulations under section 108 
     provide that the indebtedness acquired by the related party 
     is treated as new indebtedness issued by the debtor to the 
     related holder on the acquisition date (the deemed 
     issuance).\91\ The new indebtedness is deemed issued with an 
     issue price equal to the amount used under regulations to 
     compute the amount of cancellation of indebtedness income 
     realized by the debtor (i.e., either the holder's adjusted 
     basis or the fair market value of the indebtedness, as the 
     case may be).\92\ The indebtedness deemed

[[Page 4041]]

     issued pursuant to the regulations has original issue 
     discount to the extent its stated redemption price at 
     maturity exceeds its issue price.
---------------------------------------------------------------------------
     \90\Sec. 108(e)(4).
     \91\Treas. Reg. sec. 1.108-2(g).
     \92\Id.
---------------------------------------------------------------------------
       In the case of a deemed issuance under Treas. Reg. sec. 
     1.108-2(g), the related holder does not recognize any gain or 
     loss, and the related holder's adjusted basis in the 
     indebtedness remains the same as it was immediately before 
     the deemed issuance.\93\ The deemed issuance is treated as a 
     purchase of the indebtedness by the related holder for 
     purposes of section 1272(a)(7) (pertaining to reduction of 
     original issue discount where a subsequent holder pays 
     acquisition premium) and section 1276 (pertaining to 
     acquisitions of debt at a market discount).\94\
---------------------------------------------------------------------------
     \93\Treas. Reg. sec. 1.108-2(g)(2).
     \94\Id.
---------------------------------------------------------------------------
       Contribution of a debt instrument to capital of a 
           corporation
       Where a debtor corporation acquires its indebtedness from a 
     shareholder as a contribution to capital, section 118\95\ 
     does not apply, but the corporation is treated as satisfying 
     such indebtedness with an amount of money equal to the 
     shareholder's adjusted basis in the indebtedness.
---------------------------------------------------------------------------
     \95\Section 118 provides, in general, that in the case of a 
     corporation, gross income does not include any contribution 
     to the capital of the taxpayer.
---------------------------------------------------------------------------


                               House Bill

       No provision.


                            Senate Amendment

       The provision permits a taxpayer to elect to defer income 
     from cancellation of indebtedness recognized by the taxpayer 
     as a result of a repurchase by (1) the taxpayer or (2) a 
     person who bears a relationship to the taxpayer described in 
     section 267(b) or section 707(b), of a ``debt instrument'' 
     that was issued by the taxpayer. The provision applies only 
     to repurchases of debt that (1) occur after December 31, 
     2008, and prior to January 1, 2011, and (2) are repurchases 
     for cash. Thus, for example, the provision does not apply to 
     a debt-for-debt exchange or to any exchange of the taxpayer's 
     equity for a debt instrument of the taxpayer. For purposes of 
     the provision, a ``debt instrument'' is broadly defined to 
     include any bond, debenture, note, certificate or any other 
     instrument or contractual arrangement constituting 
     indebtedness.
       Income from the discharge of indebtedness in connection 
     with the repurchase of a debt instrument in 2009 or 2010 must 
     be included in the gross income of the taxpayer ratably in 
     the eight taxable years beginning with (1) for repurchases in 
     2009, the second taxable year following the taxable year in 
     which the repurchase occurs or (2) for repurchases in 2010, 
     the taxable year following the taxable year in which the 
     repurchase occurs. The provision authorizes the Secretary of 
     the Treasury to prescribe such regulations as may be 
     necessary or appropriate for purposes of applying the 
     provision.
       Effective date.--The provision applies to discharges in 
     taxable years ending after December 31, 2008.


                          Conference Agreement

       The conference agreement follows the Senate amendment with 
     modifications. The provision permits a taxpayer to elect to 
     defer cancellation of indebtedness income arising from a 
     ``reacquisition'' of ``an applicable debt instrument'' after 
     December 31, 2008, and before January 1, 2011. Income 
     deferred pursuant to the election must be included in the 
     gross income of the taxpayer ratably in the five taxable 
     years beginning with (1) for repurchases in 2009, the fifth 
     taxable year following the taxable year in which the 
     repurchase occurs or (2) for repurchases in 2010, the fourth 
     taxable year following the taxable year in which the 
     repurchase occurs.
       An ``applicable debt instrument'' is any debt instrument 
     issued by (1) a C corporation or (2 any other person in 
     connection with the conduct of a trade or business by such 
     person. For purposes of the provision, a ``debt instrument'' 
     is broadly defined to include any bond, debenture, note, 
     certificate or any other instrument or contractual 
     arrangement constituting indebtedness (within the meaning of 
     section 1275(a)(1)).
       A ``reacquisition'' is any ``acquisition'' of an applicable 
     debt instrument by (1) the debtor that issued (or is 
     otherwise the obligor under) such debt instrument or (2) any 
     person related to the debtor within the meaning of section 
     108(e)(4). For purposes of the provision, an ``acquisition'' 
     includes, without limitation, (1) an acquisition of a debt 
     instrument for cash, (2) the exchange of a debt instrument 
     for another debt instrument (including an exchange resulting 
     from a modification of a debt instrument), (3) the exchange 
     of corporate stock or a partnership interest for a debt 
     instrument, (4) the contribution of a debt instrument to the 
     capital of the issuer, and (5) the complete forgiveness of a 
     debt instrument by a holder of such instrument.
       Special rules for debt-for-debt exchanges
       If a taxpayer makes the election provided by the provision 
     for a debt-for-debt exchange in which the newly issued debt 
     instrument issued (or deemed issued, including by operation 
     of the rules in Treas. Reg. sec. 1.108-2(g)) in satisfaction 
     of an outstanding debt instrument of the debtor has original 
     issue discount, then any otherwise allowable deduction for 
     original issue discount with respect to such newly issued 
     debt instrument that (1) accrues before the first year of the 
     five-taxable-year period in which the related, deferred 
     discharge of indebtedness income is included in the gross 
     income of the taxpayer and (2) does not exceed such related, 
     deferred discharge of indebtedness income, is deferred and 
     allowed as a deduction ratably over the same five-taxable-
     year period in which the deferred discharge of indebtedness 
     income is included in gross income.
       This rule can apply also in certain cases when a debtor 
     reacquires its debt for cash. If the taxpayer issues a debt 
     instrument and the proceeds of such issuance are used 
     directly or indirectly to reacquire a debt instrument of the 
     taxpayer, the provision treats the newly issued debt 
     instrument as if it were issued in satisfaction of the 
     retired debt instrument. If the newly issued debt instrument 
     has original issue discount, the rule described above 
     applies. Thus, all or a portion of the interest deductions 
     with respect to original issue discount on the newly issued 
     debt instrument are deferred into the five-taxable-year 
     period in which the discharge of indebtedness income is 
     recognized. Where only a portion of the proceeds of a new 
     issuance are used by a taxpayer to satisfy outstanding debt, 
     then the deferral rule applies to the portion of the original 
     issue discount on the newly issued debt instrument that is 
     equal to the portion of the proceeds of such newly issued 
     instrument used to retire outstanding debt of the taxpayer.
       Acceleration of deferred items
       Cancellation of indebtedness income and any related 
     deduction for original issue discount that is deferred by an 
     electing taxpayer (and has not previously been taken into 
     account) generally is accelerated and taken into income in 
     the taxable year in which the taxpayer: (1) dies, (2) 
     liquidates or sells substantially all of its assets 
     (including in a title 11 or similar case), (3) ceases to do 
     business, or (4) or is in similar circumstances. In a case 
     under title 11 or a similar case, any deferred items are 
     taken into income as of the day before the petition is filed. 
     Deferred items are accelerated in a case under Title 11 where 
     the taxpayer liquidates, sells substantially all of its 
     assets, or ceases to do business, but not where a taxpayer 
     reorganizes and emerges from the Title 11 case. In the case 
     of a pass thru entity, this acceleration rule also applies to 
     the sale, exchange, or redemption of an interest in the 
     entity by a holder of such interest.
       Special rule for partnerships
       In the case of a partnership, any income deferred under the 
     provision is allocated to the partners in the partnership 
     immediately before the discharge of indebtedness in the 
     manner such amounts would have been included in the 
     distributive shares of such partners under section 704 if 
     such income were recognized at the time of the discharge. Any 
     decrease in a partner's share of liabilities as a result of 
     such discharge is not taken into account for purposes of 
     section 752 at the time of the discharge to the extent the 
     deemed distribution under section 752 would cause the partner 
     to recognize gain under section 731. Thus, the deemed 
     distribution under section 752 is deferred with respect to a 
     partner to the extent it exceeds such partner's basis. 
     Amounts so deferred are taken into account at the same time, 
     and to the extent remaining in the same amount, as income 
     deferred under the provision is recognized by the partner.
       Coordination with section 108(a) and procedures for 
           election
       Where a taxpayer makes the election provided by the 
     provision, the exclusions provided by section 108(a)(1)(A), 
     (B), (C), and (D) shall not apply to the income from the 
     discharge of indebtedness for the year in which the taxpayer 
     makes the election or any subsequent year. Thus, for example, 
     an insolvent taxpayer may elect under the provision to defer 
     income from the discharge of indebtedness rather than 
     excluding such income and reducing tax attributes by a 
     corresponding amount. The election is to be made on an 
     instrument by instrument basis; once made, the election is 
     irrevocable. A taxpayer makes an election with respect to a 
     debt instrument by including with its return for the taxable 
     year in which the reacquisition of the debt instrument occurs 
     a statement that (1) clearly identifies the debt instrument 
     and (2) includes the amount of deferred income to which the 
     provision applies and such other information as may be 
     prescribed by the Secretary. The Secretary is authorized to 
     require reporting of the election (and other information with 
     respect to the reacquisition) for years subsequent to the 
     year of the reacquisition.
       Regulatory authority
       The provision authorizes the Secretary of the Treasury to 
     prescribe such regulations as may be necessary or appropriate 
     for purposes of applying the provision, including rules 
     extending the acceleration provisions to other circumstances 
     where appropriate, rules requiring reporting of the election 
     and such other information as the Secretary may require on 
     returns of tax for subsequent taxable years, rules for the 
     application of the provision to partnerships, S corporations, 
     and other pass thru entities, including for the allocation of 
     deferred deductions.

[[Page 4042]]

       Effective date.--The provision is effective for discharges 
     in taxable years ending after December 31, 2008.
     9. Modifications of rules for original issue discount on 
         certain high yield obligations (sec. 1232 of the 
         conference agreement and sec. 163 of the Code)


                              Present Law

       In general, the issuer of a debt instrument with original 
     issue discount may deduct the portion of such original issue 
     discount equal to the aggregate daily portions of the 
     original issue discount for days during the taxable year.\96\ 
     However, in the case of an applicable high-yield discount 
     obligation (an ``AHYDO'') issued by a corporate issuer: (1) 
     no deduction is allowed for the ``disqualified portion'' of 
     the original issue discount on such obligation, and (2) the 
     remainder of the original issue discount on any such 
     obligation is not allowable as a deduction until paid by the 
     issuer.\97\
---------------------------------------------------------------------------
     \96\Sec. 163(e)(1). For purposes of section 163(e)(1), the 
     daily portion of the original issue discount for any day is 
     determined under section 1272(a) (without regard to paragraph 
     (7) thereof and without regard to section 1273(a)(3)).
     \97\Sec. 163(e)(5).
---------------------------------------------------------------------------
       An AHYDO is any debt instrument if (1) the maturity date on 
     such instrument is more than five years from the date of 
     issue; (2) the yield to maturity on such instrument exceeds 
     the sum of (a) the applicable Federal rate in effect under 
     section 1274(d) for the calendar month in which the 
     obligation is issued and five percentage points, and (3) such 
     instrument has ``significant original issue discount.\98\ An 
     instrument is treated as having ``significant original issue 
     discount'' if the aggregate amount of interest that would be 
     includible in the gross income of the holder with respect to 
     such instrument for periods before the close of any accrual 
     period (as defined in section 1272(a)(5)) ending after the 
     date five years after the date of issue, exceeds the sum of 
     (1) the aggregate amount of interest to be paid under the 
     instrument before the close of such accrual period, and (2) 
     the product of the issue price of such instrument (as defined 
     in sections 1273(b) and 1274(a)) and its yield to 
     maturity.\99\
---------------------------------------------------------------------------
     \98\Sec. 163(i)(1).
     \99\Sec. 163(i)(2).
---------------------------------------------------------------------------
       The disqualified portion of the original issue discount on 
     an AHYDO is the lesser of (1) the amount of original issue 
     discount with respect to such obligation or (2) the portion 
     of the ``total return'' on such obligation which bears the 
     same ratio to such total return as the ``disqualified yield'' 
     (i.e., the excess of the yield to maturity on the obligation 
     over the applicable Federal rate plus six percentage points) 
     on such obligation bears to the yield to maturity on such 
     obligation.\100\ The term ``total return'' means the amount 
     which would have been the original issue discount of the 
     obligation if interest described in section 1273(a)(2) were 
     included in the 101 stated redemption to maturity.\101\ A 
     corporate holder treats the disqualified portion of original 
     issue discount as a stock distribution for purposes of the 
     dividend received deduction.\102\
---------------------------------------------------------------------------
     \100\Sec. 163(e)(5)(C).
     \101\Sec. 163(e)(5)(C)(ii).
     \102\Sec. 163(e)(5)(B).
---------------------------------------------------------------------------


                               House Bill

       No provision.


                            Senate Amendment

       No provision.


                          Conference Agreement

       The conference agreement adds a provision that suspends the 
     rules in section 163(e)(5) for certain obligations issued in 
     a debt-for-debt exchange, including an exchange resulting 
     from a significant modification of a debt instrument, after 
     August 31, 2008, and before January 1, 2010.
       In general, the suspension does not apply to any newly 
     issued debt instrument (including any debt instrument issued 
     as a result of a significant modification of a debt 
     instrument) that is issued for an AHYDO. However, any newly 
     issued debt instrument (including any debt instrument issued 
     as a result of a significant modification of a debt 
     instrument) for which the AHYDO rules are suspended under the 
     provision is not treated as an AHYDO for purposes of a 
     subsequent application of the suspension rule. Thus, for 
     example, if a new debt instrument that would be an AHYDO 
     under present law is issued in exchange for a debt instrument 
     that is not an AHYDO, and the provision suspends application 
     of section 163(e)(5), another new debt instrument, issued 
     during the suspension period in exchange for the instrument 
     with respect to which the rule in section 163(e)(5) was 
     suspended, would be eligible for the relief provided by the 
     provision despite the fact that it is issued for an 
     instrument that is an AHYDO under present law.
       In addition, the suspension does not apply to any newly 
     issued debt instrument (including any debt instrument issued 
     as a result of a significant modification of a debt 
     instrument) that is (1) described in section 871(h)(4) 
     (without regard to subparagraph (D) thereof) (i.e., certain 
     contingent debt) or (2) issued to a person related to the 
     issuer (within the meaning of section 108(e)(4)).
       The provision provides authority to the Secretary to apply 
     the suspension rule to periods after December 31, 2009, where 
     the Secretary determines that such application is appropriate 
     in light of distressed conditions in the debt capital 
     markets. In addition, the provision grants authority to the 
     Secretary to use a rate that is higher than the applicable 
     Federal rate for purposes of applying section 163(e)(5) for 
     obligations issued after December 31, 2009, in taxable years 
     ending after such date if the Secretary determines that such 
     higher rate is appropriate in light of distressed conditions 
     in the debt capital markets.
       Effective date.--The temporary suspension of section 
     163(e)(5) applies to obligations issued after August 31, 
     2008, in taxable years ending after such date. The additional 
     authority granted to the Secretary to use a rate higher than 
     the applicable Federal rate for purposes of applying section 
     163(e)(5) applies to obligations issued after December 31, 
     2009, in taxable years ending after such date.
     10. Special rules applicable to qualified small business 
         stock for 2009 and 2010 (sec. 1241 of the Senate 
         amendment, sec. 1241 of the conference agreement, and 
         sec. 1202 of the Code)


                              Present Law

       Under present law, individuals may exclude 50 percent (60 
     percent for certain empowerment zone businesses) of the gain 
     from the sale of certain small business stock acquired at 
     original issue and held for at least five years.\103\ The 
     portion of the gain includible in taxable income is taxed at 
     a maximum rate of 28 percent under the regular tax.\104\ A 
     percentage of the excluded gain is an alternative minimum tax 
     preference,\105\ the portion of the gain includible in 
     alternative minimum taxable income is taxed at a maximum rate 
     of 28 percent under the alternative minimum tax.
---------------------------------------------------------------------------
     \103\Sec. 1202.
     \104\Sec. 1(h).
     \105\Sec. 57(a)(7). In the case of qualified small business 
     stock, the percentage of gain excluded from gross income 
     which is an alternative minimum tax preference is (i) seven 
     percent in the case of stock disposed of in a taxable year 
     beginning before 2011; (ii) 42 percent in the case of stock 
     acquired before January 1, 2001, and disposed of in a taxable 
     year beginning after 2010; and (iii) 28 percent in the case 
     of stock acquired after December 31, 2000, and disposed of in 
     a taxable year beginning after 2010.
---------------------------------------------------------------------------
       Thus, under present law, gain from the sale of qualified 
     small business stock is taxed at effective rates of 14 
     percent under the regular tax\106\ and (i) 14.98 percent 
     under the alternative minimum tax for dispositions before 
     January 1, 2011; (ii) 19.98 percent under the alternative 
     minimum tax for dispositions after December 31, 2010, in the 
     case of stock acquired before January 1, 2001; and (iii) 
     17.92 percent under the alternative minimum tax for 
     dispositions after December 31, 2010, in the case of stock 
     acquired after December 31, 2006.\107\
---------------------------------------------------------------------------
     \106\The 50 percent of gain included in taxable income is 
     taxed at a maximum rate of 28 percent.
     \107\The amount of gain included in alternative minimum tax 
     is taxed at a maximum rate of 28 percent. The amount so 
     included is the sum of (i) 50 percent (the percentage 
     included in taxable income) of the total gain and (ii) the 
     applicable preference percentage of the one-half gain that is 
     excluded from taxable income.
---------------------------------------------------------------------------
       The amount of gain eligible for the exclusion by an 
     individual with respect to any corporation is the greater of 
     (1) ten times the taxpayer's basis in the stock or (2) $10 
     million. In order to qualify as a small business, when the 
     stock is issued, the gross assets of the corporation may not 
     exceed $50 million. The corporation also must meet certain 
     active trade or business requirements.


                               House Bill

       No provision.


                            Senate Amendment

       Under the Senate amendment, the percentage exclusion for 
     qualified small business stock sold by an individual is 
     increased from 50 percent (60 percent for certain empowerment 
     zone businesses) to 75 percent.
       As a result of the increased exclusion, gain from the sale 
     of qualified small business stock to which the provision 
     applies is taxed at effective rates of seven percent under 
     the regular tax\108\ and 12.88 percent under the alternative 
     minimum tax.\109\
---------------------------------------------------------------------------
     \108\The 25 percent of gain included in taxable income is 
     taxed at a maximum rate of 28 percent.
     \109\The 46 percent of gain included in alternative minimum 
     tax is taxed at a maximum rate of 28 percent. Forty-six 
     percent is the sum of 25 percent (the percentage of total 
     gain included in taxable income) plus 21 percent (the 
     percentage of total gain which is an alternative minimum tax 
     preference).
---------------------------------------------------------------------------
       Effective date.--The provision is effective for stock 
     issued after the date of enactment and before January 1, 
     2011.


                          Conference Agreement

       The conference agreement follows the Senate amendment.
     11. Temporary reduction in recognition period for S 
         corporation built-in gains tax (sec. 1261 of the Senate 
         amendment, sec. 1251 of the conference agreement, and 
         sec. 1374 of the Code)


                              Present Law

       A ``small business corporation'' (as defined in section 
     1361(b)) may elect to be treated as an S corporation. Unlike 
     C corporations, S corporations generally pay no corporate-
     level tax. Instead, items of income and loss of an S 
     corporation pass though to its shareholders. Each shareholder 
     takes into account separately its share of these items on its 
     individual income tax return.\110\
---------------------------------------------------------------------------
     \110\Sec. 1366.

---------------------------------------------------------------------------

[[Page 4043]]

       A corporate level tax, at the highest marginal rate 
     applicable to corporations (currently 35 percent) is imposed 
     on an S corporation's gain that arose prior to the conversion 
     of the C corporation to an S corporation and is recognized by 
     the S corporation during the recognition period, i.e., the 
     first 10 taxable years that the S election is in effect.\111\
---------------------------------------------------------------------------
     \111\Sec. 1374.
---------------------------------------------------------------------------
       Gains recognized in the recognition period are not built-in 
     gains to the extent they are shown to have arisen while the S 
     election was in effect or are offset by recognized built-in 
     losses. The built-in gains tax also applies to gains with 
     respect to net recognized built-in gain attributable to 
     property received by an S corporation from a C corporation in 
     a carryover basis transaction.\112\ The amount of the built-
     in gains tax is treated as a loss taken into account by the 
     shareholders in computing their individual income tax.\113\
---------------------------------------------------------------------------
     \112\Sec. 1374(d)(8). With respect to such assets, the 
     recognition period runs from the day on which such assets 
     were acquired (in lieu of the beginning of the first taxable 
     year for which the corporation was an S corporation). Sec. 
     1374(d)(8)(B).
     \113\Sec. 1366(f)(2).
---------------------------------------------------------------------------


                               House Bill

       No provision.


                            Senate Amendment

       The Senate amendment provides that, for any taxable year 
     beginning in 2009 and 2010, no tax is imposed on an S 
     corporation under section 1374 if the seventh taxable year in 
     the corporation's recognition period preceded such taxable 
     year. Thus, with respect to gain that arose prior to the 
     conversion of a C corporation to an S corporation, no tax 
     will be imposed under section 1374 after the seventh taxable 
     year the S corporation election is in effect. In the case of 
     built-in gain attributable to an asset received by an S 
     corporation from a C corporation in a carryover basis 
     transaction, no tax will be imposed under section 1374 if 
     such gain is recognized after the date that is seven years 
     following the date on which such asset was acquired.\114\
---------------------------------------------------------------------------
     \114\Shareholders will continue to take into account all 
     items of gain and loss under section 1366.
---------------------------------------------------------------------------
       Effective date.--The provision applies to taxable years 
     beginning after December 31, 2008.


                          Conference Agreement

       The conference agreement follows the Senate amendment.
     12. Broadband internet access tax credit (sec. 1271 of the 
         Senate amendment)


                              Present Law

       A taxpayer is allowed to recover, through annual 
     depreciation deductions, the cost of certain property used in 
     a trade or business or for the production of income. The 
     amount of the depreciation deduction allowed with respect to 
     tangible property for a taxable year is determined under the 
     modified accelerated cost recovery system (``MACRS'').\115\ 
     Under MACRS, different types of property generally are 
     assigned applicable recovery periods and depreciation 
     methods. The recovery periods applicable to most tangible 
     personal property (generally tangible property other than 
     residential rental property and nonresidential real property) 
     range from three to 25 years. The depreciation methods 
     generally applicable to tangible personal property are the 
     200-percent and 150-percent declining balance methods, 
     switching to the straight-line method for the taxable year in 
     which the depreciation deduction would be maximized.
---------------------------------------------------------------------------
     \115\Sec. 168.
---------------------------------------------------------------------------
       No credit is specifically designed under present law to 
     encourage the development of qualified broadband 
     expenditures.


                               House Bill

       No provision.


                            Senate Amendment

       The amendment provides an investment tax credit for 
     ``qualified broadband expenditures.'' Qualified broadband 
     expenditures comprise both ``current-generation'' and ``next-
     generation'' broadband. The provision establishes a 10 
     percent credit for investment in current-generation broadband 
     in rural and underserved areas. The provision establishes a 
     20 percent credit for investment in current-generation 
     broadband in unserved areas. The provision establishes a 20 
     percent credit for investment in next-generation broadband in 
     rural, underserved, unserved, and residential areas. The 
     basis of qualified property must be reduced by the amount of 
     credit received. To qualify for the credit, the qualified 
     broadband equipment must be placed in service after December 
     31, 2008, and before January 1, 2011.
       ``Current-generation'' broadband services are defined as 
     the transmission of signals at a rate of at least 5 million 
     bits per second to the subscriber and at a rate of at least 1 
     million bits per second from the subscriber or wireless 
     technology transmission of signals at a rate of at least 3 
     million bits per second to the subscriber and at a rate of at 
     least 768 kilobits per second from the subscriber. ``Next-
     generation'' broadband services are defined as the 
     transmission of signals at a rate of at least 100 million 
     bits per second to the subscriber and at a rate of at least 
     20 million bits per second from the subscriber.
       Qualified broadband expenditures means the direct or 
     indirect costs properly taken into account for the taxable 
     year for the purchase or installation of qualified equipment 
     (including upgrades) and the connection of the equipment to a 
     qualified subscriber.
       Qualified broadband expenditures include only the portion 
     of the purchase price paid by the lessor, in the case of 
     leased equipment, that is attributable to otherwise qualified 
     broadband expenditures by the lessee. In the case of property 
     that is originally placed in service by a person and that is 
     sold to the taxpayer and leased back to such person by the 
     taxpayer within three months after the date that the property 
     was originally placed in service, the property is treated as 
     originally placed in service by the taxpayer not earlier than 
     the date that the property is used under the leaseback.
       A qualified subscriber, with respect to current-generation 
     broadband services, means any nonresidential subscriber 
     maintaining a permanent place of business in a rural, 
     underserved, or unserved area, or any residential subscriber 
     residing in a rural, underserved, or unserved area that is 
     not a saturated market. A qualified subscriber, with respect 
     to next generation broadband services, means any 
     nonresidential subscriber maintaining a permanent place of 
     business in a rural, underserved, or unserved area, or any 
     residential subscriber.
       For this purpose, a rural area is a low-income community 
     designated under section 45D which is defined as a population 
     census tract located in a with either (1) a poverty rate of 
     at least 20 percent or (2) median family income which does 
     not exceed 80 percent of the greater of metropolitan area 
     median family income or statewide median family income (for a 
     non-metropolitan census tract, does not exceed 80 percent of 
     statewide median family income).
       An underserved area means a census tract located in an 
     empowerment zone or enterprise community designated under 
     section 1391, or the District of Columbia Enterprise Zone 
     established under section 1400, or a renewal community 
     designated under section 1400E, or a low-income community 
     designated under section 45D.
       An unserved area is an area without current-generation 
     broadband service.
       A saturated market, for this purpose, means any census 
     tract in which, as of the date of enactment, current 
     generation broadband services have been provided by a single 
     provider to 85 percent or more of the total potential 
     residential subscribers. The services must be usable at least 
     a majority of the time during periods of maximum demand, and 
     usable in a manner substantially the same as services 
     provided through equipment not eligible for the deduction 
     under this provision.
       If current- or next-generation broadband services can be 
     provided through qualified equipment to both qualified 
     subscribers and to other subscribers, the provision provides 
     that the expenditures with respect to the equipment are 
     allocated among subscribers to determine the amount of 
     qualified broad broadband expenditures that may be deducted 
     under the provision.
       Qualified equipment means equipment that provides current- 
     or next-generation broadband services at least a majority of 
     the time during periods of maximum demand to each subscriber, 
     and in a manner substantially the same as such services are 
     provided by the provider to subscribers through equipment 
     with respect to which no deduction is allowed under the 
     provision. Limitations are imposed under the provision on 
     equipment depending on where it extends, and on certain 
     packet switching equipment, and on certain multiplexing and 
     demultiplexing equipment.
       Expenditures generally are not taken into account for 
     purposes of the credit under the provision with respect to 
     property used predominantly outside the United States, used 
     predominantly to furnish lodging, used by a tax-exempt 
     organization (other than in a business whose income is 
     subject to unrelated business income tax), or used by the 
     United States or a political subdivision or by a possession, 
     agency or instrumentality thereof or by a foreign person or 
     entity. The basis of property is reduced by the cost of the 
     property that is taken into account as a deduction under the 
     provision. Recapture rules are provided. The credit is part 
     of the general business credit.
       Effective date.--The provision is effective for property 
     placed in service after December 31, 2008.


                          Conference Agreement

       The conference agreement does not include the Senate 
     amendment provision.

            C. Fiscal Relief for State and Local Governments

     1. De minimis safe harbor exception for tax-exempt interest 
         expense of financial institutions and modification of 
         small issuer exception to tax-exempt interest expense 
         allocation rules for financial institutions (secs. 1501 
         and 1502 of the House bill, secs. 1501 and 1502 of the 
         Senate amendment, secs. 1501 and 1502 of the conference 
         agreement, and sec. 265 of the Code)


                              Present Law

       Present law disallows a deduction for interest on 
     indebtedness incurred or continued

[[Page 4044]]

     to purchase or carry obligations the interest on which is 
     exempt from tax.\116\ In general, an interest deduction is 
     disallowed only if the taxpayer has a purpose of using 
     borrowed funds to purchase or carry tax-exempt obligations; a 
     determination of the taxpayer's purpose in borrowing funds is 
     made based on all of the facts and circumstances.\117\
---------------------------------------------------------------------------
     \116\Sec. 265(a).
     \117\See Rev. Proc. 72-18, 1972-1 C.B. 740.
---------------------------------------------------------------------------
       Two-percent rule for individuals and certain nonfinancial 
           corporations
       In the absence of direct evidence linking an individual 
     taxpayer's indebtedness with the purchase or carrying of tax-
     exempt obligations, the Internal Revenue Service takes the 
     position that it ordinarily will not infer that a taxpayer's 
     purpose in borrowing money was to purchase or carry tax-
     exempt obligations if the taxpayer's investment in tax-exempt 
     obligations is ``insubstantial.''\118\ An individual's 
     holdings of tax-exempt obligations are presumed to be 
     insubstantial if during the taxable year the average adjusted 
     basis of the individual's tax-exempt obligations is two 
     percent or less of the average adjusted basis of the 
     individual's portfolio investments and assets held by the 
     individual in the active conduct of a trade or business.
---------------------------------------------------------------------------
     \118\Id.
---------------------------------------------------------------------------
       Similarly, in the case of a corporation that is not a 
     financial institution or a dealer in tax-exempt obligations, 
     where there is no direct evidence of a purpose to purchase or 
     carry tax-exempt obligations, the corporation's holdings of 
     tax-exempt obligations are presumed to be insubstantial if 
     the average adjusted basis of the corporation's tax-exempt 
     obligations is two percent or less of the average adjusted 
     basis of all assets held by the corporation in the active 
     conduct of its trade or business.
       Financial institutions
       In the case of a financial institution, the Code generally 
     disallows that portion of the taxpayer's interest expense 
     that is allocable to tax-exempt interest.\119\ The amount of 
     interest that is disallowed is an amount which bears the same 
     ratio to such interest expense as the taxpayer's average 
     adjusted bases of tax-exempt obligations acquired after 
     August 7, 1986, bears to the average adjusted bases for all 
     assets of the taxpayer.
---------------------------------------------------------------------------
     \119\Sec. 265(b)(1). A ``financial institution'' is any 
     person that (1) accepts deposits from the public in the 
     ordinary course of such person's trade or business and is 
     subject to Federal or State supervision as a financial 
     institution or (2) is a corporation described in section 
     585(a)(2). Sec. 265(b)(5).
---------------------------------------------------------------------------
       Exception for certain obligations of qualified small 
           issuers
       The general rule in section 265(b), denying financial 
     institutions' interest expense deductions allocable to tax-
     exempt obligations, does not apply to ``qualified tax-exempt 
     obligations.''\120\ Instead, as discussed in the next 
     section, only *percent of the interest expense allocable to 
     ``qualified tax-exempt obligations'' is disallowed.\121\ A 
     ``qualified tax-exempt obligation'' is a tax-exempt 
     obligation that (1) is issued after August 7, 1986, by a 
     qualified small issuer, (2) is not a private activity bond, 
     and (3) is designated by the issuer as qualifying for the 
     exception from the general rule of section 265(b).
---------------------------------------------------------------------------
     \120\Sec. 265(b)(3).
     \121\Secs. 265(b)(3)(A), 291(a)(3) and 291(e)(1).
---------------------------------------------------------------------------
       A ``qualified small issuer'' is an issuer that reasonably 
     anticipates that the amount of tax-exempt obligations that it 
     will issue during the calendar year will be $10 million or 
     less.\122\ The Code specifies the circumstances under which 
     an issuer and all subordinate entities are aggregated.\123\ 
     For purposes of the $10 million limitation, an issuer and all 
     entities that issue obligations on behalf of such issuer are 
     treated as one issuer. All obligations issued by a 
     subordinate entity are treated as being issued by the entity 
     to which it is subordinate. An entity formed (or availed of) 
     to avoid the $10 million limitation and all entities 
     benefiting from the device are treated as one issuer.
---------------------------------------------------------------------------
     \122\Sec. 265(b)(3)(C).
     \123\Sec. 265(b)(3)(E).
---------------------------------------------------------------------------
       Composite issues (i.e., combined issues of bonds for 
     different entities) qualify for the ``qualified tax-exempt 
     obligation'' exception only if the requirements of the 
     exception are met with respect to (1) the composite issue as 
     a whole (determined by treating the composite issue as a 
     single issue) and (2) each separate lot of obligations that 
     is part of the issue (determined by treating each separate 
     lot of obligations as a separate issue).\124\ Thus a 
     composite issue may qualify for the exception only if the 
     composite issue itself does not exceed $10 million, and if 
     each issuer benefitting from the composite issue reasonably 
     anticipates that it will not issue more than $10 million of 
     tax-exempt obligations during the calendar year, including 
     through the composite arrangement.
---------------------------------------------------------------------------
     \124\Sec. 265(b)(3)(F).
---------------------------------------------------------------------------
       Treatment of financial institution preference items
       Section 291(a)(3) reduces by 20 percent the amount 
     allowable as a deduction with respect to any financial 
     institution preference item. Financial institution preference 
     items include interest on debt to tax-exempt obligations 
     acquired after December 31, 1982, and before acquired on 
     August 7, 1986.\125\ Section 265(b)(3) treats qualified tax-
     exempt obligations as if they were acquired on August 7, 
     1986. As a result, the amount allowable as a deduction by a 
     financial institution with respect to interest incurred to 
     carry a qualified tax-exempt obligation is reduced by 20 
     percent.
---------------------------------------------------------------------------
     \125\Sec. 291(e)(1).
---------------------------------------------------------------------------


                               House Bill

       Two-percent safe harbor for financial institutions
       The provision provides that tax-exempt obligations issued 
     during 2009 or 2010 and held by a financial institution, in 
     an amount not to exceed two percent of the adjusted basis of 
     the financial institution's assets, are not taken into 
     account for the purpose of determining the portion of the 
     financial institution's interest expense subject to the pro 
     rata interest disallowance rule of section 265(b). For 
     purposes of this rule, a refunding bond (whether a current or 
     advance refunding) is treated as issued on the date of the 
     issuance of the refunded bond (or in the case of a series of 
     refundings, the original bond).
       The provision also amends section 291(e) to provide that 
     tax-exempt obligations issued during 2009 and 2010, and not 
     taken into account for purposes of the calculation of a 
     financial institution's interest expense subject to the pro 
     rata interest disallowance rule, are treated as having been 
     acquired on August 7, 1986. As a result, such obligations are 
     financial institution preference items, and the amount 
     allowable as a deduction by a financial institution with 
     respect to interest incurred to carry such obligations is 
     reduced by 20 percent.
       Modifications to qualified small issuer exception
       With respect to tax-exempt obligations issued during 2009 
     and 2010, the provision increases from $10 million to $30 
     million the annual limit for qualified small issuers.
       In addition, in the case of ``qualified financing issue'' 
     issued in 2009 or 2010, the provision applies the $30 million 
     annual volume limitation at the borrower level (rather than 
     at the level of the pooled financing issuer). Thus, for the 
     purpose of applying the requirements of the section 265(b)(3) 
     qualified small issuer exception, the portion of the proceeds 
     of a qualified financing issue that are loaned to a 
     ``qualified borrower'' that participates in the issue are 
     treated as a separate issue with respect to which the 
     qualified borrower is deemed to be the issuer.
       A ``qualified financing issue'' is any composite, pooled or 
     other conduit financing issue the proceeds of which are used 
     directly or indirectly to make or finance loans to one or 
     more ultimate borrowers all of whom are qualified borrowers. 
     A ``qualified borrower'' means (1) a State or political 
     subdivision of a State or (2) an organization described in 
     section 501(c)(3) and exempt from tax under section 501(a). 
     Thus, for example, a $100 million pooled financing issue that 
     was issued in 2009 could qualify for the section 265(b)(3) 
     exception if the proceeds of such issue were used to make 
     four equal loans of $25 million to four qualified borrowers. 
     However, if (1) more than $30 million were loaned to any 
     qualified borrower, (2) any borrower were not a qualified 
     borrower, or (3) any borrower would, if it were the issuer of 
     a separate issue in an amount equal to the amount loaned to 
     such borrower, fail to meet any of the other requirements of 
     section 265(b)(3), the entire $100 million pooled financing 
     issue would fail to qualify for the exception.
       For purposes of determining whether an issuer meets the 
     requirements of the small issuer exception, qualified 
     501(c)(3) bonds issued in 2009 or 2010 are treated as if they 
     were issued by the 501(c)(3) organization for whose benefit 
     they were issued (and not by the actual issuer of such 
     bonds). In addition, in the case of an organization described 
     in section 501(c)(3) and exempt from taxation under section 
     501(a), requirements for ``qualified financing issues'' shall 
     be applied as if the section 501(c)(3) organization were the 
     issuer. Thus, in any event, an organization described in 
     section 501(c)(3) and exempt from taxation under section 
     501(a) shall be limited to the $30 million per issuer cap for 
     qualified tax exempt obligations described in section 
     265(b)(3).
       Effective Date.--The provisions are effective for 
     obligations issued after December 31, 2008.


                            Senate Amendment

       The Senate amendment is the same as the House bill.


                          Conference Agreement

       The conference agreement follows the House bill and the 
     Senate amendment.
     2. Temporary modification of alternative minimum tax 
         limitations on tax-exempt bonds (sec. 1503 of the House 
         bill, sec. 1503 of the Senate amendment, sec. 1503 of the 
         conference agreement, and secs. 56 and 57 of the Code)


                              Present Law

       Present law imposes an alternative minimum tax (``AMT'') on 
     individuals and corporations. AMT is the amount by which the 
     tentative minimum tax exceeds the regular income tax. The 
     tentative minimum tax is computed based upon a taxpayer's 
     alternative minimum taxable income (``AMTI''). AMTI is the 
     taxpayer's taxable income modified to take into account 
     certain preferences and adjustments. One of the preference 
     items

[[Page 4045]]

     is tax-exempt interest on certain tax-exempt bonds issued for 
     private activities (sec. 57(a)(5)). Also, in the case of a 
     corporation, an adjustment based on current earnings is 
     determined, in part, by taking into account 75 percent of 
     items, including tax-exempt interest, that are excluded from 
     taxable income but included in the corporation's earnings and 
     profits (sec. 56(g)(4)(B)).


                               House Bill

       The House bill provides that tax-exempt interest on private 
     activity bonds issued in 2009 and 2010 is not an item of tax 
     preference for purposes of the alternative minimum tax and 
     interest on tax exempt bonds issued in 2009 and 2010 is not 
     included in the corporate adjustment based on current 
     earnings. For these purposes, a refunding bond is treated as 
     issued on the date of the issuance of the refunded bond (or 
     in the case of a series of refundings, the original bond).
       Effective date.--The provision applies to interest on bonds 
     issued after December 31, 2008.


                            Senate Amendment

       The Senate amendment is the same as the House bill.


                          Conference Agreement

       The conference agreement provides that tax-exempt interest 
     on private activity bonds issued in 2009 and 2010 is not an 
     item of tax preference for purposes of the alternative 
     minimum tax and interest on tax exempt bonds issued in 2009 
     and 2010 is not included in the corporate adjustment based on 
     current earnings. For these purposes, a refunding bond is 
     treated as issued on the date of the issuance of the refunded 
     bond (or in the case of a series of refundings, the original 
     bond).
       The conference agreement also provides that tax-exempt 
     interest on private activity bonds issued in 2009 and 2010 to 
     currently refund a private activity bond issued after 
     December 31, 2003, and before January 1, 2009, is not an item 
     of tax preference for purposes of the alternative minimum 
     tax. Also tax-exempt interest on bonds issued in 2009 and 
     2010 to currently refund a bond issued after December 31, 
     2003, and before January 1, 2009, is not included in the 
     corporate adjustment based on current earnings.
       Effective date.--The provision applies to interest on bonds 
     issued after December 31, 2008.
     3. Temporary expansion of availability of industrial 
         development bonds to facilities creating intangible 
         property and other modifications (sec. 1301 of the Senate 
         amendment, sec. 1301 of the conference agreement, and 
         sec. 144(a) of the Code)


                              Present Law

       Qualified small issue bonds (commonly referred to as 
     ``industrial development bonds'' or ``small issue IDBs'') are 
     tax-exempt bonds issued by State and local governments to 
     finance private business manufacturing facilities (including 
     certain directly related and ancillary facilities) or the 
     acquisition of land and equipment by certain farmers. In both 
     instances, these bonds are subject to limits on the amount of 
     financing that may be provided, both for a single borrowing 
     and in the aggregate. In general, no more than $1 million of 
     small-issue bond financing may be outstanding at any time for 
     property of a business (including related parties) located in 
     the same municipality or county. Generally, this $1 million 
     limit may be increased to $10 million if, in addition to 
     outstanding bonds, all other capital expenditures of the 
     business (including related parties) in the same municipality 
     or county are counted toward the limit over a six-year period 
     that begins three years before the issue date of the bonds 
     and ends three years after such date. Outstanding aggregate 
     borrowing is limited to $40 million per borrower (including 
     related parties) regardless of where the property is located.
       The Code permits up to $10 million of capital expenditures 
     to be disregarded, in effect increasing from $10 million to 
     $20 million the maximum allowable amount of total capital 
     expenditures by an eligible business in the same municipality 
     or county. However, no more than $10 million of bond 
     financing may be outstanding at any time for property of an 
     eligible business (including related parties) located in the 
     same municipality or county. Other limits (e.g., the $40 
     million per borrower limit) also continue to apply.
       A manufacturing facility is any facility which is used in 
     the manufacturing or production of tangible personal property 
     (including the processing resulting in a change in the 
     condition of such property). Manufacturing facilities include 
     facilities that are directly related and ancillary to a 
     manufacturing facility (as described in the previous 
     sentence) if (1) such facilities are located on the same site 
     as the manufacturing facility and (2 not more than 25 percent 
     of the net proceeds of the issue are used to provide such 
     facilities.\126\
---------------------------------------------------------------------------
     \126\The 25 percent restriction was enacted by the Technical 
     and Miscellaneous Tax Act of 1988 because of concern over the 
     scope of the definition of manufacturing facility. See H.R. 
     Rpt. No. 100-795 (1988). The amendment was intended to 
     clarify that while the manufacturing facility definition does 
     not preclude the financing of ancillary activities, the 25 
     percent restriction was intended to limit the use of bond 
     proceeds to finance facilities other than for ``core 
     manufacturing.'' The conference agreement followed the House 
     bill, which the conference report described as follows: ``The 
     House bill clarifies that up to 25 percent of the proceeds of 
     a qualified small issue may be used to finance ancillary 
     activities which are carried out at the manufacturing site. 
     All such ancillary activities must be subordinate and 
     integral to the manufacturing process.''
---------------------------------------------------------------------------


                               House Bill

       No provision.


                            Senate Amendment

     In general
       For bonds issued after the date of enactment and before 
     January 1, 2011, the provision expands the definition of 
     manufacturing facilities to mean any facility that is used in 
     the manufacturing, creation, or production of tangible 
     property or intangible property (within the meaning of 
     section 197(d)(1)(C)(iii)). For this purpose, intangible 
     property means any patent, copyright, formula, process, 
     design, knowhow, format, or other similar item. It is 
     intended to include among other items, the creation of 
     computer software, and intellectual property associated bio-
     tech and pharmaceuticals.
       In lieu of the directly related and ancillary test of 
     present law, the provision provides a special rule for bonds 
     issued after the date of enactment and before January 1, 
     2011. For these bonds, the provision provides that facilities 
     that are functionally related and subordinate to the 
     manufacturing facility are treated as a manufacturing 
     facility and the 25 percent of net proceeds restriction does 
     not apply to such facilities.\127\ Functionally related and 
     subordinate facilities must be located on the same site as 
     the manufacturing facility.
---------------------------------------------------------------------------
     \127\The provision is based in part on a similar rule 
     applicable to exempt facility bonds. Treas. Reg. sec. 1.103-
     8(a)(3) provides: ``(3) Functionally related and subordinate. 
     An exempt facility includes any land, building, or other 
     property functionally related and subordinate to such 
     facility. Property is not functionally related and 
     subordinate to a facility if it is not of a character and 
     size commensurate with the character and size of such 
     facility.''
---------------------------------------------------------------------------
     Effective date
       The provision is effective for bonds issued after the date 
     of enactment and before January 1, 2011.


                          Conference Agreement

       The conference agreement follows the Senate amendment.
     4. Qualified school construction bonds (sec. 1511 of the 
         House bill, sec. 1521 of the Senate amendment, sec. 1521 
         of the conference agreement, and new sec. 54F of the 
         Code)


                              Present Law

     Tax-exempt bonds
       Interest on State and local governmental bonds generally is 
     excluded from gross income for Federal income tax purposes if 
     the proceeds of the bonds are used to finance direct 
     activities of these governmental units or if the bonds are 
     repaid with revenues of the governmental units. These can 
     include tax-exempt bonds which finance public schools.\128\ 
     An issuer must file with the Internal Revenue Service certain 
     information about the bonds issued in order for that bond 
     issue to be tax-exempt.\129\ Generally, this information 
     return is required to be filed no later than the 15th day of 
     the second month after the close of the calendar quarter in 
     which the bonds were issued.
---------------------------------------------------------------------------
     \128\Sec. 103.
     \129\Sec. 149(e).
---------------------------------------------------------------------------
       The tax exemption for State and local bonds does not apply 
     to any arbitrage bond.\130\ An arbitrage bond is defined as 
     any bond that is part of an issue if any proceeds of the 
     issue are reasonably expected to be used (or intentionally 
     are used) to acquire higher-yielding investments or to 
     replace funds that are used to acquire higher yielding 
     investments.\131\ In general, arbitrage profits may be earned 
     only during specified periods (e.g., defined ``temporary 
     periods'') before funds are needed for the purpose of the 
     borrowing or on specified types of investments (e.g., 
     ``reasonably required reserve or replacement funds''). 
     Subject to limited exceptions, investment profits that are 
     earned during these periods or on such investments must be 
     rebated to the Federal Government.
---------------------------------------------------------------------------
     \130\Sec. 103(a) and (b)(2).
     \131\Sec. 148.
---------------------------------------------------------------------------
     Qualified zone academy bonds
       As an alternative to traditional tax-exempt bonds, State nd 
     local governments were given the authority to issue 
     ``qualified zone academy bonds.''\132\ A total of $400 
     million of qualified zone academy bonds is authorized to be 
     issued annually in calendar years 1998 through 2009. The $400 
     million aggregate bond cap is allocated each year to the 
     States according to their respective populations of 
     individuals below the poverty line. Each State, in turn, 
     allocates the credit authority to qualified zone academies 
     within such State.
---------------------------------------------------------------------------
     \132\Sec. 1397E.
---------------------------------------------------------------------------
       A taxpayer holding a qualified zone academy bond on the 
     credit allowance date is entitled to a credit. The credit is 
     includible in gross income (as if it were a taxable interest 
     payment on the bond), and may be claimed against regular 
     income tax and alternative minimum tax liability.
       The Treasury Department sets the credit rate at a rate 
     estimated to allow issuance of

[[Page 4046]]

     qualified zone academy bonds without discount and without 
     interest cost to the issuer.\133\ The Secretary determines 
     credit rates for tax credit bonds based on general 
     assumptions about credit quality of the class of potential 
     eligible issuers and such other factors as the Secretary 
     deems appropriate. The Secretary may determine credit rates 
     based on general credit market yield indexes and credit 
     ratings. The maximum term of the bond is determined by the 
     Treasury Department, so that the present value of the 
     obligation to repay the principal on the bond is 50 percent 
     of the face value of the bond.
---------------------------------------------------------------------------
     \133\Given the differences in credit quality and other 
     characteristics of individual issuers, the Secretary cannot 
     set credit rates in a manner that will allow each issuer to 
     issue tax credit bonds at par.
---------------------------------------------------------------------------
       ``Qualified zone academy bonds'' are defined as any bond 
     issued by a State or local government, provided that (1) at 
     least 95 percent of the proceeds are used for the purpose of 
     renovating, providing equipment to, developing course 
     materials for use at, or training teachers and other school 
     personnel in a ``qualified zone academy'' and (2) private 
     entities have promised to contribute to the qualified zone 
     academy certain equipment, technical assistance or training, 
     employee services, or other property or services with a value 
     equal to at least 10 percent of the bond proceeds.
       A school is a ``qualified zone academy'' if (1) the school 
     is a public school that provides education and training below 
     the college level, (2) the school operates a special academic 
     program in cooperation with businesses to enhance the 
     academic curriculum and increase graduation and employment 
     rates, and (3) either (a) the school is located in an 
     empowerment zone or enterprise community designated under the 
     Code, or (b) it is reasonably expected that at least 35 
     percent of the students at the school will be eligible for 
     free or reduced-cost lunches under the school lunch program 
     established under the National School Lunch Act.
       The arbitrage requirements which generally apply to 
     interest-bearing tax-exempt bonds also generally apply to 
     qualified zone academy bonds. In addition, an issuer of 
     qualified zone academy bonds must reasonably expect to and 
     actually spend 100 percent of the proceeds of such bonds on 
     qualified zone academy property within the three years period 
     that begins on the date of issuance. To the extent less than 
     100 percent of the proceeds are used to finance qualified 
     zone academy property during the three years spending period, 
     bonds will continue to qualify as qualified zone academy 
     bonds if unspent proceeds are used within 90 days from the 
     end of such three years period to redeem any nonqualified 
     bonds. The three years spending period may be extended by the 
     Secretary if the issuer establishes that the failure to meet 
     the spending requirement is due to reasonable cause and the 
     related purposes for issuing the bonds will continue to 
     proceed with due diligence.
       Two special arbitrage rules apply to qualified zone academy 
     bonds. First, available project proceeds invested during the 
     three-year period beginning on the date of issue are not 
     subject to the arbitrage restrictions (i.e., yield 
     restriction and rebate requirements). Available project 
     proceeds are proceeds from the sale of an issue of qualified 
     zone academy bonds, less issuance costs (not to exceed two 
     percent) and any investment earnings on such proceeds. Thus, 
     available project proceeds invested during the three-year 
     spending period may be invested at unrestricted yields, but 
     the earnings on such investments must be spent on qualified 
     zone academy property. Second, amounts invested in a reserve 
     fund are not subject to the arbitrage restrictions to the 
     extent: (1) such fund is funded at a rate not more rapid than 
     equal annual installments; (2) such fund is funded in a 
     manner reasonably expected to result in an amount not greater 
     than an amount necessary to repay the issue; and (3) the 
     yield on such fund is not greater than the average annual 
     interest rate of tax-exempt obligations having a term of 10 
     years or more that are issued during the month the qualified 
     zone academy bonds are issued.
       Issuers of qualified zone academy bonds are required to 
     report issuance to the Internal Revenue Service in a manner 
     similar to the information returns required for tax-exempt 
     bonds.


                               House Bill

     In general
       The provision creates a new category of tax-credit bonds: 
     qualified school construction bonds. Qualified school 
     construction bonds must meet three requirements: (1) 100 
     percent of the available project proceeds of the bond issue 
     is used for the construction, rehabilitation, or repair of a 
     public school facility or for the acquisition of land on 
     which such a bond-financed facility is to be constructed; (2) 
     the bond is issued by a State or local government within 
     which such school is located; and (3) the issuer designates 
     such bonds as a qualified school construction bond.
     National limitation
       There is a national limitation on qualified school 
     construction bonds of $11 billion for calendar years 2009 and 
     2010, respectively. Allocations of the national limitation of 
     qualified school construction bonds are divided between the 
     States and certain large school districts. The States receive 
     60 percent of the national limitation for a calendar year and 
     the remaining 40 percent of the national limitation for a 
     calendar year is allocated to certain of the largest school 
     districts.
     Allocation to the States
       Generally allocations are made to the States under the 60 
     percent allocation according to their respective populations 
     of children aged five through seventeen. However, the 
     Secretary of the Treasury shall adjust the annual allocations 
     among the States to ensure that for each State the sum of its 
     allocations under the 60 percent allocation plus any 
     allocations to large educational agencies within the States 
     is not less than a minimum percentage. A State's minimum 
     percentage for a calendar year is a product of 1.68 and the 
     minimum percentage described in section 1124(d) of the 
     Elementary and Secondary Education Act of 1965 for such State 
     for the most recent fiscal year ending before such calendar 
     year.
       For allocation purposes, a State includes the District of 
     Columbia and any possession of the United States. The 
     provision provides a special allocation for possessions of 
     the United States other than Puerto Rico under the 60 percent 
     share of the national limitation for States. Under this 
     special rule an allocation to a possession other than Puerto 
     Rico is made on the basis of the respective populations of 
     individuals below the poverty line (as defined by the Office 
     of Management and Budget) rather than respective populations 
     of children aged five through seventeen. This special 
     allocation reduces the State allocation share of the national 
     limitation otherwise available for allocation among the 
     States. Under another special rule the Secretary of the 
     Interior may allocate $200 million of school construction 
     bonds for 2009 and 2010, respectively, to Indian schools. 
     This special allocation for Indian schools is to be used for 
     purposes of the construction, rehabilitation, and repair of 
     schools funded by the Bureau of Indian Affairs. For purposes 
     of such allocations Indian tribal governments are qualified 
     issuers. The special allocation for Indian schools does not 
     reduce the State allocation share of the national limitation 
     otherwise available for allocation among the States.
       If an amount allocated under this allocation to the States 
     is unused for a calendar year it may be carried forward by 
     the State to the next calendar year.
     Allocation to lame school districts
       The remaining 40 percent of the national limitation for a 
     calendar year is allocated by the Secretary of the Treasury 
     among local educational agencies which are large local 
     educational agencies for such year. This allocation is made 
     in proportion to the respective amounts each agency received 
     for Basic Grants under subpart 2 of Part A of Title I of the 
     Elementary and Secondary Education Act of 1965 for the most 
     recent fiscal year ending before such calendar year. Any 
     unused allocation of any agency within a State may be 
     allocated by the agency to such State. With respect to a 
     calendar year, the term large local educational agency means 
     any local educational agency if such agency is: (1) among the 
     100 local educational agencies with the largest numbers of 
     children aged 5 through 17 from families living below the 
     poverty level, or (2) one of not more than 25 local 
     educational agencies (other than in 1, immediately above) 
     that the Secretary of Education determines are in particular 
     need of assistance, based on a low level of resources for 
     school construction, a high level of enrollment growth, or 
     other such factors as the Secretary of Education deems 
     appropriate. If any amount allocated to large local 
     educational agency is unused for a calendar year the agency 
     may reallocate such amount to the State in which the agency 
     is located.
       The provision makes qualified school construction bonds a 
     type of qualified tax credit bond for purposes of section 
     54A. In addition, qualified school construction bonds may be 
     issued by Indian tribal governments only to the extent such 
     bonds are issued for purposes that satisfy the present law 
     requirements for tax-exempt bonds issued by Indian tribal 
     governments (i.e., essential governmental functions and 
     certain manufacturing purposes).
       The provision requires 100 percent of the available project 
     proceeds of qualified school construction bonds to be used 
     within the three-year period that begins on the date of 
     issuance. Available project proceeds are proceeds from the 
     sale of the issue less issuance costs (not to exceed two 
     percent) and any investment earnings on such sale proceeds. 
     To the extent less than 100 percent of the available project 
     proceeds are used to finance qualified purposes during the 
     three-year spending period, bonds will continue to qualify as 
     qualified school construction bonds if unspent proceeds are 
     used within 90 days from the end of such three-year period to 
     redeem bonds. The three-year spending period may be extended 
     by the Secretary upon the issuer's request demonstrating that 
     the failure to satisfy the three-year requirement is due to 
     reasonable cause and the projects will continue to proceed 
     with due diligence:
       Qualified school construction bonds generally are subject 
     to the arbitrage requirements of section 148. However, 
     available project proceeds invested during the three-

[[Page 4047]]

     year spending period are not subject to the arbitrage 
     restrictions (i.e., yield restriction and rebate 
     requirements). In addition, amounts invested in a reserve 
     fund are not subject to the arbitrage restrictions to the 
     extent: (I) such fund is funded at a rate not more rapid than 
     equal annual installments; (2) such fund is funded in a 
     manner reasonably expected to result in an amount not greater 
     than an amount necessary to repay the issue; and (3) the 
     yield on such fund is not greater than the average annual 
     interest rate of tax-exempt obligations having a term of 10 
     years or more that are issued during the month the qualified 
     school construction bonds are issued.
       The maturity of qualified school construction bonds is the 
     term that the Secretary estimates will result in the present 
     value of the obligation to repay the principal on such bonds 
     being equal to 50 percent of the face amount of such bonds, 
     using as a discount rate the average annual interest rate of 
     tax-exempt obligations having a term of 10 years or more that 
     are issued during the month the qualified school construction 
     bonds are issued.
       As with present-law tax credit bonds, the taxpayer holding 
     qualified school construction bonds on a credit allowance 
     date is entitled to a tax credit. The credit rate on the 
     bonds is set by the Secretary at a rate that is 100 percent 
     of the rate that would permit issuance of such bonds without 
     discount and interest cost to the issuer. The amount of the 
     tax credit is determined by multiplying the bond's credit 
     rate by the face amount on the holder's bond. The credit 
     accrues quarterly, is includible in gross income (as if it 
     were an interest payment on the bond), and can be claimed 
     against regular income tax liability and alternative minimum 
     tax liability. Unused credits may be carried forward to 
     succeeding taxable years. In addition, credits may be 
     separated from the ownership of the underlying bond in a 
     manner similar to the manner in which interest coupons can be 
     stripped from interest-bearing bonds.
       Issuers of qualified school construction bonds are required 
     to certify that the financial disclosure requirements and 
     applicable State and local law requirements governing 
     conflicts of interest are satisfied with respect to such 
     issue, as well as any other additional conflict of interest 
     rules prescribed by the Secretary with respect to any 
     Federal, State, or local government official directly 
     involved with the issuance of qualified school construction 
     bonds.
     Effective date
       The provision is effective for bonds issued after December 
     31, 2008.


                            Senate Amendment

     In general
       The Senate amendment is the same as the House bill.
     National limitation
       There is a national limitation on qualified school 
     construction bonds of $5 billion for Calendar years 2009 and 
     2010, respectively. Also, allocations of the national 
     limitation of qualified school construction bonds are divided 
     between the States with no special allocations to certain 
     large school districts.
     Allocation to the States
       The allocations are made to the States according to their 
     respective populations of children aged five through 
     seventeen. However, the Secretary of the Treasury shall 
     adjust the annual allocations among the States to ensure that 
     for each State is not less than a minimum percentage. A 
     State's minimum percentage for a calendar year is calculated 
     by dividing (1) the amount the State is eligible to receive 
     under section 1124(d) of the Elementary and Secondary 
     Education Act of 1965 for such State for the most recent 
     fiscal year ending before such calendar year by (2) the 
     amount all States are eligible to received under section 
     1124(d) of the Elementary and Secondary Education Act of 1965 
     for such fiscal year, and then multiplying the result by 100.
     Allocation to large school districts
       No portion of the national limitation for a calendar year 
     is allocated by the Secretary of the Treasury among local 
     educational agencies which are large local educational 
     agencies for such year.
     Effective Date
       The provision is effective for obligations issued after the 
     date of enactment.


                          Conference Agreement

     In general
       The provision creates a new category of tax-credit bonds: 
     qualified school construction bonds. Qualified school 
     construction bonds must meet three requirements: (1) 100 
     percent of the available project proceeds of the bond issue 
     is used for the construction, rehabilitation, or repair of a 
     public school facility or for the acquisition of land on 
     which such a bond-financed facility is to be constructed; (2) 
     the bond is issued by a State or local government within 
     which such school is located; and (3) the issuer designates 
     such bonds as a qualified school construction bond.
     National limitation
       There is a national limitation on qualified school 
     construction bonds of $11 billion for calendar years 2009 and 
     2010, respectively.
     Allocation to the States
       The national limitation is tentatively allocated among the 
     States in proportion to respective amounts each such State is 
     eligible to receive under section 1124 of the Elementary and 
     Secondary Education Act of 1965 for the most recent fiscal 
     year ending before such calendar year. The amount each State 
     is allocated under the above formula is then reduced by the 
     amount received by any local large educational agency within 
     the State.
       For allocation purposes, a State includes the District of 
     Columbia and any possession of the United States. The 
     provision provides a special allocation for possessions of 
     the United States other than Puerto Rico under the national 
     limitation for States. Under this special rule an allocation 
     to a possession other than Puerto Rico is made on the basis 
     of the respective populations of individuals below the 
     poverty line (as defined by the Office of Management and 
     Budget) rather than respective populations of children aged 
     five through seventeen. This special allocation reduces the 
     State allocation share of the national limitation otherwise 
     available for allocation among the States. Under another 
     special rule the Secretary of the Interior may allocate $200 
     million of school construction bonds for 2009 and 2010, 
     respectively, to Indian schools. This special allocation for 
     Indian schools is to be used for purposes of the 
     construction, rehabilitation, and repair of schools funded by 
     the Bureau of Indian Affairs. For purposes of such 
     allocations Indian tribal governments are qualified issuers. 
     The special allocation for Indian schools does not reduce the 
     State allocation share of the national limitation otherwise 
     available for allocation among the States.
       If an amount allocated under this allocation to the States 
     is unused for a calendar year it may be carried forward by 
     the State to the next calendar year.
     Allocation to large school districts
       Forty percent of the national limitation is allocated among 
     large local educational agencies in proportion to the 
     respective amounts each agency received under section 1124 of 
     the Elementary and Secondary Education Act of 1965 for the 
     most recent fiscal year ending before such calendar year. Any 
     unused allocation of any agency within a State may be 
     allocated by the agency to such State. With respect to a 
     calendar year, the term large local educational agency means 
     any local educational agency if such agency is: (1) among the 
     100 local educational agencies with the largest numbers of 
     children aged 5 through 17 from families living below the 
     poverty level, or (2) one of not more than 25 local 
     educational agencies (other than in 1, immediately above) 
     that the Secretary of Education determines are in particular 
     need of assistance, based on a low level of resources for 
     school construction, a high level of enrollment growth, or 
     other such factors as the Secretary of Education deems 
     appropriate. If any amount allocated to large local 
     educational agency is unused for a calendar year the agency 
     may reallocate such amount to the State in which the agency 
     is located.
     Application of qualified tax credit bond rules
       The provision makes qualified school construction bonds a 
     type of qualified tax credit bond for purposes of section 
     54A. In addition, qualified school construction bonds may be 
     issued by Indian tribal governments only to the extent such 
     bonds are issued for purposes that satisfy the present law 
     requirements for tax-exempt bonds issued by Indian tribal 
     governments (i.e., essential governmental functions and 
     certain manufacturing purposes).
       The provision requires 100 percent of the available project 
     proceeds of qualified school construction bonds to be used 
     within the three-year period that begins on the date of 
     issuance. Available project proceeds are proceeds from the 
     sale of the issue less issuance costs (not to exceed two 
     percent) and any investment earnings on such sale proceeds. 
     To the extent less than 100 percent of the available project 
     proceeds are used to finance qualified purposes during the 
     three-year spending period, bonds will continue to qualify as 
     qualified school construction bonds if unspent proceeds are 
     used within 90 days from the end of such three-year period to 
     redeem bonds. The three-year spending period may be extended 
     by the Secretary upon the issuer's request demonstrating that 
     the failure to satisfy the three-year requirement is due to 
     reasonable cause and the projects will continue to proceed 
     with due diligence.
       Qualified school construction bonds generally are subject 
     to the arbitrage requirements of section 148. However, 
     available project proceeds invested during the three-year 
     spending period are not subject to the arbitrage restrictions 
     (i.e., yield restriction and rebate requirements). In 
     addition, amounts invested in a reserve fund are not subject 
     to the arbitrage restrictions to the extent: (1) such fund is 
     funded at a rate not more rapid than equal annual 
     installments; (2) such fund is funded in a manner reasonably 
     expected to result in an amount not greater than an amount 
     necessary to repay the issue; and (3) the yield on such fund 
     is not greater than the average annual interest rate of tax-
     exempt obligations having a term of 10 years or more that are 
     issued during the month the qualified school construction 
     bonds are issued.

[[Page 4048]]

       The maturity of qualified school construction bonds is the 
     term that the Secretary estimates will result in the present 
     value of the obligation to repay the principal on such bonds 
     being equal to 50 percent of the face amount of such bonds, 
     using as a discount rate the average annual interest rate of 
     tax-exempt obligations having a term of 10 years or more that 
     are issued during the month the qualified school construction 
     bonds are issued.
       As with present-law tax credit bonds, the taxpayer holding 
     qualified school construction bonds on a credit allowance 
     date is entitled to a tax credit. The credit rate on the 
     bonds is set by the Secretary at a rate that is 100 percent 
     of the rate that would permit issuance of such bonds without 
     discount and interest cost to the issuer. The amount of the 
     tax credit is determined by multiplying the bond's credit 
     rate by the face amount on the holder's bond. The credit 
     accrues quarterly, is includible in gross income (as if it 
     were an interest payment on the bond), and can be claimed 
     against regular income tax liability and alternative minimum 
     tax liability. Unused credits may be carried forward to 
     succeeding taxable years. In addition, credits may be 
     separated from the ownership of the underlying bond in a 
     manner similar to the manner in which interest coupons can be 
     stripped from interest-bearing bonds.
       Issuers of qualified school construction bonds are required 
     to certify that the financial disclosure requirements and 
     applicable State and local law requirements governing 
     conflicts of interest are satisfied with respect to such 
     issue, as well as any other additional conflict of interest 
     rules prescribed by the Secretary with respect to any 
     Federal, State, or local government official directly 
     involved with the issuance of qualified school construction 
     bonds.
     Effective date
       The provision is effective for obligations issued after the 
     date of enactment.
     5. Extend and expand qualified zone academy bonds (sec. 1512 
         of the House bill, sec. 1522 of the Senate amendment, 
         sec. 1522 of the conference agreement, and sec. 54E of 
         the Code)


                              Present Law

     Tax-exempt bonds
       Interest on State and local governmental bonds generally is 
     excluded from gross income for Federal income tax purposes if 
     the proceeds of the bonds are used to finance direct 
     activities of these governmental units or if the bonds are 
     repaid with revenues of the governmental units. These can 
     include tax-exempt bonds which finance public schools.\134\ 
     An issuer must file with the Internal Revenue Service certain 
     information about the bonds issued in order for that bond 
     issue to be tax-exempt.\135\ Generally, this information 
     return is required to be filed no later the 15th day of the 
     second month after the close of the calendar quarter in which 
     the bonds were issued.
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     \134\Sec. 103.
     \135\Sec. 149(e).
---------------------------------------------------------------------------
       The tax exemption for State and local bonds does not apply 
     to any arbitrage bond.\136\ An arbitrage bond is defined as 
     any bond that is part of an issue if any proceeds of the 
     issue are reasonably expected to be used (or intentionally 
     are used) to acquire high fielding investments or to replace 
     funds that are used to acquire higher yielding 
     investments.\137\ In general, arbitrage profits may be earned 
     only during specified periods (e.g., defined ``temporary 
     periods'') before funds are needed for the purpose of the 
     borrowing or on specified types of investments (e.g., 
     ``reasonably required reserve or replacement funds''). 
     Subject to limited exceptions, investment profits that are 
     earned during these periods or on such investments must be 
     rebated to the Federal Government.
---------------------------------------------------------------------------
     \136\Sec. 103(a) and (b)(2).
     \137\Sec. 148.
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     Qualified zone academy bonds
       As an alternative to traditional tax-exempt bonds, State nd 
     local governments were given the authority to issue 
     ``qualified zone academy bonds.'' \138\ total of $400 million 
     of qualified zone academy bonds is authorized to be issued 
     annually in calendar years 1998 through 2009. The $400 
     million aggregate bond cap is allocated each year to the 
     States according to their respective populations of 
     individuals below the poverty line. Each State, in turn, 
     allocates the credit authority to qualified zone academies 
     within such State.
---------------------------------------------------------------------------
     \138\See secs. 54E and 1397E.
---------------------------------------------------------------------------
       A taxpayer holding a qualified zone academy bond on the 
     credit allowance date is entitled to a credit. The credit is 
     includible in gross income (as if it were a taxable interest 
     payment on the bond), and may be claimed against regular 
     income tax and alternative minimum tax liability.
       The Treasury Department sets the credit rate at a rate 
     estimated to allow issuance qualified zone academy bonds 
     without discount and without interest cost to the 
     issuer.\139\ The Secretary determines credit rates for tax 
     credit bonds based on general assumptions about credit 
     quality of the class of potential eligible issuers and such 
     other factors as the Secretary deems appropriate. The 
     Secretary may determine credit rates based on general credit 
     market yield indexes and credit ratings. The maximum term of 
     the bond is determined by the Treasury Department, so that 
     the present value of the obligation to repay the principal on 
     the bond is 50 percent of the face value of the bond.
---------------------------------------------------------------------------
     \139\Given the differences in credit quality and other 
     characteristics of individual issuers, the Secretary cannot 
     set credit rates in a manner that will allow each issuer to 
     issue tax credit bonds at par.
---------------------------------------------------------------------------
       ``Qualified zone academy bonds'' are defined as any bond 
     issued by a State or local government, provided that (1) at 
     least 95 percent of the proceeds are used for the purpose of 
     renovating, providing equipment to, developing course 
     materials for use at, or training teachers and other school 
     personnel in a ``qualified zone academy'' and (2) private 
     entities have promised to contribute to the qualified zone 
     academy certain equipment, technical assistance or training, 
     employee services, or other property or services with a value 
     equal to at least 10 percent of the bond proceeds.
       A school is a ``qualified zone academy'' if (1) the school 
     is a public school that provides education and training below 
     the college level, (2) the school operates a special academic 
     program in cooperation with businesses to enhance the 
     academic curriculum and increase graduation and employment 
     rates, and (3) either (a) the school is located in an 
     empowerment zone or enterprise community designated under the 
     Code, or (b) it is reasonably expected that at least 35 
     percent of the students at the school will be eligible for 
     free or reduced-cost lunches under the school lunch program 
     established under the National School Lunch Act.
       The arbitrage requirements which generally apply to 
     interest-bearing tax-exempt bonds also generally apply to 
     qualified zone academy bonds. In addition, an issuer of 
     qualified zone academy bonds must reasonably expect to and 
     actually spend 100 percent or more of the proceeds of such 
     bonds on qualified zone academy property within the three-
     year period that begins on the date of issuance. To the 
     extent less than 100 percent of the proceeds are used to 
     finance qualified zone academy property during the three-year 
     spending period, bonds will continue to qualify as qualified 
     zone academy bonds if unspent proceeds are used within 90 
     days from the end of such three-year period to redeem any 
     nonqualified bonds. The three-year spending period may be 
     extended by the Secretary if the issuer establishes that the 
     failure to meet the spending requirement is due to reasonable 
     cause and the related purposes for issuing the bonds will 
     continue to proceed with due diligence.
       Two special arbitrage rules apply to qualified zone academy 
     bonds. First, available project proceeds invested during the 
     three-year period beginning on the date of issue are not 
     subject to the arbitrage restrictions (i.e., yield 
     restriction and rebate requirements). Available project 
     proceeds are proceeds from the sale of an issue of qualified 
     zone academy bonds, less issuance costs (not to exceed two 
     percent) and any investment earnings on such proceeds. Thus, 
     available project proceeds invested during the three-year 
     spending period may be invested at unrestricted yields, but 
     the earnings on such investments must be spent on qualified 
     zone academy property. Second, amounts invested in a reserve 
     fund are not subject to the arbitrage restrictions to the 
     extent: (1) such fund is funded at a rate not more rapid than 
     equal annual installments; (2) such fund is funded in a 
     manner reasonably expected to result in an amount not greater 
     than an amount necessary to repay the issue; and (3) the 
     yield on such fund is not greater than the average annual 
     interest rate of tax-exempt obligations having a term of 10 
     years or more that are issued during the month the qualified 
     zone academy bonds are issued.
       Issuers of qualified zone academy bonds are required to 
     report issuance to the Internal Revenue Service in a manner 
     similar to the information returns required for tax-exempt 
     bonds.


                               House Bill

     In general
       The provision extends and expands the present-law qualified 
     zone academy bond program. The provision authorizes issuance 
     of up to $1.4 billion of qualified zone academy bonds 
     annually for 2009 and 2010, respectively.
     Effective date
       The provision applies to obligations issued after December 
     31, 2008.


                            Senate Amendment

       The Senate amendment is the same as the House bill.


                          Conference Agreement

       The conference agreement follows the House bill and the 
     Senate amendment.
     6. Build America bonds (sec. 1521 of the House bill, sec. 
         1531 of the Senate amendment, sec. 1531 of the conference 
         agreement, and new secs. 54AA and 6431 of the Code)


                              Present Law

     In general
       Under present law, gross income does not include interest 
     on State or local bonds. State and local bonds are classified 
     generally as either governmental bonds or private activity 
     bonds. Governmental bonds are bonds

[[Page 4049]]

     the proceeds of which are primarily used to finance 
     governmental functions or which are repaid with governmental 
     funds. Private activity bonds are bonds in which the State or 
     local government serves as a conduit providing financing to 
     nongovernmental persons (e.g., private businesses or 
     individuals). The exclusion from income for State and local 
     bonds does not apply to private activity bonds, unless the 
     bonds are issued for certain permitted purposes (``qualified 
     private activity bonds'') and other Code requirements are 
     met.
     Private activity bonds
       The Code defines a private activity bond as any bond that 
     satisfies (1) the private business use test and the private 
     security or payment test (``the private business test''); or 
     (2) ``the private loan financing test."\140\
---------------------------------------------------------------------------
     \140\Sec. 141.
---------------------------------------------------------------------------
       Private business test
       Under the private business test, a bond is a private 
     activity bond if it is part of an issue in which:
       1. More than 10 percent of the proceeds of the issue 
     (including use of the bond-financed property) are to be used 
     in the trade or business of any person other than a 
     governmental unit (``private business use''); and
       2. More than 10 percent of the payment of principal or 
     interest on the issue is, directly or indirectly, secured by 
     (a) property used or to be used for a private business use or 
     (b) to be derived from payments in respect of property, or 
     borrowed money, used or to be used for a private business use 
     (``private payment test'').\141\
---------------------------------------------------------------------------
     \141\The 10 percent private business test is reduced to five 
     percent in the case of private business uses (and payments 
     with respect to such uses) that are unrelated to any 
     governmental use being financed by the issue.
---------------------------------------------------------------------------
       A bond is not a private activity bond unless both parts of 
     the private business test (i.e., the private business use 
     test and the private payment test) are met. Thus, a facility 
     that is 100 percent privately used does not cause the bonds 
     financing such facility to be private activity bonds if the 
     bonds are not secured by or paid with private payments. For 
     example, land improvements that benefit a privately-owned 
     factory may be financed with governmental bonds if the debt 
     service on such bonds is not paid by the factory owner or 
     other private parties.
       Private loan financing test
       A bond issue satisfies the private loan financing test if 
     proceeds exceeding the lesser of $5 million or five percent 
     of such proceeds are used directly or indirectly to finance 
     loans to one or more nongovernmental persons. Private loans 
     include both business and other (e.g., personal) uses and 
     payments by private persons; however, in the case of business 
     uses and payments, all private loans also constitute private 
     business uses and payments subject to the private business 
     test.
       Arbitrage restrictions
       The exclusion from income for interest on State and local 
     bonds does not apply to any arbitrage bond.\142\ An arbitrage 
     bond is defined as any bond that is part of an issue if any 
     proceeds of the issue are reasonably expected to be used (or 
     intentionally are used) to acquire higher yielding 
     investments or to replace funds that are used to acquire 
     higher yielding investments.\143\ In general, arbitrage 
     profits may be earned only during specified periods (e.g., 
     defined ``temporary periods'') before funds are needed for 
     the purpose of the borrowing or on specified types of 
     investments (e.g., ``reasonably required reserve or 
     replacement funds''). Subject to limited exceptions, 
     investment profits that are earned during these periods or on 
     such investments must be rebated to the Federal Government.
---------------------------------------------------------------------------
     \142\Sec. 103(a) and (b)(2).
     \143\Sec. 148.
---------------------------------------------------------------------------
     Qualified tax credit bonds
       In lieu of interest, holders of qualified tax credit bonds 
     receive a tax credit that accrues quarterly. The following 
     bonds are qualified tax credit bonds: qualified forestry 
     conservation bonds, new clean renewable energy bonds, 
     qualified energy conservation bonds, and qualified zone 
     academy bonds.\144\
---------------------------------------------------------------------------
     \144\See secs. 54B, 54C, 54D, and 54E.
---------------------------------------------------------------------------
       Section 54A of the Code sets forth general rules applicable 
     to qualified tax credit bonds. These rules include 
     requirements regarding credit allowance dates, the 
     expenditure of available project proceeds, reporting, 
     arbitrage, maturity limitations, and financial conflicts of 
     interest, among other special rules.
       A taxpayer who holds a qualified tax credit bond on one or 
     more credit allowance dates of the bond during the taxable 
     year shall be allowed a credit against the taxpayer's income 
     tax for the taxable year. In general, the credit amount for 
     any credit allowance date is 25 percent of the annual credit 
     determined with respect to the bond. The annual credit is 
     determined by multiplying the applicable credit rate by the 
     outstanding face amount of the bond. The applicable credit 
     rate for the bond is the rate that the Secretary estimates 
     will permit the issuance of the qualified tax credit bond 
     with a specified maturiy or redemption date without discount 
     and without interest cost to the qualified issuer.\145\ The 
     Secretary determines credit rates for tax credit bonds based 
     on general assumptions about credit quality of the class of 
     potential eligible issuers and such other factors as the 
     Secretary deems appropriate. The Secretary may determine 
     credit rates based on general credit market yield indexes and 
     credit ratings.
---------------------------------------------------------------------------
     \145\Given the differences in credit quality and other 
     characteristics of individual issuers, the Secretary cannot 
     set credit rates in a manner that will allow each issuer to 
     issue tax credit bonds at par.
---------------------------------------------------------------------------
       The credit is included in gross income and, under 
     regulations prescribed by the Secretary, may be stripped (a 
     separation (including at issuance) of the ownership of a 
     qualified tax credit bond and the entitlement to the credit 
     with respect to such bond).
       Section 54A of the Code requires that 100 percent of the 
     available project proceeds of qualified tax credit bonds must 
     be used within the three-year period that begins on the date 
     of issuance. Available project proceeds are proceeds from the 
     sale of the bond issue less issuance costs (not to exceed two 
     percent) and any investment earnings on such sale proceeds. 
     To the extent less than 100 percent of the available project 
     proceeds are used to finance qualified projects during the 
     three-year spending period, bonds will continue to qualify as 
     qualified tax credit bonds if unspent proceeds are used 
     within 90 days from the end of such three-year period to 
     redeem bonds. The three-year spending period may be extended 
     by the Secretary upon the issuer's request demonstrating that 
     the failure to satisfy the three-year requirement is due to 
     reasonable cause and the projects will continue to proceed 
     with due diligence.
       Qualified tax credit bonds generally are subject to the 
     arbitrage requirements of section 148. However, available 
     project proceeds invested during the three-year spending 
     period are not subject to the arbitrage restrictions (i.e., 
     yield restriction and rebate requirements). In addition, 
     amounts invested in a reserve fund are not subject to the 
     arbitrage restrictions to the extent: (1) such fund is funded 
     at a rate not more rapid than equal annual installments; (2) 
     such fund is funded in a manner reasonably expected to result 
     in an amount not greater than an amount necessary to repay 
     the issue; and (3) the yield on such fund is not greater than 
     the average annual interest rate of tax-exempt obligations 
     having a term of 10 years or more that are issued during the 
     month the qualified tax credit bonds are issued.
       The maturity of qualified tax credit bonds is the term that 
     the Secretary estimates will result in the present value of 
     the obligation to repay the principal on such bonds being 
     equal to 50 percent of the face amount of such bonds, using 
     as a discount rate the average annual interest rate of tax-
     exempt obligations having a term of 10 years or more that are 
     issued during the month the qualified tax credit bonds are 
     issued.


                               House Bill

     In general
       The provision permits an issuer to elect to have an 
     otherwise tax-exempt bond treated as a ``taxable governmental 
     bond.'' A ``taxable governmental bond'' is any obligation 
     (other than a private activity bond) if the interest on such 
     obligation would be (but for this provision) excludable from 
     gross income under section 103 and the issuer makes an 
     irrevocable election to have the provision apply. In 
     determining if an obligation would be tax-exempt under 
     section 103, the credit (or the payment discussed below for 
     qualified bonds) is not treated as a Federal guarantee. 
     Further, the yield on a taxable governmental bond is 
     determined without regard to the credit. A taxable 
     governmental bond does not include any bond if the issue 
     price has more than a de minimis amount of premium over the 
     stated principal amount of the bond.
       The holder of a taxable governmental bond will accrue a tax 
     credit in the amount of 35 percent of the interest paid on 
     the interest payment dates of the bond during the calendar 
     year.\146\ The interest payment date is any date on which the 
     holder of record of the taxable governmental bond is entitled 
     to a payment of interest under such bond. The sum of the 
     accrued credits is allowed against regular and alternative 
     minimum tax. Unused credit may be carried forward to 
     succeeding taxable years. The credit, as well as the interest 
     paid by the issuer, is included in gross income and the 
     credit may be stripped under rules similar to those provided 
     in section 54A regarding qualified tax credit bonds. Rules 
     similar to those that apply for S corporations, partnerships 
     and regulated investment companies with respect to qualified 
     tax credit bonds also apply to the credit.
---------------------------------------------------------------------------
     \146\Original issue discount (OID) is not treated as a 
     payment of interest for purposes of determining the credit 
     under the provision. OID is the excess of an obligation's 
     stated redemption price at maturity over the obligation's 
     issue price (sec. 1273(a)).
---------------------------------------------------------------------------
       Unlike the tax credit for bonds issued under section 54A, 
     the credit rate would not be calculated by the Secretary, but 
     rather would be set by law at 35 percent. The actual credit 
     that a taxpayer may claim is determined by multiplying the 
     interest payment that the taxpayer receives from the issuer 
     (i.e., the bond coupon payment) by 35 percent. Because the 
     credit that the taxpayer claims is also included in income, 
     the Committee anticipates that State and local

[[Page 4050]]

     issuers will issue bonds paying interest at rates 
     approximately equal to 74.1 percent of comparable taxable 
     bonds. The Committee anticipates that if an issuer issues a 
     taxable governmental bond with coupons at 74.1 percent of a 
     comparable taxable bond's coupon that the issuer's bond 
     should sell at par. For example, if a taxable bond of 
     comparable risk pays a $1,000 coupon and sells at par, then 
     if a State or local issuer issues an equal-sized bond with 
     coupon of $741.00, such a bond should also sell at par. The 
     taxpayer who acquires the latter bond will receive an 
     interest payment of $741 and may claim a credit of $259 (35 
     percent of $741). The credit and the interest payment are 
     both included in the taxpayer's income. Thus, the taxpayer's 
     taxable income from this instrument would be $1,000. This is 
     the same taxable income that the taxpayer would recognize 
     from holding the comparable taxable bond. Consequently the 
     issuer's bond should sell at the same price as would the 
     taxable bond.
     Special rule for qualified bonds issued during 2009 and 2010
       A ``qualified bond'' is any taxable governmental bond 
     issued as part of an issue if 100 percent of the available 
     project proceeds of such issue are to be used for capital 
     expenditures.\147\ The bond must be issued after the date of 
     enactment of the provision and before January 1, 2011. The 
     issuer must make an irrevocable election to have the special 
     rule for qualified bonds apply.
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     \147\Under Treas. Reg. sec. 150-1(b), capital expenditure 
     means any cost of a type that is properly chargeable to 
     capital account (or would be so chargeable with a proper 
     election or with the application of the definition of placed 
     in service under Treas. Reg. sec. 1.150-2(c)) under general 
     Federal income tax principles. For purposes of applying the 
     ``general Federal income tax principles'' standard, an issuer 
     should generally be treated as if it were a corporation 
     subject to taxation under subchapter C of chapter 1 of the 
     Code. An example of a capital expenditure would include 
     expenditures made for the purchase of fiber-optic cable to 
     provide municipal broadband service.
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       Under the special rule for qualified bonds, in lieu of the 
     tax credit to the holder, the-issuer is allowed a credit 
     equal to 35 percent of each interest payment made under such 
     bond.\148\ If in 2009 or 2010, the issuer elects to receive 
     the credit, in the example above, for the State or local 
     issuer's bond to sell at par, the issuer would have to issue 
     the bond with a $1,000 interest coupon. The taxpayer who 
     holds such a bond would include $1,000 on interest in his or 
     her income. From the taxpayer's perspective the bond is the 
     same the taxable bond in the example above and the taxpayer 
     would be willing to pay par for the bond. However, under the 
     provision the State or local issuer would receive a payment 
     of $350 for each $1,000 coupon paid to bondholders. (The net 
     interest cost to the issuer would be $650.)
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     \148\Original issue discount (OID) is not treated as a 
     payment of interest for purposes of calculating the 
     refundable credit under the provision.
---------------------------------------------------------------------------
       The payment by the Secretary is to be made 
     contemporaneously with the interest payment made by the 
     issuer, and may be made either in advance or as 
     reimbursement. In lieu of payment to the issuer, the payment 
     may be made to a person making interest payments on behalf of 
     the issuer. For purposes of the arbitrage rules, the yield on 
     a qualified bond is reduced by the amount of the credit/
     payment.
     Transitional coordination with State law
       As noted above, interest on a taxable governmental bond and 
     the related credit are includible in gross income to the 
     holder for Federal tax purposes. The provision provides that 
     until a State provides otherwise, the interest on any taxable 
     governmental bond and the amount of any credit, determined 
     with respect to such bond shall be treated as being exempt 
     from Federal income tax for purposes of State income tax 
     laws.
     Effective date
       The provision is effective for obligations issued after the 
     date of enactment.


                            Senate Amendment

     In general
       The Senate amendment is the same as the House bill except 
     that it renames these bonds ``Build America Bonds.''
       The Senate amendment also restricts these bonds to 
     obligations issued before January 1, 2011.
       For bonds issued by small issuers,\149\ the credit rate is 
     40 percent instead of 35 percent.
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     \149\Small issuer status is determined generally by reference 
     to the rules of sec. 148(f)(4)(D)) and increasing the 
     aggregate face amount of all tax-exempt governmental bonds 
     reasonably expected to be issued during the calendar year 
     from $5 million to $30 million.
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     Special rule for qualified bonds issued during 2009 and 2010
       The Senate amendment is the same as the House bill, except 
     for bonds issued by small issuers, the credit rate is 40 
     percent instead of 35 percent.
     Transitional coordination with State law
       The Senate amendment is the same as the House bill.
     Effective date
       The Senate amendment is the same as the House bill.


                          Conference Agreement

     In general
       The conference agreement follows the House bill except that 
     it renames these bonds ``Build America Bonds.''
       The conference agreement restricts these bonds to 
     obligations issued before January 1, 2011.
     Special rule for qualified bonds issued during 2009 and 2010
       The conference agreement follows the House bill, except 
     that it allows for a reasonably required reserve fund to be 
     funded from bond proceeds.\150\
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     \150\Under section 148(d)(2), a bond is an arbitrage bond if 
     the amount of the proceeds from the sale of such issue that 
     is part or any reserve or replacement fund exceeds 10 percent 
     of the proceeds. As such the interest on such bond would not 
     be tax-exempt under section 103 and thus would not be a 
     qualified bond for purposes of the provision.
---------------------------------------------------------------------------
     Transitional coordination with State law
       The conference agreement follows the House bill and the 
     Senate amendment.
     Effective date
       The conference agreement follows the House bill and the 
     Senate amendment.
     7. Recovery zone bonds (sec. 1531 of the House bill, sec. 
         1401 of the Senate amendment, sec. 1401 of the conference 
         agreement, and new secs. 1400U-1, 1400U-2, and 1400U-3 of 
         the Code)


                              Present Law

     In general
       Under present law, gross income does not include interest 
     on State or local bonds. State and local bonds are classified 
     generally as either governmental bonds or private activity 
     bonds. Governmental bonds are bonds the proceeds of which are 
     primarily used to finance governmental functions or which are 
     repaid with governmental funds. Private activity bonds are 
     bonds in which the State or local government serves as a 
     conduit providing financing to nongovernmental persons (e.g., 
     private businesses or individuals). The exclusion from income 
     for State and local bonds does not apply to private activity 
     bonds unless the bonds are issued for certain permitted 
     purposes (``qualified private activity bonds'') and other 
     Code requirements are met.
     Private activity bonds
       The Code defines a private activity bond as any bond that 
     satisfies (1) the private business use test and the private 
     security or payment test (``the private business test''); or 
     (2) ``the private loan financing test.''\151\
---------------------------------------------------------------------------
     \151\Sec. 141.
---------------------------------------------------------------------------
       Private business test
       Under the private business test, a bond is a private 
     activity bond if it is part of an issue in which:
       1. More than 10 percent of the proceeds of the issue 
     (including use of the bond-financed property) are to be used 
     in the trade or business of any person other than a 
     governmental unit (``private business use''); and
       2. More than 10 percent of the payment of principal or 
     interest on the issue is, directly or indirectly, secured by 
     (a) property used or to be used for a private business use or 
     (b) to be derived from payments in respect of property, or 
     borrowed money, used or to be used for a private business use 
     (``private payment test'').\152\
---------------------------------------------------------------------------
     \152\Sec. 103(a) and (b)(20.
---------------------------------------------------------------------------
        A bond is not a private activity bond unless both parts of 
     the private business test (i.e., the private business use 
     test and the private payment test) are met. Thus, a facility 
     that is 100 percent privately used does not cause the bonds 
     financing such facility to be private activity bonds if the 
     bonds are not secured by or paid with private payments. For 
     example, land improvements that benefit a privately-owned 
     factory may be financed with governmental bonds if the debt 
     service on such bonds is not paid by the factory owner or 
     other private parties and such bonds are not secured by the 
     property.
       Private loan financing test
       A bond issue satisfies the private loan financing test if 
     proceeds exceeding the lesser of $5 million or five percent 
     of such proceeds are used directly or indirectly to finance 
     loans to one or more nongovernmental persons. Private loans 
     include both business and other (e.g., personal) uses and 
     payments to private persons; however, in the case of business 
     uses and payments, all private loans also constitute private 
     business uses and payments subject to the private business 
     test.
       Arbitrage restrictions
       The exclusion from income for interest on State and local 
     bonds does not apply to any arbitrage bond.\153\ An arbitrage 
     bond is defined as any bond that is part of an issue if any 
     proceeds of the issue are reasonably expected to be used (or 
     intentionally are used) to acquire higher yielding 
     investments or to replace funds that are used to acquire 
     higher yielding investments.\154\ In general, arbitrage 
     profits may be earned only during specified periods (e.g., 
     defined ``temporary periods'') before funds are needed for 
     the purpose of the borrowing or on specified types of 
     investments (e.g., ``reasonably required reserve or 
     replacement funds''). Subject to limited exceptions, 
     investment profits that are earned

[[Page 4051]]

     during these periods or on such investments must be rebated 
     to the Federal Government.
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     \153\Sec. 103(a) and (b)(2).
     \154\Sec. 148.
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     Qualified private activity bonds
       Qualified private activity bonds permit States or local 
     governments to act as conduits providing tax-exempt financing 
     for certain private activities. The definition of qualified 
     private activity bonds includes an exempt facility bond, or 
     qualified mortgage, veterans' mortgage, small issue, 
     redevelopment, 501(c)(3), or student loan bond (sec. 141(e)).
       The definition of an exempt facility bond includes bonds 
     issued to finance certain transportation facilities 
     (airports, ports, mass commuting, and high-speed intercity 
     rail facilities); qualified residential rental projects; 
     privately owned and/or operated utility facilities (sewage, 
     water, solid waste disposal, and local district heating and 
     cooling facilities, certain private electric and gas 
     facilities, and hydroelectric dam enhancements); public/
     private educational facilities; qualified green building and 
     sustainable design projects; and qualified highway or surface 
     freight transfer facilities (sec. 142(a)).
       In most cases, the aggregate volume of qualified private 
     activity bonds is restricted by annual aggregate volume 
     limits imposed on bonds issued by issuers within each State 
     (``State volume cap''). For calendar year 2007, the State 
     volume cap, which is indexed for inflation, equals $85 per 
     resident of the State, or $256.24 million, if greater. 
     Exceptions to the State volume cap are provided for bonds for 
     certain governmentally owned facilities (e.g., airports, 
     ports, high-speed intercity rail, and solid waste disposal) 
     and bonds which are subject to separate local, State, or 
     national volume limits (e.g., public/private educational 
     facility bonds, enterprise zone facility bonds, qualified 
     green building bonds, and qualified highway or surface 
     freight transfer facility bonds).
       Qualified private activity bonds generally are subject to 
     restrictions on the use of proceeds for the acquisition of 
     land and existing property. In addition, qualified private 
     activity bonds generally are subject to restrictions on the 
     use of proceeds to finance certain specified facilities 
     (e.g., airplanes, skyboxes, other luxury boxes, health club 
     facilities, gambling facilities, and liquor stores), and use 
     of proceeds to pay costs of issuance (e.g., bond counsel and 
     underwriter fees). Small issue and redevelopment bonds also 
     are subject to additional restrictions on the use of proceeds 
     for certain facilities (e.g., golf courses and massage 
     parlors).
       Moreover, the term of qualified private activity bonds 
     generally may not exceed 120 percent of the economic life of 
     the property being financed and certain public approval 
     requirements (similar to requirements that typically apply 
     under State law to issuance of governmental debt) apply under 
     Federal law to issuance of private activity bonds.
     Qualified tax credit bonds
       In lieu of interest, holders of qualified tax credit bonds 
     receive a tax credit that accrues quarterly. The following 
     bonds are qualified tax credit bonds: qualified forestry 
     conservation bonds, new clean renewable energy bonds, 
     qualified energy conservation bonds, and qualified zone 
     academy bonds.\155\
---------------------------------------------------------------------------
     \155\See secs. 54B, 54C, 54DE, and 54E.
---------------------------------------------------------------------------
       Section 54A of the Code sets forth general rules applicable 
     to qualified tax credit bonds. These rules include 
     requirements regarding the expenditure of available project 
     proceeds, reporting, arbitrage, maturity limitations, and 
     financial conflicts of interest, among other special rules.
       A taxpayer who holds a qualified tax credit bond on one or 
     more credit allowance dates of the bond during the taxable 
     year shall be allowed a credit against the taxpayer's income 
     tax for the taxable year. In general, the credit amount for 
     any credit allowance date is 25 percent of the annual credit 
     determined with respect to the bond. The annual credit is 
     determined by multiplying the applicable credit rate by the 
     outstanding face amount of the bond. The applicable credit 
     rate for the bond is the rate that the Secretary estimates 
     will permit the issuance of the qualified tax credit bond 
     with a specified maturity or redemption date without discount 
     and without interest cost to the qualified issuer.\156\ The 
     Secretary determines credit rates for tax credit bonds based 
     on general assumptions about credit quality of the class of 
     potential eligible issuers and such other factors as the 
     Secretary deems appropriate. The Secretary may determine 
     credit rates based on general credit market yield indexes and 
     credit ratings. The credit is included in gross income and, 
     under regulations prescribed by the Secretary, may be 
     stripped.
---------------------------------------------------------------------------
     \156\Given the differences in credit quality and other 
     characteristics of individual issuers, the Secretary cannot 
     set credit rates in a manner that will allow each issuer to 
     issue tax credit bonds at par.
---------------------------------------------------------------------------
       Section 54A of the Code requires that 100 percent of the 
     available project proceeds of qualified tax credit bonds must 
     be used within the three-year period that begins on the date 
     of issuance. Available project proceeds are proceeds from the 
     sale of the bond issue less issuance costs (not to exceed two 
     percent) and any investment earnings on such sale proceeds. 
     To the extent less than 100 percent of the available project 
     proceeds are used to finance qualified projects during the 
     three-year spending period, bonds will continue to qualify as 
     qualified tax credit bonds if unspent proceeds are used 
     within 90 days from the end of such three-year period to 
     redeem bonds. The three-year spending period may be extended 
     by the Secretary upon the issuer's request demonstrating that 
     the failure to satisfy the three-year requirement is due to 
     reasonable cause and the projects will continue to proceed 
     with due diligence.
       Qualified tax credit bonds generally are subject to the 
     arbitrage requirements of section 148. However, available 
     project proceeds invested during the three-year spending 
     period are not subject to the arbitrage restrictions (i.e., 
     yield restriction and rebate requirements). In addition, 
     amounts invested in a reserve fund are not subject to the 
     arbitrage restrictions to the extent: (1) such fund is funded 
     at a rate not more rapid than equal annual installments; (2) 
     such fund is funded in a manner reasonably expected to result 
     in an amount not greater than an amount necessary to repay 
     the issue; and (3) the yield on such fund is not greater than 
     the average annual interest rate of tax-exempt obligations 
     having a term of 10 years or more that are issued during the 
     month the qualified tax credit bonds are issued.
       The maturity of qualified tax credit bonds is the term that 
     the Secretary estimates will result in the present value of 
     the obligation to repay the principal on such bonds being 
     equal to 50 percent of the face amount of such bonds, using 
     as a discount rate the average annual interest rate of tax-
     exempt obligations having a term of 10 years or more that are 
     issued during the month the qualified tax credit bonds are 
     issued.


                               House Bill

     In general
       The provision permits an issuer to designate one or more 
     areas as recovery zones. The area must have significant 
     poverty, unemployment, general distress, or home 
     foreclosures, or be any area for which a designation as an 
     empowerment zone or renewal community is in effect. Issuers 
     may issue recovery zone economic development bonds and 
     recovery zone facility bonds with respect to these zones.
       There is a national recovery zone economic development bond 
     limitation of $10 billion. In addition, there is a separate 
     national recovery zone facility bond limitation of $15 
     billion. The Secretary is to separately allocate the bond 
     limitations among the States in the proportion that each 
     State's employment decline bears to the national decline in 
     employment (the aggregate 2008 State employment declines for 
     all States). In turn each State is to reallocate its 
     allocation among the counties (parishes) and large 
     municipalities in such State in the proportion that each such 
     county or municipality's 2008 employment decline bears to the 
     aggregate employment declines for all counties and 
     municipalities in such State. In calculating the local 
     employment decline with respect to a county, the portion of 
     such decline attributable to a large municipality is 
     disregarded for purposes of determining the county's portion 
     of the State employment decline and is attributable to the 
     large municipality only.
       For purposes of the provision ``2008 State employment 
     decline'' means, with respect to any State, the excess (if 
     any) of (i) the number of individuals employed in such State 
     as determined for December 2007, over (ii) the number of 
     individuals employed in such State as determined for December 
     2008. The term ``large municipality'' means a municipality 
     with a population of more than 100,000.
     Recovery Zone Economic Development Bonds
       New section 54AA(h) of the House bill creates a special 
     rule for qualified bonds (a type of taxable governmental 
     bond) issued before January 1, 2011, that entitles the issuer 
     of such bonds to receive an advance tax credit equal to 35 
     percent of the interest payable on an interest payment date. 
     For taxable governmental bonds that are designated recovery 
     zone economic development bonds, the applicable percentage is 
     55 percent.
       A recovery zone economic development bond is a taxable 
     governmental bond issued as part of an issue if 100 percent 
     of the available project proceeds of such issue are to be 
     used for one or more qualified economic development purposes 
     and the issuer designates such bond for purposes of this 
     section. A qualified economic development purpose means 
     expenditures for purposes of promoting development or other 
     economic activity in a recovery zone, including (1) capital 
     expenditures paid or incurred with respect to property 
     located in such zone, (2) expenditures for public 
     infrastructure and construction of public facilities located 
     in a recovery zone.
       The aggregate face amount of bonds which may be designated 
     by any issuer cannot exceed the amount of the recovery zone 
     economic development bond limitation allocated to such 
     issuer.
     Recovery Zone Facility Bonds
       The provision creates a new category of exempt facility 
     bonds, ``recovery zone facility bonds.'' A recovery zone 
     facility bond means any bond issued as part of an issue if: 
     (1) 95 percent or more of the net proceeds of such issue are 
     to be used for recovery zone property and (2) such bond is 
     issued before January 1, 2011, and (3) the issuer designates 
     such bond as a recovery zone facility bond. The

[[Page 4052]]

     aggregate face amount of bonds which may be designated by any 
     issuer cannot exceed the amount of the recovery zone facility 
     bond limitation allocated to such issuer.
       Under the provision, the term ``recovery zone property'' 
     means any property subject to depreciation to which section 
     168 applies (or would apply but for section 179) if (1) such 
     property was acquired by the taxpayer by purchase after the 
     date on which the designation of the recovery zone took 
     effect; (2) the original use of such property in the recovery 
     zone commences with the taxpayer; and (3) substantially all 
     of the use of such property is in the recovery zone and is in 
     the active conduct of a qualified business by the taxpayer in 
     such zone. The term ``qualified business'' means any trade or 
     business except that the rental to others of real property 
     located in a recovery zone shall be treated as a qualified 
     business only if the property is not residential rental 
     property (as defined in section 168(e)(2)) and does not 
     include any trade or business consisting of the operation of 
     any facility described in section 144(c)(6)(B) (i.e., any 
     private or commercial golf course, country club, massage 
     parlor, hot tub facility, suntan facility, racetrack or other 
     facility used for gambling, or any store the principal 
     purpose of which is the sale of alcoholic beverages for 
     consumption off premises).
       Subject to the following exceptions and modifications, 
     issuance of recovery zone facility bonds is subject to the 
     general rules applicable to issuance of qualified private 
     activity bonds:
       1. Issuance of the bonds is not subject to the aggregate 
     annual State private activity bond volume limits (sec. 146);
       2. The restriction on acquisition of existing property does 
     not apply (sec. 147(d));
     Effective date
       The provision is effective for obligations issued after the 
     date of enactment.


                            Senate Amendment

     In general
       The Senate amendment is the same as the House bill with a 
     modification for allocating t e bonds between the States. 
     Under the Senate amendment each State receives a minimum 
     allocation of one percent of the national recovery zone 
     economic development bond limitation and one percent of the 
     national recovery zone facility bond limitation. The 
     remainder of each bond limitation is separately allocated 
     among the States in the proportion that each State's 
     employment decline bears to the national decline in 
     employment (the aggregate 2008 State employment declines for 
     all States).
     Recovery Zone Economic Development Bonds
       New section 54AA(g) of the Senate amendment creates a 
     special rule for qualified bonds type of Build America Bond) 
     issued before January 1, 2011, that entitles the issuer of 
     such bonds to receive an advance tax credit equal to 35 
     percent of the interest payable on an interest payment date. 
     For Build America Bonds that are designated recovery zone 
     economic development bonds, the applicable percentage is 40 
     percent. In other respects the Senate amendment is the same 
     as the House bill.
     Recovery Zone Facility Bonds
       The Senate amendment is the same as the House bill.
     Effective date
       The Senate amendment is the same as the House bill.


                          Conference Agreement

     In general
       The conference agreement follows the House bill, with a 
     modification for allocating the bond limitations among the 
     States. Under the conference agreement the national recovery 
     zone economic development bond limitation and national 
     recovery zone facility bond limitation are allocated among 
     the States in the proportion that each State's employment 
     decline bears to the national decline in employment (the 
     aggregate 2008 State employment declines for all 
     States).\157\ The Secretary is to adjust each State's 
     allocation for a calendar year such that no State receives 
     less than 0.9 percent of the national recovery zone economic 
     development bond limitation and no less than 0.9 percent of 
     the national recovery zone facility bond limitation. The 
     conference agreement also permits a county or large 
     municipality to waive all or part of its allocation of the 
     State bond limitations to allow further allocation within 
     that State. With respect to all other aspects of the 
     allocation of the bond limitations, the conference agreement 
     follows the House bill.
---------------------------------------------------------------------------
     \157\The Bureau of Labor Statistics prepares data on regional 
     and State employment and unemployment. See e.g., Bureau of 
     Labor Statistics, USDL 09-0093, Regional and State Employment 
     and Unemployment: December 2008 (January 27, 2009) <http://
www.bls.govnews.release/laus.nr0.htm>.
---------------------------------------------------------------------------
       The conference agreement also provides that a ``recovery 
     zone'' includes any area designated by the issuer as 
     economically distressed by reason of the closure or 
     realignment of a military installation pursuant to the 
     Defense Base Closure and Realignment Act of 1990.
     Recovery Zone Economic Development Bonds
       The conference agreement follows the House bill, except the 
     issuer of recovery zone economic development bonds is 
     entitled to receive an advance tax credit equal to 45 percent 
     of the interest payable on an interest payment date and the 
     conference agreement allows for a reasonably required reserve 
     fund to be funded from the proceeds of a recovery zone 
     economic development bond.
     Recovery Zone Facility Bonds
       The conference agreement follows the House bill, except 
     ``recovery zone property'' is defined as any property subject 
     to depreciation to which section 168 applies (or would apply 
     but for section 179) if (1) such property was constructed, 
     reconstructed, renovated, or acquired by purchase by the 
     taxpayer after the date on which the designation of the 
     recovery zone took effect; (2) the original use of such 
     property in the recovery zone commences with the taxpayer; 
     and (3) substantially all of the use of such property is in 
     the recovery zone and is in the active conduct of a qualified 
     business by the taxpayer in such zone.
     Effective date
       The conference agreement follows the House bill and the 
     Senate amendment.
     8. Tribal economic development bonds (sec. 1532 of the House 
         bill, sec. 1402 of the Senate amendment, sec. 1402 of the 
         conference agreement, and new sec. 7871(f) of the Code)


                              Present Law

       Under present law, gross income does not include interest 
     on State or local bonds.\158\ State and local bonds are 
     classified generally as either governmental bonds or private 
     activity bonds. Governmental bonds are bonds the proceeds of 
     which are primarily used to finance governmental facilities 
     or the debt is repaid with governmental funds. Private 
     activity bonds are bonds in which the State or local 
     government serves as a conduit providing financing to 
     nongovernmental persons. For these purposes, the term 
     ``nongovernmental person'' includes the Federal government 
     and all other individuals and entities other than States or 
     local governments.\159\ Interest on private activity bonds is 
     taxable, unless the bonds are issued for certain purposes 
     permitted by the Code and other requirements are met.\160\
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     \158\Sec. 103.
     \159\Sec. 141(b)(6); Treas. Reg. sec. 1.151-1(b).
     \160\Secs. 103(b)(1) and 141.
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       Although not States or subdivisions of States, Indian 
     tribal governments are provided with a tax status similar to 
     State and local governments for specified purposes under the 
     Code.\161\ Among the purposes for which a tribal government 
     is treated as a State is the issuance of tax-exempt bonds. 
     Under section 7871(c), tribal governments are authorized to 
     issue tax-exempt bonds only if substantially all of the 
     proceeds are used for essential governmental functions.\162\
---------------------------------------------------------------------------
     \161\Sec. 7871.
     \162\Sec. 7871(c).
---------------------------------------------------------------------------
       The term essential governmental function does not include 
     any function that is not customarily performed by State and 
     local governments with general taxing powers. Section 7871(c) 
     further prohibits Indian tribal governments from issuing tax-
     exempt private activity bonds (as defined in section 141(a) 
     of the Code) with the exception of certain bonds for 
     manufacturing facilities.


                               House Bill

     Tribal Economic Development Bonds
       The provision allows Indian tribal governments to issue 
     ``tribal economic development bonds.'' There is a national 
     bond limitation of $2 billion, to be allocated as the 
     Secretary determines appropriate, in consultation with the 
     Secretary of the Interior. Tribal economic development bonds 
     issued by an Indian tribal government are treated as if such 
     bond were issued by a State except that section 146 (relating 
     to State volume limitations) does not apply.
       A tribal economic development bond is any bond issued by an 
     Indian tribal government (I) the interest on which would be 
     tax-exempt if issued by a State or local government but would 
     be taxable under section 7871(c), and (2) that is designated 
     by the Indian tribal government as a tribal economic 
     development bond. The aggregate face amount of bonds that may 
     be designated by any Indian tribal government cannot exceed 
     the amount of national tribal economic development bond 
     limitation allocated to such government.
       Tribal economic development bonds cannot be used to finance 
     any portion of a building in which class II or class III 
     gaming (as defined in section 4 of the Indian Gaming 
     Regulatory Act) is conducted, or housed, or any other 
     property used in the conduct of such gaming. Nor can tribal 
     economic development bonds be used to finance any facility 
     located outside of the Indian reservation.
     Treasury study
       The provision requires that the Treasury Department study 
     the effects of tribal economic development bonds. One year 
     after the date of enactment, a report is to be submitted to 
     Congress providing the results of such study along with any 
     recommendations, including whether the restrictions of 
     section 7871(c) should be eliminated or otherwise modified.

[[Page 4053]]


     Effective date
       The provision applies to obligations issued after the date 
     of enactment.


                            Senate Amendment

       The Senate amendment is the same as the House bill except 
     the Senate amendment defines a tribal economic development 
     bond as any bond issued by an Indian tribal government (1) 
     the interest on which would be tax-exempt if issued by a 
     State or local government, and (2) that is designated by the 
     Indian tribal government as a tribal economic development 
     bond.
       The Senate amendment also clarifies that for purposes of 
     section 141 of the Code, use of bond proceeds by an Indian 
     tribe, or instrumentality thereof, is treated as use by a 
     State.


                          Conference Agreement

       The conference agreement follows the Senate amendment.
     9. Pass-through of credits on tax credit bonds held by 
         regulated investment companies (sec. 1541 of the 
         conference agreement and new section 853A of the Code)


                              Present Law

       In lieu of interest, holders of qualified tax credit bonds 
     receive a tax credit that accrues quarterly. The credit is 
     treated as interest that is includible in gross income. The 
     following bonds are qualified tax credit bonds: qualified 
     forestry conservation bonds, new clean renewable energy 
     bonds, qualified energy conservation bonds, and qualified 
     zone academy bonds.\163\ The Code provides that in the case 
     of a qualified tax credit bond held by a regulated investment 
     company, the credit is allowed to shareholders of such 
     company (and any gross income included with respect to such 
     credit shall be treated as distributed to such shareholders) 
     under procedures prescribed by the Secretary.\164\ The 
     Secretary has not prescribed procedures for the pass through 
     of the credit to regulated investment company shareholders.
---------------------------------------------------------------------------
     \163\See secs. 54B, 54C, 54D, and 54E.
     \164\See sec. 54A(h), which also covers real estate 
     investment trusts.
---------------------------------------------------------------------------


                               House Bill

       No provision.


                            Senate Amendment

       No provision.


                          Conference Agreement

       The conference agreement provides procedures for passing 
     though credits on ``tax credit bonds'' to the shareholders of 
     an electing regulated investment company. In general, an 
     electing regulated investment company is not allowed any 
     credits with respect to any tax credit bonds it holds during 
     any year for which an election is in effect. The company is 
     treated as having an amount of interest included in its gross 
     income in an amount equal that which would have been included 
     if no election were in effect, and a dividends paid deduction 
     in the same amount is allowed to the company. Each 
     shareholder of the electing regulated investment company is 
     (1) required to include in gross income an amount equal to 
     the shareholder's proportional share of the interest 
     attributable to its credits and (2) allowed such proportional 
     share as a credit against such shareholder's Federal income 
     tax. In order to pass through tax credits to a shareholder, a 
     regulated investment company is required to mail a written 
     notice to such shareholder not later than 60 days after the 
     close of the regulated investment company's taxable year, 
     designating the shareholder's proportionate share of passed-
     through credits and the shareholder's gross income in respect 
     of such credits.
       A tax credit bond means a qualified tax credit bond as 
     defined in section 54A(d), a build America bond (as defined 
     in section 54AA(d)), and any other bond for which a credit is 
     allowable under subpart H of part IV of subchapter A of the 
     Code.
       The provision gives the Secretary authority to prescribe 
     the time and manner in which a regulated investment company 
     makes the election to pass through credits on tax credit 
     bonds. In addition, the provision requires the Secretary to 
     prescribe such guidance as may be necessary to carry out the 
     provision, including prescribing methods for determining a 
     shareholder's proportionate share of tax credits.
       Effective date.--The provision is applicable to taxable 
     years ending after the date of enactment.
     10. Delay in implementation of withholding tax on government 
         contractors (sec. 1541 of the House bill, sec. 1511 of 
         the Senate amendment, sec. 1511 of the conference 
         agreement, and sec. 3402(t) of the Code)


                              Present Law

       For payments made after December 31, 2010, the Code imposes 
     a withholding requirement at a three-percent rate on certain 
     payments to persons providing property or services made by 
     the Government of the United States, every State, every 
     political subdivision thereof, and every instrumentality of 
     the foregoing (including multi-State agencies). The 
     withholding requirement applies regardless of whether the 
     government entity making such payment is the recipient of the 
     property or services. Political subdivisions of States (or 
     any instrumentality thereof) with less than $100 million of 
     annual expenditures for property or services that would 
     otherwise be subject to withholding are exempt from the 
     withholding requirement.
       Payments subject to the three-percent withholding 
     requirement include any payment made in connection with a 
     government voucher or certificate program which functions as 
     a payment for property or services. For example, payments to 
     a commodity producer under a government commodity support 
     program are subject to the withholding requirement. Present 
     law also imposes information reporting requirements on the 
     payments that are subject to withholding requirement.
       The three-percent withholding requirement does not apply to 
     any payments made through a Federal, State, or local 
     government public assistance or public welfare program for 
     which eligibility is determined by a needs or income test. 
     The three-percent withholding requirement also does not apply 
     to payments of wages or to any other payment with respect to 
     which mandatory (e.g., U.S.-source income of foreign 
     taxpayers) or voluntary (e.g., unemployment benefits) 
     withholding applies under present law. Although the 
     withholding requirement applies to payments that are 
     potentially subject to backup withholding under section 3406, 
     it does not apply to those payments from which amounts are 
     actually being withheld under backup withholding rules.
       The three-percent withholding requirement also does not 
     apply to the following: payments of interest; payments for 
     real property; payments to tax-exempt entities or foreign 
     governments; intra-governmental payments; payments made 
     pursuant to a classified or confidential contract (as defined 
     in section 6050M(e)(3)), and payments to government employees 
     that are not otherwise excludable from the new withholding 
     proposal with respect to the employees' services as 
     employees.


                               House Bill

       The provision repeals the three-percent withholding 
     requirement on government payments.
       Effective date.--The provision is effective on the date of 
     enactment.


                            Senate Amendment

       The provision delays the implementation of the three 
     percent withholding requirement by one year to apply to 
     payments after December 31, 2011.
       Effective date.--The provision is effective on the date of 
     enactment.


                          Conference Agreement

       The conference agreement follows the Senate amendment.
     11. Extend and modify the new markets tax credit (sec. 1403 
         of the Senate amendment, sec. 1403 of the conference 
         agreement, and sec. 45D of the Code)


                              Present Law

       Section 45D provides a new markets tax credit for qualified 
     equity investments made to acquire stock in a corporation, or 
     a capital interest in a partnership, that is a qualified 
     community development entity (``CDE'').\165\ The amount of 
     the credit allowable to the investor (either the original 
     purchaser or a subsequent holder) is (1) a five-percent 
     credit for the year in which the equity interest is purchased 
     from the CDE and for each of the following two years, and (2) 
     a six-percent credit for each of the following four years. 
     The credit is determined by applying the applicable 
     percentage (five or six percent) to the amount paid to the 
     CDE for the investment at its original issue, and is 
     available for a taxable year to the taxpayer who holds the 
     qualified equity investment on the date of the initial 
     investment or on the respective anniversary date that occurs 
     during the taxable year. The credit is recaptured if, at any 
     time during the seven-year period that begins on the date of 
     the original issue of the qualified equity investment, the 
     issuing entity ceases to be a qualified CDE, the proceeds of 
     the investment cease to be used as required, or the equity 
     investment is redeemed.
---------------------------------------------------------------------------
     \165\Section 45D was added by section 121(a) of the Community 
     Renewal Tax Relief Act of 2000, Pub. L. No. 106-554 (2000).
---------------------------------------------------------------------------
       A qualified CDE is any domestic corporation or partnership: 
     (1) whose primary mission is serving or providing investment 
     capital for low-income communities or low-income persons; (2) 
     that maintains accountability to residents of low-income 
     communities by providing them with representation on any 
     governing board of or any advisory board to the CDE; and (3) 
     that is certified by the Secretary as being a qualified CDE. 
     A qualified equity investment means stock (other than 
     nonqualified preferred stock) in a corporation or a capital 
     interest in a partnership that is acquired directly from a 
     CDE for cash, and includes an investment of a subsequent 
     purchaser if such investment was a qualified equity 
     investment in the hands of the prior holder. Substantially 
     all of the investment proceeds must be used by the CDE to 
     make qualified low-income community investments. For this 
     purpose, qualified low-income community investments include: 
     (1) capital or equity investments in, or loans to, qualified 
     active low-income community businesses; (2) certain financial 
     counseling and other services to businesses and residents in

[[Page 4054]]

     low-income communities; (3) the purchase from another CDE of 
     any loan made by such entity that is a qualified low-income 
     community investment; or (4) an equity investment in, or loan 
     to, another CDE.
       A ``low-income community'' is a population census tract 
     with either (1) a poverty rate of at least 20 percent or (2) 
     median family income which does not exceed 80 percent of the 
     greater of metropolitan area median family income or 
     statewide median family income (for a non-metropolitan census 
     tract, does not exceed 80 percent of statewide median family 
     income). In the case of a population census tract located 
     within a high migration rural county, low-income is defined 
     by reference to 85 percent (rather than 80 percent) of 
     statewide median family income. For this purpose, a high 
     migration rural county is any county that, during the 20-year 
     period ending with the year in which the most recent census 
     was conducted, has a net out-migration of inhabitants from 
     the county of at least 10 percent of the population of the 
     county at the beginning of such period.
       The Secretary has the authority to designate ``targeted 
     populations'' as low-income communities for purposes of the 
     new markets tax credit. For this purpose, a ``targeted 
     population'' is defined by reference to section 103(20) of 
     the Riegle Community Development and Regulatory Improvement 
     Act of 1994 (12 U.S.C. 4702(20)) to mean individuals, or an 
     identifiable group of individuals, including an Indian tribe, 
     who (A) are low-income persons; or (B) otherwise lack 
     adequate access to loans or equity investments. Under such 
     Act, ``low-income'' means (1) for a targeted population 
     within a metropolitan area, less than 80 percent of the area 
     median family income; and (2) for a targeted population 
     within a non-metropolitan area, less than the greater of 80 
     percent of the area median family income or 80 percent of the 
     statewide non-metropolitan area median family income.\166\ 
     Under such Act, a targeted population is not required to be 
     within any census tract. In addition, a population census 
     tract with a population of less than 2,000 is treated as a 
     low-income community for purposes of the credit if such tract 
     is within an empowerment zone, the designation of which is in 
     effect under section 1391, and is contiguous to one or more 
     low-income communities.
---------------------------------------------------------------------------
     \166\12 U.S.C. sec. 4702(17) (defines ``low-income'' for 
     purposes of 12 U.S.C. sec. 4702(20)).
---------------------------------------------------------------------------
       A qualified active low-income community business is defined 
     as a business that satisfies, with respect to a taxable year, 
     the following requirements: (1) at least 50 percent of the 
     total gross income of the business is derived from the active 
     conduct of trade or business activities in any low-income 
     community; (2) a substantial portion of the tangible property 
     of such business is used in a low-income community; (3) a 
     substantial portion of the services performed for such 
     business by its employees is performed in a low-income 
     community; and (4) less than five percent of the average of 
     the aggregate unadjusted bases of the property of such 
     business is attributable to certain financial property or to 
     certain collectibles.
       The maximum annual amount of qualified equity investments 
     is capped at $3.5 billion per year for calendar years 2006 
     through 2009. Lower caps applied for calendar years 2001 
     through 2005.


                               House Bill

       No provision.


                            Senate Amendment

       For calendar years 2008 and 2009, the Senate amendment 
     increases the maximum amount of qualified equity investments 
     by $1.5 billion (to $5 billion for each year). The Senate 
     amendment requires that the additional amount for 2008 be 
     allocated to qualified CDEs that submitted an allocation 
     application with respect to calendar year 2008 and either (1) 
     did not receive an allocation for such calendar year, or (2) 
     received an allocation for such calendar year in an amount 
     less than the amount requested in the allocation application. 
     The Senate amendment also provides alternative minimum tax 
     relief for equity investment allocations subject to the 2009 
     annual limitation.
       Effective date.--The provision is effective on the date of 
     enactment.


                          Conference Agreement

       The conference agreement generally follows the Senate 
     amendment but does not provide for any alternative minimum 
     tax relief.

                          D. Energy Incentives

     1. Extension of the renewable electricity production credit 
         (sec. 1601 of the House bill, sec. 1101 of the Senate 
         amendment, sec. 1101 of the conference agreement, and 
         sec. 45 of the Code)


                              Present Law

     In general
       An income tax credit is allowed for the production of 
     electricity from qualified energy resources at qualified 
     facilities (the ``renewable electricity production 
     credit'').\167\ Qualified energy resources comprise wind, 
     closed-loop biomass, open-loop biomass, geothermal energy, 
     solar energy, small irrigation power, municipal solid waste, 
     qualified hydropower production, and marine and hydrokinetic 
     renewable energy. Qualified facilities are, generally, 
     facilities that generate electricity using qualified energy 
     resources. To be eligible for the credit, electricity 
     produced from qualified energy resources at qualified 
     facilities must be sold by the taxpayer to an unrelated 
     person.
---------------------------------------------------------------------------
     \167\Sec. 45. In addition to the renewable electricity 
     production credit, section 45 also provides income tax 
     credits for the production of Indian coal and refined coal at 
     qualified facilities.
---------------------------------------------------------------------------
     Credit amounts and credit period
       In general
       The base amount of the electricity production credit is 1.5 
     cents per kilowatt-hour (indexed annually for inflation) of 
     electricity produced. The amount of the credit was 2.1 cents 
     per kilowatt-hour for 2008. A taxpayer may generally claim a 
     credit during the 10-year period commencing with the date the 
     qualified facility is placed in service. The credit is 
     reduced for grants, tax-exempt bonds, subsidized energy 
     financing, and other credits.
       Credit phaseout
       The amount of credit a taxpayer may claim is phased out as 
     the market price of electricity exceeds certain threshold 
     levels. The electricity production credit is reduced over a 
     3-cent phaseout range to the extent the annual average 
     contract price per kilowatt-hour of electricity sold in the 
     prior year from the same qualified energy resource exceeds 8 
     cents (adjusted for inflation; 11.8 cents for 2008).
       Reduced credit periods and credit amounts
       Generally, in the case of open-loop biomass facilities 
     (including agricultural livestock waste nutrient facilities), 
     geothermal energy facilities, solar energy facilities, small 
     irrigation power facilities, landfill gas facilities, and 
     trash combustion facilities placed in service before August 
     8, 2005, the 10-year credit period is reduced to five years, 
     commencing on the date the facility was originally placed in 
     service. However, for qualified open-loop biomass facilities 
     (other than a facility described in section 45(d)(3)(A)(i) 
     that uses agricultural livestock waste nutrients) placed in 
     service before October 22, 2004, the five-year period 
     commences on January 1, 2005. In the case of a closed-loop 
     biomass facility modified to co-fire with coal, to co-fire 
     with other biomass, or to co-fire with coal and other 
     biomass, the credit period begins no earlier than October 22, 
     2004.
       In the case of open-loop biomass facilities (including 
     agricultural livestock waste nutrient facilities), small 
     irrigation power facilities, landfill gas facilities, trash 
     combustion facilities, and qualified hydropower facilities 
     the otherwise allowable credit amount is 0.75 cent per 
     kilowatt-hour, indexed for inflation measured after 1992 (1 
     cent per kilowatt-hour for 2008).
       Other limitations on credit claimants and credit amounts
       In general, in order to claim the credit, a taxpayer must 
     own the qualified facility and sell the electricity produced 
     by the facility to an unrelated party. A lessee or operator 
     may claim the credit in lieu of the owner of the qualifying 
     facility in the case of qualifying open-loop biomass 
     facilities and in the case of closed-loop biomass facilities 
     modified to co-fire with coal, to co-fire with other biomass, 
     or to co-fire with coal and other biomass. In the case of a 
     poultry waste facility, the taxpayer may claim the credit as 
     a lessee or operator of a facility owned by a governmental 
     unit.
       For all qualifying facilities, other than closed-loop 
     biomass facilities modified to co-fire with coal, to co-fire 
     with other biomass, or to co-fire with coal and other 
     biomass, the amount of credit a taxpayer may claim is reduced 
     by reason of grants, tax-exempt bonds, subsidized energy 
     financing, and other credits, but the reduction cannot exceed 
     50 percent of the otherwise allowable credit. In the case of 
     closed-loop biomass facilities modified to co-fire with coal, 
     to co-fire with other biomass, or to co-fire with coal and 
     other biomass, there is no reduction in credit by reason of 
     grants, tax-exempt bonds, subsidized energy financing, and 
     other credits.
       The credit for elecnicity produced from renewable resources 
     is a component of the general business credit.\168\ 
     Generally, the general business credit for any taxable year 
     may not exceed the amount by which the taxpayer's net income 
     tax exceeds the greater of the tentative minimum tax or 25 
     percent of so much of the net regular tax liability as 
     exceeds $25,000. However, this limitation does not apply to 
     section 45 credits for electricity or refined coal produced 
     from a facility (placed in service after October 22, 2004) 
     during the first four years of production beginning on the 
     date the facility is placed in service.\169\ excess credits 
     may be carried back one year and forward up to 20 years.
---------------------------------------------------------------------------
     \168\Sec. 38(b)(8).
     \169\Sec. 38(c)(4)(B)(ii).
---------------------------------------------------------------------------
     Qualified facilities
       Wind energy facility
       A wind energy facility is a facility that uses wind to 
     produce electricity. To be a qualified facility, a wind 
     energy facility must be placed in service after December 31, 
     1993, and before January 1, 2010.

[[Page 4055]]


       Closed-loop biomass facility
       A closed-loop biomass facility is a facility that uses any 
     organic material from a plant which is planted exclusively 
     for the purpose of being used at a qualifying facility to 
     produce electricity. In addition, a facility can be a closed-
     loop biomass facility if it is a facility that is modified to 
     use closed-loop biomass to co-fire with coal, with other 
     biomass, or with both coal and other biomass, but only if the 
     modification is approved under the Biomass Power for Rural 
     Development Programs or is part of a pilot project of the 
     Commodity Credit Corporation.
       To be a qualified facility, a closed-loop biomass facility 
     must be placed in service after December 31, 1992, and before 
     January 1, 2011. In the case of a facility using closed-loop 
     biomass but also co-firing the closed-loop biomass with coal, 
     other biomass, or coal and other biomass, a qualified 
     facility must be originally placed in service and modified to 
     co-fire the closed-loop biomass at any time before January 1, 
     2011.
       A qualified facility includes a new power generation unit 
     placed in service after October 3, 2008, at an existing 
     closed-loop biomass facility, but only to the extent of the 
     increased amount of electricity produced at the existing 
     facility by reason of such new unit.
       Open-loop biomass (including agricultural livestock waste 
           nutrients) facility
       An open-loop biomass facility is a facility that uses open-
     loop biomass to produce electricity. For purposes of the 
     credit, open-loop biomass is defined as (1) any agricultural 
     livestock waste nutrients or (2) any solid, nonhazardous, 
     cellulosic waste material or any lignin material that is 
     segregated from other waste materials and which is derived 
     from:
        forest-related resources, including mill and 
     harvesting residues, precommercial thinnings, slash, and 
     brush;
        solid wood waste materials, including waste 
     pallets, crates, dunnage, manufacturing and construction wood 
     wastes, and landscape or right-of-way tree trimmings; or
        agricultural sources, including orchard tree 
     crops, vineyard, grain, legumes, sugar, and other crop by-
     products or residues.
       Agricultural livestock waste nutrients are defined as 
     agricultural livestock manure and litter, including bedding 
     material for the disposition of manure. Wood waste materials 
     do not qualify as open-loop biomass to the extent they are 
     pressure treated, chemically treated, or painted. In 
     addition, municipal solid waste, gas derived from the 
     biodegradation of solid waste, and paper which is commonly 
     recycled do not qualify as open-loop biomass. Open-loop 
     biomass does not include closed-loop biomass or any biomass 
     burned in conjunction with fossil fuel (co-firing) beyond 
     such fossil fuel required for start up and flame 
     stabilization.
       In the case of an open-loop biomass facility that uses 
     agricultural livestock waste nutrients, a qualified facility 
     is one that was originally placed in service after October 
     22, 2004, and before January 1, 2009, and has a nameplate 
     capacity rating which is not less than 150 kilowatts. In the 
     case of any other open-loop biomass facility, a qualified 
     facility is one that was originally placed in service before 
     January 1, 2011. A qualified facility includes a new power 
     generation unit placed in service after October 3, 2008, at 
     an existing open-loop biomass facility, but only to the 
     extent of the increased amount of electricity produced at the 
     existing facility by reason of such new unit.
       Geothermal facility
       A geothermal facility is a facility that uses geothermal 
     energy to produce electricity. Geothermal energy is energy 
     derived from a geothermal deposit that is a geothermal 
     reservoir consisting of natural heat that is stored in rocks 
     or in an aqueous liquid or vapor (whether or not under 
     pressure). To be a qualified facility, a geothermal facility 
     must be placed in service after October 22, 2004, and before 
     January 1, 2011.
       Solar facility
       A solar facility is a facility that uses solar energy to 
     produce electricity. To be a qualified facility, a solar 
     facility must be placed in service after October 22, 2004, 
     and before January 1, 2006.
       Small irrigation facility
       A small irrigation power facility is a facility that 
     generates electric power through an irrigation system canal 
     or ditch without any dam or impoundment of water. The 
     installed capacity of a qualified facility must be at least 
     150 kilowatts but less than five megawatts. To be a qualified 
     facility, a small irrigation facility must be originally 
     placed in service after October 22, 2004, and before October 
     3, 2008. Marine and hydrokinetic renewable energy facilities, 
     described below, subsume small irrigation power facilities 
     after October 2, 2008.
       Landfill gas facility
       A landfill gas facility is a facility that uses landfill 
     gas to produce electricity. Landfill gas is defined as 
     methane gas derived from the biodegradation of municipal 
     solid waste. To be a qualified facility, a landfill gas 
     facility must be placed in service after October 22, 2004, 
     and before January 1, 2011.
       Trash combustion facility
       Trash combustion facilities are facilities that use 
     municipal solid waste (garbage) to produce steam to drive a 
     turbine for the production of electricity. To be a qualified 
     facility, a trash combustion facility must be placed in 
     service after October 22, 2004, and before January 1, 2011. A 
     qualified trash combustion facility includes a new unit, 
     placed in service after October 22, 2004, that increases 
     electricity production capacity at an existing trash 
     combustion facility. A new unit generally would include a new 
     burner/boiler and turbine. The new unit may share certain 
     common equipment, such as trash handling equipment, with 
     other pre-existing units at the same facility. Electricity 
     produced at a new unit of an existing facility qualifies for 
     the production credit only to the extent of the increased 
     amount of electricity produced at the entire facility.
       Hydropower facility
       A qualifying hydropower facility is (1) a facility that 
     produced hydroelectric power (a hydroelectric dam) prior to 
     August 8, 2005, at which efficiency improvements or additions 
     to capacity have been made after such date and before January 
     1, 2011, that enable the taxpayer to produce incremental 
     hydropower or (2) a facility placed in service before August 
     8, 2005, that did not produce hydroelectric power (a 
     nonhydroelectric dam) on such date, and to which turbines or 
     other electricity generating equipment have been added after 
     such date and before January 1, 2011.
       At an existing hydroelectric facility, the taxpayer may 
     claim credit only for the production of incremental 
     hydroelectric power. Incremental hydroelectric power for any 
     taxable year is equal to the percentage of average annual 
     hydroelectric power produced at the facility attributable to 
     the efficiency improvement or additions of capacity 
     determined by using the same water flow information used to 
     determine an historic average annual hydroelectric power 
     production baseline for that facility. The Federal Energy 
     Regulatory Commission will certify the baseline power 
     production of the facility and the percentage increase due to 
     the efficiency and capacity improvements.
       Nonhydroelectric dams converted to produce electricity must 
     be licensed by the Federal Energy Regulatory Commission and 
     meet all other applicable environmental, licensing, and 
     regulatory requirements.
       For a nonhydroelectric dam converted to produce electric 
     power before January 1, 2009, there must not be any 
     enlargement of the diversion structure, construction or 
     enlargement of a bypass channel, or the impoundment or any 
     withholding of additional water from the natural stream 
     channel.
       For a nonhydroelectric dam converted to produce electric 
     power after December 31, 2008, the nonhydroelectric dam must 
     have been (1) placed in service before October 3, 2008, (2) 
     operated for flood control, navigation, or water supply 
     purposes and (3) did not produce hydroelectric power on 
     October 3, 2008. In addition, the hydroelectric project must 
     be 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 this criteria.
       Marine and hydrokinetic renewable energy facility
       A qualified marine and hydrokinetic renewable energy 
     facility is any facility that produces electric power from 
     marine and hydrokinetic renewable energy, has a nameplate 
     capacity rating of at least 150 kilowatts, and is placed in 
     service after October 2, 2008, and before January 1, 2012. 
     Marine and hydrokinetic renewable energy is defined as energy 
     derived from (1) waves, tides, and currents in oceans, 
     estuaries, and tidal areas; (2) free flowing water in rivers, 
     lakes, and streams; (3) free flowing water in an irrigation 
     system, canal, or other manmade channel, including projects 
     that utilize nonmechanical structures to accelerate the flow 
     of water for electric power production purposes; or (4) 
     differentials in ocean temperature (ocean thermal energy 
     conversion). The term does not include energy derived from 
     any source that uses a dam, diversionary structure (except 
     for irrigation systems, canals, and other man-made channels), 
     or impoundment for electric power production.
     Summary of credit rate and credit period by facility type

[[Page 4056]]



        TABLE 1.--SUMMARY OF SECTION 45 CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE RESOURCES
----------------------------------------------------------------------------------------------------------------
                                                                            Credit period for  Credit period for
                                                                            facilities placed  facilities placed
                                                         Credit amount for   in service on or   in service after
        Eligible electricity production activity          2008 (cents per    before August 8,    August 8, 2005
                                                           kilowatt-hour)    2005 (years from     (years from
                                                                            placed-in-service  placed-in-service
                                                                                  date)              date)
----------------------------------------------------------------------------------------------------------------
Wind...................................................                2.1                 10                 10
Closed-loop biomass....................................                2.1              \1\10                 10
  Open-loop biomass (including agricultural livestock                  1.0               \2\5                 10
               waste nutrient facilities)
Geothermal.............................................                2.1                  5                 10
Solar (pre-2006 facilities only).......................                2.1                  5                 10
Small irrigation power.................................                1.0                  5                 10
Municipal solid waste (including landfill gas                          1.0                  5                 10
 facilities and trash combustion facilities)...........
Qualified hydropower...................................                1.0                N/A                 10
Marine and hydrokinetic................................                1.0                N/A                10
----------------------------------------------------------------------------------------------------------------
\1\In the case of certain co-firing closed-loop facilities, the credit period begins no earlier than October 22,
  2004.
\2\For certain facilities placed in service before October 22, 2004, the five-year credit period commences on
  January 1, 2005.

     Taxation of cooperatives and their patrons
       For Federal income tax purposes, a cooperative generally 
     computes its income as if it were a taxable corporation, with 
     one exception: the cooperative may exclude from its taxable 
     income distributions of patronage dividends. Generally, a 
     cooperative that is subject to the cooperative tax rules of 
     subchapter T of the Code\170\ permitted a deduction for 
     patronage dividends paid only to the extent of net income 
     that is derived from transactions with patrons who are 
     members of the cooperative.\171\ The availability of such 
     deductions from taxable income has the effect of allowing the 
     cooperative to be treated like a conduit with respect to 
     profits derived from transactions with patrons who are 
     members of the cooperative.
---------------------------------------------------------------------------
     \170\Secs. 1381-1383.
     \171\Sec. 1382.
---------------------------------------------------------------------------
       Eligible cooperatives may elect to pass any portion of the 
     credit through to their patrons. An eligible cooperative is 
     defined as a cooperative organization that is owned more than 
     50 percent by agricultural producers or entities owned by 
     agricultural producers. The credit may be apportioned among 
     patrons eligible to share in patronage dividends on the basis 
     of the quantity or value of business done with or for such 
     patrons for the taxable year. The election must be made on a 
     timely filed return for the taxable year and, once made, is 
     irrevocable for such taxable year.


                               House Bill

       The provision extends for three years (generally, through 
     2013; through 2012 for wind facilities) the period during 
     which qualified facilities producing electricity from wind, 
     closed-loop biomass, open-loop biomass, geothermal energy, 
     municipal solid waste, and qualified hydropower may be placed 
     in service for purposes of the electricity production credit. 
     The provision extends for two years (through 2013) the 
     placed-in-service period for marine and hydrokinetic 
     renewable energy resources.
       The provision also makes a technical amendment to the 
     definition of small irrigation power facility to clarify its 
     integration into the definition of marine and hydrokinetic 
     renewable energy facility.
       Effective date.--The extension of the electricity 
     production credit is effective for property placed in service 
     after the date of enactment. The technical amendment is 
     effective as if included in section 102 of the Energy 
     Improvement and Extension Act of 2008.


                            Senate Amendment

       The Senate amendment is the same as the House bill.


                          Conference Agreement

       The conference agreement follows the House bill and the 
     Senate amendment.
     2. Election of investment credit in lieu of production tax 
         credits (sec. 1602 of the House bill, sec. 1102 of the 
         Senate amendment, sec. 1102 of the conference agreement, 
         and secs. 45 and 48 of the Code)


                              Present Law

     Renewable electricity credit
       An income tax credit is allowed for the production of 
     electricity from qualified energy resources at qualified 
     facilities.\172\ Qualified energy resources comprise wind, 
     closed-loop biomass, open-loop biomass, geothermal energy, 
     solar energy, small irrigation power, municipal solid waste, 
     qualified hydropower production, and marine and hydrokinetic 
     renewable energy. Qualified facilities are, generally, 
     facilities that generate electricity using qualified energy 
     resources. To be eligible for the credit, electricity 
     produced from qualified energy resources at qualified 
     facilities must be sold by the taxpayer to an unrelated 
     person. The credit amounts, credit periods, definitions of 
     qualified facilities, and other rules governing this credit 
     are described more fully in section D.1 of this document.
---------------------------------------------------------------------------
     \172\Sec. 45. In addition to the electricity production 
     credit, section 45 also provides income tax credits for the 
     production of Indian coal and refined coal at qualified 
     facilities.
---------------------------------------------------------------------------
     Energy credit
       An income tax credit is also allowed for certain energy 
     property placed in service. Qualifying property includes 
     certain fuel cell property, solar property, geothermal power 
     production property, small wind energy property, combined 
     heat and power system property, and geothermal heat pump 
     property.\173\ The amounts of credit, definitions of 
     qualifying property, and other rules governing this credit 
     are described more fully in section D.3 of this document.
---------------------------------------------------------------------------
     \173\Sec. 48.
---------------------------------------------------------------------------


                               House Bill

       The House bill allows the taxpayer to make an irrevocable 
     election to have certain qualified facilities placed in 
     service in 2009 and 2010 be treated as energy property 
     eligible for a 30 percent investment credit under section 48. 
     For this purpose, qualified facilities are facilities 
     otherwise eligible for the section 45 production tax credit 
     (other than refined coal, Indian coal, and solar facilities) 
     with respect to which no credit under section 45 has been 
     allowed. A taxpayer electing to treat a facility as energy 
     property may not claim the production credit under section 
     45.
       Effective date.--The provision applies to facilities placed 
     in service after December 31, 2008.


                            Senate Amendment

       The Senate amendment is similar to the House bill, but with 
     a modification with respect to the placed in service period 
     that determines eligibility for the election. Under the 
     Senate amendment, facilities are eligible if placed in 
     service during the extension period of section 45 as provided 
     in the Senate amendment (generally, through 2013; through 
     2012 for wind facilities), and with respect to which no 
     credit under section 45 has been allowed.


                          Conference Agreement

       The conference agreement generally follows the Senate 
     amendment. Property eligible for the credit is tangible 
     personal or other tangible property (not including a building 
     or its structural components), and with respect to which 
     depreciation or amortization is allowable but only if such 
     property is used as an integral part of the qualified 
     facility. For example, in the case of a wind facility, the 
     conferees intend that only property eligible for five-year 
     depreciation under section 168(e)(3)(b)(vi) is treated as 
     credit-eligible energy property under the election.
     3. Modification of energy credit\174\ (sec. 1603 of the House 
         bill, sec. 1103 of the Senate amendment, sec. 1103 of the 
         conference agreement, and sec. 48 of the Code)
---------------------------------------------------------------------------
     \174\Additional provisions that (1) allow section 45 
     facilities to elect to be treated as section 48 energy 
     property, and (2) allow section 45 and 48 facilities to elect 
     to receive a grant from the Department of the Treasury rather 
     than the section 45 production credit or the section 48 
     energy credit, are described in sections D.2 and D.4 of this 
     document.
---------------------------------------------------------------------------


                              Present Law

     In general
       A nonrefundable, 10-percent business energy credit\175\ is 
     allowed for the cost of new property that is equipment that 
     either (1) uses solar energy to generate electricity, to heat 
     or cool a structure, or to provide solar process heat, or (2) 
     is used to produce, distribute, or use energy derived from a 
     geothermal deposit, but only, in the case of electricity 
     generated by geothermal power, up to the electric 
     transmission stage. Property used to generate energy for the 
     purposes of heating a swimming pool is not eligible solar 
     energy property.
---------------------------------------------------------------------------
     \175\Sec. 48.
---------------------------------------------------------------------------
       The energy credit is a component of the general business 
     credit.\176\ An unused general business credit generally may 
     be carried back one year and carried forward 20 years.\177\ 
     The taxpayer's basis in the property is reduced by one-half 
     of the amount of the credit claimed. For projects whose 
     construction time is expected to equal or exceed two years, 
     the credit may be claimed as progress expenditures are made 
     on the project, rather than during the year the

[[Page 4057]]

     property is placed in service. The credit is allowed against 
     the alternative minimum tax for credits determined in taxable 
     years beginning after October 3, 2008.
---------------------------------------------------------------------------
     \176\Sec. 38(b)(1).
     \177\Sec. 39.
---------------------------------------------------------------------------
       Property financed by subsidized energy financing or with 
     proceeds from private activity bonds is subject to a 
     reduction in basis for purposes of claiming the credit. The 
     basis reduction is proportional to the share of the basis of 
     the property that is financed by the subsidized financing or 
     proceeds. The term ``subsidized energy financing'' means 
     financing provided under a Federal, State, or local program a 
     principal purpose of which is to provide subsidized financing 
     for projects designed to conserve or produce energy.
     Special rules for solar energy property
       The credit for solar energy property is increased to 30 
     percent in the case of periods prior to January 1, 2017. 
     Additionally, equipment that uses fiber-optic distributed 
     sunlight to illuminate the inside of a structure is solar 
     energy property eligible for the 30-percent credit.
     Fuel cells and microturbines
       The energy credit applies to qualified fuel cell power 
     plants, but only for periods prior to January 1, 2017. The 
     credit rate is 30 percent.
       A qualified fuel cell power plant is an integrated system 
     composed of a fuel cell stack assembly and associated balance 
     of plant components that (1) converts a fuel into electricity 
     using electrochemical means, and (2) has an electricity-only 
     generation efficiency of greater than 30 percent and a 
     capacity of at least one-half kilowatt. The credit may not 
     exceed $1,500 for each 0.5 kilowatt of capacity.
       The energy credit applies to qualifying stationary 
     microturbine power plants for periods prior to January 1, 
     2017. The credit is limited to the lesser of 10 percent of 
     the basis of the property or $200 for each kilowatt of 
     capacity.
       A qualified stationary microturbine power plant is an 
     integrated system comprised of a gas turbine engine, a 
     combustor, a recuperator or regenerator, a generator or 
     alternator, and associated balance of plant components that 
     converts a fuel into electricity and thermal energy. Such 
     system also includes all secondary components located between 
     the existing infrastructure for fuel delivery and the 
     existing infrastructure for power distribution, including 
     equipment and controls for meeting relevant power standards, 
     such as voltage, frequency and power factors. Such system 
     must have an electricity-only generation efficiency of not 
     less than 26 percent at International Standard Organization 
     conditions and a capacity of less than 2,000 kilowatts.
     Geothermal heat pump property
       The energy credit applies to qualified geothermal heat pump 
     property placed in service prior to January 1, 2017. The 
     credit rate is 10 percent. Qualified geothermal heat pump 
     property is equipment that 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.
     Small wind property
       The energy credit applies to qualified small wind energy 
     property placed in service prior to January 1, 2017. The 
     credit rate is 30 percent. The credit is limited to $4,000 
     per year with respect to all wind energy property of any 
     taxpayer. Qualified small wind energy property is property 
     that uses a qualified wind turbine to generate electricity. A 
     qualifying wind turbine means a wind turbine of 100 kilowatts 
     of rated capacity or less.
     Combined heat and power property
       The energy credit applies to combined heat and power 
     (``CHP'') property placed in service prior to January 1, 
     2017. The credit rate is 10 percent.
       CHP property is property: (1) that 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); (2) that has an electrical capacity of not 
     more than 50 megawatts or a mechanical energy capacity of no 
     more than 67,000 horsepower or an equivalent combination of 
     electrical and mechanical energy capacities; (3) that 
     produces at least 20 percent of its total useful energy in 
     the form of thermal energy that is not used to produce 
     electrical or mechanical power, and produces at least 20 
     percent of its total useful energy in the form of electrical 
     or mechanical power (or a combination thereof); and (4) the 
     energy efficiency percentage of which exceeds 60 percent. CHP 
     property does not include property used to transport the 
     energy source to the generating facility or to distribute 
     energy produced by the facility.
       The otherwise allowable credit with respect to CHP property 
     is reduced to the extent the property has an electrical 
     capacity or mechanical capacity in excess of any applicable 
     limits. Property in excess of the applicable limit (15 
     megawatts or a mechanical energy capacity of more than 20,000 
     horsepower or an equivalent combination of electrical and 
     mechanical energy capacities) is permitted to claim a 
     fraction of the otherwise allowable credit. The fraction is 
     equal to the applicable limit divided by the capacity of the 
     property. For example, a 45 megawatt property would be 
     eligible to claim 15/45ths, or one third, of the otherwise 
     allowable credit. Again, no credit is allowed if the property 
     exceeds the 50 megawatt or 67,000 horsepower limitations 
     described above.
       Additionally, the provision provides that systems whose 
     fuel source is at least 90 percent open-loop biomass and that 
     would qualify for the credit but for the failure to meet the 
     efficiency standard are eligible for a credit that is reduced 
     in proportion to the degree to which the system fails to meet 
     the efficiency standard. For example, a system that would 
     otherwise be required to meet the 60-percent efficiency 
     standard, but which only achieves 30-percent efficiency, 
     would be permitted a credit equal to one-half of the 
     otherwise allowable credit (i.e., a 5-percent credit).


                               House Bill

       The House bill eliminates the credit cap applicable to 
     qualified small wind energy property. The House bill also 
     removes the rule that reduces the basis of the property for 
     purposes of claiming the credit if the property is financed 
     in whole or in part by subsidized energy financing or with 
     proceeds from private activity bonds.
       Effective date..--The provision applies to periods after 
     December 31, 2008, under rules similar to the rules of 
     section 48(m) of the Code (as in effect on the day before the 
     enactment of the Revenue Reconciliation Act of 1990).


                            Senate Amendment

       The Senate amendment is the same as the House bill.


                          Conference Agreement

       The conference agreement follows the House bill and the 
     Senate amendment.
       4. Grants for specified energy property in lieu of tax 
     credits (secs. 1604 and 1721 of the House bill, secs. 1104 
     and 1603 of the conference agreement, and secs. 45 and 48 of 
     the Code)


                              Present Law

     Renewable electricity production credit
       An income tax credit is allowed for the production of 
     electricity from qualified energy resources at qualified 
     facilities (the ``renewable electricity production 
     credit'').\178\ Qualified energy resources comprise wind, 
     closed-loop biomass, open-loop biomass, geothermal energy, 
     solar energy, small irrigation power, municipal solid waste, 
     qualified hydropower production, and marine and hydrokinetic 
     renewable energy. Qualified facilities are, generally, 
     facilities that generate electricity using qualified energy 
     resources. To be eligible for the credit, electricity 
     produced from qualified energy resources at qualified 
     facilities must be sold by the taxpayer to an unrelated 
     person. The credit amounts, credit periods, definitions of 
     qualified facilities, and other rules governing this credit 
     are described more fully in section D.1 of this document.
---------------------------------------------------------------------------
     \178\Sec. 45. In addition to the renewable electricity 
     production credit, section 45 also provides income tax 
     credits for the production of Indian coal and refined coal at 
     qualified facilities.
---------------------------------------------------------------------------
     Energy credit
       An income tax credit is also allowed for certain energy 
     property placed in service. Qualifying property includes 
     certain fuel cell property, solar property, geothermal power 
     production property, small wind mew property, combined heat 
     and power system property, and geothermal heat pump 
     property.\179\ The amounts of credit, definitions of 
     qualifying property, and other rules governing this credit 
     are described more fully in section D.3 of this document.
---------------------------------------------------------------------------
     \179\Sec. 48.
---------------------------------------------------------------------------


                               House Bill

       The provision authorizes the Secretary of Energy to provide 
     a grant to each person who places in service during 2009 or 
     2010 energy property that is either (1) an electricity 
     production facility otherwise eligible for the renewable 
     electricity production credit or (2) qualifying property 
     otherwise eligible for the energy credit. In general, the 
     grant amount is 30 percent of the basis of the property that 
     would (1) be eligible for credit under section 48 or (2) 
     comprise a section 45 credit-eligible facility. For qualified 
     microturbine, combined heat and power system, and geothermal 
     heat pump property, the amount is 10 percent of the basis of 
     the property.
       It is intended that the grant provision mimic the operation 
     of the credit under section 48. For example, the amount of 
     the grant is not includable in gross income. However, the 
     basis of the property is reduced by fifty percent of the 
     amount of the grant. In addition, some or all of each grant 
     is subject to recapture if the grant eligible property is 
     disposed of by the grant recipient within five years of being 
     placed in service.\180\
---------------------------------------------------------------------------
     \180\Section 1604 of the House bill.
---------------------------------------------------------------------------
       Nonbusiness property and property that would not otherwise 
     be eligible for credit under section 48 or part of a facility 
     that would be eligible for credit under section 45 is not 
     eligible for a grant under the provision. The grant may be 
     paid to whichever party would have been entitled to a credit 
     under section 48 or section 45, as the case may be.
       Under the provision, if a grant is paid, no renewable 
     electricity credit or energy credit

[[Page 4058]]

     may be claimed with respect to the grant eligible property. 
     In addition, no grant may be awarded to any Federal, State, 
     or local government (or any political subdivision, agency, or 
     instrumentality thereof) or any section 501(c) tax-exempt 
     entity.
       The provision appropriates to the Secretary of Energy the 
     funds necessary to make the grants. No grant may be made 
     unless the application for the grant has been received before 
     October 1, 2011.
       Effective date.--The provision is effective on date of 
     enactment.


                            Senate Amendment

       No provision.


                          Conference Agreement

       The conference agreement generally follows the House bill 
     with the following modifications. The conference agreement 
     clarifies that qualifying property must be depreciable or 
     amortizable to be eligible for a grant. The conference 
     agreement also permits taxpayers to claim the credit with 
     respect to otherwise eligible property that is not placed in 
     service in 2009 and 2010 so long as construction begins in 
     either of those years and is completed prior to 2013 (in the 
     case of wind facility property), 2014 (in the case of other 
     renewable power facility property eligible for credit under 
     section 45), or 2017 (in the case of any specified energy 
     property described in section 48). The conference agreement 
     also provides that the grant program be administered by the 
     Secretary of the Treasury.
     5. Expand new clean renewable energy bonds (sec. 1611 of the 
         House bill, sec. 1111 of the Senate amendment, sec. 1111 
         of the conference agreement, and sec. 54C of the Code)


                              Present Law

     New Clean Renewable Enemy Bonds
       New clean renewable energy bonds (``New CREBs'') may be 
     issued by qualified issuers to finance qualified renewable 
     energy facilities.\181\ Qualified renewable energy facilities 
     are facilities that: (1) qualify for the tax credit under 
     section 45 (other than Indian coal and refined coal 
     production facilities), without regard to the placed-in-
     service date requirements of that section; and (2) are owned 
     by a public power provider, governmental body, or cooperative 
     electric company.
---------------------------------------------------------------------------
     \181\Sec. 54C.
---------------------------------------------------------------------------
       The term ``qualified issuers'' includes: (1) public power 
     providers; (2) a governmental body; (3) cooperative electric 
     companies; (4) a not-for-profit electric utility that has 
     received a loan or guarantee under the Rural Electrification 
     Act; and (5) clean renewable energy bond lenders. 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). A ``governmental body'' means 
     any State or Indian tribal government, or any political 
     subdivision thereof. The term ``cooperative electric 
     company'' means a mutual or cooperative electric company 
     (described in section 501(c)(12) or section 1381(a)(2)(C)). A 
     clean renewable energy bond lender means a cooperative that 
     is owned by, or has outstanding loans to, 100 or more 
     cooperative electric companies and is in existence on 
     February 1, 2002 (including any affiliated entity which is 
     controlled by such lender).
       There is a national limitation for New CREBs of $800 
     million. No more than one third of the national limit may be 
     allocated to projects of public power providers, governmental 
     bodies, or cooperative electric companies. Allocations to 
     governmental bodies and cooperative electric companies may be 
     made in the manner the Secretary determines appropriate. 
     Allocations to projects of public power providers shall be 
     made, to the extent practicable, in such manner that the 
     amount allocated to each such project bears the same ratio to 
     the cost of such project as the maximum allocation limitation 
     to projects of public power providers bears to the cost of 
     all such projects.
       New CREBs are a type of qualified tax credit bond for 
     purposes of section 54A of the Code. As such, 100 percent of 
     the available project proceeds of New CREBs must be used 
     within the three-year period that begins on the date of 
     issuance. Available project proceeds are proceeds from the 
     sale of the bond issue less issuance costs (not to exceed two 
     percent) and any investment earnings on such sale proceeds. 
     To the extent less than 100 percent of the available project 
     proceeds are used to finance qualified projects during the 
     three-year spending period, bonds will continue to qualify as 
     New CREBs if unspent proceeds are used within 90 days from 
     the end of such three-year period to redeem bonds. The three-
     year spending period may be extended by the Secretary upon 
     the qualified issuer's request demonstrating that the failure 
     to satisfy the three-year requirement is due to reasonable 
     cause and the projects will continue to proceed with due 
     diligence.
       New CREBs generally are subject to the arbitrage 
     requirements of section 148. However, available project 
     proceeds invested during the three-year spending period are 
     not subject to the arbitrage restrictions (i.e., yield 
     restriction and rebate requirements). In addition, amounts 
     invested in a reserve fund are not subject to the arbitrage 
     restrictions to the extent: (1) such fund is funded at a rate 
     not more rapid than equal annual installments; (2) such fund 
     is funded in a manner reasonably expected to result in an 
     amount not greater than an amount necessary to repay the 
     issue; and (3) the yield on such fund is not greater than the 
     average annual interest rate of tax-exempt obligations having 
     a term of 10 years or more that are issued during the month 
     the New CREBs are issued.
       As with other tax credit bonds, a taxpayer holding New 
     CREBs on a credit allowance date is entitled to a tax credit. 
     However, the credit rate on New CREBs is set by the Secretary 
     at a rate that is 70 percent of the rate that would permit 
     issuance of such bonds without discount and interest cost to 
     the issuer.\182\ The Secretary determines credit rates for 
     tax credit bonds based on general assumptions about credit 
     quality of the class of potential eligible issuers and such 
     other factors as the Secretary deems appropriate. The 
     Secretary may determine credit rates based on general credit 
     market yield indexes and credit ratings.\183\
---------------------------------------------------------------------------
     \182\Given the differences in credit quality and other 
     characteristics of individual issuers, the Secretary cannot 
     set credit rates in a manner that will allow each issuer to 
     issue tax credit bonds at par.
     \183\See Internal Revenue Service, Notice 2009-15, Credit 
     Rates on Tax Credit Bonds, 2009-6 I.R.B. 1 (January 22, 
     2009).
---------------------------------------------------------------------------
       The amount of the tax credit is determined by multiplying 
     the bond's credit rate by the face amount of the holder's 
     bond. The credit accrues quarterly, is includible in gross 
     income (as if it were an interest payment on the bond), and 
     can be claimed against regular income tax liability and 
     alternative minimum tax liability. Unused credits may be 
     carried forward to succeeding taxable years. In addition, 
     credits may be separated from the ownership of the underlying 
     bond similar to how interest coupons can be stripped for 
     interest-bearing bonds.
       An issuer of New CREBs is treated as meeting the 
     ``prohibition on financial conflicts of interest'' 
     requirement in section 54A(d)(6) if it certifies that it 
     satisfies (i) applicable State and local law requirements 
     governing conflicts of interest and (ii) any additional 
     conflict of interest rules prescribed by the Secretary with 
     respect to any Federal, State, or local government official 
     directly involved with the issuance of New CREBs.


                               House Bill

     In general
       The provision expands the New CREBs program. The provision 
     authorizes issuance of up to an additional $1.6 billion of 
     New CREBs.
     Effective date
       The provision applies to obligations issued after the date 
     of enactment.


                            Senate Amendment

       The Senate amendment is the same as the House bill.


                          Conference Agreement

       The conference agreement follows the House bill and the 
     Senate amendment.
     6. Expand qualified energy conservation bonds (sec. 1612 of 
         the House bill, sec. 1112 of the Senate amendment, sec. 
         1112 of the conference agreement, and sec. 54D of the 
         Code)


                              Present Law

       Qualified energy conservation bonds may be used to finance 
     qualified conservation purposes.
       The term ``qualified conservation purpose'' means:
       1. Capital expenditures incurred for purposes of reducing 
     energy consumption in publicly owned buildings by at least 20 
     percent; implementing green community programs; rural 
     development involving the production of electricity from 
     renewable energy resources; or any facility eligible for the 
     production tax credit under section 45 (other than Indian 
     coal and refined coal production facilities);
       2. Expenditures with respect to facilities or grants that 
     support research in: (a) development of cellulosic ethanol or 
     other nonfossil fuels; (b) technologies for the capture and 
     sequestration of carbon dioxide produced through the use of 
     fossil fuels; (c) increasing the efficiency of existing 
     technologies for producing nonfossil fuels; (d) automobile 
     battery technologies and other technologies to reduce fossil 
     fuel consumption in transportation; and (E) technologies to 
     reduce energy use in buildings;
       3. Mass commuting facilities and related facilities that 
     reduce the consumption of energy, including expenditures to 
     reduce pollution from vehicles used for mass commuting;
       4. Demonstration projects designed to promote the 
     commercialization of: (a) green building technology; (b) 
     conversion of agricultural waste for use in the production of 
     fuel or otherwise; (c) advanced battery manufacturing 
     technologies; (D) technologies to reduce peak-use of 
     electricity; and (d) technologies for the capture and 
     sequestration of carbon dioxide emitted from combusting 
     fossil fuels in order to produce electricity; and
       5. Public education campaigns to promote energy efficiency 
     (other than movies, concerts, and other events held primarily 
     for entertainment purposes).

[[Page 4059]]

       There is a national limitation on qualified energy 
     conservation bonds of $800 million. Allocations of qualified 
     energy conservation bonds are made to the States with sub-
     allocations to large local governments. Allocations are made 
     to the States according to their respective populations, 
     reduced by any sub-allocations to large local governments 
     (defined below) within the States. Sub-allocations to large 
     local governments shall be an amount of the national 
     qualified energy conservation bond limitation that bears the 
     same ratio to the amount of such limitation that otherwise 
     would be allocated to the State in which such large local 
     government is located as the population of such large local 
     government bears to the population of such State. The term 
     ``large local government'' means: any municipality or county 
     if such municipality or county has a population of 100,000 or 
     more. Indian tribal governments also are treated as large 
     local governments for these purposes (without regard to 
     population).
       Each State or large local government receiving an 
     allocation of qualified energy conservation bonds may further 
     allocate issuance authority to issuers within such State or 
     large local government. However, any allocations to issuers 
     within the State or large local government shall be made in a 
     manner that results in not less than 70 percent of the 
     allocation of qualified energy conservation bonds to such 
     State or large local government being used to designate bonds 
     that are not private activity bonds (i.e., the bond cannot 
     meet the private business tests or the private loan test of 
     section 141).
       Qualified energy conservations bonds are a type of 
     qualified tax credit bond for purposes of section 54A of the 
     Code. As a result, 100 percent of the available project 
     proceeds of qualified energy conservation bonds must be used 
     for qualified conservation purposes. In the case of qualified 
     conservation bonds issued as private activity bonds, 100 
     percent of the available project proceeds must be used for 
     capital expenditures. In addition, qualified energy 
     conservation bonds only maybe issued by Indian tribal 
     governments to the extent such bonds are issued for purposes 
     that satisfy the present law requirements for tax-exempt 
     bonds issued by Indian tribal governments (i.e., essential 
     governmental functions and certain manufacturing purposes).
       Under present law, 100 percent of the available project 
     proceeds of qualified energy conservation bonds to be used 
     within the three-year period that begins on the date of 
     issuance. Available project proceeds are proceeds from the 
     sale of the issue less issuance costs (not to exceed two 
     percent) and any investment earnings on such sale proceeds. 
     To the extent less than 100 percent of the available project 
     proceeds are used to finance qualified conservation purposes 
     during the three-year spending period, bonds will continue to 
     qualify as qualified energy conservation bonds if unspent 
     proceeds are used within 90 days from the end of such three-
     year period to redeem bonds. The three-year spending period 
     may be extended by the Secretary upon the issuer's request 
     demonstrating that the failure to satisfy the three-year 
     requirement is due to reasonable cause and the projects will 
     continue to proceed with due diligence.
       Qualified energy conservation bonds generally are subject 
     to the arbitrage requirements of section 148. However, 
     available project proceeds invested during the three-year 
     spending period are not subject to the arbitrage restrictions 
     (i.e., yield restriction and rebate requirements). In 
     addition, amounts invested in a reserve fund are not subject 
     to the arbitrage restrictions to the extent: (1) such fund is 
     funded at a rate not more rapid than equal annual 
     installments; (2) such fund is funded in a manner reasonably 
     expected to result in an amount not greater than an amount 
     necessary to repay the issue; and (3) the yield on such fund 
     is not greater than the average annual interest rate of tax-
     exempt obligations having a term of 10 years or more that are 
     issued during the month the qualified energy conservation 
     bonds are issued.
       The maturity of qualified energy conservation bonds is the 
     term that the Secretary estimates will result in the present 
     value of the obligation to repay the principal on such bonds 
     being equal to 50 percent of the face amount of such bonds, 
     using as a discount rate the average annual interest rate of 
     tax-exempt obligations having a term of 10 years or more that 
     are issued during the month the qualified energy conservation 
     bonds are issued.
       As with other tax credit bonds, the taxpayer holding 
     qualified energy conservation bonds on a credit allowance 
     date is entitled to a tax credit. The credit rate on the 
     bonds is set by the Secretary at a rate that is 70 percent of 
     the rate that would permit issuance of such bonds without 
     discount and interest cost to the issuer.\184\ The Secretary 
     determines credit rates for tax credit bonds based on general 
     assumptions about credit quality of the class of potential 
     eligible issuers and such other factors as the Secretary 
     deems appropriate. The Secretary may determine credit rates 
     based on general credit market yield indexes and credit 
     ratings.\185\ The amount of the tax credit is determined by 
     multiplying the bond's credit rate by the face amount on the 
     holder's bond. The credit accrues quarterly, is includible in 
     gross income (as if it were an interest payment on the bond), 
     and can be claimed against regular income tax liability and 
     alternative minimum tax liability. Unused credits may be 
     carried forward to succeeding taxable years. In addition, 
     credits may be separated from the ownership of the underlying 
     bond similar to how interest coupons can be stripped for 
     interest-bearing bonds.
---------------------------------------------------------------------------
     \184\  Given the difference in credit quality and other 
     characteristics of individual issuers, the Secretary cannot 
     set credit rates in a manner that will allow each issuer to 
     issue tax credit bonds at par.
     \185\  See Internal Revenue Services, Notice 2009--15, Credit 
     Rates on Tax Credit Bonds 2009--6 I.R.B. 1 (January 22, 
     2009).
---------------------------------------------------------------------------
       Issuers of qualified energy conservation bonds are required 
     to certify that the financial disclosure requirements that 
     applicable State and local law requirements governing 
     conflicts of interest are satisfied with respect to such 
     issue, as well as any other additional conflict of interest 
     rules prescribed by the Secretary with respect to any 
     Federal, State, or local government official directly 
     involved with the issuance of qualified energy conservation 
     bonds.


                               House Bill

     In general
       The provision expands the present-law qualified energy 
     conservation bond program. The provision authorizes issuance 
     of an additional $2.4 billion of qualified energy 
     conservation bonds. The provision expands eligibility for 
     these tax credit bonds to include loans and grants for 
     capital expenditures as part of green community programs. For 
     example, this expansion will enable States to issue these tax 
     credit bonds to finance loans and/or grants to individual 
     homeowners to retrofit existing housing. The use of bond 
     proceeds for such loans and grants will not cause such bond 
     to be treated as a private activity bond for purposes of the 
     private activity bond restrictions contained in the qualified 
     energy conservation bond provisions.
     Effective date
       The provision is effective for bonds issued after the date 
     of enactment.


                            Senate Amendment

     In general
       The provision expands the present-law qualified energy 
     conservation bond program. The provision authorizes issuance 
     of an additional $2.4 billion of qualified energy 
     conservation bonds. The provision clarifies that capital 
     expenditures to implement green community programs, includes 
     grants, loans and other repayment mechanisms for capital 
     expenditures to implement such programs.
     Effective date
       The provision is effective for bonds issued after the date 
     of enactment.


                          Conference Agreement

     In general
       The provision expands the present-law qualified energy 
     conservation bond program. The provision authorizes issuance 
     of an additional $2.4 billion of qualified energy 
     conservation bonds. Also, the provision clarifies that 
     capital expenditures to implement green community programs 
     includes grants, loans and other repayment mechanisms to 
     implement such programs. For example, this expansion will 
     enable States to issue these tax credit bonds to finance 
     retrofits of existing private buildings through loans and/or 
     grants to individual homeowners or businesses, or through 
     other repayment mechanisms. Other repayment mechanisms can 
     include periodic fees assessed on a government bill or 
     utility bill that approximates the energy savings of energy 
     efficiency or conservation retrofits. Retrofits can include 
     heating, cooling, lighting, water-saving, storm water-
     reducing, or other efficiency measures.
       Finally, the provision clarifies that any bond used for the 
     purpose of providing grants, loans or other repayment 
     mechanisms for capital expenditures to implement green 
     community programs is not treated as a private activity bond 
     for purposes of determining whether the requirement that not 
     less than 70 percent of allocations within a State or large 
     local government be used to designate bonds that are not 
     private activity bonds (sec. 54D(e)(3)) has been satisfied.
     Effective date
       The conference agreement follows the House bill and the 
     Senate amendment.
     7. Modification to high-speed intercity rail facility bonds 
         (sec. 1504 of the Senate amendment, sec. 1504 of the 
         conference agreement, and sec. 142(i) of the Code)


                              Present Law

     In general
       Under present law, gross income does not include interest 
     on State or local bonds. State and local bonds are classified 
     generally as either governmental bonds or private activity 
     bonds. Governmental bonds are bonds the proceeds of which are 
     primarily used to finance governmental functions or which are 
     repaid with governmental funds. Private activity bonds are 
     bonds in which the State or local government serves as a 
     conduit providing financing to nongovernmental persons

[[Page 4060]]

     (e.g., private businesses or individuals). The exclusion from 
     income for State and local bonds does not apply to private 
     activity bonds unless the bonds are issued for certain 
     permitted purposes (``qualified private activity bonds'') and 
     other Code requirements are met.
     High-speed rail
       An exempt facility bond is a type of qualified private 
     activity bond. Exempt facility bonds can be issued for high-
     speed intercity rail facilities. A facility qualifies as a 
     high-speed intercity rail facility if it is a facility (other 
     than rolling stock) for fixed guideway rail transportation of 
     passengers and their baggage between metropolitan statistical 
     areas. The facilities must use vehicles that are reasonably 
     expected to operate at speeds in excess of 150 miles per hour 
     between scheduled stops and the facilities must be made 
     available to members of the general public as passengers. If 
     the bonds are to be issued for a nongovernmental owner of the 
     facility, such owner must irrevocably elect not to claim 
     depreciation or credits with respect to the property financed 
     by the net proceeds of the issue.
       The Code imposes a special redemption requirement for these 
     types of bonds. Any proceeds not used within three years of 
     the date of issuance of the bonds must be used within the 
     following six months to redeem such bonds.
       Seventy-five percent of the principal amount of the bonds 
     issued for high-speed rail facilities is exempt from the 
     volume limit. If all the property to be financed by the net 
     proceeds of the issue is to be owned by a governmental unit, 
     then such bonds are completely exempt from the volume limit.


                               House Bill

       No provision.


                            Senate Amendment

     In general
       The provision modifies the requirement that high-speed 
     intercity rail transportation facilities use vehicles that 
     are reasonably expected to operate at speeds in excess of 150 
     miles per hour.
     Effective date
       The provision is effective for obligations issued after the 
     date of enactment.


                          conference agreement

       The conference agreement follows the Senate amendment.
     8. Extension and modification of credit for nonbusiness 
         energy property (sec. 1621 of the House bill, sec. 1121 
         of the Senate amendment, sec. 1121 of the conference 
         agreement, and sec. 25C of the Code)


                              Present Law

       Section 25C provides a 10-percent credit for the purchase 
     of qualified energy efficiency improvements to existing 
     homes. A qualified energy efficiency improvement is any 
     energy efficiency building envelope component (1) that meets 
     or exceeds the prescriptive criteria for such a component 
     established by the 2000 International Energy Conservation 
     Code as supplemented and as in effect on August 8, 2005 (or, 
     in the case of metal roofs with appropriate pigmented 
     coatings, meets the Energy Star program requirements); (2) 
     that is installed in or on a dwelling located in the United 
     States and owned and used by the taxpayer as the taxpayer's 
     principal residence; (3) the original use of which commences 
     with the taxpayer; and (4) that reasonably can be expected to 
     remain in use for at least five years. The credit is 
     nonrefundable.
       Building envelope components are: (1) insulation materials 
     or systems which are specifically and primarily designed to 
     reduce the heat loss or gain for a dwelling; (2) exterior 
     windows (including skylights) and doors; and (3) metal or 
     asphalt roofs with appropriate pigmented coatings or cooling 
     granules that are specifically and primarily designed to 
     reduce the heat gain for a dwelling.
       Additionally, section 25C provides specified credits for 
     the purchase of specific energy efficient property. The 
     allowable credit for the purchase of certain property is (1) 
     $50 for each advanced main air circulating fan, (2) $150 for 
     each qualified natural gas, propane, or oil furnace or hot 
     water boiler, and (3) $300 for each item of qualified energy 
     efficient property.
       An advanced main air circulating fan is a fan used in a 
     natural gas, propane, or oil furnace originally placed in 
     service by the taxpayer during the taxable year, and which 
     has an annual electricity use of no more than two percent of 
     the total annual energy use of the furnace (as determined in 
     the standard Department of Energy test procedures).
       A qualified natural gas, propane, or oil furnace or hot 
     water boiler is a natural gas, propane, or oil furnace or hot 
     water boiler with an annual fuel utilization efficiency rate 
     of at least 95.
       Qualified energy-efficient property is: (1) an electric 
     heat pump water heater which yields energy factor of at least 
     2.0 in the standard Department of Energy test procedure, (2) 
     an electric heat pump which has a heating seasonal 
     performance factor (HSPF) of at least 9, a seasonal energy 
     efficiency ratio (SEER) of at least 15, and an energy 
     efficiency ratio (EER) of at least 13, (3) a central air 
     conditioner with energy efficiency of at least the highest 
     efficiency tier established by the Consortium for Energy 
     Efficiency as in effect on Jan. 1, 2006,\186\ (4) a natural 
     gas, propane, or oil water heater which has an energy factor 
     of at least 0.80 or thermal efficiency of at least 90 
     percent, and (5) biomass fuel property.
---------------------------------------------------------------------------
     \186\The highest tier in effect at this time was tier 2, 
     requiring SEER of at least 15 and EER of at least 12.5 for 
     split central air conditioning systems and SEER of at least 
     14 and EER of at least 12 for packaged central air 
     conditioning systems.
---------------------------------------------------------------------------
       Biomass fuel property is a stove that bums biomass fuel to 
     heat a dwelling unit located in the United States and used as 
     a principal residence by the taxpayer, or to heat water for 
     such dwelling unit, and that has a thermal efficiency rating 
     of at least 75 percent. Biomass fuel is 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.
       Under section 25C, the maximum credit for a taxpayer with 
     respect to the same dwelling for all taxable years is $500, 
     and no more than $200 of such credit may be attributable to 
     expenditures on windows.
       The taxpayer's basis in the property is reduced by the 
     amount of the credit. Special proration rules apply in the 
     case of jointly owned property, condominiums, and tenant-
     stockholders in cooperative housing corporations. If less 
     than 80 percent of the property is used for nonbusiness 
     purposes, only that portion of expenditures that is used for 
     nonbusiness purposes is taken into account.
       For purposes of determining the amount of expenditures made 
     by any individual with respect to any dwelling unit, there 
     shall not be taken into account expenditures which are made 
     from subsidized energy financing. The term ``subsidized 
     energy financing'' means financing provided under a Federal, 
     State, or local program a principal purpose of which is to 
     provide subsidized financing for projects designed to 
     conserve or produce energy.
       The credit applies to expenditures made after December 31, 
     2008 for property placed in service after December 31, 2008, 
     and prior to January 1, 2010.


                               House Bill

       The House bill raises the 10 percent credit rate to 30 
     percent. Additionally, all energy property otherwise eligible 
     for the $50, $100, or $150 credits is instead eligible for a 
     30 percent credit on expenditures for such property.
       The House bill additionally extends the provision for one 
     year, through December 31, 2010. Finally, the $500 lifetime 
     cap (and the $200 lifetime cap with respect to windows) is 
     eliminated and replaced with an aggregate cap of $1,500 in 
     the case of property placed in service after December 31, 
     2008 and prior to January 1, 2011.
       The present law rule related to subsidized energy financing 
     is eliminated.
       Effective date.--The provision is effective for taxable 
     years beginning after December 31, 2008.


                            Senate Amendment

       The Senate amendment is similar to the House bill, but 
     modifies the efficiency standards for qualifying property.
       Specifically, the Senate amendment updates the building 
     insulation requirements to follow the prescriptive criteria 
     of the 2009 International Energy Conservation Code. 
     Additionally, qualifying exterior windows, doors, and 
     skylights must have a U-factor at or below 0.30 and a 
     seasonal heat gain coefficient (``SHGC'') at or below 0.30.
       Electric heat pumps must achieve the highest efficiency 
     tier of Consortium for Energy Efficiency, as in effect on 
     January 1, 2009. These standards are a SEER greater than or 
     equal to 15, EER greater than or equal to 12.5, and HSPF 
     greater than or equal to 8.5 for split heat pumps, and SEER 
     greater than or equal to 14, EER greater than or equal to 12, 
     and HSPF greater than or equal to 8.0 for packaged heat 
     pumps.
       Central air conditioners must achieve the highest 
     efficiency tier of Consortium for Energy Efficiency, as in 
     effect on January 1, 2009. These standards are a SEER greater 
     than or equal to 16 and EER greater than or equal to 13 for 
     split systems, and SEER greater than or equal to 14 and EER 
     greater than or equal to 12 for packaged systems.
       Natural gas, propane, or oil water heaters must have an 
     energy factor greater than or equal to 0.82 or a thermal 
     efficiency of greater than or equal to 90 percent. Natural 
     gas, propane, or oil water boilers must achieve an annual 
     fuel utilization efficiency rate of at least 90. Qualified 
     oil furnaces must achieve an annual fuel utilization 
     efficiency rate of at least 90.
       Lastly, the requirement that biomass fuel property have a 
     thermal efficiency rating of at least 75 percent is modified 
     to be a thermal efficiency rating of at least 75 percent as 
     measured using a lower heating value.
       Effective date.--The provision is generally effective for 
     taxable years beginning after December 31, 2008. The 
     provisions that alter the efficiency standards of qualifying 
     property, other than biomass fuel property, apply to property 
     placed in service after December 31, 2009. The modification 
     with respect to biomass fuel property is effective for 
     taxable years beginning after December 31, 2008.


                          Conference Agreement

       The conference agreement follows the Senate amendment, with 
     the exception that the

[[Page 4061]]

     new efficiency standards for qualifying property, other than 
     those for biomass fuel property, apply to property placed in 
     service after the date of enactment.
     9. Credit for residential energy efficient property (sec. 
         1622 of the House bill, sec. 1122 of the Senate 
         amendment, sec. 1122 of the conference agreement, and 
         sec. 25D of the Code)


                              Present Law

       Section 25D provides a personal tax credit for the purchase 
     of qualified solar electric property and qualified solar 
     water heating property that is used exclusively for purposes 
     other than heating swimming pools and hot tubs. The credit is 
     equal to 30 percent of qualifying expenditures, with a 
     maximum credit of $2,000 with respect to qualified solar 
     water heating property. There is no cap with respect to 
     qualified solar electric property.
       Section 25D also provides a 30 percent credit for the 
     purchase of qualified geothermal heat pump property, 
     qualified small wind energy property, and qualified fuel cell 
     power plants. The credit for geothermal heat pump property is 
     capped at $2,000, the credit for qualified small wind energy 
     property is limited to $500 with respect to each half 
     kilowatt of capacity, not to exceed $4,000, and the credit 
     for any fuel cell may not exceed $500 for each 0.5 kilowatt 
     of capacity.
       The credit with respect to all qualifying property may be 
     claimed against the alternative minimum tax.
       Qualified solar electric property is property that uses 
     solar energy to generate electricity for use in a dwelling 
     unit. Qualifying solar water heating property is property 
     used to heat water for use in a dwelling unit located in the 
     United States and used as a residence if at least half of the 
     energy used by such property for such purpose is derived from 
     the sun.
       A qualified fuel cell power plant is an integrated system 
     comprised of a fuel cell stack assembly and associated 
     balance of plant components that (1) converts a fuel into 
     electricity using electrochemical means, (2) has an 
     electricity-only generation efficiency of greater than 30 
     percent. The qualified fuel cell power plant must be 
     installed on or in connection with a dwelling unit located in 
     the United States and used by the taxpayer as a principal 
     residence.
       Qualified small wind energy property is property that uses 
     a wind turbine to generate electricity for use in a dwelling 
     unit located in the U.S. and used as a residence by the 
     taxpayer.
       Qualified geothermal heat pump property means any equipment 
     which (1) uses the ground or ground water as a thermal energy 
     source to heat the dwelling unit or as a thermal energy sink 
     to cool such dwelling unit, (2) meets the requirements of the 
     Energy Star program which are in effect at the time that the 
     expenditure for such equipment is made, and (3) is installed 
     on or in connection with a dwelling unit located in the 
     United States and used as a residence by the taxpayer.
       The credit is nonrefundable, and the depreciable basis of 
     the property is reduced by the amount of the credit. 
     Expenditures for labor costs allocable to onsite preparation, 
     assembly, or original installation of property eligible for 
     the credit are eligible expenditures.
       Special proration rules apply in the case of jointly owned 
     property, condominiums, and tenant-stockholders in 
     cooperative housing corporations. If less than 80 percent of 
     the property is used for nonbusiness purposes, only that 
     portion of expenditures that is used for nonbusiness purposes 
     is taken into account.
       For purposes of determining the amount of expenditures made 
     by any individual with respect to any dwelling unit, there 
     shall not be taken into account expenditures which are made 
     from subsidized energy financing. The term ``subsidized 
     energy financing'' means financing provided under a Federal, 
     State, or local program a principal purpose of which is to 
     provide subsidized financing for projects designed to 
     conserve or produce energy.
       The credit applies to property placed in service prior to 
     January 1, 2017.


                               House Bill

       The House bill eliminates the credit caps for solar hot 
     water, geothermal, and wind property and eliminates the 
     reduction in credits for property using subsidized energy 
     financing.
       Effective date.--The provision applies to taxable years 
     beginning after December 31, 2008.


                            Senate Amendment

       The Senate amendment is the same as the House bill.


                          Conference Agreement

       The conference agreement follows the House bill and the 
     Senate amendment.
     10. Temporary increase in credit for alternative fuel vehicle 
         refueling property (sec. 1623 of the House bill, sec. 
         1123 of the Senate amendment, sec. 1123 of the conference 
         agreement, and sec. 30C of the Code)


                              Present Law

       Taxpayers may claim a 30-percent credit for the cost of 
     installing qualified clean-fuel vehicle refueling property to 
     be used in a trade or business of the taxpayer or installed 
     at the principal residence of the taxpayer.\187\ The credit 
     may not exceed $30,000 per taxable year per location, in the 
     case of qualified refueling property used in a trade or 
     business and $1,000 per taxable year per location, in the 
     case of qualified refueling property installed on property 
     which is used as a principal residence.
---------------------------------------------------------------------------
     \187\Sec. 30C.
---------------------------------------------------------------------------
       Qualified refueling property is property (not including a 
     building or its structural components) for the storage or 
     dispensing of a clean-burning fuel or electricity into the 
     fuel tank or battery of a motor vehicle propelled by such 
     fuel or electricity, but only if the storage or dispensing of 
     the fuel or electricity is at the point of delivery into the 
     fuel tank or battery of the motor vehicle. The use of such 
     property must begin with the taxpayer.
       Clean-burning fuels are any fuel at least 85 percent of the 
     volume of which consists of ethanol, natural gas, compressed 
     natural gas, liquefied natural gas, liquefied petroleum gas, 
     or hydrogen. In addition, any mixture of biodiesel and diesel 
     fuel, determined without regard to any use of kerosene and 
     containing at least 20 percent biodiesel, qualifies as a 
     clean fuel.
       Credits for qualified refueling property used in a trade or 
     business are part of the general business credit and may be 
     carried back for one year and forward for 20 years. Credits 
     for residential qualified refueling property cannot exceed 
     for any taxable year the difference between the taxpayer's 
     regular tax (reduced by certain other credits) and the 
     taxpayer's tentative minimum tax. Generally, in the case of 
     qualified refueling property sold to a tax-exempt entity, the 
     taxpayer selling the property may claim the credit.
       A taxpayer's basis in qualified refueling property is 
     reduced by the amount of the credit. In addition, no credit 
     is available for property used outside the United States or 
     for which an election to expense has been made under section 
     179.
       The credit is available for property placed in service 
     after December 31, 2005, and (except in the case of hydrogen 
     refueling property) before January 1, 2011. In the case of 
     hydrogen refueling property, the property must be placed in 
     service before January 1, 2015.


                               House Bill

       For property placed in service in 2009 or 2010, the 
     provision increases the maximum credit available for business 
     property to $200,000 for qualified hydrogen refueling 
     property and to $50,000 for other qualified refueling 
     property. For nonbusiness property, the maximum credit is 
     increased to $2,000. In addition, the credit rate is 
     increased from 30 percent to 50 percent, except in the case 
     of hydrogen refueling property.
       Effective date.--The provision is effective for taxable 
     years beginning after December 31, 2008.


                            Senate Amendment

       The Senate amendment is the same as the House bill, except 
     that it adds interoperability, public access, and other 
     standards to qualified refueling property that is used for 
     recharging electric or hybrid-electric motor vehicles.


                          Conference Agreement

       The conference agreement follows the House bill.
     11. Recovery period for depreciation of smart meters (sec. 
         1124 of the Senate amendment)


                              Present Law

       A taxpayer generally must capitalize the cost of property 
     used in a trade or business and recover such cost over time 
     through annual deductions for depreciation or amortization. 
     Tangible property generally is depreciated under the modified 
     accelerated cost recovery system (``MACRS''), which 
     determines depreciation by applying specific recovery 
     periods, placed-in-service conventions, and depreciation 
     methods to the cost of various types of depreciable 
     property.\188\ The class lives of assets placed in service 
     after 1986 are generally set forth in Revenue Procedure 87-
     56.\189\ Present law provides a 10-year recovery period\190\ 
     and the 150-percent declining balance method\191\ be used for 
     smart meters.
---------------------------------------------------------------------------
     \188\Sec. 168.
     \189\1987-2 C.B. 674 (as clarified and modified by Rev. Proc. 
     88-22, 1988-1 C.B. 785). Assets included in class 49.14, 
     describing assets used in the transmission and distribution 
     of electricity for sale and related land improvements, are 
     assigned a class life of 30 years and a recovery period of 20 
     years.
     \190\Sec. 168(e)(3)(D)(iii).
     \191\Sec. 168(b)(2)(C).
---------------------------------------------------------------------------
       A qualified smart electric meter means any time-based meter 
     and related communication equipment which is placed in 
     service by a taxpayer who is a supplier of electric energy or 
     a provider of electric energy services and which is capable 
     of being used by the taxpayer as part of a system that (1) 
     measures and records electricity usage data on a time-
     differentiated basis in at least 24 separate time segments 
     per day; (2) provides for the exchange of information between 
     the supplier or provider and the customer's smart electric 
     meter in support of time-based rates or other forms of demand 
     response; and (3) provides data to such supplier

[[Page 4062]]

     or provider so that the supplier or provider can provide 
     energy usage information to customers electronically; and (4) 
     provides all commercial and residential customers of such 
     supplier or provider with net metering.\192\ The term ``net 
     metering'' means allowing a customer a credit, if any, as 
     complies with applicable Federal and State laws and 
     regulations, for providing electricity to the supplier or 
     provider.
---------------------------------------------------------------------------
     \192\Sec. 168(i)(18).
---------------------------------------------------------------------------


                               house bill

       No provision.


                            Senate Amendment

       The provision provides a 5-year recovery period and 200 
     percent declining balance method for any qualified smart 
     electric meter placed in service before January 1, 2011.
       Effective date.--The provision is effective for property 
     placed in service after the date of enactment.


                          Conference Agreement

       The conference agreement does not include the Senate 
     amendment provision.
     12. Energy research credit (sec. 1631 of the House bill and 
         sec. 1131 of the Senate amendment)


                              Present Law

     General rule
       A taxpayer may claim a research credit equal to 20 percent 
     of the amount by which the taxpayer's qualified research 
     expenses for a taxable year exceed its base amount for that 
     year.\193\ Thus, the research credit is generally available 
     with respect to incremental increases in qualified research.
---------------------------------------------------------------------------
     \193\Sec. 41.
---------------------------------------------------------------------------
       A 20-percent research tax credit is also available with 
     respect to the excess of (1) 100 percent of corporate cash 
     expenses (including grants or contributions) paid for basic 
     research conducted by universities (and certain nonprofit 
     scientific research organizations) over (2) the sum of (a) 
     the greater of two minimum basic research floors plus (b) an 
     amount reflecting any decrease in nonresearch giving to 
     universities by the corporation as compared to such giving 
     during a fixed-base period, as adjusted for inflation. This 
     separate credit computation is commonly referred to as the 
     university basic research credit.\194\
---------------------------------------------------------------------------
     \194\Sec. 41(e).
---------------------------------------------------------------------------
       Finally, a research credit is available for a taxpayer's 
     expenditures on research undertaken by an energy research 
     consortium. This separate credit computation is commonly 
     referred to as the energy research credit. Unlike the other 
     research credits, the energy research credit applies to all 
     qualified expenditures, not just those in excess of a base 
     amount.
       The research credit, including the university basic 
     research credit and the energy research credit, expires for 
     amounts paid or incurred after December 31, 2009.\195\
---------------------------------------------------------------------------
     \195\Sec. 41(h).
---------------------------------------------------------------------------
     Computation of allowable credit
       Except for energy research payments and certain university 
     basic research payments made by corporations, the research 
     tax credit applies only to the extent that the taxpayer's 
     qualified research expenses for the current taxable year 
     exceed its base amount. The base amount for the current year 
     generally is computed by multiplying the taxpayer's fixed-
     base percentage by the average amount of the taxpayer's gross 
     receipts for the four preceding years. If a taxpayer both 
     incurred qualified research expenses and had gross receipts 
     during each of at least three years from 1984 through 1988, 
     then its fixed-base percentage is the ratio that its total 
     qualified research expenses for the 1984-1988 period bears to 
     its total gross receipts for that period (subject to a 
     maximum fixed-base percentage of 16 percent). All other 
     taxpayers (so-called start-up firms) are assigned a fixed-
     base percentage of three percent.\196\
---------------------------------------------------------------------------
     \196\The Small Business Job Protection Act of 1996 expanded 
     the definition of start-up firms under section 41(c)(3)(B)(i) 
     to include any firm if the first taxable year in which such 
     firm had both gross receipts and qualified research expenses 
     began after 1983. A special rule (enacted in 1993) is 
     designed to gradually recompute a start-up firm's fixed-base 
     percentage based on its actual research experience. Under 
     this special rule, a start-up firm is assigned a fixed-base 
     percentage of three percent for each of its first five 
     taxable years after 1993 in which it incurs qualified 
     research expenses. A start-up firm's fixed-base percentage 
     for its sixth through tenth taxable years after 1993 in which 
     it incurs qualified research expenses is a phased-in ratio 
     based on the firm's actual research experience. For all 
     subsequent taxable years, the taxpayer's fixed-base 
     percentage is its actual ratio of qualified research expenses 
     to gross receipts for any five years selected by the taxpayer 
     from its fifth through tenth taxable years after 1993. Sec. 
     41(c)(3)(B).
---------------------------------------------------------------------------
       In computing the credit, a taxpayer's base amount cannot be 
     less than 50 percent of its current-year qualified research 
     expenses.
       To prevent artificial increases in research expenditures by 
     shifting expenditures among commonly controlled or otherwise 
     related entities, a special aggregation rule provides that 
     all members of the same controlled group of corporations are 
     treated as a single taxpayer.\197\ Under regulations 
     prescribed by the Secretary, special rules apply for 
     computing the credit when a major portion of a trade or 
     business (or unit thereof) changes hands, under which 
     qualified research expenses and gross receipts for periods 
     prior to the change of ownership of a trade or business are 
     treated as transferred with the trade or business that gave 
     rise to those expenses and receipts for purposes of 
     recomputing a taxpayer's fixed-based percentage.\198\
---------------------------------------------------------------------------
     \197\Sec. 41(f)(1).
     \198\Sec. 41(f)(3).
---------------------------------------------------------------------------
     Alternative incremental research credit regime
       Taxpayers are allowed to elect an alternative incremental 
     research credit regime.\199\ If a taxpayer elects to be 
     subject to this alternative regime, the taxpayer is assigned 
     a three-tiered fixed-base percentage (that is lower than the 
     fixed-base percentage otherwise applicable under present law) 
     and the credit rate likewise is reduced.
---------------------------------------------------------------------------
     \199\Sec. 41(c)(4).
---------------------------------------------------------------------------
       Generally, for amounts paid or incurred prior to 2007, 
     under the alternative incremental credit regime, a credit 
     rate of 2.65 percent applies to the extent that a taxpayer's 
     current-year research expenses exceed a base amount computed 
     by using a fixed-base percentage of one percent (i.e., the 
     base amount equals one percent of the taxpayer's average 
     gross receipts for the four preceding years) but do not 
     exceed a base amount computed by using a fixed-base 
     percentage of 1.5 percent. A credit rate of 3.2 percent 
     applies to the extent that a taxpayer's current-year research 
     expenses exceed a base amount computed by using a fixed-base 
     percentage of 1.5 percent but do not exceed a base amount 
     computed by using a fixed-base percentage of two percent. A 
     credit rate of 3.75 percent applies to the extent that a 
     taxpayer's current-year research expenses exceed a base 
     amount computed by using a fixed-base percentage of two 
     percent. Generally, for amounts paid or incurred after 2006, 
     the credit rat listed above are increased to three percent, 
     four percent, and five percent, respectively.\200\
---------------------------------------------------------------------------
     \200\A special transition rule applies for fiscal year 2006-
     2007 taxpayers.
---------------------------------------------------------------------------
       An election to be subject to this alternative incremental 
     credit regime can be made for any taxable year beginning 
     after June 30, 1996, and such an election applies to that 
     taxable year and all subsequent years unless revoked with the 
     consent of the Secretary of the Treasury. The alternative 
     incremental credit regime terminates for taxable years 
     beginning after December 31, 2008.
     Alternative simplified credit
       Generally, for amounts paid or incurred after 2006, 
     taxpayers may elect to claim an alternative simplified credit 
     for qualified research expenses.\201\ The alternative 
     simplified research credit is equal to 12 percent (14 percent 
     for taxable years beginning after December 31, 2008) of 
     qualified research expenses that exceed 50 percent of the 
     average qualified research expenses for the three preceding 
     taxable years. The rate is reduced to six percent if a 
     taxpayer has no qualified research expenses in any one of the 
     three preceding taxable years.
---------------------------------------------------------------------------
     \201\A special transition rule applies for fiscal year 2006-
     2007 taxpayers.
---------------------------------------------------------------------------
       An election to use the alternative simplified credit 
     applies to all succeeding taxable years unless revoked with 
     the consent of the Secretary. An election to use the 
     alternative simplified credit may not be made for any taxable 
     year for which an election to use the alternative incremental 
     credit is in effect. A transition rule applies which permits 
     a taxpayer to elect to use the alternative simplified credit 
     in lieu of the alternative incremental credit if such 
     election is made during the taxable year which includes 
     January 1, 2007. The transition rule applies only to the 
     taxable year which includes that date.
     Eligible expenses
       Qualified research expenses eligible for the research tax 
     credit consist of: (1) in-house expenses of the taxpayer for 
     wages and supplies attributable to qualified research; (2) 
     certain time-sharing costs for computer use in qualified 
     research; and (3) 65 percent of amounts paid or incurred by 
     the taxpayer to certain other persons for qualified research 
     conducted on the taxpayer's behalf (so-called contract 
     research expenses).\202\ Notwithstanding the limitation for 
     contract research expenses, qualified research expenses 
     include 100 percent of amounts paid or incurred by the 
     taxpayer to an eligible small business, university, or 
     Federal laboratory for qualified energy research.
---------------------------------------------------------------------------
     \202\Under a special rule, 75 percent of amounts paid to a 
     research consortium for qualified research are treated as 
     qualified research expenses eligible for the research credit 
     (rather than 65 percent under the general rule under section 
     41(b)(3) governing contract research expenses) if (1) such 
     research consortium is a tax-exempt organization that is 
     described in section 501(c)(3) (other than a private 
     foundation) or section 501(c)(6) and is organized and 
     operated primarily to conduct scientific research, and (2) 
     such qualified research is conducted by the consortium on 
     behalf of the taxpayer and one or more persons not related to 
     the taxpayer. Sec. 41(b)(3)(C).
---------------------------------------------------------------------------
       To be eligible for the credit, the research not only has to 
     satisfy the requirements of present-law section 174 
     (described below) but also must be undertaken for the purpose 
     of discovering information that is technological in nature, 
     the application of which is intended to be useful in the 
     development of a new or improved business component of the

[[Page 4063]]

     taxpayer, and substantially all of the activities of which 
     constitute elements of a process of experimentation for 
     functional aspects, performance, reliability, or quality of a 
     business component. Research does not qualify for the credit 
     if substantially all of the activities relate to style, 
     taste, cosmetic, or seasonal design factors.\203\ In 
     addition, research does not qualify for the credit: (1) if 
     conducted after the beginning of commercial production of the 
     business component; (2) if related to the adaptation of an 
     existing business component to a particular customer's 
     requirements; (3) if related to the duplication of an 
     existing business component from a physical examination of 
     the component itself or certain other information; or (4) if 
     related to certain efficiency surveys, management function or 
     technique, market researcNimarket testing, or market 
     development, routine data collection or routine quality 
     control.\204\ Research does not qualify for the credit if it 
     is conducted outside the United States, Puerto Rico, or any 
     U.S. possession.
---------------------------------------------------------------------------
     \203\Sec. 41(d)(3).
     \204\Sec. 41(d)(4).
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     Relation to deduction
       Under section 174, taxpayers may elect to deduct currently 
     the amount of certain research or experimental expenditures 
     paid or incurred in connection with a trade or business, 
     notwithstanding the general rule that business expenses to 
     develop create an asset that has a useful life extending 
     beyond the current year must be capitalized.\205\ However, 
     deductions allowed to a taxpayer under section 174 (or any 
     other section) are reduced by an amount equal to 100 percent 
     of the taxpayer's research tax credit determined for the 
     taxable year.\206\ Taxpayers may alternatively elect to claim 
     a reduced research tax credit amount under section 41 in lieu 
     of reducing deductions otherwise allowed.\207\
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     \205\Taxpayers may elect 10-year amortization of certain 
     research expenditures allowable as a deduction under section 
     174(a). Secs. 174(f)(2) and 59(e).
     \206\Sec. 280C(c).
     \207\Sec. 280C(c)(3).
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                               House Bill

       The House bill creates a new 20 percent credit for all 
     qualified energy research expenses paid or incurred in 2009 
     or 2010. Qualified energy research expenses are qualified 
     research expenses related to the fields of fuel cells and 
     battery technology, renewable energy, energy conservation 
     technology, efficient transmission and distribution of 
     electricity, and carbon capture and sequestration.
       Effective date.--The provision is effective for taxable 
     years beginning after December 31, 2008.


                            Senate Amendment

       The Senate amendment is the same as the House bill, except 
     that it adds expenses related to renewable fuels research to 
     the list of qualified energy research expenses.


                          Conference Agreement

       The conference agreement does not include either the House 
     bill or the Senate amendment provision.
     13. Modification of credit for carbon dioxide sequestration 
         (sec. 1141 of the Senate amendment, sec. 1131 of the 
         conference agreement, and sec. 45Q of the Code)


                              Present law

       A credit of $20 per metric ton is available for qualified 
     carbon dioxide captured by a taxpayer at a qualified facility 
     and disposed of by such taxpayer in secure geological storage 
     (including storage at deep saline formations and unminable 
     coal seams under such conditions as the Secretary may 
     determine).\208\ In addition, a credit of $10 per metric ton 
     is available for qualified carbon dioxide that is captured by 
     the taxpayer at a qualified facility and used by such 
     taxpayer as a tertiary injectant (including carbon dioxide 
     augmented waterflooding and immiscible carbon dioxide 
     displacement) in a qualified enhanced oil or natural gas 
     recovery project. Both credit amounts are adjusted for 
     inflation after 2009.
---------------------------------------------------------------------------
     \208\Sec. 45Q.
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       Qualified carbon dioxide is defined as carbon dioxide 
     captured from an industrial source that (1) would otherwise 
     be released into the atmosphere as an industrial emission of 
     greenhouse gas, and (2) is measured at the source of capture 
     and verified at the point or points of injection. Qualified 
     carbon dioxide includes the initial deposit of captured 
     carbon dioxide used as a tertiary injectant but does not 
     include carbon dioxide that is recaptured, recycled, and re-
     injected as part of an enhanced oil or natural gas recovery 
     project process. A qualified enhanced oil or natural gas 
     recovery project is a project that would otherwise meet the 
     definition of an enhanced oil recovery project under section 
     43, if natural gas projects were included within that 
     definition.
       A 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. The credit applies only with respect to 
     qualified carbon dioxide captured and sequestered or injected 
     in the United States\209\ or one of its possessions.\210\
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     \209\Sec. 638(1).
     \210\Sec. 638(2).
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       Except as provided in regulations, credits are attributable 
     to the person that captures and physically or contractually 
     ensures the disposal, or use as a tertiary injectant, of the 
     qualified carbon dioxide. Credits are subject to recapture, 
     as provided by regulation, with respect to any qualified 
     carbon dioxide that ceases to be recaptured, disposed of, or 
     used as a tertiary injectant in a manner consistent with the 
     rules of the provision.
       The credit is part of the general business credit. The 
     credit sunsets at the end of the calendar year in which the 
     Secretary, in consultation with the Administrator of the 
     Environmental Protection Agency, certifies that 75 million 
     metric tons of qualified carbon dioxide have been captured 
     and disposed of or used as a tertiary injectant.


                               House Bill

       No provision.


                            Senate Amendment

       The provision requires that carbon dioxide used as a 
     tertiary injectant and otherwise eligible for a $10 per 
     metric ton credit must be sequestered by the taxpayer in 
     permanent geological storage in order to qualify for such 
     credit. The Senate amendment also clarifies that the term 
     permanent geological storage includes oil and gas reservoirs 
     in addition to unminable coal seams and deep saline 
     formations. In addition, the Senate amendment requires that 
     the Secretary of the Treasury consult with the Secretary of 
     Energy and the Secretary of the Interior, in addition to the 
     Administrator of the Environmental Protection Agency, in 
     promulgating regulations relating to the permanent geological 
     storage of carbon dioxide.
       Effective date.--The provision is effective for carbon 
     dioxide captured after the date of enactment.


                          Conference Agreement

       The conference agreement follows the Senate amendment.
     14. Modification of the plug-in electric drive motor vehicle 
         credit (secs. 1151 and 1152 of the Senate amendment, 
         secs. 1141 through 1144 of the conference agreement, and 
         secs. 30B and 30D of the Code)


                              Present Law

     Alternative motor vehicle credit
       A credit is available for each new qualified fuel cell 
     vehicle, hybrid vehicle, advanced lean burn technology 
     vehicle, and alternative fuel vehicle placed in service by 
     the taxpayer during the taxable year.\211\ In general, the 
     credit amount varies depending upon the type of technology 
     used, the weight class of the vehicle, the amount by which 
     the vehicle exceeds certain fuel economy standards, and, for 
     some vehicles, the estimated lifetime fuel savings. The 
     credit generally is available for vehicles purchased after 
     2005. The credit terminates after 2009, 2010, or 2014, 
     depending on the type of vehicle. The alternative motor 
     vehicle credit is not allowed against the alternative minimum 
     tax.
---------------------------------------------------------------------------
     \211\Sec. 30B.
---------------------------------------------------------------------------
     Plug-in electric drive motor vehicle credit
       A credit is available for each qualified plug-in electric 
     drive motor vehicle placed in service. A qualified plug-in 
     electric drive motor vehicle is a motor vehicle that has at 
     least four wheels, is manufactured for use on public roads, 
     meets certain emissions standards (except for certain heavy 
     vehicles), draws propulsion using a traction battery with at 
     least four kilowatt-hours of capacity, and is capable of 
     being recharged from an external source of electricity.
       The base amount of the plug-in electric drive motor vehicle 
     credit is $2,500, plus another $417 for each kilowatt-hour of 
     battery capacity in excess of four kilowatt-hours. The 
     maximum credit for qualified vehicles weighing 10,000 pounds 
     or less is $7,500. This maximum amount increases to $10,000 
     for vehicles weighing more than 10,000 pounds but not more 
     than 14,000 pounds, to $12,500 for vehicles weighing more 
     than 14,000 pounds but not more than 26,000 pounds, and to 
     $15,000 for vehicle weighing more than 26,000 pounds.
       In general, the credit is available to the vehicle owner, 
     including the lessor of a vehicle subject to lease. If the 
     qualified vehicle is used by certain tax-exempt 
     organizations, governments, or foreign persons and is not 
     subject to a lease, the seller of the vehicle may claim the 
     credit so long as the seller clearly discloses to the user in 
     a document the amount that is allowable as a credit. A 
     vehicle must be used predominantly in the United States to 
     qualify for the credit.
       Once a total of 250,000 credit-eligible vehicles have been 
     sold for use in the United States, the credit phases out over 
     four calendar quarters. The phaseout period begins in the 
     second calendar quarter following the quarter during which 
     the vehicle cap has been reached. Taxpayers may claim one-
     half of the otherwise allowable credit during the first two 
     calendar quarters of the phaseout period and twenty-five 
     percent of the otherwise allowable credit during the next two 
     quarters. After this, no credit is available. Regardless of 
     the phase-out limitation, no credit is available for vehicles 
     purchased after 2014.

[[Page 4064]]

       The basis of any qualified vehicle is reduced by the amount 
     of the credit. To the extent a vehicle is eligible for credit 
     as a qualified plug-in electric drive motor vehicle, it is 
     not eligible for credit as a qualified hybrid vehicle under 
     section 30B. The portion of the credit attributable to 
     vehicles of a character subject to an allowance for 
     depreciation is treated as part of the general business 
     credit; the nonbusiness portion of the credit is allowable to 
     the extent of the excess of the regular tax over the 
     alternative minimum tax (reduced by certain other credits) 
     for the taxable year.


                               House Bill

       No provision.


                            Senate Amendment

     Credit for electric drive low-speed vehicles, motorcycles, 
         and three-wheeled vehicles
       The Senate amendment creates a new 10-percent credit for 
     low-speed vehicles, motorcycles, and three-wheeled vehicles 
     that would otherwise meet the criteria of a qualified plug-in 
     electric drive motor vehicle but for the fact that they are 
     low-speed vehicles or do not have at least four wheels. The 
     maximum credit for such vehicles is $4,000. Basis reduction 
     and other rules similar to those found in section 30 apply 
     under the provision. The new credit is part of the general 
     business credit. The new credit is not available for vehicles 
     sold after December 31, 2011.
     Credit for converting a vehicle into a plug-in electric drive 
         motor vehicle
       The Senate amendment also creates a new 10-percent credit, 
     up to $4,000, for the cost of converting any motor vehicle 
     into a qualified plug-in electric drive motor vehicle. To be 
     eligible for the credit, a qualified plug-in traction battery 
     module must have a capacity of at least 2.5 kilowatt-hours. 
     In the case of a leased traction battery module, the credit 
     may be claimed by the lessor but not the lessee. The credit 
     is not available for conversions made after December 31, 
     2012.
     Modification of plug-in electric drive motor vehicle credit
       The Senate amendment modifies the plug-in electric drive 
     motor vehicle credit by increasing the 250,000 vehicle 
     limitation to 500,000. It also modifies the definition of 
     qualified plug-in electric drive motor vehicle to exclude 
     low-speed vehicles.
       Effective date.--The Senate amendment is generally 
     effective for vehicles sold after December 31, 2009. The 
     credit for plug-in vehicle conversion is effective for 
     property placed in service after December 31, 2008, in 
     taxable years beginning after such date.


                          Conference Agreement

       The conference agreement follows the Senate amendment with 
     substantial modifications.
     Credit for electric drive low-speed vehicles, motorcycles, 
         and three-wheeled vehicles
       With respect to electric drive low-speed vehicles, 
     motorcycles, and three-wheeled vehicles, the conference 
     agreement follows the Senate amendment with the following 
     modifications. Under the conference agreement, the maximum 
     credit available is $2,500. The conference agreement also 
     makes other technical changes.
     Credit for converting a vehicle into a plug-in electric drive 
         motor vehicle
       With respect to plug-in vehicle conversions, the conference 
     agreement follows the Senate amendment but increases the 
     minimum capacity of a qualified battery module to four 
     kilowatt-hours, changes the effective date to property placed 
     in service after the date of enactment, and eliminates the 
     credit for plug-in conversions made after December 31, 2011. 
     The conference agreement also removes the rule permitting 
     lessors of battery modules to claim the plug-in conversion 
     credit.
     Modification of the plug-in electric drive motor vehicle 
         credit
       The conference agreement modifies the plug-in electric 
     drive motor vehicle credit by limiting the maximum credit to 
     $7,500 regardless of vehicle weight. The conference agreement 
     also eliminates the credit for low speed plug-in vehicles and 
     for plug-in vehicles weighing 14,000 pounds or more.
       The conference agreement replaces the 250,000 total plug-in 
     vehicle limitation with a 200,000 plug-in vehicles per 
     manufacturer limitation. The credit phases out over four 
     calendar quarters beginning in the second calendar quarter 
     following the quarter in which the manufacturer limit is 
     reached. The conference agreement also makes other technical 
     changes.
       The changes to the plug-in electric drive motor vehicle 
     credit are effective for vehicles acquired after December 31, 
     2009.
     Treatment of alternative motor vehicle credit as a personal 
         credit allowed against the alternative minimum tax
       The conference agreement provides that the alternative 
     motor vehicle credit is a personal credit allowed against the 
     alternative minimum tax. The provision is effective for 
     taxable years beginning after December 31, 2008.
       15. Parity for qualified transportation fringe benefits 
     (sec. 1251 of the Senate amendment, sec. 1151 of the 
     conference agreement, and sec. 132 of the Code)


                              Present Law

       Qualified transportation fringe benefits provided by an 
     employer are excluded from an employee's gross income for 
     income tax purposes and from an employee's wages for payroll 
     tax purposes.\212\ Qualified transportation fringe benefits 
     include parking, transit passes, vanpool benefits, and 
     qualified bicycle commuting reimbursements. Up to $230 (for 
     2009) per month of employer-provided parking is excludable 
     from income. Up to $120 (for 2009) per month of employer-
     provided transit and vanpool benefits are excludable from 
     gross income. These amounts are indexed annually for 
     inflation, rounded to the nearest multiple of $5. No amount 
     is includible in the income of an employee merely because the 
     employer offers the employee a choice between cash and 
     qualified transportation fringe benefits. Qualified 
     transportation fringe benefits also include a cash 
     reimbursement by an employer to an employee. However, in the 
     case of transit passes, a cash reimbursement is considered a 
     qualified transportation fringe benefit only if a voucher or 
     similar item which may be exchanged only for a transit pass 
     is not readily available for direct distribution by the 
     employer to the employee.
---------------------------------------------------------------------------
     \212\Code secs. 132(f), 3121(b)(2), 3306(b)(16), and 
     3401(a)(19).
---------------------------------------------------------------------------


                               House Bill

       No provision.


                            Senate Amendment

       The provision increases the monthly exclusion for employer-
     provided transit and vanpool benefits to the same level as 
     the exclusion for employer-provided parking.
       Effective date.--The provision is effective for months 
     beginning on or after date of enactment. The proposal does 
     not apply to tax years beginning after December 31, 2010.


                          Conference Agreement

       The conference agreement follows the Senate amendment.
     16. Credit for investment in advanced energy property (sec. 
         1302 of the Senate amendment, sec. 1302 of the conference 
         agreement, and new sec. 48C of the Code)


                              Present Law

       An income tax credit is all wed for the production of 
     electricity from qualified energy resources at qualified 
     facilities.\213\ Qualified energy resources comprise wind, 
     closed-loop biomass, open-loop biomass, geothermal energy, 
     solar energy, small irrigation power, municipal solid waste, 
     qualified hydropower production, and marine and hydrokinetic 
     renewable energy. Qualified facilities are, generally, 
     facilities that generate electricity using qualified energy 
     resources.
---------------------------------------------------------------------------
     \213\Sec. 45. In addition to the electricity production 
     credit, section 45 also provides income tax credits for the 
     production of Indian coal and refined coal at qualified 
     facilities.
---------------------------------------------------------------------------
       An income tax credit is also allowed for certain energy 
     property placed in service. Qualifying property includes 
     certain fuel cell property, solar property, geothermal power 
     production property, small wind energy property, combined 
     heat and power system property, and geothermal heat pump 
     property.\214\
---------------------------------------------------------------------------
     \214\Sec. 48.
---------------------------------------------------------------------------
       In addition to these, numerous other credits are available 
     to taxpayers to encourage renewable energy production and 
     energy conservation, including, among others, credits for 
     certain biofuels, plug-in electric vehicles, and energy 
     efficient appliances, and for improvements to heating, air 
     conditioning, and insulation.
       No credit is specifically designed under present law to 
     encourage the development of a domestic manufacturing base to 
     support the industries described above.


                               House Bill

       No provision.


                            Senate Amendment

       The Senate amendment establishes a 30 percent credit for 
     investment in qualified property used in a qualified advanced 
     energy manufacturing project. A qualified advanced energy 
     project is a project that re-equips, expands, or establishes 
     a manufacturing facility for the production: (1) property 
     designed to be used to produce energy from the sun, wind, or 
     geothermal deposits (within the meaning of section 
     613(e)(2)), or other renewable resources; (2) fuel cells, 
     microturbines, or an energy storage system for use with 
     electric or hybrid-electric motor vehicles; (3) electric 
     grids to support the transmission of intermittent sources of 
     renewable energy, including storage of such energy; (4) 
     property designed to capture and sequester carbon dioxide; 
     (5) property designed to refine or blend renewable fuels (but 
     not fossil fuels) or to produce energy conservation 
     technologies (including energy-conserving lighting 
     technologies and smart grid technologies; or (6) other 
     advanced energy property designed to reduce greenhouse gas 
     emissions as may be determined by the Secretary.
       Qualified property must be depreciable (or amortizable) 
     property used in a qualified advanced energy project. 
     Qualified property does not include property designed to 
     manufacture equipment for use in the refining or blending of 
     any transportation fuel other than renewable fuels. The basis 
     of qualified property must be reduced by the amount of credit 
     received.
       Credits are available only for projects certified by the 
     Secretary of Treasury, in consultation with the Secretary of 
     Energy. The

[[Page 4065]]

     Secretary of Treasury must establish a certification program 
     no later than 180 days after date of enactment, and may 
     allocate up to $2 billion in credits.
       In selecting projects, the Secretary may consider only 
     those projects where there is a reasonable expectation of 
     commercial viability. In addition, the Secretary must 
     consider other selection criteria, including which projects 
     (1) will provide the greatest domestic job creation; (2) will 
     provide the greatest net impact in avoiding or reducing air 
     pollutants or anthropogenic emissions of greenhouse gases; 
     (3) have the greatest readiness for commercial employment, 
     replication, and further commercial use in the United States, 
     (4) will provide the greatest benefit in terms of newness in 
     the commercial market; (5) have the lowest levelized cost of 
     generated or stored energy, or of measured reduction in 
     energy consumption or greenhouse gas emission; and (6) have 
     the shortest project time from certification to completion.
       Each project application must be submitted during the 
     three-year period beginning on the date such certification 
     program is established. An applicant for certification has 
     two years from the date the Secretary accepts the application 
     to provide the Secretary with evidence that the requirements 
     for certification have been met. Upon certification, the 
     applicant has five years from the date of issuance of the 
     certification to place the project in service. Not later than 
     six years after the date of enactment of the credit, the 
     Secretary is required to review the credit allocations and 
     redistribute any credits that were not used either because of 
     a revoked certification or because of an insufficient 
     quantity of credit applications.
       Effective date.--The provision is effective on the date of 
     enactment.


                          Conference Agreement

       The conference agreement follows the Senate amendment with 
     the following modifications. The conference agreement 
     increases by $300 million (to $2.3 billion) the amount of 
     credits that may be allocated by the Secretary. The 
     conference agreement expands the list of qualifying advance 
     energy projects to include projects designed to manufacture 
     any new qualified plug-in electric drive motor vehicle (as 
     defined by section 30D(c)), any specified vehicle (as defined 
     by section 30D(f)(2)), or any component which is designed 
     specifically for use with such vehicles, including any 
     electric motor, generator, or power control unit. The 
     conference agreement also replaces the third and fourth 
     project selection criteria with a requirement that the 
     Secretary, in addition to the remaining criteria, consider 
     projects that have the greatest potential for technological 
     innovation and commercial deployment.
       In addition, the conference agreement shortens to two years 
     the period during which project applications may be 
     submitted, shortens to one year the period during which the 
     project applicants must provide evidence that the 
     certification requirements have been met, and shortens to 
     three years the period during which certified projects must 
     be placed in service. The conference agreement also shortens 
     the period after which the Secretary must review the credit 
     allocations from six to four years. Finally, the conference 
     agreement clarifies that only tangible personal property and 
     other tangible property (not including a building or its 
     structural components) is credit-eligible.
     17. Incentives for manufacturing facilities producing plug-in 
         electric drive motor vehicles and components (sec. 1303 
         of the Senate amendment)


                     Present Law Depreciation rules

       A taxpayer is allowed to recover through annual 
     depreciation deductions the cost of certain property used in 
     a trade or business or for the production of income. The 
     amount of the depreciation deduction allowed with respect to 
     tangible property for a taxable year is determined under the 
     modified accelerated cost recovery system (``MACRS''). Under 
     MACRS, different types of property generally are assigned 
     applicable recovery periods and depreciation methods. The 
     recovery periods applicable to most tangible personal 
     property range from 3 to 25 years. The depreciation methods 
     generally applicable to tangible personal property are the 
     200-percent and 150-percent declining balance methods, 
     switching to the straight-line method for the taxable year in 
     which the taxpayer's depreciation deduction would be 
     maximized.
     Bonus depreciation
       For property placed in service in calendar year 2009, an 
     additional first-year depreciation deduction is available 
     equal to 50 percent of the adjusted basis of qualified 
     property.\215\ The additional first-year depreciation 
     deduction is allowed for both regular tax and alternative 
     minimum tax (``AMT'') purposes.\216\ Certain other rules and 
     limitations apply.
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     \215\Sec. 168(k). The additional first-year depreciation 
     deduction is subject to the general rules regarding whether 
     an item is deductible under section 162 or instead is subject 
     to capitalization under section 263 or section 263A.
     \216\However, the additional first-year depreciation 
     deduction is not allowed for purposes of computing earnings 
     and profits.
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     Election to claim additional research or minimum tax credits 
         in lieu of claiming bonus depreciation
       Corporations otherwise eligible for bonus depreciation 
     under section 168(k) may elect to claim additional research 
     or minimum tax credits in lieu of claiming depreciation under 
     section 168(k) for ``eligible qualified property'' placed in 
     service after March 31, 2008.\217\ A corporation making the 
     election forgoes the depreciation deductions allowable under 
     section 168(k) and instead increases the limitation under 
     section 38(c) on the use of research credits or section 53(c) 
     on the use of minimum tax credits.\218\ The increases in the 
     allowable credits are treated as refundable for purposes of 
     this provision. The depreciation for qualified property is 
     calculated for both regular tax and AMT purposes using the 
     straight-line method in place of the method that would 
     otherwise be used absent the election under this provision.
---------------------------------------------------------------------------
     \217\Sec. 168(k)(4). In the case of an electing corporation 
     that is a partner in a partnership, the corporate partner's 
     distributive share of partnership items is determined as if 
     section 168(k) does not apply to any eligible qualified 
     property and the straight line method is used to calculate 
     depreciation of such property.
     \218\Special rules apply to an applicable partnership.
---------------------------------------------------------------------------
       The research credit or minimum tax credit limitation is 
     increased by the bonus depreciation amount, which is equal to 
     20 percent of bonus depreciation\219\ for certain eligible 
     qualified property that could be claimed absent an election 
     under this provision. Generally, eligible qualified property 
     included in the calculation is bonus depreciation property 
     that meets the following requirements: (1) the original use 
     of the property must commence with the taxpayer after March 
     31, 2008; (2) the taxpayer must purchase the property either 
     (a) after March 31, 2008, and before January 1, 2009, only if 
     no binding written contract for the acquisition is in effect 
     before April 1, 2008,\220\ or (b) pursuant to a binding 
     written contract which was entered into after March 31, 2008, 
     and before January 1, 2009;\221\ and (3) the property must be 
     placed in service after March 31, 2008, and before January 1, 
     2009 (January 1, 2010 for certain longer-lived and 
     transportation property).
---------------------------------------------------------------------------
     \219\For this purpose, bonus depreciation is the difference 
     between (i) the aggregate amount of depreciation for all 
     eligible qualified property determined if section 168(k)(1) 
     applied using the most accelerated depreciation method 
     (determined without regard to this provision), and shortest 
     life allowable for each property, and (ii) the amount of 
     depreciation that would be determined if section 168(k)(1) 
     did not apply using the same method and life for each 
     property.
     \220\In the case of passenger aircraft, the written binding 
     contract limitation does not apply.
     \221\Special rules apply to property manufactured, 
     constructed, or produced by the taxpayer for use by the 
     taxpayer.
---------------------------------------------------------------------------
       The bonus depreciation amount is limited to the lesser of: 
     (1) $30 million, or (2) six percent of the sum of research 
     credit carryforwards from taxable years beginning before 
     January 1, 2006 and minimum tax credits allocable to the 
     adjusted minimum tax imposed for taxable years beginning 
     before January 1, 2006. All corporations treated as a single 
     employer under section 52(a) are treated as one taxpayer for 
     purposes of the limitation, as well as for electing the 
     application of this provision.
     Credit for plug-in vehicles
       A credit is available for each qualified plug-in electric 
     drive motor vehicle placed in service. A qualified plug-in 
     electric drive motor vehicle is a motor vehicle that has at 
     least four wheels, is manufactured for use on public roads, 
     meets certain emissions standards (except for certain heavy 
     vehicles), draws propulsion using a traction battery with at 
     least four kilowatt-hours of capacity, and is capable of 
     being recharged from an external source of electricity.
       The base amount of the plug-in electric drive motor vehicle 
     credit is $2,500, plus another $417 for each kilowatt-hour of 
     battery capacity in excess of four kilowatt-hours. The 
     maximum credit for qualified vehicles weighing 10,000 pounds 
     or less is $7,500. This maximum amount increases to $10,000 
     for vehicles weighing more than 10,000 pounds but not more 
     than 14,000 pounds, to $12,500 for vehicles weighing more 
     than 14,000 pounds but not more than 26,000 pounds, and to 
     $15,000 for vehicle weighing more than 26,000 pounds.
       In general, the credit is available to the vehicle owner, 
     including the lessor of a vehicle subject to lease. If the 
     qualified vehicle is used by certain tax-exempt 
     organizations, governments, or foreign persons and is not 
     subject to a lease, the seller of the vehicle may claim the 
     credit so long as the seller clearly discloses to the user in 
     a document the amount that is allowable as a credit. A 
     vehicle must be used predominantly in the United States to 
     qualify for the credit.
       Once a total of 250,000 credit-eligible vehicles have been 
     sold for use in the United States, the credit phases out over 
     four calendar quarters. The phaseout period begins in the 
     second calendar quarter following the quarter during which 
     the vehicle cap has been reached. Taxpayers may claim one-
     half of the otherwise allowable credit during the first two 
     calendar quarters of the phaseout period and twenty-five 
     percent of the otherwise allowable credit during the next two

[[Page 4066]]

     quarters. After this, no credit is available. Regardless of 
     the phase-out limitation, no credit is available for vehicles 
     purchased after 2014.
       The basis of any qualified vehicle is reduced by the amount 
     of the credit. To the extent a vehicle is eligible for credit 
     as a qualified plug-in electric drive motor vehicle, it is 
     not eligible for credit as a qualified hybrid vehicle under 
     section 30B. The portion of the credit attributable to 
     vehicles of a character subject to an allowance for 
     depreciation is treated as part of the general business 
     credit; the nonbusiness portion of the credit is allowable to 
     the extent of the excess of the regular tax over the AMT 
     (reduced by certain other credits) for the taxable year.


                               house bill

       No provision.


                            senate amendment

       The Senate amendment permits taxpayers to elect to expense 
     one hundred percent of the cost of any electric drive motor 
     vehicle manufacturing facility property placed in service 
     before 2012 and fifty percent of the cost of such property 
     placed in service after 2011 and before 2015. For purposes of 
     this election, qualified property is property which is a 
     facility or a portion of a facility used for the production 
     of any new qualified plug-in electric drive motor 
     vehicle\222\ or any eligible component. Eligible components 
     are any battery, any electric motor or generator, or any 
     power control unit which is designed specifically for use 
     with a new qualified plug-in electric drive motor vehicle.
---------------------------------------------------------------------------
     \222\As defined by section 30D(c).
---------------------------------------------------------------------------
       The original use of any qualified property must begin with 
     the taxpayer. In the case of dual use property, the amount of 
     cost eligible to be expensed is reduced by the total cost of 
     the facility multiplied by the percentage of property 
     expected to be produced that is not qualified property.
       The Senate amendment permits taxpayers to waive this 
     election in favor of a loan equal to thirty-five percent of 
     the amount eligible to be expensed under the general 
     provision. The loan is in the form of a senior note, with a 
     20-year term and an interest rate payable at the applicable 
     Federal rate, issued by the taxpayer to the Secretary of 
     Treasury and secured by the qualified manufacturing property. 
     Upon repayment of the loan, the taxpayer's tax liability a 
     limitations are increased for the research credit\223\ and 
     the alternative minimum tax credit\224\ by the amount of the 
     loan.
---------------------------------------------------------------------------
     \223\Sec. 38(c).
     \224\Sec. 53(c).
---------------------------------------------------------------------------
       Effective date.--The provision is effective for taxable 
     years beginning after the date of enactment.


                          conference agreement

       The conference agreement does not include the Senate 
     amendment provision.

                          E. Other Provisions

     1. Application of certain labor standards to projects 
         financed with certain tax-favored bonds (sec. 1701 of the 
         House bill, sec. 1901 of the Senate amendment, and sec. 
         1601 of the conference agreement)


                              present law

       The United States Code (Subchapter IV of Chapter 31 of 
     Title 40) applies a prevailing wage requirement to certain 
     contracts to which the Federal Government is a party.


                               house bill

       The provision provides that Subchapter IV of Chapter 31 of 
     Title 40 of the U.S. Code shall apply to projects financed 
     with the proceeds of:
       1. any qualified clean renewable energy bond (as defined in 
     sec. 54C of the Code) issued after the date of enactment;
       2. any qualified energy conservation bond (as defined in 
     sec. 54D of the Code) issued after the date of enactment; ;
       3. any qualified zone academy bond (as defined in sec. 54E 
     of the Code) issued after the date of enactment;
       4. any qualified school construction bond (as defined in 
     sec. 54F of the Code); and
       5. any recovery zone economic development bond (as defined 
     in sec. 1400U-2 of the Code).
       Effective date.--The provision is effective on the date of 
     enactment.


                            senate amendment

       The Senate amendment is the same as the House bill except 
     it makes a technical correction to change ``qualified clean 
     renewable energy bond'' to ``new clean renewable energy 
     bond.''


                          conference agreement

       The conference agreement follows the Senate amendment.
     2. Increase in the public debt limit (sec. 1902 of the Senate 
         amendment and sec. 1604 of the conference agreement)


                              present law

       The statutory limit on the public debt is 
     $11,315,000,000,000.


                               house bill

       No provision.


                            senate amendment

       The Senate amendment increases the statutory limit on the 
     public debt by $825,000,000,000 to $12,140,000,000,000.
       Effective date.--The provision is effective on the date of 
     enactment.


                          conference agreement

       The conference agreement increases the statutory limit on 
     the public debt by $789,000,000,000 to $12,104,000,000,000.
       Effective date. The provision is effective on the date of 
     enactment.
     3. Failure to redeem certain securities from the United 
         States (sec. 6021 of the Senate amendment)


                              present law

       An employer generally may deduct reasonable compensation 
     for personal services as an ordinary and necessary business 
     expense. Section 162(m) (relating to remuneration expenses 
     for certain executives that are in excess of $1 million) and 
     section 280G (relating to excess parachute payments) provide 
     explicit limitations on the deductibility of certain 
     compensation expenses in the case of corporate employers, and 
     section 4999 imposes an additional tax of 20 percent on the 
     recipient of an excess parachute payment. The Emergency 
     Economic Stabilization Act of 2008 (``EESA'') limits the 
     amount of payments that may be deducted as reasonable 
     compensation by certain financial institutions that receive 
     financial assistance from the United States pursuant to the 
     troubled asset relief program (``TARP'') established under 
     EESA by modifying the section 162(m) and section 280G limits. 
     EESA also provided non-tax rules relating to the compensation 
     that is payable by such a financial institution (the ``TARP 
     executive compensation rules'').


                               house bill

       No provision.


                            Senate Amendment

     In general
       The provision amends the TARP executive compensation rules 
     to limit payment of ``excessive bonuses'' to ``covered 
     individuals'' by financial institutions whose preferred stock 
     was purchased by the United States using funds provided under 
     TARP. Excessive bonuses are defined as the portion of an 
     ``applicable bonus payment'' made to a covered individual in 
     excess of $100,000.
       An applicable bonus payment is any bonus payment that is 
     (1) paid, or payable, for services performed by a covered 
     individual in a tax year of the financial institution ending 
     in 2008, and (2) the amount of which was communicated to the 
     covered individual at some time between January 1, 2008, and 
     January 31, 2009, or was based on a resolution of the 
     financial institution's board of directors and adopted before 
     the end of the financial institution's 2008 taxable year. For 
     purposes of determining an applicable bonus, any bonus 
     payments that relate to a taxable year prior to 2008, but 
     which are wholly or partially contingent on the performance 
     of services in the 2008 taxable year, are disregarded. In 
     addition, any conditions on 2008 bonuses that require the 
     covered individual to perform services in a subsequent 
     taxable year are also disregarded (e.g., if a 2008 bonus is 
     dependent on the performance of services in 2009, the bonus 
     is still considered to be an applicable bonus if it meets all 
     of the other requirements for such status).
       The definition of bonus includes discretionary payments for 
     services provided that are in addition to amounts payable for 
     regular services performed and is payable are cash or 
     property other than (1) the stock of the financial 
     institution or (2) an interest in a troubled asset (within 
     the meaning of EESA) held directly or indirectly by the 
     financial institution. Bonuses do not include commissions, 
     welfare and fringe benefits, or expense reimbursements.
       A covered individual is any directoA, officer, or other 
     employee of a financial institution or its controlled group 
     of corporations.\225\
---------------------------------------------------------------------------
     \225\Members of a controlled group of corporations are 
     determined as provided under section 52(a).
---------------------------------------------------------------------------
     Stock redemption
       If a financial institution pays one or more excessive 
     bonuses to one or more covered individuals, the financial 
     institution must redeem from the government an amount of 
     preferred stock equal to the aggregate amount of all 
     excessive bonuses paid or payable to such covered individual 
     or individuals. The redemption obligation exists 
     notwithstanding any otherwise applicable restrictions on the 
     redeemability of the preferred stock. The preferred stock 
     must be redeemed by the later of: 120 days after date of 
     enactment (for excessive bonuses that had already been paid) 
     or the day before the excessive bonus (or a portion thereof) 
     is paid.
     Excise tax
       An excise tax is imposed on any financial institution that 
     pays one or more excessive bonuses but does not redeem its 
     preferred stock from the government in a timely manner. The 
     tax is equal to 35 percent of the amount of preferred stock 
     that the financial institution should have redeemed from the 
     government (i.e., the amount of the excessive bonus). For 
     example, if a financial institution granted a 2008 bonus of 
     $1 million to its chief executive officer, and the financial 
     institution did not redeem $900,000 worth of preferred stock 
     from the United States, it must pay a tax of $315,000 ($1 
     million minus $100,000 times 35 percent). Once a financial 
     institution pays the 35 percent tax, the institution is no 
     longer required to redeem from

[[Page 4067]]

     the government an amount of preferred stock equal to the 
     amount of the excessive bonus. That is, a financial 
     institution that pays an excessive bonus must either redeem 
     stock or pay an excise tax on that bonus but it will not be 
     required to do both for any single bonus.
       Payment of the excise tax does not have any effect on 
     otherwise applicable agreements to redeem preferred stock 
     purchased by the Federal Government using funds provided by 
     TARP.
     Effective Date
       The provision applies to a failure to redeem preferred 
     stock that occurs after the date of enactment.


                          Conference Agreement

       The conference agreement does not include the Senate 
     amendment provision.

                      F. Trade Related Provisions

                  1. TRADE ADJUSTMENT ASSISTANCE\226\
---------------------------------------------------------------------------

     \226\Descriptions prepared by the majority staffs of the 
     House Committee on Ways and Means and the Senate Committee on 
     Finance.
---------------------------------------------------------------------------

                              I. OVERVIEW

       The conference report amends the Trade Act of 1974 (``the 
     Trade Act'') to reauthorize trade adjustment assistance 
     (``TAA''), to extend trade adjustment assistance to service 
     workers, communities, firms, and farmers, and for other 
     purposes.

                             II. HOUSE BILL

       No provision.

                            III. SENATE BILL

       First, the Senate bill amends section 245(a) of the Trade 
     Act of 1974 to extend the authorization for the TAA for 
     Workers program until December 31, 2010. Second, the proposal 
     amends section 246(b)(1) of the Trade Act of 1974 to extend 
     the authorization for Alternative Trade Adjustment Assistance 
     program by two years. Third, the proposal amends section 
     256(b) of the Trade Act of 1974 to extend the authorization 
     for the TAA for Firms program until December 31, 2010. 
     Fourth, the proposal amends section 298(a) of the Trade Act 
     of 1974 to extend the TAA for Farmers program until December 
     31, 2010. Fifth, the proposal amends section 285 of the Trade 
     Act of 1974 to extend the overall termination date of the TAA 
     programs until December 31, 2010. Sixth, the proposal 
     provides that these amendments shall have an effective date 
     of January 1, 2008. Seventh, the proposal includes a Sense of 
     the Senate that a TAA for Communities program should be 
     revived.

                         IV. CONFERENCE REPORT

           A. Part I--Trade Adjustment Assistance for Workers


  1. Subpart A--Trade Adjustment Assistance for Service Sector Workers

     Extension of Trade Adjustment Assistance to Service Sector 
         and Public Agency Workers; Shifts in Production (Section 
         1701 (amending Sections 221, 222, 231, 244, and 247 of 
         the Trade Act of 1974))
     Present Law
       Section 222 of the Trade Act provides trade adjustment 
     assistance to workers in a firm or an appropriate subdivision 
     of a firm if (1) a significant number or proportion of the 
     workers in the firm or subdivision have become (or are 
     threatened to become) totally or partially separated; (2) the 
     firm produces an article; and (3) the separation or threat of 
     same is due to trade with foreign countries.
       There are three ways to demonstrate the connection between 
     job separation and trade. The Secretary of Labor (``the 
     Secretary'') must determine either (1) that increased imports 
     of articles ``like or directly competitive'' with articles 
     produced by the firm have contributed importantly to the 
     separation and to an absolute decrease in the firm's sales or 
     production, or both; (2) that the workers' firm has shifted 
     its production of articles ``like or directly competitive'' 
     with articles produced by the firm to a trade agreement 
     partner of the United States or a beneficiary country under 
     the Andean Trade Preference Act, the African Growth and 
     Opportunity Act, or the Caribbean Basin Economic Recovery 
     Act; or (3) that the firm has shifted production of such 
     articles to another country and there has been or is likely 
     to be an increase in imports of like or directly competitive 
     articles.
       Section 222 of the Trade Act also provides TAA to adversely 
     affected secondary workers. Eligible secondary workers 
     include (1) secondary workers that supply directly to another 
     firm component parts for articles that were the basis for a 
     certification of eligibility for TAA benefits; and (2) 
     downstream workers that were affected by trade with Mexico or 
     Canada.
       When the Department investigates workers' petitions, it 
     requires firms and customers to certify the questionnaires 
     that the workers' firm and the firm's customers submit. 
     Present law also authorizes the Secretary to use subpoenas to 
     obtain information in the course of its investigation of a 
     petition. The law provides for the imposition of criminal and 
     civil penalties for providing false information and failing 
     to disclose material information, but the penalties apply 
     only to petitioners.
     Explanation of Provision
       The provision would amend section 222 of the Trade Act to 
     expand the availability of TAA to include workers in firms in 
     the services sector. Like workers in firms that produce 
     articles, workers in firms that supply services would be 
     eligible for TAA if a significant number or proportion of the 
     workers have become (or are threatened to become) totally or 
     partially separated, and if increased imports of services 
     ``contributed importantly'' to the workers'' separation or 
     threat of separation.
       As with articles, there would be three ways for service 
     sector workers to demonstrate that they are eligible for TAA. 
     First, TAA would be available if increased imports of 
     services like or directly competitive with services supplied 
     by the firm have contributed importantly to the separation 
     and to an absolute decrease in the firm's sales or 
     production, or both. Second, TAA would be available in 
     ``shift in supply'' (``service relocation'') scenarios, if 
     the workers'' firm or subdivision established a facility in a 
     foreign country to supply services like or directly 
     competitive with the services supplied by the trade-impacted 
     workers. Third, TAA would be available in ``foreign 
     contracting'' scenarios, if the workers'' firm or subdivision 
     acquired from a service supplier in a foreign country 
     services like or directly competitive with the services that 
     the trade-impacted workers had supplied. In each scenario, 
     the relevant activity would need to have contributed 
     importantly to the workers' separation or threat of 
     separation.
       The provision also expands the ``shift in production'' 
     prong of present law by eliminating the requirement in 
     section 222 that the shift be to a trade agreement partner of 
     the United States or a country that benefits from a 
     unilateral preference program. Under the modified provision, 
     if workers are separated because their firm shifts production 
     from a domestic facility to any foreign country, the 
     separated workers would potentially be eligible for TAA. 
     Additionally, there would be no requirement to demonstrate 
     separately that the shift was accompanied by an increase of 
     imports of products like or directly competitive with those 
     produced by the workers' firm or subdivision.
       The provision also amends section 222 to make workers at 
     public agencies eligible for TAA. Under the modified 
     provision, if a public agency acquires services from a 
     foreign country that are like or directly competitive with 
     the services that the public agency supplies, and if the 
     acquisition contributed importantly to the workers' 
     separation or threat thereof, the workers would be able to 
     seek TAA benefits.
       The provision also amends section 222 to expand the 
     universe of adversely affected secondary workers that could 
     be eligible for TAA. First, the provision adds firms that 
     supply testing, packaging, maintenance, and transportation 
     services to the list of downstream producers whose workers 
     potentially are eligible for TAA. Second, workers at firms 
     that supply services used in the production of articles or in 
     the supply of services would also become potentially eligible 
     for benefits. Third, the provision permits downstream 
     producers to be eligible for TAA if the primary firm's 
     certification is linked to trade with any country, not just 
     Canada or Mexico. The provision requires the Secretary to 
     obtain information that the Secretary determines necessary to 
     make certifications from workers' firms or customers of 
     workers' firms through questionnaires and in such other 
     manner as the Secretary considers appropriate. The provision 
     also permits the Secretary to seek additional information 
     from other sources, including (1) officials or employees of 
     the workers' firm; (2) officials of customers of the firm; 
     (3) officials of unions or other duly recognized 
     representatives of the petitioning workers; and (4) one-stop 
     operators. The provision states that the Secretary shall 
     require a firm or customer to certify all information 
     obtained through questionnaires, as well as other information 
     that the Secretary relies upon in making a determination 
     under section 223, unless the Secretary has a reasonable 
     basis for determining that the information is accurate and 
     complete.
       The provision states that the Secretary shall require a 
     worker's firm or a customer of a worker's firm to provide 
     information by subpoena if the firm or customer fails to 
     provide the information within 20 days after the date of the 
     Secretary's request, unless the firm or customer demonstrates 
     to the Secretary's satisfaction that the firm or customer 
     will provide the information in a reasonable period of time. 
     The Secretary retains the discretion to issue a subpoena 
     sooner than 20 days if necessary. The provision also 
     establishes standards for the protection of confidential 
     business information submitted in response to a request made 
     by the Secretary.
       The provision amends the penalties provision in section 244 
     of the Trade Act to cover persons, including persons who are 
     employed by firms and customers, who provide information 
     during an investigation of a worker's petition.
       Finally, the provision amends section 247 of the Trade Act 
     to add definitions for certain key terms and makes various 
     conforming changes to sections 221 and 222.
     Reasons for Change
       Most service sector workers presently are ineligible for 
     TAA benefits because of a statutory requirement that the 
     workers must

[[Page 4068]]

     have been employed by a firm that produces an ``article.'' Of 
     the 800 TAA petitions denied in FY2006, almost half were 
     denied for this reason. Most of the denied service-related 
     petitions came from two service industries: business services 
     (primarily computer-related) and airport-related services 
     (e.g., aircraft maintenance). In April 2006, the Department 
     of Labor issued a regulation expanding TAA eligibility to 
     software workers that partially, but not fully, addresses the 
     service worker coverage issue. See GAO Report 07-702. The 
     provision fully addresses the issue by making service sector 
     workers eligible for TAA on equivalent terms to workers at 
     firms that produce articles.
       The provision expands the ``shift in production'' prong of 
     present law for similar reasons. Under present law, a worker 
     whose firm relocates to China is not necessarily eligible for 
     TAA; such worker must also show that the relocation to China 
     will result in increased imports into the United States. In 
     contrast, a worker whose firm relocates to a country with 
     which the United States has a trade agreement (e.g., Mexico, 
     Israel, Chile) does not need to show increased imports. The 
     provision eliminates this disparate treatment by making TAA 
     benefits available in both scenarios on the same terms.
       Present law also fails to cover foreign contracting 
     scenarios, where a company closes a domestic operation and 
     contracts with a company in a foreign country for the goods 
     or services that had been produced in the United States. For 
     example, if a U.S. airline lays off a number of its U.S.-
     based maintenance personnel and contracts with an independent 
     aircraft maintenance company in a foreign country, the laid 
     off personnel are not covered under present law, even if they 
     lost their jobs because of foreign competition. The Conferees 
     believe such workers should be potentially eligible for TAA 
     benefits.
       Similarly, the Conferees believe that workers who supply 
     services at public agencies should be treated the same as 
     their private-sector counterparts: if such workers are laid 
     off because their employer contracts with a supplier in a 
     foreign country for the services that the workers had 
     supplied, the workers should be able to seek TAA benefits.
       The provision provides that in cases involving production 
     or service relocation or foreign contracting, a group of 
     workers (including workers in a public agency) may be 
     certified as eligible for adjustment assistance if the shift 
     ``contributed importantly'' to such workers' separation or 
     threat of separation. This requirement is identical to the 
     existing causal link requirement in section 
     222(a)(2)(A)(iii), which establishes the criteria for 
     certifying workers on the basis of ``increased imports.''
       The Conferees understand that the Department of Labor has 
     interpreted the ``contributed importantly'' requirement in 
     section 222(a)(2)(A)(iii) to mean that imports must have been 
     a factor in the layoffs or threat thereof. Or, in other 
     words, under present law the Secretary of Labor will certify 
     a group of workers as eligible for assistance if the facts 
     demonstrate a causal 153 2502 1,29, nexus between increased 
     imports and the workers' separation or threat thereof. The 
     Conferees approve of the Department's interpretation of the 
     ``contributed importantly'' requirement and expect that the 
     Department will continue to apply it in future cases 
     involving increased imports. Similarly, the Conferees also 
     understand that the existing language in section 222(a)(2)(B) 
     addressing production relocation contains an implicit 
     causation requirement. Thus, the Department has required 
     production relocation under section 222(a)(2)(B) to be a 
     factor in the workers' separation or threat thereof. The 
     provision makes the requirement explicit. The Conferees 
     emphasize that by making the ``contributed importantly'' 
     requirement in section 222(a)(2)(B) explicit, no change in 
     the Department's administration of cases involving production 
     relocation is intended. The Conferees expect that this change 
     in section 222 would not affect the outcomes that the 
     Department has been reaching under present law in such cases, 
     and will not alter outcomes in future cases. Thus, as has 
     been the case, if the Department finds that production 
     relocation was a factor in the layoff (or threat thereof) of 
     a group of workers in the United States, the Conferees expect 
     that the Secretary will certify such workers as eligible for 
     adjustment assistance.
       Finally, with respect to certifications involving 
     production or service relocations or foreign contracting, the 
     Conferees recognize that there may be delays in time between 
     when the domestic layoffs (or threat of layoffs) occur, and 
     when the production or service relocation or foreign 
     contracting occurs. The Conferees intend that the Department 
     of Labor certify petitions where there is credible evidence 
     that production or service relocation or foreign contracting 
     will occur, and when the other requirements of the statute 
     are met. Such evidence could include the conclusion of a 
     contract relating to foreign production of the article, 
     supply of services, or acquisition of the article or service 
     at issue; the construction, purchase, or renting of foreign 
     facilities for the production of the article, supply of the 
     service, or acquisition of the article or service at issue; 
     or certified statements by a duly authorized representative 
     at the workers' firm that the firm intends to engage in 
     production or service relocation or foreign contracting. The 
     Conferees are aware of concerns that the Secretary may rely 
     on inaccurate information in making its determinations, 
     including when denying certification of petitions. The 
     provision addresses these concerns by requiring the Secretary 
     to obtain certifications of all information obtained from a 
     firm or customer through questionnaires as well as other 
     information from a firm or customer that the Secretary relies 
     upon in making a determination under section 223, unless the 
     Secretary has a reasonable basis for determining that the 
     information is accurate and complete.
       The Conferees are also aware of concerns that some firms 
     and customers fail to respond to the Secretary's requests for 
     information or provide inaccurate or incomplete information. 
     The subpoena, confidentiality of information, and penalty 
     language included in this provision are designed to address 
     these problems.
       The provision would also apply if the Secretary needs to 
     obtain information from a customer's customer, such as in an 
     investigation involving component part suppliers.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     Group Eligibility--Component Parts (Section 1701 (amending 
         Section 222 of the Trade Act of 1974))
     Present Law
       Under present law, U.S. suppliers of inputs (i.e., 
     component parts) may be certified for TAA benefits only 
     pursuant to the secondary workers provision of section 
     222(b), which requires that the downstream producer have 
     employed a group of workers that received TAA certification. 
     Thus, for example, domestic producers of taconite have been 
     unable to obtain certification for TAA benefits when 
     downstream producers of steel slab have not obtained 
     certification. Additionally, U.S. suppliers of inputs have 
     been unable to obtain certification for TAA benefits in 
     situations in which there is a shift in imports from articles 
     incorporating their inputs to articles incorporating inputs 
     produced outside the United States.
     Explanation of Provision
       The provision allows for the certification of workers in a 
     firm when imports of the finished article incorporating 
     inputs produced outside the United States that are like or 
     directly competitive with imports of the finished article 
     produced using U.S. inputs have increased and the firm has 
     met the other criteria for certification, including a 
     significant number of workers being totally or partially 
     separated, a decrease in sales or production, and the 
     increase in imports has contributed importantly to the 
     workers' separation.
       For example, under the new provision, workers in a U.S. 
     fabric plant may be certified if the U.S. firm sold fabric to 
     a Honduran apparel manufacturer for production of apparel 
     subsequently imported into the United States and (1) the 
     Honduran apparel manufacturer ceased purchasing, or decreased 
     its purchasing, of fabric from the U.S. producer and, 
     instead, used fabric from another country; or (2) imports of 
     apparel from another country using non-U.S. fabric that are 
     like or directly competitive with imports of Honduran apparel 
     using U.S. fabric have increased.
       Prior to certification, the Department of Labor would also 
     have to determine that the firm met the other statutory 
     requirements for certification, including that a significant 
     number of workers had been totally or partially separated, or 
     are threatened to become totally or partially separated, the 
     sales or production of the petitioning fabric firm had 
     decreased, and the increased imports of apparel using non-
     U.S. fabric had contributed importantly to that decrease and 
     to the workers' separation or threat thereof.
       Likewise, workers in a U.S. picture tube manufacturing 
     plant that sells picture tubes to a Mexican television 
     manufacturer for production of televisions subsequently 
     imported into the United States would be certified under 
     section 222 if the U.S. manufacturer's sales or production of 
     picture tubes decreased and (1) the manufacturer of 
     televisions located in Mexico switched to picture tubes 
     produced in another country; or (2) imports of televisions 
     from another country using non-U.S. picture tubes that are 
     like or directly competitive with imports of Mexican 
     televisions using U.S. picture tubes have increased.
       As in the apparel example above, prior to certification, 
     the Department of Labor would also have to determine that the 
     picture tube firm met the other statutory requirements for 
     certification, including that a significant number of workers 
     had been totally or partially separated, or are threatened to 
     become totally or partially separated, the sales or 
     production of the petitioning picture tube firm had 
     decreased, and the increased imports of televisions using 
     non-U.S. picture tubes had contributed importantly to that 
     decrease and to the workers' separation or threat thereof.

[[Page 4069]]


     Reasons for Change
       Section 222(a) is being amended to provide improved TAA 
     coverage for U.S. suppliers of inputs, and to address 
     situations where suppliers of component parts have been 
     unable to obtain certification for TAA benefits because of 
     gaps in coverage under present law.
       The amended language is broad enough to encompass both the 
     situation in which the input producer's customer switches to 
     inputs produced outside the United States, and the situation 
     in which the input producer's customer is displaced by a 
     third country producer, because both situations may equally 
     impact the sales or production of the domestic input 
     producer.
       Additionally, for purposes of section 
     222(a)(2)(A)(ii)(III), as in other instances, when company-
     specific data is unavailable, the Secretary may reasonably 
     rely on such aggregate data or such other information as the 
     Secretary deems appropriate.
       As reflected in the examples above, the Conferees intend 
     that the Secretary of Labor should interpret the term 
     component parts, as used in section 222(a)(2)(A)(ii)(III), 
     flexibly. For example, the Conferees intend that uncut fabric 
     would be considered to be a component part of apparel for 
     purposes of this provision, even though, for purposes of 
     other trade laws, U.S. Customs and Border Protection might 
     not consider such fabric to be a component part.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     Separate Basis for Certification (Section 1702 (amending 
         Section 222 of the Trade Act of 1974))
     Present Law
       There is no provision in present law.
     Explanation of Provision
       The provision amends section 222(c) of the Trade Act by 
     providing that a petition filed under section 221 of the 
     Trade Act on behalf of a group of workers in a firm, or 
     appropriate subdivision of a firm, meets the requirements of 
     subsection 222(a) of the Trade Act if the firm is publicly 
     identified by name by the U.S. International Trade Commission 
     (``ITC'') as a member of a domestic industry in (1) an 
     affirmative determination of serious injury or threat thereof 
     in a global safeguard investigation under section 202(b)(1) 
     of the Trade Act; (2) an affirmative determination of market 
     disruption or threat thereof in a China safeguard 
     investigation under section 421(b)(1) of the Trade Act; or 
     (3) an affirmative final determination of material injury or 
     threat thereof in an antidumping or countervailing duty 
     investigation under section 705(b)(1)(A) or 735(b)(1)(A) of 
     the Tariff Act of 1930 (19 U.S.C. 1671d(b)(1)(A) and 
     1673d(b)(1)(A)), but only if the petition is filed within 1 
     year of the date that notice of the affirmative ITC 
     determination is published in the Federal Register (or, in 
     the case of a global safeguard investigation under section 
     202(b)(1), a summary of the report submitted to the President 
     by the ITC under section 202(f)(1) is published in the 
     Federal Register under section 202(f)(3)) and the workers on 
     whose behalf such petition was filed have become totally or 
     partially separated from such workers' firm within either 
     that 1-year period or the 1-year period preceding the date of 
     such publication.
     Reasons for Change
       The Conferees note that the provision allows workers in 
     firms publicly identified by name in certain ITC 
     investigations to be eligible for adjustment assistance on 
     the basis of an affirmative injury determination by the ITC 
     under certain circumstances, and without an additional 
     determination by the Secretary of Labor that either increased 
     imports of a like or directly competitive article contributed 
     importantly to such workers' separation or threat of 
     separation (and to an absolute decline in the sales or 
     production, or both, of such workers' firm or subdivision), 
     or that a shift in production of articles contributed 
     importantly to such workers' separation or threat of 
     separation.
       In order for workers to avail themselves of this provision, 
     the petition must be filed with the Secretary (and with the 
     Governor of the State in which such workers' firm or 
     subdivision is located) within 1 year of the date of 
     publication in the Federal Register of the applicable notice 
     from the ITC and the workers on whose behalf such petition 
     was filed must have become totally or partially separated 
     from such workers' firm within either that 1-year period or 
     the 1-year period preceding such date of publication.
       If a petition is filed on behalf of such workers more than 
     1 year after the date that the applicable notice from the ITC 
     is published in the Federal Register, it will remain 
     necessary for the Secretary of Labor to investigate the 
     petition and determine that the statutory criteria for 
     certifying such workers in section 222 are satisfied.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     Determinations by the Secretary of Labor (Section 1703 
         (amending Section 223 of the Trade Act of 1974))
     Present Law
       The Secretary is required to investigate petitions filed by 
     workers and determine whether such workers are eligible for 
     TAA benefits. A summary of such group eligibility 
     determination, together with the Secretary's reasons for 
     making the determination, must be promptly published in the 
     Federal Register. Similarly, a termination of a 
     certification, together with the Secretary's reasons for the 
     termination, must be promptly published in the Federal 
     Register.
     Explanation of Provision
       This section requires the Secretary to publish (1) a 
     summary of a group eligibility determination, together with 
     the Secretary's reasons for the determination; and (2) a 
     certification termination, together with the Secretary's 
     reasons for the termination, promptly on the Department's 
     website (as well as in the Federal Register). The section 
     also requires the Secretary to establish standards for 
     investigating petitions, and criteria for making 
     determinations. Moreover, the Secretary is required to 
     consult with the Senate Committee on Finance (``Senate 
     Finance Committee'') and the Committee on Ways and Means of 
     the House of Representatives (``House Committee on Ways and 
     Means'') 90 days prior to issuing a final rule on the 
     standards.
     Reasons for Chance
       To improve accountability, transparency, and public access 
     to this information, the Secretary should be required to post 
     (1) a summary of a group eligibility determination, together 
     with the Secretary's reasons for the determination; and (2) a 
     certification termination, together with the Secretary's 
     reasons for the termination, promptly on the Department's 
     website (as well as in the Federal Register). The Secretary 
     also should have objective and transparent standards for 
     investigating petitions, and criteria for the basis on which 
     an eligibility determination is made. The Secretary should 
     consult with Senate Finance and House Ways and Means to 
     ensure the intent of Congress is accurately reflected in such 
     standards.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     Monitoring and Reporting Relating to Service Sector (Section 
         1704 (amending Section 282 of the Trade Act of 1974))
     Present Law
       Present law requires the Secretaries of Commerce and Labor 
     to establish and maintain a program to monitor imports of 
     articles into the United States, including (1) information 
     concerning changes in import volume; (2) impacts on domestic 
     production; and (3) impacts on domestic employment in 
     industries producing like or competitive products. Summaries 
     must be provided to the Adjustment Assistance Coordinating 
     Committee, the ITC, and Congress.
     Explanation of Provision
       The provision is renamed ``Trade Monitoring and Data 
     Collection.'' The provision requires the Secretaries of 
     Commerce and Labor to monitor imports of services (in 
     addition to articles). To address data limitations, the 
     provision requires the Secretary of Labor, not later than 90 
     days after enactment, to collect data on impacted service 
     workers (by State, industry, and cause).
       Finally, it requires the Secretary of Commerce, in 
     consultation with the Secretary of Labor, to report to 
     Congress, not later than one year after enactment, on ways to 
     improve the timeliness and coverage of data regarding trade 
     in services.
     Reasons for Change
       Existing data on trade in services are sparse. Because of 
     the increases in trade in services, the Conferees believe 
     that it is critical that the government collect data on 
     imports of services and the impact of these imports on U.S. 
     workers. Such information will be useful when considering any 
     further refinement of TAA that Congress may contemplate. More 
     generally, the additional data will give U.S. businesses and 
     workers insight into trade in services, helping them better 
     compete in the global marketplace.
     Effective Date
       The provision goes into effect on the date of enactment of 
     this Act.


  2. Subpart B--Industry Notifications Following Certain Affirmative 
                             Determinations

     Notifications following certain affirmative determinations 
         (Section 1711 (amending Section 224 of the Trade Act of 
         1974))
     Present Law
       Present law includes a provision requiring the ITC to 
     notify the Secretary of Labor when it begins a section 201 
     global safeguard investigation. The Secretary must then begin 
     an investigation of (1) the number of workers in the relevant 
     domestic industry; and (2) whether TAA will help such workers 
     adjust to import competition. The Secretary of Labor must 
     submit a report to the President within 15 days of the ITC's 
     section 201 determination. The Secretary's report must be 
     made public and a summary printed in the Federal Register.

[[Page 4070]]


     Explanation of Provision
       The provision expands the notification requirement to 
     instruct the ITC to notify the Secretary of Labor and the 
     Secretary of Commerce, or the Secretary of Agriculture when 
     dealing with agricultural commodities, when it issues an 
     affirmative determination of injury or threat thereof under 
     sections 202 or 421 of the Trade Act, an affirmative 
     safeguard determination under a U.S. trade agreement, or an 
     affirmative determination in a countervailing duty or dumping 
     investigation under sections 705 or 735 of the Tariff Act of 
     1930. Additionally, the provision requires the President to 
     notify the Secretaries of Labor and Commerce upon making an 
     affirmative determination in a safeguard investigation 
     relating to textile and apparel articles. Whenever an injury 
     determination is made, the Secretary of Labor must notify 
     employers, workers, and unions of firms covered by the 
     determination of the workers' potential eligibility for TAA 
     benefits and provide them with assistance in filing 
     petitions. Similarly, the Secretary of Commerce must notify 
     firms covered by the determination of their potential 
     eligibility for TAA for Firms and provide them with 
     assistance in filing petitions, and the Secretary of 
     Agriculture must do the same for investigations involving 
     agricultural commodities.
     Reasons for Change
       A significant hurdle to ensuring that workers and firms 
     avail themselves of TAA benefits is the lack of awareness 
     about the program. In situations like these, where the ITC 
     has made a determination that a domestic industry has been 
     injured as a result of trade, giving notice to the workers 
     and firms in that industry of TAA's potential benefits is 
     warranted.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     Notification to Secretary of Commerce (Section 1712 (amending 
         Section 225 of the Trade Act of 1974))
     Present Law
       Under present law, the Secretary of Labor must provide 
     workers with information about TAA and provide whatever 
     assistance is necessary to help petitioners apply for TAA. 
     The Secretary must also reach out to State Vocational 
     Education Boards and their equivalent agencies, as well as 
     other public and private institutions, about affirmative 
     group certification determinations and projections of 
     training needs.
       The Secretary must also notify each worker who the State 
     has reason to believe is covered by a group certification in 
     writing via U.S. Mail of the benefits available under TAA. If 
     the worker lost his job before group certification, then the 
     notice occurs at the time of certification. If the worker 
     lost her job after group certification, then the notice 
     occurs at the time the worker loses her job. The Secretary 
     must also publish notice in the newspapers circulating in the 
     area where the workers reside.
     Explanation of Provision
       The provision requires the Secretary of Labor, upon issuing 
     a certification, to notify the Secretary of Commerce of the 
     identity of the firms covered by a certification.
     Reasons for Change
       Firms employing workers certified as eligible for TAA 
     benefits may not be aware that they may be eligible for 
     assistance under the TAA for Firms program. Requiring the 
     Secretary of Labor to notify the Secretary of Commerce when 
     workers at a firm are certified as TAA eligible will help put 
     these firms on notice of their potential TAA for Firms 
     eligibility.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.


                     3. Subpart C--Program Benefits

     Qualifying requirements for workers (Section 1721 (amending 
         Section 231 of the Trade Act of 1974))
     Present Law
       Present law authorizes a worker to receive TAA income 
     support (known as ``Trade Readjustment Allowance'' or 
     ``TRA'') for weeks of unemployment that begin 60 days after 
     the date of filing the petition on which certification was 
     granted.
       To qualify for TAA benefits, a worker must have (1) lost 
     his job on or after the trade impact date identified in the 
     certification, and within two years of the date of the 
     certification determination; (2) been employed by the TAA 
     certified firm for at least 26 of the 52 weeks preceding the 
     layoff; and (3) earned at least $30 or more a week in that 
     employment. A worker must qualify for, and exhaust, his State 
     unemployment compensation (``UC'') benefits before receiving 
     a weekly TRA.
       Further, to receive TRA, a worker must be enrolled in an 
     approved training program by the later of 8 weeks after the 
     TAA petition was certified, or 16 weeks after job loss (the 
     ``8/16'' deadline). The 8/16 deadline can be extended in 
     certain limited circumstances. Workers may also receive 
     limited waivers of the 8/16 training enrollment deadline.
       Present law provides for waivers in the following 
     circumstances: (1) the worker has been or will be recalled by 
     the firm; (2) the worker possesses marketable skills; (3) the 
     worker is within 2 years of retirement; (4) the worker cannot 
     participate in training because of health reasons; (5) 
     training enrollment is unavailable; or (6) training is not 
     reasonably available to the worker (nothing suitable, no 
     reasonable cost, no training funds).
       Waivers last 6 months, unless the Secretary determines 
     otherwise, and will be revoked if the basis for the waiver no 
     longer exists. States have the authority to issue waivers. By 
     regulation, State and local agencies must ``review'' the 
     waivers every thirty days.
       If a worker fails to begin training or has stopped 
     participating in training without justifiable cause or if the 
     worker's waiver is revoked, the worker will receive no income 
     support until the worker begins or resumes training.
     Explanation of Provision
       The provision amends existing law to change the date on 
     which a worker can receive TAA income support from 60 days 
     from the date of the petition to the date of certification. 
     The provision strikes the 8/16 rule and extends the deadline 
     for trade-impacted workers. If a worker lost his job before 
     the certification, then the worker has 26 weeks from the date 
     of certification to enroll in training. If the worker lost 
     his job after certification, he has 26 weeks from the date he 
     lost his job to enroll in training.
       The provision also gives the Secretary the authority to 
     waive the new 26 week training enrollment deadline if a 
     worker was not given timely notice of the deadline.
       The provision clarifies that the ``marketable skills'' 
     training waiver may apply to workers who have post-graduate 
     degrees from accredited institutions of higher education. The 
     provision requires the State to review training waivers 3 
     months after such waiver is issued, and every month 
     thereafter.
     Reasons for Change
       The Conferees believe that the 60-day rule makes little 
     sense and leads to the following scenario: a worker laid off 
     well before certification could exhaust his unemployment 
     insurance and yet have to wait to receive the trade 
     readjustment assistance to which the worker was otherwise 
     entitled.
       The Government Accountability Office, the Department of 
     Labor, the states, and workers' advocacy groups have 
     criticized the 8/16 deadline as being too short. First, these 
     deadlines often occur while the worker is still on 
     traditional UI (most workers receive up to 26 weeks of State 
     UI compensation). During those 26 weeks, most workers are 
     actively engaged in a job search and are not focused on 
     retraining. Forcing workers to enroll in training at such an 
     early stage can discourage active job search. Second, 
     typically, a worker decides to consider training only after 
     an extended period of unsuccessful job searching. Under 
     present law, workers are only beginning to consider training 
     options close to the 8/16 deadline, and often make hurried 
     decisions about training merely to preserve their TAA 
     eligibility. Third, when large numbers of certified workers 
     are laid off all at once, it can be difficult for TAA 
     administrators to perform adequate training assessments and 
     meet the 8/16 deadline. See GAO Report 04-1012. Therefore, 
     extending the enrollment deadlines to the later of 26 weeks 
     after layoff or certification would provide a reasonable 
     period for a worker to search for employment and consider 
     training options, as well as for the State to assess workers 
     and meet the enrollment deadlines.
       While recognizing the necessity of waivers in certain 
     circumstances, states have identified the monthly review of 
     waivers to be burdensome. Many states have complained that 
     processing the sheer volume of waivers requires significant 
     administrative time and cost. For example, according to GAO, 
     59,375 waivers were issued in 2005 (and 60,948 in 2004). The 
     new requirement that waivers be reviewed initially three 
     months rather than one month after they are issued reduces 
     the administrative burden while continuing to provide for 
     appropriate review, thus allowing the State to ensure the 
     worker continues to qualify for the waiver. The provision 
     does not require a review of waivers issued on the basis that 
     an adversely affected worker is within two years of being 
     eligible for Social Security benefits or a private pension. 
     The status of such workers is unlikely to change and thus, 
     automatic review of their waivers is a waste of resources. 
     States still retain the discretion to review such waivers if 
     circumstances warrant. When a worker has failed to meet the 
     training enrollment deadline through no fault of his own, the 
     Conferees believe that there should be redress. Under present 
     law, there is none. The Department of Labor has acknowledged 
     that this is a problem.
      Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     Weekly amounts (Section 1722 (amending Section 232 of the 
         Trade Act of 1974))
     Present Law
       TRA is the income support that workers receive weekly. It 
     is equal to the worker's

[[Page 4071]]

     weekly UI benefit. TRA is divided into two main periods: 
     ``Basic TRA'' and ``Additional TRA.'' Under present law, 
     because of the operation of State UI laws, workers who are in 
     training and working part-time run the risk of resetting 
     their UI benefits (and their TRA benefit) at the lower part-
     time level which would leave them with insufficient income 
     support to continue with training.
     Explanation of Provision
       The provision amends existing law to (1) disregard, for 
     purposes of determining a worker's weekly TRA amount, 
     earnings from a week of work equal to or less than the 
     worker's most recent unemployment insurance benefits where 
     the worker is working part-time and participating in full-
     time training; and (2) ensure that workers will retain the 
     amount of income support provided initially under TRA even if 
     a new UI benefit period (with a lower weekly amount) is 
     established due to the worker obtaining part-time or short-
     term full-time employment.
     Reasons for Change
       The Conferees believe that the disincentive to combining 
     full-time training and part-time work needs to be removed so 
     that workers who might not otherwise be in training, but for 
     the additional income they earn working part-time, are not 
     excluded from the program.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     Limitations on Trade Readjustment Allowances; Allowances for 
         Extended Training and Breaks in Training (Section 1723 
         (amending Section 233(a) of the Trade Act of 1974))
     Present Law
       Basic TRA is available for 52 weeks minus the number of 
     weeks of unemployment insurance for which the worker was 
     eligible (usually 26 weeks). Basic TRA must be used within 
     104 weeks after the worker lost his job (130 weeks for 
     workers requiring remedial training). Any Basic TRA not used 
     in that period is foregone.
       Additional TRA is available for up to 52 more weeks if the 
     worker is enrolled in and participating in training. The 
     worker receives Additional TRA only for weeks in training. A 
     worker on an approved break in training of 30 days or less is 
     considered to be participating in training and therefore 
     eligible for TRA during that period. Additional TRA must 
     otherwise be used over a consecutive period (e.g., 52 
     consecutive weeks).
       Participation in remedial training makes a worker eligible 
     for up to 26 more weeks of TRA.
     Explanation of Provision
       The provision increases the number of weeks for which a 
     worker can receive Additional TRA from 52 to 78 and expands 
     the time within which a worker can receive such Additional 
     TRA from 52 weeks to 91 weeks.
     Reasons for Change
       The Conferees believe that the program must provide 
     incentives for eligible workers to participate in long term 
     training, such as a two-year Associate's degree, a nursing 
     certification, or completion of a four-year degree (if that 
     four-year degree was previously initiated or if the worker 
     will complete it using non-TAA funds).
       Typically, workers cannot participate in a training program 
     without TAA income support. Thus, because many workers 
     exhaust at least some of their basic TRA while they seek 
     another job instead of beginning training, they are limited 
     to shorter-term training options, both practically and 
     because training approvals are usually tied to the period of 
     TRA eligibility. The purpose of the additional 26 weeks of 
     income support, for a total of 78 weeks of additional TRA, is 
     to provide an opportunity for workers to engage in long term 
     training that might not have otherwise been a viable option.
       The Conferees note that the Department of Labor's practice 
     is to approve, before training begins, a training program 
     consisting of a course or related group of courses designed 
     for an individual to meet a specific occupational goal. 20 
     CFR 617.22(f)(3)(i). Nothing in this section is intended to 
     change current Department of Labor practice. The additional 
     26 weeks of income support are intended to provide more 
     options for long term training at the time when this 
     individual training program is designed and approved.
       In short, the new, additional income support is available 
     only for workers in long term training.
       The Conferees note that, at the same time, it is not their 
     intent to limit the Secretary's ability, i certain, limited 
     circumstances, to modify a worker's training program where 
     the Secretary determines that the current training program is 
     no longer appropriate for the individual.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     Special Rules for Calculation of Eligibility Period (Section 
         1724 (amending Section 233 of the Trade Act of 1974))
     Present Law
       There is no provision in present law.
     Explanation of Provision
       The provision states that periods during which an 
     administrative or judicial appeal of a negative determination 
     is pending will not be counted when calculating a worker's 
     eligibility for TRA. Moreover, the provision also grants 
     justifiable cause authority to the Secretary to extend 
     certain applicable deadlines concerning receipt of Basic and 
     Additional TRA. Further, the provision allows workers called 
     up for active duty military or full-time National Guard 
     service to restart the TAA enrollment process after 
     completion of such service.
       The provision also strikes the 210 day rule, which mandates 
     that a worker is not eligible for additional TRA payments if 
     the worker has not applied for training 210 days from 
     certification or job loss, whichever is later.
     Reasons for Change
       The Conferees believe that tolling of deadlines is 
     necessary; otherwise judicial relief obtained from a 
     successful court challenge would be meaningless, as the 
     decision of the court will inevitably take place after the 
     TAA program eligibility deadlines have passed. The Department 
     of Labor provides for similar tolling in its present and 
     proposed regulations.
       Similarly, the Conferees believe that affording the 
     Secretary flexibility in instances where a worker is 
     ineligible through no fault of her own is consistent with the 
     spirit of the program and will help ensure that workers get 
     the retraining they need. The amendment permits the Secretary 
     to extend the periods during which trade readjustment 
     allowances may be paid to an individual if there is 
     justifiable cause. The provision does not increase the amount 
     of such allowances that are payable. The Conferees intend 
     that the justifiable cause extension should allow the 
     Secretary equitable authority to address unforeseen 
     circumstances, such as a health emergency. The 210 day 
     deadline is superseded by the 8/16 deadline in current law, 
     the new 26/26 enrollment deadlines under these amendments, 
     and the requirement that a worker be in training to receive 
     additional TRA.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     Application of State Laws and Regulations on Good Cause for 
         Waiver of Time Limits or Late Filing of Claims (Section 
         1725 (amending Section 234 of the Trade Act of 1974))
     Present Law
       A State's unemployment insurance laws apply to a worker's 
     claims for TRA.
     Explanation of Provision
       The provision makes a State's ``good cause'' law, 
     regulations, policies, and practices applicable when the 
     State is making determinations concerning a worker's claim 
     for TRA or other adjustment assistance.
     Reasons for Change
       Most States have ``good cause'' laws allowing the waiver of 
     a statutory deadline when the deadline was missed because of 
     agency error or for other reasons where the claimant was not 
     at fault. These good cause laws apply to administration of 
     State UI laws. The Department of Labor, by regulation, has 
     precluded application of State good cause laws to TAA. This 
     prohibition unjustifiably penalizes workers who miss a 
     deadline through no fault of their own.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     Employment and Case Management Services; Administrative 
         Expenses and Employment and Case Management Services 
         (Sections 1726 and 1727 (amending Section 235 of the 
         Trade Act of 1974))
     Present Law
       Present law requires the Secretary of Labor to make ``every 
     reasonable effort'' to secure services for affected workers 
     covered by a certification including ``counseling, testing, 
     and placement services'' and ``[s]upportive and other 
     services provided for under any other Federal law,'' 
     including WIA one-stop services. Typically, the Secretary 
     provides these services through agreements with the States.
     Explanation of Provision
       The provisions require the Secretary and the States to, 
     among other things (1) perform comprehensive and specialized 
     assessments of enrollees' skill levels and needs; (2) develop 
     individual employment plans for each impacted worker; and (3) 
     provide enrollees with (a) information on available training 
     and how to apply for such training, (b) information on how to 
     apply for financial aid, (c) information on how to apply for 
     such training, (d) short-term prevocational services, (e) 
     individual career counseling, (f) employment statistics 
     information, and (g) information on the availability of 
     supportive services.
       The provision requires the Secretary, either directly or 
     through the States (through

[[Page 4072]]

     cooperating agreements), to make the employment and case 
     management services described in section 235 available to TAA 
     eligible workers. TAA eligible workers are not required to 
     accept or participate in such services, however, if they 
     choose not to do so.
       These provisions provide for each State to receive funds 
     equal to 15 percent of its training funding allocation on top 
     of its training fund allocation. Not more than two-thirds of 
     these additional funds may be used to cover administrative 
     expenses, and not less than one-third of such funds may be 
     used for the purpose of providing employment and case 
     management services, as defined under section 235. Finally, 
     the section provides for an additional $350,000 to be 
     provided to each State annually for the purpose of providing 
     employment and case management services. With respect to 
     these latter funds, States may decline or otherwise return 
     such funds to the Secretary.
     Reasons for Change
       States incur costs to administer the TAA program, including 
     for processing applications and providing employment and case 
     management services. While appropriators customarily provide 
     the Department of Labor with administrative funds equal to 15 
     percent of the total training funds for disbursement to the 
     States, the Conferees believe that this practice should be 
     codified, with the changes discussed above.
       The Conferees believe that the employment services and case 
     management funding provided for in this section should be in 
     addition to, and not offset, any funds that the State would 
     otherwise receive under WIA or any other program.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     Training Funding (Section 1728 (amending Section 236 of the 
         Trade Act of 1974))
     Present Law
       The total amount of annual training funding provided for 
     under present law is $220,000,000. During the year, if the 
     Secretary determines that there is inadequate funding to meet 
     the demand for training, the Secretary has the authority to 
     decide how to apportion the remaining funds to the States.
       Based on internal department policy, at the beginning of 
     each fiscal year, the Department of Labor allocates 75 
     percent of the training funds to States based on each State's 
     training expenditures and the average number of training 
     participants over the previous 2 1/2 years. The previous 
     year's allocation serves as a floor. The Department of Labor 
     also has a ``hold harmless'' policy that ensures that each 
     State's initial allocation can be no less than 85 percent of 
     its initial allocation in the previous year. The Department 
     of Labor holds the remaining 25 percent in reserve to 
     distribute to States throughout the year according to need; 
     most of the remaining funds are disbursed at the end of the 
     fiscal year. States have 3 years to spend their federal 
     funds. If the funds are not spent, the money reverts back to 
     the General Treasury.
       Under present law, the Secretary shall approve training if 
     (1) there is no suitable employment; (2) the worker would 
     benefit from appropriate training; (3) there is a reasonable 
     expectation of employment following training (although not 
     necessarily immediately available employment); (4) the 
     approved training is reasonably available to the worker; (5) 
     the worker is qualified for the training; and (6) training is 
     suitable and available at a reasonable cost. ``Insofar as 
     possible,'' the Secretary is supposed to ensure the provision 
     of training on the job. Training will be paid for directly by 
     the Secretary or using vouchers.
       One of the statutory criteria for approval of training is 
     that the worker be qualified to undertake and complete such 
     training. The statute doesn't specifically address how the 
     income support available to a worker is to be considered in 
     determining the length of training the worker is qualified to 
     undertake. Another of the statutory training approval 
     criteria is that the training is available at a reasonable 
     cost. The statute doesn't specifically address if funds other 
     than those available under TAA may be considered in making 
     this determination.
     Explanation of Provision
       The provision strikes the obsolete requirement that the 
     Secretary of Labor shall ``assure the provision'' of training 
     on the job.
       This provision increases the training cap from $220,000,000 
     to $575,000,000 in FY2009 and FY2010, prorated for the period 
     beginning October 1, 2010 and ending December 31, 2010. The 
     provision requires the Secretary to make an initial 
     distribution of training funds to the States as soon as 
     practicable after the beginning of the fiscal year based on 
     the following criteria: (1) the trend in numbers of certified 
     workers; (2) the trend in numbers of workers participating in 
     training; (3) the number of workers enrolled in training; (4) 
     the estimated amount of funding needed to provide approved 
     training; and (5) other factors the Secretary determines are 
     appropriate. The provision specifies that initial 
     distribution of training funds to a State may not be less 
     than 25 percent of the initial distribution to that State in 
     the previous fiscal year.
       The provision requires the Secretary to establish 
     procedures for the distribution of the funds held in reserve, 
     which may include the distribution of such funds in response 
     to requests made by States in need of additional training 
     funds. The provision also requires the Secretary to 
     distribute 65 percent of the training funds in the initial 
     distribution, and to distribute at least 90 percent of 
     training funds for a particular fiscal year by July 15 of 
     that fiscal year.
       The provision directs the Secretary to decide how to 
     distribute funds if training costs will exceed available 
     funds.
       The provision would specify that in determining if a worker 
     is qualified to undertake and complete training, the training 
     may be approved for a period that is longer than the period 
     for which TRA is available if the worker demonstrates the 
     financial ability to complete the training after TRA is 
     exhausted. It is intended that financial ability means the 
     ability to pay living expenses while in TAA-funded training 
     after the period of TRA eligibility.
       The provision would specify that in determining whether the 
     costs of training are reasonable, the Secretary may consider 
     whether other public or private funds are available to the 
     worker, but may not require the worker to obtain such funds 
     as a condition for approval of training. This means, for 
     example, that if a training program would be determined not 
     to have a reasonable cost if only the use of TAA training 
     funds were considered, the Secretary may consider the 
     availability of other public and private funds to the worker. 
     If the worker voluntarily commits to using such funds to 
     supplement the TAA training funds to pay for the training 
     program, the training program may be approved. However, the 
     Secretary may not require the worker to use the other public 
     or private funds where the costs of the training program 
     would be reasonable using only TAA training funds.
       Finally, the provision requires the Secretary to issue 
     regulations in consultation with the Senate Finance Committee 
     and the House Committee on Ways and Means.
     Reasons for Change
       The Conferees believe that the training cap needs to be 
     increased for two reasons. First, more funding is needed to 
     cover the expanded group of TAA eligible workers because of 
     changes made elsewhere in the bill (e.g., coverage of service 
     workers, expanded coverage of manufacturing workers). Second, 
     during high periods of TAA usage, the existing training 
     funding has proved to be insufficient. Some states have run 
     out of training funds, resulting in some States freezing 
     enrollment of eligible workers in training. See GAO-04-1012.
       As the GAO has documented, there are significant problems 
     with the Department's method of allocating training funds. 
     The primary problem is that the Department of Labor's method 
     of allocation appears to result in insufficient funds for 
     some States. This appears to be occurring because of the 
     Department's reliance on historical usage and a ``hold 
     harmless'' policy. In particular, States that were 
     experiencing heavy layoffs at the time the initial allocation 
     formula was implemented may no longer be experiencing layoffs 
     at the same rate, but still receive significant allocations 
     from the Department. In contrast, a State experiencing 
     relatively few layoffs several years ago may now have far 
     greater numbers of layoffs, but still receives a limited 
     amount in its distribution. In short, the allocation that 
     States receive at the beginning of the fiscal year may not 
     reflect their present demand for training services. The 
     provision addresses these problems by lowering the ``hold 
     harmless'' provision to 25 percent, requiring initial and 
     subsequent distributions to be based on need, and by 
     requiring that 90 percent of the funds be allocated by July 
     15 of each fiscal year. Additionally, the Conferees expect 
     the Secretary to distribute the remaining funds as soon as 
     possible after that date.
       In order to facilitate the approval of longer-term 
     training, the Conferees intend to ensure that the period of 
     approved training is not necessarily limited to the duration 
     of TRA. Where the worker demonstrates the ability to pay 
     living expenses while in TAA funded training after TRA is 
     exhausted, such training should be approved if the other 
     training approval criteria are also met.
       The Conferees intend to ensure that training programs that 
     would otherwise not be approved under TAA due to costs may be 
     approved if a worker voluntarily commits to using 
     supplemental public or private funds to pay a portion of the 
     costs.
       It is also the intent that, together, these amendments to 
     the training approval criteria allow training to be approved 
     for a period that is longer than the period for which TRA and 
     TAA-funded training is available if the worker demonstrates 
     the financial ability to pay living expenses and pay for the 
     additional training costs using other funds after TRA and the 
     TAA-funded training are exhausted.
     Effective Date
       The provision increasing the training cap goes into effect 
     upon the date of enactment of this Act. The provisions 
     relating to training fund distribution procedures go into 
     effect October 1, 2009. The other provisions in

[[Page 4073]]

     this section go into effect upon expiration of the 90-day 
     period beginning on the date of enactment of this Act, and 
     apply to petitions filed on or after that date.
     Prerequisite Education, Approved Training Programs (Section 
         1729 (amending Section 236 of the Trade Act of 1974))
     Present Law
       Under present law, approvable training includes employer-
     based training (on-the-job training/customized training), 
     training approved under the Workforce Investment Act of 1998, 
     training approved by a private industry council, any remedial 
     education program, any training program whose costs are paid 
     by another federal or State program, and any other program 
     approved by the Secretary. Additionally, remedial training is 
     approvable and participation in such training makes a worker 
     eligible for up to 26 more weeks of TAA-related income 
     support.
     Explanation of Provision
       The provision clarifies that existing law allows training 
     funds to be used to pay for apprenticeship programs, any 
     prerequisite education required to enroll in training, and 
     training at an accredited institution of higher education 
     (such as those covered by 102 of the Higher Education Act), 
     including training to obtain or complete a degree or 
     certification program (where completion of the degree or 
     certification can be reasonably expected to result in 
     employment). The provision also prohibits the Secretary from 
     limiting training approval to programs provided pursuant to 
     the Workforce Investment Act of 1998.
       The provision offers up to an additional 26 weeks of income 
     support while workers take prerequisite training or remedial 
     training necessary to enter a training program. A worker may 
     enroll in remedial training or prerequisite training, or 
     both, but may not receive more than 26 weeks of additional 
     income support.
     Reasons for Change
       Present law does not explicitly state whether TAA training 
     funds may be used to obtain a college or advanced degree. 
     Some States have interpreted this silence to preclude 
     enrollment in a two-year community college or four-year 
     college or university as a training option, even where a TAA 
     participant was working towards completion of a degree prior 
     to being laid off. The Conferees believe that States should 
     be encouraged to approve the use of training funds by TAA 
     enrollees to obtain training or a college or advanced degree, 
     including degrees offered at two-year community colleges and 
     four-year colleges or universities.
       While a worker can obtain additional income support while 
     participating in remedial training, there is no corollary 
     support for workers participating in prerequisite training 
     (e.g., individuals enrolling in nursing usually need basic 
     science prerequisites, which are not considered qualifying 
     remedial training). States have requested additional income 
     support for workers who participate in prerequisite training.
       The Conferees believe that while WIA-approved training is 
     an approvable TAA training option, it should not be the only 
     one that TAA enrollees are authorized to pursue. The 
     Conferees are concerned that some States have restricted 
     training opportunities to those approved under WIA. According 
     to the Congressional Research Service, many community 
     colleges, for instance, do not get WIA certification because 
     of its costly reporting requirements. To limit TAA training 
     opportunities in this way unacceptably curbs the scope of 
     training that TAA enrollees might elect to participate in and 
     potentially impairs their ability to get retrained and 
     reemployed.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     Pre-Layoff and Part-Time Training (Section 1730 (amending 
         Section 236 of the Trade Act of 1974))
     Present Law
       Present law does not permit pre-layoff or part-time 
     training.
     Explanation of Provision
       This provision specifies that the Secretary may approve 
     training for a worker who (1) is a member of a group of 
     workers that has been certified as eligible to apply for TAA 
     benefits; (2) has not been totally or partially separated 
     from employment; and (3) is determined to be individually 
     threatened with total or partial separation. Such training 
     may not include on-the-job training, or customized training 
     unless such customized training is for a position other than 
     the worker's current position.
       Additionally, the provision permits the Secretary to 
     approve part-time training, but clarifies that a worker 
     enrolled in part-time training is not eligible for a TRA.
     Reasons for Chance
       This provision explicitly establishes Congress' intent that 
     workers be eligible to receive pre-layoff and part-time 
     training.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     On-the-Job Training (Section 1731 (amending Section 236 of 
         the Trade Act of 1974))
     Present Law
       Current law provides that the Secretary may approve on-the-
     job training (``OJT''), but does not govern the content of 
     acceptable OJT.
     Explanation of Provision
       This provision permits the Secretary to approve OJT for any 
     adversely affected worker if the worker meets the training 
     requirements, and the Secretary determines the OJT (1) can 
     reasonably lead to employment with the OJT employer; (2) is 
     compatible with the worker's skills; (3) will allow the 
     worker to become proficient in the job for which the worker 
     is being trained; and (4) the State determines the OJT meets 
     necessary requirements. The Secretary may not enter into 
     contracts with OJT employers that exhibit a pattern of 
     failing to provide workers with continued long-term 
     employment and adequate wages, benefits, and working 
     conditions as regular employees.
     Reasons for Change
       The provision incorporates requirements to ensure OJT is 
     effective. Specifically, OJT must be (1) reasonably expected 
     to lead to suitable employment; (2)compatible with the 
     workers' skills; and (2) include a State-approved benchmark-
     based curriculum. Moreover, the provision is intended to 
     prevent employers from treating workers participating in OJT 
     differently in terms of wages, benefits, and working 
     conditions from regular employees who have worked a similar 
     period of time and are doing the same type of work.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     Eligibility for Unemployment Insurance and Program Benefits 
         While in Training (Section 1732 (amending Section 236 of 
         the Trade Act of 1974))
     Present Law
       Current law states that a worker may not be deemed 
     ineligible for UI (and thus, TAA) if they are in training or 
     leave unsuitable work to enter training.
     Explanation of Provision
       The provision states that a worker will not be ineligible 
     for UI or TAA if the worker (1) is in training, even if the 
     worker does not meet the requirements of availability for 
     work, active work search, or refusal to accept work under 
     Federal and State UI law; (2) leaves work to participate in 
     training, including temporary work during a break in 
     training; or (3) leaves OJT that did not meet the 
     requirements of this Act within 30 days of commencing such 
     training.
     Reasons for Change
       The Conferees are concerned that confusion in present UI 
     law surrounding a worker's decision to quit work to enter 
     training and the ramifications of that decision from a UI 
     eligibility perspective may preclude a worker from being able 
     to participate in TAA training. The provision is meant to 
     eliminate that confusion.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     Job Search and Relocation Allowances (Section 1733 (amending 
         Section 237 of the Trade Act of 1974))
     Present Law
       The Secretary may grant an application for a job search 
     allowance where (1) the allowance will help the totally 
     separated worker find a job in the United States; (2) 
     suitable employment is not available in the local area; and 
     (3) the application is filed by the later of (a) 1 year from 
     separation, (b) 1 year from certification, or (c) 6 months 
     after completing training (unless the worker received a 
     waiver, in which case the worker must file by the later of 
     one year after separation or certification). A worker may be 
     reimbursed for 90 percent of his job search costs, up to 
     $1,250.
       The Secretary may grant an application for a relocation 
     allowance where: (1) the allowance will assist a totally 
     separated worker relocate within the United States; (2) 
     suitable employment is not available in the local area; (3) 
     the affected worker has no job at the time of relocation; (4) 
     the worker has found suitable employment that may reasonably 
     be expected to be of long-term duration; (5) the worker has a 
     bona fide offer of employment; and (6) the worker filed the 
     application the later of (a) 425 days from separation, (b) 
     425 days from certification, or (c) 6 months after completing 
     training (unless the worker received a waiver, in which case 
     the worker must file by the later of 425 days after 
     separation or certification). A worker may be reimbursed for 
     90 percent of his relocation costs plus a lump sum payment of 
     three times the worker's weekly wage up to $1,250.
     Explanation of Provision
       The provision reimburses 100 percent of a worker's job 
     search expenses, up to $1,500, and 100 percent of a worker's 
     relocation expenses, and increases the additional lump

[[Page 4074]]

     sum payment for relocation to a maximum of $1,500. It also 
     strikes the provision in existing law under which a worker 
     who has completed training but who received a prior training 
     waiver has a shorter period to apply for a job search 
     allowance and relocation allowance than other workers who 
     have completed training.
     Reasons for Change
       The Conferees believe that the job search and relocation 
     allowances need to be increased to reflect the cost of 
     inflation and the cost and difficulty a worker faces when 
     looking for work and taking a job outside the worker's local 
     community.
       The Conferees believe that workers completing training 
     should have the same periods after training to apply for job 
     search and relocation allowances irrespective of whether a 
     worker received a waiver from the enrollment in training 
     requirements prior to undertaking and completing the 
     training. This period allows workers a reasonable opportunity 
     to obtain the same assistance as other workers needed to find 
     and relocate to a new job after being trained.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.


     4. Subpart D--Reemployment Trade Adjustment Assistance Program

     Reemployment Trade Adjustment Assistance Program (Section 
         1741 (amending Section 246 of the Trade Act of 1974))
     Present Law
       The Trade Act of 2002 created a demonstration project for 
     alternative trade adjustment assistance for older workers 
     (ATAA or ``wage insurance''). Through this program, some 
     workers who are eligible for TAA and reemployed at lower 
     wages may receive a partial wage subsidy. Under the program, 
     States use Federal funds provided under the Trade Act to pay 
     eligible workers up to 50 percent of the difference between 
     reemployment wages and wages at the time of separation. 
     Eligible workers may not earn more than $50,000 in 
     reemployment wages, and total payments to a worker may not 
     exceed $10,000 during a maximum period of two years. In 
     addition to having been certified for TAA, such workers must 
     be at least 50 years of age, obtain full-time reemployment 
     with a new firm within 26 weeks of separation from 
     employment, and have been separated from a firm that is 
     specifically certified for ATAA. When considering 
     certification of a firm for ATAA, the Secretary of Labor 
     considers whether a significant number of workers in the firm 
     are 50 years of age or older and possess skills that are not 
     easily transferable. ATAA beneficiaries may not receive TAA 
     benefits other than the Health Coverage Tax Credit (HCTC).
     Explanation of Provision
       The provision renames ATAA ``reemployment TAA.'' The 
     provision eliminates the requirement that a group of workers 
     (in addition to individuals) be specifically certified for 
     wage insurance in addition to TAA certification. The 
     provision eliminates the current-law requirement that a 
     worker must find employment within 26 weeks of being laid off 
     to be eligible for the wage insurance benefit, and replaces 
     it with a requirement that the clock on the two-year duration 
     of the benefit begin at the sooner of exhaustion of regular 
     unemployment benefits or reemployment, allowing initial 
     receipt of the wage insurance benefit at any point during 
     that two-year period. The provision allows workers to shift 
     from receiving a TRA, while training, to receiving 
     reemployment TAA, while employed, at any point during the 
     two-year period. The provision increases the limit on wages 
     in eligible reemployment from $50,000 a year to $55,000 a 
     year. Similarly, it increases the maximum wage insurance 
     benefit (over two years) from up to $10,000 to up to $12,000.
       The provision lifts the restriction on wage insurance 
     recipients' participation in TAA-funded training. It also 
     permits workers reemployed less than full-time, but at least 
     20 hours a week, and in approved training, to receive the 
     wage insurance benefit (which would be prorated if the worker 
     is reemployed for fewer hours compared to previous 
     employment).
     Reasons for Change
       The Conferees believe that the reemployment TAA, or wage 
     insurance, program is a potentially beneficial option for 
     many older workers, but it includes unnecessary barriers to 
     participation. The Conferees believe that changes to section 
     246 of the Trade Act will make the wage insurance program a 
     more viable option for many more potentially interested 
     workers. Inflation has lessened the maximum value of the 
     available benefit, and increasing personal, nominal, median 
     income has lowered the share of workers eligible to 
     participate in the program. Several other requirements make 
     the program inaccessible and unattractive.
       Findings from the Government Accountability Office (GAO) 
     highlight the need to reform specific aspects of the program. 
     First, the 26-week reemployment deadline was cited by the GAO 
     as one of ``two key factors [that] limit participation.'' The 
     GAO went on to note that ``[o]fficials in States [the GAO] 
     visited said that one of the greatest obstacles to 
     participation was the requirement for workers to find a new 
     job within 26 weeks after being laid off. For example, 
     according to officials in one State, 80 percent of 
     participants who were seeking wage insurance but were unable 
     to obtain it failed because they could not find a job within 
     the 26-week period. The challenges of finding a job within 
     this time frame may be compounded by the fact that workers 
     may actually have less than 26 weeks to secure a job if they 
     are laid off prior to becoming certified for TAA. For 
     example, a local caseworker in one State [the GAO] visited 
     said that the 26 weeks had passed completely before a worker 
     was certified for the benefit.'' Additionally, the GAO found 
     that automatically certifying workers for the wage insurance 
     benefit would cut the Department of Labor's workload and 
     promote program participation. Currently, workers opting for 
     wage insurance must also surrender eligibility for TAA-funded 
     training and be reemployed full-time. The provision 
     eliminates these restrictions.
       The Conferees believe that eliminating the 26-week deadline 
     for reemployment, eliminating the need for firms to be 
     certified for wage insurance, eliminating the prohibition on 
     wage insurance beneficiaries receiving TAA-funded training, 
     and allowing part-time workers and former TRA recipients 
     access to the wage insurance benefit should make the wage 
     insurance program more accessible and attractive.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.


                      5. Subpart E--Other Matters

     Office of Trade Adjustment Assistance (Section 1751 (amending 
         Subchapter C of chapter 2 of title II of the Trade Act of 
         1974))
     Present Law
       The TAA for Workers program is currently operated by the 
     Employment and Training Administration at the Department of 
     Labor.
     Explanation of Provision
       The provision creates an Office of Trade Adjustment 
     Assistance headed by an administrator who shall report 
     directly to the Deputy Assistant Secretary for Employment and 
     Training Administration. Under the provision, the 
     administrator will be responsible for overseeing and 
     implementing the TAA for Workers program and carrying out 
     functions delegated to the Secretary of Labor, including: 
     making group certification determinations; providing TAA 
     information and assisting workers and others assisting such 
     workers prepare petitions or applications for program 
     benefits (including health care benefits); ensuring covered 
     workers receive Section 235 employment and case management 
     services; ensuring States comply with the terms of their 
     Section 239 agreements; advocating for workers applying for 
     benefits; and operating a hotline that workers and employers 
     may call with questions about TAA benefits, eligibility 
     requirements, and application procedures.
       The provision requires the administrator to designate an 
     employee of the Department with appropriate experience and 
     expertise to receive complaints and requests for assistance, 
     resolve such complaints and requests, compile basic 
     information concerning the same, and carry out other tasks 
     that the Secretary specifies.
     Reasons for Change
       It is the view of the Conferees that creating an Office of 
     Trade Adjustment Assistance in the Department of Labor with 
     primary accountability for the management and performance of 
     the TAA for Workers program will improve the program's 
     operation.
       The creation of the Office of Trade Adjustment Assistance 
     should not interfere with the coordination of services 
     provided by TAA, the National Emergency Grant program, and 
     Department of Labor Rapid Response services.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act.
     Accountability of State Agencies; Collection and Publication 
         of Program Data; Agreements with States (Section 1752 
         (amending Section 239 of the Trade Act of 1974))
     Present Law
       Present law gives the Secretary of Labor the authority to 
     delegate to the States through agreements many aspects of TAA 
     implementation, including responsibilities to (1) receive 
     applications for TAA and provide payments; (2) make 
     arrangements to provide certain employment services through 
     other Federal programs; and (3) issue waivers. It also 
     mandates that any agreement entered into shall include 
     sections requiring that the provision of TAA services and 
     training be coordinated with the provision of Workforce 
     Investment Act (WIA) services and training. In carrying out 
     its responsibilities, each State must notify workers who 
     apply for UI about TAA, facilitate early filing for TAA 
     benefits, advise workers to apply for training when they 
     apply for TRA, and interview affected workers as soon as 
     possible for purposes of getting

[[Page 4075]]

     them into training. States must also submit to the Department 
     of Labor information like that provided under a WIA State 
     plan.
     Explanation of Provision
       The provision requires the Secretary, either directly or 
     through the States (through cooperating agreements), to make 
     the employment and case management services described in the 
     amended section 235 available to TAA eligible workers. TAA 
     eligible workers are not required to accept or participate in 
     such services, however, if they choose not to do so. The 
     provision requires States and cooperating State agencies to 
     implement effective control measures and to effectively 
     oversee the operation and administration of the TAA program, 
     including by monitoring the operation of control measures to 
     improve the accuracy and timeliness of reported data. The 
     provision also requires States and cooperating State agencies 
     to report comprehensive performance accountability data to 
     the Secretary, on a quarterly basis.
     Reasons for Change
       To ensure that the employment and case management services 
     described in the amended section 235 are made available to 
     TAA enrollees as required under that section, the Conferees 
     believe that it is necessary to incorporate those obligations 
     into the agreements that the Department of Labor enters into 
     with each of the States concerning the administration of TAA.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     Verification of Eligibility for Program Benefits (Section 
         1753 (amending Section 239 of the Trade Act of 1974))
     Present Law
       There is no provision in present law.
     Explanation of Provision
       Section 1753 requires a State to re-verify the immigration 
     status of a worker receiving TAA benefits using the 
     Systematic Alien Verification for Entitlements (SAVE) Program 
     (42 U.S.C. 1320b-7(d)) if the documentation provided during 
     the worker's initial verification for the purposes of 
     establishing the worker's eligibility for unemployment 
     compensation would expire during the period in which that 
     worker is potentially eligible to receive TAA benefits.
       The section also requires the Secretary to establish 
     procedures to ensure that the re-verification process is 
     implemented properly and uniformly from State to State.
     Reasons for Change
       This provision is intended to ensure that workers maintain 
     a satisfactory immigration status while receiving benefits. 
     This section was included for the purposes of the TAA program 
     only and should not be extended to other programs.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     Collection of Data and Reports; Information to Workers 
         (Section 1754 (amending Subchapter C of chapter 2 of 
         title II of the Trade Act of 1974))
     Present Law
       Present law does not contain statutory language requiring 
     the collection of data or performance goals and the TAA 
     program has suffered a history of problems with its 
     performance data that has undermined the data's credibility 
     and limited their usefulness. Most of the outcome data 
     reported in a given program year actually reflects 
     participants who left the program up to 5 calendar quarters 
     earlier. In addition, as of FY 2006, the Department of Labor 
     does not consistently report TAA data by State or industry or 
     by services or benefits received.
       While the Department of Labor has take some steps aimed at 
     improving performance data, the data remain suspect and fail 
     to capture outcomes for some of the program's participants, 
     and many participants are not included in the final outcomes 
     at all.
     Explanation of Provision
       The provision would require the Secretary of Labor to 
     implement a system for collecting data on all workers who 
     apply for or receive TAA. The system must include the 
     following data classified by State, industry, and nationwide 
     totals: number of petitions; number of workers covered; 
     average processing time for petitions; a breakdown of 
     certified petitions by the cause of job loss (increased 
     imports etc.); the number of workers receiving benefits under 
     any aspect of TAA (broken down by type of benefit); the 
     average time during which workers receive each type of 
     benefit; the number of workers enrolled in training, 
     classified by type of training; the average duration of 
     training; the number and type of training waiver granted; the 
     number of workers who complete and do not complete training; 
     data on outcomes, including the sectors in which workers are 
     employed after receiving benefits; and data on rapid response 
     activities.
       The provision would also require, by December 15 of each 
     year, the Secretary to provide to the Senate Finance 
     Committee and the House Committee on Ways and Means a report 
     that includes a summary of the information above, information 
     on distributions of training funds under section 236(a)(2), 
     and any recommendations on whether changes to eligibility 
     requirements, benefits, or training funding should be made 
     based on the data collected. Those data must be made 
     available to the public on the Department of Labor's website 
     in a searchable format and must be updated quarterly.
     Reasons for Change
       The Conferees believe that valuable information on TAA and 
     its impact is neither being collected nor being made publicly 
     available. This, in turn, inhibits the ability of Congress to 
     perform its oversight responsibilities and, if necessary, to 
     refine and improve the program, its performance, and worker 
     outcomes. Additionally, the Conferees believe that all of the 
     data that the Department of Labor gathers should be made 
     available and posted on its website in a searchable format. 
     This will enhance the accountability of the TAA program and 
     the Department of Labor, not just to Congress, but to the 
     American people as well.
     Effective Date
       The provision goes into effect on the date of enactment of 
     this Act.
     Fraud and recovery of overpayments (Section 1755 (amending 
         Section 243(a)(1) of the Trade Act of 1974))
     Present Law
       An overpayment of TAA benefits may be waived if, in 
     accordance with the Secretary's guidelines, the payment was 
     made without fault on the part of such individual, and 
     requiring such repayment would be contrary to ``equity and 
     good conscience.''
     Explanation of Provision
       The provision states that the Secretary shall waive 
     repayment if the overpayment was made without fault on the 
     part of such individual and if repayment ``would cause a 
     financial hardship for the individual (or the individual's 
     household, if applicable) when taking into consideration the 
     income and resources reasonably available to the individual 
     or household and other ordinary living expenses of the 
     individual or household.''
     Reasons for Change
       The Conferees believe that the Department of Labor has 
     adopted a very strict standard for issuing overpayment 
     waivers. In particular, 20 CFR 617.55(a)(2)(ii)(C) defines 
     equity and good conscience to require ``extraordinary and 
     lasting financial hardship'' that would ``result directly'' 
     in the ``loss of or inability to obtain minimal necessities 
     of food, medicine, and shelter for a substantial period of 
     time'' and ``may be expected to endure for the foreseeable 
     future.'' The Conferees understand that no worker has met 
     this strict waiver standard. In including standard statutory 
     waiver language in TAA, there is no indication that Congress 
     intended to make waivers impossible to secure. To the 
     contrary, the Conferees believe that Congress intended that 
     overpaid individuals who are without fault and unable to 
     repay their TAA overpayments should have a reasonable 
     opportunity for waivers of the requirement to return those 
     overpayments. The provision clarifies this intent.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     Sense of Congress on Application of Trade Adjustment 
         Assistance (Section 1756 (amending Section Chapter 5 of 
         title II of the Trade Act of 1974))
     Present Law
       There is no provision in present law.
     Explanation of Provision
       The provision expresses the Sense of Congress that the 
     Secretaries of Labor, Commerce, and Agriculture should apply 
     the provisions of their respective trade adjustment 
     assistance programs with the utmost regard for the interests 
     of workers, firms, communities, and farmers petitioning for 
     benefits.
     Reasons for Change
       Courts reviewing determinations by the Department of Labor 
     regarding certification for trade adjustment assistance have 
     stated that the Department is obliged to conduct its 
     investigations with ``utmost regard for the interests of the 
     petitioning workers.'' See, e.g., Former Employees of Komatsu 
     Dresser v. United States Secretary of Labor, 16 C.I.T. 300, 
     303 (1992) (citations omitted). The courts have explained 
     that such statements flow from the ex parte nature of the 
     Department's certification process (as opposed to a judicial 
     or quasi-judicial proceeding) and the remedial purpose of the 
     trade adjustment assistance program. This section reflects 
     such statements and extends them to the firms, farmers, and 
     communities programs.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     Consultations in Promulgation of Regulations (Section 1757 
         (amending Section 248 of the Trade Act of 1974))
     Present Law
       The Secretary is required to prescribe necessary 
     regulations.

[[Page 4076]]


     Explanation of Provision
       This provision requires the Secretary to consult with the 
     Senate Finance Committee and the House Committee on Ways and 
     Means 90 days prior to the issuance of a final rule or 
     regulation.
     Reasons for Change
       Requiring that the Secretary consult with the relevant 
     committees 90 days prior to the issuance of a final rule or 
     regulations will help ensure that such rules and regulations 
     reflect Congress' intent.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.

           B. Part II--Trade Adjustment Assistance for Firms

     Trade Adjustment Assistance for Firms (Section 1761-1767 
         (amending Sections 251, 254, 255, 256, 257, and 258 of 
         the Trade Act of 1974))
     Present Law
       A firm may file a petition for certification with the 
     Secretary of Commerce. Upon receipt of the petition, the 
     Secretary shall publish a notice in the Federal Register that 
     the petition has been received and is being investigated. The 
     petitioner, or anyone else with a substantial interest, may 
     request a public hearing concerning the petition.
       To be certified to receive TAA benefits, a firm must show 
     (1) a ``significant'' number of workers became or are 
     threatened to become totally or partially separated; (2) 
     sales or production of an article, or both, decreased 
     absolutely, or sales or production, or both, of an article 
     that accounted for not less than 25 percent of the total 
     production or sales of the firm during the 12-month period 
     preceding the most recent 12-month period for which data are 
     available have decreased absolutely; and (3) increased 
     imports of competing articles ``contributed importantly'' to 
     the decline in sales, production, and/or workforce.
       A firm certified under section 251 has two years in which 
     to file an adjustment assistance application, which must 
     include an economic adjustment proposal.
       In deciding whether to approve an application, the 
     Secretary of Commerce must determine that the proposal (1) is 
     reasonably calculated ``to materially contribute'' to the 
     economic adjustment of the firm; (2) gives adequate 
     consideration to the interests of the firm's workers; and (3) 
     demonstrates that the firm will use its own resources for 
     adjustment.
       Criminal and civil penalties are applicable for, among 
     other things, making false statements or failing to disclose 
     material facts. However, the penalties do not cover the acts 
     and omissions of customers or others responding to queries 
     made in the course of an investigation of a firm's petition.
       The Secretary must make its decisions within 60 days.
     Explanation of Provision
       The provision makes service sector firms potentially 
     eligible for benefits under the TAA for Firms program. It 
     also expands the look back so that all firms can use the 
     average of one, two, or three years of sales or production 
     data, as opposed to one year, to show that the firm's sales, 
     production, or both, have decreased absolutely or that the 
     firm's sales, production, or both of an article or service 
     that accounts for at least 25 percent of its total 
     production, or sales have decreased absolutely.
       In determining eligibility, the provision makes clear that 
     the Secretary may use data from the preceding 36 months to 
     determine an increase in imports, and may determine that 
     increased imports exist if customers accounting for a 
     significant percentage of the decline in a firm's sales or 
     production certify that their purchases of imported articles 
     or services have increased absolutely or relative to the 
     acquisition of such articles or services from suppliers in 
     the United States.
       The provision requires the Secretary of Commerce, upon 
     receiving information from the Secretary of Labor that the 
     workers of a firm are TAA-covered, to notify the firm of its 
     potential TAA eligibility.
       The provision requires the Secretary of Commerce to provide 
     grants to intermediary organizations to deliver TAA benefits. 
     The provision requires the Secretary to endeavor to align the 
     contracting schedules for all such grants by 2010, and to 
     provide annual grants to the intermediary organizations 
     thereafter. The provision requires the Secretary to develop a 
     methodology to ensure prompt initial distribution of a 
     portion of the funds to each of the intermediary 
     organizations, and to determine how the remaining funds will 
     be allocated and distributed to them. The Secretary must 
     develop the methodology in consultation with the Senate 
     Finance Committee and the House Committee on Ways and Means.
       The provision amends the penalties provision in section 259 
     to cover entities, including customers, providing information 
     during an investigation of a firm's petition. Additionally, 
     the provision requires the Secretary of Commerce to submit an 
     annual report demonstrating the operation, effectiveness, and 
     outcomes of the TAA for Firms program to the Senate Finance 
     Committee and the House Committee on Ways and Means, and to 
     make the report available to the public. The methodology for 
     the distribution of funds to the intermediary organizations 
     shall include criteria based on the data in the report. The 
     provision creates rules relating to the disclosure of 
     confidential business information included in this annual 
     report.
     Reasons for Change
       Most service sector firms are currently ineligible for the 
     TAA for Firms program because of a statutory requirement that 
     the workers must have been employed by a firm that produces 
     an ``article.'' In an era when 80 percent of U.S. workers are 
     employed in the service sector, the Conferees believe service 
     sector firms should be eligible for TAA.
       The Conferees also note that firms currently have a limited 
     ``look back'' under existing law, which unfairly restricts 
     their ability to show that increased imports are hurting 
     their businesses.
       Because data is not always readily available to demonstrate 
     an increase in imports of articles or services, or to show 
     how such increased imports compete with the articles or 
     services of a particular firm, the Conferees believe that the 
     Secretary should be able to utilize information from the 
     customers of a firm that account for a significant percentage 
     of the decline in the firm's sales or production to verify 
     these customers have increased their imports of the relevant 
     articles or services, either absolutely or relative to their 
     purchases from domestic suppliers.
       Since a firm may not know that it could be eligible for TAA 
     benefits, despite the fact that workers at the firm have 
     qualified for the TAA for workers program, the Conferees 
     believe it is important to give these firms notice of their 
     potential eligibility for TAA benefits.
       The Conferees are concerned that at present, the Economic 
     Development Administration (EDA) is entering into contracts 
     with intermediary organizations that vary in length. Thus, 
     the contracts begin and end at different times during the 
     year. The provision requires the Secretary of Commerce to 
     provide grants to intermediary organizations to deliver TAA 
     benefits and, to the maximum extent practicable, that 
     contracts with such organizations be for 12 month periods and 
     have the same beginning and end dates. The Conferees will 
     leave it to the discretion of the Secretary to determine the 
     appropriate 12 month contract cycle.
       The Conferees also believe that the methodology for 
     distributing funds to intermediary organizations should be 
     based in part on their performance, the number of firms they 
     serve, and the outcomes of firms completing the program. The 
     Secretary of Commerce should consult Congress before 
     finalizing such methodology.
       The Conferees understand that some customers provide 
     inaccurate or incomplete information in response to 
     questionnaires posed by the Secretary. The penalty language 
     included in this provision is designed to address this 
     problem.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     Extension of Authorization of Trade Adjustment Assistance for 
         Firms (Section 1764)
     Present Law
       The authorization of the TAA for Firms program expired on 
     December 31, 2007. The program is currently authorized at $16 
     million per year.
     Explanation of Provision
       The provision reauthorizes the program through December 31, 
     2010, and increases its funding to $50 million per year for 
     fiscal years 2009 and 2010, and prorates such funding for the 
     period beginning October 1, 2010 and ending December 31, 
     2010. Of that amount, $350,000 is set aside each year to fund 
     full-time TAA for Firms positions at the Department of 
     Commerce, including a director of the TAA for Firms program.
     Reasons for Change
       The Conferees believe that the TAA for Firms program has 
     been underfunded, as at least $15 million in approved 
     projects lack funding. Additionally, the Firms team at the 
     Department of Commerce lacks adequate full-time staff to 
     administer the program.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.

        C. Part III--Trade Adjustment Assistance for Communities

     Trade Adjustment Assistance for Communities (Section 1771-
         1773)
     Present Law
       There is no provision in present law.
     Explanation of Provision
       The provision creates a Trade Adjustment Assistance for 
     Communities program that will allow a community to apply for 
     designation as a community affected by trade. A community may 
     receive such designation from the Secretary of Commerce if 
     the community demonstrates that (1) the Secretary of Labor 
     has certified a group of workers in the community as eligible 
     for TAA for Workers benefits, the Secretary of Commerce has

[[Page 4077]]

     certified a firm in the community as eligible for TAA for 
     Firms benefits, or a group of agricultural producers in the 
     community has been certified to receive benefits under the 
     TAA for Farmers and Fishermen program; and (2) the Secretary 
     determines that the community is significantly affected by 
     the threat to, or the loss of, jobs associated with that 
     certification. The Secretary of Commerce must notify the 
     community and the Governor of the State in which the 
     community is located upon making an affirmative determination 
     that the community is affected by trade.
       The Secretary of Commerce shall provide technical 
     assistance to a community affected by trade to assist the 
     community to (1) diversify and strengthen its economy; (2) 
     identify impediments to economic development that result from 
     the impact of trade; and (3) develop a community strategic 
     plan to address economic adjustment and workforce dislocation 
     in the community. The Secretary of Commerce shall also 
     identify Federal, State and local resources available to 
     assist the community, and ensure that Federal assistance is 
     delivered in a targeted, integrated manner. The Secretary 
     shall establish an Interagency Community Assistance Working 
     Group to assist in coordinating the Federal response.
       A community affected by trade may develop a strategic plan 
     for the community's economic adjustment and submit the plan 
     to the Secretary. The plan should be developed, to the extent 
     possible, with participation from local, county, and State 
     governments, local firms, local workforce investment boards, 
     labor organizations, and educational institutions. The plan 
     should include an analysis of the economic development 
     challenges facing the community and the community's capacity 
     to achieve economic adjustment to these challenges; an 
     assessment of the community's long-term commitment to the 
     plan and the participation of community members; a 
     description of projects to be undertaken by the community; a 
     description of educational opportunities and future 
     employment needs in the community; and an assessment of the 
     funding required to implement the strategic plan.
       Of the funds appropriated, the Secretary of Commerce may 
     award up to $25 million in grants to assist the community in 
     developing a strategic plan.
       The provision authorizes $150 million in discretionary 
     grants to be awarded by the Secretary of Commerce. An 
     eligible community may apply for a grant from the Secretary 
     to implement a project or program included in the community's 
     strategic plan. Grants may not exceed $5 million. The Federal 
     share of the grant may not exceed 95 percent of the cost of 
     the project and the community's share is an amount not less 
     than 5 percent. Priority shall be given to grant applications 
     submitted by small and medium-sized communities.
       Educational institutions may also apply for Community 
     College and Career Training grants from the Secretary of 
     Labor. Grant proposals must include information regarding (1) 
     the manner in which the grant will be used to develop or 
     improve an education or training program suited to workers 
     eligible for the TAA for Workers program; (2) the extent to 
     which the program will meet the needs of the workers in the 
     community; (3) the extent to which the proposal fits into a 
     community's strategic plan or relates to a Sector Partnership 
     Grant received by the community; and (4) any previous 
     experience of the institution in providing programs to 
     workers eligible for TAA. Educational institutions applying 
     for a grant must also reach out to employers in the community 
     to assess current deficiencies in training and the future 
     employment opportunities in the community.
       The provision authorizes $40 million in discretionary 
     grants to be awarded by the Secretary of Labor for the 
     Community College and Career Training Grant program. Priority 
     shall be given to grant applications submitted by eligible 
     institutions that serve communities that the Secretary of 
     Commerce has certified under section 273.
       The provision also establishes a Sector Partnership Grant 
     program that allows the Secretary of Labor to award industry 
     or sector partnership grants to facilitate efforts of the 
     partnership to strengthen and revitalize industries. The 
     partnerships shall consist of representatives of an industry 
     sector; local county, or State government; multiple firms in 
     the industry sector; local workforce investment boards 
     established under section 117 of the Workforce Investment Act 
     of 1998 (29 U.S.C. 2832); local labor organizations, 
     including State labor federations and labor-management 
     initiatives, representing workers in the community; and 
     educational institutions.
       The provision authorizes $40 million in discretionary 
     grants to be awarded by the Secretary of Labor for the Sector 
     Partnership Grant program. The Sector Partnership Grants may 
     be used to help the partnerships identify the skill needs of 
     the targeted industry or sector and any gaps in the available 
     supply of skilled workers in the community impacted by trade; 
     develop strategies for filling the gaps; assist firms, 
     especially small- and medium-sized firms, in the targeted 
     industry or sector increase their productivity and the 
     productivity of their workers; and assist such firms to 
     retain incumbent workers.
     Reasons for Change
       The TAA for Workers program provides assistance to 
     individual workers who lose their jobs because of trade with 
     foreign countries. The program does not, however, provide 
     broader assistance when the closure or downsizing of a key 
     industry, company, or plant creates severe economic 
     challenges for an entire community impacted by trade. The 
     Conferees believe there is a need for additional programs and 
     incentives to assist such communities. Accordingly, the 
     provision creates a TAA for Communities program to provide a 
     coordinated Federal response to eligible communities by 
     identifying Federal, State and local resources and helping 
     such communities to access available Federal assistance.
       The provision does not establish precise criteria for 
     determining when a particular community is impacted by trade. 
     In the view of the Conferees, this determination is better 
     left to the discretion of the Secretary of Commerce, who can 
     evaluate specific facts in specific cases. As a general 
     matter, the Conferees believe the Secretary should review the 
     underlying certification(s) that provide a basis for a 
     community's application and evaluate the potential impact of 
     the job losses (or threat thereof) associated with such 
     certification(s) on the broader community, given the 
     community's overall economic situation. The Conferees intend 
     for the Secretary to focus grants on communities facing the 
     most difficult hardships, to the extent practicable.
       The Conferees believe small- and medium-sized communities, 
     and in particular, those in rural areas where the 
     manufacturing sector has historically been a significant 
     employer, would benefit from the technical assistance and 
     grants available through this program. Such communities have 
     been disproportionately impacted by the adverse effects of 
     trade, where some lumber mills, factories and call centers, 
     for instance, have scaled back operations or closed entirely 
     in response to increased trade and globalization.
       The Conferees do not intend for the preference for such 
     communities to result in all grants, or the majority of 
     grants, going to such communities to the exclusion of other 
     impacted communities.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act.
     Authorization of Appropriations for Trade Adjustment 
         Assistance for Communities (Section 1772)
     Present Law
       There is no provision in present law.
     Explanation of Provision
       The provision authorizes $150,000,000 to the Secretary of 
     Commerce for each of fiscal years 2009 and 2010, and 
     $37,500,000 for the period beginning October 1, 2010 through 
     December 31, 2010 to carry out the TAA for Communities 
     program.
       The provision authorizes $40,000,000 to the Secretary of 
     Labor for each of fiscal years 2009 and 2010, and $10,000,000 
     for the period beginning October 1, 2010 through December 31, 
     2010 to carry out the Community College and Career Training 
     Grant Program.
       The provision authorizes $40,000,000 to the Secretary of 
     Labor for each of fiscal years 2009 and 2010, and $10,000,000 
     for the period beginning October 1, 2010 through December 31, 
     2010 to carry out the Sector Partnership Grant Program.
     Effective Date
       The provision goes into effect on the date of enactment of 
     this Act.

          D. Part IV--Trade Adjustment Assistance for Farmers

     Trade Adjustment Assistance for Farmers (Section 1781-1786 
         (amending sections 291, 292, 293, 296 and 297 of the 
         Trade Act of 1974))
     Present Law
       A group of agricultural producers or their representative 
     may file a petition for certification with the Secretary of 
     Agriculture. Upon receipt of the petition, the Secretary 
     shall publish a notice in the Federal Register that the 
     petition has been received and is being investigated. The 
     petitioner, or anyone else with a substantial interest, may 
     request a public hearing concerning the petition.
       To be certified to receive TAA benefits under this chapter, 
     the group of producers must show (1) that the national 
     average price of the agricultural commodity in the most 
     recent marketing year is less than 80 percent of the national 
     average price for the commodity for the 5 previous marketing 
     years, and (2) that increased imports of articles like or 
     directly competitive with the commodity contributed 
     importantly to the decline in price.
       A group of producers certified under Section 291 has one 
     year to receive TAA benefits, but may apply to be re-
     certified for a second year of benefits if the group can show 
     a further 20 percent price decline in the national average 
     price of the commodity, and that imports continued to 
     contribute importantly to that decline.
       To qualify to receive benefits, individual agricultural 
     producers that are covered by a

[[Page 4078]]

     certified petition must show (1) that the individual producer 
     produced the qualified commodity; and (2) the net income of 
     the producer has decreased. Producers meeting these criteria 
     are eligible to participate in an initial technical 
     assistance course, and to receive cash benefits, not to 
     exceed $10,000, based on their production and the decline in 
     price for the commodity. Where available, the producer may 
     also attend more intensive technical assistance.
     Explanation of Provision
       The provision defines an agricultural commodity producer, 
     for the purpose of the TAA for Farmers program, to include 
     fishermen, as well as farmers.
       The provision allows a group of producers to petition the 
     Secretary based on a 15 percent decline in price, value of 
     production, quantity of production, or cash receipts for the 
     commodity, rather than a 20 percent decline in price. The 
     provision shortens the look back period, from an average of 5 
     years to an average of the national average price for the 
     previous three year period. Petitioning producers must also 
     show that imports contributed importantly to the decline in 
     price, production, value of production, or cash receipts.
       Once the Secretary certifies a group of commodity producers 
     for TAA, individual producers can qualify for benefits if the 
     producer shows (1) that they are producers of the commodity; 
     and (2) that the price received, quantity of production, or 
     value of production for the commodity has decreased.
       Producers deemed eligible to receive benefits by the 
     Secretary are eligible to receive initial technical 
     assistance, and may opt to receive intensive technical 
     assistance, which consists of a series of courses designed 
     for producers of the certified commodity. Upon completion of 
     the series of courses, the producer develops an initial 
     business plan which (1) reflects the skills gained by the 
     producer during the courses; and (2) demonstrates how the 
     producer intends to apply these skills to the producer's 
     farming or fishing operation. Upon approval by the Secretary 
     of the business plan described above, the producer is 
     entitled to receive up to $4,000 to implement the business 
     plan or to assist in the development of a long-term business 
     plan.
       Producers who complete an initial business plan may choose 
     to receive assistance to develop a long-term business 
     adjustment plan. The Secretary must review the plan to ensure 
     that it (1) will contribute to the economic adjustment of the 
     producer; (2) considers the interests of the producer's 
     employees, if any; and (3) demonstrates that the producer has 
     sufficient resources to implement the plan. If the Secretary 
     approves the plan, the producer is eligible to receive up to 
     $8,000 to implement the long-term business plan.
       Once a petition is certified for the group of producers, 
     qualifying producers are eligible for benefits for a 36-month 
     period. A producer may not receive more than $12,000 in any 
     36-month period to develop and implement business plans under 
     the program.
       The provision allows fishermen and aquaculture producers 
     who are otherwise eligible to receive TAA benefits to 
     demonstrate increased imports based on imports of farm-raised 
     or wild-caught fish or seafood, or both.
     Reasons for Change
       The Conferees believe that the 20 percent price decline 
     currently required for a group of producers to be certified 
     under the TAA for Farmers program is too high, and creates an 
     unnecessary barrier for producers to qualify for TAA 
     benefits. Further, producers and the Department of 
     Agriculture were concerned that the current five-year look 
     back period was too long and burdensome for producers.
       Additionally, since net farm income is a function of many 
     factors, it has proven very difficult for producers to show 
     the required decline in net income, even when the price for 
     specific commodities had declined significantly. Several 
     disputes regarding whether producers met the net income test 
     were taken to the U.S. Court of International Trade, 
     resulting in significant administrative expense for both the 
     producers and the Department of Agriculture.
       The Conferees believe that demonstrating a decline in the 
     production or price of the commodity facing import 
     competition is a better measure of the impact of trade on the 
     individual producer, rather than net income. The provision 
     would allow farmers to demonstrate that either their 
     production decisions or price received for the qualified 
     commodity were affected.
       The Conferees also believe that the focus of the TAA for 
     Farmers program should be adjustment assistance, rather than 
     cash benefits. Under the current program, most producers 
     received only initial technical assistance, with little 
     opportunity for additional curricula. The Conferees believe 
     that all producers eligible for TAA benefits should receive 
     more thorough technical assistance and the opportunity for 
     individualized business planning, with financial assistance 
     provided to help the producer implement the business plans.
       Further, technical assistance should be provided by the 
     Department of Agriculture through the National Institute on 
     Food and Agriculture (``NIFA''), which may choose to make 
     grants to land grant universities and other outside 
     organizations to assist in the development and delivery of 
     technical assistance. NIFA (formerly the Cooperative State 
     Research, Education, and Extension Service) delivers 
     technical assistance under the current Farmers program, and 
     had successfully developed curricula to respond to producers' 
     adjustment needs.
       The Conferees believe that the current one-year limit to 
     obtain TAA benefits unnecessarily limits producers' ability 
     to access technical assistance, particularly when farmers and 
     fishermen must spend significant portions of each year in the 
     fields or at sea. Extending the eligibility period to 36 
     months will allow producers to take advantage of all the 
     benefits offered, and will eliminate the need for the current 
     burdensome recertification process.
       The Conferees believe that fishermen and aquaculture 
     producers who are otherwise eligible for TAA should be able 
     to demonstrate an increase in imports of like or directly 
     competitive products without regard to whether those imported 
     products were wild-caught or farm-raised. Current law allows 
     these producers to apply for benefits based on imports of 
     farm raised fish and seafood only.
       The Conferees expect that the Department of Agriculture 
     will fully fund and operate the TAA for Farmers and Fishermen 
     program for the full duration of each fiscal year for which 
     it is authorized.
     Effective Date
       The provision goes into effect upon expiration of the 90-
     day period beginning on the date of enactment of this Act, 
     and applies to petitions filed on or after that date.
     Extension of Authorization and Appropriation for Trade 
         Adjustment Assistance for Farmers (Section 1787 (amending 
         Section 298 of the Trade Act of 1974))
     Present Law
       The authorization and appropriation for the TAA for Farmers 
     program expired on December 31, 2007. The program is 
     currently authorized at $90 million per year.
     Explanation of Provision
       This provision reauthorizes the program through December 
     30, 2010, and maintains its funding at $90 million per year 
     for fiscal years 2009 and 2010. The provision further 
     provides funding on a prorated basis for the period beginning 
     October 1, 2010, and ending December 31, 2010.
     Effective Date
       The provision goes into effect on the date of enactment of 
     this Act.

                      E. Part V--General Provision

     Government Accountability Office Report (Section 1793)
     Present Law
       There is no provision in present law.
     Explanation of Provision
       The provision requires the Comptroller General of the 
     United States to prepare and submit a report to the Senate 
     Finance Committee and the House Committee on Ways and Means 
     on the operation and effectiveness of these amendments to 
     chapters 2, 3, 4, and 6 of the Trade Act no later than 
     September 30, 2012.
     Reasons for Change
       It is critical that GAO review and evaluate the TAA program 
     to assess the changes made by this legislation to ensure that 
     they have improved the effectiveness, operation, and 
     performance of the program.
     Effective Date
       The provision goes into effect on the date of enactment of 
     this Act.

           2. CUSTOMS AND BORDER PROTECTION COLLECTIONS\237\
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     \237\Description prepared by the majority staffs of the House 
     Committee on Ways and Means and the Senate Committee on 
     Finance.
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                              I. OVERVIEW

       The conference report prevents U.S. Customs and Border 
     Protection (``CBP'') from collecting over $92 million in 
     antidumping and countervailing duties that CBP collected on 
     imports from Canada and Mexico between 2001 and 2005, and 
     later distributed to U.S. companies that petitioned the U.S. 
     Government for relief.

                             I. HOUSE BILL

       No provision

                         III. SENATE AMENDMENT

       Section 1801 of the American Recovery and Reinvestment Act 
     of 2009, as passed by the Senate, has four sections. First, 
     it prohibits the Secretary of Homeland Security, or any other 
     person, from requiring repayment of, or in any other way 
     recouping, duties that were (1) distributed pursuant to the 
     Continued Dumping and Subsidy Offset Act of 2000 (``CDSOA''); 
     (2) assessed and paid on imports of goods from Canada and 
     Mexico; and (3) distributed on or after January 1, 2001, and 
     before January 1, 2006. Second, it prohibits CBP from 
     offsetting any current or future duty distributions on goods 
     from countries other than Canada and Mexico in an attempt to 
     recoup duties described above. Third, the provision requires 
     CBP to refund any such duty repayments or recoupments it has 
     already received. Further, it requires CBP to

[[Page 4079]]

     fully distribute any duties it is withholding as an offset 
     against current or future duty distributions. Fourth, the 
     provision clarifies that CBP is not prohibited from 
     collecting payments resulting from (1) false statements or 
     other misconduct by a recipient of a duty payment or (2) re-
     liquidation of entries with respect to which duty payments 
     were made.

                         IV. CONFERENCE REPORT

       The conferees adopted the Senate provision. The conferees 
     do not intend this provision to amend the antidumping or 
     countervailing duty laws of the United States.

                         TITLE II OF DIVISION B

       ASSISTANCE FOR UNEMPLOYED WORKERS AND STRUGGLING FAMILIES

                          Conference Document


                                 H.R. 1

                           Table of Contents

Assistance for Unemployed Workers and Struggling Families.............1
    Short Title (House bill Section 2000; Senate bill Section 2000; 
      Conference agreement Section 2000)..............................1
  Subtitle A--Unemployment Insurance..................................1
    Extension of Emergency Unemployment Compensation Program Benefits 
      (House bill Sec. 2001; Senate bill Sec. 2001; Conference 
      agreement Sec. 2001)............................................1
    Increase in Unemployment Compensation Benefits (House bill Sec. 
      2002; Senate bill Sec. 2002; Conference agreement Sec. 2002)....2
    Special Transfers for Unemployment Compensation Modernization 
      (House bill Sec. 2003; Senate bill Sec. 2003; Conference 
      agreement Sec. 2003)............................................3
    Temporary Assistance for States with Advances (House bill n.a.; 
      Senate bill Sec. 2004; Conference agreement Sec. 2004)..........5
    Full Federal Funding of Extended Unemployment Compensation for a 
      Limited Period (House bill n.a.; Senate bill n.a.; Conference 
      agreement Sec. 2005)............................................6
    Temporary Increase in Extended Unemployment Benefits under the 
      Railroad Unemployment Insurance Act. (House bill n.a.; Senate 
      bill n.a.; Conference agreement Sec. 2006)......................7
  Subtitle B--Assistance for Vulnerable Individuals...................8
    Emergency Fund for TANF Program (House bill Section 2101; Senate 
      bill Sec. 2101; Conference agreement Sec. 2101).................8
    Extension of Supplemental Grants (House bill n.a.; Senate bill Sec. 
      2102; Conference Agreement Sec. 2102)...........................9
    Clarification of Authority of States to Use TANF Funds Carried over 
      From Prior Years To Provide TANF Benefits and Services (House 
      bill n.a.; Senate bill Sec. 2103; Conference Agreement Sec. 21010
    Temporary Resumption of Prior Child Support Law (House bill Sec. 
      2103; Senate bill Sec. 2104; Conference agreement Sec. 2104)...10
    One-Time Emergency Payments to Certain Social Security, 
      Supplemental Security Income, Railroad Retirement, Veterans 
      Beneficiaries, and Certain Government Retirees (House bill Sec. 
      2102; Senate bill Sec. 1601; Conference agreement sections 2201 
      and 2202)......................................................11

       Assistance for Unemployed Workers and Struggling Families

     Short Title (House bill Section 2000; Senate bill Section 
         2000; Conference agreement Section 2000)
     Current Law
       No provision.
     House Bill
       The ``Assistance for Unemployed Workers and Struggling 
     Families Act.''
     Senate Bill
       Same as the House bill.
     Conference Agreement
       The conference agreement is the same as the House and 
     Senate bills.

                   Subtitle A--Unemployment Insurance

     Extension of Emergency Unemployment Compensation Program 
         Benefits (House bill Sec. 2001; Senate bill Sec. 2001; 
         Conference agreement Sec. 2001)
     Current Law
       Title IV, Emergency Unemployment Compensation, of the 
     Supplemental Appropriations Act, 2008 (Public Law 110-252; 26 
     U.S.C.3304 note) as amended by the Unemployment Compensation 
     Act of 2008 (Public Law 110-449) created a temporary 
     emergency unemployment compensation program (EUC08). The 
     program ends on the week ending on or before March 31, 2009. 
     No compensation under the program is payable for any week 
     beginning after August 27, 2009. Funds in the extended 
     unemployment compensation account (EUCA) of the unemployment 
     trust fund (UTF) are used for financing EUC08 payments. State 
     administration funds are made from the employment security 
     administration account (ESAA). Compensation for EUC08 
     payments to former employees of non-profits and governments 
     are from the general fund of the Treasury.
     House Bill
       The duration of the EUC08 program would extend through the 
     week ending on or before December 31, 2009. No benefits would 
     be payable for any week beginning after May 31, 2010. The 
     extension would be financed through the general fund of the 
     Treasury. The funds would not need to be repaid.
     Senate Bill
       Same provision.
     Conference Agreement
       The conference agreement includes the identical provisions 
     of the House and Senate bills.
     Increase in Unemployment Compensation Benefits (House bill 
         Sec. 2002; Senate bill Sec. 2002; Conference agreement 
         Sec. 2002)
     Current Law
       No such provision. Federal law does not provide formulas, 
     floors, or ceilings of regular weekly State unemployment 
     compensation amounts. In general, the States set weekly 
     benefit amounts as a fraction of the individual's average 
     weekly wage up to some State-determined maximum. Some States 
     include dependents' allowances in addition to the underlying 
     benefit.
     House Bill
       The provision would create an additional, federally-funded 
     $25 weekly benefit that would be available to all individuals 
     receiving regular unemployment compensation (UC) benefits. 
     All the provisions of section 2002 would also apply to 
     regular UC, extended benefits (EB), and EUC08 benefits. It 
     would require States to not take the additional compensation 
     into consideration when determining regular UC benefits 
     (including any dependants' allowances). The additional 
     benefit would be payable either at the same time and in the 
     same manner as any regular UC payable for the week involved 
     or payable separately but on the same weekly basis as any 
     regular compensation otherwise payable. States would not be 
     allowed to alter the method governing the computation of UC 
     under State law in such a manner that the weekly benefit 
     amount would be less than the benefit amount that would have 
     been payable under State law as of December 31, 2008. Funding 
     for the additional benefit would be appropriated from the 
     general fund of the Treasury, without fiscal year limitation. 
     The funds would not be required to be repaid.
       States would pay the additional compensation to individuals 
     once the State entered into an agreement with the Labor 
     Secretary and ending before January 1, 2010. The additional 
     compensation would be ``grandfathered'' for individuals who 
     had not exhausted the right to regular compensation as of 
     January 1, 2010. No additional compensation would be payable 
     for any week beginning after June 30, 2010.
       The additional benefit would be disregarded in considering 
     the amount of income of any individual for any purposes under 
     Medicaid and SCHIP.
     Senate Bill
       Same provision.
     Conference Agreement
       The conference agreement includes the identical provisions 
     of the House and Senate bills.
     Special Transfers for Unemployment Compensation Modernization 
         (House bill Sec. 2003; Senate bill Sec. 2003; Conference 
         agreement Sec. 2003)
     Current Law
       Section 903 of the Social Security Act (SSA) describes the 
     set of conditions under which funds are transferred to 
     eligible State unemployment accounts from the federal 
     accounts in the Unemployment Trust Fund

[[Page 4080]]

     (UTF) when those federal account balances exceed certain 
     levels. Transfers of excess funds in the UTF to State 
     accounts are called Reed Act distributions. No Reed Act 
     distributions are expected in the next 5 years.
       Section 903(a)(2)(B) of the SSA describes the manner in 
     which the distribution of Reed Act funds occurs. Funds are 
     distributed to the State UTF accounts based on the State's 
     share of estimated federal unemployment taxes (excluding 
     reduced credit payments) made by the State's employers.
       Unemployment Insurance Policy Letter 44-97, which 
     interpreted section 5401 of P.L. 105-33, the Balanced Budget 
     Act of 1997, says that States are not required to offer an 
     alternative base period (ABP) in determining eligibility for 
     UC benefits.
       While federal laws and regulations provide broad guidelines 
     on UC coverage, eligibility, and benefit determination, the 
     specifics of regular UC benefits are determined by each State 
     through State laws and regulations.
     House Bill
       The House bill would provide a special transfer of UTF 
     funds from the federal unemployment account (FUA) of up to $7 
     billion to the State accounts within the UTF as ``incentive 
     payments'' for changing or already having in place certain 
     State UC laws. The maximum incentive payment allowable for a 
     State would be calculated using the methods required by the 
     Reed Act if a distribution were to have occurred on October 
     1, 2008.
       One-third of the maximum payment would be contingent on 
     State law calculating the base period by either:
       (A) allowing use of a base period that includes the most 
     recently completed calendar quarter before the start of the 
     benefit year for the purpose of determining UC eligibility; 
     or
       (B) providing that, in the case of an individual who would 
     not otherwise be UC-eligible under State law, eligibility 
     shall be determined using a base period that includes the 
     most recently completed calendar quarter.
       The remaining 2/3 of the incentive payment would be 
     contingent on qualifying for the first 1/3 payment and the 
     applicable State law containing at least two of the following 
     four provisions:
       (A) No denial of UC under State law provisions relating to 
     availability for work, active search for work, or refusal to 
     accept work solely because the individual is seeking only 
     part-time work. States may exclude an individual if the 
     majority of the weeks of work in the individual's base period 
     do not include part-time work. The Labor Secretary would 
     define part-time.
       (B) No UC disqualification for separation from employment 
     if it is for compelling family reasons. These reasons must 
     include (i) domestic violence, (ii) illness or disability of 
     an immediate family member, and (iii) the need to accompany a 
     spouse to a place from where it is impractical to commute and 
     due to a change in location of the spouse's employment. The 
     Labor Secretary would define immediate family member.
       (C) Weekly UC continues for individuals who have exhausted 
     all rights to regular benefits but are enrolled and making 
     satisfactory progress in a State-approved training program or 
     in a job training program authorized under the Workforce 
     Investment Act of 1998. The benefit must be for at least an 
     additional 26 weeks and be equivalent to the previously 
     calculated UC benefit (including dependents' allowances) for 
     the most recent benefit year. The training program must 
     prepare the individual for entry into a ``high-demand'' 
     occupation.
       (D) UC Dependents' allowances are provided to all 
     individuals with a dependent (as defined by State law) at a 
     level equal to at least $15 per dependent per week. The 
     aggregate limit on dependents' allowances must be not less 
     than the lesser of $50 or 50% of the weekly benefit amount 
     for the benefit year.
       Within 60 days after enactment, the Labor Secretary may 
     prescribe (by regulation or otherwise) information required 
     in relation to the compliance of the modernization 
     requirements. The Labor Secretary would have 30 days after 
     receiving a complete application to determine if 
     modernization incentives are payable to the State.
       The Labor Secretary, while determining if State law meets 
     the requirements for an incentive payment, would disregard 
     any State law provisions that are not currently effective as 
     permanent law or are subject to a discontinuation under 
     certain circumstances. Once the Treasury Secretary has been 
     notified of the certification of the incentive payment, the 
     appropriate transfer to the State account would occur within 
     seven days. State law provisions which are to take effect 
     within 12 months after the date of their certification would 
     be considered to be in effect for the purposes of 
     certification. States must be eligible for certification 
     under section 303 [of the Social Security Act] and under 
     section 3304 of the Federal Unemployment Tax Act (FUTA) 
     [section 3304 of the Internal Revenue Code of 1986].
       Applications submitted before enactment or after the latest 
     date necessary (as determined by the Labor Secretary) will 
     not be considered in order to ensure that all incentive 
     payments are made before October 1, 2011. Incentive payments 
     may be used only for the payment of UC benefits and 
     dependents' allowances. An exception is made if the State 
     appropriates the funds for administrative expenses. Funds 
     that satisfy this exception may be used for the 
     administration of UC law and for public employment offices.
       The Treasury Secretary would be required reserve $7 billion 
     for incentive payments in the Federal Unemployment Account 
     (FUA) of the UTF. Any amount so reserved for which the 
     Secretary of the Treasury has not received a certification 
     under the proposed paragraph (4)(B) of the bill by the 
     deadline determined by the Secretary of Labor shall become 
     unrestricted regarding its use as part of the FUA upon the 
     close of fiscal year 2011.
       The bill would transfer a total of $500 million from the 
     federal employment security administration account (ESAA) to 
     the States' accounts in the UTF within 30 days of enactment. 
     Each State's transfers would be calculated using the methods 
     required by the Reed Act if a distribution were to have 
     occurred on October 1, 2008. Any amount transferred to a 
     State account as a result of this $500 million transfer would 
     be required to be used by the State agency of such State only 
     in (A) payment of expenses incurred through carrying out of 
     the purposes in State law required to receive the incentive 
     payments, (B) improved outreach to individuals who might be 
     eligible for regular UC by virtue of the changes in State 
     law, (C) improvement of unemployment benefit and unemployment 
     tax operations, including responding to increased demand for 
     unemployment compensation, and (D) staff-assisted 
     reemployment services for UC claimants.
     Senate Bill
       Same as the House bill, except that the Senate bill does 
     not explicitly give the Secretary of Labor the ability to 
     define part-time work.
       The Senate bill would require that all payments be made 
     before October 1, 2010 (rather than October 1, 2011) except 
     in those States where the first day of the first regularly 
     scheduled session of the State legislature following 
     enactment begins after December 31, 2010. Those States' 
     payments would be made before October 1, 2011.
     Conference Agreement
       The conference agreement follows the House bill with two 
     exceptions.
       If in a training program (option C under the qualifying 
     conditions of the remaining 2/3 incentive payment), the 
     agreement would allow States to not pay UC benefit if the 
     individual is receiving stipends or other training 
     allowances. Under the same training program option, the 
     agreement would also allow States to opt to take any 
     deductible income (as determined under State law) into 
     account and offset the UC payment.
     Temporary Assistance for States with Advances (House bill 
         n.a.; Senate bill Sec. 2004; Conference agreement Sec. 
         2004)
     Current Law
       Section 1202(b) of the Social Security Act (42 U.S.C. 
     1322(b)) requires that States are charged interest on new 
     loans that are not repaid by the end of the fiscal year in 
     which they were obtained. The interest rate on the loans is 
     the same rate as that paid by the federal government on State 
     reserves in the UTF for the quarter ending December 31 of the 
     preceding year, but not higher than 10% per annum. States may 
     not pay the interest directly or indirectly from funds in 
     their State account with the UTF.
       Section 1202(b)(2) allows a State to borrow funds without 
     interest from the FUA during the year if the State repays the 
     loans by September 30 of the calendar year in which the 
     advances were made. No loans may be made in October, 
     November, or December of the calendar year of such an 
     interest-free loan. Otherwise, the ``interest-free'' loan 
     will accrue interest charges.
     House Bill
       No provision.
     Senate Bill
       The Senate bill would temporarily waive interest payments 
     and the accrual of interest on advances to State unemployment 
     funds by amending section 1202(b) of the Social Security Act. 
     The interest payments that come due from the time of 
     enactment of the proposal until December 31, 2010 would be 
     deemed to have been made by the State. No interest on 
     advances accrue during the period.
     Conference Agreement
       The conference agreement follows the Senate bill.
     Full Federal Funding of Extended Unemployment Compensation 
         for a Limited Period (House bill n.a.; Senate bill n.a.; 
         Conference agreement Sec. 2005)
     Current Law
       The Extended Benefit (EB) program, established by the 
     Federal-State Extended Unemployment Compensation Act of 1970 
     (EUCA), P.L. 91-373 (26 U.S.C. 3304, note), may extend 
     receipt of unemployment benefits (extended benefits) at the 
     State level if certain economic situations exist within the 
     State.
       Extended benefits (EB) are funded half (50%) by the federal 
     government through its account for that purpose in the UTF; 
     States fund the other half (50%) through their State accounts 
     in the UTF.

[[Page 4081]]

       Individual eligibility for EB payments, among other 
     matters, requires that the worker has exhausted all rights to 
     regular UC benefits and be within the State-determined 
     benefit year (generally within 52 weeks of first claiming 
     regular UC eligibility) when a State's EB program becomes 
     active on account of economic conditions.
       States that do not require a one-week UC waiting period, or 
     have an exception for any reason to the waiting period, must 
     pay 100% of the first week of EB (rather than 50%). P.L. 110-
     449, the Unemployment Compensation Extension Act of 2008, 
     suspended this waiting week requirement from the time of its 
     enactment until the week ending on or before December 8, 
     2009.
     House Bill
       No provision.
     Senate Bill
       No provision.
     Conference Agreement
       The conference agreement would temporarily alter Federal-
     State funding ratios. Extended benefits would be 100% 
     federally financed from the date of enactment through January 
     1, 2010.
       The agreement also would temporarily allow States to ignore 
     benefit year calculations but instead base EB eligibility 
     upon having qualified for and exhausted EUC08 benefits, 
     disregarding benefit year calculations as long as the EB 
     period fell between the date of enactment and before January 
     1, 2010.
       The agreement would allow States to opt to grandfather 
     those workers who received EUC08 payments and exhausted them 
     on or after January 1, 2010. Those workers would be eligible 
     to receive EB payments based on EUC08 exhaustion and 
     disregarding benefit year determinations until the week 
     ending on or before June 1, 2010.
       The agreement would continue the temporary suspension of 
     the waiting week requirement for federal funding until the 
     week ending before May 30, 2010.
     Temporary Increase in Extended Unemployment Benefits under 
         the Railroad Unemployment Insurance Act. (House bill 
         n.a.; Senate bill n.a.; Conference agreement Sec. 2006)
     Current Law
       The Railroad Unemployment Insurance Act (45 U.S.C. 351-369) 
     provides up to 26 weeks of normal unemployment benefits for 
     railroad employees. It also provides up to 13 weeks of 
     extended benefits for railroad employees with 10 or more 
     years of service.
     House Bill
       No provision.
     Senate Bill
       No provision.
     Conference Agreement
       The conference agreement would temporarily increase the 
     duration of extended unemployment benefits for railroad 
     workers. The agreement would add an additional 13 weeks to 
     the maximum amount of time railroad workers may receive 
     extended unemployment benefits, allowing for up to 26 weeks 
     of extended benefits in addition to the 26 weeks of normal 
     benefits provided under current law.
       The agreement would apply to all qualifying railroad 
     employees, regardless of their years of service (i.e., it 
     would apply to those with fewer than 10 years of service, who 
     do not qualify for extended benefits under current law). The 
     provision would apply to employees who received normal 
     unemployment benefits during the benefit year beginning July 
     1, 2008 and ending June 30, 2009. No extended benefits under 
     this bill would begin after December 31, 2009.
       The agreement would appropriate $20 million from the 
     general fund of the Treasury to cover the cost of the 
     additional extended unemployment benefits. Subsection 2006(b) 
     would provide an additional $80,000 for administering the 
     additional benefits. If the additional extended benefits were 
     to reach $20 million in cost before December 31,2009, the 
     additional benefits would terminate.

           Subtitle B--Assistance for Vulnerable Individuals

     Emergency Fund for TANF Program (House bill Section 2101; 
         Senate bill Sec. 2101; Conference agreement Sec. 2101)
     Current Law
       TANF Recession-Related Funds. The 1996 welfare reform 
     established a contingency fund under the Temporary Assistance 
     for Needy Families (TANF) block grant. To qualify for 
     contingency dollars, States must spend under the TANF program 
     a sum of their own dollars equal to their pre-TANF FY1994 
     spending and meet a test of economic need. Economic need is 
     established by either: (1) Supplemental Nutrition Assistance 
     Program (SNAP, formerly known as food stamps) participation 
     for the most recent three months for which data are available 
     that is at least 10% higher than it was during the 
     corresponding three-month period in either FY1994 or FY1995; 
     or (2) a three-month average unemployment rate of at least 
     6.5% and that equals or exceeds 110% of the rate measured in 
     the corresponding three month period in either the of 
     previous two years. Eligible expenditures above the pre-TANF 
     level are matched at the Medicaid (Federal Medical Assistance 
     Percentage or FMAP) rate. A state's annual contingency fund 
     grant is capped at 20% of its basic TANF block grant. The 
     1996 welfare law appropriated $2 billion to the contingency 
     fund. At the beginning of FY2009, about $1.3 billion remained 
     in the contingency fund. The contingency fund is available to 
     the 50 States and the District of Columbia. The commonwealth 
     of Puerto Rico, Guam, the Virgin Islands, and tribes 
     operating tribal TANF programs are not eligible for 
     contingency funds.
       TANF Caseload Reduction Credit. TANF established federal 
     work participation standards, which are numerical performance 
     standards that States must meet or be subject to a financial 
     penalty. A State must meet two standards the all family 
     standard of 50% and the two-parent standard of 90%. These 
     standards may be met either by engaging participants in 
     creditable activities or through reductions in the cash 
     welfare caseload. States are given a caseload reduction 
     credit toward the standards of one percentage point for each 
     percent decline in the caseload from FY2005 to the preceding 
     fiscal year. Under current law, the caseload reduction credit 
     for FY2009 is based on caseload change from FY2005 to FY2008; 
     the credit for FY2010 will be based on caseload change from 
     FY2005 to FY2009; the caseload reduction credit for Fiscal 
     Year 2011 will be based on caseload change from Fiscal Year 
     2005 to FY2010.
     House Bill
       TANF Recession Funds. The House bill retains the current 
     TANF contingency fund and creates a new, temporary emergency 
     contingency fund for FY2009 and FY2010. States with increased 
     cash welfare caseloads under TANF or separate State programs 
     funded with TANF State maintenance of effort dollars are 
     eligible for capped grants from the fund. Also eligible are 
     States with increased short-term non-recurrent benefit 
     expenditures or increased subsidized employment expenditures 
     under TANF and separate State programs. The fund reimburses 
     States for 80% of the increased expenditures on basic 
     assistance (cash welfare), short-term non-recurrent benefits, 
     or subsidized employment in TANF and separate State programs, 
     up to a cap. Increased caseloads and expenditures are 
     measured on a quarterly basis, comparing each quarter in 
     FY2009 and FY2010 to the corresponding quarter in the base 
     years of FY2007 and FY2008. The applicable base period for a 
     State varies depending on whichever results in the greatest 
     increase for each State for the cash assistance caseload and 
     by expenditure category.
       Total combined State grants from the current law 
     contingency fund and the emergency contingency fund are 
     limited to 25% of a State's basic block grant. The emergency 
     fund is appropriated such sums as necessary (no national 
     funding cap, but total funding is limited by individual State 
     caps discussed above). Puerto Rico, Guam, and the Virgin 
     Islands are eligible for emergency contingency funds.
       Caseload Reduction Credit. The House bill gives States an 
     optional measuring period for the caseload reduction credit 
     that would apply to the FY2010 and FY2011 standards. States 
     would have the option to measure caseload reduction from 
     FY2005 to either FY2007 or FY2008 when determining the 
     caseload reduction credit toward the TANF work participation 
     standards for those two years.
     Senate Bill
       The Senate bill includes all the provisions of the House 
     bill, with modifications. The Senate bill caps the 
     appropriation to the TANF emergency contingency fund at $3 
     billion. For the Commonwealth of Puerto Rico, Guam, and the 
     Virgin Islands, any payments from the emergency contingency 
     fund are excluded from the overall limit on federal funding 
     for public assistance programs, including TANF, that applies 
     to these jurisdictions. The Senate bill also gives States an 
     optional measuring period for the caseload reduction credit 
     for the FY2009 standards, allowing States to measure caseload 
     reduction from FY2005 to FY2007 for that year.
     Conference Agreement
       The conference agreement follows the House and Senate 
     bills, with some modifications. It sets the appropriation for 
     the emergency contingency fund at $5 billion. The cap on each 
     State's grant is modified, from a cap on each year's grant, 
     to a cap on cumulative grants over the two years that the 
     emergency fund will operate. Cumulative, combined grants from 
     the existing contingency fund and the emergency fund are 
     limited to 50% of a state's annual basic block grant for 
     FY2009 and FY2010.
       The agreement also makes tribes that operate tribal TANF 
     programs eligible for the emergency fund. Tribes will be able 
     to access the fund in the same manner as the States, and are 
     similarly limited to cumulative emergency fund grants equal 
     to 50% of its annual tribal family assistance grant.
       The agreement follows the Senate bill for the temporary 
     modifications to the caseload reduction credit. It also 
     clarifies that all temporary provisions will be repealed. The 
     emergency fund is repealed as of October 1, 2010. The change 
     to the caseload reduction credit is repealed as of October 1, 
     2011.

[[Page 4082]]


     Extension of Supplemental Grants (House bill n.a.; Senate 
         bill Sec. 2102; Conference Agreement Sec. 2102).
     Current Law
       TANF provides supplemental grants to 17 States that met 
     historical criteria of low federal grants for welfare per 
     poor person and/or high population growth. Supplemental 
     grants total $319 million, but are set to expire at the end 
     of FY2009.
     House Bill
       No provision.
     Senate Bill
       The Senate bill extends supplemental grants through FY2010.
     Conference Agreement
       The conference agreement includes the Senate provision, 
     extending supplemental grants through FY2010.
     Clarification of Authority of States to Use TANF Funds 
         Carried Over From Prior Years To Provide TANF Benefits 
         and Services (House bill n.a.; Senate bill Sec. 2103; 
         Conference Agreement Sec. 2103)
     Current Law
       States and tribes may reserve unused TANF funds without 
     fiscal year limit. However, the use of these reserves is 
     restricted to providing assistance (essentially cash 
     welfare).
     House Bill
       No provision.
     Senate Bill
       Allows States to use reserve TANF funds for any TANF 
     benefit, service, or activity.
     Conference Agreement
       The conference agreement includes the Senate provision.
       Temporary Resumption of Prior Child Support Law (House bill 
     Sec. 2103; Senate bill Sec. 2104; Conference agreement Sec. 
     2104)
     Current Law
       The federal government reimburses each State 66% of its 
     expenditures on Child Support Enforcement (CSE) activities. 
     The federal government also provides States with an incentive 
     payment to encourage them to operate effective CSE programs. 
     Federal law requires States to reinvest CSE incentive 
     payments back into the CSE program or related activities. 
     P.L. 109-171 (the Deficit Reduction Act of 2005) prohibited 
     federal matching/reimbursement of CSE incentive payments that 
     are reinvested in the CSE program.
     House Bill
       The House bill requires HHS to temporarily provide federal 
     matching funds on CSE incentive payments that States reinvest 
     back into the CSE program. This means that CSE incentive 
     payments that are/were received by States and reinvested in 
     the CSE program can be used to draw down federal funds. 
     Federal matching funds for CSE incentive payments are to be 
     provided for FY2009 and FY2010 (i.e., from October 1, 2008 
     through September 30, 2010).
     Senate Bill
       Same as the House bill, except that federal matching funds 
     for CSE incentive payments are to be provided for the period 
     October 1, 2008 through December 31, 2010 (i.e., from October 
     1, 2008 through December 31, 2010).
     Conference Agreement
       The conference agreement follows the House bill.
     One-Time Emergency Payments to Certain Social Security, 
         Supplemental Security Income, Railroad Retirement, 
         Veterans Beneficiaries, and Certain Government Retirees 
         (House bill Sec. 2102; Senate bill Sec. 1601; Conference 
         agreement sections 2201 and 2202).
       Section 2201. Economic Recovery Payments to Recipients of 
     Social Security, Supplement Security Income, Railroad 
     Retirement Benefits, and Veterans Disability Compensation or 
     Pension benefits.
     Current Law
       Title II of the Social Security Act authorizes cash 
     benefits for retired and disabled workers and their 
     dependents and survivors under the Old Age and Survivors 
     Insurance (OASI) and Disability Insurance (DI) programs. 
     Title XVI of the Social Security Act authorizes monthly cash 
     benefits for blind and disabled persons and persons age 65 or 
     over who have limited income and resources under the 
     Supplemental Security Income (SSI) program.
       The Railroad Retirement Act of 1974 authorizes cash 
     benefits for retired and disabled railroad workers and their 
     dependents and survivors.
       Title 38 of the United States Code authorizes cash benefits 
     for certain veterans and their dependents and survivors.
       Current law does not authorize any one-time emergency 
     payments for any of these programs.
       Under Title II of the Social Security Act, a person is 
     eligible for Social Security benefits only if he or she has 
     insured status as the result of sufficient employment that 
     was covered by the Social Security system and for which 
     Social Security payroll taxes were paid. Federal employees 
     hired before 1983 were covered by the Civil Service 
     Retirement System (CSRS) and, unless they were eligible for 
     the CSRS-Offset or elected to enroll in the Federal Employees 
     Retirement System (FERS), they are not eligible for Social 
     Security benefits on the basis of their federal service. In 
     addition, some state and local government employees are not 
     covered by the Social Security system and thus are not 
     eligible for Social Security benefits on the basis of their 
     public service.
       Current law does not authorize any one-time tax credit for 
     government retirees who are not eligible for Social Security 
     benefits.
     House Bill
       The House bill authorizes a one-time emergency payment to 
     be made to SSI recipients. This payment must be made by the 
     Social Security Administration (SSA) at the earliest 
     practical date and no more than 120 days after enactment of 
     the law. The amount of this one-time emergency payment would 
     be equal to the average monthly amount of federal SSI 
     benefits paid to an individual (approximately $456) or a 
     married couple (approximately $637) in the most recent month 
     for which data are available.
       To be eligible for the one-time emergency payment, a person 
     must be eligible for an SSI benefit, other than a personal 
     needs allowance, for at least one day during the month of the 
     payment. A person who was eligible for an SSI benefit, other 
     than a personal needs allowance, for at least one day during 
     the two-month period preceding the month of the emergency 
     payment and their SSI eligibility ended during the two-month 
     period solely because their income exceeded the SSI income 
     guidelines is also eligible for the one-time emergency 
     payment.
       Only persons who are determined by the Commissioner of 
     Social Security in calendar year 2009 to fall into one of the 
     categories described above are eligible for the emergency 
     payment. Thus, a person who is awarded SSI benefits anytime 
     after 2009 would not be eligible for the emergency payment, 
     even if he or she is awarded benefits retroactive to a date 
     before the date of the emergency payment.
       The one-time emergency payment would be protected from 
     garnishment and assignment and would not be considered income 
     in the month of receipt and the following 6 months for the 
     purposes of determining eligibility of the recipient (or the 
     recipient's spouse or family) for any means-tested program 
     funded entirely or in part with federal funds.
       The House bill provides an appropriation of such sums as 
     may be necessary to carry out this section, including any 
     administrative costs associated with the payment.
     Senate Bill
       The Senate bill provides for a one-time economic recovery 
     payment of $300 to adult Social Security (Old Age and 
     Survivors Insurance and Disability Insurance) and Railroad 
     Retirement beneficiaries, Supplemental Security Income (SSI) 
     recipients, and veterans receiving compensation or pension 
     benefits from the Department of Veterans Affairs.
       The economic recovery payment would be made by the 
     Secretary of the Treasury after eligible beneficiaries are 
     identified by the Social Security Administration (SSA), the 
     Railroad Retirement Board, and the Department of Veterans 
     Affairs. Payments are to be made at the earliest practicable 
     date and in no event later than 120 days after enactment.
       To be eligible for the economic recovery payment, a person 
     must have been during the three-month period prior to the 
     month of the enactment: an adult Social Security Old Age and 
     Survivors Insurance (OASI) or Disability Insurance (DI) 
     beneficiary (including adults eligible for child's benefits 
     on the basis of as disability that began before the age of 
     22, persons eligible under transitional insured status, and 
     persons eligible under special rules for uninsured persons 
     over the age of 72), an adult Railroad Retirement or 
     disability beneficiary (including dependents, survivors, and 
     disabled adult children), a veterans pension or compensation 
     beneficiary, or an SSI recipient (excluding persons who only 
     receive a personal needs allowance).
       The Senate bill requires that economic recovery payment 
     recipients live in the United States or its territories. The 
     Senate bill prohibits any person from receiving more than one 
     economic recovery payment regardless of whether the 
     individual is entitled to, or eligible for, more than one 
     benefit or cash payment under this section.
       The Senate bill prohibits the payment of an economic 
     recovery payment to any Social Security beneficiary or person 
     eligible for Social Security benefits paid by the Railroad 
     Retirement Board, or SSI recipient, if, for the most recent 
     month of the three-month period prior to enactment the 
     person's benefits were not payable due to his or her status 
     as a prisoner, inmate in a public institute, illegal alien, 
     or fugitive felon.
       The bill prohibits an economic recovery payment to any 
     veterans compensation or pension beneficiary if, for the most 
     recent month of the three-month period prior to enactment, 
     the person's benefits were not payable due to his or her 
     status as a prisoner or fugitive felon. It also prohibits the 
     payment of an economic recovery payment to any person who 
     dies before the date he or she is certified as eligible to 
     receive a payment.

[[Page 4083]]

       The bill limits the applicability of the economic recovery 
     payments to retroactive beneficiaries by providing that no 
     payment may be made for any reason after December 31, 2010.
       The economic recovery payment would not be considered 
     income in the month of receipt and the following 9 months for 
     the purposes of determining eligibility of the recipient (or 
     the recipient's spouse or family) for any means-tested 
     program funded entirely or in part with federal funds. The 
     payment would not be considered income for the purposes of 
     taxation and would be protected from garnishment and 
     assignment. However, the payment could be used to collect 
     debts owed to the federal government. Electronic payments and 
     payments to representative payees and fiduciaries would be 
     authorized.
       The Senate bill provides additional appropriations for the 
     period from fiscal year 2009 through fiscal year 2011 in the 
     amounts of: $57,000,000 to the Department of the Treasury; 
     $90,000,000 to the SSA; $1,000,000 to the Railroad Retirement 
     Board; and $7,200,000 to the Department of Veterans Affairs 
     for administrative expenses associated with the one-time 
     economic recovery payment. Of the money appropriated to the 
     Department of Veterans Affairs, $100,000 shall be for the 
     Information Systems Technology Account and $7,100,000 for 
     general expenses related to the administration of the 
     economic recovery payment. It also appropriates to the 
     Department of the Treasury such sums as may be necessary for 
     making economic recovery payments.
       The Senate bill provides that the amount of a person's 
     Making Work Pay tax credit authorized by Section 1001 of 
     Division A of the Senate bill would be offset by the amount 
     of any economic recovery payment that person receives.
     Conference Agreement
       The conference agreement follows the Senate bill, with some 
     modifications. The conference agreement directs the Secretary 
     of the Treasury to disburse a onetime Economic Recovery 
     Payment of $250 to adults who were eligible for Social 
     Security benefits, Railroad Retirement benefits, or veteran's 
     compensation or pension benefits; or individuals who were 
     eligible for Supplemental Security Income (SSI) benefits 
     (excluding individuals who receive SSI while in a Medicaid 
     institution). Only individuals who were eligible for one of 
     the four programs for any of the three months prior to the 
     month of enactment shall receive an Economic Recovery 
     Payment.
       The provision stipulates that Economic Recovery Payments 
     will only be made to individuals whose address of record is 
     in 1 of the 50 states, the District of Columbia, Puerto Rico, 
     Guam, the United States Virgin Islands, American Samoa, or 
     the Northern Mariana Islands.
       An individual shall only receive one $250 Economic Recovery 
     Payment under this section regardless of whether the 
     individual is eligible for a benefit from more than one of 
     the four federal programs. If the individual is also 
     eligible for the ``Making Work Pay'' credit from Section 
     1001, that credit shall be reduced by the Economic Recovery 
     Payment made under this section.
       Individuals who are otherwise eligible for an Economic 
     Recovery Payment will not receive a payment if their federal 
     program benefits have been suspended because they are in 
     prison, a fugitive, a probation or parole violator, have 
     committed fraud, or are no longer lawfully present in the 
     United States.
       The provision directs the Commissioner of Social Security, 
     the Railroad Retirement Board, and the Secretary of Veterans 
     Affairs to provide the Secretary of the Treasury with 
     information and data to send the payments to eligible 
     individuals and to disburse the payments.
       The provision provides that the Economic Recovery Payments 
     shall not be taken into account as income, or taken into 
     account as resources for the month of receipt and the 
     following 9 months, for purposes of determining the 
     eligibility of such individual or any other individual for 
     benefits or assistance, or the amount or extent of benefits 
     or assistance, under any Federal program or under any State 
     or local program financed in whole or in part with Federal 
     funds.
       The provision provides that Economic Recovery Payments 
     shall not be considered gross income for income tax purposes 
     and that the payments are protected by the assignment and 
     garnishment provisions of the four federal benefit 
     programs. The payments will be subject to the 
     Treasury Offset Program.
       The provision stipulates that if an individual who is 
     eligible for an Economic Recovery Payment has a 
     representative payee, the payment shall be made to the 
     representative payee and the entire payment shall only be 
     used for the benefit of the individual who is entitled to the 
     Economic Recovery Payment.
       The provision appropriates the following amounts for FY2009 
     through FY2011: to the Secretary of the Treasury, $131 
     million for administrative costs to carry out the provisions 
     of this section and the new Section 36A (the Making Work Pay 
     credit); to the Commissioner of Social Security, such funds 
     as are necessary to make the payments and $90 million to 
     carry out the provisions of this section; to the Railroad 
     Retirement Board, such funds as are necessary to make the 
     payments and $1.4 million to carry out the provisions of this 
     section; and to the Secretary of Veterans Affairs, such funds 
     as are necessary to make the payments, $100,000 for the 
     Information Systems Technology account and $7,100,000 to the 
     General Operating Expenses account.
       The Secretary of the Treasury shall commence making 
     payments as soon as possible, but no later than 120 days 
     after the date of enactment. No Economic Recovery Payments 
     shall be made after December 31, 2010.

     Section 2202. Special Credit for Certain Government Retirees.

     Current Law
       No provision.
     House Bill
       No provision.
     Senate Bill
       No provision.
     Conference Agreement
       The conference agreement creates a $250 credit ($500 for a 
     joint return where both spouses are eligible) against income 
     taxes owed for tax year 2009 for individuals who receive a 
     government pension or annuity from work not covered by Social 
     Security, and were not eligible to receive a payment under 
     section 2201. If the individual is also eligible for the 
     ``Making Work Pay'' credit from Section 1001, that credit 
     shall be reduced by the credit made under this 
     section. Each tax return on which this credit is 
     claimed must include the social security number of the 
     taxpayer (in the case of a joint return, the social security 
     number of at least one spouse). The provision states 
     that the credit under this section shall be a refundable 
     credit.
       The provision provides that any credit or refund allowed or 
     made by this provision shall not be taken into account as 
     income and shall not be taken into account as resources for 
     the month of receipt and the following two months for 
     purposes of determining the eligibility of such individual or 
     any other individual for benefits or assistance, or the 
     amount or extent of benefits or assistance, under any Federal 
     program or under any State or local program financed in whole 
     or in part with Federal funds.
       The provision is effective on the date of enactment.

                 TITLE III--HEALTH INSURANCE ASSISTANCE

  A. Assistance for COBRA Continuation Coverage (sec. 3002(a) of the 
    House bill, sec. 3001 of the Senate amendment, sec. 3001 of the 
  conference agreement, and sec. 4980B and new secs. 139C, 6432, and 
                           6720C of the Code)


                              Present Law

     In general
       The Code contains rules that require certain group health 
     plans to offer certain individuals (``qualified 
     beneficiaries'') the opportunity to continue to participate 
     for a specified period of time in the group health plan 
     (``continuation coverage'') after the occurrence of certain 
     events that otherwise would have terminated such 
     participation (``qualifying events'' ).\228\ These 
     continuation coverage rules are often referred to as ``COBRA 
     continuation coverage'' or ``COBRA,'' which is a reference to 
     the acronym for the law that added the continuation coverage 
     rules to the Code.\229\
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     \228\Sec. 4980B
     \229\The COBRA rules were added to the Code by the 
     Consolidated Omnibus Budget Reconciliation Act of 1985, Pub. 
     L. No. 99-272. The rules were originally added as Code 
     sections 162(i) and (k). The rules were later restated as 
     Code section 4980B, pursuant to the Technical and 
     Miscellaneous Revenue Act of 1988, Pub. L. No. 100-647.
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       The Code imposes an excise tax on a group health plan if it 
     fails to comply with the COBRA continuation coverage rules 
     with respect to a qualified beneficiary. The excise tax with 
     respect to a qualified beneficiary generally is equal to $100 
     for each day in the noncompliance period with respect to the 
     failure. A plan's noncompliance period generally begins on 
     the date the failure first occurs and ends when the failure 
     is corrected. Special rules apply that limit the amount of 
     the excise tax if the failure would not have been discovered 
     despite the exercise of reasonable diligence or if the 
     failure is due to reasonable cause and not willful neglect.
       In the case of a multiemployer plan, the excise tax 
     generally is imposed on the group health plan. A 
     multiemployer plan is a plan to which more than one employer 
     is required to contribute, that is maintained pursuant to one 
     or more collective bargaining agreements between one or more 
     employee organizations and more than one employer, and that 
     satisfies such other requirements as the Secretary of Labor 
     may prescribe by regulation. In the case of a plan other than 
     a multiemployer plan (a ``single employer plan''), the excise 
     tax generally is imposed on the employer.
     Plans subject to COBRA
       A group health plan is defined as a plan of, or contributed 
     to by, an employer (including a self-employed person) or 
     employee organization to provide health care (directly or 
     otherwise) to the employees, former employees, the employer, 
     and others associated or

[[Page 4084]]

     formerly associated with the employer in a business 
     relationship, or their families. A group health plan includes 
     a self-insured plan. The term group health plan does not, 
     however, include a plan under which substantially all of the 
     coverage is for qualified long-term care services.
       The following types of group health plans are not subject 
     to the Code's COBRA rules: (1) a plan established and 
     maintained for its employees by a church or by a convention 
     or association of churches which is exempt from tax under 
     section 501 (a ``church plan''); (2) a plan established and 
     maintained for its employees by the Federal government, the 
     government of any State or political subdivision thereof, or 
     by any instrumentality of the foregoing (a ``governmental 
     plan'')\230\ and (3) a plan maintained by an employer that 
     normally employed fewer than 20 employees on a typical 
     business day during the preceding calendar year\231\ (a 
     ``small employer plan'').
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     \230\A governmental plan also includes certain plans 
     established by an Indian tribal government.
     \231\If the plan is a multiemployer plan, then each of the 
     employers contributing to the plan for a calendar year must 
     normally employ fewer than 20 employees during the preceding 
     calendar year.
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     Qualifying events and qualified beneficiaries
       A qualifying event that gives rise to COBRA continuation 
     coverage includes, with respect to any covered employee, the 
     following events which would result in a loss of coverage of 
     a qualified beneficiary under a group health plan (but for 
     COBRA continuation coverage): (1) death of the covered 
     employee; (2) the termination (other than by reason of such 
     employee's gross misconduct), or a reduction in hours, of the 
     covered employee's employment; (3) divorce or legal 
     separation of the covered employee; (4) the covered employee 
     becoming entitled to Medicare benefits under title XVIII of 
     the Social Security Act; (5) a dependent child ceasing to be 
     a dependent child under the generally applicable requirements 
     of the plan; and (6) a proceeding in a case under the U.S. 
     Bankruptcy Code commencing on or after July 1, 1986, with 
     respect to the employer from whose employment the covered 
     employee retired at any time.
       A ``covered employee'' is an individual who is (or was) 
     provided coverage under the group health plan on account of 
     the performance of services by the individual for one or more 
     persons maintaining the plan and includes a self-employed 
     individual. A ``qualified beneficiary'' means, with respect 
     to a covered employee, any individual who on the day before 
     the qualifying event for the employee is a beneficiary under 
     the group health plan as the spouse or dependent child of the 
     employee. The term qualified beneficiary also includes the 
     covered employee in the case of a qualifying event that is a 
     termination of employment or reduction in hours.
     Continuation coverage requirements
       Continuation coverage that must be offered to qualified 
     beneficiaries pursuant to COBRA must consist of coverage 
     which, as of the time coverage is being provided, is 
     identical to the coverage provided under the plan to 
     similarly situated non-COBRA beneficiaries under the plan 
     with respect to whom a qualifying event has not occurred. If 
     coverage under a plan is modified for any group of similarly 
     situated non-COBRA beneficiaries, the coverage must also be 
     modified in the same manner for qualified beneficiaries. 
     Similarly situated non-COBRA beneficiaries means the group of 
     covered employees, spouses of covered employees, or dependent 
     children of covered employees who (i) are receiving coverage 
     under the group health plan for a reason other than pursuant 
     to COBRA, and (ii) are the most similarly situated to the 
     situation of the qualified beneficiary immediately before the 
     qualifying event, based on all of the facts and 
     circumstances.
       The maximum required period of continuation coverage for a 
     qualified beneficiary (i.e., the minimum period for which 
     continuation coverage must be offered) depends upon a number 
     of factors, including the specific qualifying event that 
     gives rise to a qualified beneficiary's right to elect 
     continuation coverage. In the case of a qualifying event that 
     is the termination, or reduction of hours, of a covered 
     employee's employment, the minimum period of coverage that 
     must be offered to the qualified beneficiary is coverage for 
     the period beginning with the loss of coverage on account of 
     the qualifying event and ending on the date that is 18 
     months\232\ after the date of the qualifying event. If 
     coverage under a plan is lost on account of a qualifying 
     event but the loss of coverage actually occurs at a later 
     date, the minimum coverage period may be extended by the plan 
     so that it is measured from the date when coverage is 
     actually lost.
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     \232\In the case of a qualified beneficiary who is 
     determined, under Title II or XVI of the Social Security Act, 
     to have been disabled during the first 60 days of 
     continuation coverage, the 18 month minimum coverage period 
     is extended to 29 months with respect to all qualified 
     beneficiaries if notice is given before the end of the 
     initial 18 month continuation coverage period.
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       The minimum coverage period for a qualified beneficiary 
     generally ends upon the earliest to occur of the following 
     events: (1) the date on which the employer ceases to provide 
     any group health plan to any employee, (2) the date on which 
     coverage ceases under the plan by reason of a failure to make 
     timely payment of any premium required with respect to the 
     qualified beneficiary, and (3) the date on which the 
     qualified beneficiary first becomes (after the date of 
     election of continuation coverage) either (i) covered under 
     any other group health plan (as an employee or otherwise) 
     which does not include any exclusion or limitation with 
     respect to any preexisting condition of such beneficiary or 
     (ii) entitled to Medicare benefits under title XVIII of the 
     Social Security Act. Mere eligibility for another group 
     health plan or Medicare benefits is not sufficient to 
     terminate the minimum coverage period. Instead, the qualified 
     beneficiary must be actually covered by the other group 
     health plan or enrolled in Medicare. Coverage under another 
     group health plan or enrollment in Medicare does not 
     terminate the minimum coverage period if such other coverage 
     or Medicare enrollment begins on or before the date that 
     continuation coverage is elected.
     Election of continuation coverage
       The COBRA rules specify a minimum election period under 
     which a qualified beneficiary is entitled to elect 
     continuation coverage. The election period begins not later 
     than the date on which coverage under the plan terminates on 
     account of the qualifying event, and ends not earlier than 
     the later of 60 days or 60 days after notice is given to the 
     qualified beneficiary of the qualifying event and the 
     beneficiary's election rights.
     Notice requirements
       A group health plan is required to give a general notice of 
     COBRA continuation coverage rights to employees and their 
     spouses at the time of enrollment in the group health plan.
       An employer is required to give notice to the plan 
     administrator of certain qualifying events (including a loss 
     of coverage on account of a termination of employment or 
     reduction in hours) generally within 30 days of the 
     qualifying event. A covered employee or qualified beneficiary 
     is required to give notice to the plan administrator of 
     certain qualifying events within 60 days after the event. The 
     qualifying events giving rise to an employee or beneficiary 
     notification requirement are the divorce or legal separation 
     of the covered employee or a dependent child ceasing to be a 
     dependent child under the terms of the plan. Upon receiving 
     notice of a qualifying event from the employer, covered 
     employee, or qualified beneficiary, the plan administrator is 
     then required to give notice of COBRA continuation coverage 
     rights within 14 days to all qualified beneficiaries with 
     respect to the event.
     Premiums
       A plan may require payment of a premium for any period of 
     continuation coverage. The amount of such premium generally 
     may not exceed 102 percent\233\ of the ``applicable premium'' 
     for such period and the premium must be payable, at the 
     election of the payor, in monthly installments.
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     \233\In the case of a qualified beneficiary whose minimum 
     coverage period is extended to 29 months on account of a 
     disability determination, the premium for the period of the 
     disability extension may not exceed 150 percent of the 
     applicable premium for the period.
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       The applicable premium for any period of continuation 
     coverage means the cost to the plan for such period of 
     coverage for similarly situated non-COBRA beneficiaries with 
     respect to whom a qualifying event has not occurred, and is 
     determined without regard to whether the cost is paid by the 
     employer or employee. The determination of any applicable 
     premium is made for a period of 12 months (the 
     ``determination period'') and is required to be made before 
     the beginning of such 12 month period.
       In the case of a self-insured plan, the applicable premium 
     for any period of continuation coverage of qualified 
     beneficiaries is equal to a reasonable estimate of the cost 
     of providing coverage during such period for similarly 
     situated non-COBRA beneficiaries which is determined on an 
     actuarial basis and takes into account such factors as the 
     Secretary of Treasury prescribes in regulations. A self-
     insured plan may elect to determine the applicable premium on 
     the basis of an adjusted cost to the plan for similarly 
     situated non-COBRA beneficiaries during the preceding 
     determination period.
       A plan may not require payment of any premium before the 
     day which is 45 days after the date on which the qualified 
     beneficiary made the initial election for continuation 
     coverage. A plan is required to treat any required premium 
     payment as timely if it is made within 30 days after the date 
     the premium is due or within such longer period as applies 
     to, or under, the plan.
     Other continuation coverage rules
       Continuation coverage rules which are parallel to the 
     Code's continuation coverage rules apply to group health 
     plans under the Employee Retirement Income Security Act of 
     1974 (ERISA).\234\ ERISA generally permits the Secretary of 
     Labor and plan participants to bring a civil action to obtain 
     appropriate equitable relief to enforce the continuation 
     coverage rules of ERISA, and in the case of a plan 
     administrator who fails to give timely notice to a 
     participant or beneficiary with

[[Page 4085]]

     respect to COBRA continuation coverage, a court may hold the 
     plan administrator liable to the participant or beneficiary 
     in the amount of up to $110 a day from the date of such 
     failure.
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     \234\Secs. 601 to 608 of ERISA.
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       Although the Federal government and State and local 
     governments are not subject to the Code and ERISA's 
     continuation coverage rules, other laws impose similar 
     continuation coverage requirements with respect to plans 
     maintained by such governmental employers.\235\ In addition, 
     many States have enacted laws or promulgated regulations that 
     provide continuation coverage rights that are similar to 
     COBRA continuation coverage rights in the case of a loss of 
     group health coverage. Such State laws, for example, may 
     apply in the case of a loss of coverage under a group health 
     plan maintained by a small employer.
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     \235\Continuation coverage rights similar to COBRA 
     continuation coverage rights are provided to individuals 
     covered by health plans maintained by the Federal government. 
     5 U.S.C. sec. 8905a. Group health plans maintained by a State 
     that receives funds under Chapter 6A of Title 42 of the 
     United States Code (the Public Health Service Act) are 
     required to provide continuation coverage rights similar to 
     COBRA continuation coverage rights for individuals covered by 
     plans maintained by such State (and plans maintained by 
     political subdivisions of such State and agencies and 
     instrumentalities of such State or political subdivision of 
     such State). 42 U.S.C. sec. 300bb-1.
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                               House Bill

     Reduced COBRA premium
       The provision provides that, for a period not exceeding 12 
     months, an assistance eligible individual is treated as 
     having paid any premium required for COBRA continuation 
     coverage under a group health plan if the individual pays 35 
     percent of the premium.\236\ Thus, if the assistance eligible 
     individual pays 35 percent of the premium, the group health 
     plan must treat the individual as having paid the full 
     premium required for COBRA continuation coverage, and the 
     individual is entitled to a subsidy for 65 percent of the 
     premium. An assistance eligible individual is any qualified 
     beneficiary who elects COBRA continuation coverage and 
     satisfies two additional requirements. First, the qualifying 
     event with respect to the covered employee for that qualified 
     beneficiary must be a loss of group health plan coverage on 
     account of an involuntary termination of the covered 
     employee's employment. However, a termination of employment 
     for gross misconduct does not qualify (since such a 
     termination under present law does not qualify for COBRA 
     continuation coverage). Second, the qualifying event must 
     occur during the period beginning September 1, 2008 and 
     ending with December 31, 2009 and the qualified beneficiary 
     must be eligible for COBRA continuation coverage during that 
     period and elect such coverage.
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     \236\For this purpose, payment by an assistance eligible 
     individual includes payment by another individual paying on 
     behalf of the individual, such as a parent or guardian, or an 
     entity paying on behalf of the individual, such as a State 
     agency or charity. Further, the amount of the premium used to 
     calculate the reduced premium is the premium amount that the 
     employee would be required to pay for COBRA continuation 
     coverage absent this premium reduction (e.g. 102 percent of 
     the ``applicable premium'' for such period).
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       An assistance eligible individual can be any qualified 
     beneficiary associated with the relevant covered employee 
     (e.g., a dependent of an employee who is covered immediately 
     prior to a qualifying event), and such qualified beneficiary 
     can independently elect COBRA (as provided under present law 
     COBRA rules) and independently receive a subsidy. Thus, the 
     subsidy for an assistance eligible individual continues after 
     an intervening death of the covered employee.
       Under the provision, any subsidy provided is excludible 
     from the gross income of the covered employee and any 
     assistance eligible individuals. However, for purposes of 
     determining the gross income of the employer and any welfare 
     benefit plan of which the group health plan is a part, the 
     amount of the premium reduction is intended to be treated as 
     an employee contribution to the group health plan. Finally, 
     under the provision, notwithstanding any other provision of 
     law, the subsidy is not permitted to be considered as income 
     or resources in determining eligibility for, or the amount of 
     assistance or benefits under, any public benefit provided 
     under Federal or State law (including the law of any 
     political subdivision).
     Eligible COBRA continuation coverage
       Under the provision, continuation coverage that qualifies 
     for the subsidy is not limited to coverage required to be 
     offered under the Code's COBRA rules but also includes 
     continuation coverage required under State law that requires 
     continuation coverage comparable to the continuation coverage 
     required under the Code's COBRA rules for group health plans 
     not subject to those rules (e.g., a small employer plan) and 
     includes continuation coverage requirements that apply to 
     health plans maintained by the Federal government or a State 
     government. Comparable continuation coverage under State law 
     does not include every State law right to continue health 
     coverage, such as a right to continue coverage with no rules 
     that limit the maximum premium that can be charged with 
     respect to such coverage. To be comparable, the right 
     generally must be to continue substantially similar coverage 
     as was provided under the group health plan (or substantially 
     similar coverage as is provided to similarly situated 
     beneficiaries) at a monthly cost that is based on a specified 
     percentage of the group health plan's cost of providing such 
     coverage.
       The cost of coverage under any group health plan that is 
     subject to the Code's COBRA rules (or comparable State 
     requirements or continuation coverage requirement under 
     health plans maintained by the Federal government or any 
     State government) is eligible for the subsidy, except 
     contributions to a health flexible spending account.
     Termination of eligibility for reduced premiums
       The assistance eligible individual's eligibility for the 
     subsidy terminates with the first month beginning on or after 
     the earlier of (1) the date which is 12 months after the 
     first day of the first month for which the subsidy applies, 
     (2) the end of the maximum required period of continuation 
     coverage for the qualified beneficiary under the Code's COBRA 
     rules or the relevant State or Federal law (or regulation), 
     or (3) the date that the assistance eligible individual 
     becomes eligible for Medicare benefits under title XVIII of 
     the Social Security Act or health coverage under another 
     group health plan (including, for example, a group health 
     plan maintained by the new employer of the individual or a 
     plan maintained by the employer of the individual's spouse). 
     However, eligibility for coverage under another group health 
     plan does not terminate eligibility for the subsidy if the 
     other group health plan provides only dental, vision, 
     counseling, or referral services (or a combination of the 
     foregoing), is a health flexible spending account or health 
     reimbursement arrangement, or is coverage for treatment that 
     is furnished in an on-site medical facility maintained by the 
     employer and that consists primarily of first-aid services, 
     prevention and wellness care, or similar care (or a 
     combination of such care).
       If a qualified beneficiary paying a reduced premium for 
     COBRA continuation coverage under this provision becomes 
     eligible for coverage under another group health plan or 
     Medicare, the provision requires the qualified beneficiary to 
     notify, in writing, the group health plan providing the COBRA 
     continuation coverage with the reduced premium of such 
     eligibility under the other plan or Medicare. The 
     notification by the assistance eligible individual must be 
     provided to the group health plan in the time and manner as 
     is specified by the Secretary of Labor. If an assistance 
     eligible individual fails to provide this notification at the 
     required time and in the required manner, and as a result the 
     individual's COBRA continuation coverage continues to be 
     subsidized after the termination of the individual's 
     eligibility for such subsidy, a penalty is imposed on the 
     individual equal to 110 percent of the subsidy provided after 
     termination of eligibility.
       This penalty only applies if the subsidy in the form of the 
     premium reduction is actually provided to a qualified 
     beneficiary for a month that the beneficiary is not eligible 
     for the reduction. Thus, for example, if a qualified 
     beneficiary becomes eligible for coverage under another group 
     health plan and stops paying the reduced COBRA continuation 
     premium, the penalty generally will not apply. As discussed 
     below, under the provision, the group health plan is 
     reimbursed for the subsidy for a month (65 percent of the 
     amount of the premium for the month) only after receipt of 
     the qualified beneficiary's portion (35 percent of the 
     premium amount). Thus, the penalty generally will only arise 
     when the qualified beneficiary continues to pay the reduced 
     premium and does not notify the group health plan providing 
     COBRA continuation coverage of the beneficiary's eligibility 
     under another group health plan or Medicare.
     Special COBRA election opportunity
       The provision provides a special 60 day election period for 
     a qualified beneficiary who is eligible for a reduced premium 
     and who has not elected COBRA continuation coverage as of the 
     date of enactment. The 60 day election period begins on the 
     date that notice is provided to the qualified beneficiary of 
     the special election period. However, this special election 
     period does not extend the period of COBRA continuation 
     coverage beyond the original maximum required period 
     (generally 18 months after the qualifying event) and any 
     COBRA continuation coverage elected pursuant to this special 
     election period begins on the date of enactment and does not 
     include any period prior to that date. Thus, for example, if 
     a covered employee involuntarily terminated employment on 
     September 10, 2008, but did not elect COBRA continuation 
     coverage and was not eligible for coverage under another 
     group health plan, the employee would have 60 days after date 
     of notification of this new election right to elect the 
     coverage and receive the subsidy. If the employee made the 
     election, the coverage would begin with the date of enactment 
     and would not include any period prior to that date. However, 
     the coverage would not be required to last for 18 months. 
     Instead the maximum required COBRA continuation coverage 
     period would end not later than 18 months after September 10, 
     2008.
       The special enrollment provision applies to a group health 
     plan that is subject to the

[[Page 4086]]

     COBRA continuation coverage requirements of the Code, ERISA, 
     Title 5 of the United States Code (relating to plans 
     maintained by the Federal government), or the Public Health 
     Service Act (``PHSA'').
       With respect to an assistance eligible individual who 
     elects coverage pursuant to the special election period, the 
     period beginning on the date of the qualifying event and 
     ending with the day before the date of enactment is 
     disregarded for purposes of the rules that limit the group 
     health plan from imposing pre-existing condition limitations 
     with respect to the individual's coverage.\237\
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     \237\Section 9801 provides that a group health plan may 
     impose a pre-existing condition exclusion for no more than 12 
     months after a participant or beneficiary's enrollment date. 
     Such 12-month period must be reduced by the aggregate period 
     of creditable coverage (which includes periods of coverage 
     under another group health plan). A period of creditable 
     coverage can be disregarded if, after the coverage period and 
     before the enrollment date, there was a 63-day period during 
     which the individual was not covered under any creditable 
     coverage. Similar rules are provided under ERISA and PHSA.
---------------------------------------------------------------------------
     Reimbursement of group health plans
       The provision provides that the entity to which premiums 
     are payable (determined under the applicable COBRA 
     continuation coverage requirement)\238\ shall be reimbursed 
     by the amount of the premium for COBRA continuation coverage 
     that is no aid by an assistance eligible individual on 
     account of the premium reduction. An entity is not eligible 
     for subsidy reimbursement, however, until the entity has 
     received the reduced premium payment from the assistance 
     eligible individual. To the extent that such entity has 
     liability for income tax withholding from wages\239\ or FICA 
     taxes\240\ with respect to its employees, the entity is 
     reimbursed by treating the amount that is reimbursable to the 
     entity as a credit against its liability for these payroll 
     taxes.\241\ To the extent that such amount exceeds the amount 
     of the entity's liability for these payroll taxes, the 
     Secretary shall reimburse the entity for the excess directly. 
     The provision requires any entity entitled to such 
     reimbursement to submit such reports as the Secretary of 
     Treasury may require, including an attestation of the 
     involuntary termination of employment of each covered 
     employee on the basis of whose termination entitlement to 
     reimbursement of premiums is claimed, and a report of the 
     amount of payroll taxes offset for a reporting period and the 
     estimated offsets of such taxes for the next reporting 
     period. This report is required to be provided at the same 
     time as the deposits of the payroll taxes would have been 
     required, absent the offset, or such times as the Secretary 
     specifies.
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     \238\Applicable continuation coverage that qualifies for the 
     subsidy and thus for reimbursement is not limited to coverage 
     required to be offered under the Code's COBRA rules but also 
     includes continuation coverage required under State law that 
     requires continuation coverage comparable to the continuation 
     coverage required under the Code's COBRA rules for group 
     health plans not subject to those rules (e.g., a small 
     employer plan) and includes continuation coverage 
     requirements that apply to health plans maintained by the 
     Federal government or a State government.
     \239\Sec. 3401.
     \240\Sec. 3102 (relating to FICA taxes applicable to 
     employees) and sec. 3111 (relating to FICA taxes applicable 
     to employers).
     \241\In determining any amount transferred or appropriated to 
     any fund under the Social Security Act, amounts credited 
     against an employer's payroll tax obligations pursuant to the 
     provision shall not be taken into account.
---------------------------------------------------------------------------
     Notice requirements
       The notice of COBRA continuation coverage that a plan 
     administrator is required to provide to qualified 
     beneficiaries with respect to a qualifying event under 
     present law must contain, under the provision, additional 
     information including, for example, information about the 
     qualified beneficiary's right to the premium reduction (and 
     subsidy) and the conditions on the subsidy, and a description 
     of the obligation of the qualified beneficiary to notify the 
     group health plan of eligibility under another group health 
     plan or eligibility for Medicare benefits under title XVIII 
     of the Social Security Act, and the penalty for failure to 
     provide this notification. The provision also requires a new 
     notice to be given to qualified beneficiaries entitled to a 
     special election period after enactment. In the case of group 
     health plans that are not subject to the COBRA continuation 
     coverage requirements of the Code, ERISA, Title 5 of the 
     United States Code (relating to plans maintained by the 
     Federal government), or PHSA, the provision requires that 
     notice be given to the relevant employees and beneficiaries 
     as well, as specified by the Secretary of Labor. Within 30 
     days after enactment, the Secretary of Labor is directed to 
     provide model language for the additional notification 
     required under the provision. The provision also provides an 
     expedited 10-day review process by the Department of Labor, 
     under which an individual may request review of a denial of 
     treatment as an assistance eligible individual by a group 
     health plan.
     Regulatory authority
       The provision provides authority to the Secretary of the 
     Treasury to issue regulations or other guidance as may be 
     necessary or appropriate to carry out the provision, 
     including any reporting requirements or the establishment of 
     other methods for verifying the correct amounts of payments 
     and credits under the provision. For example, the Secretary 
     of the Treasury might require verification on the return of 
     an assistance eligible individual who is the covered employee 
     that the individual's termination of employment was 
     involuntary. The provision directs the Secretary of the 
     Treasury to issue guidance or regulations addressing the 
     reimbursement of the subsidy in the case of a multiemployer 
     group health plan. The provision also provides authority to 
     the Secretary of the Treasury to promulgate rules, 
     procedures, regulations, and other guidance as is necessary 
     and appropriate to prevent fraud and abuse in the subsidy 
     program, including the employment tax offset mechanism.
     Reports
       The provision requires the Secretary of the Treasury to 
     submit an interim and a final report regarding the 
     implementation of the premium reduction provision. The 
     interim report is to include information about the number of 
     individuals receiving assistance, and the total amount of 
     expenditures incurred, as of the date of the report. The 
     final report, to be issued as soon as practicable after the 
     last period of COBRA continuation coverage for which premiums 
     are provided, is to include similar information as provided 
     in the interim report, with the addition of information about 
     the average dollar amount (monthly and annually) of premium 
     reductions provided to such individuals. The reports are to 
     be given to the Committee on Ways and Means, the Committee on 
     Energy and Commerce, the Committee on Health Education, Labor 
     and Pensions and the Committee on Finance.
     Effective date
       The provision is effective for premiums for months of 
     coverage beginning on or after the date of enactment. 
     However, it is intended that a group health plan will not 
     fail to satisfy the requirements for COBRA continuation 
     coverage merely because the plan accepts payment of 100 
     percent of the premium from an assistance eligible employee 
     during the first two months beginning on or after the date of 
     enactment while the premium reduction is being implemented, 
     provided the amount of the resulting premium overpayment is 
     credited against the individual's premium (35 percent of the 
     premium) for future months or the overpayment is otherwise 
     repaid to the employee as soon as practical.


                            Senate Amendment

       The Senate amendment is the same as the House bill with 
     certain modifications. The amount of the COBRA the premium 
     reduction (or subsidy) is 50 percent of the required premium 
     under the Senate amendment (rather than 65 percent as 
     provided under the House bill).
       In addition, a group health plan is permitted to provide a 
     special enrollment right to assistance-eligible individuals 
     to allow them to change coverage options under the plan in 
     conjunction with electing COBRA continuation coverage. Under 
     this special enrollment right, the assistance eligible 
     individual must only be offered the option to change to any 
     coverage option offered to employed workers that provides the 
     same or lower health insurance premiums than the individual's 
     group health plan coverage as of the date of the covered 
     employee's qualifying event. If the individual elects a 
     different coverage option under this special enrollment right 
     in conjunction with electing COBRA continuation coverage, 
     this is the coverage that must be provided for purposes of 
     satisfying the COBRA continuation coverage requirement. 
     However the coverage plan option into which the individual 
     must be given the opportunity to enroll under this special 
     enrollment right does not include the following: a coverage 
     option providing only dental, vision, counseling, or referral 
     services (or a combination of the foregoing); a health 
     flexible spending account or health reimbursement 
     arrangement; or coverage for treatment that is furnished in 
     an on-site medical facility maintained by the employer and 
     that consists primarily of first-aid services, prevention and 
     wellness care, or similar care (or a combination of such 
     care).
       Effective date.--The provision is effective for months of 
     coverage beginning after the date of enactment. In addition, 
     the Senate amendment specifically provides rules for 
     reimbursement of an assistance eligible individual if such 
     individual pays 100 percent of the premium required for COBRA 
     continuation coverage for any month during the 60-day period 
     beginning on the first day of the first month after the date 
     of enactment. The person who receives the premium overpayment 
     is permitted to provide a credit to the assistance eligible 
     individual for the amount overpaid against one or more 
     subsequent premiums (subject to the 50 percent payment rule) 
     for COBRA continuation coverage, but only if it is reasonable 
     to believe that the credit for the excess will be used by the 
     assistance eligible individual within 180 days of the 
     individual's overpayment. Otherwise, the person must make a 
     reimbursement payment to the individual for the amount of the 
     premium overpayment within 60 days of receiving the 
     overpayment. Further, if as of any day during the 180-day 
     period it is no longer reasonable to believe that the credit 
     will be

[[Page 4087]]

     used during that period by the assistance eligible individual 
     (e.g., the individual ceases to be eligible for COBRA 
     continuation coverage), payment equal to the remainder of the 
     credit outstanding must be made to the individual within 60 
     days of such day.


                          Conference Agreement

     In general
       The conference agreement generally follows the House bill. 
     Thus, as under the House bill, the rate of the premium 
     subsidy is 65 percent of the premium for a period of 
     coverage. However, the period of the premium subsidy is 
     limited to a maximum of 9 months of coverage (instead of a 
     maximum of 12 months). As under the House bill and Senate 
     amendment, the premium subsidy is only provided with respect 
     to involuntary terminations that occur on or after September 
     1, 2008, and before January 1, 2010.
       The conference agreement includes the provision in the 
     Senate amendment that permits a group health plan to provide 
     a special enrollment right to assistance eligible individuals 
     to allow them to change coverage options under the plan in 
     conjunction with electing COBRA continuation coverage.\242\ 
     This provision only allows a group health plan to offer 
     additional coverage options to assistance eligible 
     individuals and does not change the basic requirement under 
     Federal COBRA continuation coverage requirements that a group 
     health plan must allow an assistance eligible individual to 
     choose to continue with the coverage in which the individual 
     is enrolled as of the qualifying event.\243\ However, once 
     the election of the other coverage is made, it becomes COBRA 
     continuation coverage under the applicable COBRA continuation 
     provisions. Thus, for example, under the Federal COBRA 
     continuation coverage provisions, if a covered employee 
     chooses different coverage pursuant to being provided this 
     option, the different coverage elected must generally be 
     permitted to be continued for the applicable required period 
     (generally 18 months or 36 months, absent an event that 
     permits coverage to be terminated under the Federal COBRA 
     continuation provisions) even though the premium subsidy is 
     only for nine months.
---------------------------------------------------------------------------
     \242\An employer can make this option available to covered 
     employees under current law.
     \243\All references to ``Federal COBRA continuation 
     coverage'' mean the COBRA continuation coverage provisions of 
     the Code, ERISA, and PHSA.
---------------------------------------------------------------------------
       The conference agreement adds an income threshold as an 
     additional condition on an individual's entitlement to the 
     premium subsidy during any taxable year. The income threshold 
     applies based on the modified adjusted gross income for an 
     individual income tax return for the taxable year in which 
     the subsidy is received (i.e., either 2009 or 2010) with 
     respect to which the assistance eligible individual is the 
     taxpayer, the taxpayer's spouse or a dependent of the 
     taxpayer (within the meaning of section 152 of the Code, 
     determined without regard to sections 152(b)(1), (b)(2) and 
     (d)(1)(B)). Modified adjusted gross income for this purpose 
     means adjusted gross income as defined in section 62 of the 
     Code increased by any amount excluded from gross income under 
     section 911, 931, or 933 of the Code. Under this income 
     threshold, if the premium subsidy is provided with respect to 
     any COBRA continuation coverage which covers the taxpayer, 
     the taxpayer's spouse, or any dependent of the taxpayer 
     during a taxable year and the taxpayer's modified adjusted 
     gross income exceeds $145,000 (or $290,000 for joint filers), 
     then the amount of the premium subsidy for all months during 
     the taxable year must be repaid. The mechanism for repayment 
     is an increase in the taxpayer's income tax liability for the 
     year equal to such amount. For taxpayers with adjusted gross 
     income between $125,000 and $145,000 (or $250,000 and 
     $290,000 for joint filers), the amount of the premium subsidy 
     for the taxable year that must be repaid is reduced 
     proportionately.
       Under this income threshold, for example, an assistance 
     eligible individual who is eligible for Federal COBRA 
     continuation coverage based on the involuntary termination of 
     a covered employee in August 2009 but who is not entitled to 
     the premium subsidy for the periods of coverage during 2009 
     due to having income above the threshold, may nevertheless be 
     entitled to the premium subsidy for any periods of coverage 
     in the remaining period (e.g. 5 months of coverage) during 
     2010 to which the subsidy applies if the modified adjusted 
     gross income for 2010 of the relevant taxpayer is not above 
     the income threshold.
       The conference report allows an individual to make a 
     permanent election (at such time and in such form as the 
     Secretary of Treasury may prescribe) to waive the right to 
     the premium subsidy for all periods of coverage. For the 
     election to take effect, the individual must notify the 
     entity (to which premiums are reimbursed under section 
     6432(a) of the Code) of the election. This waiver provision 
     allows an assistance eligible individual who is certain that 
     the modified adjusted gross income limit prevents the 
     individual from being entitled to any premium subsidy for any 
     coverage period to decline the subsidy for all coverage 
     periods and avoid being subject to the recapture tax. 
     However, this waiver applies to all periods of coverage 
     (regardless of the tax year of the coverage) for which the 
     individual might be entitled to the subsidy. The premium 
     subsidy for any period of coverage cannot later be claimed as 
     a tax credit or otherwise be recovered, even if the 
     individual later determines that the income threshold was not 
     exceeded for a relevant tax year. This waiver is made 
     separately by each qualified beneficiary (who could be an 
     assistance eligible individual) with respect to a covered 
     employee.
     Technical chances
       The conference agreement makes a number of technical 
     changes to the COBRA premium subsidy provisions in the House 
     bill. The conference agreement clarifies that a reference to 
     a period of coverage in the provision is a reference to the 
     monthly or shorter period of coverage with respect to which 
     premiums are charged with respect to such coverage. For 
     example, the provision is effective for a period of coverage 
     beginning after the date of enactment. In the case of a plan 
     that provides and charges for COBRA continuation coverage on 
     a calendar month basis, the provision is effective for the 
     first calendar month following date of enactment.
       The conference agreement specifically provides that if a 
     person other than the individual's employer pays on the 
     individual's behalf then the individual is treated as paying 
     35 percent of the premium, as required to be entitled to the 
     premium subsidy. Thus, the conference agreement makes clear 
     that, for this purpose, payment by an assistance eligible 
     individual includes payment by another individual paying on 
     behalf of the individual, such as a parent or guardian, or an 
     entity paying on behalf of the individual, such as a State 
     agency or charity.
       The conference agreement clarifies that, for the special 60 
     day election period for a qualified beneficiary who is 
     eligible for a reduced premium and who has not elected COBRA 
     continuation coverage as of the date of enactment provided in 
     the House bill, the election period begins on the date of 
     enactment and ends 60 days after the notice is provided to 
     the qualified beneficiary of the special election period. In 
     addition, the conference agreement clarifies that coverage 
     elected under this special election right begins with the 
     first period of coverage beginning on or after the date of 
     enactment. The conference agreement also extends this special 
     COBRA election opportunity to a qualified beneficiary who 
     elected COBRA coverage but who is no longer enrolled on the 
     date of enactment, for example, because the beneficiary was 
     unable to continue paying the premium.
       The conference agreement clarifies that a violation of the 
     new notice requirements is also a violation of the notice 
     requirements of the underlying COBRA provision. As under the 
     House bill, a notice must be provided to all individuals who 
     terminated employment during the applicable time period, and 
     not just to individuals who were involuntarily terminated.
       As under the House bill, coverage under a flexible spending 
     account (``FSA'') is not eligible for the subsidy. The 
     conference agreement clarifies that a FSA is defined as a 
     health flexible spending account offered under a cafeteria 
     plan within the meaning of section 125 of the Code.\244\
---------------------------------------------------------------------------
     \244\Other FSA coverage does not terminate eligibility for 
     coverage. Coverage under another group Health Reimbursement 
     Account (``HRA'') will not terminate an individual's 
     eligibility for the subsidy as long as the HRA is properly 
     classified as an FSA under relevant IRS guidance. See Notice 
     2002-45, 2002-2 CB 93.
---------------------------------------------------------------------------
       As under the House bill, there is a provision for expedited 
     review, by the Secretary of Labor or Health and Human 
     Services (in consultation with the Secretary of the 
     Treasury), of denials of the premium subsidy. Under the 
     conference agreement, such reviews must be completed within 
     15 business days (rather than 10 business days as provided in 
     the House bill) after receipt of the individual's application 
     for review. The conference agreement is intended to give the 
     Secretaries the flexibility necessary to make determinations 
     within 15 business days based upon evidence they believe, in 
     their discretion, to be appropriate. Additionally, the 
     conference agreement intends that, if an individual is denied 
     treatment as an assistance eligible individual and also 
     submits a claim for benefits to the plan that would be denied 
     by reason of not being eligible for Federal COBRA 
     continuation coverage (or failure to pay full premiums), the 
     individual would be eligible to proceed with expedited review 
     irrespective of any claims for benefits that may be pending 
     or subject to review under the provisions of ERISA 503. Under 
     the conference agreement, either Secretary's determination 
     upon review is de novo and is the final determination of such 
     Secretary.
       The conference agreement clarifies the reimbursement 
     mechanism for the premium subsidy in several respects. First, 
     it clarifies that the person to whom the reimbursement is 
     payable is either (1) the multiemployer group health plan, 
     (2) the employer maintaining the group health plan subject to 
     Federal COBRA continuation coverage requirements, and (3) the 
     insurer providing coverage under an insured plan. Thus, this 
     is the person who is eligible to offset its payroll taxes for 
     purposes of reimbursement. It also clarifies that the credit 
     for the reimbursement is

[[Page 4088]]

     treated as a payment of payroll taxes. Thus, it clarifies 
     that any reimbursement for an amount in excess of the payroll 
     taxes owed is treated in the same manner as a tax refund. 
     Similarly, it clarifies that overstatement of reimbursement 
     is a payroll tax violation. For example, IRS can assert 
     appropriate penalties for failing to truthfully account for 
     the reimbursement. However, it is not intended that any 
     portion of the reimbursement is taken into account when 
     determining the amount of any penalty to be imposed against 
     any person, required to collect, truthfully account for, and 
     pay over any tax under section 6672 of the Code.
       It is intended that reimbursement not be mirrored in the 
     U.S. possessions that have mirror income tax codes (the 
     Commonwealth of the Northern Mariana Islands, Guam, and the 
     Virgin Islands). Rather, the intent of Congress is that 
     reimbursement will have direct application to persons in 
     those possessions. Moreover, it is intended that income tax 
     withholding payable to the government of any possession 
     (American Samoa, the Commonwealth of the Northern Mariana 
     Islands, the Commonwealth of Puerto Rico, Guam, or the Virgin 
     Islands) (in contrast with FICA withholding payable to the 
     U.S. Treasury) will not be reduced as a result of the 
     application of this provision. A person liable for both FICA 
     withholding payable to the U.S. Treasury and income tax 
     withholding payable to a possession government will be 
     credited or refunded any excess of (1) the amount of FICA 
     taxes treated as paid under the reimbursement rule of the 
     provision over (2) the amount of the person's liability for 
     those FICA taxes.
     Effective date
       The provision is effective for periods of coverage 
     beginning after the date of enactment. In addition, specific 
     rules are provided in the case of an assistance eligible 
     individual who pays 100 percent of the premium required for 
     COBRA continuation coverage for any coverage period during 
     the 60-day period beginning on the first day of the first 
     coverage period after the date of enactment. Such rules 
     follow the Senate amendment.

 B. Extension of Minimum COBRA Continuation Coverage (sec. 3002(b) of 
                            the House bill)


                              Present Law

       A covered employee's termination of employment (other than 
     for gross misconduct), whether voluntary or involuntary, is a 
     COBRA qualifying \245\ A covered employee's reduction in 
     hours of employment, whether voluntary or involuntary, is 
     also a COBRA qualifying event if the reduction results in a 
     loss of employer sponsored group health plan coverage.\246\
---------------------------------------------------------------------------
     \245\Sec. 4980B(f)(3)(B); Treas. Reg. 54.4980B-4.
     \246\Sec. 4980(f)(3)(B).
---------------------------------------------------------------------------
       The minimum length of coverage continuation that must be 
     offered to a qualified beneficiary depends upon a number of 
     factors, including the specific qualifying event that gives 
     rise to a qualified beneficiary's right to elect coverage 
     continuation. In the case of a qualifying event that is the 
     termination, or reduction of hours, of a covered employee's 
     employment, the minimum period of coverage that must be 
     offered to each qualified beneficiary generally must extend 
     until 18 months after the date of the qualifying event.\247\ 
     Under certain circumstances, however, the coverage 
     continuation period can be extended up to a maximum total of 
     36 months. For example, if a second qualifying event occurs 
     within the initial 18 month continuation period the initial 
     period will be extended up to an additional 18 months (for a 
     total of 36 months) for qualified beneficiaries other than 
     the covered employee. Similarly, if a qualified beneficiary 
     is determined to be disabled for purposes of Social Security 
     during the first 60 days of the initial 18 month continuation 
     coverage period, the initial 18 month period may be extended 
     up to an additional 11 months (for a total of 29 months) for 
     the disabled beneficiary and all of his or her covered family 
     members. If a second qualifying event then occurs during the 
     additional 11 month coverage period, the continuation period 
     may be extended for another seven months, for a total of 36 
     months of continuation coverage.
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     \247\Sec. 4980B((f)(2)(B)(i)(I). If coverage under a plan is 
     lost on account of a qualifying event but the loss of 
     coverage actually occurs at a later date, the minimum 
     coverage period may be extended by the plan so that it is 
     measured from the date when coverage is actually lost.
---------------------------------------------------------------------------


                               House Bill

       The provision amends section 4980B(f)(2)(B) to provide 
     extended COBRA coverage periods for covered employees who 
     qualify for COBRA continuation coverage due to termination of 
     employment or reduction in hours and who (a) are age 55 or 
     older, or (b) have 10 or more years of service with the 
     employer, at the time of the qualifying event. Such 
     individuals would be permitted to continue their COBRA 
     coverage until the earlier of enrollment for Medicare 
     benefits under title XVIII of the Social Security Act, 
     becomes covered under another group health plan. (described 
     in section 4980B(f)(2)(B)(iv)), or termination of all health 
     plans sponsored by the employer offering the COBRA coverage. 
     The extended coverage period would apply to all qualified 
     beneficiaries of the covered employee.
       (3) The provision makes parallel changes to ERISA and PHSA.
       Effective date.--The provision is effective for periods of 
     coverage which would (without regard to any amendments made 
     by the provision) end on or after the date of enactment.


                            Senate Amendment

       No provision.


                          Conference Agreement

       The conference agreement does not include the House bill 
     provision.

   Modify the Health Coverage Tax Credit (secs. 1899 to 1899L of the 
 conference agreement and secs. 35, 4980B, 7527, and 9801 of the Code)


                              Present Law

     In general
       Under the Trade Act of 2002,\248\ in the case of taxpayers 
     who are eligible individuals, a refundable tax credit is 
     provided for 6 percent of the taxpayer's premiums for 
     qualified health insurance of the taxpayer and qualifying 
     family members for each eligible coverage month beginning in 
     the taxable year. The credit is commonly referred to as the 
     health coverage tax credit (``HCTC''). The credit is 
     available only with respect to amounts paid by the taxpayer. 
     The credit is available on an advance basis.\249\
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     \248\Pub. L. No. 107-210 (2002).
     \249\An individual is eligible for the advance payment of the 
     credit once a qualified health insurance costs credit 
     eligibility certificate is in effect. Sec. 7527. Unless 
     otherwise indicated, all ``section'' references are to the 
     Internal Revenue Code of 1986, as amended.
---------------------------------------------------------------------------
       Qualifying family members are the taxpayer's spouse and any 
     dependent of the taxpayer with respect to whom the taxpayer 
     is entitled to claim a dependency exemption. Any individual 
     who has other specified coverage is not a qualifying family 
     member.
     Persons eligible for the credit
       Eligibility for the credit is determined on a monthly 
     basis. In general, an eligible coverage month is any month 
     if, as of the first day of the month, the taxpayer (1) is an 
     eligible individual, (2) is covered by qualified health 
     insurance, (3) does not have other specified coverage, and 
     (4) is not imprisoned under Federal, State, or local 
     authority.\250\ In the case of a joint return, the 
     eligibility requirements are met if at least one spouse 
     satisfies the requirements.
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     \250\An eligible month must begin after November 4, 2002. 
     This date is 90 days after the date of enactment of the Trade 
     Act of 2002, which was August 6, 2002.
---------------------------------------------------------------------------
       An eligible individual is an individual who is (1) an 
     eligible TAA recipient, (2) an eligible alternative Trade 
     Adjustment Assistance (``TAA'') recipient, or (3) an eligible 
     Pension Benefit Guaranty Corporation (``PBGC'') pension 
     recipient.
       An individual is an eligible TAA recipient during any month 
     the individual (1) is receiving for any day of such month a 
     trade readjustment allowance\251\ or who would be eligible to 
     receive such an allowance but for the requirement that the 
     individual exhaust unemployment benefits before being 
     eligible to receive an allowance and (2) with respect to such 
     allowance, is covered under a certification issued under 
     subchapter A or D of chapter 2 of title II of the Trade Act 
     of 1974. An individual is treated as an eligible TAA 
     recipient during the first month that such individual would 
     otherwise cease to be an eligible TAA recipient.
---------------------------------------------------------------------------
     \251\The eligibility rules and conditions for such an 
     allowance are specified in chapter 2 of title II of the Trade 
     Act of 1974. Among other requirements, payment of a trade 
     readjustment allowance is conditioned upon the individual 
     enrolling in certain training programs or receiving a waiver 
     of training requirements.
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       An individual is an eligible alternative TAA recipient 
     during any month if the individual (1) is a worker described 
     in section 246(a)(3)(B) of the Trade Act of 1974 who is 
     participating in the program established under section 
     246(a)(1) of such Act, and (2) is receiving a benefit for 
     such month under section 246(a)(2) of such Act. An individual 
     is treated as an eligible alternative TAA recipient during 
     the first month that such individual would otherwise cease to 
     be an eligible TAA recipient.
       An individual is a PBGC pension recipient for any month if 
     he or she (1) is age 55 or over as of the first day of the 
     month, and (2) is receiving a benefit any portion of which is 
     paid by the PBGC. The IRS has interpreted the definition of 
     PBGC pension recipient to also include certain alternative 
     recipients and recipients who have received certain lump-sum 
     payments on or after August 6, 2002. A person is not an 
     eligible individual if he or she may be claimed as a 
     dependent on another person's tax return.
       An otherwise eligible taxpayer is not eligible for the 
     credit for a month if, as of the first day of the month, the 
     individual has other specified coverage. Other specified 
     coverage is (1) coverage under any insurance which 
     constitutes medical care (except for insurance substantially 
     all of the coverage of which is for excepted benefits)\252\ 
     maintained

[[Page 4089]]

     by an employer (or former employer) if at least 50 percent of 
     the cost of the coverage is paid by an employer\253\ (or 
     former employer) of the individual or his or her spouse or 
     (2) coverage under certain governmental health programs. 
     Specifically, an individual is not eligible for the credit 
     if, as of the first day of the month, the individual is (1) 
     entitled to benefits under Medicare Part A, enrolled in 
     Medicare Part B, or enrolled in Medicaid or SCHIP, (2) 
     enrolled in a health benefits plan under the Federal 
     Employees Health Benefit Plan, or (3) entitled to receive 
     benefits under chapter 55 of title 10 of the United States 
     Code (relating to military personnel). An individual is not 
     considered to be enrolled in Medicaid solely by reason of 
     receiving immunizations.
---------------------------------------------------------------------------
     \252\Excepted benefits are: (1) coverage only for accident or 
     disability income or any combination thereof; (2) coverage 
     issued as a supplement to liability insurance; (3) liability 
     insurance, including general liability insurance and 
     automobile liability insurance; (4) worker's compensation or 
     similar insurance; (5) automobile medical payment insurance; 
     (6) credit-only insurance; (7) coverage for on-site medical 
     clinics; (8) other insurance coverage similar to the 
     coverages in (1)-(7) specified in regulations under which 
     benefits for medical care are secondary or incidental to 
     other insurance benefits; (9) limited scope dental or vision 
     benefits; (10) benefits for long-term care, nursing home 
     care, home health care, community-based care, or any 
     combination thereof; and (11) other benefits similar to those 
     in (9) and (10) as specified in regulations; (12) coverage 
     only for a specified disease or illness; (13) hospital 
     indemnity or other fixed indemnity insurance; and (14) 
     Medicare supplemental insurance.
     \253\An amount is considered paid by the employer if it is 
     excludable from income. Thus, for example, amounts paid for 
     health coverage on a salary reduction basis under an employer 
     plan are considered paid by the employer. A rule aggregating 
     plans of the same employer applies in determining whether the 
     employer pays at least 50 percent of the cost of coverage.
---------------------------------------------------------------------------
       A special rule applies with respect to alternative TAA 
     recipients. For eligible alternative TAA recipients, an 
     individual has other specified coverage if the individual is 
     (1) eligible for coverage under any qualified health 
     insurance (other than coverage under a COBRA continuation 
     provision, State-based continuation coverage, or coverage 
     through certain State arrangements) under which at least 50 
     percent of the cost of coverage is paid or incurred by an 
     employer of the taxpayer or the taxpayer's spouse or (2) 
     covered under any such qualified health insurance under which 
     any portion of the cost of coverage is paid or incurred by an 
     employer of the taxpayer or the taxpayer's spouse.
     Qualified health insurance
       Qualified health insurance eligible for the credit is: (1) 
     COBRA continuation\254\ coverage; (2) State-based 
     continuation coverage provided by the State under a State law 
     that requires such coverage; (3) coverage offered through a 
     qualified State high risk pool; (4) coverage under a health 
     insurance program offered to State employees or a comparable 
     program; (5) coverage through an arrangement entered into by 
     a State and a group health plan, an issuer of health 
     insurance coverage, an administrator, or an employer; (6) 
     coverage offered through a State arrangement with a private 
     sector health care coverage purchasing pool; (7) coverage 
     under a State-operated health plan that does not receive any 
     Federal financial participation; (8) coverage under a group 
     health plan that is available through the employment of the 
     eligible individual's spouse; and (9) coverage under 
     individual health insurance if the eligible individual was 
     covered under individual health insurance during the entire 
     30-day period that ends on the date the individual became 
     separated from the employment which qualified the individual 
     for the TAA allowance, the benefit for an eligible 
     alternative TAA recipient, or a pension benefit from the 
     PBGC, whichever applies.\255\
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     \254\COBRA continuation is defined in section 9832(d)(1).
     \255\For this purpose, ``individual health insurance'' means 
     any insurance which constitutes medical care offered to 
     individuals other than in connection with a group health 
     plan. Such term does not include Federal- or State-based 
     health insurance coverage.
---------------------------------------------------------------------------
       Qualified health insurance does not include any State-based 
     coverage (i.e., coverage described in (2)-(7) in the 
     preceding paragraph), unless the State has elected to have 
     such coverage treated as qualified health insurance and such 
     coverage meets certain requirements.\256\ Such State coverage 
     must provide that each qualifying individual is guaranteed 
     enrollment if the individual pays the premium for enrollment 
     or provides a qualified health insurance costs eligibility 
     certificate and pays the remainder of the premium. In 
     addition, the State-based coverage cannot impose any pre-
     existing condition limitation with respect to qualifying 
     individuals. State-based coverage cannot require a qualifying 
     individual to pay a premium or contribution that is greater 
     than the premium or contribution for a similarly situated 
     individual who is not a qualified individual. Finally, 
     benefits under the State-based coverage must be the same as 
     (or substantially similar to) benefits provided to similarly 
     situated individuals who are not qualifying individuals.
---------------------------------------------------------------------------
     \256\For guidance on how a State elects a health program to 
     be qualified health insurance for purposes of the credit, see 
     Rev. Proc. 2004-12, 2004-1 C.B. 528.
---------------------------------------------------------------------------
       A qualifying individual is an eligible individual who seeks 
     to enroll in the State-based coverage and who has aggregate 
     periods of creditable coverage\257\ of three months or 
     longer, does not have other specified coverage, and who is 
     not imprisoned. In general terms, creditable coverage 
     includes health care coverage without a gap of more than 63 
     days. Therefore, if an individual's qualifying coverage were 
     terminated more than 63 days before the individual enrolled 
     in the State-based coverage, the individual would not be a 
     qualifying individual and would not be entitled to the State-
     based protections. A qualifying individual also includes 
     qualified family members of such an eligible individual.
---------------------------------------------------------------------------
     \257\Creditable coverage is determined under the Health 
     Insurance Portability and Accountability Act. Sec. 9801(c).
---------------------------------------------------------------------------
       Qualified health insurance does not include coverage under 
     a flexible spending or similar arrangement or any insurance 
     if substantially all of the coverage is for excepted 
     benefits.
     Other rules
       Amounts taken into account in determining the credit may 
     not be taken into account in determining the amount allowable 
     under the itemized deduction for medical expenses or the 
     deduction for health insurance expenses of self-employed 
     individuals. Amounts distributed from a medical savings 
     account or health savings accounts are not eligible for the 
     credit. The amount of the credit available through filing a 
     tax return is reduced by any credit received on an advance 
     basis. Married taxpayers filing separate returns are eligible 
     for the credit; however, if both spouses are eligible 
     individuals and the spouses file separate returns, then the 
     spouse of the taxpayer is not a qualifying family member.
       The Secretary of the Treasury is authorized to prescribe 
     such regulations and other guidance as may be necessary or 
     appropriate to carry out the credit provision.
     COBRA
       The Consolidated Omnibus Reconciliation Act of 1985 
     (``COBRA'') requires that a group health plan must offer 
     continuation coverage to qualified beneficiaries in the case 
     of a qualifying event. An excise tax under the Code applies 
     on the failure of a group health plan to meet the 
     requirement.\258\ Qualifying events include the death of the 
     covered employee, termination of the covered employee's 
     employment, divorce or legal separation of the covered 
     employee, and certain bankruptcy proceedings of the employer. 
     In the case of termination from employment, the coverage must 
     be extended for a period of not less than 18 months. In 
     certain other cases, coverage must be extended for a period 
     of not less than 36 months. Under such period of continuation 
     coverage, the plan may require payment of a premium by the 
     beneficiary of up to 102 percent of the applicable premium 
     for the period.
---------------------------------------------------------------------------
     \258\Sec. 4980B.
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                               House Bill

       No provision.


                            Senate Amendment

       No provision.\259\
---------------------------------------------------------------------------
     \259\The Senate amendment did not amend the HCTC, but section 
     1701 of the Senate amendment provided for a temporary 
     extension of the Trade Adjustment Assistance Program 
     (generally until December 31, 2010). Certain beneficiaries of 
     this program are eligible for the HCTC.
---------------------------------------------------------------------------


                          Conference Agreement

     Increase in credit percentage amount
       The provision increases the amount of the HCTC to 80 
     percent of the taxpayer's premiums for qualified health 
     insurance of the taxpayer and qualifying family members.
       Effective date.--The provision is effective for coverage 
     months beginning on or after the first day of the first month 
     beginning 60 days after date of enactment. The increased 
     credit rate does not apply to months beginning after December 
     31, 2010.
     Payment for monthly premiums paid prior to commencement of 
         advance payment of credit
       The provision provides that the Secretary of Treasury shall 
     make one or more retroactive payments on behalf of certified 
     individuals equal to 80 percent of the premiums for coverage 
     of the taxpayer and qualifying family members for qualified 
     health insurance for eligible coverage months occurring prior 
     to the first month for which an advance payment is made on 
     behalf of such individual. The amount of the payment must be 
     reduced by the amount of any payment made to the taxpayer 
     under a national emergency grant pursuant to section 173(f) 
     of the Workforce Investment Act of 1998 for a taxable year 
     including such eligible coverage months.
       Effective date.--The provision is effective for eligible 
     coverage months beginning after December 31, 2008. The 
     Secretary of the Treasury, however, is not required to make 
     any payments under the provision until after the date that is 
     six months after the date of enactment. The provision does 
     not apply to months beginning after December 31, 2010.
     TAA recipients not enrolled in training programs eligible for 
         credit
       The provision modifies the definition of an eligible TAA 
     recipient to eliminate the requirement that an individual be 
     enrolled in training in the case of an individual receiving 
     unemployment compensation. In addition, the provision 
     clarifies that the definition of an eligible TAA recipient 
     includes an individual who would be eligible to receive a

[[Page 4090]]

     trade readjustment allowance except that the individual is in 
     a break in training that exceeds the period specified in 
     section 233(e) of the Trade Act of 1974, but is within the 
     period for receiving the allowance.
       Effective date.--The provision is effective for months 
     beginning after the date of enactment in taxable years ending 
     after such date. The provision does not apply to months 
     beginning after December 31, 2010.
     TAA pre-certification period rule for purposes of determining 
         whether there is a 63-day lapse in creditable coverage
       Under the provision, in determining if there has been a 63-
     day lapse in coverage (which determines, in part, if the 
     State-based consumer protections apply), in the case of a 
     TAA-eligible individual, the period beginning on the date the 
     individual has a TAA-related loss of coverage and ending on 
     the date which is seven days after the date of issuance by 
     the Secretary (or by any person or entity designated by the 
     Secretary) of a qualified health insurance costs credit 
     eligibility certificate (under section 7527) for such 
     individual is not taken into account.
       Effective date.--The provision is effective for plan years 
     beginning after the date of enactment. The provision does not 
     apply to plan years beginning after December 31, 2010.
     Continued qualification of family members after certain 
         events
       The provision provides continued eligibility for the credit 
     for family members after certain events. The rule applies in 
     the case of (1) the eligible individual becoming entitled to 
     Medicare, (2) divorce and (3) death.
       In the case of a month which would be an eligible coverage 
     month with respect to an eligible individual except that the 
     individual is entitled to benefits under Medicare Part A or 
     enrolled in Medicare Part B, the month is treated as an 
     eligible coverage month with respect to the individual solely 
     for purposes of determining the amount of the credit with 
     respect to qualifying family members (i.e., the credit is 
     allowed for expenses paid for qualifying family members after 
     the eligible individual is eligible for Medicare). Such 
     treatment applies only with respect to the first 24 months 
     after the eligible individual is first entitled to benefits 
     under Medicare Part A or enrolled in Medicare Part B.
       In the case of the finalization of a divorce between an 
     eligible individual and the individual's spouse, the spouse 
     is treated as an eligible individual for a period of 24 
     months beginning with the date of the finalization of the 
     divorce. Under such rule, the only family members that may be 
     taken into account with respect to the spouse as qualifying 
     family members are those individuals who were qualifying 
     family members immediately before such divorce finalization.
       In the case of the death of an eligible individual, the 
     spouse of such individual (determined at the time of death) 
     is treated as an eligible individual for a period of 24 
     months beginning with the date of death. Under such rule, the 
     only qualifying family members that may be taken into account 
     with respect to the spouse are those individuals who were 
     qualifying family members immediately before such death. In 
     addition, any individual who was a qualifying family member 
     of the decedent immediately before such death\260\ treated as 
     an eligible individual for a period of 24 months beginning 
     with the date of death, except that in determining the amount 
     of the HCTC only such qualifying family member may be taken 
     into account.
---------------------------------------------------------------------------
     \260\In the case of a dependent, the rule applies to the 
     taxpayer to whom the personal exemption deduction under 
     section 151 is allowable.
---------------------------------------------------------------------------
       Effective date.--The provision is effective for months 
     beginning after December 31, 2009. The provision does not 
     apply to months that begin after December 31, 2010.
     Alignment of COBRA coverage
       The maximum required COBRA continuation coverage period is 
     modified by the provision with respect to certain individuals 
     whose qualifying event is a termination of employment or a 
     reduction in hours. First, in the case of such a qualifying 
     event with respect to a covered employee who has a 
     nonforfeitable right to a benefit any portion of which is 
     paid by the PBGC, the maximum coverage period must end not 
     earlier than the date of death of the covered employee (or in 
     the case of the surviving spouse or dependent children of the 
     covered employee, not earlier than 24 months after the date 
     of death of the covered employee). Second, in the case of 
     such a qualifying event where the covered employee is a TAA 
     eligible individual as of the date that the maximum coverage 
     period would otherwise terminate, the maximum coverage period 
     must extend during the period that the individual is a TAA 
     eligible individual.
       Effective date.--The provision is effective for periods of 
     coverage that would, without regard to the provision, end on 
     or after the date of enactment, provided that the provision 
     does not extend any periods of coverage beyond December 31, 
     2010.
     Addition of coverage through voluntary employees' beneficiary 
         associations
       The provision expands the definition of qualified health 
     insurance by including coverage under an employee benefit 
     plan funded by a voluntary employees' beneficiary association 
     (``VEBA'', as defined in section 501(c)(9)) established 
     pursuant to an order of a bankruptcy court, or by agreement 
     with an authorized representative, as provided in section 
     1114 of title 11, United States Code.
       Effective date.--The provision is effective on the date of 
     enactment. The provision does not apply with respect to 
     certificates of eligibility issued after December 31, 2010.
     Notice requirements
       The provision requires that the qualified health insurance 
     costs credit eligibility certificate provided in connection 
     with the advance payment of the HCTC must include (1) the 
     name, address, and telephone number of the State office or 
     offices responsible for providing the individual with 
     assistance with enrollment in qualified health insurance, (2) 
     a list of coverage options that are treated as qualified 
     health insurance by the State in which the individual 
     resides, (3) in the case of a TAA-eligible individual, a 
     statement informing the individual that the individual has 63 
     days from the date that is seven days after the issuance of 
     such certificate to enroll in such insurance without a lapse 
     in creditable coverage, and (4) such other information as the 
     Secretary may provide.
       Effective date.--The provision is effective for 
     certificates issued after the date that is six months after 
     the date of enactment. The provision does not apply to months 
     beginning after December 31, 2010.
     Survey and report on enhanced health coverage tax credit 
         program
       Survey
       The provision requires that the Secretary of the Treasury 
     must conduct a biennial survey of eligible individuals 
     containing the following information:
       1. In the case of eligible individuals receiving the HCTC 
     (including those participating in the advance payment program 
     (the ``HCTC program'')) (A) demographic information of such 
     individuals, including income and education levels, (B). 
     satisfaction of such individuals with the enrollment process 
     in the HCTC program, (C) satisfaction of such individuals 
     with available health coverage options under the credit, 
     including level of premiums, benefits, deductibles, cost-
     sharing requirements, and the adequacy of provider networks, 
     and (D) any other information that the Secretary determines 
     is appropriate.
       2. In the case of eligible individuals not receiving the 
     HCTC (A) demographic information on each individual, 
     including income and education levels, (B) whether the 
     individual was aware of the HCTC or the HCTC program, (C) the 
     reasons the individual has not enrolled in the HCTC program, 
     including whether such reasons include the burden of process 
     of enrollment and the affordability of coverage, (D) whether 
     the individual has health insurance coverage, and, if so, the 
     source of such coverage, and (E) any other information that 
     the Secretary determines is appropriate.
       Not later than December 31 of each year in which a survey 
     described above is conducted (beginning in 2010), the 
     Secretary of Treasury must report to the Committee on Finance 
     and the Committee on Health, Education, Labor, and Pensions 
     of the Senate and the Committee on Ways and Means and the 
     Committee on Education and Labor of the House of 
     Representatives the findings of the most recent survey.
       Report
       Not later than October 1 of each year (beginning in 2010), 
     the Secretary of Treasury must report to the Committee on 
     Finance and the Committee on Health, Education, Labor, and 
     Pensions of the Senate and the Committee on Ways and Means 
     and the Committee on Education and Labor of the House of 
     Representatives the following information with respect to the 
     most recent taxable year ending before such date:
       1. In each State and nationally (A) the total number of 
     eligible individuals and the number of eligible individuals 
     receiving the HCTC, (B) the total number of such eligible 
     individuals who receive an advance payment of the HCTC 
     through the HCTC program, (C) the average length of the time 
     period of participation of eligible individuals in the HCTC 
     program, and (D) the total number of participating eligible 
     individuals in the HCTC program who are enrolled in each 
     category of qualified health insurance with respect to each 
     category of eligible individuals.
       2. In each State and nationality, an analysis of (A) the 
     range of monthly health insurance premiums, for self-only 
     coverage and for family coverage, for individuals receiving 
     the benefit of the HCTC and (B) the average and median 
     monthly health insurance premiums, for self-only coverage and 
     for family coverage, for individuals receiving the HCTC with 
     respect to each category of qualified health insurance.
       3. In each State and nationally, an analysis of the 
     following information with respect to the health insurance 
     coverage of individuals receiving the HCTC who are enrolled 
     in State-based coverage: (A) deductible amounts, (B) other 
     out-of-pocket cost-sharing amounts, and (C) a description of 
     any annual or lifetime limits on coverage or any other 
     significant limits on coverage services or benefits. The 
     information must be reported with respect to each category of 
     coverage.
       4. In each State and nationally, the gender and average age 
     of eligible individuals who

[[Page 4091]]

     receive the HCTC in each category of qualified health 
     insurance with respect to each category of eligible 
     individuals.
       5. The steps taken by the Secretary of the Treasury to 
     increase the participation rates in the HCTC program among 
     eligible individuals, including outreach and enrollment 
     activities.
       6. The cost of administering the HCTC program by function, 
     including the cost of subcontractors, and recommendations on 
     ways to reduce the administrative costs, including 
     recommended statutory changes.
       7. After consultation with the Secretary of Labor, the 
     number of States applying for and receiving national 
     emergency grants under section 173(f) of the Workforce 
     Investment Act of 1998, the activities funded by such grants 
     on a State-by-State basis, and the time necessary for 
     application approval of such grants.
     Other non-revenue provisions
       The provision also authorizes appropriations for 
     implementation of the revenue provisions of the provision and 
     provides grants under the Workforce Investment Act of 1998 
     for purposes related to the HCTC.
     GAO study
       The provision requires the Comptroller General of the 
     United States to conduct a study regarding the HCTC to be 
     submitted to Congress no later than March 31, 2010. The study 
     is to include an analysis of (1) the administrative costs of 
     the Federal government with respect to the credit and the 
     advance payment of the credit and of providers of qualified 
     health insurance with respect to providing such insurance to 
     eligible individuals and their families, (2) the health 
     status and relative risk status of eligible individuals and 
     qualified family members covered under such insurance, (3) 
     participation in the credit and the advance payment of the 
     credit by eligible individuals and their qualifying family 
     members, including the reasons why such individuals did or 
     did not participate and the effects of the provision on 
     participation, and (4) the extent to which eligible 
     individuals and their qualifying family members obtained 
     health insurance other than qualifying insurance or went 
     without insurance coverage. The provision provides the 
     Comptroller General access to the records within the 
     possession or control of providers of qualified health 
     insurance if determined relevant to the study. The 
     Comptroller General may not disclose the identity of any 
     provider of qualified health insurance or eligible individual 
     in making information available to the public.


                             Effective Date

       The provision is generally effective upon the date of 
     enactment, excepted as otherwise noted above.

                TITLE IV--HEALTH INFORMATION TECHNOLOGY

  Subtitle C--Incentives for the Use of Health Information Technology

                                                                      1
Part II--Medicare Program.............................................1
  Incentives for Eligible Professionals. (House bill Sec. 4311; Senate 
    bill Sec. 4201; Conference agreement Sec.4201)....................1
  Incentives for Hospitals. (House bill Sec. 4312; Senate bill Sec. 
    4202; Conference agreement Sec. 4202).............................1
  Treatment Of Payments And Savings; Implementation Funding. (House 
    bill Sec. 4313; Senate bill Sec. 4203; Conference agreement Sec. 
    4203).............................................................1
  Study on Application of HIT Payment Incentives For Providers Not 
    Receiving Other Incentive Payments. (House bill Sec. 4314; Senate 
    bill Sec. 4205; Conference agreement Sec. 4204)...................1
  Study on Availability of Open Source Health Information Technology 
    Systems. (Senate bill Sec. 4206)..................................1
Part III--Medicaid Funding............................................1
  Medicaid Provider HIT Adoption and Operation Payments; Implementation 
    Funding. (House bill Sec. 4321; Senate bill Sec. 4211; Conference 
    agreement Sec. 4211)..............................................1
  Medicaid Nursing Home Grant Program. (House bill Sec. 4322).........1
Subtitle E--Miscellaneous Medicare Provisions.........................1
  Moratoria on Certain Medicare Regulations. (House bill Sec. 4501; 
    Senate bill Sec. 4204; Conference agreement Sec. 4301)............1
  Long-term Care Hospital Technical Corrections. (House bill Sec. 4502; 
    Conference agreement Sec. 4302)...................................1

                       Part II--Medicare Program

 Incentives for Eligible Professionals. (House Bill Sec. 4311; Senate 
            Bill Sec. 4201; Conference Agreement Sec. 4101)


                              Current law

       There are several current legislative and administrative 
     initiatives to promote the use of Health Information 
     Technology (HIT) and Electronic Health Records (EHR's) in the 
     Medicare program. The Medicare Modernization Act of 2003 
     (MMA; P.L. 108-173) established a timetable for the Centers 
     for Medicare and Medicaid Services (CMS) to develop e-
     prescribing standards, which provide for the transmittal of 
     such information as eligibility and benefits (including 
     formulary drugs), information on the drug being prescribed 
     and other drugs listed in the patient's medication history 
     (including drug-drug interactions), and information on the 
     availability of lower-cost, therapeutically appropriate 
     alternative drugs. CMS issued a set of foundation standards 
     in 2005, then piloted and tested additional standards in 
     2006, several of which were part of a 2008 final rule. The 
     final Medicare e-prescribing standards, which become 
     effective on April 1, 2009, apply to all Part D sponsors, as 
     well as to prescribers and dispensers that electronically 
     transmit prescriptions and prescription-related information 
     about Part D drugs prescribed for Part D eligible 
     individuals. The MMA did not require Part D drug prescribers 
     and dispensers to e-prescribe. Under its provisions, only 
     those who choose to e-prescribe must comply with the new 
     standards. However, the Medicare Improvement for Patients and 
     Providers Act of 2008 (MIPPA; P.L. 110-275) included an e-
     prescribing mandate and authorized incentive bonus payments 
     for e-prescribers between 2009 and 2013. Beginning in 2012, 
     payments will be reduced for those who fail to e-prescribe.
       CMS is administering a number of additional programs to 
     promote EHR adoption. The MMA mandated a three-year pay-for-
     performance demonstration in four states (AR, CA, MA, UT) to 
     encourage physicians to adopt and use EHR to improve care for 
     chronically ill Medicare patients. Physicians participating 
     in the Medicare Care Management Performance (MCMP) 
     demonstration receive bonus payments for reporting clinical 
     quality data and meeting clinical performance standards for 
     treating patients with certain chronic conditions. They are 
     eligible for an additional incentive payment for using a 
     certified EHR and reporting the clinical performance data 
     electronically.
       CMS has developed a second demonstration to promote EHR 
     adoption using its Medicare waiver authority. The five-year 
     Medicare EHR demonstration is intended to build on the 
     foundation created by the MCMP program. It will provide 
     financial incentives to as many as 1,200 small- to medium-
     sized physician practices in 12 communities across the 
     country for using certified EHRs to improve quality, as 
     measured by their performance on specific clinical quality 
     measures. Additional bonus payments will be made based on the 
     number of EHR functionalities a physician group has 
     incorporated into its practice.
       The Tax Relief and Health Care Act of 2006 (P.L. 109-432) 
     established a voluntary physician quality reporting system, 
     including an incentive payment for Medicare providers who 
     report data on quality measures. The Medicare Physician 
     Quality Reporting Initiative (PQRI) was expanded by the 
     Medicare, Medicaid, and SCHIP Extension Act of 2007 (P.L. 
     110-173) and by MIPPA, which authorized the program 
     indefinitely and increased the incentive that eligible 
     physicians can receive for satisfactorily reporting quality 
     measures. In 2009, eligible physicians may earn a bonus 
     payment equivalent to 2.0% of their total allowed charges for 
     covered Medicare physician fee schedule services. The PQRI 
     quality measures include a structural measure that conveys 
     whether a physician has and uses an EHR.


                               House Bill

       The House bill would add an incentive payment to certain 
     eligible professionals for the adoption and ``meaningful 
     use,'' defined below, of a certified EHR system. 
     Professionals eligible for the incentive payments are those 
     who participate in Medicare and who are defined under Sec. 
     1861(r) of the Social Security Act.
       Incentive payments. The amount of EHR incentive payments 
     that eligible providers could receive would be capped, based 
     on the amount of Medicare-covered professional services 
     furnished during the year in question, and the total possible 
     amount of the incentive payment would decrease over time. The 
     bill permits a rolling implementation period, with cohorts 
     starting in 2011, 2012, and 2013, respectively, being 
     eligible for the entire five years of incentives. For 
     example, incentives that start in 2011 would continue through 
     2015, while those that begin in 2012 would run through 2016 
     and those starting in 2013 would run through 2017.
       For the first calendar year of the designated period 
     described above, the limit would be $15,000. Over the next 
     four calendar years, the total possible amount would decrease 
     respectively by year to $12,000, $8,000, $4,000, and $2,000. 
     The phase-down is different for eligible professionals first 
     adopting EHR after 2013. For these eligible providers, the 
     limit on the amount of the incentive payment would equal the 
     limit in the first payment year for someone whose first 
     payment year is 2013. For example, if the first payment year 
     is after 2014 then the limit on the incentive payments for 
     that year would be $12,000 rather than $15,000. The EHR 
     incentive payments for professionals would not be available 
     to a hospital-based eligible physician, such as a 
     pathologist, anesthesiologist or emergency physician who 
     furnishes substantially all such services in a hospital 
     setting using the hospital's facilities and equipment, 
     including computer equipment. However, health IT incentive 
     payments are made available to hospitals in Sec. 4312.

[[Page 4092]]

       The payments could be in the form of a single consolidated 
     payment or in periodic installments, as determined by the 
     Secretary. The Secretary would establish rules to coordinate 
     the limits on the incentive payments for eligible 
     professionals who provide covered professional services in 
     more than one practice. The Secretary would seek to avoid 
     duplicative requirements from federal and state governments 
     to demonstrate meaningful use of certified EHR technology 
     under the Medicare and Medicaid programs. The Secretary would 
     be allowed to adjust the reporting periods in order to carry 
     out this clause.
       Meaningful use. For purposes of the EHR incentive payment, 
     an eligible professional would be treated as a ``meaningful 
     user'' of EHR technology if the eligible professional meets 
     the following three criteria: (1) the eligible professional 
     demonstrates to the satisfaction of the Secretary that during 
     the period the professional is using a certified EHR 
     technology in a meaningful manner, which would include the 
     use of electronic prescribing as determined to be appropriate 
     by the Secretary; (2) the eligible professional demonstrates 
     to the satisfaction of the Secretary that during such period 
     such certified EHR technology is connected in a manner that 
     provides, in accordance with law and standards applicable to 
     the exchange of information, for the electronic exchange of 
     health information to improve the quality of health care, 
     such as promoting care coordination; and (3) the eligible 
     professional submits information on clinical quality 
     measures.
       The Secretary could provide for the use of alternative 
     means for meeting the above requirements in the case of an 
     eligible professional furnishing covered professional 
     services in a group practice (as defined by the Secretary). 
     The Secretary would seek to improve the use of electronic 
     health records and health care quality by requiring more 
     stringent measures of meaningful use over time.
       Clinical quality measures. The Secretary would select the 
     clinical quality measures and other measures but must be 
     consistent with the following: (1) the Secretary would 
     provide preference to clinical quality measures that have 
     been endorsed by the consensus-based entity regarding 
     performance measurement with which the Secretary has a 
     contract under Sec. 1890(a) of the Social Security Act; and 
     (2) prior to any measure being selected for the purposes of 
     this provision, the Secretary would publish the measure in 
     the Federal Register and provide for a period of public 
     comment. The Secretary could not require the electronic 
     reporting of information on clinical quality measures unless 
     the Secretary has the capacity to accept the information 
     electronically, which may be on a pilot basis. In selecting 
     the measures and in establishing the form and manner for 
     reporting these measures, the Secretary would seek to avoid 
     redundant or duplicative reporting otherwise required, 
     including reporting under the physician quality reporting 
     initiative.
       A professional could satisfy the demonstration requirement 
     above through means specified by the Secretary, which may 
     include the following: (1) an attestation; (2) the submission 
     of claims with appropriate coding (such as a code indicating 
     that a patient encounter was documented using certified EHR 
     technology); (3) a survey response; (4) reporting the 
     clinical quality and other measures mentioned above; and (5) 
     other means specified by the Secretary. Notwithstanding other 
     provisions of law that place restrictions on the use of Part 
     D data, the Secretary could use data regarding drug claims 
     submitted for purposes of determining payment under Part D 
     for purposes of determining the EHR incentive payments under 
     this legislation.
       Payment adjustments. Fee schedule payments to eligible 
     professionals would be adjusted under certain conditions. For 
     covered professional services furnished by an eligible 
     professional during 2016 or any subsequent payment year, if 
     the professional is not a meaningful EHR user during the 
     previous year's reporting period, the fee schedule amount 
     would be reduced to 99% in 2016, 98% in 2017, and 97% in 2018 
     and in each subsequent year.
       For 2019 and each subsequent year, if the Secretary finds 
     that the proportion of eligible professionals who are 
     meaningful EHR users is less than 75%, the applicable fee 
     schedule amount would be decreased by 1 percentage point from 
     the applicable percent in the preceding year, but in no case 
     would the applicable percent be less than 95%.
       Hardship exemption. The Secretary could, on a case-by-case 
     basis, exempt an eligible professional from the application 
     of the payment adjustment above if the Secretary determines, 
     subject to annual renewal, that being a meaningful EHR user 
     would result in a significant hardship, such as in the case 
     of an eligible professional who practices in a rural area 
     without sufficient Internet access. In no case would an 
     eligible professional be granted such an exemption for more 
     than five years.
       Medicare Advantage. In general, Medicare incentives created 
     under this section are not available to Medicare Advantage 
     (MA) plans, and both the payments and penalties made under 
     this section are exempt from the MA benchmark determinations. 
     However, the legislation establishes conditions under which 
     the EHR bonus payments and penalties for the adoption and 
     meaningful use of certified EHR technology would apply to 
     certain HMO-affiliated eligible professionals. In general, 
     with respect to eligible professionals in a qualifying MA 
     organization for whom the organization attests to the 
     Secretary as meaningful users of EHR, the incentive payments 
     and adjustments would apply in a similar manner as they apply 
     to other eligible professionals. Incentive payments would be 
     made to, and payment adjustments would apply to, the 
     qualifying organizations. With respect to a qualifying MA 
     organization, an eligible professional would be an eligible 
     professional who (i) is employed by the organization or is 
     employed by or is a partner of an entity that through 
     contract furnishes at least 80% of the entity's patient care 
     services to enrollees of the organization; and furnishes at 
     least 80% of the professional services of the eligible 
     professional to enrollees of the organization; and (ii) 
     furnishes, on average, at least 20 hours per week of patient 
     care services. For these MA-affiliated eligible 
     professionals, the Secretary would determine the incentive 
     payments which should be similar to the payments that would 
     have been available to the professionals under FFS.
       To avoid duplication of payments, if an eligible 
     professional is both an MA-affiliated professional and 
     eligible for the maximum payment under the fee-for-service 
     program (FFS), the payment incentive would be made only under 
     FFS. Otherwise, the incentive payment would be made to the 
     plan. The Secretary would develop a process to ensure that 
     duplicate payments are not made. A qualifying MA organization 
     would specify a year (not earlier than 2011) that would be 
     treated as the first payment year for all eligible 
     professionals with respect to the MA organization.
       In applying the applicable percentage payment adjustment to 
     MA-affiliated eligible professionals, instead of the payment 
     adjustment being an applicable percent of the fee schedule 
     amount for a year, the payment adjustment to the payment to 
     the MA organization would be a proportional amount based on 
     the payment adjustment applicable to FFS providers and the 
     fraction of the organization's eligible professionals who are 
     not meaningfully using EHRs.


                              Senate Bill

       The Senate bill is mostly the same as the House bill, but 
     with the following exceptions. The Senate bill does not 
     provide for any incentive payments to eligible professionals 
     who first adopt EHR in 2014 or in subsequent years but does 
     provide a greater incentive for early adoption of EHR, with 
     payments of $18,000 if the first payment year under the EHR 
     incentive program is 2011 or 2012.
       Certain rural eligible providers would receive larger 
     incentive payments in the Senate bill. The incentive payment 
     would be increased by 25% if the provider predominantly 
     serves beneficiaries in a rural area designated as a health 
     professional shortage area.
       Under the Senate bill, the Secretary would also be given 
     the authority to deem providers who satisfy state 
     requirements for demonstrating meaningful use of EHR 
     technology as meeting the criteria for meaningful use under 
     the Medicare EHR incentive program. No similar authority or 
     provision is included in the House bill.
       The incentive adjustment (penalty) would begin a year 
     earlier in 2015 under the Senate bill as opposed to 2016 in 
     the House bill. The schedule of reductions over time in the 
     applicable percentage also reflects this difference, so that 
     the applicable percent under the Senate bill would be 99% in 
     2015, 98% in 2016, and 97% in 2017.
       With respect to the application of the incentive payment 
     program to managed care organizations, the Senate bill 
     differs from the House bill in two areas. First, the Senate 
     bill applies a slightly different requirement to determine an 
     eligible professional. Under the Senate bill, a professional 
     who furnishes at least 75% (vs. 80% in the House bill) of his 
     or her professional services to enrollees of the managed care 
     organization and who also met the additional criteria noted 
     above would be eligible for this incentive program. Second, 
     the Senate bill includes a cap on large managed care 
     organizations that limits incentive payments to no more than 
     5,000 eligible professionals of the organization in 
     recognition of economies of scale in such organizations. This 
     difference is also reflected in the payment adjustment 
     penalty calculation in the Senate bill.
       The Senate bill would require that the names, business 
     addresses, and business phone numbers of each qualifying 
     managed care organization and the associated eligible 
     professionals receiving EHR incentive payments be posted on 
     the CMS website in an easily understandable format.
       Finally, the Senate bill would require the HHS Secretary to 
     provide assistance to eligible professionals, Medicaid 
     providers, and eligible hospitals located in rural or other 
     medically underserved areas to successfully choose, 
     implement, and use certified EHR technology. To the extent 
     practicable, the assistance would be through entities that 
     have expertise in this area.

[[Page 4093]]




                          Conference Agreement

       With regard to eligible professionals, the conference 
     agreement includes provisions from the House and Senate 
     bills.
       The conference agreement provides eligible professionals 
     who show meaningful use of an EHR in 2011 or 2012 with 
     incentive payments of $18,000 in the first year; provides no 
     payment incentives after 2016; and does not provide incentive 
     payments to eligible professionals who first adopt an EHR in 
     2015 or subsequent years.
       Incentive payments would be increased by 10% if the 
     provider predominately serves beneficiaries in any area 
     designated as a health professional shortage area. The 
     conference agreement mirrors the Senate bill in that payment 
     adjustments for eligible professionals not demonstrating 
     meaningful use of an EHR would begin in 2015.
       The conference agreement, like the House and Senate-passed 
     bills, prohibits payments to hospital-based professionals 
     (because such professionals are generally expected to use the 
     EHR system of that hospital). This policy does not disqualify 
     otherwise eligible professionals merely on the basis of some 
     association or business relationship with a hospital. Common 
     examples of such arrangements include professionals who are 
     employed by a hospital to work in an ambulatory care clinic 
     or billing arrangements in which physicians submit claims to 
     Medicare together with hospitals or other entities. The 
     change in the conference agreement clarifies that this test 
     will be based on the setting in which a provider furnishes 
     services rather than any billing or employment arrangement 
     between a provider and hospital or other provider entity.
       For MA organizations, the conference agreement reflects the 
     Senate bill with the following exceptions. The agreement 
     requires MA-affiliated professionals to provide 80 percent of 
     their Medicare services to the enrollees of the qualifying MA 
     organization and removes the payment incentive cap on 
     eligible professionals affiliated with health maintenance 
     organizations. It also extends the language of limitations on 
     review for eligible professionals to professionals eligible 
     under the managed care section and makes several technical 
     corrections.
       In addition, the conference report requires the Secretary 
     to report to Congress on methods of making payment incentives 
     and adjustments with respect to eligible professionals who 1) 
     contract with one or more MA organizations or with 
     intermediary organizations that contracts with one or more MA 
     organizations and 2) are not eligible for incentive payments 
     under this legislation. The report is due to Congress within 
     120 days of enactment and shall include recommendations for 
     legislation as appropriate. The agreement reflects the 
     Congress's intent to provide payment incentives and 
     adjustments towards the meaningful use of certified EHRs with 
     respect to all physicians who treat Medicare patients without 
     regard to practice organization.

Incentives for Hospitals. (House bill Sec. 4312; Senate bill Sec. 4202; 
                    Conference agreement Sec. 4102)


                              Current Law

       Medicare pays acute care hospitals using a prospectively 
     determined payment for each discharge. These payment rates 
     are increased annually by an update factor that is 
     established, in part, by the projected increase in the 
     hospital market basket (MB) index. However, starting in 
     FY2007, hospitals that do not submit required quality data 
     will have the applicable MB percentage reduced by two 
     percentage points. The reduction would apply for that year 
     and would not be taken into account in subsequent years. 
     Currently, Medicare's payments to acute care hospitals under 
     the inpatient prospective payment system (IPPS) are not 
     affected by the adoption of EHR technology. Critical access 
     hospitals (CAHs) receive cost-plus reimbursement under 
     Medicare. Under current law, Medicare reimburses CAHs at 101% 
     of their Medicare costs. These reimbursements include 
     payments for Medicare's share of CAH expenditures on health 
     IT, plus an additional 1%.


                               House Bill

       The bill would establish incentives, starting in FY2011, 
     within Medicare's IPPS for eligible hospitals that are 
     meaningful EHR users. Generally, these hospitals would 
     receive diminishing additional payments over a four-year 
     period. Starting in FY2016, eligible hospitals that do not 
     become meaningful EHR users could receive lower payments 
     because of reductions to their annual MB updates.
       Incentive payments. Subject to certain limitations, each 
     qualified hospital would receive an incentive payment 
     calculated as the sum of a base amount ($2 million) added to 
     its discharge related payment, which would then be multiplied 
     by its Medicare's share. These payments would be reduced over 
     a four-year transition period. A qualified hospital would 
     receive $200 for each discharge paid under the inpatient 
     prospective payment system (IPPS) starting with its 1,150th 
     discharge through its 23,000th discharge.
       A hospital's Medicare share would be calculated according 
     to a specified formula. The numerator would equal inpatient 
     bed days attributable to individuals for whom a Part A 
     payment may be made, either under traditional Medicare or for 
     those who are enrolled in Medicare Advantage (MA) 
     organizations. The denominator would equal the total number 
     of inpatient bed days in the hospital adjusted by a 
     hospital's share of charges attributed to charity care. 
     Specifically, the hospital's total days would be multiplied 
     by a fraction calculated by dividing the hospital's total 
     charges minus its charges attributed to charity care by its 
     total charges. If a hospital's charge data on charity care is 
     not available, the Secretary would be required to use the 
     hospital's uncompensated care data which may be adjusted to 
     eliminate bad debt. If hospital data to construct the charity 
     care factor is unavailable, the fraction would be set at one. 
     If hospital data necessary to include MA days is not 
     available, that component of the formula would be set at 
     zero.
       The legislation establishes a four-year incentive payment 
     transition schedule. A hospital that is a meaningful EHR user 
     would receive the full amount of the incentive payment in its 
     first payment year; 75% of the amount in its second payment 
     year; 50% of the amount in its third payment year; and 
     finally, 25% of the amount in its fourth payment year. The 
     first payment year for a meaningful EHR user would be FY2011 
     or, alternatively, the first fiscal year for which an 
     eligible hospital would qualify for an incentive payment. 
     Hospitals that first qualify for the incentive payments after 
     FY2013, would receive incentive payments on the transition 
     schedule as if their first payment year is FY2013. Hospitals 
     that become meaningful EHR users after FY2015 would not 
     receive incentive payments. The incentive payments may be 
     made as a single consolidated payment or may be made as 
     periodic payments, as determined by the Secretary.
       Meaningful use. An eligible hospital would be treated as a 
     meaningful EHR user if it demonstrates that it uses certified 
     EHR technology in a meaningful manner and provides for the 
     electronic exchange of health information (in accordance with 
     applicable legal standards) to improve the quality of care. A 
     hospital would satisfy the demonstration requirements through 
     an attestation; the submission of appropriately coded claims; 
     a survey response; EHR reporting on certain measures; or 
     other means specified by the Secretary.
       Clinical quality measures. EHR measures would include 
     clinical quality measures and other measures selected by the 
     Secretary. Prior to implementation, the measures would be 
     published in the Federal Register and subject to public 
     comment. The electronic reporting of the clinical quality 
     measures would not be required unless the Secretary has the 
     capacity to accept the information electronically, which may 
     be on a pilot basis. When establishing the measures, the 
     Secretary shall provide preference to clinical quality 
     measures that have been selected for the Reporting Hospital 
     Quality Data for Annual Payment Update program (RHQDAPU) 
     established at 1886(b)(3)(B)(viii) of the Social Security Act 
     or that have been endorsed by the entity with a contract with 
     the Secretary under Sec. 1890(a), which is currently the 
     National Quality Forum. The Secretary shall seek to avoid 
     redundant measures or duplicative reporting. Not withstanding 
     restrictions placed on the use and disclosure of Medicare 
     Part D information, the Secretary would be able to use data 
     regarding drug claims.
       Miscellaneous. There would be no administrative or judicial 
     review of the determination of any incentive payment or 
     payment update adjustment (described subsequently), 
     including, the determination of a meaningful EHR user, the 
     determination of the measures, or the determination of an 
     exception to the payment update adjustment.
       The Secretary would post listings of the eligible hospitals 
     that are meaningful EHR users or that are subject to the 
     penalty and other relevant data on the CMS website. Hospitals 
     would have the opportunity to review the other relevant data 
     prior to the data being made publicly available.
       Penalties. Starting in FY2016, eligible IPPS hospitals that 
     do not submit the required quality data would be subject to a 
     25% reduction in their annual update, rather than the 2 
     percentage point reduction under current law. Those hospitals 
     that are not meaningful EHR users would be subject to a 
     reduction in their annual MB update for the remaining three-
     quarters of the update. This reduction would be implemented 
     over a three-year period. In FY2016, one-quarter of the 
     update will be at risk for quality reporting and one-quarter 
     at risk for meaningful use of EHR. In FY2017, one-quarter of 
     the update will be at risk for quality reporting and one-half 
     will be at risk for meaningful use of EHR. In FY2018 and 
     subsequent years, one-quarter of the update will be at risk 
     for quality reporting and three-quarters will be at risk for 
     meaningful use of EHR. These reductions would apply only to 
     the fiscal year involved and would not be taken into account 
     in subsequent fiscal years. Starting in FY2016, payments to 
     acute care hospitals that are not meaningful EHR users in a 
     state operating under a Medicare waiver under section 
     1814(b)(3) of the Social Security Act would be subject to 
     comparable aggregate reductions. The state would be required 
     to report its payment adjustment methodology to the 
     Secretary.

[[Page 4094]]

       Hardship exemption. The Secretary would be able to exempt 
     certain IPPS hospitals from these payment adjustments for a 
     fiscal year if the Secretary determines that requiring a 
     hospital to be a meaningful EHR user during that year would 
     result in significant hardship, such as a hospital in a rural 
     area without adequate Internet access. Such determinations 
     would be subject to annual renewal. In no case would a 
     hospital be granted an exemption for more than five years.
       Medicare Advantage. In general, Medicare incentives created 
     under this section are not available to Medicare Advantage 
     (MA) plans and the payments made under this section are 
     exempt from the benchmark determinations. However, payment 
     incentives and penalties would be established for certain 
     qualifying MA organizations to ensure maximum capture of 
     relevant data relating to Medicare beneficiaries. An eligible 
     hospital would be one that is under common corporate 
     governance with a qualifying MA organization and serves 
     enrollees in an MA plan offered by the organization. The 
     Secretary would be required to determine incentive payment 
     amounts similar to the estimated amount in the aggregate that 
     would be paid if the hospital services had been payable under 
     Part A as described above. The Secretary would be required to 
     avoid duplicative EHR incentive payments to hospitals. If an 
     eligible hospital under Medicare Part C was also eligible for 
     EHR incentive payments under Medicare Part A, and for which 
     at least 33% of hospital discharges (or bed days) were 
     covered under Medicare Part A, the EHR incentive payment 
     would only be made under Part A and not Part C. If fewer than 
     33% of discharges are covered under Part A, the Secretary 
     would be required to develop a process to ensure that 
     duplicative payments were not made and to collect data from 
     MA organizations to ensure against duplicative payments.
       If one or more eligible hospitals under a common corporate 
     governance with a qualifying MA Health Maintenance 
     Organization are not meaningful EHR users, the incentive 
     payment to the organization would be reduced by a specified 
     percentage. The percentage is defined as 100% minus the 
     product of (a) the percentage point reduction to the payment 
     update for the period described above and (b) the Medicare 
     hospital expenditure proportion. This hospital expenditure 
     proportion is defined as the Secretary's estimate of the 
     portion of expenditures under Parts A and B that are not 
     attributable to this part, that are attributable to 
     expenditures for inpatient hospital services. The Secretary 
     would be required to apply the payment adjustment based on a 
     methodology specified by the Secretary, taking into account 
     the proportion of eligible hospitals or discharges from 
     eligible hospitals that are not meaningful EHR users for the 
     period.


                              Senate Bill

       The Senate bill is largely the same as the House bill, but 
     with the following differences. First, instead of a fixed 
     amount per discharge, a qualified hospital would receive $200 
     per discharge for the 1,150th through the 9,200th discharge, 
     $100 per discharge for the 9,201st through the 13,800th 
     discharge, and $60 per discharge for the 13,801st through the 
     23,000th discharge. Second, the Senate bill would include 
     CAHs as eligible hospitals, and limit the total amount of 
     payments to a CAH for all payment years to $1.5 million. CAHs 
     would continue to also receive their cost-plus reimbursement 
     available under current law. Third, the penalties would begin 
     a year earlier in FY2015; in the House bill the penalties 
     begin in FY2016. Fourth, beginning in FY2015, a CAH that is 
     not a meaningful EHR user would have its Medicare 
     reimbursement rate as a percentage of its Medicare costs 
     reduced to the following: FY2015, 100.66%; FY2016, 100.33%; 
     FY2017 and each subsequent fiscal year, 100%. The Secretary 
     would be permitted, on a case-by-case basis, to exempt a CAH 
     from the penalties due to significant hardship. Finally, the 
     Senate bill would require that the names, business addresses, 
     and business phone numbers of each qualifying MA organization 
     receiving EHR incentive payments be posted on the CMS website 
     in an easily understandable format.


                          Conference Agreement

       The Conference Agreement follows the House bill, but with 
     the following differences. First, the Conference agreement 
     includes bonus payments for CAHs that are meaningful users of 
     EHR technology. These bonus payments are capped at an 
     enhanced Medicare share of 101 percent of those reasonable 
     costs that are normally subject to depreciation and that are 
     for the purchase of certified EHR. The enhanced Medicare 
     share will equal the Medicare share calculated for 1886(d) 
     hospitals, for EHR bonuses, including an adjustment for 
     charity care, plus an additional 20 percentage points, except 
     that the Medicare share may not exceed 100 percent. CAHs that 
     are meaningful users of EHR technology will be able to 
     expense these costs in a single payment year and receive 
     prompt interim payments, rather than receiving reimbursement 
     over a multi-year depreciation schedule. Beginning in 2011, 
     if a CAH is a meaningful EHR user, they are eligible for four 
     consecutive years of these bonuses, regardless of the year 
     they meet the meaningful user standard, except that a CAH 
     cannot get bonuses after 2015, similar to the bonus timeframe 
     for a 1886(d) hospital. CAHs will continue to receive cost-
     plus reimbursement for their remaining costs, such as for 
     ongoing maintenance or other costs that are not subject to 
     depreciation. This cost-plus reimbursement continues beyond 
     the bonus period, consistent with current law. Normal cost 
     reporting rules would apply for the purchase of certified EHR 
     technology until the CAH becomes a meaningful EHR 
     user. CAHs are eligible for the same hardship 
     exemption that is available to 1886(d) hospitals. Second, the 
     conference agreement adopts the Senate's penalty schedule for 
     both 1886(d) hospitals and CAHs. Third, the conference 
     agreement includes the Senate provision requiring CMS to post 
     information about qualifying MA hospitals on the website. 
     Fourth, the conference agreement clarifies which provisions 
     are subject to limitations on review for hospitals and 
     extends appropriate limitations to CAHs and MA hospitals.

Treatment Of Payments And Savings; Implementation Funding. (House bill 
   Sec. 4313; Senate bill Sec. 4203; Conference agreement Sec. 4103)


                              Current Law

       Physician and outpatient services provided under Medicare 
     Part B are financed through a combination of beneficiary 
     premiums, deductibles, and federal general revenues. In 
     general, Part B beneficiary premiums are set to equal 25% of 
     estimated program costs for the aged, with federal general 
     revenues accounting for the remainder. The Part B premium 
     fluctuates along with total Part B expenditures.
       Absent specific legislation to exempt premiums from policy 
     effects, the recent growth in expenditures for physician 
     services, led by the increase in imaging and diagnostic 
     services, generally results in premium increases to cover the 
     beneficiaries 25% share of total expenditures. While an 
     individual's Social Security payment cannot decrease from one 
     year to the next as a result of an increase in the Part B 
     premium (except for those subject to the income-related 
     premium), current law does permit the entire cost-of-living 
     (COLA) increase to be consumed by Medicare premium increases.
       MIPPA established the Medicare Improvement Fund (MIF), 
     available to the Secretary to make improvements under the 
     original fee-for-service program under parts A and B for 
     Medicare beneficiaries.
       For FY2009 through FY2013, the Secretary of Health and 
     Human Services would transfer $140 million from the Federal 
     Hospital Insurance Trust Fund and the Federal Supplementary 
     Medical Insurance Trust Fund to the CMS Program Management 
     Account. The amounts drawn from the funds would be in the 
     same proportion as for Medicare managed care payments 
     (Medicare Advantage), that is, in a proportion that reflects 
     the relative weight that benefits under part A and under part 
     B represent of the actuarial value of the total benefits.


                               House Bill

       The House bill would exempt spending under this title from 
     the annual amount of Medicare physician expenditures used to 
     calculate the Part B premium; beneficiaries would be held 
     harmless from potential premium increases due to the 
     increased Part B expenditures that result from this added 
     payment. Further, the bill would authorize the transfer of 
     funds from the Treasury to the Supplementary Medical 
     Insurance (Part B) Trust Fund to cover the amount of EHR 
     payment incentives that would otherwise be offset by Part B 
     premiums.
       The bill would modify the purposes of the Medicare 
     Improvement Fund by allowing the monies to be used to adjust 
     Medicare part B payments to protect against projected 
     shortfalls due to any increase in the conversion factor used 
     to calculate the Medicare Part B fee schedule.
       The amount in the fund in FY2014, after taking into account 
     the transfer directed by this section, would be modified to 
     be $22.29 billion. For FY2020 and each subsequent fiscal 
     year, the amount in the fund would be the Secretary's 
     estimate, as of July 1 of the fiscal year, of the aggregate 
     reduction in Medicare expenditures directly resulting from 
     the penalties imposed as a result of various Medicare 
     providers not using HIT in a meaningful fashion.
       To implement the provisions in and amendments made by this 
     section, $60 million for each of FY2009 through FY2015 and 
     $30 million for each succeeding fiscal year through FY2019 
     would be appropriated to the Secretary for the CMS Program 
     Management Account. The amounts appropriated would be 
     available until expended.


                              Senate bill

       The premium hold-harmless provisions in the Senate bill are 
     identical to those in the House. However, the Senate bill 
     does not include the provisions regarding the Medicare 
     Improvement Fund including the transfers of aggregate 
     reductions resulting from the penalties into the MIF. The two 
     bills also differ in the funding amounts to CMS for 
     implementation. Whereas the House bill would appropriate $60 
     million for each of FY2009-FY2015 and $30 million for FY2016 
     through FY2019, the Senate bill would appropriate $100 
     million for each of FY2009-FY2015 and $45 million for FY2016 
     through FY2018.

[[Page 4095]]




                          Conference Agreement

       The conference agreement includes the premium hold-
     harmless, as well as changes contained in the House bill to 
     the Medicare Improvement Fund. The agreement also 
     appropriates $100 million in FY2009-FY2015 and $45 million in 
     FY 2016.

   Study on Application of HIT Payment Incentives For Providers Not 
Receiving Other Incentive Payments. (House bill Sec. 4314; Senate bill 
               Sec. 4205; Conference agreement Sec. 4104)


                              Current law

       No current law.


                               House Bill

       The House bill would require the Secretary to conduct a 
     study to determine whether payment incentives to implement 
     and use qualified HIT should be made available to health care 
     providers who are receiving minimal or no payment incentives 
     or other funding under this Act, including from Medicare or 
     Medicaid, or any other funding. These health care providers 
     could include skilled nursing facilities, home health 
     agencies, hospice programs, laboratories, federally qualified 
     health centers, and non-physician professionals.
       The study would include an examination of the following: 
     (1) the adoption rates of qualified HIT by such health care 
     providers; (2) the clinical utility of HIT by such health 
     care providers; (3) whether the services furnished by such 
     health care providers are appropriate for or would benefit 
     from the use of such technology; (4) the extent to which such 
     health care providers work in settings that might otherwise 
     receive an incentive payment or other funding under this Act, 
     Medicare or Medicaid, or otherwise; (5) the potential costs 
     and the potential benefits of making payment incentives and 
     other funding available to such health care providers; and 
     (6) any other issues the Secretary deems to be appropriate. 
     The Secretary would be required to submit a report to 
     Congress on the findings and conclusions of the study by June 
     30, 2010.


                              Senate bill

       Same provision.


                          Conference Agreement

       The conference report includes the study contained in the 
     House and Senate bills on providing incentive payments to 
     encourage use of health IT to providers who are receiving 
     minimal or no payment incentives or other funding under this 
     Act. It also includes a study in Section 4206 of the Senate 
     bill on the availability of open source health IT systems.

  Study on Availability of Open Source Health Information Technology 
                    Systems. (Senate bill Sec. 4206)


                              Current Law

       No provision.


                               House Bill

       No provision.


                              Senate Bill

       The Senate bill would the Secretary, in consultation with 
     other federal agencies, to study and report to Congress by 
     October 1, 2010, on the availability of open source HIT 
     systems to safety net providers.


                          Conference Agreement

       This study is included in Section 4104 of the conference 
     agreement.

                       Part III--Medicaid Funding

 Medicaid Provider HIT Adoption and Operation Payments; Implementation 
   Funding. (House bill Sec. 4321; Senate bill Sec. 4211; Conference 
                          agreement Sec. 4201)


                              Current Law

       The federal government pays a share of every state's 
     spending on Medicaid services and program administration. The 
     federal match for administrative expenditures does not vary 
     by state and is generally 50%, but certain functions receive 
     a higher amount. Section 1903(a)(3) of the Social Security 
     Act authorizes a 90% match for expenditures attributable to 
     the design, development, or installation of mechanized claims 
     processing and information retrieval systems--referred to as 
     Medicaid Management Information Systems (MMISs)--and a 75% 
     match for the operation of MMISs that are approved by the 
     Secretary of Health and Human Services (HHS). A 50% match is 
     available for non-approved MMISs under Section 1903(a)(7). In 
     order to receive payments under Section 1903(a) for the use 
     of automated data systems in the administration of their 
     Medicaid programs, states are required under Section 1903(r) 
     to have an MMIS that meets specified requirements and that 
     the Secretary has found (among other things) is compatible 
     with the claims processing and information retrieval systems 
     used in the administration of the Medicare program.
       State expenditures to encourage the purchase, adoption, and 
     use of electronic health records do not receive federal 
     financial participation, nor do State expenditures for the 
     operation and maintenance of such systems.


                               House Bill

       The House Bill would amend Title XIX of the Social Security 
     Act to authorize a 100% Federal match for a portion of 
     payments to encourage the adoption of EHR technology 
     (including support services and maintenance) to certain 
     Medicaid providers who meet certain requirements. The state 
     must prove to the Secretary that allowable costs are paid 
     directly to the provider without any deduction or rebate; 
     that the provider is responsible for payment of the EHR 
     technology costs not provided for; and, that for costs not 
     associated with purchase and initial implementation, the 
     provider certifies meaningful use of the EHR technology. 
     Finally, the certified EHR technology should be compatible 
     with state or Federal administrative management systems.
       Eligible providers would include physicians, nurse mid-
     wives, and nurse practitioners who are not hospital-based, 
     and who have patient volume of at least 30% attributable to 
     Medicaid patients. In order to qualify as a Medicaid 
     provider, the professional would have to waive any right to 
     Medicare EHR incentive payments for professionals detailed in 
     the bill. This group of providers would be eligible for a 
     payment equal to 85% of their net allowable technology costs. 
     However, the allowable costs for the purchase and initial 
     implementation of EHR technology cannot exceed $25,000 or 
     include costs over a period of more than 5 years. Annual 
     allowable costs not associated with initial implementation or 
     purchase of the EHR technology could not exceed $10,000 per 
     year or be made over a period of more than 5 years. Aggregate 
     allowable costs for these eligible professionals, after 
     application of the 85% adjustment, could not exceed $63,750.
       Acute care hospitals with at least 10% Medicaid patient 
     volume would be eligible for payments, as would children's 
     hospitals of any Medicaid patient volume. Payments to 
     hospitals would be limited to amounts analogous to those 
     specified for eligible hospitals in Medicare in Section 4312. 
     The payment limit for such hospitals is calculated as a base 
     amount plus an amount related to the total number of 
     discharges for such a hospital. The hospital's patient share 
     attributable to Medicaid is then multiplied by that amount to 
     calculate the limit of the payment an eligible hospital can 
     receive. Unlike the Medicare hospital amount, the Medicaid 
     hospital amount in the House bill is available, subject to 
     State administration, without restriction as to the schedule 
     of payments over time. That amount may not exceed the total 
     amount described above.
       Rural health clinics and Federally-Qualified Health Centers 
     with at least 30% patient volume attributable to Medicaid 
     patients would also be eligible for a payment for the costs 
     of adoption and use of certified EHR technology, limited to 
     amounts to be determined by the Secretary.
       In counting towards patient volume thresholds, patients in 
     Medicaid managed care plans are to be counted equivalently to 
     other individuals in Medicaid in all circumstances. 
     Individuals enrolled in optional Medicaid expansion programs 
     financed through title XXI of the Social Security Act also 
     must be counted.
       Because the payments to eligible professionals would be 
     sufficient to cover most or all of the costs of acquiring and 
     operating a certified EHR, providers eligible under for both 
     Medicare and Medicaid payments are required to choose one. 
     The Secretary would be required to ensure that eligible 
     professionals do not receive payments from both Medicare and 
     Medicaid. The Secretary would also be instructed to attempt 
     to avoid duplicative requirements for Federal and state 
     governments to demonstrate meaningful use of EHR technology 
     under Medicaid and Medicare, and may deem demonstration of 
     meaningful use of certified EHRs in Medicare to be sufficient 
     for demonstration of meaningful use of such technology in 
     Medicaid.
       By contrast, hospital limitations for Medicare and Medicaid 
     are assessed on a proportional basis depending upon a 
     hospital's patient volume from each payer, so hospitals could 
     receive funding from both sources.
       The House bill would authorize a 90% Federal match for 
     payment to the states for administrative expenses related to 
     EHR technology payments. In order for a state to receive the 
     match it must show that: it is using the funds provided for 
     these purposes to administer these systems including tracking 
     of meaningful use by providers; conducting adequate oversight 
     of meaningful use of the systems; and pursuing initiatives to 
     encourage the adoption of certified EHR technology to promote 
     health care quality and the appropriate exchange of 
     information.
       The House bill would appropriate $40 million for each of 
     FY2009 through FY2015 and $20 million for each succeeding 
     fiscal year through FY2019 to the Centers for Medicare & 
     Medicaid Services for the costs of administering the 
     provisions of this section.


                              Senate Bill

       The Senate bill is very similar to the House bill, with the 
     following differences. First, in measuring meaningful use, 
     which may include the reporting of clinical quality measures, 
     a State would be required to ensure that populations with 
     unique needs, such as children, are appropriately addressed. 
     Second, rural health clinics and Federally-Qualified Health 
     Centers that have at least 30% of their patient volume 
     attributable to Medicaid patients would face a

[[Page 4096]]

     somewhat higher required contribution to the costs of 
     adoption and use of certified EHRs. Finally, the Senate bill 
     would require that the Secretary submit a report to Congress 
     no later than July 1, 2012, that details the process 
     developed to ensure coordination of the different health 
     information technology program payments.


                          Conference Agreement

       The Conference agreement mirrors both the House-passed and 
     Senate-passed bills. Across all eligible provider categories, 
     the conference agreement provides Medicaid incentives towards 
     the use of certified EHR technology based on a provider's 
     involvement in the Medicaid program or other care for the 
     uninsured and low-income populations. In addition to payment 
     incentives for eligible professionals and hospitals contained 
     in both bills, the agreement also provides for expanded 
     funding to pediatricians, federally qualified health clinics 
     (FQHCs), rural health clinics (RHCs), and physician 
     assistants in physician assistant-led rural health clinics.
       Specifically, eligible pediatricians with 20 to 30 percent 
     patient volume attributable to patients receiving assistance 
     through Medicaid would be eligible to receive up to two-
     thirds of the amount of eligible professionals with 30 
     percent patient volume attributable to such individuals 
     (approximately $42,500 over a period of six years).
       Federally qualified health centers and rural health clinics 
     would be able to count additional patients towards the 30 
     percent qualifying threshold for Medicaid payments, including 
     Medicaid patients; individuals receiving assistance through 
     the Children's Health Insurance Program; individuals 
     receiving charity care; and individuals receiving care for 
     which payment is made on a sliding scale basis according to a 
     patient's ability to pay. In addition, FQHCs and RHCs would 
     be paid an amount for the adoption and use of certified EHRs 
     proportional to the number of eligible professionals 
     practicing predominantly in such settings according to the 
     payment amounts determined for other eligible professionals 
     (typically, up to $63,750 in federal contributions over a 
     period of six years).
       Additionally, the conference agreement provides that 
     physician assistants practicing in RHCs and FQHCs that are 
     led by physician assistants may receive Medicaid payments 
     related to certified EHRs, provided that the facility meets 
     the 30% facility threshold described above.
       Like both the House-passed and Senate-passed bills, the 
     conference agreement provides for up to $63,750 in federal 
     contributions towards the adoption, implementation, upgrade, 
     maintenance, and operation of certified EHR technology for 
     eligible professionals. Up to 85% of $25,000, or $21,250, 
     subject to a cap on average allowable costs, would be 
     provided to eligible professionals to aid in adopting, 
     implementing, and upgrading certified EHR systems. And up to 
     85% of $10,000, or $8,500, would be provided to eligible 
     professionals for purposes of operation and maintenance of 
     such systems over a period of up to 5 years.
       Payments to hospitals would be limited to amounts analogous 
     to those specified for eligible hospitals in Medicare in 
     Section 4102. The payment limit for such hospitals is 
     calculated as a base amount plus an amount related to the 
     total number of discharges for such a hospital. The 
     hospital's patient share attributable to Medicaid is then 
     multiplied by that amount to calculate the limit of the 
     payment an eligible hospital can receive. Relative to both 
     the House and Senate-passed bills, the conference agreement 
     provides additional specificity on the spending limitations 
     for eligible hospitals in Medicaid. States may not pay more 
     than 50% of the aggregate amount to a hospital in any year, 
     and must spread payments to hospitals out over at least three 
     years (contingent on demonstration of meaningful use of 
     certified electronic health records).
       Like both the House-passed and Senate-passed bills, the 
     conference agreement prohibits payments to hospital-based 
     professionals (because such professionals are generally 
     expected to use the EHR system of that hospital). This policy 
     does not disqualify otherwise eligible professionals merely 
     on the basis of some association or business relationship 
     with a hospital. Common examples of such arrangements include 
     professionals who are employed by a hospital to work in an 
     ambulatory care clinic or billing arrangements in which 
     physicians submit claims to Medicare together with hospitals 
     or other entities. The conference agreement clarifies that 
     this test will be based on the setting in which a provider 
     furnishes services rather than any billing or employment 
     arrangement between a provider and hospital or other provider 
     entity.
       The agreement requires coordination of payments to eligible 
     professionals with Medicare payments under sections 1848(o) 
     and 1853(l) in order to assure no duplication of funding. The 
     provision requires that such coordination include, to the 
     extent practicable, a data matching process between State 
     Medicaid agencies and the CMS using national provider 
     numbers. The Congress intends that such process be used to 
     identify providers who have received funding from either 
     Medicare or Medicaid so as to prevent such providers from 
     accessing incentives in the other program.

      Medicaid Nursing Home Grant Program. (House bill Sec. 4322)


                              Current Law

       No provision.


                               House Bill

       The House bill would authorize the appropriation of $600, 
     to remain available until expended, for the Secretary to 
     establish a Medicaid grant program for the purpose of making 
     incentive payments, through States, to nursing facilities to 
     encourage the meaningful use of certified EHR technology in 
     nursing facilities. The program would require nursing 
     facilities to engage in quality improvement programs in 
     addition to demonstrating meaningful use of certified EHR 
     technology. The Secretary would be authorized to award grants 
     to not more than 10 states. Incentive payments would cover up 
     to 90% of a facility's EHR adoption and operation costs.


                              Senate Bill

       No provision.


                          Conference Agreement

       No provision.

             Subtitle E--Miscellaneous Medicare Provisions

   Moratoria on Certain Medicare Regulations. (House bill Sec. 4501; 
         Senate bill Sec. 4204; Conference agreement Sec. 4301)

     (a) Delay in phase out of Medicare hospice budget neutrality 
         adjustment factor during Fiscal Year 2009


                              Current Law

       The prospective payment methodology for hospice was 
     established in 1983. This prospective payment system (PPS) 
     pays hospices according to the general type of care provided 
     to a beneficiary on a daily basis. This rate attempts to 
     adjust for geographic differences through a wage index 
     adjustment. The current hospice wage index methodology was 
     implemented in 1997 through the rulemaking process. The 
     hospice wage index is updated annually and based upon the 
     most current hospital wage data and any changes to the Office 
     of Management and Budget's (OMB) Metropolitan Statistical 
     Areas (MSA) definitions. Prior to this date, the wage 
     adjustment used a hospice wage index based upon 1981 hospital 
     data collected by the Bureau of Labor Statistics (BLS). The 
     change in 1997 was intended to improve the data used to 
     account for disparities in geographic location and improve 
     accuracy, reliability, and equity of Medicare payments to 
     hospices across the country.
       When the data source used to adjust hospice payments for 
     differences in the cost of labor across geographic area was 
     changed in 1997 from the BLS data to the hospital wage data, 
     a budget neutrality adjustment factor (BNAF) was instituted 
     as part of the payment system. The BNAF prevents 
     participating hospices from experiencing reductions in total 
     payments as a result of the wage data change. The BNAF 
     increases payments to those hospices that would otherwise 
     experience a payment reduction by boosting hospice payments 
     to these providers by amounts that would make overall 
     payments budget neutral to the levels they would have 
     received had the BLS based wage adjustment data been used. On 
     August 8, 2008, in a final rule, published by HHS, the BNAF 
     would be phased-out over three years, beginning with a 25% 
     reduction in FY2009, an additional 50% reduction (totaling 
     75%) in FY2010, and a final 100%, or elimination, in FY2011. 
     The phase-out of the BNAF went into effect on October 1, 
     2008.


                               House Bill

       The House bill would require that the Secretary not phase-
     out or eliminate the budget neutrality adjustment factor 
     before October 1, 2009. The hospice wage index used for 
     FY2009 would be recomputed as if there had been no reduction 
     in the budget neutrality factor.


                              Senate Bill

       No provision.


                          Conference Agreement

       The Conference Agreement recedes to the House provision. 
     The Conferees do not anticipate extending this provision as 
     they expect the hospice community to seek a permanent fix in 
     the annual rulemaking cycle for Medicare hospice payments.
     (b) Non-application of phased-out Indirect Medical Education 
         (IME) adjustment factor for Fiscal Year 2009


                              Current Law

       Medicare sets separate per discharge payment rates to cover 
     the costs for depreciation, interest, rent and other 
     property-related expenses in acute care hospitals. Due to a 
     regulatory change implemented by the Center for Medicare and 
     Medicaid Services (CMS), Medicare's indirect medical 
     education (IME) adjustment in its capital inpatient 
     prospective payment system (IPPS) is scheduled to be phased 
     out over a 2-year period starting in FY2009. In FY2009, 
     teaching hospitals will receive half of the IME adjustment in 
     Medicare's capital IPPS; in FY2010 and in subsequent years, 
     the capital IME adjustment will be eliminated.

[[Page 4097]]




                               House Bill

       The FY2009 adjustment to 50% of the capital IME adjustment 
     would not be implemented. Medicare payments would be 
     recomputed for discharges after October 1, 2008. The 
     elimination of capital IME in FY2010 would not be affected. 
     To implement this provision, $2 million would be transferred 
     from Medicare's Federal Hospital Insurance Trust Fund into 
     the CMS Program Management Account for FY2009.


                              Senate Bill

       The Senate bill includes the same IME adjustment provision, 
     but without implementation funding.


                          Conference Agreement

       The Conference Agreement recedes to the House provision. 
     The Conferees do not anticipate extending this provision as 
     they expect the hospital community to seek a permanent fix in 
     the annual IPPS rulemaking cycle.

 Long-term Care Hospital Technical Corrections. (House bill Sec. 4502; 
                    Conference agreement Sec. 4302)


                              Current Law

       Long-term care hospitals (LTCHs) are generally defined as 
     hospitals that have an average Medicare inpatient length of 
     stay greater than 25 days. LTCHs are designed to provide 
     extended medical and rehabilitative care for patients who are 
     clinically complex and have multiple acute or chronic 
     conditions.
       Starting October 1, 2004, CMS established limits on the 
     number of discharged Medicare patients that an LTCH hospital-
     within-hospital (HwH) or satellite LTCH could admit from its 
     co-located host hospital. In general, CMS applied a payment 
     adjustment for discharges in excess of a 25% threshold that 
     an LTCH HwH or satellite admitted from its co-located host 
     hospital. After that threshold had been reached, generally, 
     the LTCH would receive a lower payment for subsequent patient 
     admissions that had been discharged from the host hospital. 
     The adjustment was not applied to ``grandfathered'' HwHs or 
     ``grandfathered'' LTCH satellites. Beginning in rate year 
     2008, CMS extended the 25% threshold payment adjustment for 
     discharges from co-located host hospitals to grandfathered 
     HwHs and LTCH satellite facilities. CMS also extended the 25% 
     threshold payment adjustment to LTCH discharges admitted from 
     hospitals with which the LTCH or satellite facility was not 
     co-located, also referred to as freestanding LTCHs. The 
     regulatory policy setting forth the payment adjustment policy 
     for referrals from co-located hospitals is in 42 CFR 412.534. 
     The regulatory policy setting forth the payment adjustment 
     policy for referrals from non-co-located hospitals is in 42 
     CFR 412.536.
       The Medicare, Medicaid and SCHIP Extension Act of 2007 
     (MMSEA) provided for a three-year delay for grandfathered 
     LTCH HwHs of the 25% threshold for discharges admitted from a 
     co-located host (42 CFR 412.534). MMSEA also provided for a 
     three-year delay for grandfathered LTCH HwHs and freestanding 
     LTCHs of the 25% threshold payment adjustment for referrals 
     from non-co-located hospitals (42 CFR 412.536). These 
     provisions in MMSEA became effective for cost reporting 
     periods beginning on or after December 29, 2007.
       MMSEA also increased the patient percentage thresholds from 
     25% to 50% for certain LTCH HwH and non-grandfathered 
     satellite discharges admitted from a co-located hospital (CFR 
     412.534), and from 50% to 75% for certain LTCH HwH and 
     satellite discharges admitted from a co-located rural, MSA-
     dominant, or urban single hospital for a three-year period. 
     These provisions were effective for cost reporting periods 
     beginning on or after December 29, 2007.
       MMSEA provided a three-year moratorium on new LTCHs or 
     satellite LTCHs, with exceptions for an LTCH that, as of the 
     date of enactment: (1) began its qualifying payment period as 
     an LTCH; (2) had binding written agreements and had expended 
     a certain percent of estimated cost or dollar amount for the 
     purpose of construction, renovation, lease or demolition; 
     and, (3) had an approved certificate of need from a State 
     where one is required.


                               House Bill

       The House bill would align the start date of the three-year 
     delay in the implementation of the 25% patient threshold 
     adjustment for referrals from non-co-located facilities for 
     freestanding LTCHs and grandfathered HwHs with the original 
     effective date for the phase-in of this regulatory policy. 
     This new effective date is July 1, 2007. The bill also would 
     align the start date of the three-year delay in the 
     implementation of the 25% patient threshold for referrals 
     from co-located hospitals with the original effective date 
     for the phase-in of this regulatory policy (at 42 CFR 
     412.534(g)). The new effective date is October 1, 2007. 
     For grandfathered LTCH satellite facilities, the 
     effective date is July 1, 2007.
       The bill would clarify that the 3-year delay from the 25% 
     threshold policy for referrals from non-co-located facilities 
     applies to LTCH or LTCH satellites that are co-located with 
     an entity that is a provider-based, off-campus location of a 
     subsection (d) hospital which did not provide 1886(d) 
     services at the off-campus location. It also 
     clarifies that grandfathered satellite facilities receive the 
     same relief as non-grandfathered satellites from 42 CFR 
     412.534 pertaining to applicable patient percentage 
     thresholds.
       The bill would clarify that the exception from the LTCH 
     moratorium applies to LTCHs with certificates of need for bed 
     expansions prior to date of enactment but no earlier than 
     April 1, 2005.


                              Senate Bill

       No provision.


                          Conference Agreement

       The Conference Agreement recedes to the House provision.

                      TITLE V--STATE FISCAL RELIEF

           Sec. 5000. Purposes (Sec. 5000 of the Senate Bill)


                              current Law

       No provision.


                               house Bill

       No provision.


                              senate bill

       The Senate bill sets forth the purposes of the State Fiscal 
     Relief title as: (1) to provide fiscal relief to states in a 
     period of economic downturn, and (2) to protect and maintain 
     state Medicaid programs during a period of economic downturn, 
     including by helping to avert cuts to provider payment rates 
     and benefits or services, and to prevent constrictions of 
     income eligibility requirements for such programs, but not to 
     promote increases in such requirements.


                          conference agreement

       The conference agreement follows the Senate bill.

Sec. 5001. Temporary Increase of Medicaid FMAP (Sec. 5001 of the House 
                  Bill; Sec. 5001 of the Senate Bill)


                              current law

       The federal medical assistance percentage (FMAP) is the 
     rate at which states are reimbursed by the federal government 
     for most Medicaid service expenditures. It is based on a 
     formula that provides higher reimbursement to states with 
     lower per capita incomes relative to the national average 
     (and vice versa); it has a statutory minimum of 50% and 
     maximum of 83%. Exceptions to the FMAP formula have been made 
     for certain states and situations. For example, the District 
     of Columbia's Medicaid FMAP is set in statute at 70%, and the 
     territories have FMAPs set at 50% (they are also subject to 
     federal spending caps). During the last economic downturn 
     under the Jobs and Growth Tax Relief Reconciliation Act of 
     2003 (P.L. 108-27), all states received a temporary increase 
     in Medicaid FMAPs for the last two quarters of FY2003 and the 
     first three quarters of FY2004 as part of a fiscal relief 
     package. In addition to Medicaid, the FMAP is used in 
     determining the federal share of certain other programs 
     (e.g., foster care and adoption assistance under Title IV-E 
     of the Social Security Act) and serves as the basis for 
     calculating an enhanced FMAP that applies to the Children's 
     Health Insurance Program.


                               House Bill

       The House bill provides a temporary adjustment FMAP during 
     a recession adjustment period that begins with the first 
     quarter of FY2009 and runs through the first quarter of 
     FY2011, The House provision would hold all states harmless 
     from any scheduled decline in their regular FMAPs, provide 
     all states with an across-the-board increase of 4.9 
     percentage points, and provide high unemployment states with 
     an additional increase. It would also allow each territory to 
     choose between an FMAP increase of 4.9 percentage points 
     along with a 10% increase in its spending cap, or its regular 
     FMAP along with a 20% increase in its spending cap. It is 
     estimated that the House provision would provide about half 
     of its spending via the hold harmless and across-the-board 
     increases, and about half via the unemployment-related 
     increase which is targeted to the states hit hardest by job 
     loss.
       States would be evaluated on a quarterly basis for the 
     additional unemployment-related FMAP increase, which would 
     equal a percentage reduction in the state share. The 
     percentage reduction would be applied to the state share 
     after the hold harmless increase and before the 4.9 
     percentage point increase. For example, after applying the 
     4.9 point increase provided to all states, a state with a 
     regular FMAP of 50% (state share of 50%) would have an FMAP 
     of 54.90%. If the state share were further reduced by 6%, the 
     state would receive an additional FMAP increase of 3 points 
     (50 * 0.06 = 3). The state's total FMAP increase would be 7.9 
     points (4.9 + 3 = 7.9), providing an FMAP of 57.90%.
       The additional unemployment-related FMAP increase would be 
     based on a state's unemployment rate in the most recent 3-
     month period for which data are available (except for the 
     first two and last two quarters of the recession adjustment 
     period, for which the 3-month period would be specified) 
     compared to its lowest unemployment rate in any 3-month 
     period beginning on or after January 1, 2006. The criteria 
     would be as follows:
        unemployment rate increase of at least 1.5 but 
     less than 2.5 percentage points = 6% reduction in state 
     share;

[[Page 4098]]

        unemployment rate increase of at least 2.5 but 
     less than 3.5 percentage points = 12% reduction in state 
     share; and
        unemployment rate increase of at least 3.5 
     percentage points = 14% reduction in state share.
       If a state qualifies for the additional unemployment-
     related FMAP increase and later has a decrease in its 
     unemployment rate, its percentage reduction in state share 
     could not decrease until the fourth quarter of FY2010 (for 
     most states, this corresponds with the first quarter of 
     SFY2011). If a state qualifies for the additional 
     unemployment-related FMAP increase and later has an increase 
     in its unemployment rate, its percentage reduction in state 
     share could increase.
       The full amount of the temporary FMAP increase would only 
     apply to Medicaid (excluding disproportionate share hospital 
     payments). A portion of the temporary FMAP increase (hold 
     harmless plus 4.9 percentage points) would apply to Title IV-
     E foster care and adoption assistance. States would be 
     required to maintain their Medicaid eligibility standards, 
     methodologies, and procedures as in effect on July 1, 2008, 
     in order to be eligible for the increase. They would be 
     prohibited from depositing or crediting the additional 
     federal funds paid as a result of the temporary FMAP increase 
     to any reserve or rainy day fund. States would also be 
     required to ensure that local governments do not pay a larger 
     percentage of the state's nonfederal Medicaid expenditures 
     than otherwise would have been required on September 30, 
     2008.


                              Senate Bill

       Similar to the House provision, the Senate provision would 
     hold all states harmless from any decline in their regular 
     FMAPs. However, it would provide a larger across-the-board 
     increase of 7.6 percentage points and a smaller unemployment-
     related increase. It would apply the 7.6 percentage point 
     increase and raise the territories' spending caps in the 
     territories by 15.2%. It is estimated that the Senate 
     provision would provide about 80% of its spending via the 
     hold harmless and across-the-board increases, and about 20% 
     via the unemployment-related increase.
       As in the House provision, the Senate provision would 
     calculate the unemployment-related increase as a percentage 
     reduction in the state share. However, the percentage 
     reduction would be applied to the state share after both the 
     hold harmless increase and the across-the-board increase of 
     7.6 percentage points. The Senate provision would evaluate 
     states based on the same unemployment data, except that it 
     would not specify the three-month period to be used for the 
     first two and last two quarters of the temporary FMAP 
     increase. The criteria would be as follows: unemployment rate 
     increase of at least 1.5 but less than 2.5 percentage points 
     = 2.5% reduction in state share; increase of at least 2.5 but 
     less than 3.5 percentage points = 4.5% reduction; increase of 
     at least 3.5 percentage points = 6.5% reduction. Like the 
     House provision, a state's percentage reduction could 
     increase over time as its unemployment rate increases, but it 
     would not be allowed to decrease until the last quarter of 
     FY2010.
       Unlike the House provision, the Senate provision would not 
     apply the temporary FMAP increase to expenditures for 
     individuals who are eligible for Medicaid because of an 
     increase in a state's income eligibility standards above what 
     was in effect on July 1, 2008. It would also prohibit states 
     from receiving the temporary increase if they are not in 
     compliance with existing requirements for prompt payment of 
     health care providers under Medicaid and would extend this 
     requirement to nursing facilities. States would be required 
     to report to the Secretary of HHS on their compliance with 
     such requirements. Otherwise, the Senate provision is similar 
     to the House provision.


                          Conference Agreement

       The conference agreement follows the Senate bill with 
     modifications. The across-the-board increase in FMAP would be 
     6.2 percentage points. The reductions in state share for 
     states with increases in unemployment rates would be 5.5%, 
     8.5%, and 11.5%. These percent reductions would be applied 
     against the state share after the hold harmless reduction and 
     after an across-the-board increase of 3.1 percentage points. 
     Each territory would be allowed to choose between an FMAP 
     increase of 6.2 percentage points along with a 15% increase 
     in its spending cap, or its regular FMAP along with a 30% 
     increase in its spending cap. It is estimated that the 
     conference agreement would provide about 65% of its spending 
     via the hold harmless and across-the-board increases, and 
     about 35% via the unemployment-related increase.
       The conference agreement would also prohibit states from 
     receiving the temporary increase if they are not in 
     compliance with existing requirements for prompt payment of 
     practitioners under Medicaid and would extend this 
     requirement to nursing facilities and hospitals. States would 
     be required to report to the Secretary of HHS on their 
     compliance with such requirements.

 Sec. 5001(0(2). Compliance with prompt pay requirements (Sec. 3304 of 
                            the Senate Bill)


                              Current Law

       Under SSA Sec. 1902(a)(37)(A) states are to reimburse 
     providers for services within 30 days of the receipt of a 
     reimbursement claim. State Medicaid programs are to reimburse 
     providers for 90% of claims submitted for payment within 30 
     days of receipt of the claim. Medicaid also is to process and 
     pay 99% of claims within 90 days from the date of receipt of 
     such claims. These requirements allow states additional time 
     to process claims that are inaccurate, incomplete, or 
     otherwise can not be processed in a timely manner.


                               House Bill

       No provision.


                              Senate Bill

       Under this provision, for states to qualify for the 
     temporary enhanced FMAP funding under section 5001, states 
     would have to meet current prompt payment requirements under 
     section 1902(a)(37)(A), as well as a temporary extension of 
     those requirements to nursing facilities, which are not 
     currently subject to the prompt pay requirements in title 
     XIX.


                          Conference Agreement

       The conference agreement follows the Senate bill with 
     modifications to the reporting requirements, to temporarily 
     extend application of the prompt pay requirements to 
     hospitals, and to provide a grace period before states become 
     ineligible for increased FMAP as a result of failure to 
     comply with the requirements as relate to nursing facilities 
     and hospitals.

Sec. 5002. Temporary Increase in DSH Allotments During Recession (Sec. 
         5006 of the House Bill; Sec. 5002 of the Senate Bill)


                              Current Law

       Medicaid law requires that states make. Medicaid payment 
     adjustments for hospitals that serve a disproportionate share 
     of low-income patients with special needs. Payments to these 
     hospitals known as disproportionate share hospital (DSH) 
     payments, are specifically defined in Medicaid law. They are 
     subject to aggregate annual state-specific limits on federal 
     financial participation. States are required to provide an 
     annual report to the Secretary describing the payment 
     adjustments made to each DSH hospital.


                               House Bill

       This provision would increase states' FY2009 annual 
     Disproportionate Share Hospital (DSH) allotments by 2.5% 
     above the allotment they would have received in FY2009 under 
     current law. In addition, states' DSH allotments in FY2010 
     would be equal to the FY2009 DSH allotment (with the 
     adjustment) increased by 2.5%. After FY2010, states' annual 
     DSH allotments would be determined as under current law. If, 
     under current law, states' annual DSH allotments are higher 
     in either FY 2009 or FY 2010 than they would have been with 
     the 2.5% adjustment, then states would receive the higher DSH 
     allotments without the recession adjustment.


                              Senate Bill

       Under this provision, states that reported to the Health 
     and Human Services Secretary, as of August 31, 2009, FY2006 
     total (federal and state) DSH allotments of less than 3% of 
     the state's total state plan medical assistance expenditures 
     would receive special DSH allotments established under the 
     Medicare Modernization Act of 2003 (MMA, P.L. 108-391). This 
     new provision may affect the number of states that are 
     determined to be low-DSH states since the provision would 
     rely on a different base year than that used under MMA. Under 
     this provision, low-DSH states would receive the following 
     revised DSH allotments:
        for FY2009, the DSH allotment would be the FY2008 
     DSH allotment increased by 16%;
        for FY2010, the DSH allotment would be the FY2009 
     DSH allotment increased by 16%;
        for the first quarter of FY2011(through December 
     31, 2010), the DSH allotment would be \1/4\ of the DSH 
     allotment for FY2010 increased by 16%;
        for the remainder of FY2011 (January 1, 2011-
     September 30, 2011), the DSH allotment would be \3/4\ of the 
     FY2010 DSH allotment for each qualified state without the 
     changes contained in this provision;
        for FY2012, qualified states' DSH allotments would 
     be FY2010 DSH allotment (as if this provision had not been 
     enacted);
        for FY2013 and subsequent years, qualified states 
     would receive the DSH allotment for the previous fiscal year 
     with an inflation adjustment, as described in the Social 
     Security Act (SSA), Section 1923(f)(5).


                          Conference Agreement

       The conference agreement follows the House provision.

 Sec. 5003. Moratoria on Certain Medicaid Final Regulations (Sec. 5002 
            of the House Bill; Sec. 5002 of the Senate Bill)


                              Current Law

       In 2007 and 2008, the Centers for Medicare and Medicaid 
     Services (CMS) issued seven Medicaid regulations that 
     generated controversy during the 110th Congress. To address 
     concerns with the impact of the regulations, Congress passed 
     a law that imposed moratoria on six of the Medicaid 
     regulations until April 1, 2009 (excluding the rule on 
     outpatient hospital facility and clinic services). The seven 
     Medicaid regulations covered the following Medicaid areas:
        Graduate Medical Education,

[[Page 4099]]

        Cost Limit for Public Providers,
        Rehabilitation Services,
        Targeted Case Management,
        School-Based Services,
        Provider Taxes, and
        Outpatient Hospital Services.


                               House Bill

       This provision would extend the moratoria on the first six 
     regulations beyond April 1, 2009, when the current moratoria 
     expire, to July 1, 2009. The regulations covered under the 
     extension would include: (1) Graduate Medical Education, (2) 
     Cost Limit for Public Providers, (3) Rehabilitative Services, 
     (4) Targeted Case Management, (5) School-Based Services, and 
     (6) Provider Taxes. In addition, this provision would 
     specifically prohibit the Health and Human Services Secretary 
     from taking any action until after June 30, 2009 (through 
     regulation, regulatory guidance, use of federal payment audit 
     procedures, or other administrative action, policy, or 
     practice, including Medical Assistance Manual transmittal or 
     state Medicaid director letter) to implement a final 
     regulation covering Outpatient Hospital facility services.


                              Senate Bill

       No provision.


                          Conference Agreement

       The conference agreement follows the House bill with a 
     modification limiting the application of the moratoria to the 
     four regulations that have been published as final: (1) 
     Targeted Case Management, (2) School-Based Services, (3) 
     Provider Taxes, and (4) Outpatient Hospital Services. The 
     conference agreement also states the sense of the Congress 
     that the Secretary of HHS should not promulgate as final the 
     proposed regulations relating to Graduate Medical Education, 
     Cost Limit for Public Providers, and Rehabilitative Services.

  Sec. 5004. Extension of Transitional Medical Assistance (TMA) (Sec. 
         5003 of the House Bill; Sec. 3101 of the Senate Bill)


                              Current Law

       States are required to continue Medicaid benefits for 
     certain low-income families who would otherwise lose coverage 
     because of changes in their income. This continuation is 
     called transitional medical assistance (TMA). Federal law 
     permanently requires four months of TMA for families who lose 
     Medicaid eligibility due to increased child or spousal 
     support collections, as well as those who lose eligibility 
     due to an increase in earned income or hours of employment. 
     However, Congress expanded work-related TMA under Section 
     1925 of the Social Security Act in 1988, requiring states to 
     provide at least six, and up to 12, months of coverage. Since 
     2001, these work-related TMA requirements have been funded by 
     a series of short-term extensions, most recently through June 
     30, 2009.
       To qualify for work-related TMA under Section 1925, a 
     family must have received Medicaid in at least three of the 
     six months preceding the month in which eligibility is lost 
     and have a dependent child in the home. During the initial 6-
     month period of TMA, states must provide the same benefits 
     the family was receiving, although this requirement may be 
     met by paying a family's premiums, deductibles, coinsurance, 
     and similar costs for employer-based health coverage. An 
     additional 6-month extension of TMA (for a total of up to 12 
     months) is available for families who continue to have a 
     dependent child in the home, who meet reporting requirements, 
     and whose average gross monthly earnings (less work-related 
     child care costs) are below 185% of the federal poverty line. 
     States may impose a premium, limit the scope of benefits, and 
     use an alternative service delivery system during the second 
     six months of TMA.


                               House Bill

       The provision would extend work-related TMA under Section 
     1925 for 18 months through December 31, 2010. The provision 
     also would give States the flexibility to extend an initial 
     eligibility period of 12 months of Medicaid coverage to 
     families transitioning from welfare to work, in which case 
     the additional 6-month extension would not apply. The House 
     bill also gives states the option of waiving the requirement 
     that a family must have received Medicaid in at least three 
     of the last six months in order to qualify.
       Under the House provision, states would be required to 
     collect and submit to the Secretary of Health and Human 
     Services (and make publicly available) information on average 
     monthly enrollment and participation rates for adults and 
     children under work-related TMA; states would also be 
     required to collect and submit information on the number and 
     percentage of children who become ineligible for work-related 
     TMA, but who continue to be eligible under another Medicaid 
     eligibility category or who are enrolled in the Children's 
     Health Insurance Program.


                              Senate Bill

       The Senate bill is the same as the House bill.


                          Conference Agreement

       The conference agreement follows the House and Senate 
     bills.

 Sec. 5005. Extension of the qualifying individual (QI) program (Sec. 
                        3201 of the Senate Bill)


                              Current Law

       Certain low-income individuals who are aged or have 
     disabilities, as defined under the Supplemental Security 
     Income (SSI) program, and who are eligible for Medicare, are 
     also eligible to have their Medicare Part B premiums paid for 
     by Medicaid under the Medicare Savings Program (MSP). 
     Eligible groups include Qualified Medicare Beneficiaries 
     (QMBs), Specified Low-Income Medicare Beneficiaries (SLMBs), 
     and Qualifying Individuals (QIs). QMBs have incomes no 
     greater than 100% of the federal poverty level (FPL) and 
     assets no greater than $4,000 for an individual and $6,000 
     for a couple. SLMBs meet QMB criteria, except that their 
     incomes are greater than 100% of FPL but do not exceed 120% 
     FPL. QIs meet the QMB criteria, except that their income is 
     between 120% and 135% of FPL. Further, they are not otherwise 
     eligible for Medicaid. The QI program is currently slated to 
     terminate December 2009.
       In general, Medicaid payments are shared between federal 
     and state governments according to a matching formula. Unlike 
     the QMB and SLMB programs, the QI program is paid 100% by the 
     federal government from the Part B Trust fund. The total 
     amount of federal QI spending is limited each year and 
     allocated among the states. States are required to cover only 
     the number of people that would bring their annual spending 
     on these population groups to their allocation levels. For 
     the period beginning on January 1, 2009 and ending on 
     September 30, 2009, the total allocation amount for all 
     states was $350 million. For the period that begins on 
     October 1, 2009 and ends on December 31, 2009, the total 
     allocation is $150 million.


                               House Bill

       No provision.


                              Senate Bill

       This provision would extend the QI program an additional 
     year from December 2009 to December 2010. It establishes 
     specific funding limits:
        from January 1, 2010, through September 30, 2010, 
     the total allocation amount would be $412.5 million, and
        from October 1, 2010, through December 31, 2010, 
     the total allocation amount would be $150 million.


                          Conference Agreement

       The conference agreement follows the Senate bill.

Sec. 5006(a), (b), (c). Protections for Indians Under Medicaid and CHIP 
      (Sec. 5004 of the House Bill; Sec. 3301 of the Senate Bill)


                              Current Law

       Premiums and Cost Sharing. In Medicaid, premiums and 
     enrollment fees generally are prohibited for most 
     beneficiaries. Nominal premiums and enrollment fees specified 
     in regulations may be imposed on selected groups (e.g., 
     medically needy, certain families qualifying for transitional 
     Medicaid, pregnant women and infants with income over 150% 
     FPL). Premiums and enrollment fees can exceed these nominal 
     amounts for other selected groups (e.g., certain workers with 
     disabilities and individuals covered under Section 1115 
     demonstrations).
       Service-related cost-sharing (e.g., deductibles, 
     copayments, co-insurance) is prohibited for selected groups 
     (e.g., children under 18, pregnant women) and for selected 
     benefits (e.g., hospice care, emergency services, family 
     planning services and supplies). For most other groups and 
     services, nominal cost-sharing amounts specified in 
     regulations may be applied at state option. For other 
     selected groups (e.g., workers with disabilities and 
     individuals covered under Section 1115 demonstrations), cost-
     sharing can exceed nominal amounts.
       The Deficit Reduction Act of 2005 (P.L. 109-171) added a 
     new Medicaid state option for alternative premiums and cost-
     sharing for certain subgroups. Applicable maximum amounts 
     vary by income level (as a percent of the federal poverty 
     level). Special rules apply to prescription drugs and to non-
     emergency services provided in hospital emergency rooms.
       Indians are not explicitly exempted from cost-sharing and 
     premium charges in Medicaid. When an Indian Medicaid 
     beneficiary receives services from a contract health services 
     (CHS) provider, Medicaid pays for the service. Any copayment 
     that Medicaid does not pay must be paid by the Indian Health 
     Service (IHS) or the Tribe from its CHS budget, since the CHS 
     provider may not bill the Indian patient. The practical 
     effect of this is simply to reduce the amount of appropriated 
     funds available for health care from IHS or CHS for Tribes 
     that already lack sufficient resources. CHIP programs are 
     already prohibited from imposing cost-sharing on eligible 
     Indians.
       Eligibility Determinations under Medicaid and CHIP. The 
     federal Medicaid statute defines more than 50 eligibility 
     pathways. For some pathways, states are required to apply an 
     assets test. For other pathways, assets tests are a state 
     option. When assets tests apply, some pathways give states 
     flexibility to define specific assets that are to be counted 
     and which can be disregarded. For other pathways, primarily 
     for people qualifying on the basis of having a disability or 
     who are elderly, assets tests are required. States generally 
     follow asset guidelines specified for

[[Page 4100]]

     the Supplementary Security Income (SSI) program. Medicaid 
     also defines the rules for the counting of certain assets. 
     Under SSI law, several types of assets are excluded, 
     including: (1) any land held in trust by the United States 
     for a member of a federally-recognized tribe, or any land 
     held by an individual Indian or tribe and which can only be 
     sold, transferred, or otherwise disposed of with the approval 
     of other individuals, his or her tribe, or an agency of the 
     federal government; and (2) certain distributions (including 
     land or an interest in land) received by an individual Alaska 
     Native or descendant of an Alaska Native from an Alaska 
     Native Regional and Village Corporation pursuant to the 
     Alaska Native Claims Settlement Act. Most other property is 
     required to be counted. There is no similar provision in 
     current CHIP law.
       Estate Recovery. The Omnibus Budget Reconciliation Act of 
     1993 requires all states to recover ; property and assets of 
     deceased Medicaid beneficiaries for the cost of certain 
     services provided by Medicaid. At a minimum, states must seek 
     recovery for certain services provided, including nursing 
     home care, services provided by an intermediate care facility 
     for the mentally retarded or other similar medical 
     institutions, and Medicaid payments to Medicare for cost-
     sharing related benefits. The state has discretion to recover 
     further assets to cover the costs for all Medicaid services 
     provided to the beneficiary. The state also has the authority 
     to grant an exemption if the recovery would place undue 
     hardship against the estate. The Secretary specifies the 
     standards for a state hardship waiver for Medicaid estate 
     recovery purposes.


                               House Bill

       Premiums and Cost Sharing. The provision would specify that 
     no enrollment fee, premium or similar charge, and no 
     deduction, co-payment, cost-sharing, or similar charge shall 
     be imposed against an Indian who receives Medicaid-coverable 
     services or items directly from the Indian Health Service 
     (IHS), an Indian Tribe (IT), Tribal Organization (TO), or 
     Urban Indian Organization (UIO), or through referral under 
     the contract health services (CHS) program. In addition, 
     Medicaid payments due to the IHS, an IT, TO, or UIO, or to a 
     health care provider through referral under the CHS program 
     for providing services to a Medicaid-eligible Indian, could 
     not be reduced by the amount of any enrollment fee, premium 
     or similar charge, as well as any cost-sharing or similar 
     charge that would otherwise be due from an Indian, if such 
     charges were permitted. A rule of construction would specify 
     that nothing in this provision could be construed as 
     restricting the application of any other limitations on the 
     imposition of premiums or cost-sharing that may apply to a 
     Medicaid-enrolled Indian. This language would also add 
     Indians receiving services through Indian entities to the 
     list of individuals exempt from paying premiums or cost-
     sharing under the DRA option for alternative premiums and 
     cost-sharing under Medicaid. The effective date of this 
     provision would be October 1, 2009.
       Eligibility Determinations under Medicaid and CHIP. The 
     provision would prohibit consideration of four different 
     classes of property from resources in determining Medicaid 
     eligibility of an Indian. These classes include: (1) 
     property, including real property and improvements, that is 
     held in trust (subject to federal restrictions or otherwise 
     under the supervision of the Secretary of the Interior), 
     located on a reservation, including any federally recognized 
     Indian Tribes reservation, Pueblo, or Colony, including 
     former reservations in Oklahoma, Alaska Native regions 
     established by the Alaska Native Claims Settlement Act 
     (ANCSA), and Indian allotments on or near a reservation as 
     designated and approved by the Bureau of Indian Affairs; (2) 
     for any federally recognized Tribe not described in the first 
     class, property located within the most recent boundaries of 
     a prior federal reservation; (3) ownership interests in 
     rents, leases, royalties, or usage rights related to natural 
     resources, including extraction of natural resources or 
     harvesting of timber, other plants and plant products, 
     animals, fish, and shellfish, resulting from the exercise of 
     federally protected rights; and (4) ownership interest in or 
     usage rights to items not covered in the previous classes 
     that have unique religious, spiritual, traditional, or 
     cultural significance or rights that support subsistence or a 
     traditional life style according to applicable tribal law or 
     custom. This provision is modeled on the provisions of the 
     Centers for Medicare & Medicaid Services (CMS) State Medicaid 
     Manual that exempt the same type of Indian property from 
     Medicaid estate recovery. The House bill would also apply 
     this new language to CHIP in the same manner in which it 
     applies to Medicaid.
       Estate Recovery. The provision would provide that certain 
     income, resources, and property would remain exempt from 
     Medicaid estate recovery if they were exempted under Section 
     1917(b)(3) of the Social Security Act (allowing the Secretary 
     to specify standards for a state hardship waiver of asset 
     criteria) under instructions regarding Indian tribes and 
     Alaskan Native Villages as of April 1, 2003. The provision 
     also would allow the Secretary to provide for additional 
     estate recovery exemptions for Indians under Medicaid.


                              Senate Bill

       Same as House bill, except that these provisions would 
     sunset on December 31, 2010. The Senate bill did not specify 
     an effective date for the premiums and cost sharing 
     provision, meaning those provisions would take effect upon 
     enactment.


                          Conference Agreement

       The conference agreement follows the Senate bill with 
     modifications for the provisions to be permanently effective 
     July 1, 2009.

Sec. 5006(d). Rules Aapplicable Under Medicaid and CHIP to Managed Care 
   Entities With Respect to Indian Enrollees and Indian Health Care 
  Providers and Indian Managed Care Entities (Sec. 3302 of the Senate 
                                 Bill)


                              Current Law

       Section 1903(m)(1) of Title XIX defines: (1) the term 
     Medicaid managed care organization (MCO), (2) requirements 
     regarding accessibility of services for Medicaid MCO 
     beneficiaries vis-a-vis non-MCO Medicaid beneficiaries within 
     the area served by the MCO; (3) solvency standards in general 
     and specific to different types of organizations; and (4) the 
     duties and functions of the Secretary with respect to the 
     status of an organization as a Medicaid MCO.
       Section 1905(t) of Title XIX defines another type of 
     managed care arrangement called primary care case management 
     (PCCM). Under such arrangements, states contract with primary 
     care case managers who are responsible for locating, 
     coordinating and monitoring covered primary care (and other 
     services stipulated in contracts) provided to all individuals 
     enrolled in such PCCM programs.
       Title XIX contains a number of additional provisions 
     regarding managed care under Medicaid. Section 1932(a)(5) 
     specifies rules regarding the provision of information about 
     managed care to beneficiaries and potential enrollees. Such 
     information must be in an easily understood form, and must 
     address the following topics: (1) who providers are and where 
     they are located, (2) enrollee rights and responsibilities, 
     (3) grievance and appeal procedures, (4) covered items and 
     services, (5) comparative information for available MCOs 
     regarding benefits, cost-sharing, service area and quality 
     and performance, and (6) information on benefits not covered 
     under managed care arrangements. In addition, Section 
     1932(d)(2)(B) requires managed care entities to distribute 
     marketing materials to their entire service areas.
       Sections 1903(m) and 1932 provide cross-referencing 
     definitions for the term ``Medicaid managed care 
     organization.'' Under Title XIX, section 1932(a)(2)(C) 
     stipulates the rules regarding Indian enrollment in Medicaid 
     managed care. A state may not require an Indian (as defined 
     in Section 4(c) of the Indian Health Care Improvement Act 
     (IHCIA) to enroll in a managed care entity unless the entity 
     is one of the following (and only if such entity is 
     participating under the plan): (1) the IHS, (2) an IHP 
     operated by an Indian tribe or tribal organization pursuant 
     to a contract, grant, cooperative agreement, or compact with 
     the IHS pursuant to the Indian Self-Determination Act, or (3) 
     an urban IHP operated by a UI0 pursuant to a grant or 
     contract with the IHS pursuant to Title V of IHCIA.
       In general, Federally Qualified Health Centers (FQHCs) are 
     paid on a per visit basis, using a prospective payment system 
     that takes into account costs incurred and changes in the 
     scope of services provided. Per visit payment rates are also 
     adjusted annually by the Medicare Economic Index applicable 
     to primary care services. When an FQHC is a participating 
     provider with a Medicaid managed care entity (MCE), the state 
     must make supplemental payments to the center in an amount 
     equal to any difference between the rate paid by the MCE and 
     the per visit amount determined under the prospective payment 
     system.


                               House Bill

       No provision.


                              Senate Bill

       Under this provision, Medicaid managed care contracts with 
     Managed Care Entities (MCEs) and Primary Care Case Management 
     (PCCMs) companies would be required to meet certain 
     conditions relating to access for Indian Medicaid 
     beneficiaries in order to receive Medicaid payments, 
     including:
      MCEs and PCCMs would need to demonstrate that the number of 
     participating Indian health care providers was sufficient to 
     ensure timely access to covered Medicaid managed care 
     services for eligible enrollees, and
      MCEs and PCCMs would need to agree to pay Indian health care 
     providers (IHPs) at rates equal to the rates negotiated 
     between these organizations and the provider involved, or, if 
     such a rate has not been negotiated, at a rate that is not 
     less than the level and amount of payment which the MCE or 
     PCCM would make for services rendered by a participating non-
     Indian health care provider.
       In addition, this provision would specify that MCEs and 
     PCCMs must agree to make prompt payment, as required under 
     Medicaid

[[Page 4101]]

     rules for all providers, to participating Indian health care 
     providers, and states would be prohibited from waiving 
     requirements relating to assurance that payments are 
     consistent with efficiency, economy, and quality.
       Further, this provision would apply special payment 
     provisions to certain Indian health care providers that are 
     Federally Qualified Health Centers (FQHCs). For non-
     participating Indian FQHCs that provide covered Medicaid 
     managed care services to Indian MCE enrollees, the MCE must 
     pay a rate equal to the payment that would apply to a 
     participating non-Indian FQHC. When payments to such 
     participating and non-participating providers by an MCE for 
     services rendered to an Indian enrollee with the MCE are less 
     than the rate under the state plan, the state must pay such 
     providers the difference between the rate and the MCE 
     payment. Likewise, if the amount, paid to a non-FQHC Indian 
     provider (whether or not the provider participates with the 
     MCE) is less than the rate that applies under the state plan, 
     the state must pay the difference between the applicable rate 
     and the amount paid by MCEs. Under this provision, Indian 
     Medicaid MCEs would be permitted to restrict enrollment to 
     Indians and to members of specific tribes in the same manner 
     as IHPs may restrict the delivery of services to such Indians 
     and tribal members.
       Finally, the provision would apply specific sections 
     affecting Medicaid to the CHIP program, including (1) Section 
     1932(a)(2)(C) in current law regarding enrollment of Indians 
     in Medicaid managed care (e.g., states cannot require Indians 
     to enroll in a MCE unless the entity is the IHS, certain IHPs 
     operated by tribes or tribal organizations, or certain urban 
     IHPs operated by Urban Indian Organizations (UIOs), and (2) 
     the new Section 1932(h) as described above.


                          Conference Agreement

       The conference agreement follows the Senate bill with a 
     modification deleting the sunset date clarifying that Indian 
     Medicaid MCEs would be permitted to restrict enrollment to 
     Indians but not to members of specific tribes, and clarifying 
     access standards in states where there are no Indian 
     providers. The provision would be effective July 1, 2009.

  Sec. 5006(e). Consultation on Medicaid, CHIP, and Other Health Care 
 Programs Funded Under the Social Security Act Involving Indian Health 
 Programs and Urban Indian Organizations (Sec. 5005 of the House Bill; 
                     Sec. 3303 of the Senate Bill)


                              Current Law

       There are no provisions in current Medicaid or CHIP 
     statutes regarding a Tribal Technical Advisory Group (TTAG) 
     within the Centers for Medicare and Medicaid Services (CMS), 
     the federal agency that oversees the Medicare, Medicaid and 
     CHIP programs. CMS currently maintains a TTAG for 
     consultation on matters relating to Indian health care, but 
     it is not codified in law.


                               House Bill

       The provision would require the Secretary to maintain 
     within CMS a Tribal TAG, previously established in accordance 
     with requirements of a charter dated September 30, 2003. The 
     provision also would require that the TAG include a 
     representative of the UI0s and IHS. The UI0 representative 
     would be deemed an elected official of a tribal government 
     for the purposes of applying Section 204(b) of the Unfunded 
     Mandates Reform Act of 1995, which exempts elected tribal 
     officials from the Federal Advisory Committee Act for certain 
     meetings with federal officials.
       The provision would also require states in which one or 
     more IHPs or UI0s provide health services to establish a 
     process for obtaining advice on a regular, on-going basis 
     from designees of IHPs and UI0s regarding Medicaid law and 
     its direct effects on those entities. This process must 
     include seeking advice prior to submission of state Medicaid 
     plan amendments, waiver requests or proposed demonstrations 
     likely to directly affect Indians, IHPs, or UI0s. This 
     process may include appointment of an advisory panel and of a 
     designee of IHPs and UI0s to the Medicaid medical care 
     advisory committee advising the state on its state Medicaid 
     plan. The provision would also apply this new language to 
     CHIP in the same manner in which it applies to Medicaid. 
     Finally, the provision would prohibit construing these 
     amendments as superseding existing advisory committees, 
     working groups, guidance or other advisory procedures 
     established by the Secretary or any state with respect to the 
     provision of health care to Indians.


                              Senate Bill

       This provision is similar to the House provision. Both 
     versions would require the Secretary to maintain within CMS a 
     Tribal Technical Advisory Group (TTAG), previously 
     established in accordance with requirements of a charter 
     dated September 30, 2003. The provision also would require 
     that the TTAG include a IHS representative. Unlike the House 
     bill, however, under this provision in S.Amdt. 570, the TTAG 
     also would include a representative of a national urban 
     Indian Health organization, rather than a representative of 
     the UI0s. The non-application of Federal Advisory Committee 
     Act (FACA) would still hold for a representative of a 
     national UIO.


                          Conference Agreement

       The conference agreement follows the Senate bill with a 
     modification deleting the sunset date. The provision would be 
     effective July 1, 2009.

 Sec. 5007. Funding for Oversight and Implementation (Sec. 5004 of the 
                              Senate Bill)


                              Current Law

       The Office of Inspector General (OIG) of the Department of 
     Health and Human Services is responsible for ensuring program 
     integrity of over 300 programs in the Department, including 
     the Medicaid program. The OIG's program integrity activities 
     are funded through a combination of discretionary 
     appropriations and mandatory funding through the Health Care 
     Fraud and Abuse Control Program. The Centers for Medicare & 
     Medicaid Services (CMS) in the Department of Health and Human 
     Services administers the Medicaid program at the federal 
     level. These administrative activities are funded through 
     discretionary appropriations.


                               House Bill

       No provision.


                              Senate Bill

       Under this provision, the Health and Human Services Office 
     of the Inspector General (HHS OIG) is to receive $31.25 
     million to ensure the proper expenditure of federal Medicaid 
     funds. These funds are appropriated from any money in the 
     Treasury not otherwise appropriated and are available 
     throughout the recession period (defined as October 1, 2008 
     through December 31, 2010). Amounts appropriated under this 
     provision would be available until September 30, 2012, 
     without further appropriation, and would be in addition to 
     any other amounts appropriated or made available to HHS OIG.


                          Conference Agreement

       The conference agreement follows the Senate bill with a 
     modification. The funds for the HHSOIG would be appropriated 
     in FY2009 and would be available for expenditure until 
     September 30, 2011. The conference agreement would also 
     appropriate $5 million in FY2009 to CMS for the 
     implementation and oversight of the state fiscal relief 
     provisions relating to Medicaid. These funds would remain 
     available until expended.

Sec. 5008. GAO Study and Report Regarding State Needs During Periods of 
       National Economic Downturn (Sec. 5005 of the Senate Bill)


                              Current Law

       No provision.


                               House Bill

       No provision.


                              Senate Bill

       Under this provision, the Comptroller General of the United 
     States, would study the current (as of the date of enactment 
     of the legislation) economic recession as well as previous 
     national economic downturns since 1974. GAO would develop 
     recommendations to address states' needs during economic 
     recessions, including the past and projected effects of 
     temporary increases in the federal medical assistance 
     percentage (FMAP) during these recessions. By April 1, 2011, 
     GAO would submit a report to appropriate congressional 
     committees that would include the following:
      Recommendations for modifying the national economic downturn 
     assistance formula for temporary Medicaid FMAP adjustments (a 
     ``countercyclical FMAP,'' as described in GAO report number, 
     GAO-07-97), to improve the effectiveness of the 
     countercyclical FMAP for addressing states' needs during 
     national economic downturns:
        what improvements are needed to identify factors 
     to begin and end the application of a countercyclical FMAP;
        how to adjust the amount of a countercyclical FMAP 
     to account for state and regional variations; and
        how a countercyclical FMAP could be adjusted to 
     better account for actual Medicaid costs incurred by states 
     during economic recessions.
        Analysis of the impact on states of recessions, 
     including declines in private health insurance benefits 
     coverage; declines in state revenues; and maintenance and 
     growth of caseloads under Medicaid, CHIP, or any other 
     publicly funded programs that provide health benefits 
     coverage to state residents.


                          Conference Agreement

       The conference agreement follows the Senate bill.

  Payment of Medicare Liability to States as a Result of the Special 
       Disability Workload Project (Sec. 5003 of the Senate Bill)


                              Current Law

       No provision.


                               House Bill

       No provision.


                              Senate Bill

       Under this provision, within three months after enactment 
     of this law, the Secretary, in consultation with the 
     Commissioner of Social Security, would negotiate an agreement 
     on a payment amount to be made to each state for the Medicare 
     Special Disability Workload (SDW) project. Payments

[[Page 4102]]

     to states would be subject to certain conditions:
        states would waive the right to file or be a part 
     of any civil action in any federal or state court where 
     payment was sought for liability related to the Medicare SDW 
     project;
        states would release the federal government from 
     any further claims for reimbursement of state expenditures 
     arising from the SDW project;
        states that are parties to civil actions in any 
     federal or state court seeking reimbursement for the SDW 
     project, would be ineligible to receive payment under this 
     provision while such action is pending or if it is resolved 
     in a state's favor.
       In negotiating with states, the Secretary and SSA 
     Commissioner would use the most recent federal data 
     available, including estimates, to determine the amount of 
     payment to be offered to each state that elects to enter into 
     an agreement with the Secretary. The payment methodology 
     would consist of the following factors:
        the number of SDW cases that were eligible for 
     benefits under Medicare and the month when these cases 
     initially became eligible;
        the applicable non-federal share of Medicaid 
     expenditures made by states during the period these cases 
     were eligible; and
        other factors determined appropriate by the 
     Secretary and the SSA Commissioner in consultation with 
     states.
       However, as a condition of payment under a negotiated 
     agreement for SDW cases, states would not be required to 
     submit individual paid Medicaid claims data.
       To make payments to states for the SDW project, $3 billion 
     would be appropriated for FY2009 from money in the treasury 
     not otherwise appropriated. Aggregate payments to states 
     could not exceed $3 billion. Payments to states would be 
     provided within four months from the date of enactment of 
     ARRA.
       An SDW case would be defined as an individual determined by 
     the SSA Commissioner to have been eligible for benefits under 
     Title II of the SSA for a period during which such benefits 
     were not provided to the individual and who was, during all 
     or part of such period, enrolled in Medicaid.


                          Conference Agreement

       The conference agreement follows the House bill.

                               DIVISION B

          TITLE VI--BROADBAND TECHNOLOGY OPPORTUNITIES PROGRAM


                               House Bill

       Section 6001 of the House bill directs the National 
     Telecommunications and Information Administration (``NTIA'') 
     to develop and maintain a broadband inventory map of the 
     United States that identifies and depicts broadband service 
     availability and capability and directs the NTIA to make the 
     map accessible on the NTIA's website no later than 2 years 
     after the date of enactment of this Act. It authorizes the 
     creation of grant programs for the deployment of wireless and 
     wireline broadband infrastructure to be administered by the 
     NTIA. It also authorizes a state to submit a priority report 
     to the NTIA that identifies the geographic areas within that 
     state that have greatest need for new or additional 
     telecommunications infrastructure. A state may not identify 
     areas encompassing more than 20% of that state's population.
       Section 6002 of the House bill authorizes the NTIA to award 
     wireless deployment grants and broadband deployment grants to 
     eligible entities for the non-recurring costs of deploying 
     broadband infrastructure in qualified urban, suburban, and 
     rural areas. Section 6002 directs the NTIA to seek to 
     distribute wireless grants, to the extent possible, so that 
     25% of the available funds go to ``unserved areas'' for basic 
     wireless voice services and 75% to ``underserved areas'' for 
     advanced wireless broadband services. It also directs that 
     the NTIA shall seek to distribute broadband deployment 
     grants, to the extent possible, so that 25% of the available 
     funds go to ``unserved areas'' for basic broadband services 
     and 75% to ``underserved areas'' for advanced broadband 
     services. Section 6002 directs the NTIA to establish certain 
     grant requirements, including that grant recipients are not 
     unjustly enriched by the program, adhere to the FCC's August 
     5, 2005, broadband internet policy statement, operate 
     networks on an open access basis, and adhere to a build out 
     schedule.
       Section 6002 of the House bill sets forth the requirements 
     of the grant application and grant selection criteria. The 
     NTIA is required to consider certain public policy goals 
     (e.g., public safety benefits and enhancement of computer 
     ownership or literacy) before awarding grants. It requires 
     the NTIA to coordinate with the FCC and to consult with other 
     agencies as necessary. Section 6002 requires the NTIA to 
     submit an annual report to Congress assessing the impact of 
     the grants on the policy objectives and criteria contained in 
     this Section and grants the NTIA authority to prescribe rules 
     as necessary to implement this Section. Section 6002 also 
     contains definitions of terms used in this Section, and 
     directs the FCC to develop definitions for the terms 
     unserved, underserved, and open access.
       Section 6002 defines ``basic broadband service'' as a 
     service delivering data to the end user at a speed of at 
     least 5 megabits per second downstream and 1 megabit per 
     second upstream. The term ``advanced broadband service'' 
     means a service capable of delivering at least 45 megabits 
     per second downstream and 15 megabits per second upstream. 
     The term advanced wireless broadband service means a service 
     capable of delivering at least 3 megabits downstream and 1 
     megabit upstream.
       Section 6003 of the House bill requires the FCC to, not 
     later than one year after the date of enactment of this 
     section, develop and submit to Congress a report containing a 
     national broadband plan and specifies what the plan should 
     include.


                              Senate Bill

       Section 201 of the Senate bill authorizes the NTIA to 
     create a grant program entitled the Broadband Technology 
     Opportunity Program to award competitive grants to State and 
     local governments, nonprofits, and public-private 
     partnerships to: (1) accelerate broadband deployment in 
     unserved and underserved areas and to strategic institutions 
     that are likely to create jobs or provide significant public 
     benefits; (2) increase sustained broadband adoption; and (3) 
     upgrade technology and capacity for public safety entities 
     and at public computing centers, which are a key source of 
     access to the Internet for lower income users, such as 
     libraries and community colleges.
       Section 201 gives the NTIA the authority to impose grant 
     conditions with regard to interconnection and 
     nondiscrimination requirements that apply to facilities 
     funded in part by this program, regardless of who operates 
     those facilities.
       Section 201 also (1) imposes a 20 percent match requirement 
     for grants, which may be satisfied by the grant applicant or 
     any third-party partnering with the grant applicant, and may 
     be waived only under special circumstances; (2) requires 
     specific commitments from grantees on scheduled progress for 
     meeting the goals of the grant; (3) requires that grant 
     applications show that the proposed broadband deployment 
     would not occur during the grant period without this Federal 
     investment; (4) requires quarterly reporting by any entity 
     receiving funds regarding how funds are spent and progress 
     meeting the schedule, as well as quarterly reporting to 
     Congress by Federal agencies making grants regarding how 
     funds are being spent; (5) requires strong public 
     transparency regarding how funds are spent under the program 
     and grantees' progress fulfilling specific commitments to 
     deploy facilities, increase broadband adoption or deploy 
     computer infrastructure; and (6) empowers the NTIA to revoke 
     funding in any case of misspending, and to recapture funds in 
     certain circumstances.


                          Conference Agreement

     Summary
       The Conference substitute retains the general structure and 
     language of the Senate bill, while incorporating a series of 
     amendments related to the priorities of the House.
       Section 6001. Section 6001 establishes the Broadband 
     Technology Opportunities Program within the NTIA. The 
     Conferees intend that the NTIA has discretion in selecting 
     the grant recipients that will best achieve the broad 
     objectives of the program. The Conferees also intend that the 
     NTIA select grant recipients that it judges will best meet 
     the broadband access needs of the area to be served, whether 
     by a wireless provider, a wireline provider, or any provider 
     offering to construct last-mile, middle-mile, or long haul 
     facilities. The Conferees intend that the NTIA award grants 
     serving all parts of the country, including rural, suburban, 
     and urban areas. The Conferees intend that the NTIA seek to 
     ensure, to the extent practicable, that grant funds be used 
     to assist infrastructure investments that would not otherwise 
     be made by the entity applying, or, secondarily, that might 
     not be made as quickly.
       Part of the program is directed towards competitive grants 
     for innovative programs to encourage sustainable adoption of 
     broadband service in particular by vulnerable populations. 
     The Conferees note the success of such programs in several 
     States, and hope that these grantees will be involved in 
     aggregating demand, ensuring community involvement, and 
     fostering useful technology applications, thereby stimulating 
     economic growth and job creation.
       Eligible Entities. The Conference substitute creates a new, 
     broad definition of entities that are eligible to receive 
     grants. It is the intent of the Conferees that, consistent 
     with the public interest and purposes of this section, as 
     many entities as possible be eligible to apply for a 
     competitive grant, including wireless carriers, wireline 
     carriers, backhaul providers, satellite carriers, public 
     private partnerships, and tower companies.
       Grant Distribution Considerations and Broadband Speeds. The 
     Conference substitute inserts a new Section 6001(h) that 
     incorporates several of the grant distribution considerations 
     from the House bill. In particular, new Section 6001(h)(3) 
     requires the NTIA to consider whether a grant applicant is a 
     socially and economically disadvantaged small business, as 
     defined under the Small Business Act.
       New Section 6001(h)(2)(Bb) also requires the NTIA to 
     consider whether an application will

[[Page 4103]]

     result in the greatest possible broadband speeds being 
     delivered to consumers. While the House bill had included 
     specific speed thresholds that an applicant must have met to 
     be eligible for a grant, the substitute requires only that 
     the NTIA consider the speeds that would be delivered to 
     consumers in awarding grants. The Conferees are mindful that 
     a specific speed threshold could have the unintended result 
     of thwarting broadband deployment in certain areas. The 
     Conferees are also mindful that the construction of broadband 
     facilities capable of delivering next-generation broadband 
     speeds is likely to result in greater job creation and job 
     preservation than projects centered on current-generation 
     broadband speeds. Therefore, the Conferees instruct the NTIA 
     to seek to fund, to the extent practicable, projects that 
     provide the highest possible, next-generation broadband 
     speeds to consumers.
       Broadband Policy Statement. The Conference substitute 
     inserts the House language that requires grant recipients to 
     adhere to the principles contained in the Federal 
     Communications Commission's Broadband Policy Statement.
       National Broadband Plan. The Conference substitute adopts 
     the House language on the creation of a national broadband 
     plan, with some minor modifications.
       Federal/State Cooperation. Section 6001(c) directs the NTIA 
     to consult with States on: (1) the identification of unserved 
     and underserved areas within their borders; and (2) the 
     allocation of grants funds to projects affecting each State. 
     The Conferees recognize that States have resources and a 
     familiarity with local economic, demographic, and market 
     conditions that could contribute to the success of the 
     broadband grant program. States are encouraged to coalesce 
     stakeholders and partners, assess community needs, aggregate 
     demand for services, and evaluate demand for technical 
     assistance. The Conferees therefore expect and intend that 
     the NTIA, at its discretion, will seek advice and assistance 
     from the States in reviewing grant applications, as long as 
     the NTIA retains the sole authority to approve the awards. 
     The Conferees further intend that the NTIA will, in its 
     discretion, assist the States in post-grant monitoring to 
     ensure that recipients comply fully with the terms and 
     conditions of their grants.
       Definitions. The substitute does not define such terms as 
     ``unserved area'' ``underserved areas'' and ``broadband.'' 
     The Conferees instruct the NTIA to coordinate its 
     understanding of these terms with the FCC, so that the NTIA 
     may benefit from the FCC's considerable expertise in these 
     matters. In defining ``broadband service,'' the Conferees 
     intend that the NTIA take into consideration the technical 
     differences between wireless and wireline networks, and 
     consider the actual speeds that broadband networks are able 
     to deliver to consumers under a variety of circumstances.

              TITLE VII--LIMITS ON EXECUTIVE COMPENSATION

 A. Executive Compensation Oversight (Secs. 6001 to 6006 of the Senate 
          Amendment and Sec. 7001 of the Conference Agreement)


                              Present Law

       An employer generally may deduct reasonable compensation 
     for personal services as an ordinary and necessary business 
     expense. Section 162(m) (relating to remuneration expenses 
     for certain executives that are in excess of $1 million) and 
     section 280G (relating to excess parachute payments) provide 
     explicit limitations on the deductibility of certain 
     compensation expenses in the case of corporate employers, and 
     section 4999 imposes an additional tax of 20 percent on the 
     recipient of an excess parachute payment. The Emergency 
     Economic Stabilization Act of 2008 (``EESA'') limits the 
     amount of payments that may be deducted as reasonable 
     compensation by certain financial institutions (``TARP 
     recipients'') that receive financial assistance from the 
     United States pursuant to the troubled asset relief program 
     (``TARP'') established under EESA by modifying the section 
     162(m) and section 280G limits. EESA also provided non-tax 
     rules relating to the compensation that is payable by such a 
     financial institution (the ``TARP executive compensation 
     rules'').


                               House Bill

       No provision.


                            Senate Amendment

       The provision modifies and expands the present law non-tax 
     TARP executive compensation rules. The modifications include: 
     (1) expanding the requirement of recovery of a bonus, 
     retention award, or incentive compensation paid to a senior 
     executive officer based on statements of earnings, revenues, 
     gains, or other criteria that are found to be materially 
     inaccurate to the next 20 most highly compensated employees 
     of a TARP recipient; (2) expanding the prohibition on the 
     payment of golden parachute payments from senior executive 
     officers to the next five most highly compensated employees 
     of the TARP recipient, and defining the term ``golden 
     parachute payment'' as any payment to a senior executive 
     officer for departure from a company for any reason, except 
     for payments for services performed or benefits accrued; and 
     (3) prohibiting a TARP recipient from paying or accruing any 
     bonus, retention award, or incentive compensation to at least 
     the 25 most highly compensated employees; and (4) prohibiting 
     any compensation plan that would encourage manipulation of 
     the reported earnings of a TARP recipient to enhance the 
     compensation of any of its employees. The provision also 
     provides rules relating to the compensation committees of 
     TARP recipients, nonbinding shareholder votes on executive 
     compensation payable by a TARP recipient, and the adoption by 
     TARP recipients of policies regarding luxury expenditures 
     such as entertainment, aviation, and office renovation 
     expenses.


                          Conference Agreement

       The conference agreement follows the Senate amendment with 
     several modifications. Among the modifications are (1) a rule 
     that provides that financial assistance under TARP is not 
     treated as outstanding for a period in which the United 
     States only holds warrants to purchase common stock of the 
     TARP recipient; (2) rules that phase-in the restriction on 
     bonuses, retention awards, and other incentive compensation 
     by the amount of financial assistance received by the entity 
     receiving TARP assistance, and that permit compensation to be 
     paid in the form of restricted stock; and (3) and a directive 
     to the Secretary of the Treasury to review compensation paid 
     to senior executive officers and the next 20 most highly 
     compensated employees of an entity receiving TARP assistance 
     before the date of enactment to determine whether such 
     payments were inconsistent with the provision, the TARP, or 
     public interest.

                        TAX COMPLEXITY ANALYSIS

       Section 4022(b) of the Internal Revenue Service Reform and 
     Restructuring Act of 1998 (the ``IRS Reform Act'') requires 
     the staff of the Joint Committee on Taxation (in consultation 
     with the Internal Revenue Service and the Treasury 
     Department) to provide a tax complexity analysis. The 
     complexity analysis is required for all legislation reported 
     by the Senate Committee on Finance, the House Committee on 
     Ways and Means, or any committee of conference if the 
     legislation includes a provision that directly or indirectly 
     amends the Internal Revenue Code and has widespread 
     applicability to individuals or small businesses. For each 
     such provision identified by the staff of the Joint Committee 
     on Taxation a summary description of the provision is 
     provided along with an estimate of the number and type of 
     affected taxpayers, and a discussion regarding the relevant 
     complexity and administrative issues.
       Following the analysis of the staff of the Joint Committee 
     on Taxation are the comments of the IRS and Treasury 
     regarding each of the provisions included in the complexity 
     analysis.

                        1. Make Work Pay Credit


                  Summary description of the provision

       The provision creates a refundable tax credit for taxable 
     years beginning in 2009 and 2010 equal to the lesser of (1) 
     6.2 percent of an individual's earned income or (2) $400 
     ($800 in the case of a joint return). The credit is phased 
     out at a rate of two percent of the eligible individual's 
     modified adjusted gross income above $75,000 ($150,000 in the 
     case of a joint return).


                      Number of affected taxpayers

       It is estimated that the provision will affect in excess of 
     100 million individual tax returns.


                               Discussion

       The provision will require additional paperwork for 
     taxpayers and additional processing burdens for IRS. It is 
     expected that taxpayers will need to complete additional 
     worksheets and or forms to compute the amount of the credit. 
     Taxpayers may also wish to adjust their income tax 
     withholding by filing the appropriate forms before the end of 
     2009. The IRS is anticipated to revise income tax withholding 
     schedules and publish new schedules. These revised income tax 
     withholding schedules should be designed to reduce taxpayers' 
     income tax withheld for each remaining pay period in the 
     remainder of 2009 so that the full benefit of the provision 
     is reflected in the income tax withholding schedules during 
     the balance of 2009.

     2. Extension of Alternative Minimum Tax Relief for Individuals


                  Summary description of the provision

       The provision increases the individual AMT exemption amount 
     for taxable years beginning in 2009 to $70,950 in the case of 
     married individuals filing a joint return and surviving 
     spouses; $46,700 in the case of other unmarried individuals; 
     and $35,475 in the case of married individuals filing 
     separate returns. In addition, for taxable years beginning in 
     2009, the provision allows an individual to offset the entire 
     regular tax liability and alternative minimum tax liability 
     by the nonrefundable personal credits.


                      Number of affected taxpayers

       It is estimated that the provision will affect 
     approximately 25 million individual tax returns.


                               Discussion

       Many individuals will not have to compute their alternative 
     minimum tax and file the IRS forms relating to that tax.

[[Page 4104]]



     3. Special Allowance for Certain Property Acquired During 2009


                  Summary description of the provision

       The provision extends the additional first-year 
     depreciation deduction for one year, generally through 2009 
     (through 2010 for certain longer-lived and transportation 
     property).


                      Number of affected taxpayers

       It is estimated that more than 10 percent of small 
     businesses will be affected by the provision.


                               Discussion

       It is not anticipated that small businesses will have to 
     keep additional records due to this provision, nor will 
     additional regulatory guidance be necessary to implement this 
     provision. It is not anticipated that the provision will 
     result in an increase in disputes between small businesses 
     and the IRS. However, small businesses will have to perform 
     additional analysis to determine whether property qualifies 
     for the provision. In addition, for qualified property, small 
     businesses will be required to perform additional 
     calculations to determine the proper amount of allowable 
     depreciation. Complexity may also be increased because the 
     provision is temporary. For example, different tax treatment 
     will apply for identical equipment based on the acquisition 
     and placed in service date. Further, the Secretary of the 
     Treasury is expected to have to make appropriate revisions to 
     the applicable depreciation tax forms.

                4. Premium Assistance for COBRA Benefits


                  Summary description of the provision

       The provision reimburses employers providing COBRA 
     continuation health coverage to employees to the extent of 65 
     percent of the premium amount for up to nine months and 
     requires the eligible individual to pay 35 percent of the 
     premium. The program is mandatory for employers required to 
     offer COBRA continuation health coverage. Eligible 
     individuals must have a qualifying event between September 1, 
     2008 and December 31, 2009, and must have been terminated 
     involuntarily. Firms providing COBRA benefits will be able to 
     allow those electing COBRA to choose from other insurance 
     options at the time of the qualifying event, and firms will 
     be able to contribute to the individual portion of the 
     premium. Lastly, the benefit phases out for single taxpayers 
     with modified adjusted gross incomes between $125,000 and 
     $145,000 ($250,000 and $290,000 for joint filers) for the 
     taxable year.
       Employers will pay reduced payroll taxes in the aggregate 
     amount of 65 percent of the premium for all individuals who 
     opt into the provision, or, if COBRA subsidy exceeds payroll 
     taxes, employers will be reimbursed directly through a 
     program established by the Department of Treasury. COBRA 
     continuation health coverage for this purpose includes not 
     only coverage that applies to private, nongovernmental 
     employers with 20 or more employees but also coverage rules 
     that apply to Federal and State and local governmental 
     employers pursuant to Federal law, and to State law mandates 
     that apply to small employers (employers with less than 20 
     employees) and other employers not covered by Federal law, 
     provided that such State law mandates require an employer or 
     other entity to offer comparable continuation health 
     coverage. The social security trust fund is held harmless 
     from payroll tax offsets that are permitted under the 
     program.


                      Number of affected taxpayers

       It is estimated that more than 10 percent of small 
     businesses will be affected by the provision.


                               Discussion

       This provision will require additional processing by the 
     IRS in three areas; accounting, income eligibility and 
     provision enforcement. First, for all firms with eligible 
     employees, the firm must deduct that amount from their 
     payroll taxes, so IRS must be aware of the number of 
     employees eligible for the reimbursement and the average 
     monthly premium at the firm to properly assess the amount of 
     the deduction from payroll taxes. The Department of Treasury 
     must then transfer the appropriate amount of funds back into 
     the social security trust fund. All employers bound by COBRA 
     or COBRA-type legislation described above, and who terminate 
     individuals from employment between September 1, 2008, and 
     December 31, 2009, are affected by this provision. In 
     addition, firms are permitted to collect full premiums from 
     individuals for 60 days in accordance with their current 
     premium billing cycles, but must then credit back the 
     difference in later payments or if later payments are 
     insufficient to credit back all funds, the employer will 
     submit payment to the individual. The IRS must also 
     distinguish between the 65 percent of subsidy contribution 
     mandated and any optional firm contribution to the remaining 
     35 percent of premium.
       Second, the income eligibility provision in the bill limits 
     eligibility for the modified adjusted gross income limit of 
     the provision phasing out between $125,000 and $145,000 for 
     single filers ($250,000 and $290,000 for joint filers) for 
     the taxable year. While individuals may waive the subsidy if 
     they believe their earnings will exceed the limit, if an 
     individual accepts the subsidy and earns over the limit the 
     individual will be responsible for paying the subsidy back to 
     Treasury. For married individuals filing separately, if any 
     family member is over the single modified adjusted gross 
     income limit of $125,000, the entire non-subsidized portion 
     (this accounts for the phase out) must be repaid. This clause 
     requires IRS to match the incomes of spouses filing 
     separately and determine if the modified adjusted gross 
     income of either spouse disqualifies both for the subsidy 
     received. Children not claimed as dependents, however, who 
     are still on family plans have their incomes excluded from 
     this limitation.
       Third, the IRS must create rules and regulations to prevent 
     fraud and abuse of this provision. For example, taxpayers may 
     be required to provide evidence of eligibility for the 
     subsidy including evidence of involuntary separation from 
     work, which can include attestation from the former employer 
     or certification from state unemployment insurance agencies. 
     If a premium assistance eligible individual becomes eligible 
     for other group coverage while receiving premium assistance, 
     that individual must forfeit the subsidy or face a penalty 
     and the IRS must attempt to prevent individuals from claiming 
     the subsidy while eligible for other group coverage either 
     through a spouse or through a new employer.

            COMPLIANCE WITH CLAUSE 9 OF RULE XXI (EARMARKS)

       Pursuant to clause 9 of rule XXI of the Rules of the House 
     of Representatives, neither this conference report nor the 
     accompanying joint statement of managers contains any 
     congressional earmarks, limited tax benefits, or limited 
     tariff benefits as defined in clause 9(e), 9(f), or 9(g) of 
     rule XXI.

     David Obey,
     Charles Rangel,
     Henry Waxman,
                                Managers on the Part of the House.

     Daniel K. Inouye,
     Max Baucus,
     Harry Reid,
     Managers on the Part of the Senate.

                          ____________________